rec ltd share price Directors report


To

The Shareholders,

Your Directors have pleasure in presenting the Fifty Third Annual Report together with the Audited Financial Statements of your Company for the financial year ended on March 31,2022.

1. PERFORMANCE HIGHLIGHTS

1.1 Summary of performance

The highlights of performance of your Company for the financial year 2021-22, with comparative position of previous years performance, were as under:

(Rs. in crore)

Parameter FY 2021-22 FY 2020-21
Loans Sanctioned 54,421.76 1,54,820.87
Disbursements 64,150.21 92,987.49
Subsidy under DDUGJY (including DDG component) and SAUBFIAGYA schemes of the Government 5,317.66 4,940.62
Recoveries (including interest) 91,681.72 71,755.40
Total Operating Income 39,132.49 35,387.89
Profit Before Tax 12,424.90 10,756.13
Profit AfterTax 10,045.92 8,361.78
Total Comprehensive Income 9,986.85 8,818.30

1.2 Financial performance

The Total Operating Income of your Company for the financial year 2021-22 was Rs. 39,132.49 crore, as compared to Rs. 35,387.89 crore during the last financial year 2020-21.

The Profit After Tax and Total Comprehensive Income for the financial year 2021-22 were Rs. 10,045.92 crore and Rs. 9,986.85 crore respectively, as compared to Rs. 8,361.78 crore and Rs. 8,818.30 crore for the last financial year.

Earnings Per Share (EPS) for the financial year ended March 31,2022 was Rs. 50.87 per share of Rs. 10/- each, as against EPS of Rs. 42.34 per share for the last year. Net Worth of the Company as on March 31,2022 increased to Rs. 50,985.60 crore, i.e., 17.41% higher than the Net Worth of Rs. 43,426.37 crore as on March 31,2021.

The Gross Loan Asset Book of your Company as on March 31, 2022 was Rs. 3,85,371.26 crore, as compared to Rs. 3,77,418.15 crore as on March 31, 2021. Further, the outstanding borrowings as on March 31,2022 were Rs. 3,26,844.29 crore.

1.3 Impact of Covid-19

Since outbreak of Covid-19, India has experienced two further waves of pandemic following the discovery of mutant coronavirus variants. These waves led to temporary re-imposition of localized / regional lockdowns, which were subsequently lifted. With improving coverage of vaccination programme and resumption of economic activities, India is witnessing recovery in demand. The Companys strong credit profile, liquidity access and availability of contingency buffers provides it no reasons to believe that the current crisis will have any significant impact on its operations, including the going concern assessment. Flowever, the impact will continue to be dependent, among other things, on uncertain future developments about discovery of further coronavirus variants and any action to contain its spread, whether Government mandated or otherwise.

1.4 Dividend

For the financial year 2021-22, the Board of Directors of your Company has recommended a final dividend of Rs. 4.80/- per equity share of face value of Rs. 10/- each (48% of the paid up share capital), which is subject to approval of the shareholders in the ensuing 53,d Annual General Meeting. The above is in addition to the 1st Interim Dividend of Rs. 2.00/- per equity share (20% of the paid up share capital) paid on September 2,2021,2nd Interim Dividend of Rs. 2.50/- per equity share (25% of the paid up share capital) paid on November 5, 2021 and 3,d Interim Dividend of Rs. 6.00/- per equity share (60% of the paid up share capital) paid on March 3,2022.

The total dividend for the financial year 2021-22, including the proposed final dividend, amounts to Rs. 15.30 per share of face value of Rs. 10/- each, which is 153% of the paid-up share capital of the Company. For the last financial year 2020-21, the Company had paid a dividend of Rs. 12.71 per share of face value of Rs. 10/- each, which was 127.10% of the paid-up share capital of the Company.

The total dividend pay-out for the financial year 2021-22, including the proposed final dividend, would work out Rs. 3,021.62 crore. The dividend is paid in accordance with the Companys Dividend Distribution Policy, which is available at httpsy/recindia.nicin/uploads/files/Dividend Distribution Policv.pdf.

1.5 Share capital & Bonus Issue

As on March 31, 2022, the authorized share capital of the Company was Rs. 5,000 crore, consisting of 500 crore equity shares of Rs. 10/- each; and the issued and paid-up share capital was Rs. 1,974.92 crore, consisting of 197,49,18,000 equity shares of Rs. 10/- each. Power Finance Corporation Limited, a Government of India undertaking, held 52.63% of the paid-up equity share capital of the Company as on March 31, 2022, comprising of 103,94,95,247 equity shares of Rs. 10/- each. The balance 47.37% of paid-up equity share capital was held by public.

Pursuant to comprehensive guidelines on Capital Restructuring of Central Public Sector Enterprises, issued by the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, Government of India, and based on the financial statements of the Company for the financial year ended on March 31, 2022, the Company is issuing bonus shares in the ratio of 1:3, i.e., one (1) bonus equity share of Rs. 10/- each fully paid-up for every three (3) existing equity shares of Rs. 10/- each fully paid-up, by capitalizing a sum of Rs. 6,58,30,60,000 out of the sum standing to the credit of its Securities Premium Account. The shareholders have approved the said bonus issue through postal ballot on August 9, 2022. The said bonus shares will rank pari-passu with the existing fully paid-up equity shares of the Company.

The postal ballot notice and results can be accessed at https://recindia.nic.in/postalballot. After the allotment of the bonus shares, the paid up share capital of the Company will be increased to Rs. 2,633.22 crore, consisting of 2,63,32,24,000 equity shares of Rs. 10/- each.

1.6 Policy initiatives

The policy framework of the Company is constantly reviewed, updated and strengthened, to enhance business value and to meet the statutory requirements and amendments thereto.

During the financial year 2021-22, the Company strengthened its corporate governance framework, with adoption ofpolicy on diversity and skills of the board, criteria for appointing senior management personnel and remuneration to directors, KMPs and other employees,policy on fit & proper criteria of directors,policy on dealing with related party transactions and internal guidelines on corporate governance.

In order to enhance the competitive position in the market, the Company introduced business-oriented policies including policy on term loan to state sector utilities for operational requirements, guidelines for funding projects under KUSUM scheme,guidelines forappraisal and financing for transmission projects in private sector, prepayment policy, letter of credit policy for state and private sector borrowersand exposure norms for state sector borrowers.

The Company also updated the internal framework for its key operations, by modifying the delegation of powers, comprehensive risk management policy, prevention of money laundering &KYC policyandpolicy for adjustment of interest on interest charged during moratorium period due to Covid-19 pandemic.

In order to keep its FIR practices employee friendly, the Company updated its recruitment rules, promotion policy, medical welfare measures etc., during the year under review.

2. FINANCIAL REVIEW

2.1 Summary of Financial Results

The summary of audited financial results of the Company for the financial year 2021-22, including the transfers to reserves, vis-a-vis the previous financial year, is given as under:

(Rs. in crore)

Particulars Standalone Consolidated
FY 2021-22 FY 2020-21 FY 2021-22 FY 2020-21
Revenue from Operations 39,132.49 35,387.89 39,269.05 35,552.68
Other Income 97.96 22.55 70.15 22.72
Total Income 39,230.45 35,410.44 39,339.20 35,575.40
Finance Costs 22,052.91 21,489.08 22,050.96 21,489.05
Nettranslation/transaction exchange loss 799.05 330.26 799.05 330.26
Fees and Commission Expense 16.73 9.95 16.73 9.95
Net loss on fair value changes - - - -
Impairment on financial instruments 3,473.31 2,419.62 3,470.02 2,445.94
Other Expenses 463.55 405.40 560.10 518.64
Total Expenses 26,805.55 24,654.31 26,896.86 24,793.84
Share of Profit/Loss of Joint Venture accounted for using equity method - - (11.81) (1.97)
Profit Before Tax 12,424.90 10,756.13 12,430.53 10,779.59
Tax Expenses (2,378.98) (2,394.35) (2,394.83) (2,401.35)
Profit After Tax 10,045.92 8,361.78 10,035.70 8,378.24
Other Comprehensive Income for the period (59.07) 456.52 (57.90) 457.76
Total Comprehensive Income 9,986.85 8,818.30 9,977.80 8,836.00
Add: Opening Balance of Retained Earnings and Other Comprehensive Income 4,225.00 3,085.17 4,504.73 3,347.20
Amount available for appropriation 14,211.85 11,903.47 14,482.53 12,183.20
Less: Appropriations
Special Reserve created u/s 36(1 )(viii) of the Income Tax Act, 1961 (3,080.70) (2,563.13) (3,080.70) (2,563.13)
Reserve for bad and doubtful debts u/s 36(1 )(viia) of the IncomeTax Act, 1961 - (288.13) - (288.13)
Reserve Fund u/s 45-IC of Reserve Bank of India Act, 1934 (2,010.00) (1,673.00) (2,010.00) (1,673.00)
Debenture Redemption Reserve - - -
General Reserve - (981.10) (981.10)
Impairment Reserve - - -
Issue expenses on Perpetual Debt Instruments (net of taxes) - (0.70) (0.70)
Coupon payment on Instrument Entirely Equity in Nature (Perpetual Debt Instruments) (Net ofTaxes) (34.12) - (34.12)
Sub-total: Appropriations (5,124.82) (5,506.06) (5,124.82) (5,506.06)
Less: Dividend payments to Owners (2,411.37) (2,172.41) (2,411.37) (2,172.41)
Closing Balance of Retained Earnings and Other Comprehensive Income 6,675.66 4,225.00 6,946.34 4,504.73

2.2 Contribution to National Exchequer

During the financial year 2021-22, the Company contributed an amount of Rs. 3,229.83 crore to the National Exchequer, which included Rs. 3,080.60 crore towards direct taxes and Rs. 149.23 crore towards GST. In the previous financial year, the total contribution to the National Exchequer was Rs. 2,721.64 crore.

2.3 Ratio analysis

A comparative statement of significant ratios of the Company for the financial year 2021-22 vis-a-vis the previous financial year, is given below::

Particulars FY 2021-22 FY 2020-21
Earnings Per Share (f) 50.87 42.34
Return on Average Net Worth (%) 21.28 21.30
Book Value per Share (f) 258.17 219.89
Debt Equity Ratio (times)* 6.41 7.40
Price Earnings Ratio (times)# 2.42 3.10
Interest Coverage Ratio (times) 1.56 1.50

* Net debt represents principal outstanding, less cash and cash equivalent available.

# PE Ratio is calculated based onclosing price ofRECs Equity Share at NSE, as on March 31,2022 and as on March 31,2021 respectively.

2.4 Resource mobilization

2.4.1 Total resource mobilization during the year

During the financial year 2021-22, the Company mobilized funds of Rs. 73,962.93 crore from the market. This included Rs. 19,251.56 crore from External Commercial Borrowings in different currencies, USD 2,250.00 million and JPY 37,506.625 million, long and short rupee term loans from banks and financial institutions of Rs. 25,850 crore and Rs. 1,250 crore respectively, Rs. 7,316.11 crore from Capital Gains Tax Exemption Bonds, Rs. 9,370.20 crore from Institutional

Bonds, Rs. 10,494.38 equivalent to USD 1,420.00 million from FCNR (B) loans and Rs. 430.68 equivalent of USD 59.15 million from Official Development Assistance (ODA).

2.4.2 Redemption and pre-payment

During the financial year 2021-22, the Company repaid a sum of Rs. 58,376.27 crore. This includes repayment amounting to Rs. 36,667.20 crore towards Institutional Bonds, Rs. 7.11 crore towards Infrastructure Bonds, Rs. 839.67 crore towards Tax-free Bonds, Rs. 2,451.85 crore towards External Commercial Borrowings equivalent of USD 330.00 Million, Rs. 6,307.54 crore of FCNR loans equivalent of USD 845.00 Million and Rs. 192.90 crore of Official Development Assistance (ODA) loan equivalent of USD 12.00 Million, Euro 10.53 million and JPY 188.58 million. The Company also repaid long term loans Rs. 11,910 crore to banks.

2.4.3 Cost of borrowing

The overall weighted average annualized cost offundsforthe outstanding borrowing as on March 31, 2022 was 7.00% as compared to 7.26% for the year ending March 31,2021.

The fund mobilization during the financial year 2021-22 included Rs. 9,080 crore raised through listed bonds, the cost of raising for which works out to 5.85% p.a. The cost is 15 bps lower than the rates of similarly rated instruments issued by other CPSEs/entities (margin over Reuters).

2.4.4 Cash credit facilities

The Company has an approved cash credit / working capital demand loan / overdraft limit of Rs. 9,478 crore from various banks for its day-to-day operations, out of which Rs. 1,410 crore was availed as on March 31,2022.

2.4.5 Perpetual Debt Instruments

During the last financial year 2020-21, REC had raised an amount of Rs. 558.40 crore by issue of Perpetual Debt Instruments (PDI). REC had issued 5,584 PDI (Series 206) of face value of Rs. 10 lakh each, aggregating to Rs. 558.40 crore, which carry coupon rate of 7.97%. The PDI have no maturity and are callable only at the option of the Company after lOyears.

The said instruments form 1.16% of the Tier-1 capital of the Company i.e., Rs. 48,052.65 crore as on March 31,2022. The first interest payment of these instrument was due in 2021-22 and was duly paid. Detailed disclosure on PDI is appearing in note no. 26 of the standalone financial statements forming part of this Annual Report.

