To The Members,

The Directors are pleased to present their Twelfth Annual Report on the business and operations of the Company along with the Audited Balance Sheet and Profit and Loss Accounts for the year ended 31^st March, 2013.

FINANCIAL RESULTS

* Previous year figures have been reclassified so as to make them comparable with current year figures

FINANCIAL HIGHLIGHTS

TPDDL earned revenues from operations aggregating to Rs. 5,644.26 Crores during Financial Year 2012-13 (FY13), a growth of about 6% over the previous year revenues of Rs. 5,338.87 Crores. The Company however incurred a loss of Rs. 389 Crores in FY 13 as compared to a loss of Rs. 1,354 Crores in FY 12 prior to accounting Revenues amounting to Rs. 779 Crores in FY 13 (Rs. 1,782 Crores in FY 12) to be recovered through future tariffs. This amount reflects the shortfall (termed as 'Revenue Gap' in Regulatory parlance) in the Company's revenues billed at current tariffs: and those chargeable by it to its consumers based on costs incurred during the year. The same have been recognized as Income of the Current Year on basis of accrual, system of accounting which requires revenues to be recognized in the year to which they pertain, even though realisable in future, so long as the same are quantifiable and there is certainty of ultimate recovery. Consequently, on recognizing the Revenue Gap of Rs. 779 Crores (Rs.1,782 Crores in FY 12) as Income Recoverable from future tariffs, resultant profit before tax (PBT) was Rs. 390 Crores in FY13 as compared to Rs. 428 Crores in FY 12 reflecting a reduction of 9% over previous year. The Profit after tax (PAT) for FY 13 was Rs. 310 Crores as compared to Rs. 339 Crores in FY 12 thereby reflecting a 9% decrease over the previous year. The Lower Profitability in FY 13 vis-a-vis FY 12 was due to the one time impact of ATE/DERC Orders recognised in respective years. The Normalized PAT excluding one time impact of ATE order was Rs 305 Cr in FY 13 as compared to Rs. 275 Cr in FY 12 reflecting an increase of 11% over previous year.

In-order to partially finance existing Revenue Gap subsequent to the Board approval in its meeting on 4^th May 2012 and shareholders' approval in Annual General Meeting held on 26^th July, 2012, the Company raised Rs. 500 Crores by issuing (i) 2,55,00,000 (Two Crores Fifty Five Lakhs), 12% Cumulative Redeemable Preference shares of Rs. 100/- (Rupees One Hundred) each amounting to Rs. 255 Crores (Rupees Two Hundred and Fifty Five Crores) to The Tata Power Company Limited and (ii) 2,45,00,000 (Two Crores Forty Five Lakhs), 12% Cumulative Redeemable Preference shares of Rs. 100/- (Rupees One , Hundred) each amounting to Rs. 245 Crores (Rupees Two Hundred and Forty Five Crores) to the Delhi Power Company Limited in the ratio of 51:49 which is the proportion of their respective shareholdings in the Company.

Tariff Related Matters

The Tariffs chargeable to consumers by Power Distribution Utilities are determined by their respective State Electricity Regulatory Commissions, which in case of TPDDL, is the Delhi Electricity Regulatory Commission (DERC).Subject to achievement of targets as laid down by the DERC, the retail tariffs are expected to ensure recovery of the Company's reasonable costs, including eligible return on investment. Power Purchase Costs constitute around 80-85% of total costs incurred by a Discom. Operation & Maintenance expenses (inclusive of Establishment Cost, Administrative & General Expenses and Repair & Maintenance Expenses) constitute the next highest expenditure at around 8%-10% with Depreciation being around 3%, Interest on Loans, approximately 4%-5% and Return on Equity (RoE) deployed in the business constituting only around 2-3% of the total amounts recoverable through tariffs chargeable to Consumers. The above need to be recovered through tariffs determined by the DERC. As may be seen from above, over 80%-85% of a Discom's total costs comprise solely of costs incurred for procuring power for its consumers, which is totally outside the control of the Discoms. Out of the balance 15-20%, only 2-3% is towards recovery of Return on Equity invested in business with the balance being incurred on operation and maintenance together with debt servicing.

The Tariffs notified by the DERC over the years have been delayed as well as have been grossly inadequate to recover the prudent costs of the Utilities including that of TPDDL, thereby resulting in large arrears or Revenue Gaps to be recovered through future tariff increases. Infact, as shall be observed from the table below, against a power purchase cost increase of around 91% in past five years, the effective tariff increase seen in these years is only around 50%, and that too in last two years.

