Annual Report - REC - 2008-2009

RURAL ELECTRIFICATION CORPORATION LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

To
The Shareholders,

The Directors have the pleasure in presenting the Fortieth Annual Report
together with the Audited Statements of Accounts of the Company for the
financial year ended 31st March, 2009.

1. PERFORMANCE HIGHLIGHTS

1.1 The highlights of performance of the Company for the year 2008-09 were
as under with comparison of previous year's performance:-

Particulars 2008-09 2007-08
(Rs. in crore) (Rs. in crore)

Loans sanctioned 40745.84* 46770.00*

Disbursements 22277.86 16304.00
(including subsidy under RGGVY)

Recoveries 9796.97 9042.00

Total Operating Income 4757.17 3378.21

Profit before tax 1920.11 1312.42

Profit after tax 1272.08 860.15

* Excluding subsidy under RGGVY

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1.2 Financial Performance

The total operating income of the company for the year increased by 41% to
Rs. 4757.17 crore from Rs.3378.21 crore during the previous year. The
profit before tax increased by 46% to 1920.11 crore from Rs. 1312.42 crore
for the previous year and the profit after tax increased by 48% to
Rs.1272.08 crore from Rs. 860.15 crore for the previous year.

1.3 Dividend

In addition to interim dividend of Rs.2 per share paid in March, 2009, your
Directors are happy to recommend a final dividend of Rs.2.50 per share for
the year 2008-09. The total dividend for the year will be Rs.4.50 per share
as against Rs.3.00 per share paid for the previous year. The total dividend
pay-out for the year will amount to Rs.386.397 crore.

2. LOANS SANCTIONED

The Company sanctioned loans worth Rs.40745.84 crore during the year 2008-
09, as against Rs.46770.00 crore in the previous year excluding subsidy
under RGGVY The state and category-wise break-up of loans sanctioned during
the year are given in enclosed Tables-1 and 2 respectively. The cumulative
amount of sanctions made since inception upto 31.3.2009 was Rs.221098.72
crore including subsidy under RGGVY The cumulative statewise position of
sanctions up to the end of 2008-09 is given in enclosed Table-3.

3. DISBURSEMENTS

A total sum of Rs. 22277.86 crore was disbursed during the year 2008-09 as
against Rs.16304 crore in the previous year including subsidy under RGGVY
The cumulative amount disbursed since inception upto 31.3.2009 was
Rs.92400.65 crore excluding subsidy under RGGVY The state-wise
disbursements and repayment by borrowers during the year together with
cumulative figures and outstandings as on 31.3.2009 are given in enclosed
Table-4.

4. RECOVERIES

4.1 The amount due for recovery during the year 2008-09 was Rs. 9788.90
crore as compared to Rs. 9002.73 crore during the previous year. The figure
includes the dues from defaulting Borrowers. The Company recovered a total
sum of Rs. 9796.97 crore during the year 2008-09 against of Rs. 9042 crore
during the previous year.

4.2 Out of the overdues as on 31.03.2009 of Rs.201.70 crore, amount of
Rs.64.42 crore stands already recovered till 30.06.2009.

4.3 The Company has also been making serious efforts for bringing down Non-
Performing Assets (NPAs) to Zero level. As on 31.03.2009 the Gross NPAs of
the Company stood at Rs.68.89 crores (i.e. 0.14% of Gross Loan Assets), as
compared to Rs.316.18 crore (0.82% of Gross Loan Assets), as on 31.03.2008.
Further out of Rs.68.89 crore, NPAs of approx. Rs.38 crore have been
liquidated till 30.06.2009 in the current financial year 2009-10.

5. FINANCIAL REVIEW

5.1 A summary of Financial Results

The summary of financial results of the Company for the year ended 31st
March, 2009 is given below:

(Rs. in crore)

Standalone Consolidated
Particulars 2008-09 2007-08 2008-09 2007-08

Gross Income 4931.28 3537.66 4936.55 3541.25

Profit before tax 1920.11 1312.42 1922.36 1315.12

Depreciation 1.36 1.39 1.37 1.39

Provision for Income Tax, 648.03 452.27 648.83 453.19
Deferred Tax & FBT

Net Profit/Profit after Tax 1272.08 860.15 1273.53 861.93

Appropriations:

Transfer to Special Reserve 340.00 255.00 340.00 255.00

Transfer to Reserve for Bad 80.00 58.00 80.00 58.00
& Doubtful Debts

Interim Dividend 171.73 - 171.73 -

Dividend Tax on Interim 29.19 - 29.19 -

Dividend

Proposed Final Dividend 214.67 257.60 214.72 257.60

Dividend Tax on proposed 36.48 43.78 36.49 43.78
Final Dividend

Transfer to General Reserve 255.00 140.00 256.00 140.00

Balance carried forward 145.01 105.77 145.40 107.55

5.2 Authorized and Paid-up Share Capital

The Authorised and Paid-up Share Capital of the Company are Rs.1200 crore
and Rs.858.66 crore respectively as on 31.3.2009.

5.3 Resource Mobilization

The Company mobilized Rs.14,894.89 crore from the market during the year
2008-09. This includes Rs.1,750 crore by way of loan from commercial banks,
Rs.2,525.23 crore by way of Capital Gain Tax Exemption Bonds, Rs. 8,930.20
crore by way of Non-priority Sector Bonds, Rs.1,232.81 crore through
Commercial Paper(CP) and Rs.456.65 crore by way of Official Development
Assistance (ODA) loan from Kreditanstat fur Wiederaufbau (KfW), Germany
(Euro 22.02 Million equal to INR 140.02 crore) & Japan International
Cooperation Agency ff ICA) (JPY 6.68 Billion equal to INR 316.63 Crore).The
domestic debt instruments of the Company continued to enjoy 'AAA' rating -
the highest rating assigned by CRISIL, CARE, FITCH & ICRA-Credit Rating
Agencies.

Cash Credit Facilities

For day to day operations, the Company also arranged cash credit limits to
the tune of Rs.1030 crore from various banks.

5.4 Sovereign rating

The Company 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.

5.5 Cost of borrowing.

As per the Finance Act 2006, only REG and National Highway Authority of
India (NHAI) were eligible to raise money through Bonds issued under
Section 54 EC of the Income Tax Act, 1961. This helped in keeping the cost
of borrowing at a low level. The overall annualized average cost of funds
was 9.30% during the year 2008-09. As a result REG is able to deliver debt
financing at competitive rates.

5.6 Redemption and Pre-Payment

During the year, the Company repaid a sum of Rs.17.18 crore to the
Government of India. It also redeemed a total sum of Rs.68.58 crore owed to
Non- priority/ Priority Sector

Bond Holders. In addition, Rs.2838.04 crore worth of Capital Gain Tax
Exemption Bonds and Rs. 6.94 crore of Infrastructure Bonds were also
redeemed. The Company also redeemed long term and short term loans from
Banks of Rs.1861.76 crore.

5.7 Particulars regarding Foreign Exchange Earnings & Outgo

The particulars regarding foreign exchange outgo during the year under
review are given in Point 15 of Schedule 17 of the 'Notes on the Accounts'
forming part of the Annual Accounts. No foreign exchange was earned during
the year under review.

5.8 Financial status at the close of the year

At the close of the financial year 2008-09, the total resources of the
Company stood at Rs.52082.72 crore. Out of this sum, Equity Share Capital
contributed Rs.858.66 crore, Reserve and Surplus stood at Rs.5331.42 crore,
Loans from LIC, Commercial Banks and Market Borrowings accounted for
Rs.44935.96 crore and deferred tax liability of Rs.956.68 crore. These
funds were deployed as Long / Short Term Loans of Rs.51381.45 crore and
Fixed Assets of Rs.80.90 crore, Investments of Rs.1004.86 crore and balance
of Rs.(-) 384.49 crore in Net Current Assets.

During the year 2008-09 an amount of Rs.3610.62 lacs was written back to
Income as provision for Bad & Doubtful Debts made in earlier years was no
longer required due to realisation/upgradation of Loan Assets.

6. DIRECTORS' RESPONSIBILITY STATEMENT

In pursuance of Section 217 (2AA) of the Companies Act, 1956, your
Directors certify -

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

(ii) That the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
company at the end of the financial year and of the profit or loss of the
company for that period;

(iii) That the directors had taken proper and sufficient care to maintain
adequate accounting records as per the provisions of the Companies Act for
safeguarding the assets of the company and for preventing and detecting
fraud and other irregularities;

(iv) That the directors had prepared the annual accounts on a going concern
basis.

7. FINANCING ACTIVITIES

The Company has been funding power generation, transmission & distribution
projects besides electrification of villages. Various initiatives in this
regard are enumerated below:

7.1 Generation

During the year 2008-09, the Company sanctioned 20 nos. of new generation /
R&M loans and 3 no. additional loan assistance with total financial outlay
of Rs.21525.31 crore, including consortium financing with other financial
institutions. Since 2002-03 and upto 31.3.2009, the Company has sanctioned
financial assistance of Rs.79527 crore for thermal and hydro generation/R&M
projects. The Company has disbursed Rs.7850.56 crore during 200809 against
the on-going generation projects.

The sector wise break up of loans sanctioned including additional loan
assistance is as below:

No. of Loans Loan Amount
(Rs. in crore)

STATE SECTOR

Fresh Loan 12 17783.31

Additional Loan 3

PRIVATE SECTOR

Fresh Loan 5 3742.00
Additional loan 0

Total 20 21525.31

7.2 Transmission & Distribution

The Company continued to play an active role in creating new infrastructure
and improving 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, the Company has been financing schemes for expansion and
strengthening of the transmission network and more importantly, modernizing
of the distribution system.

7.3 System Improvement & Bulk Loan

During the year 2008-09, a total of 317 system improvement schemes and bulk
loan schemes were sanctioned involving a loan outlay of Rs.14511.49 crore.
This included: (i) counterpart funding under Accelerated Power Development
& Reforms Programme (APDRP) of Ministry of Power involving loan outlay of
Rs.155.51 crore, (ii) 28 schemes involving a loan assistance of Rs.791.91
crore for financing investment in the distribution system by way of
installation of essential equipments like transformers, meters, capacitors
etc. (iii) 18 schemes involving a loan assistance of Rs.1040.57 crores for
conversion of Low Voltage Distribution to High Voltage Distribution System
(HVDS), (iv) 154 schemes for Rs.3763.59 crores for improving the
distribution system, and (v) 117 schemes for Rs.8759.91 crores for
improving the transmission network.

7.4 Pumpset energization

During the year, 188743 electric irrigation pumpsets were reported
energized under REG financed schemes. Total 77 new schemes for a loan
assistance of Rs.874.39 crore were sanctioned during the year under this
category. The statewise details and cumulative position up to 31.3.2009 are
given in the enclosed Table-5.

7.5 Activities in North Eastern (NE) States

A loan assistance of Rs.25 crore was disbursed to the NE states under T&D
programme during the year 2008-09 as compared to Rs.41.27 crore during the
previous year. 2 schemes for a loan assistance of Rs.18.79 crore & Rs.18.87
crore were sanctioned to Arunachal Pradesh & Nagaland respectively during
2008-09 under System Improvement category.

