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Power Finance Corporation Ltd.

BSE: 532810 | NSE: PFC |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE134E01011 | SECTOR: Finance - Term Lending Institutions

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Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

REPORT OF THE BOARD OF DIRECTORS'' FY 2018-19

The Members,

Power Finance Corporation Limited

The Board of Directors of your Company are pleased to present their 33rd Annual Report on the performance of your company for the financial year ended March 31, 2019 along with Audited Financial Statements, Auditor''s Report, Secretarial Auditor''s Report & report by the Comptroller and Auditor General of India.

1.0 FINANCIAL AND OPERATIONAL HIGHLIGHTS

(a) PROFITABILITY (Rs, in crore)

Particulars

Standalone

Consolidated

2018-19

2017-18

2018-19

2017-18

Total Income

28851.29

25980.25

54156.83

48645.42

Profit Before Tax

9815.79

5845.11

17862.03

11779.44

Tax expenses

2862.87

1458.34

5221.76

2982.75

Profit After Tax

6952.92

4386.77

12640.27

8796.69

Owners of the Company

-

-

9920.86

6688.69

Non-Controlling Interests

-

-

2719.41

2108.00

Total Comprehensive Income

6745.95

4063.03

12372.52

8480.60

Owners of the Company

-

-

9681.81

6369.92

Non-Controlling Interests

2690.71

2110.68

(Rs, in crore)

Particulars

Standalone

Consolidated

2018-19

2017-18

2018-19

2017-18

Opening balance of Surplus

3848.43

5184.72

6887.10

5467.43

Profit After Tax for the year

6952.92

4386.77

9920.86

6688.69

Re-Measurement of Defined Benefit Plans

(1.94)

7.50

(8.57)

5.32

Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1) (viia) (c) of Income Tax Act, 1961

(353.42)

(372.10)

(497.44)

(548.85)

Transfer to Special Reserve created and maintained u/s 36(1) (viii) of Income Tax Act, 1961

(1577.91)

(1595.06)

(2274.58)

(2428.00)

Transfer to Special Reserve created u/s 45-IC (1) of Reserve Bank of India Act, 1934

(1390.58)

(6.37)

(1997.46)

(6.37)

Transfer to Debenture Redemption Reserve

(289.73)

(292.65)

(393.21)

(396.13)

Transfer to General Reserve

(1000.00)

(1000.00)

(1000.00)

(1263.17)

Transfer to Interest Differential Reserve-KFW Loan (net)

(2.10)

(1.49)

(2.10)

(1.49)

Dividend

0.00

(2059.26)

(1325.29)

(3103.90)

Dividend Distribution Tax

0.00

(404.41)

(299.35)

(633.07)

Transfer from Debenture Redemption Reserve on account of utilization

2.30

0.00

2.30

0.00

Transfer from OCI- Equity Instruments

14.56

0.78

14.56

0.78

Other Comprehensive lncome/(Expense)

-

-

(0.11)

(0.04)

Reclassification of gain / loss on sale of equity instrument measured at OCI

2.85

Pooling of interest accounting for common control business combination

-

3 33 33

Closing Balance of Surplus

6202.53

3848.43

9029.56

6887.10

(Rs, in crore)

Particulars

2018-19

2017-18

Sanction

95230

116233

Disbursement

67678

64414

(c) INTEGRATED POWER DEVELOPMENT SCHEME (IPDS) OPERATIONS (R-APDRP scheme subsumed)

(Rs, in crore)

Particulars

2018-19

Cumulative (up to March''19)

Sanctioned project cost

a. R-APDRP

(2196)

35327

b. IPDS

3387

32059

Disbursement

a. R-APDRP

867

12017

b. IPDS

2713

7852

Note : Negative sanction in 2018-19 indicates reduction in cost

Additionally, funds worth X578 crore (cumulative) have been released under J&KPMDP.

2.0 FINANCIAL PERFORMANCE

2.1 ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS)

The Company adopted Ind AS from April 1, 2018 and the effective date of transition was April 1,2017. Accordingly, the financial statements have been prepared in accordance with the recognition and measurement principles of Ind AS prescribed under section 133 of the Companies Act, 2013 read with relevant rules issued there under. The transition to Ind AS has been carried out from the erstwhile Accounting Standards notified under the Act read with relevant rules there under and directions issued by the RBI (collectively referred to as “Previous GAAP”). The impact of transition has been accounted for in the opening reserves as at April 1,2017. Results and financial figures for the corresponding period prepared under Previous GAAP stated in this Board Report and its attachments/annexure have been restated to Ind AS.

2.2 REVENUE

The total income achieved by your Company during the FY 2018-19 is Rs, 28,851.29 crore as compared to Rs, 25,980.25 crore in FY2017-18. Out of it, Revenue from Operations for the year isRs, 28,842.00 crore as compared to Rs, 25,975.85 crore in the previous year.

2.3 EXPENSES

The total expenditure for the FY 2018-19 amounted to Rs, 19,035.50 crore as against total expenditure ofRs, 20,135.14 crore in FY 2017-18. Out of it, Finance cost amounted to Rs, 18,981.76 crore in FY 2018-19 as compared to Rs, 16,955.89 crore in FY 2017-18. This constituted 99.72% of total expenses in FY 2018-19 as compared to 84.21% in FY2017-18. During FY 2018-19, Employee Benefit expenses and other expenses, which includes administrative and office expenses were Rs, 288.26 crore (1.51 % of total expenses and 1.52% of finance cost) against Rs, 248.08 crore (1.23% of total expenses and 1.46 % of finance cost) in the previous year.

2.4 PROFIT

During the FY 2018-19, your Company earned a net profit of Rs, 6,952.92 crore as compared to Rs, 4,386.77 crore for theFY2017-18.

2.5 TOTAL COMPREHENSIVE INCOME

During the FY 2018-19, your Company earned total comprehensive income of Rs, 6,745.95 crore as compared to Rs, 4,063.03 crore for the FY 2017-18.

2.6 SHARE CAPITAL

As on March 31, 2019, the paid-up share capital of your Company was Rs, 2,640.08 crore consisting of 2,64,00,81,408 equity shares of Rs, 10 each. During FY 2018-19 Government of India (Gol) transferred 1,93,72,120 and 16,19,54,570 equity shares held in the Company, in connection with New Fund Offer, to the Asset Management Company (AMC) of Bharat 22 ETF and CPSE ETF respectively. Consequently, the Government of India''s shareholding came down from 65.92% to 59.05%. No dividend is recommended in FY 2018-19 as compared to FY 2017-18, wherein the dividend payout amounted to Rs, 2,059.26 crore.

Your Company sanctioned loans ofRs, 95,230 crore during the FY 2018-19 to State, Central, Private and Joint Sector entities. An amount of Rs, 67,678 crore was disbursed during the same period. With this, as on March 31, 2019, the cumulative sanctions amount to Rs, 7,62,248 crore and cumulative disbursements amount to Rs, 5,87,446 crore.

In addition to above, projects worth Rs, 3,387 crore were sanctioned under IPDS during FY 2018-19. An amount of Rs, 2,713 crore was disbursed under IPDS and Rs, 867 crore under R-APDRP during the same period. With this, cumulative approved project cost amounts to Rs, 32,059 crore under IPDS and Rs, 35,327 crore under R-APDRP and cumulative disbursements of Gol funds to utilities amount to Rs, 7,852 crore under IPDS and Rs, 12,017 crore under R-APDRP.

3.0 OPERATIONAL PERFORMANCE

Your Company sanctioned loans ofRs, 95,230 crore during the FY 2018-19 to State, Central, Private and Joint Sector entities. An amount of Rs, 67,678 crore was disbursed during the same period. With this, as on March 31, 2019, the cumulative sanctions amount to Rs, 7,62,248 crore and cumulative disbursements amount to Rs, 5,87,446 crore.

