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Power Finance Corporation
BSE: 532810 | NSE: PFC | ISIN: INE134E01011 | Finance - Term Lending Institutions
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Mar '08 |
The Directors have great pleasure in presenting the 22nd Annual Report
on the performance of your Company for the financial year ended 31st
March, 2008 along with Audited Statements of Accounts.
1.0 FINANCIAL HIGHLIGHTS
(a) Profitability (Rs. in crore)
2007-08 2006-07
Profit for the Year 1782.48 1511.55
Prior Period Adjustments 5.21 (-)0.02
Profit Before Tax 1787.69 1511.53
Less: Provision for Income Tax
(current year) 481.98 333.55
Less: Provision for Interest on
Income Tax (current year) 0.29 4.67
Less: Provision for Income
Tax (earlier years) 0.04 14.30
Less: Deferred Tax Liability 97.65 172.05
Less: Provision for Fringe Benefit Tax 0.97 0.82
Profit After Tax 1206.76 986.14
Transfer towards provision for Bad &
Doubtful Debts u/s 36(1) (viia)
(c) of Income-Tax Act, 1961 90.97 78.52
Transfer to Special Reserve
u/s 36(1) (viii) of Income
Tax Act, 1961 311.84 501.47
Interim Dividend 286.94 145.00
Proposed Final Dividend 114.78 114.78
Corporate Dividend Tax paid on
Interim Dividend 48.77 20.33
Proposed Corporate Dividend Tax 19.51 19.51
Transfer to General Reserve 121.00 99.00
Balance carried to Balance Sheet 212.95 7.53
(b) LENDING OPERATIONS (Rs in crore)
2007-08 2006-07
TOTAL SANCTION 69492.77 31130.26
a) Term Loans 66073.53 28739.25
b) Short Term Loans 2506.00 2391.01
c) Lease & other financial product 913.24 0.00
TOTAL DISBURSEMENT 16207.24 14054.70
a) Term Loans 13765.44 11688.69
b) Short Term Loans 2316.00 2366.01
c) Lease & other financial product 125.80 0.00
GRANTS
Grants for Studies Sanctioned 5.42 15.47
Grants for Studies Disbursed 3.89 0.30
2.0 FINANCIAL PERFORMANCE
2.1 REVENUE
The total income during financial year 2007-08 increased by 28.32% to
Rs.5,040.04 crore as compared to Rs.3,927.65 crore in 2006-07.
Operating income during the year amounted to Rs.5,029.28 crore as
compared to Rs.3,816.67 crore in 2006-07 showing an increase of 31.77%.
Interest income including lease income during the financial year
2007-08 amounted to Rs.4,804.55 crore as compared to Rs.3,758.44 crore
in 2006-07.
2.2 EXPENSES
Interest and other finance charges for the financial year 2007-08
amounting to Rs.3,182.56 crore accounted for 97.70% of total expenses.
Personnel and Administration expenses were 2.48% of total expenses and
0.16% of Loan Assets.
2.3 PROFIT
During the financial year 2007-08, your Company earned a net profit of
Rs.1,206.76 crore as compared to Rs.986.14 crore for the financial year
2006-07 registering an increase of 22.37%.
2.4 DIVIDEND
Your Directors have recommended a final dividend of Re.1 per equity
share (10%) in addition to an interim dividend of Rs.2.50 per equity
share (25%) paid in February, 2008. The dividend for the year 2007-08
thus aggregates to Rs.3.50 per equity share as against Rs.2.41 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.401.72 crore representing
35% of the paid-up capital of the company and 33.29% of the profits
after tax as against a dividend pay-out of 22.63% of the paid-up
capital and 26.34% of the profits 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 SUBSIDIARIES
As a Nodal Agency designated by Government of India for development of
the ultra mega power projects, your Company had incorporated eleven
(11) wholly owned Subsidiary Companies, out of which nine (9)
subsidiaries are to facilitate development and construction of large
capacity power projects based on international competitive bidding. The
two (2) subsidiaries are for development of large transmission
projects.
The Subsidiary Companies are responsible for the process of obtaining
statutory clearances such as environment and forest clearance, airport
authority clearance, coastal regulation zone clearance, defence
clearance and necessary linkages such as water, fuel ( in case of pit
head projects) in the name of the respective SPVs thereby mitigating
the development and pre-construction risk for these projects. As per
the Electricity Act and the provisions of the guidelines for
procurement of power through tariff based competitive bidding by
distribution licensee ( issued by the Ministry of Power), subsidiary
companies are working as authorized representatives of procurers (i.e.
Distribution Companies, Transmission Companies, State Electricity
Boards, etc) for conducting the bid process.
On completion of the bidding process the subsidiaries are transferred
to the successful bidder for implementation of the projects. On
successful completion of bidding process, three(3) of the subsidiaries
have already been transferred to successful bidders.
The Company also incorporated on 25th March, 2008, PFC Consulting
Limited, a wholly owned subsidiary company to promote, organize and
carry on consultancy services.
4.0 OPERATIONAL HIGHLIGHTS
Your Company issued sanctions for Rs.69,498 crore of loans and grants
during the financial year 2007-08 compared to Rs.31,146 crore
sanctioned during the last year. An amount of Rs.16,211 crore was
disbursed during the same period to State, Central and Private Sector
entities, compared to Rs.14,055 crore disbursed during the last year.
With this, cumulative sanction of Rs.1,86,419 crore and disbursement of
Rs.92,065 crore of loans and grants have been made by the Company as on
31st March, 2008, apart from sanction of Guarantees worth Rs.1,380
crore.
4.1 Loan Portfolio (Sector-wise)
2007-08
Category No. of Loans Sanction Disbursement
(Rs. crore) (Rs. crore)
State Sector 258 52745.84 13476.69
Private Sector 14 5231.26 861.92
Central Sector 4 11515.67 1868.63
Total 276 69492.77 16207.24
Cumulative upto March, 2008
No. of Loans Sanction Disbursement
(Rs. crore) (Rs. crore)
2715 147144.49 76960.86
112 14103.76 5537.81
49 25098.68 9522.37
2876 186346.93 92021.04
4.2 Loan Portfolio (Discipline-wise)
2007-08
Category No. of Loans Sanction Disbursement
(Rs. crore) (Rs. crore)
Thermal Generation 43 51984.13 8290.62
Hydro Generation 10 5659.38 1830.30
Wind & Solar Power 3 644.14 0.00
Renovation and Modernisation
of Thermal Power Stations 9 190.22 380.27
Renovation & Up rating of
Hydro Power Projects 3 222.31 89.89
Transmission 66 3045.19 1976.35
Distribution 69 4699.16 1110.83
Short Term & Working
Capital Loans 67 2506.00 2316.00
Others 6 542.24 212.98
Total 276 69492.77 16207.24
Cumulative upto March, 2008
No. of Loans Sanction Disbursement
(Rs. crore) (Rs. crore)
262 103286.00 35434.16
140 23306.85 14237.71
7 944.99 280.66
263 6683.75 4058.44
112 1415.25 832.62
791 16903.08 10867.53
626 10356.00 4192.51
370 17296.24 16871.24
305 6154.77 5246.17
2876 186346.93 92021.04
4.3 Grants:
2007-08
Category No. Sanction Disbursement
(Rs. crore) (Rs. crore)
Grant for Studies 5 1.26 3.44
DDM (MoP) 1 0.07 0.45
DRUM 3 4.09 0.00
Total 9 5.42 3.89
Cumulative upto March, 2008
No. Sanction Disbursement
(Rs. crore) (Rs. crore)
113 51.96 43.50
11 4.75 0.59
3 15.02 0.00
127 71.73 44.09
4.4. Total Assistance (Product-wise)
2007-08
Category Sanction Disbursement
(Rs. crore) (Rs. crore)
Term Loans 66073.53 13765.44
Short Term & Working
Capital Loans 2506.00 2316.00
Leasing 613.24 0.00
Others (including grant) 305.42 129.69
Total 69498.19 16211.13
Cumulative upto March, 2008
Sanction Disbursement
(Rs. crore) (Rs. crore)
164828.58 71918.16
17296.24 16871.24
1179.56 565.67
3114.28 2710.06
186418.66 92065.13
5.0 REALISATION
Your Company gives highest priority to the realisation of its dues
towards principal Interest, etc. Out of Rs.13,682.63 crore to be
recovered during the year towards principal Interest etc. under term
loans, bill discounting, working capital, lease financing, foreign
currency loans, equipment financing and guarantee fees, an amount of
Rs.13,292.21 crore was actually realised.
