Rural Electrification Corporation

1.  Contingent Liabilities not provided for in respect of:-
 
 The amounts referred to in (a) above are dependent upon the outcome of
 settlement of court/arbitration cases.
 
 The amounts under 1(c) refers to Letters of comfort issued to various
 Banks for opening of Letters of credit to procure generation equipment
 against loan sanctioned by the Corporation to its borrowers.
 
 2. The Corporation is registered with the Reserve Bank of India (RBI)
 as a Non-Banking Financial Company (NBFC) since 1997-98. As per
 notification No. DNBS (PD), CC No. 12/D2.01/ 99-2000 dated 13.1.2000 of
 RBI, Govt. Companies conforming to Section 617 of the Companies Act
 have been exempted from applicability of the provisions of RBI Act 1934
 relating to maintenance of liquid assets and creation of Reserve Funds
 
 and the Directions relating to acceptance of public deposits and
 prudential norms. The said notification is also applicable to REC,
 being a Govt. Company conforming to Section 617 of the Companies Act,
 1956. Moreover in view of the non applicability of the provisions of
 section 45 (I) C of the RBI Act, 1934 regarding creation of Reserve
 Fund, the Reserve Fund is not created.
 
 3.  There has been shortfall in creation of Special Fund by some of the
 RE Cooperative Societies amounting to Rs 500.89 lacs (Previous year
 Rs.501.18lacs) and the societies are pursued to create the required
 Special Fund.
 
 4.  Balance confirmation has been received from some of the borrowers.
 
 5.  Income Tax as applicable in respect of Interest accrued on bonds is
 deducted at source at the time of actual payment of interest to the
 bond holders since such bonds are freely transferable.
 
 6.  The formalities regarding registration of conveyance deeds etc. in
 respect of some of the Land & Building acquired by the Corporation
 amounting to Rs.3,996.51 lacs (Previous year Rs.5,792.70 lacs) are in
 the process of completion.
 
 7.  In terms of Accounting Policy No. 11.2, the balances in respect of
 Interest Warrants Accounts (both for institutional and 54EC & Infra
 bonds) as on 31.3.2009 held in specified banks are Rs.5,025.32 lacs
 (previous year Rs. 12,045.48 lacs).
 
 8.  In the opinion of the management, the current assets, loans and
 advances appearing in the balance sheet have a value equivalent to the
 amount stated therein if realized during the ordinary course of
 business and all known liabilities have been provided.
 
 9.  Provision for impairment loss as required under Accounting
 Standard-28 on impairment of Assets is not necessary as in the opinion
 of management there is no impairment of the Corporation’s Assets in
 terms of AS-28.
 
 10.  The company has no outstanding liability towards Micro, Small and
 Medium undertakings.
 
 11.  No Bond Redemption Reserve (BRR) has been created since in terms
 of clarification issued by the Department of Company Affairs, Govt. of
 India vide no.6/3/2001-CL.V dated 18.4.2002, BRR is not required to be
 created in the case of privately placed debentures issued by NBFC’s
 registered with the RBI under section 45-IA of the RBI (Amendment) Act,
 1997.
 
 12.  During the year the Corporation has earned Rs.420.16 lacs
 (Previous Year Rs.953.32 lacs) on account of swap (coupon only)
 transaction which has resulted in reduction in cost of borrowing to
 that extent.
 
 The Corporation had entered into various Coupon only swap transactions
 and cross currency swap transactions. The Net Mark to Market position
 in respect of the above swap transactions as on 31.03.2009 is of
 Rs.24,271.25 lacs (favourable)
 
 The Chairman and Managing Director and other whole time Directors have
 also been allowed to use Staff car including for private journey(s) up
 to a ceiling of 1000 kms per month on payment of monthly charges of Rs.
 780/- per month as per DPE guidelines.
 
 Loans and Advances include Rs 10.66 lacs (Previous year Rs.0.81lacs)
 due from Directors of the Corporation, maximum amount outstanding
 during the year Rs.14.17 lacs (Previous year Rs.1.89 lacs).
 
 13.  Related Party Disclosure: A.  Key Management Personnel:
 
 Sh. P. Uma Shankar           Chairman cum Managing Director 
 Sh. H.D Khunteta             Director (Finance)
 Sh. Bal Mukand               Director (Technical)
                             (Up-to 30.11.2008)
 Sh. Guljit Kapur             Director (Technical)
                             (w.e.f. 01.12.2008)
 
 Remuneration to whole time Directors including Chairman & Managing
 Director is disclosed in Note No.13
 
 Advance due from whole time Directors including Chairman & Managing
 Directors have been disclosed in Note No.13
 
 14.  Subsidy Under Accelerated Generation & Supply Programme (AG&SP): -
 
 The Corporation is maintaining a Interest Subsidy Fund Account and is
 claiming subsidy from Govt. of India at net present value calculated at
 indicative rates in accordance with GOIs letter vide D.O.No.
 32024/17/97-PFC dated 23.09.1997 and O.M.No.32024/23/2001-PFC dated
 07.03.03 irrespective of the actual repayment schedule, moratorium
 period and duration of repayment. The impact of difference between the
 indicative rate and period considered at the time of drawl and the
 actual can be ascertained only after the end of the respective schemes.
 
