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Power Finance Corporation Ltd.

BSE: 532810 Sector: Financials
NSE: PFC ISIN Code: INE134E01011
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VOLUME 251077
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P/E 3.62
Mkt Cap.(Rs cr) 36,578
Buy Price 138.55
Buy Qty 943.00
Sell Price 138.70
Sell Qty 1245.00

Power Finance Corporation Ltd. (PFC) - Director Report

Company director report

FY 2021-22

To

The Members

Power Finance Corporation Limited

Your Directors are pleased to present their 36th Annual Report on theperformance of your Company for the financial year ended March 31 2022 along with AuditedFinancial Statements Auditor's Report Secretarial Auditor's Report & report by theComptroller and Auditor General of India.

Your Directors at the outset take pride in informing you that duringthe year your company has been accorded 'Maharatna' Status - the highest recognition byGovernment of India to Central Public Sector Enterprises (CPSE's).

1.0 Financial and Operational Highlights

• Total income achieved during the FY 2021-22 was up by 2% to Rs38591 crore.

• Net Interest Income during the FY 2021-22 increased by 8% to Rs14030 crore.

• Delivered highest ever Net profit of Rs 10022 crore up by 19%during FY 2021-22.

• Board recommended a final dividend of Rs 1.25 per equity sharein addition to an interim dividend of Rs 10.75 per equity share which was paid during FY2021-22. The total dividend for the FY 2021-22 thus aggregates to Rs 12 per equity shareas against Rs 10 per equity share paid for the previous year.

The final dividend will be paid after your approval at the AnnualGeneral Meeting. The total dividend pay-out for the FY 2021-22 will thus amount to Rs3168.1 crore (inclusive of TDS) representing 32% of the profit after tax.

• Total expenditure for the FY 2021-22 amounted to Rs 26364crore. Out of it finance cost amounted to Rs 22671 crore. This constituted 86% of totalexpenses in FY 2021-22. During FY 2021-22 employee benefit expenses and other expenseswhich includes administrative and office expenses were Rs 336 crore (1.27% of totalexpenses) against Rs 265 crore (0.96% of total expenses) in the previous year.

• Loans Sanctioned amounted to Rs 51616 crore during the FY2021-22 to State Central Private and Joint Sector entities. Disbursements amounted to Rs51242 crore during the same period.

• Gross Loan Asset book as on FY 2021-22 stood at Rs 373135crore. The outstanding borrowing as on FY 2021-22 stood at Rs 320128 crore.

• Total provision of Rs 14344 crore towards Stage- III LoanAssets as at the end of FY 2021-22. The Net Stage-III Assets stands at Rs 6571 crore ason March 31 2022 which is 1.76% to the Total Gross Loan Assets. In addition to aboveprovision of Rs 2059 crore and Rs 945 crore on Stage-I Loan Assets and Stage-II LoanAssets respectively is available as on March 31 2022.

• As on March 31 2022 the Government of India's shareholding is55.99%.

• PFC's robust financials inspire higher levels of confidenceamongst investors regulators and other stakeholders in your Company.

1.1 Financial Performance Overview

1.1.1 Profitability

(Rsin crore)

Particulars Standalone Consolidated
2021-22 2020-21 2021-22 2020-21
Total Income 38591.17 37766.57 76344.92 71700.67
Profit Before Tax 12227.65 10207.31 23382.22 19890.73
Tax expenses 2205.75 1763.30 4614.01 4174.53
Profit After Tax 10021.90 8444.01 18768.21 15716.20
Owners of the Company - - 14014.79 11747.83
Non-Controlling Interests - - 4753.42 3968.37
Total Comprehensive Income 10202.73 8534.21 18889.78 16264.09
Owners of the Company - - 14163.78 12078.90
Non-Controlling Interests - - 4726.00 4185.19

1.1.2 Reserve & Surplus

Particulars

Standalone

Consolidated*

2021-22 2020-21 2021-22 2020-21
Opening Balance of Surplus 7203.86 6042.40 9760.52 8080.18
Profit after tax for the year 10021.90 8444.01 14014.79 11747.83
Re-Measurement of Defined Benefit Plans (3.70) (3.13) (6.98) (8.75)
Transfer towards Reserve for Bad & Doubtful Debts u/s 36(1)(viia)(c) of Income Tax Act 1961 (576.44) (609.83) (576.44) (761.49)
Transfer to Special Reserve created and maintained u/s 36(1)(viii) of Income Tax Act 1961 (2423.45) (2534.77) (4044.97) (3883.87)
Transfer to Special Reserve created u/s 45-IC(1) of Reserve Bank of India Act 1934 (2004.38) (1688.80) (3062.34) (2569.38)
Transfer to Debenture Redemption Reserve - - - -
Transfer to General Reserve - - - (516.40)
Transfer to Interest Differential Reserve - KFW Loan (net) (1.42) (1.25) (1.42) (1.25)
Dividends (3366.10) (2112.07) (3366.10) (2112.07)
Dividend Distribution Tax - - - -
Transfer from Debenture Redemption Reserve on account of utilisation - - - -
Transfer from OCI - Equity Instruments - - - -
Other Comprehensive Income/(Expense) - - - -
Reclassification of gain/loss on sale of equity instrument measured at OCI 13.22 6.98 58.90 134.73
Pooling of interest accounting for common control business combination - - - -
Impairment Reserve - - - -
Adjustments - (339.68) (18.86) (349.01)
Closing Balance of Surplus 8863.49 7203.86 12757.10 9760.52

*Attributable to owners of the Company (PFC)

1.2 OPERATIONAL PERFORMANCE OVERVIEW 1.2.1 ASSET QUALITY

(Rs in crore)
Particulars 2021-22 2020-21
Gross Loan Assets 373135 370771
Stage III Assets 20915 21150
Provision on Stage III Assets 14344 13416
Gross Stage III as % of Gross Loan Assets 5.61% 5.70%
Net Stage III as % of Gross Loan Assets 1.76% 2.09%

1.2.2 SANCTION / DISBURSEMENT (EXCLUDING R-APDRP / IPDS)

(Rs in crore)
SECTOR

FY 2021-22

FY 2020-21

Category Sanctions Disbursements Sanctions Disbursements
State Sector 36197 41512 115170 73016
Central Sector 63 10 9172 3912
Joint Sector 6743 773 8907 2123
Private Sector 8613 8947 33121 9251
Total 51616 51242 166370 88302*

* Includes Rs 20144 Crore towards moratorium loans during Covidpandemic.

1.2.3 Borrowings

1.2.3.1 Deposits

Your Company is a non-deposit taking NBFC and thus has not acceptedany public deposits during the FY 2021-22. Further no Perpetual Debt Instruments (PDI)was issued by your Company during FY 2021-22.