In addition to above, projects worth Rs, 3,387 crore were sanctioned under IPDS during FY 2018-19. An amount of Rs, 2,713 crore was disbursed under IPDS and Rs, 867 crore under R-APDRP during the same period. With this, cumulative approved project cost amounts to Rs, 32,059 crore under IPDS and Rs, 35,327 crore under R-APDRP and cumulative disbursements of Gol funds to utilities amount to Rs, 7,852 crore under IPDS and ^ 12,017 crore under R-APDRP.

Your Company did not conduct any auction of its loan assets during FY 2018-19.

3.1 LENDINGS (Excluding R-APDRP/IPDS)

3.1.1 Sector-wise (Rs, in crore)

2018-19

Cumulative up to March, 2019

Category

Sanctions

Disbursements

Sanctions

Disbursements

State Sector

71971

58734

549291

428898

Central Sector

1221

819

46069

43778

Joint Sector

5976

3608

47692

34783

Private Sector

16063

4516

119196

79988

Total

95230

67678

762248

587446

3.1.2 Discipline-wise (Rs, in crore)

2018-19

Cumulative up to March, 2019

Category

Sanctions

Disbursements

Sanctions

Disbursements

Thermal Generation

10239

16059

324073

261376

Hydro Generation (>25MW)

2271

134

48460

34887

Renewable Energy

8139

3900

29129

20094

Renovation, Modernization and Uprating of Thermal & Hydro Power Stations

443

152

12839

11052

Transmission

10351

4222

71873

39499

Distribution

26156

12778

76037

36568

Short Term Loan

12211

12401

82613

80460

Others*

25420

18032

117224

103510

Total

95230

67678

762248

587446

* Others include Medium Term Loan, Transitional Finance, Fuel Sources Development, Funding of Regulatory Assets, Buyer Line of Credit, Associated Infrastructure, Equipment Manufacturing Loan, Computerization, Loan for Redemption of bonds, Project settlement, Purchase of power through PXI, Loan for Asset Acquisition, Loan Against Receivables, Bill Discounting, Studies, Pre Investment Fund, Technical Assistance Project, Decentralized Management etc.

3.2 Financial Assistance under IPDS/R-APDRP (Rs, in crore)

2018-19

Cumulative upto March, 2019

Scheme

Approved project cost

Disbursements* (Gol funds)

Approved project cost

Disbursements*

R-APDRP

Part A (IT)

(219)

314

5156

4040

Part A (SCADA)

-

48

1251

639

Part B

(1977)

505

28920

7338

Sub - Total

(2196)

867

35327

12017

IPDS

IPDS

3387

2713

32059

7852

*ln addition to above, during FY 2018-19, X41 crore were released by MoP for nodal agency fee/ enabling activities under IPDS, Rs, 59 crore under Part-C including re-imbursement of PFC''s actual expenditure of R-APDRP. Cumulatively, MoP has released an amount of Rs, 166 crore for nodal agency fee/enabling activities under IPDS andt 471 crore under Part-C of R-APDRP.

The Moll targets agreed with MoP under IPDS/ R-APDRP for FY 2018-19 and actual achievements during the year is tabulated below:

SI.

FY2018-19

Cumulative

No.

Moll Parameter

Target

Actual

Target

Actual

1

IPDS work completion (No. of Circles)

223

223

223

223

2

IPDS Ph-ll implementation (No. of Towns)

350

365

350

365

3

Award of ERP work (No. of Utilities)

29

21*

29

21

4

Verification of Part-A IT completion by TPIEA-IT (No. of Towns) (Cum.)

605

357*

1400

1152

5

SCADA under Part-A completion (No. of Towns) (Cum.)

30

27*

55

52

6

Capacity Building (Mandays)

5,000

5,022

-

-

*Note : MoP has approved relaxation of shortfall in achievement of Moll targets due to external factors

4.0 REALISATION

Your Company gives utmost priority to the realization of its dues towards principal, interest etc. under various financial assistance such as rupee term loans, working capital, lease financing, foreign currency loans, loans for equipment financing and guarantee fee. The Recovery Rate for the performing loan assets for the FY 2018-19 is 99.01 %.

Provisioning on Stage-Ill Loan Assets has been decreased by an amount of Rs, 780 crore during the year. The Company has made total provision ofRs,15,021 crore (excluding LoC) towards Stage-Ill Loan Assets against Loan Assets in its Annual Accounts up to the year 2018-19. After making provision on Stage-Ill assets, the level of net Stage-Ill Assets has been recorded at Rs, 14,332 crore which is 4.55% to the Total Gross Loan Assets as on March 31,2019.

In addition to above, your company has also made a provision ofRs, 857 crore and Rs, 303 crore on Stage-I Loan Assets and Stage-ll Loan Assets respectively as on March 31,2019, which would strengthen PFC''s balance sheet by providing a adequate provisioning and inspire higher levels of confidence amongst investors, regulators and other stakeholders in your company.

5.0 BORROWINGS

5.1 DEPOSITS

Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2018-19. Further, no Perpetual Debt Instruments (PDI) were issued by your company during FY 2018-19.

5.2 BORROWINGS FROM DOMESTIC MARKET

The major borrowings from Domestic market during the FY2018-19 are given as follows:- (Rs, in crore)

S. No.

Source

Amount

1.

Commercial Paper (CP)

*9,634.38

2.

Bonds -Private Placement (Taxable)

25,862.50

3.

Bonds -Private Placement (Sec 54 EC)

491.95

4.

Term Loans

41,979.00

TOTAL

77,967.83

‘Excluding CP raised and repaid during the year of Rs, 22,199.71 crore

5.3 CASH CREDIT/ OVERDRAFT FACILITIES

For day to day operations, your company continued to follow prudent strategies for optimum utilization of fund based resources. To hedge any financial liquidity bottlenecks, ample credit lines to the tune of Rs, 14,600 crore were available as on March 31, 2019 by various scheduled commercial banks to the company for short term funding which do not bear any commitment charges towards unutilized limits.

5.4 EXTERNAL BORROWINGS

The foreign currency denominated borrowings during FY2018-19 are as follows: (Rs, in crore)

S. No.

Source

Amount

1.

Bonds under MTN / GMTN programme

5,568

2.

Syndicated Loans

2,883

3.

FCNR(B) loans*

2,031

TOTAL

10,482

* FCNR(B) Loans are not external borrowing in terms of ECB guidelines issued by RBI

Green Bonds

PFC''s Green Bond Framework was established in October, 2017 as approved by Climate Bonds Initiative, London, UK. Your Company issued its first USD Green bond in December, 2017 and raised US $400 million at a coupon of 3.75% and these bonds are listed on the London Stock Exchange''s new International Securities Market (ISM) and Singapore Stock Exchange. The funds raised have been utilized to finance renewable energy projects as per the “Eligible Projects” under PFC''s Green Bond Framework. As at March 31,2019, outstanding loan balances of Solar & Wind energy projects funded by PFC are Rs, 7,484 crore and Rs, 6,961 crore respectively.

5.5 EXTERNALLY AIDED PROJECTS

No loans have been availed from Multilateral/ Bilateral agencies during FY2018-19. Outstanding balance from such agencies as at March 31,2019 is as follows:

Particulars

Amount

KFWI

EUR 61,87,159

Credit National

EUR 64,67,904

ADB

USD 119,72,518

6.0 PARTICULARS REGARDING CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

6.1 CONSERVATION OF ENERGY/TECHNOLOGY ABSORPTION

There are no significant particulars, relating to conservation of energy and technology absorption as your Company does no town any manufacturing facility.

6.2 FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign exchange outgo aggregating Rs, 1424.29 crore was made on account of debt servicing, financial & other charges, travelling and training expenses.

The Foreign exchange earnings forthe FY2018-19were nil.

7.0 CREDIT RATING Domestic

Credit Ratings by Domestic credit rating agencies for domestic program of the Company as at March 31,2019:

S. No.

Rating Agency

Long Term Rating

Short Term Rating

1.

CRISIL

CRISILAAA

CRISIL A1

2.

ICRA

ICRA AAA

ICRAA1

3.

