1. Share Capital (` in Crores) 1.1 Reconciliation of the number of shares outstanding at the beginning and at the end of the year

Transcription

1 1. Share Capital No. of Shares Amount No. of Shares Amount Authorised : Equity shares of ` 10 each 5,00,00,00,000 5, ,20,00,00,000 1, Issued, Subscribed and Paid up : Fully paid up Equity shares of ` 10 each 1,97,49,18,000 1, ,74,59, Total 1,97,49,18,000 1, ,74,59, Reconciliation of the number of shares outstanding at the beginning and at the end of the year No. of Shares Amount No. of Shares Amount Number of shares at the beginning of the year 98,74,59, ,74,59, Add: Bonus shares issued & allotted during the year 98,74,59, Number of shares at the end of the year 1,97,49,18,000 1, ,74,59, The shareholders of the Company in Annual General Meeting (AGM) held on 21 September 2016 inter-alia approved the increase in Authorised Capital of the Company from ` 1,200 crores to ` 5,000 crores and issue of Bonus shares in the ratio of 1:1 (i.e. one bonus equity share of ` 10/- each for every one fully paid up Equity Share of ` 10/- each), to the shareholders by capitalizing existing reserves by a sum of ` Crores. Accordingly, 98,74,59,000 bonus shares were issued & allotted on 30 September Allotment of Bonus Shares during the year and during preceding five years The Company has allotted 98,74,59,000 Equity Shares as fully paid up by way of bonus shares during FY The holders of the equity shares of the Company are entitled to receive dividends as and when declared by the Company and enjoy proportionate voting rights in case any resolution is put to vote. Further, the shareholders have all such rights, as may be available to a shareholder of a listed public company, under the Companies Act, 2013 and rules made thereunder, Companies Act, 1956 (to the extent applicable), SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Memorandum of Association and Articles of Association of the Company. 1.4 Shareholders holding more than 5% of fully paid-up equity shares : Name No. of Shares Percentage No. of Shares Percentage The President of India 1,16,25,04, % 59,87,67, % Life Insurance Corporation of India 12,63,22, % 8,64,90, % During the financial year , the President of India acting through Ministry of Power, Government of India divested/sold 2,51,33,733 equity shares i.e % of total paid up capital of the Company on 25 January 2017 and 98,97,155 equity shares i.e. 0.50% of total paid up capital of the Company on 22 March 2017 through Off-market sale of shares under the Central Public Sector Enterprises Exchange Traded Fund (CPSE ETF). Accordingly, as on 31 March 2017, the President of India holds % of the paid up equity share capital of the Company. 135

2 RURAL ELECTRIFICATION CORPORATION LIMITED 3. Reserves and Surplus Capital Reserve Securities Premium Account (Refer Note 2.1 & 2.4) Balance as at the beginning of the year 3, , Add: Additions during the year Less: Deductions/ Adjustments during the year Balance as at the end of the year 2, , Debenture Redemption Reserve (Refer Note 2.2) Balance as at the beginning of the year Add: Amount transferred from Surplus Account Balance as at the end of the year Special Reserve created u/s 36(1) (viii) of the Income Tax Act, 1961 Balance as at the beginning of the year 10, , Add: Amount transferred from Surplus Account 1, , Balance as at the end of the year 12, , Reserve for Bad and doubtful debts u/s 36(1)(viia) of the Income Tax Act, 1961 Balance as at the beginning of the year 2, , Add: Amount transferred from Surplus Account Balance as at the end of the year 2, , Foreign Currency Monetary Item Translation Difference Account (Refer Note 2.3) Balance as at the beginning of the year Add: Foreign Currency Translation Gain/ Loss (-) on long term monetary items during the year Amortisation during the year Balance as at the end of the year General Reserve Balance as at the beginning of the year 4, , Add: Amount transferred from Surplus Account Balance as at the end of the year 4, , Surplus Account Balance as at the beginning of the year 6, , Less: Adjustment of MTM in respect of Interest Rate Swaps as at March 2016 (Refer Note 2.4) Add: Profit during the year 6, , Less : Appropriations 136

3 - Transfer to Special Reserve u/s 36(1)(viii) of the Income Tax 1, , Act, Transfer to Reserve for Bad & Doubtful Debts u/s 36(1)(viia) of the Income Tax Act, Dividend - Interim Dividend 1, , Proposed Dividend (Final) (Refer Note 2.5) Dividend Distribution Tax - Interim Dividend Proposed Dividend (Final) Transfer to Debenture Redemption Reserve Transfer to General Reserve - 4, , Balance as at the end of the year 8, , Total Reserves and Surplus 31, , Additions in Securities Premium Account for the year ended 31 March 2017 represent the premium of Nil (Previous year ` 0.28 Crores) received on issue of Tax Free Bonds through private placement. 2.2 Debenture Redemption Reserve (DRR) In accordance with provisions of Section 71(4) of the Companies Act, 2013 as further clarified by the Companies (Share Capital and Debentures) Rules, 2014 issued by Ministry of Corporate Affairs, Govt. of India, the company creates Debenture Redemption Reserve (DRR) upto 25% of the value of debentures issued through public issue as per present SEBI (Issue and Listing of Debt Securities) Regulations, 2008 during the maturity period of such debentures, and no DRR is required in the case of privately placed debentures. Accordingly, during the year, the company has created DRR amounting to ` Crores (Previous year ` Crores). 2.3 Foreign Currency Monetary Item Translation Difference Account The company has opted towards an irrevocable option for amortising the foreign exchange fluctuation loss/gain on the long term foreign currency monetary items over the balance period of such items in accordance with Para 46A of Accounting Standard 11 The Effects of Changes in Foreign Exchange Rates. The balance in Foreign Currency Monetary Item Translation Difference Account remaining to be amortised is ` Crores as at 31 March 2017 (` Crores as at 31 March 2016). 2.4 Draw down from Reserves In accordance with the transitional provisions mentioned in the Guidance Note on Accounting for Derivative Contracts, an amount of ` crores after netting of taxes of ` crores has been adjusted in the retained earnings during the year ended 31 March This represents the change in the fair value of the interest rate swaps till 31 March Further, bonus shares have been issued to the shareholders by capitalising Securities Premium Account by a sum of ` Crores during the year. Further, no amount had been drawn from reserves during the financial year Proposed Dividend The dividend proposed for the year is as follows : On Equity Shares of ` 10 each - Amount of Dividend proposed Rate of Dividend 26.50% 25.50% - Dividend per equity share (`)

