LADIES & GENTLEMEN,
 
 It gives me great pleasure in welcoming you all to the 25th Annual
 General Meeting of your Company, a momentous year in the PFC history as
 we celebrate completion of 25 years of operation.  Your Company has
 crossed many impressive milestones in this journey which has made us
 the most dominant player in the sector.
 
 Your Company is the youngest to enter the list of the top 10 Profit
 making public sector undertakings as per PSE Survey Report of
 Department of Public Enterprises released in February, 2011. PFC is
 ranked 35th based on net worth in a listing of top 500 companies
 according to Dun & Bradstreet. Your Company also figures among the top
 500 global financial brands (Ranked 376th), according to Brand Finance
 Plc of UK. PFC got listed in Global 2000 leading Companies (Ranked
 1195th), only 57 Companies from India figured in this list.
 
 The Indian power sector had a different landscape when your Company
 started operations. Your Company acted as the change agent in turning
 around the sector into a viable investment proposition. Today your
 Company performs a variety of functions like funding power projects,
 implementing key development schemes and offering diverse products and
 services like consultancy and advisory in the power sector. Your
 Company is also looking at business diversification in related areas,
 but more on that later.
 
 INDIAN ECONOMY
 
 The Indian economy during fiscal 2011 has been characterized by robust
 economic growth and steady fiscal consolidation.  Inflation continues
 to be high even though it has come down significantly from where it
 was at the start of the fiscal year. This has been a classic year of
 economic recovery for India. The economy remained on the path of rapid
 resurgence, which began in fiscal 2009 and has virtually returned to
 the high growth path that it had achieved during fiscal 2008, before
 the global financial crisis and economic meltdown. India''s growth story
 this year has been remarkable by any standards.
 
 One of the major requirements for sustainable and inclusive economic
 growth is an extensive and efficient infrastructure network.  It is
 critical for the effective functioning of the economy and industry. The
 key to global competitiveness of the Indian economy lies in building a
 high class infrastructure. Among the 10 infrastructure sectors, power
 is the most critical. Of the USD 500 billion investment in
 infrastructure required during the 11th plan, power is the largest
 head, accounting for about a third of the overall fund requirement.
 Investment requirements will only increase in the 12th plan, as demand
 for power grows. Your Company is well positioned to take advantage of
 these opportunities.
 
 OUTLOOK ON POWER SECTOR
 
 Power sector at this point of time is undergoing crucial changes in
 terms of huge capacity addition, higher efficiency, increased private
 power participation, competitive pricing and improved regulatory
 framework. The power requirement in India is expected to grow manifold
 in the coming years as a result of industrial and urban expansion. Govt
 of India has responded positively by accelerating the capacity addition
 from 21,180 MW in 10th Plan to 39,631 MW in the 11th plan upto 31st
 July, 2011. It is expected that approximately 52,000 MW will be added
 by end of 11th Plan, leading to almost two and a half times that of
 10th Plan. In addition, 16 UMPPs have been identified, out of which 4
 UMPPs have already been awarded. This initiative will immensely
 contribute in achieving the targeted capacity addition of 93,000 MW in
 12th Plan (including 12,000 MW slippages from 11th Plan). On the same
 lines, Govt of India has also initiated development of large
 Transmission Systems through private sector participation. 11 such
 Independent Transmission Projects (ITPs) have been identified by the
 Empowered Committee.
 
 In spite of impressive growth in capacity addition and transmission
 infrastructure, the distribution sector continues to be the weak spot.
 The financial health of distribution utilities in the country is a
 matter of concern. The financial losses have shown increase in the last
 few years. While the utilities should make serious efforts to reduce
 the Aggregate Technical and Commercial (AT&C)
 
 losses there should be adequate tariff to recover the cost of supply.
 You will be happy to note that in the Conference of Power Ministers
 held on 13th July, 2011 on Distribution Reforms, about 14 resolutions
 were passed unanimously aiming at reforming the distribution sector.
 Some of the major resolutions include (1) Distribution utilities file
 the Annual Tariff Revision Petition by December-January of the
 preceding financial year to the State Regulators as stipulated in the
 National Tariff Policy (2) automatic pass through in tariff for any
 increase in fuel cost (3) clearance of all outstanding subsidies to the
 utilities and ensure advance payment of subsidy (4) the accounts of the
 utilities are audited upto the financial year 2009-10 and the accounts
 of a financial year are audited by Sept of the next financial year,
 henceforth.
 
