The Shareholders,
 
 The Directors have pleasure in presenting the Forty Second Annual
 Report together with the Audited Accounts of the Company for the
 financial year ended 31st March, 2011.
 
 1.  PERFORMANCE HIGHLIGHTS
 
 1.1 The highlights of performance of the Company for the financial year
 2010-11 were as under with comparison of previous year''s performance:-
 
                                       2010-11           2009-10
 
 Parameter                          (Rs. in crore)       (Rs. in crore)
 
 Loans sanctioned                     66419.98           45357.36
 
 (excluding subsidy under RGGVY)
 
 Disbursements                        28517.11           27127.14
 
 (including subsidy under RGGVY)
 
 Recoveries (including interest)      16951.31           12496.12
 
 Total Operating Income                8256.91            6549.76
 
 Profit before tax                      3476.63            2649.19
 
 Profit after tax                       2569.93            2001.42
 
 1.2 Financial Performance
 
 The total operating income of the Company for the year increased by
 26.06% to Rs.8256.91 crore from Rs.6549.76 crore during the previous year.
 The profit before tax increased by 31.23% to Rs.3476.63 crore from
 Rs.2649.19 crore for the previous year and the profit after tax increased
 by 28.40% to Rs.2569.93 crore from Rs.2001.42 crore for the previous year.
 
 1.3 Dividend
 
 In addition to interim dividend of Rs.3.50 per share paid in February,
 2011, your Directors are happy to recommend a final dividend of Rs.4.00
 per share for the year 2010-11, which is subject to approval
 
 Dr. J.M. Phatak, CMD, REC, presenting a cheque of Rs.230.86 crore to Shri
 Sushilkumar Shinde, Hon''ble Union Minister of Power on 23rd September,
 2010 in presence of Shri P. Uma Shankar, Secretary (Power), senior
 Officials of Ministry of Power and REC.  of shareholders in the Annual
 General Meeting. The total dividend for the year will work out to Rs.7.50
 per share as against Rs.6.50 per share paid last year. The total dividend
 pay-out for the year will amount to Rs.740.59 crore (excluding dividend
 tax).
 
 1.4 Share Capital
 
 The Issued and Paid up Share Capital is Rs.987.46 crore consisting of
 98,74,59,000 equity shares of Rs.10 each as on 31.03.2011 against the
 Authorized Capital of Rs.1200 crore. The Government of India holds 66.80%
 of the equity share paid up capital.
 
 2.  LOANS SANCTIONED
 
 The Company sanctioned loans worth Rs.66419.98 crore during the year
 2010-11, as against Rs.45357.36 crore in the previous year excluding
 subsidy under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). The
 state and category-wise break-up of loans sanctioned during the year
 are given in enclosed table-1 and 2 respectively. The cumulative amount
 of sanctions made since inception upto 31.3.2011 was Rs.345906.22 crore
 including subsidy under RGGVY. The cumulative state-wise position of
 sanctions up to the end of 2010-11 is given in enclosed table-3.
 
 3.  DISBURSEMENTS
 
 A total sum of Rs.28517.11 crore was disbursed during the year 2010-11 as
 against Rs.27127.14 crore in the previous year including subsidy under
 RGGVY. The cumulative amount disbursed since inception upto 31.3.2011
 was Rs.138052.41 crore excluding subsidy under RGGVY. The state-wise
 disbursements and repayment by borrowers during the year together with
 cumulative figures and outstandings as on 31.3.2011 are given in
 enclosed table-4.
 
 4.  RECOVERIES
 
 4.1 The amount due for recovery including interest during the year
 2010-11 was Rs.16979.84 crore as compared to Rs.12461.02 crore during the
 previous year. The overdues from defaulting borrowers were Rs.195.13
 crore as on 31.3.2011. The Company recovered a total sum of Rs.16951.31
 crore during the year 2010-11 against Rs.12496.12 crore during the
 previous year. The details are given below:
 
                                                            Total 
 Particulars                                          (Rs. in crore)
 
 Overdues as on 1.4.2010                                   166.60
 
 Dues receivable during the year                         16979.84
 
 Received during the year                                16951.31
 
 Overdues as on 31.03.2011                                 195.13
 
 4.2 Out of the overdues of Rs.195.13 crore as on 31.03.2011, a sum of
 Rs.55.58 crore stands recovered till 31.05.2011.
 
 4.3 The Company has been making continuous efforts to keep Non-
 Performing Assets (NPAs) to Zero level. As on 31.03.2011, the Gross
 NPAs of the Company stood at Rs.19.54 crore (i.e. 0.02% of Gross Loan
 Assets), as compared to Rs.19.54 crore (0.03% of Gross Loan Assets) as on
 31.03.2010.
 
 5.  FINANCIAL REVIEW
 
 5.1 a summary of financial results
 
 The summary of financial results of the Company for the year ended 31st
 March, 2011 is given below:
 
                                                        (Rs. in crore)
 
 Particulars                   Standalone            Consolidated
 
                           2010-11     2009-10     2010-11    2009-10
 
 Gross Income              8495.27     6707.60     8532.20    6747.63
 
 Profit before tax          3476.63     2649.19     3499.16    2680.76
 
 Depreciation                 3.04        2.16        3.07       2.18
 
 Provision for 
 Income Tax ,               906.70      647.77      914.26     658.51
 
 Deferred Tax & FBT
 Net Profit / Profit
 after Tax                 2569.93     2001.42     2584.89    2022.25
 
 Add: Reversal of
 Deferred Tax Liability 
 for earlier                   -        325.77        -        325.77
 years
 
 Total amount available    2569.93     2327.19    2584.89     2348.02
 for appropriations
 appropriations :
 
 Transfer to Special
 Reserve u/s 36(1)
 (viii) of                  610.11      458.03     610.11      458.03
 the Income Tax 
 Act, 1961
 
 Transfer to 
 Reserve for
 Bad & Doubtful
 Debts u/s                  144.09      107.60     144.09      107.60
 36(1)(viia) of the 
 Income Tax Act, 1961
 
 Interim Dividend           345.61      257.60     345.61      257.60
 Dividend Tax 
 on Interim                  57.39       43.77      57.39       43.77
 
 Dividend
 Proposed Final Dividend    394.98      345.61     395.03      345.66
 
 Dividend Tax on             64.08       57.40      64.08       57.41
 proposed Final Dividend
 
 Transfer to Reserve for       -           -         0.20         -
 Doubtful Debts
 
 Transfer to General        260.00      500.00     263.00      500.75
 Reserve
 
 Balance carried forward    693.67      557.17     705.37      577.20
 
 5.2 Resource Mobilization
 
 The Company mobilized Rs.25855.35 crore from the market during the year
 2010-11. This includes Rs.2750 crore by way of loan from commercial banks
 and FI, Rs.5045.47 crore by way of capital gain tax exemption bonds,
 Rs.217.16 crore from infrastructure bonds under Section 80CCF of Income
 Tax Act, 1961, Rs.10169.78 crore by way of non-priority sector bonds,
 Rs.1600 crore through Commercial Paper(CP), Rs.375 crore by way of Short
 Term Loan from Commercial Banks, Rs.5308.87 crore from external
 commercial borrowings and Rs.389.07 crore by way of Official Development
 Assistance (ODA) loan from Kreditanstat fur Wiederaufbau (KfW), Germany
 & Japan International Cooperation Agency (JICA), Japan.
 
 External Commercial Borrowings
 
 The Company mobilized USD 1170 million (Rs.5308.87 crore) from
 International market during FY 2010-11. Out of the above, USD 500
 million was raised through Reg S Bond and USD 670 million through
 syndicated Term Loan facilities.
 
 Cash Credit facilities
 
 For day to day operations, the Company has an approved limit of Rs.1200
 crore to arrange cash credit limits which has been tied up with various
 banks.
 
 5.3 domestic and international Credit rating
 
 Domestic
 
 The domestic debt instruments of REC continued to enjoy AAA rating –
 the highest rating assigned by CRISIL, CARE, FITCH & ICRA-Credit Rating
 Agencies.
 
 International
 
 REC enjoys international credit rating equivalent to sovereign rating
 of India from International Credit Rating Agencies Moody''s and FITCH
 which is Baa3 and BBB- respectively. Baa3 rated obligations
 denote moderate credit risk and BBB- rated obligations denote that
 expectations of default risk are currently low.
 
 5.4 Cost of borrowing
 
 As per the Finance Act 2006, only REC and National Highway Authority of
 India (NHAI) are eligible to raise money through bonds issued under
 Section 54 EC of the Income Tax Act, 1961, which helped in keeping the
 cost of borrowing at a low level. The overall annualized average cost
 of funds was 6.90 % during the year 2010-11. As a result REC is able to
 deliver debt financing at competitive rates.
 
