MPORTANT NOTICE

This Information Memorandum ( IM ) has been prepared by SBI Capital Markets Limited
(SBICAP) for the proposed 1,980 MW Power Project of Talwandi Sabo Power Limited
( TSPL or the Company ) at Village Banawala, District Mansa, Punjab. The power project
is promoted by Sterlite Energy Limited ( SEL or the Promoter ). The contents of this
IM are strictly confidential. Accordingly, this IM and its contents are circulat
ed on the basis that it will be held in and with complete confidentiality. By ac
cepting a copy of this IM, the recipient agrees to keep its contents and any oth
er information, which is disclosed to such recipient, confidential and shall not
divulge, distribute or disseminate any information contained herein, in part or
in full, without the prior written approval of SBI Capital Markets Limited ( SBIC
AP ). The recipient also agrees to indemnify SBICAP against any claims that may ar
ise as a result of a breach of any confidentiality arrangement, which governs th
e contents of this IM.
This IM has been prepared for the internal use of prospective lenders to the 1,9
80 MW power project of Talwandi Sabo Power Limited, and may contain proprietary
and confidential information about the project, the Company and its promoters. T
his IM has been prepared, inter alia, on the basis of the information and docume
nts made available by the Company and discussions held with its officials, infor
mation and documents available in the public domain and in-house databases avail
able with SBICAP as a part of its professional practice & which SBICAP believes
to be reliable. SBICAP has not carried out any independent verification for the
accuracy or truthfulness of the same.
This IM constitutes an opinion expressed by SBICAP and each party concerned has
to draw its own conclusions on making independent enquiries & verifications and
SBICAP cannot be held liable for any financial loss incurred by anyone based on
this IM. Further, on accepting a copy of this IM, the recipient accepts the ter
ms of this Notice, which forms an integral part of this IM and the recipient sha
ll be deemed to have agreed to indemnify SBICAP against any claims that may be r
aised against SBICAP as a result of or in connection with the data & opinions pr
esented in this IM.
The delivery of this IM does not imply that the information in it is correct as
of any time after the date set out on the cover page hereof, or that there has b
een no change in the operation, financial condition, prospects, creditworthiness
, status or affairs of the subject or anyone else since that date. Further, futu
re projections are subject to uncertainties concerning the effects that change i
n legislation or economic or other circumstances may have on future events, and
different people may have a different view in future. There will usually be diff
erences between projected & actual results because events & circumstances do not
occur as expected and those differences may be material. Under the circumstance
s, no assurance can be provided that the assumptions or data, upon which any pro
jections have been based, are accurate or whether these business-plan projection
s will actually materialize.
Neither SBICAP, nor State Bank of India or any of its associates, nor any of the
ir respective directors, employees or advisors make any expressed or implied rep
resentation or warranty and no responsibility or liability is accepted by any of
them with respect to the accuracy, completeness or reasonableness of the facts,
opinions, estimates, forecasts, projections, or other information set forth in
this IM or the underlying assumptions on which they are based or the accuracy of
any computer model used and nothing contained herein is, or shall be relied upo
n as a promise or representation regarding the historic or current position or p
erformance of the Company, or any future events or performance of the Company.
This IM is divided into sections & sub-sections only for the purpose of reading
convenience. Any partial reading of this IM may lead to inferences, which may be
at divergence with the conclusions and opinions based on the entirety of this I
M. Neither this IM, nor the information contained herein, may be reproduced or p
assed to any person or used for any purpose other than stated above.
It may also be noted that SBI Capital Markets Limited is not a monitoring agency
for the aforesaid project and shall not be responsible in any way for utilizati
on of funds raised by SEL through its proposed Initial Public Offering (IPO) eit
her temporarily or until deployment in the aforesaid project/ purposes stated in
the Prospectus.

TABLE OF CONTENTS
 TOC \O "1-2" LIST OF ANNEXURES  PAGEREF _TOC244161183 \H 1
LIST OF ABBREVIATIONS  PAGEREF _TOC244161184 \H 2
CHAPTER 1: INTRODUCTION  PAGEREF _TOC244161185 \H 6
CHAPTER 2: THE PROJECT COMPANY  PAGEREF _TOC244161186 \H 10
2.1 General Particulars  PAGEREF _Toc244161187 \h 10
2.2 Management and Organization  PAGEREF _Toc244161188 \h 10
2.3 Financial Position  PAGEREF _Toc244161189 \h 13
2.4 Shareholding and Capital Structure  PAGEREF _Toc244161190 \h 14
2.5 Present banking Arrangements and position of Accounts  PAGEREF _Toc2441
61191 \h 15
CHAPTER 3: PROMOTER AND GROUP COMPANIES  PAGEREF _TOC244161192 \H 16
3.1 Promoter  PAGEREF _Toc244161193 \h 16
3.2 Group Companies  PAGEREF _Toc244161194 \h 17
3.2.1 Vedanta Resources Plc  PAGEREF _Toc244161195 \h 17
3.2.2 Sterlite Industries (India) Ltd.  PAGEREF _Toc244161196 \h 22
3.2.3 Hindustan Zinc Ltd.  PAGEREF _Toc244161197 \h 23
3.2.4 Bharat Aluminium Company Ltd.  PAGEREF _Toc244161198 \h 24
3.2.5 Madras Aluminium Company Ltd.  PAGEREF _Toc244161199 \h 25
3.2.6 Sesa Goa Ltd.  PAGEREF _Toc244161200 \h 26
CHAPTER 4: PROJECT DETAILS  PAGEREF _TOC244161201 \H 28
4.1 Scope  PAGEREF _Toc244161202 \h 28
4.2 Project Structure  PAGEREF _Toc244161203 \h 30
4.3 Location  PAGEREF _Toc244161204 \h 30
4.4 Land  PAGEREF _Toc244161205 \h 31
4.5 Process  PAGEREF _Toc244161206 \h 32
4.6 Major Plant Equipment & Systems  PAGEREF _Toc244161207 \h 34
4.6.1 Boiler and Auxiliaries  PAGEREF _Toc244161208 \h 34
4.6.2 Steam Turbo Generator and Auxiliaries  PAGEREF _Toc244161209 \h 37
4.6.3 Balance of Plant  PAGEREF _Toc244161210 \h 40
4.6.3.1 Coal Handling System  PAGEREF _Toc244161211 \h 40
4.6.3.2 Fuel Oil Handling System  PAGEREF _Toc244161212 \h 41
4.6.3.3 Plant Water System  PAGEREF _Toc244161213 \h 42
4.6.3.4 Ash Handling System  PAGEREF _Toc244161214 \h 44
4.6.3.5 Electrical System  PAGEREF _Toc244161215 \h 46
4.6.3.6 Fire Protection System  PAGEREF _Toc244161216 \h 47
4.6.3.7 Infrastructure Facilities  PAGEREF _Toc244161217 \h 49
4.7 Implementation Arrangement  PAGEREF _Toc244161218 \h 49
4.8 Owner s Engineer  PAGEREF _Toc244161219 \h 56
4.9 Operation & Maintenance Arrangements  PAGEREF _Toc244161220 \h 60
4.10 Raw Material  PAGEREF _Toc244161221 \h 60
4.11 Water  PAGEREF _Toc244161222 \h 67
4.12 Evacuation of power  PAGEREF _Toc244161223 \h 68
4.13 Environmental Aspects  PAGEREF _Toc244161224 \h 70
4.14 Lenders Independent Engineer  PAGEREF _Toc244161225 \h 72
4.15 Schedule of Implementation  PAGEREF _Toc244161226 \h 73
4.16 Current Status of Implementation  PAGEREF _Toc244161227 \h 74
4.17 Expenditures incurred on the Project  PAGEREF _Toc244161228 \h 75
CHAPTER 5: STATUS OF APPROVALS / CLEARANCES  PAGEREF _TOC244161229 \H 76
CHAPTER 6: COST OF THE PROJECT  PAGEREF _TOC244161230 \H 79
6.1 Components of Project Cost  PAGEREF _Toc244161231 \h 79
6.2 Capital Cost Comparison  PAGEREF _Toc244161232 \h 83
CHAPTER 7: MEANS OF FINANCE  PAGEREF _TOC244161233 \H 85
CHAPTER 8: MARKET AND SELLING ARRANGEMENTS  PAGEREF _TOC244161234 \H 88
8.1 Power Sector Scenario in India  PAGEREF _Toc244161235 \h 88
8.2 Performance at a Glance  PAGEREF _Toc244161236 \h 89
8.3 Demand Forecast (All India-17th EPS)  PAGEREF _Toc244161237 \h 97
8.4 GoI Initiatives for Power Sector Development  PAGEREF _Toc244161238 \h
100
8.5 Power Scenario in Northern India  PAGEREF _Toc244161239 \h 109
8.6 Supply Forecast Northern Region  PAGEREF _Toc244161240 \h 112
8.7 Power Scenario in Punjab  PAGEREF _Toc244161241 \h 113
8.8 Off-Take Arrangements  PAGEREF _Toc244161242 \h 114
8.9 Competitiveness of Power Produced by TSPL  PAGEREF _Toc244161244 \h 120
CHAPTER 9: PROFITABILITY PROJECTIONS  PAGEREF _TOC244161245 \H 125
9.1 Financial Projections Snapshot  PAGEREF _Toc244161246 \h 125
9.2 Sensitivity Analysis  PAGEREF _Toc244161247 \h 126
CHAPTER 10: RISK ANALYSIS AND SWOT ANALYSIS  PAGEREF _TOC244161248 \H 128
10.1 Risk Analysis Allocation & Mitigation  PAGEREF _Toc244161249 \h 128
10.2 SWOT Analysis - Project  PAGEREF _Toc244161250 \h 142
CHAPTER 11: CONCLUSION  PAGEREF _TOC244161251 \H 146
APPENDIX  PAGEREF _TOC244161252 \H 149
ANNEXURES  PAGEREF _TOC244161253 \H 169


LIST OF ANNEXURES
Annexure I Financial results of Sterlite Energy LimitedAnnexure II Consolidated
Financial results of Sterlite Industries (India) LimitedAnnexure IIIKey Assumpti
ons underlying the Projections for the ProjectAnnexure IV (A 1)Projected Profit
& Loss account (up to refinancing) Annexure IV (B 1)Projected Cash Flow Statemen
t (up to refinancing)Annexure IV (C 1)Projected Balance Sheet & Ratios (up to re
financing)Annexure IV (D 1)Projected DSCR Calculations Project Annexure IV (A 2)
Projected Profit & Loss account (after refinancing) Annexure IV (B 2)Projected C
ash Flow Statement (after refinancing)Annexure IV (C 2)Projected Balance Sheet &
Ratios (after refinancing)Annexure VSalient Features of the Engineering, Procur
ement and Construction (EPC) contract entered with SEPCOAnnexure VIEPC Contracto
r and BTG Supplier CredentialsAnnexure VIIKey Terms of Project Documents:
1. Power Purchase Agreement (PPA)
2. Salient Features of Default Escrow Mechanism
3. Agreement to Hypothecate Cum Deed of Hypothecation
4. Fuel Supply Agreement (Model)
5. Proposed Rail Transportation Agreement (RTA)

LIST OF ABBREVIATIONS
AbbreviationsDescriptionsAG&SPAccelerated Generation and Supply ProgrammeAPDRPAc
celerated Power Development and Reforms ProgrammeATCAggregate, Technical and Com
mercialBFPBoiler Feed PumpsBTGBoiler and Turbine GeneratorBUBillion UnitsCEACent
ral Electricity AuthorityCERCCentral Electricity Regulatory CommissionCHPCoal Ha
ndling PlantCIFCost Insurance FreightCODCommercial Operation DateCTUCentral Tran
smission UtilityDEDebt EquityDMDemineralizedDPRDetailed Project ReportEAElectric
ity ActEIAEnvironmental Impact AssessmentEPCEngineering Procurement Construction
EPSElectric Power SurveyESPElectro Static PrecipitatorsFOBFree On BoardFOPHFuel
Oil Pump HouseFSAFuel Supply AgreementGCVGross Calorific ValueGoIGovernment of
India
GoPGovernment of PunjabHFOHeavy Fuel OilIDCInterest During ConstructionIMInforma
tion MemorandumIPPIndependent Power ProducerKcalKilo CalorieskVKilo VoltsKwhKilo
Watt Hour LCLetter of CreditLDLiquidated DamagesLDOLight Diesel OilLoALetter of
AssuranceLoILetter of IntentMCRMaximum Continuous RatingMCLMahanadi Coalfields
Ltd.MoAMemorandum of AgreementMoPMinistry of Power MoCMinistry of CoalMoEFMinist
ry of Environment & ForestMTMillion TonneMTPAMillion Tonnes Per AnnumMUMillion U
nitsMVWSMedium Velocity Water Spray SystemMWMega WattNOCNo Objection Certificate
NTPNotice to ProceedO&MOperations & MaintenancePGPerformance GuaranteePGCILPower
Grid Corporation of India LimitedPLFPlant Load FactorPPAPower Purchase Agreemen
tPSEBPunjab State Electricity BoardPTCPower Trading CorporationR&RRehabilitation
& ResettlementRCCReinforced Cement ConcreteRIReliability IndexRPMRevolutions P
er MinuteSEBState Electricity BoardSEPCOShandong No. 3 Electric Power Constructi
on Corporation of Shandong, ChinaSERCState Electricity Regulatory CommissionSELS
terlite Energy LimitedSILSterlite Industries (India) Ltd.SLDCState Load Dispatch
CentreSPVSpecial Purpose VehicleSPCBState Pollution Control BoardSTGSteam Turbi
ne GeneratorSTUState Transmission UtilityTDBFPTurbine Driven Boiler Feed PumpT&D
Transmission & DistributionTGTurbo GeneratorTPHTonne Per HourUSDUnited States Do
llarVWOValves Wide Open
CHAPTER 1: INTRODUCTION
To achieve the country s objective of rapid economic growth and poverty alleviatio
n, electricity is one of the key drivers. For improving the standard of living,
supply of electricity at reasonable rate to all the households is essential. The
total installed capacity of electricity in India as on November 30th 2010 was
1,67, 077 MW. It is note worthy that out of the total installed capacity of 1,
67, 077 MW as on November 30, 2010, 65% was thermal power, 3% was of nuclear pow
er, 22% was hydro, and about 10% from RES (Renewable Energy Source). Gujarat Sta
te has the third highest installed capacity in India and accounts for 8.8% of In
dia s total installed capacity in the power sector.
The Indian Government is concentrating on the development of renewable energy to
meet its energy demand. In the 11th five-year plan, the Ministry of New and Ren
ewable Energy (MNRE) has plans to increase the renewable energy capacity to 10%
of the total energy mix in India by 2012. Gujarat has been in the forefront of i
ndustrial development in India and has shown significant leadership in other sph
eres of economics and social too. Government of Gujarat (GoG), Energy and Petroc
hemicals department, on 6th January 2009, launched Solar Power Policy 2009 . The mi
ssion aims promoting generation of green and clean power in the state using sola
r energy and envisages an installed solar generation capacity of 500 MW by 31.03
.2014.
Under the above scheme, GoG allocated development and operation of a 25 MWp Sola
r PV Power Plant to Roha Dyechem Pvt. Ltd. In October 2010 under the PPP route w
ith a 25 year Power Purchase Agreement from Gujarat Urja Vikas Nigam Limited (GU
VNL). The proposed project would be a thin film technology solar photovoltaic po
wer project located in the Solar Park area in village Charnaka, District Patan,
Gujarat - hereinafter, referred to as the Proposed Project or Project . The Project
is being developed by Roha Energy Private Limited (REPL), a subsidiary of Roha D
yechem Pvt. Ltd. that was incorporated subsequent to the allocation. RDPL holds
51% stake in REPL while the remaining stake is held by other investors, prominen
t among them being Mr. Vishal Veeru Devgan (alias Ajay Devgan), Mr. Vijay Omprak
ash Jain & Roha Infrastructure Developers Pvt. Ltd.
RDPL is the fastest growing manufacturer of Natural & Synthetic colours, special
izing in the Food & Beverage (Bakery, Beverage, Confectionery, Dairy, Ice Cream,
Seafood, Petfood), Paints, Fertilizers, Cosmetics and Pharmaceutical industries
.
RDPL's strength lies in its excellence in Global Manufacturing Capabilities. Wit
h 8 manufacturing plants, 8 application support labs and over 15 offices spread
across five continents with 110 distributors and stock points located across the
globe, the company ensures customers get a ready supply of finished material, i
n any conceivable quantity. RDPL has one of the world's largest facilities, with
state-of-the-art equipment backed by cutting edge technologies.
RDPL has also installed a 7.5 MW wind turbine plant in Sangli, Maharashtra.
RDPL reported a Net Worth of Rs. 289 cr in FY 2010 with a Total Debt of Rs. 101
cr. The company reported a PAT of Rs. 23.8 cr on a sale of Rs. 257 cr. The compa
ny has investments to the tune of Rs. 86 cr in various global subsidiaries and a
ssociates, through which RDPL manages the 2nd largest natural & synthetic colour
s business in the world.
A PPA has been executed on 9th December 2010 between GUVNL and REPL for sale of
power corresponding to a capacity of 25 MW. The PPA obligates REPL to sell all g
enerated power to GUVNL at rates fixed and specified in the agreement for a peri
od of 25 years from commissioning. The PPA has set the tariff payable at Rs. 15/
unit for the first 12 years and Rs. 5/unit for the next 13 years. The PPA and al
location letter specify that the entire project must be commissioned by December
31st, 2011. Any capacity remaining un-commissioned after that date would not qu
alify for the above mentioned power purchase rates.
The project is being implemented by way of a fixed price fixed time turnkey Engi
neering Procurement and Construction (EPC) contract. In January 2011, REPL has e
xecuted a Purchase Order with WIPRO Eco Energy, a division of WIPRO Limited, cov
ering the design, engineering, supply, installation, testing & commissioning of
a 25 MWp solar PV power plant based on thin film technology at the Project site,
ensuring that the commercial operations can begin before 31st December 2011. A
detailed contract has also been executed. WIPRO will also act as the operation &
maintenance contractor (O&M) for the plant. There are no fuel requirements for
the plant while requirements of auxiliary power and water are insignificant. The
same will be covered in the operation & maintenance costs payable to the O&M co
ntractor for the plant.
The terms of the PPA allow sale of entire contracted capacity to GUVNL at the co
ntracted rates. The delivery of electricity needs to occur at an interconnect fa
cility which is defined by the PPA to be a dead end delivery tower within the sw
itchyard of the solar power plant. REPL has to approach GUVNL to install an evac
uation facility at the expense of GUVNL. In case GUVNL does not have proper evac
uation facility of power made available by REPL, charges will still be paid to R
EPL.
The company has also obtained the major approvals like MOEF clearance, SPCB clea
rance, AAI clearance, consent for drawal of water, letter of assurance for suppl
y of coal from Ministry of coal and Rail Transport clearance for movement of coa
l.
The total project cost is expected to be around Rs. 341.62 crores (Rs. 13.66 cro
res per MW), which is proposed to be financed at a debt equity ratio of 2.33:1 w
ith equity of Rs. 102.49 crores and debt of Rs. 239.14 crores. The entire equity
for the project would be brought in through a mix of equity and quasi equity in
the form of unsecured loans from promoters. Besides, REPL would also be getting
all the necessary support from RDPL for financing this project. Out of total eq
uity, around Rs. 61.49 crores, (i.e. 40% of the total equity) would be brought i
n upfront by the promoters before any draw down of the debt. 100% of the equity
would be brought in before any disbursement of debt facilities beyond 50% of th
e total facility amount. The debt for the project is proposed to be raised by a
mix of Rupee Loans and ECB. However, the rupee limits to be sanctioned initially
would total Rs. 239.14 crores and they shall be reduced as and when any ECB is
raised by the company. The maximum ECB carve out allowed in this manner is 20% o
f the total debt quantum.
The Company has mandated Kotak Mahindra Bank and Bank of India to syndicate the
entire debt of Rs. 239.14 crores required for the project.

CHAPTER 2: THE PROJECT COMPANY

2.1 General Particulars
Name:Roha Energy Private Limited (REPL)Incorporation Date :Constitution:Private
Limited Company Sector:Private Sector (Independent Power Producer: IPP)Registere
d Office:A 44 & 45, Road No. 2, MIDC, Andheri (East),
Mumbai 400093Site Location:Village Charanaka, District Patan, Gujarat
The Government of Gujarat through letter dated October 14, 2010 has allocated 25
MW capacities to M/s Roha Dychem Private Limited (RDPL), Mumbai for developing
and setting up Solar PV based power project in the State of Gujarat. RDPL subseq
uently incorporated the Company REPL as an SPV on _________ to undertake the dev
elopment obligations relating to the solar power plant.
M/s Roha Dyechem Private Limited, Mumbai has taken approval from Energy & Petroc
hemical Department, Government of Gujarat to take up the solar power project of
25 MW through the Special Purpose Vehicle REPL.
2.2 Management and Organization
Board of Directors
The Articles of Association of REPL provides for a minimum of 3 and a maximum of
12 Directors on the Board of the Company. The Board of REPL currently comprises
of 3 directors. A brief profile of the directors is given below:

DirectorAge, Qualifications Experience / Past employment Mr. M. S. Mehta

Professional/ Nominee Director of SEL52, Mechanical Engineering from MBM College
, Jodhpur and MBA from IIM, Ahmedabad.He is the Chief Executive Officer of Vedan
ta Resources Plc. He has served as CEO and Whole Time Director of Hindustan Zinc
Ltd. and was responsible for marketing of Copper, Aluminium, Zinc and Lead and
procurement of ore concentrates and coal. Prior to joining the group, Mr. Mehta
was with Lloyds Steel Industries Ltd. where he was involved in marketing, procur
ement, working capital finance and projects.Mr. D. D. Jalan
Professional/ Nominee Director of SEL53, Chartered AccountantHe is the Chief Fin
ancial Officer of Vedanta Resources Plc. He has over 27 years experience with va
rious companies in engineering, mining and non-ferrous metal sectors. Prior to j
oining the group in 2001, he was associated with Aditya Birla Group in various c
apacities from 1996 to 2000, in commercial and financial activities. Mr. B. K. S
harma
Professional/ Nominee Director of SEL56, Bachelor of Science, MBA from Punjab Un
iversityHe is the Chief Executive Officer of TSPL. Mr. Sharma has over 35 years
of experience in the areas of Commercial/ Marketing and Business Operations mana
gement. Mr. Sharma joined the Vedanta Group in 1997 and prior to that was associ
ated with West Coast Paper Mills.
The details of other directorships of the Company s directors are given below:
DirectorDetails of other Directorships heldMr. M. S. Mehta* Madanpur South Coal
Ltd
* Hindustan Zinc Ltd.Mr. D. D. Jalan* Madanpur South Coal Ltd
* Sterlite Shipping Ventures Ltd,
* Sterlite Opportunities and Ventures Ltd.,
* Vedanta Resources Finance Limited.Mr. B. K. SharmaNo other directorship held
The Company would be broad-basing its Board of Directors suitably.
Organization Structure and Key Executives
REPL has identified key executives for leading the development of the Project. T
hey would be suitably assisted by a team of professionals at various levels, spe
cializing in critical functions related to managing the project.
A brief profile of the key executives of REPL is as under:
* Mr. S. R. Srinivasan - He is a Mechanical Engineer from Govt College of Techno
logy, Coimbatore. He has more than 25 years of experience in Power Sector in dev
elopment of Central/ State sector power projects and IPPs in various capacities
from construction, commissioning to operation of the units. Mr. Srinivasan joine
d the group in 2003 in Hindustan Zinc as Project Manager for its 2*77 MW thermal
power plant. He took over as the Head Power Plant in 2005 and was also the Head
Projects for the two 80 MW plants at Chanderiya and Zawar. Prior to joining the
Group, he has worked with NLC, ABB and Alsthom where he was involved in the com
missioning of power plants for NLC, GVK, Reliance Industries and ABB, Germany.
* Mr. Sridhar Narasimhan - He is B.Com from Madras University and Member of the
Institute of Chartered Accountants of India and the Institute of Cost and Works
Accountants of India. Mr. Sridhar joined the group in 1996 as a Management Train
ee in Madras Aluminium Company Limited (MALCO). Prior to the current position, h
e was Head Finance in MALCO where he also headed the Commercial Function and Coa
l Procurement. Prior to that he has headed the overall finance and accounting fu
nctions across various group companies where he was involved in finalizing large
mining contracts, finalisation of Joint Venture Agreements and liaison with gov
ernmental agencies, Due Diligence exercise of various mining and smelter operati
ons, handling Concentrate purchase, Commodity Hedging and MIS.
Mr. Sridhar will be the overall in charge of the financial activities of the pro
ject as Chief Financial Officer TSPL.
The proposed organization structure of TSPL is as follows:
The Company would suitably strengthen its team as the implementation of the Proj
ect progresses.
2.3 Financial Position
Since the Company has not commenced any manufacturing, trading or production act
ivity, the expenditure incurred so far has been shown under Capital Work in Prog
ress and Investments. The financial position of REPL as on September 30, 2009 is
as under:
(Rs. Crore)
As on 30.09.09 (Rs. crore) Share Holders Fund Share Ca
pital0.05Share Application Money pending allotment of shares362.00Loan Funds-Tot
al362.05Fixed AssetsGross Block0.97Less: Depreciation0.14Net Block0.83Capital Wo
rks in Progress356.85Investments4.71Current AssetsCash and Bank Balances0.03Loan
s & Advances0.34Less: Current Liabilities & Provision 0.71Net Current Assets(0.3
4)Total 362.05
* Capital work in progress includes 2,113 acres of land acquired for the main pl
ant area for Rs 312.16 crores and also includes site development expenses and pr
e-operative expenses.
* Investments includes investment made in units of mutual funds
Further on behalf of TSPL, SEL has made an advance payment of Rs. 494 crore to t
he EPC contractor in September 2009, which will be charged to TSPL shortly at th
e time of assignment of EPC contract in favour of TSPL.
2.4 Shareholding and Capital Structure
Details of the authorized, issued, subscribed and paid-up capital of the Company
as on December 31, 2010 are as under:
S. No.DescriptionRs. crore1.Authorised Capital
(100,000 equity shares of Rs.10 each)0.102.Issued, Subscribed and Paid-up Capita
l
(50,000 equity shares of Rs.10 each)0.05 3.Share Application Money pending allot
ment of shares362.00
As informed by the company, the entire subscribed and paid up equity capital hol
ding of TSPL is presently with SEL (the holding company) and its nominees. Furt
her, based on the proposed financing plan for the project, the entire share capi
tal of TSPL would be held by SEL and other group companies. However, the company
may induct any strategic investor with minority shareholding, if required.
TSPL would need to increase its authorised share capital suitably in line with t
he proposed financing plan. A suitable condition has been stipulated in this reg
ard.
2.5 Present banking Arrangements and position of Accounts

The Company presently has not availed any fund based limits. As informed by the
company, it has provided a bank guarantee of Rs. 33.96 crore to Coal India Limit
ed which is availed from HDFC bank.

Chapter 3: PROMOTERS AND GROUP COMPANIES

3.1 Promoters
Roha Dyechem Private Limited
REPL is promoted by Roha Dyechem Private Limited ( RDPL ), which is the flagship com
pany of the Roha Group and is one of the fastest growing manufacturers of natura
l & synthetic colours in the world, specializing in the food & beverage, paints,
fertilizers, cosmetics and pharmaceutical segments. The company has its registe
red office at 12, Abhishek, 303-307, Samuel Street, Mumbai 400003 and its admini
strative office at A, 44-45, MIDC, Andheri East, Mumbai 400093.
The groups strength lies in its excellence in global manufacturing capabilities.
It has 8 manufacturing plants, 8 application support labs and over 15 offices sp
read across five continents with 110 distributors and stock points located acros
s the globe. The group has one of the world's largest facilities, with state-of-
the-art equipment backed by cutting edge technologies.
Board of Directors:
NameAgeExperience & QualificationsMr. Ramakant J. Tibrewala54 yearsB. Com with a
vast experience of over 34 years in the field of food colours and chemicalsMr.
Shrikant J. Tibrewala52 yearsB. Com with an experience of over 29 years in the f
ield of food colours and chemicalsMrs. Sushma R. Tibrewala48 yearsB. Com with an
experience of over 19 years in the field of administration
Shareholding Pattern: (as on 12th August 2010)
SR.NAME OF SHARE HOLDER NO.OF SHARE % OFNO.€ SHARE CAPITAL HOLDING1SHRIKANT J
.TIBREWALA 11,640 1,164,000 4.75 2RAMAKANT
J .TIBREWALA 48,598 4,859,800 19.84 3SUSHMA R
. TIBREWALA 34,370 3,437,000 14.03 4MAHESH R. T
IBREWALA 33,000 3,300,000 13.47 5BRIJESH R. TI
BREWALA 36,960 3,696,000 15.09 6HARSH S. TI
BREWALA 11,000 1,100,000 4.49 7BRIJESH RAMA
KANT H U F 29,302 2,930,200 11.96 8ANNAPURNA S
. TIBREWALA 16,720 1,672,000 6.82 9DEEPESH
S. TIBREWALA 11,066 1,106,600 4.52 10DEEPE
SH SHRIKANT H U F 12,244 1,224,400 5.00 11J R
H U F 100 10,000 0.04 €TOTAL 245
,000 24,500,000 100.00
As is evident, the entire shareholding of the company rests with the Tibrewala f
amily.
Products:
RDPL provides systematic solutions with verified certifications. Being a complet
e color solution provider, RDPL's technical and legislative experts are constant
ly involved with regulation committees such as WHO, EU Directives, US FDA CFR 21
and other respective country regulations. The group has a series of internation
al certification and accreditations.
ISACert is a certification body operating internationally, with representation in
30 countries all over the world. The core competence of ISACert is auditing and
certification all along the entire food chain, including suppliers of additives
, packaging, transport, as well as auditing and certification for the personal c
are market, with schemes that cover all links in the production chain.FPA-SAFE pr
ovides a reliable, comprehensive assessment of a company's entire food quality a
nd safety system while reducing the time and expenses associated with redundant
supplier auditsThe GMA-SAFE program meets the global food industry's audit needs.
 GMA-Safe provides a reliable, comprehensive assessment of a company's entire fo
od quality and safety systemISO 22000 is needed by the organization to demonstrat
e its ability to control food safety hazards in order to provide consistently sa
fe end products that meet both the requirements of the customer and complies wit
h applicable food safety regulations.
The KOF-K symbol is the internationally recognized trademark of KOF-K Kosher sup
ervision, one of the foremost Kosher certification agencies in the United States
. Kosher certification makes the customer to know that the product of ROHA is gl
obally known very well.
Halal certificates benefits all consumers as it covers religious requirements an
d impose strict hygiene practices. It boosts customer's trust and confidence in
product. Halal certificates are used by ROHA in Gulf countries
 HYPERLINK "http://www.rohadyechem.com/homepage.php" 
Micron2 is one of the best-recognized providers of€technical support to the food i
ndustry including auditing services in the UK and overseas.
Global Footprint in Manufacturing:
RDPL has more than 8 manufacturing plants, 8 application support labs and over 1
5 offices spread across five continents, ROHA has the infrastructure, capability
and presence to be able to guarantee food colouring products, services and supp
ort to any customer, in any country, globally.
> Asia
o China
o Indonesia
o India
o Thailand
o Vietnam
o Philippines > Europe
o France
o Germany
o Italy
o Russia
o Spain
o UK > Africa
o South Africa> North America
o USA> Latin America
o Mexico

The summary of P&L Account and Balance sheet of RDPL are as under:
(Rs. crore)
For the year ended/ As on March 31201020092008Networth289.4266.1244.1Total Debt1
01.894.773.1Sales257.3228.6192.6Total Revenue264.2242.3196.3PBIDT57.257.136.18PA
T23.822.619.1Cash Accrual35.935.731.47PBIDTM (%)21.7%23.6%18.4%PATM (%)9.0%9.3%9
.7%Total Debt-Equity Ratio0.350.360.30Current Ratio10.4512.9012.46Interest Cover
5.656.427.70
The detailed analysis of SEL s Profit & Loss A/c and Balance Sheet is furnished at
Annexure I._
As per audited accounts for the year ended March 31, 2010, the company earned PA
T of Rs. 23.8 crore on an operating income base of Rs. 257.3 crore.
The overall workings and financial position of RDPL are satisfactory. RDPL has t
he necessary financial strength to meet its equity and other financing requireme
nts of the Project.
3.2 Group Companies
Roha Group has interests in businesses spanning beyond natural & synthetic dyes
and colours. They include sunrise sectors like infrastructure and renewable ener
gy. The group s thrust in renewable energy is a well co-ordinated initiative that
will give the group a diversified revenue stream as well as a strategic depth in
the energy scenario of the future.

Apart from the core business of manufacturing and marketing of food colors and in
gredients, RDPL has diversified its activities in Renewable Energy, as one of th
e emerging sector of its business in the years to come. The group believes in si
ncerely contributing towards a cleaner, greener and safer planet, while pursuing
the goal of helping to create a better place for people to live in. Whether in
areas of energy conservation, natural resource protection or social up-liftment,
they are constantly striving to contribute towards conserving natural resources
. This project is their initiative towards CDM (Clean Development Mechanism) as
per the Kyoto Protocol on Carbon dioxide (CO2) abatement.
Wind Mill Power Generation
As on today, the installed capacity of wind mill power generation is 7.50 MW. G
roup has plans to install another 7.50 MW wind mill by end of 31-03-2012 and fur
ther capacity of 10.00 MW in the year ending 31-03-2013. These installations ar
e planned in various parts of India. Apart from above installations, the group w
ith its international presence in its core business, has plans to diversify in w
ind mill power generation, out of India, too, and accordingly, efforts are on to
explore the possibilities in installing Wind Mills, in Denmark, Germany and USA
.
3.2.1 Roha Energy Pvt. Ltd.
Roha Energy Pvt. Ltd. has been setup for expansion into renewable energy space
and particularly solar energy. The company is headed by Mr. Shrikisan Bhutada, C
hartered Accountant, with his vast experience in setting up projects of wind mil
l power generation. Under his leadership, wind mills of more than 150 MW are be
ing setup in various parts of India. Of this total capacity, Roha Group owns 7.
50 MW.
Apart from the present project, company is planning to install another 25 MW cap
acity in the rest of India, viz., Rajasthan, and Tamil Nadu. Apart from this, gr
oup has plans to setup Solar Power Projects globally in, Thailand, Indonesia, Ch
ina, Spain, Germany and other countries, as per the suitability of each project.
In view of its global presence in its core business, the renewable energy segm
ent has been viewed as emerging opportunity for the next two decades and accordi
ngly plans are being devised.
The company was incorporated in November 2010 and as such has no operational res
ults and financials as on date.
3.2.2 Roha Infrastructure Pvt. Ltd.

