Director Report

On behalf of the Board of Directors, it gives me immense pleasure in presenting the 34^th Annual Report on the performance of the Company, together with the Audited Financial Statements for the financial year ended 31^st March, 2023.

. Rated "Excellent" with a score of 95.96 in Memorandum of Understanding (MoU) signed with Government of India for FY 2021-22.

. On a standalone basis, the Company's Total Income at 345,968.07 crore, increased by 8.58% and Profit after Tax (PAT) at 315,333.02 crore, increased by 11.16% (Excluding Exceptional Item), as compared to previous year.

. Achieved system availability of 99.82%. The trippings per line decreased to 0.27, lowest in last five years.

. Charging of 2,972 circuit km (ckm) of Extra High Voltage (EHV) transmission lines, 28,990 Mega Volt Ampere (MVA) transformation capacity and 9 new Substations (including subsidiaries).

. Assets of 37,413 Crore were capitalized.

. For ensuring effective communication of the existing as well as new substations with Regional Load Despatch Centres (RLDCs) /State Load Despatch Centers (SLDCs), 6,600 km of Optical Ground Wire (OPGW) network was added.

. Achieved collection efficiency of 98.84% of billing in FY 2022-23.

. Emerged successful in 11 TBCB projects

. Rated as best utility in Transformer Maintenance and 3^rd best utility in Vegetation Management in International

Transmission Operation and Maintenance Study (ITOMS) for 2021-22.

Financial Performance during year under review (FY 2022-23) as compared to the previous year (FY 2021-22) on standalone basis is summarized below:

(All Figures except per share data are in units as indicated)

* Including current maturities of Long-Term Borrowings

** Excluding Exceptional Item

Convenience Conversion at US $ 1= 582.74 as on 31.03.2023

The Company recommended / declared dividend as follows: -

* Including a Special Dividend of 53.00 per share a Recommended for approval of Shareholders

The total dividend payout for the year amounts to 510,289 crore (including interim dividends of 56,975 crore).

The final dividend shall be paid after approval at the Annual General Meeting. The total payout ratio for the year was 67% as compared to 60% for previous year.

For FY 2022-23, appropriation of profit has been made as follows:

a) General Reserve: 58,000.00 crore

b) Self-Insurance Reserve: 5299.42 crore

The Government of India's shareholding in the Company remained unchanged at 51.34%.

During the year under review, your Company emerged as successful bidder in eleven lnter-State Transmission System Projects under TBCB route. The SPVsto implement these projects were also acquired by your Company in FY 2022-23. Besides, two SPVs to implement one inter-state and one intra-state Transmission System projects namely, Strengthening Scheme for Evacuation of Power from Solar Energy Zones in Rajasthan (8.1 GW) under Phase-ll Part-G and Transmission System for Mohanlalganj (Lucknow) with associated 400kV lines, LILOs at Rampur & Sector 123 Noida respectively in which your Company had emerged successful in FY 2021-22, were also acquired by your Company in FY 2022-23. The aggregate annual levelized tariff of these projects is about 51,200 crore.

As on 31^st March 2023,13 TBCB subsidiaries were fully operational while 2 TBCB subsidiaries were partly operational with total TBCB transmission assets comprising 83 transmission lines with 7354 ckm & 13 Substations with aggregate transformation capacity of 30,175 MVA. At the end of FY 2022-23, the Company owned 33 TBCB subsidiaries, the details of which are provided in the Management Discussion & Analysis Report (MD&A).

In Union Budget 2021-22, Monetization of Assets has been identified as one of the three pillars for enhanced and sustainable infrastructure financing in the country. Based on the mandate for 'Asset Monetisation' in the Union Budget, Niti Aayog prepared "National Monetization Pipeline" (NMP) with year wise targets. The framework for monetization of core asset as per the NMP has three key imperatives:

• Monetization of 'Rights' not 'Ownership', Assets handed back to the government at the end of transaction life.

• Brownfield de-risked assets, stable revenue streams.

• Structured partnerships under defined contractual frameworks with strict KPIs & performance standards.

During FY 2022-23, considering the above, POWERGRID monetized the cashflow of its three operational TBCB SPVs through securitization route by private placement of bonds and raised 53,412 crore in three tranches against monetization target of 53,000 crore.

3.1. Asset Management

As on 31^st March, 2023, your Company's total transmission assets including those owned through its wholly owned subsidiaries consisted of 1,459 transmission lines aggregating to 1,74,113 ckm., 272 substations with an aggregate transformation capacity of 4,99,362 MVA.

Keeping in view the growing asset base, your Company is migrating towards digitization of asset management. Some of the initiatives and developments in this direction are as follows:

• Remote operation of the +/- 500 kV, 1500MW HVDC Rihand -Dadri Bi-Pole Terminals and 500MW Vindhyachal HVDC back to back from National Transmission Asset Management Centre (NTAMC) Manesar. This is first time in India that a HVDC Sub-station is being operated from a remote control centre. This innovation enhances efficiency, reduces cost and presents a promising future for the industry.

• In-house development of a Al/ ML based defect identification tool POWERGRID Asset Management though Artificial Intelligence in Transmission (PG AMRIT) which has been integrated with transmission line patrolling platform POWERGRID Digital Application for Routine Patrolling & Assessment of Network (PG-DARPAN). This has aided in optimizing the efforts of line maintenance manpower and move the focus from defect identification to defect rectification.

• Implementation of Asset Management Dashboard (UDAAN-Unique Digital Analysis of Asset and Network) to ensure a single window access to all the key performance indicators (KPIs) by integrating data stored in various formats. This has enabled management to have a bird's eye geospatial view of the asset management system across the organization.

• Commissioned a Green field fully digital 220/66kV GIS Substation at Chandigarh with IEC 61850 Process Bus based Protection Automation and Control system. It significantly reduces the use of cables in EHV Sub-station thus resulting in safer working environment and lower carbon footprint.

• Launch of In-house, Asset Health Indexing Software for Circuit Breakers which automatically fetches and evaluates the Circuit Breaker data from a centralized database and assigns health index to the equipment based on the extent of deterioration using POWERGRID's own interpretation technique. This will help in migration to Reliability Centered Maintenance of Transmission Assets.

• Organized a two-day International Conference, GRIDCON2023, on 16^th & 17^th February 2023. The theme of the conference was "Digitalization in Transmission Asset Management: Building Block for tuture ana it coverea global asset management practices. International experts & industry leaders - from USA, Canada, South l Africa, Scotland, Japan, Portugal & Germany shared — knowledge pertaining to O&M of power transmission / networks. It provided an excellent platform to enable ~ sharing of knowledge and V expertise in the transmission sector, and discussion that helped identify international best practices, innovative solutions and new opportunities for feHi collaboration.

• Drone-based patrolling of transmission lines all across the Regions of POWERGRID.

• Methanol Marker Test Kit has been commissioned which shall be helpful in early detection of aging of transformer/reactors and take proactive action to redress the same. Your Company is one of the few utilities globally to establish alcoholic marker test facility.

• First 765 kV RIP bushing in India has been taken into service in Line Reactor at Satna, Western Region.

• In-house Repair of GIS Substation equipment have been carried out by the maintenance teams of your Company at 9 Substations which prevented long outages of system and resulted in considerable cost savings. One old AIS Substation in NER has been converted to GIS which will result in increased reliability of the system.

