Power Finance Corporation Limited
The Directors are pleased to present their 31st Annual Report on the performance of your company for the financial year ended March 31, 2017 along with Audited Financial Statements, Auditor''''s Report, Secretarial Auditor''''s Report & review report by the Comptroller and Auditor General of India.
1.0 FINANCIAL AND OPERATIONAL HIGHLIGHTS
(Rs, in crore)
Opening balance of Surplus
Profit After Tax for the year
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1) (viia) (c) of Income Tax Act,
Transfer to Special Reserve created and maintained u/s 36(1) (viii) of Income Tax Act,
Transfer to Debenture Redemption Reserve
Transfer to General Reserve
Proposed Final Dividend
Corporate Dividend Tax on Interim Dividend
Proposed Corporate Dividend Tax
Transfer from Debenture Redemption Reserve on account of utilization
Adjustment made during the year
Transfers to Special Reserve under Income Tax Act, 1961
Closing Balance of Surplus
(b) LENDING OPERATIONS (excluding RAPDRP/IPDS)
(Rs, in crore)
(c) INTEGRATED POWER DEVELOPMENT SCHEME (IPDS) OPERATIONS (R-APDRP scheme subsumed)
(Rs, in crore)
Cumulative (up to MarchRs,17)
Sanctioned project cost
* Negative sanctions indicate loans cancelled
2.0 FINANCIAL PERFORMANCE
The total income achieved by your Company during the FY 2016-17 was Rs,27,018.57 crore as compared to Rs,27,564.31 crore in FY 2015-16. Operating income for the year is Rs,26,716.23 crore as compared to Rs,27,473.65 crore in the previous year.
The total expenditure for the FY 2016-17 amounted to Rs,21,908.78 crore as against total expenditure of Rs,18,503.65 crore in FY 2015-16. Finance cost including bond issue expenses amounted to Rs,16,459.27 crore in FY 2016-17 as compared to Rs,16,507.25 crore in FY 2015-16. This constituted 75.13% of total expenses in FY 2016-17 as compared to 89.21% in FY 2015-16. Employee Benefit expenses and other expenses were 0.52% and 0.31% respectively of total expenses against 0.49% and
0.27% respectively in the previous year.
During the FY 2016-17, your Company earned a net profit of Rs,2,126.39 crore as compared to Rs,6,113.48 crore for the FY 2015-16.
Your Company had been in correspondence with RBI w.r.t. implementation of RBl''''s restructuring norms. Based on the various correspondence exchanged, RBI on April 11, 2017 has directed the Company to apply RBI restructuring norms and allowed exemption till March 31, 2022 from borrower-wise classification of loans to state sector utilities which are downgraded to NPA due to no achievement of DCCO (Date of commencement of commercial operation) within RBI prescribed limits.
Your Company had been applying RBI restructuring norms on new generation loans sanctioned w.e.f. April 1, 2015 (Before April 1, 2015, MoP, Gol approved restructuring norms were applicable). After the receipt of RBI letter dated April 11, 2017, your Company has adopted RBI restructuring norms on remaining loans (other than loans to Transmission & Distribution, Renovation & Modernization and Life Extension projects and also the hydro projects in Himalayan region or affected by natural disasters). In generation loans sanctioned before March 31, 2015 and where restructuring has been done w.e.f. April 1, 2015, the asset classification has been given effect on March 31, 2017 as per RBI norms with consequent provisioning. The financial impact (decrease in PBT) on account to adoption of RBl''''s restructuring norms (shifting from MoP approved norms) has amounted to Rs,3,954.55 crore.
Due to realignment with RBI Norms, Rs,59,304.01 crore of loan assets got downgraded, of which Rs,35,994.70 crore got downgraded to restructured and Rs,23,309.31 crore to NPAs. This has negatively impacted the profits by Rs,3,954.55 crore.
All the loan assets of Rs,59,304.01 crore that got affected belong to State Government or Central Sector PSUs and are generation projects. Further, all Government sector borrowers are servicing dues regularly with recovery rate of 100% in FY 2016-17 i.e. there were no dues as on March 31, 2017 (except Rs,4 crore which got cleared after March 31, 2017).
Details of the accounts that got impacted due to RBI Norms
A. Downgrade of loan assets to Restructured with 4.25% provisioning:-
a all restructured assets are of State Govt. or Central Power PSUs and all the loans are being serviced regularly (100% recovery rate)
a Rs,35,994.70 crore loan assets were downgraded from Standard to Restructured having a negative impact of Rs,1,403.79 crore on profit, of these restructured assets:-
Rs, 58% or Rs,20,890 crore : Already commissioned & will reverse in FY 2018-19 Rs, 31% or Rs,11,165 crore : Scheduled to commission in FY 2017-18 Rs, 10% or Rs,3,670 crore : Scheduled to commission in FY 2018-19 Rs, 1% or Rs,270 crore : Scheduled to commission in FY 2019-20
B. Downgrade of loan assets to NPAs with 10% provisioning:-
Rs,23,309.31 crore loan assets have been downgraded to NPAs having a negative impact of Rs,2,550.76 crore on profit before tax, of these NPAs:-
a 79% or Rs,18,504 crore will get an upgrade in FY 2017-18, of which:-Rs, 68% or Rs,15,883 crore COD already achieved Rs, 2% or Rs,525 crore COD to be achieved Rs, 9% or Rs,2,096 crore COD to be achieved a 19% or Rs,4,494 crore will upgrade in FY 2018-19 a 1% or Rs,312 crore will upgrade in FY 2019-20
All the above projects are State Govt. owned generation projects and are having FSAs & PPAs and are also being serviced regularly with 100% recovery.
