DIRECTORS' REPORT 2014-2015

To

The Members,

Power Finance Corporation Limited

Your Directors are pleased to present the 29th Annual Report on the performance of your company for the financial year ended March 31, 2015 along with Audited Financial Statements including Consolidated Financial Statements, Auditor's Report, Secretarial Auditor's Report & Report of Comptroller and Auditor General of India.

2.0 FINANCIAL PERFORMANCE

2.1 REVENUE

The total income achieved by your Company during the FY 2014-15 was Rs.24,906.80 crore registering growth of 16.73% over the total income of Rs.21,337.60 crore earned during FY 2013-14. Operating income for the year increased from Rs.21,322.56 crore to Rs.24,861.32 crore registering a growth of 16.60%.

2.2 EXPENSES

The total expenditure during FY 2014-15 amounted to Rs.16,528.57 crore as against total expenditure of Rs.13,779.29 crore in FY 201314. Finance cost including bond issue expenses incurred during

FY 2014-15 amounted to Rs.15,469.58 crore as against the corresponding expenses of Rs.13,078.82 crore in FY 2013-14. This constituted 93.59% of total expenses in FY 2014-15 as compared to 94.92% during last fiscal. Employee Benefit expenses and Administrative expenses were 0.55% and 0.29% respectively of Finance Cost and 0.52% and 0.27% respectively of total expenses.

2.3 PROFIT

During the FY 2014-15, your Company earned a net profit of Rs.5,959.33 crore viz-a-viz Rs.5,417.75 crore for the FY 2013-14 registering an increase of 10%.

2.4 SHARE CAPITAL

As on March 31, 2015, the paid-up share capital of your Company was Rs.1,320.04 crore consisting of 1,32,00,40,704 equity shares of Rs.10 each of which the Government of India holds 72.80% of the paid-up capital.

2.5 DIVIDEND

Your Directors have recommended a final dividend of Rs.0.60 per equity share in addition to an interim dividend of Rs.8.50 per equity share on paid up equity share capital of Rs.1,320.04 crore, which was paid in March 2015. The total dividend for the FY 2014-15 thus aggregates to Rs.9.10 per equity share as against Rs.9.00 per equity share paid for the previous year. The final dividend will be paid after your approval at the Annual General Meeting. The total dividend pay-out for the FY 2014-15 will thus amount to n,201.24 crore representing 20.16% of the profit after tax as against a dividend pay-out of Rs.1188.04 crore representing 21.93% of the profit after tax in the previous year.

3.0 LENDING OPERATIONS

Your Company sanctioned loans amounting to Rs.60,784 crore during the FY 2014-15 to State, Central, Private and Joint Sector entities. An amount of Rs.44,691 crore was disbursed during the same period. With this as on March 31, 2015, the cumulative sanctions amount to Rs.4,87,716 crore and cumulative disbursements amount to Rs.3,45,969 crore.

In addition to above, projects worth Rs.4,407 crore were sanctioned under IPDS scheme (with R-APDRP subsumed under it) during FY 2014-15. An amount of Rs.1,571 crore were disbursed during the same period. With this, cumulative sanctions amount to Rs.42,496 crore and cumulative disbursements amount to Rs.8,931 crore under IPDS scheme (with R-APDRP subsumed under it).

4.0 REALISATION

Your Company gives utmost priority to the realisation of its dues towards principal, interest etc. Out of Rs.41,343.53 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.39,747.61 crore was actually realised representing an overall recovery rate of 96.14% (previous year 97.68%). This overall recovery rate has been consistently maintained at 96-99% for over past decade.

In terms of Prudential Norms, as applicable, the provisioning on Non Performing Loan Assets has been increased by an amount of Rs.231.16 crore during the year. The Company has made a total provision of Rs.473.46 crore towards Non-Performing Assets (NPA) against Loan Assets in its Annual Accounts upto the year 201415. After making provision on NPA, the level of net Non-

Performing Assets (NPA) has been recorded at M890.17 crore which is 0.87% to the Total Loan Assets as on March 31, 2015.

In addition to above, your company has also made a provision of Rs.486.57 crore and Rs.564.44 crore on Standard Assets and Restructured Standard Assets respectively as on March 31, 2015, 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.

6.0 BORROWINGS

Your Company is a non-deposit taking NBFC, and thus has not accepted any public deposits during the FY 2014-15.

6.1 BORROWINGS FROM DOMESTIC MARKET

Your Company mobilized funds amounting to Rs.55,928.29 crore from the domestic market during FY 2014-15 as against Rs.45,220.06 crore mobilized during FY 2013-14 comprising of

6.3 CASH CREDIT/ OVERDRAFT FACILITIES

For day to day operations, your company continued to follow prudent strategies for optimum utilization of fund based resources. To hedge any financial liquidity bottlenecks, ample credit lines to the tune of Rs.9,555 crore were sanctioned as on March 31, 2015 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 ABSORPTION OF ENERGY/ TECHNOLOGY

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.326.17 crore was made on account of debt servicing, financial & other charges and training expenses. The Foreign exchange earnings for the FY 2014-15 were nil.