 15.  Disclosure in respect of Intangible Assets as required in AS-26
 Intangible Assets:-
 
 i) Amortisation Rate 20%;
 
 100% in case of cost of asset is Rs. 5,000 or less
 
 ii) Amortisation Method Straight Line
 
 16. The Corporation has been providing for deferred tax assets /
 liabilities in terms of Accounting Standard No. 22 on Accounting for
 Taxes on Income. During the year the Corporation has provided
 Rs.13960.70 Lacs (previous year Rs. 7741.02 Lacs) as deferred tax
 liability.
 
 Major components of deferred tax liability as on 31.03.2009 are given
 as under:-
 
 17. In terms of Accounting Standard No. 20 issued by the Institute of
 Chartered Accountants, Earning per share (Basic and Diluted) is worked
 out as under: -
 
 18.  Some of the erstwhile State Electricity Boards (SEBs) against whom
 loans were outstanding or on whose behalf guarantees were given, were
 restructured by the respective State Governments and new entities were
 formed in the past.  Consequently, the liabilities of the erstwhile
 SEBs stand transferred to new entities and transfer agreements in most
 of the cases are to be executed amongst the Corporation, new entities
 and the State Governments.
 
 19.  Subsequent to settlement of liabilities of REC between MPSEB and
 CSEB on bifurcation of erstwhile State of M P, there is a legal dispute
 between them regarding sharing of dues, as a result of which CSEB has
 been claiming refund of approx. Rs.16,000 lacs plus interest which if
 accrues shall be payable by MPSEB.
 
 20.  The expenses of Rs.643.98 lacs incurred up to 2006-07 on RGGVY
 implementation were adjusted out of interest earned on such funds. The
 Corporation had approached MOP for regularization of above adjustments
 which is still pending. The management considers that amount is still
 recoverable from Govt. of India.
 
 21.  The pay revision of the employees of the Corporation is due
 w.e.f.1st January 2007. Pending final calculation of revised pay scales
 (including perks) as notified by Govt. of India and considered by Board
 of Directors an estimated additional provision of Rs.463.16 lacs based
 on average salary (Previous year Rs.816.84 lacs) had been made towards
 wage revision arrears during the year and accordingly Rs.1,280 lacs is
 cumulatively available toward provision for wage revision including for
 non executive employee for whom no such notification is available but
 there arrear have also been considered in line with such notification.
 Actuarial valuation of employees benefit has been carried out
 considering the estimated revised wages.
 
 22.  The Corporation has adopted AS15 (revised 2005) Employees
 Benefit. Defined employee benefit scheme are as follows:
 
 a.  Provident Fund
 
 Corporation pays fixed contribution of Provident Fund at pre-determined
 rates to a separate trust which invests the funds in permitted
 securities. The trust is required to pay a minimum rate of interest on
 contribution to the members of the trust. As per Actuarial report, the
 fair value of the assets of the Provident fund including the returns of
 the assets thereof, as at 31st March 2009 is greater than the
 obligation under the defined contribution plan.
 
 b.  Gratuity
 
 The Corporation has a defined benefit gratuity plan. Every employee is
 entitled to gratuity as per the provision of the payment of Gratuity
 Act. The scheme is funded by the Corporation and is managed by separate
 trust. The liability of Gratuity is recognized on the basis of
 actuarial valuation.
 
 c.  Post-Retirement Medical Facility (PRMF)
 
 The corporation has Post Retirement Medical Facility and Settlement
 benefits under which entitled employee (including spouse) are covered
 as per Corporations rule.
 
 d.  Leave Travel Concession (LTC)
 
 The Corporation has a scheme of providing LTC to employees and their
 dependents. This is recognized in the profit & loss account on the
 basis of actuarial valuation on annual basis.
 
 e.  Other Defined Retirement Benefit (ODRB)
 
 The Corporation has a scheme for settlement at the time of
 superannuation at home town for employees and dependents. This is
 recognized in the profit & loss account on the basis of actuarial
 valuation on annual basis.
 
