DRAFT RED HERRING PROSPECTUS Dated March 30, 2010 Please read Section 60B of the Companies Act, 1956 (The Draft Red Herring Prospectus will be updated upon filing with the RoC) 100% Book Building Issue

AVANTHA POWER & INFRASTRUCTURE LIMITEDOur Company was incorporated on July 20, 2005 as BILT Power Limited under the Companies Act, 1956, as amended (the Companies Act), with the Registrar of Companies (RoC), National Capital Territory of Delhi and Haryana. For details of our change in name, see, History and Certain Corporate Matters on page 101. Registered Office: Thapar House, 124 Janpath, New Delhi 110 001, India; Tel: + (91 11) 2336 8096; Fax: + (91 11) 2336 8729. Corporate Office: Centrum Plaza, Second Floor, Golf Course Road, Sector 53, Gurgaon, Haryana 122 002, India; Tel: + (91 124) 439 2000; Fax: + (91 124) 437 6496; Website: www.avanthapower.com. Company Secretary and Compliance Officer: Mr. Sandeep Pathak; Tel: + (91 124) 409 9425; Fax: + (91 124) 437 6496; Email: complianceofficer@avanthapower.com. Promoters: Mr. Gautam Thapar, Crompton Greaves Limited (Crompton Greaves), Ballarpur Industries Limited (BILT), BILT Paper Holdings Limited (BPHL), Solaris Industrial Chemicals Limited (SICL), Salient Financial Solutions Limited (SFSL) and Avantha Holdings Limited (AHL). PUBLIC ISSUE OF UP TO [] EQUITY SHARES OF RS. [] EACH OF AVANTHA POWER & INFRASTRUCTURE LIMITED (THE COMPANY OR THE ISSUER) FOR CASH AT A PRICE OF RS. [] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [] PER EQUITY SHARE) AGGREGATING UP TO RS. 12,500 MILLION (THE ISSUE). THE ISSUE WILL CONSTITUTE [] % OF THE POST-ISSUE PAID-UP EQUITY CAPITAL OF THE COMPANY. Our Company is considering a Pre-IPO Placement of up to 65,000,000 Equity Shares and/or aggregating up to Rs. 3,000 million with certain investors (Pre-IPO Placement). The Pre-IPO Placement is at the discretion of our Company. Our Company will complete the issuance and allotment of such Equity Shares, if any, prior to the filing of the red herring prospectus with the RoC. If the Pre-IPO Placement is completed, the Issue size offered to the public would be reduced to the extent of such Pre-IPO Placement. THE PRICE BAND WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND ADVERTISED AT LEAST TWO WORKING DAYS PRIOR TO THE BID OPENING DATE. In case of revision in the Price Band, the Bidding Period will be extended for a minimum period of three additional working days after the revision of the Price Band subject to the Bidding Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding Period, if applicable, will be widely disseminated by notification to the Bombay Stock Exchange Limited (the BSE) and the National Stock Exchange of India Limited (the NSE), by issuing a press release, and also by indicating the change on the websites of the Book Running Lead Managers (the BRLMs) and at the terminals of the members of the Syndicate. This Issue is being made through the 100% Book Building Process wherein at least 50% of the Issue will be allocated on a proportionate basis to Qualified Institutional Buyers (QIBs and such portion the QIB Portion) (including Mutual Funds), provided that our Company may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the Anchor Investor Portion). For details, see Issue Procedure on page 229. Further 5% of the QIB Portion less the Anchor Investor Portion shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to QIBs and Mutual Funds, subject to valid Bids being received from them at or above the Issue Price. If at least 50% of the Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less than 15% of the Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue will be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. RISK IN RELATION TO THE FIRST ISSUE This being the first public issue of Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Equity Shares is Rs. 10 per Equity Share and the Floor Price is [] times the face value and Cap Price is [] times the face value. The Issue Price has been determined and justified by the BRLMs and the Company (as stated in Basis for Issue Price on page 44) and should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing. GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue, including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (the SEBI), nor does the SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited to Risk Factors on page xv. IPO GRADING This Issue has been graded by [] as [], indicating []. The IPO Grading is assigned on a five-point scale from 1 to 5, with IPO Grade 5/5 indicating strong fundamentals and IPO Grade 1/5 indicating poor fundamentals. For details, see General Information on page 13. ISSUERS ABSOLUTE RESPONSIBILITY Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the BSE and the NSE. We have received in-principle approvals from the BSE and the NSE for the listing of our Equity Shares pursuant to their letters dated [] and [], respectively. For the purposes of this Issue, the Designated Stock Exchange shall be []. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE

ENAM SECURITIES PRIVATE LIMITED 801, Dalamal Towers Nariman Point Mumbai 400 021 Maharashtra, India Tel: + (91 22) 6638 1800 Fax: + (91 22) 2284 6824 E-mail: avantha.ipo@enam.com Investor Grievance E-mail: complaints@enam.com Website: www.enam.com Contact Person: Mr. Akash Aggarwal SEBI Registration No.: INM000006856

AXIS BANK LIMITED 111, Central Office Cuffe Parade, Colaba Mumbai 400 005 Maharashtra, India Tel: + (91 22) 6707 1312 Fax: + (91 22) 6707 1264 Email: avantha.ipo@axisbank.com Investor Grievance E-mail: axbmbd@axisbank.com Website: www.axisbank.com Contact Person: Mr. Dipen Kapadia / Mr. Sandeep Walawalkar SEBI Registration No.: INM000006104

CITIGROUP GLOBAL MARKETS INDIA PRIVATE LIMITED 12th Floor, Bakhtawar Nariman Point Mumbai 400 021 Maharashtra, India Tel: + (91 22) 6631 9999 Fax: + (91 22) 6646 6192 Email: avantha.ipo@citi.com Investor Grievance E-mail: investors.cgmib@citi.com Website: www.citibank.co.in Contact Person: Mr. Akhilesh Poddar SEBI Registration No.: INM000010718BIDDING PROGRAMME*

KOTAK MAHINDRA CAPITAL COMPANY LIMITED 1st Floor, Bakhtawar 229, Nariman Point Mumbai 400 021 Maharashtra, India Tel: + (91 22) 6634 1100 Fax: + (91 22) 2283 7517 E-mail: avantha.ipo@kotak.com Investor Grievance E-mail: kmccredressal@kotak.com Website: www.kmcc.co.in Contact Person: Mr. Chandrakant Bhole SEBI Registration No.: INM000008704

LINK INTIME INDIA PRIVATE LIMITED C-13, Pannalal Silk Mills Compound, L.B.S Marg, Bhandup (West) Mumbai 400 078, India Tel: +(91 22) 2596 0320 Fax: +(91 22) 2596 0329 Email: apil.ipo@linkintime.co.in Website: www.linkintime.co.in Contact Person: Mr. Sachin Achar SEBI Registration No: INR000004058

BID OPENS ON []

BID CLOSES ON []

*Our Company may consider participation by Anchor Investors. The Anchor Investor Bidding Date shall be one Working Day prior to the Bid Opening Date.

TABLE OF CONTENTS

SECTION I GENERAL ..................................................................................................................................... i DEFINITIONS AND ABBREVIATIONS ...................................................................................................... i PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA .............................................. x NOTICE TO INVESTORS ........................................................................................................................... xii FORWARD-LOOKING STATEMENTS .................................................................................................. xiii SECTION II RISK FACTORS ...................................................................................................................... xv SECTION III - INTRODUCTION ..................................................................................................................... 1 SUMMARY OF INDUSTRY .......................................................................................................................... 1 SUMMARY OF OUR BUSINESS.................................................................................................................. 3 SUMMARY OF FINANCIAL INFORMATION.......................................................................................... 6 THE ISSUE .................................................................................................................................................... 12 GENERAL INFORMATION ....................................................................................................................... 13 CAPITAL STRUCTURE .............................................................................................................................. 23 OBJECTS OF THE ISSUE ........................................................................................................................... 35 BASIS FOR ISSUE PRICE........................................................................................................................... 44 STATEMENT OF TAX BENEFITS ............................................................................................................ 47 SECTION IV- ABOUT THE COMPANY ....................................................................................................... 52 INDUSTRY .................................................................................................................................................... 52 OUR BUSINESS ............................................................................................................................................ 67 REGULATIONS AND POLICIES IN INDIA ............................................................................................ 88 HISTORY AND CERTAIN CORPORATE MATTERS ......................................................................... 101 OUR MANAGEMENT ............................................................................................................................... 116 OUR PROMOTERS AND GROUP ENTITIES ....................................................................................... 130 DIVIDEND POLICY .................................................................................................................................. 153 SECTION V FINANCIAL INFORMATION .............................................................................................. F 1 FINANCIAL STATEMENTS ...................................................................................................................... F 1 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...................................................................................................................................... 154 FINANCIAL INDEBTEDNESS ................................................................................................................. 176 SECTION VI LEGAL AND OTHER INFORMATION ........................................................................... 182 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ............................................. 182 GOVERNMENT AND OTHER APPROVALS ........................................................................................ 206 OTHER REGULATORY AND STATUTORY DISCLOSURES ........................................................... 213 SECTION VII ISSUE RELATED INFORMATION ................................................................................. 222 ISSUE STRUCTURE .................................................................................................................................. 222 TERMS OF THE ISSUE ............................................................................................................................. 226 ISSUE PROCEDURE .................................................................................................................................. 229 SECTION VIII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF THE COMPANY ..... 258 SECTION IX: OTHER INFORMATION...................................................................................................... 268 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................ 268 DECLARATION ......................................................................................................................................... 271

