Directors Report of Power Finance Corporation Ltd.

Mar 31, 2025

S. No.	Borrower Name	Details of Resolution Plan
1	Lanco Amarkantak Power Limited	Resolution with change in ownership through NCLT
2	KSK Mahanadi Power Company Limited	Â
3	Om Shakti Renergies Ltd	Liquidated through NCLT
4	Vyshaka Solar Energy Systems Private Limited	Restructuring with existing promoter outside NCLT

 

On behalf of the Board of Directors, it is my privilege to present
the 39^th Annual Report of your Company for the Financial Year
ended March 31, 2025, along with the Audited Standalone
and Consolidated Financial Statements and Auditor's
Report thereon.

Your Company has been striving to enhance the value
proposition for all stakeholders while maintaining the
momentum of project sanctions, sustaining development levels
and optimizing costs. Your Company has played an important
part in accelerating the progress of the Indian economy, which
was amongst the fastest growing economies in FY 2024-25. By
consolidating our efforts and continuing to grow sustainably,
we can support in meeting the country's expanding energy
needs while creating value for stakeholders. Your Company
has registered another year of robust performance and made
substantial progress.

The year 2024-25 was excellent for your Company as it
demonstrated remarkable persistent performance to
achieve significant milestones in operational and financial
performance. The performance highlights of your company for
the FY 2024-25 are briefly mentioned here to give an overview
of accomplishments on all fronts:

BUILDING ON 39 YEARS: EMPOWERING FOR
FOUR DECADES OF SUCCESS

As your company proudly completes 39 years of empowering
India's power sector, it stands tall as a pillar of strength,
resilience, and innovation. Over nearly four decades, your
company has played a transformative role in financing and
developing power infrastructure, driving the nation's energy
growth. With a legacy built on integrity, excellence, and strategic
foresight, PFC is not only celebrating past achievements
but also preparing to embrace the future with renewed
commitment. As it is approaching the milestone of 40 years,
PFC is poised to scale greater heights, continuing its journey
as a key enabler of sustainable and inclusive development in
India's energy landscape. In the growth journey, this fiscal year
2024-25 has marked a period of notable accomplishments for
your Company, characterized by comprehensive performance.
The key highlights of achievements during the FY 2024-25 are
outlined as follows:

1. Prominent Accomplishments

•    36^th in Fortune 500 India' 2024

•    3^rd highest profit making CPSE in India

•    Largest Renewable Energy Financer in India

•    Crossed H5 Lakh crore mark in loan assets

•    IFSC's First Finance Company for Power & Infrastructure
lending i.e. PFC Infra Finance IFSC Limited received

approval from IFSCA for commencing its operations as
a Finance Company in IFSC GIFT City Gujarat.

•    PFC has been conferred "Governance Now PSU Award"
for both "Financial Performance" and "Excellence in
Learning and Development" recognized for its strong
financial performance and commitment to employee
development, the recognition highlighting PFC's robust
institutional governance and its overall contribution to
the power and financial sectors.

2. PFC's Financial and Operational Health:

A Pillar of Sustainable Growth

i.    Financial Excellence (Standalone)

•    Profit After Tax (PAT) increased by 21% in FY 2024-25
from H14,367 crore in FY 2023-24 to H17,352 in
FY 2024-25.

•    Net worth increased by 15% on account of increasing
profits i.e. H90,937 crore as at March 31, 2025 vs H79,203
crore as at March 31, 2024.

•    Earnings per share increase by 21% in FY 2024-25.

•    10% year on year increase in 54EC bonds portfolio with
54EC bonds-a low-cost fund avenue available to PFC of
H9,943.09 crore as on March 31, 2025 vs H8,994 crore as
on March 31, 2024.

ii.    Consolidated Performance: Driving Forward

•    15% increment in PAT i.e H30,514 crore in FY 2024-25 vs
H26,461 crore in FY 2023-24.

•    The gross loan assets recorded a growth of 12%,
H11,09,996 crore as at March 31, 2025 from H9,90,824
crore as at March 31, 2024.

•    Net Worth of the company grew by 16% in FY 2024-25
to H1,55,155 crore as compared to H1,34,289 crore in
FY 2023-24.

•    PFC Group, the nodal agency for implementation of
LPS Rules has been instrumental in reduction in legacy
dues of DISCOMs by 90% of total legacy dues.

•    Significant reduction in NPA

Particulars	As at March 31, 2025	As at March 31, 2024
Gross NPA to Gross Loans	1.64%	3.02%
Net NPA to Net Loans	0.38%	0.85%

iii. Healthy Asset Portfolio

•    Total provision of H8,424 crore towards Stage- III Loan
Assets as at the end of FY 2024-25 against H5,43,120
crore Total Gross Loan Assets. The Net Stage-III Assets
stands at H2,093 crore as on March 31, 2025, which is

0.39% to the Total Gross Loan Assets.

•    Major projects resolved during the year:

iv. PFC'S Strategic Compass Towards Navigating
Tomorrow-'Nayi Soch Nayi Raahein'

Embracing the motto 'Nayi Soch Nayi Raahein' - Your
Company is steering into new directions, shaping the
future through innovative ideas and forward-looking
perspectives. With the amendment in the Memorandum
of Association, PFC's lending capabilities have been
extended to encompass the wider infrastructure and
logistics sectors with focus on charging infrastructure,
roads, ports, metro rail, smart cities, other infrastructure
projects etc.

During the year, your company has provided financial
assistance to projects such as metro rail, petroleum
refining, desalination plant and bio ethanol manufacturing.
It is focused on maintaining a 25% market share in India's
renewable capacity and exploring funding opportunities
in clean technologies such as energy storage - Battery &
Pumped Hydro, e- mobility, Green Hydrogen etc. and also
contribute to India's energy transformation and meeting
the Net Zero Targets.

Your Company's above navigation of strategic objectives
will be on the following lines:

4. Financial Performance - Standalone

i. Profitability

•    Preferred Lending Partner: Consolidate its
position as the lender of choice in the Power, Energy
and Infrastructure sectors, financing solutions to
government and private borrowers at reasonable costs.

•    Net-Zero Leadership: Lead investments towards
achieving India's Net-Zero emissions goal by prioritizing
investments in green infrastructure projects. Leverage
the expertise to catalyze sustainable energy solutions
that align with global climate objectives.

•    Sectoral Reforms and Innovation: Spearhead
transformative reforms in the Power, Energy, and
Climate sectors, collaborating closely with the
Government of India to implement policies and
programmes of GoI for power sector.

•    Diversified Growth: Expand the lending portfolio into
new and emerging areas in power and infrastructure
sector and adapt to evolving market dynamics to
capitalize on new opportunities which can help in
reducing the cost of power to the end consumer and to
ensure viability of emerging technologies.

3. Powering Growth Through Numbers-
A Financial Synopsis

Your company has demonstrated strong financial growth
in FY 2024-25. Both Profit Before Tax and Profit After Tax
have seen significant double-digit increases. This positive
trend is supported by a substantial increase in total
income, primarily driven by revenue from operations.
While total expenses also increased, the growth in revenue
outpaced the growth in expenses, leading to improved
profitability. The dominance of finance costs within total
expenses remains a key characteristic of your company's
financial structure. Total Comprehensive Income also saw
a healthy increase. The government's substantial holding
in the company's equity remains a significant aspect of its
ownership structure.

Particulars	Standalone	Â	Consolidated	Â
	2024-25	2023-24	2024-25	2023-24
Total Income	53,127.76	46,034.10	1,06,598.70	91,174.87
Profit Before Tax	21,172.37	17,625.69	38,632.16	33,588.12
Tax expenses	3,820.18	3,258.67	8,117.76	7,126.94
Profit After Tax	17,352.19	14,367.02	30,514.40	26,461.18
Owners of the Company	Â	Â	22,990.81	19,761.16
Non-Controlling Interests	Â	Â	7,523.59	6,700.02
Total Comprehensive Income	17,051.35	15,755.48	28,698.82	28,893.91
Owners of the Company	Â	Â	21,893.66	21,699.27
Non-Controlling Interests	Â	Â	6,805.16	7,194.64

 

Total Income 53,121 46,034		(I crore) 1,06,599 91,175 3			Â	Tax expenses 3,820 3,259		7,127 I	(I crore) 8,118
FY24	FY25	FY24	FY25	Â	Â	FY24	FY25	FY24	FY25	Â
Standalone		Consolidated		Â	Â	Standalone		Consolidated		Â
Â	Â	Â	Â	Â		Â	Â	Â	Â	Â
Profit Before Tax			(I crore)		Â	Profit After Tax		Â	(I crore)
Â	Â	38,632			Â	Â	Â	30,514
Â	Â	33,588	Â	Â	Â	Â	Â	26,461	Â	Â
21,172			Â	Â	Â	17,352			Â	Â
17,626	1	Â	Â	Â	Â	14,367	1	Â	Â	Â
FY24	FY25	FY24	FY25	Â	Â	FY24	FY25	FY24	FY25	Â
Standalone		Consolidated		Â	Â	Standalone		Consolidated		Â

ii. Other Equity (Retained Earnings)

Â	Â	Standalone	Consolidated*	Â
Â	2024-25	2023-24	2024-25	2023-24
Opening Balance of Surplus	15,876.21	12,648.64	23,413.33	18,236.28
Profit after tax for the year	17,352.19	14,367.02	22,990.81	19,761.16
Re-Measurement of Defined Benefit Plans	(4.72)	(4.27)	(4.42)	(4.66)
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1)(viia) (c) of Income Tax Act, 1961	(915.33)	(712.12)	(1,358.42)	(1,074.12)
Transfer to Special Reserve created and maintained u/s 36(1)(viii) of Income Tax Act, 1961	(3,295.53)	(2,804.90)	(5,164.37)	(4,419.18)
Transfer to Special Reserve created u/s 45-IC(1) of Reserve Bank of India Act, 1934	(3,470.45)	(2,873.40)	(5,124.57)	(4,349.20)
Transfer to General Reserve	-	-	(394.76)	-
Transfer to Interest Differential Reserve - KfW Loan (net)	(1.75)	(2.18)	(1.75)	(2.18)
Dividends	(5,362.67)	(4,818.15)	(5,362.67)	(4,818.16)
Reclassification of gain / loss on sale of equity instrument measured at OCI	114.38	164.76	114.38	190.02
Impairment Reserve	-	(89.18)	-	(89.18)
Adjustments	-	-	(17.53)	(17.45)
Closing Balance of Surplus	20,292.33	15,876.21	29,090.03	23,413.33

iii. Dividend

The Board of Directors of the Company has recommended final dividend H676.52 crore @ 20.5% on the paid up equity share
capital i.e. H2.05 /- per equity share of H10/- each for the FY 2024-25, subject to the approval of the shareholders at the ensuing
Annual General Meeting. The Company had also paid interim dividend H4,537.64 crore @ 137.5% on the paid up equity share
capital i.e. H13.75 /- per equity share of H10 /- each during FY 2024-25.

Dividend (per share)	FY 2024-25		FY 2023-24
	In J	In %	In J	In %
First Interim	3.25	32.5	4.5	45
Second Interim	3.5	35	3.5	35
Third Interim	3.5	35	3.0	30
Fourth Interim	3.5	35	-	-
Final Dividend	2.05A	20.5a	2.5	25
TOTAL DIVIDEND	15.8	158	13.5	135

^ARecommended for approval of Shareholders

Details of Interim Dividend paid & Final Dividend payable in FY 24-25 and Interim / Final dividends paid in previous years are
as follows:

16	Â	Â			Â			13.75	6,000
14	Â	Â			Â			JV	5,000
Â	Â	Â			11.00			Â
12	Â	Â			10.75			5,205	Â
Â	9.50	Â			8.75		4,455	Â	4,000
10		Â			Â			Â	Â
	Â	Â			Â			Â	Â
Â	Â	Â			1111111111 f J MMllllj			Â	Â
Â	Â	8.0			Â	Â	Â	Â	3,000
8	Â	-^-			Â	Â	Â	Â
Â	#—	Â	- •	Â	Â	Â	Â	Â	Â
6	2,508	—	2,640	—	Â	Â	Â	Â	2,000
4	Â	—	Â	—	Â	Â	Â	Â	Â
2	Â	-	Â	-	Â	Â	Â	Â	1,000
n	Â	Â	Â	Â	Â	Â	Â	Â	n
0	FY19-20	FY20-21			FY21-22	FY22-23	FY23-24	FY24-25	0

H Interim Dividend paid per share in J | Total Dividend pay out in J crore

5. Operational Performance

i. Asset Quality

Particulars	FY 2024-25	FY 2023-24
Gross Loan Assets	5,43,120	4,81,462
Stage III Assets	10,517	16,073
Provision on Stage III Assets	8,424	11,963
Gross Stage III as % of Gross Loan Assets	1.94%	3.34%
Net Stage III as % of Gross Loan Assets	0.39%	0.85%

ii. Key Financial Ratios of the Company for FY 2024-25 Vis-A-Vis FY 2023-24 are given below:

Ratio	As at March 31, 2025	As at March 31, 2024
Net Debt Equity Ratio	5.12	5.14
Operating Margin %	39.82%	38.27%
Net Profit Margin%	32.66%	31.21%
Gross Credit Impaired Assets Ratio %	1.94%	3.34%
Net Credit Impaired Assets Ratio %	0.39%	0.85%
CRAR%	22.08%	25.41%
Return on Net Worth (%)	20.40%	19.49%

iii. Sanction/Disbursement (Excluding RDSS/IPDS/R-APDRP)

During FY 2024-25, your Company sanctioned loans amounting to H3,61,068 crore, thereby registering an increase of 28%
over the previous year's sanctioned amount of H2,82,269 crore. Loans disbursed during FY 2024-25 were H1,68,265 crore,
showing an increase of 32% over the previous year's disbursed amount of H1,27,656 crore.

The details of sector wise sanctions and disbursements are provided in below:

 

B. Social & Governance Leadership

 

SECTOR	FY 2024-25		FY 2023-24
Category	Sanctions	Disbursement	Sanctions	Disbursements
State sector	1,35,158	1,15,244	2,16,167	96,349
Central sector	20,049	3,789	14,648	1,459
Joint sector	76,072	5,300	8,804	5,855
Private sector	1,29,789	43,932	42,650	23,993
Total	3,61,068	1,68,265	2,82,269	1,27,656

 

Award	Awarded By	Recognition
Best Innovation in CSR Practices	ASSOCHAM	For leveraging assistive technologies to support social inclusion and upliftment of Divyangjan.
Indian CSR One Decade Celebration Award	Â	Celebrates a decade of impactful CSR interventions in the areas of education, health, sanitation, and community welfare.
Governance Now PSU Award	Governance Now	Conferred for excellence in Financial Performance and Learning & Development, showcasing robust institutional governance.
Rajbhasha Niti Shreshth Karyanwayan Protsahan Puraskar	Ministry of Home Affairs (Rajbhasha Vibhag)	Recognizes exemplary implementation of the Official Language Policy in promoting Hindi usage in official communication.

 

C. Financial & Institutional Excellence

 

iv. Infrastructure Financing

As on March 31, 2025, PFC has sanctioned H84,433 crore and disbursed H12,534 crore.
Summary of loans sanctioned and disbursed to Logistic & Infrastructure sector are as below:

 

Discipline	Sanction	Disbursement
Basic Infrastructure	773	0
Desalination & Water Infrastructure	163.6	0
Ethanol and Associated Infra	318.2	167
Logistics Associated Infrastructure	76.5	75
Petroleum and Natural Gas Infra.	4,011.8	986
Port	32,110.5	4,518
Refinery and Petrochemical Complex	3,037.5	3,005
Roads and Highways	43,941.8	3,783
Total	84,433	12,534

 

Award	Awarded By	Recognition
SCOPE Meritorious Award for Best Financial Institution	Standing Conference of Public Enterprises (SCOPE)	Prestigious recognition of PFC's leadership as a high-performing financial institution in the infrastructure sector.
Leading Infrastructure Finance Company Award	Dun & Bradstreet	Acknowledges PFC's pioneering role in power and allied infrastructure financing in India.
Corporate Bond Market Award 2024	ASSOCHAM	Recognizes PFC's leadership in deepening India's corporate bond market and expanding capital availability for long-term infrastructure projects.

 

v. Renewable Energy

As on March 31, 2025, PFC has Sanctioned around H1,13,800 crore and Disbursed H64,702 crore to Renewable Energy Projects.
Summary of loans sanctioned and disbursed to Renewable energy projects are as below:

 

Discipline	Sanction	Disbursement
Solar	56,037	29,370
Wind	35,968	24,934
WTE	2,469	1,542
Small Hydro (<=25 MW)	2,046	1,570
Bagasse	859	859
Biomass	1,264	149
Hybrid (Solar & Wind)	15,157	6,278
Total	1,13,800	64,702

 

6. Awards & Recognition

Your Company celebrated excellence across Environmental, Social, Governance & Financial Leadership during FY 2024-25.
A. Environmental Excellence

 

Award	Awarded By	Recognition
Outlook CSR Award - Non-Fossil Fuel Business Category	Outlook Planet Sustainability Summit 2024	For outstanding CSR initiative in clean energy promotion and sustainable development.
REINVEST Award	Ministry of New and Renewable Energy (MNRE)	For significant contributions to renewable energy infrastructure financing and transition leadership.
Swachhta Pakhwada Award 2024 - 2nd Prize	Ministry of Power, Government of India	For impactful implementation of cleanliness campaigns under Swachh Bharat Abhiyan.

 

7. Events, Outreach & Brand Engagement

In FY 2024-25, your Company significantly enhanced its
stakeholder outreach and public engagement through a
series of high-impact events, exhibitions, and awareness
campaigns which has showcased that your company is a
responsible, future-ready public sector leader, blending
innovation with impact, and brand building with nation¬
building. These initiatives were not only aligned with
PFC's vision of promoting sustainability, innovation, and
inclusivity but also strategically amplified its presence
across media and public platforms.

Through these efforts, PFC successfully advanced
its image.

1. Central Sector Meet

In the backdrop of Government of India's vision to make
India the third-largest economy globally by 2030, your
company organized a Meet for Central Sector Entities.
In the meet, the importance and role played by Central
Sector Entities under various Ministries in the country
through investments in the infrastructure projects was
emphasized. In this regard, PFC has a dedicated team and
focused approach towards financing capex requirements
of these entities. PFC also understands the nuances of
different types of infrastructure projects and is fully
geared up to meet the challenges and cater to the varying
requirements of each project.

The meet provided a platform for building stronger ties
and relationships, so that the collaborative efforts of

 

these entities can propel India in the journey of becoming
the third-largest economy globally by 2030.

2.    Investor engagement through Annual Meet
2025

PFC continues to actively engage with the investor
community through regular and transparent
communication. As part of these efforts, PFC organised
its Annual Investor Meet for FY 2024-25 to facilitate in¬
person engagement with investors and analysts. During
the meet, senior management presented the Company's
financial performance, shared key business updates,
provided insights into the power sector outlook, and
addressed investor queries. Such engagements support
transparent, timely, and two-way communication with
existing and potential investors, enhancing PFC's visibility
and reinforcing stakeholder confidence.

3.    Youth Engagement through Energy
Conservation Campaigns

Your Company organized the State Level Painting
Competition on Energy Conservation under the aegis of
the Bureau of Energy Efficiency (BEE), targeting school
students in the Delhi-NCR region. The competition aimed
to sensitize youth towards energy conservation and
climate awareness. The award ceremony, graced by senior
officials from PFC and BEE, received strong visibility across
educational and public outreach channels, reinforcing the
organization's alignment with national sustainability goals.

 

4.    Exhibition Participation & Sectoral
Showcases

Your Company maintained a prominent presence at key
sectoral exhibitions during the year:

•    GRIDCON 2025: PFC showcased its leadership in grid
modernisation, SCADA automation, and green finance
at a dedicated exhibition stall.

•    India Energy Week 2025: PFC's stall, hosted within the
Ministry of Power Pavilion, highlighted cutting-edge
intelligent metering systems and digital grid solutions.
These exhibits emphasized PFC's commitment to
technological excellence and energy efficiency.

•    ELECRAMA 2025: PFC actively engaged with key
themes of smart energy and decarbonisation through
coordinated social media and partner participation.

5.    Sports Engagement - Hockey India
Sponsorship

PFC served as the Title Sponsor for the India vs Germany
Bilateral Hockey Series held in October 2024 at Major
Dhyan Chand National Stadium, New Delhi. This landmark
event marked the return of international hockey to the
capital after a decade. PFC enabled free digital ticketing for
the public, promoting national sport and social inclusion.
The event significantly enhanced PFC's brand visibility and
stakeholder goodwill.

6.    Swachhata Hi Seva Campaign

As part of the Government of India's nationwide cleanliness
drive, PFC organized comprehensive Swachhata activities
in Delhi. Employees actively participated in cleaning
public areas such as Shivaji Bridge Railway Station and
Connaught Place. Hygiene kits were distributed to vendors
and sanitation workers. These activities reinforced the
corporation's commitment to civic responsibility and
sustainable urban development.

7.    Strategic Social Media Impact

PFC's digital communication strategy played a critical
role in amplifying the impact of these initiatives.
Highlights include:

8. Borrowings

i. Borrowings from Domestic Market

During the FY 2024-25, an amount of H84,609 crore was
mobilized through domestic market as per the details
given below:-

(H in crore)

Private Placement of Unsecured Taxable Bonds	50,078
Term Loan from Banks & FIs	26,444
Commercial Paper	5,987
Public Issue of Secured Taxable Bonds -
54EC Capital Gain Tax Exemption Bonds	2100
Total	84,609

Cash Credit/ Overdraft Facilities

For day to day operations, your company continued
to follow prudent strategies for optimum utilization of
fund based resources. To hedge any financial liquidity
bottlenecks, ample credit lines to the tune of H15,750
crore were sanctioned as on March 31, 2025 by various
scheduled commercial banks to the company for short
term funding.

LCR Compliance

RBI has prescribed Liquidity Coverage Ratio (LCR)
framework for NBFCs. These guidelines aims for
maintenance of a liquidity buffer in terms of LCR by
ensuring that NBFCs have sufficient High Quality Liquid
Asset (HQLA) to survive any acute liquidity stress scenario
lasting for next 30 days.

PFC is maintaining 100% of the HQLA requirement to
cover net cash outflows over the next 30 calendar days, in
compliance with the RBI guidelines on LCR. HQLA stood at
H2,280.88 crore (LCR Ratio 140.64%) as on March 31, 2025.

ii. External Borrowings

The foreign currency denominated borrowings during
FY 2024-25 are as follows:

1. Foreign Currency Term Loans	21,096.66
2. Short Term Loans in Foreign Currency	5,811.93
TOTAL	26,908.59

Green Bonds

PFC established its Green Bond Framework in October,
2017 as approved by Climate Bonds Initiative (CBI), London,
UK. The Green Bond framework for funding renewable

projects (viz. Solar and Wind) has been updated in August,
2021 to align with the latest set of guidelines namely
Climate Bonds Standard version 3.0, the Green Bond
Principles (GBP), 2021 issued by the International Capital
Markets Association (ICMA). In this context, an agreement
was executed between PFC & Climate Bonds Initiative.

The Green Bonds issued by PFC:

Particulars	Amount	Listed on
First USD Green bond	US $400 million	London Stock Exchange's
issued in December,	(H2,575 crore)	new International
2017 at a coupon of	Â	Securities Market
3.75%	Â	(ISM), Singapore Stock Exchange and India INX
First Euro Green	EUR 300 million	Singapore Stock
Bonds issued in	(H2,597 crore)	Exchange, India INX and
September, 2021 at a coupon of 1.84%	Â	NSE IFSC

Annual update to the holders of the bonds, as required
under the PFC's Green bond framework is as follows:-

The funds raised under Green bonds have been utilized
to finance renewable energy projects as per the "Eligible
Projects" under PFC's Green Bond Framework. As at
March 31, 2025, outstanding loan balances of Solar & Wind
energy projects funded by PFC are H22,118 crore & H16,971

crore respectively. The total capacity of Solar & Wind
energy projects funded by PFC and which are outstanding
as on March 31, 2025 is 14,670 MW. Accordingly, PFC green
bond portfolio is more than the amount raised through
issue of green bonds.

Externally Aided Projects

Outstanding balance from multilateral/ bilateral agencies

as at March 31 2025 is as follows

Source	Amount
KfW	EUR 71,646,3111
Credit National	EUR 311,498
ADB	USD 3,432,302

* Includes EUR 58,747,000.56 disbursed by KfW in FY 2022-23 and Eur
17,763,829.26 in FY 2023-24 under Discom Investment Facility (ODA
Loan- Without Govt. Guarantee).

9. Domestic and International Credit Rating

Your company has been assigned the highest ratings by
Domestic Credit Rating Agencies and Sovereign Rating by
International Credit Rating Agencies as at March 31, 2025.
Your Company believes that these credit ratings enables
us to develop strong relationship with our lenders and
borrow funds at competitive rates.

Credit Rating Overview

Domestic Credit Rating Agencies (Borrowing Programme)

 

r	1	Â	r	Â	Â	r	Â
CRISIL	Â	Â	ICRA	Â	Â	CARE	Â
Long Term Rating	Â	Â	Long Term Rating	Â	Â	Long Term Rating	Â
CRISIL AAA	Â	Â	ICRA AAA	Â	Â	CARE AAA	Â
Short Term Rating	Â	Â	Short Term Rating	Â	Â	Short Term Rating	Â
CRISIL A1 + L	J	Â	ICRA A1+	A	Â	CARE A1+ L	J
International Credit Rating Agencies (Issuer Rating)						Â	Â
Fitch Ratings	r ^ Moody's			Â		Â	Â
Long Term Rating	Long Term Rating			Â		Â	Â
BBB-	Baa3			Â		Â	Â
L_J	Â	Â	_A	Â		Â	Â

 

10. Memorandum of Understanding with Govt.
of India

Your Company enters into a Memorandum of
Understanding (MoU) with the Ministry of Power (MoP)
every year wherein your Company is evaluated on various
financial and non-financial parameters. The performance
of your company in this regard is as follows:

•    Consistent Rating: 'Excellent' by Government of India

•    FY 2023-24: 'Excellent' Rating Received

•    FY 2024-25: Rating Awaited

In FY 2024-25, the achievement of your Company on some
of the key MoU parameters (on standalone basis) has
been as under:

MoU Parameter	Achievement
Revenue from Operations	H53,099.22 crore
Loans Disbursed to Total Funds Available	99.99%
Overdue loans to Total Loans	0.06%
NPA to Total Loans	0.39%
Cost of raising funds through Bonds as compared to similarly rated CPSEs	(-)11.94 bps

11. Subsidiaries

A. REC Limited

Your company is the promoter & holding company of
REC, with shareholding of 52.63% in its paid up equity
share capital.

REC is also a Systemically Important (Non-Deposit
Accepting or Holding) Non-Banking Finance Company
(NBFC) registered with Reserve Bank of India (RBI) as
an Infrastructure Finance Company (IFC). Its business
activities involve financing projects in the complete
power sector value chain, be it generation, transmission
or distribution. REC provides financial assistance to state
electricity boards, state governments, central/state power
utilities, independent power producers, rural electric
cooperatives and private sector utilities.

Further, during the FY 2024-25, the total income of REC
was H55,979.62 crore vis-a-vis H47,571 crore in the previous
FY 2023-24 and the net profit earned by REC during
FY 2024-25 was H15,713.21 crore as against the corresponding
net profit of H14,019.21 crore for last FY 23-24.

The detailed operational and financial performance of
REC is available on its website i.e. www.recindia.nic.in

The following subsidiaries of REC as on March 31, 2025 are
also subsidiaries of PFC:

i.    REC Power Development & Consultancy Limited

ii.    Chandil Transmission Limited

iii.    Dumka Transmission Limited

iv.    Mandar Transmission Limited

v.    Koderma Transmission Limited

vi.    Luhri Power Transmission Limited

vii.    Shongtong Power Transmission Limited

viii.    Kankani Power Transmission Limited

ix.    Tuticorin Power Transmission Limited

x.    WRNES Talegaon Power Transmission Limited

xi.    Rajgarh III Power Transmission Limited

xii.    Jejuri Hinjewadi Power Transmission Limited

xiii.    Velgaon Power Transmission Limited

B. PFC Consulting Limited

PFC Consulting Limited (PFCCL) is a wholly owned
subsidiary of your company. It has been offering
consultancy support to the Power Sector. The Services
offered by PFCCL are broadly in the following areas:

•    Transaction Advisory: End-to-End solutions in
Transaction Advisory Services across different areas in
power sector (Selection of Sellers/Developers, Reform
& Restructuring, Independent Transmission Projects,
Privatization of Electricity Distribution in Union
Territories, Resolution Plan and RE-Bundling)

•    Project Development: Project Development &
implementation of various GoI initiatives (Ultra
Mega Power Projects, Lender's Independent
Engineer, Lender's Insurance Advisor, Setting up of
Manufacturing Zone for power and renewable energy
equipment, Subsea Cables)

•    PMA / PMC/ GoI Schemes: Project management &
change agents focusing on revamped solutions &
aiming for loss reduction (Revamped Distribution
Sector Scheme, Procurement of Power, DEEP
Portal, Coal Linkage Auction under SHAKTI Scheme,
Pilot Scheme, PRAAPTI Portal, Integrated Power
Development Scheme)

•    Smart Solutions: Smart solutions to improve
performance & processes, productivity & pro¬
active planning (Smart Metering, Energy Portfolio
Management)

•    Policy Formulation Support: Support to Government/
Regulators for formulation of Policies, Regulatory
framework and Guidelines & SBDs

•    Other Services: Strategy, Regulatory, Tariff Support,
fund mobilization and other aspects of power sector

Till date, consultancy services have been rendered by
PFCCL to its clients spread across India. The total no. of
projects/ assignments undertaken as on date are more
than 200.

Further, during the FY 2024-25, performance of PFCCL is
as follows:

Particulars	FY 2024-25	FY 2023-24
Total Income	298.14	267.07
Net Worth (as on March 31,	340.09	239.49
2025)	Â	Â
Net Profit	183.38	158.67

Your Company is designated by Ministry of Power (MoP)
as the 'Nodal Agency' for facilitating development of Ultra
Mega Power Projects and its wholly owned subsidiary i.e.
PFC Consulting Limited is the 'Bid Process Coordinator' for
Independent Transmission Projects.

As on March 31, 2025, the following subsidiaries of PFCCL
are also subsidiaries of PFC:

1.    Chhatarpur Transmission Limited

2.    Siot Transmission Limited

3.    Joda Barbil Transmission Limited

4.    Ramakanali B -Panagarh Transmission Limited

5.    Gola B -Ramgarh B Transmission Limited

6.    KPS III HVDC Transmission Limited

7.    Bhuj II Transmission Limited

8.    Angul Sundargarh Transmission Limited

9.    Bhadla and Bikaner Complex Transmission Limited

10.    Bhuj ICT Transmission Limited

11.    Kakinada I Transmission Limited

12.    Kandla GHA Transmission Limited

13.    MEL Power Transmission Limited

14.    NER Expansion Transmission Limited

15.    NES Dharashiv Transmission Limited

16.    NES Navi Mumbai Transmission Limited

17.    NES Pune East New Transmission Limited

18.    Raghanesda RE Transmission Limited

19.    Wahipora and Sallar Transmission Limited

C.    PFC Infra Finance IFSC Limited (PIFIL)

PFC Infra Finance IFSC Limited was incorporated on
February 11, 2024 as wholly-owned subsidiary of Power
Finance Corporation Limited. The Company received
approval from International Financial Services Centres
Authority (IFSCA) on October 10, 2024 to commence
business as Finance Company in IFSC GIFT City Gujarat.

Your Company is the first Govt. NBFC which has
established a subsidiary in the International Financial
Services Centre (IFSC) at GIFT City, Gujarat dedicated to
Power and Infrastructure Lending in foreign currency.
IFSC provides a unique platform to access global capital
and expertise, which will enable your Company to provide
even more efficient and innovative financing solutions to
the clients. PFC's entry into the IFSC shall open up new
business opportunities and establish its global presence.
This Company will focus on providing financial solutions
for infrastructure projects across various sectors,
including renewable energy.

D.    PFC Projects Limited (PPL)

PFC Projects Limited (PPL), formerly Coastal Karnataka
Power Ltd., was established as a wholly owned subsidiary
of PFC for developing an Ultra Mega Power Project in
Karnataka. In 2022, its name and charter were amended
to allow participation in Lenders' Backed Resolution Plans
(LbRP).

PPL partnered with REC Ltd. and others to submit a
resolution plan under CIRP for Lanco Amarkantak Power
Ltd. (LAPL). The consortium was initially declared the
Successful Resolution Applicant (SRA), but later opted out
of the challenge process initiated by NCLT, on the condition
that incurred costs be reimbursed—which was done.

Later, PPL submitted an EOI for CIRP of two KSK Mahanadi
Power SPVs, but PFC and REC couldn't proceed due to the
absence of DIPAM approval. DIPAM, via its letter dated

December 21, 2023, advised against LbRPs citing financial
and risk concerns.

As no future business is expected, the Board of PPL
approved striking off the company's name from the
ROC under the Companies Act, subject to approvals and
settlement of liabilities.

E. Other Subsidiaries Established for
Development of UMPP'S:

1.    Orissa Integrated Power Limited

2.    Coastal Tamil Nadu Power Limited

3.    Sakhigopal Integrated Power Company Limited

4.    Ghogarpalli Integrated Power Company Limited

5.    Deoghar Mega Power Limited

6.    Cheyyur Infra Limited

7.    Odisha Infrapower Limited

8.    Deoghar Infra Limited

9.    Bihar Infrapower Limited

10.    Bihar Mega Power Limited

11.    Jharkhand Infrapower Limited

I n view of the country making energy transition from
fossil to non-fossil fuel, it was deliberated in MoP to close
the UMPPs. MoP directed PFC to take necessary action for
closure of UMPPs. Accordingly, PFC/PFCCL has initiated the
process for closure of SPV's established for development
of UMPPs.

12. Building Resilience: Our Multi-Layered Risk
Approach

i. Asset Liability Management

Your Company has implemented a comprehensive and
robust Asset Liability Management (ALM) Policy, aligned
with the Reserve Bank of India (RBI) guidelines. The policy
is designed to ensure focused and proactive management
of liquidity and interest rate risks as follows:

Risk Monitoring Methodologies:

1.    Liquidity Risk: Monitored using the cash flow
approach to assess the timing of cash inflows
and outflows.

2.    Interest Rate Risk: Measured through traditional gap
analysis, as prescribed by the RBI, to understand
mismatches across various time buckets.

Measurement and monitoring of Liquidity risk is done
through cash flow approach; and for Interest rate risk,
it is done through traditional gap analysis technique
as detailed in RBI guidelines. Such analysis is made on
periodical basis in various time buckets and is used for
critical decisions regarding the time, volume and maturity
profile of the borrowings and creation of mix of assets and
liabilities in terms of time period (short, medium and long¬
term) and in terms of fixed and floating interest rates. The
details of the asset liability management maturity pattern
are given at Note No. 53.1 of the Notes to Accounts of
the Standalone Financial statements forming part of this
Annual Report.

Financial Assistance under RDSS:

For States allocated to PFC, projects for loss reduction (including household electrification works) and smart metering have
been sanctioned for 24 Distribution Utilities across 13 States. Details as on March 31, 2025 are tabulated below:

 

Project	Approved Cost	GoI Component (GBS)	GoI Grant Disbursement
Metering	56,887	10,435	6
Power Distribution including Household electrification	65,182	40,323	8,199
Total	1,22,069	50,758	8,205

^Ain addition, MoP has also disbursed H198 crore for other than the Project activities viz. nodal agency fee (H171 crore), training & capacity building etc.

 

ii.    Foreign Currency Risk Management

Your Company has put in place "Policy for Management
of Risks on Foreign Currency Borrowings" to manage
risks associated with foreign currency borrowings. The
Company enters into hedging transactions to cover
exchange rate and interest rate risk through various
instruments like forwards, options and swaps.

As on March 31, 2025, the total o/s foreign currency
liabilities stand at USD eqv 10,415 mn, and the borrowings
denominated in different currencies are USD 7,238 mn,
JPY 2,86,367 mn, EUR 1,023 mn & GBP 135 mn. Out of the
total foreign currency borrowing portfolio 95% is hedged

i.e. USD eqv 9,906 mn. Also, 96% of the FC portfolio with
residual maturity up to 5 years is hedged.

iii.    Information Security Risk Management

Your company has established a Board level "Information
Technology Strategy Committee" (ITSC) as per the RBI
Master Direction on Information Technology Governance,
Risk, Controls and Assurance Practices for the NBFC.
ITSC ensures that the IT Strategy aligns with the overall
strategy of the organization towards accomplishment
of its business objectives. ITSC is headed by an
Independent Director.

Further, your company also has in place an Information
Security Committee (ISC) headed by Chief Risk Officer
(CRO) under the oversight of ITSC for managing information
security, development of information security policies,
implementation of policies, standards and procedures.

PFC has also nominated a Chief Information Security
Officer (CISO) for monitoring information security strategy
and ensuring compliance to the extant regulatory/
statutory instructions on information/ cyber security.

In compliance with RBI Master Direction, PFC has
implemented BoD approved IT policy covering the
following security related components:

i.    Physical and Environmental Security Policy

ii.    Access Control Policy

iii.    IT Cyber Security Policy

iv.    Business Continuity Policy

iv.    Integrated Enterprise Wide Risk
Management

In order to manage risks faced by your Company, it has put
in place an Integrated Enterprise Wide Risk Management
Policy (IRM policy). For implementation of the policy,
your Company has constituted the Risk Management
Committee. Under the IRM policy, the Company has to
identify the principal risks which may have an impact on
its profitability/revenues. In this regard, the Company has
identified significant risk parameters which arise from the

Company's business model and from its use of financial
instruments. These risk parameters cover the major
operational risks, financial risks, market risks, regulatory
risks etc. faced by the Company and are regularly assessed
as per the Risk Assessment Criteria. Further, the Company
also maintains a risk register which serves as repository of
relevant information related to various risks.

13. Catalyzing Power Sector Reforms: Our
Government Partnership

i. Revamped Distribution Sector Scheme
(RDSS) & Integrated Power Development
Scheme (with Restructured Accelerated
Power Development and Reform
Programme (R-APDRP) Subsumed in IT)

The Company is involved in various GoI programs for
the power sector including acting as the Nodal Agency
for operationalization and implementation of Revamped
Distribution Sector Scheme (RDSS) launched by Govt.
of India in July, 2021. PFC was also the designated nodal
agency for operationalization of IPDS and R-APDRP
Schemes. Both of the Schemes have been Sunset in
March, 2022.

Revamped Distribution Sector Scheme
(RDSS)

MoP/ GoI launched the "Revamped Distribution Sector
Scheme (RDSS) - A Reforms-based and Results-linked,
Distribution Sector Scheme" in July 2021 to improve the
operational efficiencies and financial sustainability of
DISCOMs, by providing financial assistance to DISCOMs for
upgradation of the Distribution Infrastructure and Prepaid
Smart Metering & System Metering based on meeting
pre-qualifying criteria and achieving basic minimum
benchmarks in reforms. PFC and our subsidiary REC are
the designated nodal agencies for operationalization of
the Scheme, as per RDSS guidelines and directions of
inter-ministerial Monitoring Committee/ MoP from time
to time.

Nodal agencies are eligible for 0.5% of the sum total of
the Gross Budgetary Support (GBS) component of the
various projects approved by Monitoring Committee as
its fee. PFC is the nodal agency for 17 States/ UTs under
the Scheme. The present implementation period of the
Scheme is 5 Years (FY 2021 -22 to FY 2025-26). The Scheme
has an outlay of H3,03,758 crore. with an estimated
gross budgetary support of H97,631 crore. from the
GoI. RDSS also envisages electrification of balance/ left-
out households.

During April 1, 2022 to June 30, 2025, PFC incurred an
expenditure of H31.50 crore under various heads like
Project Coordinators, Manpower & Consultant, Site Office,
Website management etc. maintained under RDSS.

Role of PFC in the implementation of RDSS Scheme and
other activities/ Initiatives under RDSS

The wide range of activities being performed by PFC under
RDSS and for other allied Schemes of GoI are listed below:

a.    Core Activities for RDSS

•    Overall facilitation and Program management
including appraisal of projects, quality monitoring,
monitoring compliance of scheme guidelines,
resolving queries of DISCOMs, coordination with
MoP/ CEA etc.

•    Annual result evaluation framework of DISCOMs
including monitoring of regulatory parameters
e.g. subsidy accounting, Govt. dues, analysis of
tariff orders, analysis of sales data etc.

•    Capacity building/ training programme for skills
development of DISCOMs' employees. 450 training
programs have been conducted through NPTI,
DISCOM institutes and other agencies covering
~13,350 DISCOM personnel including 4,300 days
of training imparted to women employees under
RDSS cumulatively so far.

b.    Supporting Activities for RDSS/ Allied

programs of GoI

•    Counterpart funding - PFC is supporting
the counterpart (CP) funding @ 40% (10% for
special category States) of the project cost for
Loss Reduction (LR) projects under RDSS. PFC
has so far sanctioned CP loans of H18,516 crore
and disbursed H2,557 crore for LR works under
RDSS. To support the RDSS Program of GoI, PFC
is offering special interest rate to DISCOMs for
RDSS CP loans. In addition, PFC is also extending
interim loans to DISCOMs in case of any paucity
of GoI funds, to maintain adequate fund flow
for project implementation and has sanctioned
H20,972 crore and disbursed H1,186 crore towards
interim loans.

•    Implementation of Smart Distribution Network
pilot projects in selected cities across India.

•    Ensuring Household electrification for
remotest corner of the Country - Sanction

and monitoring of electrification of over 80,000
Particularly Vulnerable Tribal Groups (PVTG)
households (PFC States) under PM JANMAN
Program and 65,000 identified households; 3,000
public institutions across ~9,000 villages under
DA-JGUA Scheme being funded under RDSS.

•    Facilitation with DISCOMs for Projects covered
under National Infrastructure Pipeline (NIP); Ease
of Living (EoL) parameters; PM-KUSUM; PM-AJAY;
PM Surya Ghar Yojana; Border area electrification;
left-out household electrification; supply to BSNL
Telecom towers in remote areas etc.

c. Other Concurrent Activities

•    PFC is supporting the States by preparing
Model Bidding Documents for Automation
and ERP projects under RDSS; monitoring of
implementation of SCADA systems; developing
National SCADA Resource Centre (NSRC);
development of Integrated web portal for various
government Schemes including RDSS; tie-up with
multilateral agencies viz. ADB, KfW for funding
under RDSS and FCDO, USAID, GiZ etc. for training
& capacity building of DISCOM personnel.

•    PFC was instrumental in development of Digital
Utility Manager (DUM) training program to
enhance the skills of power sector professionals
and utility employees in adopting emerging
digital technologies. This self-paced course was
made available on the iGOT Karmayogi Portal in
March, 2025 and is designed to help professionals
stay competitive and resilient amidst the evolving
energy transition. The program consists of 16 key
modules covering a wide range of topics.

•    As part of Accelerating Smart Power & Renewable
Energy in India (ASPIRE) program supported by
the UK Government's Foreign, Commonwealth
& Development Office (FCDO), PFC also took
the initiative to assess the composition &
participation rate of women in the workforce of
Power Distribution sector and published a report
on Gender Equity in Power Distribution sector.

Impact of RDSS in Power Distribution Sector

Various regulatory as well as corporate governance
related reform measures being implemented in the
DISCOMs (interalia including RDSS), have started showing
desired results:

•    Tariff orders are being issued regularly.

•    Reduction in Average AT&C loss of distribution utilities
in country from 22.3% in FY 21 to 16.3% in FY 24.

•    The gap between ACS and ARR (cash basis) has
improved from H0.92 per KwH in FY 21 to H0.39 per KwH
in FY 24.

•    Timely payments of subsidy and Govt. department
dues by State Governments have contributed to
reduction of ACS-ARR Gap.

•    Quarterly accounts are now being submitted regularly.

•    Scheme also places strong emphasis on enhancing
consumer satisfaction with improvement in service
quality, leading to increased consumer trust and loyalty.

ii.    Late Payment Surcharge Rule, 2022

Ministry of Power (MoP) vide Gazette Notification dated
June 3, 2022, notified "The Electricity (Late Payment
Surcharge and Related Matters) Rules, 2022" (LPS Rules).
Your Company has been designated by MoP as the Nodal
Agency for implementation of LPS Rules, 2022. PFC shall be
responsible for all the activities related to implementation
of the said Rules including regular review and monitoring.

With the implementation of Electricity (LPS and Related
Matters) Rules, 2022, remarkable improvement has been
seen in recovery of outstanding dues of Suppliers including
Generating Companies, Transmission Companies and
Traders. Against legacy dues of H1,39,947 crore as on
June 03, 2022, 13 States/UTs have paid instalment of
H1,24,768 crore (35 EMIs) upto June 2025 i.e. 90% of total
legacy dues. Further, 20 States/ UTs reported to have no
outstanding dues as on June 03, 2022. Now the legacy dues
(overdues) have reduced from H1,39,947 crore to H13,698
crore and as on date there is no default in payment of
instalments for legacy dues by States.

In view of provision of regulation under LPS Rules, 2022,
the Distribution companies are paying their current dues
in time. Since implementation of the rule, as on June 10,
2025, total bills amounting to H13,77,668 crore have been
settled against total billed amount of H14,58,480 crore
from May 2022(excluding EMI Payments against legacy
dues and including Disputed Invoices).

iii.    Independent Transmission Projects (ITPs)

To promote private investment and accelerate the
growth of India's transmission infrastructure, the
Ministry of Power has implemented a Tariff-Based
Competitive Bidding (TBCB). Projects are prepared up to
key milestones—including surveys, route planning, land
acquisition, and statutory clearances before being offered
to investors.

As on March 31, 2025, 101 SPVs were established for
transmission development: 89 for inter-state and 12 for
intra-state projects. 2 SPVs were set up by your company,
while 99 were established by PFC Consulting Ltd.

Significant Developments

Further, during the FY 2024-25, following SPVs
established for development of transmission projects
have been transferred to the successful bidders selected
through TBCB:

1.    Barmer I Transmission Limited

2.    Beawar - Mandsaur Transmission Limited

3.    Bhadla-III & Bikaner-III Transmission Limited

4.    Jamnagar Transmission Limited

5.    Khavda PS1 And 3 Transmission Limited

6.    Paradeep Transmission Limited

7.    Pune- III Transmission Limited

8.    Sirohi Transmission Limited

9.    South Olpad Transmission Limited

10.    Navinal Transmission Limited

11.    Mundra I Transmission Limited

12.    Kurnool III PS RE Transmission Limited

13.    Kudankulam ISTS Transmission Limited

14.    Jam Khambhaliya Transmission Limited

15.    Gadag II and Koppal II Transmission Limited

16.    Fatehgarh II and Barmer I PS Transmission Limited

17.    Chitradurga Bellary REZ Transmission Limited

18.    Bijapur Rez Transmission Limited

19.    Anantapur II REZ Transmission Limited

As on March 31,2025, out of 99 SPVs, 74 SPVs (69 are related
to inter-state transmission scheme and 5 are related to
intra-state transmission scheme) were transferred to
the successful bidders. Further, due to de-notification of
schemes by MoP, 5 SPVs were closed.

iv. Ultra Mega Power Projects (UMPPs)

Development of Ultra Mega Power Projects (UMPPs),
with a capacity of about 4,000 MW each, adopting super
critical technology is the initiative of MoP, Government of
India for which your Company has been designated as the
'Nodal Agency' and Central Electricity Authority (CEA) as
the Technical Partner by MoP.

Your Company incorporated a total of 19 Special Purpose
Vehicles (SPVs) as its wholly-owned subsidiaries for
development of UMPPs. Out of these, 4 UMPPs are
awarded and 7 UMPPs are closed.

I n view of the country making energy transition from
fossil to non-fossil fuel, it was deliberated in MoP to close
the UMPPs. MoP directed PFC to take necessary action for
closure of UMPPs. Accordingly, PFC/PFCCL has initiated the
process for closure of SPV's established for development
of UMPPs.

14. Other Major Investments

i. PTC India Limited

PTC India Limited (PTC) was jointly promoted by Power
Grid, NTPC, NHPC and PFC. PFC has invested H12 crore

in PTC which is 4.05% of PTC's total equity. PTC is the
leading provider of power trading solutions in India, a
Government of India initiated public-private partnership,
whose primary focus is to develop a commercially vibrant
power market in the country.

ii.    Power Exchange India Limited

Power Exchange India Limited (PXIL) is India's first
institutionally promoted Power Exchange that provides
innovative and credible solutions to transform the Indian
Power Markets. PXIL, provides nation-wide, electronic
exchange for trading of power and handles power trading
and transmission clearance, simultaneously, it provides
transparent, neutral and efficient electronic platform.
PXIL offers various products such as Day Ahead, Day
Ahead Contingency, Any Day, Intra Day and Weekly
Contracts. PXIL provides trading platform for Renewable
Energy Certificates. PFC's investment in equity shares of
PXIL as on March 31, 2025 is H5.06 crore. PFC's investment
value as on March 31, 2024 is H4.78 crore.

iii.    Energy Efficiency Services Limited

Energy Efficiency Services Limited (EESL) was incorporated
on December 10, 2009. EESL was jointly promoted by Power
Grid, NTPC, REC and PFC with 25% equity stake each for
implementation of Energy Efficiency projects in India and
abroad. The shareholding of your company (along with its
subsidiary REC) as on March 31, 2025 is 21.49%.

iv.    NHPC Limited

PFC has initially invested 26,05,42,051 equity shares of
NHPC Limited at the rate of H21.78 per share (including
securities transaction tax, brokerage and other charges)
amounting to H567.49 crore in April 2016 during
disinvestment by GoI through offer for sale route. PFC has
sold 15,78,62,576 number of equities shares till March 31,
2025. As on March 31,2025 PFC holds 10,26,79,475 shares of
NHPC Limited valued at H844.03 crore. NHPC has reported
profit after tax of H3083.98 crore for the FY 2024-25
as compared to profit after tax of H3,721.80 crore for
FY 2023-24.

v.    Coal India Limited

PFC has invested 1,39,64,530 equity shares of Coal
India Limited at the rate of H358.58 per share (including
securities transaction tax, brokerage and other charges)
amounting to H500.74 crore in February 2015 through
offer for sale route. As on March 31, 2025, PFC holds
1,39,64,530 equity shares of Coal India Limited valued
at H556.07 crore. CIL has reported profit after tax of
H17,016.56 crore for the FY 2024-25 as compared to Profit
after Tax of H15,766.83 crore for FY 2023-24.

15. Initiatives for Monitoring DISCOM'S
Performance

i. Annual Integrated Rating of Power
Distribution Utilities

Ministry of Power, as part of its reform initiatives, has put
in place an Integrated Rating Framework to evaluate the

performance of power distribution utilities. The primary
objective of the Integrated Rating exercise is to grade all
utilities in the power distribution sector based on their
financial performance and their ability to sustain the
performance over time. Private Distribution Utilities and
Power Departments are also included to provide complete
sectoral coverage.

The rating framework objectively evaluates the
performance of distribution utilities across various
parameters broadly classified under i) Financial
Sustainability ii) Performance Excellence and iii) External
Environment. For Power Departments, a subset of metrics
with modified weightages has been adopted from the
overall methodology to ensure relevance and fairness
in assessment.

The ratings were carried out by Deloitte Touche Tohmatsu
India LLP, a reputed consulting firm, and were co-ordinated
by your Company. These ratings serve as valuable
diagnostic tools in the hands of the State Governments
as well as Utilities to leverage their strengths and address
areas requiring improvements so as to improve their
operational efficiency and financial sustainability.

The Thirteenth Integrated Ratings for FY 2023-24,
covering 63 utilities across the country, were released by
the Hon'ble Union Minister of Power and Housing & Urban
Affairs on February 20, 2025.

ii.    Annual Performance Report of Power Utilities

PFC has been publishing the Report on Performance of
Power Utilities annually. The Report covers State Power
Utilities in all states and UTs and major private distribution
companies, offering a comprehensive insight into the
Indian power sector. The Report covers a range of key
financial and operational parameters such as profitability,
gap between average cost of supply and average
revenue, net worth, receivables, payables, AT&C losses
and consumption pattern of the sector at utility, state
and national level. The Report is part of PFC's effort to
provide a reliable database on the performance of power
utilities offering critical inputs for policy interventions
and monitoring the progress of various GoI schemes in
the power sector. The Report for FY 2023-24 has been
published in May 2025.

iii.    Categorization of Utilities

For purposes of funding, your Company classifies
State Power Generation and Transmission entities into
A++, A+, A, B, C and D categories. The categorization
(biannually) of State Power Generation and Transmission
entities is arrived based on the evaluation of entity's
performance against specific parameters covering
operational & financial performance including regulatory
environment, availability of audited accounts, etc. as per
categorization policy.

With respect to State Power Distribution entities (including
PDs/entities with integrated operations), your Company's
categorization policy provides for adoption of MoP's

Integrated Ratings by aligning such ratings/grading with
PFC's standard categories of A+, A, B, C and D.

The categorization of Borrowers in the Logistics and Non¬
Power Infrastructure sector is carried out on the basis of
recommendations of the Internal Committee considering
the strengths and weaknesses of the project.

The categorization enables PFC to determine pricing of
loans and stipulation of security to the state power entities.

16. Right to Information: Empowering Citizens
Through Transparent Communication

The Right to Information (RTI) under the Right to
Information Act, 2005 ("RTI Act") is a constitutional right
that promotes transparency, accountability, and citizen
empowerment. It plays a pivotal role in ensuring that
public authorities are answerable for their decisions and
actions, while also enabling citizens, journalists, and civil
society to engage more meaningfully in governance.

The RTI Act empowers individuals with the right to
access information held by public authorities, subject to
certain exceptions. The Preamble of the Act highlights
its purpose: to promote transparency and accountability
in the working of every public authority through access
to information.

Power Finance Corporation (PFC) has put in place a robust
mechanism for the effective implementation of the RTI
Act. A dedicated Public Information Officer (PIO) and a
First Appellate Authority (FAA-RTI) have been appointed
at the company's registered office to manage information
requests. PFC also proactively publishes key information
and disclosures on its official website www.pfcindia.co.in.
in line with statutory requirements.

Between April 1, 2024, and March 31, 2025, PFC received
96 RTI applications, all of which were processed and
responded to within the stipulated timeframes. The
company also ensured timely filing of RTI Quarterly
Returns through the Central Information Commission's
(CIC) online portal.

In furtherance of compliance with Section 4 of the RTI Act,
the Department of Personnel & Training (DoPT), through
its Office Memorandum No. 1/6/2011-IR dated April 15,
2013, issued specific guidelines regarding:

•    Proactive disclosure under Section 4;

•    Digital publication of information;

•    Enhanced clarity in disclosures under Section 4(1)
(b); and

•    Establishment of a compliance framework for
proactive disclosure.

PFC has fully implemented these guidelines and made
all necessary disclosures available on its website.
Additionally, PFC is integrated with the RTI Online Portal
of the Government of India (https://rtionline.gov.in). This
portal allows Indian citizens to file RTI applications and
first appeals digitally, with payments accepted via SBI

internet banking, credit/debit cards (Visa, MasterCard),
and RuPay cards.

17.    Corporate Social Responsibility - Driving
Social Progress

PFC has formulated its CSR Policy in line with Section 135
of the Companies Act, 2013 and the Companies (CSR)
Rules, 2014 (as amended from time to time) and DPE
guidelines issued from time to time. The aim of PFC's
Corporate Social Responsibility Policy (CSR Policy) is to
ensure that the Company becomes a socially responsible
corporate entity committed to improving the quality of life
of society at large by undertaking projects for Sustainable
Development, mainly focusing on Health, Education and
Energy needs of the society.

To oversee the activities of CSR, PFC has in place a
Board level CSR Committee of Directors headed by an
Independent Director. Every year CSR Annual Action Plan
and Budget are recommended by CSR Committee and
approved by the Board. Third party impact assessment
agencies are being engaged to assess the benefit/outcome
of the projects.

PFC has implemented wide range of activities throughout
the Country in the field of Environment Sustainability,
Healthcare, Education, PM Internship, Rural Development,
contribution to Swachh Bharat Kosh and other areas as
specified under Schedule VII of the Companies Act, 2013.

The CSR Report under Companies (CSR Policy), Rules is
annexed herewith.

18.    Investing in our People: Training &
Development

a. Training & Development and Capacity
Building

Investing in employee capacity building is crucial for
achieving our strategic objectives and maintaining
a competitive edge. During FY 2024-25, the focus on
conducting customised programs was maintained
to ensure specific skill development aligned with the
corporate goals.

The programs on critical areas including Environmental,
Social and Governance (ESG), AML, KYC, CFT, General
Management Programs, Stressed Asset Resolution under
the Insolvency & Bankruptcy Code, 2016, Financial Frauds,
GIS, Governance, Public Procurement through GeM Portal,
Advanced Excel, Conduct, Discipline & Appeal (CDA) Rules
of PFC, Communication skills, CSR practices, RTI ACT etc.
were organized along with other need-based programs.

In addition to the above, other compliance-related
programs such as Awareness Workshop on Sexual
Harassment of Women at Workplace (Prevention,
Prohibition & Redressal) Act, 2013, Occupational Health &
Safety Hazards, Office etiquettes were organised.

All the fresh recruits of your company attended a 3-week
Foundation course of National Power Training Institute
(NPTI) wherein they were trained on Basics of Power

Sector, Renewables & Solar Energy, Government Schemes,
Energy Transition, Energy Conservation & Energy
Efficiency, SCADA, and Project Appraisal among other
topics. Employees are also encouraged to participate
in Conferences related to energy and infrastructure
sector, promoting continuous learning and exposure to
the industry.

Your Company organised General Management Programs
for employees due for promotion to equip them with skills
to take on higher roles and develop leadership qualities.

As of March 31,2025, 28 Nos. of In-house training programs
were organised by PFC for its employees. A total of 1921
man-days were achieved through conducting various in¬
house programs and sponsoring PFC employees to the
programs organised by other external training agencies

b. Recreational Activities (Engagement
Activity)

•    PFC is a founding member of Power Sports Control
Board (PSCB). PFC employees participated with
full vigour and enthusiasm in various Inter-CPSU
sports tournaments organized by the PSCB member
organizations during the FY 2024-25.

•    As a part of Inter CPSU tournaments, PFC organized a
Bridge Tournament from 25-27 November 2024 at New
Delhi. 10 Power sector PSUs including MoP participated
in the tournament.

•    Inter CPSU sports competition details - 118 employees
participated in PSCB sports during FY 2024-25.

•    PFC celebrated its Foundation Day for its employees
& their family member on July 16, 2024 at Bharat
Mandapam, New Delhi.

•    PFC organized One day picnic on February 15, 2025 for
employees and their dependent family members.

•    Every year, PFC celebrates various occasions such as
festival of Diwali, New Year etc to encourage a feeling
of togetherness among the employees.

c.    Human Resource Management

Your company has put in place effective talent acquisition
and retention practices, which are benchmarked with best
corporate practices designed to meet the organizational
needs. This apart from other strategic interventions leads
to an effective management of Human Resources thereby
ensuring high level of productivity.

The Industrial Relations within the company have
been very cordial and harmonious with the employees
committing themselves entirely to the objectives of the
company. There were no man-days lost during the year
under review. The attrition during the period from April 1,
2024 to March 31, 2025 was 0.73%.

d.    Employee Welfare Measures

Your Company is committed to strive towards adopting
the best management practices of the industry and
take up new initiatives for enhancing the productivity
of employees.

An effective package of employee welfare measures
which include comprehensive insurance, medical facilities
and other amenities lead to a healthy and productive
workforce. During the period, several employee related
policies and facilities were reviewed and revised.

19. Building A Diverse and Equitable Workforce

The Company follows the Presidential Directives and guidelines issued by the Government of India to promote inclusive
growth. The status is presented under:

i. Status of Reservation of Posts for various categories (as on March 31, 2025)

 

Group	Total Employees as on March 31, 2025	SC1	SC%	ST2	ST%	OBC3	OBC%	EWS4	EWS%
A	526	95	18.06%	35	6.65%	108	20.53%	9	1.71%
B	4	0	0.00%	1	25%	0	0.00%	0	0.00%
C	10	1	10%	1	10%	3	30%	0	0.00%
D	0	0	0.00%	0	0.00%	0	0.00%	0	0.00%
Total	540	96	17.77%	37	6.85%	111	20.55%	9	1.66%

 

PFC makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time
to time pertaining to the welfare of SC/ST/OBC/ ESM⁵/ PwBD⁶ employees. The steps taken include due reservations and
relaxation as applicable under the various directives for direct recruitment as well as for promotions. Separate Liaison
officers have been appointed to look into the matter of reservations. PFC uploaded dashboard about the details of backlog
of any reserved post on career page of PFC website. During the year there was no backlog reserved post.

1    Scheduled Caste

2    Scheduled Tribe

3    Other Backward Classes

4    Economically Weaker Section

5    Ex-Servicemen

6    Persons with Benchmark Disabilities

 

ii. Women in Leadership and Management

Your Company has women in important and critical functional areas. Women representations have gone across hierarchical
levels. The Company provides equal growth opportunities for the women in line with Govt. of India philosophy on the subject.
The women are adequately represented, with 22.03% of the total work force.

 

Group	Total Employees	Number of Women	Percentage (%) of overall
	as on March 31, 2025	Employees	staff strength
A	526	117	22.24%
B	4	1	25%
C	10	1	10%
D	0	0	0.00%
Total	540	119	22.03%

 

PFC as part of its social responsibility makes all efforts to
ensure compliance of the Directives and guidelines issued
by the Government of India from time to time pertaining
to the welfare of female employees.

iii. Internal Complaints Committee

Your company has complied with the provisions relating
to the constitution of Internal Complaints Committee
under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013.

Disclosures in relation to the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013:

Details of complaints during FY 2024-25	Nos.
Number of complaints of sexual harassment received in the year	1
Number of complaints disposed off during the year	1
Number of cases pending for more than ninety	0*

* As on March 31, 2025, no case was pending for more than ninety days.

iv. Talent Management

Your Company continues to strengthen its talent
management framework by aligning recruitment,
development and retention strategies with overall
business objectives. It attracts highly qualified
professionals from premier institutions such as IIMs, ICAI,
ICMAI, etc. ensuring a strong talent pool. New recruits
undergo a well-structured induction program that
provides comprehensive exposure to various functions
of the Corporation, including practical field visits, which
facilitate smooth onboarding and early engagement.

Throughout the year, continuous learning is encouraged
through targeted training programs. Your company
introduced E-Learning scheme to encourage self-paced
learning from renowned learning platforms. Special
emphasis is placed on behavioral and leadership
development initiatives for senior executives, including
Advanced Management and Leadership Programs,
to build a robust leadership pipeline and support
career progression. Your Company regularly conducts
employee engagement surveys to understand workforce
sentiments and address concerns through data-driven
interventions, resulting in a motivated and productive

work environment. These efforts have contributed to a
low attrition rate of 0.73% during FY 2024-25.

Your company recruited 10 new executives during
FY 2024-25. Additionally, industrial relations have
remained cordial and harmonious, reflecting the
employees' strong commitment to the Company's
objectives and the effectiveness of its human resource
management practices.

20. Corporate Vigilance: a Foundation of Trust

During the Financial Year 2024-25, the Vigilance Unit has
continued to serve as a vital instrument in supporting the
Corporation's integrity and efficiency. The Unit actively
pursued preventive vigilance by conducting regular and
surprise inspections across various departments. In
addition, it issued operational guidelines and instructions
aimed at streamlining systems and procedures, thereby
addressing potential vulnerabilities and reinforcing
transparency in daily operations.

Power Finance Corporation Limited (PFC) observed
Vigilance Awareness Week from October 28 to November
3, 2024, in alignment with the directives of the Central
Vigilance Commission (CVC). To mark the occasion,
banners promoting Vigilance Awareness Week were
prominently displayed at key locations within and outside
the office premises. The theme for this year, "Culture
of Integrity for Nation's Prosperity", was prominently
showcased, including on the desktop screens of all
employees. Additionally, extensive publicity was carried
out through social media platforms such as Facebook, X
(formerly Twitter), and Instagram. A dedicated link was
also provided on the Corporation's intranet and official
website to facilitate widespread participation in the online
Integrity Pledge (e-pledge).

As part of the week-long observance, the Vigilance
Unit organized a series of employee engagement
activities including slogan writing, poetry, and pictorial
competitions centered on vigilance-related themes.
These competitions were open to all regular employees,
including those stationed at regional offices, with the
objective of encouraging creativity and innovation in
promoting good governance.

As a new initiative, three dedicated portals were launched
by the dignitaries during the VAW event—Vendor
Grievance Redressal Portal, Vigilance Complaint Portal,
and Employee Grievance Redressal Portal—aimed at
enhancing transparency, accountability, and ease of
communication. Additionally, the revised and updated
edition of the Vigilance Manual was formally released,
reinforcing the Corporation's commitment to robust
vigilance practices. During this period, the Vigilance Unit
also undertook comprehensive investigations into the
complaints received, ensuring thorough examination and
appropriate follow-up actions.

In continuation of the broader three-month Vigilance
Awareness campaign (VAW-2024), several training and
sensitization programs were conducted:

•    Workshop on "Conduct, Discipline and Appeal Rules"
for PFC employees.

•    One-day refresher course on "Cyber Security and
Incident Response."

•    Two-day residential training program on "Sensitization
on Fraud Management and Staff Accountability"
for Internal Advisory Committee members and
relevant personnel.

•    Workshop on "Ethics and Governance" aimed at
reinforcing ethical standards across the Corporation.

Additionally, outreach meetings were held with vendors
of both PFC and PFCCL, reinforcing the Corporation's
commitment to transparency and ethical business
practices. To further enhance public engagement, the
CVC's jingle was broadcast on two major FM radio
channels—Red FM and Radio City—during evening prime
time slots.

I n adherence to CVC guidelines, sensitive posts within
the Corporation were identified and officers were
rotated regularly to ensure objectivity and reduce risk.
Furthermore, Agreed Lists and the List of Officers of
Doubtful Integrity for 2024 were prepared in consultation
with the Central Bureau of Investigation (CBI) for the
Corporate Office in Delhi and regional offices in Mumbai
and Chennai. All prescribed periodical statistical returns
were submitted to the CVC, CBI, and Ministry of Power
(MoP) within the stipulated timelines.

The Vigilance Unit continuously functioned for systemic
improvements with a view to increase transparency,
objectivity and accountability in the operations of
the corporation. Thus, it has contributed towards
strengthening in the functioning of the organization.

21. Implememtation of Official Language

PFC always gives utmost priority to Rajbhasha Hindi in all
its official working. It celebrated Hindi Day on September
14, 2024 and Hindi Month from September 14, 2024 to
October 13, 2024 successfully. Five (5) competitions, viz.
'Hindi Tippan evam Aalekhan', 'Chitra Kuchh Bolte Hain',
'Smaran Shakti Pratiyogita', 'Humse Badhkar Kaun' and
'Rajbhasha Prashnottari' (for Senior Executives) were
conducted during the Hindi Month to encourage and
motivate employees to continue working in Hindi.

During the year, Six (6) Hindi workshops were organized
on various topics in which 342 employees participated.

A Rajbhasha Sangoshthi was organized on March 17,
2025 on the subject "Bharat ke Bhashai Kshetra mein
Aatmanirbharta aur Hindi ki Bhumika" in which 38
employees participated.

Apart from the competitions held during the Hindi month,
Four (4) Hindi competitions, viz. 'Paheliyon ka Chakravyuh',
'Naara Lekhan', 'Nibandh Lekhan' and 'Shuddh Varti
Pratiyogita' were also conducted during the year in order
to promote the usage of Official Language in which 147
employees participated.

Review meetings with various units, Internal inspections
and Personal contact programme were conducted for the
purpose of reviewing the Rajbhasha related work being
done by these units and employees. To motivate the
employees towards Hindi, the book "Surykant Tripathi
ki Sampurna Kahaniyan" written by renowned poet and
writer Surykant Tripathi Nirala was distributed to all
the employees.

I nspection was carried out by the Ministry of Power on
November 07, 2024 regarding implementation of Official
Language in the Corporation and they appreciated the
efforts being made by PFC towards the same. Apart
from this, the inspection of Power Finance Corporation
Limited, Regional Office (South) Chennai, was successfully
conducted by the Parliamentary Committee on Official
Language on January 6, 2025.

The 59^th meeting of the Town Official Language
Implementation Committee (Undertaking-1, Delhi) was
held on August 9, 2024. In this meeting, Power Finance
Corporation was awarded for the Best Implementation of
Official Language Policy.

In the meeting of Town Official Language Implementation
Committee (Undertaking-1, Delhi) held onJanuary 21,2025,
your company was awarded for successfully organizing
the 'Hindi Kavita Paath Pratiyogita' on November 28, 2024.
A total of 24 participants from various Office members
of the committee participated in this competition. Along
with this, 03 employees of the Corporation won prizes in
various competitions organized by Town Official Language
Implementation Committee (Undertaking-1), Delhi during
October-December 2024.

Four (4) issues of the house journal, "Urja Deepti", were
published and uploaded on the PFC website as well as the
website of the Department of Official Language, Ministry
of Home Affairs.

In meetings of OLIC conducted under the chairmanship of
CMD, PFC, wherein CMD reviewed the Rajbhasha related
work in PFC and motivated the OLIC members to promote
Hindi in their area of working.

All these efforts acted as motivational tools for creating
possibilities of progressive use of Official Language in
the Corporation.

22. Directors' Responsibility Statement

As required under Section 134(5) of the Companies Act,
2013, it is confirmed that:

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

b)    such accounting policies have been selected and
applied them consistently and made judgements
and estimates that are reasonable and prudent so
as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of
the profit and loss of the Company for that period;

c)    proper and sufficient care has been taken for the
maintenance of adequate accounting records
in accordance with the provisions of this Act for
safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

d)    the annual accounts have been prepared on a going
concern basis;

e)    internal financial controls have been laid to be
followed by the Company and such internal financial
controls were adequate and operating effectively;

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

23. Auditors

i.    Statutory Auditors

M/s Thakur, Vaidyanath Aiyar & Co., Chartered Accountants
and M/s Mehra Goel & Co., Chartered Accountants were
appointed as Joint Statutory Auditors of the Company
for FY 2024-25 by the Office of the Comptroller & Auditor
General of India.

The Joint Statutory Auditors have audited the accounts of
the Company for the FY 2024-25 and have given their report
without any reservation, adverse remark or disclaimer.
The copy of the audit report is annexed herewith.

Maintenance of cost records as specified by the Central
Government under sub-section (1) of section 148 of the
Companies Act, 2013, is required by the Company and
accordingly such accounts and records are made and
maintained, is not applicable on the company.

ii.    Secretarial Auditor:

Your Company had engaged M/s. Mehta & Mehta,
Company Secretaries as Secretarial Auditors for
FY 2024-25. Secretarial Audit Report is annexed herewith.

The observations of the Secretarial Auditor and reply of
the management on the observations, for the FY 2024-25
along with copy of the audit report is annexed herewith.

iii.    Comments of Comptroller & Auditor General
of India

The Comptroller and Auditor General of India (C&AG)
has mentioned that on the basis of audit, nothing
significant has come to their knowledge which would give

rise to any comment upon or supplement to Statutory
Auditors' report. The copy of the report of C&AG is
annexed herewith.

24.    Streamlining Governance Through Technology

I n today's rapidly evolving landscape, our organization
has significantly advanced its governance practices
by strategically leveraging technology. This digital
transformation has been instrumental in enhancing
efficiency, transparency, and accountability across
all operational facets. By implementing robust digital
platforms and tools, we have streamlined decision-making
processes, automated routine tasks, and improved real¬
time data accessibility for stakeholders. Our initiatives
have focused on secure digital record-keeping, virtual
collaboration tools for board and committee meetings etc.

Pursuant to the Companies Act, 2013, the Companies
are permitted to send documents like Notice of Annual
General Meeting, Annual Report etc. through electronic
means to its members at their registered email addresses.
PFC, being a socially responsive Company actively
supports the implementation of 'Green Initiative' of
the Ministry of Corporate Affairs (MCA). Your Company
has effected electronic delivery of Notices and Annual
Reports to shareholders, whose email ids are registered.
Further, pursuant to Section 108 of the Companies Act,
2013 read with Rule 20 of the Companies (Management
and Administration) Rules, 2014, the Company is
providing e-voting facility to all members to enable them
to cast their votes electronically in respect of resolutions
set forth in postal ballot and Annual General Meeting
(AGM). The Company also conducts the AGM through
video conferencing / other audio-visual means. Members
can refer to the detailed instructions for e-voting and
electronic participation in the AGM, as provided in the
Notice of AGM.

25.    Statutory Disclosures

i.    Deposits

Your Company is a non-deposit taking NBFC, and thus has
not accepted any public deposits during the FY 2024-25
and the Board of Directors of the Company has passed
requisite resolution in this regard, in compliance of RBI
Guidelines. Further, no Perpetual Debt Instruments (PDI)
was issued by your company during FY 2024-25.

The outstanding balance of PDI is H100 crore as on March
31, 2025. The Interest payment on PDI has been made on
time on the due date.

As on March 31, 2025, the PDI to Tier-1 capital is 0.13%
and is appearing in notes to accounts Note no. 39.1 of
the standalone financial statements forming part of this
Annual Report.

ii.    Material order

No significant and material orders were passed by any
regulator or court or tribunal impacting the going concern
status and company's operations during the FY 2024-25.

iii.    Adequate system of Internal Control

The Company maintains an adequate system of Internal
Control, including suitable monitoring procedures to
ensure accurate and timely financial reporting of various
transactions, efficiency of operations and compliance with
statutory laws, regulations and Company procedures/
policies. For details, please refer to the 'Management
Discussion and Analysis Report' annexed to this report.

iv.    Report on Corporate Governance

Information on composition, terms of reference and
number of meetings of the Board and its Committees
held during the year, Whistle Blower Policy, remuneration
to Whole time Directors, sitting fees to Independent
Directors and details regarding IEPF and web-links for
familiarization programmes of Directors, Policy on
Materiality of Related Party Transactions and Dealing with
Related Party Transactions, Policy for determining Material
Subsidiaries, etc. have been provided in the 'Report on
Corporate Governance', prepared in compliance with
the provisions of SEBI (LODR) Regulations, 2015 and DPE
Guidelines on Corporate Governance, 2010, as amended
from time to time, which forms part of this Annual Report.

v.    Presidential Directives

During last 3 years, there has been no Presidential
Directive.

vi.    Loan. Guarantee and Investment

Pursuant to Section 186(11) of the Companies Act, 2013,
loans made, guarantees given, securities provided or
investment made by a company engaged in the business
of financing of companies or of providing infrastructural
facilities in the ordinary course of its business are not
applicable to the Company, hence no disclosure is
required to be made. Further, details of investments are
appearing at note no.11 of the Notes to Accounts of the
standalone financial statements.

vii.    Managerial Remuneration

The provisions of Section 197 of the Companies Act,
2013 and Rules made thereunder relating to managerial
remuneration are not applicable to Government
companies, therefore no disclosure is required to
be made.

viii.    Stock options

The Company has not issued any stock options to the
Directors or any employee of the Company during the
FY 2024-25.

ix.    Cost accounts and records

The Central Government has not prescribed the
maintenance of cost records for the products/services
of the Company under the Companies (Cost Records and
Audit) Rules, 2014 read with the Companies (Cost Records
and Audit) Amendment Rules, 2014 prescribed by the
Central Government under Section 148 of the Companies

Act, 2013. Accordingly, cost accounts and records are not
required to be maintained by the Company.

x.    Fraud

During the year under review, neither the statutory
auditors nor the secretarial auditor has reported to the
audit committee, under Section 143(12) of the Companies
Act, 2013, any instances of fraud committed against PFC
by its officers or employees.

xi.    Secretarial Standards

The Company is compliant with the applicable Secretarial
Standards issued by the Institute of Company Secretaries
of India.

xii.    Independent Directors

The Independent Directors of the Company are appointed
by the President of India acting through the administrative
ministry, i.e., MoP. Accordingly, the appointing authority
considers the integrity, expertise and experience of the
individual to be appointed.

In the FY 2024-25, three Independent Directors on
completion of their tenure, ceased to be part of the Board
of PFC. No new Independent Director was appointed on
the Board of PFC during the FY 2024-25.

Subsequently, in the first quarter of FY 2025-26, Ministry
of Power, Government of India appointed/ reappointed
five Independent Directors (including one Independent
Women Director) viz. Smt. Usha Sajeev Nair, Shri Prasanna
Tantri, Shri Naresh Dhanrajbhai Kella w.e.f. April 17, 2025
and Shri Bhaskar Bhattacharya & Dr. Sudhir Mehta w.e.f.
May 13, 2025 & May 14, 2025 respectively.

xiii.    Conservation of Energy and Technology
Absorption

There are no significant particulars, relating to
conservation of energy and technology absorption as
your Company does not own any manufacturing facility.

xiv.    Foreign exchange earnings and outgo

The Foreign exchange outgo for the FY 2024-25 aggregated
to H14,796.34 crore. The payments are majorly for the
purpose of servicing principal and interest component
of foreign currency borrowings. The Foreign exchange
earnings for the FY 2024-25 were nil.

xv.    Total expenditure for the FY 2024-25 amounted to
H31,955.39 crore as against total expenditure of H28,408.41
crore in FY 2023-24. Out of it, finance cost amounted to
H30,538.04 crore in FY 2024-25 as compared to H28,013.78
crore in FY 2023-24. During FY 2024-25, employee benefit
expenses and other expenses were H268.58 crore and
H162.68 crore respectively against H242.72 crore and
H166.11 crore respectively in the previous year.

xvi.    M/s. ASA & Associates LLP, Chartered Accountants,
appointed for testing adequacy and operative
effectiveness of Internal financial control over financial
reporting, has certified that the Company maintains

The details of the procurements made from Micro, Small and Medium Enterprises (MSEs) during the FY 2024-25 and the
targets for FY 2025-26 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 along
with Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 is as under:

 

S. No.	Particulars	FY 2024-25 J in crore)	Target for FY 2025-26 J in crore)
I.	Total annual procurement (in value)	65.46	96.34
II.	Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs)	27.57	24.09
III.	Total value of goods and services procured from only MSEs owned by SC/ST entrepreneurs	4.48	3.85
IV.	%age of procurement from MSEs (including MSEs owned by SC/ST entrepreneurs) out of total procurement	42.12%	25%
V.	%age of procurement from only MSEs owned by SC/ST entrepreneurs out of total procurement	6.84%	4%
VI.	Total number of vendor development programmes for MSEs	2	2
VII.	Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same	https://pfcindia.com/ensite/Home/VS/125

 

an adequate system of internal financial controls,
evaluates and makes an assessment of its adequacy and
effectiveness in a satisfactory manner which takes care of
requirements under Companies Act, 2013.

The Statutory Auditors of the Company i.e. Thakur,
Vaidyanath Aiyar & Co., Chartered Accountants and
Mehra Goel & Co., Chartered Accountants have also given
their Report on Internal Financial Controls stating that the
Company has, in all material respects, internal financial
controls system over financial reporting and such internal
financial controls over financial reporting were operating
effectively as at March 31, 2025 based on internal
control over financial reporting criteria established by
the Company considering the essential components of
internal control stated in the Guidance Note on Audit of
Internal Financial Controls over Financial Reporting issued
by the Institute of Chartered Accountants of India.

xvii.    Annual Return

The Annual Return of PFC for FY 2023-24 is available
on the link https://www.pfcindia.com/ensite/Home/
VS/10256 and for FY 2024-25 it shall be made available on
your Company's website www.pfcindia.co.in.

xviii.    Debenture trustees

The details of Debenture trustees appointed by the
company for the different series of Bonds issued by your
company are annexed herewith.

xix.    Insolvency and Bankruptcy Code, 2016

During the year no application has been made or any
proceedings pending against PFC under the Insolvency
and Bankruptcy Code, 2016. Further, details of the
difference between amount of the valuation done at the
time of one time settlement and the valuation done while
taking loan from the banks or financial institutions, are
not applicable.

xx. Procurement from Micro & Small Enterprises

Government of India has notified Public Procurement
Policy for Micro and Small Enterprises (MSEs) Order, 2012
to support marketing of products produced and services
rendered by them. In compliance to the policy, annual
procurement plan including items to be procured from
Micro & Small Enterprises (MSEs) are uploaded on PFC's
website for the benefit of MSEs.

The benefits to MSEs like exemption from tender fees and
earnest money deposit, purchase preference, interest on
delayed payments and exemption from prior experience
- prior turnover criteria subject to meeting of quality and
technical specifications are also extended to encourage
these enterprises.

During the financial year, your company has made all
the payments against invoices of MSE vendors within
the prescribed timelines, and invoices of MSE vendors
pending for payment beyond prescribed timelines at the
end of the financial year is Nil.

During the financial year, your Company has procured
products and services from MSEs, which constituted
42.12 % of the total annual procurement value, against
the mandate of 25 % set by Ministry of Micro, Small and
Medium Enterprises, Govt. of India. During the year, 356
MSEs were benefited out of which 21 MSEs belonged to
SC/ST category and 72 MSEs were owned by women.

PFC is also registered on four Trade Receivables
Discounting System (TReDS) platform (i.e. Receivables
Exchange of India Ltd (RXIL), M1xchange, Invoicemart,
and C2FO) for financing of trade receivables of Micro,
Small & Medium Enterprises (MSMEs). TReDS platform
facilitates the discounting of invoices of MSMEs leading
to prompt generation of working capital for their regular
business operations.

Your Company had also organized/participated in 02
vendor development programmes in co-ordination
with Ministry of Micro, Small and Medium Enterprises,
Govt. of India to encourage participation of Micro and
Small Enterprises.

xxi. Compliance of the provisions relating to the
Maternity Benefit Act, 1961

Your company adheres to the obligations in terms of paid
leave and other facilities mandated under the Maternity
Benefit Act, hence creating a supportive and equitable
workplace environment. Your company reaffirms its
commitment to protecting the rights and well-being of its
women employees.

In addition to this, to facilitate women employees to take
care of the needs of their minor children during their
examination, sickness, etc., a provision of Child Care Leave
(CCL) is in place for a maximum period of 2 years (730 days)
to be availed during their entire service in the Corporation.

26. Information Technology Initiatives

The PFC IT Unit promotes effective stewardship of
information access and provides a secure, reliable
technology infrastructure for customer oriented services
and support, so as to meet the ever changing business
needs. Accordingly, PFC has undertaken many Information
Technology (IT) initiatives to help streamline operations,
improve efficiency, optimise resource utilization and
devote talent to core business to enable better services
and relationship with stakeholders.

IT Governance Structure:

A robust IT governance structure has been established
at PFC to ensure strict adherence to the necessary
compliance to the guidelines prescribed by various
statutory and regulatory bodies. PFC also has BoD
approved IT policy in-line with RBI master directions.

IT Strategy Committee (ITSC):

As per the recent RBI Master Direction on Information
Technology Governance, Risk, Controls and Assurance
Practices, a Board Level ITSC, has been constituted in
PFC to ensure that the IT Strategy aligns with the overall
strategy of the organization towards accomplishment
of its business objectives. ITSC is headed by an
Independent Director.

IT Steering Committee:

In line with the Reserve Bank of India's Master Directions
for NBFCs, the IT Steering Committee have been duly
constituted and regular meetings are conducted to
oversee the execution of IT Strategy and ensure that
necessary IT risk management processes are in place.

Head of IT Function (HoF):

"Head of IT Function" bas been nominated at PFC.
HoF is managing the Information Technology setup
while planning, giving technical oversight, managing IT
compliances and resources.

Chief Information Security Officer (CISO):

CISO has been nominated at PFC. CISO is involved in
information security strategy and ensuring compliance
to the extant regulatory/ statutory instructions on
information/ cyber security.

Information Security Committee (ISC):

In line with RBI Master Directions, an Information
Security Committee (ISC), under the oversight of the
ITSC, has been formed for managing information
security for development of information security policies,
implementation of policies, standards and procedures to
ensure that all identified risks are managed.

Regulatory & Statutory Requirements:

PFC comply with RBI guidelines/master directions and
follows advisories and cybersecurity directives applicable
to it is issued by the Ministry of Power (MoP), CERT-In to
ensure robust security for its IT infrastructure and critical
financial systems. In case any incident happens, the same
is reported to RBI, Cert-IN and CSIRT of MoP.

PFC Datacenter:

In order to provide technological support through IT
infrastructures, PFC established a Datacenter at its
headquarter at Delhi seismic zone (IV), which is operational
24x7, housing Database, Applications, Network, Email,
Antivirus, Cyber security systems etc.

Business Applications:

PFC has implemented software applications to cater
its business requirement integrating its core business
activities. Major applications are "Project Appraisal &
Management System", "Loan Accounting & Management
System", "Resource Mobilization" , "Oracle ERP eBusiness
suite for Financial Accounting", "Human Resource
Management System" and Payroll.

Automation of Business Processes &
Paperless Office:

PFC remains steadfast in harnessing Information
Technologyto empower its employeesin efficientlyfulfilling
business functions. Implementation of collaboration tools
for online meetings, adoption of an e-Office solution for
streamlined file processing, conducting paperless digital
board meetings through BoardPac, and transitioning
to paperless employee claims are among the initiatives
undertaken by PFC to enhance organizational efficiency
through technological utilization.

PFC Website:

The bi-lingual PFC website is maintained with up-to-date
information as per "Guidelines for Indian Government
Websites". The website is hosted on NIC.

Cyber Security:

PFC is committed to work towards aligning itself with the
changing threat landscape. PFC ensures 24x7 real-time
monitoring of its IT infrastructure to promptly detect &
alert. This proactive approach helps minimize service
disruptions and ensures high availability of critical
systems and services. PFC observes "Cyber Jagarukta
Diwas" on the first Wednesday of every month to raise
awareness about cyber security among its users.

PFC - IT Cyber Security Policy:

The objective of the IT Cyber Security Policy is to establish
a comprehensive framework to safeguard PFC's IT
systems and digital assets to maintain confidentiality,
integrity, and availability of PFC's IT systems and data.
Areas covered under Cyber security policy include:

•    Network and Cyber Security

•    Server Security

•    Application Security

•    Logging, Monitoring, and Reporting

•    Security Review

Multi Factor Authentication (MFA):

To enhance security, comply with RBI guidelines, and
safeguard PFC users from emerging cyber threats,
Multi-Factor Authentication (MFA) has been successfully
implemented across the organization. MFA has been
introduced as an additional layer of security to reinforce
the organization's cybersecurity posture. This additional
layer of security ensures more robust protection against
unauthorized access.

Business Continuity & Disaster Recovery:

A Disaster Recovery (DR) site has been established on a
cloud platform, replicating the existing data centre setup
at Mumbai in a different seismic zone (III) to seamlessly
continue its business operations in the event of a disaster.
Further, PFC conducts Disaster Recovery (DR) drills half
yearly to ensure organizational readiness in the face of
unexpected disruptions or disasters. These drills are
vital for testing the effectiveness of the DR, identifying
potential gaps, and enhancing the organization's ability to
respond swiftly and efficiently during critical situations.

27.    Establishment of Vigil Mechanism

Your Company has established stringent vigil mechanism
by way of implementing various codes and policies like fair
practices code, code of conduct, code for prevention of
insider trading, fraud prevention policy, policy on related
party transactions, public procurement policy, whistle
blower policy, etc. The details are also posted on the
Corporation's website.

28.    Grievance Redressal

PFC has a Grievance Redressal System for dealing with
grievances of the public at large. The status of the Public
grievances are also available in PFC web portal under
public domain. The link for accessing the same is as
under:-

https://www.pfcindia.co.in/ensite/DocumentRepository/
ckfinder/files/Statutory Requirements/Status of Public
Grievances/CPGRAMS%20Report-Q1%20FY25-26.pdf

The systems are duly notified and the Nodal Officers ensure
quick redressal of grievances within the permissible time
frame. PFC has also notified Citizen's Charter to ensure
transparency in its work activities. The Charter is available
on the website of PFC to facilitate easy access.

29. Statutory and other Information

Information required to be furnished as per the Companies
Act, 2013, Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations,
2015, DPE's Guidelines on Corporate Governance for
CPSEs and other applicable statutory provisions is
annexed to this report as follows:

Particulars	Annexure
Management Discussion and Analysis Report	A
Integrated Reporting	B
Report on Corporate Governance	C
Business Responsibility and Sustainability Report	D
ESG report	E
Secretarial Audit Report (MR-3)	F
Annual Report on CSR Activities	G
Disclosure of particulars of contracts/ arrangements entered into by the company with related parties (AOC-2)	H
Details of Debenture Trustees	I

ACKNOWLEDGEMENT

Your Directors are highly grateful for the valuable support,
cooperation, and encouragement extended to the Company by
the Government of India—particularly the Ministry of Power,
Ministry of Finance, Ministry of Corporate Affairs, various State
Governments, the Reserve Bank of India, Department of Public
Enterprises, NITI Aayog, DIPAM, Securities and Exchange Board
of India, National Stock Exchange of India Limited, BSE Limited,
Ministry of Micro, Small and Medium Enterprises, and other
relevant government departments and agencies at both Central
and State levels. Your Directors acknowledge the constructive
suggestions received from Auditors and Comptroller and
Auditor General of India and are grateful for their continued
support and cooperation.

The Company also extends its gratitude to the Statutory
Auditors, Secretarial Auditor, RBI Auditors, and its bankers for
their valuable insights, guidance, and continued cooperation.

The Directors further wish to convey their heartfelt thanks to
the shareholders, investors, clients, and customers for their
steadfast trust and support. Lastly, the Board acknowledges
all members of the PFC Family for the unstinting efforts and
dedicated contributions put in by the PFCians at all levels to
ensure that the Company continues to sustain and grow.

Sd/-

(Parminder Chopra)

Chairman and Managing Director
DIN:08530587

Dated: August 06, 2025

1

   Consistent engagement on Facebook, LinkedIn, and
X (formerly Twitter), especially around CSR initiatives,
exhibitions, and national observances.

•    Focused campaigns on key themes like energy
conservation, Swachhta campaign, smart energy
usage, and public health awareness.

•    Media recognition through awards such as the CSR
Champion Award at the Outlook Planet Sustainability
Summit 2024.

---

Mar 31, 2024

On behalf of the Board of Directors, it is my privilege to present the 38^th Annual Report of your Company for the Financial Year ended March 31, 2024, along with the Audited Standalone and Consolidated Financial Statements and Auditor's Report thereon.

The year 2023-24 was excellent for your Company as it demonstrated remarkable resilience to achieve significant milestones in operational and financial performance. Your Company has played an important part in accelerating the progress of the Indian economy, which was amongst the fastest growing economies in 2023-24. The performance highlights of your Company for the financial year 2023-24 are briefly mentioned here to give an overview of accomplishments on all fronts:

1. PFC'S DYNAMIC GROWTH AND FINANCIAL

ROBUSTNESS:    DRIVING FORCE FOR

SUSTAINABLE FUTURE

i.    FINANCIAL EXCELLENCE (STANDALONE) -

OPTIMISING SHAREHOLDER GAINS

•    Highest Profit making NBFC in India in FY2023-24 with 24% increase registered in Profit After Tax from 111,605 crore in FY2022-23 to 114,367 crore in FY2023-24.

•    Networth increased by 16% on account of increasing profits i.e. 179,203 crore as at March 31, 2024 vs. 168,202 crore as at March 31, 2023.

•    The Board of Directors of the Company has recommended final dividend (1825.03 crore) @ 25% on the paid up equity share capital i.e. 12.50 /- per equity share of 110/- each for the FY2023-24, subject to the approval of the shareholders at the ensuing Annual General Meeting. The Company had also paid interim dividend (13,630.11 crore) of 111.00 /- per equity share of 1 10 /- each during FY2023-24. Thus, the total dividend declared for the FY2023-24 is (14455.14 crore)

i.e. 113.50/- per equity share of 110 each.

•    In September 2023, the Company issued bonus equity shares in the ratio of 1:4, i.e. 1 new equity share of 110/-each for every 4 equity shares and consequently issued 66,00,20,352 new equity shares of 110/- each.

•    36% year on year increase in 54EC bonds portfolio with 54EC bonds-a low-cost fund avenue available to PFC of 18,994 crore as on March 31, 2024 vs. 16,600 crore as on March 31, 2023

ii.    PERSISTENT AND    CONTINUOUS

OPERATIONAL ADVANCEMENT

•    14% double digit growth recorded in loan asset book with 14,81,462 crore as on March 31, 2024 vs. 14,22,498 crore as on March 31, 2023 and 49% increase in

disbursement, from 185,756 crore in FY2022-23 to 11,27,656 crore in FY2023-24

•    Renewable loan asset portfolio crossed 160,000 crore with 25% year on year growth in renewable loan book with 160,208 crore as on March 31, 2024 vs. 148,198 crore as on March 31, 2023.

•    Stressed asset book reduced by more than 45% in the last 5 years with 116,073 crore as on March 31, 2024 vs. 129,540 crore as on March 31, 2019 i.e. decrease of 46% Net NPA Levels at 0.85% for FY2023-24.

iii.    EXPANDING PFC'S BUSINESS AND

MAINTAINING LONG-TERM GROWTH

TRAJECTORY

•    First Govt. NBFC to establish a foreign subsidiary 'PFC Infra Finance IFSC Limited' in IFSC GIFT City. This subsidiary has been setup as a Finance Company in IFSC. A landmark milestone which will open avenues in international lending space for PFC.

•    Conducive regulatory environment: 100% tax exemption for 10 consecutive years; no GST applicable on services; exemptions in provisions of Companies Act, etc.

•    IFSC entity will contribute to the growth of power and infrastructure sector by lending in foreign currency

•    37^th in Fortune 500 India'2023

iv.    STRONG CONSOLIDATED PERFORMANCE

YEAR ON YEAR

•    Highest ever PAT with an increase 25% i.e. 126,461 crore in FY2023-24 vs. 121,179 crore in FY2022-23.

•    Growth of 16% in consolidated loan asset book. 19,90,824 crore as on March 31, 2024 vs. 18,57,500 crore as on March 31, 2023.

•    Increase of 20% in consolidated net worth (Including Non-controlling interest) 11,34,289 crore as on March 31, 2024 vs. 11,11,981 crore as on March 31, 2023.

•    The consolidated net NPA ratio at below 1%. The Net NPA ratio of 0.85% in FY2023-24 vs. 1.03% in FY2022-23. Gross NPA ratio of 3.02% in FY2023-24 vs. 3.66% in FY2022-23.

•    PFC Group is the nodal agency for implementation of LPS Rules and has been instrumental in reduction of legacy dues of DISCOMs by more than 70%.

v.    SOUND ASSET HEALTH

•    Total provision of 111,963 crore towards Stage- III Loan Assets as at the end of FY2023-24 against 14,81,462 crore Total Gross Loan Assets. The Net Stage-III Assets stands at 14,110.70 crore as on March 31, 2024, which is 0.85% to the Total Gross Loan Assets.

•    In addition to above, provision of 13,732.95 crore and 1175.83 crore on Stage-I Loan Assets and Stage-II Loan Assets respectively is available as on March 31, 2024.

•    The details of resolution plans implemented during FY2023-24:

Â	Â	Principal O/s
Sr. No.	Name of Borrower	prior to date of Resolution
Â	Â	(1 in crore)
1	Mytrah Vayu Tungbhadra Private Limited	650.51
2	Dans Energy Private Limited	412.99

2. FINANCIAL SYNOPSIS

i. PROFITABILITY

vi. ENHANCING SUSTAINABLE COLLABORATIONS

•    First member from India to join Asia transition Finance Study Group.

•    Collaborated with Council on Energy, Environment and Water (CEEW) to advance India's Net Zero Goal.

•    Strategic tie up with Japan's New Energy and Industrial Technology Development Organisation (NEDO) to promote creation of environment friendly power supplies.

(1 in crore)
Particulars	Standalone	Â	Consolidated	Â
Â	2023-24	2022-23	2023-24	2022-23
Total Income	46,034.10	39,665.63	91,174.87	77,625.19
Profit Before Tax	17,625.69	14,170.62	33,588.12	26,496.07
Tax expenses	3,258.67	2,565.15	7,126.94	5,317.48
Profit After Tax	14,367.02	11,605.47	26,461.18	21,178.59
Owners of the Company	Â	Â	19,761.16	15,889.33
Non-Controlling Interests	Â	Â	6,700.02	5,289.36
Total Comprehensive Income	15,755.48	11,445.80	28,893.91	20,047.88
Owners of the Company	Â	Â	21,699.27	15,218.55
Non-Controlling Interests	Â	Â	7,194.64	4,829.33
ii. RESERVE & SURPLUS	Â	Â	Â	(1 in crore)
Particulars	Standalone	Â	Consolidated*	Â
Â	2023-24	2022-23	2023-24	2022-23
Opening Balance of Surplus	12,648.64	8,863.49	18,236.28	12,757.10
Profit after tax for the year	14,367.02	11,605.47	19,761.16	15,889.33
Re-Measurement of Defined Benefit Plans	(4.27)	(2.68)	(4.66)	(5.04)
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1)(viia)(c) of Income Tax Act, 1961	(712.12)	(529.39)	(1,074.12)	(529.39)
Transfer to Special Reserve created and maintained u/s 36(1)(viii) of Income Tax Act, 1961	(2,804.90)	(2,372.31)	(4,419.18)	(3,780.27)
Transfer to Special Reserve created u/s 45-IC(1) of Reserve Bank of India Act, 1934	(2,873.40)	(2,321.09)	(4,349.20)	(3,484.93)
Transfer to Debenture Redemption Reserve	-	-	-	-
Transfer to General Reserve	-	-	-	-
Transfer to Interest Differential Reserve - KFW Loan (net)	(2.18)	(0.90)	(2.18)	(0.90)
Dividends	(4,818.15)	(2,640.08)	(4,818.16)	(2,640.08)
Dividend Distribution Tax	-	-	-	-
Transfer from Debenture Redemption Reserve on account of utilisation	-	-	-	-
Transfer from OCI - Equity Instruments	-	-	-	-
Other Comprehensive Income / (Expense)	-	-	-	-
Reclassification of gain/loss on sale of equity instrument measured at OCI	164.76	46.13	190.02	48.77
Pooling of interest accounting for common control business combination	-	-	-	-
Impairment Reserve	(89.18)	-	(89.18)	-
Adjustments	-	-	(17.45)	(18.30)
Closing Balance of Surplus	15,876.21	12,648.64	23,413.33	18,236.28
*Attributable to owners of the Company (PFC)

 

In addition to above, provision of 13,732.95 crore and 1175.83 crore on Stage-I Loan Assets and Stage-II Loan Assets respectively is available as on March 31, 2024.

ii. KEY FINANCIAL RATIOS OF THE COMPANY FOR FY2023-24 VIS-A-VIS FY2022-23 ARE GIVEN BELOW:

 

iii. SANCTION / DISBURSEMENT (EXCLUDING RDSS/ IPDS/ R-APDRP)

During FY2023-24, your Company sanctioned loans to the tune of 12,82,269 crore, thereby registering an increase of 21% over the previous year's sanctioned amount of 12,31,625 crore. Loans disbursed during FY2023-24 were 11,27,656 crore, showing an increase of 48.86% over the previous year's disbursed amount of 185,756 crore.

The details of cumulative sector wise sanctions and disbursements are provided in below:

 

3. OPERATIONAL SYNOPSIS i. ASSET QUALITY

(1 in crore)
Particulars	2023-24	2022-23
Gross Loan Assets	4,81,462	422498
Stage III Assets	16,073	16502
Provision on Stage III Assets	11,963	11999
Gross Stage III as % of Gross Loan Assets	3.34%	3.91%
Net Stage III as % of Gross Loan Assets	0.85%	1.07%

 

Ratio	As at March 31, 2024	As at March 31, 2023	Remarks
Net Debt Equity Ratio	5.14	5.32	Â
Operating Margin %	38.27%	35.70%	No significant change
Net Profit Margin%	31.21%	29.26%
CRAR%	25.41%	24.37%
Return on Net Worth (%)	19.49%	18.20%	Â

 

(1 in crore)
Sr.	SECTOR	FY2023-24		FY2022-23
No.	Category	Sanctions	Disbursement	Sanctions	Disbursements
1	State sector	2,16,167	96,349	1,49,300	57,963
2	Central sector	14,648	1,459	26,704	3,063
3	Joint sector	8,804	5,855	19,418	2,300
4	Private sector	42,650	23,993	36,203	22,430
Â	Total	2,82,269	1,27,656	2,31,625	85,756

 

6. CREDIT RATING

Your Company has been assigned the highest ratings by Domestic Credit Rating Agencies and Sovereign Rating by International Credit Rating Agencies as at March 31, 2024:

 

4. AWARDS & RECOGNITION

Environmental:

1.    PFC secured the 3^rd position in the "Swachhta Ranking" for offices in the NDMC area under Swachh Bharat Mission led by Hon'ble Prime Minister emphasising PFC's dedication to cleanliness and vision for a garbage free India.

2.    PFC was conferred with the prestigious "Swachhta Pakhwada Award 2023" for its exemplary performance under Swachh Bharat Abhiyan.

Social & Governance

3.    PFC was ranked 2^nd among Central Public Sector Enterprises for procuring goods and services from MSME Businesses in the 110 crore to 1100 crore range in the FY2022-23. This achievement highlights

PFC's commitment to diversity and empowerment in procurement practices.

4.    PFC secured SCOPE's Meritorious Award for "Best Managed Financial Institution" in the Institutional Category-I (Maharatna/Navratna PSEs). The award was presented by Shri Jagdeep Dhankar, Hon'ble Vice President of India.

5.    PFC won the prestigious "South Asian Federation of Accountants (SAFA) Gold Award in Best Presented Accounts/Annual Report Awards (BPA) for the Financial Year 2021-22 in the 'Public Sector Entities' category.

6.    PFC was conferred with the prestigious Indian Chamber of Commerce Award in the category of "Operational Excellence" at the 12^th PSE excellence Awards.

Others

7.    PFC was selected as India's "Leading Infrastructure Finance Company" at the BFSI & FinTech Summit 2024 by Dun & Bradstreet.

8.    'Rajbhasha Kirti' Puruskar for Best performance in Official Language - PFC won the prestigious 'Rajbhasha Kirti' third prize for the year 2022-23 in the category of Public Sector Undertakings in Region 'A' for best performance in the implementation of Official Language Policy.

5. BORROWINGS

i. BORROWINGS FROM DOMESTIC MARKET

During the FY2023-24, an amount of 184,846.19 crore was mobilized through domestic market as per the details given below:-

(1 in crore)
Source	Amount
Private Placement of Unsecured Taxable Bonds	42,851.89
Term Loan from Banks & FIs	34,462.69
Commercial Paper	1966.13
Public Issue of Secured Taxable Bonds	2,824.48
54EC Capital Gain Tax Exemption Bonds	2741.00
Total	84,846.19

Further, for maintaining adequate liquidity, credit lines to the tune of 114,250 crore were sanctioned as on March 31, 2024 by various scheduled commercial banks to the Company for short-term funding generally without any commitment charges.

RBI has prescribed Liquidity Coverage Ratio (LCR) framework for NBFCs. These guidelines aims for maintenance of a liquidity buffer in terms of LCR by ensuring that NBFCs have sufficient High Quality Liquid Asset (HQLA) to survive any acute liquidity stress scenario lasting for next 30 days. PFC maintains sufficient liquidity buffer in the form of HQLA as prescribed.

ii. EXTERNAL BORROWINGS

The foreign currency denominated borrowings during FY2023-24 are as follows:

(1 in crore)
Sr. No.	Source	Amount
1.	Foreign Currency Term Loans	13,246.68
2.	Short-Term Loans in Foreign Currency	4,221.31
Â	Total	17,467.99

GREEN BONDS

PFC established its Green Bond Framework in October, 2017 as approved by Climate Bonds Initiative (CBI), London, UK. The Green Bond framework for funding renewable projects (viz. Solar and Wind) has been updated in August, 2021 to align with the latest set of guidelines namely Climate Bonds Standard version 3.0, the Green Bond Principles (GBP), 2021 issued by the

International Capital Markets Association (ICMA). In this context, an agreement was executed between PFC & Climate Bonds Initiative.

PFC has issued its first USD Green bond in December, 2017 and raised US $400 million (12,575 crore) at a coupon of 3.75% and these bonds are listed on the London Stock Exchange's new International Securities Market (ISM) and Singapore Stock Exchange. Further, in September, 2021 PFC issued its first ever Euro Green Bonds amounting to EUR 300 million (12,597 crore) at a coupon of 1.841% and these bonds are listed on the Singapore Stock Exchange, India INX and NSE IFSC. Annual update to the holders of the bonds, as required under the PFC's Green bond framework is as follows:-

The funds raised under Green bonds have been utilised to finance renewable energy projects as per the "Eligible Projects" under PFC's Green Bond Framework. As at March 31, 2024, outstanding loan balances of Solar & Wind energy projects funded by PFC are 119,610 crore & 116,551 crore respectively. The total capacity of Solar & Wind energy projects funded by PFC and which are outstanding as on March 31, 2024 is 13,492 MW. Accordingly, PFC green bond portfolio is more than the amount raised through issue of green bonds.

EXTERNALLY AIDED PROJECTS

Outstanding balance from multilateral/ bilateral agencies as at March 31, 2024 is as follows:

Your Company believes that these credit ratings enables us to develop strong relationship with our lenders and borrow funds at competitive rates.

7. MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded 'Excellent' Rating by Government of India since FY 1993-94 except

 

Source	Amount
KFW	EUR 80,815,756.91*
Credit National	EUR 1,114,888.62
ADB	USD 4,814,004.45

* Includes EUR 58,747,000.56 disbursed by KFW in FY2022-23 and EUR 17,763,829.26 in FY2023-24 under Discom Investment Facility (ODA Loan- Without Govt. Guarantee).