 Govt of India has also initiated various reform measures to address the
 issue of distribution sector losses. These include: (i) Re-structured
 Accelerated Power Development and Reform Programme (R-APDRP) which
 focuses on actual, demonstrable performance in terms of sustained loss
 reduction; (ii) Procurement of Power by Competitive bidding, which
 focuses on the concept of competitive tariffs that leads to economical
 power procurement by DISCOMs thereby increasing their viability and
 (iii) Franchisee models. Some of franchisee models implemented have
 shown that this could be a possible viable alternative to existing
 distribution business. In addition to these three, other initiatives to
 reduce distribution losses include constitution of a High Level Panel
 on Financial Position of Distribution Utilities under Shri V. K.
 Shunglu (former CAG), constitution of Task Force on private
 participation in power distribution and Rating of Distribution
 Utilities.
 
 PERFORMANCE HIGHLIGHTS
 
 Your Company has come a long way since 25 years when it started its
 lending operations in the fiscal 1988 with a modest sanction of Rs.107
 Crores and disbursement of Rs. 101 Crore. In comparison, your Company
 has sanctioned Rs.75,197 Crores and disbursed close to Rs.34,122 Crore
 including R-APDRP during the just concluded fiscal 2011, which is quite
 creditable. With this, cumulative sanctions move to Rs.3,45,726 Crore
 and cumulative disbursements to Rs.1,73,049 Crore as on March 31, 2011.
 Your Company has supported the capacity addition in power sector
 significantly by providing financial support to 31,462 MW during the
 11th Plan and 48,573 MW so far in the 12th Plan.
 
 The fiscal 2011 has been yet another year of impressive growth in loan
 assets of 25% with a net Profit of about Rs.2,620 Crore.  The operating
 income touched a new level of Rs.10,128 Crore showing an increase of
 26% over previous year. Personnel and Administration expenses in the
 fiscal 2011 were 0.09% of Loan Assets. Your Company has also maintained
 very low levels of net NPAs of 0.20% of loan assets.
 
 Long Term Infrastructure Bonds and Tax free Bonds : Your Company by
 virtue of its Infrastructure Finance Company (IFC) status has become
 eligible to issue Long Term Infrastructure Bonds u/s 80CCF of Income
 Tax Act, 1961. The Company collected a total of Rs.235 Crore from the
 market in this fiscal 2011 and intends to tap the market again in the
 next fiscal 2012 with an issue size of Rs.6,900 Crore. Additionally,
 the Company has been allocated tax free bonds of Rs. 5000 Crore for
 issuance in the next fiscal 2012.
 
 Ratings: In the fiscal 2011, International credit rating agencies
 Moody''s, Fitch and Standard & Poor''s have given to your Company, long
 term foreign currency issuer ratings of Baa3, BBB- & BBB-
 respectively, which are at par with sovereign rating. The long term
 domestic borrowing programme (including bank loans) got the highest
 safety rating of AAA and LAAA respectively by CRISIL and ICRA.
 Further, short term domestic borrowing programme of your Company
 (including bank loans) was awarded the highest rating of P1  and
 A1  respectively by CRISIL & ICRA. PFC is an ISO 9001:2008 certified
 Company.
 
 Further Public Offer (FPO): PFC successfully closed its FPO despite
 tough market conditions during the first quarter of fiscal 2012. The
 issue got a phenomenal response and was subscribed 4.31 times. The
 issue was priced at Rs.203 (5% discount to Retail & Employees). The
 offering comprised of fresh issue of 17,21,65,005 equity shares by the
 Company and an offer for sale (disinvestment) of 5,73,88,335 equity
 shares by Government of India. Post-issue, the holding of the
 Government of India stands at 73.72% and the balance is held by public.
 The Company raised an amount of Rs. 3,433 Crore from issue of fresh
 shares to the public.
 
 Restructured Accelerated Power Development & Reform Programme
 (R-APDRP): Your Company, as nodal agency, has contributed signifi
 cantly during the year in implementation of R-APDRP programme. Your
 Company cumulatively upto fiscal 2011 (i) Sanctioned Part A (IT)
 schemes of all eligible 1,401 towns (ii) Sanctioned Part-A (SCADA)
 schemes for 28 out of 60 eligible towns and (iii) Sanctioned Part-B
 schemes for 823 of 1,100 eligible towns. During this year (fiscal 2011)
 your Company sanctioned Rs.13,665 Crore of projects against the MoU
 target of Rs.9,000 Crore set for PFC, which include Rs.147 Crore for
 Part-A (IT) covering projects of 23 towns, Rs.603 Crore for Part-A
 (SCADA) of 25 projects and Rs.12,915 Crore for Part-B projects of 584
 towns.
 
