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REC Ltd.

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






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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) - Director Report

Company director report


The Shareholders

Your Directors have pleasure in presenting the Forty Ninth Annual Report together withthe Audited Financial Statements of your Company for the financial year ended March 312018.


1.1 The highlights of performance of the Company for the financial year 2017-18 were asunder with comparative position of previous year's performance:

(Rs in crore)

Parameter FY 2017-18 FY 2016-17
Loans Sanctioned 107534.05 83870.82
Disbursements 61712.47 58038.61
Subsidy under DDUGJY (including DDG) & Saubhagya 10568.72 8037.54
Total Recoveries (including interest) 46351.13 46747.17
Total Operating Income 22358.27 23587.30
Profit Before Tax 6852.09 8860.70
Profit After Tax 4647.00 6245.76

1.2 Financial Performance

The total operating income of your Company for the financial year 2017-18 was Rs22358.27 crore as compared to Rs 23587.30 crore during the financial year 2016-17. Theprofit after tax for financial year 2017-18 was Rs 4647 crore as compared to Rs 6245.76crore for the financial year 2016-17.

Gross Loan asset book of your Company as on March 312018 was Rs 239449.34 crore ascompared to Rs 201928.67 crore in the previous year. The outstanding borrowings as onMarch 31 2018 was Rs 198791.51 crore.

Earnings Per Share (EPS) for the financial year ended March 312018 was Rs 23.53 pershare of Rs 10/- each. Net worth of the Company as on March 31 2018 has increased by 6%to Rs 35491 crore from Rs 33326 crore.

1.3 Dividend

The Board of Directors of your Company has recommended final dividend of Rs 1.75 pershare for the financial year 2017-18 which is subject to approval of the Shareholders inthe 49th Annual General Meeting. This is in addition to the interim dividend of Rs 7.40per share for the financial year 2017-18 paid in February 2018. The total dividend forthe financial year 2017-18 will work out to Rs 9.15 per equity share representing 91.50%of the paid-up share capital of the Company as against Rs 9.65 per share representing96.50% of the paid-up share capital of the Company in the previous year. The totaldividend pay-out for the financial year 2017-18 will amount to Rs 1807.05 crore(excluding dividend distribution tax).

1.4 Share Capital

As on March 31 2018 the Authorized Share Capital of the Company was Rs 5000 croreconsisting of 500 crore equity shares of Rs 10/- each and the issued & paid up sharecapital of the Company was Rs 1974.92 crore consisting of 1974918000 equity shares ofRs 10/- each.

The President of India acting through Ministry of Power Government of Indiadivested/sold 10825689 equity shares i.e. 0. 54% of total paid up capital of theCompany on November 23 2017 through off market sale of shares under 'Bharat 22 ExchangeTraded Fund'. Accordingly as on March 31 2018 the President of India held1151678783 equity shares 1. e. 58.32% of the paid up equity share capital of theCompany.

Further during the financial year 2018-19 the President of India acting throughMinistry of Power Government of India divested/sold 6473244 equity shares i.e. 0.33% oftotal paid up capital of the Company on June 18 2018 through off market sale of sharesunder 'Bharat 22 Exchange Traded Fund'. Accordingly as on date the President of Indiaholds 1145205539 equity shares i.e. 57.99% of the paid up equity share capital of theCompany.

1.5 Change of Name of the Company

Considering that 'REC' has become a brand name and is recognized by public at large inIndia & abroad and to correctly display the remarkable presence of your Company infinancing all segments of Indian Power Sector viz. generation transmissiondistribution renewable energy etc. and to remove the myth that the Company is mainlyinto the business of rural electrification the Board of Directors of the Company in itsmeeting held on May 28 2018 had proposed change of the name of the Company from"Rural Electrification Corporation Limited" to "REC Limited" subjectto the approval of shareholders and other approvals as may be required.

Further Ministry of Power Government of India vide letter dated August 9 2018 hasaccorded approval for change of name of the Company to "REC Limited".


The Company sanctioned loans worth Rs 107534.05 crore during the financial year2017-18 as against Rs 83870.82 crore in the previous year. The state-wise andcategory-wise break-up of loans sanctioned during the financial year are given in Table-1and Table-2 respectively. The cumulative sanctions upto March 31 2018 made by yourCompany since its inception was Rs 872884.10 crore as detailed in Table-3.

3. disbursements

A total sum of Rs 61712.47 crore was disbursed during the financial year 2017-18 asagainst Rs 58038.61 crore in the previous year. In addition to that grant/subsidy of Rs10568.72 crore {'9028.09 crore (including Rs 262.60 crore under DdG) under DDUGJY and Rs1540.63 crore under Saubhagya scheme} provided by Government of India was disbursed tothe States/ Implementing Agencies. The cumulative amount disbursed since inception up toMarch 31 2018 was Rs 449289.49 crore excluding subsidy under Government programmes. Thestate-wise disbursements and repayment of loan by borrowers during the financial year2017-18 together with cumulative figures and outstanding as on March 31 2018 are given inTable-4.


4.1 The Company gives utmost priority to the timely realization of its dues towardsprincipal interest etc. The amount due for recovery including interest for performingassets during the financial year 2017-18 was Rs 46236 crore as compared to Rs 46298crore during the previous year. The Company recovered a total sum of Rs 45566 croretowards performing assets during the financial year 2017-18 as against Rs 45169 croreduring the previous year. The Company achieved recovery rate of 98.55% for the financialyear 2017-18. The overdues from defaulting borrowers pertaining to performing assets as onMarch 31 2018 was Rs 1762 crore. Further an amount of Rs 785.13 crore has beenrecovered from non-performing assets during financial year 2017-18 as against Rs 1578crore recovered during financial year 2016-17.

4.2 During the year under review RBI vide its circular dated February 12 2018 hasnotified Revised Framework for Resolution of Stressed Assets which per se was notapplicable to REC being an NBFC. However as a matter of prudence loans amounting to Rs9591 crore have been classified as Non-performing Assets (NPAs) during the year in linewith the above circular.

Accordingly as on March 31 2018 the Gross NPAs were Rs 17128 crore (7.15% of LoanAssets) and the Net NPAs were Rs 13612 crore (5.68% of Loan Assets). However the GrossNPAs were Rs 7537 crore (3.14% of Loan Assets) and the Net NPAs were Rs 4980 crore(2.07% of Loan Assets) without considering the impact of the above RBI circular. Furtherno doubtful loans have been rescheduled by the Company during the financial year 2017-18.

The details of loans rescheduled during the financial year 2017-18 and their positionas on March 31 2018 are as under:

(Rs in crore)

Particulars FY 2017-18 FY 2016-17
Standard Loans No. of Borrowers 8 19
Amount Outstanding 12677.10 27784.80
Sub-Standard Loans No. of Borrowers 1 0
Amount Outstanding 1970.18 0
Total No. of Borrowers 9 19
Amount Outstanding 14647.28 27784.80


5.1 Summary of Financial Results

The summary of audited financial results of the Company for the financial year 2017-18vis-a-vis 2016-17 is given as under:

(Rs in crore)




FY 2017-18 FY 2016-17 FY 2017-18 FY 2016-17
Revenue from Operations 22358.27 23587.30 23054.42 24194.92
Other Income 82.04 183.28 46.98 166.31
Total Income 22440.31 23770.58 23101.40 24361.23
Finance Costs 13829.52 13450.35 13859.59 13461.59
Other Operating Expenses 343.15 350.06 879.51 816.97
Provisions and Contingencies 1415.55 1109.47 1421.06 1110.31
Total Expenses 15588.22 14909.88 16160.16 15388.87
Profit Before Tax 6852.09 8860.70 6941.24 8972.36
Provision for Taxation 2205.09 2614.94 2251.78 2658.99
Profit After Tax 4647.00 6245.76 4689.46 6313.37
Add: Opening Balance of Surplus account 8714.47 6706.34 9001.69 6932.34
Less: Adjustment of MTM in respect of Interest Rate Swaps - 86.75 - 86.75
Add: Other Adjustments during the year - - 2.26 1.72
Amount available for appropriation 13361.47 12865.35 13693.41 13160.68
Less : Appropriations
Transfer to Special Reserve u/s 36(1)(viii) of the Income Tax Act 1961 1582.49 1881.06 1582.49 1881.06
Transfer to Reserve for Bad & Doubtful Debts u/s 36(1)(viia) of the Income Tax Act 1961 335.80 413.33 335.80 413.33
Dividend 1984.79 1382.44 1984.79 1382.44
Dividend Distribution Tax 397.88 277.46 405.78 277.46
Transfer to Debenture Redemption Reserve 196.59 196.59 212.64 201.20
Transfer to General Reserve 500.00 - 500.00 3.50
Surplus carried over to Balance Sheet 8363.92 8714.47 8671.91 9001.69

The figures of dividend and dividend distribution tax does not include the respectiveamounts pertaining to Final Dividend for the financial year 2017-18 (as detailed in para1.3 above) considering that the Company is not required to make any provision in thisregard in terms of Revised Accounting Standard 4.

5.2 Contribution to National Exchequer

During the financial year 2017-18 your Company contributed an amount of Rs 3764.93crore as compared to Rs 4097.79 crore in the previous year to National Exchequer in theform of payment of Dividend to the Government of India against its shareholding in theCompany Dividend Distribution Tax Direct Taxes IGST & CGST and Service Tax paidincluding CENVAT credit as detailed below:

(Rs in crore)

Particulars FY 2017-18 FY 2016-17
Dividend paid to the Government of India 1160.30 1126.05
Dividend Distribution Tax 397.88 379.98
Direct Taxes 2166.70 2546.34
IGST and CGST 23.50 -
Service Tax paid including CENVAT credit 16.55 45.42
Total 3764.93 4097.79

5.3 Ratio Analysis

A comparative statement of important ratios of the Company for the financial year2017-18 vis-a-vis 2016-17 is as below:

Particulars FY 2017-18 FY 2016-17
Earnings Per Share (') 23.53 31.63
Return on Average Net Worth (%) 13.51 20.17
Book Value per Share (') 179.71 168.75
Debt Equity Ratio (times) 5.60 5.03
Price Earnings Ratio (times)* 5.30 5.72
Interest Coverage Ratio (times) 1.50 1.64

*PE Ratio has been calculated on the basis of Closing Price of equity share of REC atNSE as on March 28 2018 & March 31 2017 respectively.

5.4 Resource Mobilization

The Company mobilized Rs 51164.89 crore from the market during the financial year2017-18. This comprised of Rs 9565.50 crore (includes Rs 1469.23 crore towards BondsApplication money) by way of Capital Gain Tax Exemption Bonds and Rs 26145 crore by wayof Institutional Bonds. The Company also mobilized funds of Rs 15454.39 crore equivalentto USD 2293.37 million [USD 1807.50 million from external commercial borrowing and USD485.87 million from FCNR(B)] during the financial year 2017-18. Further in addition toabove an amount of Rs 12114.85 crore was also raised through Commercial Paper.

Further for meeting Government of India's funding requirement of DDUGJY Scheme theCompany during the year has also raised an aggregate amount of Rs 4000 crore throughInstitutional Bonds on private placement basis. The repayment of principal and interest ofthese bonds shall be made by Government of India by making suitable budget provisions inthe demand of Ministry of Power.

Disclosure of Green Bonds issued by REC

During the financial year 2017-18 REC became the first PSU to raise USD 450 millionGreen Bond for a tenor of ten years which witnessed a phenomenal response from investorsacross Asia and Europe with oversubscription of 6.7 times ($3.01 Billion offer for a bookof $450 Million). These bonds are a step towards realization of the Hon'ble PrimeMinister's vision of harnessing green energy's enormous potential in the country and toachieve the targeted capacity of 175 GW by 2022. The Green Bonds are listed on theInternational Securities Market (ISM) segment of London Stock Exchange and also onSingapore Stock Exchange.

KPMG India has provided its post-verification Independent Assurance Report based onthe Green bond framework of REC and the same has also been certified by the Climate BondsStandard Board of Climate Bond Initiative on July 17 2018.

Use of Proceeds: The proceeds have been utilized to finance Solar Wind and RenewalPurchase Obligations including refinancing of eligible projects as defined in the GreenBond framework of REC contributing to positive environmental impact and alsostrengthening India's energy security by reducing fossil fuel dependency.

REC has created a 'Green Portfolio' which was managed through a well laid internaltracking system updated on regular basis to monitor establish and account for theallocation of the proceeds for such Green Portfolio.