Sr. No.	Rating Agency	Long-Term Rating Short-Term Rating
Domestic Credit Rating Agencies (Borrowing Programme)
1.	CRISIL	CRISIL AAA CRISIL A1 +
2.	ICRA	ICRA AAA ICRA A1 +
3.	CARE	CARE AAA CARE A1 +
International Credit Rating Agencies (Issuer Rating)
1.	Fitch Ratings	BBB-
2.	Moody's	Baa3

for two financial years. For the FY2022-23, your Company was accorded 'Excellent' rating. The rating for FY2023-24 is still awaited.

In FY2023-24, the achievement of your Company on some of the key MoU parameters (on standalone basis) has been: Revenue from Operations 146,022.46 crore, Loans Disbursed to Total Funds Available 99.98%, Overdue loans to Total Loans 0.05%, NPA to Total Loans 0.87%, and Cost of raising funds through Bonds as compared to similarly rated CPSEs (-)16.42 bps.

8. SUBSIDIARIES

A. REC LIMITED

REC is also a Systemically Important (Non-Deposit Accepting or Holding) Non-Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI) as an Infrastructure Finance Company (IFC). Its business activities involve financing projects in the complete power sector value chain, be it generation, transmission or distribution and also logistics and infrastructure sector. REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.

During the FY2023-24, the total income of REC was 147,571 crore and the net profit was 114,145 crore on consolidated basis.

The detailed operational and financial performance of REC is available on its website i.e. www.recindia.nic.in .

The following subsidiaries of REC as on March 31, 2024 are also subsidiaries of PFC:

i.    REC Power Development & Consultancy Ltd.

ii.    Chandil Transmission Limited

iii.    Dumka Transmission Limited

iv.    Koderma Transmission Limited

v.    Mandar Transmission Limited

vi.    Meerut Shamli Power Transmission Limited

vii.    Luhri Power Transmission Limited

viii.    Neres XVI Power Transmission Limited

ix.    Khavda II-D Transmission Limited

x.    Jalpura Khurja Power Transmission Limited

xi.    Kallam Transco Limited

xii.    Rajasthan Part I Power Transmission Limited

xiii.    Shongtong Power Transmission Limited

xiv.    Khavda IV C Power Transmission Limited

xv.    Khavda IV-E2 Power Transmission Limited

xvi.    Khavda IV A Power Transmission Limited

xvii.    Khavda V-A Power Transmission Limited

xviii.    Rajasthan IV A Power Transmission Limited

xix.    Rajasthan IV C Power Transmission Limited

xx.    Rajasthan IV HI Power Transmission Limited

xxi.    Rajasthan IV E Power Transmission Limited

xxii.    Tumkur-II REZ Power Transmission Limited

xxiii.    NERGS-I Power Transmission Limited

xxiv.    Kankani Power Transmission Limited

xxv.    ERES-XXXIX Power Transmission Limited

B. PFC CONSULTING LIMITED

Your Company had been offering consultancy support to the Power Sector through PFC Consulting Limited, its wholly-owned subsidiary. The Services offered by PFCCL are broadly in the following areas:

• Transaction Advisory:    End-to-End solutions in Transaction Advisory Services across different areas in power sector (Selection of Sellers/Developers, Reform & Restructuring, Independent Transmission Projects, Privatisation of Electricity Distribution in Union Territories, Resolution Plan and RE-Bundling).

• Project Development: Project Development & implementation of various GoI initiatives (Ultra Mega Power Projects, Lender's Independent Engineer, Lender's Insurance Advisor, Setting up of Manufacturing Zone for power and renewable energy equipment).

•    PMA / PMC/ GoI Schemes: Project management & change agents focusing on revamped solutions & aiming for loss reduction (Revamped Distribution Sector Scheme, Procurement of Power, DEEP Portal, Coal Linkage Auction under SHAKTI Scheme, Pilot Scheme, PRAAPTI Portal, Integrated Power Development Scheme).

•    Smart Solutions: Smart solutions to improve performance & processes, productivity & pro-active planning (Smart Metering, Energy Portfolio Management).

•    Policy Formulation Support: Support to Government/ Regulators for formulation of Policies, Regulatory framework and Guidelines & SBDs.

•    Other Services: Strategy, Regulatory, Tariff Support, fund mobilisation and other aspects of power sector-.

Till date, consultancy services have been rendered by PFCCL to its clients spread across India. The total no. of projects/assignments undertaken as on date are more than 200.

Further, during the FY2023-24, the total income of PFCCL is 1267.07 crore and the net profit earned is 1158.67 crore. The net worth of PFCCL as on March 31, 2024 is 1239.49 crore.

Your Company is designated by Ministry of Power (MoP) as the 'Nodal Agency' for facilitating development of Ultra Mega Power Projects and its wholly-owned subsidiary i.e.

PFC Consulting Limited is the 'Bid Process Coordinator' for Independent Transmission Projects.

As on March 31, 2024, the subsidiaries of PFCCL incorporated as Special Purpose Vehicles (SPVs) are as follows:

1.    Chhatarpur Transmission Limited

2.    Siot Transmission Limited

3.    Joda Barbil Transmission Limited

4.    Ramakanali B -Panagarh Transmission Limited

5.    Paradeep Transmission Limited

6.    Gola B -Ramgarh B Transmission Limited

7.    Khavda PS1 and 3 Transmission Limited

8.    Pune- III Transmission Limited

9.    Barmer I Transmission Limited

10.    KPS III HVDC Transmission Limited

11.    Sirohi Transmission Limited

12.    Beawar - Mandsaur Transmission Limited

13.    South Olpad Transmission Limited

14.    Bhadla-III & Bikaner-III Transmission Limited

15.    Jamnagar Transmission Limited

16.    Bhuj II Transmission Limited

17.    Angul Sundargarh Transmission Limited

C.    PFC INFRA FINANCE IFSC LIMITED

PFC Infra Finance IFSC Limited was incorporated on February 11, 2024 as wholly-owned subsidiary of Power Finance Corporation Limited. Your Company is the first Govt. NBFC which has established a subsidiary in the International Financial Services Centre (IFSC) at GIFT City, Gujarat. This subsidiary has been setup as a Finance Company in IFSC. IFSC provides a unique platform to access global capital and expertise, which will enable your Company to provide even more efficient and innovative financing solutions to the clients. PFC's entry into the IFSC shall open up new business opportunities and establish its global presence. This Company will focus on providing financial solutions for infrastructure projects across various sectors, including renewable energy. It will unlock avenues in international lending space and help in taking PFC's brand global.

D.    PFC PROJECTS LIMITED

Coastal Karnataka Power Limited (CKPL), a wholly-owned company of PFC Ltd. was set up for developing the UMPPs in the State of Karnataka as per the mandate from GoI. Accordingly, CKPL's MoA was amended to enable Bidding in lenders' backed resolution plan by PFC and it has been renamed as PFC Projects Limited (PPL).

E. OTHER SUBSIDIARIES ESTABLISHED FOR DEVELOPMENT OF UMPP'S

i.    Coastal Tamil Nadu Power Limited

ii.    Orissa Integrated Power Limited

iii.    Sakhigopal Integrated Power Company Limited

iv.    Ghogarpalli Integrated Power Company Limited

v.    Deoghar Mega Power Limited

vi.    Cheyyur Infra Limited

vii.    Odisha Infrapower Limited

viii.    Deoghar Infra Limited

ix.    Bihar Infrapower Limited

x.    Bihar Mega Power Limited

xi.    Jharkhand Infrapower Limited

9. PROACTIVE RISK MANAGEMENT THROUGH A MULTI LAYERED RISK FRAMEWORK

i.    ASSET LIABILITY MANAGEMENT

Your Company has put in place a sound and robust Asset Liability Management Policy formulated in line with the RBI's guidelines to establish focus on liquidity and interest rate risk management process in PFC. Measurement and monitoring of Liquidity risk is done through cash flow approach; and for Interest rate risk, it is done through traditional gap analysis technique as detailed in RBI guidelines. Such analysis is made on periodical basis in various time buckets and is used for critical decisions regarding the time, volume and maturity profile of the borrowings and creation of mix of assets and liabilities in terms of time period (short, medium and long-term) and in terms of fixed and floating interest rates. The details of the asset liability management maturity pattern are given at Note No. 53.1 of the Notes to Accounts of the Standalone Financial statements forming part of this Annual Report.

ii.    FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place "Policy for Management of Risks on Foreign Currency Borrowings" to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like forwards, options and swaps.

As on March 31, 2024, the total o/s foreign currency liabilities stand at USD eqv 8,736 mn, and the borrowings denominated in different currencies are USD 6,940 mn, JPY 2,09,309 mn & EUR 382 mn. Out of the total foreign currency borrowing portfolio 88% is hedged i.e. USD eqv 7,694 mn. Also, 93% of the FC portfolio with residual maturity up to 5 years is hedged.

iii.    INFORMATION SECURITY RISK MANAGEMENT

Your Company has in place an IT Strategy Committee in compliance with the RBI Master Direction on Information Technology Governance, Risk, Controls and Assurance

Practices for the NBFC sector, The Committee reviews the IT strategies in sync with the corporate strategy & Board policy, and monitors the IT risks, controls, cyber security arrangements and other matters related to IT Governance ensuring an effective and robust system in place. In line with the RBI Master Direction for NBFCs, your Company has implemented its IT policy and other policies on Change Management, Information Security, Business Continuity Management and Cyber Security.

iv. INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

In order to manage risks faced by your Company, it has put in place an Integrated Enterprise Wide Risk Management Policy (IRM policy). For implementation of the policy, your Company has constituted the Risk Management Committee. Under the IRM policy, the Company has to identify the principal risks which may have an impact on its profitability/revenues. In this regard, the Company has identified 11 significant risk parameters which arise from the Company's business model and from its use of financial instruments. These risk parameters cover the major operational risks, financial risks, market risks, regulatory risks etc. faced by the Company and are regularly assessed as per the Risk Assessment Criteria. Further, the Company also maintains a risk register which serves as repository of relevant information related to various risks.

10. PFCA STRATEGIC PARTNER OF GOVT. OF INDIA IN BRINGING POWER SECTOR REFORMS

i. REVAMPED DISTRIBUTION SECTOR SCHEME (RDSS) & INTEGRATED POWER DEVELOPMENT SCHEME (with RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP) SUBSUMED IN IT)

The Company is involved in various GoI programmes for the power sector including acting as the Nodal Agency for operationalisation and implementation of Revamped Distribution Sector Scheme (RDSS) launched by Govt. of India in July, 2021. PFC was also the designated nodal agency for operationalisation of IPDS and R-APDRP Schemes. Both of the Schemes have been Sunset in March, 2022.

Revamped Distribution Sector Scheme (RDSS)

MoP/ GoI vide OM dated 20.07.2021 has conveyed sanction of President of India for implementation of "Revamped Distribution Sector Scheme (RDSS) - A Reforms-based and Results-linked, Distribution Sector Scheme" to improve the operational efficiencies and financial sustainability of DISCOMs, by providing financial assistance to DISCOMs for upgradation of the Distribution Infrastructure and Prepaid Smart Metering & System Metering based on meeting pre-qualifying criteria and achieving basic minimum benchmarks in reforms. PFC and REC (PFC's subsidiary) are the designated nodal agencies for operationalisation of the Scheme, as per RDSS guidelines and directions of

inter-ministerial Monitoring Committee/MoP from time to time. Nodal agencies are eligible for 0.5% of the sum total of the Gross Budgetary Support (GBS) component of the various projects approved by Monitoring Committee as its fee. PFC is the nodal agency for 17 States/UTs under the Scheme. The implementation period of the Scheme is 5 Years (FY2021 -22 to FY2025-26). The Scheme has an outlay of 13,03,758 crore with an estimated gross budgetary support of 197,631 crore from the GoI.

Financial Assistance under RDSS:

For States allocated to PFC, projects for loss reduction and metering have been sanctioned for 24 Distribution Utilities across 13 States. Details as on March 31,2024 are tabulated below:

(1 in crore)
Project	Approved Cost	GoI Component (GBS)	GoI Grant Disbursement
Metering	56,691	10,401	5
Loss Reduction	56,183	34,903	3,304
Total	1,12,874	45,304	3,308

^Ain addition, MoP has also disbursed 1158 crore for other than the Project activities e.g. nodal agency fee (1 38 crore), training & capacity building etc.

Role of PFC in the implementation of RDSS Scheme and other activities/Initiatives under RDSS.

Wide range of activities being performed by PFC under RDSS and for other allied Schemes of GoI are listed below:

Core Activities

•    Overall facilitation and Programme management including appraisal of projects, quality monitoring, monitoring compliance of scheme guidelines, resolving queries of DISCOMs etc.

•    Annual result evaluation framework of DISCOMs including monitoring of regulatory parameters e.g. subsidy accounting, Govt. dues, analysis of tariff orders, analysis of sales data etc.

•    Capacity building/training programme for skills development of DISCOMs' employees.

Supporting Activities for allied programmes of GoI

•    Co-ordinating with DISCOMs/ CEA/ MoP for State Sector Distribution Projects covered under National Infrastructure Pipeline (NIP)

•    Sanction and monitoring of electrification of over 70,000 Particularly Vulnerable Tribal Groups (PVTG) households under PM JANMAN Programme being funded under RDSS.

•    Facilitation with DISCOMs for Ease of Living (EoL) parameters; PM-KUSUM; Border area electrification; left-out household electrification; supply to BSNL Telecom towers in remote areas etc.

Other Concurrent Activities

•    PFC is supporting the States by preparing Model Bidding Documents for Automation and ERP projects under RDSS; monitoring of implementation of SCADA systems; development of Integrated web portal for various government Schemes including RDSS; tie-up with multi-lateral agencies viz. ADB, KfW for funding under RDSS and USAID, GiZ etc. for training & capacity building of DISCOM personnel

Impact of RDSS in Power Distribution Sector

Various regulatory as well as corporate governance related reform measures being implemented in the DISCOMs (inter alia including RDSS), have started showing desired results:

•    Tariff orders are being issued regularly.

•    Reduction in Average AT&C loss of distribution utilities in country from 22.3% in FY 21 to 15.4% in FY 23.

•    For FY 22 and FY 23, there has been an improvement in the average revenue realisation by the DISCOMs.

•    Quarterly accounts are now being submitted regularly.

•    Timely payments of subsidy and Govt. department dues by State Governments have also contributed to increased revenue.

•    Over 100% receipt of Subsidy by DISCOMs for the 2^nd consecutive year.

•    Scheme also places strong emphasis on enhancing consumer satisfaction with improvement in service quality, leading to increased consumer trust and loyalty.

Integrated Power Development Scheme (IPDS) (including R-APDRP subsumed)

The erstwhile Scheme of IPDS (including R-APDRP subsumed) launched by Ministry of Power, Government of India in order to provide impetus to strengthening of power distribution sector, consumer/system metering, IT enablement of distribution sector, Digital technology initiatives, new & innovative technologies etc. in urban areas were subsumed in RDSS Scheme. The Schemes have been Sunset in March, 2022.

Achievements of IPDS (including R-APDRP subsumed)

•    The Schemes have helped in making a difference in the lives of around 10 crore urban electricity consumers living in 3,600 towns across the country where the Power Distribution infrastructure has been upgraded.

•    IT and Technical interventions coupled with administrative and other measures undertaken under the Schemes have helped in improvement of Billing/Collection efficiency for reduction in Aggregate Technical and Commercial (AT&C) losses.

•    There has been an increase in transparency by way of capturing of data from ~36,000 urban feeders (11 kV)

in IT enabled towns on Urban Distribution Monitoring System under National Power Portal.

•    Real Time Data Acquisition System has been set up covering around 15,000 feeders for capturing data

w.r.t. reliability indices at feeder level.

•    92 Gas Insulated Substations (GIS) & Hybrid PSS have been commissioned/upgraded. Such substations have been set up for the first time in Bihar, Karnataka, UP and NER States.

•    Around 10 lakh Smart/Prepaid Meters have been installed in the country under IPDS.

•    '1912' - Short-code for 'Complaints on Electricity' was made operational in all DISCOMs.

•    Capacity building/training of Utility personnel has also been carried out using Digital means under IPDS/ R-APDRP to enhance their skill through workshops/ webinars on AT&C loss reduction, smart metering, project management, guidelines, best practices etc.

Thus, your Company is contributing towards improving operational efficiency and financial health of Power Distribution Sector of the Country.

ii. LATE PAYMENT SURCHARGE RULE, 2022

Ministry of Power (MoP) vide Gazette Notification dated June 03, 2022, notified "The Electricity (Late Payment Surcharge and Related Matters) Rules, 2022" (LPS Rules). These rules provide a mechanism for settlement of outstanding dues of Generating Companies, Inter-State Transmission Licensees and Electricity Trading Licensees.

Your Company has been designated by MoP as the Nodal Agency for implementation of LPS Rules, 2022. PFC shall be responsible for all the activities related to implementation of the said Rules including regular review and monitoring.

For operationalisation of Rules, PRAAPTI Portal (developed and managed by PFC Consulting Ltd.) acts as an information portal wherein suppliers enter invoice details and Discoms update the corresponding payment information to ensure invoice and payment tracking of power bills in the country. Based on the information available on PRAAPTI, regulations are imposed on defaulting Discoms as per LPS Rules, 2022 by Grid Controller of India Limited.

With the implementation of Electricity (LPS and Related Matters) Rules, 2022, remarkable improvement has been seen in recovery of outstanding dues of suppliers including Generating Companies, Transmission Companies and Traders. Against legacy dues of 11,39,947 crore as on June 3, 2022, 13 States/UTs have paid instalment of 11,00,724 crore (22 EMIs) up to May 2024 i.e. 72% of total legacy dues. Further, 20 States/UTs reported to have no outstanding dues as on June 03, 2022. Now the legacy dues (overdues) have reduced from 11,39,947 crore to 139,223 crore and as on date there is no default in payment of instalments for legacy dues by States.

In view of provision of regulation under LPS Rules, 2022, the Distribution companies are paying their current dues in time. Since implementation of the rule, as on May 07, 2024, total bills amounting to 18,47,611 crore have been settled against total billed amount of 19,21,183 crore from May 2022 (excluding EMI Payments against legacy dues and including Disputed Invoices).

iii. INDEPENDENT TRANSMISSION PROJECTS (ITPs)

MoP has initiated Tariff Based Competitive Bidding Process (TBCB) for development and strengthening of transmission system through private sector participation. Mop designated PFC Consulting Ltd. as Bid Process Coordinator (BPC)

The objective is to develop transmission capacities in India and to bring in the potential investors after preliminary works like survey, route identification, etc.

As on March 31, 2024, 77 SPVs (69 are related to interstate transmission scheme and 8 are related to intra-state transmission scheme), 2 by your Company and other 75 by its wholly-owned subsidiary (PFC Consulting Ltd.) have been established for ITPs.

Further, during the FY23-24, following SPVs established for development of transmission projects has been transferred to the successful bidders selected through TBCB:

i.    Ananthpuram Kurnool Transmission Limited

ii.    Fatehgarh III Beawar Transmission Limited

iii.    Beawar Dausa Transmission Limited

iv.    Fatehgarh III Transmission Limited

v.    Bhadla III Transmission Limited

vi.    Fatehgarh IV Transmission Limited

vii.    Bikaner III Neemrana Transmission Limited

viii.    Bikaner III Neemrana II Transmission Limited

ix.    Neemrana II Kotputli Transmission Limited

x.    Neemrana II Bareilly Transmission Limited

xi.    Koppal II Gadag II Transmission Limited

xii.    Halvad Transmission Limited

xiii.    Vataman Transmission Limited

xiv.    Tirwa Transmission Limited

xv.    Jewar Transmission Limited

xvi.    Solapur Transmission Limited

As on March 31,2024, out of 77 SPVs, 55 SPVs (50 are related to inter-state transmission scheme and 5 are related to intra-state transmission scheme) were transferred to the successful bidders. Further, due to de-notification of schemes by MoP, 5 SPVs were closed.

iv. ULTRA MEGA POWER PROJECT (UMPP)

Development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each, adopting super critical technology is the initiative of MoP, Government of India for which your Company has been designated as the 'Nodal Agency' and Central Electricity Authority (CEA) as the Technical Partner by MoP.

PFC Consulting Limited (a wholly-owned subsidiary of PFC) along with MoP and CEA undertake preliminary site investigation activities, land acquisition activities, site specific studies to obtain appropriate regulatory and other approvals for land, water, coal block, environment etc. necessary to conduct catalyst of the bidding process. The successful bidder is then expected to develop and implement these projects.

Your Company incorporated a total of 19 Special Purpose Vehicles (SPVs) as its wholly-owned subsidiaries for 14 UMPPs. Out of these, 4 UMPPs are awarded and 4 UMPPs are closed.

In reference to closed UMPPs, SPVs namely Tatiya Andhra Mega Power Ltd. (2^nd Andhra UMPP), Coastal Maharashtra Mega Power Ltd. (Munge UMPP) and Chhattisgarh Surguja Power Ltd. (Chhattisgarh UMPP) are striked-off from the records of RoC in FY22-23. Further, SPV namely Coastal Karnataka Power Ltd. (Karnataka UMPP) is being utilised by PFC for bidding reg. stressed projects (name of the SPV changed to PFC Projects Ltd.).

It was deliberated in MoP that UMPPs may be closed in view of the country making energy transition. Further, MoP directed PFC to take necessary action for closure of 6 UMPPs. Accordingly, PFC/PFCCL has initiated the process.

11. INITIATIVES FOR MONITORING DISCOM'S PERFORMANCE

i. ANNUAL INTEGRATED RATING OF STATE DISTRIBUTION UTILITIES

Ministry of Power has taken various reform initiatives, to bring about improvements in the Distribution Sector and has put in place an Integrated Rating Methodology for an objective evaluation of performance of Distribution Utilities. The objective of the Integrated Rating is to rate all utilities in the power distribution sector based on their financial performance and their ability to sustain the performance level. Private Distribution Utilities and Power Departments are also being included to provide complete sectoral coverage.

The methodology adopted attempts to objectively adjudge the performance of distribution utilities against various parameters broadly classified under i) Financial Sustainability parameters ii) Performance Excellence parameters and iii) External Environment parameters. For the introduction of Power Departments in the rating exercise, a subset of metrics with modified weightages from the overall methodology have been utilised for rating.

These ratings were carried out by the reputed consultant M/s. McKinsey & Company and co-ordinated by your Company. These ratings are immensely beneficial as a diagnostic tool in the hands of the State Governments as well as Utilities to build on their strengths and work on areas requiring improvements so as to improve their operational efficiency and financial sustainability. Twelfth Integrated Ratings for FY2022-23, covering 72 Utilities/ departments across the country and inter se ranking of the Utilities was released by the Hon'ble Minister of Power, New & Renewable Energy on March 11, 2024.

11.    ANNUAL PERFORMANCE REPORT OF POWER UTILITIES

PFC publishes the Report on Performance of State Power Utilities on an annual basis. The Report covers a range of key financial and operational parameters such as profitability, gap between average cost of supply and average revenue, net worth, receivables, payables, AT&C losses and consumption pattern of the sector at utility, state and national level. The report covers distribution utilities in all the States and UTs of India including major private distribution utilities and all State Gencos/ Transcos/ Trading utilities, offering a comprehensive insight into the performance of the Indian Power Sector.

The report for the period 2020-21 to 2022-23 with inputs received from the state power utilities up to April 2024 has been published.

iii. CATEGORISATION OF UTILITIES

For purposes of funding, your Company classifies State Power Generation and Transmission entities into A++, A+, A, B and C categories. The categorisation (biannually) of State Power Generation and Transmission entities is arrived based on the evaluation of entity's performance against specific parameters covering operational & financial performance including regulatory environment, availability of audited accounts, etc. as per categorisation policy.

With respect to State Power Distribution entities (including PDs/entities with integrated operations), your Company's categorisation policy provides for adoption of MoP's Integrated Ratings by aligning such ratings/gradings with PFC's standard categories of A+, A, B, C and D.

The categorisation of Borrowers in the Logistics and Non-Power Infrastructure sector is carried out on the basis of recommendations of the Internal Committee considering the strengths and weaknesses of the project.

The categorisation enables PFC to determine pricing of loans and stipulation of security to the state power entities.

12.    OTHER MAJOR INVESTMENTS

i. POWER EXCHANGE INDIA LIMITED

Power Exchange India Limited (PXIL) is India's first institutionally promoted Power Exchange that provides

innovative and credible solutions to transform the Indian Power Markets. PXIL, provides nation-wide, electronic exchange for trading of power and handles power trading and transmission clearance, simultaneously, it provides transparent, neutral and efficient electronic platform. PXIL offers various products such as Day Ahead, Day Ahead Contingency, Any Day, Intra Day and Weekly Contracts. PXIL provides trading platform for Renewable Energy Certificates. PFC's investment in equity shares of PXIL as on March 31, 2024 is 13.22 crore. PFC's investment value as on March 31, 2024 is 14.78 crore.

ii.    ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad. The shareholding of your Company (along with its subsidiary REC) as on March 31, 2024 is 21.49%.

iii.    PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested 112 crore in PTC which is 4.05% of PTC's total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country.

iv.    NHPC LIMITED

PFC has initially invested 26,05,42,051 equity shares of NHPC Limited at the rate of 121.78 per share (including securities transaction tax, brokerage and other charges) amounting to 1567.46 crore in April 2016 during disinvestment by GoI through offer for sale route. PFC has sold 14,28,62,859 number of equities shares till March 31, 2024. As on March 31, 2024 PFC holds 11,76,79,192 shares of NHPC Limited valued at 11,055.58 crore. NHPC has reported profit after tax of 13,745 crore for the financial year 2023-24 as compared to Profit after Tax of 1 3,834 crore for Financial year 2022-23.

v.    COAL INDIA LIMITED

PFC has invested 1,39,64,530 equity shares of Coal India Limited at the rate of 1358.58 per share (including securities transaction tax, brokerage and other charges) amounting to 1500.74 crore in February 2015 through offer for sale route. As on March 31, 2023, PFC holds 1,39,64,530 equity shares of Coal India Limited valued at 1606.20 crore. CIL has reported profit after tax of 115,766.83 crore for the financial year 2023-24 as compared to Profit after Tax of 114,802 crore for Financial year 2022-23.

13. PRESIDENTIAL DIRECTIVES

During last 3 years, there has been no Presidential Directive.

14. RIGHT TO INFORMATION: EMPOWERING CITIZENS THROUGH TRANSPARENT COMMUNICATION

The Right to Information is a fundamental right under the Constitution of India. The basic object of the Right to Information Act is to empower the citizens, promote transparency and accountability in the working of the Government, contain corruption, and make our democracy work for the people in real sense. It goes without saying that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable to the governed. The Act is a big step towards making the citizens informed about the activities of the Government. The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the Public Authorities.

An elaborate mechanism has been set up in PFC to deal with requests received under the RTI Act, 2005. PFC has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the Company. The Company has designated a Public Information Officer (PIO) and a First Appellate Authority (RTI) at its registered office for effective implementation of the RTI Act. The relevant information/disclosures are also made available on the official website (www.pfcindia. com) of the Company. During the period from April 01, 2023 to March 31, 2024, all 120 applications received under the RTI Act, were duly processed and replied to. PFC has also complied with the requirement of filing of online RTI Quarterly Returns on the portal of Central Information Commission (CIC) during the said period.

Further, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated 15.04.2013 issued guidelines on the following :-

(i)    Suo moto disclosure of more items under Section 4;

(ii)    Guidelines for digital publication of proactive disclosure under Section 4;

(iii)    Guidelines for certain clauses of Section 4(1 )(b) to make disclosure more effective;

(iv)    Compliance mechanism for suo-moto disclosure (proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid Guidelines, PFC has placed the requisite information on the website of the Company.

Besides the above, PFC is also linked with the online RTI Portal of Govt. of India, Department of Personnel & Training (https://rtionline.gov.in). which enables citizens of India, to file RTI applications/first appeals online along with payment gateway. Payment can be made through internet banking of SBI & its associate banks, debit/ credit cards of Master/ Visa and RuPay cards.

15.    CORPORATE SOCIAL RESPONSIBILITY

The aim of PFC's Corporate Social Responsibility and Sustainability Policy (CSR and Sustainability Policy) is to ensure that the Corporation becomes a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfillment of Power and Energy needs of the society.

PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. To oversee the activities of CSR, PFC has in place a Board level CSR&SD Committee of Directors headed by an Independent Director.

PFC has implemented wide range of activities in the field of Environment Sustainability, Rehabilitation and Reconstruction Activities, Healthcare, Education, Sports, Sanitation & Drinking water and Skill development & Livelihood, Rural Development etc. Further, as per DPE's mandate, PFC has also been contributed to thematic areas i.e. 'Health & Nutrition'.

The CSR Report under Companies (CSR Policy), Rules is annexed herewith.

16.    HR INITIATIVES CAPACITY BUILDING:

Investing in employee capacity building is crucial for achieving our strategic objectives and maintaining a competitive edge. During FY2023-24, the focus on conducting customised programmes was maintained to ensure specific skill development aligned with the corporate goals.

The programmes on critical areas including Environmental, Social and Governance (ESG), AML, KYC, CFT, General Management Programmes, Stressed Asset Resolution under the Insolvency & Bankruptcy Code, 2016, Public Procurement through GeM Portal, Advanced Excel, Conduct, Discipline & Appeal (CDA) Rules of PFC, etc. were organised along with other need-based programmes.

In addition to the above, other compliance-related programmes such as Awareness Workshop on Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, Occupational Health & Safety Hazards, Office etiquettes were organised.

All the fresh recruits of PFC attended a 3-week Foundation course of National Power Training Institute (NPTI) wherein they were trained on Basics of Power Sector, Renewables & Solar Energy, Government Schemes, Energy Transition, Energy Conservation & Energy Efficiency, SCADA, and Project Appraisal among other topics. Employees are also encouraged to participate in Conferences related to energy and infrastructure sector, promoting continuous learning and exposure to the industry.

Your Company nominates senior executives in Leadership development programmes of premier management

institutes like IIMs to equip them with skills to take on leadership roles.

During the year a total of 2484 man-days training were achieved through conducting various in- house programmes and sponsoring PFC employees to the programmesorganisedbyotherexternaltrainingagencies.

EMPLOYEE ENGAGEMENT ACTIVITIES

A dedicated employee engagement Portal viz. Portal for Enhancing Engagement, Promote Awareness & Learning (PEEPAL) has been created for all employees to increase Information/Knowledge sharing within the organisation and increase employee engagement and inclusiveness.

The Knowledge Sharing Platform initiative was commenced in the year 2023 with the aim of fostering a culture of continuous learning and collaboration within PFC. This initiative aims to develop employees' communication skills, subject matter expertise, facilitate cross-functional knowledge exchange and enhance overall organisational performance. The sessions conducted on this platform are readily available in form of presentations/recordings on the PEEPAL portal for wider dissemination of knowledge.

PFC is a founding member of Power Sports Control Board (PSCB). PFC employees participated with full vigour and enthusiasm in various Inter-CPSU sports tournaments like Badminton, Chess, Carrom, Table Tennis & Cricket organised by the PSCB member organisations during the FY2023-24. PFC Men's team has won 1^st prize in Carrom tournament and PFC Women's team has won 3^rd prize in Table Tennis tournament.

PFC also celebrated its Foundation Day for its employees & their family member on July 16, 2023 at JLN Stadium, New Delhi.

TALENT MANAGEMENT

Your Company has put in place effective talent acquisition and retention practices, which are benchmarked with best corporate practices designed to meet the organisational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity.

The Industrial Relations within the Company have been very cordial and harmonious with the employees committing themselves entirely to the objectives of the Company. There were no man-days lost during the year under review. Your Company recruited 57 executives in FY2023-24 and the attrition during the period from April 01, 2023 to March 31, 2024 was 0.75%.

EMPLOYEE WELFARE MEASURES

Your Company is committed to strive towards adopting the best management practices of the industry and take up new initiatives for enhancing the productivity of employees.

An effective package of employee welfare measures which include comprehensive insurance, medical facilities and other amenities lead to a healthy and productive workforce. During the period, several employee related policies and facilities like TA rules, Promotion policy, Service rule etc. were reviewed and revised.

EMBRACING DIVERSITY & FOSTERING INLCUSION

The Company follows the Presidential Directives and guidelines issued by the Government of India to promote inclusive growth. The status is presented under:

. Status of Reservation of Posts for various categories (as on March 31, 2024)
Group	Total Employees	SC1	SC%	ST2	ST%	OBC3	OBC%	EWS4	EWS%
A	529	97	18.33%	36	6.80%	109	20.60%	8	1.51%
B	11	1	9.09%	1	9.09%	0	0.00%	0	0.00%
C	5	1	20.00%	1	20.00%	3	60.00%	0	0.00%
D	0	0	0.00%	0	0.00%	0	0.00%	0	0.00%
Total	545	99	18.16%	38	6.97%	112	20.55%	8	1.46%

 

PFC makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC/ ESM⁵/ PwBD⁶ employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions. Separate Liaison officers have been appointed to look into the matter of reservations. PFC has uploaded dashboard about the details of backlog of any reserved post on career page of PFC website. During the year there was no backlog reserved post.

* Grievance redressal cell as per the statutory requirements are in place in the corporation.

’Scheduled Caste Economically Weaker Section ⁵Persons with Benchmark Disabilities ²Scheduled Tribe ⁴Other Backward Classes    Ex-Servicemen

 

ii. Empowering diversity:    Women's

representation in workforce

Your Company has women in important and critical functional areas. Women representations have gone up across hierarchical levels. The Company provides equal growth opportunities for the women in line with Govt. of India philosophy on the subject. Women constitute 21.46% of the total work force.

Group	Total Employees as on March 31,2024	Number of Women Employees	Percentage of overall staff strength
A	529	115	21.73%
B	11	1	9.09%
C	5	1	20.00%
D	0	0	0.00%
Total	545	117	21.46%

PFC as part of its social responsibility makes all efforts to ensure compliance of the Directives and guidelines issued by the Government of India from time to time pertaining to the welfare of female employees.

iii. Ensuring a Secure Work Environment: Compliance With Sexual Harassment Prevention

Your Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

a)    Number of complaints filed during the financial year 2023-24-NIL

b)    Number of complaints disposed of during the financial year 2023-24-NIL

c)    Number of complaints pending as on end of the financial year 2023-24-NIL

17. VIGILANCE - ENHANCING TRUST AND ACCOUNTABILITY

The function of PFC's Vigilance Unit is to perform as an effective tool of the Corporation. During the Financial Year 2023-24, the Vigilance Unit has done preventive vigilance, by constantly emphasising on periodic & surprise inspections of various units. During the period, the Vigilance Unit has also issued instructions/operative guidelines to rationalise systems and procedures in order to eliminate gaps and confirming transparency in day to day operations. As a new initiative, the PFC has organised various outreach meetings for the vendors of the PFC, Regional office (South) and (West) and PFCCL to educate them about PIDPI, public procurement, latest trends in public procurement, integrity, ongoing changes etc. The vendors were sensitised about PIDPI by Vigilance Officials.

The Vigilance Unit carried out detailed investigation in respect of complaints registered during this period.

Power Finance Corporation Limited observed Vigilance Awareness Week from 30.10.2023 to 05.11.2023. On the occasion, banners showing observance of the Vigilance Awareness Week were displayed at the prime locations in and outside the office premises. Theme of Vigilance Awareness Week -2023 i.e. "Say no to Corruption; Commit to the Nation" was also displayed on desktops of all the employees of the corporation. Publicity of the event was also done through social media such as Facebook, Twitter (X) and Instagram. Vigilance Unit also provided link on intranet and PFC website for varied administration of e-pledge on Integrity.

During the week-long celebrations, the Vigilance Unit organised various competitions/events for employees such as Slogan writing competition, Poem Writing competition and Pictorial Competition on the subjects related to Vigilance. These competitions were open to all regular employees of this Corporation including those posted in the regional offices. The aim of these competitions was to stimulate the creativity, imagination and originality of the employees to enable them to come out with innovative ideas about dealing with Good Governance. As a part of sequence of events being held during 3 months VAW-2023 campaign, a training programme on Conduct, Discipline and Appeal Rules, workshop on "Ethics and Governance" and talk session on the topic "Vigilance Awareness" and "Say no to Corruption; Commit to the Nation was organised for the employees of the Corporation. The talk session was taken by Shri P. Daniel, Secretary, CVC, and Shri Pankaj Agarwal, Secretary Power in presence of senior officials of the Corporation. In addition to this, a workshop on PIDPI, Preventive Vigilance and PFC CDA Rules were organised by PFCCL for its employees on the subject of Preventive Vigilance. Shri R.N. Nayak, Ex-Director, CVC has taken the sessions. All the employees of PFCCL have actively participated in the event.

In compliance of the instructions of CVC, the sensitive posts in the Corporation have been identified and the concerned officers were rotated on a regular basis. Agreed lists and List of officers of Doubtful Integrity for the year 2024 were prepared in respect of corporate office at Delhi and regional offices at Mumbai and Chennai in consultation with the CBI. Prescribed periodical statistical returns were sent to CVC, CBI, MOP on time.

The Vigilance Unit continuously functioned for systemic improvements with a view to increase transparency, objectivity and accountability in the operations of the corporation. Thus, it has contributed towards strengthening in the functioning of the organisation.

18. OFFICIAL LANGUAGE

PFC always gives utmost priority to Official Language Hindi in all its official working. It is a matter of great pride that PFC has been awarded the prestigious 'Rajbhasha

Kirti Puraskaar' 3^rd Prize for the year 2022-23 (in Public Sector Category in Region 'A') by the Department of Official Language, Ministry of Home Affairs for its concerted efforts made towards implementation of Official Language Policy. The Prize has been received by PFC for consecutively 10^th time.

PFC celebrated Hindi Day on September 14, 2023 and Hindi Month from September 14, 2023 to October 13, 2023 successfully. Six (6) competitions, viz. 'Hindi Tippan evam Aalekhan', 'Chitra Kuchh Bolte Hain', 'Rajbhasha Niti, Niyam Pratiyogita', 'Samanya Gyan Prashnottari Pratiyogita', Smaran Shakti Pratiyogita and 'Special Competition for Senior Executives' were conducted during the Hindi Month to encourage and motivate employees to continue working in Hindi. During Hindi Month, a Kavi Sammelan along with employee's performances was also organised on October 10, 2023 for PFC employees at Kamani Auditorium.

During the year, Seven (7) Hindi workshops were organised on various topics in which 364 employees participated. A Rajbhasha Sammelan was organised at Puri, Odisha for the Executive Directors and HoUs of the Corporation from May 05, 2003 to May 07, 2023. A Hindi Seminar was also organised on October 09, 2023 on the subject "Pracheen Bharat Aur Hindi" in which 55 employees participated. Apart from the competitions held during the Hindi month, Five (5) Hindi competitions, viz. 'Shabd Vyuh Bhedan Pratiyogita', 'Mera Desh, Meri Bhasha, Meri Pahchan', 'Shabd Manthan Pratiyogita', 'Samanya Gyan Hindi Pratiyogita' and a special competition on the occasion of World Hindi Day on January 10, 2024 were also conducted during the year in order to promote the usage of Official Language in which 266 entries were received from the employees. Review meetings with various units, internal inspections and Personal contact programme were conducted for the purpose of reviewing the Rajbhasha related work being done by these units and employees. To motivate the employees towards Hindi, the book "Kurukshetra" written by renowned poet and writer Ramdhari Singh Dinkar was distributed to all the employees.

The meeting of Hindi Advisory Committee, Ministry of Power was held on August 17, 2023. The meeting was presided over by Shri R. K. Singh, Hon'ble Minister of Power and New & Renewable Energy. During the meeting, the Corporation was honoured with "Rajbhasha Samman" for the year 2022-23 by the Hon'ble Power Minister for its significant contribution towards the implementation of the Official Language Policy and organising the meeting of Hindi Advisory Committee.

I nspections were carried out by the Northern Regional Implementation Office-1, (Delhi), Department of Official Language, Ministry of Home Affairs and the Ministry of Power on May 02, 2023 and May 18, 2023, respectively; regarding implementation of Official Language in the Corporation and they appreciated the efforts being made by PFC towards the same.

Four (4) issues of the house journal, "Urja Deepti", were published and uploaded on the PFC website as well as the website of the Department of Official Language, Ministry of Home Affairs. The house journal, "Urja Deepti", was awarded Second prize for "Shreshth Grih Patrika" among the magazines/journals published by the member undertakings of NARAKAS (Upkram-1) Delhi during January to December 2023 in the meeting held by NARAKAS (Upkram-1) on January 24, 2024.

All these efforts acted as motivational tools for creating possibilities of progressive use of Official Language in the Corporation.

19.    DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

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

(b)    the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

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

(d)    the Directors had prepared the annual accounts on a going concern basis; and

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

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

20.    AUDITORS

i. STATUTORY AUDITORS

Prem Gupta & Company, Chartered Accountants and Chokshi & Chokshi LLP, Chartered Accountants were appointed as Joint Statutory Auditors of the Company for FY2023-24 by the Office of the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY2023-24 and have given their report without any qualification, reservation, adverse remark or disclaimer. The copy of the audit report is annexed herewith.

ii.    SECRETARIAL AUDIT

Your Company had engaged M/s. Mehta & Mehta, Company Secretaries as Secretarial Auditors for FY2023-24. Secretarial Audit Report is annexed herewith.

The observations of the Secretarial Auditor and reply of the management on the observations, for the FY2023-24 along with copy of the audit report is annexed herewith.

iii.    COMMENTS OF COMPTROLLER & AUDITOR GENERAL OF INDIA

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors' report. The copy of the report of C&AG is annexed herewith.

21.    DIGITISING GOVERNANCE PRACTICES BY LEVERAGING TECHNOLOGY

Pursuant to the Companies Act, 2013, the Companies are permitted to send documents like Notice of Annual General Meeting, Annual Report etc. through electronic means to its members at their registered e-mail addresses. PFC, being a socially responsive Company actively supports the implementation of 'Green Initiative' of the Ministry of Corporate Affairs (MCA). Your Company has effected electronic delivery of Notices and Annual Reports to shareholders, whose email ids are registered. Further, pursuant to Section 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014, the Company is providing e-voting facility to all members to enable them to cast their votes electronically in respect of resolutions set forth in Annual General Meeting (AGM). The Company will also be conducting the AGM this year through video conferencing/other audio-visual means. Members can refer to the detailed instructions for e-voting and electronic participation in the AGM, as provided in the Notice of AGM.

22.    STATUTORY DISCLOSURES

i.    Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY2023-24. The Board of Directors of the Company has passed requisite resolution in this regard, in compliance of RBI Guidelines.

Further, Perpetual Debt Instruments (PDI) of 1100.00 crore was issued by your company during FY2023-24.

ii.    No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company's operations during the FY2023-24.

iii.    The Company maintains an adequate system of Internal Control, including suitable monitoring procedures to ensure accurate and timely financial reporting of various transactions, efficiency of

operations and compliance with statutory laws, regulations and Company procedures/policies. For details, please refer to the 'Management Discussion and Analysis Report' annexed to this report.

iv.    Information on composition, terms of reference and number of meetings of the Board and its Committees held during the year, Whistle-Blower Policy, remuneration to Whole time Directors, sitting fees to Independent Directors and details regarding IEPF and web-links for familiarisation programmes of Directors, Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions, Policy for determining Material Subsidiaries, etc. have been provided in the 'Report on Corporate Governance', prepared in compliance with the provisions of SEBI (LODR) Regulations, 2015 and DPE Guidelines on Corporate Governance, 2010, as amended from time to time, which forms part of this Annual Report.

v.    Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or investment made by a company engaged in the business of financing of companies or of providing infrastructural facilities in the ordinary course of its business are not applicable to the Company, hence no disclosure is required to be made. Further, details of investments are appearing at note no. 11 of the Notes to Accounts of the standalone financial statements.

vi.    The provisions of Section 197 of the Companies Act, 2013 and Rules made thereunder relating to managerial remuneration are not applicable to Government companies, therefore no disclosure is required to be made.

vii.    The Company has not issued any stock options to the Directors or any employee of the Company during the FY2023-24.

viii.    The Central Government has not prescribed the maintenance of cost records for the products/ services of the Company under the Companies (Cost Records and Audit) Rules, 2014 read with the Companies (Cost Records and Audit) Amendment Rules, 2014 prescribed by the Central Government under Section 148 of the Companies Act, 2013. Accordingly, cost accounts and records are not required to be maintained by the Company.

ix.    During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against PFC by its officers or employees.

x.    The Company is compliant with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

xi.    The Independent Directors of the Company are nominated/appointed by the President of India

acting through the administrative ministry, i.e. MoP. Accordingly, the appointing authority considers the integrity, expertise and experience of the individual to be nominated/appointed. In the FY2023-24 no new Independent Directors were appointed on the Board of PFC.

xii.    There are no significant particulars, relating to conservation of energy and technology absorption as your Company does not own any manufacturing facility.

xiii.    The Foreign exchange outgo for the FY2023-24 aggregated to 111,409.41 crore. The payments are majorly for the purpose of servicing principal and interest component of foreign currency borrowings. The Foreign exchange earnings for the FY2023-24 were nil.

xiv.    Total expenditure for the FY2023-24 amounted to 128,408.41 crore as against total expenditure of 125,495.01 crore in FY2022-23. Out of it, finance cost amounted to 128,013.78 crore in FY2023-24 as compared to 123,282.57 crore in FY2022-23. This constituted 98.61 % of total expenses in FY2023-24. During FY2023-24, employee benefit expenses and other expenses were 1242.72 crore and 1166.11 crore respectively against 1219.01 crore and 1128.55 crore respectively in the previous year.

xv.    M/s. ASA & Associates LLP, Chartered Accountants, appointed for testing adequacy and operative effectiveness of Internal financial control over financial reporting, has certified that the Company maintains an adequate system of internal financial controls, evaluates and makes an assessment of its adequacy and effectiveness in a satisfactory manner which takes care of requirements under Companies Act, 2013.

xvi.    The Annual Return of PFC for FY2022-23 is available on the link The Annual Return of PFC for FY2022-23 is available on the link https://pfcindia.com/ensite/ DocumentRepository/ckfinder/files/Investors/ Annual Return/Annual Return 22 23.pdf and for FY2023-24 it shall be made available on your Company's website www.pfcindia.com.

xvii.    The details of Debenture trustees appointed by the Company for the different series of Bonds issued by your Company are annexed herewith.

xviii.    During the year no application has been made or any proceedings pending against PFC under the

Insolvency and Bankruptcy Code, 2016. Further, details of the difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the banks or financial institutions, are not applicable.

xix. Procurement from Micro & Small Enterprises

Government of India has notified Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 to support marketing of products produced and services rendered by them. In compliance to the policy, annual procurement plan including items to be procured from Micro & Small Enterprises (MSEs) are uploaded on PFC's website for the benefit of MSEs.

Government of India has notified Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 to support marketing of products produced and services rendered by them. In compliance to the policy, annual procurement plan including items to be procured from Micro & Small Enterprises (MSEs) are uploaded on PFC website for the benefit of MSEs.

The benefits to MSEs like exemption from tender fees and earnest money deposit, purchase preference, interest on delayed payments and exemption from prior experience - prior turnover criteria subject to meeting of quality and technical specifications are also extended to encourage these enterprises.

During the financial year, your Company has procured products and services from MSEs, which constituted 69.82% of the total annual procurement value, against the mandate of 25% set by Ministry of Micro, Small and Medium Enterprises, Govt. of India. During the year, 338 MSEs were benefited out of which 21 MSEs belonged to SC/ST category and 67 MSEs were owned by women.

PFC is also registered on the Trade Receivables Discounting System (TReDS) platform for financing of trade receivables of Micro, Small & Medium Enterprises (MSMEs). TReDS platform facilitates the discounting of invoices of MSMEs leading to prompt generation of working capital for their regular business operations.

Your Company had also organised/participated in 03 vendor development programmes in coordination with Ministry of Micro, Small and Medium Enterprises, Govt. of India to encourage participation of Micro and Small Enterprises.

The details of the procurements made from Micro, Small and Medium Enterprises (MSEs) during the FY2023-24 and the targets for FY2024-25 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 along with Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 is as under:

 

(I in crore)
Sr. No.	Particulars	FY2023-24	Tentative Target for FY2024-25
I.	Total annual procurement (in value)	58.54	202.39
II.	Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs)	40.87	50.60
III.	Total value of goods and services procured from only MSEs owned by SC/ST entrepreneurs	0.19	8.10
IV.	%age of procurement from MSEs (including MSEs owned by SC/ST entrepreneurs) out of total procurement	69.82%	25.00%
V.	%age of procurement from only MSEs owned by SC/ST entrepreneurs out of total procurement	0.34%	4.00%
VI.	Total number of vendor development programmes for MSEs	3	2
VII.	Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same	https://pfcindia.com/ensite/Home/ VS/125

 

23. INFORMATION TECHNOLOGY INITIATIVES

PFC has embarked on several information technology initiatives aimed at gaining strategic advantage through encouraging creative and innovative utilisation of technology to accomplish the Corporation's goals. PFC advocates for responsible management of information access and delivers a secure, dependable technology framework alongside high-quality user services and support, with the aim of addressing the continuously evolving business requirements while ensuring the regulatory compliances.

Compliance to guidelines issued by statutory bodies

The compliance guidelines issued by various statutory & regulatory bodies are being followed and implemented at PFC. As per the guidelines issued by RBI vide Master Directions to NBFCs, the IT Strategy & IT Steering committees have been constituted and regular meetings are conducted. IT policy has been implemented & IT audits are being carried out on annual basis.

Augmentation of Cyber Security arrangements

PFC is committed to work towards aligning itself with the changing threat landscape and has initiated significant measures to enhance its cyber security. PFC has enhanced the following security services.

a)    PFC has implemented the SOAR (Security Orchestration, Automation & Response) system which covers the security for Servers, Endpoint systems, Managed Detection and Response solutions to protect PFC's IT infrastructure from Security Threats and Vulnerabilities.

b)    Anti-APT Devices, Next Generation Firewall, IPv6 for increased cybersecurity posture.

PFC observes "Cyber Jagrukta Diwas" on the first Wednesday of every month to raise awareness about cyber security among its employees including casual staff.

PFC is ensuring 24x7 real-time monitoring of its IT infrastructure to detect, alert and respond to avert cyber incidents, minimise service disruptions and maintain high availability of critical systems & services.

Digital Transformation & ERP Implementation

PFC has taken up initiatives for a complete digital transformation as per the laid down IT roadmap to adopt state-of-the-art technology which can ensure PFC to adopt the industry best practices & standards. As part of this, PFC is upgrading to a "Comprehensive Single Stack IT ERP platform" to ensure end-to-end integration and digitisation of the processes and services.

Automation of Business Processes & Paperless Office

PFC remains steadfast in harnessing Information Technology to empower its employees in efficiently fulfilling business functions. Implementation of collaboration tools for online meetings, adoption of an e-Office solution for streamlined file processing, conducting paperless digital board meetings through BoardPac, and transitioning to paperless employee claims are among the initiatives undertaken by PFC to enhance organisational efficiency through technological utilisation.

Remote Work Facility

PFC has provided a facility to its employees to work remotely with secure, remote access to the Company's internal resources, data & networks in order to attend work exigencies when not in office.

Business Continuity arrangement

It is very crucial to safeguard the business operations of PFC in order to ensure business continuity. PFC has established a disaster recovery site on a private cloud to replicate the existing data centre setup in a different seismic zone. With this, PFC can continue its business operation during any disaster.

PFC Website

The bi-lingual PFC website is maintained with up-to-date information as per "Guidelines for Indian Government Websites". The face uplifted website provides more comprehensive information to meet the needs of external stakeholders.

Business Analytics

MIS portal for Business intelligence and Decision Support System are in place and enriched regularly with required metrics for fast and effective decisions.

24.    ESTABLISHMENT OF VIGIL MECHANISM

Your Company has established stringent vigil mechanism by way of implementing various codes and policies like fair practices code, code of conduct, code for prevention of insider training, fraud prevention policy, policy on related party transactions, public procurement policy, whistle-blower policy, etc. The details are also posted on the Corporation's website.

25.    GRIEVANCE REDRESSAL

PFC has a Grievance Redressal System for dealing with grievances of the public at large. The status of the Public grievances are also available in PFC web portal under public domain. The link for accessing the same is as under:-

https://pfcindia.com/ensite/Home/VS/61

The systems are duly notified and the Nodal Officers ensure quick redressal of grievances within the permissible time frame. PFC has also notified Citizen's Charter to ensure transparency in its work activities. The Charter is available on the website of PFC to facilitate easy access.

26.    STATUTORY AND OTHER INFORMATION

Information required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, DPE's Guidelines on Corporate Governance for

CPSEs and other applicable statutory provisions is annexed to this report as follows:

Particulars	Annexure
Management Discussion and Analysis Report	A
Integrated Reporting	B
Report on Corporate Governance	C
Business Responsibility and Sustainability Report	D
ESG Report (Environment, Social & Governance)	E
Secretarial Audit Report	F
Annual Report on CSR Activities	G
Disclosure of particulars of contracts/ arrangements entered into by the Company with related parties (AOC-2)	H
Details of Debenture Trustees	I

27. ACKNOWLEDGEMENT

Your Board of Directors acknowledge and place on record their appreciation for the assistance, co-operation and encouragement extended to the Company by the Government of India particularly the Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, State Governments, Reserve Bank of India, Department of Public Enterprises, NITI Aayog, DIPAM, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited, Ministry of Micro, Small and Medium Enterprises, and other concerned Government departments/agencies at the Central and State level etc.

The Company is also thankful to the Comptroller & Auditor General of India, the Statutory Auditors, Secretarial Auditor and RBI Auditors and the bankers for their constructive suggestions and co-operation.

Your Directors would also like to convey their gratitude to the shareholders, investors, clients and customers for their unwavering trust and support. Last but not the least the directors would like to thank the employees for their continuing support and contribution in ensuring an excellent all round performance.

---

Mar 31, 2023

On behalf of the Board of Directors, I am delighted to present the 37^th Annual Report of your Company, along with Audited Standalone and Consolidated Financial Statements for the Financial Year 2022-23.

Your Company has registered yet another year of robust performance and made substantial progress in its field. The performance highlights of your Company for the financial year 2022-23 are briefly mentioned here to give an overview of accomplishments on all fronts:

1. PFC''S ROBUST GROWTH AND FINANCIALSTRENGTH: CATALYST FOR A GREENERTOMORROW

i. Forayed into infrastructure financing - A step

forward in shaping India''s Growth Story

• Your Company received the assent of Government of India to lend to Logistics and Infrastructure sectors, a milestone decision, which will play a crucial role in PFC''s long term business growth.

• Since receiving the approval for lending to Infrastructure sector in August 2022, PFC has sanctioned around '' 16,647 crores and disbursed around '' 1,016 crores of loans till March 31, 2023 in its debut year. In the FY 202223, PFC has forayed into new areas of Desalination plants, Ports, Metro rail etc.

ii. Strong financial performance year on year -

Maximizing value for Shareholders

• Highest ever PAT with an increase of 16%. i.e. '' 11,605 crore in FY 2022-23 vs. '' 10,022 crore in FY 2021-22.

• Net worth increased by 15% on account of increasing profits i.e. '' 68,202 crore as at March 31, 2023 vs. '' 59,350 crore as at March 31, 2022.

• Total income achieved during the FY 2022-23 was up by 2.78% to '' 39,666 crore.

• The Board of Directors of the Company has recommended final dividend (''1,188.04 crore ) @ 45% on the paid up equity share capital i.e. '' 4.50 /- per equity share of '' 10/- each for the financial year 2022-23, subject to the approval of the shareholders at the ensuing Annual General Meeting. The Company had also paid interim dividend ('' 2,310.07 crore ) of '' 8.75 /- per equity share of '' 10 /- each during FY 2022-23. Thus, the total dividend declared for the FY 2022-23 is ('' 3,498.11 Crore) i.e. '' 13.25 per equity share of '' 10 each.

• PFC bagged SAFA Gold Award in Best Presented Accounts/Annual Report Awards (BPA) for the Financial Year 2020-21 in ''Public Services Entities category''.

iii. Consistent & Sustainable Growth

• Registered a growth of 13% in Loan assets book i.e. '' 4,22,498 crore as at March 31, 2023 vs. '' 3,73,135 crore as at March 31, 2022

• Total Loans Sanctioned by your Company amounted to '' 2,31,625 crore during the FY 2022-23 to State, Central, Private and Joint Sector entities and Disbursements amounted to '' 85,756 crore during the same period.

• Under the Late Payment Surcharge Rules, PFC sanctioned '' 47,906 crore and disbursed '' 16,764 crore till March 31, 2023.

iv. Stable Asset Quality

• Continuous efforts in resolution of stressed assets lead to 21% sharp reduction in stressed assets. The Net NPA ratio is of 1.07% in FY 2022-23 vs. 1.76% in FY 2021-22.

• During the year PFC successfully resolved four Stage III Loans viz; Suzlon Energy Ltd, South-East UP Power Transmission Company Limited, Jhabua Power Limited and Ind Barath Energy Utkal Ltd., the total principal outstanding prior to date of Resolution being '' 4,634 crore.

v. Thrust on Global and Green Borrowing

• During FY 2022-23, PFC has signed a Loan Agreement for JPY 30 Billion with Japan Bank for International Cooperation (JBIC). Further, a Project Loan agreement (PLA) has also been signed for JPY 2.65 billion between PFC and JBIC. JBIC has provided this long term facility under its initiative titled ''Global action for Reconciling Economic growth and Environmental preservation'' ("GREEN"). Thus, the funds under the facility would be used by PFC to finance its renewable energy portfolio.

• Foreign Currency loans worth USD 1.60 bn were raised during the year:

- JPY denominated loan equivalent to USD 875 mn at 1.02% - the largest FCL raised by PFC in a single transaction.

- FCNRB loan of USD 720 mn at 4.96% - this was the first time PFC raised FCNRBs in USD with an embedded swap to EUR.

• Availed loans from Multi-lateral agencies:

- EUR 58.74 mn availed from KfW after a gap of 20 years.

2. FINANCIAL SYNOPSIS i. Profitability (''in crore)
Particulars	Standalone Consolidated
	2022-23	2021-22	2022-23	2021-22
Total Income	39,665.63	38,591.17	77,625.19	76,344.92
Profit Before Tax	14,170.62	12,227.65	26,496.07	23,382.22
Tax expenses	2,565.15	2,205.75	5,317.48	4,614.01
Profit After Tax	11,605.47	10,021.90	21,178.59	18,768.21
Owners of the Company			15,889.33	14,014.79
Non-Controlling Interests			5,289.26	4,753.42
Total Comprehensive Income	11,445.80	10,202.73	20,047.88	18,889.78
Owners of the Company			15,218.55	14,163.78
Non-Controlling Interests			4,829.33	4,726.00
ii. Reserve & Surplus (''in crore)
Particulars	Standalone Consolidated*
	2022-23	2021-22	2022-23	2021-22
Opening Balance of Surplus	8,863.49	7,203.86	12,757.10	9,760.52
Profit after tax for the year	11,605.47	10,021.90	15,889.33	14,014.79
Re-Measurement of Defined Benefit Plans	(2.68)	(3.70)	(5.04)	(6.98)
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1)(viia)(c) of Income Tax Act, 1961	(529.39)	(576.44)	(529.39)	(576.44)
Transfer to Special Reserve created and maintained u/s 36(1)(viii) of Income Tax Act, 1961	(2,372.31)	(2,423.45)	(3,780.27)	(4,044.97)
Transfer to Special Reserve created u/s 45-IC(1) of Reserve Bank of India Act, 1934	(2,321.09)	(2,004.38)	(3,484.93)	(3,062.34)
Transfer to Debenture Redemption Reserve	-	-	-	-
Transfer to General Reserve	-	-	-	-
Transfer to Interest Differential Reserve - KFW Loan (net)	(0.90)	(1.42)	(0.90)	(1.42)
Dividends	(2,640.08)	(3,366.10)	(2,640.08)	(3,366.10)
Dividend Distribution Tax	-	-	-	-
Transfer from Debenture Redemption Reserve on account of utilisation	-	-	-	-
Transfer from OCI - Equity Instruments	-	-	-	-
Other Comprehensive Income/(Expense)	-	-
Reclassification of gain/loss on sale of equity instrument measured at OCI	46.13	13.22	48.77	58.90
Pooling of interest accounting for common control business combination	-	-	-	-
Impairment Reserve	-	-	-	-
Adjustments	-	-	(18.30)	(18.86)
Closing Balance of Surplus	12,648.64	8,863.49	18,236.28	12,757.10
*Attributable to owners of the Company (PFC)

3. OPERATIONAL SYNOPSIS i. Asset Quality (''in crore)
Particulars			2022-23	2021-22
Gross Loan Assets			4,22,498	3,73,135
Stage III Assets			16,502	20,915
Provision on Stage III Assets			11,999	14,344
Gross Stage III as % of Gross Loan Assets			3.91%	5.61%
Net Stage III as % of Gross Loan Assets			1.07 %	1.76%
ii. Sanction/Disbursement (excluding RDSS/IPDS/R-APDRP) (''in crore)
SECTOR	FY2022-23		FY 2021-22
Category	Sanctions	Disbursements	Sanctions Disbursements
State Sector	149,300	57,963	36,197 41,512
Central Sector	26,704	3,063	63 10
Joint Sector	19,418	2,300	6,743 773
Private Sector	36,203	22,430	8,613 8,947
Total	2,31,625	85,756	51,616 51,242

4. BORROWINGS

i. Borrowings from Domestic Market

During the FY 2022-23, PFC has raised funds to an amount of '' 62,297.47 crore vide Private Placement of Bonds including 54EC Capital Gain Bonds and rupee term loans from Domestic market. The object/purpose of the said bond issuances under private placement is to augment resources of PFC for meeting fund requirement. The details of borrowings made from domestic market during FY 202223 are as under;

(''in crore)
Source	Amount
Bonds (including 54EC )	44,697.47
Rupee Term Loans	17,600.00
Total	62,297.47

Further, for maintaining adequate liquidity, credit lines to the tune of '' 12,150 crore were sanctioned as on March 31, 2023 by various scheduled commercial banks to the Company for short-term funding generally without any commitment charges.

RBI has prescribed Liquidity Coverage Ratio (LCR) framework for NBFCs. These guidelines aims for maintenance of a liquidity buffer in terms of LCR by ensuring that NBFCs have sufficient High Quality Liquid Asset (HQLA) to survive any acute liquidity stress scenario lasting for next 30 days. PFC maintains sufficient liquidity buffer in the form of HQLA as prescribed.

ii. External Borrowings The foreign currency denominated FY 2022-23 are as follows:		borrowings during (''in crore)
Sr. No.	Source	Amount
1.	Foreign Currency Term Loans	7,258.77
2.	Foreign Currency Non-Resident Borrowings	5,930.87
3.	Loan from KFW - under ODA (Official Development Assistance) route	516.58
	TOTAL	13,706.23

Green Bonds

PFC established its Green Bond Framework in October, 2017 as approved by Climate Bonds Initiative (CBI), London, UK. The Green Bond framework for funding renewable projects (viz. Solar and Wind) has been updated in August, 2021 to align with the latest set of guidelines namely Climate Bonds Standard version 3.0, the Green Bond Principles (GBP), 2021 issued by the International Capital Markets Association (ICMA). In this context, an agreement was executed between PFC & Climate Bonds Initiative.

PFC has issued its first USD Green bond in December, 2017 and raised US $400 million ('' 2,575 crore) at a coupon of 3.75% and these bonds are listed on the London Stock Exchange''s new International Securities Market (ISM) and Singapore Stock Exchange. Further, in September, 2021 PFC issued its first ever Euro Green Bonds amounting to

5. CREDIT RATING

Your Company has been assigned the highest ratings by Domestic Credit Rating Agencies and Sovereign Rating by International Credit Rating Agencies as at March 31, 2023:

Your Company believes that these credit ratings enables us to develop strong relationship with our lenders and borrow funds at competitive rates.

6. MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ''Excellent'' Rating by Government of India since FY 1993-94 except for two financial years. For the FY 2021-22, your Company was accorded ''Excellent'' rating. The rating for FY 2022-23 is still awaited.

EUR 300 million ('' 2,597 crore) at a coupon of 1.841% and these bonds are listed on the Singapore Stock Exchange, India INX and NSE IFSC. Annual update to the holders of the bonds, as required under the PFC''s Green bond framework is as follows:-

The funds raised under Green bonds have been utilised to finance renewable energy projects as per the "Eligible Projects" under PFC''s Green Bond Framework. As at March 31, 2023, outstanding loan balances of Solar & Wind energy projects funded by PFC are '' 14,765 crore & '' 13,442 crore respectively. The total capacity (MW) of outstanding Solar & Wind energy projects funded by PFC as on March 31, 2023 is 9,324 MW. Accordingly, PFC green bond portfolio is more than the amount raised through issue of green bonds.

Externally Aided Projects

Outstanding balance from multilateral/ bilateral agencies as at March 31, 2023 is as follows:

Particulars	Amount
KFW	EUR 63,428,374.05*
Credit National	EUR 2,104,961.44
ADB	USD 6,245,707.13

* Includes Eur 58,747,000.56 disbursed by KFW in FY 2022-23 under Discom Investment Facility (ODA Loan- Without Govt. Guarantee).

Sr. No.	Rating Agency	Long-Term Rating	Short-Term Rating
Domestic Credit Rating Agencies (Borrowing Programme)
1.	CRISIL	CRISIL AAA	CRISIL A1
2.	ICRA	ICRA AAA	ICRA A1
3.	CARE	CARE AAA	CARE A1
International Credit Rating Agencies (Issuer rating)
1 .	Fitch Ratings	BBB-
2.	Moody''s	Baa3

In FY 2022-23, the achievement of your Company on some of the key MoU parameters (on consolidated basis) has been as under:

MoU Parameter	Achievement
Revenue from Operations	'' 77,568.30 crore
Loans Disbursed to Total Funds Available	99.99%
Overdue loans to Total Loans	0.11%
NPA to Total Loans	1.07%
Cost of raising funds through Bonds as compared to similarly rated CPSEs/ entities (Margin over Reuters)	-16.69 bps

7. SUBSIDIARIES A. REC Limited

The following subsidiaries of REC as on March 31, 2023 are also subsidiaries of PFC:

i. REC Power Development & Consultancy Ltd.

ii. Bidar Transmission Limited

iii. Chandil Transmission Limited

iv. Dumka Transmission Limited

v. Koderma Transmission Limited

vi. Mandar Transmission Limited

vii. Sikar Khetri Transmission Limited

viii. Ramgarh II Transmission Limited

ix. Beawar Transmission Limited

x. Meerut Shamli Power Transmission Limited

xi. Luhri Power Transmission Limited

xii. Neres XVI Power Transmission Limited

xiii. Khavda II-D Transmission Limited

xiv. KPSI Transmission Limited

REC is also a Systemically Important (Non-Deposit Accepting or Holding) Non-Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI) as an Infrastructure Finance Company (IFC). Its business activities involve financing projects in the complete power sector value chain, be it generation, transmission or distribution and also logistics and infrastructure sector. REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.

During the FY 2022-23, the total income of REC was '' 39,520 crore and the net profit was '' 11,167 crore on standalone basis.

The detailed operational and financial performance of REC is available on its website i.e. www.recindia.nic.in.

B. PFC Consulting Limited

Your Company had been offering consultancy support to the Power Sector through PFC Consulting Limited (PFCCL), its wholly-owned subsidiary. The Services offered by PFCCL are broadly in the following areas:

• Transaction Advisory: End-to-End solutions in Transaction Advisory Services across different areas in power sector (Selection of Sellers/Developers, Reform & Restructuring, Independent Transmission Projects, Privatisation of Electricity Distribution in Union Territories, Resolution Plan)

• Project Development: Project Development & implementation of various GoI initiatives (Ultra Mega Power Projects, Ultra Mega Renewable Energy Power Parks, Owner''s Engineer, Lender''s Independent Engineer, Lender''s Insurance Advisor, Setting up of Manufacturing Zone for power and renewable energy equipment)

• PMA/ PMC/ Gol Schemes: Project management & change agents focusing on revamped solutions & aiming for loss reduction (Revamped Distribution Sector Scheme, Procurement of Power, DEEP Portal, Coal Linkage Auction under SHAKTI Scheme, Pilot Scheme, PRAAPTI Portal, Integrated Power Development Scheme)

• Smart Solutions: Smart solutions to improve performance & processes, productivity & pro-active planning (Smart Metering, Energy Portfolio Management)

• Policy Formulation Support: Support to Government/ Regulators for formulation of Policies, Regulatory framework and Guidelines & SBDs

• Other Services: Strategy, Regulatory, Tariff Support, fund mobilisation and other aspects of power sector

Till date, consultancy services have been rendered by PFCCL to its clients spread across India. The total projects of assignments undertaken as on date are more than 200.

Further, during the FY 2022-23, the total income of PFCCL is '' 139.66 crore and the net profit earned is '' 63.80 crore. The net worth of PFCCL as on March 31, 2023 is '' 163.09 crore.

Your Company is designated by Ministry of Power (MoP) as the ''Nodal Agency'' for facilitating development of Ultra Mega Power Projects and its wholly-owned subsidiary i.e. PFC Consulting Limited is the ''Bid Process Coordinator'' for Independent Transmission Projects. Further various State Governments have appointed PFCCL as Bid Process Coordinator for their Intra State Transmission Projects. .

The following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries of PFCCL as on March 31, 2023:

i. Bijawar-Vidarbha Transmission Limited (Under process of Strike-off)

ii. Ananthapuram Kurnool Transmission Limited

iii. Chhatarpur Transmission Limited

iv. Fatehgarh IV Transmission Limited

v. Fatehgarh III Transmission Limited

vi. Bhadla III Transmission Limited

vii. Fatehgarh III Beawar Transmission Limited

viii. Beawar Dausa Transmission Limited

ix. Siot Transmission Limited

C. PFC Projects Limited

Coastal Karnataka Power Limited (CKPL), a wholly-owned company of PFC Ltd was set up for developing the UMPPs in the State of Karnataka as per the mandate from GoI. During FY 2022-23, CKPL''s MoA has been amended to enable for Bidding in lenders'' backed resolution plan by PFC and it has been renamed as PFC Projects Limited (PPL).

D. Other subsidiaries established for development of UMPP''s

i. Coastal Tamil Nadu Power Limited

ii. Orissa Integrated Power Limited

iii. Sakhigopal Integrated Power Company Limited

iv. Ghogarpalli Integrated Power Company Limited

v. Deoghar Mega Power Limited

vi. Cheyyur Infra Limited

vii. Odisha Infrapower Limited

viii. Deoghar Infra Limited

ix. Bihar Infrapower Limited

x. Bihar Mega Power Limited

xi. Jharkhand Infrapower Limited

8. PROACTIVE RISK MANAGEMENT THROUGH A MULTI LAYERED RISK FRAMEWORK

i. Asset Liability Management

Your Company has put in place a sound and robust Asset Liability Management Policy formulated in line with the RBI''s guidelines to establish focus on liquidity and interest rate risk management process in PFC. Measurement and monitoring of Liquidity risk is done through cash flow approach; and for Interest rate risk, it is done through traditional gap analysis technique as detailed in RBI guidelines. Such analysis is made on periodical basis in various time buckets and is used for critical decisions regarding the time, volume and maturity profile of the borrowings and creation of mix of assets and liabilities in terms of time period (short, medium and long-term) and

in terms of fixed and floating interest rates. The details of the asset liability management maturity pattern are given at Note No. 53.1 of the Notes to Accounts of the Standalone Financial statements forming part of this Annual Report.

An ALM Committee of Functional Directors has been constituted as per PFC''s Asset Liability Management Policy formulated in line with the RBI''s guidelines.

As on March 31, 2023 the ALM Committee of Functional Directors comprised of Smt. Parminder Chopra, Director (Finance) as Chairman of the Committee and Shri R.R. Jha, Director (Projects) as Member.

ii. Foreign Currency Risk Management

Your Company has put in place "Policy for Management of Risks on Foreign Currency Borrowings" to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like forwards, options and swaps.

As on March 31, 2023, the total o/s foreign currency liabilities stand at USD eqv 7,852 mn, and currency wise denominated borrowings are USD 5,841 mn, JPY 1,32,381 mn & EUR 932 mn. Out of the total foreign currency borrowing portfolio, USD eqv 4,959 mn i.e. 63% is hedged. Also, 82% of the FC portfolio with residual maturity up to 5 years is hedged.

iii. Integrated Enterprise Wide Risk Management

In order to manage risks faced by your Company, it has put in place an Integrated Enterprise Wide Risk Management Policy (IRM policy). For implementation of the policy, Your Company has constituted the Risk Management Committee. Under the IRM policy, the Company has to identify the principal risks which may have an impact on its profitability/revenues. In this regard, the Company has identified 11 significant risk parameters which arise from the Company''s business model and from its use of financial instruments. These risk parameters cover the major operational risks, financial risks, market risks, regulatory risks etc. faced by the Company and are regularly assessed as per the Risk Assessment Criteria.

Further, the above would also cover aspects relating to development and implementation of a risk management policy for the Company including identification therein of elements of risk, which should cover the requirements of Sec. 134(3)(n) of Companies Act, 2013.

9. PFC A STRATEGIC PARTNER OF GOVERNMENT OF INDIA IN BRINGING POWER SECTOR REFORMS

i. Revamped Distribution Sector Scheme (RDSS) & Integrated Power Development Scheme (with Restructured Accelerated Power Development and Reform Programme (R-APDRP) Subsumed In It)

The Company is involved in various GoI programmes for the power sector, including acting as a nodal agency for the IPDS (R-APDRP subsumed) and Revamped Distribution Sector Scheme (RDSS) launched by Govt. of India in July, 2021.

MoP/GoI vide OM dated 20.07.2021 has conveyed sanction of President of India for implementation of "Revamped Distribution Sector Scheme (RDSS) - A Reforms-based and Results-linked, Distribution Sector Scheme" to improve the operational efficiencies and financial sustainability of DISCOMs, by providing financial assistance to DISCOMs for upgradation of the Distribution Infrastructure and Prepaid Smart Metering & System Metering based on meeting pre-qualifying criteria and achieving basic minimum benchmarks in reforms. PFC and REC (PFC''s subsidiary) are the designated nodal agencies for operationalisation of the Scheme, as per RDSS guidelines and directions of inter-ministerial Monitoring Committee/MoP from time to time. Nodal agencies are eligible for 0.5% of the sum total of the Gross Budgetary Support (GBS) component of the various projects approved by Monitoring Committee as its fee. PFC is the nodal agency for 17 States/UTs under the Scheme. The approved projects under IPDS/R-APDRP were subsumed in RDSS. All State-owned distribution companies and State/UT Power Dept. excluding private sector companies are eligible for financial assistance under the Scheme. The implementation period of the Scheme is 5 Years (FY 2021-22 to FY 2025-26).

Scheme Objectives

a) Improve the quality, reliability and affordability of power supply to consumers through a financially sustainable and operationally efficient distribution sector.

b) Reduce AT&C losses to pan-India levels of 12-15% by 2024-25.

c) Reduce ACS-ARR gap to zero by 2024-25.

Scope of Scheme

The Scheme has two parts:

a) Part A covers Metering works (prepaid smart metering for consumers and system metering) and distribution infrastructure works (loss reduction; modernisation & system augmentation components).

b) Part B covers Training & Capacity Building and other Enabling & Supporting Activities.

Outlay and Budgetary Support

The Scheme has an outlay of '' 3,03,758 crore with an estimated gross budgetary support of '' 97,631 crore from the GoI.

Targeted infrastructure creation under RDSS in States across India based on fund sanction:

• Around 500 new Substations

• Over 4,00,000 Distribution transformers

• Around 7.5 lakh ckm of AB and XLPE cables

• Around 7 lakh ckm of overhead lines

• Over 20 crore Smart meters

Financial Assistance under RDSS in states allocated to PFC (as on March 31, 2023)

(Amounts in '' crore)
Scheme	FY 2022-23		Cumulative up to March, 2023
	Approved Cost	GoI Fund Disbursed	Approved Cost	GoI Fund Disbursed
RDSS	54,534	1,142	1,16,951	1,679

Other Initiatives

• Supporting the States by preparing Model Bidding Documents for Automation and ERP projects under RDSS.

• Working on developing a Centre of Excellence in the form of National SCADA Resource Centre (NSRC) under RDSS at NPTI, Faridabad for developing the technical and operational skills of the Distribution Workforce across SCADA / DMS systems supplied by multiple OEMs.

• PFC (alongwith its subsidiary company i.e. REC) has developed an Integrated web portal that will serve as single version of truth for various government Schemes as well as vital reports being published by PFC/ REC viz. RDSS Scheme, DISCOM Integrated Rating (IR) Report, DISCOM Performance Report, Consumer Services Rating of DISCOMs (CSRD), PRAAPTI Portal, Energy audit reports etc.

• PFC is taking-up capacity building/ training programme for DISCOMs'' employees under RDSS by engaging NPTI. Till March 2023; 175 training programmes were conducted through NPTI covering 6,490 DISCOM personnel.

• PFC is supporting skill development of the workforce for rolling out the RDSS Smart metering programme by

training 1,000 persons on various job-roles under PFC''s CSR Programme.

• PFC, in partnership with The United States Agency for International Development (USAID) has launched the South Asia Distribution Utilities Network (DUN), a regional platform to foster collaboration among electricity distribution Utilities across Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka for the reform and modernisation of the sector. PFC will act as the anchor institution with technical support from USAID through its South Asia Regional Energy Partnership (SAREP) programme.

• PFC with technical assistance of Foreign Commonwealth and Development Office (FCDO), Government of UK in association with MoP, GoI has developed Digital Utility Manager (DUM) Training Programme. The programme aimed at proactive technology adoption at DISCOMs, to have flexibility in the mode of learning making this self-paced, covering frontier technologies such as Smart Grids, AMI, EVs, Energy Storage, Al/ ML, Blockchain, Robotics etc.

• PFC is also handholding the DISCOMs in incorporating better corporate governance practices.

The impact of various reforms measures undertaken by States Government/DISCOMs under RDSS Scheme is evident as all India average AT&C losses have improved to 16.5% in FY 22 (data based on 11^th Integrated Rating report), which is significantly lower than 21.5% in FY 21. Further, ACS-ARR gap, which captures the cash-adjusted revenue gap per unit, also significantly improved to 40 paise per unit energy in FY 22 compared to 89 paise per unit energy in FY 21. In addition, there has been significant improvement in compliances in form of filing and issuance of Tariff Orders, submission of Quarterly and Annual accounts by DISCOMs etc.

Integrated Power Development Scheme (IPDS) (including R-APDRP subsumed)

The erstwhile Schemes of IPDS (including R-APDRP subsumed) launched by Ministry of Power, Government of India in order to provide impetus to strengthening of power distribution sector, consumer/ system metering, IT enablement of distribution sector, Digital technology initiatives, new & innovative technologies etc. in urban areas were subsumed in RDSS Scheme. The Schemes have been sunset in March, 2022.

Achievements of IPDS (including R-APDRP subsumed)

• The Schemes have helped in making a difference in the lives of around 10 crore urban electricity consumers living in 3,600 towns across the country where the Power Distribution infrastructure has been upgraded.

• IT and Technical interventions coupled with administrative and other measures undertaken under the Schemes have helped in improvement of Billing/

Collection efficiency for reduction in Aggregate Technical and Commercial (AT&C) losses.

• There has been an increased in transparency by way of capturing of data from = 36,000 urban feeders (11 kV) in IT enabled towns on Urban Distribution Monitoring System under National Power Portal.

• Real Time Data Acquisition System has been set up covering around 15,000 feeders for capturing data

w.r.t. reliability indices at feeder level.

• 92 Gas Insulated Substations (GIS) & Hybrid PSS have been commissioned/upgraded. Such substations have been set up for the first time in Bihar, Karnataka, UP and NER States.

• Around 10 lakh Smart/Prepaid Meters have been installed in the country under IPDS.

• ''1912'' - Short-code for ''Complaints on Electricity'' is now operational in all DISCOMs.

• Capacity building/training of Utility personnel has also been carried out using Digital means under IPDS/ R-APDRP to enhance their skill through workshops/ webinars on AT&C loss reduction, smart metering, project management, guidelines, best practices etc.

Thus, your Company is contributing towards better power supply to the people of India and improving operational efficiency and financial health of Distribution Utilities.

ii. Late Payment Surcharge Rule, 2022

Ministry of Power (MoP) vide Gazette Notification datedJune 3, 2022, notified "The Electricity (Late Payment Surcharge and Related Matters) Rules, 2022" (LPS Rules). These rules provide a mechanism for settlement of outstanding dues of Generating Companies, Inter-State Transmission Licensees and Electricity Trading Licensees.

Power Finance Corporation Limited (PFC) has been designated by MoP, as the Nodal Agency for implementation of LPS Rules'' 2022. PFC shall be responsible for all the activities related to implementation of the said Rules including regular review and monitoring.

For operationalisation of Rules, PRAAPTI Portal (developed and managed by PFC Consulting Ltd.) acts as an information portal wherein suppliers enter invoice details and Discoms update the corresponding payment amount to ensure invoice and payment tracking of power bills in the country. Based on the information available on PRAAPTI, regulations are imposed on defaulting Discoms as per LPS Rules, 2022 by Grid controller of India Limited.

With the implementation of Electricity (LPS and Related Matters) Rules, 2022, remarkable improvement has been seen in recovery of outstanding dues of Suppliers including Generating Companies, Transmission Companies and Traders. Against legacy dues of '' 1,39,747 crore as on 03.06.2022, 13 States/UTs have paid instalment of '' 69,790 crore (12 EMIs). Discoms of 11 out of these 13 states opted for loans from PFC/REC (total loan sanctioned of

'' 1,05,065 crore). Further, 20 States/UTs reported to have no outstanding dues as on 03.06.2022

In view of regulations under LPS Rules, 2022 the Distribution companies are paying their current dues in time. Since implementation of the rule, as on July 24, 2023, total bills amounting to '' 4,85,041 crores have been settled against total billed amount of '' 5,60,366 crore (excluding EMI Payments against legacy dues and including Disputed Invoices).

iii. Independent Transmission Projects (ITPs)

MoP has also initiated Tariff Based Competitive Bidding Process for development and strengthening of transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for substations, if any, initiation of process of seeking forest clearance, if required etc.

MoP has designated PFC Consulting Limited (a wholly-owned subsidiary of PFC) as one of the Bid Process Coordinator for Independent Transmission Projects. As on March 31, 2023, 49 SPVs have been established for ITPs by PFC / PFCCL.

During the year, the following nine companies / ITP-SPVs were incorporated:

i. Siot Transmission Limited

ii. Fatehgarh III Beawar Transmission Limited

iii. Beawar Dausa Transmission Limited

iv. Khandukhal Rampura Transmission Limited -Transferred

v. Fatehgarh III Transmission Limited

vi. Bhadla III Transmission Limited

vii. Fatehgarh IV Transmission Limited

viii. Raipur Pool Dhamtari Transmission Limited -Transferred

ix. Dharamjaigarh Transmission Limited -Transferred

Further, during the FY 22-23, following SPVs established for development of transmission projects has been transferred to the successful bidders selected through TBCB:

i. Khetri-Narela Transmission Limited

ii. Khandukhal Rampura Transmission Limited

iii. Kishtwar Transmission Limited

iv. Bhadla-Sikar Transmission Limited

v. Raipur Pool Dhamtari Transmission Limited

vi. Dharamjaigarh Transmission Limited

ii. Power Exchange India Limited

Power Exchange India Limited ("PXIL") is India''s first institutionally promoted Power Exchange, that provides innovative and credible solutions to transform the Indian power markets. PXIL, provides nationwide, electronic exchange for trading of power and handles power trading and transmission clearance, simultaneously, it provides transparent, neutral and efficient electronic platform. PXIL offers various products such as day ahead, day ahead contingency, any day, intra-day and weekly contracts. PXIL provides trading platform for renewable energy certificates. As on March 31, 2023, PFC''s investment in 32,20,000 equity shares of PXIL is valued at '' 3.59 crore.

iii. Energy Efficiency Services Limited

Energy Efficiency Services Limited ("EESL") was incorporated as a public limited company on December 10, 2009 under the Companies Act, 1956. EESL intends to focus on energy efficiency and climate change initiatives. The Company along with its subsidiary RECL is holding 33.33 % stake in equity share capital of Energy Efficiency Services Limited (EESL). However, in the absence of any practical ability to direct the relevant activities as per the requirements of Ind AS 28 ''Investment in Associates and Joint Ventures'', the Company does not have any significant influence, accordingly EESL has not been considered as an associate company.

As at March 31, 2023, the Company along with its subsidiary RECL holds 33.13% stake in equity share capital of EESL (17.65% directly and 15.68% through its subsidiary RECL). As on March 31, 2023, PFC holds 24,55,00,000 Equity Shares of FV of '' 10 each of Energy Efficiency Services Limited valued at '' 158.08 crore.

iv. NHPC Limited

PFC has initially invested 26,05,42,051 equity shares of NHPC Limited at the rate of '' 21.78 per share (including securities transaction tax, brokerage and other charges) amounting to '' 567.46 crore in April 2016 during disinvestment by Gol through offer for sale route. PFC has sold 10,52,17,881 number of equities shares till March 31, 2023. As on March 31, 2023 PFC holds 15,53,24,170 shares of NHPC Limited valued at '' 624.40 crore.

NHPC has reported profit after tax of '' 3,834 crore for the financial year 2022-23 as compared to Profit after Tax of '' 3,538 crore for Financial year 2021-22.

v. COAL INDIA LIMITED

PFC has invested 1,39,64,530 equity shares of Coal India Limited at the rate of '' 358.58 per share (including securities transaction tax, brokerage and other charges) amounting to '' 500.74 crore in February 2015 through offer for sale route. As on March 31, 2023, PFC holds 1,39,64,530 equity shares of Coal India Limited Valued at '' 298.35 crore.

As on March 31, 2023, out of 49 SPVs, 36 SPVs were transferred to the successful bidders and bidding process for 8 SPVs are under progress. Further, due to de-notification of schemes by MoP, 4 SPVs were closed and 1 SPV is under process of closure.

iv. Ultra Mega Power Project (UMPP)

Development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each, adopting super critical technology is the initiative of MoP, Government of India for which your Company has been designated as the ''Nodal Agency'' and Central Electricity Authority (CEA) as the Technical Partner by MoP.

PFC Consulting Limited (a wholly-owned subsidiary of PFC) along with MoP and CEA undertake preliminary site investigation activities, land acquisition activities, site specific studies to obtain appropriate regulatory and other approvals for land, water, coal block, environment etc. necessary to conduct catalyst of the bidding process. The successful bidder is then expected to develop and implement these projects.

Your Company incorporated a total of 19 Special Purpose Vehicles (SPVs) as its wholly-owned subsidiaries for 14 UMPPs. Out of these, 4 UMPPs are awarded and 4 UMPPs are closed.

In reference to closed UMPPs, SPVs namely Tatiya Andhra Mega Power Ltd. (2^nd Andhra UMPP), Coastal Maharashtra Mega Power Ltd. (Munge UMPP) and Chhattisgarh Surguja Power Ltd. (Chhattisgarh UMPP) are striked-off from the records of RoC in FY 22-23. Further, SPV namely Coastal Karnataka Power Ltd. (Karnataka UMPP) is being utilised by PFC for bidding stressed assets projects (name of the SPV changed to PFC Projects Ltd.).

As the Country is transforming from fossil to non-fossil fuel, MoP has decided to close remaining UMPP''s also and advised your Company to take necessary steps for closure of UMPP in consultation with state Government.

10. OTHER MAJOR INVESTMENTS

i. PTC India Limited

PTC India Limited ("PTC") was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested '' 12 crore in PTC constituting 120,00,000 equity shares which is 4.05% of PTC''s total equity share capital. PTC is the leading provider of power trading solutions in India, a Gol initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country. PTC has reported profit after tax of '' 370 crore for the financial year 2022-23 as compared to Profit after Tax of '' 425 crore for Financial year 2021-22. As on March 31, 2023, PFC holds 120,00,000 shares of PTC valued at '' 102.06 crore.

CIL has reported profit after tax of '' 14,802 crore for the financial year 2022-23 as compared to Profit after Tax of '' 11,202 crore for Financial year 2021-22.

11. INITIATIVES FOR MONITORING DISCOM''S PERFORMANCE

i. Annual Integrated Rating of State Distribution Utilities

Ministry of Power has taken various reform initiatives, to bring about improvements in the Distribution Sector and has put in place an Integrated Rating Methodology for an objective evaluation of performance of Distribution Utilities. The objective of the integrated rating is to rate all utilities in the power distribution sector based on their financial performance and their ability to sustain the performance level. Private Distribution Utilities and Power Departments are also being included to provide complete sectoral coverage.

The methodology adopted attempts to objectively adjudge the performance of distribution utilities against various parameters broadly classified under i) Financial Sustainability parameters ii) Performance Excellence parameters and iii) External Environment parameters. For the introduction of Power Departments in the rating exercise, a subset of metrics with modified weightages from the overall methodology have been utilised for rating.

These ratings are carried out by reputed independent agencies and co-ordinated by your Company. These ratings are immensely beneficial as a diagnostic tool in the hands of the State Governments as well as Utilities to build on their strengths and work on areas requiring improvements so as to improve their operational efficiency and financial sustainability. Eleventh Integrated Ratings for FY 202122, covering 69 Utilities/departments across the country and inter se ranking of the Utilities was released by the Hon''ble Minister of Power, New & Renewable Energy on April 10, 2023.

ii. Annual Performance Report of Power Utilities

PFC publishes the Report on Performance of State Power Utilities on an annual basis. The Report covers a range of key financial and operational parameters such as profitability, gap between average cost of supply and average revenue, net worth, receivables, payables, AT&C losses and consumption pattern of the sector at utility, state and national level. The report covers distribution utilities in all States and UTs of India and all State Gencos/ Transcos/ Trading utilities, offering a comprehensive insight into the Indian Power Sector.

The Report for the years 2018-19 to 2020-21 was released by the Hon''ble Cabinet Minister for Power, New & Renewable Energy in the Conference of Power and Renewable Energy Ministers of State/UTs held in October 2022.

The report for the years 2019-20 to 2021-22 is under finalisation.

iii. Categorisation of Utilities

For purposes of funding, your Company classifies State Power Generation and Transmission entities into A , A , A, B and C categories. The categorisation (biannually) of State Power Generation and Transmission entities is arrived at based on the evaluation of entity''s performance against specific parameters covering operational & financial performance including regulatory environment, availability of audited accounts, etc. as per categorisation policy.

With respect to State Power Distribution entities (including PDs/entities with integrated operations), your Company''s categorisation policy provides for adoption of MoP''s Integrated Ratings by aligning such ratings/gradings with PFC''s standard categories of A , A, B, C and D.

The categorisation enables PFC to determine pricing of loans and stipulation of security to the state power entities.

12. PRESIDENTIAL DIRECTIVES

During last 3 years, there has been no Presidential Directive.

13. RIGHT TO INFORMATION: EMPOWERING CITIZENS THROUGH TRANSPARENT COMMUNICATION

The RTI Act, 2005 is a progressive legislation based on citizen''s right to know which is a fundamental right enshrined in the Constitution of India. The primary goal of the Right to Information Act is to empower citizens, promote openness and accountability in government operations, combat corruption, and make our democracy truly function for the people. An informed citizen is better equipped to keep a required track on governance instruments and hold the government responsible to the governed. The Act is a significant step in informing citizens about the activities of the government.

All constitutional authorities, agencies, owned and controlled, also those organisations which are substantially financed by the government comes under the purview of the Act. The Act also mandates public authorities of union government or state government, to provide timely response to the citizens'' request for information.

An elaborate mechanism has been set up in PFC to deal with requests received under the RTI Act, 2005. PFC has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the Company. For effective implementation of the RTI Act, PFC has designated its Company Secretary as Public Information Officer (PIO) to dispose off the RTI applications received in the corporation at its registered office. Further, an ED level officer has been designated as a First Appellate Authority (RTI) in PFC to dispose off the RTI appeals. The

relevant information/ disclosures are also made available on the official website (www.pfcindia.com) of the Company.

As regards process in disposal of RTI applications, it is stated that PIO compiles the information from respective Head of the Units who are Deemed PIOs under Section 5(5) of the RTI Act, 2005 and the said information is made available to the applicant within the prescribed period of 30 days.

If the RTI applicant is not satisfied with the reply of the PIO, he can file an appeal with the First Appellate Authority (RTI) of PFC, within 30 days of the receipt of the reply. The First Appellate Authority (RTI) disposes off the appeals within the prescribed period of 30 days. During the period from April 1, 2022 to March 31, 2023, all 140 applications and 13 RTI appeals received under the RTI Act, were duly processed and replied to. PFC has also complied with the requirement of filing of online RTI Quarterly Returns on the portal of Central Information Commission (CIC) during the said period.

Further, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated 15.04.2013 issued guidelines on the following:

a) Suo moto disclosure of more items under Section 4;

b) Guidelines for digital publication of proactive disclosure under Section 4;

c) Guidelines for certain clauses of Section 4(1 )(b) to make disclosure more effective;

d) Compliance mechanism for suo-moto disclosure (proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid Guidelines, PFC has placed the requisite information on the website of the Company.

Besides the above, PFC is also linked with the online RTI Portal of Govt. of India, Department of Personnel & Training (https://rtionline.gov.in), which enables citizens of India, to file RTI applications/first appeals online along with payment gateway. Payment can be made through internet banking of SBI & its associate banks, debit/credit cards of Master/Visa and RuPay cards.

To strengthen the proactive / suo motu disclosure, DoPT has come out with detailed instructions vide DoPT OM No. 1/6/2011-IR dated April 15, 2013. The guidelines lay down one of the most important mechanisms in terms of getting its proactive disclosures audited by the third party every year to ensure effective compliance of the guidelines. In line with the above, PFC has successfully got its RTI Disclosures audited through National Power Training Institute (NPTI) during 2022-23. The said audit report is also placed on PFC website for information of the public.

14. CORPORATE SOCIAL RESPONSIBILITY

The aim of PFC''s Corporate Social Responsibility and Sustainability Policy (CSR and Sustainability Policy) is to

ensure that the Company becomes a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfillment of Power and Energy needs of the society.

The policy embodies a holistic approach, aligning the company''s efforts with the key tenets of Environmental, Social, and Governance (ESG) principles, as is evident through the comprehensive array of initiatives, spanning Environment Sustainability, Healthcare, Education, and more.

PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. To oversee the activities of CSR, PFC has in place a Board level CSR&SD Committee of Directors headed by an Independent Director.

PFC has implemented wide range of activities in the field of Environment Sustainability, Rehabilitation and Reconstruction Activities, Healthcare, Education, Sports, Sanitation & Drinking water and Skill development & Livelihood etc. Further, as per DPE''s mandate, PFC has also contributed to thematic areas i.e. ''Health & Nutrition, with preference given to Aspirational Districts.

The CSR Report under Companies (CSR Policy), Rules is annexed herewith.

15. HR INITIATIVES Capacity Building

Your Company firmly believes that being in service sector, Human Resource is the most important asset of the organisation. To foster market competitiveness, your Company is committed to cultivating a high-performance work culture that unleashes individuals'' full potential, while equipping and empowering them to engage in continuous learning in line with business goals and adapt to future challenges. Our goal is to develop top-tier organisational capabilities that set us apart from the competition.

During this year, your Company organised various training and development programmes in line with corporate goals. The range of trainings imparted include orientation programme to new recruits as well as hands-on, managerial, behavioural and leadership training for its employees. Besides this, a wide range of functional training programmes were also organised which included Stressed Asset Management with focus on Insolvency & Bankruptcy Code 2016, Advanced Excel, Public Procurement through GeM Portal, Capacity Building for Financial Institutions on Energy Efficiency Financing, AML-KYC-CFT and Fraud Monitoring & Recovery Aspects of Loan Assets, Prevention of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, Implementation of ISO 45001:2018 - OHS Standards, Exposure Norms & Capital Requirements for NBFCs, and more.

Furthermore, all newly recruited employees of PFC participated in a comprehensive 3-week Foundation course for Power Sector Professionals of National Power Training Institute (NPTI). This course covered essential

topics such as Basics of Power Sector, Renewables & Solar Energy, Government Schemes, Energy Transition, Energy Conservation & Energy Efficiency, SCADA, Project Appraisal, and more.

As of March 31, 2023, your Company successfully provided 2,608 mandays of training to its employees by organising need based customised programmes and sponsoring employees to external programmes organised by reputed training agencies.

Overall, these initiatives have significantly contributed to enhancing the skills and knowledge of our workforce in alignment with our organisational goals.

Employee Engagement Activities

PFC being a founding member of Power Sports Control Board (PSCB), PFC employees participated with full vigor and enthusiasm in various Inter-CPSU sports tournaments organised by the PSCB member organisations during the period, viz. Badminton, Chess, Carrom and Table Tennis Tournament. PFC Chess Team won Ist Prize in single tournament. PFC organised the Inter CPSU Chess Tournament under the aegis of PSCB from 27-29^th April,

2022 at Vishwa Yuvak Kendra, New Delhi successfully. PFC also participated in Power Cup Cricket Tournament which was organised in collaboration with all power sector CPSEs based in Delhi-NCR during the month of January-February,

2023 organised by Power Grid and won 2^nd Prize in the Tournament.

Apart from these, PFC organised a PFC Foundation Day programme for its employees & their family member on July 16, 2022 at JLN Stadium, New Delhi. During the year PFC organised Family Picnic in March 2023 for its employees and their dependent family members at Vishalgarh Farms, Gurgaon.

Talent Management

Your Company has put in place effective human resource acquisition and maintenance function, which is benchmarked with best corporate practices designed to meet the organisational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity. PFC''s recruitment efforts are focused on attracting and nurturing diverse talent.

The Industrial Relations within the Company have been very cordial and harmonious with the employees committing themselves entirely to the objectives of the Company. There were no man-days lost during the year under review. The attrition during the period from April 1, 2022 to March 31, 2023 was 0.04%.

Employee Welfare Measures

Your Company endeavours to follow the best management practices of the industry.

Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which lead to a healthy workforce. During the period, several new initiatives were taken for employees'' welfare such as introducing flexi-timing for employees below HoU level, implementing paperless medical claims system and review of certain provisions under TA Rules, Company Leased Accommodation Rules, etc.

Diversity & Inlcusion

The Company follows the Presidential Directives and guidelines issued by the Government of India to promote inclusive growth. The status is presented under:

Status of Reservation of Posts for various categories
Group	Total Employees as on March 31, 2023	SC1	SC%	ST2	ST%	OBC3	OBC%	EWS4	EWS%
A	500	89	17.80%	32	6.40%	100	20.00%	5	1.00%
B	4	0	0.00%	1	25.00%	0	0.00%	0	0.00%
C	15	2	13.33%	1	6.67%	3	20.00%	0	0.00%
D	0	0	0.00%	0	0.00%	0	0.00%	0	0.00%
Total	519	91	17.53%	34	6.55%	103	19.84%	5	0.96%

PFC makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC/ ESM⁵/ PwD⁶ employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions. Separate Liaison officers have been appointed to look into the matter of reservations.

’Scheduled Caste ²Scheduled Tribe ³Other Backward Classes Economically Weaker Section Ex-Servicemen ⁶Persons with Disabilities

Empowering Diversity: Women''s Representation In Workforce

Your Company has women in important and critical functional areas. Women representations have gone across hierarchical levels. The Company provides equal growth opportunities for the women in line with Govt. of India philosophy on the subject. The women are adequately represented, with 21.00% of the total work force.

Group	Total Employees as on March 31, 2023	Number of Women Employees	Percentage of overall staff strength
A	500	107	21.40%
B	4	1	25.00%
C	15	1	6.67%
D	0	0	0.00%
Total	519	109	21.00%

PFC as part of its social responsibility makes all efforts to ensure compliance of the Directives and guidelines issued by the Government of India from time to time pertaining to the welfare of female employees.

Fostering A Safe Workplace: Compliance With Sexual Harassment Prevention

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

a)	Number of complaints filed during the financial year 2022-23	NIL
b)	Number of complaints disposed of during the financial year 2022-23	NIL
c)	Number of complaints pending as on end of the financial year 2022-23	NIL

16. AWARDS & RECOGNITIONS

Awards received under the pillars of Environment, Social, Governance (ESG): Showcasing PFC''s efforts in creating sustainable impact:

• Environmental

- PFC received ''Green Urja Energy Efficiency Award'' for being the Best Renewable Energy Financing Institution this year at the Atma Nirbhar Bharat Summit organized by Elets.

- Indian Chamber of Commerce''s (ICC) Gold Award for the "Top Financing institution in Renewable Energy and Energy Efficiency category at the 11^th Green Energy Summit.

• Social

- PFC has been ranked 2^nd in "Swachhata Ranking" by NDMC in the category of offices in NDMC area.

- PFC won the Rajbhasha Kirti Puraskar. PFC was awarded the third prize of highest and prestigious ''Rajbhasha Keerti'' for the year 2021-22 in the category of undertaking ''A'' area for best performance in official language. PFC has been awarded this award for the ninth consecutive time.

• Governance

- PFC has been ranked 9^th amongst the Top 10 Profitmaking CPSEs as per the "Public Enterprises Survey 2021-22" published by the Department of Public Enterprises, Ministry of Finance, Govt. of India.

- PFC was ranked at ''34'' out of ''Top 500'' Indian Companies by the Fortune Magazine.

- ICAI Gold Shield Award in the category of ''Public Sector Entities'' of ICAI Awards for Excellence in Financial Reporting for 2021-22.

- Governance Now (Sab TV Group''s) Award to PFC in the categories of "Best Performer (Financial) & Use of Emerging Technologies: Cloud".

- PFC bagged Dun & Bradstreet''s India''s Best PSU Award in the category of "Best Navratna" in a virtual format.

- Smt. Parminder Chopra, presently CMD, PFC has been bestowed with ''Icon of the year'' award by the Institute of Cost Accountants of India.

• Others

PFC bagged four awards at the 16^th Annual Global

Communications Conclave organized by the Public

Relations Council of India in the categories of Best

Corporate Film (Gold), Best Annual Report (Silver),

Best House Journal Print (Regional) and Best Use of

Social Media.

17. VIGILANCE: FOSTERING ACCOUNTABILITY AND TRANSPARENCY

PFC operates with a proactive vigilance unit functioning as a robust vigil mechanism within the corporation. During the Financial Year 2022-23, the Vigilance Unit has undertaken preventive vigilance, emphasizing periodic & surprise inspections of various units, contributing to operational integrity and transparency. During the period, the Vigilance Unit has also issued instructions/operative guidelines to rationalize systems and procedures in order to eliminate gaps and confirming transparency in day to day operations. As a new initiative the first edition of the Vigilance Magazine "Prahari" was inaugurated, which contains various articles related to vigilance, power & allied sector and award winning entries of the Vigilance Awareness Week. The Vigilance Unit carried out detailed investigation in respect of complaints registered during this period.

Power Finance Corporation Limited observed Vigilance Awareness Week from 31.10.2022 to 06.11.2022, actively promoting ethical practices and the theme "Corruption-Free India for a developed India." On this occasion, banners

showing observance of the Vigilance Awareness Week were displayed at the prime locations in and outside the office premises. Theme of Vigilance Awareness Week -2022 was also displayed on desktops of all the employees of the corporation. Publicity of the event was also done through social media such as Facebook, Twitter, Instagram, and Newspapers including their online editions. To instill integrity and ethical values, "e-pledge on Integrity" was taken by the employees via the intranet and PFC website.

During the week, competitions focused on Pictorial, Slogan Writing, Poem Writing were organized on the subjects related to Vigilance. These competitions were open to all regular employees of this Corporation including those posted in the regional offices. The aim of these competitions was to stimulate the creativity, imagination and originality of the employees to enable them to come out with innovative ideas about dealing with Good Governance. A one day workshop on the topic PFC''s Conduct, Discipline and Appeal Rules" was also organized by the Corporation with eminent faculty for the benefit of employees, in which regular employees participated. A talk "ABBFF and Role of IAC" was also organized for the employees of the PFC by Shri Vijay Kumar Tyagi, CVO, PNB. A Talk session on Preventive Vigilance was organized by the PFCCL for employees of the PFCCL by Shri R. N. Nayak, Ex-Director, CVC. It emphasized upon constant systemic improvements, integrity and transparency in public life.

I n compliance of the instructions of CVC, the sensitive posts in the Corporation have been identified and the concerned officers were rotated on a regular basis. Agreed lists and List of officers of Doubtful Integrity for the year 2023 were prepared in respect of corporate office at Delhi and regional offices at Mumbai and Chennai in consultation with the CBI, aligning with transparent and responsible practices. Prescribed periodical statistical returns were sent to CVC, CBI, MOP on time.

The Vigilance Unit continuously pursued systemic improvements to improve transparency, objectivity and accountability in the operations of the corporation. Thus, it has contributed towards strengthening in the functioning of the organization.''

18. OFFICIAL LANGUAGE

PFC always gives utmost priority to Rajbhasha Hindi in all its official working. It is a matter of great pride that PFC has been awarded with the Third Prize in Public Sector Category in Region ''A'' of ''Rajbhasha Kirti Puraskar'' for 2021-22 by Rajbhasha Vibhag, Ministry of Home Affairs for its concerted efforts made in implementation of Official Language Policy. The Prize has been received by PFC for consecutively 9^th time.

Hindi Day on September 14, 2022 and Hindi Month from September 14, 2022 to October 13, 2022 were celebrated to create a Hindi oriented environment. Five (05) competitions like ''Katha Visataran'', ''Hindi Tippan evam Aalekhan'', ''Rajbhasha Niti'', ''Shabd Gyan'' and ''Anek Rang Ek Pratiyogita

ke sang'' were organised during the Hindi Month. A play "Mahabharat - Ek Amar Katha" was organised for PFC employees during Hindi Month on 07.10.2022 at Sirifort Auditorium Complex, New Delhi. The play was presented by the well-known theatre company ''Felicity Theatre''. The drama is written and directed by film, television veteran Puneet Issar. Along with Puneet Issar, many veteran actors like Gufi Paintal, Rahul Bhuchar presented their brilliant performances in this play.