SECTION I GENERAL DEFINITIONS AND ABBREVIATIONS Unless the context otherwise indicates or implies, the following terms have the following meanings in this Draft Red Herring Prospectus, and references to any statute, regulation or policy shall include amendments notified thereto, from time to time. Company-Related TermsTerm APIL, the Issuer, the Company or our Company we, us or our AHL AoA /Articles of Association APR Sacks Arizona Printers Asia Aviation ASA Agencies Audit Committee Description Avantha Power & Infrastructure Limited, a public limited company incorporated under the Companies Act Avantha Power & Infrastructure Limited and our Subsidiaries on a consolidated basis Avantha Holdings Limited Articles of Association of our Company, as amended APR Sacks Limited Arizona Printers & Packers Private Limited Asia Aviation Limited ASA Agencies Private Limited The committee of the Board of Directors constituted as our Companys Audit Committee in accordance with Clause 49 of the Listing Agreement to be entered into with the Stock Exchanges The statutory auditors of our Company, K.K.Mankeshwar & Company, Chartered Accountants Group of companies which are controlled by Mr. Gautam Thapar Avantha Realty Limited Axis Bank Limited Our 67.50 MW captive power plant located at Ballarpur, Maharashtra Biltech Building Elements Limited BILT Graphic Paper Products Limited Our 60 MW captive power plant located at Bhigwan, Maharashtra Ballarpur Industries Limited BILT Industrial Packaging Company Limited The board of directors of our Company, or a duly constituted committee thereof Blue Horizon Investments Limited BILT Paper Holdings Limited BILT Tree Tech Limited Brand equity and business promotion agreement dated October 20, 2009 between our Company and AHL, one of our Promoters, as described in History and Certain Corporate Matters-Material Agreements on page 106. Brook Crompton Greaves Limited Our captive power plants of 67.50 MW located at Ballarpur, Maharashtra, 60 MW located at Bhigwan, Maharashtra, 24.50 MW located at Yamuna Nagar, Haryana and 13 MW located at Sewa, Orissa CG Actaris Electricity Management Private Limited CG Sales Networks Americas Inc CG Electric Systems Hungary Zrt. CG Holdings Belgium NV CG Holdings Hungary Kft CG Power Holdings Ireland Limited CG Lucy Switchgear Limited CG PPI Adhesive Products Limited CG Power Systems Belgium NV CG Power Systems Canada Inc. CG Power Systems, Ireland CG Power Systems USA Inc CG Sales Network France S.A. Collectively, Chhattisgarh Power Project Phase I and Chhattisgarh Power Project Phase II The first unit of a coal based thermal power plant with a planned power generation capacity of 600 MW, located in Raigarh in the State of Chhattisgarh

Auditor Avantha Group Avantha Realty Axis Bank Ballarpur Unit BBEL BGPPL Bhigwan Unit BILT BILT Packaging Board/ Board of Directors Blue Horizon BPHL BTTL Brand Agreement

Brook Crompton Captive Power Units

CG Actaris CG Americas CG Electric Hungary CG Holdings Belgium CG Hungary CG Ireland CG Lucy CG PPI CG Power Belgium CG Power Canada CG Power Ireland CG Power USA CG Sales France Chhattisgarh Power Project Chhattisgarh Power Project Phase I

i

Term Chhattisgarh Power Project Phase II Corporate Office Crompton Greaves Directors ESOP 2010 Global Green Gyanodaya Grant Date

Group Entities

Gujarat Power Project

ICIL IDFCL Intergarden India Intergarden NV JPIPL JPL KCTBL Key Management Personnel

Krebs & CIE KWPCL Leading Line Madhya Pradesh Power Project Madhya Pradesh Power Project Phase I Madhya Pradesh Power Project Phase II Malanpur Power Plant MoA / Memorandum of Association MCPL NewQuest Paperbase Pauwels Trafo Phase I Phase II Pioneer Promoters

Description The second unit of a coal based thermal power plant with a planned power generation capacity of 600 MW, located in Raigarh in the State of Chhattisgarh The corporate office of our Company located at Centrum Plaza, Second Floor, Golf Course Road, Sector 53, Gurgaon, Haryana 122 002, India Crompton Greaves Limited Directors of our Company Employee Stock Option Plan, 2010 of our Company as approved by our shareholders on February 2, 2010 Global Green Company Limited Gyanodaya Prakashan Private Limited The date on which the options are granted to an eligible employee ( as such term is defined under ESOP 2010) by the Compensation & Remuneration Committee of our Board The companies and entities mentioned in Our Promoter and Group Entities on page 130, promoted by our Promoters, irrespective of whether such entities are covered under Section 370(1)(B) of the Companies Act Our project to build a coal based thermal power plant with a planned power generation capacity of 1,320 MW (comprising two units of 660 MW each) located in Amreli, in the State of Gujarat International Components India Limited Infrastructure Development Finance Company Limited Intergarden (India) Private Limited Intergarden NV, Aaist, Belgium Jhabua Power Investments Private Limited Jhabua Power Limited Karam Chand Thapar & Bros. Limited Officers vested with executive powers and officers at the level immediately below the Board of Directors, including any other person whom our Company may declare as key management personnel. See Our Management Key Management Personnel on page 126. Krebs & CIE (India) Limited Korba West Power Company Limited Leading Line Merchant Traders Private Limited Collectively, Madhya Pradesh Power Project Phase I and Madhya Pradesh Power Project Phase II The first unit of a coal based thermal power plant with a planned power generation capacity of 600 MW, located in Seoni in the State of Madhya Pradesh The second unit of a coal based thermal power plant with a planned power generation capacity of 600 MW, located in Seoni in the State of Madhya Pradesh The gas-fired power plant of an installed capacity of 26.19 MW located in Malanpur, District Bhind, Madhya Pradesh, operated by Malanpur Captive Power Limited Memorandum of Association of our Company, as amended Malanpur Captive Power Limited NewQuest Services Private Limited T H E Paperbase Company Limited Pauwels Trafo Gent N.V. The first unit of a coal based thermal power plant with a planned power generation capacity of 600 MW The second unit of a coal based thermal power plant with a planned power generation capacity of 600 MW The Pioneer Limited Mr. Gautam Thapar, Crompton Greaves Limited, Ballarpur Industries Limited, BILT Paper Holdings Limited, Solaris Industrial Chemicals Limited, Salient Financial Solutions Limited and AHL Includes such persons and entities constituting our promoter group pursuant to Regulation 2(1)(zb) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, other than Ms. Shalini Waney, Mr. Karan Thapar and Ms. Renate Hempal The registered office of our Company located at Thapar House, 124 Janpath, New Delhi 110 001, India Sabah Forest Industries Sendirian Berhad Salient Business Solutions Limited

Promoter Group

Registered Office Sabah Salient Business

ii

Term Scheme of Demerger

Sewa Unit SFSL SHL Solaris Chemtech Yamuna Nagar Unit SECL SICL Subsidiary(ies)

Toscana Footwear Toscana Lasts TKS UHL Power Ultima Hygiene Varun Prakashan Venus Zenith

Description Scheme of arrangement and demerger dated April 1, 2006 between Bilt Power Limited, BILT and Janpath Investments and Holdings Limited (currently Avantha Realty Limited) and which was approved by the High Court of Delhi by an order dated May 25, 2006 and the Mumbai High Court (Nagpur Bench) by an order dated April 25, 2006 Our 13MW captive power plant located at Sewa, Orissa Salient Financial Solutions Limited Solaris Holdings Limited Solaris Chemtech Industries Limited Our 24.50 MW captive power plant located at Yamuna Nagar, Haryana South Eastern Coalfields Limited Solaris Industrial Chemicals Limited Subsidiaries of our Company, being Jhabua Power Investments Private Limited, Jhabua Power Limited, Korba West Power Company Limited, TKS Developers Limited and Malanpur Captive Power Limited. See History and Certain Corporate Matters - Our Subsidiaries on page 104 Toscana Footwear Components Limited Toscana Lasts Limited TKS Developers Limited UHL Power Company Limited Ultima Hygiene Products Private Limited Varun Prakashan Private Limited Venus Financial Services Limited Zenith Drugs and Allied Enterprises

