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DRAFT RED HERRING PROSPECTUS Please read Section 60B of the Companies Act, 1956

Dated January 8, 2008 (The Draft Red Herring Prospectus will be updated upon filing with theRoC)

100% Book Building Issue

(Our Company was incorporated as a public limited company as ‘Jaiprakash Power Ventures Limited’ pursuant to a certificate of incorporation dated May 18, 1995 under the Companies Act, 1956 and has been allocated CIN U36991UR1995PLC018069)

Registered Office: 113, Rajpur Road, Dehradun – 248 001, Uttarakhand; Tel: +91 135 274 6760; Fax +91 135 274 0860; Corporate/Head Office: ‘JA House’, 63, Basant Lok, Vasant Vihar, New Delhi – 110 057.

Tel: +91 11 2614 1540; Fax +91 11 2614 5389; e-mail: jpvl.ipo@jalindia.co.in; website: www.jppowerventures.com Contact Person: Mr. Manmohan Sibbal, Company Secretary and Compliance Officer

PUBLIC ISSUE OF 104,000,000 EQUITY SHARES OF RS. 10 EACH AT A PRICE OF RS. [●] FOR CASH AGGREGATING RS. [●] MILLION (REFERRED TO AS THE “ISSUE”), BY JAIPRAKASH POWER VENTURES LIMITED (THE “COMPANY” OR THE “ISSUER”). THE ISSUE COMPRISES [●] EQUITY SHARES OF RS. 10 EACH RESERVED FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES, [●] EQUITY SHARES OF RS. 10 EACH RESERVED FOR SUBSCRIPTION BY ELIGIBLE SHAREHOLDERS AND A NET ISSUE TO THE PUBLIC OF [●] EQUITY SHARES OF RS. 10 EACH. THE ISSUE WILL CONSTITUTE 16.34 % OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF OUR COMPANY. THE NET ISSUE TO PUBLIC WILL CONSTITUTE [●]% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF OUR COMPANY* *Our Company is considering a Pre-IPO private placement of certain Equity Shares with some investors, (Pre-IPO Placement). The Pre-IPO Placement, if any, will be completed before the filing of the Red Herring Prospectus with the RoC. The number of Equity Shares in the Issue will be reduced to the extent of the Equity Shares proposed to be allotted in the Pre-IPO Placement, if any, subject to the Net Issue to the public being at least 10% of the fully diluted post-Issue paid up capital of our Company. Further, the reservation for Eligible Shareholders and Eligible Employees shall be subject to a maximum of 10% each of such revised Issue size.

PRICE BAND: RS. [●] TO RS. [●] PER EQUITY SHARE OF FACE VALUE RS. 10. THE ISSUE PRICE IS [●] TIMES OF THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND [●] TIMES AT THE HIGHER END OF THE PRICE BAND In case of revision in the Price Band, the Bidding Period will be extended for three (3) additional working days after revision of the Price Band subject to the Bidding Period not exceeding ten (10) working days. Any revision in the Price Band and the revised Bidding Period, if applicable, will be widely disseminated by notification to the National Stock Exchange of India Limited (NSE) and the Bombay Stock Exchange Limited (BSE) by issuing a press release, and also by indicating the change on the websites of the Book Running Lead Managers, Co-Book Running Lead Manager and at the terminals of the Syndicate. Pursuant to Rule 19 (2)(b) of the Securities Contract (Regulation) Rules, 1957 (SCRR), this being an Issue for less than 25% of the post-Issue capital, the Issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be allocated to Qualified Institutional Buyers (QIBs) on a proportionate basis out of which 5% 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 all QIBs including Mutual Funds, subject to valid Bids being received from them at or above the Issue Price. If at least 60% of the Net Issue cannot be allotted to QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the Net Issue shall be available for allocation to Non-Institutional Bidders and on a proportionate basis and not less than 30% of the Net Issue shall be available for allocation to Retail Individual Bidders on a proportionate basis, subject to valid Bids being received from them at or above the Issue Price. Further, up to [●] Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received at or above the Issue Price. Further, up to [●] Equity Shares shall be available for allocation on a proportionate basis to Eligible Shareholders, subject to valid Bids being received at or above the Issue Price. Payment Methods

Payment Method -1@ Payment Method -2 Retail Individual Bidders Any Category

Amount Payable per Equity Share (In

Rs.) Face Value Premium Total Face Value Premium Total On Application 2.5 [●] [●] 10.0 [●] [●] By Due Date for Balance Amount Payable

7.5 [●] [●]

- - - Total 10.0 [●] [●] 10.0 [●] [●]

@ Non-Residents require the approval of the RBI for subscribing to partly paid up Equity Shares and copy of such approval should be submitted along with the Bid-cum-Application Form. See page xxxvii for risks associated with Payment Method – 1

RISK IN RELATION TO THE FIRST ISSUE This being the first issue of Equity Shares of our Company, there has been no formal market for our Equity Shares. The face value of the Equity Shares is Rs. 10 and the Issue Price is [●] times of the face value at the lower end of the Price Band and [●] times of the face value at the higher end of the Price Band. The Issue Price (as determined by our Company, in consultation with the BRLMs and the Co-BRLM on the basis of assessment of market demand for the Equity Shares by way of the Book Building Process) 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 and/or sustained trading in the Equity Shares of our Company 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

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decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Company 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 (SEBI), nor does SEBI guarantee the accuracy or adequacy of the Draft Red Herring Prospectus. Specific attention of the investors is invited to the chapter titled “Risk Factors” beginning on page xii of the Draft Red Herring Prospectus.

COMPANY’S ABSOLUTE RESPONSIBILITY The Company having made all reasonable inquiries, accept responsibility for and confirm that this Draft Red Herring Prospectus contains all information with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in the 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 document 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 issued through the Draft Red Herring Prospectus are proposed to be listed on the BSE and the NSE. We have received in-principle approvals from these Stock Exchanges for the listing of our Equity Shares pursuant to letters dated [●] and [●], respectively. For purposes of this Issue, [●] is the Designated Stock Exchange.

IPO Grading The Issue has been graded by [●] as [●] (pronounced [●]) indicating [●]. For details, see the chapter titled “General Information” on page 55 of the Draft Red Herring Prospectus.

BOOK RUNNING LEAD MANAGERS

Enam Securities Private Limited 801/ 802, Dalamal Towers, Nariman Point Mumbai - 400 021 Tel: +91 22 6638 1800 Fax: +91 22 2284 6824 Email: jpvl.ipo@enam.com Investor Grievances Email id: complaints@enam.com Website: www.enam.com Contact person: Ms. Kinjal Palan SEBI Registration No.: IMN000006856

Morgan Stanley India Company Private Limited 1101-1115, Hilton Towers Nariman Point Mumbai - 400 021 Tel: +91 22 6621 0555 Fax: +91 22 6621 0556 E-mail: jpvl_ipo@morganstanley.com Investor Grievances Email id: investors_india@morganstanley.com Contact Person: Mr. Amit H. Shah Website: www.morganstanley.com/indiaofferdocuments SEBI Registration No.: INM000011203

Deutsche Equities India Private Limited DB House, Hazarimal Somani Marg, Fort, Mumbai - 400 001 Tel: +91 22 6658 4600 Fax: +91 22 2200 6765 Email: jpvl.ipo@db.com Investor Grievances Email id: db.redressal@db.com Website: www.db.com/India Contact person: Mr. Sameer Taimni SEBI Registration No.: INM 000010833

J.P. Morgan India Private Limited 9th Floor, Mafatlal Centre Nariman Point, Mumbai - 400 021 Tel:+91 22 2285 5666 Fax: +91 22 6639 3091 E-mail: jpvl_ipo@jpmorgan.com Investor Grievances Email id: investorsmb.jpmipl@jpmorgan.com Contact Person: Mr. Abhishek Goenka Website:www.jpmipl.com SEBI Registration No.: INM000002970

IDFC-SSKI Private Limited* 803/4, Tulsiani Chambers 8th Floor, Nariman Point Mumbai - 400 021 Tel: +91 22 6638 3333 Fax: +91 22 2204 0282 E-mail: jpvl.ipo@idfcsski.com Investor Grievances Email id: complaints@idfcsski.com Contact Person: Ms. Anjali Peri Website: www.sski.co.in SEBI Registration No.: INM000010254 * name being changed from SSKI Corporate Finance Private Limited, subject to regulatory approvals

BOOK RUNNING LEAD MANAGERS CO-BOOK RUNNING LEAD MANAGER

REGISTRAR TO THE ISSUE

ICICI Securities Limited ICICI Centre H.T. Parekh Marg Churchgate Mumbai - 400 020 Tel: +91 22 2288 2460 Fax: +91 22 2882 6580 Email: jpvl_ipo@isecltd.com Investor Grievances Email id: customercare@isecltd.com Contact Person: Mr. Nikhil Dhingra Website www.icicisecurities.com SEBI Registration No.: INM000011179