CHAPTER 4: PROJECT DETAILS

4.1 Scope
Sterlite Energy Limited (SEL) through its SPV viz. Talwandi Sabo Power Ltd. (TSP
L) proposes to set up a domestic coal based power plant with a capacity of 1,980
MW (3 X 660 MW) at Village Banawala, Dist. Mansa, in the state of Punjab, India
. The project has been awarded to SEL under the PPP initiatives of Punjab State
Government through a competitive bidding process, for long term supply of power
to PSEB.
Vedanta Group has considerable experience in developing power projects successfu
lly at low capital cost and also operating them consistently at higher PLF. SEL
proposes to leverage the experience of its Group in successful implementation an
d operations of the proposed power project.
The proposed site at Banawala village is about 45 km from Bhatinda, 150 km from
Patiala and 220 km from Chandigarh. The proposed project site is well connected
by air, rail and road.
The project is being implemented by way of a fixed price fixed time turnkey Engi
neering Procurement and Construction (EPC) contract. Sterlite Energy Ltd. had pr
eviously entered an EPC Contracts in May 2008 with SEPCO Electric Power Construc
tion Corporation (SEPCO) for 1980 MW (3 X 660 MW) capacity for its proposed powe
r plant in Korba, Chhattisgarh. Subsequently in July 2009, SEL has executed a Co
ntract Amendment agreement with SEPCO pursuant to which it has been agreed by bo
th SEPCO and SEL to shift the location and hence SEPCO will now supply and const
ruct the power plant under the same contract at the proposed project site of TSP
L viz. Talwandi Sabo in Punjab instead of Korba. The EPC contract would need to
be assigned in favour of TSPL and a suitable condition has been stipulated in th
is regard.
The primary fuel for the proposed project would be domestic coal which the compa
ny proposes to source from Mahanadi Coalfields Limited (MCL). MCL has issued a L
etter of Assurance dated 14.08.2008 to the company, assuring coal quantity of 7.
72 Million Tonnes per annum (MTPA) with a GCV of coal corresponding to Grade E (Gr
ade F in case of shortage of Grade E coal) to meet the entire requirement of pow
er plant .
PSEB would enter into Rail Transportation Agreement (RTA) with Indian Railways b
ased on Fuel Supply Agreement to be entered into with MCL. PSEB would then assig
n RTA in favour of TSPL. The company has already received conceptual clearance f
or railway siding from offtake point to plant site, further for Rail Transport C
learance (RTC) for the transportation of coal of 8.7 MTPA from MCL coalfields in
Orissa to the plant site in Punjab.
The plant would require around 8,000 cubic meters/hr (80 cusec) of water. Entire
water requirement of the plant is proposed to be met from Bheni canal of sub br
anch of Kotla canal Branch which is at a distance of about 38 km from the projec
t site. The company proposes to make adequate arrangements for raw water pump ho
use, water pipelines/canal and reservoir for uninterrupted supply of water for t
he project.
A PPA dated September 01, 2008 has been signed among TSPL and PSEB for sale of p
ower corresponding to a contracted capacity of 1841.40 MW (total generation capa
city of 1980 MW less 7% auxiliary power consumption) at Bus Bar located at Talwa
ndi Sabo. The quoted levelised tariff for TSPL works out to Rs. 2.864 per unit.
However, as the fuel charges are pass through, this levalised tariff can increas
e or decrease depending upon the actual cost of coal and coal transportation.The
PPA is to be effective for a period of 25 years (Initial Term) from the COD of
Power Station. The term of the Agreement may be extended beyond this Initial Ter
m on mutually agreed terms for a mutually agreed period.
The operations & maintenance (O&M) of the power plant would be undertaken by the
company in-house with the support of its technical team and expert engineers. H
owever, the Company would also like to have an option to outsource the O&M servi
ces from a reputed agency in this field, if required, to the satisfaction of the
Lenders.
As per PPA with PSEB, the entire power generated from the power plant would be p
rocured by PSEB from the Bus Bar of the project only. Further it will be respons
ibility of PSEB to ensure availability of interconnection facility prior to sche
duled interconnection date.The power from TSPL will be evacuated through 3 numbe
rs of double circuit 400 KV transmission lines, one of which will be connected t
o the PGCIL s existing network for system stability. PSEB would be entering into n
ecessary agreement with PGCIL for laying the transmission lines to evacuate the
power from this project.
4.2 Project Structure

4.3 Location

4.3 Location
Patan is the administrative seat of Patan District in the Indian state of Gujara
t and administered by municipality. Patan is located at 23.83° N Latitude and 72.1
2° E Longitude.
Nearest Rail head is located at Santalpur about 16.5 km from the project site. P
atan Railway Station is 108 km away from Ahemdabad Railway Station. It can be re
ached by a bus or private taxi from Ahmedabad via Chansama or Unjha. The propose
d Site is connected to National High way NH-15, through an existing road coverin
g a length of about 15.5 km and passes through the villages of Bakutra and Dhoka
vada respectively en-route. Access to site seems to be quite sufficient to meet
the transportation requirement of the Solar Project.
Nearest airport for this proposed site is Kandla besides Bhuj and Ahmadabad. The
distance from project site to airport are shown below:
* Kandla : 161.5 km
* Bhuj : 207.5 km
* Ahmedabad : 215.5 km
The investigated area in solar park is more or less flat with very gentle slop t
owards North - West and west direction. Southern side of village Charanka and No
rthern Side of village Dhokavada is undulating and covered with small hillocks a
t places. The average elevation of the plain area is about 3 m to 10 m. The aver
age rain fall is 427 mm. The proposed site is in Seismic Zone III (moderate). Fu
rther the proposed location is plain, leveled and does not have shadows or obstru
ction .

4.4 Land & Site Selection

The total land required for the project is around 173 acres and the same has bee
n allocated to REPL by GoG within the Solar Park.
As per the NASA Surface Meteorology and Solar Energy information the annual aver
age solar radiation on a global horizontal surface is 5.16 kWh/m2/day and at 23° t
ilted surface is 5.40 kWh/m2/day. For the proposed site, maximum solar radiation
at Horizontal Surface is found in the months of April, May and June (Average 6.
40 kWh/m2/day) and at 23° Tilted Surface is found in the months of March, April an
d May (Average 6.13 kWh/m2/day).
The average daily temperature of proposed site is 28°C with a maximum of 32.1°C in t
he month of May. The daily average relative humidity of proposed site is 44 perc
ent, which is taken into account during selection of PV Panel.
The site selection for a solar power plant is pre-dominantly determined by solar
insolation & grid connectivity for exporting power. Equally important are other
essential factors / considerations such as:
* Site location is solar park under solar power policy 2009 of Gujarat Governmen
t.
* Availability of adequate land for power plant.
* Soil condition like soil bearing capacity.
* Proximity to State Electricity Grid (Substation) enabling economic evacuation
of power generated.
* Availability of water & power during construction.
* Availability of labour force in the proximity.
* Availability of developed Village / Tehsil in the nearby area.
* Easy accessibility to the site.
Lenders may stipulate suitable pre-disbursement condition that land required for
the Project on ownership/lease basis from Punjab Government shall be free from
all encumbrances as may be required for smooth implementation of the project ade
quacy of which will be reviewed by LIE. For balance requirement of land for Rail
way siding and Water Intake channel, the company shall acquire it at least 12
months prior to COD of the first unit of the Project.
4.5 Process
Photovoltaic (PV) is the technical word for solar panels that create electricity
. Photovoltaic material, most commonly utilizing highly-purified silicon, conver
ts sunlight directly into electricity. When sunlight strikes the material, elect
rons are dislodged, creating an electrical current which can be captured and har
nessed. The photovoltaic materials can be several individual solar cells or a si
ngle thin layer, which make up a larger solar panel.
Over the past three decades SPV technology has shown impressive growth towards t
echnological and economic maturity. The major SPV technologies based on material
s used are (i) Crystalline Technology (ii) Thin Film Technology. Crystalline Sil
icon Technology as of today has a share of 82% vs. 18% share of Thin Film Techno
logy. Since Thin Film Technology is rapidly developing, the market share of crys
talline Technology is expected to reduce to 65% whereas the share of Thin Film T
echnology to rise to 35 % by 2014.
Advantages of Thin Film Silicon PV Technology
The high cost of crystalline silicon wafers (they make up 40-50% of the cost of
a finished module) has led the industry to look at cheaper materials to make sol
ar cells. The selected materials are all strong light absorbers and only need to
be about 1 micron thick, so materials costs are significantly reduced.
In Thin Film Solar Cell / Module technology, very thin layers and a chosen semic
onductor material (ranging from nanometer level to several micrometers in thickn
ess) are deposited on to either coated glass or stainless steel or a polymer
Cell TechnologyCrystalline SiliconThin FilmTypes of TechnologyMono-crystalline s
ilicon (c-Si)
Poly-crystalline silicon (pc-Si/ mc-Si)
String RibbonAmorphous silicon (a-Si)
Cadmium Telluride (CdTe)
Copper Indium Gallium Selenide (CIG/ CIGS)
Organic photovoltaic (OPV/ DSC/ DYSC)Voltage Rating (Vmp/ Voc)
(Higher is better as there is less gap in Voc and Vmp)80%-85%72%-78%Temperature
CoefficientsHigherLower
(Lower is beneficial at high ambient temperatures)I-V Curve Fill Factor
(Idealized PV cell is 100%)73%-82%60%-68%Module constructionWith Anodized Alumin
umFrameless, sandwiched between glass;
lower cost, lower weightModule efficiency13%-19%4%- 12%Inverter Compatibility an
d SizingLower temperature coefficient
is beneficialSystem designer has to consider
factor such as temperature coefficients,
Voc-Vmp difference, isolation resistance due to external factorsMounting systems
Industry standardSpecial clips and structures may be needed. In some cases labor
cost is significantly savedDC wiringIndustry standardMay require more number of
circuit combiners and fusesApplication TypeResidential/ Commercial/ UtilityComm
ercial/ UtilityRequired AreaIndustry standardMay require up to %50 more space
for a given project size
* Higher quantity of cables and structures, resulting in higher cost of balance
of system (BOS) per MWp.
* Requirement of land in the range of 7-8 acres per MWp for fix tilted structure
s.
* Lower Module cost per MW due to substantially lower direct input material cost
.
* Less drop in performance level and efficiencies at temperatures exceeding abov
e 35°C, resulting in better performance at higher temperatures.
* Less drop in performance level and efficiencies in the conditions of diffused
radiation & dusty environment, resulting in better performance in dusty atmosphe
re.
Combination of all above factors leads to lower overall system cost per MW.
4.6 Major Plant Equipment & Systems
The plant would have other standard equipment and systems, which are enumerated
below:
4.6.1 Boiler and Auxiliaries
Boiler Auxiliaries comprising of the following systems:

Technical Data: Boiler and Auxiliaries

Boiler Parameters (Typical)UnitBoiler MCRSH Steam Flowtph~ 2000Outlet Pressureki
logram / sq. centimetre~ 256 Temperature at SH OutletDegree Centigrade~ 540SH Te
mperature controlBy spraySafety valvesAs per IBRFD fansNos / Type2 / Axial ; Hyd
raulic Blade pitchID fansNos / Type2 / Radial; variable speed
4.6.2 Steam Turbo Generator and Auxiliaries
The turbine component and its auxiliaries will be designed and selected to meet
the stringent requirements in respect of superior thermal performance, excellent
product reliability and operational flexibility.
Other auxiliary systems such as seal-oil system, hydrogen / stator cooling water
system etc. will be provided, as standard.
4.6.3 Balance of Plant
The Balance of Plant would have following major systems
4.6.3.1 Coal Handling System
4.6.3.3 Plant Water System
The waste water treatment system shall be designed to collect waste water from a
ll sources in the Power Plant and provide treatment to enable it to be reused in
the Power Plant to achieve Zero / Minimum Discharge as far as possible. The qua
lity of effluent shall conform to norms stipulated by Central Pollution Board, s
uitable for disposal to storm water drain, as and when considered necessary
4.6.3.4 Ash Handling System
The ash handling system of each unit will be designed to meet the following requ
irements:

4.6.3.5 Electrical System

4.6.3.7 Infrastructure Facilities

* Township
There will be residential quarters for employees and associates near by the plan
t. Training Hostel, School, shopping complex, bank, hospital, post office, telep
hone exchange, club house, community centre, guest house, field hostel, electric
al sub-station, auditorium, etc shall be constructed.
4.7 Implementation Arrangement
Turnkey EPC Contract:
The proposed project is being implemented by way of a fixed price fixed time tur
nkey Engineering, Procurement and Construction (EPC) contract which has already
been

4.8 Owner s Engineer

Infrastructure Ltd. s, 6x660 MW Super-critical Ultra Mega Power Project Krishnapat
nam, Andhra Pradesh, GMR Energy Ltd. s, 2x660 MW Coal based Super Critical Thermal
Power Plant in Chhattisgarh, Orissa Power Generation Corporation Ltd. s, 2x600+ M
W Coal based IB Thermal Power Plant in Orissa and many others.
4.9 Operation & Maintenance Arrangements
The Lenders may stipulate a condition that the company shall provide an undertak
ing to make the necessary arrangement for O&M of the project prior to COD of the
first unit of the project, which would be reviewed by LIE.
4.10 Raw Material
The key inputs for generation of power from the proposed project are primary fue
l i.e. coal, secondary fuel i.e. LDO/ HFO and water.

Transportation Arrangement

4.11 Water

CHAPTER 5: PROJECT IMPLEMENTATION STRATEGY

5.1 Project Structure Chart
5.2 EPC Contract
5.3 Profile of EPC Contractor - WIPRO
Wipro s Solar Credentials
Wipro EcoEnergy has partnered with renowned players in the solar energy sector a
cross the world to leverage their experience and competencies to engineer, to pr
ocure and to commission solar farms in India. The following details the experien
ce of Wipro in the field of solar energy.
Civil
Description
Sl
Client
COD
Scheme
Technology
Current
11.00
RL
31st
JNNSM
Thin Clean
Expected
MWwork
March
Film
Details
Status
SPV
Power
+completed.
mix
2011
ofbyPvt
Power
Crystalline
thePlant
SPVStructure
Ltd project
in Marakathoor
erectionVillage,
in progress.
Tamilnadu
Modules being shipped in l
21.00 investigation
ots
AseanAero
30th
JNNSM
Thin
Soil MW Solar
June
Film Education
2011 Powerstudy
Plantdone.
Ltd in Jaisalmer,
Design & detailing
rajasthan work in progress. Civil works
31.00 investigation
started.
Gemini
30th
JNNSM
Thin
Soil MWGeoss
June
FilmSolar
2011ltd
Powerstudy
Plantdone.
in Sattur,
DesignTamilnadu
& detailing work in progress. Civil works
41.00 Levelling
started
Abacus
30th
JNNSM
Thin
Land MWHoldings
June
FilmSolar
2011Power
work
Pvt being
Plant carried
Ltd in Orissaout at site. Site study to be done. Design & d
etailing
530
Gemini
Gujarat
31st
Thin
Order
Total
MWFilm
Dec
SPV
booked.
Order
Geoss
Solar
work
2011
power
book
ltd
started
park
Design
plant
as on&in31st
detailing
Gujarat
Jan 2011
SolarinPark
work Cumulative
progress.capacity of 34MW Solar Projects

5.4 Implementation Timelines

5.5 Current Status

CHAPTER 6: STATUS OF APPROVALS & CLEARANCES

The Company has obtained/ is in the process of obtaining the necessary approvals
. The current status of the key statutory approvals and clearances is as follows
:
Approval/ ConsentAuthority / AgencyStatusEnvironmental clearance MoEFMoEF cleara
nce dated 11th July, 2008 is received for 2000 MW power project based on configu
ration of 4 x 500 MW with sub critical technology. However, TSPL has since final
ised the configuration of 3 X 660 MW using super critical technology. The compan
y would apply for the revision in it s existing approval to MoEF shortly.
As the change from sub critical to super critical technology by the company woul
d result in reduced emissions from the power plant. Therefore no environmental i
ssues are envisaged to be involved and it is expected to be viewed positively by
MoEF. In view of this, the company does not foresee any problem in getting the
revision in its existing approval and is expected to obtain the same shortly.
No forest clearance required since there is no forest land is involved.Pollution
controlSPCBThe Company has received No Objection Certificate (NOC) vide letter
dated September 8, 2009 from Punjab Pollution Control Board for 2000 MW power pr
oject based on configuration of 4 x 500 MW with sub critical technology. However
, TSPL has since finalised the configuration of 3 X 660 MW using super critical
technology. The company would apply for the revision in it s existing approval to
MoEF shortly.
As mentioned above, as the change from sub critical to super critical technology
by the company would result in reduced emissions from the power plant, the comp
any does not foresee any problem in getting the revision in its existing approva
l and is expected to obtain the same during the shortly.
Stack height clearanceAirport Authority of India (AAI)No Objection Certificate d
ated 6th May, 2008 received from AAIWater AvailabilityGovt. of Punjab Dept. of P
ower
Consent from Chief Engineer (Canals), Irrigation Works, Punjab received vide let
ter dated 9th May, 2008 for 80 cusecs of water from Bheni Canal.
Land AvailabilityGovt. of Punjab
Total land requirement is estimated as 2371 acres. Of this, 2113 acres of land f
or power station has been acquired for Rs. 312 crore and is in possession of the
company. The company has also paid the necessary sum to PSEB towards R&R for th
e land. Hence, no R&R issue is pending.
The company is in the process of identifying balance land of around 274 acres wh
ich is required for Railway siding and Water Intake channel. The company propose
s to acquire the balance land by way ownership/ lease/ right of way in the due c
ourse so as to ensure smooth implementation of the project. Fuel LinkageMahanadi
Coal Fields (Subsidiary of CIL)
The Letter of Assurance was issued by MCL vide letter dated 14th August, 2008 as
suring supply of 7.72 MTPA of coal for 1,800 MW of capacity, which is sufficient
to meet the total estimated coal requirement of 7.59 MTPA for the project.
After TSPL fulfils certain conditions specified in LoA, Punjab State Electricity
Board (PSEB) would enter into FSA with MCL and subsequently, PSEB would assign
this Fuel Supply Agreement in favour of TSPL.Railway Transportation AgreementMin
istry of RailwayRail Transport Agreement (RTA) for movement of coal, is proposed
to be executed between PSEB and Indian Railways, after signing of FSA and PSEB
would then assign RTA in favour of TSPL.
Feasibility studies for Rail and Road transportation has been conducted by RITES
.
The application is being made to the Indian Railways for Rail Transport Clearanc
e (RTC) for the transportation of coal of 8.7 MTPA from MCL coalfields in Orissa
to the plant site in Punjab. Railway SidingNorthern RailwayThe company has rece
ived a conceptual approval for laying down the railway sidings from the Sada Sin
ghwala railway station to the plant site from Northern Railway on June 20, 2008.
All the relevant approvals and permissions obtained by the company are enclosed
in the Document Docket.
CHAPTER 6: COST OF THE PROJECT
6.1 Components of Project Cost
The project is being set up by way of a turnkey fixed time fixed price turnkey E
PC contract based on super critical technology at an estimated total cost of Rs.
9,320 crore comprising of expenditure towards Land & Site Development, EPC cost
, Railway Sidings, Water Arrangement, Preliminary & Preoperative Expenditure, Co
ntingencies, Interest During Construction Period and Margin Money for Working Ca
pital.
A summary of the components of the project cost is presented below:
Cost HeadTotal Cost
(Rs. Crore)Land & Site Dev.362EPC Cost (including FERV)7,420Railway Siding326Wat
er Intake system37Total Hard Cost8,145Preliminary and Preoperative Exp105Conting
ency52Interest During Construction868Margin Money for WC150Total Soft Cost1,175T
otal Project Cost9,320
The above project cost does not consider any benefits available for mega power p
rojects. In future, the company may apply for the mega power benefit to the Mini
stry of Power. On obtaining the mega power status, there would be a reduction in
the project cost on account of duties and taxes benefits.
Land
The project requires a total of 2,387 acres of land. Of this 2,113 acres of land
, required for power station, ash pond area and green belt area has already been
acquired. Remaining 191 and 83 acres of land required for construction of Rail
way siding and water corridor respectively, is yet to be acquired. The cost of l
and towards railway siding and water corridor has been included in the respectiv
e cost head for these items.
The company estimates land and site development expenses of Rs. 362 crore. Out o
f this the company has already paid Rs. 312 crore comprising of Rs. 282 crore to
wards the cost of land and Rs. 30 crore towards R&R (Rehabilitation and Resettle
ment) to the Punjab State Government. The company has estimated Rs 50 crore for
site development expenses like construction of compound wall & fencing gates, in
ternal and approach roads, storm water drainage, leveling & grading, green belt,
landscaping etc.
EPC Cost:
1. Civil Works & Infrastructure
The civil works and infrastructure includes expenditure on development of indepe
ndent systems such as main plant building, cooling water system, RCC chimney, va
rious pump house buildings, storage tanks, coal handling plant, ash handling pla
nt etc. Civil works contract for the envisaged work would also be a part of the
EPC contract.
2. Plant & Machinery
The complete plant and machinery for the project would be procured through a tur
nkey EPC contract, which the company has awarded to SEPCO, China. The EPC cost c
omprises of 4 various contract viz. Onshore Supply Contract, Onshore Service & c
onstruction contract, Offshore Supply Contract and Offshore Engineering & Techni
cal Service contract. The EPC cost for offshore contract is USD 1,115 millions (
including taxes and duties), while EPC cost for onshore contract is Rs. 2,126 cr
ore (including taxes and duties). The total EPC cost in rupee terms works out to
Rs. 7,420 crore. The EPC Contract comprises of Civil Works contracts, Boiler Tu
rbine Generator package (for super critical technology), Cooling tower, DM water
system, Coal handling system, Other BoP mechanical, LT Switchgear, Control & In
strumentation, Initial spares etc.
The Lenders may stipulate suitable condition for review of the EPC contract by L
enders Independent Engineer (LIE). The lenders may also stipulate that LIE shall
also examine the reasonability of contract prices and the company shall carry o
ut necessary changes/ modifications as recommended by the LIE and deemed necessa
ry by the Lenders.
Railway Sidings
As per the estimates furnished by the Company, the cost of laying down the railw
ay sidings works out to approximately Rs. 326 crore. The nearest railway station
is Sadda Singhwala located at about 12 km from the project site. The Railway St
ation is on Delhi -Bhatinda Railway line of Northern Railway. The railway line w
ill be extended to link the plant railway siding for the transportation of plant
heavy equipment, coal and fuel oil. The above cost includes the cost of land to
be acquired for laying down the railway line.
Water Arrangement
The water source for the proposed project is Bheni distributory of Kotla Branch
of Sirhind canal at a distance of about 38 km. Bheni canal will be raised over a
distance of about 20 km and a new canal/ pipeline from Bheni canal will be laid
over a distance of about 18 km upto power station boundary by the Irrigation De
partment of State Government. As per the Company estimates, the cost for water i
ntake system will work out to approximately Rs. 37 crore. The above cost include
s the cost of land to be acquired for laying down the pipe line/ canal to the pl
ant site.
Pre-Operative Expenses
Pre-operative Expenses are estimated to cost Rs. 105 crores and include fees to
be paid towards technical studies conducted by owner s engineer and lenders indepen
dent engineer, legal expenses for fees payable to the lenders and owner s legal cou
nsel, insurance advisor s fees, appraisal fees, merchant banker s fees, upfront fees
to lenders, advisors fees, start up fuel, employees recruitment, training and s
alaries, establishment and other expenses etc.
Contingency
The company is implementing the project by way of a turnkey EPC contract which i
s a fixed price and fixed time contract. Hence, a contingency provision of 10% o
f the non firm cost i.e. Site Development, Water Line, Railway Line and Pre-oper
ative expenses has been provided; which works out to a total of Rs.52 crores.
Interest During Construction Period
The interest during construction (IDC) works out to Rs. 868 crores The IDC perio
d has been estimated at the respective interest rates assumed for rupee and fore
ign currency loans. The IDC has been calculated based on the estimated implement
ation period for each of the units of the project i.e. 41 months for Unit 1, 44
months for Unit III and 48 months for the entire plant from the NTP. The debt dr
awdown schedule has been made with a provision for 30% equity being brought upfr
ont, while the balance equity coming on pro-rata basis along with debt (includin
g any interim funding). The company has proposed to avail disbursements / drawdo
wn for meeting its requirements of the payments towards EPC as per the proposed
implementation schedule and the relevant contracts.
Margin Money
The provision for margin money for working capital has been made at Rs. 150 cror
e. The margin money has been estimated at the rate of 25% of projected net worki
ng capital requirement of TSPL. For the purpose of estimates, the current assets
comprising of receivables of 1 month, primary fuel stock of 1.5 month, secondar
y fuel stock of 2 months, O&M expenses of 1 month and spares requirement equal t
o 20% of O&M expenses has been assumed.

6.2 Capital Cost Comparison

The total project cost envisaging setting up a 1,980 MW power plant using super
critical technology on a turnkey EPC contract basis is estimated at Rs.9,320 cro
re. Based on the total project cost of Rs. 9,320 crore, the per MW cost of the p
roject works out to Rs. 4.71 crore.
A comparison of the project cost of TSPL with that of the other comparable coal
based power projects developed/ being currently developed using super critical t
echnology is given below:
Comparison of TSPL s Capital Cost with other Super Critical Projects:
ProjectCapacity (MW)Unit SizeCost (Rs. crore)Cost per MW (Rs. Crore)Cu
ddalore Power1320660*263794.83Adani Power Ltd. Mundra (Phase IV)1980660*38,9604.
53NTPC Barh1980660*386934.39TSPL (including taxes and duties) 1980660*39,3204.71
Tata UMPP4000800*5170244.26India Bulls Sophia Power1,320660*26,8885.22Adani Powe
r Maharashtra Pvt. Ltd.- Phase I1,320 660*26,5604.97Source: Industry Research
Data
As mentioned earlier, the company has not considered the mega power benefit this
has resulted into an increase in the project cost on account of taxes and dutie
s. Further, most of the other projects mentioned above have been estimated based
on lower forex rate prevalent at that time, whereas the proposed project envisa
ges forex rate of Rs. 47 per USD (based on the present forex rates). This has al
so resulted in an increase in the project cost by around Rs. 450 crore or around
Rs. 0.23 crore per MW.
In future the company may apply for mega power benefit to the Ministry of Power.
In the event of the company obtaining mega power status there would be a reduct
ion in the total project cost due to the benefit of exemption of duties and taxe
s. If we remove the above two difference, the estimated project cost for the pro
posed 1980 MW project of TSPL would come down substantially, which compares very
well with other similar projects. In view of this, the cost per MW of TSPL Proj
ect is competitive as compared to other thermal power projects being developed u
sing super critical technology.

CHAPTER 7: MEANS OF FINANCE

The cost of the project estimated at Rs. 9,320 crore is proposed to be financed
by a mix of debt and equity at a debt equity ratio of 75:25. The proposed compo
nents of financing are
ParticularsRs. Crore%Promoter s Contribution2,33025%Senior Debt Finance6,99075%Tot
al9,320100%
Promoter s Contribution
The total equity requirement of the project is Rs. 2,330 crore.This entire capit
al would be brought in through a mix of equity and quasi equity in the form of u
nsecured loans from promoters, by the holding company, Sterlite Energy Ltd. whic
h is a 100% subsidiary of Sterlite Industries (India) Ltd. The part of equity re
quirement for the project would be brought in by SEL by raising equity from prim
ary markets through its proposed Initial Public Offering (IPO). Also, SEL would
be getting all the necessary support from SIL for financing this project. The Pr
omoter shall have the option to invest upto 50 % of the total envisaged promoter s
contribution in the project by way of quasi equity in form of unsecured and sub
ordinated loan, preference shares or any other form as may be approved by the Le
nders.
Out of total equity of Rs. 2,330 crore, 30% of the total equity would be brought
in upfront by the promoters before any draw down of the debt. Till September 30
, 2009, the company has already brought in Rs. 362 crore in the form of equity.
Also, on behalf of TSPL, SEL has made an advance payment of Rs. 494 crore to the
EPC contractor in September 2009, so the amount of promoter s contribution would
accordingly stand increased. During FY 2009, SIL earned a consolidated profit of
Rs. 4,961 crore and had a consolidated net worth of Rs. 27,021 crore. Hence, it
 is expected that the promoters would not face any difficulty in putting the req
uired equity contribution in TSPL.
The Lenders may stipulate suitable promoter undertaking for bringing in any shor
tfall in equity and financing of cost overrun, if any, by the promoters from the
ir own contribution.
Debt Financing
TSPL proposes to approach domestic/ foreign banks and financial institutions for
raising the requisite senior debt finance aggregating Rs.6,990 crore by a mix o
f Rupee Loans (RL) and Foreign Currency Loans (FCL).
TSPL proposes to raise the RL and FCL for the project as under:
i) Rupee Loan (RL)
The company proposes to raise rupee term loans mainly from Indian commercial ban
ks and Financial Institutions.
During the implementation period, the Borrower would also have the option for fu
nding senior debt by way of Export Credit Assistance (ECA) / External Commercial
Borrowings (ECB) / Foreign Currency Loan (FCL) / Domestic Bonds to the extent o
f 30% of total rupee loan sanctioned under RL for achieving financial closure in
addition to the ECB borrowings tied-up at the time of financial closure. Corres
pondingly, the undisbursed/ unavailed Rupee Loan component will get cancelled/ r
educed/ substituted to that extent on a pro rata basis.
The maximum door to door tenor of the Rupee Loan facility would be for 15 years
including the construction period of 4 years (48 months), 0.5 years (6 months) o
f moratorium and repayment of 10.5 years into 42 quarterly instalments. 65% of t
he total loan amount shall be repaid over a period 10.5 years by way of equal qu
arterly instalments from end of the Moratorium period with the balance 35% of th
e total term loan shall be payable by way of a bullet instalment at the end of 1
0.5 years from end of the moratorium period for RL.
It may be mentioned that as part of the sanction terms, there is a provision of
cash sweep which would be utilised to prepay the bullet instalment. The cash swe
ep clause states that in case the DSCR in any year exceeds 1.30, 50% of the surp
lus cash flow after topping up the DSRA (i.e. surplus cash above 1.30 DSCR, whic
h is available for distribution to Shareholders) will be utilised for prepayment
of the bullet repayment of the Senior Debt first and then for unamortized porti
on of the Senior Debt. Further, during the last 3 financial years before the bul
let repayment, 100% of the surplus cash flow above 1.30 DSCR after topping up th
e DSRA would be utilised for prepayment of the bullet repayment of the Senior De
bt first and then for unamortized portion of the Senior Debt.
Due to this cash sweep option considered in the base case financial model, subst
antial amount of the total bullet payment is getting prepaid during the initial
repayment terms of 10.50 years itself, which means the company would be require
d to refinance only marginal amount of the bullet loan instalment by way of rais
ing fresh funds. It may also be noted that as per the base case, even after maki
ng these prepayments by way of cash sweep option, the company would have suffici
ent cash balance at the end of FY 2025 (bullet instalment) to also repay the bal
ance bullet instalment amount. Hence the company does not have any refinancing r
isk for this bullet repayment. This cash sweep option would also not in any way
effect the debt servicing ability of the company for servicing any other set of
Lenders.
ii) External Commercial Borrowing/ Foreign Currency Loan (FCL)
The company proposes to raise ECB mainly from Indian Infrastructure Finance Comp
any, UK (IIFC, UK) and other Institutions.
The term sheet for the proposed Rupee Term Loans is furnished at Appendix.