Management of Proceeds: Pending the full allocation to Eligible Green Projects balanceof the proceeds during intervening period were invested in instruments permitted as perthe Green Bond Framework.The net proceeds from the Bonds amounting to Rs 2894 crore wereallocated against the following projects as on March 31 2018:

(Rs in crore)

Sl. No. Location Capacity (in MW) Loan sanction date Loan sanction Amount Outstanding Amount on March 31 2018
1. Telangana 45 September 9 2016 269.50 267.22
2. Telangana 30 September 9 2016 179.62 177.42
3. Karimnagar Telangana 15 November 11 2016 89.84 88.80
4. Chitradurga Karnataka 10 January 27 2016 53.81 50.22

(Rs in crore)

Sl. No. Location Capacity (in MW) Loan sanction date Loan sanction Amount Outstanding Amount on March 31 2018
5. Warangal Telangana 15 November 11 2016 89.84 89.05
6. Andhra Pradesh 500 February 24 2016 2480.00 240.66
7. Karimnagar Telangana 15 November 11 2016 89.84 88.77
8. Anantpur Andhra Pradesh 5 February 9 2015 24.45 22.28
9. Telangana 30 September 21 2016 179.62 177.03
10. Kadapa Andhra Pradesh 50 April 12 2017 277.50 225.00
11. Randa Reddy Telangana 5 January 27 2016 26.90 26.90
12. MansaPunjab 50 September 22 2016 242.84 236.44
13. Medak Telangana 7 November 26 2015 39.90 38.57
14. Nizamabad Telangana 15 November 11 2016 89.84 88.43
15. Andhra Pradesh 23 February 24 2016 140.00 57.15
16. Kadapa Andhra Pradesh 50 April 12 2017 277.50 224.01
17. Karimnagar Telangana 15 November 11 2016 89.84 88.79
18. Nirudanagar Tamil Nadu 5 July 14 2015 26.13 24.50
19. Chitradurga Karnataka 30 April 17 2017 150.39 150.39
20. Kadapa Andhra Pradesh 50 April 12 2017 277.50 225.00
21. Mansa and Sangrur Punjab 50 May 21 2016 169.69 157.57
sub-total (A) 5264.55 2744.20
1. Sangli Maharashtra 10 February 24 2015 47.09 44.79
2. Mandasaur Madhya Pradesh 20 January 28 2016 86.63 76.41
3. Tirpur Tamil Nadu 6.8 June 6 2012 26.16 21.15
sub-total (B) 159.88 142.35
Renewable Energy Obligation (RPO)
1. Maharashtra RPO July 24 2017 500.00 500.00
2. Maharashtra RPO September 21 2017 1000.00 1000.00
sub-total (C) 1500.00 1500.00
GRAND TOTAL (A+B+C) 6924.43 4386.55

Cash Credit Facilities

The Company has an approved cash credit/WCDL/OD limit of Rs 9590 crore for availmentfrom various banks for its day-to-day operations.

5.5 Domestic and International Credit Rating Domestic

The domestic debt instruments of REC continued to enjoy "AAA" rating - thehighest rating assigned by CRISIL CARE India Ratings & Research & ICRA-CreditRating Agencies.


REC enjoys international credit rating of "Baa3" and "BBB-"respectively from Moody's and FITCH International Credit Rating Agencies.

5.6 Cost of Borrowing

The overall weighted average annualized interest rate of borrowing for the funds raisedduring the financial year 2017-18 was 6.17% p.a. and for the borrowings outstanding as onMarch 31 2018 is 7.53% p.a. As a result your Company was able to deliver debt financingat competitive rates.

5.7 Redemption and Pre-Payment

During the year the Company repaid a sum of Rs 23210.86 crore. This includesrepayment amounting to Rs 10813 crore to Institutional bondholders Rs 5337.78 croreworth of Capital Gain Tax Exemption Bonds Rs 1.175 crore towards Infrastructure Bonds Rs6720.78 crore of external commercial borrowings and Rs 338.12 crore of OfficialDevelopment Assistance (ODA) loan. The Company has also redeemed long term loan of Rs 350crore and Commercial Papers of Rs 9100 crore.

5.8 Financial status at the close of the year

At the close of the financial year 2017-18 the total resources of your Company stoodat Rs 246484.46 crore. Out of this Equity Share Capital contributed Rs 1974.92 croreReserves and Surplus stood at Rs 33515.59 crore Loans from Financial InstitutionsCommercial Banks and market borrowings through Bonds and Commercial Papers accounted forRs 198791.51 crore Deferred Tax Liabilities of Rs 66.96 crore and other liabilities& provisions stood at Rs 12135.48 crore. These funds were deployed as Long / ShortTerm Loans of Rs 235933.05 crore (net of provisions of Rs 3516.27 crore) fixed assets(net of depreciation) of Rs 247.88 crore (including Capital Work in progress) Investmentsof Rs 2574.80 crore Cash & Bank Balances of Rs 1773.53 crore (includes Rs 1469.23crore towards Bonds Application money) and other assets of Rs 5955.20 crore.

5.9 Policy Initiatives

The Company constantly reviews its policies/ procedures from time to time to suitablyalign with market requirements and also with its corporate objectives and applicablestatutory requirements. During the year your Company has adopted / amended variouspolicies and guidelines such as policy for advancing Short Term Loans to private sectorborrowers; updation of Appraisal Guidelines in respect of Private Sector Conventional& Renewable projects; rationalization of Post-COD interest rate and modification ofinterest rate reset period for Renewable Energy projects; Comprehensive Risk ManagementPolicy along with project and other risk categorization frameworks; REC policy forinvestment of Short Term Surplus funds; Succession Planning for key positions;Modification of REC Long Term Investment Policy; New Grading Model and Exposure Norms forState Power Utilities; etc. The new/modified guidelines shall make the Company morecompetitive and provide a thrust for the business.

Despite growing competition in the market the Company has been able to maintainhealthy spreads balancing its objectives of business growth and profitability during theyear.


To provide reliable power supply to consumers and integration of upcoming RenewableEnergy Sources with the Electricity grid.

The installed generation capacity of Central State as well as Private utilities of thecountry is now a high of 344 GW as on March 31 2018 as per Central ElectricityAuthority. Further enormous capacities are planned to be added through renewable sourcesof energy with the ambitious goal of 175 GW by 2022. This itself seems fraught with manyrisks emanating from increasingly lower tariffs from each subsequent bidding low costfinancing tie-ups etc. However the setting up of dedicated Solar Parks along with makingavailable

Transmission and Distribution (T&D) industry is poised at the cusp keeping in viewthe ongoing policy initiatives to make the sector reliable healthy affordable andcapable of absorbing the envisaged future growth vis-a -vis capacity addition and reachingthe last mile across the Country. The Policy framework has been able to increase theresolve of State Governments

Bus Bar Arrangement of 400 kV Suryapet Sub-station in Telangana State financed by REC

all major clearances like land transmission connectivity raising the Limit ofRenewable Purchase Obligation (RPO) etc. by the respective Central / State Governmentagencies has mitigated these risks to a great extent. The above shall pose requirement forplanning in line with upcoming renewable energy capacity developments and creation ofinfrastructure to ensure system availability with relatively shorter gestation period.Accordingly dedicated Green Transmission Corridors are being planned along withstrengthening / augmenting the transmission system to take care of such supply / loadingpattern.

Transmission & Distribution system basically consists of Transmission lines(inter-state and intra-state) Sub-stations Switching Stations Transformers andDistribution lines etc. at various voltage levels. Distribution is the weakest but centralpart of the entire power value chain and most difficult to deal with due to variousreasons. As the only interface between utilities and consumers it is the cash registerfor the entire sector. Therefore the ever-increasing demand for affordable reliable andquality power by various classes of consumers makes Distribution Sector all the morechallenging task to manage. Proper planning for further transmission and distributionsystem development in this light and that the energy from different sources some of whichmay have a largely intermittent nature viz. energy from Renewable Sources - SolarWind Tidal and biomass etc. has become even more pertinent.

Further providing unconstrained inter-regional power transfer open accessavailability and maintaining the grid discipline reliably are the primary requirements.The task of regulating and reliably maintaining it is taken care of by five RLDCs and NLDCthrough state-of-the-art unified load dispatch & communication facilities.

As a part of Government of India plan to connect 250000 Gram Panchayats (GP) in thecountry BharatNet project has been taken up with the task of development and maintenanceof the National Optical Fibre Network in States namely Andhra Pradesh TelanganaHimachal Pradesh Jharkhand and Odisha.

Accordingly the TRANSCOs and DISCOMs need to create the infrastructure and enhancetheir capital expenditure during forthcoming years to be able to provide reliable robust& efficient system for transfer of power from generation facilities to sub-stationsand up to the consumer end.

Smart technology interventions have been taken up for making the System sturdier suchas implementing Synchrophasor Technology in its Wide Area Measurement System (WAMS)Project through installation of PMUs (Phasor Measurement Units) at different locations inall regions across the country for facilitating better visualization and situationalawareness of the grid events such as grid robustness oscillations angle/voltageinstability system margin as well as decision support tools. The ultimate aim is to builda robust integrated grid network that will allow large transfers of power from one part ofthe country to another.

Your Company has always strived to play an active role in creation of newinfrastructure and augmentation/strengthening of the existing network. Your Companyencourages the DISCOMs to expedite various reform measures and to adopt best practicesincluding modernization and automation of systems/smart grid IT-enabled systems formetering and consumer services other technology interventions in the distribution sector& helps them in improving their operational and financial performance. Sincedistribution is gateway for all the revenue coming into the power sector it plays apivotal role in development and sustainability of the power sector and overall developmentof the country.

Distribution sector today faces major challenges like high level of accumulated losses& depleted net worth. The two together have affected the financial health of theDISCOMs adversely over the years. High AT&C losses limited capability to implementcapital expenditure plans delay in tariff order resulting in creation of regulatoryassets carrying cost of these regulatory assets lack of tariff rationalisation leadingto cross subsidy open access issues delay in release of subsidy by State Governmentdelayed revenue collection cycle etc. have caused a dent in their cash flows. The overallperformance of the State Distribution Utilities has been an issue of concern due to theabove factors. In the environment where Utilities are facing difficulty to keep themselvesafloat and meet the consumer expectations at the same time your Company today financesentire gamut of Distribution Projects broadly with the objectives of System Improvement& Augmentation loss 400/230/110 kV substation at Kanarpatty Tamil Nadu financedby REC. reduction measures IT-enabling consumer satisfaction etc. Your Company isalways ready to consider special dispensation/ requirements of DISCOMs based on theprudence/merit and sound appraisal mechanism. A dedicated Strategic Business Group hasbeen set up in the Company for this purpose.

Your Company is playing a pivotal role in partnering with Ministry of Power Governmentof India in all major initiatives and is committed to improve & turn around the PowerDistribution sector in the country by its involvement in programmes like DDUGJY &SAUBHAGYA NEF and other programmes viz. IPDS Ujwal DISCOM Assurance YojanaFinancial Restructuring Plan (FRP) Smart Grid Task Force etc. Your Company in light ofall these major interventions is optimistic that overall Distribution scenario wouldimprove and turnaround in times to come when the impact and outcomes of the aboveprogrammes in conjunction with the reform measures taken up by the respective States starttrickling in and transform the entire landscape of Distribution.

Increased demand of quality power to the end consumer needs a robust Transmission andDistribution Infrastructure. Therefore there is a requirement for huge investment in theTransmission and Distribution sector for development of new infrastructure in line withnew capacity addition to meet out additional demand and augmentation works including useof IT enabled systems to develop SMART grids.

Technological advancement in mobility including hybrid vehicles electric vehiclescharging stations with incentivized support of Central Government is also expected to openan entirely new investment opportunity in the area.

6.1 Major reforms in Distribution Sector

Government of India from time to time has made all efforts to ensure the overalldevelopment of the Sector by way of Electricity Act 2003 and various other policymeasures such as National Tariff Policy National Electricity Policy RuralElectrification Policy etc. to provide a comprehensive framework and also the blueprintfor Power Sector reforms. The Green shoots of operational and financial performance are anindication that the Distribution sector is headed in the right direction. The process ofun-bundling corporatization instituting regulatory commission etc. has already beencompleted in most of the States thus increasing their accountability and also providingmore autonomy to the DISCOMs. Further to spruce up the operational efficiencyDistribution Franchisees have been engaged in particular areas by some DISCOMs on case tocase basis. In the past decade Government of India has launched programmes to extend thebenefits to the ailing DISCOMs such as R-APDRP with an objective to strengthen theinfrastructure and to reduce the losses efforts for last mile connectivity and to releaseservice connections to BPL R-APDRP for undertaking improvements in urban pockets and tointroduce IT enabling of distribution systems and recently DDUGJY and IPDS. MoreoverUjwal DISCOM Assurance Yojana implemented by Government of India has come as an enablerfor Operational and Financial Turnaround of DISCOMs which would in long run help themimprove the quality & reliability of power supply. Further NEF - an Interest SubsidyScheme is also under implementation with objective to promote capital investment &expedite the reform process in Distribution sector. The financial outlay of DDUGJY andIPDS should provide considerable fillip to the pace of capital investments in distributionsector and strengthen the distribution backbone for absorbing the future growth pattern ofelectricity consumption both in rural and urban areas without putting additional strain onalready stressed balance sheets of DISCOMs. REC is the Nodal Agency for implementation ofDDUGJY & NEF scheme and is playing a key role in assisting the efforts of Governmentof India in implementation of UDAY also.

REC has been providing counterpart funding for a large number of R-APDRP projects whichaim to reduce the Aggregate Technical and Commercial (AT&C) losses considerably inurban areas. Also REC supports the funding requirement of the loan component under DDUGJYand IPDS programmes.

'Power for All' document signed by all States reflects the commitment across length andbreadth of the country to work towards achieving the very objective which seemedimpossible until recently. PFA document has enabled having projections of all the capitalexpenditure required by respective States in order to achieve 24x7 power for allincluding the Generation (Conventional / Non-Conventional) Transmission Distributionetc. and has thus brought forth the efforts required to achieve the same.

Your Company has been instrumental in development of 'Power for All' web-portal and isengaged in assisting Ministry of Power (MoP) in this endeavor. Your Company is alsosupporting these efforts by partnering with respective State Utilities in terms of makingavailable requisite financing as well as working with Central Government & StateGovernments to resolve issues if any for achievement of the objective.