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8. RAJIV GANDHI GRAMEEN VIDYUTIKARAN YOJANA (RGGVY)

Government of India, in April 2005, launched the scheme 'Rajiv Gandhi
Grameen Vidyutikaran Yojana (RGGVY) Scheme of Rural Electricity
Infrastructure and Household Electrification', for the attainment of the
National Common Minimum Programme (NCMP) goal of providing access to
electricity to all households in 5 years. 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.

8.1 Electrification of villages and BPL Households

Initial approval was for implementation of Phase I of the scheme for
capital subsidy of Rs.5000 crores during X-Plan period. 235 projects
covering 180699 villages (68763 unelectrified and 111936 electrified
villages) with the total sanctioned project cost of Rs.9733 crores were
sanctioned by the Ministry of Power for implementation in X-Plan period.

Further approval has been accorded for capital subsidy of Rs.28000 crore
for continuation of the scheme in XI Plan for attaining the goal of
providing access to electricity to all households, electrification of about
1.15 lakh unelectrified villages and electricity connections to 2.34 crore
13PL households by 2009. 327 projects covering 290875 villages (49383 un-
electrified and 241492 electrified villages) costing Rs.16268 crores have
been sanctioned by Ministry of Power for implementation in XI-Plan.

The state-wise details of projects sanctioned in X Plan and XI Plan periods
under RGGVY are furnished in the enclosed Table-6.

Under the scheme, it has been reported that works have been completed in
48,533 villages (including 12056 unelectrified and 36477 electrified
villages) and connections to 36.22 Lakh rural households including 30.84
Lakh BPL households have been provided during 2008-09.

Cumulatively, works in 1,37,488 villages (59882 unelectrified and 77606
electrified villages) have been completed and connections to 53.78 Lakh
13PL households have been released under the scheme up to 31.03.2009.

The state-wise details of Achievements in respect of Unelectrified villages
and BPL households upto 2007-08, during 2008-09 and Cumulative Achievements
upto 31.3.2009 are furnished in the enclosed Table-7.

8.2 Decentralized Distributed Generation (DDG)

8.2.1 DDG under RGGVY

RGGVY provides for DDG projects from conventional or renewable non-
conventional sources such as biomass, biogas, mini hydro, and solar etc.
for villages where grid connectivity is either not feasible or not cost
effective.

DDG Systems are small power generation units near the load centers.

Ninety per cent capital subsidy would be provided under RGGVY towards
overall cost of the DDG projects under the scheme, excluding the amount of
state or local taxes, which will be borne by the concerned State/State
Utility. 10% of the project cost would be contributed by states through own
resources/loan from financial institutions.

A provision of Rs. 540 crore has been kept as subsidy for DDG projects
under XI Plan.

The Guidelines for DDG projects under RGGVY have been issued by Ministry of
Power on 12.1.2009.

8.2.2 Contribution of REC in promotion of Renewable/DDG Projects

So far the Company has financed various Renewable Projects as per details
given below as on 31.3.2009:

Projects under Implementation and Projects Commissioned.

Description Projects Projects TOTAL
under Commissioned
Implementation

(i) Value of Loan 548.14 80.73 628.87
sanctioned (Rs. Crore)

(ii) Disbursement 268.74 78.34 347.08
made so far (Rs. Crore)

(iii) Value of Projects 907.90 180.11 1088.01
Sanctioned (Rs. Crore)

(iv) MW of Projects 152.70 36.60 189.30

(v) No. of Projects 13 08 21

8.3 Standardisation, Quality Control & Monitoring

The Company has continually provided technical expertise in distribution
systems to State Power Utilities. The technical specifications and
constructions 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 single phase distribution transformers, battery, battery
charger, internal wiring, vacuum circuit breaker and electricity meters.

In line with 3-Tier Quality Control for ensuring proper quality in
implementation of RGGVY XI Plan schemes, REG Quality Monitors (RQM) have
been appointed during the financial year covering 327 projects in 24 states
of the country. And these RQMs have undertaken 126 Nos. of RGGVY project
material inspections during the year under review for ensuring quality of
equipment. Further, the Company has been entrusted with the task of
initiating necessary processes, on behalf of MOP, for appointment of
National Quality Monitors' for inspection of RGGVY XI Plan projects at
Ministry level in line with the 3-Tier Quality Control Manual for RGGVY
projects. Accordingly, the Company has initiated the process for
appointment of National Quality Monitors' which is in the advanced stage
of finalization.

9. INTERNATIONAL COOPERATION & BUSINESS DEVELOPMENT

9.1 Japan International Cooperation Agency (JICA) (earlier JBIC)

(i) The Company entered into a loan agreement with JICA on 31.3.2006 for
loan assistance of 20.629 billion Japanese Yen (approx. Rs.784 crore at an

exchange rate of 100 yen = Rs 38.01 as on 31.3.2006) under the Official
Development Assistance (ODA) loan package for implementation of the Rural
Electricity Distribution Backbone (REDB) Project, envisaging implementation
of 749 nos. 33/11 KV new substations and augmentation of 510 substations by
the respective state power distribution utilities in the states of Andhra
Pradesh, Maharashtra and Madhya Pradesh. Cumulative disbursements to the
tune of Rs.446.60 crore have been made to the sub-borrowers and loan amount
to the tune of Rs.408.40 crore has been drawn from JICA till 31.3.2009, as
a result of which implementation of 405 nos of 33/11 KV new substations and
augmentation of 270 nos substations has been completed till 31.03.2009.

(ii) The Company entered into a second loan agreement with JICA on
10.03.2008 for ODA loan of 20.902 billion Japanese Yen (approx. Rs.833
crore at an exchange rate of 100 yen = Rs.39.86 as on 10.3.2008) for
implementation of transmission system project by Haryana Vidyut Prasaran
Nigam Limited (HVPNL) in the state of Haryana with the objective of
strengthening the intra-state transmission systems in the state.
Implementation of projects has commenced and drawal of loan from JICA
commenced during the financial year 2008-09. Disbursements to the tune of
Rs.28 crore have been made to the sub-borrower and loan amount to the tune
of Rs.28 crore has been drawn from JICA till 31.3.2009.

9.2 Indo-German Bilateral Cooperation Programme

(i) The Company entered into a loan agreement with KfW on 08.08.2006 for
ODA loan of 70 Million Euro (approx. Rs.418 crore at an exchange rate of 1
Euro = Rs.59.74 as on 08.08.2006) under KfW - Energy Efficiency Programme-I
for implementation of High Voltage Distribution System (HVDS) Project by
the Andhra Pradesh Southern Power Distribution Company Limited (APSPDCL) in
the Chittoor and Kadapa districts in the state of Andhra Pradesh.
Cumulative disbursements to the tune of Rs.224.57 crore have been made to
the sub-borrower and loan amount to the tune of Rs.185.78 crore has been
drawn from KfW till 31.3.2009.

(ii) The Company entered into a second loan agreement with KfW on
16.03.2009 for ODA loan of 70 million Euro (approx. Rs.466.13 crore at an
exchange rate of 1 Euro = Rs.66.59 as on 16.03.2009) under KfW - Energy
Efficiency Programme-II for implementation of Energy Efficiency HVDS
project by the Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) in the
state of Haryana. The Project Preparatory activities have commenced and
drawal of loan from KfW is expected to commence during the financial year
2009-10.

9.3. Asian Development Bank (ADB)

ADB has approved, in-principle, a line of credit amounting to US $ 225
million to REG on 27.11.08 to finance power transmission and distribution
networks in the rural sector. The loan documentation is expected to be
completed during 2009-10 and loan drawal is expected to commence during
2009-10.

9.4. lean Development Mechanism (CDM)

4 nos of Project Design Documents (PDDs) on HVDS Project of APSPDCL being
financed by the Company under RECKfW Energy Efficiency Programme-I have
received Host Country Approval from the Designated National Authority, i.e.
the Ministry of Environment and Forests, Government of India, in January
2009 for availing carbon credits under CDM. This approval is the first of
its kind in the Indian Power Distribution Sector.

9.5 Business Development

9.5.1 Delegation from REA, Govt of Tanzania

The Company hosted a delegation from Rural Energy Agency (REA), Govt. of
Tanzania, on 19th March 2009.The delegation was on a study tour to India
and Bangladesh to exchange and share the professional expertise in the
field of rural electrification. REG being the nodal agency for the RGGVY
programme of Ministry of Power has helped in REG emerging as a role model
amongst the international agencies seeking to promote and facilitate
improved access to modern energy services in their rural areas. The
delegation also visited a RGGVY project having rural infrastructure.

9.5.2 Indian Energy Exchange (IEX)

The country's first power exchange, called the Indian Energy Exchange
(IEX), commenced operations in June 2008. REG is one of the co-promoters
and holds equity to the extent of 4.68% in the venture. The core promoters
of IEX are Financial Technologies India Ltd (FTIL) and Power Trading
Corporation of India Ltd (PTC). IEX secured CERC approval on June 09, 2008
after which the exchange commenced its operations. Currently it trades for
the dayahead electricity market. IEX is India's first-ever, nationwide,
automated, and online electricity trading platform. IEX is a demutualised
exchange that enables efficient price discovery and price risk management.

9.5.3 Preferred Customer Policy

The Company moved a step further in taking care of its valued clients by
framing a Policy for Preferred Customers. REG already has a policy of
providing discount in interest rate for utilities who commit bulk business
over a specified period. The current policy instead focuses on felicitating
and acknowledging customers who have emerged outstanding based on a set of
evaluation criteria. REG shall sponsor training and capacity building
programs for selected clients both in India and abroad.

10. ERP BASED INTEGRATED INFORMATION SYSTEM

10.1 The Company is implementing an integrated Oracle based ERP system
covering all major business function. M/s Tata Consultancy Services (TCS)
is implementation partner, along with consultancy of Management Development
Institute (MDI), Gurgaon and Technical Consultancy of IIT, Delhi. During
the period, phases like AS-IS' process study, TO-BE' Module Testing,
Integration Testing, Gap-Fit analysis & Functional Design and Customization
and User Acceptance Testing (UAT) have been completed. Data Migration has
been completed and GO-LIVE has started for all functional modules except
Loans and Claim. In addition, training on ERP has been imparted to 250 end
users of various levels covering 76 days.

10.2 As a part of implementation of IT infrastructure for ERP operation,
Commissioning of ERP Data Centre and MPLSVPN based Wide Area Network (WAN),
for interconnecting all offices of REG except Shimla, has been completed.

10.3 The Local Area Network (LAN) at Corporate Office, SCOPE Complex and
Palika Bhavan, New Delhi have been consolidated. LAN has been setup in all
17 Zonal / Project offices and 1 Training Centre (CIRE) across the country.

10.4 The website of the Company has been made bilingual. Revamped Corporate
Intranet has been developed in-house, with more attractive and dynamic
features, and launched in July 2008.