CARE

CARE AAA

CAREA1

International

Long term foreign currency issuer rating assigned to the Company as at March 31, 2019:

S. No.

Rating Agency

Rating

1.

Fitch Ratings

BBB-

2.

Standard & Poor (S&P)

BBB-

3.

Moody''s

Baa3

The rating as mentioned above stands same during the year.

8.0 RISK MANAGEMENT

8.1 ASSET LIABILITY MANAGEMENT

Your Company has put in place an effective Asset Liability Management System and constituted an Asset Liability Management Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity and interest rate and also monitors implementation of decisions taken in the ALCO meetings. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of asset receipts and debt service obligations. While the liquidity risk is being monitored with the help of Asset Liability gap analysis, the interest rate risk is managed by analysis of interest rate sensitive gap statements. Such analysis is made on quarterly basis in various time buckets and is being used for critical decisions regarding the time, volume and maturity profile of the borrowings and creation of mix of assets and liabilities in terms of time period (short, medium and long-term) and in terms of fixed and floating interest rates.

The asset liability management maturity pattern of items of assets and liabilities as on March 31, 2019 is set out below:

(Rs, in crore)

Bucket as at March 31, 2019

Deposits/

Investments

Advances

Domestic

Borrowings

Foreign Currency Items \ssets Liabilitios

Up to 30/31 Days

14133.64

4955.46

21785.18

0.00

696.50

Over 1 Month up to 2 Months

1833.07

1928.13

4915.00

0.00

0.00

Over 2 Months up to 3 Months

0.00

1264.76

7495.20

0.00

2080.35

Over 3 Months & up to 6 Months

0.00

9225.21

10292.05

0.00

0.00

Over 6 Months & up to 1 Year

0.00

16559.51

19088.10

0.00

3468.40

Over 1 Year & up to 3 Years

0.00

50663.28

76608.05

0.00

4971.67

Over 3 Years & up to 5 Years

0.00

49879.10

32730.60

0.00

9235.95

Over 5 Years

0.00

165146.63

87160.38

23.84

8373.99

8.2 FOREIGN CURRENCY RISK MANAGEMENT

Your Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forwards, options, principal swaps and forward rate agreements.

As on March 31,2019, the details of outstanding foreign currency liabilities are USD 3,612 mn, JPY 60,079 mn & EUR 13 mn; out of which USD 2,400 mn & JPY 9,670 mn are hedged. Further, 85% of the foreign currency portfolio with residual maturity up to 8 years has been hedged.

8.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT

Your Company being a Financial Institution in the business of lending to power sector is exposed to several risks in the course of its business. In this regard, the Company had put in place an Integrated Enterprise Wide Risk Management Policy (IRM policy). In order to implement the IRM Policy, your company had constituted a Risk Management Compliance Committee of Directors to monitor various risks arising in the operations.

Under the IRM policy, the Company has to identify the principal risks which may have an impact on its profitability/revenues. In this regard, the Company has identified 11 significant risk parameters which arise from the Companies business model and from its use of financial instruments. These risk parameters cover the major operational risks, financial risks, market risks, regulatory risks etc. faced by the Company and are regularly assessed as per the prescribed Risk Assessment Criteria. To facilitate this assessment, Your Company has put in place a mechanism to ensure that the identified risks are monitored carefully and managed efficiently.

9.0 ULTRAMEGA POWER PROJECTS fUMPPs) AND INDEPENDENT TRANSMISSION PROJECTS fITPs)

9.1 UMPPs

Development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each, adopting super critical technology is the initiative of Ministry of Power (MoP), Government of India for which your Company has been designated as the ''Nodal Agency1 and Central Electricity Authority (CEA) as the Technical Partner by MoP.

As on March 31, 2019, 17 UMPPs have been identified by MoP for development which are located in the states namely Madhya Pradesh (1), Gujarat (2), Chhattisgarh (1), Karnataka (1), Maharashtra (1), Andhra Pradesh (2), Jharkhand (2), Tamil Nadu (2), Odisha (3), Bihar (1) and Uttar Pradesh (1).

PFC Consulting Limited (a wholly owned subsidiary of PFC) in conjunction with MoP and CEAundertake preliminary site investigation activities, land acquisition activities, site specific studies to obtain appropriate regulatory and other approvals for land, water, coal block, environment etc. necessary to conduct the bidding process. The successful bidder is then expected to develop and implement these projects.

PFC incorporated a total of 19 wholly owned Special Purpose Vehicles (SPVs) for the UMPPs. Out of these, 14 Operating SPVs were incorporated to undertake preliminary site investigation activities and obtain appropriate regulatory and other approvals for water, environment etc. necessary to conduct the bidding process for these projects. These Operating SPVs are meant to be eventually transferred to successful bidder(s) selected through a Tariff Based International Competitive Bidding Process in accordance with the guidelines notified by MoP under section 63 of Electricity Act, 2003. The successful bidders are then expected to develop and implement these projects. 5 additional infrastructure SPVs were incorporated for holding the land and coal blocks for Odisha UMPP, Cheyyur UMPP, Deoghar and Tilaiya UMPP in Jharkhand and Bihar UMPP. These infrastructure SPVs would be transferred to the respective procurers of power from these projects.

Out of the above 19,4 UMPPs have been transferred to successful bidders.

9.2 ITPs

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required etc.

30 Special Purpose Vehicles (SPVs), 2 by PFC and other 28 by PFC Consulting Limited have been established for ITPs. Out of these 30 SPVs, 19 SPVs were transferred to the successful bidders, 6 SPVs for which bidding process are under progress, 4 SPVs are in process of closure and 1 SPV Bokaro-Kodarma Maithon Transmission Company Limited was liquidated in December 2010.

10.0 INTEGRATED POWER DEVELOPMENT SCHEME (with RESTRUCTURED ACCELERATED POWER DEVELOPMENTAND REFORM PROGRAMME (R-APDRP) SUBSUMED IN IT)

In order to provide impetus to strengthening of power distribution sector in urban area, Ministry of Power, Government of India launched “Integrated Power Development Scheme (IPDS) on December 3, 2014. Following components are covered under the scheme:

i) Strengthening of sub-transmission and distribution networks in the urban areas;

ii) Metering ofdistribution transformers/feeders/consumers in the urban areas.

iii) IT enablement of distribution sector and strengthening of distribution network under R-APDRP for 12th and 13th Plans by carrying forward the approved outlay for R-APDRP to IPDS.

iv) Schemes for Enterprise Resource Planning (ERP) and IT enablement of balance urban towns. Scope of IT enablement has been extended to all 4041 towns as per Census 2011.

v) Smart metering solution for performing UDAY States and Solar panels on Govt, buildings with net-metering.

vi) Gas Insulated switchgear(GIS) Sub-stations.

vii) Real Time-Data Acquisition System (RT-DAS) projects for accurate measurement of power interruption parameters like SAIDI/SAIFI.

Erstwhile, R-APDRP Scheme has been subsumed in newly launched IPDS scheme.

The above excluding (iii), have an estimated outlay of Rs, 32,612 crore including a budgetary support ofRs, 25,354 crore from Government of India during the entire implementation period.

R-APDRP scheme cost of Rs, 44,011 crore including a budgetary support ofRs, 22,727 crore as already approved by CCEA will be carried forward to the new scheme of IPDS in addition to the outlay Rs, 32,612 crore as indicated above.

Progress of implementation

IPDS

Under IPDS, Out of NIT issued worth Rs, 28,940 crore, projects worth Rs, 27,486 crore has already been awarded in 531 out of 546 sanctioned circles and implementation has started in said circles. Further, your company also sanctioned Rs, 753 crore as counterpart loans and disbursed an amount of Rs, 1,650 crore under IPDS during the year.

R-APDRP

With the measures taken so far, 20 out of 21 Data Centers, 20 out of 21 Disaster Recovery Centres and 44 out of 46 Customer Care Centers (except Puducherry and Odisha) have been commissioned. Further, 1378 towns have been declared Go-Live and declaration of Go-Live in balance 27 towns of Odisha(12),Tamil Nadu(8), Puducherry(4) and Arunachal Pradesh(3) is under progress. In 1378 Go-live towns, all business process software modules are functional and energy audit reports are being derived from the IT system implemented under the scheme.

