Reliance Infrastructure

The Directors have pleasure in presenting the 79th Annual Report,
 together with the audited statement of accounts of the Company for the
 year ended March 31, 2008.
 
 Financial Results
 
 The performance of the Company for the financial year ended March 31,
 2008 is summarised below
 
                          Financial Year ended    Financial Year ended
                             March 31, 2008         March 31, 2007 *
 Particulars            Rs. Crores     US $ in   Rs. Crores      US $ in
                                       million *                million *
 
 Total Income             7,501.20    1,869.69     6,575.25     1,512.59
 
 Gross Profit before 
 Depreciation             1,374.64      342.63     1,112.43       255.91
 
 Depreciation               222.94       55.57       240.06        55.22
 
 Profit before Taxation
 and Adjustments          1,151.70      287.06       872.37       200.69
 
 Provision for Taxation
 (Income Tax and 
 Wealth Tax)                137.15       34.18        90.15        20.74
 
 Provision for Deferred Tax  17.22        4.29        27.15         6.24
 
 Fringe Benefit Tax           6.00        1.50         4.77         1.10
 
 Tax Adjustments for earlier
 years (Net)                (93.30)     (23.25)       51.15        11.77
 
 Profit after Taxation and
 Adjustments              1,084.63      270.34       801.45       184.38
 
 Add: Balance of Profit
 brought forward from
 previous year              359.28       89.55       275.93        63.47
 
 Profit available for 
 appropriation            1,443.91      359.89     1,077.38       247.85
 
 Less: Statutory Reserves    13.32        3.32        11.41         2.62
 
 Amount available for 
 appropriations           1,430.59      356.57     1,065.97       245.23
 
 Appropriations :
 
 Dividend on Equity Shares
 
 (i) Final Dividend         147.73       36.82       121.12        27.86
 
 (ii) Final Dividend on 
      Equity Shares for       -            -         (39.40)       (9.06)
      Previous Year 
     (not appropriated in the
      previous year)
 
 Corporate Tax on Dividends  25.11        6.26        20.58         4.73
 
 Transfer to General 
 Reserve                    500.00      124.63       600.00       138.03
 
 Transfer to Debenture
 Redemption Reserve          53.99       13.46         4.39         1.01
 
 Balance carried to
 Balance Sheet              703.76      175.41       359.28        82.66
 
 * Rs 40.12 = US $ 1 Exchange rate as on March 31, 2008 (Rs 43.47 = US $
 1 as on March 31, 2007)
 
 Financial Performance
 
 During the year under review, your Company recorded the total income of
 the Company was Rs 7,501 crore, against Rs 6,575 crore in the previous
 year, an increase of 14%. Net Profit for the financial year ended Mach
 31, 2008 recorded an increase of 35% to Rs 1,085 crore from Rs 801
 crore in the previous year.  Shareholders equity (Networth) increased
 to Rs 11,690 crore from Rs 9,339 crore in the previous year.
 
 Change of name
 
 As approved by the members through postal ballot on April 17, 2008, the
 name of the Company has been changed to Reliance Infrastructure Limited
 with effect from April 28, 2008. The new name appropriately reflects
 various infrastructure businesses being carried on by the Company and
 redefines the Company’s vision and focus to emerge as a premier
 infrastructure company.
 
 Dividend
 
 Your Directors recommend a dividend of Rs 6.30 (63 per cent) per equity
 share aggregating Rs 147.73 crore for the financial year 2007-08 which,
 if approved at the ensuing 79th AGM, will be paid to (i) those members
 whose names appear on the Register of Members of the Company after
 giving effect to all valid share transfers in physical form lodged with
 the Company on or before July 7, 2008, and (ii) to those members whose
 names appear as beneficial owners as at the end of business hours on
 July 7, 2008, as per particulars to be furnished fo r this purpose, by
 the Depositories, viz. National Securities Depository Limited and
 Central Depository Services (India) Limited.
 
 The dividend pay out as proposed is in accordance with the Company’s
 policy to pay sustainable dividend linked to long term performance,
 keeping in view the capital needs for the Company’s growth plans and
 the intent to optimal financing of such plans through internal
 accruals.
 
 Management Discussion and Analysis
 
 Management Discussion and Analysis of financial condition including
 results of operations of the Company for the year under review as
 required under clause 49 of the listing agreement with the stock
 exchanges, is given as a separate statement in the annual report.
 
 The Company has entered into various contracts in the areas of energy
 and infrastructure business. While the benefits from such contracts
 will accrue in the future years, their progress is periodically
 reviewed.
 
