Reliance Power

My dear fellow shareowners,
 
 It gives me great pleasure to share with you the highlights of our
 Company’s achievements in FY 2008-09. During the year, our Company made
 significant progress in fulfilling its vision of becoming the largest
 and the fastest growing private sector power utility in the country.
 
 We reached key milestones, including the financial closure of the Sasan
 Ultra Mega Power Project. We won the Tilaiya Ultra Mega Power Project
 in addition to hydro power projects in Arunachal Pradesh. We also made
 excellent progress towards the execution of Rosa Power Plant ahead of
 schedule.
 
 The installation of a stable government at the Centre is a huge
 positive development, which is likely to usher in long pending reforms
 that are required to keep the economy on a high-growth trajectory.
 
 Key Developments
 
 Financial Closures
 
 As you are aware, our Company has embarked upon a capacity addition
 programme in generation that is unparalleled in the history of the
 Indian Power Sector. We plan to add over 30,000 MW in the next 7-8
 years. Since financing these projects will entail significant amounts
 of debt, achieving timely financial closures is of utmost importance.
 
 It is therefore a matter of pride that we were able to secure the
 largest ever debt on non-recourse project finance basis across any
 industry in India for the Sasan Ultra Mega Power Project at a time when
 the External Debt Market had gone completely dry and the domestic
 lenders had turned ultra-cautious, thanks to the unfolding global
 credit crisis.
 
 The Sasan closure also represents the first ever appraisal of an
 integrated coal mine cum power project of this scale on project finance
 basis in the country. We were also successful in getting our appraisals
 completed for the 600-MW expansion at Rosa and the 300-MW at Butibori.
 In addition, we obtained part sanction for the Krishnapatnam Ultra Mega
 Power Project. In all, we were able to get appraisals done or obtain
 sanctions for project with an investment outlay of more than Rs 40,000
 crore (US$ 8 billion).
 
 Progress on Project Execution
 
 Given our large generation portfolio, it is imperative that we focus
 our attention on ensuring that we implement all our projects on time
 and at costs which are lower than our initial estimates. Indeed, we are
 committed to setting new benchmarks in project costs and time
 schedules. The Rosa Power Plant, located in Uttar Pradesh, is currently
 ahead of schedule and we expect it to be operational before the end of
 FY 2009-10. In 2011, we expect to commission the expansion units at
 Rosa and the upcoming plants at Butibori.
 
 We have also advanced, by almost three years, the schedule for the
 commissioning of the first Ultra Mega Power Project at Sasan. We hope
 to commission two units of 660 MW each at Sasan before the end of FY
 2011-12.
 
 We are well aware of the complex challenges that lie in the way of
 successful execution of power projects. But given our traditional
 strength in project management and the experience of our execution
 teams, we remain confident of successfully overcoming any odds.
 
 New Projects
 
 The power sector in India continues to offer exciting new
 opportunities. During the year, we won, through a competitive bidding
 process, the right to develop the 3,960 MW Tilaiya Ultra Mega Power
 Project located in the State of Jharkhand. Aside from the significant
 synergies that it has with other power projects that we are developing,
 Tilaiya also presents the added advantage of having captive coal mines
 allocated for it.
 
 While coal-based power projects provide large headroom for growth, we
 are equally confident about the benefits and advantages that would
 accrue from having hydro power projects in our portfolio. We have
 therefore keenly participated in the bids for such projects and have
 recently been awarded four more hydro power projects for development in
 the state of Arunachal Pradesh. With this, the total hydro capacity in
 our portfolio has gone up to 4,620 MW, while our aggregate portfolio
 now stands at more than 33,000 MW.
 
 Securing Fuel tie-ups
 
 Fuel availability and its pricing continue to be one of the biggest
 challenges for power projects in India. While we have plenty of coal
 reserves in the country, the development of mines has not kept pace
 with our ambitious programme for the addition of generation capacities.
 We have therefore made it a conscious part of our strategy to ensure
 that a major portion of our coal-based generation portfolio is
 supported by captive mines.
 
 The proposed Ultra Mega Power Project at Tilaiya has given us the right
 to develop coal mines with estimated reserves of almost one billion
 metric tonnes. Potentially this makes us one of the largest coal mining
 companies in the country with nearly 2 billion tonnes of aggregate
 reserves.
 
 Performance review
 
 The salient points of company’s financial performance are
 
 - Total income of Rs 334.72 crore as compared to Rs 132.87 crore in the
 previous year.
 
 - Net profit of Rs 248.90 crore as compared to Rs 94.67 crore in the
 previous year.
 
 - Earnings per share (EPS) of Rs 1.04 as compared to Re 0.17 in the
 previous year.
 
 Corporate governance
 
 During the year under review, a series of unfortunate disclosures
 brought the spotlight back on governance practices in Corporate India
 and jolted investors in India and across the world.
 
 We remain committed to maintaining the highest standards of corporate
 governance and would continue to work in a transparent and professional
 manner for creating value for all stakeholders.
 
 There is nothing we value more highly than the trust of our 3.8 million
 shareholders, the largest such family in the world. And we will do all
 we can to preserve, protect and enhance it.
 
 Social Commitments
 
 Our company is setting up power projects across the length and breadth
 of the country. These projects entail the acquisition of significant
 amounts of land which, in some cases, might come from people who have
 to be rehabilitated and resettled. We are committed to adopting
 Rehabilitation & Resettlement (R&R) policies which go beyond the norms
 set out by the Government. Our intention is to ensure that we meet the
 development needs of the local community wherever we are setting up our
 projects.
 
 Our commitment
 
 Our Company takes pride in being a part of the Reliance Anil Dhirubhai
 Ambani Group, which ranks among India’s top business houses. This
 association would continue to shape our vision and values.
 
 At Reliance Power, we believe in maximizing shareholders value, and in
 benchmarking ourselves to the best global standards. We make every
 effort to ensure that our projects are based on cutting-edge
 technologies, and are executed at speeds and costs which are unmatched
 in the industry
 
 The last financial year was a landmark year in our endeavour to take
 over the mantle of leadership among India’s private sector power
 players. The year ahead will be, if anything, even more critical.
 
 As ever, I seek your whole-hearted support and encouragement in this
 exciting journey.
 
                                                    Anil D Ambani
                                                         Chairman