The tariffs in the recent past have been insufficient to ensure recovery of even the Power Purchase Costs of the Company leave aside recovery of other expenses on Establishment, R&M, debt servicing, etc. together with any RoE. Despite a 22% increase in tariffs in FY 2012 and 21% tariff increase together with levy of 8% past deficits recovery surcharge in FY 2013, Tariffs have not been able to ensure full recovery of costs and returns, consequently resulting in significant build-up of Revenue Gaps/ Regulatory Assets over the years. It is worthwhile to point out that prior to the last two tariff revisions in FY 12 and FY 13, the last tariff revision was in FY 2005-06 with an insignificant 5 paise/ unit (around 1%) increase being also affected in FY 2007-08.

As stated above, during FY 13, DERC allowed a 21% tariff increase together with levy of 8% Past Gaps Recovery Surcharge with effect from July 2012. This was over a 22% increase in tariffs allowed in FY 12. Further, DERC substituted the levy of Fuel Price Adjustment Surcharge with Power Purchase Adjustment Charges (PPAC) to take care of any variance in Fixed Costs of Long Term Power Procurement in addition to Fuel Price Variances.

However, despite the tariff increase, Revenue Gap further increased during FY 13 over FY 12 by Rs. 779 Crores (Net addition of 758 Cr. in Accumulated Revenue Gap after adjustment of Rs.20.53 Crores from Contingency Reserve) primarily due to the Power Purchase Adjustment Charges (PPAC) mechanism not fully recovering the variance in the actual power purchase cost vis-a-vis the costs factored by the DERC in revised tariffs as the mechanism does not true-up any variance resulting due to sale of surplus power and any arrear payments made during the year. Further, as the revised tariff was implemented for only nine months (from July 2012) in FY 13, the same too contributed to addition in Revenue Gap.

Consequently, the accumulated Revenue Gap at end of FY 13 increased to Rs. 4,712 Crores against a Revenue Gap of Rs. 3,954 Crores till FY 2012.

While the 21% tariff increase with additional 8% Revenue Gap recovery surcharge for FY 12-13 is a step in right direction, further timely and appropriate revisions of tariff are necessary so as to ensure that the Revenue Gap does not increase any further and is liquidated over a reasonable period of time.

The Company has represented to DERC for determination of FY 2013-14 tariffs in a manner that the costs for FY 2013-14 are fully recovered together with partial recovery of past gaps. The company is doing policy advocacy on the matters like allowance of O&M cost close to the actual cost being incurred by the company and has also filed appeals before the Appellate Tribunal of Electricity (ATE) on certain issues in DERC's tariff orders of Sept 2011 and July 2012 in Appellate Tribunal of Electricity.

Dividends

Due to build up of large Revenue Gaps in absence of fully cost reflective tariffs and consequent liquidity issues in the Company, it was decided to defer the decision on recommending dividends distribution -to later part of the year after the impact of issuance of Tariff Order for FY 2013-14 is examined.

Amount to be transferred to general reserves

No amount has been transferred to general reserves during FY 2012-13 (FY 2011-12-Nil).

Key Achievements at Commercial for FY 2012-13

AT&C Loss Reduction: One of the most significant measures of operational efficiency in Power Distribution Sector is Aggregate Technical & Commercial (AT&C) Loss Reduction. AT&C Losses refer to the difference between energy input and energy for which revenue is realised. TPDDL has consistently over-achieved its Regulatory AT&C Loss Reduction Targets including in FY 2012-13, thereby to some extent mitigating increases in retail tariffs despite steep increase in input costs, and also maintaining edge over competition. However, having reached higher levels of efficiency, further reduction of AT&C Losses, in particular Technical losses, is becoming increasingly more difficult without significant capital investment, which is a challenge in view of large accumulated Revenue Gaps, associated financing and impact on tariff issues.

The twelve month rolling AT&C loss level at the end of FY 2012-13 was 10.78% against 11.42 % at end of FY 2011-12.

Power Procurement

As in the past years, TPDDL procured sufficient quantity of power during the period under review for meeting 100% peak demand of its Consumers. However, this procurement has its challenges as variance in demand due to seasonal weather fluctuations are unpredictable and surplus power during off peak hours has to be disposed off at the prevailing prices. This issue is dealt in greater detail in the Management Discussion and Analysis Report.

The Company procured the consumer requirement of 7764 Million units in FY 2012-13 from external and own generation sources against 7548 Million units procured in FY 2011-12, reflecting an increase of around 3% over the previous year.

