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Project for Corporate Governance

Topic Name: Reliance Power & NTPC

Name Ankit Wadhwani Mayank Sareen Utkarsh Sahai Vasundhara Pandey Siddharth Bundela

Roll No. 13025 13081 13189 13193 13209

Serial No. 6 18 43 44 48

Section: A Batch 2012-2014

Contents
Executive Summary....................................................................................................................................... 3 Introduction .................................................................................................................................................. 4 Objectives & Scope ....................................................................................................................................... 6 Research & Data Analysis.............................................................................................................................. 7 Observations & Findings ............................................................................................................................. 34 Bibliography & References.......................................................................................................................... 35

Executive Summary
The Corporate Governance report of two companies i.e. Reliance Power and Power Grid is studied. These reports are analyzed in the context of C.G. by Kumar Manglam Birla AND Report of N. Naryanmurthy Committee by keeping them as the base of our study. Comparison is made in the project between the corporate governance report of Reliance Power and NTPC with the two reports that we are taking as the base of our study. The focus of the study was to see the whether our selected companies are following the recommendation made by C.G. by Kumar Manglam Birla AND Report of N. Naryanmurthy Committee. Both the companies report are analyzed on the basis of the board composition of BOD, importance of Corporate Goverance and its future goal, how many Committee does the company have and what is the role of each Committee, its composition of board and information regarding code of conduct.

Introduction
We have selected two companies for our study Reliance Power and NTPC both from energy sector. The rationale behind selecting these two companies was these both the companies are very different from each other as one company reliance Power is Private company on the other hand NTPC is Government holding company as Government is holding its major percent of shares. Thus there is diversification in our choice and we get the opportunity to analyze report of different types of company. Reliance Power Reliance Power Limited is a part of the Reliance Group, one of Indias largest business houses. The group operates across multiple sectors, including telecommunications, financial services, media and entertainment, infrastructure and energy. The energy sector companies include Reliance Infrastructure and Reliance Power. Reliance Power has been established to develop, construct and operate power projects both in India as well as internationally. The Company on its own and through its subsidiaries has a portfolio of over 35,000 MW of power generation capacity, both in operation as well as capacity under development. The power projects are going to be diverse in terms of geographic location, fuel type, fuel source and off-take, and each project is planned to be strategically located near an available fuel supply or load centre. The company has 1,540 MW of operational power generation assets. The projects under development include seven coal-fired projects to be fueled by reserves from captive mines and supplies from India and elsewhere; two gas-fired projects; and twelve hydroelectric projects, six of them in Arunachal Pradesh, five in Himachal Pradesh and one in Uttarakhand. Reliance Power has won three of the four Ultra Mega Power Projects (UMPPs) awarded by the Indian Government so far. These include UMPPs in Sasan( Madhya Pradesh),Krishnapatnam( Andhra Pradesh) & Tilaiya(Jharkhand).UMPPs are a significant part of the Indian government's initiative to collaborate with power generation companies to set up 4,000 MW projects to ease the countrys power deficit situation.

Besides these, Reliance Power is also developing coal bed methane (CBM) blocks to fuel gas based power generation. The company is registering projects with the Clean Development Mechanism executive board for issuance of Certified Emission Reduction (CER) certificates to augment its revenues. NTPC Indias largest power company, NTPC was set up in 1975 to accelerate power development in India. NTPC is emerging as a diversified power major with presence in the entire value chain of the power generation business. Apart from power generation, which is the mainstay of the company, NTPC has already ventured into consultancy, power trading, ash utilization and coal mining. NTPC ranked 384th in the 2013, Forbes Global 2000 ranking of the Worlds biggest companies. NTPC became a Maharatna company in May, 2010, one of the only four companies to be awarded this status.

The total installed capacity of the company is 42,464 MW (including JVs) with 17 coal based and 7 gas based stations, located across the country. In addition under JVs, 7 stations are coal based & another station uses naptha/LNG as fuel and 3 renewable energy projects. The company has set a target to have an installed power generating capacity of 1,28,000 MW by the year 2032. The capacity will have a diversified fuel mix comprising 56% coal, 16% Gas, 11% Nuclear and 17% Renewable Energy Sources(RES) including hydro. By 2032, non fossil fuel based generation capacity shall make up nearly 28% of NTPCs portfolio. NTPC has been operating its plants at high efficiency levels. Although the company has 16% of the total national capacity, it contributes 25.6% of total power generation due to its focus on high efficiency.