4 RURAL ELECTRIFICATION CORPORATION LIMITED During the previous year, the Company had made a provision for the dividend declared by the Board of Directors as per the requirements of pre-revised Accounting Standard 4 Contingencies and Events Occurring After the Balance Sheet Date. However, as per the requirements of Revised AS 4 as amended vide the Companies (Accounting Standards) Amendment Rules, 2016, the Company is not required to provide for dividend proposed by the Board of Directors for the year ended 31 March Consequently, no provision has been made in respect of the aforesaid dividend. Had the Company continued with creation of provision of proposed dividend, as at Balance Sheet date, the figure of Reserves & Surplus would have been lower by ` Crores and Short term Provisions would have been higher by the same amount (including dividend distribution tax of ` crores). Further, the previous year figures have been adjusted in view of the bonus issue in the current year to make the figures comparable (Refer Note 1.1). 3. Long-Term Debt Non-current portion of the long term debt has been classified as Long-term borrowings and the current portion of the long term debt has been classified as Current Maturities of Long-term debt in Note-8 Other Current Liabilities. Non-Current Current Non-Current Current (A) (a) Secured Long-Term Debt Bonds - Institutional Bonds 22, , , , EC Capital Gain Tax Exemption Bonds 14, , , , Tax Free Bonds 12, , (b) Term Loans - from Financial Institutions Total Secured Long-Term Debt (a+b) 49, , , , (B) (a) Unsecured Long-Term Debt Bonds - Institutional Bonds 79, , , , Infrastructure Bonds Zero Coupon Bonds 1, (b) Other Loans & Advances - Foreign Currency Borrowings 19, , , , Total Unsecured Long-Term Debt (a+b) 1,00, , , , Total Long-Term Debt (A+B) 1,49, , ,38, , Total Long-Term Debt (Non-Current + Current) 1,67, ,62,

5 3.1 Details of Long-term Debt : Details of secured long-term debt : (Refer Note 3.3 for details of the security) Bonds Non-Current Current Non-Current Current Institutional Bonds 123-IIIB Series 1, , % Redeemable at par on I Series 1, , % Redeemable at par on II Series % Redeemable at par on II Series % Redeemable at par on C-II Series 1, , % Redeemable at par on B-II Series % Redeemable at par on th Series 2, , % Redeemable at par on nd Series 1, , % Redeemable at par on th Series 2, , % Redeemable at par on th Series 1, , % Redeemable at par on th Series 1, , % Redeemable at par on th Series 2, , % Redeemable at par on A-III Series % Redeemable at par on II Series % Redeemable at par on II Series % Redeemable at par on B-III Series % Redeemable at par on

6 RURAL ELECTRIFICATION CORPORATION LIMITED Non-Current Current Non-Current Current 86-A Series % Redeemable at par on th Series % Redeemable at par on rd Series % Redeemable at par on nd Series % Redeemable at par on I Series - 2, , % Redeemable at par on IIIA Series - 1, , % Redeemable at par on st Series , % Redeemed at par on th Series , % Redeemed at par on st Series % Redeemed at par on I Series % Redeemed at par on IV Series , % Redeemed at par on II Series , % Redeemed at par on Total - Institutional Bonds 22, , , , EC Capital Gain Tax Exemption Bonds Series X ( ) 7, %- 6.00% Redeemable at par during financial year Series X ( ) 6, , % Redeemable at par during financial year Series IX ( ) - 5, , % Redeemable at par during financial year Series IX ( ) , % Redeemable at par during financial year Total - 54EC Capital Gain Tax Exemption Bonds 14, , , ,

7 Non-Current Current Non-Current Current Tax Free Bonds Series Tranche Redeemable at par. Bonds amounting to ` Crores are redeemable on , ` Crores are redeemable on and ` Crores are redeemable on with interest rates varying from 6.89% to 7.43% payable annually Series Series 5A % Redeemable at par on Series Tranche 2 1, , Redeemable at par. Bonds amounting to ` Crores are redeemable on , ` Crores are redeemable on and ` Crores are redeemable on with interest rates varying from 8.19% to 8.88% payable annually Series Series 4A & 4B Redeemable at par. Bonds amounting to ` Crores are redeemable on and ` Crores are redeemable on with interest rates varying from 8.18% to 8.54% payable annually Series Tranche 1 3, , Redeemable at par. Bonds amounting to ` Crores are redeemable on , ` 2, Crores are redeemable on and ` Crores are redeemable on with interest rates varying from 8.01% to 8.71% payable annually Series Series 3A & 3B 1, , Redeemable at par. Bonds amounting to ` Crores are redeemable on and ` 1, Crores are redeemable on with interest rates varying from 8.01% to 8.46% payable annually Series Tranche Redeemable at par. Bonds amounting to ` Crores are redeemable on and bonds amounting to ` Crores are redeemable on with interest rates varying from 6.88% to 7.54% payable annually Series Tranche 1 2, , Redeemable at par. Bonds amounting to ` 1, Crores are redeemable on and bonds amounting to ` Crores are redeemable on with interest rates varying from 7.22% to 7.88% payable annually 141