During the year, your company disbursed an amount of Rs, 143 crore and cumulatively Rs, 2,662 crore as counterpart loan under Part-B of R-APDRP. Implementation work of distribution system strengthening has been reported complete in 1195 towns out of 1227 towns.

Cumulatively, 57 out of 59 sanctioned SCADA Control Centers have been commissioned and 52 out of 59 SCADA towns were completed.

The reduction in AT&C loss is already visible in 1081 R-APDRP towns (as per Post Go-Live reports) as on March 31,2019, because of establishment of IT system and Part-B completion in various towns coupled with administrative and other measures. Thus, your company shall be contributing towards improving financial health of Distribution Utilities.

Other developments:

- Revamped IPDS web-portal with provision of on-line submission of IPDS DPRs and maintaining MIS. The revamped portal also includes 7 post Go-Live parameters viz. AT&C loss reduction, Consumer Grievance Redressal, New Connection release, High loss feeders, power reliability indices, Feeder meter communication and digital payment along with their graphical analytics. These post Go-live parameters are being monitored on monthly basis and States are being ranked based on improvement on these parameters that are being shared in monthly RPM meetings. All the model documents, guidelines, Links for bidding documents of Utilities, events etc. are regularly posted on dedicated IPDS web portal.

- A system has been developed in-house for web-based project monitoring of IPDS/ R-APDRP on IPDS web portal. Discoms are uploading award details, work execution details along with financial progress of the projects on the portal at regular intervals. MoP/ PFC is monitoring the progress of project implementation online through the system. New tabs have been added in the project monitoring system for monitoring of IT Phase-ll implementation, Collection of ERP DPRs, Capturing of counterpart fund and own fund details under IPDS. Further, new provisions made for fetching separate MIS reports for use of the Hon''ble MoSP (1C), MoP Officials and Utility officials.

- Capacity building/training of Utility personnel is also carried out under IPDS - RAPDRP to enhance their skill. Capacity Building programme was rolled-out in-house, in which 5,022 man-days achieved in FY 2018-19. PFC/MoP also organizes workshops on project management, guidelines, best practices etc. for dissemination of information. PFC/MoP also issues guidelines for simplification of implementation procedures. Large scale peer-learning workshop for sharing of best practices was also conducted by PFC.

- PFC on behalf of Ministry of Power has developed a Mobile App URJA for Urban Power Distribution Sector to enhance Consumer Connect, Project Monitoring of Urban Distribution Sector projects etc. The App broadly covers Consumer/Discoms Dashboard, IPDS and R-APDRP monitoring. The App also depicts Town Wise AT&C Loss, New Service Connection, Consumer Complaints Redressal, Feeder with Highest AT&C Loss, SAIDI SAIFI, Feeder Meter Communication, Town-wise E-Payment/Digital Payment of R-APDRP towns and daily outage schedules in various Utilities. The web version of U RJ A is also available at www.uriaindia.co.in.

- Online Feeder Monitoring system has been developed as an integral part of National Power Portal (NPP). NIC along with PFC is implementing the project. The Feeder data of 49 Discoms in 29 States has been received and integrated on NPP. As on March 31, 2019, Master data of 36,673 feeders and transaction data of 31,696 Feeders uploaded by Discoms on NPP for urban towns. Reports based on said data are being generated online and are being sent regularly to MDs of respective Discoms to enable them to initiate administrative actions for improvement.

- Coordination for adoption of toll free number1912, the short code for electricity complaints, by all Utilities on pan-India basis. 1912 has already been implemented in all 62 Discoms (61 with all service providers). 1912 has been implemented as Toll free facility in 60 Discoms.

- PFC on behalf of Ministry of Power has engaged IPDS Consultants as Urban Vidyut Abhiyanta (UVA) purely on contractual basis. There are 41 UVAs engaged with PFC. PFC has deployed 38 UVAs in DISCOMs and 3 at PFC HQ to monitor IPDS project implementation. As per the direction of MoP vide its letter dated March 4, 2016, expenditure on appointment of UVAs are being borne by PFC. Process of appointment of 16 UVAs/ Consultants is underway against resignation/ attrition for filling up vacancies.

- Feeder Manager Recognition & Awards scheme under IPDS has been instituted by Ministry of Power in order to recognize efforts of DISCOMs/ Feeder Managers working towards reduction of AT&C loss. Feeder Managers are given this award during the Review Planning and Monitoring meeting by Hon''ble MoSP/ Secretary (Power) on the basis of their performance w.r.t AT&C loss reduction/ Energy saving/ Revenue saving on feeder. So far, 65 Feeder Managers across DISCOMs have been awarded in the above categories on monthly basis for the period from Sept, 2017 to Aug,

2018. First Feeder Manager Workshop was held in Kodaikanal to share best practices among the feeder managers from 18-20th Jan, 2018 and Second Feeder Manager Workshop was held from 28-30th Sept in Puducherry.

- IPDS guidelines envisaged appointment of Third Party Concurrent evaluating Agency (TPCEA) by PFC, Nodal agency for concurrent and post implementation evaluation of the sanctioned IPDS schemes for assuring quality of work in projects being carried out by Utilities. PFC has completed appointment of TPCEA for states for smooth implementation of the scheme. The appointment has been made after reverse e-auction bidding for 15 groups covering 33 states/UTs across India. Stage -I inspection is already completed in 490 circles and Stage-ll inspection is underway in most Utilities.

Impact Assessment of RAPDRP /IPDS

In order to assess the impact of RAPDRP, the Nodal agency was asked to carry out detailed assessment on how the scheme has eased the life of consumers and has benefited the Discoms.

As per the Region-wise study conducted by the four independent consultants,

- Savings to the tune of Rs, 3052 crore in 2017-18 were estimated from the AT&C loss reductions in the sampled 249 towns out of the total 1405 RAPDRP towns

- Reduction in AT&C losses was reported in 90% of the sampled towns.

- Nearly 100% AMR based metering achieved on all urban feeders. Focus shifted to Feeder level energy audit and intervention for AT&C loss reduction

- SCAD Aimplementation in larger towns lead to reduction in downtime in case of outages

- Centralized customer care centers established in 45 Utilities, have simplified the processes and enhanced the service delivery to consumers.

- Introduction of Spot Billing Machines, lead to reduction in billing errors

- Manifold increase in Digital payments by consumers observed in many Discoms,

- Online gateways for payments, complaints, customer care etc., have done away with long queues and hours of waiting time and added ease of life to consumers

- Establishment of universal customer support number “1912” implemented by all Discoms.

- Large scale addition of Distribution Infrastructure resulted in improved voltage profile and reliability of power supply.

- Extensive use of AB cabling was encouraged in implementation of RAPDRP.

Further, to check the quality of works of completed RAPDRP projects, Quality Council of India has also been appointed by MoP.

11.0 INITIATIVES TOWARDS REFORMS AND RESTRUCTURING Categorization of Utilities

For purposes of funding, your company classifies State/Central Sector Generation, Transmission Utilities & Project SPVs into A , A , A, B, C and ''non-responsive'' categories. The categorization (biannual) of State Power Generation and Transmission utilities is arrived based on the evaluation of utility''s performance against specific parameters covering operational & financial performance including regulatory environment, generation of audited accounts, etc.

With regard to State Power Distribution utilities (including SEBs/utilities with integrated operations), your company''s categorization policy provides for adoption of MoP''s Integrated Ratings by aligning such ratings/gradings with PFC''s standard categories of A , A , A, B and C.

The categorization enables your company to determine credit exposure limits and pricing of loans to the state power utilities. As on April 25, 2019, 127 utilities were categorized, out of which 13 utilities were categorized as “A ”, 43 as “A ”, 39 as “A”, 17 as “B”, 13 as “C” and 2 as “non-responsive”.