Objectives & Scope

To improve the understanding of the subject Understanding the organization and Corporate Governance in real life situation Comparing recommendation of Report on C.G. by Kumar Manglam Birla AND Report of N. Naryanmurthy Committee and Reliance Power and NTPC.

Research & Data Analysis

Q-1. Comment on the Composition of the BOD..Total number of directors, Composition, (i.e) Type of directors & type of Chairman NTPC A STATEMENT ON THE BOARDS, COUNCILS, COMMITTEES AND OTHER BODIES CONSISTING OF TWO OR MORE PERSONS CONSTITUTED AS ITS PART OR FOR THE PURPOSE OF ITS ADVICE, AND AS TO WHETHER MEETINGS OF THOSE BOARDS, COUNCILS, COMMITTEES AND OTHER BODIES ARE OPEN TO THE PUBLIC, OR THE MINUTES OF SUCH MEETINGS ARE ACCESSIBLE TO THE PUBLIC. Meetings of the Boards, Committees and other bodies are not open to the Public or the minutes of such meetings are not made accessible for public as the nature of business of NTPC is that of a strategic establishment. Board of Directors: The Management of the Company is vested with the Board of Directors. In terms of the Articles of Association of the Company the Board of Directors can have minimum four Directors and maximum twenty Directors. The Composition of the Board of Directors as on December 31, 2013 is given below S.No. Name Designation Date of Appointment Functional Directors 1 Shri Arup Roy Choudhury 2 3 4 5 Shri I.J.Kapoor Shri N.N.Mishra Shri A.K.Jha Shri U.P. Pani Director (Commercial) Director (Operations) Director (Technical) Director (Human Resources) 26.12.2008 19.10.2010 01.07.2012 01.03.2013 Chairman & Managing Director 01.09.2010

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Shri S.C. Pandey Shri Kulamani Biswal

Director (Projects) Director (Finance)

01.10.2013 09.12.2013

Part-Time Official Directors 1 Shri Pradeep Kumar Joint Secretary & Financial Adviser, Ministry of Power, Government of India 2 Shri G. Sai Prasad Joint Secretary, Ministry of Power, Government of India Part-Time Non-Official Directors 1 Shri S. B. Ghosh Dastidar 2 3 Shri R. S. Sahoo Shri Ajit M. Nimbalkar 4 5 Shri S. R. Upadhyay Ms. Homai A. Daruwalla 6 7 8 9 Prof. Sushil Khanna Shri A.N. Chatterjee Dr. A. Didar Singh Shri Prashant Mehta 30.01.2012 30.01.2012 23.08.2012 30.07.2013 20.01.2012 30.01.2012 26.08.2011 20.01.2012 26.08.2011 05.12.2013 09.06.2009

In terms of the provisions of the Companies Act, 1956, Dr. Yogendra Narain, Independent Director of the Company retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting. A brief resume of the Director retiring by rotation at the ensuing AGM, nature of expertise in specific functional areas and names of the companies in which he holds directorship and/ or membership/ chairmanships of Committees of the respective Boards, shareholding and relationship between Directors inter se as stipulated under Clause 49 of the Listing Agreement

with the Stock Exchanges in India, is given in the section on Corporate Governance Report forming part of this Annual Report. Reliance Power Name Anil Dhirubhai Ambani Yogendra Narain Darius J Kaklia J L Bajaj V K Chaturvedi Designation Chairman Director Independent Director Director Director

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Q-2. In addition to the Directors Report, does the Annual Report contain Management Discussion and Analysis portion of the firms? Briefly discuss & comment on the following as mentioned in the annual report a) Oppertunities & Threats b) Segment wise or product wise performance c) Outlook d) Risk and concern e) Discussion on financial performance Opportunities and threats NTPC: Huge demand and supply gap Large opportunity in energy consultancy service New sources of power generations Rising cost of production Huge competition from growing private sector firms New and cleaner sources of power Reliance Power: Setting up huge power plants in Jharkhand and Orissa which have huge reserves of coal Huge scope in power sector once the projects become operational Investing in Non-conventional energy projects International tie-ups and collaborations

