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REC Ltd.

BSE: 532955 Sector: Financials
BSE 00:00 | 18 Sep 108.00 -0.60






NSE 00:00 | 18 Sep 108.00 -0.65






OPEN 109.00
VOLUME 114300
52-Week high 157.25
52-Week low 79.00
P/E 4.08
Mkt Cap.(Rs cr) 21,329
Buy Price 107.60
Buy Qty 3616.00
Sell Price 108.00
Sell Qty 205.00
OPEN 109.00
CLOSE 108.60
VOLUME 114300
52-Week high 157.25
52-Week low 79.00
P/E 4.08
Mkt Cap.(Rs cr) 21,329
Buy Price 107.60
Buy Qty 3616.00
Sell Price 108.00
Sell Qty 205.00

REC Ltd. (RECLTD) - Chairman Speech

Company chairman speech

Dear Shareholders

It is my privilege to present the 49th Annual Report of REC. I am delighted to sharethe happy news that our Company has entered the 50th year of service in the nation'sdevelopment and continues its march as the leading public financial and developmentinstitution of India playing a key role in holistic development of the power sectoracross the nation. Having contributed successfully to the green revolution throughenergization of irrigation systems during early decades of its existence REC has grownfrom strength to greater strength as the major financier and accelerator of power sectordevelopment in the country. We have the unique distinction of having made significantcontribution to the historical landmark of electrification of all villages in our countryon April 28 2018. We continue to consolidate and strengthen our unique positioning in theIndian power sector not only as a financier but also as the facilitator and enabler ofaccess to quality power for all citizens of India and work closely with the national andstate governments power utilities and the private sector.

The past financial year has been a challenging but historic for the economy with theroll-out of the much-awaited Goods and Services Tax (GST) implementation of Insolvencyand Bankruptcy Code (IBC) and launch of the Pradhan Mantri Sahaj Bijli Har Ghar Yojana-Saubhagya - that seeks to electrify all households of the country. The second half of the2017-18 financial year witnessed overall improvement in macro-economic parameters with theeconomic growth gathering momentum along with credit uptake. Major step-up in governmentspending played an important role in boosting the overall growth and demand. Theturnaround in industrial production and the capital goods sector has set in motion avirtuous cycle. Introduction of GST has dispensed multiple and varied levies and usheredin a uniform tax regime across the nation thus heralding the creation of a giant nationalmarket.

The economic outlook for the Asia and the Pacific region remains strong with theregion being the most dynamic in the global economy accounting for nearly two-thirds ofthe global growth. The economic growth for Asia in 2018 and 2019 is expected to be robustaround 5.6 per cent. The World Bank IMF and the Reserve Bank of India have reposedconfidence in India's growth prospects and have predicted a higher growth trajectory inthe years ahead which could be around 7.5% in the 2018-19 financial year in the backdropof improved global demand prospects of good monsoon credit uptick and continued reformsby the Government. This makes India the fastest growing economy amongst the emergingeconomies. At the same time rise of oil prices could have implications for inflationcurrent account deficit and external sector parameters. Hardening of interest rates alsorepresents reversal of the declining interest rate environment of recent years. The powersector growth however should remain robust in the coming years.


The power sector has witnessed transformational momentum during the past four years onaccount of a series of decisive steps taken by the government across the power value chainthat have contributed to surplus power availability improved fiscal discipline greateroperational efficiency of the state utilities and unprecedented growth in the clean energymarket.

Further proactive action has been initiated to effect transition from a fossil fuelcentric system to energy efficient and renewable centric paradigm on an accelerated mode.Government of India has affirmed its commitment to rapid implementation of the covenantsof Paris Agreement and has set a target of 175 GW of additional power from renewableenergy sources by 2022 and increase the share of green energy to 40% of the totalinstalled capacity by the year 2030 apart from rapid transition to Electric Mobility(EVs) energy saving devices and adoption of new & emerging energy technologies.