The management does not see any stress in these loan assets of Rs,59,304.01 crore affected due to RBI norms and they are likely to turn standard over next few years. Further 79% of NPAs are likely to get upgraded in FY 2017-18 itself.
Further, as per track record, Government borrowers have never been declared NPA (Except Sikkim Power which is standard now & Ratnagiri which is a JV of two public sector undertakings namely NTPC and GAIL).
Although, your company has retrospectively applied RBI Norms on private sector generation projects also w.e.f April 1, 2015, no private account has been downgraded since the Company has been with in RBI Norms largely due to consortium funding of private generation projects.
The profit was also impacted this year due to reversal of Income of a Standard Asset of Rs,413.03 crore (RKM) and additional tax incidence of Rs,225 crore due to UDAY prepayments. Further, it may also be noted that without considering the impact of this reversal of Income and additional provisioning to align with provisioning policy of RBI, the profit of your Company would have been at Rs,6,400 crore.
Asset quality without the RBI impact
i. In fact without RBI impact, during the year 2016-17, your Company has actually decreased its NPAs as below: a 4 loan accounts of Rs,920 crore got upgraded to Standard
a 1 generation loan asset of Rs,442 crore has been downgraded to NPA
ii. With all this, NPAs ratios for the year stand at:
With RBI Impact
Without RBI Impact
3.01% (improved from 3.15% last year)
1.68% (improved from 2.55% last year)
iii. As far as balance Restructured Book is concerned, other than ones impacted due to RBI norms is Rs,19,445.92 crore.
a 26% or Rs,5,000 crore have already got commissioned, Rs,4,500 crore will be reversed in FY 2017-18 and Rs,500 crore in FY 2018-19. a 70% or Rs,13,500 crore of this restructured book is Scheduled COD in FY2017-18. a All this restructured book of Rs,19,445.92 crore is private sector.
i. Despite sectoral challenges, your Company has registered strong business growth during FY 2016-17 reflected in:-a Loan Sanctions growth by 55% to Rs,1,00,603 crore from Rs,65,042 crore.
a Disbursements growth by 35% to Rs,62,798 crore from Rs,46,588 crore.
a Despite UDAY prepayments of Rs,28,400 crore during the year, disbursements have increase to show a positive loan asset growth with Loan Assets increasing by 3% to Rs,2,45,525 crore from Rs,2,38,920 crore.
ii. Without considering RBI impact, PFC has also maintained interest spread at a healthy level of 3.00% and NIM of 4.50% for the year.
i. Your Company raised about Rs,66,800 crore during the year, at a marginal cost of 7.47%.
ii. Capital adequacy ratio is maintained comfortably at 19.28%, with tier I capital of 16.20% against the RBI requirement of 15% and 10% tier I capital respectively.
iii. Your company has been allowed to raise 54EC Bonds which shall lead to further reduction in PFC''''s cost of funds.
The financial performance of the Company based on Audited Annual Accounts for the FY 2016-17, without considering the impact of alignment to RBI Restructuring norms, duly certified by statutory auditors is enclosed herewith as ‘Annexure A'''' (Page No. 48) for better understanding of above.
2.4 SHARE CAPITAL
As on March 31, 2017, 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 of which the Government of India holds 66.35% of the paid-up capital. During FY 2016-17, the Company allotted 1,32,00,40,704 bonus equity shares to the existing equity shareholders in the ratio of 1:1.
Dividend of Rs,5 per equity share on paid up equity share capital of Rs,2,640.08 crore (after issue of bonus shares) was paid in FY 201617 as against total dividend of Rs,13.90 per equity share on paid up equity share capital of Rs,1,320.04 crore during FY 2015-16. The dividend pay-out for the FY 2016-17 amounts to Rs,1,320.04 crore representing 62.08% of the profits after tax as against a dividend pay-out of Rs,1,834.86 crore representing 30.01% of the profits after tax in the previous year.
In view of alignment with RBI''''s restructuring norms, profits for the year has reduced to Rs,2,126.39 crore as compared to previous year. Keeping in view the reduced profitability and interim dividend already paid amounting to Rs,1,588.77 crore (including Corporate Dividend Tax), Board of Directors of your Company could not recommend declaration of further dividend. Accordingly, interim dividend @ 50% of equity share capital is considered as total dividend for the year.
3.0 OPERATIONAL PERFORMANCE
Your Company issued sanctions of Rs,1,00,603 crore during the FY 2016-17 to State, Central, Private and Joint Sector entities. An amount of Rs,62,798 crore was disbursed during the same period. With this as on March 31, 2017, the cumulative sanctions amount to Rs,6,05,864 crore and cumulative disbursements amount to Rs,4,55,355 crore.
