power finance corporation ltd share price Management discussions



ANNEXURE A OF BOARDS REPORT

The last year has been a year of robust performance for Power Finance Corporation Limited (PFC). The economic environment appears more promising than before and it is believed that it will continue to drive capex growth in the power sector.

The Management of the Company (PFC) is pleased to present its Report on Industry scenario including Companys performance during the FY 2022-23.

    1. INDUSTRY STRUCTURE AND DEVELOPMENT
    2. India has emerged as a major force in the global energy economy. As the world is grappling with the challenge of climate change, India is committed towards reducing its carbon footprint in line with the global response to tackle this challenge. Indias approach of growth in power sector is resonating with the global demand of shift towards green generation. In this regard, India stands committed to reduce Emissions Intensity of its GDP by 45 percent by 2030, from 2005 level and achieve about 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.

      Between 2005 and 2022, per capita electricity consumption doubled from 631 Unit to 1255 Unit in India, making it the third largest electricity market in the world. With the onset of Covid-19 pandemic the pace of energy development of the country slowed down temporarily. However, the actual power scenario observed during FY 2022-23 is indicating return to normalcy from Covid pandemic as power consumptions are higher than the trends witnessed in the recent past. With steady economic growth expected there is much scope of the Demand to rise.

      The Government of India has identified the power sector as a key sector to promote sustained industrial growth. Some initiatives by the Government to boost the Indian power sector are as below:

      • In the Union Budget 2022-23, the government allocated

    19,500 crore for a PLI scheme to boost manufacturing

    of high-efficiency solar modules, the government announced the issuance of sovereign green bonds, as well as conferring infrastructure status to energy storage systems, including grid-scale battery systems.

        • Electrification in the country is increasing with support from schemes like Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY), and Integrated Power Development Scheme (IPDS).
    • In order to meet Indias 500 GW renewable energy target and tackle the annual issue of coal demand- supply mismatch, the Ministry of Power has identified 81 thermal units which will replace coal with renewable energy generation by 2026.
    • The Pradhan Mantri Sahaj Bijli Har Ghar Yojana, "Saubhagya", was launched by the government of India with an aim of achieving universal household electrification.

    The total fund requirement for the period 2022-2027 is estimated to be 14,54,188 crores, which also includes the likely expenditure during 2022-27 for advance action for the projects expected to get commissioned during 2027-2032. The total fund requirement for the period 2027-2032 has been estimated to be 19,06,406 crore. This fund requirement does not include advance action for the projects which may get commissioned after 31.03.2032.

    Based on the estimation of fund requirement for the period 2022-27 and considering sector-wise equity contribution, it is estimated that developers will be required to arrange for total debt of 10,90,641 crore.

    Generation

    Installed Capacity

    The total installed capacity as on March 31, 2023 was 416059 MW. Thermal sources continued to have a dominant share at around 57% (237268.91 MW), Hydro around 11% (46850.17 MW), Renewable around 30%

    (125159.81 MW) and Nuclear around 2% (6780.00 MW). The installed capacity stood at around 25% (105726.43MW) in state sector, around 51% (210278MW) in private sector and around 24% (100054.93MW) in central sector.

    The country has significant potential of generation from renewable energy sources. All efforts are being made by Government of India to harness this potential. With a substantial increase in renewable capacity and higher output from wind farms (due to improved wind speeds) and better availability of gas at competitive prices, the contribution of coal/lignite-fired plants is expected to decrease from current levels. As per National electricity plan 2023, the share of non-fossil based capacity is likely to increase to 57.4% by the end of 2026-27 and may likely to further increase to 68.4% by the end of 2031-32.

    The Overall generation (Including generation from grid connected renewable sources) in the country increased

    by 8.89% from 1491.859 BU during 2021-22 and 1624.465 BU during 2022-23. The performance of Category wise generation during the year 2022-23 is as follows:-

    The achievement of Transmission Lines during 2022-23 sector wise is as follows:

    In (Ckm)

    Thermal Increased by

    8.21%

    Central Sector 3926
    Nuclear Increased by

    2.66%

    State Sector 6816
    Hydro Increased by

    6.91%

    JV/Private Sector 3883

    Bhutan Import Reduced by 10.02%

    Your Company, through its subsidiary PFC Consulting

    Solar Wind & Other Renewable energy source increased by

    19.10%

    Limited has initiated Tariff Based Competitive Bidding Process (TBCB) for development and strengthening of transmission system through private sector participation.

    The growth of the renewable energy (RE) sector in India

    can be attributed to strong policy support from the Indian government, as well as robust investor interest driven by a greater focus on environmental, social, and governance (ESG) factors and attractive returns on assets. The market has attracted a wide range of global investors, including pension funds, sovereign wealth funds, private equity funds, and conglomerates that have established a presence in India.

    Over the years, participants in the RE sector have found it relatively easier to raise debt both domestically and internationally. This is due to the improved creditworthiness of the participants and a general decrease in interest rates over the medium-term. Various avenues have been explored by Indian RE players to raise funds, including domestic loans, domestic bonds, external commercial borrowings (ECBs), and green bonds.

    Lender appetite has been supported by the introduction of new and innovative financing structures. These include cross-collateralisation between multiple projects, cash pooling, and co-obligor structures. Additionally, credit enhancement has been achieved through partial or full guarantees provided by stronger entities or institutions.

    Transmission

    Transmission system plays an important role in supply of power to the consumers through the vital link between the generating stations and the distribution system. The energy resources like coal, hydro and renewable are unevenly distributed in India. This skewed distribution of resources necessitated the development of robust transmission system including establishment of inter-regional corridors for seamless transfer of power from surplus to deficit regions/areas.

    During FY 2022-23, 14625 Ckm(Circuit km) of transmission lines have been added comprising of 1655 Ckm of 765 kV, 3772 Ckm of 400 kV and 9198 Ckm of 220 kV.

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

    During the FY 22-23, 6 SPVs established for development of transmission projects, has been transferred to the successful bidders selected through TBCB.

    Distribution

    The distribution sector is the most important link in the power sector value chain, which channelises the revenue realisation to provide overall stability to the sector. To improve the operational and financial health of DISCOMs, the Government has launched the Revamped Distribution Sector Scheme (RDSS) in 2021 and Late Payment Surcharge (LPS) scheme in 2022

    Revamped Distribution Sector Scheme (RDSS)

    A Reforms-based and Results-linked, Distribution Sector Scheme has been formulated by Ministry of Power to improve the operational efficiencies and financial sustainability of DISCOMs.

    The objectives of the Scheme are:

    • to improve the quality, reliability and affordability of power supply to consumers through a financially sustainable and operationally efficient distribution sector;
    • Reduce AT&C losses to pan-India levels of 12-15% by 2024-25 and Reduce ACS-ARR gap to zero by 2024-25.

    PFC and its subsidiary REC Limited are the designated nodal agencies for operationalisation of the said scheme. The implementation period of the Scheme is 5 Years (FY 2021- 22 to FY 2025-26).

    RDSS has an outlay of 3,03,758 crore with an estimated gross budgetary support from Central Government of

    97,631 crore.

    Late Payment Surcharge Rule, 2022

    Ministry of Power (MoP) vide Gazette Notification dated June 3, 2022, notified "The Electricity (Late Payment Surcharge and Related Matters) Rules, 2022" (LPS Rules). These rules provide a mechanism for settlement of outstanding dues of Generating Companies, Inter-State Transmission Licensees and Electricity Trading Licensees.

    Power Finance Corporation Limited (PFC) has been designated by MoP, as the Nodal Agency for implementation of LPS Rules 2022. PFC shall be responsible for all the activities related to implementation of the said Rules including regular review and monitoring.

    For operationalisation of Rules, PRAAPTI Portal (developed and managed by PFC Consulting Ltd.) acts as an information portal wherein suppliers enter invoice details and Discoms update the corresponding payment amount to ensure invoice and payment tracking of power bills in the country. Based on the information available on PRAAPTI, regulations are imposed on defaulting Discoms as per LPS Rules, 2022 by Grid controller of India Limited.

    With the implementation of Electricity (LPS and Related Matters) Rules, 2022, remarkable improvement has been seen in recovery of outstanding dues of Suppliers including Generating Companies, Transmission Companies and Traders. Against legacy dues of 1,39,747 crore as on 03.06.2022, 13 States/ UTs have paid installment of 69,790 crore (12 EMIs). Discoms of 11 out of these 13 states opted for loans from PFC/ REC (total loan sanctioned of

    1,05,065 crore). Further, 20 States/ UTs reported to have no outstanding dues as on 03.06.2022

    In view of regulations under LPS Rules, 2022 the Distribution companies are paying their current dues in time. Since implementation of the rule, as on July 24, 2023, total bills amounting to 4,85,041 crore have been settled against total billed amount of 5,60,366 crore (excluding EMI Payments against legacy dues and including Disputed Invoices).

    Infrastructure Financing

    As the Infrastructure sector is stepping up, financing the same is emerging as a strong sector in India. Indias G20 presidency presents an opportunity for the country to shape its infrastructure agenda and lead the way in global infrastructure development. With the aim of achieving a $5 trillion economy by 2025, India recognises the crucial role of infrastructure in sustaining its high growth trajectory. Given its youthful population, expanding middle class, and vast domestic market, global investors are increasingly drawn to India as a preferred destination for infrastructure investments. The Indian infrastructure financing landscape is maturing, with the availability of private equity, robust

    regulatory frameworks, competitive debt financing, and innovative financing structures like InvITs (Infrastructure Investment Trusts).

    In order to leverage potential synergies of emerging opportunities in the changed business environment and to facilitate providing financial assistance to Infrastructure Sector for meeting its financing and development requirements, the GoI granted its assent to your Company for lending to Logistics and Infrastructure sectors. As on March 31, 2023, PFC has sanctioned around 16,647 crores and disbursed around 1,016 crores of loans to new areas of Desalination plants, Ports, Metro rail etc.

    1. OPPORTUNITIES & THREATS Opportunities

    With Maharatna status, your Company acquired greater operational and financial autonomy and imparted enhanced power to the PFC Board for taking various financial decisions like to make equity investments to undertake

    financial joint ventures and wholly-owned subsidiaries,

    undertake mergers and acquisitions in India and abroad etc. The Board can also structure and implement schemes relating to personnel and Human Resource Management and Training. They can also enter into technology Joint Ventures or other strategic alliances among others.

    During FY 2022-23, PFC added funding to Logistics and Infrastructure sectors to its business line. It was a milestone decision which will play a crucial role in PFCs long-term business growth. The idea is not to shift focus from power to infra but to gradually build it over time, creating a separate business line, as the power sector matures.

    To meet the demands of Indias growing population and economic development, substantial investments in transport infrastructure are necessary. The budget for overall capex in 2023-24 has seen a significant increase of 33% to 10 lakh crore (USD 122 billion), amounting to approximately 3.3% of GDP. Additionally, the establishment of the Infrastructure Finance Secretariat aims to facilitate private investment opportunities in various sectors, including railways, roads, urban infrastructure, and power.

    Thanks to policy reforms, increased project awards by central and state authorities, and capital recycling through stake sales of completed projects, the credit profile of most infrastructure entities in India has witnessed improvement over the past two years, despite the challenges posed by the pandemic. Against the backdrop of growing economic and political uncertainty worldwide, the stability and resilience of infrastructure projects provide a ray of hope for patient capital, while contributing to climate targets and the development of more robust and inclusive infrastructure.

    Since receiving approval, PFC has already sanctioned around 16,650 crore and disbursed around 1,000 crore. These funds have been directed towards projects such as ports, irrigation and fibernet.

    The long-term business strategy of PFC

      • Grow lending by maintaining share in conventional sectors and expanding portfolio to emerging power sectors as well as infrastructure sectors.
      • Adapt a paradigm shift in account management and customer experience principles by providing differentiated services, innovative products and re- imagining existing processes to cater to the changing customer mix.
      • Optimise the cost of funds by increasing the share of 54EC bonds, institutionalising a dedicated team for sourcing MDB loans, re-imagining the hedging strategy and fine-tuning resource mobilisation process.
      • Position to become the nodal agency for Net-Zero, to pursue immediate dispensations in the interim to lower the cost of funds.
      • Re-purpose PFCCL to become a thought leader in the Net-Zero/new energy sectors and support PFC in the go-to-market activities in these sectors.
      • Re-align organisation as per the key objectives of PFC.
      • Tap new talent resources and revamp performance management system.

    Threats, Risks & Concerns

    Inspite of the fact that PFC is a very sound financial player in power sector, its business is not free from risks. Keeping in view its nature of operations, the Company regularly identifies emerging risks and takes timely action to address and manage the same. The following are some of the risks and concerns faced by your Company:

    Credit risk

    Credit risk involves the risk of loss arising from the diminution in credit quality of a borrower along with the risk that the borrower will default on contractual repayments under a loan or an advance. Your Company follows a systematic institutional and project appraisal process to assess and mitigate credit risk. These processes include a detailed appraisal methodology, identification of risks and suitable structuring, of credit risk mitigation measures.

    Liquidity risk

    Liquidity risk primarily arises due to the maturity mismatch associated with assets and liabilities of the Company. Liquidity risk involves the inability of the Company to fund increase in assets, manage unplanned changes in funding sources and to meet obligations when required. It could require us to raise funds or liquidate assets on unfavourable terms. We manage liquidity risk through a mix of strategies, including forward-looking resource mobilisation based on projected disbursements and maturing obligations.

    Foreign Currency Exchange Risk

    Foreign currency exchange risk involves exchange rate movements among currencies that may adversely impact the value of foreign currency-denominated assets, liabilities and off-balance sheet arrangements. Our foreign currency

    borrowings could expose us to foreign currency exchange rate risk. The foreign currency risk is managed by lending in foreign currency and through derivative products (such as currency forwards, options, principal only swaps, interest rate swaps and forward rate agreements) offered by banks who are authorised dealers.

    Legal risk

    Legal risk arises from the uncertainty of the enforceability of contracts relating to the obligations of our borrowers. This could be on account of delay in the process of enforcement or difficulty in the applicability of contractual obligations. We seek to minimise legal risk through legal documentation that is drafted to protect our interests to the greatest extent possible.

    Interest rate risk

    Interest rates are dynamic and dependent on various internal and external factors including cost of borrowing, liquidity in the market, competitors rates, movement of benchmarks such as AAA bond/GSEC yields and RBI policy changes. Changes in market interest rates will adversely affect the Companys financial condition. The primary interest rate-related risks that the Company faces are from timing differences. The interest rate risk is managed by the analysis of interest rate sensitivity gap statements and by evaluating the creation of assets and liabilities with a mix of fixed and floating interest rates.

    Changes in legislation

    PFC is a listed Government company and a public financial institution under the Companies Act. It is registered with the RBI as a non-deposit taking systemically important NBFC and was classified as an IFC in July 2010. As a result, various legislations are applicable to PFC like Companies Act, 2013, Securities and Exchange Board of India Regulations, DPEs Guidelines for CPSEs, RBI act and guidelines, Tax regulations etc. Changes in these legislations could affect our Companys results/operations.

    1. SEGMENT–WISE OR PRODUCT-WISE
    2. PERFORMANCE

      Companys main business is to provide financial assistance to the power and infrastructure sector and Company does not have any separate reportable segments.

    3. OUTLOOK
    4. Your Company is a leading Non-Banking Financial Company (NBFC) and Maharatna Central Public Sector Enterprise (CPSE). Established in 1986, it has played a critical role in developing core power related infrastructure in India. It has strong expertise in power sector as well as managing a large loan portfolio and large-scale resource mobilisation.

      PFC is a critical vehicle for government to drive policy/ scheme implementation in the power sector and has been the nodal agency for various government schemes (e.g., UMPP, RDSS/ IPDS/ (RAPDRP subsumed in it), Liquidity Infusion Scheme

      (LIS) and Late Payment Surcharge Scheme (LPS) and as a bid process coordinator through its wholly-owned subsidiary PFC Consulting Limited for the ITP scheme.

      PFC provides a comprehensive range of financial products and related advisory and other services from project conceptualisation to the post-commissioning stage to our clients in the power sector, including for generation (conventional and renewable), transmission and distribution projects as well as for related renovation and modernisation projects. PFC provides various fund based financial assistance, including long-term project finance, short-term loans, buyers line of credit, underwriting of debt and debt refinancing schemes as well as non-fund based assistance including credit enhancement guarantees and letters of comfort. Your Company also provide various fee-based technical advisory and consultancy services for power sector projects through our wholly-owned subsidiary.

      Over the years, PFC has always been on the forefront of innovation, be it funding emerging areas such as Solar, Wind, EV etc. or tapping international markets through green bond. It has now added Logistics and Infrastructure funding also to its line of business which will form part of our future lending business going forward.

    5. INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
    6. The Statutory Auditors of the Company i.e. Dass Gupta & Associates, Chartered Accountants and Prem Gupta & Company, Chartered Accountants have given their Report on the Internal Financial Controls stating that the Company has, in all material respects, an internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2023 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

      PFC is an ISO certified Company. These stringent internal control processes and credit review mechanisms reduce the number of defaults and ultimately contribute in gaining the faith of all the stakeholders.

    7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
    8. Your Company continued to accomplish a healthy growth during the FY 2022-23. The total income stood at 39,666 crore and the net profit earned was 11,605 crore.

      Further, Net Worth (share capital plus all reserves) of the Company grew by 15% in FY 2022-23 to 68,202 crore as compared to 59,350 crore in FY2021-22 and the gross loan assets as at March 31, 2023 grew to 4,22,498 crore from

      3,73,135 crore as at March 31, 2022.

      The Interest Spread on Earning Assets was 2.53% and the net Debt Equity Ratio was 5.32 times in FY2022-23 as compared to 5.38 times in FY 2021-22. The Operating Margin % has increased from 31.60% in FY 2021-22 to 35.70% in FY2022- 23 and the Net Profit Margin% has increased from 25.97% in FY 2021-22 to 29.26% in FY2022-23.

      In the preparation of financial statements, the Company has followed Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) with effect from April 1, 2018, issued by the Ministry of Corporate Affairs, to the extent applicable.

    9. MATERIAL DEVELOPMENTS IN HUMAN
    10. RESOURCES / INDUSTRIAL RELATIONS FRONT

      Your Company focuses on capability building and takes various initiatives to significantly contribute in enhancing the skills and knowledge of our workforce in alignment with our organisational goals. Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which lead to a healthy workforce. During the period, several new initiatives were taken for employees welfare such as introducing flexi-timing for employees below HoU level, implementing paperless medical claims system and review of certain employee related provisions.

      The Industrial Relations within the Company have been very cordial and harmonious with the employees committing themselves entirely to the objectives of the Company. There were no man-days lost during the year under review. The attrition during the period from April 1, 2022 to March 31, 2023 was 0.04%. Total Number of employees on the rolls of the Company as on March 31, 2023 was 519.

    11. CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT (CSR&SD)
    12. Your Company, through its Corporate Social Responsibility and Sustainable Development initiatives, aims to become a socially responsible corporate entity committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development, mainly focusing on fulfillment of Power and Energy needs of the society.

      PFC has implemented its CSR and Sustainability Policy with all its earnest and zeal. The Company has implemented wide range of activities in the field of Environment Sustainability, Rehabilitation and Reconstruction Activities, Healthcare, Education, Sports, Sanitation & Drinking water and Skill development & Livelihood etc. Further, as per DPEs mandate, PFC has also been contributed to thematic areas i.e. ‘Health & Nutrition, with preference given to Aspirational Districts.

    13. RENEWABLE AND CLEAN DEVELOPMENT

    MECHANISM

    Renewable Energy offers opportunity to contribute to social and economic development, energy access, secure energy supply, climate change mitigation, and the reduction of negative environmental and health impacts.

    The Ministries of Power and New & Renewable Energy have rolled out a slew of reforms to push mainstreaming of energy from green and sustainable sources and achieve the 500 GW target. Towards this end, thermal power generators have been allowed to set up renewable energy capacities on their own or through dedicated developers and to supply it to the consumers under the existing PPAs.

    PFC has strategically increased its focus on renewable energy projects, including solar, wind, biomass and small hydro projects, to capitalise on the GoIs various renewable energy initiatives. These initiatives include certain minimum specified percentages of state distribution utilities total power requirements required to be met from renewable energy sources and special tariffs for renewable energy projects.

    PFC is also focusing more and more on finance to clean/ renewable energy projects. As on March 31, 2023, PFCs Gross Loan assets comprised of 48,198 crore in Renewable energy comprising 16,251 crore of large hydro projects (>25MW) and 31,947 crore other than large hydro projects.

    During FY 2022-23, PFC has signed a Loan Agreement for JPY 30 billion with Japan bank for International cooperation ( JBIC). Further, a Project Loan agreement (PLA) has also been signed for JPY 2.65 billion between PFC and JBIC. JBIC has provided this long-term facility under its initiative titled Global action for Reconciling Economic growth and Environmental preservation ("GREEN"). Thus, the funds under the facility would be used by PFC to finance its renewable energy portfolio.

    Indias energy transition landscape is quite exciting with newer technologies being explored to reduce carbon emissions. Some of the emerging technologies that are now being explored for commercial expansion are green hydrogen, battery storage, pump storage and offshore wind. PFCs thrust in the coming years is to actively target these technologies and contribute in making India a greener nation.

    Cautionary Note

    Certain statements in the "Management Discussion and Analysis" section may be forward-looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Management envisages in terms of future performance and outlook. Readers are cautioned not to place undue reliance on these forward-looking statements.

    Integrated Reporting


    ANNEXURE B OF BOARDS REPORT

    Integrated Reporting (IR) brings together material information about the Companys strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates. It leads to a clear and concise articulation of your value creation story which is useful and relevant to all stakeholders.

    The IR framework enables your Company to disclose a holistic view of value created beyond the financial capital, contributing to the economic, social and environmental system. This disclosure is structured using the capitals model of value creation, adopted by the International Integrated Reporting Council (IIRC) in the International Framework and explains our dependence and impact on the forms of capital that are fundamental to our ability to create value over the long-term.

    The capitals are categorised in the above said framework as financial, manufactured, intellectual, human, social & relationship and natural.

    THE SIX CAPITALS

    Financial capital

    Financial capital is the sum of funds available to an organisation including Cash in Bank, Invested Capital, Liabilities, OPEX (operational expenditure), CAPEX (Capital expenditure), NBV (Net book value) & True Assets Value and Income. This is a very important capital because it also serves as a medium of exchange that can obtain value through conversion into other forms of capital like manufactured, natural, human, social, & intellectual capitals.

    The accrued financial capital is given to shareholders as dividend and interest on debt instruments. Different taxes are paid to the government thereby promoting the overall growth of our country. Main financials of your Company are as below:

    FY 2022-23

    Manufactured capital

    Manufactured Capital encompasses physical infrastructure or technology pertaining to it, including buildings, equipment, infrastructure etc. PFC is not a Manufacturing Company and offers financial assistance mainly to Power Sector projects. However, PFC contributes to manufactured capital by way of its tangible and intangible infrastructure.

    PFC is headquartered in New Delhi also maintains regional

    offices to facilitate its business operations.

    PFC has implemented state-of-the-art data centre providing various IT services and housing ERP application system to integrate all the business functions. PFC invests in physical assets, which includes physical infrastructure, IT systems & infrastructure to improve efficiency and delivery mechanism, which ultimately leads to better services to all the associated stakeholders.

    Existing manufactured capital enables PFC to be able to be responsive to market needs, enabling the employees to work remotely, efficiently and seamlessly to ensure business continuity.

    Manufactured capital is also helping PFC in focusing on creating other forms of capital more particularly Human Capital and Intellectual capital.

    Intellectual capital

    Intellectual capital accounts for the intangibles that provide competitive advantage to the Company and is associated with brand and reputation, in addition to patents, copyrights, organisational systems and related procedures that an organisation has developed.

    Your Company plays a strategic role in the initiatives of the Government of India for the development of the power sector in India and works with Government of India agencies, state governments, power sector utilities, other power sector intermediaries and private sector clients for the development

    11,605 crore

    PAT

    16%

    68,202 crore 14,362 crore

    and implementation of policies and for structural and procedural reforms in the power sector in India. It is involved in various GoI programmes relating to the power sector, including acting as the nodal agency for Revamped Distribution Sector Scheme (RDSS), Ultra Mega Power Projects (UMPPs), Integrated Power Development Scheme (IPDS), bid process coordinator for Independent Transmission Projects (ITPs), DISCOM Liquidity Package under Atmanirbhar Bharat and Late Payment Surcharge

    10,022 crore 59,350 crore 14,030 crore

    FY 2021-22

    The above volumes speak for themselves. PFC through its financial capital is contributing in creating superior value for its stakeholders especially by playing the role of a pioneer in power sector funding and as a result contributing to the development of power sector of the country.

    (LPS) Rules, 2022.

    Keeping in view the role of PFC in development of Indian power sector, PFC has developed sound organisational systems, procedures, software and protocols which are proving PFC a competitive edge and helping it in developing brand and reputation in the market.

    Since Intellectual capital mainly relates to human resource, PFC has put in place effective human resource acquisition and maintenance system, which is benchmarked with best corporate practices designed to meet the organisational needs.

    Through these organisational systems, procedures and protocols

    i.e. Intellectual Capital, PFC has acquired the knowledge and intellect necessary for its operation and processes. In order to sustain in this dynamic business environment, PFC continues to prepare its talent pool and create Intellectual capital to embrace disruptions, to innovate, to be able to adapt to the changes brought by transformed business models.

    Human capital

    Human capital refers to the competencies, capabilities, and talent of the Companys employees, in addition to their commitment and motivation — which affect their ability to fulfill their roles.

    PFC is having highly skilled, professionally qualified and experienced workforce. PFC follows the best management practices of the industry. Commitment of the workforce is ensured through an effective package of welfare measures which include comprehensive insurance, medical facilities and other amenities which lead to a healthy workforce. During the period, several new initiatives were taken for employees welfare such as introducing flexi-timing for employees below HoU level, implementing paperless medical claims system etc.

    The relations within the Company have been very cordial and harmonious with the employees committing themselves entirely to the objectives of the Company. The reason being, PFC has been consistent in holistic personality development of its employees through facilities like Gymnasium, participation of employees in various sports, cultural and literary activities.

    By doing so PFC has been able to create a strong Human Capital and as a result of this highly motivated workforce, PFC could achieve the outstanding growth year by year. The growth of PFC is contributing in the growth of country and creating value to its stakeholders. This highly motivated workforce is bringing change in the society at large.

    Social and Relationship Capital

    Social and relationship capital represents an organisations engagements and relationships with external stakeholder groups, namely clients, investors, suppliers, communities, government and regulators.

    PFC has a CSR and Sustainability policy in place. The aim of the policy is to ensure that the Company becomes socially responsible corporate entity committed to improving the quality of life of the society at large. PFC has implemented wide range of activities in the field of Environment Sustainability, Rehabilitation and Reconstruction Activities, Healthcare, Education, Sports, Sanitation & Drinking water and Skill development & Livelihood etc. Further, as per DPEs mandate, PFC has also been contributed to thematic areas i.e. ‘Health & Nutrition, with preference given to Aspirational Districts.

    PFC as a part of its social responsibility makes all efforts to

    ensure compliance of the Directives and Guidelines issued by

    the Government of India from time to time pertaining to the welfare of SC/ ST/ OBC/ PwD employees. The steps taken include due reservations and relaxation as applicable under the various directives for direct recruitment as well as for promotions.

    PFC always wants to bring change in the lives of the people and the society at large. PFC consistently strives towards meeting the expectations of the society so as to help in achieving a real and lasting reduction of social and economic disparities as well as protecting the environment. PFC continues to support activities that aim at improving the quality of life of both present and future generations and at the same time safeguarding the capacity of the earth to support life in all its diversity.

    Natural Capital

    Natural Capital represents all the natural resources that are used

    and in turn are affected by the operations of an organisation.

    PFC always endeavours to protect environment by minimising consumption of natural resources and also by minimising wastage of the same. PFC endeavours to reduce its paper consumption through IT solutions by digitalising processes, wherever possible. PFC, being a Financial Institution, has limited applicability of mechanism to recycle products and waste, however, the Company has installed an Organic Composting machine in the office premises for recycling organic waste generated on routine basis in the office building kitchen/ pantry etc.

    PFC has gone paperless, wherever possible, thereby empowering its employees to work with lesser carbon footprint.

    To help make the Nation cleaner and greener, PFC has sanctioned a loan of 633 crores to Gensol Engineering Ltd (GEL) for purchase of 5,000 passenger Electric Vehicles (EVs) and 1,000 cargo EVs. The passenger EVs will be leased to Blusmart Mobility Pvt. Ltd. (BMPL) to expand its fleet of ride-hailing cabs. The first tranche of the loan has been disbursed, and the first lot of EV cabs has hit the roads of Delhi. Touted to be the largest EV Asset financing deal in India, the 5,000 EVs funded by PFC would result

    in emission savings of over 1,00,000 tonnes of CO2 equivalent. This is equivalent to the amount of carbon dioxide absorbed by over five million fully-grown trees in a year.

    With a vision of accelerating Indias net-zero goal, PFC, apart from funding renewables in a big way, has been exploring opportunities in debt funding of EVs (OEMs and fleet acquisition), Battery OEMs and EV charging infrastructure.

    During FY 2022-23, your Company received ‘Green Urja Energy Efficiency Award for being the Best Renewable Energy Financing Institution at the Atma Nirbhar Bharat Summit organised by Elets. It also received the Indian Chamber of Commerces (ICC) Gold Award for the "Top Financing institution in Renewable Energy

    and Energy Efficiency category at the 11th Green Energy Summit.

    Your Company through such measures contributes in preservation and enhancing natural capital. Through investment in renewable products, promoting renewable energy and works towards integrating positive environmental action in business, PFC is committed to create Natural Capital.