1. Applicability of the Code:

(i) This Code of Conduct (Code) applies to the Officers in 'Senior Management' (hereinafter called "Senior Officers") of the KRISHNA BHAGYA JALA NIGAM LIMITED ('company') i.e. all officers of management one level below the directors including all functional heads.

(ii) The Company is committed to conducting its business in accordance with the applicable laws, rules and regulations and with highest standards of business ethics. This code is intended to provide guidance and help in recognising and dealing with ethical issues, provide mechanisms to report unethical conduct, and to help foster a culture of honesty and accountability. Each Senior Officer of the Company is expected to comply with the letter and spirit of this Code.

(iii) Senior Officers of the Company must not only comply with applicable laws, rules and regulations but should also promote honest and ethical conduct of the business. They must abide by the policies and procedures that govern the conduct of the Company's business. Their responsibilities include helping to create and maintain a culture of high ethical standards and commitment to compliance, and to maintain a work environment that encourages the stakeholders to raise concerns to the attention of the management.

(iv) This code does not attempt to describe all potential problem areas that could develop, but some of the more common problems are described below:

2. Guidelines for Conduct:

(i) A Senior Officer of the Company must act honestly, fairly, ethically, and responsibly. He/she should be loyal to the Company and act with integrity and in good faith. Each Senior Officer in 'Senior Management' of the Company should seek to use due care in the performance of his/her duties in the best interests of the Company as a whole. He/she should act with competence and diligence, without allowing independent judgement to be subordinated. A Senior Officer of the Company has an obligation, at all times, to comply with the spirit, as well as the letter, of the law and of the principles of this Code.

(ii) A Senior Officer in 'Senior Management' of the Company should:

(a) Dedicate sufficient time, energy and attention to the Company to ensure diligent performance of his/her duties, including preparing for meetings and decision making by reviewing in advance any materials distributed and making reasonable inquiries.

(b) Seek to comply with all Corporate Policies as laid down from time to time.

(c) Act in the best interests of, and fulfill fiduciary obligations to the Company's shareholders.

(d) Conduct himself in a professional, courteous and respectful manner.

(e) Comply with all applicable laws, rules and regulations.

(f) Act in a manner to enhance and maintain the reputation of the Company.

(g) Respect the confidentiality of information relating to the affairs of the Company acquired in the course of service as a Senior Officer, except when authorised or legally required to disclose such information.

(h) Not use confidential information acquired in the course of service as a Senior Officer of the Company for personal advantage.

3. Corporate Business Opportunities:

(i) A corporate business opportunity is an opportunity:
(a) in the Company's line of business or proposed expansion or diversification;
(b) which the Company is financially able to undertake; and
(c) which may be of interest to the Company

(ii) A Senior Officer of the Company who learns of such a corporate business opportunity and who wishes to participate in it should disclose the opportunity to the Managing Director. If the Managing Director determines that the Company does not have an actual or expected interest in the opportunity, then, and only then, may the Senior Officer participate in it, provided that the Senior Officer of the Company has not wrongfully utilized the Company's resources in order to acquire the opportunity.

(iii) Senior Officers of the Company owe a duty to the Company to advance the Company's interest when the opportunity to do so arise. Senior Officers of the Company may not:
(a) take for himself personally opportunities that are discovered through the use of Company property or information or through his/her position;
(b) use the Company's property or information or the position for personal gain; compete with the Company, directly or indirectly, for business opportunities that the Company is pursuing.

4. Conflicts of Interest:

(i) Senior Officers of the Company are expected to dedicate their best efforts to advancing the Company's interests and to make decisions that affect the Company based on the Company's best interests and independent of outside influences.

(ii) A conflict of interest occurs:
(a) When a Senior Officer of the Company takes action or has interests that may take it difficult to perform his/her work objectively and effectively.
(b) The receipt of improper personal benefits by a member of his or her family as a result of his/her position in the Company;
(c) Any outside business activity that detracts an individual's ability to devote appropriate time and attention to his or her responsibilities with the Company;
(d) The receipt of non-nominal gifts or excessive entertainment from any person/company with which the Company has current or prospective business dealings;
(e) Any significant ownership interest in any supplier, customer, development partner or competitor of the Company;
(f) Any consulting or employment relationship with any supplier, customer, business associate or competitor of the Company.