JM Financial Consultants Private Limited 141 Maker Chamber III Nariman Point Mumbai - 400 021 Tel: +91 22 6630 3030 Fax: +91 22 2204 7185 E-mail: jpvl.ipo@jmfinancial.in Investor Grievances Email id: grievance.ibd@jmfinancial.in Contact Person: Poonam Karande Website: www.jmfinancial.in SEBI Registration No.: INM000010361

Kotak Mahindra Capital Company Limited 3rd Floor, Bakhtawar 229 Nariman Point, Mumbai - 400 021 Tel: +91 22 6634 1100 Fax: +91 22 2283 7517 Email: jpvl.ipo@kotak.com Investor Grievances Email id: kmccredressal@kotak.com Contact Person: Mr. Chandrakant Bhole Website: www.kotak.com SEBI Registration No.: INM000008704

Axis Bank Limited Central Office, Maker Tower ‘F’, 11th Floor, Cuffe Parade, Colaba, Mumbai 400 005, India Tel: +91-22-6707 1725 Fax: +91-22-2216 2467 E-mail: jpvl.ipo@axisbank.com Investor Grievances E-mail id: axbmbd@axisbank.com Contact Person: Mr. Vishal Sharan Website: www.axisbank.com SEBI Registration No.: INM000006104

Karvy Computershare Private Limited Plot No. 17-24 Vitthal Rao Nagar, Madhapur, Hyderabad – 500081 Tel: + 91 40 2342 0818 Fax: + 91 40 2342 0814 E-mail: jpventuresipo @karvy.com Website: www.karishma.karvy.com Contact Person: Mr. M Muralikrishna SEBI Registration No.: INR000000221

ISSUE PROGRAM BID/ISSUE OPENS ON [•], 2008 BID/ISSUE CLOSES ON [•], 2008

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TABLE OF CONTENTS

SECTION I - DEFINITIONS AND ABBREVIATIONS-----------------------------------------------------i DEFINITIONS ------------------------------------------------------------------------------------------------------i ISSUE RELATED TERMS ---------------------------------------------------------------------------------------i INDUSTRY/ COMPANY RELATED TERMS-------------------------------------------------------------- vi CONVENTIONAL AND GENERAL TERMS/ABBREVIATIONS ------------------------------------ vii

SECTION II - GENERAL ----------------------------------------------------------------------------------------- x CERTAIN CONVENTIONS; USE OF MARKET DATA -------------------------------------------------- x FORWARD LOOKING STATEMENTS --------------------------------------------------------------------- xi

SECTION III - RISK FACTORS ------------------------------------------------------------------------------ xii SECTION IV - INTRODUCTION----------------------------------------------------------------------------- 42

SUMMARY OF INDUSTRY AND BUSINESS ----------------------------------------------------------- 42 SUMMARY OF FINANCIAL INFORMATION----------------------------------------------------------- 48 THE ISSUE ------------------------------------------------------------------------------------------------------- 50 GENERAL INFORMATION ---------------------------------------------------------------------------------- 55 CAPITAL STRUCTURE --------------------------------------------------------------------------------------- 65 OBJECTS OF THE ISSUE ------------------------------------------------------------------------------------- 77 BASIS FOR ISSUE PRICE ------------------------------------------------------------------------------------ 91 STATEMENT OF TAX BENEFITS-------------------------------------------------------------------------- 94

SECTION V -ABOUT US --------------------------------------------------------------------------------------- 99 INDUSTRY OVERVIEW -------------------------------------------------------------------------------------- 99 OUR BUSINESS------------------------------------------------------------------------------------------------ 114 KEY BUSINESS CONTRACTS ----------------------------------------------------------------------------- 135 REGULATIONS AND POLICIES--------------------------------------------------------------------------- 159 HISTORY AND OTHER CORPORATE MATTERS ---------------------------------------------------- 166 OUR MANAGEMENT ---------------------------------------------------------------------------------------- 171 OUR PROMOTER---------------------------------------------------------------------------------------------- 194 OUR PROMOTER GROUP COMPANIES ---------------------------------------------------------------- 203

SECTION VI - FINANCIAL STATEMENTS ------------------------------------------------------------- 221 AUDITOR’S REPORT ON THE RESTATED FINANCIAL STATEMENTS ----------------------- 221 AUDITOR’S REPORT ON RESTATED FINANCIAL STATEMENTS OF JKHCL--------------- 248 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS---------------------------------------------------------------------------------- 271 FINANCIAL INDEBTEDNESS------------------------------------------------------------------------------ 286 DIVIDEND POLICY------------------------------------------------------------------------------------------- 297

SECTION VII - LEGAL AND REGULATORY INFORMATION ----------------------------------- 298 OUTSTANDING LITIGATIONS, MATERIAL DEVELOPMENTS AND OTHER DISCLOSURES--------------------------------------------------------------------------------------------------------------------- 298 GOVERNMENT/STATUTORY AND BUSINESS APPROVALS ------------------------------------ 331 OTHER REGULATORY AND STATUTORY DISCLOSURES--------------------------------------- 350

SECTION VIII - ISSUE RELATED INFORMATION -------------------------------------------------- 361 TERMS OF THE ISSUE--------------------------------------------------------------------------------------- 361 ISSUE STRUCTURE ------------------------------------------------------------------------------------------ 364 ISSUE PROCEDURE ------------------------------------------------------------------------------------------ 368 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ------------------------ 400

SECTION IX - MAIN PROVISION OF THE ARTICLES OF ASSOCIATION ------------------ 401 MAIN PROVISION OF THE ARTICLES OF ASSOCIATION OF OUR COMPANY ------------ 401

SECTION X - OTHER INFORMATION------------------------------------------------------------------- 432 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION------------------------------- 432 DECLARATION------------------------------------------------------------------------------------------------ 434

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SECTION I - DEFINITIONS AND ABBREVIATIONS

In the Draft Red Herring Prospectus, unless the context otherwise requires, the terms defined and abbreviations expanded herein below shall have the same meaning as stated in this Section.

DEFINITIONS

Term Description “JPVL” or “the Company” or “our Company” or “we” or “us” and “our”

Jaiprakash Power Ventures Limited, a public limited company incorporated under the Companies Act, 1956 having its registered office at 113, Rajpur Road, Dehradun – 248 001, Uttarakhand.

Promoter or “JAL” Jaiprakash Associates Limited, a public limited company incorporated under the Companies Act having its registered office at Sector 128, Noida 201304, Uttar Pradesh, and listed on the BSE and the NSE.

Promoter Group Companies The Promoter Group Companies forming a part of our Promoter Group, as set out under the chapter titled “Our Promoter Group Companies” beginning on page 203 of the Draft Red Herring Prospectus.

ISSUE RELATED TERMS

Term Description

Allocation Allocation of Equity Shares pursuant to this Issue. Allotted / Allotment The issue and allotment of Equity Shares, pursuant to the Issue. Allottee The successful Bidder to whom the Equity Shares are/ have been Allotted. Amount Payable on Submission of Bid-cum-Application Form

The amount specified under Payment Method-1 or Payment Method-2 for Retail Individual Bidders and Payment Method-2 for any category.

Articles/Articles of Association

Articles of Association of our Company.

Auditors The statutory auditors of our Company, being M/s Awatar & Co. Balance Amount Payable Issue Price less amount already paid, if any, payable by Retail Individual

Bidders choosing Payment Method-1 and for which a Call Notice shall be issued by our Company on the date of Allotment.

Banker(s) to the Issue [●] Bankers to our Company Bankers to our Company, being ICICI Bank Limited, Industrial Development

Bank of India Limited, Punjab National Bank and Oriental Bank of Commerce. Bid An indication to make an offer during the Bidding Period by a prospective

investor to subscribe to our Equity Shares at a price within the Price Band, including all revisions and modifications thereto.

Bid / Issue Closing Date The date after which the Syndicate will not accept any Bids for the Issue, which shall be notified in an English national newspaper and Hindi national newspaper and a newspaper in the regional language with wide circulation.

Bid / Issue Opening Date The date on which the Syndicate shall start accepting Bids for the Issue, which shall be the date notified in an English national newspaper and a Hindi national newspaper and a newspaper in the regional language with wide circulation.

Bid Amount The highest value of the optional Bids indicated in the Bid-cum-Application Form and payable by the Bidder on submission of the Bid in the Issue.

Bid cum Application Form / Bid-cum-Application Form

The form in terms of which the Bidder shall make an offer to subscribe to the Equity Shares of our Company which will be considered as the application for issue of the Equity Shares pursuant to the terms of the Red Herring Prospectus.

Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid-cum-Application Form.

Bidding Period The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date inclusive of both days and during which prospective Bidders can submit their Bids.

Board of Directors / Board The board of directors of our Company or a committee thereof duly constituted. Book Building Process Book building route as provided under Chapter XI of the SEBI Guidelines, in

terms of which the Issue is made. BRLMs / Book Running Book Running Lead Managers to the Issue, in this case being Enam Securities

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Term Description Lead Managers

Private Limited, Morgan Stanley India Company Private Limited, Deutsche Equities India Private Limited, J.P. Morgan India Private Limited, IDFC-SSKI Private Limited, ICICI Securities Limited, JM Financial Consultants Private Limited and Kotak Mahindra Capital Company Limited.

BSE The Bombay Stock Exchange Limited. Call Notice A notice issued by our Company for payment of the Balance Amount Payable in

respect of partly paid Equity Shares Allotted to Retail Individual Bidders chosing Payment Method – 1.

CAN / Confirmation of Allocation Note

The note or advice or intimation of allocation of Equity Shares sent to the Bidders who have been allocated Equity Shares after discovery of the Issue Price in accordance with the Book Building Process.

Cap Price The higher end of the Price Band, above which the Issue Price will not be finalised and above which no Bids will be accepted.

Co-BRLM / Co-Book Running Lead Manager

Co-Book Running Lead Manager to the Issue, in this case being Axis Bank Limited.

Companies Act The Companies Act, 1956 as amended from time to time. Cut-off Price Any price within the Price Band finalised by us in consultation with the BRLMs

and the Co-BRLM. A Bid submitted at the Cut-off Price by a Retail Individual Bidder, Eligible Employee under the Employee Reservation Portion who has Bid for Equity Shares for an amount less than or equal to Rs. 100,000 and an Eligible Shareholder in the Listed Promoter Group Companies Shareholders’ Reservation Portion who has Bid for Equity Shares for an amount less than or equal to Rs. 100,000 and is a valid Bid at all price levels within the Price Band.

Depositories Act The Depositories Act, 1996, as amended from time to time. Depository A body corporate registered under the SEBI (Depositories and Participant)

Regulations, 1996, as amended from time to time. Depository Participant A depository participant as defined under the Depositories Act. Designated Date The date on which funds are transferred from the Escrow Account to the Issue

Account after the Prospectus is filed with the RoC, following which the Allotment will be made to successful Bidders.

Designated Stock Exchange [●]. Director(s) Director(s) of Jaiprakash Power Ventures Limited. Draft Red Herring Prospectus

This draft red herring prospectus dated January 8, 2008 and issued in accordance with Section 60B of the Companies Act, which does not have complete particulars on the price at which the Equity Shares are offered and the size of the Issue in terms of value.

Due Date for Balance Amount Payable

Last date for payment of the Balance Amount Payable for Retail Individual Bidders choosing Payment Method-1, which is a date falling 30 days from the date of Allotment.

Eligible Employee/ Employees (in the Employee Reservation Portion)

a. A permanent employee or Director of our Company (whether a whole-time Director or not); or

b. A permanent employee or Director (whether a whole-time Director or not)

of our holding company, Jaiprakash Associates Limited which is also our Promoter;

To be eligible to apply in the Issue in the Employee Reservation Portion, the Bidder should be an Eligible Employee of our Company / or Jaiprakash Associates Limited as on the date of filing of the Red Herring Prospectus with the RoC, based and physically present in India as on the date of submission of the Bid-cum-Application Form.

Eligible NRI NRIs from jurisdictions outside India where it is not unlawful to make an issue or invitation under the Issue and in relation to whom the Red Herring Prospectus constitutes an invitation to subscribe to the Equity Shares Allotted herein.

Eligible Shareholders For the purposes of the Listed Promoter Group Companies Shareholder Reservation Portion, Eligible Shareholders shall mean shareholders of our Promoter and those Promoter Group Companies whose equity shares are listed on stock exchanges in India (being Jaiprakash Associates Limited, Jaiprakash

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Term Description Hydro-Power Limited and Jaypee Hotels Limited) as on the specified date to be fixed by each Promoter Group Company whose equity shares are listed on stock exchanges in India, when the details of the shareholders of the Listed Promoter Group Companies are available, based in India and are physically present in India on the date of submission of the Bid-cum-Application Form.

Employee Reservation Portion

[●] Equity Shares available for Allocation to Eligible Employees on a proportionate basis. Upon completion of the Pre-IPO Placement, if any, the Issue size would stand reduced to the extent of such Pre-IPO Placement, if any, and Employee Reservation Portion shall stand reduced to 10% of the revised Issue size.

Equity Shares Equity shares of our Company having a face value of Rs. 10 each fully paid up unless otherwise specified in the context thereof.

Escrow Account Account opened with an Escrow Collection Bank(s) and in whose favour the Bidder will issue cheques or drafts in respect of the Bid Amount when submitting a Bid.

Escrow Agreement Agreement to be entered into among our Company, the Registrar, the Escrow Collection Bank(s), the BRLMs, the Co-BRLM and the Syndicate Members for collection of the Bid Amounts and for remitting refunds, if any, to the Bidders.

Escrow Collection Bank(s) The banks, which are clearing members and registered with SEBI as Banker to the Issue at which the Escrow Account will be opened in this Issue being [●].

FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and the regulations framed thereunder.

FII Foreign Institutional Investor (as defined under Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000) registered with SEBI under applicable laws in India.

Financial Year / Fiscal / FY Period of twelve months ended March 31 of that particular year, unless specifically otherwise stated.

First Bidder The Bidder whose name appears first in the Bid-cum-Application Form or Revision Form.

Floor Price The lower end of the Price Band, below which the Issue Price will not be finalised and below which no Bids will be accepted.

FVCI Foreign Venture Capital Investor registered under the Securities and Exchange Board of India (Foreign Venture Capital Investor) Regulations, 2000, as amended from time to time.

GoI / Government The Government of India. I.T. Act / IT Act The Income Tax Act, 1961, as amended from time to time. Indian GAAP Generally accepted accounting principles in India. Issue Public issue of 104,000,000 Equity Shares at the Issue Price in terms of the

Draft Red Herring Prospectus. Issue Account Account opened with the Banker(s) to the Issue to receive monies from the

Escrow Account for the Issue on the Designated Date. Issue Price The final price at which Equity Shares will be Allotted in terms of the Draft Red

Herring Prospectus, as determined by our Company in consultation with the BRLM and the Co-BRLM, on the Pricing Date.

Listed Promoter Group Companies Shareholders’ Reservation Portion

[●] Equity Shares available for Allocation to Eligible Shareholders on a proportionate basis. Upon completion of the Pre-IPO Placement, if any, the Issue size would stand reduced to the extent of such Pre-IPO Placement and the Listed Promoter Group Companies Shareholders’ Reservation Portion shall stand reduced to 10% of the revised Issue size.

Margin Amount The amount paid by the Bidder at the time of submission of the Bid, which may be between 10% or 100% of the Bid Amount, as applicable.

Memorandum / Memorandum of Association

The Memorandum of Association of our Company.

Monitoring Agency [●]. Mutual Fund Portion 5% of the QIB Portion of the Net Issue, being not less than [●] Equity Shares

(assuming the QIB Portion is 60% of the Net Issue) available for Allocation to Mutual Funds only. Upon completion of the Pre-IPO Placement, if any, the Issue size and the Net Issue would stand reduced to the extent of such Pre-IPO

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Term Description Placement and the Mutual Fund Portion shall stand reduced to 5% of the QIB Portion of the revised Net Issue.

Mutual Funds Mutual Funds registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996, as amended from time to time.

Net Issue The Issue, other than the Employee Reservation Portion and the Listed Promoter Group Companies Shareholders’ Reservation Portion, in this case being [●] Equity Shares. Upon completion of the Pre-IPO Placement, if any, the Net Issue would stand reduced to the extent of such Pre-IPO Placement.

Non-Institutional Bidders

All Bidders that are not Qualified Institutional Buyers or Retail Individual Bidders and who have Bid for an amount more than Rs. 100,000.

Non-Institutional Portion The portion of the Net Issue being not less than [●] Equity Shares available for Allocation to Non-Institutional Bidders on a proportionate basis, subject to valid Bids at or above the Issue Price. Upon completion of the Pre-IPO Placement, if any, the Issue size and the Net Issue would stand reduced to the extent of such Pre-IPO Placement and the Non-Institutional Portion shall stand reduced to not less than 10% of the revised Net Issue.