8.0 CREDIT RATING

International

During the FY 2014-15, the international credit rating agencies Moody's, Fitch and Standard and Poor's have given to your company, long term currency issuer ratings of Baa3, BBB- and BBB- respectively, which are at par with sovereign rating for India.

Domestic

Ratings assigned by domestic rating agencies during FY 2014-15, for your Company's long term domestic borrowing programme (including bank loans) were the highest rating of CRISIL AAA, ICRA AAA and CARE AAA by CRISIL, ICRA and CARE respectively. The Company's short term domestic borrowing programme (including bank loans) was awarded the highest rating of CRISIL A1+, ICRA A1 + and CARE A1 + by CRISIL, ICRA and CARE respectively.

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 & 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 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.

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, 2015, the total foreign currency liabilities are USD 1272.70 million, JPY 24,208.80 million and Euro 18.96 million. On an overall basis, the currency exchange rate risk is covered to the extent of 10% 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, the Risk Management Committee of Directors constitutes Risk Management Compliance Committee and a separate unit for monitoring of the identified risks. The unit continuously monitors the risks from time to time and ensures that the risks are being mitigated on time.

10.0 ULTRA MEGA POWER PROJECTS (UMPPs) AND INDEPENDENT TRANSMISSION PROJECTS (ITPs) 10.1 UMPPs

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. Sixteen such UMPPs have been identified to be located at Madhya Pradesh (Sasan), Gujarat (Mundra), Andhra Pradesh (Krishnapatnam), Jharkhand (Tilaiya), Chhattisgarh (Surguja), Karnataka, Maharashtra (Munge), Tamil Nadu (Cheyyur), Odisha (Sundargarh), Bihar, 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 31, 2015, 15 Special Purpose Vehicles (SPVs) were established by the Company for UMPPs, out of these, 13 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. Two additional SPVs were incorporated by PFC for holding the land for Cheyyur UMPP and for holding the land and coal blocks for Odisha UMPP. These SPVs would be transferred to the respective procurers of power from these projects. Documents (SBDs) are revised by MoP.

10.2 ITPs

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

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification ofroute, 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 31, 2015, 18 Special Purpose Vehicles (SPVs), 2 by PFC and other 16 by PFC Consulting Limited were established as wholly owned subsidiaries for ITPs. Out of these 18 SPVs, Bokaro- Kodarma Maithon Transmission Company Limited was liquidated in December 2010 and 8 SPVs were transferred to the successful bidders till last fiscal. During the FY 2014-15, PFCCL has transferred DGEN Transmission Company Limited to the successful bidder Instalaciones Inabensa, S.A., Spain.

During the year, the bidding process for Tanda Transmission Company Limited (TTCL) for the transmission project "ATS for Tanda Expansion TPS (2X660 MW)" was re-initiated in October 2014.

During the year, Ministry of Power appointed PFC Consulting Limited as Bid Process Coordinator (BPC) for six new Independent Transmission Projects to be implemented through Tariff Based Competitive Bidding Process. PFC Consulting Limited incorporated following SPVs as its wholly owned subsidiaries for these projects and initiated bidding process as per following details and SPVs for the remaining 2 projects are being incorporated:

Bidding process is underway for the above projects and is likely to be completed in FY 2015-16.

The bidding process for the Ballabhgarh-GN Transmission Company Limited (BGNTCL), SPV for the transmission project "Northern Region System Strengthening Scheme - XXXIII" is kept in abeyance on the advise of CEA due to issues related to dispute in the PPA between NPCL and Essar Power (Jharkhand) in case of BGNTCL.

11.0 INTEGRATED POWER DEVELOPMENT SCHEME (with RESTRUCTURED ACCELERATED POWER DEVELOPMENT AND REFORM PROGRAMME (R-APDRP) subsumed in)

Ministry of Power, Government of India has launched a reforms programme namely, Integrated Power Development Scheme

(IPDS) in December, 2014 aiming at:

(i) 24x7 power supply for consumers

(ii) Reduction of AT&C losses &

(iii) Providing access to all urban households

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

As a part of R-APDRP, for the first time, Information Technology (IT) is being deployed in identified 1,412 towns of the country for establishment of accurate, reliable & sustainable baseline data, business process automation, carrying out energy audit for identifying AT&C losses and better consumer services etc. in the power distribution sector.

Also under Part-A, projects for Supervisory Control and Data Acquisition (SCADA) System/ Distribution Management System (DMS) is being established in big towns in the country (72 towns) for real time operation and control of Distribution Network for improvement of efficiency, quality and reliability of power supply.

Further, under Part-B, projects for Distribution Strengthening and Improvement are being implemented in over 1,259 towns of the country. The main focus of the scheme is reduction of AT&C losses to 15% or below.

Your Company, as nodal agency, has contributed significantly in implementation of RAPDRP programme during the FY 2014-15. The company cumulatively upto FY 2014-15 sanctioned, Part-A (IT) schemes of all eligible 1,412 towns, Part-A (SCADA) schemes for 72 towns and Part-B schemes for 1259 towns. During the year, your company sanctioned n,155 crore of projects. The cumulative sanction under R-APDRP is Rs.39,244 crore as on March 31, 2015.