This works out to an overall recovery rate of 97.15% (previous year
97.27%). The recovery rate has been consistently maintained at 96-98%
for last ten years. The company has achieved a recovery rate of 99.11%
in respect of principal amount due during the year.
In terms of Prudential Norms applicable, the Company has made provision
for Non-Performing Assets (NPA) in its Annual Accounts for the year
2007-08 amounting to Rs.6.02 crore as against the provision for
Rs.16.40 crore in the year 2006-07. After making the provision on NPA,
the level of net Non-Performing Assets (NPA) has been recorded at
Rs.7.14 crore forming 0.01% to the Net Loan Assets as on 31st March,
2008 in comparison to 0.06% in the previous year.
6.0 BORROWINGS
6.1 BORROWINGS FROM DOMESTIC MARKET
Your Company mobilized funds amounting to Rs.15,972.34 crore from the
domestic market during 2007-08 as against Rs.13,525.70 crore (including
roll over of Rs.1,803.00 crore) during 2006-07. Out of the above,
Rs.7,258.30 crore was raised by issue of unsecured taxable bonds in the
nature of debentures, Rs.5,100.40 crore by way of long / medium term
loans from banks/FIs, Rs.3,230.00 crore by way of short term loans from
Banks/FIs and Rs.383.64 crore by way of issue of Commercial Paper.
6.2 EXTERNAL BORROWINGS
During the financial year 2007-08, your Company raised External
Commercial Borrowing (ECB) of US0 million through private placement
in US markets (USPP). This loan facility carries a fixed interest rate
of 6.61% p.a., payable semi-annually with 10 years bullet maturity.
Further, US.09 million were drawn by the Company from ADB, Manila by
way of line of credit sanctioned to PFC.
Your Company has also signed a Memorandum of Understanding (MoU) with
Export-Import Bank of United States on 14th May, 2008. EX-IM Bank will
make available a special delegated line of credit of up to USD 800
million to PFC to be used to purchase goods and services from US for
power projects in India. The line of credit is available for 2 years
w.e.f. 16th April, 2008.
6.3 REDEMPTION AND STATUS OF UNCLAIMED AMOUNTS
BONDS
The unclaimed balance amount of bonds in respect of redemption as on
31st March, 2008 was Rs.1.00 crore (previous year – Rs.1.08 crore).
This represents the amount remaining unclaimed by the bondholders, as
the bondholders had not surrendered their bond certificates. The
bondholders have been individually advised to surrender bond
certificates.
7.0 CREDIT RATINGS
Domestic:
During the financial year 2007-08, 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. PFC’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 2007-08, 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.
8.0 POWER LENDERS’ CLUB
The Company had established Power Lenders’ Club (PLC) with Life
Insurance Corporation of India and ten Indian banks to provide ‘single
window’ financing solutions for clients in the power sector and enable
projects to achieve faster financial closure which will further
facilitate the process. The Power Lenders Club has already been
operationalised with its first syndication assignment for IFFCO,
Chhattisgarh project. Subsequently, HUDCO and eight other banks have
also joined the consortium which will further facilitate the process.
9.0 RISK MANAGEMENT
9.1 ASSET LIABILITY MANAGEMENT
Asset Liability Management Committee (ALCO) monitors risks related to
liquidity and interest rate and also monitors implementation of
decision taken. 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 assets,
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).
Considering the cash liquidity gap analysis, the committee managed the
liquidity risk through a mix of strategies, including by following a
forward-looking resource raising program based on projected
disbursement and maturity obligations. The interest rate risk is also
managed through a mix of strategies including the process of liability
management that involves matching the weighted average maturity of
assets and liabilities and reduction in gap of rate sensitive assets
and liabilities.
9.2 FOREIGN CURRENCY RISK MANAGEMENT
Your Company has put in place Currency Risk Management (CRM) policy to
manage risks associated with the 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 31st March,
2008, the total foreign currency liabilities are USD 441.82 million,
JPY 4.62 billion and Euro 32.49 million. On an overall basis, the
currency exchange rate risk and interest rate risk is covered to the
extent of 54% and 85% respectively through hedging instruments and
lending in foreign currency.
9.3 ENTERPRISE-WIDE INTEGRATED RISK MANAGEMENT
Your Company has 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 has decided to put in place an
Integrated Enterprise – Wide Risk Management Policy (IRM Policy). The
objective of IRM policy is to establish and implement effective risk
management by identifying, assessing, prioritizing, monitoring and
managing risks in a planned and coordinated manner. The Company has
already prepared IRM Policy Guidelines and Procedures.
The Risk Management Framework under the IRM Policy includes risk
management structure, risk portfolio management, measuring and
monitoring of risks, risk optimization and risk management strategy.
For monitoring and controlling the risks, the company has already
identified the risks, the root causes, mitigating factors, key
performance indicators and prioritization of risks.
For implementation of Integrated Wide Risk Management framework, Risk
Management Committee of Board constituted Risk Management Compliance
Committee and a separate unit namely Corporate Risk Assurance unit
(CRA) has also been set up for implementation and monitoring of
identified risks.
10.0 STATE AND CENTRAL SECTOR GENERATION PROJECTS
10.1 Thermal Projects
Your Company is providing financial support to the Thermal Generation
Projects for their timely completion. During the year 2007-08, the
Company has sanctioned loans amounting to Rs.51,984 crore and disbursed
an amount of Rs.8,291 crore. The cumulative financial support provided
by the Company for Thermal Generation Scheme is Rs.1,03,286 crore out
of which Rs.35,434 crore has been disbursed till 31st March, 2008.