Issue Related TermsTerm Allotted/Allotment/Allot Allottee Anchor Investor Anchor Investor Bid Anchor Investor Bidding Date Anchor Investor Issue Price Description Unless the context otherwise requires, the issue and allotment of Equity Shares pursuant to this Issue to the successful Bidders A successful Bidder to whom Equity Shares are Allotted A Qualified Institutional Buyer, who applies under the Anchor Investor Portion with a minimum Bid of Rs. 100 million Bid made by an Anchor Investor The date which is one Working Day prior to the Bid Opening Date, prior to or after which the Syndicate will not accept any Bids from Anchor Investors The final price at which Equity Shares will be issued and Allotted in terms of the Red Herring Prospectus and the Prospectus to the Anchor Investors, which will be a price equal to or higher than the Issue Price but not higher than the Cap Price. The Anchor Investor Issue Price will be decided by our Company in consultation with the BRLMs An amount representing 25% of the Bid Amount payable by Anchor Investors at the time of submission of their Bid Up to 30% of the QIB Portion or a maximum of [] Equity Shares of our Company, which may be allocated to Anchor Investors by our Company in consultation with the BRLMs, on a discretionary basis. One third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Anchor Investor Bids being received from domestic Mutual Funds at or above the price at which allocation will be made to Anchor Investors The application (whether physical or electronic) used by an ASBA Bidder to make a Bid authorizing the SCSB to block the Bid Amount in his/her specified bank account maintained with the SCSB Account maintained by an ASBA Bidder with an SCSB which will be blocked by such SCSB to the extent of the Bid Amount of the ASBA Bidder The form, whether physical or electronic, used by an ASBA Bidder to make a Bid, which will be considered as the application for Allotment for the purposes of the Red Herring Prospectus and the Prospectus Any Bidder (other than a QIB) who intends to apply through ASBA The form used by the ASBA Bidders to modify the quantity of Equity Shares or the Bid Amount in any of their ASBA Bid cum Application Forms or any previous revision form(s) The bank(s) which is / are clearing member and registered with the SEBI as Bankers to the Issue with whom the Escrow Account will be opened, in this case being [] The basis on which the Equity Shares will be Allotted, described in Issue Procedure on page 229.

Anchor Investor Margin Amount Anchor Investor Portion

ASBA / Application Supported by Blocked Amount ASBA Account ASBA Bid cum Application Form ASBA Bidder ASBA Revision Form

Banker(s) to the Issue Basis of Allotment

iii

Term Bid

Description An indication to make an offer during the Bidding Period by a Bidder, or on the Anchor Investor Bidding Date by an Anchor Investor, pursuant to submission of a Bid cum Application Form to subscribe to our Equity Shares at a price within the Price Band, including all revisions and modifications thereto For the purposes of ASBA Bidders, a Bid means an indication to make an offer during the Bidding Period by an ASBA Bidder pursuant to the submission of an ASBA Bid cum Application Form to subscribe to the Equity Shares The highest value of the optional Bids indicated in the Bid cum Application Form and payable by a Bidder on submission of a Bid in the Issue Except in relation to Anchor Investors, the date after which the Syndicate and SCSBs will not accept any Bids, which shall be notified in an English national newspaper and a Hindi national newspaper, each with wide circulation The form in terms of which the Bidder shall make an offer to purchase Equity Shares and which shall be considered as the application for the issue of Equity Shares pursuant to the terms of the Red Herring Prospectus and the Prospectus including the ASBA Bid cum Application as may be applicable Except in relation to Anchor Investors, the date on which the Syndicate and SCSBs shall start accepting Bids, which shall be notified in an English national newspaper and a Hindi national newspaper, each with wide circulation Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form, including an ASBA Bidder and an Anchor Investor The period between the Bid Opening Date and the Bid Closing Date, inclusive of both days during which prospective Bidders (excluding Anchor Investors) can submit their Bids, including any revisions thereof Book building process as provided in Schedule XI of the ICDR Regulations, in terms of which this Issue is being made The merchant bankers appointed by our Company to undertake the Book Building Process in respect of the Issue, being Enam Securities Private Limited, Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited and Axis Bank Limited The note or advice or intimation of allocation of Equity Shares sent to successful Bidders who have been allocated Equity Shares after discovery of the Issue Price in accordance with the Book Building Process, including any revisions thereof In relation to Anchor Investors, the note or advice or intimation of allocation of Equity Shares sent to the successful Anchor Investors who have been allocated Equity Shares after discovery of the Anchor Investor Issue Price, including any revisions thereof The higher end of the Price Band, above which the Issue Price and Anchor Investor Issue Price will not be finalized and above which no Bids will be accepted, including any revisions thereof Such branches of the SCSBs which coordinate Bids in the Issue by ASBA Bidders with the BRLMs, the Registrar to the Issue and the Stock Exchanges, a list of which is provided on www.sebi.gov.in The Issue Price finalized by our Company in consultation with the BRLMs which shall be any price within the Price Band. Only Retail Individual Bidders are entitled to Bid at the Cut-off Price. QIBs (including Anchor Investors) and Non-Institutional Bidders are not entitled to Bid at the Cut-off Price Such branches of the SCSBs which shall collect the ASBA Bid cum Application Form used by ASBA Bidders and a list of which is available at www.sebi.gov.in The date on which funds are transferred from the Escrow Account(s) to the Public Issue Account and the amount blocked by the SCSBs are transferred from the bank account of the ASBA Bidders to the Public Issue Account, as the case may be, after the Prospectus is filed with the RoC, following which the Board of Directors shall Allot Equity Shares to the Allottees [] This Draft Red Herring Prospectus dated March 30, 2010, filed with the SEBI and issued in accordance with Section 60B of the Companies Act, which does not contain complete particulars on the price at which the Equity Shares are offered and the size (in terms of value) of the Issue A Non-Resident Indian in a jurisdiction outside India where it is not unlawful to make an offer or invitation under the Issue and in relation to whom the Red Herring Prospectus will constitute an invitation to subscribe for the Equity Shares

Bid Amount Bid Closing Date

Bid cum Application Form

Bid Opening Date

Bidder

Bidding Period

Book Building Process BRLMs / Book Running Lead Managers

CAN / Confirmation of Allocation Note

Cap Price

Controlling Branches of the SCSBs Cut-off Price

Designated Branches Designated Date

Designated Stock Exchange Draft Red Herring Prospectus

Eligible NRI

iv

Term Equity Shares Escrow Account (s)

