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Directors Report of PTC India Financial Services Ltd.

Mar 31, 2014

Dear Shareholders

The Directors have pleasure in presenting you the Eighth Annual Report together with the audited accounts of your Company for the Financial Year 2013-14.

OVERVIEW

Power or electricity is one of the most critical components of infrastructure and one of the prime drivers of economic growth and social development. India is the fifth largest producer and consumer of electricity in the world after US, China, Japan and Russia. The Indian power sector is one of the most diversified in the world. Sources for power generation range from commercial sources such as coal, lignite, natural gas, oil, hydro and nuclear power to other viable non- conventional sources such as wind, solar and agriculture and domestic waste.

The demand for electricity in the country has been growing at a rapid rate and is expected to grow further in the years to come. Indian Power Sector recorded a capacity addition of about 20,000 MW during FY 2013-14 taking the total installed power generation capacity in the country to about 243,000 MW as at 31st March 2014. The government''s policy measures aimed at improving fuel availability and the financial health of state utilities have helped revive the power sector. It is felt that Indian government''s FY13 and FY14 policy measures towards solving two key issues - fuel risk and poor financial health of state power utilities are yielding positive results.

The investment climate is very positive in the power sector. Due to policy liberalization, the sector has witnessed higher investment flows than envisaged. The Power Ministry has set a target for adding about 76,000 MW of electricity generation capacity in the 12th Plan (2012-17) and about 93,000 MW in the 13th Plan (2017-2022).

The new government''s resolve to pursue economic reforms is set to catalyse the power sector''s revival. The stimulation is also seeing an increase in the number of foreign companies interested in participating in the Indian projects. The focus on solving the coal impasse by increasing coal production and assuring coal supply to power plants makes the government''s priorities clear. The increased allocation to power in the plan outlay is crucial for sustained growth recovery. The investors have welcomed the move to extend the 10-year tax holiday and the proposed restoration of ''accelerated depreciation'' which is expected to go a long way in encouraging investments into the sector. Comprehensive measures for enhancing domestic coal production, more washeries to improve the quality of delivered coal and rationalization of coal linkages are all expected to yield positive results.

India is blessed with an abundance of sunlight, water and biomass and the government is committed to increasingly tap this potential for generation of electricity. The composition of renewable power in the country''s installed generation capacity is expected to increase going forward since renewable energy sources and technologies have potential to provide solutions to the long- standing energy problems. India is increasingly adopting responsible renewable energy techniques and taking positive steps towards carbon emissions, cleaning the air and ensuring a more sustainable future. The Indian government has proposed to construct four giant solar energy plants, with a capacity of 1,000MW each, as part of its efforts to accelerate the solar energy program and the Union budget has allocated a sum of Rs. 10,000 million for the solar power sector, a move that is expected to boost energy generation from renewable sources. PFS focuses on attractive opportunities across the infrastructure sector.

PTC India Financial Services Limited (PFS) is a systematically important non- deposit taking non-banking finance company registered with Reserve Bank of India (RBI) and set-up to devote itself mainly for providing financial solutions to projects in the energy value chain. The Company has also been accorded the status of Infrastructure Finance Company (IFC) by the RBI in August 2010. The operational and financial performance of the Company during FY 2013-14 has maintained a robust growth momentum.

FINANCIAL RESULTS

During the year 2013-14, your Company has recorded a total revenue of Rs. 5,461.63 million.

The highlights of the financial results are as under

(Rs. in millions) Particulars 2013-14 2012-13

Income 5,461.63 2,865.22

Expenditure 2,612.77 1,312.33

Profit before tax 2,848.85 1,552.89

Tax expense 771.66 511.32

Profit after tax 2,077.19 1,041.57

Transfer to statutory reserve 415.44 208.31

Transfer to special reserve (in terms of 325.00 200.00 Sec.36(1)(viii)of Income Tax Act, 1961

The operational performance was quiet robust and the interest income increased to Rs.4,199.99 million during 2013-14, thereby recording an increase of 67% compared to Rs.2,513.16 million during 2012-13. In line with the same, the borrowings also increased leading to increase in the finance costs which increased to Rs.2,209.55 million during 2013-14 compared to Rs.1,066.17 million during 2012-13. Finance costs include amortization of foreign currency translation which increased to Rs.1,257.04 million in 2013-14 compared to Rs.544.40 million during 2012-13. The Company made a profit of Rs.821.69 million during the year by divesting its equity stake in one of the company. The profit before tax (PBT) stood at Rs.2,848.85 million during 2013-14 as compared to Rs.1,552.89 million during 2012-13, thus recording a growth of 83% whereas profit after tax nearly doubled to Rs.2,077.19 million during 2013- 14 as compared to Rs.1,041.57 million during 2012-13.

OPERATIONAL PERFORMANCE

The debt assistance sanctioned to various projects during 2013-14 aggregated to Rs.25,202 million compared to Rs.40,271 million in 2012-13. However, the disbursements were quite robust at Rs.30,706 million during 2013-14 compared to about Rs.13,000 million during 2012-13. The loan book stood at Rs.49,744 million as at 31st March 2014 whereas the equity investments stood at Rs.3,054 million as on the said date. The cumulative aggregate debt assistance sanctioned as at 31st March 2014 stands at Rs.103,030 million.