In addition to above, projects worth Rs,3,018 crore were sanctioned under IPDS and Rs,28 crore under R-APDRP during FY 2016-17. An amount of Rs,2,333 crore was disbursed under IPDS and Rs,1,581 crore under R-APDRP during the same period. With this, cumulative approved project cost amounts to Rs,26,066 crore under IPDS and Rs,37,956 crore under R-APDRP and cumulative disbursements to utilities amount to Rs,2,660 crore under IPDS and Rs,10,187 crore under R-APDRP.
3.1 Financial Assistance (Excluding R-APDRP/IPDS)
(Rs, in crore)
Cumulative up to March, 2017
(Rs, in crore)
Cumulative up to March, 2017
Wind, Solar, Bagasse and Biomass
Renovation, Modernization and Updating of Thermal & Hydro Power Stations
Short Term Loan
Medium Term Loan
Buyers Line of Credit
* Others include Funding of Regulatory Assets, Equipment Manufacturing Loan, Fuel Sources Development, Loan for Redemption of bond, Computerization, Project settlement, Purchase of power through PXI, Loan for Asset Acquisition, Loan Against Receivables, Studies, Bill Discounting, Pre Investment Fund, Decentralized Management, Technical Assistance Project etc.
3.2 Financial Assistance under IPDS/R-APDRP
(Rs, in crore)
Cumulative up to March'''' 2017
Approved project cost
Approved project cost
Part A (IT)
Part A (SCADA)
* In addition to above, during FY 2016-17, Rs,47 crore were released by MoP for nodal agency fee/ enabling activities under IPDS, Rs,101 crore under Part-C including reimbursement of PFC''''s actual expenditure of R-APDRP and Rs,304.70 crore has been disbursed by MoP directly to project implementing agencies of J&K under PMRP 2015. Cumulatively, MoP has released an amount of Rs,77crore for nodal agency fee/enabling activities under IPDS and Rs,364 crore under Part-C of R-APDRP.
# Approved Project cost R-APDRP(Part A(IT) is net cost (During FY 2016-17, Sanctions Rs,28 crore and cancelation of Rs,55.35 crore)
The MoU targets agreed with MoP under IPDS/ R-APDRP for FY 2016-17 and actual achievements during the year are tabulated below:
Part-A Completion -Go Live Cum. (Towns)
Award of Works in Towns under IPDS (Towns)
Monitoring of energy data through National Power Portal (NPP) (Feeders)
Completion of Part-B works (Towns)
Establishment of SCADA Control Centers (Towns)
Completion of SCADA system (Towns)
Your Company gives utmost priority to the realization of its dues towards principal, interest etc. Out of Rs,47,657.03 crore to be recovered towards principal, interest etc. under rupee term loans, bill discounting, working capital, lease financing, foreign currency loan, loans for equipment financing and guarantee fee, an amount of Rs,46,076.16 crore was actually realised representing an overall recovery rate of 96.68% (previous year 94.50%).
Provisioning on Non Performing Loan Assets has been increased by an amount of Rs,3,898.23 crore during the year. The Company has made a total provision of Rs,5,356.25 crore towards Non-Performing Assets (NPA) against Loan Assets in its Annual Accounts up to the year 2016-17. After making provision on NPA, the level of net Non-Performing Assets (NPA) has been recorded at Rs,25,345.96 crore which is 10.55% to the Total Net Loan Assets as on March 31, 2017.
In addition to above, your company has also made a provision of Rs,557.84 crore and Rs,2,356.23 crore on Standard Assets and Restructured Standard Assets respectively as on March 31, 2017, which would strengthen PFC''''s balance sheet by providing a buffer provisioning and inspire higher levels of confidence amongst investors, regulators and other stakeholders in your company.
5.0 RESTRUCTERED LOANS
The details of loans restructured during the FY 2016-17 are as follows:
(Rs, in crore)
Standard Loans Restructured
No. of Borrowers
Sub-Standard Loans Restructured
No. of Borrowers
Doubtful Loans Restructured
No. of Borrowers
No. of Borrowers
Rs,735.67 crore is restructured subsequently in 2 borrowers.
Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2016-17.
6.2 BORROWINGS FROM DOMESTIC MARKET
The major borrowings from Domestic market are given as follows:-
(Rs, in crore)
Bonds -Private Placement (Taxable)
Further, Rs,5,000 crore were raised by issuing GoI fully serviced Bonds through private placement.
6.3 EXTERNAL BORROWINGS
During the FY 2016-17, your company did not raise any funds through external borrowing.
6.4 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,12,960 crore were sanctioned as on March 31, 2017 by various scheduled commercial banks to the company for short term funding which do not bear any commitment charges towards unutilized limits.
7.0 PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
7.1 CONSERVATION OF ENERGY/ TECHNOLOGY ABSORPTION
There are no significant particulars, relating to conservation of energy and technology absorption as your Company does not own any manufacturing facility.
7.2 FOREIGN EXCHANGE EARNINGS AND OUTGO
The Foreign exchange outgo aggregating Rs,254.01 crore was made on account of debt servicing, financial & other charges and training expenses.