1.2.3.2 Borrowings from Domestic Market

The details of borrowings made from domestic market during FY 2021-22are as under:

(Rs in crore)
Source Amount
Bonds (including 54EC ) 14666.84
Rupee Term Loans 14005.00
Total 28671.84

Further for maintaining adequate liquidity credit lines to the tuneof Rs 9030 crore were sanctioned as on March 31 2022 by various scheduled commercialbanks to the Company for shortterm funding generally without any commitment charges.

RBI has prescribed Liquidity Coverage Ratio (LCR) framework for NBFCs.These guidelines aims for maintenance of a liquidity buffer in terms of LCR by ensuringthat NBFCs have sufficient High Quality Liquid Asset (HQLA) to survive any acute liquiditystress scenario lasting for next 30 days. PFC maintains sufficient liquidity buffer in theform of HQLA as prescribed.

1.2.3.3 External Borrowings

The foreign currency denominated borrowings during FY 2021-22 are asfollows:

(Rsin crore)
Source Amount
Bonds under GMTN programme 2597.41
Syndicated Loans 4674.28
Total 7271.69

Green Bonds

PFC established its Green Bond Framework in October 2017 as approvedby Climate Bonds Initiative (CBI) London UK. The Green Bond framework for fundingrenewable projects (viz. Solar and Wind) has been updated in August 21 to align with thelatest set of guidelines namely Climate Bonds Standard version 3.0 the Green BondPrinciples (GBP) 2021 issued by the International Capital Markets Association (ICMA). Inthis context an agreement was executed between PFC & Climate Bonds Initiative.

PFC has issued its first USD Green bond in December 2017 and raised US$400 million ('2575 crore) at a coupon of 3.75% and these bonds are listed on the LondonStock Exchange's new International Securities Market (ISM) and Singapore Stock Exchange.Further in September 2021 PFC issued its first ever Euro Green Bonds amounting to EUR300 million ('2597 crore) at a coupon of 1.841% and these bonds are listed on theSingapore Stock Exchange India INX and NSE IFSC. Annual update to the holders of thebonds as required under the PFC's Green bond framework is as follows:-

The funds raised under Green bonds have been utilised to financerenewable energy projects as per the "Eligible Projects" under PFC's Green BondFramework. As at March 31 2022 outstanding loan balances of Solar & Wind energyprojects funded by PFC are Rs 11794 crore & Rs 6573 crore respectively. The totalcapacity (MW) of outstanding Solar & Wind energy projects funded by PFC as on March31 2022 is 6225MW. Accordingly PFC green bond portfolio is more than the amount raisedthrough issue of green bonds.

1.3 CREDIT RATING

During the FY 2021-22 Company's both long-term & short-termdomestic borrowing programme (including bank loans) continued to be the highest rating.

Domestic Rating assigned by CRISIL ICRA and CARE

- Long-term domestic borrowing programme Rating - CRISIL AAA ICRA AAAand CARE AAA

- Short-term domestic borrowing programme Rating - CRISIL A1+ ICRA A1+and CARE A1 +

International Rating

The Company's international credit ratings continue to be Baa3 and BBB-assigned by International Credit Rating Agencies Moody's and Fitch respectively.

1.4 MEMORANDUM OF UNDERSTANDING WITH GOVT. OF INDIA

Your Company has been consistently accorded 'Excellent' Rating byGovernment of India since FY 1993-94 except for two financial years. For the FY 2020-21your Company was accorded 'Excellent rating'. The rating for FY 2021-22 is still awaited.

In FY 2021-22 the achievement of your Company on some key MoUparameters has been as under:

MoU Parameter Achievement
Revenue from Operations ' 38545.40 Cr.
Loans Disbursed to Total Funds Available 98.59%
Overdue loans to Total Loans 0.29%
NPA to Total Loans 1.82%
Cost of raising funds through Bonds as compared to similarly rated CPSEs/entities (Margin over Reuters) (-) 17.24 bps

1.5 SUBSIDIARIES

1.5.1 REC LIMITED

Consequent upon acquisition of majority stake in REC (Formerly RuralElectrification Corporation Limited) from Government of India on March 28 2019 YourCompany is the promoter and holding Company of REC. Accordingly the followingsubsidiaries of REC as on March 31 2022 are also subsidiaries of PFC:

(i) REC Power Development and Consultancy Limited

(ii) Chandil Transmission Limited

(iii) Dumka Transmission Limited

(iv) Koderma Transmission Limited

(v) Mandar Transmission Limited

(vi) Bidar Transmission Limited

(vii) Rajgarh Transmission Limited

(viii) MP Power Transmission Package-I Limited

(ix) ER-NER Transmission Limited

REC is also a Systemically Important (Non-Deposit Accepting or Holding)Non-Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI) as anInfrastructure Finance Company (IFC). Its business activities involve financing projectsin the complete power sector value chain be it generation transmission or distribution.REC provides financial assistance to state electricity boards state governmentscentral/state power utilities independent power producers rural electric cooperativesand private sector utilities.

During the FY 2021-22 the total income of REC was Rs 39231 crore andthe net profit was Rs 10046 crore on standalone basis.

The detailed operational and financial performance of REC is availableon its website i.e. www.recindia.nic.in.

1.5.2 PFC CONSULTING LIMITED

Your Company had been offering consultancy support to the Power Sectorthrough PFC Consulting Limited its wholly- owned subsidiary.

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

• Selection of Sellers/Developers Through 'Case-1' and 'Case-2';

• Guidelines & SBDs: Short-Term Medium-Term Long-Term (CaseRs 1' Case Rs 2' and UMPPs) Hydro Solar Wind Pilot Scheme 1 & 2

• Reform & Restructuring

• Independent Transmission Projects

• Privatisation of Electricity Distribution in UTs

Project Development

• Ultra Mega Power Projects (UMPPs)

• Ultra Mega Renewable Energy Power Parks (UMREPPs)

• Owner's Engineer Lender's Independent Engineer Lender'sInsurance Advisor

• Setting up of Manufacturing Zone for power and renewable energyequipment

PMA / PMC/ Other GoI Schemes

• Revamped Distribution Sector Scheme (RDSS)

• Procurement of Power: DEEP Portal

• Coal Linkage Auction under SHAKTI Scheme

• Pilot Scheme I & II

• PRAAPTI Portal

• Integrated Power Development Scheme (IPDS)

• Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY)

• National Smart Grid Mission (NSGM)

• Restructured Accelerated Power Development and Reforms Programme(R-APDRP)

Smart Solutions

• Smart Metering

• Energy Portfolio Management

Other Services

• Tariff & Regulatory

• Selection of EPC Contractor

• Resource Mobilisation

• Project advisory for new power plant

• Strategy

• Contracts commercial and legal

• Project Appraisal

• Computerisation of Operations

• Accounting Systems

• Policy

• Energy Audit

Till date consultancy services have been rendered to 77 clients spreadacross 27 States/UTs in India by PFCCL. The total number of assignments undertaken as ondate are more than 160.