 5.5 Redemption and Pre-Payment
 
 During the year, the Company repaid a sum of Rs.11665.05 crore.  This
 includes repayment amounting to Rs.13.29 crore to the Government of
 India, Rs.1200.22 crore to non-priority / priority sector bond holders,
 Rs.3871.21 crore worth of Capital Gain Tax Exemption Bonds and Rs.83.09
 crore of Official Development Assistance (ODA) loan. The Company also
 redeemed long term and short term loans from Banks of Rs.2447.24 crore
 and Commercial Paper of Rs.4050 crore.
 
 5.6 Financial status at the close of the financial year
 
 At the close of the financial year 2010-11, the total resources of the
 Company stood at Rs.82792.44 crore. Out of this sum, Equity Share Capital
 contributed Rs.987.46 crore, Reserve and Surplus stood at Rs.11801.16
 crore, Loans from LIC, Commercial Banks and Market Borrowings accounted
 for Rs.70003.82 crore. These funds were deployed as Long / Short Term
 Loans of Rs.82132.06 crore and Fixed Assets of Rs.88.06 crore (including
 Capital Work in progress), Investments of Rs.812.43 crore, Deferred Tax
 Asset of Rs.12.77 crore and balance of Rs.252.88 crore in Net Current
 Assets.
 
 5.7 Policy Initiative
 
 Your Company constantly reviews and revises its lending and operation
 policies/ procedures to suitably align with market requirements as also
 with its corporate objectives.
 
 In spite of growing competition in the market as well as concerns on
 account of factors like high government borrowings, increase in RBI
 policy rates, rise in inflation etc., your Company has been able to
 maintain healthy spreads balancing its objectives of business growth
 and profitability during the year.
 
 6.  RECOGNITION, AWARDS AND ACHIEVEMENTS
 
 6.1 REC gets ''Infrastructure Finance Company'' (IFC) status
 
 We have the pleasure to inform that on an application made by the
 Company, Reserve Bank of India (RBI) vide its letter dated September
 17, 2010 categorized your Company as an Infrastructure Finance Company
 (IFC). With IFC Status, REC can now take an additional lending exposure
 of up to 5% of its owned funds in case of a single borrower as well as
 up to 10% of its owned funds in case of a single group of borrowers.
 The total permissible exposures would thus be 40% of owned funds in
 case of single group of borrowers. In addition, REC becomes eligible
 for issuance of Infrastructure Bonds and for raising funds up to USD
 500 million through External Commercial Borrowing (ECB) in a year under
 automatic route.
 
 6.2 Awards and Achievements
 
 During the year under review, performance of your Company has been
 recognised by way of bestowing the following prestigious awards
 /accolades:
 
 (i) Gold Trophy of SCOPE Meritorious Award for The Best Managed Bank,
 Financial Institution or Insurance Company 2008-09. The award was
 given by Hon''ble President of India on 10th April, 2010. The award is
 instituted by SCOPE in recognition of the outstanding performance of
 PSUs in specific field.
 
 (ii) DSIJ PSU Award 2010 for The Best Wealth Creator by Dalal Street
 Investment Journal (DSIJ).
 
 (iii) India Pride Award 2010 for The Best NBFC instituted by Dainik
 Bhaskar DNA group. The award is given for excellent performance of
 PSUs.
 
 (iv) Asia Pacific HRM Congress Award 2010 for Organisational
 Development & Leadership. The award is given under the aegis of Asia
 Pacifc HRM Congress.
 
 (v) DSIJ PSU Award 2011- Speed King for fastest growing PSUs across
 Maharatnas, Navratnas & Miniratnas.
 
 (vi) Featured in Dun & Bradstreet''s India''s Top PSUs 2011.
 
 Hon''ble Union Minister of Finance Shri Pranab Mukherjee giving away the
 india pride award 2010 - the Best NBfC for excellent performance of
 PSUs instituted by Dainik Bhaskar DNA Group, to Shri Hari Das Khunteta,
 Director (Finance), REC
 
 Hon''ble Union Minister for Power Shri Sushikumar Shinde giving away the
 3rd dsij psu award 2011-speed king for fastest growing PSUs across
 Maharatnas, Navratans & Miniratanas, to Shri Hari Das Khunteta, CMD on
 behalf of REC, on 21st April, 2011
 
 7.  MOU WITH MINISTRY OF POWER
 
 The performance of REC in terms of Memorandum of Understanding (MoU)
 signed with Ministry of Power, Government of India for the financial
 year 2009-10 has been rated as Excellent. This is the 17th year in
 succession that REC has received Excellent rating since the year
 1993-94 when the first MoU was signed with the Government. For the
 financial year 2010-11 also, based on the performance achieved, the
 Company is poised to receive Excellent rating.
 
 8.  FINANCING ACTIVITIES
 
 REC has been funding power generation, transmission & distribution
 projects besides for electrification of villages. Various initiatives in
 this regard are enumerated below:
 
 8.1 Generation
 
 During the year 2010-11, the Company sanctioned 34 nos.  of generation
 / R&M loans including 10 nos. additional loan assistance with total
 financial outlay of Rs.40101 crore including consortium financing with
 other financial institutions. Since 2002-03 and upto 31.3.2011, REC has
 sanctioned financial assistance of Rs.143904.76 crore for R&M, thermal,
 wind and hydro generation projects. REC has disbursed Rs.11753.92 crore
 during 2010-11 against the ongoing generation projects.
 
 The sector wise break up of loans sanctioned including additional loan
 assistance is as below:
 
 Particulars                          No. of loans         Loan amount
                                                          (Rs. in crore) 
 STATE SECTOR
 
 Fresh Loan                                    7             19680.87
 
 Additional Loan                               3
 
 PRIVATE SECTOR
 
 Fresh Loan                                   17             20420.13
 
 Additional loan                               7
 
 Total : Fresh Loan   Additional      24 10 = 34             40101.00
 Loan
 
 8.2 Renewable Energy (RE)
 
 During the year 2010-11, 11 nos. Renewable Energy projects including 6
 nos. Solar projects were sanctioned with total project cost of Rs.621.06
 crore and loan assistance of Rs.390.71 crore.
 
 8.3 Transmission & Distribution
 
 REC continued to play an active role in creation of new infrastructure
 and improvement of the existing ones under the transmission and
 distribution network in the country under its T&D portfolio. In line
 with the country''s objective to provide power for all by the year 2012
 and also reduce the AT&C losses, REC has been financing schemes for
 expansion and strengthening of the transmission network and more
 importantly, modernizing of the distribution system.
 
 During the year 2010-11, REC sanctioned 569 nos. of Transmission and
 Distribution schemes involving a total loan assistance of Rs.22009.13
 crore. This includes primary power evacuation schemes associated with
 generating plants, system improvement schemes including R-APDRP
 projects, bulk loan schemes, intensive electrification schemes and
 pumpset energisation schemes. The state-wise and category-wise details
 of the schemes are as per table 1 & 2 respectively.
 
 Shri P. J. Thakkar, Executive Director, REC receiving india power
 awards 2010 at a function organised by Council of Power Utilities on
 11th November, 2010 for the availability of electricity for accelerated
 growth and enrichment of quality of life of rural & semi urban
 population.
 
 8.4 System Improvement & Bulk Loan
 
 During the year 2010-11, a total of 480 system improvement schemes and
 bulk loan schemes were sanctioned involving a loan outlay of Rs.20298.36
 crore. This included: (i) 62 schemes involving a loan assistance of
 Rs.1554.26 crore for financing investment in the distribution system by
 way of installation of essential equipments like transformers, meters,
 capacitors etc. (ii) 30 schemes involving a loan assistance of Rs.1940.09
 crore for conversion of Low Voltage Distribution to High Voltage
 Distribution System (HVDS), (iii) 221 schemes for Rs.6531.59 crore for
 improving the distribution system, and (iv) 72 schemes for Rs.1017.26
 crore towards counterpart funding of Part-B of R-APDRP projects and (v)
 95 schemes for loan assistance of Rs.9255.17 crore for improving the
 transmission network.
 
 8.5 Pumpset Energization
 
 During the year 2010-11, 318176 electric irrigation pumpsets were
 reported energized under REC financed schemes. 76 new schemes for a loan
 assistance of Rs.1562.55 crore were sanctioned during the year under this
 category. The state-wise details and cumulative position up to
 31.3.2011 are given in the enclosed table-5.
 
 8.6 activities in North eastern (Ne) states
 
 A loan assistance of Rs.17.78 crore was disbursed to the NE states under
 T&D programme during the year 2010-11.
 
 Loan assistance of Rs.7.14 crore was sanctioned to Department of Hydro
 Power Development, Govt. of Arunachal Pradesh for setting up of one
 micro hydel project.
 