For many years, your Company has participated in the International Transmission Operation and Maintenance Study (ITOMS), a global Operations & Maintenance (O&M) benchmarking platform that includes 32 major power transmission utilities globally. Based on the report on ITOMS for 2021-22, published in February, 2023. Your Company has been ranked in first quadrant for both Line and Substation Maintenance reflecting asset maintenance being carried out at low cost with high performance levels.

To facilitate remote operation of your Company's transmission system and monitoring of various parameters on real time basis at Regional and National levels, NTAMC was set up at Manesar, near Gurugram (Haryana) and RTAMCs were set up at various locations across the country. The back-up of main control centre i.e. BNTAMC is located at Bengaluru (Karnataka). These state-of-the-art centres are manned round-the-clock by experts for effective monitoring and management of transmission assets. During FY 2022-23, ten Extra High Voltage (EHV) Substations were integrated with NTAMC for remote operation. By the end of FY 2022-23, a total of 271

Substations are being operated remotely from these asset management centres.

Central Government has declared Supervisory Control and Data Acquisition (SCADA) System installed at NTAMC & RTAMCs as Critical Information Infrastructure (Cll) vide Gazette notification dated 13^tfl December 2022.

Cyber Security initiatives are led by the Chief Information Security Officer (CISO) through the Information Security Department in the Company. Your Company's Corporate Office, all regional headquarters and 239 substations are certified as per the Information Security Management System ISO:27001. The Company works closely with designated statutory bodies: Computer Emergency Response Team (CERT-ln) and the National Critical Information Infrastructure Protection Center (NCIIPC). Your Company follows the recommendations issued by these agencies from time to time. Your Company conducts extensive training programs for employees and participated in programs and simulations organised by CERT-ln and NCIIPC.

Your Company has set up a Cyber Security Operations Center for threat analysis and monitoring to strengthen resilience in its operations.

Your Company is certified with ISO 45001:2018, Occupational Health & Safety Management System which ensures a healthy work environment for employees by strict adherence to norms on Occupational Health & Safety at workplace.

The Company recognizes its responsibility for maintaining a safe working environment for all its employees including contract workers. Necessary steps are taken to ensure that all applicable safety factors are taken into account as per standards during the design, construction and operation & maintenance of assets.

Safety audits/ inspections, trainings, safety briefings, mock-drills were carried out for all contract workers and Company staff at various O&M and construction sites. Safety audits of 272 substations and safety inspection at 235 construction sites were carried out in FY 2022-23.

Animated safety video films on "safety during transmission line maintenance work" have been developed for promoting safety awareness of the workers. Remote safety monitoring of construction sites on mobile apps connected through static camera were started on trial basis.

Safety trainings were organized on various safety aspects such as job specific training, fire safety, stress & health management and first aid etc. at various sites. 1207 safety training sessions were organized for Company employees and 5374 safety training sessions were conducted for construction agency workers/ staff. 1227 mock-drills were organized at sites for preparedness to cope up with any untoward incident/ urgency/emergency.

National Safety Day/week in March, National fire safety day/week in April, National electrical day/week in June are celebrated every year involving employees, their family members and contractual workers helping in creating awareness towards adherence to safety at work place and home.

All the dangerous occurrences were reviewed by Standing Safety Management Committee and POWERGRID Apex Safety Board in association with all Heads of Regions and Board level representatives of construction Agencies. Recommendations of Accident Enquiry committees were widely circulated at all sites for implementation.

During FY 2022-23, your Company added about 2,972 circuit kilometer (ckm) of Extra High Voltage (EHV) transmission lines, 28,990 Mega Volt Ampere (MVA) transformation capacity and 9 new Substations (including through its subsidiaries).

Further, about 6,600 km of OPGW network was added during the year to support voice and data communication with Regional Load Dispatch Centres (RLDCs) / State Load Despatch Centres (SLDCs) for effective grid management.

. Reconfiguration of 765 kV D/c Bhuj PS - Lakadia PS line so as to establish 765 kV D/C Bhuj-ll -Lakadia line as well as 765 kV D/C Bhuj-Bhuj-ll line

. 400 kV D/C Jeerat (New) - Subhasgram (PM-JTL-TBCB) line

. 400 kV D/C Lower Subhansiri - Biswanath Chariyali line-1

. 400 kV D/C Simbhavali - Meerut line

. 220 kV D/C UT Chandigarh s/s - Panchkula (PG) s/s line

. 400 kV D/c Mohindergarh - Bhiwani line

. LILO of Kishanganj (POWERGRID) - Darbhanga (DMTCL) 400 kV D/c (Quad) line at Saharsa (New)

. 400 kV D/c Bina- Guna line

. LILO of both circuits of 400 kV D/c Dhauliganga - Bareilly (PG) line at Jauljivi

As on 31^st March 2023, the inter-regional power transfer capacity of the transmission assets belonging to the Company and its subsidiaries was 97,290 MW (i.e. 86.67%) out of 1,12,250 MW inter-regional power transfer capacity of the national grid.

During FY 2022-23, your Company made a consolidated capital investment of 58,850 crore on cash basis. To finance this investment, the Company mobilized 52,120 crore from securitization, 54,488 crore through bonds & term loans and 52,242 crore from Internal accruals & others.

During FY 2022-23, investment approvals for transmission projects with an estimated cost of 522,250 crore were accorded.

Sharing of Inter-state transmission charges is governed by CERC (Sharing of Inter State Transmission Charges and Losses) Regulations, as notified from time to time in line with the National Tariff Policy notified by Govt, of India and provisions of the Electricity Act, 2003. Presently, CERC (Sharing of Inter State Transmission Charges and Losses) Regulations, 2020 are in vogue. As per the Sharing Regulations, the Central Transmission Utility (CTU), had the responsibility of billing & collecting transmission charges on behalf of all ISTS licensees in the country including your Company and disbursing to them. Central Transmission Utility of India Limited (CTUIL), a wholly owned subsidiary of your Company has been notified as CTU by the Government of India. Your Company continues to be a deemed Transmission Licensee under the Electricity Act, 2003.

Your Company, through regular follow up with its customers (DICs) and timely regulatory actions has achieved collection efficiency of 98.84% of billing in FY 2022-23.

The Company is providing a range of services under its Unified License as National Long Distance (NLD) and Internet Service Provider - Category 'A' (lSP-'A') service authorizations. Your Company is providing nationwide services like point-to-point leased line bandwidth services, Internet leased line, Tower co-location, MPLS based IP-VPN, SD-WAN, DDoS etc. in all parts of the country with its Pan India high-capacity network under the brand name 'POWERTEL'. Revenue from Telecom Business was 5729 crore during FY 2022-23.

During FY 2022-23, the Company's telecom network coverage increased to 82,294 km from 74,109 km at the end of previous year and the telecom backbone availability for the year was 99.99%. The Company's telecom network is present in more than 3000 locations covering ? all major cities /towns and metros in India.

Your Company has signed Agreements with Damodar Valley Corporation (DVC), Manipur ^a State Power Company Ltd. (MSPCL), J&K Power Development Corp. Ltd. (JKPDCL), Power Transmission Corp. of Uttarakhand Ltd. (PTCUL), Goa Electricity Department (GED), Uttar Pradesh Power Transmission Corp. Ltd. (UPPTCL) and Rajasthan Vidyut Prasaran Nigam Ltd. (RVPNL) for leasing of their OPGW fibres (approx. 19,000 km). Utilisation of these OPGW fibres will enable Company to expand its telecom network in various cities for new business opportunities.