The Foreign exchange earnings for the FY 2016-17 were nil.
8.0 CREDIT RATING Domestic
Credit Ratings by Domestic credit rating agencies for domestic program of the Company during the FY 2016-17:
Long Term Rating
Short Term Rating
CRISIL AAA with stable outlook
Credit Rating by International credit rating agencies:
Standard & Poor (S&P)
9.0 RISK MANAGEMENT
9.1 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. Such analysis is made every month in yearly buckets for the next 10 years and is being used for critical decisions regarding the time, volume and maturity profile of the borrowings, creation of new assets and mix of assets and liabilities in terms of time period (short, medium and long-term). While the liquidity risk is being monitored with the help of liquidity gap analysis, the interest rate risk is managed by analysis of interest rate sensitivity gap statements, evaluation of Earning at Risk (EaR) on change of interest rate and creation of assets and liabilities with the mix of fixed and floating interest rates.
The maturity profile of major items of assets and liabilities as at March 31, 2017 is set out below:
(Rs, in crore)
Maturity pattern of certain items of Assets and Liabilities based on Audited Balance Sheet as on March 31, 2017
Beyond 2021-22 Total
Advances (Rupee Loan Assets)
Foreign Currency Assets
Investments (Net of Provision)
Foreign Currency Liabilities
Borrowings (Rupee Liabilities)
9.2 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 forward, option, principal swap and forward rate agreements.
As on March 31, 2017, the total o/s foreign currency liabilities are USD 895 million, JPY 43,668 million and Euro 16 million. On an overall basis, the currency exchange rate risk is covered to the extent of 24% through hedging instruments and lending in foreign currency.
9.3 INTEGRATED ENTERPRISE WIDE RISK MANAGEMENT
Your Company has put in place a mechanism to ensure that the risks are monitored carefully and managed efficiently. In this regard, your company had constituted the Risk Management Committee of Directors to monitor various risks, examine risk management policies & practices and initiate action for mitigation of risks arising in the operations. To facilitate this, the Company had put in place an Integrated Enterprise - Wide Risk Management Policy (IRM Policy).
The Company has identified 21 risks (8 quantifiable risks and 13 non quantifiable risks) which may have an impact on profitability/ revenues of the Company. In order to implement IRM policy, Risk Management Compliance Committee and a unit were constituted for monitoring/reporting of the identified risks.
10.0 ULTRA MEGA POWER PROJECTS (UMPPs) AND INDEPENDENT TRANSMISSION PROJECTS (ITPs)
Your Company has been designated as the ‘Nodal Agency'''' by Ministry of Power (MoP), Government of India, for development of Ultra Mega Power Projects (UMPPs), with a capacity of about 4,000 MW each. Fifteen such UMPPs have been envisaged to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Karnataka, Maharashtra (Munge), Tamil Nadu (Cheyyur), Odisha (Sundargarh), Bihar (Banka), Uttar Pradesh, 2 Additional UMPPs in Odisha and 2nd UMPP in Tamil Nadu, Gujarat and Jharkhand (Deoghar).
UMPP is the initiative of Government of India with Ministry of Power as the ‘facilitator'''' for the development of these UMPPs while Central Electricity Authority (CEA) is the ‘Technical Partner’. Till March 2017, nineteen Special Purpose Vehicles (SPVs) were established by the Company for UMPPs. Out of these, fourteen SPVs (operating SPVs) were incorporated to undertake preliminary site investigation activities necessary for conducting the bidding process for the projects. These SPVs shall be transferred to successful bidder(s) selected through Tariff Based International Competitive Bidding Process for implementation and operation. Five additional SPVs (Infra SPVs) were incorporated by PFC for holding the land for power plant and land for coal blocks in case of domestic coal based UMPPs (Odisha, Bihar, Deoghar and Tilaiya UMPPs) and for holding land for power plant/port in case of imported coal based UMPP (Cheyyur UMPP). These SPVs would be transferred to the respective procurers of power from these projects.
Out of these nineteen SPVs, four SPVs have been transferred to the successful bidders as indicated below:
Name of SPV
Date of Transfer
Coastal Gujarat Power Ltd.
The Tata Power Company Ltd.
April 22, 2007
Sasan Power Ltd.
Reliance Power Ltd.
August 7, 2007
Coastal Andhra Power Ltd.
Reliance Power Ltd.
January 29, 2008
Jharkhand Integrated Power Ltd.*
Reliance Power Ltd.
August 7, 2009
*Reliance Power Ltd./Jharkhand Integrated Power Limited (JIPL) has issued Termination notice of Power Purchase Agreement (PPA) for Tilaiya UMPP on 28th April, 2015. Procurers have decided to accept the termination after which JIPL shall be taken over by Procurers and subsequently transferred to PFC for rebidding.
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.
Till March 2017, twenty five Special Purpose Vehicles (SPVs), two by PFC and other twenty three by PFC Consulting Limited were established as wholly owned subsidiaries for ITPs. Out of these twenty five SPVs, Bokaro-Kodarma Maithon Transmission Company Limited was liquidated in December 2010 and seventeen SPVs were transferred to the successful bidders till March 31, 2017.