 9.  RAJIV GANDHI GRAMEEN VIDYUTIKARAN YOJANA (RGGVY)
 
 Government of India, launched the scheme Rajiv Gandhi Grameen
 Vidyutikaran Yojana (RGGVY)–Scheme of Rural Electricity Infrastructure
 and Household Electrification vide OM No.44/19/2004/D(RE) dated 18th
 March, 2005, for providing access to electricity to all rural
 households. The scheme is being implemented through REC. Under the
 scheme, 90% capital subsidy is being provided by Govt. of India for
 overall cost of the projects.
 
 9.1 Electrification Of Villages And Bpl Households
 
 Initial approval was for implementation of Phase I of the scheme for
 capital subsidy of Rs.5000 crore during X Plan period. Further sanction
 for continuation of the scheme in XI Plan was conveyed by Ministry of
 Power vide OM No.44/37/07-D(RE) dated 6th February, 2008 with an outlay
 of Rs.28000 crore as capital subsidy.
 
 573 Projects Covering Electrification Of 118499 Un-Electrified Villages
 (Provisional revised coverage 111062) and 2.46 crore BPL households
 (Provisional revised coverage 2.33 crore) costing Rs.26349.03 crore have
 been sanctioned by the Ministry of Power for implementation. The
 state-wise details are furnished in
 
 Table-6.
 
 Cumulatively, under the scheme works in 96562 un-Electrified villages
 have been completed and connections to 1.598 crore BPL households have
 been provided under the scheme up to 31.03.2011. The state-wise details
 are furnished in table-7.
 
 During 2010-11, it has been reported that works have been completed in
 18306 un-Electrified villages and connections to 0.588 crore BPL
 households have been provided. The state-wise details are furnished in
 table-7. Further, during the year under review, RGGVY Subsidy of Rs.5000
 crore was disbursed by the Ministry of Power, GoI, to REC.
 
 10.  RGGVY- DECENTRALISED DISTRIBUTED GENERATION (DDG)
 
 10.1 RGGVY provides for DDG projects from conventional or renewable
 non-conventional sources such as biomass, biogas, mini hydro, wind and
 solar etc. for villages where grid connectivity is either not feasible
 or not cost effective.
 
 10.2 DDG Systems are small power generation units near the load
 centres.
 
 10.3 Ninety percent capital subsidy is provided under RGGVY towards
 overall cost of the DDG projects under the scheme, excluding the amount
 of state or local taxes, which is borne by the concerned State/State
 Utility. 10% of the project cost is to be contributed by states through
 own resources/loan from financial institutions.
 
 10.4 A provision of Rs.540 crore has been kept as subsidy for DDG
 projects under XI Plan.
 
 10.5 The Guidelines for DDG projects under RGGVY have been issued by
 Ministry of Power on 12.01.2009. Amendments to DDG Guidelines were
 issued by Ministry of Power on 05.01.2011, 17.03.2011 and 18.03.2011
 for more coverage & faster implementation of DDG projects and also for
 facilitation of DDG in Lefit Wing Extremism (LWE) affected districts.
 
 10.6 29 nos. DDG projects were sanctioned during FY 2010-11 in the
 states of West Bengal, Chhattisgarh and Uttarakhand for a total project
 cost of Rs.112.58 crore. Most of the States have appointed implementing
 agencies for DDG projects and are in the process of preparation of DPRs
 for DDG projects.
 
 11. CONTRIBUTION OF REC IN PROMOTION OF RENEWABLE/DDG PROJECTS
 
 The Company till 31.3.2011 has financed various Renewable Projects as
 per details given below:
 
 sl.  Description              Projects         Projects        Total
 No.                       under imple-         Commis-
                              mentation         sioned
 
      Value of Loan
 (i)                            1895.29         132.96        2028.25
      sanctioned (Rs. crore)
 
      Disbursement made
 (ii)                            397.67         126.10         523.77
      so far (Rs. crore)
 
      Value of Projects
 (iii)                          2717.11         378.61        3095.72
      Sanctioned (Rs. crore)
 
 (iv) MW of Projects             389.60          61.46         451.06
 
 (v)  No. of Projects                23             11             34
 
 12.  STANDARDISATION, QUALITY CONTROL & MONITORING
 
 The Company has continually provided technical expertise in the
 distribution system to State Power Utilities. The technical
 specifications and construction standards issued by the Company are
 used extensively by the State Power Utilities. The Company, in order to
 promote new technologies, has been continuously looking for innovations
 using latest R&D in the field of power distribution and has recently
 issued / updated technical specifications on Insulation Piercing
 Connectors for LT Aerial Bunched Cables of Voltage upto 1100 volts and
 Anchor (Dead end) and Suspension Assemblies for LT Aerial Bunched
 Cables of working voltage upto and including 1100 volts.
 
 12.1 In Line With The Three-Tier Quality Control Mechanism For Ensuring
 proper quality of materials and works in implementation of RGGVY XI -
 Plan schemes, (i) REC Quality Monitors (RQM) have been appointed
 covering 338 projects in 25 states and (ii) National Quality Monitors
 (NQMs) have been appointed under Tier-III for the 332 projects covering
 24 states of country. Further during the year under review, RQMs have
 undertaken 528 Nos.
 
 of materials inspections and 5634 village inspections, and NQMs have
 undertaken 729 Nos. of village inspections for ensuring quality of
 works.
 
 13.  ENERGY EFFICIENCY SERVICES LIMITED (EESL)
 
 REC along with three other PSUs namely Powergrid, NTPC, and PFC as
 equal partners has formed a Joint Venture Company by the name Energy
 Efficiency Services Limited (EESL) on December 10, 2009. The total equity
 requirement for EESL is Rs.190 crore to be shared equally by the four
 PSUs. EESL is expected to take a lead in implementing energy efficiency
 projects, play a market creation role in promoting usage of energy
 efficient appliances, promote the concept of Energy Service Companies
 (ESCOs) and performance contracting, manage a partial risk guarantee
 fund to provide risk mitigation to ESCOs etc, besides taking over the
 current commercial roles being discharged by the Bureau of Energy
 Efficiency (BEE). Thus EESL is expected to implement the recommendations
 under the National Mission for Enhanced Energy Efficiency (NMEEE) which
 is part of the National Action Plan for Climate Change (NAPCC). The
 business plan of EESL envisages taking up projects in Energy
 Conservation and Building Codes, Agriculture Demand Side Management
 (DSM), Municipal DSM, Bachat Lamp Yojana, besides taking up other
 functions.
 
 13.1 Indian Energy Exchange Limited (IEX)
 
 Your Company has also contributed Rs.1.25 crore (being 4.68 % of paid-up
 capital) towards equity contribution in Indian Energy Exchange Limited
 (IEX) up to 31st March, 2011. The IEX has a nationwide presence in the
 form of electronic exchange for trading in power.
 
 14.  INTERNATIONAL COOPERATION & DEVELOPMENT
 
 14.1 Japan International Cooperation Agency (JICA)
 
 REC has 2 Nos. of ongoing ODA loans from Japan International
 Cooperation Agency (JICA) – (JICA-I & II of JPY 20629 million and JPY
 20902 million respectively) and 2 nos. ODA loans from KfW (KfW-I & II
 of EURO 70 million each). JICA-I loan is towards Rural Electricity
 Distribution Backbone (REDB) projects being implemented in the states
 of Andhra Pradesh, Madhya Pradesh and Maharashtra. JICA-II loan is
 towards Transmission System projects being implemented in the state
 of Haryana. KfW-I loan is towards Energy Efficiency Programme on HVDS
 projects being implemented in the state of Andhra Pradesh. KfW-II loan
 is towards Energy Efficiency Programme on HVDS projects being
 implemented in the state of Haryana. Under JICA-I&II ODA loans, a
 cumulative amount of JPY 15673.01 million and JPY 8142.81 million
 respectively has been drawn as on 31.03.2011. The drawal under KfW-I
 ODA loan was completed fully during the year under review and drawal
 under KfW-II ODA loan is yet to start.
 
 15.  ERP BASED INTEGRATED INFORMATION SYSTEM
 
 15.1 ERP in REC has been operational since 24th July 2009, and covers
 all important business areas of REC like Central Accounting, Project
 Appraisal and sanction, disbursement and management of Loan Accounts,
 Cash Management & Treasury functions, payroll and purchases etc. This
 enables capturing of data and information at the point of origin across
 all Offices of REC and flow of the same upto the appropriate level
 depending on the defined workflow hierarchy, resulting in improvement of
 internal efficiency and greater customer satisfaction.
 
 15.2 REC Data Centre along with support functions comprising of IT, HR,
 Legal, Administration and Finance has been certified the global ISO/IEC
 27001:2005 security standard, by BSI Management Systems India Private
 Limited. A Centralized helpdesk with state- of-the-art HelpDesk
 sofitware system has also been established to streamline and improve the
 IT support across REC.
 
 15.3 REC''s bilingual website (www.recindia.gov.in) was adjudged as the
 best Hindi website by the ‘NA.RA.KA.S'' for the past consecutive three
 years.
 