In addition the government has launched a series of programmes - Deen Dayal UpadhyayGram Jyoti Yojana (DDUGJY) Integrated Power Development Scheme (IPDS) Pradhan MantriSahaj Bjli Har Ghar Yojana (Saubhagya) etc. - to transform its vision of Power for All(PFA) into reality well ahead of the schedule. Recognising that DISCOMs continue to be theAchilles heel of the power sector Government has launched Ujwal DISCOM Assurance Yojana(UDAY) to reform and revitalise the DISCOMs across the nation which has brought thecentral and state governments and the DISCOMs on the same platform with a commitment totransform the operational efficiency and effectiveness of the DISCOMs. In additiongovernment is vigorously promoting energy efficiency systems through the joint venture ofour Company the Energy Efficiency Services Limited (EESL). It is a matter of pride thatour Company has been integral part of several important government initiatives to engineeraccelerated transformation of the power sector. We have played a major role inelectrification of all villages in the country a landmark achievement in the history ofindependent India.

On March 31 2018 the total installed power generating capacity in the country was 344GW. Of this thermal power accounted for 65% followed by renewable hydro and nuclear at20% 13% and 2% respectively. In tune with the Government's 'One Nation One Grid'initiative the total length of transmission lines in the country aggregated to about 3.90Lakh circuit kilometres. The aggregate substation transformation capacity at 765 kV 400kV and 220 kV has reached 8.25 Lakh MVA at the end of the FY 2017-18.

The aggregate Power Supply Deficit for FY 2017-18 was 0.7%. In order to address theissues of shortage of coal supply the Government undertook a slew of proactive effortsand initiatives such as allocation of coal mines through transparent auction routeaugmenting indigenous coal production domestic supply of gas to gas-based strandedprojects and efforts to improve the operational efficiency of State generation utilities.Government of India has launched a Scheme for Harnessing and Allocating Koyala (coal)Transparently in India (SHAKTI) for allocation of coal in a transparent manner for powersector. This policy is an important initiative in alleviating one key challenge in thepower sector viz. lack of coal linkage. This initiative has contributed positivelyto the revitalisation of some stressed power assets.

Overall your Company has been playing a central role in facilitating supportingtrouble shooting and building the capacity of the power sector across the country andthroughout the value-chain by financing and providing value-added services through itssubsidiaries REC Power Distribution Company Limited (RECPDCL) and REC TransmissionProjects Company Limited (RECTPCL); and the training institute REC-Institute of PowerManagement and Training (REC-IPMAT).


Year after year our Company has played an important role in the development of thepower sector across the value chain. It has financed the development of power generationprojects in conventional as well as the renewable energy space. The Company has playedactive role in modernisation and creation of additional capacity of Transmission &Distribution (T & D) infrastructure across the country. In addition we have financedthe development of energy efficient and solar-based irrigation systems and such othervalue-added activities. As the nodal agency for the DDUGJY scheme of the Government ofIndia your Company has facilitated accelerated electrification of the entire country andimproved capacity and performance of the distribution system. With the electrification ofthe last village living in darkness 'Leisang' in Manipur State on April 28 2018 we havecontributed to a historical landmark electrification of all villages in our country. Asthe nodal agency for Saubhagya we are proactively facilitating electrification of allhouseholds in the country ahead of the scheduled deadline of December 31 2018.

During the financial year 2017-18 your Company became the first Indian PSU to launchGreen Bonds denominated in US Dollars and raised USD 450 million for a tenor of ten yearswhich attracted overwhelming response from investors across the globe with the issuegetting oversubscribed 6.7 times. These Bonds are listed on the International SecuritiesMarket (ISM) segment of London Stock Exchange and Singapore Stock Exchange. It wasaffirmation of our commitment to promotion of green energy and a step towards realizationof the national goal of harnessing the enormous green energy potential in the country toachieve the targeted capacity of 175 GW by 2022.

The domestic debt instruments of REC continued to enjoy "AAA" rating - thehighest rating assigned by CRISIL CARE India Ratings & Research & ICRA. TheCompany enjoys international credit rating from International Agencies i.e. Moody's andFITCH of "Baa3" and "BBB-" respectively.