During the year, Ministry of Power appointed PFC Consulting Limited as Bid Process Coordinator (BPC) for four new Independent Transmission Projects to be implemented through Tariff Based Competitive Bidding Process. PFC Consulting Limited incorporated four SPVs as its wholly owned subsidiaries for these projects and initiated bidding process as per following details:
Date of Incorporation
Transmission system for Ultra Mega Solar Park in Fatehgarh, Distt. Jaisalmer Rajasthan
Fatehgarh-Bhadla Transmission Ltd
Bidding process is underway
i) Additional 400kV feed to Goa
ii) Additional System for Power Evacuation from Generation Projects pooled at Raigarh (Tamnar) Pool
Goa-Tamnar Transmission Project Ltd.
Bidding process is underway.
Connectivity and Long Term Access (LTA) to HPPCL 450 MW from Shongtong Karcham HEP
Shongtong Karcham-Wangtoo Transmission Ltd
Bidding process is underway
i) Connectivity System for Lanco Vidarbha Thermal Power Pvt. Ltd. (LVTPPL)
ii) Inter State Transmission system strengthening in Chhatarpur area in Madhya Pradesh
Bijawar-Vidarbha Transmission Ltd.
RFQ inputs awaited from CEA
During the year following five SPVs were transferred to successful bidders:
Date of Transfer
Odisha Generation Phase - II Transmission Limited
Sterlite Grid3 Ltd.
Warora-Kurnool Transmission Limited
Essel Infraprojects Ltd.
Gurgaon-Palwal Transmission Limited
Sterlite Grid 4 Ltd.
Medinipur-Jeerat Transmission Limited
Powergrid Corporation of India Ltd.
Kohima- Mariani Transmission Limited
Kalpatru Power transmission Ltd.
The schemes Northern Region System Strengthening Scheme - XXXIII" (SPV- Ballabhgarh-GN Transmission Company Limited), and Northern Region System Strengthening Scheme-XXXV (SPV-Mohindergarh-Bhiwani Transmission Ltd) have been de-notified from tariff based bidding process. Process has been initiated to liquidate these two SPVs.
11.0 INTEGRATED POWER DEVELOPMENT SCHEME (with RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND 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 notified “Integrated Power Development Scheme" (IPDS) on December 3, 2014 with following components:
i) Strengthening of sub-transmission and distribution networks in the urban areas;
ii) Metering of distribution 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.
Erstwhile, R-APDRP Scheme has been subsumed in newly launched IPDS scheme.
The components at (i) and (ii) above have an estimated outlay of Rs,32,612 crore including a budgetary support of Rs,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 of Rs,22,727 crore as already approved by CCEA will be carried forward to the new scheme of IPDS in addition to the outlay for components at (i) and (ii) indicated above.
You company, as nodal agency, has contributed significantly during the year in implementation of IPDS (with RAPDRP subsumed
a Your company sanctioned projects of Rs,3,018 crore during FY 2016-17 and Rs,26,066 crore cumulatively under IPDS.
a Your company also disbursed Rs,2,333 crore during FY 2016-17 and Rs,2,660 crore cumulatively to the State Utilities for projects sanctioned under IPDS.
a Your company sanctioned projects of Rs,28 crore during FY 2016-17 and Rs,37,956 crore cumulatively for 1,405 towns under Part-A IT, 72 towns under Part-A(SCADA) and 1228 towns under Part-B of R-APDRP.
a Your company also disbursed Rs,1,581 crore during FY 2016-17 and Rs,10,187 crore cumulatively to the State Utilities for projects sanctioned under R-APDRP.
Progress of implementation
Under IPDS, Project Management Agency appointment has been done in 55 Utilities and TPA has been signed with 53 Utilities.
Out of NIT value of Rs,22,483 crore issued, projects worth Rs,13,809 crore has already been awarded in 223 out of 538 sanctioned circles and implementation has started in said circles. Further, your company also sanctioned Rs,2,233 crore as counterpart loans and disbursed an amount of Rs,57 crore under IPDS during the year.
Nodal agency is in process of appointing Third Party Concurrent Evaluation Agency (TPCEA) for concurrent evaluation of IPDS projects and for inspections on sample basis.
With the measures taken so far, 20 out of 21 Data Centers, 19 out of 21 Disaster Recovery Centres and 40 out of 46 Customer Care Centers have been commissioned. Further, 1356 towns have been declared Go-Live in 28 States and declaration of Go-Live in balance 49 towns of J&K (15), Tamil Nadu (8), Puducherry (4), Odisha (12), Arunachal Pradesh (4), Mizoram (3) and Nagaland (3) is under progress. In 1356 Go-live towns, all business process software modules are functional and energy audit reports are being derived from the system.
During the year, your company disbursed an amount of Rs,457 crore and cumulatively Rs,1,877 crore as counterpart loan under Part-B of R-APDRP. Implementation work has commenced cumulatively in 1227 Part-B towns to strengthen & improve distribution system and reduce AT&C losses to 15% or below and system strengthening works have been cumulatively completed in 783 towns.