The major Thermal Generation projects sanctioned to State & Central
sector are Katwa TPS (2x500 MW) of WBPDCL, Raghunathpur TPS U-1&2
(2x500 MW) of DVC and Durgapur PPS Extn U-7 (1x300 MW) of DPL in West
Bengal, Mettur TPS Stg-III (1x 500 MW) and Valathur Gas Turbine Ph-II
(92.2 MW) of TNEB in Tamil Nadu, Kalisindh TPS U-1&2 (2x500 MW+20%) of
RRVUNL in Rajasthan, Koradi Expansion TPS (1x800 MW) of MSPGCL in
Maharashtra and Satpura TPS U-10&11 (2x250 MW) of MPPGCL in Madhya
Pradesh, Raichur TPS U-8 (1x250 MW) of KPCL in Karnataka, Hissar TPP
(2x600 MW) of HPGCL in Haryana, Sikka TPS U-3&4 (2x250 MW), Ukai TPS
Extn.
U-6 (1x490 MW), Utran CCPP Expansion unit (370 MW) of GSECL and 700 MW
Gas based CCPP of GSPC Pipavav in Gujarat, Marwa TPS U-I&II (2x500 MW)
and Korba(west) TPS Extn. Stg- III (1x500 MW) of CSEB in Chhattisgarh,
Krishnapatnam TPS (2x800 MW) of APPDCL, Kothagudam TPS Stg-VI (1x500
MW) and Rayalseema TPP Stg-III U-5 (1x210 MW) of APGENCO in Andhra
Pradesh, Namrup Gas based CCPP Ph-I (100 MW) of APGCL in Assam, Jhajjar
TPP (3x500 MW) of Aravali Power Co. Ltd. in Haryana.
Thermal Projects Commissioned
The important projects of State & Central sector which were supported
by PFC and commissioned during the current financial year are
Yamunanagar TPS Unit-I (300 MW) of HPGCL, Dholpur CCGT (220 MW) of
RRVUNL, Birsighpur Extn. U-5 (500 MW) of MPPGCL, Paras Extn. (250 MW)
of MSPGCL, Rayalseema TPS U-4 (210 MW) of APGENCO, DPL (300 MW),
Dhuvran CCPP (40 MW) of GSECL, Sagardighi TPS (300 MW) of WBPDCL.
10.2 Hydro Generation Projects
During the year 2007-08 loans amounting to Rs.5,659 crore were
sanctioned and an amount of Rs.1,830 crore were disbursed. The
cumulative amount sanctioned for Hydro Generation Projects is Rs.23,307
crore out of which Rs.14,238 crore has been disbursed till 31st March,
2008.
The major projects supported during the current financial year are
Parabati HEP (800 MW) in Himachal Pradesh, Teesta Low Dam-III HEP (132
MW) & Teesta Low Dam-IV HEP (4x40 MW) in West Bengal, Teesta-V HEP
(3x170 MW) in Sikkim, SEWA-II HEP (120 MW) & Chutak HEP (4x11 MW) in
J&K of NHPC. In addition to this other projects supported are Havana
Kattalai Barrage-2(2x15 MW) & 3(2x15 MW) HEP of TNEB in Tamil Nadu,
Lower Jurala HEP (6x40 MW) of APGENCO in Andhra Pradesh.
Hydro Projects Commissioned
The important projects which were supported by PFC and commissioned
during the current financial year are Maneri Bhali U-1,3&4 (228 MW) of
UTJVNL in Uttaranchal, Balimela U-7 of OHPC in Orissa and Teesta V HEP
U-2 (170 MW) of NHPC in Sikkim.
10.3 Wind & Solar Power Projects
Your company is also providing financial support to wind as well as
solar power projects. During the year 2007-08, loans amounting to
Rs.644 crore were sanctioned for wind and solar power projects. The
cumulative amount sanctioned for wind & solar power project is Rs.945
crore out of which Rs.281 crore has been disbursed till 31st March,
2008.
The major projects supported during the current financial year are 24.7
MW wind power project of M/s Ushdev Intl. Ltd. & 99.45 MW wind power
project of R.S.India Wind Energy Private Limited in Maharashtra and 2
MW solar PV power plant of West Bengal Green Energy Dev. Corn. Ltd. at
Asansol in West Bengal.
11.0 RENOVATION, MODERNISATION AND LIFE EXTENSION
11.1 Thermal Projects
During the year 2007-08, loans worth Rs.190 crore were sanctioned for R
& M and Life Extension of thermal power plants and an amount of Rs.380
crore has been disbursed. Cumulatively, an amount of Rs.6,684 crore has
been sanctioned and Rs.4,058 crore stands disbursed, till 31st March,
2008.
11.2 Hydro Projects
During the year 2007-08, the Company sanctioned Rs.222 crore for R&U of
Hydro Power Projects and Rs.90 crore were disbursed. Cumulatively, an
amount of Rs.1,415 crore has been sanctioned and Rs.833 crore stands
disbursed, till 31st March, 2008.
12.0 ULTRA MEGA POWER PROJECTS
12.1 GENERATION PROJECTS
Your Company has been designated as the Nodal Agency by the Ministry of
Power, Government of India for the development of Ultra Mega Power
Projects (UMPPs), each with a capacity of about 4000 MW. So far, nine
such projects have been identified. These are located in Madhya Pradesh
(Sasan), Gujarat (Mundra), Andhra Pradesh (Krishnapatnam), Jharkhand
(Tilaiya), Chhattisgarh, Karnataka, Maharashtra, Orissa and Tamil Nadu.
The projects in Madhya Pradesh, Chhattisgarh, Orissa and Jharkhand are
indigenous coal based projects located at coal pit heads with captive
coalmines.
The other five are imported coal based projects located at coastal
areas. PFC had incorporated nine wholly owned subsidiary companies
Special Purpose Vehicles (SPVs) for these nine UMPPs. These SPVs in
coordination with Central Electricity Authority (CEA) undertake all
activities necessary to obtain the appropriate clearances required to
establish these projects. Ministry of Power is acting as the
facilitator for development of UMPPs. These SPVs are transferred to
successful bidder selected through tariff based international
competitive bidding process as per the Guidelines issued by GoI for
procurement of power by Distribution Licencees.
Three of the SPVs namely Coastal Gujarat Power Limited (CGPL) for
Mundra UMPP in Gujarat, Sasan Power Limited (SPL) for Sasan UMPP in
Madhya Pradesh and Coastal Andhra Power Limited (CAPL) for
Krishnapatnam UMPP in Andhra Pradesh have been transferred to the
successful bidders. CGPL was transferred to the Tata Power Company
Limited on 22nd April, 2007 while SPL and CAPL were transferred to
Reliance Power Limited on 7th August, 2007 and 29th January, 2008
respectively. The bid process for Tilaiya UMPP in Jharkhand is in
progress.
12.2. INDEPENDENT TRANSMISSION PROJECTS
Ministry of Power has initiated a scheme for development of
transmission system through private sector participation for evacuation
of power from the Generating Stations, Transmission of power from
pooling stations to other grid stations up to load centers and System
strengthening in India with PFC playing the lead role in formation of
SPVs and carrying out the coordination for the selection of a developer
for these transmission systems under tariff based competitive bidding
route under Section 63 of the Electricity Act, 2003.
Towards this end, two Shell Companies namely East- North
Interconnection Company Limited and Bokaro- Kodarma-Maithon
Transmission Company Limited have been set up as wholly owned
subsidiaries of Power Finance Corporation Limited. Shell companies
shall undertake preliminary survey work, identification of route,
preparation of Survey Report, initiation of the process of land
acquisition, initiation of process of seeking forest clearance, if
required and to conduct bidding process, etc.