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Fluctuating International prices of coal and oil. Changes in International policies regarding import of coal and oil. Government policies and regulations affects operations

Segment wise or product wise performance Reliance Power;

Outlook Reliance Power: The year 2012-13 turned out to be a difficult one for the Indian economy as the GDP growth rate fell to just 5.0 per cent, the lowest in a decade. The slowdown can be attributed both to domestic and external factors. High fiscal deficit, dependence on foreign inflows to finance the current account deficit (CAD), lower savings and lower investment, a tight monetary policy to contain inflation - all contributed to lowering growth. Global economic growth also fell from 3.9 per cent in 2011 to 3.2 per cent in 2012 primarily because of the Euro crisis and uncertainties in fiscal policy in the US. This further contributed to lowering Indias growth. There was a widespread concern in almost all sectors which were affected by the slowdown.

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Q-3. Then briefly discuss how Corporate Governance can contribute to the companys Future goals As contribution of Corporate Governance in Future Goals of NTPC, realises the goal emanating from the core principles of Corporate Governance philosophy and in compliance with the requirements of Listing Agreement executed with the Stock Exchanges and Guidelines on Corporate Governance for Central Public Sector Enterprises by Department of Public Enterprises (Guidelines), there existed two separate Codes of Conduct, one for Board Members and another for Senior Management Personnel. The Company had appointed M/s KPMG as consultant to review and suggest a suitable framework for compliance under Clause 49 of the Listing Agreement in alignment with Companys Vision and Values to achieve the Mission & Objectives and aiming at enhancing ethical and transparent process in managing the affairs of the Company. M/s KPMG suggested that as the compliance under both the Codes are similar in nature, therefore, there can be a Single Code of Conduct for Board Members and Senior Management Personnel. Accordingly, the Board of Directors, in its meeting held on 27.01.2012, amended Code of Conduct earlier laid down separately for Board Members and for Senior Management Personnel incorporating suggestions from M/s KPMG and provisions of the Guidelines by DPE and laid a single Code of Conduct for Directors & Senior Management Personnel. In NTPC, Corporate Governance philosophy stems from our belief that corporate governance is a key element in improving efficiency and growth as well as enhancing investor confidence. The Corporate Governance philosophy is scripted as: As a good corporate citizen, the Company is committed to sound corporate practices based on conscience, openness, fairness, professionalism and accountability in building confidence of its various stakeholders in it thereby paving the way for its long term success.

We believe that our company shall go beyond adherence to regulatory framework. Our corporate structure, business and disclosure practices have been aligned to our Corporate Governance Philosophy. Transparency, accountability, fairness and intensive communication with

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stakeholders are integral to our functioning. We believe in system driven performance and performance oriented systems. We accord highest priority to these systems and protect the interests of all our shareholders, particularly the minority shareholders.

The company has a sound Corporate Governance mechanism in place built around following principles: Diversified Expertise based Board drives our Company NTPC Board, at present, comprises of six full time functional Directors and the Managing Director who is also the Chairman of the company. Our Companys functional directors are highly experienced professionals in their functional areas, provide directions to the management on operational issues, adoption of systems and best practices in management and oversight of compliance of various legal and other requirements. The Company has nine Independent Directors and two directors nominated by the administrative ministry. The Independent Directors on the Board of the company are appointed by the Government of India through an elaborate procedure of selection which encompasses induction of professionals and experts in relevant field through a Search Committee by the Government of India. Our Company believes that Independent Directors bring with them the rich experience followed in other companies resulting in imbibing the best practices followed in the industry.

Clear definition of roles and responsibilities of our Board of Directors leading to decentralized decision making Our Companys framework is designed to enable the Board to provide strategic guidelines for the company the effective over-sight of management. The respective roles and responsibilities of Board Members and Senior Executives are clearly defined to facilitate accountability to company as well as its shareholders. This ensures a balance of authority so that no single individual has unfettered powers.