MoP has devised Integrated Rating System for all the State DISCOMs in the country whichfacilitates realistic assessment of performance based on key defining parameters. Therating methodology enables the DISCOMs analyze their strengths & weaknesses andfacilitate a focused approach for improving upon their operational and financialperformance. It also aids in adoption of consistent approach by Banks/FIs whileconsidering funding proposals of Distribution Companies.

The introduction of Information & Communication Technology (ICT) in PowerDistribution sector shall enable the power system to become "SMART" &Near-real-time information would allow Utilities to manage the entire system as anintegrated framework actively sensing and responding to changes in power demand supplycosts quality of power etc. MoP is also working towards ensuring technologicalinterventions through introduction of Smart Grid and has already extended financialassistance to several pilot projects. Further to evolve a road map for implementation ofsmart grids in India MoP has constituted India Smart Grid Task Force (ISGTF) aninter-ministerial group. 14 Nos. Smart Grid Pilot Projects had been approved by MoP with50% Government of India funding to test various functionalities in Indian environment. Theobjectives of these Pilot projects cover - Power Quality Management (PQM) providingAdvanced Metering Infrastructure (AMI) Outage Management (OM) Peak Load Management (PLM)and also DG (Distributed Generation) & Micro Grid functionalities. Various Projectshave been undertaken for installation of smart meters in different cities under theNational Smart Grid Mission (NSGM). Consumers equipped with smart and updated informationwould be able to manage their consumption pattern according to their requirement. On theother hand meters having feature of real time communication with the Data Centre wouldadd to revenue as the power used earlier as theft would not go unnoticed. Furtherutilities would be able to map the individual consumers data based on important parametersviz. time of the day quality and quantum of consumption nature of Load Seasonalload pattern etc. for better Demand side management. The initiative would aid in movingtowards a Smarter Grid.

These projects are under various stages of implementation in the country. TheGovernment of India is promoting development of 100 smart cities which shall furtherthrow new financing opportunities in further adoption of technology and best practices inthe Distribution segment.

The two pronged mission of Government of India of facilitating power to all andimproving operational & financial performance of the utilities have already startedshowing results in terms of timely notification of tariffs by Regulator in many Statesfiling of MYT petitions claiming of Return on Equity in the ARR release of revenuesubsidy by State Government etc.

6.2 ujwal DISCOM Assurance Yojana

Financially stressed DISCOMs were incapable of supplying adequate power at affordablerates which has for long hampered the quality of life overall economic growth anddevelopment in the country. Efforts towards 100% village electrification and then 100%household electrification 24x7 power supply and clean energy cannot be achieved withoutundertaking adequate capacity building of DISCOMs. Moreover the issues of frequent poweroutages need earnest resolution for meeting national priorities like "Make inIndia" and "Digital India". Unresolved legacy issues with DISCOMs havehowever kept them trapped in vicious cycle with operational losses being funded by debt.Outstanding debt of DISCOMs had increased from about Rs 2.4 lakh crore at the end of2011-12 to about Rs 4.3 lakh crore in 2014-15. To ensure permanent resolution of all theselong standing as well as potential future issues the highly ambitious initiative ofMinistry of Power Government of India through Ujwal DISCOM Assurance Yojana (UDAY)launched in November 2015 is a path breaking reform for realizing the Hon'ble PrimeMinister's vision of affordable and accessible 24x7 power for all.

UDAY scheme empowers DISCOMs with the opportunity to break even in the next 2-3 yearsthrough initiatives viz. (i) improving operational efficiencies of DISCOMs; (ii)reduction of cost of power; (iii) reduction in interest cost of DISCOMs; and (iv)enforcing financial discipline on DISCOMs through alignment with State finances. This isanother decisive step furthering the landmark strides made in the Power sector over thepast two years with the sector witnessing a series of historic improvements across theentire value chain from improved domestic fuel supply situation to significant growth ingeneration capacity to substantial improvement in transmission capacity/reliability andconsumption.

The programme has already witnessed significant traction from various StateGovernments/DISCOMs and 32 States/UTs are now part of UDAY fold with 16 States(Jharkhand Chhattisgarh Rajasthan Uttar Pradesh Punjab Bihar Haryana Jammu &Kashmir Andhra Pradesh Madhya Pradesh Maharashtra Himachal Pradesh Telangana AssamTamil Nadu & Meghalaya) joining for comprehensive improvement and another 11 States& 5 UTs joining for operational turnaround. UDAY scheme is showing encouraging resultsas liabilities of DISCOMs of Rs 2.09 Lakh crore have been taken over by respective StateGovernments and additionally Rs 0.24 Lakh crore have been restructured/re-priced throughissuance of bonds; thus cleaning the balance sheets of DISCOMs and enabling them torestart the capital expenditure cycle while also enabling financially viable operations ofall power sector stakeholders i.e. DISCOMs TRANSCOs GENCOs IPPs Banks / FIs etc.

Your Company has been instrumental in development of UDAY Web Portal ( )and UDAY Mobile App which is a key enabler in achieving the major objectives outlinedunder the programme. Through Web Portal / Mobile App all the details with respect toperformance of DISCOMs are readily available vis-a-vis the planned trajectory underthe scheme. Accordingly any deviations in the performance get suitably highlighted forall stakeholders thus enabling DISCOMs to take corrective actions and others toappropriately access their condition. Also earlier the information about performance ofDISCOMs used to be very outdated and with UDAY Web Portal & Mobile App now theperformance of latest quarter is available largely within a gap of 1 to 3 months.

UDAY by encompassing all the key initiatives required to turnaround the sector is aprogramme not just for strengthening of DISCOMs but is keenly handling most of thecurrent as well as impending issues of the entire power sector by providing a centralplatform to participating States for taking up any and all of their concerns / issues withrelevant stakeholders. Further UDAY has undertaken to resolve coal rationalization issues& efficiency improvement of conventional generation segment through NTPC handholdingetc. ensuring better RPO compliance to promote non-conventional generation and lossreduction of transmission segment as well. Your Company is assisting the Government ofIndia to liaison with respective State Governments / Utilities to enable achievement ofall the objectives envisaged under the programme.

With UDAY implementation various participating States have in general witnessed thereduction in interest costs power purchase costs and improvement in operationalefficiencies which has led to significant reduction in their AT&C losses and ACS-ARRgap as compared to their last year performance thus enabling huge amount of savings onthis account. It is expected that in upcoming years the results of the initiative shallbecome more pronounced.

6.3 National Electricity Fund

REC is Nodal Agency for National Electricity Fund (NEF) - this is an interest subsidyscheme having provision of Rs 8466 crore (against interest subsidy) to be provided over14 years on loan disbursements amounting to Rs 25000 crore for distribution schemessanctioned during 2 financial years viz. 2012-13 and 2013-14. Ministry of PowerGovernment of India provide interest subsidy on loans disbursed to the State PowerUtilities Distribution Companies both in public and private sector to improve theinfrastructure in Distribution Sector. The Scheme is reform linked and interest subsidy of3% to 7% is payable to the DISCOMs on achievement of reform based parameters outlined inNEF Guidelines. During the financial year 2012-13 & 2013-14 NEF Steering Committeehas already approved projects of Rs 25000 crore to 25 DISCOMs in 15 States for takingbenefits under NEF. The utilities from the states of Andhra Pradesh Gujarat HaryanaKarnataka Madhya Pradesh Punjab Rajasthan Telangana Uttarakhand and West Bengal havealready benefitted from the interest subsidy of Rs 84.92 crore approved under the schemetill March 31 2018.

6.4 Urja Mitra

Urja Mitra is a distribution sector initiative of Ministry of Power Government ofIndia being implemented through your Company's subsidiary i.e. RECTPCL. Urja Mitra isfirst of its kind application which provides a central platform ( as well as mobile app) for State Power Distribution utilities todisseminate Power Outage information to urban/rural power consumers across India throughSMS/email/push notifications. Power Consumers across the nation shall have priorintimation of expected duration and cause of scheduled power outages and post faultintimation of unscheduled power outages duration. It also provides a platform to view realtime power outages in any part of the country lodge a complaint on power outages etc.Stakeholder connect is ensured by providing for vernacular mobile apps which can be usedby field staff to trigger power outage information/view ongoing outages/ take correctiveaction on outage complaints etc.

As on June 30 2018 data of around 16.30 crore Rural/Urban/Mixed feeder consumers of51 DISCOMs already linked on web portal and application live in 46 DISCOMs with consumerbase of approximately 14.10 crore. Further 53.97 crore power outage SMS were sent to theconsumers by June 30 2018.

6.5 11 kV Rural Feeder Monitoring Scheme

11kV Rural Feeder Monitoring is a distribution sector initiative of Ministry of PowerGovernment of India being implemented through your Company's subsidiary i.e. RECTPCL. Toget complete picture of the entire distribution network in the country and to ensureachievement of Rs 24x7 Power for All' it has been felt essential to capture real timesupply parameters of rural India and this can be achieved by monitoring theavailability/quality of power supply in rural areas of the country by capturing actualdistribution parameters i.e. Power supply outages and conducting feeder wise Energy auditand AT&C losses calculation. In order to meet this objective Rs 11kV Rural FeederMonitoring Scheme' has been introduced. Under the scheme rural feeders meter data shallbe acquired through modem and shall be sent to National Power Portal (NPP) to make itavailable for use of all stakeholders. This scheme targets to develop a self-sustainedindependent web based automated system for approx.

1.2 Lakh rural and agricultural feeders across the country by acquiring variousessential parameters of all the outgoing 11kV rural feeders & such 66/33 kV incomingfeeders from where 11kV rural feeders are emanating and making the information availableonline for all on public portal on real time basis for power supply monitoring alertsmeter data analysis information dissemination and energy audit.

The system would help in monitoring power supply proper planning decision support andtaking corrective actions on the business activities in addition to transparentlydisseminating power supply status. It would further facilitate consolidation of variousparameters downloaded from the meters installed on the feeders into a common database thusenabling generation of various MIS reports for analysis and action. As on June 30 2018almost 53000 Nos. of Modems in different DISCOMs have been installed. This is in additionto the already integrated 29000 Nos. of Rural Feeders to National Power Portal.


TARANG is a transmission sector initiative for its better monitoring being run underguidance from Ministry of Power through your company's subsidiary i.e. RECTPCL which hasdeveloped 'TARANG'- Transmission App for Real-Time Monitoring & Growth. TARANG is aninformative medium to provide information regarding Pan-India progress of TransmissionSystem which can be drilled down to month wise agency wise state wise etc. The detailsof stalled/delayed projects is separately provided with reasons of delay so that allconcerned stakeholders can take a corrective decision in time to drive benefits from thetimely completion of the projects. TARANG monitors the progress of transmission system inthe country both Intra State and Inter State Transmission Projects through Tariff BasedCompetitive Bidding (TBCB) as well as Regulated Tariff Mechanism.

TARANG also shows the prospective upcoming Intra-State as well as Inter-State Projectsalong with NITs being floated by different Transmission Utilities Pan-India. Tarangprovides advance information of upcoming transmission projects approved by EmpoweredCommittee on Transmission helping bidders to gear up future transmission projects.


Your Company has been providing funding assistance for power generation transmission& distribution projects including for the electrification of villages. Details ofmajor financing activities during the financial year 2017-18 are as under:

7.1 Generation

During the financial year 2017-18 your Company sanctioned 83 Nos. ofGeneration/R&M loans including 6 Nos. of additional loan assistance with totalfinancial outlay of Rs 53223.55 crore including consortium financing with other financialinstitutions as details mentioned below:

(Rs in crore)

Particulars No. of Loans Loan Amount
State Sector
Fresh Loan 77 45334.28
Additional Loan 6 7242.28
Private Sector
Additional loan 0 646.99
Total 83 53223.55

Director (Technical) REC receiving the CBIP award for Best Power Financing Company'.

7.2 Renewable Energy

During the year REC sanctioned loan assistance of Rs 7034.24 crore to 28 RenewableEnergy projects with installed generation capacity aggregating 704 MW out of which 17 arenew grid connected projects 4 projects are under micro grid under decentralizeddistributed generation projects 1 solar pump set project and 6 projects for meetingrenewable purchase obligations to state DISCOMs.

Out of new 17 grid connected projects 7 solar photo-voltaic projects aggregating 235MW 3 SHP Project of 64 MW 2 Wind projects of 352 MW and 5 Bagasse/Municipal Solid Wasteto Energy projects of 53 MW have been sanctioned. The total cost of all the projectssanctioned during 2017-18 aggregates to Rs 9453.42 crore. The sanctions and disbursementunder renewable energy category recorded a growth over 300% vis-a-vis the previousyear.

100 MW Wind Project of Ostro Dakshin Power Private Limited at Koppal Karnatakafinanced by REC.

The disbursement achieved during the year was Rs 5403.27 crore as detailed below:

Particulars unit FY 2017-18 FY 2016-17
Projects Sanctioned Nos. 28 16
Capacity of Sanctioned Projects MW 704 367
Cost of Projects

Rs in crore

9453.42 3035.53
Loan Sanctioned 7034.24 2089.77
Loan Disbursed 5403.27 1617.68

7.3 Transmission & Distribution

During the financial year 2017-18 your Company sanctioned 734 Nos. of Transmission andDistribution schemes involving a total loan assistance of Rs 36326.27 crore. Thisincludes primary power evacuation schemes associated with generating plants systemimprovement schemes schemes for Procurement & Installation of equipment/materialslike meters transformers conductors tower material cables etc. Government approvedschemes like DDUGJY & IPDS schemes and Infrastructure schemes for providingelectricity access to various categories of consumers including Agriculture.