 Share Capital
 
 (i) Authorised Share Capital
 
 In order to make the preferential issue of equity linked securities to
 the promoters, the authorised share capital of the Company was
 increased during the year by Rs 100 crore, from Rs 1,850 crore to Rs
 1,950 crore by increasing the number of authorised equity shares from
 25 crore equity shares to 35 crore equity shares of Rs 10 each.
 
 (ii) Preferential allotment of warrants
 
 Pursuant to approval of the members of the Company accorded through
 postal ballot on December 5, 2007, the Company allotted 4,30,00,000
 warrants at Rs 1,822.08 each (including a premium of Rs 1,812.08 per
 equity share) on preferential basis to one of the promoter companies,
 AAA Project Ventures Private Limited, on January 20, 2008.  The
 warrants are convertible into equity shares of Rs 10 each on or before
 18 months from the date of allotment of warrants, i.e. on or before
 July 19, 2009.
 
 (iii) Conversion of US$ 178.058 million Foreign Currency Convertible
 Bonds (FCCBs)
 
 During the period October 15, 2007 to February 4, 2008, the Company
 allotted 79,99,954 equity shares on conversion of US$ 178.058 million
 FCCBs. Consequent upon the allotment of these shares, the paid - up
 capital of the Company rose to Rs 236,53,02,620. The excess of fair
 value (market price) of equity shares on the dates of allotment over
 the issue price of Rs 1,006.92 being the attributable cost has been
 charged to the Profit and Loss Account.
 
 (iv) Buy-back of shares
 
 Pursuant to the resolution passed by the Board of Directors of the
 Company in accordance with the provisions of the Companies Act, 1956
 and the Securities and Exchange Board of India (Buy-back of Securities)
 Regulations, 1998 to buy- back the equity shares of the Company at a
 maximum price of Rs 1,600 per equity share, up to an amount not
 exceeding 10 per cent of the paid-up equity share capital and free
 reserves (including securities premium) of the Company, i.e.  up to Rs
 800.06 crore, the Company had bought-back 24,38,551 equity shares of Rs
 10 each at an aggregate value of Rs 307.68 crore up to April 28, 2008.
 Consequently, the paid–up equity share capital of the Company stands
 reduced to Rs 234,09,17,110 as on April 28, 2008.  Further, the members
 of the Company have on April 17, 2008, approved a proposal enabling the
 Company to buy- back equity shares at a maximum price of Rs 1,600 per
 equity share, up to an amount not exceeding 25 per cent of the paid-up
 equity share capital and free reserves (including securities premium)
 of the Company aggregating Rs 2,000.14 crore, including the limits
 approved by the Board of the Company.
 
 Major Associate Company Reliance Power Limited
 
 Reliance Power Limited (Reliance Power), promoted jointly by Reliance
 Infrastructure Limited and Shri Anil Dhirubhai Ambani through AAA
 Project Ventures Private Limited, made an Initial Public Offering (IPO)
 of 26 crore equity shares of Rs 10 each in January 2008 at an issue
 price of Rs 450 per share with a discount of Rs 20 to retail investors
 i.e. an issue price of Rs 430 per share. The IPO received an
 overwhelming and record breaking response, with commitment of about Rs
 7,50,000 crore (US$ 190 billion) from nearly 500 institutional
 investors across the globe and over 5 million retail investors.
 
 Issue of Bonus Shares
 
 (i) Waiver of entitlement to Bonus shares: Subsequent to the closing of
 the IPO of Reliance Power, the global and Indian equity markets
 suffered an extraordinary meltdown, with all benchmark indices
 declining by 15 to 20 per cent and leading Indian stocks declining by
 an even greater range of 20 per cent to 40 per cent. Reliance Power
 share declined by 11 per cent from the IPO price for retail investors
 and by 15 per cent for other categories of investors. In keeping with
 the Reliance Anil Dhirubhai Ambani Group’s fundamental and over-riding
 philosophy of creating value for genuine long term investors, the Board
 of Reliance Power proposed an extraordinary and unprecedented one-time
 measure to reduce the effective cost of acquisition of the shares below
 the IPO price by issue of bonus shares at the rate of three new equity
 shares of Rs 10 each for every five existing equity shares of Rs 10
 each to the holders of Reliance Power in the public category (excluding
 the promoters) and sought the approval of members of its Company for
 the proposal. The promoters of Reliance Power, viz. AAA Project
 Ventures Private Limited and Reliance Infrastructure Limited, who
 collectively held 203.20 crore equity shares representing 89.92% of the
 existing equity share capital of Reliance Power prior to bonus, waived
 their entitlement to the issue and allotment of bonus shares. This
 initiative from the Company was taken in the long term common interests
 of both Reliance Power and Reliance Infrastructure and their more than
 5.70 million shareholders.
 