Escrow Agreement

Escrow Collection Bank(s) First Bidder Floor Price

Issue

Description Equity Shares of our Company of face value Rs. 10 each Account(s) opened with the Escrow Collection Bank(s) for the Issue and in whose favour the Bidder (excluding ASBA Bidders) will issue cheques or drafts in respect of the Bid Amount Agreement to be entered into among our Company, the Registrar, the BRLMs, the Syndicate Members and the Escrow Collection Bank(s) for collection of the Bid Amounts and remitting refunds, if any of the amounts to the Bidders (excluding ASBA Bidders) on the terms and conditions thereof The bank(s) which is / are clearing members and registered with the SEBI as Bankers to the Issue with whom the Escrow Account will be opened, in this case being [] The Bidder whose name appears first in the Bid cum Application Form or the Revision Form or the ASBA Bid cum Application Form The lower end of the Price Band, at or above which the Issue Price and Anchor Investor Issue Price will be finalized and below which no Bids will be accepted including any revisions thereof This public issue of [] Equity Shares of Rs. [] each at the Issue Price by our Company aggregating up to Rs. 12,500 million Our Company is considering a Pre-IPO Placement, which is at the discretion of our Company. Our Company will complete the issuance and allotment of such Equity Shares, if any, prior to the filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the Issue size offered to the public would be reduced to the extent of such Pre-IPO Placement The agreement entered into on March 27, 2010 amongst our Company and the BRLMs, pursuant to which certain arrangements are agreed to in relation to the Issue The final price at which Equity Shares will be issued and Allotted to successful Bidders, which may be equal to or lower than the Anchor Investor Issue Price, in terms of the Red Herring Prospectus and the Prospectus. The Issue Price will be decided by our Company in consultation with the BRLMs on the Pricing Date The amount paid by the Bidder (excluding Anchor Investors) at the time of submission of the Bid, being 10% to 100% of the Bid Amount [] 5% of the QIB Portion (excluding Anchor Investor portion) equal to a minimum of [] Equity Shares available for allocation to Mutual Funds only on a proportionate basis A mutual fund registered with the SEBI under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 Proceeds of the Issue that are available to our Company, excluding Issue-related expenses. See Objects of the Issue on page 35 All Bidders, including sub-accounts of FIIs registered with the SEBI, which are foreign corporate or foreign individuals that are not QIBs (including Anchor Investors) or Retail Individual Bidders and who have Bid for Equity Shares for an amount more than Rs. 100,000 The portion of the Issue being not less than [] Equity Shares available for allocation to Non Institutional Bidders Non Resident Indian, is a person resident outside India, who is a citizen of India or a person of Indian origin and shall have the same meaning as ascribed to such term in the Foreign Exchange Management (Deposit) Regulations, 2000, as amended With respect to QIB Bidders, the Bid Closing Date or the last date specified in the CAN sent to Bidders, as applicable and which shall with respect to the Anchor Investors, be a date not later than two days after the Bid Closing Date Except with respect to ASBA Bidders, those Bidders whose Margin Amount is 100% of the Bid Amount, the period commencing on the Bid Opening Date and extending until the Bid Closing Date; and With respect to Bidders, except Anchor Investors whose Margin Amount is less than 100% of the Bid Amount, the period commencing on the Bid Opening Date and extending until the last date specified in the CAN With respect to Anchor Investors, the period commencing on the Anchor Investor Bidding Date and extending until the last date specified in the CAN which shall not be later than two days after the Bid Closing Date Proposed preferential issue of up to 65,000,000 Equity Shares and/or aggregating up to Rs. 3,000 million to certain investors is being considered by our Company, and will be completed prior to the filing of the Red Herring Prospectus with the RoC

Issue Agreement Issue Price

Margin Amount Monitoring Agency Mutual Fund Portion Mutual Fund(s) Net Proceeds Non-Institutional Bidders

Non-Institutional Portion Non-Resident Indian / NRI

Pay-in Date

Pay-in-Period

Pre-IPO Placement

v

Term Price Band Pricing Date Prospectus

Public Issue Account QIB Margin Amount QIB Portion Qualified Institutional Buyers or QIBs

Red Herring Prospectus / RHP

Refund Account(s) Refund Bank(s) Registrar / Registrar to the Issue Retail Individual Bidder(s)

Description Price band of a minimum Floor Price of Rs. [] and a maximum Cap Price of Rs. [] including revisions thereof The date on which our Company in consultation with the BRLMs will finalize the Issue Price The Prospectus to be filed with the RoC in terms of Section 60 of the Companies Act, containing, inter alia, the Issue Price that is determined at the end of the Book Building Process, the size of the Issue and certain other information and including any corrigendum thereof Account opened with the Bankers to the Issue to receive monies from the Escrow Account on the Designated Date An amount representing at least 10% of the Bid Amount payable by QIBs (other than Anchor Investors) at the time of submission of their Bid The portion of the Issue being a minimum of [] Equity Shares to be Allotted to QIBs (including the Anchor Investor Portion) at the time of submission of their Bid Public financial institutions as defined in Section 4A of the Companies Act, FIIs and subaccounts registered with the SEBI, other than a sub-account which is a foreign corporate or foreign individual, scheduled commercial banks, mutual funds registered with SEBI, multilateral and bilateral development financial institutions, venture capital funds registered with the SEBI, foreign venture capital investors registered with the SEBI, state industrial development corporations, insurance companies registered with Insurance Regulatory and Development Authority, provident funds (subject to applicable law) with minimum corpus of Rs. 250 million and pension funds with minimum corpus of Rs. 250 million, the National Investment Fund set up by resolution F. No. 2/3/2005-DD-II dated November 23, 2005 of the GoI published in the Gazette of India, and insurance funds set up and managed by the army, navy or air force of the Union of India The Red Herring Prospectus to be issued in accordance with Section 60B of the Companies Act, which will not have complete particulars of the price at which the Equity Shares shall be issued and which shall be filed with the RoC at least three days before the Bid Opening Date and will become the Prospectus after filing with the RoC after the Pricing Date Account(s) opened with the Refund Bank(s) from which refunds of the whole or part of the Bid Amount (excluding to the ASBA Bidders), if any, shall be made The bank(s) which is a/ are clearing member(s) and registered with the SEBI as Bankers to the Issue, at which the Refund Accounts will be opened, in this case being [] Registrar to the Issue in this case being Link Intime India Private Limited Individual Bidders (including HUFs and NRIs) who have submitted Bids for Equity Shares for an aggregate amount less than or equal to Rs. 100,000 in all of the bidding options in the Issue The portion of the Issue being up to [] Equity Shares available for allocation to Retail Bidder(s) The form used by Bidders to modify the quantity of Equity Shares or the Bid Amount in any of their Bid cum Application Forms or any previous Revision Form(s) Registrar of Companies, National Capital Territory of Delhi and Haryana, located at New Delhi The banks which are registered with SEBI under the SEBI (Bankers to an Issue) Regulations, 1994 and offer services of ASBA, including blocking of bank account, a list of which is available on http://www.sebi.gov.in The BSE and the NSE Collectively, the BRLMs and the Syndicate Members Agreement among the Syndicate and our Company in relation to the collection of Bids (excluding Bids from ASBA Bidders) in this Issue Intermediary appointed in respect of the Issue, registered with the SEBI and permitted to carry on activities as an underwriter, in this Issue being [] The slip or document issued only on demand by the Syndicate or the SCSB to the Bidder as proof of registration of the Bid BRLMs and the Syndicate Member(s) The Agreement among the Underwriters and our Company to be entered into on or after the Pricing Date Any day other than Saturday and Sunday on which commercial banks in Mumbai and New Delhi are open for business

Retail Portion Revision Form RoC Self Certified Syndicate Bank/ SCSB Stock Exchanges Syndicate Syndicate Agreement Syndicate Member(s) TRS / Transaction Registration Slip Underwriters Underwriting Agreement Working Day

Conventional and General Terms

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Term Air Act CERC Tariff Regulations CERC Trading Margin Regulations CLRA Companies Act Competition Act Depositories Act Depository DP/ Depository Participant EPA EIA Notification Electricity Act ERC Act FEMA Factories Act FEMA Regulations FIRs Financial Year/ fiscal/ fiscal year GoI GDP GIR No Hazardous Waste Rules ICDR Regulations I.T. Act Indian GAAP NRE Account NRO Account Press Note 2 of 2009 Press Note 4 of 2009 P/E Ratio RBI RBI Act Rs. Securities Act Supply Act SICA SEBI Act State Government Supply Act Takeover Code Water Act Water Cess Act US GAAP USD / US$

Description The Air (Prevention and Control of Pollution) Act, 1981 The Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2009 The Central Electricity Regulatory Commission (Fixation of Trading Margin) Regulations, 2010 Contract Labour (Regulation and Abolition) Act, 1970 Companies Act, 1956 Competition Act, 2002 Depositories Act, 1996 A depository registered with SEBI under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 A depository participant as defined under the Depositories Act, 1996 The Environment (Protection) Act, 1986 The Environment Impact Assessment Notification S.O. 1533(E), 2006 The Electricity Act, 2003 Electricity Regulatory Commissions Act, 1998 Foreign Exchange Management Act, 1999 The Factories Act, 1948, as amended Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 First Information Reports Period of 12 months ended March 31 of that particular year Government of India Gross domestic product General index register number The Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 Income Tax Act, 1961 Generally accepted accounting principles in India Non Resident External Account Non Resident Ordinary Account Press Note No. 2 (2009 Series), dated February 13, 2009, issued by the DIPP Press Note No. 4 (2009 Series), dated February 25, 2009, issued by the DIPP Price/earnings ratio Reserve Bank of India Reserve Bank of India Act, 1934 Indian Rupees U.S. Securities Act of 1933, as amended Electricity (Supply) Act, 1948 Sick Industrial Companies (Special Provisions) Act, 1985 Securities and Exchange Board of India Act 1992 The government of a state of the Republic of India The Electricity (Supply) Act, 1948 Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 The Water (Prevention and Control of Pollution) Act, 1974 The Water (Prevention and Control of Pollution) Cess Act, 1977 Generally accepted accounting principles in the United States of America United States Dollars