8 RURAL ELECTRIFICATION CORPORATION LIMITED 142 Non-Current Current Non-Current Current Series Series 2A & 2B Redeemable at par. Bonds amounting to ` Crores are redeemable on and bonds amounting to ` Crores are redeemable on with interest rates of 7.21% and 7.38% respectively payable annually Series , , Redeemable at par. Bonds amounting to ` Crores are redeemable on and bonds amounting to ` 2, Crores are redeemable on with interest rates varying from 7.93% to 8.32% payable annually Total - Tax Free Bonds 12, , Term Loans Term Loan from Financial Institutions - Life Insurance Corporation of India (LIC) The Loan of ` 1500 Crores (present outstanding ` % and ` %) & ` 2,000 Crores (present outstanding ` %) repayable in 10 equal annual installments commencing from and respectively. Total - Term Loans Details of Unsecured long-term debt : Bonds Institutional Bonds 147th Series 2, % Redeemable at par on nd Series 3, % Redeemable at par on th Series 2, % Redeemable at par on th Series 2, , % Redeemable at par on II Series 1, , % Redeemable at par on th Series 1, , % Redeemable at par on rd Series 2, , % Redeemable at par on st Series 2, , % Redeemable at par on

9 Non-Current Current Non-Current Current 130th Series 2, , % Redeemable at par on th Series 1, , % Redeemable at par on th Series 2, , % Redeemable at par on th Series - Subordinate Tier-II Bonds 2, , % Redeemable at par on th Series 4, , % Redeemable at par on II Series 2, , % Redeemable at par on th Series 2, , % Redeemable at par on nd Series % Redeemable at par on th Series % Redeemable at par on st Series 1, % Redeemable at par on th Series 1, , % Redeemable at par on th Series 3, , % Redeemable at par on th Series 2, % Redeemable at par on III Series 3, , % Redeemable at par on th Series 1, , % Redeemable at par on th Series 3, , % Redeemable at par on th Series 2, , % Redeemable at par on th Series 1, , % Redeemable at par on th Series 2, , % Redeemable at par on

10 RURAL ELECTRIFICATION CORPORATION LIMITED Non-Current Current Non-Current Current 144th Series % Redeemable at par on th Series 2, , % Redeemable at par on rd Series 1, % Redeemable at par on th Series 1, % Redeemable at par on th Series 1, , % Redeemable at par on I Series % Redeemable at par on th Series 1, , % Redeemable at par on th Series 3, , % Redeemable at par on II Series % Redeemable at par on I Series % Redeemable at par on th Series 2, , % Redeemable at par on th Series 3, % Redeemable at par on th Series - 1, , % Redeemable at par on th Series - 1, , % Redeemable at par on I Series - 2, , % Redeemable at par on th Series , % Redeemed at par on th Series , % Redeemed at par on I Series % Redeemed at par on nd Series , % Redeemed at par on

11 Non-Current Current Non-Current Current 101-II Series % Redeemed at par on Total - Institutional Bonds 79, , , , Infrastructure Bonds Series-II ( ) Redeemable at par. Refer Note 3.6 Series-I ( ) Redeemable at par. Refer Note 3.6 Total - Infrastructure Bonds Zero Coupon Bonds ZCB - Series II (Net of unamortised discount, 89,510 bonds with face value of ` 30,000 each redeemable at par on ) ZCB - Series I (Net of unamortised discount, 3,92,700 bonds with face value of ` 30,000 each redeemable at par on ) Total - Zero Coupon Bonds 1, Other Loans & Advances Foreign Currency Borrowings CHF Bonds - CHF 200 Mn , % Redeemed at par on JICA Loan - Guaranteed by Govt. of India % JICA-I loan repayable in equal half-yearly instalments of Mn till , next instalment falling due on and 0.65% JICA-II loan repayable in half-yearly instalments till , next instalment falling due on KfW Loan - Guaranteed by Govt. of India % Loan repayable in equal half-yearly instalments of 3.68 Mn, next instalment due on Syndicated Loan- US $300 Mn , Repaid on KfW-II Loan - Guaranteed by Govt. of India % Loan repayable in equal half-yearly instalments of 3.88 Mn, next instalment falling due on

