Statutory Benefits The Biomass power plant and the power generated are entitled for the following benefits:

100% Depreciation under Section 32 of Income Tax Act 1961   100% Tax free Income under Section 80 (i)a of Income Tax Act 1961   Some States give exemption under Sales Tax for production and purchase

Assured Income

The entire generation of Power will be sold to the Government of Karnataka as per the Power Purchase Agreement. This agreement is valid for first ten years and will be eligible for renewal for further periods. The Company will raise a bill on monthly basis and KPTCL will pay as per the agreed price at Rs. 2.85 per unit with escalation of 2% every year within 15 days from the date of delivery of the tariff invoice by the Company. If any payment from KTPCL is not paid when due, there shall be due and payable to the Company penal interest at the rate of SBI Prime Lending rate plus 2% per annum for such payment from the date such payment was due until such payment is made in full.   KPTCL will establish and maintain irrevocable and unconditional revolving Letter of Credit if favor of and for the sole benefit of the Company. The LC shall be established on the date hereof and made operational thirty days prior to the commercial operation date of the project and shall be maintained consistently.   As such the Company will have assured income and there will not be any delay in making payments.

Socio Economic

Substantial employment generation   Rural economic development   Saving of valuable foreign exchange   Enhanced income for farmers by sale of Biomass   Improved power potential leads to availability of power for agriculture and industrialization

Environmental

Conversion of waste and barren land into useful land   Increase of forest cover and there from a positive impact on rainfall pattern   Improvement of ground water level   Reduction of the levels of environmentally harmful gases   Reduction in CO 2 content in the atmosphere – a green house gas

Risk Factors

Normally the risk factor in Renewable Energy Plant is availability of Biomass. In this case, the Company has selected a place where the Biomass is available within 20 KM radius and the quantities available are very huge. As such there is no risk of not getting Biomass for this plant. Hence it is totally hassling free.