Annual Report on the Performance of State Power Utilities

Your Company compiles the Report on the Performance of State Power Utilities (SPUs) on an annual basis. The latest report for the three years period ending on March 31,2018 is under compilation. The Report is a comprehensive study of the performance of the State Power Utilities on key financial and operational parameters. The Report contains key performance parameters e.g. profitability, gap between average cost of supply and average realization (Rs./kwh), net worth, capital employed, receivables, payables, capacity (MW), generation (Mkwh), AT&C losses (%) etc. and consumption pattern of the sector at utility, state, regional and national level.

12.0 POLICY INITIATIVES

Your Company constantly reviews its policy framework so as to align itself with the market requirements and also with its corporate objectives. In this regard, the following policy initiatives were undertaken during FY 2018-19:

- Your company has aligned its lending policy for the renewable energy sector with the prevailing business environment, so to enhance its market share.

- In order to expedite the appraisal process and to capture more business in Solar & wind sector, your company has introduced online screening of Solar & Wind proposals.

- The company has introduced market friendly policies for pre-payment & release of collateral securities, to attract more business.

- Mechanism for the prompt payment to IPPs by Discoms is being evolved, on the advice of MoP.

- Review of appraisal system including project & Promoter rating framework for Private Projects, so as to make the appraisal process dynamic and also more robust.

- An online system was introduced for banks to check LoC issued by PFC to safeguard against frauds, in light of the recent events in banking industry w.r.t. LOU''s.

13.0 PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT. 2013

Your Company is exempt from the provisions of Section 186 of the Companies Act, 2013. However, details of equity investments made during the FY2018-19 are as follows:-

- During the FY 2017-18, PFC had approved an additional investment of Rs, 241 crore towards equity contribution in Energy Efficiency Services Limited (EESL), a Joint Venture Company of NTPC, PFC, REC and POWERGRID. Out of the above said approval, PFC has subscribed 9,90,00,000 equity shares of Rs, 10 each amounting to Rs, 99,00,00,000 in EESL''s Rights Issue on April 27,2018 under the first tranche and the same were allotted to PFC by EESLon July 2,2018.

- PFC has acquired 10,39,399,343 equity shares of face value of Rs, 10 each at the rate of Rs, 139.5036 per share amounting to Rs, 14,499,99,50,186 in REC on March 28,2019.

14.0 SUBSIDIARIES

- Your Company had been offering consultancy support to the Power Sector through its Consultancy Services Group (CSG) since October 1999. Leveraging the experience of the CSG Unit and appreciating the growth in the services offered by the Group and recognizing the potential of such services in reforming Power Sector, your Company decided to organize the services as a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary of your company on March 25,2008, in orderto give it requisite autonomy in functions and flexibility in operations.

- To focus on additional business in the area of equity financing, your Company had incorporated Power Equity Capital Advisors Private Limited (PECAP), a wholly owned subsidiary. However, it has not been able to transact any business due to lack of business proposals even after its acquisition by PFC and accordingly approval has been sought from MoP for dissolving and getting the name of the Company struck off from the records of Registrar of Companies. Ministry of Power (MoP), Government of India (Gol) vide its letter no F.No.7/13/2012-PFC Desk(1) dated March 19, 2019 has conveyed its approval for dissolving/striking off the name of PECAP from the records of Registrar of Companies under the provisions of section 248 to 252 of the Companies Act, 2013. The same is under process.

- Pursuant to the order of Ministry of Corporate Affairs dated February 5, 2019, PFC Capital Advisory Services Limited (PFCCAS, a wholly owned subsidiary of the Company) has been amalgamated with PFC Consulting Limited, wholly owned subsidiary of the Company w.e.f. the appointed date i.e. April 1,2018.

- Further, pursuant to the order of Ministry of Corporate Affairs dated February 7, 2019, PFC Green Energy Limited (PFCGEL, a wholly owned subsidiary of the Company) has been amalgamated with the Company from the appointed date i.e. April 1,2017.

- Further, your Company is designated by Ministry of Power, Government of India as the ''nodal agency1 for facilitating development of Ultra Mega Power Projects and its wholly owned subsidiary i.e. PFC Consulting Limited is the ''Bid Process Coordinator1 for Independent transmission projects. As on March 31, 2019, for the said purpose, the following Special Purpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiaries of the Company:

i) Chhattisgarh Surguja Power Limited (Previously known as Akaltara Power Ltd.)

ii) Coastal Karnataka Power Limited

iii) Coastal Maharashtra Mega Power Limited

iv) Coastal Tamil Nadu Power Limited

v) Orissa Integrated Power Limited

vi) Sakhigopal Integrated Power Company Limited

vii) Ghogarpalli Integrated Power Company Limited

viii) Tatiya Andhra Mega Power Limited

ix) Deoghar Mega Power Limited

x) Cheyyur Infra Limited

xi) Odisha Infrapower Limited

xii) Deoghar Infra Limited

xiii) Bihar Infrapower Limited

xiv) Bihar Mega Power Limited

xv) Jharkhand Infrapower Limited

xvi) Ballabhgarh-GN Transmission Company Limited*

xvii) Tanda Transmission Company Limited *

xviii) Mohindergarh-Bhiwani Transmission Limited*

xix) South-Central East Delhi PowerTransmission Limited*

xx) Bijawar-Vidarbha Transmission Limited*

xxi) Shongtong Karcham-Wangtoo Transmission Limited*

xxii) Vapi II North LakhimpurTransmission Limited*

xxiii) Lakadia-Vadodara Transmission Project Limited*

xxiv) Bikaner-Khetri Transmission Limited*

xxv) Fatehgarh-IITransco Limited*

xxvi) Bhuj-ll Transmission Limited*

* wholly owned subsidiaries of PFC Consulting Limited

- During the year, the Company acquired 52.63% shareholding held by the President of India (103,93,99,343 equity shares of face valueRs, 10/- per share) in REC Limited (REC) atRs, 139.5036 per share for a total cash consideration of Rs, 1,44,99,99,50,186/- on March 28, 2019. By virtue of this investment, the Company has become the holding company of REC and REC has become subsidiary of PFC in terms of the provisions of the Companies Act, 2013. Consequently, the following subsidiaries of REC as on March 31, 2019 have also become subsidiaries of PFC:

i) REC Transmission Projects Company Limited

ii) REC Power Distribution Company Ltd

iii) Koderma Transmission Limited

iv) MandarTransmission Limited

v) Dinchang Transmission Limited

vi) Chandil Transmission Limited

vii) Dumka Transmission Limited

viii) Bhind-GunaTransmission Limited

ix) Jam Khambaliya T ransco Limited

x) Ajmer PhagiTransco Limited

xi) WRSS XXI (A) Transco Limited

xii) Udupi Kasagode Transmission Limited

xiii) Khetri Transco Limited

xiv) Lakadia Banaskantha Transco Limited

- Further, since PFC acquired REC on March 28, 2019, the holding of REC in Energy Efficiency Services Limited (EESL) i.e. 21.70% which when combined with PFC''s share in EESLi.e. 36.36% amounts to 58.06%. Accordingly, your company has since become the holding company of EESL and EESL has become subsidiary of PFC in terms of the provisions of the Companies Act, 2013. Consequently, the following subsidiaries of EESL as on March 31, 2019 have also become subsidiaries of PFC:

i) Creighton Energy Limited

ii) EESL EnergyPro Assets Limited

iii) Anesco Energy Services (South) Limited

iv) EPAL Holdings Limited

v) Edina Power Services Limited

vi) Edina UK Limited

vii) Armoura Holdings Limited

viii) Edina Manufacturing Limited

ix) Edina Acquisition Limited

x) Edina Limited

xi) Edina Australia Pty Limited

xii) Stanbeck Limited

xiii) Edina Power Limited

14.1 PFC CONSULTING LIMITED

PFC Consulting Limited is mandated to promote, organize and carry out consultancy services to the Power Sector and is also undertaking the work related to the development of UMPPs. PFCCL has been nominated as the ''Bid Process Coordinator1 for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, Gol.