Your company has also disbursed an amount of n,521 crore (claims processed) upto March 31, 2015 to the state utilities. The cumulative disbursement under R-APDRP is Rs.8,881 crore (claims processed) as on March 31, 2015. With the measures taken so far, as on March 31, 2015, Data Centers in cumulatively 19 States have been commissioned. Further, 861 towns have gone live in 23 states in which all business process software modules are functional and energy audit reports are being derived from the system.

During the year, for implementation of Part-B projects of R-APDRP, utilities have tied up counterpart funding amounting to Rs.873 crore. With this, cumulative counterpart funding tied up amounts to Rs.15,727 crore of which Rs.4,497 crore is from PFC. Implementation work has commenced cumulatively in 1108 towns, to strengthen & improve distribution system and reduce AT&C losses to 15% or below.

During the year, utilities have also appointed SCADA Implementing Agencies in 12 states for implementation of projects in 47 towns. Overall, SCADA Implementing Agencies have been appointed in 18 states for 69 towns.

For capacity building and to recognize the need and to keep pace with technology, contemporary knowledge and skill, your company imparted training on various themes to personnel of Power Utilities for 8,550 man days against MoU target of 6,000 man days.

The reduction in AT&C losses are likely to be visible in R-APDRP towns in the utilities in next one to five years with establishment of IT system and Part-B completion in various towns coupled with administrative and other measures. Thus, your company shall be contributing largely in improvement of financial health of Distribution utilities which shall consequently improve health of Transmission and Generation Power Utilities, resulting in improvement of quality of assets of your company for such borrowers in the State Power Sector.

12.0 INITIATIVES TOWARDS REFORMS AND RESTRUCTURING

Your Company has been assisting the State Power Utilities in their sustainable reform and restructuring program. During the year, your company has disbursed an amount of Rs.50 lakh towards grant for reform related studies to Bihar State Power Holding Company Limited (BSPHCL).

PFC has also been encouraging its clients to take IT initiatives for overall operational and managerial improvement. During the year, an amount of Rs.3.58 crore has been sanctioned and Rs.3.84 crore disbursed for computerization schemes of State Power Utilities (other than computerization schemes covered under R-APDRP).

CATEGORISATION OF UTILITIES

For purposes of funding, your company classifies State Power Utilities into 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. The categorization enables your company to determine credit exposure limits and pricing of loans to the state power utilities. In April, 2015, 105 utilities were categorized, 28 as "A+", 47 as "A", 23 as "B" and 7 as "C".

Quarterly and Annual Report of State Power Utilities

Your company is releasing one page research report on the performance of each of the State Power Utilities (SPUs) on a quarterly basis. The report contains key operational and financial performance parameters, reform status, status of implementation of Electricity Act 2003 and areas of concern. The report is forwarded to the stakeholders in the power sector. The Report is a useful tool in flagging the key issues/areas of concern to be reviewed by the SPUs for taking mid-term corrective measures for the overall improvement of the sector.

During the FY 2014-15, your company has issued performance reports for the quarter January-March 2014, April-June 2014, July-September 2014 & October-December 2014 covering 41, 41, 43 and 40 utilities respectively.

During FY 2014-15, your company also submitted to MoP, the 11th edition of the 'Report on the Performance of State Power Utilities (SPUs)' for the years 2010-11 to 2012-13 covering 96 utilities. The Report is a comprehensive study of the performance of the SPUs on key financial and operational parameters like 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. The 12th edition of the Report for the years 2011-12 to 2013-14 is under finalization.

During the year, your company also prepared the Strategic Analysis Report for State Distribution Utilities to present the overall picture of the Distribution sector in each state.

13.0  POLICY INITIATIVES

Your company constantly reviews and revises its lending policies/guidelines/products to suitably align these with market conditions as also with its corporate objectives. Your company also introduces new lending policies/guidelines/products to meet the dynamic business requirement.

During the year, your company introduced various new policies/guidelines/products like Takeout Financing to enable the participation of other lenders with no appetite for long tenure loans and to facilitate down selling of your company's underwritten loan portfolio. In addition a scheme for newly formed Gencos / Transco / Discoms incorporated out of bifurcation/reorganization of State was introduced for meeting the temporary liquidity crunch being faced by the Gencos/Transco/Discoms during its initial years.

In order to increase your company's loan portfolio and to address the problem of power sector, the company also reviewed its policies/guidelines/products with respect to cost overrun funding to private sector projects; Buyer's Line of Credit and Repayment period of project loans.

The interest rates in respect of term loan and short term loan were reviewed and revised periodically during the financial year. Further, in order to address the ALM problem, differential interest rates have been introduced for 5 year reset and 10 year reset option.

The financial charges/fees were also reviewed and modified from time to time. Further, fees for few products have been introduced.

14.0  FACILITATION SERVICES

The Facilitation Group (FG) has been set up to expand PFC's financing business beyond its traditional products into new areas of Forward & Backward linkages to the Power sector. The Facilitation Group (FG) is also mandated to explore the opportunities of expanding PFC's business in new geographies.