Technical/Industry Related TermsTerm APDRP AT&C Bidding Guidelines BOO BTG Description Accelerated Power Development Reform Programme Aggregate Technical and Commercial Losses Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees, 2005 Build own and operate Boiler, Turbine and Generator

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Term CDM CDSL CEA CEA January 2010 Report CER CERC COD CTU EPS ERC ERU IAEA IEX IPP JI KW kWh LoA MCL MoC MPCB mtpa MU MPP NTP MW NLDC NTPC PCA PGCIL PLF PPA PXIL RFP RFQ RLDC sq. km. STU Trading License Regulations UMPP Units VERs

Description Clean Development Mechanism Central Depository Services (India) Limited Central Electricity Authority CEA Power Scenario At A Glance, dated January 2010 Certified Emission Reduction Central Electricity Regulatory Commission Commercial Operation Date Central Transmission Utility as defined in the Electricity Act 17th Electric Power Survey, May 2007 Electricity Regulatory Commission Electricity Reduction Unit International Atomic Energy Agency India Energy Exchange Independent Power Producers Joint Implementation Kilo Watt Kilo Watt Hour Letter of Assurance Mahanadi Coalfields Limited Ministry of Coal, GoI Maharashtra Pollution Control Board Million tonnes per annum Million units where one unit is one kWh Merchant power plants National Tariff Policy Megawatts National Load Dispatch Centre National Thermal Power Corporation Limited Power Consumption Agreement Power Grid Corporation of India Limited Plant Load Factor Power Purchase Agreement Power Exchange India Limited Request for Proposal Request for Qualification Regional Load Dispatch Centre Square kilometre State Transmission Utility as defined in the Electricity Act, 2003 CERC (Procedure, Terms and Conditions for grant of trading license and other related matters) Regulations, 2009 Ultra Mega Power Project kWh Verified Emission Reductions

AbbreviationsTerm AS AY BSE CAGR CBI CEO CFO CPCB CSEB CSPHCL CSO CSR CIN DIPP Description Accounting Standards issued by the Institute of Chartered Accountants of India Assessment Year Bombay Stock Exchange Limited Compounded Annual Growth Rate Central Bureau of Investigation Chief Executive Officer Chief Financial Officer Central Pollution Control Board Chhattisgarh State Electricity Board Chhattisgarh State Power Holding Company Limited Central Statistical Organisation Corporate Social Responsibility Company Identification Number Department of Industrial Policy and Promotion, Ministry of Commerce, GoI

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Term DP ID ECS EEA EGM EPS FDI FI FII(s) FIPB FVCI GoI / Government GoCH GoMP HNI HUF IDC IFRS IPC I.T. Act IPO MoEF MoU NA NAV NGOs NEFT NIA NOC NR / Non-Resident NRI NSDL NSE O&M OCB

PAN PIO PLR RFQ RFP RoNW RTGS Supreme Court/SC SEBs SERC SEZ SGO SPV UIN US / USA VAT w.e.f./wef

Description Depository Participants Identity Electronic Clearing Service European Economic Area Extraordinary General Meeting Earnings per share, i.e., profit after tax for a fiscal year divided by the weighted average outstanding number of equity shares at the end of that fiscal year Foreign Direct Investment Financial Institutions Foreign Institutional Investors as defined under the Securities and Exchange Board of India (Foreign Institutional Investor) Regulations, 1995 registered with the SEBI Foreign Investment Promotion Board Foreign Venture Capital Investor registered under the Securities and Exchange Board of India (Foreign Venture Capital Investor) Regulations, 2000 registered with SEBI Government of India Government of Chhattisgarh Government of Madhya Pradesh High Net worth Individual Hindu Undivided Family Interest during commission International Financial Reporting Standards Indian Penal Code, 1860 Income Tax Act, 1961 Initial Public Offering Ministry of Environment and Forests, GoI Memorandum of understanding Not Applicable Net Asset Value Non-governmental organizations National Electronic Fund Transfer Negotiable Instruments Act, 1881 No Objection Certificate A person residing outside India, as defined under the FEMA and includes a NonResident Indian Non Resident Indian, is a person resident outside India, as defined under the FEMA and the FEMA Regulations National Securities Depository Limited The National Stock Exchange of India Limited Operation and Maintenance A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least 60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly as defined under the FEMA Regulations. OCBs are not allowed to invest in this Issue. Permanent Account Number allotted under the I.T. Act Persons of Indian Origin Prime Lending Rate Request for qualification Request for proposal Return on Net Worth Real Time Gross Settlement Supreme Court of India State Electricity Boards State Electricity Regulatory Commission Special Economic Zone State Government of Orissa Special Purpose Vehicle Unique Identification Number United States of America Value added tax With effect from

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PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA Financial Data Unless indicated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our financial statements as on the end of and for the six months ended September 30, 2009 and fiscal 2009, fiscal 2008 on a consolidated basis and for the nine months period ended March 31, 2007 on an unconsolidated basis, prepared in accordance with the Generally Accepted Accounting Principles in India (the Indian GAAP) and the Companies Act, and restated in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the ICDR Regulations). Our fiscal year commences on April 1 and ends on March 31, so all references to a particular fiscal year are to the twelve-month period ended March 31 of that year, unless stated otherwise. In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. All decimals have been rounded off to two decimal points. Our consolidated financial statements and reported earnings could be different in a material manner from those which would be reported under IFRS or U.S. GAAP. There are significant differences between Indian GAAP, IFRS and U.S. GAAP. This Draft Red Herring Prospectus does not contain a reconciliation of our consolidated financial statements to IFRS or U.S. GAAP nor does it include any information in relation to the differences between Indian GAAP, IFRS and U.S. GAAP. Had the financial statements and other financial information been prepared in accordance with IFRS or U.S. GAAP, the results of operations and financial position may have been materially different. Accordingly, the degree to which the financial information prepared in accordance with Indian GAAP and restated in accordance with the ICDR Regulations, included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the readers level of familiarity with Indian standards and accounting practices, Indian GAAP, the Companies Act and the ICDR Regulations. Any reliance by persons not familiar with Indian accounting practices, Indian GAAP, the Companies Act and the ICDR Regulations on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. In making an investment decision, investors must rely upon their own examination of our Company, the terms of the Issue and the financial information relating to our Company. Potential investors should consult their own professional advisors for an understanding of these differences between Indian GAAP and IFRS or U.S. GAAP, and how such differences might affect the financial information contained herein. Currency and Units of Presentation All references to Rupees or Rs. are to Indian Rupees, the official currency of the Republic of India. All references to EUR are to Euro, the official currency of the European Union. All references to US$ or USD or U.S. Dollar are to United States Dollars, the official currency of the United States of America. All references to CAD are to Canadian Dollars, the official currency of the Republic of Canada. All references to MYR are to Malaysian Ringgit, the official currency of the Republic of Malaysia. Industry and Market Data Unless stated otherwise, industry and market data used throughout this Draft Red Herring Prospectus has been obtained from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe that industry data used in this Draft Red Herring Prospectus is reliable, it has not been independently verified. The extent to which the market and industry data used in this Draft Red Herring Prospectus is meaningful depends on the readers familiarity with and understanding of the methodologies used in compiling such data. Exchange Rates The following table shows the relevant exchange rates:Currency Exchange rate as on March 31, 2009 Exchange rate as on September 30, 2009

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Currency US$ EUR CAD MYRSource:www.oanda.com

Exchange rate as on March 31, 2009 52.17 68.91 41.78 14.31

Exchange rate as on September 30, 2009 48.34 70.54 44.53 13.89

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NOTICE TO INVESTORS The Equity Shares have not been recommended by any U.S. federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Draft Red Herring Prospectus. Any representation to the contrary is a criminal offence in the United States. The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act) and, unless so registered, may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to persons reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the Securities Act and referred to in this Draft Red Herring Prospectus as U.S. QIBs, for the avoidance of doubt, the term U.S. QIBs do not refer to a category of institutional investor defined under applicable Indian regulations and referred to in the Draft Red Herring Prospectus as QIBs) in transactions exempt from the registration requirements of the Securities Act and (b) outside the United States in compliance with Regulation S and the applicable laws of the jurisdiction where those offers and sales occur. This Draft Red Herring Prospectus has been prepared on the basis that all offers of Equity Shares will be made pursuant to an exemption under the Prospectus Directive, as implemented in Member States of the European Economic Area (EEA), from the requirement to produce a prospectus for offers of Equity Shares. The expression Prospectus Directive means Directive 2003/71/EC of the European Parliament and Council and includes any relevant implementing measure in each Relevant Member State (as defined below). Accordingly, any person making or intending to make an offer within the EEA of Equity Shares which are the subject of the placement contemplated in this Draft Red Herring Prospectus should only do so in circumstances in which no obligation arises for the Company or any of the Underwriters to produce a prospectus for such offer. None of the Company and the Underwriters has authorized, nor do they authorize, the making of any offer of Equity Shares through any financial intermediary, other than the offers made by the Underwriters which constitute the final placement of Equity Shares contemplated in this Draft Red Herring Prospectus.