NR / Non-Resident A “person resident outside India”, as defined under FEMA including FIIs. NRI / Non-Resident Indian

A “person resident outside India”, as defined under FEMA and who is a citizen of India or is a person of Indian origin (as defined under the Foreign Exchange Management (Deposit) Regulations, 2000.

NSE The National Stock Exchange of India Limited. OCB / Overseas Corporate Body

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 and which was in existence on October 3, 2003 and immediately before such date had taken benefits under the general permission granted to OCBs under the FEMA. OCBs are not permitted to invest in this Issue.

Pay-in-Date Bid/Issue Closing Date or the last date specified in the CAN sent to Bidders, as applicable.

Pay-in-Period (i) With respect to Bidders whose Margin Amount is 100% of the Bid Amount, the period commencing on the Bid/Issue Opening Date and extending until the Bid/Issue Closing Date, and (ii) with respect to Bidders whose Margin Amount is less than 100% of the Bid Amount, the period commencing on the Bid/Issue Opening Date and extending until the closure of the Pay-in Date, as specified in the CAN.

Payment Method Either of Payment Method -1 or Payment Method- 2 chosen by Retail Individual Bidders

Payment Method-1 Amount Payable on Submission of Bid-cum-Application Form in case of Retail Individual Bidders is Rs. [●] per Equity Share, such that it shall not be less than 25% of the Issue Price and Balance Amount Payable shall be paid by the Due Date for Balance Amount Payable. All Non Resident Bidders availing the option of Payment Method-1 are required to submit a copy of an approval from the RBI allowing them to subscribe to the partly-paid up Equity Shares. Under Payment Method – 1, out of the Amount Payable on Submission of Bid-cum-Application Form, Rs. 2.5 is towards face value and Rs. [●] is towards premium.

Payment Method-2 Amount Payable on Submission of Bid-cum-Application Form in case of Retail Individual Bidders and Non-Institutional Bidders shall be 100% of Bid and in case of QIBs shall be 10% of the Bid Amount with balance being payable on allocation.

Person / Persons Any individual, sole proprietorship, unincorporated association, unincorporated organization, body corporate, corporation, company, partnership, limited liability company, joint venture, or trust or any other entity or organization validly constituted and/or incorporated in the jurisdiction in which it exists and operates, as the context requires.

Pre-IPO Placement A Pre-IPO private placement of certain Equity Shares is being considered by our Company, with some investors.

Price Band The price band with a minimum price (Floor Price) of Rs. [•] and the maximum

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Term Description price (Cap Price) of Rs. [•] including revisions thereof.

Pricing Date The date on which our Company in consultation with the BRLMs and the Co-BRLM finalises the Issue Price.

Prospectus 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.

QIB Margin Amount An amount representing at least 10% of the Bid Amount. QIB Portion The portion of the Net Issue, being at least [●] Equity Shares to be Allotted to

QIBs on a proportionate basis. Upon completion of the Pre-IPO Placement, if any, the Issue size and the Net Issue would stand reduced to the extent of such Pre-IPO Placement and the QIB Portion shall stand reduced to at least 60% of the revised Net Issue.

Qualified Institutional Buyers or QIBs

Public financial institutions as specified in Section 4A of the Companies Act, FIIs, scheduled commercial banks, mutual funds registered with SEBI, multilateral and bilateral development financial institutions, venture capital funds registered with SEBI, foreign venture capital investors registered with SEBI, state industrial development corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with minimum corpus of Rs. 250 million and pension funds with minimum corpus of Rs. 250 million.

Registered Office The registered office of our Company located at 113, Rajpur Road, Dehradun – 248 001, Uttarakhand.

Registrar /Registrar to the Issue

Registrar to the Issue, in this case being Karvy Computershare Private Limited having its office at Plot No. 17-24, Vitthal Rao Nagar, Madhapur, Hyderabad – 500 081.

Retail Individual Bidders Individual Bidders (including HUFs and NRIs) and Bidders in reserved categories who have bid for Equity Shares for an amount less than or equal to Rs. 100,000.

Retail Portion The portion of the Net Issue, being not less than [●] Equity Shares available for Allocation to Retail Individual Bidder(s) on a proportionate basis, subject to valid Bids at or above the Issue Price. Upon completion of the Pre-IPO Placement, if any, the Issue size and the Net Issue would stand reduced to the extent of such Pre-IPO Placement and the Retail Portion shall stand reduced to not less than 30% of the revised Net Issue.

Revision Form The form used by the Bidders to modify the number of Equity Shares or the Bid Price in any of their Bid-cum-Application Forms or any previous Revision Form(s).

RHP or Red Herring Prospectus

The red herring prospectus dated [●] issued in accordance with Section 60B of the Companies Act, which does not have complete particulars on the price at which the Equity Shares are offered and the size of the Issue. The Red Herring Prospectus will be filed with the RoC at least three (3) days before the Bid/Issue Opening Date and will become a Prospectus upon filing with the RoC after the Pricing Date.

RoC Registrar of Companies, Uttar Pradesh and Uttarakhand having its address at 10/499-B, Allen Ganj, Khalasi Lines, Kanpur - 208001, Uttar Pradesh.

SCRA Securities Contracts (Regulation) Act, 1956, as amended from time to time. SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time. SEBI The Securities and Exchange Board of India constituted under the SEBI Act,

1992. SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to

time. SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on

January 27, 2000, as amended, from time to time including instructions and clarifications issued by SEBI from time to time.

SEBI Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997, as amended from time to time.

Stock Exchanges BSE and NSE. Syndicate The BRLMs, the Co-BRLM and the Syndicate Members.

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Term Description Syndicate Agreement The agreement to be entered into among our Company and the members of the

Syndicate, in relation to the collection of Bids in this Issue. Syndicate Members [●]. TRS or Transaction Registration Slip

The slip or document issued by the Syndicate Members to the Bidder as proof of registration of the Bid.

U.S. GAAP Generally accepted accounting principles in the United States of America. Underwriters Enam Securities Private Limited, Morgan Stanley India Company Private

Limited, Deutsche Equities India Private Limited, J.P. Morgan India Private Limited, IDFC-SSKI Private Limited, ICICI Securities Limited, JM Financial Consultants Private Limited, Kotak Mahindra Capital Company Limited, Axis Bank Limited and [●];

Underwriting Agreement The Agreement to be entered into among our Company and the Underwriters on or after the Pricing Date.

INDUSTRY/ COMPANY RELATED TERMS

Term Description

50% Dependable Year A year in which the annual energy generation has the probability of being equal to or in excess of 50% of the expected period of operation of the plant.

90% Dependable Year A year in which the annual energy generation has the probability of being equal to or in excess of 90% of the expected period of operation of the plant.

Arunachal projects The Lower Siang project and the Hirong project. Capacity Index Declared capacity expressed as a percentage of the maximum available

capacity for the plant. Capacity Index Incentive The amount payable when a plant’s Capacity Index exceeds the normative

Capacity Index in a given year. Central Transmission Utility

As defined in Section 2(10) of the Electricity Act 2003, of India, as amended from time to time, to mean any government company which the Government of India may notify under Section 38(1) of the said Act.

Certified Emission Reductions

Carbon sequestration credits used for carbon trading under the Clean Development Mechanism of the Kyoto Protocol.

Coal Supply Agreement An agreement dated December 25, 2007 between us and MPJML to supply coal to our Nigrie Thermal project from the Amelia (North) Coal Block.

Deemed Generation Energy which a plant was capable of generating but could not generate due to the conditions of grid or power system beyond the control of the plant resulting in spillage of water.

Design Energy The quantum of energy that could be generated by a plant in a 90% Dependable Year with 95% availability of plant.

Design Saleable Energy The quantum of Design Energy less transformation losses, auxillary consumption and free power.

Hirong project Our 500 MW hydroelectric power project in the state of Arunachal Pradesh. Infirm Energy Energy delivered by a unit after its synchronization to the grid prior to the

commercial operation date of the unit. Karcham-Wangtoo project JKHCL’s 1,000 MW (4 x 250 MW) run-of-the-river, with pondage,

hydroelectric power project on the river Sutlej, in the Kinnaur district of the state of Himachal Pradesh.

Karcham PPA The Power Purchase Agreement dated March 21, 2006 between PTCIL and JKHCL.

Kynshi II project Our 450 MW hydroelectric project in the state of Meghalaya. Land Acquisition Act The Land Acquisition Act, 1894, of India, as amended from time to time. Lower Siang project Our 2,025 MW hydroelectric power project in the state of Arunachal

Pradesh. Meghalaya projects The Kynshi II project and the Umngot project. National Grid India’s national power transmission network. Nigrie Thermal project Our 1,000 MW (2 x 500 MW) supercritical technology based coal-fired

thermal power plant in the Sidhi district in the state of Madhya Pradesh. Peaking Power Power required during peak usage periods, in excess of normal power

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Term Description requirements.