As a pro-active step for facilitating the availability of finance for projects, your company has evolved a scheme for financing of projects in the area of Fuel Sources Development & Distribution (FSD&D).

Your Company has entered into Memorandums of Understandings (MoUs) with leading PSUs for providing assistance in appraising projects by utilising their expertise and experience.

• Central Mine Planning and Design Institute Ltd. (CMPDIL) for the appraisal of projects related to development of coal block/ mines associated with power projects.

• National Institute of Technology (NIOT) for the appraisal of marine terminal for handling the fuel associated with power sector MoU with RITES Ltd. for appraisal of projects related to transportation of fuel for power projects is in advance stage of finalization. Your company has also received applications for financing of projects related to coal block allocated through e-auction by Ministry of Coal, Govt. of India.

Also, financial assistance for setting up/ expansion of equipment manufacturing capacity for power sector etc. is extended by your company under the 'Equipment Manufacturing (EM) Scheme for Power Sector'.

15.0 RENEWABLE ENERGY AND CLEAN DEVELOPMENT MECHANISM (RE&CDM)

Your company provides financial support to Renewable Energy Generation projects like wind farms, small hydro projects, bio-mass projects and solar projects and also energy saving projects in the form of higher exposure and special rate of interest in State and Private sectors.

During the FY 2014-15, loans amounting to n,065 crore with total capacity of 346 MW were sanctioned for State and Private sectors. Your company has also disbursed around Rs.607 crore during the financial year. In addition, a loan of Rs.24.40 crore has also been sanctioned to APSPDCL under energy saving project for setting up of 3000 solar pumps in AP.

As on March 31, 2015, your company has cumulatively supported a total generation capacity of 1672 MW, extending financial assistance of Rs.5,265 crore and disbursed Rs.3,681 crore to all kinds of renewable energy projects with an aggregate project cost of m,065 crore.

16.0 PROMOTION OF POWER TRADING THROUGH POWER EXCHANGE

In the FY 2008-09, the Central Electricity Regulatory Commission had granted its permission to set up power exchanges in the country. As on date, 2 power exchanges, namely, Power Exchange India Ltd. (PXIL) and Indian Energy Exchange Ltd. (IEX) are in operation. These power exchanges have a nationwide presence in the form of electronic exchange for trading in power. The trading through power exchanges have certainly lent an impetus for power sector development since it acts as an open and transparent mechanism for buyers and sellers and provides investment signal to the prospective investors. Further with the presence of these exchanges, the available resources shall be used optimally.

Your company has contributed Rs.3.22 crore (being 6.64% of paid up equity upto March 31, 2015) towards equity contribution in Power Exchange India Ltd., promoted by NSE and NCDEX.

17.0 EQUITY FINANCING

Equity investment business is generally considered as a logical extension of debt business. Your Company is endeavoring to make a mark in the area of equity investment to capitalize on its vast domain knowledge & experience. Your company aims to leverage its financial strength, large debt providing capability and power sector expertise to invest in equity of suitable power projects. Over a period of time, your company proposes to build an equity portfolio of power assets which could provide consistent gains in the form of dividend and/or capital appreciation. PFC has obtained consent of RBI to invest in equity of power projects ranging between 0.5% and 5% of its own net worth in a single company. Presently, "Equity Policy", paving way for PFC to take equity stakes in power projects, is being revisited to make it more flexible and customer friendly before evaluating equity proposals.

18.0 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 is exempt from the relevant provisions of Sec.186 of the Companies Act, 2013.

19.0 SUBSIDIARIES

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 in its meeting held on May 28, 2015 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. The process to seek regulatory approvals for the merger has been initiated. 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 date, 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 I ntegrated 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 - Incorporated on June 30, 2015

(xiii) Bihar Infrapower Limited - Incorporated on June 30, 2015

(xiv) Bihar Mega Power Limited - Incorporated on July 9, 2015

(xv) Tanda Transmission Company Limited (a wholly owned subsidiary of PFC Consulting Limited)

(xvi) Ballabhgarh-GN Transmission Company Limited (a wholly owned subsidiary of PFC Consulting Limited)

(xvii) Sipat Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on December 23, 2014

(xviii) Raipur-Rajnandgaon-Warora Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on December 23, 2014

(xix) Mohindergarh-Bhiwani Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on December 23, 2014

(xx) Chhattisgarh-WR Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on December 24, 2014

(xxi) South-Central East Delhi Power Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on February 18, 2015

(xxii) Odisha Generation Phase - II Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on April 17, 2015

(xxiii) Warora-Kurnool Transmission Limited (a wholly owned subsidiary of PFC Consulting Limited) - Incorporated on April 20, 2015

Further, during the FY 2014-15, DGEN Transmission Company Limited, a wholly owned subsidiary of PFC Consulting Limited was transferred and thus ceased to be a subsidiary.

19.1   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 under a distinct dedicated business entity. Accordingly, PFC Consulting Limited (PFCCL) was incorporated in the form of a wholly owned subsidiary on March 25, 2008, to provide it with 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:

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

• Tariff based competitive bidding as per the Guidelines issued by MoP, GoI for various segments of Power Sector

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

• Communication, information dissemination and feedback

• Preparation of organization performance improvement plans

• Contract related services for power sector

• Financial management, resource mobilization, accounting systems etc.