13.0 NON-CONVENTIONAL ENERGY SOURCES
Recognising the importance of the renewable sources of energy and the
challenge of supplying energy to the vast population of India in a
sustainable manner, PFC is giving priority in financing of new and
renewable energy generation projects viz solar, wind farms, small hydro
projects, bio-mass projects etc. PFC has framed various policies for
providing assistance to renewable energy projects. To promote such
projects, PFC offers higher exposure and special interest rates.
Your Company has entered into MoU with Indian Renewable Energy
Development Agency Limited (IREDA) and Karnataka Renewable Energy
Development Limited (KREDL) for facilitating financing of renewable
energy projects and also to provide single window approach to the
promoters / entities approaching for consortium financing for renewable
energy projects. Further, to increase the business in renewable,
co-generation, energy saving projects and captive power plants, the
Company evolved a strategy of soliciting business through empanelling
Business Development Associates (BDA).
During 2007-08, PFC has sanctioned financial assistance for a 20 MW
bagasse based co-generation Project of Vishwanath Sugar in Karnataka
and another 20 MW of cogeneration project of EMPEE Power Co Ltd in
Andhra Pradesh. In addition to this, financial assistance has also been
extended to 24.7 MW wind farm project of M/s Ushdev Intl. Ltd., another
99.45 MW wind farm project of M/s RS India Wind Energy Private Limited
in Maharashtra and 2 MW Solar PV power plant of West Bengal Green
Energy Dev. Corp Ltd. to be located Asansol in the state of West
Bengal.
14.0 FINANCIAL ASSISTANCE FOR POWER SECTOR STUDIES
Your Company has been extending financial assistance in the form of
grants, interest free and/or concessional loans to its utilities to
take up important power sector studies in priority areas of R&M of
Hydro & Thermal Power Projects, Distribution Management, Reform &
Restructuring, Institutional Development, etc. The major studies
sanctioned during the year include RLA Study of Boilers of Sanjay
Gandhi TPS U-1&2 (Birsingpur) of MPPGCL, RLA CA & PET of Hasdeo TPS –
Korba(W) Unit 1 to 4 (4x210 MW) of CSEB , Consultancy for Institutional
Development of Discoms – Jaipur VVNL, Consultancy services for Reforms
Implementation – MeSEB.
Grants amounting to Rs.0.99 crore and term loan amounting to Rs.4.14
crore were sanctioned during the financial year 2007-08 towards studies
in the areas of RLA Study, Reform & Restructuring and Institutional
Development, etc. and an amount of Rs.2.39 crore as grant and Rs.37.06
crore as term loan were disbursed. Cumulatively, grant for studies
amounting to Rs.50.76 crore and term loan amounting to Rs.320 crore has
been sanctioned and Rs.42.31 crore as grant and Rs.270 crore as term
loan has been disbursed, till 31st March, 2008.
15.0 ENVIRONMENT UPGRADATION
PFC has established a Clean Development Mechanism (CDM) cell to help
state sector power utilities. A grant under Technical Assistance (TA
4992-IND: Energy efficiency Enhancement in the Power Generation Sector)
of US$ 1 million has been arranged from ADB to assist state power
utilities to exploit carbon finance opportunities under the Clean
Development Mechanism (CDM) of United Nations Framework Convention on
Climate Change for R&M and RM&U projects.
PFC as the Nodal Agency for Ultra Mega Power Projects (UMPP) initiative
of Ministry of Power, Government of India, is promoting the adoption of
super critical technology to facilitate reduction in emissions from new
power stations.
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) that
complements the MoP’s 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, PFC has sanctioned loans worth Rs.165.33 crore to Maharashtra
State Electricity Distribution Co. Ltd. (MSEDCL), Madhya Gujarat Vij
Co. Ltd. (MGVCL) and Bangalore Electricity Supply Co. Ltd. (BESCOM),
while Rs.52.625 crore is disbursed to MSEDCL. 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 to
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, PFC has sanctioned grants of Rs.5.03 crore 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.1.66 crore is disbursed to NTPC Ltd. towards their five
completed schemes. NTPC Ltd. has already commissioned 8 schemes and
other schemes are under implementation.
17.0 PRIVATE SECTOR FINANCING
Your Company has so far supported 15,214 MW of generation capacity
through various types of thermal plants including coal, gas/naphtha,
furnace oil or DG set based; hydro plants, wind power plants, T&D
network, etc in the private sector.
During the year 2007-08, loans amounting to Rs.5,231 crore have been
sanctioned and Rs.862 crore has been disbursed to private sector
entities. Major projects sanctioned are 350 MW TPP U-1 of RKM Powergen
at Chhattisgarh, 20 MW Bagsbased Co-Gen of Vishwanath Sugar in
Karnataka, 600 MW TPS of Lanko Amarkantak Pvt. Ltd. in Chhattisgarh,
300 MW TPP of KVK Nilanchal in Orissa, 820 MW Ph-II Natural Gas based
CCPP at Devarapalli and 445 MW Gas based PP at Godavari of Konaseema
Gas Power Ltd. in Andhra Pardesh, 1200 MW Mahan TPS of Empee Power Co.
Ltd in Madhya Pradesh, 1320 MW Mundra TPP of Adani Power Ltd. in
Gujarat.
The Company has so far cumulatively sanctioned loans worth Rs.14,104
crore and guarantees worth Rs.1,096 crore out of which an amount of
Rs.5,538 crore has been disbursed till 31st March, 2008.
The important project of private sector which was supported by PFC and
commissioned during the current financial year is Raigarh Ph-I Unit 1
(250 MW) of Jindal Power Ltd. in Chhattisgarh.
18.0 EXTERNALLY AIDED PROJECTS
Your Company had USD 50 million Line of Credit (LoC) facility with ADB
for utilization for R&M of thermal power plants and for Transmission
and Distribution schemes. For the utilization of loan, ADB has so far
approved schemes with ADB reimbursement component of about USD 25
million. Utilities were finding it difficult to comply with some of the
social, environmental and procurement related covenants of the loan,
therefore there were not many eligible projects for utilization of the
loan. Due to this, the loan amount has been reduced to USD 25 million
out of which, PFC has utilized USD 20.26 million till March 2008.
The Company has a Line of Credit of Euro 100.56 million line of credit
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.
The Company is negotiating with EDC, Canada for another Line of Credit
facility which would be utilized for procuring good and services from
Canada. Funds from the facility would be used for hydro electric
projects of UJVNL.
19.0 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.
During the year, PFC has sanctioned grant of Rs.0.96 crore to Meghalaya
State Electricity Board for operationalisation of Corporatization of
Power Sector in the State of Meghalaya.
During the year FY 2007-08, West Bengal State Electricity Board was
reorganized / unbundled into West Bengal State Electricity Transmission
Company Limited and West Bengal State Electricity Distribution Company
Limited w.e.f. 1.4.2007. Steps have been initiated for reorganization
of Bihar State Electricity Board into Generation, Transmission and
Distribution Companies as part of the implementation of Electricity Act
2003 for improving performance of the state power sector.