The financial assistance sanctioned by PFS would help capacity creation of more than 30,000 MW. The Company continues to diversify its portfolio and as a result, the composition of renewable projects in the outstanding loan book stands at around 35%, thermal projects constitute about 33%. It is worthwhile to mention that renewable portfolio constitutes a maximum portion of PFS'' loan book. The company has also forayed into financing infrastructure facilities like private railway sidings and development & operation of coal mines and power transmission projects. The Company continues to regularly monitor the progress and operations of the assisted projects through its comprehensive project monitoring mechanism.

DIVIDEND

The Board of Directors of the Company have recommended a dividend @ 10% i.e. Re.1.00 per equity share of Rs.10/- each for the financial year 2013-14.

SHARE CAPITAL

The paid up share capital of the Company as at 31st March 2014 aggregates to Rs.5,620.83 million comprising of 562,083,335 equity shares of Rs.10 each fully paid up. PTC India Limited continues to hold 60% of the paid up capital of the Company as at 31st March 2014. The shares of the Company are listed on the National Stock Exchange and Bombay Stock Exchange.

RESERVES

Out of the profits earned during the financial year 2013-14, the Company has transferred an amount of Rs.415.44 million to Statutory Reserve in accordance with the requirements of Section 45-IC of the Reserve Bank of India Act, 1934. During 2013-14, the Company has also appropriated an amount of Rs.325 million to a reserve created under Section 36(1)(viii) of the Income Tax Act, 1961 in order to achieve tax efficiencies.

RESOURCE MOBILIZATION

The growth in loan assets brings in the challenge of arranging funds at optimal cost and maintaining spread. In order to meet the growing requirement for business operations, and to continuously optimise its borrowing cost, the Company has:

(i) arranged term loans aggregating to around Rs.23,083 million from various banks and financial institutions at competitive rates.

(ii) received funding from IREDA aggregating to Rs.180 million under the "National Clean Energy Fund" (NCEF) to IREDA for on-lending to one solar project being executed in Punjab.

The total borrowings of the Company stood at Rs.38,951 million as at 31st March 2014 compared to Rs.15,868 million as at 31st March 2013. The continuous and persistent efforts made by the Company have enabled it to maintain its overall cost of borrowed funds at about 9.07% for the year and borrow from various banks at their base rates.

The Company raised external commercial borrowings (ECB) aggregating to USD 26 million and USD 50 million from Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG) and International Finance Corporation (IFC) respectively and has successfully implemented the Environmental and Social Management System (ESMS) as per the new IFC Performance Standards 2012.

PFS has entered into derivative transactions to hedge against the currency risk and interest rate risk on outstanding ECBs, using option structures and such transactions are not for trading or speculative purposes. There are no foreign currency exposures that are not hedged by a derivative instrument or otherwise. PFS has outstanding foreign currency borrowings of USD 74.55 million (Previous Year USD 76.00 million), against which the Company has taken call spread options to hedge the currency risk on principal repayments and cap spread options to hedge the interest rate risk on interest payments.

REALISATION

The Company gives utmost priority to the realization of the amounts due towards principal and interest. During 2013-14, PFS recovered principle amount of Rs.3,922 million, and interest of Rs.4,118 million. The Company has NIL Net NPAs as at 31st March 2014. During the year 2013-14, the Company has created a provision for contingencies on standard assets amounting to Rs.165.62 million in accordance with the requirements of Reserve Bank of India vide RBI Circular No. DNBS.PD.CC.No.207/ 03.02.002 /2010-11 dated 17th January, 2011. Though the RBI stipulates the provision equivalent to 0.25%, the Company creates a provision equivalent to 0.50% of the standard assets.

CREDIT RATINGS

During the year ended 31st March 2014, CRISIL has assigned its highest rating "CRISIL A1 " (pronounced CRISIL A one plus) rating to the proposed Short Term Debt Programme (including Commercial Paper) and "CRISIL A " rating to the proposed Non-Convertible Debentures of PFS.

The other long term borrowings of the Company have been rated [ICRA] A by ICRA and Non-Convertible Debentures have been rated [ICRA] A by ICRA, CARE A by CARE and BWR AA by Brickworks.

HUMAN RESOURCE

Human Resources is critical to rapid growth of your Company. Broadening and deepening the human skills and conducive HR practices have been core to the HR initiatives. The human resource policies of the Company help in attracting and retaining the best talent in the industry. Other HRD initiatives include employee welfare measures, in-house and out-station training programmes in leading institutes and promoting participative management.

DIRECTORS'' RESPONSIBILITY STATEMENT

In pursuance of Section-217 (2AA) of the Companies Act, 1956, the Directors make the following statement:

(i) In the preparation of the Annual Accounts, the applicable accounting standards have been followed by PFS along with proper explanation relating to material departures;

(ii) The Directors have selected such Accounting policies, and applied them consistently, and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the FY 2013-14 and of the profit of the Company for that period;

(iii) Proper and sufficient care has been taken by the Directors for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

(iv) The Annual Accounts have been prepared on a going concern basis.

NON-ACCEPTANCE OF PUBLIC DEPOSIT

PFS is a Non - Deposit Taking Systemically Important Non Banking Finance Company. It has not accepted any public deposit during FY 2013-14.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO ETC.

Since PFS is engaged in investment and lending activities, particulars relating to conservation of energy and technology absorption are not applicable to it.