• Coal block development

• Renewable and non-conventional energy project development

• Distribution system strengthening, IPDS and DDUGJY etc.

Till date, consultancy services have been rendered to 51 clients spread across 23 States/UTs by PFCCL. The total number of assignments undertaken as on date is 93.

Further, during the FY 2014-15, the total income of PFCCL was Rs.49.40 crore vis-a-vis Rs.55.19 crore in the previous FY 2013-14 and the net profit earned by PFCCL during FY 2014-15 was Rs.21.70 crore as against the corresponding net profit of Rs.26.96 crore last fiscal

19.2 PFC GREEN ENERGY LIMITED

PFC GEL was incorporated on March 30, 2011 as a wholly owned subsidiary of your company to extend finance and financial services to promote green (renewable and non-conventional) sources of energy. As on March 31, 2015, PFC GEL had an authorized share capital of Rs.1200 crore and paid-up share capital of Rs.300 crore comprising of 10 crore Equity Shares of Rs.10/- each and 20 crore Fully Convertible Preference Shares of Rs.10/- each.

The financial assistance sanctioned by PFC GEL during the FY

2014-15 would help capacity creation of about 173 MW from renewable energy sources. During FY 2014-15, the Company made sanction and disbursement of Rs.554.78 crore and Rs.71.67 crore respectively. Out of the total sanction of Rs.554.78 crore, 44% (Rs.246.11 crore) was sanctioned towards the state sector project and 56% (Rs.308.67 crore) was sanctioned towards private sector projects. Cumulatively, the sanctions and disbursements by the Company till March 31, 2015 is Rs.806.85 crore and Rs.97.13 crore respectively. The Company continues to diversify its portfolio across the renewable energy technologies and has a healthy composition across wind, solar & small hydro sectors.

The total income achieved by the Company during the FY 2014-15 is Rs.33.65 crore and earned a net profit of Rs.18.91 crore. PFC GEL has taken steps to increase its business in the Renewable energy sector and it has signed a MoU with IREDA (Indian Renewable Energy Development Agency Ltd.) and with PFS ( PTC Financial Services Limited) on May 21, 2014 and September 10, 2014 respectively to jointly finance renewable energy projects.

For the FY 2015-16, PFC GEL has signed a Memorandum of Undertaking with PFC with sanction and disbursement targets of Rs.800 crore and Rs.275 crore respectively after deliberations with MoU Task Force constituted under the auspices of Department of Public Enterprises.

During the FY 2014-15, PFC GEL has been conferred with 'Sourya Urja Puraskar 2014' of 'Innovative Sourya Urja Financier of the Year' for the year 2013-14.

Since the company is dedicated for renewable energy projects such as wind, solar, biomass, hydro etc. it is envisaged to mobilize dedicated green funds available in the market. With the flow of funds dedicated for the green energy, the company shall be in the position to provide loans at competitive interest rates in future.

19.3 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 Company is also involved with the activities related to Power Lenders' Club, an exclusive set of Banks & FIs financing power projects under a consortium arrangement under the aegis of PFC. The authorised capital of the Company is Rs.1 crore and the paid up share capital of the Company is Rs.0.10 crore. Presently PFCCAS is active in debt syndication services and is carrying out down selling of project loans underwritten by your company and is handling business proposals across various domains in power sector i.e. thermal, hydro and wind etc.

During FY 2014-15, PFCCAS has arranged sanction of loans of Rs.1,266 crore out of loans underwritten by PFC while the new assignments for debt syndication services were Rs.8,435 crore. During the year, PFCCAS was registered with SEBI to act as a Debenture Trustee (Registration Number IND000000551) and has issued special edition on Newsletter covering insights on power sector in March 2015.

During the year, total income of PFCCAS was Rs.4.85 crore with net profit of the company is Rs.1.85 crore from syndication services.

PFCCAS has initiated steps to diversify its portfolio of services and is looking at business opportunities in equity funding advisory services in power sector. The company had also filed application for grant of Certificate of Registration as Investment Advisor from SEBI and the same has been granted in August 2015.

Further, Board of Directors of PFC in its meeting held on May 28, 2015 approved the merger of PFC Capital Advisory Services Ltd. (PFCCAS) with PFC Consulting Ltd. (PFCCL) subject to regulatory and other compliances.

19.4   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 awaited.

20.0 JOINT VENTURES, ASSOCIATE COMPANIES AND OTHER MAJOR INVESTMENTS

20.1 NATIONAL POWER EXCHANGE LIMITED (NPEX)

In order to promote short term trading through power exchange, your company had promoted National Power Exchange Ltd (NPEX), jointly with NTPC, NHPC and TCS during 2008-09. Your company has contributed 72.19 crore (being 16.66% of paid up equity upto March 31, 2015) towards equity contribution. NTPC and NHPC had expressed their intention to exit from JV Company and based on the recommendations of the Group of Promoters (GoP) of NPEX in March 2014, the Board of Directors of NPEX has decided for voluntary winding up of NPEX. The process of winding up of NPEX is in process.