12 RURAL ELECTRIFICATION CORPORATION LIMITED 146 Non-Current Current Non-Current Current Syndicated Loan Bn - 1, , Repayable on KfW-III Loan - Guaranteed by Govt. of India % Loan repayable in equal half-yearly instalments of 5.26 Mn, next instalment falling due on Syndicated Loan- US $285 Mn 1, , Repayable on Syndicated Loan- US $250 Mn 1, , Repayable on Syndicated Loan- US $400 Mn 2, , Loan of US$ 230 Mn and US$ 170 Mn repayable on and respectively Syndicated Loan- US $400 Mn 2, , Repayable on Syndicated Loan- US $300 Mn 1, , Repayable on Syndicated Loan- US $250 Mn 1, , Loan of US$ 150 Mn and US$ 100 Mn repayable on and respectively Syndicated Loan- US $300 Mn 1, , Repayable on Syndicated Loan- US $250 Mn 1, , Repayable on Syndicated Loan- US $120 Mn Repayable on Syndicated Loan- US $100 Mn Repayable on Syndicated Loan- US $230 Mn 1, Repayable on Total - Foreign Currency Borrowings 19, , , , Security Details of the Secured Borrowings The Bond Series 82, 83, 85, 86A, 86 B-III, 87-II, 87 A-III, 88, 90, 90 B-II, 90 C-II, 91-II and 92-II of Institutional Bonds are secured by a charge on (a) mortgage of Flat no. 640, Asiad Games Village, New Delhi and (b) pari passu charge on the receivables of our Company, both present and future, save and except receivables hypothecated to Vistra ITCL (India) Ltd. (formerly known as IL&FS Trust Company Ltd.) on the basis of joint hypothecation agreement dated 24 September 2010 in favour of IDBI Trusteeship Services Ltd. The Bond Series 116-II, 117, 118, 119 and 122 of Institutional Bonds are secured by a charge on first pari passu charge on the book debts of the issuer both present & future which are charged to other lenders / trustees and as may be agreed between the issuer and the trustee, pursuant to the terms of the Debenture /Bond Trust cum Hypothecation Deed with a minimum security cover of one time of the aggregate face value amount of the bonds outstanding at all times in favor of IDBI Trusteeship Services Ltd.

13 The Bond Series 123-I, 123-IIIA, 123-IIIB and 124-I of Institutional Bonds are secured by way of first pari passu charge on the Specified Immovable Property and the book debts of the Issuer which are charged to other lender / trustee and as may be agreed between the Issuer and the Trustee, pursuant to the terms of the Bond Trust Deed with a minimum security cover of one time of the aggregate face value of amount of bonds outstanding at all times and amount of interest due thereon in favor of IDBI Trusteeship Services Ltd. The Bond Series IX of 54EC Capital Gain Tax Exemption Bonds is secured by first pari passu charge on (a) mortgage of premises at Sub Plot No. 8, TPS No 2, FP No. 584P, situated at Village Subhanpura, Distt Vadodara and (b) hypothecation of receivables (other than those that are exclusively charged/earmarked to lenders / other Trustees) in favour of IDBI Trusteeship Services Ltd. Tax Free Bonds issued during FY are secured by first pari passu charge on premises at Shop No. 12, Ground Floor, Block No. 35, Church Road, Mylapore, Chennai and hypothecation of receivables of ` 4, Crores of MSEDCL in favour of Vistra ITCL (India) Ltd. (formerly known as IL&FS Trust Company Ltd.). Tax Free Bonds issued during FY are secured by first pari passu charge on the book debts (other than those that are exclusively charged/earmarked to lenders / other Trustees) of the Company in favour of SBICap Trustee Company Ltd. The Bond Series X of 54EC Capital Gain Tax Exemption Bonds and Tax Free Bonds issued during FY & are secured by first pari passu charge on (a) mortgage of premises at Sub Plot No. 8, TPS No 2, FP No. 584P, situated at Village Subhanpura, Distt Vadodara and (b) hypothecation of receivables (other than those that are exclusively charged/ earmarked to lenders / other Trustees) in favour of SBICap Trustee Company Ltd. The term loans are secured by a charge on the receivables of our Company, both present and future, save and except certain specific receivables hypothecated to IL&FS Trust Company Limited on the basis of joint hypothecation agreement dated September 24, 2010 in favour of IDBI Trusteeship Services Ltd. 3.4 Foreign Currency Borrowings have been raised at interest rates ranging from a spread of 65 bps to 220 bps over 6 Months USD/ JPY LIBOR (London Inter Bank Offered Rate) except where rates have been stated above in Note No Ratings assigned by credit rating agencies and migration of ratings during the year Domestic and International Credit Rating The domestic debt instruments of REC continue to enjoy AAA rating the highest rating assigned by CRISIL, CARE, India Ratings & Research & ICRA-Credit Rating Agencies. REC enjoys international credit rating equivalent to sovereign rating of India from International Credit Rating Agencies Moody s and FITCH which is Baa3 and BBB- respectively. There has been no migration of ratings during the year. 3.6 Details of Infrastructure Bonds Issued are as under : Series I ( ) allotted on Rate of Interest Amount Redemption Details 8.00% Redeemable on the date falling 10 years from the date of allotment with buyback 8.20% option by bondholders after 5/6/7/8/9 years 8.10% 1.60 Redeemable on the date falling 10 years from the date of allotment 8.20% 3.79 Total Series II ( ) allotted on Amount Rate of Interest Redemption Details 9.15% Cumulative Redeemable on the date falling 15 years 9.15% Annual 5.00 from the date of allotment with buyback option by bondholders after 7 years 147

