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History of Power Grid Corporation of India Ltd.

In 1980 the Rajadhyaksha Committee on Power Sector Reforms submitted its report to the Government of India suggesting extensive reforms in the Indian power sector. Based on the recommendations of Rajadhyaksha Committee, in 1981 the Government of India took the policy decision to form a national power grid which would pave the way for integrated operation of the central & regional transmission systems.

Pursuant to this decision to form a national power grid, our Comp. was incorporated on October 23, 1989 under the Companies Act, 1956 as the National Power Transmission Corporation Limited, with the responsibility of planning, executing, owning, operating & maintaining the high voltage transmission systems in the country. We received a certificate for commencement of business on November 8, 1990. Subsequently, the name of our Comp. was changed to Power Grid Corporation of India Limited with effect from October 23, 1992.

Change in Registered Office The Registered Office of our Comp. is located at B-9, Qutab Institutional Area, Katwaria Sarai, New Delhi 110 016. The registered office was shifted to its present location from Hemkunt Chambers, 89, Nehru Place, New Delhi with effect from July 29, 1998 pursuant to a resolution of Board of Directors.

Transfer of transmission assets from generating units

Initially, our Comp. was engaged in the management of transmission assets owned by central generating companies such as the National Thermal Power Corporation Limited, National Hydro Electric Power Corporation Limited & North-Eastern Electric Power Corporation Limited . In January 1993, the National Thermal Power Corporation Limited, the National Hydro Electric Power Corporation Limited & the North-Eastern Electric Power Corporation Limited [Acquisition and Transfer of Power Transmission Systemss] Ordinance ['Power Transmission Systems Ordinance's] was enacted pursuant to which the right, title & interest of these three power generating companies in relation to the power transmission system, comprising of main transmission lines, including the extra high voltage alternative current transmission lines & the HVDC lines, & sub-stations, owned by them, were acquired by Government of India & transferred to our Company, with effect from April 1, 1992. Under the Power Transmission Systems Ordinance, our Comp. acquired all the rights, liabilities, assets, leaseholds, powers, authorities & privileges and all movable & immovable property relating to the power transmission systems owned by three generating companies. The Power Transmission Systems Ordinance also provided that all employees of three generating companies who were associated with power transmission systems would be deemed to be the employees of our Company. In April 1993, the Power Transmission System Ordinance became a statute after receiving the assent of President of India.

Transmission assets of Neyveli Lignite Corporation Limited were taken over by our Company with effect from April 1992 under the Neyveli Lignite Corporation Limited [Acquisition & Transfer of Power Transmission Systems] Act, 1994. The transmission assets of Nuclear Power Corporation Limited & Tehri Hydro Development Corporation Limited have also been transferred to our Comp. with effect from April 1991 & August 1993 respectively pursuant to MoUs executed with our Company.

Regional Load Despatch Functions

In 1994, the Government of India entrusted our Comp. with the further responsibility of controlling the existing load despatch centres in the country with a view to achieve better grid management & operation. Pursuant to this decision, the control of five regional load despatch & communication centres was transferred to our Comp. in a phased manner between 1994 & 1996. Our Comp. has undertaken the unified load despatch & communication project ['ULDC's] under which modernized load despatch facilities have been established in each of five regional centres. The establishment of national load despatch centre is also underway. The implementation of ULDC project has, amongst other things, caused the reduction of grid disturbances, improved grid reliability & facilitated the effective implementation of availability based tariff.

Designation as the Central Transmission Utility

Our Comp. was notified as the Central Transmission Utility by Government of India on December 31, 1998. We continue to be the CTU under the Electricity Act, 2003 as per the notification issued by GoI on November 27, 2003. Amongst other functions, as CTU we are required to

[as] undertake transmission of electricity through the inter-state transmission system;

[bs] discharge all functions of planning & co-ordination relating to inter-state transmission systems along with certain specified authorities & stakeholders;

[cs] ensure development of an efficient, co-ordinated & economical system of inter-state transmission lines for smooth flow of electricity from generating stations to load centres; &

[ds] provide non-discriminatory open access to its transmission system for use by any licensee or generating Comp. on payment of transmission charges & to any consumer on payment of transmission charges & a surcharge thereon in accordance with the Electricity Act, 2003.

Under the Electricity Act, 2003 the CTU is required to undertake the functions of RLDC and we are therefore responsible for

[as] optimum scheduling & despatch of electricity within the region, in accordance with the contracts entered into with the licensees or the generating companies operating in the region;

[bs] monitor grid operations; [cs] keep Acc. of quantity of electricity transmitted through the regional grid; [ds] exercise supervision & control over the inter-state transmission system; &

[es] carrying out real time operations for grid control & despatch of electricity within the region through secure & economic operation of regional grid in accordance with the grid standards and grid code.

However, the National Electricity Policy states that the existing arrangement of CTU operating the RLDCs shall be reviewed by Government of India based on the experience of working with the existing arrangement & that a view on this aspect would be taken by December 2005.

Mini Ratna

On October 14, 1998 our Comp. was notified as a Mini Ratna [Category Is] Comp. by the Government of India. As a Mini Ratna Comp. we are eligible for enhanced delegation of powers to our Board, including

[as] power to incur capital expenditure without governmental approval up to Rs. 5,000 million or equal to our net worth, whichever is less,

[bs] power to establish joint ventures & subsidiaries with an equity investment up to 15% of our net worth for a single project, subject to a maximum of Rs. 5,000 million. The overall ceiling on all investments shall be 30% of our net worth &

[cs] power to enter into mergers & acquisitions subject to certain conditions.