The Company has incurred expenditure of Rs.153.07 million (previous year Rs.140.18 million) in foreign exchange during the year ended 31st March, 2014. This includes interest in external commercial borrowings amounting to Rs.150.76 million (previous year Rs.127.39 million).

PARTICULARS OF EMPLOYEES

During the financial year ended on 31st March, 2014, no employee was employed for full or part of the year and who was in receipt of remuneration from PFS of more than Rs. 6.00 million per annum or Rs.0.5 million per month, in aggregate.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants were appointed as statutory auditors of the Company for FY 2013-14 by the shareholders and shall hold office upto the conclusion of the forthcoming Annual General Meeting.

The Auditors have audited the Accounts of the Company for the year ended 31st March 2014. Audited Accounts together with the Auditor''s Report thereon are annexed to this report.

The Board of Directors has recommended the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants as statutory auditors of the Company in term of Section 139 of the Companies Act, 2013, subject to the approval by shareholders in the ensuing annual general meeting.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance and Management Discussion & Analysis report, pursuant to the requirement of Clause 49 of the Listing Agreement forms part of the Annual Report. A certificate obtained from the Statutory Auditor of the Company, confirming compliance of conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is annexed to the Report on Corporate Governance.

ACKNOWLEDGEMENT

The Board of Directors acknowledge with deep appreciation the cooperation received from Ministry of Power, Ministry of Finance, Reserve Bank of India, SEBI, NSE, BSE, PTC India Limited and other stakeholders, International Finance Corporation (IFC), DEG, various Banks, Consortium Partners and Officials of the Company.

For and on behalf of the Board of Directors

Sd/- Date : 1st August, 2014 Deepak Amitabh Place: New Delhi Chairman (DIN: 016061535)


Mar 31, 2013

Dear Shareholders

The Directors have pleasure in presenting you the seventh annual Report together with the audited accounts of your Company for the Financial Year 2012-13.

OVERVIEW

Power sector in india has recorded capacity addition of about 23,466 MW during FY 2012-13 taking the total installed power generation capacity in the country to about 223,343 MW as at 31st March 2013. The installed generation capacity in India is fifth largest in the world and the energy-mix comprises both non-renewable (coal, lignite, petroleum and natural gas) and renewable energy sources (wind, solar, small hydro, biomass, cogeneration bagasse etc). The policy landscape in india has progressively evolved and has led to changes in the power sector, especially in terms of competition, private sector involvement and focus on green energy over the last decade, commencing with the passing of the Electricity Act 2003. However, the power generation has been largely dominated by coal based generation.

The indian power sector has achieved a lot over the last decade in the areas of policy reforms, private sector participation in generation and transmission, new manufacturing technology and capabilities, but there is still much to achieve and a number of challenges to overcome before the opportunities can be leveraged. india aims to add 88,000 MW by the end of the 12th Five- Year Plan, of which almost three-fifths of capacity is expected to be built by private companies. The huge capacity addition plan also offers opportunity for developing evacuation capacities and supply related OEMs like conductor manufacturing, insulator manufacturing, tower fabrication and EPC.

The Government has approved debt restructuring plan for beleaguered state electricity boards, however, it is still felt that strong political will is necessary to achieve meaningful reforms in the power sector. The debt restructuring for the sEBs is dependent upon important conditions such as tariff revisions, reduction in AT&C losses. The implications of the re-structuring are far- reaching. It is expected to improve the financial health of boards, which in turn will ensure timely payments to utilities, and utilities in turn will be able to re-deploy funds into new projects, and the provision to increase tariffs will benefit the sector. Banks will again begin to lend to power projects.

PTC India Financial Services Limited (PFS) is a systematically important non-deposit taking non banking finance company registered with Reserve Bank of India (RBI) and set-up to devote itself exclusively for providing financial solutions to projects in the energy value chain. The Company was accorded the status of Infrastructure Finance Company (IFC) by the RBI in August 2010. The operational and financial performance of the Company during FY 2012-13 has maintained rather growth momentum.

FINANCIAL RESULTS

During the year 2012-13, your Company has recorded a total revenue of Rs.2,865.22 million.

The highlights of the financial results are as under

(Rs. in millions)

Particulars 2012-13 2011-12

income 2,865.22 3,071.99*

Expenditure 1,312.33 1,055.58

Profit before tax 1,552.89 2,016.41

Tax expense 511.32 475.99

Profit after tax 1,041.57 1,540.43

Transfer to statutory reserve 208.31 308.09

Transfer to special reserve (in terms of Sec.36(i) 200.00 - (viii) of Income Tax Act, 1961

*includes Rs. Nil during FY 2012-13 (Rs.1,272.43 million during FY 2011-12) being profit on sale of equity investments.

The operational performance was quiet robust and the interest income increased to Rs.2,513.16 million during 2012-13, thereby recording an increase of 89% compared to Rs.1,329.54 million during 2011-12. in line with the same, the borrowings increased leading to increase in the finance costs. However, compared to the increase in interest income, the finance costs recorded an increase of 47% only during 2012-13 and increased to Rs.1,011.73 million compared to Rs.686.12 million during 2011-12. The Company had made a profit of Rs.1272.43 million being profit on disinvestment of its stake in two companies viz., ind-Barath PowerGencom Limited and indian Energy Exchange Limited during 2011-12. However, no divestments were made during 2012-13. Hence, profit before tax (PBT) stood at Rs.1,552.89 million during 2012-13 as compared to Rs.2,016.41 million in 2011-12, thus recording a decline of 23%. Excluding, the profit on sale of equity investments aggregating to Rs.1272.43 million in 2011-12, the profit before tax increased by 109%. Profit after tax (PAT) stood at Rs.1,041.57 million during 2012-13 compared to Rs.1,540.43 million during 2010-11.