Cumulatively, 52 out of 72 sanctioned SCADA Control Centers have been commissioned and 18 out of 72 SCADA towns were completed.
The reduction in AT&C loss is already visible in 1024 R-APDRP towns (as per Post Go-Live reports) 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.
a Study of ten Discoms was conducted where AT&C losses reduced in last 5 years. The committee pin pointed various administrative, technical and commercial interventions adopted by these Utilities to reduce AT&C losses. The report was released by Secretary (Power), MoP in July, 2016.
a Urban Distribution Feeder Monitoring system is being developed as an integral part of National Power Portal (NPP). NIC along with PFC is implementing the project. The 11 kV Feeder data of 46 Discoms in 28 States has been received and integrated on NPP. As on March 31, 2017, transaction data of 24,395 Feeders uploaded by Discoms on NPP and master data of 28,878 Feeders taken on-board. Further, data from additional 6,752 Feeders are likely to be available on NPP in FY 2017-18.
a A system has been developed in-house for web-based project monitoring of IPDS/ R-APDRP. Discoms are uploading award details, 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.
a Power System reliability data is being compiled in the form of SAIDI/SAIFI reports for R-APDRP towns. Utilities are being encouraged to take subsequent necessary administrative interventions for reduction of AT&C losses, based on Post Go Live reports (D1 to D7).
a Revamped IPDS Portal with Web analytics for Post Go-Live parameters: now include 7 Post Go-Live parameters viz. AT&C loss reduction, Consumer Grievance redressal, New Connection release, High loss feeders, power reliability indices (SAIFI/SAIDI), Feeder meters communication and e-payment report, along-with their graphical web analytics.
a PFC on behalf of Ministry of Power has engaged IPDS Consultants as Urban Vidyut Abhiyanta (UVA) purely on contractual basis, as per PFC policy. There are 42 UVAs engaged with PFC as on date. PFC has deployed these UVAs in Discoms to monitor IPDS project implementation.
a PFC on behalf of Ministry of Power has developed a Mobile App URJA (Urban Jyoti Abhiyaan) for Urban Power Distribution Sector to enhance Consumer Connect, Project Monitoring of Urban Distribution Sector projects etc. The APP also depicts daily outage schedules in various Utilities. The web version of URJA is also available at www.urjaindia.co.in. The App won its first laurel in form of an award for ‘Most efficient use of Information and Communications Technology (ICT) for Consumer Connect'''' at 3rd eLets PSU Summit. Your company was also honoured with the prestigious “One Globe Award for Excellence in Enabling a Mobile Economy" for the URJA App at the 6th Annual One Globe Forum.
a Capacity building / training of Utility personnel were re-launched under IPDS with the first training programme on the theme “Efficiency Improvement Measures in Distribution System" organized at Power Management Institute (PMI) of NTPC.
12.0 INITIATIVES TOWARDS REFORMS AND RESTRUCTURING Categorization of Utilities
For purposes of funding, your company classifies State Power Generation and Transmission Utilities into A , A , A, B and C categories. The categorization (biannually) 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 regards 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/ grading with PFC''''s standard categories of 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 3rd August, 2017, 106 utilities were categorized, 4 as A , 31 as “A ", 35 as “A", 23 as “B" and 13 as “C".
Quarterly and Annual Report of State Power Utilities
During the year, your Company has undertaken the initiative of revising its existing Quarterly Performance Research report to focus on the distribution sector and to make the report more exhaustive and informative. The information/formats of the new revised Quarterly Report were developed after discussions with various stakeholders and the consultants i.e. CARE & ICRA.
The data for new quarterly report is being collected from 40 distribution utilities covered under the Annual Integrated Rating exercise.
The first edition of the revised report with data for July - September 2015 vis-a-vis April - June 2015 and FY 2014-15 was forwarded to MoP in June 2016. The latest edition of the Report with data for Q4 FY 2016-17 was submitted in June 2017.
PFC also publishes the Report on the Performance of State Power Utilities (SPUs) on an annual basis. The 13th edition of the Report for the years 2012-13 to 2014-15 covering 100 utilities for the year 2014-15 was submitted to MoP in July 2016. The 14th edition of the Report for the years 2013-14 to 2015-16 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.
13.0 POLICY INITIATIVES
Your Company constantly reviews and revises its lending policies/guidelines/products to suitably align these with market requirements as also with its corporate objectives.
During the FY 2016-17, your Company reviewed its policies/guidelines/products with respect to Short Term Loan and Debt Refinancing with a view to make the same more market oriented and borrower friendly.
During the year, interest rates and financial charges/fees in respect of term loan and short term loan were reviewed and revised to ensure sustainability and aligning with the market.
In spite of growing competition in the market as well as concerns on interest rates, your company could balance its objectives of business growth and profitability.