We have further refined and diversified the range of products to finance the emergingneeds of the power sector across the value- chain in the state and central as well as theprivate sector domain. During the FY 2017-18 the Company sanctioned a total loanassistance of Rs 107534 crore which included Rs 53224 crore for Generation projects; Rs36326 crore towards Transmission and Distribution (T&D) sector strengthening; Rs7034 crore for renewable energy projects i.e. solar small hydro and wind energy; and Rs10950 crore for other investments. Your Company is poised for a major leap in financingrenewable projects in the coming days.

Further during the 2017-18 financial year the Company disbursed a total loan amountof Rs 61712 crore which included Rs 26676 crore for T&D projects Rs 18086 croretowards generation projects Rs 5403 crore towards renewable energy projects Rs 10860crore towards other loans and Rs 687 crore as counterpart financing for DDUGJY. Inaddition we administered a grant of Rs 10569 crore provided by Government of Indiaunder DDUGJY and Saubhagya schemes that was disbursed to different states/implementingagencies.

During the FY 2017-18 the operating income of REC on a standalone basis was Rs 22358crore. The Profit Before Tax and Profit After Tax for the reporting year was Rs 6852crore and Rs 4647 crore respectively. REC's Net Worth on March 31 2018 was Rs 35491crore which was 6.50% higher than the net worth of Rs 33326 crore a year earlier.


After addition of loan assets of Rs 37520 crore during the financial year 2017-18gross Loan book of your Company stood at Rs 239449 crore on March 31 2018. Of thisState Sector accounted for 78% 8% towards Joint Sector followed by 14% to the PrivateSector.

It is pertinent to mention that the Reserve Bank of India (RBI) notified 'RevisedFramework for Resolution of Stressed Assets' which per se was not applicable toREC being a Non-Banking Financial Company (NBFC). However as a matter of abundantprudence loans amounting to Rs 9591 crore were classified as non-performing assetsduring the year in line with the above circular. Accordingly as on March 31 2018 theGross NPAs stood at Rs 17128 crore (7.15% of Loan Assets) and the Net NPAs were Rs 13612crore (5.68% of Loan Assets). It is important to note that without the impact of the abovecircular the Gross NPAs were Rs 7537 crore (3.14% of Loan Assets) and the Net NPAs wereRs 4980 crore (2.07% of Loan Assets). The Company did not reschedule any doubtful loansduring the FY 2017-18.

We have initiated several measures to ensure high quality of project assets thatinclude inter-alia robust entity and project appraisal diligent administrationof loan effective monitoring of the project implementation through Lenders' Engineers andProject Management Consultants. Consequently your Company continues to own high qualityassets and has the lowest Non-Performing Assets (NPAs) in the league.


Being an Infrastructure Finance Company your Company is required to maintain a Capitalto Risk Weighted Assets Ratio (CRAR) of 15% with a minimum Tier I Capital of 10%.Notwithstanding the higher provisioning that has been made as a matter of abundantprudence and reduction in the net interest margin the Company was able to maintain CRARof 19.39% which is well above the regulatory requirements.

During the year under review the President of India acting through the Ministry ofPower divested/sold 10825689 equity shares i.e. 0.54% of total paid up capital of theCompany. Accordingly as on March 31 2018 the President of India held 58.32% of thepaid-up equity share capital of the Company. Further 6473244 equity shares i.e. 0.33%of total paid up capital of the Company were divested/sold in June 2018 and as on datethe President of India holds 57.99% of the paid-up equity share capital of the Company.


The Board of Directors of your Company has recommended final dividend of Rs 1.75 pershare for the financial year 2017-18 subject to approval of the Shareholders in thisannual general meeting which is in addition to the interim dividend of Rs 7.40 per sharepaid in February 2018. Total dividend for the financial year 2017-18 will work out to Rs9.15 per share representing 91.50% of the paid-up equity share capital.


During the financial year 2017-18 your Company has adopted / amended various policiesand guidelines such as policy for advancing Short Term Loans to private sector borrowers;updation of Appraisal Guidelines in respect of Private Sector Conventional & Renewableprojects; rationalization of Post-COD interest rate and modification of interest ratereset period for Renewable Energy projects; Comprehensive Risk Management Policy alongwith project and other risk categorization frameworks; REC policy for investment of ShortTerm Surplus funds; Succession Planning for key positions; Modification of REC Long TermInvestment Policy; New Grading Model and Exposure Norms for State Power Utilities; etc.The new/modified guidelines shall make the Company more competitive and provide a thrustfor the business.