2.4.6 Green Bonds issued by REC

Towards realization of the Honble Prime Ministers vision of harnessing green energys enormous potential in the country, REC raised USD 450 million Green Bond in July 2017 for a tenor of ten years, which are listed on the International Securities Market (ISM) segment of London Stock Exchange and Singapore Stock Exchange.

Use of Green Bond proceeds: The proceeds have been utilized to finance solar, wind and renewable purchase obligations (RPO) including refinancing of eligible projects, as defined in the Green Bond framework of REC, contributing to positive environmental impact and also strengthening Indias energy security by reducing fossil fuel dependency. KPMG India has provided its post-verification Independent Assurance Report based on the Green Bond framework of REC and the same has also been certified by the Climate Bonds Standard Board of Climate Bond Initiative on July 17,2018.

In accordance with the Green Bond framework, REC has created a Green Portfolio managed through a well laid internal tracking system, updated on regular basis, to monitor, establish and account for the allocation of the proceeds for such Green Portfolio.

Managements of Green Bond proceeds: The net proceeds from the Bonds amounting to Rs. 2,894 crore were allocated against the following projects as on March 31,2022:

(Rs. in crore)

SI. no. Location Capacity Date of loan sanction Loan sanctioned Loan outstanding
A. Solar
1 Karimnagar, Telangana 15 MW 11-Nov-2016 89.84 65.12
2 Telangana 30 MW 21-Sep-2016 179.62 136.22
3 Telangana 30 MW 21-Sep-2016 179.62 136.52
4 Warangal, Telangana 15 MW 11-Nov-2016 89.84 65.31
5 Andhra Pradesh 500 MW 24-Feb-2016 2,480.00 1,648.41
6 Karimnagar, Telangana 15 MW 11-Nov-2016 89.84 65.10
7 Ranga Reddy,Telangana 5 MW 27-Jan-2016 26.90 19.73
8 Medak, Telangana 7 MW 26-Nov-2015 39.90 28.59
9 Karimnagar.Telangana 15 MW 11-Nov-2016 89.84 65.11
10 Chitradurga, Karnataka 30 MW 17-Apr-2017 150.39 116.67
11 Mansa and Sangrur, Punjab 50 MW 21-May-2016 169.69 123.43
12 Kudligi, Karnataka 20 MW 31-Dec-2018 84.00 68.54
13 Belgaum, Karnataka 15 MW 31-Dec-2018 63.86 52.22
14 Bagalkot, Karnataka 15 MW 31-Dec-2018 64.08 52.41
15 Bagalkot, Karnataka 15 MW 31-Dec-2018 66.41 54.63
16 Thoothukkudi,Tamil Nadu 252 MW 29-Dec-2017 520.00 488.48
Sub-total (A) 4,383.83 3,186.49
B. Wind
1 Mandsaur, Madhya Pradesh 20 MW 28-Jan-2016 86.63 52.90
2 Tirpur,Tamil Nadu 6.8 MW 6-Jun-2012 26.16 15.35
Sub-total (B) 112.79 68.25
C. Renewable Purchase Obligations
1 Maharashtra RPO 24-Jan-2017 500.00 62.50
Sub-total (C) 500.00 62.50
GRAND TOTAL (A+B+C) 4,996.62 3,317.24

REC is compliant with the requirements of its Green bond framework as per its continuing obligations to ensure that the amount raised through Green Bonds remains invested in the eligible projects as perthe Green bond frameworkduring the tenor of bonds.

2.4.7 International Cooperation & Development

REC has five lines of ODA (Official Development Assistance) credit with KfW, Germany, four of them have been fully drawn as on March 31, 2022. In financial year 2021-22, REC entered into a fifth loan agreement with KfW for financial assistance of USD 169.50 million, of which funds drawn as on March 31,2022 are Nil. Apart from the above, REC has two lines of ODA credit with JICA, Japan. Both of them have also been fully drawn.

2.5 Domestic and International Credit Rating

The domestic debt instruments of REC continued to enjoy "AAA" rating, the highest rating assigned by CRISIL, CARE, India Ratings & Research & ICRA-credit rating agencies.

Further, REC enjoys international credit rating from international credit rating agencies Moodys and FITCH of "Baa3" and "BBB-" respectively, which is at par with the sovereign rating of India.

2.6 Investments made during the financial year 2021 -22

RBI vide its circular dated November 4, 2019, had prescribed to maintain sufficient High Quality Liquid Assets (HQLAs) effective from December 1, 2020, in order to promote resilience of NBFCs to potential liquidity disruptions and to survive any acute liquidity stress scenario. In compliance of the same, during the year, the Company has invested in State Development Loans.

During the financial year 2021-22, the Company sold 15,64,59,022 equity shares held in NHPC Limited through stock exchange mechanism, considering the market scenario. The price of the share was prevailing higherthan its purchase price, thus resulting in cumulative gain of Rs. 89.86 crore on such sale.

Other details of investments made by the Company are appearing in note no. 10 of the notes to accounts of the standalone financial statements.

2.7 Financial status at the close of the year

At the close of the financial year 2021-22, the total resources of your Company stood at Rs. 410,412.61 crore.

Out of this, equity share capital contributed Rs. 1,974.92 crore, instruments entirely equity in nature comprised Rs. 558.40 crore, other equity including Reserves & Surplus stood at Rs. 48,452.28 crore,financial liabilities including borrowings and other financial liabilities accounted for Rs. 3,59,230.61 crore and non-financial liabilities including provisions stood at Rs. 196.40 crore.

These funds were deployed as financial assets including long-term and short-term loans, investments etc. of Rs. 4,06,417.32 crore and non-financial assets including property, plant & equipment, tax assets etc. of Rs. 3,994.43 crore, besides asset classified as held for sale, amounting to Rs. 0.86 crore.

3. LOANS SANCTIONED

During the financial year 2021-22, the Company sanctioned loans worth Rs. 54,421.76 crore.The cumulative loans sanctioned by your Company since inception till March 31, 2022, were Rs. 13,08,992.08 crore.

The loans sanctioned for the financial year 2021-22 included Rs. 16,089.15 crore towards generation projects, Rs. 14,733.52 crore towards renewable energy projects, Rs. 21,150.79 crore towards T&D projects including loans under liquidity infusion scheme of the Government of India under Atmanirbhar Bharat and Rs. 2,448.30 crore towards other loans such as short-term, medium-term loans etc. Details of category-wise sanctions approved during the year are appearing subsequently in this report.

4. DISBURSEMENTS

During the financial year 2021-22, the Company disbursed total sum of Rs. 64,150.21 crore, as against Rs. 92,987.49 crore in the previous financial year.The cumulative amount disbursed by your Company since inception till March 31, 2022 was Rs. 7,54,259.57 crore, excluding subsidy disbursed under various Government programmes.

The disbursements for financial year 2021-22 included Rs. 19,406.90 crore towards generation projects, Rs. 2,823.51 crore towards renewable energy projects, Rs. 16,554.23 crore towards T&D projects, Rs. 19,752.42 crore towards liquidity infusion scheme of the Government of India under Atmanirbhar Bharat and Rs. 4,877.68 crore towards other loans including short term-and medium-term loans etc. The disbursements also included Rs. 735.47 crore of counter-part funding under DDUGJY (including DDG component) and SAUBHAGYA schemes of the Government of India.

Apart from the above, the Company also disbursed during the financial year 2021-22, total subsidy of Rs. 5,317.66 crore received from the Government of India, which included Rs. 4,782.72 crore under DDUGJY scheme, Rs. 65.96 crore under DDG component of DDUGJY scheme and Rs. 468.98 crore under the SAUBHAGYA schemes.

5. RECOVERIES

5.1 Recoveries during the year

Your Company gives utmost priority to timely realization of its dues towards principal, interest, etc. During the financial year 2021-22, the amount due for recovery including interest for Standard Assets (Stage I & II) was Rs. 92,696.37 crore, as compared to Rs. 71,680.23 crore during the previous financial year.The Company recovered a total sum of Rs. 91,681.72 crore towards Standard Assets (Stage I & II) during the year, as against Rs. 71,424.90 crore in the previous financial year. The Company achieved recovery rate of 98.91% for the financial year 2021-22. The principal overdues from defaulting borrowers pertaining to Standard Assets (Stage I & II) as on March 31,2022 were Rs. 591.06 crore. Further, an amount of Rs. 265.33 crore has been recovered from Credit Impaired Assets (Stage III) in the financial year 2021-22, as compared to Rs. 330.50 crore recovered in the previous financial year.

5.2 Credit Impaired Assets

Your Companys Credit Impaired Assets (Stage III) continue to be at low levels. The Company has created "Impairment Reserve" from its profits, which is higher than the minimum requirement specified under Income Recognition, Asset Classification and Provisioning (IRACP) Norms (including standard asset provisioning) issued by RBI.

As on March 31, 2022 the Gross Credit Impaired Assets (Stage III) were Rs. 17,159.89 crore, which is 4.45% of Gross Loan Assets; and Net Credit Impaired Assets (Stage III) were Rs. 5,594.16 crore, which is 1.45% of the Gross Loan Assets.

5.3 Stressed Asset Management

RECs dedicated Stressed Asset Management (SAM) division works towards resolution of stressed assets, through various frameworks including RBI framework and resolutions under Insolvency and Bankruptcy Code (IBC) etc. REC has been able to contain its NPAs at minimum level, i.e., one of the lowest among peer organizations in power sector. During the financial year 2021-22, REC successfully resolved and upgraded 3 stressed power projects:

(Rs. in crore)

SI. no. Name of the borrower and project RECs exposure Remarks
i Essar Power (MP) Limited (1200 MWThermal Power Plant in Madhya Pradesh) 1,345.00 Resolved under IBC
2 AmritJal Ventures Private Limited (1 MW solar plant in Andhra Pradesh) 4.35 Resolved under IBC
3 VS Lignite Power Private Limited (135 MWThermal Power Plant in Rajasthan) 54.00 Resolved under IBC
TOTAL 1,403.35

Further, REC was holding Corporate Guarantee of Lanco Thermal Power Limited (LTPL) by virtue of financial assistance accorded to other Lanco Group companies. Lanco Thermal Power Limited was resolved under IBC in financial year 2021-22. Accordingly, total recovery of REC from LTPL was Rs. 5.79 crore in financial year 2021-22.

6. APPRAISAL SYSTEM FOR FINANCING

6.1 Appraisal system for financing private sector projects

Your Company has its own guidelines for appraisal of private sector projects. The promoter/entity appraisal is carried out on the basis of the financial performance, credit-worthiness, management proficiency and sectoral experience of the promoter entities. The project appraisal is carried out on the basis of various technical parameters like statutory clearances, PPA, infrastructure etc. Thus, Integrated Rating of the project is arrived at, on the basis of combined ratings of entity and project. RECs interest rates and security structure are linked to the grades or integrated ratings assigned to private sector projects. The Entity Appraisal Guidelines for financing Private sector projects have been reviewed and modified during FY 22-23.

6.2 Grading of state power utilities, JVs, companies, entities etc.

Your Company has a well-defined policy and guidelines for grading of State power utilities. The grading of State power utilities (generation, transmission, trading, holding company etc.) is carried out twice during a year, based on the evaluation of the utilitys performance against specific parameters, operational and financial performance, regulatory compliances, annual financial results etc. With regard to State power distribution utilities (including SEBs / utilities with integrated operations), your Company adopts the final annual integrated ratings carried out by independent rating agencies, after approval of framework and rating by the Ministry of Power, Government of India.The rating framework for integrated rating ofdiscoms have been reviewed and modified by external consultant.

For the purpose of funding, your Company has classified the utilities/entities into A++, A+, A, B & C categories. During the financial year 2021 -22,your Company has completed grading in respect of 132 utilities (excluding State Government), out of which 16 utilities were graded as A++, 39 as A+, 42 as A, 25 as B and 5 utilities as C. Further, 5 utilities were non-responsive.

7. FINANCING ACTIVITIES DURINGTHE YEAR

Your Company has been providing funding assistance for power generation (including conventional and renewable energy), transmission and distribution projects including for the electrification of villages and special schemes like liquidity infusion scheme of the Government of India envisaged under Atmanirbhar Bharat. Details of major financing activities during the year under review were as under:

7.1 Generation

During the financial year 2021-22, your Company sanctioned 53 nos. of loans towards generation projects including hydropower projects, implementation of pollution control equipment, renovation & modernization schemes, irrigation projects etc. and sanctioned total loan assistance of Rs. 16,089.15 crore, as per details given below:

(Rs. in crore)

Particulars No. of Loans Loan amount
State Sector 51 14,492.56
• Fresh Loan(s) 51 14,492.56
• Additional Loan(s) 0 -
Private Sector 2 1,596.59
• Fresh Loan 1 1,300.00
• Additional Loan 1 296.59
Total 53 16,089.15

7.2 Renewable Energy

During the financial year 2021-22, your Company sanctioned 15 nos. of Renewable Energy projects with installed generation capacity aggregating to 1,609 MW, with total loan assistance of Rs. 14,733.52 crore, as per details given below:-

(Rs. in crore)

Particulars No. of Loans Loan amount
State Sector 5 393.25
• Fresh Loan(s) 5 393.25
Private Sector 10 14,340.27
• Fresh Loan(s) 9 10,787.27
•Takeout financing 1 3,553.00
Total 15 14,733.52

The above loans included 2 wind energy projects with aggregate capacity of 810 MW, 1 solar wind hybrid project of 450 MW capacity, 1 solar wind hybrid project of 300 MW capacity with battery energy storage system.l takeout financing of wind turbine manufacturing, 1 solar module and cell manufacturing project of 2000 MWp per annum capacity, 1 small hydro project of 22.5 MW capacity, 2 waste-to-energy projects of 26.5 MW capacity, 2 projects for repair & maintenance of hydel plants and 1 e-mobility project to finance procurement of 65 e-vehicles.

7.3 Transmission & Distribution

During the financial year 2021-22, your Company sanctioned 288 nos. of Transmission & Distribution (T&D) schemes and projects involving a total loan assistance of Rs. 21,150.79 crore, including loan towards an intra-state transmission project in private sector, system improvement schemes, intensive electrification schemes, renovation & modernization schemes and loan component under various Government schemes like DDUGJY, SAUBHAGYA, IPDS etc.The total loans under T&D category also included three loans aggregating to Rs. 3,750.65 crore, under the liquidity infusion scheme of the Government of India envisaged under Atmanirbhar Bharat.

Details of T&D loans sanctioned during the financial year 2021-22 are given below:-

(Rs.in crore)
Particulars No. of Loans Loan amount
State Sector 287 20,500.79
•Transmission Loan(s) 125 9,077.46
• Distribution Loan(s) 159 7,672.68
• Liquidity Infusion Scheme Loan(s) 3 3,750.65
Private Sector 1 650.00
• Inter-state Transmission Project 1 650.00
Total 288 21,150.79

7.4 Short / Medium Term Loans and other loan assistance

Your Company has also sanctioned 14 nos. of short-term, medium-term, special loans and other loans aggregating to Rs. 2,448.30 crore to various power utilities during the financial year 2021 -22, towards their short-term or medium-term fund requirement, working capital requirement etc.

7.5 Financing activities in North Eastern States

The total financial assistance sanctioned by your Company during the financial year 2021-22 includes a sum of Rs. 1,008.17 crore towards various projects in the North Eastern States. The disbursement towards various projects in the North Eastern States during the financial year 2021-22, including against projects sanctioned in earlieryears, were Rs. 303.71 crore.

8. PRESENTT&D SCENARIO AND REFORMS

As the countrys installed generation capacity is at a high of 400 GW, with huge capacities planned in the renewable energy space, the Transmission & Distribution (T&D) sector is poised to witness growth. There is also a need to strengthen the technically old and aging distribution infrastructure. Need of the hour is to install a state-of-the-art robust and reliable evacuation and distribution system, capable of handling higher loads. Distribution is all the more focused area of power sector, with several reforms through Government of Indias flagship programmes and schemes. Therefore, T&D segment shall play a significant role in making the sector reliable, affordable and capable of absorbing envisaged future growth.

Your Company, as the nodal agency to various schemes of the Ministry of Power, Government of India, plays an active role in creating new infrastructure and augmentation/ strengthening of the existing network. Your Company finances entire gamut of T&D projects, broadly with the objectives of system improvement and augmentation, loss reduction, IT based system implementation, consumer satisfaction etc., thus playing a significant role in the development and sustainability of the sector and towards overall socio-economic progress of the country.

8.1 Major reforms in the Distribution Sector

The Government has implemented various schemes and programmes in the recent past, to improve the financial and operational performance of distribution companies (discoms). The policy framework of Government to support distribution sector includes initiatives like Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA), Ujwal DISCOM Assurance Yojana (UDAY), Integrated Power Development Scheme (IPDS), National Electricity Fund (NEF), Liquidity Infusion Scheme (LIS) etc., to name a few.

While this has resulted in major infrastructure creation and bridging of supply side gaps in the distribution sector, the management and governance related issues that manifest in operational & financial performance of discoms, still persist. Aggregate Technical & Commercial (AT&C) losses and the Average Cost of Supply-Average Revenue Realized (ACS-ARR) gap, continue to be high. The discoms need to focus on improving their operational efficiencies and financial sustainability, to meet the desired consumer service standards. For this, large scale reforms are required, including schemes to reduce losses and enhance discom efficiencies.

It is with this aim and the Government of Indias commitment to provide 24x7 uninterrupted, quality, reliable and affordable power supply, that the reforms-based and results-linked Revamped Distribution Sector Scheme (RDSS) has been launched, for supporting discoms to undertake reforms and improve performance in a time-bound manner.

Your Company encourages discoms to expedite improvements and to adopt best practices, including modernization and automation of systems and smart grid, IT-enabled systems for metering and consumer services, and other technological interventions of distribution sector. Your Company is the nodal agency for Government of Indias flagship schemes, DDUGJY and SAUBHAGYA, which have been successfully completed in their sunset year FY 2021 -22 and now, your Company is associated, inter-alia, with RDSS.

8.2 Revamped Distribution Sector Scheme (RDSS)

8.2.1 Overview

REC and PFC are the nodal agencies for the reforms-based and results-linked Revamped Distribution Sector Scheme (RDSS) notified by the Government of India vide OM dated July 20,2021, with an outlay of Rs. 3,03,758 crore and estimated Gross Budgetary Support (GBS) from the Central Government of Rs. 97,631 crore. REC, as nodal agency, has been assigned 19 States/Union Territories for overseeing and monitoring of implementation of the scheme, namely Assam, Meghalaya, Arunachal Pradesh, Chhattisgarh, Jammu & Kashmir, Ladakh, Goa, Tamil Nadu, Karnataka, Bihar, Rajasthan, Uttar Pradesh, West Bengal, Andaman & Nicobar Islands, Sikkim, Mizoram, Manipur, Nagaland and Tripura. The remaining States / Union Territories have been assigned to PFC.

All discomsand power departments ofState/UnionTerritories, excluding private sector discoms, are eligible for financial assistance under this scheme. The scheme is optional to discoms and is to be implemented in urban and rural areas of all States/Union Territories (except private discoms). The scheme allows States to adopt customized reform measures and plan infrastructure works to meet specific needs of the State with the approval of the Government of India.

8.2.2 Objectives

The objectives of the scheme are:

1. To improve the quality, reliability and affordability of power supply to consumers through a financially sustainable and operationally efficient distribution sector;

2. To reduce the AT&C losses to Pan-India levels of 12-15% by 2024-25; and

3. To reduce the ACS-ARR gap to zero by 2024-25.

The state-wise targets for reduction of AT&C losses/ACS-ARR revenue gap each year will depend on their current levels of AT&C losses and ACS-ARR gap.

8.2.3 Components

Part A-Metering & Distribution Infrastructure Works:

Component-1 : Prepaid Smart Metering

Component-ll : System Metering and upgradation of the Distribution Infrastructure

Component-Ill: Project Management

Part B - Training & Capacity Building and other enabling & supporting activities:

Including upgradation of human skills, process improvements, nodal agency fee, enabling components of Ministry of Power (communication plan, publicity, consumer survey, consumer awareness and other associated measures such as third-party evaluation etc.), augmentation of Smart Grid Knowledge Centre (including Al, training and capacity building for personnel involved in execution of the scheme at field level), awards and recognitions etc.

Ongoing approved projects: Projects sanctioned under PMDP 2015 in the erstwhile State of Jammu & Kashmir have been subsumed in RDSS.

8.2.4 Funding Pattern

The release of funds under the scheme will be linked to achievement of results and reforms laid down under an evaluation framework, as under:

Part A-Metering & Distribution Infrastructure Works

Component-1: Prepaid Smart metering solutions, including at consumer, DT and feeder level including integration of existing infrastructure, will be funded through GBS as under:

• for discoms in "Other than notified Special Category States", a fixed amount of Rs. 900 per consumer meter or 15% of the cost per consumer meter worked out for the whole project, whichever is lower.

• for discoms in "notified Special Category States", a fixed amount of Rs. 1,350 per consumer meter or 22.5% of the cost per consumer meter worked out for the whole project, whichever is lower.

To incentivize deployment of prepaid Smart meters within the targeted timeline of December 2023, the Scheme provide incentives as under:

• for discoms in "Other than notified Special Category States", a fixed amount of Rs. 450 per consumer meter or @ 7.5% of the cost per consumer meter worked out for the whole project, whichever is lower;

• for discoms in "notified Special Category States", a fixed amount of Rs. 675 per consumer meter or 11.25% of the cost per consumer meter, worked out for the whole project, whichever is lower.

Component-ll: Distribution Infrastructure works, including SCADA, DMS, AB cables, feeder segregation etc. maximum financial assistance to be funded through GBS will be as under:

• for discoms in "Other than Special Category States", up to 60% of the approved project cost, and,

• for discoms in "Special Category States", up to 90% of the approved project cost.

Part B - Training & Capacity Building and other Enabling & Supporting Activities:

• 100% of the approved project cost will be eligible for funding through GBS

Ongoing approved projects: Projects sanctioned under PMDP 2015 subsumed in RDSS will be eligible to receive grant funds up to March 31,2023 in terms of extant guidelines and terms & conditions of sanction.

8.2.5 Promoting use of advanced technologies in power distribution sector

RDSS lays special emphasis on leveraging advanced technologies to analyze data generated through Information Technology (IT) / Operational Technology (OT) devices, including system meters and prepaid smart meters, to materialize the envisaged goal i.e., introducing advanced technologies like Al (Artificial Intelligence) / ML (Machine Learning) in power distribution by leveraging partnerships and consultations.

REC plays a role as designated agency to select discoms and identify key intervention areas, empanelling incubator(s) to select Technology Service Providers (TSPs) through a competitive screening process and establishing governance mechanisms for the pilot projects and their scale-up. A competition named "Powerthon" was launched by Honble Union Cabinet Minister of Power and New & Renewable Energy on February 7, 2022, to select TSPs across problem statements submitted by willing discoms.

The key objective of Powerthon-2022 is to create a forum for the participation of TSPs, start-ups, educational institutions, research institutes, equipment manufacturers, state power utilities and other state and central power sector entities, brief them on the current challenges faced across the power distribution sector and primarily invite applications from TSPs to participate in Powerthon-2022. Herein, the TSPs can showcase their technology driven solutions based on advanced emerging technologies like AI/ML, Blockchain etc. to solve the complex problems.

8.3 National Electricity Fund (NEF)

REC is the nodal agency for operationalization of National Electricity Fund (NEF), an interest subsidy scheme having provision of Rs. 8,466 crore (against interest subsidy and other incidental expenses), to be provided over 14 years against interest paid on loan disbursements amounting to Rs. 23,973 crore for distribution schemes sanctioned during two financial years viz. 2012-13 and 2013-14. The Ministry of Power, Government of India provides interest subsidy on interest paid for loans availed by State power utilities & distribution companies, both in public and private sector, to improve the infrastructure in the distribution sector. In this reform-linked scheme, an interest subsidy of 3% to 7% is payable to discoms, on achievement of reform-based parameters outlined in NEF Guidelines.

The utilities from the States of Andhra Pradesh, Chhattisgarh, Gujarat, Flaryana, Flimachal Pradesh, Karnataka, Maharashtra, Madhya Pradesh, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttarakhand and West Bengal have already benefited from this scheme, with interest subsidy of Rs. 1,475 crore released till March 31,2022.

8.4 Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY)

Government of Indias flagship programme, DDUGJY, for which REC is the nodal agency, has been completed in its sunset year FY 2021-22 i.e., on March 31, 2022. All un-electrified villages/habitations, irrespective of population criteria, have been covered for electrification in accordance with the Guidelines of the scheme. All erstwhile ongoing rural electrification (RE) schemes had been subsumed in DDUGJY. In a landmark achievement, all remaining un-electrified census inhabited villages in the country became electrified as on April 28, 2018.

DDUGJY facilitated towards achievement of24x7 Power For AH in the rural areas of India, through the following project components:

a. Separation of agriculture and non-agriculture feeders facilitating continuous quality power supply to non-agricultural consumers and adequate power supply to agricultural consumers;

b. Strengthening and augmentation of sub-transmission and distribution infrastructure;

c. Micro-grid and off-grid distribution network;

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

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

Under the scheme, 60% of the project cost (85% for special category States) was provided as grant by the Government of India; and additional grant upto 15% (5% for special category States) was provided on achievement of prescribed milestones. The scheme had an approved outlay of Rs. 43,033 crore, including budgetary support of Rs. 33,453 crore from the Government of India. An amount of Rs. 48,185.67 crore (including grant of Rs. 30,668.11 crore) has been sanctioned by the Ministry of Power for DDUGJY in 33 States and Union Territories, against which Rs. 33,801.79 crore (including grant of Rs. 24,857.82 crore) has been released at the time of successful completion of the scheme i.e., March 31,2022. On closures, the total executed cost under the scheme has been arrived at Rs. 45,942.74 crore.

8.4.1 Erstwhile RE projects, subsumed under DDUGJY

Ministry of Power, Government of India has sanctioned an amount of Rs. 66,367.13 crore (including DDG projects) (grant involved: Rs. 59,730.42 crore) under erstwhile RE projects (i.e., Xth Plan, XIth Plan & XIIth Plan) subsumed under DDUGJY in 29 States including Union Territories, against which Rs. 59,651.89 crore (including grant of Rs. 53,827.21 crore) has been released till March 31,2022. On closures, the total executed cost under erstwhile RE projects has been arrived at Rs. 62,066.19 crore.

8.5 SAUBHAGYA - Pradhan Mantri Sahaj Bijli Har Ghar Yojana

Government of Indias flagship programme, SAUBHAGYA (Pradhan Mantri Sahaj Bijli Har Ghar Yojana), for which REC is the nodal agency, has been completed in its sunset year FY 2021-22 i.e., on March 31, 2022. The scheme outlay was Rs. 16,320 crore, including gross budgetary support of Rs. 12,320 crore. The SAUBHAGYA scheme aimed at providing:

a. Last mile connectivity and electricity connection to all un-electrified households in rural areas;

b. Last mile connectivity and electricity connection to all remaining economically poor un-electrified households in urban areas. Non-poor urban households are excluded from this scheme;

c. Solar Photo-Voltaic (SPV) based standalone system for un-electrified households located in remote and inaccessible villages/habitations, where grid extension is not feasible or cost effective.

Under the scheme, Rs. 14,082.43 crore (including grant of Rs. 9,078.84 crore) was sanctioned by the Ministry of Power to 26 States and Union Territories, against which Rs. 8,815.12 crore (including Government of Indias grant of Rs. 5,754.09 crore) has been released till March 31, 2022. It is noteworthy that 2.86 crore households have been electrified under SAUBHAGYA, DDUGJY and State Government schemes till March 31, 2022. On closures, the total executed cost of the projects has been arrived atRs. 9,246.22 crore.

8.5.1 Additional infrastructure for enabling electrification of SAUBHAGYA households

The Ministry of Power, Government of India had sanctioned additional fund of Rs. 14,178.89 crore (grant involved: Rs. 9,399 crore) for creation of additional infrastructure for SAUBHAGYA scheme under DDUGJY, against which Rs. 7,809.15 crore (including grant of Rs. 7,213.45 crore) has been released till March 31,2022. On closures, the total executed cost under Additional Infra projects has been arrived at Rs. 11,334.01 crore.

8.6 Prime Minister Development Package (PMDP-2015)

The Prime Minister Development Package (PMDP-2015), for erstwhile State of Jammu & Kashmir, now J&K and Ladakh Union Territories, was announced by the Honble Prime Minister on November 27, 2015, with approved project cost of Rs. 2,570.14 crore (90% grant from Government of India i.e., Rs. 2,301.62 crore) for distribution strengthening works in rural and urban areas. The major works covered under the scheme are system strengthening, connecting unconnected households, replacing of barbed wire and worn-out poles, underground cables at tourist places, consumer metering, construction of 33/11 kV sub-stations at industrial areas and electrical infrastructure at religious shrines.

Out of the above, project cost of Rs. 1,029.70 crore (Government of Indias grant: Rs. 926.73 crore) and PMA grant of Rs. 5.15 crore has been sanctioned for distribution strengthening works in rural areas. The funds shall be channelized through REC. Under the scheme, an amount of Rs. 615.47 crore has been released till March 31,2022. Further additional project cost of Rs. 527.55 crore, PMA charges of Rs. 2.65 crore and PIA charges of Rs. 28.44 crore for distribution strengthening projects in rural areas have been sanctioned by the Ministry of Power under PMDP-2015. Projects under PMDP-2015 in the erstwhile State of Jammu & Kashmir have been subsumed in RDSS as per extant guidelines and terms & conditions, and are eligible to receive grantfunds up to March 31,2023.

8.7 DISCOM Consumer Service Rating

An exercise was undertaken by REC for grading of DISCOMs across the country (public/private) in terms of consumer centric service and operational parameters. Scoring is spread across four broad parameters i.e., (i) Operational reliability,

(ii) Connections and other services, (iii) Metering, Billing and Collection, and (iv) fault Rectification & Grievance Redressal. The DISCOM Consumer Service Rating report for FY 2020-21 can be accessed at REC website https://recindia.nic.in/consumer- service-ratina-of-discoms.

8.8 Regulatory Parameters Report

During the year 2021-22, REC has published periodical reports capturing key regulatory parameters across Generation, Transmission & Distribution segment in Power sector for the benefit of various stakeholders and assisting policy formulation. The published reports can be accessed at REC website https://recindia.nic.in/ReaulatorvParameters.

8.9 Urja Mitra

Urja Mitra is a distribution sector initiative and a first of its kind application being implemented by your Companys wholly owned subsidiary, viz. REC Power Development and Consultancy Limited ("RECPDCL"), under the guidance of Ministry of Power, Government of India.

Urja Mitra provides a Central Outage Management and notification platform for State power distribution utilities, to disseminate power outage information to urban and rural power consumers across India through SMS, email or push notifications. The consumers get power outage update through integrated mobile application for Android and iOS platforms. Urja Mitra also provides a platform to view real time power outages in any part of the country and lodge complaints on power outages. Data of around 23.24 crore consumers from 52 discoms have been uploaded on the Urja Mitra App and almost 530 crore SMSes have been sent to the consumers.

8.10 11 kV Rural Feeder Monitoring Scheme

11 kV Rural Feeder Monitoring Scheme is being implemented by your Companys wholly owned subsidiary, RECPDCL. The objective of the scheme is to monitor quality and reliability parameters of rural power supply at feeder level, to ensure achievement of "24x7 Power for All". The scheme targets to develop a self-sustained, independent, web based automated system by installing Modem/DCUs for rural, agricultural and mixed (agriculture rural) feeders across the country. Data is acquired on various essential parameters of all the outgoing 11 kV rural feeders and such 66/33 kV incoming feeders, from where 11 kV rural feeders are emanating and information is made available online for all stakeholders. Analysis of such data provides useful MIS to various stakeholders such as discoms and Central Electricity Authority (CEA).

8.11 National Feeder Monitoring System (NFMS)

RECPDCL has been awarded the work of implementation of National Feeder Monitoring System (NFMS), for monitoring the reliability and quality of power in all rural and urban feeders across the country. The project shall be implemented in two parts, i.e., NFMS Central IT Solution, wherein RECPDCL shall establish a state-of-the-art central IT Solution comprising of data ingestion, data processing, data storage and data analytics; and NFMS Field Solution, wherein RECPDCL shall be project implementing agency for expediting Smart Feeder Metering.

8.12 Smart Prepaid Metering

Your Companys wholly owned subsidiary, RECPDCL, is implementing Advanced Metering Infrastructure (AMI) projects in the country. The Company has installed approx. 25 thousand smart meters in Chandigarh and is also installing 1.15 lakh Smart Meters in Jammu and Srinagar towns, of which around 50,000 smart meters have been installed. Further, RECPDCL has also received Letter of Intent to implement more than 10 million smart prepaid meters under RDSS (in Kerala and Gujarat), under PMDP (in UT of Jammu & Kashmir) and under Special Development Package (in UT of Ladakh).

8.13 Implementation of Transmission projects

Your Companys wholly owned subsidiary, RECPDCL, is implementing 220 kV transmission lines project in Ladakh at an altitude of approx. 5,500 meters above mean sea level, which is Indias highest transmission line. The project also includes construction of modern Gas Insulated Substation (GIS) in Nubra and Zanskar valley of Ladakh. These projects will connect Ladakh to uninterrupted grid power supply and help in socio-economic development of the region.

8.14 Tarang

Tarang (Transmission App for Real-Time Monitoring and Growth) is a transmission sector initiative, being run under the guidance of the Ministry of Power, Government of India, through your Companys wholly owned subsidiary RECPDCL. Tarang App is a real time repository of transmission system across the country. It provides an informative medium regarding Pan-India progress of the transmission system, which can be drilled down for analysis to month-wise, agency-wise, state-wise information etc. Tarang monitors the progress of both inter-state and intra-state transmission projects being implemented throughTariff Based Competitive Bidding (TBCB) process, as well as regulated tariff mechanism.

9. PERFORMANCE & ACHIEVEMENTS UNDER GOVERNMENT PROGRAMMES

The performance and achievements under various Government programmes during finacial year 2021-22 and cumulatively till March 31,2022, are given below:

9.1 Performance and achievement during FY 2021-22 under RDSS, DDUGJY, SAUBHAGYA and PMDP-2015:

a. Sanction and release: During the financial year 2021-22, an amount of Rs. 89,521 crore was sanctioned under RDSS against smart metering and loss reduction works in the States assigned to REC (nodal agency). Further, an amount of Rs. 2,860.59 crore was sanctioned under DDUGJY for electrification of households left out under SAUBFIAGYA.

The subsidy of Government of India is channelized through REC and the matching contribution is infused by the respective State Government or implementing agencies, through loan from any financial institution or from their own sources. During the financial year 2021-22, aggregate GBS funds amounting to Rs. 5,413.34 crore have been released to States [comprising of DDUGJY (including additional infrastructure): Rs. 3,240.83 crore; DDG: Rs. 99.06 crore; PMDP-2015: Rs. 2.72 crore and SAUBHAGYA: Rs. 360.41 crore],

b. Physical progress of creation of infrastructure: During the financial year 2021-22, the following works have been completed under the 3 schemes of Government of India i.e., DDUGJY, SAUBHAGYA and PMDP-2015:

(i) Commissioning of sub-stations including augmentation: 382 nos.

(ii) Commissioning of Distribution transformers (including augmentation): 82,444 nos.

(iii) 11 kV lines (including Feeder Segregation): 71,114 cKm

(iv) LT lines: 1,21,313 cKm

(v) 33 kV/66 kV Lines: 8,409 cKm

(vi) Installation of consumer metering: 42,15,933 nos.

(vii) Metering of DTRs and Feeders: 51,966 nos.

c. Progress of electrification of households: During the financial year 2021-22, electrification of 4.41 lakh households was achieved under DDUGJY.

9.2 Cumulative performance upto March 31,2022

a. Sanction and release: Under RDSS, an amount of Rs. 89,521 crore was sanctioned to the States allocated to REC (nodal agency) towards smart metering and loss reduction. However, no funds have been released till March 31,2022. Under DDUGJY including RE Projects and SAUBHAGYA schemes, aggregate amount of Rs. 1,44,537 crore was sanctioned and on completion of the projects, aggregate executed cost arrived at Rs. 1,30,312 crore as on March 31,2022.

Since launch of the schemes, Rs. 92,249.52 crore of Government of India grant funds have been disbursed by REC as nodal agency to the implementing agencies up to March 31, 2022 [comprising of DDUGJY (including additional infrastructure): Rs. 31,384.90 crore, DDG: Rs. 844.94 crore; PMDP-2015: Rs. 615.47 crore and SAUBHAGYA: Rs. 5,754.09 crore],

b. Physical progress of creation of infrastructure: The following works have been completed cumulatively upto March 31,2022 under the above-mentioned Government programmes since inception:

(i) Commissioning of sub-stations incl. augmentation: 7,338 nos.

(ii) Commissioning of Distribution transformers (including augmentation): 16,62,727 nos.

(iii) 11 kV lines (including Feeder Segregation): 8,07,187 cKm

(iv) LT lines: 13,83,566 cKm

(v) 33 kV/66 kV lines: 41,241 cKm

(vi) Installation of consumer metering: 1,87,97,312 nos.

(vii) Metering of DTRsand Feeders: 2,54,307 nos.

c. Progress of electrification of households: 2.86 crore households have been electrified in the SAUBHAGYA scheme period under various schemes i.e., SAUBHAGYA, DDUGJY, RE, State schemes etc., since launch i.e., October 2017 till the completion of DDUGJY and SAUBHAGYA schemes on March 31,2022.

10. STANDARDIZATION, QUALITY CONTROL & MONITORING

Your Company has regularly provided handholding support and technical expertise in the distribution system, to State power utilities for implementation of Government schemes. The technical specifications, guaranteed technical particulars (GTP), layout drawing, data sheet and construction standards issued by the Company are being used by the state power utilities along with their State practices.

The Company has been adopting new emerging technologies in distribution sector, such as prepaid smart meters, consumer and system metering, advanced metering infrastructure (AMI) (head-end system, metering data management, billing software/system and communication technology), supervisery control and data acquisition (SCADA), real time data acquisition system (RT-DAS), distribution management system (DMS), information technology/operational technology (IT/OT) related works including ERP software. Sate power utilities are taking leverages of these new technologies for improving their operational efficiency and financial sustainability.ln line with the Quality Control Mechanism Guidelines of Government Programmes, REC Quality Monitors (RQMs) and National Quality Monitors (NQMs) have been appointed for carrying out material and field works inspections for ensuring quality of materials supplied at site and field works during implementation of such schemes.

During the financial year 2021-22, RQMs have undertaken field inspection of 4,169 nos. of villages, 466 nos. of substations and 287 nos. of feeders and 31 nos. of pre-dispatch material inspections at manufacturer premises, for ensuring quality of materials supplied in village electricity infrastructures & substations installed under the Government schemes.

11. ISO 9001:2015 QUALITY ASSURANCE CERTIFICATION

The Company has implemented Quality Management Systems as per ISO 9001:2015 standards in six major divisions of corporate office and 18 regional / state offices across the country, for processing of claims.

12. RISK MANAGEMENT

The Company has a Comprehensive Risk Management Policy, which covers various risks including Credit Risk, Operational Risk, Liquidity Risk, and Market Risk. The Company has identified its various risks and is constantly taking appropriate steps to mitigate the same.

Brief description of the key risks and their mitigation measures is given below:

(i) Credit Risk: Credit risk is the inherent risk in the financing industry and involves the risk of loss, arising from the diminution in credit quality of a borrower and the risk that the borrower will default on contractual repayments under a loan or an advance.

To mitigate the same, the Company follows systematic institutional and project appraisal process to assess credit risk. These processes include a detailed appraisal methodology, identification of risks and suitable structuring and credit risk mitigation measures. Further, on regular basis REC loan book is categorized as high, moderate or low, depending upon the asset classification based on the ECL methodology.

(ii) Operational Risk: Operational riskarises from inadequate or failed internal processes, people and systems or external events.

The Company has implemented a comprehensive Risk Register, through which all operational risks are measured and categorised as high, moderate or low. Further, the operational risks of the Company are studied in all functional areas such as Business, Compliance, Finance, Human Resource, Cyber Security, Legal, Operational and Strategic.

(iii) Liquidity Risk: Liquidity risk primarily arises due to the maturity mismatch associated with assets and liabilities of the Company. It is the risk of potential inability to meet liabilities as they become due. 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. The Company faces liquidity risks, which could require it to raise funds or liquidate assets on unfavourable terms.

In order to mitigate the liquidity risk, there is a mix of strategies including forward looking resource mobilization based on project disbursements and maturing obligations.

Your Company has been able to mitigate negative impact on its liquidity position due to outbreak of Covid-19 pandemic, through its strong market credibility and reach in the market in arranging funds through various sources of borrowings i.e., institutional bonds, ECBs and bank loans etc.

(iv) Market Risk: Market risk of the Company is defined as the risk to Companys earnings and capital due to changes in the market dynamics, such as interest rate or prices of securities, foreign exchange fluctuations.

The Company has implemented various risk limits to mitigate the market risk. The Company has also constituted an Asset Liability Management Committee to monitorthe components of market riskincluding interest rate risk, liquidity risk and forex risk.

(v) Interest Rate Risk: Interest rate risk is the potential loss arising from fluctuations in market interest rates.

In order to mitigate the interest rate risk, your Company periodically reviews its lending rates and the weighted average cost of borrowing based on prevailing market rates.

(vi) Forex 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.

The Company manages foreign currency risk associated with exchange rate and interest rate through appropriate hedging strategies.

12.1 Risk Management Committee

The Company is having a Risk Management Committee (RMC) of its Directors in place, for monitoring the integrated risks of the Company. The Committee comprises of two Independent Directors including Chairperson, Director (Finance) and Director (Technical). Executive Directors and Chief General Managers from various key divisions of the organization, are standing invitees to the meetings of RMC.

The main function of the RMC is to monitor various risks and also to suggest action for mitigation of risks arising in the operation and other related matters of the Company. Further, as required under RBI norms, the Company has appointed a Chief Risk Officer (CRO).

12.2 Asset Liability Management Committee

To manage the market risk, the Company has constituted an Asset Liability Management Committee (ALCO) under the chairmanship of CMD, which comprises of Director (Finance), Director (Technical), Executive Directors and Chief General Managers from Finance and Operating Divisions as its members.The ALCO monitors risks related to interest rates, liquidity and currency rates.

13. RISK BASED INTERNAL AUDIT

RBI vide its circular February 3, 2021, had mandated the Risk Based Internal Audit (RBIA) framework for all nondeposit taking NBFCs with asset size of Rs. 5000 croreand above. Accordingly, REC has implemented the RBIA framework effective from April 1, 2022. The Company has a Board-approved RBIA policy/manual which links the organizations overall risk management framework and provides an assurance to the Board of Directors, Audit Committee and senior management, on the quality and effectiveness of the organizations internal controls, risk management and governance related systems and processes. RBIA will help the organization to identify the risks and address them based on the risk priority and direction provided by the Board. The activities under RBIA framework include independent riskassessmentofthe operation/activities, identification of audit universe, development of risk matrix, preparation of annual RBIA Plan and execution of internal audit as per the frequency defined in approved RBIA policy.

14. PREFERRED CUSTOMER POLICY

As a part of business promotion strategy, a Preferred Customer Policy was formulated in 2008 with the basic purpose of offering enhanced level of services to the Companys customers and to have a long term mutually beneficial relationship with them. The policy lays down the eligibility criteria which takes into account various factors such as amount of loan outstanding, duration of loan relationship, repayment track record of the borrower etc. for determining preferred customers and sponsoring them for capacity building domestic/ international seminars and training programmes organized by various external agencies, as well as RECIPMT Hyderabad.

15. INFORMATION TECHNOLOGY INITIATIVES

RECs revamped Business ERP, whichsupports GST and Ind- AS, has advanced features which have facilitated further automation of business operation of the Company. The ERP system is continuously improved as per requirements. REC has also implemented NIC e-office solution, with automated workflow and electronic document management features. The NIC e-office has brought major transformation in the way of working of the Company by improving efficiency and transparency, besides reducing the use of paper.

Organization wide MPLS VPN network infrastructure facility has been revamped with latest network and security devices, with high availability to meet the demanding requirements of operations. The secured VPN network has facilitated users to connect to REC network from remote locations to access business applications viz. ERP and NIC e-office, thus ensuring seamless operations without any disruption.

The Primary Data Centre and Disaster Recovery Center of REC are ISO/IEC 27001:2013 certified and also comply with the National Cyber Security Policy of the Government of India. REC has implemented IT Security directives of Master Direction of IT Framework as per RBI Guidelines. Further, the Company provides training and awareness to its employees on cyber security and information security.

16. REC INSTITUTE OF POWER MANAGEMENT ANDTRAINING

REC Institute of Power Management and Training (RECIPMT) is a premier power sector training institute under the aegis of REC. Established in 1979 at Hyderabad, the institute caters to the training and development needs of engineers and managers of power sector organizations. During the last four decades, RECIPMT has organized 2,895 national training programmes and trained 63,763 engineers/managers from power utilities including generation, transmission & distribution companies, electricity departments, rural electric cooperatives, electricity regulatory commissions etc.

16.1 National Training Programme (NTP) sponsored by MoP under DDUGJY

RECIPMT is the nodal agency for coordination and implementation of National Training Programme for C&D category employees of power distribution companies under DDUGJY sponsored by Ministry of Power, Governmentof India (MoP). In spite of the Covid-19 pandemic, RECIPMT signed 29 Memorandum of Agreements with discomsand theirtraining institutes and completed training for 16,376 participants, in a total of 679 training batches across the country during the financial year 2021-22. It is pertinent to mention that 546 training batches were organized by discoms, whereas 113 training batches were organized by RECIPMT support, on the request of discoms.

16.2 MEA sponsored international training programmes under Indian Technical & Economic Cooperation (ITEC)

RECIPMT is also a partner training institute with Ministry of External Affairs, Government of India (MEA) for organizing training programmes for the executives of international power sector organizations. The duration of such training programmes varies from 4 to 12 weeks. Since 2005 until now.

RECIPMT has organized 104 such training programmes and trained 1,747 executives from 98 countries.

During 2021-22, 2 webinars each of 3-weeks duration were organized, with participation of 64 executives from countries such as Azerbaijan, Algeria, Bangladesh, Bhutan, Bolivia, Cambodia, Ethiopia, Ecuador, Egypt, Kenya, Lebanon, Mauritius, Mozambique, Nigeria, Palestine, Seychelles, Sri Lanka, Sudan,Tanzania,Thailand and Zambia.

16.3 REC sponsored programmes

In order to encourage training activities and bring in awareness among the executives of power utilities during the Covid-19 pandemic situation, the following training programmes were conducted free of cost by RECIPMT during the financial year 2021-22 with all India participation:

a. REC sponsored training programmes on Electrical Safety Safety being the major concern of power utilities in the country, REC sponsored 60 batches on "Electrical Safety", under which 1,522 participants from different utilities were trained during the financial year 2021-22.

b. REC sponsored webinars on Techno-Commercial Improvement of DISCOM

RECIPMT organized 40 batches of 2-day webinars on "Techno-Commercial Improvement of DISCOMs Performance", covering subjects such as Electricity Act amendments, tariff reforms, real time markets and renewable integration. Under the same, RECIPMT trained 1,004 participants of power sector companies i.e., from gencos, transcos and discoms.

c. REC sponsored webinars on Sustainability of Power Utilities

REC has sponsored 50 batches of 1-day webinar on "Sustainability of Power Utilities" and trained 1,027 participants of power sector including gencos, transcos and discoms.

16.4 Open calendar programmes for power utilities

Due to Covid-19 situation, the trainings were announced in virtual or online mode in the form of webinars. In spite of the severity of pandemic, RECIPMT successfully organized 13 training programmes as webinars and 2 programmes in classroom mode on different topics such as solar power generation, disaster management, distribution transformers, labour laws, O&M of sub-stations and smart meters. A total of 266 participants took part in the same.

16.5 REC executives (in-house) training programmes

During the financial year 2021-22, RECIPMT organized 8 classroom sessions of 12 days duration for HPSEBL and 3 online webinars for DVC. Further, training programmes were conducted for 8 batches of total 200 newly recruited junior teammates and junior helpers of HPSEBL. RECIPMT also organized 3 online trainings for 126 DVC executives on power cable selection, testing laying & commissioning.

16.6 Customized Programmes

During the financial year 2021-22, RECIPMT organized 8 classroom sessions of 12 days duration for HPSEBL and 3 online webinars for DVC. Further 8 batches of training programmes were conducted for newly recruited junior teammates and junior helpers of HPSEBL.A total of 200 participants were trained in the same. RECIPMT also organized 3 online trainings for 126 DVC executives on power cable selection, testing laying & commissioning.

16.7 Total Training Programmes organized during the financial year 2021-22

During the financial year 2021-22, RECIPMT conducted an aggregate of 868 training programmes, which were attended by 20,728 participants, with achievement of 64,361 training man-days in total.

17. HUMAN RESOURCE MANAGEMENT

In order to professionalize the executive strength of REC and to infuse fresh blood, 44 executives were appointed through campus and direct recruitment during the financial year 2021-22. The total manpower of the Company as on March 31, 2022 stood at 440 employees, which includes 392 executives and 48 non-executives.

17.1 Reservation in Employment

The Directives issued by the Government of India regarding reservations for SC/ST/OBC etc. in appointment and promotion to various posts, were complied with. As on March 31,2022, group-wise details of SC/ST/OBC employees against the total strength were as under:

Number of Employees
Year Category Group A Group B Group C Total
Total Employees 392 15 33 440
2021-22 SC 43 3 15 61
ST 17 0 0 17
OBC 83 1 3 87
Total Employees 366 22 40 428
2020-21 SC 40 3 15 58
ST 16 0 0 16
OBC 72 1 3 76

17.2 Training & Human Resource Development

As a measure of capacity building including up-gradation of employees skill sets and to ensure high delivery of performance. Training and Human Resource Development continued to receive priority during the financial year 2021-22. Due to Covid-19 pandemic, the employees were encouraged to take-up online training programs and various special programs on managing lifestyle during the pandemic.

The Training and Human Resource Policy of the Company aimsatsharpening business ski Ms a nd competencies required for better employee performance; and provides all possible opportunities and support to the employees to improve their performance and productivity. Training was also provided to promote better understanding of professional requirements, as well as to sensitize the employees aboutthe socio-economic environment in which the Company operates. Trainings on topics of health and spiritual well-being were also imparted. During the financial year 2021-22, 231 employees attended various training programs, workshops etc., which enabled the Company to achieve 466 training man-days.

17.3 Employee Welfare

In order to provide improved health care facilities to the employees and theirdependent family members, part-time services of doctors were engaged to provideonsite medical facilities. Additionally, the Company conducted 7 (seven) Covidvaccination camps forits employees, their dependent family members and retired employees.The Company hasalso funded sports & recreation equipment for its employees to promotetheir well-being.The employees are also encouraged to participate in various quizzes, paper presentations and simulation competitions conducted by reputed institutions.

17.4 Sports activities

During the financial year 2021-22, REC hosted an Inter-CPSU Cricket Tournament at Gurugram and also sponsored its employees for various Inter-CPSU sports tournaments such as table tennis, badminton, volley ball, chess etc., organized by power sector CPSUs under the aegis of Power Sports Control Board (PSCB).

17.5 Representation of Women Employees

As on March 31, 2022, the Company had 72 permanent women employees, which represented 16.36% of the total work force. There is no discrimination of employees on the basis of gender. The Company has a Womens Cell to look after welfare and all round development of women employees. The International Womens Day 2022 was celebrated with active participation of all employees.

17.6 Industrial Relations

The industrial relations scenario in the Company continued to be cordial and harmonious in the financial year 2021-22. There was no loss of man-days on account of industrial unrest. Regular interactions were held with REC Employees Union and REC Officers Association on issues of employee welfare.This has helped in building an atmosphere of trust and cooperation, resulting in a motivated workforce and continuedimprovement in performance.

17.7 Grievance Redressal

In accordance with the guidelines issued by the Government of India, the Company has constituted a Grievance Redressal Committee to redress the grievances of its employees.

Further, your Company has a Public Grievance Redressal system for dealing with the grievances of the public at large. The Company has appointed a senior official in this regard as the Chairman, Public Grievance, to ensure prompt redressal of grievances within the stipulated time frame.

18. CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) initiatives of the Company are aimed at supporting socially beneficial projects, so as to maximize outreach through a wide spectrum of beneficiaries and empower economically and socially backward communities as a guiding principle, while giving priority to development issues of national concern. CSR initiatives have been undertaken in the fields of sanitation and hygiene, promotion of healthcare facilities, skill development, women empowerment, environmental sustainability and rural infrastructural development, in order to promote and facilitate inclusive social development.

The Companys Corporate Social Responsibility Policy is aligned with the provisions of Companies Act, 2013 and Rules made thereunder; and is available at httpsy/recindia.nic.in/uploads/files/REC-CSR-Policv-07-12-2021 .pdf.

In terms of guidelines issued by DPE for the year 2021-22, CPSEs are to spend 60% of their CSR budget on the theme of "Health & Nutrition, with special focus on COVID related measures including setting up makeshift hospitals and temporary COVID care facilities", preferably in aspirational districts. The Company stepped-up its efforts to support social welfare activities in health and related thematic areas, in different aspirational districts spread across India. The Companys CSR projects aimed at improving health services and reducing malnutrition were undertaken in Gajapati (Odisha), Mamit (Mizoram), Kiphire (Nagaland), Muzaffarpur (Bihar), Udham Singh Nagar (Uttarakhand), Chandel (Manipur) and West Sikkim (Sikkim) districts.

During the financial year 2021-22, the Board approved CSR budget of Rs. 170.67 crore, i.e., 2% of average of net profits of the last three financial years, in line with the applicable provisions of the Companies Act and Rules made thereunder. Against the same, the Company has spent Rs. 171.07 crore during the year (including carry forward of excess spent of Rs. 3.45 crore from the previous year). The total expenditure included contribution of Rs. 50 crore to the PM CARES Fund and various other projects in different thematic areas, including:

• Distribution of aids &assistive devices to over 9000 persons with special abilities, across various States of India

• Providing mobile health clinics van and emergency ambulance for 12 villages in Manipur

• Strengthening cancer screening and basic cancer care services in 14 districts of Bihar

• Improving screening for cervical cancer through Empowering Communities in Uttar Pradesh

• Assistance for construction of residential building (G+2) for 150 tribal girls at Sehore district in Madhya Pradesh and providing support for studies, food and other basic necessities to 11 Seva Kutirs comprising of over 1,541 children

• Operation of innovative mobile school for imparting free education to 462 children of migrant construction labourers in Gurugram, Haryana and Hardoi, Uttar Pradesh

• Free distribution of seeds to farmers residing in drought- prone areas in Maharashtra

• Conservation and sustainable management of bioresources of Andhra Pradesh

• Construction and operation of shelter home with wellness facility (60 seater) for the care of elderly in Leh

• Installation and commissioning of 4300 LPM Pressure Swing Adsorption (PSA) oxygen generation plant in hospitals of 5 locations, namely, Baran(Rajasthan), Pune (Maharashtra), Chamba (Himachal Pradesh), Pithoragarh (Uttarakhand), Chatra (Jharkhand),

• Broad basing of sports and promotion of excellence in sports across India, emphasizing on women hockey, athletics and boxing.

The detailed Annual Report on CSR activities for the financial year 2021-22, including particulars of impact assessment(s) carried out by the Company in respect of various CSR projects, is forming part of this Annual Report.

19. VIGILANCE ACTIVITIES

REC constantly endeavors to optimize probity and integrity among employees and to promote transparency, fairness and accountability in all operational areas. RECs Vigilance division mainly aims atPreventiveVigilanceby reviewing the policies, rotation and transfers of employees holding sensitive posts, review of audit reports, review of projects, tenders and contracts awarded, inspections of regional offices, review of Annual Property Returns (APRs) etc.

In this regard, the following major activities have been carried out:

• In compliance with the instructions of CVC/MoP, the matter of rotational transfers from the identified sensitive posts is constantly being pursued.

• Sending prescribed periodical statistical returns to CVC and MoP on time.

• Regular review of audit reports i.e.. Internal, Statutory and C&AG Audit Reports.

• Review of projects, tenders and contracts awarded. Wherever deviations were observed, the matter was taken up with the concerned divisions, which led to strengthening of appraisal system and guidelines.

• Field inspections of regional offices and scrutiny of APRs.

• Review of selection process of legal consultant and lenders legal counsel.

• Field inspections of REC financed projects.

• Thrust on leveraging of technology was continued, with the result that information relating to loans, schemes, tenders, third party bills etc. are online.

• Vigilance Monitoring System has been developed for timely detection and reducing the occurrence of lapses, which covers various functionalities of the organization, like procurement & contracts, bill tracking, loans, assets and employee payments (medical and travel).

• It was ensured that information and policies like tenders, requisite forms, status of loan applications and third-party payments. Fair Practices Code, Prevention of Fraud Policy, CSR Guidelines, Whistle Blower Policy etc. are available on RECs website.

19.1 Observance of Vigilance Awareness Week

REC limited observed Vigilance Awareness Week 2021 from October 26, 2021 to November 1, 2021, on the theme "Independent India @ 75: Self Reliance with Integrity", in line with the circular issued in this regard by the Central Vigilance Commission.

All employees were administered Integrity Pledge and various activities and competitions were organized, to spread awareness about vigilance amongst the employees, as well as public at large. An activity of learning the art of nest-making was organized in cooperation with Shri Rakesh Khatri, known asthe"NestMan of lndia"and founder of the NGO"ECO Roots", which is working in the field of conserving the ecosystem, environment and bio-diversity.

20. IMPLEMENTATION OF OFFICIAL LANGUAGE

To promote the use of Hindi in official work, continuous efforts are made by the Company in terms of the Annual Programme issued by the Department of Official Language, Ministry of Home Affairs, Government of India. Hindi Pakhwada was organized at Corporate Office from September 14-28, 2021, wherein various competitions like Rajbhasha quiz, Hindi spelling, Hindi translation, Hindi essay writing, Hindi poetry writing and general knowledge competitions were organized.The participation of employees in such events and competitions was encouraging.

Prizes were awarded to the winners, to motivate the employees to increase the use of Hindi in their day-to- day work. Hindi Pakhwada was also organized in various offices of the Company including RECIPMT, to provide hands-on exposure to participants in discharge of their official work in Hindi.

During the financial year 2021-22, the Committee of Parliament on Official Language successfully conducted inspections at various regional offices of the Company viz. Chennai, Jammu, Hyderabad, Kolkata and Patna. These inspection have inculcated a spirit of awareness amongst employees for enhanced adoption of Hindi in their work.

An Official Language Conference-cum-Hindi Workshop was organized during 9-10 December 2021 by Corporate Office and RECIPMT, Hyderabad. A special Hindi workshop was organized for the newly recruited employees on August 27, 2021, wherein the team from Regional Implementation Office, Delhi guided the employees for improving use of Hindi.

REC has been conferred with Shrestha Karyanwayan Puraskar for implementation of Official Language Policy, by the Town Official Language Implementation Committee (PSUs-l) Delhi in its 35th meeting. Further, REC has been awarded for the implementation of Kanthastha (Translation Memory) by the Department of Official Language, Ministry of Home Affairs. REC has been publishing a Hindi journalUrjayan, containing interesting and useful articles as well as literary writings of its employees. To motivate the employees, the Company has adopted a policy to award prizes and incentives for write-ups, articles, poems, etc. During the financial year, use of Hindi was also promoted by the Company in its tweets and posts on social media platforms.

21. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO.

21.1 Conservation of Energy

Your Company does not own any manufacturing facility, there are no significant particulars relating to conservation of energy and technology absorption.

The registered office of the Company is located in SCOPE Complex at New Delhi, where all civil, electrical installation and maintenance is carried out by SCOPE (Standing Conference of Public Enterprises).

REC Corporate Office has shifted to its new office building, Gurugram which is designed and constructed by using energy efficient fagade and radiant cooling slabs to lower about 30% HVAC load requirement in the building in order to conserve energy. Further, a 979kWp solar plant has been installed at top of the building (supported by solar pergola structure) to cater to load requirement of REC office by using clean and renewable source of energy.

Highly efficient solar panels (efficiency = 21.2%) have been installed and the solar plant is in operation since July 2021. The solar plant is functional and connected to grid and has generated 8,22,072 units of electricity, which has catered to around 50% of the total load requirement of REC corporate office building (i.e., 16,30,956 units) during the financial year 2021-22. It is pertinent to mention that total capital investment on energy conservation equipment by the Company i.e., towards SITC (supply, installation, testing and commissioning of solar pergola and solar panels), was Rs. 12.22 crore.

21.2 Foreign Exchange Earnings & Outgo

During the financial year 2021-22, the Company had no foreign exchange earnings. Further, foreign exchange outflow aggregating to Rs. 11,047.28 crore was made during the year, on account of interest, principal repayment, finance charges and other expenses.

22. SUBSIDIARY COMPANIES

RECs wholly-owned subsidiary, viz. REC Power Development and Consultancy Limited ("RECPDCL")(formerly known as REC Power Distribution Company Limited) [CIN U40101DL2007GOI165779], is engaged in the businesses of project implementation and consultancy services in power sector viz. implementation of distribution system strengthening works, implementation of grid/off-grid solar (PV) projects, installation of smart meters, preparation of detailed project reports, third party inspections, pre-dispatch material inspections and acting as project management consultant / project management agency under some projects of State-funded schemes such as DDUGJY, IPDS etc.

Further, RECPDCL also acts as "Bid Process Coordinator" for selection of Transmission Service Providers through Tariff Based Competitive Bidding (TBCB) process, for independent inter-state and intra-state transmission projects assigned by the Ministry of Powerand State Governments from time to time.

In order to initiate development of each independent interstate / intra-state transmission project, RECPDCL incorporates a project-specific Special Purpose Vehicle (SPV) as its wholly- owned subsidiary, which also becomes the subsidiary of REC. After selection of the successful bidder in accordance with TBCB Guidelines, such subsidiaries are transferred by RECPDCL to the successful bidder, along with all assets and liabilities.

During the financial year 2021-22, RECPDCL transferred 5 project specific SPVs to the successful bidders, namely:

SI. no. Name of the SPV Name of the successful bidder Date of transfer of SPV
i Fatehgarh BhadlaTransco Limited [CIN: U40108DL2020GOI364227] Powergrid Corporation of India Limited 4-Jun-2021
2 Sikar NewTransmission Limited [CIN: U40106DL2020GOI364672] Powergrid Corporation of India Limited 4-Jun-2021
3 MP PowerTransmission Package-ll Limited [CIN: U40100DL2020GOI368275] Adani Transmission Limited 1-Nov-2021
4 KallamTransmission Limited [CIN: U40106DL2020GOI364104] Consortium of Indigrid 1 Limited and Indigrid 2 Limited 28-Dec-2021
5 Gadag Transmission Limited [CIN: U40100DL2020GOI364213] ReNewTransmission Ventures Private Limited 17-Mar-2022

As on March 31, 2022, RECPDCL had the following project- specific SPVs for various inter-state / intra-state transmission projects:-

(1) Chandil Transmission Limited [CIN: U40108DL2018GOI330905]

(2) Dumka Transmission Limited [CIN: U40300DL2018GOI331490]

(3) MandarTransmission Limited [CIN: U40101DL2018GOI331526]

(4) Koderma Transmission Limited [CIN: U40300DL2018GOI331192]

(5) BidarTransmission Limited [CIN: U40106DL2020GOI364498]

(6) Rajgarh Transmission Limited [CIN: U40106DL2020GOI364436]

 

(Transferred to GR Infraprojects Limited on May 30,2022)

(7) MP PowerTransmission Package-1 Limited [CIN: U40108DL2020GOI367417]

(8) ER NERTransmission Limited [CIN: U40108DL2021GOI387793]

Further, after the end of financial year 2021-22, several new SPVs have been incorporated as wholly-owned subsidiaries of RECPDCL and REC, namely:

(1) Neemuch Transmission Limited [CIN: U40106DL2022GOI396525]

(2) Khavda ll-ATransmission Limited [CIN: U40200DL2022GOI396828]

(3) Ramgarh II Transmission Limited [CIN: U40106DL2022GOI396994]

(4) Khavda ll-BTransmission Limited [CIN: U40106DL2022GOI397064]

(5) Khavda ll-CTransmission Limited [CIN: U40106DL2022GOI397095]

(6) Khavda ll-DTransmission Limited [CIN: U40108DL2022GOI397181 ]

(7) BeawarTransmission Limited [CIN: U40106DL2022GOI397400]

(8) KPS3 Transmission Limited [CIN: U40109DL2022GOI397632]

(9) KPS2Transmission Limited [CIN: U40106DL2022GOI397788]

(10) KPS1 Transmission Limited [CIN: U40100DL2022GOI397888]

(11) Sikar Khetri Transmission Limited [CIN: U40100DL2022GOI397891]

(12) Khavda RE Transmission Limited [CIN: U40100DL2022GOI397942]

(13) Gadag ll-ATransmission Limited [CIN: U40100DL2022GOI399702]

During the financial year 2021-22, RECPDCL recorded an income of Rs. 177.20 crore, as compared to income of Rs. 184.86 crore in the previous financial year. The Profit After Tax for the financial year 2021-22 was Rs. 53.03 crore, as against Rs. 25.62 crore in the previous financial year. Further, the Net Worth of RECPDCL as on March 31,2022 was Rs. 328.59 crore, as against the NetWorth of Rs. 297.99 crore as on March 31,2021.

23. JOINTVENTURE & ASSOCIATE COMPANY

REC, along with three other PSUs, namely. Power Grid Corporation of India Limited, NTPC Limited and Power Finance Corporation Limited, had formed a joint venture company i.e.. Energy Efficiency Services Limited (EESL) [CIN: U40200DL2009PLC196789] on December 10,2009. EESL is doing pioneering work in the field of energy efficiency and is implementing several Government and other programmes in this area, across the country.

During the financial year 2021-22, pursuant to an agreement executed amongst the joint venture partners, EESL ceased to be a jointly controlled entity of REC in terms of the applicable accounting standard (Ind-AS), with effect from September 1, 2021 .The financial statements of REC also reflect the position accordingly. Flowever, REC continues to be a partner in the joint venture, with equity stake of 15.68% in EESL as on March 31,2022.

24. CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129 of the Companies Act, 2013 and Rules made thereunder and Indian Accounting Standards, the Company has prepared the Consolidated Ind-AS Financial Statements for the financial year 2021-22, that include its wholly owned subsidiary company i.e., RECPDCL (Audited) and joint venture company i.e., EESL (Un-audited) till the date when it ceased to be a jointly controlled entity of the Company with effect from September 1,2021 .The same shall also be laid before the ensuing 53,d Annual General Meeting along with the Standalone Financial Statements of the Company.

Pursuant to Section 129(3) of the Act, a statement containing the salient features of the financial statements of subsidiaries, associates and joint ventures in Form AOC-1, forms part of this Annual Report. The financial statements of Special Purpose Vehicle (SPV) companies, which are wholly-owned subsidiaries of RECPDCL, are not consolidated with the financial statements of REC, since the investment / interest in such companies is held for sale and therefore, interest in such SPV companies is accounted for as per Ind-AS 105.

The Audited Ind-AS Financial Statements including the Consolidated Ind-AS Financial Statements and Audited Accounts of subsidiaries of the Company are available on the website of the Company i.e., https://recindia.nic.in/recpdcl. Further, these documents would be kept open for inspection through electronic mode by any member or any trustee for debenture holders. The Company would also make available copy thereof through e-mail upon specific request by a member of the Company.

25. DIRECTORS, KMP & POLICY FRAMEWORK RELATED THERETO

Being a Government company within the meaning of the Companies Act, 2013 and in terms of Article 91 of the Articles of Association of the Company, all Directors on the Board of REC are nominated / appointed / reappointed by the President of India acting through the administrative ministry i.e.. Ministry of Power, Government of India (MoP).

The nomination / appointment / reappointment of Directors and their eligibility criteria, qualifications, experience and selection procedure etc., is also subject to the prescribed norms of Department of Personnel & Training (DoPT), Department of Public Enterprises (DPE), Public Enterprises Selection Board (PESB) etc., as applicable from time to time, the compliance of which is taken care at the end of the administrative ministry.

Further, being a CPSE, the remuneration of Functional Directors, Key Managerial Personnel and other employees of the Company, including Senior Management Personnel, is determined as per the extant guidelines on pay, perquisites, allowances etc. issued by the Department of Public Enterprises (DPE) and/or Government of India from time to time. Nonexecutive Directors (including Independent Directors) are paid sitting fees for attending the meetings of Board or Committees thereof, which is well within the applicable provisions of the Companies Act, 2013. The Government Nominee Director is not be entitled to receive any sitting fees from the Company, as per norms of the Government of India.

The Company has adopted a policy on diversity and skills of the board, criteria for appointing senior management personnel and remuneration to directors, KMPs and other employees, which can be accessed at https://recindia.nic.in/uploads/files/Amended—Policv-on-Board- Diversitv-Qther-matters-dt-150722.pdf.

Further, being a NBFC, inter-alia, the appointment of Directors in REC is also subject to due diligence by the Nomination & Remuneration Committee (NRC), as per the Companys Board-approved policy on fit & proper criteria of Directors, which can be accessed at https://recindia.nic.in/uploads/files/Amended—Policv-on-Fit- Proper-Criteria.pdf.

As per the provisions of the Companies Act, 2013, the Board of Directors of the Company has designated the Chairman and Managing Director (CMD), Director (Finance), Director (Technical) and Company Secretary as Key Managerial Personnel (KMPs) of the Company.

Being a Government Company, the role of CEO is being performed by CMD and the role of CFO is performed by Director (Finance) of the Company.

Particulars of Directors & KMP of the Company are brought out below

25.1 CMD and Whole-time Directors

• Pursuant to a communication dated May 13,2022 issued by the Appointments Committee of the Cabinet (ACC) read with subsequent order issued by the Ministry of Power, Shri Vivek Kumar Dewangan, IAS (DIN 01377212) was appointed as the CMD of the Company, in the rank and pay of Additional Secretary to the Government of India, with effect from May 17,2022.

• During the financial year 2021-22, Shri Sanjay Maihotra, IAS (DIN 00992744), former CMD of REC, ceased to be a Director with effect from February 11,2022, due to his appointment as Secretary, Department of Financial Services, Ministry of Finance. The MoP vide its order dated February 22, 2022, had assigned the additional charge of CMD-REC to Shri Sudhir Kumar Gangadhar Rahate, IAS (DIN 05254178), who was then serving as Additional Secretary in MoP, for a period of three months or until further orders.

• Subsequently, due to the appointment of Shri Rahate as Secretary, Department of Justice, Ministry of Law & Justice, he ceased to be a Director of the Company with effect from May 10, 2022. Accordingly, the MoP vide its order dated May 10, 2022, had assigned the additional charge of CMD-REC to Shri Ravinder Singh Dhillon (DIN: 00278074), the CMD of Power Finance Corporation Limited, for a period of three months or until further orders. Shri Dhillon handled the additional responsibility of CMD-REC during May 10 to 16, 2022, i.e., till the appointment of regular incumbent namely Shri Vivek Kumar Dewangan.

• Shri Sanjeev Kumar Gupta (DIN 03464342), Director (Technical), ceased to be a Director of the Company with effect from November 1, 2021 on attaining the age of superannuation. The Ministry of Power, vide its orders dated October 21, 2021, entrusted the additional charge of Director (Technical) to then CMD Shri Sanjay Malhotra, for the period October 1, 2021 to January 31, 2022. Further, vide its order dated July 15, 2022, MoP had conveyed approval of ex post facto entrustment of the additional charge of Director (Technical) to Shri Ajoy Choudhury, Director (Finance), for the period February 1, 2022 till the date of joining of regular incumbent.

• Pursuant to order dated July 15, 2022, the MoP has appointed Shri Vijay Kumar Singh (DIN 02772733), who was earlier serving as Executive Director in the Company, as Director (Technical) of REC in the scale of pay of Rs. 180,000- 340,000 (IDA), with effect from the date of his assumption of charge of the post till the date of his superannuation i.e., June 30, 2025 or until further orders, whichever is earlier. Shri V.K. Singh assumed the charge of Director (Technical) w.e.f. July 15,2022.

25.2 Nominee Directors

• The Ministry of Power, vide its office order dated September 7, 2021, had appointed Shri Vishal Kapoor (DIN 08700132), Joint Secretary MoP as the Government Nominee Director on the Board of REC, vice Shri Tanmay Kumar (DIN 02574098), who was the earlier Government Nominee Director on the Board of REC.

• The former Nominee Director of Power Finance Corporation Limited (PFC), Shri Praveen Kumar Singh (DIN 03548218), ceased to be a Director with effect from February 1,2022 due to superannuation from nominating authority. Subsequently, pursuant to MoP letter dated February 2,2022, Smt. Parminder Chopra (DIN 08530587), Director (Finance) of PFC, was appointed as Nominee Director of PFC with effect from February 4,2022.

25.3 Independent Directors

• The Ministry of Power, vide order(s) dated November 15, 2021, had appointed Dr. Gambheer Singh (DIN 02003319) and Dr. Manoj Manohar Pande (DIN 09388430) as Part-time Non-official (Independent) Director on the Board of REC, for a period of three years with effect from the date of notification.

• Further, pursuant to MoP order dated December 27,2021 read with resolution by circulation passed by the Board on December 30, 2021, Dr. Durgesh Nandini (DIN 09398540) was appointed as Part-time non-official (Independent) Director on the Board for a period three years with effect from the date of notification of her appointment, or until further orders.

25.4 Director(s) retiring and seeking appointment/ re-appointment at the ensuing AGM

In accordance with the provisions of the Companies Act, 2013 and Article 91 (iv) of the Articles of Association of the Company, Shri Ajoy Choudhury, Director (Finance) shall retire by rotation at the ensuing 53,d AGM of the Company and being eligible, offers himself for re-appointment. Further, pursuant to Regulation 17(1 C) of SEBI LODR Regulations, the appointment of Shri V.K. Singh as Director (Technical) is also being submitted to the shareholders for approval. The Board recommends their appointment/re-appointment.

Brief resume and other particulars of Shri Ajoy Choudhury and Shri V.K. Singh are annexed to the Notice of AGM forming part of this Annual Report.

25.5 Company Secretary

The Company Secretary of the Company is Shri J.S. Amitabh.

26. EVALUATION OF BOARD OF DIRECTORS/INDEPENDENT DIRECTORS

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

Flowever.the Ministry of Corporate Affairs vide its notification dated June 5, 2015 has, inter-alia, exempted Government companies from the above requirement, in case the Directors are evaluated by the Ministry or Department of the Central Government which is administratively in charge of the company, as per its own evaluation methodology. Further, MCA vide notification dated July 5, 2017, also prescribed that the provisions relating to review of performance of Independent Directors and evaluation mechanism prescribed in Schedule IV of the Companies Act, 2013, is not applicable to Government companies.

Accordingly, being a Government company, REC is inter-alia exempted in terms of the above notifications, as the evaluation of performance of all members of the Board of the Company is being done by the administrative ministry i.e., the Ministry of Power and/orby the Department of Public Enterprises (DPE). During the financial year 2021-22, the performance evaluation of Non-Executive Directors of the Company was carried out by the administrative ministry, as per its internal guidelines.

Further, your Company also enters into Memorandum of Understanding (MoU) with its holding company, PFC.under the framework prescribed in MoU Guidelines issued by DPE. The MoU demarcates key performance parameters for the Company finalized in consultation with the Ministry of Power, Government of India and the performance of the Company is evaluated vis-a-vis the MoU parameters.

27. DIRECTORS RESPONSIBILITY STATEMENT

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, 2022, the applicable Accounting Standards have been followed and no material departures have been made from the same;

(ii) such accounting policies have been selected and applied consistently (except for the adoption of newly effective Indian Accounting Standards as disclosed in the Notes to Accounts to the Financial Statements) and judgments and estimates made 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 and of the profit of the Company for that period;

(iii) proper and sufficient care is taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets 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 such internal financial controls were adequate and operating effectively;

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

28. MoU RATING OF REC

The performance of the Company in terms of Memorandum of Understanding (MoU) for the financial year 2020-21 signed with the holding company viz. Power Finance Corporation Limited, has been rated as "Excellent" by Department of Public Enterprises (DPE), with a perfect score of 100. REC is the only CPSE in the entire country, to secure 100 out of 100 marks in MoU evaluation for the financial year 2020-21.

29. THINK GREEN, GO GREENINITIATIVE

The Companies Act, 2013 permits companies to send documents like Notice of Annual General Meeting, Annual Report etc. through electronic means to its members at their registered email addresses. As a responsible corporate citizen, the Company has actively supported the implementation of Green Initiativeof the Ministry of Corporate Affairs (MCA) and effected electronic delivery of Notices and Annual Reports to shareholders, whose email ids are registered. The intimation of dividend (interim/final) is also being sent electronically to such shareholders.

Further, pursuant to Section 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014, the Company is providing e-voting facility to all members to enable them to cast their votes electronically in respect of resolutions set forth in postal ballot and Annual General Meeting (AGM). The Company will also be conducting the AGM this year through video conferencing / other audio-visual means. Members can refer to the detailed instructions for e-voting and electronic participation in the AGM.as provided in the Notice of AGM.

Members, who have not registered their e-mail addresses so far, are requested to register their e-mail addresses with the Registrar and Share Transfer Agent (R&TA) of the Company or their respective Depository Participant (DP) and take part in the green initiative.

30. COMMITMENT TO SWACHHTA

REC has undertaken activities for creating awareness on Swachhata, like installation of dustbins at public places, weeding out of old records, digitization of documents andorganizing competitions on cleanliness, under the Swachtta Action Plan.

31. RIGHTTO INFORMATION ACT, 2005

The purpose of the Right to Information Act, 2005 (RTI Act) is to enable the citizens to seek information from the public authorities and to ensure transparency and accountability in their functioning. An RTI Cell is in existence in the Company to deal with applications received under the RTI Act. The Company has designated a Chief Public Information Officer (PIO) to respond to the RTI applications and a First Appellate Authority (RTI) to adjudicate on RTI First Appeals for effective implementation of the RTI Act. The RTI Cell also comprises of an Assistant Public Information Officer.The entire functioning of the RTI Cell and implementation of the RTI Act in REC is observed by the Transparency Officer.

REC is also associated with the online RTI Portal of Govt, of India, Department of Personnel & Training (https://rtionline.aov.in), which enables citizens of India, to file RTI applications/first appeals online along with a payment gateway. Below is the information pertaining to the number of applications and appeals received by the RTI Cell, during the period of April 1,2021 to March 31,2022:

SI. no. Particulars of RTI Nos.
1. Applications received 362
2. Applications disposedof 358
3. Applications disposedof subsequently* 4
4. First appeals received by Appellate Authority, REC 22
5. First appeals disposedof by Appellate Authority, REC 18
6. Appeals disposed of subsequently 4
7. Second appeals received from Central Information Commission 2
8. Second appeals disposedof by Central Information Commission 2

 

*The pending applications and appeal were disposed of within the timeframe

Further, REC has placed the requisite information on its website, in compliance with the requirements specified by Department of Personnel & Training (DoPT). Further, in compliance of the said Guidelines, which provide for annual audit of suo-moto disclosures by a third party, third-party audit of RTI Disclosures has been carried out and the report is posted on RECs website.

32. REPORTING UNDER PUBLIC PROCUREMENT POLICY FOR MICRO & SMALL ENTERPRISES (MSEs) ORDER, 2012.

The Guidelines for MSMEs, as defined in the purchase procedure, are being followed by the Company. As an endeavor to foster the Governments ambitious initiatives for the promotion of MSME sector and in order to surpass the prescribed public procurement norms, revised with effect from November 2018, REC has already made it mandatory to procure 100% of certain common use goods and services valuing upto Rs. 10 lakh from MSME vendors and also to allow price preference of upto 50% to MSEs, out of which 20% is reserved for SC, ST and women entrepreneurs. Further, REC is registered on GeM (Government e-Marketplace), Sambandh, SamadhanandTReDS(Trade Receivables Discounting System) portals of the Government of India (Gol) and all offices of REC.including regional offices.are effectively using the same.

During the financial year 2021-22, total procurement made by the Company was Rs. 57.38 crore. REC has not only achieved, but exceeded its targets set by the Government. The procurement from GeM portal was Rs. 29.35 crore (achieved more than the target of 25%) and procurement from MSMEs was Rs. 21 crore (achieved more than the target of 25%), out of which procurement from SC/ST was Rs. 0.67 crore and procurement from women entrepreneurs was Rs. 0.40 crore respectively. The procurements from SC, ST and women entrepreneurs, highly depend on the claims lodged by vendors, on which REC has no control. It is noteworthy that there was no complaint against REC regarding delay in payments or any other grievance by any MSME vendor, on Gols Samadhan portal during the year.

REC has made it compulsory for all its Pan-India offices to have 100% procurement of Common use Goods and Services available on GeM are required to be procured mandatorily through GeM only; and has conducted a comprehensive GeM procurement training programme for its employees, having specially featured sessions offaculty from GeM. The same were attended and praised overwhelmingly by the participants. REC has also conducted its Annual Vendor Development Programme (VDP) through online session, which was attended by various vendors.

All tenders of REC are in full compliance of GolsMake in India directions, as applicable. Further, as per Gols directives, such compliance is being monitored quarterly by the Board of Directors; and on a case-to-case basis by the Sub-committee to ensure compliance of Gol directives on Make in India, for tenders valuing Rs. 250 crore or above.

RECs Public Procurement Policy for MSMEs and Make in India is included in all the tenders duly published on the website of the Company and on the CPPP (Central Public Procurement Portal). The same is also being examined and monitored on quarterly and annual basis by the Independent External Monitor (IEM) appointed by CVC. The IEM has found that all procurement activities are in order and has appreciated the efforts and achievements of REC.

33. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

In line with the provisions of Sexual Flarassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (POSFH Act), an Internal Complaints Committee has been constituted in the Company for redressal of complaint(s) against sexual harassment of women employees. The committee is headed by a senior woman official of the Company and includes representative of NGO as one of its members. Anti-sexual harassment stance of the Company is also outlined in REC (Conduct, Discipline and Appeal) Rules.

During the financial year 2021-22, the Company did not receive any complaint of sexual harassment.The Company also conducted an online awareness programme on POSH Act, for all its employees.

34. ANNUAL RETURN

The Annual Return of the Company for the financial year 2020-21 has already been filed with the Ministry of Corporate Affairs (MCA); and the draft Annual Return for the financial year 2021 -22, are available on the website of the Company at https://www.recindia.nic.in/annual-returns.

After filing of the Annual Return for financial year 2021-22 with MCA, the same will be uploaded on the website at the same weblink.

35. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The particulars of Related Party Transactions required to be disclosed in Form AOC-2 for the financial year 2021-22 wereNil.

36. AUDITORS

36.1 Statutory Auditors

M/s S.K. Mittal & Co., Chartered Accountants, New Delhi (firm registration no.: 001135N) and M/s O.P. Bagla& Co. LLP, Chartered Accountants, New Delhi (firm registration no.: 000018N/N500091) were appointed as Statutory Auditors of your Company for the financial year 2021-22 by the Comptrollers; Auditor General (C&AG) of India. The Statutory Auditors have audited the Financial Statements of the Company for the financial year ended March 31,2022.

Further, the appointment of the Statutory Auditors for the financial year 2022-23 is yet to be made by the C&AG of India. Approval of the Members will be obtained in the ensuing AGM, to authorize the Board of Directors to fix remuneration of the Statutory Auditors for the financial year 2022-23, as may be appointed by C&AG.

36.2 Secretarial Auditors

M/s Hemant Singh & Associates, Company Secretaries, Delhi (Certificate of Practice no.6370), were appointed as Secretarial Auditors for carrying out Secretarial Audit of the Company for the financial year 2021-22. In terms of Section 204 of the Companies Act, 2013 and Rules made thereunder, they have issued Secretarial Audit Report for the financial year 2021 -22 and the same is annexed to this Report.

36.3 Managements comments on the Auditors Report(s)

The Statutory Auditors have audited the standalone and consolidated financial statements of the Company for the financial year 2021-22 and have given their report without any qualification, reservation, adverse remark or disclaimer. The AuditorsReport(s) are forming part of this Annual Report.

The Secretarial Auditors of the Company have given an unqualified report for the financial year 2021-22. However, they have certain observations relating to composition of the Board and its Committees.

The managements reply to the observations of the Secretarial Auditors is as under:

Observation of Secretarial Auditors Managements Reply
1. The Company was not in compliance with the provisions of section 149 of the Companies Act, 2013 read with Regulation 17 of the SEBI (LODR), in respect of the appointment of requisite number of Independent Directors including a Woman Independent Director, as the Board had a total of three Independent Directors against the requirement of four Independent Directors (two Independent Directors appointed on November 15, 2021 and one Independent Woman Director appointed on December 30,2021). REC is a Government Company and as per the provisions of Article 91 of Articles of Association of the Company, the power to appoint Directors on the Board of the Company vests with the President of India, acting through the administrative ministry, i.e., the Ministry of Power, Government of India.
After the completion of tenure of erstwhile Independent Directors including Woman Independent Director of REC, the Ministry of Power had appointed two Independent Directors on the Board of the Company w.e.f. November 15, 2021 and one Woman Independent Director w.e.f. December 30, 2021. Accordingly, as on March 31,2022, the composition of the Board of the Company was falling short by one Independent Director as mandated in SEBI (LODR) Regulations, 2015.
2. The composition, chairmanship and quorum of meetings of Audit Committee & Nomination & Remuneration Committee and composition of Stakeholders Relationship Committee were not in compliance with section 177 & 178 of the Companies Act, 2013 read with regulation 18, 19 & 20 of SEBI (LODR) from April 1,2021 till December 6,2021.
The Company has time and again requesting the Ministry of Power, Government of India, for appointment of requisite number of Independent Directors on the Board of REC and our request is under consideration at the Ministry. Once the requisite number of Independent Directors are appointed by the Ministry of Power, the Company will be in due compliance with all the applicable statutory provisions.
3. The composition of Corporate Social Responsibility Committee was notin compliance with section 135(1) of the Companies Act, 2013 from April 1, 2021 till December 6,2021.
4. The composition of Risk Management Committee was not in compliance with regulation 21(2) of SEBI (LODR) from May 5,2021 to December 6,2021. The Company was not in compliance of Regulation 25(6) of SEBI (LODR) with respect to appointment of Independent Directors within the stipulated time. Further, after the appointment of above Independent Directors during the financial year 2021-22, various statutory committees of the Board were reconstituted and all the committees of the Board are in full compliance of applicable provisions of the Companies Act, 2013 & rules made thereunder and SEBI (LODR) Regulations, 2015.

37. COMMENTS OF C&AG OF INDIA

The Comptroller & Auditor General {C&AG) of India, vide letter(s) dated July 22, 2022 have givenNilcomments on the Audited Financial Statements of the Company for the financial year ended March 31, 2022 under Section 143(6)(a) of the Companies Act, 2013.

The comments of C&AG for the financial year 2021-22 have been placed along with the report of Statutory Auditors of the Company in this Annual Report.

38. DEBENTURETRUSTEES

In compliance with SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a list containing the details of Debenture Trustees appointed by the Company for different series of its bonds / debentures issued from time to time, is annexed to this Report.

39. STATUTORY DISCLOSURES

a) There was no change in the nature of business of the Company during the financial year 2021-22.

b) During the financial year 2021-22, the Objects Clause of the Memorandum of Association of the Company was amended, by way of a Special Resolution passed by the Shareholders at the last Annual General Meeting of the Company held on September 24, 2021. The amendment was done with a view to, inter-alia, enable the Company to tap emerging business opportunities in the power sector and explore potential in new areas of business.

c) The Company has not accepted any public deposits during the financial year 2021-22 and the Board of Directors of the Company has passed requisite resolution in this regard, in compliance of RBI Guidelines.

d) No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.

e) The Company maintains an adequate system of Internal Control, including suitable monitoring procedures to ensure accurate and timely financial reporting of various transactions, efficiency of operations and compliance with statutory laws, regulations and Company procedures/ policies. For details, please refer to the Management Discussion and Analysis Reportannexed to this report.

f) Information on composition, terms of reference and number of meetings of the Board and its Committees held during the year, establishment of Vigil Mechanism/ Whistle Blower Policy and web-links for familiarization programmes ofDirectors, Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions, Policy for determining Material Subsidiaries, compensation to Key Managerial Personnel, sitting fees to Directors and details regarding IEPF etc. have been provided in the Report on Corporate Governance, prepared in compliance with the provisions ofSEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and DPE Guidelines on Corporate Governance, 2010, as amended from time to time, which forms part of this Annual Report.

g) Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or investment made by a company engaged in the business of financing of companies or of providing infrastructural facilities in the ordinary course of its business are not applicable to the Company, hence no disclosure is required to be made. Further, details of investments are appearing at note no.10 of the Notes to Accounts ofthe standalone financial statements.

h) The provisions of Section 197 of the Companies Act, 2013 and Rules made thereunder relating to managerial remuneration are not applicable to Government companies, therefore no disclosure is required to be made.

i) There are no material changes and commitments affecting the financial position of the Company, which has occurred between the end of the financial year i.e., March 31,2022and the date of this report.

j) The Company has not issued any stock options to the Directors or any employee ofthe Company.

k) The details related to vigilance cases, replies to audit objections and RTI matters etc., as applicable, are duly incorporated in this report, as required vide OM dated January 24, 2018 of the Ministry of Parliamentary Affairs, Government of India.

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

m) During the year under review, the statutory auditors / secretarial auditors have not reported to the Audit Committee, any instances offraud committed against the Company by its officers or employees.Flowever, in terms of the Companys Policy on Prevention of Frauds, the Audit Committee was informed about a fraud committed by a retired employee in the medical claims lodged for reimbursement. Based on preliminary investigation, his medical benefits have been put on hold and an FIR has been lodged against the said retired employee.

n) The Company is compliant with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

o) The Independent Directors of the Company are nominated / appointed by the President of India acting through the administrative ministry, i.e., MoP. Accordingly, the appointingauthority considers the integrity, expertise and experience of the individual to be nominated / appointed. In the opinion of the Board, the Independent Directors appointed during the year, are persons of integrity and possess the relevant expertise, proficiency and experience to contribute effectively to the Company.

p) The Company has adequate internal financial controls with reference to the financial statements.

q) There is neither any pending IBC (Insolvency & Bankruptcy Code) proceeding against REC, nor the Company has received any notice for initiation of any IBC proceedings against it.

40. CORPORATE OFFICE BUILDING

During the financial year 2021-22, the Company shifted to its state-of-the-art office building at Sector-29, Gurugram and has obtained the clearances required such as occupation certificate, fire NOC, consent to operate etc. The building is designed by M/s CWA, New York, the project architect; and constructed by JMC Project (India) Limited, the contractor, under supervision of Telecommunications Consultants India Limited (a Government of India enterprise), the project management consultant.

The unique design of the building contains several special features like fair finish white concrete surfaces, raised flooring, radiant cooling for slabs, IBMS, automated sensor controlled lighting, bio-climatic glass fagade with motorized blinds etc. The building has a 979kWp Solar PVpiantat rooftop supported by pergola structure, which provides clean energy for REC office. The building also houses an in-house auditorium with 400 seating capacity.

41. ANNEXURESTO BOARDS REPORT

In terms of the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and other applicable statutory provisions, separate sections containing Management Discussion & Analysis Report, Report on Corporate Governance, Business Responsibility & Sustainability Report etc., are enclosed to this Boards Report. The Company has prepared an Integrated Report for the financial year 2021-22 on a voluntary basis, as per SEBI Circular dated February 6,2017.

Various statutory reports, information, certificates etc., in terms of the Companies Act, 2013, SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, DPE Guidelines on Corporate Governance for CPSEs, 2010 and other applicable statutory provisions, are enclosed to the Boards Report as follows:

Particulars Annexure
Management Discussion & Analysis Report 1
Report on Corporate Governance II
Business Responsibility & Sustainability Report III
Integrated Report IV
Secretarial Audit Report V
Auditors Certificate on Corporate Governance VI
Annual Report on CSR Activities VII
Details of Debenture Trustees appointed for different series of Bonds VIII

42. ACKNOWLEDGEMENTS

The Directors whole-heartedly thank the Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, NITI Aayog, DIPAM, DPE, RBI, SEBI and the Comptroller & Auditor General of India, for their guidance and support to the Company. The Directors also thank Power Finance Corporation Limited, the holding company, for their continued support and goodwill. The Directors extend their gratitude to all shareholders, investors, lenders and bond holders for their faith in the Company. The Directors thank all customers and borrowers, including State Governments, State Electricity Boards, State Power Utilities and Independent Power Producers, for reposing their trust and continuing their association with the Company. The Directors are grateful to Statutory Auditors, Secretarial Auditors and other professionals associated with the Company, for their support to management. Last but not the least, the Directors thank the employees and staff, for working relentlessly in pursuit of excellence.