Further during the FY 2021-22 the total income of PFCCL onconsolidated basis was Rs 91.09 crore and the net profit earned was Rs 37.67 crore. Thenet worth of PFCCL as on March 31 2022 was Rs 111.35 crore.

• Your Company is designated by Ministry of Power Government ofIndia as the 'Nodal Agency' for facilitating development of Ultra Mega Power Projects andits wholly-owned subsidiary

i.e. PFC Consulting Limited is the 'Bid Process Coordinator' forIndependent Transmission Projects.

As on March 31 2022 for the said purpose the following SpecialPurpose Vehicles (SPVs) have been incorporated as subsidiaries/deemed subsidiaries of theCompany:

i. Chhattisgarh Surguja Power LimitedA

ii. Coastal Karnataka Power Limited

iii. Coastal Maharashtra Mega Power LimitedA

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 LimitedA

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. Tanda Transmission Company Limited *a

xvii. Bijawar-Vidarbha Transmission Limited*

xviii. Shongtong Karcham-Wangtoo Transmission Limited*A

xix. Ananthapuram Kurnool Transmission Limited*

xx. Bhadla Sikar Transmission Limited*

xxi. Khetri Narela Transmission Limited*

xxii. Kishtwar Transmission Limited*

xxiii. Mohanlalganj Transmission Limited*

xxiv. Chhatarpur Transmission Limited*

a SPV under the process of striking-off.

* wholly-owned subsidiaries of PFC Consulting Limited.

2.0 Risk Management

2.1 Asset Liability Management

Your Company has put in place an effective Asset Liability ManagementSystem as per Asset Liability Management Policy formulated in line with the RBI'sguidelines on Liquidity Risk Management Framework to manage the liquidity and interestrate risks. Measurement and monitoring of Liquidity risk is done through cash flowapproach; and for Interest rate risk it is done through traditional gap analysistechnique as detailed in RBI guidelines. Such analysis is made on periodical basis invarious time buckets and is used for critical decisions regarding the time volume andmaturity profile of the borrowings and

creation of mix of assets and liabilities in terms of time period(short medium and long-term) and in terms of fixed and floating interest rates. Thedetails of the asset liability management maturity pattern are given at Note No. 53 of theNotes to Accounts of the Standalone Financial statements forming part of this AnnualReport.

2.2 Foreign Currency Risk Management

Your Company has put in place "Policy for Management of Risks onForeign Currency Borrowings" to manage risks associated with foreign currencyborrowings. The Company enters into hedging transactions to cover exchange rate andinterest rate risk through various instruments like forwards options and swaps.

As on March 31 2022 the total o/s foreign currency liabilities areUSD 6783 million JPY 36336 million & EUR 308 million; out of which USD 4075million is hedged. Further 92% of the FC portfolio with residual maturity up to 5 yearshas been hedged.

2.3 Integrated Enterprise Wide Risk Management

In order to manage risks faced by your Company it has put in place anIntegrated Enterprise Wide Risk Management Policy (IRM policy). For implementation of thepolicy Your Company has constituted a Risk Management Committee of Directors. Under theIRM policy the Company has to identify the principal risks which may have an impact onits profitability/revenues. In this regard the Company has identified 11 significant riskparameters which arise from the Company's business model and from its use of financialinstruments. These risk parameters cover the major operational risks financial risksmarket risks regulatory risks etc. faced by the Company and are regularly assessed as perthe Risk Assessment Criteria.

3.0 PFC & Government Partnership

3.1 Independent Transmission Projects (ITPs)

Ministry of Power has also initiated Tariff Based Competitive Bidding(TBCB) Process for development and strengthening of Transmission system through privatesector participation.

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

As on March 31 2022 40 Special Purpose Vehicles (SPVs) 2 by PFC andother 38 by PFC Consulting Limited (wholly-owned subsidiary) have been established forITPs.

Further during the FY 2021-22 following SPVs established fordevelopment of transmission projects has been transferred to the successful biddersselected through TBCB:

i. Khavda-Bhuj Transmission Limited

ii. Nangalbibra-Bongaigaon Transmission Limited

iii. Sikar-II Aligarh Transmission Limited

iv. Koppal-Narendra Transmission Limited

v. Karur Transmission Limited

Further in the month of April & May 2022 PFCCL has incorporated

5 new SPVs for development of transmission schemes.

i. Fatehgarh III Beawar Transmission Limited

ii. Beawar Dausa Transmission Limited

iii. Siot Transmission Limited

iv. Khandukhal Rampura Transmission Limited

v. Fatehgarh III Transmission Limited

As on date out of 45 SPVs 31 SPVs were transferred to the successfulbidders and bidding process for 8 SPVs are under progress. Further due to de-notificationof schemes by MoP 2 SPVs were closed other 3 SPVs are under process of closure and 1scheme is under abeyance.

3.2 Ultra Mega Power Projects (UMPPs)

Development of Ultra Mega Power Projects (UMPPs) with a capacity ofabout 4000 MW each adopting super critical technology is the initiative of Ministry ofPower (MoP) Government of India for which your Company has been designated as the 'NodalAgency' and Central Electricity Authority (CEA) as the Technical Partner by MoP.

PFC Consulting Limited (a wholly-owned subsidiary of PFC) along withMoP and CEA undertake preliminary site investigation activities land acquisitionactivities site specific studies to obtain appropriate regulatory and other approvals forland water coal block environment etc. necessary to conduct catalyst of the biddingprocess. The successful bidder is then expected to develop and implement these projects.

Your Company incorporated a total of 19 wholly-owned Special PurposeVehicles (SPVs) for the 14 UMPPs. Out of these 4 UMPPs have been transferred tosuccessful bidders and as per the direction of MoP and respective State Governments PFC /PFCCL is in the process of closure of 4 UMPPs.

PFC initiated the process of closure of SPVs namely Tatiya Andhra MegaPower Limited (TAMPL) Coastal Maharashtra Mega Power Ltd (CMMPL) and Chhattisgarh SurgujaPower Ltd (CSPL). Requisite documents for closure are filed in RoC. Further PFC isintending to utilise the SPV namely Coastal Karnataka Power Ltd (CKPL) for biddingregarding stressed projects.