400 kV Line from Suryapet to Kamavarapukota Telangana State financed by REC.

Your Company continued to play an active role in the creation of new infrastructure andimprovement of the existing ones under the transmission and distribution network in thecountry under its T&D portfolio. In line with the Government of India's objective toprovide power for all by creation of infrastructure and also to reduce the At&Closses your Company has been financing schemes for expansion and strengthening of thetransmission network and more importantly modernizing the existing distribution systemthrough new technologies.

7.4 Short / Medium Term Loans and other Loan assistance

During the financial year 2017-18 your Company has also sanctioned 50 loan assistanceof Rs 10950 crore to various power utilities in the form of short / medium term loans& other loan assistance to meet their funds requirement of short/ medium term &working capital etc.

7.5 Financing Activities in North Eastern States

During the financial year 2017-18 a total sum of Rs 368.01 crore was sanctioned and anamount of Rs 378.42 crore was disbursed against the various projects relating toTransmission & Distribution Generation including Renewable projects etc. in NorthEastern states as detailed in the attached tables.

7.6 Appraisal System for financing Private Sector Projects

REC has its own guidelines for appraisal of Private Sector Conventional & RenewablePower Generation Projects. The appraisal is carried out on the basis of the financialperformance creditworthiness management proficiency & sectoral experience of thepromoter entities. REC's interest rates & security structure are linked to the gradesassigned to the private sector projects.

7.7 Grading of State Power utilities

The Company has well defined policy/guidelines for grading of State Power Utilities.The guidelines for grading of State Power Utilities (Generation/Transmission and TradingUtilities) are reviewed periodically in view of significant changes in the power sector.During the year the State Grading Guidelines were reviewed and modified incorporatingsuitable parameters in line with the changing scenario.

For the purpose of funding the Company has classified State Power Generation andTransmission utilities into A++ A+ B and C categories. The categorization (bi-annually)of State Power Generation and Transmission utilities is arrived based on the evaluation ofutility's performance against specific parameters covering operational & financialperformance including regulatory environment Audited Financial Statements etc. Withregard to State Power Distribution utilities (including SEBs/ utilities with integratedoperations) the Company adopts Ministry of Power's Integrated Ratings by aligning suchratings/ grading with REC standard categories of A+ A B and C. The categorizationenables your Company to determine credit exposure limits and interest rates to the statepower utilities.

7.8 Investments made during the financial year 2017-18

The Company has subscribed to 347429 fully paid equity shares of Housing & UrbanDevelopment Corporation Limited (HUDCO) under Initial Public Offer at a cost of Rs 60/-per equity share of face value of Rs 10/- each with aggregate investment amounting to Rs2.08 crore in May 2017.


REC has three lines of ODA credit with KfW Germany. All of them have been fully drawnas on March 31 2018. KfW-I and KfW-II ODA loan are of EUR 70 million each (approx. Rs454.02 crore & Rs 480.97 crore respectively) and KfW-III is of EUR 100 million(approx. Rs 753.73 crore). Apart from above REC has two lines of ODA credit with JICAJapan. Both of them have also been fully drawn. Under JICA-I & II ODA loanscumulative amount of JPY 16949.38 million (approx. Rs 820.12 crore) and JPY 11809.48million (approx. Rs 640.64 crore) respectively has been drawn as on March 31 2018.


Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) is the flagship scheme of Government ofIndia covering all aspects of rural power distribution. Under the scheme 60% of theproject cost (85% for special States) is provided as grant by Government of India andadditional grant upto 15% (5% for special States) on achievement of prescribed milestonesand all unelectrified villages/habitations irrespective of population criteria are coveredfor electrification in accordance with the guidelines of the Scheme. All erstwhile REschemes have been subsumed in DDUGJY. REC is the Nodal agency for operationalization ofDDUGJY.

Further DDUGJY facilitates towards achievement of Rs 24x7 Power for All' in thecountry through the following project components:

a) Separation of agriculture and non-agriculture feeders facilitating continuousquality power supply to non-agricultural consumers and adequate power supply toagricultural consumers in the rural areas;

b) Strengthening and augmentation of sub-transmission & distribution infrastructurein rural areas;

c) Micro-grid and Off-grid distribution network;

d) Metering of distribution transformers/feeders/consumers; and

e) Rural Electrification works (including the erstwhile RE projects).

In order to realize the objectives of the scheme participation of all stakeholdersparticularly public representatives has already been institutionalized throughconstitution of District Electricity Committees (now DISHA) under the Chairmanship ofsenior most Member of Parliament. DISHA is empowered to monitor and review theimplementation of DDUGJY.

9.1 Village Electrification

India's rural electrification programme passed through several stages of improvementwith appropriate intervention at Government of India level. In spite of various programmesof Government of India as on April 1 2015; there were 18452 villages which stillremained un-electrified.

In the Independence Day address to the nation on August 15 2015 Hon'ble PrimeMinister pledged that all remaining Un-Electrified (UE) villages in the country would beelectrified within 1000 days with the help of States and local bodies. AccordinglyMinistry of Power had fast tracked electrification of all 18452 villages on prioritymode. As these remaining un-electrified villages are located in inaccessible areas(thickly forested mountainous regions etc.) involving tough terrain inclement weatherareas facing Right of Way (RoW) issues areas plagued by insurgency and Leftwingextremism intensive monitoring mechanism strategized to get regular progress of eachvillage. Towards this direction entire process of village electrification was categorizedinto 12 milestones. Electrical engineers viz. 'Gram Vidyut Abhiyantas (GVAs)' weredeployed at Block/District level in order to shoulder this mission at field level.Further a dedicated web-portal namely 'GARV App' ( well acknowledged forits transparent and accountable mechanism was developed for meticulous monitoring of theprogress of electrification of all un-electrified villages through an online system alongwith the milestones of village electrification progress.

The Salient features of GARV APP are real-time dashboard. paper-less working. capturingvillage-wise milestones. uploading photographs/Global Positioning System (GPS)coordinates timely highlighting of implementation hurdles if any habitation wiseinfrastructure allows offline data entry tracking of delay in implementation of workssegregation of uninhabited villages state-wise snapshots adoption ofvillages/districts/states & view their respective customized dashboard and alsofeedback and suggestions from users.

During the course of village electrification process States reported an additional1227 villages as un-electrified. Accordingly REC made all concerted efforts infacilitation and made available adequate funds for village electrification. To thoseinaccessible difficult to approach villages air lifting of material had been resortedthrough choppers of Indian Air Force to the States of Jammu & Kashmir and ArunachalPradesh. Further. assistance of Railways had been availed for transporting voluminousmaterials to Arunachal Pradesh. To such remotest areas where neither of the options ofsophisticated transportation was available. material were transported through manual headloading for days together.

With the above initiatives and collective efforts of States and other stakeholders16859 villages have been electrified as on March 31 2018. Further April 28 2018 hadbeen made as a historic day in the Power Sector by achieving electrification of allun-electrified census inhabited villages in the country totaling to 18374 villagesexcluding the 1305 uninhabited villages.

9.2 Performance during financial year 2017-18:

a. Sanction:

Under DDUGJY. Decentralized Distributed Generation (DDG) projects have also beensanctioned. for providing electricity access to the un-electrified villages/habitationswhere grid connectivity is neither technically feasible nor cost effective. During thefinancial year an amount of Rs 17.05 crore (including capital subsidy of Rs 15.34 crore)was sanctioned for Manipur state.

b. Fund release:

The subsidy of Government of India is channelized through REC and the matchingcontribution is infused by the respective State Govt. /Implementing Agencies through Loanor their own sources.

Under the scheme grant/subsidy of Rs 9.028.09 crore (including Rs 262.60 crore underDDG) provided by Government of India and a loan of Rs 687.58 crore was disbursed to theStates/Implementing Agencies by the Company during the financial year 2017-18.

c. Progress of electrification:

During the financial year under DDUGJY 3736 un-electrified villages have beenelectrified and free electricity connections to 50.42 Lakh BPL households have beenprovided. Further segregation of feeders and new 11 kV lines totaling to 1.01.054 Kmshave been laid and 1.571 sub-stations (New & Augmentation) have been commissioned.

The State-wise details of sanctions fund releases & progress of electrificationduring the financial year are given in Table- 5.

9.3 Cumulative Performance upto March 31 2018:

Under DDUGJY. cumulatively up to March 31. 2018; 6.287 projects for Rs 1.08.496.85crore have been sanctioned and a sum of Rs 59.075.87 crore (including Government of Indiagrant of Rs 54.150.55 crore) have been disbursed to the Implementing agencies.

As regards physical progress cumulatively upto March 31 2018 125895 un-electrifiedvillages have been electrified and free electricity connections to 305.10 Lakh BPLhouseholds have been provided. Further 3063 Sub-stations (including 1979 AugmentationSub-stations) have been commissioned and 21.811 cKm of 11 KV feeders have been segregated.

The State-wise details of cumulative sanction. fund release & achievements arefurnished at Table- 6.

9.4 Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA)

Hon'ble Prime Minister launched Pradhan Mantri Sahaj Bijli Har Ghar Yojana - Saubhagyaon September 25 2017 to achieve Universal Household electrification in the countrythrough electrification of all households in both rural and urban areas. Ministry of Powerdesignated REC as the Nodal agency for operationalization of Saubhagya Scheme as well.

The capital outlay of Saubhagya Scheme is Rs 16320 crore including Gross BudgetarySupport of Rs 12320 crore. Estimated

3.5 crore households in the country are targeted for electrification through creationaccess and last mile connectivity in rural and urban areas. Wherever Grid connectivity istechnically not feasible and financially unviable electrification is resorted throughSolar based off-grid systems.

Major Initiatives taken by REC for successful completion of Saubhagya Schemes are asunder:

• Guidelines issued to all States/Power Utilities;

• Dedicated Saubhagya web-portal developed for monitoring;

• Gram Vidyut Abhiyantas (GVAs) have been deployed across the districts in Stateswhere major un-electrified households remain;

• As on March 31 2018 Government subsidy of Rs 1540.63 crore released toStates;

• Nodal Officers at State level have been nominated; and

• States have been asked to upload DPRs in web-portal and to freeze theun-electrified Household figures.

With the active support and cooperation of States/Power Utilities and otherstakeholders 40.45 Lakh households were electrified upto March 31 2018 which havecrossed the figure of 1.00 crore on August 5 2018. Under the scheme grant/ subsidy of Rs1540.63 crore provided by Government of India was disbursed to the States/ImplementingAgencies by the Company during the financial year 2017-18. The State-wise details ofhouseholds electrified and subsidy disbursed under Saubhagya during the financial year2017-18 are furnished at Table-7.


Your Company has continually provided technical expertise in the distribution system toState Power Utilities. The technical specifications and construction standards issued bythe Company are used extensively by the State Power Utilities. The Company in order topromote new technologies has been continuously looking for innovations using latestR&D in the field of power distribution.

In line with the Three-Tier Quality Control Mechanism for ensuring proper quality ofmaterials and works in implementation of RE component of DDUGJY XI & XII five-yearplan schemes REC Quality Monitors (RQM) under Tier-II have been appointed covering 413projects in 25 states under XI plan (Phase-I&II) and 273 projects in 15 states underXII Plan. During the financial year 2017-18 RQMs have undertaken inspection of 75villages under XI Plan Phase-I projects; 2033 villages under XI Plan Phase-II projectsand 9194 villages under XII Plan Projects. Further 405 Nos. of material inspections werecarried out in XII Plan projects at manufacturer premises for ensuring quality ofmaterials.

REC Quality Monitors (RQM) for DDUGJY New Projects were also appointed. During thefinancial year 2017-18 1229 Nos. of material inspections were carried out by RQMs underDDUGJY new projects at manufacturer premises for ensuring quality of materials.


As a Lending entity the Company is exposed to various risks such as credit riskoperational risk market risk interest rate risk liquidity risk and foreign currencyrisk. The Company is conscious of such risks and has put in place a comprehensive RiskManagement Policy to address the same.

11.1 Risk Management Committee

The Company is having a Risk Management Committee (RMC) which is functioning under thechairmanship of Part-time Non Official Independent Director and it comprises of Director(Finance) and Director (Technical) as its members for monitoring the integrated risks ofthe Company.

The main function of RMC is to monitor various risks and also to suggest action formitigation of risk arising in the operation and other related matters of the Company. TheCompany has identified its various risks and has taken various steps to mitigate them.

The brief description of the risks is as below:

(i) Credit Risk:

Credit risk is a risk inherent in the financing industry and involves the risk of lossarising from the diminution in credit quality of a borrower and the risk that the borrowerwill default on contractual repayments under a loan or an advance. To mitigate the samethe company follows systematic institutional and project appraisal process to assess thecredit risk. These processes include a detailed appraisal methodology identification ofrisks and suitable structuring and credit risk mitigation measures. Further on regularbasis the project risks and are reviewed and categorized as High/ Moderate/Low on thebasis of different risk parameters and exposure of the project as per Project Riskcategorization frameworks.