OPERATIONAL PERFORMANCE

The debt assistance sanctioned to various projects during 2012-13 aggregated to Rs. 40,271 million compared to Rs.36,923 million in 2011-12. The disbursement of debt during 2012-13 was quite robust at Rs.13,000.71 million compared to Rs.6,241.75 million in 2011-12. The disbursements in equity investments aggregated to Rs.102.64 million during 2012-13 compared to Rs.224.62 million in 2011-12. The aggregate debt assistance sanctioned as at 31st March 2013 stands at almost Rs.100,000 million.

The financial assistance sanctioned by PFS so far would help capacity creation of more than 30,000 MW. The Company continues to diversify its portfolio and as a result, the composition of renewable projects in the total debt sanctioned has increased to 25% as at 31st March 2013 compared to 13% as at 31st March 2012. The debt assistance to renewable projects constitutes about 40% of the total loan assets as at 31st March 2013 compared to 21% a year ago. The company has also forayed into financing infrastructure facilities like private railway sidings, and development & operation of coal mines and power transmission projects. The Company continues to regularly monitor the progress and operations of the assisted projects through its comprehensive project monitoring mechanism.

DIVIDEND

The Board of Directors of the Company have recommended a dividend @ 4% i.e. Rs.0.40 per equity share of Rs.10/- each for the financial year 2012-13.

SHARE CAPITAL

The paid up share capital of the Company as at 31st March 2013 aggregates to Rs.5,620.83 million comprising of 562,083,335 equity shares of Rs.10 each fully paid up. PTC india Limited continues to hold 60% of the paid up capital of the Company as at 31st March, 2012. The shares of the Company are listed on National Stock Exchange and on Bombay Stock Exchange.

RESERVES

Out of the profits earned during the financial year 2012-13, the Company has transferred an amount of Rs. 208.31 million to statutory Reserve in accordance with the requirements of section 45-iC of the Reserve Bank of india Act, 1934. During 2012-13, the Company has also appropriated an amount of Rs. 200 million to a reserve created under Section 36(i)(viii) of the Income Tax Act, 1961 in order to achieve tax efficiencies.

RESOURCE MOBILIZATION

The growth in loan book brings in the challenge of arranging funds at optimal cost and maintaining spread. in order to meet the growing requirement for business operations, and to continuously optimise its borrowing cost, the Company has:

(i) executed external commercial borrowing (ECB) agreement with International Finance Corporation (IFC) for borrowing of Rs. 1,620 million equivalent of uSD 30 million. The drawdown of same is expected during 2013-14. The Company has already availed ECB funds to the extent of USD 76 million till 31st March, 2013 out of the ECB agreements executed in earlier years. The new ECB facility from IFC has been arranged on fully hedged basis at fixed interest rate, thus providing a cushion against the future volatility in currency and exchange rates.

(ii) arranged term loans aggregating to Rs.13,000 million from various banks at competitive rates.

The total borrowings of the Company stood at Rs.15,868.15 million as at 31st March 2013 compared to Rs.7,602.61 million as at 31st March 2012. The continuous and persistent efforts made by the Company have enabled it to reduce its overall cost of funds to 8.31% during 2012- 13 compared to 10.13% in 2011-12. The reduction has been achieved despite the no significant changes in the interest rate scenario in the economy during the entire financial year 2012-13.

The Company had raised an aggregate amount of Rs.2,016.91 million by way of secured long term tax saving infrastructure bonds during 2010-11 and 2011-12. The same has been fully utilized for business purposes as mentioned in the respective information memorandum for the issue.

REALISATION

The Company gives utmost priority to the realization of the amounts due towards principal and interest. During 2012-13, PFS recovered principle amount of Rs. 2,812.65 million, and interest of Rs. 2340.17 million. The Company has NIL NPAs as at 31st March 2013. During the year 2012-13, the Company has created a provision for contingencies on standard assets amounting to Rs.51.64 million in accordance with the requirements of Reserve Bank of India vide RBI Circular No. DNBS.PD.CC.No.207/ 03.02.002 /2010-11 dated 17th January, 2011. Though the RBI stipulates the provision equivalent to 0.25%, the Company creates a provision equivalent to 0.50% of the standard assets.

CREDIT RATINGS

During the year ended 31st March 2013, the long term bank borrowings of the Company have been rated [ICRA] A by ICRA and Non Convertible Debentures have been rated [ICRA] A by ICRA, CARE A by CARE and BWR AA by Brickwork.

HUMAN RESOURCE

Human Resources is critical to rapid growth of your Company. Broadening and deepening the human skills and conducive HR practices have been core to the HR initiatives. Apart from the campus recruitments being made from the reputed institutions, direct recruitments have been made for specialised positions. The human resource policies of the Company help in attracting and retaining the best talent in the industry. Other HRD initiatives include employee welfare measures, in-house and out-station training programmes in leading institutes and promoting participative management.