Capital Expenditure TPDDL has executed Distribution related Capital works aggregating to Rs. 3,406 Crores in the past 11 Years till 31.03.2013 including Rs 283 Cr of capital works in the current year and this amount has been judiciously utilized for enhancement of reliability through Network improvements, Reduction of AT&C. Losses and improvement in consumer services. In addition to the above, the Company has also incurred Rs. 331 Crores of Generation related capital expenditure on Rithala and Solar Projects till 31.03.2013.

Rs. 349 Crores of Distribution related expenditure was capitalized during FY 2012-13 (Previous Year Rs. 346 Crores).

Due to infusion of Capex for strengthening and augmenting network and advancements in maintenance practices, reliability of TPDDL's network continued to improve.

Generation Initiatives

Rithala CCPP

The Company has filed a petition with the DERC for approval of Terms of Agreement for supply of power from Rithala Generation Plant to the Company at tariffs to be determined by the DERC. Another petition has been filed for determination of Final Tariffs based on audited accounts. Both the petitions are under consideration by the DERC.

While the Rithala Plant has been allocated 0.4 million metric standard cubic meters per day (MMSCMD) from the Krishna Godavari (KG) Basin, the production and supply of Gas steadily declined during the year with the supply being completely curtailed to Power Projects from 1^st Mar, 2013 as per the Gas Utilization policy of Ministry of Petroleum and Natural Gas (MoPNG) which provides a higher priority to Fertilizer and LPG sectors on usage of KG D6 gas. While the Company has made adequate arrangements for Spot RLNG, the Plant is not being dispatched by the State Load Despatch Center (SLDC) owing to higher costs associated with RLNG. The MoPNG has indicated that the Gas prioritization policy likely to be amended thereby ensuring pro-rata supply of gas to Gas Plants with allocation from KG-D6 Basin. The Company is hopeful that with amendment in the Gas Utilization policy, some gas shall become available to the Rithala Plant, which should be sufficient to operate the Plant, albeit at a low Plant Load Factor. In FY 2012-13, the Plant generated 129 MUs at an average Plant Load Factor of 16.

Solar Projects

Subsequent to the commissioning of 1 MWp Rooftop Solar Power Plant in its Licensed Area, TPDDL has added solar capacities of various sizes ranging from a few KWp to 225 KWp, aggregating to 1.65 MWp. TPDDL has partnered with Ministry of New and Renewable Energy (MNRE) for setting up seven of these projects on rooftops of its grid stations for which MNRE has sanctioned capital grants aggregating to approx. Rs. 4 Crores.

In FY 2012-13, 2.08 MUs were generated by these Solar Projects.

Standards of Performance

The DERC has specified stringent Performance Assurance (PA) Standards with respect to consumer service delivery. The Company strives to

provide various services well within the DERC stipulated time limits. As in the past, the Company's compliance to PA time limits in FY 2012-13 continued to be in the range of 100% with certain key services such as providing new connections (in Average 5-7 days against DERC allowed 30 days), "fault restoration (in Average < 2 hours even in rural areas against 3 to 8 hours allowed by DERC), replacement of defective meters (4-6 days against 15 days allowed by DERC), being provided in significantly less (faster) time than permitted by DERC.

As per a survey conducted by Ascent Group, an international management consulting firm that specializes in customer service operations and competitive benchmarking, TPDDL's Call Center services are a global benchmark for average handling time per call (from receiving the call to its completion) at 3.0 minutes against average 4.7 minutes taken by global utilities.

SCADA EMS, DMS & QMS

TPDDL has implemented SCADA EMS (Energy Management System) with GSAS (Grid S/Stn Automation System) to control and monitor the 66/33 KV network with main objective of improving operational efficiency. This has resulted in significant improvement in reliability of power supply as the entire network is now operated from a central location with all load management decisions being based on real time power flow information from the system. As of now, all 61 grids have been automated and are unmanned.

DMS (Distribution Management System) along with first phase of DA (Distribution Automation) was successfully implemented during FY 2010-11 to monitor and control 11 KV network. Its implementation has helped in curtailing downtime of the 11 KV network by online identification of faults and centralized restoration of power supply from the control center through automated switching. The second phase of DA shall be implemented in a phased wise manner during FY13-14, Further, advanced distribution Automation shall be implemented over the next three years.

As part of TPDDL's continued efforts towards ensuring customer delight by enhancing reliability of network and further reducing the fault restoration time, TPDDL has implemented Outage Management System (OMS) for faster and more accurate location and restoration of faults in the LT Network, thereby significantly reducing downtime. TPDDL is the first Utility in the country to implement OMS.

