1.  The Company is a government company engaged in extending financial
 assistance to power sector.
 
 2.  Contingent liabilities:
 
 (i) Default guarantees issued by the Company in foreign currency :
 
 a) EURO 0.355 million equivalents to Rs. 2.27 crore (previous year EURO
 0.710 million equivalents to Rs. 4.35 crore).
 
 b) US $ 14.34 million equivalent to Rs. 64.75 crore (previous year US $
 17.745 million equivalent to Rs. 80.88 crore).
 
 (ii) Default guarantee issued by the Company in Indian Rupee: Rs. 400
 crore (previous year Rs.  400.00 crore).
 
 (iii) Bank guarantee issued by the Company in Indian Rupee: Rs. 50.04
 crore (previous year Rs 0.04 crore).
 
 (iv) The additional demand raised by Income Tax Department of Rs. 9.24
 crore, Rs 0.57crore , Rs. 0.03 crore and Rs. 4.48 crore. for Assessment
 Years 2005-06, 2006-07, 2007-08 and 2008-09 respectively are being
 contested. The management does not consider it necessary to make any
 provision, as the probability of outfl ow of resources is negligible.
 
 (v) Claims against the Company not acknowledged as debts are Rs. 7.80
 crore (previous year Rs. 7.80 crore).
 
 (vi) Outstanding disbursement commitments to the borrowers by way of
 Letter of Comfort issued against loans sanctioned, Rs. 5,758.02 crore
 as at 31.03.2011 (previous year Rs. 3,414.21 crore).
 
 3.  Estimated amount of contract remaining to be executed on account of
 capital contracts, not provided for, is Rs. 3.70 crore (previous year
 Rs. 4.26 crore).
 
 4.  Additional demands raised by the Income Tax Department (net of
 relief granted by Appellate Authorities) amounting to Rs. 22.58 crore
 for Assessment Year 2001-02 to 2008-09 were paid, provided for and are
 being contested.
 
 5.  A project under implementation having principal outstanding of Rs.
 700.00 crore (previous year Rs. 325.00 crore) has been considered as
 standard asset in terms of RBI circular No. DBS.FID.No.C – 11 /
 01.02.00 / 2001-02 dated 01.02.2002 read with D.O. letter DBS.FID
 No.1285 / 01.02.00 / 2001-02 dated 14.05.2002 (thereby treating the
 asset as standard till June, 2008), RBI letter no. DBOD, BP.No.7675 /
 21.04.048 / 2008-09 dated 11.11.2008 (which inter-alia advised that the
 date of commencement of commercial operation (DCCO) be treated as
 31.03.2009), RBI circular no. DBOD. BP. BC. 85 / 21.04.048 / 2009 -10
 dated 31.03.2010 and RBI letter no. DBOD. No. BP. No. 11505 / 21.04.048
 / 2010-11 dated- 21.01.2011. (which inter-alia enables that the said
 asset can be retained as standard asset, if the DCCO is re-fixed
 within the period of 3 years from the commercial operation of
 31.03.2009 provided the change in DCCO is due to reasons beyond control
 of the promoter and subject to compliance of certain provisions).
 
 Accordingly, in terms of the RBI circular no. DBOD. No. BP. BC. 85 /
 21.04.048 / 2009 -10 dated 31.03.2010, the Company has made a provision
 of Rs. 2.80 crore at the rate of 0.40% of the outstanding amount of Rs.
 700 crore during the year. However, the Company recognizes interest on
 this loan on receipt basis in terms of the accounting policy and as per
 prudential norms approved by the MoP.
 
 The Company has approved and finalized amendments to the Financial
 Realignment Plan (FRP).As per FRP, the Project Company is to issue Zero
 Coupon Bonds (ZCB) (towards interest outstanding for the period from
 01.10.2001 to 31.10.2005) valuing Rs. 103.87 crore. During the FY
 2010-11, an amount of Rs. 120.81 crore ( including the dues of previous
 year of Rs. 23.12 crore and the guarantee fee of Rs. 4.60 crore for the
 current year) became due on the loan as per FRP, out of which Rs. 74.74
 crore were received and accounted for as per the accounting policy. The
 balance of Rs. 46.07 crore being interest and guarantee fee due up to
 31.03.2011 and Rs.103.87 crore against ZCB have not been recognized, as
 per the accounting policy.
 
 6.  During the year, one borrower had made premature repayment of loan
 of Rs. 497.92 crore with payment of Rs. 10.99 crore towards prepayment
 premium. As per the terms and conditions of the loans / prepayment
 policy of the company, the demand for balance prepayment premium of Rs.
 10.79 crores was sent to the borrower, which they have disputed and
 have not paid. Hence the same has not been accounted for.
 
 7.  Interest Subsidy of Rs. 17.65 crore under Accelerated Generation &
 Supply Programme (AG&SP) along with interest upto 31st March, 2011
 amounting to Rs.26.78 crore (previous year Rs. 24.67 crore), became
 recoverable in respect of one project, as the project was not completed
 till 31.03.2007 and the subsidy was withdrawn by the MoP. The amount of
 Rs. 26.78 crore (previous year Rs.24.67 crore) is payable to the MoP on
 receipt from the borrower.
 
 8.  The company creates Debenture Redemption Reserve (DRR) upto 50% of
 the value of bonds / debentures issued through public issue, during the
 maturity period of such bonds / debentures. Accordingly, during the
 year the company has created DRR amounting to Rs. 0.06 crore (previous
 year Nil) on account of public issue of long term infrastructure bonds.
 
 The Company is not required to create Debenture redemption reserve in
 case of privately placed debentures as per circular No. 6 / 3 / 2001 –
 CL.V dated 18.04.2002 of the Government of India, Ministry of Law,
 Justice Company Affairs, Department of Company Affairs.
 
 The Company is not required to maintain reserve fund under section 45 –
 I C of the Reserve Bank of India Act, 1934 by transferring 20 percent
 of its net Profits, as it is exempted by RBI, vide RBI letter dated
 24.01.2000.
 
 9.1 Related party disclosures: Key managerial personnel:
 
 Name of the key managerial personnel
 
 Shri Satnam Singh, CMD (with effect from 01.08.2008)
 
 Shri M K Goel, Director (with effect from 27.07.2007)
 
 Shri Rajeev Sharma, Director (with effect from 09.03.2009)
 
 Shri R. Nagarajan, Director (with effect from 31.07.2009)
 
 Subsidiary company
 
 Shri N D Tyagi, CEO of PFC Consulting Limited.
 
 Joint Ventures entities
 
 Shri R. S. Sharma, Chairman of Energy efficiency Services Limited
 
 Shri I. J. Kapoor, Chairman of National Power Exchange Limited
 
 9.2 Power Finance Corporation Green Energy Ltd. (PFCGEL) 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 authorized share capital of
 Rs. 1200.00 crores and subscribed share capital of Rs. 0.05 crores. The
 certificate of commencement of business is awaited. The subsidiary''s
 financial statement is not consolidated, as the first financial year
 of the subsidiary has been decided by its Board of directors to be for
 the period from 30.03.2011 to 31.03.2012.
 
 9.3 (i) Investment in Small is Beautiful Fund: -
 
 The Company has outstanding investment of Rs. 8.73 crore (previous year
 Rs. 12.08 crore) in units of Small is Beautiful Fund. The face value of
 the Fund is Rs. 10 per unit. The NAV as on 31.03.2010 was Rs. 9.80 per
 unit and as on 31.03.2011 is Rs. 10.08 per unit. As investment in Small
 is Beautiful Fund is long term investment, the fl uctuation in NAV in
 the current scenario is considered as temporary.  (ii) Investment in
 equity (unquoted) in Power Exchange India Limited:- Power Exchange
 India Ltd. (PXIL) has been promoted by National Stock Exchange (NSE)
 and National Commodity and Derivatives Exchange Limited (NCDEX). The
 authorized capital has been enhanced from Rs. 50 crore to Rs. 100 crore
 in September 2010. The paid up capital of PXIL is Rs. 40.00 crore, as
 on 31.03.2011. The Company has subscribed Rs. 1.75 crore of the paid up
 capital of PXIL.
 
 10.  Interest Differential Fund (IDF) – KFW
 
 The agreement between KFW and PFC provides that the IDF belongs to the
 borrowers solely and will be used to cover the exchange risk variations
 under this loan and any excess will be used in accordance with the
 agreement. The balance in the IDF fund has been kept under separate
 account head titled as Interest Differential Fund – KFW and shown as a
 liability. The total fund accumulated as on 31.03.2011 is Rs. 49.01
 crore (previous year Rs. 47.60 crore) after adjusting the translation
 loss of Rs. 15.74 crore (previous year Rs. 13.73 crore).
 
 11.  The Company borrows money in foreign currency to finance power
 projects. In the opinion of the Company, AS 16 – Borrowing costs is
 applicable where funds are borrowed for acquisition of qualifying
 asset. The Company does not have any qualifying asset as per AS 16 and
 hence the foreign exchange gain / loss have been recognized in the
 Profit & Loss A/c as per AS 11 – The Effects of Changes in Foreign
 Exchange Rates.
 
 (ii) The company enters into derivative contracts for mitigating
 exchange rate risk in foreign currency liabilities and interest rate
 risk in foreign currency and rupee liabilities. Paragraphs 36 and 39 of
 the AS 11 states that in respect of forward exchange contracts not
 intended for trading or speculative purpose, the forward premium /
 discount be amortised over the life of such contracts and the forward
 exchange contracts intended for trading or speculative purpose be
 marked to market. The derivatives entered into by the company are in
 the nature of hedging and not in the nature of speculative or trading.
 The derivatives in the nature of forwards are dealt with in accordance
 with AS 11.
 
 The Institute of Chartered Accountants of India (ICAI) had issued an
 announcement dated 29th March, 2008 regarding accounting for
 derivatives which gives companies an option either to account for
 losses, if any, on derivatives based on mark to market valuation or to
 adopt the principles enunciated in the Accounting Standard (AS) 30 on
 ''Financial Instruments: Recognition and Measurements''. The Company has
 not adopted AS 30, nor accounted for mark to market losses for other
 derivatives outstanding as at 31st March 2011, as the ICAI, vide their
 announcement dated 11th February 2011, have stated, inter-alia, that AS
 - 30 is not presently mandatory and that it is not expected to continue
 in its present form, and hence the announcement prior to the date of
 11th February, 2011, in the management''s view, does not hold good.
 
 ii) The Company had sanctioned an amount of Rs. 88.90 crore in the year
 2004 as finance lease for financing wind turbine generator
 (commissioned on 19.07.2004) which was reduced to Rs. 88.85 crore in
 December 2006. The gross investment stood at the level of Rs. 46.01
 crore as on 31.03.2011. The lease rent is to be recovered within a
 period of 15 Years, starting from 19.07.2004, which comprises of 10
 years as a primary period and 5 years as a secondary period.
 
 (iii) The Company had sanctioned an amount of Rs. 98.44 crore in the
 year 2004 as finance lease for financing wind turbine generator
 (commissioned on 18.5.2004). The gross investment stood at Rs. 48.33
 crore as on 31.03.2011. The lease rent is to be recovered within a
 period of 20 years, starting from 18.05.2004, which comprises of 10
 years as a primary period and maximum of another 10 years as a
 secondary period.
 
 (iv) The Company had sanctioned an amount of Rs.93.51 crore in the year
 2004 as finance lease for financing wind turbine generator
 (commissioned on 09.06.2005). The gross investment stood at Rs. 65.60
 crore as on 31.03.2011. The lease rent is to be recovered within a
 period of 19 years 11 months, starting from 09.06.2005, which comprises
 of 10 years as a primary period and maximum of 9 years and 11 months as
 a secondary period.
 
 (v) The Company had sanctioned an amount of Rs.228.94 crore in the year
 2008 as finance lease for financing wind turbine generator. The gross
 investment stood at Rs. 381.25 crore as on 31.03.2011. The lease rent
 is to be recovered within a period of 20 years, starting from
 31.10.2010, which comprises of 12 years as a primary period and maximum
 of 8 years as a secondary period.
 
 b) Operating Lease:
 
 The Company''s operating leases consists:- Premises for offices and for
 residential use of employees are lease arrangements, and are usually
 renewable on mutually agreed terms, and are cancellable. Rent for
 residential accommodation of employees include Rs. 6.89 crore (previous
 year Rs. 4.06 crore) towards lease payments, net of recoveries in
 respect of premises for residential use of employees. Lease payments in
 respect of premises for employees are shown as rent for residential
 accommodation of employees in Schedule 14 – Personnel, Administration
 and Other Expenses. Lease payments in respect of premises for offices
 are shown as office rent in Schedule 14 – Personnel, Administration
 and Other Expenses.
 
 12.  Subsidy under Accelerated Generation & Supply Programme (AG&SP):
 
 (i) The Company claims subsidy from Govt. of India at net present value
 calculated at indicative interest rates in accordance with the GOI''s
 letter vide D.O.No.32024 / 17 / 97 – PFC dated 23.09.1997 and
 O.M.No.32024 / 23 / 2001 – PFC dated 07.03.2003, irrespective of the
 actual repayment schedule, moratorium period and duration of repayment.
 The amount of interest subsidy received and to be passed on to the
 borrower is retained as Interest Subsidy Fund Account. The impact of
 difference between the indicative rate and period considered at the
 time of claims and at the time of actual disbursement can be
 ascertained only after the end of the respective schemes. However on
 the basis of the projections made for each project (based upon certain
 assumptions that these would remain same over the projected period of
 each loan / project), the Company estimated the net excess amount of
 Rs. 35.31 crore and Rs. 229.43 crore (excluding an amount of Rs. 17.65
 crore recoverable from Irrigation Department of Government of
 Maharashtra) as at 31.03.2011 for IX and X plan respectively under
 AG&SP schemes and there is no shortfall. This net excess amount is
 worked out on overall basis and not on individual basis and may vary
 due to change in assumptions, if any, during the projected period such
 as changes in moratorium period, repayment period, loan restructuring,
 pre payment, interest rate reset etc. Any excess / shortfall in the
 interest subsidy fund will be refunded or adjusted / charged off at the
 completion of the respective scheme.
 
 13. (i) The Company has been designated as the Nodal Agency for
 operationalisation and associated service for implementation of the
 Re-structured Accelerated Power Development and Reforms Programme (R –
 APDRP) during XI plan by the MoP, GoI under it''s overall guidance.
 
 Projects under the scheme are being taken up in two parts. Part – A
 includes the projects for establishment of baseline data and IT
 applications for energy accounting as well as IT based customer care
 centers. Part – B includes regular distribution strengthening projects.
 GoI provides 100% loan for Part A and up to 25% (up to 90% for special
 category States) loan for Part – B. Balance funds for Part – B projects
 can be raised by the utilities from PFC / REC / multi-lateral
 institutions and / or own resources. The loans under Part – A alongwith
 interest thereon is convertible into grant as per R – APDRP guidelines.
 Similarly, upto 50% (up to 90% for special category states) of the loan
 against Part –B project would be convertible in to grant as per R –
 APDRP guidelines. Enabling activities of the programe is covered under
 Part – C.
 
 The loans under R – APDRP are routed through the Company for
 disbursement to the eligible utilities. The amount so disbursed but not
 converted in to grants as per R – APDRP guidelines will be repaid along
 with interest to the GoI on receipt from the borrowers.
 
 ii) Pending finalization of norms for payment of nodal agency fee,
 etc. the accounting policy therefore was held in abeyance in 2009-10
 and fee etc. had not been accounted for in 2009-10. On finalization of
 norms by MoP, GoI, vide office Memorandum No. 14 / 03 / 2008 – APDRP
 dated 20th August, 2010, the Company has recognised in the books of
 accounts, during the year ended 31.03.2011, nodal agency fee income Rs.
 89.62 crore (previous year NIL) in respect of sanctions and
 disbursements done in 2008-09, 2009-10 and 2010-11.
 
 (iii) During the year ended 31.03.2011, the Company has recognized Rs.
 39.20 crore as amount reimbursed / reimbursable from the Ministry of
 Power, Govt. of India, towards the actual expenditure incurred in FY
 2008-09, 2009-10 and in 2010-11 on various activities for
 operationalising the programme.
 
 14. The net deferred tax liabilities of Rs. 82.97 crore (previous year
 Rs. 46.95 crore) have been computed as per Accounting Standard 22
 Accounting for Taxes on Income.
 
 15.  The Company has no outstanding liability towards Micro, Small and
 Medium enterprises.
 
 16.  The value of lease hold land aggregating to Rs. 37.87 crore
 (previous year Rs. 38.33 crore) comprises of Rs. 31.83 crore (previous
 year Rs. 31.83 crore) paid towards cost of land to Land and Development
 office (L&DO), Ministry of Urban Affairs, Govt. of India, stamp duty
 of Rs. 2.01 crore (previous year Rs.2.47 crore) and capitalization of
 ground rent of Rs.4.03 crore (previous year Rs. 4.03 crore) up to the
 date of completion of building. The Land and Development office have
 executed the perpetual lease deed on 23.03.2011. The registration of
 the perpetual lease deed is under process.
 
 Leasehold land is not amortized, as it is a perpetual lease.
 
 17. Disclosures as per Accounting Standard –15 :- 
 
 A.  PROVIDENT FUND
 
 The Company pays fixed contribution to provident fund at prescribed
 rates to a separate trust, which invests the funds in permitted
 securities. The contribution to the fund for the period is recognized
 as expense and is charged to the Profit and loss account. The
 obligation of the Company is to make such fixed contribution and to
 ensure a minimum rate of return to the members as specified by GoI.
 Any short fall for payment of interest to members as per specified
 rate of return has to be compensated by the Company. The Company
 estimates that no liability will take place in this regard in the near
 future and hence no further provision is considered necessary.
 
 B.  GRATUITY
 
 The Company has a defined gratuity scheme and is managed by a separate
 trust. The provision for the same has been made on actuarial valuation
 based upon total number of years of service rendered by the employee
 subject to a maximum amount of Rs.10 lakh.
 
 C.  POST RETIREMENT MEDICAL SCHEME (PRMS)
 
 The Company has Post-Retirement Medical Scheme (PRMS), under which
 retired employees and the dependent family members are provided medical
 facilities in empanelled hospitals. They can also avail of
 reimbursement of out-patient treatment subject to a ceiling fixed by
 the Company.
 
 D.  TERMINAL BENEFITS
 
 Terminal benefits include settlement in home town for employees &
 their dependents.
 
 E.  LEAVE
 
 The Company provides for earned leave benefit and half-pay leave to
 the credit of the employees, which accrue on half yearly basis @ 15
 days and 10 days, respectively. 75% of the earned leave is encashable
 while in service and a maximum of 300 days earned leave can be
 accumulated, which is encashable on superannuation / separation. Half
 pay leave is encashable on separation after 10 years of service or at
 the time of superannuation subject to a maximum of 300 days. The
 liability for the same is recognized, based on actuarial valuation.
 
 The above mentioned schemes (C, D and E) are unfunded and are
 recognized on the basis of actuarial valuation.
 
 The summarised position of various defined benefits recognized in the
 Profit and loss account, balance sheet are as under {Figures in
 brackets ( ) represents to previous year}
 
 v) One percent increase / decrease in the Inflation rate would impact
 liability for medical cost of PRMS, as under:-
 
 Cost increase by 1% Rs. 0.14 crore
 
 Cost decrease by 1% Rs. 0.11 crore
 
 vi) During the year, the Company has provided liability towards
 contribution to the Gratuity Trust of Rs. 1.79 crore, to PRMS of Rs.
 0.92 crore, to leave Rs. 3.34 crore and to pension Rs. 2.28 crore.
 (previous year towards contribution to the Gratuity Trust of Rs.2.76
 crore, to PRMS of Rs.3.09 crore, to leave Rs.7.36 crore and to pension
 Rs.1.78 crore).
 
 E.  OTHER EMPLOYEE BENEFITS:-
 
 During the year, provision of Rs. - 0.03 crore (previous Year Rs. 0.04
 crore) has been made for Economic Rehabilitation Scheme for Employees
 and provision of Rs. 0.65 crores has been made for Long Service Award
 for Employees (Previous year Rs. 0.01 crore reversed) on the basis of
 actuarial valuation made at the year end by charging / crediting the
 Profit and loss account.
 
 18. (i) During the year, the Company has sent letters seeking confi
 rmation of balances as on 31.12.2010 to the borrowers.  However, confi
 rmations in few cases were yet to be received.
 
 (ii) Some of the designated bank accounts opened for making interest
 payment to bondholders / debenture holders have outstanding balance of
 Rs. 0.50 crore are subject to reconciliation / confirmation.
 
 Reserve for bad and doubtful debts u/s 36 (i) (viia) (c) of Income Tax
 Act, 1961 is considered as part of Tier II Capital, as advised by RBI,
 vide their letter No. DNBS.CO.PD.No. 6774 / 03-10-01 / 2009 – 10 dated
 17.06.2010.
 
 19.  The Company has no exposure to real estate sector as on
 31.03.2011.
 
 20.  The Company does not have more than one reportable segment in
 terms of Accounting Standard No. 17 on Segment Reporting.
 
 21.  Previous year''s figures have been re-grouped / re-arranged,
 wherever practicable, to make them comparable with the current period.
 
 22.  Figures have been rounded off to the nearest crore of rupees with
 two decimals.
 
 23.  Balance Sheet abstract and Company''s General Business profile as
 per Part IV of Schedule VI of the Companies Act, 1956 is enclosed as
 Appendix.