Considering that 'REC' has become a Brand that is recognized by public at large inIndia and abroad your Company has initiated the process for aligning its name to reflectits current mandate and activities. Accordingly we have initiated the process forchanging the name of our Company from "Rural Electrification CorporationLimited" to "REC Limited" subject to the requisite approvals. Your Companyis also in the process of widening the scope of its Objects for harnessing new businessopportunities emerging in the Power sector.

Further in order to secure improved operational efficiency and to reap the benefits ofhigher capital base and pooled resources we have initiated the process to effect mergerof REC Power Distribution Company Limited (RECPDCL) and REC Transmission Projects CompanyLimited (RECTPCL) wholly owned subsidiary companies of your Company.


Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya): During the financial year2017-18 the Government of India notified Saubhagya with the objective of achievinguniversal household electrification in the country by providing last mile distributionnetwork and electricity connections to all households. On the date of launching thescheme October 11 2017 around 3.50 crore households that had remained un-electrifiedare targeted for providing electricity connections by December 31 2018. The Government ofIndia has designated our Company as the Nodal Agency for the Saubhagya scheme. In thiscontext our Company is supporting the Ministry of Power State Governments and theimplementing agencies with planning facilitation coordination capacity developmentmonitoring and reporting to ensure timely completion of the programme.

To expedite and monitor the electrification of households under Saubhagya a dedicatedweb portal ( has been developed which disseminates information aboutthe status of household electrification across the country in real-time. With the activesupport and cooperation of State governments Power Utilities and other stakeholders40.45 Lakh households were electrified upto March 31 2018 which have crossed the figureof 1.00 crore on August 5 2018 and the remaining will be electrified by December 312018. During the year under review grant/subsidy provided by Government of Indiaamounting to Rs 1541 crore was disbursed to the States/ Implementing Agencies under thescheme.

Deen Dayal upadhyaya Gram Jyoti Yojana (DDuGJY): is the flagship scheme of Governmentof India covering all aspects of rural power distribution supplementing the overallmanagement of rural power distribution for achieving Rs 24x7 Power for All' in the countrythrough defined project components that include inter-alia distributioninfrastructure strengthening feeder separation village and habitation electrification.REC has been the nodal agency for operationalization of the scheme. During the year underreview grant/ subsidy provided by Government of India of Rs 9028 crore was disbursed tothe States/ Implementing Agencies under the scheme.

Village Electrification: The Hon'ble Prime Minister in his address on Independence Day- August 15 2015 announced that the remaining 18452 Un-Electrified (UE) villageshowever remote and inaccessible they might be would be electrified within 1000 days.Accordingly the Ministry of Power had taken up the task of electrification of allun-electrified villages and assigned the task of coordination and monitoring ofelectrification work to REC.

Your Company has devised rigorous intensive monitoring mechanism under which the entirevillage electrification process was divided into 12 milestones and an online web-portal( ) viz. 'GARV App' was developed for transparent and accountablemonitoring of the progress of village electrification. For the successful and fastcompletion of assigned task electrical engineers viz. ‘Gram Vidyut Abhiyantas'(GVA) were appointed at block/district level.

During the financial year 3736 un-electrified villages were electrified and freeelectricity connections were provided to 50.41 Lakh households. Further April 28 2018has been marked as a historic day in the Indian Power Sector on achieving electrificationof all inhabited census villages in the country.

DISCOM Assurance Yojana (uDAY): The Government of India in financial year 2015-16announced ‘Ujwal DISCOM Assurance Yojana' that aims at financial turnaround andrevival of Power Distribution Companies and to ensure sustainable solution to thefinancial constraints of DISCOMs through defined initiatives viz. improvingoperational efficiencies of DISCOMs; reduction of cost of power; reduction in interestcost of DISCOMs; and enforcing financial discipline on DISCOMs through alignment withstate finances.

Your Company has been supporting the Ministry of Power (MoP) for effective monitoringof UDAY scheme and has established a state-of-the-art web-portal and an online App formonitoring the performance of State DISCOMs. This has resulted in transparency andaccountability leading to improvement in the operational efficiency and cost-effectivenessof DISCOMs.