11. CENTRAL INSTITUTE FOR RURAL ELECTRIFICATION (CIRE)

11.1 CIRE was established at Hyderabad in 1979 under the aegis of REG 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 programmes on various aspects of Transmission
and Distribution of Power Sector.

11.2 Franchising of Distribution Management throughout the country in RGGVY
villages is a mandatory requirement. In this connection, Ministry of Power,
Govt. of India has chosen CIRE for imparting 'National Franchisee Training
Programme'. This training activity will continue upto 2011-12. During the
year 2008-09, CIRE conducted 50 programmes on 'Training of Trainers: Rural
Electricity Distribution Franchising' under RGGVY in association with TERI.

11.3 CIRE also conducted 11 programmes on Distribution Reforms Upgrades and
Management (DRUM), other than Franchisee programmes, and the topics covered
included Disaster Management in Electrical Safety Procedures and Accident
Prevention; Financial Management in Distribution Business; Communication
Skills, Employee Motivation and Morale Development; Customer Satisfaction,
Communication and Outreach. As per the MIS of DRUM Project Secretariat,
among the 13 training institutions conducting DRUM training programmes all
over the country, CIRE is one of the best performing training institutions
and trained maximum number of participants.

11.4 CIRE was given the mandate by the Ministry of Power, Govt. of India to
conduct 'National Training Programme for C&D Employees'. The supporting
staff in technical, nontechnical areas working in distribution sector, who
are the first interface with the consumers were to be provided training and
skill development to effectively deliver their responsibilities and improve
the customer satisfaction. Under this programme, about 75,000 C&D employees
in the country will be trained during the period of Eleventh Five Year
Plan. In this connection, Two Pilot programmes were organized: One on
'National Capacity Building of Franchisees' at Lucknow and another on
'National Training Programme for C&D (Linemen and Technicians) Employees'
at Gurgaon for Dakshina Haryana Vidyut Nigam Ltd. (DHVNL).

11.5 Two In-house Training programmes were organised for the executives of
REG on 'Change Management on implementation of ERP Package' and 'Monitoring
of RGGVY projects', REG being the nodal agency for implementation of RGGVY
Programme.

11.6 Eleven Regular/Open programmes were organised on topics such as Power
Trading & Tariffs - ABT Scenario; Energy Management & Conservation in Power
Sector; Pilferage of Electricity - Technical and Legal Remedies; REG
Specifications, Standards & Construction Practices in Distribution Systems;
New Developments in Metering Technologies; Distribution Automation,
Switchgear and Protection; Power Sector Accounting with reference to ESAAR
& GAAP; Power & Distribution Transformers; Safety Management in Power
Sector; Power Purchase Agreement; and Power Reactor Improvement-Reactive
Compensation.

11.7 Six International Training Programmes under ITEC/SCARP, sponsored by
Ministry of External Affairs, Govt. of India were also conducted. The
programmes, each of 4 to 8 week duration, covered following topics:-

(i) Best Practices in Generation & Transmission Systems;

(ii) Planning, Design and Erection of EHV Sub-systems;

(iii) Power Transmission and Distribution Management and

Technologies;

(iv) Planning & Management of Power Sector in Developing Countries;

(v) Decentralised Distributed Generation and Rural Power Distribution
Management; and

(vi) Power Distribution Project Financing and Accounting Systems.

Participants came from various countries such as Mauritius, Malawi,
Thailand, Zimbabwe, Turkey, Bhutan,Algeria, Afghanistan, Myanmar, Malaysia,
Tanzania, Ghana, etc.

11.8 CIRE also conducted Three programmes on Strategic Financial
Management; Human Resources Management in Power Sector and Customer
Management & Information Systems in Power Sector in collaboration with the
Institute of Public Enterprise (IPE) and availed the services of the best
faculty resources of IPE for the benefit of the participants.

11.9 CIRE also conducted Seven programmes under the sponsorship of KfW,
Germany on the topics of 'Energy Accounting and Auditing in Power Sector -
Strategies and Techniques' and 'High Voltage Distribution System (HVDS)'.

11.10 In addition, Five customer specific / tailor-made programmes on
'Pilferage of Electricity - Theft & Legal Remedies' for the Vigilance
Executives and Police Officers of power utilities in Karnataka State i.e.
KPTCL, BESCOM, HESCOM, GESCOM and CESCOM were also conducted.

11.11 CIRE also organised a Training programme on 'Monitoring of RGGVY
Projects' to a batch of 25 executives of NESCL of NTPC.

11.12 CIRE as a nodal agency is entering into MoUs with various Power
utilities for implementing two National Programmes as nodal agency i.e.
'National Franchisee Training Programme' and 'National Training Programme
for C&D Employees'. CIRE will also be maintaining the MIS for both the
above training programmes and coordinate for their successful
implementation, as per the guidelines provided by Ministry of Power, Govt.
of India.

11.13 In all, during the year 2008-09, CIRE has conducted 98 programmes and
trained 2767 participants as per details given below:

Programmes No. of No. of
Programmes Participants
1. Programmes on 50 1494
TOT: Rural Electricity
Distribution Franchising
(in association with TERI)

2. DRUM Programmes other 11 333
than Franchising Programmes

3. Others- Pilot Training For 2 79
C&D Employees and Franchisees

4. In-house Programmes 2 40

5. Regular/Open Programmes 11 179

6. International Programmes 6 65

7. Programmes in 3 35
Collaboration with IPE

8. Sponsored Programmes 13 542

Total 98 2767

This is the best achievement of CIRE since its inception in 1979.

11.14 CIRE was also identified as the Nodal Agency for coordinating the
Meeting of Inspection by the Parliament Second Sub-Committee on Official
Language at Hyderabad. Inspection of 6 Central Government institutions i.e.
Indian Institute of Chemical Technology, National Consumer Cooperative
Federation, Central Ground Water Board, Coconut Development Board, Central
Research Institute for Dry Land Agriculture and Central Institute for Rural
Electrification (CIRE) were taken up by the Sub-Committee during 19 - 20
Jan 2009. The meeting was successfully conducted by CIRE and it received an
appreciation letter from the Chairman of the Parliamentary Second
SubCommittee on Official Language.

12. RISK MANAGEMENT

12.1 Asset Liability Management

The Company has a Risk Management Policy which covers inter alia Asset
Liability Management, Derivatives and Investment of Surplus Funds. An Asset
Liability Management Committee (ALCO) is currently functioning under the
leadership of CMD with reporting responsibility to the Board. ALCO also
comprises of Director (Finance), Director (Technical) and the General
Managers in Finance, Generation and T&D Divisions. Asset Liability
Management Committee (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 managed the liquidity risk
through a mix of strategies like forward looking resource raising program
based on projected disbursement and maturity obligations. The interest rate
risk is also managed through interest rate sensitivity analysis.

12.2 Foreign Currency Risk Management

The company has put in place a derivative policy to manage risk associated
with the foreign currency borrowings. The company enters into derivative
transactions to cover exchange rate and interest rate risk through various
instruments. As on 31st March 2009 the total foreign currency liabilities
outstanding are JPY 33.50 billion and Euro 29.61 million which are fully
hedged.

13. ISO 9001:2000 QUALITY ASSURANCE CERTIFICATION

The Company has implemented Quality Management Systems as per ISO 9001:2000
/ ISO 9001:2008 standards in six major Divisions of Corporate Office, and
all Project Offices across the country for claims processing activities.

14. HUMAN RESOURCES MANAGEMENT

In order to professionalize the Executive strength of REG and also to
infuse fresh blood, 4 Executives were appointed in the Company through open
advertisement and 3 Executives through campus recruitment during the year.
The total manpower at the close of the financial year 200809 i.e. on 31-03-
2009 was 681 which include 351 executives and 330 Non-executives.

14.1 Scheduled Caste/Scheduled Tribe Reservations

The directives issued by the Government regarding reservations for SC/ST 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-
2009 is given below:

Group Total No. of SC ST
employees

A 316 (294) 25(28) 6(6)
B 148(183) 22(22) 4(4)
C 112(115) 19(20) 1(1)
D 105(107) 31(33) 4(5)
Grand Total: 681(699) 97(103) 15(16)

(Figures in bracket give the corresponding position in the previous year)

14.2 Training & Human Resource Development

As a means of equipping employees with a range of skills including their
renewal, to enable them perform their responsibilities, Training and HRD
continued to receive a place of priority during the year. Based on the
assessed needs and as means to satisfy them, the company sponsored 97
employees to various training programmes, workshop etc. within the country
and abroad. In addition, 16 training programmes were conducted in-house,
which were attended by 298 employees including one programme conducted at
CIRE, Hyderabad exclusively for the Company's employees. Taken together,
these initiatives enabled the company to significantly out-perform MOU
targets by achieving a figure of 1688 man-days against the target of 1000
man-days. In order to enable them develop global exposure, several officers
were sent to attend various programmes abroad to various countries which
included Japan, U.K., Korea, Geneva, Italy, Bangladesh etc.

14.3 Staff Welfare

The Company undertook several steps in the area of Staff Welfare during the
year. These included providing better medical treatment to the employees/
their dependent family members at Corporate Office and Zonal Offices/
Project Offices, by empanelling 17 more Hospitals (including chain of Metro
Hospitals) under its 'Direct Payment' Scheme.

14.4 Women Cell

The Company's Women Cell celebrated the International Working Women's Day
(IWD) on Friday, the 6th March, 2009 (as 8th March, 2009 was a Sunday).

14.5 Industrial Relations

The Company maintained healthy, cordial and harmonious relations at all
levels.

14.6 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.

15. PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A) OF THE COMPANIES ACT,
1956.

There is no person employed in the Company throughout the financial year
2008-09 or part thereof, who comes under the purview of Section 217(2A) of
the Companies Act, 1956.

16. VIGILANCE ACTIVITIES

16.1 The Vigilance Division headed by the Chief Vigilance Officer (of the
rank of Functional Director) constantly endeavoured to emphasize on
'Preventive Vigilance' so as to improve upon systems and procedures and
leaving minimum scope for discretion. It also ensured to enforce discipline
in exercising power in a judicious way in matters relating to
administrative and financial functions.

16.2 The Vigilance set up in the Company consisting of one CVO and three
Managers/officers, though small, has been an effective managerial tool in
enhancing the performance of the Company by way of pursuation with
functional divisions to systematize /document the policies/ procedures.
Presently, there is no CBI case against any employee of the Company. Three
disciplinary cases and two complaints are pending at the end of financial
year.

16.3 During the Vigilance Awareness Week 2008 emphasis was laid on the
initiatives taken for improvement of the systems and procedures and of the
avenues available to the user citizen for redressal of grievances like
procedure for making complaints under of Public Interest Disclosure
and Protection of Informers' ( PIDPI) Resolution, 2004 known as Whistle
Blower Resolution highlighting the fact that the identity of the
complainant is kept secret and the complainant is protected from
victimization. On this occasion, various programmes were also organized at
Corporate Office/Zonal/Project Offices and Central Institute for Rural
Electrification, Hyderabad.

