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C M Y K

C M Y K
DRAFT SHELF PROSPECTUS
December 01, 2011
POWER FINANCE CORPORATION LIMITED
A GOVERNMENT OF INDIA UNDERTAKEING)
(Incorporated on July 16, 1986 under the Companies Act, 1956 as a public limited company)
Registered Office and Corporate Office: 'Urjanidhi', 1, Barakhamba Lane, Connaught Place, New Delhi 110 001,India.
Tel: +91 11 2345 6000. Fax: +91 11 2341 2545.
Compliance Officer & Company Secretary : Mr. J.S. Amitabh, Tel: +91 11 2345 6740 Fax: +91 11 2345 6786.
E-mail: taxfreebonds11-12@pfcindia.com. Website: www.pfcindia.com.
PUBLIC ISSUE BY POWER FINANCE CORPORATION LIMITED (COMPANY OR ISSUER) OF TAX FREE BONDS OF FACE
VALUE OF `1,000 EACH, IN THE NATURE OF SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES, HAVING BENEFITS
UNDER SECTION 10(15)(iv)(h) OF THE INCOME TAX ACT, 1961, AS AMENDED, (BONDS), UP TO ` 4033.13 CRORES*
(ISSUE). THE BONDS WILL BE ISSUED AT PAR IN ONE OR MORE TRANCHES UP TO ` 4033.13CRORES, ON THE TERMS
AND CONDITIONS AS SET OUT IN SEPERATE TRANCHE PROSPECTUSES FOR EACH SUCH TRANCHE.
The Issue is being made under the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (SEBI Debt
Regulations) and pursuant to Notification No. 52/2011. F. No. 178/56/2011 - (ITA.1) dated September 23, 2011 issued by the Central Board
of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, by virtue of powers conferred upon it by item (h) of sub-
clause (iv) of clause (15) of section 10 of the Income Tax Act, 1961 (43 of 1961).
*The subscription list for the Issue shall remain open for subscription at the commencement of banking hours and close at the close of banking hours, with an option for
early closure (subject to the Issue being open for a minimum of 3 days) or extension by such period, upto a period of 30 days from the date of opening of the Issue, as may
be decided by the Board of Directors/ Committee of the Company. In the event of such early closure of the subscription list of the Issue, our company shall ensure that public
notice of such early closure is published on or before the day of such early date of closure through advertisement/s in a leading national daily newspaper.
**The SEBI registration of one of the Lead Managers to the Issue, SBI Capital Markets Limited was valid up to July 31, 2011. The application for renewal of the certificate
of registration in the prescribed manner has been made by SBI Capital Markets Limited on April 29, 2011, to SEBI, three months before the expiry of the period of the
certificate as required under Regulation 9(1) of the SEBI (Merchant Bankers) Regulations, 1992. The approval of SEBI in this regard is currently awaited.
* ISSUE PROGRAMME
ISSUE OPENS ON : [G] ISSUE CLOSES ON : [G]
LEAD MANAGERS TO THE ISSUE
SBI CAPITAL MARKETS LIMITED
202, Maker Tower E, Cuffe Parade,
Mumbai 400 005
Tel: +91 22 2217 8300;
Fax: +91 22 2218 8332
Email: pfctaxfree@sbicaps.com
InvestorGrievance Email:
investor.relations@sbicaps.com
Website: www.sbicaps.com
Contact Person: Mr.Nithin Kanuganti/
Mr. Puneet Deshpande
Compliance Officer: Mr. Bhaskar
Chakraborty
SEBI Registration No.: INM000003531**
GDA TRUSTEE &
CONSULTANCY LTD.
"ShriNiwas" Apte Road,
1202/29, Shivaji Nagar,
Pune - 411004
Tel: 91-20-25510401(3 lines)
Fax: 91-20-25532567
Email: gdatm@vsnl.net
Contact Person: Mr. R. K. Kulkarni
Website: www.gdatc.com
SEBI Registration No: IND000000034
A. K. CAPITAL SERVICES
LIMITED
30-39 Free Press House, 3rd Floor,
Free Press Journal Marg, 215,
Nariman Point, Mumbai 400021
Tel: +91 22 6754 6500/ 6634 9300;
Fax: +91 22 6610 0594
Email: pfcbonds@akgroup.co.in
Investor Grievance Email:
investor.grievance@akgroup.co.in
Website: www.akcapindia.com
Contact Person: Mr. Hitesh Shah
Compliance Officer: Mr.VikasAgarwal
SEBI Registration No.: INM000010411
GENERAL RISKS
Investors are advised to read the Risk Factors carefully before taking an investment decision in relation to this Issue. For taking an investment
decision, investors must rely on their own examination of the Issuer and the Issue, including the risks involved. Specific attention of the
investors is invited to Risk Factors on page 9. This document has not been and will not be approved by any regulatory authority in India,
including the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), any registrar of companies or any Stock
Exchange in India.
ISSUERS ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Shelf Prospectus contains all
information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Draft
Shelf Prospectus is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions
expressed herein are honestly held and that there are no other material facts, the omission of which makes this Draft Shelf Prospectus as a
whole or any such information or the expression of any such opinions or intentions misleading in any material respect.
CREDIT RATING
CRISIL Limited (CRISIL) has assigned a rating of CRISIL AAA/Stable (pronounced as CRISIL Triple A rating with stable outlook) vide its
letter no. SN/FSR/PFC/2011-12/865 to the long term borrowing programme of `38,500 Crores and CRISIL A1+ (pronounced as CRISIL A One
Plus) vide its letter no. SN/FSR/PFC/2011-12/866 to the short term borrowing programme of `5000 Crores both dated October 13, 2011 (for
total of `43,500) and ICRA Limited has by its letter no. D/RAT/2011-2012/P3/20 dated October 21, 2011, assigned a rating of ICRA AAA
(pronounced ICRA triple A) to the Long Term Borrowing Programme of `43,500 crores, during the financial year 2011-12. These ratings are
not a recommendation to buy, sell or hold securities and investors should take their own decision. These ratings are subject to revision or
withdrawal at any time by the assigning rating agency(ies) and should be evaluated independently of any other ratings. For the rationale for
these ratings, see Annexure II of this Draft Shelf Prsopectus. Instruments with this rating are considered to have highest degree of safety
regarding timely recurring of financial obligations such instruments carry lowest credit risks.
PUBLIC COMMENTS
The Draft Shelf Prospectus has been filed with the Designated Stock Exchange, pursuant to the provisions of the SEBI Debt Regulations. This
Draft Shelf Prospectus is open for public comments and all comments on this Draft Shelf Prospectus are to be forwarded to the attention of
the compliance officer within seven Working Days (i.e., until 5 p.m) of the date of filing of this Draft Shelf Prospectus with the Designated
Stock Exchange..
LISTING
The Bonds are proposed to be listed on the BSE Limited (BSE). BSE has given their in-principle listing approval vide letter dated []. The
Designated Stock Exchange for the Issue is BSE.
REGISTRAR TO THE ISSUE
RR INVESTORS CAPITAL
SERVICES PRIVATE LIMITED
133-A, 13th Floor, A-wing, Mittal Tower,
Nariman Point, Mumbai - 400 021
Tel: +91 22 2288 6627/28
Fax: +91 22 2285 1925
Email: pfcbonds@rrfcl.com
Investor Grievance Email:
investors@rrfcl.com
Website: www.rrfinance.com /
www.rrfcl.com
Contact Person: Mr. Brahmdutta Singh
Compliance Officer: Mr. Sandeep
Mahajan
SEBI Registration No.: INM000007508
TRUSTEE FOR THE
BONDHOLDERS
KARVY COMPUTERSHARE
PRIVATE LIMITED
Plot No's.17-24, VittalRao Nagar,
Madhapur, Hyderabad - 500 081,
India
Tel: 1-800- 3454001
Fax: +91 (40) 23431551
Email: pfctaxfree@karvy.com
Investor Grievance Email:
einward.ris@karvy.com
Website: www.karvy.com
Contact Person: Mr.Murali Krishna
SEBI Registration: INR000000221
TABLE OF CONTENTS
SECTION I - GENERAL
DEFINITIONS AND ABBREVIATIONS ............................................................................................................. 1
CERTAIN CONVENTIONS, USE OF FINANCIAL, INDUSTRY AND
MARKET DATA AND CURRENCY OF PRESENTATON .................................................................................. 7
FORWARD LOOKING STATEMENTS............................................................................................................... 8
SECTION II - RISK FACTORS ......................................................................................................................... 9
SECTION III - INTRODUCTION..................................................................................................................... 32
THE ISSUE ........................................................................................................................................................ 32
SELECTED FINANCIAL INFORMATION ....................................................................................................... 35
GENERAL INFORMATION .............................................................................................................................. 50
CAPITAL STRUCTURE.................................................................................................................................... 55
OBJECTS OF THE ISSUE.................................................................................................................................. 59
STATEMENT OF TAX BENEFITS ................................................................................................................... 61
SECTION IV - ABOUT THE COMPANY......................................................................................................... 65
INDUSTRY OVERVIEW.................................................................................................................................... 65
OUR BUSINESS ................................................................................................................................................ 75
REGULATIONS AND POLICIES ....................................................................................................................... 98
HISTORY AND CERTAIN CORPORATE MATTERS ..................................................................................... 109
MANAGEMENT............................................................................................................................................. 120
STOCK MARKET DATA FOR OUR EQUITY SHARES/DEBENTURES........................................................ 131
FINANCIAL INDEBTEDNESS........................................................................................................................ 133
SECTION V - LEGAL AND OTHER INFORMATION................................................................................... 140
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS............................................................ 140
OTHER REGULATORY AND STATUTORY DISCLOSURES ......................................................................... 144
SECTION VI - ISSUE RELATED INFORMATION.......................................................................................... 147
ISSUE STRUCTURE ....................................................................................................................................... 147
TERMS OF THE ISSUE................................................................................................................................... 151
PROCEDURE FOR APPLICATION ................................................................................................................. 162
SECTION VII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF THE COMPANY ............... 178
SECTION VIII - OTHER INFORMATION..................................................................................................... 192
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION............................................................. 192
DECLARATION.............................................................................................................................................. 193
ANNEXURE I FINANCIAL STATEMENTS
ANNEXURE II CREDIT RATINGS
ANNEXURE III STOCK DATA FOR DEBENTURES
ANNEXURE IV LIST OF TOP TEN NON-CONVERTIBLE DEBENTURE/BOND HOLDERS

1

SECTION I - GENERAL
DEFINITIONS AND ABBREVIATIONS

This Draft Shelf Prospectus uses certain definitions and abbreviations which, unless the context indicates or implies
otherwise, have the meaning as provided below. References to statutes, rules, regulations, guidelines and policies will be
deemed to include all amendments and modifications notified thereto.

Company Related Terms
Term Description
Issuer, PFC, our Company, or
the Company, or the
Corporation
Power Finance Corporation Limited, a public limited company incorporated under
the Companies Act, 1956.
We, or us, our or Group Power Finance Corporation Limited and its Subsidiaries, PFC Green Energy Limited,
PFC Consulting Ltd., Chhattisgarh Surguja Power Ltd., Coastal Karnataka Power
Limited, Coastal Maharashtra Mega Power Limited, Orissa Integrated Power
Limited, Coastal Tamil Nadu Power Limited, Sakhigopal Integrated Power Company
Limited, Ghogarpalli Integrated Power Company Limited, Tatiya Andhra Mega
Power Ltd., Nagapattinam-Madhugiri Transmission Company Limited, PFC Capital
Advisory Services Limited and Power Equity Capital Advisors Private Limited and
its joint ventures and associates, on a consolidated basis.
Articles/ Articles of
Association/AoA
Articles of Association of our Company
Board/ Board of Directors Board of Directors of our Company
Equity Shares Equity Shares of our Company
Memorandum/Memorandum of
Association/MoA
Memorandum of Association of our Company
Registered Office and Corporate
Office
The registered office and corporate office of our Company, situated at
Urjanidhi, 1, Barakhamba Lane, Connaught Place, New Delhi- 110 001, India
RoC Registrar of Companies, National Capital Territory of Delhi and Haryana
Statutory Auditors/Auditors Raj Har Gopal & Co. and N. K. Bhargava & Co., the statutory auditors of our
Company
Subsidiaries PFC Green Energy Limited, PFC Consulting Ltd., Chhattisgarh Surguja Power Ltd.,
Coastal Karnataka Power Limited, Coastal Maharashtra Mega Power Limited, Orissa
Integrated Power Limited, Coastal Tamil Nadu Power Limited, Sakhigopal Integrated
Power Company Limited, Ghogarpalli Integrated Power Company Limited, Tatiya
Andhra Mega Power Ltd., Nagapattinam-Madhugiri Transmission Company Limited,
PFC Capital Advisory Services Limited and Power Equity Capital Advisors Private
Limited.

Issue Related Terms
Term Description
Allotment/ Allot/ Allotted The issue and allotment of the Bonds to the successful Applicants, pursuant to
the Issue.
Allottee A successful Applicant to whom the Bonds are allotted pursuant to the Issue
Applicant/Investor A person who applies for issuance of Bonds pursuant to the terms of the relevant
tranche prospectus and Application Form
Application Amount The aggregate value of the Bonds applied for, as indicated in the Application
Form
Application Form The form in terms of which the Applicant shall make an offer to subscribe to the
Bonds and which will be considered as the application for Allotment of Bonds in
terms of respective Tranche Prospectus(es)
Application Interest Interest paid on application money in a manner as more particularly detailed
in Terms of the I ssue Application I nterest on page 155 of this Draft Shelf
Prospectus.

2

Base Issue Size As specified in the Tranche Prospectus.
Banker(s) to the Issue/ Escrow
Collection Bank(s)
The banks which are clearing members and registered with SEBI as bankers to the
Issue, with whom the Escrow Account will be opened and in this case being [].
Bond Certificate(s) Certificate issued to the Bondholder(s) in case the Applicant has opted for physical
bonds based on request from the Bondholders pursuant to Allotment
Bondholder(s) Any person holding the Bonds and whose name appears on the beneficial owners list
provided by the Depositories (in case of bonds in dematerialized form) or whose
name appears in the Register of Bondholders maintained by the Issuer (in case of
bonds in physical form)
Bonds Tax Free Secured Redeemable Non Convertible Bonds in the nature of Debentures of
face value of ` 1000 each having tax benefits under Section 10(15)(iv)(h) of the Income
Tax Act, 1961 proposed to be issued by Company under the respective Tranche
Prospectus
BSE BSE Limited
Category I
Public Financial Institutions, Statutory Corporations, Scheduled Commercial Banks,
Co-operative Banks and Regional Rural Banks, which are authorised to invest in the
Bonds;
Provident Funds, Pension Funds, Superannuation Funds and Gratuity Fund, which
are authorised to invest in the Bonds;
Insurance companies registered with the IRDA;
National Investment Fund;
Mutual Funds;
Foreign Institutional Investors (including sub-accounts)
Companies; bodies corporate and societies registered under the applicable laws in
India and authorised to invest in the Bonds;
Public/private charitable/religious trusts which are authorised to invest in the Bonds;
Scientific and/or industrial research organisations, which are authorised to invest in
the Bonds;
Partnership firms in the name of the partners; and Limited liability partnerships
formed and registered under the provisions of the Limited Liability Partnership Act,
2008 (No. 6 of 2009)
Category II The following investors applying for an amount aggregating to above ` 5 lakhs across
all Series in each tranche
Resident Indian individuals;
Hindu Undivided Families through the Karta; and Non Resident Indians on
repatriation as well as non-repatriation basis.
Category III The following investors applying for an amount aggregating to upto and including `5
lakhs across all Series in each tranche
Resident Indian individuals;
Hindu Undivided Families through the Karta; and Non Resident Indians on
repatriation as well as non-repatriation basis.
Consolidated Bond Certificate The certificate issued by the Issuer to the Bondholder for the aggregate
amount of the Bonds that are applied in physical form or rematerialized and held
by such Bondholder under each Tranche Issue(s)
Credit Rating Agencies For the present Issue, Credit Rating Agencies are CRISIL and ICRA

3

CRISIL CRISIL Limited
CRISIL AAA/Stable
Instruments with this rating are considered to have the highest degree of safety
regarding timely servicing of financial obligations. Such instruments carry lowest
credit risk.
Debenture Trust Deed Trust deed to be entered into between the Debenture Trustee and the
Company, within three months from the Deemed Date of Allotment
Debenture Trustee/ Trustee Trustee for the Bondholders in this case being GDA Trustee & Consultancy Ltd.
Deemed Date of Allotment Deemed Date of Allotment shall be the date on which the Board of Directors/or any
committee thereof approves the Allotment of the Bonds for each Tranche Issue. All
benefits relating to the Bonds including interest on Bonds (as specified for each
tranche by way of Tranche Prospectus) shall be available to the Bondholders from the
Deemed Date of Allotment. The actual allotment of Bonds may take place on a date
other than the Deemed Date of Allotment
Designated Date The date on which Application Amounts are transferred from the Escrow
Account to the Public Issue Account or the Refund Account, as appropriate,
following which the Board of Directors shall Allot the Bonds to the successful
Applicants, provided that the sums received in respect of the Issue will be kept in the
Escrow Account up to this date
Designated Stock Exchange BSE Limited
Draft Shelf Prospectus This draft shelf prospectus filed by the Company with the Designated Stock
Exchange in accordance with the provisions of SEBI Debt Regulations
Escrow Account Account opened with the Escrow Collection Bank(s) and in whose favour the
Applicants will issue cheques or drafts, in respect of the Application Amount
when submitting an Application
Escrow Agreement Agreement dated [] entered into amongst the Company, the Registrar to the
Issue, the Lead Managers and the Escrow Collection Bank(s) for collection
of the Application Amounts and where applicable, refunds of the amounts
collected from the Applicants on the terms and conditions thereof
ICRA ICRA Limited
ICRA AAA Instruments with this rating are considered to have the highest degree of safety
regarding timely servicing of financial obligations. Such instruments carry lowest
credit risk.
Issue Public Issue by Power Finance Corporation Limited (Company or Issuer) of tax
free bonds of face value of ` 1,000 each, in the nature of secured, redeemable, non-
convertible debentures, having benefits under section 10(15)(iv)(h) of the Income Tax
Act, 1961, as amended, (Bonds), up to ` 4033.13 crores (Issue). The bonds will be
issued at par in one or more tranches, on the terms and conditions as set out in separate
tranche prospectuses for each such tranche.