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Delegation of decision making to various Committees of the Board Our Company has taken adequate steps to form various Committees at the Board level to focus attention on crucial issues before placing the same before the Board for consideration. Some of these committees have been constituted voluntarily even though there is no legal requirement under listing agreement. These include the Projects Committee to consider and decide on investment proposals before approval by the Board, Contracts Committee to deal with award of contracts upto a threshold limit set by the Board, Committee on Management controls, to review various internal control systems and their compliance and Investment/Contribution SubCommittee for matters related to deployment of surplus funds, approval of contributions/donations for national, public or charitable causes etc. Other Committees of the Board are- Audit Committee, Shareholders/Investors Grievance Committee and Committee of the Board for allotment and post-allotment activities of the companys Securities. The Audit Committee was constituted in NTPC in 1995, much before it became a statutory necessity under the Companies Act, in 2000. The Audit Committee ensures that truthful and factual financial position of the company is presented to the Board and hence safeguards integrity of the management. Established Code of Conduct to promote ethical and responsible decision making There are two separate Code of Conduct-one for Board Members and another for Senior Management Personnel in alignment with Companys Vision and Values to achieve the Mission & Objectives and aims at enhancing ethical and transparent process in managing the affairs of the Company. The Code of Conduct also covers issues relating to insider trading in the Companys security. Going beyond Regulation, we think for our shareholders NTPC has more than 9.67 lakh shareholders as on 31.12.08. About 99% of these are retail shareholders and the Company besides appointing a Share Transfer Agent for servicing these shareholders has set up an in-house Investor Services Department to ensure proper and timely redressal of grievances of these small shareholders. As a pro-active investor friendly measure, we had undertaken an exercise in August 2008 to credit unpaid dividend amounts by use of

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supplementary ECS facility/ Direct Payment. Under this initiative, close to 49000 unpaid warrants were paid amounting to Rs.1.23 crores. Continuous efforts are being made to enlarge the number of locations for payment of Dividend through Electronic Clearing System (ECS) etc. Our Directors constantly interacts with the Institutional Investors to explain to them the strategies and plans of the company. During such interactions, investors express various view points on the sector and business of the company and the management, in turn, addresses their concerns and explains the measures taken by the Company. We also organize an annual investor and analyst conference where our entire Board meets with the analyst and investing community and addresses to their queries and concerns about the company.

Establishing a Risk Management System NTPC has formulated a Risk Management Policy in fiscal 2005 to institutionalize the risk management in the Company. The policy aims to identify, assess, monitor and manage risk nt for identifying and capitalizing on opportunities to create value. In order to imbibe the best practices prevalent in the industry, we have appointed a reputed Consultant to develop and implement a Framework for Compliance under clause 49 of the listing agreements with Bombay Stock Exchange/National Stock Exchange. After holding detailed deliberations involving all the units of the Company, an elaborate enterprise wide Risk Management Framework has been developed and risks are being reviewed periodically by the senior management. Customer Relationship Management NTPC engages itself in extending continuous support to all its stake holders including customers and it is regarded among its customers for its professionalism. Under its Customer Relationship Management (CRM) programme, the Company has started to offer services/support to customers in selected areas such as Operation & Maintenance, R&D Finance, IT etc with the explicit objective of overall power sector growth.

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Undivided Commitment towards Society NTPC has been a committed and socially responsible corporate citizen since its inception. The Company has also formulated and adopted Corporate Social Responsibility-Community Development (CSR-CD) policy for taking up CSR activities in areas adjoining the power stations. There is an established NTPC Foundation to address the niche domains of social development at national level through strategic interventions

Reliance Power Reliance Power follows the highest standards of corporate governance principles and best practices by adopting the Reliance Group Corporate Governance Policies and Code of Conduct as is the norm for all constituent companies in the group. These policies prescribe a set of systems and processes guided by the core principles of transparency, disclosure, accountability, compliances, ethical conduct and the commitment to promote the interests of all stakeholders. The policies and the code are reviewed periodically to ensure their continuing relevance, effectiveness and responsiveness to the needs of our stakeholders. They have developed a large portfolio of projects which require substantial use of natural resources such as land, water and minerals. We take adequate care in designing our power generation plants in a manner that optimises the utilisation of land, thereby bringing down the aggregate land requirement and minimising the potential for disruption and displacement of local communities. We are also adopting cleaner technologies related to power generation that reduce the consumption of fuel and water required for plant operations, thereby conserving precious natural resource and contributing to a greener and healthier environment.

Many of the areas in which we are implementing projects are not very well developed and it will always be our mission to contribute towards improving the quality of life of the communities living in these areas. Indeed, we believe that our success in executing large-scale generation projects is critically dependent on following a participatory development-oriented approach that strengthens our bond with the local population.