(ii) Operational Risk:

The operational risk arises from inadequate or failed internal processes people andsystems or external events. The Company has an Organization-wide risk categorizationframework through which all the operational risks are measured and categorized as High/Moderate/ Low. Further the operational Risks of the Company are studied in eightfunctional areas such as Business Compliance Finance Human Resource InformationTechnology Legal Operational and Strategic.

(iii) Market Risk:

Market Risk comprises the Interest Rate Risk Liquidity Risk and Foreign Currency Riskwhich is dealt by Asset Liability Management Policy and Hedging Policy.

11.2 ALCO Committee

To manage the market risks the Company has constituted an Asset Liability ManagementCommittee (ALCO) which is functioning under the chairmanship of CMD and comprises ofDirector (Finance) Director (Technical) Executive Directors and General Managers fromFinance and Operating Divisions as its members.

ALCO monitors risks related to interest rates liquidity and currency rates. The briefdescription of the risks is as below:

(i) Interest Rate Risk:

Interest rate risk is the potential loss arising from fluctuations in market interestrates. In order to mitigate the interest rate risk Company periodically review itslending rates and the weighted average cost of borrowing based on prevailing market rates.

(ii) Liquidity Risk:

Liquidity risk is the risk of potential inability to meet liabilities as they becomedue. We face liquidity risks which could require us to raise funds or liquidate assets onunfavourable terms. We manage our liquidity risk through a mix of strategies includingforward-looking resource mobilization based on projected disbursements and maturingobligations.

(iii) Foreign Currency Risk:

Foreign currency exchange risk involves exchange rate movements among currencies thatmay adversely impact the value of foreign currency denominated assets liabilities andoff-balance sheet arrangements. The Company manages foreign currency risk associated withexchange rate and interest rate through various derivative instruments.


As a part of business promotion strategy a Preferred Customer Policy was formulatedwith the basic purpose of offering an enhanced level of services to the Company'scustomers and to have a long term mutually beneficial relationship with them. The Policylays down the eligibility criterion which takes into account various factors such asamount of loan outstanding duration of loan relationship repayment track record of theborrower etc. for determining preferred customers and sponsoring them for capacitybuilding/ domestic/ international seminars/ training programmes organized by variousexternal agencies as well as REC-IPMAT Hyderabad.


(i) Implementation of latest version of Business ERP: ERP is in place since July 2009.REC has now initiated a process of migration of existing e-Business ERP (Oracle e-Bizsuite) 11i (launched on July 24 2009) to the latest version R12.2.7 and replacement ofERP hardware. The new ERP system will have:

- Advanced features which will further facilitate automation of business operation ofthe Company;

- Integration to other systems like e-Office etc; and

- GST and Ind-AS compliant.

Live operations in new upgraded version of Business ERP started since July 2018.

(ii) Implementation of e-Office across all Offices: Digital office solution has beenimplemented across all offices of the Company w.e.f. January 2018. Training has beenimparted to all users across all offices of the Company. As a continuous improvementseveral additional features have been incorporated.

(iii) up-gradation of REC WAN Network with enhanced Bandwidth: Organization wide MPLSVPN network infrastructure (operational since 2008) along with Video Conferencing facilityhas been completely revamped with latest network devices enhancement of Bandwidth highavailability features etc. to meet the demanding requirement of operation.

(iv) Implementation of IT Framework as per RBI Master Direction: REC has initiatedsteps to comply with Master Direction of IT Framework issued by RBI for NBFC sector. Thisactivity is completed and now REC is compliant with IT framework as per RBI MasterDirections since May 2018.

(v) Development of GST module and integration with Business ERP: With the new taxregime of GST REC is GST compliant and integrated with GSP solution as per statutoryrequirement.

(vi) Development of REC Corporate Intranet / Internet Website: REC Corporate Website& Intranet portal have been completely revamped to make it user friendly interactivedynamic & informative and accessible from mobile devices from public network insecured environment.

(vii) Migration of entire existing REC network from IPv4 to IPv6: As per directive ofGovernment of India (Ministry of Information Technology) REC has become IPv6 compliant inSeptember 2017. This activity has been completed and reported to the Ministry of Power.

(viii) Primary Data Centre (PDC) and Disaster Recovery Center (DRC): Both PDC and DRCof REC are ISO/IEC 27001:2013 certified and also comply to National Cyber Security Policyof Government of India. REC has also implemented Data Leakage & Prevention (DLP)system at DC & DR for preventing sharing of confidential and critical informationoutside the corporate network

(ix) Promoting Government of India initiatives: REC facilitates and promotes the ITinitiatives of Government of India like My Gov e-Governance DPE guidelines on digitalmode of payments etc. within the Company.

(x) Providing training and computing facility to Employees: Computer to Employeepopulation ratio is 100%. IT Division also organizes and impart various trainingprogrammes on IT & IS to upgrade Computer skills of the employees of the Company.


REC-Institute of Power Management and Training (REC-IPMAT) earlier known as CentralInstitute for Rural Electrification was established at Hyderabad in 1979 under the aegisof Rural Electrification Corporation Limited to cater to the training and developmentneeds of engineers and managers of Power Sector organizations. REC-IPMAT has conductedvarious programmes on the state-of-art subjects of Power Generation TransmissionDistribution and Renewable energy sources and other related issues/topics.

14.1 National Training Programmes (NTP) under DDuGJY

REC/REC-IPMAT is the Nodal Agency for coordination and implementation of NationalTraining Programmes for employees of C&D category under DDUGJY sponsored by Ministryof Power Government of India. During the year 2017-18 as against the target of 25000employees of C&D category 28235 were trained. Since starting of the NationalTraining Programmes in 2009 total 233030 employees of C&D category were trainedupto March 31 2018.

REC-IPMAT on the request of power utilities has conducted 103 programmes for theemployees of C&D category with 2566 participants for HPSEBL JdVVNL SOUTHCO JKPDDTSNPDCL Lakshadweep Electricity Department (LED) MPPaKVVCL DVVNL & APDCL at variouslocations under its banner and 3 Nos. of Training of Trainers (ToT) programmes for LEDMPPaKVVCL and MeECL and trained 45 participants.

14.2 International Programmes

REC-IPMAT is empanelled by Ministry of External Affairs Government of India toorganise training programmes in the area of power sector under ITEC/SCAAP. During theyear REC-IPMAT has organized 9 International programmes with 174 participants on thetopics viz. Solar Power Generation - Grid Enabling (4 weeks); Rural Electrificationand Power Management (8 weeks); Design Erection O&M of EHV Sub-Stations (4 weeks);Planning and Management of Power Transmission and Distribution System (8 weeks); BestPractices in Power Distribution (4 weeks); Management of Power Utilities using IT/Automated Solutions (5 weeks); Certificate Course in Electric Power Management (12 Weeks)and Latest Trends in Thermal Power Generation (4 weeks).The participants from countries viz.Afghanistan Bangladesh Bhutan Cambodia Cameroon Cote d'Ivoire Egypt EthiopiaGambia Ghana Guatemala Haiti Iran Iraq Kenya Lebanon Madagascar MalawiMauritius Nigeria Oman Peru Philippines Seychelles South Sudan Sri Lanka SudanSuriname Syria Tanzania Tunisia Vietnam and Zimbabwe have attended the programmes.

14.3 Regular National Programmes

REC-IPMAT has organised 25 Regular T raining Programmes for the personnel of variousPower Utilities on different topics such as Earthing Practices & Safety Measures inElectrical Installations; Power Transformer - Testing Commissioning Protection &Maintenance; Concept to Commissioning of Solar Power Plants; Latest Trends in O&M ofDistribution Transformers; Power Trading & Exchange; Operation Maintenance andProtection aspects of Distribution Sub-stations and Lines; Labour Laws - WorkmenCompensation and Contract Labour Act-Procedures in dealing Court cases; Underground Cables- Design Laying Monitoring and Fault Detection; Technical Specifications andConstruction Standards for Distribution System; Power Purchase Agreement; Gas InsulatedSub-stations; Tariff Policy and Submission of ARRs - Regulatory Compliance; Power SystemProtection; Open Access Trading and Availability Based Tariff (ABT); AdvancedTechnologies in Metering Billing and Collection; Zero-Breakdown in Power Transformers;Power Factor Improvement and Reactive Power Management; Distribution Loss Reduction -Issues Challenges and Remedial Measures; Implementation of Goods & Service Tax (GST);Ind AS (IFRS) adoption in Power Sector; Competitive Bidding-Economical Procurement; PowerTransmission Lines - Design Construction & O&M and Energy Management &Auditing. A total number of 318 participants attended the above programmes.

14.4 IPDS Programmes

REC-IPMAT as partner training institute organized IPDS programmes sponsored by Ministryof Power. During the year 19 IPDS programmes were conducted for employees of A&Bcategory on the themes viz. Communication & Customer Relations; EfficiencyImprovement Measures in Distribution System; Revenue Management & Distribution LossReduction and Best Practices in Distribution Operation & Management System. In total351 participants were trained under these programmes.

14.5 Customized Programmes

14 customised programmes were designed and organised suitable to the utilityrequirements. The programmes conducted are on "Power Distribution Management"for JKPDD at REC-IPMAT campus and for the freshly recruited Junior Engineers of HPSEBL atDharamshala Sundernagar & Shimla (8 batches). The programme on "Finance forNon-Finance Executives" for MPPTCL at Jabalpur and Safety Programme for MPPKVVCL atIndore. The 3 programmes on "Finance for Non-Finance Executives" "PowerTransformer-Testing Commissioning Protection & Maintenance" and "PowerManagement & Energy losses" for JBVNL at Ranchi. In total 383 participants weretrained under customized programmes.

14.6 In-house Training Programmes

REC-IPMAT also organised 3 in-house programmes for the employees of REC and 33employees have taken part in these programmes. The topics covered are Solar Power - Designand Development; Smart Grid & Smart Meters and Managing Change in Power Sector forSenior CPMs/ CPMs.

14.7 Solar Energy Programmes

REC-IPMAT has been empanelled by National Institute of Solar Energy (NISE) as partnertraining institute for conduct of Solar Energy Programmes and organised 13 programmes on"Solar Roof Top" for Distribution Engineers of MSEDCL at various locations ofMaharastra state including one ToT programme at REC-IPMAT Campus Hyderabad. In total 504participants were trained under these programmes.

14.8 In all during the financial year 2017-18 in addition to coordinating andmonitoring the National Training Programmes for employees of C&D category sponsoredby Ministry of Power Government of India REC-IPMAT has conducted 189 programmes onvarious themes/subjects and trained 4374 personnel with 21639 man-days of training.


The Company has implemented Quality Management Systems as per ISO 9001:2008 standardsin six major Divisions of Corporate Office and all Regional/Sub-Offices across the countryfor claims processing.

16. human resource management

As on March 31 2018 the Company's total manpower was 528 employees including 414employees in the executive cadre and 114 employees in the non-executive cadre. The Companygives utmost importance to the capacity-building and well-being of its employees. Duringthe year under review the Company sponsored 190 of its employees to various trainingprogrammes/workshops within the country and abroad. The Industrial Relations continued tobe on a cordial note in the Company. During the year there was no loss of man-days onaccount of industrial unrest. Further there are regular interactions and open-housesessions between the management and the employees which helps in building an atmosphereof trust and cooperation thereby leading to a motivated work force and consistent growthin organizational performance.

16.1 Reservation in Employment

The directives issued by the Government of India regarding reservations for SC/ST appointment and promotion to various posts were complied with. The group wise detailsof SC and ST employees out of total strength as on March 31 2018 are given below:


Number of Employees




FY 2017-18 FY 2016-17 FY 2017-18 FY 2016-17 FY 2017-18 FY 2016-17
A 363 377 35 36 13 14
B 87 84 15 12 2 2
C 16 35 1 6 0 0
D 62 70 17 21 1 2
Total 528 566 68 75 16 18

16.2 Training & Human Resource Development

As a measure of capacity building including overall development of employees and toensure high delivery of performance Training and HRD continued to receive priority duringthe financial year. Training and Human Resource Policy of the Company aims at sharpeningbusiness skills and competencies required for better employee performance and provides allpossible opportunities and support to the employees to improve their performance andproductivity.

Training was also provided to promote better understanding of professional requirementsas well as to sensitize employees to socio-economic environment in which business of theCompany is carried out. Training which helped employees benefit in spiritual health andattitudinal change process was also imparted.

In order to equip the employees professionally the Company sponsored 190 employees tovarious training programmes workshops etc. within the country and abroad. In additionfour training programmes were conducted in-house which were attended by 71 employees.Taken together these initiatives enabled the Company to achieve 723 training man days.Further 17 Executives were deputed for programmes in countries like Germany FranceJapan Morocco Malaysia Norway USA etc.

‘Transformational Leadership Programme' organised for Senior officials of REC atIndian Institute of Management Bengaluru during March 2018.

16.3 Employee Welfare

In order to provide improved health care facilities to the employees and theirdependent family members the Company has expanded the list of empanelled hospitals underDirect Payment Scheme by adding three hospitals. Further part time services of fourspecialized doctors were engaged to provide onsite medical facilities to employees. TheCompany has also been funding sports & recreation equipment for use by employees andpromote well- being of employees.

Sports Activities

During the financial year 2017-18 REC hosted an Inter-CPSU Cricket Tournament at NewDelhi and also sponsored its employees for various Inter-CPSU sports tournaments such asBadminton Table Tennis Volley Ball Kabaddi Chess etc. organized by various powersector CPSUs under the aegis of Power Sports Control Board (PSCB). Further employees wereencouraged to participate in various quizzes paper presentations and simulationcompetitions conducted by reputed institutions.