The Services offered by PFCCL are broadly in the following areas:

- Advisory services on issues emanating from implementation of Electricity Act 2003 like reform, restructuring, regulatory etc.

- Bid process management including Tariff based competitive bidding as per the Guidelines issued by MoP, Gol for various segments of Power Sector

- Project-structuring/ planning/ development/ specific studies, implementation monitoring, efficiency improvement projects

- Human Resource Management Plans

- Organization performance improvement plans

- Contract related services for power sector

- Financial management, resource mobilization, accounting systems etc.

- Coal block development

- Renewable and non-conventional energy project development including “Waste to Energy” Projects

- Advisory Services for Distribution System Improvement Schemes

- Project Management Activities under IPDS and DDUGJY Schemes

- Detailed Project Reports and selection of Implementation Agency for Smart Grid

- Bidding under DEEP Portal for procurement of Power (for Short Term, Medium Term & Pilot Schemes)

- Consultancy services relating to takeover & transfer of equity

- Valuation of Land Bank & shares

- Assessment of Implementation of GST

- Energy Portfolio Management

- LIE, LIA&TEVstudy

Till date, consultancy services have been rendered to 68 clients spread across 24 States/UTs by PFCCL. The total number of assignments undertaken as on date is 125.

Further, during the FY 2018-19, the total income of PFCCL was Rs, 70.17 crore vis-a-vis Rs, 79.73 crore in the previous FY 2017-18, net worth of PFCCL as on March 31, 2019 was Rs, 91.74 crore as compared to Rs, 198.32 crore on March

31,2018 and the net profit earned by PFCCL during FY 2018-19 was Rs, 22.00 crore as against the corresponding net profit ofRs, 26.88 crore last fiscal.

14.2 REC LIMITED

PFC acquired 103,93,99,343 equity shares of REC (representing 52.63% of the share capital of REC Limited) from President of India at a consideration of Rs, 1,44,99,99,50,186/- at the rate of Rs, 139.5036 per share on March 28,2019.

Power Finance Corporation Ltd. has since become the holding company and also a promoter of REC.

REC is also a Navratna Central Public Sector Undertaking under the Ministry of Power and one of the leading infrastructure finance company. REC is also a Systemically Important, Non-Deposit Accepting, Non-Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI) as an Infrastructure Finance Company (IFC). Its business activities involve financing projects in the complete power sector value chain, be it generation, transmission or distribution. REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.

REC sanctioned loans ofRs, 1,15,957 crore during the FY 2018-19 and an amount of Rs, 72,165 crore was disbursed during the same period.

Further, during the FY 2018-19, the total income of REC was Rs, 25,341.16 crore vis-a-vis Rs, 22,467.35 crore in the previous FY 2017-18 and the net profit earned by REC during FY 2018-19 was Rs, 5,763.72 crore as against the corresponding net profit ofRs, 4,419.89 crore in last fiscal.

Further details about the operational and financial performance of the Company are available on its website i.e. www.recindia.nic.in.

14.3 ENERGY EFFICIENCYSERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009. EESL was jointly promoted by Power Grid, NTPC, REC and PFC with 25% equity stake each for implementation of Energy Efficiency projects in India and abroad. The shareholding of your company as on March 31,2019 is 36.36%.

Consequent upon acquisition of controlling stake in REC Limited (REC) on March 28, 2019, EESL has been reclassified from associate to a subsidiary company during the year as the Company holds 36.36% ownership interest and its subsidiary REC holds 21.70% ownership interest as on March 31,2019.

Further, during the FY 2018-19, the total income of EESL was Rs, 1935.67 crore vis-a-vis Rs, 1410.70 crore in the previous FY 2017-18, net worth of EESL as on March 31,2019 wasRs, 839.97 crore as compared to Rs, 644.43 crore on March 31, 2018 and the net profit earned by EESL during FY 2018-19 was Rs, 95.10 crore as against the corresponding net profit ofRs, 39.46 crore last fiscal.

15.0 JOINT VENTURES. ASSOCIATE COMPANIES AND OTHER MAJOR INVESTMENTS

15.1 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested Rs, 12 crore in PTC which is 4.05% of PTC''s total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country. During the FY 2018-19, PTC maintained its leadership position with trading volumes of62.49 BUs. PTC has reported profit after tax of Rs, 262.32 crore for the FY 2018-19.

15.2 POWER EXCHANGE INDIA LIMITED

Power Exchange India Limited (PXIL) is India''s first institutionally promoted Power Exchange, that provides innovative and credible solutions to transform the Indian Power Markets. PXIL, provides nation-wide, electronic exchange for trading of power and handles power trading and transmission clearance, simultaneously, it provides transparent, neutral and efficient electronic platform. PXILoffers various products such as Day Ahead, Day Ahead Contingency, Any Day, Intra Day and Weekly Contracts. PXIL provides trading platform for Renewable Energy Certificates. PFC''s investment in equity shares of PXIL as on March 31,2019 isRs, 3.22 crore. Due to erosion of Net Worth of PXIL, PFC has provided the entire investment amount ofRs, 3.22 crore as provision for diminution in the value of investment in its books.

15.3 SHREE MAHESHWAR HYDEL POWER CORPORATION LIMITED

In June, 2016, PFC, being one of the lenders of Shree Maheshwar Hydel Power Corporation Limited (SMHPCL) had enforced its legal rights as per the Pledge deed dated November 30, 2006 as amended from time to time and subordinate loan agreement dated September 29, 2006, by invoking the shares pledged by the promoters of SMHPCL in favor of PFC and by partial converting sub debt loan into equity shares. Upon invocation of pledged shares and partial conversion of sub-debt, the total shareholding of PFC in SMHPCL is 13,18,46,779 equity shares of Rs, 10 each representing 23.32% of paid up equity share capital of SMHPCL. However, the matter is subjudice.

16.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded ''Excellent'' Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY2017-18, your company was accorded ''Excellent rating1. The rating for FY 2018-19 is still awaited.

17.0 PRESIDENTIAL DIRECTIVES

Ministry of Power vide its letter dated May 10,2018 issued Presidential Directives with regard to the pay scale revision for Board level and below Board level executives w.e.f. January 1, 2017 in accordance with DPE OMs dated August 3, 2017 and August 4, 2017. In line with the Presidential Directives, the pay scales for Board level and below Board level executives of your Company as well as other perks and allowances, etc. have been revised w.e.f. January 1,2017.

18.0 CORPORATE SOCIAL RESPONSIBILITY

The aim of your company''s Corporate Social Responsibility and Sustainability Policy (CSR and Sustainability Policy) is to ensure that your Company becomes a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfillment of Power and Energy needs of the society.

PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. To oversee the activities of CSR, PFC has in place a Board level CSR&SD Committee of Directors headed by an Independent Director.

During the year, PFC implemented wide range of activities in the field of Environment Sustainability, Skill development, Sanitation, Healthcare and supporting the differently abled. Further, DPE vide OM dated December 10, 2018 has instructed CPSEs to spend 60% of CSR budget for thematic programme (i.e. School Education and Healthcare for year 2018-19) preferably in asp rational districts.

For the FY 2018-19, the Board had approved the CSR budget ofRs, 148.15 crore based on 2% of the average stand-alone Profit Before Tax as per Companies Act, 2013 excluding dividend received from other companies covered under and complying with Section 135 of the Act in line with Rule 2(f) (ii) of Companies (CSR Policy) Rules 2014.

The projects sanctioned in a year are completed in subsequent years and there is milestone linked payment to various stages of completion of the project. Further, as per the DPE guidelines, the CSR Budget is non-lapsable and any unspent amount is carried forward to the next year for utilization for the purpose for which it was allocated.

Accordingly, the total amount to be spent in the financial year amounted to Rs, 279.38 crore (i.e. Rs, 148.15 crore for FY 2018-19 and Rs, 131.23 crore carried forward from previous years). However, out of which Rs, 100.50 crore was spent during FY2018-19.

