Status of Investor Complaints for the quarter ended March 31, 2009

Complaints Pending at the beginning of the quarter 52

Complaints Received during the quarter 04

Complaints disposed off during the quarter 56

Complaints unresolved at the end of the quarter Nil

1. The above results were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on May 28, 2009.

2. In respect of the Standby Charges dispute with Reliance Infrastructure Ltd. (R-Infra - formerly Reliance Energy Ltd.) for the periods from April 01, 1999 to March 31, 2004, the Appellate Tribunal for Electricity (ATE) set aside the Maharashtra Electricity Regulatory Commission (MERC) Order dated May 31, 2004 and directed the Company to refund to R-Infra as on March 31, 2004, Rs. 354 crores (including interest of Rs. 15.14 crores) and pay interest at 10% p.a. thereafter. As at March 31, 2009, the accumulated interest was Rs. 139.96 crores (Rs. 11.20 crores for the year ended March 31, 2009). On appeal, the Hon’ble Supreme Court has stayed the ATE Order and as directed, the Company has furnished a bank guarantee of Rs 227 crores and also deposited Rs. 227 crores with the Registrar General of the Court which amount has been withdrawn by R-Infra on furnishing the required undertaking to the Court. The said amount has been accounted under Other Deposits.
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Further, no adjustment has been made for the reversal in terms of the ATE Order dated December 20, 2006 of Standby Charges credited in previous years estimated at Rs. 519 crores. The aggregate of Standby Charges credited in previous years, net of tax is estimated at Rs. 342.60 crores, which will be adjusted, wholly by a withdrawal / set off from certain Statutory Reserves as allowed by MERC. No provision has been made in the accounts towards interest that may be finally determined as payable to R-Infra. However, since April 01, 2004, the Company has accounted for Standby Charges on the basis determined by the respective MERC Tariff Orders.

The Company is of the view, supported by legal opinion that the ATE´s Order can be successfully challenged and hence, adjustments, if any, including consequential adjustments to the Deferred Tax Liability Fund and the Deferred Tax Liability Account will be recorded by the Company based on the final outcome the matter.

3. In the matter of claims raised by the Company on R-Infra towards (i) the difference in the energy charges for the period March 2001 to May 2004 and (ii) for minimum off-take charges of energy for the period 1998 to 2000, MERC, has issued an Order dated December 12, 2007 in favour of the Company. The total amount payable by R-Infra including interest is estimated to be Rs. 323.87 crores as on December 31, 2007. ATE in its order dated May 12, 2008, on appeal by R-Infra, has directed R-Infra to pay for the difference in the energy charges for the period March 2001 to May 2004. In respect of the minimum off-take charges of energy for the period 1998 to 2000 claimed by the Company from R-Infra. ATE has directed MERC that the issue be examined afresh after the decision of the Supreme Court in the Appeals relating to the distribution licence and rebates given by R-Intra. The Company and R-Infra have filed appeals in the Supreme Court. On grounds of prudence, the Company has not recognised any income arising from the above matters.

4. During the year, the Company has accounted for revenue and computed regulatory return entitlement in respect of its Mumbai Licensed Area operations based on the principles laid down under the (Terms and Conditions of Tariff) Regulations 2005 notified by MERC and the respective Tariff Orders issued by MERC. Further any adjustments that may arise on annual performance review by MERC under the aforesaid tariff regulations would be made after the completion of such review.

5. In accordance with the MERC (Terms and Conditions of Tariff) Regulations, 2005, the Company has reversed certain Statutory Appropriations pertaining to its Generation Business. These Appropriations amounting to Rs. 63 crs were made in the previous year and are no longer required to be retained.

6. Contingency Reserve Investments and Deferred Taxation Liability Fund Investments hitherto included the cost of 6.75% Unit Trust of India Free US Bonds 2008 received on conversion of units in Scheme US-64, which bonds were redeemed during the year. In the terms of Appellate Tribunal for Electricity (ATE) Order dated February 25, 2009, the appropriations made to Contingency Reserve and Deferred Taxation Liability Fund (DTLF) have been utilised to meet the loss of Rs 155.47 crores realised on redemption of the above statutory investments.

7. Other Income for the year ended March 31, 2009, is inclusive of Rs. 255.78 crores on account of Profit (net) on sale of Long Term Investments (Rs. 314.52 crores for the year ended March 31, 2008).

8. During the year ended March 31, 2009, 9,865 Foreign Currency Convertible Bonds (FCCB) have been convened into 7,24,281 Equity Shares of Rs 10/- each at a premium as per terms of issue. Consequently, there is an increase in the Subscribed Share Capital by Rs. 0.72 crores and Securities Premium by Rs. 41.39 crores. Further, provision made for premium on redemption of FCCB by debiting Securities Premium Account in an earlier year has been reversed to the extent of Rs. 6.83 crores since it pertains to the FCCB converted during the period. As a result, Securities Premium Account has increased by Rs. 48.22 crores.

9. The Company had on June 18, 2007 issued and allotted 1,03,89,000 Convertible Warrants on preferential basis to Tata Sons Ltd. which were convertible into shares within a period of 18 months from the date of allotment. Tata Sons Ltd. did not exercise its rights to convert the warrants allotted to it. Accordingly, an amount of Rs. 60.99 crores, representing the initial amount paid on the allotment of such warrants has been forfeited and credited to Capital Reserve.

10. Previous year’s figures have been regrouped /reclassified wherever necessary.

Ratan N Tata
Chairman