Plant Availability Availability of the plant (including all the generating units) to generate power.

Primary Energy The quantum of energy generated upto Design Energy on an annual basis. Saleable Energy The energy available for sale from a power plant after transformation losses,

auxillary consumption and free power. Secondary Energy Energy produced in excess of the Design Energy. Transmission project The 230 km long power transmission project, with 4 km of loop-in loop-out,

of Baspa-Nathpa Jhakri line, being developed by JPL to evacuate power from the Karcham-Wangtoo project to the interconnection point at Abdullapur in the state of Haryana.

Transmission Service Agreement

An agreement dated February 22, 2007, between Jaypee Karcham Hydro Corporation Limited and Jaypee Powergrid Limited.

Transmission Service Charges

Monthly charges calculated in accordance with CERC regulations relating to the Transmission Service Agreement payable by JKHCL from the date on which the Transmission project is commissioned until the said agreement expires or is terminated.

Umngot project Our 270 MW hydroelectric project in the state of Meghalaya. Verified Emission Reductions

Certificates issued for quantity of emission reduction based on the power that is generated according to defined standards and requirements.

Vishnuprayag plant Our 400 MW (4 x 100 MW) run-of-the-river hydroelectric power plant on the river Alaknanda in Chamoli district of the state of Uttarakhand.

Vishnuprayag PPA The Final Power Purchase Agreement dated January 16, 2007 between UPPCL and our Company.

CONVENTIONAL AND GENERAL TERMS/ABBREVIATIONS

Abbreviation Full Form A/c Account ADRB Additional Dispute Review Board AGM Annual General Meeting AS Accounting Standards as issued by the Institute of Chartered Accountants of India AY Assessment Year CAGR Compounded Annual Growth Rate CDM Clean Development Mechanism CDSL Central Depository Services (India) Limited CEA Central Electrical Authority CENVAT Central Value Added Tax CERC Central Electricity Regulatory Commission CERs Certified Emissions Reductions CESTAT Central Excise and Services Tax Appellate Tribunal CIA Capacity Index Achieved CIN Company Identification Number Consortium Jaiprakash Hyundai Consortium CPI Consumer Price Index CSA Coal Supply Agreement DDA Delhi Development Authority Depositories NSDL and CDSL DIN Director Identification Number DP ID Depository Participant’s Identity DP/Depository Participant A depository participant as defined under the Depositories Act, 1996 DPR Detailed Project Report DRB Dispute Review Board DRT Debt Recovery Tribunal EGM Extraordinary General Meeting EIA Environmental Impact Assessment EMP Environment Management Plan

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Abbreviation Full Form EPC Engineering, procurement and construction EPS Earnings per share FCNR Account Foreign Currency Non Resident Account FDI Foreign Direct Investment FIPB Foreign Investment Promotion Board GoAP Government of Arunachal Pradesh GoM Government of Meghalaya GDP Gross Domestic Product GIR Number General Index Registry Number GIS Gas Insulate Switchgear GNIDA Greater Noida Industrial Development Authority HNI High Net-worth Individual HPERC Himachal Pradesh Electricity Regulatory Commission HPSEB Himachal Pradesh State Electricity Board HPTLRA Himachal Pradesh Transfer of Land Regulation Act, 1968 HUF Hindu Undivided Family I.T. Act The Income Tax Act, 1961, of India as amended from time to time ICAI Institute of Chartered Accountants of India ICC International Chamber of Commerce, Paris IPC Indian Penal Code IPP Independent Power Producer IPTC Independent Private Transmission Company JAPL Jaypee Arunachal Power Limited JHPL Jaiprakash Hydro-Power Limited JKHCL Jaypee Karcham Hydro Corporation Limited JPL Jaypee Powergrid Limited JPVL Jaiprakash Power Ventures Limited JSS Jaiprakash Sewa Sansthan JVPL Jaypee Ventures Private Limited KV Kilo Volt KWH Kilo Watt Hour LC Letter of Credit Mn / mn Million MOA Memorandum of Agreement MODVAT Modified Value Added Tax MOEF Ministry of Environment and Forests, Government of India. MOU Memorandum of Understanding MPERC Madhya Pradesh Electricity Regulatory Commission MPJML Madhya Pradesh Jaypee Minerals Limited MPSEB Madhya Pradesh State Electricity Board MPSERC Madhya Pradesh State Electricity Regulatory Commission MPSMCL Madhya Pradesh State Mining Corporation Limited MU Million Units MW Mega Watt NA Not Applicable NAV Net Asset Value NHDCL Narmada Hydroelectric Development Corporation Limited NHPC National Hydro Power Corporation Limited NIACL New India Assurance Company Limited NOC No Objection Certificate NRE Account Non Resident External Account NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited NVDA Narmada Valley Development Authority O&M Operation and Maintenance P/E Ratio Price/Earnings Ratio PAN Permanent Account Number

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Abbreviation Full Form PAT Profit After Tax PBT Profit Before Tax PGCIL Power Grid Corporation of India Limited PPA Power Purchase Agreement PSU Public Sector Undertaking in India RBI The Reserve Bank of India RONW Return on Net Worth RTGS Real Time Gross Settlement SBI State Bank of India SHRIL Sterling Holiday Resorts India Limited SJVNL Sutlej Jal Vidyut Nigam Limited TEA Taj Expressway Industrial Development Authority THDCL Tehri Hydro Development Corporation Limited TIN Tax payers Identification Number TSA Transmission Service Agreement TSC Transmission Service Charges U.S.$ United States Dollars UJVNL Uttarakhand Jal Vidyut Nigam Limited UPCL Uttaranchal Power Corporation Limited, Dehradun UPPCL Uttar Pradesh Power Corporation Limited UPSCCL UP State Cement Corporation Limited in liquidation UPERC Uttar Pradesh Electricity Regulatory Commission VERs Verified Emissions Reductions WPI Wholesale Price Index XLPE Cross Linked Polyethene

Notwithstanding the foregoing, in the chapters titled “Main Provisions of the Articles of Association of our Company”, “Statement of Tax Benefits”, “Financial Statements” and the paragraphs titled “Disclaimer Clause of BSE and NSE” in the chapter titled “Issue Procedure” beginning on pages 401, 94, 221, and 368 respectively of the Draft Red Herring Prospectus, defined terms have the meaning given to such terms in these respective sections of the Draft Red Herring Prospectus.

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SECTION II - GENERAL

CERTAIN CONVENTIONS; USE OF MARKET DATA Certain Conventions All references in the Draft Red Herring Prospectus to “India” refer to the Republic of India. All references in the Draft Red Herring Prospectus to “US”, “USA” or “United States” are to the United States of America. Financial data Unless stated otherwise, the financial data in the Draft Red Herring Prospectus is derived from our restated financial statements prepared in accordance with Indian GAAP and included elsewhere in the Draft Red Herring Prospectus. Our fiscal year commences on April 1 and ends on March 31 of each year, so all references to a particular fiscal year are to the twelve month period ended March 31 of that year. In the Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off. There are significant differences between Indian GAAP and U.S. GAAP; accordingly, the degree to which the Indian GAAP financial statements included in the Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practices, Indian GAAP, Companies Act and the SEBI Guidelines. Any reliance by Persons not familiar with Indian accounting practices, Indian GAAP, Companies Act and the SEBI Guidelines on the financial disclosures presented in the Draft Red Herring Prospectus should accordingly be limited. We have not attempted to explain those differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data. Currency of Presentation: All references to “Rupees” or “Rs.” are to Indian Rupees, the official currency of the Republic of India. Rs. 1 lakh means Rs. 100,000 and Rs. 1 Crore means Rs. 10,000,000. All references to “US$”; “U.S. Dollar” or “US Dollars” are to United States Dollars, the official currency of the United States of America. For additional definitions, see the section titled “Definitions and Abbreviations” beginning on page i of the Draft Red Herring Prospectus Market and Industry Data Unless stated otherwise, industry data used throughout the Draft Red Herring Prospectus has been obtained from industry publications and publicly available government documents. 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. Similarly while information contained in the publicly available government documents that is relied upon for the purposes of the Draft Red Herring Prospectus is believed to be complete and reliable, there can be no assurance of the same. Accordingly, no investment decisions should be made based on such information. Although we believe that industry data used in the Draft Red Herring Prospectus is reliable, it has not been verified. Similarly, while we believe that the internal company reports are reliable, they have not been verified by any independent sources.