(iii) Senior Officers of the Company should be scrupulous in avoiding 'conflicts of interest' with the Company. In case there is likely to be a conflict of interest, he/she should make full disclosure of all facts and circumstances thereof to the Managing Director and obtain a prior written approval before undertaking such activities.

5. Gifts:

Senior Officers of the Company and members of their immediate families may not accept gifts from persons or firms who deal with the Company where the gift is being made in order to influence them or where acceptance of the gifts could create the appearance of a conflict of interest.

6. Honest and Ethical Conduct :

Senior Officers of the Company shall act in accordance with the highest standards of personal and professional integrity, honesty and ethical conduct not only on Company's premises and offsite but also at company sponsored business, social events as well as any places. They shall act and conduct free from fraud and deception. Their conduct shall conform to the best-accepted professional standards of conduct.

7. Confidentiality:

Senior Officers of the Company shall maintain the confidentiality of confidential information of the Company or that of any customer, supplier or business associate of the Company to which the Company has a duty to maintain confidentiality, except when disclosure is authorized or legally mandated. The Confidential information includes all non-public information (including private, proprietary, and other) that might be of use to competitors or harmful to the Company or its associates. The use of confidential information for their own advantage or profit is also prohibited.

8. Fair Dealing:

Senior Officers of the Company should deal fairly with customers, suppliers, competitors and employees of group companies. They should not take unfair advantage of anyone through manipulation, concealment, abuse of confidential, proprietary or trade secret information, misrepresentation of material facts, or any other unfair dealing-practices.

9. Protection and Proper Use of Company's Assets:

All Senior Officers of the Company should protect Company's assets and property and ensure its efficient use. Theft, carelessness and waste of the Company's assets and property have a direct impact on the Company's profitability. Company's assets should be used only for legitimate business purposes.

10. Compliance with Laws, Rules and Regulations:

Senior Officers of the Company shall comply with all applicable laws, rules and regulations. Transactions, directly or indirectly, involving securities of the Company should not be undertaken without pre-clearance from the Company's compliance officer. Any Senior Officer of the Company who is unfamiliar or uncertain about the legal rules involving Company business conducted by him/her should consult the legal department of the Company before taking any action that may jeopardize the Company or that individual.

11. Compliance with Code of Conduct:

(i) If any Senior Officer of the Company who knows of or suspects of a violation of applicable laws, rules or regulations or this Code of Conduct, he/she must immediately report the same to the Managing Director. Such person should as far as possible provide the details of suspected violations with all known particulars relating to the issue. The Company recognizes that resolving such problems or concerns will advance the overall interests of the Company that will help to safeguard the Company's assets, financial integrity and reputation. All reported violations would be appropriately investigated.

(ii) Violations of this Code of Ethics will result in disciplinary action, which may even include termination of services of the Senior Officer of the Company. The Managing Director shall determine appropriate action in response to violations of this Code of Ethics.

12. Interpretation of Code:

Any question or interpretation under this Code of Ethics and Business Conduct will be handled by the Managing Director. The Managing Director has the authority to waive compliance with this Code of business conduct for any Senior Officer in 'Senior Management' of the Company. The person-seeking waiver of this Code shall make full disclosure of the particular circumstances to the Managing Director.

13. Disclosure:

Senior Officers of the Company shall affirm the compliance with the code on annual basis. The Annual Report of the Company shall carry a declaration to this effect signed by the CEO of the company. All Senior Officers of the Company shall annually sign a confirmation that they have read and will comply with this Code in the format similar to the one annexed to this Code of Conduct.

To
The Board of KRISHNA BHAGYA JALA NIGAM LIMITED

Dear Sirs,

The undersigned, being a Senior Officer of KRISHNA BHAGYA JALA NIGAM LIMITED as defined under Clause 49 of the Listing Agreement (Corporate Governance) entered into by the Company with the Stock Exchanges, do hereby affirm my compliance with the Code of Conduct for Senior Management as laid down by the Company for the year 2005-06.

I further confirm that I have read and understood the contents of the aforesaid Code of Conduct for Senior Management Officers and shall abide by the same.

This is for your kind information and record purposes.

Thanking you

Yours faithfully

(Name & Signature)

Place:

Date: