Reliance Infrastructure

My dear fellow Shareowners,
 
 For Indian economy as also of the rest of the world, 2008-09 was one of
 the toughest years to be in business, especially in the infrastructure
 sector. In the wake of the global financial meltdown, it was hard for
 businesses to raise resources and maintain the high trend growth rate
 of the last few years. However, for Reliance Infrastructure, it was
 another outstanding year - a year in which we made significant strides,
 and moved closer to our goal of being one of the top players in most of
 the businesses in which we operate.
 
 The year saw us making important strides forward in our mission to
 become one of India’s top infrastructure players and achieve leadership
 position across every business segment in which we operate.
 
 On April 28, 2008, the Company changed its name from Reliance Energy
 Limited to Reliance Infrastructure Limited signifying a renewed thrust
 on exploiting the emerging long-term opportunities in the
 infrastructure sector. In recent years, we have made a conscious and
 concerted effort to align our people, processes and technological
 nitiatives more closely with our new business strategy and focus.
 
 Reliance Infrastructure continues to draw its inspiration and guidance
 from the vision of our legendary founder, Shri Dhirubhai Ambani. It was
 one of Dhirubhai’s great ambitions in life to see the creation of world
 class infrastructure in India. With specific reference to the power
 sector, he wanted that the consumers be provided with uninterrupted and
 quality power at competitive prices through the deployment of cutting
 edge technology and operational efficiencies, something that was only
 possible in his view with the active participation of the private
 sector in core areas of infrastructure.
 
 It is a tribute to Dhirubhai’s vision that Reliance Infrastructure is
 now one of India’s leading and fastest growing companies in the
 nfrastructure sector, with estimated group revenues of Rs 21,818 crore
 (US$ 4.3 billion) and gross fixed assets of Rs 14,722 crore (US$ 2.9
 billion).
 
 Reliance Infrastructure is today one of India’s most valuable private
 sector infrastructure companies.
 
 Performance review
 
 You will be happy to note that our Company made substantial mprovement
 in its financial and operational performance during the year.
 
 The salient points are:
 
 . Total income of Rs 10,959 crore (US$ 2.16 billion), as against Rs
 7,501 crore in the previous financial year, an increase of 46%.
 
 . Cash profit of Rs 1,384 crore (US$ 273 million), against Rs 1,308
   crore (US$ 258 million) in the previous financial year.
 
 . Net profit of Rs 1,139 crore (US$ 225 million), against Rs 1,085
   crore (US$ 214 million) in the previous financial year.
 
 . Cash Earnings Per Share (Cash EPS) of Rs 60 (US$ 1.18), against Rs 56
   in the previous year and Earnings Per Share (EPS) of Rs 49.5 (US$ 1),
   against Rs 46.9 in the previous year.
 
 . A net worth of Rs 11,907 crore (US$ 2.35 billion), making Reliance
   Infrastructure amongst the top Indian private sector companies.
 
 Restructuring of business
 
 While generation, transmission and distribution of power continues to
 be the core business of the Company, it has in recent years made major
 inroads in other vital areas such as mass rapid transit systems, roads,
 special economic zones, and Engineering, Procurement and Construction
 (EPC). During the past year, the Company evaluated its existing
 businesses and felt the need to create a simplified and transparent
 structure, focused on each individual business segment.  Each of the
 several businesses carried on by the Company, either by itself or
 through subsidiaries, affiliate companies or strategic investments in
 other companies, was seen to have significant potential for growth
 
 In order to provide a simplified, transparent business structure, the
 Company has decided to reorganize all its businesses verticals. This
 re-organization envisages the transfer of various divisions of Reliance
 Infrastructure dealing with different areas of operations, to separate
 wholly owned subsidiary companies. I am sure we would receive the
 overwhelming support of the Members when we seek their approval to the
 new scheme of arrangement.
 
 Buy-back of Shares
 
 In keeping with our fundamental and overriding philosophy of creating
 value for our investors, we decided to utilize a part of our
 accumulated surplus for buy-back of shares so as to improve the return
 on equity We have bought-back a total of 112.6 lakh equity shares from
 the open market, aggregating Rs 923 crore.
 
 Power generation, transmission and distribution
 
 Power Generation
 
 Our Company’s power generation units continue to demonstrate
 significant improvements across all important performance parameters.
 
 During the past year, the Dahanu power station achieved a record Plant
 Load Factor (PLF) of 100.99 per cent. The Station has been consistently
 operating at more than 100 per cent PLF for the last five years. The
 estimated over-performance incentive and efficiency gains as per MERC
 norm is over Rs 80 crore for the year. Similarly, our power stations at
 Samalkot and Goa have also registered healthy levels of performance
 during the year and been consistently improving on major operational,
 environmental and safety performance parameters.
 
 All the stations are certified for Integrated management system
 covering ISO 9001 the quality management system, ISO 14001 the
 environmental management system and OHSAS 18001 the occupational health
 and safety management system. They are also certified for 8000 the
 social accountability standard and ISO 27001 the information security
 standard.
 
 Power Transmission
 
 Reliance Infrastructure continues to explore emerging opportunities in
 the transmission sector. Keeping in line with the requirements of the
 sector, the Government of India has identified 14 transmission
 
 projects for development under tariff-based competitive bidding route
 to be awarded on build, own and operate basis. As you are aware, our
 Company has been selected as a joint venture partner, along with Power
 Grid Corporation of India Limited, for setting up the transmission
 network for Parbati and Koldam hydroelectric projects in Himachal
 Pradesh. Our Company was also the first private utility to win projects
 under the Western Region System Strengthening Scheme in Maharashtra and
 Gujarat. For strengthening our transmission network for Mumbai
 distribution, we have finalised a comprehensive plan aimed at enhancing
 our extra high voltage transmission network at a capital outlay of Rs
 1,800 crore.
 
 Power Distribution
 
 Our Company’s distribution network in Mumbai has achieved the
 distinction of consistently operating its distribution network at 99.9
 per cent reliability.
 
 The Company was recognized as the best among 20 utilities across the
 country for ‘Excellence in Power Distribution – Urban’ at the
 prestigious IEEMA National Awards 2009.
 
 Strengthening and modernization of our network is a continuous process
 with a view to meeting the rising demand in our distribution area. The
 Company would continue to maintain its leadership position on key
 industry parameters such as uninterrupted power supply, deployment of
 IT and other technologies, meter modernization, and customer service.
 
 Our two associate companies viz. BSES Rajdhani Power Limited (BRPL) and
 BSES Yamuna Power Limited (BYPL) continue to implement a series of
 measures aimed at improving overall customer service and reducing
 aggregate technical and commercial (AT&C) losses. Over the past year,
 both companies have made substantial progress in further paring down
 AT&C losses – from 27.26 per cent to 20.59 per cent in BRPL and from
 29.99 per cent to 24.02 per cent in BYPL. In the process, we have
 exceeded the multi-year-tariff target levels. This over-achievement
 would enable the Company to qualify for performance incentives to the
 tune of Rs 136 crore.
 
 The EPC Business
 
 Our Engineering, Procurement and Construction (EPC) division, focusing
 mainly on the power sector, is leveraging its strength in executing
 power generation projects on a turn-key basis. Backed by an
 extraordinarily talented work force and years of experience in the
 field, we employ state-of-the-art technology in every facet of our EPC
 operation, delivering superior value in engineering, design and project
 management.
 
 A Centre of Engineering Excellence has been formed to build Knowledge
 Capital in order to enable the execution of large projects at optimum
 cost, while ensuring high standards of quality and strict adherence to
 timelines.
 
 The turnover of our EPC business during 2008-09 was Rs 2,513 crore (US$
 495 million), against Rs 1,444 crore (US$ 285 million) in the previous
 year. The EPC division had an order book position of Rs 20,625 crore
 (US $ 4.07 billion) as on March 31, 2009.
 
 Infrastructure Projects
 
 Currently, the Company is engaged in four-laning of five road projects
 in the State of Tamil Nadu, aggregating to a total length of 401 kms
 and a total cost of Rs 3,150 crore. Of the five, two are at an advanced
 stage of completion.
 
 The Company has been awarded an important road connectivity project of
 66 kms between Gurgaon and Faridabad in the State of Haryana.  The
 Company has also emerged as the sole bidder for the 135-km ‘Eastern
 Peripheral Expressway’ project at Delhi at a project outlay of Rs 4,000
 crore.
 
 The ongoing Versova-Andheri-Ghatkopar Corridor Mass Rapid Transit
 System (MRTS) project, which is being implemented by a special
 
 purpose vehicle of the Company along with MMRDA, is scheduled to be
 commissioned by second quarter of FY2011, two years ahead of the
 contractual commissioning date.
 
 The Delhi Airport Express Line Project, being implemented by the
 Company’s special purpose vehicle, Delhi Airport Metro Express Private
 Limited in consortium with CAF of Spain, will connect the Delhi Airport
 with the Central Business District. Overseen by globally renowned
 consultants and system contractors, the project is likely to start by
 second quarter of FY2011 i.e. before the Commonwealth Games.
 
 The Company has also been awarded a project to develop a 100- storey
 trade tower and commercial business district in Hyderabad. We are also
 developing a special economic zone at the Dhirubhai Ambani Knowledge
 City in Navi Mumbai
 
 Reliance Power Limited
 
 An associate of the Company, Reliance Power Limited is currently
 executing projects with a combined planned installed capacity of more
 than 33,480 MW, the largest portfolios of power generation assets under
 development in India in the private sector.
 
 Corporate Governance
 
 Our Company is a proud member of the Reliance Anil Dhirubhai Ambani
 Group. As such we have adopted the Group’s Corporate Governance
 Practices and Code of Conduct. These guidelines prescribe a set of
 systems, processes and principles that conform to the best global
 standards, and are aimed at promoting the interests of all our
 stakeholders.
 
 Social Commitments
 
 The Company continues to take up several initiatives related to
 healthcare, education, water management, including construction of
 check dams and water drains, and promotion of environmental improvement
 measures as well as providing vocational training. In all programmes,
 special priority is given to the economically vulnerable sections of
 society, who stay in the vicinity of the power stations and project
 sites.
 
 Awards and Recognitions
 
 All our power stations continue to receive prestigious awards and
 recognitions for outstanding performance in various fields, viz.
 excellence in thermal power generation, environment, quality, water and
 energy management, leadership, technology and innovations, safety and
 corporate social responsibility.
 
 Commitments
 
 We are on the threshold of a major organizational transformation from
 being a power utility to being a diversified infrastructure company
 with strong presence across the entire gamut of infrastructure space.
 
 Our young team of highly trained, motivated and qualified professionals
 will aim to make the most of every opportunity that opens up in
 infrastructure.
 
 Powered by the experience and expertise of the Reliance ADA group in
 project management and financial engineering, we will seek to achieve
 the highest performance standards in the industry and an unchallenged
 leadership position across all segments in which we operate.
 
 Our founder gave us a mantra for growth and success: think big - and
 act bigger. We will follow his lead and his inspiration in striving for
 bigger and better in everything that we do, paving the way for ever
 faster growth and ever higher value for all our stakeholders.
 
                                                   Anil D Ambani
 
                                                        Chairman