As on March 31 2018 16 comprehensive and 16 operational MoUs have been signed amongstPower Utilities States/UTs and the Ministry of Power Government of India. Under thescheme the States/DISCOMs have issued bonds for Rs 2.32 Lakh crore and DISCOMs have savedmore than Rs 20000 crore of interest cost. The other significant positive results aredeclining gap between ACS and ARR and reduction in average AT&C losses of UDAY States.


Our Company has been according highest importance to capacity building and well-beingof its employees. It is well equipped with high-value human resources that is sine quanon for meeting the emerging challenges and harness the opportunities. During theyear there was no loss of man-days because of industrial unrest. Further there have beenregular interactions and open-house sessions between the management and the employeeswhich has helped in building an atmosphere of trust and cooperation thereby contributingto a motivated work force and consistent growth in organizational performance. REC alsoendeavours to recruit fresh talent with requisite skills and competencies as may berequired for future.


During the financial year 2017-18 your Company has implemented digital office solutionacross all offices of the Company since January 2018. Further your Company has alsomigrated to the latest version of Business ERP in July 2018. Your Company is fullycompliant with the RBI Master Directions - IT Framework for NBFC sector and alsofacilitates & promotes the IT initiatives of Government of India like MyGove-Governance DPE guidelines on digital mode of payments etc. within the Company. Otherinitiatives of your Company during the year include revamping of the entire network andcommunication infrastructure corporate website and development of various in-houseapplications including for effective monitoring of implementation of DDUGJY Saubhagya andother schemes. In addition information technology based management information system isbeing implemented in REC Foundation.


REC Institute of Power Management and Training (REC-IPMAT) continues to cater to thetraining and development needs of engineers and managers of Power Sector. It has conductednumerous training programmes on Power Generation Transmission Distribution Renewableenergy and other industry relevant subjects. Further the National Institute of SolarEnergy (NISE) has empanelled REC-IPMAT as the partner-training institute for conductingSolar Energy Programmes. REC-IPMAT has been training power sector professionals from theAfrica and Middle East regions in the spirit of south-south co-operation.


As a responsible corporate citizen REC has been actively pursuing various initiativeson the CSR front for Sustainable Development of the regions and communities in need ofeconomic and financial support. During the financial year 2017-18 the Company hassanctioned total financial assistance of Rs 167 crore towards CSR activities/projects inthe fields of skill development education environmental sustainability health care(including persons of old age and persons with disabilities) drinking water andsanitation facilities etc. against allocated CSR budget of Rs 162 crore and total amountof Rs 49 crore was disbursed.

Our Company has established REC Foundation to channel CSR funds and has strengthenedthe human resources capacity of the Foundation for effective management of the social andeconomic development initiatives. The Foundation has collaborated with the United NationsPopulation Fund (UNFPA) North East Council (NEC) and International Fund for AgriculturalDevelopment (IFAD) financed North East Resource Management Project to leverage theirknowledge capacity and presence in the community to maximise development impact. TheFoundation has stepped up its efforts to promote holistic sustainable development in theNorth East India and the Aspirational Districts of other States. REC Foundation has beenin discussions with other national and international development agencies like GlobalInnovation Fund (GIF) WISH Foundation etc. for supporting innovation in social andeconomic development arena.

Besides your Company has organized various programmes to spread awareness among thegeneral public about Swachh Bharat and socio-economic development. All employees of REChave been participating with great enthusiasm and zeal in various social developmentactivities and have taken proactive action in promoting cleanliness drive. Your Companyhas organized Nukkad Nataks in different locations across Delhi to spread awarenessabout hygiene and sanitation and waste management by encouraging people to participate in 'SwachhtaHi Seva' campaign.


Your Company is committed to the highest standards of Corporate Governance and believesin adopting and adhering to the best corporate governance practices. All measures aretaken to conduct the business in an ethical and responsible manner with the soleobjective of sustainable value creation for all Stakeholders within the prevalentregulatory framework. As a listed Public- Sector Enterprise your Company has beencomplying with all the applicable provisions related to Corporate Governance as stipulatedunder Companies Act SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 DPE Guidelines and other applicable laws.


