INCENTIVES AT NTPC LIMITED

GENERATION INCENTIVE SCHEME (PERFORMANCE LINKED INCENTIVE) The Scheme shall be called "NTPC Power Generation Incentive Scheme". BASIC CONSIDERATIONS The purpose of any Incentive Scheme is to motivate the employees to give their best. In the case of a power plant, the incentive plan also takes into account the maintenance aspect of the plant while motivating employees to maximize generation. Any Scheme which encourages maximization of Generation only in the short term may be self-defeating as it leads to irreparable damage to plants and machinery because of insufficient motivation to employee of the proper upkeep and regular maintenance of the Plant. A successful Incentive Scheme, hence, should strike a balance between short range and long range plant requirements and should achieve a good blend of the two in such a way as to optimize generation on a sustained long range basis. The parameters for payment have been determined to encourage better maintenance for higher availability of plant. APPLICABILITY The Scheme covers all regular employees of NTPC directly or indirectly engaged in Generation of Electricity. The Scheme will not be applicable to: Apprentices under Apprentices Act and Trainees Casual or daily rated employees

Monthly Incentive The monthly incentive will be paid based on Equivalent Availability Factor (EAF %) achieved during the month. Quarterly Incentive The quarterly incentive will be paid based on Equivalent Availability Factor (EAF %) achieved during the quarter. The quarter for this purpose will be April-June, July-Sept., Oct.-Dec. and Jan.-March of the financial year. Yearly Incentive The yearly incentive will be paid based on Equivalent Availability Factor (EAF %) achieved during the year. The year for this purpose will be April-March of the financial year.

Generation incentive payable (% of Basic Pay) EAF 70% - Monthly 5.625, Quarterly 1.875, Total 7.50 EAF 90% - Monthly 22.5, Quarterly 7.5, Total - 30

OTHER GENERAL CONDITIONS The employees will be entitled to incentive payments on pro-rata basis for actual period of attendance. The period of training in India for duration of not more than 15 days and casual leave will be treated as attendance for the purpose of incentive payment. The amount of Incentive earnings will neither be termed as pay nor allowance, nor wages. Accordingly, this amount would not count for any service benefits i.e. computation of House Rent Allowance, Compensatory Allowance, cash compensation, encashment of leave, pay fixation, Provident Fund, Pension or Gratuity etc. Employees may be transferred from one department/division to another. In such cases their entitlement for incentive will be determined as per the entitlement of the department/division in which they are actually posted. Relevant particulars and data relating to generation, oil consumption, attendance etc., will be finalized on the basis of records and accounts maintained by the Company.

NTPC INCENTIVE QUALIFICATIONS

SCHEME

FOR

ACQUIRING

HIGHER/ADDITIONAL

The NTPC Incentive Scheme for acquiring higher/additional qualifications has been formulated with a view to encouraging employees to acquire higher/ additional qualifications so as to enable them to improve their knowledge and professional competence for better and more efficient performance in their respective functional areas. APPLICABILITY: The Scheme shall be applicable to all employees and drawing pay in the regular pay scales of the Company excluding the following: Deputationists; Apprentices/trainees engaged under either Company's own training scheme or Apprentices Act, 1961; and

Muster roll, daily-rated, casual, badli or substitute employees.

OTHER CONDITIONS: If an employee, who has received the Incentive under the Scheme, leaves the services of the Company within a year of the receipt of the incentive, he shall be liable to refund the same to the company before his Resignation is accepted.

LONG SERVICE AWARD SCHEME The Scheme shall be called the NTPC Long Service Award Scheme

OBJECTIVE: Rewarding the employees suitably in recognition and appreciation of long, continuous and satisfactory service rendered by them, so as to further motivate them and strengthen their range of belongingness to the Company. COVERAGE: The Scheme shall be applicable to all regular employees borne on the establishment of the Company, but shall exclude the following: Casual, daily rated, temporary or muster roll employees; and Persons in employment of the Company on contract basis.

ELIGIBILITY: An employee shall be eligible for grant of awards under the Scheme on completion of 15 years and 25 years of continuous service. THE AWARD: (a) On completion of 15 years of continuous service, the employees shall be presented with a silver plaque weighing 110 gms. (b) On completion of 25 years of service, the employees shall be presented with a silver plaque weighing 250 grams.