CHAPTER 8: MARKET AND SELLING ARRANGEMENTS

8.1 Power Sector Scenario in India
A Perspective
The power sector provides one of the most important inputs for the development o
f a country and availability of reliable and inexpensive power is critical for i
ts sustainable economic development. To sustain GDP growth rate of around 8-10%,
it is imperative that the power sector also grows at the same rate.
Indian power sector has grown significantly in size and capacity since independe
nce with the installed capacity of power generation having increased by around 8
0 times, electricity generation by nearly 140 times and the total length of tran
smission lines by over 135 times. Generation capacity, which was only 1,362 MW a
t the time of independence, has increased to over 1,49,111 MW by the end of May,
2009. Even after the considerable growth in the power sector infrastructure and
the supply of electricity, many parts of the country continue to face severe po
wer shortages as consumption by commercial and industrial consumers has been inc
reasing at much faster rate than electricity supply.
The per capita annual consumption of electricity in India is one of the lowest i
n the world at approximately 660 Kwh, when compared to the estimated per capita
annual consumption of over 1,200 Kwh in China and nearly 13,000 Kwh in the Unite
d States of America. In terms of per capita consumption, India does not rank ev
en in the top 100 countries of the world, whose weighted average per capita cons
umption exceeds 5,700 Kwh (nearly 10 times India s per capita consumption). The lo
w per capita consumption is a result of the low penetration of electricity at th
e household level. The Census 2001 reveals that only 55.8% of the households in
India have access to electricity, which varies between 87.6% of urban households
and only 43.5% of rural households. GoI has set up the target of providing acce
ss to electricity to all households even in rural areas by 2012 for which the Ra
jeev Gandhi Grameen Vidyutikaran Yojana has been introduced.
Electricity being a concurrent subject, both the Centre and the States has to pl
ay a decisive role in this sector. While the Centre has a significant share in t
he transmission segment, the distribution segment is in the domain of the States
. However, for creation of generation and transmission capacity, in line with th
e growing needs of economy, all the sectors namely Central, State and Private ne
ed to play a vital role.
In the past few five year plans, it was being expected that the private sector w
ould assume greater responsibility in the power sector, especially in the genera
tion segment. Perhaps, this could not materialize as the financial health of the
distribution system was not capable of sustaining such a magnitude of investmen
t by the private sector.€ The key factor for sustainability of the power sector is
to keep the Aggregate Technical and Commercial (ATC) losses at low levels, as a
gainst the current high level of around 28%. If the power sector is to proceed o
n the path of sustainable development, India must target to reduce the ATC losse
s to around 15% by the end of the Eleventh Plan (2007-2012). To address this iss
ue, GoI started an initiative named as Accelerated Power Development and Reform
Programme (APDRP) to leverage distribution reforms in the states. Priority is gi
ven to the states that have committed themselves to a time-bound programme of re
forms as elaborated in the Memorandum of understanding and Memorandum of Agreeme
nt with the central government, and are progressing on those commitments.
The GoI has set a vision of achieving Power for All by 2012, when the demand for p
ower is expected to be around 152,700 MW and 968,000 Gwh for peak power demand a
nd energy demand respectively (as per 17th EPS by CEA). In order to bridge the e
ver increasing demand-supply gap and realize the vision, a warranted mid-course
correction has been carried out through the Electricity Act 2003. Moreover, para
llel focus is being given on DSM (Demand Side Management) with initiatives like
energy conservation and energy efficiency and SSM (Supply Side Management) with
initiatives like reduction in T&D losses, improvement in transmission and sub-tr
ansmission networks.
8.2 Performance at a Glance
Power - Demand-Supply Scenario
Despite significant growth in electricity generation over the years, the shortag
e of power continues to exist primarily on account of growth in demand for power
outstripping the growth in generation and capacity additions in power generatio
n.€The problem of the shortage in supply becomes worse during peak hours leading t
o load shedding by many utilities to maintain the demand-supply balance. The pow
er supply position is characterized by shortages both in terms of demand met dur
ing peak time and overall energy supply. The all India power situation for the l
ast six years is as follows:

PeriodPeak Demand
(MW)Peak Deficit
(MW)Peak Deficit
( %)Energy Requirement
(MU)Energy Deficit
(MU)Energy Deficit
(%)9th Plan End78441-9252-11.8522537-39187-7.52002-0381492-9945-12.2545983-48093
-8.82003-0484574-9508-11.2559264-39866-7.12004-0587906-10254-11.7591373-43258-7.
32005-0693255-11463-12.3631757-52938-8.42006-07100715-13897-13.8690587-66092-9.6
2007-08108866-18073-16.6739345-73338-9.92008-09109809-13124-12.0774324-85303-11A
PR-MAY,2009110958-13603-12.3135812-12113-8.9MAY,2009109439-12838-11.767820-4498-
6.6Source: CEA, Project Monitoring Cell
Regional Power Supply Situation for April, 2008 March, 2009
RegionPeak Demand
(MW)Peak Deficit
(MW)Peak Deficit
( %)Energy Requirement
(MU)Energy Deficit
(MU)Energy Deficit
(%)Northern33,034-3,530-10.72,24,218-24,290-11.1Western37,240-7,086-19.02,54,486
-40,762-16.0Southern28,340-2,096-7.42,04,086-15,221-7.5Eastern12,901-1,212-9.482
,127-3,757-4.6N.Eastern1,820-462-25.49,407-1,273-13.5Source: CEA, Project Monito
ring Cell

The energy shortage increased from about 7.1% in 2003-04 to about 8.9% in April-
May 2009. The peaking shortage also rose from 11.2% in 2003-04 to about 12.3% in
April-May 2009, mainly due to shortage of natural gas for power generation. If
we take into account the generation loss of around 23.88 Billion Units (BU) due
to shortage of natural gas, the energy and peaking shortage during 2005-06 would
have reduced to about 4% and 9% respectively. However, last year i.e. 2008-09 h
as been one of the worst on the supply front when energy shortage touched 11.1%
and peaking shortage increased to 11.9%. This has happened mainly due to dismal
performance in capacity addition programs and high growth in industrial and comm
ercial demand for power.
The other reasons for power shortage are:-
* Low Plant Load Factor of some of the thermal generating units, mostly in the S
tate Sector
* High Transmission and Distribution losses.
* Inadequate sub-transmission and distribution network in some States.
* Inadequate inter regional transmission capacity, for supplying power from surp
lus regions to deficit regions.
* Poor financial position of State Utilities rendering it difficult for them to
raise the resources necessary for making required investments to create adequate
generation, transmission and distribution system.
To achieve the power vision as enunciated in the National Electricity Policy 200
5 i.e. Supply of reliable and quality power to all by 2012 , energy and peaking sho
rtages are required to be overcome and spinning reserve of at least 5% is to be
made available at the national level.
Installed Capacity
The Indian power sector has grown significantly since 1947 and India today is th
e third largest producer of power in Asia. The power generating capacity has inc
reased from 1,362 MW in 1947 to about 1, 49,111 MW as on May 31, 2009. However,
if we see the growth rate achieved in the recent past, the picture may not look
that rosy. This is because despite reforms being initiated through the Electrici
ty Act, 2003 and other measures, the situation has not improved much.

Existing Installed Capacity (MW) as on May 31, 2009:

Sector wise:
SectorHydroThermalNuclearWindTotal
(MW)CoalGasDieselTotalState 27,056 42,398 3,672 603
46,672 - 2,248 75,976 Private 1,230
5,791 5,412 597 11,801 - 10,995 2
4,025 Central 8,592 29,760 6,638 - 36,398
4,120 - 49,110 Total 36,878 77,949 1
5,723 1,200 94,871 4,120 13,242 149,111 Source: CE
A, Project Monitoring Cell
Region wise
RegionHydroThermalNuclearWindTotal (MW)CoalGasDieselTotal NORTHERN 13,425
19,765 3,531 13 23,309 1,180 1,766
39,680 WESTERN 7,449 25,938 7,366 18 33
,320 1,840 4,024 46,632 SOUTHERN 10,954 16,983
3,870 939 21,792 1,100 7,048 40,894 EA
STERN 3,934 15,063 190 17 15,270
- 227 19,432 N.EASTERN 1,116 201
766 143 1,110 - 171 2,397 ISL
ANDS - - - 70 70
- 6 76 ALL-INDIA 36,878 7
7,949 15,723 1,200 94,872 4,120 13,242 149,1
11 Source: CEA, Project Monitoring Cell

Growth Rates in the past:

Installed capacity as onInstalled Capacity (MW)Annual growth rate (%)31.3.1990 (
End of 7th Plan)63,6368.3631.3.1991 ( One year Plan)66,0863.8531.3.1992 ( One ye
ar Plan)69,0654.5031.3.1997 (End of 8th Plan)85,7954.4331.3.2002 (End of 9th Pla
n)1,04,8514.1831.3.20031,07,9732.9831.3.20041,12,0583.7831.3.20051,16,5003.9631.
3.20061,24,1016.5231.3.2007 (End of 10th Plan)1,32,5476.8031.3.20081,43,0617.933
1.3.20091,49,1114.23Source: Infraline
From the above table, it may be observed that in the recent past Indian power se
ctor has been growing at a pace much below than the required levels. However, du
ring the last 3-4 years due to some focused efforts in the power sector, there h
ave been some improvement in the growth rates and the sector is expecting major
initiatives in terms of capacity additions.
Capacity Addition Programme
The capacity addition scenario had been dismal in all the previous 5 year plans
despite the government taking aggressive measures to push capacity additions. Th
e capacity additions in the earlier two plans missed the targets by nearly 50 pe
r cent. The government had set aggressive targets every time, achievement figure
s, however, painted a dismal picture.
PlanTarget (MW)Achievement (MW)% achievement8th Plan30,53816,42353.779th Plan4
0,24519,01547.2510th Plan41,11021,18051.5211th Plan (2008-12)78,70017,000*21.6*
Source: MoP
*Upto August 2009
10th Plan (2002-07)
A capacity addition target of 41,110 MW was set for the 10th Plan. Out of this t
he share of Central Sector was 22,832 MW and Private Sector was 7,121 MW. The St
ate Sector had a share of 11,157 MW. The region wise 10th Plan targets have been
summarized in the Table below:
RegionHydroThermalNuclearTotal%Northern7,2745,046-12,32030%Western3,7526,6041,08
011,43628%Southern1,1585,9982207,37618%Eastern1,8607,075-8,93522%North Eastern34
9669-1,0182%Total14,39325,3921,30041,085100%Source: Infraline
Total Capacity Addition during 10th Plan
SectorThermalHydroNuclearTotalTargetAchiv.
Achiv.
( %)TargetAchiv.
Achiv.
( %)TargetAchiv.
Achiv.
( %)TargetAchiv.
Achiv.
( %)Central12,7906,59051.52%8,7424,49551.42%1,3001,18090.77%22,83212,26553.72%St
ate6,6763,55353.22%4,4812,69160.05%00-11,1576,22455.79%Private5,9511,97033.10%1,
17070059.83%00-7,1212,67037.49%Total25,41712,11447.66%14,3937,88654.79%1,3001,18
090.77%41,11021,17951.52%
The following has been identified as the main reasons for repeated failures in a
chievement of the targets by Thermal Power Plants:
> Delay in supplies/erection by suppliers/contractors
> Delay in tie-up for super critical technology
> Delay in award of Coal linkage/ Gas linkage
> Delay in award of Works mainly in State Sector /NLC
> Hydro Project-delay in environmental clearance, geological surprises, natural
calamities, R&R issues, delay in signing of MoU, Court Cases
> Water Linkage
> Environmental clearances
> Road and Railway connectivity for approach
> Land acquisition
> Financial Problems related to the health of SEBs as also delay in achieving fi
nancial closures of the projects
Plant Load Factor (Thermal Power Units)
The Plant Load Factor (PLF) of a generating unit is the ratio of the actual ener
gy generated during a given period of time to the energy that could have been ge
nerated if the unit had operated continuously at its maximum rated capacity duri
ng the period. The PLF, expressed in percentage, is an important indicator of th
e performance of the thermal power generating units.
Though the PLF achieved by Thermal Power units have shown a steady improvement o
ver the years (as could be seen from the Table below), still there is good scope
for improvements especially in the State sector units.
YearTargetActualSector-wise Actual (%)(%)(%)CentralStatePrivate2002-0370.872.177
.168.778.92003-0472.072.778.768.480.42004-0573.474.881.769.685.22005-0674.773.68
2.167.085.142006-0776.177.086.471.486.352007-0877.1478.6186.7471.8990.792008-097
9.1777.1984.3071.1791.01Source: Infraline
From the above table, it may be observed that the central and private sector hav
e been performing better than the state sector. To remove this difference and to
further improve PLF of all the plants many steps have been taken by Government
like:
> Renovation and Modernization (R&M) of existing thermal power stations with fin
ancial assistance from PFC at concessional rate of interest.
> Continuous monitoring of power stations and interaction with various authoriti
es/ agencies by CEA for sorting out operational and maintenance problems.
> Reducing the duration of Planned Maintenance in the thermal power stations as
per the recommendation made by Kukde Committee, set up by Ministry of Power on M
odernization of Maintenance procedure and Review of Norms for the Planned Mainte
nance in large thermal power stations.
Captive Generation
To insure against unreliable power supply of government plants, some process ind
ustries started installing captive power plants. Though over the years captive p
ower s share has been rising in India, its importance for grid support and stabili
ty was never recognized. But now many states have come up with separate and deta
iled captive power policy and Centre has also realized captive power s potential i
n achievement of overall targets of the sector. As per MOP, 12,000 MW of captive
power plants are envisaged in next 5 years.
T&D Losses
Transmission & Distribution losses have not come down as per the targets, which
is affecting available energy for productive consumption and thus creating addit
ional demand on the system. As per 17th EPS by CEA, the existing all India avera
ge of T&D losses was 28.27% in 2006-07 and is expected to remain at 21.97% at th
e end of 2011-12. The higher T&D losses (28.27%) was mainly due to the poor effi
ciency of some of the states like MP, Rajasthan, Delhi, J&K, Bihar and Orissa, h
aving T&D losses above 30% for the year 2006-07.
YearT & D Losses2003-0430.80%2004-0530.67%2005-0629.51%2006-0728.27%2007-0826.91
%
T&D Losses Region Wise
Region2003-042004-052005-062006-07Northern36.65%35.36%33.73%32.05%Western31.83%3
2.70%31.71%30.71%Southern22.01%22.48%21.80%20.85%Eastern32.39%30.75%29.56%28.16%
North Eastern38.45%40.29%35.07%31.08%All India30.80%30.67%29.51%28.27%Source: 17
th EPS, CEA
As mentioned earlier, the key factor for sustainability of the sector is to keep
the Aggregate Technical and Commercial (ATC) losses at low levels, as against t
he current high level of around 28%. If the power sector is to proceed on the pa
th of sustainable development, India must target to reduce the ATC losses to aro
und 15% by the end of the Eleventh Plan (2007-2012). To address this issue, GoI
started an initiative named as Accelerated Power Development and Reform Programm
e (APDRP) to leverage distribution reforms in the states.
8.3 Demand Forecast (All India-17th EPS)
CEA undertakes periodic Electric Power Surveys (EPS) in order to project the ene
rgy requirement of the country and guide the planning process for capacity addit
ion. CEA released its 17th EPS in June 2007 with detailed estimates of the growt
h in power demand, region-wise and for the country as a whole. The following tab
le shows the long-term projected energy requirement across various regions in th
e country.
According to the 17th EPS, India's peak demand will reach 152,746 MW with an ene
rgy requirement of 968 billion units (BUs) by the year 2012. By the year 2016-17
, the peak demand will reach 218,209 MW and energy requirement will touch nearly
1,392 BUs.
Projected Energy Requirement and Peak Load
RegionPeak Load ( MW)Energy Requirement ( MU)2011-122016-172021-222011-122016-17
2021-22Northern48,13766,58389,9132,94,8414,11,5135,56,768Western 47,10864,34984,
7782,94,8604,09,8055,50,022Southern 40,36760,43380,4852,53,4433,80,0685,11,659Ea
stern 19,08828,40142,7121,11,8021,68,9422,58,216NE Region2,5373,7606,18013,32921
,14336,997All India1,52,7462,18,2092,98,2539,68,65913,92,06619,14,508Source: 17t
h EPS
Supply Forecast for All India at the end of XIth Plan
To cater to this demand, huge capacity addition is being planned. As of now, nea
rly 78,700 MW of new power plants are under various stages of implementation/ co
nceptualisation. A brief summary of the likely capacity additions - sector wise
and region wise, during the XIth plan period (2007-2012) is given below:
Likely capacity addition Target in XIth plan Sector-wise
SectorHydroThermalNuclearWindTotalCoalGasDieselTotalState3482199853316.4023301.4
0026783.4Private3491951520370115520015043Central86542335014900248403380036874Tot
al15627528506843.4059693.43380078700.4Source: CEA, Project Monitoring Cell & SBI
Caps Information
Region wise
RegionHydroThermalNuclearWindTotalCoalGasDieselTotalNORTHERN74881128017200130004
40020928WESTERN11701687533350202100021380SOUTHERN109498851001.2010886.2294001492
0.2EASTERN31511406000140600017211N.EASTERN2724750787.201537.2004261.2ALL-INDIA15
627528506843.4059693.43380078700.4Source: CEA, Project Monitoring Cell & SBICaps
Information
This estimate is based on the announcements of projects in this period.
In case the above planned capacity additions comes up as per the envisaged sched
ule, the total installed capacity of the country will nearly reach 2,27,812 MW a
t the end of eleventh plan. However, as we have seen in the past, the capacity a
dditions target was never achieved rather in the last two plans, the capacity ad
dition targets were missed by nearly 50%. Though, there could be some improveme
nt in achieving the capacity addition targets during the current XIth plan, stil
l it is felt that the same would be much below the targeted level and India woul
d continue to be in power deficit.
Based on the above, it is expected that the total capacity addition during eleve
nth five year plan would be 56,527 MW (as against 21,180 MW added during 10th pl
an). Accordingly, the total available capacity at the end of FY 2012 would be 17
9,133 MW. Considering this, the projected demand and supply position at the end
of eleventh five year plan (2011-2012) would look as under:

Available Peak Load ( MW)Projected Peak DemandSurplus/ DeficitAvailable Energy (

MU)Projected Energy DemandSurplus/ Deficit1,25,3931,52,746-27,352
(17.90%)9,25,3399,68,659-43,319
(4.47%)
It may be observed from the above that despite large capacity additions, India w
ill have significant deficit in peak power as well as energy requirements even a
t the end of eleventh five year plan (2012).
Projected Peak DemandAvailable Peak Load ( MW)Surplus/ DeficitProjected Energy D
emandAvailable Energy ( MU)Surplus/ DeficitAll India152,7461,25,39327,352
(17.91%)968,6599,25,33943,319
(4.47%)NR48,13741,6516,485
(13.47%)2,94,8412,61,59233,249
(11.28%)WR47,10840,3766,731
(14.29%)2,94,8602,80,34314,517
(4.92%)SR40,36730,4099,958
(24.67%)2,53,4432,06,96546,477
(18.34%)ER19,08818,489599
(3.14%)1,11,8021,37,60925,807
(23.08%)
Supply Forecast for All India at the end of XII th Plan
The long term perspective studies for the year 2012-17 carried out by CEA have i
ndicated an installed capacity requirement of about 2,72,200 MW to meet the 17t
h EPS demand forecasts with 3.6% inter-regional diversity. As a result, the addi
tional capacity requirement during 12th Plan works out to be about 86,500 MW. Th
e 12th Plan s tentative capacity addition of 86,500 MW has been planned and it com
prises of 30,000 MW of hydro, 44,500 MW of thermal and 12,000 MW of nuclear capa
city.
8.4 GoI Initiatives for Power Sector Development
To tackle the root cause of the problem the inefficiency in operations, poor fin
ancial health of the SEBs and lack of focus - and complete reform of the sector,
the Government of India has implemented a number of policy / reform initiatives
:
i. Memorandum of Agreement (MOA) with State Government, as per pre-determined mi
lestone for improvement in efficiency levels of State Electricity Boards, for di
sbursal of funds.
ii. Set up of Regulatory Commissions in all states for Tariff determination
iii. Accelerated Power Development and Reform Programme (APDRP) for assisting St
ates in investment in distribution network for reducing technical looses and imp
roving the quality of supply
iv. Periodical ratings of State power utilities for assessing the progress of re
forms.
v. Accelerated Rural Electrification of villages and rural households and introd
uction of High Voltage Distribution System (HVDS) for reducing power pilferage f
or reduction of losses.
vi. Transparent policies regarding subsidies.
vii. Development of national grid.
viii. Application of information technology for improving distribution system an
d billing.
ix. Setting up of forums for redressal of consumer grievances and appointing Omb
udsman for looking into non-redressal of grievances by the forums.
x. Monitoring the Reliable Index (RI) of power availability in distribution.
xi. Implementation of energy conservation measures. Bureau of Energy Efficiency
has been set up under the Energy Conservation Act.
xii. 50,000 MW hydropower initiatives for exploitation of hydroelectric potentia
l.
xiii. Mega Power Policy for encouraging quick capacity addition of bigger genera
tion plants aimed at less expensive power.
xiv. Accelerated Generation and Supply Programme (AG&SP) to support capacity aug
mentation through renovation and modernization and new generation schemes
The other major initiatives include implementation of the Availability Based Tar
iff regime, SEB Dues Settlement Scheme, Electricity Act 2003, National Electrici
ty Policy and National Tariff Policy 2005.

8.4.1 Mega Power Projects

In order to accelerate the rate of capacity additions in the power sector and lo
wer the cost of power, the Central government announced the Mega Power Project P
olicy in November 1995. Detailed guidelines under the policy were notified in No
vember 1998 which was subsequently revised in October 2009.Under the revised meg
a power project policy, the government notified select projects in the public an
d private sector as mega power projects. Mega power projects are entitled to sev
eral concessions and benefits, such as
* Exemption from customs duty on imports of equipment and material
* Security of payment through the sale of power to Power Trading Corporation (PT
C), which in turn would have to sell power to beneficiary states and would have
recourse to central plan assistance in the event of default by SEBs.
* Refund of terminal excise duty paid by various domestic supplier on supply of
equipments and material based on Deemed Export Benefit
In order to qualify for the mega power project status, thermal power projects wo
uld have to have power plant of a capacity of 1,000 MW or more located in states
other than Jammu & Kashmir and other NE states.
In order to buy power from mega power projects, as per earlier policy, states ha
d to fulfil the following criteria:
* The power purchasing States have constituted the Regulatory commission with fu
ll powers to fix tariffs;
* The power purchasing States undertakes, in principle, to carry out distributio
n reforms as laid down by the Ministry of Power.

Modification to the Mega Power Policy

In order to rationalize the Mega Power Policy and bring it in consonance with th
e National Electricity Policy 2005 and Tariff Policy 2006, the following modific
ations of the existing Mega Power Policy have been envisaged:-
> The existing condition of privatization of distribution by power purchasing st
ates would be replaced by the condition that power purchasing states shall under
take to carry out distribution reforms as laid down by the Ministry of Power.
> The conditions requiring inter-state sale of power for getting mega power stat
us would be removed.
> The present dispensation of 15% price preference available to the domestic bid
ders in case of cost plus projects of PSUs would continue. However, the price pr
eference will not apply to tariff based competitively bid projects of PSUs.
> The benefits of Mega Power Policy will also be extended to supercritical proje
cts to be awarded through ICB with the mandatory condition of setting up indigen
ous manufacturing facility provided they meet the eligibility criteria.
> The requirement of undertaking international competitive bidding (ICB) by the
developers for procurement of equipment for mega power projects would not be man
datory, if the requisite quantum of power has been tied up through tariff based
competitive bidding or the project has been awarded through tariff based competi
tive bidding.
> A basic custom duty of 2.5% only would be applicable on brown field expansion
of existing mega projects. All other benefits under mega power policy available
to Greenfield projects would also be available to expansion unit(s) (brownfield
projects) even if the total capacity of expansion unit(s) is less than the thres
hold qualifying capacity, provided the size of the unit(s) is not less than that
provided in the earlier phase of the project granted mega power project certifi
cate. All other conditions for grant of the mega power status shall remain the s
ame.
> Mega Power Projects would be required to tie up power supply to the distributi
on companies/utilities through long term PPA(s) and may also sell power outside
long term PPA(s) in accordance with the National Electricity Policy 2005 and Tar
iff Policy 2006, as amended from time to time, of Government of India.
In future, the company may apply for the Mega Power status to the Ministry of Po
wer and based on the Modified Mega Power Policy, it is highly likely that the me
ga power status would be available to the project. On obtaining the Mega Power s
tatus, the company will be entitled to the above mentioned benefits. However, to
be on a conservative side, these expected benefits have not been taken into acc
ount in the base case scenario.
8.4.2 APDRP (Accelerated Power Development and Reform Programme)
APDRP (Accelerated Power Development and Reforms Programme) has been formulated
by the MoP, GoI in the year 2000-01 with the objective of achieving financial tu
rnaround in the performance of the power sector utilities, especially in the are
a of distribution. Earlier its name was APDP (Accelerated Power development prog
ramme) which was changed to APDRP in the year 2002-03. Funds disbursed under APD
RP are used to implement specific projects relating to up-gradation and strength
ening of sub-transmission and distribution network including energy accounting a
nd metering, renovation and modernization of sub-stations, consumer indexing, SC
ADA, computerized billing etc. In this scheme priority is given to the states th
at have committed themselves to a time-bound programme of reforms as elaborated
in the Memorandum of Understanding and Memorandum of Agreement and are progressi
ng on those commitments.
Main Parameters of the MOU signed by state governments with MOP are:
> Setting up of SERC
> Filing and implementation of Tariff orders
> Securitization of CPSU dues
> Metering of all feeders and all consumers
> Energy Audit at 11kV level
> Maintenance of grid discipline
Main parameters of MOA signed by state governments with MOP are:
> Constitution of Distribution Reform Committee at the state level
> Identification of Nodal Officer
Government had earmarked Rs. 40,000 Cr for APDRP for 10th plan (Rs. 20,000 Crs f
or Investment component and Rs. 20,000 Crs for Incentive component for cash loss
reduction). However, full amount could not be utilized as many states failed in
the reforms commitments.

8.4.3 The Electricity Act, 2003

The conceptual framework underlying the Electricity Act, 2003 is that the electr
icity sector must be opened-up for competition. The Act moves towards creating a
market-based regime in the power sector. The Act seeks to consolidate, update a
nd rationalize laws related to generation, transmission, distribution, trading a
nd use of power. It focuses on
> Creating competition in the industry
> Protecting consumer interests
> Ensuring supply of electricity to all areas
> Rationalizing tariff and thus lowering the cross-subsidization levels
> Encouraging autonomous regulation with the separation of policy, regulatory an
d operational aspects
Some of the major provisions of the Electricity Act, 2003 are
> Elimination of licensing for setting up a generating station, subject to the c
ompliance with the technical standards specified by the Central Electricity Auth
ority (CEA)
> Elimination of the requirement of CEA clearance for generation projects, excep
t hydro-generating stations involving an expenditure exceeding such sums as the
Central Government may fix from time to time
> Removal of captive power plants from the ambit of licensing and other permissi
ons
> Provision for issuing more than one license for transmission and distribution
in the same geographical area
> Provision for Open Access from the onset of the act with respect to transmission
.
> Open access in distribution is to be introduced in phases, and a surcharge for
 current level of cross-subsidy will be gradually phased out along with cross-su
bsidies and obligation to supply
> The State Electricity Regulatory Commissions (SERC) will frame regulations wit
hin one year regarding phasing-in of open access
> Introduction of the concept of power trading as a distinct activity, and the i
ntroduction of a spot market for bulk electricity
> Provision for reorganization or continuance of State power utilities
> State governments will have the freedom to decide the sequence and phases of r
estructuring
> Provision for issuing separate licenses for transmission, distribution and sup
ply by SERCs
> Compulsory metering of all consumers, in order to improve accountability.
> Provisions for preventing and eliminating power theft and stringent penalties
for the later
Further, the Act also allows independent power producers (IPPs) and captive powe
r producers open access to transmission lines, thus allowing them to bypass the
state utilities and sell power directly to distribution and trading licensees.
The Act also provides for open access in distribution, thus opening the way for
competition in the retail supply segment. However, as SERCs have the discretion
to allow open access, the whole process of granting open access in distribution
sector would be implemented in a phased manner based on the state of readiness o
f individual states.
8.4.4 National Tariff Policy
In compliance with the provisions under the Electricity Act, 2003, GoI notified
the Tariff Policy on January 06, 2006. The objectives of this tariff policy are
to:
(a) Ensure availability of electricity to consumers at reasonable and competitiv
e rates;
(b) Ensure financial viability of the sector and attract investments;
(c) Promote transparency, consistency and predictability in regulatory approache
s across jurisdictions and minimise perceptions of regulatory risks;
(d) Promote competition, efficiency in operations and improvement in quality of
supply.
As per the Tariff Policy, all future requirement of power should be procured com
petitively by Distribution Licensees except in cases of expansion of existing pr
ojects or where there is a State owned company is an identified developer.
The policy basically deals with various parameters with respect to fixation of t
ariffs, like providing adequate return on investment to the power generator and
ensuring reasonable user charges for the customers. The policy moots the procure
ment of power separately for base and peak load requirements and introduction of
differential tariffs for peak and off-peak hours, for better load management.
8.4.5 Tariff Based Competitive Bidding
Promotion of competition in the electricity industry in India was one of the key
objectives of the Electricity Act, 2003. Power purchase costs constitute the la
rgest cost element for distribution licensees. Competitive procurement of electr
icity by the distribution licensees is expected to reduce the overall cost of pr
ocurement of power and facilitate development of power markets. Internationally,
competition in wholesale electricity markets has led to reduction in prices of
electricity and to significant benefits for consumers. The Electricity Act, 2003
provides that the Appropriate Commission shall adopt the tariff if such tariff
has been determined through transparent process of bidding in accordance with th
e guidelines issued by the Central Government. Once the regulatory approval is o
btained on the bid documentation, and the power is procured, the tariffs would n
ot be subject to year on year regulatory scrutiny
The Guidelines for the Determination of Tariff by Bidding Process for Procurement
of Power by Distribution Licensees have been notified by the Govt. of India vide
its Resolution dated January 19, 2005. The specific objectives of these guideli
nes are as follows:
1. Promote competitive procurement of electricity by distribution licensees;
2. Facilitate transparency and fairness in procurement processes;
3. Protect consumer interests by facilitating competitive conditions in procurem
ent of electricity;
4. Enhance standardization and reduce ambiguity and hence time for materializati
on of projects;
5. Provide flexibility to suppliers on internal operations while ensuring certai
nty on availability of power and tariffs for buyers.
The guidelines apply for procurement of power for medium term (1 year to 7 years
) and long tem (above 7 years). Many States viz. Gujarat, Madhya Pradesh, Uttar
Pradesh, Haryana, Punjab, Rajasthan, Maharashtra and Delhi have started the proc
ess for the procurement of power through the competitive bidding.
8.4.6 UMPPs (Ultra Mega Power Projects)
Recognizing the fact that economies of scale leads to cheaper power, MoP felt a
need of developing large capacity projects using super critical technologies at
the national level, to meet the requirement of a number of states at one go unde
r the competitive bidding guidelines dispensation. In 2005 MoP, CEA and PFC star
ted working in tandem for the development of nine UMPPs under tariff based compe
titive bidding route. Each UMPP was envisaged having a capacity of 4,000 MW and
scope for expansion in future as well.
To reduce risk perception of these projects and enhance investors confidence, it
was deemed necessary to provide the site, land, fuel, linkage to captive mine bl
ock, water and environmental & forest clearances, through a Shell Company arrang
ement. This Shell Company would also help in getting PPA for the project signed.
On the award of the project to the successful bidder, Shell Company would be tr
ansferred to the developer. In whole process MoP/ PFC would work as facilitator
and coordinator.
Under the above arrangement, MoP proposes to award 9 ultra mega projects and has
already awarded two imported coal based such project at Mundra in Gujarat to Ta
ta Power Company and Krishnapatnam in Andhra Pradesh to Reliance Energy Limited.
Further, two such pit head domestic coal based power project at Sasan in Madhya
Pradesh and Tilaiya in Jharkhand have also been awarded to Reliance Power Limit
ed.
Impact of various GoI initiatives on IPPs
Open Access in Transmission & Distribution - Bigger Market
The introduction of open access in transmission & distribution has opened up the
entire country as a potential market for power. The Act allows independent powe
r producers (IPP) and captive power producers open access to transmission lines,
thus allowing them to bypass the SEBs and sell power directly to distribution a
gency, trading licensees, bulk consumers. This is subject to the adequate availa
bility of requisite transmission infrastructure, which would be determined by th
e Central Transmission Utility (CTU) or the State Transmission Utility (STU), as
the case may be. While the Centre and the State governments are empowered to ch
arge a surcharge for authorizing open access for transmission (primarily to cove
r the loss of cross-subsidies which the electricity boards have been collecting
from industrial consumers to support other weaker sections), the ERCs have to en
sure that these cross-subsidies are not continued beyond a specified time-frame
and are removed in consultation with the respective governments.
It may be mentioned that CPSUs like National Thermal Power Corporation Limited ( N
TPC ) have already made a step towards direct power sale by initiating an arrangem
ent for sale of power to the Indian Railways, which is an attractive customer. S
uch arrangements are expected to become a more common feature in the liberalized
scenario ushered in by the new Electricity Act.
The Act also provides for open access in distribution, thus opening the way for
competition in the retail supply segment. However, as SERCs have the discretion
to allow open access, the whole process of granting open access in distribution
sector would be implemented in a phased manner based on the state of readiness o
f individual states.
Improved Health of SEBs
It is mandatory under the Electricity Act for the State Governments to constitut
e SERC s within a period of 6 months from notification of the Act. The role of SER
C s include - promoting competition, fixing reasonable charges for transmission, g
enerating tariffs, fixing wheeling and cross-subsidy charges and issue of transm
ission and distribution licenses. This has encouraged SEBs to accelerate the unb
undling process, thus giving an impetus to the reform process. The financial pos
ition of the SEBs/utilities is improving gradually and will improve further in t
he long run with tariff rationalization. As the financial health of the SEB s impr
oves, the problem of timely recoveries of dues will decrease resulting in better
payment security for the industry.
Trading Opportunities
With the impetus given to power trading under the Electricity Act, the quantum o
f power traded is going up significantly and expected to show an exponential gro
wth in the coming years. Trading activity is helping the electricity market in m
any ways. First, short term demand supply mismatch can be bridged at market dete
rmined prices. Second, IPP can sell their power as per prevailing market prices
instead of pre-determined prices for long term contracts, thereby taking advanta
ge of short term demand supply mismatches. Conclusively, trading activity has in
creased attractiveness of the power sector to private players.
As the proposed project is located in Punjab having long term PPA with PSEB for
full capacity, the power from this project would be sold in the state of Punjab
and in case of any surplus power, the same would mainly be sold in Northern Indi
a. Hence, analysis of Northern India and the state of Punjab has been done to as
sess the power sector scenario in those regions.