During the year, 06 Hindi workshops and 01 Sangoshthi were organised in which 336 employees participated. Apart from the competitions held during Hindi month, in order to motivate employees, 04 Hindi competitions namely ''Smaranshakti Pratiyogita'', ''Bujho toh Jaane Pratiyogita'' and ''Shabdon Ka Taana-baana Pratiyogita'' and ''Vishwa Hindi Diwas Pratiyogita'' were also organised in which 205 employees participated. Review meetings with various units, internal inspections and Personal contact programme were conducted for the purpose of reviewing the Rajbhasha related work being done by these units and employees. To motivate the employees towards Hindi, the book "Kamayani" written by Jaishankar Prasad was distributed to all the employees.

The meeting of Hindi Salahakar Samiti, Ministry of Power was held on May 12, 2022 at Ashok Hotel, New Delhi. All co-ordination work related to the arrangement of this meeting was done by PFC. The meeting was presided over by Shri R. K. Singh, Hon''ble Minister of Power and New & Renewable Energy.

Four (04) Issues including ''Atulya Bharat Visheshank'' of House Journal ''Urja Deepti'' were also published and made available on website of Department of Official Language, Ministry of Home Affairs.

All these efforts were motivational tools in creating possibilities of better and progressive use of Rajbhasha Hindi in the Corporation.

19. DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

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

(b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detectingfraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis; and

(e) the Directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

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

20. AUDITORS

i. Statutory Auditors

Dass Gupta & Associates, Chartered Accountants and Prem Gupta & Company, Chartered Accountants were appointed as Joint Statutory Auditors of the Company for FY 2022-23 by the Office of the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2022-23 and have given their report without any qualification, reservation, adverse remark or disclaimer. The copy of the audit report is annexed herewith.

ii. Secretarial Audit:

Your Company had engaged M/s. Mehta & Mehta, Company Secretaries as Secretarial Auditors for FY 2022-23. Secretarial Audit Report is annexed herewith.

The observations of the Secretarial Auditor and reply of the management on the observations, for the FY 2022-23 along with copy of the audit report is annexed herewith.

iii. Comments of Comptroller & Auditor General of India

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors'' report. The copy of the report of C&AG is annexed herewith.

21. DIGITIZING GOVERNANCE PRACTICES BY LEVERAGING TECHNOLOGY

Pursuant to the Companies Act, 2013, the Companies are permitted to send documents like Notice of Annual General Meeting, Annual Report etc. through electronic means to its members at their registered e-mail addresses. PFC, being a socially responsive Company actively supports the implementation of ''Green Initiative'' of the Ministry of Corporate Affairs (MCA). Your Company has effected electronic delivery of Notices and Annual Reports to shareholders, whose e-mail IDs are registered. The intimation of dividend (interim/final) is also being sent electronically to such shareholders. Further, pursuant to Section 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014, the Company is providing e-voting facility to all members to enable them to cast their votes electronically

in respect of resolutions set forth in postal ballot and Annual General Meeting (AGM). The Company will also be conducting the AGM this year through video conferencing/ other audio-visual means. Members can refer to the detailed instructions for e-voting and electronic participation in the AGM, as provided in the Notice of AGM.

22. STATUTORY DISCLOSURES

i. Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2022-23. Further, no Perpetual Debt Instruments (PDI) was issued by your Company during FY 2022-23. The Board of Directors of the Company has passed requisite resolution in this regard, in compliance of RBI Guidelines.

ii. No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company''s operations during the FY 2022-23.

iii. The Company maintains an adequate system of Internal Control, including suitable monitoring procedures to ensure accurate and timely financial reporting of various transactions, efficiency of operations and compliance with statutory laws, regulations and Company procedures/ policies. For details, please refer to the ''Management Discussion and Analysis Report'' annexed to this report.

iv. Information on composition, terms of reference and number of meetings of the Board and its Committees held during the year, Whistle-Blower Policy, remuneration to Whole time Directors, sitting fees to Independent Directors and details regarding IEPF and web-links for familiarisation programmes of Directors, Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions, Policy for determining Material Subsidiaries, etc. have been provided in the ''Report on Corporate Governance'', prepared in compliance with the provisions of SEBI (LODR) Regulations, 2015 and DPE Guidelines on Corporate Governance, 2010, as amended from time to time, which forms part of this Annual Report.

v. Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or investment made by a company engaged in the business of financing of companies or of providing infrastructural facilities in the ordinary course of its business are not applicable to the Company, hence no disclosure is required to be made. Further, details of investments are appearing at note no.11 of the Notes to Accounts of the standalone financial statements.

vi. The provisions of Section 197 of the Companies Act, 2013 and Rules made thereunder relating to managerial remuneration are not applicable to Government companies, therefore no disclosure is required to be made.

vii. The Company has not issued any stock options to the Directors or any employee of the Company.

viii. The Central Government has not prescribed the maintenance of cost records for the products/services of the Company under the Companies (Cost Records and Audit) Rules, 2014 read with the Companies (Cost Records and Audit) Amendment Rules, 2014 prescribed by the Central Government under Section 148 of the Companies Act, 2013. Accordingly, cost accounts and records are not required to be maintained by the Company.

ix. During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against PFC by its officers or employees.

x. The Company is compliant with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

xi. The Independent Directors of the Company are nominated/appointed by the President of India acting through the administrative ministry, i.e., MoP. Accordingly, the appointing authority considers the integrity, expertise and experience of the individual to be nominated/appointed. In the FY 2022-23 no new Independent Directors were appointed on the Board of PFC.

xii. There are no significant particulars, relating to conservation of energy and technology absorption as your Company does not own any manufacturing facility.

xiii. The Foreign exchange outgo for the FY 2022-23 aggregated to '' 10,226.94 crore. The Foreign excha nge earnings for the FY 2022-23 were nil. The payments are majorly for the purpose of servicing principal and interest component of foreign currency borrowings.

xiv. Total expenditure for the FY 2022-23 amounted to '' 25,495.01 crore as against total expenditure of '' 26,363.52 crore in FY 2021-22. Out of it, finance cost amounted to '' 23,282.57 crore in FY 2022-23 as compared to '' 22,671.30 crore in FY 2021-22. This constituted 91.32 % of total expenses in FY 2022-23. During FY 2022-23, employee benefit expenses and other expenses were '' 219.01 crore and '' 128.55 crore respectively against 213.11 crore and '' 122.71 crore respectively in the previous year.

xv. M/s. ASA & Associates LLP, Chartered Accountants, appointed for testing the adequacy and operative effectiveness of Internal financial control over financial reporting, has certified that the Company maintains an adequate system of internal financial controls, evaluates and makes an assessment of its adequacy and effectiveness in a satisfactory manner which takes care of requirements under Companies Act, 2013.

The Statutory Auditors of the Company i.e. Dass Gupta & Associates, Chartered Accountants and Prem Gupta & Company, Chartered Accountants and have also given their Report on the Internal Financial Controls stating that the Company has, in all material respects, an internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2023 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

xvi. The Annual Return of PFC for FY 2021-22 is available on the link chrome-extension:// efaidnbmnnnibpcajpcglclefindmkaj/https://www. pfcindia.com/DocumentRepository/ckfinder/files/ Investors/Annual_Return/Annual_Report_21_22.pdf and for FY 2022-23 it shall be made available on your Company''s website www.pfcindia.com.

xvii. The details of Debenture Trustees appointed by the Company for the different series of Bonds issued by your Company are annexed herewith.

xviii. During the year no application has been made or any proceedings pending against PFC under the Insolvency and Bankruptcy Code, 2016. Further, details of the difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the banks or financial institutions, are not applicable.

xix. Procurement from Micro & Small Enterprises:

Government of India has notified Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 to support marketing of products produced and services rendered by them. In compliance to the policy, annual procurement plan including items to be procured from Micro & Small Enterprises (MSEs) are uploaded on PFC website for the benefit of MSEs.

The benefits to MSEs like exemption from tender fees and earnest money deposit, purchase preference, interest on delayed payments and exemption from prior experience - prior turnover criteria subject to meeting of quality and technical specifications are also extended to encourage these enterprises.

During the financial year, your Company has procured products and services from MSEs, which constituted 66.09% of the total annual procurement value, against the mandate of 25 % set by Ministry of Micro, Small and Medium Enterprises, Govt. of India. During the year, 309 MSEs were benefited out of which 19 MSEs belonged to SC/ST category and 48 MSEs were owned by women.

The details of the procurements made from Micro, Small and Medium Enterprises (MSEs) during the FY 2022-23 and the targets for FY 2023-24 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 along with Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 is as under:

PFC is also registered on the Trade Receivables Discounting System (TReDS) platform for financing of trade receivables of Micro, Small & Medium Enterprises (MSMEs). TReDS platform facilitates the discounting of invoices of MSMEs leading to prompt generation of working capital for their regular business operations.

Your Company had also organised/participated in 03 vendor development programmes in co-ordination with Ministry of Micro, Small and Medium Enterprises, Govt. of India to encourage participation of Micro and Small Enterprises.

?!*’ Particulars No.	FY 2022-23 (''in crore)	Target for FY 2023-24 (''in crore)
I. Total annual procurement (in value)	46.81	169.2 (135* 34.2)
II. Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs)	30.93	42.3
III. Total value of goods and services procured from only MSEs owned by SC/ST entrepreneurs.	3.90	6.768
IV. % age of procurement from MSE (including MSEs owned by SC/ST entrepreneurs) out of total procurement.	66.09	25
V. % age of procurement from only MSEs owned by SC/ST entrepreneurs) out of total procurement	8.33	4
VI. Total Number of vender development programmes for MSEs	3	2
VII. Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same.	https://www.pfcindia.com/ DocumentRepository/ckfinder/files/ Statutory_Requirements/Codes_and_ Policies/Public_Procurement_Policy_for_ MSME/Procurement%20Target%20%20 and%20Profile%202023-24%20V0_0.pdf
*One Time IT infrastructure refresh expenditure planned for FY 2023-24

23. INFORMATION TECHNOLOGY

PFC has undertaken various information technology initiatives to achieve sustainable business growth, improve overall productivity, ensure data integrity and data privacy. PFC has implemented state-of-the-art Data center providing various IT services and housing ERP application system to integrate all the Business functions, reflecting PFC''s commitment to operational excellence.

Digital Transformation & ERP Implementation

MS Unit has taken up initiatives for a complete digital transformation as per the laid down IT roadmap to adopt state-of-the-art technology which can help PFC to reflect the standards of being a MAHARATNA. As part of this, the most ambitious project is to implement a comprehensive IT ERP platform that can ensure end-to-end integration and digitization of the processes and services as a single source of truth. At present, the ERP platform is under implementation stage and some modules are released for user experience.

Enhancing Digital reach - Online Borrower Services

I n the digital era, Information Technology has been put to use to ensure timely "information sharing" to enhance the customer experience of the borrowers. PFC has implemented "Online Borrower Portal", through which the

disbursement detail, loan ledger, due-receipt, outstanding detail & remittance detail etc., are made available in an online mode which can be accessed for instant information dissemination. Through this portal, borrowers not only have access to their loan data instantly, and also it allows them to plan for further necessary action timely.

Business automation & Paperless Office

PFC continuously poised to utilize Information Technology to enable its employees to cater to business functions efficiently. Implementation of collaboration tools for online meetings, e-Office solution for efficient file processing, paperless digital board meetings thru Board Pac and paperless employee claims are few of the initiatives highlighting PFC''s efforts in going Green.

Adopting Robust Cyber Security Measures

PFC has developed a comprehensive cyber security framework to safeguard its IT assets, PFC has taken substantial initiatives to augment the cyber security arrangements. PFC has implemented Anti-APT Devices, Next Generation Firewall, IPv6 for increased cybersecurity posture and also inducted Managed Detection & Response Services for proactive cyber security protection. As per the guidelines of Ministry of Power, the "Cyber Jagrukta Diwas" is being conducted on every first Wednesday of the month at PFC, contributing to a vigilant cyber-safe environment.

Ensuring Business Continuity

I t is very crucial to safeguard the business operations of PFC in order to ensure business continuity. As a milestone achievement, PFC has established a disaster recovery site on a private cloud which is considered as highly secured, to replicate the existing data center setup in a different seismic zone. With this, PFC can continue its business operation during any disaster or cyber security incidents. This critical measure bolsters PFC''s commitment to sustainability and resilience.

PFC Website & Knowledge sharing

The bi-lingual PFC website is maintained with up-to-date information as per "Guidelines for Indian Government Websites". The face uplifted website has been made more informative to address the information requirements of external stakeholders.

Business Analytics

MIS portal for Business intelligence and reporting requirements is in place for decision support. The portal has been enriched regularly with more business data metrics.

Knowledge sharing Portal

To share their domain knowledge amongst employees handling various functions within PFC, a software portal has been developed which is named as "PEEPAL" for knowledge sharing, mutual appreciation and to create a positive association among the employees.

Compliance to guidelines issued by statutory bodies

The compliance guidelines issued by various statutory & regulatory bodies have been stringently followed and implemented at PFC. As per the guidelines issued by RBI vide Master Directions to NBFCs, the IT Strategy Committee has been constituted, IT policy has been implemented & IT audits are being carried out regularly on annual basis. All guidelines & regulations pertaining to Information Technology issued by various statutory and regulatory bodies like Meity, RBI, MoP, NCCC, NCIIPC etc. have been implemented and strictly followed by PFC.

Through these strategic IT initiatives, PFC continues its unwavering dedication to ESG principles, contributing to sustainable growth, operational efficiency, and responsible corporate practices.

24. ESTABLISHMENT OF VIGIL MECHANISM

The establishment of a robust vigil mechanism is a pivotal aspect of your Company''s commitment to Environmental, Social, and Governance (ESG) principles. This mechanism encompasses a range of codes and policies, including fair practices, codes of conduct, prevention of insider trading, fraud prevention, related party transactions, public procurement, and a comprehensive whistle-blower policy. These measures reinforce the organization''s focus towards transparent, accountable and ethical business practices.

The vigil mechanism''s effectiveness is underscored by its accessibility and visibility. Details ofthese codes and policies, along with pertinent information, are readily available on the Corporation''s official website. This not only reflects your Company''s commitment to open communication but also empowers stakeholders to understand and engage with the principles that govern the organization.

25. GRIEVANCE REDRESSAL

PFC has a Grievance Redressal System for dealing with grievances of the public at large and in accordance with the guidelines issued by the Government of India, the Company has also constituted a Grievance Redressal Committee to redress the grievances of its employees.

The transparency and accessibility of this system are key tenets of PFC''s responsible governance approach. The status of public grievances is openly available on the PFC web portal, accessible to all stakeholders.

The link for accessing the same is as under:-

https://pfcindia.com/DocumentRepository/ckfinder/files/

Statutory_Requirements/Status_of_Public_Grievances/

PFC%20CPGRAMS%20Report.pdf

The systems are duly notified and the Nodal Officers ensure quick redressal of grievances within the permissible time frame. PFC''s commitment to transparency extends further through its Citizen''s Charter, ensuring clear communication of its business practices. The Charter is available on the website of PFC to facilitate easy access.

26. STATUTORY AND OTHER INFORMATION

Information required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, DPE''s Guidelines on Corporate Governance for CPSEs and other applicable statutory provisions is annexed to this report as follows:

Particulars	Annexure
Management Discussion and Analysis Report	A
Integrated Reporting	B
Report on Corporate Governance	C
Business Responsibility and Sustainability Report	D
Secretarial Audit Report	E
Annual Report on CSR Activities	F
Disclosure of particulars of contracts/arrangements entered into by the Company with related parties (AOC-2)	G
Details of Debenture Trustees	H

27. ACKNOWLEDGEMENT

Your Board of Directors acknowledge and place on record their appreciation for the assistance, co-operation and encouragement extended to the Company by the Government of India particularly the Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, State Governments, Reserve Bank of India, Department of Public Enterprises, NITI Aayog, DIPAM, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited, Ministry of Micro, Small and Medium Enterprises, and other concerned Government departments/agencies at the Central and State level etc.

The Company is also thankful to the Comptroller & Auditor General of India, the Statutory Auditors, Secretarial Auditor and RBI Auditors and the bankers for their constructive suggestions and co-operation.

Your Directors would also like to convey their gratitude to the shareholders, investors, clients and customers for their unwavering trust and support. Last but not the least the directors would like to thank the employees for their continuing support and contribution in ensuring an excellent all round performance.

(Parminder Chopra)

Chairman and Managing Director DIN: 08530587

Place: New Delhi Dated: August 21,2023

---

Mar 31, 2022

Your Directors are pleased to present their 36^th Annual Report on the performance of your Company for the financial year ended March 31, 2022 along with Audited Financial Statements, Auditor''s Report, Secretarial Auditor''s Report & report by the Comptroller and Auditor General of India.

Your Directors, at the outset take pride in informing you that during the year, your company has been accorded ''Maharatna'' Status - the highest recognition by Government of India to Central Public Sector Enterprises (CPSE''s).

1.0 Financial and Operational Highlights

• Total income achieved during the FY 2021-22 was up by 2% to ''38,591 crore.

• Net Interest Income during the FY 2021-22 increased by 8% to ''14,030 crore.

• Delivered highest ever Net profit of ''10,022 crore up by 19% during FY 2021-22.

• Board recommended a final dividend of ''1.25 per equity share in addition to an interim dividend of ''10.75 per equity share, which was paid during FY 2021-22. The total dividend for the FY 2021-22 thus aggregates to ''12 per equity share as against ''10 per equity share paid for the previous year.

The final dividend will be paid after your approval at the Annual General Meeting. The total dividend pay-out for the FY 2021-22 will thus amount to ''3,168.1 crore (inclusive of TDS) representing 32% of the profit after tax.

• Total expenditure for the FY 2021-22 amounted to ''26,364 crore. Out of it, finance cost amounted to ''22,671 crore. This constituted 86% of total expenses in FY 2021-22. During FY 2021-22, employee benefit expenses and other expenses, which includes administrative and office expenses were ''336 crore (1.27% of total expenses) against ''265 crore (0.96% of total expenses) in the previous year.

• Loans Sanctioned amounted to ''51,616 crore during the FY 2021-22 to State, Central, Private and Joint Sector entities. Disbursements amounted to ''51,242 crore during the same period.

• Gross Loan Asset book as on FY 2021-22 stood at ''3,73,135 crore. The outstanding borrowing as on FY 2021-22 stood at ''3,20,128 crore.

• Total provision of ''14,344 crore towards Stage- III Loan Assets as at the end of FY 2021-22. The Net Stage-III Assets stands at ''6,571 crore as on March 31, 2022, which is 1.76% to the Total Gross Loan Assets. In addition to above, provision of ''2,059 crore and ''945 crore on Stage-I Loan Assets and Stage-II Loan Assets respectively is available as on March 31, 2022.

• As on March 31, 2022, the Government of India''s shareholding is 55.99%.

• PFC''s robust financials inspire higher levels of confidence amongst investors, regulators and other stakeholders in your Company.

1.1 Financial Performance Overview

1.1.1 Profitability

(''in crore)
Particulars	Standalone		Consolidated
	2021-22	2020-21	2021-22	2020-21
Total Income	38,591.17	37,766.57	76,344.92	71,700.67
Profit Before Tax	12,227.65	10,207.31	23,382.22	19,890.73
Tax expenses	2,205.75	1,763.30	4,614.01	4,174.53
Profit After Tax	10,021.90	8,444.01	18,768.21	15,716.20
Owners of the Company	-	-	14,014.79	11,747.83
Non-Controlling Interests	-	-	4,753.42	3,968.37
Total Comprehensive Income	10,202.73	8,534.21	18,889.78	16,264.09
Owners of the Company	-	-	14,163.78	12,078.90
Non-Controlling Interests	-	-	4,726.00	4,185.19

1.1.2 Reserve & Surplus ('' in crore)
		Standalone Consolidated*
rai mu ia i 3 2021-22 2020-21 2021-22 2020-21
Opening Balance of Surplus		7,203.86		6,042.40		9,760.52		8,080.18
Profit after tax for the year		10,021.90		8,444.01		14,014.79		11,747.83
Re-Measurement of Defined Benefit Plans		(3.70)		(3.13)		(6.98)		(8.75)
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1)(viia)(c) of Income Tax Act, 1961		(576.44)		(609.83)		(576.44)		(761.49)
Transfer to Special Reserve created and maintained u/s 36(1)(viii) of Income Tax Act, 1961		(2,423.45)		(2,534.77)		(4,044.97)		(3,883.87)
Transfer to Special Reserve created u/s 45-IC(1) of Reserve Bank of India Act, 1934		(2,004.38)		(1,688.80)		(3,062.34)		(2,569.38)
Transfer to Debenture Redemption Reserve		-		-		-		-
Transfer to General Reserve		-		-		-		(516.40)
Transfer to Interest Differential Reserve - KFW Loan (net)		(1.42)		(1.25)		(1.42)		(1.25)
Dividends		(3,366.10)		(2,112.07)		(3,366.10)		(2,112.07)
Dividend Distribution Tax		-		-		-		-
Transfer from Debenture Redemption Reserve on account of utilisation		-		-		-		-
Transfer from OCI - Equity Instruments		-		-		-		-
Other Comprehensive Income/(Expense)		-		-		-		-
Reclassification of gain/loss on sale of equity instrument measured at OCI		13.22		6.98		58.90		134.73
Pooling of interest accounting for common control business combination		-		-		-		-
Impairment Reserve		-		-		-		-
Adjustments		-		(339.68)		(18.86)		(349.01)
Closing Balance of Surplus		8,863.49		7,203.86		12,757.10		9,760.52
*Attributable to owners of the Company (PFC) 1.2 OPERATIONAL PERFORMANCE OVERVIEW 1.2.1 ASSET QUALITY ('' in crore)
Particulars 2021-22 2020-21
Gross Loan Assets					3,73,135		3,70,771
Stage III Assets					20,915		21,150
Provision on Stage III Assets					14,344		13,416
Gross Stage III as % of Gross Loan Assets					5.61%		5.70%
Net Stage III as % of Gross Loan Assets					1.76%		2.09%
1.2.2 SANCTION / DISBURSEMENT (EXCLUDING R-APDRP / IPDS) ('' in crore)
SECTOR	FY 2021-22				FY 2020-21
Category	Sanctions		Disbursements		Sanctions		Disbursements
State Sector	36,197		41,512		1,15,170		73,016
Central Sector	63		10		9,172		3,912
Joint Sector	6,743		773		8,907		2,123
Private Sector	8,613		8,947		33,121		9,251
Total	51,616		51,242		1,66,370		88,302*
* Includes '' 20,144 Crore towards moratorium loans during Covid pandemic. 1.2.3 Borrowings 1.2.3.1 Deposits Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2021-22. Further, no Perpetual Debt Instruments (PDI) was issued by your Company during FY 2021-22. 1.2.3.2 Borrowings from Domestic Market The details of borrowings made from domestic market during FY 2021-22 are as under: ('' in crore)
Source Amount
Bonds (including 54EC )							14,666.84
Rupee Term Loans							14,005.00
Total							28,671.84

Till date, consultancy services have been rendered to 77 clients spread across 27 States/UTs in India by PFCCL. The total number of assignments undertaken as on date are more than 160.

Further, during the FY 2021-22, the total income of PFCCL on consolidated basis was ''91.09 crore and the net profit earned was ''37.67 crore. The net worth of PFCCL as on March 31, 2022 was ''111.35 crore.

• Your Company is designated by Ministry of Power Government of India as the ''Nodal Agency'' for facilitating development of Ultra Mega Power Projects and its wholly-owned subsidiary i.e. PFC Consulting Limited is the ''Bid Process Coordinator'' for Independent Transmission Projects.

As on March 31, 2022, for the said purpose, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiaries of the Company:

i. Chhattisgarh Surguja Power Limited^A

ii. Coastal Karnataka Power Limited

iii. Coastal Maharashtra Mega Power LimitedA

iv. Coastal Tamil Nadu Power Limited

v. Orissa Integrated Power Limited

vi. Sakhigopal Integrated Power Company Limited

vii. Ghogarpalli Integrated Power Company Limited

viii. Tatiya Andhra Mega Power LimitedA

ix. Deoghar Mega Power Limited

x. Cheyyur Infra Limited

xi. Odisha Infrapower Limited

xii. Deoghar Infra Limited

xiii. Bihar Infrapower Limited

xiv. Bihar Mega Power Limited

xv. Jharkhand Infrapower Limited

xvi. Tanda Transmission Company Limited *a

xvii. Bijawar-Vidarbha Transmission Limited*

xviii. Shongtong Karcham-Wangtoo Transmission Limited*^A

xix. Ananthapuram Kurnool Transmission Limited*

xx. Bhadla Sikar Transmission Limited*

xxi. Khetri Narela Transmission Limited*

xxii. Kishtwar Transmission Limited*

xxiii. Mohanlalganj Transmission Limited*

xxiv. Chhatarpur Transmission Limited*

a SPV under the process of striking-off.

* wholly-owned subsidiaries of PFC Consulting Limited.

2.0 Risk Management

2.1 Asset Liability Management

Your Company has put in place an effective Asset Liability Management System as per Asset Liability Management Policy formulated in line with the RBI''s guidelines on Liquidity Risk Management Framework to manage the liquidity and interest rate risks. Measurement and monitoring of Liquidity risk is done through cash flow approach; and for Interest rate risk, it is done through traditional gap analysis technique as detailed in RBI guidelines. Such analysis is made on periodical basis in various time buckets and is used for critical decisions regarding the time, volume and maturity profile of the borrowings and

Further, for maintaining adequate liquidity, credit lines to the tune of ''9,030 crore were sanctioned as on March 31, 2022 by various scheduled commercial banks to the Company for shortterm funding generally without any commitment charges.

RBI has prescribed Liquidity Coverage Ratio (LCR) framework for NBFCs. These guidelines aims for maintenance of a liquidity buffer in terms of LCR by ensuring that NBFCs have sufficient High Quality Liquid Asset (HQLA) to survive any acute liquidity stress scenario lasting for next 30 days. PFC maintains sufficient liquidity buffer in the form of HQLA as prescribed.

1.2.3.3 External Borrowings

The foreign currency denominated borrowings during FY 2021-22 are as follows:

(''in crore)
Source Amount
Bonds under GMTN programme	2,597.41
Syndicated Loans	4,674.28
Total	7,271.69

Green Bonds

PFC established its Green Bond Framework in October, 2017 as approved by Climate Bonds Initiative (CBI), London, UK. The Green Bond framework for funding renewable projects (viz. Solar and Wind) has been updated in August, 21 to align with the latest set of guidelines namely Climate Bonds Standard version 3.0, the Green Bond Principles (GBP), 2021 issued by the International Capital Markets Association (ICMA). In this context, an agreement was executed between PFC & Climate Bonds Initiative.

PFC has issued its first USD Green bond in December, 2017 and raised US $400 million (''2,575 crore) at a coupon of 3.75% and these bonds are listed on the London Stock Exchange''s new International Securities Market (ISM) and Singapore Stock Exchange. Further, in September, 2021 PFC issued its first ever Euro Green Bonds amounting to EUR 300 million (''2,597 crore) at a coupon of 1.841% and these bonds are listed on the Singapore Stock Exchange, India INX and NSE IFSC. Annual update to the holders of the bonds, as required under the PFC''s Green bond framework is as follows:-

The funds raised under Green bonds have been utilised to finance renewable energy projects as per the "Eligible Projects" under PFC''s Green Bond Framework. As at March 31, 2022, outstanding loan balances of Solar & Wind energy projects funded by PFC are ''11,794 crore & ''6,573 crore respectively. The total capacity (MW) of outstanding Solar & Wind energy projects funded by PFC as on March 31, 2022 is 6,225MW. Accordingly, PFC green bond portfolio is more than the amount raised through issue of green bonds.

1.3 CREDIT RATING

During the FY 2021-22, Company''s both long-term & short-term domestic borrowing programme (including bank loans) continued to be the highest rating.

• Domestic Rating assigned by CRISIL, ICRA and CARE

- Long-term domestic borrowing programme Rating -CRISIL AAA, ICRA AAA and CARE AAA

- Short-term domestic borrowing programme Rating -CRISIL A1 , ICRA A1 and CARE A1

• International Rating

The Company''s international credit ratings continue to be Baa3 and BBB- assigned by International Credit Rating Agencies Moody''s and Fitch respectively.

1.4 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ''Excellent'' Rating by Government of India since FY 1993-94 except for two financial years. For the FY 2020-21, your Company was accorded ''Excellent rating''. The rating for FY 2021-22 is still awaited.

In FY 2021-22, the achievement of your Company on some key MoU parameters has been as under:

MoU Parameter	Achievement
Revenue from Operations	'' 38,545.40 Cr.
Loans Disbursed to Total Funds Available	98.59%
Overdue loans to Total Loans	0.29%
NPA to Total Loans	1.82%
Cost of raising funds through Bonds as compared to similarly rated CPSEs/entities (Margin over Reuters)	(-) 17.24 bps

1.5 SUBSIDIARIES

1.5.1 REC LIMITED

Consequent upon acquisition of majority stake in REC (Formerly Rural Electrification Corporation Limited) from Government of India on March 28, 2019, Your Company is the promoter and holding Company of REC. Accordingly, the following subsidiaries of REC as on March 31, 2022 are also subsidiaries of PFC:

(i) REC Power Development and Consultancy Limited

(ii) Chandil Transmission Limited

(iii) Dumka Transmission Limited

(iv) Koderma Transmission Limited

(v) Mandar Transmission Limited

(vi) Bidar Transmission Limited

(vii) Rajgarh Transmission Limited

(viii) MP Power Transmission Package-I Limited

(ix) ER-NER Transmission Limited

REC is also a Systemically Important (Non-Deposit Accepting or Holding) Non-Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI) as an Infrastructure Finance Company (IFC). Its business activities involve financing projects in the complete power sector value chain, be it generation, transmission or distribution. REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.

During the FY 2021-22, the total income of REC was ''39,231 crore and the net profit was ''10,046 crore, on standalone basis.

The detailed operational and financial performance of REC is available on its website i.e. www.recindia.nic.in.

1.5.2 PFC CONSULTING LIMITED

Your Company had been offering consultancy support to the Power Sector through PFC Consulting Limited, its wholly-owned subsidiary.

The Services offered by PFCCL are broadly in the following areas: Transaction Advisory

• Selection of Sellers/Developers Through ''Case-1'' and ''Case-2'';

• Guidelines & SBDs: Short-Term, Medium-Term, Long-Term (Case ''1'', Case ''2'' and UMPPs), Hydro, Solar, Wind, Pilot Scheme 1 & 2

• Reform & Restructuring

• Independent Transmission Projects

• Privatisation of Electricity Distribution in UTs

Project Development

• Ultra Mega Power Projects (UMPPs)

• Ultra Mega Renewable Energy Power Parks (UMREPPs)

• Owner''s Engineer, Lender''s Independent Engineer, Lender''s Insurance Advisor

• Setting up of Manufacturing Zone for power and renewable energy equipment

PMA / PMC/ Other GoI Schemes

• Revamped Distribution Sector Scheme (RDSS)

• Procurement of Power: DEEP Portal

• Coal Linkage Auction under SHAKTI Scheme

• Pilot Scheme I & II

• PRAAPTI Portal

• Integrated Power Development Scheme (IPDS)

• Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY)

• National Smart Grid Mission (NSGM)

• Restructured Accelerated Power Development and Reforms Programme (R-APDRP)

Smart Solutions

• Smart Metering

• Energy Portfolio Management

Other Services

• Tariff & Regulatory

• Selection of EPC Contractor

• Resource Mobilisation

• Project advisory for new power plant

• Strategy

• Contracts, commercial and legal

• Project Appraisal

• Computerisation of Operations

• Accounting Systems

• Policy

• Energy Audit

creation of mix of assets and liabilities in terms of time period (short, medium and long-term) and in terms of fixed and floating interest rates. The details of the asset liability management maturity pattern are given at Note No. 53 of the Notes to Accounts of the Standalone Financial statements forming part of this Annual Report.

2.2 Foreign Currency Risk Management

Your Company has put in place "Policy for Management of Risks on Foreign Currency Borrowings" to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like forwards, options and swaps.

As on March 31, 2022, the total o/s foreign currency liabilities are USD 6,783 million, JPY 36,336 million & EUR 308 million; out of which USD 4,075 million is hedged. Further, 92% of the FC portfolio with residual maturity up to 5 years has been hedged.

2.3 Integrated Enterprise Wide Risk Management

In order to manage risks faced by your Company, it has put in place an Integrated Enterprise Wide Risk Management Policy (IRM policy). For implementation of the policy, Your Company has constituted a Risk Management Committee of Directors. Under the IRM policy, the Company has to identify the principal risks which may have an impact on its profitability/revenues. In this regard, the Company has identified 11 significant risk parameters which arise from the Company''s business model and from its use of financial instruments. These risk parameters cover the major operational risks, financial risks, market risks, regulatory risks etc. faced by the Company and are regularly assessed as per the Risk Assessment Criteria.

3.0 PFC & Government Partnership

3.1 Independent Transmission Projects (ITPs)

Ministry of Power has also initiated Tariff Based Competitive Bidding (TBCB) Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required etc.

As on March 31, 2022, 40 Special Purpose Vehicles (SPVs), 2 by PFC and other 38 by PFC Consulting Limited (wholly-owned subsidiary) have been established for ITPs.

Further, during the FY 2021-22, following SPVs established for development of transmission projects has been transferred to the successful bidders selected through TBCB:

i. Khavda-Bhuj Transmission Limited

ii. Nangalbibra-Bongaigaon Transmission Limited

iii. Sikar-II Aligarh Transmission Limited

iv. Koppal-Narendra Transmission Limited

v. Karur Transmission Limited

Part-B component of RDSS focuses on the human resources and skill development inter alia including capacity building initiatives on corporate governance, technical matters, advance technology intervention areas, new business processes etc. MoP has mandated PFC for taking-up skill development for Smart Metering works as well as training programme for DISCOMs'' employees. Upto March 2022, total 31 training programmes were conducted through NPTI covering 1,168 DISCOM personnel. Your Company is also handholding the Discoms in incorporating better corporate governance practices.

3.3.2 Integrated Power Development Scheme (IPDS)

In order to provide impetus to strengthening of power distribution sector in urban areas and extend financial assistance against capital expenditure for addressing the gaps in sub transmission & distribution network and metering in urban areas to supplement the resources of DISCOMs/Power Departments, Ministry of Power, Government of India launched "Integrated Power Development Scheme" (IPDS) on December 3, 2014. Restructured Accelerated Power Development & Reforms Programme (R-APDRP) Scheme notified vide MoP order dated September 19, 2008 was subsumed into IPDS. PFC is the Nodal Agency for operationalisation of the IPDS/ R-APDRP Scheme. IPDS (including R-APDRP subsumed) Scheme had Sunset date of March 31, 2022 (excluding identified Projects).

Components of IPDS

The major components envisaged under the Scheme and additional components included by Ministry of Power from time-to-time are as under:

i. Strengthening of sub-transmission and distribution networks in the urban areas;

ii. Metering of distribution transformers/ feeders/ consumers in the urban areas;

iii. Schemes for Enterprise Resource Planning (ERP) and IT enablement of balance urban towns are also included under IPDS. Scope of IT enablement has been extended to all urban towns as per Census 2011.

iv. Smart metering solution for performing UDAY States and Solar panels on Govt. buildings with net-metering are also permissible under the Scheme.

v. Gas Insulated Sub-stations (GIS) at locations where space constraint exists are also permissible

vi. Real Time-Data Acquisition System (RT-DAS) Projects for accurate measurement of power interruption parameters like SAIDI/ SAIFI at 11KV feeder level are also covered under the Scheme.

vii. IT enablement of distribution sector and strengthening of distribution network under R-APDRP for 12^th and 13^th Plans by carrying forward the approved outlay for R-APDRP to IPDS.

Outlay & Budgetary Support

• The estimated outlay of the scheme is ''32,612 crore including a budgetary support of ''25,354 crore from Government of India during the entire implementation period.

Further in the month of April & May, 2022, PFCCL has incorporated

5 new SPVs for development of transmission schemes.

i. Fatehgarh III Beawar Transmission Limited

ii. Beawar Dausa Transmission Limited

iii. Siot Transmission Limited

iv. Khandukhal Rampura Transmission Limited

v. Fatehgarh III Transmission Limited

As on date, out of 45 SPVs, 31 SPVs were transferred to the successful bidders and bidding process for 8 SPVs are under progress. Further, due to de-notification of schemes by MoP, 2 SPVs were closed, other 3 SPVs are under process of closure and 1 scheme is under abeyance.

3.2 Ultra Mega Power Projects (UMPPs)

Development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each, adopting super critical technology is the initiative of Ministry of Power (MoP), Government of India for which your Company has been designated as the ''Nodal Agency'' and Central Electricity Authority (CEA) as the Technical Partner by MoP.

PFC Consulting Limited (a wholly-owned subsidiary of PFC) along with MoP and CEA undertake preliminary site investigation activities, land acquisition activities, site specific studies to obtain appropriate regulatory and other approvals for land, water, coal block, environment etc. necessary to conduct catalyst of the bidding process. The successful bidder is then expected to develop and implement these projects.

Your Company incorporated a total of 19 wholly-owned Special Purpose Vehicles (SPVs) for the 14 UMPPs. Out of these, 4 UMPPs have been transferred to successful bidders and as per the direction of MoP and respective State Governments, PFC / PFCCL is in the process of closure of 4 UMPPs.

PFC initiated the process of closure of SPVs namely Tatiya Andhra Mega Power Limited (TAMPL), Coastal Maharashtra Mega Power Ltd (CMMPL) and Chhattisgarh Surguja Power Ltd (CSPL). Requisite documents for closure are filed in RoC. Further, PFC is intending to utilise the SPV namely Coastal Karnataka Power Ltd (CKPL) for bidding regarding stressed projects.

MoP has decided to defer any action on formulation of UMPPs Bidding framework as of now as the country is making energy transition from fossil fuel to non-fossil fuel. Further, in QPRM held on 16.12.2021, PFC was advised to review the status of UMPPs and take necessary action for closure wherever required, in consultation with stakeholders. Matter is under consideration.

3.3 Revamped Distribution Sector Scheme (RDSS)

6 Integrated Power Development Scheme (With Restructured Accelerated Power Development and Reform Programme (R-APDRP) Subsumed in IT)

Your Company is involved in various GoI programmes for the power sector, including acting as a nodal agency for the IPDS (R-APDRP subsumed) and Revamped Distribution Sector Scheme (RDSS) launched by Govt. of India in July, 2021.

3.3.1 Revamped Distribution Sector Scheme (RDSS)

MoP/Gol vide OM dated July 20, 2021 has conveyed sanction of President of India for implementation of "Revamped Distribution Sector Scheme (RDSS) - A Reforms-based and Results-linked, Distribution Sector Scheme" to improve the operational efficiencies and financial sustainability of DISCOMs, by providing financial assistance to DISCOMs for upgradation of the distribution infrastructure and prepaid smart metering & system metering based on meeting pre-qualifying criteria and achieving basic minimum benchmarks in reforms. PFC and REC (PFC''s subsidiary) are the designated nodal agencies for operationalization of the Scheme, as per RDSS guidelines and directions of inter-ministerial Monitoring Committee/MoP from time to time. Nodal agencies are eligible for 0.50% of the sum total of the Gross Budgetary Support (GBS) component of the various projects approved by Monitoring Committee as its fee. PFC is the nodal agency for 17 States/UTs under the Scheme. The ongoing approved projects under IPDS/R-APDRP have been subsumed in RDSS. All State-owned distribution companies and State/UT Power Dept. excluding private sector companies are eligible for financial assistance under the Scheme. The implementation period of the Scheme is 5 Years (FY 2021-22 to FY 2025-26).

Scheme Objectives

i. Improve the quality, reliability and affordability of power supply to consumers through a financially sustainable and operationally efficient distribution sector.

ii. Reduce AT&C losses to pan-India levels of 12-15% by 2024-25.

iii. Reduce ACS-ARR gap to zero by 2024-25.

The Scheme has two parts:

i. Part A covers metering works (prepaid smart metering for consumers and system metering) and distribution infrastructure works (loss reduction; modernization & system augmentation components).

ii. Part B covers training & capacity building and other enabling & supporting activities.

Outlay and Budgetary Support

The Scheme has an outlay of ''3,03,758 crore with an estimated gross budgetary support of ''97,631 crore from the GoI.

Progress of implementation

Based on the recommendations of PFC, upto March 2022, GoI has approved projects worth ''65,018 crore (GoI Grant component of ''25,613 crore) to DISCOMs of Andhra Pradesh (AP), Gujarat, Himachal Pradesh (HP), Kerala, Madhya Pradesh (MP) and Uttarakhand under RDSS. Further, PFC has disbursed an amount of ''537 crore to Discoms of AP, Gujarat and HP towards Phase - I advance of 5% of GoI Grant for implementation of Loss Reduction Projects, as per RDSS guidelines. Your Company is also supporting the States by preparing Model Bidding Documents for Automation and ERP projects under RDSS.

• R-APDRP scheme cost of ''44,011 crore (with a budgetary support of ''22,727 crore) as already approved by CCEA is also carried forward to IPDS in addition to the outlay of ''32,612 crore.

Financial Assistance under IPDS / R-APDRP

(''in crore)
	FY 2021-22		Cumulative up to March, 2022
Scheme
	Approved Cost	GoI Fund Disb.	Approved GoI Fund Cost Disb.
R-APDRP	(1,987)*	385	29,978 13,580
IPDS	(2,428)*	1,977	28,886 17,638

*Negative figure is due to cancellation/ reduction in cost of Projects upon financial closure

In addition to above disbursement to Discoms for Projects, during FY 2021-22, MoP has also released Gol Grant of ''67 crore (cumulative ''284 crore) for IPDS other than Project head (e.g. nodal agency fee, re-imbursement of expenditure, Un-interrupted Direct Current (UDC), National Power Portal (NPP) etc.) and ''29 crore (cumulative ''563 crore) under Part-C of R-APDRP to PFC.

Moreover, MoP has also released GoI Grant of ''350 crore during FY 2021-22 (cumulative ''1,350 crore) for implementation of PMDP-2015 in J&K through your Company.

Progress of Implementation

IPDS

Under IPDS, inspite of a tough pandemic hit last 2 years, work in 546 out of 547 sanctioned Circles/Projects has been declared complete with overall physical progress achieved of 99% (timeline for completion of Ayodhya Circle is up to March, 2023). The Scheme is helping in making a difference in the lives of around 10 crore urban electricity consumers living in 3600 towns across the country where the Power Distribution infrastructure has been upgraded. IT enablement has been undertaken even in smaller towns of 34 Discoms. ERP system has been set up / upgraded in 32 Discoms.

Further, during the year, your Company also disbursed an amount of ''440 crore (cumulative disbursement ''3,755 crore) as counterpart loans to State Power Discoms under IPDS.

R-APDRP

With the measures taken so far, IT backbone has been established in the State Power Discoms which has aided the Discoms continue their operations during COVID-19 and consequent lockdown. All sanctioned 1,233 towns have been declared completed under Part A IT with all business process software modules are functional and energy audit reports being derived. SCADA Automation has been completed in 57 large towns to improve power reliability. Implementation work of distribution system strengthening has been completed in all sanctioned 1,227 towns.

Further, your Company has also disbursed an amount of ''3,616 crore (cumulative) as counterpart loans to State Power Discoms under Part B of R-APDRP.

Other developments

• IT and Technical interventions undertaken under the scheme is helping in improvement of Billing/ Collection efficiency which will ultimately result in reduction in Aggregate Technical and Commercial (AT&C) losses. The reduction in AT&C loss is already visible in many R-APDRP towns because of establishment of IT system and Part-B completion coupled with administrative and other measures.

• There has been an increased in transparency by way of capturing of data from = 36,000 urban feeders (11 kV) in IT enabled towns on Urban Distribution Monitoring System under National Power Portal.

• Real Time Data Acquisition System has been set up covering around 15,000 feeders for capturing data w.r.t. reliability indices at feeder level.

• 92 Gas Insulated Substations (GIS) & Hybrid PSS have been commissioned/upgraded. Such substations have been set up for the first time in Bihar, Karnataka, UP and NER States.

• Around 10 lakh Smart/Prepaid Meters have been installed in the country under IPDS.

• ''1912'' - Short-code for ''Complaints on Electricity'' is now operational in all Discoms.

• Capacity building/training of Utility personnel has been carried out using Digital means under IPDS / R-APDRP to enhance their skill through workshops/ webinars on AT&C loss reduction, smart metering, project management, guidelines, best practices etc.

Thus, your Company is contributing towards improving operational efficiency and financial health of Distribution Utilities.

4.0 Other Major Investments (As on March 31, 2022)

4.1 Energy Efficiency Services Limited

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad. The shareholding of your Company (along with its subsidiary REC) as on March 31, 2022 is 33.33%.

4.2 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested ''12 crore in PTC which is 4.05% of PTC''s total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country.

5.0 Initiatives Towards Reforms and Restructuring

5.1 Categorisation of Utilities

For purposes of funding, your Company classifies State Power Generation and Transmission entities into A , A , A, B and C categories. The categorisation (biannually) of State Power Generation and Transmission entities is arrived based on the evaluation of entity''s performance against specific parameters covering operational & financial performance including

regulatory environment, availability of audited accounts, etc. as per categorisation policy.

With respect to State Power Distribution entities (including SEBs/entities with integrated operations), your Company''s categorisation policy provides for adoption of MoP''s Integrated Ratings by aligning such ratings/gradings with PFC''s standard categories of A , A, B and C.

The categorisation enables PFC to determine credit exposure limits, pricing of loans and stipulation of security to the state power entities.

5.2 Annual Performance Report of Power Utilities

PFC publishes the Report on Performance of State Power Utilities on an annual basis. The Report covers a range of key financial and operational parameters such as profitability, gap between average cost of supply and average revenue, net worth, receivables, payables, generation capacity (MW), energy generation (MU), AT&C losses (%) etc. and consumption pattern of the sector at utility, state and national level.

The Report for the period 2017-18 to 2019-20 was published in August 2021. The coverage of the utilities in the Report from this edition onwards has been increased to include distribution utilities in all UTs and major Private Distribution Companies. Accordingly, the report covers distribution utilities in all States and UTs of India and all State Gencos/ Transcos/ Trading utilities, offering a comprehensive insight into the Indian Power Sector.

The report for the years 2018-19 to 2020-21 is under finalisation.

5.3 Annual Integrated Rating of State Distribution Utilities

Ministry of Power has taken various reform initiatives, to bring about improvements in the Distribution Sector and has put in place an Integrated Rating Methodology for an objective evaluation of performance of Distribution Utilities. The objective of the integrated rating is to rate all utilities in the power distribution sector based on their financial performance and their ability to sustain the performance level. Private Distribution Utilities and Power Departments are also being included to provide complete sectoral coverage.

The methodology adopted attempts to objectively adjudge the performance of distribution utilities against various parameters broadly classified under i) Financial Sustainability parameters ii) Performance Excellence parameters and iii) External Environment parameters. For the introduction of Power Departments in the rating exercise, a subset of metrics with modified weightages from the overall methodology will be utilised for rating.

These ratings are carried out by reputed independent agencies and co-ordinated by your Company. These ratings are immensely beneficial as a diagnostic tool in the hands of the State Governments as well as Utilities to build on their strengths and work on areas requiring improvements so as to improve their operational efficiency and financial sustainability.

Ninth Integrated Ratings for FY 2019-20, covering 41 Utilities in 22 States and inter se ranking of the Utilities was released by the Hon''ble Minister of Power, New & Renewable Energy on July 16, 2021. From the Tenth Integrated Rating exercise onwards, for the rating year FY 2020-21 covering 71 utilities/departments is under finalisation.

6.0 Presidential Directives

During last 3 years, there has been no Presidential Directive.

7.0 Corporate Social Responsibility

The aim of PFC''s Corporate Social Responsibility and Sustainability Policy (CSR and Sustainability Policy) is to ensure that the Company becomes a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfilment of Power and Energy needs of the society.

PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. To oversee the activities of CSR, PFC has in place a Board level CSR&SD Committee of Directors headed by an Independent Director.

PFC has implemented wide range of activities in the field of Environment Sustainability, Healthcare, Sanitation & Drinking water and Skill development etc. Further, as per DPE''s mandate, PFC has also contributed to thematic areas i.e. ''Health & Nutrition, with special focus on COVID related measures including setting up makeshift hospitals and temporary COVID Care Facilities'' with preference given to Aspirational Districts.

The CSR Report under Companies (CSR Policy), Rules is annexed herewith.

8.0 HR Initiatives Development & Training

During the year, 12 Nos. of in-house programmes was maintained in order to ensure specific skill development in line with the corporate goals. Customised virtual in-house programmes viz. Risk Management, General Management Programmes, Leadership Programme, KYC policy/Anti Money Laundering, Corporate Credit & Risk Management, Stressed Asset Management & IBC 2016, Induction Programme, Awareness Programme on Gender Sensitisation, Government e-Marketplace (GeM), Communication Skills - Writing, Documentation & Presentation, etc. were organised along with other need-based programmes.

As on March 31, 2022, 12 Nos. of In-house training programmes were organised by your Company for its employees. A total of 1396 man-days were achieved through conducting various in-house programmes and by sponsoring PFC employees to programmes organised by external training agencies.

Recreational Activities

PFC being a founding member of Power Sports Control Board (PSCB), PFC employees participated with full vigor and enthusiasm in various Inter-CPSU sports tournaments organised

by the PSCB member organisations during the period, viz. Badminton, Carrom, Table Tennis, Kabbadi, Cricket and Chess Tournament. PFC organised the Inter CPSU Chess Tournament under the aegis of PSCB. PFC also participated in Power Cup Cricket Tournament which was organised in collaboration with all power sector CPSEs based in Delhi-NCR. Apart from these, PFC also organised a Sports Meet for its employees & their family members to encourage team spirit in the Company.

Human Resource Management

Your Company has put in place effective human resource acquisition and maintenance function, which is benchmarked with best corporate practices designed to meet the organisational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity. The employees of the Company have access to the Top Management officials thereby contributing effectively in the management and growth of the Company.

PFC makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC/ ESM/ PwD employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions. Separate Liaison officers have been appointed to look into the matter of reservations.

Reservation of posts for SC/ ST/ OBC/ EX-			Servicemen and Physically Handicapped Persons:
Group	Total Employees as on March 31, 2022	SC	SC%	ST	ST%	OBC	OBC%	EWS	EWS%
A	479	86	17.95%	30	6.26%	93	19.41%	2	0.41%
B	7	1	14.28%	1	14.28%	0	0.00%	0	0.00%
C	15	2	13.33%	1	6.66%	3	20.00%	0	0.00%
D	0	0	0.00%	0	0.00%	0	0.00%	0	0.00%
Total	501	89	17.76%	32	6.38%	96	19.16%	2	0.39%

PFC as part of its social responsibility makes all efforts to ensure compliance of the Directives and guidelines issued by the Government of India from time to time pertaining to the welfare of female employees.

Representation of Women Employees

Your Company has women in important and critical functional areas. Women representations have gone across hierarchical levels. The Company provides equal growth opportunities for the women in line with Govt. of India philosophy on the subject. The women are well represented, with 19.96% of the total work force.

Group	Total Employees as on March 31, 2022	Number of Women Employees	Percentage of overall staff strength
A	479	97	20.25%
B	7	2	28.57%
C	15	1	6.66%
D	0	0	0.00%
Total	501	100	19.96%

The Industrial Relations within the Company have been very cordial and harmonious with the employees committing themselves entirely to the objectives of the Company. There were no man-days lost during the year under review. The attrition during the period from April 1, 2021 to March 31, 2022 was 1.42%.

Welfare Measures

Your Company endeavours to follow the best management practices of the industry.

Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which lead to a healthy workforce. During the period, several new initiatives were taken for employees'' welfare such as amendments in Death Relief Scheme, Economic Rehabilitation Scheme, Medical Attendance Rules, Monthly Conveyance Reimbursement Rules etc.

INTERNAL COMPLAINTS COMMITTEE

An Internal Complaints Committee to examine the cases related to sexual harassment is in place under the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013. The complaints received by the Committee are being dealt in line with the provisions in the Act.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

a) Number of complaints pending as on April 1, 2021: Nil

b) Number of complaints filed during FY 2021-22: Nil

c) Number of complaints disposed of during FY 2021-22: Nil

d) Number of complaints pending as on March 31, 2022: Nil

HEALTH AND SAFETY

PFC has acquired certification in ISO 45001:2018 which stands for Occupational Health and Safety (OH&S) Management System. OH&S is the first and only International Standard for occupational health and safety management, containing agreed good practice from around the world. Due to COVID-19 pandemic we had to face various challenges and in line with

guidelines set in OH&S, we strive to provide a healthy and safe working environment for employees.

9.0 AWARDS & RECOGNITIONS

• PFC bagged Dun & Bradstreet''s India''s Best PSU Award in the category of "Best Navratna" in a virtual format.

• PFC received Dalal Street Investment Journal PSU AWARD OF THE YEAR 2020 in the Category - Navratna of the Year and the Most Efficient and Profitable Navratna of the Year -Non-Manufacturing.

• PFC has been awarded the First prize in Public Sector Category in Region ''A'' of ''Rajbhasha Kirti puruskar'' for the year 2020-21.

• PFC''s House Journal ''Urja Deepti'' was awarded First prize in the ''Best House Journal Category''.

• PFC won the prestigious ICAI (Institute of Chartered Accountants of India) Silver award for excellence in financial reporting for the financial year 2020-21 in ''Public Sector Entities'' category. PFC was bestowed with this coveted award for its highest degree of compliance with accounting standards, commendable accounting practices adopted while preparing financial statements, the policies adopted for disclosure & presentation of financial statements amongst other information contained in the annual report.

• The Company Secretary of your Company, Shri Manohar Balwani has been included amongst top 10 Chief Compliance Officers of India - 2022 by ''CEO Insights'' in its July 2022 publication. This is an annual recognition that showcases exceptional leaders and professionals in Compliance Assurance Department in an Organisation.

10.0 Brief on COVID-19 Related Activities

PFC adopted SOPs in Corporate office building to prevent spread of COVID-19, which included Temperature checking at entrance, Mask and gloves at entrance, Chemical sanitisation foot mats, Face capturing and infra-red temperature reading devices, Quick Response Team to tackle COVID cases.

For regular operations, PFC adopted digital technologies including E-Office solutions for internal approvals, meetings on virtual mode, facilitating Work from Home (WFH), secure VPN & Remote Desktop access (RDA) for seamless secured connectivity. PFC shifted to virtual reskilling amidst restrictions on physical training. Onboarding programme for new employees was also organised virtually during the financial year.

PFC emphasised the importance of health and safety for employees'' well-being. Multiple health talks and awareness programmes on COVID-19 were organised. Vaccination camps, RT-PCR testing camps were organised for employees and dependent family members. Entry into the Office campus was strictly regulated. Use of Aarogya Setu application is highly emphasised for both employees and visitors. An online wellness status report was developed for daily updates. Food and critical medical supplies including oxygen cylinders, concentrators, medicines, etc. were provided to Covid-affected employees and families. Periodic sanitisation of office premises was

conducted. Online consultation facility with physicians and pulmonologists for employees and dependent family members was also provided.

11.0 VIGILANCE

The Vigilance Unit proactively perform as an effective tool of Organisation. During the Financial Year 2021-22, the Vigilance Unit has done preventive vigilance, by constantly emphasising on periodic & surprise inspections of various units. During the period, the Vigilance Unit has also issued directions/effective guidelines to rationalise systems and procedures in order to eradicate gaps and confirming transparency in day to day operations. As a new initiative a "Vigilance Corner" has been introduced on the websites of PFC and PFCCL for creating mass awareness and sensitisation among the stakeholders. The Vigilance Unit carried out detailed investigation in respect of complaints registered during this period.

The Vigilance Unit continuously functioned for systemic improvements with a view to increase transparency, objectivity and accountability in the operations of the Company. Thus, it has contributed towards strengthening in the functioning of the organisation.

12.0 OFFICIAL LANGUAGE

It is a matter of great pride that once again PFC has been awarded the First Prize in Public Sector Category in Region ''A'' of ''Rajbhasha Kirti Puraskar'' for the year 2020-21 by Rajbhasha Vibhag, Ministry of Home Affairs for its concerted efforts made in implementation of Official Language Policy.

Hindi Day on September 14, 2021 and Hindi Month from September 14, 2021 to October 13, 2021 were celebrated to create a Hindi oriented environment.

Four Issues including ''Bhartiya Sanskriti Visheshank'' of House Journal ''Urja Deepti'' were also published and made available on website of Department of Official Language, Ministry of Home Affairs. It is a matter of pride that ''Urja Deepti'' was awarded First Prize in the ''Best House Journal category'' for the year 2021 by the Town Official Language Implementation Committee (Undertaking -I), Delhi.

All these efforts were motivational tools in creating possibilities of better and progressive use of Rajbhasha Hindi in the Company.

13.0 DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

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

(b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

15.10 Details of significant and material orders passed by the Regulators or Courts or tribunals impacting the going concern status and Company''s operations in future

No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company''s operations during the FY 2021-22.

15.11 Details of the application made or any proceedings pending under the insolvency and bankruptcy code, 2016 during the year along with their status as at the end of the financial year and details of the difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the banks or financial institutions along with the reasons thereof.

During the year no application has been made or any proceedings pending against PFC under the Insolvency and Bankruptcy Code, 2016. Further, details of the difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the banks or financial institutions, are not applicable.

15.12 Details of procurement from MSEs

The details of the procurements made from Micro, Small and Medium Enterprises (MSEs) during the FY 2021-22 and the targets for FY 2022-23 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 along with Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 is as under:

(''in crore)
Sr- Particulars Target for No. Particulars FY 2021-22 FY 2022-23
I. Total annual procurement (in value)	176.67	267.99*
II. Total value of goods and services procured from MSEs (including MSEs owned by SC / ST entrepreneurs)	68.12	69.75
III. Total value of goods and services procured from only MSEs owned by SC / ST entrepreneurs.	0.016	15.34
IV. % age of procurement from MSE (including MSEs owned by SC / ST entrepreneurs) out of total procurement.	38.56	25.98
V. % age of procurement from only MSEs owned by SC / ST entrepreneurs) out of total procurement	0.009	5.72
VL Total Number of vender development programmes for MSEs	2	2
VII. Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same.	https://www.pfcindia.com/ DocumentRepository/ckfinder/ files/Statutory_Requirements/ Codes_and_Policies/Public_ Procurement_Policy_for_MSME/ Procurement_target_and_ profile_20_202223.pdf
including '' 208 crore as one time requirement of MS unit in PFC (related to IT infrastructure refresh - planned for FY 2022-23).

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

(d) the Directors had prepared the annual accounts on a going concern basis; and

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

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

14.0 Auditors Statutory Auditors

Dass Gupta & Associates, Chartered Accountants and Prem Gupta & Company, Chartered Accountants were appointed as Joint Statutory Auditors of the Company for FY 2021-22 by the Office of the Comptroller & Auditor General of India.

The Statutory Auditors have not issued any qualification, reservation or adverse remark or disclaimer on the financial statements for FY 2021 -22.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2021-22 and have given their report without any qualification, reservation, adverse remark or disclaimer. The copy of the audit report is annexed herewith.

Secretarial Auditor

Amit Agarwal & Associates, Company Secretaries was appointed as the Secretarial Auditor of the Company for the FY 2021-22 by the Board of Directors of the Company.

The observations of the Secretarial Auditor and reply of the management on the observations, for the FY 2021-22 along with copy of the audit report is annexed herewith.

Comments of Comptroller & Auditor General of India

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors'' report. The copy of the report of C&AG is annexed herewith.

15.0 Statutory Disclosures

15.1 Conservation of Energy/ Technology Absorption

There are no significant particulars, relating to conservation of energy and technology absorption as your Company does not own any manufacturing facility.

15.2Foreign Exchange Earnings and Outgo

The Foreign exchange outgo for the FY 2021-22 aggregated to ''31,477.69 crore. The Foreign exchange earnings for the FY 2020-21 were nil.

15.3 Particulars of Loans, Guarantees or Investments Under Section 186 of Companies Act, 2013

Your Company is exempt from the provisions of Section 186 of the Companies Act, 2013.

However, the details of Investment are given at Note No. 11 of the Notes to Accounts of the Standalone Financial statements forming part of this Annual Report.

15.4 Details of Adequacy of Internal Financial Controls with reference to the Financial Statements

M/s. ASA & Associates LLP, Chartered Accountants, appointed for the said purpose, has certified that the Company maintains an adequate system of internal financial controls, evaluates and makes an assessment of its adequacy and effectiveness in a satisfactory manner which takes care of requirements under Companies Act, 2013.

The Statutory Auditors of the Company i.e. Dass Gupta & Associates, Chartered Accountants and Prem Gupta & Company, Chartered Accountants and have also given their Report on the Internal Financial Controls stating that the Company has, in all material respects, an internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2022 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

15.5 Compliance of Secretarial Standards

The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.

15.6 Particulars of Remuneration U/S 197(12) of the Companies Act, 2013

The provisions of Section 197 of the Companies Act, 2013 and Rules made thereunder related to Managerial Remuneration are not applicable to your Company being a Government Company.

15.7 Annual Return Link

The Annual Return of PFC for FY 2020-21 is available on the link https://www.pfcindia.com/DocumentRepository/ckfinder/files/ Investors/Annual Return/Annual Return 23112021.pdf and for FY2021-22 it shall be made available on your Company''s website www.pfcindia.com.

15.8 Reporting of Frauds by Auditors

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against PFC by its officers or employees.

15.9 Debenture Trustees

The details of Debenture Trustees appointed by the Company for the different series of Bonds issued by your Company are annexed herewith.

16.0 Information Technology

PFC has taken up various Information Technology initiatives to improve overall productivity. PFC has implemented state-of-the-art Data center housing various IT services and ERP application system to integrate all the Business functions. Further, PFC is in the process of implementing latest & advanced IT systems including a single-platform ERP systems to consolidate the technology landscape.

Compliance to guidelines issued by statutory bodies:

As per the guidelines issued by RBI vide Master Directions to NBFCs, the IT Strategy Committee has been constituted, IT policy has been implemented and IT audits are being carried out. Guidelines and regulations with respect to Information Technology issued by various statutory & regulatory bodies such as Meity, RBI, MoP, NCCC, NCIIPC etc have been complied by PFC.

Revamped PFC Website:

The bi-lingual PFC website has been revamped and maintained with up-to-date information. The face uplifted website has been made more informative to address the information requirements of external stakeholders.

17.0 Right to information Act

Right to Information is derived from our fundamental right of freedom of speech and expression under Article 19 of the Constitution. Democracy revolves around the basic idea of Citizens being at the centre of governance. The right to information has been recognised as a fundamental human right, which upholds the inherent dignity of all human beings. The right to information forms the crucial underpinning of participatory democracy - it is essential to ensure accountability and good governance. The greater the access of the citizen to information, the greater the responsiveness of government to community needs. RTI Act is a progressive legislation based on citizen''s right to know which is a fundamental right enshrined in the Constitution of India. The purpose of the Act is to make the executive accountable and ensure transparency in the implementation of schemes and policies. Under the act, information may be sought from a public authority as defined under the act. Right to information includes right to inspect documents. Under the Act, it is believed that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable. The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the Public Authorities.

An elaborate mechanism has been set up in PFC to deal with requests received under the RTI Act, 2005. Your Company has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the Company. The Company has designated a Public Information Officer (PIO) and a First Appellate Authority (RTI) at its registered office for effective implementation of the RTI Act. The relevant information/ disclosures are also made available on the official website (www.pfcindia.com) of the Company. During the period from April 1, 2021 to March 31, 2022, all 152 applications received under the RTI Act, were duly processed and replied to. PFC has also complied with the requirement of filing of online RTI Quarterly Returns on the portal of Central Information Commission (CIC) during the said period.

Further, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated 15.04.2013 issued certain guidelines on Suo moto disclosure of more items. In compliance of the aforesaid Guidelines, PFC has placed the requisite information on the website of the Company.

Besides the above, PFC is also linked with the online RTI Portal of Govt. of India, Department of Personnel & Training (https://rtionline.gov.in), which enables citizens of India, to file RTI applications/first appeals online along with payment gateway. Payment can be made through internet banking of SBI & its associate banks, debit/credit cards of Master/Visa and RuPay cards.

18.0 Establishment of Vigil Mechanism

Your Company has established stringent vigil mechanism by way of implementing various codes and policies like Fair Practices Code, Code of Conduct, Code for Prevention of Insider Training, Fraud Prevention Policy, Policy on Related Party Transactions, Public Procurement Policy, Whistle Blower Policy, etc. The details are also posted on the Company''s website.

19.0 Grievance Redressal

PFC has a Grievance Redressal System for dealing with grievances of the public at large. The systems are duly notified and the Nodal Officers ensure quick redressal of grievances within the permissible time frame. PFC has also notified Citizen''s Charter to ensure transparency in its work activities. The Charter is available on the website of PFC to facilitate easy access.

20.0 Statutory and other information

Information required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015,

DPE''s Guidelines on Corporate Governance for CPSEs and other applicable statutory provisions is annexed to this report as follows:

Particulars	Annexure
Management Discussion and Analysis Report	A
Integrated Reporting	B
Report on Corporate Governance	C
Business Responsibility Report	D
Secretarial Audit Report	E
Annual Report on CSR Activities	F
Disclosure of particulars of contracts/arrangements entered into by the company with related parties (AOC-2)	G
Details of Debenture Trustees	H

21.0 ACKNOWLEDGEMENT

The Board of Directors place on record their appreciation for the co-operation, guidance and encouragement extended to the Company by the Government of India particularly Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India, Department of Public Enterprises, NITI Aayog, DIPAM, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited, Ministry of Micro, Small and Medium Enterprises, and other concerned Government departments/agencies at the Central and State level etc.

The Board also conveys its gratitude to the shareholders, investors, various International and Indian Banks/Multilateral agencies/financial Institutions/ credit rating agencies for the continued trust and for the confidence reposed by them in PFC. Your Directors would also like to convey their gratitude to the clients and customers for their unwavering trust and support.

The Company is also thankful to the Comptroller & Auditor General of India and the Statutory Auditors, Secretarial Auditor and RBI Auditors for their constructive suggestions and cooperation.

Your Directors also recognise and appreciate the untiring efforts and contributions made by the employees to ensure excellent all round performance of your Company.

For and on behalf of the Board of Directors

(R. S. Dhillon)

Chairman & Managing Director DIN:00278074

Place: New Delhi Dated: August 29, 2022

---

Mar 31, 2021

Your Directors are pleased to present their 35^th Annual Report on the performance of your Company for the financial year ended March 31,2021 along with Audited Financial Statements, Auditor''s Report, Secretarial Auditor''s Report & report by the Comptroller and Auditor General of India.

1.0 FINANCIAL AND OPERATIONAL HIGHLIGHTS

• Total income achieved during the FY 2020-21 was up by 13% to ''37,767 Crore.

• Net Interest Income during the FY 2020-21 increased by 28% to ''12,951 Crore.

• Delivered highest ever Net profit of ''8,444 Crore during FY 2020-21.

• Board recommended a final dividend of ''2 per equity share in addition to an interim dividend of ''8 per equity share, which was paid in March 2021. The total dividend for the FY 2020-21 thus aggregates to ''10 per equity share as against ''9.50 per equity share paid for the previous year. The final dividend will be paid after your approval at the Annual General Meeting. The total dividend pay-out for the FY 2020-21 will thus amount to ''2,640 Crore (inclusive of TDS) representing 31.27% of the profit after tax.

• Total expenditure for the FY 2020-21 amounted to ''27,559.26 Crore. Out of it, finance cost amounted to ''23,194.49 Crore. This constituted 84.16% of total expenses in FY 2020-21. During FY 2020-21, employee benefit expenses and other expenses, which includes administrative and office expenses were ''265.42 Crore (0.96 % of total expenses and 1.14% of

finance cost) against ''282.73 Crore (1.12% of total expenses and 1.29% of finance cost) in the previous year.

• Highest ever loans sanctioned amounting to ''1,66,370 Crore during the FY 2020-21 to State, Central, Private and Joint Sector entities. Highest ever disbursements amounting to ''88,302 Crore during the same period.

• Gross Loan Asset book as on FY 2020-21 stood at ''3,70,771 Crore. The outstanding borrowing as on FY 2020-21 stood at ''3,25,095 Crore.

• Total provision of ''13,416 Crore towards Stage-III Loan Assets as at the end of FY 2020-21. The Net Stage-III Assets stands at ''7,734 Crore as on March 31, 2021, which is 2.09% to the Total Gross Loan Assets. In addition to above, provision of ''1,236 Crore and ''1,945 Crore made on Stage-I Loan Assets and Stage-II Loan Assets respectively as on March 31, 2021

• As on March 31, 2021, the Government of India''s shareholding is 55.99%.

• PFC''s robust financials inspire higher levels of confidence amongst investors, regulators and other stakeholders in your Company.

1.1 FINANCIAL PERFORMANCE OVERVIEW1.1.1 PROFITABILITY

('' in Crore)
Particulars	Standalone		Consolidated
	2020-21	2019-20	2020-21	2019-20
Total Income	37,766.57	33,371.06	71,700.51	62,275.36
Profit Before Tax	10,207.31	8,192.54	19,890.73	14,092.67
Tax expenses	1,763.30	2,537.40	4,174.53	4,615.42
Profit After Tax	8,444.01	5,655.14	15,716.20	9,477.25
Owners of the Company	-	-	11,747.83	7,122.13
Non-Controlling Interests	-	-	3,968.37	2,355.12
Total Comprehensive Income	8,534.21	5,320.51	16,264.09	8,588.64
Owners of the Company	-	-	12,078.90	6,495.85
Non-Controlling Interests	-	-	4,185.19	2,092.79

1.1.2 RESERVE & SURPLUS

(? in Crore)
Particulars	Standalone		Consolidated*
	2020-21	2019-20	2020-21	2019-20 9,029.56
Opening balance of Surplus	6,042.40	6,202.53	8,080.18
Profit After Tax for the year	8,444.01	5,655.14	11,747.83	7,122.13
Re-measurement of Defined Benefit Plans	(3.13)	(5.01)	(8.75)	(6.14)
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1) (viia) (c) of Income Tax Act, 1961	(609.83)	(304.81)	(761.49)	(481.94)
Transfer to Special Reserve created and maintained u/s 36(1) (viii) of Income Tax Act, 1961	(2,534.77)	(1,350.13)	(3,883.87)	(2,151.40)
Transfer to Special Reserve created u/s 45-IC (1) of Reserve Bank of India Act, 1934	(1,688.80)	(1,131.02)	(2,569.38)	(1,645.79)
Transfer to Debenture Redemption Reserve	-	-	-	(25.87)
Transfer to General Reserve	-	-	(516.40)	-
Transfer to Interest Differential Reserve-KFW Loan (net)	(1.25)	(1.40)	(1.25)	(1.40)
Dividends	(2,112.07)	(2,508.08)	(2,112.07)	(2,508.08)
Dividend Distribution Tax	-	(264.79)	-	(514.99)
Transfer from Debenture Redemption Reserve on account of utilisation	-	-	-	-
Transfer from OCI - Equity Instruments	6.98	(249.96)	134.73	(295.33)
Other Comprehensive Income/(Expense)	-	-		(0.20)
Reclassification of gain/loss on sale of equity instrument measured at OCI	-	-	-	-
Pooling of interest accounting for common control business combination	-	-	-	-
Impairment Reserve	-	-	-	(417.55)
Adjustments	(339.68)	(0.07)	(349.01)	(22.82)
Closing Balance of Surplus	7,203.86	6,042.40	9,760.52	8,080.18
* Attributable to owners of the Company (PFC).

1.2 OPERATIONAL PERFORMANCE OVERVIEW1.2.1 ASSET QUALITY

(? in Crore)
Particulars	2020-21	2019-20
Gross Loan Assets	3,70,771	3,44,905
Stage III Assets	21,150	27,872
Provision on Stage III Assets	13,416	14,749
Gross Stage III as % of Gross Loan Assets	5.70%	8.08%
Net Stage III as % of Gross Loan Assets	2.09%	3.80%

1.2.2 SANCTION / DISBURSEMENT (EXCLUDING R-APDRP / IPDS)

('' in Crore)
Category	2020-21		2019-20
	Sanctions	Disbursements	Sanctions	Disbursements
State Sector	1,15,170	73,016	84,395	55,848
Central Sector	9,172	3,912	6,550	1,006
Joint Sector	8,907	2,123	1,873	2,326
Private Sector	33,121	9,251	18,270	8,817
Total	1,66,370	88,302	1,11,089	67,997

1.2.3 BORROWINGS 1.2.3.1 DEPOSITS

Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2020-21. Further, no Perpetual Debt Instruments (PDI) was issued by your Company during FY 2020-21.

As on March 31,2021, PFC has utilised the entire net proceeds of the said Tranche I of public issue of the NCDs as per the objects specified in the Tranche I prospectus dated January 11, 2021.

1.2.3.3 EXTERNAL BORROWINGS

The foreign currency denominated borrowings during FY 2020-21 are as follows:

('' in Crore)
Sr. No.	Source	Amount
1.	Bonds under GMTN programme	3,641.08
2.	Syndicated Loans	2,962.30
	TOTAL	6,603.38

1.2.3.2 BORROWINGS FROM DOMESTIC MARKET

The major borrowings from Domestic market during the FY 2020-21 are given as follows:

('' in Crore)
Sr. No.	Source	Amount
1.	Bonds	40,965.60
2.	Rupee Term Loans	20,400.00
3.	Commercial Paper (Maturity Value)	3,120.00
	TOTAL	64,485.60*

*In addition to above funds amounting to ''4,775 Crore were raised and repaid during the FY 2020-21 through Commercial Paper.

Further, for maintaining adequate liquidity, credit lines to the tune of ''10,930 Crore were sanctioned as on March 31, 2021 by various scheduled commercial banks to the Company for short-term funding generally without any commitment charges.

Public Issue of NCDs

During the FY 2020-21, your Company launched first tranche of public issue of secured, redeemable, taxable Non-Convertible Debentures (NCDs) for base issue size of ''500 Crore with an option to retain oversubscription up to ''4,500 Crore, aggregating up to ''5,000 Crore. This was the first ever public issue of taxable NCDs by PFC and also by a Central PSU in the Indian power sector. Object of the said public issue was to raise funds for onward lending, financing/refinancing existing indebtedness and/or debt servicing (payment of interest and/or repayment/prepayment of interest and principal of existing borrowings) and general corporate purposes.

In order to address varied requirements of investors, PFC offered a bouquet of options with tenure of NCDs ranging from 3 years to 15 years. The 3-year tenure NCD in Series I offered a fixed coupon rate of 4.65% p.a. to 4.80% p.a. depending on the category of investor, while the 5 year tenure NCD in Series II offered fixed coupon rate of 5.65% p.a. to 5.80% p.a. depending on the category of investor. The 10-year tenure NCDs offered options of both fixed and floating rates of interest. The fixed coupon rate was 6.63% p.a. (quarterly) to 7.00% p.a. and the floating coupon rate, on the other hand, was based on Benchmark FIMMDA 10-year G-Sec (Annualised) spread of 55 basis points to 80 basis points (subject to floor and cap rates) depending on the category of investors. The 15-year tenure NCD offered a range of fixed coupon rates with maximum rate of 7.15% p.a.

The said public issue of NCDs (Tranche I) was opened for subscription on January 15, 2021 and was pre-closed on January 18, 2021. The issue was a resounding success with the base issue of ''500 Crore being oversubscribed about 9 times, raising ''4,428.99 Crore. Date of allotment of the NCDs issued under the said Tranche I of public issue is January 22, 2021 and the same have also been listed on the BSE Ltd. The principal amount of the said NCDs issued along with interest accrued thereon, is secured by way of first pari passu charge through hypothecation of the book debts/receivables of PFC (excluding book debts/receivables on which a specific charge has already been created). Further, M/s Beacon Trusteeship Ltd. has been appointed as the Debenture Trustee of the said NCDs.

Green Bonds

PFC established its Green Bond Framework in October, 2017 as approved by Climate Bonds Initiative (CBI), London, UK. In this context, an agreement was executed between PFC & Climate Bonds Initiative.

Your Company issued its first USD Green bond in December, 2017 and raised USD 400 million at a coupon of 3.75% and these bonds are listed on the London Stock Exchange''s new International Securities Market (ISM) and Singapore Stock Exchange. A generalised annual update to the holders of the bonds, as required under the agreement for climate bond certification is as follows:-

The funds raised under Green bonds have been utilised to finance renewable energy projects as per the "Eligible Projects" under PFCs Green Bond Framework. As at March 31,2021, outstanding loan balances of Solar & Wind energy projects funded by PFC are ''10,945 Crore & ''8,696 Crore respectively. Accordingly, PFC green bond portfolio is more than the loan outstanding under the green bond.

1.3 CREDIT RATING

• During the FY 2020-21, Company''s both long-term & shortterm domestic borrowing programme (including bank loans) continued to be the highest rating.

• Domestic Rating assigned by CRISIL, ICRA and CARE

• Long-term domestic borrowing programme Rating -CRISIL AAA, ICRA AAA and CARE AAA

• Short-term domestic borrowing programme Rating -CRISIL A1 , ICRA A1 and CARE A1

• International Rating

The Company''s international credit ratings continue to be Baa3 and BBB - assigned by International Credit Rating Agencies Moody''s and Fitch respectively.

1.4 MEMORANDUM OF UNDERSTANDING WITH GOVERNMENT OF INDIA

Your Company has been consistently accorded ''Excellent'' Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY 2018-19, your Company was accorded ''Excellent rating''. The rating for FY 2019-20 and FY 2020-21 is still awaited.

1.5 SUBSIDIARIES1.5.1 REC LIMITED

Consequent upon acquisition of majority stake in REC (Formerly Rural Electrification Corporation Limited) from Government of India on March 28, 2019, Your Company is the promoter and holding Company of REC. Accordingly, the following subsidiaries of REC as on March 31, 2021 are also subsidiaries of PFC:

i) REC Power Distribution Company Limited#

ii) Koderma Transmission Limited

iii) Mandar Transmission Limited

iv) Dinchang Transmission Limited

v) Chandil Transmission Limited

vi) Dumka Transmission Limited

vii) Kallam Transmission Limited

viii) Sikar New Transmission Limited

ix) Bidar Transmission Limited

x) Gadag Transmission Limited

xi) Rajgarh Transmission Limited

xii) Fatehgarh Bhadla Transco Limited

xiii) MP Power Transmission Package-I Limited

xiv) MP Power Transmission Package-II Limited

• renamed as REC Power Development & Consultancy Ltd. w.e.f. July 16, 2021. REC is also a Systemically Important (Non-Deposit Accepting or Holding) Non-Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI) as an Infrastructure Finance Company (IFC). Its business activities involve financing projects in the complete power sector value chain, be it generation, transmission or distribution. REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.

During the FY 2020-21, the total income of REC was ''35,410 Crore and the net profit was ''8,362 Crore.

The detailed operational and financial performance of REC is available on its website i.e. www.recindia.nic.in.

1.5.2 PFC CONSULTING LIMITED

Your Company had been offering consultancy support to the Power Sector through PFC Consulting Limited, its wholly-owned subsidiary.

The Services offered by PFCCL are broadly in the following areas: Transaction Advisory

• Selection of Sellers/Developers Through ''Case-1'' and ''Case-2'';

• Guidelines & SBDs: Short-Term, Medium-Term, Long-Term (Case ''1'', Case ''2'' and UMPPs), Hydro, Solar, Wind, Pilot Scheme 1 & 2

_• Reform & Restructuring

• Independent Transmission Projects

• Privatisation of Electricity Distribution in UTs

Project Development

• Ultra Mega Power Projects (UMPPs)

• Ultra Mega Renewable Energy Power Parks (UMREPPs)

• Smart Metering

• Owner''s Engineer, Lender''s Independent Engineer, Lender''s Insurance Advisor

PMA / PMC In Distribution Sector

• IPDS

• DDUGJY

_• Smart Metering

_• Smart Grid

• NSGM

• R-APDRP

Smart Solutions

• GIS & Smart Metering

_• Smart Grid

• Energy Portfolio Management

• Procurement of Power: DEEP Portal

• Coal Linkage Auction under SHAKTI Scheme

• Pilot Scheme I & II

• PRAAPTI Portal

Other Services

• Tariff & Regulatory

_• Selection of EPC Contractor

_• Resource Mobilisation

_• Project advisory for new power plant

_• Strategy

_• Contracts, commercial and legal

_• Trading

_• Project Appraisal

_• Computerisation of Operations

_• Accounting Systems

_• Policy

_• Energy Audit

Till date, consultancy services have been rendered to 74 clients spread across 25 States/UTs by PFCCL. The total number of assignments undertaken as on date is 150.

Further, during the FY 2020-21, the total income of PFCCL was ''74.90 Crore and the net profit earned was ''28.11 Crore. The net worth of PFCCL as on March 31, 2021 was ''88.18 Crore.

The Statutory Auditor of PFCCL during the course of audit for FY 2019-20, highlighted certain suspected irregularities in some of the transactions of PFCCL related to business promotions, official hospitality and related allocation of expenses to subsidiaries/ fellow subsidiary companies. Statutory Auditor of PFCCL vide its letter dated 25.06.2020 reported the matter to Board of Directors of PFCCL and MCA. Based on this letter of Statutory Auditor of PFCCL, investigation was initiated against some of the employees as per the applicable rules and regulations. As per the investigation, one of the employees of PFCCL has been awarded major penalty and further investigation is under way.

• Your Company is designated by Ministry of Power, Government of India as the ''nodal agency'' for facilitating development of Ultra Mega Power Projects and its wholly-owned subsidiary i.e. PFC Consulting Limited is the ''Bid Process Coordinator'' for Independent transmission projects.

As on March 31, 2021, for the said purpose, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiaries of the Company:

i) Chhattisgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.)

ii) Coastal Karnataka Power Limited

iii) Coastal Maharashtra Mega Power Limited

iv) Coastal Tamil Nadu Power Limited

v) Orissa Integrated Power Limited

vi) Sakhigopal Integrated Power Company Limited

vii) Ghogarpalli Integrated Power Company Limited

viii) Tatiya Andhra Mega Power Limited

ix) Deoghar Mega Power Limited

x) Cheyyur Infra Limited

xi) Odisha Infrapower Limited

xii) Deoghar Infra Limited

xiii) Bihar Infrapower Limited

xiv) Bihar Mega Power Limited

xv) Jharkhand Infrapower Limited

xvi) Tanda Transmission Company Limited *

xvii) Bijawar-Vidarbha Transmission Limited*

xviii) Shongtong Karcham-Wangtoo Transmission Limited*

xix) Koppal-Narendra Transmission Limited*

xx) Karur Transmission Limited*

xxi) Ananthapuram Kurnool Transmission Limited*

xxii) Sikar-II Aligarh Transmission Limited*#

xxiii) Bhadla Sikar Transmission Limited*

xxiv) Khetri Narela Transmission Limited*

xxv) Kishtwar Transmission Limited**

xxvi) Khavda-Bhuj Transmission Limited**

xxvii) Nangalbibra-Bongaigaon Transmission Limited**

xxviii) Mohanlalganj Transmission Limited**

* wholly-owned subsidiaries of PFC Consulting Limited.

**wholly-owned by PFC Consulting Limited and incorporated

in FY 2021-22.

* Transferred on June 8, 2021.

2.0 RISK MANAGEMENT2.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System as per Asset Liability Management Policy formulated in line with the RBI''s guidelines on Liquidity Risk Management Framework to manage the liquidity and interest rate risks. Measurement and monitoring of Liquidity risk is done through cash flow approach; and for Interest rate risk, it is done through traditional gap analysis technique as detailed in RBI guidelines. Such analysis is made on periodical basis in various time buckets and is used for critical decisions regarding the time, volume and maturity profile of the borrowings and creation of mix of assets and liabilities in terms of time period (short, medium and long-term) and in terms of fixed and floating interest rates. The details of the asset liability management maturity pattern are given at Note No. 53 of the Notes to Accounts of the Standalone Financial statements forming part of this Annual Report.

2.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like forwards, options and swaps in line with RBI guidelines.

As on March 31, 2021, the total o/s foreign currency liabilities are USD 6,309 mn, JPY 50,892 mn & EUR 11 mn; out of which USD 2,800 mn & JPY 459 mn are hedged. Further, 86% of the FC portfolio with residual maturity up to 5 years has been hedged.

2.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

In order to manage risks faced by your Company, it has put in place an Integrated Enterprise Wide Risk Management Policy (IRM policy). For implementation of the policy, your Company has constituted a Risk Management Committee of Directors. Under the IRM policy, the Company has to identify the principal risks which may have an impact on its profitability/revenues. In this regard, the Company has identified 11 significant risk parameters which arise from the Company''s business model and from its use of financial instruments. These risk parameters cover the major operational risks, financial risks, market risks, regulatory risks etc. faced by the Company and are regularly assessed as per the Risk Assessment Criteria.

3.0 PFC & GOVERNMENT PARTNERSHIP3.1 INDEPENDENT TRANSMISSION PROJECTS (ITPs)

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required etc.

As on March 31, 2021, 36 Special Purpose Vehicles (SPVs), 2 by PFC and other 34 by PFC Consulting Limited (wholly-owned subsidiary), have been established for ITPs. Further in the month of April & May, 2021 PFCCL has incorporated 3 new SPVs for development of transmission schemes. Out of 39 SPVs, 26 SPVs were transferred to the successful bidders and bidding process for 9 SPVs are under progress. Further, due to de-notification of schemes by MoP, 2 SPVs were closed and other 3 SPVs are under process of closure.

3.2 ULTRA MEGA POWER PROJECTS (UMPPs)

Development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each, adopting super critical technology is the initiative of Ministry of Power (MoP), Government of India for which your Company has been designated as the ''Nodal Agency'' and Central Electricity Authority (CEA) as the Technical Partner by MoP.

PFC Consulting Limited (a wholly-owned subsidiary of PFC) in conjunction with MoP and CEA undertake preliminary site investigation activities, land acquisition activities, site specific studies to obtain appropriate regulatory and other approvals for land, water, coal block, environment etc. necessary to conduct the bidding process. The successful bidder is then expected to develop and implement these projects.

Your Company incorporated a total of 19 wholly-owned Special Purpose Vehicles (SPVs) for the UMPPs. Out of these, 4 UMPPs have been transferred to successful bidders and as per the direction of MoP and respective State Governments, PFC / PFCCL is in the process of closure of 4 UMPPs.

Further, MoP is in the process of revision of Standard Bidding Documents (SBDs). The developmental work for UMPPs is under progress.

3.3 INTEGRATED POWER DEVELOPMENT SCHEME (WITH RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP) SUBSUMED IN IT)

a) In order to provide impetus to strengthening of power distribution sector in urban areas and extend financial assistance against capital expenditure for addressing the gaps in sub transmission & distribution network and metering in urban areas to supplement the resources of DISCOMs/ Power Departments, Ministry of Power, Government of India

launched '' Integrated Power Development Scheme '' (IPDS) on December 3, 2014. The scheme has been sanctioned under 3 main heads -

i. Strengthening of sub-transmission and distribution networks in the urban areas covering new substations, new lines, replacement of old lines/cables, Aerial Bunched and Underground cabling, metering etc.

ii. I T based technologies like IT enablement of smaller towns and ERP and smart Metering.

iii. New Technologies like Gas Insulated Sub-stations (GIS) and Real Time-Data Acquisition System (RT-DAS) projects.

Erstwhile, R-APDRP Scheme has been subsumed in the IPDS Scheme.

The estimated outlay of the scheme is ''32,612 Crore including a budgetary support of ''25,354 Crore from Government of India during the entire implementation period.

R-APDRP scheme cost of ''44,011 Crore (with a budgetary support of ''22,727 Crore) as already approved by CCEA is also carried forward to IPDS in addition to the outlay of ''32,612 Crore.

b) Details of Sanctions/Disbursements under IPDS (R-APDRP scheme subsumed)

(? in Crore)
Scheme	2020-21		Cumulative up to March''2021
	Approved Project Cost	Disbursements	Approved Project Cost	Disbursements
R-APDRP	(2,749) *	300	31,965	13,194
IPDS	(745) #	3,210	31,314	15,661

Note: * Negative sanction for R-APDRP in 2020-21 indicates reduction in cost upon final closure of R-APDRP Projects.

# Reduction in sanctioned project cost for IPDS Projects is due to cancellation of Projects by 16^th Monitoring Committee Meeting held on August 3, 2020 considering delay in award of Projects by Utilities and less availability of time for project implementation up to present Sunset date of Mar, 2022 for IPDS/R-APDRP. 18^th Monitoring Committee Meeting held on March 18, 2021 decided to revoke cancellation of few Projects based on the request of Utilities.

c) Other developments

• IT and Technical interventions undertaken under the scheme is helping in improvement of Billing/Collection efficiency which will ultimately result in reduction in Aggregate Technical and Commercial (AT&C) losses. The reduction in AT&C loss is already visible in many R-APDRP towns because of establishment of IT system and Part-B completion coupled with administrative and other measures.

• There has been an increased in transparency by way of capturing of data from = 36,000 urban feeders (11 kV) in IT enabled towns on Urban Distribution Monitoring System under National Power Portal.

• The initiatives have helped in giving an impetus to Digital Economy which is evident from the fact that collection of over 50% revenue across IT enabled towns was through Digital means as per data captured on IPDS website.

• Gas Insulated Substations (GIS) have been commissioned for first time in Bihar, Karnataka, UP and NER States.

• More than 3.5 lakh Smart Meters have been installed in the country.

• ''1912'' - Short-code for ''Complaints on Electricity'' is now operational in all Discoms.

• Capacity building/training of Utility personnel has also been carried out using Digital means under IPDS / R-APDRP to enhance their skill through workshops/webinars on AT & C loss reduction, smart metering, project management, guidelines, best practices etc.

Revamped Distribution Sector Scheme

The Central Government has approved a ''Revamped Distribution Sector Scheme - A Reforms based and Results linked Scheme '' with the objective of improving the quality and reliability of power supply to consumers through a financially sustainable and operationally efficient distribution Sector. The Scheme aims to reduce the AT & C losses to pan-India levels of 12-15% and Average Cost of Supply (ACS) -Average Revenue Realised (ARR) gap to zero by 2024-25. The Scheme has an outlay of ''3,03,758 Crore. Under the scheme, eligible DISCOMs would be provided financial support for upgradation of the Distribution Infrastructure and Smart Metering Systems for the network as well as prepaid smart metering systems for consumers. The funding against the works other than prepaid Smart Metering and System Metering would be contingent upon DISCOMs meeting the pre-qualifying criteria and achieving at least 60% marks on the result evaluation matrix formulated on the basis of action plans for loss reduction and work plans of DISCOMs agreed upon by the Government of India.

Your Company has been designated as the Nodal Agency for the said scheme along with its subsidiary REC Limited. Thus, your Company is contributing towards improving operational efficiency and financial health of Distribution Utilities.

4.0 JOINT VENTURES, ASSOCIATE COMPANIES AND OTHER MAJOR INVESTMENTS (AS ON MARCH 31, 2021)

4.1 ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad.

As on March 31, 2021, the Company along with its subsidiary REC holds 47.15% stake in equity share capital of EESL (24.97% directly and 22.18% through its subsidiary REC).

Based on the provisional financials of EESL for FY 2020-21, its turnover for the year was ''1,471.85 Crore (on standalone basis). Further, the Profit Before Tax and Profit After Tax for the FY 202021 were ''43.96 Crore and ''32.87 Crore respectively.

4.2 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested ''12 Crore in PTC which is 4.05% of PTC''s total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country.

4.3 PFC had invested in Power Exchange India Limited (PXIL). PFC''s investment in equity shares of PXIL as on March 31, 2021 is ''3.22 Crore. Due to erosion of Net Worth of PXIL, the investment has been fair valued at nil as no material amount is expected to be realised.

5.0 INITIATIVES TOWARDS REFORMS AND RESTRUCTURING5.1 CATEGORISATION OF UTILITIES

For purposes of funding, your Company classifies State Power Generation and Transmission entities into A , A , A, B and C categories. The categorisation (biannually) of State Power Generation and Transmission entities is arrived based on the evaluation of entity''s performance against specific parameters covering operational & financial performance including regulatory environment, generation of audited accounts, etc. as per categorisation policy.

With respect to State Power Distribution entities (including SEBs/entities with integrated operations), your Company''s categorisation policy provides for adoption of MoP''s Integrated Ratings by aligning such ratings/gradings with PFC''s standard categories of A , A, B and C. The categorisation enables PFC to determine credit exposure limits, pricing of loans and stipulation of security to the state power entities.

5.2 ANNUAL PERFORMANCE RESEARCH REPORT OF STATE POWER UTILITIES

PFC brought out the Report on the Performance of State Power Utilities (SPUs) for the period of 3 years i.e. 2016-17 to 2018-19 covering 104 utilities for the year 2018-19. The Report is a part of PFC''s effort to provide a reliable database which can help to determine the results associated with the reforms in the sector. The Report is recognised by various stakeholders as a useful source of information regarding the state power sector. The Report analyses financial and operational performance e.g. profitability, gap between average cost of supply and average revenue, net worth, capital employed; receivables, payables, AT&C losses etc. and consumption pattern of the sector at utility, state and national level.

The Report for the 3 year period i.e. 2017-18 to 2019-20 is under finalisation and a draft report has been submitted to MoP in March 2021.

5.3 ANNUAL INTEGRATED RATING OF STATE DISTRIBUTION UTILITIES

Ministry of Power has taken various reform initiatives, to bring about improvements in the State Distribution Sector and has put in place an Integrated Rating Methodology for an objective evaluation of performance of State Distribution Utilities. A range of financial, operational & reform-related parameters identified as part of the Integrated Rating Methodology, besides covering the power sector reform initiatives of the State Governments/ DISCOMs and also including parameters relating to actual performance of the Utilities. These ratings are carried out by reputed independent agencies and co-ordinated by your Company.

These ratings are immensely beneficial as a diagnostic tool in the hands of the State Governments as well as Utilities to build on their strengths and work on areas requiring improvements so as to improve their operational efficiency and financial selfsustainability.

Ninth Integrated Ratings for FY 2019-20, covering 41 Utilities in 22 States and inter-se ranking of the Utilities was released by the Hon''ble Minister of Power, New & Renewable Energy on July 16, 2021.

6.0 PRESIDENTIAL DIRECTIVES

During last 3 years, Ministry of Power vide its letter dated May 10, 2018 issued Presidential Directives with regard to the pay scale revision for Board level and below Board level executives w.e.f. January 1,2017 in accordance with DPE OMs dated August 3, 2017 and August 4, 2017. In line with the Presidential Directives, the pay scales for Board level and below Board level executives of your Company as well as other perks and allowances, etc. have been revised w.e.f. January 1, 2017.

7.0 CORPORATE SOCIAL RESPONSIBILITY

The aim of PFC''s Corporate Social Responsibility and Sustainability Policy (CSR and Sustainability Policy) is to ensure that the Company becomes a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfillment of Power and Energy needs of the society.

PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. To oversee the activities of CSR, PFC has in place a Board level CSR & SD Committee of Directors headed by an Independent Director.

PFC implemented wide range of CSR & SD activities in the field of Environment Sustainability, Healthcare, Sanitation & Drinking water and Skill development. Further, as per DPE''s mandate, PFC has also contributed to thematic areas i.e. Health & Nutrition with preference given to Aspirational Districts.

The CSR Report under Companies (CSR Policy), Rules is annexed herewith.

8.0 HR INITIATIVES DEVELOPMENT & TRAINING

During the FY 2020-21, the focus of conducting in house programmes was maintained in order to ensure specific skill development in line with the corporate goals. Customised need-based virtual in-house programmes were organised besides sponsoring employees to other programmes conducted by external agencies. A total of 254 employees were sponsored for virtual programmes.

WELFARE MEASURES

Your Company endeavours to follow the best management practices of the industry.

Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which lead to a healthy workforce. During the period, several new initiatives were taken for employees'' welfare such as amendments in Medical Attendance Rules, EPF Trust Rules and Preventive Measures for Covid, etc.

Your Company has undertaken various measures to contain the spread of COVID-19 pandemic. Working through e-office has been implemented to ensure smooth and paperless work in all conditions. Necessary provisions such as remote working and video conferencing were enabled to facilitate work from home during lock-down conditions. The physical meetings in office were minimised to contain the spread of infection. Several camps were organised in the office premises during the period for testing and vaccination of employees. Health talks were also organised to take care of various concerns among employees including stress management during the pandemic.

RECREATIONAL ACTIVITIES

Your Company being a founding member of Power Sports Control Board (PSCB), PFC employees participated with full vigor and enthusiasm in various Inter-CPSU sports tournaments organised by the PSCB member organisations during the period, in addition to organising an Inter-Division T-20 Cricket Tournament for its employees on February, 2021 to encourage team spirit in the Company. The Tournament also witnessed participation of women teams.

HUMAN RESOURCE MANAGEMENT

Your Company has put in place effective human resource acquisition and maintenance function, which is benchmarked with best corporate practices designed to meet the organisational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity.

The Industrial Relations within the Company have been very cordial and harmonious with the employees committing themselves entirely to the objectives of the Company. There were no man-days lost during the year under review. The attrition during the period from April 1,2020 to March 31,2021 was 0.42%.

RESERVATION OF POSTS The status of implementation of reservation policy of Government of India is as under:
Group	Total Employees as on March 31, 2021	SC	SC %	ST	ST %	OBC	OBC %	EWS	EWS %
A	461	84	18.22	29	6.29	85	18.44	1	0.22
B	5	1	20.00	1	20.00	0	0.00	0	0.00
C	17	2	11.76	1	5.88	3	17.65	0	0.00
D	0	0	0.00	0	0.00	0	0.00	0	0.00
Total	483	87	18.01	31	6.42	88	18.22	1	0.21

PFC makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC/ ESM/ PwD employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions. Separate Liaison officers have been appointed to look into the matter of reservations.

REPRESENTATION OF WOMEN EMPLOYEES

Your Company has women in important and critical functional areas. Women representations have gone across hierarchical levels. The Company provides equal growth opportunities for the women in line with Government of India philosophy on the subject. The women are well represented, with 20.29% of the total work force.

Group	Total Employees as on March 31, 2021	Number of Women Employees	Percentage of overall staff strength
A	461	95	20.61%
B	5	0	0.00%
C	17	3	17.65%
D	0	0	0.00%
Total	483	98	20.29%

PFC as part of its social responsibility makes all efforts to ensure compliance of the Directives and guidelines issued by the Government of India from time to time pertaining to the welfare of female employees.

INTERNAL COMPLAINTS COMMITTEE

An Internal Complaints Committee to examine the cases related to sexual harassment is in place under the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013. The complaints received by the Committee are being dealt in line with the provisions in the Act.

a) Number of complaints pending as on April 1, 2020:01

b) Number of complaints filed during FY 2020-21: Nil

c) Number of complaints disposed of during FY 2020-21: 01

d) Number of complaints pending as on March 31,2021: Nil

9.0 VIGILANCE

The Vigilance Unit proactively functioned as an effective tool of management. During the FY 2020-21 Vigilance Unit has done Preventive vigilance. This aspect was constantly emphasised by conducting periodic & surprise inspections of various units. During the period, the Vigilance Unit has also issued directions/ effective guidelines to rationalise systems and procedures in order to eliminate gaps and confirming transparency in day to day operations. Information technology was used as an effective tool for providing on-line services to all the stakeholders and to enhance organisational efficiency. The Vigilance Unit carried out detailed investigation in respect of complaints registered during this period.

The Vigilance Unit continuously worked for systemic improvements with a view to increase transparency, objectivity and accountability in the operations of the Company. Thus, it has contributed towards overall improvement in the functioning of your Company.

10.0 OFFICIAL LANGUAGE

It is a matter of great pride that your Company has been awarded the First Prize in Public Sector Category in Region ''A'' of '' Rajbhasha Kirti Puraskar'' for the year 2019-20 by Rajbhasha Vibhag, Ministry of Home Affairs for its concerted efforts made in implementation of Official Language Policy. The Prize has been received by PFC for consecutively 7^th time.

Hindi Day on September 14, 2020 and Hindi Month from September 14, 2020 to October 13, 2020 were celebrated to create a Hindi oriented environment. Due to COVID-19, five online competitions like ''Rajbhasha Hindi Prashnottari'', ''Likhe Kahani-Apni Zubani'', ''Nibandh Lekhan'' etc. were organised during the Hindi Month. On the closing ceremony of ''Hindi Month'', a cultural programme was organised on October 13, 2020 in which employees of PFC presented cultural programme comprising of PFC song and Poem recitation.

During the year, 9 Hindi workshops and 1 Sangoshthi were organised in which 297 executives participated. Under the joint aegis of Department of Official Language and PFC, a Technical Workshop/Conference on ''Kanthastha'' was organised in which more than 50 Officials from various Central Government Offices, Undertakings, Banks and Para Military Forces located in Delhi participated. A Hindi competition namely ''Rajbhasha Samanya Gyan Pratiyogita'' was also organised in which more than 75 employees participated. The Head Office (Delhi) and the Regional Office (West), Mumbai of your Company were inspected by the Parliamentary Committee of Official Language respectively and Honourable Committee appreciated the work being done in Hindi in PFC.

Four Issues including ''Rajbhasha Visheshank'' of House Journal ''Urja Deepti'' were also published and made available on website of Department of Official Language, Ministry of Home Affairs.

11.0 DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

(a) i n the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) such accounting policies have been selected, applied consistently and judgements & estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the accounts have been prepared on a going concern basis;

(e) the Company has laid down internal financial controls to be followed and that such internal financial controls are adequate and are operating effectively;

(f) the Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

12.0 AUDITORS STATUTORY AUDITORS

Gandhi Minocha & Co., Chartered Accountants and Dass Gupta & Associates, Chartered Accountants were appointed as Joint Statutory Auditors of the Company for FY 2020-21 by the Office of the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2020-21 and have given their report without any qualification, reservation, adverse remark or disclaimer. The copy of the audit report is annexed herewith.

SECRETARIAL AUDITOR

Amit Agarwal & Associates, Company Secretaries was appointed as the Secretarial Auditor of the Company for the FY 2020-21 by the Board of Directors of the Company.

The observations of the Secretarial Auditor and reply of the management on the observations, for the FY 2020-21 along with copy of the audit report is annexed herewith.

COMMENTS OF COMPTROLLER & AUDITOR GENERAL OF INDIA

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors'' report. The copy of the report of C&AG is annexed herewith.

13.0 STATUTORY DISCLOSURES

13.1 CONSERVATION OF ENERGY / TECHNOLOGY ABSORPTION

There are no significant particulars, relating to conservation of energy and technology absorption as your Company does not own any manufacturing facility.

13.2 FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign exchange outgo for the FY 2020-21 aggregating ''5,096.27 Crore was made on account of debt servicing, financial & other charges.

The Foreign exchange earnings for the FY 2020-21 were nil.

13.3 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT, 2013

Your Company is exempt from the provisions of Section 186 of the Companies Act, 2013.

However, the details of Investment are given at Note No. 11 of the Notes to Accounts of the Standalone Financial statements forming part of this Annual Report.

13.4 DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

Our outsourced Internal Auditor M/s ASA & Associates LLP, Chartered Accountants, has certified that the Company maintains an adequate system of internal financial controls, evaluates and makes an assessment of its adequacy and effectiveness in a satisfactory manner which takes care of requirements under Companies Act, 2013.

The Statutory Auditors of the Company i.e. Gandhi Minocha & Co., Chartered Accountants and Dass Gupta & Associates, Chartered Accountants and have also given their Report on the Internal Financial Controls stating that the Company has, in all material respects, an internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2021 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

13.5 COMPLIANCE OF SECRETARIAL STANDARDS

The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.

13.6 PARTICULARS OF REMUNERATION U/S 197(12) OF THE COMPANIES ACT, 2013

The provisions of Section 197 of the Companies Act, 2013 and Rules made thereunder related to Managerial Remuneration are not applicable to your Company being a Government Company.

13.7 ANNUAL RETURN LINK

The Annual Return of PFC for FY 2019-20 is available on the link https://pfcindia.com/Home/VS/10256 and for FY 2020-21 it shall be made available on your Company''s website www.pfcindia.com.

13.8 REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against PFC by its officers or employees.

13.9 DEBENTURE TRUSTEES

The details of Debenture Trustees appointed by the Company for the different series of Bonds issued by your Company are annexed herewith.

13.10 DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company''s operations during the FY 2020-21.

13.11 DETAILS OF THE APPLICATION MADE OR ANY PROCEEDINGS PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR AND DETAILS OF THE DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF.

During the year no application has been made or any proceedings pending against PFC under the Insolvency and Bankruptcy Code, 2016. Further, details of the difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the banks or financial institutions, are not applicable.

13.12 DETAILS OF PROCUREMENT FROM MSES

The details of the procurements made from Micro, Small and Medium Enterprises (MSEs) during the FY 2020-21 and the targets for FY 2021-22 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 along with Public

Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012 is as under''

Sr. No.	Particulars	2020-21 (''in Crore)	Target for 2021-22 ('' in Crore)
I.	Total annual procurement (in value)	42.30	141.86*
II.	Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs)	21.63	35.47
III.	Total value of goods and services procured from only MSEs owned by SC / ST entrepreneurs	0.04	5.67
IV.	% age of procurement from MSE (including MSEs owned by SC / ST entrepreneurs) out of total procurement	51%	25%
V.	% age of procurement from only MSEs owned by SC / ST entrepreneurs out of total procurement	0.1%	4%
VI.	Total number of vendor development programmes for MSEs	2	2
VII.	Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same	https://pfcindia.com/DocumentRepository/ckfinder/ files/Statutory_Requirements/Codes_and_Policies/ Public_Procurement_Policy_for_MSME/Procurement_ Target_2021_22.pdf

* Including '' 95.34 Crore as one time requirement of MS unit in PFC (related to IT infrastructure refresh - planned for FY 2021-22).

14.0 RIGHT TO INFORMATION ACT

The Right to Information is a fundamental right under the Constitution of India. RTI Act is a progressive legislation based on citizen''s right to know which is a fundamental right enshrined in the Constitution of India. The purpose of the Act is to make the executive accountable and ensure transparency in the implementation of schemes and policies. Under the act, information may be sought from a public authority as defined under the act. Right to information includes right to inspect documents. Under the Act, it is believed that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable. The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the Public Authorities.