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FORWARD LOOKING STATEMENTS The 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”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” 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 about us that could cause our actual results to differ materially from those contemplated by the relevant statement. Important factors that could cause our actual results to differ materially from our expectations include, but are not limited to, the following:

• Our ability to implement our projects due to our limited operating history; • Financial, operational and technical risks inherent to our projects; • Unavailability of fuel (water/coal/any other raw material) for our current and proposed power plants; • Failure of our offtakers to fulfill their payment obligations under the relevant PPA’s; • Our inability to establish new offtake arrangements; • Our ability to anticipate and manage changes or shortages in the supply of skilled or unskilled labour or

technology and continue to operate our business; • Our inability to raise requisite funding for capital expenditure, including for implementation of our new

projects; • Natural calamities including earthquake, flood, fire and drought in India resulting in an impact on our

projects or the general economy; • General economic and business conditions in India; • Our ability to successfully implement our strategy; • Changes in laws or competitive conditions which may affect us adversely; • Changes in the value of the Rupee and other currency changes, inflation, deflation, changes in

monetary policy, unanticipated turbulence in interest rates; • Changes in political conditions in India; • Changes in laws and regulations that apply to our clients, suppliers and the power generation and

trading and construction and property development sectors; and • Increasing competition in and the conditions of our clients, suppliers and the power generation and

trading and construction and property development sectors.

For a discussion of the factors that could cause our actual results to differ, see the chapters titled “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operations” on pages xii and 271 respectively of the Draft Red Herring Prospectus. Neither our Company nor the Underwriters nor any of their respective affiliates has any obligation 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 SEBI requirements, our Company, the BRLMs and the Co-BRLM will update the Red Herring Prospectus and Propectus to ensure that investors in India are informed of material developments until the time of commencement of trading of the Equity Shares Allotted pursuant to the Issue on the Stock Exchanges.

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SECTION III - RISK FACTORS An investment in our Equity Shares involves a high degree of risk. You should carefully consider all of the information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, financial condition and results of operations could suffer, the trading price of our Equity Shares could decline, and you may lose all or part of your investment. These risks and uncertainties are not the only issues that we face; additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also have a material adverse effect on our business, results of operations and financial condition. The financial data in this chapter is as per our restated financial statements contained in this Draft Red Herring Prospectus.

Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial or other implications of any of the risks mentioned herein. Numbering of the risk factors is for convenience only and may not reflect the relative importance of any of the following risk factors.

In this chapter, any reference to “we”, “us”, “our” refers to Jaiprakash Power Ventures Limited or JKHCL or the special purpose vehicles proposed to be incorporated for the Arunachal projects and the Meghalaya projects, either on a standalone basis or on a consolidated basis, as the context may require.

I. Risks relating to our Business in General

1. We have a limited history with respect to the operation of power plants and we are subject to all of the business risks and uncertainties associated with any newly operating business.

We plan to expand our installed generation capacity, however, we have limited experience in the operation of hydroelectric power plants and no experience in the construction, management and operation of coal-fired power plants or in power transmission. Our Promoter, Jaiprakash Associates Limited (JAL), has limited experience in the construction, management and operation of coal-fired power plants and no experience in the construction, operation and management of power transmission projects. We are proposing to use a portion of the net proceeds of the Issue to part finance our 1,000 MW coal-fired thermal power plant in the state of Madhya Pradesh and subscribe for a certain percentage of the equity capital of companies engaged in the implementation of a hydroelectric power project and a power transmission project in the state of Himachal Pradesh. Our success in these initiatives will depend on our ability to attract and retain talented and experienced personnel. These businesses are evolving in India and are likely to be subject to substantial regulatory overview with respect to the award, implementation and operation of new projects, the terms of our agreements and the tariffs that we charge. We are subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that we will not achieve our objectives and that the value of your investment in the Equity Shares could decline substantially. In addition, we have limited operating results that can demonstrate our ability to build and manage our business. The financial statements included in the Draft Red Herring Prospectus may not be indicative of the level of revenues we expect from, and the expenditure we expect to incur in future. As a result of the foregoing factors, the financial statements we have presented in the Draft Red Herring Prospectus will not be an accurate estimate of our future performance as a public company or indicative in any way of our future results. Any inability to effectively manage and operate our 400 MW Vishnuprayag plant or develop or operate the projects which we are developing or expect to develop could adversely affect our business, prospects, financial condition and results of operations.

2. Our new projects require a long gestation period and substantial capital outlay before we realise any benefits or returns on investments.

Due to the nature of our business, our projects typically require a long gestation period and substantial capital outlay before completion and may take months or even years before positive cash flows can be generated, if at all. The time and costs required in completing a project may be subject to substantial increases due to factors including shortages of materials, equipment, skilled personnel and labour, adverse weather conditions, natural disasters, labour disputes, disputes with contractors, accidents, changes in government priorities and policies, changes in market conditions, delays in obtaining the requisite licenses, permits and approvals from the relevant authorities and other unforeseeable problems and circumstances. In particular our Arunachal Pradesh projects and our Meghalaya projects, which represent aggregate planned capacity of 3,245 MW of the current and planned capacity of 5,245 MW are at very early stages. We cannot assure you that these 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. As part of our growth strategy, we may seek to acquire businesses, technologies and products, but we

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may fail to complete such acquisitions or realise the anticipated benefits of such acquisitions and may incur costs that could negatively affect our business. In addition, failure to complete a project according to its original specifications or schedule, if at all, may give rise to potential liabilities and, as a result, our returns on investments may be lower than originally expected. Any of these factors may lead to delays in, or prevent, the completion of our projects and result in costs substantially exceeding those originally budgeted for, which would have a material adverse effect on our business, financial condition and results of operations. In addition, it is likely that the benefits of our utilisation of the Issue proceeds will not be immediately available to you and that returns on our investments of these proceeds will not be generated until following the commissioning of each project in which investment is made.

3. We may not be successful in integrating the assets which we expect to own as a result of our subscriptions to equity in certain power assets.

We propose to subscribe to equity shares representing 55.36% of the equity capital in Jaypee Karcham Hydro Corporation Limited (JKHCL) and 23% of the equity capital in Jaypee Powergrid Limited (JPL) using a portion of the proceeds of the Issue. We also propose to subscribe to an equity interest in the special purpose vehicles to be incorporated to implement the 2,025 MW Lower Siang project, the 500 MW Hirong project, the 450 MW Kynshi II project and the 270 MW Umngot project. Even if we are successful in subscribing for such shares, we may not be successful in integrating these businesses with our existing business. We cannot assure you that we will be successful or will not suffer losses in such businesses or that our proposed investments will achieve the goals we have set for it. We may have difficulty integrating newly acquired assets, businesses and employees into our existing operations and managing a substantially larger group.

To the extent our operations continue to expand, we may need to increase the number of our employees and the scope of our operational and financial systems to handle the increased complexity and expanded geographic area of our operations. There can be no assurance that we will be able to manage such growth efficiently, retain and attract qualified management and employees, identify and successfully enter into strategic partnerships or that our current operational and financial systems and controls will be adequate as we grow. This could have a material adverse effect on our business, prospects, financial condition and results of operations.

4. Our projects are subject to construction, financing and operational risks.

The development of new projects involves various risks, including among others, regulatory risk, construction risk, financing risk and the risk that these projects may prove to be unprofitable. We may need to undergo certain changes to our operations as a result of developing these new projects in order to implement such projects effectively, integrate them into our business and comply with conditions under power purchase agreement or agreements entered into by us with various agencies for allocation and implementation. Entering into any new projects may pose significant challenges to our management, administrative, financial and operational resources. We cannot provide any assurance that we will succeed in any new projects we may enter into or that we will recover our investments. The funding requirement and project costs for our projects have been either evaluated by banks for financing purposes or are based on management estimates. If the funding requirements and project costs for these projects are higher than estimated, we will need to find sources to fund the extra costs which may not be readily available. Any failure in the development, financing or operation of any of our new projects will likely materially and adversely affect our business prospects, financial condition and results of operations.

We expect to commence commercial operation of the Karcham-Wangtoo project by 2011, the Nigrie Thermal project by 2012, the Lower Siang project by 2014, the Hirong project by 2015 and the Meghalaya projects by 2016. In addition, we expect the Transmission project to be completed by 2010. We may be adversely affected in the course of development of these and other new projects because:

• contractors hired by us may not be able to complete the construction of our project on time, within budget or to the specifications and standards set out in our contracts with them;

• delays in completion and commercial operation could increase the financing costs, including those due to increases in prices of raw materials associated with construction and increased interest costs, which could cause our budget to be exceeded;

• we may not be able to obtain adequate working capital or other financing to complete construction of and to commence operations of our projects;

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• we may not be able to recover the amounts we have invested in our projects if the assumptions contained in the feasibility studies for these projects do not materialize; and

• our protection from force majeure risks is limited to certain amounts under our insurance policies.