Smart Grid

TPDDL endeavors to shift its Orbit to the next level by developing its 'Smart Grid' Technology Roadmap. Smart Grid is an integration of automation systems of the entire electricity value chain from generation to the consumer end by utilization of Information Technology. Smart Grids address issues of Reliability of Supply, Demand Side Management and integration of infirm renewable power (Solar/Wind) with the Grid. They facilitate consumers in monitoring their power consumption in real time, thereby empowering them to take informed decisions with respect to timing and quantity of consumption. The Company is also . developing the second phase of its Technology Journey as part of the Smart Grid Feasibility Study, having completed implementation of first phase road map which included technologies such as Automatic Meter Reading (AMR), Geographical Information System (GIS), SCADA, DMS, DA and finally the OMS. M/s Quanta Technologies, a US based consultancy firm, has been appointed to develop the Technology and Smart Grid Roadmap for which a grant of USD 0.7 Mln. (around Rs. 3.5 Cr.) has been secured from United States Trade & Development Agency (USTDA).

Information Technology

Secondary Data Centre (SDC) In order to ensure and improve Business Continuity, mitigate technical, human and natural threats, SDC was created and made fully operational at TPDDL. This system ensures 100% availability of all business critical applications. TPDDL is the first utility in the country to implement a SDC.

HUMAN RESOURCES DEVELOPMENT

During the period under review, the Company launched various initiatives towards improving performance, culture building and employee engagement.

Great Places to Work Institute. India

TPDDL continued to rank amongst India's Best Companies To Work For 2013 - Top 50. Also for the first time TPDDL has appeared in the category of "Among Industry Best".

Employee Engagement

Employee Engagement and Satisfaction Survey was conducted in 2013 covering 84% employees as compared to 62% in 2011. Results and analysis of the survey are awaited.

Talent Management

To further enhance performance orientation and learning environment in the organization, several initiatives were undertaken like the concept of co-opting an observer in the appraisal process, which has also resulted in increased transparency; differential bell curve has been introduced for executives and non - executives.

A new and comprehensive learning & development policy has been introduced. The policy covers leadership and capability development opportunities for all employees at Senior Management, Middle Management & Junior Management level to meet their personal and professional aspirations.

In order to increase engagement levels of employees, 27% employees have been given Job Rotation in the FY 2012 -13.

Welfare

To celebrate ten years of the Company's existence, Ullas - an employee Mela was organized for employees and their family members. Various other employee welfare initiatives have been undertaken:

• New scheme introduced to provide Employment opportunity to Employee Wards / BA & Outsourced Employees

• A platform where in employees may interact with the CEO & ED has also been introduced - One to One meeting with CEO

• Institution of Cultural Clubs for employees

• Introduction of Employee Referral Scheme

• New policy for Gift on the occasion of marriage of employees and employee wards.

With the objective of promoting culture of sports in the organization, a "Sports Council" was constituted and various Inter-Departmental Sports events were organized by the Sports Council.

Safety

Reporting a minimum number of Safety Observations has also been made a mandatory KRA for each employee.

Ethics

To inculcate ethical culture and implement ethics management across the organization, the Company has adopted a Code of Conduct and also has a Whistle Blower policy in place. As per the Whistle Blower policy, any stakeholder can raise ethical concern(s) upto the level of the Chairman, Audit Committee. The Company has instituted a three tier Ethics Management Structure headed by the Principal Ethics Officer i.e. CEO & ED, which in turn reports to the Board of Directors which maintains a continuous oversight on ethical issues being raised and their resolution. The Company also has a Sexual Harassment Committee to look into any sexual harassment related complaints.

In accordance with the above processes, appropriate actions have been taken wherever necessary.

Further, steps like celebration of ethics week, online quizzes, publication of Ethics Patrika & Ethics Violation Updates, Ethical Compass (Ethics related sayings/ quotations), etc. have been undertaken to promote culture of ethics.

Industrial Relations

The Industrial Relations situation in Company continued to be generally peaceful during the year under review.

CORPORATE SOCIAL RESPONSISBILITY

Community welfare is central to the core values of TPDDL and concern for bringing about a positive change in people's lives drives TPDDL as a company. Its motto 'Power to the People' not only translates to offering business services but attempts to empower society as well. Further, the Tata philosophy "to give back to the community manifold" and TPDDL's Mission Statement "to enrich the quality of life in the society that we operate in" provide the necessary direction, and the rationale to create an environment supporting Affirmative Action.