16.4 Representation of Women Employees

As on March 31 2018 the Company had 89 permanent women employees which represent16.86% of the total work force. There is no discrimination of employees on the basis ofcaste creed and religion etc. A Women Cell has been in operation in the Company to lookafter welfare and all round development of women employees. International Women's Day wascelebrated by REC Women's Cell.

16.5 Industrial Relations

The Industrial Relations scenario in the Company continued to be cordial and harmoniousin the financial year 2017-18. There was no loss of man days on account of industrialunrest. Regular interactions were held with REC Employees Union and REC OfficersAssociation on issues of employee welfare. This has helped to build an atmosphere of trustand cooperation resulting in a motivated workforce and continued improvement in businessperformance. In compliance with the provisions of "The Rights of Persons withDisabilities Act 2016" Company has appointed the Executive Director (Admin. &Estate) as the Grievance Redressal Officer for the Persons with Disabilities (PwD).

16.6 Public Grievance Redressal Machinery

A Public Grievance Cell has been set up in REC for the purpose of redressing thegrievances from the public in a time bound manner. The cell handles Centralized PublicGrievance Redress and Monitoring System (CPGRAMS) portal which is a platform for thecitizens for lodging their grievances. The CPGRAMS portal is developed and maintained bythe Department of Administrative Reforms & Public Grievances (DARPG) Government ofIndia.


The Company has its 'Corporate Social Responsibility & Sustainability Policy'aligned with the amended provisions of Companies Act 2013 the Companies (CorporateSocial Responsibility Policy) Rules 2014 and Guidelines for CSR and Sustainability forCentral Public Sector Enterprises issued by Department of Public Enterprises. The copy ofthe 'REC Corporate Social Responsibility & Sustainability Policy' is available on thewebsite of the Company.

During the financial year 2017-18 the Corporate Social Responsibility and SustainableDevelopment (CSR & SD) initiatives of the Company were continued with a view tointegrate REC's business CMD REC gnd Djstfict Magistrate Ghaziabad exchanging MoU forextending operations with social processes while recognizing support forinfrastructure development in Government schools of Ghaziabad.

Further in compliance of RBI Guidelines the Company has put in place a GrievanceRedressal mechanism to resolve disputes between the company and its customers andappointed a senior official as the Grievance Redressal Officer. Further in accordancewith the guidelines issued by the Government of India the Company has constituted aGrievance Redressal Committee to redress the grievances of employees.

The interests of its stakeholders. CSR & SD projects were linked with the principleof sustainable development. The strategic focus was aimed at CSR & SD initiativetowards fulfilling the National Plan goals and objectives including SustainableDevelopment Goals ensuring gender sensitivity skill enhancement entrepreneurship andemployment generation by cocreating value with local institutions/people.

While identifying such initiatives the Company has adopted an integrated approach toaddress the community societal and environmental concerns measured in terms of triplebottom line approach. During the year the Company has undertaken various CSR initiativesin the fields of skill development programme education environmental sustainabilityhealth care including for old age and persons with disabilities drinking water andsanitation facilities etc. The CSR strategy has been developed with action plan inproject-based accountability approach. The CSR activities have been implemented inprojectmode with baseline survey specified time-frame identified milestones periodicmonitoring and impact assessment. Disbursement of allocated funds under CSR was linkedwith achievement of the milestones and deliverables. During the financial year 2017-18financial assistance aggregating to Rs 167.24 crore was sanctioned for various projectsunder Corporate Social Responsibility and Rs 49.45 crore was disbursed. A detailed Reporton Corporate Social Responsibility and Sustainability Activities is annexed to thisReport.


REC constantly endeavors to optimize probity and integrity among employees and topromote transparency fairness and accountability in all operational areas. VigilanceDivision mainly aims at "Preventive Vigilance" by reviewing of policiesrotation/transfers of employees holding sensitive posts review of Audit Reports reviewof projects/tenders/contracts awarded inspections of Regional Offices/State Officesreview of Annual Property Returns (APRs) etc. Streamlining of systems and procedures inmatters relating to administrative financial and human resources functions was alsoaccorded priority. The thrust on leveraging of technology was continued with the resultthat information relating to loans schemes tenders third party bills recruitment etc.are online as well as invigorated online vigilance clearance system. Further it wasensured that information/policies like tenders requisite forms status of loanapplications/third party payments Fair Practices Code Policy for Prevention of FraudCSR guidelines Whistle Blower Policy etc. are available on the website of the Company.

With effect from April 2016 almost all tenders above Rs 2 lakh were processed throughE-Procurement mode and E-Reverse Auction has also started in cases where estimated valueof procurement is more than Rs 1 crore and lowest quoted price are more than 20% ofestimated value. Regular/surprise inspections of field offices were carried out andemployees were sensitized about the importance of Vigilance. Regular review meetings weretaken up with operating Divisions on the existing systems and procedures to make thesemore transparent and accountable. Agreed List and List of Officers of Doubtful Integritywere finalized. Prescribed periodical statistical returns were also being sent to CentralVigilance Commission (CVC) and MoP on time.

Vigilance Awareness Week was observed from October 30 2017 to November 4 2017 whereall employees were sensitized to ensure that REC's CDA rules are followed scrupulously andhighest standard of ethics and integrity are maintained by everyone at all times. Duringthe week REC has administered Integrity Pledge conducted Just a Minute Essay WritingPainting and Slogan Writing Competitions for employees and their family members andorganized one day workshop on "Financial Frauds: Investigation Controls and RiskManagement Strategy". Banners/standees/posters were displayed at different locationsof all offices of the Company across country as well as various schools and colleges.Inter-College Debate Competition was organized wherein 39 colleges have participated andInter-School Debate Competition was organized among 18 Schools. Apart from these allIndia level Inter School Poster Competition has also been organized. Further REC hassetup Integrity Clubs in 25 schools all over India the first of its kind in India toencourage children to collectively participate in fight against corruption.

The performance of Vigilance Division was reviewed periodically by CVC Board ofDirectors and CMD in addition to regular reviews undertaken by the CVO in accordance withthe prescribed norms.


In compliance with the Official Language Act 1963 Official Language Rules 1976 andorders issued by the Government of India from time to time efforts were continued duringthe year for increasing the progressive use of Hindi in official work. To ensure theimplementation of Official Language effectively and to review the progress ofimplementation of the Official Language policy Committees(s) are constituted in alloffices. The Committees chalks out strategies to implement the constitutional provisionsof the Official Language Policy of the Union with a view to achieve the targets prescribedin the Annual Programme issued by the Department of Official Language Ministry of HomeAffairs.

During the year Hindi fortnight was organized in Corporate Office from September12017 to September 15 2017 under which various competitions/activities like Hindidebate competition on the topic 'Vision New India: Challenges and opportunities' and'India Business Quiz' were organized. The participation of employees in all theevents/competitions was encouraging and cash prizes were also awarded to winners indifferent categories to encourage larger participation and to motivate employees toincrease use of Hindi in their day to day working.

Further to give hands-on exposure to participants in various facets of use of Hindi indischarge of their official duties and to impart practical knowledge about the OfficialLanguage Policy and related subjects Hindi workshops were organised where a number ofExecutives/Non-Executives participated.

Inspections of different divisions and ROs/SOs were carried out by REC RajbhashaDivision to assess the progressive use of Hindi in official work. A team of officials ofMinistry of Power also reviewed the status of Official Language implementation in RECCorporate Office.

Rajbhasha Division has come out with two editions (Half yearly) of In-house HindiJournal 'Urjayan' containing interesting and useful articles as well as literary writingsof the employees. In order to motivate Hindi write ups articles poems etc. for themagazine the Company has a policy to award cash incentives to the participants.


20.1 Conservation of Energy

There are no significant particulars relating to conservation of energy and technologyabsorption as your Company does not own any manufacturing facility. Further theRegistered Office of the Company is located at 'SCOPE Complex' where all civil electricalinstallation & maintenance is carried out by SCOPE. Effective monitoring controlling& scheduling the operation of AC chilling units elevators & by putting otherenergy efficient equipments replacement of conventional light fittings CFL etc. withLED light fittings and maintaining power factor nearest to unity SCOPE has saved around10.31 lakh units consumption during the financial year 2017-18 resulting saving in termsof amount of around Rs 1.10 crore.

20.2 Foreign Exchange Earnings & Outgo

During the financial year 2017-18 an interest income of Rs 0.16 crore was earned onunutilised foreign currency. Further the foreign exchange outflow aggregating Rs 553.87crore was made during the financial year on account of foreign travelling trainingexpenses interest principal repayment finance charges and other expenses.

21. subsidiary companies

Your Company has two Wholly Owned Subsidiaries to focus on additional business ofconsultancy in the areas of distribution transmission etc.:

i. REC Power Distribution Company Limited (RECPDCL) (CIN: U40101DL2007GOI165779)

ii. REC Transmission Projects Company Limited (RECTPCL) (CIN:U40101DL2007GOI157558)

In order to initiate development of each independent Interstate and Intrastatetransmission project allocated by Ministry of Power Government of India and StateGovernments RECTPCL incorporates Project specific Special Purpose Vehicle (SPV) as WhollyOwned Subsidiary Company and after selection of successful bidder through a two stageBidding process featuring separate Request for Qualification (RfQ) and Request forProposal (RfP) in accordance with Tariff Based Competitive Bidding guidelines fortransmission projects as notified by Ministry of Power Government of India therespective Project Specific SPV along with its all assets and liabilities is transferredto the selected bidder.

21.1 REC Power Distribution Company Limited

During the financial year 2017-18 the performance of RECPDCL has been consistent inits core business viz. Preparation of Detailed Project Reports (DPR) Third PartyInspection (TPI) Material Inspection & Project Management Consultancy (PMC) andProject Management Agency/Project Management Consultant under DDUGJY and IPDS.

At the end of the financial year 2017-18 RECPDCL has been working on about 80 on-goingprojects with project cost of Rs 83237 crore and expected consultancy fee of Rs 1032crore for 43 Nos. of DISCOMs/RE Cooperative Societies and other agencies/Governmentbodies spread in 27 States and 4 Union Territories.

Major assignments/on-going projects

The major assignments/on-going projects undertaken by RECPDCL during the financial year2017-18 includes -

(i) PMA/PMC work under DDUGJY and IPDS for the 25 DISCOMs and 5 Co-Operative Societiesin 16 States on Pan India basis;

(ii) PIA work in J&K region under IPDS/R-APDRP Part-B/PMDP scheme for urbanelectrification works and also as PMA for Urban and Rural Electrification works underDDUGJY/PMDP schemes;

(iii) PMC & AMC work of EESL LED street light project in Chandigarh ChhattisgarhPunjab & Jharkhand and AMC work of EESL LED street light project in Rajasthan &Tripura;

(iv) Preparation of DPRs under 24x7 Power for All & Survey in 4 DISCOMs of UttarPradesh covering all 75 districts;

(v) PMA for designing of Power Management Software tool for Haryana Power PurchaseCenter and to provide Operation Support for a period of 3 years after Go-Live of softwareand PMA works for turnkey execution of deposit work of 66kV line for ChandigarhElectricity Department;

(vi) PIA work for turnkey execution of AMI and SCADA for Smart Grid Pilot Project inChandigarh for Chandigarh Electricity Department (CED);

(vii) Management & Technical Consultancy Services for all 5 DISCOMs of UttarPradesh for conducting Energy Audit of all feeders of UPPCL;

(viii) Preparation of Cost Data Book and Asset verification of Capex of 2 DISCOMs (BRPL& BYPL) for Delhi Electricity Regulatory Commission (DERC); and

(ix) PMA/PMC for electrification of Un-electrified Off Grid villages in the state ofJammu & Kashmir and Arunachal Pradesh. Financial Performance

During the financial year 2017-18 RECPDCL has achieved a total revenue of Rs 207.03crore against Rs 191.57 crore in the previous year and the Profit After Tax of Rs 36.80crore as against Rs 40.33 crore in the previous year.

As on March 31 2018 the Net Worth of the Company has increased by 14.08% to Rs 180.07crore as compared to Rs 157.84 crore in the previous year. For the financial year 2017-18the Board of Directors of the company has recommended a dividend of Rs 2210/- (Rupees TwoThousand Two Hundred Ten only) per equity share (on the face value of Rs 10/- each)subject to the approval of Shareholders in the ensuing Annual General Meeting of thecompany.

21.2 REC Transmission Projects Company Limited

During the financial year 2017-18 four project specific SPVs have been incorporated viz.Chandil Transmission Limited Dumka Transmission Limited Mandar Transmission Limited andKoderma Transmission Limited in respect of Transmission System Strengthening in JharkhandState (Package 1 to 4) with aggregate estimated cost of Rs 4605 crore allocated to theCompany by Government of Jharkhand to work as Bid Process coordinator for selecting ofsuccessful Bidder(s). Further a project specific SPV viz. Jawaharpur FirozabadTransmission Limited has been incorporated on August 20 2018 in respect of TransmissionProject allocated by UP Power Transmission Corporation Limited.