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FORWARD-LOOKING STATEMENTS This Draft Red Herring Prospectus contains certain forward-looking statements. These forward-looking statements generally can be identified by words or phrases such as aim, anticipate, believe, contemplate, expect, estimate, future, goal, intend, propose, may, objective, plan, project, seek, will, will continue, will seek to or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant statement. Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, regulatory changes pertaining to the industries in India in which we have our businesses and our ability to respond to them, technological changes, our exposure to market risks, general economic and political conditions in India, which have an impact on our business activities or investments, the performance of the financial markets in India and globally, and changes in competition in our industry. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following: Outcome of outstanding litigation, including any criminal litigation, in which we, our Subsidiaries, our Directors, our Promoters or our Group Entities are involved; Our ability to commence operations as expected because of delays or otherwise; Our ability to obtain or renew necessary approvals, licenses, registrations and permits for our business; Potential liability to a third party for the sale of power from our power project under implementation in Seoni in Madhya Pradesh (the Madhya Pradesh Power Project); Our ability to raise additional capital to fund the construction and development of our projects and future capital expenditure requirements or to obtain the necessary funds on commercially acceptable terms or in a timely manner; Our indebtedness and the impact of the conditions and restrictions imposed on us by our debt financing arrangements on our ability to conduct our business operations and maintain our financial condition; The exercise by lenders, in the event of a default on our part, of their rights with respect to equity interests in our Subsidiaries that we have pledged; Our lack of a track record in implementing and operating large-scale power projects; Availability of water, quality fuel at competitive prices or at all, power evacuation facilities, land or transportation infrastructure for our power plants; Our ability to enter into off-take arrangements in a timely manner and on terms that are commercially acceptable to us; Our ability to effectively manage our growth and expansion or to successfully implement our power projects and growth strategy; Changes in tariffs, custom duties and government assistance and changes in applicable laws and regulations; Our inability to acquire land in connection with our power projects in a timely manner or at all and/or the increase in the cost of acquisition of such land; Our ability to retain our senior management team and other key personnel and hire and retain sufficiently skilled labour to support our operations; Changes in foreign exchange rates, equity prices or other rates or prices; Worldwide economic and business conditions and political or general economic instability in India; Costs of compliance with environmental laws or damage due to natural or man-made disasters or events; Increasing competition in the Indian power sector; The monetary and interest policies of India, inflation, deflation and unanticipated increases in interest rates; and Terrorist attacks and other acts of violence, natural calamities and other environmental conditions in India and around the region.

For further discussion of factors that could cause our actual results to differ from our expectations, see Risk Factors, Our Business and Managements Discussion and Analysis of Financial Condition and Results of Operations on pages xv, 67 and 154, respectively.

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By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Our Company, the BRLMs, the Syndicate Members or their respective affiliates do not have any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with the requirements of SEBI and applicable law, we will ensure that investors are informed of material developments until the time of the grant of final listing and trading approvals by the Stock Exchanges.

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SECTION II RISK FACTORS An investment in our Equity Shares involves a high degree of risk. You should carefully consider all the information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before making an investment in our Equity Shares. The risks and uncertainties described in this section are not the only risks that we currently face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also have an adverse effect on our business, results of operations and financial condition. If any of the following risks, or other risks that are not currently known or are now deemed immaterial, actually occur, our business, results of operations and financial condition could suffer, the price of our Equity Shares could decline, and you may lose all or part of your investment. In making an investment decision, prospective investors must rely on their own examination of the Company and the terms of the Issue, including the merits and risks involved. Unless otherwise stated, the financial information of the Company used in this section is derived from our restated audited consolidated financial statements under Indian GAAP. Unless otherwise stated, we are not in a position to quantify the financial or other risks described in any risk factor. INTERNAL RISK FACTORS 1. Certain criminal proceedings have been instituted against two of our Promoters, Crompton Greaves and BILT and some of our Group Entities.

Our Promoters, Crompton Greaves and BILT, are involved in certain criminal proceedings. The brief details of which are as follows: There are two criminal proceedings against Crompton Greaves, including one against Mr. Sudhir Mohan Trehan, Managing Director of Crompton Greaves, in his capacity as a factory occupier, for alleged nonmaintenance of health records and other documents for hazardous processes. This proceeding has been challenged before the High Court of Bombay at Goa. There are eight criminal proceedings against BILT, among others, alleging forgery, contempt of court, wrongfully withholding property and violations of provisions of the Standards of Weights and Measures Act, 1976, as amended.

In addition, some of our Group Entities are involved in criminal proceedings. The brief details of these criminal proceedings are as follows: There is one criminal proceeding against BILT Tree Tech Limited (BTTL) and its employees alleging negligence on the part of an employee of BTTL that caused an accident. There is one criminal proceeding against KCTBL alleging pollution of the river Ganga due to discharge of effluent from its distillery.

We cannot provide any assurance that these matters will be decided in favour of our Promoters or in the favour of the respective Group Entities, as the case may be. Further, there is no assurance that similar proceedings will not be initiated against our Promoters or our Group Entities in the future. For further details of the cases described above, see Outstanding Litigation and Material Developments on page 182. 2. Delays in the completion of our power projects currently under implementation for any reason could have adverse effects on our business, results of operations and financial results and we cannot assure you that these projects will reach commercial operation on a timely basis, if at all.

We currently have two power projects under implementation. Each of these projects will be implemented in two phases i.e., Phase I and Phase II in Raigarh, Chhattisgarh (Chhattisgarh Power Project) and Phase I and Phase II in Seoni, Madhya Pradesh (Madhya Pradesh Power Project). The proposed aggregate capacity of these two projects is 2,400 MW. Further, we have one project under planning with expected capacity of 1,320 MW (divided into two units of 660 MW each) located in Gujarat (the Gujarat Power Project). Our power projects will have long gestation periods due to the process involved in the commissioning of power projects. Additionally, power projects typically require months or even years after being commissioned before positive cash flows can be xv

generated, if at all. The scheduled completion targets for our power projects are estimates and are subject to delays as a result of, among other things, the performance shortfall of one or more contractors, unforeseen engineering problems, an inability or delay with respect to leasing or acquiring any of the required land, disputes with workers, force majeure events, availability of adequate financing, delays in entering into definitive power purchase agreements (PPA), unanticipated cost increases, changes in the plans for a project, or failure or delay in obtaining fuel and water supplies or approvals from government authorities. If any of these risks materialize, it could give rise to delays, cost overruns, lower or no returns on capital, erosion of capital and reduced revenue for the Company and failure to meet scheduled debt service payment dates. There can be no assurance that our power projects will be completed in the time expected, or at all, or that their gestation period will not be affected by any or all of these factors. We cannot assure you that all potential liabilities that may arise from delays or shortfall in performance will be covered or that the damages that may be claimed from such contractors will be adequate to cover any loss of profits resulting from such delays, shortfalls or disruptions. In addition, failure to complete a power project according to its original specifications or schedule, if at all, may give rise to potential liabilities. Moreover, a delay in the completion of a project would increase the length of time preceding the commissioning of a project during which a fall in merchant tariffs could occur. If any delay in completion of our power projects were to occur, such delay could adversely affect our business, results of operations and financial condition. 3. It may be difficult for investors to evaluate the probable impact of our current and proposed development activities on our financial performance.