The CSR Report under Companies (CSR Policy), Rules is annexed with Annual Report.

19.0 HRD INITIATIVES DEVELOPMENT&TRAINING

During FY 2018-19, in order to ensure specific skill development, the focus of conducting in house programs was maintained in line with the corporate goals. Customized programs like training on KYC policy, Executive Development Programs, Leadership & Team Building, Appraisal & Disbursement Procedures, Outbound Experiential Learning, Developing Positive Thinking, Stress & Health Management, etc. were organized along with other need-based programs.

During the year 2018-19,14 in-house training programs were organized by the company for its employees. A total of 2219 man-days were achieved by conducting various in-house programs and by sponsoring employees to other need based programs conducted by external training agencies.

RECREATIONAL ACTIVITIES

Your Company is committed towards holistic personality development of its employees through facilities like Gymnasium, Library, Table Tennis and participation of employees in various sports, cultural and literary activities.

As a member of Power Sports Control Board, your company has been organizing an Inter-CPSU Tournament every year for the employees of PSCB member organizations. During the FY 2018-19, PFC organized 23rd Inter-CPSU Badminton Tournament under the aegis of PSCB. Employees of PFC exhibited enthusiastic participation in various Inter-CPSU sports tournaments such as Cricket, Badminton, Table Tennis, Carrom, Chess, Kabaddi, etc. organized by the PSCB member organizations. The participation in these sports results in a greater level of team spirit and fitness among the employees.

During the period, the Company observed National Unity Day on October 31, 2018 and celebrated Communal Harmony Campaign during November 19, 2018 to November 26, 2018 by holding slogan writing competitions among the employees. National Productivity Week was celebrated by the Company during February 18, 2019 to February 25,2019 by organizing essay writing competition and holding an expert talk on the theme for the employees. Various other events and get-togethers were also organized during the year to mark special occasions such as New Year, Foundation Day, etc. and employees participated with zeal and enthusiasm. On the occasion of PFC Foundation Day, a Kavi Sammelan was organized at PFC premises. Eminent poets like Shri Ashok Chakradhar, Sh. Hari Om Panwar, Sh. Pratap Faujdarand Sh. Vineet Chauhan entertained PFC employees with their poetic performance.

HUMAN RESOURCE MANAGEMENT

Your company has put in place effective human resource acquisition and maintenance function, which is benchmarked with best corporate practices designed to meet the organizational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity.

The Industrial Relations within the company has been very cordial and harmonious with the employees committing themselves entirely to the objectives of the company. There was no mandays lost during the year under review. The attrition rate for the period from April 1,2018 to March 31,2019 was zero.

WELFARE MEASURES

Your Company endeavors to follow the best management practices of the industry. The employees of the company have access to the Top Management officials thereby contributing effectively in the management and growth of the company. Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which lead to a healthy workforce. During the period, several new initiatives were taken for employees'' welfare such as amendments in Medical Attendance Rules, Leave Rules etc.

RESERVATION OF POSTS

Group

Total Employees as on March 31, 2019

SCs

SC%

STs

ST%

OBC

OBC%

A

474

83

17.51%

28

5.91%

81

17.08%

B

6

1

16.67%

1

16.67%

0

0.00%

C

17

3

17.65%

1

5.88%

3

17.65%

D

1

0

0.00%

0

0.00%

0

0.00%

Total

498

87

17.47%

30

6.02%

84

16.87%

PFC makes all efforts to ensure compliance of the Directives and Guidelines issued by the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC/ ESM/PwD employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions. Separate Liaison officers have been appointed to look into the matter of reservations.

REPRESENTATION OF WOMEN EMPLOYEES

Your Company has women in important and critical functional areas. Women representations have gone across hierarchical levels. The Company provides equal growth opportunities for the women in line with Government of India philosophy on the subject. The women are adequately represented, with 20.68% of the total workforce.

Group

Total Employees as on March 31, 2019

Number of Women Employees

Percentage of overall staff strength

A

474

100

21.09%

B

6

0

0.00%

C

17

3

17.65%

D

1

0

0.00%

Total

498

103

20.68%

PFC as part of its social responsibility, makes all efforts to ensure compliance of the Directives and guidelines issued

by the Government of India from time to time pertaining to the welfare of female employees.

INTERNAL COMPLAINTS COMMITTEE

An Internal Complaints committee to examine the cases related to sexual harassment is in place under the Sexual

Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act 2013. During the FY 2018-19, no complaint has been filed under the said Act.

20.0 DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) such accounting policies have been selected, applied consistently and judgments & estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the accounts have been prepared on a going concern basis;

(e) the company has laid down internal financial controls to be followed and that such internal financial controls are adequate and are operating effectively.

(f) the company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

21.0 STATUTORY AUDITORS

M.K. Aggarwal & Co., Chartered Accountants and Gandhi Minocha & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for the FY2018-19 by the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY 2018-19 and have given their report without any qualification, reservation, adverse remark or disclaimer. The copy of the audit report is annexed with Annual Report.

SECRETARIAL AUDITOR

Agarwal S. & Associates, Company Secretaries was appointed as the Secretarial Auditor of the Company for the FY 2018-19 by the Board of Directors of the Company.

The observations of the Secretarial Auditor and reply of the management on the observations, for the FY 2018-19 along with copy of the audit report is annexed with Annual Report.

22.0 COMMENTS OF COMPTROLLER&AUDITORGENERALOF INDIA

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors'' report. The copy of the report of C&AG is annexed with Annual Report.

23.0 DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Internal Auditor of the Company i.e. A.R. & Co., Chartered Accountants quarterly certifies on the adequacy of internal financial controls with reference to the financial statements of the Company.

The Statutory Auditors of the Company i.e. M.K. Aggarwal & Co., Chartered Accountants and Gandhi Minocha & Co., Chartered Accountants have also given their Report on the Internal Financial Controls stating that the Company has, in all material respects, an internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2019 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

24.0 COMPLIANCE OF SECRETARIAL STANDARDS

The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.

25.0 PARTICULARS OF REMUNERATION U/S 197(12) OF THE COMPANIES ACT. 2013 READ WITH RULE 5 OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES. 2014

As per the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the ratio of remuneration of each director to the median employees'' remuneration and details of employees receiving remuneration exceeding the limits as prescribed from time to time in the Board''s Report.

However, as per notification dated June 5,2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of Section 197 of the Companies Act, 2013. Therefore, such particulars have not been included as part of Board''s Report.

26.0 ANNUAL RETURN LINK

An extract of the Annual Return in the prescribed format is annexed with the Annual Report.

27.0 REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which need to be mentioned in the Board''s Report.

28.0 DEBENTURE TRUSTEES

The details of Debenture Trustees appointed by the company for the different series of Bonds issued by your company are annexed with Annual Report.

29.0 STATUS OF UNCLAIMED AMOUNTS Bonds

The total unclaimed and unpaid amount as on March 31, 2019 was Rs, 15.10 crore (principal plus interest). The unpaid/ unclaimed amount of bonds transferred to I EPF during FY 2018-19 isRs, 0.14 crore.

Equity

The unclaimed balance amount of dividend (equity) as on March 31, 2019 was Rs, 3.38 crore. The unclaimed amount of Rs, 6,77,584 related to “Application money due for refund” and unclaimed dividend of Rs, 8,33,402 become due for transfer during the year ended March 31,2019 and was accordingly transferred to Investor Education and Protection Fund (IEPF).

30.0 EMPLOYEES STOCK OPTIONS PLAN f ESOP)

The Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises, Government of India, through its directions on pay revision had made it mandatory for all the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees in the form of ESOPs. In accordance with these directions of the DPE, the Board of Directors of your company had formulated an Employee Stock Option Plan titled as ''PFC-ESOP 2010''. Shareholders had also approved this Employee Stock Option Plan in their 24th Annual General Meeting held on September 21, 2010. Subsequently, the Board of Directors had decided that 25% of the PRP of the employees should be given in the form of ESOPs. However, later in view of a clarification dated July 30,2012 issued by DPE, this PRP based Stock Option Plan has been made optional. The above scheme has been implemented in the Company as per the applicable Rules/Regulations/DPE guidelines and clarifications. A certificate in this regard by statutory auditors will be placed at the ensuing AGM of the Company.