20.2 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). During the FY 2015-16, PFC has contributed Rs.25 crore as additional equity contribution in EESL. EESL has reported profit after tax of Rs.9.06 crore for the year.

20.3 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid,NTPC, NHPC and PFC. Your Company 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 year, PTC maintained its leadership position with trading volumes at 37137 MUs. PTC has reported profit after tax of Rs.203.10 crore for the year.

20.4  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, providesNation-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. Your Company 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, 2015).

21.0 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded 'Excellent' Rating by Government of India since FY 1993-94 except for FY 2004-05. For the FY 2014-15, your company has achieved all the MoU targets and has obtained maximum MoU score of '1.00' for the second consecutive year.

22.0  PRESIDENTIAL DIRECTIVES

The Company has not received any Presidential directives during FY 2014-15.

23.0 CORPORATE SOCIAL RESPONSIBILITY

Your Company has implemented its CSR and Sustainability Policy with all its earnest and zeal. The aim of the CSR & Sustainability Policy is to ensure that the Company becomes a socially responsible corporate entity committed to improving the quality of life of the society at large. To oversee the activities of CSR, the company has in place a Board level CSR&SD Committee of Directors headed by an Independent Director.

For the FY 2014-15, the Board had approved the CSR budget of Rs.117.49 crore based on 2% of the average stand-alone PBT as per Companies Act 2013 excluding dividend received from other companies covered under and complying with Section 135 of the Act in line with Rule 2(f) (ii) of Companies (CSR Policy) Rules 2014. During the FY 2014-15, projects worth Rs.304.10 crore (inclusive of Rs.1.78 crore on account of CSR administrative expenses incurred in FY 2014-15) were sanctioned and your company implemented wide range of activities in the field of Solar energy, Sanitation, Skill Development etc. in various states.

Due to the gestation period involved in the sanctioned projects, the Company has disbursed Rs.51.68 crore (inclusive of Rs.1.78 crore on account of CSR administrative expenses incurred in FY 2014-15) out of the available sanctions and the remaining budget will be utilized/disbursed based on the progress achieved for completion of the projects. Further it is not out of place to mention that as per the DPE guidelines, the CSR Budget is non-lapsable and carried forward to the next year. So the entire budget will be utilized for CSR activities.

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

24.0 HRD INITIATIVES LEARNING & DEVELOPMENT

Your company attaches great importance to the employee development and their competency. Your company reviews the need for learning as an ongoing process and provides opportunity to keep the employees abreast with latest trend in their respective functional areas. Additionally to keep pace with competition, senior executives are given exposure in advance management techniques through premier management Institutes in India and abroad. In order to achieve this, the Company has an annual training plan to assess the various training needs. Necessary professional skills are also imparted across all levels of employees through customized training interventions.

During the year 2014-15, your company organized 26 in-house programs. A total of 1691 mandays were achieved during the period under review of which 1053 were through in-house programs and 638 were through nominations to open programmes organized by other training institutes.

HUMAN RESOURCE MANAGEMENT

Your company lays great emphasis on upgrading the skills of its Human Resources. It benchmarks its practices with the best practices being followed in the other Public Sector Companies. This, apart from other strategic interventions, lead to an effective management of Human Resources thereby ensuring a high level of productivity.

Your company regularly interacts with the employee representatives to ensure cordial and harmonious employee employer relations. Due to the positive work culture in the organization, no mandays were lost during the period under review.

WELFARE MEASURES

Your Company follows best management practices to ensure welfare of its employees through a process of inclusive growth &development. Your company follows open door policy and absoluteaccessibility to top management thereby facilitating the growth of the organization. Employee commitment is high due to various employee welfare measures that are best in the sector including various welfare policy measures such as comprehensive insurance, medical facilities and other amenities which has resulted in team spirit and healthy work atmosphere. Your company is one of the very few organizations in forming Contributory Post Retirement Medical Fund Trust to address the needs of retired employees. Besides this, your company also organized various health camps during the year for the welfare of the employees. Your company also organized sports events to build team spirit and cohesive work culture.

RESERVATION OF POSTS FOR SC/ST/OBC/EX-SERVICEMEN AND PHYSICALLY HANDICAPPED PERSONS IN THE SERVICES OF COMPANY

Your Company as a part of its social responsibility makes all-out efforts to ensure compliance of the Directives and Guidelines issued by the Govt. for the reservation to be allowed for SC/ST/OBC/Persons with Disabilities. The steps taken include due reservations and relaxation as applicable under the various directives. In the year 2014-15, total 22 new employees were recruited out of which 18.18% are SC(4) and 27.27% are OBC(6).

REPRESENTATION OF WOMEN EMPLOYEES

Your Company provides equal growth opportunities for its women employees and the Company can take pride in saying that certain critical functions are headed by women employees. There is no discrimination of employees on the basis of gender. Women employees represent 19.78 °% of the total work force.

During the FY 2014-15, no case has been filed under the "Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act 2013".