An elaborate mechanism has been set up in PFC to deal with requests received under the RTI Act, 2005. Your Company has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the Company.

The Company has designated a Public Information Officer (PIO) and a First Appellate Authority (RTI) at its registered office for effective implementation of the RTI Act. The relevant information/ disclosures are also made available on the official website (www. pfcindia.com) of the Company. During the period from April 1, 2020 to March 31, 2021, all 136 applications received under the RTI Act, were duly processed and replied to. PFC has also complied with the requirement of filing of online RTI Quarterly Returns on the portal of Central Information Commission (CIC) during the said period.

Further, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated 15.04.2013 issued guidelines on the following:

(i) Suo moto disclosure of more items under Section 4;

(ii) Guidelines for digital publication of proactive disclosure under Section 4;

(iii) Guidelines for certain clauses of Section 4(1 )(b) to make disclosure more effective;

(iv) Compliance mechanism for suo-moto disclosure (proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid Guidelines, PFC has placed the requisite information on the website of the Company. Further, the above guidelines lay down one of the most important mechanisms in terms of getting its proactive disclosures audited by the third party every year to ensure effective compliance of the guidelines. Accordingly, National Power Training Institute (NPTI) (the only Training Institute under the Ministry of Power) has been nominated for carrying out third party audit of RTI Disclosures of power companies including PFC. For FY 2020-21, NPTI will be conducting third party audit of RTI Disclosures of PFC and the said report will be posted on our website.

Besides the above, PFC is also linked with the online RTI Portal of Govt. of India, Department of Personnel & Training (https:// rtionline.gov.in), which enables citizens of India, to file RTI applications/first appeals online along with payment gateway. Payment can be made through internet banking of SBI & its associate banks, debit/ credit cards of Master/ Visa and RuPay cards.

15.0 GRIEVANCE REDRESSAL

Your Company has a Grievance Redressal System for dealing with grievances of the public at large. The systems are duly notified and the Nodal Officers ensure quick redressal of grievances within the permissible time frame. Your Company has also notified Citizen''s Charter to ensure transparency in its work activities. The Charter is available on the website of PFC to facilitate easy access.

16.0 STATUTORY AND OTHER INFORMATION

Information required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, DPE''s Guidelines on Corporate Governance for CPSEs and other applicable statutory provisions is annexed to this report as follows:

17.0 ACKNOWLEDGEMENT

The Board of Directors place on record their appreciation for the co-operation, guidance and encouragement extended to the Company by the Government of India particularly Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India, Department of Public Enterprises, NITI Aayog, DIPAM, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level etc.

The Board also conveys its gratitude to the shareholders, investors, various International and Indian Banks/Multilateral agencies/ financial Institutions/ credit rating agencies for the continued trust and for the confidence reposed by them in PFC. Your Directors would also like to convey their gratitude to the clients and customers for their unwavering trust and support.

The Company is also thankful to the Comptroller & Auditor General of India and the Statutory Auditors, Secretarial Auditor and Internal Auditors for their constructive suggestions and co-operation.

Your Directors also recognise and appreciate the untiring efforts and contributions made by the employees to ensure excellent all round performance of your Company.

For and on behalf of the Board of Directors (R. S. Dhillon)

Place: New Delhi Chairman & Managing Director

Dated: 26^th August, 2021 DIN: 00278074

Particulars	Annexure
Management Discussion and Analysis Report	A
Integrated Reporting	B
Report on Corporate Governance	C
Business Responsibility Report	D
Secretarial Audit Report	E
Annual Report on CSR Activities	F
Disclosure of particulars of contracts/arrangements entered into by the Company with related parties (AOC-2)	G
Details of Debenture Trustees	H

---

Mar 31, 2019

REPORT OF THE BOARD OF DIRECTORS'' FY 2018-19

The Members,

Power Finance Corporation Limited

The Board of Directors of your Company are pleased to present their 33^rd Annual Report on the performance of your company for the financial year ended March 31, 2019 along with Audited Financial Statements, Auditor''s Report, Secretarial Auditor''s Report & report by the Comptroller and Auditor General of India.

1.0 FINANCIAL AND OPERATIONAL HIGHLIGHTS

(a) PROFITABILITY (Rs, in crore)

Particulars	Standalone		Consolidated
	2018-19	2017-18	2018-19	2017-18
Total Income	28851.29	25980.25	54156.83	48645.42
Profit Before Tax	9815.79	5845.11	17862.03	11779.44
Tax expenses	2862.87	1458.34	5221.76	2982.75
Profit After Tax	6952.92	4386.77	12640.27	8796.69
Owners of the Company	-	-	9920.86	6688.69
Non-Controlling Interests	-	-	2719.41	2108.00
Total Comprehensive Income	6745.95	4063.03	12372.52	8480.60
Owners of the Company	-	-	9681.81	6369.92
Non-Controlling Interests			2690.71	2110.68

(Rs, in crore)

Particulars	Standalone		Consolidated
	2018-19	2017-18	2018-19	2017-18
Opening balance of Surplus	3848.43	5184.72	6887.10	5467.43
Profit After Tax for the year	6952.92	4386.77	9920.86	6688.69
Re-Measurement of Defined Benefit Plans	(1.94)	7.50	(8.57)	5.32
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1) (viia) (c) of Income Tax Act, 1961	(353.42)	(372.10)	(497.44)	(548.85)
Transfer to Special Reserve created and maintained u/s 36(1) (viii) of Income Tax Act, 1961	(1577.91)	(1595.06)	(2274.58)	(2428.00)
Transfer to Special Reserve created u/s 45-IC (1) of Reserve Bank of India Act, 1934	(1390.58)	(6.37)	(1997.46)	(6.37)
Transfer to Debenture Redemption Reserve	(289.73)	(292.65)	(393.21)	(396.13)
Transfer to General Reserve	(1000.00)	(1000.00)	(1000.00)	(1263.17)
Transfer to Interest Differential Reserve-KFW Loan (net)	(2.10)	(1.49)	(2.10)	(1.49)
Dividend	0.00	(2059.26)	(1325.29)	(3103.90)
Dividend Distribution Tax	0.00	(404.41)	(299.35)	(633.07)
Transfer from Debenture Redemption Reserve on account of utilization	2.30	0.00	2.30	0.00
Transfer from OCI- Equity Instruments	14.56	0.78	14.56	0.78
Other Comprehensive lncome/(Expense)	-	-	(0.11)	(0.04)
Reclassification of gain / loss on sale of equity instrument measured at OCI			2.85
Pooling of interest accounting for common control business combination			-	3" 33 33
Closing Balance of Surplus	6202.53	3848.43	9029.56	6887.10

(Rs, in crore)

Particulars	2018-19	2017-18
Sanction	95230	116233
Disbursement	67678	64414

(c) INTEGRATED POWER DEVELOPMENT SCHEME (IPDS) OPERATIONS (R-APDRP scheme subsumed)

(Rs, in crore)

Particulars	2018-19	Cumulative (up to March''19)
Sanctioned project cost
a. R-APDRP	(2196)	35327
b. IPDS	3387	32059
Disbursement
a. R-APDRP	867	12017
b. IPDS	2713	7852

Note : Negative sanction in 2018-19 indicates reduction in cost

Additionally, funds worth X578 crore (cumulative) have been released under J&KPMDP.

2.0 FINANCIAL PERFORMANCE

2.1 ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS)

The Company adopted Ind AS from April 1, 2018 and the effective date of transition was April 1,2017. Accordingly, the financial statements have been prepared in accordance with the recognition and measurement principles of Ind AS prescribed under section 133 of the Companies Act, 2013 read with relevant rules issued there under. The transition to Ind AS has been carried out from the erstwhile Accounting Standards notified under the Act read with relevant rules there under and directions issued by the RBI (collectively referred to as “Previous GAAP”). The impact of transition has been accounted for in the opening reserves as at April 1,2017. Results and financial figures for the corresponding period prepared under Previous GAAP stated in this Board Report and its attachments/annexure have been restated to Ind AS.

2.2 REVENUE

The total income achieved by your Company during the FY 2018-19 is Rs, 28,851.29 crore as compared to Rs, 25,980.25 crore in FY2017-18. Out of it, Revenue from Operations for the year isRs, 28,842.00 crore as compared to Rs, 25,975.85 crore in the previous year.

2.3 EXPENSES

The total expenditure for the FY 2018-19 amounted to Rs, 19,035.50 crore as against total expenditure ofRs, 20,135.14 crore in FY 2017-18. Out of it, Finance cost amounted to Rs, 18,981.76 crore in FY 2018-19 as compared to Rs, 16,955.89 crore in FY 2017-18. This constituted 99.72% of total expenses in FY 2018-19 as compared to 84.21% in FY2017-18. During FY 2018-19, Employee Benefit expenses and other expenses, which includes administrative and office expenses were Rs, 288.26 crore (1.51 % of total expenses and 1.52% of finance cost) against Rs, 248.08 crore (1.23% of total expenses and 1.46 % of finance cost) in the previous year.

2.4 PROFIT

During the FY 2018-19, your Company earned a net profit of Rs, 6,952.92 crore as compared to Rs, 4,386.77 crore for theFY2017-18.

2.5 TOTAL COMPREHENSIVE INCOME

During the FY 2018-19, your Company earned total comprehensive income of Rs, 6,745.95 crore as compared to Rs, 4,063.03 crore for the FY 2017-18.

2.6 SHARE CAPITAL

As on March 31, 2019, the paid-up share capital of your Company was Rs, 2,640.08 crore consisting of 2,64,00,81,408 equity shares of Rs, 10 each. During FY 2018-19 Government of India (Gol) transferred 1,93,72,120 and 16,19,54,570 equity shares held in the Company, in connection with New Fund Offer, to the Asset Management Company (AMC) of Bharat 22 ETF and CPSE ETF respectively. Consequently, the Government of India''s shareholding came down from 65.92% to 59.05%. No dividend is recommended in FY 2018-19 as compared to FY 2017-18, wherein the dividend payout amounted to Rs, 2,059.26 crore.

Your Company sanctioned loans ofRs, 95,230 crore during the FY 2018-19 to State, Central, Private and Joint Sector entities. An amount of Rs, 67,678 crore was disbursed during the same period. With this, as on March 31, 2019, the cumulative sanctions amount to Rs, 7,62,248 crore and cumulative disbursements amount to Rs, 5,87,446 crore.

In addition to above, projects worth Rs, 3,387 crore were sanctioned under IPDS during FY 2018-19. An amount of Rs, 2,713 crore was disbursed under IPDS and Rs, 867 crore under R-APDRP during the same period. With this, cumulative approved project cost amounts to Rs, 32,059 crore under IPDS and Rs, 35,327 crore under R-APDRP and cumulative disbursements of Gol funds to utilities amount to Rs, 7,852 crore under IPDS and Rs, 12,017 crore under R-APDRP.

3.0 OPERATIONAL PERFORMANCE

Your Company sanctioned loans ofRs, 95,230 crore during the FY 2018-19 to State, Central, Private and Joint Sector entities. An amount of Rs, 67,678 crore was disbursed during the same period. With this, as on March 31, 2019, the cumulative sanctions amount to Rs, 7,62,248 crore and cumulative disbursements amount to Rs, 5,87,446 crore.

In addition to above, projects worth Rs, 3,387 crore were sanctioned under IPDS during FY 2018-19. An amount of Rs, 2,713 crore was disbursed under IPDS and Rs, 867 crore under R-APDRP during the same period. With this, cumulative approved project cost amounts to Rs, 32,059 crore under IPDS and Rs, 35,327 crore under R-APDRP and cumulative disbursements of Gol funds to utilities amount to Rs, 7,852 crore under IPDS and ^ 12,017 crore under R-APDRP.

Your Company did not conduct any auction of its loan assets during FY 2018-19.

3.1 LENDINGS (Excluding R-APDRP/IPDS)

3.1.1 Sector-wise (Rs, in crore)

	2018-19		Cumulative up to March, 2019
Category	Sanctions	Disbursements	Sanctions	Disbursements
State Sector	71971	58734	549291	428898
Central Sector	1221	819	46069	43778
Joint Sector	5976	3608	47692	34783
Private Sector	16063	4516	119196	79988
Total	95230	67678	762248	587446

3.1.2 Discipline-wise (Rs, in crore)

	2018-19		Cumulative up to March, 2019
Category	Sanctions	Disbursements	Sanctions	Disbursements
Thermal Generation	10239	16059	324073	261376
Hydro Generation (>25MW)	2271	134	48460	34887
Renewable Energy	8139	3900	29129	20094
Renovation, Modernization and Uprating of Thermal & Hydro Power Stations	443	152	12839	11052
Transmission	10351	4222	71873	39499
Distribution	26156	12778	76037	36568
Short Term Loan	12211	12401	82613	80460
Others*	25420	18032	117224	103510
Total	95230	67678	762248	587446

* Others include Medium Term Loan, Transitional Finance, Fuel Sources Development, Funding of Regulatory Assets, Buyer Line of Credit, Associated Infrastructure, Equipment Manufacturing Loan, Computerization, Loan for Redemption of bonds, Project settlement, Purchase of power through PXI, Loan for Asset Acquisition, Loan Against Receivables, Bill Discounting, Studies, Pre Investment Fund, Technical Assistance Project, Decentralized Management etc.

3.2 Financial Assistance under IPDS/R-APDRP (Rs, in crore)

	2018-19		Cumulative upto March, 2019
Scheme	Approved project cost	Disbursements* (Gol funds)	Approved project cost	Disbursements*
R-APDRP
Part A (IT)	(219)	314	5156	4040
Part A (SCADA)	-	48	1251	639
Part B	(1977)	505	28920	7338
Sub - Total	(2196)	867	35327	12017
IPDS
IPDS	3387	2713	32059	7852

*ln addition to above, during FY 2018-19, X41 crore were released by MoP for nodal agency fee/ enabling activities under IPDS, Rs, 59 crore under Part-C including re-imbursement of PFC''s actual expenditure of R-APDRP. Cumulatively, MoP has released an amount of Rs, 166 crore for nodal agency fee/enabling activities under IPDS andt 471 crore under Part-C of R-APDRP.

The Moll targets agreed with MoP under IPDS/ R-APDRP for FY 2018-19 and actual achievements during the year is tabulated below:

SI.		FY2018-19		Cumulative
No.	Moll Parameter	Target	Actual	Target	Actual
1	IPDS work completion (No. of Circles)	223	223	223	223
2	IPDS Ph-ll implementation (No. of Towns)	350	365	350	365
3	Award of ERP work (No. of Utilities)	29	21*	29	21
4	Verification of Part-A IT completion by TPIEA-IT (No. of Towns) (Cum.)	605	357*	1400	1152
5	SCADA under Part-A completion (No. of Towns) (Cum.)	30	27*	55	52
6	Capacity Building (Mandays)	5,000	5,022	-	-

*Note : MoP has approved relaxation of shortfall in achievement of Moll targets due to external factors

4.0 REALISATION

Your Company gives utmost priority to the realization of its dues towards principal, interest etc. under various financial assistance such as rupee term loans, working capital, lease financing, foreign currency loans, loans for equipment financing and guarantee fee. The Recovery Rate for the performing loan assets for the FY 2018-19 is 99.01 %.

Provisioning on Stage-Ill Loan Assets has been decreased by an amount of Rs, 780 crore during the year. The Company has made total provision ofRs,15,021 crore (excluding LoC) towards Stage-Ill Loan Assets against Loan Assets in its Annual Accounts up to the year 2018-19. After making provision on Stage-Ill assets, the level of net Stage-Ill Assets has been recorded at Rs, 14,332 crore which is 4.55% to the Total Gross Loan Assets as on March 31,2019.

In addition to above, your company has also made a provision ofRs, 857 crore and Rs, 303 crore on Stage-I Loan Assets and Stage-ll Loan Assets respectively as on March 31,2019, which would strengthen PFC''s balance sheet by providing a adequate provisioning and inspire higher levels of confidence amongst investors, regulators and other stakeholders in your company.

5.0 BORROWINGS

5.1 DEPOSITS

Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2018-19. Further, no Perpetual Debt Instruments (PDI) were issued by your company during FY 2018-19.

5.2 BORROWINGS FROM DOMESTIC MARKET

The major borrowings from Domestic market during the FY2018-19 are given as follows:- (Rs, in crore)

S. No.	Source	Amount
1.	Commercial Paper (CP)	*9,634.38
2.	Bonds -Private Placement (Taxable)	25,862.50
3.	Bonds -Private Placement (Sec 54 EC)	491.95
4.	Term Loans	41,979.00
	TOTAL	77,967.83

‘Excluding CP raised and repaid during the year of Rs, 22,199.71 crore

5.3 CASH CREDIT/ OVERDRAFT FACILITIES

For day to day operations, your company continued to follow prudent strategies for optimum utilization of fund based resources. To hedge any financial liquidity bottlenecks, ample credit lines to the tune of Rs, 14,600 crore were available as on March 31, 2019 by various scheduled commercial banks to the company for short term funding which do not bear any commitment charges towards unutilized limits.

5.4 EXTERNAL BORROWINGS

The foreign currency denominated borrowings during FY2018-19 are as follows: (Rs, in crore)

S. No.	Source	Amount
1.	Bonds under MTN / GMTN programme	5,568
2.	Syndicated Loans	2,883
3.	FCNR(B) loans*	2,031
	TOTAL	10,482

* FCNR(B) Loans are not external borrowing in terms of ECB guidelines issued by RBI

Green Bonds

PFC''s Green Bond Framework was established in October, 2017 as approved by Climate Bonds Initiative, London, UK. Your Company issued its first USD Green bond in December, 2017 and raised US $400 million at a coupon of 3.75% and these bonds are listed on the London Stock Exchange''s new International Securities Market (ISM) and Singapore Stock Exchange. The funds raised have been utilized to finance renewable energy projects as per the “Eligible Projects” under PFC''s Green Bond Framework. As at March 31,2019, outstanding loan balances of Solar & Wind energy projects funded by PFC are Rs, 7,484 crore and Rs, 6,961 crore respectively.

5.5 EXTERNALLY AIDED PROJECTS

No loans have been availed from Multilateral/ Bilateral agencies during FY2018-19. Outstanding balance from such agencies as at March 31,2019 is as follows:

Particulars	Amount
KFWI	EUR 61,87,159
Credit National	EUR 64,67,904
ADB	USD 119,72,518

6.0 PARTICULARS REGARDING CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

6.1 CONSERVATION OF ENERGY/TECHNOLOGY ABSORPTION

There are no significant particulars, relating to conservation of energy and technology absorption as your Company does no town any manufacturing facility.

6.2 FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign exchange outgo aggregating Rs, 1424.29 crore was made on account of debt servicing, financial & other charges, travelling and training expenses.

The Foreign exchange earnings forthe FY2018-19were nil.

7.0 CREDIT RATING Domestic

Credit Ratings by Domestic credit rating agencies for domestic program of the Company as at March 31,2019:

S. No.	Rating Agency	Long Term Rating	Short Term Rating
1.	CRISIL	CRISILAAA	CRISIL A1
2.	ICRA	ICRA AAA	ICRAA1
3.	CARE	CARE AAA	CAREA1

International

Long term foreign currency issuer rating assigned to the Company as at March 31, 2019:

S. No.	Rating Agency	Rating
1.	Fitch Ratings	BBB-
2.	Standard & Poor (S&P)	BBB-
3.	Moody''s	Baa3

The rating as mentioned above stands same during the year.

8.0 RISK MANAGEMENT

8.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity and interest rate and also monitors implementation of decisions taken in the ALCO meetings. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. While the liquidity risk is being monitored with the help of Asset Liability gap analysis, the interest rate risk is managed by analysis of interest rate sensitive gap statements. Such analysis is made on quarterly basis in various time buckets and is being used for critical decisions regarding the time, volume and maturity profile of the borrowings and creation of mix of assets and liabilities in terms of time period (short, medium and long-term) and in terms of fixed and floating interest rates.

The asset liability management maturity pattern of items of assets and liabilities as on March 31, 2019 is set out below:

(Rs, in crore)

Bucket as at March 31, 2019	Deposits/ Investments	Advances	Domestic Borrowings	Foreign Currency Items \ssets Liabilitios
Up to 30/31 Days	14133.64	4955.46	21785.18	0.00	696.50
Over 1 Month up to 2 Months	1833.07	1928.13	4915.00	0.00	0.00
Over 2 Months up to 3 Months	0.00	1264.76	7495.20	0.00	2080.35
Over 3 Months & up to 6 Months	0.00	9225.21	10292.05	0.00	0.00
Over 6 Months & up to 1 Year	0.00	16559.51	19088.10	0.00	3468.40
Over 1 Year & up to 3 Years	0.00	50663.28	76608.05	0.00	4971.67
Over 3 Years & up to 5 Years	0.00	49879.10	32730.60	0.00	9235.95
Over 5 Years	0.00	165146.63	87160.38	23.84	8373.99

8.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forwards, options, principal swaps and forward rate agreements.

As on March 31,2019, the details of outstanding foreign currency liabilities are USD 3,612 mn, JPY 60,079 mn & EUR 13 mn; out of which USD 2,400 mn & JPY 9,670 mn are hedged. Further, 85% of the foreign currency portfolio with residual maturity up to 8 years has been hedged.

8.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

Your Company being a Financial Institution in the business of lending to power sector is exposed to several risks in the course of its business. In this regard, the Company had put in place an Integrated Enterprise Wide Risk Management Policy (IRM policy). In order to implement the IRM Policy, your company had constituted a Risk Management Compliance Committee of Directors to monitor various risks arising in the operations.

Under the IRM policy, the Company has to identify the principal risks which may have an impact on its profitability/revenues. In this regard, the Company has identified 11 significant risk parameters which arise from the Companies business model and from its use of financial instruments. These risk parameters cover the major operational risks, financial risks, market risks, regulatory risks etc. faced by the Company and are regularly assessed as per the prescribed Risk Assessment Criteria. To facilitate this assessment, Your Company has put in place a mechanism to ensure that the identified risks are monitored carefully and managed efficiently.

9.0 ULTRAMEGA POWER PROJECTS fUMPPs) AND INDEPENDENT TRANSMISSION PROJECTS fITPs)

9.1 UMPPs

Development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each, adopting super critical technology is the initiative of Ministry of Power (MoP), Government of India for which your Company has been designated as the ''Nodal Agency¹ and Central Electricity Authority (CEA) as the Technical Partner by MoP.

As on March 31, 2019, 17 UMPPs have been identified by MoP for development which are located in the states namely Madhya Pradesh (1), Gujarat (2), Chhattisgarh (1), Karnataka (1), Maharashtra (1), Andhra Pradesh (2), Jharkhand (2), Tamil Nadu (2), Odisha (3), Bihar (1) and Uttar Pradesh (1).

PFC Consulting Limited (a wholly owned subsidiary of PFC) in conjunction with MoP and CEAundertake preliminary site investigation activities, land acquisition activities, site specific studies to obtain appropriate regulatory and other approvals for land, water, coal block, environment etc. necessary to conduct the bidding process. The successful bidder is then expected to develop and implement these projects.

PFC incorporated a total of 19 wholly owned Special Purpose Vehicles (SPVs) for the UMPPs. Out of these, 14 Operating SPVs were incorporated to undertake preliminary site investigation activities and obtain appropriate regulatory and other approvals for water, environment etc. necessary to conduct the bidding process for these projects. These Operating SPVs are meant to be eventually transferred to successful bidder(s) selected through a Tariff Based International Competitive Bidding Process in accordance with the guidelines notified by MoP under section 63 of Electricity Act, 2003. The successful bidders are then expected to develop and implement these projects. 5 additional infrastructure SPVs were incorporated for holding the land and coal blocks for Odisha UMPP, Cheyyur UMPP, Deoghar and Tilaiya UMPP in Jharkhand and Bihar UMPP. These infrastructure SPVs would be transferred to the respective procurers of power from these projects.

Out of the above 19,4 UMPPs have been transferred to successful bidders.

9.2 ITPs

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required etc.

30 Special Purpose Vehicles (SPVs), 2 by PFC and other 28 by PFC Consulting Limited have been established for ITPs. Out of these 30 SPVs, 19 SPVs were transferred to the successful bidders, 6 SPVs for which bidding process are under progress, 4 SPVs are in process of closure and 1 SPV Bokaro-Kodarma Maithon Transmission Company Limited was liquidated in December 2010.

10.0 INTEGRATED POWER DEVELOPMENT SCHEME (with RESTRUCTURED ACCELERATED POWER DEVELOPMENTAND REFORM PROGRAMME (R-APDRP) SUBSUMED IN IT)

In order to provide impetus to strengthening of power distribution sector in urban area, Ministry of Power, Government of India launched “Integrated Power Development Scheme" (IPDS) on December 3, 2014. Following components are covered under the scheme:

i) Strengthening of sub-transmission and distribution networks in the urban areas;

ii) Metering ofdistribution transformers/feeders/consumers in the urban areas.

iii) IT enablement of distribution sector and strengthening of distribution network under R-APDRP for 12^th and 13^th Plans by carrying forward the approved outlay for R-APDRP to IPDS.

iv) Schemes for Enterprise Resource Planning (ERP) and IT enablement of balance urban towns. Scope of IT enablement has been extended to all 4041 towns as per Census 2011.

v) Smart metering solution for performing UDAY States and Solar panels on Govt, buildings with net-metering.

vi) Gas Insulated switchgear(GIS) Sub-stations.

vii) Real Time-Data Acquisition System (RT-DAS) projects for accurate measurement of power interruption parameters like SAIDI/SAIFI.

Erstwhile, R-APDRP Scheme has been subsumed in newly launched IPDS scheme.

The above excluding (iii), have an estimated outlay of Rs, 32,612 crore including a budgetary support ofRs, 25,354 crore from Government of India during the entire implementation period.

R-APDRP scheme cost of Rs, 44,011 crore including a budgetary support ofRs, 22,727 crore as already approved by CCEA will be carried forward to the new scheme of IPDS in addition to the outlay Rs, 32,612 crore as indicated above.

Progress of implementation

IPDS

Under IPDS, Out of NIT issued worth Rs, 28,940 crore, projects worth Rs, 27,486 crore has already been awarded in 531 out of 546 sanctioned circles and implementation has started in said circles. Further, your company also sanctioned Rs, 753 crore as counterpart loans and disbursed an amount of Rs, 1,650 crore under IPDS during the year.

R-APDRP

With the measures taken so far, 20 out of 21 Data Centers, 20 out of 21 Disaster Recovery Centres and 44 out of 46 Customer Care Centers (except Puducherry and Odisha) have been commissioned. Further, 1378 towns have been declared Go-Live and declaration of Go-Live in balance 27 towns of Odisha(12),Tamil Nadu(8), Puducherry(4) and Arunachal Pradesh(3) is under progress. In 1378 Go-live towns, all business process software modules are functional and energy audit reports are being derived from the IT system implemented under the scheme.

During the year, your company disbursed an amount of Rs, 143 crore and cumulatively Rs, 2,662 crore as counterpart loan under Part-B of R-APDRP. Implementation work of distribution system strengthening has been reported complete in 1195 towns out of 1227 towns.

Cumulatively, 57 out of 59 sanctioned SCADA Control Centers have been commissioned and 52 out of 59 SCADA towns were completed.

The reduction in AT&C loss is already visible in 1081 R-APDRP towns (as per Post Go-Live reports) as on March 31,2019, because of establishment of IT system and Part-B completion in various towns coupled with administrative and other measures. Thus, your company shall be contributing towards improving financial health of Distribution Utilities.

Other developments:

- Revamped IPDS web-portal with provision of on-line submission of IPDS DPRs and maintaining MIS. The revamped portal also includes 7 post Go-Live parameters viz. AT&C loss reduction, Consumer Grievance Redressal, New Connection release, High loss feeders, power reliability indices, Feeder meter communication and digital payment along with their graphical analytics. These post Go-live parameters are being monitored on monthly basis and States are being ranked based on improvement on these parameters that are being shared in monthly RPM meetings. All the model documents, guidelines, Links for bidding documents of Utilities, events etc. are regularly posted on dedicated IPDS web portal.

- A system has been developed in-house for web-based project monitoring of IPDS/ R-APDRP on IPDS web portal. Discoms are uploading award details, work execution details along with financial progress of the projects on the portal at regular intervals. MoP/ PFC is monitoring the progress of project implementation online through the system. New tabs have been added in the project monitoring system for monitoring of IT Phase-ll implementation, Collection of ERP DPRs, Capturing of counterpart fund and own fund details under IPDS. Further, new provisions made for fetching separate MIS reports for use of the Hon''ble MoSP (1C), MoP Officials and Utility officials.

- Capacity building/training of Utility personnel is also carried out under IPDS - RAPDRP to enhance their skill. Capacity Building programme was rolled-out in-house, in which 5,022 man-days achieved in FY 2018-19. PFC/MoP also organizes workshops on project management, guidelines, best practices etc. for dissemination of information. PFC/MoP also issues guidelines for simplification of implementation procedures. Large scale peer-learning workshop for sharing of best practices was also conducted by PFC.

- PFC on behalf of Ministry of Power has developed a Mobile App URJA for Urban Power Distribution Sector to enhance Consumer Connect, Project Monitoring of Urban Distribution Sector projects etc. The App broadly covers Consumer/Discoms Dashboard, IPDS and R-APDRP monitoring. The App also depicts Town Wise AT&C Loss, New Service Connection, Consumer Complaints Redressal, Feeder with Highest AT&C Loss, SAIDI SAIFI, Feeder Meter Communication, Town-wise E-Payment/Digital Payment of R-APDRP towns and daily outage schedules in various Utilities. The web version of U RJ A is also available at www.uriaindia.co.in.

- Online Feeder Monitoring system has been developed as an integral part of National Power Portal (NPP). NIC along with PFC is implementing the project. The Feeder data of 49 Discoms in 29 States has been received and integrated on NPP. As on March 31, 2019, Master data of 36,673 feeders and transaction data of 31,696 Feeders uploaded by Discoms on NPP for urban towns. Reports based on said data are being generated online and are being sent regularly to MDs of respective Discoms to enable them to initiate administrative actions for improvement.

- Coordination for adoption of toll free number1912, the short code for electricity complaints, by all Utilities on pan-India basis. 1912 has already been implemented in all 62 Discoms (61 with all service providers). 1912 has been implemented as Toll free facility in 60 Discoms.

- PFC on behalf of Ministry of Power has engaged IPDS Consultants as Urban Vidyut Abhiyanta (UVA) purely on contractual basis. There are 41 UVAs engaged with PFC. PFC has deployed 38 UVAs in DISCOMs and 3 at PFC HQ to monitor IPDS project implementation. As per the direction of MoP vide its letter dated March 4, 2016, expenditure on appointment of UVAs are being borne by PFC. Process of appointment of 16 UVAs/ Consultants is underway against resignation/ attrition for filling up vacancies.

- Feeder Manager Recognition & Awards scheme under IPDS has been instituted by Ministry of Power in order to recognize efforts of DISCOMs/ Feeder Managers working towards reduction of AT&C loss. Feeder Managers are given this award during the Review Planning and Monitoring meeting by Hon''ble MoSP/ Secretary (Power) on the basis of their performance w.r.t AT&C loss reduction/ Energy saving/ Revenue saving on feeder. So far, 65 Feeder Managers across DISCOMs have been awarded in the above categories on monthly basis for the period from Sept, 2017 to Aug,

2018. First Feeder Manager Workshop was held in Kodaikanal to share best practices among the feeder managers from 18-20th Jan, 2018 and Second Feeder Manager Workshop was held from 28-30th Sept in Puducherry.

- IPDS guidelines envisaged appointment of Third Party Concurrent evaluating Agency (TPCEA) by PFC, Nodal agency for concurrent and post implementation evaluation of the sanctioned IPDS schemes for assuring quality of work in projects being carried out by Utilities. PFC has completed appointment of TPCEA for states for smooth implementation of the scheme. The appointment has been made after reverse e-auction bidding for 15 groups covering 33 states/UTs across India. Stage -I inspection is already completed in 490 circles and Stage-ll inspection is underway in most Utilities.

Impact Assessment of RAPDRP /IPDS

In order to assess the impact of RAPDRP, the Nodal agency was asked to carry out detailed assessment on how the scheme has eased the life of consumers and has benefited the Discoms.

As per the Region-wise study conducted by the four independent consultants,

- Savings to the tune of Rs, 3052 crore in 2017-18 were estimated from the AT&C loss reductions in the sampled 249 towns out of the total 1405 RAPDRP towns

- Reduction in AT&C losses was reported in 90% of the sampled towns.

- Nearly 100% AMR based metering achieved on all urban feeders. Focus shifted to Feeder level energy audit and intervention for AT&C loss reduction

- SCAD Aimplementation in larger towns lead to reduction in downtime in case of outages

- Centralized customer care centers established in 45 Utilities, have simplified the processes and enhanced the service delivery to consumers.

- Introduction of Spot Billing Machines, lead to reduction in billing errors

- Manifold increase in Digital payments by consumers observed in many Discoms,

- Online gateways for payments, complaints, customer care etc., have done away with long queues and hours of waiting time and added ease of life to consumers

- Establishment of universal customer support number “1912” implemented by all Discoms.

- Large scale addition of Distribution Infrastructure resulted in improved voltage profile and reliability of power supply.

- Extensive use of AB cabling was encouraged in implementation of RAPDRP.

Further, to check the quality of works of completed RAPDRP projects, Quality Council of India has also been appointed by MoP.

11.0 INITIATIVES TOWARDS REFORMS AND RESTRUCTURING Categorization of Utilities

For purposes of funding, your company classifies State/Central Sector Generation, Transmission Utilities & Project SPVs into A , A , A, B, C and ''non-responsive'' categories. The categorization (biannual) of State Power Generation and Transmission utilities is arrived based on the evaluation of utility''s performance against specific parameters covering operational & financial performance including regulatory environment, generation of audited accounts, etc.

With regard to State Power Distribution utilities (including SEBs/utilities with integrated operations), your company''s categorization policy provides for adoption of MoP''s Integrated Ratings by aligning such ratings/gradings with PFC''s standard categories of A , A , A, B and C.

The categorization enables your company to determine credit exposure limits and pricing of loans to the state power utilities. As on April 25, 2019, 127 utilities were categorized, out of which 13 utilities were categorized as “A ”, 43 as “A ”, 39 as “A”, 17 as “B”, 13 as “C” and 2 as “non-responsive”.

Annual Report on the Performance of State Power Utilities

Your Company compiles the Report on the Performance of State Power Utilities (SPUs) on an annual basis. The latest report for the three years period ending on March 31,2018 is under compilation. The Report is a comprehensive study of the performance of the State Power Utilities on key financial and operational parameters. The Report contains key performance parameters e.g. profitability, gap between average cost of supply and average realization (Rs./kwh), net worth, capital employed, receivables, payables, capacity (MW), generation (Mkwh), AT&C losses (%) etc. and consumption pattern of the sector at utility, state, regional and national level.

12.0 POLICY INITIATIVES

Your Company constantly reviews its policy framework so as to align itself with the market requirements and also with its corporate objectives. In this regard, the following policy initiatives were undertaken during FY 2018-19:

- Your company has aligned its lending policy for the renewable energy sector with the prevailing business environment, so to enhance its market share.

- In order to expedite the appraisal process and to capture more business in Solar & wind sector, your company has introduced online screening of Solar & Wind proposals.

- The company has introduced market friendly policies for pre-payment & release of collateral securities, to attract more business.

- Mechanism for the prompt payment to IPPs by Discoms is being evolved, on the advice of MoP.

- Review of appraisal system including project & Promoter rating framework for Private Projects, so as to make the appraisal process dynamic and also more robust.

- An online system was introduced for banks to check LoC issued by PFC to safeguard against frauds, in light of the recent events in banking industry w.r.t. LOU''s.

13.0 PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT. 2013

Your Company is exempt from the provisions of Section 186 of the Companies Act, 2013. However, details of equity investments made during the FY2018-19 are as follows:-

- During the FY 2017-18, PFC had approved an additional investment of Rs, 241 crore towards equity contribution in Energy Efficiency Services Limited (EESL), a Joint Venture Company of NTPC, PFC, REC and POWERGRID. Out of the above said approval, PFC has subscribed 9,90,00,000 equity shares of Rs, 10 each amounting to Rs, 99,00,00,000 in EESL''s Rights Issue on April 27,2018 under the first tranche and the same were allotted to PFC by EESLon July 2,2018.

- PFC has acquired 10,39,399,343 equity shares of face value of Rs, 10 each at the rate of Rs, 139.5036 per share amounting to Rs, 14,499,99,50,186 in REC on March 28,2019.

14.0 SUBSIDIARIES

- Your Company had been offering consultancy support to the Power Sector through its Consultancy Services Group (CSG) since October 1999. Leveraging the experience of the CSG Unit and appreciating the growth in the services offered by the Group and recognizing the potential of such services in reforming Power Sector, your Company decided to organize the services as a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary of your company on March 25,2008, in orderto give it requisite autonomy in functions and flexibility in operations.

- To focus on additional business in the area of equity financing, your Company had incorporated Power Equity Capital Advisors Private Limited (PECAP), a wholly owned subsidiary. However, it has not been able to transact any business due to lack of business proposals even after its acquisition by PFC and accordingly approval has been sought from MoP for dissolving and getting the name of the Company struck off from the records of Registrar of Companies. Ministry of Power (MoP), Government of India (Gol) vide its letter no F.No.7/13/2012-PFC Desk(1) dated March 19, 2019 has conveyed its approval for dissolving/striking off the name of PECAP from the records of Registrar of Companies under the provisions of section 248 to 252 of the Companies Act, 2013. The same is under process.

- Pursuant to the order of Ministry of Corporate Affairs dated February 5, 2019, PFC Capital Advisory Services Limited (PFCCAS, a wholly owned subsidiary of the Company) has been amalgamated with PFC Consulting Limited, wholly owned subsidiary of the Company w.e.f. the appointed date i.e. April 1,2018.

- Further, pursuant to the order of Ministry of Corporate Affairs dated February 7, 2019, PFC Green Energy Limited (PFCGEL, a wholly owned subsidiary of the Company) has been amalgamated with the Company from the appointed date i.e. April 1,2017.

- Further, your Company is designated by Ministry of Power, Government of India as the ''nodal agency¹ for facilitating development of Ultra Mega Power Projects and its wholly owned subsidiary i.e. PFC Consulting Limited is the ''Bid Process Coordinator¹ for Independent transmission projects. As on March 31, 2019, for the said purpose, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiaries of the Company:

i) Chhattisgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.)

ii) Coastal Karnataka Power Limited

iii) Coastal Maharashtra Mega Power Limited

iv) Coastal Tamil Nadu Power Limited

v) Orissa Integrated Power Limited

vi) Sakhigopal Integrated Power Company Limited

vii) Ghogarpalli Integrated Power Company Limited

viii) Tatiya Andhra Mega Power Limited

ix) Deoghar Mega Power Limited

x) Cheyyur Infra Limited

xi) Odisha Infrapower Limited

xii) Deoghar Infra Limited

xiii) Bihar Infrapower Limited

xiv) Bihar Mega Power Limited

xv) Jharkhand Infrapower Limited

xvi) Ballabhgarh-GN Transmission Company Limited*

xvii) Tanda Transmission Company Limited *

xviii) Mohindergarh-Bhiwani Transmission Limited*

xix) South-Central East Delhi PowerTransmission Limited*

xx) Bijawar-Vidarbha Transmission Limited*

xxi) Shongtong Karcham-Wangtoo Transmission Limited*

xxii) Vapi II North LakhimpurTransmission Limited*

xxiii) Lakadia-Vadodara Transmission Project Limited*

xxiv) Bikaner-Khetri Transmission Limited*

xxv) Fatehgarh-IITransco Limited*

xxvi) Bhuj-ll Transmission Limited*

* wholly owned subsidiaries of PFC Consulting Limited

- During the year, the Company acquired 52.63% shareholding held by the President of India (103,93,99,343 equity shares of face valueRs, 10/- per share) in REC Limited (REC) atRs, 139.5036 per share for a total cash consideration of Rs, 1,44,99,99,50,186/- on March 28, 2019. By virtue of this investment, the Company has become the holding company of REC and REC has become subsidiary of PFC in terms of the provisions of the Companies Act, 2013. Consequently, the following subsidiaries of REC as on March 31, 2019 have also become subsidiaries of PFC:

i) REC Transmission Projects Company Limited

ii) REC Power Distribution Company Ltd

iii) Koderma Transmission Limited

iv) MandarTransmission Limited

v) Dinchang Transmission Limited

vi) Chandil Transmission Limited

vii) Dumka Transmission Limited

viii) Bhind-GunaTransmission Limited

ix) Jam Khambaliya T ransco Limited

x) Ajmer PhagiTransco Limited

xi) WRSS XXI (A) Transco Limited

xii) Udupi Kasagode Transmission Limited

xiii) Khetri Transco Limited

xiv) Lakadia Banaskantha Transco Limited

- Further, since PFC acquired REC on March 28, 2019, the holding of REC in Energy Efficiency Services Limited (EESL) i.e. 21.70% which when combined with PFC''s share in EESLi.e. 36.36% amounts to 58.06%. Accordingly, your company has since become the holding company of EESL and EESL has become subsidiary of PFC in terms of the provisions of the Companies Act, 2013. Consequently, the following subsidiaries of EESL as on March 31, 2019 have also become subsidiaries of PFC:

i) Creighton Energy Limited

ii) EESL EnergyPro Assets Limited

iii) Anesco Energy Services (South) Limited

iv) EPAL Holdings Limited

v) Edina Power Services Limited

vi) Edina UK Limited

vii) Armoura Holdings Limited

viii) Edina Manufacturing Limited

ix) Edina Acquisition Limited

x) Edina Limited

xi) Edina Australia Pty Limited

xii) Stanbeck Limited

xiii) Edina Power Limited

14.1 PFC CONSULTING LIMITED

PFC Consulting Limited is mandated to promote, organize and carry out consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs. PFCCL has been nominated as the ''Bid Process Coordinator¹ for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, Gol.

The Services offered by PFCCL are broadly in the following areas:

- Advisory services on issues emanating from implementation of Electricity Act 2003 like reform, restructuring, regulatory etc.

- Bid process management including Tariff based competitive bidding as per the Guidelines issued by MoP, Gol for various segments of Power Sector

- Project-structuring/ planning/ development/ specific studies, implementation monitoring, efficiency improvement projects

- Human Resource Management Plans

- Organization performance improvement plans

- Contract related services for power sector

- Financial management, resource mobilization, accounting systems etc.

- Coal block development

- Renewable and non-conventional energy project development including “Waste to Energy” Projects

- Advisory Services for Distribution System Improvement Schemes

- Project Management Activities under IPDS and DDUGJY Schemes

- Detailed Project Reports and selection of Implementation Agency for Smart Grid

- Bidding under DEEP Portal for procurement of Power (for Short Term, Medium Term & Pilot Schemes)

- Consultancy services relating to takeover & transfer of equity

- Valuation of Land Bank & shares

- Assessment of Implementation of GST

- Energy Portfolio Management

- LIE, LIA&TEVstudy

Till date, consultancy services have been rendered to 68 clients spread across 24 States/UTs by PFCCL. The total number of assignments undertaken as on date is 125.

Further, during the FY 2018-19, the total income of PFCCL was Rs, 70.17 crore vis-a-vis Rs, 79.73 crore in the previous FY 2017-18, net worth of PFCCL as on March 31, 2019 was Rs, 91.74 crore as compared to Rs, 198.32 crore on March

31,2018 and the net profit earned by PFCCL during FY 2018-19 was Rs, 22.00 crore as against the corresponding net profit ofRs, 26.88 crore last fiscal.

14.2 REC LIMITED

PFC acquired 103,93,99,343 equity shares of REC (representing 52.63% of the share capital of REC Limited) from President of India at a consideration of Rs, 1,44,99,99,50,186/- at the rate of Rs, 139.5036 per share on March 28,2019.

Power Finance Corporation Ltd. has since become the holding company and also a promoter of REC.

REC is also a Navratna Central Public Sector Undertaking under the Ministry of Power and one of the leading infrastructure finance company. REC is also a Systemically Important, Non-Deposit Accepting, Non-Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI) as an Infrastructure Finance Company (IFC). Its business activities involve financing projects in the complete power sector value chain, be it generation, transmission or distribution. REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.

REC sanctioned loans ofRs, 1,15,957 crore during the FY 2018-19 and an amount of Rs, 72,165 crore was disbursed during the same period.

Further, during the FY 2018-19, the total income of REC was Rs, 25,341.16 crore vis-a-vis Rs, 22,467.35 crore in the previous FY 2017-18 and the net profit earned by REC during FY 2018-19 was Rs, 5,763.72 crore as against the corresponding net profit ofRs, 4,419.89 crore in last fiscal.

Further details about the operational and financial performance of the Company are available on its website i.e. www.recindia.nic.in.

14.3 ENERGY EFFICIENCYSERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad. The shareholding of your company as on March 31,2019 is 36.36%.

Consequent upon acquisition of controlling stake in REC Limited (REC) on March 28, 2019, EESL has been reclassified from associate to a subsidiary company during the year as the Company holds 36.36% ownership interest and its subsidiary REC holds 21.70% ownership interest as on March 31,2019.

Further, during the FY 2018-19, the total income of EESL was Rs, 1935.67 crore vis-a-vis Rs, 1410.70 crore in the previous FY 2017-18, net worth of EESL as on March 31,2019 wasRs, 839.97 crore as compared to Rs, 644.43 crore on March 31, 2018 and the net profit earned by EESL during FY 2018-19 was Rs, 95.10 crore as against the corresponding net profit ofRs, 39.46 crore last fiscal.

15.0 JOINT VENTURES. ASSOCIATE COMPANIES AND OTHER MAJOR INVESTMENTS

15.1 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested Rs, 12 crore in PTC which is 4.05% of PTC''s total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country. During the FY 2018-19, PTC maintained its leadership position with trading volumes of62.49 BUs. PTC has reported profit after tax of Rs, 262.32 crore for the FY 2018-19.

15.2 POWER EXCHANGE INDIA LIMITED

Power Exchange India Limited (PXIL) is India''s first institutionally promoted Power Exchange, that provides innovative and credible solutions to transform the Indian Power Markets. PXIL, provides nation-wide, electronic exchange for trading of power and handles power trading and transmission clearance, simultaneously, it provides transparent, neutral and efficient electronic platform. PXILoffers various products such as Day Ahead, Day Ahead Contingency, Any Day, Intra Day and Weekly Contracts. PXIL provides trading platform for Renewable Energy Certificates. PFC''s investment in equity shares of PXIL as on March 31,2019 isRs, 3.22 crore. Due to erosion of Net Worth of PXIL, PFC has provided the entire investment amount ofRs, 3.22 crore as provision for diminution in the value of investment in its books.

15.3 SHREE MAHESHWAR HYDEL POWER CORPORATION LIMITED

In June, 2016, PFC, being one of the lenders of Shree Maheshwar Hydel Power Corporation Limited (SMHPCL) had enforced its legal rights as per the Pledge deed dated November 30, 2006 as amended from time to time and subordinate loan agreement dated September 29, 2006, by invoking the shares pledged by the promoters of SMHPCL in favor of PFC and by partial converting sub debt loan into equity shares. Upon invocation of pledged shares and partial conversion of sub-debt, the total shareholding of PFC in SMHPCL is 13,18,46,779 equity shares of Rs, 10 each representing 23.32% of paid up equity share capital of SMHPCL. However, the matter is subjudice.

16.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ''Excellent'' Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY2017-18, your company was accorded ''Excellent rating¹. The rating for FY 2018-19 is still awaited.

17.0 PRESIDENTIAL DIRECTIVES

Ministry of Power vide its letter dated May 10,2018 issued Presidential Directives with regard to the pay scale revision for Board level and below Board level executives w.e.f. January 1, 2017 in accordance with DPE OMs dated August 3, 2017 and August 4, 2017. In line with the Presidential Directives, the pay scales for Board level and below Board level executives of your Company as well as other perks and allowances, etc. have been revised w.e.f. January 1,2017.

18.0 CORPORATE SOCIAL RESPONSIBILITY

The aim of your company''s Corporate Social Responsibility and Sustainability Policy (CSR and Sustainability Policy) is to ensure that your Company becomes a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfillment of Power and Energy needs of the society.

PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. To oversee the activities of CSR, PFC has in place a Board level CSR&SD Committee of Directors headed by an Independent Director.

During the year, PFC implemented wide range of activities in the field of Environment Sustainability, Skill development, Sanitation, Healthcare and supporting the differently abled. Further, DPE vide OM dated December 10, 2018 has instructed CPSEs to spend 60% of CSR budget for thematic programme (i.e. School Education and Healthcare for year 2018-19) preferably in asp rational districts.

For the FY 2018-19, the Board had approved the CSR budget ofRs, 148.15 crore based on 2% of the average stand-alone Profit Before Tax as per Companies Act, 2013 excluding dividend received from other companies covered under and complying with Section 135 of the Act in line with Rule 2(f) (ii) of Companies (CSR Policy) Rules 2014.

The projects sanctioned in a year are completed in subsequent years and there is milestone linked payment to various stages of completion of the project. Further, as per the DPE guidelines, the CSR Budget is non-lapsable and any unspent amount is carried forward to the next year for utilization for the purpose for which it was allocated.

Accordingly, the total amount to be spent in the financial year amounted to Rs, 279.38 crore (i.e. Rs, 148.15 crore for FY 2018-19 and Rs, 131.23 crore carried forward from previous years). However, out of which Rs, 100.50 crore was spent during FY2018-19.

The CSR Report under Companies (CSR Policy), Rules is annexed with Annual Report.

19.0 HRD INITIATIVES DEVELOPMENT&TRAINING

During FY 2018-19, in order to ensure specific skill development, the focus of conducting in house programs was maintained in line with the corporate goals. Customized programs like training on KYC policy, Executive Development Programs, Leadership & Team Building, Appraisal & Disbursement Procedures, Outbound Experiential Learning, Developing Positive Thinking, Stress & Health Management, etc. were organized along with other need-based programs.

During the year 2018-19,14 in-house training programs were organized by the company for its employees. A total of 2219 man-days were achieved by conducting various in-house programs and by sponsoring employees to other need based programs conducted by external training agencies.

RECREATIONAL ACTIVITIES

Your Company is committed towards holistic personality development of its employees through facilities like Gymnasium, Library, Table Tennis and participation of employees in various sports, cultural and literary activities.

As a member of Power Sports Control Board, your company has been organizing an Inter-CPSU Tournament every year for the employees of PSCB member organizations. During the FY 2018-19, PFC organized 23^rd Inter-CPSU Badminton Tournament under the aegis of PSCB. Employees of PFC exhibited enthusiastic participation in various Inter-CPSU sports tournaments such as Cricket, Badminton, Table Tennis, Carrom, Chess, Kabaddi, etc. organized by the PSCB member organizations. The participation in these sports results in a greater level of team spirit and fitness among the employees.

During the period, the Company observed National Unity Day on October 31, 2018 and celebrated Communal Harmony Campaign during November 19, 2018 to November 26, 2018 by holding slogan writing competitions among the employees. National Productivity Week was celebrated by the Company during February 18, 2019 to February 25,2019 by organizing essay writing competition and holding an expert talk on the theme for the employees. Various other events and get-togethers were also organized during the year to mark special occasions such as New Year, Foundation Day, etc. and employees participated with zeal and enthusiasm. On the occasion of PFC Foundation Day, a Kavi Sammelan was organized at PFC premises. Eminent poets like Shri Ashok Chakradhar, Sh. Hari Om Panwar, Sh. Pratap Faujdarand Sh. Vineet Chauhan entertained PFC employees with their poetic performance.

HUMAN RESOURCE MANAGEMENT

Your company has put in place effective human resource acquisition and maintenance function, which is benchmarked with best corporate practices designed to meet the organizational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity.

The Industrial Relations within the company has been very cordial and harmonious with the employees committing themselves entirely to the objectives of the company. There was no mandays lost during the year under review. The attrition rate for the period from April 1,2018 to March 31,2019 was zero.

WELFARE MEASURES

Your Company endeavors to follow the best management practices of the industry. The employees of the company have access to the Top Management officials thereby contributing effectively in the management and growth of the company. Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which lead to a healthy workforce. During the period, several new initiatives were taken for employees'' welfare such as amendments in Medical Attendance Rules, Leave Rules etc.

RESERVATION OF POSTS

Group	Total Employees as on March 31, 2019	SCs	SC%	STs	ST%	OBC	OBC%
A	474	83	17.51%	28	5.91%	81	17.08%
B	6	1	16.67%	1	16.67%	0	0.00%
C	17	3	17.65%	1	5.88%	3	17.65%
D	1	0	0.00%	0	0.00%	0	0.00%
Total	498	87	17.47%	30	6.02%	84	16.87%

PFC makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC/ ESM/PwD employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions. Separate Liaison officers have been appointed to look into the matter of reservations.

REPRESENTATION OF WOMEN EMPLOYEES

Your Company has women in important and critical functional areas. Women representations have gone across hierarchical levels. The Company provides equal growth opportunities for the women in line with Government of India philosophy on the subject. The women are adequately represented, with 20.68% of the total workforce.

Group	Total Employees as on March 31, 2019	Number of Women Employees	Percentage of overall staff strength
A	474	100	21.09%
B	6	0	0.00%
C	17	3	17.65%
D	1	0	0.00%
Total	498	103	20.68%

PFC as part of its social responsibility, makes all efforts to ensure compliance of the Directives and guidelines issued

by the Government of India from time to time pertaining to the welfare of female employees.

INTERNAL COMPLAINTS COMMITTEE

An Internal Complaints committee to examine the cases related to sexual harassment is in place under the "Sexual

Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act 2013. During the FY 2018-19, no complaint has been filed under the said Act.

20.0 DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

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

(b) such accounting policies have been selected, applied consistently and judgments & estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the accounts have been prepared on a going concern basis;

(e) the company has laid down internal financial controls to be followed and that such internal financial controls are adequate and are operating effectively.

(f) the company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

21.0 STATUTORY AUDITORS

M.K. Aggarwal & Co., Chartered Accountants and Gandhi Minocha & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for the FY2018-19 by the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2018-19 and have given their report without any qualification, reservation, adverse remark or disclaimer. The copy of the audit report is annexed with Annual Report.

SECRETARIAL AUDITOR

Agarwal S. & Associates, Company Secretaries was appointed as the Secretarial Auditor of the Company for the FY 2018-19 by the Board of Directors of the Company.

The observations of the Secretarial Auditor and reply of the management on the observations, for the FY 2018-19 along with copy of the audit report is annexed with Annual Report.

22.0 COMMENTS OF COMPTROLLER&AUDITORGENERALOF INDIA

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors'' report. The copy of the report of C&AG is annexed with Annual Report.

23.0 DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Internal Auditor of the Company i.e. A.R. & Co., Chartered Accountants quarterly certifies on the adequacy of internal financial controls with reference to the financial statements of the Company.

The Statutory Auditors of the Company i.e. M.K. Aggarwal & Co., Chartered Accountants and Gandhi Minocha & Co., Chartered Accountants have also given their Report on the Internal Financial Controls stating that the Company has, in all material respects, an internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2019 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

24.0 COMPLIANCE OF SECRETARIAL STANDARDS

The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.

25.0 PARTICULARS OF REMUNERATION U/S 197(12) OF THE COMPANIES ACT. 2013 READ WITH RULE 5 OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES. 2014

As per the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the ratio of remuneration of each director to the median employees'' remuneration and details of employees receiving remuneration exceeding the limits as prescribed from time to time in the Board''s Report.

However, as per notification dated June 5,2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of Section 197 of the Companies Act, 2013. Therefore, such particulars have not been included as part of Board''s Report.

26.0 ANNUAL RETURN LINK

An extract of the Annual Return in the prescribed format is annexed with the Annual Report.

27.0 REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which need to be mentioned in the Board''s Report.

28.0 DEBENTURE TRUSTEES

The details of Debenture Trustees appointed by the company for the different series of Bonds issued by your company are annexed with Annual Report.

29.0 STATUS OF UNCLAIMED AMOUNTS Bonds

The total unclaimed and unpaid amount as on March 31, 2019 was Rs, 15.10 crore (principal plus interest). The unpaid/ unclaimed amount of bonds transferred to I EPF during FY 2018-19 isRs, 0.14 crore.

Equity

The unclaimed balance amount of dividend (equity) as on March 31, 2019 was Rs, 3.38 crore. The unclaimed amount of Rs, 6,77,584 related to “Application money due for refund” and unclaimed dividend of Rs, 8,33,402 become due for transfer during the year ended March 31,2019 and was accordingly transferred to Investor Education and Protection Fund (IEPF).

30.0 EMPLOYEES STOCK OPTIONS PLAN f ESOP)

The Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises, Government of India, through its directions on pay revision had made it mandatory for all the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees in the form of ESOPs. In accordance with these directions of the DPE, the Board of Directors of your company had formulated an Employee Stock Option Plan titled as ''PFC-ESOP 2010''. Shareholders had also approved this Employee Stock Option Plan in their 24^th Annual General Meeting held on September 21, 2010. Subsequently, the Board of Directors had decided that 25% of the PRP of the employees should be given in the form of ESOPs. However, later in view of a clarification dated July 30,2012 issued by DPE, this PRP based Stock Option Plan has been made optional. The above scheme has been implemented in the Company as per the applicable Rules/Regulations/DPE guidelines and clarifications. A certificate in this regard by statutory auditors will be placed at the ensuing AGM of the Company.

Further, as on date, there is no option pending for grant or exercise under the ''PFC-ESOP 201 O''.

Further no option was granted/exercised to/by any employee during the year 2018-19.

31.0 VIGILANCE

During the FY 2018-19, the Vigilance Unit functioned as an effective tool of management, the thrust being on preventive vigilance. This aspect was emphasized by conducting periodic and surprise inspections of various units on constant basis. The Vigilance Unit also issued directions/effective guidelines to rationalize systems and procedures to eliminate gaps and confirming transparency in day-to-day operations. Information technology was used as an effective tool for providing on-line services to all the stakeholders and to enhance organizational efficiency. The Vigilance Unit carried out detailed investigation in respect of complaints registered during this period.

In compliance of the instructions of CVC, the sensitive posts in the Company were identified and the concerned officers were rotated on a regular basis. Agreed lists for the year 2018 were finalized in respect of corporate office at Delhi and regional offices at Mumbai and Chennai in consultation with the CBI. Prescribed periodical statistical returns were sent to CVC, CBI, MoP on time.

The Vigilance Unit continuously worked for systemic improvements with a view to increase transparency, objectivity and accountability in the operations of the Company. Thus, it has contributed towards overall improvement in the functioning through efficiency and effectiveness of the organization.

32.0 OFFICIAL LANGUAGE

It is a matter of great pride that your Company has been awarded the First Prize in Public Sector Category in Region ''A'' of ''Rajbhasha Kirti Puraskar'' for the year 2017-18 by Rajbhasha Vibhag, Ministry of Home Affairs for its concerted efforts made in implementation of Official Language Policy. CMD, PFC received the prestigious award from Hon''ble Vice President of India, Sh. M. Venkaiah Naidu.The Prize has been received by PFCforthe 5^th time in a row.

PFC''s Quarterly Magazine ''Urja Deepti'' and a book ''App Deepo Bhav'' written by a PFC employee were released in the Hindi Advisory Committee Meeting held on April 11,2018.

On the occasion of PFC Foundation Day, a Kavi Sammelan was organized. Hindi Day and Hindi Month were celebrated to create a Hindi oriented environment. During the Hindi Month, various competitions were organized. On the eve of Samapan Samaroh of ''Hindi Mah'', a Cultural Programme was organized on October 12,2018 in which employees of your company presented a Cultural Programme comprising of various Indian dance forms, Songs, Kavya Path and Natika etc. On the occasion of ''Vishwa Hindi Diwas'' a dance ballet namely ''Shri Krishna'' was organized by the artists of Shri Ram Bhartiya Kala Kendra.

10 Hindi workshops for 279 executives and 2 days Rajbhasha Sammelan for 28 Senior Executives as well as 2 Sangoshthies were organized. Internal inspections in the form of personal contact programme were conducted. Three Issues including ''Yog Evam Rajbhasha Visheshank'' of house magazine ''Urja Deepti'' were also published.

All these efforts were motivational tools in creating possibilities of better and progressive use of Hindi in the Company.

33.0 RIGHT TO INFORMATION ACT

The main objective of the Right to Information Act, 2005, is to ensure greater and more effective access to information and to maintain transparency and improve accountability in the working of the public departments both Central and State. The Right to Information Act, 2005 is an Act of the Parliament of India to provide for setting out the practical regime of right to information for citizens. It also endeavors to promote transparency and accountability in the working of the Government, to contain corruption and to enhance people''s participation in the democratic process by making the citizens informed about the activities of the Government. Under the Act, it is believed that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable. The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the Public Authorities.

An elaborate mechanism has been set up throughout your Company to deal with requests received under the RTI Act, 2005. Your company has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the company. The Company has designated a Public Information Officer (PIO) and First Appellate Authority (RTI) at its registered office for effective implementation of the RTI Act. The relevant information/ disclosures are also made available on the official website (www.pfcindia.com) of the company. During the FY 2018-19, all 131 applications received under the RTI Act, were duly processed and replied to. Your company has also complied with the requirement of filing of online RTI Quarterly Returns on the portal of Central Information Commission (ClC)for the FY2018-19.

Further, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated April 15, 2013 issued guidelines on the following :-

(i) Suo moto disclosure of more items under Section 4;

(ii) Guidelines for digital publication of proactive disclosure under Section 4;

(iii) Guidelines for certain clauses of Section 4(1 )(b) to make disclosure more effective;

(iv) Compliance mechanism for suo moto disclosure (proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid Guidelines, PFC has placed the requisite information on the website of the company. Besides the above, PFC is also linked with the online RTI Portal of Govt, of India, Department of Personnel & Training (https://rtionline.aov.in). which enables citizens of India, to file RTI applications/first appeals online along with payment gateway. Payment can be made through internet banking of SBI & its associate banks, debit/credit cards of Master/Visa and Ru Pay cards.

34.0 GRIEVANCE REDRESSAL

Your Company has a Grievance Redressal System for dealing with grievances of the public at large. The systems are duly notified and the Nodal Officers ensure quick redressal of grievances within the permissible time frame. Your Company has also notified Citizen''s Charter to ensure transparency in its work activities. The Charter is available on the website of PFC to facilitate easy access.

35.0 DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company''s operations during the FY2018-19.

36.0 DETAILS OF PROCUREMENT FROM MSEs

The details of the procurements made from Micro and Small Enterprises (MSEs) during the FY 2018-19 and the targets for FY 2019-20 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 along with Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 is as under:

S.No.	Particulars	FY 2018-19	Target for FY 2019-20
I	Total annual procurement (in value)	26.24 crore	30.38 crore
II	Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs)	9.21 crore	7.6 crore
III	Total value of goods and services procured from only MSEs owned by SC/ST entrepreneurs	0.55 crore	1.22 crore
IV	% age of procurement from MSEs (including MSEs owned by SC/ST entrepreneurs) out of total procurement	35.09%	25%
V	% age of procurement from only MSEs owned by SC/ST entrepreneurs out of total procurement	2.10%	4%
VI	Total number of vendor development programmes for MSEs	2 Half yearly	2
VII	Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same	http://www.Dfcindia. com/Home/VS/125

37.0 STATUTORY AND OTHER INFORMATION

Information required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, DPE''s Guidelines on Corporate Governance for CPSEs etc. is annexed to this report as follows:

Particulars	Annexure
Details of Debenture Trustees	A
Extract of Annual Return	B
Annual Report on CSR Activities	C
Disclosure of particulars of contracts/arrangements entered into by the company with related parties (AOC-2)	D
Management Discussion and Analysis Report	E
Integrated Reporting	F
Report on Corporate Governance	G
Business Responsibility Report	H
Secretarial Audit Report	I

38.0 ACKNOWLEDGEMENT

The Board of Directors acknowledge and place on record their appreciation for the guidance, co-operation and encouragement extended to the Company by the Government of India, Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India, Department of Public Enterprises, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level as well as various domestic and international financial institutions/banks, agencies etc.

The Board also conveys its gratitude to the shareholders, various International and Indian Banks/Multilateral agencies/financial Institutions/ credit rating agencies for the continued trust and for the confidence reposed by them in PFC. Your Directors would also like to convey their gratitude to the clients and customers for their unwavering trust and support.

The Company is also thankful to the Comptroller & Auditor General of India and the Statutory Auditors, Internal Auditors and Secretarial Auditor for their constructive suggestions and co-operation.

The Board also recognize and appreciate the untiring efforts and contributions made by the employees to ensure excellent all round performance of your Company.

For and on behalf of the Board of Directors

(Rajeev Sharma)

Chairman & Managing Director

DIN: 00973413

Place : New Delhi

Dated : 30.07.2019

---

Mar 31, 2018

The Members,

Power Finance Corporation Limited

The Directors are pleased to present their 32^nd Annual Report on the performance of your Company for the financial year ended March 31, 2018 along with Audited Financial Statements, Auditor’s Report, Secretarial Auditor’s Report & report by the Comptroller and Auditor General of India.

1.0 FINANCIAL AND OPERATIONAL HIGHLIGHTS

a) PROFITABILITY

(Rs. in crore)

Particulars	Standalone		Consolidated
	2017-18	2016-17	2017-18	2016-17
Total Income	26737.74	27018.57	27245.33	27611.29
Profit Before Tax	8326.95	5109.79	8,359.48	5263.69
Tax expenses	2471.73	2983.40	2515.37	3027.59
Profit After Tax	5855.22	2126.39	5844.11	2236.10

(Rs. in crore)

Particulars	Standalone		Consolidated
	2017-18	2016-17	2017-18	2016-17
Opening balance of Surplus	6903.07	8898.37	7241.55	9144.25
Profit After Tax	5855.22	2126.39	5844.11	2236.10
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1) (viia) (c) of Income Tax Act, 1961	(368.30)	(467.55)	(372.10)	(467.55)
Transfer to Special Reserve created and maintained u/s 36(1) (viii) of Income Tax Act, 1961	(1585.24)	(1803.78)	(1595.07)	(1812.97)
Transfer to Debenture Redemption Reserve	(292.65)	(298.02)	(294.17)	(312.55)
Transfer to General Reserve	(1000.00)	(0.00)	(1000.00)	(0.00)
Transfer to Interest Differential Reserve-KFW Loan(net)	(57.90)	(0.00)	(57.90)	(0.00)
Interim Dividend	(2059.26)	(1320.04)	(2059.26)	(1320.04)
Corporate Dividend Tax on Interim Dividend	(404.41)	(268.73)	(414.59)	(268.73)
Proposed Corporate Dividend Tax	0.00	0.00	(6.28)	0.00
Transfer from Debenture Redemption Reserve on account of utilization	0.00	36.40	0.00	36.40
Transfer to Statutory Reserve u/s 45-IC of the Reserve Bank of India Act, 1934	0.00	0.00	(6.37)	(6.03)
Adjustment made during the year	0.00	0.03	(15.97)	2.75
Closing Balance of Surplus	6990.53	6903.07	7263.95	7231.63

(b) LENDING OPERATIONS (excluding R-APDRP/IPDS)

(Rs. in crore)

Particulars	2017-18	2016-17
Sanction	116233	100603
Disbursement	64414	62798

(c) INTEGRATED POWER DEVELOPMENT SCHEME (IPDS) OPERATIONS (R-APDRP scheme subsumed)

(Rs. in crore)

Particulars	2017-18	Cumulative (upto March’ 18)
Sanctioned project cost
a. R-APDRP	(433)*	37523
b. IPDS	2637	28671
Disbursement
a. R-APDRP	962	11150
b. IPDS	2479	5139

*Negative sanctions indicate loans cancelled

Note: additionally, funds worth Rs. 273 crore (FY 2017-18) and Rs. 578 crore(cumulative) have been released under J&K PMDP.

2.0 FINANCIAL PERFORMANCE

2.1 REVENUE

The total income achieved by your Company during the FY 2017-18 is Rs.26,737.74 crore as compared to Rs.27,018.57 crore in FY 2016-17. Operating income for the year is Rs.26,414.47 crore as compared to Rs.26,907.53 crore in the previous year.

2.2 EXPENSES

The total expenditure for the FY 2017-18 amounted to Rs.18,410.79 crore as against total expenditure of Rs.21,908.78 crore in FY 2016-17. Finance cost including borrowing expenses amounted to Rs.17,233.01 crore in FY 2017-18 as compared to Rs.16,459.27 crore in FY 2016-17. This constituted 93.60% of total expenses in FY 2017-18 as compared to 75.13% in FY 2016-17. The other expenses including Administrative expenses, office expenses, Employee Benefit expenses etc. for the FY 2017-18 amounted to Rs.237.78 crore as against Rs.182.76 crore for FY 2016-17. This amounts to 1.29% of Total Expenses and 1.38% of Finance Cost as compared to 0.83% of Total Expenses and 1.11% of Finance Cost in the previous year.

2.3 PROFIT

During the FY 2017-18, your Company earned a net profit of Rs.5,855.22 crore as compared to Rs.2,126.39 crore for the FY 2016-17.

2.4 SHARE CAPITAL

As on March 31, 2018, the paid-up share capital of your Company was Rs.2,640.08 crore consisting of 52,64,00,81,408 equity shares of Rs.10 each of which the Government of India holds 65.92% of the paid-up share capital.

The Board of Directors have declared first and second Interim Dividend of Rs.6 per equity share and Rs.1.80 per equity share respectively on paid up equity share capital of Rs.2,640.08 crore (paid on November 23, 2017 and March 19, 2018 respectively) as against total dividend of Rs.5 per equity share on paid up equity share capital of Rs.2,640.08 crore during FY 2016-17. The dividend pay-out for the FY 2017-18 amounts to Rs.2,059.26 crore representing 35.17% of the profits after tax as against a dividend pay-out of Rs.1,320.04 crore representing 62.08% of the profits after tax in the previous year.

The Board of Directors of your Company have not recommended declaration of further dividend. Accordingly, interim dividend @ 78% of paid up equity share capital is considered as total dividend for the year.

3.0 OPERATIONAL PERFORMANCE

Your Company sanctioned loans of Rs.1,16,233 crore during the FY 2017-18 to State, Central, Private and Joint Sector entities. An amount of Rs.64,414 crore was disbursed during the same period. With this as on March 31, 2018, the cumulative sanctions amount to Rs.6,78,986 crore and cumulative disbursements amount to Rs.5,19,769 crore.

In addition to above, projects worth Rs.2,637 crore were sanctioned under IPDS during FY 2017-18. An amount of Rs.2,479 crore was disbursed under IPDS and Rs.962 crore under R-APDRP during the same period. With this, cumulative approved project cost amounts to Rs.28,671 crore under IPDS and Rs.37,523 crore under R-APDRP and cumulative disbursements amount to Rs.5,139 crore under IPDS and Rs.11,150 crore under R-APDRP.

3.1 LENDINGS (Excluding R-APDRP/IPDS)

3.1 .1 Sector-wise

(Rs. in crore)

	2017-18		Cumulative upto March, 2018
Category	Sanctions	Disbursements	Sanctions	Disbursements
State Sector	86801	42348	487304	370164
Central Sector	-	905	44849	42958
Joint Sector	14787	6826	41716	31174
Private Sector	14645	14335	105118	75472
Total	116233	64414	678986	519769

3.1.2 Discipline-wise

(Rs. in crore)

	2017-18		Cumulative upto March, 2018
Category	Sanctions	Disbursements	Sanctions	Disbursements
Thermal Generation	37476	21852	317964	245382
Hydro Generation (>25MW)	7678	1577	46040	34753
Renewable Energy	8057	9011	20771	16195
Renovation, Modernization and Uprati’ng of Thermal & Hydro Power Stations	772	653	13222	10900
Transmission	11763	3264	64979	35277
Distribution	23549	5721	51566	23790
Short Term Loan	12767	11143	71438	68059
Others*	14171	11193	93007	85413
Total	116233	64414	678986	519769

* Others include Transitional Finance, Medium Term Loan, Funding of Regulatory Assets, Buyer Line of Credit, Equipment Manufacturing Loan, Fuel Sources Development, Computerization, Loan for Redemption of bond, Project settlement, Purchase of Power through PXI, Loan for Asset Acquisition, Loan Against Receivables, Bill Discounting, Studies, Pre Investment Fund, Technical Assistance Project, Decentralized Management etc.

3.2 Financial Assistance under IPDS/R-APDRP

(Rs. in crore)

Scheme	2017-18		Cumulative upto March, 2018
	Approved project cost	Disbursements*	Approved project cost	Disbursements*
R-APDRP
Part A (IT)	(8)	329	5375	3726
Part A(SCADA)	(305)	79	1251	591
Part B	(121)	555	30897	6833
R-APDRP - Total	(433)	962	37523	11150
IPDS
IPDS	2637	2479	28671	5139

* In addition to above, during FY 2017-18, Rs. 48 crore were released by MoP for nodal agency fee/enabling activities under IPDS, Rs. 49 crore under Part-C including re-imbursement of PFC’s actual expenditure of R-APDRP. Cumulatively, MoP has released an amount of Rs. 125 crore for nodal agency fee/enabling activities under IPDS and Rs. 413 crore under Part-C of R-APDRP.

The MoU targets agreed with MoP under IPDS/ R-APDRP for FY 2017-18 and actual achievements during the year are tabulated below:

Sl.	MoU Parameter	2017-18		Cumulative
No		Target	Actual	Target	Actual
1	Monitoring of energy data through National Power Portal (NPP) (No. of Feeders)	6752	7292	31147	31687
2	Completion of R-APDRP Part-B works (Towns)	400	404	1183	1187
3	Completion of SCADA system (Towns)	6	7	24	25
4	Completion of TPIEA verification (States)	8	9	14	15
5	Award of Works in circles under IPDS (Circles)	250	261	473	484
6	Capacity Building (Mandays)	2000	16011	-	-

4.0 REALISATION

Your Company gives utmost priority to the realisation of its dues towards principal, interest etc. under various financial assistance such as rupee term loans, working capital, lease financing, foreign currency loans, loans for equipment financing and guarantee fee. The actual realization is well represented by the overdue loans to total performing loan assets which is 0.14%.

Provisioning on Non Performing Loan Assets has been increased by an amount of Rs.746 crore during the year. The Company has made a total provision of Rs.6,103 crore towards Non-Performing Assets (NPA) against Loan Assets in its Annual Accounts upto the year 2017-18. After making provision on NPA, the level of net NonPerforming Assets (NPA) has been recorded at Rs.20,600 crore which is 7.39% to the Total Gross Loan Assets as on March 31, 2018.

In addition to above, your Company has also made a provision of Rs.1,338 crore and Rs.1,404 crore on Standard Assets and Restructured Standard Assets respectively as on March 31, 2018, which would strengthen PFC’s balance sheet by providing a buffer provisioning and inspire higher levels of confidence amongst investors, regulators and other stakeholders in your Company.

5.0 RESTRUCTERED LOANS

The details of loans restructured during the FY 2017-18 are as follows:

(Rs. in crore)

Particular		2017-18	2016-17
Standard Loans Restructured	No. of Borrowers	6	11
	Amount Outstanding	6384.41	36,445.60
Sub-Standard Loans	No. of Borrowers	6	-
Restructured	Amount Outstanding	8,696.16	-
Doubtful Loans Restructured	No. of Borrowers		-
	Amount Outstanding		-
Total	No. of Borrowers	12	11
	Amount Outstanding	15,080.57	36,445.60

Out of above, Rs. 6196.99 crore is restructured subsequently in 2 borrowers.

6.0 BORROWINGS

6.1 DEPOSITS

Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2017-18.

6.2 BORROWINGS FROM DOMESTIC MARKET

The major borrowings from Domestic market during the FY 2017-18 are given as follows:-

(Rs. in crore)

Sl. No.	Source	Amount
1.	Commercial Paper	26,737.02
2.	Bonds -Private Placement (Taxable)	28,301.00
3.	Bonds -Private Placement (Secured Capital gains - Sec 54 EC)	292.15
4.	Term Loans	11,725.00
	TOTAL	67,055.17

Ministry of Finance, Government of India vide its notification no. 47/2017/F.No.370142/18/2017-TPL dated June 8, 2017 permitted PFC to raise funds through Bonds under Section 54 EC of Income Tax Act, 1961. Following the notification, your Company launched Series I of PFC Capital Gain Tax Exemption Bonds u/s 54 EC of Income Tax Act, 1961 on July 3, 2017. The bonds are Secured, Redeemable, NonConvertible, Non-Cumulati’ve, Taxable Bonds in the nature of Debentures having benefits under Section 54 EC of Income Tax Act, 1961. The subscription for the bonds was kept open till March 31, 2018.

6.3 CASH CREDIT/ OVERDRAFT FACILITIES

For day to day operations, your Company continued to follow prudent strategies for optimum utilization of fund based resources. To hedge any financial liquidity bottlenecks, ample credit lines to the tune of Rs.17,100 crore were sanctioned as on March 31, 2018 by various scheduled commercial banks to the Company for short term funding which do not bear any commitment charges towards unutilized limits.

6.4 EXTERNAL BORROWINGS

The foreign currency denominated borrowings during FY 2017-18 are as follows:

(Rs. in crore)

Sl. No.	Source	Amount
1.	Green Bonds	2,541.24
2.	Syndicated Loans	5,182.25
3.	FCNR(B) Loans*	2,962.51
	TOTAL	10,686.00

* Please note the above do not qualify as “External Borrowing” in terms of ECB guidelines issued by RBI

PFC has issued its first USD Green bond to finance renewable energy projects. The 10 year green bonds had raised $400 million, at a coupon of 3.75% p.a. payable semi-annually at an yield of 3.91% p.a. and listed on the London Stock Exchange’s new International Securities Market (ISM) and Singapore Stock Exchange. The funds raised has been utilized to finance renewable energy projects as per the “Eligible Projects” under PFC’s Green Bond Framework duly approved by Climate Bonds Initiative, London, UK with KPMG designated as third party verifier. The initiative will help to promote renewable energy projects across the country and aid in achieving the Government’s target of 5175GW of installed renewable energy capacity by 2022.

Projects nominated to be associated with the Green Bond offering (“Eligible Green Projects”) as per PFC’s Green Bond Framework are:

(A) Renewable Energy

- Solar energy - photovoltaic solar electricity, concentrated solar power, infrastructure and manufacturing, transmission;

- Wind energy - offshore and onshore wind farms, infrastructure and manufacturing, transmission;

- Bioenergy - renewable feed stocks, infrastructure and manufacturing, networks;

- Hydropower - Run of river and small hydro as approved by Govt, of India;

- Geothermal - geothermal electricity, geothermal heat pump (GHP) technology;

- Other renewable energy - sea and ocean derived energy sources;

- Energy distribution & management - transmission & grid infrastructure, smart systems/meters, heating management;

- Energy storage - hydro storage systems, thermal heat storage, new technologies.

(B) Energyefficiency

- Energy efficiency technology/products manufacturing and supply - operational performance will recognise special purpose products needed to ensure buildings meet industry metrics;

- Energy efficient processes/systems;

- Cogeneration/tri-generation/combined heat and power;

- Waste heat recovery;

- Electrical Vehicles

Green Bond Principles (GBP)

The Green Bond Principles are voluntary process guidelines, intended for broad use by the market that recommend transparency and disclosure, and promote integrity in the development of the Green Bond Market. The GBP has the following four key components:

1. Utilisation of Proceeds: The proceeds from the issuance of Green Bonds by PFC has been applied for refinancing of 523 Solar projects with a total capacity of 304 MW and 4 Wind projects with a total capacity of 5527 MW, funded by PFC across the country, termed as Green Portfolio within overall Eligible Green Projects as per PFC’s Green Bond Framework.

2. Process for Evaluation and Selection of Eligible Projects: For the Project financing covered under Green Bonds, a two-stage process has been followed consisting of preliminary appraisal through which the proposal is shortlisted followed by detailed appraisal before the final sanction. The preliminary appraisal relies on the information provided by the borrower while an in-depth analysis is carried out during the detailed appraisal stage. In-depth analysis involves projects’ Techno Economic Financial Viability as well as strength of promoter and borrower entities.

3. Management of Proceeds: PFC has a well laid internal tracking system through Integrated Power Financing System/Enterprise Resource Planning system (IPFS/ERP) in place which is used to monitor, establish and account for the allocation of the proceeds for such Green Portfolio. Proceeds of the current issuance has been fully utilized for refinancing of the Green Portfolio within the overall eligible projects under PFC’s Green Bonds Framework.

4. Reporting: Reporting includes an annual update giving the summary of projects to which Green Bond proceeds have been allocated to, mentioning brief description including amount disbursed and installed capacity.

Impacts

The proceeds of the Green Bonds have been utilized for augmenting solar and wind energy projects contributing towards positive environmental impact and also strengthen India’s energy security by reducing fossil fuel dependency. These solar and wind projects have a significant impact on reduction in emissions of other pollutants as well as C0₂, S0₂ and NO_x. These projects also avoid significant amounts of external costs of conventional fossil fuel-based electricity generation.

6.5 EXTERNALLY AIDED PROJECTS

No loans have been availed from Multilateral/ Bilateral agencies during FY 2017-18. Outstanding balance from such agencies as at March 31, 2018 is as follows:

Particulars	Amount
KFWI	EUR 6563605.60
Credit National	EUR 7558639.04
ADB	USD 13404220.53

7.0 PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

7.1 CONSERVATION OF ENERGY/ TECHNOLOGY ABSORPTION

There are no significant particulars, relating to conservation of energy and technology absorption as your Company does not own any manufacturing facility.

7.2 FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign exchange outgo aggregating Rs.1,491.79 crore was made on account of debt servicing, financial & other charges, travelling and training expenses.

The Foreign exchange earnings for the FY 2017-18 were nil.

8.0 CREDIT RATING

Domestic

Credit Ratings by Domestic credit rating agencies for domestic program of the Company during the FY 2017-18:

Sl. No.	Rating Agency	Long Term Rating	Short Term Rating
1.	CRISIL	CRISIL AAA	CRISILA1
2.	ICRA	ICRA AAA	ICRAA1
3.	CARE	CARE AAA	CARE A1

International

Long term foreign currency issuer rating assigned to the Company as at March 31, 2018:

Sl. No.	Rating Agency	Rating	Outlook
1.	Fitch Ratings	BBB-	Stable
2.	Standard & Poor (S&P)	BBB-	Stable
3.	Moodys	Baa3	Stable

9.0 RISK MANAGEMENT

9.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity and interest rate and also monitors implementation of decisions taken in the ALCO meetings. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. While the liquidity risk is being monitored with the help of Asset Liability gap analysis, the interest rate risk is managed by analysis of interest rate sensitive gap statements. Such analysis is made on quarterly basis in various time buckets and is being used for critical decisions regarding the time, volume and maturity profile of the borrowings and creation of mix of assets and liabilities in terms of time period (short, medium and long-term) and in terms of fixed and floating interest rates.

The maturity profile of certain items of assets and liabilities as at March 31, 2018 is set out below:

(Rs. in crore)

Maturity pattern of certain items of Assets and Liabilities as on March 31, 2018

Particulars	Upto 30/31 Days	Over 1 Month upto 2 Months	Over 2 Months upto 3 Months	Over 3 Months & upto 6 Months	Over 6 Months & upto 1 Year	Over 1 Year & upto 3 Years	Over 3 Years & upto 5 Years	Over 5 Years	Total
Deposits	532.95	-	-	-	-	-	-	-	532.95
Advances (Rupee Loan Assets)	4485.03	688.44	3905.59	7909.22	12684.38	42719.38	47703.98	158577.76	278673.77
Investments (Net of Provision)	0.00	0.00	0.00	0.00	1070.76	0.00	0.00	1265.60	2336.36
Borrowings (Rupee Liabilities)	1275.80	2805.00	7345.70	12457.70	13056.65	69867.712	37178.05	67628.47	211615.08
Foreign Currency Assets	0.00	0.00	0.00	0.00	0.00	0.00	0.00	240.96	240.96
Foreign Currency Liabilities	4.67	0.00	5.93	0.00	2348.39	5174.02	8024.53	2702.55	18260.08

9.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forwards, options, principal swaps and forward rate agreements.

As on March 31, 2018, the total o/s foreign currency liabilities are USD 2,372 million, JPY 43,668 million and Euro 14 million. On an overall basis, the currency exchange rate risk is covered to the extent of 551% through various hedging instruments.

Your Company has put in place a mechanism to ensure that the risks are monitored carefully and managed efficiently. In this regard, your Company had constituted the Risk Management Committee of Directors to monitor various risks, examine risk management policies & practices and initiate action for mitigation of risks arising in the operations. To facilitate this, the Company had put in place an Integrated Enterprise -Wide Risk Management Policy (IRM Policy).

The Company has identified 21 risks (8 quantifiable risks and 13 non quantifiable risks) which may have an impacton profitability/revenues of the Company. In order to implement IRM policy, Risk Management Compliance Committee and a unit were constituted for monitoring/reporting of the identified risks.

10.0 ULTRA MEGA POWER PROJECTS (UMPPs) AND INDEPENDENT TRANSMISSION PROJECTS (ITPs)

10.1 UMPPs

Your Company has been designated as the ‘Nodal Agency’ by Ministry of Power (MoP), Government of India, for development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each. Seventeen such UMPPs have been envisaged to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Chhattsgarh, Karnataka, Maharashtra (Munge), Tamil Nadu (Cheyyur), Odisha (Sundargarh), Bihar (Banka), Uttar Pradesh, 2^nd UMPP in Andhra Pradesh, 2 Additional UMPPs in Odisha and 2^nd UMPP in Tamil Nadu, Gujarat and Jharkhand (Deoghar).

UMPP is the initiative of Government of India with Ministry of Power as the ‘facilitator’ for the development of these UMPPs while Central Electricity Authority (CEA) is the ‘Technical Partner’. Till March 2018, nineteen Special Purpose Vehicles (SPVs) were established by the Company for UMPPs. Out of these, fourteen SPVs (operating SPVs) were incorporated to undertake preliminary site investigation activities necessary for conducting the bidding process for the projects. These SPVs shall be transferred to successful bidder(s) selected through Tariff Based International Competitive Bidding Process for implementation and operation. Further, to meet the requirement of Standard Bid Documents, your Company has incorporated five additional SPVs (Infra SPVs) for holding the land for power plant and land for coal blocks in case of domestic coal based UMPPs (Odisha, Bihar, Deoghar and Tilaiya UMPPs) and for holding land for power plant/port in case of imported coal based UMPP (Cheyyur UMPP). These SPVs would be transferred to the respective procurers of power from these projects.

Out of these nineteen SPVs, four SPVs have been transferred to the successful bidders as indicated below:

Sl. No	Name of SPV	Successful Bidder	Date of Transfer
1	Coastal Gujarat Power Ltd.	The Tata Power Company Ltd.	April 22, 2007
2	Sasan Power Ltd.	Reliance Power Ltd.	August 7, 2007
3	Coastal Andhra Power Ltd.	Reliance Power Ltd.	January 29, 2008
4	Jharkhand Integrated Power Ltd.*	Reliance Power Ltd.	August 7, 2009

‘Reliance Power Ltd./Jharkhand Integrated Power Limited (JIPL) has issued Termination notice of Power Purchase Agreement (PPA) for Tilaiya UMPP on April 28, 2015. Procurers have decided to accept the termination after which JIPL shall be taken over by Procurers and subsequently transferred to PFC for rebidding.

Government of Andhra Pradesh has decided not to proceed further with the 2^nd UMPP in Andhra Pradesh and in view of the same it has been decided by the Ministry of Power for the closure of the project. Action has been initiated to wind up/strike off the name of SPV from the records of Registrar of Companies (ROC).

Further, Government of Chhattsgarh had informed that they are not keen to set up UMPP at present due to surplus power in the state and in view of the same it has been decided by the Ministry of Power for the closure of the project. The process for winding up/striking off the name of SPV from the records of Registrar of Companies (ROC) has been initiated.

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required etc.

Till March 2018, twenty five Special Purpose Vehicles (SPVs), two by PFC and other twenty three by PFC Consulting Limited were established as wholly owned subsidiaries for ITPs. Out of these twenty five SPVs, Bokaro-Kodarma Maithon Transmission Company Limited was liquidated in December 2010 and nineteen SPVs were transferred to the successful bidders till March 31, 2018.

During the year following two SPVs were transferred to successful bidders:

Sl. No.	SPV	Successful Bidder	Date of Transfer
1.	Fatehgarh-Bhadla Transmission Limited	Adani Transmission Limited	March 14, 2018
2.	Goa-Tamnar Transmission Project Limited	Sterlite Grid 5 Limited	March 14, 2018

The schemes Northern Region System Strengthening Scheme - XXXIII (SPV- Ballabhgarh-GN Transmission Company Limited), and Northern Region System Strengthening Scheme-XXXV (SPV-Mohindergarh-Bhiwani Transmission Ltd) have been de-noti’fied from tariff based bidding process. Process has been initiated to liquidate these two SPVs.

Letter of Intent (LOI) was issued to the successful bidders forTanda Transmission Company Ltd. on October 9, 2015. However, the Standing Committee on Power System Planning of Northern Region had decided to drop the said scheme. Further, MoP vide Gazette Notification dated February 23, 2018 de-noti’fied the scheme “ATS for Tanda Expansion TPS (2x660) MW”. Accordingly requisite action will be taken for the closure of the SPV.

11.0 INTEGRATED POWER DEVELOPMENT SCHEME (with RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP) SUBSUMED IN IT)

In order to provide impetus to strengthening of power distribution sector in urban area, Ministry of Power, Government of India notified “Integrated Power Development Scheme” (IPDS) on December 3, 2014 with following components:

i) Strengthening of sub-transmission and distribution networks in the urban areas;

ii) Metering of distribution transformers/ feeders/ consumers in the urban areas.

iii) IT enablement of distribution sector and strengthening of distribution network under R-APDRP for 12^th and 13^th Plans by carrying forward the approved outlay for R-APDRP to IPDS.

iv) Enterprise Resource Planning (ERP) and IT enablement of balance urban towns. Scope of IT enablement has been extended to all 4041 towns as per Census 2011.

v) Smart metering solution for performing UDAY states and solar panels on Government buildings with net metering.

Erstwhile, R-APDRP Scheme has been subsumed in newly launched IPDS scheme.

The components at (i) and (ii) above have an estimated outlay of Rs.32,612 crore including a budgetary support of Rs.25,354 crore from Government of India during the entire implementation period.

R-APDRP scheme cost of Rs.44,011 crore including a budgetary support of Rs.22,727 crore as already approved by CCEA will be carried forward to the new scheme of IPDS in addition to the outlay for components at (i) and

(ii) indicated above.

Your Company, as nodal agency, has contributed significantly during the year in implementation of IPDS (with RAPDRP subsumed under it) programme:

IPDS

- Your Company sanctioned projects of Rs.2,637 crore during FY 2017-18 and Rs.28,671 crore cumulatively under IPDS.

- Your Company also disbursed Rs.2,479 crore during FY 2017-18 and Rs.5,139 crore cumulatively to the State Utilities for projects sanctioned under IPDS.

R-APDRP

- Your Company has sanctioned projects of Rs.37,523 crore cumulatively for 1,405 towns under Part-A IT, 59 towns under Part-A (SCADA) and 1227 towns under Part-B of R-APDRP.

- Your Company also disbursed Rs.962 crore during FY 2017-18 and Rs.11,150 crore cumulatively to the State Utilities for projects sanctioned under R-APDRP.

Progress of implementation

IPDS

Under IPDS, Project Management Agency appointment has been done in 57 Utilities and TPA has been signed with 56 Utilities.

Out of NIT value of Rs.25,992 crore issued, projects worth Rs.25,075 crore has already been awarded in 484 out of 5546 sanctioned circles and implementation has started in said circles. Further, your Company also sanctioned Rs.816 crore as counterpart loans and disbursed an amount of Rs.82 crore under IPDS during the year.

R-APDRP

With the measures taken so far, 20 out of 521 Data Centers, 20 out of 521 Disaster Recovery Centres and 42 out of 546 Customer Care Centers have been commissioned. Further, 1376 towns have been declared Go-Live and declaration of Go-Live in balance 29 towns of Odisha (12), Tamil Nadu (8), Puducherry (4), Arunachal Pradesh (3), Mizoram (1) and Nagaland (1) is under progress. In 1346 Go-live towns, all business process software modules are functional and energy audit reports are being derived from the system.

During the year, your Company disbursed an amount of Rs.641 crore and cumulatively Rs.2,519 crore as counterpart loan under Part-B of R-APDRP. Implementation work of distribution system strengthening has been reported complete in 1187 towns out of 51227 towns.

Cumulatively, 52 out of 59 sanctioned SCADA Control Centers have been commissioned and 25 out of 559 SCADA towns were completed.

The reduction in AT&C loss is already visible in 1156 R-APDRP towns (as per Post Go-Live reports) in March 2018 because of establishment of IT system and Part-B completion in various towns coupled with administrative and other measures. Thus, your Company shall be contributing towards improving financial health of Distribution Utilities.

Other developments:

- Revamped IPDS web-portal with provision of on-line submission of IPDS DPRs and maintaining MIS. The revamped portal also includes 7 post Go-Live parameters which are being monitored on monthly basis and States are being ranked based on improvement on these parameters.

- A system has been developed in-house for web-based project monitoring of IPDS/ R-APDRP on IPDS web portal. Discoms are uploading award details, work execution details along with financial progress of the projects on the portal at regular intervals. Further, project monitoring of Old Kashi IPDS project has already been started on www.kashiipds.com.

- Capacity building / training of Utility personnel is also carried out under IPDS - RAPDRP to enhance their skill. Capacity Building programme was rolled-out through empanelled PTIs in which 16,011 man-days achieved in FY 2017-18.

- PFC on behalf of Ministry of Power has developed a Mobile App for Urban Power Distribution Sector (URJA) to enhance Consumer Connect, Project Monitoring of Urban Distribution Sector projects etc. The web version of URJA is also available at www.urjaindia.co.in.

- Online Feeder Monitoring system is being developed as an integral part of National Power Portal (NPP). NIC along with PFC is implementing the project. The Feeder data of 50 Discoms in 30 States has been received and integrated on NPP. As on date, transaction data of 31,687 Feeders has been uploaded by Discoms on NPP for urban towns.

- Coordination for adoption of 51912, the short code for electricity complaints, by all Utilities on Pan-India basis. As on date, 1912 has already been implemented in 47/51 Government Discoms (45 with all service providers). 1912 has been implemented as Toll free facility in 47 Discoms.

- PFC on behalf of Ministry of Power has engaged IPDS Consultants as Urban Vidyut Abhiyanta (UVA) purely on contractual basis, as per PFC policy. There are 48 UVAs engaged with PFC and posted at various Discom HQ.

- In order to recognize efforts of Discoms/Feeder managers working towards reduction in AT&C, MoP has approved Feeder Manager Recognition scheme. 31 Feeder Managers from across Utilities have been awarded on monthly basis for the period September, 2017 to February, 2018.

- IPDS guidelines envisaged appointment of Third Party Concurrent evaluating Agency (TPCEA) by PFC (Nodal agency), for concurrent and post implementation evaluation of the sanctioned IPDS schemes, for assuring quality of work in projects being carried out by Utilities. PFC has completed 1^st round of appointment of TPCEA for various states. The appointment has been made after reverse e-aucti’on bidding for 15 groups across the country, the major bidders were WAPCOS, Feedback Infra, Voyant Solutions, SMEC India Pvt. Ltd. etc.

12.0 INITIATIVES TOWARDS REFORMS AND RESTRUCTURING

Categorization of Utilities

For purposes of funding, your Company classifies State Power Generation and Transmission utilities into A , A , A, B and C categories. The categorization (biannual) of State Power Generation and Transmission utilities is arrived based on the evaluation of utility’s performance against specific parameters covering operational & financial performance including regulatory environment, generation of audited accounts, etc.

With regards to State Power Distribution utilities (including SEBs/utilities with integrated operations), your Company’s categorization policy provides for adoption of MoP’s Integrated Ratings by aligning such ratings/ gradings with PFC’s standard categories of A , A, B and C.

The categorization enables your Company to determine credit exposure limits and pricing of loans to the state power utilities. As on May 15, 2018, 121 utilities were categorized, 5 as ‘A ”, 43 as ‘A ”, 43 as ‘A”, 19 as “B” and lias “C”.

Quarterly and Annual Report of State Power Utilities

During the year 2015-16, PFC had undertaken the initiative of revising its existing Quarterly Performance Research Report of State Power Utilities to focus on the distribution sector and the new formats for the revised Quarterly Report were developed after discussion with various stakeholders and the consultants i.e. ICRA & CARE. The data for this report is being collected from 40 distribution utilities covered under the Annual Integrated Rating exercise.

PFC also publishes the Report on the Performance of State Power Utilities (SPUs) on an annual basis. The Report is a comprehensive study of the performance of the State Power Utilities on key financial and operational parameters. The Report contains key performance parameters e.g. profitability, gap between average cost of supply and average realization (f/kwh), net worth, capital employed, receivables, payables, capacity (MW), generation (Mkwh), AT&C losses (%) etc. and consumption pattern of the sector at utility, state, regional and national level.

13.0 POLICY INITIATIVES

Your Company constantly reviews its policy framework so as to align itself with the prevailing conditions in the power sector. Towards this end, your Company recently reviewed its refinancing policy so as to make it more flexible and customer oriented. PFC has also re-aligned its lending terms with the market for the renewable sector particularly for solar & wind power so to enhance its market share. In order to capture more business in transmission sector, your Company has formulated a new policy for funding Independent Transmission projects (ITP’s).

14.0 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT, 2013

Your Company being a Non-Banking Financial Company engaged in business of financing companies, its loan operations are exempt from the relevant provisions of Section 186 of the Companies Act, 2013.

The particulars of investments during the FY 2017-18 are as follows:-

- During the FY 2017-18, PFC has approved an additional investment of Rs.241 crore towards equity contribution in Energy Efficiency Services Limited (EESL), a Joint Venture Company of PFC, REC, NTPC and POWERGRID.

PFC has subscribed to 9,90,00,000 equity shares of Rs.10 each amounting to Rs.99,00,00,000 in EESL’s Rights Issue on April 27, 2018 under the first tranche and the same were allotted to PFC by EESL on July 2, 2018.

15.0 SUBSIDIARIES

To focus on additional business in the areas of consultancy, renewable energy, consortium lending, equity financing, etc. following wholly owned subsidiaries have been incorporated by your Company, as on date:

(i) PFC Consulting Limited

(ii) PFC Green Energy Limited

(iii) PFC Capital Advisory Services Limited

(iv) Power Equity Capital Advisors Private Limited

The Board of Directors of the Company have approved the Merger of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL).

Further, the Board of Directors of PFC Green Energy Limited (PFC GEL) and PFC has approved the Scheme for the merger of PFC GEL with PFC subject to sanction by the Ministry of Corporate Affairs.

The process of mergers is under way.

Decision of voluntary winding up of PECAP is under consideration of Ministry of Power, Government of India.

Further, your Company is designated by Ministry of Power, Government of India as the ‘nodal agency’ for facilitating development of Ultra Mega Power Projects and its wholly owned subsidiary i.e. PFC Consulting Limited is the ‘Bid Process Coordinator’ for Independent transmission projects. As on March 31, 2018, for the said purpose, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiaries of the Company:

i) Chhattsgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.)

ii) Coastal Karnataka Power Limited

iii) Coastal Maharashtra Mega Power Limited

iv) Coastal Tamil Nadu Power Limited

v) Orissa Integrated Power Limited

vi) Sakhigopal Integrated Power Company Limited

vii) Ghogarpalli Integrated Power Company Limited

viii) Tatiya Andhra Mega Power Limited

ix) Deoghar Mega Power Limited

x) Cheyyur Infra Limited

xi) Odisha Infrapower Limited

xii) Deoghar Infra Limited

xiii) Bihar Infrapower Limited

xiv) Bihar Mega Power Limited

xv) Jharkhand Infrapower Limited

xvi) Ballabhgarh-GN Transmission Company Limited*

xvii) Tanda Transmission Company Limited *

xviii) Mohindergarh-Bhiwani Transmission Limited*

xix) South-Central East Delhi Power Transmission Limited*

xx) Bijawar-Vidarbha Transmission Limited*

xxi) Shongtong Karcham-Wangtoo Transmission Limited*

- wholly owned subsidiaries of PFC Consulting Limited

15.1 PFC CONSULTING LIMITED

Your Company had been offering consultancy support to the Power Sector through its Consultancy Services Group (CSG) since October 1999. Leveraging the experience of the CSG Unit and appreciating the growth in the services offered by the Group and recognizing the potential of such services in reforming Power Sector, your Company decided to organize the services as a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary on March 25, 2008, in order to give it requisite autonomy in functions and flexibility in operations. PFCCL is mandated to promote, organize and carry out consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs and ITPs. PFCCL has been nominated as the ‘Bid Process Coordinator’ for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, Go I.

The Services offered by PFCCL are broadly in the following areas:

- Advisory services on issues emanating from implementation of Electricity Act 2003 like reform, restructuring, regulatory etc.

- Bid process management including Tariff based competitive bidding as per the Guidelines issued by MoP, Gol for various segments of Power Sector

- Project-structuring/planning/development/specific studies, implementation monitoring, efficiency improvement projects

- Human Resource Management Plans

- Organisation performance improvement plans

- Contract related services for Power Sector

- Financial management, resource mobilization, accounting systems etc.

- Coal block development

- Renewable and non-conventional energy project development including “Waste to Energy” Projects

- Advisory Services for Distribution system Improvement Schemes

- Project Management Activities under IPDS and DDUGJY Schemes

- Detailed Project Reports and selection of Implementation Agency for Smart Grid

- Bidding under DEEP Portal for procurement of Power

Till date, consultancy services have been rendered to 62 clients spread across 24 States/UTs by PFCCL. The total number of assignments undertaken as on date is 113.

Further, during the FY 2017-18, the total income of PFCCL was Rs.78.87 crore vis-a-vis Rs.120.67 crore in the previous FY 2016-17 and the net profit earned by PFCCL during FY 2017-18 was Rs.28.33 crore as against the corresponding net profit of Rs.57.85 crore last fiscal.

15.2 PFC GREEN ENERGY LIMITED

PFC Green Energy Limited (PFC GEL) was incorporated on March 30, 2011 as a wholly owned subsidiary of the Company to extend finance and financial services to promote green (renewable and non-conventi’onal) sources of energy. As on March 31, 2018, PFC GEL had an authorized share capital of Rs.1200 crore and paid up share capital of Rs.300 crore comprising of Rs.10 crore equity shares of Rs.10 each and Rs.20 crore Fully Convertible Preference Shares of Rs.10 each.

The Board of Directors of PFC GEL and PFC accorded its approval for Scheme of merger of PFC GEL with PFC in their respective meetings held on August 25, 2017 and September 29, 2017 respectively.

Further, the Reserve Bank of India (RBI) has issued a letter dated April 20, 2018, inter-alia intimating that “Bank does not have any objection to the scheme of arrangement”.

PFC GEL continues to accomplish a healthy growth during the FY 2017-18. The total revenue from operation grew by 14% from Rs.64.79 crore to Rs.73.94 crore, profit before tax (PBT) grew by 2% from Rs.43.14 crore to Rs.44.14 crore and profit after tax (PAT) grew by 6% from Rs.30.15 crore to Rs.31.83 crore in FY 2017-18.

Further, PFCGEL has disbursed Rs.77.26 crore to various ongoing renewable energy projects already sanctioned by it. As on March 31, 2018, the Company has a loan portfolio of Rs.681.94 crore.

15.3 PFC CAPITAL ADVISORY SERVICES LIMITED

PFC Capital Advisory Services Limited (PFCCAS) was incorporated as a wholly owned subsidiary of your Company on July 18, 2011 to focus on sectoral requirements for financial advisory services, including syndication services. The authorised capital of the Company is Rs.1 crore and the paid up share capital of the Company is Rs.0.10 crore.

During the year, income from operations of PFCCAS was “NIL” and other income was Rs.0.61 crore while net profit after tax of the Company was Rs.0.38 crore.

Further, Board of Directors of PFC approved merger of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL) subject to regulatory and other compliances in line with the recommendation of the Board of PFCCAS with PFCCL and the same is under process.

Further, PFCCAS vide its letter dated August 21, 2017 applied to SEBI for Surrender of Certificate of Registration as a Debenture Trustee and SEBI vide its letter dated April 20, 2018 has intimated that the said application has been duly approved.

15.4 POWER EQUITY CAPITAL ADVISORS PRIVATE LIMITED

Power Equity Capital Advisors Private Limited (PECAP), the wholly owned subsidiary of your Company has not been able to transact any business due to lack of business proposals even after its acquisition by PFC and accordingly approval has been sought from MoP for dissolving and gett’ng the name of the Company struck off from the records of Registrar of Companies, which is under consideration of MoP, Gol.

16.0 JOINT VENTURES, ASSOCIATE COMPANIES AND OTHER MAJOR INVESTMENTS (as on March 31, 2018)

16.1 ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad. The shareholding of your Company as on March 31, 2018 is 31.71%.

During FY 2017-18, your Company has approved an investment of Rs.241 crore towards additional equity infusion in EESL for various activities to be undertaken by EESL such as Ujala, street lighting, building, e-vehicles etc.

PFC has subscribed to 9,90,00,000 fully paid equity shares of EESL of face value of Rs.10 per share amounting to Rs.99,00,00,000 as on April 27, 2018 under first tranche and the same were alloted to PFC by EESL on July 2, 2018.

Further, during the FY 2017-18, the total income of EESL was Rs.1,410.70 crore vis-a-vis Rs.1,227.18 crore in the previous FY 2016-17 and the net profit earned by EESL during FY 2017-18 was Rs.39.38 crore as against the corresponding net profit of Rs.51.81 crore last fiscal.

16.2 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested Rs.12 crore in PTC which is 4.05% of PTC’s total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country. During the FY 2017-18, PTC maintained its leadership position with trading volumes of 557.02 BUs. PTC has reported profit after tax of Rs.319.20 crore for the FY 2017-18.

