Suryachakra Power Corporation Limited Note on receivables from Electricity Department, A&N, GOI.

Power Purchase Agreement/Contingent Receivables:

(i) The Company's revenue from sale of electricity is based on the Power Purchase Agreement (PPA) entered into with the Andaman and Nicobar (A & N) administration. The PPA is for an initial period of 15 years as the period over as on 31st March 2018 and can be extended on mutual terms and conditions for three further periods of five (5) years each. PPA contains a set of pre-defined formulae for calculation of the revenue to be billed on a monthly basis. Such billings as per terms of the PPA include a fixed charge payment, a variable charge payment, incentive payment, foreign exchange adjustment and change in law adjustment.

(ii) The Company for the purpose of determining the monthly billings, invoices the A & N administration based on the costs and formulae as envisaged in the PPA and as determined by the order of Joint Electricity Regulatory Commission (JERC), Gurgaon dated 29th April 2015, pending final confirmation and acceptance of actual cost and the formulae by the A & N administration, no adjustment is made to the revenue. Such adjustments, if any will be made in the period in which the amount becomes determinable and is confirmed by Regulatory Commissions.

(iv) The Andaman & Nicobar administration without honouring the judgements of JERC & APTEL has filed an appeal in APTEL for quashing the orders of JERC dated 29.04.2015. However, APTEL has dismissed their appeal filed twice therein upheld the JERC order dated 29.04.2015 fixing the project cost Rs.77.64Crores

(V) The Andaman & Nicobar administration had filed two contempt applications in Hon'ble Supreme Court. The Hon'ble Supreme Court has given its verdict vide its order dated 22.09.2016 & 18.10.2016 dismissing both the CA's filed by the A&N Administration, reduced the Project cost to Rs.74.96 Cr and directed JERC to compute the calculations. As per the Company an amount of Rs.130 Crores stands receivable as arrears along with interest on fixing the purchase price of power based on the Project cost of Rs.74.96 Cr as stated by the Hon'ble Supreme Court. Later Hon'ble Supreme Court in its order dated 12.04.2017 has allowed to get reddressal stating that the dismissal of application for clarification and review petition will not stand in the way of the ground that may be urged by the company in the next round of litigation.

(vi) Meanwhile JERC in its order dated 13.01.2017 completed the Calculations and passed orders that an amount of Rs.9.67 Crores is to be received by A&N Administration from the Company (as against large amounts to be received by the Company from A & N Administration). The Company on going through JERC order found that many settled issues were re-opened by JERC. The JERC has committed grave mistakes in the calculations. Aggrieved by the order of JERC DT 13.01.2017, the company filed an appeal in APTEL against the order and which is still pending as on date.

(vii) On Successful resolution of the above dispute in the favour of the Company at Honourable Supreme Court now the project cost is reinstated to Rs.77.64 crores, the Company estimates to receive an amount including 12% applicable interest as on date it works out to be approx. Rs.513.00 Crores on account of fixation of the Power Price as per the Formulae envisaged in the PPA contingent on the final decision of JERC/APTEL/Hon'ble Supreme Court.