16.4 In compliance to the instructions of CVC, the sensitive posts in the
Company have been identified and informed to CVC. HR Department has been
advised to rotate the officers working on these posts for a long time.

16.5 Information with a vigilance bias was scrutinized carefully. Vigilance
Division initiated measures to streamline and strengthen office system and
procedures where some systemic failures were noticed. In this process, all
important circulars as and when received from CVC and circular issued by
Vigilance Division from time to time are regularly placed on Company's
intranet for information of all the Zonal Offices, Project Offices /
Central Institute for Rural Electrification, Hyderabad. Vigilance Division
ensures implementation of the instructions contained in those circulars.

16.6 As a surveillance measure, inspections were carried out by the
Officers of Vigilance Division in respect of 6 Zonal / Project Offices.
More than 95% Annual Property Returns of employees were subjected to
scrutiny and clarifications were sought wherever necessary.

16.7 Performance of Vigilance Division was reviewed regularly by the BOD-
REC, CVO-MOP, CVC in addition to constant reviews undertaken by the CVO,
REG in accordance with the prescribed norms.

17. IMPLEMENTATION OF OFFICIAL LANGUAGE

17.1 It was yet another year of achievements in the area of Rajbhasha
Hindi. The Company excelled most of the targets fixed by the Department of
Official Language in its Annual Programme for the year as a result of
increased interest shown by its officers and employees in Hindi noting and
correspondence. The Company has been honoured with 'Rajbhasha Shri Sammaan'
by Bharatiya Rajbhasha Vikas Sansthan.

17.2 In order to increase the use of Hindi by all in official work, eight
Hindi workshops were organized in Corporate Office with participation of
122 employees. To give impetus to the correspondence in Hindi, standard
formats have also been made available on Intranet. Bilingual working
facilities have also been made available to all on their computers. During
the year, Technical & Financial Glossary in addition to Administrative
Glossary and Conduct, Discipline & Appeal rules were published bilingually
for use of all the employees so that they can work in Hindi more
conveniently and in an effective manner. Library budget was utilized more
than the fixed target for purchase of Hindi books this year. Monthly E-
Darpan' about activities of the Company including Hindi work were published
for internal circulation.

17.3 Quarterly review meetings of Official Language Implementation
Committee were regularly held this year under the chairmanship of CMD, in
which detailed discussions were held to review on the progress and suggest
measures to overcome the difficulties in order to achieve the targets.

17.4 The Parliamentary Committee on Official Language inspected REC's
progress of Hindi work at Corporate Office on 8.4.2008 & Central Institute
for Rural Electrification at Hyderabad on 20.1.2009. Rajbhasha Division of
Corporate Office also inspected Six Internal Divisions as well as Six
Project Offices during the year. Ministry's officials have also been
associated during some of the inspections in Project Offices.

17.5 The Company organized nine Hindi competitions for Middle level
officers and Non- Executives as well as Sulekh Competition for Class IV
employees during Hindi Pakhwara from 1.9.2008 to 15.9.2008. A Hindi debate
(Vad Vivad Pratiyogita) was organized exclusively for General Managers /
Executive Directors. Cash prizes and certificates were given away to
winners of these competitions by CMD, REC, Shri Ashok Chakradhar (Chief
Guest), Sint. Alka Sinha & Shri I.C.P Keshari, Joint Secretary (MOP) on
this occasion. In orderto encourage employees, all the incentive schemes
introduced by the Government of India have been implemented in the Company.
Hindi Essay competition was also organized on 27.10.2008 under the aegis of
NARAKAS. The Company's website is available both in Hindi and English and
is updated from time to time. All publications, reports, memoranda, press
releases, mailers, tenders etc. were issued bilingually. 20 Manuals have
also been updated and published in diglot form as per instructions of
Parliamentary Committee.

18. MOU WITH MINISTRY OF POWER

The performance of the Company in terms of Memorandum of Understanding
signed with the Govt. of India in the Ministry of Power for the financial
year 2007-08 has been rated as 'Excellent'. This is the 15th year in
succession that the Company has received 'Excellent' rating since the year
1993-94. For the year 2008-09 also, the Company has met all the MOU targets
and its performance is poised for 'Excellent' rating.

19. 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 I

Company's Report on Compliance with II
Corporate Governance

Certificate on Corporate Governance issued III
by the Statutory Auditors of the Company

Statement pursuant to Section 212 (1) (e) of IV
the Companies Act, 1956 relating to Subsidiary
Companies.

Non-Banking Financial Companies Auditors' V
Report (Revised)

20. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

A policy on Corporate Social Responsibility has been adopted by the
Company. The details of the policy are posted on the REC's website i.e.
www.recindia.nic.in.

21. BOARD OF DIRECTORS

21.1 Shri Bal Mukand ceased to be Director (Technical) of the Company with
effect from 30th November, 2008 on attaining the age of superannuation.

21.2 In pursuance of Article 82(2) of the Articles of Association of the
Company, the President of India has appointed Shri Guljit Kapur as Director
(Technical), and he has taken over charge w.e.f. 1st December, 2008.

In terms of Articles 82(2) and 82(3) of the Articles of Association of the
Company read with Sections 255 255(l) and (2) of the Companies Act, 1956,
the Board of Directors of the Company has decided that Chairman and
Managing Director (CMD) and Director (Finance) be made not liable to retire
by rotation and the balance 6 Directors shall be liable to retire by
rotation. Further, as per Article 82(3), Directors who are liable to retire
by rotation will be appointed in the General Meeting in accordance with the
provisions of the Companies Act.

Accordingly, it is proposed to get the appointment of Shri Guljit Kapur, as
Director (Technical), approved by the shareholders at the next Annual
General Meeting of the Company.

21.3 As per the terms of appointment, the tenure of Shri H.D.Khunteta,
Director (Finance) of the Company expired on 04.05.2009. In pursuance of
Article 82(2) of the Articles of Association of the Company, the President
of India has extended the tenure of Shri H.D. Khunteta as Director
(Finance) beyond 04.05.2009 till the date of his superannuation i.e. upto
31.07.2012, or until further orders, whichever is earlier.

21.4 In accordance with the provisions of Articles 82 (4) of the Articles
of Association of the CompanyTwo Independent Directors i.e. Dr. M. Govinda
Rao and Shri P.R. Balasubramanian shall retire by rotation at the next
Annual General Meeting of the Company and, being eligible, offer themselves
for re-appointment.

22. SUBSIDIARY COMPANIES

The Company has formed four Subsidiary Companies for undertaking specific
business activities. The names of these companies and the percentage of the
Holding Company's stake in these Companies are as follows:-

Name of Subsidiary Proportion of
Company ownership interest

1. REG Transmission Projects
Company Limited (RECTPCL) 100%

2. REG Power Distribution
Company Limited (RECPDCL) 100%

3. North Karanpura Transmission
Company Limited (NKTCL)(a wholly
owned subsidiary of RECTPCL) 100%

4. Talcher II Transmission Company
Limited (TTCL) (a wholly owned
subsidiary of RECTPCL) 100%

22.1 REC Transmission Projects Company Ltd. (RECTPCL)

RECTPCL has taken up the task of selection of developer for the two
transmission projects entrusted to REC. Technical Consultants and Bid
Process Consultants to assist RECTPCL in the process have already been
appointed. Subsequently, under RECTPCL, two projects specific SPVs namely
(i) North Karanpura Transmission Company Limited (NKTCL) and (ii) Talcher
II Transmission Company Limited (TTCL) have been formed. These SPVs would
be merged with the Transmission Service Provider (TSP) of the Transmission
system after the developer is granted a license by the CERC.

Request For Qualification (RFQ) for the two transmission projects were
issued on 6.10.2008. 13 bidders submitted their RFQ proposal for North
Karanpura Transmission System and 15 bidders submitted their RFQ proposal
for Talcher II transmission system which were opened in December, 2008. Six
bidders have been issued letters on 8.5.2009 for issuance of RFP based on
the short listing done after evaluation of RFQ for each of the above two
projects which are ESSAR Power, JSW Energy, L&T Transco, Reliance Power,
Lanco-Deepak Consortium and Sterlite Technology.

Financial Performance

Since RECTPCL and its two subsidiaries namely NKTCL and TTCL have not yet
started its commercial operations, Profit and Loss Account for these
companies were not prepared for the financial year ended 3111 March, 2009.
In place thereof, Statement of Incidental expenditure during Construction
period were prepared.

The total Expenditure as per the Statement of Incidental Expenditure of
these Companies for the year ended 31.03.2009 is as under:

Name of the Total Remarks
Company Incidental
expenditure
during
Construction
for the year
ended 31.3.2009
(Figures in
16t Rupees)

1. REG A total
Transmission expenditure of
Projects Company Rs.201,70,313
Limited (RECTPCL) incurred by REG
TPCL has been
allocated to its
two Subsidiaries
NKTCL and TTCL

2. North 118,75,059 Includes Rs.
Karanpura 115,65,910
Transmission allocated by
Company RECTPCL
Limited (NKTCL)

3. Talcher II 86,35,176 Includes
Transmission Rs.86,04,403
Company Limited allocated
(TTCL) by RECTPCL
Total 205,10,235

22.2 REC Power Distribution Company Limited (RECPDCL)

During this year, RECPDCL secured orders from 13 Discoms namely UPCL,
MSEDCL, WBSEDCL, DGVCL, PGVCL, UGVCL, AVVNL, JdVVNL, JVVNL, HPSEB, UHBVNL,
APEPDCL, MESEB and 4 RE co-operative societies of A.P for third party
quality monitoring, supervision and inspection of the village
electrification work awarded on turnkey basis under Rajiv Gandhi Grameen
Vidyutikaran Yojana (RGGVY) covering approximately 34,934 villages in 71
districts of 9 states with a cumulative project cost of about Rs.1868
crores. On completion of these projects, RECPDCL would get a consultancy
fee of about Rs. 31 crores.

During the year ending 31st March, 2009, third party inspection of about
7000 villages under RGGVY works and 144 nos. feeders under FRP of Ajmer
Vidyut Vitaran Nigam Ltd. were completed by RECPDCL.

Financial Performance

During the year ending 31st March, 2009, RECPDCL has been able to generate
an Income of Rs. 5.27 crore and Profit before Tax & Profit after Tax are
Rs. 2.22 crore & Rs. 1.42 crore respectively.

23. RIGHT TO INFORMATION ACT 2005

The Company has taken action for implementation of Right To Information
(RTI) Act 2005. An independent RTI Cell has been created to ensure
compliance of the provisions of the RTI Act and attending to the requests
for information. REG website has been updated and contains information on
all the 17 items as required under Clause 4.1(b) of RTI Act, 2005.

RTI MACHINERY IN REC

CORPORATE OFFICE:

(A) Departmental Appellate Authority

Shri Rama Raman,
Executive Director (T&D)

(B) Public Information Officer

Shri B.R.Raghunandan,
General Manager & Company Secretary

(C) Asstt. Public Information Officer

Shri A.PS. Manocha,
Chief Manager (Legal & RTI)

24. Details of unclaimed Shares

The Company went for a maiden public offer of 15,61,20,000 equity shares in
February, 2008, which comprised fresh issue of 7,80,60,000 equity shares by
the Company and an offer for sale of another equal number of shares by the
President of India.