These risks are particularly acute in respect of the Arunachal projects and the Meghalaya projects, which are at a very early stage.

Also, we do not have guarantees or indemnities for these projects from any independent third parties. While we maintain insurance policies to cover natural disaster risks and certain other insurable risks, we cannot assure you that any cost overruns or additional liabilities on our part would be adequately covered by such insurance policies, if at all. There can be no assurance that our current or future projects will be completed or, if completed, that they would be completed on time, within the anticipated budget and that they will provide the returns anticipated.

5. Our planned projects and any future projects we implement will require significant capital expenditure for which we will require additional capital. If we are unable to obtain the necessary funds on acceptable terms, our growth plans could be adversely affected.

Our funding requirements for new projects are substantial, and our ability to finance these plans is subject to a number of risks, contingencies and other factors, some of which are beyond our control, including general economic and capital markets conditions and our ability to obtain financing on acceptable terms. While we have financing arrangements for our Vishnuprayag plant and Nigrie Thermal project, JKHCL has financing commitments for its Karcham-Wangtoo project and JPL has received certain in-principle approvals from various banks towards its debt requirements for the Transmission project. We have not yet secured any financing for the Arunachal projects and the Meghalaya projects. Furthermore, adverse developments in the Indian credit markets or a reduced perception in the credit markets of our creditworthiness could increase our debt service costs and the overall cost of our funds. We cannot assure you that debt or equity financing or our internal accruals will be available or sufficient to meet our capital expenditure requirements.

Our ability to obtain required capital on acceptable terms is subject to a variety of uncertainties, including:

• limitations on our ability to incur additional debt, including as a result of prospective lenders’ evaluations of our creditworthiness and pursuant to restrictions on incurrence of debt in our existing and anticipated credit facilities;

• investors’ and lenders’ perception of, and demand for, debt and equity securities of power generation and transmission companies, as well as the offerings of competing financing and investment opportunities in India by our competitors;

• whether it is necessary to provide credit support or other assurances from our Promoter on terms and conditions and in amounts that are commercially acceptable to them;

• limitations on our ability to raise capital in the capital markets and conditions of the Indian, U.S. and other capital markets in which we may seek to raise funds; and

• our future results of operations, financial condition and cash flows.

Any inability to raise sufficient capital to fund our projects could have a material adverse effect on our business and results of operations.

6. We have not applied for, or have not obtained, certain permits, consents, licenses and approvals for our proposed projects.

We require statutory and regulatory permits, consents, licenses and approvals in order to implement and operate our respective businesses. Also currently we have not yet applied for majority of the permits, licenses and approvals for our Arunachal projects, and all of the aforesaid for our Meghalaya projects since these projects are at at very early stages, and we propose to obtain the required licenses at appropriate stages in the future. We require additional licenses in respect of construction, commencement and maintenance of the Nigrie Thermal

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project, the Karcham-Wangtoo project and the Transmission project. Further, certain licenses in relation to our Nigrie Thermal project have been issued in the name of JAL and are pending transfer to our Company. In addition, a majority of the licenses and approvals obtained in respect of our existing plant and proposed projects are subject to expiry after specified periods of time, and are issued subject to compliance with specified conditions and restrictions.

We cannot assure that we will be able to apply for any licenses in a timely manner, or at all, or obtain such permits or approvals at such times as may be required, and there can be no assurance that the relevant authorities will issue or transfer any of such permits or approvals in the time frames anticipated by us. Further, we cannot assure that the licenses issued to us would not be subject to suspension or revocation for non-compliance or alleged non-compliance with any terms or conditions thereof, or pursuant to any regulatory action. Any failure to apply for and obtain the required permits or approvals, or any suspension or revocation of any of the licenses and approvals that have been or may be issued to us, may result in the interruption of the operation of our existing Vishnuprayag plant or impede execution of our proposed projects. For details on the various material licenses obtained in relation to our existing plant and proposed projects, , and licenses and approvals applied for but not received and licenses and approvals that have not yet been applied for in respect of the aforesaid please refer to the chapter titled “Government/Statutory and Business Approvals” beginning on page 331 of the Draft Red Herring Prospectus.

We cannot assure you that we will be able to obtain and comply with all necessary licenses, permits and approvals required for our plants, or that changes in the governing regulations or the methods of implementation will not occur. Additionally, 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 or be subject to penalties, which could disrupt our operations and adversely affect our business and results of operations.

7. As part of the proposed reorganisation of the Jaypee Group’s power assets, we have taken certain steps for which we need to obtain certain lender consents and approvals.

As part of the proposed reorganisation of the Jaypee Group’s power assets and pursuant to our contractual arrangements, consents and approvals are required from our lenders. We have not yet applied for or received such consents in relation to the Arunachal Projects and Meghalaya projects, and we cannot assure you that we shall be able to obtain such consents in the future. A delay or inability to receive these approvals may have a material adverse effect on our business prospects, financial condition and results of operations.

8. The objects of the Issue for which funds are being raised are based on our internal estimates, and the utilisation of funds will be at the discretion of our Company.

We cannot assure you that the Issue proceeds will be utilised in conformity with the costs or schedules of implementation of the projects proposed to be implemented as described in the chapter titled “Objects of the Issue” beginning on page 77 of the Draft Red Herring Prospectus. We propose to utilize the Issue proceeds to part-fund the capex during our fiscal years 2008 through 2012, including approximately Rs. 115 million in our fiscal year 2008, approximately Rs. 9,480 million in our fiscal year 2009, approximately Rs. 18,037.5 million in our fiscal year 2010, approximately Rs. 22,357.5 million in our fiscal year 2011 and approximately Rs. 10,000 million in our fiscal year 2012. However, it is possible that the utilisation of Issue proceeds may vary due to various factors that may be beyond our control, including factors that we do not currently foresee. Accordingly, prospective investors in the Issue will need to rely upon our management’s judgment with respect to the use of proceeds. If we are unable to enter into arrangements for utilisation of the Issue proceeds as expected and assumed by us in a timely manner or at all, we may not be able to derive the expected benefits from the proceeds of the Issue and our business and financial results may suffer.

9. Our proposed investment in JKHCL may be subject to a pledge or non-disposal undertaking.

One of the objects of the Issue is to invest in the equity share capital of JKHCL. The financing documents executed by JKHCL for the Karcham-Wangtoo project provide that 30% of JKHCL’s equity capital will be pledged to the lenders and an additional 46% of JKHCL’s equity capital will be subject to a non-disposal undertaking on a pro rata basis. Following our investment in JKHCL, the lenders may also require us to pledge our holding in JKHCL and/or subject our holding in JKHCL to a non-disposal undertaking. Any such restrictions on our investment in the equity share capital of JKHCL could have an adverse effect on our business. For further details, please refer to the chapter titled “Financial Indebtedness” beginning on page 286 of the Draft Red Herring Prospectus.

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10. The interests of our controlling shareholder and our affiliates could cause significant conflicts of interest in the ordinary course of our business, including various conflicts with respect to our power business.

Our Promoter, JAL, which will hold approximately 67.40% of our Equity Shares after the completion of the Issue, has a 63.34% subsidiary Jaiprakash Hydro-Power Limited (JHPL), a listed company that operates the 300 MW Baspa II hydroelectric power plant. There is no non-compete agreement in place between JAL, other Jaypee Group companies and us. Other Jaypee Group companies may develop power generation projects in the future that may compete with us. There may be conflicts of interest between Jaypee Group companies, including JAL and JHPL, and our Company as regards bidding for new projects and selling power from projects that are operated by us and by other members of the Jaypee Group.

Conflicts may arise in the ordinary course of our decision-making. Among other situations, conflicts may arise in connection with our negotiations and dealings with Jaypee Group companies with respect to services that they are expected to provide to us and the arrangements that we may enter into with them. Conflicts may also arise in the allocation of resources, including key personnel, contractors and intellectual property, between other Jaypee Group companies, including JAL, and us.

Furthermore, as JAL is a guarantor of certain of our loan and credit facilities, in the event that we default under one or more of these facilities and our creditors invoke JAL’s guarantee, JAL would become our creditor, which may lead to a conflict of interest.

In addition, key management personnel and employees may also encounter conflicts of interest in the above situations, among others.

We have had and also expect to have a substantial amount of ongoing transactions with our Promoter Group Companies. For details of such transactions, please refer to the chapter titled “Related Party Transactions” beginning on page 269 of the Draft Red Herring Prospectus.

11. We are significantly dependent on our Promoter and Promoter Group Companies for execution of our projects and for financial support.