DIRECTORS'' RESPONSIBILITY STATEMENT

In pursuance of Section 217 (2AA) of the Companies Act, 1956, the Directors make the following statement:

(i) In the preparation of the Annual Accounts, the applicable accounting standards have been followed by PFS along with proper explanation relating to material departures;

(ii) The Directors have selected such Accounting policies, and applied them consistently, and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the FY 2012-13 and of the profit of the Company for that period;

(iii) Proper and sufficient care has been taken by the Directors for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

(iv) The Annual Accounts have been prepared on a going concern basis.

NON-ACCEPTANCE OF PUBLIC DEPOSIT

PFS is a Non - Deposit Taking Systemically Important Non Banking Finance Company. It has not accepted any public deposit during FY 2012-13.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO ETC.

Since PFS is engaged in investment and lending activities, particulars relating to conservation of energy and technology absorption are not applicable to it.

The Company has incurred expenditure of Rs.140.18 million (previous year Rs. 67.68 million) in foreign currency during the year ended 31st March, 2013. These included payment of Rs. 12.21 million as charges/fee for raising ECB.

PARTICULARS OF EMPLOYEES

During the Financial Year ended on 31st March, 2013, no employee was employed for full or part of the year and who was in receipt of remuneration from PFS of more than Rs. 6.00 million per annum or Rs.0.5 million per month, in aggregate.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants were appointed as Statutory Auditors of the Company for FY 2012-13 by the shareholders and shall hold office upto the conclusion of the forthcoming Annual General Meeting.

The Auditors have audited the Accounts of the Company for the year ended 31st March 2013. Audited Accounts together with the Auditor''s Report thereon are annexed to this report.

The Board of Directors has recommended the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants as statutory auditors of the Company for FY 2013-14 subject to the approval by shareholders in the ensuing annual general meeting.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance and Management Discussion & Analysis report, pursuant to the requirement of Clause 49 of the Listing Agreement forms part of the Annual Report. A certificate obtained from the Statutory Auditor of the Company, confirming compliance of conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is annexed to the Report on Corporate Governance.

ACKNOWLEDGEMENT

The Board of Directors acknowledge with deep appreciation the cooperation received from Ministry of Power, Ministry of Finance, Reserve Bank of India, SEBI, NSE, BSE, PTC India Limited and other stakeholders, International Finance Corporation (IFC), DEG, various Banks, Consortium Partners and Officials of the Company.

For and on behalf of the Board of Directors

Sd/-

Place : New Delhi Deepak Amitabh

Date : 27th June, 2013 Chairman

DIN : 01061535


Mar 31, 2012

Dear Shareholders

The Directors have pleasure in presenting you the sixth Annual Report together with the audited accounts of your Company for the financial year 2011-12.

OVERVIEW

Power Sector in India has recorded capacity addition of about 26,251 MW during FY 2011-12 taking the total installed power generation capacity in the country to about 199,877 MW as at 31st March, 2012. The installed capacity addition during the 11th Five Year Plan 2007-12 was about 55,000 MW and the Government has set a target of 90,000 MW capacity addition during the 12th Five Year Plan 2012-17. India's energy-mix comprises both non-renewable (coal, lignite, petroleum and natural gas) and renewable energy sources (wind, solar, small hydro, biomass, cogeneration bagasse etc). Though the sector is currently constrained by shortage of fuel, implementation risks, logistical arrangements, banks' increasing exposure to distribution companies, these constraints are expected to overcome in short to medium term. The planned capacity addition during the 12th Five Year Plan, which will not only lead to setting up of power plants but also stimulate investments in other areas such as transmission lines, distribution networks, setting up of more EPC contractors, investment in logistics for movement of heavy machinery, transportation network for fuel etc, presents us with enormous opportunities of providing assistance in the sector and it is estimated that power sector would require capital investment in excess of Rs. 11 trillion during the ensuing plan.

PTC India Financial Services Limited (PFS) is a Systemically Important Non- Deposit Taking Non Banking Finance Company registered with Reserve Bank of India (RBI) and set-up to devote itself exclusively for providing financial solutions to projects in the energy value chain. The Company was accorded the status of Infrastructure Finance Company (IFC) by the RBI in August 2010. The operational and financial performance of the Company during FY 2011-12 has maintained rather exceeded growth momentum.

FINANCIAL RESULTS

During the year 2011-12, the Company has recorded a total revenue of Rs. 3,071.99 million, an increase of 182% over the previous year's revenue of Rs. 1,088.52 million.

The highlights of the financial results are as under (Rs. in million)

Particulars 2011-12 2010-11

Income 3,071.99 1,088.52

Expenditure 1,055.58 574.21

Profit before tax 2,016.41 514.31

Tax expense 475.99 144.04

Profit after tax 1,540.42 370.27

Transfer to statutory reserve 308.09 74.10

During the year, the Company has disinvested its equity stake in two companies viz., Ind-Barath Power Gencom Limited and Indian Energy Exchange Limited which resulted in a profit of Rs. 1,272.43 million compared to a profit of Rs. 123.66 million on similar divestments during the previous year.

The profit before tax (PBT) has increased to Rs. 2,016.41 million during 2011-12 as compared to Rs. 514.31 million in 2010-11, thus recording a significant growth of 292%. Profit after tax (PAT) increased by 316% to Rs. 1,540.42 million from Rs. 370.27 million during 2010-11.