After completion of bidding process the following project specific SPV has beentransferred to the successful bidder during the financial year 2017-18:-

Sl. No. Name of Transmission Project Name of Project Specific SPV Name of Selected Bidder Date of Transfer of project specific SPV
1. Eastern Region Strengthening Scheme - XXI (ERSS-XXI) ERSS XXI Transmission Limited M/s Power Grid Corporation of India Limited January 12 2018
2. New WR-NR 765 kV Interregional corridor WR - NR Power Transmission Limited M/s Power Grid Corporation of India Limited March 27 2018

As on March 31 2018 the status of following Inter-state and Intra-state transmissionprojects is as under:-

Sl. No. Name of Transmission Project Name of Project Specific SPV Date of Incorporation of SPV Status as on date
1. Transmission system for Phase-I Generation Projects in Arunachal Pradesh Dinchang Transmission Limited December 2 2015 Project on hold as per instruction of CEA & Empowered Committee on transmission.
2. Evacuation of power from 3 x 660 MW Ghatampur Thermal Project Ghatampur Transmission Limited December 2 2016 SPV transferred on June 19 2018 to Adani Transmission Limited.
3. Transmission System Strengthening in Jharkhand State (Package-1) Chandil Transmission Limited March 14 2018 The Bidding process is expected to complete during the financial year 2018-19.
4. Transmission System Strengthening in Jharkhand State (Package-2) Dumka Transmission Limited March 23 2018
5. Transmission System Strengthening in Jharkhand State (Package-3) Mandar Transmission Limited March 26 2018
6. Transmission System Strengthening in Jharkhand State (Package-4) Koderma Transmission Limited March 19 2018

Besides the above during the financial year 2017-18 RECTPCL has also bagged thefollowing assignments:

1. Bid Process Coordinator work for KSEB Transmission works;

2. Preparation of DPR for feeder separation work of MSEDCL;

3. Bid process coordinator & PMC services for design supply erection testing& commissioning of 220 kV GIS S/s & Transmission work of Saligaon by GED.

Financial Performance

During the financial year ended March 31 2018 RECTPCL has recorded an income of Rs53.30 crore as compared to Rs 52.38 crore in the previous financial year. The Profitbefore tax and Profit after tax for the financial year 2017-18 is Rs 47.22 crore and Rs35.29 crore respectively. The Net worth of the Company as on March 31 2018 was Rs 176.54crore against initial Capital of Rs 0.05 crore injected by Rural ElectrificationCorporation Limited (holding company) in the year 2007. Further the Board of Directors ofthe company have recommended a dividend of Rs 7058/- per equity share i.e. 70580% on thepaid up equity share of Rs 10/- each for the financial year 2017-18 subject to approvalof shareholders in the ensuing Annual General Meeting.

Scheme of Arrangement for amalgamation of RECTPCL with RECPDCL

In order to have better operational efficiency and to reap the benefits of highercapital base & pooled resources it was proposed to merge two unlisted wholly ownedsubsidiary companies of Rural Electrification Corporation Limited i.e. RECPDCL and RECTPCLinto one single entity.

Accordingly as per provisions of the Companies Act 2013 and Rules made thereunder andafter the approval of Board of Directors shareholders creditors of respective companiesand approval of holding company i.e. REC an application was filed with the Ministry ofCorporate Affairs (MCA) on March 27 2018 by both subsidiary companies for sanction ofScheme of Arrangement for amalgamation of RECTPCL (Transferor Company) with RECPDCL(Transferee Company) and the approval of the same is awaited.


REC along with three other PSUs namely Power Grid Corporation of India Limited NTPCLimited and Power Finance Corporation Limited as partners has formed a Joint VentureCompany by the name Energy Efficiency Services Limited (EESL) on December 10 2009. EESLis a Super Energy Service Company (ESCO). It acts as the resource center for capacitybuilding for State Distribution Companies (DISCOMs) Energy Regulatory Commissions (ERCs)State Development Authorities (SDAs) upcoming ESCOs financial institutions etc. REC hascontributed Rs 146.50 crore (being 31.71% of paid- up capital of EESL) upto March 312018. However after infusion of additional equity by other promoters as on date RECholds 21.70% of the paid up share capital of the Company.

EESL is formed to create & sustain market access of energy efficient technologiesparticularly in the public facilities like municipalities buildings agricultureindustry etc. and to implement several schemes of Bureau of Energy Efficiency Ministryof Power MNRE Government of India. EESL is also leading the market-related activities ofthe National Mission for Enhanced

Energy Efficiency (NMEEE) one of the 8 national missions under National Action Plan onClimate Change. EESL today is implementing the largest energy efficiency portfolio in theworld. EESL's energy efficient appliances and technologies have saved India over 40billion kWh estimated energy annually.

Currently EESL is implementing world's largest non-subsidy based LED lightingprogramme: Unnat Jyoti by Affordable LED for ALL (UJALA) Programme for distribution of LEDbulbs LED tube lights and Energy Efficient fans to domestic consumers world's largeststreet light replacement programme: Street Lighting National Programme (SLNP) to replaceconventional street lights with smart and energy efficient LED street lights inmunicipalities National E-Mobility Programme to provide electric vehicles for Governmententities on lease/outright purchase basis to replace the existing petrol and dieselvehicles taken on lease by various Government organizations world's largest AgriculturalDemand Side Management programme: AgDSM Programme for replacement of inefficientAgricultural Pump sets in agriculture sector Building Energy Efficiency Programme (BEEP)to retrofit energy efficient appliances in buildings to make them energy efficient SmartMeter National Programme (SMNP) to replace conventional meters with smart metersMunicipal Energy Efficiency Programme (MEEP) under AMRUT for implementation of energyefficient pump sets in public water works and sewage systems after approval of the ULB/State Government Solar Programme for implementing solar roof top and decentralized smallsolar power plant Atal Jyoti Yojna (AJAY) for installation of solar LED street lights inrural semi-urban areas which don't enjoy adequate coverage of power Solar Urja Lamps(SoUL) for distribution of solar study lamps to school going children.

The performance of EESL during the year has improved and the financial performance ofthe company is on the growth path. The turnover of the company has grown from Rs 5 crorein financial year 2012-13 to Rs 1411 crore in the financial year 2017-18. During thefinancial year Profit Before Tax (PBT) is Rs 61.50 crore and the Profit After Tax (PAT)is Rs 39.46 crore.


Pursuant to Section 129 of the Companies Act 2013 and Accounting Standard-21 &Accounting Standard-27 the Company has prepared Consolidated Financial Statementsincluding that of its Subsidiary Companies i.e. RECTPCL & RECPDCL (Audited) and JointVenture Company i.e. EESL (Un-audited) which shall be laid before the ensuing 49th AnnualGeneral Meeting along with the Standalone Financial Statements of the Company. Howeverthose wholly owned subsidiary companies which are incorporated by RECTPCL & aresubsidiary of REC in terms of provisions of Section 2(87) of Companies Act 2013 for thepurpose of subsequent disposal have not been consolidated in the financial statements ofthe Company.

Pursuant to sub-section (3) of Section 129 of the Act a statement containing thesalient features of the financial statements of subsidiaries and joint venture in FormAOC-1 forms part of this Annual Report.

The Audited Financial Statements including the consolidated financial statements andaudited accounts of subsidiaries of the Company are available on the website of theCompany at . Further these documents will be kept for inspection by anymember or trustee of the holder of any debentures at the Registered Office of the Company.The Company will also make available copy thereof upon specific request by any member ofthe Company interested in obtaining the same.


To receive any remuneration/sitting fee from the Company. The details ofremuneration/sitting fees paid to Directors are given in Corporate Governance Reportannexed to this report.

As per the provisions of the Companies Act

2013 the Board of Directors of the Company has designated the Chairman and ManagingDirector (CMD) Director (Finance) Director (Technical) Directors and Key ManagerialPersonnel at 48th AGM of the Company.

Being a Government Company the power of appointment of Directors on the Board of theCompany is vested with the President of India acting through the Ministry of Power (MoP)Government of India. The remuneration of Directors and employees of the Company is fixedas per extant Guidelines issued by Department of Public Enterprises (DPE) from time totime. Further the Part time Non Official Independent Directors are paid sitting fees asdecided by the Board of Directors from time to time (within the limits prescribed underthe Companies Act 2013) for attending the meetings of Board and Committees thereof. Asper the norms of Government of India the Government Nominee Director is not entitled andCompany Secretary as Key Managerial Personnels (KMPs) of the Company. The role of CEO andCFO is being performed by the CMD and Director (Finance) of the Company respectively.

During the financial year 2017-18 Shri Arun Singh (DIN: 00891728) IndependentDirector of REC resigned from the Board of the Company due to personal reasons and ceasedto be a Director w.e.f. March 8 2018.

In terms of order dated May 17 2012 issued by the Ministry of Power Government ofIndia Shri Ajeet Kumar Agarwal (DIN: 02231613) had assumed charge as Director (Finance)of the Company with effect from August 12012 and his tenure of five years came to an endon July 31 2017. However Ministry of Power vide its order dated July 19 2017 extendedhis tenure as Director (Finance) of the Company from August 1 2017 to May 31 2020 i.e.the date of his superannuation or until further orders whichever is earlier.

The Ministry of Power Government of India vide its Order No. 20/6/2017-Coord. datedJuly 17 2018 has appointed Dr. Bhagvat Kisanrao Karad (DIN: 00998839) as Non-officialIndependent Director on the Board of REC for a period of three years from the date ofnotification of his appointment or till further orders whichever is earlier.

Further in line with the statutory requirements all the Independent Directors havegiven the requisite declaration that they meet the criteria of independence and none ofthe Directors are related inter-se.

In accordance with the provisions of the Companies Act 2013 and Article 91 (iv) of theArticles of Association of the Company Shri Sanjeev Kumar Gupta (DIN: 03464342) Director(Technical) shall retire by rotation at the 49th Annual General Meeting of the Company andbeing eligible offers himself for re-appointment. The Board of Directors recommends hisre-appointment as a Director. His brief resume is annexed to the Notice of the AGM.


As per the statutory provisions a listed company is required to disclose in itsBoard's Report a statement indicating the manner in which formal annual evaluation of theperformance of the Board its Committees and individual Directors has been made and thecriteria for performance evaluation of Independent Directors as laid down by Nominationand Remuneration Committee.

However Ministry of Corporate Affairs vide its notification dated June 5 2015 has inter-aliaexempted the Government Companies from the above requirement in case the Directors areevaluated by the Ministry or Department of the Central Government which isadministratively in charge of the Company as per its own evaluation methodology. FurtherMCA vide Notification dated July 5 2017 also prescribed that the provisions relating toreview of performance of Independent Directors and evaluation mechanism prescribed inSchedule IV of the Companies Act 2013 is not applicable to Government Companies.

Accordingly REC being a Government company is exempted in terms of above notificationsas the evaluation of performance of all the members of the Board of the Company is beingdone by the administrative Ministry i.e. Ministry of Power and the Department of PublicEnterprises (DPE).

Further your Company also enters into Memorandum of Understanding (MoU) with Ministryof Power Government of India each year demarcating key performance parameters for theCompany and the performance of the Company is evaluated vis-a-vis MoU parameters.


The performance of the Company in terms of MoU signed with the Ministry of PowerGovernment of India for the financial year 2016-17 has been rated as"Excellent". This is the 24th year in succession that REC has received"Excellent" rating since the year 1993-94 when the first MoU was signed with theGovernment. The rating for financial year 2017-18 is still awaited.

During the financial year 2017-18 the Company has been conferred with the 'Certificateof Recognition for Excellence in Corporate Governance' by the Institute of CompanySecretaries of India (ICSi) at CMD & Director (Finance) receiving SCOPE ExcellenceAward for outstanding contribution to the Public Sector Management and ‘SCOPEMeritorious Award' for Best Managed Bank - Financial Institution Category from Shri PranabMukherjee the then President of India.

The Rs 17th ICSI National Awards for Excellence in Corporate Governance' inrecognition of its continuous efforts and innovative practices in promoting good corporategovernance.

Further REC has also received the Governance Now 5th PSU Award 2017 CBIP Award forBest Power Financing Company and "SCOPE Award for Excellence and OutstandingContribution to the Public Sector Management" for the year 2016-17 under SpecialInstitutional Category Digitalization during the year under review.


With reference to Section 134(5) of the Companies Act 2013 it is confirmed that:

(i) in the preparation of the annual accounts for the year ended March 31 2018 theapplicable Accounting Standards have been followed and no material departures have beenmade from the same;

(ii) such accounting policies have been selected and applied consistently (except forchanges in Accounting Policies as disclosed in the Notes to Accounts to the FinancialStatements) and judgments and estimates made that are reasonable and prudent so as to givea true and fair view of the state of affairs of the Company at the end of the financialyear and of the profit of the Company for that period;

(iii) proper and sufficient care is taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

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

(v) internal financial controls have been laid to be followed by the Company and suchinternal financial controls were adequate and operating effectively; and

(vi) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.


The Companies Act 2013 permits companies to send documents like Notice of AnnualGeneral Meeting Annual Report and other documents through electronic means to its membersat their registered email addresses besides sending the same in physical form.

As a responsible Corporate Citizen the Company has actively supported theimplementation of 'Green Initiative' of Ministry of Corporate Affairs (MCA) and effectedelectronic delivery of Notices and Annual Reports since 2010-11 to those share holderswhose email ids were already registered with the respective Depository Participants (DPs)and who have not opted for receiving such documents in physical form. The intimation ofdividends (interim/final) is also being sent electronically to those shareholders whoseemail ids are registered.