Issue Period The period between the Issue Opening Date and the Issue Closing Date inclusive of
both days, during which prospective Applicants may submit their Application
Forms (minimum 3 days)
Lead Managers/LMs SBI Capital Markets Limited, A.K. Capital Services Limited and RR Investors
Capital Services Private Limited
Lead Brokers []
Market / Trading Lot One Bond
Notification/CBDT Notification Notification No. 52/2011. F. No. 178/56/2011 - (ITA.1) dated September 23, 2011
issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of
Finance, Government of India
NSE National Stock Exchange of India Limited
Public Issue Account An account opened with the Banker(s) to the Issue to receive monies from
the Escrow Accounts for the Issue on the Designated Date
Record Date 15 (fifteen) days prior to the relevant Interest Payment Date, relevant
Redemption Date for Bonds issued under the relevant Tranche Prospectus

4

Refund Account The account opened with the Refund Bank(s), from which refunds, if any, of the
whole or part of the Application Amount shall be made
Refund Bank As mentioned in the respective Tranche Prospectus
Refund Interest Interest paid on Application Amount in a manner as more particularly detailed in
Terms of the I ssue Refund I nterest on page 155 of this Draft Shelf Prospectus.
Register of Bondholders
The register of Bondholders maintained by the Issuer in accordance with the
provisions of the Companies Act,1956 and as more particularly detailed in
Terms of the I ssue Register of Bondholders on page 153 of this Draft Shelf
Prospectus.
Registrar to the Issue or
Registrar
Karvy Computershare Private Limited

Registrar MoU Memorandum of understating dated November 28, 2011 entered into between the
Company and the Registrar to the Issue
Residual Shelf Limit In relation to each Tranche Issue, this shall be the Shelf Limit less the aggregate
amount of Bonds allotted under all previous Tranche Issue
Security The Bonds issued by the Company will be secured by creating a charge on the book
debts of the company and/or identified immovable property by a first /pari passu
charge, as may be agreed between the Company and the Debenture Trustee, pursuant
to the terms of the Debenture Trust Deed.
Series 1 Bonds Tranche [] Series []
Series 2 Bonds Tranche [] Series []
Series Bondholder(s) A holder of the Bond(s) of a particular Series issued under a Tranche Issue
Series of Bonds A series of Bonds which are identical in all respects including, but not limited to
terms and conditions, listing and ISIN number and as further stated to be an
individual Series in the relevant Tranche Prospectus
Shelf Limit
The aggregate limit of the issue being ` 4033.13 Crores to be issued under this Draft
Shelf Prospectus, through one or more tranches.
Tranche Issue Issue of the Bonds pursuant to the respective Tranche Prospectus.
Tranche Issue Closing Date Issue closing date as specified in the relevant Tranche Prospectus for the relevant
Tranche Issue or such other date as may be decided
Tranche Issue Opening Date Issue opening date as specified in the relevant Tranche Prospectus for the relevant
Tranche Issue
Tranche Prospectus The tranche prospectus containing the details of Bonds including interest, other
terms and conditions, recent developments, general information, objects, procedure
for application, statement of tax benefits, regulatory and statutory disclosures and
material contracts and documents for inspection of the relevant Tranche Issue
Tripartite Agreements Agreements entered into between the Issuer, Registrar and each of the Depositories
under the terms of which the Depositories agree to act as depositories for the
securities issued by the Issuer.
Working Days All days excluding Saturdays, Sundays or a public holiday in India or at any
other payment centre notified in terms of the Negotiable Instruments Act, 1881

Conventional and General Terms or Abbreviations
Term/Abbreviation Description/ Full Form
Act/ Companies Act The Companies Act, 1956
AGM Annual General Meeting
AS Accounting Standards as notified by Institute of Chartered Accountants of India
CBDT Central Board of Direct Taxes
CDSL Central Depository Services (India) Limited
CRAR Capital to Risk Assets Ratio
Debt Listing Agreement The agreement for listing of debt securities on the BSE.
DIN Director Identification Number
DoEA Department of Economic Affairs, Ministry of Finance, Government of India
DoFS Department of Financial Services, Ministry of Finance, Government of India
Depository(ies) CDSL and NSDL

5

Depositories Act Depositories Act, 1996
DP/ Depository Participant Depository Participant as defined under the Depositories Act, 1996
DRR Debenture Redemption Reserve
DTC Direct Tax Code
FCNR Account Foreign Currency Non Resident Account
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999
FII Foreign Institutional Investor (as defined under the SEBI (Foreign Institutional
Investors) Regulations, 1995), registered with the SEBI under applicable laws in
India
FIMMDA Fixed Income Money Market and Derivative Association of India
Financial Year/ Fiscal/ FY Period of 12 months ended March 31 of that particular year
GDP Gross Domestic Product
GoI or Government Government of India
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
Income Tax Act Income Tax Act, 1961
India Republic of India
Indian GAAP Generally accepted accounting principles followed in India
IT Information technology
LIBOR London Inter-Bank Offer Rate
MoF Ministry of Finance, GoI
MCA Ministry of Corporate Affairs, GoI
NBFC Non Banking Finance Company, as defined under applicable RBI guidelines
MoP Ministry of Power, GoI
NECS National Electronic Clearing System
NEFT National Electronic Fund Transfer
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
NR Non-Resident
NRI
A Person resident outside India, as defined under FEMA, and who is a citizen of
India or a Person of Indian Origin and such term as defined under the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2000, as amended
NII(s) Non Institutional Investor(s) other than a Retail Applicants or HNIs
p.a. Per annum
PAN Permanent Account Number
PAT Profit After Tax
PFI Public Financial Institution, as defined under Section 4A of the Companies Act, 1956
PMDO Pooled Municipal Debt Obligation
PPP Public Private Partnership
RBI Reserve Bank of India
` or Rupees or Indian Rupees The lawful currency of India
RTGS Real Time Gross Settlement
SARFAESI
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002
SEBI Securities and Exchange Board of India
SEBI Act SEBI Act, 1992
SEBI Debt Regulations SEBI (Issue and Listing of Debt Securities) Regulations, 2008






6

Business / Industry Related Terms
Term/Abbreviation Description/ Full Form
ADB Asian Development Bank
ALCO Asset Liability Management Committee
APDRP Accelerated Power Development and Reform Program
AT&C Aggregate technical and commercial losses
CAGR Compounded Annual Growth Rate
CDM Clean Development Mechanism
CEA Central Electricity Authority
DMS Distribution Management System
DPE Department of Public Enterprises, Government of India
ECBs External Commercial Borrowings
FCNR Foreign Currency Non-Resident
IFC Infrastructure Finance Company
IPP Independent Power Producer
ISO International Organization for Standardization
ITP Independent Transmission Project(s)
JNNSM Jawaharlal Nehru National Solar Mission
MNRE Ministry of New and Renewable Energy
MW Mega Watts
NBFC Non Banking Financial Company
NCDEX National Commodities & Derivatives Exchange Limited
NHPC NHPC Limited
NPAs Non-Performing Assets
NPCIL Nuclear Power Corporation of India Limited
NPEL National Power Exchange Limited
NTPC NTPC Limited
PECAP Power Equity Capital Advisors Private Limited
PEIL Power Exchange India Limited
PSU Public Sector Undertaking
PV Photovoltaic
R-APDRP Restructured Accelerated Power Development and Reform Programme
SEBs State Electricity Boards
SERC State Electricity Regulatory Board(s)
SIA SCADA Implementing Agencies
SPU State Power Utilities
SPV Special Purpose Vehicle
TCS Tata Consultancy Services Limited
UMPP Ultra Mega Power Project
USAID United States Agency for International Development
USPP United State Private Placement
Yield Ratio of interest income to the daily average of interest earning assets













7

CERTAIN CONVENTIONS, USE OF FINANCIAL, INDUSTRY AND MARKET DATA AND CURRENCY OF
PRESENTATON

Certain Conventions
All references in this Draft Shelf Prospectus to India are to the Republic of India and its territories and possessions.

Financial Data
Unless stated otherwise, the financial data in this Draft Shelf Prospectus is derived from (i) our audited standalone financial
statements, prepared in accordance with Indian GAAP and the Companies Act for the Fiscal 2011, 2010, 2009, 2008 and
2007 and half year ended on September 30, 2011 and; and/or (ii) our audited consolidated financial statements, prepared in
accordance with Indian GAAP and the Companies Act for the Fiscal 2011, 2010, 2009 and half year ended on September 30,
2011. In this Draft Shelf Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are
due to rounding off. All decimals have been rounded off to one decimal point.

The current financial year of the Company commences on April 1 and ends on March 31 of the next year, so all references to
particular financial year, fiscal year and Fiscal or FY, unless stated otherwise, are to the 12 months period ended on
March 31 of that year.

The degree to which the Indian GAAP financial statements included in this Draft Shelf Prospectus will provide meaningful
information is entirely dependent on the readers level of familiarity with Indian accounting practices. Any reliance by
persons not familiar with Indian accounting practices on the financial disclosures presented in this Draft Shelf Prospectus
should accordingly be limited.

Currency and Unit of Presentation
In this Draft Shelf Prospectus, references to `, Indian Rupees, INR and Rupees are to the legal currency of India and
references to US$, USD, and U.S. dollars are to the legal currency of the United States of America, references to
Euro and are to the legal currency of the European Union and references to Yen and JPY are to the legal currency
of Japan. For the purposes of this Draft Shelf Prospectus data will be given in `in Crore. In the Draft Shelf Prospectus, any
discrepancy in any table between total and the sum of the amounts listed are due to rounding off.

Industry and Market Data
Any industry and market data used in this Draft Shelf Prospectus consists of estimates based on data reports compiled by
government bodies, professional organizations and analysts, data from other external sources and knowledge of the markets
in which we compete. These publications generally state that the information contained therein has been obtained from
publicly available documents from various sources believed to be reliable but it has not been independently verified by us or
its accuracy and completeness is not guaranteed and its reliability cannot be assured. Although we believe the industry and
market data used in this Draft Shelf Prospectus is reliable, it has not been independently verified by us. The data used in these
sources may have been reclassified by us for purposes of presentation. Data from these sources may also not be comparable.
The extent to which the industry and market data is presented in this Draft Shelf Prospectus is meaningful depends on the
readers familiarity with and understanding of the methodologies used in compiling such data. There are no standard data
gathering methodologies in the industry in which we conduct our business and methodologies and assumptions may vary
widely among different market and industry sources.

Exchange Rates
The exchange rates (`) of the US$, JPY and as for last 5 years and 6 months ended September 30, 2011 are provided below:

(Source: SBI TT Selling rates)
Currency March 31,
2007
March 31,
2008
March 31,
2009
March 31,
2010
March 31,
2011
September
30, 2011
USD 43.77 40.11 51.45 45.58 45.14 49.30
JPY 0.3724 0.4029 0.5265 0.4900 0.5484 0.6480
Euro 58.34 63.47 68.43 61.31 63.99 67.29

8

FORWARD LOOKING STATEMENTS


Certain statements contained in this Draft Shelf Prospectus that are not statements of historical fact constit ute
forward-looking statements. Investors can generally identify forward-looking statements by terminology such as aim,
anticipate, believe, continue, could, estimate, expect, intend, may, objective, plan, potential,
project, pursue, shall, seek, should, will, would, or other words or phrases of similar import. Similarly,
statements that describe our strategies, objectives, plans or goals are also forward-looking statements. All statements
regarding our expected financial conditions, results of operations, business plans and prospects are forward-looking
statements. These forward-looking statements include statements as to our business strategy, revenue and profitability, new
business and other matters discussed in this Draft Shelf Prospectus that are not historical facts. All forward-looking
statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from
those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ
materially from our expectations include, among others:

growth prospects of the Indian infrastructure sector and related policy developments;
general, political, economic, social and business conditions in Indian and other global markets;
our ability to successfully implement our strategy, growth and expansion plans;
competition in the Indian and international markets;
availability of adequate debt and equity financing at reasonable terms;
performance of the Indian debt and equity markets;
changes in laws and regulations applicable to companies in India, including foreign exchange control regulations in
India; and
other factors discussed in this Draft Shelf Prospectus, including under Risk Factors on page 9 of this Draft Shelf
Prospectus.


Additional factors that could cause actual results, performance or achievements to differ materially include, but are not
limited to, those discussed under Our Business on page 75 of this Draft Shelf Prospectus. The forward-looking statements
contained in this Draft Shelf Prospectus are based on the beliefs of management, as well as the assumptions made by, and
information currently available to, management. Although we believe that the expectations reflected in such forward-looking
statements are reasonable at this time, we cannot assure investors that such expectations will prove to be correct. Given these
uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. If any of these risks
and uncertainties materialize, or if any of our underlying assumptions prove to be incorrect, our actual results of operations or
financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. All
subsequent forward-looking statements attributable to us are expressly qualified in their entirety by reference to these
cautionary statements.









9

SECTION II - RISK FACTORS

Prospective Investors should carefully consider all the information in this Draft Shelf Prospectus, including the risks and
uncertainties described below, and under Our Business on page 75 of this Draft Shelf Prospectus and Financial
Statements in Annexure I of this Draft Shelf Prospectus , before making an investment in the Bonds. The risks and
uncertainties described in this section are not the only risks that we currently face. Additional risks and uncertainties not
known to us or that we currently believe to be immaterial may also have an adverse effect on our business, prospects, results
of operations and financial condition. If any of the following or any other risks actually occur, our business prospects, results
of operations and financial condition could be adversely affected and the price of, and the value of your investment in the
Bonds could decline and you may lose all or part of your redemption amounts and /or interest amounts..

The financial and other related implications of risks concerned, wherever quantifiable, have been disclosed in the risk factors
mentioned below. However, there are certain risk factors where the effect is not quantifiable and hence has not been disclosed
in such risk factors. The numbering of risk factors has been done to facilitate ease of reading and reference, and does not in
any manner indicate the importance of one risk factor over another.

In this section, unless the context otherwise requires, a reference to the "Company"is a reference to Power Finance
Corporation Limited and unless the context otherwise requires, a reference to "we", "us"and "our"refers to Power Finance
Corporation Limited and its Subsidiaries, joint ventures and associate companies, as applicable in the relevant fiscal period,
on a consolidated basis.

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

1. We have a significant concentration of outstanding loans to certain borrowers, particularly public sector power
utilities, many of which are historically loss-making, and if these loans become non-performing, the quality of our
asset portfolio may be adversely affected. As of September 30, 2011, our single largest borrower accounted for 8.58%
(` 9,475.81 crores) of our total outstanding loans, and our top five and top ten borrowers accounted for, in the
aggregate, 31.86% (` 35,175.55 crores) and 53.99% (` 59,635.10 crores), respectively of our total outstanding loan
assets amounting to ` 1,10,421.25 crores

We are a public financial institution focused on financing of the power sector in India, which has a limited number of
borrowers primarily comprising State power utilities ("SPUs") and State electricity boards ("SEBs"), many of which have
been historically loss making. Our past exposure has been, and future exposure is expected to be, concentrated towards these
borrowers. As of September 30, 2011, our state sector, central sector, joint sector and private sector borrowers accounted for
64.29%,19.19%,7.81% and 8.71%, respectively, of our total outstanding loans. Historically, public sector utilities have had a
relatively weak financial position and have in the past defaulted on their indebtedness. Consequently, we have had to
restructure some of the loans sanctioned to certain SPUs and SEBs, including rescheduling of repayment terms. In addition,
many of our public sector borrowers, particularly SPUs, are susceptible to various operational risks including low metering at
the distribution transformer level, high revenue gap, high receivables, low plant load factors and high aggregate technical and
commercial ("AT&C") losses, which may lead to further deterioration in the financial condition of such entities.

As of September 30, 2011, our single largest borrower accounted for 8.58% of our total outstanding loans, and our top five
and top ten borrowers accounted for, in the aggregate, 31.86% and 53.99%, respectively, of our total outstanding loans. In
addition, we have additional exposure to these borrowers in the form of non-fund based assistance. Our most significant
borrowers are primarily public sector power utilities. Any negative trends or financial difficulties, or an inability on the part
of such borrowers to manage operational, industry and other risks applicable to such borrowers, could result in an increase in
our non-performing assets ("NPAs") and adversely affect our business, financial condition and results of operations.

2. We may not be able to recover, or there may be a delay in recovering, the expected value from security and collaterals
for our loans, which may affect our financial condition.

Although we endeavor to obtain adequate security or implement quasi-security arrangements in connection with our loans,
we have not obtained such security or collateral for all our loans. In addition, in connection with certain of our loans, we have
been able to obtain only partial security or have made disbursements prior to adequate security being created or perfected.
There can be no assurance that any security or collateral that we have obtained will be adequate to cover repayment of our
loans or interest payments thereon or that we will be able to recover the expected value of such security or collateral in a

10

timely manner, or at all. As of September 30, 2011, 64.74% of our outstanding loans were secured by a charge on the relevant
project assets, 12.70% were unsecured (but guaranteed by the relevant State government), and 22.56% were unsecured.

Our loans are typically secured by various movable and immovable assets and/or other collaterals. We generally seek a first
ranking pari passu charge on the relevant project assets for loans extended on a senior basis, while for loans extended on a
subordinated basis, we generally seek to have a second pari passu charge on the relevant project assets. In addition, some of
our loans may relate to imperfect security packages or negative liens provided by our borrowers. The value of certain kinds of
assets may decline due to operational risks that are inherent to power sector projects, the nature of the asset secured in our
favor and any adverse market or economic conditions in India or globally. The value of the security or collateral obtained
may also decline due to an imperfection in the title or difficulty in locating movable assets. Although several pieces of
legislation in India provide for various rights of creditors for the effective realization of collateral in the event of default, there
can be no assurance that we will be able to enforce such rights in a timely manner, or at all. There could be delays in
implementing bankruptcy or foreclosure proceedings. Further, inadequate security documentation or imperfection in title to
security or collateral, requirement of regulatory approvals for enforcement of security or collateral, or fraudulent transfers by
borrowers may cause delays in enforcing such securities. In addition, certain of our loans have been granted as part of a
syndicate, and joint recovery action implemented by a consortium of lenders may be susceptible to delay. In addition, in the
event that any specialized regulatory agency assumes jurisdiction over a defaulting borrower, actions on behalf of creditors
may be further delayed.

In addition, the RBI has developed a corporate debt restructuring process to enable timely and transparent debt restructuring
of corporate entities that are beyond the jurisdiction of the Board of Industrial and Financial Reconstruction, the Debt
Recovery Tribunal and other legal proceedings. The applicable RBI guidelines contemplate that in the case of indebtedness
aggregating ` 100.00 million or more, lenders for more than 75.0% of such indebtedness by value and 60.0% by number may
determine the restructuring of such indebtedness and such determination is binding on the remaining lenders. In
circumstances where other lenders account for more than 75.0% of such indebtedness by value and 60.0% by number and
they are entitled to determine the restructuring of the indebtedness of any of our borrowers, we may be required by such other
lenders to agree to such debt restructuring, irrespective of our preferred mode of settlement of our loan to such borrower. In
addition, with respect to any loans made as part of a syndicate, a majority of the relevant lenders may elect to pursue a course
of action that may not be favorable to us. Any such debt restructuring could lead to an unexpected loss that could adversely
affect our business, financial condition, results of operations.

3. We have granted loans to private sector borrowers on a non-recourse or limited recourse basis, which increases the
risk of non-recovery and may adversely affect our financial condition. As of September 30, 2011, ` 9619.21 crores,
or 8.71%, of our total loans outstanding as of such date, were to private sector borrowers.

We commenced lending to private sector borrowers in fiscal year 1997. As of September 30, 2011, ` 9619.21 crores, or
8.71%, of our total loans outstanding as of such date, were to private sector borrowers. Under the terms of our loans to private
sector borrowers, our loans are secured by project assets, and in certain cases, we also obtain additional collateral in the form
of a pledge of shares by the relevant promoter, or sponsor guarantee. We expect to increase our exposure to private sector
borrowers in the future. The ability of such borrowers to perform their obligations under our loans will depend primarily on
the financial condition and results of the relevant projects, which may be affected by many factors beyond the borrowers'
control, including competition, operating costs, regulatory issues and other risks. If borrowers with non-recourse or limited
recourse loans were to be adversely affected by these or other factors and were unable to meet their obligations, the value of
the underlying assets available to repay the loans may become insufficient to pay the full principal and interest on the loans,
which could expose us to significant losses.

4. Our ability to compete effectively is dependent on our ability to maintain a low effective cost of funds; inability to do
so could have a material adverse effect on our business, financial condition and results of operations.

Our ability to compete effectively is dependent on our timely access to, and the costs associated with raising capital and our
ability to maintain a low effective cost of funds in the future that is comparable or lower than that of our competitors.
Historically, we have been able to reduce our cost of capital and our reliance on commercial borrowings through issuance of
Rupee denominated bonds and loans guaranteed by the GoI. We also benefit from certain tax benefits extended by the GoI.
As a government owned NBFC, loans made by us to Central and State entities in the power sector are currently exempt from
the RBI's prudential lending (exposure) norms that are applicable to other non-government owned NBFCs. In addition, in
respect of certain of our foreign currency borrowings guaranteed by the GoI, we have been exempted from guarantee fees

11

payable to the GoI, which has also enabled us to reduce our costs of funds. There can be no assurance that we will continue to
benefit from any direct or indirect support from the GoI and any adverse development in GoI policies may result in an
increase in our cost of funds. Following a general decrease in the level of direct and indirect financial support by the GoI to us
in recent years, we are fundamentally dependent upon funding from the equity and debt markets and commercial borrowings
and are particularly vulnerable in this regard given the growth of our business. The market for such funds is competitive and
there can be no assurance that we will be able to obtain funds on acceptable terms, or at all. Many of our competitors have
greater and cheaper sources of funding than we do. Further, many of our competitors may have larger resources or balance
sheet strength than us and may have considerable financing resources. In addition, since we are a non-deposit taking NBFC,
we may have restricted access to funds in comparison to banks and deposit taking NBFCs. While we have generally been able
to pass any increased cost of funds onto our customers, we may not be able to do so in the future. If our financial products are
not competitively priced, there is a risk of our borrowers raising loans from other lenders and in the case of financially
stronger SPUs and SEBs and private sector borrowers, the risk of their raising funds directly from the market. Our ability to
raise capital also depends on our ability to maintain our credit ratings in order to access various cost competitive funding
options. We are also dependent on our classification as an IFC which enables us, among other things, to diversify our
borrowings through the issuance of Rupee-denominated infrastructure bonds that offer certain tax benefits to bondholders and
to raise, under the automatic route (without the prior approval of the RBI), ECBs up to US$ 500.00 million each fiscal year.

In addition, adverse developments in economic and financial markets or the lack of liquidity in financial markets could make
it difficult for us to access funds at competitive rates. If we are not able to maintain a low effective cost of funds, we may not
be able to implement our growth strategy, competitively price our loans and, consequently, we may not be able to maintain
the profitability or growth of our business, which could have a material adverse effect on our business, financial condition
and results of operations.

5. The escrow account mechanism and the trust and retention account arrangements implemented by us as a quasi-
security mechanism in connection with the payment obligations of our borrowers may not be effective, which could
adversely affect our financial condition and results of operations.

We use escrow accounts as a credit enhancement mechanism for certain of our public sector borrowers that do not meet
certain of our credit risk criteria. As of September 30, 2011, 80.62% of our outstanding loans to State and Central sector
borrowers involved such escrow account mechanism. Similarly, in the case of private sector borrowers, security is typically
obtained through a first priority pari passu charge on the relevant project assets, and through a trust and retention mechanism.

The escrow account mechanism and the trust and retention account arrangements are effective in the event that revenue from
the end users or other receipts, as applicable, is received by our borrowers and deposited in the relevant escrow account or
trust and retention account. We do not have any arrangement in place to ensure that such revenue is actually received or
deposited in such accounts and the effectiveness of the escrow account mechanism and the trust and retention account
arrangements is limited to such extent. In the event that end users do not make payments to our borrowers, the escrow
account mechanism and the trust and retention account arrangements will not be effective in ensuring the timely repayment of
our loans, which may adversely affect our financial condition and results of operations. In addition, as we diversify our loan
portfolio and enter into new business opportunities, we may not be able to implement such or similar quasi-security
mechanisms or arrangements and there can be no assurance that even if such mechanisms and arrangements are implemented,
that they will be effective.

