Reliance Power

The Directors have pleasure in presenting the 14th 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 
                                              March 31, 2008
 
 Particulars                       Rs. in million       US $ in million 
 
 Total Income                             1328.67                 33.12
 
 Gross Profit before                      1014.39                 25.28
 
 Depreciation
 
 Less: Depreciation                          -                      -
 
 Profit before Tax                        1014.39                 25.28
 
 Less: Provision for -
 
 Current Tax                                58.00                  1.45
 
 Fringe Benefit Tax                          4.00                  0.10
 
 Taxes of earlier years                      5.70                  0.13
 
 Profit After Tax                          946.69                 23.60
 
 Balance of Profit/(Loss) brought            0.15                  0.00
 
 forward from previous period
 
 Balance carried to Balance Sheet          946.84                 23.60
 
 
          Financial Year ended
             March 31, 2007 
 Rs. in million       US $ in million *
 
          22.52                  0.52
 
           5.42                  0.13
 
              -                     -
 
           5.42                  0.13
 
            3.8                 0.090
 
              -                     -
 
              -                     -
 
           1.62                  0.04
 
          (1.46)                 0.03
 
           0.15                  0.01
 
 Financial Performance
 
 During the year under review, your Company recorded total income of Rs
 132.87 crore, against Rs 2.25 crore in the previous year. Net Profit
 for the financial year ended March 31, 2008 increased to Rs 94.67 crore
 from Rs 0.16 crore in the previous year. Shareholders equity (Networth)
 increased to Rs 13,542.68 crore from Rs 200.06 crore in the previous
 year.
 
 Promoters of the Company
 
 AAA Project Ventures Private Limited and Reliance Energy Limited are
 the promoters of the Company, with aggregate holdings of 89.92% in the
 equity capital of the Company.
 
 Initial Public Offering
 
 The Company with a view to raising funds for implementation of the
 various projects under execution and consideration, came out with an
 Initial Public Offering (IPO) of 26,00,00,000 equity shares of Rs 10
 each for cash at a price of Rs 450 per equity share at a premium of Rs
 440 per equity share (Rs.420 per share for Retail Individual Investors)
 aggregating Rs 11,563.20 crore (net of retail discount) including 3.20
 crore equity shares to the Promoters of the Company at a price of Rs
 450 per share.
 
 The Company received the clearance from the Securities and Exchange
 Board of India on December 28, 2007, and from the Registrar of
 Companies on January 2, 2008, for its maiden IPO. The IPO opened on
 January 15, 2008, and closed on January 18, 2008. The IPO, the largest
 in the history of the Indian capital markets, received an overwhelming
 response with commitment of nearly Rs 7,50,000 crore (US $ 190 billion)
 from nearly 500 institutional investors across the globe and 5 million
 retail investors. The sheer scale and unprecedented magnitude of the
 response clearly reflected the pricing of the IPO as being in line with
 prevailing valuation benchmarks and market sentiments.
 
 Post-allotment, the Company has approximately 42 lakh shareholders. The
 equity shares, offered through this IPO, are listed at the Bombay Stock
 Exchange Limited and the National Stock Exchange of India Limited and
 are traded from February 11, 2008.
 
 Issue of Bonus Shares
 
 Subsequent to the closing of the IPO, the global and Indian equity
 markets have suffered an extraordinary meltdown, with all benchmark
 indices declining by 15 - 20 per cent, and leading Indian stocks
 declining by an even greater range of 20 – 40 per cent. In line with
 this global trend, the Company’s share price had closed below the IPO
 price for the first two weeks after listing on February 11, 2008. Since
 the opening of the Company’s IPO on January 15, 2008 and after a week
 from listing on February 11, 2008, the Sensex was down by 13 per cent,
 while the Company’s share price was down by 11 per cent from the IPO
 price for retail investors and 15 per cent for other categories of
 investors.
 
 In the long term interests of the Company and its more than 4 million
 Members, the Promoters of the Company i.e. Reliance Energy Limited and
 Anil Dhirubhai Ambani Group who collectively hold 203.20 crore equity
 shares representing 89.92 per cent of the existing paid-up equity share
 capital of the Company, have in an extraordinary and unprecedented step
 decided to waive their entitlement to the issue and allotment of Bonus
 Shares.
 
 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 Directors of the Company deemed appropriate as
 one-time measure to reduce the effective cost of acquisition of the
 Company’s shares below the IPO price by issue of Bonus Shares. The
 Board recommended issue of bonus shares to all the shareholders of the
 Company under public category (excluding the promoters) in the ratio of
 three new fully paid-up equity shares of Rs 10 each for every five
 existing fully paid-up equity shares of Rs 10 each held.
 
 In another unprecedented step in order to protect Reliance Energy
 Limited (REL), a Promoter of the Company, from suffering any dilution
 of its holding in the Company consequent upon REL waiving its right to
 Bonus Shares, AAA Project Ventures Private Limited, an entity fully
 controlled by Shri Anil D Ambani and also Promoter of REL has
 undertaken voluntarily without any obligation to do so and without any
 specific consideration to contribute as and by way of gift, 2.57 per
 cent of its post Bonus Issue shareholding comprising 6,15,00,000 equity
 shares in the Company to REL.
 
 The members through Postal Ballot have approved the proposal for issue
 and allotment of bonus equity shares on April 21, 2008. The Company is
 taking steps to implement the proposal in this regard.
 
 Dividend
 
 Your Directors have not recommended any dividend on equity shares for
 the year under review.
 