25.0   DIRECTORS' RESPONSIBILITY STATEMENT

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

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

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

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

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

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

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

26.0 STATUTORY AUDITORS

M/s. N.K. Bhargava & Co., Chartered Accountants and M/s K. B. Chandna & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for the FY 2014-15 by the Comptroller & Auditor General of India. The Joint Statutory Auditors have audited the accounts of the Company for the FY 2014-15 and have given their report without any qualification. The copy of the audit report is annexed herewith. SECRETARIAL AUDITOR

M/s. Agarwal S. & Associates, Company Secretaries was appointed as the Secretarial Auditor of the Company for the FY 2014-15 by the Board of Directors of the Company. The observations of the Secretarial Auditor and reply of the management for the FY 2014-15 along with copy of the audit report is annexed herewith.

27.0  COMMENTS OF COMPTROLLER & AUDITOR GENERAL OF INDIA

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

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

The Internal Auditor of the Company i.e. M/s HDSG & Associates, Chartered Accountants quarterly certifies on the adequacy of internal financial controls with reference to the financial statements of the Company. Further, the statutory auditors of the Company i.e. M/s. N.K. Bhargava & Co., Chartered Accountants and M/s K. B. Chandna & Co., Chartered Accountants in their Report have also opinioned that there is adequate internal control system commensurate with the size of the company and nature of its business with regard to purchase of fixed assets and services rendered by the company.

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

Pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement of the particulars of remuneration is annexed herewith.

30.0 DEBENTURE TRUSTEES

The Details of Debenture Trustees appointed by the company for the different series of Bonds issued by your company, are annexed herewith.

31.0 REDEMPTION AND STATUS OF UNCLAIMED AMOUNTS Bonds

The unclaimed/unpaid balance amount of bonds (principal and interest) as on March 31, 2015 was Rs.6.39 crore. Further, an amount of Rs.1.26 crore is lying with 'Payee Banks' and hence not shown as liability in the Books of Accounts.

Equity

The unclaimed balance amount of dividend (equity) and application money received and due for refund (FPO) as on March 31, 2015 was Rs.1.32 crore and Rs.0.038 crore respectively. The unclaimed amount of Rs.4,97,903 and Rs.10,90,197 under "Unclaimed & Unpaid Dividend of the Company" has been transferred to Investor Education and Protection Fund (IEPF) in the month of November, 2014 and April, 2015 respectively. The detail of investors' (whose refund is due) is available on PFC's website and IEPF website of Ministry of Corporate Affairs.

32.0 EMPLOYEES STOCK OPTIONS PLAN (ESOP)

Stock Options have been recognized world over as an effective instrument to attract and retain the talent in the organization and to align the interest of employees with those of the organization. Stock Options provide an opportunity to employees to share the growth of the Company and create long term wealth. They also promote the culture of employee ownership in the company.

The Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises, Govt. of India, through its directions on pay revision had also made it mandatory for all the Central Public Sector Enterprises (CPSEs) to formulate an Employee Stock Option Plan (ESOP) and pay 10% to 25% of the Performance Related Pay (PRP) of the employees in the form of ESOPs. In accordance with these directions of the DPE, the Board of Directors of your company had formulated an Employee Stock Option Plan titled as 'PFC-ESOP 2010'. Shareholders had also approved this Employee Stock Option Plan in their 24thAnnual General Meeting held on September 21, 2010. Subsequently, the Board of Directors had decided that 25% of the PRP of the employees should be given in the form of ESOPs. However, later in view of a clarification issued by DPE, the Company started giving an option to the employees to receive full PRP amount in cash or to receive part of PRP amount in cash and part of PRP in the form of grant of ESOPs.

The disclosure in respect of the ESOP scheme pursuant to Clause 12 of SEBI (Employees' Stock Option Scheme and Employees' Stock Purchase Scheme) Guidelines, 1999 is annexed herewith.

33.0 VIGILANCE

During the FY 2014-15, the Vigilance Unit functioned as an effective tool of positive management in your company with the thrust being on "Preventive Vigilance". This aspect was emphasized by conducting periodic and surprise inspections of various units and by issuing effective guidelines to streamline systems with the aim of eliminating loopholes and ensuring transparency in day-to-day operations, minimizing scope for misuse. Vigilance Unit undertook the review of Operational Manuals of various activities of the Company. The Review of Coordinator's Manual of PFCCL is in process of finalization. The publication of a Quarterly Newsletter on Vigilance activities 'Prahari' was launched to appraise employees about the ongoing Vigilance activities. An updated "Vigilance Handbook" of the Company was also published. The Vigilance Unit's working was computerized through the development of in- house software, the Vigilance Monitoring System. In addition, detailed investigations were carried out in several cases of registered complaints.

The performance of Vigilance Unit was reviewed by the Central Vigilance Commission (CVC), Ministry of Power, Board of Directors and CMD of PFC in addition to regular reviews undertaken by the CVO, PFC as per the prescribed norms.