6. We are involved in a number of legal proceedings that, if determined against us, could adversely impact our business
and financial condition.

Our Company is a party to various legal proceedings. These legal proceedings are pending at different levels of adjudication
before various courts, tribunals, statutory and regulatory authorities/ other judicial authorities, and if determined against our
Company, could have an adverse impact on the business, financial condition and results of operations of our Company. For
further information relating to outstanding litigation against our Company, see the section titled "Outstanding Litigation and
Material Developments" on page 140 of this Draft shelf Prospectus. No assurances can be given as to whether these legal
proceedings will be decided in our Companys favor or have no adverse outcome, nor can any assurance be given that no
further liability will arise out of these claims. Details of the proceeding that have been initiated against and by our Company
and the amounts claimed against and by us in these proceedings, to the extent ascertainable as on September 30 2011, are set
forth below:


12

Litigation pending against our Company
Nature of Proceedings Number of Proceedings against the
Company
Amount Involved (` Crores)*
Writ Petitions 4 Not ascertainable
Income Tax 3 65.03
Consumer Cases 2 0.01
Civil Nil Nil
Criminal 1 Not ascertainable
Total 10 65.04
* The amounts stated do not include the interest claimed or payable.

Litigation/Appeal preferred by our Company
Nature of Proceedings Number of Proceedings preferred by
the Company
Amount Involved (` Crores)*
Writ Petitions Nil Nil
Income Tax 8 43.57
Civil 2 14.03
Total 10 57.60
* The amounts stated do not include the interest claimed or payable.


7. Our borrowers insurance of assets may not be adequate to protect them against all potential losses to which they
may be subject to, which could affect our ability to recover the loan amounts due to us.

Under our loan agreements, where loans are extended on the basis of charge on assets, our borrowers are required to create a
charge on their assets in our favour in the form of hypothecation or mortgage or both. In addition, terms and conditions of the
loan agreements require our borrowers to maintain insurance against damage caused by any disasters including floods, fires
and earthquakes or theft on their charged assets as collateral against the loan granted by us. However, in most cases our
borrowers do not have the required insurance coverage, or they have not renewed the insurance policies or the amount of
insurance coverage may be less than the replacement costs of all covered property and is therefore insufficient to cover all
financial losses that our borrowers may suffer. In the event the assets charged in our favour are damaged, it may affect our
ability to recover the loan amounts due to us.

8. We will be impacted by volatility in interest rates in our operations, which could cause our net interest margins to
decline and adversely affect our profitability.

Our operations will be impacted by volatility in interest rates. Interest rates are highly sensitive due to many factors beyond
our control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and
international economic and political conditions and other factors. Due to these factors, interest rates in India have historically
experienced a relatively high degree of volatility. When interest rates decline, we are subject to greater re-pricing and
prepayment risks as borrowers take advantage of the attractive interest rate environment. In periods of low interest rates and
high competition among lenders, borrowers may seek to reduce their borrowing cost by asking lenders to re-price loans. If we
are required to restructure loans, it could adversely affect our profitability. If borrowers prepay loans, the return on our capital
may be impaired as any prepayment premium we receive may not fully compensate us for the costs of utilizing funds
elsewhere. If interest rates rise we may have greater difficulty in maintaining a low effective cost of funds compared to our
competitors, who may have access to lower cost funds.


13

9. Our interest income and profitability is dependant on the continued growth of our asset portfolio. Any declines in our
net interest margins in the future can have a material adverse effect on our business, financial condition and results
of operations

Our results of operations are substantially dependent upon the level of our Net Interest Margins. Income from our financing
activities is the largest component of our total income. Among other factors, volatility in interest rates can materially and
adversely affect our financial performance. In a rising interest rate environment, if the yield on our interest -earning assets
does not increase simultaneously with or to the same extent as our cost of funds, or, in a declining interest rate environment,
if our cost of funds does not decline simultaneously or to the same extent as the yield on our interest-earning assets, our net
interest income and net interest margin would be adversely impacted.

Our net interest margin has decreased from 4 % in 2010-11 to 3.91% for the half year ended September 30, 2011. Any such
declines in our net interest margins in the future can have a material adverse effect on our business, financial condition and
results of operations.

10. As an NBFC and an I FC, we are required to adhere to certain individual and borrower group exposure limits
prescribed by the RBI . Any change in the regulatory regime may adversely affect our business, financial condition,
results of operations.

We are a systemically important non-deposit taking NBFC and are subject to various regulations by the RBI as an NBFC.
With effect from July 28, 2010, our Company has been classified as an IFC by the RBI, which classification is subject to
certain conditions including (i) a minimum of 75.0% of the total assets of such NBFC should be deployed in infrastructure
loans (as defined under the Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms
(Reserve Bank) Directions, 2007); (ii) net owned funds of ` 300.00 crore or more; (iii) a minimum credit rating of "A" or an
equivalent credit rating of CRISIL, FITCH, CARE, ICRA or equivalent rating by any other accrediting rating agencies; and
(iv) a capital to risk-weighted asset ratio ("CRAR") of 15.0% (with a minimum Tier I capital of 10.0%). Tier I capital for such
purposes mean Owned Funds as reduced by investment in shares of other NBFCs and in shares, debentures, bonds,
outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and
companies in the same group exceeding, in aggregate, 10.0% of the Owned Fund and perpetual debt instruments issued by a
systemically important non-deposit taking NBFC in each year to the extent it does not exceed 15.0% of the aggregate Tier I
capital of such company as on March 31 of the previous accounting year.

The maximum exposure ceilings as prescribed in respect of systemically important non-deposit taking NBFC that are also
IFCs under the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)
Directions, 2007 are set out below:

Concentration of credit / investment Loan company Infrastructure Finance Company
Lending ceilings

Lending to any single borrower 15% (+ 5*) 25%
Lending to any single group of borrowers 25% (+ 10*) 40%
Investing ceilings

Investing in shares of a company 15% (+ 5*) 15% (+ 5*)
Investing in shares of a single group of
companies
25% (+ 10*) 25% (+ 10*)
Loans and investment taken together

Lending and investing to single party 25% (+ 5*) 30%
Lending and investing to single group of
parties
40% (+ 10*) 50%
* Additional exposure applicable in case the same is on account of infrastructure loan and/or investment.



14

As of September 30, 2011, the CRAR of our Company was 18.22%. Any inability to continue being classified as an IFC may
impact our growth plans by affecting our competitiveness. As an IFC, we will have to constantly monitor our compliance
with the necessary conditions, which may hinder our future plans to diversify into new business lines. In the event we are
unable to comply with the eligibility condition(s), we may be subject to regulatory actions by the RBI and/or cancellation of
our registration as a systemically important non-deposit taking NBFC that are also IFCs. Any levy or fines or penalties or the
cancellation of our registration as an NBFC or IFC may adversely affect our business, prospects, results of operations and
financial condition. In addition, the RBI has exempted us from prudential exposure norms in respect of lending to Central and
State sector borrowers in the power sector until March 31, 2012. In compliance with RBI's directive in this regard, we are in
the process of formulating and submitting a roadmap (in consultation with the MoP) to the RBI prior to March 31, 2012, that
sets out the manner in which we intend to comply with such prudential lending norms of the RBI, including additional
capitalization. However, if such exemption is not extended, our business prospects, financial condition and results of
operations may be adversely affected.

In addition, our ability to borrow from various banks may be restricted under guidelines issued by the RBI imposing
restrictions on banks in relation to their exposure to NBFCs. For example, according to the RBI, the exposure (both lending
and investment, including off balance sheet exposures) of a bank to a single NBFC should not exceed 10.0% of the bank's
capital funds as per its last audited balance sheet. Banks may, however, assume exposures on a single NBFC up to 15.0% of
their capital funds provided the exposure in excess of 10.0% is on account of funds on-lent by the NBFC to the infrastructure
sector. Further, exposure of a bank to IFCs should not exceed 15.0% of its capital funds as per its last audited balance sheet,
with a provision to increase it to 20.0% if the same is on account of funds on-lent by the IFCs to the infrastructure sector.
Banks may also consider fixing internal limits for their aggregate exposure to the power sector put together. Although we do
not believe such exposure limits have had any adverse effects on our own liquidity, we believe that individual lenders from
whom we currently borrow may not be able to continue to provide us funds.

As we grow our business and increase our borrowings we may face similar limitations with other lenders, which could impair
our growth and interest margins and could therefore have a material adverse effect on our business, financial condition,
results of operations.

11. Our contingent liabilities in the event they were to materialize could adversely affect our business, financial
condition, results of operations.

As of September 30, 2011, we had contingent liabilities of ` 6162.00 crores including non-funded contingent exposure of `
561.51 crores in the form of guarantees and ` 5574.64 crores in the form of letters of comfort issued to borrowers banks in
connection with letters of credit and other contingent liabilities of ` 25.85 crores. If any or all of these contingent liabilities
materialize, our financial condition could be adversely affected.

12. I f the level of non-performing assets in our loan portfolio were to increase, our financial condition would be
adversely affected.

In the past, our gross NPAs have been as indicated below:
Particulars as of Amount of Gross NPA (` crores) NPA as % of total loan assets
As at March 31, 2009 13.16 0.02%
As at March 31, 2010 13.16 0.02%
As at March 31, 2011 230.65 0.23%
As at September 30, 2011 237.86 0.22%

The provisioning has been made in terms of prudential norms laid down internally by us. As a government owned NBFC,
loans made by us to Central and State sector borrowers in the Indian power sector are currently exempt from the RBI's
prudential lending (exposure) norms that are applicable to other non-government owned NBFCs. Such exemption, unless
further extended by the GoI, is currently applicable until March 31, 2012. In compliance with RBI's directive in this regard,
we are in the process of formulating and submitting a roadmap (in consultation with the MoP) to the RBI prior to March 31,
2012, that sets out the manner in which we intend to comply with such prudential norms of the RBI, including further
capitalization. In accordance with our internal prudential norms, in case of government sector borrowers, we follow a loan-
wise NPA determination policy, rather than a borrower-wise NPA determination policy, which is a regulatory requirement for
other non-government sector NBFCs. In the event we are required to follow a borrower-wise NPA determination policy for
our government sector borrowers, our NPA levels may increase substantially, which may have a material adverse effect on

15

our business, financial condition and results of operations. In addition, we may, from time to time, amend our policies and
procedures regarding asset classification or rescheduling of our loans, which may also increase our level of NPAs. In
addition, we are required to assign risk weight of 20.0% to the State government guaranteed loans not in default. However, if
such loans have remained in default for a period of more than 90 days, a risk weight of 100.0% is assigned. Our loans made
to the private sector are generally consistent with lending (exposure) norms stipulated by the RBI. For further information on
RBI regulations and guidelines applicable to us, see section titled "Regulations and Policies" on page 98 of this Draft Shelf
Prospectus. If RBI provisioning norms were to become applicable to us, our level of NPAs and provisions with respect
thereto could be significantly higher. If we are not able to prevent increases in our level of NPAs, our business and our future
financial condition could be adversely affected.

13. Our statutory auditors have qualified their reports on our audited standalone financial statements for fiscal 2007,
2008, 2009, and 2010 and our audited consolidated financial statements for fiscal 2009 and 2010. There can be no
assurance that there will not be any similar qualifications to our audited standalone and consolidated financial
statements in future periods.

Our statutory auditors have qualified their reports on our audited standalone financial statements for fiscal 2007, 2008, 2009
and 2010. Our statutory auditors have also qualified their reports on our audited consolidated financial statements for fiscal
2009 and 2010.

Our statutory auditors have qualified their report on our audited standalone and consolidated financial statements for 2010 as
reproduced below:

Power Finance Corporation Limited (The Company) pursuant to the opinion of the Expert Advisory Committee (EAC) of the
Institute of Chartered Accountants of India (ICAI) provided Deferred Tax Liability (DTL) on special reserve created under
section 36(1) (viii) of the Income Tax Act, 1961 in fiscal 2005, by charging the profit and loss account with ` 142.87 crores
and debiting the free reserves by ` 745.14 crores (for creating DTL for fiscal 1998 to fiscal 2004). Since then the Company
continued to provide DTL until the end of March 2008 by charging the profit and loss account. The total amount towards
DTL up to March 31, 2008 comes to ` 1,228.38 crores. The Company during the fiscal 2009 reversed the DTL provided in
earlier years amounting to ` 1,228.38 crores and also did not provide DTL amounting to ` 291.21 crores (including ` 133.28
crores for fiscal 2009) in the current year, contrary to opinions expressed by the EAC of the ICAI on two occasions dated
November 23, 2004 and May 18, 2006, clarification furnished in July 2009 by the ICAI on the request of the Comptroller and
Auditor General of India and mandatory provisions of Accounting Standard 22.

In view of the facts and circumstances placed before us, the profits and free reserves of the Company are overstated by `
774.45 crores and ` 745.14 crores (previous year ` 616.52 crores and ` 745.14 crores), respectively and DTL has been
understated by ` 1,519.59 crores (previous year ` 1,361.66 crores).

Further, the amount of capital considered in the calculation of Capital Risk Adjustment Ratio (CRAR) is overstated to the
above extent. As regards the liability of ` 663.49 crores (previous year ` 908.94 crores) shown as Interest Subsidy Fund
from GOI in the balance sheet, received under Accelerated Generation and Supply Program (AG&SP) Scheme from the
Ministry of Power, Government of India, the Company has estimated the net excess amount of ` 166.25 crores (previous year
` 283.14 crores) and ` 209.97 crores (previous year ` 44.27 crores) as at March 31, 2010, for the 9th Five Year Plan period
and 10th Plan, respectively.

This net excess amount is worked out on overall basis and not on individual basis and may vary due to change in
assumptions, if any, during the projected period such as changes in moratorium period, repayment period, loan
restructuring, pre payment, interest rate reset, etc. Hence, the impact of this excess, if any could not be determined. As such
we are not in a position to express our opinion thereon.

Our statutory auditors have similarly qualified their reports on our audited standalone and consolidated financial statements
for fiscal 2009 with respect to the non-provision of such deferred tax liability on special reserve created under Section
36(1)(viii) of the I.T. Act. In addition, our statutory auditors have similarly qualified their reports on (i) our audited
standalone and consolidated financial statements for fiscal 2007, 2008, 2009 and 2010 with respect to the impact of the
excess amount relating to the interest subsidy fund from the GoI under the AG&SP scheme and (ii) our audited standalone
and consolidated financial statements for fiscal 2006, 2007 and 2008 with respect to certain balances shown under loans,

16

advances and other debits/ credits in so far such balances have not been confirmed, realized, discharged or adjusted, which
are subject to reconciliation.

Our statutory auditors have not qualified their report on our audited standalone and consolidated financial statements for the
financial year ended March 31, 2011. However, there can be no assurance that there will not be any similar qualifications to
our audited standalone and consolidated financial statements in future periods.

14. The power sector in I ndia and our business and operations are regulated by, and are directly and indirectly
dependent on, GoI policies and support, which make us susceptible to any adverse developments in such GoI policies
and support.

We are a Government company operating in a regulated industry, and the GoI, acting through the MoP, exercises significant
influence on key decisions relating to our operations, including with respect to the appointment and removal of members of
our Board, and can determine various corporate actions that require the approval of our Board or shareholders, including
proposed budgets, transactions with other Government companies or GoI entities and agencies, and the assertion of any claim
against such entities. The GoI has also issued directions in connection with the payment of dividends by Government
companies.

The power sector in India and our business and operations are regulated by, and are directly or indirectly dependent on, GoI
policies and support for the power sector. The GoI has implemented various financing schemes and incentives for the
development of power sector projects, and we, like other Government companies, are responsible for the implementation of,
and providing support to, such GoI schemes and initiatives. We may therefore be required to follow public policy directives
of the GoI by providing financing for specific projects or sub-sectors in the public interest which may not be consistent with
our commercial interests. In addition, we may be required to provide financial or other assistance and services to public sector
borrowers and GoI and other government agencies in connection with the implementation of such GoI initiatives, resulting in
diversion of management focus and resources from our core business interests. Any developments in GoI policies or in the
level of direct or indirect support provided to us or our borrowers by the GoI in these or other areas could adversely affect our
business, financial condition, results of operations.

15. We currently engage in foreign currency borrowing and lending and we are likely to continue to do so in the future,
which will expose us to fluctuations in foreign exchange rates, which could adversely affect our financial condition.

As of September 30, 2011, we had foreign currency borrowings outstanding of US$ 388.04 million, Japanese Yen 42097.12
million and Euro 25.70 million, the total of which was equivalent to ` 4813.87 crores, or 5.29% of our total borrowings. We
may continue to be involved in foreign currency borrowing and lending in the future, which will further expose us to
fluctuations in foreign currency rates. Volatility in foreign exchange rates could adversely affect our business and financial
performance. We are also affected by adverse movements in foreign exchange rates to the extent they impact our borrowers
negatively, which may in turn impact the quality of our exposure to these borrowers. Foreign lenders may also impose
conditions more onerous than domestic lenders.

16. Certain of our SEB borrowers have been restructured and we have not yet entered into definitive loan agreements
with such restructured entities, which could affect our ability to enforce applicable loan terms and related State
government guarantees.

We have granted longterm loans to various SEBs that were guaranteed by the respective State governments. Pursuant to
certain amendments to the Electricity Act, the respective State governments have restructured these SEBs into separate
entities formed for power generation, transmission and/or distribution activities. As part of such restructuring process, all
liabilities and obligations of the restructured SEBs relating to our loans were transferred, pursuant to a notification process, to
the respective State government, which in turn transferred such liabilities and obligations to the newly formed State
government-owned transmission, distribution and/or generation companies. However, the relevant notification transferring
such liabilities and obligations under our loans necessitates the execution of a transfer agreement among us, the respective
State government and the relevant newly formed transferee entity. We have not yet executed such transfer agreements with
respect to some of these loans. In such circumstances, as the State government guarantees have not been reaffirmed to cover
the debt obligations of such newly formed transferee entities, we may not be able to enforce the relevant State guarantees in
case of default on our loans by such transferee entities. Although we intend to enter into such transfer agreements to ensure
that the terms of our original loan agreements entered into with the SEBs continue to apply to such transferee entities, there

17

can be no assurance that we will be able to execute such transfer agreements in a timely manner, or at all. In addition, the
relevant State government may not reaffirm such guarantees with respect to the debt obligations assumed by such restructured
transferee entities. There may also be delay, due to factors beyond our control, with respect to the establishment of relevant
trust and retention account arrangements with such restructured transferee entities. In addition, we have restructured loans
sanctioned to certain SPUs and other SEBs, including rescheduling of repayment terms. Any negative trends or financial
difficulties faced by such SPUs and SEBs could increase our NPAs and adversely affect our business, financial condition and
results of operations.


17. We may incur shortfalls in the advance subsidy received under the Accelerated Generation and Supply Programme
(AG&SP) of the GoI , which may affect our financial condition.

In fiscal 1998, the GoI started the AG&SP, a scheme for providing interest subsidies for various projects. We oversee and
operate this scheme on behalf of the GoI. The scheme subsidises our normal lending rates on loans to state power utilities.
The subsidy is paid in advance directly to us from the central government budget and is to be passed on to the borrowers
against their interest liability arising in future under the AG&SP.

We maintain an interest subsidy fund account on account of the subsidy claimed from the GoI at net present value which is
calculated at certain pre-determined and indicative discount rates, irrespective of the actual repayment schedule, moratorium
period and duration of repayment. The impact of the difference between the indicative discount rate and period considered at
the time of drawal and the actual can be ascertained only after the end of the respective repayment period in relation to that
particular loan. There might be instances where there is a shortfall or a surplus in the subsidy received from the GoI. In the
event of there being a shortfall, we shall have to bear the difference, which may affect our financial condition.

18. I f we are unable to manage our growth effectively, our business and financial results could be adversely affected.

Our business has grown since we began operations in March 1988. Our total loan assets increased from ` 43,902.83 Crores as
of March 31, 2007 to `1,10,421.25 Crores as of September 30, 2011.We intend to continue to grow our business, which could
place significant demands on our operational, credit, financial and other internal risk controls. It may also exert pressure on
the adequacy of our capitalization, making management of asset quality increasingly important.

Our asset growth will be primarily funded by the issuance of new debt. We may have difficulty in obtaining funding on
attractive terms. Adverse developments in the Indian credit markets, such as the recent increase in interest rates, may
significantly increase our debt service costs and the overall cost of our funds.

Any inability to manage our growth effectively on favourable terms could have a material adverse effect on our business and
financial performance. Because of our growth and the long gestation period for power sector investments, our historical
financial statements may not be an accurate indicator of our future financial performance.

19. We might not be able to develop or recover costs incurred on our Ultra Mega Power Projects and our failure to do so
may have an adverse effect on our profitability.