OPERATIONAL PERFORMANCE

The amount of loan sanctioned during 2011-12 aggregated to Rs. 36,923 million compared to Rs. 17,030 million in 2010-11. The level of disbursement of debt was Rs. 6,241.75 million during the year compared to Rs. 6,236.64 million during the previous year. A large portion of equity of PFS was already committed and disbursed in the equity investments as at the beginning of the year 2011-12. As a result, the amount of disbursement of equity during the year was lower at Rs. 224.62 million. Effective commitments for debt as at 31st March, 2012 were Rs. 58,364 million compared to Rs. 33,649 million as at 31st March, 2011.

The number of new projects for which financial assistance was sanctioned during the year was 28 taking the total number of sanctioned projects till 31st March, 2012 to 90. The financial assistance sanctioned by PFS so far would help capacity creation of more than 24,000 MW. Fuel wise assisted projects during the year comprised of 11 coal-based thermal projects, 5 wind-based projects, 4 solar-based projects, 3 hydro-based project and 1 biomass-based project.

Most of the assisted projects have progressed well compared with the schedule of implementation. 3 coal-based thermal projects, 2 wind-based projects and 2 solar-based projects have achieved commercial operations during the year 2011-12. Through a comprehensive project monitoring mechanism, PFS continuously monitors status of implementation of assisted projects on a regular basis.

DIVIDEND

The Directors of the Company have not recommended dividend for the financial year ended 31st March, 2012.

SHARE CAPITAL

The paid up share capital of the Company as at 31st March, 2012 aggregates to Rs. 5,620.83 million comprising of 562,083,335 equity shares of Rs. 10 each fully paid up. PTC India Limited continues to hold 60% of the paid up capital of the Company as at 31st March, 2012. The shares of the Company are listed on National Stock Exchange and Bombay Stock Exchange.

RESERVES

Out of the profits earned during the financial year 2011-12, the Company has transferred an amount of Rs. 308.09 million to Statutory Reserve in accordance with the requirements of Section 45-IC of the Reserve Bank of India Act, 1934.

RESOURCE MOBILIZATION

In order to meet the growing requirement of funds for the business operations, and to continuously optimise the borrowing cost, the Company has:

(i) raised an amount of Rs. 1,596.05 million during FY 2011-12 through secured long term tax saving Infrastructure Bonds eligible for tax benefit under Section- 80CCF of the Income Tax Act, 1961.

(ii) executed external commercial borrowing (ECB) agreement during the year with International Finance Corporation (IFC) for borrowing upto USD 50 million. The Company has availed ECB funds to the extent of USD 26 million till 31st March, 2012 out of the ECB agreement with DEG executed during financial year 2010-11 and the ECB facility from IFC shall be utilized during the ensuing financial year which would help us to lower the cost of borrowings.

The total borrowings of the Company stood at Rs. 7,602.61 million as at 31st March, 2012 as compared to Rs. 5,698.75 million as at 31st March 2011. The Company has made continuous and persistent efforts which have enabled it to reduce its cost of funds to 10.13% in financial year 2011-12 from 10.47% in financial year 2010-11. The reduction has been achieved despite the rising interest rate scenario in the economy during the entire financial year 2011-12. The ECB drawdown during 2012-13 will further help in lowering the cost of funds of the Company.

Out of the total proceeds from issue of secured long term tax saving infrastructure bonds aggregating to Rs. 1,596.05 million during FY 2011-12, the Company utilized a sum of Rs. 1,187.77 million for business purposes as mentioned in the information memorandum for the issue. The balance amount of Rs. 408.28 million as at 31st March, 2012 is held in current accounts and fixed deposits with scheduled banks.

REALISATION

The Company gives utmost priority to the realization of the amounts due towards principal and interest. During the year, PFS recovered loans of Rs. 617.3 million, and realized interest of Rs. 1,258.2 million on both short- term and long-term loans. The Company has all accounts as standard during the year and has not made any provision on Loan Assets (non performing) in its financial statements upto the year ended 31st March, 2012 other than the Statutory Reserve as mandated by the Reserve Bank of India. During the year 2011-12 the Company has created a provision for contingencies on standard assets amounting to Rs. 46.30 million in accordance with the requirements of Reserve Bank of India vide RBI Circular No. DNBS.PD.CC.No.207/ 03.02.002 /2010-11 dated 17th January, 2011. Though the RBI stipulates the provision equivalent to 0.25%, the Board of Directors of the Company has decided to create a provision equivalent to 0.50% of the standard assets.

CREDIT RATINGS

During the year ended 31st March, 2012, the long term bank borrowings of the Company have been rated [ICRA] A by ICRA and Non Convertible Debentures have been rated [ICRA] A by ICRA, CARE A by CARE and BWR AA by Brickwork. The Company's commercial paper programme has been awarded the rating of A1 by ICRA.

HUMAN RESOURCE

Human Resources becomes critical to the rapid growth of your Company. Broadening and deepening the human skills and conducive HR practices have been core to the HR initiatives. Apart from the campus recruitments being made from the reputed institutions, direct recruitments have been made for specialised positions. The human resource policies of the Company help in attracting and retaining the best talent in the industry. Other HRD initiatives taken include employee welfare measures, in-house and out- station training programmes and promoting participative management.