Meghalaya SERC issued its first tariff order for Meghalaya State
Electricity Board (MeSEB) in December 2007. The status of reform and
restructuring as on 31st March, 2008 is as under:-
SERC’s No. of States
Constituted 28
Operationalised 23
Tariff Orders Issued 23
Unbundling/Corporatisation Implemented 16
Privatisation of Distribution 2
Distribution Reform – 100% Metering
11 kV feeder Metering 23
Consumer Metering
(excluding metering for agriculture) 9
Categorization of Utilities
PFC classifies State Power Utilities, its principal borrowers, into
categories as A+, A, B and C. The categorization is based on the reform
status and operational & financial performance parameters of the
utilities and is carried out biannually.
The categorization enables PFC to determine credit exposure and
differential loan pricing mechanism. As on 31st March 2008, 58 nos.
utilities were categorized, 6 as A+, 30 as A, 18 as B and 4 as C. PFC
is also stipulating appropriate conditions relating to implementation
of reforms and improvement of performance while sanctioning financial
assistance to its borrowers based on entity appraisal.
Quarterly Performance Research Report of State Power Utilities
PFC 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, reform
status, 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. The report
is acknowledged as useful effort in flagging the key issues/areas of
concern to be reviewed by the stakeholders and State Power Utilities
for taking mid-term corrective measures. PFC’s endeavor is to
progressively cover more utilities in the report, continue flagging the
key performance highlights and areas of concern to meet the
expectations of the stakeholders in the sector for overall improvement
of performance of State Power Utilities.
Annual Performance Report of State Power Utilities
PFC brings out a Report on the “Performance of State Power Utilities”.
The 4th Report covering performance of State power utilities for the
years 2003-04 to 2005- 06 has already been published. The Preliminary
Report covering performance of 75 utilities out of total 90 utilities
accounting for 99% of the total power generation in State power sector
for the year 2006-07 has been prepared and submitted to Ministry of
Power as per the targets set in MoU.
The report analyses 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 5th edition of the Report on the performance of
State power utilities for the years 2004-05 to 2006-07 is being
finalized for issuance.
20.0 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. Some of the key policies/
guidelines introduced during the year related to financing for initial
project development expenditure including land acquisition, financing
of grid connected solar PV power generation projects, funding of energy
saving projects. Further, some policies/guidelines such as lease
finance scheme for wind power projects, extent of funding for
transmission & distribution projects, short-term loan etc. were revised
during the year.
In spite of growing competition in the market, PFC maintained its
spreads well and could balance its objectives of business growth &
profitability. Further, the policies of extending special interest
rates for large generation loans, volume discount in case of loans for
transmission & distribution schemes and rebate in interest rates after
commissioning in case of generation projects were continued during the
current financial year.
21.0 ADDITIONAL INITIATIVES
Your Company has signed a MoU with RITES Limited (A Govt. of India
Enterprise) on 27th March, 2008 to facilitate import of coal from
African countries and elsewhere, to fill the demand and supply gap in
availability of coal for the thermal generation plants in India. RITES,
besides being a technical partner will identify the countries from
where possibility of owning coal mining exists, excavation and
transportation of coal is feasible for export of coal to India and will
also liaison with Railway authorities for adequate rail network for
coal movement and development of new rail links with Ports
connectivity.
The Company has also signed an MoU with TNEB on 31st March, 2008
whereby PFC would finance co- generation projects of around 250 MW
planned to be set up at a cost of Rs.1200 crore in various co-
operative and public sector sugar mills in the state of Tamil Nadu. The
amount is likely to be drawn during the eleventh plan. Presently TNEB
is in the process of preparing DPRs for these projects and would
approach PFC once the same are ready.
Your company is taking additional initiative for North- Eastern states
including Sikkim by conducting programmes in this region with active
participation of Top level executives from states for accelerated
development of power sector in North-Eastern region and Sikkim.
22.0 CONSULTANCY SERVICES
PFC’s Consultancy Services have grown in operations manifold and has
generated an atmosphere of competitive pricing and confidence in its
clients in the areas where PFC has been providing such services.
During the year 2007-08, PFC has further enhanced its reputation as a
premier consultancy organization. PFC’s Consultancy Services received 9
assignments worth Rs.37.56 crore. The pioneering assignments awarded to
PFC show the high degree of trust and confidence manifested by the
clients in the services provided by PFC.
PFC have been appointed as advisors for assisting in the selection of
developers under ‘Case 2’ in line with the Tariff Based Competitive
Bidding Guidelines issued by Ministry of Power, by Jharkhand State
Electricity Board (JSEB) for a multi-state pithead based thermal power
project of 1320 MW capacity and by Rajasthan Rajya Vidyut Prasaran
Nigam for the Chhabra Stage II, Phase III.
PFC, as part of its Consultancy Services has worked with ‘35’ Clients
across ‘20’ States and Union territories. The Clients include ‘14’
State Power Utilities, ‘8’ Licensees/ IPPs, ‘4’ PSUs, ‘3’ SERCs and ‘6’
State Governments. Some of the assignments are repeat orders which
exhibit the Client’s satisfaction with the services provided in the
past.
Subsidiary Company for Consulting Incorporated
With the surging activity level and business in the consulting field,
PFC has launched a 100% owned subsidiary company for providing these
services. The “PFC Consulting Limited” company was incorporated on 25th
March, 2008 and was formally launched on 31st March, 2008. The
subsidiary would provide focused attention to consultancy services and
address the client needs more effectively.
Joint Venture for Advisory Company
An advisory company namely Power Equity Capital Advisors Private
Limited (PECAP) has been incorporated on 25th March, 2008 to provide
advisory services related to equity investments in Indian power sector,
where our Company is the largest shareholder with 30% shareholding and
the balance equity is held by industry veterans.
23.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA
Your Company has signed a MoU with the Govt. of India for the financial
year 2008-09 on 28th March, 2008. The MoU sets an ‘Excellent’ level of
target of Rs.50,600 crore against Sanctions, Rs.19,300 crore against
disbursement and 13% against Net profit to Networth ratio. Some new
dynamic parameters have also been introduced viz. ISO certification for
“Entity Appraisal” and Employee Training.
For the financial year 2007-08, PFC had surpassed all the ‘Excellent’
MoU targets for various performance parameters and likely to be
accorded ‘Excellent’ rating.
24.0 NAVARATNA STATUS AND GOLDEN PEACOCK AWARD
Your Company was conferred with Navratna status in June 2007 based on
its impeccable performance and contribution to Indian power sector. PFC
was also conferred with Golden Peacock Award for Excellence in
‘Corporate Governance’ (National Award category) in September 2007 in
UK for adopting best practices and contribution in Corporate
Governance.
25.0 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 enhancing 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 2007-08, PFC organized nine in-house training
programmes including four Rajbhasha training programmes. A total of 126
employees were trained through in-house programmes. In addition, 155
employees were sponsored for training programmes organized by other
training institutes.
Utility Training
During the year 2007-08, PFC had organized four programmes across the
country for personnel of various power utilities on subjects such as
Emerging regulatory regime: Changing Role of Utilities, Towards Faster
Project Delivery: Issue and Concern for Northern State Power Utilities,
Effective Project Management System: Issue, Strategies & PFC
Initiatives, Program on Corporate Governance in the Power Sector.