TPDDL has developed a unique socio-economic business case for addressing needs and aspirations of key communities (weaker sections of society) which also are its consumers, thereby building a symbiotic relationship for the benefit of both, viz. members of such economically weaker sections as well as the Company. The Company proactively and responsibly conducts social activities and devises strategies to help build a self- sustainable developmental structure within the community, especially for those residing in JJ clusters resettlement colonies and BA employees.

To give it a greater thrust, the Board recently constituted a CSR Committee in line with the requirements of the pending Companies Bill, 2012.

AFFIRMATIVE ACTION

TPDDL's journey in the realm of Affirmative Action began with the signing of the Code for Affirmative Action on 3rd February 2007. The "Policy on Affirmative Action for Scheduled Caste & Scheduled Tribe Communities" was approved by the Board of Directors on 18th July 2007. TPDDL's Affirmative Action's aiming towards upliftment of Schedule castes and Schedule tribe communities are classified under 4Es, viz. Education, Employability, Employment and Entrepreneurship. They also address the government's expectations on Affirmative Action (AA) and Cll agenda. TPDDL's innovative processes of integrating Corporate Social responsibility with its Loss Reduction Strategy have also won Break through Innovation award at the All India Management Association.

TPDDL's practice on supporting Education for SC/ ST communities has also been recognized as a "Best Practice in Education" amongst Tata Group companies.

UN Global Compact

TPDDL is a signatory to United Nations Global Compact and is now a part of a group of 5300 organizations worldwide. TPDDL is committed to upholding the 10 principles in the areas of Human Rights, Labour, and Environment & Anti-Corruption. Communication on progress of the activities carried out in this area is annually uploaded on UNGC website.

SA-8000 Certification; TPDDL has also been certified for SA-8000, an international standard for social accountability. After initial certification in 2009, the certification was renewed during the year based on surveillance audit by DNV, an internationally certified auditor for the SA-8000 certification. In order to address Social & Environmental challenges, TPDDL continues to strive to identify areas where it can make a difference.

Various awards and recognitions have been bestowed on the Company and Company executives during the period under review. Some of the awards and recognitions received by the Company and its officers are as under:

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

TPDDL Energy Club Movement:- Energy Conservation Program

The TPDDL Energy Club Movement encourages school children to learn the message of Energy conservation and disseminate the learning to their friends/ neighbors/ parents during vacations.

TPDDL Energy Club was started as a pilot project in 2004 with 5 schools which has now swelled to 190 schools (140 Govt. + 50 Private). Since then Ten Lakh children and adults in North and North West of Delhi have been sensitized on the need and ways and means of energy conservation. Issues of Climate Change, Safety and Water conservation have also been included as part of TPDDL Energy Club sensitization program. Children and youth as ambassadors of positive social change have been involved in two basic projects i.e. PROJECT CONSERVE (for conserving electricity) and PROJECT NEST (Neighbourhood Energy Sensitization Task), in their designated schools as part of the TPDDL Energy Club. These efforts have helped in saving around seven lac units of electricity each in phase IV and V of sensitization plan.

CORPORATE GOVERNANCE

The Company is committed to following the principles and practices of good Corporate Governance. A separate voluntary statement on Corporate Governance is annexed to and forms part of the Directors' Report.

AUDITORS' REPORT

We are pleased to append herewith the Auditors' Report. Comments of the Auditors in their Report and the notes forming part of the Accounts are self-explanatory.

FOREIGN EXCHANGE EARNINGS & OUTGO

During the financial year under review, the Company earned nil (previous year Rs. 14.84 lacs) in foreign exchange from consultancy services. The foreign exchange outflow during the financial year was Rs 15.97 lacs (previous year Rs. 52.01 Lacs) on account of import of Capital goods and Components & spare parts, Rs. 75.14 lacs (previous year Rs. 0.77 lacs) on account of foreign consultancy expenses and Rs.32.31 lacs (previous year Rs. 33.98 lacs) on account of foreign travel.

DEPOSITS

The Company did not accept any deposits during the year.

PARTICULARS OF EMPLOYEES

Statement under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Amendment Rules, 2011 is annexed hereto and forms part of the report.

WHOLLY OWNED SUBSIDIARY

NDPL Infra Limited: Wholly owned subsidiary of TPDDL namely NDPL Infra Limited was incorporated on 23^rd August, 2011 with an Authorised Share Capital of Rs. 1,00,00,000/- (Rupees One Crore only) and the initial paid up share capital of Rs. 5,00,000/- (Rupees Five Lakhs only) with an objective of carrying on businesses other than the licensed businesses of TPDDL.