16.3 POWER EXCHANGE INDIA LIMITED

Power Exchange India Limited (PXIL) is India’s first institutionally promoted Power Exchange, promoted by two of India’s biggest exchanges i.e. National Stock Exchange of India Limited and National Commodity & Derivatives Exchange Limited (NCDEX). It provides innovative and credible solutions to transform the Indian Power Markets. PXIL, provides nation-wide, electronic exchange for trading of power and handles power trading and transmission clearance, simultaneously, it provides transparent, neutral and efficient electronic platform. PXIL offers various products such as Day Ahead, Day Ahead Contingency, Any Day, Intra Day and Weekly Contracts. PXIL provides trading platform for Renewable Energy Certificates. PFC’s investment in equity shares of PXIL as on March 31, 2018 of Rs.3.22 crore.Due to erosion of Net Worth of PXIL, PFC has provided the entire investment amount of Rs.3.22 crore as provision for diminution in the value of investment in its books.

16.4 SHREE MAHESHWAR HYDEL POWER CORPORATION LIMITED

In June, 2016, PFC, being one of the lenders of Shree Maheshwar Hydel Power Corporation Limited (SMHPCL) has enforced its legal rights as per the Pledge deed dated November 30, 2006 as amended from time to time and subordinate loan agreement dated September 29, 2006, by invoking the shares pledged by the promoters of SMHPCL in favor of PFC and by partial converting sub debt loan into equity shares. Upon invocation of pledged shares and partial conversion of sub-debt, the total shareholding of PFC in SMHPCL stands 13,18,46,779 equity shares of Rs.10 each representing 23.32% of paid up equity share capital of SMHPCL.

The promoters of SMHPCL have disputed the said invocation of pledged shares and partial conversion of sub-debt before NCLT, Ahmedabad. The matter is subjudice.

17.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ‘Excellent’ Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY 2016-17, your Company was accorded ‘Excellent rating’. The rating for FY 2017-18 is still awaited.

18.0 PRESIDENTIAL DIRECTIVES

The Company has not received any Presidential directives during last three years.

The pay scale revision for Board level and below Board level executives became due w.e.f. January 1, 2017 in accordance with DPE OMs no W-02/0028/2017-DPE(WC)-GL-XIII-17 dated August 3, 2017 and W-02/0028/2017-DPE(WC)-GL-XIV-17 dated August 4, 2017. In this regard, Presidential Directives were issued by Ministry of Power vide its letter no 24-9/8/2017 PFC(MOP) dated May 10, 2018. Accordingly, PFC has implemented the Presidential Directives on revision of pay scales for Board level and below Board level executives of the Company w.e.f. January 1, 2017.

19.0 CORPORATE SOCIAL RESPONSIBILITY

The aim of your Company’s Corporate Social Responsibility and Sustainability Policy (CSR and Sustainability Policy) is to ensure that your Company becomes a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfillment of Power and Energy needs of the society.

PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. To oversee the activities of CSR, PFC has in place a Board level CSR&SD Committee of Directors headed by an Independent Director.

During the year, PFC implemented wide range of activities in the field of Environment Sustainability, Skill development, Sanitation, Healthcare and supporting the differently abled.

For the FY 2017-18, the Board had approved the CSR budget of Rs.149.21 crore based on 2% of the average stand-alone Profit Before Tax as per Companies Act, 2013 excluding dividend received from other companies covered under and complying with Section 135 of the Act in line with Rule 2(f) (ii) of Companies (CSR Policy) Rules 2014.

The CSR Report under Companies (CSR Policy), Rules is annexed with Annual Report.

20.0 HRD INITIATIVES DEVELOPMENT & TRAINING

During FY 2017-18, in order to ensure specific skill development the focus of conducting in house programs was maintained in line with the corporate goals. Customized programs like training on Indian Accounting Standards, Management of Non-Performing Assets, Leadership & Team Building, General Management Program with help of Indian Institute of Management (IIM), Bangalore & Lucknow, etc. were organized along with other need-based programs.

As on March 31, 2018, 14 in-house training programs were organized by the Company for its employees. A total of 51594 man-days were achieved by conducting various in-house programs and by sponsoring employees to other need based programs conducted by external training agencies.

RECREATIONAL ACTIVITIES

Your Company is committed towards holistic personality development of its employees through facilities like Gymnasium, Library, Table Tennis and participation of employees in various sports, cultural and literary activities.

As a member of Power Sports Control Board, your Company has been organizing an Inter-CPSU Tournament every year for the employees of PSCB member organisations. During the FY 2017-18, PFC organized 20^th Inter-CPSU Carrom Tournament under the aegis of PSCB. Employees of PFC exhibited enthusiastic participation in various Inter-CPSU sports tournaments such as Cricket, Badminton, Table Tennis, Carrom, Chess, Kabaddi, etc. organized by the PSCB member organisations. The participation in these sports results in a greater level of team spirit and fitness among the employees.

During the period, the Company organized Qaumi Ekta week during November 19, 2017 to November 25, 2017. During the week various events like essay writing competition, Slogan writing competition and linguistic test were organized and employees participated with zeal and enthusiasm. On the occasion of PFC Foundation Day, a Kavi Samelan was organized at PFC premises. Eminent poets like Shri Ashok Chakradhar, Surender Sharma and Rahat Indori entertained PFC employees with their poetic performance.

HUMAN RESOURCE MANAGEMENT

Your Company has put in place effective human resource acquisition and maintenance function, which is benchmarked with best corporate practices designed to meet the organizational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity.

The Industrial Relations within the Company has been very cordial and harmonious with the employees committ’ng themselves entirely to the objectives of the Company. There was no mandays lost during the year under review. The attrition rate for the period from April 1, 2017 to March 31, 2018 comes out to 1.00%.

WELFARE MEASURES

Your Company follows good management practices. The employees of the Company have access to the Top Management officials thereby contributing effectively in the management and growth of the Company. Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which lead to a healthy workforce. During the period, several new initiatives were taken for employees’ welfare such as amendments in Medical Attendance Rules, Child Care Leave Rules etc.

RESERVATION OF POSTS FOR SC / ST / OBC / EX-SERVICEMEN AND PHYSICALLY HANDICAPPED PERSONS IN THE SERVICES OF COMPANY

Group	Total Employees as on March 31, 2018	SCs	SC%	STs	ST%	OBC	OBC%
A	387	69	17.83%	21	5.43%	69	17.83%
B	92	15	16.30%	8	8.70%	12	13.04%
C	18	3	16.67%	1	5.56%	3	16.67%
D	1	0	0.00%	0	0.00%	0	0.00%
Total	498	87	17.47%	30	6.02%	84	16.87%

PFC as a part of its social responsibility makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC/ PwD employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions. A separate Liaison officer has been appointed to look into the matter of reservations.

REPRESENTATION OF WOMEN EMPLOYEES

Your Company has women in important and critical functional areas. Women representations have gone across hierarchical levels. The Company provides equal growth opportunities for the women in line with Govt, of India philosophy on the subject. The women are adequately represented, with 20.28% of the total work force.

Group	Total Employees as on March 31, 2018	Number of Women Employees	Percentage of overall staff strength
A	387	64	16.54%
B	92	34	36.96%
C	18	3	16.67%
D	1	0	0.00%
Total	498	101	20.28%

PFC as part of its social responsibility makes all efforts to ensure compliance of the Directives and guidelines issued by the Government of India from time to time pertaining to the welfare of female employees. A committee to examine the cases related to sexual harassment is in place.During the FY 2017-18, no case has been filed under the “Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act 2013”.

21.0 DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

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

(b) such accounting policies have been selected, applied consistently and judgments & estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the accounts have been prepared on a going concern basis;

(e) the Company has laid down internal financial controls to be followed and that such internal financial controls are adequate and are operating effectively.

(f) the Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

22.0 STATUTORY AUDITORS

M. K. Aggarwal &Co., Chartered Accountants and Gandhi Minocha &Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for the FY 2017-18 by the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2017-18 and have given their report without any qualification, reservation, adverse remark or disclaimer. The copy of the audit report is annexed with Annual Report.

SECRETARIAL AUDITOR

Agarwal S. & Associates, Company Secretaries was appointed as the Secretarial Auditor of the Company for the FY 2017-18 by the Board of Directors of the Company.

The observations of the Secretarial Auditor and reply of the management on the observations, for the FY 201718 along with copy of the audit report is annexed with Annual Report.

23.0 COMMENTS OF COMPTROLLER & AUDITOR GENERAL OF INDIA

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors’ report. The copy of the report of C&AG is annexed with Annual Report.

24.0 DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Internal Auditor of the Company i.e. A. R. & Co., Chartered Accountants quarterly certifies on the adequacy of internal financial controls with reference to the financial statements of the Company.

The Statutory Auditor of the Company i.e. M. K. Aggarwal & Co., Chartered Accountants and Gandhi Minocha & Co., Chartered Accountants have also given their Report on the Internal Financial Controls stating that the Company has, in all material respects, an internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2018 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

25.0 PARTICULARS OF REMUNERATION U/S 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5 OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

As per the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed ompany is required to disclose the ratio of remuneration of each director to the median employees’ remuneration and details of employees receiving remuneration exceeding the limits as prescribed from time to time in the Board’s Report.

However, as per notification dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of Section 197 of the Companies Act, 2013. Therefore, such particulars have not been included as part of Board’s Report.

26.0 DEBENTURE TRUSTEES

The details of Debenture Trustees appointed by the Company for the different series of Bonds issued by your Company are annexed with Annual Report.

27.0 STATUS OF UNCLAIMED AMOUNTS

Bonds

The total unclaimed and unpaid amount as on March 31, 2018 was Rs.17.94 crore (principal plus interest). The unpaid/unclaimed amount of bonds transferred to IEPF during FY 2017-18 is Rs.0.60 crore.

Equity

The unclaimed balance amount of dividend (equity) and application money received and due for refund (FPO) as on March 31, 2018 was Rs.2.63 crore and Rs.0.038 crore respectively. The unclaimed amount of Rs.23,17,050 become due for transfer during the year ended March 31, 2018 and was accordingly transferred to Investor Education and Protection Fund (IEPF).

28.0 EMPLOYEES STOCK OPTIONS PLAN (ESOP)

The Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises, Govt, of India, through its directions on pay revision had made it mandatory for all the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees in the form of ESOPs. In accordance with these directions of the DPE, the Board of Directors of your Company had formulated an Employee Stock Option Plan titled as ‘PFC-ESOP 2010’. Shareholders had also approved this Employee Stock Option Plan in their 24^th Annual General Meeting held on September 21, 2010. Subsequently, the Board of Directors had decided that 25% of the PRP of the employees should be given in the form of ESOPs. However, later in view of a clarification dated July 30, 2012 issued by DPE, this PRP based Stock Option Plan has been made optional. The details regarding ESOP are available on Company website i.e. www.pfcindia.com. The above scheme has been implemented in the Company as per the applicable Rules/Regulations/DPE guidelines and clarifications. A certificate in this regard by statutory auditors will be placed at the ensuing AGM of the Company.

Further, as on date, there is no option pending for grant or exercise under the ‘PFC-ESOP 2010’.

Further no option was granted/exercised to/by any employee during the year 2017-18.

29.0 VIGILANCE

During the FY 2017-18, the Vigilance Unit functioned as an effective tool of management, the thrust being on preventive vigilance. This aspect was emphasized by conducting periodic and surprise inspections of various units. The Vigilance Unit also issued directions/effective guidelines to rationalize systems and procedures to eliminate gaps and ensuring transparency in day-to-day operations. Information technology was used as an effective tool for providing on-line services to all the stakeholders and to enhance organizational efficiency. Vigilance Unit also prepared e-learning case studies for the e-learning module of the CVC. The Vigilance Unit carried out detailed investigation in respect of complaints registered during this period.

In accordance with directives of CVC, Vigilance Awareness week was observed from October 30, 2017 to November 4, 2017 in the head office and regional offices of the Company.

In compliance of the instructions of CVC, the sensitive posts in the Company were identified and the concerned officers were rotated. Agreed lists for the year 2017 were finalized in respect of corporate office at Delhi and regional offices at Mumbai and Chennai in consultation with the CBI. Prescribed periodical statistical returns were sent to CVC, CBI, MoP on time.

The Vigilance Unit continuously worked for systemic improvements with a view to increase transparency, objectivity and accountability in the operations of the Company. Thus, it has contributed towards overall improvement in the functioning through efficiency and effectiveness of the organization.

30.0 OFFICIAL LANGUAGE

Your Company was awarded the third prize in Public Sector Category in Region ‘A’ of ‘Rajbhasha Kirti Puraskar’ for the year 2016-17 by Rajbhasha Vibhag, Ministry of Home Affairs for its concerted efforts made in implementation of Official Language Policy. CMD, PFC received the Prestigious Award from Hon’ble President of India, Shri Ram Nath Kovind.

Meetings of the Official Language Implementation Committee (OLIC) were organised in each quarter. Departmental Hindi meetings were also organized at the unit level.

Hindi Day and Hindi Month were celebrated to create a Hindi oriented environment in the Company. During the Hindi Month, apart from other activities, various competitions, like chakke pe chakka, Vartani Shodhan, Shabd Vyuhbhedan, Sahitya Ke Kharokhe Se etc. were organized. A ‘Nritya Natika’ was organised by the artistes of Bharatiya Kala Kendra on the life of Sri Ram. One more nritya natika based on the life of ‘Karn’ was also organised. A booklet of compilation of standard notings was circulated to the employees to help them in their day-to daywork in Hindi. Two books namely ‘Premchand ki 51 shreshth kahaniyan’ and ‘Bharatiya Veranganayen’ were also distributed to all the employees.

Under various Rajbhasha Incentive Schemes for the year 2017-18, 187 employees and 8 children of PFC employees were awarded.

31.0 RIGHT TO INFORMATION ACT

The Right to Information Act, 2005 is an Act of the Parliament of India to provide for settng out the practical regime of right to information for citizens. It also endeavors to promote transparency and accountability in the working of the Government, to contain corruption and to enhance people’s participation in the democratic process by making the citizens informed about the activities of the Government. Under the Act, it is believed that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable. The main objective of the Right to Information Act, 2005, is to ensure greater and more effective access to information and to maintain transparency and improve accountability in the working of the public departments both Central and State. The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the Public Authorities.

Your Company has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the Company. The Company has designated a Public Information Officer (PIO) and Appellate Authority at its registered office for effective implementation of the RTI Act. The relevant information/ disclosures are also made available on the official website (www.pfcindia.com) of the Company. During the FY 2017-18, all 94 applications received under the RTI Act, were duly processed and replied to. PFC has also complied with the directions of Central Information Commission (CIC) regarding filing of online Quarterly/Annual Return for the FY 2017-18.

Further, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated April 15, 2013 issued guidelines on the following:-

i) Suo-moto disclosure of more items under Section 4;

ii) Guidelines for digital publication of proactive disclosure under Section 4;

iii) Guidelines for certain clauses of Section 4(l)(b) to make disclosure more effective;

iv) Compliance mechanism for suomoto disclosure (proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid guidelines, your Company has placed the requisite information on the website of the Company.

Besides the above, your Company is also linked with the online RTI Portal of Government of India, Department of Personnel & Training (https://rtionline.gov.in), which enables citizens of India, to file RTI applications/first appeals online along with payment gateway. Payment can be made through internet banking of SBI & its associate banks, debit/credit cards of Master/Visa and RuPay cards.

32.0 GRIEVANCE REDRESSAL

Your Company has a Grievance Redressal System for dealing with grievances of the public at large. The systems are duly notified and the Nodal Officers ensure quick redressal of grievances within the permissible time frame. Your Company has also notified Citizen’s Charter to ensure transparency in its work activities. The Charter is available on the website of PFC to facilitate easy access.

33.0 DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

No significant and material orders were passed by any regulator or court ortribunal impacting the going concern status and Company’s operations during the FY 2017-18.

34.0 DETAILS OF PROCUREMENT FROM MSEs

The details of the procurements made from Micro and Small Enterprises (MSEs) during the FY 2017-18 and the targets for FY 2018-19 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 along with Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 is as under:

Sl. No.	Particulars	FY 2017-18 (Rs.)	Target for FY2018-19 (Rs.)
1	Total annual procurement (in value)	19.62 cr.	25.49 cr.
II	Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs)	7.33 cr.	5.1 cr.
III	Total value of goods and services procured from only MSEs owned by SC/ST	0.03 cr.	1.02 cr.
IV	% age of procurement from MSEs (including MSEs owned by SC/ST entrepreneurs) out of total procurement	37%	20%
V	% age of procurement from only MSEs owned by SC/ ST entrepreneurs out of total procurement	0.02%	4%
VI	Total number of vendor development programmes for MSEs	2 Half yearly (June/Feb)	2
VII	Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same	http://www.pfcindia.com/Home/VS/125

35.0 STATUTORY AND OTHER INFORMATION

Information required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, DPE’s Guidelines on Corporate Governance for CPSEs etc. is annexed to this report as follows:

Particulars	Annexure
Details of Debenture Trustees	A
Extract of Annual Return (MGT-9)	B
Annual Report on CSR Activities	C
Disclosure of particulars of contracts/arrangements entered into by the Company with related parties (AOC-2)	D
Management Discussion and Analysis Report	E
Integrated Reporting	F
Report on Corporate Governance	G
Business Responsibility Report	H
Secretarial Audit Report	1

36.0 ACKNOWLEDGEMENT

The Board of Directors acknowledge and place on record their appreciation for the guidance, co-operation and encouragement extended to the Company by the Government of India, Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India, Department of Public Enterprises, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level as well as various domestic and international financial institutions/banks, agencies etc.

The Board also conveys its gratitude to the shareholders, various International and Indian Banks/Multilateral agencies/financial Institutions/ credit rating agencies for the continued trust and for the confidence reposed by them in PFC. Your Directors would also like to convey their gratitude to the clients and customers for their unwavering trust and support.

The Company is also thankful to the Comptroller & Auditor General of India and the Statutory Auditors and Secretarial Auditor for their constructive suggestions and co-operation.

We would also like to place on record our appreciation for the untiring efforts and contributions made by the employees to ensure excellent all round performance of your Company.

For and on behalf of the Board of Directors

(Rajeev Sharma)

Place : New Delhi Chairman & Managing Director

Dated : 03.08.2018 DIN: 00973413

---

Mar 31, 2017

To

The Members,

Power Finance Corporation Limited

The Directors are pleased to present their 31^st Annual Report on the performance of your company for the financial year ended March 31, 2017 along with Audited Financial Statements, Auditor''s Report, Secretarial Auditor''s Report & review report by the Comptroller and Auditor General of India.

1.0 FINANCIAL AND OPERATIONAL HIGHLIGHTS

(a) PROFITABILITY

(Rs, in crore)

Particulars	2016-17	2015-16
Opening balance of Surplus	8898.37	8871.98
Profit After Tax for the year	2126.39	6113.48
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1) (viia) (c) of Income Tax Act,	(467.55)	(429.21)
1961
Transfer to Special Reserve created and maintained u/s 36(1) (viii) of Income Tax Act,	(1803.78)	(2004.16)
1961
Transfer to Debenture Redemption Reserve	(298.02)	(316.27)
Transfer to General Reserve	0.00	(1101.00)
Interim Dividend	(1320.04)	(1755.66)
Proposed Final Dividend	0.00	(79.20)
Corporate Dividend Tax on Interim Dividend	(268.73)	(356.74)
Proposed Corporate Dividend Tax	0.00	(16.12)
Transfer from Debenture Redemption Reserve on account of utilization	36.40	0.00
Adjustment made during the year	0.03	0.03
Transfers to Special Reserve under Income Tax Act, 1961	0.00	(28.76)
Closing Balance of Surplus	6903.07	8898.37

(b) LENDING OPERATIONS (excluding RAPDRP/IPDS)

(Rs, in crore)

Particulars	2016-17	2015-16
Sanction	100603	65042
Disbursement	62798	46588

(c) INTEGRATED POWER DEVELOPMENT SCHEME (IPDS) OPERATIONS (R-APDRP scheme subsumed)

(Rs, in crore)

Particulars	2016-17	Cumulative (up to MarchRs,17)
Sanctioned project cost
a. R-APDRP	(922)*	37956
b. IPDS	3018	26066
Disbursement
a. R-APDRP	1581	10187
b. IPDS	2333	2660

* Negative sanctions indicate loans cancelled

2.0 FINANCIAL PERFORMANCE

2.1 REVENUE

The total income achieved by your Company during the FY 2016-17 was Rs,27,018.57 crore as compared to Rs,27,564.31 crore in FY 2015-16. Operating income for the year is Rs,26,716.23 crore as compared to Rs,27,473.65 crore in the previous year.

2.2 EXPENSES

The total expenditure for the FY 2016-17 amounted to Rs,21,908.78 crore as against total expenditure of Rs,18,503.65 crore in FY 2015-16. Finance cost including bond issue expenses amounted to Rs,16,459.27 crore in FY 2016-17 as compared to Rs,16,507.25 crore in FY 2015-16. This constituted 75.13% of total expenses in FY 2016-17 as compared to 89.21% in FY 2015-16. Employee Benefit expenses and other expenses were 0.52% and 0.31% respectively of total expenses against 0.49% and

0.27% respectively in the previous year.

2.3 PROFIT

During the FY 2016-17, your Company earned a net profit of Rs,2,126.39 crore as compared to Rs,6,113.48 crore for the FY 2015-16.

Your Company had been in correspondence with RBI w.r.t. implementation of RBl''s restructuring norms. Based on the various correspondence exchanged, RBI on April 11, 2017 has directed the Company to apply RBI restructuring norms and allowed exemption till March 31, 2022 from borrower-wise classification of loans to state sector utilities which are downgraded to NPA due to no achievement of DCCO (Date of commencement of commercial operation) within RBI prescribed limits.

Your Company had been applying RBI restructuring norms on new generation loans sanctioned w.e.f. April 1, 2015 (Before April 1, 2015, MoP, Gol approved restructuring norms were applicable). After the receipt of RBI letter dated April 11, 2017, your Company has adopted RBI restructuring norms on remaining loans (other than loans to Transmission & Distribution, Renovation & Modernization and Life Extension projects and also the hydro projects in Himalayan region or affected by natural disasters). In generation loans sanctioned before March 31, 2015 and where restructuring has been done w.e.f. April 1, 2015, the asset classification has been given effect on March 31, 2017 as per RBI norms with consequent provisioning. The financial impact (decrease in PBT) on account to adoption of RBl''s restructuring norms (shifting from MoP approved norms) has amounted to Rs,3,954.55 crore.

Due to realignment with RBI Norms, Rs,59,304.01 crore of loan assets got downgraded, of which Rs,35,994.70 crore got downgraded to restructured and Rs,23,309.31 crore to NPAs. This has negatively impacted the profits by Rs,3,954.55 crore.

All the loan assets of Rs,59,304.01 crore that got affected belong to State Government or Central Sector PSUs and are generation projects. Further, all Government sector borrowers are servicing dues regularly with recovery rate of 100% in FY 2016-17 i.e. there were no dues as on March 31, 2017 (except Rs,4 crore which got cleared after March 31, 2017).

Details of the accounts that got impacted due to RBI Norms

A. Downgrade of loan assets to Restructured with 4.25% provisioning:-

a all restructured assets are of State Govt. or Central Power PSUs and all the loans are being serviced regularly (100% recovery rate)

a Rs,35,994.70 crore loan assets were downgraded from Standard to Restructured having a negative impact of Rs,1,403.79 crore on profit, of these restructured assets:-

Rs, 58% or Rs,20,890 crore : Already commissioned & will reverse in FY 2018-19 Rs, 31% or Rs,11,165 crore : Scheduled to commission in FY 2017-18 Rs, 10% or Rs,3,670 crore : Scheduled to commission in FY 2018-19 Rs, 1% or Rs,270 crore : Scheduled to commission in FY 2019-20

B. Downgrade of loan assets to NPAs with 10% provisioning:-

Rs,23,309.31 crore loan assets have been downgraded to NPAs having a negative impact of Rs,2,550.76 crore on profit before tax, of these NPAs:-

a 79% or Rs,18,504 crore will get an upgrade in FY 2017-18, of which:-Rs, 68% or Rs,15,883 crore COD already achieved Rs, 2% or Rs,525 crore COD to be achieved Rs, 9% or Rs,2,096 crore COD to be achieved a 19% or Rs,4,494 crore will upgrade in FY 2018-19 a 1% or Rs,312 crore will upgrade in FY 2019-20

All the above projects are State Govt. owned generation projects and are having FSAs & PPAs and are also being serviced regularly with 100% recovery.

The management does not see any stress in these loan assets of Rs,59,304.01 crore affected due to RBI norms and they are likely to turn standard over next few years. Further 79% of NPAs are likely to get upgraded in FY 2017-18 itself.

Further, as per track record, Government borrowers have never been declared NPA (Except Sikkim Power which is standard now & Ratnagiri which is a JV of two public sector undertakings namely NTPC and GAIL).

Although, your company has retrospectively applied RBI Norms on private sector generation projects also w.e.f April 1, 2015, no private account has been downgraded since the Company has been with in RBI Norms largely due to consortium funding of private generation projects.

The profit was also impacted this year due to reversal of Income of a Standard Asset of Rs,413.03 crore (RKM) and additional tax incidence of Rs,225 crore due to UDAY prepayments. Further, it may also be noted that without considering the impact of this reversal of Income and additional provisioning to align with provisioning policy of RBI, the profit of your Company would have been at Rs,6,400 crore.

Asset quality without the RBI impact

i. In fact without RBI impact, during the year 2016-17, your Company has actually decreased its NPAs as below: a 4 loan accounts of Rs,920 crore got upgraded to Standard

a 1 generation loan asset of Rs,442 crore has been downgraded to NPA

ii. With all this, NPAs ratios for the year stand at:

	With RBI Impact	Without RBI Impact
Gross NPAs	12.50%	3.01% (improved from 3.15% last year)
Net NPAs	10.55%	1.68% (improved from 2.55% last year)

iii. As far as balance Restructured Book is concerned, other than ones impacted due to RBI norms is Rs,19,445.92 crore.

a 26% or Rs,5,000 crore have already got commissioned, Rs,4,500 crore will be reversed in FY 2017-18 and Rs,500 crore in FY 2018-19. a 70% or Rs,13,500 crore of this restructured book is Scheduled COD in FY2017-18. a All this restructured book of Rs,19,445.92 crore is private sector.

i. Despite sectoral challenges, your Company has registered strong business growth during FY 2016-17 reflected in:-a Loan Sanctions growth by 55% to Rs,1,00,603 crore from Rs,65,042 crore.

a Disbursements growth by 35% to Rs,62,798 crore from Rs,46,588 crore.

a Despite UDAY prepayments of Rs,28,400 crore during the year, disbursements have increase to show a positive loan asset growth with Loan Assets increasing by 3% to Rs,2,45,525 crore from Rs,2,38,920 crore.

ii. Without considering RBI impact, PFC has also maintained interest spread at a healthy level of 3.00% and NIM of 4.50% for the year.

Resource Mobilization

i. Your Company raised about Rs,66,800 crore during the year, at a marginal cost of 7.47%.

ii. Capital adequacy ratio is maintained comfortably at 19.28%, with tier I capital of 16.20% against the RBI requirement of 15% and 10% tier I capital respectively.

iii. Your company has been allowed to raise 54EC Bonds which shall lead to further reduction in PFC''s cost of funds.

The financial performance of the Company based on Audited Annual Accounts for the FY 2016-17, without considering the impact of alignment to RBI Restructuring norms, duly certified by statutory auditors is enclosed herewith as ‘Annexure A'' (Page No. 48) for better understanding of above.

2.4 SHARE CAPITAL

As on March 31, 2017, the paid-up share capital of your Company was Rs,2,640.08 crore consisting of 2,64,00,81,408 equity shares of Rs,10 each of which the Government of India holds 66.35% of the paid-up capital. During FY 2016-17, the Company allotted 1,32,00,40,704 bonus equity shares to the existing equity shareholders in the ratio of 1:1.

2.5 DIVIDEND

Dividend of Rs,5 per equity share on paid up equity share capital of Rs,2,640.08 crore (after issue of bonus shares) was paid in FY 201617 as against total dividend of Rs,13.90 per equity share on paid up equity share capital of Rs,1,320.04 crore during FY 2015-16. The dividend pay-out for the FY 2016-17 amounts to Rs,1,320.04 crore representing 62.08% of the profits after tax as against a dividend pay-out of Rs,1,834.86 crore representing 30.01% of the profits after tax in the previous year.

In view of alignment with RBI''s restructuring norms, profits for the year has reduced to Rs,2,126.39 crore as compared to previous year. Keeping in view the reduced profitability and interim dividend already paid amounting to Rs,1,588.77 crore (including Corporate Dividend Tax), Board of Directors of your Company could not recommend declaration of further dividend. Accordingly, interim dividend @ 50% of equity share capital is considered as total dividend for the year.

3.0 OPERATIONAL PERFORMANCE

Your Company issued sanctions of Rs,1,00,603 crore during the FY 2016-17 to State, Central, Private and Joint Sector entities. An amount of Rs,62,798 crore was disbursed during the same period. With this as on March 31, 2017, the cumulative sanctions amount to Rs,6,05,864 crore and cumulative disbursements amount to Rs,4,55,355 crore.

In addition to above, projects worth Rs,3,018 crore were sanctioned under IPDS and Rs,28 crore under R-APDRP during FY 2016-17. An amount of Rs,2,333 crore was disbursed under IPDS and Rs,1,581 crore under R-APDRP during the same period. With this, cumulative approved project cost amounts to Rs,26,066 crore under IPDS and Rs,37,956 crore under R-APDRP and cumulative disbursements to utilities amount to Rs,2,660 crore under IPDS and Rs,10,187 crore under R-APDRP.

3.1 Financial Assistance (Excluding R-APDRP/IPDS)

3.1.1 Sector-wise

(Rs, in crore)

Category	2016-17		Cumulative up to March, 2017
	Sanctions	Disbursements	Sanctions	Disbursements
State Sector	82263	45757	441113	327802
Central Sector	4118	4659	44865	42068
Private Sector	11462	7652	92266	61137
Joint Sector	2760	4730	27620	24348
Total	100603	62798	605864	455355

3.1.2 Discipline-wise

(Rs, in crore)

Category	2011	5-17	Cumulative up to March, 2017
	Sanctions	Disbursements	Sanctions	Disbursements
Thermal Generation	25884	21451	288662	223530
Hydro Generation	8156	1327	53271	34058
Wind, Solar, Bagasse and Biomass	7021	2471	12298	6302
Renovation, Modernization and Updating of Thermal & Hydro Power Stations	733	518	13656	10247
Transmission	16666	3605	63542	32013
Distribution	5697	1580	32399	18069
Short Term Loan	10638	8754	59381	56916
Medium Term Loan	15749	14149	15962	14362
Transitional Finance	-	325	45532	42357
Buyers Line of Credit	800	736	3704	2645
Others*	9259	7882	17457	14856
Total	100603	62798	605864	455355

* Others include Funding of Regulatory Assets, Equipment Manufacturing Loan, Fuel Sources Development, Loan for Redemption of bond, Computerization, Project settlement, Purchase of power through PXI, Loan for Asset Acquisition, Loan Against Receivables, Studies, Bill Discounting, Pre Investment Fund, Decentralized Management, Technical Assistance Project etc.

3.2 Financial Assistance under IPDS/R-APDRP

(Rs, in crore)

Scheme	2016-17		Cumulative up to March'' 2017
	Approved project cost	Disbursements*	Approved project cost	Disbursements*
R-APDRP Part A (IT)	(28)#	604	5382		3397
Part A (SCADA)	0	51	1556		512
Part B	(894)	926	31018		6278
Total	(922)	1581	37956		10187
IPDS IPDS	3018	2333	26066		2660

* In addition to above, during FY 2016-17, Rs,47 crore were released by MoP for nodal agency fee/ enabling activities under IPDS, Rs,101 crore under Part-C including reimbursement of PFC''s actual expenditure of R-APDRP and Rs,304.70 crore has been disbursed by MoP directly to project implementing agencies of J&K under PMRP 2015. Cumulatively, MoP has released an amount of Rs,77crore for nodal agency fee/enabling activities under IPDS and Rs,364 crore under Part-C of R-APDRP.

# Approved Project cost R-APDRP(Part A(IT) is net cost (During FY 2016-17, Sanctions Rs,28 crore and cancelation of Rs,55.35 crore)

The MoU targets agreed with MoP under IPDS/ R-APDRP for FY 2016-17 and actual achievements during the year are tabulated below:

Sl. No	MoU Parameter	FY		Cumulative
		Target	Actual	Target	Actual
1	Part-A Completion -Go Live Cum. (Towns)	171	134	1393	1356
2	Award of Works in Towns under IPDS (Towns)	361	1203	361	1203
3	Monitoring of energy data through National Power Portal (NPP) (Feeders)	17374	17521	24248	24395
4	Completion of Part-B works (Towns)	358	358	783	783
5	Establishment of SCADA Control Centers (Towns)	6	7	51	52
6	Completion of SCADA system (Towns)	18	18	18	18

4.0 REALISATION

Your Company gives utmost priority to the realization of its dues towards principal, interest etc. Out of Rs,47,657.03 crore to be recovered towards principal, interest etc. under rupee term loans, bill discounting, working capital, lease financing, foreign currency loan, loans for equipment financing and guarantee fee, an amount of Rs,46,076.16 crore was actually realised representing an overall recovery rate of 96.68% (previous year 94.50%).

Provisioning on Non Performing Loan Assets has been increased by an amount of Rs,3,898.23 crore during the year. The Company has made a total provision of Rs,5,356.25 crore towards Non-Performing Assets (NPA) against Loan Assets in its Annual Accounts up to the year 2016-17. After making provision on NPA, the level of net Non-Performing Assets (NPA) has been recorded at Rs,25,345.96 crore which is 10.55% to the Total Net Loan Assets as on March 31, 2017.

In addition to above, your company has also made a provision of Rs,557.84 crore and Rs,2,356.23 crore on Standard Assets and Restructured Standard Assets respectively as on March 31, 2017, which would strengthen PFC''s balance sheet by providing a buffer provisioning and inspire higher levels of confidence amongst investors, regulators and other stakeholders in your company.

5.0 RESTRUCTERED LOANS

The details of loans restructured during the FY 2016-17 are as follows:

(Rs, in crore)

Particular		FY 2016-17	FY 2015-16
Standard Loans Restructured	No. of Borrowers	11	5
	Amount Outstanding	36,445.60	14192.68
Sub-Standard Loans Restructured	No. of Borrowers	-	-
	Amount Outstanding	-	-
Doubtful Loans Restructured	No. of Borrowers	-	-
	Amount Outstanding	-	-
Total	No. of Borrowers	11	5
	Amount Outstanding	36445.60	14192.68

Rs,735.67 crore is restructured subsequently in 2 borrowers.

6.0 BORROWINGS

6.1 DEPOSITS

Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2016-17.

6.2 BORROWINGS FROM DOMESTIC MARKET

The major borrowings from Domestic market are given as follows:-

(Rs, in crore)

S. No.	Source	Amount
1.	Commercial Paper	28,673.91
2.	Bonds -Private Placement (Taxable)	36,115.00
3.	Term Loans	2,000.00
	Total	66788.91

Further, Rs,5,000 crore were raised by issuing GoI fully serviced Bonds through private placement.

6.3 EXTERNAL BORROWINGS

During the FY 2016-17, your company did not raise any funds through external borrowing.

6.4 CASH CREDIT/ OVERDRAFT FACILITIES

For day to day operations, your company continued to follow prudent strategies for optimum utilization of fund based resources. To hedge any financial liquidity bottlenecks, ample credit lines to the tune of Rs,12,960 crore were sanctioned as on March 31, 2017 by various scheduled commercial banks to the company for short term funding which do not bear any commitment charges towards unutilized limits.

7.0 PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

7.1 CONSERVATION OF ENERGY/ TECHNOLOGY ABSORPTION

There are no significant particulars, relating to conservation of energy and technology absorption as your Company does not own any manufacturing facility.

7.2 FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign exchange outgo aggregating Rs,254.01 crore was made on account of debt servicing, financial & other charges and training expenses.

The Foreign exchange earnings for the FY 2016-17 were nil.

8.0 CREDIT RATING Domestic

Credit Ratings by Domestic credit rating agencies for domestic program of the Company during the FY 2016-17:

S. No.	Rating Agency	Long Term Rating	Short Term Rating
1.	CRISIL Ltd.	CRISIL AAA with stable outlook	CRISIL A1
2.	ICRA Ltd.	ICRA AAA	ICRA A1
3.	CARE Ltd.	CARE AAA	CARE A1

International

Credit Rating by International credit rating agencies:

S. No.	Rating Agency	Rating
1.	Fitch Ratings	BBB-/ Stable
2.	Standard & Poor (S&P)	BBB-/ Stable
3.	Moody''s	Baa3/ Positive

9.0 RISK MANAGEMENT

9.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity and interest rate and also monitors implementation of decisions taken in the ALCO meetings. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. Such analysis is made every month in yearly buckets for the next 10 years and is being used for critical decisions regarding the time, volume and maturity profile of the borrowings, creation of new assets and mix of assets and liabilities in terms of time period (short, medium and long-term). While the liquidity risk is being monitored with the help of liquidity gap analysis, the interest rate risk is managed by analysis of interest rate sensitivity gap statements, evaluation of Earning at Risk (EaR) on change of interest rate and creation of assets and liabilities with the mix of fixed and floating interest rates.

The maturity profile of major items of assets and liabilities as at March 31, 2017 is set out below:

(Rs, in crore)

Maturity pattern of certain items of Assets and Liabilities based on Audited Balance Sheet as on March 31, 2017
Particulars 2017-18		2018-19	2019-20	2020-21 2021-22		Beyond 2021-22 Total
Advances (Rupee Loan Assets)	32652	18241	20830	19371	18911	135260 245265
Foreign Currency Assets	5	0	0	0	0	255 260
Investments (Net of Provision)	1326	0	0	0	0	2265 3591
Foreign Currency Liabilities	1187	19	1641	2810	1836	951 8444
Borrowings (Rupee Liabilities)	26980	31907	26444	25562	22591	60931 194415

9.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forward, option, principal swap and forward rate agreements.

As on March 31, 2017, the total o/s foreign currency liabilities are USD 895 million, JPY 43,668 million and Euro 16 million. On an overall basis, the currency exchange rate risk is covered to the extent of 24% through hedging instruments and lending in foreign currency.

9.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

Your Company has put in place a mechanism to ensure that the risks are monitored carefully and managed efficiently. In this regard, your company had constituted the Risk Management Committee of Directors to monitor various risks, examine risk management policies & practices and initiate action for mitigation of risks arising in the operations. To facilitate this, the Company had put in place an Integrated Enterprise - Wide Risk Management Policy (IRM Policy).

The Company has identified 21 risks (8 quantifiable risks and 13 non quantifiable risks) which may have an impact on profitability/ revenues of the Company. In order to implement IRM policy, Risk Management Compliance Committee and a unit were constituted for monitoring/reporting of the identified risks.

10.0 ULTRA MEGA POWER PROJECTS (UMPPs) AND INDEPENDENT TRANSMISSION PROJECTS (ITPs)

10.1 UMPPs

Your Company has been designated as the ‘Nodal Agency'' by Ministry of Power (MoP), Government of India, for development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each. Fifteen such UMPPs have been envisaged to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Karnataka, Maharashtra (Munge), Tamil Nadu (Cheyyur), Odisha (Sundargarh), Bihar (Banka), Uttar Pradesh, 2 Additional UMPPs in Odisha and 2^nd UMPP in Tamil Nadu, Gujarat and Jharkhand (Deoghar).

UMPP is the initiative of Government of India with Ministry of Power as the ‘facilitator'' for the development of these UMPPs while Central Electricity Authority (CEA) is the ‘Technical Partner’. Till March 2017, nineteen Special Purpose Vehicles (SPVs) were established by the Company for UMPPs. Out of these, fourteen SPVs (operating SPVs) were incorporated to undertake preliminary site investigation activities necessary for conducting the bidding process for the projects. These SPVs shall be transferred to successful bidder(s) selected through Tariff Based International Competitive Bidding Process for implementation and operation. Five additional SPVs (Infra SPVs) were incorporated by PFC for holding the land for power plant and land for coal blocks in case of domestic coal based UMPPs (Odisha, Bihar, Deoghar and Tilaiya UMPPs) and for holding land for power plant/port in case of imported coal based UMPP (Cheyyur UMPP). These SPVs would be transferred to the respective procurers of power from these projects.

Out of these nineteen SPVs, four SPVs have been transferred to the successful bidders as indicated below:

S.No	Name of SPV	Successful Bidder	Date of Transfer
1	Coastal Gujarat Power Ltd.	The Tata Power Company Ltd.	April 22, 2007
2	Sasan Power Ltd.	Reliance Power Ltd.	August 7, 2007
3	Coastal Andhra Power Ltd.	Reliance Power Ltd.	January 29, 2008
4	Jharkhand Integrated Power Ltd.*	Reliance Power Ltd.	August 7, 2009

*Reliance Power Ltd./Jharkhand Integrated Power Limited (JIPL) has issued Termination notice of Power Purchase Agreement (PPA) for Tilaiya UMPP on 28^th April, 2015. Procurers have decided to accept the termination after which JIPL shall be taken over by Procurers and subsequently transferred to PFC for rebidding.

10.2 ITPs

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required etc.

Till March 2017, twenty five Special Purpose Vehicles (SPVs), two by PFC and other twenty three by PFC Consulting Limited were established as wholly owned subsidiaries for ITPs. Out of these twenty five SPVs, Bokaro-Kodarma Maithon Transmission Company Limited was liquidated in December 2010 and seventeen SPVs were transferred to the successful bidders till March 31, 2017.

During the year, Ministry of Power appointed PFC Consulting Limited as Bid Process Coordinator (BPC) for four new Independent Transmission Projects to be implemented through Tariff Based Competitive Bidding Process. PFC Consulting Limited incorporated four SPVs as its wholly owned subsidiaries for these projects and initiated bidding process as per following details:

S. No.	Project Name	SPV	Date of Incorporation	Present Status
1.	Transmission system for Ultra Mega Solar Park in Fatehgarh, Distt. Jaisalmer Rajasthan	Fatehgarh-Bhadla Transmission Ltd	30.12.2016	Bidding process is underway
2.	i) Additional 400kV feed to Goa ii) Additional System for Power Evacuation from Generation Projects pooled at Raigarh (Tamnar) Pool	Goa-Tamnar Transmission Project Ltd.	16.01.2017	Bidding process is underway.
3.	Connectivity and Long Term Access (LTA) to HPPCL 450 MW from Shongtong Karcham HEP	Shongtong Karcham-Wangtoo Transmission Ltd	13.01.2017	Bidding process is underway
4.	i) Connectivity System for Lanco Vidarbha Thermal Power Pvt. Ltd. (LVTPPL) ii) Inter State Transmission system strengthening in Chhatarpur area in Madhya Pradesh	Bijawar-Vidarbha Transmission Ltd.	13.01.2017	RFQ inputs awaited from CEA

During the year following five SPVs were transferred to successful bidders:

S.No.	SPV	Successful Bidder	Date of Transfer
1.	Odisha Generation Phase - II Transmission Limited	Sterlite Grid3 Ltd.	08.04.2016
2.	Warora-Kurnool Transmission Limited	Essel Infraprojects Ltd.	06.07.2016
3.	Gurgaon-Palwal Transmission Limited	Sterlite Grid 4 Ltd.	14.07.2016
4.	Medinipur-Jeerat Transmission Limited	Powergrid Corporation of India Ltd.	28.03.2017
5.	Kohima- Mariani Transmission Limited	Kalpatru Power transmission Ltd.	31.03.2017

The schemes Northern Region System Strengthening Scheme - XXXIII" (SPV- Ballabhgarh-GN Transmission Company Limited), and Northern Region System Strengthening Scheme-XXXV (SPV-Mohindergarh-Bhiwani Transmission Ltd) have been de-notified from tariff based bidding process. Process has been initiated to liquidate these two SPVs.

11.0 INTEGRATED POWER DEVELOPMENT SCHEME (with RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP) SUBSUMED IN IT)

In order to provide impetus to strengthening of power distribution sector in urban area, Ministry of Power, Government of India notified “Integrated Power Development Scheme" (IPDS) on December 3, 2014 with following components:

i) Strengthening of sub-transmission and distribution networks in the urban areas;

ii) Metering of distribution transformers/ feeders/ consumers in the urban areas.

iii) IT enablement of distribution sector and strengthening of distribution network under R-APDRP for 12^th and 13^th Plans by carrying forward the approved outlay for R-APDRP to IPDS.

Erstwhile, R-APDRP Scheme has been subsumed in newly launched IPDS scheme.

The components at (i) and (ii) above have an estimated outlay of Rs,32,612 crore including a budgetary support of Rs,25,354 crore from Government of India during the entire implementation period.

R-APDRP scheme cost of Rs,44,011 crore including a budgetary support of Rs,22,727 crore as already approved by CCEA will be carried forward to the new scheme of IPDS in addition to the outlay for components at (i) and (ii) indicated above.

You company, as nodal agency, has contributed significantly during the year in implementation of IPDS (with RAPDRP subsumed

IPDS

a Your company sanctioned projects of Rs,3,018 crore during FY 2016-17 and Rs,26,066 crore cumulatively under IPDS.

a Your company also disbursed Rs,2,333 crore during FY 2016-17 and Rs,2,660 crore cumulatively to the State Utilities for projects sanctioned under IPDS.

R-APDRP

a Your company sanctioned projects of Rs,28 crore during FY 2016-17 and Rs,37,956 crore cumulatively for 1,405 towns under Part-A IT, 72 towns under Part-A(SCADA) and 1228 towns under Part-B of R-APDRP.

a Your company also disbursed Rs,1,581 crore during FY 2016-17 and Rs,10,187 crore cumulatively to the State Utilities for projects sanctioned under R-APDRP.

Progress of implementation

IPDS

Under IPDS, Project Management Agency appointment has been done in 55 Utilities and TPA has been signed with 53 Utilities.

Out of NIT value of Rs,22,483 crore issued, projects worth Rs,13,809 crore has already been awarded in 223 out of 538 sanctioned circles and implementation has started in said circles. Further, your company also sanctioned Rs,2,233 crore as counterpart loans and disbursed an amount of Rs,57 crore under IPDS during the year.

Nodal agency is in process of appointing Third Party Concurrent Evaluation Agency (TPCEA) for concurrent evaluation of IPDS projects and for inspections on sample basis.

R-APDRP

With the measures taken so far, 20 out of 21 Data Centers, 19 out of 21 Disaster Recovery Centres and 40 out of 46 Customer Care Centers have been commissioned. Further, 1356 towns have been declared Go-Live in 28 States and declaration of Go-Live in balance 49 towns of J&K (15), Tamil Nadu (8), Puducherry (4), Odisha (12), Arunachal Pradesh (4), Mizoram (3) and Nagaland (3) is under progress. In 1356 Go-live towns, all business process software modules are functional and energy audit reports are being derived from the system.

During the year, your company disbursed an amount of Rs,457 crore and cumulatively Rs,1,877 crore as counterpart loan under Part-B of R-APDRP. Implementation work has commenced cumulatively in 1227 Part-B towns to strengthen & improve distribution system and reduce AT&C losses to 15% or below and system strengthening works have been cumulatively completed in 783 towns.

Cumulatively, 52 out of 72 sanctioned SCADA Control Centers have been commissioned and 18 out of 72 SCADA towns were completed.

The reduction in AT&C loss is already visible in 1024 R-APDRP towns (as per Post Go-Live reports) because of establishment of IT system and Part-B completion in various towns coupled with administrative and other measures. Thus, your company shall be contributing towards improving financial health of Distribution Utilities.

Other developments:

a Study of ten Discoms was conducted where AT&C losses reduced in last 5 years. The committee pin pointed various administrative, technical and commercial interventions adopted by these Utilities to reduce AT&C losses. The report was released by Secretary (Power), MoP in July, 2016.

a Urban Distribution Feeder Monitoring system is being developed as an integral part of National Power Portal (NPP). NIC along with PFC is implementing the project. The 11 kV Feeder data of 46 Discoms in 28 States has been received and integrated on NPP. As on March 31, 2017, transaction data of 24,395 Feeders uploaded by Discoms on NPP and master data of 28,878 Feeders taken on-board. Further, data from additional 6,752 Feeders are likely to be available on NPP in FY 2017-18.

a A system has been developed in-house for web-based project monitoring of IPDS/ R-APDRP. Discoms are uploading award details, execution details along with financial progress of the projects on the portal at regular intervals. MoP/ PFC is monitoring the progress of project implementation online through the system.

a Power System reliability data is being compiled in the form of SAIDI/SAIFI reports for R-APDRP towns. Utilities are being encouraged to take subsequent necessary administrative interventions for reduction of AT&C losses, based on Post Go Live reports (D1 to D7).

a Revamped IPDS Portal with Web analytics for Post Go-Live parameters: now include 7 Post Go-Live parameters viz. AT&C loss reduction, Consumer Grievance redressal, New Connection release, High loss feeders, power reliability indices (SAIFI/SAIDI), Feeder meters communication and e-payment report, along-with their graphical web analytics.

a PFC on behalf of Ministry of Power has engaged IPDS Consultants as Urban Vidyut Abhiyanta (UVA) purely on contractual basis, as per PFC policy. There are 42 UVAs engaged with PFC as on date. PFC has deployed these UVAs in Discoms to monitor IPDS project implementation.

a PFC on behalf of Ministry of Power has developed a Mobile App URJA (Urban Jyoti Abhiyaan) for Urban Power Distribution Sector to enhance Consumer Connect, Project Monitoring of Urban Distribution Sector projects etc. The APP also depicts daily outage schedules in various Utilities. The web version of URJA is also available at www.urjaindia.co.in. The App won its first laurel in form of an award for ‘Most efficient use of Information and Communications Technology (ICT) for Consumer Connect'' at 3^rd eLets PSU Summit. Your company was also honoured with the prestigious “One Globe Award for Excellence in Enabling a Mobile Economy" for the URJA App at the 6^th Annual One Globe Forum.

a Capacity building / training of Utility personnel were re-launched under IPDS with the first training programme on the theme “Efficiency Improvement Measures in Distribution System" organized at Power Management Institute (PMI) of NTPC.

12.0 INITIATIVES TOWARDS REFORMS AND RESTRUCTURING Categorization of Utilities

For purposes of funding, your company classifies State Power Generation and Transmission Utilities into A , A , A, B and C categories. The categorization (biannually) of State Power Generation and Transmission utilities is arrived based on the evaluation of utility''s performance against specific parameters covering operational & financial performance including regulatory environment, generation of audited accounts, etc. With regards to State Power Distribution utilities (including SEBs/utilities with integrated operations), your company''s categorization policy provides for adoption of MoP''s Integrated Ratings by aligning such ratings/ grading with PFC''s standard categories of A , A, B and C. The categorization enables your company to determine credit exposure limits and pricing of loans to the state power utilities. As on 3^rd August, 2017, 106 utilities were categorized, 4 as A , 31 as “A ", 35 as “A", 23 as “B" and 13 as “C".

Quarterly and Annual Report of State Power Utilities

During the year, your Company has undertaken the initiative of revising its existing Quarterly Performance Research report to focus on the distribution sector and to make the report more exhaustive and informative. The information/formats of the new revised Quarterly Report were developed after discussions with various stakeholders and the consultants i.e. CARE & ICRA.

The data for new quarterly report is being collected from 40 distribution utilities covered under the Annual Integrated Rating exercise.

The first edition of the revised report with data for July - September 2015 vis-a-vis April - June 2015 and FY 2014-15 was forwarded to MoP in June 2016. The latest edition of the Report with data for Q4 FY 2016-17 was submitted in June 2017.

PFC also publishes the Report on the Performance of State Power Utilities (SPUs) on an annual basis. The 13^th edition of the Report for the years 2012-13 to 2014-15 covering 100 utilities for the year 2014-15 was submitted to MoP in July 2016. The 14^th edition of the Report for the years 2013-14 to 2015-16 is under compilation. The Report is a comprehensive study of the performance of the State Power Utilities on key financial and operational parameters. The Report contains key performance parameters e.g. profitability, gap between average cost of supply and average realization (Rs./kwh), net worth, capital employed, receivables, payables, capacity (MW), generation (Mkwh), AT&C losses (%) etc. and consumption pattern of the sector at utility, state, regional and national level.

13.0 POLICY INITIATIVES

Your Company constantly reviews and revises its lending policies/guidelines/products to suitably align these with market requirements as also with its corporate objectives.

During the FY 2016-17, your Company reviewed its policies/guidelines/products with respect to Short Term Loan and Debt Refinancing with a view to make the same more market oriented and borrower friendly.

During the year, interest rates and financial charges/fees in respect of term loan and short term loan were reviewed and revised to ensure sustainability and aligning with the market.

In spite of growing competition in the market as well as concerns on interest rates, your company could balance its objectives of business growth and profitability.

14.0 RENEWABLE ENERGY AND CLEAN DEVELOPMENT MECHANISM

Power is one of the most important components of infrastructure, critical to sustain economic growth. The Indian power sector is undergoing a significant change that is redefining the industry outlook. Sustained economic growth continues to drive power demand in India. The Government of India''s focus to attain ‘Power For All'' has accelerated capacity addition in the country. Over the years, renewable energy sector in India has emerged as a significant player in the grid connected power generation capacity. It supports the government agenda of sustainable growth, while, emerging as an integral part of the solution to meet the nation''s energy needs and an essential player for energy access. It has been realized that renewable energy has to play a much deeper role in achieving energy security in the years ahead and be an integral part of the energy planning process.

Renewable energy sector landscape in India has, during the last few years, witnessed tremendous changes in the policy framework with accelerated and ambitious plans to increase the contribution of solar energy. The Government of India has set a target to achieve 175 GW installed capacity by 2022. This includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power.

The increased focus of GoI towards renewable energy has created attractive opportunities for investments in this sector.

In addition to above, during FY 2016-17, PFC issued sanctions of Rs,8,156 crore to Hydro Generation and disbursed Rs,1,327 crore. Further, PFC sanctioned Rs,7,021 crore to Wind, Solar, Bagasse and Biomass related projects and disbursed an amount of Rs,2471 crore during the same period.

15.0 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT, 2013

Your Company being a Non-Banking Financial Company engaged in business of financing companies, its loan operations are exempt from the relevant provisions of Section 186 of the Companies Act, 2013.

The particulars of investments during the FY 2016-17 are as follows:-

a During the FY 2015-16, PFC has invested Rs,124 crore in Energy Efficiency Services Limited (EESL), a Joint Venture Company of PFC, REC, NTPC and POWERGRID. Out of which, Rs,99 crore is towards Share Application Money pending for allotment. The application money pending for allotment was fully allotted to PFC during FY 2016-17 on April 25, 2016.

a During the year, the Company has subscribed to 26,05,42,051 fully paid equity shares of NHPC Limited of face value of Rs,10 per share under Offer for Sale by GoI. The shares have been subscribed at a cost of Rs,21.78 per share including brokerage and other statutory charges aggregating to Rs,567.50 crore.

In case of a borrower Shree Maheshwar Hydel Power Corporation Limited (SMHPCL), which was classified as a doubtful loan asset, the Company invoked the pledge of equity shares. Accordingly, 6,57,46,779 number of equity shares of Rs,10 each pledged by the promoters have been transferred to the Company on June 1, 2016. These equity shares have been recognized at a value of Rs,1.

Further, 6,61,00,000 number of equity shares of Rs,10 each have been allotted to the Company on June 1, 2016 on partial conversion of sub-debt loan given earlier to the extent of Rs,66.10 crore. A provision for diminution in value of these shares of Rs,66.10 crore has been made as per Prudential Norms of RBI.

Further, in case of another borrower GMR Chhattisgarh Energy Ltd. (GCEL), the Company has converted its debt into equity under approved Strategic Debt Restructuring (SDR) package and 27,50,00,000 number of equity shares of Rs,10 each have been allotted to the Company on February 23, 2017. As at March 31, 2017, provision for diminution in value of investment works out to Rs,81.95 crore. Company has opted to distribute the provision over four calendar quarters in accordance with RBI''s SDR norms. Accordingly, a provision for diminution in value of investment of Rs,20.49 crore has been provided in the last quarter of the current year. The balance diminution in value of investment of Rs,61.46 crore shall be provided in FY 2017-18.

16.0 SUBSIDIARIES

To focus on additional business in the areas of consultancy, renewable energy, consortium lending, equity financing, etc. following wholly owned subsidiaries have been incorporated by your Company, as on date:

(i) PFC Consulting Limited

(ii) PFC Green Energy Limited

(iii) PFC Capital Advisory Services Limited

(iv) Power Equity Capital Advisors Private Limited

The Board of Directors of the Company have approved the Merger of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL). It is envisaged that the area of operations of PFCCAS (Debt Syndication, Debenture Trustee, Strategy/ Financial Advisory) can complement the area of operations of PFCCL (Reform Advisory, Tariff Bid Process Advisory, Communication Services etc.) providing synergy in the merger of PFCCL and PFCCAS.

Further, the Board of Directors of PFC Green Energy Limited (PFC GEL) and PFC accorded its in-principal approval for merger of PFC GEL with PFC in their respective meetings held on July 18, 2016 and August 9, 2016 respectively.

The process of mergers is under way.

Further, your Company is designated by Ministry of Power, Government of India as the ‘nodal agency'' for facilitating development of Ultra Mega Power Projects and its wholly owned subsidiary i.e. PFC Consulting Limited is the ‘Bid Process Coordinator'' for Independent transmission projects. As on March 31, 2017, for the said purpose, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiaries of the Company:

i) Chhattisgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.)

ii) Coastal Karnataka Power Limited

iii) Coastal Maharashtra Mega Power Limited

iv) Coastal Tamil Nadu Power Limited

v) Orissa Integrated Power Limited

vi) Sakhigopal Integrated Power Company Limited

vii) Ghogarpalli Integrated Power Company Limited

viii) Tatiya Andhra Mega Power Limited

ix) Deoghar Mega Power Limited

x) Cheyyur Infra Limited

xi) Odisha Infrapower Limited

xii) Deoghar Infra Limited

xiii) Bihar Infrapower Limited

xiv) Bihar Mega Power Limited

xv) Jharkhand Infrapower Limited

xvi) Ballabhgarh-GN Transmission Company Limited*

xvii) Tanda Transmission Company Limited *

xviii) Mohindergarh-Bhiwani Transmission Limited*

xix) South-Central East Delhi Power Transmission Limited*

xx) Fatehgarh-Bhadla Transmission Limited*

xxi) Bijawar-Vidarbha Transmission Limited*

xxii) Shongtong Karcham-Wangtoo Transmission Limited*

xxiii) Goa-Tamnar Transmission Project Limited*

'' wholly owned subsidiaries of PFC Consulting Limited

16.1 PFC CONSULTING LIMITED

Your Company had been offering consultancy support to the Power Sector through its Consultancy Services Group (CSG) since October 1999. Leveraging the experience of the CSG Unit and appreciating the growth in the services offered by the Group and recognizing the potential of such services in reforming Power Sector, your Company decided to organize these services as a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary on March 25, 2008, in order to give it requisite autonomy in functions and flexibility in operations. PFCCL is mandated to promote, organize and carry out consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs and ITPs. PFCCL has been nominated as the ‘Bid Process Coordinator'' for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, GoI.

The Services offered by PFCCL are broadly in the following areas:

a Advisory services on issues emanating from implementation of Electricity Act 2003 like reform, restructuring, regulatory etc.

a Bid process management including Tariff based competitive bidding as per the Guidelines issued by MoP, GoI for various segments of Power Sector

a Project-structuring/ planning/ development/ specific studies, implementation monitoring, efficiency improvement projects a Human Resource Management Plans a Organization performance improvement plans a Contract related services for power sector

a Financial management, resource mobilization, accounting systems etc. a Coal block development

a Renewable and non-conventional energy project development including “Waste to Energy" Projects a Advisory Services for Distribution system Improvement Schemes a Project Management Activities under IPDS and DDUGJY Schemes a Detailed Project Reports and selection of Implementation Agency for Smart Grid a Bidding under DEEP Portal for procurement of Power

Till date, consultancy services have been rendered to 57 clients spread across 23 States/UTs by PFCCL. The total number of assignments undertaken as on date is 104.

Further, during the FY 2016-17, the total income of PFCCL was Rs,120.67 crore vis-a-vis Rs,73.55 crore in the previous FY 2015-16 and the net profit earned by PFCCL during FY 2016-17 was Rs,57.85 crore as against the corresponding net profit of Rs,37.06 crore last fiscal.

16.2 PFC GREEN ENERGY LIMITED

PFC Green Energy Limited (PFC GEL) was incorporated on March 30, 2011 as a wholly owned subsidiary of the Company to extend finance and financial services to promote green (renewable and non-conventional) sources of energy. As on March 31, 2017, PFC GEL had an authorized share capital of Rs,1200 crore and paid up share capital of Rs,300 crore comprising of Rs,10 crore equity shares of Rs,10 each and Rs,20 crore Fully Convertible Preference Shares of Rs,10 each.

The Board of Directors of PFC GEL and PFC accorded its in-principal approval for merger of PFC GEL with PFC in their respective meetings held on July 18, 2016 and August 9, 2016 respectively.

PFC GEL continues to accomplish a healthy growth during the FY 2016-17. The total revenue from operation grew by 67% from Rs,38.71 crore to Rs,64.79 crore, profit before tax(PBT) grew by 31% from Rs,32.95 crore to Rs,43.14 crore and profit after tax (PAT) grew by 33% from Rs,22.60 crore to Rs,30.15 crore in FY 2016-17.

Considering the proposed merger of the company with its holding company, it has disbursed Rs,283.51 crore to various ongoing renewable energy projects already sanctioned by it. As on March 31, 2017, the company had a loan portfolio of Rs,629.60 crore.

During FY 2016-17, PFC GEL contributed Rs,53.85 lakh towards ‘Swachh Bharat Kosh'' under its Corporate Social Responsibility.

16.3 PFC CAPITAL ADVISORY SERVICES LIMITED

PFC Capital Advisory Services Limited (PFCCAS) was incorporated as a wholly owned subsidiary of your company on July 18, 2011 to focus on sectoral requirements for financial advisory services, including syndication services. The authorized capital of the Company is Rs,1 crore and the paid up share capital of the Company is Rs,0.10 crore.

During the year, income from operations of PFCCAS was Rs,1.53 crore while net profit after tax of the company is Rs,1.06 crore.

Further, Board of Directors of PFC approved merger of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL) subject to regulatory and other compliances in line with the recommendation of the Board of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL).

16.4 POWER EQUITY CAPITAL ADVISORS PRIVATE LIMITED

Power Equity Capital Advisors Private Limited (PECAP), the wholly owned subsidiary of your company has not been able to transact any business due to lack of business proposals even after its acquisition by PFC and accordingly approval has been sought from MoP for dissolving and getting the name of the Company struck off from the records of Registrar of Companies, which is under consideration of MoP, GoI.

17.0 JOINT VENTURES, ASSOCIATE COMPANIES AND OTHER MAJOR INVESTMENTS (as on March 31, 2017)

17.1 ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad. It is the main implementation arms of the National Mission on Enhanced Energy Efficiency (NMEEE). Your Company has subscribed to 9,90,00,000 fully paid equity shares of EESL of face value of Rs,10 per share as on March 31, 2016 and the same have been allotted on April 25, 2016. As on March 31, 2017, the stake of your company was 31.71% in EESL. EESL has reported profit after tax of Rs, 51.86 crore (Previous year: Rs,37.08 crore) for FY 2016-17.

17.2 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested Rs,12 crore in PTC which is 4.05% of PTC''s total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country. During the FY 2016-17, PTC maintained its leadership position with trading volumes of 48.32 BUs. PTC has reported profit after tax of Rs,290.87 crore for the year.

17.3 POWER EXCHANGE INDIA LIMITED

Power Exchange India Limited (PXIL) is India''s first institutionally promoted Power Exchange that provides innovative and credible solutions to transform the Indian Power Markets. PXIL, provides nation-wide, electronic Exchange for trading of power and handles power trading and transmission clearance, simultaneously, it provides transparent, neutral and efficient electronic platform. PXIL offers various products such as Day Ahead, Day Ahead Contingency, Any Day, Intra Day and Weekly Contracts. PXIL provides trading platform for Renewable Energy Certificates. PFC has made an equity investment of Rs,3.22 crore in exchange (being 6.64% of PXIL’s paid up equity share capital as on March 31, 2017). Due to erosion of Net Worth of PXIL, PFC has provided the entire investment amount of Rs,3.22 crore as provision for diminution in the value of investment in its books.

17.4 SHREE MAHESHWAR HYDEL POWER CORPORATION LIMITED

In June, 2016, PFC, being one of the lenders of Shree Maheshwar Hydel Power Corporation Limited (SMHPCL) has enforced its legal rights as per the Pledge deed dated November 30, 2006 as amended from time to time and subordinate loan agreement dated September 29, 2006, by invoking the shares pledged by the promoters of SMHPCL in favor of PFC and by partial converting sub debt loan into equity shares. Upon invocation of pledged shares and partial conversion of sub-debt, the total shareholding of PFC in SMHPCL stands 13,18,46,779 Equity Shares of Rs,10 each representing 23.32% of paid up equity share capital of SMHPCL.

17.5 NATIONAL POWER EXCHANGE LIMITED

In order to promote short term trading through power exchange, PFC had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. PFC has contributed Rs,2.19 crore (being 16.66% of paid up equity up to March 31, 2016) towards equity contribution in NPEX. NTPC and NHPC had expressed their intention to exit from JV Company and based on the recommendations of the Group of Promoters (GoP) of NPEX in March 2014, the Board of Directors of NPEX had decided for voluntary winding up of NPEX. The voluntary winding up procedure with respect to the NPEX has been completed and the liquidator has distributed the surplus funds to the promoters. Accordingly, PFC has received an amount Rs,1.21 crore from liquidation of NPEX on July

21, 2016. The company was dissolved w.e.f March 31, 2017 by the order of The High Court of Delhi issued on May 26, 2017. The balance amount of investment of Rs,0.98 crore has been written off as loss on the investment in the books of PFC in FY 2016-17.

18.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ‘Excellent'' Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY 2015-16, your company was accorded ‘Excellent rating. The rating for FY 2016-17 is still awaited.

19.0 PRESIDENTIAL DIRECTIVES

The Company has not received any Presidential directives during last three years.

20.0 CORPORATE SOCIAL RESPONSIBILITY

The aim of your company''s Corporate Social Responsibility and Sustainability Policy (CSR and Sustainability Policy) is to ensure that your Company becomes a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfillment of Power and Energy needs of the society.

In line with Section 135 of the Companies Act, 2013, at least 2% of the average Stand-alone Net Profit Before Tax (PBT) of the company earned during the three immediately preceding financial years is allocated every financial year for CSR activities.

PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. To oversee the activities of CSR, PFC has in place a Board level CSR&SD Committee of Directors headed by an Independent Director.

During the year, PFC implemented wide range of activities in the field of Solar energy, Skill development, Sanitation, Health, Environment sustainability and supported the differently abled.

For the FY 2016-17, the Board had approved the CSR budget of Rs,166.15 crore based on 2% of the average stand-alone Profit Before Tax as per Companies Act 2013 excluding dividend received from other companies covered under and complying with Section 135 of the Act in line with Rule 2(f) (ii) of Companies (CSR Policy) Rules 2014.

The CSR Report under Companies (CSR Policy), Rules is annexed herewith.

21.0 HRD INITIATIVES DEVELOPMENT & TRAINING

During the year 2016-17, the focus of conducting in house programs was maintained in order to ensure specific skill development in line with the corporate goals. Customized programs like training on Indian Accounting Standards, Financial Modeling & Credit Analysis, Private Equity, Non-Performing Assets Management, Early Warning Signals & Restructuring of Stressed Accounts, Induction program, Training for promotion, Health Management, Personality Development, CDA Rules & Filing of Property Return etc. were organized along with other need-based programs.

As on March 31, 2017, 21 number of in-house training programs were organized by the Company for its employees. A total of 1947 man-days were achieved through conducting various in-house programs and by sponsoring PFC employees to the programs organized by external training agencies.

RECREATIONAL ACTIVITIES

Your Company is committed towards holistic personality development of its employees through facilities like Gymnasium, Library, Table Tennis and participation of employees in various sports, cultural and literary activities.

As a member of Power Sports Control Board, your company has been organizing an Inter-CPSU Tournament every year for the employees of PSCB member organizations. PFC organized 16^th Inter-CPSU Cricket Tournament under the aegis of PSCB. Employees of PFC exhibit an enthusiastic participation in various Inter-CPSU sports tournaments such as Cricket, Badminton, Table Tennis, Carrom, Chess, etc. organized by the PSCB member organizations. The participation in these sports results in a greater level of team spirit and fitness among the employees.

Employees of PFC also participate in various Inter-PSU competitions organized at Delhi-NCR level by Nagar Rajbhasha Karyanvayan Samiti (NARAKAS) every year such as Debate, Poetry, Shrut Lekhan & General Hindi Knowledge competitions. PFC also organizes Inter-PSU competitions under the aegis of NARAKAS. Employees also explore their love for writing, photography, etc. through active engagement with ‘Urja Deepti'' - a quarterly paper magazine of PFC. Entries selected for the magazine are also rewarded in the form of cash incentive to the employees to encourage them for frequent engagement with the recreational activities and promotion of the official language.

PFC has organized one hour session of yoga classes for 20 days to ensure healthy lifestyle of its employees. Training program on ‘Stress Management & Team Building'' was also organized during the year for its employees.

In addition to the above, many cultural and literary activities like speech, debate, pictorial theme representation, nukkad natak, etc. were organized in the Company to celebrate various special occasions during last one year.

HUMAN RESOURCE MANAGEMENT

Your company has put in place effective human resource acquisition and maintenance function, which is benchmarked with best corporate practices designed to meet the organizational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity.

The Industrial Relations within the company has been very cordial and harmonious with the employees committing themselves entirely to the objectives of the company. There was no mandays lost during the year under review. The attrition rate for the period from April 1, 2016 to March 31, 2017 comes out to 0.21%.

WELFARE MEASURES

Your Company follows good management practices. The employees of the company have access to the Top Management officials thereby contributing effectively in the management and growth of the company.

Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which lead to a healthy workforce.

RESERVATION OF POSTS FOR SC/ST/OBC/EX-SERVICEMEN AND PHYSICALLY HANDICAPPED PERSONS IN THE SERVICES OF COMPANY

Group	Total Employees as on March 31, 2017 SCs	SC%	STs	ST%	OBC	OBC%
A	388 67	17.27%	20	5.16%	68	17.53%
B	92 15	16.30%	8	8.70%	12	13.04%
C	17 3	17.65%	1	5.88%	3	17.65%
D	2 0	0.00%	0	0.00%	1	33.33%
Total	499 85	17.03%	29	5.81%	84	16.83%

PFC as a part of its social responsibility makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions. A separate Liaison officer has been appointed to look into the matter of reservations.

REPRESENTATION OF WOMEN EMPLOYEES

Your Company has women in important and critical functional areas. Women representations have gone across hierarchical levels. The Company provides equal growth opportunities for the women in line with Govt. of India philosophy on the subject. The women are adequately represented, with 20.04% of the total work force.

Group	Total Employees as on March 31, 2017	Number of Women Employees	Percentage of overall staff strength
A	388	63	16.23%
B	92	34	36.96%
C	17	3	17.65%
D	2	0	0.00%
Total	499	100	20.04%

PFC as part of its social responsibility makes all efforts to ensure compliance of the Directives and guidelines issued by the Government of India from time to time pertaining to the welfare of female employees. A committee to examine the cases related to sexual harassment is in place. During the FY 2016-17, no case has been filed under the “Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act 2013".

22.0 DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

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

(b) such accounting policies have been selected, applied consistently and judgments & estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the accounts have been prepared on a going concern basis;

(e) the company has laid down internal financial controls to be followed and that such internal financial controls are adequate and are operating effectively.

(f) the company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

23.0 STATUTORY AUDITORS

M/s. M.K. Aggarwal & Co., Chartered Accountants and M/s K. B. Chandna & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for the FY 2016-17 by the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2016-17 and have given their report without any qualification. The copy of the audit report is annexed herewith.

SECRETARIAL AUDITOR

M/s. Agarwal S. & Associates, Company Secretaries was appointed as the Secretarial Auditor of the Company for the FY 2016-17 by

The observations of the Secretarial Auditor and reply of the management on the observations, for the FY 2016-17 along with copy of the audit report is annexed herewith.

24.0 COMMENTS OF COMPTROLLER & AUDITOR GENERAL OF INDIA

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors'' report. The copy of the report of C&AG is annexed herewith.

25.0 DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Internal Auditor of the Company i.e. M/s A.R. & Co., Chartered Accountants quarterly certifies on the adequacy of internal financial controls with reference to the financial statements of the Company.

The Statutory Auditor of the Company i.e. M/s. M.K. Aggarwal & Co., Chartered Accountants and M/s K. B. Chandna & Co., Chartered Accountants have also given their Report on the Internal Financial Controls stating that the Company has, in all material respects, an adequate internal financial control system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control as per Guidance Note of the Institute of Chartered Accountants of India.

26.0 PARTICULARS OF REMUNERATION U/S 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5 OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

As per the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the ratio of remuneration of each director to the median employees'' remuneration and details of employees receiving remuneration exceeding the limits as prescribed from time to time in the Board''s Report.

However, as per notification dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of Section 197 of the Companies Act, 2013. Therefore, such particulars have not been included as part of Board''s Report.

27.0 DEBENTURE TRUSTEES

The details of Debenture Trustees appointed by the company for the different series of Bonds issued by your company are annexed herewith.

28.0 STATUS OF UNCLAIMED AMOUNTS Bonds

The total unclaimed and unpaid amount as on March 31, 2017 was Rs,13.78 crore (principal and interest). Further, an amount of Rs,0.56 crore (principal and interest) remains unpaid pending submission of succession certificate by the claimants. The unpaid/unclaimed amount of bonds transferred to 1EPF during FY 2016-17 is Rs,4.30 crore.

Equity

The unclaimed balance amount of dividend (equity) and application money received and due for refund (FPO) as on March 31, 2017 was Rs,1.47 crore and Rs,0.038 crore respectively. The unclaimed amount of Rs,28,56,105 become due for transfer to Investor Education and Protection Fund (1EPF) during the year ended March 31, 2017. Of this, an amount of Rs,19,53,354 was deposited in 1EPF during FY 2016-17 and the balance amount of Rs,9,02,751 was deposited in 1EPF on April 3, 2017 vide DD dated March 31, 2017. The detail of investors'' (whose refund is due) is available on PFC''s website and 1EPF website of Ministry of Corporate Affairs.

29.0 EMPLOYEES STOCK OPTIONS PLAN (ESOP)

The Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises, Govt. of India, through its directions on pay revision had made it mandatory for all the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees in the form of ESOPs. In accordance with these directions of the DPE, the Board of Directors of your company had formulated an Employee Stock Option Plan titled as ‘PFC-ESOP 2010’. Shareholders had also approved this Employee Stock Option Plan in their 24^th Annual General Meeting held on September 21, 2010. Subsequently, the Board of Directors had decided that 25% of the PRP of the employees should be given in the form of ESOPs. However, later in view of a clarification dated July 30, 2012 issued by DPE, this PRP based Stock Option Plan has been made optional. The details regarding ESOP are available on Company website i.e. www.pfcindia.com. The above scheme has been implemented in the Company as per the applicable Rules/Regulations/DPE guidelines and clarifications. A certificate in this regard by statutory auditors will be placed at the ensuing AGM of the Company.

Further, as on date, there is no option pending for grant or exercise under the ‘PFC-ESOP 2010’.

Further no option was granted/exercised to/by any employee during the year 2016-17.

30.0 VIGILANCE

During the FY 2016-17, the Vigilance Unit functioned as an effective tool of management, the thrust being on preventive vigilance. This aspect was emphasized by conducting periodic and surprise inspections of various units and by issuing effective guidelines to streamline systems with the aim of eliminating gaps and ensuring transparency in day-to-day operations. 1nformation technology was used as an effective tool for providing on-line services to all the stakeholders and to enhance organizational efficiency. Vigilance Unit also undertook the review of Operational Manuals of various units of the Company. The detailed investigation was carried out in respect of registered complaints during this period.

In accordance with directives of CVC, Vigilance Awareness week was observed from October 31, 2016 to November 5, 2016 in the head office and regional offices of the Company.

In compliance of the instructions of CVC, the sensitive posts in the Company were identified afresh and the concerned officers were rotated. Agreed lists for the year 2016 were finalized in respect of corporate office at Delhi and regional offices at Mumbai and Chennai in consultation with the CB1. Prescribed periodical statistical returns were sent to CVC, CB1, MoP on time.

Thus, the Vigilance Unit continuously worked for systemic improvements with a view to bring about greater transparency, objectivity and accountability thereby contributing to the overall efficiency and effectiveness of the organization.

31.0 OFFICIAL LANGUAGE

Your Company was awarded the First Prize in Public Sector Category in Region ‘A'' of ‘Rajbhasha Kirti Puraskar'' for the year 2015-16 by Rajbhasha Vibhag, Ministry of Home Affairs for its concerted efforts made in implementation of Official Language Policy. PFC also received ‘Rajbhasha Shield'' third prize for the year 2014-15 by Ministry of Power.

Meetings of the Official Language Implementation Committee (OL1C) were organized in each quarter. Departmental Hindi meetings were also organized at the unit level. Several Sangoshties and/or talks in Hindi on various topics like, ‘Financial Planning, ‘Rashtriya Pension Scheme, ‘Hriday Rog, ‘Ahimsa, ‘Bharat ka Samvidhan'' were organized in Hindi wherein various officials of PFC participated. On the occasion of 1nternational Yoga Day on June 21, 2016, CMD addressed the employees in Hindi highlighting the importance and benefits of Yoga.

Hindi Day and Hindi Month were celebrated to create a Hindi oriented environment in the Company. During the Hindi Month, apart from other activities, various competitions, like Vartani Shodhan, ‘Tasveer kya kahati hai, ‘Boond-Boond Se Sagar Banta'' and ‘Bhanumati ka Pitara'' were organized. A Paricharcha under the aegis of TOL1C was also organized wherein officials of various organizations participated. Four Hindi workshops were organized for the employees of the Company with a view to improve their efficiency in doing their day to day official work in Hindi. The Annual Report of the Company was published in bilingual form.

32.0 RIGHT TO INFORMATION ACT

The Right to Information Act, 2005 has been enacted by the Parliament to provide for right to information for citizens to secure access to information under the control of public authorities. The basic object of the Right to 1nformation Act is to empower the citizens, promote transparency and accountability in the working of the Government, contain corruption, and make our democracy work for the people in real sense. It goes without saying that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable. The Act is a big step towards making the citizens informed about the activities of the Government.

PFC is a Public Authority under the RT1 Act 2005. 1n compliance with the requirements of the Right to 1nformation Act 2005, your Company has put in place a web based RT1 workflow system and a comprehensive mechanism for handling RT1 applications.

The Company has designated a Public 1nformation Officer (P1O) and Appellate Authority at its registered office for effective implementation of the RT1 Act.

During the FY 2016-17, all 120 applications received under the RT1 Act, were duly processed and replied to. 1n compliance with Section 4 of the RT1 Act, requisite disclosures have been updated and hosted on PFC website. Your company has also complied with the directions of Central 1nformation Commission (C1C) regarding filing of online Quarterly/Annual Return for the FY 2016-17.

SUO-MOTO DISCLOSURES UNDER SECTION 4 OF THE RTI ACT 2005

1n order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RT1 Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-1R dated 15.04.2013 issued guidelines on the following :-

(i) Suo-moto disclosure of more items under Section 4;

(ii) Guidelines for digital publication of proactive disclosure under Section 4;

(iii) Guidelines for certain clauses of Section 4(1)(b) to make disclosure more effective;

(iv) Compliance mechanism for suomoto disclosure (proactive disclosure) under RT1 Act, 2005.

1n compliance of the aforesaid guidelines, your company has placed the requisite information on the website of the company.

33.0 GRIEVANCE REDRESSAL

Your Company has a Grievance Redressal System for dealing with grievances of the public at large. The systems are duly notified and the Nodal Officers ensure quick redressal of grievances within the permissible time frame. Your Company has also notified Citizen''s Charter to ensure transparency in its work activities. The Charter is available on the website of PFC to facilitate easy access.

34.0 DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company''s operations during the FY 2016-17.

35.0 DETAILS OF PROCUREMENT FROM MSEs

The details of the procurements made from Micro and Small Enterprises (MSEs) during the FY 2016-17 and the targets for FY 2017-18 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 is as under:

S.No.	Particulars	FY 2016-17 ('')	Target for FY 2017-18 ('')
1	Total annual procurement (in value)	16,07,50,983	17,68,00,000
11	Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs)	5,45,53,083	3,54,00,000
111	Total value of goods and services procured from only MSEs owned by SC/ST entrepreneurs*	-	-
1V	% age of procurement from MSEs (including MSEs owned by SC/ST entrepreneurs) out of total procurement	34%	20%
V	% age of procurement from only MSEs owned by SC/ST entrepreneurs out of total procurement*	-	-
V1	Total number of vendor development Programmes for MSEs	5 vendors per year	5 vendors per year
V11	Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same	http://www.pfcindia.com/Home/VS/125

* Provision for SC/ST entrepreneurs was made in the tender documents. However, no SC/ST vendor participated in bidding process.

36.0 STATUTORY AND OTHER INFORMATION

1nformation required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of 1ndia (Listing Obligations and Disclosure Requirements) Regulations, 2015, DPE''s Guidelines on Corporate Governance for CPSEs etc. is annexed to this report as follows:

Particulars	Annexure
The financial performance of the Company based on Audited Annual Accounts for the FY 2016-17, without considering the impact of alignment to RB1 Restructuring norms certified by statutory auditors.	A
Details of Debenture Trustees	B
Extract of Annual Return (MGT-9)	C
Annual Report on CSR Activities	D
Disclosure of particulars of contracts/arrangements entered into by the company with related parties (AOC-2)	E
Management Discussion and Analysis Report	F
Report on Corporate Governance	G
Business Responsibility Report	H
Secretarial Audit Report	1

37.0 ACKNOWLEDGEMENT

The Board of Directors acknowledge and place on record their appreciation for the guidance, co-operation and encouragement extended to the Company by the Government of 1ndia, Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of 1ndia, Department of Public Enterprises, Securities and Exchange Board of 1ndia, National Stock Exchange of 1ndia Limited, Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level as well as various domestic and international financial institutions/banks, agencies etc.

The Board also conveys its gratitude to the shareholders, various 1nternational and 1ndian Banks/Multilateral agencies/financial 1nstitutions/ credit rating agencies for the continued trust and for the confidence reposed by them in PFC. Your Directors would also like to convey their gratitude to the clients and customers for their unwavering trust and support.

The Company is also thankful to the Comptroller & Auditor General of 1ndia and the Statutory Auditors and Secretarial Auditor for their constructive suggestions and co-operation.

We would also like to place on record our appreciation for the untiring efforts and contributions made by the employees to ensure excellent all round performance of your Company.

For and on behalf of the Board of Directors

(Rajeev Sharma)

Chairman & Managing Director

Place: New Delhi DIN: 00973413

Dated: August 24, 2017

---

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 29th Annual Report on the performance of your company for the financial year ended March 31, 2015 along with Audited Financial Statements including Consolidated Financial Statements, Auditor's Report, Secretarial Auditor's Report & Report of Comptroller and Auditor General of India.

1.0 FINANCIAL HIGHLIGHTS

(a) PROFITABILITY

(Rs. in crore)

Particulars 2014-15 2013-14

Profit Before Tax 8378.23 7558.31

Less: Provision for Income Tax (-) 2502.42 (-) 2075.81 (current year)

Less: Provision for Income Tax (-) 0.46 (-) 10.32 (earlier years)

Less: Deferred Tax Liability 83.98 (-) 54.43

Profit After Tax 5959.33 5417.75

Transfer towards provision for Bad & 387.49 321.43 Doubtful Debts u/s 36(1) (viia) (c) of Income Tax Act, 1961

Transfer to Special Reserve created 1850.10 1464.74 and maintained u/s 36(1) (viii) of Income Tax Act, 1961

Debenture Redemption Reserve 310.20 271.23

Interim Dividend 1122.04 1161.64

Proposed Final Dividend 79.20 26.40

Corporate Dividend Tax paid on 224.10 197.41 Interim Dividend

Corporate Dividend Tax on Proposed 16.12 4.49

Final Dividend

Transfer to General Reserve 596.00 542.00

Balance carried to Balance Sheet 1374.08 1428.41

(b) LENDING OPERATIONS (excluding RAPDRP/IPDS)

(Rs. in crore)

Particulars 2014-15 2013-14

Sanction 60784 60729

Disbursement 44691 47162

(c) INTEGRATED POWER DEVELOPMENT SCHEME (IPDS) OPERATIONS (R-APDRP scheme subsumed in)

(Rs. in crore)

Particulars 2014-15 2013-14

Sanctioned project cost 4407 (including 4331 3252 of IPDS)

Disbursement 1571 (including 640 (Claims processed/released) 50 of IPDS)

2.0 FINANCIAL PERFORMANCE

2.1 REVENUE

The total income achieved by your Company during the FY 2014-15 was Rs. 24,906.80 crore registering growth of 16.73% over the total income of Rs. 21,337.60 crore earned during FY 2013-14. Operating income for the year increased from Rs. 21,322.56 crore to Rs. 24,861.32 crore registering a growth of 16.60%.

2.2 EXPENSES

The total expenditure during FY 2014-15 amounted to Rs. 16,528.57 crore as against total expenditure of Rs. 13,779.29 crore in FY 2013- 14. Finance cost including bond issue expenses incurred during FY 2014-15 amounted to Rs. 15,469.58 crore as against the corresponding expenses of Rs. 13,078.82 crore in FY 2013-14. This constituted 93.59% of total expenses in FY 2014-15 as compared to 94.92% during last fiscal. Employee Benefit expenses and Administrative expenses were 0.55% and 0.29% respectively of Finance Cost and 0.52% and 0.27% respectively of total expenses.

2.3 PROFIT

During the FY 2014-15, your Company earned a net profit of Rs. 5,959.33 crore viz-a-viz Rs. 5,417.75 crore for the FY 2013-14 registering an increase of 10%.

2.4 SHARE CAPITAL

As on March 31,2015, the paid-up share capital of your Company was Rs. 1,320.04 crore consisting of 1,32,00,40,704 equity shares of Rs. 10 each of which the Government of India holds 72.80% of the paid-up capital.

2.5 DIVIDEND

Your Directors have recommended a final dividend of Rs. 0.60 per equity share in addition to an interim dividend of Rs. 8.50 per equity share on paid up equity share capital of Rs. 1,320.04 crore, which was paid in March 2015. The total dividend for the FY 2014-15 thus aggregates to Rs. 9.10 per equity share as against Rs. 9.00 per equity share paid for the previous year. The final dividend will be paid after your approval at the Annual General Meeting. The total dividend pay-out for the FY 2014-15 will thus amount to Rs. 1,201.24 crore representing 20.16% of the profit after tax as against a dividend pay-out of Rs. 1188.04 crore representing 21.93% of the profit after tax in the previous year.

3.0 LENDING OPERATIONS

Your Company sanctioned loans amounting to Rs. 60,784 crore during the FY 2014-15 to State, Central, Private and Joint Sector entities. An amount of Rs. 44,691 crore was disbursed during the same period. With this as on March 31,2015, the cumulative sanctions amount to Rs. 4,87,716 crore and cumulative disbursements amount to Rs. 3,45,969 crore.

In addition to above, projects worth Rs. 4,407 crore were sanctioned under IPDS scheme (with R-APDRP subsumed under it) during FY 2014-15. An amount of Rs. 1,571 crore were disbursed during the same period. With this, cumulative sanctions amount to Rs. 42,496 crore and cumulative disbursements amount to Rs. 8,931 crore under IPDS scheme (with R-APDRP subsumed under it).

3.1 Financial Assistance (Excluding R-APDRP/IPDS)

3.1.1 Sector-wise

(Rs. in crore)

2014-15

Category Sanctions Disbursements

State Sector 35105 31964

Central Sector 3577 1084

Private Sector 17016 9496

Joint Sector 5086 2147

Total 60784 44691

Cumulative upto March, 2015

Category Sanctions Disbursements

State Sector 340971 249705

Central Sector 36928 32734

Private Sector 86444 46565

Joint Sector 23373 16965

Total 487716 345969

3.1.2 Discipline-wise (Rs. in crore)

2014-15

Category Sanctions Disbursements

Thermal Generation 22842 20954

Hydro Generation 5751 1637

Wind, Solar, Bagasse and Biomass 989 607

Renovation, Modernization and Uprat- 1735 968 ing of Thermal & Hydro Power Stations

Transmission 3821 3063

Distribution 325 695

Counterpart Funding for R-APDRP Part B

Short Term Loans 4234 4292

Transitional Finance 12289 11339

Funding of Regulatory Assets 6805 500

Buyers Line of Credit 1221 232

Others* 55 105

Total 60784 44691

Cumulative upto March, 2015

Category Sanctions Disbursements

Thermal Generation 258897 179389

Hydro Generation 49892 31022

Wind, Solar, Bagasse and Biomass 3914 2663

Renovation, Modernization and Uprat- 12329 8919 ing of Thermal & Hydro Power Stations

Transmission 44101 26248

Distribution 17777 13919

Counterpart Funding for R-APDRP Part B

Short Term Loans 44536 44060

Transitional Finance 34857 31497

Funding of Regulatory Assets 7905 1600

Buyers Line of Credit 2261 1176

Others* 5618 4452

Total 487716 345969

* Others include Decentralized Distribution Management, Project Settlement, Pre Investment Fund, Technical Assistance Project, Medium Term Loan, Equipment Manufacturing Loan, Loan for Redemption of bond, Loan for Asset Acquisition, Bill Discounting, Studies, Purchase of power through PXI, Computerization, Loan Against Receivables etc.

3.2 Financial Assistance under IPDS

(Rs. in crore)

2014-15

Sanctioned Disbursements Category project cost (Claims processed)

R-APDRP

Part A (IT) 124 356

Part A (SCADA) (-)45 40

Part B 1076 1125

Total 1155 1521

IPDS

IPDS 3252 50

Total 4407 1571

Cumulative upto March, 2015

Sanctioned Disbursements Category project cost Processed)

R-APDRP

Part A (IT) 5472 2826

Part A (SCADA) 1556 455

Part B 32216 5600

Total 39244 8881

IPDS

IPDS 3252 50

Total 42496 8931

4.0 REALISATION

Your Company gives utmost priority to the realisation of its dues towards principal, interest etc. Out of Rs. 41,343.53 crore to be recovered towards principal, interest etc. under rupee term loans, bill discounting, working capital, lease financing, foreign currency loan, loans for equipment financing and guarantee fee, an amount of Rs. 39,747.61 crore was actually realised representing an overall recovery rate of 96.14% (previous year 97.68%). This overall recovery rate has been consistently maintained at 96-99% for over past decade.

In terms of Prudential Norms, as applicable, the provisioning on Non Performing Loan Assets has been increased by an amount of Rs. 231.16 crore during the year. The Company has made a total provision of Rs. 473.46 crore towards Non-Performing Assets (NPA) against Loan Assets in its Annual Accounts upto the year 2014- 15. After making provision on NPA, the level of net Non- Performing Assets (NPA) has been recorded at Rs. 1890.17 crore which is 0.87% to the Total Loan Assets as on March 31,2015.

In addition to above, your company has also made a provision of Rs. 486.57 crore and Rs. 564.44 crore on Standard Assets and Restructured Standard Assets respectively as on March 31, 2015, which would strengthen PFC's balance sheet by providing a buffer provisioning and inspire higher levels of confidence amongst investors, regulators and other stakeholders in your company.

5.0 RESTRUCTURED LOANS

The details of loans restructured during the FY 2014-15 are as follows:

(Rs. in crore)

Particular

No. of Borrowers Standard Loans Restructured Amount Outstanding

No. of Borrowers Sub-Standard Loans Restructured Amount Outstanding

No. of Borrowers Doubtful Loans Restructured Amount Outstanding

No. of Borrowers Total Amount Outstanding

Particular FY 2014-15 FY 2013-14

6 5 Standard Loans Restructured 7082.71 3955.36

1 1 Sub-Standard Loans Restructured 386.23 27.20

- 1 Doubtful Loans Restructured - 414.97

7 7 Total 7468.94 4397.53

6.0 BORROWINGS

Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2014-15.

6.1 BORROWINGS FROM DOMESTIC MARKET

Your Company mobilized funds amounting to Rs. 55,928.29 crore from the domestic market during FY 2014-15 as against Rs. 45,220.06 crore mobilized during FY 2013-14 comprising of Rs. 46,920 crore through issue of unsecured taxable bonds in the nature of debentures and Rs. 9,008.29 crore by issue of Commercial Paper.

6.2 EXTERNAL BORROWINGS

During the FY 2014-15, your company raised External Commercial Borrowing (ECB) of USD 700 million through Syndicated Loan as per the following details:

Amount S.No Particulars (Rs. crore)

1 Syndicated Loan USD 250 million (SLN 16) 1549.24

2 Syndicated Loan USD 150 million (SLN 17) 932.89

3 Syndicated Loan USD 150 million (SLN 17) 932.89

4 Syndicated Loan USD 150 million (SLN 17) 932.89

Total 4347.92

Date of Date of Fixed/ S.No Period drawl Maturity Floating

1 5 years Floating

2 March 26, 66 months Floating

3 March 26 72 months Mar°h 26 Floating

4 March 26, 78 months September Floating

6.3 CASH CREDIT/ OVERDRAFT FACILITIES

For day to day operations, your company continued to follow prudent strategies for optimum utilization of fund based resources. To hedge any financial liquidity bottlenecks, ample credit lines to the tune of Rs. 9,555 crore were sanctioned as on March 31, 2015 by various scheduled commercial banks to the company for short term funding which do not bear any commitment charges towards unutilized limits.

7.0 PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

7.1 CONSERVATION OF ENERGY/ TECHNOLOGY ABSORPTION

There are no significant particulars, relating to conservation of energy and technology absorption as your Company does not own any manufacturing facility.

7.2 FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign exchange outgo aggregating Rs. 326.17 crore was made on account of debt servicing, financial & other charges and training expenses.

The Foreign exchange earnings for the FY 2014-15 were nil.

8.0 CREDIT RATING

International

During the FY 2014-15, the international credit rating agencies Moody's, Fitch and Standard and Poor's have given to your company, long term currency issuer ratings of Baa3, BBB- and BBB- respectively, which are at par with sovereign rating for India.

Domestic

Ratings assigned by domestic rating agencies during FY 2014-15, for your Company's long term domestic borrowing programme (including bank loans) were the highest rating of CRISIL AAA, ICRA AAA and CARE AAA by CRISIL, ICRA and CARE respectively. The Company's short term domestic borrowing programme (including bank loans) was awarded the highest rating of CRISIL A1 , ICRA A1 and cArE A1 by CRISIL, ICRA and CARE respectively.

9.0 RISK MANAGEMENT

9.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity & interest rate and also monitors implementation of decisions taken in the ALCO meetings. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. Such analysis is made every month in yearly buckets for the next 10 years and is used for critical decisions regarding the time, volume and maturity profile of the borrowings, creation of new assets and mix of assets and liabilities in terms of time period (short, medium and long-term). While the liquidity risk is being monitored with the help of liquidity gap analysis, the interest rate risk is managed by analysis of interest rate sensitivity gap statements, evaluation of Earning at Risk (EaR) on change of interest rate and creation of assets and liabilities with the mix of fixed and floating interest rates.

The maturity profile of certain items of assets and liabilities as at March 31,2015 is set out below:

(Rs. in crore)

Maturity pattern of certain items of Assets and Liabilities based on Audited Balance Sheet as on March 31,2015

Particulars 2015-16 2016-17 2017-18

Rupee Loan Assets 15,794 17,589 19,088

Foreign Currency Assets 39 33 5

Investments 504 0 0

Foreign Currency Liabilities 2,051 1,930 1,154

Rupee Liabilities 23,565 20,380 21,324 (Bonds RTL STL)

Particulars Beyond 2018-19 2019-20 2019-20 Rupee Loan Assets 19,544 20,616 1,24,571 Foreign Currency Assets 0 92 144 Investments 0 0 347 Foreign Currency Liabilities 19 1,596 2,981 Rupee Liabilities

(Bonds RTL STL) 20,491 20,224 72,417

Particulars Total

Rupee Loan Assets 2,17,202

Foreign Currency Assets 313

Investments 851

Foreign Currency Liabilities 9,731

Rupee Liabilities 1,78,401 (Bonds RTL STL)

9.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forward, option, principal swap and forward rate agreements.

As on March 31,2015, the total foreign currency liabilities are USD 1272.70 million, JPY 24,208.80 million and Euro 18.96 million. On an overall basis, the currency exchange rate risk is covered to the extent of 10% through hedging instruments and lending in foreign currency.

9.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

Your Company has put in place a mechanism to ensure that the risks are monitored carefully and managed efficiently. In this regard, your company had constituted the Risk Management Committee of Directors to monitor various risks, examine risk management policies & practices and initiate action for mitigation of risks arising in the operations. To facilitate this, the Company had put in place an Integrated Enterprise - Wide Risk Management Policy (IRM Policy).

The Company has identified 21 risks (8 quantifiable risks and 13 non quantifiable risks) which may have an impact on profitability/revenues of the Company. In order to implement IRM policy, the Risk Management Committee of Directors constitutes Risk Management Compliance Committee and a separate unit for monitoring of the identified risks. The unit continuously monitors the risks from time to time and ensures that the risks are being mitigated on time.

10.0 ULTRA MEGA POWER PROJECTS (UMPPs) AND INDEPENDENT TRANSMISSION PROJECTS (ITPs)

10.1 UMPPs

Your Company has been designated as the 'Nodal Agency' by Ministry of Power (MoP), Government of India, for development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each. Sixteen such UMPPs have been identified to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Chhattisgarh (Surguja), Karnataka, Maharashtra (Munge), Tamil Nadu (Cheyyur), Odisha (Sundargarh), Bihar, Uttar Pradesh, 2 Additional UMPPs in Odisha and 2nd UMPP in Tamil Nadu, Gujarat and Jharkhand (Deoghar).

UMPP is the initiative of Government of India with Ministry of Power as the 'facilitator' for the development of these UMPPs while Central Electricity Authority (CEA) is the 'Technical Partner'. Till March 31, 2015, 15 Special Purpose Vehicles (SPVs) were established by the Company for UMPPs, out of these, 13 SPVs were incorporated to undertake preliminary site investigation activities necessary for conducting the bidding process for the projects. These SPVs shall be transferred to successful bidder(s) selected through Tariff Based International Competitive Bidding Process for implementation and operation. Two additional SPVs were incorporated by PFC for holding the land for Cheyyur UMPP and for holding the land and coal blocks for Odisha UMPP. These SPVs would be transferred to the respective procurers of power from these projects.

Out of these 13 SPVs, 4 SPVs have been transferred to the successful bidders as indicated below:

S.No Name of SPV Successful Bidder

1 Coastal Gujarat Power Ltd. The Tata Power Company Ltd.

2 Sasan Power Ltd. Reliance Power Ltd.

3 Coastal Andhra Power Ltd. Reliance Power Ltd.

4 Jharkhand Integrated Power Ltd. Reliance Power Ltd.

S.No Date of Transfer

1 April 22, 2007

2 August 7, 2007

3 January 29, 2008

4 August 7, 2009

During the year, the bidding process for Odisha and Cheyyur UMPPs was suspended to be initiated after Standard Bidding Documents (SBDs) are revised by MoP.

10.2 ITPs

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required etc.

Till March 31,2015, 18 Special Purpose Vehicles (SPVs), 2 by PFC and other 16 by PFC Consulting Limited were established as wholly owned subsidiaries for ITPs. Out of these 18 SPVs, Bokaro- Kodarma Maithon Transmission Company Limited was liquidated in December 2010 and 8 SPVs were transferred to the successful bidders till last fiscal. During the FY 2014-15, PFCCL has transferred DGEN Transmission Company Limited to the successful bidder Instalaciones Inabensa, S.A., Spain.

During the year, the bidding process for Tanda Transmission Company Limited (TTCL) for the transmission project "ATS for Tanda Expansion TPS (2X660 MW)" was re-initiated in October 2014.

During the year, Ministry of Power appointed PFC Consulting Limited as Bid Process Coordinator (BPC) for six new Independent Transmission Projects to be implemented through Tariff Based Competitive Bidding Process. PFC Consulting Limited incorporated following SPVs as its wholly owned subsidiaries for these projects and initiated bidding process as per following details and SPVs for the remaining 2 projects are being incorporated:

S.No. Project Name

1 Northern Region System Strengthening Scheme - XXXV

2 System strengthening for IPPs in Chhattisgarh and other generation projects in Western Region

3. Additional System Strengthening For Sipat STPS

4. Additional System Strengthening Scheme for Chhattisgarh IPPs

5. Additional Inter-Regional AC link for import into Southern Region i.e. Warora-Warangal and Chilakaluripeta-Hyderabad-Kurnool 765 kV link

6. Common Transmission System for Phase-II . Generation Projects in Odisha and immediate Evacuation System for OPGC (1320 MW) Project in Odisha

S.No. SPV Date of Incorporation

1 Mohindergarh-Bhiwani December 23, 2014 Transmission Limited

2 Chhattisgarh-WR Transmission December 24, 2014 Limited

3. Sipat Transmission Limited December 23, 2014

4. Raipur-Rajnandgaon-Warora Transmission Limited December 23, 2014

5. Warora-Kurnool Transmission April 20, 2015 Limited

6. Odisha Generation Phase - II April 17, 2015 Transmission Limited

Bidding process is underway for the above projects and is likely to be completed in FY 2015-16.

The bidding process for the Ballabhgarh-GN Transmission Company Limited (BGNTCL), SPV for the transmission project "Northern Region System Strengthening Scheme - XXXIII" is kept in abeyance on the advise of CEA due to issues related to dispute in the PPA between NPCL and Essar Power (Jharkhand) in case of BGNTCL.

11.0 INTEGRATED POWER DEVELOPMENT SCHEME (with RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP) subsumed in)

Ministry of Power, Government of India has launched a reforms programme namely, Integrated Power Development Scheme (IPDS) in December, 2014 aiming at:

(i) 24x7 power supply for consumers

(ii) Reduction of AT&C losses &

(iii) Providing access to all urban households

Erstwhile, R-APDRP scheme has been subsumed in newly launched IPDS scheme.

As a part of R-APDRP, for the first time, Information Technology (IT) is being deployed in identified 1,412 towns of the country for establishment of accurate, reliable & sustainable baseline data, business process automation, carrying out energy audit for identifying AT&C losses and better consumer services etc. in the power distribution sector.

Also under Part-A, projects for Supervisory Control and Data Acquisition (SCADA) System/ Distribution Management System (DMS) is being established in big towns in the country (72 towns) for real time operation and control of Distribution Network for improvement of efficiency, quality and reliability of power supply.

Further, under Part-B, projects for Distribution Strengthening and Improvement are being implemented in over 1,259 towns of the country. The main focus of the scheme is reduction of AT&C losses to 15% or below.

Your Company, as nodal agency, has contributed significantly in implementation of RAPDRP programme during the FY 2014-15. The company cumulatively upto FY 2014-15 sanctioned, Part-A (IT) schemes of all eligible 1,412 towns, Part-A (SCADA) schemes for 72 towns and Part-B schemes for 1259 towns. During the year, your company sanctioned '1,155 crore of projects. The cumulative sanction under R-APDRP is Rs. 39,244 crore as on March 31,2015.

Your company has also disbursed an amount of Rs. 1,521 crore (claims processed) upto March 31,2015 to the state utilities. The cumulative disbursement under R-APDRP is Rs. 8,881 crore (claims processed) as on March 31,2015.

With the measures taken so far, as on March 31, 2015, Data Centers in cumulatively 19 States have been commissioned. Further, 861 towns have gone live in 23 states in which all business process software modules are functional and energy audit reports are being derived from the system.

During the year, for implementation of Part-B projects of R-APDRP, utilities have tied up counterpart funding amounting to Rs. 873 crore. With this, cumulative counterpart funding tied up amounts to Rs. 15,727 crore of which Rs. 4,497 crore is from PFC. Implementation work has commenced cumulatively in 1108 towns, to strengthen & improve distribution system and reduce AT&C losses to 15% or below.

During the year, utilities have also appointed SCADA Implementing Agencies in 12 states for implementation of projects in 47 towns. Overall, SCADA Implementing Agencies have been appointed in 18 states for 69 towns.

For capacity building and to recognize the need and to keep pace with technology, contemporary knowledge and skill, your company imparted training on various themes to personnel of Power Utilities for 8,550 man days against MoU target of 6,000 man days.

The reduction in AT&C losses are likely to be visible in R-APDRP towns in the utilities in next one to five years with establishment of IT system and Part-B completion in various towns coupled with administrative and other measures. Thus, your company shall be contributing largely in improvement of financial health of Distribution utilities which shall consequently improve health of Transmission and Generation Power Utilities, resulting in improvement of quality of assets of your company for such borrowers in the State Power Sector.

12.0 INITIATIVES TOWARDS REFORMS AND RESTRUCTURING

Your Company has been assisting the State Power Utilities in their sustainable reform and restructuring program. During the year, your company has disbursed an amount of Rs. 50 lakh towards grant for reform related studies to Bihar State Power Holding Company Limited (BSPHCL).

PFC has also been encouraging its clients to take IT initiatives for overall operational and managerial improvement. During the year, an amount of Rs. 3.58 crore has been sanctioned and Rs. 3.84 crore disbursed for computerization schemes of State Power Utilities (other than computerization schemes covered under R-APDRP).