Role in distribution reforms & rural electrification

In 2001, our Comp. was assigned the role of an advisor-cum-consultant, by Government of India, for implementation of Accelerated Power Development & Reform Programme ['APDRP's] in 18 states. The objective of APDRP is to give impetus to reforms in the power distribution sector & the responsibility of our Comp. extends to providing assistance to state power utilities in formulation of detailed project reports ['DPRs's], to technically examine the DPRs and recommend the same to the MoP & to monitor the implementation of schemes, the commercial performance & reform measures undertaken by state power utilities in the assigned geographical areas. Our Comp. has also entered into bilateral agreements with seven state power utilities to implement certain APDRP schemes.

Additionally, our Comp. has been assigned a significant role in relation to implementation of projects under the Rajiv Gandhi Grameen Vidyutkaran Yojana programme ['Rural Electrification Programme's] for accelerated electrification of rural households to be undertaken in association with REC, the concerned state government & state power utility. For further details refer to the paragraph entitled 'Material Agreements' on page 366 of this Draft Red Herring Prospectus.

Major events

In addition to events described hereinabove, the following table illustrates the major events in the history of our Comp. since its incorporation in 1989.

Year Event

1989 Our Comp. was incorporated as the National Power Transmission Corporation.

1992 Transmission assets from National Thermal Power Corporation Limited, National Hydroelectric Power Corporation Limited & North-Eastern Electric Power Corporation Limited were transferred to our Comp. pursuant to legislation promulgated by Parliament.

1992 The name of our Comp. was changed from National Power Transmission Corporation to Power Grid Corporation of India Limited.

1993 Transmission assets of Tehri Hydro Development Corporation Limited were transferred to our Comp. pursuant to a memorandum of understanding executed between the parties.

1994 Our Comp. took over the management of Southern Regional Load Despatch Centre.

1994 Our Comp. entered into a memorandum of understanding with the Ministry of Power, Government of India, which is revised annually. We achieved the highest rating of 'Excellent' under the memorandum of understanding.

1995 Our Comp. took over the management of Eastern Regional Load Despatch Centre & the North Eastern Load Despatch Centre.

1996 Our Comp. took over the management of remaining two regional load despatch centres, namely, the Northern Regional Load Despatch Centre & the Western Load Despatch Centre.

1998 Our Comp. formulated an Environment & Social Policy & Procedures code to deal with environmental & social issues relating to its transmission projects. 1998 Our Comp. was formally notified as a Central Transmission Utility by the Government of India.

1998 Our Comp. was declared as a Mini Ratna Category i public sector undertaking by the Government of India.

2001 Our Comp. was granted Infrastructure Provider II license [IP IIs] from the Department of Telecommunications, Government of India to pursue leasing of bandwidth capacity to various customers on its telecommunications network.

2002 The unified load dispatch & communications schemes for northern & southern regions were commissioned.

2002 Our Comp. was appointed as the Advisor-cum-Consultant under the Accelerated Power Development Reform Program by Ministry of Power, Government of India for power sector reforms.

2002 The Sasaram HVDC back to back transmission system developed by our Comp. was commissioned leading to the completion of first phase of construction of the National Grid.

2002 The 2,000 MW Talchar-Kolar bipolar HVDC link developed by our Comp. was commissioned.

2003 Our Comp. entered into a joint venture arrangement with The Tata Power Company Limited implementing a part of entire transmission system associated with Tala Hydro-Electric Project which was the first public-private sector initiative in the transmission sector.

2003 The 400 KV Raipur-Rourkela line transmission line developed by our Comp. was commissioned & the Western region, Eastern Region & North-Eastern Region begin operating in a synchronised manner with a cumulative capacity of 50,000 MW

2003 Our Comp. secured its first international consultancy contract from Bhutan Telecommunications

2005 The unified load dispatch & communications scheme for eastern region was commissioned.

2006 The unified load dispatch & communications scheme for western region was commissioned.

2006 Our Comp. entered into an agreement with Rural Electrification Corporation Limited & certain state governments & state utilities for undertaking rural electrification works under the Rajiv Gandhi Grameen Vidyutkaran Yojana in nine states.

2007

-Power Grid Corporation of India Ltd has informed that the Ministry of Power vide its Order dt. October 15, 007 has conveyed the acceptance of President to the resignation tendered by Sh. M S Kapur, from the Directorship of Comp. w.e.f. October 05, 2007.

2008

- Power Grid Corporation of India Ltd [PGCILs] has been selected for Government MoU Excellence Award for year 2006-07. The MoU Excellence Award benchmarks performance of Central public sector undertakings & is given by Department of Public Enterprises, Ministry of Heavy Industries & Public Enterprises to only one public sector utility in a sector for its extraordinary performance.

- Power Grid Corporation of India Ltd has appointed the following persons as non-official Part-time Directors on the Board of POWERGRID:

1. Shri. S C Tripathi, Former Secy. to the Govt of India.

2. Shri. Ashok Khanna, Ex-President, PHD.

2008

-Power Grid Corporation of India Ltd has informed that Ministry of Power vide their Order dated July 23, 2008 conveyed appointment of Smt. Sarita Prasad, IAS [Retd.s] as part-time non-official Director on the Board of POWERGRID for a period of three years w.e.f the date of assumption of charge of post or until further orders whichever event occurs earlier.

-Power Grid Corporation of India has set up a joint venture Comp. with Teesta Urja Ltd for developing transmission system to evacuate power from the upcoming 1,200 MW Teesta-III Hydro Electric Project in Sikkim

2009

- Power Grid Corporation of India Ltd has informed that Ministry of Power vide Office Order dated March 16, 2009 conveyed the appointment of Sh. V M Kaul, Executive Director as Director [Personnels] of Power Grid Corporation of India Ltd for a period of five years with effect from the date of taking over the charge of post i.e. March 16, 2009 or till the date of his superannuation or until further orders, whichever is the earliest.