8.5 Power Scenario in Northern India

The power requirement of Northern India are met by the power generated by state
utilities, Independent Power Producers (IPPs) and the state s share in the power g
enerated by the central sector power stations. The total installed capacity in t
he northern region as on May 31, 2009 was 39,680 MW. Details of the installed ca
pacity in Northern region are given below:

Installed Capacity as on May 31, 2009

SectorHydroThermalNuclearWindTotalCoalGasDieselTotalState7141.111757.51219.21312
989.70648.820779.7Private786000001117.51903.5Central5498800723120103191180016997
Total13425.119764.53531.21323308.711801766.439680.2Source: CEA, Project Monitori
ng Cell
Demand Supply Position
Period Peak Demand
(MW)Peak Deficit
(MW)Peak Deficit
(%)Energy Requirement
(MU)Energy Deficit
(MU)Energy Deficit
(%)9th Plan End23200-1854-8150383-7973-5.32002-0324092-2203-9.1156610-12392-7.92
003-0423817-1546-6.5161595-8852-5.52004-0526834-2709-10.1175498-16140-9.22005-06
28154-2954-10.5188794-20183-10.72006-0731516-4872-15.5202125-22139-112007-083246
2-2967-9.1219797-23650-10.82008-0933034-3530-10.7224218-24290-10.8MAY,200932223-
4432-13.820080-1095-5.5Source: CEA, Project Monitoring Cell
It may be observed from the above table that Northern Region is facing acute pea
k power as well as energy shortage perennially. On analysing state wise, we see
that Uttar Pradesh, Delhi and Punjab are the states which are facing the crisis
most seriously, as tabulated below.
State-wise demand supply position in Northern India for the year 2007-08
State/UT Peak Demand
(MW)Peak Deficit
(MW)Peak Deficit
(%)Energy Requirement
(MU)Energy Deficit
(MU)Energy Deficit
(%)Chandigarh27900140100Delhi 4036-2022249-126-0.6Haryana5511-720-13.128791-2460
-8.5H P1055-41-3.96261-15-0.2J & K2120-715-33.711148-2584-23.2Punjab8690-1381-15
.941297-4397-10.6Rajasthan6303-202-3.237306-408-1.1U P10587-2339-22.168003-14207
-20.9Uttarakhand1267007762-93-1.2Source: MoP
Considering the demand forecast projected by CEA in its 17th EPS, in 2011-12 Nor
thern Region will have a peak demand of 48,137 MW at a CAGR of nearly 9%. Simila
rly energy requirement is expected to touch 294,860 MU at CAGR 7.8%. A state wis
e demand forecast for Northern India is presented in the table below:
Demand Forecast for Northern India
State/UTPeak Load (MW)Energy Requirements (MKwh)2011-122016-172011-122016-17Delh
i609287293629352762Haryana683993753841754305Himachal Pradesh16112194950413136J &
K206327901120215272Punjab11000144416048982572Rajasthan8482114044891667767U P139
471962379268110665Uttaranchal15332085844511666Chandigarh42060223083367Total48,13
766,583294,841411,513

Source: 17th EPS

8.6 Supply Forecast Northern Region
The likely capacity addition (sector wise and state wise) in the Northern Region
during XIth plan is given below
Likely capacity Addition in XIth plan Sector Wise
SectorHydroThermalNuclearWindTotalCoalGasDieselTotalState9645870172007590008554P
rivate17922680002680004472Central4732273000273044007902Total74881128017200130004
40020928Source: CEA, Project Monitoring Cell & SBI Caps Information
Based on the likely capacity additions in the Northern Region during the XIth pl
an period as also considering the assumptions taken for forecasting supply posit
ion for the country above, the likely capacity addition during the eleventh plan
period in Northern Region is estimated at 13,603 MW thereby taking the total ca
pacity at the end of plan period to 53,283 MW. Considering this, the projected
demand and supply position at the end of eleventh five year plan (2011-2012) for
Northern Region would look as under:
Supply Forecast in Northern Region in XIth Plan Years
Available Peak Load( MW) Projected Peak DemandSurplus/ Deficit Available Energ
y( MU)Projected Energy DemandSurplus/ Deficit39,17848,137-8.959
(-18.61%)273,316326,729-53,414
(-16.35%)
It may be observed from the tables above that despite large capacity addition, N
orthern region will have deficit in peak power as well as energy requirement.
8.7 Power Scenario in Punjab
It may be observed from the tables given before, that in the Northern Region aft
er J&K, and Uttar Pradesh, Punjab faces acute peak power as well as energy short
age perennially. The following table details current and forecasted trends of e
nergy for the state.
Punjab: Installed Capacity as on June, 2009
Ownership SectorModewise breakup NuclearHydro Wind (renewable) EnergyGrand To
talThermalTotal ThermalCoalGasDieselState2,630-2,630- 2,319.81245073.7Private-
-----37.637.6Central730264-994151723.3-1868.3Total3,360264-3,6241513,043.1161.56
,979.6Source: CEA, Power Scenario at a Glance
Summary of Current and forecasted trends for Punjab
CategoryActualForecasted0 FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY 12T&D L
osses (%)26.3925.7925.1924.5923.9923.3922.7922.1921.59PLF (%)61.9762.0762.1762.2
762.3762.4762.5762.6762.77Source: 17th EPS,
This may be observed from the table above that state is improving on T&D loss re
duction which would make the state utilities more profitable and commercially su
stainable.
Actual power supply position
PeriodPeak Demand
(MW)Peak Deficit
(MW)Peak Deficit
( %)Energy Requirement
(MU)Energy Deficit
(MU)Energy Deficit
(%)9Th Plan End 5,420484-8.928,7801,2034.22002-035,849394-6.730,0821,7695.92003-
045,9225,455-6.731,4209002.92004-057,1221,563-5.133,3933,01092005-067,7311,57320
.335,6823,0918.72006-078,9712,41326.938,6413,8028.42007-088,6721,33215.442,3723,
5778.42008-098,6901,38115.941297439710.6Apr 08 Jun 099,0781,94721.411,1391,29711.6Sour
ce: CEA, Power Scenario at a Glance
It may be observed from the table that state of Punjab has been facing shortage
of energy for many years. Moreover, the Peak Deficit situation has worsened sinc
e FY 2004-05. Energy Deficit situation had become increasingly bad over the year
s.
For planning of capacity addition requirement in the various states of India, CE
A has done 17th Electric Power Survey (EPS) in 2007, which forecasts peak power
demand as also energy requirement in various states. For the state of Punjab pro
jections are as follows:
Demand Forecast: 17th EPS
StatePeak Load (MW)Energy Requirement (GWh)€2011-122016-172021-222011-122016-17202
1-22Punjab11,00014,44118,35260,48982572107,342
8.8 Off-Take Arrangements
A PPA dated September 1, 2008 has been signed among TSPL (seller) and PSEB (proc
urer), for sale of power corresponding to a contracted capacity of 1841.4 MW (3
Units of 613.8 MW each) at TSPL power station switchyard. The Agreement is to be
effective for a period of 25 years from the COD of Power Station. The term of t
he Agreement may be extended beyond this initial term on mutually agreed terms f
or a mutually agreed period. The scheduled COD is also to be extended by the dur
ation of any Force Majeure Event occurring during the construction period.
As mentioned earlier, PPA was executed on September 1, 2008, so considerable tim
e has elapsed after signing of PPA and it requires extension of time from PSEB.
As per PPA both the procurer and the seller have to fulfil certain conditions wi
thin the time frame as stipulated as per the Article 3 of PPA. It includes inter
alia achieving the financial closure. However, due to the global financial melt
down which started in the mid 2008, the company could not fulfil this condition
and therefore the project got delayed. The Vedanta Group is fully committed to t
he project and expected that in the due course the crisis may abate. As per arti
cle 12 of PPA, financial crisis does constitute a force majeure event and in vie
w of this TSPL has notified to PSEB on February 16, 2009 that such force majeure
event is clearly not within reasonable control of TSPL, hence should be conside
red as constitution of force majeure event. Now that the economic recovery has s
tarted, TSPL will inform PSEB about the cessation of force majeure event. Accord
ingly, the scheduled COD is likely to be extended by the duration of this Force
Majeure Event occurred during the construction period. For this, the company thr
ough letter dated January 12, 2009 has requested PSEB to grant the necessary sup
port to the company. The company expects to receive extension of SCOD and other
obligations of TSPL as per PPA from PSEB shortly.
Lenders may stipulate a suitable condition that the Borrower has obtained the ne
cessary approval from Punjab State Electricity Board (PSEB) for extending the sc
hedule commercial operation date (SCOD) for the project as per the PPA and for c
ompleting other milestones including achieving financial closure if required und
er PPA in view of the current envisaged implementation and financial closure pla
n to be reviewed by LIE. In case, any penalty or liquidated damages is payable b
y the Borrower to PSEB or any other agency for delay in implementing the project
, the same shall be funded by the Promoter from its own resources. The Promoter
to provide undertaking for the same.

Salient Features of PPA

Tariff
As per the PPA, the tariff is to be paid in two parts comprising of:
* Capacity charge based on plant availability (full capacity charge recoverable
at 80 % availability); and
* Energy charge based on actual cost of coal for Energy generated based on Net q
uoted Heat Rate, 2400 Kcal/kwh which is the same for 25 years.
The tariff schedule as agreed to, in the PPA is set out below:
Contract YearQuoted Non-Escalable Capacity Charges (Rs./kwh)Quoted Escalable Cap
acity Charges (Rs./kwh)Net Quoted Heat Rate (Kcal/kwh)1(Scheduled COD of first U
nit )1.2590.095240021.2550.095240031.2320.095240041.2050.095240051.2020.09524006
1.1900.095240071.0740.095240081.0250.095240091.0040.0952400100.9660.0952400110.9
510.0952400120.9460.0952400130.9410.0952400140.8670.0952400150.8610.0952400160.8
430.0952400170.8370.0952400180.7350.0952400190.7440.0952400200.7870.0952400210.7
800.0952400220.7920.0952400230.7600.0952400240.7690.0952400250.6480.095240026 (
25th anniversary of the Scheduled COD of first Unit)0.6480.0952400
TSPL s Tariff Profile
The levelised tariff is Rs. 2.864 / kwh. The levelised capacity charge is Rs. 1.
21/kwh. Whereas Energy charge is linked to Net Qouated Heat Rate basis. The foll
owing may be mentioned with regard to the tariff profile of TSPL:
1. Capacity charge of the tariff is high in the initial years, and it has been r
educed gradually over the years.
2. Energy charges are linked to actual cost of fuel based on Net Quoted Heat Rat
e which is 2400 kCal/Kwh.
3. Based on 2400 Kcal/kwh consumption of coal will be calculated. This calculate
d quantity will be multiplied by actual cost of coal including transportation/ha
ndling and other statutory charges to arrive at the energy charges of each month
/year. PSEB will pay this energy charges on actual generation basis.
4. The above modality to arrive at the energy charges of tariff makes cost of fu
el entirely pass through in nature.
5. Any variation in coal price will be reflected in energy charge of the tariff.
Hence, risk of fuel price variation is not there at all in this type of tariff
structure.
6. Net Quoted Heat Rate in the tariff is 2400 Kcal/Kwh is quite reasonable and w
ill have comfortable margin with respect to actual net heat rate that the compan
y would be able to negotiate with EPC contracts.
Energy Incentive Payment
If the plant availability exceeds 85% in a Contract year, then an incentive at t
he rate of 40% of quoted non-escalable Capacity Charge, subject to a maximum of
Rs. 0.25 / kwh, would be allowed to TSPL on the energy corresponding to availabi
lity in excess of 85 %.
Penalty for Availability below 75 %
If the plant availability is less than 75 % in a Contract year, then TSPL would
pay a penalty at the rate of 20 % of the simple average Capacity Charge for all
months in the contract year applied on the energy (in kwh) corresponding to the
difference between 75 % and availability during such contract year
Transmission/Wheeling Charges and Scheduling Charges
The payment of transmission charges shall be settled between the CTU / STU and t
he PSEB. The payment of scheduling charges to the respective nodal agency (RLDC
or SLDC) would be the responsibility of the PSEB.
Implication of delays
In case of delays on account of the procurer event of default, the procurer shal
l make payment to the seller of capacity charges calculated on Normative Availab
ility of contracted capacity of such unit for and during the period of such dela
y. However, if any Unit is not commissioned by its COD due to unavailability of
Transmission system, the Procurer shall make payment to the Seller of an amount
equivalent to the amounts paid by the PSEB/ PGCIL to the procurer with PSEB/ PGC
IL for establishment of transmission system for the period of delay up to COD.
Billing and Payment
From the COD of the first Unit, Procurer shall pay the Seller the Monthly Tariff
Payment, on or before the Due Date (which is 30 days after the receipt of bill)
, comprising of Tariff for every Contract Year, determined in accordance with th
e PPA. All payments made by the Procurer shall be appropriated by the Seller in
the following order of priority:
1. towards Late Payment Surcharge, payable by the Procurer, if any;
2. towards earlier unpaid Monthly Bill, if any; and
3. towards the then current Monthly Bill.
In the event of delay in payment of a monthly bill by any Procurer beyond its du
e date, a late payment surcharge would be payable by the Procurer to TSPL at SBA
R+ 2 % on the outstanding amount, calculated on a daily basis for each day of de
lay
In the event that the payment is made by any Procurer before the due date, a reb
ate would be provided by TSPL to the respective Procurer. The rate of such a reb
ate ranges from 2.25 % to 0 %, depending upon the date of the payment.
Payment Security Mechanism
Letter of Credit (LC): The Procurer would provide to TSPL an unconditional, revo
lving and irrevocable LC, for an amount equal to 1.1 times the estimated average
monthly billing. TSPL may draw upon the LC in case of payment default by the Pr
ocurer.
If the Letter of Credit is insufficient to pay for the due payments to the Selle
r or is not replenished for the drawals made, then within a period of seven (7)
days from the date such shortfall in the Letter of Credit occurs, the Letter of
Credit shall be reinstated to the requisite amount specified in this Agreement,
and in the manner specified in the Default Escrow Agreement.
Collateral arrangement: Default Escrow Agreement and Agreement to Hypothecate Cu
m Deed of Hypothecation have been executed whereby the Procurer has agreed to hy
pothecate amounts deposited in Default Escrow Account and the incremental receiv
ables.
Incremental Receivables: shall mean the amount of the Receivables, in excess of
the amounts which have already been charged or agreed to be charged in favour of
the Procurer s Financing Parties by way of a legally binding agreement, executed
prior to the Effective Date (i.e. the date of signing of PPA), provided such cha
rge of the Procurer s Financing Parties shall be limited to the extent of their ou
tstanding exposure (including commitments for exposure) as on the Effective Date
.
The minimum revenue flow in any month in the Default Escrow Account is to be at
least equal to the amount required for Letter of Credit. TSPL has first ranking
charge on the revenues routed through Default Escrow Account and the incremental
receivables.
Third Party Sales on default: If the procurer does not pay within Due Date of an
invoice TSPL has the right to offer to sell 25% of the contracted capacity to a
third party after giving a notice of at least 7 days to the defaulting procure
r. If, further, the Collateral Agreement is not fully restored by the Defaulting
Procurer within thirty days of the non-payment by the defaulting Procurer, then
TSPL would have the option to sell 100 % of the contracted capacity.
In case of third party sales, the adjustment of the surplus revenue over Energy
Charge attributable to such electricity sold shall be adjusted as under:
(a) the surplus up to the Tariff shall be used towards the extinguishment of the
subsisting payment liability of the defaulting Procurer towards the Seller; and
(b) the surplus if any above the Tariff shall be retained by the Seller.
The payment security mechanism can be graphically presented as follows:
8.9 Competitiveness of Power Produced by TSPL
An attempt has been made to ascertain the competitiveness of the power produced
by TSPL in terms of the merit order dispatch / ranking. Higher order dispatch of
power and price advantage mitigates the risk of default and provides a natural
payment security mechanism. It is likely that PSEB would not be in the position
to purchase power at this price from other sources. Alternatively, even in the e
vent of default, the power generated by TSPL could easily be sold through trader
(in power exchange) thereby providing a mitigate against off-take risk.
While preparing the merit order table, variable cost of generation at TSPL for F
Y 2013-14 (the first full year of operation) has been compared with multi-year t
ariff for FY 2008-09 for the Central and State generating stations and other Ind
ependent Power Producers. It may be possible that the multi-year tariff from the
se stations may undergo an upward revision owing to escalation in fuel charges,
O&M expenses etc. In such a scenario, TSPL would enjoy a much higher ranking in
the merit order dispatch than is currently evident.
The table below provides details on the various sources of power procured by the
Procurer along with the volume and cost of purchase:
Source / Station Variable
Charge
(Rs. / kwh)Energy
Purchased
(MU)Cumulative
Energy
Purchased
(MU)Cumulative
Energy
Purchased
(%)RankRSD 1Mukerian 2UBDC 3Shanan 4Anandpur Sahib 5Micro Hydel 6Sa
01,2419.26%8Tanakpur 0.81741,3159.81%9Cham era-I 0.812271,54211.51%10Cham era-II
0.812451,78713.33%11Uri 0.813482,13515.93%12Dhauliganga 0.81782,21316.51%13Sing
rauli 0.841,5623,77528.17%14Rihand -I 0.958434,61834.46%15Rihand -II 0.988645,48
240.91%16Unchahar-II 1.284745,95644.44%17Farakka 1.281776,13345.77%18Unchahar-I
1.292826,41547.87%19Unchahar-III 1.361986,61349.35%20Kahelgaon 1.407887,40155.23
%21Anta (G/F) 1.412987,69957.45%22GHTP 1.597,69957.45%23Auraiya(G/F) 1.614448,14
360.76%24GGSTP 1.638,14360.76%25Dadri (G/F) 1.646898,83265.91%26NAPP 1.892219,05
367.55%27GNDTP 1.929,05367.55%28North Karanpura 2.04679,12068.05%29Barh 2.04889,
20868.71%30Banking HPSEB 2.481909,39870.13%31Bhilangna 2.49839,48170.75%32NJPC 2
.8369510,17675.93%33RAPP-4 2.8727010,44677.95%34RAPP-3 2.8725710,70379.87%35RAPP
5-6 3.045210,75580.26%36Sewa-II 3.281610,77180.37%37Tehri 3.2833011,10182.84%38
Banking UPCL 3.4617111,27284.11%39Dulhasti 3.719911,37184.85%40Co-gen. Incl Jalk
heri 3.9327311,64486.89%41Banking Rajasthan 4.5111111,75587.72%42Banking J&K 4.7
719611,95189.18%43Traders 5.341,25613,20798.55%44Auraiya(L/F) 6.336713,27499.05%
45Dadri (L/F) 6.849613,37099.77%46Anta (L/F) 6.853113,401100.00%47Total Power13,
401Source: SERC Tariff Orders & SBI Caps Analysis
From the above table, it may be observed that as per current ranking, TSPL stand
s 29th out of 47 positions for PSEB. It would thus be able to carry advantage ov
er almost ~32 % of the power in the merit order dispatch.
India and especially Northern region is currently suffering from deficit in powe
r and the situation is expected to continue in future considering the expected g
rowth in demand and likely supply. Hence, the company is confident of full off t
ake of power by PSEB. Considering the competitive tariff of the proposed project
Rs. 2.864 per unit and the current power deficit scenario, TSPL does not percei
ve the risk of non-off take of the power from the plant
Market Scenario for trading of power
Due to prevailing acute shortage of power, the price of power in short term trad
ing market has increased substantially and the Average Sale Prices of merchant p
ower are as under:
PeriodAverage sale price of all trading companiesVolume (MU)Oct-Dec 06Rs. 4.84 p
er kwh4102Jan-Mar 07Rs. 4.69 per kwh3018Apr-Jun 07Rs. 4.64 per kwh4716July-Sep 0
7Rs. 3.37 per kwh7226Oct-Dec 07Rs. 4.52 per kwh5218Jan-Mar 08Rs. 5.61 per kwh380
3Apr Jun 08 Rs. 7.24 per kwh4451 Jul Sep 08Rs. 6.91 per kwh6274
Source: CERC quarterly report on power trading
During the year 2007-08, PSEB stands highest in terms of net units of power brou
ght through power trading.
As per the market sources, PSEB has executed contract with PTC to purchase 100 M
W from Malana Power for one year from July 07- May 08 at fixed price of Rs. 5.85
per Kwh. Andhra Pradesh has executed contract with JSW Energy to purchase 200 M
W from Sept 07 May 08 at fixed price of Rs. 5.50 per Kwh. Adani Enterprises Ltd.
has executed agreement with Govt. of Sikkim for purchase of 50 MW power for one
year at firm price of Rs. 5.25 per unit.
It may be mentioned that the price of power traded in the market has increased y
ear after year. Whereas the price was of the order of Rs. 2.00 - 2.50 per kWh u
pto the year 2004-05, it has been higher in last about 3 years. Attached at Fig
ure - 2 is the price behaviour from Q3-FY 07 to Q2-FY 09. Trading has taken pla
ce at different tariff during different years. Attached at Figure - 3 is price v
olume break-up for the percentage of power sold in different price range. The p
ower sold in the range Rs. 0 2 is not representative of the market sale of power b
ut sale of specific power under the Government Order and cannot be treated as th
e market power. If this power is excluded from the price behaviour, the price o
f remaining power would go further higher.

In view of the above it can easily be observed that India is facing acute shorta
ge of power and average realisations by trading of power has been at very high
level giving very high profitability to power traders.
Based on the above analysis, it may be observed that power generated by TSPL s pro
posed project will be highly competitive and no difficulty is envisaged in selli
ng this power in all possible scenarios. Even in case PSEB is not able to procur
e full power from the plant, the company should be in a position to sell the sam
e to other states distribution companies or trading companies.