CATEGORISATION OF UTILITIES

For purposes of funding, your company classifies State Power Utilities into A , A, B and C categories. The categorization (biannually) of State Power Generation and Transmission utilities is arrived based on the evaluation of utility's performance against specific parameters covering operational & financial performance including regulatory environment, generation of audited accounts, etc. With regards to State Power Distribution utilities (including SEBs / utilities with integrated operations), your company's categorization policy provides for adoption of MoP's Integrated Ratings. The categorization enables your company to determine credit exposure limits and pricing of loans to the state power utilities. In April, 2015, 105 utilities were categorized, 28 as "A ", 47 as "A", 23 as "B" and 7 as "C".

Quarterly and Annual Report of State Power Utilities

Your company is releasing one page research report on the performance of each of the State Power Utilities (SPUs) on a quarterly basis. The report contains key operational and financial performance parameters, reform status, status of implementation of Electricity Act 2003 and areas of concern. The report is forwarded to the stakeholders in the power sector. The Report is a useful tool in flagging the key issues/areas of concern to be reviewed by the SPUs for taking mid-term corrective measures for the overall improvement of the sector.

During the FY 2014-15, your company has issued performance reports for the quarter January-March 2014, April-June 2014, July- September 2014 & October-December 2014 covering 41, 41,43 and 40 utilities respectively.

During FY 2014-15, your company also submitted to MoP, the 11th edition of the 'Report on the Performance of State Power Utilities (SPUs)' for the years 2010-11 to 2012-13 covering 96 utilities. The Report is a comprehensive study of the performance of the SPUs on key financial and operational parameters like profitability, gap between average cost of supply and average realization (Rs. /kwh), net worth, capital employed, receivables, payables, capacity (MW), generation (Mkwh), AT&C losses (%) etc. and consumption pattern of the sector at utility, state, regional and national level. The 12th edition of the Report for the years 2011-12 to 2013-14 is under finalization.

During the year, your company also prepared the Strategic Analysis Report for State Distribution Utilities to present the overall picture of the Distribution sector in each state.

13.0 POLICY INITIATIVES

Your company constantly reviews and revises its lending policies/guidelines/products to suitably align these with market conditions as also with its corporate objectives. Your company also introduces new lending policies/guidelines/products to meet the dynamic business requirement.

During the year, your company introduced various new policies/guidelines/products like Takeout Financing to enable the participation of other lenders with no appetite for long tenure loans and to facilitate down selling of your company's underwritten loan portfolio. In addition a scheme for newly formed Gencos / Transco / Discoms incorporated out of bifurcation/reorganization of State was introduced for meeting the temporary liquidity crunch being faced by the Gencos/Transco/Discoms during its initial years.

In order to increase your company's loan portfolio and to address the problem of power sector, the company also reviewed its policies/guidelines/products with respect to cost overrun funding to private sector projects; Buyer's Line of Credit and Repayment period of project loans.

The interest rates in respect of term loan and short term loan were reviewed and revised periodically during the financial year. Further, in order to address the ALM problem, differential interest rates have been introduced for 5 year reset and 10 year reset option.

The financial charges/fees were also reviewed and modified from time to time. Further, fees for few products have been introduced.

14.0 FACILITATION SERVICES

The Facilitation Group (FG) has been set up to expand PFC's financing business beyond its traditional products into new areas of Forward & Backward linkages to the Power sector. The Facilitation Group (FG) is also mandated to explore the opportunities of expanding PFC's business in new geographies.

As a pro-active step for facilitating the availability of finance for projects, your company has evolved a scheme for financing of projects in the area of Fuel Sources Development & Distribution (FSD&D).

Your Company has entered into Memorandums of Understandings (MoUs) with leading PSUs for providing assistance in appraising projects by utilising their expertise and experience.

* Central Mine Planning and Design Institute Ltd. (CMPDIL) for the appraisal of projects related to development of coal block/ mines associated with power projects.

* National Institute of Technology (NIOT) for the appraisal of marine terminal for handling the fuel associated with power sector

MoU with RITES Ltd. for appraisal of projects related to transportation of fuel for power projects is in advance stage of finalization. Your company has also received applications for financing of projects related to coal block allocated through e-auction by Ministry of Coal, Govt. of India.

Also, financial assistance for setting up/ expansion of equipment manufacturing capacity for power sector etc. is extended by your company under the 'Equipment Manufacturing (EM) Scheme for Power Sector'.

15.0 RENEWABLE ENERGY AND CLEAN DEVELOPMENT MECHANISM (RE&CDM)

Your company provides financial support to Renewable Energy Generation projects like wind farms, small hydro projects, bio-mass projects and solar projects and also energy saving projects in the form of higher exposure and special rate of interest in State and Private sectors.

During the FY 2014-15, loans amounting to Rs. 1,065 crore with total capacity of 346 MW were sanctioned for State and Private sectors. Your company has also disbursed around Rs. 607 crore during the financial year. In addition, a loan of Rs. 24.40 crore has also been sanctioned to APSPDCL under energy saving project for setting up of 3000 solar pumps in AP.

As on March 31,2015, your company has cumulatively supported a total generation capacity of 1672 MW, extending financial assistance of Rs. 5,265 crore and disbursed Rs. 3,681 crore to all kinds of renewable energy projects with an aggregate project cost of Rs. 11,065 crore.

16.0 PROMOTION OF POWER TRADING THROUGH POWER EXCHANGE

In the FY 2008-09, the Central Electricity Regulatory Commission had granted its permission to set up power exchanges in the country. As on date, 2 power exchanges, namely, Power Exchange India Ltd. (PXIL) and Indian Energy Exchange Ltd. (IEX) are in operation. These power exchanges have a nationwide presence in the form of electronic exchange for trading in power. The trading through power exchanges have certainly lent an impetus for power sector development since it acts as an open and transparent mechanism for buyers and sellers and provides investment signal to the prospective investors. Further with the presence of these exchanges, the available resources shall be used optimally.

Your company has contributed Rs. 3.22 crore (being 6.64% of paid up equity upto March 31,2015) towards equity contribution in Power Exchange India Ltd., promoted by NSE and NCDEX.

17.0 EQUITY FINANCING

Equity investment business is generally considered as a logical extension of debt business. Your Company is endeavoring to make a mark in the area of equity investment to capitalize on its vast domain knowledge & experience. Your company aims to leverage its financial strength, large debt providing capability and power sector expertise to invest in equity of suitable power projects. Over a period of time, your company proposes to build an equity portfolio of power assets which could provide consistent gains in the form of dividend and/or capital appreciation. PFC has obtained consent of RBI to invest in equity of power projects ranging between 0.5% and 5% of its own net worth in a single company. Presently, "Equity Policy", paving way for PFC to take equity stakes in power projects, is being revisited to make it more flexible and customer friendly before evaluating equity proposals.

18.0 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT, 2013

Your Company being a Non-Banking Financial Company engaged in business of financing companies is exempt from the relevant provisions of Sec.186 of the Companies Act, 2013.

19.0 SUBSIDIARIES

To focus on additional business in the areas of consultancy, renewable energy, consortium lending, equity financing, etc. following wholly owned subsidiaries have been incorporated by your Company, as on date:

(i) PFC Consulting Limited

(ii) PFC Green Energy Limited

(iii) PFC Capital Advisory Services Limited

(iv) Power Equity Capital Advisors Private Limited

The Board of Directors of the Company in its meeting held on May 28, 2015 approved the Merger of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PfCCL). It is envisaged that the area of operations of PFCCAS (Debt Syndication, Debenture Trustee, Strategy/ Financial Advisory) can complement the area of operations of PFCCL (Reform Advisory, Tariff Bid Process Advisory, Communication Services etc.) providing synergy in the merger of PFCCL and PFCCAS. The process to seek regulatory approvals for the merger has been initiated.

Further, your Company is designated by Ministry of Power, Government of India as the 'nodal agency' for facilitating development of Ultra Mega Power Projects and its wholly owned subsidiary i.e. PFC Consulting Limited is the 'Bid Process Coordinator' for Independent transmission projects. As on date, for the said purpose, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiaries of the Company:

(i) Chhattisgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.)

(ii) Coastal Karnataka Power Limited

(iii) Coastal Maharashtra Mega Power Limited

(iv) Coastal Tamil Nadu Power Limited

(v) Orissa Integrated Power Limited

(vi) Sakhigopal Integrated Power Company Limited

(vii) Ghogarpalli Integrated Power Company Limited

(viii) Tatiya Andhra Mega Power Limited

(ix) Deoghar Mega Power Limited

(x) Cheyyur Infra Limited

(xi) Odisha Infrapower Limited

(xii) Deoghar Infra Limited - Incorporated on June 30, 2015

(xiii) Bihar Infrapower Limited - Incorporated on June 30, 2015

(xiv) Bihar Mega Power Limited - Incorporated on July 9, 2015

(xv) Tanda Transmission Company Limited (a wholly owned subsidiary of PFC Consulting Limited)

(xvi) Ballabhgarh-GN Transmission Company Limited (a wholly owned subsidiary of PFC Consulting Limited)

(xvii) Sipat Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on December 23, 2014

(xviii) Raipur-Rajnandgaon-Warora Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on December 23, 2014

(xix) Mohindergarh- Bhiwani Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on December 23, 2014

(xx) Chhattisgarh-WR Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on December 24, 2014

(xxi) South-Central East Delhi Power Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on February 18, 2015

(xxii) Odisha Generation Phase - II Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on April 17, 2015

(xxiii) Warora-Kurnool Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on April 20, 2015

Further, during the FY 2014-15, DGEN Transmission Company Limited, a wholly owned subsidiary of PFC Consulting Limited was transferred and thus ceased to be a subsidiary.

19.1 PFC CONSULTING LIMITED

Your Company had been offering consultancy support to the Power Sector through its Consultancy Services Group (CSG) since October 1999. Leveraging the experience of the CSG Unit and appreciating the growth in the services offered by the Group and recognizing the potential of such services in reforming Power Sector, your Company decided to organize these services under a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary on March 25, 2008, to provide it with requisite autonomy in functions and flexibility in operations. PFCCL is mandated to promote, organize and carry out consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs and ITPs. PFCCL has been nominated as the 'Bid Process Coordinator' for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, GoI.

The Services offered by PFCCL are broadly in the following areas:

* Advisory services on issues emanating from implementation of Electricity Act 2003 like reform, restructuring, regulatory etc.

* Tariff based competitive bidding as per the Guidelines issued by MoP, GoI for various segments of Power Sector

* Project-structuring/ planning/ development/ specific studies, implementation monitoring, efficiency improvement projects

* Communication, information dissemination and feedback

* Preparation of organization performance improvement plans

* Contract related services for power sector

* Financial management, resource mobilization, accounting systems etc.

* Coal block development

* Renewable and non-conventional energy project development

* Distribution system strengthening, IPDS and DDUGJY etc.

Till date, consultancy services have been rendered to 51 clients spread across 23 States/UTs by PFCCL. The total number of assignments undertaken as on date is 93.

Further, during the FY 2014-15, the total income of PFCCL was Rs. 49.40 crore vis-a-vis Rs. 55.19 crore in the previous FY 2013-14 and the net profit earned by PFCCL during FY 2014-15 was Rs. 21.70 crore as against the corresponding net profit of Rs. 26.96 crore last fiscal

19.2 PFC GREEN ENERGY LIMITED

PFC GEL was incorporated on March 30, 2011 as a wholly owned subsidiary of your company to extend finance and financial services to promote green (renewable and non-conventional) sources of energy. As on March 31,2015, PFC GEL had an authorized share capital of Rs. 1200 crore and paid-up share capital of Rs. 300 crore comprising of 10 crore Equity Shares of Rs. 10/- each and 20 crore Fully Convertible Preference Shares of Rs. 10/- each.

The financial assistance sanctioned by PFC GEL during the FY 2014-15 would help capacity creation of about 173 MW from renewable energy sources. During FY 2014-15, the Company made sanction and disbursement of Rs. 554.78 crore and Rs. 71.67 crore respectively. Out of the total sanction of Rs. 554.78 crore, 44% (Rs. 246.11 crore) was sanctioned towards the state sector project and 56% (Rs. 308.67 crore) was sanctioned towards private sector projects. Cumulatively, the sanctions and disbursements by the Company till March 31, 2015 is Rs. 806.85 crore and Rs. 97.13 crore respectively. The Company continues to diversify its portfolio across the renewable energy technologies and has a healthy composition across wind, solar & small hydro sectors.

The total income achieved by the Company during the FY 2014-15 is Rs. 33.65 crore and earned a net profit of Rs. 18.91 crore.

PFC GEL has taken steps to increase its business in the Renewable energy sector and it has signed a MoU with IREDA (Indian Renewable Energy Development Agency Ltd.) and with ( PTC Financial Services Limited) on May 21,2014 and September 10, 2014 respectively to jointly finance renewable energy projects.

For the FY 2015-16, PFC GEL has signed a Memorandum of Undertaking with PFC with sanction and disbursement targets of Rs. 800 crore and Rs. 275 crore respectively after deliberations with MoU Task Force constituted under the auspices of Department of Public Enterprises.

During the FY 2014-15, PFC GEL has been conferred with 'Sourya Urja Puraskar 2014' of 'Innovative Sourya Urja Financier of the Year' for the year 2013-14.

Since the company is dedicated for renewable energy projects such as wind, solar, biomass, hydro etc. it is envisaged to mobilize dedicated green funds available in the market. With the flow of funds dedicated for the green energy, the company shall be in the position to provide loans at competitive interest rates in future.

19.3 PFC CAPITAL ADVISORY SERVICES LIMITED

PFC Capital Advisory Services Limited (PFCCAS) was incorporated as a wholly owned subsidiary of your company on July 18, 2011 to focus on sectoral requirements for financial advisory services, including syndication services. The Company is also involved with the activities related to Power Lenders' Club, an exclusive set of Banks & FIs financing power projects under a consortium arrangement under the aegis of PFC. The authorised capital of the Company is '1 crore and the paid up share capital of the Company is Rs. 0.10 crore.

Presently PFCCAS is active in debt syndication services and is carrying out down selling of project loans underwritten by your company and is handling business proposals across various domains in power sector i.e. thermal, hydro and wind etc.

During FY 2014-15, PFCCAS has arranged sanction of loans of Rs. 1,266 crore out of loans underwritten by PFC while the new assignments for debt syndication services were Rs. 8,435 crore. During the year, PFCCAS was registered with SEBI to act as a Debenture Trustee (Registration Number IND000000551) and has issued special edition on Newsletter covering insights on power sector in March 2015.

During the year, total income of PFCCAS was Rs. 4.85 crore with net profit of the company is Rs. 1.85 crore from syndication services.

PFCCAS has initiated steps to diversify its portfolio of services and is looking at business opportunities in equity funding advisory services in power sector. The company had also filed application for grant of Certificate of Registration as Investment Advisor from SEBI and the same has been granted in August 2015.

Further, Board of Directors of PFC in its meeting held on May 28, 2015 approved the merger of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL) subject to regulatory and other compliances.

19.4 POWER EQUITY CAPITAL ADVISORS PRIVATE LIMITED

Power Equity Capital Advisors Private Limited (PECAP), the wholly owned subsidiary of your company has not been able to transact any business due to lack of business proposals even after its acquisition by PFC and accordingly approval has been sought from MoP for dissolving and getting the name of the Company struck off from the records of Registrar of Companies, which is awaited.

20.0 JOINT VENTURES, ASSOCIATE COMPANIES AND OTHER MAJOR INVESTMENTS

20.1 NATIONAL POWER EXCHANGE LIMITED (NPEX)

In order to promote short term trading through power exchange, your company had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. Your company has contributed Rs. 2.19 crore (being 16.66% of paid up equity upto March 31,2015) towards equity contribution. NTPC and NHPC had expressed their intention to exit from JV Company and based on the recommendations of the Group of Promoters (GoP) of NPEX in March 2014, the Board of Directors of NPEX has decided for voluntary winding up of NPEX. The process of winding up of NPEX is in process.

20.2 ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad. It is the main implementation arms of the National Mission on Enhanced Energy Efficiency (NMEEE). During the FY 2015-16, PFC has contributed '25 crore as additional equity contribution in EESL. EESL has reported profit after tax of Rs. 9.06 crore for the year.

20.3 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. Your Company has invested Rs. 12 crore in PTC which is 4.05% of PTC's total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country. During the year, PTC maintained its leadership position with trading volumes at 37137 MUs. PTC has reported profit after tax of Rs. 203.10 crore for the year.

20.4 POWER EXCHANGE INDIA LIMITED

Power Exchange India Limited (PXIL) is India's first institutionally promoted Power Exchange that provides innovative and credible solutions to transform the Indian Power Markets. PXIL, provides Nation-wide, electronic Exchange for trading of power and handles power trading and transmission clearance, simultaneously, it provides transparent, neutral and efficient electronic platform. PXIL offers various products such as Day Ahead, Day Ahead Contingency, Any Day, Intra Day and Weekly Contracts. PXIL provides trading platform for Renewable Energy Certificates. Your Company has made an equity investment of Rs. 3.22 crore in exchange (being 6.64% of PXIL's paid up equity share capital as on March 31,2015).

21.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded 'Excellent' Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY 2014-15, your company has achieved all the MoU targets and has obtained maximum MoU score of '1.00' for the second consecutive year.

22.0 PRESIDENTIAL DIRECTIVES

The Company has not received any Presidential directives during FY 2014-15.

23.0 CORPORATE SOCIAL RESPONSIBILITY

Your Company has implemented its CSR and Sustainability Policy with all its earnest and zeal. The aim of the CSR & Sustainability Policy is to ensure that the Company becomes a socially responsible corporate entity committed to improving the quality of life of the society at large. To oversee the activities of CSR, the company has in place a Board level CSR&SD Committee of Directors headed by an Independent Director.

For the FY 2014-15, the Board had approved the CSR budget of Rs. 117.49 crore based on 2% of the average stand-alone PBT as per Companies Act 2013 excluding dividend received from other companies covered under and complying with Section 135 of the Act in line with Rule 2(f) (ii) of Companies (CSR Policy) Rules 2014. During the FY 2014-15, projects worth Rs. 304.10 crore (inclusive of Rs. 1.78 crore on account of CSR administrative expenses incurred in FY 2014-15) were sanctioned and your company implemented wide range of activities in the field of Solar energy, Sanitation, Skill Development etc. in various states.

Due to the gestation period involved in the sanctioned projects, the Company has disbursed Rs. 51.68 crore (inclusive of Rs. 1.78 crore on account of CSR administrative expenses incurred in FY 2014-15) out of the available sanctions and the remaining budget will be utilized/disbursed based on the progress achieved for completion of the projects. Further it is not out of place to mention that as per the DPE guidelines, the CSR Budget is non-lapsable and carried forward to the next year. So the entire budget will be utilized for CSR activities.

The CSR Report under Companies (CSR Policy), Rules is annexed herewith.

24.0 HRD INITIATIVES LEARNING & DEVELOPMENT

Your company attaches great importance to the employee development and their competency. Your company reviews the need for learning as an ongoing process and provides opportunity to keep the employees abreast with latest trend in their respective functional areas. Additionally to keep pace with competition, senior executives are given exposure in advance management techniques through premier management Institutes in India and abroad. In order to achieve this, the Company has an annual training plan to assess the various training needs. Necessary professional skills are also imparted across all levels of employees through customized training interventions.

During the year 2014-15, your company organized 26 in-house programs. A total of 1691 mandays were achieved during the period under review of which 1053 were through in-house programs and 638 were through nominations to open programmes organized by other training institutes.

HUMAN RESOURCE MANAGEMENT

Your company lays great emphasis on upgrading the skills of its Human Resources. It benchmarks its practices with the best practices being followed in the other Public Sector Companies. This, apart from other strategic interventions, lead to an effective management of Human Resources thereby ensuring a high level of productivity.

Your company regularly interacts with the employee representatives to ensure cordial and harmonious employee employer relations. Due to the positive work culture in the organization, no mandays were lost during the period under review.

WELFARE MEASURES

Your Company follows best management practices to ensure welfare of its employees through a process of inclusive growth & development. Your company follows open door policy and absolute accessibility to top management thereby facilitating the growth of the organization. Employee commitment is high due to various employee welfare measures that are best in the sector including various welfare policy measures such as comprehensive insurance, medical facilities and other amenities which has resulted in team spirit and healthy work atmosphere. Your company is one of the very few organizations in forming Contributory Post Retirement Medical Fund Trust to address the needs of retired employees. Besides this, your company also organized various health camps during the year for the welfare of the employees. Your company also organized sports events to build team spirit and cohesive work culture.

RESERVATION OF POSTS FOR SC/ST/OBC/EX-SERVICEMEN AND PHYSICALLY HANDICAPPED PERSONS IN THE SERVICES OF COMPANY

Your Company as a part of its social responsibility makes all-out efforts to ensure compliance of the Directives and Guidelines issued by the Govt. for the reservation to be allowed for SC/ST/OBC/Persons with Disabilities. The steps taken include due reservations and relaxation as applicable under the various directives.

In the year 2014-15, total 22 new employees were recruited out of which 18.18% are SC(4) and 27.27% are OBC(6).

REPRESENTATION OF WOMEN EMPLOYEES

Your Company provides equal growth opportunities for its women employees and the Company can take pride in saying that certain critical functions are headed by women employees. There is no discrimination of employees on the basis of gender. Women employees represent 19.78 % of the total work force.

During the FY 2014-15, no case has been filed under the "Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act 2013".

25.0 DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

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

(b) such accounting policies have been selected, applied consistently and judgments & estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the accounts have been prepared on a going concern basis;

(e) the company has laid down internal financial controls to be followed and that such internal financial controls are adequate and are operating effectively.

(f) the company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

26.0 STATUTORYAUDITORS

M/s. N.K. Bhargava & Co., Chartered Accountants and M/s K. B. Chandna & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for the FY 2014-15 by the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2014-15 and have given their report without any qualification. The copy of the audit report is annexed herewith.

SECRETARIAL AUDITOR

M/s. Agarwal S. & Associates, Company Secretaries was appointed as the Secretarial Auditor of the Company for the FY 2014-15 by the Board of Directors of the Company.

The observations of the Secretarial Auditor and reply of the management for the FY 2014-15 along with copy of the audit report is annexed herewith.

27.0 COMMENTS OF COMPTROLLER & AUDITOR GENERAL OF INDIA

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors' report. The copy of the report of C&AG is annexed herewith.

28.0 DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Internal Auditor of the Company i.e. M/s HDSG & Associates, Chartered Accountants quarterly certifies on the adequacy of internal financial controls with reference to the financial statements of the Company.

Further, the statutory auditors of the Company i.e. M/s. N.K. Bhargava & Co., Chartered Accountants and M/s K. B. Chandna & Co., Chartered Accountants in their Report have also opinioned that there is adequate internal control system commensurate with the size of the company and nature of its business with regard to purchase of fixed assets and services rendered by the company.

29.0 PARTICULARS OF REMUNERATION U/S 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5 OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement of the particulars of remuneration is annexed herewith.

30.0 DEBENTURE TRUSTEES

The Details of Debenture Trustees appointed by the company for the different series of Bonds issued by your company, are annexed herewith.

31.0 REDEMPTION AND STATUS OF UNCLAIMED AMOUNTS Bonds

The unclaimed/unpaid balance amount of bonds (principal and interest) as on March 31,2015 was Rs. 6.39 crore. Further, an amount of Rs. 1.26 crore is lying with 'Payee Banks' and hence not shown as liability in the Books of Accounts.

Equity

The unclaimed balance amount of dividend (equity) and application money received and due for refund (FPO) as on March 31,2015 was Rs. 1.32 crore and Rs. 0.038 crore respectively. The unclaimed amount of Rs. 4,97,903 and Rs. 10,90,197 under "Unclaimed & Unpaid Dividend of the Company" has been transferred to Investor Education and Protection Fund (IEPF) in the month of November, 2014 and April, 2015 respectively. The detail of investors' (whose refund is due) is available on PFC's website and IEPF website of Ministry of Corporate Affairs.

32.0 EMPLOYEES STOCK OPTIONS PLAN (ESOP)

Stock Options have been recognized world over as an effective instrument to attract and retain the talent in the organization and to align the interest of employees with those of the organization. Stock Options provide an opportunity to employees to share the growth of the Company and create long term wealth. They also promote the culture of employee ownership in the company.

The Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises, Govt. of India, through its directions on pay revision had also made it mandatory for all the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees in the form of ESOPs. In accordance with these directions of the DPE, the Board of Directors of your company had formulated an Employee Stock Option Plan titled as 'PFC-ESOP 2010'. Shareholders had also approved this Employee Stock Option Plan in their 24thAnnual General Meeting held on September 21,2010. Subsequently, the Board of Directors had decided that 25% of the PRP of the employees should be given in the form of ESOPs. However, later in view of a clarification issued by DPE, the Company started giving an option to the employees to receive full PRP amount in cash or to receive part of PRP amount in cash and part of PRP in the form of grant of ESOPs.

The disclosure in respect of the ESOP scheme pursuant to Clause 12 of SEBI (Employees' Stock Option Scheme and Employees' Stock Purchase Scheme) Guidelines, 1999 is annexed herewith.

33.0 VIGILANCE

During the FY 2014-15, the Vigilance Unit functioned as an effective tool of positive management in your company with the thrust being on "Preventive Vigilance". This aspect was emphasized by conducting periodic and surprise inspections of various units and by issuing effective guidelines to streamline systems with the aim of eliminating loopholes and ensuring transparency in day-to-day operations, minimizing scope for misuse. Vigilance Unit undertook the review of Operational Manuals of various activities of the Company. The Review of Coordinator's Manual of PFCCL is in process of finalization. The publication of a Quarterly Newsletter on Vigilance activities 'Prahari' was launched to appraise employees about the ongoing Vigilance activities. An updated "Vigilance Handbook" of the Company was also published. The Vigilance Unit's working was computerized through the development of in- house software, the Vigilance Monitoring System. In addition, detailed investigations were carried out in several cases of registered complaints.

The performance of Vigilance Unit was reviewed by the Central Vigilance Commission (CVC), Ministry of Power, Board of Directors and CMD of PFC in addition to regular reviews undertaken by the CVO, PFC as per the prescribed norms.

In accordance with the directives of Central Vigilance Commission the Vigilance Awareness Week was observed from October 27, 2014 to November 1,2014 in the Head Office and Regional offices of the Company. During the Vigilance Awareness Week, a one day workshop on "Leveraging Technology to Combat Corruption" was organized for the employees of the Company. Interactive sessions were organized with prominent faculty members on varied subjects like personal values and ethics and dealing with day to day situations involving ethical dilemmas faced while working in the organization.

A Slogan Writing Competition, an Essay Writing Competition as well as a Pictorial Theme Representation Competition were organized on themes relating to "Technology and Citizen: Improving Accountability", "Role of Technology in Combating Corruption" and "Combating Corruption-Technology as an Enabler" respectively with the aim of involving employees and encouraging them to come forward with innovative ideas on combating corruption.

34.0 OFFICIAL LANGUAGE

Your company was awarded the first prize in Public Sector Category of the 'Indira Gandhi Rajbhasha Puraskar' for the FY 2013-14 by Rajbhasha Vibhag, Grih Mantralay for its concerted efforts made in implementation of official language policy. CMD, PFC received the prestigious award from President of India, Sh. Pranab Mukherjee. Your company also won the first prize of 'Best Hindi Promotion In- House Journal" from Sh. Oomen Chandy, Hon'ble Chief Minister of Kerala.

During the year, Drafting and Evidence Sub-Committee of the Committee of Parliament on Official Language held discussion with the Chairmen of Town Official Language Implementation Committee (TOLIC) including PFC. Second Sub-Committee of Parliament on Official Language Committee held the inspection of Regional Offices and appreciated the work being done in Hindi. Officials from Ministry of Power and Department of Official Language under Ministry of Home Affairs conducted the inspection of PFC Head Office. To ensure the effective implementation of Official Language Policy in the Company, internal inspections in the form of personal contact programme were conducted. Meetings of the Official Language Implementation Committee were organised in each quarter to review and find out solutions for better implementation of Official Language Policy under the chairmanship of CMD, PFC. Departmental Hindi meetings were also organized at Unit level.

During the year, a Rajbhasha Sammelan was organized at Chennai wherein 50 officials of various PSUs of TOLIC, Chennai participated. Further, Hindi Day and Month were celebrated on September 14 and from September 14 to October 13, 2014 respectively. During the Hindi Month, various competitions, like Vartani Shodhan, Mook Prahelika (Dumb Charades), Shabd Vyuh Bhedan, Chitrabhivyakti, Navras Abhivyakti, Hindi Bhasha Gyan Pratiyogita (for senior level officers) were organized. In all, 207 employees participated in these competitions. During the year, six Hindi workshops were organized for 140 executives (including senior executives) and non-executives of the Company with a view to improve their efficiency in doing their day to day official work in Hindi. Three Hindi Sangoshthi on different topics related to Rajbhasha Hindi were organized wherein 93 employees participated.

35.0 RIGHT TO INFORMATION ACT

The Right to Information Act, 2005 is a powerful tool to usher in public probity and empower citizens. It also endeavors to promote transparency and accountability in the working of the Government, to contain corruption and to enhance people's participation in the democratic process by making the citizens informed about the activities of the Government. Under the Act, it is believed that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable. The main objective of the Right to Information Act, 2005, is to ensure greater and more effective access to information and to maintain transparency and improve accountability in the working of the public departments both Central and State. The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the Public Authorities.

Your company has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the company. The Company has designated a Public Information Officer (PIO) and Appellate Authority at its registered office for effective implementation of the RTI Act.

During the FY 2014-15, all 102 applications received under the RTI Act, were duly processed and replied to. In compliance with Section 4 of the RTI Act, requisite disclosures have been updated and hosted on PFC website. Your company has also complied with the directions of Central Information Commission (CIC) regarding filing of online Quarterly/Annual Return for the FY 2014-2015.

SUOMOTO DISCLOSURES UNDER SECTION 4 OF THE RTI ACT 2005

During FY 2014-15, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated 15.04.2013 issued guidelines on the following :-

(i) Suomoto disclosure of more items under Section 4;

(ii) Guidelines for digital publication of proactive disclosure under Section 4;

(iii) Guidelines for certain clauses of Section 4(1)(b) to make disclosure more effective;

(iv) Compliance mechanism for suo moto disclosure (proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid guidelines, your company has placed the requisite information on the website of the company.

36.0 GRIEVANCE REDRESSAL

Your Company has separate grievance redressal systems for dealing with the grievances of the employees, its customers and the public at large. The systems are duly notified and are easily accessible. A designated Nodal Officer is responsible to ensure quick redressal of grievances within the permissible time frame. The company also has a notified Citizen's Charter to ensure transparency in its work activities. This Charter is available on the website of the Company to facilitate easy access.

37.0 DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company's operations during the FY 2014-15.

38.0 DETAILS OF PROCUREMENT FROM MSEs

The details of the procurements made from Micro and Small Enterprises (MSEs) during the FY 2014-15 and the targets for FY 2015-16 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 is as under:

S.No. Particulars

I Total annual procurement (in value)

II Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs)*

III Total value of goods and services procured from only MSEs owned by SC/ST entrepreneurs**

IV %age of procurement from MSEs (including MSEs owned by SC/ ST entrepreneurs) out of total procurement

V %age of procurement from only MSEs owned by SC/ST entrepreneurs out of total procurement

VI Total number of vendor development programmes for MSEs

VII Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same

S.No. FY 2014-15 Target for FY 2015-16

I Rs. 4,99,64,348 Rs. 6,00,00,000

II Rs. 77,73,890 Rs. 1,20,00,000

III - Rs. 24,00,000**

IV 15.56% 20%

V - 4%

VI 3 vendors half yearly 3 Vendor development half yearly

VII Annual Procurement Plan uploaded at http://www.pfcindia. com/WhatsNewDetail.aspx?wtsid=290

* Procurement value includes the purchase from MSME, KB, NCCF, DCCWS Ltd., Handicraft Emporiums and Central Cottage Industries.

** Subject to availability of the product through MSME SC/ST Agency.

39.0 STATUTORY AND OTHER INFORMATION

Information required to be furnished as per the Companies Act, 2013, Listing Agreement with Stock exchanges, DPE's Guidelines on Corporate Governance for CPSEs etc. is annexed to this report as follows:

Particulars Annexure

Particulars of employees u/s 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and A Remuneration of Managerial Personnel) Rules, 2014

Details of Debenture Trustees B

Extract of Annual Return (MGT-9) C

Annual Report on CSR Activities D

ESOP details E

Disclosure of particulars of contracts/arrangements entered into by the company with related parties (AOC-2) F

Management Discussion and Analysis Report G

Report on Corporate Governance H

Business Responsibility Report I

Secretarial Audit Report J

40.0 ACKNOWLEDGEMENT

The Board of Directors acknowledge and place on record their appreciation for the guidance, co-operation and encouragement extended to the Company by the Government of India, Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India, Department of Public Enterprises, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level as well as various domestic and international financial institutions/banks, agencies etc.

The Board also conveys its gratitude to the shareholders, various International and Indian Banks/Multilateral agencies/financial Institutions/ credit rating agencies for the continued trust and for the confidence reposed by them in PFC. Your Directors would also like to convey their gratitude to the clients and customers for their unwavering trust and support.

The Company is also thankful to the Comptroller & Auditor General of India and the Statutory Auditors for their constructive suggestions and co-operation.

Your Directors also recognize and appreciate the untiring efforts and contributions made by the employees to ensure excellent all round performance of your Company.

For and on behalf of the Board of Directors

(M. K. Goel) Place : New Delhi Chairman & Managing Director Dated : August 21, 2015 DIN No. 00239813

---

Mar 31, 2014

Dear Members,

On behalf of Board of Directors, I have pleasure in presenting 28th Annual Report on the performance of your company for the financial year ended March 31, 2014 along with Audited Statements of Accounts, Auditor''s Report & review of accounts by the Comptroller and Auditor General of India.

1.0 FINANCIAL HIGHLIGHTS

(a) PROFITABILITY (Rs. in crore)

Particulars 2013-14 2012-13

Profit Before Tax 7558.31 5967.04 Less: Provision for Income Tax (current year) (-) 2075.81 (-) 1543.57 Less: Provision for Income Tax (earlier years) (-) 10.32 128.49 Less: Deferred Tax Liability (-) 54.43 (-) 132.36 Profit After Tax 5417.75 4419.60 Transfer to CSR and SD Reserve 0.00 18.85 Transfer towards provision for Bad & Doubtful Debts u/s 36(1) (viia) (c) of Income Tax Act, 1961 321.43 250.40 Transfer to Special Reserve created and maintained u/s 36(1) (viii) of Income Tax Act, 1961 1464.74 1155.90 Debenture Redemption Reserve 271.23 219.06 interim Dividend 1161.64 792.01 Proposed Final Dividend 26.40 132.00 Corporate Dividend Tax paid on interim Dividend 197.41 128.48 Corporate Dividend Tax on Proposed Final Dividend 4.49 22.43 Transfer to General Reserve 542.00 442.00 Balance carried to Balance Sheet 1428.41 1258.47

(b) LENDING OPERATIONS (Rs. in crore) Particulars 2013-14 2012-13

Sanction 60729 75147 Disbursement 47162 45151

(c) R-APDRP OPERATIONS (Rs. in crore) Particulars 2013-14 2012-13

Sanctioned project cost 4331 3728 Disbursement 640 1217

2.0 FINANCIAL PERFORMANCE

2.1 REVENUE

The total income achieved by your Company during the FY 2013-14 was Rs.21,537.46 crore registering growth of 24.69% over the total income of Rs.17,272.55 crore earned during FY 2012-13. Operating income for the year increased from Rs.17,266.14 crore to Rs. 21,522.42 crore registering a growth of 24.65%. Interest income including lease income for the FY 2013-14 was at Rs. 20,978.71 crore against Rs.16,922.91 crore in FY 2012-13.

2.2 EXPENSES

The total expenditure during FY 2013-14 amounted to Rs.13.979.15 crore as against total expenditure of Rs.11,305.51 crore in FY 2012-13, Interest, finance and other charges including bond issue expenses incurred during FY 2013-14 amounted to Rs.13.278.68 crore in FY 2013-14 as against the corresponding expenses of Rs.11,088.41 crore in FY 2012-13. This constituted 94.99% of total expenses in FY 2013-14 as compared to 98.08% during last fiscal. Employee Benefit expenses and other expenses were 0.57% and 0.60% respectively of total expenses as against 0.72% and 0.37% respectively during the previous year. Total Employee Benefit expenses and other expenses during FY 2013-14 constituted 0.09% of the Net Loan Assets of your company.

2.3 PROFIT

During the FY 2013-14, your Company earned a net profit of 75,417.75 crore viz-a-viz Rs.4,419.60 crore for the FY 2012-13 registering an increase of 22.58%.

2.4 SHARE CAPITAL

As on April 1, 2013 the paid-up share capital of your Company was Rs.1,320.02 crore consisting of 132,00,15,011 equity shares of Rs.10 each of which the Government of India held 73.72% of the paid-up capital. During the FY 2013-14, Government of India set up a fund namely Goldman Sachs CPSE Exchange Traded Scheme (“GS CPSE BeES") launched by Goldman Sachs Asset Management (India) Private Limited (AMC). In March 2014, Government of India, Ministry of Power, acting through Department of Disinvestment, has disinvested 1,21,06,076 equity shares of face value of Rs.10/- each to the said fund. After disinvestment, the holding of Government of India in the paid up equity share capital of the Company has come down to 72.80%.

Further, during the FY 2013-14, 25,693 equity shares having face value of Rs.10 each, were allotted to the employees under the Company''s Employee Stock Option Plan titled as “PFC-ESOP 2010. Consequent to this allotment, the paid-up equity share capital of the Company stands increased to Rs.1,320.04 crore consisting of 1,32,00,40,704 equity shares of Rs.10 each as on March 31, 2014.

2.5 DIVIDEND

Your Directors have recommended a final dividend of 70.20 per equity share in addition to an interim dividend of Rs.8.80 per equity share on paid up equity share capital of Rs.1,320.04 crore, which was paid in Feb 2014. The total dividend for the FY 2013-14 thus aggregates to Rs. 9.00 per equity share as against Rs.7.00 per equity share paid for the previous year. The final dividend will be paid after your approval at the Annual General Meeting. The total dividend pay-out for the FY 2013-14 will thus amount to Rs.1,188.04 crore representing 21.93% of the profits after tax as against a dividend pay-out of Rs.924.01 crore representing 20.91%of the profits aftertax in the previous year.

2.6 ISSUE OF TAX FREE BONDS

Your company mobilized resources to the tune of Rs.3875.90 crore by public issue of Tax Free Bonds Tranche-I from October 14, 2013 till November 5, 2013 in six series i.e. Series 1A, 1B, 2A, 2B, 3A and 3B bearing interest rate of 8.18% for 10 years, 8.43% for 10 years, 8.54% for 15 years, 8.79% for 15 years, 8.67% for 20 years and 8,92% for 20 years respectively. The date of allotment of said public issue of Tax Free Bonds listed on Bombay Stock Exchange {BSE) was November 16, 2013. The funds raised from the said public issue were utilized towards lending purposes and debt servicing.

Your company also mobilized resources to the tune of Rs.1,124.10 crore by Private Placement of Tax Free Bonds issue in the month of August, 2013 in one series i.e. Series 107 (A&B) 3.1 Financial Assistance (Excluding R-APDRP) bearing interest rate of 8.01% p.a. and 8.46% p.a. for 10 years and 15 years respectively. The date of allotment of the said Private placement of Tax Free Bond was August 30, 2013. These bonds have been listed on National Stock Exchange (NSE) and subsequently on Bombay Stock Exchange (BSE),

3.0 LENDING OPERATIONS

Your Company issued sanctions of loans amounting to Rs.60,729 crore during the FY 2013-14 to State, Central. Private and Joint Sector entities. An amount of Rs.47,162 crore was disbursed to State, Central, Private and Joint Sector entities during the same period. With this, as on March 31, 2014, cumulative sanctions amount to Rs.4,57,315 crore and cumulative disbursements amount to Rs.3,01,278 crore.

In addition to above, projects worth 74,331 crore were sanctioned under R-APDRP scheme during FY 2013-14 and Rs.640 crore were disbursed. With this as on March 31, 2014, cumulative sanctions amount to Rs.38,089 crore under R-APDRP scheme and cumulative disbursements amount to Rs.7,360 crore.

3.1.1 Sector-wise (Rs. in crore) 2013-14 Cumulative upto March, 2014 Category Sanctions Disbursements Sanctions Disbursements

State Sector 46161 32790 332064 217740 Central Sector 500 919 34033 31650 Private Sector 13010 11259 72931 37069 Joint Sector 1058 2194 18287 14819

Total 60729 47162 457315 301278

3.1.2 Discipline-wise (Rs. in crore) 2013-14 Cumulative upto March, 2014

Category Sanctions Disbursements Sanctions Disbursements

Thermal Generation 29352 26320 254934 158433 Hydro Generation 10581 4389 47247 29386 Wind, Solar, Bagasse and Biomass 757 420 3142 2057 Renovation and Modernization of Thermal Power Stations 1238 428 8964 6787 Renovation & Uprating of Hydro Power Projects 277 83 1845 1163 Transmission 3208 2046 41772 23185 Distribution 4400 993 20308 13224 Short Term Loans 3927 2678 42691 39768 Counterpart Funding for R-APDRP Part B 599 709 4912 724 Transitional Finance 4381 7341 22569 20159 Others* 2009 1755 8931 6392

Total 60729 47162 457315 301278

* Others Include Decentralized Management, Project Settlement, Pre Investment Fund, Technical Assistance Project, Medium Term Loan, Buyers Line of Credit, Equipment Manufacturing Loan, Loan for Asset Acquisition, Bill Discounting, Studies, Loan for Redemption of bonds, Purchase of power through PXI, Computerization, Funding of Regulatory Assets, Loan Against Receivables etc.

3.1.3 Product-wise (Rs. in crore)

2013-14 Cumulative upto March, 2014 Category Sanctions Disbursements Sanctions Disbursements

Term Loans 47855 36053 380376 234514 Short Term Loans 3927 2678 42691 39768 Transitional Finance 4381 7341 22569 20159 Grants 1 2 72 57 Others** 4565 1088 11607 6780

Total 60729 47162 457315 301278

** Others include Leasing, Debt Refinancing, Bridge Loan, Loan to Equipment Manufacturers, Buyers Line of Credit, Bill Discounting, Purchase of power through PXI etc.

3.2 Financial Assistance under R-APDRP (Rs. in crore)

2013-14 Cumulative upto March, 2014 Category Sanctioned Disbursements Sanctioned Disbursements project cost project cost

Part A (IT) 115 427 5348 2470 Part A (SCADA) 131 3 1601 415 Part 8 4085 210 31140 4475

Total 4331 6.40 38089 7360

3.3 GENERATION PROJECTS

3.3.1 THERMAL PROJECTS

Thermal Power generation comprises a major proportion of India''s total installed capacity. During the FY 2013-14, the Company has sanctioned loans amounting to Rs.29,352 crore and disbursed an amount of Rs.26,320 crore. The cumulative financial support provided by the Company for thermal generation schemes is Rs.2,54,934 crore out of which Rs.1,58,433 crore has been disbursed till March 31, 2014.

The major thermal generation projects sanctioned by your Company during the year are: APGENCO''s Kakatiya Stage III TPP (800 MW) & Ramagundem TPP (660 MW), MPPGCL''s Satpura TPP Extension (660 MW), SEPC Power Pvt. Ltd.''s coal based TPP at Tuticorin (525 MW) and Trishakti Power Private Ltd.''s coal based TPP at Barabanki (250 MW).

3.3.2 HYDRO PROJECTS

Hydro generation capacity in the country needs significant augmentation for overall systems to have optima! energy mix. During the FY 2013-14, loans amounting to Rs. 10,581 crore were sanctioned and an amount of Rs.4,389 crore was disbursed by your company. The cumulative financial support provided by the Company for hydro generation scheme is Rs.47,247 crore out of which Rs.29,386 crore has been disbursed till March 31, 2014.

3.4 RENOVATION, MODERNISATION AND LIFE EXTENSION

3.4.1 THERMAL PROJECTS

During the FY 2013-14, loans worth Rs.1,238 crore were sanctioned for R&M and life extension of thermal power plants and an amount of Rs. 7 428 crore was disbursed. Cumulatively, an amount of 7 8,964 crore has been sanctioned and 7 6,787 crore stands disbursed till March 31,2014,

3.4.2 HYDRO PROJECTS

During the FY 2013-14, loans worth Rs.277 crore ware sanctioned for R&M of Hydro power projects and an amount of 783 crore was disbursed. Cumulatively, an amount of Rs.1,845 crore has been sanctioned and Rs.1,163 crore stands disbursed till March 31,2014.

3.5 TRANSITIONAL LOANS

Your Company has formulated Broad Guidelines for Transitional Financing to Discoms for supplementing the Financial Restructuring Scheme approved by Government of India by providing funding towards the yearly cash gap as per Financial Restructuring Plan (FRP). The objective is to provide financial support to meet the temporary liquidity crunch being faced by the Discoms and to enable these Discoms to bring financial turnaround over a specified period. Your Company has sanctioned transitional loans of 722,569 crore to various Discoms in the states of Punjab, Haryana, Uttar Pradesh, Rajasthan and Tamil Nadu against which an amount of Rs.20,159 crore has already been disbursed by the company as on March 31,2014, Further, out of the total loan disbursed to Uttar Pradesh, your company has subscribed to the bonds of up Power Corporation Ltd. for an amount of Rs.1,171 crore as perthe FRP.

4.0 REALISATION

Your Company gives utmost priority to the realisation of its dues towards principal, interest etc. Out of Rs.39,674.86 chore to be recovered towards principal, interest etc. under rupee term loans, bill discounting, working capital, lease financing, foreign currency loan, loans for equipment financing and guarantee fee, an amount of Rs.38,753.94 chore was actually realised representing an overall recovery rate of 97.68% (previous year 99.15%). This overall recovery rate has been consistently maintained at 96-99% for over past decade. Your company has achieved recovery rate of 98.17% in respect of principal amount due during the year.

In terms of Prudential Norms, as applicable, the provisioning on Non Performing Loan Assets has been increased by an amount of Rs.121 crore during the year. The Company has made a total provision of Rs. 242 crore towards Non-Performing Assets (NPA) against Loan Assets in its Annual Accounts upto the year 2013-14. After making provision on NPA, the level of net Non-Performing Assets (NPA) has been recorded at Rs.985 crore which is 0.52% to the Total Loan Assets as on March 31,2014.

In addition to above, the company has also made a provision of 7469.42 crore on standard assets outstanding as on March 31, 2014, which woukl strengthen PFC''s balance sheet by providing a buffer provisioning and inspire higher levels of confidence amongst investors, regulators and other stake holders in your company.

5.0 RESTRUCTERED LOANS

The details of loans restructured during the FY 2013-14 are as follows: (Rs. in crore) Particular FY 2013-14 FY 2012-13

Standard Loans Restructured No. of Borrowers 5 7 Amount Outstanding 3955.3 3699.84

Sub-Standard Loans Restructured No. of Borrowers 1 1 Amount Outstanding 27.20 325.00

Doubtful Loans Restructured No. of Borrowers 1 - Amount Outstanding 414.97 -

Total No. of Borrowers 7 8 Amount Outstanding 4397.53 4024.84

6.0 BORROWINGS

6.1 BORROWINGS FROM DOMESTIC MARKET

Your Company mobilized funds amounting to Rs. 45,220.06 crore from the domestic market during FY 2013-14 as against Rs.37,751,21 crore mobilized during FY 2012-13 comprising of Rs.28,574 crore through issue of unsecured/secured taxable/Tax free bonds in the nature of debentures, Rs.14,614 crore by way of long/medium term loans from Banks/FIs, and Rs. 2,032.06 crore by issue of Commercial Paper and Short term Loans.

6.2 EXTERNAL BORROWIN GS

During the FY 2013-14, your Company could not raise foreign currency loan due to the global economic siowdown, unfavourable market conditions and the unavailability of funds at a competitive rate.

6.3 CASH CREDIT/OVERDRAFT FACILITIES

For day to day operations, your company continued to follow prudent strategies for optimum utilization of fund based resources. To hedge any financial liquidity bottlenecks, ample credit lines to the tune of Rs.4850 crore were maintained with various scheduled commercial banks for short term funding which do not bear any commitment charges towards unutilized limits.

7.0 FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign exchange outgo aggregating Rs.259.52 crore was made on account of debt servicing, financial & other charges and training expenses.

The Foreign exchange earnings for the FY 2013-14 were nil.

8.0 CREDIT RATING

Domestic

Ratings assigned by domestic rating agencies during FY 2013-14, for Company''s long term domestic borrowing programme (including bank loans) were the highest rating of CRISIL AAA, ICRA AAA and CARE AAA by CRISIL, ICRA and CARE respectively. The Company''s short term domestic borrowing programme (including bank loans) was awarded the highest rating of CRISIL A1 , ICRAA1 and CARE A1 by CRISIL, ICRAand CARE respectively.

International

During the FY 2013-14, the international credit rating agencies Moody''s, Fitch and Standard and Poor''s have given to the company, long term currency issuer ratings of Baa3, 888- and 888- respectively, which are at par with sovereign rating for India.

9.0 RISK MANAGEMENT

9.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity & interest rate and also monitors implementation of decisions taken in the ALCO meetings. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. Such analysis is made every month in yearly buckets for the next 10 years and is used for critical decisions regarding the time, volume and maturity of profile of the borrowings, creation of new assets and mix of assets and liabilities in terms of time period (short, medium and long-term). While the liquidity risk is being monitored with the help of liquidity gap analysis, the interest rate risk is managed by analysis of interest rate sensitivity gap statements, evaluation of Earning at Risk (EaR) on change of interest rate and creation of assets and liabilities with the mix of fixed floating interest rates.

The maturity profile of major Its ms of assets and liabilities as at March 31, 2014 Is set our below: (Rs. in crore)

Maturity pattern of certain Items of Assets and Liabilities based on Audited Balance Sheet as on March 31, 2014

Particulars 2014-15 2015-16 2016-17 2017-18 2018-19 Beyond Total 2018-19

Rupee Loan Assets 13749 15496 17377 17711 17424 106890 188647

Foreign Currency Assets 43 46 46 23 22 166 348

Investments 0 0 0 0 0 352 352

Foreign Currency Liabilities 3699 1988 1930 1110 21 178 8926

Rupee Liabilities (Bonds RTL STL) 17425 21902 17439 14705 18322 60902 150695

9.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forward, option, principal swap, interest rate swap and forward rate agreements.

As on March 31, 2014, the total foreign currency liabilities were USD 999.13 million, JPY 41,643.20 million and Euro 20.87 million. On an overall basis, the currency exchange rate risk is covered to the extent of 18% through hedging instruments and lending in foreign currency.

9.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

Your Company has put in place a mechanism to ensure that the risks are monitored carefully and managed efficiently, in this regard, your company had constituted the Risk Management Committee of Directors to monitor various risks, examine risk management policies & practices and initiate action for mitigation of risks arising in the operations. To facilitate this, the Company had put in place an Integrated Enterprise - Wide Risk Management Policy (IRM Policy).

The Company has identified 26 risks (11 quantifiable risks and 15 non quantifiable risks) which may have an impact on profitability/business of the Company. In order to implement IRM policy, the Risk Management Committee of Directors constitutes Risk Management Compliance Committee and a separate unit for monitoring of the identified risks. The unit continuously monitors the risks from time to time and ensures that the risks are being mitigated on time.

10.0 ULTRA MEGA POWER PROJECTS (UMPPs) AND INDEPENDENT TRANSMISSION PROJECTS (TPs)

10.1 UMPPs

Your Company has been designated as the ‘Nodal Agency'' by Ministry of Power (MoP), Government of India, for development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each. Sixteen such UMPPs were identified to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Chhattisgarii (Surguja), Karnataka, Maharashtra (Munge), Tamil Nadu (Cheyyur), Odisha (Sundargarh), 2 Additional UMPPs in Odisha and 2nd UMPP in Andhra Pradesh (Prakasam), Tamil Nadu, Gujarat, Jharkhand (Deoghar) and Bihar,

UMPP is the initiative of Government of India with Ministry of Power as the ''facilitator'' for the development of these UMPPs while Central Electricity Authority (CEA) is the Technical Partner''. Till March 2014, 15 Special Purpose Vehicles (SPVs) were established by the Company for UMPPs, out of these, 13 SPVs were incorporated to undertake preliminary site investigation activities necessary for conducting the bidding process for the projects. These SPVs shall be transferred to successful bklder(s) selected through Tariff Based International Competitive Bidding Process for implementation and operation.

Out of these 13 SPVs, 4 SPVs have been transferred to the successful bidders as indicated below:

S. Name of SPV Successful Bidder Date of Transfer No. 1 Coastal Gujarat Power Ltd. The Tata Power Company April 22, 2007 Ltd.

2 Sasan Power Ltd. Reliance Power Ltd. August 7,2007

3 Coastal Andhra Power Ltd. Reliance Power Ltd. January 29,2008

4 Jharkhand Integrated Reliance Power Ltd. August 7,2009 Power Ltd.

The remaining two SPVs were incorporated during the FY 2013-14 by PFC for holding the land for Cheyyur UMPP and for holding the land and cool blocks for Odessa UMPP, These SPVs would be transferred to the respective procurers of power from these projects.

During the year, the RfQ for Odisha and Chattisgarh UMPPs based on the existing Standard Bidding Documents (S8Ds) were annulled on the direction of Ministry of Power, The revised S&Ds were issued by MOP In September, 2013. Accordingly, the bidding process for two UMPPs viz. Cheyyur and Odisha UMPPs were initiated during the year on the basis of these revised SBDs. Further, the RfQ for Chhattisgarh UMPP will be issued afresh on the revised (S8Ds) on clearance of coal blocks allocated to the project or allocation of new coal blocks. Further, the Government of Andhra Pradesh decided not to proceed further with the 2nd UMPP in Andhra Pradesh and in view of the same, it was decided by the Ministry of Power for the ciosure of the Project. Action has been initiated to wind up the SPV / strike off name of SPV from the records of Registrar of Companies{ROC).

10.2 ITPs

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required etc.

Till March 2014,12 Special Purpose Vehicles (SPVs), 2 by PFC and other 10 by PFC Consulting Limited were established as wholly owned subsidiaries for TPs. Out of these 12 SPVs, Bokaro-Kodarma Maithon Transmission Company Limited was liquidated in December 2010 and 4 SPVs were transferred to the successful bidders till March 31, 2013. During the FY 2013-14, PFCCL has transferred the following 4 more SPVs to successful bidders:

S. Name of SPV Successful Bidder Date of Transfer No. 1 Patran Transmission Techno Electric and November l3,20l3 Company Ltd Engineering Company Ltd

2 Purulia & Kharagpur Sterlite Grid Ltd December 9,2013 Transmission Company Ltd

3 Oarbhanga-Motihari Essel Infraprojects Ltd December 10,2013 Transmission Company Ltd

4 RAPP Transmission Sterlite Grid Ltd March 12,2014 Company Ltd

Out of the remaining 3 SPVs for TPs, the bidding process for the Independent Transmission Project viz. Transmission Project Associated with DGEN TPS (1200MW) of Torrent Power Ltd. was completed during the year and the Letter of Intent was issued to the successful bidder on May 19,2014.

During the year. Ministry of Power appointed PFC Consulting Limited as Sid Process Coordinator (BPC) for two new Independent Transmission Projects to be implemented through Tariff Based Competitive Bidding Process, PFC Consulting Limited incorporated following 2 SPVs as its wholly owned subsidiaries for these projects;

(i) Tanda Transmission Company Limited (TTCL) for the transmission project "ATS for Tanda Expansion TPS (2X680 MW)"

(ii) Ballabhgarh-GN Transmission Company Limited (8GNTCL), SPV for the transmission project "Northern Region System Strengthening Scheme - XXXIII"

The bidding process for the above two SPVs is kept in abeyance on the advise of CEA due to issues related to award of EPC contract and acquisition of land for Tanda Expansion TPS in case of TTCL and dispute in the PPA between NPCL and Essar Power (Jharkhand) in case of BGNTCL.

11.0 RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP)

As a part of R-APDRP, for the first time. Information Technology (IT) is being deployed in identified 1,412 towns of the country for establishment of accurate, reliable & sustainable base line data, business process automation, carrying out energy audit for identifying AT&C losses and better consumer services etc. in the power distribution sector.

Also under Part-A, projects for Supervisory Control and Data Acquisition (SCADA) System/ Distribution Management System (DMS) is being established in big towns in the country (about 72 towns envisaged) for real time operation and control of Distribution Network for improvement of efficiency, quality and reliability of power supply.

Further, under Part-B, projects for Distribution Strengthening and Improvement are being implemented in over 1,240 towns of the country. The main focus of the scheme is reduction of AT&C losses to 15% or below.

Your Company, as nodal agency, has contributed significantly in implementation of RAPDRP programme during the FY 2013-14. The company cumulatively upto FY 2013-14 sanctioned, Part-A(IT) schemes of all eligible 1,412 towns, Part-A(SCADA) schemes for all envisaged 72 towns and Part-8 schemes for 1,244 towns out of envisaged 1,250 towns. During the year, your company sanctioned Rs.4,331 chore of projects. The cumulative sanction under R-APDRP Is Rs. 38,089 crore as on March 31, 2014.

Your company has also disbursed the entire amount of Rs.640 crore released by Ministry of Power (MoP) during the FY 2013-14 upto March 31, 2014 to the state utilities. The cumulative disbursement under R-APDRP is Rs.7,360 crore as on March 31,2014.

With the measures taken so far, as on March 31,2014, Data Centers in cumulatively 17 States have been commissioned. Further, 509 towns have gone live in 17 states in which, all business process software modules are functional and energy audit reports are being derived from the system.

During the year, for implementation of Part-6 projects of R-APDRP, utilities have tied up counterpart funding amounting to Rs.389 chore. With this, cumulative counterpart funding tied up amounts to Rs.14,854 crore of which Rs.3,780 chore is from MFC. Implementation work has commenced cumulatively in 1049 towns, to strengthen & improve distribution system and reduce AT&C losses to 15% or below.

During the year, utilities have also appointed SCADA Implementing Agencies in 6 states for implementation of projects in 22 towns. Overall, SCADA Implementing Agencies have been appointed in 15 states for 63 towns.

For capacity building and to recognize the need and to keep pace with technology, contemporary knowledge and skill, your company imparted training on various themes to personnel of Power Utilities for 25,800 man days against MoU target of6,000 man days.

Cumulatively, as on March 311 2014, 1,372 towns have been ringfenced & baseline AT&C tosses have been established in 1,251 towns.

The reduction in AT&C losses are likely to be visible in R-APDRP towns in the utilities in next one to five years with establishment of IT system and Part-8 completion in various towns coupled with administrative and other measures. Thus, your company shall be contributing largely in improvement of financial health of Distribution utilities which shall consequently improve health of Transmission and Generation Power Utilities, resulting in improvement of quality of assets of your company for such borrowers in the State Power Sector.

12.0 EXTERN ALLY AIDED PROJECTS

Government of India and the Government of the Federal Republic of Germany in the Indo-German Annual Negotiations held in New Delhi in July, 2013 had decided to cancel the Loan and Financing Agreement for Line of Credit of Euro 100.56 million from KFW to finance six RM&U of Hydro Electric Projects (HEPs) of Uttrakhand Jal Vidyut Nigam Ltd. (UJVNL). Consequently, the Loan and Financing Agreement for the aforesaid line of credit was cancelled in December, 2013.

13.0 IN ITI ATI VE S TOWARDS REFORMS AND RESTRUCTURING

Your Company has been assisting the State Power Utilities in their reform and restructuring programs. During the year, your company has sanctioned grant of 71 crone to Bihar State Power Holding Company Limited (BSPHCL)for taking reform process ahead.

The changing environment has necessitated the power utilities to be more responsive to market requirements by enhancing efficiency through introducing latest technologies as part of ongoing IT initiatives. During the year, an amount of 77.11 crore was disbursed for computerization schemes of State Power Utilities (other than computerization schemes covered under R-APDRP).

CATEGORISATION OF UTILIT1ES

For purposes of funding, your company classifies State Power Utilities into A , A, B and C categories. The categorisation (biannually) of State Power Generation and Transmission utilities is arrived based on the evaluation of utility''s performance against specific parameters covering operational & financial performance including regulatory environment, audited accounts, etc. With regards to State Power Distribution utilities (including SEBs / utilities with integrated operations), your companies categorisation policy provides for adoption of Integrated Ratings of Ministry of Power, The categorisation enables your company to determine credit exposure limits and pricing of loans to the state power utilities. As on May 30, 2014,101 utilities were categorised, 26 as "A ''p 42 as “A”, 25 as “B” and 8 as “C*.

Quarterly and Annual Report of State Power Utilities

Your company is releasing one page research report on the performance of each of the State Power Utilities (SPUs) on a quarterly basis. The report is acknowledged as a useful effort by the SPUs as they can compare performance of their utility vis-d-vis other utilities for taking mid-term objective measures for the overall improvement of the sector. The report contains key operational and financial parameters, reform status, status of implementation of Electricity Act 2003, areas of concern etc. The report is forwarded to the stakeholders in the power sector such as the SPUs and Power Secretaries of the States.

During the FY 2013-14, your company has issued performance reports for the quarter January-March 2013, April-June 2013, July-September 2013 & October- December 2013 covering 42 utilities each.

During FY 2013-14, your company also released 10th edition of the ''Report on the Performance of State Power Utilities (SPUs)'' for the years 2009-10 to 2011-12 covering 91 utilities. The Report is an integral part of your companies constant endeavor towards tracking the performance of State Power Sectors by analyzing financial and operational performance e.g. profitability, gap between average cost of supply and average realization (7 /kwh), net worth, capital employed, receivables, payables, capacity (MW), generation (Mkwh), AT&C losses (%) etc at utility, state, regional and national level. The Report provides a reliable database and helps in determining the results associated with the reforms in the sector and is also recognized by various stakeholders as a useful source of information regarding the state power sector.

The Report for the years 2010-11 to 2012-13 covering 77 utilities has been prepared and submitted to Ministry of Power as per the targets set in the MoU. The final Report (11th) on the performance of all SPUs for the period 2010- 11 to 2012-13 has been finalized,

14.0 POLICY INITIATIVES

Your company constantly reviews and revises its lending policies/guidelines/products to suitably align these with the dynamic market conditions as also with its corporate objectives. Your company also introduces new lending pollcies/guideiines/products to meet the ever changing business requirement.

During the year, your Company introduced various new policies/guidelines/products like Policy for Refinancing of Debt of Commissioned Projects along with Additional Corporate Loan for New/ Expansion/Acquisition of Projects, Policy for Financial Assistance to Distribution Franchisees and Option of Flexi-Line of Credit under Rupee Short Temn Loan Scheme for Government Sector Borrowers.

Your Company also reviewed its policies / guidelines / products with respect to Scheme for Extending Credit Facility for Purchase of Power through Power Exchange, Funding Grid Connected Solar PV Private Sector Power Generation Projects, Guidelines for giving Financing Proposals in Support of Bid for Projects Promoted by Government Sector / Private Sector AAA rated companies, etc. with a viewto make the same more borrower friendly.

Ouring the FY 2013-14, provision against Standard Assets has been accelerated by one year for bringing it to 0.25% as on March 31, 2014. After this provisioning, PFC''s Prudential Norms will be in alignment with RBI''s Prudential Norms for NBFC-ND with reference to Provisioning for Standard Assets as on March 31,2014.

The interest rates in respect of term loan and short term loan were reviewed and revised periodically during the financial year. The financial charges/fees were also reviewed and modified. Further, guarantee fee and other financial charges for issuance of Guarantee for Credit Enhancement has been introduced.

In spite of growing competition in the market as well as concerns on interest rates on account of factors like increase in RSI key policy rates, inflation prevailing in the financial year etc., your Company could balance its objectives of business growth and profitability.

15.0 FACILITATION SERVICES

The Facilitation Group (FG) has been set up to expand PFC''s financing business beyond its traditional products into new areas of Forward & Backward linkages to the Power sector. The Facilitation Group (FG) is also mandated to explore the opportunities of expanding PFC''s business in new geographies.Towards this end as a pro-active step for facilitating the availability of finance for projects, your company has evolved ''Fuel Sources Development & its Distribution (FSO&D) Scheme'' for financing of projects in these areas. Also, financial assistance for setting up/ expansion of equipment manufacturing capacity for power sector etc. is extended by your company under the ''Equipment Manufacturing (EM) Scheme for Power Sector'',

16.0 RENEWABLE ENERGY AND CLEAN DEVELOPMENT MECHANISM (RE&CDM)

The future scenario of power from renewable sources is bright due to ever-increasing high cost of hydrocarbon. The increasing dependence on renewable sources of energy, given the global movement to reduce green house gases and shift to non-fossil fuel sources, has created a lot of business opportunities in power sector.

Your company assigns priority to renewable energy projects like wind farms, small hydro projects, bio-mass projects and solar projects in the form of higher exposure and special rale of interest. In order to give a thrust to the funding of projects in the Renewable Energy Sector, your company is having a Strategic Business Unit i.e. Renewable Energy & Clean Development Mechanism (RE & CDM) Unit for handling its renewable energy portfolio for giving focused attention in the development of Renewable Energy sector. These projects are funded at a lower interest rate than conventional projects in order to encourage renewable energy projects.

Your company is also providing financial support to Renewable Energy Generation projects in State and Private sectors. During the FY 2013-14, seven loans amounting to Rs.845.87 crore for projects of total capacity of 246.5 MW were sanctioned for State and Private sectors. Your company has also disbursed around Rs.457 crore during the financial year.

As on March 31, 2014, your company has cumulatively supported a total generation capacity of 1412 MW extending financial assistance of Rs.4,409 crore and disbursed Rs.3,074 crore to all kinds of renewable energy projects with an aggregate project cost of Rs. 8,927 crore.

17.0 PROMOTION OF POWER TRADING THROUGH POWER EXCHANGE

In the FY 2008-09, the Central Electricity Regulatory Commission had granted its permission to set up power exchanges in the country. As on date, 2 power exchanges, namely, Power Exchange India Ltd. (PXIL) and Indian Energy Exchange Ltd. (IEX) are in operation. These power exchanges have a nationwide presence in the form of electronic exchange for trading in power. The trading through power exchanges have certainly lent an impetus for power sector development since it acts as an open and transparent mechanism for buyers and sellers and provides investment signal to the prospective Investors. Further with the presence of these exchanges, the available resources shall be used optimally.

Your company has con tributed Rs.3.22 crore (bei ng 6.93% of paid up equity upto March 31, 2014) towards equity contribution in Power Exchange India Ltd., promoted by NSEand NCOEX,

18.0 EQUTYFINANCING

Equity investment business is generally considered as a logical extension of debt business. Your Company is endeavoring to make a mark in the area of equity investment to capitalize on its vast domain knowledge & experience attained during it''s over 25 years of operations. Your company aims to leverage its financial strength, large debt providing capability and power sector expertise to invest in equity of suitable power projects. Over a period of time, your company proposes to build an equity portfolio of power assets which could provide consistent gains in the form of dividend and/or capital appreciation. PFC has obtained consent of RBI to invest in equity of power projects ranging between 0.5% and 5% of its own net worth in a single company. Presently, "Equity Policy", paving way for PFC to take equity stakes in power projects, is being revisited to make it more flexible and customer friendly before evaluating equity proposals.

19.0 SUBSIDIARIES

To focus on additional business in the areas of consultancy, renewable energy, consortium lending, equity financing, etc. following wholly owned subsidiaries have been incofporated by your Company, as on date:

(I) PFC Consulting Limited

(ii) PFC Green Energy Limited

(iii) PFC Capital Advisory Services Limited

(iv) Power Equity Capital Advisors Private Limited

Further, your Company is designated by Ministry of Power, Government of India as the nodal agency for facilitating development of Ultra Mega Power Projects and its wholly owned subsidiary i.e. PFC Consulting Limited is the ''Bid Process Coordinator'' for Independent transmission projects. As on date, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiaries of the Company:

(i) Chhattisgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.)

(ii) Coastal Karnataka Power Limited

(iii) Coastal Maharashtra Mega Power Limited

(iv) Coastal Tamil Nadu Power Limited

(v) Orissa Integrated PowerUmited

(vi) Sakhigopal Integrated Power Company Limited

(vii) Ghogarpalli Integrated Power Company Limited

(viii) TATRA Andhra Mega Power Limited

(ix) deodar Mega Power Umited

(x) Cheyyur Infra Limited

(xi) Odisha Infrapower Limited

(xii) DGEN Transmission Company Limited (a wholly owned subsidiary of PFC Consulting Limited)

(xiii) Tanda Transmission Company Limited (a wholly owned subsidiary of PFC Consulting Limited)

(xiv) Ballabhgarh-GN Transmission Company Limited (a wholly owned subsidiary of PFC Consulting Limited)

19.1 PFC CONSULTING LIMITED

Your Company had been offering consultancy support to the Power Sector through its Consultancy Services Group (CSG) since October 1999. Leveraging the experience of the CSG Unit and appreciating the growth in the services offered by the Group and recognizing the potential of such services in the reforming Power Sector, your Company decided to organize these services under a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary on March 25, 2008, to provide It with requisite autonomy in functions and flexibility in operations. PFCCL is mandated to promote, organize and carry out consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs and ITPs. PFCCL has been nominated as the ''Bid Process Coordinator* for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, Gol.

The Services offered by PFCCL are broadly in the following areas;

* Advisory services on issues emanating from implementation of Electricity Act, 2003 like reform, restructuring, regulatory etc.

* Tariff based competitive bidding as per the Guidelines issued by MoP, Gol for various segments of Power Sector

* Project-structuring/ planning/ development/ specific studies, implementation monitoring, efficiency improvement projects

* Communication, information dissemination and feedback

* Preparation of organization performance improvement plans

* Con tract related services for power sector

* Financial management, resource mobilization, accounting systems etc,

* Coal block development

* Renewable and non-conventional energy project development

Till date, consultancy services have been rendered to 43 clients spread across 21 States/UTs by PFCCL. The total number of assignments undertaken as on date is 80.

During the FY 2013-14, the total income of PFCCL was 755.19 crore vis-S-vts 736.49 crore in the previous FY 2012-13. The net profit earned by PFCCL during FY 2013 14 was Rs.26.96 crore as against the corresponding net profit of Rs.16.38 crore last fiscal.

19.2 PFC GREEN ENERGY LIMITED

PFC Green Energy Limited (PFC GEL), was incorporated on March 30, 2011 as a wholly owned subsidiary of the company to extend finance and financial services to promote green (renewable and non-conventional) sources of energy. As on March 31, 2014, PFC GEL had an authorized share capital of Rs.1200 crore and paid up share capital of Rs.300 chore comprising of 10 crore equity shares of Rs.10/- each and 20 crore Fully Convertible Preference Shares of Rs.10/- each. During the year, the company increased its paid up share capital from Rs.109.99 crore (as on March 31,2013) to Rs.300 crore (as on March 31,2014).

PFC GEL made a significant progress in financing Renewable Energy Sector in its first full year of operation with a sanction of 7 304 crore of debt during 2013-14 for the development of 55 MW of renewable projects. In terms of disbursement, PFCGEL disbursed Rs.25.4 crore during the FY 2013-14. PFC GEL has been assigned the highest credit rating of SMERAAAA(IR) by SMERA Ratings Private Limited.

PFC GEL has taken steps to increase its business in the Renewable energy sector and has signed a MoU with Indian Renewable Energy Development Agency Ltd. (IREDA) on May 21, 2014 to jointly finance renewable energy projects.

For the FY 2014-15, PFC GEL has signed a Memorandum of Understanding with your company, with sanction and disbursement targets of Rs.500 chore and Rs.210 crore respectively after deliberations with MOU Task Force constituted under the auspices of Department of Public Enterprises.

Since the company is dedicated for renewable energy projects such as wind, solar, biomass, hydro etc., it is expecting to mobilize dedicated green funds available in the market. During the FY 2013-14, the company has been approached by various foreign/ Indian funding agencies for providing funds for green energy sector. With the flow of funds dedicated for the green energy, the company shall be in a position to provide loans at competitive interest rates in future.

19.3 PFC CAPITAL ADVISORY SERVICES LIMITED

PFC Capital Advisory Services Limited (PFCCAS) was incorporated as a wholly owned subsidiary of your company on July 18, 2011 to focus on sectoral requirements for financial advisory services, including syndication services. The Company is also involved with the activities related to Power Lenders'' Club, an exclusive set of Banks & FIs financing power projects under a consortium arrangement under the aegis of PFC. The authorised capital of the Company is 71 crore and the paid up share capital of the Company is Rs.0,10 crore.

Presently PFCCAS is active in debt syndication services and is carrying out down selling of project loans underwritten by your company. It is handling syndication proposals across various domains in power sector i.e. thermal, hydro and wind.

During FY 2013-14, PFCCAS has arranged sanction of loans of Rs.1,060 crore out of loans underwritten by PFC, During the year, total income of PFCCAS was Rs.6.29 crore with net profit increasing to Rs. 3.03 crore from Rs.0,85 crore in FY 2012-13.

PFCCAS has initiated steps to diversify its portfolio of services. The company has also filed application for grant of Certificate of Registration as Debenture Trustee from SEBI and the same is under process,

19.4 POWER EQUITY CAPITAL ADVISORS PRIVATE LIMITED

Power Equity Capital Advisors private limited (PECAP), the wholly owned subsidiary of your company has not been able to transact any business due to lack of business proposals even after Its acquisition by PFC and accordingly approval has been sought from MoP for dissolving and getting the name of the Company struck off from the records of Registrar of Companies under the provisions of Section 560 of the Companies Act, 1956, which is awaited.

20.0 JOINT VENTURES AND ASSOCIATE COMPANIES

20.1 NATIONAL POWER EXCHANGE LIMITED

In order to promote short term trading through power exchange, your company had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. Your company has contributed Rs.2.19 crore (being 16.66% of paid up equity upto March 31, 2014) towards equity contribution. NTPC and NHPC had expressed their intention to exit from JV Company and based on the recommendations of the Group of Promoters (GoP) of NPEX in March 2014, the Board of Directors of N PEX has decided for voluntary winding up of N PEX.

20.2 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. Your Company has invested Rs.12 crore in PTC which is 4.05% of PTC''s total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country. Ouring the year, PTC maintained its leadership position with trading volumes at 358U. PTC has reported profit after tax of Rs. 251 crore for the year.

20.3 ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad. It is the main implementation arm of the National Mission on Enhanced Energy Efficiency (NMEEE). EESL has reported profit after tax of Rs. 3.35 crore for the year.

21.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ''Excellent'' Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY 2013-14, your company has achieved all the MoU targets and is likely to be accorded ''Excellent'' rating.

22.0 PRESIDENTIAL DIRECTIVES

The Company has not received any Presidential directives during FY 2013-14.

23.0 CORPORATE SOCIAL RESPONSIBILITY

CSR being the cornerstone of its operations your company discharges its social responsibility obligations as a part of its growth philosophy. It has been your Company''s endeavour to act as a responsible Corporate citizen committed to improving the welfare of the society through inclusive growth aimed at empowerment of communities through skill development, environment protection through promotion of renewable energy, development of underprivileged sections of the society through hygiene and sanitation programmes etc.

In order to give a concrete, speedy and meaningful direction to the above initiatives, your company has constituted a Board level CSR Committee of Directors headed by an Independent Director.

With a view to addressing the domains of socio-economic issues at national level, your Company has dubbed its CSR&SD activities and formulated a new CSR&SD Policy in line with the Guidelines issued by Department of Public Enterprises, Govt. of India.

Your company has entered into an MOU with Govt, of India for spending during the FY 2013-14,1% of the Profit after Tax (PAT) of FY 2012-13 on CSR&SO activities. Accordingly, your company had earmarked Rs.44.38 chore for CSR&SD initiatives during the FY 2013-14. However, PFC had sanctioned projects/ activities worth Rs.70.21 crore during FY 2013-14 alone and disbursed Rs.46.52 crore which included projects sanctioned in FY 2013-14, FY 2012-13 and FY 2011-12 under CSR&SD activities. The funds were mainly disbursed for implementing a wide range of social interventions in the field of Skill Development, Renewable Energy, providing relief & rehabilitation to the victims of Natural Calamities etc. in various states.

24.0 EMPLOYEES STOCK OPTIONS PLAN (ESOP)

Stock Options have been recognized world over as an effective instrument to attract and retain the talent in the organization and to align the inierest of employees with those of the organization. Stock Options provide an opportunity to employees to share the growth of the Company and create long term wealth. They also promote the culture of employee ownership in the company.

The Department of Public Enterprises (OPE), Ministry of Heavy Industries & Public Enterprises, Govt, of India, through its directions on pay revision had also made it mandatory for aJI the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees in the form of ESOPs. In accordance with the said directions of the DPE, the Board of Directors of your company had formulated an Employee Stock Option Plan titled as ‘PFC-ESOP 2010'' which was also approved by the Shareholders in their 24th Annual General Meeting held on September 21,2010. Subsequently, the Board of Directors had decided that 25% of the PRP of the employees should be given in the form ofESOPs.

For FY 2009-10, out of 87,888 Options granted during the FY 2011-12, your company had allotted 83,306 equity shares during previous financial year. During FY 2013-14, 4,255 equity shares have been allotted upon exercise of the stock options by the employees. The Options can be exercised within a period of two years from the date of vesting i.e. July 29,2012 by paying Rs.10/-per option. Thus, the remaining options are due to lapse if not exercised by the employees by the end of the said period.

For FY 2010-11, 92,964 options had been granted during the FY 2012-13 to the eligible employees. However, out of the 92,964 options granted, 69,954 options have been settled in cash and 1,572 options have been cancelled during previous financial year. The remaining 21,438 equity shares have been allotted upon exercise of the stock options by the employees during FY 2013-14.

The disclosure in respect of the ESOP scheme pursuant to Clause 12 of SEBI (Employees''Stock Option Scheme and Employees'' Stock Purchase Scheme) Guidelines, 1999 is annexed herewith.

25.0 HRD INITIATIVES LEARNING & DEVELOPMENT

Your company attaches great importance to the employee development and their Competency. Your company reviews the need for learning as an on going process and provide opportunity to keep the employees abreast with latest trend in their respective functional areas. Additionally to keep pace with competition, senior executives are given exposure in advanoe management techniques through premier management Institutes in India and abroad. In order to achieve this, the Company has an annual training plan to assess the various training needs. Necessary professional skills are also imparted across all levels of employees through customized training interventions.

During the year 2013-14, PFC organized 18 in-house programs. A total of 1659 mandays were achieved during the period under review. Your company imparted training in the area of Leadership Development & Team Building.

26.0 HUMAN RESOURCE MANAGEMENT

Your company lays great emphasis on upgrading the skills of its Human Resources. It benchmarks its practices with the best practices being followed in the other Public Sector Companies. This, apart from other strategic interventions, lead to an effective management of Human Resources thereby ensuring a high level of productivity.

Your company regularly interacts with the employee representatives to ensure cordial and harmonious employee employer relations. Due to the positive work culture in the organization, no mandays were lost during the period under review.

27.0 WELFARE MEASURES

Your Company follows best management practices to ensure welfare of its employees through a process of inclusive growth & development. Your company follows open door policy and absolute accessibility to top management thereby facilitating the growth of the organization. Employee commitment is high due to various employee welfare measures that are best in the sector including various welfare policy measures such as comprehensive insurance, medical facilities and other amenities which has resulted in team sprit and healthy work atmosphere. Your company is one of the very few organizations in forming Contributory Post Retirement Medical Fund Trust to address the needs of retired employees. Besides this, your company also organized various health camps during the year for the welfare of the employees. Your company also organized sport events to build team spirit and cohesive work culture.

28.0RESERVATION OF POSTS FOR SC/ST/OBC/EX- SERVICEMEN AND PHYSICALLY HANDICAPPED PERSONS IN THE SERVICES OF COMPANY

Your Company as a part of its social responsibility makes all-out efforts to ensure compliance of the Directives and Guidelines issued by the Govt, for the reservation to be allowed for SC/ST/CHBC/Persons with Disabilities. The steps taken indude due reservations and relaxation as applicable under the various directives.

In the FY 2013-14, total 30 new employees were recruited out of which 10% are SC (3), 3.3% are ST (1), Nil % are FWD (0) aid 36.7% are OBC (11).

29.0 REPRESENTATION OF WOMEN EMPLOYEES

Your Company provides equal growth opportunities for its women employees and the Company can take pride in saying that critical functions are haded by women employees. There is no discrimination of employees on the basis of gender. Women employees represent 19.73% of the total work force.

During the FY 2013-14, no case has been filed under the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressa!)Act2013*.

30.0 DIRECTORS'' RESPONSIBILLTY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

* In the preparation of the annual accounts for the FY 2013-14, the applicable accounting standards had been followed;

* The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of FY 2013-14 and of the profit of the Company for that period;

* The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

* The Directors had prepared the Annual Accounts for FY 2013-14 on a going concern basis.

31.0 AUDITORS

M/s. N.K. Bhargava & Co., Chartered Accountants and M/s K. 8. Chandna & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for the FY 2013-14 by the Comptroller & Auditor Genera! of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2013-14 and have given their audit report without any qualification. The copy of the audit report is annexed herewith.

32.0 COMMENTS OF COMPTROLLER & AUDITOR GENERAL OF INDIA

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or suppliment to Statutory Auditors'' report under section 619(4) of the Companies Act, 1956. The copy of the report of C&AG is annexed herewith.

33.0 PARTICULARS OF EMPLOYEES U/S 217 (2A) OF THE COMPANIES ACT, 1956

Pursuant to provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, a statement of the particulars of employees who were in receipt of remuneration exceeding 760 Lakh per annum or 75 Lakh per month and above, is annexed herewith.

34.0 DEBENTURE TRUSTEES

The details of Debenture Trustees appointed by the company for the different series of Bonds issued by your company, are annexed herewith.

35.0 REDEMPTION AND STATUS OF UNCLAIMED AMOUNTS

Bonds

The unclaimed balance amount of bonds (principal and interest) as on March 31, 2014 was Rs.6.50 crore. No amount is liable to be transferred to Investor Education Protection Fund as 7 years have not elapsed since the date of redemption.

Equity

The unclaimed balance amount of dividend (equity) and application money received and due for refund (FPO) as on March 31, 2014 was Rs.1.45 crore and Rs.0.04 crore respectively. During the FY 2013-14, the unclaimed amount of Rs.11,89,630 under "Application money received and due for refund (IPO)" has been transferred to Investor Education and Protection Fund (IEPF) in the month of March. 2014. The detail of investors'' (whose refund is due) is available on PFC''s website and IEPF webstte of MInistry of Corporate Affairs.

36.0 VIGILANCE

During the FY 2013-14, the Vtgilance Unit functioned as an effective tool of management, the thrust being on preventive vigilance. This aspect was emphasized by conducting periodic & surprise inspections of various units and by issuing effective guidelines to streamline systems with the aim of eliminating gaps and ensuring transparency in day to day operations. Information technology was used as an effective tool for providing on-line services to all the stakeholders and to enhance organizational efficiency. Vigilance Unit also undertook the review of operational manuals of various activities of the Company. A number of comprehensive manuals on different areas of company''s activities have already been notified after review and some other manuals are in process of finalization. Detailed investigations were also carried out in respect of registered complaints during this period.

In accordance with the directives of CVC, Vigilance Awareness week was observed from October 26, 2013 to November 2, 2013 in the head office and regional offices of the Company. As part of a sequence of events during the Vigilance Awareness Week*, a one day workshop on "Sustaining an Organization''s Ethical Vision" was organized for the employees of your company. In the programme, interactive sessions were organised with prominent (acuity members on varied subjects like personal values and ethics and how to deal with day to day situations involving ethical dilemmas faced during working in an organization.

In compliance with the instructions of CVC, sensitive posts in the Company were identified afresh and the concerned officers were rotated. Agreed lists were finalized in respect of corporate office at Delhi and regional offices at Mumbai and Chennai in consultation with the CBI. Prescribed periodical statistical returns were sent to CVC, CBI, and MOP on time.

The Vigilance Unit worked for systematic improvements with a viewto bring about greater transparency, objectivity and accountability thereby contributing to the overall efficiency and effective ness of the organization.

37.0 OFFICIAL LANGUAGE

The FY 2013-14 had been a remarkable year of achievements for your company in the area of Official Language. Several awards and accolades were conferred upon the company like, ''Narakas Rajbhasha Shield (Vishesh Protsahan Puraskar)'' for Rajbhasha Implementation, ''Narakas Pratiyoglta Samman Trophy1 by Town Official Language Implementation Committee (TOUC). ''Karyalay Oeep Shield" by Rajbhasha Sansthan for significant contribution in use of Hindi. ''Rajbhasha Shiromani Shield 2014'' for Excellent implementation of Official Langauge, ''Rajbhasha Manishi Shield'' to DGM (Rajbhasha) for encouraging use of Rajbhasha by Bharatiya Bhasha Aivam Sanskrtiti Sansthan. One of our employees won first prize in Inter PSU Debate Competition held under the aegis of TOUC.

The meetings of the Official Language Implementation Committee were organised in each quarter to review and improve implementation of Official Language Policy. Hindi website of your company was updated regularly. Twelve Hindi workshops were organized wherein 242 executives and non executives were trained and special thrust was laid on use of Unicode. Annual Report of the Company was published in bilingual form. Company''s Quarterly magazine ''UtjaDeepti'' was published regularly.

To create a Hindi oriented environment, the Company celebrated Hindi Day on September 14, 2013 and Hindi Month from September 14, 2013 to October 15, 2013. Various competitions, like Nara/Slogan lekhan, Vartanishodhan, Sansmaran, Bhav Pallavan, Kaiiani Buno and Mook Prahelika were organized. In all, 216 employees participated in these competitions. An inter PSU competition i.e. ''Chitra (Maukhik) Abhivyakti Pratiyoglta'' was also conducted under the aegis of TOLIC wherein employees of 25 various Public Sector Undertakings participated. During the Vigilance Awareness Week'', three competitions were organised in Hindi, slogans were displayed in Hindi and SMS sent in Hindi.

During the year, Inspection of PFC Head Office was carried out by Second Sub Committee of Parliamentary Committee on Official Language. Officials of Ministry of Power also conducted the inspections of Head Office at New Delhi, Regional Office (South) at Chennai as well as Regional Office (West) at Mumbai.

38.0 RIGHT TO INFORMATION ACT

Information is an integral part of our life to upgrade ourselves on various issues which may either have a direct or indirect influence on our day to day life. Without information, it would not be possible to exercise our valuable fundamental right of ''Freedom of Speech and Expression'' as guaranteed under Article 19(1) (a) of the Indian Constitution. Every democratic country attributes much importance to the freedom of speech and expression and in order to exercise such right more effectively and efficiently. The people of the Country are entitled to know about the functioning for the welfare of the people and development of the country. The main objective of the Right to Information Act, 2005, is to ensure greater and more effective access to information and to maintain transparency and improve accountability in the working of the public departments both Central and State .The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the PublicAuthorities.

Your company has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the company. The Company has designated a Public Information Officer (PIO), an Appellate Authority and a Transparency Officer at its registered office for effective implementation of the RTI Act.

During the FY 2013-14, all 89 applications received under the RTI Act, were duty processed and replied to. In compliance with Section 4 of the RTI Act, requisite disclosures have been updated and hosted on PFC website. Your company has also complied with the directions of Centra! Information Commission (CIC) regarding filing of online Quarterly/Annual Return for the FY 2013-2014.

SUOMOTO DISCLOSURES UNDER SECTION 4 0F THE RTI ACT 2005

During FY 2013-14, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated 15.04.2013 issued guidelines on the following

(i) Suomoto disclosure of more items under Section 4;

(ii) Guidelines for digital publication of proactive disclosure under Section 4;

(iii) Guidelines for certain clauses of Section 4(1)(b) to make disclosure more effective;

(iv) Compliance mechanism for suomoto disclosure (proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid guidelines, your company has placed the requisite information on the website of the company.

39.0 GRIEVANCE REDRESSAL

Your Company has separate Grievance Redressal Systems for dealing with the grievances of the employees, its customers and the public at large. The systems are duly notified and are easiy accessible. Adesignated Nodal Officer is responsible to ensure quick redressal of grievances within the permissible time frame. The company atso has a notified Citizen''s Charter to ensure transparency in its work activities. This Charter te available on the website of the Company to facilitate easy access.

40.0 DETAILS OF PROCUREMENT FROM MSEs

The details of the procurements made from Micro and Small Enterprises (MSEs) during the FY 2013-14 and the targets for FY 2014-15 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 is as under:

S. Particulars Achievements of Target for No. FY 2013-14 FY 2014-15

I Total annual procurement (in value) Rs.311,89,453 Rs. 330,00,000

II Total value of goods and services Rs.73,54,663* Rs.66,00,000 procured from MSEs (including MSEs owned by SC/ST entrepreneurs)

III Total value of goods and services - 13,20,000** procured from only MSEs owned by SC/ST entrepreneurs

IV %age of procurement from MSEs 23.5% 20% (including MSEs owned by SC/ST entrepreneurs) out of total procurement

V %age of procurement from only MSEs - - owned by SC/ST entrepreneurs out of total procurement

VI Total number of vendor development - One Vendor programmes for MSEs development half yearly

VII Confirmation of uploading annual MSE - Annual pro- procurement profile on your website by curement plan hyperlink of same uploaded at www.pfcindia.com

* Procurement value includes the purchase from MSME. KB, NCCf, DCCWS Ltd., Handicraft Emporiums and Central Cottage Industries.

** Subject to availability of the product through MSME SC/ST Agency,

41.0 POSTAL BALLOT

During May-June, 2014, your company conducted Postal Ballot seeking approval of the shareholders on the following proposals by passing special resolutions:

(a) Raising of resources through private placement of non-convertible debentures pursuant to the provisions of Section 42 of the Companies Act 2013 read with Rule 14 of Companies (Prospectus and allotment of securities) Rules, 2014,

(b) Enhancement of the borrowing power for the purpose of business of the company pursuant to the provisions of Section 180 (1) (c) of the Companies Act, 2013 read with the applicable rules.

(c) Authorization to the Board of Directors for mortgaging and/or creating charge on the assets of the company for securing borrowings for the purpose of business of the company pursuant to the provisions of Section 180 (1) (a) of the Companies Act, 2013 read with the applicable rules.

All the above proposals were passed by the shareholders with requisite majority and the result of the Postal ballot was announced on June 20,2014.

42.0 BOARD OF DIRECTORS

Following are the changes in Board of Directors of your company since April 1,2013:

* Shri M. K. Goel, Director (Commercial) assumed the additional charge of Chairman and Managing Director vice Shri Satnam Singh w.e.f. September 13,2013.

* Shri Vijay Mohan Kaul assumed the charge of Non Official Part Time (Independent) Director on the Board of PFC w.e.f, June 24,2013,

* Shri Yogesh Chand Garg assumed the charge of Non Official Part Time (Independent) Director on the Board of PFC w.e.f, August 22,2013.

* Shri Ajit Prasad, Non Official Part Time (Independent) Director relinquished the charge of Director of the Company consequent upon compl etion of h is ten u re w. e .f. October 8,2013.

* Shri Krishna Mohan Sahni, Non Official Part Time (Independent) Director relinquished the charge of Director of the Company consequent upon completion of his tenure w.e.f. December 31,2013.

The Board placed on record its deep appreciation for the commendable contributions made by Shri Satnam Singh, Shri Ajit Prasad and Shri Krishna Mohan Sahni in the deliberations of Board and its committees during their association with the Company.

The Board also welcomes Shri Vijay Mohan Kaul and Shri Yogesh Chand Garg and expresses confidence that the Company shall immensely benefit from their rich and varied experience.

43.0 ACKNOWLEDGEMENT

The Board of Directors acknowledge and place on record their appreciation for the guidance, co-operation and encouragement extended to the Company by the Government of India, Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India, Department of Public Enterprises, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level as well as from various domestic and international financial institutions/banks, agencies etc.

The Board also conveys its gratitude to the shareholders, various International and Indian Banks/Multilateral agencies/financial Institutions/ credit rating agencies for the continued trust and for the confidence reposed by them in PFC. Your Directors would also like to convey their gratitude to the clients and customers for their unwavering trust and support.

The Company is also thankful to the Comptroller & Auditor Genera! of India and the Statutory Auditors for their constructive suggestions and co-operation.

Your Directors also recognize and appreciate the untiring efforts and contributions made by the employees to ensure excellent all round performance of your Company.

For and on behalf of the Board of Directors

(M. K. Goel) Chairman & Managing Director

Place : New Delhi Dated : 25/08/2014

---

Mar 31, 2013

To The Members of Power Finance Corporation Limited

The behalf of Board of Directors, I have pleasure in presenting 27th Annual Report on the performance of your company for the financial year ended March 31, 2013 along with Audited Statements of Accounts, Auditor''s Report & review of accounts by the Comptroller and Auditor General of India.

1. FINANCIAL HIGHLIGHTS

(a) PROFITABILITY

(Rs. in crore)

Particulars 2012-13 2011-12

Profit Before Tax 5967.04 4104.25

Provision for Income Tax (current year) (-) 1543.57 (-) 1070.87

Provision for Income Tax (earlier years) 128.49 2.82

Provision for Deferred Tax Liability (-) 132.36 (-) 4.46

Profit After Tax 4419.60 3031.74

Appropriations of Profit after Tax:

Reserve for Bad & Doubtful Debts u/s 36(1) 250.40 173.73 (viia) (c) of Income Tax Act, 1961

Special Reserve created and maintained u/s 1155.90 776.20 36(1) (viii) of Income Tax Act, 1961

Debenture Redemption Reserve 219.06 55.73

CSR Reserve 18.36 0.00

SD Reserve 0.49 0.00

General Reserve 442.00 304.00

Interim Dividend 792.01 659.97

Proposed Final Dividend 132.00 132.00

Corporate Dividend Tax paid on Interim 128.48 107.06 Dividend

Proposed Corporate Dividend Tax on Final 22.43 21.41 Dividend

Balance carried to Balance Sheet 1258.47 801.64

(b) LENDING OPERATIONS

(Rs. in crore)

Particulars 2012-13 2011-12

Sanction 75147 59429

Disbursement 45151 39818

(c) R-APDRP OPERATIONS

(Rs. in crore)

Particulars 2012-13 2011-12

Sanctioned project cost 3728 9595

Disbursement 1217 1600

2.0 FINANCIAL PERFORMANCE

2.1 REVENUE

The highest ever total income achieved by your company during the FY 2012-13 was Rs.17,272.55 crore registering an increase of 33% over the total income of Rs.13,037.11 crore achieved last fiscal. Operating income for the current year increased from Rs.13,014.85 crore to Rs.17,260.27 crore registering an increase of 33% over last fiscal. Interest income including lease income for the year increased from Rs.12,621.06 crore to Rs.16,917.04 crore.

2.2 EXPENSES

The total expenditure for the FY 2012-13 amounted to Rs.11,305.51 crore as against expenditure of Rs.8,932.86 crore during last fiscal. Interest, finance and other charges including bond issue expenses incurred during FY 2012- 13 amounted to Rs.11,088.41 crore as against Rs.8,661.55 crore in the previous year. These expenses constituted 98% of total expenditure in the FY 2012-13 as compared to 97% in the previous year. Employee Benefit and other administrative expenses for the FY 2012-13 reduced from 1.39% of total expenses during last fiscal to 1.23% of total expenses. Further, these Employee Benefit and other administrative expenses amounted to 0.09% of the Loan assets in the FY 2012-13 as against 0.10% of loan assets last fiscal.

2.3 PROFIT

During the FY 2012-13, your Company earned its highest ever net profit of Rs.4,419.60 crore registering a growth of 46% over the net profit of Rs.3,031.74 crore earned by your company during FY 2011-12.

2.4 SHARE CAPITAL

As on April 1, 2012, the paid-up share capital of the Company was Rs.1,319.93 crore comprising of 1,31,99,31,705 equity shares of face value Rs.10 each. During FY 2012-13, 83,306 equity shares of face value Rs.10/- each were allotted to the employees under the Company''s Employee Stock Option Scheme i.e. PFC ESOP 2010. Consequent to this allotment, the paid-up equity share capital of the Company stands increased to Rs.1,320.02 crore comprising of 1,32,00,15,011 equity shares of face value Rs.10 each as on March 31, 2013.

Further, the Board of Directors in its meeting held on July 15, 2013 has allotted 21,820 equity shares of face value of Rs.10 each. Consequent to this allotment, the paid-up equity share capital of the Company stands increased to Rs.1,320.04 crore comprising of 1,32,00,36,831 equity shares of face value Rs.10 each.

2.5 DIVIDEND

Your Directors have recommended a final dividend of Rs.1 per equity share in addition to an interim dividend of Rs.6 per equity share paid on February 13, 2013.

The total dividend for the FY 2012-13 thus aggregates to Rs.7 per equity share as against Rs.6 per equity share paid for the previous year. The final dividend will be paid after approval at the Annual General Meeting. The total dividend pay-out for the year 2012-13 amounts to Rs.924.01 crore as against a dividend pay-out of Rs.791.97 crore in the preceding year.

2.6 ISSUE OF TAX FREE BONDS

Your company came out with the public issue of Tax Free Bonds Tranche-I from December 14, 2012 till December 27, 2012 in two series i.e. Series 1 & 2. The interest rate of Series 1 was 7.19% and of Series 2 was 7.36%. An additional interest of 0.50% p.a. has been made available to the original allottees under retail category for bonds of both the series. The company mobilized resources to the tune of Rs.699.75 crore in both the series from the market. The date of allotment of said public issue of Tax Free Bonds was January 4, 2013. These bonds have been listed on Bombay Stock Exchange (BSE). The funds raised from the above said issue were utilized towards lending purposes and working capital requirements.

Your Company also came out with the Public issue of Tax free Bonds Tranche-II from February 18, 2013 till March 19, 2013 in two series i.e. Series 1 & 2. The interest rate of Series 1 was 6.88% and of Series 2 was 7.04%. An additional interest of 0.50% p.a. has been made available to the original allottees under retail category for bonds of both the series. The Company mobilized resources to the tune of Rs.165.37 crore in both the series from the market. The date of allotment of said public issue of Tax Free Bonds was March 28, 2013. These bonds have also been listed on Bombay Stock Exchange (BSE) w.e.f. April 10, 2013. The funds raised from the above said issue will be utilized towards lending purposes, debt servicing and working capital requirements.

Your Company also came out with the Private placement of Tax free Bonds issue in the month of November, 2012 in two series i.e. Series 94 (A&B) & Series 95 (A&B). The interest rate of Series 94 (A&B) for 10 years and 15 years was 7.21% p.a. and 7.38% p.a. respectively and of Series 95 (A&B) for 10 years and 15 years were 7.22% p.a. and 7.38% p.a. respectively. The Company mobilized resources to the tune of Rs.410 crore in both the series. The date of allotment of these Private placements of Tax Free Bonds series 94 & 95 (A&B) was November 15, 2012 and November 29, 2012 respectively. These bonds are listed on National Stock Exchange (NSE).

3.0 LENDING OPERATIONS

Your Company issued its highest ever sanctions of loans amounting to Rs.75,147 crore during the FY 2012-13 to State, Central and Private Sector entities. In addition to above, projects worth Rs.3,728 crore were sanctioned under R-APDRP scheme during 2012-13. With this, cumulative sanctions amount to Rs.9,52,979 crore including Rs.35,143 crore under R-APDRP scheme.

An amount of Rs.45,151 crore was disbursed to State, Central, Private and Joint Sector entities during the FY 2012-13 in addition to disbursement of Rs.1,217 crore under R-APDRP scheme. With this the cumulative disbursements amount to Rs.2,60,836 crore including cumulative disbursements of Rs.6,720 crore under R-APDRP scheme.

3.1 Financial Assistance

3.1.1 Sector-wise

(Rs. in crore)

2012-13 Cumulative upto March, 2013 Category Sanctions Disbursements Sanctions Disbursements

State Sector 55410 34781 294970 184950

Central Sector 474 1577 33665 30731

Private Sector 19263 6731 71972 25810

Joint Sector - 2062 17229 12625

Total 75147 45151 417836 254116

3.1.2 Discipline-wise

(Rs. in crore)

2012-13 Cumulative upto March, 2013 Category Sanctions Disbursements Sanctions Disbursements

Thermal Generation 31546 22743 239544 132162

Hydro Generation 4484 1952 37669 24997

Wind, Solar, Bagasse and Biomass 2240 417 4089 1589

Renovation and Modernization of Thermal Power Stations 13 462 7753 6360

Renovation & Uprating of Hydro Power Projects 69 7 1615 1080

Transmission 8278 2033 39801 21138

Distribution 460 1265 16192 12231

Short Term Loans 4760 3120 38880 37090

Counterpart funding for R-APDRP Part B 890 15 4666 15

Transitional Finance 18188 12818 18188 12818

Others* 4219 319 9439 4636

Total 75147 45151 417836 254116

* Others include Decentralized Management, Project Settlement, Pre Investment Fund, Technical Assistance Project, Medium Term Loan, Buyers Line of Credit, Equipment Manufacturing Loan, Loan for Asset Acquisition, Bill Discounting, Studies, Loan for Redemption of bonds, Purchase of power through PXI, Loan for Promoter''s Equity, Computerization, Fuel Sources Development, funding of Regulatory assets, Loan against receivables etc.

3.1.3 Product-wise

(Rs. in crore)

2012-13 Cumulative upto March, 2013 Category Sanctions Disbursements Sanctions Disbursements

Term Loans 51468 28933 353355 198461

Short Term Loans 4760 3120 38880 37090

Leasing - - 1043 795

Grants - 1 73 55

Transitional Finance 18188 12818 18188 12818

Others ** 731 279 6297 4897

Total 75147 45151 417836 254116

** Others include Debt Refinancing, Bridge Loan, Loan to Equipment Manufacturers, Buyers Line of Credit, Bill Discounting, Purchase of power through PXI etc.

3.2 Financial Assistance under R-APDRP

(Rs. in crore)

2012-13 Cumulative upto March, 2013 Category Sanctions Disbursements Sanctions Disbursements Project cost project cost

Part A (IT) 47 282 5243 2043

Part A (SCADA) 27 111 1470 412

Part B 3654 824 28430 4265

Total 3728 1217 35143 6720

3.3 GENERATION PROJECTS

3.3.1 THERMAL PROJECTS

Thermal Power generation comprises a major proportion of India''s total installed capacity. During the FY 2012-13, the Company has sanctioned loans amounting to Rs.31,546 crore and disbursed an amount of Rs.22,743 crore for thermal power projects. The cumulative financial support provided by the Company for thermal generation schemes is Rs.2,40,644 crore out of which Rs.1,32,162 crore has been disbursed till March 31, 2013.

The major thermal generation projects sanctioned by your Company during the year include: OBRA-C Extension TPS (2x660 MW), Bellary TPS (1x700 MW), SDSTPS Unit III at Krishnapatnam (1x800 MW), 2x660MW TPS at Angul Distt, Odisha, 5x270 MW phase-II TPP at Nasik.

3.3.2 HYDRO PROJECTS

Hydro generation capacity in the country needs significant augmentation for overall systems to have optimal energy mix. During the FY 2012- 13, loans amounting to Rs.4,484 crore were sanctioned and an amount of Rs.1,952 crore was disbursed by your company. The cumulative financial support provided by the Company for hydro generation scheme is Rs.37,669 crore out of which Rs.24,997 crore has been disbursed till March 31, 2013.

3.4 RENOVATION, MODERNISATION AND LIFE EXTENSION

3.4.1 THERMAL PROJECTS

During the FY 2012-13, loans worth Rs.13 crore were sanctioned for R&M and life extension of thermal power plants and an amount of Rs.462 crore was disbursed. Cumulatively, an amount of Rs.7,753 crore has been sanctioned and Rs.6,360 crore stands disbursed till March 31, 2013.

3.4.2 HYDRO PROJECTS

During the FY 2012-13, loans worth Rs.69 crore were sanctioned for R&M of Hydro power projects and an amount of Rs.7 crore was disbursed. Cumulatively, an amount of Rs.1,615 crore has been sanctioned and Rs.1,080 crore stands disbursed till March 31, 2013.

3.5 TRANSITIONAL LOANS

In August 2012, your company formulated Broad Guidelines for "Transitional Financing to Discoms for supplementing the Financial Restructuring Scheme approved by GoI" by providing funding towards the yearly cash gap as per Financial Restructuring Plan (FRP). The objective is to provide financial support to meet the temporary liquidity crunch being faced by the Discoms and to enable these Discoms to bring financial turnaround over a specified period. While formulating the scheme, terms and conditions were stipulated to enable the Distribution companies to convert into a financially stable entity which will pave the way for further sustainable investment in power sector. Your Company has already sanctioned transitional loans of Rs.18,188 crore to various Discoms in the states of Punjab, Haryana, Uttar Pradesh, Rajasthan and Tamil Nadu. Further, an amount of Rs.12,818 crore has already been disbursed under these loans as on March 31, 2013.

4.0 REALISATION

Your Company gives utmost priority to the realisation of its dues towards principal, interest etc. Out of Rs.31,158.72 crore to be recovered towards principal, interest etc. under rupee term loans, bill discounting, working capital, lease financing, foreign currency loan, loans for equipment financing and guarantee fee, an amount of Rs.30,894.97 crore was actually realised. This works out to an overall recovery rate of 99.15% (previous year 98.91%). The overall recovery rate has been consistently maintained at 96-99% for past decade. Your company has achieved recovery rate of 99.39% in respect of principal amount due during the year.

In terms of Prudential Norms applicable, the provisioning on Non Performing Loan Assets has been reduced by an amount of Rs.22.39 crore during the year. The Company has made a total provision amounting to Rs.121.48 crore for Non-Performing Assets (NPA) against Loan Assets in its Annual Accounts upto the year 2012- 13. After making provision on NPA, the level of net Non-Performing Assets (NPA) has been recorded at Rs.1,013.04 crore which is 0.63% to the Total Loan Assets as on March 31, 2013.

In addition to above, the company has also made a provision of Rs.132.79 crore on standard assets outstanding as on March 31, 2013, which would strengthen PFC''s balance sheet by providing a buffer provisioning and inspire higher levels of confidence amongst investors, regulators and other stakeholders in your company.