 15.4 Towards achieving greater e-governance and transparency, REC has
 implemented applications like ‘e-procurement'' and web-based online
 flling of ‘Annual Property Return''. Presently, all tenders of above Rs.10
 lakh are procured through e-tendering system. The ‘Annual Property
 Return'' System is being used by all employees across REC for on-line
 submission of Annual Property Return and intimation as per statutory
 requirements.
 
 15.5 With the implementation of ERP, more desks have been provided with
 Computer Systems. The present population of desktop systems against
 total employees stands around 90% (excluding class IV employees).
 
 16.  CENTRAL INSTITUTE FOR RURAL ELECTRIFICATION (CIRE)
 
 16.1 CIRE was established at Hyderabad in 1979 under the aegis of REC
 to cater to the training and development needs of engineers and
 managers of Power and Energy Sector and other organizations concerned
 with Power and Energy. CIRE conducts regular training programmes on
 various aspects of Generation, Transmission and Distribution for
 National and International Power Sector Executives.
 
 16.2 National Training Programmes Sponsored By Mop
 
 CIRE is designated as a nodal agency for implementation of National
 Franchisee and Training Programmes for employees of C&D category under
 the Human Resources Development component of RGGVY programme. 40000
 Franchisees and 75000 employees of C&D category are to be trained under
 National Training Programme (NTP). This training activity will continue
 upto March, 2012. CIRE has entered into MoUs with 42 Power Utilities,
 so as to implement the training programme. During the year 2010-11, 472
 Franchisee Programmes were conducted with 16770 participants and 1372
 programmes for employees of C&D category were conducted with 32383
 participants by various utilities across the country. The cumulative
 figure of personnel trained under Franchisee Training programme and C&D
 training stand at 26119 and 50256 respectively till March, 2011.
 
 16.3 Regular National Programmes
 
 CIRE during the year under review, has organised 16 Regular Training
 Programmes with 251 participants for the personnel of various Power
 Utilities/Distribution Companies, on the topics such as, Distribution
 Automation & SCADA for Power utilities; Power & Distribution
 Transformers –Modern Trends and Practices; Earthing Practices in
 Electrical Installations and Safety Precautions; EHT Sub-stations –
 Design, Operation & Maintenance; EHV Transmission Lines - Design,
 Operation & Maintenance; Open Access, Power Trading and Tariffs - ABT
 
 Scenario; Maintenance Management in Distribution; Reactive Power
 Management; Customer Management including procedures for ISO
 certification; Power Sector Accounting; Power Purchase Agreement; REC
 Standards for Construction, and Specifications for Materials; Operation
 & Maintenance of Generating Stations; Pilferage of Electricity -
 Technical & Legal Remedies; Appraisal and Financing of Power Projects;
 and 33/11 KV Sub-Station protection.
 
 16.4 Sponsored National Programmes
 
 CIRE has also organised 3 customised programmes and trained 94
 participants, with two programmes being on Pilferage of Electricity and
 Legal Remedies for the Vigilance / Police Officers / Executives of
 Karnataka Power Utilities and One on Reactive Power Management for the
 Officers of Narmada Hydro Power Development Corporation.
 
 16.5 Regular International Programmes
 
 CIRE is empanelled by Ministry of External Aaffairs, Govt. of India to
 organise training programmes in the area of power sector under
 ITEC/SCAAP. During the year, CIRE has organised 7 International
 programmes with 117 participants, on the topics, viz., Modern Practices
 in Generation and Transmission Systems; Financial Management and
 Accounting System for Power Companies; Planning and Management of Power
 Transmission and Distribution Systems; Business Management of Power
 Utilities through IT/Automated Solutions; Modernization of Power
 Distribution Sector; Decentralized Distributed Generation and Rural
 Power Distribution Management and Planning and Financial Management of
 Power Projects. The participation was from countries, viz.,
 Afghanistan, Angola, Belarus, Bhutan, Cambodia, Egypt, Ethiopia, Ghana,
 Guyana, Honduras, Indonesia, Iraq, Kenya, Laos, Lesotho, Madagascar,
 Mauritius, Malawi, Myanmar, Nepal, Nigeria, Oman, Philippines, Samoa,
 Sudan, Sri Lanka, Syria, Tanzania, Tajikistan, Thailand, Zambia and
 Zimbabwe.
 
 16.6 Sponsored International Programmes
 
 Three programmes were sponsored by USAID/SARI(Energy) for the capacity
 building of power sector executives of Afghanistan on Skill Based
 Development Programme on Transformers; Distribution Loss Reduction and
 on Protection Systems and CIRE trained 35 participants with Industries
 tie-ups for hands-on experience. Further, a 3-week customised programme
 on Solar Power Generation with 10 participants was organised for Arab
 Organisation for Industrialisation (AOI) Cairo, Egypt.
 
 16.7 Programmes Organised In Collaboration
 
 CIRE is also organising training programmes jointly with a premier
 Management Institute i.e. Institute of Public Enterprise and during the
 year conducted 4 programmes viz. Human Resources and Personnel
 Management in Power Sector; Strategic Financial Management for Power
 Sector; Finance for Non-Finance Executives and Appraisal and Financing
 of Power Projects with 51 participants drawn from various power
 utilities.
 
 16.8 Drum Programmes
 
 CIRE is empanelled as a partner training institute to organise DRUM
 training programmes, sponsored by Ministry of Power, Govt. of India
 under the financial support of USAID, through
 
 Power Finance Corporation. CIRE has organised 31 programmes most of
 them are offsite programs (at Utilities premises) and trained 878
 participants for various power utilities in the country on different
 themes, viz. Best Practices in Distribution Systems Operation and
 Maintenance; Distribution Efficiency and Demand Side Management; Best
 Practices in Distribution Loss Reduction; Communication Skills,
 Employee Motivation and Morale Development; Disaster Management,
 Electrical Safety Procedures and Accident Prevention, Financial
 Management in Distribution Business and TOT - Rural Distribution
 Franchising.
 
 16.9 R-APDRP Programme
 
 R-APDRP programme is sponsored by Ministry of Power, through PFC. CIRE
 conducted one R-APDRP programme for 63 Linemen of Haryana State Utility
 at Hisar during the year.
 
 16.10 Conducting Of Ntp Programmes By Cire As Empanelled Training
 Institute
 
 During the year 2010-11, CIRE as Empanelled Training Institute of NTP
 Programmes has conducted 31 Franchisee Programmes with 1,260
 participants and 16 C&D Programmes with 401 participants.
 
 16.11 in-house programmes
 
 Four programmes and two workshops with 104 participants were organised
 for the employees of REC to upgrade their knowledge and skills on
 various topics.
 
 16.12 In all, during the year 2010-11, in addition to coordinating and
 monitoring the National Training Programmes for Franchisees and
 employees of C&D category, CIRE conducted 119 programmes and trained
 3264 executives as indicated below:
 
 Sl.No. Name of the programme          No. of programmes         No. of 
                                                           participants
 
 1 Regular - National Programmes                     16             251
 
 2 Sponsored - National Programmes                    3              94
 
 3 Regular - International Programmes                 7             117
 
 4 Sponsored - International 
   Programmes                                         4              45
 
 5 Programmes in collaboration 
   with IPE                                           4              51
 
 6 DRUM Programmes sponsored by USAID                31             878
 
 7 R-APDRP programmes sponsored 
   by MoP/PFC                                         1              63
 
 8 National Training Programme for 
   Franchisees conducted by CIRE                     31            1260
 
 9 National Training Programme for 
   employees of C&D category 
   conducted by CIRE                                 16             401
 
 10 In-house Programmes                               6             104
 
 Total                                              119            3264
 
 17.  RISK MANAGEMENT
 
 17.1 Asset Liability Management
 
 The Company has a Risk Management Policy which covers inter alia Asset
 Liability Management and Derivative Instruments. An Asset Liability
 Management Committee (ALCO) is currently functioning under the
 chairmanship of CMD and it comprises of Director (Finance), Director
 (Technical), Executive Director (Finance), General Managers in Finance,
 Generation, T&D Division and also one Part-time Non-Official Independent
 Director, nominated by Board of Directors of REC. ALCO monitors risk
 related to liquidity, interest rates and currency rates. The liquidity
 risk is being monitored with the help of liquidity gap analysis and the
 Committee manages the liquidity risk through a mix of strategies, like
 a forward looking resource raising program based on projected
 disbursement and maturity obligations. The interest rate risk is
 monitored through interest rate sensitivity analysis and managed
 through review of lending rates and cost of borrowings and the terms of
 lending and borrowing. Maturity pattern of certain items of Asset and
 Liabilities based on Balance Sheet as on 31st March, 2011, is as under:
 
 17.2 Foreign Currency Risk Management
 
 The Company manages foreign currency risk associated with exchange rate
 and interest rate through various derivative instruments. For this, the
 Company has put in place a hedging Policy to manage risk associated
 with foreign currency borrowings.
 