Our revenues in previous fiscal years, including for the fiscal year ended March 31, 2009, have been derived primarily from our four wholly-owned captive power and steam power plants situated in Ballarpur (the Ballarpur Unit), Bhigwan (the Bhigwan Unit), Yamuna Nagar and Sewa (collectively, the Captive Power Units). These four captive power plants had an aggregate operational capacity of 95 MW through March 31, 2009. During the six months ended September 30, 2009, we expanded our capacity at our Ballapur Unit by 40 MW and our capacity at our Bhigwan Unit by 30 MW increasing our current aggregate operational capacity by 70 MW to 165 MW. Further, pursuant to a share purchase agreement dated March 1, 2010, we acquired from Crompton Greaves, one of our Promoters, 59% stake in Malanpur Captive Power Limited (MCPL), which owns and operates a gas-fired power plant located in the Malanpur Industrial Area, Bhind district, Madhya Pradesh (the Malanpur Power Plant). The Malanpur Power Plant is a gas fired power plant with 3 engines of 8.73 MW each, aggregating to an installed capacity of 26.19 MW (out of which two engines aggregating to 17.46 MW are operating as a captive power plant while one engine of 8.73 MW is operating as an independent power plant), bringing our operating capacity to 191 MW. We currently have two power generation projects under implementation (i.e., the Chhattisgarh Power Project and the Madhya Pradesh Power Project) and one project under planning (i.e., the Gujarat Power Project), which are expected to aggregate to 3,720 MW of capacity, which are significantly more than the combined capacity of 191 MW of the Captive Power Units and the Malanpur Power Plant. Due to the high levels of current and proposed development activity, and due to the long gestation periods before projects achieve commercial operation, our historical financial results may not accurately predict our future performance. Further, we do not expect the projects currently under implementation or planning, with a combined capacity of 3,720 MW, to be commissioned until the following dates: Chhattisgarh Power Project Phase I Second quarter of fiscal year 2013; Chhattisgarh Power Project Phase II Second quarter of fiscal year 2014; Madhya Pradesh Power Project Phase I Fourth quarter of fiscal year 2013; Madhya Pradesh Power Project Phase II Fourth quarter of fiscal year 2014; and Gujarat Power Project Fourth quarter of fiscal year 2016.

Therefore, it may be difficult for investors to evaluate the probable impact of the completed power projects on our financial performance or to make meaningful comparisons between reporting periods until we have operating results for a number of reporting periods for these facilities and assets. We anticipate that our financial condition and results of operations will increasingly depend on the performance of these new power projects. Any inability to effectively develop our power projects could adversely affect our business, prospects, results of operations and financial condition. In addition, the viability of our power projects that are currently under implementation or planning is based on assumptions and estimates regarding the probable demand for, and deficits of, power in India for the foreseeable xvi

future, especially in Western India. However, the significant investment in power generation assets being made across India coupled with the long gestation period before power projects achieve commercial operation means that by the time our power projects achieve commercial operation, there may be a surplus of power in certain regions of India. As a result, we may not realize the returns that we have estimated. Further, we cannot predict either the competition or the environment in which we may then be required to operate. Moreover, you should not evaluate our prospects and viability based on the performance or capabilities of our Promoters or other affiliates. Any evaluation of our business and our prospects must be considered in light of the risks and uncertainties inherent in new business ventures. 4. We require a number of approvals, licenses, registrations and permits for our business and the failure to obtain or renew them in a timely manner may adversely affect our operations.

Our business is subject to extensive government regulation. To conduct our business we are required to obtain various approvals, licenses, registrations and permits for our business. Certain approvals that we have applied for in connection with the construction and development of our power projects are pending. The following applications made by us in relation to our business and our Captive Power Units are pending: An application submitted to the Joint Director (Industrial Safety and Health) for renewal of a license under the Factories Act, 1948, for the Ballarpur Unit. An application submitted to the Ministry of Coal, GoI, (MoC) for a long-term coal linkage for the Ballarpur Unit to meet the additional coal needs resulting from the 40 MW capacity expansion of this unit. An application submitted to the MoC, for a long-term coal linkage for the Bhigwan Unit to meet the additional coal needs resulting from the 30 MW capacity expansion of this unit. An application submitted to the Joint Director (Industrial Safety and Health) for renewal of a license under the Factories Act, 1948, for the Bhigwan Unit. An application submitted to the Director of Factories and Boilers, Orissa for renewal of a license under the Factories Act, 1948 for the Sewa Unit.

The following application made by us in relation to the Malanpur Power Plant is pending: An application submitted to the Madhya Pradesh Pollution Control Board for obtaining authorization for collection/reception/reception/treatment/transport/storage of disposal of hazardous waste.

The following application made by us in relation to the Chhattisgarh Power Project is pending: An application submitted to the MoC, for a long-term coal linkage for Chhattisgarh Power Project Phase II. An application submitted to the Ministry of Environment and Forests, GoI, (MoEF) for environmental clearance for Chhattisgarh Power Project Phase I.

The following applications made by us in relation to the Madhya Pradesh Power Project are pending: An application submitted to the Airports Authority of India for a no-objection certificate for the construction of building/structures around airports for the Madhya Pradesh Power Project. An application submitted to the MoC, for a long-term coal linkage for Madhya Pradesh Power Project Phase II. An application submitted to the MoC, to amend the letters of assurance (LoAs) for Madhya Pradesh Power Project Phase I to reflect that the Madhya Pradesh Power Project will be located in the Seoni district, Madhya Pradesh instead of in the Jhabua district as currently contemplated in such LoAs.

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An application submitted to the MoEF, to permit us to acquire tribal land as the MoEF clearance for the Madhya Pradesh Project Phase I restricts us from acquiring tribal land. An application submitted to the Water Resource Department, Government of Madhya Pradesh (GoMP) for the allotment of water for Madhya Pradesh Power Project Phase II. An application submitted to the Chief Transportation Planning Manager, South East Central Railway for in-principle approval for providing a railway siding at Binaki railway station in Seoni, Madhya Pradesh for the Madhya Pradesh Power Project. An application submitted to MoEF for environmental approval for Madhya Pradesh Power Project Phase II.

In addition, we have not yet applied for registration under the Factories Act, 1948 and environmental clearance under the Environmental Impact Assessment Notification, 2006 for Chhattisgarh Power Project Phase II. In addition, we have not yet applied for any approvals, licenses and registrations required for implementation of the Gujarat Power Project. For more information, see Government and Other Approvals on page 206. Moreover, some of these approvals are subject to certain conditions, the non-fulfilment of which may result in revocation of such approvals. Even after such required licenses, permits and approvals have been obtained, our operations will be subject to continued review and the governing regulations may change. Further, certain of our contractors and other counterparties are required to obtain approvals, licenses, registrations and permits with respect to the services they provide to us. We cannot assure you that such contractors or counterparties have obtained and will maintain the validity of such approvals, licenses, registrations and permits. We cannot assure you that we or any other party will be able to obtain or comply with all necessary licenses, permits and approvals required for our power plants in a timely manner to allow for the uninterrupted construction or operation of our power plants, or at all. Furthermore, our government approvals and licenses, including environmental approvals, are subject to numerous conditions, some of which are onerous and require us to incur substantial expenditure, specifically with respect to compliance with environmental laws. We cannot assure you that the approvals, licenses, registrations and permits issued to us would not be suspended or revoked in the event of non-compliance or alleged non-compliance with any terms or conditions thereof, or pursuant to any regulatory action. If we fail to comply with all applicable regulations or if the regulations governing our business or their implementation change, we may incur increased costs, be subject to penalties and suffer a disruption in our operations, any of which could materially and adversely affect our business and results of operations. Any failure to renew the approvals that have expired or apply for and obtain the required approvals, licenses, registrations or permits, or any suspension or revocation of any of the approvals, licenses, registrations and permits that have been or may be issued to us, may adversely affect our operations. 5. We may be liable to a third party for the sale of power from our Madhya Pradesh Power Project.

Prior to our acquisition of Jhabua Power Limited (JPL) in 2008, JPL entered into a PPA in July 2007 (2007 PPA) with a third party for the sale of net power output of 530 MW of power for a period of 25 years from the date of commercial operation of a proposed coal based thermal power project in District Jhabua in Madhya Pradesh. While certain conditions set forth in the 2007 PPA to make it effective have neither been fulfilled nor waived by either party, and we believe that there are circumstances that exist that, in our opinion, have made the 2007 PPA impossible to be performed, the 2007 PPA has not been terminated as of the date of this Draft Red Herring Prospectus. In the absence of termination of the 2007 PPA, the purchaser under the 2007 PPA may sue us for compensation for any loss or damage suffered by it or may seek specific performance of the 2007 PPA, which we would not be able to perform due to our obligations to the GoMP pursuant to the Implementation Agreement for the Madhya Pradesh Power Project. This may impact our ability to sell power generated at our Madhya Pradesh Power Project or to sell power at tariffs favourable to our Company, or we may be required to pay liquidated damages to such third party under the terms of the 2007 PPA. Any such eventuality would have a material adverse effect on our business, prospects, results of operations and financial condition. 6. The Net Proceeds of the Issue may be inadequate and we may not be able to raise additional capital to fund the balance costs for power projects that are a part of the Objects of the Issue, which could adversely affect our business, results of operations and financial condition.