We have been appointed as the nodal agency for the development of UMPPs, each with a contracted capacity of 3,500 MW
or more. As of September 30, 2011, we have a total of 8 wholly-owned subsidiaries as special purpose vehicles ("SPVs") for
these projects. These SPVs have been established to conduct the bidding process in accordance with the Guidelines for
Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees, 2005, as amended. The
SPVs undertake preliminary studies and obtain necessary linkages, clearances, land and approvals including for water, land
and power sale arrangements, prior to transfer of the projects to successful bidders. The objective is to transfer these SPVs to
successful bidders, through a tariff based international competitive bidding process, who will then implement these projects,
on payment of development costs incurred by each SPV (including a success fee). We have and are likely to continue to incur
expenses in connection with these SPVs. There may be delays in the development of such UMPPs or we may be unable to
transfer these UMPPs due to various factors, including environmental issues, resistance by local residents, changes in related
laws or regulatory frameworks, or our inability to find a developer for such projects. For example, development of two
UMPPs have been delayed due to delay in receipt of certain clearances. In addition, we may not be able to fully recover our
expenses from the successful bidder, which may result in financial loss to us, which could adversely affect our financial
condition and results of operations.

18


We have also been appointed as a bid process coordinator for the ITP scheme. The ITP scheme is a tariff based competitive
bidding process for ITPs, similar to that followed for UMPPs, for the development of transmission systems through private
sector participation. We earn revenue from our involvement with ITP projects in a manner similar to the UMPPs. Four SPVs,
were initially incorporated under the ITP scheme, of which one SPV was liquidated in December, 2010 and another SPV was
transferred to the successful bidder in March, 2010 and the remaining two were recently transferred to successful bidders in
March 2011. If we are unable to transfer these SPVs to successful bidders in the future, due to various reasons such as those
mentioned above, it may result in financial loss to us, which could adversely affect our financial condition and results of
operations.

20. Our agreements regarding certain of our joint venture arrangements or investments in other companies contain
restrictive covenants, which limit our ability on transfer our shareholding in such ventures.

Our Company has entered into various joint venture arrangements, pursuant to which certain joint venture companies have
been incorporated, namely, National Power Exchange Limited, Energy Efficiency Services Limited and PTC India Limited
(formerly known as Power Trading Corporation of India Limited). Our Company has also entered into a share subscription
and shareholders agreement with the National Stock Exchange and National Commodity & Derivates Exchange Limited
subscribing to the equity shares of Power Exchange India Limited. Furthermore, our Company has investments in the Small is
Beautiful Fund, a venture capital fund established with the objective to invest in equity and equity like instruments of special
purpose vehicles involved in the development of power projects. For further information see section titled "History and
Certain Corporate Matters" on page 109 of this Draft Shelf Prospectus.

Further, as we hold minority interests in each of these joint venture companies, our joint venture partners will have control
over such joint venture companies (except to the extent agreed under the respective joint venture agreements). In addition, we
have not made provisions for the decline in value of such investments. Under the terms of the relevant agreements our
Company is not permitted to transfer its shareholding in the joint ventures to a third party for a specified lock-in period and/or
with consent of the board of director or the other parties to such agreement/ arrangement. Such covenants may limit our
ability to make optimum use of our investments or exit these joint ventures and thereby liquidating our investments at our
discretion, which may have an adverse impact on our financial condition. In addition, we cannot assure that we will be able
perform or comply with our obligations under the joint venture agreements and our failure to do so may result in a breach of
such agreements, which could affect our rights under these agreements.

Further, the success of these joint ventures is dependent upon the cooperation of our joint venture partners. These joint
ventures are subject to the risk of non-performance by our joint venture partners of their obligations, including their financial
obligations, in respect of the joint venture. Joint venture partners may have business interests or goals that may differ from
our business interests or goals, or those of our shareholders. Any disputes that may arise between our joint venture partners
and us may cause delays in completion or the suspension or abandonment of the venture. In addition, though our joint
ventures confer rights on us, our joint venture partners have certain decision-making rights that may limit our flexibility to
make decisions relating to such business, and may cause delays or losses.

21. We benefit from certain tax benefits available to us as a lending institution. I f these tax benefits are no longer
available to us it would adversely affect our business, financial condition, results of operations.

We have received and currently receive tax benefits by virtue of our status as a lending institution, including as a result of our
lending within the infrastructure sector, which have enabled us to reduce our effective tax rate. In fiscal 2008, 2009, 2010,
2011 and for the half year ended September 30, 2011, our effective tax liability, calculated on the basis of our tax liability as a
percentage of profit before tax, was 27%, 24.7%, 26.6%, 25.37% and 25.27% respectively, compared to statutory corporate
tax rates (including surcharge and cess) of 33.99%, 33.99%, 33.99%, 33.22% and 32.44% respectively in such periods. The
availability of such tax benefits is subject to the policies of the GoI, among other things, and there can be no assurance as to
any tax benefits that we will receive in the future. If the laws or regulations regarding these tax benefits are amended, our
taxable income and tax liability may increase, which would adversely impact our financial condition and results of
operations.



19

22. We may make equity investments in power sector in the future and such investments may erode/depreciate.

We may make equity investments in the power sector either directly or indirectly. As of September 30, 2011, our investments
in equity and equity linked instruments were ` 26.68 crores. The value of these investments depends on the success and
continued viability of these businesses. In addition to the project-specific risks described in the above risk factors, we have
limited control over the operations or management of these businesses. Therefore, our ability to realize expected gains as a
result of our equity interest in a business is highly dependent on factors outside our control. Write-offs or write-downs in
respect of our equity investments may adversely affect our financial performance.

23. The GoI holds a majority of our Equity Shares and can therefore determine the outcome of shareholder voting and
influence our operations.

Our principal shareholder, GoI, holding 73.72% of our paid up equity share capital, exercises a significant degree of influence
over us and will be able to control the outcome of any proposal that can be passed with a majority shareholder vote. In
addition, the GoI significantly influences our operations through its various departments and policies.


24. We are subject to restrictive covenants under our credit facilities that could limit our flexibility in managing our
business.

There are restrictive covenants in the agreements we have entered into with certain banks and financial institutions for our
short term borrowings, medium term borrowings, long term borrowings and bonds trust deeds. These restrictive covenants
require us to maintain certain financial ratios and seek the prior permission of these banks/financial institutions for various
activities, including, amongst others, selling, leasing, transferring or otherwise disposing of any part of our business or
revenues, effecting any scheme of amalgamation or reconstitution, implementing a new scheme of expansion or taking up an
allied line of business. Such restrictive covenants in our loan and bond documents may restrict our operations or ability to
expand and may adversely affect our business. For details of these restrictive covenants, see the section titled Financial
I ndebtedness beginning on page 133 of this Draft Shelf Prospectus.

25. Our success depends in large part upon our management team and skilled personnel and our ability to attract and
retain such persons. The loss of key personnel may have an adverse affect on our business, results of operations,
financial condition and ability to grow.

Our future performance depends on the continued service of our management team and skilled personnel. We also face a
continuous challenge to recruit and retain a sufficient number of suitably skilled personnel, particularly as we continue to
grow. There is significant competition for management and other skilled personnel in our industry, and it may be difficult to
attract and retain the personnel we need in the future. While, we have employee friendly policies including an incentive
scheme to encourage employee retention, the loss of key personnel may have an adverse affect on our business, results of
operations, financial condition and ability to grow.

26. The power sector financing industry is becoming increasingly competitive and our growth will depend on our ability
to compete effectively and maintain a low effective cost of funds.
We face increasing competition from public and private sector commercial banks in India and from other financial
institutions that provide power sector finance products or services. Many of our competitors have greater and cheaper
resources than we do. Competition in our industry depends on, among other things, the ongoing evolution of government
policies relating to the industry, the entry of new participants into the industry and the extent to which there is consolidation
among banks and financial institutions in India.
Our ability to compete effectively is dependent on our ability to maintain a low effective cost of funds. Our borrowing costs
have been competitive in the past initially due to the sizeable equity contribution by the GoI as a 100% owner, the availability
of tax-free bonds, SLR bonds and loans guaranteed by the GoI and subsequently as a result of our strong credit ratings. With
the growth of our business, we are increasingly reliant on funding from the debt capital markets and commercial borrowings.
The market for such funds is competitive and our ability to obtain funds on acceptable terms will depend on various factors
including our ability to maintain our credit ratings. If we are unable to access funds at an effective cost that is comparable to
or lower than our competitors, we may not be able to offer competitive interest rates to our borrowers, which could adversely
affect our business growth.

20


27. Power projects carry certain risks, which to the extent they materialize could adversely affect our business and
financial performance.

Our business mainly consists of lending to and providing advisory services to power sector projects in India. Power sector
projects carry project-specific as well as general risks. These risks are generally out of our control and include:

political, regulatory, fiscal, monetary, legal actions and policies that may adversely affect the viability of projects to
which we lend;
changes in government and regulatory policies relating to the power sector;
delays in the construction and operation of projects to which we lend;
adverse changes in demand for, or the price of, power generated or distributed by the projects to which we lend;
the willingness and ability of consumers to pay for the power produced by projects to which we lend;
shortages of, or adverse price developments for, raw materials and key inputs for power production such as coal and
natural gas;
increased project costs due to environmental challenges and changes in environmental regulations;
potential defaults under financing arrangements of project companies and their equity investors;
failure of co-lenders with us under consortium lending arrangements to perform on their contractual obligations;
failure of third parties such as contractors, fuel suppliers, sub-contractors and others to perform on their contractual
obligations in respect of projects to which we lend;
adverse developments in the overall economic environment in India;
adverse fluctuations in interest rates or currency exchange rates; and
economic, political and social instability or occurrences such as natural disasters, armed conflict and terrorist attacks,
particularly where projects are located or in the markets they are intended to serve.

To the extent these or other risks relating to the power projects we finance materialize, the quality of our asset portfolio and
our profitability may be adversely affected.

28. Negative trends in the I ndian power sector or the I ndian economy could adversely affect our business and financial
performance.

Our Company was formed with the objective of extending finance to and promoting Indian power projects and related
activities. For the foreseeable future, we expect to continue to be a sector specific public financial institution with a focus on
the Indian power sector. Any negative trend or financial difficulty in the Indian power sector could adversely affect our
business and financial performance.

We believe that the further development of Indias power sector is dependent on regulatory framework, policies and
procedures that facilitate and encourage private and public sector investment in the power sector. Many of these policies are
evolving and their success will depend on whether they properly address the issues faced and are effectively implemented.

Additionally, these policies will need continued support from stable and experienced regulatory regimes throughout India that
not only stimulate and encourage the continued investment of capital into power development, but also lead to increased
competition, appropriate allocation of risk, transparency and more efficient power supply and demand management to the end
consumer.

The allocation of capital and the continued growth of the power sector are also linked to the continued growth of the Indian
economy. Since much of the power supply in India has historically been provided by the central and state governments at a
relatively low charge to consumers, the growth of the power industry will be impacted by consumers income levels and the
extent to which they would be willing to pay or can be induced to pay for power.

If the central and state governments initiatives and regulations in the power sector do not proceed to improve the power
sector as intended or if there is any downturn in the macroeconomic environment in India or in the power sector, our business
and financial performance could be adversely affected.



21

29. We have certain cash credit facilities which can be recalled by our lenders at any time that may affect our financial
condition adversely.

We have certain cash credit facilities amounting to ` 1524.46 crores as on September 30, 2011 which can be recalled by our
respective lenders at any time. In the event any of our lenders recall the cash credit facilities, we may face adverse liquidity
problems and our financial condition may get affected to the extent of the financial assistance recalled.

30. A decline in our capital adequacy ratio could restrict our future business growth.

We are required under applicable laws and regulations to maintain a capital adequacy ratio of at least 15.0% of our risk-
weighted assets, with the minimum requirement of Tier I capital being 10.0%. Our capital adequacy ratio was 18.22% as of
September 30, 2011, with Tier I capital comprising 17.25%. If we continue to grow our loan portfolio and asset base, we will
be required to raise additional Tier I and Tier II capital in order to continue to meet applicable capital adequacy ratios. There
can be no assurance that we will be able to raise adequate additional capital in the future on terms favorable to us or that we
will be able to retain our IFC classification and this may adversely affect the growth of our business.

31. We have entered and may enter into certain transactions with related parties, which may not be on an arm's length
basis or may lead to conflicts of interest.

We have entered and may enter into transactions with related parties, including our Directors. There can be no assurance that
we could not have achieved more favorable terms on such transactions had they not been entered into with related parties.
Furthermore, it is likely that we will enter into related party transactions in the future. There can be no assurance that such
transactions, individually or in the aggregate, will not have an adverse effect on our financial condition and results of
operations. The transactions we have entered into and any future transactions with related parties have involved or could
potentially involve conflicts of interest.

Our subsidiary PFC Consulting Limited ("PFCCL") is engaged in the consultancy services business, and our own
constitutional documents permit us to engage in similar business, and there is no relationship agreement or similar
arrangement currently in place between PFCCL and us, which may result in potential conflicts of interest.

32. Our Directors may have interests in companies/entities similar to ours, which may result in a conflict of interest that
may adversely affect future financing opportunity referrals.

Some of our Directors have interests in other companies, which are in businesses similar to ours, which may result in
potential conflict of interest. Our Director, Mr. M. K. Goel is also a director on the board of PTC India Financial Services
Limited, a company that has business interest similar to ours. Further, our Director Mr. Devender Singh is a government
nominee director on the board of Rural Electrification Corporation Limited, which is also in a business similar to ours. For
further information with respect to directorships of certain of our Directors, see section titled "Management" on page 120 of
this Draft Shelf Prospectus. Accordingly, potential conflicts of interest may arise out of common business objectives shared
by us and our Directors and there can be no assurance that these or other conflicts of interest will be resolved in an impartial
manner.

33. We have negative cash flows from operations in recent periods. There is no assurance that such negative cash flows
from operations shall not recur in the future.

Our cash outflows relating to loans and advances we disburse (net of any repayments we receive) are reflected in our cash
flow from operating activities whereas the cash inflows from external funding we procure (net of any repayments of such
funding) to disburse these loans and advances are reflected in our cash flows from financing activities. The net cash flows
from investing activities primarily represent sale and purchase of fixed assets, other investments and interest received. The
following table sets forth certain information with respect to our historical negative cash flows in the periods indicated:







22

Particulars
As of March 31(Consolidated) As of
September
30, 2011(` in
Crores)
2009 2010 2011
Net cash from operating activities (10,736.90) (13,405.21) (16,575.45) (9079.77)
Net cash from investing activities 32.11 8.78 (21.21) 5.01
Net cash from financing activities 10449.28 14,437.23 17,580.46 (8205.87)
Net increase/(decrease) in cash and cash
equivalents
(255.51) 1,040.80 983.80 (868.89)

Our operating profits before allocation for working capital changes in these periods were as follows:
Particulars (` in crores)
Fiscal 2009
2270.98
Fiscal 2010
2831.52
Fiscal 2011
3647.36
As of September 30, 2011
2084.51

However, our net cash flow from operating activities was negative in these periods as a result of an increase in our lending
operations.

34. Our insurance may not be adequate to protect us against all potential losses to which we may be subject.

We maintain insurance for our physical assets such as our office and residential properties against standard fire and special
perils (including earthquake), amounting to ` 108 crores. In addition, we maintain a group personal accident insurance as well
as directors' and officers' insurance policy. However, the amount of our insurance coverage may be less than the replacement
cost of such property and may not be sufficient to cover all financial losses that we may suffer should a risk materialize. If we
were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our results
of operations and financial position.

In addition, in the future, we may not be able to maintain insurance of the types or in the amounts which we deem necessary
or adequate or at premiums which we consider acceptable. The occurrence of an event for which we are not adequately or
sufficiently insured or the successful assertion of one or more large claims against us that exceed available insurance
coverage, or changes in our insurance policies (including premium increases or the imposition of large deductible or co-
insurance requirements), could have a material and adverse effect on our business, financial condition, results of operations,
and cash flows.

35. We may not be able to identify attractive financing or investment opportunities, or provide financing to or make
investments in such identified opportunities, which may adversely affect our financial condition and results of
operations.

There can be no assurance that we will be able to identify attractive financing or investment opportunities that meet our
financing and investment criteria, or provide financing to or make investments in such identified opportunities. The activity
of identifying attractive financing and investment opportunities is highly competitive and providing financing to or making
such investments may be subject to various factors beyond our control. In addition, we may not be able to fully ascertain the
risks involved in the power sector projects we finance or invest in due to limited information.

Furthermore, any investment that we make in power sector projects may be subject to contractual, legal and other restrictions,
such as pre-emption rights and the requirement to obtain consents and approvals on resale. Lack of liquidity in these
investments may make it difficult to sell investments even if we determine that the sale is in our interest. In addition, if we are
required to liquidate all, or a portion of our investment portfolio quickly, we may not realize an appropriate value for our
investments. We may also face other restrictions on our ability to liquidate an investment in an investee company to the
extent that we have material non-public information regarding such company. In addition, the large number of competitors
compared to the limited number of attractive investment opportunities in the Indian power sector may increase the cost at
which investments may be made and reduce potential profits. We may also incur significant expenses identifying,
investigating and seeking to acquire potential investments, which are ultimately not consummated, including expenses

23

relating to due diligence, transportation, extended competitive bidding processes, legal expenses and the fees of other third-
party advisors. Furthermore, in case of equity investments in the power sector, our competing entities may seek to sell assets
at the same time as us, thereby resulting in a decline in the value of such assets.


36. We are in process of executing a perpetual lease deed for our registered office premises and consequently do not have
title to the premises at present.

In accordance with the Memorandum of Agreement dated February 5, 2002 entered into with NDMC, we were required to
execute a perpetual lease deed with the NDMC after completion of construction of the building where our registered office is
located. We are currently awaiting execution of the same, as a result of which, we presently do not hold title to the premises
where our registered office is situated.

37. Our business and our industry are dependent on the policies and support of the Government of I ndia which makes
us susceptible to changes in such policies and the level of support we receive.

We are a GoI undertaking operating in a regulated industry. Our business and our industry are dependent, directly and
indirectly, on the policies and support of the GoI in many significant ways, including with respect to the cost of our capital,
the financial strength of our borrowers, the management and growth of our business and our industry and our overall
profitability. Historically, we have been able to reduce our cost of capital and reliance on commercial borrowings because of
various forms of assistance received from GoI. Currently, we receive tax concessions with respect to certain types of our
bonds that enable us to price such bonds at a lower rate of interest than would otherwise be available to us. We also benefit
from direct tax benefits provided by the GoI.

The GoI also impacts the nature of our business in a number of ways. In particular, the GoI establishes the schemes in which
we and our borrowers participate. Like any other public sector undertaking, the GoI can also influence or determine key
decisions about our Company, including with respect to dividends and the appointment of members of our Board.

Additionally, the GoI may implement policies that are inconsistent with our business objectives. For example, although we
intend to continue to diversify our asset portfolio and continue to increase generation-related lending activity, our lending
capacity is not unlimited and the GoI could seek refocus of our lending capacity on transmission and distribution projects or
rural areas.

Our borrowers are also significantly impacted by the policies and support of the GoI in a variety of ways, as the GoI regulates
the industry in which our borrowers operate. For example, the GoI has established a number of schemes and provides
incentives that provide benefits to power projects that have enhanced the financial viability of the projects and the financial
position of our borrowers. Additionally, the GoI has in the past assisted us in procuring the repayment of our loans from our
borrowers.

Furthermore, the growth of our business is dependent upon the continued growth of the power sector and the overall Indian
economy, which are significantly impacted by the policies of the GoI. Changes in the policies of or in the level of direct or
indirect support to us provided by, the GoI in these or other areas could have a material adverse effect on our business,
financial condition and results of operations.

38. Our ability to borrow from various banks may be restricted by changes in guidelines issued by the RBI imposing
restrictions on banks in relation to their exposure on NBFCs, including us, that may adversely affect our growth and
margins.

The RBI regulates on a continuous basis, the permitted exposure (both lending and investment, including off balance sheet
exposures) that banks may hold with respect to NBFCs such as ourselves. Accordingly, banks may assume exposure limits of
up to 15% of the bank's capital funds as per its last audited balance sheet for a NBFC engaged in businesses similar to our
Company, provided the exposure in excess of 10%, is on account of funds on-lent by the NBFC to the infrastructure sector.

Presently, the ceiling on bank credit-linked to Net Owned Fund of NBFCs has been withdrawn in respect of all NBFCs
registered with the RBI and engaged in principal business of loan and investment activities, among others. Accordingly,
banks may extend need based working capital facilities as well as term loans to all such NBFCs.

24


Furthermore, the RBI has suggested that banks consider fixing internal limits for their aggregate exposure to all NBFCs and
may formulate suitable loan policies with the approval of their boards of directors within the prudential guidelines and
exposure norms prescribed by the RBI to extend various kinds of credit facilities to NBFCs subject to certain conditions.

Although we do not believe such exposure limits has had any adverse effects on our own liquidity, we believe that individual
lenders from whom we currently borrow may not be able to continue to provide us funds.

As we grow our business and increase our borrowings we may face similar limitations with other lenders, which could impair
our growth and interest margins and could therefore have a material adverse effect on our business, financial condition and
results of operations.


39. We may fail to obtain certain regulatory approvals in the ordinary course of our business in a timely manner or at
all, or to comply with the terms and conditions of our existing regulatory approvals and licenses which may have a
material adverse effect on the continuity of our business and may impede our effective operations in the future.