 17.3 Enterprise-Wide Integrated Risk Management
 
 The Company has constituted a Risk Management Committee (RMC)
 consisting of Director (Finance), Director (Technical) and one
 Part-time Non-Official Independent Director for managing the integrated
 risks of the Company. The main function of RMC is to monitor various
 risks likely to arise and to examine Risk Management Policies and
 practices adopted by the Company, and also to initiate action for
 mitigation of risk arising in the operation and other related matters
 of the Company. All the heads of operational divisions are required to
 list out various risks, pertaining to their functional areas and the
 controls/action plan formulated to mitigate the same and seek approval
 of the Risk Management Committee (RMC).
 
 18.  ISO 9001:2008 QUALITY ASSURANCE CERTIFICATION
 
 REC has implemented Quality Management Systems as per ISO 9001:2008
 standards in six major Divisions of Corporate Office and all Zonal /
 Project Offices across the country.
 
 19.  HUMAN RESOURCES MANAGEMENT
 
 In order to professionalize the Executive strength of REC and also to
 infuse fresh blood, 7 Executives were appointed through open
 advertisement and 27 Executives through campus recruitment drawn from
 premier Institutions empanelled for the purpose during the year under
 review.
 
 The total manpower at the close of the financial year 2010-11 i.e. on
 31.03.2011 was 688 which include 396 executives and 292 Non-executives.
 
 19.1 Reservation In Employment
 
 The directives issued by the Government of India regarding reservations
 for SC/ST etc. in appointment and promotion to various posts were
 complied with. The group wise details of SC and ST employees out of the
 total strength as on 31.03.2011 are given below:
 
 Group       Total No. of              SC                 ST 
                employees
 
 A               366(332)           32(30)              9(9)
 
 B               137(153)           18(19)              3(3)
 
 C                 87(87)           17(17)              0(0)
 
 D                 98(101)          30(31)              2(3)
 
 Total            688(673)          97(97)            14(15)
 
 (Figures in bracket give the corresponding position in the previous
 year)
 
 19.2 Training & Human Resource Development
 
 As a means of equipping employees with a range of skills including
 their renewal and to enable them perform their responsibilities,
 training and HRD continued to receive priority during the year. REC
 Training and Human Resource Development policy aims at sharpening the
 managerial skills and competence needed for better employee performance
 and provides all possible opportunities to the employees to improve
 their performance and productivity. The training inputs are provided to
 promote better understanding of professional requirements as well as
 for sensitization to professional, socio-economic and political
 environment in which work is done and also for spiritual, health and
 attitudinal change processes. Significant focus area in training and HRD
 has been development of functional skills, soft skills as well as those
 related to areas such as IT, Rajbhasha etc.
 
 Based on the assessed needs and as means to satisfy them, the Company
 sponsored 149 employees to various training programmes, workshop etc.
 within the country and abroad. In addition, 25 training programmes were
 conducted in house, which were attended by 448 employees. In order to
 enable them develop global exposure several Officers were sent to attend
 various programmes abroad to countries viz. Germany, Malaysia,
 Singapore etc. Taken together, these initiatives enabled the Company to
 Significant out-perform MoU targets. As against the target of 1500
 mandays of training, REC achieved a figure of 2732 mandays for the year.
 
 19.3 Employee Welfare
 
 REC has been providing a wide range of welfare amenities to employees;
 to take care of their diverse needs with a view to ensure their
 committment to the organizational objectives. In order to provide better
 medical facilities to the employees / their dependent family members at
 Corporate Office and Zonal / Project Offices (including CIRE, Hyderabad),
 the Company during the year has expanded the list of empanelled
 Hospitals under the Direct Payment Scheme.
 
 19.4 Representation Of Women Employees
 
 Your Company provides equal growth opportunities to its women
 employees. REC''s Women Cell celebrated the International Women''s Day
 on Tuesday, the 08th March, 2011.
 
 19.5 Industrial Relations
 
 The Industrial Relations continued to be healthy, cordial and
 harmonious. The process of consultation with the REC Employees and REC
 Officers'' Association on important issues governing
 
 employees'' benefits and welfare etc. continued and on majority of the
 issues, consensus could be achieved which is a reffection of the
 atmosphere of mutual trust and harmonious relations that prevails in
 the Company. During the year 2010-11, a Bi- partite Wage Settlement was
 arrived at & implemented which comprehensively redefnes the structure
 of salary, grade & pay scales and other elements of compensation
 including provision of a comprehensive structure of social security
 along with provisions of economic rehabilitation policy, pension,
 provision of the insurance cover for long term employees'' liabilities
 etc.  Hailed as a historic event in the organization, this has brought
 REC fully in sync with other Navratna PSUs in Power Sector and ensured
 high employee motivation. A committed REC employee fraternity ensured
 best ever collective performance excelling all past records during the
 year.
 
 Dr. J. M. Phatak, CMD, REC receiving asia pacifc Hrm Congress award
 2010 for Organisational Development & Leadership from Shri Bhaskar
 Chatterjee, Secretary to the Govt. of India, Department of Public
 Enterprises, on 3rd September, 2010.
 
 19.6 Public Grievance Redressal Machinery
 
 In accordance with the guidelines issued by the Govt. of India, the
 Company has constituted a Grievance Redressal Committee to redress the
 grievances of Officers and staff. The scope of the Committee has further
 been enlarged to cover Public Grievance also. One day during a week has
 been fixed as meeting day to attend the grievances by the Heads of
 Divisions at Corporate Office as well as Zonal / Project Offices and CIRE.
 
 19.7 Sports Activities
 
 In the year 2010-11, REC hosted Inter-CPSU Kabaddi Tournament as well
 as sponsored its Team to the Inter-CPSU Table Tennis and Chess
 Tournaments organized by various CPSUs of Power Sector under the aegis
 of Power Sports Control Board (P.S.C.B.).
 
 REC Team receiving the Silver Trophy for winning the Inter-CPSU Chess
 and Bridge Tournament 2011 in April 2011 at Shillong.
 
 20.  CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY
 
 20.1 During the year, the Corporate Social Responsibility initiatives
 were pursued actively with a view to integrate REC Business operations
 with social responsibilities to all stakeholders.  Strategic focus was
 accorded by the REC CSR vision which was articulated during the year as
 follows:
 
 REC, through its Corporate Social Responsibility (CSR) initiatives
 would strive to encourage excellence in young Indian champion achievers
 in all fields to shine at international levels and also to contribute
 towards modernization of society as its social responsibility to all
 stakeholders.
 
 20.2 Accordingly the CSR activities have been pursued as Sustainable
 Projects under Corporate Social Responsibility as per policy of REC
 realigned with the DPE Guidelines issued in this regard in April 2010.
 For the fiscal 2011 CSR Budget @ 0.25% of previous year Profit after Tax
 was allocated amounting to Rs.5.00 crore.  Against this a number of
 projects were sanctioned during the year aggregating to Rs.5.10 crore.
 Promotion of young talent in Education, Sciences and Sports was a key
 programme pursued during the year. Through the Homi Bhabha Centre for
 Science education, TIFR, Mumbai, all the Olympiad winner students were
 rewarded with awards to promote education and excellence in these
 fields. Similarly a program has been launched with the National Council
 for Education Research and Training (NCERT) to provide awards to
 selected scholars. Further, awards have also been instituted for young
 champions in various sports under which the identified sportspersons is
 provided awards for the purpose of defraying the cost of preparation /
 participation for international sports events so as to enable them win
 medals in International competitions for the country.
 
 20.3 Assistance was also provided to The Energy Resources Institute
 (TERI) for its ongoing initiative of Lighting a Billion Lives (LABL).
 For provision of solar lanterns for ‘poorly Electrified'' 45 villages in
 the states of Assam, Madhya Pradesh and Maharashtra under which over 50
 Solar LED Lanterns will be distributed in each village aggregating over
 2250 Nos.
 
 20.4 Other projects include assistance for skill upgradation and
 employment assistance for Safai Karamcharis and BPL youth; assistance
 to IIT, Delhi for Design and Development of Solar, Wind energy
 conversion system for Rural Electrification; assistance to one agency
 which implements the midday meal program in Government schools for
 transportation of cooked food to school children in rural areas;
 assistance for a girls hostel in a remote village in South 24 Parganas
 of West Bengal along with provision of Solar lighting; provision of a
 Community Mobile Clinic to improve the overall health status in 10
 villages surrounding Chandpur area in Faridabad district of Haryana;
 assistance to a project for free operative eye treatment; assistance
 for promotion of art and culture etc.
 