 Your Company has also disbursed the entire amount of Rs.2,257 Crore
 released by Ministry of Power (MoP) during the fiscal 2011 upto March
 31, 2011 to the State Utilities.
 
 During this fiscal 2011, ring fencing of 810 towns was completed as
 against the MoU target of 350 towns. Recognizing the need and to keep
 pace with technology and contemporary knowledge and skill, PFC 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.
 
 Ultra Mega Power Project: Your Company has been designated as the
 ''Nodal Agency'' by Ministry of Power, Government of India, for
 facilitating development of Ultra Mega Power Projects (UMPPs), with a
 capacity of about 4,000 MW each. As on March, 2011, twelve Special
 Purpose Vehicle (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. So far, 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. The Orissa UMPP received response from 20 bidders
 and the evaluation is in process, whereas Chhattisgarh UMPP is at
 Request for Qualification (RfQ) stage. The remaining 10 identified
 UMPPs are in the pipeline which are at various stages of development.
 
 Independent Transmission Projects (ITPs): PFC Consulting Limited
 (PFCCL), a wholly owned subsidiary of your Company is nominated as ''Bid
 Process Coordinator'' for Independent Transmission Projects by Ministry
 of Power, Govt. of India.
 
 Special Purpose Vehicles (SPVs) have been incorporated for the above
 purpose, one by PFC namely East North Interconnection Company Limited
 (ENICL) and three by PFC Consulting Limited (a wholly owned subsidiary
 of PFC) namely Jabalpur Transmission Company Limited (JTCL), Bhopal
 Dhule Transmission Company Limited (BDTCL) and Nagapattinam-Madhugiri
 Transmission Company Limited (NMTCL). ENICL, JTCL and BDTCL have
 already been transferred to successful developers and the RFQ responses
 for NMTCL are under evaluation.
 
 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 without
 compromising on ecological conditions. During the year, your Company
 has allocated an amount of Rs.12 Crore and taken several initiatives
 which includes (i) construction of houses for the fl ood affected
 marginalized sections of the population in Andhra Pradesh (400Nos) (ii)
 distribution of Solar Lanterns in 169 Villages for people who do not
 have access to electricity (iii) construction of primary school and
 construction of fl ood protection wall in Ladakh.
 
 BUSINESS EXPANSION THROUGH VERTICALS
 
 PFC Consulting Ltd: In 1999, Consultancy Services Group (CSG) was
 created to offer consultancy services in power sector. To provide
 exclusive focus to this business, CSG in 2008 was converted into a
 wholly owned subsidiary of PFC namely PFC Consulting Ltd (PFCCL). PFCCL
 is now providing wide ranging services related to power sector with a
 diverse client base of 37 clients spread across 20 states. During the
 fiscal 2011, PFCCL has earned a total income of Rs. 52.60 crore and
 earned a net Profit of Rs.26.95 crore.
 
 PFC Green Energy Limited: Your Company believes that the renewable
 energy space in India provides significant untapped potential. To tap
 this opportunity, the Renewables business group of PFC was converted
 into PFC Green Energy Limited as a wholly owned subsidiary of the
 Company. This company will exclusively extend finance and financial
 services to promote green (renewable and non-conventional) sources of
 energy with an 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.
 
 PFC Capital Advisory Services Limited: With an aim to harness the huge
 business potential offered by power sector in the consortium lending
 operations space, PFC converted its Consortium Lending business group
 into PFC Capital Advisory Services Ltd, a wholly owned subsidiary of
 PFC. This company got incorporated on July 18, 2011 to exclusively
 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.
 
 Facilitation Group: Your Company has created this business group to tap
 opportunities in allied sector like power equipment, gas
 transportation, coal mining etc which have a backward linkage to power
 sector. The group has already started its business by financing large
 project for its expansion of power equipment manufacturing / production
 facilities. Your Company is expanding this business with several
 funding proposals in hand to finance power equipment manufacturing
 facilities like the solar PV facilities.
 
 Power Trading through Power Exchanges : To promote short term trading
 through power exchange, your Company had promoted National Power
 Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during fiscal 2009
 and contributed Rs.2.19 Crore (being 16.66% of paid up equity up to
 March 2011) towards equity contribution.
 
 Your Company has also contributed Rs.1.75 Crore (being 4.37% of paid up
 equity up to March 2011) towards equity contribution in Power Exchange
 India Ltd., promoted by NSE and NCDEX.
 
 Equity Financing: Your Company is endeavouring to make a mark in the
 area of equity investment so as to capitalize on its vast domain
 experience, attained 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.
 