14 RURAL ELECTRIFICATION CORPORATION LIMITED 8.95% Cumulative 5.73 Redeemable on the date falling 10 years 8.95% Annual 1.38 from the date of allotment 9.15% Cumulative 2.83 Redeemable on the date falling 15 years 9.15% Annual 1.13 from the date of allotment Total During the year, the Company has come across an instance of fraudulent encashment through forged documents of money invested by one of the investors in 54EC Capital Gains tax Exemption Bonds by some impersonator. The Company has lodged complaint with the Police against the unknown person and the officials of then Registrar and Transfer Agent (R&TA). Accordingly, an amount of ` 0.59 Crore has been shown recoverable from the RTA in the books of accounts and the matter has been duly reported to the Reserve Bank of India (RBI). Further, as a precautionary measure, the services of then existing RTA have been discontinued and new RTA has been appointed. 4. Deferred Tax Liabilities (Net) Deferred Tax Liabilities on account of: Depreciation Foreign Currency Exchange Fluctuation Loss MTM on Interest Rate Swap Total Deferred Tax Assets on account of: Provision for Earned Leave Provision for Medical Leave Foreign Currency Exchange Fluctuation Loss Total Deferred Tax Liabilities (Net) The Company has no intention to make withdrawal from the special reserve created and maintained under section 36(1)(viii) of the Income Tax Act, Hence, the special reserve created and maintained is not capable of being reversed and thus, it becomes a permanent difference as per Accounting Standard 22. Accordingly, the Company is not creating any deferred tax liability on the said reserve. 5. Other Long-term Liabilities - Non-Current Portion of Interest accrued but not due on borrowings Total Long-term and Short-term Provisions Non-Current Current Non-Current Current Provisions for (A) Employee Benefits Earned Leave Liability Post Retirement Medical Benefits

15 Non-Current Current Non-Current Current Medical Leave Liability Settlement Allowance Economic Rehabilitation Scheme Long Service Award Sub-total (A) (B) Others Standard Loan Assets Restructured Standard Loans 1, Interest on Loans Due & Converted into Equity Incentive Pay Revision Proposed Dividend (Refer Note 2.5) Corporate Dividend Tax CSR Expenses Sub-total (B) 1, , Total (A+B) 1, , Details and movement of Provisions: (in ` Crores) Provisions for Opening Balance Additions during the Year Paid/ Adjusted during the year Closing Balance Earned Leave Liability Previous year Post Retirement Medical Benefits Previous year Medical Leave Liability Previous year Settlement Allowance Previous year Economic Rehabilitation Scheme Previous year Long Service Award Previous year Standard Loan Assets Previous year Restructured Standard Loans , Previous year Interest on Loans Due & Converted into Equity Previous year

16 RURAL ELECTRIFICATION CORPORATION LIMITED Provisions for Opening Balance Additions during the Year Paid/ Adjusted during the year Closing Balance Incentive Previous year Pay Revision Previous year CSR Expenses Previous year Proposed Dividend Previous year Corporate Dividend Tax Previous year Income Tax 6, , , , Previous year 5, , , , Short-term Borrowings (A) Loans Repayable on Demand, unsecured - from Banks (B) Commercial Paper, unsecured - 5, Total (A+B) - 6, Other Current Liabilities (A) Current maturities of long-term debt (Refer Note 3) 18, , (B) Interest accrued but not due on borrowings 6, , (C) Income Received in Advance (D) Unpaid Dividends (E) Unpaid Principal & Interest on Bonds - Matured Bonds & Interest Accrued thereon Interest on Bonds (F) Other payables - Funds Received from Govt. of India for Disbursement as Subsidy/ Grant" 46, , Add: Interest on Subsidy/ Grant (Refer Note 8.3) Less: Disbursed to Beneficiaries -46, , Undisbursed Funds to be disbursed as Subsidy/Grant

17 - Statutory Dues payable including PF and TDS Payable towards funded staff benefits Other Liabilities Sub-total (F) Total (A to F) 24, , Subsidy Under Accelerated Generation & Supply Programme (AG&SP): The Company is maintaining an Interest Subsidy Fund Account and was given AG&SP subsidy (for disbursement to the eligible borrowers) by Govt. of India at net present value calculated at indicative rates and year in accordance with GOI s letter vide D.O.No /17/97-PFC dated and O.M.No.32024/23/2001-PFC dated irrespective of the actual repayment schedule, moratorium year and duration of repayment of the eligible schemes. The impact of difference between the indicative rate and year considered at the time of drawl and the actual can be ascertained only after the end of the respective schemes. Net amount of ` 0.86 Crores as at 31 March 2017 (` 1.26 Crores as at 31 March 2016) represents the balance amount of interest subsidy fund, which is to be passed on to the borrowers against their interest liability arising in future, under Accelerated Generation & Supply Programme (AG&SP), which comprises of the following :- For the For the Opening Balance of Interest Subsidy Fund Add: Interest earned during the year Less: Interest subsidy passed on to the borrower Closing Balance of Interest Subsidy Fund Government of India has appointed Rural Electrification Corporation Ltd. as a nodal agency for implementation of Deen Dayal Upadhyaya Gram Jyoti Yojna (DDUGJY). The funds received for disbursement to various agencies under the scheme are kept in a separate bank account. The undisbursed funds for the scheme (including the funds received under erstwhile RGGVY Scheme) including interest earned thereto are classified under Undisbursed Subsidy/ grant under the head Other Current Liabilities. During the year, interest earned of ` Crores (Previous year ` Crores) has been taken to DDUGJY Subsidy account. Further, during the year, an amount of ` crores (Previous year ` crores) has been refunded back to MoP out of the total interest on subsidy. 8.3 The movement in Interest on Subsidy/ Grant is explained as under: For the For the Opening Balance Add: Interest earned during the year Less: Amount refunded to Govt. during the year Less: Disbursement out of Interest earned on account of AG&SP Grant Closing Balance