 
 (ii) Gift of Reliance Power shares: AAA Project Ventures Private
 Limited, an entity fully controlled by our Chairman, Shri Anil
 Dhirubhai Ambani and also Promoter of Reliance Power, voluntarily
 decided to gift 2.57 per cent of post bonus issue equity share capital
 comprising 6,15,00,000 shares in Reliance Power to the Company. This
 extraordinary measure was undertaken by AAA Project Ventures Private
 Limited to protect the Company from suffering any dilution of its
 holding in Reliance Power consequent upon the Company waiving its right
 to bonus shares.
 
 The Company has received the approval of the members of the Company
 through postal ballot on April 17, 2008 for waiver of its entitlement
 to bonus shares of Reliance Power and acceptance of gift of shares from
 AAA Project Ventures Private Limited.
 
 Standby Charges
 
 In the pending litigation on standby charges, The Tata Power Company
 Limited (TPC) had filed an appeal in the Hon’ble Supreme Court which
 admitted it and directed TPC to deposit Rs 227 crore (being 50 per cent
 of the amount of refund including interest up to December 31, 2006) as
 per the order of the Appellate Tribunal for Electricity and furnish a
 bank guarantee for Rs 227 crore. The Company was permitted to withdraw
 the amount after giving an undertaking to repay the amount if required,
 without demur, on the final order being passed. The Company, after
 giving such an undertaking received Rs 227 crore on March 12, 2007. The
 Company is yet to receive further order from the Hon’ble Supreme Court.
 
 Subsidiary Companies
 
 The Company, as of March 31, 2008 had nine subsidiaries, viz.  BSES
 Kerala Power Limited, Reliance Infraprojects Limited, Reliance Projects
 Finance Private Limited, Reliance Power Infrastructure Private Limited,
 Reliance Power Transmission Limited, Noida Global SEZ Private Limited,
 Mumbai Metro One Private Limited, Reliance Energy Trading Limited and
 Parbati Koldam Transmission Company Limited. Besides, Western Region
 Transmission (Maharashtra) Private Limited and Western Region
 Transmission (Gujarat) Private Limited became wholly owned subsidiaries
 of Reliance Power Transmission Limited, a subsidiary of the Company,
 with effect from November 14, 2007 and in terms of Section 4(1) (c) of
 the Companies Act, 1956, these two companies have become subsidiaries
 of the Company.
 
 In terms of the approvals granted by the Central Government under
 Section 212(8) of the Companies Act, 1956, copies of the balance sheet,
 profit & loss account and reports of the board of directors and
 auditors of the subsisting subsidiaries have not been attached with the
 balance sheet of the Company. However, these documents will be made
 available upon request to any member of the Company interested in
 obtaining the same. As directed by the Central Government, the
 financial data of the subsidiaries has been furnished in the Notes on
 abridged consolidated financial statements, which forms part of the
 Annual Report. The annual accounts of the Company including that of
 subsidiaries will be kept for inspection by any member. Further,
 pursuant to Accounting Standard-21 (AS-21) issued by the Institute of
 the Chartered Accountants of India, Consolidated Financial Statements
 presented by the Company include financial information about its
 subsidiaries.  For implementing the Delhi airport metro express
 project, the Company has incorporated a special purpose vehicle viz
 Delhi Airport Metro Express Private Limited which became subsidiary of
 the Company on April 1, 2008.
 
 Fixed Deposits
 
 The Company discontinued accepting fixed deposits since December 1998.
 The Company, during the year, transferred Rs 95,061 being the unclaimed
 deposit and interest thereon to the Investor Education and Protection
 Fund set up by the Government of India. There was no unclaimed fixed
 deposit as on March 31, 2008.
 
 Amalgamation
 
 With a view to enhancing the Company’s infrastructure service
 capabilities and financial strength, a petition for amalgamation of one
 of the wholly owned subsidiaries of the Company, viz. Reliance Projects
 Finance Private Limited with the Company has been filed in the Hon’ble
 High Court of Bombay on March 28, 2008. The same is pending for hearing
 before the Hon’ble Court.
 
 Directors
 
 Shri S C Gupta was re-appointed as Whole-time Director designated as
 Director (Operations) for a further period of five years with effect
 from January 18, 2008 up to January 17, 2013. The Company has received
 approval of the members of the Company through postal ballot on April
 17, 2008 in respect of the above appointment.  Gen V P Malik, Shri S L
 Rao and Dr Leena Srivastava retire by rotation and are eligible for
 re-appointment. Brief resumes of these directors, the nature of their
 expertise in specific functional areas, names of companies in which
 they hold directorships and the memberships/chairmanship of committees
 of the board, their shareholdings, etc. as stipulated under clause 49
 of the listing agreement with the stock exchanges in India are provided
 in the report on corporate governance forming part of the annual
 report.  The five year tenure of Shri J P Chalasani as Director
 (Business Development) ceased on January 17, 2008. Shri Chalasani since
 ceased to be a Director of the Company.
 