The details of unclaimed shares as on 31st March, 2009 is given as under

Particulars No. of No. of shares
cases involved

1. Aggregate number of 4557 453023
shareholders and the outstanding
unclaimed shares as on 01.04.2008

2. Number of shareholders 3898 397004
who approached for transfer of
unclaimed shares during the year.

3. Number of shareholders to whom 3898 397004
unclaimed shares were transferred

4. Aggregate number of shareholders 659 56019
and the outstanding unclaimed shares
as on 31.3.2009

The voting rights on these shares shall remain frozen till the rightful
owner of such shares claims the shares.

25. STATUTORY AUDITORS

M/s G.S. Mathur & Co., Chartered Accountants, New Delhi were appointed as
Statutory Auditors of your Company for the financial year 2008-09 by the
Comptroller and Auditor General of India (C & AG of India), for the fourth
year in succession. The Statutory Auditors have audited the Accounts of the
Company for the year ended 31st March, 2009. Accordingly, following
documents are annexed to this Report:

a) Audited Accounts and Cash Flow Statement of the Company for the year
ended 31st March 2009;

b) Auditors' Report on the Audited Accounts of the Company for the year
ended 31st March 2009;

c) Annexure to be enclosed with the audited Balance Sheet for NBFC
Companies as prescribed by RBI;

d) Audited consolidated Financial Statements of the Company for the year
ended 31st March 2009;

e) Auditors' Report on the Consolidated Financial Statements of the Company
and its Subsidiaries.

26. COMMENTS OF C&AG OF INDIA

Comments of the Comptroller and Auditor General of India dated 30.6.2009 on
the Accounts of the Company for the year ended 31st March, 2009 is
enclosed. It is reported therein 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 under Section
619(4) of the Companies Act, 1956.

27. FINANCIAL STATEMENTS/DOCUMENTS UNDER SECTION 212 OF THE COMPANIES ACT,
1956.

The financial statements and other documents in respect of Subsidiary
Companies are included as a part of the Annual Report in pursuance of
Section 212 of the Companies Act, 1956.

28. 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 affairs 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 Investors in REC Shares and
Bonds, Banks, Life Insurance Corporation, KfW of Germany, JICA (earlier
JBIC) of Japan and Asian Development Bank (ADB) in the fund raising
programmes of the Company.

The Directors also thank the Statutory Auditors M/s G.S. Mathur & 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

Place: New Delhi (P. Uma Shankar)
Date : July 15, 2009 Chairman & Managing Director

TABLE - 1

PROJECTS SANCTIONED DURING 2008-09 UNDER REG FINANCED SCHEMES

State No. of Loan Amount
Projects (Rs. in Lakh)

A. T&D Projects

1. Andhra Pradesh 70 57670

2. Arunachal Pradesh 1 1879

3. Gujarat 3 16387

4. Haryana 26 135624

5. Himachal Pradesh 5 4039

6. Jammu and Kashmir 16 9717

7. Jharkhand 2 98487

8. Karnataka 21 53861

9. Kerala 9 45531

10. Madhya Pradesh 0 0

11. Maharashtra 77 408165

12. Mizoram 0

13. Nagaland 1 1887

14. Orissa 23 44068

15. Punjab 18 143079

16. Rajasthan 61 160539

17. Tamilnadu 55 262255

18. Uttar Pradesh 49 111714

19. Uttaranchal 4 32426

20. West Bengal 4 16396

Sub-Total (A) 445 1603724

B. Generation Projects

1. Andhra Pradesh 2 267000

2. Chhattisgarh 1 88000

3. Jammu & Kashmir 0 6500

4. Jharkhand 1 19600

5. Karnataka 2 252500

6. Kerala 1 16544

7. Madhya Pradesh 2 345200

8. Maharashtra 3 298000

9. Punjab 2 40487

10. Tamil Nadu 3 808700

Sub-Total (B) 17 #2152531

C. Short Term Loan

1. Bihar 1 5000

2. Punjab 1 30000

3. Tamil Nadu 2 60000

4. Uttar Pradesh 10 115000

Sub-Total (C) 14 210000

D. RGGVY Projects

1. Arunachal Pradesh 1 2261.78

2. Chattisgarh 3 53552.60

3. J&K 1 1696.22

4. Himachal Pradesh 2 1412.32

5. MP 3 11982.71

6. Rajasthan 1 20995.86

Sub-Total (C) 11 *91901

E. IC&D Projects

1. Andhra Pradesh 0 5549

2. Haryana 15 73765

3. Madhya Pradesh 0 1360

4. Maharashtra 0 172

Sub-Total (E) 15 80846

F. DDG Proejcts

1. Andhra Pradesh 1 1153

2. Haryana 1 2560

3. Mizoram 0 593

4. Orissa 0 44

5. West Bengal 2 8143

Sub-Total (F) 4 18293

Grand Total (A+B+C+D+E+F) 506 4157295
0
Less: Subsidy under RGGVY
(equal to 90% of sanctions
under RGGVY) 82711

Net Sanctions excluding
subsidy under RGGVY 4074584

State Coverage in Numbers
Pumpsets Dalit Bastis Villages Households

A. T&D Projects

1. Andhra Pradesh - - - -

2. Arunachal Pradesh - - - -

3. Gujarat - - - -

4. Haryana - - - -

5. Himachal Pradesh - - - -

6. Jammu and Kashmir - - - -

7. Jharkhand - - - -

8. Karnataka - - - -

9. Kerala - - - -

10. Madhya Pradesh - - - -

11. Maharashtra - - - -

12. Mizoram - - - -

13. Nagaland - - - -

14. Orissa - - - -

15. Punjab - - - -

16. Rajasthan - - - -

17. Tamilnadu - - - -

18. Uttar Pradesh - - - -

19. Uttaranchal - - - -

20. West Bengal - - - -

Sub-Total (A) - - - -

B. Generation Projects

1. Andhra Pradesh - - - -

2. Chhattisgarh - - - -

3. Jammu & Kashmir - - - -

4. Jharkhand - - - -

5. Karnataka - - - -

6. Kerala - - - -

7. Madhya Pradesh - - - -

8. Maharashtra - - - -

9. Punjab - - - -

10. Tamil Nadu - - - -

Sub-Total (B) - - - -

C. Short Term Loan

1. Bihar - - - -

2. Punjab - - - -

3. Tamil Nadu - - - -

4. Uttar Pradesh - - - -

Sub-Total (C) - - - -

D. RGGVY Projects

1. Arunachal Pradesh - - 146 6680

2. Chattisgarh - - 3884 302946

3. J&K - - 170 5960

4. Himachal Pradesh - - 519 2112

5. MP - - 2379 259096

6. Rajasthan - - 1898 73818

Sub-Total (D) - - **8996 ***650612

E. IC&D Projects

1. Andhra Pradesh - - - -

2. Haryana - - - -

3. Madhya Pradesh - - - -

4. Maharashtra - - - -

Sub-Total (E) - - - -

F. DDG Proejcts

1. Andhra Pradesh - - - -

2. Haryana - - - -

3. Mizoram - - - -

4. Orissa - - - -

5. West Bengal - - - -

Sub-Total (F) - - - -

Grand Total (A+B+C+D+E+F) - - **8996 ***650612
Less: Subsidy under RGGVY
(equal to 90% of sanctions
under RGGVY)

Net Sanctions excluding
subsidy under RGGVY

ncludes additional loan sanction against already sanctioned 3 nos.
projects of Chattisgarh, J&K and Punjab.

# Includes additional loan asistance of Rs.50448 lakhs against already
sanctioned 3 nos. of projects.

* The project cost sanctioned under RGGVY comprises of capital subsidy and
loan.

** Includes both un-electrified, de-electrified and electrified
villages(This includes 1725 unelectrified / de-electrified villages)

*** Including BPL households

Includes additional loan sanction against already sanctioned 26 nos.
projects of Andhra Pradesh, Madhya Pradesh and Maharashtra.

ncludes additional loan sanction against already sanctioned 2 nos.
projects of Orissa & Mizoram.

TABLE-2

CATEGORY WISE PROJECTS SANCTIONED DURING 2008-09 UNDER REG FINANCED SCHEMES

Category Category Code No. of Loan Amount
Projects (Rs. In Lakh

A. T&D Projects

1. Project: Intensive P:IE 51 65136
Electrification

2. Special Project SPAYE 77 87439
Agriculture:
Pumpset
Energisation

3. Project: System P:SI-Distribution 154 376359
Improvement

4. Project: System P:SI-Distribution 18 104057
Improvement (HVDS)

5. APDRP APDRP 0 15551

6. System Improvement: SI:Meter 2 6223
Meters (Dist.)

7. System Improvement: SI-Transformer 20 66739
Transformers (Dist.)

8. System Improvement: SI-Panels/ 6 6229
Panels/Capacitor/ Capacitor
Conductors (Dist.)

9. Project: System P:SI-Transmission 117 875991
Improvement

10. SI-Pow Transformer Pow Transformer - -

Sub-Total 445 1603724

B. Project: Generation P:Gen 17 #2152531

C. Short Term Loan STL 14 210000
D. RGGVY P:RHhE 11 *91901

E. IC&D Projects IC&D 15 0846

F. DDG Projects DDG 4 18293

Grand Total(A+B+C+D+E+F) 506 4157295

Less: Subsidy under RGGVY
(equal to 90% of sanctions
under RGGVY) 82711

Net Sanctions excluding
subsidy under RGGVY 4074584

Category Category Code Coverage in Numbers

Pumpsets Dalit Villages Households
Bastis
A. T&D Projects

1. Project: Intensive P:IE - - - -
Electrification

2. Special Project SPAYE - - - -
Agriculture:
Pumpset
Energisation

3. Project: System P:SI- - - - -
Improvement Distri-
bution

4. Project: System P:SI- - - - -
Improvement Distri-
bution
(HVDS)

5. APDRP APDRP - - - -

6. System Improvement: SI:Meter - - - -
Meters (Dist.)

7. System Improvement: SI- - - - -
Transformers (Dist.) Trans-
former

8. System Improvement: SI-Panels/ - - - -
Panels/Capacitor/ Capacitor
Conductors (Dist.)

9. Project: System P:SI- - - - -
Improvement Trans-
mission

10. SI-Pow Transformer Pow - - - -
Trans-
former
Sub-Total - - - -

B. Project: Generation P:Gen - - - -

C. Short Term Loan STL - - - -
D. RGGVY P:RHhE - - **8996 ***650612
E. IC&D Projects IC&D - - - -

F. DDG Projects DDG - - - -
Grand Total(A+B+C+D+E+F) - - **8996 ***650612
Less: Subsidy under
RGGVY (equal to 90% of
sanctions under RGGVY)
Net Sanctions excluding
subsidy under RGGVY - - - -

# Includes additional loan asistance of Rs.50448 lakhs against already
sanctioned 3 nos. of projects of Chhatishgarh, J&K and Punjab.