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Q-4. 4. How many board meeting were held? Attendance particulars of each of the directors

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Reliance

Name of Director

Number of Board Meetings attended during the financial year

Attendance at the Last AGM held on 04-092012

No. of Directorshi ps (including RPower)

Shri Anil Dhirubhai Ambani Shri J. L. Bajaj Dr. Yogendra Narain Dr. V. K. Chaturvedi

5 out of 5

Present

5 out of 5

Present

5 out of 5

present

5 out of 5

Present

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Q-5. Do the firms have Audit Committee? How many Ex directors & Non Ex Directors in the Committee? Was the chairman of the committee Executive OR Non Executive How many Times did it meet in a year? Reliance Power: In terms of Clause 49 of the listing agreement as well as Section 292A of the Companies Act, 1956, the Board has constituted the Audit Committee of the Board of Directors. Reliance power has three non executive directors Shri J. L. Bajaj, Dr. Yogendra Narain and Dr. V. K. Chaturvedi. The Audit Committee is chaired by Shri J. L. Bajaj and he is non executive director of Reliance Power. The Audit Committee of Reliance Power met 7 times in financial year 2012-2013. The Audit Committee held its meetings on May 24, 2012, August 14, 2012, September 4, 2012 November 5, 2012, December 8, 2012, January 25, 2013 and February 27, 2013. The maximum gap between any two meetings was 81 days and the minimum gap was 20 days. NTPC: The Audit Committee of NTPC is in line with companies act 1956 and guidelines of Corporate Governance as issued by Department of public Intrest. NTPC has four independent directors and one non executive director. Rajib Sekhar Sahoo S B Ghosh Dastidar Homai A Daruwalla Anol Nath Chatterji Shri Rakesh Jain Non Executive Independent Director Non Executive Independent Director Non Executive Independent Director Non Executive Independent Director Non Executive Director

Dr S.B Ghosh Dastidar the Non Executive Independent director was the Chairman of Audit Committee of NTPC. Audit Committee of NTPC met for eight times in financial year 2012-2013 on April 13, May 10, May 17, July 10, October 25, December 27, and January 21.

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Q-6. What was the role played by the Audit committee? Reliance Power: During the year, the Committee discussed with the Companys Auditors the overall scope and plans for an independent audit. The Management represented to the Committee that the Companys financial statements were prepared in accordance with prevailing laws and regulations. The Committee discussed the Companys audited financial statements, the rationality of significant judgments and the clarity of disclosures in the financial statements. Based on the review and discussions conducted with the Management and the auditors, the Audit Committee believes that the Companys financial statements are fairly pr esented in conformity with prevailing laws and regulations in all material aspects. The Committee has also reviewed the internal controls put in place to ensure that the accounts of the Company are properly maintained and that the accounting transactions are in accordance with the prevailing laws and regulations. In conducting such reviews, the Committee found no material discrepancy or weakness in the internal control systems of the Company. The Committee also reviewed the financial policies of the Company and expressed its satisfaction with the same. The Committee, after review expressed, its satisfaction on the independence of both the internal and the statutory auditors. Based on the Committees discussion with the Management and the auditors and the Committees review of the representations of the Management, the Committee has recommended the following to the Board of Directors: 1. The audited annual financial statements of the Company for the year ended March 31, 2013, be accepted by the Board as a true and fair statement of the financial status of the Company. 2. The audited abridged financial statements of the Company for the year ended March 31, 2013, be accepted by the Board as a true and fair statement of the financial status of the Company. 3. The audited consolidated financial statements of the Company, its subsidiaries for the year ended March 31, 2013, be accepted by the Board as a true and fair statement of the financial status.

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4. The audited abridged consolidated financial statements of the Company, its subsidiaries for the year ended March 31, 2013, be accepted by the Board as a true and fair statement of the financial status. NTPC: The role played by the Audit Committee of NTPC is not mentioned in the Corporate Governance report. Only the scope of Audit Committee and the member of it are mentioned there.

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Q-7. Do the firms have Remuneration Committee? How many Ex directors & Non Ex Directors in the committee? Was the chairman of the committee Executive OR Non Executive How many times did it meet in a year?