18 RURAL ELECTRIFICATION CORPORATION LIMITED 9. Fixed Assets as at 31 March 2017 FIXED ASSETS GROSS BLOCK DEPRECIATION/ AMORTISATION NET BLOCK Tangible Assets Additions during the year Sales/ adjustment during the year Closing as on Upto During the year Adjustment during the year Freehold Land Leasehold Land Buildings Furniture & Fixtures Vehicles EDP Equipments Office Equipments Total Previous year Intangible Assets Computer Software Total Previous year Capital Work-in-progress Previous year Intangible Assets under Development Previous year The formalities regarding registration of conveyance deed in respect of certain immovable properties acquired by the Company amounting to ` Crores (Previous year ` Crores) are yet to be executed. 9.2 In the opinion of management, there is no impairment of the assets of the Company in terms of AS-28. Accordingly, no provision for impairment loss as required under Accounting Standard-28 Impairment of Assets has been made. 9.3 Disclosure in respect of Intangible Assets as required under AS-26 Intangible Assets Amortisation Rate 20%, 100% in case the total cost of the asset is ` 5,000 or less 152

19 10. Investments Valued at Cost (1) Non-Current Investments (A) Trade Investments Number (Face Value in `) Amount Number (Face Value in `) Amount (i) Investment in Equity Instruments - Quoted - NHPC Limited 18,40,11,865 (10) (ii) Investment in Equity Instruments - Unquoted - Subsidiaries - REC Power Distribution Company Limited 50,000 (10) ,000 (10) REC Transmission Projects Company Limited 50,000 (10) ,000 (10) Joint Ventures - Energy Efficiency Services Limited 14,65,00,000 (10) ,75,00,000 (10) Others - India Energy Exchange Limited 12,50,000 (10) ,50,000 (10) Universal Commodity Exchange Limited 1,60,00,000 (10) ,60,00,000 (10) Less: Provision for Diminution in Investment (16.00) (16.00) (iii) Investment in Government Securities - Unquoted - 8% Government of Madhya Pradesh Power 4 (47,16,00,000) (47,16,00,000) Bonds-II* Maturing in equal half yearly Instalments of one bond each, next instalment due on (iv) Investment in Venture Capital Funds - Unquoted - 'Small is Beautiful' Fund 61,52,200 (10) ,52,200 (10) 6.15 (v) Investment in Debentures - Unquoted % Bonds of UP Power Corporation Ltd. 30,385 (1,00,000) ,050 (1,00,000) (vi) Share Application money pending allotment - Energy Efficiency Services Limited (B) Other Investments (v) Investment in Debentures - Quoted % Additional Tier-1 Perpetual Bonds of 5,000 (10,00,000) ,000 (10,00,000) Indian Bank % Additional Tier-1 Perpetual Bonds of 5,000 (10,00,000) ,000 (10,00,000) Vijaya Bank % Additional Tier-1 Perpetual Bonds of 5,000 (10,00,000) ,000 (10,00,000) Syndicate Bank Total - Non-Current Investments (1) 2, , (2) Current Investments (i) Investment in Equity Instruments - Unquoted - Lanco Teesta Hydro Power Limited 10,20,00,000 (10) ,20,00,000 (10)

20 RURAL ELECTRIFICATION CORPORATION LIMITED Number (Face Value in `) Amount Number (Face Value in `) Amount (ii) Investment in Government Securities - Unquoted - 8% Government of Madhya Pradesh Power 1 (47,16,00,000) (47,16,00,000) Bonds-II * Maturing in equal half yearly Instalments of one bond each, next instalment due on Total - Current Investments (2) Total (1+2) 2, , * The number of bonds and the amount of the investment in current portion represents the investments maturing within the next 12 months and the balance is the non-current portion Investments include ` 6.15 Crores (Previous year ` 6.15 Crores) representing company s contribution in the units of Small is Beautiful (SIB ) Venture Capital fund promoted by KSK Energy Ventures Limited. Name of the Company Contribution towards Fund Country of Residence Percentage of Share SIB Fund of KSK Energy Ventures Ltd ` 6.15 Crores India 9.74% The face value of the fund is ` 10 per unit. The NAV as on is ` per unit (Previous year ` per unit). Further, investments also include ` 1.25 Crores (Previous year ` 1.25 Crores) representing company s investment in equity shares of India Energy Exchange Limited. Name of the Company No. of Shares Invested Amount Country of Shareholding % Incorporation India Energy Exchange Limited 12,50,000 ` 1.25 Crores India 4.34% 10.2 Information in relation to the interest of the Company in Joint Ventures (JVs): 1. Energy Efficiency Services Limited Proportion of Interest in Equity 31.71% Country of Incorporation India Area of Operation India 1. NTPC Limited (31.71%) JV Partners (% share) 2. Power Grid Corporation of India Limited (4.87%) 3. Power Finance Corporation Limited (31.71%) The Company s share of assets, liabilities, contingent liabilities and capital commitments as at and income and expenses for the year in respect of joint venture are given below: / For the year ended (Unaudited) / For the year ended (Unaudited) / For the year ended (Audited) * (i) Total Assets (ii) Total Liabilities (iii) Total Reserves & Surplus (iv) Contingent Liabilities (v) Capital Commitments

21 / For the year ended (Unaudited) / For the year ended (Unaudited) / For the year ended (Audited) * (vi) Total Income (vii) Total Expenses * The consolidated financial statements of the Company for the FY had been prepared considering the unaudited financial statements of the joint venture, Energy Efficiency Services Limited (EESL). However, the financial statements of EESL were subsequently audited on 16 September Additional disclosures required in respect of the investments : Non-Current Current Non-Current Current (1) Value of Investments (i) Gross Value of Investments (a) In India 2, , (b) Outside India, (ii) Provisions for Depreciation (a) In India (b) Outside India, (iii) Net Value of Investments (a) In India 2, , (b) Outside India (2) Movement of provisions held towards depreciation on investments. (i) Opening balance (ii) Add : Provisions made during the year (iii) Less : Write-off / write-back of excess provisions during the year (iv) Closing balance (3) Aggregate amount of Quoted Investments 1, , Market Value of Quoted Investments 2, , (4) Aggregate amount of Unquoted Investments (5) Aggregate provision for diminution in value of investments Long-term Loans & Advances (A) Capital Advances (Unsecured, considered good) (B) Security Deposits (Unsecured, considered good) (C) Loans & Advances to Related Parties - To Key Managerial Personnel (KMP) (D) Other Loans & Advances - Staff Loans & Advances (except to KMP)