We require certain regulatory approvals, sanctions, licenses, registrations and permissions for operating and expanding our
business. We may not receive or be able to renew such approvals in the time frames anticipated by us, or at all, which could
adversely affect our business. If we do not receive, renew or maintain the regulatory approvals required to operate our
business it may have a material adverse effect on the continuity of our business and may impede our effective operations in
the future.

NBFCs in India are subject to strict regulations and supervision by the RBI. These laws and regulations impose numerous
requirements on us, including those relating to asset classification and prescribed levels of capital adequacy, cash reserves
and liquid assets. However, as a government company, loans made by us to Central and State entities in the power sector have
been exempted from certain RBI policies relating to prudential lending norms applicable to certain non-government NBFCs,
such as asset classification norms, RBI's norms in respect of cash reserves and liquid assets. In addition to the numerous
conditions required for the registration as a NBFC with the RBI, we are required to maintain certain statutory and regulatory
permits and approvals for our business. In the future, we will be required to renew such permits and approvals and obtain new
permits and approvals for any proposed operations. There can be no assurance that the relevant authorities will issue any of
such permits or approvals in the time-frame anticipated by us or at all. Failure by us to renew, maintain or obtain the required
permits or approvals may result in the interruption of our operations and may have a material adverse effect on our business,
financial condition and results of operations.

Further, the RBI has not provided for any ceiling on interest rates that can be charged by non-deposit taking NBFCs. There
may be future changes in the regulatory system or in the enforcement of the laws and regulations including policies or
regulations or legal interpretations of existing regulations, relating to or affecting interest rates, taxation, inflation or exchange
controls, that could have an adverse effect on non-deposit taking NBFCs. In addition, we are required to make various filings
with the RBI, the RoC and other relevant authorities pursuant to the provisions of RBI regulations, Companies Act and other
regulations. If we fail to comply with these requirements, or a regulator claims we have not complied with such requirements,
we may be subject to penalties. Moreover, these laws and regulations can be amended, supplemented or changed at any time
such that we may be required to restructure our activities and incur additional expenses in complying with such laws and
regulations, which could materially and adversely affect our business. In addition, any historical or future failure to compl y
with the terms and conditions of our existing regulatory or statutory approvals may cause us to lose or become unable to
renew such approvals. For further details, see section titled "Regulations and Policies" on page 98 of this Draft Shelf
Prospectus.

40. We are subject to stringent labour laws, thus making it difficult for us to maintain flexible human resource policies,
which could have an adverse affect on our business, financial condition and results of operations.

India has stringent labour legislation that protects the interests of workers, including legislation that sets forth detailed
procedures for employee removal and dispute resolution and imposes financial obligations on employers upon employee
layoffs. This makes it difficult for us to maintain flexible human resource policies, discharge employees or downsize, which
though not quantifiable, may adversely affect our business and profitability.


25


41. Some of the properties taken on lease by us may have certain irregularities in title, as a result of which our
operations may be impaired.

We have taken on lease properties for the purposes of our branch offices and for residential purposes for our employees.
Certain of these properties may not have been constructed or developed in accordance with local planning and building laws
and other statutory requirements. In addition, there may be certain irregularities in title in relation to some of our
owned/leased properties. For example, some of the agreements for such arrangements may not have been duly executed
and/or adequately stamped or registered in the land records of the local authorities or the lease deeds have expired and have
not yet been renewed. Our business may be adversely affected if we are unable to continue to utilize these properties as a
result of any irregularity of title or otherwise.

42. We have not entered into any definitive arrangements to utilise the Net Proceeds towards the object of this I ssue.

We intend to utilize the Net Proceeds raised through this Issue towards lending purposes, debt servicing and working capital
requirements, after meeting the Issue expenses. Our Company has not entered into any definitive agreements for utilization of
the Net Proceeds towards the object of this Issue. For further details in this regard, see the section titled Objects of the
Issue on page 59 of the Draft Shelf Prospectus.

43. We may become liable for the acts or omissions of external consultants engaged by PFC Consulting Limited
(PFCCL).

Our Companys wholly-owned subsidiary, PFCCL, provides consultancy services and may undertake execution and valuation
of projects in the power distribution sector on behalf of its clients. For these purposes, PFCCL employs external consultants.
In the event that any acts or omissions of these external consultants result in professional negligence or breach of contract, we
could become liable to our clients or third parties for the acts or omissions of such external consultants which could have an
adverse affect on our business, financial condition and results of operations.

44. Any Cross Default of financial indebtedness would trigger payment to all other borrowings made by the corporation
thereby adversely affecting the liquidity position of the Company

PFC has given cross default covenant in few of its borrowings which means that if the company defaults in any of its
obligation under its loan, the loan which has the cross default clause will also become payable even if there is no breach of
covenant or default of payment on this loan. The risk may have impact on the liquidity in case of happening of such event.

45. Volatility in Foreign Exchange and un-hedged foreign currency could adversely affect our financial conditions and
results of operations.

The Company has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency
borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various
instruments like currency forward, option, principal swap, interest rate swap and forward rate agreements.

We are currently engaged in borrowing from the foreign market in foreign currency. The enhanced level of borrowing will
expose PFC to fluctuations in foreign exchange rates which may have adverse effects on financial results of the corporation.
As on 30th September, 2011, our outstanding foreign currency borrowing is 6% approx. of the total liabilities. Although we
have in place currency risk management policy to manage risk associated with foreign currency borrowing but there is no
assurance that it will remain effective over a period of time. We expect our Company may be exposed to fluctuations in
foreign currency rates with the increased foreign currency borrowings. Volatility in foreign exchange could adversely affect
our financial conditions.

As on September 30, 2011, we had entered into hedging transaction or lent on back-to-back basis to cover 13.75% of its
foreign currency principal exposure.



46. Significant differences exist between Indian GAAP and IFRS which may be material to investors assessment of our

26

financial condition.

We may be required to prepare annual and interim financial statements under IFRS in accordance with the roadmap for the
adoption of, and convergence with, IFRS announced by the Ministry of Corporate Affairs, GoI in January, 2010. The
convergence of certain Indian Accounting Standards with IFRS was notified by the Ministry of Corporate Affairs on
February 25, 2011. The date of implementing such converged Indian accounting standards has not yet been determined, and
will be notified by the Ministry of Corporate Affairs in due course after various tax-related and other issues are resolved.

Our financial condition, results of operations, cash flows or changes in shareholders equity may appear materially different
under IFRS than under Indian GAAP. This may have a material adverse effect on the amount of income recognized during
that period and in the corresponding period in the comparative period. In addition, in our transition to IFRS reporting, we may
encounter difficulties in the ongoing process of implementing and enhancing our management information systems.
Moreover, our transition may be hampered by increasing competition and increased costs for the relatively small number of
IFRS-experienced accounting personnel available as more Indian companies begin to prepare IFRS financial statements.

47. There is a significant risk due to changes in environment norms being followed for the thermal power projects with
the corporations main focus for financing of thermal projects, it may pose problems in future.

With the adoption of norms provided for the climate conservation in line with the global parameters there may be risk for the
environmental norms being followed for the thermal power projects which is the PFCs major focus in financing of the
generation projects. This may pose a problem in the future sanctions/ disbursements and also the timely implementation of
these power projects. Consequently any delay in implementation of these projects will have adverse impact on the financials
of the Corporation.


48. As the Company adopts I nformation Technology the risk exists for the possibilities of I T frauds

With the computerization of the accounting, payroll, human resource systems and in other areas of PFC, there is every
possibility of fraud related to hacking of internal systems, possibility of manual intervention which may lead to frauds.

RISKS RELATING TO THE INDIAN ECONOMY

We are an Indian company and all of our assets and customers are located in India. Consequently, our financial performance
will be influenced by political, social and economic developments in India and in particular by the policies of the GoI.

49. A slowdown in economic growth in I ndia could adversely impact our business.

We are dependent on prevailing economic conditions in India and our results of operations are significantly affected by
factors influencing the Indian economy. Any slowdown in economic growth in India could adversely affect us, including our
ability to grow our loan portfolio, the quality of our assets, and our ability to implement our strategy.

Any slowdown in the growth or negative growth of sectors where we have a relatively higher exposure could adversely
impact our performance. Any such slowdown could adversely affect our business, prospects, results of operations and
financial condition.

50. Private participation in the power sector in I ndia is dependent on the continued growth of the I ndian economy and
regulatory developments in I ndia. Any adverse change in policy/implementation/industry demand may adversely
affect us.

Although the power sector is rapidly growing in India, we believe that further development of this sector is dependent upon
the formulation and effective implementation of regulations and policies that facilitate and encourage private sector
investment in power projects. Many of these regulations and policies are evolving and their success will depend on whether
they are designed to adequately address the issues faced and are effectively implemented. In addition, these regulations and
policies will need continued support from stable and experienced regulatory regimes that not only stimulate and encourage
the continued investment of private capital into power projects, but also lead to increased competition, appropriate allocation
of risk, transparency, and effective dispute resolution. The availability of private capital and the continued growth of the

27

private power sector in India are also linked to continued growth of the Indian economy. Many specific factors in the power
sector may also influence the success of power projects, including changes in policies, regulatory frameworks and market
structures. Any adverse change in the policies relating to the power sector may leave us with unutilized capital and interest
and debt obligations to fulfill. If the central and state governments initiatives and regulations in the power sector do not
proceed in the desired direction, or if there is any downturn in the macroeconomic environment in India, our business,
prospects, results of operations and financial condition could be adversely affected. In addition, it is generally believed that
demand for power in India will increase in connection with expected increases in India's GDP. However, there can be no
assurance that demand for power in India will increase to the extent we expect or at all. In the event demand for power in
India does not increase as anticipated, the extent to which we are able to grow our business by financing the growth of the
power sector would be limited and this could have a material adverse effect on our business, financial condition and results of
operations.

51. Significant shortages in the supply of crude oil, natural gas or coal could adversely affect the I ndian economy and
the power sector projects to which we have exposure, which could adversely affect us.

India imports approximately 75 % of its requirements of crude oil. Crude oil prices are volatile and are subject to a number of
factors such as the level of global production and political factors such as war and other conflicts, particularly in the Middle
East, where a substantial proportion of the worlds oil and natural gas reserves are located. The recent events in Middle East
has increased political uncertainity in this region. Further, in June 2010, the GoI eliminated subsidies on certain petroleum
products, and has initiated partial de-regulation since then.

Any significant increase in oil prices could affect the Indian economy, including the power sector, and the Indian banking and
financial system. High oil prices could also add to inflationary pressures in the Indian economy. Additionally, increases in oil
prices may have a significant impact on the power sector and related industries in which we have substantial exposure. This
could adversely affect our business including our ability to grow, the quality of our asset portfolio, our financial performance
and our ability to implement our strategy.

In addition, natural gas is a significant input for power projects. India has experienced interruptions in the availability of
natural gas, which has caused difficulties in these projects. Continued difficulties in obtaining reliable, timely supply of
natural gas could adversely affect some of the projects we finance and could impact the quality of our asset portfolio and our
financial performance. Prices of other key raw materials, for example steel, coal and cement, have also risen in recent years
and if the prices of such raw materials approach levels that project developers deem unviable, this will result in a slowdown
in the infrastructure sector and thereby reduce our business opportunities, our financial performance and our ability to
implement our strategy.

Continued shortages of fuel could adversely affect some of the projects we finance and could impact the quality of our asset
portfolio and our financial performance.

52. Political instability or changes in the government could delay the liberalization of the I ndian economy and adversely
affect economic conditions in I ndia generally, which could impact our financial results and prospects.

Since 1991, successive Indian governments have pursued policies of economic liberalization, including significantly relaxing
restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as
producers, consumers and regulators has remained significant. Although, the current government has announced policies and
taken initiatives that support the economic liberalization policies, the rate of economic liberalization could change, and
specific laws and policies affecting banking and finance companies, foreign investment and other matters affecting
investment in our securities could change as well. Any major change in government policies might affect the growth of Indian
economy and thereby our growth prospects. Additionally, as economic liberalization policies have been a major force in
encouraging private funding of power sector development, any change in these policies could have a significant impact on
power sector development, business and economic conditions in India, which could adversely affect our business and our
future financial performance.

53. Difficulties faced by other financial institutions or the I ndian financial sector generally could cause our business to
suffer.

We are exposed to the risks consequent to being part of the Indian financial sector. This sector in turn may be affected by

28

financial difficulties and other problems faced by Indian financial institutions. Certain Indian financial institutions have
experienced difficulties during recent years, and some co-operative banks have also faced serious financial and liquidity
difficulties in the past. Any major difficulty or instability experienced by the Indian financial sector could create adverse
market perception, which in turn could adversely affect our business and financial performance.

54. Terrorist attacks, civil unrest and other acts of violence or war involving I ndia and other countries could adversely
affect the financial markets and our business.

India has from time to time experienced social and civil unrest and hostilities within itself and with neighbouring countries.
India has also experienced terrorist attacks in some parts of the country. These hostilities and tensions and/or the occurrence
of terrorist attacks have the potential to cause political or economic instability in India and adversely affect our business and
future financial performance. Further, India has also experienced social unrest in some parts of the country. If such tensions
occur in other parts of the country, leading to overall political and economic instability, it could have an adverse effect on our
business, prospects, results of operations and financial condition. These acts may also result in a loss of business confidence,
make travel and other services more difficult and ultimately adversely affect our business.

55. Natural calamities could have a negative impact on the I ndian economy and cause our business to suffer.

India has experienced natural calamities such as earthquakes, floods, tsunami, and drought in the recent past. The extent and
severity of these natural disasters determine their impact on the Indian economy. In previous years, many parts of India
received significantly less than normal rainfall. As a result, the agricultural sector recorded minimal growth. Prolonged spells
of below normal rainfall in the country or other natural calamities could have a negative impact on the Indian economy,
thereby affecting our business, prospects, results of operation and financial condition.

56. Changes in legislation, including tax legislation, or policies applicable to us could adversely affect our results of
operations.

The Finance Minister has presented the Direct Tax Code Bill, 2010 ("DTC Bill") on August 30, 2010, which is proposed to
be effective from April 1, 2012. On the finalization of the DTC Bill and on obtaining the approval of the Indian Cabinet, the
DTC Bill will be placed before the Indian Parliament for its approval and notification as an Act of Parliament. Accordingly, it
is currently unclear what effect the Direct Tax Code would have on our financial statements. However, under the proposed
DTC Bill, the deduction u/s 36(1)(viia)(c) and 36(1)(viii) of the I.T. Act, which are currently available to the Company,
would not be available in the future, which will increase our tax liability. If the DTC Bill is passed in its entirety and we are
affected, directly or indirectly, by any provision of the Direct Tax Code, or its application or interpretation, including any
enforcement proceedings initiated under it and any adverse publicity that may be generated due to scrutiny or prosecution
under the Direct Tax Code, it may have a material adverse effect on our business, financial condition and results of
operations. For more information, see section titled "Statement of Tax Benefits" on page 61 of this Draft Shelf Prospectus.
In addition, upon the passing of the Companies Bill, 2009 by the Indian legislature the regulatory framework may undergo a
change which may affect our operations.

57. Our ability to raise foreign currency borrowings may be constrained by I ndian law.

As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such regulatory
restrictions limit our financing sources and hence could constrain our ability to obtain financing on competitive terms and
refinance existing indebtedness. In addition, we cannot assure you that the required approvals will be granted to us without
onerous conditions, if at all. Limitations on raising foreign debt may have an adverse effect on our business, financial
condition and results of operations.

58. Any downgrading of our debt rating or Indias sovereign rating by a credit rating agency could have a negative
impact on our business.

Any adverse revisions to our credit rating or Indias sovereign credit ratings for domestic and international debt by credit
rating agencies may adversely impact our ability to raise additional financing, and the interest rates and other commercial
terms at which such additional financing is available. This could have a material adverse effect on our business and financial
performance, our ability to obtain financing for lending operations.


29

59. The I ndian and global financial sector is very competitive and the ability of banks and financial institutions to grow
depends on their ability to compete effectively.

There is heavy competition among Indian public and private sector banks, foreign banks operating in India and financial
institutions to lend to power sector. Some of these institutions are smaller and may be more flexible and better positioned to
take advantage of market opportunities than big banks. In particular, private banks may have operational advantages in
implementing new technologies, rationalizing branches and recruiting employees through incentive-based compensation.
Additionally, both the Indian and global financial sector may experience further consolidation, resulting in fewer banks and
financial institutions. The GoI has recently permitted foreign banks to set up wholly owned subsidiaries in India. It has also
allowed takeovers of Indian banks by permitting foreign banks to acquire up to a 74 per cent stake in an existing private bank.
These developments are likely to further increase competition and may stimulate consolidation in the Indian financial sector.
These competitive pressures affect the Indian financial sector and our growth will depend in large part on our ability to
respond in an effective and timely manner to these competitive pressures.

60. There may be other changes to the regulatory framework that could adversely affect us.

The statutory and regulatory framework for the Indian power sector has changed significantly in recent years and the impact
of these changes is yet to be seen. The Electricity Act, 2003 (the Electricity Act) puts in place a framework for reforms in
the sector, but in many areas the details and timing are yet to be determined. It is expected that many of these reforms will
take time to be implemented. Furthermore, there could be additional changes in the areas of tariff and other policies, the
unbundling of the State Power Utilities, restructuring of companies in the power sector, open access and parallel distribution,
and licensing requirements for, and tax incentives applicable to companies in the power sector. In 2004, the GoI reviewed the
Electricity Act. We presently do not know what the nature or extent of review in future will be, and cannot assure that such
review will not have an adverse impact on our financial condition and results of operations.

61. Direct capital market access by our borrowers could adversely affect us.

The Indian capital markets are developing and maturing and, as such, there may be a shift in the pattern of power sector
financing. Financially stronger state power utilities might source their fund requirement directly from the market. We have a
large exposure to state power utilities and such changes may have an adverse impact on our business, financial condition and
results of our operations.

62. Recent global economic conditions have been unprecedented and challenging and have had, and continue to have,
an adverse effect on the I ndian financial markets and the I ndian economy in general, which has had, and may
continue to have, a material adverse effect on our business, financial condition and results of operations.

Recent global market and economic conditions have been unprecedented and challenging with tighter credit conditions and
recession in most major economies.

Continued concerns about the systemic impact of potential long-term and wide-spread recession, energy costs, geopolitical
issues, the availability and cost of credit, and the global housing and mortgage markets have contributed to increased market
volatility and diminished expectations for western and emerging economies.

As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected
by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of
counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide
credit to businesses and consumers. These factors have led to a decrease in spending by businesses and consumers alike and
corresponding decreases in global infrastructure spending and commodity prices. Continued turbulence in the United States,
Europe and other international markets and economies and prolonged declines in business consumer spending may adversely
affect our liquidity and financial condition, and the liquidity and financial condition of our customers, including our ability to
refinance maturing liabilities and access the capital markets to meet liquidity needs.

These global market and economic conditions have had, and continue to have, an adverse effect on the Indian financial
markets and the Indian economy in general, which may continue have a material adverse effect on our business and our
financial performance.


30

63. Companies operating in I ndia are subject to a variety of central and State government taxes and surcharges.

Tax and other levies imposed by the central and state governments in India that affect our tax liability include: central and
state taxes and other levies, income tax, value added tax, turnover tax, service tax, stamp duty and other special taxes and
surcharges which are introduced on a temporary or permanent basis from time to time. Moreover, the central and state tax
scheme in India is extensive and subject to change from time to time. For example, a new direct tax code is proposed to be
introduced before the Indian Parliament. In addition, there is a proposal to introduce a new goods and services tax and the
scope of the service tax is proposed to enlarge. The central or state government may in future increase the corporate income
tax it imposes. Any such future increases or amendments may affect the overall tax efficiency of companies operating in India
and may result in significant additional taxes becoming payable. Additional tax exposure could adversely affect our business
and results of operations.

RISKS RELATING TO THE BONDS

64. There has been no prior public market for the Bonds and it may not develop in the future, and the price of the Bonds
may be volatile.

The Bonds have no established trading market. There can be no assurance that an active public market for the Bonds will
develop or be sustained. The liquidity and market prices of the Bonds can be expected to vary with changes in market and
economic conditions, our financial condition and prospects and other factors that generally influence market price of Bonds.
Such fluctuations may significantly affect the liquidity and market price of the Bonds, which may trade at a discount to the
price at which you purchase the Bonds.

65. The Bonds are classified as tax free bonds eligible for tax exemption under Section 10(15)(iv)(h) of the Income Tax
Act, up to an amount of interest on such bonds.

The Bonds are classified as tax free bonds issued in terms of Section 10(15)(iv)(h) of the Income Tax Act and the
notification dated September 23, 2011, issued by the CBDT. In accordance with the said section, the amount of interest on
such bonds shall be entitled to exemption under the provisions of Income Tax Act. Therefore only the amount of interest on
bonds is exempt and not the actual amount of investment.

66. There is no guarantee that the Bonds issued pursuant to this Issue will be listed on BSE in a timelymanner, or at all.

In accordance with Indian law and practice, permissions for listing and trading of the Bonds issued pursuant to this Issue will
not be granted until after the Bonds have been issued and allotted. Approval for listing and trading will require all relevant
documents authorising the issuing of Bonds to be submitted. There could be a failure or delay in listing the Bonds on the
BSE.