 OTHER EMPLOYEE BENEFITS :- Provision for Earned Leave Encashment
 amounting to Rs.160.09 lacs(Previous Year Rs.644.49 lacs) and for sick
 leave Rs.583.36 lacs (Previous year Rs.126.39 lacs) for the year have
 been made on the basis of Actuarial Valuation at the year end and
 charged to P&L A/c.
 
 In terms of A.S-15 (revised 2005) on Employees benefits LTC has been
 accounted for the basis of Actuarial valuation.  Accordingly an amount
 of Rs.21.22 lacs for the year has been made and charged to P&L A/c.
 
 - The Expected Rate on Return on Assets over the accounting period is
 assumed rate of return.
 
 - The Principle assumptions are the discount rate and salary growth
 rate. The discount rate is generally based on the market yields
 available on govt. bonds at the accounting date with a term that
 matches of the liabilities and the salary Growth rate takes account of
 inflation, seniority, promotions and other relevant factors as long
 term basis.  The above information is certified by the Actuary.
 
 23 Government of India has appointed REC as a nodal agency for
 implementation of RGGVY. The funds received for disbursement to various
 agencies under such schemes are kept
 
 in a separate bank account. The undisbursed funds and interest earned
 thereto are classified as current liabilities.
 
 During current year interest earned of Rs.2,933.95 lacs (Previous Year
 Rs.699.72 lacs) including TDS of Rs. 658.95 lacs (Previous Year
 Rs.158.08 lacs) has been taken to RGGVY grant account and such TDS
 credits are being taken by REC for ultimately passing off the benefit
 of same to the credit of Govt. Funds.
 
 24.  During the year, Corporation has invested its surplus funds with
 the Public Mutual Funds in Liquid Scheme and Liquid Plus Scheme. The
 same have been disinvested during the year itself
 
 25.  The Corporation does not have more than one reportable segment in
 terms of Accounting Standard No.17 issued by the Institute of Chartered
 Accountants of India.
 
 26.  Prepaid expenses and prior period expenses up to Rs.5,00,000/-
 amounting to Rs.5.87 lacs & Rs.0.96 lacs( net of income of
 Rs.13.32 lacs and expenditure of Rs.12.36 lacs) respectively
 have been charged to the natural heads of accounts. Due to
 change in accounting policy of recognizing prior period /prepaid
 items up to Rs.5,00,000/- to natural head of account, prior
 period and prepaid items have been decreased by Rs.0.96 lacs
 and increased by Rs.5.87 lacs respectively and there is no
 impact on profit.
 
 27.  Previous year figures have been regrouped/rearranged/recasted,
 wherever necessary, to make them comparable with the current years
 figures.
 
 28.  Figures have been rounded off to the nearest lacs.
 
 29.  Schedules 1 to 17 form an integral part of the Balance Sheet and
 Profit & Loss Account and have been duly authenticated.
 
 30.  Balance Sheet Abstract and companys General Business Profile as
 per Part IV of Schedule VI of the Companies Act, 1956.
 
 1.  REGISTRATION DETAILS:
 
 Registration No.          005095         State Code          55
 Balance Sheet Date:       31                03              2009
                          Date              Month            Year
                                              Amount (Rs. in lacs)
 2.    CAPITAL RAISED DURING THE YEAR                 NIL
 3.    POSITION OF MOBILISATION AND DEPLOYMENT OF
       FUNDS
 
 Total Liabilities                   52,08,272.22
 Total Assets                        52,08,272.22
 SOURCES OF FUNDS
 Paid up Capital                        85,866.00
 Reserves and Surplus                 5,33,142.00
 Secured Loans                       37,61,365.25
 Unsecured Loans                      7,32,230.45
 Deferred Tax Liability                 95,668.52
 
 APPLICATIONS OF FUNDS:
 
 Net Fixed Assets                8,090.29
 Investments                  1,00,486.36
 (Incl. Capital WIP)
 Net Current Assets            (38,449.01)
 Loans                       51,38,144.58
 Deferred Tax Assets              NIL
 Misc. Expenditure                NIL
 Accumulated Losses               NIL
 
 4.PERFORMANCE OF COMPANY(Rs. In Lacs)
 
 Turnover                          4,93,127.80
 Total Expenditure                 3,01,117.17
 Profit before Ta                  1,92,010.63
 Profit after Tax                  1,27,207.76
 EPS in Rs.                              14.81
 Dividend Rate             Rs.4.50 per share
 (On an equity share of Rs. 10/- face value )
 
 5.     GENERIC NAMES OF PRINCIPAL PRODUCTS/SERVICES
 OF THE COMPANY
 
 Item Code No.           N.A.            Financial Services
                                         Signatures to all
                                         Schedules 1 to 17