In accordance with the directives of Central Vigilance Commission the Vigilance Awareness Week was observed from October 27, 2014 to November 1, 2014 in the Head Office and Regional offices of the Company. During the Vigilance Awareness Week, a one day workshop on "Leveraging Technology to Combat Corruption" was organized for the employees of the Company. Interactive sessions were organized with prominent faculty members on varied subjects like personal values and ethics and dealing with day to day situations involving ethical dilemmas faced while working in the organization.

A Slogan Writing Competition, an Essay Writing Competition as well as a Pictorial Theme Representation Competition were organized on themes relating to "Technology and Citizen: Improving Accountability", "Role of Technology in Combating Corruption" and "Combating Corruption-Technology as an Enabler" respectively with the aim of involving employees and encouraging them to come forward with innovative ideas on combating corruption.

34.0 OFFICIAL LANGUAGE

Your company was awarded the first prize in Public Sector Category of the 'Indira Gandhi Rajbhasha Puraskar' for the FY 2013-14 by Rajbhasha Vibhag, Grih Mantralay for its concerted efforts made in implementation of official language policy. CMD, PFC received the prestigious award from President of India, Sh. Pranab Mukherjee. Your company also won the first prize of 'Best Hindi Promotion In-House Journal" from Sh. Oomen Chandy, Hon'ble Chief Minister of Kerala.

During the year, Drafting and Evidence Sub-Committee of the Committee of Parliament on Official Language held discussion with the Chairmen of Town Official Language Implementation Committee (TOLIC) including PFC. Second Sub-Committee of Parliament on Official Language Committee held the inspection of Regional Offices and appreciated the work being done in Hindi. Officials from Ministry of Power and Department of Official Language under Ministry of Home Affairs conducted the inspection  of PFC Head Office. To ensure the effective implementation of Official Language Policy in the Company, internal inspections in the form of personal contact programme were conducted. Meetings of the Official Language Implementation Committee were organised in each quarter to review and find out solutions for better implementation of Official Language Policy under the chairmanship of CMD, PFC. Departmental Hindi meetings were also organized at Unit level.

During the year, a Rajbhasha Sammelan was organized at Chennai wherein 50 officials of various PSUs of TOLIC, Chennai participated. Further, Hindi Day and Month were celebrated on September 14 and from September 14 to   October 13, 2014 respectively. During the Hindi Month, various competitions, like Vartani Shodhan, Mook Prahelika (Dumb Charades), Shabd Vyuh Bhedan, Chitrabhivyakti, Navras Abhivyakti, Hindi Bhasha Gyan Pratiyogita (for senior level officers) were organized. In all, 207 employees participated in these competitions. During the year, six Hindi workshops were organized for 140 executives (including senior executives) and non-executives of the Company with a view to improve their efficiency in doing their day to day official work in Hindi. Three Hindi Sangoshthi on different topics related to Rajbhasha Hindi were organized wherein 93 employees participated.

35.0 RIGHT TO INFORMATION ACT

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

Your company has implemented the Right to Information Act, 2005 to provide information to the citizens of India and also to maintain accountability and transparency in the working of the company. The Company has designated a Public Information Officer (PIO) and Appellate Authority at its registered office for effective implementation of the RTI Act.

During the FY 2014-15, all 102 applications received under the RTI Act, were duly processed and replied to. In compliance with Section 4 of the RTI Act, requisite disclosures have been updated and hosted on PFC website. Your company has also complied with the directions of Central Information Commission (CIC) regarding filing of online Quarterly/Annual Return for the FY 2014-2015.

SUOMOTO DISCLOSURES UNDER SECTION 4 OF THE RTI ACT 2005

During FY 2014-15, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training (DoPT) vide its OM No. 1/6/2011-IR dated 15.04.2013 issued guidelines on the following :-

(i) Suomoto disclosure of more items under Section 4;

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

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

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

In compliance of the aforesaid guidelines, your company has placed the requisite information on the website of the company.

36.0 GRIEVANCE REDRESSAL

Your Company has separate grievance redressal systems for dealing with the grievances of the employees, its customers and the public at large. The systems are duly notified and are easily accessible. A designated Nodal Officer is responsible to ensure quick redressal of grievances within the permissible time frame. The company also has a notified Citizen's Charter to ensure transparency in its work activities. This Charter is available on the  website of the Company to facilitate easy access.

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

No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company's operations during the FY 2014-15.

38.0  DETAILS OF PROCUREMENT FROM MSEs

The details of the procurements made from Micro and Small Enterprises (MSEs) during the FY 2014-15 and the targets for FY 2015-16 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 is as under:

39.0  STATUTORY AND OTHER INFORMATION

Information required to be furnished as per the Companies Act, 2013, Listing Agreement with Stock exchanges, DPE's Guidelines on Corporate Governance for CPSEs etc. is annexed to this report as follows:

40.0 ACKNOWLEDGEMENT

The Board of Directors acknowledge and place on record their appreciation for the guidance, co-operation and encouragement extended to the Company by the Government of India, Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, Reserve Bank of India,

Department of Public Enterprises, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level as well as various domestic and international financial institutions/banks, agencies etc.

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

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

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

For and on behalf of the Board of Directors

(M. K. Goel)

Chairman & Managing Director

DIN No. 00239813

Place : New Delhi

Dated : August 21, 2015