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The Net Proceeds of the Issue are expected to be used to partly finance the cost of construction and development of Chhattisgarh Power Project Phase I and Madhya Pradesh Power Project Phase I. However, at least approximately Rs 1,874.42 million (in addition to debt that has been tied up) will still be needed to completely finance phase I of each of these projects. Since the Net Proceeds of the Issue and debt currently tied up will be insufficient to finance the implementation of Chhattisgarh Power Project Phase I and Madhya Pradesh Power Project Phase I, we will need to raise additional amounts through equity issuances or contributions from our Promoters to fund the balance cost of these power projects. There can be no assurance that we will be able to fund such additional amounts from internal accruals or raise additional capital or arrange additional financing on terms that would be acceptable to us, or at all, which could adversely affect our business, results of operations and financial condition. 7. Our operations will have significant fuel requirements, and we may not be able to ensure the availability of fuel at competitive prices, which could have an adverse effect on our business, results of operations and financial condition. Further, shortages of gas could negatively affect the productivity of the Malanpur Power Plant.

The success of our operations will depend on, among other things, our ability to source fuel at competitive prices. We have received LoAs from South Eastern Coalfields Limited (SECL) for the majority of the supply of coal for Chhattisgarh Power Project Phase I and LoAs from SECL and Mahanadi Coalfields Limited (MCL) for the majority of the supply of coal for Madhya Pradesh Power Project Phase I (The LoAs for Madhya Pradesh Power Project Phase I contemplate this project being located in the Jhabua district. We applied to the MoC on January 11, 2010 to amend these LoAs to reflect that the Madhya Pradesh Power Project will be located in the Seoni district, Madhya Pradesh. Approval for this change is pending. If the approvals to amend these LoAs are not granted, coal will not be delivered to Madhya Pradesh Power Project Phase I in Seoni and we will not have a coal supply for Madhya Pradesh Power Project Phase I.) Each letter of assurance allows us to enter into a long-term fuel supply agreements with the relevant coal supplier within three months of fulfilling certain conditions precedent, including obtaining the relevant approvals and debt financing within specified timelines, as long as these conditions precedent are fulfilled within the 24-month term of the letter of assurance. There can be no assurance that we will be able to satisfy these conditions in a timely manner or that we will be able to enter into such fuel supply agreements. In addition, failure to achieve such milestones within the specified timelines under the LoAs would result in us having to provide additional commitment guarantees. We have in the past provided such additional commitment guarantees to the relevant coal suppliers. We cannot assure you that we will not have to provide additional commitment guarantees in the future. Further, we have recently submitted an application to the MoC for coal linkage for Chhattisgarh Power Project Phase II and for Madhya Pradesh Power Project Phase II. In addition, we have applied to the MoC for long-term coal linkages for the additional capacity of 40 MW at our Ballarpur Unit and 30 MW at our Bhigwan Unit. Pending the execution of the fuel supply agreements to cover the expanded capacity of these units, we are purchasing coal in the open market. We will also have to secure sources of fuel for the Gujarat Power Project. There can be no assurance that our applications to MoC for coal linkages will be approved or that we will secure sources of fuel for the Gujarat Power Project. Failure to enter into fuel supply agreements or in receiving in a timely manner, or at all, coal linkages in respect of any of the additional capacity of our Captive Power Units or power projects under implementation or planning may require us to procure coal at a significantly higher spot price from the market in order to undertake our operations. There can be no assurance that we will be able to obtain coal supplies in sufficient quantities, of acceptable quality and/or on commercially acceptable terms for the expanded captive power plant capacity or power plants under implementation or planning. Any such failure or inability could have an adverse effect on our business, results of operations and financial condition. The success of our operations at the Malanpur Power Plant also depend on, among other things, our ability to source fuel at all and at competitive prices. MCPL entered into a gas sale agreement with GAIL (India) Limited (GAIL) dated December 31, 2008, for the supply of gas which supports capacity utilization up to approximately 18.93 MW at 100% utilization. GAIL is the only supplier of gas available to the Malanpur Power Plant. Therefore, the operating capacity of the Malanpur Power Plant is currently restricted by its gas supply. If MCPL is unable to obtain gas supplies from GAIL on the agreed terms or if GAIL were to otherwise be unable to supply us with the amount of gas agreed to, we cannot obtain gas supplies from alternative supplies and the productivity of the Malanpur Power Plant would be severely affected, which in turn would adversely affect our business, results of operations and financial condition. There can also be no assurance that we can increase our gas supply from GAIL so as to allow the Malanpur Power Plant to operate at full capacity. For further details on the gas sale agreement, and the LoAs for the Chhattisgarh Power Project and the Madhya Pradesh Power Project, see History and Certain Corporate Matters- Material Agreements on page 106.

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8.

We have incurred significant indebtedness and further intend to incur substantial borrowings in connection with the development of our power projects. The indebtedness incurred by us and the conditions and restrictions imposed upon us by our debt financing arrangements could adversely impact our ability to conduct our business operations. Further, we may not be able to meet our obligations under these debt financing arrangements.

As of December 31, 2009, we had total outstanding indebtedness of Rs. 5,412.94 million. For further details regarding our indebtedness, see Financial Statements and Financial Indebtedness on pages F1 and 176, respectively. In addition, increasing our level of indebtedness has important consequences to us such as: Increasing our vulnerability to general adverse economic, industry and competitive conditions; Dedicating a significant portion of our cash flows to repayment of existing debt; Limiting our flexibility in planning for, or reacting to, changes in our business and the industry; Limiting our ability to borrow more money for our power projects; and Increasing our interest expenditure, since most of our debt bears interest at floating rates.

Further, our financing arrangements contain restrictive covenants whereby we are required to obtain approval from our lenders, regarding, among other things, any reorganization, amalgamation or merger, incurrence of additional indebtedness, the disposition of assets and the expansion of our business. We cannot assure you that we will receive such approvals in a timely manner, or at all. These agreements also require us to maintain certain financial ratios. In addition, some of our financing arrangements may contain cross default provisions that could automatically trigger defaults under other financing arrangements. Moreover, we have obtained unsecured loans for which the lenders may demand repayment at any time. Also, if interest rates were to increase, our debt service cost would increase. However, our revenues under PPAs might not correspondingly increase and we might not be able to negotiate higher rates under our PPAs. Such occurrence may have an adverse effect on our business, financial condition and results of operations. Our ability to meet our debt service obligations and to repay our outstanding borrowings will depend primarily upon the cash flow generated by our business over time, as well as capital markets as a source of capital. If we fail to meet our debt service obligations or breach our financial or other covenants required under the financing documents, the relevant lenders could declare us in default under the terms of our borrowings, accelerate the maturity of our obligations, either in whole or in part, require us to pay any costs related to our default or take over and/or sell the assets that have been used to secure our loans, which may include immovable and movable properties, book debts, operating cash flows, project receivables, commissions and revenues. We cannot assure you that, in the event of any such acceleration, we will have sufficient resources to repay these borrowings. Failure to meet our obligations under the debt financing arrangements could have an adverse effect on our cash flows, business and results of operations. 9. Increases in interest rates may materially impact our results of operations.

As our power business is capital intensive, we are seeking to finance 75% of our expected capital expenditure through debt financing. Most of the debt facilities we currently have in place have variable interest rates thereby exposing us to interest rate risk. Any increase in interest rates would increase our interest expense, which in turn may have an adverse effect on our financial results and business prospects. In addition, due to the number of large-scale infrastructure projects currently under development in India and increased lending by banks and institutions to these projects, we may not be able to receive adequate debt funding on commercially reasonable terms in India and may be required to seek funding internationally, which may result in exposure to higher interest rates and foreign exchange risks. We are not currently a party to any interest rate hedging or swap arrangements. We cannot assure you that we will be able to enter into any hedging or swap arrangements against interest rate risks in the future on commercially acceptable terms, or at all, or that any such arrangements would successfully protect us from losses due to fluctuations in interest rates.

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In view of the high debt to equity ratios of the power projects, typically 3:1, an increase in interest expense is likely to have a significant adverse effect on our financial results and also increase our cost of capital, which will, in turn, reduce the value of projects to us. 10. We have pledged a significant portion of our equity interest in our Subsidiaries in favour of lenders. Such lenders may exercise their rights under the respective pledge agreements in the event of a default.

Our Company has pledged 51% of the equity interest that we hold in each of Korba West Power Company Limited (KWPCL) and JPL, the project Subsidiaries that are implementing the Chhattisgarh Power Project and the Madhya Pradesh Power Project, respectively, in favour of security trustees as security for the loans provided to these Subsidiaries. If any of these Subsidiaries were to default in its obligations under the relevant financing agreement, the lenders may exercise their rights under such agreements, have the equity interests transferred into their names and, depending on the percentage of shares pledged and transferred to the lenders, take management control over the relevant Subsidiary. If this were to occur, we w