 21.  INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
 
 21.1 The Company maintains system of Internal Control including
 suitable monitoring procedures which ensures accurate and timely
 financial reporting of various transactions, efficiency of operations and
 compliance with statutory laws, regulations and Company policies. In
 order to ensure that all checks and balances are in place and all
 internal control system are in order, regular and exhaustive Internal
 Audit of various Divisions / offices are conducted by In-house Internal
 Audit Division and for some selected Project Offices by experienced firms
 of Chartered Accountants. Audit Committee periodically reviews the
 Significant findings of different Audits as prescribed in the Companies
 Act and in the Listing Agreement.
 
 21.2 During the year, the Internal Audit Division has been further
 strengthened with induction of more professionals and implementation of
 updated REC Internal Audit Manual (2010).  The Internal Audit Division
 covers all the major areas of operations including identified critical /
 risk areas as per the Annual Internal Audit Programme. The Division
 also helps in improving accuracy and efficiency of transactions and
 operations by undertaking periodical review of controls and examination
 of records of the Company.
 
 22.  VIGILANCE ACTIVITIES
 
 22.1 The major thrust of the Vigilance Division is on Preventive
 Vigilance with a view to bring about greater transparency in systems
 and procedures. Several measures/steps have been taken in this
 direction. E-procurement for procurements exceeding Rs.10 lakhs has been
 implemented. The Procurement Guidelines have been improved upon
 incorporating latest CVC instructions and good practices of other
 Public Sector Enterprises. The final stage of computerization of Annual
 Property Returns (APR) where employees can submit their APRs details
 online was completed during the year. The returns for the calendar year
 ending 31.12.2010 were accordingly furnished on-line. Leveraging of
 Technology has also been done to provide online status of loan
 applications. As per instructions of CVC, REC (CDA) Rules have been
 reviewed and have been made more comprehensive.
 
 22.2 Inspections and field visits are being regularly conducted by the
 Vigilance Division. The Audit Reports are examined from vigilance point
 of view. Regular meetings are conducted with Functional Divisions to
 streamline the system and procedures.  Training programmes are also
 being organized for vigilance and non-vigilance Officers at Corporate
 Office as well as field Offices on vigilance related matters.
 
 22.3 The Vigilance Awareness Period was organized from 25th October to
 1st November, 2010. A Vigilance Handbook was released at the inaugural
 session of the Vigilance Awareness Period on 25th October, 2010. This
 Handbook, inter alia, covers vigilance related aspects like concept of
 vigilance, role of CVC/CBI, handling of complaints, whistle blower
 policy, investigation, disciplinary proceedings, vigilance clearance
 procedure, coordination with external agencies, organization and
 employee related issues.  During this period, posters containing
 different messages discouraging corruption and encouraging preventive
 vigilance were displayed at Corporate Office as well as field Offices.
 Debate and Essay Writing Competitions were organized for executives as
 well as non-executives. Eminent faculty was also invited for delivering
 lectures on various important topics.
 
 22.4 In compliance to the instructions of CVC, the sensitive posts in
 the Corporation were identified and HR Division has rotated many Officers
 working on these posts for a long time. Agreed lists were finalized in
 respect of all Zonal Offices / Project Offices / Central Institute of Rural
 Electrification (CIRE) in addition to Corporate Office after constant
 pursuation with local branches of CBI. Prescribed periodical returns
 were sent to CVC, CBI, MoP on time.
 
 22.5 The performance of Vigilance Division was reviewed regularly by
 the CVC, Board of Directors and CMD, REC in addition to constant
 reviews undertaken by the CVO, REC in accordance with the prescribed
 norms. Two disciplinary cases are pending and only 3 complaints are
 pending as on date.
 
 23. IMPLEMENTATION OF OFFICIAL LANGUAGE
 
 23.1 Strenuous efforts were made to achieve targets set out in the
 Annual Programme 2010-11 issued by Department of Official Language.
 During the year, Officers & Staff of the Company showed keen interest in
 Hindi with the result that its usage has increased in day to day
 working. In order to encourage employees, all Incentive Schemes
 introduced by the Government of India have been implemented in the
 Company.
 
 23.2 Inspections were carried out to assess the progressive use of
 Hindi in 15 divisions of Corporate Office and suggestions were given to
 them to improve the shortcomings. During the year, inspection of 10
 Project Offices has been carried out. Ministry of Power''s Officers have
 also inspected four Project Offices during the year. A target of 25%
 inspection of Divisions of Corporate Office & Zonal / Project Offices was
 set out in the Annual Programme 2010-11 by Official Language Department
 and against this the Company has achieved the double target of
 inspections at Corporate Office as well as Zonal /Project Offices.
 
 23.3 The Company has been honoured with RAJBHASHA SHRI SAMMAN by
 Bharatiya Rajbhasha Vikas Sansthan, Dehradun during the year 2010-11.
 
 23.4 The Company organized nine Hindi competitions separately for
 General Managers / Executive Directors, Middle level Managers and
 Non-Executives as well as Sulekh Competition for Class IV employees
 during Hindi Pakhwara from 1.9.2010 to 14.9.2010 which witnessed
 participation of employees and Officers in large scale.
 
 23.5 A Prize Distribution Function was organized on 27.12.2010.  Dr. P.
 C. Tandon, Sr. Reader, Delhi University was Chief Guest.  Winners of
 these competitions were awarded Certificates of Merits & cash prizes by
 CMD, REC. Famous Hindi Poet Mr. Arun Jamini, Mr. Deepak Gupta & Mr.
 Mahendra Ajnabi charmed with their satirical poetry in Hindi and
 motivated all present to work in Rajbhasha.
 
 Hon''ble Union Minister of Power, Shri Sushilkumar Shinde addressing the
 Rajbhasha Sammelan organized by REC under the aegis of Ministry of
 Power, Government of India at India International Centre, New Delhi on
 May 16, 2011.
 
 23.6 Cash Prizes and Certificates were given to encourage employees for
 doing their Original Work in Hindi.
 
 23.7 Four quarterly review meetings of Official Language Implementation
 Committee were held during the year 2010-11 under the Chairmanship of
 CMD, in which detailed discussions were held to review the progress and
 suggest measures to overcome the difculties in order to achieve the
 targets.
 
 23.8 In order to increase use of Hindi by all in Official work, ten Hindi
 workshops were organized in Corporate Office and nine in Zonal/Project
 Offices, in which 136 Officers and 104 employees participated.
 
 23.9 Maintaining of required ratio in purchase of Hindi & English books
 for Library was ensured and Company library has been equipped with a
 large number of Hindi literary books, magazines & reference
 publications.
 
 23.10 REC''s website is available both in Hindi and English and is being
 updated from time to time. Billingual working facility has been made
 available on all computers. All publications, reports, memorandums,
 press releases, MoUs, tenders, annual report etc.  were issued
 bilingually. To give impetus to the correspondence in Hindi, standard
 formats have also been made available on REC intranet.
 
 24.  FINANCIAL STATEMENTS / DOCUMENTS UNDER SECTION 212 OF THE
 COMPANIES ACT, 1956
 
 The Ministry of Corporate Aaffairs, Government of India, vide its
 Circular dated 8th February, 2011 has granted general exemption to all
 Companies from attaching the financial statements of its subsidiary
 companies, pursuant to Section 212(8) of the Companies Act, 1956,
 subject to compliance of certain conditions by the Companies as
 prescribed in this circular. Accordingly, copies of the balance sheet,
 profit and loss account and reports of the board of directors and
 auditors of the subsidiaries have not been attached with the balance
 sheet of the Company. However, these documents will be made available
 upon request by 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 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) prescribed under the Companies (Accounting Standard) Rules,
 2006, Consolidated Financial Statements presented by the Company
 include financial information about its subsidiaries.
 
 25.  PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY
 ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
 
 There are no Significant particulars, relating to conservation of
 energy, technology absorption under the Companies (Disclosure of
 Particulars in the Report of Board of Directors) Rules, 1988 as your
 Company does not own any manufacturing facility.  However, the Company
 has made intensive use of technology in its operations during the year
 under review.
 