67. You may not be able to recover, on a timely basis or at all, the full value of the outstanding amounts and/or the
interest accrued thereon in connection with the Bonds.

Our ability to pay interest accrued on the Bonds and/or the principal amount outstanding from time to time in connection
therewith would be subject to various factors, including our financial condition, profitability and the general economic
conditions in India and in the global financial markets. We cannot assure you that we would be able to repay the principal
amount outstanding from time to time on the Bonds and/or the interest accrued thereon in a timely manner, or at all.

68. A debenture redemption reserve will be created, only up to an extent of 50% for the Bonds.

The Department of Company Affairs General Circular No.9/2002 No.6/3/2001-CL.V dated April 18, 2002 specifies that a
Public Financial Institution (PFI) shall create debenture redemption reserve to the extent of 50% of the value of the
debentures issued through public issue. Therefore, we will maintain a debenture redemption reserve only to the extent of 50%
of the Bonds issued and the Bondholders may find it difficult to enforce their interests in the event of or to the extent of a
default in excess of such reserve.

69. Changes in interest rates may affect the price of the Bonds.


31

All securities where a fixed rate of interest is offered, such as the Bonds, are subject to price risk. The price of such securities
will vary inversely with changes in prevailing interest rates, i.e., when interest rates rise, prices of fixed income securities fall
and when interest rates drop, the prices increase. The extent of fall or rise in the prices is a function of the existing coupon
rate, days to maturity and the increase or decrease in the level of prevailing interest rates. Increased rates of interest, which
frequently accompany inflation and/or a growing economy, are likely to have a negative effect on the trading price of the
Bonds.

70. Any downgrading in credit rating of our Bonds may affect the trading price of our Bonds.

CRISIL Limited (CRISIL) has assigned a rating of CRISIL AAA/Stable (pronounced as CRISIL Triple A rating with stable
outlook) vide its letter no. SN/FSR/PFC/2011-12/865 to the long term borrowing programme of `38,500 Crores and CRISIL
A1+ (pronounced as CRISIL A One Plus) vide its letter no. SN/FSR/PFC/2011-12/866 to the short term borrowing programme
of `5000 Crores both dated October 13, 2011(total ` 43,500 crores) and ICRA Limited has by its letter no. D/RAT/2011-
2012/P3/20 dated October 21, 2011, assigned a rating of ICRA AAA (pronounced ICRA triple A) to the Long Term Borrowing
Programme of ` 43,500 crores, during the financial year 2011-12. These ratings may be suspended, withdrawn or revised at any
time. Any revision or downgrading in the credit rating may lower the trading price of the Bonds and may also affect our ability
to raise further debt. For the rationale for these ratings, see Annexure II.

71. Payments made on the Bonds will be subordinated to certain tax and other liabilities preferred by law.

The Bonds will be subordinated to certain liabilities preferred by law such as to claims of the GoI on account of taxes, and
certain liabilities incurred in the ordinary course of our transactions. In particular, in the event of bankruptcy, liquidation or
winding-up, our assets will be available to pay obligations on the Bonds only after all of those liabilities that rank senior to
these Bonds have been paid. In the event of bankruptcy, liquidation or winding-up, there may not be sufficient assets
remaining, after paying amounts relating to these proceedings, to pay amounts due on the Bonds. Further, there is no
restriction on the amount of debt securities that we may issue that may rank above the Bonds. The issue of any such debt
securities may reduce the amount recoverable by investors in the Bonds on our bankruptcy, winding-up or liquidation.








32

SECTION III - INTRODUCTION

THE ISSUE

CBDT vide its Notification No. 52/2011 [F.No. 178/56/2011-(ITA 1)] dated September 23, 2011 authorised the Company to
raise Tax Free Bonds aggregating to ` 5,000 crores out of which, the Company has already raised funds through two private
placements vide documents dated September 28, 2011 and November 1, 2011, respectively, aggregating to an amount of `
966.87 crores. Thus, the Company proposes to raise the balance amount of ` 4033.13 crores through public issue of Tax Free
Bonds in one or more tranche(s), prior to March 31, 2012.
The following is a summary of the terms of the Bonds. This section should be read in conjunction with, and is qualified in its
entirety by, more detailed information in Issue Structure & Terms of the Issue on page 147 & 151 of this Draft Shelf
Prospectus.
COMMON TERMS FOR ALL SERIES OF THE BONDS
Issuer Power Finance Corporation Limited
Issue of Bonds Public Issue by Power Finance Corporation Limited (Company or Issuer) of tax free bonds
of face value of ` 1,000 each, in the nature of secured, redeemable, non-convertible debentures,
having benefits under section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended, (Bonds), up
to ` 4033.13 crores (Issue). The bonds will be issued at par in one or more tranches on the terms
and conditions as set out in separate tranche prospectuses for each such tranche.

Face Value (`) ` 1,000
Objects of the Issue Please refer to Section Objects of the I ssue on page 59 of this Draft Shelf Prospectus
Issue Price (`) ` 1,000
Minimum
Application
[]
Market Lot /
Trading Lot
One Bond
Pay-in Date Application Date (Full Application Amount is payable on Application)
Ratings
CRISIL Limited (CRISIL) has assigned a rating of CRISIL AAA/Stable (pronounced as CRISIL
Triple A rating with stable outlook) to the long term borrowing programme of ` 38,500 Crores and
CRISIL A1+ (pronounced as CRISIL A One Plus) to the short term borrowing programme of `
5000 Crores (a total of ` 43,500 crores).

ICRA Limited has assigned a rating of ICRA AAA (pronounced ICRA triple A) to the Long Term
Borrowing Programme of ` 43,500 crores during the financial year 2011-12.
Listing BSE
Security The Bonds issued by the Company will be secured by creating a charge on the book debts of the
company and/or identified immovable property by a first /pari passu charge, as may be agreed
between the Company and the Debenture Trustee, pursuant to the terms of the Debenture Trust
Deed.
Debenture Trustee GDA Trustee & Consultancy Ltd.
Registrar Karvy Computershare Private Limited
Modes of Payment 1. At par cheques
2. Demand Drafts
Issuance **In dematerialized form and physical form
Trading In dematerialized form only
Issue Opening Date []
Issue Closing Date* [],

33


The subscription list for the Issue shall remain open for subscription at the commencement of
banking hours and close at the close of banking hours, with an option for early closure (subject to the
Issue being open for a minimum of 3 days) or extension by such period, upto a period of 30 days
from the date of opening of the Issue, as may be decided by the Board of Directors/ Committee of
the Company. In the event of such early closure of the subscription list of the Issue, our company
shall ensure that public notice of such early closure is published on or before the day of such early
date of closure through advertisement/s in a leading national daily newspaper.
Deemed Date of
Allotment
Deemed Date of Allotment shall be the date on which the Directors of the Company or any
committee thereof approves the Allotment of the Bonds for each Tranche Issue. All benefits relating
to the Bonds including interest on Bonds (as specified for each tranche by way of Tranche
Prospectus) shall be available to the investors from the Deemed Date of Allotment. The actual
allotment of Bonds may take place on a date other than the Deemed Date of Allotment
Lead Managers SBI Capital Markets Limited, A.K. Capital Services Limited and RR Investors Capital Services
Private Limited

* The Issue shall remain open for subscription during banking hours for the period indicated above.

** In terms of Regulation 4(2)(d) of the Debt Regulations, the Company will make public issue of the Bonds in the
dematerialized form. However, in terms of Section 8 (1) of the Depositories Act, the Company, at the request of
the Investors who wish to hold the Bonds in physical form will fulfil such request.








34

SPECIFIC TERMS FOR EACH SERIES OF BONDS
The terms of each Series of Bonds are set out below:
Options
Series of Bonds*
Tranche [] Series [] Tranche [] Series []
Tenor
10 Years 15 Years
Redemption Date
10 Years from the Deemed Date of Allotment 15 Years from the Deemed Date of
Allotment
Redemption Amount
(`/ Bond)
Repayment of the Face Value plus any interest
that may have accrued at the Redemption Date
Repayment of the Face Value plus any
interest that may have accrued at the
Redemption Date
Frequency of Interest
Payment
As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
Minimum
Application Size
As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
In Multiples of As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
Face Value (`/Bond) ` 1,000.00 ` 1,000.00
Issue Price (`/Bond) ` 1,000.00 ` 1,000.00
Mode of Interest
Payment
Through various modes available** Through various modes available**
Coupon Rate (%) p.a. As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
Annualized Yield As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
Nature of
Indebtedness and
Ranking
The claims of the Bondholders shall rank pari
passu with other secured creditors having a
charge over the on the book debts of the
company and/or identified immovable
property as may be agreed between the
Company and the Debenture Trustee,
pursuant to the terms of the Debenture Trust
Deed and such claims shall be superior to the
claims of any unsecured creditors
The claims of the Bondholders shall rank
pari passu with other secured creditors
having a charge over the on the book debts of
the company and/or identified immovable
property as may be agreed between the
Company and the Debenture Trustee,
pursuant to the terms of the Debenture Trust
Deed and such claims shall be superior to the
claims of any unsecured creditors
*Number of Series of Bonds will be decided at the Tranche Prospectus(es) stage. The Company shall allocate and allot Bond
Series bearing longest maturity to all valid applications, wherein the applicants have not indicated their choice of the
relevant Bond Series.

**For various modes of interest payment, see Terms of the I ssue Modes of Payment on page 157 of this Draft Shelf
Prospectus.


35

SELECTED FINANCIAL INFORMATION

POWER FINANCE CORPORATION LIMITED
Statement of Consolidated Assets & Liabilities

(` in crores)
Description
Schedule
Number
As at
31.03.2011
As at
31.03.2010
As at
31.03.2009

I . SOURCES OF FUNDS

(1) Share Holder's Funds
(a) Share Capital 1 1147.77 1147.77 1147.77
(b) Reserves & Surplus 2 14093.04 12143.80 10369.78
15240.81 13291.57 11517.55
(2) Loans Funds
Secured Loans 3 235.36 0.00 0.00
Unsecured Loans 3 85363.21 67108.41 52160.15
85598.57 67108.41 52160.15

(3) Interest Subsidy Fund from GOI 451.87 663.49 908.94

(4) Deferred Tax Liablity (Net of Asset ) 82.90 46.93 55.48


Total 101374.15 81110.40 64642.12

II . APPLICATION OF FUNDS

(1) Fixed Assets 4
(a) Gross Block 99.15 93.31 97.37
Less : Depreciation 24.57 20.47 22.19
Net Block 74.58 72.84 75.18

(b) Capital Works in Progress 2.28 1.73 0.00


(2) Investments 5 26.63 30.02 35.08

(3) Loans 6 99570.74 79855.76 64428.99

(4) Current Assets, Loans & Advances 7
(a) Cash & Bank Balances 2444.19 1460.39 418.99
(b) Other Current Assets 1943.64 1599.14 1345.35
(c) Loans & Advances 663.18 504.85 449.89
5051.01 3564.38 2214.23
Less : Current Liabilities & Provisions 8
(a) Current Liabilites 3040.47 2167.23 1880.38
(b) Provisions 310.82 247.10 231.02
3351.29 2414.33 2111.40

Net Current Assets 1699.72 1150.05 102.83

(5) MISCELLANEOUS EXPENDITURE
(To the extent not written-off or adjusted)
Preliminary Expenses 0.20 0.00 0.04

101374.15 81110.40 64642.12

POWER FINANCE CORPORATION LIMITED

36

Statement of Consolidated Profits & Losses

(` in crore)
Description
Schedule
Number
Year ended
31.03.2011
Year ended
31.03.2010
Year ended
31.03.2009


INCOME
Operating Income 9 10174.95 8043.20 6572.02
Other Income 10 39.15 78.51 27.58
Exchange Risk Management Account
written back


Total 10214.10 8121.71 6599.60

EXPENSES
Interest and other charges 11 6426.46 4915.39 4436.61
Bonds Issue Expenses 12 63.05 43.79 65.68
Personnel & Administration Expenses 13 102.11 114.93 84.03
Depreciation 4.31 3.40 3.85
Amortisation of Intangible Assets 0.77 0.43 0.28
Provision for Contingencies 31.79 -0.57 2.17
Provision for decline in value of investments -0.06 -1.52 1.49
Preliminary Expenses written off 0.00 0.34 0.01

Total 6628.43 5076.19 4594.12

Profit for the year 3585.67 3045.52 2005.48
Prior Period adjustments 14 -0.08 0.10 0.02

Profit before tax 3585.59 3045.62 2005.50

Less(-)/Add(+) : Provision for taxation
- Current Year :-
- Tax -912.94 -811.66 -497.27
- Earlier Years :-
- Tax 10.45 135.79 32.61

Less/Add: Deferred tax liability(-)/Asset(+)
- Current Year -35.98 8.55 -43.61
- Reversal of DTL of Earlier Years
(Refer Note No.19 of Schedule-18,
Notes on Accounts of FY 2008-09)
0.00 0.00 483.24

Less(-) / Add(+) : Provision for fringe benefit tax 0.00 0.00 -0.78

Profit after tax available for appropriations 15 2647.12 2378.30 1979.69




37

Statement of Consolidated Cashflows
(` in crore)
PARTICULARS Year ended
31.03.2011
Year ended
31.03.2010
Year ended
31.03.2009
I. Cash Flow from Operating Activities :-

Net Profit before Tax and Extraordinary items 3585.59 3045.95 2005.50
ADD: Adjustments for
Loss on Sale of Assets 0.06 0.02 0.01
Profit on Sale of Fixed Assets 0.00 0.00 0.00
Depreciation / Amortization 5.08 3.82 4.13
Amortization of Zero Coupon Bonds 22.52 20.83 19.27
Foreign Exchange Loss/Gain (2.47) (248.27) 235.66
Diminution in value of investments (0.06) (1.52) 1.49
Provision for Contingencies 31.79 (0.57) 2.17
Dividend / Interest and profit on sale of investment (6.32) (5.50) (5.41)
Provision for Retirement Benefits/Other Welfare Expenses/Wage
revision
10.68 16.74 8.16
Provision for interest under IT Act (Standalone) 0.22 0.28 0.00
Interest Received 0.00 0.00 0.00
Interest Paid 0.27
Preliminary expenses written off 0.00 (0.26) 0.00
Operating profit before working Capital Changes: 3647.36 2831.52 2270.98
Increase/Decrease :
Loans Disbursed (Net) (19755.37) (15496.04) (12701.30)
Other Current Assets (350.71) (255.66) (289.48)
Increase/Decrease in Miscellaneous Expenditure 0.00 0.00 0.00
Loans & Advances (138.18) 99.31 (102.07)
Miscellaneous Expenditure (not written off/adjusted) 0.00 0.00 (0.04)
Current Liabilities and provisions 901.05 240.99 684.43
Cash flow before extraordinary items (15695.85) (12579.88) (10137.48)
Extraordinary items 0.00 0.00 0.00
Cash Inflow/Outflow from operations before Tax (15695.85) (12579.88) (10137.48)
Income Tax paid (879.60) (825.33) (599.42)
Income Tax Refund
Net Cash flow from Operating Activities (16575.45) (13405.21) (10736.90)

II. Cash Flow From Investing Activities :
Sale / decrease of Fixed Assets 0.64 0.05 0.05
Purchase of Fixed Assets (7.55) (1.57) (2.64)
Increase/decrease in Capital Works in Progress (0.55) (1.73) 0.00
Plant & Machinery (Lease Equalization) 0.00 0.00 0.27
Investments in Subsidiaries 0.10 (0.05) (0.12)
Dividend / Interest and profit on sale of investment 7.18 5.50 5.41
Interest Received 0.00 0.00 0.00
Other Investments (21.03) 6.58 29.14
Net Cash Used in Investing Activities (21.21) 8.78


III. Cash Flow From Financial Activities :
Issue of Bonds 14023.96 12283.30 12808.90
Short Term Loans (Net) 3400.00 (750.00) (1080.00)
Loan Against Fixed Deposits (Net) 565.92 1675.12 0.00
Raising of Long Term Loans 7855.00 8004.50 4750.00
Repayment of Long Term Loans (5870.00) (4473.00) (4449.00)
Redemption of Bonds (3710.91) (1981.86) (892.30)
Foreign Currency Loans (Net) 2214.60 486.88 (40.46)
Interest paid (0.98) 0.00 0.00
Interest Subsidy Fund (211.62) (245.45) (157.81)
Unclaimed Bonds (Net) (16.31) 21.87 0.09
Payment of Final Dividend (including Corporate Dividend Tax) of
Previous year
(200.76) (181.28) (134.29)
Payment of Interim Dividend (including Corporate Dividend Tax) of
Current year
(468.44) (402.85) (355.85)
Net Cash in-flow from Financing Activities 17580.46 14437.23 10449.28

Net Increase/Decrease in Cash & Cash Equivalents 983.80 1040.80 (255.51)

Add : Cash & Cash Equivalents at beginning of the period 1460.39 419.59 674.50
Cash & Cash Equivalents at the end of the period 2444.19 1460.39 418.99
Details of Cash & Cash Equivalents at the end of the period:
Cheques in hand, Imprest with Postal authority & Balances with
Banks
250.21 10.45 2.55
Fixed Deposits with Scheduled Banks 2193.98 1449.94 416.44
2444.19 1460.39 418.99


38

POWER FINANCE CORPORATION LIMITED
Statement of Standalone Assets & Liabilities
(` in Crores)
Description
Schedule
Number
As at
31.03.2011
As at
31.03.2010
As at
31.03.2009
As at
31.03.2008
As at
31.03.2007

I . SOURCES OF FUNDS
1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.1.6

(1)
Share Holder's Funds
(a) Share Capital 1 1147.77 1147.77 1147.77 1147.77 1147.77
(b) Reserves & Surplus 2 14034.72 12113.02 10360.05 8182.08 7445.32
15182.49 13260.79 11507.82 9329.85 8593.09
(2) Loan Funds 3
Secured Loans 235.36 0.00 0.00 0.00 0.00
Unsecured Loans 85363.21 67108.41 52160.15 40647.81 33584.18
85598.57 67108.41 52160.15 40647.81 33584.18

(3) Interest Subsidy Fund from
GOI
451.87 663.49 908.94 1066.75 1231.63

(4) Deferred Tax Liability (Net of
Asset )
82.97 46.95 55.48 1240.25 1142.59

Total 101315.90 81079.64 64632.39 52284.66 44551.49

II
.
APPLICATION OF FUNDS
1.1.7 1.1.8 1.1.9 1.1.10 1.1.11 1.1.12
(1) Fixed Assets 4
Gross Block 98.94 93.21 97.33 374.86 375.84
Less : Depreciation /
Amortization
24.51 20.44 22.18 297.86 294.39
Net Block 74.43 72.77 75.15 77.00 81.45

Capital Works in Progress


2.28 1.73 0.00 0.00 0.00

(2) Investments 5 53.88 31.43 35.86 65.59 58.88

(3) Loans 6 99570.74 79855.76 64428.99 51568.31 43902.83
(4) Net Current Assets
Current Assets, Loans &
Advances - (A)
7
(a) Cash & Bank Balances 2350.26 1394.30 392.23 695.33 507.67
(b) Other Current Assets 1941.87 1592.76 1340.57 1055.86 1106.11
(c) Loans & Advances 640.58 491.12 445.87 209.80 282.95
4932.71 3478.18 2178.67 1960.99 1896.73

Less : Current Liabilities &
Provisions - (B)
8
(a) Current Liabilities 3021.47 2124.52 1860.59 1216.22 1187.87
(b) Provisions 296.87 235.71 225.69 171.01 200.53
3318.34 2360.23 2086.28 1387.23 1388.40

Net Current Assets (A) - (B) 1614.37 1117.95 92.39 573.76 508.33

(6) MISCELLANEOUS
EXPENDITURE

(To the extent not written-off)

Miscellaneous Expenses 0.20 0.00 0.00 0.00 0.00

Total 101315.90 81079.64 64632.39 52284.66 44551.49


39

POWER FINANCE CORPORATION LIMITED
Statement of Standalone Profits & Losses

(` in crore)
Description
Schedule
Number
Year ended
31.03.2011
Year ended
31.03.2010
Year ended
31.03.2009
Year ended
31.03.2008
Year ended
31.03.2007

INCOME
Operating Income 9 10128.49 8002.10 6557.37 5029.28 3816.67
Other Income 10 32.07 74.76 26.17 10.76 9.42
Exchange Risk
Management Account
written back
101.56

Total 10160.56 8076.86 6583.54 5040.04 3927.65

EXPENSES
Interest and other
charges
11 6423.90 4912.24 4432.92 3143.74 2334.77
Bond Issue Expenses 12 63.05 43.79 65.68 38.82 33.23
Personnel &
Administration
and Other Expenses
13 92.62 106.04 86.71 81.24 53.84
Depreciation 4 4.28 3.38 3.84 4.48 3.77
Amortization of
Intangible Assets
4 0.77 0.43 0.28 0.02 0.02
Provision for
Contingencies
31.79 -0.57 2.17 -10.21 -4.85
Provision for decline in
value of investments
-0.06 -1.52 1.49 -0.24 -0.01