POWERGRID Teleservices Limited (PTL), the wholly owned subsidiary of your Company has been incorporated to undertake Telecommunications and Digital Technology business. PTL has obtained the Unified License with service authorization of National Long Distance (NLD), Internet Service Provider (ISP-A) & International Long Distance (ILD). The business transfer agreement to hive off the Telecom business into PTL has been executed and the transfer is to take effect in this financial year.

Your Company's Board approved expansion of POWERGRID Telecom into Data Center Business and to establish the Pilot Data Center at Manesar. The Central Electricity Regulatory Commission (CERC) has given permission on 30^th November, 2022 to set-up the Data Centre at Manesar through POWERGRID Teleservices Limited. Further, POWERGRID is also planning to set-up a 500 Rack Disaster Recovery (DR) Data Centre at Bengaluru. The DR centre at Bengaluru will serve as a back-up for the Data Centre at Manesar and also as a main Data Centre for nearby customers. In this regard. Petition has been filed before CERC requesting permission for establishment of DR Data Centre at Bengaluru and Data Centre(s) at 15 Nos. other substations across the country.

POWERGRID Teleservices Limited is also planning to provide International Long Distance (ILD) connectivity. The provisional permissions for setting-up ILD-Gateways has been received from DoT.

Your Company is one of the implementing agencies for 'Bharat Net' Phase-1 project envisaged to provide broadband connectivity to Gram Panchayats (GPs), thus making valuable contribution to the initiatives of the Govt, of India for Digital India.

The scope of work is spread across 39 districts in 5 States viz., Andhra Pradesh, Telangana, Himachal Pradesh, Jharkhand & Odisha. The Company has completed the work for all 511 Blocks and successfully handed over to M/s BBNL.

Your Company, one among the largest power transmission utilities in the World, has developed expertise in its core areas such as power transmission projects, sub-transmission system, distribution management, load dispatch & communications, in India and abroad. Leveraging its capacity and experience, consulting services have been provided to several customers in India and worldwide. During the year, your Company achieved revenue from operations of 5509 crore from Consultancy segment.

On behalf of Government of India, your Company is implementing two important projects as consultancy assignments for strengthening of the Intra-State Transmission and Distribution Systems (33kV and above) namely 'NER Power System Improvement Project' (NERPSIP) in Manipur, Meghalaya, Mizoram, Tripura, Nagaland & Assam and 'Comprehensive Scheme' for strengthening of Transmission & Distribution in Arunachal Pradesh and Sikkim. Your Company is also providing consultancy services to Indian Railway for electrification of un-electrified railways tracks in Central, East Central, South- Western & South-East-Central Railway zones.

Your Company is currently executing about 80 consultancy assignments in various fields including transmission & sub transmission, design & engineering, EV charging, Renewable, Smart Metering, etc. During the year, your Company bagged 54 new consultancy assignments.

Some of the major consultancy assignments include:

• Agreement signed with Jammu Power Distribution Corporation Limited (JPDCL) and Kashmir Power Distribution Corporation Limited (KPDCL) for loss reduction initiatives under Revamped Distribution Sector Scheme (RDSS).

• MOU signed with Greenko Energies Pvt. Ltd. for implementation of transmission system associated with RE generation.

• MOUs signed with Madhya Pradesh Power Transmission Company Limited (MPPTCL) and Odisha Power Transmission Corporation Limited (OPTCL) for Substations Automation/ establishment of State Transmission Asset Management System (STAMS).

• Consultancy services to NHIDCL for Construction of 2x25MVA, 66/11 kV, substation at Zojila east portal location and 66 kV D/C line from 220/66 kV Drass substation to 66/11 kV Zojila east portal location substation along with 66 kV underground cable work in the union territory of Ladakh.

• Consultancy services to NHIDCL for Construction of 50MVA 220/33KV Nilgrar Subsation and LILO of one circuit of SLTS at Nilgrar at West Portal location, UT of J&K.

• Consultancy services to CVPPLfor Laying of 400 kV Dedicated Transmission Line from Pothead Yards of 1000 MW Pakal Dul HE Project, 624 MW Kiru HE Project & 540 MWKwar HE Project to proposed Pooling Station in Kishtwar, UT of J&K.

On the International front, as on 31^stMarch, 2023, your Company has its footprint in 23 countries. During the FY 2022-23, Your Company has received orders worth Rs. 52 crores from Uganda, Nepal, and Ethiopia. The Company is providing consultancy to various clients in Nepal, Uganda, Fiji, and Moldova.

A Privately Initiated Proposal (PIP) for development of transmission project in Kenya submitted by your company in Joint Venture with Africa-50 has been approved by PPP Directorate, Govt, of Kenya, to proceed into Project Development Phase in line with Public Private Partnership (PPP) Law of Kenya. The estimated cost of the Project is USD 300 Million. Your Company is exploring suitable opportunities to replicate the similar model in other African countries.

Your Company has established a Joint Venture Company viz. Butwal-Gorakhpur Cross Border Power Transmission Limited (BGCBPTL) with equity participation of 50:50 with Nepal Electricity Authority (NEA) for Implementation of Indian Portion of New Butwal - Gorakhpur 400 kV Double Circuit (Quad Moose) Cross- border Transmission Line.

Your Company has developed and maintained systems and procedures that are in accordance with the Publicly Available Specification, PAS 99:2012, while also incorporating the requirements of ISO 9001:2015 (Quality Management System), ISO 14001:2015 (Environmental Management System), and ISO 45001:2018. (Occupational Health & Safety Management System).

Re-certification of Integrated Management system Certification (IMS) covering requirement of ISO 9001 (Quality

Management System), ISO 14001 (Environment Management System) and ISO 45001 (Occupational health and Safety Management System) was carried out successfully for three years without any non-conformity. Further, re-certification of Energy Management System ISO 50001 for Corporate Office building and NTAMC Building received for a period of three years without any non- conformity.

Other initiatives taken in the field of quality management are as follows:

Manufacturer Unit Approval Portal: Your Company has launched a new online portal for approval of new manufacturing units, extension of approval of existing units and renewal of their manufacturing quality plan. With the launch of the portal, the complete process from approval to material dispatch has become paperless. The manufacturers can now upload their documents and check the real time status of their application for approval.

Grading of Manufacturer: Grading of vendors, based on process audit and past performance with goal for almost zero inspection for Grade A vendors, has been initiated for transformer radiators as a pilot project. Standardization of documents viz MQP / FAT Checklist for level II item/ process audit checklist, has been carried out to bring uniformity, consistency and transparency in the inspection process.

Your Company has been granted two patents by the Patent Office, Government of India.

• Patent (No. 418166) for an invention entitled 'ENERGY EFFICIENT ALL-SEASON ROOF SCREENING'. This roof coating /screening technique offers energy efficiency round the year without compromising the comfort level. Also, the invented screening process takes care of reflection issue on nearby buildings, dust settlement and expense towards deployment.

• Patent (No. 411380) for an invention entitled 'SMART SOCKET AND SMART HOME ENERGY MANAGER' which has been developed in collaboration with NT Kharagpur. This smart socket along with home energy manager application can be used to manage household appliances efficiently to achieve optimum energy consumption and reduce the electricity bill.

This recognition is a testament to the innovative spirit and unwavering commitment of your Company towards advancing the indigenous technology.

In pursuit of cutting-edge innovation and advancement in the field of substation aerial inspection, development of programmable drone with specialized sensors (Thermal & Video) for substation aerial inspection including Al/ML based analytics capable of operating in diverse topographies has been taken up as a first of its kind in India. This integrated solution represents a significant step forward in enhancing efficiency, accuracy and safety of substation aerial inspections, and heralds a new era of data-driven decision-making.