DRUM Training
Apart from the above, PFC is also functioning as the focal point as
well as the Principal Implementation Partner under the Distribution
Reforms, Upgrades & Management (DRUM) initiative of Ministry of Power
and Govt. of United States (USAID), which focuses on development of the
critical Distribution Sector. The major objectives of the DRUM Training
Programme are to (i) enhance the knowledge and experience of a
significant number of distribution engineers, managers and technicians
through the facilitation of technical and managerial training delivered
by professional Indian training institutions; and (ii) support the
development and institutional capacity enhancement of selected Indian
institutions for sustainable delivery of distribution business
management, reform and regulation training.
Under this initiative, 315 training programmes were organized during
the financial year through which 7818 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, and The Energy Research Institute, New Delhi, for an MBA in
Infrastructure.
To further enhance the reach of its training activities the DRUM
program had initiated the distance learning mode. In a collaboration
agreement with the Indira Gandhi National Open University, in which PFC
is the partner and major sponsor, an Advanced Certificate in Power
Distribution Management of six months duration has been initiated for
utility engineers located at remote centers who would otherwise not
have access to training for upgradation of their skills.
26.0 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 Govt. for the reservation to be allowed for SC/ST/OBC/Physically
handicapped. The steps taken include due reservations and relaxation as
applicable under the various directives.
27.0 CORPORATE SOCIAL RESPONSIBILITY
One of the important steps towards Government of India directive to all
Public Sector Organizations is to fulfill corporate social
responsibility to help NGOs/ charitable organizations in the wake of
upliftment of the downtrodden communities who are physically and
economically handicapped.
Power Finance Corporation has played an important role in this
direction by giving a helping hand to the NGOs to help physically
disabled, especially the visually challenged to realize their
potentials and play their role as equal members of the society.
As a measure of good and corporate social responsibility, all the
available surplus office furniture/ materials which became available
after shifting of PFC’s office from its old rented accommodation at
Chanderlok building to its newly owned constructed building at
Barakhamba road, were donated to NGO’s (total value around Rs.20
lakhs). The donation was made to 26 NGOs through its centralized
controlled office called CAF ( Charities Aid Foundation – who are
responsible for looking after the activities of these NGOs ). All these
NGOs have applauded this act of social responsibility by PFC Management
and have commended PFC’s efforts in this direction.
28.0 VIGILANCE
Vigilance is not an isolated activity. It is a part of the overall
management strategy of an organisation where the systems, policies and
procedures are built in a manner to prevent leakages which adversely
affect its efficiency, productivity and profitability. With this end in
view, Vigilance performed a pivotal role in suggesting corrective
measures for improving the control systems, setting up of adequate
checks and balances, enforcing compliance of laid down procedures,
carrying out investigation into complaints and also taking other
preventive vigilance initiatives.
During the financial year 2007-08, Vigilance functioned as an effective
management tool with the thrust being on improving systems and
increasing transparency with a view to incorporating best practices and
promoting growth of the Company. Towards achieving these objectives,
Preventive Vigilance was accorded a high priority.
This aspect was focused upon by conducting periodic & surprise
inspections of files and by issuing effective guidelines to enforce
adherence to systems and procedures that were framed to ensure
transparency, objectivity and accountability in operations so as to
minimize the scope for fraud, corruption and misuse. Vigilance Wing was
the prime mover in formulation of manuals for Procurement, Policy
relating to Appointment of Consultants and Policy for hiring PR Firms.
An Integrity Pact have been finalised and notified during the year. To
further reinforce preventive vigilance, an Invoice Tracking System was
got installed for monitoring all type of bills/invoices, processing and
payments pertaining to supplier(s)/contractor(s), other parties etc.
and a computerized File Tracking System was introduced which is being
effectively used in all units of the Company.
As part of other preventive vigilance initiatives, Vigilance Unit
reviewed the property returns of the employees on a continuous basis
and monitored job rotation in the sensitive posts. It also ensured that
the circulars issued by CVC for strengthening preventive vigilance like
the requirement for all types of tenders to be put on the website of
the Company, transparency in the tendering system, payments and
receipts to be transacted through electronic mode, leveraging
technology as an effective tool in vigilance administration by
uploading information with regard to PFC’s operations ( including
rules, procedures etc.) on corporate websites etc., are complied with
in the Company.
Vigilance clearance cases of the employees were processed on a
continuous basis in respect of resignations, promotions, going abroad
for personal visits and training etc.
In accordance with the directives of CVC, Vigilance Awareness Week was
observed from 12th November to 16th November 2007 in the head office
and regional offices of the Company in order to disseminate a strong
message of integrity and transparency in public service. Interactive
two days programme on ‘Corporate Governance in Power Sector’ was held
for the benefit of the executives and customers/clients of the Company
so as to sensitize them about the evil effects of corruption and also
to educate them on the initiatives taken for improvement in systems,
procedures and the complaint handling policy of the Company.
Further, Slogan, Essay and Pictorial Theme Representation Competitions
were organized on themes relating to vigilance/corruption with the aim
of involving employees and encouraging them to come forward with
innovative ideas in spreading awareness about the harmful effects of
corruption. A booklet containing the detailed activities, articles and
proceedings of the Vigilance week has been published and circulated.
The Vigilance Unit is making sincere efforts towards continuous
improvement of the systems/procedures to bring about transparency,
objectivity and accountability in various areas for the benefit &
further development of the organisation.
29.0 OFFICE AUTOMATION
Office automation in its real sense refers to the varied computer
machinery and software used to digitally create, collect, store,
manipulate and relay office information needed for accomplishing the
basic tasks and goals in an organization. In fact, with the
operationalization of its official activities from its own building and
by well equipping itself with the latest office automation accessories,
PFC could be considered to be one of the fully automated offices. Just
to mention a few, the provision of video conference facility to board
level officials/ PA System/ Voice Recording System including separate
FOREX dealing room/ CCTV plus more importantly the installation of
latest audio visual system with one touch control operation makes
conference/meeting proceedings more practical and all these measures
enhance its march towards business oriented activities.
Further, another milestone with PFC marching ahead in this direction is
the online data availability on its LAN about PFC’s policies and
procedures and online availability of its Loan Documentation formats to
its perspective domestic/foreign clientele, enables PFC to maintain
high level of its increased operational performance year by year.
In addition, steps initiated on the introduction of staff/ visitors
entry/exit through Access Control System, accompanied with its 24x7
CCTV operation to keep a watch on the movement of unknown intruders in
the office vicinity are well acknowledged and appreciated by one and
all, especially on account of terrorist threat menace.
A step further in this direction is the digitization and scanning of
PFC’s classified documents in order to safeguard its important
documents stored in PFC’s server. Quick response to the queries of
investors of PFC’s Public Issue through the Voice Logger System has
been well appreciated by its shareholders. In fact, the above
advancements go hand in hand with the Management’s Business ethics in
enhancing PFC’s credibility and confidence amongst business clientele
and the common people at large.
30.0 OFFICIAL LANGUAGE
It was yet another year of achievements in the area of Rajbhasha Hindi
Implementation. During the year, the Company made concerted efforts for
implementation of Hindi and to achieve the targets fixed by Rajbhasha
Vibhag in its Annual Programme.