 No foreign exchange was earned during the year under review.  The
 particulars regarding foreign exchange outgo during the year are as
 under:
 
 Particulars                                                  As on
                                                         31.03.2011 
                                                       (Rs. in crore)
 
 Royalty, Know-how, Professional Consultation                  Nil
 Fees
 
 Interest                                                    31.27
 
 Finance Charges                                             50.24
 
 Other Expenses                                               0.77
 
 Total                                                       82.28
 
 26.  SUBSIDIARY COMPANIES
 
 Your Company has formed six subsidiary companies for undertaking
 specific business activities. The names of these companies, dates of
 their formation and the percentage of ownership interest in these
 Companies are as follows:-
 
 Sl.  Name of subsidiary Company             Date of       Percentage
 No.                                       formation     of ownership
                                                             Interest
 
      REC Transmission Projects Company
 1.   Limited (RECTPCL)                   08.01.2007             100%
      (a wholly owned subsidiary of REC)
 
      North Karanpura Transmission
      Company Limited (NKTCL)*
 2.                                       23.04.2007             100%
      (a wholly owned subsidiary of
      RECTPCL)
 
      Talcher II Transmission Company
      Limited (TTCL)*
 3.                                      01.05.2007              100%
      (a wholly owned subsidiary of
      RECTPCL)
 
      REC Power Distribution Company
 4.   Limited (RECPDCL)                  12.07.2007              100%
     (a wholly owned subsidiary of REC)
 
      Raichur Sholapur Transmission
      Company Limited (RSTCL)*
 5.                                      19.11.2009              100%
     (a wholly owned subsidiary of
      RECTPCL)
 
      Vemagiri Transmission System
      Limited (VTSL)
 6.                                      21.04.2011              100%
      (a wholly owned subsidiary of
      RECTPCL)
 
 *NKTCL and TTCL have been transferred to M/s Reliance Power
 Transmission Limited on 20.05.2010 and 27.04.2010 respectively.  RSTCL
 has been transferred to a Consortium of M/s Patel Engineering Limited,
 M/s Simplex Infrastructures Limited and M/s BS TransComm Limited on
 07.01.2011.
 
 26.1 REC Transmission Projects Company Limited (RECTPCL)
 
 RECTPCL has successfully concluded the process of selection of
 developer as Transmission Service Provider (TSP) for three inter- State
 Transmission Projects during the year 2010-11 allocated by Ministry of
 Power, Government of India namely (i) North Karanpura Transmission
 System; (ii) Talcher-II Augmentation System and (iii) Transmission
 System associated with Krishnapattnam UMPP – Synchronous
 interconnection between Southern Region and Western Region (Part-B).
 Three project specific Special Purpose Vehicle (SPVs) namely North
 Karanpura Transmission Company
 
 Limited (NKTCL), Talcher II Transmission Company Limited (TTCL) &
 Raichur Sholapur Transmission Company Limited (RSTCL) were established
 as wholly owned subsidiary of RECTPCL for development of above three
 projects. Subsequent to successful conclusion of the selection process,
 North Karanpura Transmission Company Limited (NKTCL) & Talcher II
 Transmission Company Limited (TTCL) have been transferred to M/s
 Reliance Power Transmission Limited on 20.05.2010 & 27.04.2010
 respectively.  Similarly, Raichur Sholapur Transmission Company Limited
 (RSTCL) has also been transferred to Consortium of M/s Patel
 Engineering Limited, M/s Simplex Infrastructures Limited & M/s BS
 TransComm Limited on 07.01.2011. The selected bidders have acquired the
 project specific SPV after payment of Acquisition Price for the
 acquisition of one hundred percent (100%) of the equity shareholding of
 the SPV.
 
 Ministry of Power, Government of India vide Gazette notification dated
 March 16, 2011 has appointed RECTPCL as Bid Process Coordinator (BPC)
 for selection of developer as Transmission Service Provider for three
 new projects viz. Transmission System associated with IPPs of Vemagiri
 Area: Packages A, B & C through tariff based competitive bidding
 process. These projects will be implemented on Build, Own, Operate and
 Maintain (BOOM) basis and two stage process featuring separate Request
 for Qualification (RFQ) and Request for Proposal (RFP) will be adopted
 for selection of developer in accordance with the guidelines notified by
 Ministry of Power, Government of India. The project specific Special
 Purpose Vehicle namely Vemagiri Transmission System Limited for
 Package-A has been incorporated on April 21, 2011.
 
 The total length of transmission lines involved in Package A is about
 400 KM. In response to global notification for Request for Qualification
 (RFQ) for said project, RECTPCL has received responses from 28 bidders
 which include foreign bidders also.  The responses are presently under
 evaluation and short-listing of bidders shall be concluded shortly.
 
 26.2 Financial Performance During 2010-11
 
 During the year ended 31st March, 2011, REC Transmission Projects
 Company Limited (RECTPCL) has been able to generate an income of Rs.16.49
 crore. The profit before tax and profit after tax for the year is Rs.16.34
 crore and Rs.10.92 crore respectively. The net worth of RECTPCL has
 reached to Rs.30.77 crore against initial capital injected by REC of
 Rs.0.05 crore.
 
 26.3 REC Power Distribution Company Limited (RECPDCL)
 
 26.3.1 RECPDCL during the year completed milestone of Third Party
 Inspection (TPI) of 24,136 villages and 1,617 feeders under Rajiv
 Gandhi Grameen Vidyutikaran Yojana (RGGVY) and Feeder Renovation
 Programme (FRP) works respectively. The Company has carried out the
 material inspection of more than 17,500 distribution transformers in 13
 DISCOMS under RGGVY and material inspection of High Voltage
 Distribution System (HVDS) projects of Uttar Haryana Bijli Vidyut Nigam
 Ltd. (UHBVN).
 
 26.3.2 RECPDCL prepared the Detailed Project Report (DPR) for the
 Restructured-Accelerated Power Development and Reform Program
 (R-APDRP-Part-B) Scheme for 31 towns (20 for Uttar Haryana Bijli Vidyut
 Nigam Ltd. (UHBVN) and 11 for Dakshin Haryana Bijli Vidyut Nigam Ltd.)
 
 26.3.3 The Company has widened its business horizon by taking up the
 new initiatives viz., TPI works of HVDS, Energy Audit, Carrying out
 Energy Accounting & Energy Audit in Distribution Network and Lender
 Engineer Assignment. During the year 2010-11, the Company has conducted
 Energy Audit at Indian Institute of Management (IIM) Lucknow, NOIDA
 campus and National Institute of Public Finance and Policy (NIPFP), New
 Delhi
 
 26.3.4 The Company has also entered into a MOU with M/s North Delhi
 Power Ltd. (NDPL) to undertake the business of distribution of
 electricity in the License area. This new initiative would help the
 Company in achieving its main objective to promote, develop, construct,
 operate, distribute and maintain 66 kV and below distribution network.
 
 26.4 Financial Performance During 2010-11
 
 26.4.1 During the year ended 31st March, 2011, RECPDCL has been able to
 generate gross income of Rs.20.44 crore and profit before tax and profit
 after tax of Rs.6.16 crore and Rs.4.04 crore respectively.
 
 26.4.2 The net worth of the Company has doubled this year and reached
 to Rs.8.15 crore against initial capital injected by REC of Rs.0.05 crore.
 For the year, the Board of Directors have proposed a dividend @100% on
 par value, which is subject to approval of shareholders of the Company
 in the Annual General Meeting.
 
 28.  DIRECTORS'' RESPONSIBILITY STATEMENT
 
 With reference to Section 217 (2AA) of the Companies Act, 1956, your
 Directors confirm that:–
 
 (i) in the preparation of the Annual Accounts for the period ended
 31.03.2011, the applicable Accounting Standards had been followed and
 no material departures have been made from the same;
 
 (ii) such accounting policies have been selected and applied
 consistently and judgements and estimates made that are reasonable and
 prudent so as to give a true and aaffair view of the state of aaffairs of
 the Company at the end of the financial year and of the profit of the
 Company for that period;
 
 (iii) proper and sufficient care is taken 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;
 
 (iv) the annual accounts have been prepared on a going concern basis.
 
 29.  GREEN INITIATIVE IN CORPORATE GOVERNANCE
 
 29.1 As part of the Green Initiative in Corporate Governance, the
 Ministry of Corporate Aaffairs (MCA), Government of India, through its
 Circular Nos. 17/2011 and 18/2011, dated April 21 and 29, 2011
 respectively, has also allowed companies to send Official
 Notices/documents to their shareholders electronically.
 
 29.2 As a responsible corporate citizen, your Company has also taken
 initiative by seeking consent/dissent of its shareholders for
 electronic delivery of documents such as Notice of Annual General
 Meeting, Annual Report (Audited Financial Statements, Directors''
 Report, Auditors'' Report etc.) for the financial year ended March 31,
 2011. Accordingly e-mails were sent to 113790 shareholders whose e-mail
 addresses were already registered with Karvy Computershare Private
 Limited, Registrar & Share Transfer Agent (R&TA) of REC/Depository
 Participant. Response to the Green Initiative was overwhelming and
 84852 shareholders opted for electronic delivery of Annual Report for
 the year 2010-11. Accordingly, Annual Report 2010-11 is being sent to
 these shareholders by e-mail. Annual Report 2010-11shall also be
 available on REC website www.recindia.nic.in.
 
 29.3 It is reiterated that upon receipt of a requisition from the
 member including the members who have exercised the option electronic
 delivery of these documents, every member of the Company is entitled to
 be furnished free of cost, with a copy of the Balance Sheet of the
 Company and all other documents required by law to be attached thereto,
 including the Profit and Loss Account and Auditors'' Report.
 