Company is in the process of obtaining UCAlug Accreditation of Protection Automation and Control laboratory at POWERGRID Advanced Research and Technology Centre for testing and certifying IEC 61850 compliant equipment.

Your Company executives have published 14 technical papers at the CIGRE Session 2022 held in Paris on new technology / case studies, which were highly acclaimed by the industry / academia / experts.

Your Company through continuous measures, has encouraged localization of various goods to be sourced for development/operations of transmission system. Foreign manufacturers have also been nudged to set-up facilities in India and thus promoting the Make in India initiative of the Government. With the Company's efforts, new plants and facilities have been set-up in India over the past few years by a number of foreign manufacturers for equipment like GIS, transformers, reactors, STATCOM, OPGW, etc. paving way for a wider vendor base and emergence of a more efficient supply chain.

Your Company also promotes existing vendors to upgrade their equipment to higher voltage level & cover more items to increase vendor base.

Further, the Company has given much impetus towards procuring from local suppliers in its various procurement verticals in line with the extant Government of India's policy on the same. This is evident from the fact that during FY 2022-23, total awards amounting to about S 13,740 crore (124 nos. of Contracts) were placed on Indian vendors. Your Company is actively working on the development of its vendor base in the domestic market by encouraging participation of local suppliers and promoting capacity building for existing vendors.

In line with Government of India directives for promotion of MSMEs, the Company has been complying with the guidelines issued by the Government from time to time. The Company is registered on all the three(03) available Trade Receivable e-Discounting System (TReDS) platforms of (i) Receivable Exchange of India Limited (RXIL) (a NSE - SIDBI JV), (ii) Mynd Solutions Private Ltd (Mlxchange) and (iii) A TREDS Ltd. (invoicemart). Trade Receivables Discounting System (TReDS) is the platform for facilitating the financing of trade receivables from corporate and other buyers, including Government Departments and Public Sector Undertakings (PSUs), through multiple financiers. The Company is continuously pursuing with its MSMEs suppliers to get themselves on-boarded on TReDS Platforms, for which detailed guidelines have been provided on Company's website www. powergrid.in.

Suitable provisions have already been incorporated in the bidding documents of POWERGRID for procurement of various products and services rendered by Micro and Small Enterprises (MSEs) in line with the Public Procurement Policy of the Government of India.

Your Company is actively developing and adding sub vendors, particularly in the MSME category. During FY 2022-23, 62 nos. of new vendors were added out of these 28 were MSE vendors.

In terms of the said policy, the total procurement from MSEs (including MSEs owned by SC/ST and Women entrepreneurs) by your Company was Rs. 1,243.54 crore which is 53.34% of the total eligible value of Annual procurement of goods produced and services rendered by MSEs.

Further, the total procurement from MSEs owned by SC/ST entrepreneurs is S 48.76 Crore (2.09%) and from MSEs owned by Women Entrepreneurs is S 71.27 Crore (3.06%) against the sub-targets of 4% and 3% annual procurement from MSEs owned by SC/ST and Women entrepreneurs respectively. As such, POWERGRID is meeting the subtarget as per Public Procurement Policy for MSEs Order 2012, and its Amendment dated: 09^tfl

November 2018, which, inter alia, directs that in event of failure of such Micro and Small Enterprises to participate in tender process or meet tender requirements and LI price, 4 percent sub-target for procurement earmarked for Micro and Small Enterprises owned by Scheduled Caste or Scheduled Tribe entrepreneurs shall be met from other Micro and Small Enterprises.

Annual procurement plan for FY 2022-23 from MSEs is uploaded on www.powergrid.in.

The Company has taken various steps to encourage MSE participation in the procurement process across India. During this year, in order to encourage and develop Micro and Small manufacturers for supply of innovative & quality products, 20 nos. of Vendor Development Programs(VDPs) have been organized in various parts of the country out of which 09 nos. of VDPs were exclusively held for SC/ST and Women MSEs. In these MSE vendor development programs, various presentations were made and discussions were held with representatives of numerous Micro and Small Enterprises of our Country. Special focus was on Micro and Small Enterprises owned by SC/ ST and Women entrepreneurs. The response of Micro and Small Enterprises in these meetings was overwhelming. A number of Micro, Small & Medium Enterprises have been developed as sub-vendors and approved for supply of components for various equipment.

In line with Gol mandate, procurement of Goods & Services is being done through GeM portal. Procurement through GeM in POWERGRID started in FY 2018-19 and in subsequent years, with persistent emphasis, procurement through GeM has continuously increased. During FY 2022-23, procurement of S1404 crore of Goods & Services was from GeM portal which is about twice the procurement of last FY 2021-22 ( Rs. 706 crore).

Further, the percentage achievement for FY 2022-23 in respect of GeM procurement with respect to the Categories of Goods & Services that are available in GeM works out to 98.86%. It may also be mentioned that for the first time, the Mega Insurance Package for Insurance of the HVDC and Building Assets of POWERGRID valuing about S138 crores was successfully awarded through GeM after enabling of the feature by GeM. Further, the Scrap Disposal Package was also auctioned successfully for the first time through GeM during the year.

The principles of Environment, Social and Governance (ESG) are being embedded by your Company into business operations and the Company continues to attach importance to ESG ecosystem.

The Company is taking steps to align its sustainability related aspects with global requirements and is participating in assessment surveys carried out by MSCI, FTSE and S&P Global CSA annually, wherein your Company gets an opportunity to benchmark its various parameters pertaining to ESG under power transmission against domestic & international peers.

Your company has been practicing the standards of sustainable development integrated in its corporate Environmental and Social Policy & Procedures (ESPP) since 1998, that lays down a detailed framework for identification, assessment and management for environmental and social concerns at organizational and project level based on the established principles of Avoidance, Minimization and Mitigation with provision of restoration too. The comprehensive coverage and content of the ESPP can be judged by the fact that it has been accepted by two leading Multilateral Agencies of the world i.e. The World Bank and ADB under their Use of Country System (UCS) and Country Safeguard System (CSS) policy in 2009 and 2017 respectively.

On the environmental management front, your Company undertakes detailed Environmental & Social Assessment of new projects in line with the provisions of ESPP including alternative studies, development of Environment Management Plan (EMP) and public consultation, even though not mandated by the law of the land. Besides, your Company also leverages latest technology such as adoption of modern survey techniques to select most optimum line route to avoid ecological and social sensitive areas, use of innovative towers (multi circuit, compact, pole tower) in forest and habitation areas, and such initiatives not only helped in conservation of natural resources like forest and Right of Way (Row) but also substantially reduced project's environmental and social footprints.

Management of land issues has become a key challenge in recent times and as such securing land for infrastructure projects is becoming increasingly challenging. In this regard, your Company endeavor to secure barren government land as first option has resulted in conservation of precious land resources as well as minimization of adverse social impacts. Further, decisions like securing land through consent of landowners at mutually agreed rate on "Willing Buyer Willing Seller" basis instead of using involuntary mode of land acquisition, have not only strengthened our standing among local community /affected population but also ensured hassle free securing of land.