The Company received its Certificate of Commencement of Business on 16th September, 2011. The documents of NDPL infra Limited pursuant to Section 212 of the Companies Act, 1956 are annexed and form part of this Annual Report.

Financial Highlights: NDPL Infra Limited earned revenues of Rs. 60,06,481/- during Financial Year 2012-13, a growth of about 9 times over the previous year revenues of

Rs 6,87,760/- from 23^rd August 2011 to 31^st March, 2012 being the year of formation of the company. Loss before Tax was Rs. 407,010/- for the year ended 31^st March 2013 as against profit before tax (PBT) of Rs. 4,875/- for the period 23^rd August 2011 to 31^st March, 2012. The Loss after tax adjustment was Rs. 465,133/- for the year ended 31^st March 2013 as against Profit after tax (PAT) of Rs. 3375/- for the period 23^rd August 2011 to 31^st March, 2012.

DIRECTORS

Mr. Adi J Engineer reached the age of 75 years on 27th August, 2012 and in line with the practice of Tata Group Companies, he stepped down from the Board of Tata Power Delhi Distribution Limited (TPDDL). The Tata Power Company Limited nominated Mr. Anil Sardana to take over as Chairman of TPDDL with effect from 28.8.2012.

The Tata Power Company Limited had also nominated Mr. Nawshir H Mirza as a nominee of Tata Power, as an Additional Director on Board of TPDDL, w.e.f. 28th August, 2012.

Dr. H.S. Vachha had stepped down as Director from the Board of Tata Power Delhi Distribution Limited with effect from 28th November, 2012.

The Tata Power Company Limited also nominated Mr. Ashok Kumar Basu as an Additional Director on Board of TPDDL, in place of Dr. H.S. Vachha w.e.f. 14th December, 2012.

The Company had received a communication from Department of Power, GoNCTD vide letter no F.11(29)/2002/Power/Vol.il/986 dated 9th April, 2013, conveying resignation of Mr. P.K. Tripathi from the Board of Directors of the Company.

The Company had received a communication from Department of Power, GoNCTD vide letter no F.11(129)/2002/Power/Vol.ll/1209 dated 9th April, 2013 and Delhi Power Company Limited vide letter No. F.17/DPCL/CS/2013-14/70 dated 16^th May, 2013, conveying nomination of Mr. Rajendra Kumar on the Board of Directors of the Company.

The Company has received notices as per Section 257 of the Companies Act, 1956 from shareholders proposing the name of Mr. Nawshir H Mirza, Mr. Ashok Kumar Basu and Mr. Rajendra Kumar for their appointment for the office of Director at the forthcoming Annual General Meeting.

In accordance with the requirements of the Companies Act, 1956 and the Articles of Association of the Company, Mr. D.M. Spolia, Mr. M.M.Kutty and Mr. R.K. Srivastava retire by rotation and are eligible for reappointment.

The Board, places on record its appreciation of the valuable contribution made by the outgoing Directors as members of the Board and welcomes the new Directors on the Board.

None of the Company's Directors are disqualified from being appointed as Directors as specified in Section 274 of the Companies Act, 1956.

AUDITORS

Messrs Deloitte Haskins & Sells, the Company's Statutory Auditors, (Firm Registration No. 015125N) will retire at the conclusion of the forthcoming Annual General Meeting.

DERC vide letters no.

F.6(10)/AF/DERC/2012-13/6101 dated 22^nd February, 2013 and F.6(10)/AF/DERC/2012-13/3781/6518 dated 20^th March, 2013 has directed the Company that:

(i) Services of same Statutory Auditor may be availed for a maximum period of three years/rotation of Statutory Auditors every three years

(ii) Appointment of auditors from amongst the list of C&AG approved auditors for the appropriate category of companies.

Based on the above directions of DERC, it is proposed to consider and appoint M/s V.Sankar Aiyar St Co. C&AG empanelled Chartered Accontants, to hold office from the conclusion of this Annual General Meeting upto the conclusion of next Annual General Meeting.

M/s V.Sankar Aiyar & Co., pursuant to Section 224 (1B) of the Companies Act, 1956, have furnished a certificate regarding their eligibility for appointment as the Auditors of the Company. Their appointment, if made, will have to be by way of a Special Resolution of the Members as required under Section 224A of the Companies Act, 1956.