During the year, quarterly meetings of Official Language Implementation
Committee of the Company were organized regularly where detailed
discussions were held about the progress made in implementation of
Official Language Policy and its effective implementation.
Rajbhasha Month’ was organized in the Company from 14th September to
12th October, 2007.
Messages from Hon’ble Minister of Home Affairs, Hon’ble Minister of
Power and the Chairman and Managing Director of the Company
respectively were also distributed amongst the employees. Several
competitions in Hindi, like ‘National Anthem’ and ‘National Song’
writing, Vartanee shodhan, Nibandh Lekahn, Sansmaran and Khanai Lekhan
competitions were held. First Monday of every month was celebrated as
Hindi Day in the Company. The problems faced by the officials while
doing their work in Hindi were resolved by way of holding internal
Rajbhasha inspections. 75% amount of total budget amount for library
was spent on purchase of Hindi books during the year.
Four workshops were organized during the year with a view to make the
employees more conversant with doing their official work in Hindi. A
two day workshop was organized in Mussoorie for Senior Officials. A
five day refresher course was also organized for all the stenographers
during June-October 2007. The employees were nominated and trained in
Hindi workshops and seminars organized by other voluntary
organizations.
As per the decision taken by the Ministry of Power, ‘Saransh’ bilingual
package was installed on computers of the employees and training
programmes for its usage were also organized.
The Company was bestowed with ‘Rajbhasha Shree Samman’ by Bharatiya
Rajbhasha Vikas Sansthan during its All India Rajbhasha Sammelan held
at Khajuraho from 11-13th December, 2007.
In the Inter PSU house magazine competition held by Town Official
Language Implementation Committee, Undertakings (Delhi), the House
Magazine ‘Urja Deepti’ being published by the Corporation received
third prize for 2007-08.
An employee of the Corporation Smt. Shashi Bala Banduni, Supervisor
(Rajbhasha) received second prize from Hon’ble Union Minister of Power
Shri Sushilkumar Shinde in the Hindi Advisory Committee Meeting held on
29th March, 2008 at Kodaikanal for her book ‘Vidyut Pareshan-Vitaran
tatha Grid Prabandhan’ under the ‘Kendriya Vidyut Pustak Lekhan
Puraskar Yojana’ of Central Electricity Authority, Ministry of Power.
She received a cheque of Rs.30,000/- and certificate as prize.
31.0 AUDITORS
M/s. Bansal Sinha & Co., Chartered Accountants were appointed as
Statutory Auditors of the Company for the financial year 2007-2008 by
the Comptroller & Auditor General of India.
32.0 FOREIGN EXCHANGE EARNINGS AND OUTGO
The Foreign exchange outgo aggregating Rs.127.37 crore was made on
account of debt servicing, financial & other charges, travelling and
other miscellaneous expenses. Also, there was foreign exchange earning
of Rs.1.08 crore during the year under consideration.
33.0 PARTICULARS OF EMPLOYEES U/S 217 (2A) OF THE COMPANIES ACT, 1956.
During the year 2007-08, the details of the employees who were in
receipt of gross remuneration in excess of Rs.24 lakh per annum or Rs.2
lakh per month and above, is given in Annexure A.
34.0 HUMAN RESOURCE MANAGEMENT
Your Company places utmost importance on its Human Resources. It
benchmarks its practices with the best practices being followed by
other corporates in the World. This alongwith the other interventions
in the effective management of Human Resources, ensures a high level
productivity in its employees.
It enjoys a very cordial and harmonious relationship with its
employees. The employees, in term have aligned their individual goal
with that of the organization. There were no man-days lost during the
year under review.
35.0 WELFARE MEASURES
Your Company has ensured the welfare of the employees through a process
of inclusive development. The participation of the employees and their
constructive suggestions are encouraged in all major activities
pertaining to the overall improvement in the functioning of the
company. There is a systematic mechanism through which the employees
can air their opinions and suggest to the top management various ideas
regarding the improvement in its function.
The employees are being provided with state of art facilities to ensure
optimum productivity. Employees are encouraged to maintain a healthy
lifestyle by providing them with facilities of regular work-outs in the
office premises. They are also being provided with world class medical
facilities.
36.0 REPRESENTATION OF WOMEN EMPLOYEES
Your Company provides equal growth opportunities for its women
employees and today the Company can boast off having important and
critical functional areas which are manned by women employees. There is
no discrimination of employees on the grounds of gender. The women
employees represent 19 % of the total work force.
37.0 GLOBAL COMPACT
PFC has always been a socially conscious organization and fully
endorses the nine principles of Global Compact enunciated by United
Nations Organisation (UNO) and encompassing areas of human rights,
environmental protection and labour rights. These principles of Global
Compact are embedded in our various organizational policies and thus
facilitate their implementation in a natural way.
PFC has been an active participant in various endeavors of Global
Compact and apart from implementing Global Compact Principles on
organizational level, it also provides sponsorship aid and support to
other endeavors which are in line with the principles of Global
Compact.
PFC 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 PFC 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.
38.0 GRIEVANCE REDRESSAL
Your Company has a Grievance Redressal System for dealing with the
grievances of the employees and the public at large. The systems are
duly notified and the Nodal Officers 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.
39.0 CORPORATE GOVERNANCE
A detailed report on Corporate Governance and Management Discussion and
Analysis report, pursuant to the requirement of Clause 49 of the
Listing Agreement forms part of the Annual Report. A certificate from
the auditors of the Company, M/s Bansal Sinha & Co., Chartered
Accountants, confirming compliance of conditions of Corporate
Governance as stipulated under the aforesaid Clause 49 is annexed to
the Report on Corporate Governance.
40.0 DEBENTURE TRUSTEES:
The Company in line with the requirements of SEBI, appointed following
Debenture Trustees for their different series of Bonds:
Sl. Name & Address of Trustee Bond Series
No.
1. Vijaya Bank, Merchant Banking Division, 10.40% TAXFREE PFC Bonds
(2008)-Ist Series.