Recognizing the changing business contours, your Company has been providing due importance to issues related to Environment, Social & Governance (ESG), Sustainability reporting and alignment of Business activities in line with United Nations Sustainable Development Goals (SDG) and Net Zero Commitments. It's a matter of great satisfaction that your Company has been continuously rated highly by several independent agencies both in the areas of ESG and Sustainability Reporting. However, your Company has planned to further improve its performance by setting up higher goals and scaling up sustainability efforts. Key initiatives taken in this direction are:

i. Separate policies viz. ESG, Waste management and Water Management were developed and approved by the Board. These policies are linked with company's sustainability milestones like to achieve 50% of its electricity consumption from renewable sources by 2025 and become Net Zero by 2047, in line with Govt of India commitment towards climate change and net zero targets. Your Company has also committed to become a "Net Water Positive organization" and achieve "Zero Waste to Landfill status" by 2030.

ii. To reduce its carbon footprints, your Company has already taken various measures like installation of roof top solar PV on office buildings and Solar PV plants on vacant substation land, progressive replacement of diesel vehicle by e-vehicles, improving carbon sink through plantation etc.

Hon'ble Prime Minister introduced Mission LiFE to the world at the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow.

In line with Mission LiFE of Government of India, POWERGRID undertook major outreach and advocacy activities for mass mobilisation on mission LiFE (Lifestyle For Environment), from 11th May 2023 to 5th June 2023 which covered seven themes of Mission LiFE - (a) Save energy (b) Save water (c)Say no to single use of plastic (d) Adopt sustainable food systems, (e) Reduce waste (f) Adopt healthy life system, (g) Reduce e-waste. The programme concluded on 5th June (World Environment Day) by Mass Plantation Drive across POWERGRID establishments. Major outreach activities included banning of single-use plastic, theme- based pledges, competitions, cycle rally, save energy measures at offices, waste reduction, segregation and re-use, media & FM campaign, expert talks on themes etc.

For social and economic development of communities, your Company undertakes CSR activities in areas of healthcare, drinking water & sanitation, education, skill development, rural development and other areas of national importance. The projects are conceived in consultation with the stakeholders, primarily in the vicinity of its area of operations.

During FY 2022-23, your Company has spent 5321.66 crore on CSR activities. Further, 168 new CSR projects of 5275.10 crore were sanctioned during FY 2022-23.

During the year, the Company contributed 5 105 crore to PM CARES Fund towards COVID-19 pandemic.

Also, the Company provided "POWERGRID Endowment Scholarship" Merit-Cum-Means (MCM) Scholarship Programme for B.Tech students of Indian Institute of Technology Madras (lITM).

• Vishram Sadan at DMCH, Darbhanga (Bihar), Guwahati Medical College & Hospital, Guwahati (Assam) and Sir Sayajirao General (SSG) Hospital, Vadodara (Gujarat).

• Ring Gantry Linear Accelerator for Radiotherapy Treatment at Regional Cancer Centre, Thiruvananthapuram, Kerala.

• MRI machine to Vivekanand Medical lnstitute,Palampur, Himachal Pradesh.

• 100 bedded Pediatric Intensive Care Unit (PICU) at GSVM Medical College, Kanpur UP.

• Financial assistance to National Foundation for Communal Harmony (NFCH) for education of 1600 violence affected students from Assam, Manipur and Chhattisgarh, etc.

• 50 seat Hostel in Schedule Caste Senior Girls Hostel at Tehsil Sarai in Singrauli District.

• Playground with all necessary facilities at K.B. Women's Govt. College, Hazaribagh, Jharkhand.

• Development & Upgradation of Dichenling Crematorium Complex Gangtok.

• Providing Medical equipment and Instruments to various Government Health facilities in the State of Sikkim.

• Supply of Medical equipment to ESI Hospital Faridabad.

• Providing Aids & Appliances to Persons with Disabilities at Nalgonda in Telangana and East Godavari Districts in Andhra Pradesh.

• Supply of Medical equipment to Swami Ramanand Theerth Rural, Government Medical College (SRTRGMC), Ambajogai, Beed district, Maharashtra.

• Setting up of Industrial Training Institute (iTl) at Dharamgarh, sub division of Kalahandi District, Odisha.

• Construction of 200 bedded Vishram Sadan at Maharani Laxmi Bai College and Hospital, Jhansi.

• Engagement of apprentice trainees for skill development under CSR initiative FY 2022-23.

• Providing life-saving medical equipment for critically-ill cancer and kidney-failure patients at Safdarganj Hospital, New Delhi.

• Supply & Installation of 128-Slice CT scan for Emergency Medical Service Department of JIPMER,

Puducherry.

• Establishment of Wi-Fi facility at NIT Jamshedpur campus.

• Procurement of medical equipment for Govt. Maharaja Jitendra Narayan Medical College (MJN MC&H) at District Coochbehar, West Bengal.

• Providing emergency & essential equipment/machinery (22 Nos. of items) to Osmania General Hospital, Hyderabad, Telangana.

• Repair and Renovation of Sanskritik Bhawan, Ara, Bhojpur, Bihar.

• Supply and installation of essential I

Medical Equipment in Chigateri District Hospital, Davanagere, * Karnataka.

• Improving nutrition of severely wasted and underweight children /Neonatal and adolescent girls of Baghpat District through establishment of Mother & New Born Care, Nutrition Rehabilitation Centre and mobile Pathology centre along with nutrition diet and supplement.

• Installation of High Technology Nucleic Acid Amplification testing (ID NAAT) Machine at AIMS, Mohali, Punjab.

• Construction of new OPD and ward in Community Health Center at Mehgaon, Bhind District, Madhya Pradesh.

• Construction of community centers, boundary wall, classrooms in Govt, schools at Kota, Rajasthan.

• Providing General modular operation theatre with required medical equipment's in Civil General Hospital, Malegaon under Nashik District.

• Installation of Equipment & machineries, furniture and Audio-visual aids for Skill Development Training Centre Building at Assam Engineering Institute.

• Providing medical apparatus/instruments to Rural Hospital, Brahampuri and Sub-Dist Hospital, Warora General Hospital, Chandrapur, etc.

A complete list of all CSR Projects undertaken and sanctioned by the Company during FY 2022-23 are given in Annexure-X of this Report.

To promote transparency and accountability, an appropriate mechanism has been set up across your Company in line with 'Right to Information Act, 2005'. The Company has nominated Public Information Officers and Appellate Authorities at Corporate, Regional Head Quarters and other offices to provide required information to the citizens under the provisions of Act.

The Company has also developed its own web based online RTI portal, which facilitates timely reply of RTl/Appeal to applicants through real time monitoring of all RTIs/ Appeals. The portal also facilitates auto generation of various RTI reports for internal and external stakeholders.

In FY 2022-23,933 RTI applications were received in the Company and processed timely as per the RTI Act, 2005. Training programs / awareness sessions for the Company's CPIOs/PIOs/Appellate Authorities were organized for sensitization about their role in implementation of the RTI Act. The Company under suo moto disclosures in compliance under Section 4 (l)(b) of Right to Information Act, 2005 has place large amount of information in public domain on a proactive basis to make the functioning of the Public Authorities more transparent and to reduce the number of RTI applications from individuals.

Your Company advocates the principles of Transparency, Probity and Ethics in its functioning. Vigilance Department of your Company undertakes Preventive, Pro-active as well as Punitive Vigilance activities and ensures that the best ethical practices are followed in the organization.

To strengthen the organizational process and to minimize malpractices in various systems & activities of the organization, emphasis on preventive vigilance is given. Preventive vigilance focuses on the right types of systems or re-engineering processes for acting against potential threats.

During FY 2022-23, 71 surprise inspections, 32 process-on-line inspections and 21 Chief Technical Examiner (CTE) Type inspections were conducted. Pursuant to Vigilance inspections and observations/ recommendations, several system improvements have been implemented.