 Merger of Reliance Public Utility Private Limited with the Company
 
 In terms of the scheme of Amalgamation sanctioned by the Hon’ble High
 Court of Bombay effective from September 29, 2007, Reliance Public
 Utility Private Limited amalgamated with the Company.
 
 Authorised Capital
 
 During the year under review, the authorised share capital of the
 Company increased to Rs 15,000 crore effective from September 1, 2007.
 Further, pursuant to the scheme of amalgamation of Reliance Public
 Utility Private Limited with the Company, the authorised capital of the
 Company stands increased to Rs 16,000 crore divided into 1,100 crore
 equity shares of face value Rs 10 each and 500 crore preference shares
 of face value Rs 10 each.
 
 Management Discussion and Analysis
 
 Management Discussion and Analysis report for the year under review, as
 stipulated under clause 49 of the listing agreement with the stock
 exchanges in India, is presented in a separate section forming part of
 the Annual Report.
 
 The Company has entered into various contracts in the areas of power
 business. While benefits from such contracts will accrue in the future
 years, their progress is periodically reviewed.
 
 Subsidiary Companies
 
 During the year under review, the following companies, viz.  Sasan
 Power Limited, Maharashtra Energy Generation Limited, Vidarbha
 Industries Power Limited, Tato Hydro Power Private Limited, MP Power
 Generation Private Limited, Siyom Hydro Power Private Limited, Urthing
 Sobla Hydro Power Private Limited, Kalai Power Private Limited, Coastal
 Andhra Power Limited, Maharashtra Energy Generation Infrastructure
 Limited (subsidiary of Maharashtra Energy Generation Limited), Coastal
 Andhra Power Infrastructure Limited (subsidiary of Coastal Andhra Power
 Limited), Sasan Power Infrastructure Limited (subsidiary of Sasan Power
 Limited), Sasan Power Infraventures Private Limited (subsidiary of
 Sasan Power Limited) and Reliance Coal Resources Private Limited, have
 become subsidiaries of the Company.
 
 In terms of the approval granted by the Central Government under
 Section 212(8) of the Companies Act, 1956, copies of the Balance Sheet,
 Profit & Loss Account, report of the Board of Directors and Auditors of
 the subsisting subsidiaries have not been attached with the Balance
 Sheet of the Company.  These documents will be made available upon
 request to any member of the Company interested in obtaining the same.
 However, 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
 subsdiaries will be kept for inspection by any member. Further,
 pursuant to Accounting Standard-21 (AS- 21) issued by the Institute of
 Chartered Accountants of India, Consolidated Financial Statements
 presented by the Company include financial information of its
 subsidiaries.
 
 Fixed Deposits
 
 The Company has not accepted any fixed deposits during the year under
 review.
 
 Directors
 
 During the year under review, Shri S C Gupta, Shri Rakesh Aggarwal,
 Shri Ashish Tambawala and Shri Himanshu Agarwal, resigned as Directors
 of the Company.
 
 Shri Anil D Ambani, Shri S L Rao, Shri J L Bajaj, Dr Yogendra Narain
 and Dr V K Chaturvedi were appointed as Additional Directors in terms
 of Section 260 of the Companies Act, 1956 effective from September 30,
 2007. They hold office up to the date of the ensuing Annual General
 Meeting. The Company has received notices in writing from members
 proposing the candidatures of Shri Anil D Ambani, Shri S L Rao, Shri J
 L Bajaj, Dr Yogendra Narain and Dr V K Chaturvedi, for the office of
 Director.
 
 Shri K H Mankad, was appointed as an Additional director and Whole-time
 Director with effect from November 7, 2007.  Members of the Company at
 their extraordinary general meeting held on November 9, 2007, approved
 the appointment of Shri Mankad as a Director and Whole-time Director of
 the Company.  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.
 
 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 annual accounts for the financial year
 ended March 31, 2008, the applicable accounting standards have been
 followed and that there are no material departures from the same;
 
 (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
 disclosed 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
 
 The statutory auditors, M/s Price Waterhouse, Chartered Accountants and
 M/s Chaturvedi & Shah, Chartered Accountants, retire at the conclusion
 of the ensuing Annual General Meeting and are eligible for
 re-appointment.
 
 The Company has received letters from both of them, to the effect that
 their appointments, if made, would be within the limits under Section
 224 (1B) of the Companies Act, 1956. It is accordingly proposed to
 appoint M/s Price Waterhouse and M/s Chaturvedi & Shah, as joint
 statutory auditors of the Company for the year 2008-09.
 
 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
 
 Information in accordance with the provisions of Section 217(1)(e) of
 the Companies Act, 1956, read with the Companies (Disclosures of
 Particulars in the Report of Board of Directors) Rules, 1988 regarding
 conservation of energy and technology absorption are not given as the
 Company has not undertaken any manufacturing activity.
 
 Foreign Exchange Earnings and Outgo
 
 Foreign Exchange earned : Nil
 
 Foreign Exchange used : Rs 35.41 lakh
 
 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 conforming compliance
 with the conditions of Corporate Governance as stipulated under clause
 49 of the Listing Agreement is given in Annexure I.
 
 Acknowledgements
 
 Your Directors wish to place on record their appreciation for the
 continued support and co-operation of the shareholders, banks, various
 regulatory and government authorities and for the valuable
 contributions made by the employees of the Company.
 
                                  On behalf of the Board of Directors
 
                                                        Anil D Ambani
                                                             Chairman
 Mumbai
 April 28, 2008