22 RURAL ELECTRIFICATION CORPORATION LIMITED - Loan Assets 1,77, ,57, ,77, ,57, Total (A to D) 1,77, ,57, Details of Staff Loans & Advances and Loan Assets : 11.1 Staff Loans & Advances Non-current portion of the staff loans & advances has been classified under Long-term Loans & Advances above and the current portion of the staff loans & advances has been classified under Note-15 Other Current Assets. Non-Current Current Non-Current Current (A) Secured Staff Loans & Advances (A1) To Key Managerial Personnel (a) Considered Good (A2) To Others (a) Considered Good Sub-total (A1+ A2) (B) Unecured Staff Loans & Advances (B1) To Key Managerial Personnel (a) Considered Good (B2) To Others (a) Considered Good Sub-total (B1+ B2) Grand Total (A+B) Loan Assets Non-current portion of the loan assets has been classified under Long-term Loans & Advances above and the current portion of the loan assets has been classified under Note-19 Other Current Assets. (A) (A1) (A2) (B) (B1) Non-Current Current Non-Current Current Secured Loans Loans to State Power Utilities/ State Electricity Boards/Corpn. (Secured by hypothecation and/or mortgage of materials/ tangible assets) (a) Considered Good 1,25, , ,09, , Loans to Others (Secured by hypothecation and/or mortgage of tangible assets) (a) Considered Good 24, , , , (b) Classified Doubtful 2, , , , Less: Provision for bad & doubtful debts , , , , Sub-total (A1+ A2) 1,52, , ,35, , Unsecured Loans Loans Guaranteed by respective State Governments (a) Considered good 19, , , ,

23 (B2) (B3) Loans to State Governments (a) Considered good 2, , Loans - Others (a) Considered Good 3, , (b) Classified Doubtful Less: Provision for Bad & doubtful debts Sub-total (B1+ B2+B3) 24, , , , Grand Total (A+B) 1,77, , ,57, , Loan balance confirmations for 86% of total loan assets as at 31 March 2017 have been received from the borrowers. Out of the remaining 14% loan assets amounting to ` 28,474 crore for which balance confirmations have not been received, 82% loans are secured by way of hypothecation of assets, 13% by way of Government Guarantee/ Loans to Government and 5% are unsecured loans Loan Assets also include amount financed by the Company as per the Scheme for Financial Restructuring of State Distribution Companies (Discoms) REC, as a lead lender had sanctioned ` 650 Crore as initial sanction to Corporate Power Limited for 540 MW Phase-I TPP at Chandwa, Jharkhand. The debt is secured by way of combination of securities representing charge on all the Company s present and future immovable properties, movables, all bank accounts, project documents, clearances, letter of credits, guarantees, insurance contracts and insurance proceeds etc., pledge of shares representing 51% of the total paid up equity share capital of the Company and Corporate Guarantee of Corporate Ispat and Alloys Limited (CIAL). Subsequently, REC, had sanctioned ` 196 Crore as additional loan towards funding of cost overrun. 31 March 2017, the loan outstanding is ` crores. The progress of Phase-I of the Project (where REC is Lead) as per last available Lender Independent Engineer s Report, is approximately 96%. However, the account has become NPA on 30 June March 2017, the account of the borrower is classified as Doubtful asset. As per the Independent valuer s report, the realisable sale value of Phase-I & Phase- II project assets is ` 1, Crores. Accordingly, 100% provision to the extent of loan not covered by the realizable value of the security amounting to ` Crores and for the balance loan amount of ` Crores, 30% provision amounting to ` Crores is created in the books as per Significant Accounting Policy no 2.3(ii). As such, total provision created as on 31 March 2017 is ` Crores. Recall notice has been served to the borrower and Corporate guarantee of promoter Company, CIAL, has been invoked. REC and ARCIL have filled winding up petition before the Calcutta High Court against CIAL. Meanwhile CIAL moved to Board of Industrial and Financial Reconstruction (BIFR), pursuant thereto, Hon ble High Court abated the winding up petition. Lenders are exploring various options for the revival of the project including change in the management. With the consent of lenders, ARCIL has initiated the proceedings under SARFAESI Act. ARCIL has taken the possession of the Project site and deployed security for protection of the project. Lenders have also filed joint Original Application (OA) before Debt Recovery Tribunal (DRT), Calcutta for recovery of dues REC has sanctioned ` 1,150 Crore to Jas Infrastructure & Power Limited (JIPL) wherein total disbursement is ` Crores till 31 March The account has become NPA on 30 June March 2017, the account of the borrower is classified as Doubtful asset. As per the Independent valuer s report, the realizable sale value of project assets is valued at ` Crores. Accordingly, 100% provision to the extent of loan not covered by the realizable value of the security amounting to ` crore and for the balance loan amount of ` 1.77 crores, 30% provision amounting to ` 0.53 crores is created in the books as per Significant Accounting Policy No. 2.3(ii). As such, total provision created as at 31 March 2017 is ` Crores on total loan outstanding of ` Crores. Lenders have already initiated recovery. Recall notice has been served to the borrower and Personal guarantee of promoter has been invoked. Original Application has been filed by the REC in DRT for recovery of dues. Further, action as per SARFAESI Act is being explored by Lenders March 2017, the dues of one of the borrowers were overdue for more than 6 months, thus, exceeding the time limit for classification of the borrower as Standard Asset. However, the borrower had obtained an ad-interim order from Hon ble High Court of Madras on 18 September 2015 not to classify the account as NPA. In view of the same, the classification of the borrower has been retained as Standard Asset pending final decision of the Court. Accordingly, 10% provision as applicable 157