During FY 2022-23, various Preventive Vigilance Workshops, Webinars were conducted for nonvigilance personnel at various regions of the Company. These workshops inter-alia cover contracts management, provisions of Conduct Discipline and Appeal Rules (CDA) Rules, compliances of rules and policies, common irregularities, deliberation of case studies Ak based on real cases, quality aspects as well as Ethics Management which enables the employees to identify and deal with ethical dilemma.

In pursuance of the directions of the Central Vigilance Commission, Vigilance Awareness Week (VAW) ! was observed in POWERGRID from 31^st October, 2022 to 6^th November, 2022 with the theme "Corruption free India for a developed nation; "fcocmix Further, preventive vigilance measures cum housekeeping activities were also taken up as a 3 month's campaign from 16^th August, 2022 to 15^th November, 2022 as a precursor to VAW-2022. Various activities like essay competition, quiz competition, slogan competition, etc. were organized within and outside POWERGRID in which more than 14,000 students participated. 19 Awareness Gram Sabhas involving approx. 6,000 persons were conducted. Vendor Meets were organized at Corporate Centre and all Regions. The message of VAW 2022 was propagated through social media platforms, FM Channel and Electronic media. Journal of Vigilance Department of POWERGRID (CANDOUR) was released in digital mode during the closing ceremony of VAW.

Senior officers of your Company participated in VAW celebration event organized by the CVC at Vigyan Bhawan on 3^rd November, 2022. Company's best practices like Contract Closing Portal and Information on Record Portal were recognized and published in the Preventive Vigilance Initiative booklet released during the event.

1^st Meeting of G20 Anti Corruption Working Group held at Gurugram from 1^st to 3^rd March 2023. The Company organized various competitions like quiz, poster making, debate, essay competitions for students of schools and colleges, activities like nukkad-natak (street plays) and displayed banners and posters for general public at prominent locations to generate public awareness on theme of "Promoting Integrity, Preventing and Combating Corruption.

A Citizen's Charter has been formulated for the Company providing a visible front of its Vision, Mission and Objectives. The Citizens' Charter consisting of Company profile, commitments, expectations from citizens. Integrated Management Policy, services offered, values and standards of services, access to information and grievance redressal is available on the Company's website.

Your Company has always believed in its employees achieving the assigned targets and has continually strived to nurture their abilities by addressing their requirements through timely and appropriate HR interventions. It has been our endeavour to develop and deploy systems & practices that facilitate employees to perform at their fullest potential. Company believes in attracting, retaining and developing such employees who are aligned with the core values of the Company and provide them with a workplace where their safety and health are upheld in a non-discriminative and approachable environment.

As on 31^st March 2023, the permanent employees on rolls of your Company stood at 8342 of which women employees constituted 8.15%. The attrition rate of regular employees stood at 0.83% in the year 2022-23. The Company also ensured filling up of key roles of Executive Directors and Chief General Managers in time.

In a world of disruptive business models and changing technologies, our ability to learn is one of the biggest organizational capabilities to survive and thrive in the future, and to this end. Human Resource Development has a key role in upskilling our workforce to make them future-ready. Through well-articulated talent management and learning & development interventions, Company has always endeavored to create a high-trust, high-performance work culture that brings out the best in people, enables and empowers them for continuous learning and be future ready.

To scaleup the learning & development in Power Sector, your Company has been operating state-of- art POWERGRID Academy of Leadership (PAL) at Manesar, which imparts a wide range of training and development opportunities for its employees and other stakeholders in India and abroad.

Some of the key learning & development initiatives undertaken by the Company during the year includes the following:

• More than 700 training and development programs were organized at PAL, other Employee Development Centres in the regions and associated premier educational institutes in India and abroad.

• In order to answer frequently asked queries regarding various HR & HRD policies, an Al /ML based chatbot named "POWERGRID Robotic Al Bot for HR Assistance (PRABHA)" has been rolled out.

• To promote employee education, 15 employees have been sponsored for M. Tech program in POWER System and reliability by NIT Jalandhar and 5 employees have been sponsored for 15 months PGDM program by NTPC School of Business. 50 employees have been sponsored in AO/ML course through IIITB.

• Company has developed 122 e-Learning modules related to different business verticals and 9 refresher courses related to various company domains benefiting about 7500 employees.

• Company has hosted 7 modules related to Power transmission for Government of India ambitious "Mission Karmayogi" Programme.

• Tie-up has been made with Ministry of IT & Electronics, Government of India and IT Industry body

NASSCOM for their FutureSkills Prime portal. This provides access to all employees to e-courses in emerging technologies and professional skills in FutureSkills Prime.

• Your Company encouraged continuous learning and knowledge upgradation of its employees by providing access to more than 5 million online documents/ resources through EBSCO and IEEE collection with 24*7 access to e-books, e-journals, and standards on different subjects.

Leveraging its people's capabilities and infrastructure available at PAL for capacity development of power sector, your Company has taken following initiatives for stakeholder development:

• More than 950 apprentices have been engaged in different trades as per the Apprentice Act.

• About 380 contract staff have been imparted training under Recognition of Prior Learning (RPL) certification.

• Assessment and Development Centre (ADC) for E5-E8 covering about 2800 employees is under progress.

• MoU has been signed among National Skill Development Corporation (NSDC), National Skill Development Fund (NSDF), Power Sector Skill Council (PSSC) and POWERGRID for Skill development training of 6000 unemployed youth in power Sector. As a part of this program, at present more than 5500 trainees are undergoing training across 25 locations in India.

• Under the Northern Eastern Regional Power System Improvement (CBIS-NERPSIP) Project, the Company is undertaking Capacity Building and Institutional Strengthening program for State Power Utilities in 6 (six) states of NER (viz: Assam, Meghalaya, Mizoram, Manipur, Nagaland and Tripura) and Capacity Building under Comprehensive Scheme (Arunachal Pradesh & Sikkim - 2 states)

• Extended customized Training Programs for clients from various power utilities.

In order to respond to the constantly evolving business scenario and to address the dynamic requirements of employees, your Company undertakes regular updation of its policies to keep up with the industry trends. In an effort to make the employee related processes smooth and for uniform implementation of employee benefits, an Employee Benefit Centre (EBC) has been established at Manesar, Haryana.

Continuing our efforts towards gender equity and to extend the coverage of maternal leave, your Company provided special maternity leave for adoption of child and for commissioning mothers & paternity leave for adoption of child/ having a child through surrogacy and also extended the provisions of childcare leave to single male parents.

Your Company has been an ardent advocate of physical and mental wellbeing of its employees and in this direction Company has organized numerous health talks on various topics to make its employees aware about the cause of diseases and measures to prevent them. In the wake of new diseases and to keep the employees hale and healthy, your Company encourages preventive medical interventions through preventive health checkup and reimbursement of vaccination. Further, as a novel initiative, a 24*7 Emergency helpline for dealing with medical emergencies of employees and their dependents has been made functional.

Your Company has constantly encouraged employees to be physically and mentally fit and active, in this direction, it has bagged the 2^nd position . for excellent performance in , sports activities in the Annual Performance Awards 2021-22 by Power Sports Control Board. Your Company has i also won many notable ! laurels in sports viz., Bronze , medal at the International ¹ Para TT Championship and the champions trophy of the , Power Cup 2022.

Your Company has taken many initiatives towards digitalization, like the introduction of dedicated portals for reservation related matters and management of apprentices. Further, a semi-formal online interaction medium has been provided for employees to interact and collaborate on their personal interests. Yet another digital initiative this year has been the launch of PG Arogya Portal as a repository of employee wellbeing related information and the introduction of e-medical card, whereby employees and dependents can access and download the medical card and authorization for hospitalization, anywhere and anytime.