Total 6616.35 5063.79 4593.09 3257.85 2420.77

Profit for the year 3544.21 3013.07 1990.45 1782.19 1506.88
Less(-) / Add(+) : Prior
Period adjustments
14 -0.07 0.13 0.02 5.21 -0.02

Profit before tax 3544.14 3013.20 1990.47 1787.40 1506.86

Less(-) / Add(+) :
Provision for Taxation

- Current Year :-
- Tax -898.99 -800.27 -492.02 -481.98 -333.54
- Earlier Years :-
- Tax 10.45 135.79 32.61 -0.04 -14.31

Less / Add : Deferred tax
liability(-) / Asset(+)

- Current Year -36.02 8.53 -43.61 -97.65 -172.05
- Reversal of DTL
of Earlier Years
483.24

Less(-) / Add(+) :
Provision for fringe
benefit tax
0.00 0.00 -0.73 -0.97 -0.82

Profit after tax
available for
appropriations
15 2619.58 2357.25 1969.96 1206.76 986.14




40

Statement of Standalone Cashflows
(` in crore)
PARTICULARS
Year
ended
31.03.2011
Year
ended
31.03.2010
Year
ended
31.03.2009
Year
ended
31.03.2008
Year ended
31.03.2007
Cash Flow from Operating Activities :-

Net Profit before Tax and Extraordinary items 3544.14 3013.20 1990.47 1787.40 1506.86
ADD: Adjustments for
Loss on Sale of Assets 0.06 0.02 0.01 0.13 0.01
Profit on Sale of Fixed Assets (0.01)
Depreciation / Amortization 5.05 3.81 4.12 4.50 3.79
Amortization of Zero Coupon Bonds 22.52 20.83 19.27 17.83 16.49
Foreign Exchange Loss/Gain (2.47) (248.27) 235.66 23.00 (16.14)
Diminution in value of investments (0.06) (1.52) 1.49 (0.24) (0.01)
Provision for Contingencies 31.79 (0.57) 2.17 (10.21) (4.85)
Dividend / Interest and profit on sale of investment (3.49) (5.50) (5.41) (8.74) (2.29)
Provision for interest under IT Act 0.22 0.28 0.00 0.29 4.67
Provision for Retirement Benefits/Other Welfare
Expenses/Wage revision
10.68 16.74 8.16 5.03 2.49
Operating profit before working Capital Changes: 3608.44 2799.02 2255.94 1818.99 1511.01
Increase/Decrease :
Loans Disbursed (Net) (19755.37) (15496.04) (12701.30) (7702.77) (8311.79)
Other Current Assets (349.11) (252.19) (284.71) 50.25 (411.85)
Increase/Decrease in Miscellaneous Expenditure (28.78)
Loans & Advances (139.03) 100.14 (101.65) 109.73 (232.00)
Current Liabilities and provisions 901.54 216.44 664.65 24.66 602.90
Cash flow before extraordinary items (15733.53) (12632.63) (10167.07) (5699.14) (6870.51)
Extraordinary items 0.00 0.00 0.00 0.00 0.00
Cash Inflow/Outflow from operations before Tax (15733.53) (12632.63) (10167.07) (5699.14) (6870.51)
Income Tax paid (865.72) (811.34) (595.85) (570.65) (310.34)
Income Tax Refund 13.51
Net Cash flow from Operating Activities (16599.25) (13443.97) (10762.92) (6269.79) (7167.34)
Cash Flow From Investing Activities :
Sale / decrease of Fixed Assets 0.64 0.05 0.05 0.08 0.06
Purchase of Fixed Assets (7.42) (1.51) (2.60) (1.58) (44.13)
Increase/decrease in Capital Works in Progress (0.55) (1.73) 31.27
Plant & Machinery (Lease Equalization) 0.00 0.27 0.24 14.21
Investments in Subsidiaries 0.00 (0.05) (0.07) 0.10 (0.50)
Dividend / Interest and profit on sale of investment 3.49 5.50 5.41 8.74 2.29
Other Investments (22.39) 5.95 28.31 (6.57) (41.86)
Net Cash Used in Investing Activities (26.23) 8.21 31.37 1.01 (38.66)
Cash Flow From Financial Activities :
Issue of Shares 997.19
Issue of Bonds 14023.96 12283.30 12808.90 7258.30 5299.70
Short Term Loans (Net) 3400.00 (750.00) (1080.00) 340.00 (31.10)

41

Loan Against Fixed Deposits (Net) 565.92 1675.12 0.00 (171.00) 171.00
Raising of Long Term Loans 7855.00 8004.50 4750.00 4338.00 3483.00
Repayment of Long Term Loans (5870.00) (4473.00) (4449.00) (4885.71) (1563.00)
Redemption of Bonds (3710.91) (1981.86) (892.30) (144.70) (272.14)
Foreign Currency Loans (Net) 2214.60 486.88 (40.46) 335.61 (412.17)
Interest Subsidy Fund (211.62) (245.45) (157.81) (164.88) 31.30
Unclaimed Bonds (Net) (16.31) 21.87 0.09 (0.01) 0.00
Payment of Final Dividend (including Corporate
Dividend Tax) of Previous year
(200.76) (181.28) (134.29) (134.29) (189.61)
Payment of Interim Dividend (including Corporate
Dividend Tax) of Current year
(468.44) (402.85) (355.85) (335.71) (165.34)
Net Cash in-flow from Financing Activities 17581.44 14437.23 10449.28 6435.61 7348.83
Net Increase/Decrease in Cash & Cash Equivalents 955.96 1001.47 (282.27) 166.83 142.83
Add : Cash & Cash Equivalents at beginning of the
period
1394.30 392.83 674.50 507.67 364.84
Cash & Cash Equivalents at the end of the period 2350.26 1394.30 392.23 674.50 507.67





Details of Cash & Cash Equivalents at the end of
the period:


Cheques in hand,Imprest with Postal authority &
Balances with Banks
248.21 3.88 2.04 (20.00) 43.41
Fixed Deposits with Scheduled Banks 2102.05 1390.42 390.19 694.50 464.26
2350.26 1394.30 392.23 674.50 507.67



42

POWER FINANCE CORPORATION LTD
Standalone Balance Sheet as at September 30,2011


(Amount ` in crore)

Description

S
c
h
e
d
u
l
e
N
u
m
b
e
r


As at
30.09.2011


As at
30.09.2010

I . SOURCES OF FUNDS





(1) Share Holder's Funds



(a) Share Capital 1 1319.93 1147.77

(b) Reserves & Surplus 2 18381.82 19701.75 13466.89 14614.66



(2) Loan Funds 3

Secured Loans

235.36 0.00

Unsecured Loans

90827.66 91063.02 73562.77 73562.77



(3) Interest Subsidy Fund from GOI

408.88 599.35



(4) Deferred Tax Liablity (Net of Asset )

78.33 42.75







Total

111251.98 88819.53

II . APPLICATION OF FUNDS



(1) Fixed Assets 4


Gross Block

99.99

98.14


Less : Depreciation / Amortization

26.87

22.10


Net Block

73.12

76.04


Capital W orks in Progress

2.28

2.08


(2) Investments 5

54.03

30.64


(3) Loans 6

110421.25

87906.41



(4) Current Assets, Loans & Advances 7


(a) Cash & Bank Balances

1483.35 1320.35

(b) Other Current Assets

2224.97 1817.83

(c) Loans & Advances

416.42 586.50

4124.74 3724.68

Less : Current Liabilities & Provisions 8

(a) Current Liabilites

3126.74 2762.00

(b) Provisions

296.70 158.32

3423.44 2920.32

Net Current Assets

701.30 804.36



Total

111251.98 88819.53



43


POWER FINANCE CORPORATION LIMITED
Standalone Profit And Loss Account for the half year ended 30
th
September, 2011

(Amount ` in
crore)
Description
S
c
h
e
d
u
l
e
N
u
m
b
e
r
Half year ended
30.09.201
1
Half year ended
30.09.2010

INCOME

Operating Income 9 6049.58 4935.46
Other Income 1
0
19.61 20.53

Total

6069.19 4955.99

EXPENSES

Interest and other charges 1
1
4482.40 3052.20
Bond Issue Expenses 1
2
54.19 42.64
Personnel & Administration and Other Expenses 1
3
57.07 36.36
Depreciation 4 2.04 1.92
Amortization of Intangible Assets 4 0.41 0.50
Provision for Contingencies

6.87 -0.14
Provision for decline in value of investments

0.00 -0.04

Total

4602.98 3133.44

Profit for the year

1466.21 1822.55
Less(-) / Add(+) : Prior Period adjustments 1
4
0.84 -0.15

Profit before tax

1467.05 1822.40

Less(-) / Add(+) : Provision for Taxation

- Current Year :-

- Tax

-369.56 -484.17

- Earlier Years :-

- Tax

3.40 10.77

Less / Add : Deferred tax liability(-) / Asset(+)

- Current Year

4.64 4.20

Profit after tax available for appropriations 1
5
1105.53 1353.20

Basic & Diluted Earning Per Share of Rs.10/- each Refer Note No.
15 of Schedule-17, Notes on Accounts - (Amount in `)

8.70

11.79



44

POWER FINANCE CORPORATION LIMITED
STANDALONE CASH FLOW STATEMENT FOR THE HALF YEAR ENDED 30 TH SEPTEMBER, 2011
(` in Crores)

PARTICULARS
Half year ended
30.09.2011
Half year ended
30.09.2010
I
Cash Flow from Operating Activities :-

Net Profit before Tax and Extraordinary items 1467.05 1822.40
Add : Adjustment for
Loss on Sale of Assets 0.02 0.04
Depreciation / Amortisation 2.45 2.42
Amortisation of Zero Coupon Bonds 11.96 11.07
Foreign Exchange Loss / Gain 586.92 (2.59)
Dimunition in value of investments 0.00 (0.04)
Provision for Contingencies 6.87 (0.14)
Dividend / interest and profit on sale of investment (1.91) (0.13)
Provision of CSR Expenditure 6.50 5.85
Provision for Retirement Benefits / Others Welfare Expenses /
Wage revision
3.73 5.01
Operating profit before working capital changes : 2083.59 1843.89
Increase / Decrease :
Loans Disbursed (Net) (10827.79) (8053.63)
Other Current Assets (283.10) (225.07)
Loans & Advances (54.68) (82.76)
Current Liabilities and provisions 113.62 640.96
Cash flow before extraordinary items (8968.3) (5876.61)
Extraordinary items 0.00 0.00
Cash inflow / outflow from operations before tax (8968.36) (5876.61)
Income Tax & Fringe Benefit Tax Paid (477.63) (391.22)
Income Tax Refund 372.73 0.00
Net Cash flow from Operating Activities (9073.26) (6267.83)





45



I. Cash Flow From Investing Activities :
Sale / decrease of Fixed Assets 0.06 0.19
Purchase of Fixed Assets (1.23) (5.93)
Increase / decrease in Capital Works in Progress 0.00 (0.35)
Investment in Subsidiaries (0.15) 0.00
Dividend / Interest and profit on sale of investment 1.91 0.13
Other Investments 0.00 0.83
Net Cash Used in Investing Activities 0.59 (5.13)
III. Cash Flow From Investing Financial Activities :
Issue of Share Capital 3413.73 0.00
Issue of Bonds 14901.90 10298.50
Short Term Loans (Net) (4050.00) (650.00)
Loan Against Fixed Deposits (Net) (716.58) (1438.30)
Raising of Long Term Loans 0.00 3755.00
Repayment of Long Term Loans (2863.50) (3900.00)
Redemption of Bonds (2435.30) (2690.25
Foreign Currency Loans (Net) (0.64) 1073.92
Interest Subsidy Fund (42.99) (64.14)
Unclaimed Bonds (Net) (0.86) (13.55)
Payment of Final Dividend (including Corporate Dividend Tax) of previous
year
0.00 (172.17)
Net Cash in-flow from Financing Activities 8205.76 6199.01
Net Increase / Decrease in Cash & Cash Equivalents (866.91) (73.95)
Add : Cash & Cash Equivalents as at 31.03.2011 2350.26 1394.30
Cash & Cash Equivalents at the end of the period 1483.35 1320.35
Details of Cash & Cash Equivalents at the end of the period :
Cheque in hand, Imprest with Postal authority & Balances with Banks 1.16 50.11
Fixed Deposits with Scheduled Banks 1482.19 1270.24
1483.35 1320.35

46

POWER FINANCE CORPORATION
Consolidated Balance Sheet as at 30th September,


(` in crore)


S
c
h

As


As


I . SOURCES OF FUNDS



(1) Share Holder's Funds


(a) Share Capital 1319.93

1147.77


(b) Reserves & Surplus 18442.88 19762.81 13501.36 14649.13



(2) Loans Funds


Secured Loans

235.36



Unsecured Loans

90827.66 73562.7


(3) Interest Fund from GOI

408.88




(4) Deferred Tax (Net of Asset )









111313.03

88853.98

II . OF FUNDS



(1) Fixed Assets


(a) Gross Block

100.39




Less : / Amortization






Net Block






(b) Capital orks in Progress







(2) Investments






(3) Loans

110421.25

87906.41



(4) Current Assets, Loans & Advances


(a) Cash & Bank Balances

1575.30 1374.94

(b) Other Current Assets

2231.31 1821.1 4

(c) Loans & Advances

433.41

602.39


4240.02

3798.47


Less : Current Liabilities & Provisions


(a) Current Liabilites

3151.41

2796.72


(b) Provisions

299.23

160.28


3450.64

2957.00


(5) Net Current Assets

789.38

841.48


(6) EXPENDITURE


(to extent not written off)


expenses








111313.03

88853.98




















47


POWER FINANCE CORPORATION LIMITED
Consolidated Profit and Loss account for the half year ended 30th September, 2011


(` in
crore)
Description
S
c
h
e
d
u
l
e
N
u
m
b
e
r
Half year ended
30.09.2011
Half year ended
30.09.2010


INCOME

Operating Income 9 6059.59 4942.50
Other Income 1
0
24.98 24.97

Total

6084.57 4967.47

EXPENSES

Interest and other charges 1
1
4483.21 3053.84
Bonds Issue Expenses 1
2
54.19 42.64
Personnel & Administration and Other Expenses 1
3
66.26 40.53
Depreciation 4 2.09 1.94
Amortisation of Intangible Assets 4 0.41 0.50
Provision for Contingencies

6.87 -0.14
Provision for decline in value of investments

0.00 -0.04
Total

4613.03 3139.27

Profit for the year

1471.54 1828.20
Prior Period adjustments 1
4
0.88 -0.16

Profit before tax

1472.42 1828.04

Less(-)/Add(+) : Provision for taxation

- Current Year :-

- Tax

-372.09 -486.12
- Earlier Years :-

- Tax

3.36 10.77

Less/Add: Deferred tax liability(-)/Asset(+)

- Current Year

4.58 4.20

Profit after tax available for appropriations 1
5
1108.27 1356.89


Basic / Diluted Earning Per Share of Rs.10/- each - Amount in ` (Refer
Note No. 15 of Schedule-17, Consolidated Notes on Accounts)


8.73

11.82

















48

POWER FINANCE CORPORATION LIMITED
Consolidated Cash Flow Statement for the half year ended 30th September, 2011
(` in crore)

PARTICULARS

Half year ended
30.09.2011
Half year ended
30.09.2010
I
Cash flow from Operating Activities:-

Net Profit before Tax and Extraordinary items 1472.42

1828.04
Add : Adjustment for
Loss on Sale of Assets 0.02 0.04
Depreciation / Amortisation 2.50 2.44
Amortisation of Zero Coupon Bonds 11.96 11.07
Foreign Exchange Loss / Gain 586.92 (2.59)
Diminution in value of investments 0.00 (0.04)
Provision for Contingencies 6.87 (0.14)
Dividend / interest and profit on sale of investment (3.18) (0.13)
Provision of CSR Expenditure 6.50 5.85
Provision for Retirement Benefits / Others Welfare Expenses /
Wage revision
3.73 5.01
Interest received (3.23) (1.86)
Interest paid 0.00 0.22
Operating profit before working capital changes : 2084.51 1847.91
Increase / Decrease :
Loans Disbursed (Net) (10827.79) (8053.63)
Other Current Assets (292.72) (231.43)
Loans & Advances (57.81) (83.95)
Current Liabilities and provisions 122.10 633.69
Cash flow before extraordinary items (8971.71) (5887.41)
Extraordinary items 0.00 0.00
Cash inflow / outflow from operations before tax (8971.71) (5887.41)
Income Tax & Fringe Benefit Tax Paid (480.79) (394.30)
Income Tax Refund 372.73 0.00
Net Cash flow from Operating Activities (9079.77) (6281.71)

49

2 Cash flow from Investing Activities:-
Sale on Fixed Assets 0.06 0.19
Purchase of Fixed Assets (1.41) (5.98)
Work in progress 0.00 (0.35)
Investment in Subsidiaries including interest thereon (0.05) 0.00
Interest Received 3.23 2.01
Dividend/ Interest and profit on sale of investment 3.18 0.13
Other Investments 0.00 2.17
Net Cash Used in Investing Activities 5.01 (1.83)
3 Cash flow from Financing Activities:-
Issue of Share Capital 3413.73 0.00
Issue of Bonds 14901.90 10298.50
Short Term Loans (Net) (4050.00) (650.00)
Loan Against Fixed Deposits (Net) (716.58) (1438.30)
Raising of Long Term Loans 0.00 3755.00
Repayment of Long Term Loans (2863.50) (3900.00)
Redemption of Bonds (2435.30) (2690.25
Foreign Currency Loans (Net) (0.64) 1073.92
Interest paid 0.11 (0.94)
Interest Subsidy Fund from GOI (Net) (42.99) (64.14)
Unclaimed Bonds (Net) (0.86) (13.55)
Payment of Final Dividend (including Corporate Dividend Tax) of
previous year
0.00 (172.17)
Net Cash in flow from Financing Activities 8205.87 6198.07
Net Increase / Decrease in Cash & Cash Equivalents (868.89) (85.47)
Add : Cash & Cash Equivalents as at 31.03.2011 2444.19 1460.41
Cash & Cash Equivalents at the end of the period # 1575.30 1374.94
Details of Cash & Cash Equivalents at the end of the period :
Cheque in hand, Imprest with Postal authority & Balances with
Banks
3.15 50.75
Fixed Deposits with Scheduled Banks 1572.15 1324.19
1575.30 1374.94

# Includes ` 28.30 Crore (Previous period ` 19.06 Crores share of jointly controlled Entity)




50

GENERAL INFORMATION
Our Company was incorporated on July 16, 1986 as a public limited company under the Companies Act. We received a
certificate for commencement of business on December 31, 1987. The GoI incorporated our Company as a financial institution
in order to finance, facilitate and promote power sector development in India with the President of India holding 100% of our
paid up equity share capital at the time of incorporation and at present its shareholding is 73.72% of our paid up equity share
capital.
Registered and Corporate Office
Urjanidhi,
1, Barakhamba Lane,
Connaught Place,
New Delhi- 110 001, India.
Tel.: +91 11 2345 6000
Fax: +91 11 2341 2545
Website: www.pfc.gov.in

Registration

Details Registration/Identification number
Registration Number 24862
Corporate Identity Number L65910DL1986GOI024862
RBI Registration Number classifying Company as
Infrastructure Finance Company
B-14.00004

For details on changes in our Registered Office, see History and Certain Corporate Matters on page 109 of this Draft Shelf
Prospectus.
Address of the Registrar of Companies
The Registrar of Companies
National Capital Territory of Delhi and Haryana
4
th
Floor, IFCI Tower, 61, Nehru Place
New Delhi 110 019, India
Tel: +91 (11) 2623 5704
Fax: +91 (11) 2623 5702

Company Secretary and Compliance Officer
Mr. J. S. Amitabh,
Urjanidhi, 1, Barakhamba Lane,
Connaught Place,
New Delhi 110 001, India
Tel: +91 11 2345 6000
Fax: +91 11 2345 6285
E-mail: taxfreebonds11-12@pfcindia.com
Website: www.pfc.gov.in


Investors may contact the Compliance Officer or the Registrar to the Issue in case of any pre-Issue or post-Issue related
problems such as non-receipt of letters of allotment, credit of allotted Bonds in the respective beneficiary account or
refund orders, etc.






51

LEAD MANAGERS TO THE ISSUE
SBI Capital Markets Limited

202, Maker Tower E, Cuffe Parade,
Mumbai -400 005
Tel: +91 22 2217 8300; Fax: +91 22 2218 8332
Email: pfctaxfree@sbicaps.com
Investor Grievance Email: investor.relations@sbicaps.com
Website: www.sbicaps.com
Contact Person: Mr Nithin Kanuganti/Mr. Puneet Deshpande
Compliance Officer: Mr. Bhaskar Chakraborty
SEBI Registration No.: INM000003531*


*The SEBI registration of one of the Lead Managers to the Issue, SBI Capital Markets Limited was valid up to July 31, 2011. The
application for renewal of the certificate of registration in the prescribed manner has been made by SBI Capital Markets Limited on
April 29, 2011, to SEBI, three months before the expiry of the period of the certificate as required under Regulation 9(1) of the SEBI
(Merchant Bankers) Regulations, 1992. The approval of SEBI in this regard is currently awaited.