DIRECTORS' RESPONSIBILITY STATEMENT

In pursuance of Section 217 (2AA) of the Companies Act, 1956, the Directors make the following statement:

(i) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed by PFS along with proper explanation relating to material departures;

(ii) The Directors have selected such Accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2011-12 and of the profit of the Company for that period;

(iii) Proper and sufficient care has been taken by the Directors for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

(iv) The Annual Accounts have been prepared on a going concern basis.

NON-ACCEPTANCE OF PUBLIC DEPOSIT

PFS is a Systemically Important Non - Deposit Taking Non Banking Finance Company. It has not accepted any public deposits during financial year 2011-12.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO ETC.

Since PFS is engaged in investment and lending activities, particulars relating to conservation of energy and technology absorption are not applicable to it.

The Company has incurred expenditure of Rs. 67.68 million (previous year Rs. 22.59 million) in foreign exchange during the year ended 31st March, 2012. These included payment of Rs. 41.90 million as charges/fee for raising ECB.

PARTICULARS OF EMPLOYEES

During the Financial Year ended on 31st March, 2012, no employee was employed for full or part of the year and who was in receipt of remuneration from PFS of more than Rs. 6.00 million per annum or Rs. 0.5 million per month, in aggregate.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants were appointed as Statutory Auditors of the Company for financial year 2011-12 by the shareholders and shall hold office upto the conclusion of the forthcoming Annual General Meeting.

The Auditors have audited the Accounts of the Company for the year ended 31st March, 2012. Audited Accounts together with the Auditor's Report thereon are annexed to this report.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance and Management Discussion & Analysis report, pursuant to the requirement of Clause 49 of the Listing Agreement forms part of the Annual Report. A certificate obtained from the Statutory Auditor of the Company confirming compliance of conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is annexed to the Report on Corporate Governance.

ACKNOWLEDGEMENT

The Board of Directors acknowledge with deep appreciation the co-operation received from Ministry of Power, Ministry of Finance, Reserve Bank of India, SEBI, NSE, BSE, PTC India Limited and other stakeholders, International Finance Corporation (IFC), DEG, various Banks, Consortium Partners and Officials of the Company.

For and on behalf of the Board of Directors

Sd/-

T.N. Thakur

Date : 30th July, 2012 Chairman & Managing Director

Place: New Delhi DIN : 00024322


Mar 31, 2010

The Directors have pleasure in presenting the Fourth Annual Report together with audited accounts of your company for the financial year ending 31st March, 2010.

Overview

1. PTC India Financial Services Limited (PFS) is a systematically important non- deposit taking NBFC registered with Reserve Bank of India (RBI), exclusively engaged in providing financing solutions to projects in the energy value chain. An impressive all-round growth reflected in financial and operational performance during the year 2009-10 has provided a strong base to a newly set-up and fast evolving institution. Significantly improved performance during the year is also marked by a large number of initiatives taken to broad-base resource mix, explore new areas of business and build institutional capacity.

Financial Results

2. Starting its business operations effectively from September, 2007, PFS in its third year of operations i.e. 2009-10, has recorded revenue income of Rs.534.90 million rising from Rs.116 million in 2008-09. The highlights of financial results are as under.

(Rs. in million)

Particualrs 2009-10 2008-09

Revenue 534.90 116.00

Expenditure 167.42 28.92

Amortization & depreciation 0.47 0.24

Profit/(Loss) before tax 367.00 86.81

Provision for tax 112.48 1.51

Net profit/loss after taxation 254.52 85.30

Transfer to statutory reserve fund 50.95 17.06

Equity share capital (Rs. 10 each) 4,345.83 4,345.83

Reserve and surplus (including share premium) 2,001.14 1,746.62

The Profit Before Tax (PBT) has increased to Rs.367 million, from Rs.86.81 million in the year 2009-10 as compared to last year. This was largely due to increased level of disbursement of loans to power projects - both term loan and mezzanine/short-term loan, and increase in the fee-based income. The revenue for the year includes Rs. 348.84 million as interest on loans, and fee based income towards services involved in appraisal, structuring of financing product, due-diligence, legal documentation and disbursement as compared to Rs.13.89 million during the previous year.



Dividend

11. The Directors have not recommended dividend for the financial year ended on 31st March, 2010.

Transfer to Reserves

12. Out of profits of financial year 2009-10, Rs. 50.95 million has been transferred to Statutory Reserve Fund in terms of Section-45-IC of Reserve Bank of India Act, 1934.

Directors Responsibility Statement

13. In pursuance of Section-217 (2AA) of the Companies Act, 1956, the Directors make the following statement that :

(i) In preparation of the Annual Accounts, applicable accounting standards have been followed by PFS along with proper explanation relating to material departures;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year 2009-10 and of the profit or loss of the Company for that period;

(iii) Proper and sufficient care has been taken by the Directors for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

(iv) The Annual Accounts have been prepared on a going concern basis.

Non Acceptance of Public Deposit

14. PFS is a Non-Public Deposit taking Systematically Important NBFC. It has not accepted any public deposit during the year since inception.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo Etc.

15. Since PFS is engaged in investment and lending activities, particularly relating to conservation of energy and technology absorption are not applicable to it. The Company has incurred Rs.1.42 million as expenditure in foreign exchange during the financial year ended on 31st March, 2010.

Particulars of Employees

16. During the Financial Year ended on 31st March, 2010, particulars of the employee who was employed for full or part of the year and who was in receipt of remuneration from PFS, which in aggregate not more than Rs.2.40 million per annum or Rs.0.20 million per month as the case may be are given at Annexure of this report.