REC's performance has been rated "Excellent" against the Memorandum ofUnderstanding (MoU) signed with the Ministry of Power Government of India for the FY2016-17. This is the 24th year in succession that REC has received "Excellent"rating.

During the year under review the Company has been conferred with the 'Certificate ofRecognition for Excellence in Corporate Governance' by the Institute of CompanySecretaries of India (ICSI) at the Rs 17th ICSI National Awards for Excellence inCorporate Governance' in recognition of its continuous efforts and innovative practicesin promoting good corporate governance. Further REC has also received the 'Governance Now5th PSU Award' 'CBIP Award for Best Power Financing Company' and 'SCOPE Award forExcellence and Outstanding Contribution to the Public Sector Management' for the year2016-17.


The Company has the following two wholly owned subsidiaries for consultancy services inthe areas of transmission distribution bid process transaction advisory servicesproject management project implementation quality assurance project monitoring etc.:

• REC Transmission Projects Company Limited (RECTPCL); and

• REC Power Distribution Company Limited (RECPDCL).

RECTPCL acts as the "Bid Process Coordinator" for selection of TransmissionService Provider(s) through Tariff Based Competitive Bidding (TBCB) process forindependent inter-state and intra-state transmission projects assigned by the Ministry ofPower and State Governments and has established six Project Specific Special PurposeVehicles (SPVs) for such transmission projects by the end of the year. During thefinancial year 2017-18 RECTPCL generated an income of Rs 53 crore and earned a Net Profitof Rs 35 crore. It's Net worth on March 31 2018 was Rs 177 crore.

RECPDCL's core business includes preparation of detailed project reports third partyinspection material inspection and project management consultancy services technicalassistance technology transfer capacity development etc. RECPDCL is also monitoring thevillage electrification works under DDUGJY During the financial year 2017-18 RECPDCLachieved a total revenue of Rs 207 crore and earned net profit of Rs 37 crore. Furtherit's Net worth as on March 31 2018 was Rs 180 crore.

Your Company along with three other power sector PSUs as partners has a JointVenture Company by the name Energy Efficiency Services Limited (EESL) Super EnergyService Company (ESCO). EESL acts as the resource centre for capacity building for StateDISCOMs Energy Regulatory Commissions State Development Authorities upcoming ESCOsfinancial institutions etc. and to create and sustain market access to energy efficienttechnologies particularly in the public facilities like municipalities buildingsagriculture industry etc. and to implement several schemes of Bureau of EnergyEfficiency.

As on date REC holds 21.70% of the paid-up equity share capital of Energy EfficiencyServices Limited. Presently EESL is implementing world's largest non-subsidy-based LEDlighting programme i.e. UJALA for distribution of LED bulbs LED tube lights andenergy-efficient fans to domestic consumers besides many other programmes/initiatives.The performance of EESL during the financial year 2017-18 is on the growth path as thecompany has generated total revenue from operations of Rs 1411 crore and earned NetProfit of Rs 39 crore.


The Power sector scenario in the country is poised for a paradigm shift with increasedfocus on renewable energy power generation energy conservation energy efficiencyefficiency in transmission and strengthening of the distribution sector and overall reformof the power sector management in order to make it more responsive and responsible to theconsumer demand. As a result newer business opportunities are emerging in the Powersector albeit with increased competition from banks financial institutions and otherNBFCs. With a view to effectively meet the challenges/ competition and to harness theopportunities in India and abroad your Company is actively scouting for viableparticipatory avenues.

Retiring the old thermal generation plants tailoring the existing thermal plants incompliance with the new environmental regulations massive expansion in the renewableenergy space harnessing hydropower potential in the North East and Himalayan regionsinvestment in strengthening transmission and distribution infrastructure automation ofthe distribution network through establishment of smart distribution management systemswill provide further business opportunities to your Company. The state/ power utilitiesbeing one of the major stakeholders of REC's business are also taking new initiatives indeveloping renewable energy sector like solar roof top programmes electric vehiclescharging infrastructure smart city projects energy efficiency devices etc. Your Companyis closely working with all the stakeholders to harness these investment opportunities.Further our Company also intends to partner with various other power sector participantsto diversify and achieve synergies in business operations.