MoP has decided to defer any action on formulation of UMPPs Biddingframework as of now as the country is making energy transition from fossil fuel tonon-fossil fuel. Further in QPRM held on 16.12.2021 PFC was advised to review the statusof UMPPs and take necessary action for closure wherever required in consultation withstakeholders. Matter is under consideration.

3.3 Revamped Distribution Sector Scheme (RDSS)

6 Integrated Power Development Scheme (With Restructured AcceleratedPower Development and Reform Programme (R-APDRP) Subsumed in IT)

Your Company is involved in various GoI programmes for the powersector including acting as a nodal agency for the IPDS (R-APDRP subsumed) and RevampedDistribution Sector Scheme (RDSS) launched by Govt. of India in July 2021.

3.3.1 Revamped Distribution Sector Scheme (RDSS)

MoP/Gol vide OM dated July 20 2021 has conveyed sanction of Presidentof India for implementation of "Revamped Distribution Sector Scheme (RDSS) - AReforms-based and Results-linked Distribution Sector Scheme" to improve theoperational efficiencies and financial sustainability of DISCOMs by providing financialassistance to DISCOMs for upgradation of the distribution infrastructure and prepaid smartmetering & system metering based on meeting pre-qualifying criteria and achievingbasic minimum benchmarks in reforms. PFC and REC (PFC's subsidiary) are the designatednodal agencies for operationalization of the Scheme as per RDSS guidelines and directionsof inter-ministerial Monitoring Committee/MoP from time to time. Nodal agencies areeligible for 0.50% of the sum total of the Gross Budgetary Support (GBS) component of thevarious projects approved by Monitoring Committee as its fee. PFC is the nodal agency for17 States/UTs under the Scheme. The ongoing approved projects under IPDS/R-APDRP have beensubsumed in RDSS. All State-owned distribution companies and State/UT Power Dept.excluding private sector companies are eligible for financial assistance under the Scheme.The implementation period of the Scheme is 5 Years (FY 2021-22 to FY 2025-26).

Scheme Objectives

i. Improve the quality reliability and affordability of power supplyto consumers through a financially sustainable and operationally efficient distributionsector.

ii. Reduce AT&C losses to pan-India levels of 12-15% by 2024-25.

iii. Reduce ACS-ARR gap to zero by 2024-25.

The Scheme has two parts:

i. Part A covers metering works (prepaid smart metering for consumersand system metering) and distribution infrastructure works (loss reduction; modernization& system augmentation components).

ii. Part B covers training & capacity building and other enabling& supporting activities.

Outlay and Budgetary Support

The Scheme has an outlay of Rs 303758 crore with an estimated grossbudgetary support of Rs 97631 crore from the GoI.

Progress of implementation

Based on the recommendations of PFC upto March 2022 GoI has approvedprojects worth Rs 65018 crore (GoI Grant component of Rs 25613 crore) to DISCOMs ofAndhra Pradesh (AP) Gujarat Himachal Pradesh (HP) Kerala Madhya Pradesh (MP) andUttarakhand under RDSS. Further PFC has disbursed an amount of Rs 537 crore to Discoms ofAP Gujarat and HP towards Phase - I advance of 5% of GoI Grant for implementation of LossReduction Projects as per RDSS guidelines. Your Company is also supporting the States bypreparing Model Bidding Documents for Automation and ERP projects under RDSS.

Part-B component of RDSS focuses on the human resources and skilldevelopment inter alia including capacity building initiatives on corporate governancetechnical matters advance technology intervention areas new business processes etc. MoPhas mandated PFC for taking-up skill development for Smart Metering works as well astraining programme for DISCOMs' employees. Upto March 2022 total 31 training programmeswere conducted through NPTI covering 1168 DISCOM personnel. Your Company is alsohandholding the Discoms in incorporating better corporate governance practices.

3.3.2 Integrated Power Development Scheme (IPDS)

In order to provide impetus to strengthening of power distributionsector in urban areas and extend financial assistance against capital expenditure foraddressing the gaps in sub transmission & distribution network and metering in urbanareas to supplement the resources of DISCOMs/Power Departments Ministry of PowerGovernment of India launched "Integrated Power Development Scheme" (IPDS) onDecember 3 2014. Restructured Accelerated Power Development & Reforms Programme(R-APDRP) Scheme notified vide MoP order dated September 19 2008 was subsumed into IPDS.PFC is the Nodal Agency for operationalisation of the IPDS/ R-APDRP Scheme. IPDS(including R-APDRP subsumed) Scheme had Sunset date of March 31 2022 (excludingidentified Projects).

Components of IPDS

The major components envisaged under the Scheme and additionalcomponents included by Ministry of Power from time-to-time are as under:

i. Strengthening of sub-transmission and distribution networks in theurban areas;

ii. Metering of distribution transformers/ feeders/ consumers in theurban areas;

iii. Schemes for Enterprise Resource Planning (ERP) and IT enablementof balance urban towns are also included under IPDS. Scope of IT enablement has beenextended to all urban towns as per Census 2011.

iv. Smart metering solution for performing UDAY States and Solar panelson Govt. buildings with net-metering are also permissible under the Scheme.

v. Gas Insulated Sub-stations (GIS) at locations where space constraintexists are also permissible

vi. Real Time-Data Acquisition System (RT-DAS) Projects for accuratemeasurement of power interruption parameters like SAIDI/ SAIFI at 11KV feeder level arealso covered under the Scheme.

vii. IT enablement of distribution sector and strengthening ofdistribution network under R-APDRP for 12th and 13th Plans by carrying forward theapproved outlay for R-APDRP to IPDS.

Outlay & Budgetary Support

• The estimated outlay of the scheme is Rs 32612 crore includinga budgetary support of Rs 25354 crore from Government of India during the entireimplementation period.

• R-APDRP scheme cost of Rs 44011 crore (with a budgetary supportof Rs 22727 crore) as already approved by CCEA is also carried forward to IPDS inaddition to the outlay of Rs 32612 crore.

Financial Assistance under IPDS / R-APDRP

(Rsin crore)

Scheme

FY 2021-22

Cumulative up to March 2022

Approved Cost GoI Fund Disb. Approved Cost GoI Fund Disb.
R-APDRP (1987)* 385 29978 13580
IPDS (2428)* 1977 28886 17638

*Negative figure is due to cancellation/ reduction in cost of Projectsupon financial closure

In addition to above disbursement to Discoms for Projects during FY2021-22 MoP has also released Gol Grant of Rs 67 crore (cumulative Rs 284 crore) for IPDSother than Project head (e.g. nodal agency fee re-imbursement of expenditureUn-interrupted Direct Current (UDC) National Power Portal (NPP) etc.) and Rs 29 crore(cumulative Rs 563 crore) under Part-C of R-APDRP to PFC.