14.0 RENEWABLE ENERGY AND CLEAN DEVELOPMENT MECHANISM
Power is one of the most important components of infrastructure, critical to sustain economic growth. The Indian power sector is undergoing a significant change that is redefining the industry outlook. Sustained economic growth continues to drive power demand in India. The Government of India''''s focus to attain ‘Power For All'''' has accelerated capacity addition in the country. Over the years, renewable energy sector in India has emerged as a significant player in the grid connected power generation capacity. It supports the government agenda of sustainable growth, while, emerging as an integral part of the solution to meet the nation''''s energy needs and an essential player for energy access. It has been realized that renewable energy has to play a much deeper role in achieving energy security in the years ahead and be an integral part of the energy planning process.
Renewable energy sector landscape in India has, during the last few years, witnessed tremendous changes in the policy framework with accelerated and ambitious plans to increase the contribution of solar energy. The Government of India has set a target to achieve 175 GW installed capacity by 2022. This includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power.
The increased focus of GoI towards renewable energy has created attractive opportunities for investments in this sector.
In addition to above, during FY 2016-17, PFC issued sanctions of Rs,8,156 crore to Hydro Generation and disbursed Rs,1,327 crore. Further, PFC sanctioned Rs,7,021 crore to Wind, Solar, Bagasse and Biomass related projects and disbursed an amount of Rs,2471 crore during the same period.
15.0 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT, 2013
Your Company being a Non-Banking Financial Company engaged in business of financing companies, its loan operations are exempt from the relevant provisions of Section 186 of the Companies Act, 2013.
The particulars of investments during the FY 2016-17 are as follows:-
a During the FY 2015-16, PFC has invested Rs,124 crore in Energy Efficiency Services Limited (EESL), a Joint Venture Company of PFC, REC, NTPC and POWERGRID. Out of which, Rs,99 crore is towards Share Application Money pending for allotment. The application money pending for allotment was fully allotted to PFC during FY 2016-17 on April 25, 2016.
a During the year, the Company has subscribed to 26,05,42,051 fully paid equity shares of NHPC Limited of face value of Rs,10 per share under Offer for Sale by GoI. The shares have been subscribed at a cost of Rs,21.78 per share including brokerage and other statutory charges aggregating to Rs,567.50 crore.
In case of a borrower Shree Maheshwar Hydel Power Corporation Limited (SMHPCL), which was classified as a doubtful loan asset, the Company invoked the pledge of equity shares. Accordingly, 6,57,46,779 number of equity shares of Rs,10 each pledged by the promoters have been transferred to the Company on June 1, 2016. These equity shares have been recognized at a value of Rs,1.
Further, 6,61,00,000 number of equity shares of Rs,10 each have been allotted to the Company on June 1, 2016 on partial conversion of sub-debt loan given earlier to the extent of Rs,66.10 crore. A provision for diminution in value of these shares of Rs,66.10 crore has been made as per Prudential Norms of RBI.
Further, in case of another borrower GMR Chhattisgarh Energy Ltd. (GCEL), the Company has converted its debt into equity under approved Strategic Debt Restructuring (SDR) package and 27,50,00,000 number of equity shares of Rs,10 each have been allotted to the Company on February 23, 2017. As at March 31, 2017, provision for diminution in value of investment works out to Rs,81.95 crore. Company has opted to distribute the provision over four calendar quarters in accordance with RBI''''s SDR norms. Accordingly, a provision for diminution in value of investment of Rs,20.49 crore has been provided in the last quarter of the current year. The balance diminution in value of investment of Rs,61.46 crore shall be provided in FY 2017-18.
To focus on additional business in the areas of consultancy, renewable energy, consortium lending, equity financing, etc. following wholly owned subsidiaries have been incorporated by your Company, as on date:
(i) PFC Consulting Limited
(ii) PFC Green Energy Limited
(iii) PFC Capital Advisory Services Limited
(iv) Power Equity Capital Advisors Private Limited
The Board of Directors of the Company have approved the Merger of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL). It is envisaged that the area of operations of PFCCAS (Debt Syndication, Debenture Trustee, Strategy/ Financial Advisory) can complement the area of operations of PFCCL (Reform Advisory, Tariff Bid Process Advisory, Communication Services etc.) providing synergy in the merger of PFCCL and PFCCAS.
Further, the Board of Directors of PFC Green Energy Limited (PFC GEL) and PFC accorded its in-principal approval for merger of PFC GEL with PFC in their respective meetings held on July 18, 2016 and August 9, 2016 respectively.
The process of mergers is under way.
Further, your Company is designated by Ministry of Power, Government of India as the ‘nodal agency'''' for facilitating development of Ultra Mega Power Projects and its wholly owned subsidiary i.e. PFC Consulting Limited is the ‘Bid Process Coordinator'''' for Independent transmission projects. As on March 31, 2017, 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 Power Transmission Limited*
xx) Fatehgarh-Bhadla Transmission Limited*
xxi) Bijawar-Vidarbha Transmission Limited*
xxii) Shongtong Karcham-Wangtoo Transmission Limited*
xxiii) Goa-Tamnar Transmission Project Limited*
'''' wholly owned subsidiaries of PFC Consulting Limited
16.1 PFC CONSULTING LIMITED
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 these services as a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary on March 25, 2008, in order to give it requisite autonomy in functions and flexibility in operations. PFCCL 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 and ITPs. PFCCL has been nominated as the ‘Bid Process Coordinator'''' for selection of developer for the Independent Transmission Projects (ITPs) by Ministry of Power, GoI.