The Indian Power Sector is poised for major transformation with notification ofNational Electricity Policy National Tariff Policy Renewable Energy Policy NationalHydro Policy implementation of SHAKTI rationalization of coal linkages etc. Totranslate its vision of Power for All (PFA) the Government has launched major flagshipprogrammes - Deen Dayal Upadhyay Gram Jyoti Yojana Integrated Power Development SchemePradhan Mantri Sahaj Bijli Har Ghar Yojana etc. These programmes are under vigorousimplementation in mission mode to ensure access to affordable quality power to allcitizens.

Endless energy. Infinite possibilities.

In addition the Government has undertaken a slew of reforms such as emphasis onvillage and household electrification promotion of renewable sources of energy specificmeasures for grid stability and scheduling establishment of green corridors operationaland financial turnaround of DISCOMs through UDAY specific measures for scheduling andgrid stability and digital interventions through various apps such as URJA MITRA GARVTARANG etc. Rationalization of tariffs under GST and restructuring of stressed assetsunder Insolvency and Bankruptcy Code setting up of dedicated freight corridors andincreased public investment in infrastructure hold great potential for future of powersector in the country.

Besides a plethora of newer business opportunities are also coming up in the powersector with emerging role of new technologies such as electric vehicles energy savingdevices power storage devices smart metering smart T&D systems smart city projectsand/or other projects involving integration of Information and Communication Technology(ICT) and Internet of Things (IoT) technology. Further the focus on renewable energy andmassive investment in the strengthening of transmission and distribution infrastructureare likely to increase the penetration of electricity in the country thereby driving thedemand upwards.

With the increasing emphasis of the Government to ensure affordable and quality powerfor all citizens of the country there is a vast potential for increase in powerconsumption not only in the domestic segment but also because of expansion in ruralenterprise development employment creation and overall dynamism in the economy. FurtherREC plans to collaborate with all stakeholders to diversify its business and foray intonewer and related avenues across the segment.

However there has been some stress in the conventional power generation capacity inthe country due to various reasons such as lack of Power Purchase Agreements/Fuel SupplyArrangements/ transmission connectivity regulatory issues promoter inefficiencies andweak financial health of DISCOMs. Due to sectoral issues of power sector the resolutionplans under IBC framework are likely to be sub-optimal. Accordingly your Company hasfinalised advanced action plan to collaborate with other power sector players to warehousesuch assets set up an Asset Management and Revitalization Company (PARIWARTAN) totakeover and revive such assets in order to optimize the value for the lenders.

With the magnitude of funds being provided to the States under the ongoing CentralGovernment schemes for strengthening their power infrastructure and the proactive stepstaken to remove the bottlenecks the scenario for the Power Sector looks highlyoptimistic. REC plans to enter the newer avenues not just as a funding partner but wouldalso like to play a larger role as an implementing agency and provider ofproducts/services. REC is closely following the market to identify and analyse the ongoingand upcoming challenges in order to launch appropriate measures to maximize itsshareholders' value. Our Company is also exploring financing and development opportunitiesin the overseas market.


I take this opportunity to thank the Hon'ble Minister of State (Independent Charge) forPower and New & Renewable Energy the Secretary Additional Secretary JointSecretaries and other Officials of the Ministry of Power for their support and guidanceto the Company. I would also like to thank the officials of the NITI Aayog Ministry ofFinance Ministry of Corporate Affairs DIPAM DPE RBI SEBI Stock Exchanges andDepositories for their continued cooperation. Further I am also grateful to theComptroller and Auditor General of India Statutory Auditors Secretarial AuditorsRegistrars and other professionals associated with the Company. Above all I wish to thankour investors lenders and borrowers especially the State Governments power utilitiesand the private entrepreneurs for reposing their trust in REC.

Last but not the least I am grateful to my esteemed colleagues on the Board and to allemployees of REC for their untiring efforts.

I am confident that with your cooperation and with the dedicated efforts of Team RECwe will grow from strength to strength in the times ahead.

With warm wishes
P V Ramesh
Chairman and Managing Director
August 23 2018 (DIN: 02836069)