Moreover MoP has also released GoI Grant of Rs 350 crore during FY2021-22 (cumulative Rs 1350 crore) for implementation of PMDP-2015 in J&K throughyour Company.

Progress of Implementation

IPDS

Under IPDS inspite of a tough pandemic hit last 2 years work in 546out of 547 sanctioned Circles/Projects has been declared complete with overall physicalprogress achieved of 99% (timeline for completion of Ayodhya Circle is up to March 2023).The Scheme is helping in making a difference in the lives of around 10 crore urbanelectricity consumers living in 3600 towns across the country where the Power Distributioninfrastructure has been upgraded. IT enablement has been undertaken even in smaller townsof 34 Discoms. ERP system has been set up / upgraded in 32 Discoms.

Further during the year your Company also disbursed an amount of Rs440 crore (cumulative disbursement Rs 3755 crore) as counterpart loans to State PowerDiscoms under IPDS.

R-APDRP

With the measures taken so far IT backbone has been established in theState Power Discoms which has aided the Discoms continue their operations during COVID-19and consequent lockdown. All sanctioned 1233 towns have been declared completed underPart A IT with all business process software modules are functional and energy auditreports being derived. SCADA Automation has been completed in 57 large towns to improvepower reliability. Implementation work of distribution system strengthening has beencompleted in all sanctioned 1227 towns.

Further your Company has also disbursed an amount of Rs 3616 crore(cumulative) as counterpart loans to State Power Discoms under Part B of R-APDRP.

Other developments

• IT and Technical interventions undertaken under the scheme ishelping in improvement of Billing/ Collection efficiency which will ultimately result inreduction in Aggregate Technical and Commercial (AT&C) losses. The reduction inAT&C loss is already visible in many R-APDRP towns because of establishment of ITsystem and Part-B completion coupled with administrative and other measures.

• There has been an increased in transparency by way of capturingof data from = 36000 urban feeders (11 kV) in IT enabled towns on Urban DistributionMonitoring System under National Power Portal.

• Real Time Data Acquisition System has been set up coveringaround 15000 feeders for capturing data w.r.t. reliability indices at feeder level.

• 92 Gas Insulated Substations (GIS) & Hybrid PSS have beencommissioned/upgraded. Such substations have been set up for the first time in BiharKarnataka UP and NER States.

• Around 10 lakh Smart/Prepaid Meters have been installed in thecountry under IPDS.

• Rs 1912' - Short-code for 'Complaints on Electricity' is nowoperational in all Discoms.

• Capacity building/training of Utility personnel has been carriedout using Digital means under IPDS / R-APDRP to enhance their skill through workshops/webinars on AT&C loss reduction smart metering project management guidelines bestpractices etc.

Thus your Company is contributing towards improving operationalefficiency and financial health of Distribution Utilities.

4.0 Other Major Investments (As on March 31 2022)

4.1 Energy Efficiency Services Limited

Energy Efficiency Services Limited (EESL) was incorporated on December10 2009. EESL was jointly promoted by Power Grid NTPC REC and PFC with 25% equity stakeeach for implementation of Energy Efficiency projects in India and abroad. Theshareholding of your Company (along with its subsidiary REC) as on March 31 2022 is33.33%.

4.2 PTC INDIA LIMITED

PTC India Limited (PTC) was jointly promoted by Power Grid NTPC NHPCand PFC. PFC has invested Rs 12 crore in PTC which is 4.05% of PTC's total equity. PTC isthe leading provider of power trading solutions in India a Government of India initiatedpublic-private partnership whose primary focus is to develop a commercially vibrant powermarket in the country.

5.0 Initiatives Towards Reforms and Restructuring

5.1 Categorisation of Utilities

For purposes of funding your Company classifies State Power Generationand Transmission entities into A++ A+ A B and C categories. The categorisation(biannually) of State Power Generation and Transmission entities is arrived based on theevaluation of entity's performance against specific parameters covering operational &financial performance including regulatory environment availability of audited accountsetc. as per categorisation policy.

With respect to State Power Distribution entities (includingSEBs/entities with integrated operations) your Company's categorisation policy providesfor adoption of MoP's Integrated Ratings by aligning such ratings/gradings with PFC'sstandard categories of A+ A B and C.

The categorisation enables PFC to determine credit exposure limitspricing of loans and stipulation of security to the state power entities.

5.2 Annual Performance Report of Power Utilities

PFC publishes the Report on Performance of State Power Utilities on anannual basis. The Report covers a range of key financial and operational parameters suchas profitability gap between average cost of supply and average revenue net worthreceivables payables generation capacity (MW) energy generation (MU) AT&C losses(%) etc. and consumption pattern of the sector at utility state and national level.

The Report for the period 2017-18 to 2019-20 was published in August2021. The coverage of the utilities in the Report from this edition onwards has beenincreased to include distribution utilities in all UTs and major Private DistributionCompanies. Accordingly the report covers distribution utilities in all States and UTs ofIndia and all State Gencos/ Transcos/ Trading utilities offering a comprehensive insightinto the Indian Power Sector.

The report for the years 2018-19 to 2020-21 is under finalisation.

5.3 Annual Integrated Rating of State Distribution Utilities

Ministry of Power has taken various reform initiatives to bring aboutimprovements in the Distribution Sector and has put in place an Integrated RatingMethodology for an objective evaluation of performance of Distribution Utilities. Theobjective of the integrated rating is to rate all utilities in the power distributionsector based on their financial performance and their ability to sustain the performancelevel. Private Distribution Utilities and Power Departments are also being included toprovide complete sectoral coverage.

The methodology adopted attempts to objectively adjudge the performanceof distribution utilities against various parameters broadly classified under i) FinancialSustainability parameters ii) Performance Excellence parameters and iii) ExternalEnvironment parameters. For the introduction of Power Departments in the rating exercisea subset of metrics with modified weightages from the overall methodology will be utilisedfor rating.

These ratings are carried out by reputed independent agencies andco-ordinated by your Company. These ratings are immensely beneficial as a diagnostic toolin the hands of the State Governments as well as Utilities to build on their strengths andwork on areas requiring improvements so as to improve their operational efficiency andfinancial sustainability.

Ninth Integrated Ratings for FY 2019-20 covering 41 Utilities in 22States and inter se ranking of the Utilities was released by the Hon'ble Minister ofPower New & Renewable Energy on July 16 2021. From the Tenth Integrated Ratingexercise onwards for the rating year FY 2020-21 covering 71 utilities/departments isunder finalisation.

6.0 Presidential Directives

During last 3 years there has been no Presidential Directive.