CHAPTER 9: PROFITABILITY PROJECTIONS

9.1 Financial Projections Snapshot
The key assumptions underlying the profitability projections for the Project are
presented at Annexure III. Based on the same the key financial parameters for
some of the years of operations are given below. Detailed Profit and Loss Accoun
t, Cash Flow Statement, Balance Sheet and Projected DSCR are attached as Annexur
e IVA, IVB, IVC and IVD respectively.
(Rs in crores)
Yr Ended 31 March2013201520172019202120232025Capacity (MW)1,9801,9801,9801,9801,
9801,9801,980Generation (MUs)354 13,711 13,711 13,711 13,711 13,711 13,711 Equit
y1,0271,1651,1651,1651,1651,1651,165Reserves & Surplus104841,0151,6122,1582,7713
,563Net Worth2,0632,8143,3453,942 4,4885,1015,893TNW2,0662,9533,5634,172 4,6
825,2255,923Long Term Borrowings6,1596,5575,6924,8263,9613,0962,202TOL6,2917,011
6,1695,3214,4823,6492,797TOL/ TNW3.042.371.731.280.960.700.47Sales993,8223,9403,
9484,0554,2114,452PBDIT471,7461,7161,5551,4731,4091,392Interest19873787700613527
441Depreciation13468468468468468468PBT15404459384388408477PAT1026735131934537744
6PBDIT / sales (%)48%46%44%39%36%33%31%PAT / Sales (%)10%7%9%8%8%9%10%DSCR2.471.
431.511.491.541.621.72DSCR Minimum
(upto refinance)1.43DSCR Minimum
(overall)1.43DSCR Average (upto refinance)1.57DSCR Average
(overall)1.66Project IRR 13.78%
From the above summary, it may be observed that the financial projections are he
althy and debt service coverage is adequate. The average DSCR for the senior deb
t during the tenure of the loan is 1.57 with the minimum DSCR at 1.43. Also the
project IRR at 13.78% is satisfactory.
9.2 Sensitivity Analysis
A sensitivity analysis of the company s financial position for the proposed projec
t has been carried out to ascertain the effect of following scenarios on the maj
or financial parameters the company as a whole.
ScenarioDescription Scenario 1Reduction in PLF by 5%Scenario 2Increase in Auxili
ary Consumption by 1%Scenario 3Increase in Station Heat Rate (SHR) by 100 Kcal/K
whScenario 4Increase in base O&M Expenses by 10%Scenario 5Increase in O&M expens
es every year by 5% (as against 4%)Scenario 6Increase in Interest Rate by 100 bp
sScenario 7Increase in Project Cost by 5%Scenario 8Increase in USD exchange rate
to Rs. 50 per USD (current Rs. 47)Scenario 9Non availability of 80 IA benefit
As the entire fuel cost is pas trough, increase in the same has not been conside
red for the purpose of sensitivity analysis.
The summary of the sensitivity analysis is provided hereunder:
Sensitivity Parameters
Project ResultsIRR ProjectMin. DSCRAvg. DSCRBase Case13.78%1.431.57Scenario 113.
73%1.421.56Scenario 213.61%1.411.55Scenario 312.73%1.361.47Scenario 413.56%1.411
.55Scenario 513.15%1.411.52Scenario 613.87%1.341.48Scenario 713.20%1.371.51Scena
rio 813.28%1.381.52Scenario 913.51%1.431.57
As may be seen from above, the project is able to withstand the operations at va
rious sensitivity levels and its debt servicing capability and IRR are at satisf
actory levels.
CHAPTER 10: RISK ANALYSIS AND SWOT ANALYSIS
10.1 Risk Analysis Allocation & Mitigation
Risk FactorAllocated ToProposed Mitigation MechanismManagement RiskSponsor RiskS
EL/SILThe promoters, Sterlite / Vedanta Group, has prior track record of develop
ing large projects including power plants. In the power sector, Sterlite/Vedanta
 Group operates significant captive power capacities of about 1,200 MW. Also, St
erlite/Vedanta group has demonstrated strong project execution capabilities and
is currently building another 2,875 MW for its captive power requirements which
are at various stages of developments, as envisaged. Further, the promoter compa
ny viz. Sterlite Energy Limited (SEL) is developing a domestic coal based power
project with a generation capacity of 2,400 MW (4 x 600 MW) at Jharsuguda, Oriss
a, India which is expected to be fully commissioned by September 2010.
TSPL already has in place a team of experienced and qualified people to execute
this Power Project and employees at various levels are in the process of being a
ppointed.
The equity in TSPL will be infused by SEL which is a 100% subsidiary of SIL. The
part of equity requirement for the project would be brought in by SEL by raisin
g equity from primary markets through its proposed IPO. SIL would be providing t
he necessary support to SEL for meeting all its financial obligations for financ
ing the Talwandi Sabo power project.
Lenders may stipulate a suitable condition that the borrower shall bring in 30%
of the equity required for the Project up-front and SEL shall provide suitable u
ndertaking in the form and manner acceptable to the Lenders to bring in the bala
nce 70% of the equity as per the requirements of the project.Withdrawal of
PromotersSELThe lenders may stipulate that SEL shall undertake that the manageme
nt and control of the Borrower (TSPL) shall not change and SEL shall not divest
their stake in TSPL below 51%, during the pendency of the loans availed for the
project. Similarly, SIL shall also undertake that the management and control of
the SEL (promoter) shall not change and SIL shall not divest its stake in SEL be
low 51% during the pendency of the loans availed for the project.
SEL is committed to the Project and would continue to hold substantial stake in
the project. Pre-Completion RisksConstruction Period EPC Contractor (SEPCO)The c
ompany has awarded a fixed price fixed time turnkey Engineering, Procurement and
Construction (EPC) contract to SEPCO Electric Power Construction Corporation (S
EPCO), a reputed power plant EPC company in China.
SEL had previously entered an EPC Contracts in May 2008 with SEPCO for 1980 MW (
3 X 660 MW) capacity for its proposed power plant in Korba, Chhattisgarh. Subseq
uently in July 2009, SEL has executed a Contract Amendment agreement with SEPCO
pursuant to which it has been agreed by both SEPCO and SEL to shift the location
and hence SEPCO will now supply and construct the power plant under the same co
ntract at the proposed project site of TSPL viz. Talwandi Sabo in Punjab instead
of Korba.
The EPC agreement provides for adequate liquidated damages in case of delay in i
mplementation and for plant s tested capacity below stipulated level. Also, TSPL h
as appointed DCPL as Owner s Engineering Consultants for construction/ commissioni
ng supervision during implementation of the project.
The Lenders may stipulate suitable conditions that the Borrower has executed the
EPC Contract for the Project including any Novation/Amendment Agreement. The EP
C Contract and the Novation/Amendment Agreement shall be reviewed by Lenders Inde
pendent Engineer and Lenders Legal Counsel and the Borrower shall carry out the n
ecessary modification in the EPC contract and the Novation/Amendment Agreement a
s may be required by the Lenders.
Further, lenders may stipulate that the EPC contract shall stipulate adequate li
quidated damages for delay in commissioning of plant and shortfall in performanc
e guarantees.Land AvailabilityTSPLThe land required for the project comprising m
ain Plant area (1200 acres), Ash Disposal area (235 acres), township area (60 ac
res) and greenbelt area (618 acres) has already been acquired from the GoP and i
t is under the possession of TSPL.
The company is in the process of identifying balance land to be acquired for Rai
lway siding (191 acres) and Water Intake channel (83 acres).
Lenders may stipulate suitable pre-disbursement condition that land required for
the Project on ownership/lease basis from Punjab Government shall be free from
all encumbrances as may be required for smooth implementation of the project ade
quacy of which will be reviewed by LIE. For balance requirement of land for Rail
way siding and Water Intake channel, the company shall acquire it at least 12
months prior to COD of the first unit of the Project. Cost Over-runEPC Contracto
r /TSPLThe project is being implemented by way of a fixed price and fixed time T
urnkey EPC Contract which has already been awarded to SEPCO. The cost has been a
rrived at based on EPC contract executed with SEPCO as well as on the basis of c
ost estimates by company for Railway Sidings and water intake channel.
The company expects the non firm cost other than the EPC cost to be well within
the cost estimates.
In addition, a contingency provision of 10% of the non firm cost i.e. Site Devel
opment, Water Line, Railway Line and Pre-operative expenses has been provided in
the total project cost which is considered reasonable.
In addition to this and to take care of the cost over-runs, the Lenders may stip
ulate that SEL/promoter finances the same by way of additional equity /unsecured
loans from its own resources or loans arranged by SEL/promoter without recourse
to the Project assets to the satisfaction of the Lenders.Post-Completion RisksE
nvironmental RisksTSPLEnvironment Impact Assessment studies have been concluded
earlier based on the configuration of 4 x 500 by PSEB and subsequently MoEF clea
rance dated 11th July, 2008 was also received for 2000 MW power project (4 x 500
MW) based on sub critical technology. The Company has received No Objection Cer
tificate (NOC) vide letter dated September 8, 2009 from Punjab Pollution Control
Board for 2000 MW power project based on configuration of 4 x 500 MW with sub c
ritical technology.
However, TSPL has since finalised the configuration of 3 X 660 MW using super cr
itical technology. The company would apply for the revision in the existing appr
oval to MoEF & SPCB shortly. As such the change from sub critical to super criti
cal technology by the company would result in reduced emissions from the power p
lant. Therefore no environmental issues are envisaged to be involved and it is e
xpected to be viewed positively by MoEF. In view of this, the company does not f
oresee any problem in getting the revision in its existing approval and expects
to obtain the same during shortly.
No forest clearance required since there is no forest land is involved in the pr
oject.
Hence, the environmental risk has been considerably mitigated. The company only
has to comply with the environmental emission norms as stipulated in MoEF & SPCB
Clearance. Water AvailabilityTSPLThe raw water requirement for the project is e
stimated at about 8,000 cubic meter/hr (80 cusec) for cooling and consumptive pu
rposes. Chief Engineer, canal, Irrigation Dept, Punjab vide letter No.4729 dated
09.05.2008 has accorded consent for making available 80 cusecs of canal water w
hich is sufficient to meet the water requirement for the proposed project.
The water source for the proposed project is Bheni canal, a sub branch of Kotla
canal Branch which is at a distance of about 38 km from the project site. Bheni
canal will be extended/raised over a distance of about 20 km and a pipe line/can
al from Bheni canal will be laid over a distance of about 18 km upto power stati
on boundary by the Irrigation Department of the Government of Punjab (GoP). The
report for the same is being prepared by the Irrigation department and the work
will be started after the report is ready.
The cost for extension of canal and laying down the pipeline/canal will be charg
ed to the company by GoP and is included in the project cost.
Given the above arrangements, no difficulty is envisaged for availability of wat
er for the proposed project; hence the risk is substantially mitigated.
Fuel Supply TSPL / PSEBThe coal for the proposed project would be procured from
the mines in the area of Mahanadi Coalfields Limited (MCL). MCL has issued a Let
ter of Assurance dated 14.08.2008 to the company, assuring coal quantity of 7.72
Million Tonnes per annum (MTPA) as per the normative requirement of the plant a
nd GCV of coal corresponding to Grade E (Grade F in case of shortage of Grade E co
al).
To be on a conservative side, the company has assumed that Grade F coal will be
supplied by MCL. The total requirement of coal for project is estimated at 7.59
Million Tonnes Per Annum (MTPA), considering average gross calorific value of F
grade coal of 4,095 kcal/kg and the PLF at 85 %. It may be noted that the alloca
tion of coal of 7.72 MTPA as per LoA is based on E grade of coal having an average
GCV of 4,707 Kcal/kg. However, for the purpose of profitability projection, the
company has assumed a lower GCV of coal assuming all supplies of F grade coal. So
the total assurance of the coal quantity of 7.72 MTPA as per LOA is sufficient
to cover total coal requirement of 7.59 MTPA.
Punjab State Electricity Board (PSEB) would enter into a firm Fuel Supply Agreem
ent (FSA) with MCL on long term basis as per new coal distribution policy of Min
istry of Coal, GoI. Subsequently, PSEB would assign this Fuel Supply Agreement i
n favour of TSPL.
Lenders may stipulate an appropriate pre-disbursement condition that the Company
shall undertake to procure necessary coal linkages/letter of assurance or make
alternate arrangements for procurement of coal for the Project or for meeting su
bstantial requirement of the project to the satisfaction of the Lenders.
Further, lenders may stipulate that the Borrower shall enter into firm Fuel Supp
ly Agreement (FSA) either directly or through PSEB as per the Ministry of Coal,
Government of India policy for meeting its requirement of coal prior to COD of t
he respective units of the Project for that unit of the Project. Fuel PriceTSPL
/ PSEBThe FSA will be entered into at a price for E/F Grade coal (including handli
ng, transportation and royalty) at the start of the operations of its first unit
. However, as the cost of coal would be entirely pass through to PSEB, the same
would not have any impact on the projected financials of the company.
Hence, Fuel Price risk stands mitigated for the tenure of loan.Coal Transportati
on TSPL / Indian RailwaysTSPL proposes to transport coal from MCL s coalfields si
tuated at Orissa through Indian Railways. As per the RITES feasibility report, c
oal will be transported using either BOXN wagons or BOBRN wagons. The company ha
s already received conceptual clearance for railway siding from offtake point to
plant site, further The application is being made to the Indian Railways for Ra
il Transport Clearance (RTC) for the transportation of coal of 8.7 MTPA from MCL
coalfields in Orissa to the plant site in Punjab.
The take off point will be the Sadda Singhwala located at about 12 km from the p
roject site. The Railway Station is on Delhi - Bhatinda Railway line of Northern
Railway. The railway line will be extended to link the plant railway siding/MGR
for the transportation of coal from MCL s coalfields at Orissa.
PSEB would enter into Rail Transportation Agreement (RTA) with Indian Railways b
ased on Fuel Supply Agreement to be entered into with MCL and PSEB would then as
sign RTA in favour of TSPL.
Lenders may stipulate suitable condition that the Company shall make necessary a
rrangements including obtaining necessary approvals from Railway and other autho
rities for transportation of coal within 12 months from the date of first disbur
sement. Further, the company shall also arrange for Coaches/ Railway Wagons, lay
ing of railway siding from the plant site to the nearest railway station for tra
nsportation of the coal from the IB coal fields of MCL/ coal linkages till the p
lant site of the proposed power project at least 3 months prior to COD of the fi
rst unit of the Project to the satisfaction of the Lenders. Borrower shall also
enter into the necessary Railway Transportation Agreement with the Indian Railwa
y/ appropriate agency either directly or through PSEB prior to COD of the respec
tive units of the Project. Evacuation RisksTSPLThe power generated at generator
end of the proposed project would be stepped upto 400 kV and connected to the 4
00 kV switchyard at the project site. As per PPA with PSEB, the entire power gen
erated from the power plant would be procured by PSEB from the Bus Bar of the pr
oject only. Further it will be responsibility of PSEB to ensure availability of
interconnection facility prior to scheduled interconnection date. Also in case o
f non-availability of interconnection facility, PSEB would be liable to pay char
ges as recovered from STU/CTU as per the agreement which would be entered into w
ith CTU/STU.
As informed, PSEB has appointed Power Grid Corporation of India Limited (PGCIL)
for conducting the studies for proposed power plant of 1980 MW. A system study w
ould be done by PGCIL and on the basis of final detailed report by PGCIL on evac
uation arrangement, an agreement to lay the transmission lines will be entered i
nto between PGCIL and PSEB. The cost of transmission line would be borne by PSEB
and hence is not part of the project cost.
The Lenders may stipulate that the Lenders Engineer (LIE) and Lender Legal Counsel
(LLC) will review the agreement executed/ arrangements made between PGCIL and P
SEB as well as carry out periodic review of the progress of the evacuation arran
gements. Based upon the review by LIE/ LLC, in case of any deficiency in the eva
cuation system, the Borrower shall take all necessary steps to remove those defi
ciencies.Market RiskOff Take RiskPSEB / TSPLThe company has already entered into
Power Purchase Agreement (PPA) dated September 1, 2008 for sale of contracted c
apacity of 1841.4 MW power to PSEB (total generation capacity of 1980 MW less 7%
auxiliary power consumption).
A considerable time has elapsed after signing of PPA, this requires extension of
time from PSEB. As per the PPA, TSPL has already notified to PSEB, vide letter
dated February 16, 2009, citing the reason for delay in the project due to force
majeure events not under control of company. The company expects to receive ext
ension of PPA from PSEB shortly and accordingly scheduled COD will be revised.
Hence off take risk for its entire gross capacity of 1980 MW stands mitigated. A
lso the recovery of Capacity Charges would be based on normative availability of
80% which will ensure debt servicing.
Lenders may stipulate a suitable condition that the Borrower has obtained the ne
cessary approval from Punjab State Electricity Board (PSEB) for extending the sc
hedule commercial operation date (SCOD) for the project as per the PPA and for c
ompleting other milestones including achieving financial closure if required und
er PPA in view of the current envisaged implementation schedule and financial cl
osure plan to be reviewed by LIE. In case, any penalty or liquidated damages are
payable by the Borrower to PSEB or any other agency for delay in implementing t
he project, the same shall be funded by the Promoter from its own resources. The
Promoter to provide undertaking for the same. Payment RiskPSEB/ TSPLAn uncondi
tional, revolving and irrevocable letter of credit for 1.1 times of monthly sale
s would be available from PSEB under PPA for sale of contracted capacity of 1841
.4 MW power. Also additional payment security mechanism like default escrow mech
anism and third party sell of power in case of default by the procurer would als
o be available.
Considering the existing payment security structure as per PPA with PSEB in comp
arison to the prevalent security mechanism available under competitive bidding g
uidelines the payment risk is substantially mitigated.
Technology RiskPlant PerformanceEPC contractor/ TSPL/ O&M ContractorThe proposed
project will be implemented by way of a turnkey EPC contract which has already
been awarded to SEPCO with suitable liquidated damages for any shortfall in the
performance. Also performance guarantees have been provided for the contracted p
erformance during the defect liability period. Further, lender s independent engin
eer would also review the operations of the project. SEPCO is a reputed EPC cont
ractor and has implemented several similar projects successfully.
The operations & maintenance (O&M) of the power plant would be undertaken by the
company in-house with the support of its technical team and expert engineers. H
owever, the Company would also like to have an option to outsource the O&M servi
ces from any reputed agency in the field, if required, subject to satisfaction o
f the Lenders.
Suitable LDs have been stipulated in Turnkey EPC contract to mitigate the risk d
ue to short fall in performance and delay in commissioning. Thus, the plant perf
ormance risk is considerably mitigated.Financial RiskForeign Exchange TSPLTSPL p
roposes to meet major part of the foreign currency expenditure by raising foreig
n currency loan.
For estimation of project cost, the exchange rate for has been considered at Rs.
47.00 per USD. Further, avg. rupee depreciation of 0.40% p.a. during the constr
uction period and the repayment period has also been considered.
All other expenses are in Indian Rupees, hence there is no forex risk during the
operations period. The company will enter into a suitable hedging mechanism for
the payments towards import component of EPC in USD and also for repayment of f
oreign currency loan; hence the risk of rupee depreciation is substantially miti
gated.Interest RateTSPLThe interest rates assumed for projections are in line wi
th the current market scenario for raising long term loans. Under the said assum
ptions, TSPL is expected to be able to service its debt comfortably.
The sensitivity has been worked out for increase in rate of interest by 100 bps
wherein DSCR remains at comfortable level. Refinancing Risk of Bullet instalmen
tSEL / Sponsor35% of the total Rupee Loan and ECBs shall be repayable by way of
a bullet instalment at the end of 10.50 years from end of moratorium, which may
cause a refinancing risk. However, a condition has been stipulated for cash swee
p, wherein payment of 50% (100% during the last 3 financial years before bullet
repayment) of the surplus cash flow (pertaining to the Project) above 1.30 DSCR
would be utilised towards prepayment of senior debt. Hence as per base case, sub
stantial amount of total bullet repayment would be made during the regular repay
ment period only. Further, TSPL would also be having sufficient cash balance to
serve the balance bullet instalment from the accumulated project cash flow only,
as per base case model. This would mitigate the risk of refinancing substantial
ly.
Talwandi Sabo Project has been awarded in accordance with Competitive Bidding Gu
idelines. To match the cash flow, the Project is in requirement of long-tenured
loans, as is the case of all similar projects. The Lenders are however consideri
ng loan upto tenure of 15 years. Hence, refinancing of a portion of the loans is
envisaged in the financing structure.
Periodic refinancing of outstanding debt is an established practice in the power
sector financing in India (via financing through bullet maturity bonds or bonds
with a maturity of less than 10 years). CPSUs have also utilised this route for
financing their projects.
The term of the PPA is 25 years from COD of the Power Station and with a long tai
l of around 10 years after the primary repayment period, the refinance risk is co
nsidered to be mitigated.
The Lenders may also stipulate that SEL shall provide an undertaking to assist a
nd provide all help to TSPL in raising fresh funds for refinancing of the bullet
repayment of 35% of the total term loan at the end of 10.50 years from the end
of the moratorium period.Other RiskForce MajeureTSPL/ InsurersTSPL proposes to t
ake out a comprehensive insurance policy package during the construction/ operat
ions period for this project.
Lenders may stipulate suitable condition that the TSPL shall take full insurance
cover over its assets, offered as security for the Facility, against fire and a
ll such other risks as may be required by the Lenders/ LIA, the policies to be r
etained by the Borrower.
10.2 SWOT Analysis - Project
Strengths
> Talwandi Sabo Power Project is being implemented by SEL, a part of the Vedanta
Group - one of India's most respected business conglomerates. The part of equit
y requirement for the project would be brought in by SEL by raising equity from
primary markets through its proposed IPO. SEL in turn is a wholly owned subsidia
ry of SIL and would leverage the group s power sector credentials / experience in
setting up and running captive and commercial power plants. Also, SEL would be g
etting all the necessary support from SIL for financing this project.
> PSEB and Punjab State Government are highly committed to the Project. Signific
ant initial groundwork in land acquisition, R&R related work, water linkage, env
ironment clearance, finalisation of power evacuation plan from the project has a
lready been undertaken.
> The project has been awarded on Case II bidding criteria for long-term procure
ment from projects. This is a Public Private Partnership (PPP) initiative taken
at state level and similar in line with UMPP based power project developed by Mo
P/ Power Finance Corporation at national level.
> The total land of 2,113 acres required for main power plant, ash disposal area
, township and greenbelt area is already acquired from GoP and the same is readi
ly available for the project.
> Power generated from the Project is to be sold in the state of Punjab. The sta
te is currently facing peak demand deficit of around 15.4% as well as average en
ergy shortage of 8.6% and is expected to continue to face peak shortages, even a
fter including capacity augmentation through this project. The project is also h
aving a high priority in merit order dispatch which shows that TSPL s power would
carry advantage over power produced by others to the extent of 50 % in the state
of Punjab.
> A turnkey EPC contract has already been awarded to SEPCO, a reputed power plan
t EPC company in China. SEPCO has already been awarded many turnkey contracts pr
ojects, both for sub critical and super critical power project developed by repu
ted groups in India. SEPCO is also implementing SEL s 2400 MW Jharsuguda power pro
ject.
> Entire power generated from the proposed project has already been tied up with
PSEB for the contracted capacity of 1841.40 MW (total generation capacity of 19
80 MW less 7% auxiliary power consumption). The PPA is signed with PSEB at compe
titive quoted levelised tariff of Rs. 2.86 per unit. The quoted levelised capaci
ty charge is Rs. 1.21/kwh.
> The energy charge is recoverable on basis of Net Quoted Heat Rate (NQHR). The
advantage is that any price variations in landed price of coal on account of cha
nges in revision in fuel price and/or change in fuel transportation price are en
tirely pass-through to the procurer. This ensures that there is no risk related
to raw material prices as the coal charges including transportation are fully pa
ss through. This would act as a major strength for the project.
> Provision of payment security is in the form of irrevocable, revolving and unc
onditional LC backed by first ranking pari-passu charge on the incremental recei
vable of the Procurers by way of Default Escrow Agreement. Further, it has been
strengthened due to option available to the company to sell the power to Third P
arty in case of default. Incremental Receivables to be escrowed are expected to
be at a very comfortable level even in the very first full year of operation. I
t would further improve during the remaining period of operation as first charge
(after the charge already created before signing of PPA) would always remain wi
th TSPL and any charge on additional revenue would be subservient to TSPL s charge
.
Weaknesses
> Arrangement for power evacuation system of desired capacity is yet to be final
ized. Timely erection of transmission lines would be required in order to evacua
te the power generated.
The transmission lines are expected to be in place prior to the Talwandi Sabo Po
wer Project being ready to generate power. As per PPA with PSEB, the entire powe
r generated from the power plant would be procured by PSEB from the Bus Bar of t
he project only and hence it is the responsibility of the procurer. As informed,
PSEB has appointed Power Grid Corporation of India Limited (PGCIL) for conducti
ng the studies for proposed power plant of 1980 MW. The system study has been d
one by PGCIL and detailed report will be issued by PGCIL shortly. The transmissi
on lines are expected to be in place prior to the Project being ready to generat
e power. PSEB would enter into a contract with PGCIL for developing transmission
line which will be connected to PSEB grid. The cost of transmission line would
be incurred by PSEB.
> TSPL is yet to enter into RTA with Indian Railways, which can be signed only u
pon finalisation of FSA.
Transportation of coal is envisaged through Indian Railways. The company has alr
eady received conceptual clearance for railway siding from offtake point to plan
t site, further application is being made to the Indian Railways for Rail Transp
ort Clearance (RTC) for the transportation of coal of 8.7 MTPA from MCL coalfiel
ds in Orissa to the plant site in Punjab.

Opportunities
> Policy focus on enabling open access that would allow generators to sell direc
tly to large consumers in case of default by the Procurer and the evolving power
trading market through power trading exchanges would imply that generators can
also look at the possibility of selling any excess / available capacity for merc
hant use.
> Surplus power in excess of contracted capacity or in the event PSEB is not abl
e to take off the contracted capacity can be sold to Third Parties on merchant s
ale basis. In the current short term power trading market it has been observed t
hat power is traded as high as Rs. 7 to 8 per unit. Hence, additional revenue ge
neration opportunity exists from third party merchant sale of power from the pro
ject.

Threats
> Development of large hydroelectric projects offering power at lower tariffs ma
y reduce the demand for power from power plants based on captive coal mines.
The power sector in the country is expected to be played in the near future with
significant energy shortages. Also, environmental impact of hydel power project
s tends to increase resistance to such projects, thus creating delays. Further,
power generated from alternate sources of fuel, viz. LNG, Natural Gas and Naphth
a, is not expected to be competitive as compared to the TSPL Project. Hence, it
is expected that sufficient demand would exist for power from power plant based
on captive coal mines in the near and medium term.

CHAPTER 11: CONCLUSION

Talwandi Sabo Power Ltd. (TSPL), promoted by Sterlite Energy Limited (SEL), is d
eveloping a domestic coal based power project with a total generation capacity o
f 1,980 MW at Village Banawala, Dist. Mansa, in the state of Punjab, India. SEL,
a 100% subsidiary of Sterlite Industries (India) Ltd., is belonging to the UK b
ased Vedanta Group. SIL has satisfactory financial position and would provide al
l the necessary support to SEL in meeting its financial obligation for the propo
sed project.
The Vedanta Group has considerable experience in developing power projects succe
ssfully at low capital cost and also operating them consistently at higher PLF.
As of 31st March 2009, the total power generating capacity of the Vedanta Group s
power plants was about 1,200 MW (mainly for captive use). SEL would be pioneerin
g the non-captive power sector initiatives of Vedanta Group by setting up variou
s power projects and participating in various bids in India through various SPVs
. The group is in the process of setting up an incremental capacity both captive
and independent, which is in various stages of implementation.
The project is being implemented by way of a fixed price fixed time turnkey Engi
neering Procurement and Construction (EPC) contract. Sterlite Energy Ltd. had pr
eviously entered an EPC Contracts in May 2008 with SEPCO Electric Power Construc
tion Corporation (SEPCO) for 1980 MW (3 X 660 MW) capacity for its proposed powe
r plant in Korba, Chhattisgarh. Subsequently in July 2009, SEL has executed a Co
ntract Amendment agreement with SEPCO pursuant to which it has been agreed by bo
th SEPCO and SEL to shift the location and hence SEPCO will now supply and const
ruct the power plant under the same contract at the proposed project site of TSP
L viz. Talwandi Sabo in Punjab instead of Korba.
The primary fuel for the proposed project would be domestic coal which the compa
ny proposes to source from mines in the area of Mahanadi Coalfields Limited (MCL
). MCL has issued a Letter of Assurance dated 14.08.2008 to the company, assurin
g coal quantity of 7.72 Million Tonnes per annum (MTPA) with GCV of coal corresp
onding to Grade E (Grade F in case of shortage of Grade E coal) which is sufficien
t to meet the total estimated coal requirement of 7.59 MTPA of the project.
Punjab State Electricity Board (PSEB) would enter into a Fuel Supply Agreement (
FSA) with MCL wherein MCL would be committing supply of the required coal for th
e project and PSEB would assign this Coal Supply Agreement in favour of TSPL.
PSEB would enter into Rail Transportation Agreement (RTA) with Indian Railways b
ased on Fuel Supply Agreement to be entered into with MCL. PSEB would then assig
n RTA in favour of TSPL. The company has already received conceptual clearance f
or railway siding from offtake point to plant site, further the application is b
eing made to the Indian Railways for Rail Transport Clearance (RTC) for the tran
sportation of coal of 8.7 MTPA from MCL coalfields in Orissa to the plant site i
n Punjab.
A PPA dated September 01, 2008 has been signed among TSPL and PSEB for sale of p
ower corresponding to a contracted capacity of 1841.40 MW (total generation capa
city of 1980 MW less 7% auxiliary power consumption) at Bus Bar located at power
plant. The overall levalised tariff for TSPL works out to Rs. 2.864 per unit, o
ut of which the levellised capacity charges works out to Rs. 1.21 per unit. As p
er the PPA, the entire fuel charges are pass through to PSEB; hence, any increas
e in fuel price or transportation cost would not have any negative impact on the
project. The Agreement is to be effective for a period of 25 years (Initial Ter
m) from the COD of Power Station.
The power from the proposed project would be generated at low voltage at about 2
2 kV and the same will be stepped upto 400 kV and connected to the 400 kV switch
yard at the project site. As per PPA with PSEB, the entire power generated from
the power plant would be procured by PSEB from the Bus Bar of the project only.
Also PSEB would be responsible to ensure availability of evacuation arrangements
through PGCIL as per envisaged timeline. The power from TSPL will be evacuated
through 3 numbers of double circuit 400 KV transmission lines, one of which will
be connected to the PGCIL s existing network for system stability.
As informed, PSEB has appointed Power Grid Corporation of India Limited (PGCIL)
for conducting the studies on evacuation arrangement for proposed power plant of
1980 MW. A system study has been done by PGCIL and on the basis of detailed rep
ort by PGCIL, an agreement to lay the transmission lines will be entered into be
tween PGCIL and PSEB.
The company has also obtained the major approvals like MOEF clearance, SPCB clea
rance, AAI clearance, consent for drawal of water, letter of assurance for suppl
y of coal from Ministry of coal and Rail Transport clearance for movement of coa
l.
The total project cost is estimated to be around Rs. 9,320 crore (Rs.4.71 crore
per MW), which is proposed to be financed at a debt equity ratio of 3:1 with equ
ity of Rs. 2,330 crore and debt of Rs. 6,990 crore. The equity for the project w
ould be contributed by SEL which is a 100% subsidiary of SIL. SEL would be getti
ng all the necessary financial support from SIL for financing this project. Out
of total equity, around Rs.699 crore, (i.e. 30% of the total equity) would be br
ought in upfront by the promoters before any draw down of the debt. The debt for
the project is proposed to be raised by a mix of rupee loans and ECB with diffe
rent tranches.
While on one hand the tariff is competitive enabling the Project to be adequatel
y placed in the merit order dispatch ranking, on the other hand the projected fi
nancial and debt service coverage ratios are satisfactory. On the basis of the a
ssumptions underlying the cost of production and profitability estimates, the pr
ojected cash flow results in an average DSCR for the senior debt during the tenu
re of the loan at 1.66 (1.57 upto refinancing), with the minimum DSCR being 1.43
..
Based on the information provided by the company and discussions held with its e
xecutives, the Information Memorandum and the financial projections of the Proje
ct have been prepared. The viability of the project is also assessed under the i
mpact of various scenarios, which could be at variance with the base case scenar
io assumed.
On the basis of the above and the financial projections prepared -subject to the
risk factors, weaknesses and threats enumerated in the SWOT analysis and the im
pact of the various scenarios as envisaged under the sensitivity analysis, the p
roposed project of TSPL is viewed as financially viable. The project s envisaged c
ash flows are stable and the debt servicing capability is satisfactory.

SBI Capital Markets Limited

Mumbai
November 2009

APPENDIX
Talwandi Sabo Power Limited - Power Project of 1980 MW
Indicative Term Sheet for Senior Rupee Term Loan
A. GENERAL TERMS1. BorrowerTalwandi Sabo Power Limited
("TSPL" or the "Borrower" or the Company )2. Promoter / Holding CompanySterlite E
nergy Limited (SEL) or SEL
3. Main SponsorSterlite Industries (India) Limited or SIL .
SIL shall undertake to the Lenders of TSPL that all the financial obligations of
SEL under the financing of this project and as required under this Term Sheet s
hall be met and fulfilled by SIL, from its own resources, by routing the funds t
hrough SEL to the satisfaction of the Lenders. However, SEL would be allowed to
meet the fund requirements of the Borrower for the proposed project from the pro
ceeds of its proposed Initial Public Offer (IPO) as per its DRHP/ Offer Document
. 4. Lenders
Indian Banks/ Foreign Banks/ Institutions, collectively the Lenders" or Senior L
enders , who are participating in funding the Project by way of Senior Debt/ Facil
ity.5. Lead BankState Bank of India
(subject to approval of the Lenders Consortium)6. Project
1980 MW (3 unit of 660 MW each) power project using super critical technology be
ing set up at Talwandi Sabo, Village Banawala, Dist. Mansa, Punjab, India (the "
Project") by the Borrower. 7. Project Cost & Means of Finance
The cost of the project is estimated at around Rs. 9,320 crore ("Project Cost"),
to be funded at a Debt Equity Ratio of 3:1 as under:
Senior Debt : Rs. 6,990 crore
Promoters Contribution/ Equity : Rs. 2,330 crore
The Promoter shall have the option to invest upto 50 % of the total envisaged eq
uity in the project by way of quasi equity (in form of unsecured and subordinate
d loan, preference shares or any other form as may be approved by the Lenders).
Such quasi equity shall not be repaid during the currency of the Senior Loan and
shall be subordinated to Senior Debt in servicing of interest/ preference divid
end also. Such quasi equity shall be on the terms acceptable to the lenders. 8.
Debt: Equity Ratio75: 25 (3:1)9. FacilityTerm Loan of Rs. 6,990 crore, to be fu
nded through a mix of Rupee Term Loan (RTL) and Export Credit Assistance/ Foreig
n Currency Loans/ External Commercial Borrowings (ECBs).
Sub Limit: 75% of the sanctioned rupee loan by way of Letter of Credit (LC)/ Let
ter of Commitment (LoC), as a sub limit of the rupee loan amount for a period of
3 years. However, in case, the Borrower does not avail such Letter of Credit/ L
etter of Commitment, the entire rupee loan shall be available for drawl to meet
the project cost.
During the implementation period, the Borrower would also have the option for fu
nding senior debt by way of Export Credit Assistance (ECA) / External Commercial
Borrowings (ECB) / Foreign Currency Loan (FCL) / Domestic Bonds to the extent o
f 30% of total rupee loan sanctioned for achieving financial closure in addition
to the ECB borrowings tied-up at the time of financial closure. Correspondingly
, the undisbursed/ unavailed Rupee Loan component will get cancelled/ reduced/ s
ubstituted to that extent.
This term sheet provides the terms and conditions for Senior Rupee Debt under thi
s tranche excluding sanctions of ECA/ ECB/ FCL etc. 10. Purpose of the FacilityTh
e proceeds of the Facility will be utilized to fund the Project Cost of the prop
osed power Project including repayment of any interim funds raised by the Borrow
er for funding of the Project.11. Interest Rate

At 50 bps below State Bank Advance Rate (SBAR) floating, presently the same work
s out at 11.25% p.a., with annual reset of spread from the financial closure dat
e i.e. the date of signing of the loan documents. 12. Interest Payments
Interest up to COD for each unit will be capitalized and paid out of the sources
of funding of the Project and thereafter the interest will be paid out of Proje
ct Cash Flows/ Other funds on monthly basis/ as agreed by the Lenders on the out
standing loan till the repayment of the Facility. 13. Commercial Operation Date
(COD) of the ProjectThe commercial operation date for the project shall be earli
est of the following:
i) 48 months from the date of Financial Closure i.e. signing of the loan documen
ts
ii) Actual commercial operation date of the 3rd Unit.
Unless specifically mentioned COD would mean Commercial Operation Date of the Proj
ect as above. 14. Availability PeriodFrom the date of loan documentation till 6
months after Commercial Operations Date ( COD ). 15. Moratorium6 Months from the Com
mercial Operation Date (COD) 16. Repayment65% of the total loan amount shall be
repaid over a period of 10.50 years by way of equal quarterly installments from
end of the Moratorium period.
Balance 35% shall be repayable as a bullet repayment at the end of 10.50 years f
rom the end of the Moratorium Period.
SEL shall provide a Promoter Support Undertaking that it would assist and provid
e all help to the Borrower in raising fresh funds for refinancing the bullet rep
ayment of 35% of the loan. 17. Tenure
Door-to-Door tenure of 15 years (including the construction period of 4 years fr
om financial close, 0.5 years of moratorium and repayment of 10.50 years).18. U
p-Front Equity30% of the total envisaged equity contribution for the project sha
ll be brought up-front and SEL shall provide suitable undertaking in the form an
d manner acceptable to the Lenders to bring in the balance 70% of the equity as
per the requirements of the project.19. Up-Front Fee
0.20% of the debt amount shall be payable on or before execution of t
he loan documents for the loan.20. Commission for LC/ Letter of Commitment 0.4
5% p.a. of the outstanding amount of LC/ Letter of Commitment payable quarterly
in advance. In case of fronting of LCs by the Lead Bank/ Issuing Bank, the above
commission would be shared in the agreed ratio between the LC Participating Ban
ks and LC Issuing Bank.21. Commitment Charges

The Borrower shall pay to the Lenders, a commitment fee of 1.20% p.a. on the amo
unt undrawn with respect to draw down schedule agreed to by the Lenders. The fee
s shall be calculated on the basis of amount undrawn and the number of days devi
ated from the scheduled date.
However, the Borrower would have the option to modify/ revise the draw down sche
dule by a written notice 30 days prior to beginning of the each quarter without
any commitment charges.22. Financial Covenant Starting from first full year of o
perations of all the 3 units of the project (i.e. FY 2014-15), any adverse devia
tion of any two out of the three covenants indicated below by (a) more than 20%
from the levels stipulated in respect of the items (i) to (ii); and (b) any devi
ation from the minimum level stipulated for item (iii), Penal Interest of 1% p.a
. will be levied for the period of non-adherence, as against the levels indicate
d below, subject to a minimum period of one year. The measurement of deviation s
hall be once in a year with reference to the last annual audited statement of ac
counts.
i) Total Debt Gearing, i.e. Total Outstanding Liabilities / Tangible Net Worth *
of 3.00
ii) Security margin (1- Long Term Loans outstanding / Net fixed assets) = 20%
iii) Gross DSCR of 1.30 (never below 1.10)
In case of continuous default/decline in performance levels, the Lenders may sti
pulate any other necessary conditions as deemed necessary in consultation with t
he borrowers. No dividend shall be paid till the position is rectified to the sa
tisfaction of Lenders.
* Tangible Net Worth would include the equity share capital, preference share ca
pital, quasi equity/ unsecured loans as brought in by the Promoter to fund the c
ost of project and the revenue reserves as per the Balance Sheet. 23. Prepayment
Penalty

The Borrower shall at any time have the option to prepay the Lenders in part or
in full, the loan together with all interest, prepayment premium and other charg
es and monies due and payable to the Lenders upto the date of such prepayment, o
n payment of prepayment penalty equal to 1% of the principal amount prepaid.
Provided that no prepayment penalty would be payable to the Lenders:
* if the pre-payment is effected at the instance of the Lenders;
* If the pre-payment is made from surplus cash accruals generated by the project
on interest reset dates;
* if the pre-payment is made on interest reset dates with 30 days prior notice;
* If on the interest reset date(s), the interest rate spread is increased by the
Lender(s), which is not acceptable to the Borrower, the Borrower would have the
option to prepay the outstanding loan within the next 3 months by giving a noti
ce for the same within one month from such interest reset dates/ receipt of advi
ce from the Lenders.
* If on the interest reset date(s), the rate of interest of any Lender is higher
than the consortium interest rate, the Borrower shall have the option to prepay
the outstanding loan of such Lender within next 3 months by giving a notice for
the same within one month from such interest reset dates/ receipt of advice fro
m the Lender.
* If the prepayment is made under cash sweep option of Lenders.
24. Default InterestThe Borrower shall pay penal interest at the rate of 2% p.a.
on the total outstanding of the Facility in the event of any defaults in paymen
t of interest, principal, upfront fee or any other monies due to the Lenders on
their respective dates during the currency of the Facility for the relevant peri
od.
25. Security Stipulations