Further, as on date, there is no option pending for grant or exercise under the ''PFC-ESOP 201 O''.

Further no option was granted/exercised to/by any employee during the year 2018-19.

31.0 VIGILANCE

During the FY 2018-19, the Vigilance Unit functioned as an effective tool of management, the thrust being on preventive vigilance. This aspect was emphasized by conducting periodic and surprise inspections of various units on constant basis. The Vigilance Unit also issued directions/effective guidelines to rationalize systems and procedures to eliminate gaps and confirming transparency in day-to-day operations. Information technology was used as an effective tool for providing on-line services to all the stakeholders and to enhance organizational efficiency. The Vigilance Unit carried out detailed investigation in respect of complaints registered during this period.

In compliance of the instructions of CVC, the sensitive posts in the Company were identified and the concerned officers were rotated on a regular basis. Agreed lists for the year 2018 were finalized in respect of corporate office at Delhi and regional offices at Mumbai and Chennai in consultation with the CBI. Prescribed periodical statistical returns were sent to CVC, CBI, MoP on time.

The Vigilance Unit continuously worked for systemic improvements with a view to increase transparency, objectivity and accountability in the operations of the Company. Thus, it has contributed towards overall improvement in the functioning through efficiency and effectiveness of the organization.

32.0 OFFICIAL LANGUAGE

It is a matter of great pride that your Company has been awarded the First Prize in Public Sector Category in Region ''A'' of ''Rajbhasha Kirti Puraskar'' for the year 2017-18 by Rajbhasha Vibhag, Ministry of Home Affairs for its concerted efforts made in implementation of Official Language Policy. CMD, PFC received the prestigious award from Hon''ble Vice President of India, Sh. M. Venkaiah Naidu.The Prize has been received by PFCforthe 5th time in a row.

PFC''s Quarterly Magazine ''Urja Deepti'' and a book ''App Deepo Bhav'' written by a PFC employee were released in the Hindi Advisory Committee Meeting held on April 11,2018.

On the occasion of PFC Foundation Day, a Kavi Sammelan was organized. Hindi Day and Hindi Month were celebrated to create a Hindi oriented environment. During the Hindi Month, various competitions were organized. On the eve of Samapan Samaroh of ''Hindi Mah'', a Cultural Programme was organized on October 12,2018 in which employees of your company presented a Cultural Programme comprising of various Indian dance forms, Songs, Kavya Path and Natika etc. On the occasion of ''Vishwa Hindi Diwas'' a dance ballet namely ''Shri Krishna'' was organized by the artists of Shri Ram Bhartiya Kala Kendra.

10 Hindi workshops for 279 executives and 2 days Rajbhasha Sammelan for 28 Senior Executives as well as 2 Sangoshthies were organized. Internal inspections in the form of personal contact programme were conducted. Three Issues including ''Yog Evam Rajbhasha Visheshank'' of house magazine ''Urja Deepti'' were also published.

All these efforts were motivational tools in creating possibilities of better and progressive use of Hindi in the Company.

33.0 RIGHT TO INFORMATION ACT

The main objective of the Right to Information Act, 2005, is to ensure greater and more effective access to information and to maintain transparency and improve accountability in the working of the public departments both Central and State. The Right to Information Act, 2005 is an Act of the Parliament of India to provide for setting out the practical regime of right to information for citizens. It also endeavors to promote transparency and accountability in the working of the Government, to contain corruption and to enhance people''s participation in the democratic process by making the citizens informed about the activities of the Government. Under the Act, it is believed that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable. The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the Public Authorities.

An elaborate mechanism has been set up throughout your Company to deal with requests received under the RTI Act, 2005. Your company has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the company. The Company has designated a Public Information Officer (PIO) and First Appellate Authority (RTI) at its registered office for effective implementation of the RTI Act. The relevant information/ disclosures are also made available on the official website (www.pfcindia.com) of the company. During the FY 2018-19, all 131 applications received under the RTI Act, were duly processed and replied to. Your company has also complied with the requirement of filing of online RTI Quarterly Returns on the portal of Central Information Commission (ClC)for the FY2018-19.

Further, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated April 15, 2013 issued guidelines on the following :-

(i) Suo moto disclosure of more items under Section 4;

(ii) Guidelines for digital publication of proactive disclosure under Section 4;

(iii) Guidelines for certain clauses of Section 4(1 )(b) to make disclosure more effective;

(iv) Compliance mechanism for suo moto disclosure (proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid Guidelines, PFC has placed the requisite information on the website of the company. Besides the above, PFC is also linked with the online RTI Portal of Govt, of India, Department of Personnel & Training (https://rtionline.aov.in). which enables citizens of India, to file RTI applications/first appeals online along with payment gateway. Payment can be made through internet banking of SBI & its associate banks, debit/credit cards of Master/Visa and Ru Pay cards.

34.0 GRIEVANCE REDRESSAL

Your Company has a Grievance Redressal System for dealing with grievances of the public at large. The systems are duly notified and the Nodal Officers ensure quick redressal of grievances within the permissible time frame. Your Company has also notified Citizen''s Charter to ensure transparency in its work activities. The Charter is available on the website of PFC to facilitate easy access.

35.0 DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company''s operations during the FY2018-19.

36.0 DETAILS OF PROCUREMENT FROM MSEs

The details of the procurements made from Micro and Small Enterprises (MSEs) during the FY 2018-19 and the targets for FY 2019-20 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 along with Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 is as under:

S.No.

Particulars

FY 2018-19

Target for FY 2019-20

I

Total annual procurement (in value)

26.24 crore

30.38 crore

II

Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs)

9.21 crore

7.6 crore

III

Total value of goods and services procured from only MSEs owned by SC/ST entrepreneurs

0.55 crore

1.22 crore

IV

% age of procurement from MSEs (including MSEs owned by SC/ST entrepreneurs) out of total procurement

35.09%

25%

V

% age of procurement from only MSEs owned by SC/ST entrepreneurs out of total procurement

2.10%

4%

VI

Total number of vendor development programmes for MSEs

2 Half yearly

2

VII

Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same

http://www.Dfcindia. com/Home/VS/125

37.0 STATUTORY AND OTHER INFORMATION

Information required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, DPE''s Guidelines on Corporate Governance for CPSEs etc. is annexed to this report as follows:

Particulars

Annexure

Details of Debenture Trustees

A

Extract of Annual Return

B

Annual Report on CSR Activities

C

Disclosure of particulars of contracts/arrangements entered into by the company with related parties (AOC-2)

D

Management Discussion and Analysis Report

E

Integrated Reporting

F

Report on Corporate Governance

G

Business Responsibility Report

H

Secretarial Audit Report

I

38.0 ACKNOWLEDGEMENT

The Board of Directors acknowledge and place on record their appreciation for the guidance, co-operation and encouragement extended to the Company by the Government of India, Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India, Department of Public Enterprises, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level as well as various domestic and international financial institutions/banks, agencies etc.

The Board also conveys its gratitude to the shareholders, various International and Indian Banks/Multilateral agencies/financial Institutions/ credit rating agencies for the continued trust and for the confidence reposed by them in PFC. Your Directors would also like to convey their gratitude to the clients and customers for their unwavering trust and support.

The Company is also thankful to the Comptroller & Auditor General of India and the Statutory Auditors, Internal Auditors and Secretarial Auditor for their constructive suggestions and co-operation.

The Board also recognize and appreciate the untiring efforts and contributions made by the employees to ensure excellent all round performance of your Company.

For and on behalf of the Board of Directors

(Rajeev Sharma)

Chairman & Managing Director

DIN: 00973413

Place : New Delhi

Dated : 30.07.2019

Director’s Report