 30.  Board Of Directors
 
 30.1 The current composition of the Board of Directors of your Company
 is under:-
 
 Sl.  Name of director            Designation              Date of
 No.                                                       present
                                                           Appointment
 
                                  Chairman & Managing
      Shri Hari Das
 1.                               Director (Additional     16.04.2011
      Khunteta                    Charge)
 
      Shri Hari Das
 2.                               Director (Finance)       05.05.2004
      Khunteta
 
      Shri Prakash
 3.                               Director (Technical)     02.05.2011
      Thakkar
 
      Shri Devender               Government Nominee
 4.                                                        29.08.2007
      Singh                       Director
 
                                  Part-Time Non-Official
 
 5.   Dr. Devi Singh                                       10.06.2011
                                  Independent Director
 
      Dr. Govinda                 Part-Time Non-Official
 
 6.                                                        10.06.2011
      Marapalli Rao               Independent Director
 
      Shri Venkataraman           Part-Time Non-Official
 7.                                                        10.06.2011
      Subramanian                 Independent Director
 
 30.2 There were following changes in the Board of Directors of your
 Company during the year:
 
 30.2.1 Dr. J.M. Phatak who took over the charge as CMD, REC on 15th
 June, 2010 relinquished charge on 16th April, 2011. Earlier Shri P. Uma
 Shankar relinquished the charge as CMD, REC on 15th June, 2010.
 
 30.2.2 As per terms of appointment, the tenure of Shri Guljit Kapur,
 Director (Technical) ended on 31st March, 2011 on attaining the age of
 superannuation (i.e. 60 years) on 31st March, 2011.
 
 30.2.3 Ministry of Power, Government of India, vide its order dated
 10th June, 2011, appointed three Part-time Non-Official Independent
 Directors namely Dr. Devi Singh, Dr. Govinda Marapalli Rao and Shri
 Venkataraman Subramanian, on the Board of REC for a period of three
 years, with effect from the date of their appointment, or until further
 orders, whichever is earlier.
 
 30.2.4 As per terms of appointment, the three-year tenure of Part- time
 Non-Official Independent Directors namely Shri V.N. Dhoot, Dr. M. Govinda
 Rao, Shri P.R. Balasubramanian ended on 19th December, 2010 and of Dr.
 Devi Singh on 6th January, 2011.
 
 30.2.5 Shri Rakesh Jain, Joint Secretary & Financial Advisor, Ministry
 of Power (MoP), was appointed as Government Nominee Director on the
 Board of REC w.e.f. 20th January, 2011 and his services were withdrawn
 by the Ministry of Power w.e.f. 5th July, 2011, from the Board.
 
 30.3 In accordance with the provisions of Articles 82 (4) of the
 Articles of Association of the Company, Shri Devender Singh, Director
 shall retire by rotation at the ensuing Annual General Meeting of the
 Company and, being eligible, offer himself for re-appointment.
 
 30.4 The Board wishes to place on record its deep appreciation for the
 valuable services rendered by Shri P.Uma Shankar, Dr. J.M. Phatak, Shri
 Guljit Kapur, Shri V.N. Dhoot and Shri P.R.  Balasubramanian.
 
 31.  RIGHT TO INFORMATION ACT, 2005
 
 The Company has taken necessary steps for the Implementation of Right
 To Information (RTI) Act, 2005 in REC and independent RTI Cell has
 been set up for coordinating the work relating to receipt of
 applications and furnishing information thereto.  RTI Handbook, both in
 English and Hindi, has been placed on REC website which is updated
 periodically. The status of RTI applications for the year 2010-11 (upto
 09.05.2011) is given below:
 
 Sl. Particulars                                               Nos.
 No.
 
 1.  Applications received (upto 09.05.2011)                   110
 
 2.  Applications disposed of (upto 09.05.2011)                108
 
 3.  Applications disposed of subsequently                       2
 
 4.  Appeals received by AA, REC                                 2
 
 5.  Appeals disposed of by AA, REC                              2
 
 6.  Appeals received from CIC                                   1
 
 7.  Appeals disposed of by CIC                                  1
 
 RTI MACHINERY IN REC
 
 CORPORATE OFFICE:
 
 (a) Assistant public information Officer
 
 Shri A.K. Mathur,
 Chief Manager (Law)
 
 (B) Public information Officer
 
 Shri R.K. Mittal,
 General Manager (Law)
 
 (C) Appellate authority
 
 Shri B.P. Yadav,
 Executive Director
 
 32.    COMMENTS OF C&AG OF INDIA
 
 Comments of the Comptroller and Auditor General of India on the
 Accounts of the Company for the year ended 31st March, 2011 are being
 enclosed in the Annual Report.
 
 33.  STATUTORY AND OTHER INFORMATION REQUIREMENTS
 
 Information required to be furnished as per the Companies Act, 1956,
 Listing Agreement with Stock Exchanges, Government guidelines etc. is
 annexed to this report as under :-
 
 Particulars                                                 Annexure
 
 Management Discussion & Analysis Report                            I
 
 Report on Corporate Governance                                    II
 
 Certificate on Corporate Governance issued by the                 III
 Joint Statutory Auditors of the Company
 
 Secretarial Audit Report issued by the Secretarial                IV
 Auditors of the Company
 
 Statement pursuant to Section 212 (1) (e) of
 the Companies Act, 1956 relating to subsidiary                     V
 companies.
 
 34.  STATUTORY AUDITORS
 
 M/s K.G. Somani & Co., Chartered Accountants, New Delhi and M/s. Bansal
 & Co. Chartered Accountants, New Delhi, were appointed as Joint
 Statutory Auditors of your Company for the financial year 2010-11 by the
 Comptroller and Auditor General (C&AG) of India. The Joint Statutory
 Auditors have audited the Annual Accounts of the Company for the
 financial year ended 31st March, 2011. Following documents are annexed
 to this Report:
 
 a) Auditors'' Report on the Audited Accounts of the Company for the
 financial year ended 31st March, 2011;
 
 b) Auditors'' Report on the Consolidated Financial Statements of the
 Company and its Subsidiaries;
 
 c) Non-Banking Financial Companies Auditors'' Report;
 
 d) Audited Accounts and Cash Flow Statement of the Company for the
 financial year ended 31st March, 2011;
 
 e) Annexure to be enclosed with the audited Balance Sheet for NBFC
 Companies as prescribed by RBI; and
 
 f) Audited consolidated Financial Statements of the Company for the
 financial year ended 31st March, 2011.
 
 34.1 reply to the observations/Comments of joint statutory auditors
 
 In terms of Section 217(3) of the Companies Act, 1956, the information
 / explanation to the observations of Joint Statutory Auditors in para
 (iv) of Annexure to the Auditors Report referred in Point No. 3 of
 Auditors Report are submitted as under:
 
 In our opinion and according to information & explanations given to
 us, internal controls for purchase of fixed assets and for the financial
 services are generally commensurate with the size of the Corporation
 and the nature of its business. However in certain areas internal
 control needs further strengthening like Utilization of
 grants/subsidies disbursed under various schemes; Monitoring and
 supervision of loans given to various SEBs/ DISCOMS/ TRANSCOS/ GENCOS
 including obtaining search reports for charges created against the
 loans given, ascertainment of viability of revised project at the time
 of re-schedulement of loan assets; Generation of various reports from
 loan module in ERP to have better control over loan assets. During the
 course of audit we have not come across any major failure in internal
 control system*.
 
 Efforts are being made to fur t h er strengthen the internal control
 in the said areas.
 
 35.  SECRETARIAL AUDITORS
 
 M/s Chandrasekaran Associates, New Delhi was appointed as Secretarial
 Auditors of your Company for carrying out Secretarial Audit for the
 financial year 2010-11. A copy of the Secretarial Audit Report is
 annexed to this report.
 
 36.  ACKNOWLEDGEMENTS
 
 The Directors are grateful to the Government of India particularly the
 Ministries of Power & Finance, the Planning Commission and the Reserve
 Bank of India for their continued co-operation, support and guidance in
 effective management of Company''s aaffairs and resources.
 
 The Directors thank the State Governments, State Electricity Boards,
 State Power Utilities and other Borrowers for their continued interest
 and trust in the Company.
 
 The Directors also place on record their sincere appreciation for the
 continued support and goodwill of the esteemed Shareholders, Investors
 in REC Bonds, Banks, Life Insurance Corporation, KFW of Germany, and
 JICA of Japan in the fund raising programmes of the Company.
 
 The Directors also thank the Secretarial Auditors M/s. Chandrasekran
 Associates, Joint Statutory Auditors M/s. K.G. Somani & Co. and M/s.
 Bansal & Co., and the Comptroller & Auditor General of India for their
 valued cooperation.
 
 The Directors also sincerely appreciate and thank the employees of the
 Company at all levels for their valuable contribution and dedicated
 efforts in steering the Company to excellent performance for yet another
 year in succession.
 
                             For and on behalf of the Board of Directors
 
 New Delhi                                           (Hari das khunteta)
 
 15th July, 2011                            Chairman & managing director