The senior debt for the project, all interest, fees, commission and other monies
in respect thereof shall be secured by way of:
Security to be created prior to first disbursement or opening of the LC after ac
hieving financial closure:
1. A First priority charge by way of hypothecation of all the movables assets of
the Borrower including but not limited to plant and machinery, machinery spares
, tools and accessories, of the Project
2. A first charge on all the Project s bank accounts including but not limited to
the Trust & Retention Account (TRA) and Debt Service Reserve Account (DSRA), ope
ned in a designated bank, where all cash inflows from the Project shall be depos
ited and all proceeds shall be utilised in a manner and priority to be decided b
y the Lenders. The appointment of the Trustee for operating the above account sh
all be subject to the approval of the Lenders;
3. A first charge on the operating cash flows, commissions, revenues of whatsoev
er nature and wherever arising, present and future, intangibles, goodwill, uncal
led capital, present and future; pertaining to this project only;
Security to be created within 6 months from the date of first disbursement or op
ening of LC after achieving financial closure:
1. A First priority mortgage and charge on all immovable assets (including lease
hold land, if any) of the Borrower already acquired for the project. The First p
riority mortgage on the balance land pertaining to the project shall be created
as and when such land is acquired.
2. Assignment by way of security in favour of the Lenders of all rights, titles
and interest of the Borrower in, to and under all assets of the Borrower and all
Project Documents, contracts, insurance policies, permits/ approvals, clearan
ces etc. to which the Borrower is a party and which can be legally assigned;
3. Assignment of all the Borrower s rights and interests under Letter of Credit or
such other security to be provided by the Procurer of power under the terms of
the PPA in favour of the Borrower, guarantee or performance bond provided by any
party for any contract in favour of the Borrower.
The above security for Lenders will rank pari-passu with charges
a) created in favor of all term Lenders including foreign currency Lenders, part
icipating in financing for the Project, and
b) to be created to secure the Bank borrowings for the working capital requireme
nt subject to a maximum of Rs. 500 crore of fund based facilities and a maximum
of Rs. 100 crore of non fund based facilities.
c) to be created to secure Loan Equivalent Risk (LER) lines as per Hedging Plan
to be approved by Lenders.
26. Additional InterestThe Borrower will have to create final security as per th
e Security stipulations of this term sheet with the time period provided there.
In case, the Security is not created within the stipulated period, the Borrower
shall pay an additional interest of 1% p.a. from the end of such stipulated time
period on the entire drawn and outstanding loan amount till creation of such se
curity. Moreover, any further disbursement of the loan would be at the discretio
n of the Lenders.27. Legal ExpensesActual legal expenses incurred by the Lenders
for documentation, filing of charges, etc. for the proposed Facility to be born
e by the Borrower.28. Interest tax, levies and dutiesInterest tax / other levies
/ duties, if any, applicable, shall be payable by the Borrower over and above t
he interest rates mentioned hereinabove.
B. PRE-COMMITMENT CONDITIONSThe Borrower/ Promoter (SEL) shall to the satisfacti
on of the Lenders:
1. Tie up entire debt amounting to Rs. 6,990 crore for the project or make alter
nate arrangement to the satisfaction of the Lead Bank.
2. Undertake to bring in the entire envisaged equity of Rs. 2,330 crore for the
project as per the project requirements.
3. Provide an undertaking from SEL that in case of any shortfall in equity, the
same will be met by SEL in a manner and to the satisfaction of the Lenders.
4. Provide an undertaking that the completion cost of the Project shall not exce
ed Rs. 9,320 crore and in case of any cost over-run, the same shall be met by SE
L from further equity contribution /subordinated debt from SEL or loans arranged
by SEL without recourse to the Project assets, in a manner and to the satisfact
ion of the Lenders.
5. Undertake to open a Trust and Retention Account (TRA) to the satisfaction of
the Lenders through which all the Project cash flows (including during construct
ion period) would flow and maintain a Debt Service Reserve Account (DSRA) in the
TRA for the ensuing 3 months principal and interest payment due to the Lenders
(except for bullet repayment) from the cash flows available after meeting debt s
ervice obligations during the operational phase, or undertake to provide a lette
r of credit/ bank guarantee acceptable to Lenders, for an amount equivalent to e
nsuing 3 months principal and interest payment to the Lenders (except for bullet
repayment), in lieu of such deposit.
6. Agree for appointment of Lenders Independent Engineer (LIE), Lenders Legal Coun
sel (LLC) and Lenders Insurance Advisor (LIA) and any other agencies as may be re
quired by the Lenders as per scope of services to be provided by the Lenders. Th
e Borrower would also agree that all information required by such agencies for c
arrying out the work assigned to them would be provided and expenditure incurred
for availing the services from these agencies shall be borne by the Borrower.
7. Undertake to furnish to the Lenders or any agency appointed by the Lenders, s
uch information and data as may be required by them or any agency appointed by t
he Lenders to ensure that the physical and financial progress of the project are
as per the schedule.
8. Agree that the technical configuration of the plant, the EPC contracts, Coal
Supply Agreement (on execution)/ Letter of Assurance, Rail Transportation Agreem
ent (on execution) and other important contracts executed/ to be executed, appro
vals received by the Borrower for the Project shall be reviewed by LIE/ LLC/ LIA
or any other consultant, as may be required, and that Lenders reserve the right
to insist on recommended changes, as applicable, which shall be carried out by
the Borrower to the satisfaction of Lenders.
9. Agree to prepare a schedule for award of contract matching with the implement
ation schedule for the Project (to be reviewed by LIE).
10. Agree that the preliminary and preoperative expenses shall be allowed as par
t of the project cost only to the extent they are certified by the Statutory Aud
itor/ Other agency as relating to the proposed project and as accepted by the Le
nders.
11. Undertake to obtain all statutory and non-statutory clearances as may be req
uired for smooth implementation and for operation of the Project, which shall be
reviewed by LIE. Borrower shall undertake to comply with the conditions stipula
ted in such clearances as and when required, during the currency of loan to the
satisfaction of lenders.
12. Undertake to make suitable arrangements for project management/ O&M prior to
COD of the first unit of the project, which shall be reviewed by LIE.
13. Agree to modify its Memorandum of Association and Articles of Association, f
or enhancement of the authorised share capital and borrowing power as per the en
visaged financing plan, if required, and incorporate any other changes, if requi
red by the Lenders.
14. Agree that the Lenders reserve the right to appoint any independent /concurr
ent auditors/consultants for the review of the Project as deemed fit during the
currency of the loan.
15. Agree that in the event of reduction in project cost on account of any savin
gs on account of duties/other taxes, price negotiations or otherwise, there woul
d be a pro-rata reduction in all components of means of finance.
16. Undertake that based on the review by LIE, if required, the Borrower shall m
ake necessary arrangements for disposal of ash.
17. Undertake to make/ enter into suitable hedging mechanism for the payments to
wards import component of plant and machinery in foreign currency and also for r
epayment of foreign currency loans, if any, to the satisfaction of the Lead Bank
.
18. Provide an undertaking from SEL that it would assist and provide all help to
TSPL in raising fresh funds for refinancing of the bullet repayment of 35% of t
he total term loan at the end of the Repayment period.
19. Agree that the Lenders shall have the right to stipulate any other condition
in consultation with the Borrower, as deemed necessary before financial closure
.
20. Agree that in case the DSCR in any year exceeds 1.30, the 50% of the surplus
cash flow after topping the DSRA (i.e. surplus cash above 1.30 DSCR, which is a
vailable for distribution to Shareholders) will be utilised for prepayment of th
e bullet repayment of the Senior Debt first and then for unamortized portion of
the Senior Debt. Further, during the last 3 financial years before the bullet re
payment, 100% of the surplus cash flow above 1.30 DSCR after topping up the DSRA
would be utilised for prepayment of the bullet repayment of the Senior Debt fir
st and then for unamortized portion of the Senior Debt.
21. SIL shall undertake to the Lenders of TSPL that all the financial obligation
s of SEL under the financing of this project and as required under this Term She
et shall be met and fulfilled by SIL, from its own resources, by routing the fun
ds through SEL to the satisfaction of the Lenders. However, SEL would be allowed
to meet the fund requirements of the Borrower for the proposed project from the
proceeds of its proposed Initial Public Offer (IPO) as per its DRHP/ Offer Docu
ment.
C.PRE-DISBURSEMENT CONDITIONS Prior to first disbursement under the Facility,
the Borrower shall, to the satisfaction of the Lenders, have complied with the
following:
1. Demonstrate to the Lead Bank that satisfactory arrangements have been made fo
r tie-up of Rs. 2,330 crore by way of equity from SEL / its associates.
2. 30% equity required for the Project has been brought in up-front and SEL shal
l provide suitable undertaking in the form and manner acceptable to the Lenders
to bring in the balance 70% of the equity as per the requirements of the project
.
3. The Borrower has obtained the necessary approval from Punjab State Electricit
y Board (PSEB) for extending the schedule commercial operation date (SCOD) for t
he project as per the PPA and for completing other milestones including achievin
g financial closure if required under PPA in view of the current envisaged imple
mentation and financial closure plan to be reviewed by LIE. In case, any penalty
or liquidated damages is payable by the Borrower to PSEB or any other agency fo
r delay in implementing the project, the same shall be funded by the Promoter fr
om its own resources. The Promoter to provide undertaking for the same.
4. The Borrower has executed the EPC Contract for the Project including any Nova
tion/Amendment Agreement. The EPC Contract and the Novation/Amendment Agreement
shall be reviewed by Lenders Independent Engineer and Lenders Legal Counsel and th
e Borrower shall carry out the necessary modification in the EPC contract and th
e Novation/Amendment Agreement as may be required by the Lenders.
5. The EPC contract shall stipulate adequate liquidated damages for delay in com
missioning of plant and shortfall in performance guarantees.
6. The LIE shall vet the cost of project, contracts for supply of major equipmen
ts, including provision for liquidated damages and performance guarantee, Coal S
upply Agreement (on execution)/ Letter of Assurance, Rail Transportation Agreeme
nt (on execution) and other major contracts/ approvals as executed/ obtained. LI
E will also examine the reasonability of these contract prices. The Borrower to
carry out necessary changes/ modifications as recommended by the LIE and deemed
necessary by the Lenders.
7. Obtain the necessary land required for the Project including the land acquire
d on ownership/ lease basis from Punjab Government/ Others free from all encumbr
ances as may be required for smooth implementation of the project adequacy of wh
ich will be reviewed by LIE. Obtain the balance land/ Right of way required for
Railway siding and Water Intake channel for the project at least 12 months prior
to COD of the first unit of the Project.
8. The Borrower shall procure necessary coal linkages/ letter of assurance or ma
ke alternate arrangements for procurement of coal for the Project or for meeting
substantial requirement of the project to the satisfaction of the Lenders.
9. The Borrower shall enter into firm Fuel Supply Agreement (FSA) either directl
y or through PSEB as per the Ministry of Coal, Government of India policy for me
eting its requirement of coal prior to COD of the respective units of the Projec
t for that unit of the Project.
10. The Borrower shall make necessary arrangements including obtaining necessary
approvals from Railway and other authorities for transportation of coal within
12 months from the date of first disbursement.
11. The Borrower shall also arrange for Coaches/ Railway Wagons, laying of railw
ay siding from the plant site to the nearest railway station for transportation
of the coal from the IB coal fields of MCL/ coal linkages till the plant site of
the proposed power project at least 3 months prior to COD of the first unit of
the Project.
12. The Borrower shall enter into the necessary Railway Transportation Agreement
with the Indian Railway/ appropriate agency either directly or through PSEB pri
or to COD of the respective units of the Project.
13. The Borrower shall have received the necessary approval, for requisite water
drawl for the Project from the Bheni Canal from Irrigation Works Dept. of Punja
b Government and any other related approval, as may be required.
14. The Borrower shall also make necessary arrangements for receiving the water
at the plant site by way of pipelines etc. at least 6 months prior to COD of the
first unit of the project, which will be reviewed by LIE.
15. LIE and LLC shall have reviewed the position of various statutory and regula
tory clearances. The Borrower shall obtain all requisite statutory and other cle
arances as may be required and applicable upto the stage, for smooth implementat
ion of the Project, have been obtained and agreed to comply with all the conditi
onality of these clearances/ approvals.
16. The Borrower shall arrange to obtain/ modify the necessary approval and clea
rance or NOC for environmental clearance from MoEF/ State Govt./ Other statutory
bodies, as may be required, for the project to the satisfaction of the Lenders
at the earliest but in any case at least 6 months prior to COD of the first unit
of the project. The Borrower shall also undertake to comply with all the provis
ions and requirements of such environmental clearances and shall take all the ne
cessary steps in this regard well in time so as to ensure smooth functioning of
the project to the satisfaction of the Lenders till the full repayment of senior
debt.
17. Open a Trust and Retention Account (TRA) to the satisfaction of Lenders thro
ugh which all the Project cash flows would flow. TRA shall also have the provisi
on for payment of 50% (100% during the last 3 financial years before bullet repa
yment) of the surplus cash flow pertaining to the Project above 1.30 DSCR after
topping up DSRA to Senior Lenders towards prepayment of senior debt, before tran
sferring the same to the distribution account. Pending utilisation of the procee
ds of the disbursements for the project as also the cash generations during the
operations, investments in permitted securities by the Borrower would be allowed
.
18. Create securities as envisaged in the security package within the stipulated
time period.
19. Finalise the insurance package and submit the same for review by the Lenders
Insurance Advisor/ Lenders. Ensure that these policies are suitably endorsed in
favour of the Lenders.
20. Ensure that all key contractors required for the implementation of the proje
ct have been identified and the agreements with them have been finalised based o
n the review to be done by LIE.
21. PPA entered by the Borrower with PSEB for sale of power from the Project sha
ll be reviewed by the Lenders, LIE and LLC and the Borrower would take all neces
sary steps to resolve the issues raised, if any, in such reviews.
22. SEL shall undertake that the management and control of the Borrower (TSPL) s
hall not change during the currency of the loan without the consent of the Lende
rs. SEL shall continue to hold at least 51% of the total paid up equity share ca
pital of TSPL throughout till full repayment of the loan borrowed by TSPL. SEL t
o provide the necessary Undertaking for the same.
23. SIL shall undertake that the management and control of the SEL (promoter) sh
all not change during the currency of the loan without the consent of the Lender
s. SIL shall continue to hold at least 51% of the total paid up equity share cap
ital of SEL throughout till full repayment of the loan borrowed by TSPL. SIL to
provide necessary Undertaking for the same.
24. The Borrower shall remove the directors, whose names appear in RBI wilful de
faulters list from its Board, or get their names deleted from the list or any oth
er similar requirements from time to time.D. OTHER CONDITIONS1. In case any mo
re favorable terms are stipulated by any other set of Lenders the same shall app
ly mutatis mutandis to the Lenders under this term sheet except rate of interest
, repayment terms, prepayment terms, up-front fee, default interest, conversion
clause in case of default and commitment fees stipulated by any Foreign Currency
Lenders and Rupee Loan Other Tranche Lenders e.g. PFC/ REC/ HUDCO.
2. Lenders reserve the right to withhold disbursement of the amount of loan equi
valent to the provision against margin money for working capital in the cost of
the project till such time as the project is near completion and the build up of
the working capital commences.
3. Lenders shall reserve the right to review the cost of the project and means o
f finance anytime during construction period of the project and stipulate releva
nt conditions, as deemed necessary and acceptable to the Borrower.
4. Lenders shall have the right to appoint 1 nominee on the Board of Directors o
f the Borrower in case of default.
5. In case of default in repayment of the principal amount or payment of interes
t or any other dues on due dates, the Lenders / RBI / CIBIL shall have right to
disclose details of the default and/or other information and the name of the Bor
rower and of its directors as defaulters.
6. The Lenders acting through the Lead Bank will have the right to examine the b
ooks of accounts of the Borrower and to have the Project site inspected from tim
e to time by officers of the Lenders and/or outside Consultants. Reasonable expe
nses incurred by the Lenders in this regard will be borne by the Borrower.
7. The Borrower shall ensure that necessary work related to extension of Bheni C
anal and laying of the water intake pipeline to the project site is completed by
the Irrigation Works Department of the Punjab State Government at least 6 month
s prior to the COD of the first unit of the project to the satisfaction of the L
enders.
8. The Borrower shall agree that the Lenders shall have the right to stipulate a
ny additional condition, as considered necessary, as acceptable to the Borrower,
upon occurrence of any event, which may have any material adverse impact on the
project.
The Borrower shall arrange for review by LIE and LLC of the agreement executed/
arrangements made between PGCIL and procurer as well as arrange for periodic rev
iew of the progress of the evacuation arrangements. Based upon the review by LIE
/ LLC, in case of any deficiency in the evacuation system, the Borrower shall ta
ke all necessary steps to remove those deficiencies.
The Borrower shall to the satisfaction of the Lenders:
9. Make satisfactory arrangements for tying up the required working capital faci
lities prior to start of commercial operations to the satisfaction of the Lender
s.
10. Ensure that the expenditure on the project is as per schedule and in case of
any savings in the expenditure, the Lenders shall have the right to cancel thei
r term loans proportionately.
11. Appoint technical, financial and executive personnel of proper qualification
and experience for the key posts and ensure that the organization set up is ade
quate enough for smooth implementation and operation of the Project.
12. Undertake not to declare any dividend during construction/ moratorium period
and that during the currency of the financial assistance, it shall not, without
obtaining prior consent of the Lenders declare any dividend on its share capita
l, (a) if it fails to meet its obligations to pay interest and/or installments a
nd/or other monies due to the Lenders as long as it is in such default, (b) if t
he DSRA is not funded and /or arranged as required by the Lenders, and (c) if th
e Borrower is in breach of covenants and terms of sanction.
13. Agree to constitute a Project Management Committee of Directors/Senior Execu
tives for the purpose of supervising and monitoring the progress of implementati
on of the project. The committee shall be responsible for the management of the
project during construction period and monitoring of the implementation of the p
roject and the Lenders shall have the rights to seek appropriate information fro
m this committee.
14. Agree to constitute an Audit Sub-committee of its Directors for monitoring o
f the Borrower s operations and its compliance with Corporate Governance as requir
ed under Companies Act/ any other statute;
15. Furnish to the Lenders every year a copy of audited annual accounts of the B
orrower immediately on finalisation of the same but in any case not later than 1
80 days from the end of each relevant accounting period.
16. Provide regular progress reports on the Project both during construction and
during operation to the Lenders as may be required by them.
17. Agree to broad-base its Board of Directors with professional and strengthen
its management set up to the satisfaction of Lenders.
18. Create a Debt Service Reserve Account (DSRA) to meet the debt service requir
ements for the ensuing 3 months principal and interest payment due to the Lender
s (except for bullet repayment) from the cash flows available after meeting debt
service obligations during the operational phase or provide a letter of credit/
bank guarantee acceptable to Lenders, for an amount equivalent to ensuing 3 mon
ths principal and interest payment to the Lenders (except for bullet repayment),
in lieu of such deposit. The amounts accumulated in the DSRA shall not be used
for any purpose other than for servicing the debt. The amount in the DSRA would
be utilized only in case of a shortfall in cash flows for meeting debt service r
equirements from time to time, which shall be topped up immediately on availabil
ity of the cash flows. The Borrower shall invest the funds in the DSRA only in p
ermitted investments and securities as approved by Lenders. No dividends shall b
e permitted until the DSRA is topped up.
19. Permit the Lenders and their authorized officers or employees to carry out t
echnical, financial and legal inspections of the assets created out of the Facil
ity and to visit any facilities and construction sites included in the Project a
nd to examine any plants, installations, sites, works, buildings, properties, eq
uipment, records and documents relevant to the performance of the obligations of
Borrower under the Facility agreement. Any such representative of the Lenders s
hall have access to Borrower s properties upon suitable prior notice and shall rec
eive full cooperation and assistance from the employees of Borrower provided no
material disturbance will be caused to the business and operations of Borrower.
20. Fully insure the Borrower s assets, offered as security for the Facility, agai
nst fire and all such other risks as may be required by the Lenders/ LIA, the po
licies to be retained by the Borrower. However, a copy of this policy should be
submitted to the Lenders. Insurance policies should contain the Lenders' Securit
y Stipulation and name the Lenders as loss payees.
21. Maintain adequate books of accounts which should correctly reflect its finan
cial position and scale of operations and should not radically change its accoun
ting system without prior notice to the Lenders.
22. Submit to the Lenders such financial statements as may be required by the Le
nders from time to time, apart from the set of such statements to be furnished b
y the Borrower to the Lenders as on date of publication of the Borrower s annual a
ccounts.
23. Keep the Lenders informed of the happening of any event likely to have subst
antial effect on its profit and business with explanations and the remedial step
s proposed to be taken.
24. Keep the Lenders advised of any circumstances adversely affecting the financ
ial position of its promoter (SEL) and SIL.
25. Increase its authorized share capital in line with the envisaged means of fi
nance, if required.
26. Obtain rating by an external rating agency with-in 3 months from the date of
first disbursement.
27. At all times comply with the environmental, health, safety, Social (EHSS) an
d other requirements.
E. NEGATIVE COVENANTSDuring the currency of the term loans, the Borrower shall n
ot without prior approval of the Lenders, which would not be withheld unreasonab
ly:
1. Effect any change in the capital structure including shareholding pattern oth
er than as contemplated for this Project, which will result in the Long Term Deb
t Equity Ratio for the Borrower increasing beyond 3:1 (treating promoter s unsecur
ed loan, if any, as part of equity)
2. Create any Other Security Interest over the Project assets/ properties and co
ntracts.
3. The Borrower shall not undertake any new power projects as an SPV or as a sep
arate unit in the same company except as provided in the base case model or cape
x/ investment of Rs. 25 crore p.a. provided the financial covenants are not brea
ched.
4. Augment, modernize, expand or otherwise make material change in the scope of
the Project.
5. Make any material modifications to Project Contracts/ Agreements.
6. Formulate any scheme of amalgamation or reconstruction.
7. Enter into borrowing arrangements, either secured or unsecured, with any othe
r bank or financial institution, except for buyer s credit for the project, toward
s refinancing of the bullet installment of loan and for meeting its working capi
tal requirements and such additional financing as may have been approved by the
Lenders.
8. Undertake guarantee obligations on behalf of any other person except in the o
rdinary course of business.
9. Sell, assign, mortgage or otherwise dispose off any of the fixed assets charg
ed to the Lenders in excess of Rs. 25 crore in a financial year.
10. Monies brought in by the promoter/ directors/ associate companies as loans/
share application money pending allotment as part of promoters contribution brou
ght in towards the funding of the proposed project shall be subordinated to the
loans of the Lenders, and shall not be repaid during the currency of the loans b
y the Lenders, and may carry such interest as approved by the Lenders. F. DOCUM
ENTATIONIn addition to the terms and conditions contained in this Term Sheet, at
the time of documentation the Borrower will also have to comply with other cust
omary/ additional stipulation/ clauses such as, Financial covenants, Representat
ion & Warranties from the Borrower, Conditions Precedent to the effectiveness of
the loan and condition precedents to each disbursement, Affirmative covenants b
y Borrower, Negative Covenants, Additional Covenants, Information Covenants, Eve
nts of Defaults by the Borrower and the Consequences of the Event of Default, Cr
oss Defaults, RBI disclosure norms, as applicable, etc.

ANNEXURES
Annexure I
Financial results of Sterlite Energy Limited
(A) Detailed Analysis of Profit & Loss Statement
(Rs. in Crore)
For the year ended31-Mar-0731-Mar-0831-Mar-09Income0.000.000.00ExpenditureManufa
cturing Exps- - Salaries & wages0.68 2.74 6.45Selling & distribution- -
Administrative & General Expenses0.78 2.26 3.67Premium on redemption of preferen
ce shares--2.48Less: Expenditure (net) to CWIP 1.49 20233.3Total(0.02)(14.99)(22
0.70)PBDIT0.02 14.99 220.70 Depreciation0.00 0.120.2Interest on term loans & wor
king capital loan- 3.12 38.4Bank & other finance charge1.01 15.57196.75Total I
nterest1.01 18.69 235.15 Profit before other income(0.99)(3.82)(14.65)Other inco
me (non operational)1.34 3.826.13PBT0.35 - (8.52)Tax0.06 - - Deferred Tax
- - - PAT0.29 - (8.52)Preference Share dividend0.02 0.02 0Tax on Dividen
d0.00 0.000Retained Earnings0.27 (0.02)(8.52)Gross Cash Accruals0.29 0.12 (8.32)
Net Cash Accruals0.27 0.10 (8.32)
(B) Detailed Analysis of Balance Sheet
(Rs. in Crore)
As on31-Mar-0731-Mar-0831-Mar-09Sources of FundsShareholder's FundsEquity share
capital0.49 1186.491186.49Preference share capital0.80 0.80 0.80 Share Applicati
on Money--1,335.00Reserves and Surplus28.78 26.27 217.16 Less: Revaluation Reser
ve- - - Less Misc. expenditure not written Off- - - Deferred Tax Lia
bility---Net Worth30.07 1,213.56 2,739.45 Loan FundsTerm Loans & Debentures586.0
0 - - WC Borrowing - Secured Buyer's Credit--199.81Unsecured Loans - Buyer's
credit & short term loan from bank- 304.67 1,395.27 Sub Total586.00 304.67 1,
595.08 Current Liabilities & Provisions9.27 155.03 626.64 Total625.35 1,673.26 4
,961.17 Application of FundsFixed AssetsGross Block6.54 10.67 9.49 Less: Revalua
tion Reserve- - - Less: Accumulated Depreciation0.00 0.12 0.33 Net Block6.
54 10.55 9.16 CWIP609.28 1,556.99 4,052.65 Total615.82 1,567.54 4,061.81 Investm
ents8.53 96.78 193.59 Current AssetsInventories- - - Sundry Debtors- -
- Cash & Bank Balance0.37 8.85 195.92 Loans & Advances0.63 0.10 509.85 Sub To
tal1.00 8.95 705.77 Total625.35 1,673.27 4,961.17
Annexure II
Consolidated Financial results of Sterlite Industries (India) Limited
Detailed Analysis of Profit & Loss Statement
(Rs. in Crore)
For the year ended31-Mar-0731-Mar-0831-Mar-09IncomeNet Sales24,387 24,705 21,144
Other Income (operational)- - - Changes in stock383 99 (279)Total24,770 2
4,804 20,865 ExpenditureManufacturing & other expenses14,058 15,453 14,698 Perso
nnel549 659 756 Selling & distribution385 408 392 Administrative & General Expen
ses365 456 315 Pre operative expenses of project(46)(41)- Total15,311 16,936 1
6,161 PBDIT9,459 7,868 4,704 Depreciation804 595 701 Interest on term loans & wo
rking capital loan360 297 376 Bank & other finance charge19 22 22 Total Interest
379 319 397 Profit before other income8,276 6,955 3,606 Other income (non operat
ional)682 1,566 2,154 Profit before tax & prior period adjustment8,958 8,521 5,7
60 Extra- ordinary itemsAdv to subsidiaries w/off, Impairment of FA & Unrecovera
ble loans w/off- - (79)Loss on sale of Power Trans. Line Division4 - - V
oluntary retirement scheme20 - - Losses, W/offs & Provision for Investments
& Loans133 53 24 PBT8,800 8,468 5,816 Tax2,303 1,869 788 Deferred Tax 167 234 67
PAT6,330 6,365 4,961 Proposed dividend386 464 309 Retained Earnings5,944 5,901
4,651 Gross Cash Accruals7,301 7,194 5,728 Net Cash Accruals6,916 6,730 5,419
Detailed Analysis of Balance Sheet
(Rs. in Crore)
As on31-Mar-0731-Mar-0831-Mar-09Sources of FundsShareholder's FundsEquity share
capital112142142Preference share capital000Reserves and Surplus98702216125471Les
s: Revaluation Reserve000Less Misc. expenditure not written Off000Deferred Tax L
iability91713541408Net Worth108992365627021Minority Interest362656236813Loan Fun
dsTerm Loans & Debentures15268971467Working capital Borrowings0637253Unsecured L
oans308535405293Sub Total461050757014Current Liabilities & Provisions48645040420
5Total239993939445053Application of FundsFixed AssetsGross Block126411456415387L
ess: Revaluation Reserve000Less: Accumulated Depreciation432445885155Net Block83
18997510232CWIP140024616979Total97181243717210Investments52221629416206Current A
ssetsInventories280933342459Sundry Debtors16521562876Cash & Bank Balance11132454
5505Loans & Advances348433142715Interest Accrued on investment1081Sub Total90591
066311636Total239993939445053
Annexure III
Key Assumptions underlying the Projections for the Project
The financial model has been developed for the project on a stand alone basis.
1. Exchange Rate Assumptions
* Base USD Exchange Rate: Rs. 47.00 / USD
* Rupee Depreciation every year against the US $ (During Construction Period): 0
.40%
* Rupee Depreciation every year against the US $ (During Operations Period): 0.4
0%
2. Timeline for Project - Unit wise
ParticularsUnit 1Unit 2Unit 3Capacity (MW)660660660Construction Start Date (NTP
of EPC)1 Oct 091 Oct 091 Oct 09No. of Months of Construction414448CoD1-Mar-131-J
un-131-Oct-13No. of months in first year of operations1106End of Life of Unit1-M
ar-381-Jun-381-Oct-38
3. Assumptions for Profit & Loss Statement:
Tariff AssumptionsLevellised Capacity Charge for sale of entire contracted capac
ity to PSEBRs 1.21Variable ChargeAs per the PPA contract the entire coal consump
tion considering a Net Station Heat rate of 2400 Kcal/KwH is pass through on act
ual basis Incentive payment in case of plant availability exceeds 85%40% of quot
ed non-escalable Capacity Charge, subject to a maximum of Rs. 0.25 / kwhDiscount
ing rate for calculation of levelized tariff10.49%

O& M ExpensesO&M Expense assumed for the proposed project (Lacs /MW) for 2009-1
0 11.70 Efficiency assumed with respect to CERC parameters60%O&M Expense annual
Escalation 4%
Working Capital Norms Receivables (Months)1Coal Inventory (Months)1.5Fuel Oil In
ventory (Months)2O & M Expenses (Months)1Maintenance Spares as % of O&M expense
s20%Interest on Working Capital11.50%Margin Money for WC25%
Depreciation & TaxDepreciation Rate Companies Act5.28%Maximum depreciable value
as per Companies Act95%Depreciable Life25 years Depreciation Rate as per IT act1
5%Additional depreciation for 1st year20%Minimum Alternate Tax Rate*17.00%No. of
 years of Tax holiday out of the block of 15 years (u/s 80IA)10Normal Tax Rate*3
3.99%Other DutiesCustoms Duties under project Import5%Countervailing Duty10%SAD
(Special Additional Duty)4%Education Cess3%Service Tax10%
* Calculated assuming a 10% surcharge on tax and a 3% education cess levied by
the Government of India.
4. Debt Assumptions
RTL
(Indian Banks & LIC)FCL/ECB
(IIFCL UK)Moratorium (Qtrs from Plant CoD)22Repayment %65%65%Repayment (Qtrs)424
2Interest rate - During construction11.25%8.00%Int rate - Post Construction11.25
%8.00%DSRA (Qtrs)11
5. Operational Parameter Assumptions
Plant Operating Parameters Assumptions
The operational parameters assumed for the purpose of the financial model are su
mmarised as follows:
Operational ParameterPlant Capacity in MW1,980Availability90%Stabilisation Perio
d6 monthsPlant Load Factor-During Stabilisation80%Plant Load Factor -After Stab
ilisation85%Auxiliary Consumption7%Available hours in a year8760Gross Station He
at Rate (kcal / kWh) 2,067SHR Degradation1% every 10 years
Fuel Assumptions
Fuel Assumptions for the plant are summarized as follows:
Fuel AssumptionsGross Calorific Value (Avg. F Grade Coal in kcal / kg )4,095Basic C
oal Price AT Pit Head (Rs./ MT) as on 23 June 2008440Additional Charges (Steam
Coal, Sizing, transportation from pit till loading point)275Coal Price Escalatio
n 6.77% p.a.Basic Coal Cost (inclusive of Additional Charges) on CoD of Unit 197
7.42Fuel Handling charges 10Transportation Cost (Rs. / MT)1,295Transportation Es
calation0.54% p.a.Royalty (Fixed) 55Royalty Ad-Valorem (as % of Base Price of R
OM at Pit Head)5%Landed Cost of Coal on CoD 2401.48Secondary Fuel Oil (Rs. per k
l ) 25,000Escalation factor for fuel oil p.a.3%Fuel oil Consumption (ml/kWh) in
the 1st year of operation of a Unit1Fuel oil Consumption (ml / kWh) from 2nd yea
r onwards0.3
6. Other Assumptions
Other pertinent assumptions for the purpose of the financial model are as follow
s:
* Interest on Debt Service Reserve Account: 7% p.a
* Interest on Current Year s Excess Cash (not on the cumulative cash balance):
5% p.a

Annexure IV (Up to Refinance )

(A 1) Projected Profit and Loss Account
(figures in crore)
FY Ending on 31 March Mar-10Mar-11Mar-12Mar-13Mar-14Mar-15Mar-16Mar-17Mar-18Mar-
19Mar-20Mar-21Mar-22Mar-23Mar-24Mar-25Net Units Generated (Million Units)---3541
0,25213,71113,71113,71113,71113,71113,71113,71113,71113,71113,71113,711Revenue F
rom Tariff ---982,8483,7893,8313,9073,9773,9183,9514,0274,0874,1844,3014,425Ince
ntive Income---1253333333230292827272727Total Bill Amount---992,8723,8223,8643,9
404,0103,9483,9804,0554,1154,2114,3284,452Net Operational Income---992,8723,8223
,8643,9404,0103,9483,9804,0554,1154,2114,3284,452Interest Income on Cash----1599
1011989991010Interest Income DSRA----102019181717161514141312Total Revenue---992
,8973,8513,8923,9694,0383,9734,0044,0794,1384,2344,3504,474Fuel Cost---471,4071,
9291,9942,0622,1352,2132,2962,3832,4772,5842,7082,822O&M Expense---5132176183190
198206214223231241250260Total Expenditure---521,5382,1052,1772,2532,3332,4192,51
02,6062,7082,8252,9583,082PBDIT---471,3591,7461,7161,7161,7051,5551,4951,4731,43
01,4091,3921,392Interest on RTL---13436556520485449414378343307272236200Interest
on FCL---41211491401311221131039485756656Total Long Term Interest---17556704660
615571526481437392347302256Interest on Unsecured Loans (Quasi Equity)-----117117
117117117117117117117117117Interest on WC---1385253555657586062646668FERV on FCL
Repayment-----22334455567PBDT---28764872884926958851835856855876901944Depreciat
ion---13362468468468468468468468468468468468PBT---154024044164594903843673883874
08434477Current Tax ---3686971788365626666697481Deferred Tax---36869492913(1)(13
)(23)(31)(38)(45)(50)PAT---10265267297351394319317345352377404446
(B 1) Projected Cash Flow Statement (upto refinancing)
(figures in crore)
Cash Flow StatementMar-10Mar-11Mar-12Mar-13Mar-14Mar-15Mar-16Mar-17Mar-18Mar-19M
ar-20Mar-21Mar-22Mar-23Mar-24Mar-25Cash Inflow€€€€€€€€€€€€€€€€Equity350(0)224453138--------
224453138-----------RTL06888622,717831-------- ---FCL1576491,0833------------I
ncrease in WC loan---131297261013135111514182120PAT---10265267297351394319317345
352377404446Depreciation---13362468468468468468468468468468468468Differed Tax---
36869492913(1)(13)(23)(31)(38)(45)(50)Total Cash Inflow8561,3372,3923,7832,10082
9823861887791784804803825848884Cash OutflowCapex8561,3372,3923,6261,108---------
--Repayment of RTL-----316316316316316316316316316316336Repayment of FCL-----117
117117117117117117117117117125Increase in Current Assets---175396351317177152019
242827Total Cash Outflow8561,3372,3923,8021,503468446450450440448452452457461488
Cash Surplus---(18)597361377412438352336352352368388396Opening Cash Balance----(
18)2916059351,2991,6901,9942,2832,5882,8923,2133,554Cash Available for DSRA (Ope
ning Cash + Cash Surplus)---(18)5796529821,3461,7372,0412,3302,6352,9393,2603,60
13,950Transfer to DSRA----288(11)(11)(11)(11)(11)(11)(11)(11)(11)(11)2Dividend P
ayout-----58585858585858585858-Closing Cash---(18)2916059351,2991,6901,9942,2832
,5882,8923,2133,5543,948

(C 1) Projected Balance Sheet and Ratios (upto refinancing)