The Services offered by PFCCL are broadly in the following areas:
a Advisory services on issues emanating from implementation of Electricity Act 2003 like reform, restructuring, regulatory etc.
a Bid process management including Tariff based competitive bidding as per the Guidelines issued by MoP, GoI for various segments of Power Sector
a Project-structuring/ planning/ development/ specific studies, implementation monitoring, efficiency improvement projects a Human Resource Management Plans a Organization performance improvement plans a Contract related services for power sector
a Financial management, resource mobilization, accounting systems etc. a Coal block development
a Renewable and non-conventional energy project development including “Waste to Energy" Projects a Advisory Services for Distribution system Improvement Schemes a Project Management Activities under IPDS and DDUGJY Schemes a Detailed Project Reports and selection of Implementation Agency for Smart Grid a Bidding under DEEP Portal for procurement of Power
Till date, consultancy services have been rendered to 57 clients spread across 23 States/UTs by PFCCL. The total number of assignments undertaken as on date is 104.
Further, during the FY 2016-17, the total income of PFCCL was Rs,120.67 crore vis-a-vis Rs,73.55 crore in the previous FY 2015-16 and the net profit earned by PFCCL during FY 2016-17 was Rs,57.85 crore as against the corresponding net profit of Rs,37.06 crore last fiscal.
16.2 PFC GREEN ENERGY LIMITED
PFC Green Energy Limited (PFC GEL) was incorporated on March 30, 2011 as a wholly owned subsidiary of the Company to extend finance and financial services to promote green (renewable and non-conventional) sources of energy. As on March 31, 2017, PFC GEL had an authorized share capital of Rs,1200 crore and paid up share capital of Rs,300 crore comprising of Rs,10 crore equity shares of Rs,10 each and Rs,20 crore Fully Convertible Preference Shares of Rs,10 each.
The Board of Directors of PFC GEL and PFC accorded its in-principal approval for merger of PFC GEL with PFC in their respective meetings held on July 18, 2016 and August 9, 2016 respectively.
PFC GEL continues to accomplish a healthy growth during the FY 2016-17. The total revenue from operation grew by 67% from Rs,38.71 crore to Rs,64.79 crore, profit before tax(PBT) grew by 31% from Rs,32.95 crore to Rs,43.14 crore and profit after tax (PAT) grew by 33% from Rs,22.60 crore to Rs,30.15 crore in FY 2016-17.
Considering the proposed merger of the company with its holding company, it has disbursed Rs,283.51 crore to various ongoing renewable energy projects already sanctioned by it. As on March 31, 2017, the company had a loan portfolio of Rs,629.60 crore.
During FY 2016-17, PFC GEL contributed Rs,53.85 lakh towards ‘Swachh Bharat Kosh'''' under its Corporate Social Responsibility.
16.3 PFC CAPITAL ADVISORY SERVICES LIMITED
PFC Capital Advisory Services Limited (PFCCAS) was incorporated as a wholly owned subsidiary of your company on July 18, 2011 to focus on sectoral requirements for financial advisory services, including syndication services. The authorized capital of the Company is Rs,1 crore and the paid up share capital of the Company is Rs,0.10 crore.
During the year, income from operations of PFCCAS was Rs,1.53 crore while net profit after tax of the company is Rs,1.06 crore.
Further, Board of Directors of PFC approved merger of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL) subject to regulatory and other compliances in line with the recommendation of the Board of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL).
16.4 POWER EQUITY CAPITAL ADVISORS PRIVATE LIMITED
Power Equity Capital Advisors Private Limited (PECAP), the wholly owned subsidiary of your company 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, which is under consideration of MoP, GoI.
17.0 JOINT VENTURES, ASSOCIATE COMPANIES AND OTHER MAJOR INVESTMENTS (as on March 31, 2017)
17.1 ENERGY EFFICIENCY SERVICES 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. It is the main implementation arms of the National Mission on Enhanced Energy Efficiency (NMEEE). Your Company has subscribed to 9,90,00,000 fully paid equity shares of EESL of face value of Rs,10 per share as on March 31, 2016 and the same have been allotted on April 25, 2016. As on March 31, 2017, the stake of your company was 31.71% in EESL. EESL has reported profit after tax of Rs, 51.86 crore (Previous year: Rs,37.08 crore) for FY 2016-17.
17.2 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 2016-17, PTC maintained its leadership position with trading volumes of 48.32 BUs. PTC has reported profit after tax of Rs,290.87 crore for the year.
17.3 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. PXIL offers 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 has made an equity investment of Rs,3.22 crore in exchange (being 6.64% of PXIL’s paid up equity share capital as on March 31, 2017). Due to erosion of Net Worth of PXIL, PFC has provided the entire investment amount of Rs,3.22 crore as provision for diminution in the value of investment in its books.
17.4 SHREE MAHESHWAR HYDEL POWER CORPORATION LIMITED
In June, 2016, PFC, being one of the lenders of Shree Maheshwar Hydel Power Corporation Limited (SMHPCL) has 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 invocatio