24 RURAL ELECTRIFICATION CORPORATION LIMITED 158 for sub-standard loans on the loan outstanding ` 2, Crores has not been created. Based on the decision taken by lenders in the JLF subsequent to the court order, the accrued interest of ` crores (` cr pertaining to Financial year ) has been adjusted through disbursement of loan as per the terms of sanction and the income recognised accordingly. However, since the account is currently into Restructured Standard Loan Assets category, a provision of 5% amounting to ` Crores had been created in full in respect of the loan as against creating the same in phased manner in accordance with Significant Accounting Policy 2.3(iv). Apart from this, as a matter of prudence, an additional provision amounting to ` Crores has been 4.50% of the loan over and above 5% provision. Accordingly, as on 31 March 2017, the total provision of ` Crores stands created against the project and unrealized income of ` Crores has also not been recognized. An application has been filed by REC for vacation of stay order issued by Hon ble High Court of Madras REC had sanctioned ` 390 Crores to M/s Lanco Teesta Hydro Power Limited with ICICI Bank as Lead lender having initial project SCOD in May However, due to equity crunch of promoters, geological surprises and poor rock strata, project couldn t be commissioned till date. In order to revive the Project, which is stalled at present, change in ownership is an important imperative which ensures that additional resources are brought in by the new investor. Towards this end, change of ownership could be effectively considered under the recent RBI dispensation on Strategic Debt Restructuring (SDR) dated 8 June In terms of SDR Regulations dated 8 June 2015 issued by RBI, the Lenders consortium had decided to invoke the SDR in the lenders meet held on 24 July Accordingly, REC, on 24 September 2015, approved the Strategic Debt Restructuring (SDR) package pursuant to RBI circular dated 8 June 2015, for conversion of ` 102 Crores out of REC s outstanding loan into equity at face value of ` 10/- per share towards effecting the change in Management. Subsequently, on 20 October 2015, necessary documentation had been carried out along with the signing of shareholder s agreement and an amount of ` 102 Crores of REC s sanction had been converted into equity on 20 October As per SDR scheme, asset classification shall remain standard up to 18 months from 24 July 2015 i.e. 23 January 2017 within this timeline a suitable investor has to be identified and the exercise of change in management shall have to be completed failing which the asset classification will be as per the extant IRAC norms, assuming the aforesaid stand-still in asset classification had not been given. As no investor had been identified till 23 January 2017, the asset classification has now been downgraded to Doubtful Category with provision 20% of the outstanding loan. Further, in view of the Management, there has been no decline in the fair value of the investment in equity shares of the Company on the basis of the latest available audited financial statements of the Company for the FY Accordingly, no provision is being made in respect of the investment in the equity shares REC has extended a loan of ` 217 Crores (Outstanding loan amount as at 31 March ` Crores) to Gati Infrastructure Private Limited for the implementation of 2X55 MW HEP in Sikkim with IDFC as Lead lender. Project achieved COD on 18 May 2013 and is operational since then. However, since the Company is selling its entire power under short term arrangements, lower revenue realization is causing stress on project cash flows. Lenders have invoked the implementation of Strategic Debt Restructuring (SDR)/ outside SDR with Reference Date as 5 December 2016 under the prevailing RBI norms. The process under SDR / outside SDR is in progress REC has given a loan to M/s Ind Barath Power (Madras) Limited (IBPML) under consortium lending with PFC being the lead lender, wherein the loan outstanding as at 31 March 2017 is ` Crores. The total disbursement towards IBPML by three consortium lenders was ` crore. Out of this, ` cr. kept as FDs, were utilized by the borrower from TRA for other than the project purposes. The account has become NPA on 31 December March 2017, the account of the borrower is classified as Sub-standard asset. Accordingly, 10% provision amounting to ` Crores has been created in the books as per Significant Accounting Policy No. 2.3(iii). Further, considering the physical progress in the project, an additional provision amounting to ` Crores has been made during the year in respect of the loan as a matter of prudence. The provisioning of the account shall be reviewed during the year on the basis of latest valuation report and financials REC sanctioned a loan of ` 750 crore to M/s Lanco Vidharbha Thermal Power Limited (LVTPL), promoted by Lanco Group, for setting up of 1320 MW (2x660 MW) thermal power project at Mandwa, district Wardha, Maharashtra. The loan outstanding as at 31 March 2017 is ` Crores. 31 March 2017, the account of the borrower is classified as Restructured Standard asset. Accordingly, 4.25% provision amounting to ` Crores has been created in the books as per Significant Accounting Policy No. 2.3(iv). Further, considering the physical progress in the project, an additional provision amounting to ` 60 Crores has been made during the year in respect of the loan as a matter of prudence One of the borrowers with an outstanding loan amount of ` 2, Crores as at 31 March 2017 has expressed his intention to prepay its loan. Further, the borrower has already prepaid more than 40% of the outstanding loan before the Balance sheet date and has further intimated his intention to prepay the balance loan within the FY Accordingly, the loan outstanding has been considered as Current in terms of Schedule III to the Companies Act, 2013.