 Directors’ Responsibility Statement
 
 Pursuant to the requirement under Section 217 (2AA) of the Companies
 Act, 1956, with respect to the Directors’ Responsibility Statement, it
 is hereby confirmed that:
 
 i.  in the preparation of the accounts for the financial year ended
 March 31, 2008, the applicable accounting standards have been followed
 along with proper explanations relating to material departures.
 
 ii. the Directors have selected such accounting policies and applied
 them consistently, and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as at March 31, 2008 and of the profit of the Company
 for the said period;
 
 iii. the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities; and
 
 iv. the Directors have prepared the accounts for the financial year
 ended March 31, 2008, on a ‘going concern’ basis.
 
 The above statements have been noted by the audit committee at its
 meeting held on April 27, 2008.
 
 Group
 
 Pursuant to an intimation from the Promoters, the names of the
 Promoters and entities comprising ‘group’ as defined under the
 Monopolies and Restrictive Trade Practices (‘MRTP’) Act, 1969 are
 discused in the Annual Report for the purpose of the SEBI (Substantial
 Acquisition of Shares and Takeovers) Regulations, 1997.
 
 Consolidated Financial Statements
 
 The Audited Consolidated Financial Statements based on the Financial
 Statements recieved from subsidiary Companies, as approved by their
 respective board of directors, have been prepared in accordance with
 the Accounting Standard (AS-21) on consolidated financial statements
 read with Accounting Standard (AS-23) on Accounting for Investments in
 Associates.
 
 Auditors
 
 Price Waterhouse, Chartered Accountants and Chaturvedi & Shah,
 Chartered Accountants, as statutory auditors of the Company, hold
 office until the conclusion of the ensuing annual general meeting and
 are eligible for re-appointment.
 
 The Company has recieved letters from Price Waterhouse, Chartered
 Accountants and Chaturvedi & Shah, Chartered Accountants, to the effect
 that their appointment, if made, would be within the prescribed limits
 under section 224 (1B) of the Companies Act, 1956, and that they are
 not disqualified for such appointment within the meaning of section 226
 of the Companies Act, 1956.
 
 Cost Auditor
 
 Pursuant to the direction of the Central Government that the cost
 accounts maintained by the Company be audited by an auditor, the
 Company appointed V J Talati & Company, Cost Accountants, for
 conducting the cost audit for the generation, transmission and
 distribution of electricity business of the Company for the financial
 year ended March 31, 2008.
 
 Particulars of Employees
 
 In terms of the provisions of Section 217 (2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975,
 the names and other particulars of employees are set out in the
 Annexure to the Directors’ report. However, having regard to the
 provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the
 annual report is being sent to all members of the Company excluding the
 aforesaid information. Any member interested in obtaining such
 particulars may write to the Company Secretary at the registered office
 of the Company.
 
 Energy Conservation, Technology Absorption and Foreign Exchange
 Earnings and Outgo
 
 The information relating to energy conservation, technology absorption,
 foreign exchange earnings and outgo required to be disclosed under Rule
 2 of the Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988, is given in Annexure I and forms part of this
 report.
 
 Corporate Governance
 
 The Company has adopted the “Reliance Anil Dhirubhai Ambani Group -
 Corporate Governance Policies and Code of Conduct” which has set out
 the systems, processes and policies conforming to international
 standards. As per Clause 49 of the Listing Agreement, a separate
 section on corporate governance forms part of the annual report.
 
 A certificate from the auditors of the Company regarding compliance of
 conditions of corporate governance as stipulated under clause 49 of the
 listing agreement is given in Annexure II.
 
 Acknowledgment
 
 Your directors wish to thank the Government of India (including the
 Ministry of Power), Governments of Maharashtra, Andhra Pradesh and Goa
 (including Energy and Environment Departments), Maharashtra State
 Electricity Board, Electricity Regulatory Commissions of Maharashtra
 and Andhra Pradesh, Dahanu Taluka Environment Protection Authority,
 Municipal Corporation of Greater Mumbai, financial institutions,
 bankers, customers, suppliers, shareholders and the employees of the
 Company for their co-operation and support.
 
                                   On behalf of the Board of Directors
 
 Mumbai                                        Anil D Ambani
 April 28, 2008                                   Chairman