M/s Deloitte Haskins & Sells have tendered their resignation vide letter no ND/AC/136 dated 30^th May, 2013

Internal Audit : Based upon the recommendations of the Audit Committee, the Board through circulation resolution dated 31^st May, 2013 approved the appointment of M/s PWC Chartered Accountants as the Internal Auditors of the Company for the Financial Year 2013-14.

Tax Audit : Based upon the recommendations of the Audit Committee, the Board through circulation resolution dated 31^st May, 2013 approved the appointment of M/s Deloitte Haskins & Sells, Chartered Accountants (ICAI Firm Registration No. 015125N) as the Tax Auditors of the Company for the Financial Year 2013-14.

COST AUDIT

As per the requirements of the Central Government and pursuant to Section 233B of the Companies Act, 1956, the Company carries out an audit of the Cost Accounts relating to Electricity every year since 2006. Subject to the approval of the Central Government and based on the recommendation of the Audit Committee, the Board of Directors of the Company have appointed M/s Ramanath Iyer & Company, Cost Accountants, (Firm Registration No. 00019) to audit the cost accounts relating to electricity for FY 2013-14. They have, pursuant to Section 224 (1B) of the Companies Act, 1956, furnished a certificate regarding their eligibility for re-appointment as the Cost Auditors of the Company. They have also certified their independence and arms length relationship with the Company.

Cost Audit Report for the Financial Year ended 31^st March, 2012 was to be filed with the Central Government by 28^th February, 2013 and it was filed with Central Govt., Ministry of Corporate Affairs on 22^nd January, 2013.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to all material departures;

ii. they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit and Loss of the Company for that period;

iii. they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the. provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. they have prepared the accounts for the year ended 31^st March, 2013 on a 'going concern' basis.

ACKNOWLEDGEMENT

The Board of Directors wish to thank the Government of India (including Ministry of Power), Government of National Capital Territory of Delhi, Delhi Electricity Regulatory Commission, Delhi Power Company Limited, Delhi Transco Limited, Power Suppliers, USTDA & their associates, financial institutions, bankers, customers, shareholders, employees of the Company and all individuals and agencies that have contributed in one or the other way, for their co-operation and support extended to the Company.

ANNEXURE 1 TO THE DIRECTORS' REPORT

Disclosure under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

(A) Conservation of Energy: N.A.

(B) Technology Absorption: As below

(C) Foreign Exchange Earnings and Outgo:

During the financial year under review, the Company earned nil (previous year Rs. 14.84 lacs) in foreign exchange from consultancy services. The foreign exchange outflow during the financial year was Rs 15.97 lacs (previous year Rs. 52.01 Lacs) on account of import of Capital goods and Components & spare parts, Rs. 75.14 lacs (previous year Rs. 0.77 lacs) on account of foreign consultancy expenses and Rs.32.31 lacs (previous year Rs. 33.98 lacs) on account of foreign travel.

(i)Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans: N.A.

(ii)Total Foreign Exchange used & earned:

During the financial year under review, the Company earned nil (previous year Rs. 14.84 lacs) in foreign exchange from consultancy services. The foreign exchange outflow during the financial year was Rs 15.97 lacs (previous year Rs. 52.01 Lacs) on account of import of Capital goods and Components & spare parts, Rs. 75.14 lacs (previous year Rs. 0. 77 lacs) on account of foreign consultancy expenses and Rs.32.31 lacs (previous year Rs. 33.98 lacs) on account of foreign travel.

RESEARCH AND DEVELOPMENT (R&D)

1. Specific areas in which R&D was carried out by the Company.

(a) Trench less laying of cable without HDPE pipe using Sodium Bentonite slurry (Project won 2^nd position in Shikhar Award by TPC)

(b) 11KV Auto Changeover in RMU (Ring main unit) for Key/Express consumers like water-works, amusement park and hospitals through in-house development. Total auto changeover installed-10 nos.

(c) Harmonic analysis study has been carried out at 33KV, 11KV and LT level for quality power supply to its consumers. -Total 87 nos consumers identified breaching harmonic limits as per IEEE 519 standard.

(d) Remote relay parameterization done to analyze SCADA-compatible relay data of grid switchgear from a centralized location. -Total 60% lEDs (Intelligent electronic device) at grid station can now be accessed from centralized location.

(e) In-house development of logics in IED's (Intelligent electronic device) has been done for extending Auto - reclose facility to overhead 11KV feeders in TPDDL.-Total 75 nos. of feeders enabled with this feature.

(f) Enhancement of cable jointing technology through inclusion of mechanical connector and roll spring in 11 KV transition Joints.

(g) Development in LT-XLPE cable by introduction of all black cores to avoid cracking phenomenon due to UV (ultraviolet) effects.