Vijaya Building, 3rd Floor,
17, Barakhamba Road,
New Delhi- 110 001
2. United Bank of India 8.70% TAX FREE PFC Bonds
(2009)-II Series
P-90/8, Connaught Circus 8.20% TAX FREE PFC Bonds
(2010)-III Series
New Delhi-110 001 9.30% TAXU PFC Bonds
(2008)-IX Series
9.70% TAXU PFC Bonds
(2011)-X Series
9.25% TAXU PFC Bonds
(2012)-XI Series
8.85% TAXU PFC Bonds
(2009)-XII Series
5.85% TAXU PFC Bonds
(2010)-XX Series
3. IL&FS Trust Company Limited 9.60% TAXU PFC Bonds
(2017)-XIII Series
The IL&FS Financial Centre, 9.10% TAXU PFC Bonds
(2009)-XIV Series
Plot C-22, G-Block, 9.00% TAXU PFC Bonds
(2009)-XV Series
Bandra Kurla Complex, Bandra East, 7.50% TAXU PFC Bonds
(2009)-XVI Series
Mumbai- 400 051 8.21% TAXU PFC Bonds
(2017)-XVII Series
7.87% TAXU- PFC Bonds
(2017)-XVIII Series
Zero Coupon Bonds-(2022)
-XIX Series
4. IDBI Trusteeship Services Ltd,
10th Floor, 6.80% TAXU PFC Bonds
(2011)-XXI-A Series
227, Vinay K. Saha Marg, Nariman Point, 7.00% TAXU PFC Bonds
(2011)-XXI-B Series
Mumbai- 400 021 7.00% TAXU PFC Bonds
(2011)-XXII Series
6.00% PFC Infrastructure
Bonds(u/s 88)-I Series
8.85% TAXU PFC Bonds
(2021)-XXVIII Series
8.80% TAXU PFC Bonds
(2016)-XXIX-A Series
8.55% TAXU PFC Bonds
(2011)-XXIX-B Series
8.49% TAXU PFC Bonds
(2011)-XXX Series
8.78% TAXU PFC Bonds
(2016)-XXXI-A Series
8.38% TAXU PFC Bonds
(2009)-XXXI-B Series
9.25% TAXU PFC Bonds
(2012)-XXXII Series
9.80% TAXU PFC Bonds
(2012)-XXXIII-A Series
9.90% TAXU PFC Bonds
(2017)-XXXIII-B Series
9.90% TAXU PFC Bonds
(2017)-XXXIV Series
5. The Western India Trustee &
Executor Co. Ltd. 7.00% TAXU PFC Bonds
(2012)-XXIII Series
C/o IDBI Trusteeship Services
Limited, Asian TAXU PFC Bonds
(2010)-XXIV Series
Building, Ground Floor, 17 7.60% TAXU PFC Bonds
(2015)-XXV Series
R.Kamai Marg, Ballard Estate,
Mumbai-400 001 7.50% TAXU PFC Bonds
(2009)-XVI Series
TAXU PFC Bonds
(2016)-XXVI Series
8.20% TAXU PFC Bonds
(2016)-XXVII-A Series
8.09% TAXU PFC Bonds
(2013)-XXVII-B Series
9.96% TAXU PFC Bonds
(2017)-XXXV Series
9.90% TAXU PFC Bonds
(2010)-XXXVI-A Series
10.00% TAXU PFC Bonds
(2012)-XXXVI-B Series
9.80% TAXU PFC Bonds
(2012)-XXXVIII Series
9.22% TAXU PFC Bonds
(2012) – XL –B Series
9.28% TAXU PFC Bonds
(2017) – XL –C Series
8.94% TAXU PFC Bonds
(2013) – XLI –B Series
9.01% TAXU PFC Bonds
(2011) - XLII –A Series
9.03% TAXU PFC Bonds
(2013) - XLII –B Series
9.30% TAXU PFC Bonds
(2011) –XLIII-A Series
9.30% TAXU PFC Bonds
(2013) – XLIII-B Series
9.40% TAXU PFC Bonds
(2013) – XXXIV Series
41.0 REPLIES TO THE REPORT/COMMENTS OF AUDITOR
Under Section 217 (3) of the Companies Act, 1956 the information to the
Auditor’s observations are submitted as under:
1(a) On the Report of Statutory Auditors:
Observations Replies
4(i) As regards the liability of
Rs.1,066.75 crore, shown as Note No. 16 of Schedule
No. 18 of Notes on Accounts is
Interest Subsidy Fund from GOI’ in the
Balance Sheet, self explanatory and explains
the method of claiming
received under Accelerated Generation
and Supply Interest Subsidy Fund,
utilization, and excess
worked out
Programme (AG&SP) Scheme from Ministry
of Power, on overall basis based on
projections made for loans
Government of India, the corporation
estimated the sanctioned during IX th & X
thplans, etc. The actual/exact
net excess amount of Rs.253.47 crores
and Rs.52.49 excess due to difference
between the indicative rate,
crore as at 31/03/2008 for IX th & X th
plan respectively. period and assumptions
considered atthe time of drawl
This net excess amount is worked out on
overall basis and at the time actual
disbursement can be ascertained
& not on individual basis & may vary
due to changes only after the end of the
respective schemes.
in assumptions, if any during the
projected period such as changes in
moratorium period, repayment
period, loan restructuring, pre
payment, interest rate reset etc.
Hence the impact of this excess,
if any, could not be ascertained as
such not commented upon.
(Refer Note No. 16 of Schedule 18).
4(ii) Some of the balances shown under
loans, advances The company had received
confirmations from debtors
and other debits / credits in so far as
these have since and creditors in most of
the cases. No material
discrepancy
not been confirmed, realized, discharged
or adjusted has been noticed in the
balances.
are subject to reconciliation
(Refer Note No.28 of Schedule 18).
1(b) On the annexure to Auditors
Report
4 Internal controls with regard to
awarding of PFC consulting Ltd., a
wholly owned subsidiary of the
consultancy assignments by the
corporation were corporation is
incorporated with effect from
25th March,
found to be lacking. 2008 to perform the work of
consultancy and the company
is advised to take care of
the auditors’ observation and
strengthen the internal
control in this regard.
9(b) According to the records of the
company, there are As explained in Note No.1(iv)
of Schedule No.18 of Notes
no dues of income tax/ wealth tax/
service tax, etc., on Accounts which is self
explanatory.
which have not been deposited by the
company on account of any dispute except
the unpaid demand of Income tax of
Rs.5.31 crore for the assessment year
2006-07 for which stay application has
been moved.
12(b) In one ‘finance lease’ transaction, the company had As explained
in Note No.15(a)(i) of Schedule No.18 of purchased and leased back the
assets amounting to Notes on Accounts which is self explanatory.
Rs.27,999.22 lacs from APSEB (now APGENCO).
However, sale-deed between PFC and APSEB was executed on 14-02-1997 for
part of the amount of Rs.26,410.33 lacs and the execution of
supplementary sale deed for the balance amount of Rs.1,588.89 lacs is
still pending. However, the lease has since expired on 31st March, 2007
and the commercial terms for continued deployment of these assets are
yet to be accepted by the lessee. (Refer Note No. 15(a) (i))
2. On the Comments of Comptroller and 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.
42.0 DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm that in the preparation of annual accounts for
the year ended 31st March, 2008:
- The applicable accounting standards had been followed along with
proper explanation.
- Reasonable and prudent judgment and estimate were made so as to give
a true and fair view of the state of Company at 31.03.2008 and of the
profit and loss of the Company for the period 2007-08.
- Proper and sufficient care was 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.
- The accounts have been prepared on going concern basis.
43.0 ACKNOWLEDGEMENT
The Directors acknowledge and place on record their appreciation for
the assistance, co-operation and encouragement extended to the Company
by the Central and State Governments, Reserve Bank of India and various
Government agencies, the World Bank, the Asian Development Bank, USAID,
KfW of Germany, EDC of Canada and various international financia
institutions/banks, agencies.
The Company is also thankful to the Comptroller & Auditor General of
India, the Statutory Auditors and the bankers for their suggestions and
co-operation.
The Directors would also like to thank its investors, clients and
customers for their unwavering trust and support. Last but not the
least the directors would ike to thank the employees for their
continuing support and contribution in ensuring an excellent all round
performance.
For and on behalf of the Board of Directors
(Dr. V. K. Garg)
Chairman & Managing Director
Place: New Delhi
Dated: 3rd July, 2008
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