(figures in crore)
Balance Sheet & RatiosMar-10Mar-11Mar-12Mar-13Mar-14Mar-15Mar-16Mar-17Mar-18Mar-
19Mar-20Mar-21Mar-22Mar-23Mar-24Mar-25Liabilities€€€€€€€€€€€€€€€€Equity3503505731,0271,1651
1651,1651,1651,1651,165 1,165 1,165 Quasi Equity3503505731,0271,1
651,1651,1651,1651,1651,1651,1651,1651,1651,165 1,165 1,165 Reser
ve & Surplus---102754847221,0151,3511,6121,8712,1582,4522,771 3,117
3,563 Net Worth6996991,1462,0632,6052,8143,0523,3453,6813,9424,2014,4884,7825
,101 5,447 5,893 RTL06881,5504,2675,0974,7824,4664,1513,8353,5203
,2042,8882,5732,257 1,942 1,606 FCL1578071,8901,8931,8931,7761,65
81,5411,4241,3071,1901,073955838 721 596 Total Senior Long
Term Debt1571,4953,4396,1596,9906,5576,1255,6925,2594,8264,3943,9613,5283,096
2,663 2,202 Total Debt1571,4953,4396,1596,9906,5576,1255,6925,2594,
8264,3943,9613,5283,096 2,663 2,202 WC Borrowings---1314284544644
77490495506521535553 574 595 Differed tax Liability---37114
0188217230229217194163124 80 30 Total Sources8562,194
4,5868,35710,0949,9659,8299,7329,6609,4939,3189,1649,0088,8748,7648,719Assets€€Gross
Block8562,1944,5868,2129,3209,3209,3209,3209,3209,3209,3209,3209,3209,320
9,320 9,320 Accumulated Depreciation---133758431,3111,7782,2462,7143,1
823,6494,1174,585 5,053 5,520 Net Block8562,1944,5868,2008,9458,4
778,0097,5427,0746,6066,1385,6715,2034,735 4,267 3,800 Net Curren
t Assets---175571606619636653660675695714738 766 793 DSRA--
--288277266255244233222210199188 177 178 Cash---(18)2916059
351,2991,6901,9942,2832,5882,8923,2133,5543,948Total Uses8562,1944,5868,35710,09
49,9659,8299,7329,6609,4939,3189,1649,0088,8748,7648,719
(D 1) Projected Debt Service Coverage Calculations
(figures in Rs. crore)
31-Mar-1031-Mar-1131-Mar-1231-Mar-1331-Mar-1431-Mar-1531-Mar-1631-Mar-1731-Mar-1
831-Mar-1931-Mar-2031-Mar-2131-Mar-2231-Mar-2331-Mar-2431-Mar-25PAT0.000.000.001
0.23265.21266.55296.69351.43393.99319.41317.19344.58352.50377.47404.48445.57Depr
eciation0.000.000.0012.79362.48467.72467.72467.72467.72467.72467.72467.72467.724
67.72467.72467.72Interest on LT Loans0.000.000.0017.40556.38704.45660.01615.4957
0.90526.23481.48436.67391.77346.80301.75255.88Interest on Unsecured Loans (Quasi
Equity)0.000.000.000.000.00116.50116.50116.50116.50116.50116.50116.50116.50116.
50116.50116.50FERV on FCL Repayment0.000.000.000.000.001.622.102.573.053.534.024
.504.995.485.976.89Differed tax0.000.000.002.6368.2868.6348.5129.3112.99-0.88-12
.67-22.70-31.22-38.46-44.61-49.84Total Cash Available (A)0.000.000.0043.061252.3
51625.471591.521583.031565.151432.511374.241347.281302.261275.511251.811242.72Re
payment0.000.000.000.000.00432.71432.71432.71432.71432.71432.71432.71432.71432.7
1432.71461.01Interest on LT Loans0.000.000.0017.40556.38704.45660.01615.49570.90
526.23481.48436.67391.77346.80301.75255.88FERV on FCL Repayment0.000.000.000.00
0.001.622.102.573.053.534.024.504.995.485.976.89Total cash required (B)0.000
.000.0017.40556.381138.791094.821050.781006.66962.48918.22873.88829.47784.99740.
43723.78DSCR---2.472.251.431.451.511.551.491.501.541.571.621.691.72MDSCR (Upto r
efinance)1.43ADSCR1.57MDSCR (Overall)1.43ADSCR1.66
Annexure IV - After Refinancing
(A 2) Projected Profit and Loss Account (FY 2026 to FY 2030)
(figures in Rs. crore)
FY Ending on 31 March Mar-26Mar-27Mar-28Mar-29Mar-30Net Units Generated (Million
Units)13,71113,71113,71113,71113,711RevenueRevenue From Tariff 4,4674,6094,7434
,9024,948Incentive Income2525252523Total Bill Amount4,4934,6344,7674,9274,971Net
Operational Income4,4934,6344,7674,9274,971Interest Income on Cash89101114Inter
est Income DSRA12111094Total Revenue4,5134,6544,7884,9474,989ExpenditureFuel Cos
t2,9423,0713,2083,3543,509O&M Expense271282293305317Total Expenditure3,2133,3533
,5013,6583,826PBDIT1,3001,3021,2871,2891,163Total Long Term Interest205154103526
Interest on Unsecured Loans (Quasi Equity)117117117117117Interest on WC707376798
1LC Charges on DSRA-----FERV on FCL Repayment889105PBDT9009509831,033954Deprecia
tion468468468468468PBT432482515565486Current Tax 73828896159Deferred Tax(30)----
PAT389400427469328
(B 2) Projected Cash Flow Statement After Refinancing
(figures in Rs. crore)
Cash Flow StatementMar-26Mar-27Mar-28Mar-29Mar-30Cash Inflow€€€€€Equity-----Quasi Equity--
---RTL-----FCL-----Increase in WC loan1623232620PAT389400427469328Depreciation46
8468468468468Differed Tax(30)----Total Cash Inflow842891919963815Cash OutflowCap
ex-----Repayment of RTL357357357357178Repayment of FCL13213213213266Increase in
Current Assets2131313526Total Cash Outflow511520521524271Cash Surplus33237139843
9544Opening Cash Balance3,9484,2344,5604,9125,306Cash Available for DSRA (Openin
g Cash + Cash Surplus)4,2804,6054,9585,3515,850Transfer to DSRA(13)(13)(13)(13)(
127)Dividend Payout5858585858Closing Cash4,2344,5604,9125,3065,919

(C 2) Projected Balance Sheet and Ratios After Refinancing

(Figures in Rs. crore)
Balance Sheet & RatiosMar-26Mar-27Mar-28Mar-29Mar-30Liabilities€€€€€Equity1,1651,1651,1651
,1651,165Quasi Equity1,1651,1651,1651,1651,165Reserve & Surplus3,8934,2354,6045,
0155,284Net Worth6,2236,5656,9347,3457,614RTL-11,2498925351780RTL-2---00FCL-1464
331199660FCL-2---00Total Senior Long Term Debt1,7131,2237342450Sub-debt-----Tota
l Debt1,7131,2237342450WC Borrowings611634657683703Differed tax Liability-----To
tal Sources8,5468,4228,3258,2738,317AssetsGross Block9,3209,3209,3209,3209,320Ac
cumulated Depreciation5,9886,4566,9237,3917,859Net Block3,3322,8642,3971,9291,46
1Net Current Assets814845876911938DSRA166153140127-Cash4,2344,5604,9125,3065,919
Total Uses8,5468,4228,3258,2738,317

Annexure V
Salient Features of the Engineering, Procurement and Construction (EPC) contract
and the Contract Amendment entered into with SEPCO:
The scope of work under the full EPC Contract shall inter alia include design, e
ngineering, procurement, manufacture, supply, storage at site, construction, ere
ction and installation, project management, testing, commissioning and handing o
ver the Project to SEL/TSPL. The EPC Contractor would perform all start up tests
and performance tests as envisaged in the bid documents. In a nutshell, the EPC
Contractor shall have the single point responsibility for successful performanc
e of the EPC Contract.
For offshore contract, Contract Price will be on CFR basis and for onshore contr
act it will be excluding freight, transit insurance charges, taxes and duties (i
f applicable) and same will be paid pro-rata as per billing schedule.
Performance Guarantees
1. Unit heat rate (at generator terminals): 2222.80 Kcal/KWh
2. Net Unit Output for each unit: 611.82 MW
Where,
Net Output = [Power at STG terminals-NAPC (Net
Auxiliary Power Consumption)
Transformer losses]
Minimum Acceptance Criteria
1. Unit Net heat rate (at generator terminals): 2278.38 Kcal/KWh
2. Net Unit Output for each unit: 596.52 MW
Liquidated Damages
In case of any failure whatsoever towards meeting the Completion Schedule and to
wards establishing Performance Guarantees, Supplier/Contractor will be liable to
pay Liquidated Damages, and not by the way of penalty, in accordance with the r
espective clauses of the individual contracts. However, the period can be extend
ed with mutual agreement. Further, Payment or deduction of Liquidated damages sh
all in no way relieve the Supplier from completing the Works and discharging all
its obligations under the Contract.
Liquidated damages payable for failure to adhere to the completion schedule woul
d be restricted to the 10% of the Total Contact Price. While Liquidated damages
payable for failure in establishing Performance Guarantees would be restricted t
o the 10% of the Total Contact Price. Maximum Liquidated damages cannot be more
than 17.5% of the Total Contact Price.
ONSHORE SUPPLY CONTRACT
Scope
Scope includes, but not limited to, manufacture, shop inspection, testing, packi
ng, forwarding, inland transportation and delivery of Plant & Equipment includin
g commissioning spares, Operation and maintenance spares, initial fill of lubric
ants, chemicals & consumables, special tools and tackles, on FOR Site basis. The
scope will also include demonstration of performance guarantees as specified.
Payment Terms
1. 10% Advance submission of Advance BG of equal amount and performance BG of 10
% contract price.
2. 70% against receipt for onshore supplies.
3. 5% against first synchronization
4. 10% against successful completion of Reliability run.
6. 5% against successful completion of PG test (prorated for each unit except fo
r the 3rd unit which shall be released after demonstration of Integrated Perform
ance of all the units.
ONSHORE SERVICES & CONSTRUCTION CONTRACT
Scope
Scope includes but not limited to
> Custom clearance, port clearance, inland transportation of offshore as well as
onshore plant and equipment, unloading, storage and preservation for all equipm
ent and material required for the facility as a whole
> Shop inspection of onshore plant and equipment (mechanical, electrical, instru
mentation & controls, refractory, utility services, associated facilities etc.)
> Infrastructure and all civil works including 275 meter high chimney(s), in pla
nt roads, drainage and sewage systems, site clearances, levelling, assistance to
Owner with the necessary data, drawings and details etc. as may be required for
statutory clearance to be procured by the Owner
> All erection work including site supervision and inspection, pre-operational c
hecking, starting, calibration, system balancing, hooking up with existing syste
m, all commissioning activity including start up, trial run, Reliability Run and
activities relating to Performance Guarantees Tests
Payment Terms
1. Civil Works
a) 10% Advance submission of Advance BG of equal amount and performance BG of 10
% contract price.
b) 10% against completion of all ABCD row main column foundations
c) 10% on completion of chimney including inside flues
d) 10% on completion of turbine pedestals
e) 5% on completion of all UAT & GT and Station transformer foundations
f) 5% on completion of side concrete wall of Track hopper
g) 5% on completion of entire Track hopper.
h) 5% on completion of Crusher house building.
i) 10% on completion of Boiler foundation
j) 5% on completion of operating floor slab of AB bay
k) 5% on completion of control rooms.
l) 10% against completion of cooling towers
m) 5% against final finishing of all building and roads.
n) 5% against successful completion of PG test (prorated for each unit except fo
r the 3rd unit which shall be released after demonstration of Integrated Perform
ance of all the units.
2. Erection and Commissioning
a) 10% Advance submission of Advance BG of equal amount and performance BG of 10
% contract price.
b) 5% on completion of first layer of boiler structure lifting
c) 10% on boiler drum lifting
d) 10% on placement of generator stator
e) 10% on turbine box up
f) 10% on boiler hydro test
g) 15% on boiler light up
h) 10% on back charging of Station Transformer and 6.6 KV switchyard
i) 5% against first synchronization
j) 10% against successful completion of reliability run
k) 5% against successful completion of PG test (prorated for each unit except fo
r the 3rd unit which shall be released after demonstration of Integrated Perform
ance of all the units.
OFFSHORE SUPPLY CONTRACT
Scope
Scope includes, but not limited to, manufacture, shop inspection, testing, seawo
rthy packing, forwarding, inland transportation and delivery of Plant & Equipmen
t including commissioning spares, Operation and maintenance spares, initial fill
of lubricants, chemicals & consumables, special tools and tackles, on Cost & Fr
eight (CFR) Indian Sea Port basis. The scope will also include demonstration of
performance guarantees as specified.
Payment Terms
1. 10% Advance submission of Advance BG of equal amount and performance BG of 10
% contract price.
2. 60% against despatch of offshore supplies on prorata basis as per billing sch
edule to be approved by the purchaser.
3. 10% against receipt for offshore supplies.
4. 5% against first synchronization
5. 10% against successful completion of Reliability run.
6. 5% against successful completion of PG test (prorated for each unit except fo
r the 3rd unit which shall be released after demonstration of Integrated Perform
ance of all the units.
OFFSHORE ENGINEERING & TECHNICAL SERVICES CONTRACT
Scope
Scope includes but not limited to
> System design and Design & Engineering of Plant & equipment as per technical
Specifications
> Supervision of civil, structure and manufacturing work of contractor s affiliate
s or sub-contractors
> Interfacing, integration, synchronization, trial run and demonstration of Perf
ormance Guarantee of all the units
> Training of Owner s personnel in China and onsite training
Payment Terms
1. 10% Advance submission of Advance BG of equal amount and performance BG of 10
% contract price.
2. 5% against approval of basic engineering drawings after incorporating all the
comments by the Owner.
3. 15% on approval of boiler pressure part design by IBR Authorities.
4. 15% on approval of all piping drawings by IBR authorities.
5. 35% on mechanical completion of the first unit.
6. 5% against first synchronization
7. 10% against successful completion of Reliability run.
8. 5% against successful completion of PG test (prorated for each unit except fo
r the 3rd unit which shall be released after demonstration of Integrated Perform
ance of all the units.

Annexure VI
EPC Contractor and BTG Supplier - CREDENTIALS
1. EPC Supplier - (SEPCO)
Shandong Electric Power Construction Corporation (SEPCO) is a professional elect
ric power engineering enterprise in People s Republic of China, which is mainly en
gaged in contracting thermal power plant, nuclear power plant, gas-fired power p
lant, hydropower station, wind power station and biological power station. SEPCO
owns scientific management system, advance construction and a large amount of p
owerful equipment and enjoys striking achievements. The Company has a profession
al team with rich international experience and advanced technologies, of which 1
05 persons have the national first-class registered constructors certificates, an
d has more than one hundred strategic cooperation companies. Moreover, SEPCO pos
sesses two hundred and thirty-six of large-size construction machines such as CC
2500 500t crawler crane, CC2200 350t crawler crane, CC1400 250t crawler crane th
at enable the company to undertake several large-sized projects at the same time
. The company owns the qualification certificate of First-class General Contract
ing and Business Qualification Certificate for International Project Contracting
and Labour Service, Banking AAA Grade Credit and Standing AAA Grade for Enterpr
ise; it has passed the authentication of ISO9001 quality management system, ISO1
4001 environmental management system and OHSMS occupation health and safety mana
gement system.
Over the past twenty-one years, the Company has enjoyed high reputations for lot
s of achieved economic indexes, which had ranked the leading place in Chinese po
wer engineering industry. It has constructed as many as 40 large-sized and mediu
m-sized power plant projects ranging from 12MW to 1000MW with total installed ge
nerating capacity reaches 14000MW, which means the Company has the highest annua
l average installed capacity in China power engineering industry. SEPCO is also
one of the few electric power engineering companies that have experience in buil
ding 1000MW ultra-supercritical units. It has won Luban Prize ---the highest nation
al award for high construction quality---for three times, the makes the Company
one of the most winning companies in China. Furthermore, SEPCO has successfully
entered into the electric power markets in Nigeria, Indonesia and India; it is t
he earliest Chinese electric power engineering enterprise entering into the inte
rnational electric power market and is possessed of rich professional experience
in management and operation for international electric power projects. SEPCO is
capable of undertaking every kinds of power station such as coal-fired power st
ation, gas-fired power station, hydropower station, wind power station on the ba
sis of EPC, BOT, BOO or PMC etc.
SEPCO and Vedanta have now been associated for over a decade for various power p
rojects of the group. All the projects have been implemented within time and bud
get and strictly as per the technical specifications and at the same time no maj
or contractual issues have been encountered with SEPCO. Thus SEPCO also enjoys a
healthy relationship with Vedanta group.
Credentials of SEPCO:
No.The Name of the ProjectsType of UnitsCapacity of UnitsConstruction ScheduleTy
pe of the ContractsSite1 HYPERLINK "http://www.sepco3.com/english/gsyj_show.asp?i
d=51" Shandong Rizhao Electricity Generating Co., Ltd. 2×350MW unit Projectthermal p
ower300MW unit1997.3-2000.1Civil works + Installation worksRizhao, Shandong Prov
ince2 HYPERLINK "http://www.sepco3.com/english/gsyj_show.asp?id=59" Laicheng Power
Plant Phase ? 4×300MW unit 3 and 4 Projectthermal power300MW unit2000.11-2003.5Civ
il works of the main power building + Installation worksLaiwu, Shandong Province
3 HYPERLINK "http://www.sepco3.com/english/gsyj_show.asp?id=72" Weifang Power Plan
t 2×670MW Supercritical unit Projectthermal power600MW unit2004.3-Civil works + Ins
tallation worksWeifang, Shandong Province4 HYPERLINK "http://www.sepco3.com/engli
sh/gsyj_show.asp?id=75" Changdao Phase ? Wind Power Plantwind powerbelow 135MW uni
t2004.8-2004.9Installation worksChangdao, Shandong Province5 HYPERLINK "http://ww
w.sepco3.com/english/gsyj_show.asp?id=46" Weifang Power Plant Phase ??2×300MW unit
Projectthermal power300MW unit1991.5-1994.10Civil works + Installation worksWeifa
ng, Shandong Province6 HYPERLINK "http://www.sepco3.com/english/gsyj_show.asp?id=
89" Bandung 1×30MW Power Station in Indonesiathermal powerbelow 135MW unit2006.4-Tec
hnical service + Equipment supplyBandung, Indonesia7 HYPERLINK "http://www.sepco3
.com/english/gsyj_show.asp?id=88" Palu 2×15MW Power Station in Indonesiathermal powe
rbelow 135MW unit2005.11-Technical service + Equipment supplyPalu, Indonesia8 HYP
ERLINK "http://www.sepco3.com/english/gsyj_show.asp?id=87" MPPL 1×135MW CFB Boiler
Power Plant in Indiathermal powerbelow 135MW unit2006.9-EPC projectsBikanera, Ind
ia9 HYPERLINK "http://www.sepco3.com/english/gsyj_show.asp?id=86" Jharsuguda 6×600MW
Power Plant in Indiathermal power600MW unit2006.5-EPC projectsJharsuguda, India1
0 HYPERLINK "http://www.sepco3.com/english/gsyj_show.asp?id=85" Jharsuguda 9×135MW P
ower Plant in Indiathermal powerbelow 135MW unit2005.11-EPC projectJharsuguda, In
dia11Zouxian Power Plantthermal power4×300MW
2×600MW
2×1000MW2007EPC projectChina12Weihai Power Plantthermal power2×125MW
2×300MW
SEPCO has implemented 660 MW super critical units in China, as per the list belo
w. Also, SEPCO by virtue of their long presence in India have good business rela
tions with civil & erection contractors such as L&T, Simplex, Petron who can be
sub-contracted by them for civil/erection jobs.
 EMBED Excel.Sheet.8 
2. BTG Suppliers
Boiler Supplier Harbin Boiler Company Limited, China
Harbin is one of the most diversified power equipment manufacturers in China wit
h a wide range of power products for coal-fired, hydro, nuclear and gas-fired un
its; it is also one of the two companies selected for production of third-genera
tion nuclear power equipment in China. It is engaged in the manufacture of equip
ments for thermal power stations (single unit capacity up to 1000 MW), hydro pow
er stations (single unit capacity up to 700 MW) and nuclear power main equipment
. In 2006, the annual production volume of Harbin s power generating unit was more
than 27,000 MW. The company is the largest utility boiler manufacturer in China
and is one of the first national first-class enterprises. It deals in manufactu
ring of 600 MW & 300 MW utility boiler as leading products and medium & small-si
zed utility boiler, industrial boiler & heat recovery boiler, matching accessori
es & valves, large petrochemical vessels, nuclear power equipment, etc.

Turbine & Generator Dongfang Turbine Company Limited, China

Dongfang is a China state-owned company specialized in power equipment manufactu
ring and worldwide power projects contracting for thermal, hydro, nuclear, wind,
gas turbine, combined cycle power plant and power distribution systems. With th
e strong capacity and leading technology, Dongfang represents the power equipmen
t industry level of China and has been nominated by the Chinese Central Governme
nt as one of the key state-owned enterprises concerning national economy.
Dongfang s annual manufacturing capacity on thermal power equipment more than 20,0
00MW. Dongfang s major products on thermal power nowadays focus on 1000MW, 600MW a
nd 300MW unit capacity. Dongfang s hydro products manufacturing capacity reaches 3
500MW per year, covering five types ranging from 1MW to 700MW. Dongfang is dedic
ated to develop the Nuclear power, wind power, solar power, come as significant
portion in Dongfang s product chains.
Dongfang has engaged into the power project contracting for more than 20 years.
Relying on the experienced project management team and strict quality assurance,
Dongfang gains trust from power authorities of countries and builds internation
al reputation. Dongfang is willing to serve for the worldwide customers, either
under turn-key contracting, or EPC contracting for portion project, or equipment
package contracting, or equipment supply. It is one of the World TOP 225 Intern
ational Contractors as Published by Engineering News Record, USA
Shanghai Electric Group Company Limited (SEC)
Shanghai Electric Group Company Limited (SEC), China is engaged in the design, m
anufacture and sale of products and the provision of related services in the pow
er equipment, electromechanical equipment, transportation equipment and environm
ental protection industries.
The company recorded revenues of CNY56.44 billion (approximately USD8.23 billion
) during the fiscal year ended December 2007. The profit after tax was CNY4.30
billion (approximately USD0.63 billion) in fiscal year 2007.
The Power Generation Business Unit of SEC specializes in manufacturing, supplyin
g and contracting of equipment for fossil-fuelled, hydraulic and nuclear power g
eneration. It also manufactures large sized metallurgical and mining equipment,
heavy chemical industry equipment, industrial boiler, motor, electrical equipmen
t and automatic control system. SEC is the largest manufacturer of power generat
ion equipment in China, whose main products include 125 MW, 300 MW and 600 MW fo
ssil fuelled power generator sets, as well as 300 MW & 600 MW nuclear power gene
rator sets. SEC has been accredited with the international ISO 9001 Quality Assu
rance System and is authorized to apply ASME stamp on the pressure vessels.
In 1988, after intense competition, the bidding group headed by SEC won the EPC
contract of 2 x 300 MW Wujing Second Thermal Power Project financed by World Ban
k which were put into commercial operation at the end of 1991 / 1992. In 1992, S
EC undertook the 320 MW fossil fuel generating unit project for Muzaffargarh Pow
er Plant in Pakistan, which was commenced operation in December 1997.
SEC is the supplier for the 2 x 300 MW capacity Boiler-Turbine-Generator package
to the Yamuna Nagar project of HSEB (Rel Infra is the EPC Contractor).
Amongst 3 largest Chinese power equipment makers, SEC has the strongest capabili
ty in terms of delivering whole services packages, including design, constructio
n and after sale service. SEC has recently completed Phase I of its new plant at
Lingang. The new plant would greatly enhance SEC s capability on new model power
equipment manufacturing. This new plant would increase its power equipment manuf
acturing capability by 30 %.
Annexure VII - Key Terms of Project Documents
1. Power Purchase Agreement (PPA)
TSPL has entered into a PPA with Punjab State Electricity Board (PSEB) (the Proc
urer) for sale of power generated by TSPL (the Seller).
The salient features of the Agreement are produced below:
Term
The Agreement is to be effective for a period of 25 years (Initial Term) from Co
mmercial operation date (COD) of the Power Station. The term of the Agreement ma
y be extended beyond this Initial Term on mutually agreed terms for a mutually a
greed period. The scheduled COD is to be extended by the duration of any Force M
ajeure Event occurring during the construction period.
Conditions Subsequent
Simultaneously with the execution of the agreement, TSPL has provided to the Pro
curers, Performance Guarantee from any of the banks in the list of banks provide
d in the RFP, of an aggregate amount of Rupees One Hundred Fifty Crore only. Thi
s Performance Guarantee shall be valid till 3 months after the scheduled COD of
the project, and it shall be extended from time to time to be valid up to 3 mont
hs after the Actual COD of the project. Such a Performance Guarantee shall be re
duced by an aggregate amount of Rupees One Hundred Crore on infusion of at least
30% of the total equity required into the project.
Seller s Obligations:
TSPL is required to duly perform and complete the following activities within 12
months from the Effective Date i.e. the date of signing of the PPA with the las
t Procurer or 14 months from the date of issue of Letter of Intent, whichever is
later:
o Award the EPC Contract or main contract for BTG, for the project, and give to
such contractor an irrevocable Notice of Proceed
o Shall send a written notice to the Procurer indicating the Contracted Capacit
y and Gross Capacity for the each Unit and for Power Station as a whole expresse
d in MW
o In case the project is to be developed on the books of the Bidder, complete th
e execution and delivery of the Financing Agreements for at least 25% of the deb
t required for the Project, as certified by the Lenders
o In case the project is developed on a non-recourse basis, achieve the financia
l closure
o Make available to the Procurer the data with respect to the Project for design
of Interconnection Facilities and Transmission Facilities, if required;
o Finalise the specific delivery point for supply of power in consultation with
the Procurer;
o Taken the possession of the land for the Power Station and have paid the remai
ning Declared Price of the Land, if any to the State Government authority acquir
ing the land,
Procurer s Obligations:
Initial Consents
i. Notification by Govt. of Punjab for acquisition of land under the Land Acquis
ition Act;
ii. Environmental Clearance;
iii. Long term coal linkage
iv. Water linkage
Within six months from the Effective Date the Procurer shall Obtaining order of
the Appropriate Commission adopting the Tariff under Section 63 of the Electrici
ty Act, 2003.
Procurer s obligations - During operation period:
a. Procuring the interconnection and transmission facilities to enable the conne
ction not later than scheduled connection date
b. Provide connection for start up power
c. Shall be responsible for payment of Transmission Charges and RLDC/SLDC charge
s
d. Make available all reasonable arrangements for evacuation of infirm power, ba
sed on availability of transmission lines
Tariff
As per Schedule 7 of the PPA signed between TSPL and Procurers, the tariff is to
be paid in two parts comprising of:
* Capacity charge based on plant availability (full capacity charge recoverable
at 80% availability); and
* Energy charge based on actual net generation.
The tariff schedule is as follows:

Contract YearCommencement Date of Contract YearEnd Date of Contract YearQuoted N

on-Escalable Capacity Charges (Rs./kwh)Quoted Escalable Capacity Charges (Rs./kw
h)Quoted Heat Rate (Kcal/kwh)1Scheduled COD of first Unit31-Mar1.2590.095240021-
Apr31-Mar1.255Same as aboveSame as above31-Apr31-Mar1.232Same as aboveSame as ab
ove41-Apr31-Mar1.205Same as aboveSame as above51-Apr31-Mar1.202Same as aboveSame
as above61-Apr31-Mar1.190Same as aboveSame as above71-Apr31-Mar1.074Same as abo
veSame as above81-Apr31-Mar1.025Same as aboveSame as above91-Apr31-Mar1.004Same
as aboveSame as above101-Apr31-Mar0.966Same as aboveSame as above111-Apr31-Mar0.
951Same as aboveSame as above121-Apr31-Mar0.946Same as aboveSame as above131-Apr
31-Mar0.941Same as aboveSame as above141-Apr31-Mar0.867Same as aboveSame as abov
e151-Apr31-Mar0.861Same as aboveSame as above161-Apr31-Mar0.843Same as aboveSame
as above171-Apr31-Mar0.837Same as aboveSame as above181-Apr31-Mar0.735Same as a
boveSame as above191-Apr31-Mar0.744Same as aboveSame as above201-Apr31-Mar0.787S
ame as aboveSame as above211-Apr31-Mar0.780Same as aboveSame as above221-Apr31-M
ar0.792Same as aboveSame as above231-Apr31-Mar0.760Same as aboveSame as above241
-Apr31-Mar0.769Same as aboveSame as above251-Apr31-Mar0.648Same as aboveSame as
above261-Apr25th anniversary of the Scheduled COD of first unit0.648Same as abov
eSame as above
The quoted levelised tariff is Rs. 2.864 / kwh.
Other details are as mentioned below:
* Contract Year Energy Incentive Payment
If the plant availability exceeds 85% in a Contract year, then an incentive at t
he rate of 40% of quoted non-escalable Capacity Charge, subject to a maximum of
Rs. 0.25 / kwh, would be allowed to TSPL on the energy corresponding to availabi
lity in excess of 85 %.
* Contract Year Penalty for Availability below 75 %
If the plant availability is less than 75 % in a Contract year, then TSPL would
pay a penalty at the rate of 20 % of the simple average Capacity Charge on the e
nergy corresponding to the difference between 75 % and availability during such
contract year
* Transmission/Wheeling Charges and Scheduling Charges
The payment of transmission charges shall be settled between the CTU / STU and t
he respective Procurer. The payment of scheduling charges to the respective noda
l agency (RLDC or SLDC) would be the responsibility of the Procurers
Billing and Payment
From the COD of the first Unit, Procurer shall pay the Seller the Monthly Tariff
Payment, on or before the Due Date, comprising of Tariff for every Contract Yea
r, determined in accordance with the PPA. All payments made by the Procurer sha
ll be appropriated by the Seller in the following order of priority:
1. towards Late Payment Surcharge, payable by the Procurer, if any;
2. towards earlier unpaid Monthly Bill, if any; and
3. towards the then current Monthly Bill.
In the event of delay in payment of a monthly bill by any Procurer beyond its du
e date, a late payment surcharge would be payable by the Procurer to TSPL at SBA
R+ 2 % on the outstanding amount, calculated on a daily basis for each day of de
lay
In the event that the payment is made by any Procurer before the due date i.e. 3
0th day after monthly bill is received by procurer, a rebate would be provided b
y TSPL to the respective Procurer. The rate of such a rebate ranges from 2.25 %
to 0 %, depending upon the date of the payment.
Seller shall open bank account [identified Place of Account designated by Lender
s] ( Designated Account ) for all tariff payments to be made by Procurer to the sell
er
Right to available Capacity and Scheduled Energy:
The entire Contracted Capacity of the Power Station shall be for exclusive benef
it of Procurer, however if the Available Capacity is not Dispatched/ availed by
the procurer, the seller shall be entitled to sell such Available Capacity witho
ut losing the right to receive Capacity Charges from the Procurer for such un-av
ailed Available Capacity. In such case sales realisation in excess of Energy Cha
rges shall be equally shared by Seller with the Procurer.
Payment Security Mechanism
Letter of Credit (LC): Each Procurer would provide to TSPL an unconditional, rev
olving and irrevocable LC, for an amount equal to 1.1 times the estimated averag
e monthly billing. TSPL may draw upon the LC in case of payment default by the P
rocurer.
If the Letter of Credit is insufficient to pay for the due payments to the Selle
r or is not replenished for the drawals made, then within a period of seven (7)
days from the date such shortfall in the Letter of Credit occurs, the Letter of
Credit shall be reinstated to the requisite amount specified in this Agreement,
and in the manner specified in the Default Escrow Agreement.
Collateral arrangement: Default Escrow Agreement and Agreement to Hypothecate Cu
m Deed of Hypothecation have been executed whereby each Procurer has agreed to h
ypothecate amounts deposited in Default Escrow Account and the incremental recei
vables.
Incremental Receivables: shall mean the amount of the Receivables, in excess of
the amounts which have already been charged or agreed to be charged in favour of
the Procurer s Financing Parties by way of a legally binding agreement, executed
prior to the Effective Date, provided such charge of the Procurer s Financing Part
ies shall be limited to the extent of their outstanding exposure (including comm
itments for exposure) as on the Effective Date.
The minimum revenue flow in any month in the Default Escrow Account is to be at
least equal to the amount required for Letter of Credit. TSPL has first ranking
charge on the revenues routed through Default Escrow Account and the incremental
receivables.
Third Party Sales on default: If the Procurer does not make the election to re
ceive the Default Electricity or a part thereof, within two (2) Business Days of
it being so offered, the Seller shall have the right to make available and sell
the Default Electricity or a part thereof to a third party which may be any con
sumer or any licensee under the Electricity Act, 2003;
If the Collateral Agreement is not fully restored by the Defaulting Procurer wit
hin thirty days of the non-payment by the defaulting Procurer, then TSPL would h
ave the option to sell 100 % of the contracted capacity.
In case of third party sales , the adjustment of the surplus revenue over Energy
Charge attributable to such electricity sold, shall be adjusted as under :
(a) the surplus up to the Tariff shall be used towards the extinguishment of the
subsisting payment liability of the defaulting Procurer towards the Seller; and
(b) the surplus if any above the Tariff shall be retained by the Seller.
Force Majeure
Consequences of a Force Majeure Event:
EventConsequences to TSPL
1Any Force Majeure
(Prior to COD of unit) Scheduled COD of that Unit would be extended for a reason
able period of time relative to the duration and impact of such Force Majeure Ev
ent.2Direct Non-Natural Force Majeure
(After COD of unit)Payment of Capacity Charges by Procurer calculated on deemed
Normative Availability of 80 %, and such a payment would be made by an increase
in the Capacity Charge to be paid after the cessation of such a Force Majeure ev
ent.3Direct Non-Natural Force Majeure
(Prior to COD of unit)The unit would be deemed to have been commissioned from th
e Scheduled COD, and the Procurer to make payments of Capacity Charges, calculat
ed on Normative Availability, and such a payment would be made by an increase in
the Capacity Charge to be paid after the cessation of such a Force Majeure Even
t.4Indirect Non-Natural Force Majeure
(After COD of unit)Payment of Debt Service, relating to this unit, by the Procur
er subject to a maximum of Capacity Charges based on Normative Availability, and
such a payment would be made by an increase in the Capacity Charge to be paid a
fter the cessation of such a Force Majeure Event.5Indirect Non-Natural Force Maj
eure
(Prior to COD of unit)The unit shall be deemed to have been commissioned from th
e Scheduled COD, and the Procurer shall make payments of Capacity Charges, calcu
lated on Normative Availability, and such a payment would be made by an increase
in the capacity charge to be paid after the cessation of such a Force Majeure e
vent.
6 Natural Force Majeure affecting Procurer / Procurer Event of Default
(After COD of unit)Payment of Debt Service, relating to this unit, by the Procur
er subject to a maximum of Capacity Charges based on Normative Availability7Natu
ral Force Majeure affecting Procurer / Procurer Event of Default
(Prior to COD of unit)The unit shall be deemed to have been commissioned from th
e Scheduled COD, and the Procurer shall make payments of Capacity Charges, calcu
lated on Normative Availability.8Un-availability of Transmission SystemThe Procu
rer shall make payment to SPL of an amount equivalent to the amounts paid by CTU
/ STU to the Procurers, as per the terms of the Agreement proposed to be entere
d into by the Procurer with CTU / STU
Events of Default
TSPL s major Events of Default include:
* TSPL failing to enter into Commercial Operation within 12 months of the Schedu
led COD;
* TSPL or TSPL s construction contractors abandon the construction of the Project
for a continuous period of two months and such default is not rectified within t
hirty days from the receipt of first notice from any of the Procurers in this re
gard;
* If at any time following a Unit being Commissioned and during its retests, as
per Article 8 of the PPA, such Unit s Tested Capacity is less than ninety two perc
ent of its Contracted Capacity, as existing on the Effective Date, and such Test
ed Capacity remains below ninety two percent even for a period of three months t
hereafter;
* If after Commercial Operation Date of all the Units of the Power Station, TSPL
fails to achieve Average Availability of sixty five percent (65%), for a perio
d of twelve (12) consecutive Months or within a non-consecutive period of twelve
(12) Months within any continuous aggregate period of thirty six (36) Months, o
r
* TSPL fails to make any payment (a) of an amount exceeding Rupees One (1) Crore
required to be made to the Procurer under this Agreement, within three (3) Mont
hs after the Due Date of an undisputed invoice /demand raised by the said Procur
er on the Seller or (b) of an amount upto Rupees One (1) Crore required to be ma
de to Procurer under this Agreement within six (6) Months after the Due Date of
an undisputed invoice/demand, or
* If any of the representations and warranties made by the Seller in Schedule 10
of this Agreement; being found to be untrue or inaccurate. Further, in addition
to the above, any of representations made or the undertakings submitted by the
Selected Bidder at the time of submission of the Bid being found to be breached
or inaccurate, including but not limited to undertakings from its parent company
/ affiliates related to the minimum equity obligation; Provided however, prior t
o considering any event specified under this sub-article to be an Event of Defau
lt, the Procurer shall give a notice to the Seller in writing of at least thirty
(30) days, or
* If TSPL:
o assigns or purports to assign any of its assets or rights in violation of this
Agreement; or
o transfers or novates any of its rights and/or obligations under this agreement
, in violation of this Agreement; or
* TSPL repudiates the PPA and does not rectify such breach even within a period
of thirty days from a notice from the Procurers (jointly) in this regard; and
* Occurrence of any other event which is specified in the PPA to be a material b
reach / default of TSPL
Procurer s major Events of Default:
* A defaulting Procurer fails to pay (with respect to a Monthly Bill or Suppleme
ntary Bill) an amount exceeding 15 % of the most recent undisputed Monthly Bill,
for a period of ninety days after the Due Date and the Seller is unable to reco
ver the amount outstanding to the Seller through the Collateral Arrangement and
Letter of Credit;
* The defaulting Procurer repudiates the PPA and does not rectify such breach ev
en within a period of thirty days from a notice from the Seller in this regard;
and
* Occurrence of any other event which is specified in the PPA to be a material b
reach or default of the Procurers
Change in Law
The definition of Change in Law includes the following events after the date, wh
ich is 7 days prior to the Bid Deadline:
* The enactment, bringing into effect, adoption, promulgation, amendment, modifi
cation or repeal, of any Law;
* A change in interpretation of any Law by a Competent Court of law, Tribunal or
Indian Governmental Instrumentality provided such Court of Law, Tribunal or Ind
ian Governmental Instrumentality is the final authority under law for such inter
pretation ;
* Change in any consents, approvals or licenses available or obtained for the Pr
oject, otherwise than for default of the Seller, which results in any change in
any cost of or revenue from the business of selling electricity by the Seller to
the Procurers under the terms of the PPA;
* Any change in the
(a) Declared Price of Land for the Project or
(b) the cost of implementation of the R&R package of the land for the Project me
ntioned in the RFP or
(c) the cost of implementing Environmental Management Plan for the Power Station
mentioned in the RFP or
Liquidated Damages for delay in providing Contracted Capacity
* If any Unit is not commissioned by its Scheduled COD, TSPL shall pay to each P
rocurer liquidated damages for the delay in such Commissioning or making the Uni
t s Contracted Capacity available for dispatch by such date. Liquidated damages sh
all be Rs. 10,000 per MW per day for delay not more than 60 days and Rs. 15,000
per MW per day.
* If a unit is not commissioned by its Scheduled COD because of a Procurer Event
of default or non-natural Force Majeure Event such that such an event prevents
TSPL from undertaking a commissioning test, then such a Unit shall be deemed to
have been commissioned with effect from the Scheduled COD.
* In case of delay on account of Direct Non Natural Force Majeure Event, the Pro
curer shall make payment to the Seller of Capacity Charges calculated on Normati
ve Availability of Contracted Capacity of such Unit for the period of such event
s in excess of three (3) continuous or non-continuous Months.
* In case of an Indirect Non Natural Force Majeure Event (or Natural Force Majeu
re affecting the Procurer), the Procurer shall make payments for amounts ( Debt Se
rvice ) relatable to such Unit, which are due under the Financing Agreements, subj
ect to a maximum of Capacity Charges based on Normative Availability, for the pe
riod of such events in excess of three (3) continuous or non-continuous Months.
De-rating
If the tested capacity of any Unit of the plant is less than the Contracted Capa
city, then such a unit shall be de-rated with the following consequences:
* Quoted Capacity Charges shall be paid with respect to such reduced Contracted
Capacity;
* Quoted Non-Escalable Capacity Charge shall be reduced; and
* The capital cost and each element of the Capital Structure Schedule shall be r
educed proportionately.
Re-rating
If the tested capacity of any Unit is found to be more than the Contracted Capac
ity, and the Procurers decide against purchasing the excess capacity, then TSPL
shall be free to sell such excess tested capacity to any third party.