We are significantly dependent on our Promoter, JAL, for financial support and execution expertise for our projects under implementation and planned projects. JAL has hitherto provided corporate guarantees for certain of our borrowings. In addition, in the past, JAL has also executed the civil works of the Vishnuprayag plant and is currently the EPC contractor for the Karcham-Wangtoo project. We are and have been dependent on JVPL for design expertise for our projects. We may also be dependent on JAL and other Jaypee Group companies to be able to meet pre-qualification requirements for bidding on projects. Going forward, however, there is no assurance our Promoter and Promoter Group Companies will continue to provide us with the same degree of financial and other support and services. Non – continuance of such arrangements could affect our operations and financial condition.

12. We will continue to be controlled by JAL following the Issue, and our other shareholders will be unable to affect the outcome of shareholder voting.

JAL currently holds 80.57 % of our Equity Shares and will, after the completion of this Issue, continue to own 67.40% of our paid-up capital. Consequently, JAL will continue to control us and will have the power to elect and remove our directors and therefore determine the outcome of most proposals for corporate action requiring approval of our Board of Directors or shareholders, such as proposed annual plans, revenue budgets, capital expenditure, dividend policy, transactions with other JAL-controlled companies, or the assertion of claims against such companies and/or other companies. Under article 90 of our Articles of Association, as long as JAL holds 51% or more of the paid up equity capital of our Company, the Managing Director(s) or the whole-time directors shall be JAL’s nominees. Under the Companies Act, shareholders may appoint a Director to our Board by way of an ordinary resolution (a resolution passed by a majority of the votes of shareholders present and voting). Shareholders may also remove a Director from our Board by an ordinary resolution passed after giving special notice to the shareholders. As our majority shareholder, JAL may exercise these rights or impose other restrictions on us. For more details see the chapter titled “Main Provisions of our Articles of Association” beginning on page 401 of the Draft Red Herring Prospectus.

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The interests of JAL may be different from our interests or the interests of our other shareholders. JAL could, by exercising its powers of control, delay or defer a change of control of our Company or a change in our capital structure, delay or defer a merger, consolidation, takeover or other business combinations involving us, or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company, even if such a transaction may be beneficial to us and our other shareholders.

13. We have not placed orders or entered into definitive agreements for the machinery and equipment required for the Nigrie Thermal project.

We have not yet placed orders, entered into an EPC contract or entered into any definitive arrangements for any of the major machinery and equipment required in relation to the Nigrie Thermal project. It is possible that, when we place such orders, limited supply of machinery or equipment, currency fluctuations or other factors may result in a future increase in the cost of such machinery and equipment. In turn, this could cause the total cost of the Nigrie Thermal project to exceed the current estimated cost, which may have a material adverse effect on our liquidity and results of operations.

14. JKHCL is not adequately protected from cost escalations in relation to certain costs under its EPC contract or from costs not covered under the EPC contract.

JKHCL has entered into an EPC contract with JAL for the implementation of the Karcham-Wangtoo project. Although the EPC contract has certain protections for JKHCL against cost escalations, JAL could be entitled to cost escalations under certain circumstances. In addition, the EPC only protects JKHCL against cost escalation related to the machinery and equipment that are covered by its terms. JKHCL will be responsible for any other cost escalation. In the event of any cost escalation for which JKHCL is liable, the total project cost may increase, which may have a material adverse effect on JKHCL’s liquidity and results of operations. For more details regarding the EPC contract for the Karcham-Wangtoo project, please refer to the chapter titled “Key Business Contracts” beginning on page 135 of the Draft Red Herring Prospectus.

15. We face certain contractual risks associated with agreements that we have entered into with respect to our projects.

We are required to undertake various activities and have various obligations, including preparing a DPR and achieving financial closure under the memoranda of agreement, implementation agreements and other agreements associated with our projects. If we fail to undertake such activities and fulfill such obligations within the time prescribed or at all, this could lead to our Company being liable to a regulatory or governmental authority or may also result in cancellation of the project. Any such liability or cancellation could adversely affect our business, results of operations and profitability. For details of these activities and obligations please refer to the chapter titled “Key Business Contracts” beginning on page 135 of the Draft Red Herring Prospectus.

16. Extreme variations in hydrological conditions and geological uncertainties may materially and adversely affect our results of operations.

Our only operating plant, the Vishnuprayag plant, is a hydroelectric plant. Hydroelectric generation at our Vishnuprayag plant, and at the other hydroelectric projects in which we expect to subscribe for interests, is dependent on the amount and location of rainfall, snow melt and river flows in those regions, which vary considerably from quarter to quarter and from year to year. The levels of hydroelectric production can, therefore, vary from period to period. In years of less favorable hydrological conditions, such as periods of drought, hydroelectric plants generate less electricity, which reduces the amount of electricity that they are able to generate and sell. Furthermore, the advent of climate change can cause conditions that may result in unusual hydrological variations and extremities. Any adverse hydrological conditions could render us unable to meet the requirements of our PPAs. Conversely, if hydrological conditions are such that too much rainfall occurs at any one time, such as during the monsoon, water may flow too quickly and at volumes in excess of a particular hydroelectric plant’s designated flood levels, which may result in plant shutdowns. Any of these events could reduce our revenues from the sale of electricity, which could have a material adverse effect on our business, financial condition and results of operations.

Extensive geological investigation is carried out by independent engineers before taking up civil works for our projects. While past studies have not indicated any adverse geological features such as major faults, thrusts or highly stressed rock mass and our Vishnuprayag plant has been completed and commissioned, occurrences of such adverse geological conditions in the future cannot be ruled out. Furthermore, the conclusions of

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independent geological investigation are subject to uncertainty. In the recent past, there have been incidents of earthquakes in Northern India, where our Vishnuprayag plant and Karcham-Wangtoo project are located, and we cannot state with certainty that any future earthquakes in the region will not affect our operations there. Such adverse geological features could adversely affect our business, financial condition and results of operations.

17. Natural disasters could disrupt our operations and result in loss of revenues and increased costs.

Our operating plant and proposed hydroelectric projects require a constant supply of water to continue to operate and are vulnerable to man-made and natural disasters such as explosions, earthquakes, storms and floods, as well as to terrorist attacks or other enemy actions. The occurrence of a man-made or natural disaster, terrorist attack, enemy action or other accidents could disrupt the operations of our operating plant and hydroelectric projects and result in loss of revenues and increased costs. Although we believe we maintain insurance coverage consistent with industry standards, there can be no assurance that the insurance coverage we maintain for these risks will cover such risks or be adequate to compensate us for all damages and economic losses which we may suffer as a result of any such events.

18. Our business is dependent upon the discharge of water from certain rivers, which is seasonal in nature, such that steady revenue streams throughout the year cannot be assured.

The respective capacities of our Vishnuprayag plant, the Karcham-Wangtoo project and the Lower Siang project have been designed based on historical hydrological data assuming a 90% Dependable Year. We expect the capacities of the Hirong project, the Kynshi II project and the Umngot project to be designed on the same basis. Inadequate availability of water may result in reduced generation of power from our Vishnuprayag plant and our planned hydroelectric projects, which may affect our operations. The water flow from the rivers on which our Vishnuprayag plant and our planned hydroelectric projects are located, increases during the months of May to September each year due to melting snow and monsoons. As a result, approximately 65% of our generation in a year is during this period. This trend is likely to continue in the future. As our business is seasonal in nature, the profitability and revenues will vary quarter to quarter for each financial year.

19. Our proposed thermal power plant will have significant coal requirements, and we may not be able to ensure the availability of coal at competitive prices.

The success of our Nigrie Thermal project will depend on, among other things, our ability to source coal at competitive prices. The Nigrie Thermal project will have the benefit of coal supplies from long-term coal allocations pursuant to a coal supply agreement (CSA) that we have entered into with Madhya Pradesh Jaypee Minerals Limited (MPJML) in respect of the Amelia (North) coal block, which is a joint venture between JAL and Madhya Pradesh State Mining Corporation Limited (MPSMCL). However, the price of coal extracted pursuant to such CSA will vary according to general economic conditions. The price which we shall pay for coal pursuant to such CSA may exceed the cost at which we might otherwise be able to procure coal in the open market or may exceed the price at which we can profitably operate our Nigrie Thermal project. In either case, our business, financial condition and results of operations would be adversely affected.

Furthermore, mining at the Amelia (North) and the Dongri Tal II coal block is yet to commence. MPJML, being a newly incorporated entity which does not have experience in coal mining, and hence is subject to all business risks and uncertainties associated with any new business enterprise, including the risk that it will not be able to achieve the objective of extracting coal as planned, by the time the Nigrie Thermal project is operational or at all. Additionally, we have not yet entered into any agreement for supply of coal from Dongri Tal II coal block and there can be no assurance that we will be able to enter into any such agreement or procure the required supply of coal to run our thermal power plant at anticipated plant load factor.

20. Estimates of the coal reserves are subject to assumptions, and i