2 Benefits derived as a result of the above R&D:

(a) Cost reduction in laying/repairing of cable. Avoiding de-rating and easy fault location identification.

(b) Improvement in Consumer satisfaction. Reduction in unserved energy & greenhouse gas emissions by preventing the generator startup at consumer end.

(c) Improvement in power quality thereby reducing technical losses and improvement in life of the asset.

(d) Improvement in network reliability and reduction in carbon Emissions with less vehicle movement.

(e) Improvement in network reliability and reduction in unserved energy.

(f) Improvement in reliability and customer satisfaction.

(g) Saving of cost by avoiding cracking of cables and improvement in customer satisfaction and reliability of network.

FOREIGN EXCHANGE EARNINGS & OUTGO

During the financial year under review, the Company earned nil (previous year Rs. 14.84 lacs) in foreign exchange from consultancy services. The foreign exchange outflow during the financial year was Rs 15.97 lacs (previous year Rs. 52.01 Lacs) on account of import of Capital goods and Components & spare parts, Rs. 75.14 lacs (previous year Rs. 0.77 lacs) on account of foreign consultancy expenses and Rs.32.31 lacs (previous year Rs. 33.98 lacs) on account of foreign travel.

3. Expenditure on R&D:

(a) Capital Expenditure: Rs. 5605567.18/-

(b) Recurring Expenditure: Rs. 416374.56/-

(c) Total Expenditure: 6021941.74/-

(d) Total R&D expenditure as a percentage of total turnover : 0.012%

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

I. Efforts, in brief, made towards Technology Absorption, Adaptation and Innovation:

(a) Safety Audit management Process Implementation

(b) Meter Seizure Process implementation

(c) Implemented l&QA Process

(d) Implementation of New Ordering Process for CAPEX Scheme

(e) Implementation of preventive and scheduled maintenance process for system generated PTW's

(f) Automated Process for posting EAG Meter Data in MDS

(g) Revamping of Offline Cash Collection Module (OCCM).

(h) Revamping of intranet knowledge portal (Sanchay).

Benefits derived as a result of the above efforts:

a) Launch of Safety Audit management Process in SAP-ISU for mapping public installation safety audits process. It ensures complete monitoring of safety audit process like audit plan and audit creation, uploading the audit results, sending scorecard to consumers through mail. It also ensures effective monitoring of audits carried out in a year as reports can be extracted from system

b) Meter Seizure Process implemented in SAP-ISU for Enforcement cases. This is also integrated with third party Lab testing S/W. Earlier seized meters details were not captured in the system.

c) Implemented I & QA Process (In house inspection of new electrical installation) in SAP for Projects, Systems & Zones in SAP. This process enables users in capturing

- Quality related observations after completion of site work & updating their compliance

Electrical Safety related observation & updating their compliance. Also safety related points are highlighted to all concerned HOGs.

- New Pole numbers

d) Implementation of New Ordering Process for CAPEX Scheme to allow placement of purchase orders only after RoW clearance from different agencies like MCD, PWD, DDA, etc,

- Reduce number of purchase orders processed for Amendment

- Saving in Interest cost on vendors payments due to delay in RoW

e) Implementation of preventive and scheduled maintenance process for planed and un-planned shutdown requests for distribution network.

- System generated PTW's

- Saving in time, by reduction of triplicate efforts of data entry in SAP, Flash Report and GDR (General Dairv).

- Online monitoring of shutdowns and PTWs.

f) Automated Process of posting EAG Meter Data in MDS which was being done manually. This has saved 7-8 days of manual efforts / month

g) Revamping of Offline Cash Collection Module (OCCM) with better technology:

- Saving of appx 30 SAP licenses' and improved response time

front end screens having look and feel of currently running SAP cash collection screens for ease in operation

- Migration of database from MSDE to SQL 2008 R2 increasing database limit from 2GB to 10GB

- Features like auto updating of application to save time in implementing new version in different locations

h) Revamping of knowledge portal (Sanchay) with new features and improved look and feel.

- Migration from Share point portal 2007 to 2010 with advanced features Intimation of birthdays/ anniversaries, Employee Corner, Poll, etc.

Following is the information of imported technology (imported during the last 5 years reckoned from the beginning of the financial year):

Deloitte Haskins & Sells

Chartered Accountants 7th Floor, Building 10, Tower B DLF Cyber Cily Complex DLF City Phase-II Gurgaon- 122002,'faryarta India

Tel : + 91 (124) 679 2000 Fax: +91 (124)679 2012