Reliance Power:

Yes the company has the Nomination/Remuneration Committee of the Board. The Nomination/Remuneration Committee comprises of Dr. V. K. Chaturvedi Non Executive Director Dr. Yogendra Narain Non Executive Director Shri J. L. Bajaj Non Executive Director

Dr. V. K. Chaturvedi Non Executive Director is the Chairman of the Committee. The Committee met once during the year to recommend the remuneration payable to the Manager for the year 2012-13.

NTPC:

Yes the company has the Nomination/Remuneration Committee of the Board. Shri Ajit m. Nimbalkar Non Executive Director Shri S.R. Upadhyay Non Executive Director Shri A.N. Chartterji Non Executive Director Shri I.C.P Keshari Non Executive Director Shri Rakesh Jain Non Executive Director

Shri Ajit m. Nimbalkar Non Executive Director is the Chairman of the Committee. Two meetings were held during the year on October 19, 2012 and December 28.

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Q-8. Has the company mentioned remuneration packages for all the Executive Directors? Reliance Power: Details of Sitting Fees paid to non-executive directors during the year 2012-13. Name Shri Anil D. Ambani Shri J. L. Bajaj Dr. Yogendra Narain Dr. V. K. Chaturvedi Position Chairman Director Director Director Sitting Fees 1.00 3.80 3.80 3.40

NTPC: Board has not mentioned any remuneration packages for all the Executive Directors.

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Q-9. Does the board have committee to look into redressing of shareholder complaints? How many Ex/ non-executive directors heading of the committee? Number of complaints received & pending Reliance Power: Yes the board has the Shareholders / Investors Grievance Committee to look into redressing of shareholder complaints. The Shareholders / Investors Grievance Committee comprises of 3 non executive directors. Dr. V. K. Chaturvedi Non Executive Director Dr. Yogendra Narain Non Executive Director Shri J. L. Bajaj Non Executive Director The number of complaints received & pending is not mentioned by the board in its Corporate governance report.

NTPC: Yes the company has constituted the Shareholders / Investors Grievance Committee to look into redressing of shareholder complaints. The Shareholders / Investors Grievance Committee comprises of 2 non executive directors and 2 Executive Directors. Shri Rakesh Jain Executive Director Shri A.K. Singhal Executive Director Shri U.P. Pani Non Executive Director Ms. H.A. Daruwalla Non Executive Director

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Q-10. What was the venue for last 3 AGMs? NTPC Date, time, venue & special resolutions of the last three AGMs of NTPC were held are as under: Date & Time September 23, 2010 Time Venue 10:30 AM Air Force Auditorium, Subroto Park, New Delhi 110 010 Special Resolutions N.A. September 20, 2011 10:30 AM Air Force Auditorium, Subroto Park, New Delhi 110 010 N.A. September 18, 2012 10:30 AM Air Force Auditorium, Subroto Park, New Delhi 110 010 Amendments in Articles of Association by inserting provisions relating to buyback of shares and appointment of additional directors.

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Reliance Power Date, time, venue & special resolutions of the last three AGMs of NTPC were held are as under:

Date & Time

September 28, 2010

September 27, 2011 02:00 PM Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400 020 1. Issue of equity shares to the

September 4, 2012 02:00 PM Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400 020 Issue of equity shares to the qualified

Time Venue

10:00 AM Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400 020

Special Resolutions

N.A.

qualified Institutional Institutional Buyers. Buyers. 2. Raising of resources through the issue of securities in the International Markets.

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Q-11. Is there a whistle blower policy? NTPC Reliance Power NO (Instead a fraud prevention policy) Yes

NTPC: The Company has not adopted a separate whistle blower policy. However, under the provisions of Fraud prevention policy adopted by the company, a whistle blower mechanism is in place for reporting of fraud or suspected fraud involving employees of the Company as well as representatives of vendors, suppliers, contractors, consultants, service provider or any other party doing any type of business with NTPC. The mechanism for prevention of fraud is also provided in the policy. Reliance Power: The Company has formulated a Whistle Blower Policy to prohibit managerial personnel from taking adverse action against employees who are disclosing in good faith alleged wrongful conduct on matters of public concern involving violation of any law, mismanagement, gross waste or misappropriation of public funds, substantial and specific danger to public health and safety or an abuse of authority. The policy also lays down the mechanism for making enquiry into whistle blower complaints received by the Company. Employees aware of any alleged wrongful conduct are encouraged to make a disclosure to the audit committee.