Grievance redressal is always taken up with priority and your Company promptly redresses the grievances of its employees within the broad parameters of guidelines enumerated by Government of India and policy framework. Employees can lodge their grievances on an online portal. The Company has designated nodal officers at corporate & regional offices for systematic & prompt redressal of the grievances within stipulated time frames.

Separate cell to look after and safeguard the interests of SC/ ST/ OBC & PwD categories of employees is in place.

Liaison Officer looks after SC/ ST/ OBC & PwD employees and is assisted by the reservation cell. The Liaison Officer also ensures that there is no discrimination on the basis of caste, religion & disabilities amongst the employees. To ensure effective discharge of duties across all establishments of your Company, separate liaison officer for each region has been nominated. The Company implements all directives and guidelines with regard to reservation policy issued by Government of India. Annual inspection is also conducted by Liaison Officer to ensure implementation of directives issued by Government of India. Periodic meeting is held with representatives of the association of SC/ ST & OBC to resolve issues, if any.

Your Company has framed a Policy on Prevention of Sexual Harassment at Workplace to reaffirm its commitment towards zero tolerance against Sexual Harassment and to provide a framework for dealing with Sexual Harassment incidents. The policy is in line with the provisions contained in the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules made there under. Training/ workshop programs for both male and female employees have been conducted to sensitize them on issues and the law/ Act/ Policy relating to sexual harassment. Workshops on women empowerment, development and gender sensitization are also organized. One complaint of sexual harassment was received during FY 2022-23 and the same has been disposed off in stipulated time as per the Guidelines/ Policy.

In pursuance of Govt, of India's Rajbhasha policy to promote Indian languages and Rajbhasha "Hindi", your Company has made all round efforts to integrate and promote use of Hindi in its works at all levels. Your Company has proved its commitment to ensure the implementation of Rajbhasha policy and to achieve the goal as laid out in the Rajbhasha Annual Target given by Department of Official Language.

To ensure the increased use of Official Language, various activities such as Annuvad Abhayaas Karyakram, Workshops, Trainings, motivational programmes have been organized. Computer trainings are being imparted to enhance the working knowledge in Hindi on computers. Hindi classes are also being organized for non-Hindi speaking employees through Hindi Teaching Scheme.

Various activities are undertaken to publicize Hindi every year, Akhil Bhartiya Rajbhasha Sammelans and technical conferences in Hindi, Kavi Sammelans (Poetry sessions), Plays, publication of House Magazines, publication of monthly articles in Hindi via emails are most prominent among these. These programs have been organized both online and offline during the year 2022- 23. Also various competitions throughout the year with special emphasis during Hindi Pakhwada, Vigilance Awareness Week, Swachchhta Pakhwada etc. along with departmental meetings as well as Official Language Implementation Gurugram for excellent implementation in the field of Rajbhasha Committee (OLIO) meetings are also being conducted. Your Company has established one of the best Hindi libraries among Public Sector where popular/literary Magazines and News Papers have been made available for the employees.

Attractive incentive schemes for employees working in Hindi have been implemented as per the Government guidelines. In addition, various reward schemes have been introduced to encourage employees to actively participate in promotion of Hindi, by giving articles/write-ups for in-house magazines, reading library books etc.

The effort made by your Company has been applauded in several forums during FY 2022-23. Various awards were given by "Town Official Language Implementation Committee (TOLIC), Rajbhasha Vibhag, Ministry of Home Affairs, Govt, of India and other agencies in recognition of implementation of Official Language. The offices at Gurugram, Secunderabad, Vadodara, Bhopal, Kolkata, Dadri, Faridabad, Nagpur, Magarwada, Siliguri, Jabalpur, Maithon, Jamshedpur etc. have been honoured.

Your Company focuses on engaging with all of its stakeholders and building cordial relationships with them. This helps us in not only understanding their needs and expectations, but also helps us in recognizing opportunities and mitigating risks to our operations. We have a framework for engaging with our stakeholders which also includes categories of Stakeholder along with the respective modes of engagement.

Management Discussion and Analysis Report, forming part of the Directors' Report is placed as Annexure-I of this report.

The Business Responsibility and Sustainability Report, as stipulated under Regulation 34(2) of the SEBI (LODR) Regulations, 2015, is given in Annexure-ll and forms part of this Report.

Pursuant to Section 134(3)(m) of Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, information relating to 'Conservation of energy, technology absorption and foreign exchange earnings and outgo', is given in Annexure-lll to this Report.

The Statutory Auditors of the Company are appointed by the Comptroller and Auditor General of India. M/s. S. Ramanand Aiyar & Co., M/s. Umamaheswara Rao & Co., M/s. B M Chatrath & Co LLP and M/s. PSD & Associates were appointed as Joint Statutory Auditors for the FY 2022-23.

The Statutory Auditors have given an unqualified report. The report is self-explanatory and does not require any further comments by the Board.

The Company has received no comments on the Financial Statements (standalone and Consolidated) for the Financial Year ended 31^st March 2023 from the Comptroller and Auditor General of India (C&AG) under Section 143(6) of the Companies Act, 2013. The communication from C&AG are placed at Annexure-IV.

M/s. Kumar Naresh Sinha & Associates, Practicing Company Secretary has conducted Secretarial Audit of the Company for the financial year ended 31^st March, 2023. The Secretarial Audit Report is placed at Annexure-V.

The observations of Secretarial Auditor are as under:

i. Half of the board of directors of the Company was not independent as required under Regulation 17(l) of SEBI (LODR) Regulations, 2015 and para 3.1.4 of DPE Guidelines on Corporate Governance with regard to Composition of the Board of Directors.

ii. The Company did not have at least one independent woman director on its Board as required under Regulation 17(l)(a) of SEBI (LODR) Regulations, 2015 and at least one woman director with effect from June 1 2022 as required under section 149(l) of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014.

Your Company's response to the observation made in Secretarial Audit Report is that the power to appoint Independent Directors in POWERGRID, which is a Government Company vests with the Government of India and the Company has taken up the matter for appointment of requisite number of Independent Directors (including one Independent Woman Director) with Government of India.

The Company appointed M/s Dhananjay V. Joshi & Associates and M/s Bandyopadhyaya Bhaumik & Co., as Cost Auditors for the FY 2022-23 under section 148 of the Companies Act, 2013.

Your Company is maintaining Cost Accounting Records as prescribed under the Companies (Cost Records and Audit) Rules, 2014, specified by the Central Government under section 148(l) of the Companies Act, 2013.

The Cost Audit Report for the Financial Year ended 31^st March, 2023 will be filed within the prescribed time period under the Companies (Cost Records and Audit) Rules, 2014.

During FY 2022-23, Shri Dilip Nigam, Scientist 'G', Ministry of New and Renewable Energy (MNRE), Government of India, who completed his tenure as a Government Nominee Director on 30^tfl April, 2022 was appointed again as Government Nominee Director w.e.f. 6^th June, 2022.

Shri Raghuraj Madhav Rajendran, Joint Secretary, Ministry of Power, Government of India was appointed as Government Nominee Director w.e.f. 5^th August, 2022 and ceased to be a Director on 11^th October, 2022. In his place Mr. Mohammad Afzal, Joint Secretary, Ministry of Power, Govt, of India was appointed as Government Nominee Director w.e.f. 11^th October, 2022. Fie ceased to be a Govt. Nominee Director on 17^th May, 2023 and in his place Dr. Saibaba Darbamulla, Joint Secretary, Ministry of Power, Govt, of India was appointed as Government Nominee Director w.e.f. 18^th May, 2023.