2. Salient Features of Default Escrow Mechanism

Default Escrow Agreement
The key points of the Default Escrow Agreement, signed between TSPL (the Seller)
, PSEB (the Procurer), the Escrow Agent and the Subsidiary Escrow Agents, are as
follows:
Subsidiary Escrow Account
All bank accounts of the Procurer with the Procurer s Banks shall be deemed to hav
e been designated by the Procurer as subsidiary escrow accounts (hereinafter ref
erred to as the (Subsidiary Escrow Account).
Term and Termination
The Default Escrow agreement has become effective from the date of signing of th
e agreement and shall be co-terminus with the PPA. It shall terminate on the Exp
iry Date or if the PPA is terminated earlier in accordance with the terms therei
n, if at such time, all of the Secured Obligations towards TSPL, under the PPA h
ave been paid in full.
Establishment of Accounts
* The Procurer shall, within 7 days of the Effective Date, establish a special,
segregated and irrevocable cash collateral account at the specified branch of th
e Default Escrow Agent until the termination of this agreement which shall be re
ferred as Default Escrow Account.
* Within 7 days of the signing of the Default Escrow Agreement:
o TSPL shall establish and maintain in its name an account at the branch of the
Default Escrow Agent (Seller Account).
o The Procurer shall establish and maintain in its name an account at the branch
of the Default Escrow Agent or designate any of its then existing current accou
nt with the Default Escrow Agent until the termination of this Agreement (Procur
er Account).
* Upon occurrence of an Event of Default mentioned in Article 8.1 of this agreem
ent, the Subsidiary Escrow agents shall ensure that all the Incremental Receivab
les available in their respective Subsidiary Escrow Accounts are transferred to
the Default Escrow Account.
* Upon occurrence of an Event of Default mentioned in Article 8.1 of this agreem
ent, the Default Escrow Agent shall ensure that all Incremental Receivables tran
sferred by the Subsidiary Escrow Agents to the LC (Letter of Credit) Account or
to the TSPL account or the procurer account, in accordance with the terms of thi
s agreement.
* The Default Escrow Agent and the Subsidiary Escrow Agents shall not have any l
ien or to be entitled to assert a general claim on or against the monies in the
Default Escrow Account or the Subsidiary Escrow Accounts respectively
* Procurer s Banks (Subsidiary Escrow Agents) hereby confirm and agree to limit th
eir charge on the Receivables to the extent of their outstanding exposure (inclu
ding commitments for exposure) as on the Effective Date and cede their existing
first priority charge, if any, on the Incremental Receivables, such ceding to be
effective as of the Charge Creation Date.
Obligations of the Procurer
* The Procurer hereby agrees that at least 45 days prior to the Scheduled Commer
cial Operation Date or Revised Schedule Commercial Operation Date of the first U
nit of the Power Station( Charge Creation date), as the case may be, it shall crea
te first charge over the Incremental Receivables in favour of TSPL and effective
as of the Charge Creation Date and until satisfaction of the Secured Obligation
s and the termination of this Agreement, the Procurer s Financing Parties shall no
t have any charge over the Incremental Receivables or any part of the Security,
and that such charge, if created in future, in favour of the Procurer s Financing
Parties or any other entity would be secondary and subordinate to the first char
ge created in favour of TSPL.
* The Procurer covenants with TSPL that it will pay or discharge each of the Sec
ured Obligations in accordance with the provisions of the PPA and this Agreement
.
* No change shall be made or permitted by the Procurer in its business operation
s or collections policies which would result in the reduction in the flow of Inc
remental Receivables.
Deposits
* The Procurer agrees and confirms that it has irrevocably instructed, or shall
irrevocably instruct any additional Procurer s banks and each of the Subsidiary Es
crow Agents to transfer on the occurrence of an Event of Default, Incremental Re
ceivables received by them directly into the Default Escrow Account.
* Any and all credits made into Subsidiary Escrow Accounts, the Default Escrow A
ccount and the Procurer s Bank Accounts under this Agreement shall be irrevocable
and all income or gain earned or realised on amounts on such credit in the Subsi
diary Escrow Accounts, Default Escrow Account shall be treated for all purposes
of this Agreement as part of the Default Escrow Account or Subsidiary Escrow Acc
ounts, as the case may be.
Operation and Management of the Default Escrow Account
* In the event that TSPL is unable to draw on the Letter of Credit pursuant to t
he failure of the Procurer to establish the Letter of Credit, TSPL shall instruc
t the Subsidiary Escrow Agents and the Default Escrow Agent to transfer the tota
l Incremental Receivables from the Subsidiary Escrow Accounts and thereon from t
he Default Escrow Account to the TSPL Account to the extent of maximum of the am
ounts due to TSPL under PPA. The Subsidiary Escrow Agents and the Default Escrow
Agent shall so transfer the funds, subject to the provisions of Article 5.3.5 o
f the Default Escrow Agreement.
* During currency of the transfer of Incremental Receivables to the Default Escr
ow Account and from the Default Escrow Account to the LC Account or TSPL s Account
, the Subsidiary Escrow Agent and the Default Escrow Agent shall not transfer mo
ney being part of such Incremental Receivables from the Subsidiary Escrow Accoun
t and the Default Escrow Account to the Procurer Account, or its nominee except
upon receiving written instructions from TSPL in this regard.
Representations and Warranties of the Procurer:
* No hypothecation, lien, charge, security interest or other encumbrance shall e
xist over or shall be created over the Incremental Receivables, after the Charge
Creation Date or otherwise than as permitted under this Agreement or the Agreem
ent to Hypothecate Cum Deed of Hypothecation
* After the Charge Creation Date, the Procurer s Financing Parties do not and shal
l not have any first ranking security charge, security interest or other encumbr
ance over the Incremental Receivables, except a second and subordinate charge wh
ich may be created in their favour
* To the best of the knowledge of the Procurer, there is no pending or threatene
d action, suit or proceeding before any court, tribunal or judicial or quasi jud
icial body or Government that could reasonably be expected to materially and adv
ersely affect the financial condition or operations of the Procurer or the abili
ty of the Procurer to perform its obligations under this Agreement or which purp
orts to affect the legality, validity or enforceability of this Agreement

Representations and Warranties of Default Escrow Agent:

* This Agreement constitutes the valid legal and binding obligations of the Defa
ult Escrow Agent enforceable in accordance with the terms of this Agreement
* There are no actions, suits or proceedings pending or threatened, against or a
ffecting the Default Escrow Agent before any court or administrative body or arb
itral tribunal that could reasonably be expected to affect adversely and materia
lly the ability of the Default Escrow Agent to perform its duties and obligation
s under this Agreement
* The Default Escrow Agent is not aware of any other charge or security interest
or encumbrance granted over the Incremental Receivables in favour of any other
person other than TSPL.
Representations and Warranties of the Subsidiary Escrow Agents:
* This Agreement constitutes the valid legal and binding obligations of the Subs
idiary Escrow Agent enforceable in accordance with the terms of this Agreement
* There are no actions, suits or proceedings pending or threatened, against or a
ffecting the Subsidiary Escrow Agent before any court or administrative body or
arbitral tribunal that could reasonably be expected to affect adversely and mate
rially the ability of the Subsidiary Escrow Agent to perform its duties and obli
gations under this Agreement
* The Subsidiary Escrow Agent is not aware of any other charge or security inter
est or encumbrance granted over the Incremental Receivables in favour of any oth
er person other than TSPL.
* The execution delivery and performance of this Agreement has been duly authori
sed by all requisite action, and will not constitute a violation of:
o any statute, judgement, order, decree or regulation of any court, Indian Gover
nment Instrumentality or arbitral tribunal applicable or relating to the Default
Escrow Agent, its assets or its business; or
o the Default Escrow Agent s constitution or other documents or any indenture, con
tract or agreement to which it is a party or by which it or its property may be
bound;
Representations and Warranties of the Seller
The Seller hereby represents and warrants to the Default Escrow Agent and the Pr
ocurer that:
* it has been duly constituted under the Indian Companies Act, 1956 as amended a
nd is validly existing under the laws of India and has all requisite legal power
and authority to enter into this Agreement and to perform its duties and obliga
tions hereunder;
* this Agreement constitutes the valid, legal and binding obligations of the Sel
ler enforceable in accordance with the terms of this Agreement; and
* the execution, delivery and performance of this Agreement by the Seller has be
en duly authorised by all requisite action, and will not constitute a violation
of:
(i) any statute, judgement, order, decree or regulation of any court, Indian
Government Instrumentality or arbitration tribunal applicable or relating to th
e Seller, its assets or its business; or
(ii) the Seller s constitution or other documents or any indenture, contract or
agreement to which it is Party or by which it is Party or by which it or its pr
operty may be bound.
Representations and Warranties of the Subsidiary Escrow Agents
Each of the Subsidiary Escrow Agents represents and warrants to the Seller and t
he Procurer as of the Effective Date and at all times that:
* this Agreement constitutes the valid legal and binding obligations of the Subs
idiary Escrow Agent enforceable in accordance with the terms of this Agreement;
* there are no actions, suits or proceedings pending or threatened, against or a
ffecting the Subsidiary Escrow Agent before any court or administrative body or
arbitral tribunal that could reasonably be expected to affect adversely and mate
rially the ability of the Subsidiary Escrow Agent to perform its duties and obli
gations under this Agreement;
* the execution delivery and performance of this Agreement has been duly authori
sed by all requisite action, and will not constitute a violation of:
(i) any statute, judgement, order, decree or regulation of any court, Indian
Government Instrumentality or arbitral tribunal applicable or relating to the S
ubsidiary Escrow Agent, its assets or its business; or
(ii) the Subsidiary Escrow Agent s constitution or other documents or any inden
ture, contract or agreement to which it is a party or by which it or its propert
y may be bound; and
(e) the Subsidiary Escrow Agent is not aware of any other charge or security
interest or encumbrance granted over the Incremental Receivables in favour of a
ny other person other than the Seller.
Covenants
The Procurer covenants that:
* It shall create and maintain valid, perfected and enforceable first priority a
nd ranking security interest and charge over all of the Security pursuant to the
Agreement to Hypothecate Cum Deed of Hypothecation
* It shall procure all amendments, approvals, consents or waivers as may be requ
ired from the Procurer Financing Parties and any other financing parties from wh
om such amendments, approvals, consents or waivers are required, for the creatio
n, maintenance and enforcement of the security interest contemplated hereby or b
y the Agreement to Hypothecate Cum Deed of Hypothecation in favour of TSPL;
* It shall not after the Charge Creation Date grant or create a first priority s
ecurity interest, hypothecation, charge, lien, security interest or other encumb
rance over the Incremental Receivables, throughout the term of this Agreement ot
her than the Security created hereunder and created under the Agreement to Hypot
hecate Cum Deed of Hypothecation in favour of TSPL except in compliance with the
provisions of this Agreement or the Agreement to Hypothecate Cum Deed of Hypoth
ecation;
Events of Default:
For the purposes of this Agreement, the term Event of Default shall mean the occur
rence or existence of any one or more of the following:
* The Procurer being in breach of its material obligations under this Agreement
or the Agreement to Hypothecate Cum Deed of Hypothecation
* The Procurer committing a Procurer Event of Default as mentioned in Article 14
.2 (i) of the PPA
* Default by the Procurer for the repayment and/or discharge of obligations of t
he Procurer to any person under a legally binding agreement providing inter alia
, security by way of a charge on the Incremental Receivables of the Procurer, pr
ovided such charge to such person enjoys a lower priority and ranking security i
nterest to TSPL.

3. Agreement to Hypothecate Cum Deed of Hypothecation

In consideration of TSPL having entered into the PPA and agreeing to supply elec
tricity to the Procurer, subject to the terms and conditions set out in the PPA,
the Procurer agrees to pay to TSPL all the Secured Obligations set out in the P
ower Purchase Agreement.
The main points of the Agreement to Hypothecate Cum Deed of Hypothecation are:
Security Interest
* As security for the payment of the Secured Obligations when due in accordance
with the PPA, the Procurer as the legal and/or beneficial owner of the Hypotheca
ted Interest does hereby agree to hypothecate on the Charge Creation Date charge
in favour of TSPL all right, title, interest, benefit, claims and demands whats
oever of the Procurer in respect of the Incremental Receivables (collectively Hyp
othecated Interest )
* The charge so created by the Procurer shall be a floating charge and shall not
hinder the Procurer from selling, leasing or otherwise disposing of or dealing
with the Hypothecated Interest or any part thereof
* The floating charge so created shall immediately and automatically be converte
d into a fixed charge upon the occurrence of any Event of Default as defined in
the Default Escrow Agreement
* Following the occurrence of an Event of Default as defined in the Default Escr
ow Agreement, TSPL shall not be obliged before taking steps to enforce the Secur
ity constituted by or pursuant to this Agreement to:
o Take action or obtain judgement or any arbitration award against the Procurer
in any court or before any arbitrator
o Make or file any claim or proof in a winding up or dissolution of the Procurer
o Exercise any legal remedies, which may be available to it under the PPA
Representation and Warranties of the Procurer
* The charge and security interest created hereunder constitute a first priority
security interest in favour of TSPL
* No charge, security interest or other encumbrance presently exists over the Hy
pothecated Interest other than the charge created under this Agreement
* This Agreement has been duly executed by a duly authorized officer of the Proc
urer and constitute the valid, legal and binding obligations of the Procurer enf
orceable in accordance with the terms hereof
Representation and Warranties of TSPL:
* This Agreement has been duly executed by a duly authorized officer of the TSPL
and constitute the valid, legal and binding obligations of the TSPL enforceable
in accordance with the terms hereof
Procurer Undertakings
During the term of this Agreement, the Procurer shall:
* Do all acts and things as may be reasonably required to give effect to the cha
rge / security interest created in favour of TSPL on and in the Hypothecated Int
erest and to take all steps to maintain such charges and security interest in fu
ll force and effect on and in the Hypothecated Interest
* Deposit or cause to be deposited immediately upon the receipt of Receivables i
n the Procurer s Banks
* After the occurrence and during the continuance of an Event of Default deliver
to the Seller copies of summary statements of the electricity sold during the i
mmediately preceding month
Miscellaneous Provisions
Neither the charge hereby granted nor the rights, powers and remedies conferred
on TSPL by this Agreement or by law shall be discharged, impaired or otherwise a
ffected by:
* Any amendment of the PPA or the Default Escrow Agreement not agreed to by TSPL
* any release or exchange of Security or obligations granted or undertaken pursu
ant to PPA or the Default Escrow Agreement
* Any other act, event or omission which but for this provision would impair or
discharge the Procurer s liability hereunder
* Any change in the structure or organization of the Procurer as a result of a C
hange in Law, insolvency of the Procurer or otherwise
* The Procurer shall not have the right to assign all or any of its rights or ob
ligations hereunder
The Seller shall have the right to assign all or any of its rights, title and in
terest hereunder and to the Hypothecated Interest as security only to the Lender
s or the Selectee appointed under the terms of the PPA.

Diagrammatic Representation of Payment Security Mechanism

4. Model Fuel Supply Agreement

Term
The Fuel Supply Agreement (FSA) will come into force upon execution by both the
parties and unless terminated shall continue to remain in force for a period of
5 years from date of first delivery of coal, subject to review after 3 years. F
irst delivery will start not latter than 18 months from the execution of FSA.
Conditions Precedent

Within eighteen months from the effective date:

Buyer s Obligations
* Order for procurement of BTG and Power Purchase Agreement (PPA) for sale of po
wer for at least 50% has been entered into.
* 50% of the power plant construction has been completed as per implementation s
chedule.
* Buyer has obtained all necessary clearances, approvals and permissions require
d for the power plant.
* The buyer shall have obtained all necessary sanctions approvals, licenses cons
ents including environmental clearance in respect of the plant from the lawful a
uthorities.
* Government of India to have issued a notification pursuant to Section 14 of Co
lliery Control Order, 2000.
Seller s Obligations
* The seller shall have obtained all necessary sanctions approvals, licenses, co
nsents including forest land clearance from the lawful authority.
* Financial Closing of linked coal mine shall have occurred
* The seller shall have obtained environmental clearance in respect of the linke
d coal mines
Quantity
Annual Contracted Quantity (ACQ)
Annual Contracted Quantity (ACQ) to be supplied by seller from it mines/ or inte
rnational sources will be agreed between parties which will further be divided i
n Quarterly Quantity(QQ) as follows:
1st Quarter (Apr-Jun)25% of ACQ2nd Quarter (Jul-Sep)22% of ACQ3rd Quarter (Oct-D
ec)25% of ACQ4th Quarter (Jan-Mar)28% of ACQ
There is provision of compensation/penalty for less delivery/lifting with refere
nce to agreed ACQ by MCL/TSPL. If MCL failed to delivery below certain% (expecte
d to be between 80-90% based on negotiation) of ACQ in a year it has to pay TSPL
at the rate of 10% of Base Price of coal with respect to the shortfall quantity
. Similar penalty has to be paid by the company, TSPL in case it does not take d
elivery of the agreed Annual Contracted Quantity.
Scheduled Quantity (SQ):
Scheduled Quantity of coal to be supplied for any month will be 1/3 of Quarterly
Quantity (QQ) and variation of monthly scheduled quantity would not exceed 10%.
Compensation for short delivery/lifting:
If for a year, the level of delivery by seller or level of lifting by the buyer
falls below ACQ with respect to that year, the defaulting party shall be liable
to pay compensation to the other party for such shortfall as per following terms
:
Level of Delivery/ Lifting of coal in a yearRate of compensation for the Failed
Quantity (at the rate of simple average of Base Prices of Grades)Less than 100%
but upto certain % of ACQNILBelow certain % of ACQ10%
Sources
Seller will make full endeavour to supply coal from the mines as envisaged in th
e LoA issued. However, in case seller is not able to source required quantity of
coal from the said mines, it has the option to source from alternate source inc
luding imported coal. Further, when seller has failed to deliver ACQ, buyer shal
l have the right to procure the shortfall from other sources.
Quality
In order to ensure that the required quality is maintained in the coal supply, s
ize and grade of the contracted coal will be mentioned in the CSA. If seller del
ivers s any quantity of un-graded coal buyer shall limit the payment of coal to
Rs. 1/ - per tonne. Provision of compensation has been stipulated for supply of
coal with stones and excess surface moisture.
Seller is committed to supply coal as per specification agreed in the CSA. Measu
rement of moisture, presence of stone etc are also prescribed in the agreement.
There will be provision for compensation for over sized stones and excess surfac
e moisture.
Purchase Price for Coal
The as delivered price of coal shall be the sum of
* Base Price The base price for different grades of coal as at the signature dat
e shall be set out in this agreement.
* Sizing Charges for limiting the top size of coal
* Transportation Charges where coal is transported by seller beyond a distance o
f 3 kms to the delivery point
* Statutory charges these shall comprise royalties cesses duties taxes levies an
d other payments of similar nature
It may be noted that the above terms and conditions are indicative and the same
would be finalised on signing of FSA.
Loading and Delivery
* The quantity of coal delivered at the delivery point shall be weighed on the s
eller s electronic weight bridges installed in accordance with this agreement.
* Title to and risk of loss with respect to the coal supplied form the linked co
al mine shall pass from the seller to the buyer at the loading point of seller s
ide.
Billing & Payment
Seller will raise invoice on rack-on-rack basis in case coal is transported thro
ugh railway.
Buyer will
* Pay advance payment for a month in three instalments. Each instalment will be
based on 1/9th of quarterly quantity (QQ) agreed between parties.
Maintain irrevocable revolving letter of credit equivalent of 1/9th of QQ.

5. Proposed Rail Transportation Agreement

Borrower shall also enter into the necessary Railway Transportation Agreement wi
th the Indian Railway/ appropriate agency either directly or through PSEB prior
to COD of the respective units of the Project, the salient features of the propo
sed Rail Transportation Agreement are as under:
Term
Twenty five (25) years from the Project Commercial Operations Date (COD)
Conditions Precedent
The Agreement shall be effective from the date (Effective date ) on which all thes
e Conditions Precedent have either been met or waived.
* Occurrence of Financial Closing (FC)
* Grant of all required clearances
* Execution of Private Siding Agreements (PSA) and if required, the execution of
Siding Land Lease Agreements
* Delivery of a copy of the Memorandum and Articles of Association of the Compan
y along with a copy of the resolution of the Board of Directors of the Company a
uthorizing execution, delivery and performance by the Company of this Agreement
* The delivery of a copy of an authority permitting execution, delivery and perf
ormance by the Railway of this Agreement
* the Coal Supply Agreement (CSA) being effective
In the event that the CPs stipulated shall not have been satisfied or waived wit
hin one year of the date of the Agreement, either Party shall terminate this Agr
eement with no liability on wither Party by giving a minimum notice of 30 days.
Quantity and Transportation of Coal
* The Company shall have stocking capacity at the Loading Point at all times equ
ivalent to at lest twice the Daily Scheduled Quantity
* During the Start-up Period and the Operating Year the Railway shall Place Rake
s, Transport and Deliver coal in accordance with the Delivery Schedule, Monthly
Scheduled Quantity (MSQ) and Annual Scheduled Quantity (ASQ) as the case may be.
* Liquidated Damages (LD) shall not be applicable in respect of supply from acce
ptable Alternate Sources.
* The Railway shall have the right in any month to deliver up to 10% more than M
SQ for that month subject to the cumulative transport for that Operating Year no
t exceeding ASQ as also to transport additional coal to the Unloading Point to m
ake up for its failure to supply the MSQ in the immediately preceding month
* During the Start-Up Period the Railway shall transport and deliver additional
coal equivalent to the Carpet Stocks
Obligations of the Railway
* The Railway shall obtain all necessary consents, permissions and clearances re
quired.
* The Railway shall place BOBRN/BOXN Rakes, transport and deliver coal in accord
ance with MSQ and ASQ while maintaining the Coal Stock Amount.
* The Railway shall be obliged to supply additional Rakes to make up any deemed
delivery in the preceding month.
Obligations of the Company
* Company shall obtain all necessary consents, permissions and clearances for un
dertaking its obligations
* Company shall provide construction of private siding or provide alternative ar
rangements for loading and unloading
* The Company shall offer the ASQ/MSQ in any Operating Year (adjusted pro rata i
n beginning and ending year/month).
* The Company shall load or arrange loading at the Loading Point and unload or a
rrange unloading at Unloading Point as the case may be
* The Company shall pay to the railways, the Freight Charges in terms for the co
al transported
Deemed Delivery
* Subject to the Railway having placed the Rakes at the Loading Point or the Unl
oading Point, as the case may be, the Railway shall be deemed to have performed
its obligations under the Agreement (Deemed Delivery)
* If the Company fails to load at the Loading Point and unload at the Unloading
Point the Rakes placed by the Railway, Deemed Delivery shall be determined in th
e basis of the time the Rakes are actually detailed at the Loading Point or the
Unloading Point, as the case my be on the basis of time slabs as may be decided
between the Parties.
* In any Month, if the Company requests the Railway to Place Rakes, Transport an
d Deliver less than the MSQ/ASQ for that Month/Year, the difference between the
MSQ/ASQ for that Month/Year and the quantity requested by the Company for that M
onth/Year will Constitute Deemed Delivery
* Deemed Delivery shall be subject to certain exclusions in favour of the Compan
y and capped as mutually agreed by the Parties.
Breach of Guarantees
* At the end of any Month, if the Railway fails to Place Rakes, Transport and De
liver to the Power Station the cumulative MSQ, the Railway shall pay to the Comp
any Liquidated Damages which shall be calculated as per the cumulative amount of
coal delivered in a Month and individual amount of coal delivered in a day in a
slab structure as mutually decided by the Parties
* Liquidated Damages of 100% of Freight Charges shall be payable by railways onl
y if the Coal Stock at the power Station (excluding the Carpet Stock) is reduced
to Minimum Coal Stock or below
* On the occurrence and continuance of an event of Force Majeure which reduces t
he Coal Stock Amount, both Parties shall be obliged to rebuild the Coal Stock Am
ount on the termination of the event of Force Majeure to such levels as existed
on the date of Commencement of Force Majeure, such replenishment shall be comple
ted on the expiry thereof within such number of days as mutually agreed between
the Parties
* Interest on delayed payments of Liquidated Damages shall be agreed on a recipr
ocal basis
Insurance
* The Company shall maintain those insurances as are required by the Lenders
Billing and Payment
* The Railway shall issue a railway Receipt (RR) to the Company for every Rake d
ispatched and the Company shall pay the amount indicated in the RR immediately o
n receipt of the RR
* Thirty days prior to the commencement of Start-Up Period, the Company will pro
vide and maintain a cash deposit (Security Deposit) equivalent to 15 days Freigh
t Charges as per extant Railway Rules
Guaranteed delivery and Capacity Charge
* The Railway guarantees to Place Rakes, Transport and Deliver [ ] tonnes of coal
per Operating Year for the entire term
* Subject to the Railway placing the Rakes at the Loading Point or Unloading Poi
nt, as the case may be, if the Company fails to offer the cumulative MSQ in any
Operating Year in for reasons other that Force Majeure, the Company shall be lia
ble to pay Capacity Charges (CC) to the Railway wherein the Deemed Delivery and
Lost Capacity shall be determined by mutual agreement of the Parties.
Force Majeure
* Force Majeure shall include but not limit to the following events
a. Act of God
b. Acts of War
c. Strike Lockouts, stoppage or restraint of labour
d. Arrest restraint or seizure under legal process
e. Radioactive contamination or ionizing radiation from any source
f. The enactment, promulgation, amendment, suspension or repeal of any Applicabl
e Laws after the date thereof.
g. Nationalisation of the Company
Event of Default
* Failure of any Party to make payment of any Material Amount which failure cont
inues for a period of 30 days after notice of such non-payment
* Failure by the Railway to Place Rakes, Transport and Deliver any coal or failu
re by the Company to load / unload any coal in accordance with the Agreement for
a continuous period of six months
* Insolvency, appointment of liquidator, appointment of receiver
* The Company ceases to carry on all if its business
* Winding up of the Company unless winding up is for the purpose of reconstructi
on of the Company that does not affect the ability of the resulting entity to pe
rform its obligations under Agreement
Termination
In addition to the rights of the Parties to terminate the Agreement following an
Event of Default, the Agreement may also be terminated as follows
* The Company may terminate the Agreement with 30 days prior notice if the CSA/P
PA or PSA is terminated
* The Railway may terminate the Agreement if the PSA are terminated and no alter
native arrangements are made the Company within a period of 45 days from the dat
e of receipt of written notice of the Railway of the proposed termination
Compensatory Costs and Termination Costs
* Should the PPA be terminated owing to a Company event of Default which is caus
ed by failure by the Railway to
a. Place Rakes, Transport and Deliver any coal for a continuous Period of Six Mo
nths or
b. Supply minimum of half the MSQ in accordance in each of twelve Months in any
continuous period of eighteens Months or
c. Make payment of any material amount due to the Company under this Agreement w
hich has been proved to have led to termination of the PPA
The Railway shall pay to the Company Net Present Value of the Liquidated Damages
for the period of four years or the balance of the term of the Agreement whiche
ver is lower.
* Should the first unit COD and / or Project COD be delayed for reasons attribut
able to default of the Railway under the Agreement, the Railway shall pay to the
Company Liquidated Damages as set forth below.
* The Liquidated Damages shall be mutually decided by the Parties and based on t
he delivery shortfall amount slab with different slabs before and during first f
our months of Start-up Period and the remaining period.

Representation, Warranties and Covenants

Representations and Warranties
* The Railway and the Company represents and Warrants that:
a. To the best of its knowledge and belief, there are no actions, suits or proce
edings pending or threatened against or affecting it before any court or adminis
trative body or arbitral tribunal which might materially adversely affect its ab
ility to exercise its rights and perform its obligations under the Agreements
Covenants
* The Company covenants with the Railway that it will obtain and during the term
of the Agreement, it will renew and maintain all permits, licenses and approval
s required under Applicable Laws to be held in connection with the construction
and operation so the Power Station, all as contemplated by the Agreement and as
otherwise required for the performance by the Company of its obligations hereund
er.
* The Company shall promptly notify the Railway of any actual loss, revocation,
termination, amendment or breach of any such permit, license or approval or any
actual breach of any applicable laws related to performance of the Agreement.
* The Railway and the Company shall take all action required under Applicable la
ws un connection with the Railway s and Company s respective operations and activiti
es under the Agreement.
PAGE 

Strictly Private
& Confidential

PAGE 95
25 MWp Solar PV Power Plant Page No.

Strictly Private & Confidential

Talwandi Sabo Power Limited - 1980 MW Power Project

Page No.  PAGE 141

Strictly Private & Confide

ntial
Talwandi Sabo Power Limited - 1980 MW Power Project
Page No.  PAGE 179