7.0 Corporate Social Responsibility

The aim of PFC's Corporate Social Responsibility and SustainabilityPolicy (CSR and Sustainability Policy) is to ensure that the Company becomes a sociallyresponsible corporate entity committed to improving the quality of life of the society atlarge by undertaking projects for Sustainable Development mainly focusing on fulfilmentof Power and Energy needs of the society.

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

PFC has implemented wide range of activities in the field ofEnvironment Sustainability Healthcare Sanitation & Drinking water and Skilldevelopment etc. Further as per DPE's mandate PFC has also contributed to thematic areasi.e. 'Health & Nutrition with special focus on COVID related measures includingsetting up makeshift hospitals and temporary COVID Care Facilities' with preference givento Aspirational Districts.

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

8.0 HR Initiatives Development & Training

During the year 12 Nos. of in-house programmes was maintained in orderto ensure specific skill development in line with the corporate goals. Customised virtualin-house programmes viz. Risk Management General Management Programmes LeadershipProgramme KYC policy/Anti Money Laundering Corporate Credit & Risk ManagementStressed Asset Management & IBC 2016 Induction Programme Awareness Programme onGender Sensitisation Government e-Marketplace (GeM) Communication Skills - WritingDocumentation & Presentation etc. were organised along with other need-basedprogrammes.

As on March 31 2022 12 Nos. of In-house training programmes wereorganised by your Company for its employees. A total of 1396 man-days were achievedthrough conducting various in-house programmes and by sponsoring PFC employees toprogrammes organised by external training agencies.

Recreational Activities

PFC being a founding member of Power Sports Control Board (PSCB) PFCemployees participated with full vigor and enthusiasm in various Inter-CPSU sportstournaments organised

by the PSCB member organisations during the period viz. BadmintonCarrom Table Tennis Kabbadi Cricket and Chess Tournament. PFC organised the Inter CPSUChess Tournament under the aegis of PSCB. PFC also participated in Power Cup CricketTournament which was organised in collaboration with all power sector CPSEs based inDelhi-NCR. Apart from these PFC also organised a Sports Meet for its employees &their family members to encourage team spirit in the Company.

Human Resource Management

Your Company has put in place effective human resource acquisition andmaintenance function which is benchmarked with best corporate practices designed to meetthe organisational needs. This apart from other strategic interventions leads to aneffective management of Human Resources thereby ensuring high level of productivity. Theemployees of the Company have access to the Top Management officials thereby contributingeffectively in the management and growth of the Company.

The Industrial Relations within the Company have been very cordial andharmonious with the employees committing themselves entirely to the objectives of theCompany. There were no man-days lost during the year under review. The attrition duringthe period from April 1 2021 to March 31 2022 was 1.42%.

Welfare Measures

Your Company endeavours to follow the best management practices of theindustry.

Commitment of the workforce is ensured through an effective package ofwelfare measures which include comprehensive insurance medical facilities and otheramenities which lead to a healthy workforce. During the period several new initiativeswere taken for employees' welfare such as amendments in Death Relief Scheme EconomicRehabilitation Scheme Medical Attendance Rules Monthly Conveyance Reimbursement Rulesetc.

Reservation of posts for SC/ ST/ OBC/ EX- Servicemen and PhysicallyHandicapped Persons:

Group Total Employees as on March 31 2022 SC SC% ST ST% OBC OBC% EWS EWS%
A 479 86 17.95% 30 6.26% 93 19.41% 2 0.41%
B 7 1 14.28% 1 14.28% 0 0.00% 0 0.00%
C 15 2 13.33% 1 6.66% 3 20.00% 0 0.00%
D 0 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total 501 89 17.76% 32 6.38% 96 19.16% 2 0.39%

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

Representation of Women Employees

Your Company has women in important and critical functional areas.Women representations have gone across hierarchical levels. The Company provides equalgrowth opportunities for the women in line with Govt. of India philosophy on the subject.The women are well represented with 19.96% of the total work force.

Group Total Employees as on March 31 2022 Number of Women Employees Percentage of overall staff strength
A 479 97 20.25%
B 7 2 28.57%
C 15 1 6.66%
D 0 0 0.00%
Total 501 100 19.96%

PFC as part of its social responsibility makes all efforts to ensurecompliance of the Directives and guidelines issued by the Government of India from time totime pertaining to the welfare of female employees.

INTERNAL COMPLAINTS COMMITTEE

An Internal Complaints Committee to examine the cases related to sexualharassment is in place under the Sexual Harassment of Women at Work Place (PreventionProhibition and Redressal) Act 2013. The complaints received by the Committee are beingdealt in line with the provisions in the Act.

Disclosures in relation to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013:

a) Number of complaints pending as on April 1 2021: Nil

b) Number of complaints filed during FY 2021-22: Nil

c) Number of complaints disposed of during FY 2021-22: Nil

d) Number of complaints pending as on March 31 2022: Nil

HEALTH AND SAFETY

PFC has acquired certification in ISO 45001:2018 which stands forOccupational Health and Safety (OH&S) Management System. OH&S is the first andonly International Standard for occupational health and safety management containingagreed good practice from around the world. Due to COVID-19 pandemic we had to facevarious challenges and in line with

guidelines set in OH&S we strive to provide a healthy and safeworking environment for employees.

9.0 AWARDS & RECOGNITIONS

• PFC bagged Dun & Bradstreet's India's Best PSU Award in thecategory of "Best Navratna" in a virtual format.

• PFC received Dalal Street Investment Journal PSU AWARD OF THEYEAR 2020 in the Category - Navratna of the Year and the Most Efficient and ProfitableNavratna of the Year - Non-Manufacturing.

• PFC has been awarded the First prize in Public Sector Categoryin Region 'A' of 'Rajbhasha Kirti puruskar' for the year 2020-21.

• PFC's House Journal 'Urja Deepti' was awarded First prize in the'Best House Journal Category'.

• PFC won the prestigious ICAI (Institute of Chartered Accountantsof India) Silver award for excellence in financial reporting for the financial year2020-21 in 'Public Sector Entities' category. PFC was bestowed with this coveted award forits highest degree of compliance with accounting standards commendable accountingpractices adopted while preparing financial statements the policies adopted fordisclosure & presentation of financial statements amongst other information containedin the annual report.

• The Company Secretary of your Company Shri Manohar Balwani hasbeen included amongst top 10 Chief Compliance Officers of India - 2022 by 'CEO Insights'in its July 2022 publication. This is an annual recognition that showcases exceptionalleaders and professionals in Compliance Assurance Department in an Organisation.

10.0 Brief on COVID-19 Related Activities

PFC adopted SOPs in Corporate office building to prevent spread ofCOVID-19 which included Temperature checking at entrance Mask and gloves at entranceChemical sanitisation foot mats Face capturing and infra-red temperature reading devicesQuick Response Team to tackle COVID cases.