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Q-12. Is there a code of conduct for the board? What does it contain? NTPC Reliance Power YES YES

NTPC : The company has in place Code of Conduct for Directors & Senior Management personnel in alignment with Companys vision and values to achieve mission & objectives and aiming at enhancing ethical & transparent process in managing the affairs of the Company. A copy of the Code of Conduct is available at the website of the Company. Declaration as required under clause 49 of the listing agreement: All the members of the Board & Senior Management Personnel have affirmed compliance of the Code of Conduct for the financial year ended on March 31, 2013. Arup Roy Chaudhuri (CMD). In pursuance of SEBI regulations, 1992, the board has laid down Code of internal procedures and conduct for prevention of Insider Tading.

Reliance Power: The Company has adopted the code of conduct and ethics for directors and senior management. The code had been circulated to all the members of the Board and senior management and the same has been put on the Companys website www.reliancepower.co.in. The Board members and senior management have affirmed their compliance with the code and a declaration signed by the Manager of the Company appointed in terms of the Companies Act, 1956 {i.e. the CEO within the meaning of clause 49(V) of the listing agreement} is given below: It is hereby declared that the Company has obtained from all members of the Board and senior management personnel affirmation that they have complied with the code of

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conduct for Directors and senior management of the Company for the year 2012-13. Ramaswami Kalidas (Manager).

The Company has also formulated a Code of Conduct for Prevention of Insider Trading (the Code) in accordance with the guidelines specified under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

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Q-13. Does the report mentions the business risk faced, measure to address, and as to how such risk will be minimized and any limitations, if any? NTPC: Business Risk Faced Measure to Address Risk Minimizing Steps Project Implementation on deposit work basis under RGGVY- this activity is expected to last another 12 months after which a sudden decline in revenue stream is perceived as major concern. Frittering away of experienced manpower because of above reason. Cap on trading margin by CERC. Risk gets further enhanced due to private players offering lower trade margin than capped margin. High Risk Risk relating coal mining. Difficulties in Company has been repatriating manpower back to NTPC An Enterprise Risk Management Committee (ERMC) comprising of Executive Directors is in place. ERMC meets every quarter to deliberate on strategies to mitigate the risks to ensure operational efficiency/profitab ility of the Company. Foreign Exchange Risk Management Committee in Overall Risk Responsibility: Responsible for driving timely approvals of EMRC recommendations and monitoring Secondary Risk Responsibility: Formulates action plan and supports the process of approvals. Primary Risk Responsibility: Suggests risk mitigation measures and approval of action plans and implements it. N.A. Limitations

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acquisition of land. Compliance of emission, ash utilization and regulatory norms. Sustaining efficient plant operations. Threat to safety and security of people and property. Medium Risk Delay in execution of projects. Inadequate fuel supply. Risk of not getting schedule. Challenges in attracting & retaining skilled & experienced employees. Other Risks: Hazard Risk Financial Risk Operational Risk

place. Exchange Risk Management Policy. Company is currently negotiating International Swaps & Derivatives Association (ISDA) agreements with authorized dealer banks.

of Action plans for Risk Mitigation.

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Reliance Power Business Risk Faced Measure to Address Risk Minimizing Steps Key Risks: Coal supply position Gas availability position Weak financial condition of electricity distribution companies. Execution risk Quarterly review of Risk Management process by the Risk Management Committee / Board. A Risk Management Committee (RMC) under the Chairmanship of the designated CEO consisting of Senior Executives of the Company Reliance Power has put in place a Risk Management Framework, both at the corporate as well as at the project level. N.A. N.A. Limitations

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The outcome of this monitoring is reported to the Audit Committee and to the Board of Directors on a quarterly basis

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Observations & Findings

Both the companies have mentioned the risks which are Industry specific, and not business specific. For both the companies, there is no mention of specific actions taken on each of the risks specified; only meetings are mentioned, and not the actions taken. Limitations of risk management plan has not been mentioned in both the companies reports.

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Bibliography & References

Report on C.G. by Kumar Manglam Birla Report of N. Naryanmurthy Committee Annual report of Reliance Power 2012-2013. Annual report of NTPC 2012-2013. http://www.reliancepower.co.in/home.htm http://ntpc.co.in/