* The project cost sanctioned under RGGVY comprises of capital subsidy and
loan.

* * Includes both un-electrified, de-electrified and electrified villages.
(This includes 1725 unelectrified / de-electrified villages)

* * * Including BPL households

Include additional Loan sanction against already sanction 26 nos.
projects of AP, MP and Maharashtra.

Include additional Loan sanction against already sanction 2 nos.
projects of Orissa and Mizoram.

TABLE - 3

CUMULATIVE STATEWISE SANCTIONS UNDER REG PROJECTS DURING THE LAST 39 YEARS
UPTO 31-03-2009

(Rs. In lakh)

State No. of Loan
Projects Sanctioned

1. Andhra Pradesh 6082 2151642
2. Arunachal Pradesh 228 195816
3. Assam 446 213585
4. Bihar 1752 398527
5. Chhatisgarh 37 482364
6. Delhi 31 441806
7. Goa 16 2007
8. Gujarat 1925 1307859
9. Haryana 1438 679560
10. Himachal Pradesh 490 196616
11. Jammu & Kashmir 588 252148
12. Jharkhand 39 403184
13. Karnataka 2931 1092860
14. Kerala 1754 508816
15. Madhya Pradesh 5281 981236
16. Maharashtra 5624 2733816
17. Manipur 151 39528
18. Meghalya 114 75364
19. Mizoram 76 38583
20. Nagaland 118 28661
21. Orissa 1707 572624
22. Punjab 1571 1342872
23. Rajasthan 3823 1733103
24. Sikkam 44 14137
25. Tamilnadu 3724 2211689
26. Tripura 181 63295
27. Uttar Pradesh 3232 1525739
28. Uttaranchal 91 346850
29. West Bengal 1483 1134898
30. DVC 1 48726
31. Generation PVT 25 880443
32. CCI-Pvt. Party 0 1519
33. NEEPCO 0 10000
Total 45003 22109872

TABLE-4

STATEMENT SHOWING STATE-WISE AND PROGRAMME-WISE DISBURSEMENTS AND REPAYMENT
BY BORROWERS DURING THE YEAR 2008-09 AND OUTSTANDINGS AS ON 31-03-2009

(Rs. In Lacs)

Name of State Transmission Generation RGGVY STL/Debt
Distribution Ref


1. Andhra Pradesh 85600 101079 1037 0
2. Arunachal Pradesh 376 496 933 0
3. Assam 0 0 5297 0
4. Bihar 0 0 6569 0
5. Chhattisgarh 0 58750 0 0
6. Goa 0 0 0 0
7. Gujarat 3302 71514 679 0
8. Haryana 59194 53599 302 0
9. Himachal Pradesh 3766 44700 790 0
10. Jammu & Kashmir 2363 0 1852 0
11. Jharkhand 9853 0 11807 0
12. Karnataka 25536 0 629 0
13. Kerela 0 8515 0 0
14. Madhya Pradesh 6288 9346 2195 0
15. Maharashtra 107729 134848 2243 0
16. Manipur 0 0 412 0
17. Meghalaya 0 0 109 0
18. Mizoram 0 2488 799 2500
19. Nagaland 2123 0 580 0
20. Orissa 4882 611 9743 0
21. Punjab 64659 66375 546 0
22. Rajasthan 223596 3500 2968 16500
23. Sikkim 0 24295 444 0
24. Tamil Nadu 47852 104126 -13 60000
25. Tripura 0 0 335 0
26. Uttar Pradesh 7460 24779 712 125000
27. Uttranchal 0 0 697 0
28. West Bengal 14154 76035 6280 0
29. Wind Energy 0 0 0 0
Total 668733 785056 57945 204000

RGGVY Subsidy

Grand Total

Name of State Total Disbursed Repayments Outstand-
disburs- upto the During upto the ing at
ement for end of the the year end of the of the
the year year year year
2008-09 2008-09

1. Andhra Pradesh 187716 1284930 64248 575924 709006

2. Arunachal
Pradesh 1805 22009 1291 9513 12496

3. Assam 5297 32911 0 4645 28266

4. Bihar 6569 57518 2756 22336 35182

5. Chhattisgarh 58750 286061 15301 48719 237342

6. Goa 0 1479 0 1479 0

7. Gujarat 75495 612089 44541 439829 172260

8. Haryana 113095 379290 14802 131014 248276

9. Himachal Pradesh 49256 191853 8616 75774 116079

10. Jammu & Kashmir 4215 92420 2294 40117 52303

11. Jharkhand 21660 124684 0 15334 109350

12. Karnataka 26165 402029 12992 268940 133089

13. Kerela 8515 338668 12196 284966 53702

14. Madhya Pradesh 17829 226467 6724 139467 87000

15. Maharashtra 244820 1154596 87845 587475 567121

16. Manipur 412 15840 103 3069 12771

17. Meghalaya 109 41400 46 12167 29233

18. Mizoram 5787 23935 66 4658 19277

19. Nagaland 2703 14415 709 6342 8073

20. Orissa 15236 116743 3185 91553 25190

21. Punjab 131580 738837 38790 332397 406440

22. Rajasthan 246564 1129232 55467 464897 664335

23. Sikkim 24739 69500 175 2826 66674

24. Tamil Nadu 211965 643469 21887 184058 459411

25. Tripura 335 11390 0 10547 843

26. Uttar Pradesh 157951 697759 97942 362006 335753

27. Uttranchal 697 238947 14715 33695 205252

28. West Bengal 96469 288581 5245 20879 267702

29. Wind Energy 0 3013 0 158 2855

Total 1715734 9240065 511936 4174784 5065281

RGGVY Subsidy 512052

Grand Total 2227786

TABLE-5

PUMPSETS ENERGISED UNDER THE PROJECTS FINANCED BY REG DURING 2008-09 AND
CUMULATIVE POSITION UPTO 31.3.2009

(Provisional)

State Achievement Cumulative
during 2008-09 Achievement
upto 31.3.2009

1. Chhatisgarh 81036 1734629
2. Arunachal Pradesh - -

3. Assam - 1922

4. Bihar - 113354

5. Delhi - -

6. Goa - -

7. Gujarat - 420456

8. Haryana - 223928

9. Himachal Pradesh 17 5935

10. Jammu & Kashmir 1202 10627

11. Jharkhand - -

12. Karnataka - 862387

13. Kerala - 340882

14. Madhya Pradesh - 1054106

15. Chhatisgarh - -

16. Maharashtra 69746 1795059

17. Manipur - 29

18. Meghalaya - 58

19. Mizoram - -

20. Nagaland - 164

21. Orissa - 63015

22. Punjab 142 483826

23. Rajasthan 1817 489907

24. Sikkim - -

25. Tamil Nadu 34783 1046670

26. Tripura - 1530

27. Uttar Pradesh - 379544

28. Uttarakhand - -

29. West Bengal - 82202

Total 188743 9110230

TABLE 6

DETAILS OF PROJECTS SANCTIONED IN X PLAN AND XI PLAN UNDER RGGVY

Amount in Rs. Crores

State A B C D E F G

1. Andhra Pradesh 17 17 0 21623 3166161 2114317 648.15
2. Arunachal Pradesh 2 2 237 321 7230 4377 43.30
3. Assam 3 3 903 1746 190663 148971 158.03
4. Bihar 26 25 17125 0 843499 843499 1495.80
5. Chhattisgarh 3 3 117 3504 270085 122326 148.94
6. Gujarat 3 3 0 2409 243397 188471 60.84
7. Haryana 4 4 0 1075 116814 49198 48.48
8. Himachal Pradesh 1 1 0 1118 2531 647 25.02
9. J& K 3 3 103 1444 99088 59731 97.62
10. Jharkhand 13 13 8727 4379 1469520 942319 1287.67
11. Karnataka 17 17 49 21152 1319939 631828 375.39
12. Kerala 1 1 0 38 23799 17834 19.75
13. Madhya Pradesh 8 8 115 9653 565912 311295 395.57
14. Maharashtra 4 4 0 4052 355590 262538 78.86
15. Manipur 2 2 186 270 25136 14447 64.07
16. Meghalaya 2 2 174 797 41495 23676 45.99
17. Mizoram 2 2 90 209 15331 8618 41.75
18. Nagaland 2 2 12 279 21701 14290 16.25
19. Orissa 4 4 2602 4637 598625 335080 434.10
20. Punjab 0 0 0 0 0 0 0
21. Rajasthan 25 24 1705 15608 1009310 699951 453.23
22. Sikkim 2 2 16 158 10320 3724 26.09
23. Tamilnadu 0 0 0 0 0 0 0
24. Tripura 1 1 48 72 20548 13119 19.57
25. Uttar Pradesh 64 65 30802 3287 1694075 1120648 2719.51
26. Uttranchal 13 13 1469 14105 357309 281615 643.89
27. West Bengal 13 13 4283 0 145918 97847 385.03
Total 235 234 68763 111936 12613996 8310366 9732.90

State H I J K L M N

1. Andhra Pradesh 9 5 0 5858 787967 477823 191.94
2. Arunachal Pradesh 14 14 1892 1435 69177 36433 494.39
3. Assam 20 20 7622 11584 1224165 842685 1501.97
4. Bihar 17 13 6086 6651 5178537 1918956 1480.09
5. Chhattisgarh 11 11 1015 12829 1015460 654839 956.27
6. Gujarat 22 22 0 15525 1352456 766679 299.59
7. Haryana 14 14 0 4910 452872 174875 148.92
8. Himachal Pradesh 11 11 93 9548 33948 11801 180.23
9. J&K 11 11 180 4606 196133 76999 538.31
10. Jharkhand 9 9 11010 3243 1456740 749478 1374.94
11. Karnataka 7 6 83 6743 516464 220442 186.32
12. Kerala 0 0 0 0 0 0 0.00
13. Madhya Pradesh 24 24 691 24441 2087624 1064947 1137.77
14. Maharashtra 30 30 6 36240 2278152 1613853 634.58
15. Manipur 2 2 309 457 51131 34741 91.69
16. Meghalaya 5 5 1769 2739 147153 92771 244.42
17. Mizoram 6 6 47 361 29003 18799 62.50
18. Nagaland 9 9 93 873 121291 55610 94.92
19. Orissa 27 26 15293 24355 4259667 2850783 3141.01
20. Punjab 17 17 0 11840 405023 148860 154.59
21. Rajasthan 16 16 2783 19233 1221077 1050400 803.76
22. Sikkim 2 2 9 260 17846 7734 31.01
23. Tamilnadu 26 26 0 12416 1692235 545511 447.41
24. Tripura 3 3 112 570 208211 181611 111.89
25. Uttar Pradesh 0 0 0 0 0 0 0.00
26. Uttranchal 0 0 0 0 0 0 0.00

27. West Bengal 15 4 290 24775 3828087 2601887 1959.60

Total 327 300 49383 241492 28630419 16198517 16268.12

State O P Q R S T U

1. Andhra Pradesh 26 22 0 27481 3954128 2592140 840.09
2. Arunachal Pradesh 16 16 2129 1756 76407 40810 537.69
3. Assam 23 23 8525 13330 1414828 991656 1660.00
4. Bihar 43 38 23211 6651 6022036 2762455 2975.89
5. Chhattisgarh 14 14 1132 16333 1285545 777165 1105.21
6. Gujarat 25 25 0 17934 1595853 955150 360.43
7. Haryana 18 18 0 5985 569686 224073 197.40
8. Himachal Pradesh 12 12 93 10666 36479 12448 205.25
9. J& K 14 14 283 6050 295221 136730 635.93
10. Jharkhand 22 22 19737 7622 2926260 1691797 2662.61
11. Karnataka 24 23 132 27895 1836403 852270 561.71
12. Kerala 1 1 0 38 23799 17834 19.75
13. Madhya Pradesh 32 32 806 34094 2653536 1376242 1533.34
14. Maharashtra 34 34 6 40292 2633742 1876391 713.44
15. Manipur 4 4 495 727 76267 49188 155.76
16. Meghalaya 7 7 1943 3536 188648 116447 290.41
17. Mizoram 8 8 137 570 44334 27417 104.25
18. Nagaland 11 11 105 1152 142992 69900 111.17
19. Orissa 31 30 17895 28992 4858292 3185863 3575.11
20. Punjab 17 17 0 11840 405023 148860 154.59
21. Rajasthan 41 34 4488 34841 2230387 1750351 1256.99
22. Sikkim 4 4 25 418 28166 11458 57.10
23. Tamilnadu 26 26 0 12416 1692235 545511 447.41
24. Tripura 4 4 160 642 228759 194730 131.46
25. Uttar Pradesh 64 65 30802 3287 1694075 1120648 2719.51
26. Uttranchal 13 13 1469 14105 357309 281615 643.89
27. West Bengal 28 17 4573 24775 3974005 2699734 2344.63
Total 562 534 118146 353428 41244415 24508883 26001.02

A = Projects Sanctioned in X Plan - No. of Projects

B = Projects Sanctioned in X Plan - No. of Districts

C = Projects Sanctioned in X Plan - No. of un-electrified villages covered

D = Projects Sanctioned in X Plan - No. of electrified villages covered

E = Projects Sanctioned in X Plan - No. of un-electrified h/h covered
(Incl. BPL)

F = Projects Sanctioned in X Plan - No. of BPL households covered

G = Projects Sanctioned in X Plan - Total Project Cost

H = Projects Sanctioned in XI Plan - No. of Projects

I = Projects Sanctioned in XI Plan - No. of Districts

J = Projects Sanctioned in XI Plan - No. of un-electrified villages covered

K = Projects Sanctioned in XI Plan - No. of electrified villages covered

L = Projects Sanctioned in XI Plan - No. of un-electrified h/h covered
(Incl. BPL)

M = Projects Sanctioned in XI Plan - No. of BPL households covered

N = Projects Sanctioned in XI Plan - Total Project Cost

O = Total Projects Sanctioned - No. of Projects

P = Total Projects Sanctioned - No. of Districts

Q = Total Projects Sanctioned - No. of un-electrified villages covered

R = Total Projects Sanctioned - No. of electrified villages covered

S = Total Projects Sanctioned - No. of un-electrified h/h covered (Incl.
BPL)

T = Total Projects Sanctioned - No. of BPL households covered

U = Total Projects Sanctioned - Total Project Cost

TABLE-7

STATE WISE DETAIL OF ACHIEVEMENT

State A B C D E F

1. Andhra Pradesh - 833404 - 945368 - 1778772
2. Assam 84 - 651 32718 735 32718
3. Bihar 13362 67820 3098 474277 16460 542097
4. Chhattisgarh - 15302 50 75592 50 90894
5. Gujarat - 78317 - 116310 - 194627
6. Haryana - 6907 - 16930 - 23837
7. Himachal Pradesh - - - 392 - 392
8. J&K - 4062 46 3924 46 7986
9. Jharkhand 1259 2826 4933 243830 6192 246656
10. Karnataka 47 374736 11 226046 58 600782
11. Kerala - 6596 - 3394 - 9990
12. Madhya Pradesh 15 1099 69 76026 84 77125
13. Maharashtra - 56287 - 145715 - 202002
14. Manipur 36 1300 57 2056 93 3356
15. Meghalaya - - 90 1264 90 1264
16. Orissa - 72 1427 144056 1427 144128
17. Rajasthan 1628 255378 158 237727 1786 493105
18. Tamil Nadu - - - 296 - 296
19. Uttar Pradesh 26985 447264 695 251575 27680 698839
20. Uttranchal 1226 83181 175 50111 1401 133292
21. West Bengal 3184 59219 596 37181 3780 96400
Total 47826 2293770 12056 3084788 59882 5378558

A = Achievement up to 2007-08 - Un-electrified Villages

B = Achievement up to 2007-08 - BPL HH

C = Achievement in 2008-09 - Un-electrified Villages

D = Achievement in 2008-09 - BPL HH

E = Cumulative Achievement - Un-electrified Villages

F = Cumulative Achievemen - BPL HH

MANAGEMENT DISCUSSION AND ANALYSIS

1. INDUSTRY STRUCTURE

In fiscal 2009, the electricity generation grew by 2.71 from 704.45 to
723.56 BUs whereas during the same period the requirement grew from 739.35
BUs to 774.32 BUs. The annual energy shortage thus increased to 11%. This
was the highest in six years, previous year shortage being 9.9%. The peak
shortage however declined to 12% in the year 2009 when compared with 16.6%
in the previous year. The gross electricity requirement by the end of the
Eleventh Plan projected by the Working Group on power is 1038 Billion Unit
(BU) and peak demand estimation is 151000 MW. To fulfil the estimated
electricity demand requirement, the target for capacity addition during
Eleventh Plan has been kept at 78577 MW. The three key components of the
power industry include Generation, Transmission and Distribution a brief of
which is given as follows:

Generation

The installed generation capacity has increased by 15635.4 MW to 147965.4
MW in the first two fiscal ears of the 11th plan.

(MW)

Sector Installed Installed Increase in Target
Capacity Capacity Installed Capacity
at the end of as on Capacity Addition
10th Plan 31.03.2009 so far in during
(2007) 11th Plan 11th Plan
(2012)

State 70096 76115.70 6019.70 27952

Central 45121 48971.00 3850.00 39865

Private 17113 22878.70 5765.70 10760

Total 132330 147965.40 15635.40 78577

The electricity supply industry in India is also characterized by a large
amount of captive generation, which has been established by energy
intensive industries such as steel and aluminium. Under the Electricity
Act, captive generators are able to sell excess power to consumers.

The total requirement of funds for generation projects, during the Eleventh
Plan period is estimated at Rs. 4,108,960 million, with Rs. 2,020,670
million being required for the central sector, Rs. 1,237,920 million being
required for the state sector and Rs. 850,370 million being required for
the private sector.

Transmission

By the end of loth Plan the total length of transmission lines in the
country comprised about 1.98 lakh ckt kms. During the first two fiscal
years of the 11th plan a total of about 23239 ckt km of lines have already
been commissioned. Similarly the substation transformation capacity has
gone up from about 2.62 lakh MVA at the end of the 10th Plan to 3.06 lakh
MVA at the end of fiscal 2009. Investments for transmission system
development and related schemes during the Eleventh Plan period is
estimated at Rs. 1,400,000 million, with Rs. 750,000 million being required
for the central sector and Rs. 650,000 million being required for the state
sector.

The focus of transmission system development is to provide adequate inter-
regional and intra-regional transmission capacity so as to consolidate and
strengthen the national grid network towards a strong all-India grid. The
Government of India's (GoI's) transmission perspective plans focus on the
creation of a national grid in a phased manner by adding over 60,000 ckm of
transmission network by 2012. It is intended that integrated grid will
evacuate an additional 100,000 MW by the year 2012 and carry 60% of the
power generated in the country. The existing inter-regional power transfer
capacity is to be enhanced to 30,000 MW by fiscal 2012 through creation of
'Transmission Super Highways'.

In order to attract private sector investments in major transmission
projects, the Got launched a scheme in 2007 under the Electricity Act,
pursuant to which private developers are proposed to become transmission
service providers on a 'build, own and operate' basis. The Got has
identified 14 transmission-related projects to be implemented on a build,
own and operate basis, which are in various stages of development.

Distribution

Distribution reforms have been re-emphasized by the Got by re-launching the
APDRP scheme, which has now been made performance based. The total fund
requirement for sub-transmission and distribution system development for
urban and rural areas, during the eleventh Plan period is estimated at
Rs.2,870,000 million inclusive of APDRP and RGGVY schemes, however the
reforms in this segment are limited by the poor financial health of the
SEBs and State Public Utilities and their resultant inability to upgrade
the distribution network.

To address this issue, the erstwhile APDRP has been continued through the
1lthplan as R-APDRP (Restructured APDRP). The program is now focussed on
actual, demonstrable performance in terms of sustained loss reduction and
proposes to cover urban areas - towns and cities with population of more
than 30,000 (10,000 in case of special category states). In addition, in
certain high-load density rural areas with significant loads, works of
separation of agricultural feeders from domestic and industrial ones, and
of High Voltage Distribution System (11KV) will also be taken up. The Part-
A of R-APDRP aims at preparation of Base-line data for the project area
covering Consumer Indexing, CIS Mapping, Metering of Distribution
Transformers and Feeders, and Automatic Data Logging for all Distribution
Transformers and Feeders and SCADA / DMS system etc. Part-B aims at
renovation, modernization and strengthening of 11KV level Substations,
Transformers/ Transformer Centers, Re-conductoring of lines at 11KV level
and below and upgradation of the entire last mile distribution
infrastructure.

Got will provide 100% Loan for part-A of the R-APDRP schemes and upto 25%
(90% for special category States) Loan for part-B of the R-APDRP schemes
for which funds would be channelized through PFC / REC. The entire amount
of Got loan for part-A of the project shall be converted into grant after
establishment of the required base-line data system within a stipulated
time frame and duly verified by third party inspection agencies. Part-B
loans to the extent of 50% (90% for special category States) loan for Part-
B projects shall be converted into grant in five equal tranches on
achieving 15% AT&C loss in the project area duly verified by third party
inspection agencies, on a sustainable basis for a period of five years.

The performance orientation built into the R-APDRP is expected to
incentivise and accelerate investments in distribution infrastructure, and
result in faster accomplishment of loss reduction goals.