5.0 RESTRUCTERED LOANS

The details of loans restructured during the FY 2012-13 are as follows:

Particular FY 2012-13 FY 2011-12

Standard Loans Restructured No. of Borrowers 7 4

Amount Outstanding 3699.84 2868.46

Sub-Standard Loans Restructured No. of Borrowers 1 1

Amount Outstanding 325.00 227.61

Doubtful Loans Restructured No. of Borrowers - -

Amount Outstanding - -

Total No. of Borrowers 8 5

Amount Outstanding 4024.84 3096.07

* The restructured loan amount includes Rs. 3,735.57 crore wherein the first repayment date was extended due to delayed commissioning of the respective project.

6.0 BORROWINGS

6.1 BORROWINGS FROM DOMESTIC MARKET

Your Company mobilized funds amounting to Rs.37,751.21 crore from the domestic market during FY 2012-13 as against Rs.36,318.57 crore mobilized during FY 2011-12 comprising of Rs.31,142.01 crore through issue of unsecured/secured taxable/Tax free bonds in the nature of debentures, Rs.1,700 crore by way of long/medium term loans from Banks/FIs, and Rs.4,909.20 crore by issue of Commercial Paper and Short Term Loans.

6.2 EXTERNAL BORROWINGS

During the FY 2012-13, your company raised External Commercial Borrowing (ECB) of USD 500 million through syndicated loans as detailed here in below:

Amount (USD in Million) Rate of Interest Tenor of the Loan (Years) Average Tenor (Years)

250 6 month LIBOR 175 bps 3 3

250 6 month LIBOR 145 bps 4 3

6.3 CASH CREDIT/ OVERDRAFT FACILITIES

For day to day operations, your company continued to follow prudent strategies for optimum utilization of fund based resources. To hedge any financial liquidity bottlenecks, ample credit lines to the tune of Rs.8,339.93 crore were maintained with various scheduled commercial banks for short term funding which do not bear any commitment charges towards unutilized limits. The said limits have been utilized to the extent of Rs.2,959.22 crore as on March 31, 2013.

7.0 CREDIT RATINGS Domestic

During the FY 2012-13, your Company''s long term domestic borrowing programme (including bank loans) was awarded the highest rating of CRISIL AAA, ICRA AAA and CARE AAA by CRISIL, ICRA and CARE respectively. The Company''s short term domestic borrowing programme (including bank loans) was awarded the highest rating of CRISIL A1 , ICRA A1 and CARE A1 by CRISIL, ICRA and CARE respectively.

International

During the FY 2012-13, the international credit rating agencies Moody''s, Fitch and Standard and Poor''s have given long term currency issuer ratings of Baa3, BBB- and BBB- respectively to your company, which are at par with sovereign rating for India.

8.0 RISK MANAGEMENT

8.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity and interest rate and also monitors implementation of decisions taken in the ALCO meetings. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. Such analysis is made every month in yearly buckets for the next 10 years, and is used for critical decisions regarding the time, volume and maturity of profile of the borrowings, creation of new assets and mix of assets and liabilities in terms of time period (short, medium and long-term). While the liquidity risk is being monitored with the help of liquidity gap analysis, the interest rate risk is managed by analysis of interest rate sensitivity gap statements, evaluation of Earning at Risk (EaR) on change of interest rate and creation of assets and liabilities with the mix of fixed floating interest rates.

8.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forward, option, principal swap, interest rate swap and forward rate agreements.

As on March 31, 2013, the total foreign currency liabilities were USD 1040.30 million, JPY 41,643.20 million and Euro 22.80 million. On an overall basis, the currency exchange rate risk is covered to the extent of 15% through hedging instruments and lending in foreign currency.

8.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

Your Company has put in place a mechanism to ensure that the risks are monitored carefully and managed efficiently. In this regard, your company had constituted the Risk Management Committee of Directors to monitor various risks, examine risk management policies & practices and initiate action for mitigation of risks arising in the operations. To facilitate this, the Company had put in place an Integrated Enterprise - Wide Risk Management Policy (IRM Policy).

The Company has identified 26 risks (11 quantifiable risks and 15 non quantifiable risks) which may have an impact on profitability/business of the Company. In order to implement IRM policy, the Risk Management Committee of Directors constitutes Risk Management Compliance Committee and a separate unit namely CRM (erstwhile CRA unit) for monitoring of the identified risks. CRM unit continuously monitors the risks from time to time and ensures that the risks are being mitigated on time.

9.0 ULTRA MEGA POWER PROJECTS (UMPPs) AND INDEPENDENT TRANSMISSION PROJECTS (ITPs)

9.1 UMPPs

UMPP is the initiative of Government of India with Ministry of Power as the ''facilitator'' for the development of these UMPPs while Central Electricity Authority (CEA) is the ''Technical Partner''. Your Company has been designated as the ''Nodal Agency'' for development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each. Sixteen (16) such UMPPs were identified to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Chhattisgarh (Surguja), Karnataka, Maharashtra (Munge), Tamil Nadu (Cheyyur), Odisha (Sundargarh), 2 Additional UMPPs in Odisha and 2nd UMPPs in Andhra Pradesh (Prakasam), Tamil Nadu, Gujarat and Jharkhand (Deoghar) and Bihar. So far, 13 Special Purpose Vehicles (SPVs) have been established by the Company for UMPPs to undertake preliminary site investigation activities necessary for conducting the bidding process for these projects. These SPVs shall be transferred to successful bidder(s) selected through Tariff Based International Competitive Bidding Process for implementation and operation.

Four (4) SPVs have been transferred to the successful bidders as indicated below:

S. Successful Date of No. Name of S P V Bidder Transfer

1 Coastal Gujarat The Tata Power April 22, Power Ltd. Company Ltd. 2007

2 Sasan Power Ltd. Reliance Power August 7, Ltd. 2007

3 Coastal Andhra Reliance Power January Power Ltd. Ltd. 29, 2008

4 Jharkhand Reliance Power August 7, Integrated Power Ltd. 2009 Ltd.

Out of the remaining nine (9) SPVs namely Chhattisgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.), Coastal Karnataka Power Limited, Coastal Maharashtra Mega Power Limited, Coastal Tamil Nadu Power Limited, Orissa Integrated Power Limited, Sakhigopal Integrated Power Company Limited, Ghogarpalli Integrated Power Company Limited, Tatiya Andhra Mega Power Limited and Deoghar Mega Power Limited, Request for Qualification (RfQ) for Chhattisgarh UMPP was issued in March, 2010 and RfQ for Odisha UMPP was issued in June, 2010. The last date for submission of response to RfQ for Chhattisgarh UMPP has been extended several times on the advice of MoP due to forest related issues concerning coal blocks and is now October 3, 2013. Responses for RfQ for Odisha UMPP were received on August 1, 2011. RfP for this project would be issued once revised standard bid document (SBDs) to be followed are notified by Ministry of Power.

9.2 ITPs

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors, after developing such projects to a stage having completed preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required and to conduct bidding process etc.

So far nine (9) Special Purpose Vehicles (SPVs), two (2) by PFC and other seven (7) (including four (4) in the year under report) by PFC Consulting Limited, the wholly owned subsidiary of your company, have been established for ITPs. Out of these nine (9) SPVs, four (4) SPVs have been transferred to the successful bidders as detailed here in below:

S. Successful Date of No. Name of S P V Bidder Transfer

1 East North Sterlite March 31, Interconnections Technologies 2010 Company Limited (ENICL) Limited

2 Jabalpur Transmission Sterlite Transmission March 31, Company Limited (JTCL) Projects Private 2011 Limited

3 Bhopal Dhule Sterlite Transmission March 31, Transmission Company Projects Private 2011 Limited (BDTCL) Limited

4 Nagapattinam-Madhugiri Power Grid March 29, Transmission Company Corporation of 2012 Limited (NMTCL), India Limited Package A (POWERGRID)

The bidding process for the independent transmission project viz. ''Transmission Project associated with DGEN TPS (1200MW) of Torrent Power Limited and Interconnection between Srinagar and Tehri'' was re- initiated during the year since the scope of project was revised where under the transmission scheme associated with Interconnection between Srinagar and Tehri was deleted. The said transmission project with the revised scope was re-notified by Ministry of Power and the name of the SPV incorporated for the said transmission project was changed from "DGEN & Uttrakhand Transmission Company Limited" to "DGEN Transmission Company Limited".

During the year, Ministry of Power appointed PFC Consulting Limited, the wholly owned subsidiary of your company, as Bid Process Coordinator (BPC) for four (4) new Independent Transmission Projects to be implemented through Tariff Based Competitive Bidding Process. During the year under report, PFC Consulting Limited incorporated following four (4) SPVs as its wholly owned Subsidiaries

(i) Patran Transmission Company Limited, SPV established for Transmission System for Patran 400 kv S/S

(ii) RAPP Transmission Company Limited, SPV established for Part ATS of RAPP U-7&8 in Rajasthan

(iii) Darbhanga-Motihari Transmission Company Limited, SPV established for Eastern Region System Strengthening Scheme - VI

(iv) Purulia & Kharagpur Transmission Company Limited, SPV established for Eastern Region System Strengthening Scheme - VII.

The bidding processes for these Independent Transmission Projects are under progress.

Further, PFCCL has also been appointed as ''Bid Process Cordinator'' by MoP, GoI, to undertake work on 2 new Independent Transmission Project viz. "Northern Region System Strengthening Scheme-XXXIII" "ATS for Tanda Expansion TPS (2x660MW)" in June 2013. Incorporation of SPVs for the said two ITPs is in progress.

10.0 RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP)

As a part of R-APDRP, for the first time, Information Technology (IT) is being deployed in identified 1,402 towns of the country for establishment of accurate, reliable & sustainable baseline data, business process automation, carrying out energy audit for identifying AT&C losses and better consumer services etc. in the power distribution sector.

Also under Part-A, projects for Supervisory Control and Data Acquisition (SCADA) System/ Distribution Management System (DMS) is being established in big towns in the country (67 towns envisaged) for real time operation and control of Distribution Network for improvement of efficiency, quality and reliability of power supply.

Further, under Part-B, projects for Distribution Strengthening and Improvement are being implemented in over 1,100 towns of the country. The main focus of the scheme is reduction of AT&C losses to 15% or below.

Your Company, as nodal agency, has contributed significantly during the year in implementation of R-APDRP programme during the FY 2012-13. Your company has cumulatively sanctioned, Part-A(IT) schemes of all eligible 1,402 towns, Part-A (SCADA) schemes for 65 towns out of 67 envisaged towns and Part-B schemes for 1,171 towns out of envisaged 1,200 towns till March 31, 2013. During the year, your company sanctioned Rs.3,728 crore of projects against the MoU targets of Rs.1,084 crore set for R-APDRP. The cumulative sanction under R-APDRP is Rs.35,143 crore as on March 31, 2013.

Your company has also disbursed the entire amount of Rs.1,217 crore released by Ministry of Power (MoP) under R-APDRP during the FY 2012-13 to the state utilities. The cumulative disbursement under R-APDRP is Rs.6,720 crore as on March 31, 2013.

With the measures taken so far, as on March 31, 2013, Data Centers in cumulatively 15 States have been commissioned. Further, 170 towns have gone live in seven states, namely, Andhra Pradesh (24), Gujarat (43), Karnataka (10), Maharashtra (16), Madhya Pradesh (45), Uttarakhand (2) & West Bengal (30). In such towns, all business process software modules are functional and energy audit reports are being derived from the system. During the year, for implementation of Part-B projects of R-APDRP, utilities have tied up counterpart funding amounting to Rs.5,901 crore. With this, cumulative counterpart funding tied up amounts to Rs.14,665 crore of which Rs.4,666 crore is from PFC. Implementation work has commenced cumulatively in 822 towns, to strengthen & improve distribution system and reduce AT&C losses to 15% or below.

For capacity building and to recognize the need and to keep pace with technology, contemporary knowledge and skill, your company imparted training on various themes to 16,457 personnel of Power Utilities against MoU target of 8,000 personnel.

Cumulatively, as on March 31, 2013, 1356 towns have been ring fenced & baseline AT&C losses have been established in 1014 towns.

The reduction in AT&C losses are likely to be visible in R-APDRP towns in the utilities in next one to five years with establishment of IT system and Part-B completion in various towns coupled with administrative and other measures. Thus, your company shall be contributing largely in improvement of financial health of Distribution utilities which shall consequently improve health of Transmission and Generation Power Utilities, resulting in improvement of quality of assets of your company for such borrowers in the State Power Sector.

11.0 EXTERNALLY AIDED PROJECTS

Your Company has a Line of Credit of Euro 100.56 million from KfW to finance renovation modernization and upgradation (RM&U) of Hydro Electric Projects (HEPs) which envisaged financing RM&U schemes of six HEPs of Uttrakhand Jal Vidyut Nigam Ltd. (UJVNL). Out of six projects, Notice for Inviting Tenders (NIT) has already been issued for the Kulhal, Dhakrani and Dhalipur projects. Upon request by UJVNL in FY 2012-13, it has been agreed that Line of Credit would cover only those three projects for which NIT has been issued. Subsequently, UJVNL has shown inclination to close the loan as the repayment schedule and other conditions of KW loan are not favorable to them. Further course of action in the matter is being examined by your company.

12.0 INITIATIVE TOWARDS REFORMS AND RESTRUCTURING

Your Company has been assisting the State Power Utilities (SPUs) in their reform and restructuring program. During the year, your company disbursed an amount of Rs.1 crore to Bihar State Electricity Board (BSEB) for Reform & Restructuring assignment. Government of Bihar vide their Notification dated October 30, 2012 have unbundled BSEB as per the provisions of the Electricity Act, 2003.

The changing environment has necessitated the power utilities to be more responsive to market requirements by way of enhancing efficiency by introducing latest technologies as part of ongoing IT initiatives. During the year, an amount of Rs.163 crore has been sanctioned and Rs.9 crore disbursed for computerization schemes of State Power Utilities in addition to the computerization schemes covered under R-APDRP.

Categorization of Utilities

Your Company classifies State Power Utilities, its principal borrowers, into A , A, B and C categories. The categorization is based on the pre-determined parameters including operational & financial performance of the utilities. The categorization enables the company to determine credit exposure limits and pricing of loans to the state power utilities. This categorization is carried out biannually. As on March 31, 2013, out of 101 utilities categorized, 29 were categorized as "A ", 29 as "A", 28 as "B" and 15 as "C".

The Company is also stipulating appropriate conditions relating to implementation of reforms and improvement of performance while sanctioning financial assistance to the said State Power Utilities based on their appraisal.

The Ministry of Power in July 2012 formulated an Integrated Rating Methodology covering the State Power Distribution Utilities. The main objective of the integrated rating system for the state distribution utilities is to develop a mechanism for incentivising/dis-incentivising the distribution entities in order to improve their operational and financial performance, evaluate all utilities in power distribution sector on the basis of current levels of performance as well as on relative improvements in performance achieved on a year to year basis, facilitate realistic assessment by Banks/FIs and enable funding with appropriate loan covenants and serve as a guiding factor for Govt. of India''s assistance to the state power distribution sector under various initiatives.

The Integrated Rating framework covers all state distribution utilities (including SEBs/utilities with integrated operations) except state power departments. The integrated ratings shall be carried out on an annual basis by independent credit rating agencies.

Your Company has been nominated by MoP as the nodal agency for coordinating the activities relating to integrated rating of state distribution utilities by independent credit rating agencies.

The first Integrated Rating exercise covering all the 39 state distribution utilities was carried out by ICRA and CARE and the same were declared on March 19, 2013. Quarterly and Annual Report of State Power Utilities

Your Company is compiling brief research report on the performance of each of the state power utilities (SPUs) on a quarterly basis. The report is acknowledged as a useful effort from the SPUs as they can compare performance of their utility vis-a-vis other utilities and take mid term corrective measures for the overall improvement of the sector. The report contains key operational and financial parameters, reforms status, the status of implementation of Electricity Act 2003, areas of concern and conditions for improvement of performance etc. The report is sent to the stakeholders in the Power Sector such as the SPUs and Power Secretaries of the States.

During the FY 2012-13, your company issued performance reports for the quarters January-March 2012 covering 42 utilities, April-June 2012 for 41 utilities and for July- September 2012 and October-December 2012 covering 42 utilities each.

In addition, during FY 2012-13, your Company released 9th edition of its report on the performance of SPUs for the years 2008-09 to 2010-11 covering 93 utilities. The report is an integral part of your Company''s constant endeavour towards analyzing the performance of State Power Sectors in the areas of financial and operational performance e.g. profitability, gap between average cost of supply and average realization (Rs./kwh), net worth, capital employed, receivables, payables, capacity (MW), generation (Mkwh), AT&C losses (%) etc. at utility, state, regional and national level. The report provides a reliable database and helps in determining the results associated with the reforms in the sector and is also recognized by various stakeholders as a useful source of information regarding the state power sector. The Report for the years 2009-10 to 2011-12 covering 77 utilities has been prepared and submitted to Ministry of Power as per the targets set in MoU. The final report (10th) on the performance of all SPUs for the period 2009-10 to 2011-12 is under finalization.

13.0 POLICY INITIATIVES

Your Company constantly reviews and revises its lending & operational policies/ procedures to suitably align these with market requirements as also with its corporate objectives and introduces new policies/products to meet the dynamic business requirements.

During the year, your company introduced various new policies/ schemes/ guidelines like transitional financing to discoms, funding grid connected solar thermal private sector power generation projects, underwriting of debt, investment in equity of power projects and guarantee for credit enhancement etc.

Your company also reviewed its policy guidelines for Rupee Short Term Loan (STL), Buyer''s Line of Credit, issue/ extension of Letter of Comfort for opening of Letter of Credit (LC) under term loan sanctions, levy of commitment charges/upfront fee, with a view to make the same more borrower friendly.

The interest rates in respect of term loan and short term loan were reviewed and revised periodically during the financial year. The financial charges/fees were also reviewed and modified. Further, advisory fee and revalidation fee payable by investee company in case of PFC''s Equity Investment commitment and fees for underwriting of debt have been introduced.

In spite of growing competition in the market as well as concerns on interest rates on account of factors like high inflation levels, tight liquidity in the market etc., PFC judiciously balance its objectives of business growth and profitability.

14.0 PRIVATE EQUITY FUND

In order to exhibit persistent growth and to enter new areas of business so as to keep pace with market developments, your company has decided to enter Private Equity business. Your Company plans to shortly launch a private equity fund for the power sector along with Tata Capital Limited (TCL) to facilitate flow of institutional funds in equity of power projects leading to faster financial closure of such projects and thus enabling accelerated capacity addition in the sector. The fund would enable your company to take an indirect exposure to equity assets in addition to earning other income (through fee based earnings of the Asset Management Company (AMC). The fund is proposed to be registered as an Alternate Investment Fund (AIF) under SEBI''s AIF regulations. TCL and your company have signed the ''Head of Terms" (containing major terms and conditions) on the basis of which a Joint Venture Agreement will be signed by the parties.

15.0 FACILITATION SERVICES

The Facilitation Group (FG) has been set up to expand PFC''s financing business beyond its traditional products into new areas of Forward & Backward linkages to the Power sector like Fuel Sources Development, setting up of Equipment Manufacturing facilities, Nuclear Power Projects, among others. The Facilitation Group (FG) is also mandated to explore the opportunities of expanding PFC''s business in new geographies like Hydel projects in Bhutan & Nepal, JVs in Sri Lanka etc.

The ambitious capacity addition programme of Government of India envisaged for XII Plan requires augmentation of country''s equipment manufacturing capacity in all the spheres of power sector viz., Generation, Transmission and Distribution. Also existing thermal power projects (coal & gas based) are already facing shortage of fuel (coal & gas) and based on current projections of demand and supply of fuel, the gap is likely to widen and there is need to enhance fuel supply so as to ensure efficient utilization of existing capacity as well as proposed/expected capacity addition in future. Considering these aspects, GoI has already initiated steps including the allocation of various coal blocks/mines to both State Sector as well as private sector entities to develop and produce coal for power sector. The port facilities are also being enhanced to facilitate more import of coal, gas and oil. These developments offer an opportunity to your company for venturing into these areas e.g., financing of development/ expansion of fuel supply sources (Coal, Gas & Oil) and its distribution (rail network, pipelines, ports, jetties etc), equipment manufacturing etc.

Fuel Sources Development & Distribution (FSD&D) Scheme

As a pro-active step for facilitating the availability of finance for these projects, your company has evolved a Scheme for financing of projects in the area of Fuel Sources Development & its Distribution (FSD&D) for Power Projects. The objective of the scheme is to provide financial assistance for development/expansion of fuel supply sources and its distribution for Power Sector; covering development/expansion of Coal Blocks/mines, Coal Bed Methane, Coal Washeries, Coal Beneficiation Projects, Re-gasification & Liquefaction Projects, etc. and Development/expansion of Coal/Oil/Gas transportation facilities including ports/jetties for import of coal/oil/gas, gas pipelines etc.

Equipment Manufacturing (EM) Scheme for Power Sector

Concurrently, a scheme for financing of projects in the area of Equipment Manufacturing (EM) for Power Sector has also been introduced. The objective of this scheme is to provide financial assistance for setting up/expansion of equipment manufacturing capacity for power sector; covering of main plant equipments, balance of plant equipments, Transmission & Distribution equipments, non-conventional energy sources, nuclear power plants'' equipments and other relevant projects such as projects aimed at Demand Side Management (DSM) etc.

16.0 DIVERSIFICATION IN BANKING SECTOR

Your Company is exploring the possibility to acquire a substantial stake in a Public Sector Bank. In this regard, your company has sought consent of the Ministry of Power for your company''s diversification into banking sector.

17.0 RENEWABLE ENERGY AND CLEAN DEVELOPMENT MECHANISM (RE&CDM)

With rapid economic growth, the prospect of new demand being served by fossil fuels poses a serious concern for future global emissions, as well as India''s energy security. In response to these challenges, the Indian government has formulated various plans/incentives to increase the share of renewable energy sources through ambitious plan of capacity addition, in excess of 20,000 MW in 12th Plan, in particular, the Jawaharlal Nehru National Solar Mission (JNNSM) has set a target of installing 22 GW (22,000 MW) of solar power capacity by 2022. In order to facilitate achieving this ambitious target, state regulators have set Renewable Purchase Obligations (RPOs) for both solar and non-solar category, which will increase each year.

Considering the emerging prospects in the development and financing of renewable energy sector, your company has set up a wholly owned subsidiary exclusively for funding renewable energy sector. While there is separate subsidiary for financing of renewable energy projects, your Company still continues to fund larger renewable energy projects and has a dedicated Renewable Energy Group to focus and accelerate the development of business in the Renewable Energy Sector which include Wind, Biomass, Small Hydro, Solar etc. The company offers special interest rates for Renewable Energy Generation Projects and is considering funding all types of Renewable Energy Projects.

Your Company has sanctioned Rs.2,313 crore and made disbursement of Rs.461 crore in its renewable portfolio, supporting a capacity of 612 MW, during the FY 2012-13.

As of March 31, 2013, your company has cumulatively supported a total generation capacity of 1,674 MW, extending financial assistance of Rs.5,373 crore and disbursed Rs.2,616 crore to all kinds of renewable energy projects with an aggregate project cost of Rs.13,000 crore.

18.0 PROMOTION OF POWER TRADING THROUGH POWER EXCHANGE

In the FY 2008-09, the Central Electricity Regulatory Commission had granted its permission to set up power exchanges in the country. As on date two power exchanges, namely, Power Exchange India Ltd. (PXIL) and Indian Energy Exchange Ltd. (IEX) are in operation. These power exchanges have a nationwide presence in the form of electronic exchange for trading in power. The trading through power exchanges have certainly lent an impetus for power sector development since it acts as an open and transparent mechanism for buyers and sellers and provides investment signal to the prospective investors. Further with the presence of these exchanges, the available resources shall be used optimally.

Your company has also contributed Rs.2.80 crore (being 6.08% of paid up equity upto March 31, 2013) towards equity contribution in Power Exchange India Ltd., promoted by NSE and NCDEX.

Further, your company has promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS. Your company has contributed Rs.2.19 crore (being 16.66% of paid up equity upto March 31, 2013) towards equity contribution. This exchange is yet to start its commercial operations.

19.0 EQUITY FINANCING

Equity investment business is generally considered as a logical extension of debt business. Your Company is endeavoring to make a mark in the area of equity investment so as to capitalize on its vast domain experience, attained during it''s over 25 years of operations in power sector debt financing. PFC aims to leverage its financial strength, large debt providing capability and power sector expertise to invest in equity of attractive power projects. Over a period of time, your company proposes to build an equity portfolio of power assets which could provide consistent gains in the form of dividend and/or capital appreciation. The Board of Directors of your company has approved a policy for investment in equity of power projects, as per which, your company may look at investments ranging between 0.5% to 5% of its own net worth in a single company. The company has started the appraisal of a few proposals for investment in equity.

20.0 SUBSIDIARIES

To focus on additional business in the areas of consultancy, renewable energy, consortium lending, equity financing, etc. following wholly owned subsidiaries have been incorporated by your Company, as on date:

(i) PFC Consulting Limited

(ii) PFC Green Energy Limited

(iii) PFC Capital Advisory Services Limited

(iv) Power Equity Capital Advisors Private Limited Further, your Company is designated by Ministry of Power, Government of India as the nodal agency for facilitating development of Ultra Mega Power Projects and its wholly owned subsidiary i.e. PFC Consulting Limited is the ''Bid Process Coordinator'' for Independent transmission projects. As on date, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/ deemed subsidiary of the Company:

(i) Chhattisgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.)

(ii) Coastal Karnataka Power Limited

(iii) Coastal Maharashtra Mega Power Limited

(iv) Coastal Tamil Nadu Power Limited

(v) Orissa Integrated Power Limited

(vi) Sakhigopal Integrated Power Company Limited

(vii) Ghogarpalli Integrated Power Company Limited

(viii) Tatiya Andhra Mega Power Limited

(ix) Deoghar Mega Power Limited

(x) DGEN Transmission Company Limited

(a wholly owned subsidiary of PFC Consulting Limited)

(xi) Patran Transmission Company Limited

(a wholly owned subsidiary of PFC Consulting Limited)

(xii) RAPP Transmission Company Limited

(a wholly owned subsidiary of PFC Consulting Limited)

(xiii) Darbhanga-Motihari Transmission Company Limited

(a wholly owned subsidiary of PFC Consulting Limited)

(xiv) Purulia & Kharagpur Transmission Company Limited (a wholly owned subsidiary of PFC Consulting Limited)

21.1 PFC CONSULTING LIMITED

Background

Aiming to provide professional consultancy support to the Power Sector and recognizing the potential of such services in the reforming Power Sector, your company incorporated PFC Consulting Limited (PFCCL) as a wholly owned subsidiary of your company on March 25, 2008, in order to give it requisite autonomy in functions and flexibility in operations. PFCCL is mandated to promote, organize and carry out consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs and ITPs. PFCCL has been nominated as the ''Bid Process Coordinator'' for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, GoI.

Range of Services Offered

The Services being offered by PFCCL are broadly in the following areas:

- Procurement of Power by Distribution Licensees through Tariff based competitive bidding

- Implementation of Govt. of India initiatives like UMPPs, ITPs etc.

- Assignments from State Power Utilities, Licensees/ IPPs, State Govt., PSUs & SERCs

- Renewable and Non-Conventional Energy Schemes

- Coal Block JVs and selection of developers for Coal Blocks and linked Power Projects

- Project Advisory including Selection of EPC Contractor

- Reform, Restructuring and Regulatory Aspects

- Capacity Building and Human Resource Development

- Preparation of DPRs and Project Management Consultancy for projects including projects covered under R-APDRP

- Strategic Studies for Power Sector

Client Base

Till date, consultancy services have been rendered to 42 clients spread across 21 States/UTs namely Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Puducherry, Punjab, Rajasthan, Tripura, Uttar Pradesh and West Bengal. The profile of clients is as below:

Clients Nos.

State Utilities 21

Licensees/ IPPs 7

Public Sector Undertakings 6

State Governments 4

Regulatory Commissions 3

Central Govt. departments/Ministries 1

Total 42

During the FY 2012-13, the total income of PFCCL is Rs.36.49 crore and net profit is Rs.16.38 crore.

A dedicated website of PFCCL, ''www.pfcclindia.com'', was launched in July, 2012 to provide a much needed platform for external interface and to reach out to present and prospective clients through internet. This website also provides snapshot of the operations of PFCCL as also displays all notifications related to ITPs (for which PFCCL has been nominated as Bid Process Coordinator) and other tenders etc.

PFCCL has signed an MoU with Central Mine Planning & Design Institute Limited (CMPDI) for jointly providing comprehensive consultancy solutions for the power projects involving coal mine related activities to various clients in Power Sector.

PFCCL is moving towards tapping the opportunities available in technical consulting domain by envisaging a Joint Venture (JV) with a consulting organisation having international experience of providing consulting solutions in Thermal Generation segment of Power Sector. In this regard Global Expression of Interest (EoI) were invited from consulting organisations having expertise in the area. EoIs have been received and are being scrutinized for finalizing the eventual JV partner.

21.2 PFC GREEN ENERGY LIMITED

During the FY 2012-13, PFC Green Energy Limited (PFC GEL) received its certificate of registration to function as a Non Banking Financial Company (NBFC) from the Reserve Bank of India on October 1, 2012. With the receipt of the NBFC status, the Company has commenced its business operations in March 2013 and further it has also made its first sanction of a term loan to a small hydro project of 6 MW. The company is getting geared up to take up further sanction of loans & is targeting to have substantial market share in the renewable energy sector in the coming years.

Since the Company is dedicated for renewable energy projects such as wind, solar, bio mass, hydro etc., it is expected to mobilise dedicated green funds available in the market. During the FY 2012-13, the company has been approached by various foreign funding agencies for providing funds for renewable energy sector. With the flow of funds dedicated for green energy, the company is in a position to provide more loans at competitive interest rates in future.

At present PFC GEL has an authorised share capital of Rs.1200 crore and during the year the paid up capital has been increased from Rs.4.99 crore to Rs.109.99 crore. During the first quarter of 2013-14, PFC GEL has further increased the paid-up share capital from Rs.109.99 crore to Rs.177.99 crore comprising of 3.95 crore equity shares of Rs.10/- each and 13.84 crore Fully Convertible Preference Sharesa of Rs.10/- each.

21.3 PFC CAPITAL ADVISORY SERVICES LIMITED Background

Your Company has a presence in debt syndication business since August 2008 and is well known for its strong appraisal capabilities. The Company is also managing the Power Lenders'' Club, an exclusive set of Banks & FIs financing power projects under a consortium arrangement. In line with the above, PFC Capital Advisory Services Ltd. (PFCCAS) was incorporated as a wholly owned subsidiary of your company on July 18, 2011 to focus on sectoral requirements for financial advisory services, including syndication services. The company obtained the Certificate of Commencement of Business on September 2, 2011 and has started its operations.

Services offered

PFCCAS is presently focusing on debt syndication services for power sector. The various activities/ services under debt syndication are as follows:

- Identification of Lenders,

- Preparation of IM/ Term Sheets,

- Approach Lenders and facilitate Due Diligence by Lenders,

- Assistance in Documentation.

Presently, the company is handling syndication proposals in various types of power generation projects, such as thermal, hydro, wind and solar.

Other than the above, the company is looking at business opportunities in advisory in line with its area of competence such as:

- Preparation of project profiles, project reports, pre- investment studies etc.

- Act as lead manager on behalf of banks, institutions etc. in respect of project assignments and to act as adviser in the management of undertakings, businesses etc.

- Consultancy in investment and capital markets

- Advice on restructuring, business strategy, financial policies and long term planning in the areas of power, energy and infrastructure.

- Fund raising, Currency Risk Management, Project Appraisal and Modeling.

21.4 POWER EQUITY CAPITAL ADVISORS PRIVATE LIMITED

An advisory company namely Power Equity Capital Advisors Private Limited (PECAP) was incorporated to provide advisory services related to equity investments in Indian power sector, where your Company held 30% stake and the remaining being held by individuals. However, being largely owned by individuals, the company was not able to transact any business as it was unable to provide the requisite comfort to its clients. Therefore, in order to provide the requisite comfort to the clients and to substantially improve the possibility of PECAP to do meaningful business, the Board of Directors of PFC in February, 2011 approved a proposal for acquiring 100% stake in PECAP and accordingly on October 11, 2011 the balance 70% stake held by individuals was transferred to PFC, making PECAP a wholly owned subsidiary of PFC.

Your Company has sought an approval from Ministry of Power (MoP) for dissolving and getting the name of the Company struck off from the records of Registrar of Companies under the provisions of Section 560 of the Companies Act, 1956. Such approval from MoP is awaited.

22.0 JOINT VENTURES AND ASSOCIATE COMPANIES

22.1 NATIONAL POWER EXCHANGE LIMITED

In order to promote short term trading through power exchange, your company has promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS and has contributed Rs.2.19 crore (being 16.66% of paid up equity of NPEX upto March 31, 2013) towards equity contribution. This exchange is yet to start its commercial operations. Recently, NTPC and NHPC have expressed their intention to exit from JV Company. A final decision on the exit of NTPC and NHPC is yet to be taken by other promoter companies.

22.2 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid Corporation of India Limited (POWERGRID), NTPC, NHPC and PFC. Your Company has invested Rs.12 crore which is 4.07% of total equity of PTC. PTC is the leading provider of power trading solutions in India. Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country.

22.3 ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid Corporation of India Limited (POWERGRID), NTPC, REC and PFC with equal equity participation of Rs.25 crore each for implementation of Energy Efficiency projects in India and abroad. EESL would be one of the main implementation arms of the National Mission on Enhanced Energy Efficiency (NMEEE), which is one of the eight National Missions announced by the Hon''ble Prime Minister as a part of "National Action Plan on Climate Change".

23.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ''Excellent'' Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY 2012-13, your Company is likely to be accorded ''Excellent'' rating.

24.0 PRESIDENTIAL DIRECTIVES

The Company has not received any Presidential directives during the FY 2012-13.

25.0 CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABLE DEVELOPMENT (SD) ACTIVITIES

25.1 CSR

Your company has implemented its CSR policy with all its earnest and zeal. The aim of the CSR policy of your company is to become a socially responsible corporate entity contributing towards improving the quality of life of the society at large. The CSR activities of the company have been planned in such a way that its benefits should reach upto the village level and deprived sections of the society in all corners of India. To oversee the activities of CSR, the company has in place a Board level CSR Committee of Directors headed by an Independent Director.

The company had entered into a MoU with Govt. of India for spending 0.5% of PAT towards CSR activities as part of its Corporate Social Responsibilities.

The company had allocated Rs.15.29 crore for CSR initiatives in the FY 2012-13. However PFC had sanctioned projects/ activities worth Rs.19.34 crore in FY 2012-13 and disbursed Rs.16.09 crore for the projects sanctioned in FY 2012-13 & FY 2011-12. During the year PFC had implemented wide range of activities in the field of Solar energy, Skill Development, Relief to the victims of Natural Calamities in various states etc.

Your company sanctioned a project for construction of 100 Toilet-cum-bathroom facilities for the cloud burst victims at Leh which was implemented through Hindustan Prefab Ltd., Rs.0.26 crore sanctioned for Solar lantern distribution to shepherds in Kargil (J&K) through Kargil Renewal Energy Development Agency (KREDA). Your Company also sanctioned Rs.3.79 crore for Skill Development Programme for SC/ST/OBC/Women & EWS of society (1400 persons) which were implemented by Construction Industry Development Council, Larsen & Toubro Construction Skill Training Institute, Indo German Institute of Advanced Technology ITI, Guwahati. PFC had allocated Rs.3.50 crore for Project of Adopting entire colony constructed for flood victims of Rajoli Village of Waddepally Mandal in Andhra Pradesh for providing street lighting using Solar Power LED lights through AP Housing Corporation Ltd, Rs.0.22 crore for Financial assistance for project to distribute the appliances for the benefit of the Persons with Disabilities (PwD) through Artificial Limbs Manufacturing Corporation of India (ALIMCO) in NCR of Delhi and Maharashtra.

Your Company had also sanctioned Rs.3.80 crore for Street Lighting/ High Mast Light for Kargil Town and District Headquarters (J&K) through Jammu & Kashmir Power Development Department (JKPDD), Rs.2.04 crore for Project for Installation of solar home lighting systems on the looms of prestigious Chanderi Saree weavers through Madhya Pradesh Urja Vikas Nigam Ltd (MPUVNL), Rs.3.77 crore for Project for Supply, Installation and Commissioning of SPV Power Plants with aggregate capacity of 245 KW in the schools of Punjab through Punjab Energy Development Agency (PEDA) and Rs.0.05 crore for Impact assessment studies of various projects that were completed in FY 2010-11 and FY 2011-12. All the initiatives under CSR activities were reported to National CSR Hub.

25.2 SD

The aim of PFC''s Sustainable Development Policy is to ensure that the Corporation becomes a socially responsible corporate entity by finding ways to develop social, financial and environmental resources that meet the needs of the present without compromising the ability of future generations to meet their own needs.

Your Company has entered into an MoU with Government of India for spending Rs.50 lakh plus 0.1% of Profit After Tax (consolidated) exceeding Rs.100 crore of the previous year towards Sustainable Development activities for FY 2012-13. During the year PFC had formulated Sustainable Development policy and reconstituted the earlier Board level CSR Committee as CSR&SD Committee of Directors headed by an Independent Director to oversee the activities of CSR as well as Sustainable Development. During the FY 2012-13, PFC had allocated Rs.3.46 crore for SD initiatives. However, PFC sanctioned projects/activities worth Rs.4.32 crore in FY 2012-13 and disbursed Rs.3.47 crore in the FY 2012-13.

During the year, PFC had allocated funds for various activities related to Waste Management, Energy Management, afforestation etc. PFC sanctioned Rs.0.43 crore to Hindustan Prefab Ltd. for Project for construction of Sanitary toilets in Shillong, Meghalaya, Rs.3.29 crore through The Energy and Resource Institute (TERI) for Project for Providing Clean Lighting and ICT Services in identified schools in Meghalaya, AP and Orissa through Solar energy and Rs.0.28 crore for Providing Solar water heating and Solar Steam generating cooking systems in Rajiv Gandhi Navodaya Vidyalaya in Uttarakhand. PFC has also sanctioned Rs.0.24 crore for Afforestation activity in New Delhi for planting 3,400 number of trees in Budha Jayanti Park through CPWD, PFC had also spent Rs.0.02 crore towards training on Sustainable Development activities for PFC employees and Rs.0.07 crore for installation of energy efficient LED lamps in PFC premises.

26.0 EMPLOYEES STOCK OPTIONS PLAN (ESOP)

Stock Options have been recognized world over as an effective instrument to attract and retain the talent in the organization and to align the interest of employees with those of the organization. Stock Options provide an opportunity to employees to share the growth of the Company and create long term wealth. They also promote the culture of employee ownership in the company.

The Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises, Govt. of India, through its directions on pay revision had also made it mandatory for all the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees in the form of ESOPs. In accordance with these directions of the DPE, the Board of Directors of your company had formulated an Employee Stock Option Plan titled as ''PFC-ESOP 2010''. Shareholders had also approved this Employee Stock Option Plan in their 24thAnnual General Meeting held on September 21, 2010. Subsequently, the Board of Directors had decided that 25% of the PRP of the employees should be given in the form of ESOPs.

During the FY 2012-13, the Company has granted 92,964 options for the FY 2010-11, convertible into equal number of equity shares to the eligible employees under PFC- ESOP 2010 Scheme. These options have vested with the employees on April 30, 2013 and shall be exercisable by them within two years from the date of vesting by paying Rs.10/-(face value per equity share) as exercise price.

However, in view of a clarification issued by DPE, the Board of Directors of Power Finance Corporation Limited in its Meeting held on November 9, 2012 had approved modification in PFC''s Employee Stock Option Scheme i.e. PFC- ESOP 2010 by making it optional.

During the year, 71,526 options granted under PFC- ESOP 2010 Scheme for the FY 2010-11 were cancelled including 69,954 options having been settled in cash consequent upon employees excersing the option under the above modified scheme. Further, for the FY 2009-10, out of 87,888 Options granted during the FY 2011-12, the company has allotted 83,306 equity shares during the current year upon exercise of the stock options by the employees of the Company.

The disclosure in respect of the ESOP scheme pursuant to Clause 12 of SEBI (Employees'' Stock Option Scheme and Employees'' Stock Purchase Scheme) Guidelines, 1999 is annexed herewith.

27.0 HRD INITIATIVES TRAINING & DEVELOPMENT

In the field of Human Resource Development, your company stresses on the need to continuously upgrade the competencies of its employees and equip them to keep abreast of latest developments in the sector. The Company operates in a knowledge intensive business and is committed to enhancing these skills of its employees. In order to achieve this, the Company has an annual training plan to assess the various training needs. Necessary professional skills are also imparted across all levels of employees through customized training interventions.

Employee Training

During the year 2012-13, your company organized 26 in-house programs. A total of 1,416 mandays were achieved during the period under review of which 957 were through in-house programs and 459 were through nominations to open programmes organized by other training institutes.

28.0 HUMAN RESOURCE MANAGEMENT

Your Company lays great emphasis on upgrading the skills of its Human Resource. It benchmarks its practices with the best practices being followed in the corporate world. This, apart from other strategic interventions, lead to an effective management of Human Resource thereby ensuring high level of productivity. Your Company enjoys a very cordial and harmonious relationship with its employees. There were no man-days lost during the year under review.

29.0 WELFARE MEASURES

Your Company follows good management practices to ensure welfare of its employees through a process of inclusive growth & development. The Company follows an open door policy whereby the employees can access the top management thereby contributing in the management and growth of the company. Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which in turn lead to a healthy workforce.

During the FY 2012-13, various camps in association with eminent hospitals/institutes were organized by your company for its employees which included comprehensive eye check up, health check up, ENT checkup, health talks etc. A blood donation camp in association with Lions Club International was also organized.

30.0 RESERVATION OF POSTS FOR SC/ST/OBC/EX- SERVICEMEN AND PHYSICALLY HANDICAPPED PERSONS IN THE SERVICES OF COMPANY

Your Company as a part of its social responsibility makes all-out efforts to ensure compliance of the Directives and Guidelines issued by the Government for the reservation to be allowed for SC/ST/OBC/Persons with disabilities. The steps taken include due reservations and relaxation as applicable under the various directives.

In the year 2012-13, total 58 new employees were recruited, of which 13.8% are SC (8), 6.9% are ST (4), 5.2% are PWD (3) and 29.3% are OBC (17).

31.0 REPRESENTATION OF WOMEN EMPLOYEES

Your Company provides equal growth opportunities for its women employees and today the Company can boast of women heading certain critical functional areas. There is no discrimination of employees on the basis of gender. The women employees represent 20.14% of the total work force.

32.0 DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

- In the preparation of the annual accounts for the FY 2012-13, the applicable accounting standards had been followed;

- Accounting policies selected were applied consistently, judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of March 31, 2013 and of the profit of the Company for the year ended on that date;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

- Annual Accounts for FY 2012-13 have been prepared on a going concern basis.

33.0 AUDITORS

M/s. Raj Har Gopal & Co., Chartered Accountants and M/s. N. K. Bhargava & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for the FY 2012-2013 by the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2012-13 and have given their audit report without any qualification. The copy of the audit report is annexed herewith.

34.0 COMMENTS OF COMPTROLLER & AUDITOR GENERAL OF INDIA

The Comptroller and Auditor General of India has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors'' Report under Section 619(4) of the Companies Act, 1956. The copy of the report of C&AG is annexed herewith.

35.0 FOREIGN EXCHANGE EARNINGS AND OUTGO

During the FY 2012-13, the foreign exchange outgo aggregating Rs.262.90 crore was made on account of debt servicing, financial & other charges, travelling and training expenses. Earning in foreign currency is nil.

36.0 PARTICULARS OF EMPLOYEES U/S 217 (2A) OF THE COMPANIES ACT, 1956

During the year 2012-13, the details of the employees who were in receipt of gross remuneration in excess of Rs.60 Lakh per annum or Rs.5 Lakh per month and above, is annexed herewith.

37.0 DEBENTURE TRUSTEES

The Debenture Trustees appointed by the company for the different series of Bonds are annexed herewith.

38.0 REDEMPTION AND STATUS OF UNCLAIMED AMOUNTS REGARDING BONDS

The unclaimed balance amount of bonds (principal and interest) as on March 31, 2013 was Rs.7.92 crore (previous year Rs.8.82 crore). No amount is liable to be transferred to Investor Education Protection Fund as 7 years have not elapsed since the date of redemption.

39.0 VIGILANCE

During the FY 2012-13, the Vigilance unit functioned as an effective tool of management, the thrust being on preventive vigilance. This aspect was emphasized by conducting periodic & surprise inspections of various units and by issuing effective guidelines to streamline systems with the aim of eliminating gaps and ensuring transparency in day to day operations. Vigilance Unit also undertook the review of operational manuals of various activities of the Company. A number of comprehensive manuals on different areas of company''s activities have already been notified after review and some other manuals are in process of finalization. Detailed investigations were carried out in respect of registered complaints during this period.

In accordance with the directives of CVC, Vigilance Awareness Week was observed from October 29, 2012 to November 3, 2012 in the head office and regional offices of the Company. As part of a sequence of events during the ''Vigilance Awareness Week'' a one day workshop on "Business and Corporate Governance with special emphasis on procurement" was organized for the employees in the company. In order to educate and increase vigilance awareness among the employees, three workshops were held viz. "Provisions of RTI Act", "Public Interest Disclosure and Protection of Informers Resolution" and "Conduct, Discipline & Appeal Rules" during the year 2012-13.

In compliance to the instructions of CVC, the sensitive posts in the Company were identified afresh and the concerned officers were rotated. Agreed lists were finalized in consultation with the CBI. Prescribed periodical statistical returns were sent to CVC, CBI, MoP on time.

Thus, the vigilance unit endeavoured for systematic improvements with a view to bring about greater transparency, objectivity and accountability thereby contributing to the overall efficiency and effectiveness of the organization.

40.0 OFFICIAL LANGUAGE

In PFC it is believed that success is the sum of small efforts, repeated day in and day out and it is best reflected in your company while working in Hindi. Year 2012-13 had been yet another year of success with continuous efforts of all employees in the area of Official Language Policy implementation. Meetings of Official Language Implementation Committee were organized regularly where at progress of implementation of official language policy in your company was reviewed, suggestions were made and implemented to achieve the annual targets.

During the period under review, six workshops were organized for 145 executives. Special thrust was given to organize workshops for senior officials. Workshops were also organized for Senior Managers, Nodal Officers and newly joined officers, to sensitize them of their duties for implementation of official language policy and to guide them to make progressive use of Hindi in their day to day work.

Your company spent 50% of total amount spent on advertisements, on publishing of advertisements in Hindi and other regional languages and 56% of total expenditure on purchase of books was incurred on purchase of Hindi books.

Internal inspections of 17 units and both the regional offices were conducted. Officers of Rajbhasha Vibhag also conducted the inspection of Head office and the Parliamentary Committee on Official Language conducted the inspection of Regional Office at Chennai of the company and appreciated the steps taken.

Hindi month was observed from September 14, 2012 to October 13, 2012. During the month, several competitions like, Vartani shodhan, Chitrabhivyhakti, Quiz, Katha Vistaran, Sansmaran lekhan, Antyakshari, Kavya Goshthi etc. were organized.

PFC''s website is in bilingual form. Annual Report of PFC and its 12 subsidiaries was published in Bilingual. PFC''s quarterly magazine ''Urja Deepti'' was published on regular intervals.

41.0 RIGHT TO INFORMATION ACT

Information is an integral part of our life to upgrade ourselves on various issues which may either have a direct or indirect influence on our day to day life. Without information, it would not be possible to exercise our valuable fundamental right of ''Freedom of Speech and Expression'' as guaranteed under Article 19(1)(a) of the Indian Constitution. Every democratic country attributes much importance to the freedom of speech and expression and in order to exercise such right more effectively and efficiently. The people of the country are entitled to know about the functioning for the welfare of the people and development of the country. The main objective of the Right to Information Act, 2005, is to ensure greater and more effective access to information and to maintain transparency and improve accountability in the working of the public departments both Central and State.

Your company has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the company. The Company has designated a Public Information Officer (PIO), an Appellate Authority and also one Transparency Officer at its registered office for effective implementation of the RTI Act.

During the FY 2012-2013, all 108 applications received under the RTI Act, were duly processed and replied to. In compliance with Section 4 of the RTI Act, requisit disclosures have been updated and hosted on PFC website. Your company has also complied with the directions of Central Information Commission (CIC) regarding filing of online Quarterly/Annual Return for the FY 2012-2013.

42.0 GLOBAL COMPACT

Your Company is a socially conscious organization and fully endorses the nine principles of Global Compact enunciated by the United Nations Organisation (UNO) which encompass areas of human rights, environmental protection and labour rights. These principles of Global Compact are embedded in various organizational policies of the Company thereby facilitating their implementation in a natural way. Your Company has been an active participant in various endeavors of the Global Compact.

Your Company lays special emphasis on medical facilities and health care for its employees and their families whereby they can avail best health care facilities. In pursuit of making the Company a learning organization it also supports integrated learning of its employees through a variety of measures. Other aspects like promotion of sports, cultural heritage, community development etc. are also given due importance in our working by organizing various events etc. and also by providing sponsorship support on relevant occasions.

43.0 GRIEVANCE REDRESSAL

Your Company has Grievance Redressal Systems for dealing with the grievances of the employees, its customers and the public at large. The systems are duly notified and are easily accessible. A designated Nodal Officer is responsible to ensure quick redressal of grievances within the permissible time frame. The company also has a notified Citizen''s Charter to ensure transparency in its work activities. This Charter is available on the website of the Company to facilitate easy access.

44.0 BOARD OF DIRECTORS

Following are the changes in Board of Directors of your company since April 1, 2012:

- Shri A. K. Agarwal assumed the charge of Director (Projects) w.e.f. July 13, 2012

- Shri B. N. Sharma, Joint Secretary, Ministry of Power took over as Government Nominee Director vice Shri Devender Singh w.e.f. August 28, 2012.

- Shri P. Murali Mohana Rao, Non Official Part Time (Independent) Director and Shri Ravindra H. Dholakia,

Non Official Part Time (Independent) Director ceased to be the Directors of the Company consequent upon completion of their tenure w.e.f. December 21, 2012.

- Shri S.C. Gupta, Non Official Part Time (Independent) Director ceased to be the Director of the Company consequent upon completion of his tenure w.e.f. February 24, 2013.

- Shri J.N. Prasanna Kumar took over the charge as Non Official Part Time (Independent) Director w.e.f. December 22, 2012.

- Shri Vijay Mohan Kaul took over the charge as an Non Official Part Time (Independent) Director w.e.f. June 24, 2013.

The Board placed on record its deep appreciation for the commendable contributions made by Shri Devender Singh, Shri P. Murali Mohana Rao, Shri Ravindra H. Dholakia and Shri S.C. Gupta in the deliberations of Board and its committees during their association with the Company. The Board also welcomes Shri B. N. Sharma, Shri J.N. Prasanna Kumar, Shri Vijay Mohan Kaul & Shri A. K. Agarwal and expresses confidence that the Company shall immensely benefit from their rich and varied experience.

46.0 STATUTORY AND OTHER INFORMATION

Information required to be furnished as per the Companies Act, 1956, Listing Agreement with Stock exchanges, Guidelines on Corporate Governance for CPSEs etc. is annexed to this report as follows:

Particulars Annexure

Management Discussion and Analysis I Report

Report on Corporate Governance II

Business Responsibility Report III

Non-Banking Financial Companies Audi- IV tors'' certificate

Statement pursuant to Section 212 of V the Companies Act, 1956

47.0 ACKNOWLEDGEMENT

The Board of Directors acknowledge and place on record their appreciation for the guidance, co-operation and encouragement extended to the Company by the Government of India, Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India, Department of Public Enterprises, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level as well as from various domestic and international financial institutions/banks, agencies etc.

The Board also conveys its gratitude to the shareholders, various International and Indian Banks/Multilateral agencies/financial Institutions/ credit rating agencies for the continued trust and for the confidence reposed by them in PFC. Your Directors would also like to convey their gratitude to the clients and customers for their unwavering trust and support.

The Company is also thankful to the Comptroller & Auditor General of India and the Statutory Auditors for their constructive suggestions and co-operation.

We would also like to place on record our appreciation for the untiring efforts and contributions made by the employees to ensure excellent all round performance of the Company.

For and on behalf of the Board of Directors

(Satnam Singh)

Chairman & Managing Director

Place : New Delhi

Dated : 21.08.2013

---

Mar 31, 2012

The Directors have great pleasure in presenting the 26thAnnual Report on the performance of your Company for the financial year ended March 31, 2012 along with Audited Statements of Accounts.

1.0 FINANCIAL HIGHLIGHTS

(a) PROFITABILITY

(Rs. in crore)

Particulars 2011-12 2010-11

Profit Before Tax 4104.25 3544.14

Provision for Income Tax (current year) (-) 1070.87 (-) 898.99

Provision for Income Tax (earlier years) 2.82 10.45

Deferred Tax Liability ( )/Assets (-) (-) 4.46 (-) 36.02

Profit After Tax 3031.74 2619.58

Transfer towards Provision for Bad & Doubtful Debts u/s 36(1) (viia)(c) of Income Tax Act, 1961 173.73 142.47

Transfer to Special Reserve created and maintained u/s 36(1) (viii) of Income Tax Act, 1961 776.20 634.32

Debenture Redemption Reserve 55.73 0.06

Interim Dividend 659.97 401.72

Proposed Final Dividend 132.00 197.99

Corporate Dividend Tax paid on Interim Dividend 107.06 66.72

Proposed Corporate Dividend Tax 21.41 32.12

Transfer to General Reserve 304.00 262.00

Balance carried to Balance Sheet 801.64 882.18

(b) LENDING OPERATIONS

(Rs. in crore) Particulars 2011-12 2010-11

Sanction 59429 61532

Disbursement 39818 31865

(c) R-APDRP OPERATIONS

(Rs. in crore)

Particulars 2011-12 2010-11

Sanctioned project cost 9595 13665

Disbursement 1600 2257

2.0 FINANCIAL PERFORMANCE

2.1 REVENUE

The total income achieved during the FY 2011-12 was Rs. 13,037.11 crore registering an increase of 28.31% as compared to Rs. 10,160.56 crore in FY 2010-11. Operating income for the year increased from Rs. 10,128.49 crore to Rs. 13,014.85 crore showing an increase of 28.50%. Interest income including lease income for the FY 2011-12 was higher at Rs. 12,621.06 crore against Rs. 9,776.32 crore in 2010-11.

2.2 EXPENSES

Interest, finance and other charges including bond issue expenses amounted to Rs. 8,661.55 crore in FY 2011-12 as compared to Rs. 6,486.95 crore in FY 2010-11. This constituted 96.96% of total expenses in FY 2011-12 as compared to 98.04% in FY 2010-11.Employee Benefit expenses and other expenses were 1.39% and 1.43% of financial expenses and total expenses respectively and constitute 0.095% of the Loan Assets in FY 2011-12.

2.3 PROFIT

During the FY 2011-12, your Company earned a net profit of Rs. 3,031.74 crore as compared to Rs. 2,619.58 crore for the FY 2010-11 registering an increase of 15.73%.

2.4 FURTHER PUBLIC OFFER (FPO)

During the first quarter of FY 2011-12, your Company made a Further Public Offer (FPO) of 22,95,53,340 equity shares of Rs. 10/- each for cash through 100% book-building process with a price band of Rs. 193-203 per equity share. The issue included a fresh issue of 17,21,65,005 equity shares by the Company and an offer for sale of 5,73,88,335 equity shares by the President of India acting through Ministry of Power, Government of India.

The issue was priced at Rs. 203/- per share. A discount of 5% to the issue price being Rs. 10.15 per equity share determined pursuant to completion of the Book Building Process was offered to Eligible Employees and to Retail Bidders. The issue proceeds amounted to Rs. 4,578.20 crore of which Rs. 1,144.55 crore pertains to offer for sale. Thus, the total fresh capital including share premium raised through FPO was Rs. 3,433.65 crore.

The issue got a good response and was subscribed 4.31 times. The Qualified Institutional Bidders (QIB) portion got subscribed 6.92 times, Non-Institutional portion 1.08 times, Retail portion 1.97 times and Employees category 0.87 times. The total number of applications received were 2,58,497. The equity shares under FPO got listed on NSE and BSE on May 27, 2011. Post-issue, the holding of the Government of India stands at 73.72% and the balance is held by various investors.

The issued and paid-up share capital increased from Rs. 1,147.77 crore to Rs. 1,319.93 crore and an amount of Rs. 3,241.57 crore (net of issue expenses of Rs. 19.91 crore) was credited to Securities Premium Reserve.

The issue proceeds have been fully utilized for the purpose as mentioned under the objects of the issue enumerated in the Offer Document.

2.5 SHARE CAPITAL

At the beginning of the FY 2011-12, the paid-up share capital of the Company was Rs. 1,147.77 crore consisting of 1,14,77,66,700 equity shares of Rs. 10 each, of which the Government of India held 89.78%. The Company through Further Public Offer (FPO) issued 17,21,65,005 equity shares in May, 2011 resulting in an increase of Rs. 172.16 crore in paid up equity share capital. The post-issue paid-up equity share capital as on March 31, 2012 is Rs. 1,319.93 crore. The shareholding of Government of India in the Company now stands at 73.72% of the paid up capital.

Further, on August 8, 2012, 75,178 equity shares of Rs. 10/- each of the Company were alloted to the Employees under the Company's Employee Stock Option Scheme i.e. PFC ESOP 2010. Consequent to this allotment, the paid-up equity share capital of the Company stands increased to Rs. 1,320.01 crore consisting of 1,32,00,06,883 equity shares of Rs. 10 each.

2.6 DIVIDEND

Your Directors have recommended a final dividend of Rs. 1 per equity share in addition to an interim dividend of Rs. 5 per equity share on paid up equity share capital of Rs. 1,319.93 crore.

The total dividend for the FY 2011-12 thus aggregates to Rs. 6 per equity share as against Rs. 5 per equity share paid for the previous year. The final dividend will be paid after your approval at the Annual General Meeting. The total dividend pay-out for the year amounts to Rs. 791.97 crore representing 60% of the paid-up capital of the company and 26.12% of the profit after tax as against a dividend pay-out of Rs. 599.71 crore representing 50% of the paid-up capital and 22.89% of the profit after tax in the previous year.

2.7 ISSUE OF LONG TERM INFRASTRUCTURE BONDS

Your Company came out with the public issue of Long Term Infrastructure Bonds from September 29, 2011 till November 4, 2011 in four kinds of series i.e. Series 1 & 3 non cumulative and Series 2 & 4 cumulative. The interest rate of Series 1 & 2 was 8.50% and of Series 3 & 4 was 8.75%. The Company collected a total of Rs. 95.64 crore in all the series from the market. The date of allotment of public issue of Long Term Infrastructure Bonds was November 21, 2011. These bonds are listed on Bombay Stock Exchange (BSE).

The company also came out with private placement of Long Term Infrastructure Bonds from February 29, 2012 till March 26, 2012 in four kinds of series i.e. Series 1 & 3 non cumulative and Series 2 & 4 cumulative. The interest rate of Series 1 & 2 was 8.43% and of Series 3 & 4 was 8.72%. The

Company collected a total of Rs. 30.56 crore in all the series from the market. The date of allotment of private placement of Long Term Infrastructure Bonds was March 30, 2012. These bonds are listed on National Stock Exchange (NSE). The funds raised from the above said issues were utilized towards ‘Infrastructure Lending'.

2.8 ISSUE OF TAX FREE BONDS

The Company came out with the Private placement of Tax free Bonds from October 15, 2011 till November 25, 2011 in two series i.e. Series 79 (A&B) & Series 80 (A&B). The interest rate of Series 79(A&B), for 10 years and 15 years was 7.51% p.a. and 7.75% p.a. and of Series 80 (A&B), for 10 years and 15 years were 8.09% p.a. and 8.16% p.a respectively. The Company collected a total of Rs. 966.87 crore in both the series from the market. The date of allotment of Private placement of Tax Free Bonds series 79 (A&B) was October 15, 2011 and November 25, 2011. These bonds are listed on National Stock Exchange (NSE).

The company also came out with the public issue of Tax Free Bonds of Rs. 4,033.13 crore from December 30, 2011 till January 12, 2012 in two kinds of series i.e. Series 1 & 2 non cumulative. The interest rate of Series 1 was 8.20% and of Series 2 was 8.30%. The issue got a good response and was oversubscribed 2.62 times of the Issue size. The date of allotment of public issue of Tax Free Bonds was February 1, 2012. These bonds are listed on Bombay Stock Exchange (BSE). The funds raised from the above said issues were utilized towards lending purposes, debt servicing and working capital requirements.

3.0 LENDING OPERATIONS

Your Company issued sanctions of Rs. 59,429 crore during the FY 2011-12 to State, Central, Private and Joint Sector entities. An amount of Rs. 39,818 crore was disbursed during the same period. With this, cumulative sanction of Rs. 3,70,940 crore and disbursement of Rs. 2,08,965 crore have been made by the Company as on March 31, 2012.

In addition to above, an amount of Rs. 9,595 crore was sanctioned and Rs. 1,600 crore was disbursed during 2011- 12 under R-APDRP scheme. With this, cumulative sanction under R-APDRP stands at Rs. 31,416 crore and disbursement at Rs. 5,503 crore.

3.1 Financial Assistance

3.1.1 Sector-wise

( Rs. in crore)

2011-12 Cumulative upto March, 2012

Category Sanctions Disburse -ments Sanctions Disbursements

State Sector 42663 24601 258224 150168

Central Sector 811 5393 35691 29154

Private Sector 14894 8205 59796 19080

Joint Sector 1061 1619 17229 10563

Total 59429 39818 370940 208965

3.1.2 Discipline-wise

( Rs. in crore)

2011-12 Cumulative upto March, 2012

Category Sanctions Disburs -ements Sanctions Disbursements

Thermal Generation 39396 25816 229590 109419

Hydro Generation 1243 1277 32583 23044

Wind, Solar and Bagasse 245 279 1945 1172

Renovation and Moderni -zation of Thermal Power Stations 401 344 7766 5897

Renovation & Uprating of Hydro Power Projects 162 33 1549 1073

Transmission 2678 3270 36295 19106

Distribution 2664 1667 15923 10966

Short Term Loans 7100 6950 34945 33970

Counterpart funding for R-APDRP Part B 4273 - 4273 -

Others* 1267 182 6071 4318

Total 59429 39818 370940 208965

* Others include Decentralized Management, Project Settlement, Pre Investment Fund, Technical Assistance Project, Medium Term Loan, Buyers Line of Credit, Equipment Manufacturing Loan, Loan for Asset Acquisition, Bill Discounting, Studies, Loan for Redemption of bonds, Purchase of power through PXI, Loan for Promoter's Equity and Computerization etc.

3.1.3 Product-wise

( Rs. in crore)

Category 2011-12 Cumulative upto March, 2012

Sanctions Disburs -ements Sanctions Disbursements

Term Loans 51262 32687 328228 169351

Short Term Loans 7100 6950 34945 33970

Leasing - 11 1043 795

Grants 1 3 74 54

Others ** 1066 167 6650 4795

Total 59429 39818 370940 208965

** Others include Debt Refinancing, Bridge Loan, Associated Infrastructure, Loan to Equipment Manufacturers, Buyers Line of Credit, Loan for Assets Acquisition, Bill Discounting, Purchase of power through PXI and Loan for Promoter's Equity etc.

3.2 Financial Assistance under R-APDRP

( Rs. in crore)

Category 2011-12 Cumulative upto March, 2012

Sanctioned Disburse -ments Sanctioned Disbursements project cost project cost

Part A (IT) 20 249 5196 1761

Part A (SCADA) 774 146 1444 301

Part B 8801 1205 24776 3441

Total 9595 1600 31416 5503

3.3 GENERATION PROJECTS

3.3.1 THERMAL PROJECTS

Thermal Power generation comprises a major proportion of India's total installed capacity. During the year 2011-12, the Company has sanctioned loans amounting to Rs. 39,396 crore and disbursed an amount of Rs. 25,816 crore. The cumulative financial support provided by the Company for thermal generation schemes is Rs. 2,29,590 crore out of which Rs. 1,09,419 crore has been disbursed till March 31, 2012.

The major thermal generation projects sanctioned by your Company during the year are: Shree Singaji TPS Stage-II (2x660 MW), Adilabad TPS (2x600 MW), Harduaganj TPS Extn-II (1x660 MW), Bhusawal Replacement Project (1x660 MW), Barauni TPS Extn (2x250 MW).

3.3.2 HYDRO PROJECTS

Hydro generation capacity in the country needs significant augmentation for overall systems to have optimal energy mix. During the year 2011-12, loans amounting to Rs. 1,243 crore were sanctioned and an amount of Rs. 1,277 crore was disbursed by your company. The cumulative financial support provided by the Company for hydro generation scheme is Rs. 32,583 crore out of which Rs. 23,044 crore has been disbursed till March 31, 2012. crore to be recovered towards principal, interest etc. under rupee term loans, bill discounting, working capital, lease financing, foreign currency loan, loans for equipment financing and guarantee fee, an amount of Rs. 21,033.91 crore was actually realised. This works out to an overall recovery rate of 98.91% (previous year 99.66%). The overall recovery rate has been consistently maintained at 96-99% for the last ten years. The company has achieved recovery rate of 99.19% in respect of principal amount due during the year.

In terms of Prudential Norms applicable, the Company has made an additional provision amounting to Rs. 109.26 crore on non-performing loan assets during the year. The Company has made a total provision amounting to Rs. 143.87 crore for Non-Performing Assets (NPA) against Loan Assets in its Annual Accounts upto the year 2011- 12. After making provision on NPA, the level of net Non- Performing Assets (NPA) has been recorded at Rs. 1,214.59 crore forming 0.93% to the Total Loan Assets as on March 31, 2012.

5.0 RESTRUCTERED LOANS

The details of loans restructured during the FY 2011-12 are as follows:

Particular FY 2011-12 FY 2010-11

Standard Loans Restructured No. of Borrowers 4 3

Amount Outstanding 2868.46 998.48

Sub-Standard Loans Restructured No. of Borrowers 1 -

Amount Outstanding 227.61 -

Doubtful Loans Restructured No. of Borrowers - -

Amount Outstanding - -

Total No. of Borrowers 5 3

Amount Outstanding 3096.07 998.48

3.4 RENOVATION, MODERNISATION AND LIFE EXTENSION

3.4.1 THERMAL PROJECTS

During the year 2011-12, loans worth Rs. 401 crore were sanctioned for R&M and life extension of thermal power plants and an amount of Rs. 344 crore was disbursed. Cumulatively, an amount of Rs. 7,766 crore has been sanctioned and Rs. 5,897 crore stands disbursed till March 31, 2012.

3.4.2 HYDRO PROJECTS

During the year 2011-12, loans worth Rs. 162 crore were sanctioned for R&M of Hydro power projects and an amount of Rs. 33 crore was disbursed. Cumulatively, an amount of Rs. 1,549 crore has been sanctioned and Rs. 1,073 crore stands disbursed till March 31, 2012.

4.0 REALISATION

Your Company gives highest priority to the realisation of its dues towards principal, interest etc. Out of Rs. 21,265.81

6.0 BORROWINGS

6.1 BORROWINGS FROM DOMESTIC MARKET

Your Company mobilized funds amounting to Rs. 36,318.57 crore from the domestic market during FY 2011-12 as against Rs. 26,057.39 crore during FY 2010-11. Out of the above, Rs. 33,140.59 crore was raised through issue of unsecured/ secured taxable/Tax free bonds in the nature of debentures, Rs. 2,200 crore by way of long/medium term loans from Banks/ FIs, and Rs. 977.98 crore by way of issue of Commercial Paper and Short Term Loans.

6.2 EXTERNAL BORROWINGS

During the FY 2011-12, your Company could not raise foreign currency loan as the global economic slowdown was prevalent and the availability of funds at a competitive rate was not there.

6.3 CASH CREDIT/ OVERDRAFT FACILITIES

For day to day operations, your company has sanction limit of CC/OD/WCDL/Line of Credit of Rs. 5,709.23 crore tied up with various scheduled commercial banks. As per PFC's Board approval, a limit upto Rs. 5,000 crore outstanding at any point of time may be utilized.

7.0 CREDIT RATINGS

Domestic:

During the FY 2011-12, your Company's long term domestic borrowing programme (including bank loans) was awarded the highest rating of CRISIL AAA and ICRA AAA by CRISIL and ICRA respectively. The Company's short term domestic borrowing programme (including bank loans) was awarded the highest rating of CRISIL A1 and ICRA A1 by CRISIL & ICRA respectively.

International:

During the FY 2011-12, the international credit rating agencies Moody's, Fitch and Standard and Poor's have given to the company, long term currency issuer ratings of Baa3, BBB- and BBB- respectively, which are at par with sovereign rating for India.

8.0 RISK MANAGEMENT

8.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and has constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity and interest rate and also monitors implementation of decisions taken in the ALCO meetings. The liquidity risk is being monitored with the help of liquidity gap analysis. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. Such analysis is made every month in yearly buckets for the next 10 years and is being used for critical decisions regarding the time, volume and maturity profile of the borrowings, creation of new assets and mix of assets and liabilities in terms of time period (short, medium and long-term). The interest rate risk is managed by analysis of interest rate sensitivity gap statements, evaluation of Earning at Risk (EaR) on change of interest rate and creation of assets and liabilities with the mix of fixed and floating interest rates.

The maturity profile of certain items of assets and liabilities as at March 31, 2012 is set out below:

8.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forward, option, principal swap, interest rate swap and forward rate agreements.

As on March 31, 2012, the total foreign currency liabilities are USD 541.15 million, JPY 41,643.20 million and Euro 24.73 million. On an overall basis, the currency exchange rate risk is covered to the extent of 14% through hedging instruments and lending in foreign currency.

8.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

Your Company has put in place a mechanism to ensure that the risks are monitored carefully and managed efficiently. In this regard, your company had constituted the Risk Management Committee of Directors to monitor various risks, examine risk management policies & practices and initiate action for mitigation of risks arising in the operations. To facilitate this, the Company had put in place an Integrated Enterprise – Wide Risk Management Policy (IRM Policy).

The Company has identified 26 risks (11 quantifiable risks and 15 non quantifiable risks) which may have an impact on profitability/business of the Company. In order to implement IRM policy, the Risk Management Committee of Directors constituted Risk Management Compliance Committee and a separate unit namely Corporate Risk Assurance unit (CRA) for monitoring of the identified risks. The CRA unit continuously monitors the identified risks from time to time. The status report on quarterly basis is being submitted to Risk Management Compliance Committee & Risk Management Committee of Board. The minutes of the Risk Management Committee of Board is being submitted to the Audit Committee of Directors and the Board of Directors on quarterly basis for information.

9.0 ULTRA MEGA POWER PROJECTS (UMPPs) AND INDEPENDENT TRANSMISSION PROJECTS (ITPs)

9.1 UMPPs

Your Company has been designated as the ‘Nodal Agency' by Ministry of Power (MoP), Government of India, for development of Ultra Mega Power Projects (UMPPs), with a

(Rs. in crore)

Maturity pattern of certain items of Assets and Liabilities based on Audited Balance Sheet as on March 31, 2012

Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 Beyond Total 2016-17

Rupee Loan Assets 14932 11203 11611 11437 11381 69130 129694

Foreign Currency Assets 37 37 37 32 181 54 378

Investments 0 0 0 0 0 59 59

Foreign Currency Liabilities 216 21 2668 449 1119 1117 5590

Rupee Liabilities (Bonds RTL STL) 13825 10452 7509 10934 11049 50766 104535

capacity of about 4,000 MW each. Sixteen such UMPPs were identified to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Chhattisgarh (Surguja), Karnataka, Maharashtra (Munge), Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Tamil Nadu (Cheyyur), Odhisa (Sundargarh), 2 Additional UMPPs in Odisha and 2nd UMPPs in Andhra Pradesh, Tamil Nadu, Gujarat and Jharkhand and 3rd UMPP in Andhra Pradesh. Out of these projects, 3rd UMPP in Andhra Pradesh was shelved due to want of clarity on the site for the project.

UMPP is the initiative of Government of India with Ministry of Power as the ‘facilitator' for the development of these UMPPs while Central Electricity Authority (CEA) is the ‘Technical Partner'. So far, 13 Special Purpose Vehicles (SPVs) have been established by the Company for these UMPPs to undertake preliminary site investigation activities necessary for conducting the bidding process for these projects. These SPVs shall be transferred to successful bidder(s) selected through Tariff Based International Competitive Bidding Process for implementation and operation.

Four (4) SPVs have been transferred to the successful bidders as indicated below:

S. Name of SPV Successful Date of No. Bidder Transfer

1 Coastal Gujarat The Tata Power April 22, Power Ltd. Company Ltd. 2007

2 Sasan Power Ltd. Reliance August 7, Power Ltd. 2007

3 Coastal Andhra Reliance January 29, Power Ltd. Power Ltd. 2008

4 Jharkhand Integrated Reliance August 7, Power Ltd. Power Ltd. 2009

Out of the remaining nine SPVs namely Chhattisgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.), Coastal Karnataka Power Limited, Coastal Maharashtra Mega Power Limited, Coastal Tamil Nadu Power Limited, Orissa Integrated Power Limited, Sakhigopal Integrated Power Company Limited, Ghogarpalli Integrated Power Company Limited, Tatiya Andhra Mega Power Limited and Deoghar Mega Power Limited, Request for Qualification (RfQ) for Chhattisgarh UMPP was issued in March, 2010 and RfQ for Odisha UMPP was issued in June, 2010. Responses for RfQ for Odisha UMPP were received on August 1, 2011. RfP for this project would be issued once SBDs to be followed are indicated by Ministry of Power.

9.2 ITPs

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub- stations, if any, initiation of process of seeking forest clearance, if required and to conduct bidding process etc.

So far 6 Special Purpose Vehicles (SPVs), 2 by PFC and other 4 by PFC Consulting Limited, a wholly owned subsidiary of PFC, have been incorporated.

East North Interconnections Company Limited (ENICL), an SPV established for ‘Transmission Scheme for enabling import of NER/NR(north eastern region/northern region) surplus power by NR', has been transferred to the successful developer i.e. M/s Sterlite Technologies Limited on March 31, 2010. Bokaro-Kodarma Maithon Transmission Company Limited (BKMTCL) was established for evacuation system for Maithon RB, Kodarma and Bokaro Extension Thermal Power Plants. Ministry of Power, Government of India, has directed Power Grid Corporation of India Limited (PGCIL) for taking up the work for above evacuation system. Accordingly, the name of the company was struck off from the records of Registrar of Companies in December 2010.

PFC Consulting Limited (PFCCL), a wholly owned subsidiary of PFC, was nominated as ‘Bid Process Coordinator' for independent transmission projects by Ministry of Power, Govt. of India. PFCCL has incorporated 4 SPVs namely Jabalpur Transmission Company Limited (JTCL) for ‘System Strengthening Common for Western Region (WR) and Northern Region (NR)', Bhopal Dhule Transmission Company Limited (BDTCL) for ‘System Strengthening for Western Region (WR)', Nagapattinam-Madhugiri Transmission Company Limited (NMTCL) for 'Transmission System Associated with IPPs of Nagapattinam/Cuddalore Area- Package A' and DGEN & Uttrakhand Transmission Co. Ltd. for ‘Transmission Project Associated with DGEN TPS (1200MW) of Torrent Power Ltd. and Interconnection between Srinagar and Tehri' as wholly owned subsidiaries for the development of Independent Transmission Projects.

Out of the above, 2 SPVs namely Jabalpur Transmission Company Limited (JTCL) and Bhopal Dhule Transmission Company Limited (BDTCL), have been transferred to successful developer i.e. M/s Sterlite Transmission Project Private Limited on March 31, 2011 and one SPV namely Nagapattinam-Madhugiri Transmission Company Limited (NMTCL) has been transferred to PGCIL on March 29, 2012.

10.0 RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP)

As part of R-APDRP, for the first time Information Technology (IT) is being deployed in identified 1402 towns of the country for establishment of accurate, reliable & sustainable baseline data, business process automation, carrying out energy audit for identifying AT&C losses and better consumer services etc. in the power distribution sector.

Also under Part A, Projects for Supervisory Control and Data Acquisition (SCADA) System/Distribution Management System (DMS) is being established in big towns in the country (67 towns envisaged) for real time operation and control of Distribution Network for improvement of efficiency, quality and reliability of power supply.

Further, under Part B, projects for Distribution Strengthening and Improvement are being implemented in over 1100 towns in the country. The main focus of the scheme is reduction of AT&C losses to 15% or below.

Your Company, as nodal agency, has contributed significantly during the FY 2011-12 in implementation of R-APDRP programme. The company cumulatively upto FY 2011-12 sanctioned, Part A(IT) schemes of all eligible 1402 towns, Part-A(SCADA) schemes for 63 towns out of 67 envisaged towns and Part-B schemes for 1086 towns out of envisaged 1100 towns. During the year, your company sanctioned Rs. 9,595 crore of projects against the MoU target of Rs. 5,697 crore set for it. The cumulative sanction under R-APDRP is Rs. 31,416 crore as on March 31, 2012.

Your Company has also disbursed the entire amount of Rs. 1,600 crore released by Ministry of Power (MoP) during the FY 2011-12 upto March 31, 2012 to the state utilities. The cumulative disbursement under RAPDRP is Rs. 5,503 crore as on March 31, 2012.

With the measures taken so far, as on March 31, 2012, Data Centers in cumulatively 9 States (8 States during the current year) have been commissioned. Further, 156 towns have been integrated with the Data Center in these 9 states namely West Bengal (43) Gujarat (52), Uttarakhand (3) Karnataka (1), AP (22), MP (1), Maharashtra (30), UP (1) and Punjab (3) and all the business process software modules and data capturing from towns demonstrated.

During the year, for implementation of Part-B projects of R- APDRP, utilities have tied up counterpart funding amounting to Rs. 8,653 crore, which include Rs. 4,273 crore from PFC, and have commenced implementation work in projects of 423 towns, to strengthen & improve distribution system and reduce AT&C losses to 15% or below.

During the year utilities have also appointed SCADA Implementing Agencies in 3 states for implementation of projects in 20 towns. Further, your company appointed the Third Party Independent Evaluation Agencies–Information Technology (TPIEA-IT) for verification of completion of Part A, IT and SCADA projects during the year.

For capacity building and to recognize the need and to keep pace with technology, contemporary knowledge and skill, your company imparted training on various themes to 11,495 personnel of Power Utilities, against MoU target of 8000.

Cumulatively, as on March 31, 2012, over 1200 towns were ring fenced by installation of boundary meters to enable utilities to account for the import and export of energy in these towns and to establish baseline AT&C losses. The TPIEA-EA, appointed by PFC/MoP, have also verified and established baseline AT&C losses cumulatively in 403 towns.

States where establishment of Distribution Transformer, Feeders and town-wise AT&C losses have been achieved, have started taking administrative and other measures to bring down the AT&C losses. These states are A P, M P, Gujarat and Karnataka. Further, reduction of AT&C losses is likely to be visible in R-APDRP towns in the utilities in next 1 to 5 years with establishment of IT system and Part-B system in towns coupled with administrative and other measures. Thus, your company shall be contributing largely in improvement of financial health of Distribution Utilities, which shall consequently improve health of Transmission and Generation Power Utilities, resulting in improvement of quality of assets of your company for such borrowers in the State Power Sector.

11.0 EXTERNALLY AIDED PROJECTS

Your Company has a Line of Credit of Euro 100.56 million from KfW to finance RM&U of Hydro Electric Projects. Funds from the facility would be used to finance RM&U schemes of six HEPs of Uttrakhand Jal Vidyut Nigam Ltd. (UJVNL). Out of six projects, Notice for Inviting Tenders (NIT) has already been issued for the Kulhal, Dhakrani and Dhalipur projects. For the remaining three projects, NIT is under process and is expected to be issued soon.

12.0 INITIATIVE TOWARDS REFORMS AND RESTRUCTURING

Your Company has been assisting the State Power Utilities (SPUs) in their sustainable reform and restructuring program. During the year, your company sanctioned an amount of Rs. 1 crore to Bihar State Electricity Board and disbursed an amount of Rs. 0.16 crore towards grant for reform related studies to Kerala State Electricity Board and Government of Jharkhand.

Your company has also been encouraging our clients to take IT initiatives for their overall operational and managerial improvement. During the year, an amount of Rs. 21crore has been sanctioned and Rs. 14.37crore disbursed for computerization schemes of State Power Utilities (other than computerization schemes covered under R-APDRP).

Categorization of Utilities

Your Company classifies State Power Utilities, its principal borrowers, into A , A, B and C categories. The categorization is based on the pre-determined parameters including operational & financial performance of the utilities. The categorization enables the company to determine credit exposure limits and pricing of loans to the state power utilities. As on March 31, 2012, 99 utilities were categorized, 33 as “A ”, 28 as “A”, 26 as “B” and 12 as “C”.

Category No. of Utilities

A 33

A 28

B 26

C 12

The Company is also stipulating appropriate conditions relating to implementation of reforms and improvement of performance while sanctioning financial assistance to its borrowers based on their appraisal.

Quarterly and Annual Report of State Power Utilities

Your Company is bringing out one page research report on the performance of each of the state power utilities (SPUs) on a quarterly basis. The report contains key operational and financial performance parameters, reforms status, the status of implementation of Electricity Act 2003, areas of concern and conditions for improvement of performance etc. The report is sent to the stakeholders in the Power Sector. The report is acknowledged as a useful effort in flagging the key issues/areas of concern to be reviewed by the SPUs for taking mid term corrective measures for the overall improvement of the sector.

During the FY 2011-12, your company issued performance reports for the quarters January-March 2011 covering 41 utilities and for April-June 2011, July-September 2011 and October-December 2011 covering 42 utilities each.

In addition, your Company brought out the 8th edition of the report on the performance of SPUs covering 89 utilities during the year 2011. The report is a part of our effort to provide a reliable database which can help to determine the results associated with the reforms in the sector. The report is also recognized by various stakeholders as a useful source of information regarding the state power sector. The report analyses the financial and operational performance e.g. profitability, gap between average cost of supply and average realization (Rs. /kwh), net worth, capital employed, receivables, payables, capacity (MW), generation (Mkwh), AT&C losses (%) etc. and consumption pattern of the sector at utility, state, regional and national level. The Report for the years 2008-09 to 2010-11 covering 77 utilities has been prepared and submitted to Ministry of Power as per the targets set in MoU. The final report (9th) on the performance of all SPUs for the period 2008-09 to 2010-11 is under finalization.

13.0 POLICY INITIATIVES

Your Company constantly reviews and revises its lending & operational policies/ procedures to suitably align these with market conditions as also with its corporate objectives and introduces new policies/products to meet the business requirements. During the year, your company introduced various new policies/schemes/guidelines like policy for financing of grid connected Solar PV power generation projects, short term loan scheme for private sector borrowers etc. Further, with the objective of having in place a system to anticipate and identify problems related to recovery of dues from borrowers as well as ensuing that appropriate remedial actions are taken in time, guidelines for management of non-performing assets and one time settlement was also introduced during the year.

The scheme for extending credit facility for purchase of power through power exchange was also modified in line with change in regulations and as per market requirements.

During the year, the company also reviewed its policy guidelines for debt refinancing, categorization policy for

state sector entities, policy guidelines for premature repayment of loans and financing of private sector generation projects with Debt Equity (D/E) ratio more than 70:30 with a view to make them more borrower friendly. Further, considering the financial health of discoms, the rupee short term loan (STL) scheme was also modified to impose some reform related conditionality and steadier eligibility criteria.

The interest rate in respect of corporate loan, rupee term loan, short term loan, foreign currency loan and R-APDRP schemes were reviewed and revised periodically during the financial year. Further, financial charges/fees were also reviewed and modified.

In spite of growing competition in the market as well as pressure on interest rates on account of factors like increase in RBI policy rates, inflation prevailing in this financial year etc., PFC could balance its objectives of business growth & profitability.

14.0 ADDITIONAL INITIATIVES

14.1 PRIVATE EQUITY FUND

In order to sustain growth and to enter new areas of business so as to keep pace with market developments, your company has decided to enter Private Equity business. PFC would launch a private equity fund along with a selected partner which would facilitate flow of institutional funds in equity of power project leading to faster financial closure of power projects and thus enabling swifter capacity addition in the sector. The fund would enable PFC to take an indirect exposure to equity assets in addition to earning other income (through fee based earnings of the Asset Management Company). The process of selection of partner is underway.

15.0 CONSORTIUM LENDING SERVICES

Consortium Lending Group (CLG) of your company is primarily responsible for administering loans for the private (Power) projects where PFC is the lead FI. The unit is also coordinating with developers of IPPs, corporate bodies, prospective lenders for identifying loan syndication proposals and coordinating with members of Power Lenders Club for providing single window facility to power project developers.

During the FY 2011-2012, various documents were successfully executed for 8 projects which included 5 MW solar PV project of Yantraesolarindia Pvt. Ltd., 2 MW solar PV project of Clover solar Ltd, 3X360 MW RKM Ph-II, 220 MW Captive project of Vadinar Power Co. Ltd, 1x300 MW Lanco Amarkantak Ltd- Unit-2 COR, Udupi Power Corpn. Ltd, additional Rupee Term Loan Agreement for Udupi Power Corpn Ltd. and additional Rupee Term Loan Agreement for Lanco Amarkantak Power Ltd Unit-3&4.

Further, regular disbursements started for 2X660 MW TPP of M/s Lanco Amarkantak Power Ltd., 6X600 MW KSK Mahanadi Power Co. Ltd, Parbati Koldam Transmission Co. Ltd., 96 MW HEP of M/s Madhya Bharat Power Co. Ltd., Cost overrun funding for Udupi Power Corpn. Ltd., 2MW Solar PV Project of M/s Clover Solar Ltd. after financial closure has been achieved for these projects. Total disbursement of Rs. 5,032 crore has been made during the year. A lead fee income of Rs. 10.20 crore was earned during the year.

In order to syndicate and make financial arrangements for the Projects/enterprises in the areas of power, energy, infrastructure and other industries, a separate subsidiary company namely PFC Capital Advisory Services Ltd has been incorporated on July 18, 2011.

16.0 FACILITATION SERVICES

With a view to harness the business potential in the allied sector, your company has set up Facilitation Group. The Group is a single window to finance equipment manufacturing, fuel sources development and distribution for the power sector. During the period, the Group obtained business proposal for funding more than USD 750 Million for coal/ gas mining/development overseas. The group is spear heading PFC's foray into global operations/footprint.

Further, to harness the business potential in Nuclear Power, your company has initiated financing of Nuclear Power. Nuclear Power Corporation of India Limited, a wholly owned CPSU of Govt. of India has requested PFC for financial assistance by way of debt for upcoming nuclear power projects, including Kakrapar U#3&4 (2x700MW) of project cost of Rs. 11,459 crore and Debt Equity Ratio of 70:30 translating into debt of Rs. 8,021 crore.

17.0 ACQUISITION ADVISORY SERVICES

Your company believes that institutional and regulatory reforms in the Indian power sector and increased investor interest will lead to consolidation in the power sector in order to ensure synergies and economies of scale. In addition, the company believes that the increasing demand- supply gap in the power sector has driven the procurement of power from the private sector through competitive bidding. Further, high demand for efficiency and economies in generation are expected to lower the cost of tariff. Open access and power trading are likely to increase competition in the sector in the future.

Your company has therefore set up an Acquisition Advisory Services unit to focus on acquisition advisory services for power sector projects. The unit shall develop and maintain the required database to explore business opportunities for various promoters in the power sector who want to acquire projects which are either completed or under the process of implementation. The unit would also provide any professional due diligence to enable such acquisition.

18.0 COMMERCIAL BANKING OPERATIONS

Your Company is currently in the preliminary stages of evaluating the possibility of establishing or acquiring a bank and for this purpose the company conducted an internal study for exploring the possibility of acquisition of a bank or establishing a bank. The report is under examination.

19.0 RENEWABLE ENERGY AND CLEAN DEVELOPMENT MECHANISM (RE&CDM)

The potential of Renewable Energy to provide clean and sustainable energy is universally accepted. Government of India is giving high focus for promotion of Renewable Energy through Electricity Act 2003 and National Electricity Policy. By launching Jawaharlal Nehru National Solar Mission, Renewable Energy has been given a central place in Government of India's National Action Plan on Climate Change.

The SERCs in various states are making it mandatory for distribution utilities to procure minimum percentage of energy from Renewable Energy generation sources and notifying special tariffs for solar, wind, biomass and small hydro generation projects for purchase of power by State Power Utilities. To promote the Renewable Energy business in state and private sector, your company is giving interest rebates for financing of Renewable Energy Projects.

Till March 2012, your company has sanctioned around 83 projects in solar, wind, biomass and small hydro sectors with a total cumulative capacity of 1079 MW. For the FY 2011-12, the Company has sanctioned 8 projects with a capacity of 55 MW and loan amount of Rs. 268 crore and disbursed an amount of Rs. 299 crore. Further, your Company has been approached with proposals of capacity of around 1400 MW with expected debt component of around Rs. 4800 crore.

In order to promote green (renewable and non- conventional) sources of energy, a separate subsidiary company namely PFC Green Energy Limited has been incorporated under the Companies Act, 1956 as a wholly owned subsidiary of Power Finance Corporation Limited on March 30, 2011 and obtained Commencement of Business Certificate on July 30, 2011 for providing financial assistance to projects for generating green energy through renewable and non-conventional sources. The Company has an authorised capital of Rs. 1,200 crore and paid-up capital of Rs. 4.99 crore.

The Company will commence its business operations on registration as a Non Banking Financial Company (NBFC) with RBI. The application for grant of Certificate of Registration (CoR) from RBI has been filed and the same is under process.

20.0 PROMOTION OF POWER TRADING THROUGH POWER EXCHANGE

In the FY 2008-09, the Central Electricity Regulatory Commission had granted its permission to set up power exchanges in the country. As on date two power exchanges, namely, Power Exchange India Ltd. (PXIL) and Indian Energy Exchange Ltd. (IEX) are in operation. These power exchanges have a nationwide presence in the form of electronic exchange for trading in power. The trading through power exchanges have certainly lent an impetus for power sector development since it acts as an open and transparent mechanism for buyers and sellers and provides investment signal to the prospective investors. Further with the presence of these exchanges, the available resources shall be used optimally.

In order to promote short term trading through power exchange, your company had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. Your company has contributed Rs. 2.19 crore (being 16.66% of paid up equity upto March 31, 2012) towards equity contribution. This exchange is yet to start its operation.

Your company has also contributed Rs. 2.80 crore (being 6.82% of paid up equity upto March 31, 2012) towards equity contribution in Power Exchange India Ltd., promoted by NSE and NCDEX.

21.0 EQUITY FINANCING

Equity investment business is generally considered as a logical extension of debt business. Your Company is endeavoring to make a mark in the area of equity investment so as to capitalize on its vast domain experience, attained during it's over 25 years of operations in power sector debt financing. PFC aims to leverage its financial strength, large debt providing capability and power sector expertise to invest in equity of attractive power projects. Over a period of time, your company proposes to build an equity portfolio of power assets which could provide consistent gains in the form of dividend and/or capital appreciation. Recently, your company has obtained consent of RBI to invest in equity of power projects ranging from 0.5% to 5% of its own net worth in a single company.

22.0 SUBSIDIARIES

To focus on additional business in the areas of consultancy, renewable energy, consortium lending, equity financing, etc. following wholly owned subsidiaries have been incorporated by your Company, as on date:

(i) PFC Consulting Limited

(ii) PFC Green Energy Limited

(iii) PFC Capital Advisory Services Limited

(iv) Power Equity Capital Advisors Private Limited

Further, your Company is designated by Ministry of Power, Government of India as the nodal agency for facilitating development of Ultra Mega Power Projects and its wholly owned subsidiary i.e. PFC Consulting Limited is the ‘Bid Process Coordinator' for Independent Transmission projects. As on date, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiary of the Company:

(v) Chhattisgarh Surguja Power Limited (Previously known

as Akaltara Power Ltd.) (vi) Coastal Karnataka Power Limited (vii) Coastal Maharashtra Mega Power Limited (viii) Coastal Tamil Nadu Power Limited (ix) Orissa Integrated Power Limited (x) Sakhigopal Integrated Power Company Limited (xi) Ghogarpalli Integrated Power Company Limited (xii) Tatiya Andhra Mega Power Limited (xiii) Deoghar Mega Power Limited (incorporated on 26th April, 2012) (xiv) DGEN & Uttrakhand Transmission Company Limited (a wholly owned subsidiary of PFC Consulting Limited)

22.1 PFC CONSULTING LIMITED

Background

As you are aware, your Company had been offering consultancy support to the Power Sector through its Consultancy Services Group (CSG) since October 1999. Leveraging the experience of the CSG Unit and appreciating the growth in the services offered by the Group and recognizing the potential of such services in the reforming Power Sector, your Company decided to organize the services as a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary on March 25, 2008, in order to give it requisite autonomy in functions and flexibility in operations. PFCCL is mandated to promote, organize and carry out consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs and ITPs. PFCCL has been nominated as the ‘Bid Process Coordinator' for selection of developer for the ndependent Transmission Projects (ITPs) by Ministry of Power, GoI.

Range of Services Offered

The Services being offered by PFCCL are broadly classified as under:

- Procurement of Power by Distribution Licensees through Tariff based competitive bidding.

- Govt. of India initiatives like UMPPs, ITPs etc.

- Assignments from State Power Utilities, Licensees/IPPs, State Govt., PSUs & SERCs.

- Renewable and Non-Conventional Energy Schemes.

- Coal Block JVs and selection of developers for Coal Blocks and linked Power Projects.

- Project Advisory including Selection of EPC Contractor.

- Reform, Restructuring and Regulatory Aspects.

- Capacity Building and Human Resource Development.

Client Base

Till date, consultancy services have been rendered to 39 clients spread across 21 States/UTs namely Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Jharkhand, Karnataka, Kerala, Madhya

Pradesh, Maharashtra, Meghalaya, Odisha, Puducherry, Punjab, Rajasthan, Tripura, Uttar Pradesh and West Bengal. The profile of clients is as below:

Clients Nos.

State Utilities 18

Licensees / IPPs 7

Public Sector Undertakings 6

State Governments 4

Regulatory Commissions 3

Central Govt. departments/ Ministries 1

Total 39

During the FY 2011-12, the total income of PFCCL has increased to Rs. 56.04 crore as compared to Rs. 52.60 crore in the previous FY 2010-11 and net profit has increased to Rs. 27.66 crore as compared to Rs. 26.96 crore in the previous year.

22.2 PFC GREEN ENERGY LIMITED

PFC Green Energy Limited has been incorporated on March 30, 2011 as a wholly owned subsidiary of the Company to extend finance and financial services to promote green (renewable and non-conventional) sources of energy with authorised capital of Rs. 1,200 crore. The company received its certificate of commencement of business on July 30, 2011. During the FY 2011-12, the paid-up capital of the Company increased from Rs. 0.05 crore to Rs. 4.99 crore.

The Company will commence its business operations on registration as a Non Banking Financial Company (NBFC) with RBI. The application for grant of Certificate of Registration from RBI has been filed and the same is under process.

22.3 PFC CAPITAL ADVISORY SERVICES LIMITED

PFC Capital Advisory Services Ltd, a wholly owned subsidiary of the Company has been incorporated on July 18, 2011 interalia to provide debt syndication services in the areas of power, energy, infrastructure and other industries in the long run. The service offering of this venture shall cover all activities in assisting a Project Developer in raising the required funds. The Certificate for Commencement of Business was obtained by the Company on September 2, 2011. The authorised share capital of the company is Rs. 1 crore.

22.4 POWER EQUITY CAPITAL ADVISORS PRIVATE LIMITED

An advisory company namely Power Equity Capital Advisors Private Limited (PECAP) was incorporated to provide advisory services related to equity investments in Indian power sector, where your Company held 30% stake and the remaining being held by individuals. However, being largely owned by individuals, the company was not able to transact any business as it was unable to provide the requisite comfort to its clients. Therefore, in order to provide the requisite comfort to the clients and to substantially improve the possibility of PECAP to do meaningful business, the Board of Directors of PFC in February, 2011 approved a proposal for acquiring 100% stake in PECAP and accordingly on October 11, 2011 the balance 70% stake held by individuals was transferred to PFC, making PECAP a wholly owned subsidiary of PFC.

23.0 JOINT VENTURES AND ASSOCIATE COMPANIES

23.1 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. Your Company has invested Rs. 12 crore which is 4.07% of total equity of PTC. PTC is the leading provider of power trading solutions in India. Government of India initiated public-private partnership, whose primarily focus is to develop a commercially vibrant power market in the country.

23.2 NATIONAL POWER EXCHANGE LIMITED

In order to promote short term trading through power exchange, your company had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. Your company has contributed Rs. 2.19 crore (being 16.66% of paid up equity upto March 31, 2012) towards equity contribution. This exchange is yet to start its operation.

23.3 ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with equal equity participation of Rs. 25 crore each for implementation of Energy Efficiency projects in India and abroad. EESL would be one of the main implementation arms of the National Mission on Enhanced Energy Efficiency (NMEEE), which is one of the eight National Missions announced by the Hon'ble Prime Minister as a part of “National Action Plan on Climate Change”.

24.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ‘Excellent' Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY 2011-12, your Company is likely to be accorded ‘Excellent' rating.

25.0 PRESIDENTIAL DIRECTIVES

Your Company has implemented wage-revision w.e.f. 01.01.2007 for the employees in the Executive Cadre in September 2009 and for employees in non-unionised Supervisory Cadre in August 2010 as per Presidential Directives issued on 26.11.2008 and 02.04.2009. The Company has not received any Presidential directives during the year 2011-12.

26.0 CORPORATE SOCIAL RESPONSIBILITY

Your Company has implemented its Corporate Social Responsibility (CSR) Policy with an aim to ensure that the Company becomes a socially responsible corporate entity contributing towards quality of life of the society at large. In order to have a focused approach, the company has created a separate CSR unit to undertake the CSR programmes of the Company. Further, to oversee the activities of CSR, a CSR Committee of Directors has also been constituted.

Your Company has entered into a MoU with Government of India for spending 0.5% of PAT towards CSR activities as part of its Corporate Social Responsibility. The Company has undertaken major initiatives in several critical areas which impact the lives of the common man in a positive way. Your Company had allocated Rs. 13.24 crore for CSR initiatives in the FY 2011-12. However, during the year, the company sanctioned projects worth Rs. 20.33 crore and disbursed Rs. 19.37 crore. Out of this Rs. 13.27 crore was disbursed for projects sanctioned in 2011-12 and Rs. 6.10 crore for projects sanctioned in 2010-11. Though, your company was required to undertake three out of the five activities listed out in the MoU for FY 2011-12 for achieving excellent level, the company has sanctioned amount for all the five projects.

Your company sanctioned Rs. 3 crore to The Energy and Resources Institute (TERI) for providing easy access of electricity to the people by distributing solar lanterns to 150 villages, specially for SC/ST/OBC & EWS of the society in the state of Andhra Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Uttar Pradesh and Uttarakhand. Upto March 31, 2012, TERI had distributed 2500 solar lanterns and installed solar charging stations in 50 villages. It has also completed installation of solar charging stations in all 169 identified villages particularly those located in Left wing affected/border area villages in Assam, Bihar, J&K, Jharkhand, Meghalaya, Odisha, U.P. and West Bengal under CSR Project sanctioned earlier during 2010-11.

The company sanctioned Rs. 1.21 crore for converting conventional street lighting to LED lighting at Mussoorie, Uttarakhand. Further, Rs. 1.26 crore were provided to Hardicon Ltd for implementing Skill Development Programme for SC/ST/OBC/Women & EWS of society (1000 in no.) in 33 locations in various trades in J&K. The programmes were concluded from March 23 to March 30, 2012 at all the locations.

PFC sanctioned Rs. 0.45 crore for setting up of 15 temporary night shelters through Delhi Urban Shelter Improvement Board. All 15 such night shelters had been set up for homeless from SC/ST/OBC & EWS of the society in different locations of Delhi in January 2012. Financial assistance was also provided to Forest Department, Government of Gujarat for installation of 150 improved crematoria bed in villages where schedule caste population is at least 250 or more. Under the project, 20 crematoria beds have been installed in Surendranagar district of Gujarat upto March 2012.

In addition to the above five projects which were to be implemented as per MOU, your company also sanctioned Rs. 6.6 crore for upgradation of 264 Adult Education Centres (AECs) to Model AECs in Andhra Pradesh, Karnataka, Gujarat, Himachal Pradesh, Punjab, Rajasthan, Tamilnadu and Dadra and Nagar Haveli under Saakshar Bharat Programme of Ministry of HRD. AS per GoI criteria, preference may be given to Gram Panchayat having more concentration of SCs, STs and Minorities. The entire amount was disbursed to the respective SLMAS for implementation in the FY 2011-12. Restoration of damaged Transmission & Distribution System of Sikkim due to the earthquake was also covered under CSR and financial assistance of Rs. 7.1 crore was provided to Energy & Power Department of Sikkim. Out of which Rs. 3.30 crore was disbursed upto March 2012.

The company also contributed Rs. 26 lakh towards National CSR Hub at Mumbai. All the initiatives under CSR activities are being reported to National CSR Hub. The impact evaluation study for the completed projects will be done in FY 2012-13.

27.0 EMPLOYEES STOCK OPTIONS PLAN (ESOP)

Stock Options have been recognized world over as an effective instrument to attract and retain the talent in the organization and to align the interest of employees with those of the organization. Stock Options provide an opportunity to employees to share the growth of the Company and create long term wealth. They also promote the culture of employee ownership in the company.

The Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises, Govt. of India, through its directions on pay revision had also made it mandatory for all the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees in the form of ESOPs. In accordance with these directions of the DPE, the Board of Directors had formulated an Employee Stock Option Plan titled as ‘PFC-ESOP 2010'. Shareholders had also approved this Employee Stock Option Plan in their 24thAnnual General Meeting held on September 21, 2010. Subsequently, the Board of Directors had decided that 25% of the PRP of the employees should be given in the form of ESOPs.

Accordingly, during the financial year 2011-12, the Company had granted 87,888 options, convertible into equal number of equity shares to the eligible employees under the said

ESOP Scheme. These options have vested with the employees on July 29, 2012 and shall be exercisable by them within two years from the date of vesting by paying Rs. 10/-(face value per equity share) as exercise price.

Further, 75,178 options have been exercised by the employees so far and consequently equal number of equity shares have been alloted to them.

The disclosures in respect of the ESOP scheme pursuant to Clause 12 of SEBI (Employees' Stock Option Scheme and Employees' Stock Purchase Scheme) Guidelines, 1999 is enclosed at Annexure A.

28.0 HRD INITIATIVES

TRAINING & DEVELOPMENT

In the field of Human Resource Development, your company stresses on the need to continuously upgrade the competencies of its employees and equip them to keep abreast of latest developments in the sector. The Company operates in a knowledge intensive business and is committed to enhancing these skills of its employees. In order to achieve this, the Company has an annual training plan to assess the various training needs. Necessary professional skills are also imparted across all levels of employees through customized training interventions.

Employee Training

During the year 2011-12, your company organized 16 in- house programs. A total of 1,768 mandays were achieved during the period under review of which 1,086 were through in-house programs and 682 were through nominations to open programmes organized by other training institutes.

29.0 HUMAN RESOURCE MANAGEMENT

Your Company lays great emphasis on upgrading the skills of its Human Resource. It benchmarks its practices with the best practices being followed in the corporate world. This, apart from other strategic interventions, leads to effective management of Human Resource thereby ensuring high level of productivity. Your Company enjoys a very cordial and harmonious relationship with its employees. There were no man-days lost during the year under review.

30.0 WELFARE MEASURES

Your Company follows good management practices to ensure welfare of its employees through a process of inclusive growth & development. The Company follows an open door policy whereby the employees can access the top management thereby contributing in the management and growth of the company. Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which in turn lead to a healthy workforce.

31.0 RESERVATION OF POSTS FOR SC/ST/OBC/EX-SERVICEMEN AND PHYSICALLY HANDICAPPED PERSONS IN THE SERVICES OF COMPANY

Your Company as a part of its social responsibility makes all-out efforts to ensure compliance of the Directives and

Guidelines issued by the Government for the reservation to be allowed for SC/ST/OBC/Persons with disabilities. The steps taken include due reservations and relaxation as applicable under the various directives.

In the year 2011-12, total 21 new employees were recruited, out of which 14.29% are SC (3), 4.76% are ST (1) and 19.05% are OBC (4).

32.0 REPRESENTATION OF WOMEN EMPLOYEES

Your Company provides equal growth opportunities for its women employees and today the Company can boast of women heading critical functional areas. There is no discrimination of employees on the basis of gender. The women employees represent 19.53% of the total work force.

33.0 DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

o In the preparation of the annual accounts for the FY 2011-12, the applicable accounting standards had been followed along with proper explanation relating to material departures;

o The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the FY 2011-12 and of the profit of the Company for that period;

o The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956 for safeguarding the assets of the Company and for prev

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Mar 31, 2011

The Members,

The Directors have great pleasure in presenting the 25th Annual Report on the performance of your Company for the financial year ended March 31, 2011 along with Audited Statements of Accounts.