 Nuclear Funding: Your Company has signed a Memorandum of Understanding
 (MoU) with Nuclear Power Corporation of India Ltd (NPCIL) in October,
 2010 to offer financial assistance as well as other services to NPCIL
 for its nuclear power capacity addition in the next 20 years. NPCIL has
 requested your Company to provide debt financial assistance for its 2
 nuclear power projects costing about Rs.24,000 Crore.
 
 Banking Business : Your Company is currently in the preliminary stages
 of evaluating the possibility of foray into banking and is in the
 process of appointing a consultant in connection with such initiative.
 
 Acquisition Advisory Services: Your Company being a dominant player in
 the sector is seeing a fundamental shift of players from government
 sector to private sector. It believes that increasingly private players
 will play significant role in power sector and will consolidate their
 position in the sector. This business group namely Acquisition Advisory
 Services is formed to tap the mergers and acquisition opportunities in
 the power sector due to the above referred phenomena. This company will
 provide advisory services ranging from identification of target
 projects / players, potential M&A opportunities and also provide
 techno- commercial appraisal of target projects / players.
 
 FUTURE STRATEGY
 
 As a part of the sustainable strategy to expand business, your Company
 intends to fl oat independent business verticals in the form of
 subsidiaries. As indicated above, your Company has already 3
 subsidiaries in place which have developed expertise in their
 respective niche areas of business to tap the significant business
 potential. The other business groups in your Company will adopt a
 similar approach of spinning off into independent subsidiaries as they
 grow and develop expertise in such areas.
 
 The future strategy therefore is to sustain the growth momentum of your
 Company by further consolidation in power sector and strengthening of
 these business verticals so as to enable them to grow into a strong
 Companies with sound financials. As a part of Corporate Plan, your
 Company has also identified other potential business areas like foray
 into international markets, insurance, capacity building initiatives,
 strategic alliance with domestic and international institutions etc,
 whose feasibility will be explored and developed on the above lines to
 further fuel the growth of your Company.
 
 While your Company is committed to accelerate growth, your Company will
 continue to achieve the best standards of Corporate Governance with
 emphasis on authority and freedom of the management coupled with
 transparency, accountability and professionalism in their working with
 the aim of enhancing long term economic value of all the stakeholders
 and the society at large.
 
 AWARDS & ACCOLADES
 
 Your Company''s performance has been recognized time and again and the
 same is reflected in various awards / accolades received. PFC received
 SCOPE Commendation Certificate in the category of Best Managed Bank,
 Financial Institution or Insurance Company for the year 2009-10 from
 H.E. President of India Smt. Pratibha Devisingh Patil, the MoU Award
 of Excellence in Performance for 7th time in the category of
 Excellence in Financial Services Sector from Hon''ble Prime Minister
 of India Dr Manmohan Singh, the ICT for India Award 2010 for
 excellence in performance for R-APDRP from Hon''ble Union Minister Shri
 S. Jaipal Reddy, the 3rd PSU Awards 2011 in the category of Gentle
 Giant, The Largest Navratna (Non-Manufacturing) from Hon''ble Union
 Power Minister Shri Sushilkumar Shinde.
 
 ACKNOWLEDGEMENTS:
 
 would like to place on record my sincere thanks to the Board of
 Directors, Shareholders, investors and valued clients for reposing
 faith in the Company. I also place on record the support of a
 motivated, dedicated and highly committed PFC team
 
 take this opportunity to express my sincere and grateful thanks to the
 unstinted support of Hon''ble Union Minister of Power, Hon''ble Union
 Minister of State for Power, Secretary (Power), Officials of the
 Ministry of Power, Ministry of Finance, Reserve Bank of india,
 Department of Public Enterprises, Securities and Exchange Board of
 India, National Stock Exchange of India Limited, Bombay Stock Exchange
 Limited, Planning Commission, CEA, C&AG, Statutory Auditors and other
 concerned Government departments/ agencies at the Central and State
 level, World Bank, the Asian Development Bank, USAID, KfW of Germany,
 EDC of Canada and various international financial institutions/banks,
 Commercial Banks, Financial Institutions, Registrars and other agencies
 for their continuous support. I extend my sincere thanks to the Print &
 Electronic Media for their untiring support as well. 
 
 I hope the coming years will further strengthen our relationship with
 all stakeholders for a sustainable growth and performance of your
 Company
 
                                                       (Satnam Singh)
 
                                        Chairman & Managing Director
 New Delhi
 
 26th August, 2011