Significant Policy Action

Policy action taken by the Government of India progressively over the years
continues to enable and restructure the power sector and attract greater
private capital. Starting from the introduction of the Electricity Act,
2003 which modified the legal framework governing the electricity sector,
and set the stage for attracting capital for large scale power projects,
the National Electricity Policy, was notified in February 2005, which
defined the broad goals with the following key features (i) access to
Electricity for all households in the next five years; (ii) energy and
peaking shortages to be overcome and power demand to be fully met by 2012
(iii) Supply of reliable and quality power of specified standards in an
efficient manner and at reasonable rates (iv) Minimum lifeline consumption
of 1 unit / household / day as a merit good by year 2012 (v) Financial
turnaround and commercial viability of the electricity sector; and (vi)
Protection of consumer interests. The National Tariff Policy was notified
in January 2006, which aimed to ensure financial viability of the power
sector, attract investments, ensure availability of electricity to
consumers at reasonable rates, and promote transparency and consistency in
regulatory approach for tariff setting. An Appellate Tribunal for
electricity also became functional since July 2005. Further, distribution
reforms were identified as the key area to bring about the efficiency and
improve financial health of the power sector. Among other various
initiatives, the Got approved a scheme called 'Accelerated Power
Development and Reforms Programme (APDRP)' in March 2003 which has been
relaunched as R-APDRP in September, 2008 by making it more performance-
based and financially attractive. The Rural Electrification Policy was
notified in August 2006, with the objective of improving access and quality
of electricity supply in rural areas to ensure rapid economic development
by providing electricity as an input for productive uses in agriculture,
rural industries etc.

The Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) which was launched by
the Got in April 2005 envisages electrification of about 1.15 lakh un-
electrified villages, free electricity connections to 2.34 crore BPL
households and providing access to electricity to all rural households in
the country. The scheme aims to establish (i) Rural Electricity
Distribution Backbone (REDB) with 33/11 KV (or 66/11 KV) sub-stations of
adequate capacity and lines in blocks where these do not exist (ii) Village
Electrification Infrastructure (VEI) with provision of distribution
transformers of appropriate capacity in villages / habitations) and (iii)
Decentralized Distributed Generation (DDG) and supply from conventional or
renewable or nonconventional sources such as biomass, bio fuel, bio gas,
mini hydro, geo thermal and solar etc. for villages where grid connectivity
is either not feasible or not cost effective. Subsidy towards capital
expenditure to the tune of 90% is being channelized through REC, which is
the nodal agency for implementation of the scheme in entire country. BPL
households are provided free electricity connections under the scheme in
rural habitations of project areas. The management of rural distribution is
envisaged through franchisees who could be Non-Governmental Organisations
(NGOs), Users Association, Panchayat Institutions, Cooperatives or
individual entrepreneurs. A three-tier quality control mechanism has been
built into the scheme. Initially approval for capital subsidy of Rs.5000
crores was provided during the 10th Plan period and further approval has
been accorded for capital subsidy of Rs.28000 crore during the Eleventh
Plan period. RGGVY has thus resulted in huge investments in providing
electricity supply in rural India.

2. OPPORTUNITIES

Got estimates for investment in the power sector, for XI Plan, stand at
10316 Billion INR which includes funds required for adding power generation
capacity, R&M of existing power plants, expansion and upgradation of
transmission and distribution infrastructure, decentralized distributed
generation etc. The capacity addition program during the XII Plan is even
higher. Therefore the opportunities for financing power infrastructure
projects are quite buoyant and are likely to remain so in the foreseeable
future. As a nodal agency for monitoring and channelizing funds under the
RGGVY program REG continues to take up the socio-economic responsibility of
village electrification and contribute to the mission of 'Power for all by
2012'.

3. PRODUCT WISE PERFORMANCE

The Company, as a leading Public financial institution, provides interest
bearing loans to SEBs, State Power utilities/State Power Departments and
Private sector for development of all segments of Power infrastructure. The
Company has already devised and also continuously modifies/updates/extends
loan portfolios to suit the emerging requirements of the borrowing power
utilities.

During the year, the Company has sanctioned loan assistance of Rs.40745.84
crore (excluding subsidy of Rs.827.11 crore under RGGVY) and disbursed
Rs.22277.86 crore (including subsidy of Rs.5120.52 crore under RGGVY) in
line with the mandate given by the Government enlarging the areas of
operation of the Company to cover financing of all projects in Power
Sector. The major component of the sanctions of the Company was for
Generation schemes with total sanction amount of Rs. 21525.31 crore. In
addition, an amount of Rs.16037.24 Crore under Transmission and
Distribution (T&D) schemes, Rs.2,100 crore under Short Term Loan, Rs.808.46
crore under IC&D projects, Rs.182.93 crore under DDG projects and Rs.91.90
crore under RGGVY (excluding subsidy of Rs.827.11 crore under RGGVY) were
sanctioned. The disbursement includes Rs.7850.56 crore under Generation,
Rs.5699.97 crore under RGGVY (including subsidy of Rs.5120.52 crore under
RGGVY), Rs.6,687.33 crore under T & D schemes and Rs. 2,040 crore for Short
Term Loan.

4. THREATS, RISKS AND CONCERNS

Raising resources in a cost-effective manner in an adverse economic
environment prevalent during the year has been quite a challenging task and
by and large, the Company has done well on that front. The economic slow
down does not seem to have affected the power sector, and the ability of
eligible borrowers in mobilising capital and debt for their projects
continues to remain on track. The weak financial health of SEBs remains an
area of concern even as they undergo the reform process.

5. OUTLOOK

Several years of concerted policy action in the power sector has put it on
a sound footing. The progress in XI Plan projects gives an indication that
actual achievements could be far higher than the previous Five Year Plans
and close to the XI Plan capacity addition targets of 78577 MW of XI Plan.
Activity has already begun among the shelf of projects targeted for XII
plan and beyond which is over 1.55 lakh MW Planned investments in
transmission and distribution sector along with introduction of modern
technologies and investments in rural electrification guide us to a
continued robust growth in the power sector in India. Over the long term,
the per capita energy consumption in India is bound to increase, which is
currently significantly lower than world average. Power sector is one of
the key constituents of infrastructure required for overall growth of the
economy. With the outlook for Indian economy remaining bright, the power
sector is likely to scale new highs in the coming years.

6. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has formulated various policies and procedures, as part of its
Internal Control System, for orderly and efficient conduct of its business,
including adherence to management's policies, safeguarding of assets,
prevention and detection of fraud and error, accuracy and completeness of
the accounting records, and the timely preparation of reliable financial
information.

The Company has a separate Internal Audit Division which verifies
compliance to the policies and procedures framed by the management. The
Internal Audit Division covers all areas of operations of the Company as
per the Annual Internal Audit Programme. The Division helps in improving
accuracy and efficiency of transactions and operations by undertaking
review of controls in built, scrutiny of payments and expenditure, and
examination of financial and technical records of the Company.

The audit of various Zonal Offices / Project Offices / CIRE located in
different parts of the country and various divisions of the Company at the
Corporate Office are also carried out on bi-annual, annual and biennial
basis during the year.

7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT OF OPERATIONAL
PERFORMANCE

The loan sanctioned during the year 2008-09 was Rs.40745.84 crore as
compared to Rs. 46770 crore during the previous year (excluding subsidy
under RGGVY). The disbursement during the year also increased to
Rs.22277.86 crore as compared to Rs.16304 crore during the previous year
(including subsidy under RGGVY).

The amount due for recovery during the year 2008-09 was Rs.9788.90 crore as
compared to Rs. 9002.73 crore during the previous year. The figure includes
the dues from defaulting Borrowers. The Company recovered a total sum of
Rs. 9796.97 crore during the year 2008-09 as against Rs.9041.99 crore
during the previous year.

During the financial year, the Company registered an increase of Rs1378.95
crore in operational income which went up to Rs.4757.17 crore in 2008-09
from Rs. 3378.21 crore during the year 2007-08. Profit before tax was at
Rs.1920.11 crore in 2008-09 in comparison to Rs. 1312.42 crores in 2007-08.
Net profit of the company was Rs.1272.08 crore, an increase of Rs.411.93
crore over the previous year's figure of Rs.860.15 crore. Net worth of the
Company as on 31st March, 2009 is Rs.6190 crore.

8. MATERIAL DEVELOPMENT IN HUMAN RESOURCE/INDUSTRIAL RELATIONS FRONT
INCLUDING NUMBER OF PEOPLE EMPLOYED

In order to professionalize the Executive-strength of the Company and also
to infuse fresh blood, 4 executives were appointed in the Company through
open advertisement and 3 executives through campus recruitment during the
year. The total manpower at the close of the financial year 2008-09 was 681
which includes 351 executives and 330 non-executives.

The Company sponsored 97 employees to various training programmes, workshop
etc. within the country and abroad. In addition, 16 training programmes
were conducted inhouse, which were attended by 298 employees including one
programme at CIRE, Hyderabad exclusively for REG employees. In order to
develop global exposure, several officers were sent to attend various
programmes abroad to various countries which included Japan, U.K., Korea,
Geneva, Italy, Bangladesh etc.

In order to provide better medical treatment to the employees/their
dependent family members at Corporate Office and Zonal Offices/Project
Offices, the Corporation has included 17 more Hospitals (including chain to
Metro Hospitals) under its 'Direct Payment' Scheme.

9. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

The Company has formulated a policy on Corporate Social Responsibility. The
brief details of the policy are given below:-

Policy

'To remain a responsible corporate entity mindful of its social
responsibilities to all stakeholders including consumers, share holders,
employees, local community and society at large'.

Aims and Objectives

As a responsible corporate entity, the Company will consistently strive for
opportunities to meet the expectation of its stake holders by pursuing the
concept of sustainable development with focus on the following:

1) To facilitate demonstration of commercially viable rural electricity
delivery models with appropriate intervention and support on a selective
basis such that they can be replicated elsewhere.

2) Promotion of rural enterprises and livelihood including skill
development and training.

3) Providing development support to common facility centers/production
centers in rural areas.

4) Promotion and development of rural technologies for micro enterprises
promotion.

5) Making sustained efforts for environmental preservation.

6) Promotion of sports and games.

7) Promotion of the development and well being of employees and their
families.

8) Undertaking relevant community development programmes.

9) Supporting initiatives of vocational, technical and higher education to
the most disadvantaged and marginalized section of the society.

10) To be a part of national/local initiatives to provide relief/
rehabilitation in times of natural Disaster/calamities.

Mandatory Corporate Social Responsibility Activities

(i) To offer employment opportunity to members of Scheduled Caste,
Scheduled Tribes, other Backward Classes, in conformity with various
guidelines from Government of India as may be applicable from time to time.

(ii) To offer employment opportunity to persons who are Physically
challenged persons (suffering from various disabilities such as visual,
orthopedic disability etc.) in compliance to various mandatory guidelines
issued by Government of India as applicable from time to time.

(iii) To offer necessary social security benefits to the employees of the
Company in the form of benefits under Contributory Provident Fund Scheme,
payment of gratuity etc. as may be applicable from time to time under
various statutory provisions or otherwise under the Company's policy.

(iv) To offer necessary facilities to the employees and their dependent
family members in the area of health and medical facilities including
prevention of various diseases, disabilities etc. as may be outlined in
various policies of the company or statutory provisions under various laws.

(v) To provide necessary measures of social security to women employees of
the Company in terms of allowing maternity benefits as applicable under
various statutory provisions or as may be decided by the Company from time
to time.