Shri Ghanshyam Prasad, Joint Secretary, Ministry of Power, Govt, of India relinquished the post of Government Nominee Director on 14^th July, 2022 in terms of Article 31 of Articles of Association of the Company.

Shri M.N. Venkatesan, Independent Director ceased to be Director w.e.f. 10^th July, 2022 on completion of his tenure.

Smt. Seema Gupta and Shri M. Taj Mukarrum completed the tenure as Director (Operations) and Director (Finance) of POWERGRID on attaining the age of superannuation w.e.f. 31^st May, 2022 and 31^st July, 2022, respectively.

Shri R. K. Tyagi assumed the charge of the post of Director (Operations) w.e.f. 12^th August, 2022 and Shri G. Ravisankar assumed the charge of the post of Director (Finance) w.e.f. 21^stSeptember, 2022.

Shri K. Sreekant, Chairman & Managing Director had been entrusted with the additional charge of the post of Director (Operations) and Director (Finance) from 1^st June, 2022 to 12^th August, 2022 and from 1^st August, 2022 to 21^stSeptember, 2022, respectively.

The Board placed on record its appreciation and gratitude to Smt. Seema Gupta, Shri M. Taj Mukarrum, Shri Ghanshyam Prasad, Shri Raghuraj Madhav Rajendran, Mr. Mohammad Afzal and Shri M.N. Venkatesan for their valuable contribution in steering the affairs of the Company.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, the resolutions w.r.t. reappointment of Shri Abhay Choudhary (DIN: 07388432) as Director liable to retire by rotation, has been included in the Notice of Annual General Meeting.

Board of Directors met 12 times during FY 2022-23. Details regarding dates and attendance at the Board meetings are provided in the Report on Corporate Governance, which forms part of this report.

Report on the Corporate Governance is enclosed at Annexure-VI, and the certificate thereon, issued by Practicing Company Secretary pursuant to Schedule V Para E of SEBI (LODR) Regulations, 2015 is attached at Annexure-VII to this Report.

The Company has constituted Audit Committee, Corporate Social Responsibility Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee, Risk Management Committee and other Committees for operational convenience. The composition and scope of the aforesaid Committees are provided in the Report on Corporate Governance, which forms part of this report.

During the financial year, all the Independent Directors have met the requirements specified under Section 149(6) of the Companies Act, 2013 and Regulation 16(l)(b) of SEBI (LODR) Regulations, 2015 for holding the position of 'Independent Director' and necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of SEBI (LODR) Regulations, 2015 has been received.

Pursuant to Regulation 34(3) and Schedule V Para C Clause (l0)(i) of SEBI (LODR) Regulations, 2015, M/s Naresh Kumar Sinha & Associates, Company Secretaries have issued Certificate of Non-Disqualification of Directors, who were on the Board of the Company during FY 2022-23.

This has been provided in the 'Report on Corporate Governance' section of this Report and you may refer it for details.

The Company has framed a policy on the remuneration of the Directors, KMPs and employees. The said policy is available on our website at

Information on Risk Management Framework is covered in the Management Discussion and Analysis placed at Annexure-I of this Report.

The Board has adopted policies and procedures for ensuring orderly and efficient conduct of its businesses, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds, error reporting mechanism, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures.

In accordance with Section 92(3) read with Section 134 (3) (a) of the Companies Act, 2013, Annual Return of the Company is available on the website of the Company and can be accessed at https://www.powergrid.in/sites/default/files/agm egm files/Form MGT 7 FY 2022 23.pdf

Loans, Guarantees or investments under Section 186 of the Companies Act, 2013 form part of the notes to financial statements attached to this Report.

Contracts or arrangements with related parties referred to in Section 188(l) of the Companies Act, 2013, in the prescribed Form AOC-2, are given at Annexure-VIII of this Report. Further, attention of the members is drawn on Note No. 55 of the Financial Statement which sets out related party disclosure.

As on 31^st March, 2023, the Company has 37 subsidiaries, 12 Joint Ventures and 4 Associate Companies.

Salient features of the financial of our Subsidiaries and Joint Ventures are covered in the Management discussion and Analysis and a statement in the prescribed Form AOC-1 is annexed as Annexure-IX of this Report.

The dividend distribution policy setting out the parameters and circumstance that will be considered by the Board in determining the distribution of dividend to its shareholders and/or retained profits earned by the Company available on the Company's website at

https://www.powergrid.in/sites/default/files/Dividend%20Distribution%20Policy.pdf

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future.

In terms of provisions of Section 135 of the Companies Act, 2013, read with amended Companies (CSR Policy) Rules, 2014, the Annual Report on CSR activities in the format prescribed under the said rules is annexed to this Report at Annexure-X.

Your Company being a Government Company, the provisions of Section 197(12) of the Companies Act, 2013 and relevant Rules issued thereunder, are not applicable as per the notification dated 5^th June, 2015 issued by the Ministry of Corporate Affairs.

The terms and conditions of the appointment of Functional Directors are subject to the applicable guidelines issued by the Department of Public Enterprises (DPE), Government of India from time to time.

No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year is not applicable.

During the year under review, none of the Auditors have reported to the Audit Committee or the Board, under Section 143(12) of the Companies Act, 2013 any instances of fraud committed against the Company by its officers or employees.

We have not accepted any fixed deposits, including from the public and as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

The Company has followed the requirements prescribed under Secretarial Standard on Meetings of Board of

Directors (SS-l) and General Meetings (SS-2).

There have been no material changes & commitments affecting the financial position of the Company, which have occurred between the end of the financial year and date of this report.

As required under Section 134(3)(c) & 134(5) of the Companies Act, 2013, the Directors confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the situation of the Company at the end of the financial year and of the profit of the Company for that period;

c. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the Directors had prepared the annual accounts on a going concern basis;

e. the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The Board of Directors would like to express their deep sense of appreciation for the guidance and cooperation received from Government of India, particularly the Ministry of Power, Ministry of Finance, Ministry of Home Affairs, Ministry of External Affairs, Ministry of Statistics and Programme Implementation, Ministry of Environment & Forests, Ministry of Corporate Affairs, Central Electricity Regulatory Commission, Appellate Tribunal for Electricity, Central Electricity Authority, NITI Aayog, Department of Public Enterprises, Regional Power Committees, Office of the Comptroller and Auditor General of India, and other concerned Government departments/agencies at the Central and State level without whose active support, the achievements of the Company during the year under review would not have been possible.

Special thanks to our valued customers, State Governments and State power utilities and other clients, who have awarded various consulting works and reposed faith in Company's capability to handle them. The Board also appreciates the contribution of Contractors, Vendors and Consultants for successful implementation of various projects by your Company.

The Directors also acknowledge the valuable suggestions and guidance received from the Statutory Auditors during the audit of accounts of the Company for the year under review. The Board also conveys its sincere thanks to national and international financial institutions, multilateral financial institutions, domestic & international credit rating agencies for their assistance, continued trust and confidence reposed in the Company.

On behalf of Board of Directors, I would like to place on record our deep appreciation of the dedicated efforts and valuable services rendered by the employees contributing to the performance of the Company during the year 2022-23. The commitment displayed by the employees at all levels is exemplary and praise-worthy. I would also like to thank the Executive team for their strong leadership, the employee unions for their support and all our employees for their commitment, enthusiasm, and dedication.