For regular operations PFC adopted digital technologies includingE-Office solutions for internal approvals meetings on virtual mode facilitating Workfrom Home (WFH) secure VPN & Remote Desktop access (RDA) for seamless securedconnectivity. PFC shifted to virtual reskilling amidst restrictions on physical training.Onboarding programme for new employees was also organised virtually during the financialyear.

PFC emphasised the importance of health and safety for employees'well-being. Multiple health talks and awareness programmes on COVID-19 were organised.Vaccination camps RT-PCR testing camps were organised for employees and dependent familymembers. Entry into the Office campus was strictly regulated. Use of Aarogya Setuapplication is highly emphasised for both employees and visitors. An online wellnessstatus report was developed for daily updates. Food and critical medical suppliesincluding oxygen cylinders concentrators medicines etc. were provided to Covid-affectedemployees and families. Periodic sanitisation of office premises was conducted. Onlineconsultation facility with physicians and pulmonologists for employees and dependentfamily members was also provided.

11.0 VIGILANCE

The Vigilance Unit proactively perform as an effective tool ofOrganisation. During the Financial Year 2021-22 the Vigilance Unit has done preventivevigilance by constantly emphasising on periodic & surprise inspections of variousunits. During the period the Vigilance Unit has also issued directions/effectiveguidelines to rationalise systems and procedures in order to eradicate gaps and confirmingtransparency in day to day operations. As a new initiative a "Vigilance Corner"has been introduced on the websites of PFC and PFCCL for creating mass awareness andsensitisation among the stakeholders. The Vigilance Unit carried out detailedinvestigation in respect of complaints registered during this period.

The Vigilance Unit continuously functioned for systemic improvementswith a view to increase transparency objectivity and accountability in the operations ofthe Company. Thus it has contributed towards strengthening in the functioning of theorganisation.

12.0 OFFICIAL LANGUAGE

It is a matter of great pride that once again PFC has been awarded theFirst Prize in Public Sector Category in Region 'A' of 'Rajbhasha Kirti Puraskar' for theyear 2020-21 by Rajbhasha Vibhag Ministry of Home Affairs for its concerted efforts madein implementation of Official Language Policy.

Hindi Day on September 14 2021 and Hindi Month from September 14 2021to October 13 2021 were celebrated to create a Hindi oriented environment.

Four Issues including 'Bhartiya Sanskriti Visheshank' of House Journal'Urja Deepti' were also published and made available on website of Department of OfficialLanguage Ministry of Home Affairs. It is a matter of pride that 'Urja Deepti' was awardedFirst Prize in the 'Best House Journal category' for the year 2021 by the Town OfficialLanguage Implementation Committee (Undertaking -I) Delhi.

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

13.0 DIRECTORS' RESPONSIBILITY STATEMENT

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

(a) in the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures;

(b) the Directors had selected such accounting policies and appliedthem consistently and made judgements and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(d) the Directors had prepared the annual accounts on a going concernbasis; and

(e) the Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively.

(f) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

14.0 Auditors Statutory Auditors

Dass Gupta & Associates Chartered Accountants and Prem Gupta &Company Chartered Accountants were appointed as Joint Statutory Auditors of the Companyfor FY 2021-22 by the Office of the Comptroller & Auditor General of India.

The Statutory Auditors have not issued any qualification reservationor adverse remark or disclaimer on the financial statements for FY 2021 -22.

The Joint Statutory Auditors have audited the accounts of the Companyfor the FY 2021-22 and have given their report without any qualification reservationadverse remark or disclaimer. The copy of the audit report is annexed herewith.

Secretarial Auditor

Amit Agarwal & Associates Company Secretaries was appointed as theSecretarial Auditor of the Company for the FY 2021-22 by the Board of Directors of theCompany.

The observations of the Secretarial Auditor and reply of the managementon the observations for the FY 2021-22 along with copy of the audit report is annexedherewith.

Comments of Comptroller & Auditor General of India

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

15.0 Statutory Disclosures

15.1 Conservation of Energy/ Technology Absorption

There are no significant particulars relating to conservation ofenergy and technology absorption as your Company does not own any manufacturing facility.

15.2Foreign Exchange Earnings and Outgo

The Foreign exchange outgo for the FY 2021-22 aggregated to Rs31477.69 crore. The Foreign exchange earnings for the FY 2020-21 were nil.

15.3 Particulars of Loans Guarantees or Investments Under Section 186of Companies Act 2013

Your Company is exempt from the provisions of Section 186 of theCompanies Act 2013.

However the details of Investment are given at Note No. 11 of theNotes to Accounts of the Standalone Financial statements forming part of this AnnualReport.

15.4 Details of Adequacy of Internal Financial Controls with referenceto the Financial Statements

M/s. ASA & Associates LLP Chartered Accountants appointed for thesaid purpose has certified that the Company maintains an adequate system of internalfinancial controls evaluates and makes an assessment of its adequacy and effectiveness ina satisfactory manner which takes care of requirements under Companies Act 2013.

The Statutory Auditors of the Company i.e. Dass Gupta & AssociatesChartered Accountants and Prem Gupta & Company Chartered Accountants and have alsogiven their Report on the Internal Financial Controls stating that the Company has in allmaterial respects an internal financial controls system over financial reporting and suchinternal financial controls over financial reporting were operating effectively as atMarch 31 2022 based on internal control over financial reporting criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India.

15.5 Compliance of Secretarial Standards

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

15.6 Particulars of Remuneration U/S 197(12) of the Companies Act 2013

The provisions of Section 197 of the Companies Act 2013 and Rules madethereunder related to Managerial Remuneration are not applicable to your Company being aGovernment Company.

15.7 Annual Return Link

The Annual Return of PFC for FY 2020-21 is available on the linkhttps://www.pfcindia.com/DocumentRepository/ckfinder/files/ Investors/Annual Return/AnnualReturn 23112021.pdf and for FY2021-22 it shall be made available on your Company's websitewww.pfcindia.com.

15.8 Reporting of Frauds by Auditors

During the year under review neither the statutory auditors nor thesecretarial auditor has reported to the audit committee under Section 143(12) of theCompanies Act 2013 any instances of fraud committed against PFC by its officers oremployees.

15.9 Debenture Trustees

The details of Debenture Trustees appointed by the Company for thedifferent series of Bonds issued by your Company are annexed herewith.

15.10 Details of significant and material orders passed by theRegulators or Courts or tribunals impacting the going concern status and Company'soperations in future

No significant and material orders were passed by any regulator orcourt or tribunal impacting the going concern status and company's operations during theFY 2021-22.