Auditors

17. M/s. Deloitte Haskins & Sells were appointed as statutory auditors of the Company for Financial Year 2009-10 by the shareholders and shall hold office upto the conclusion of the forthcoming Annual General Meeting.

The Auditors have audited the Accounts of the Company for the year ended 31st March, 2010. Audited Accounts together with the Auditors Report thereon are annexed to this report.

Corporate Governance

18. Your Company endeavours to inculcate good corporate governance practices in its organisational and business systems and processes. Your company realises that the good governance is a reflection of its culture, policies, relationship with stakeholders and commitments to values. Accordingly, it not only fulfils corporate governance requirements as stipulated by the Reserve Bank of India for NBFCs but also endeavours to adhere to corporate governance requirements stipulated by SEBI for listed companies, as a best practice.

Committees of Board of Directors:

19. The Board has constituted the following committees:

1) Audit Committee

2) Nomination-cum-Remuneration Committee

3) Compensation Committee for ESOP

4) Assets Liability Management Committee

5) Risk Management Committee

1. Audit Committee

As per the requirement of Companies Act, 1956, the Board has constituted an Audit Committee. The Committees role includes oversight of the companys financial reporting process to ensure that the financial statements of the company are true and fair, reviewing the companys financial and risk management. The Committee is chaired by Shri. P. Abraham, and Shri Shashi Shekhar, Shri Deepak Amitabh, Mrs. Rama Murali are the members of the committee. The Committee met five times in the financial year 2009-10. The Chairman of the Audit committee, Mr. P. Abraham was present in the last AGM of the company.

2. Nomination-cum-Remuneration Committee

The Board has constituted a Nomination cum Remuneration Committee in its 15th meeting on 5th of August, 2008. The Committees role includes fixing of remuneration of managerial personnel and ensuring that fit and proper person are placed on Board of the Company. The Committee is chaired by Shri T.N. Thakur and Shri P. Abraham, Shri. Deepak Amitabh, Shri L.B. Naidu are members of the Committee. During the financial year 2009-10, no meeting of the committee was held.

3. Compensation Committee for ESOP

The Board has constituted a Compensation Committee for ESOP in its 14th meeting held on 29th April, 2008. The scope of the Committee is to finalize the basic feature of ESOP scheme and allocation of ESOP to Directors and employees of the Company. The Committee is chaired by Shri T.N. Thakur and Shri Deepak Amitabh and Shri L.B. Naidu are members of the committee. The Committee met twice during the financial year 2009-10.

4. Assets Liability Management Committee

The Board has constituted Assets Liability Management Committee in its 19th

meeting held on 30th March 2009. The Company has also put in place an ALM Policy for effectively managing market risk, interest rate and liquidity risk. The policy also provides for periodic reporting to Board and prescribes various limits. The Committee is chaired by Shri T.N. Thakur and Shri P. Abraham, Shri Deepak Amitabh, Dr. Ashok Haldia are the members of the Committee. The Committee met twice during the financial year 2009-10.

5. Risk Management Committee

The Board has constituted a Risk Management Committee in its 21st meeting held on 7th July, 2009, as per the requirement of Reserve Bank of India. The scope of the Committee is to review risk management in relation to various risks, like - credit risk, operational risk and integrated risk profile of the Company. The Committee is chaired by Shri Shashi Shekhar, and Shri. L.B. Naidu, Dr. Ashok Haldia are the members of the Committee. The Committee met twice during the financial year 2009-10

Employee Stock Option Plan - ESOP 2008

20. The Company instituted the Employee Stock Option Plan - ESOP 2008 to grant equity based incentives to all its eligible employees. During the year, second tranche of ESOP 2008 was approved by the shareholders on October 23, 2009 and provided for grant of 1,00,75,000 options exercisable at a price of Rs 16 per share, representing one share for each option upon exercise. During the previous year the first tranche of ESOP was approved by the shareholders on October 27, 2008 and the Company granted two types of options i.e. Growth options granted to the employees and exercisable at intrinsic value as on the date of grant as certified by an independent valuer and Founder Member Options exercisable at face value of shares i.e. Rs 10 per share, representing one share for each option upon exercise. The vesting period of these options granted is 4 years from the respective date of grant.

Movement in Stock Options Year ended 31.03.2010 (in Nos.)

Growth Founder Options Member Options

Outstanding at the beginning of the year 8865000 1210000

Add: Granted during the year 10075000 -

Less: Forfeited during the year 544500 -

Less: Exercised during the year - -

Less: Expired during the year - -

Options outstanding as at the end of the year 18395500 1210000

Debenture Trustees

21. The Company has issued Non Convertible Debentures(NCD) of Series I & 2, in line with the requirement of SEBI, appointed IDBI Trusteeship Services Limited as debentures trustee for NCDs Series I & 2.

Acknowledgement

The Board of Directors acknowledge with deep appreciation the cooperation received from the Ministry of Finance, Reserve Bank of India, PTC India Ltd., Macquarie India Holdings Ltd., G.S. Strategic Investments Ltd., various banks, and officials of the Company.

For and on behalf of the Board of Directors

(Tantra Narayan Thakur)

Chairman & Managing Director

Date : 23rd July, 2010

Place : New Delhi


Mar 31, 2008

Not Available

 
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