1.0 FINANCIAL HIGHLIGHTS

(a) PROFITABILITY (Rs. in crore)

Particulars 2010-11 2009-10

Profit for the Year 3544.21 3013.07

Prior Period Adjustments (-) 0.07 0.13

Profit Before Tax 3544.14 3013.20

Provision for Income Tax (-) 898.99 (-) 800.27 (current year)

Provision for Income Tax 10.45 135.79 (earlier years)

Deferred Tax Liability(-)/ (-) 36.02 8.53

Assets( )

Profit After Tax 2619.58 2357.25

Transfer towards Provision 142.47 123.92

for Bad & Doubtful Debts u/s 36(1) (viia)(c) of Income Tax Act, 1961

Transfer to Special Reserve 634.32 568.61

created and maintained u/s 36(1) (viii) of Income Tax Act, 1961 Debenture Redemption 0.06 -

Reserve

Interim Dividend 401.72 344.33

Proposed Final Dividend 197.99 172.17

Corporate Dividend Tax paid 66.72 58.52 on Interim Dividend

Proposed Corporate 32.12 29.26

Dividend Tax

Transfer to General Reserve 262.00 236.00

Balance carried to Balance 882.18 824.44

Sheet

(b) LENDING OPERATIONS (Rs. in crore)

Particulars 2010-11 2009-10

Sanction 61532 59228

Disbursement 31865 24487

(c) R-APDRP OPERATIONS (Rs. in crore)

Particulars 2010-11 2009-10

Sanctioned project cost 13665 6237

Disbursement 2257 1321

2.0 FINANCIAL PERFORMANCE

2.1 REVENUE

The total income during the financial year 2010-11 was Rs.10,160.56 crore registering an increase of 25.80% as compared to Rs.8,076.86 crore in financial year 2009-10. Operating income for the year increased from Rs.8,002.10 crore to Rs.10,128.49 crore showing an increase of 26.57%. Interest income including lease income for the financial year 2010-11 was higher at Rs.9,776.32 crore against Rs.7,867.16 crore in 2009-10.

2.2 EXPENSES

Interest and other finance charges for the financial year 2010-11 amounting to Rs.6,486.95 crore accounted for 98.04% of total expenses. Personnel and Administration expenses in the financial year 2010-11 were 1.40% of total expenses and 0.09% of Loan Assets as against 2.09% and 0.13% respectively in the previous year. Further, Personnel and Administration expenses in the financial year 2010-11 were 1.43% of interest and other financial expenses as compared to 2.14% in the previous year.

2.3 PROFIT

During the financial year 2010-11, your Company earned a net Profit of Rs.2,619.58 crore as compared to Rs.2,357.25 crore for the financial year 2009-10 registering an increase of 11.13%.

2.4 FURTHER PUBLIC OFFER (FPO)

During the first quarter of financial year 2011-12, your Company made a Further Public Offer (FPO) of 22,95,53,340 equity shares of Rs.10/- each for cash through 100% book- building process with a price band of Rs.193-203 per equity share. The issue included a fresh issue of 17,21,65,005 equity shares by the Company and an offer for sale of 5,73,88,335 equity shares by the President of India acting through Ministry of Power, Government of India.

The issue was priced at Rs.203/- per share. A discount of 5% to the issue price being Rs.10.15 per equity share determined pursuant to completion of the Book Building Process was offered to Eligible Employees and to Retail Bidders. The issue proceeds amounted to Rs.4,578.20 crore of which Rs.1,144.55 crore pertains to offer for sale. Thus, the total fresh capital including share premium raised through FPO was Rs.3,433.65 crore.

The issue got a good response and was subscribed 4.31 times. The Qualified Institutional Bidders (QIB) portion got subscribed 6.92 times, Non-Institutional portion 1.08 times, Retail portion 1.97 times and Employees category 0.87 times. The total number of applications received were 2,58,497. The equity shares under FPO got listed on the NSE and BSE on May 27, 2011. Post-issue, the holding of the

Government of India stands at 73.72% and the balance is held by various investors.

The issued and paid-up share capital increased from Rs.1,147.77 crore to Rs.1,319.93 crore.

The issue proceeds have been fully utilized for the purpose as mentioned under the objects of the issue enumerated in the Offer Document.

2.5 SHARE CAPITAL

As on March 31, 2011, the paid-up share capital of the Company was Rs.1,147.77 crore consisting of 1,14,77,66,700 equity shares of Rs.10 each. The Government of India held 89.78% of the equity share paid-up capital. The Company has issued 17,21,65,005 equity shares in May, 2011 resulting in an increase of Rs.172.16 crore in paid up equity share capital. The post-issue paid-up equity share capital is Rs.1,319.93 crore. The shareholding of Government of India in the Company now stands at 73.72%.

2.6 DIVIDEND

Your Directors have recommended a final dividend of Rs.1.50 per equity share (15%) on the total post issue paid up equity share capital of Rs.1,319.93 crore. This is in addition to an interim dividend of Rs.3.50 per equity share (35%) on the pre-issue paid up equity share capital of Rs.1,147.77 crore which was paid in January 2011.

The total dividend for the financial year 2010-11 thus aggregates to Rs.5.00 (interim dividend of Rs.3.50 and final dividend of Rs.1.50) per equity share of Rs.10 each on the pre-issue equity share capital of Rs.1,147.77 crore and Rs.1.50 (final dividend) on the additional equity share capital of Rs.172.16 crore issued in May 2011.

The final dividend will be paid after your approval at the Annual General Meeting. The total dividend pay-out for the year amounts to Rs.599.71 crore representing 22.89% of Profit after tax as against a dividend pay-out of Rs.516.50 crore representing 21.91% of Profit after tax in the previous year.

3.0 INFRASTRUCTURE FINANCE COMPANY (IFC)

Infrastructure Finance Company (IFC) is a new category of infrastructure funding entities introduced by Reserve Bank of India (RBI) in February 2010. Non-deposit taking Non Banking Financial Companies (NBFCs-ND) which satisfy minimum eligibility criteria relating to proportion of infrastructure loans (75% of total assets deployed in infrastructure loans), net owned funds (Rs.300 crore), credit rating ('A' or equivalent of CRISIL, FITCH, CARE, ICRA or equivalent rating by any other accredited rating agencies), CRAR (15% with minimum Tier I capital of 10%) are eligible to apply to RBI and seek IFC status.

IFC's enjoy benefits including a lower risk weight on their bank borrowings (from a fl at 100% to as low as 20% for AAA rated borrowers), higher permissible bank borrowing (upto 20% of the bank's capital funds) and relaxation in their single party & group lending exposure norms. It also enables to raise funds on a cost-competitive basis (including through issuance of Rupee-denominated infrastructure bonds that offer certain tax benefits to the bondholders). IFCs are also eligible to avail External Commercial Borrowings (ECBs) up to US$ 500 million in each fiscal year subject to maximum of 50% of their owned funds, from recognized lenders.

RBI vide its letter dated July 28, 2010 classified your Company as an IFC, and consequently we can avail the benefits applicable to IFCs from time to time.

4.0 ISSUE OF LONG TERM INFRASTRUCTURE BONDS

As stated above, your Company was awarded the status of Infrastructure Finance Company (IFC) in July 2010 by RBI. Consequently, the Company became eligible to issue Long Term Infrastructure Bonds u/s 80CCF of Income Tax Act, 1961. Your Company came out with the public issue of Long Term Infrastructure Bonds from February 24, 2011 till March 22, 2011 in four kinds of series i.e. Series 1 & 3 non cumulative and Series 2 & 4 cumulative. The interest rate of Series 1 & 2 was 8.30% and of Series 3 & 4 was 8.50%. The Company collected a total of Rs.235.36 crore in all the series from the market to be utilized towards 'infrastructure lending'. The date of allotment of Long Term Infrastructure Bonds was March 31, 2011. These bonds are listed on Bombay Stock Exchange (BSE).

5.0 EMPLOYEES STOCK OPTIONS PLAN (ESOP)

Stock Options have been recognized world over as an effective instrument to attract and retain the talent in the organization and to align the interest of employees with those of the organization. Stock Options provide an opportunity to employees to share the growth of the Company and create long term wealth. They also promote the culture of employee ownership in the company.

The Department of Public Enterprises (DPE) also through its guidelines on pay revision had made it mandatory for all the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees as ESOPs. In accordance with these directions of the DPE, the Board of Directors had formulated an Employee Stock Option Plan titled as 'PFC-ESOP 2010' and intends to grant ESOPs to the employees through a Trust. Shareholders had also approved this Employee Stock Option Plan in their last Annual General Meeting held on September 21, 2010. However, no stock option has been granted so far under this plan.

6.0 LENDING OPERATIONS

Your Company issued sanctions of Rs.61,532 crore during the financial year 2010-11 compared to Rs.59,228 crore sanctioned during the financial year 2009-10. An amount of Rs.31,865 crore was disbursed during the same period to State, Central, Private and Joint Sector entities, compared to Rs.24,487 crore disbursed during the last year. With this, cumulative sanction of Rs.3,23,905 crore and disbursement of Rs.1,69,146 crore have been made by the Company as on March 31, 2011.

In addition to above, an amount of Rs.13,665 crore was sanctioned and Rs.2,257 crore was disbursed during 2010-11 under R-APDRP scheme. With this, cumulative sanction under R-APDRP stands at Rs.21,821 crore and disbursement at Rs.3,903 crore.

6.1. Financial Assistance

6.1.1 Sector-wise

(Rs. in crore)

2010-11 Cumulative upto March, 2011 Category Sanctions Disbursements Sanctions Disbursements

State Sector 42345 20400 220116 125567

Central Sector 2500 5944 35030 23761

Private Sector 16687 3746 51045 10875

Joint Sector 0 1775 17714 8943

Total 61532 31865 323905 169146

6.1.2 Discipline-wise

(Rs. in crore)

2010-11 Cumulative upto March, 2011

Category Sanctions Disbursements Sanctions Disbursements

Thermal Generation 46995 19545 198303 83603

Hydro Generation 3322 1733 32059 21767

Wind, Solar and Bagasse 974 466 1888 893

Renovation and Modernization of 556 562 8556 5553 Thermal Power Stations

Renovation & Uprating of Hydro 7 83 1387 1040 Power Projects

Transmission 4173 2616 34877 15835

Distribution 216 1825 14058 9298

Short Term Loans 4265 4206 27495 27020

Others* 1024 829 5282 4137

Total 61532 31865 323905 169146

* Others include Decentralized Management, Project Settlement, Pre Investment Fund, Technical Assistance Project, Medium Term Loan, Buyers Line of Credit, Equipment Manufacturing Loan, Loan for Asset Acquisition, Bill Discounting, Studies, Loan for Redemption of bonds, Purchase of power through PXI, Loan for Promoter's Equity and Computerization etc.

6.1.3 Product-wise

(Rs. in crore)

2010-11 Cumulative upto March, 2011

Category Sanctions Disbursements Sanctions Disbursements

Term Loans 56440 26750 289609 136663

Short Term Loans 4265 4206 27495 27020

Leasing 0 78 1043 784

Grants 0 4 74 52

Others ** 827 827 5684 4627

Total 61532 31865 323905 169146

** Others include Debt Refinancing, Bridge Loan, Associated Infrastructure, Loan to Equipment Manufacturers, Buyers Line of Credit, Loan for Assets Acquisition, Bill Discounting, Purchase of power through PXI and Loan for Promoter's Equity etc.

6.2 Financial Assistance under R-APDRP

(Rs. in crore)

2010-11 Cumulative upto March, 2011

Category Sanctioned Sanctioned Disbursements Disbursements

project cost project cost

Part A 750 217 5846 1667

Part B 12915 2040 15975 2236

Total 13665 2257 21821 3903

7.0 REALISATION

Your Company gives highest priority to the realisation of its dues towards principal, interest etc. Out of Rs.21,491.54 crore to be recovered towards principal, interest etc. under rupee term loans, bill discounting, working capital, lease financing, foreign currency loan, loans for equipment financing and guarantee fee, an amount of Rs.21,417.86 crore was actually realised. This works out to an overall recovery rate of 99.66% (previous year 99.63%). The overall recovery rate has been consistently maintained at 96-99% for the last ten years. The company has achieved recovery rate of 99.81% in respect of principal amount due during the year.

In terms of Prudential Norms applicable, the Company has made an additional provision amounting to Rs.29.14 crore on non-performing loan assets during the year. The Company has made a total provision amounting to Rs.36.06 crore for Non-Performing Assets (NPA) against Loan Assets in its Annual Accounts upto the year 2010-11. After making provision on NPA, the level of net Non-Performing Assets (NPA) has been recorded at Rs.194.60 crore forming 0.20% to the Total Loan Assets as on March 31, 2011.

In addition to above the company has also made a provision of Rs.2.80 crore in respect of a restructured loan asset classified as 'Standard assets' in terms of RBI circular no.DBOD.No.BP.BC.85/21.4.048/2009-10 dated March 31, 2010.

8.0 BORROWINGS

8.1 BORROWINGS FROM DOMESTIC MARKET

Your Company mobilized funds amounting to Rs.26,057.39 crore from the domestic market during 2010-11 as against Rs.20,922.91 crore during 2009-10. Out of the above, Rs.14,023.96 crore was raised by issue of unsecured taxable bonds in the nature of debentures, Rs.8,029.17 crore by way of long/medium term loans from Banks/FIs, and Rs.4004.26 crore by way of issue of Commercial Paper and Short Term Loans.

8.2 EXTERNAL BORROWINGS

During the financial year 2010-11, your Company raised External Commercial Borrowing (ECB) of USD 500 million through Syndicated Loan as per the following details:

Amount Rate of Tenor of Average (USD in Million) Interest the Loan Tenor

240 6MJPY 6 years 5 years LIBOR 150bps

260 6MJPY 6 years 5 years LIBOR 165bps

8.3 REDEMPTION AND STATUS OF UNCLAIMED AMOUNTS BONDS

The unclaimed balance amount of bonds as on March 31, 2011 wasRs.7.32 crore (previous year -Rs.25.70 crore). This represents the amount remaining unclaimed/unpaid after redemption by the bondholders, as the bondholders had not surrendered their bond certificates. The bondholders have been individually advised to surrender bond certificates.

9.0 CREDIT RATINGS Domestic

During the financial year 2010-11, your Company's long term domestic borrowing programme (including bank loans) was awarded the highest rating of 'AAA' and 'LAAA by CRISIL and ICRA respectively. The Company's short term domestic borrowing programme (including bank loans) was awarded the highest rating of 'P1 ' and A1 ' by CRISIL & ICRA respectively

International

During the financial year 2010-11, the international credit rating agencies Moody's, Fitch and Standard & Poor's have given to the company, long term foreign currency issuer ratings of ' Baa3', 'BBB- ' & 'BBB-' respectively, which are at par with sovereign rating for India.

10.0 RISK MANAGEMENT

10.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and has constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity and interest rate and also monitors implementation of decisions taken in the ALCO meetings. The liquidity risk is being monitored with the help of liquidity gap analysis. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. Such analysis is made every month in yearly buckets for the next 10 years and is being used for critical decisions regarding the time, volume and maturity profile of the borrowings, creation of new assets and mix of assets and liabilities in terms of time period (short, medium and long-term). The interest rate risk is managed by analysis of interest rate sensitivity gap statements, evaluation of Earning at Risk (EaR) on change of interest and creation of assets and liabilities with the mix of fixed and floating interest rates.

The maturity profile of certain items of assets and liabilities as at March 31, 2011 is set out below:

Maturity pattern of certain items of Asset and Liabilities based on Audited Balance Sheet as on March 31, 2011

(Rs. in crore)

Particulars 2011-12 2012-13 2013-14 2014-15 2015-16 Beyond Total 2015-16

Rupee Loan Assets 8505 7886 8666 8613 8921 56582 99173

Foreign Currency Assets 86 55 55 55 50 95 396

Investments 0.00 0.00 0.00 0.00 0.00 54 54

Foreign Currency 79 203 19 2322 390 1950 4963 Liabilities

Rupee Liabilities 15239 10255 8997 2910 10623 32614 80638 (Bonds RTL STL)

10.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forward, option, principal swap, interest rate swap and forward rate agreements. As on March 31, 2011, the total foreign currency liabilities are USD 541.63 million, JPY 42,797.05 million and Euro 26.66 million. On an overall basis, the currency exchange rate risk is covered to the extent of 15% through hedging instruments and lending in foreign currency.

10.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

Your Company had constituted the Risk Management Committee of Directors to monitor various risks, examine risk management policies & practices and initiate action for mitigation of risks arising in the operations. To facilitate this, the Company had put in place an Integrated Enterprise – Wide Risk Management Policy (IRM Policy).

The Company has identified 26 risks (11 quantifiable risks and 15 non quantifiable risks) which may have an impact on Profitability/business of the Company. In order to implement IRM policy, the Risk Management Committee of Directors constituted Risk Management Compliance Committee and a separate unit namely Corporate Risk Assurance unit (CRA) for monitoring of the identified risks. The CRA unit constantly monitors the risk from time to time and ensures that the risks are being mitigated on time. The status report on quarterly basis is being submitted to Risk Management Compliance Committee & Risk Management Committee of Board. The minutes of the Risk Management Committee of Board is being submitted to the Audit Committee of Directors and the Board of Directors on quarterly basis.

11.0 GENERATION PROJECTS

11.1 THERMAL PROJECTS

Thermal Power generation comprises a major proportion of India's total installed capacity. During the year 2010-11, the Company has sanctioned loans amounting to Rs.46,995 crore and disbursed an amount of Rs.19,545 crore. The cumulative financial support provided by the Company for thermal generation scheme is Rs.1,98,303 crore out of which Rs.83,603 crore has been disbursed till March 31, 2011.

The major thermal generation projects sanctioned by your Company during the year are: Vodarevu TPP (2X800 MW), IB TPS (2X660 MW), Suratgarh TPP STG-V U7&8 (2X660 MW), Chhabra TPP U5&6 (2X660 MW), Bellary TPS UNIT 3(700 MW).

11.2 HYDRO GENERATION PROJECTS

Hydro generation capacity in the country needs significant augmentation for overall systems to have optimal energy mix. During the year 2010-11, loans amounting to Rs.3,322 crore were sanctioned and an amount of Rs.1,733 crore was disbursed by your company. The cumulative financial support provided by the Company for hydro generation scheme is Rs.32,059 crore out of which Rs.21,767 crore has been disbursed till March 31, 2011.

12.0 RENOVATION, MODERNISATION AND LIFE EXTENSION

12.1 THERMAL PROJECTS

During the year 2010-11, loans worth Rs.556 crore were sanctioned for R&M and life extension of thermal power plants and an amount of Rs.562 crore was disbursed. Cumulatively, an amount of Rs.8,556 crore has been sanctioned and Rs.5,533 crore stands disbursed till March 31, 2011.

12.2 HYDRO PROJECTS

During the year 2010-11, the Company disbursed Rs.83 crore for R&M of hydro power projects. Cumulatively, an amount of Rs.1,387 crore has been sanctioned and Rs.1,040 crore stands disbursed till March 31, 2011.

13.0 ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (APDRP)

Government of India (GoI) had introduced the Accelerated Power Development and Reforms Programme (APDRP) in X Plan to induce state power utilities to undertake reforms in power distribution.

Government of India (GoI), financed 90% of the project cost as grant in special category states. In respect of other states (non-special category states), GoI financed 25% of the project cost as grant. SEBs/Utilities have to arrange remaining 10% of the fund in respect of special category states and 75% in respect of non-special category states from financial institutions, including PFC.

As on March 31, 2011, your Company had sanctioned an amount of Rs.2,272.94 crore as APDRP counterpart loan towards 120 loans and has disbursed an amount of Rs.1,739.41 crore. The eleven States funded by your Company under APDRP are Haryana, Rajasthan, Uttar Pradesh, Delhi, Bihar, West Bengal, Andhra Pradesh, Jharkhand, Orissa, Maharashtra and Goa.

14.0 RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP)

Ministry of Power, Government of India, had launched the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) in July 2008 with focus on establishment of base line data, fixation of accountability, reduction of AT&C losses upto 15% level through strengthening & up-gradation of Sub Transmission and Distribution network and adoption of Information Technology during XI Plan. Project area shall be towns and cities with population of more than 30,000 (10,000 in case of special category states) as per census 2001. Projects under the scheme shall be taken up in two parts. Part-A shall include the projects for establishment of baseline data and IT applications for energy accounting/ auditing & IT based consumer service centres. Part-B shall include regular distribution strengthening projects and will cover system improvement, strengthening and augmentation etc.

The programme size is Rs.51,577 crore out of which Rs.10,000 crore is for Part A activities, Rs.40,000 crore is for Part B activities and the remaining Rs.1,177 crore is for enabling activities to be implemented by Ministry of Power/PFC under Part-C which shall include capacity building and development of franchisees in Distribution Sector. The entire amount of GoI loan (100%) for Part A of the project shall be converted into grant after establishment of the required Base-Line data system (IT implementation) within a stipulated time frame and duly verified by Third Party Independent Evaluation Agency. For Part B Projects upto 50% (90% for special category States) loan provided shall be converted into grant progressively on achievement of AT&C loss reduction targets for five years. If the utility fails to achieve or sustain the 15% AT&C loss target in a particular year, that year's tranche of conversion of loan to grant will be reduced in proportion to the shortfall in achieving 15% AT&C loss target w.r.t the starting base-line figure. There is a provision of Rs.400 crore as grant towards incentive for utility staff in project areas where AT&C loss levels are brought below 15%.

Your company has been designated as the nodal agency to operationalise the programme and shall act as a single window service under R-APDRP. As nodal agency, your Company shall receive a fee as well as the reimbursement of expenditure in implementation of the progarmme as per the norms to be decided by the RAPDRP Steering Committee.

Sanctions and Disbursements

Your Company, as nodal agency, has contributed significantly during the year in implementation of R-APDRP programme. Upto financial year 2011, Part A(IT) schemes of all eligible 1401 towns, Part-A(SCADA) schemes for 28 out of 60 eligible towns and Part-B schemes in 823 of 1100 eligible towns have been sanctioned. During the year, PFC appraised projects and RAPDRP Steering Committee has sanctioned Rs.13,665 crore of project during the financial year 2010-11 against the MoU target of Rs.9,000 crore set for PFC. The sanctions include Rs.147 crore for Part-A (IT) covering projects of 23 towns, Rs.603 crore for 25 projects of Part-A (SCADA) and Rs.12,915 crore for projects of 584 towns under Part-B.

Your Company has also disbursed the entire amount of Rs.2,257 crore released by Ministry of Power(MoP) during the financial year 2010-11 upto March 31, 2011 to the state utilities for the projects sanctioned by the RAPDRP Steering Committee.

During the financial year 2010-11, ring fencing of 810 towns were completed as against the MoU target of 350 towns.

PFC/MoP recognizing the need and to keep pace with technology and contemporary knowledge and skill, imparted training on various themes for various levels of Power Utility personnel across the country. Training was imparted for 35,895 mandays, against the MoU target of 4,000.

Progress of Implementation of R-APDRP

As a result of the efforts made by your Company during the year, significant progress has been achieved by the state utilities in implementation of the programme. IT Consultants have been appointed by all utilities, while IT implementation agencies have been appointed by all except north eastern (NE) states & Haryana, where the process is under way. Supervisory Control and Data Acquisition System (SCADA) consultants have been appointed in 16 utilities & 5 states have initiated process of appointment of SCADA Implementing Agencies.

15.0 ULTRA MEGA POWER PROJECTS (UMPPs)

15.1 GENERATION PROJECTS

Your Company has been designated as the 'Nodal Agency' by Ministry of Power (MoP), Government of India, for development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each. So far, 16 such UMPPs have been identified to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Chhattisgarh (Surguja), Karnataka, Maharashtra (Munge), Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Tamil Nadu (Cheyyur), Orissa (Sundergarh), 2 Additional UMPPs in Orissa and 2nd UMPPs in Andhra Pradesh, Tamil Nadu, Gujarat and Jharkhand and 3rd UMPP in Andhra Pradesh.

Upto March 31, 2011, twelve (12) Special Purpose Vehicles (SPVs) have been established by the Company for these UMPPs to undertake preliminary site investigation activities necessary for conducting the bidding process for these projects. Ministry of Power is the 'facilitator' for the development of these UMPPs while Central Electricity Authority (CEA) is the 'Technical Partner'. These SPVs shall be transferred to successful bidder(s) selected through Tariff Based International Competitive Bidding Process for implementation and operation.

Four (4) SPVs namely Coastal Gujarat Power Ltd. for Mundra UMPP in Gujarat, Sasan Power Ltd. for Sasan UMPP in Madhya Pradesh, Coastal Andhra Power Ltd. for Krishnapatnam UMPP in Andhra Pradesh and Jharkhand Integrated Power Ltd. for Tilaiya UMPP in Jharkhand have been transferred to the successful bidders as indicated below:

S. Successful Date of Name of SPV No. Bidder Transfer

1 Coastal Gujarat The Tata April 22, Power Ltd. Power 2007 Company Ltd.

2 Sasan Power Reliance August 7, Ltd. Power Ltd. 2007

3 Coastal Andhra Reliance January 29, Power Ltd. Power Ltd. 2008

4 Jharkhand Reliance August 7, Integrated Power Ltd. 2009 Power Ltd.

In addition, Request for Qualification (RfQ) for Chhattisgarh UMPP was issued in March 2010 and RfQ for Orissa UMPP was issued in June 2010.

15.2 INDEPENDENT TRANSMISSION PROJECTS (ITPs)

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition, initiation of process of seeking forest clearance, if required and to conduct bidding process etc.

PFC Consulting Limited (PFCCL), a wholly owned subsidiary of PFC, was nominated as 'Bid Process Coordinator' for independent transmission projects by Ministry of Power, Govt. of India.

So far, 5 Special Purpose Vehicles (SPVs), two by PFC namely East North Interconnection Company Limited (ENICL) and Bokaro-Kodarma Maithon Transmission Company Limited (BKMTCL) and other three i.e. Jabalpur Transmission Company Limited (JTCL), Bhopal Dhule Transmission Company Limited (BDTCL) and Nagapattinam-Madhugiri Transmission Company Limited (NMTCL) by PFC Consulting Limited, a wholly owned subsidiary of PFC, have been incorporated.

East North Interconnection Company Limited (ENICL), an SPV established for enabling import of NER/NR(north eastern region/northern region) surplus power by NR, has been transferred to the successful developer i.e. M/s Sterlite Technologies Limited on March 31, 2010. Bokaro-Kodarma Maithon Transmission Company Limited (BKMTCL) was established for evacuation system for Maithon RB, Kodarma and Bokaro Extension Thermal Power Plants. Ministry of Power, Government of India, has directed Power Grid Corporation of India Limited for taking up the work for above evacuation system. Accordingly, the name of the company was struck off from the records of Registrar of Companies in December 2010.

Two other SPVs namely, Jabalpur Transmission Company Limited (JTCL) and Bhopal Dhule Transmission Company Limited (BDTCL) have been transferred to successful developer i.e. M/s Sterlite Transmission Project Private Limited on March 31, 2011.

16.0 DISTRIBUTION REFORMS, UPGRADES & MANAGEMENT (DRUM)

The Distribution Reform, Upgrades and Management (DRUM) project is an Indo-US initiative designed jointly by the Ministry of Power (MoP) and United States Agency for International Development (USAID). DRUM addresses the critical development challenge of providing commercially viable and dependable power.

The overall goal of the DRUM project is to demonstrate commercially viable electricity distribution systems that provide reliable power of sufficient quality to consumers and to establish a commercial framework and a replicable methodology adopted by Indian Financial Institutions for providing non-recourse financing for DRUM activities and programmes.

Your Company has been appointed as Principal Financial Intermediary responsible for technical assistance and training under DRUM components. The roles and responsibilities of PFC for DRUM project are to i) provide management and implementation support, ii) co-ordinate with all stakeholders, iii) act as a financial intermediary and banker for controlling and directing funds (loans and grants) and iv) design mechanism for leveraging resources of other FIs/ Bankers.

DRUM TECHNICAL ASSISTANCE

DRUM team consists of USAID, MoP & PFC and the beneficiary States are Karnataka, Gujarat and Maharashtra. PFC provides financial assistance in the form of loan while USAID provides the grant component for creating Centre of Excellence in Distribution area.

So far, your Company has sanctioned total loan amount of Rs.164.08 crore for three DRUM Pilot Projects costing total of Rs.216.52 crore pertaining to Bangalore Electricity Supply Co. Ltd. (BESCOM), Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) and Madhya Gujarat Vij Co. Ltd. (MGVCL) and has disbursed an amount of Rs.150.96 crore towards these three projects as loan under DRUM scheme.

Further, a cumulative grant sanctioned from USAID is USD 3.278 million(i.e. Rs.14.80 crore at an exchange rate of USD 1=Rs.45.14 as on March 31, 2011) for aforesaid three DRUM Pilot Projects and a cumulative amount of USD 0.81 million(i.e. Rs.3.71 crore at an average exchange rate of USD 1=Rs.45.75) is disbursed as USAID grant through PFC. The projects are on the verge of completion.

DELIVERY THROUGH DECENTRALISED MANAGEMENT (DDM)

DDM is a scheme sponsored by Ministry of Power with the objective of showcasing participatory models of excellence in distribution predominantly in rural area, which are sensitive to the local aspirations and requirements.

PFC has been appointed as carrier agency for successful implementation of DDM Schemes. So far, Government of India (GoI) grant of Rs.5.03 crore has been sanctioned for 14 schemes of NTPC Ltd. and Rs.0.89 crore for 1 scheme of West Bengal Renewable Energy Development Agency (WBREDA) totaling Rs.5.92 crore. An amount of Rs.2.80 crore is disbursed to NTPC Ltd. towards their 8 schemes.

17.0 EXTERNALLY AIDED PROJECTS

Your Company has a Line of Credit of Euro 100.56 million from KfW to finance RM&U of Hydro Electric Projects. Funds from the facility would be used to finance RM&U schemes of six HEPs of Uttrakhand Jal Vidyut Nigam Ltd. (UJVNL). Out of six projects, Notice for Inviting Tenders (NIT) has already been issued for the Kulhal project. For the remaining five projects, NIT is under process and is expected to be issued soon.

18.0 INITIATIVE TOWARDS REFORMS AND RESTRUCTURING

Your Company has been encouraging reforms for overall improvement in the financial and technical performance of the State Power Utilities (SPUs). During the year, PFC has disbursed an amount of Rs.1.17 crore of grant for reform related studies to MeSEB, KSEB, IPGCL & PPCL and Government of Jharkhand. Government of Punjab vide their notification dt. April 16, 2010 has unbundled Punjab State Electricity Board(PSEB). Similarly, Government of Tamil Nadu vide their notification dt. October 19, 2010 has unbundled Tamil Nadu Electricity Board (TNEB).

Your company is also encouraging IT initiatives in the SPUs for their overall operational improvement. During the year, an amount of Rs.3.60 crore has been sanctioned and Rs.1.19 crore has been disbursed for computerization schemes of State Power Utilities (other than computerization schemes covered under R-APDRP).

CATEGORIZATION OF UTILITIES

Your Company classifies State Power Utilities, its principal borrowers, into A , A, B and C categories. The categorization is based on the pre-determined parameters including operational & financial performance of the utilities. The categorization enables PFC to determine credit exposure limits and pricing of loans to the state power utilities. As on March 31, 2011, 95 utilities were categorized, 26 as "A ", 31 as "A", 28 as "B" and 10 as "C"

Category No. of Utilities

A 26

A 31

B 28

C 10

PFC is also stipulating appropriate conditions relating to implementation of reforms and improvement of performance while sanctioning financial assistance to its borrowers based on their appraisal

QUARTERLY AND ANNUAL REPORT OF STATE POWER UTILITIES

Your Company is bringing out one page research report on the performance of each of the state power utilities (SPUs) on a quarterly basis. The report contains key operational and financial performance parameters, reforms status, the status of implementation of Electricity Act 2003, areas of concern and conditions for improvement of performance etc. The report is sent to the stakeholders in the Power Sector. It is the endeavor of PFC to make the utilities realize the importance of preparing the quarterly report and compare performance of their utility vis-à-vis other utilities and taking the mid term corrective measures for the overall improvement of the sector.

During the year 2010-11, your Company issued performance reports for the quarters January 2010 to March 2010, April 2010 to June 2010, July 2010 to September 2010 and October 2010 to December 2010 covering 34, 39, 41 and 41 utilities respectively In addition, your Company brings out a Report on the Performance of State Power Utilities (SPUs) annually. The 7th Report for the year 2006-07 to 2008-09 covering 90 SPUs has already been published. The report is a part of our effort to provide a reliable database which can help to gauge the pulse of reforms in the sector and the results associated with it. The report is also recognized by various stakeholders as a useful source of information regarding the state power sector. The report analyses the financial and operational performance e.g. profitability, gap between average cost of supply and average realization (Rs./kwh), net worth, capital employed, receivables, payables, capacity (MW), generation (Mkwh), AT&C losses(%) etc. and consumption pattern of the sector at utility, state, regional and national level. The Report for the years 2007-08 to 2009-10 covering 77 utilities has been prepared and submitted to Ministry of Power as per the targets set in MoU. The fi nal report (8th) on the performance of all SPUs for the period 2007-08 to 2009-10 is under finalization

19.0 POLICY INITIATIVES

Your Company constantly reviews and revises its lending & operational policies/procedures to suitably align these with market requirements as also with its corporate objectives. During the year, your company introduced new scheme to provide short term financial assistance to SPVs in Government Sector for meeting their working capital requirement, policy guidelines for partial prepayment on reset and prescribed mechanism of revolving bulk State Government guarantee, etc.

During the year, the company also reviewed its policy guidelines for rating of Government Departments & project SPVs in Government Sector, debt-equity ratio, premature repayment of loans with a view to make the same borrower friendly.

In spite of growing competition in the market as well as interest rate concerns on account of factors like increase in RBI policy rates, Inflation prevailing in this financial year etc., PFC maintained its spreads well and could balance its objectives of business growth & Profitability. The guidelines/fee structure in respect of processing fee, appraisal fee and lead fee also reviewed during the year.

20.0 CONSORTIUM LENDING SERVICES

Under Consortium Lending Services, the company has during the financial year 2010-11, started regular disbursements for 1350 MW TPP of M/s Indiabulls Power Ltd., 3X360 MW TPP of RKM Ph-II, 1350 MW TPP of M/s Indiabulls Realtech Ltd., 96 MW HEP M/s Dans Energy Pvt. Ltd, 120 MW HEP of M/s Jal Power Corporation Limited, 545 MW co-gen power project of M/s Vadinar Expansion Ph-I&II, 120 MW TPP of Indian Metal & Ferro Alloys Ltd. and 700 MW TPP of M/s Ind Barath Energy Utkal Ltd. after achieving financial closure for these projects. During the financial year, documents have been executed for 6x660 MW TPP of M/s Coastal Andhra Power Ltd. (Krishnapattnam UMPP), 1350 MW TPP of M/s Indiabulls Realtech Ltd., 2x660 MW TPP of M/s Lanco unit 3&4, 660 MW TPP of M/s Ind Barath Power (Madras) Ltd., 96 MW HEP of M/s Madhya Bharat Power Corporation Ltd., 2x660 MW TPP of M/s East Coast Energy Pvt. Ltd., Transmission line of M/s Parbati Koldam Transmission Company Ltd. 3x360 MW TPP of M/s RKM Power Ph-II, 2x60 MW TPP of M/s Indian Metals & Ferro Alloys Ltd., and 6X600 MW TPP of M/s KSK Mahanadi Power Company Ltd.

In the financial year 2010-11, interactive meetings with IPPs were organized to review the progress of projects supported by PFC and to discuss about future financial needs of IPPs to explore business opportunities.

With the aim to give impetus to Consortium Lending Operations, your Company is working towards harnessing the huge business potential offered by the Power Sector. The Company has been carrying out passive syndication activities for projects where it is lead FI and also coordinating activities pertaining to Power Lenders Club. During the financial year, your Company has also been able to syndicate Rs.262 crore for 1320 MW TPP of M/s East Coast Energy P. Ltd. and Rs.51 crore for 10 MW Solar project of M/s PLG Photovoltaic Ltd.

In order to syndicate and make financial arrangements for the Projects/enterprises in the areas of power, energy, infrastructure and other industries, a separate subsidiary company namely PFC Capital Advisory Services Ltd has been incorporated on July 18, 2011.

21.0 FACILITATION SERVICES

The Company is constantly working towards exploring new opportunities for expanding its business in areas like financing Fuel Sources Development & Distribution, Equipment manufacturing, Nuclear Power projects, Hydel projects in Bhutan & Nepal etc.

Your company has signed a Memorandum of Understanding (MoU) with NPCIL on October 28, 2010 to offer financial assistance as well as other services to NPCIL for its nuclear power capacity addition in the next 20 years. In consequence, NPCIL has requested for financial assistance for its two Nuclear projects, KAPS unit#3&4 (2x700 MW) and RAPS unit#7&8 (2X700 MW) having project cost of Rs.11,459 crore and Rs.12,320 crore with debt component of Rs.8,021 crore and Rs.8,624 crore respectively.

During FY 2010-11, your company had sanctioned as well as disbursed loan amount of Rs.827 crore to Suzlon Group under Scheme for financing equipment manufacture for Power Sector. Further, new proposals for financial assistance were received from NHPTL for setting up of transformers testing laboratory, IndoSolar Ltd. for setting up of Line-3 for Solar cell manufacturing, among others.

Apart from the above, your company is also exploring the possibility of extending services in the areas of financing of Hydel projects being developed in Nepal with linkage to India and Hydel projects being developed in Bhutan by Indian entities under Indo Bhutan bilateral treaty.

22.0 ACQUISITION ADVISORY SERVICES

The Company believes that institutional and regulatory reforms in the Indian power sector and increased investor interest will lead to consolidation in the power sector in order to ensure synergies and economies of scale. In addition, the company believes that the increasing supply-demand gap in the power sector has driven the procurement of power from the private sector through competitive bidding. Further, high demand for efficiency and economies in generation are expected to lower the cost of tariff. Open access and power trading are likely to increase competition in the sector in the future.

The company has therefore set up an Acquisition Advisory Services unit to focus on acquisition advisory services for power sector projects, including the identification of target projects and potential acquisitions and consolidation opportunities, and also provide techno- commercial appraisal of target projects.

23.0 RENEWABLE ENERGY AND CLEAN DEVELOPMENT MECHANISM (RE&CDM)

Renewable energy (RE) provides a number of primary and secondary benefi ts which are economic, social, environmental or technical in nature. Some of the key benefits related with renewable energy generation are increased power/energy availability, enhanced access to power in rural/remote areas, increased employment generation, enhanced energy security and environmental benefits. Therefore a good mix of these energy sources in the overall energy mix would enhance sustainable development at the state, national and global level.

Today, in the International Renewable Energy market, India is fast becoming one of the world's most attractive markets for Renewable Energy (RE) investments. India's rise has been due to the effective policy and regulatory support for investment in renewable energy technologies (RETs).

The central government has just launched the Jawaharlal Nehru Solar Mission and the Electricity Regulatory Commissions (CERC and SERCs) are promoting renewable energy generation through preferential tariffs. One of the main drivers in the future for enhancing RE generation is likely to be the mandatory renewable energy purchase obligations for utilities as mandated by the Electricity Act 2003 and declared by the state commissions. Several states have also issued the Renewable Purchase Obligations (RPO).

To tap the Renewable Energy business in state and private sector, your company has created a Strategic Business Unit for handling renewable energy portfolio since August 2008 for giving thrust on Renewable Energy and CDM. During the financial year 2010-11, loans amounting to Rs.974 crores were sanctioned to support a capacity of 202 MW for solar and biomass generation projects in state and private sector.

Your Company is also facilitating SPUs for Clean Development Mechanism (CDM) benefits for R&M of old Thermal & Hydro projects as per mandate from MoP. Four projects in the States of Meghalaya, Andhra Pradesh, Himachal Pradesh and Maharashtra have been identified for registration with United Nations Framework Convention on Climate Change (UNFCCC). The Project Design Documents (PDD) for 4 projects has been prepared through the consultant appointed by Asian Development Bank (ADB). Ministry of Environment and Forest (MoEF) has accorded host country approval for Koradi Thermal Power Project (Maharashtra), Umiam HEP (Meghalaya) and Giri HEP (Himachal Pradesh).

In order to promote green (renewable and non- conventional) sources of energy, a separate subsidiary company namely PFC Green Energy Limited has been incorporated during the year.

24.0 PROMOTION OF POWER TRADING THROUGH POWER EXCHANGE

In the financial year 2008-09, the Central Electricity Regulatory Commission had granted its permission to set up power exchanges in the country. As on date two power exchanges, namely, Power Exchange India Ltd. (PXIL) and Indian Energy Exchange Ltd. (IEX) are in operation. These power exchanges have a nationwide presence in the form of electronic exchange for trading in power. The trading through power exchanges have certainly lent an impetus for power sector development since it acts as an open and transparent mechanism for buyers and sellers and provides investment signal to the prospective investors. Further with the presence of these exchanges, the available resources shall be used optimally.

In order to promote short term trading through power exchange, your company had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. Your company has contributed Rs.2.19 crore (being 16.66% of paid up equity upto March 31, 2011) towards equity contribution. This exchange is yet to start its operation.

Your company has also contributed Rs.1.75 crore (being 4.37% of paid up equity upto March 31, 2011) towards equity contribution in Power Exchange India Ltd., promoted by NSE and NCDEX.

25.0 EQUITY FINANCING

Equity investment business is generally considered as a logical extension of debt business. Your Company is endeavoring to make a mark in the area of equity investment so as to capitalize on its vast domain experience, attained during its over 20 years of operations in power sector debt financing. PFC aims to leverage its financial strength, large debt providing capability and power sector expertise to invest in equity of attractive power projects. Over a period of time, your company proposes to build an equity portfolio of power assets which could provide consistent gains in the form of dividend and/or capital appreciation.

26.0 COMMERCIAL BANKING OPERATIONS

The Company is currently in the preliminary stages of evaluating the possibility of establishing or acquiring a bank and is in the process of appointing a consultant in connection with such initiative.

27.0 SUBSIDIARIES

As a nodal agency designated by Government of India for development of Ultra Mega Power projects, your Company has so far established fourteen (14) wholly owned subsidiaries out of which twelve (12) are to facilitate the development of UMPPs and two (2) for the development of ITPs. On completion of the bidding process, so far five (5) subsidiaries have already been transferred to the successful bidder for implementation of the projects. The name of one of the subsidiary i.e. Bokaro-Kodarma Maithon Transmission Company Limited (BKMTCL) was struck off from the records of Registrar of Companies in December 2010 as Ministry of Power, Government of India, has directed Power Grid Corporation of India Limited for taking up its work.

In addition, the Company has so far incorporated three wholly owned subsidiaries namely, PFC Consulting Limited, PFC Green Energy Limited and PFC Capita Advisory Services Ltd

27.1 PFC CONSULTING LIMITED

Background

As you are aware, your Company had been offering consultancy support to the Power Sector through its Consultancy Services Group (CSG) since October 1999. Leveraging the experience of the CSG Unit and appreciating the growth in the services offered by the Group and recognizing the potential of such services in the reforming Power Sector, your Company decided to organize the services as a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was ncorporated in the form of a wholly owned subsidiary on March 25, 2008, in order to give it requisite autonomy in functions and fl exibility in operations. PFCCL is mandated to promote, organize and carry out consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs and ITPs. PFCCL has been nominated as the 'Bid Process Coordinator' for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, GoI.

Range of Services Offered

The Services being offered by PFCCL in various areas nclude

- Procurement of Power by Distribution Licensees

- Govt. of India initiatives like UMPPs, ITPs etc

- New & Renewable Energy Sources

- Selection of Developers for Power Projects linked to Coal Blocks & Joint Venture Partners for Coal Blocks

- Project Advisory Services including Selection of EPC Contractor

- Reform, Restructuring and Regulatory Aspects

- Capacity Building and Human Resource Development

While PFCCL continues to undertake various assignments, its focus is on assignments relating to:-

- Procurement of power through 'Case 1' and 'Case 2' of "Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees", issued by MoP, GoI.

- Selection of JV Partners for development of Power Plants and Coal Blocks

- New and Renewable Energy Sources.

- Overall advisory services for development of a new Thermal Power Station

- Restructuring/Implementation of reforms for State Utilities.

Client Base

Till date, consultancy services have been provided to 38 Clients spread across 21 States. Assignments have been undertaken in various states, which include Punjab, Rajasthan, Jharkhand, West Bengal, Himachal Pradesh,

Bihar, Jammu & Kashmir, Meghalaya, Assam, Andhra Pradesh, Uttar Pradesh, Haryana, Chhattisgarh, Tamil Nadu, Orissa, Tripura, Madhya Pradesh, Kerala, Maharashtra, Karnataka and Delhi. The numbers of states including the profile of clients are given below:

Clients Nos.

States/ UTs 21

Total No. of Clients 38

State Utilities 17

Public Sector Undertakings 7

State Governments 4

Regulatory Commissions 3

Licensees/ IPPs 7

During the financial year 2010-11, the total income of PFCCL has increased to Rs.52.60 crore as compared to Rs.45.27 crore in the previous year and net Profit has ncreased to Rs.26.95 crore as compared to Rs.21.62 crore in the previous year.

27.1.1 SUBSIDIARIES OF PFC CONSULTING LTD

JABALPUR TRANSMISSION COMPANY LIMITED (JTCL)

SPV, Jabalpur Transmission Company Limited was ncorporated on September 8, 2009 for development of transmission system project for 'System Strengthening Common for Western Region (WR) and Northern Region (NR)'. The project includes 756 kV Single D/C line from Dhramjaygarh to Jabalpur and 765 kV S/C line from Jabalpur Pool to Bina.

The SPV was transferred to successful developer i.e M/s Sterlite Transmission Project Private Limited on March 31, 2011.

BHOPAL DHULE TRANSMISSION COMPANY LIMITED (BDTCL)

SPV, Bhopal Dhule Transmission Company Limited was incorporated on September 8, 2009 for development of transmission system project for 'System Strengthening for Western Region (WR)'. The project includes system Strengthening for WR (Jabalpur-Bhopal, Bhopal-Indore, Aurangabad-Dhule, Dhule-Vadodra), all 765 kV S/C lines with associated 765 kV substation at Bhopal and Dhule.

The SPV was transferred to successful developer i.e M/s Sterlite Transmission Project Private Limited on March 31, 2011.

NAGAPATTINAM-MADHUGIRI TRANSMISSION COMPANY LIMITED (NMTCL)

SPV, Nagapattinam-Madhugiri Transmission Company Limited was incorporated on May 20, 2011 for the development of the transmission system project for 'Transmission System Associated with IPPs of Nagapattinam/Cuddalore Area – Package A". The project includes Nagapattinam Pooling Station – Salem 765 kV D/C line, Salem – Madhugiri 765 kV S/C line. The Bid Process for the project is underway.

27.2 PFC GREEN ENERGY LIMITED

PFC Green Energy Limited has been incorporated as a wholly owned subsidiary of the Company to extend finance and financial services to promote green (renewable and non-conventional) sources of energy with authorised capital of Rs.1,200 crore and subscribed share capital of Rs.0.05 crore. The company received its certificate of commencement of business on July 30, 2011.

27.3 PFC CAPITAL ADVISORY SERVICES LIMITED

PFC Capital Advisory Services Ltd, a wholly owned subsidiary of the Company has been incorporated on July 18, 2011 interalia to syndicate and make financial arrangements for the Projects/enterprises in the areas of power, energy, infrastructure and other industries. The authorised share capital of the company is Rs.1 crore and the initial paid up share capital of the company is Rs.0.10 crore.

28.0 JOINT VENTURES AND ASSOCIATE COMPANIES

28.1 NATIONAL POWER EXCHANGE LIMITED

In order to promote short term trading through power exchange, your company had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. Your company has contributed Rs.2.19 crore (being 16.66% of paid up equity upto March 31, 2011) towards equity contribution. This exchange is yet to start its operation.

28.2 POWER EQUITY CAPITAL ADVISORS PRIVATE LIMITED

An advisory company namely Power Equity Capital Advisors Private Limited (PECAP) was incorporated to provide advisory services related to equity investments in Indian power sector, where your Company holds 30% stake and the remaining being held by individuals. However, being largely owned by individuals, the company was not able to transact any business as it was unable to provide the requisite comfort to its clients. Therefore, in order to provide the requisite comfort to the clients and to substantially improve the possibility of PECAP to do meaningful business, the Board of Directors of PFC in February, 2011 approved a proposal for acquiring 100% stake in PECAP.

28.3 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. Your Company has invested Rs.12 crore which is 4.07% of total equity of PTC. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primarily focus is to develop a commercially vibrant power market in the country.

28.4 ENERGY EFFICIENCY SERVICES LIMITED

Energy efficiency Services Limited (EESL) was incorporated on February 11, 2010. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with equal equity participation of Rs.25 crore each for implementation of Energy efficiency projects in India and abroad. EESL would be one of the main implementation arms of the National Mission on Enhanced Energy efficiency (NMEEE), which is one of the eight National Missions announced by the Hon'ble Prime Minister as a part of "National Action Plan on Climate Change".

29.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

For the Financial Year 2010-2011, your Company has surpassed all the 'Excellent' level MoU targets in respect of the various performance parameters and is likely to be accorded 'Excellent' rating.

29.1 PRESIDENTIAL DIRECTIVES

Your Company has implemented wage-revision w.e.f. January 1, 2007 for the employees in the Executive Cadre in September 2009 and for employees in non-unionised Supervisory Cadre in August 2010 as per Presidential Directives issued on April 2, 2009 and November 26, 2008. The Company has not received any Presidential directives during the year 2010-11.

30.0 HRD INITIATIVES

TRAINING & DEVELOPMENT

In the field of Human Resource Development, your company stresses on the need to continuously upgrade the competencies of its employees and equip them to keep abreast of latest developments in the sector. The Company operates in a knowledge intensive business and is committed to enhancing these skills of its employees. In order to achieve this, the Company has an annual training plan to assess the various training needs. Necessary professional skills are also imparted across all levels of employees through customized training interventions.

EMPLOYEE TRAINING

During the year 2010-11, your company organized 19 in-house programs. A total of 1,572 mandays were achieved during the period under review of which 1,109 were through in-house programs and 463 were through nominations to open programmes organized by other training institutes.

DRUM AND UTILITY TRAINING

During the financial year 2010-11, 125 training programmes were organized through which 2,875 number of personnel were trained from various power utilities. Apart from short-term training (5 days & less), the DRUM program also supports longer duration courses through collaborations with leading Institutes such as the Management Development Institute, Gurgaon, for an MBA in Power Distribution Management, The Energy Research Institute, New Delhi, for an MBA in Infrastructure and with Indira Gandhi National Open University for Advanced Certificate in Power Distribution Management.

To further enhance the reach of its training activities, PFC had initiated the distance learning mode. In a collaboration agreement with the Indira Gandhi National Open University, in which PFC is the major sponsor, a certificate in Power Distribution Management of six months duration has been initiated for utility linesmen/ technicians located at remote centers who would otherwise not have access to training for upgradation of their skills.

31.0 RESERVATION OF POSTS FOR SC/ST/OBC/EX- SERVICEMEN AND PHYSICALLY HANDICAPPED PERSONS IN THE SERVICES OF COMPANY

Your Company as a part of its social responsibility makes all-out efforts to ensure compliance of the Directives and Guidelines issued by the Government for the reservation to be allowed for SC/ST/OBC/Persons with disabilities. The steps taken include due reservations and relaxation as applicable under the various directives.

In the year 2010-11, total 46 new employees were recruited, out of which 17.39% are SC (8), 4.35% are ST (2), 2.17% are PWD (1) and 21.74% are OBC (10).

32.0 VIGILANCE

During the financial year 2010-11, the Vigilance unit functioned as an effective tool of management with the thrust being on preventive vigilance. This aspect was emphasized by conducting periodic & surprise inspections of various units and by issuing effective guidelines to streamline systems with the aim of eliminating gaps and ensuring transparency in day to day operations. Information technology was used as an effective tool for providing on-line services to all the stakeholders and enhance organizational efficiency. Vigilance Unit also undertook the review of operational manuals of various activities of the Company. A number of comprehensive manuals on different areas of company's activities have already been notified after review and some other manuals are in process of finalization. Further during this period detailed investigation was carried out in several cases of registered complaints.

In accordance with the directives of CVC, Vigilance Awareness Week was observed from October 25, 2010 to November 1, 2010 in the head office and regional offices of the Company. In order to increase scope of e-procurement in the Company and educating employees and borrowers of the Company about tendering procedures and to disseminate a strong message of integrity and transparency in public spending, interactive two days programme on "Tendering and Procurement of Goods and Services including E-procurement" was held for the benefit of the executives and borrowers of the Company so as to reap benefits of e-procurement and increase of transparency in procurement process and also to educate them on the initiatives taken for improvement in systems procedures.

In compliance to the instructions of CVC, the sensitive posts in the Corporation were identified and HR Division has rotated the concerned officers working on these posts for a long time. Agreed lists were fi nalized in respect of Corporate office at Delhi and regional offices at Mumbai and Chennai in consultation with the local branches of CBI. Prescribed periodical statistical returns were sent to CVC, CBI, MOP on time.

Thus, the vigilance Unit worked for continuous improvement of the systems with a view to bringing about transparency, objectivity and accountability thereby contributing to the overall efficiency and effectiveness of the organization.

33.0 OFFICIAL LANGUAGE

In your Company, Rajbhasha N

---

Mar 31, 2010

The Directors have great pleasure in presenting the 24th Annual Report on the performance of your Company for the financial year ended 31st March, 2010 along with Audited Statements of Accounts.

1.0 FINANCIAL HIGHLIGHTS

(a) PROFITABILITY

(Rs. in crore)

2009-10 2008-09

Profit for the Year 3013.35 1990.45

Prior Period Adjustments 0.13 0.02

Profit Before Tax 3013.48 1990.47

Less: Provision for Income Tax (current year) (-) 800.27 (-) 492.02

Less: Provision for Interest on Income Tax (current year) (-) 0.28 0.00

Add: Provision for Income Tax (earlier years) 135.79 32.61

Less/Add: Deferred Tax Liability (-)/Assets (+) 8.53 (-) 43.61

Add: Reversal of DTL of earlier years 0.00 483.24

Less: Provision for Fringe Benefit Tax 0.00 (-) 0.73

Profit After Tax 2357.25 1969.96

Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1) (viia)(c) of Income Tax Act, 1961 123.92 76.46

Transfer to Special Reserve created and maintained u/s 36(1) (viii) of Income Tax Act, 1961 568.61 346.23

Interim Dividend 344.33 304.16

Proposed Final Dividend 172.17 154.95

Corporate Dividend Tax paid on Interim Dividend 58.52 51.69

Proposed Corporate Dividend Tax 29.26 26.33

Transfer to General Reserve 236.00 197.00

Balance carried to Balance Sheet 824.44 813.14

(b) LENDING OPERATIONS

(Rs. in crore)

2009-10 2008-09

Sanction 59228 55083

Disbursement 24487 20729

(c) R-APDRP OPERATIONS

(Rs. in crore)

2009-10 2008-09

Sanctioned project cost 6237 1947

Disbursement 1321 325

2.0 FINANCIAL PERFORMANCE

2.1 REVENUE

The total income during the financial year 2009-10 was Rs.8,076.86 crore registering an increase of 22.68% as compared to Rs.6,583.54 crore in financial year 2008-09. Operating income for the year increased from Rs.6,557.37 crore to Rs.8,002.10 crore showing an increase of 22.03%. Interest income including lease income for the financial year 2009-10 was higher at Rs.7,867.16 crore against Rs.6,361.78 crore in 2008-09.

2.2 EXPENSES

Interest and other finance charges for the financial year 2009-10 amounting to Rs.4,956.03 crore accounted for 97.88% of total expenses. Personnel and Administration expenses were 2.09% of total expenses and 0.13% of Loan Assets.

2.3 PROFIT

During the financial year 2009-10, your Company earned a net profit of Rs.2,357.25 crore as compared to Rs.1,969.96 crore for the financial year 2008-09 registering an increase of 19.66%.

2.4 DIVIDEND

Your Directors have recommended a final dividend of Rs.1.50 per equity share (15%) in addition to an interim dividend of Rs.3.00 per equity share (30%) paid in February, 2010. The dividend for the year 2009-10 thus aggregates to Rs.4.50 per equity share as against Rs.4.00 per equity share paid for the previous year. The final dividend will be paid after your approval at the Annual General Meeting. The total dividend pay-out for the year amounts to Rs.516.50 crore representing 45% of the paid-up capital of the company and 21.91% of profit after tax as against a dividend pay-out of 40% of the paid-up capital and 23.31% of profit after tax in the previous year.

2.5 SHARE CAPITAL

The paid-up share capital of the Company is Rs.1,147.77 crore consisting of 1,14,77,66,700 equity shares of Rs.10 each. The Government of India holds 89.78% of the equity share paid-up capital.

3.0 LENDING OPERATIONS

Your Company issued sanctions of Rs.59,228 crore during the financial year 2009-10. An amount of Rs.24,487 crore was disbursed during the same period to State, Central, Private and Joint Sector entities, compared to Rs.20,729 crore disbursed during the last year. With this, cumulative sanction of Rs.2,70,480 crore and disbursement of Rs.1,37,282 crore have been made by the Company as on 31st March, 2010.

In addition to above, an amount of Rs.Rs.6,237 crore sanctioned

and Rs.1,321 crore disbursed during 2009-10 under R-APDRP scheme. With this, cumulative sanction under R-APDRP stands at Rs.8,184 crore and disbursement at Rs.1,646 crore.

3.1 Financial Assistance

3.1.1 Sector-wise

2009-10 Cumulative upto March, 2010 Category Sanctions Disbursements Sanctions Disbursements (Rs. crore) (Rs. crore) (Rs. crore) (Rs. crore)

State Sector 32732 14632 184570 105167

Central Sector 2248 6351 32530 17818

Private Sector 15786 1055 35666 7128

Joint Sector 8462 2449 17714 7169

Total 59228 24487 270480 137282

3.1.2 Discipline-wise

2009-10 Cumulative upto March, 2010 Category Sanctions Disbursements Sanctions Disbursements (Rs. crore) (Rs. crore) (Rs. crore) (Rs. crore)

Thermal Generation 38316 16818 155387 64059

Hydro Generation 2758 2221 28772 20034

Wind & Solar Power 531 147 1445 428

Renovation and Modernization of Thermal Power Stations 1950 423 8448 4991

Renovation & Uprating

of Hydro Power Projects 74 73 1497 957

Transmission 11620 1056 33481 13219

Distribution 295 630 13888 7473

Short Term Loans 3222 3066 23280 22814

Others* 462 53 4282 3307

Total 59228 24487 270480 137282

** Others include Decentralized Management, Project Settlement, Pre Investment Fund, Technical Assistance Project, Medium Term Loan, Buyers Line of Credit, Equipment Manufacturing Loan, Loan for Asset Acquisition, Bill Discounting, Studies, Loan for Redemption of bonds, Purchase of power through PXI, Loan for Promoters Equity and Computerization etc.

3.1.3 Product-wise 2009-10 Cumulative upto March, 2010 Category Sanctions Disbursements Sanctions Disbursements (Rs. crore) (Rs. crore) (Rs. crore) (Rs. crore)

Term Loans 55846 21231 241089 109914

Short Term Loans 3222 3066 23280 22814

Leasing 0 140 1169 706

Grants 0 1 74 48

Others ** 160 49 4868 3800

Total 59228 24487 270480 137282

** Others include Debt Refinancing, Bridge Loan, Associated Infrastructure, Loan to Equipment Manufacturers, Buyers Line of Credit, Loan for Assets Acquisition, Bill Discounting, Purchase of power through PXI and Loan for Promoters Equity etc.

3.2 Financial Assistance under R-APDRP

2009-10 Cumulative upto March, 2010 Category Sanctions Disbursements Sanctions Disbursements Project Project Cost Cost (Rs. crore) (Rs. crore) (Rs. crore) (Rs. crore)

Part A 3178 1125 5125 1450

Part B 3059 196 3059 196

Total 6237 1321 8184 1646

4.0 REALISATION

Your Company gives highest priority to the realisation of its dues towards principal, interest etc. Out of Rs.16,602.40 crore to be recovered during the year towards principal, interest etc. under rupee term loans, bill discounting, working capital, lease financing, foreign currency loan, loans for equipment financing and guarantee fees, an amount of Rs.16,541.54 crore was actually realised. This works out to an overall recovery rate of 99.63% (previous year 97.58%). The overall recovery rate has been consistently maintained at 96-99% for the last ten years. The company has achieved recovery rate of 99.89% in respect of principal amount due during the year.

In terms of Prudential Norms applicable, the Company has not made any additional provision on Loan Assets during the year. The Company has made a total provision for Non- Performing Assets (NPA) against Loan Assets in its Annual Accounts upto the year 2009-10 amounting to Rs.6.92 crore equivalent to the previous year level. After making provision on NPA, the level of net Non-Performing Assets (NPA) has been recorded at Rs.6.24 crore forming 0.01% to the Net Loan Assets as on 31st March, 2010 equivalent to the previous year level. 5.0 BORROWINGS

5.1 BORROWINGS FROM DOMESTIC MARKET

Your Company mobilized funds amounting to Rs.20,922.91 crore from the domestic market during 2009-10 as against Rs.21,482.59 crore during 2008-09. Out of the above, Rs.12,283.30 crore was raised by issue of unsecured taxable bonds in the nature of debentures, Rs.8,004.50 crore by way of long/medium term loans from Banks/FIs, and Rs.635.11 crore by way of issue of Commercial Paper.

5.2 EXTERNAL BORROWINGS

During the financial year 2009-10, your Company raised External Commercial Borrowing (ECB) of USD 300 million through Syndicated Loan at a very competitive rate.

5.3 REDEMPTION AND STATUS OF UNCLAIMED AMOUNTS

BONDS

The unclaimed balance amount of bonds as on 31st March, 2010 was Rs.25.7 crore (previous year – Rs.1.09 crore). This represents the amount remaining unclaimed/unpaid after redemption by the bondholders, as the bondholders had not surrendered their bond certificates. The bondholders have been individually advised to surrender bond certificates.

6.0 CREDIT RATINGS

Domestic:

During the financial year 2009-10, your Companys long term domestic borrowing programme (including bank loans) was awarded the highest rating of ‘AAA and ‘LAAA by CRISIL and ICRA respectively. The Companys short term domestic borrowing programme (including bank loans) was awarded the highest rating of ‘P1+ and ‘A1+ by CRISIL & ICRA respectively.

International:

During the financial year 2009-10 the international credit rating agencies Moodys, Fitch and Standard & Poors have given to the company, long term foreign currency issuer ratings of ‘ Baa3, ‘BBB- ‘ & ‘BBB- respectively, which are at par with sovereign rating for India.

7.0 RISK MANAGEMENT

7.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and has constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity and interest rate and also monitors implementation of decision taken in the ALCO meetings. The liquidity risk is being monitored with the help of liquidity gap analysis. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. Such analysis is made every month in yearly buckets for the next 10 years and is being used for critical decisions regarding the time, volume and maturity profile of the borrowings, creation of new assets and mix of assets and liabilities in terms of time period (short, medium and long-term). The interest rate risk is managed by analysis of interest rate sensitivity gap statements, evaluation of Earning at Risk (EaR) on change of interest and creation of assets and liabilities with the mix of fixed and floating interest rates.

The maturity profile of certain items of assets and liabilities as at 31st March, 2010 is set out below:

Maturity pattern of certain items of Asset and Liabilities based on Balance Sheet as on 31st March, 2010

(Rs. in Crore)

Particulars 2010-11 2011-12 2012-13 2013-14 2014-15 Beyond Total 2014-15

Rupee Loan Assets 8990 6493 6930 7033 6757 43153 79356

Foreign Currency Assets 107 80 56 56 55 146 500

Investments 0 0 0 0 0.03 31 31

Foreign Currency Liabilities 253 71 16 18 1386 1016 2759

Rupee Liabilities (Bonds+RTL+STL) 11944 8948 7501 8247 3225 24485 64350

7.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forward, option, principal swap, interest rate swap and forward rate agreements. As on 31st March, 2010, the total foreign currency liabilities are USD 541.84 million, JPY 2307.69 million and Euro 28.60 million. On an overall basis, the currency exchange rate risk is covered to the extent of 20% through hedging instruments and lending in foreign currency.

7.3 ENTERPRISE-WIDE INTEGRATED RISK MANAGEMENT

Your Company had constituted the Risk Management Committee of Directors to monitor various risks, examine risk management policies & practices and initiate action for mitigation of risks arising in the operations. To facilitate this, the Company had put in place an Integrated Enterprise – Wide Risk Management Policy (IRM Policy).

The Company has identified 26 risks (15 quantifiable risks and 11 non quantifiable risks) which may have an impact on profitability/business of the Company. In order to implement IRM policy, the Risk Management Committee of Directors constituted Risk Management Compliance Committee and a separate unit namely Corporate Risk Assurance unit (CRA) for monitoring of the identified risk. The identified risks were prioritized and initially top five risks each from quantifiable and non-quantifiable category were considered for mitigating. Further, during the financial year 2009-10, next 10 risks were also considered for monitoring and as such total 20 risks have been monitored. The status report on quarterly basis is being submitted to Audit Committee and Board of Directors.

8.0 GENERATION PROJECTS

8.1 THERMAL PROJECTS

Thermal Power generation comprises a major proportion of Indias total installed capacity. During the year 2009- 10, the Company has sanctioned loans amounting to

Rs.38,316 crore and disbursed an amount of Rs.16,818 crore. The cumulative financial support provided by the Company for thermal generation scheme is Rs.1,55,387 crore out of which Rs.64,059 crore has been disbursed till 31st March, 2010.

The major thermal generation projects sanctioned by your Company during the year are: gas based CCPP of Pragati Power Corporation Ltd. in Delhi (1,371 MW), RRVUNLs gas based CCPP Stage-III (160 MW) at Ramgarh, MSPGCLs Replacement Project at Bhusawal TPS (250 MW), APGENCOs coal based Unit - 6 stage - IV at Rayalseema (1x600 MW), WBPDCLs coal based extension unit nos. 3 & 4 at Sagardighi (2x500 MW), DPLs ext unit at Durgapur (1x250 MW), APGCLs gas based project at Namrup (100 MW), Nabinagar TPS (1,000 MW) of Bhartiya Rail Bijlee Company Ltd, 660MW super-critical TPP of Adani Power Maharashtra Ltd. at Tiroda, Gondia distt., Maharashtra, East Coast Energy Pvt. Ltd.s coal based TPP at Srikakulam (1,320 MW), Indian Metals & Ferro Alloys coal based captive Power Plant at Choudwar(120 MW), Ind Barath Energy Utkal Limiteds coal based TPP at Jharsuguda (2x350 MW), IRLs Thermal Power Project at Nasik (5x270 MW), Jhajjar Power Ltds coal based Thermal Power Project in Jhajjar (2x660 MW), ONGC Tripura Power Co. Ltd.s CCGT project at Pallatana (726.6 MW), Pipavav Energy Pvt. Ltd.s imported coal based thermal power project in distt. Amreli, Gujarat (2x600 MW), Raichur Power Corporation Ltd.s (2x800 MW) super-critical Yermarus TPS in Karnataka, 2x660 MW coal based TPS in Nellore being set up by Thermal Powertech Corporation India Ltd. and Wardha Power Company Private Ltd.s 3,600 MW TPS in Chhattisgarh.

8.2 HYDRO GENERATION PROJECTS

Hydro generation capacity in the country needs significant augmentation for overall systems to have optimal energy mix. During the year 2009-10, loans amounting to Rs.2,758 crore were sanctioned and an amount of Rs.2,221 crore was disbursed by your company.

During the current financial year financial assistance was provided to the following hydro generation projects: Shahpurkandi HEP(4x40MW+1x8 MW) of PSEB, KSEBs

Sengulam Tail Race Scheme (2x1.8 MW) and Vilangad Small Hydro Electric Project (3x2.5 MW), Dans Energys Jorethang Loop HEP (96MW) in Sikkim, Jal Power Corporation Ltd.s Rangit-IV HEP (3x40MW), Madhya Bharat Power Corporation Ltd.s Rongnichu HE Project (2x48 MW), Nirgazini SHEP (7 MW) of UPJVNL in Uttar Pradesh, Periyar Vaigai 1 & 2 and 3 & 4 (13 MW) of TNEB in Tamil Nadu, Ganol HEP (3x7.5 MW) and Myntdu Leshka Stage-I Extension (1x42 MW) of MeSEB in Meghalaya and Rellichu HEP (3x4 MW) of SPDCL in Sikkim.

9.0 RENOVATION, MODERNISATION AND LIFE EXTENSION

9.1 THERMAL PROJECTS

During the year 2009-10, loans worth Rs.1,950 crore were sanctioned for R&M and life extension of thermal power plants and an amount of Rs.423 crore was disbursed. Cumulatively, an amount of Rs.8,448 crore has been sanctioned and Rs.4,991 crore stands disbursed till 31st March, 2010.

9.2 HYDRO PROJECTS

During the year 2009-10, the Company sanctioned Rs.74 crore for R&M of hydro power projects and Rs.73 crore was disbursed. Cumulatively, an amount of Rs.1,497 crore has been sanctioned and Rs.957 crore stands disbursed till 31st March, 2010.

10.0 ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (APDRP)

Government of India (GoI) had introduced the Accelerated Power Development and Reforms Programme (APDRP) in X Plan to induce state power utilities to undertake reforms in power distribution.

Government of India (GoI) financed 90% of the project cost as grant in special category states. In respect of other states (non-special category states), GoI financed 25% of the project cost as grant. SEBs/ Utilities have to arrange remaining 10% of the fund in respect of special category states and 75% in respect of non-special category states from financial institutions, including PFC.

As on 31st March 2010, your Company had sanctioned an amount of Rs.2,319.41 crore as APDRP counterpart loan towards 120 loans and has disbursed an amount of Rs.1,730.67 crore. The eleven States funded by PFC under APDRP are Haryana, Rajasthan, Uttar Pradesh, Delhi, Bihar, West Bengal, Jharkhand, Orissa, Maharashtra and Goa. During financial year 2009-10, counterpart funds amounting to Rs.58.53 crore was disbursed towards APDRP counterpart loans.

11.0 RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP)

Ministry of Power, Government of India, has launched the Restructured Accelerated Power Development and

Reforms Programme (R-APDRP) in July 2008 with focus on establishment of base line data, fixation of accountability, reduction of AT&C losses upto 15% level through strengthening & up-gradation of Sub Transmission and Distribution network and adoption of Information Technology during XI Plan. Project area shall be towns and cities with population of more than 30,000 (10,000 in case of special category states) as per census 2001. Projects under the scheme shall be taken up in two parts. Part-A shall include the projects for establishment of baseline data and IT applications for energy accounting/auditing & IT based consumer service centres. Part-B shall include regular distribution strengthening projects and will cover system improvement, strengthening and augmentation etc.

The programme size is Rs.51,577 crore out of which Rs.10,000 crore is for Part A activities, Rs.40,000 crore is for Part B activities and the remaining Rs.1,177 crore is for enabling activities to be implemented by Ministry of Power/PFC under Part-C which shall include capacity building and development of franchisees in Distribution Sector. The entire amount of GoI loan (100%) for part A of the project shall be converted into grant after establishment of the required Base-Line data system (IT implementation) within a stipulated time frame and duly verified by Third Party Independent Evaluation Agency. For Part B Projects upto 50% (90% for special category States) loan provided shall be converted into grant progressively on achievement of AT&C loss reduction targets. If the utility fails to achieve or sustain the 15% AT&C loss target in a particular year, that years tranche of conversion of loan to grant will be reduced in proportion to the shortfall in achieving 15% AT&C loss target w.r.t the starting base-line figure. There is a provision of Rs.400 crore as grant towards incentive for utility staff in project areas where AT&C loss levels are brought below 15%.

Your company has been designated as the nodal agency to operationalise the programme and shall act as a single window service under R-APDRP. As nodal agency PFC shall receive a fee as well as the reimbursement of expenditure in implementation of the progarmme as per the norms to be decided by the RAPDRP Steering Committee.

Sanctions and Disbursements

Your Company, as nodal agency, has contributed significantly during the year in implementation of RAPDRP programme. Part A schemes of almost all the towns 1387 in number, out of eligible 1400 towns have been sanctioned. During the year, PFC appraised projects and RAPDRP Steering Committee has sanctioned Rs.6,237 crore of project during the financial year 2009-10 against the MoU target of Rs.1,900 crore set for PFC. The sanctions include Rs.3,112 crore for Part- A (IT) covering projects of 781 towns, Rs.66 crore for 3 projects of Part-A (SCADA) and Rs.3,059 crore for projects of 239 towns under Part-B.

PFC has also disbursed the entire amount of Rs.1,321 crore released by Ministry of Power(MoP) during the financial year 2009-10 upto 31st March, 2010 to the state utilities for the projects sanctioned by the RAPDRP Steering Committee.

During the financial year 2009-10, validation of baseline data of 28 towns were completed as against the MoU target of 25 towns.

PFC/MoP recognizing the need and to keep pace with technology and contemporary knowledge and skill, imparted training on various themes for various levels of Power Utility personnel across the country. The broad categorizations of utility personnel are Group A&B and Group C&D. PFC has imparted training to approximately 6100 Group C&D and 625 Group A&B power distribution utility personnel across the country, against the MoU target of 2500 and 500 for Group C&D and Group A&B respectively.

Progress of Implementation of R-APDRP

As a result of the efforts made by your Company during the year, significant progress has been achieved by the state utilities in implementation of the programme. About 39 utilities out of 50 utilities have appointed IT Consultants for Part-A and 5 utilities are having their in-house team. IT Implementing Agencies (ITIA) have been appointed by 9 States covering 26 utilities i.e. WB/Sikkim, Rajasthan, Gujarat, Karnataka, Madhya Pradesh, U P, Uttrakhand and AP have issued LoI/appointed ITIA. Further, 10 States are in different stages of bidding for appointment of ITIA.

Programme for FY 2010-11

To accelerate the pace of reforms in distribution sector for reduction of AT&C losses of towns and improvement of power supply, PFC under the aegis of Ministry of Power have drawn an ambitious programme of sanction of Rs.9,000 crore and disbursement of Rs.2,500 crore under R-APDRP during the financial year 2010-11.

12.0 ULTRA MEGA POWER PROJECTS (UMPPs)

12.1 GENERATION PROJECTS

Your Company has been designated as the ‘Nodal Agency by Ministry of Power (MoP), Government of India, for development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each. So far, 16 such UMPPs have been identified to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Chhattisgarh (Surguja), Karnataka, Maharashtra (Munge),

Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Tamil Nadu (Cheyyur), Orissa (Sundergarh), 2 Additional UMPPs in Orissa and 2nd UMPPs in Andhra Pradesh, Tamil Nadu, Gujarat and Jharkhand and 3rd UMPP in Andhra Pradesh.

As on 31st March, 2010, twelve (12) Special Purpose Vehicles (SPVs) have been established for these UMPPs to undertake preliminary site investigation activities necessary for conducting the bidding process for these projects. Ministry of Power is the ‘facilitator for the development of these UMPPs while Central Electricity Authority (CEA) is the ‘Technical Partner. These SPVs shall be transferred to successful bidder(s) selected through Tariff Based International Competitive Bidding Process for implementation and operation.

Four (4) SPVs namely Coastal Gujarat Power Ltd. for Mundra UMPP in Gujarat, Sasan Power Ltd. for Sasan UMPP in Madhya Pradesh, Coastal Andhra Power Ltd. for Krishnapatnam UMPP in Andhra Pradesh and Jharkhand Integrated Power Ltd. for Tilaiya UMPP in Jharkhand have been transferred to the successful bidders as indicated below:

S. Name of SPV Successful Bidder Date of No. Transfer

1. Coastal Gujarat The Tata Power 22.04.2007 Power Ltd. Company Ltd.

2. Sasan Power Ltd. Reliance Power Ltd. 07.08.2007

3. Coastal Andhra Reliance Power Ltd. 29.01.2008 Power Ltd.

4. Jharkhand Integrated Reliance Power Ltd. 07.08.2009 Power Ltd.

In addition, Request for Qualification (RfQ) for Surguja UMPP in Chhattisgarh was issued in March, 2010 and RfQ for Sundargarh UMPP in Orissa was issued in June, 2010.

12.2 INDEPENDENT TRANSMISSION PROJECTS (ITPs)

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition, initiation of process of seeking forest clearance, if required and to conduct bidding process etc.

So far 4 Special Purpose Vehicles (SPVs), two by PFC namely East North Interconnections Company Limited (ENICL) and Bokaro-Kodarma Maithon Transmission Company Limited (BKMTCL) and other two i.e. Jabalpur Transmission Company

Limited (JTCL) and Bhopal Dhule Transmission Company Limited (BDTCL) by PFC Consulting Limited, a wholly owned subsidiary of PFC, have been incorporated.

East North Interconnections Company Limited (ENICL) was established for enabling import of NER/NR surplus power by NR, has been transferred to the successful developer i.e. M/s Sterlite Technologies Limited on 31st March, 2010. Bokaro-Kodarma Maithon Transmission Company Limited (BKMTCL) was established for evacuation system for Maithon RB, Kodarma and Bokaro Extension. Ministry of Power, Govt. of India, has directed Power Grid Corporation of India Limited for taking up the said project. Thus, an application for closure of the company has been filed by PFC with Registrar of Companies.

PFC Consulting Limited (PFCCL), a wholly owned subsidiary of PFC, has been nominated as ‘Bid Process Coordinator by Ministry of Power, Govt. of India for the development of independent transmission projects. Two other SPVs namely, Jabalpur Transmission Company Limited (JTCL) and Bhopal Dhule Transmission Company Limited (BDTCL) have been incorporated by PFCCL. Request for qualification (RfQ) for these two SPVs have been issued in February, 2010 and March, 2010 respectively.

13.0 DISTRIBUTION REFORMS, UPGRADES & MANAGEMENT (DRUM)

The Distribution Reform, Upgrades and Management (DRUM) project is an Indo-US initiative designed jointly by the Ministry of Power (MoP) and United States Agency for International Development (USAID) that complements the MoPs Accelerated Power Development and Reform Programme (APDRP). DRUM addresses the critical development challenge of providing commercially viable and dependable power.

The overall goal of the DRUM project is to demonstrate commercially viable electricity distribution systems that provide reliable power of sufficient quality to consumers and to establish a commercial framework and a replicable methodology adopted by Indian Financial Institutions for providing non-recourse financing for DRUM activities and programmes.

Your Company has been appointed as Principal Financial Intermediary responsible for technical assistance and training under DRUM components. The roles and responsibilities of PFC for DRUM project are to i) provide management and implementation support, ii) co-ordinate with all stakeholders, iii) act as a financial intermediary and banker for controlling and directing funds (loans and grants) and iv) design mechanism for leveraging resources of other FIs/ Bankers.

DRUM Technical Assistance

DRUM team consists of USAID, MoP & PFC and the beneficiary States are Maharashtra, Delhi, Gujarat and Karnataka. PFC provides financial assistance in the form of loan while USAID provides the grant component for creating Centre of Excellence in Distribution area.

So far, your Company has sanctioned total amount of Rs. 164.55 crore for three DRUM Pilot Projects costing total of Rs. 216.52 crore pertaining to Bangalore Electricity Supply Co. Ltd. (BESCOM), Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) and Madhya Gujarat Vij Co. Ltd. (MGVCL) and has disbursed an amount of Rs. 148.19 crore towards these projects as loan under DRUM scheme.

Further, the cumulative grant sanctioned from USAID is $3.278 million(i.e. Rs. 14.94 crore at an exchange rate of $1=Rs. 45.58 as on 31.03.10) for aforesaid three DRUM Pilot Projects and an amount of $0.16 million(i.e. Rs. 0.78 crore at an exchange rate of $1=Rs. 49 as on 12.11.08, the date of approval for disbursement by USAID) is disbursed as USAID grant through PFC. The projects are under various stages of implementation.

DELIVERY THROUGH DECENTRALISED MANAGEMENT (DDM)

DDM is a scheme sponsored by Ministry of Power with the objective of showcasing participatory models of excellence in distribution predominantly in rural area, which are sensitive to the local aspirations and requirements.

PFC has been appointed as carrier agency for successful implementation of DDM Schemes. So far, Government of India (GoI) grant of Rs. 5.03 crore has been sanctioned for 14 schemes of NTPC Ltd. and Rs. 0.89 crore for 1 scheme of West Bengal Renewable Energy Development Agency (WBREDA) totaling Rs. 5.92 crore. An amount of Rs. 2.80 crore is disbursed to NTPC Ltd. towards their 8 schemes. NTPC Ltd. has already commissioned 8 schemes and other schemes are under implementation.

14.0 EXTERNALLY AIDED PROJECTS

Your Company has a Line of Credit of Euro 100.56 million from KfW to finance RM&U of Hydro Electric Projects. Funds from the facility would be used to finance RM&U schemes of six HEPs of Uttrakhand Jal Vidyut Nigam Ltd. (UJVNL). The contract for detailed feasibility studies of these projects has been awarded by UJVNL and the studies are in advanced stage of completion.

15.0 INITIATIVE TOWARDS REFORMS AND RESTRUCTURING

Your Company has been encouraging reforms for overall improvement in the financial and technical performance of the State Power Utilities (SPUs). During the year, PFC has disbursed an amount of more than Rs.1 crore of grant for reform related studies to MeSEB and KSEB. Government of Meghalaya vide their notification dt. 31st March, 2010 has unbundled/ corporatized Meghalaya State Electricity Board into four bodies namely Meghalaya Energy Corporation Limited, the Holding Company, Meghalaya Power Distribution Company Ltd, the distribution utility, Meghalaya Power Generation Company Ltd., the generation utility, Meghalaya Power Transmission Company Ltd., the transmission utility.

Your company is also encouraging IT initiatives in the SPUs for their overall operational improvement. During the year, an amount of Rs.52 crore has been sanctioned for computerization schemes of State Power Utilities (other than computerization schemes covered under R-APDRP).

The status of reform and restructuring as on 31st March, 2010 is as under:-

SERCs No. of States

Constituted 29 Operationalised 26 Unbundling/Corporatisation Implemented 16 Privatization of Distribution 2 Open access guidelines issued 23

Categorization of Utilities

Your Company classifies State Power Utilities, its principal borrowers, into A+, A, B and C categories. The categorization is based on the pre-determined parameters including operational & financial performance of the utilities. The categorization enables PFC to determine credit exposure limits and pricing of loans to the state power utilities. As on 31st March, 2010, 90 utilities were categorized, 20 as “A+", 29 as “A", 20 as “B" and 21 as “C"

Category No. of Utilities

A+ 20

A 29

B 20

C 21

PFC is also stipulating appropriate conditions relating to implementation of reforms and improvement of performance while sanctioning financial assistance to its borrowers based on their appraisal.

Quarterly Performance Research Report

Your Company is bringing out one page performance report of each state power utility (SPUs) on a quarterly basis. The report contains key operational and financial performance parameters, reforms status, the status of implementation of Electricity Act 2003, areas of concern and conditions for improvement. The report is sent to the stakeholders in the Power Sector. In order to disseminate the quarterly performance reports and its importance, PFC has organized 5 regional workshops in financial year 2009-10 and made presentations on the Quarterly Performance report to the SPUs. The workshops were organized at Shillong, Kolkata, New Delhi, Bangalore and Pune. It is the endeavor of PFC to make the utilities realize the importance of preparing the quarterly report and compare performance of their utility vis-à-vis other utilities and taking the mid term corrective measures for the overall improvement of the sector.

Annual Performance Report of State Power Utilities

Your Company brings out a Report on the Performance of State Power Utilities (SPUs) annually. The 6th Report for the year 2005-06 to 2007-08 covering 90 SPUs has already been published. The report contains analysis of various financial and operational performance utility wise, state wise, region wise and at the national level. This is an outcome of our effort to provide quality database to help to find out reform process outcome and the direction in which the Power Sector is progressing. The report is also recognized by various stakeholders as an useful source of information on the SPUs. The report analysis the financial and operational performance e.g. profitability, gap between average cost of supply and average revenue realization (Rs./kwh), net worth/capital employed, receivables, payables, capacity (MW), generation (MKWH), AT&C losses etc. and consumption pattern of the sector at utility, state, regional and national level. The Report for the year 2006-07 to 2008-09 covering 77 utilities out of total 93 utilities has been prepared and submitted to Ministry of Power as per the targets set in MoU. The final report (7th) on the performance of all SPUs for the period 2006-07 to 2008-09 is under finalization.

16.0 POLICY INITIATIVES

Your Company constantly reviews and revises its lending & operational policies/ procedures to suitably align these with market requirements as also with its corporate objectives. PFC introduced policy guidelines relating to financing of projects having backward linkage to power sector in the area of fuel sources development & its distribution and equipment manufacturing for power sector. In order to facilitate the capacity addition/ expansion programme at a faster pace and enable the experienced utilities/promoters to leverage their operational strengths, PFC also launched a new financial product to provide financial assistance for equity infusion in new projects on the strength of internal resources being generated from the commissioned projects.

PFC also reviewed its policy guidelines relating to debt- equity ratio, terms of subordinate debt, premature repayment of loans, issue of comfort letter, interest resetting methodology, ceding of charge on project assets, short term loan, mini short term loan etc. during the year with a view to make the same borrower friendly.

In spite of growing competition in the market as well as concerns on account of factors like high government borrowings, increase in RBI policy rates, rising inflation etc, PFC has maintained healthy spreads balancing its objectives of business growth & profitability during the year. Further, the policies of extending special interest rates for large generation loans and renewable energy projects as per Ministry of New and Renewable Energy (MNRE) were continued during the current financial year.

17.0 ACTIVITIES UNDERTAKEN BY PROJECTS DIVISION

Your Company had reorganized its project division in the financial year 2008-09, in order to increase the focus on appraisal of projects as well as to provide better services to our customers. The major activities undertaken by the units during the financial year are:

17.1 CONSORTIUM LENDING GROUP

Consortium Lending Group (CLG) is primarily responsible for administering loans for the private(power) projects where the Company is the lead FI. The unit is also coordinating with developers of IPPs, corporate bodies, prospective lenders for identifying loan syndication proposals and coordinate with members of Power Lenders Club for providing single window facility to power project developers. CLG is thus, dedicated to the needs of those private sector borrowers who have reposed faith in the services of the Company. During the financial year 2009- 10, CLG unit has achieved financial closure for 350 MW TPP of M/s RKM Ph-I, 1,350 MW TPP of M/s Indiabulls Power Ltd., 10MW Biomass project of M/s ASN Power Ltd., 96 MW HEP M/s Dans Energy Pvt. Ltd., 120 MW HEP of M/s Jal Power Corporation Limited, 545 MW co-gen power project of M/s Vadinar Expansion Ph- I&II and 700 MW TPP of M/s Ind Barath Energy Utkal Ltd. An interactive meeting of IPPs was also organized to get the suggestions and feedback to cater the growing requirements of IPPs in the financial year 2009-10.

CLG has revived the Power Lenders Club (PLC) and has been regularly holding meeting of its members to discuss the methodology of a common approach required for sorting out issues in funding of power projects, requirement of balance debt funds for the power projects sanctioned by the company and sharing of debt among members of PLC. During the financial year, CLG has achieved to successfully tie up Rs.350 crore from Federal Bank and Corporation bank through PLC.

In order to increase the share balance debt tie up through PLC with the approach to tie up required balance debt to the maximum for the projects, whether private or state, sanctioned by PFC as lead, CLG is planning to float separate subsidiary company with the objective to syndicate loans for projects, by providing complete end-to-end project finance solutions as well as generating business proposals by understanding the current trends in market and their regulatory environment.

17.2 FA CILITATION GROUP

Facilitation Group (FG) has successfully grown business operation in its second year of operations in the emerging areas of power equipment manufacturing financing and fuel linkage financing.

During the year, facilitation group developed 2 new financial products to enable financing in the areas of Equipment Manufacturing (EM) for Power Sector and Fuel Sources Development & its Distribution (FSD&D) for Power Sector.

During the year, your company was actively involved in financing of the wind equipment manufacturer, Suzlon Group for its Rs.11,040 crore rupee debt , as part of a pan India consortium of Banks and FIs.

In the second year since inception (2009-10), FG was successful in business development efforts and sanctioned its first loan proposal. The sanction is made as an equipment manufacturing loan by way of RTL of Rs.250 crore to KSK Suyra Photovoltaic Venture Pvt. Ltd. (KSK Surya) for setting up 146 MWp thin film based solar PV panels manufacturing facility. Discussion has been initiated with NTPC BHEL JV, RITES, NPCIL among others for extending financial assistance.

In order to give a fillip to regional co-operation, your company has initiated dialogue with M/s Feedback Ventures for exploring participation in proposed Nepal Infrastructure Bank, being promoted by Nepal Rastra Bank along with ADB, IFC & DEG-KfW, for financing Hydel Projects in Nepal.

While the company continues to finance equipment manufacturing and fuel linkages for the power sector in India, it is also exploring the possibility of extending services in the areas of financing of Nuclear Power Schemes, Hydel projects being developed in Nepal with linkage to India and Hydel projects being developed in Bhutan by Indian entities under Indo Bhutan bilateral treaty.

17.3 R E & CDM GROUP

The potential of Renewable Energy to provide clean and sustainable energy is universally accepted. Government of India is giving high focus for promotion of Renewable Energy through Electricity Act 2003 and National Electricity Policy 2006. Renewable Energy has been given

a central place in Government of Indias National Action Plan on climate change. The National Solar Mission is a major initiative of Government of India and State Governments to give impetus to the development of solar power in India. The Mission has set a target of 20,000 MW under phase-I (upto 2013)

The SERCs in various states are making it mandatory for distribution utilities to procure minimum percentage of energy from Renewable Energy generation sources and notifying special tariffs for solar, wind, biomass and small hydro generation projects for purchase of power by State Power Utilities. To tap the Renewable Energy business in state and private sector, the Company is giving enhanced focus on financing of Renewable Energy Projects.

During the current financial year, loans amounting to Rs. 603 crore were sanctioned to support a capacity of 234 MW for wind and small hydro generation projects in State and Private sector. Energy Efficiency Services Limited (EESL) is a Joint Venture of PFC, NTPC, REC & PGCIL formed with equal equity participation amounting to Rs. 190 crore among them with an objective of implementing Energy Efficiency Projects. PFC has played a leadership role in formation of the company. The new company has commenced its operations on 11th February, 2010.

Your Company is also facilitating SPUs for CDM benefits for R&M of old Thermal & Hydro projects as per mandate from MoP. Ten projects in the States of Meghalaya, Andhra Pradesh, Punjab, Himachal Pradesh, Madhya Pradesh, Kerala and Maharashtra have been identified for registration with UNFCCC. The Project Design Documents (PDD) for 5 projects has been prepared through the consultant appointed by ADB. The PDD for R&M of Machkund Hydro Power project, Umiam HEP (Meghalaya), Giri HEP (Himachal Pradesh) has been submitted to the DNA (MoEF).

18.0 ADDITIONAL INITIATIVES

18.1 ACQUISITION ADVISORY SERVICES

As India is committed to its vision ‘Power for all, the share of private sector is likely to increase to 28% in the XI Plan and to 63% in the XII Plan in terms of capacity addition. This would usher in competition among the private sector players. Besides, current requirement of procurement of power from private sector through competitive bidding as well as from state power utilities from January 2011 would result in lower tariff. The resulting low tariff regime coupled with open access and power trading is likely to bring in fierce competition in future.

The above situation is likely to lead to consolidation in the power sector and hence, the need for assistance and advice in identifying suitable projects/partners for mergers & acquisitions in order to bring in synergies & economies of scale. It is in this backdrop that your company recently took the initiative of creating ‘Acquisition Advisory Services unit in the company. The broad scope of services offered by your company through this unit would include (a) Identification of target project/company for acquisition/mergers (b) preliminary due diligence on the projects and (c) detailed techno- commercial appraisal of projects etc. It will assist its clients in sale and acquisition of power projects, keeping in view the specific needs of its clients. Besides this, the unit has been mandated to explore the possibility of acquisition of a bank/FI, for which action for engaging a consultant is in progress.

18.2 POWER TRADING THROUGH POWER EXCHANGE

In the financial year 2008-09, the Central Electricity Regulatory Commission had granted its permission to set up power exchanges in the country. As on date two power exchanges, namely, Power Exchange India Ltd. (PXIL) and Indian Energy Exchange Ltd. (IEX) are in operation. These power exchanges have a nationwide presence in the form of electronic exchange for trading in power. The trading through power exchanges have certainly lent an impetus for power sector development since it acts as an open and transparent mechanism for buyers and sellers and provides investment signal to the prospective investors. Further with the presence of these exchanges, the available resources shall be used optimally.

In order to promote short term trading through power exchange, your company had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. Your company has contributed Rs. 83.30 lakh (being 16.66% of paid up equity upto 31st March, 2010) towards equity contribution. NPEX has obtained the in-principle approval for setting up of Power Exchange from CERC. This exchange is yet to start its operation.

Your company has also contributed Rs. 1.75 crore (being 5.1% of paid up equity upto 31st March, 2010) towards equity contribution in Power Exchange India Ltd., promoted by NSE and NCDEX.

In order to further boost the short term trading volumes through power exchange, PFC had decided to provide credit facility for purchase of power through Power Exchange India Ltd. (PXIL) in addition to playing the role of Professional Clearing Member (PCM). But the company had discontinued its credit and PCM facility to PXIL in compliance with the ‘Power Market Regulations, 2010, governing power trading activities, among others, notified by CERC in the month of January 2010. However, the company is likely to resume the credit facility to the buyers/sellers in its new role i.e. Financial Associates. In this regard PXIL has already submitted revised Business Rules and ByeLaws, defining the role of ‘Financial Associates, to CERC for its approval.

18.3 EQUITY FINANCING

Equity investment business is generally considered as a logical extension of debt business. Your Company is endeavoring to make a mark in the area of equity investment so as to capitulate on its vast domain experience that it has attained during its over 20 years of operations in power sector debt financing. PFC aims to leverage its financial strength, large debt providing capability and power sector expertise to invest in equity of attractive power projects. Over a period of time, your company proposes to build an equity portfolio of power assets which could provide consistent gains in the form of dividend and/or capital appreciation.

19.0 SUBSIDIARIES

As a nodal agency designated by Government of India for development of Ultra Mega Power projects, your Company has so far established fourteen (14) wholly owned subsidiaries out of which twelve (12) are to facilitate the development of UMPPs and two (2) for the development of ITPs. On completion of the bidding process, so far five (5) subsidiaries have already been transferred to the successful bidder for implementation of the projects.

In addition, the Company had also incorporated on 25th March, 2008, PFC Consulting Limited, a wholly owned subsidiary company to promote, organize and carry on consultancy services and for undertaking the work related to the development of UMPPs and ITPs.

19.1 PFC CONSULTING LIMITED

Background

As you are aware, your Company had been offering consultancy support to the Power Sector through its Consultancy Services Group (CSG) since October 1999. Leveraging the experience of the CSG Unit and appreciating the growth in the services offered by the Group and recognizing the potential of such services in the reforming Power Sector, your Company decided to organize the services as a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary on 25th March, 2008, in order to give it requisite autonomy in functions and flexibility in operations. PFCCL is mandated to promote, organize and carry on consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs. PFCCL has been nominated as the ‘Bid Coordinator for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, GoI.

Range of Services Offered

The Services being offered by PFCCL in the following areas include:

- Procurement of Power by Distribution Licensees

- Govt. of India initiatives like UMPPs, ITPs etc.

- New & Renewable Energy Sources

- Selection of Developers for Power Projects linked to Coal Blocks & Joint Venture Partners for Coa Blocks

- Project Advisory Services including Selection of EPC Contractor

- Reform, Restructuring and Regulatory Aspects

- Capacity Building and Human Resource Development

While PFCCL continues to undertake various assignments, its focus is on assignments relating to:-

- Procurement of power through ‘Case 1 and ‘Case 2 of “Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees", issued by MoP, GoI.

- Overall advisory services for development of a new Thermal Power Station.

- Computerization of Accounting Systems for State Utilities.

- Restructuring/Implementation of reforms for State Utilities.

Client Base

Till date, consultancy services have been provided to 37 Clients spread across 20 States. Assignments have been undertaken in various states, which include Punjab, Rajasthan, Jharkhand, West Bengal, Himachal Pradesh, Bihar, Jammu & Kashmir, Meghalaya, Assam, Andhra Pradesh, Uttar Pradesh, Haryana, Chhattisgarh, Meghalaya, Madhya Pradesh, Kerala, Maharashtra, Karnataka and Delhi. The numbers of states including the profile of clients are given below:

Clients Nos.

States/ UTs 20

Total No. of Clients 37

State Utilities 15

Public Sector Undertakings 4

State Governments 7

Regulatory Commissions 3

Licensees/ IPPs 8

During the financial year 2009-10, PFCCL has more than doubled the turnover (?45.27 crore as compared to ?22.39 crore of the previous year) and net profit (?21.66 crore as compared to ?9.75 crore in the previous year).

19.2 SUBSIDIARIES OF PFC CONSULTING LIMITED

19.2.1 JABALPUR TRANSMISSION COMPANY LIMITED (JTCL)

SPV, Jabalpur Transmission Company Limited was incorporated on 8th September, 2009. It is a transmission system project for ‘System Strengthening Common for Western Region (WR) and Northern Region (NR). The project includes 756 kV Single D/C line from Dhramjaygarh to Jabalpur and 765 kV S/C line from Jabalpur Pool to Bina.

Request for Qualification (RfQ) for the project was issued in February, 2010. RfQ responses were received from 33 developers. Evaluation of RfQ responses is in progress.

19.2.2 BHOPAL DHULE TRANSMISSION COMPANY LIMITED (BDTCL)

SPV, Bhopal Dhule Transmission Company Limited was incorporated on 8th September, 2009. It is a transmission system project for ‘System Strengthening for Western Region (WR). The project includes system Strengthening for WR (Jabalpur-Bhopal, Bhopal- Indore, Aurangabad-Dhule, Dhule-Vadodra, all 765 kV S/C lines with associated 765 kV substation at Bhopal and Dhule.

Request for Qualification (RfQ) for the project was issued in March, 2010. RfQ responses were received from 28 developers. Evaluation of RfQ responses is in progress.

20.0 JOINT VENTURES AND ASSOCIATE COMPANIES

20.1 NATIONAL POWER EXCHANGE LIMITED

In order to promote short term trading through power exchange, your company had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. Your company has contributed Rs. 83.30 lakh (being 16.66% of paid up equity upto 31st March, 2010) towards equity contribution. NPEX has obtained the in-principle approval for setting up of Power Exchange from CERC. This exchange is yet to start its operation.

The Power Exchange will have a nationwide presence in the form of electronic exchange for trading in power. Apart from power trading, transmission clearance will also be taken care of by power exchange simultaneously. It will provide its members a transparent, neutral and efficient electronic platform for power trading.

20.2 POWER EQUITY CAPITAL ADVISORS PRIVATE LIMITED

An advisory company namely Power Equity Capital Advisors Private Limited (PECAP) was incorporated to provide advisory services related to equity investments in Indian power sector, where our Company is the largest shareholder.

20.3 POWER TRADING CORPORATION OF INDIA

Power Trading Corporation of India (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested Rs.12 crore which is 4.07% of total equity of PTC. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primarily focus is to develop a commercial vibrant power market in the country.

20.4 ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on 11th February, 2010. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with equal equity participation for implementation of Energy Efficiency projects in India and abroad. EESL would be one of the main implementation arms of the National Mission on Enhanced Energy Efficiency (NMEEE), which is one of the eight National Missions announced by the Honble Prime Minister as a part of “National Action Plan on Climate Change".

21.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

For the Financial Year 2009-2010, your Company has surpassed all the ‘Excellent level MoU targets in respect of the various performance parameters and is likely to be accorded ‘Excellent rating.

22.0 PRESIDENTIAL DIRECTIVES (REGARDING SALARY)

Your Company has implemented wage-revision w.e.f. 01.01.2007 for the employees in the Executive Cadre as per Presidential Directives issued on 26.11.2008 and 02.04.2009. However, wage-revision for the employees in the Non-Executive cadre is under the process of negotiation.

23.0 HRD INITIATIVES

TRAINING & DEVELOPMENT

In the field of Human Resource Development, PFC stresses on the need to continuously upgrade the competencies of its employees and equip them to keep abreast of latest developments in the sector and industry practices. The Company is in a knowledge intensive business and is committed to enhance the professional skills and knowledge of its employees. As a step towards this, it has a systematic training plan where the training needs are assessed and professional skills are imparted at all levels of employees through customized training interventions. PFC, in its role as a Development Financial Institution has also been supporting State Power Utilities (SPUs) through a variety of capacity building measures. One such initiative is in the area of need-based training and capacity development to build up their institutional and managerial capacities in keeping with the increased commercial orientation of these entities.

Employee Training

During the year 2009-10, PFC organized 16 in-house programs. A total of 1085 mandays were achieved through in-house programs. In addition, 601 training mandays, including 276 mandays of foreign training, were achieved through training programs organized by other training institutes.

DRUM and Utility Training

During the financial year 2009-10, 161 training programmes were organized through which 3524 number of personnel were trained from various utilities. Apart from short-term training (5 days & less), the DRUM program also supports longer duration courses through collaborations with leading Institutes such as the Management Development Institute, Gurgaon, for an MBA in Power Distribution Management, The Energy Research Institute, New Delhi, for an MBA in Infrastructure and with Indira Gandhi National Open University for Advanced Certificate in Power Distribution Management.

To further enhance the reach of its training activities PFC had initiated the distance learning mode. In a collaboration agreement with the Indira Gandhi National Open University, in which PFC is the major sponsor, a certificate in Power Distribution Management of six months duration has been initiated for utility linesmen/ technicians located at remote centers who would otherwise not have access to training for upgradation of their skills.

24.0 RESERVATION OF POSTS FOR SC/ST/OBC/EX- SERVICEMEN AND PHYSICALLY HANDICAPPED PERSONS IN THE SERVICES OF COMPANY

Your Company as a part of its social responsibility makes all-out efforts to ensure compliance of the Directives and Guidelines issued by the Government for the reservation to be allowed for SC/ST/OBC/Persons with disabilities. The steps taken include due reservations and relaxation as applicable under the various directives.

In the year 2009-10, total 18 new employees were recruited out of which 11.11% are SC (2) and ST (2), 16.67% are PWD (3) and 50% are OBC(9).

25.0 VIGILANCE

During the financial year 2009-10, the Vigilance unit functioned as an effective tool of management with the thrust being on preventive vigilance. This aspect was emphasized by conducting periodic & surprise inspections of various units and by issuing effective guidelines to streamline systems with the aim of eliminating loopholes and ensuring transparency in day to day operations. Vigilance Unit undertook the review of operational manuals of various activities of the Company. A number of comprehensive manuals on different areas of companys activities have already been notified after review and some other manuals are in process of finalization. Further during this period detailed investigation was carried in several cases of registered complaints.

In accordance with the directives of CVC, Vigilance Awareness Week was observed from 3rd to 7th November, 2009 in the head office and regional offices of the Company. In order to increase scope of e-procurement in the Company and borrowers of the Company and to disseminate a strong message of integrity and transparency in public spending, interactive two days programme on “E-procurement in power Sector" was held for the benefit of the executives and borrowers of the Company so as to reap benefits of e- procurement and increase of transparency in procurement process and also to educate them on the initiatives taken for improvement in systems procedures.

Slogan writing, essay writing and pictorial theme representation competitions were organized on themes relating to preventive vigilance, e-procurement and use of information technology in fighting corruption with the aim of involving employees and encouraging them to come forward with innovative ideas for prevention of corrupt practices. Internal Audit system in the company was reviewed and a report entitled “Review of Internal Audit System in PFC: A suggestive framework for effectiveness" was prepared.

26.0 OFFICIAL LANGUAGE

In your Company, Official Language Policy Implementation has been taken as an integral part of Management Operations. To enhance the environment of Rajbhasha Hindi, “Hindi Fortnight" was observed from 14th September, 2009 to 30th September, 2009. During the period, several Hindi Promotional activities were organized. On the occasion of Hindi Day on 14th September, 2009, the messages of Honble Minister of Home Affairs, Honble Minister of Power and Chairman and Managing Director of Company were distributed to all the employees of PFC. During the year, various competitions, like ‘Katha Vistaran, ‘Vartani Shodhan, ‘Nibandh, ‘Samsmaran, ‘On the Spot Chitrabhivyakti, ‘Shrutlekhan for drivers and attendants only were organized. A ‘Kavi Sammelan was organized wherein renowned Hindi and Urdu poets and poetess, like Shri Vaseem Baraelavi, Shri Rahat Indori, Shri Kunwar Baichen, Shri Surendra Dubey, Shri Popular Merathi and Ms. Kirti Kale recited their poems.

In accordance with the statutory requirement and as per the directions of MoP, Corporate version of ‘Saransh bilingual package was purchased and installed on the computers of all the employees to help them to do their work in Hindi.

During the year, six workshops on Official Language Policy were organised to address the practical difficulties being faced by the employees in performing their day to day work in Hindi. These workshops were attended by 50 participants. Two training programmes on use of ‘Saransh package were also organized wherein 40 employees participated. A personal contact programme was also initiated to inspire each of the employees personally to do their work in Hindi.

Internal inspections as part of personal contact programme were conducted in 26 units to enhance the scope of work in Hindi in their respective units. To help employees to do their day to day work in Hindi, several standard formats and other documents being used in various units of PFC were made available on Intranet of PFC. A glossary of the words being used in PFC was also uploaded on intranet.

The bilingual quarterly in-house magazine ‘Urja Deepti was brought out regularly. The employees and their family members were encouraged to send their articles and incentive was given to all those who contributed. This magazine was adjudged first and received award in an Inter PSU in-house magazine competition conducted by Town Official Language Implementation Committee, wherein 86 organisations had participated. The magazine was conferred First Prize in ‘All India Official Language In- House Magazine Competition held by ‘Akhil Bharatiya Rashtrabhasha Vikas Sangathan and also received ‘Rajbhasha Patrika Rashtriya Shield Samman from Rashtriya Hindi Academy, Rupambara.

27.0 AUDITORS

M/s. K.K.Soni & Co., Chartered Accountants and M/s. Raj Har Gopal & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for the financial year 2009- 2010 by the Comptroller & Auditor General of India.

28.0 FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign exchange outgo aggregating Rs.132.40 crore was made on account of debt servicing, financial & other charges, travelling and other miscellaneous expenses.

29.0 PARTICULARS OF EMPLOYEES U/S 217 (2A) OF THE COMPANIES ACT, 1956.

Particulars of employees as required to be furnished pursuant to Section 217(2A) of the Companies Act, 1956, read with the rules thereunder, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the reports and accounts are being sent to all the shareholders of the Company excluding the statement of particulars of employees. Any shareholder interested in obtaining a copy ma