15.11 Details of the application made or any proceedings pending underthe insolvency and bankruptcy code 2016 during the year along with their status as at theend of the financial year and details of the difference between amount of the valuationdone at the time of one time settlement and the valuation done while taking loan from thebanks or financial institutions along with the reasons thereof.

During the year no application has been made or any proceedings pendingagainst PFC under the Insolvency and Bankruptcy Code 2016. Further details of thedifference between amount of the valuation done at the time of one time settlement and thevaluation done while taking loan from the banks or financial institutions are notapplicable.

15.12 Details of procurement from MSEs

The details of the procurements made from Micro Small and MediumEnterprises (MSEs) during the FY 2021-22 and the targets for FY 2022-23 as required to bedisclosed under Micro Small and Medium Enterprises Development Act 2006 along withPublic Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012 is as under:

(Rsin crore)
No Particulars FY 2021-22 Target for FY 2022-23
I. Total annual procurement (in value) 176.67 267.99*
II. Total value of goods and services procured from MSEs (including MSEs owned by SC / ST entrepreneurs) 68.12 69.75
III. Total value of goods and services procured from only MSEs owned by SC / ST entrepreneurs. 0.016 15.34
IV. % age of procurement from MSE (including MSEs owned by SC / ST entrepreneurs) out of total procurement. 38.56 25.98
V. % age of procurement from only MSEs owned by SC / ST entrepreneurs) out of total procurement 0.009 5.72
VL Total Number of vender development programmes for MSEs 2 2
VII. Confirmation of uploading annual MSE procurement profile on your website by hyperlink of same. https://www.pfcindia.com/ DocumentRepository/ckfinder/ files/Statutory_Requirements/ Codes_and_Policies/Public_ Procurement_Policy_for_MSME/ Procurement_target_and_ profile 20 202223.pdf

including Rs 208 crore as one time requirement of MS unit in PFC(related to IT infrastructure refresh - planned for FY 2022-23).

16.0 Information Technology

PFC has taken up various Information Technology initiatives to improveoverall productivity. PFC has implemented state-of-the- art Data center housing various ITservices and ERP application system to integrate all the Business functions. Further PFCis in the process of implementing latest & advanced IT systems including asingle-platform ERP systems to consolidate the technology landscape.

Compliance to guidelines issued by statutory bodies:

As per the guidelines issued by RBI vide Master Directions to NBFCsthe IT Strategy Committee has been constituted IT policy has been implemented and ITaudits are being carried out. Guidelines and regulations with respect to InformationTechnology issued by various statutory & regulatory bodies such as Meity RBI MoPNCCC NCIIPC etc have been complied by PFC.

Revamped PFC Website:

The bi-lingual PFC website has been revamped and maintained withup-to-date information. The face uplifted website has been made more informative toaddress the information requirements of external stakeholders.

17.0 Right to information Act

Right to Information is derived from our fundamental right of freedomof speech and expression under Article 19 of the Constitution. Democracy revolves aroundthe basic idea of Citizens being at the centre of governance. The right to information hasbeen recognised as a fundamental human right which upholds the inherent dignity of allhuman beings. The right to information forms the crucial underpinning of participatorydemocracy - it is essential to ensure accountability and good governance. The greater theaccess of the citizen to information the greater the responsiveness of government tocommunity needs. RTI Act is a progressive legislation based on citizen's right to knowwhich is a fundamental right enshrined in the Constitution of India. The purpose of theAct is to make the executive accountable and ensure transparency in the implementation ofschemes and policies. Under the act information may be sought from a public authority asdefined under the act. Right to information includes right to inspect documents. Under theAct it is believed that an informed citizen is better equipped to keep necessary vigil onthe instruments of governance and make the government more accountable. The informationseekers have subject to few exceptions an overriding right under the Act to getinformation lying in the possession of the Public Authorities.

An elaborate mechanism has been set up in PFC to deal with requestsreceived under the RTI Act 2005. Your Company has implemented the Right to InformationAct 2005 to provide information to the citizens of India and also to maintainaccountability and transparency in the working of the Company. The Company has designateda Public Information Officer (PIO) and a First Appellate Authority (RTI) at its registeredoffice for effective implementation of the RTI Act. The relevant information/ disclosuresare also made available on the official website (www.pfcindia.com) of the Company. Duringthe period from April 1 2021 to March 31 2022 all 152 applications received under theRTI Act were duly processed and replied to. PFC has also complied with the requirement offiling of online RTI Quarterly Returns on the portal of Central Information Commission(CIC) during the said period.

Further in order to strengthen compliance of the provisions ofdisclosures 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 certain guidelines onSuo moto disclosure of more items. In compliance of the aforesaid Guidelines PFC hasplaced the requisite information on the website of the Company.

Besides the above PFC is also linked with the online RTI Portal ofGovt. of India Department of Personnel & Training (https://rtionline.gov.in) whichenables citizens of India to file RTI applications/first appeals online along withpayment gateway. Payment can be made through internet banking of SBI & its associatebanks debit/credit cards of Master/Visa and RuPay cards.

18.0 Establishment of Vigil Mechanism

Your Company has established stringent vigil mechanism by way ofimplementing various codes and policies like Fair Practices Code Code of Conduct Codefor Prevention of Insider Training Fraud Prevention Policy Policy on Related PartyTransactions Public Procurement Policy Whistle Blower Policy etc. The details are alsoposted on the Company's website.

19.0 Grievance Redressal

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

20.0 Statutory and other information

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

Particulars Annexure
Management Discussion and Analysis Report A
Integrated Reporting B
Report on Corporate Governance C
Business Responsibility Report D
Secretarial Audit Report E
Annual Report on CSR Activities F
Disclosure of particulars of contracts/arrangements entered into by the company with related parties (AOC-2) G
Details of Debenture Trustees H

21.0 ACKNOWLEDGEMENT

The Board of Directors place on record their appreciation for theco-operation guidance and encouragement extended to the Company by the Government ofIndia particularly Ministry of Power Ministry of Finance Ministry of Corporate AffairsReserve Bank of India Department of Public Enterprises NITI Aayog DIPAM Securities andExchange Board of India National Stock Exchange of India Limited Bombay Stock ExchangeLimited Ministry of Micro Small and Medium Enterprises and other concerned Governmentdepartments/agencies at the Central and State level etc.

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

The Company is also thankful to the Comptroller & Auditor Generalof India and the Statutory Auditors Secretarial Auditor and RBI Auditors for theirconstructive suggestions and cooperation.

Your Directors also recognise and appreciate the untiring efforts andcontributions made by the employees to ensure excellent all round performance of yourCompany.

For and on behalf of the Board of Directors

(R. S. Dhillon)
Chairman & Managing Director
DIN: 00278074
Place: New Delhi
Dated: August 29 2022

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