Members who have not registered their e-mail addresses so far are requested toregister their e-mail address with the Registrar and Share Transfer Agent (R&TA) ofthe Company/Depository Participant (DP) of respective member and take part in the GreenInitiative of the Company for receiving electronic communications and support the"THINK GREEN GO GREEN" initiative.

It is reiterated that upon receipt of requisition from the member including the memberswho have exercised the option of electronic delivery of these documents every member ofthe Company is entitled to receive free of cost a copy of the Balance Sheet of theCompany and all other documents required by law to be attached thereto including theStatement of Profit and Loss and Auditors' Report etc.

Further pursuant to Section 108 of the Companies Act 2013 read with Rule 20 of theCompanies (Management and Administration) Rules 2014 the Company is providing e-votingfacility to all members to enable them to cast their votes electronically in respect ofresolutions set forth in the Notice of Annual General Meeting (AGM). The detailedinstructions for e-voting are provided in the Notice of AGM.

The Company has also sent reminder letters to such shareholders whose folios do nothave or are having incomplete details with regard to PAN and Bank particulars requestingthem to furnish their PAN and Bank details to the Company for updation. A specimen letterand proforma for updation of PAN Bank and contact details forms part of this AnnualReport and is also available on the website of the Company.


REC organized various cleanliness programmes during the "Swachh BharatPakhwada" from September 15 2017 to October 2 2017 at Corporate Office of theCompany. During the cleanliness programmes banners & posters were fixed in and aroundoffice premises to spread awareness among employees and general public. All employees ofREC participated with great enthusiasm and zeal & undertook special cleanliness driveof their respective office premises toilets stairs lifts & other surrounding areas.REC organized 10 Nukkad Nataks in different locations across Delhi to spread awarenessabout hygiene & sanitation and waste management by encouraging people to participatein 'Swachhta Hi Seva' campaign. Old and unwanted records were weeded out as per RecordRetention Schedule. In this process official papers magazines periodicals draftreports etc. were disposed off. A new paper-less software has also been developed forcompletely discontinuing the use of paper for official work. Cleanliness is continuousprocess and it will continue in REC.


Your Company has taken necessary steps for the implementation of "Right toInformation Act 2005 (RTI)" in the Company and independent RTI Cell has been set upfor coordinating the work relating to receipt of applications & appeals and furnishingthe information & disposal off appeals. RTI Handbook both in English and Hindi hasbeen placed on the website of the Company.

The status of RTI applications and appeals during the financial year 2017-18 is asfollows:

Sl. No. Particulars Nos.
1. Applications received 341
2. Applications disposed off 335
3. Applications disposed off subsequently 06
4. Appeals received by First Appellate Authority REC 16
5. Appeals disposed off by First Appellate Authority REC 16
6. Second Appeal notice received from Central Information Commission (CIC) 02
7. Second Appeal disposed off by Central Information Commission (CIC) 02


REC encourages participation by Micro Small and Medium Enterprises (MSMEs) includingMicro and Small Enterprises owned by SC/ST and for the guidelines for MSMEs as defined inthe purchase procedure is being followed in the Company.

REC being financial institution is not executing any project. Hence only procurementof office equipment like computers printers and petty purchase i.e. consumables &stationery items other miscellaneous items & services etc. from market are beingmade. Accordingly the Company has requested the Ministry of Micro Small & MediumEnterprises to grant exemption to REC from compliance of MSE procurement target of 20%including minimum of 4% from MSEs owned by SC/ST Entrepreneurs. However during thefinancial year 2017-18 procurement amounting to Rs 1.64 crore were made from MSEs.

REC Public Procurement Policy for MSME is available on the website of the Company.

32. disclosure uNDER The SEXuAL harassment OF WOMEN AT WORKPLACE (PREVENTIONProhibition AND REDRESSAL) ACT 2013.

In line with the provisions of Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 an 'Internal Complaints Committee' has beenconstituted in the Company for redressal of complaint(s) relating to sexual harassment ofwomen employees. The committee is headed by a senior woman official of the Company andincludes a representative from an NGO as one of its members. Anti-sexual harassment stanceof the Company is also outlined in REC (Conduct Discipline and Appeal) Rules.

During the financial year 2017-18 the Company did not receive any complaint of sexualharassment.


Pursuant to Section 92(3) of Companies Act 2013 read with Rule 12(1) of Companies(Management and Administration) Rules 2014 an extract of Annual Return in Form MGT-9 isannexed to this report.


In compliance of the provisions of the Companies Act 2013 the particulars ofcontracts or arrangements entered into by the Company with its related parties aredisclosed in Form AOC-2 annexed to this report.



M/s G.S. Mathur & Co. Chartered Accountants (Firm Reg. No.: 008744N) New Delhiand M/s A.R. & Co. Chartered Accountants (Firm Reg. No.: 002744C) New Delhi wereappointed as Statutory Auditors of your Company for the financial year 2017-18 by theComptroller and Auditor General (C&AG) of India. The Statutory Auditors have auditedthe Financial Statements of the Company for the financial year ended March 31 2018.

Further the Comptroller and Auditor General (C&AG) of India in exercise of powersconferred under Section 139 of the Companies Act 2013 has appointed M/s G.S. Mathur &Co. Chartered Accountants (Firm Reg. No.: 008744N) and M/s A.R. & Co. CharteredAccountants (Firm Reg. No. :002744C) New Delhi as the Statutory Auditors of the Companyfor the financial year 2018-19 and the Statutory Auditors have also accepted theirappointment. Approval of the Members of the Company will be obtained in ensuing AnnualGeneral Meeting to authorize the Board of Directors of the Company to fix theremuneration of Auditors for the financial year 2018-19.


M/s Chandrasekaran Associates Practicing Company Secretaries (Certificate of PracticeNo.3850) New Delhi were appointed as Secretarial Auditors of the Company for carrying outSecretarial Audit for the financial year 2017-18. In terms of Section 204 of the CompaniesAct 2013 and Rules made thereunder they have issued Secretarial Audit Report for thefinancial year 2017-18 and the same is annexed to this Report.

35.1 Management's Comments on the Auditors' Report

Though auditors have not given any qualifications reservations adverse remarks ordisclaimers in their report on standalone and consolidated financial statements of theCompany but they have made certain observations on further strengthening of the internalfinancial controls. Accordingly the auditor observations and Management Reply to theobservations of the Statutory Auditors is as under:

Observation of Statutory Auditors Management's Reply
Annexure to the Independent Auditors' Report referred under 'Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")' of Independent Auditors' Report on Standalone Financial Statements (Annexure-C) & Consolidated Financial Statements (Annexure-A)
In our opinion the Company has in all material aspects an adequate internal financial controls system except (i) improvement in ERP system relating to determination of non-performing assets revalidation of the sanctions of loans and recording of non-entertaining/rejection/disposal of applications of the loans (ii) strengthening of procedures for monitoring of utilization of funds disbursed to the borrowers (iii) procedure for processing of the claims of service providers (iv) rotation of duties amongst staff as per HR Policy to be implemented in letter and spirit over financial reporting. Continuous efforts are being made to further strengthen the internal control in the said areas.

The Secretarial Auditors of the Company have given an unqualified report for thefinancial year 2017-18. However they have one observation relating to composition ofBoard of Directors. The Management's Reply to the observation is as under:

Observation of Secretarial Auditors Management's Reply
During the period under review the Company has generally complied with the provisions of the Act Rules Regulations Guidelines Standards etc. mentioned above including the provisions of Section 149 of the Companies Act 2013 and read with regulation 17 of SEBI (Listing Obligation & Disclosure Requirements) Regulation 2015 with respect to the composition of Board of Directors till March 7 2018. Thereafter vacancy of One Independent Director exists in the Company. During the financial year 2017-18 the composition of Board of Directors was in compliance with all the applicable provisions till March 7 2018. However Shri Arun Singh Independent Director of the Company resigned from the Board due to personal reasons and ceased to be a Director w.e.f. March 8 2018.

Further Ministry of Power vide its Order dated July 17 2018 has appointed Dr. Bhagvat Kisanrao Karad as Part Time Non Official Independent Director on the Board of REC.

Accordingly after the above appointment the composition of Board of the Company is in compliance with the provisions of the Companies Act 2013 SEBI (LODR) Regulations 2015 and DPE Guidelines on Corporate Governance for CPSEs.


The Comptroller and Auditor General (C&AG) of India vide letter dated August 22018 has given 'Nil' Comments on the Audited Financial Statements of the Company for theyear ended March 31 2018 under Section 143 (6) (a) of the Companies Act 2013. TheComments of C&AG for the financial year 2017-18 have been placed along with thereport of Statutory Auditors of the Company elsewhere in this Annual Report.


In compliance to the requirements of SEBI (LODR) Regulations 2015 the details ofDebenture Trustees appointed by the Company for different series of Bonds issued by theCompany from time to time is annexed to this report.


a) There was no change in the nature of business of the Company during the financialyear 2017-18.

b) The Company has not accepted any public deposits during the financial year 2017-18.

c) No significant and material orders were passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.

d) The Company maintains an adequate system of Internal Controls including suitablemonitoring procedures which ensure accurate and timely financial reporting of varioustransactions efficiency of operations and compliance with statutory laws regulations andCompany policies. For details please refer to the 'Management Discussion and Analysis'Report annexed to this report.

e) Information on composition terms of reference and number of meetings of the Board& its Committees held during the year establishment of vigil mechanism/whistle blowerpolicy and web-links for familiarization/training policy of Directors Policy onMateriality of Related Party Transactions and Dealing with Related Party Transactions andPolicy for determining Material Subsidiaries Compensation to Key Managerial PersonnelSitting fees to Independent Directors etc. have been provided in the Report on CorporateGovernance prepared in compliance of provisions of SEBI (LODR) Regulations 2015 whichforms part of the Annual Report.

f) Pursuant to Section 186(11) of the Companies Act 2013 loans made guarantees givenor securities provided by a company engaged in the business of financing of companies orof providing infrastructural facilities in the ordinary course of its business are notapplicable to the Company hence no disclosure is required to be made. Further thedetails of investments are given at Note No.8 of Notes to Accounts to Standalone FinancialStatements.

g) Since the provisions of Section 197 of the Companies Act 2013 and Rules madethereunder related to Managerial Remuneration are not applicable to GovernmentCompanies no disclosure is required to be made.

h) There are no material changes and commitments affecting the financial position ofthe Company which has occurred between the end of the financial year i.e. March 31 2018and the date of this report.

i) The Company has not issued any stock options to the Directors or any employee of theCompany.

j) The details related to vigilance cases replies to audit objections and RTI mattersetc. are duly incorporated in this report as required vide OM dated January 24 2018 ofthe Ministry of Parliament Affairs Government of India.

k) The Central Government has not prescribed the maintenance of cost records for theproducts/services of the Company under Companies (Cost Records and Audit) Rules 2014read with Companies (Cost Records and Audit) Amendment Rules 2014 prescribed by theCentral Government under Section 148 of the Companies Act 2013. Accordingly CostAccounts and Records are not required to be maintained by the Company.

39. status of construction of rec corporate office building at gurugram

The construction of REC state of art office building at Sector-29 Gurugram is beingexecuted in full swing. RCC works of this G+5 storey building is almost completed exceptauditorium roof. Services work like installation of HVAC duct firefighting pipeelectrical work installation of fresh air & ventilation fans flooring and blockmasonry work are almost completed in all three basements. Interior work and alliedservices works in superstructure are also taken up in parallel to civil works. Fagadeglass envelope and roof top solar pergola structure works are also in progress. Effortsare being made to complete the building by December 2018.

During the financial year 2017-18 the building project has been declared winner in twocategories (i) Integrated Water Management and (ii) Energy Management by GRIHA Council(Authority giving green building certification) during 9th GRIHA Summit which willfurther help REC in achieving GRIHA 5 Star rating on completion of project.


Information required to be furnished as per the Companies Act 2013 and SEBI (LODR)Regulations 2015 and other applicable statutory provisions is annexed to this report asunder:

Particulars Annexure
Management Discussion & Analysis Report I
Report on Corporate Governance II
Auditor's Certificate on Corporate Governance III
Business Responsibility Report IV
Secretarial Audit Report V
Annual Report on CSR Activities VI
Extract of Annual Return VII
Particulars of Contracts or Arrangements with Related Parties VIII
Details of Debenture Trustees appointed by the Company for different series of Bonds IX


The Directors are grateful to the Government of India particularly the Ministry ofPower Ministry of Finance NITI Aayog DIPAM DPE and the Reserve Bank of India for theircontinued co-operation support and guidance in effective management of the Company'saffairs and resources.

The Directors thank the State Governments State Electricity Boards State PowerUtilities and other Borrowers for their continued support and trust in the Company.

The Directors also place on record their sincere appreciation for the continued supportand goodwill of the esteemed Shareholders Investors in REC Bonds domestic and overseasBanks Life Insurance Corporation of India KfW of Germany and JICA of Japan in the fundraising programmes of the Company.

The Directors also thank M/s G.S.Mathur & Co. and M/s A.R & Co. StatutoryAuditors M/s Chandrasekaran Associates Secretarial Auditors and the Comptroller &Auditor General of India for their valued contribution.

The Directors also sincerely appreciate and thank all the employees of the Company fortheir valuable contribution and dedicated efforts in steering the Company to excellentperformance for yet another year in succession.

For and on behalf of the Board of Directors
P V Ramesh
Place: New Delhi Chairman and Managing Director
Date : August 23 2018 (DIN: 02836069)