A. K. Capital Services Limited

30-39 Free Press House, 3rd Floor, Free Press Journal Marg, 215,
Nariman Point, Mumbai 400021
Tel: +91 22 6754 6500/ 6634 9300; Fax: +91 22 6610 0594
Email: pfcbonds@akgroup.co.in
Investor Grievance Email: investor.grievance@akgroup.co.in
Website: www.akcapindia.com
Contact Person: Mr. Hitesh Shah
Compliance Officer: Mr. Vikas Agarwal
SEBI Registration No.: INM000010411


RR Investors Capital Services Private Limited

133-A, 13th Floor, A-wing,
Mittal Tower, Nariman Point,
Mumbai - 400 021
Tel: +91 22 2288 6627/28
Fax: +91 22 2285 1925
Email: pfcbonds@rrfcl.com
Website: www.rrfinance.com / www.rrfcl.com
Contact Person: Mr. Brahmdutta Singh
Compliance Officer: Mr. Sandeep Mahajan
SEBI Registration No.: INM000007508


DEBENTURE TRUSTEE

GDA Trustee & Consultancy Ltd.

Shri Niwas Apte Road, 1202/29,
Shivaji Nagar,
Pune - 411004
Tel: 91-20-25510401(3 lines)
Fax: 91-20-25532567
Email: gdatm@vsnl.net
Contact Person: Mr. R.K.Kulkarni
Website: www.gdatc.com
SEBI Registration No: IND000000034


52

REGISTRAR TO THE ISSUE

Karvy Computershare Private Limited

Plot Nos.17-24, Vittal Rao Nagar, Madhapur,
Hyderabad - 500 081, India
Tel: 1-800- 3454001
Fax: +91 (40) 23431551
Email: pfctaxfree@karvy.com
Investor Grievance Email: einward.ris@karvy.com
Website: www.karvy.com
Contact Person: Mr. Murali Krishna
SEBI Registration: INR000000221


STATUTORY AUDITORS

Raj Har Gopal & Co.
Chartered Accountants
412, Ansal Bhawan,
16, K.G. Marg,
New Delhi 110001, India
Tel: +91 (11) 4152 0698/ 4152 0699
Email: rajhargopal1@hotmail.com
Firm Registration No.: 002074N
N.K. Bhargava & Co.
Chartered Accountants
C-31, Acharya Nikaten, 1st Floor,
Opp Pocket One, Mayur Vihar,
Phase One, New Delhi 110091, India
Tel: +91 (11) 22793650, 22752376
Email: nkbhargavacompany@yahoo.co.in
Firm Registration No.: 000429N

Legal Advisors to the Issue
JurisPrudent Consulting Partners
First Floor, C-17, Community Centre,
Janakpuri, New Delhi 110 058, India
Tel.: +91 (11) 3200 0177
Fax: +91 (11) 4158 8441
E-mail: corporate@jurisprudentconsulting.in
Contact Person: Mr. Ajay Jain

Escrow Collection Banks / Bankers to the Issue
[]
Lead Brokers
(To be finalized in the Tranche Prospectus(es)

Bankers to the Company
State Bank of India
Chanderlok Building branch,
36, Janpath,
New Delhi - 110 001, India.
Tel: +91 (11) 2332 9831
Fax: +91 (11) 2373 9198
Email: sbi.01639@sbi.co.in
Website : www.statebankofindia.com
Contact Person: Mr.Dhanraj Chaudhary



Bank of India
P.T.I Building, 4, Sansad Marg,
New Delhi 110 001
Tel: +91 (11) 23765124, 23765125, 23765126
Fax: +91 (11) 23765123
Email:
LargeCorporateBr.NewDelhi@bankofindia.co.in
Website: www.bankofindia.com
Contact Person: Mr. Suchit Garg




53

IDBI Bank Limited
Indian Red Cross Building,
1, Red Cross Road,
New Delhi - 110 001, India.
Tel: +91 (11) 6628 1027
Fax: +91 (11) 2375 2730
Email: rajiv.sharma@idbi.co.in
Website: www.idbi.com
Contact Person: Mr. Rajiv Sharma

ICICI Bank Limited
9-A, Phelps Building,
A Block,
Connaught Place,
New Delhi - 110 001, India.
Tel: +91 (11) 6631 0336
Fax: +91 (11) 6631 0410
Email: abhay.s@icicibank.com,
mohit.sa@icicibank.com, anil.gadoo@icicibank.com
Website: www.icicibank.com
Contact Person: Mr. Abhay Singh, Mr. Mohit Saxena,
Mr.Anil Gadoo

HDFC Bank Limited
FIG OPS Department,
Lodha, I Think Techno Campus,
O-3 Level, Next to Kanjurmarg Railway Station,
Kanjurmarg (East),
Mumbai 400 042, India.
Tel: +91 (22) 3075 2928
Fax: +91 (22) 2579 9801
Email: figdelhi@hdfcbank.com,
uday.dixit@hdfcbank.com
Website: www.hdfcbank.com
Contact Person: Mr. Uday Dixit
Andhra Bank
M-35, Connaught Circus branch,
New Delhi - 110 001, India.
Tel: +91 (11) 23415616
Fax: +91 (11) 2341 6043
Email: bmdel084@andhrabank.co.in
Website: www.andhrabank.in
Contact Person: Mr. B L Gupta





Credit Rating Agencies
CRISIL Limited
CRISIL House, Central Avenue
Hiranandani Business Park, Powai,
Mumbai 400 076, India
Tel: +91 (22) 3342 3000
Fax: +91 (22) 3342 3050
Website: www.crisil.com

ICRA Limited
Building No. 8, 2
nd
Floor, Tower A,
DLF Cyber City, Phase- II,
Gurgaon 122 002, India
Tel: +91 (124) 4545 300
Fax: +91 (124) 4545 350
Website: www.icra.in

Credit Rating and Rationale
CRISIL Limited (CRISIL) has assigned a rating of CRISIL AAA/Stable (pronounced as CRISIL Triple A rating with stable
outlook) vide its letter no. SN/FSR/PFC/2011-12/865 to the long term borrowing programme of ` 38,500 Crores and CRISIL
A1+ (pronounced as CRISIL A One Plus) vide its letter no. SN/FSR/PFC/2011-12/866 to the short term borrowing programme
of ` 5000 Crores both dated October 13, 2011 (total ` 43,500 crores) and ICRA Limited has by its letter no. D/RAT/2011-
2012/P3/20 dated October 21, 2011, assigned a rating of ICRA AAA (pronounced ICRA triple A) to the Long Term
Borrowing Programme of ` 43,500 crores, during the financial year 2011-12. Instruments with this rating are considered to
have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit
risk. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decision.
These ratings are subject to revision or withdrawal at any time by the assigning rating agency(ies) and should be evaluated
independently of any other ratings.
For details in relation to the rationale for the credit rating by CRISIL and ICRA, see Annexure II of this Draft Shelf
Prospectus.

Expert Opinion
Except the letters dated October 13, 2011 and October 21, 2011 issued by CRISIL and ICRA, respectively, in respect of the
credit rating for the Bonds, and the report dated November 29, 2011 on our Audited standalone and consolidated financial
statements for the financial year March 31, 2007, 2008, 2009, 2010, 2011, the report dated November 9, 2011 on Audited
standalone and consolidated financial statements of the Company for the half year ended September 30, 2011 and statement of
tax benefits dated November 29, 2011 issued by Raj Har Gopal & Co. and N.K. Bhargava & Co., Statutory Auditors of the
Company, the Company has not obtained any expert opinion.


54



Minimum Subscription

In terms of the SEBI Debt Regulations, an issuer undertaking a public issue of debt securities is required to disclose the
minimum amount of subscription that it proposes to raise through the issue in the offer document. In the event that an issuer
does not receive the minimum subscription disclosed in the offer, all application monies received in the public issue are
required to be refunded forthwith. The Company has decided to set no minimum subscription for this Issue.

Issue Programme

ISSUE PROGRAMME*
ISSUE OPENS ON ISSUE CLOSES ON
[] []

*The subscription list for the Issue shall remain open for subscription at the commencement of banking hours and close at the close of banking hours,
with an option for early closure (subject to the Issue being open for a minimum of 3 days) or extension by such period, upto a period of 30 days from
the date of opening of the Issue, as may be decided by the Board of Directors/ Committee of the Company. In the event of such early closure of the
subscription list of the Issue, our company shall ensure that public notice of such early closure is published on or before the day of such early date of
closure through advertisement/s in a leading national daily newspaper.


55

CAPITAL STRUCTURE

Our share capital as on the date of this Draft Shelf Prospectus is set forth below:

Aggregate value
(` in crores)
Authorised share capital
2,000,000,000 Equity Shares of ` 10 each 2,000.00
Issued, subscribed and paid up share capital
1,319,931,705 Equity Shares of ` 10 each 1,319.93
Securities premium account 4092.67

Share capital history of Our Company:
The following is the history of the equity share capital of our Company, since its incorporation.
Date of Allotment Number of
equity shares


Face
Value
(`)*

Issue
price per
share (`)
Nature of
Consideration
(cash, bonus,
consideration
other than
cash)
Cumulative Share
Capital (`)
September 23, 1987 304,000 1,000 1,000 Cash 304,000,000
March 25, 1988 1,000,000 1,000 1,000 Cash 1,304,000,000
November 7, 1988 2,000,000 1,000 1,000 Cash 3,304,000,000
December 13, 1989 3,000,000 1,000 1,000 Cash 6,304,000,000
February 25, 1991 2,200,500 1,000 1,000 Cash 8,504,500,000
February 17, 1992 1,250,000 1,000 1,000 Cash 9,754,500,000
September 1, 1992 100,000 1,000 1,000 Cash 9,854,500,000
July 15, 1994 450,000 1,000 1,000 Cash 10,304,500,000
February 19, 2007 117,316,700 10 85* Cash 11,477,667,000
May 24, 2011 172,165,005 10 203# Cash 13,199,317,050
Total 1,319,931,705 13,199,317,050

* With effect from September 26, 2002, the equity shares of ` 1,000 each have been split into Equity Shares of the face value of
` 10 each. Subsequently, PFC came up with an initial public offer in February 2007. After the Issue the shareholding of the
President of India, through the Ministry of Power (including shares held through its seven nominees) was ` 10,304.50 million,
i.e. 89.78% of the issued and paid up equity capital of our Company.
# In May 2011 our company came up with a Further Public Offer(FPO) comprising of Fresh Issue of 172,165,005 Equity
Shares of ` 10 each and Offer for sale of 57,388,335 Equity Shares of ` 10 each. After the FPO, theshareholding of the
President of India, through the MoP, was reduced to 973,061,665 (along with its nominees) shares i.e. 73.72% of the fully
diluted present paid-up equity capital of our Company. The retail investors and eligible employees were issued equity shares at
a price of ` 192.85 per equity share.

56

Shareholding Pattern of the Company as on September 30, 2011
Category of Shareholder No. of
Share
holders
Total No. of
Shares
Total No. of
Shares held in
Dematerialized
Form
Total Shareholding as
a % of total No. of
Shares
As a %
of (A+B)
As a % of
(A+B+C)
(A) Shareholding of Promoter and
Promoter Group

(1) Indian
Central Government / State
Government(s)
1 *973,061,665 973,061,665 73.72 73.72
Sub Total 1 *973,061,665 973,061,665 73.72 73.72
(2) Foreign - - - - -
Total shareholding of Promoter and
Promoter Group (A)
1 *973,061,665 973,061,665 73.72 73.72
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI 143 88,620,745 88,620,745 6.71 6.75
Financial Institutions / Banks
30 6,493,350 6,493,350 0.49 0.49
Insurance Companies
6 38,321,520 38,321,520 2.90 2.90
Foreign Institutional Investors
170 85,391,556 85,391,556 6.47 6.47
Sub Total B(1)
349 218,827,171 218,827,171 16.58 16.58
(2) Non-Institutions
Bodies Corporate
1,585 81,272,605 81,272,605 6.16 6.16
Individuals
Individual shareholders holding nominal
share capital up to ` 1 lakh
242,143 38,547,860 38,539,225 2.92 2.92
Individual shareholders holding nominal
share capital in excess of ` 1 lakh
121 6,198,540 6,198,540 0.47 0.47
Any Others (Specify)
2,620 2,023,864 2,023,864 0.15 0.15
Non Resident Indians
2,349 1,109,486 1,109,486 0.08 0.08
Clearing Members
244 784,250 784,250 0.06 0.06
Trusts
26 129,888 129,888 0.01 0.01
Foreign Nationals
1 240 240 - -
Sub Total B(2)
246,469 128,042,869 128,034,234 9.70 9.70
Total Public shareholding (B) =
B(1)+B(2)
246,818 346,870,040 346,861,405 26.28 26.28
Total (A)+(B)
246,819 1,319,931,705 1,319,923,070 100.00 100.00
(C)Shares held by the custodians
against which Depository Receipts
have been issued
- - - - -
Total (A)+(B)+(C)
246,819 1,319,931,705 1,319,923,070 100.00 100.00

*Includes 700 Shares held by Mr.Devender Singh in the capacity as nominee of Government of India

57

List of top 10 holders of Equity Shares of the Company as on September 30, 2011:

S.No. Name
No. of Equity Shares of
face value of ` 10 each
% to the total Equity
Share Capital of the
company
1
President of India *973,061,665 73.72
2
Life Insurance Corporation of India 35,374,379 2.68
3
ICICI Prudential Life Insurance 15,593,573 1.81
4
HDFC Standard Life Insurance Company Limited 14,748,423 1.12
5
LIC of India - Market Plus-1 13,120,173 0.99
6
Reliance Retail Limited 8,705,775 0.66
7
Morgan Stanley Mauritius Company Limited 7,472,188 0.56
8
Government Pension Fund Global 6,189,614 0.47
9
Birla Sun Life Insurance Company Limited 5,843,179 0.44
10
LIC of India - Market Plus 5,246,442 0.40

Total 1,085,355,411 82. 23%
*Includes 700 Shares held by Mr.Devender Singh in the capacity as nominee of Government of India

List of top 10 Non-convertible Debenture/Bondholders of the Company as on September 30, 2011:

Unsecured Non-convertible Debentures/Bonds

The list of the top ten holders of unsecured, non-convertible debenture/bondholders of our Company as on September 30, 2011
is enclosed as Annexure - IV

Secured Non-convertible Debentures/Bonds

The list of the top ten holders of Secured Non-convertible Debenture/Bondholders of our Company as on September 30, 2011
is enclosed as Annexure - IV

Debt - Equity Ratio

(` in crores)
Standalone Consolidated
Description Pre Issue
^
Post Issue*# Pre Issue
^
Post Issue*#

Debts
Short term debt 1552.46 1552.46 1552.46 1552.46
Long term debt 89510.56
93543.69
89510.56
93543.69
Total Debt 91063.02 95096.15 91063.02 95096.15
Shareholders Funds
Share Capital 1319.93 1319.93 1319.93 1319.93
Reserves & Surplus 18381.82 18381.82 18442.88 18442.88
(-) Revaluation Reserve (0.00) (0.00) (0.00) (0.00)
Net Reserves(Net of
Revaluation)
18381.82 18381.82 18442.88 18442.88

58

(-) Reserve for bad and
doubtful debts u/s 36(1)(vii
a)(c) of IT Act,1961
(1044.83) (1044.83) (1044.83) ([1044.83)
(-) Miscellaneous
Expenditure (to the extent
not written off)
(0.00) (0.00) (0.02) (0.02)
Net Worth
18656.92 18656.92 18717.96 18717.96
Long Term Debt / Net
Worth
4.80 5.01 4.78 5.00
^
Pre Issue Standalone and Consolidated figures are as on September 30, 2011.
* Post Issue Standalone & Consolidated Ratios has been calculated based upon the assumptions that the issue of
` 4033.13 Crores is fully subscribed and there is no change in Shareholders' funds and Short term Debt.

# Any changes in Debt and Shareholders funds after September 30, 2011 has not been considered.

1. None of the Equity Shares of the Company are pledged or otherwise encumbered.
2. Our Company has not issued any Equity Shares or debt securities issued for consideration other than cash, whether
in whole or part, since its incorporation.
3. Our Company has not, since incorporation, issued any debt securities at a premium or at a discount, or in
pursuance of an option.
4. For details of the outstanding borrowings of the Company as on September 30, 2011, see Financial
I ndebtedness on page 133 of this Draft Shelf Prospectus.






59

OBJECTS OF THE ISSUE

Issue Proceeds
CBDT vide its Notification No. 52/2011 [F.No. 178/56/2011-(ITA 1)] dated September 23, 2011 authorised the Company to
raise Tax Free Bonds aggregating to ` 5,000 crores out of which, the Company has already raised funds through two private
placements vide documents dated September 28, 2011 and November 1, 2011, respectively, aggregating to an amount of `
966.87 crores. Thus, the Company proposes to raise the balance amount of ` 4033.13 crores through public issue of Tax Free
Bonds in one or more tranche(s), prior to March 31, 2012. The funds raised through this Issue will be utilized towards lending
purposes, debt servicing and working capital requirements.
The main objects clause of our Memorandum of Association permits our Company to undertake its existing activities as well
as the activities for which the funds are being raised through this Issue.
In accordance with the SEBI Debt Regulations, our Company will not utilize the proceeds of the Issue for providing loans to or
acquisition of shares of our Subsidiaries. Further, our Company is a public sector enterprise and, as such, we do not have any
identifiable group companies or companies under the same management.
The Issue proceeds shall not be utilized towards full or part consideration for the purchase or any acquisition, including by way
of a lease, of any property.
Interim use of Proceeds
The Board of Directors of the Company, in accordance with the policies formulated by them from time to time, will have
flexibility in deploying the proceeds received from the Issue. Pending utilization of the proceeds out of the Issue for the
purposes described above, the Company intends to temporarily invest funds in high quality interest bearing liquid instruments
including money market mutual funds, deposits with banks or temporarily deploy the funds in investment grade interest
bearing securities or inter corporate loans as may be approved by the Board. Such investment would be in accordance with the
investment policies approved by the Board or any committee thereof from time to time.
Monitoring of Utilization of Funds
In terms of the SEBI Debt Regulations, there is no requirement for appointment of a monitoring agency in relation to the use of
proceeds of the Issue. Our Board of Directors shall monitor the utilisation of the proceeds of the Issue. Our Company will
disclose in our financial statements for the relevant fiscal commencing from Fiscal 2012, the utilization of the proceeds of the
Issue under a separate head along with any details in relation to all such proceeds of the Issue that have not been utilized
thereby also indicating investments, if any, of such unutilized proceeds of the Issue. We shall utilize the proceeds of the Issue
only upon the execution of the documents for creation of security as stated in this Draft Shelf Prospectus in the section titled
Terms of the Issue Security on page 158 of this Draft Shelf Prospectus and upon the listing of the Bonds.
We propose to issue Bonds to NRIs on a non-repatriable as well as repatriable basis. Under the provisions of the Foreign
Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000, as amended, any monies borrowed from a
person resident outside India cannot be used:

(a) for any purpose except in ones own business other than (i) the business of chit fund, (ii) as Nidhi Company, (iii)
agricultural or plantation activities or real estate business; or construction of farm houses; or (iv) trading in Transferable
Development Rights (TDRs); or
(b) for any investment, whether by way of capital or otherwise, in any company or partnership firm or proprietorship
concern or any entity, whether incorporated or not, or for the purpose of re-lending.

To ensure compliance with the aforementioned, PFC shall open and maintain a separate escrow account with the Escrow
Collection Bank(s) in connection with all application monies received from NRIs, (NRI Escrow Account). All application
monies received from NRI applicants shall be deposited in the NRI Escrow Account maintained with each Escrow Collection
Bank. Upon creation of security as disclosed in this Draft Shelf Prospectus, the Escrow Collection Bank(s) shall transfer the
monies from the NRI Escrow Accounts to a separate bank account, (NRI Account), which shall be different from the Public
Issue Account. PFC shall at all times ensure that any monies kept in the NRI Escrow Account and/or the NRI Account shall be
utilised only in accordance with and subject to the restrictions contained in the Foreign Exchange Management (Borrowing and
Lending in Rupee) Regulations, 2000, and other applicable statutory and/or regulatory requirements.


60


Issue Expenses
A portion of the Issue proceeds will be used to meet Issue expenses. The details of Issue expenses shall be updated in the
respective tranche prospectus (es.)
Particulars Amount
(` in crores )
Percentage of net proceeds
(Issue proceeds less Issue
expenses) of the Issue (in %)
Percentage of total expenses
of the Issue (in %)
Fees payable to Intermediaries
Registrar to the Issue [] [] []
Legal Advisors [] [] []
Debenture Trustee [] [] []
For advertising and marketing [] [] []
Lead Managers Fees,Selling and
Brokerage commission
[] [] []
Other Miscellaneous Expenses [] [] []
Total [] [] []






61

Raj Har Gopal & Co. N.K.Bhargava & Co.
Chartered Accountants, Chartered Accountants,
412, Ansal Bhawan, C-31, Ist Floor, Acharya Niketan,
16, K.G. Marg Mayur Vihar Phase-I
New Delhi 110 001 New Delhi 110 091.
Ph no.011 41520698,41520699 Ph no. 011 22752376
E-mail:rajhargopal@hotmail.com E-mail: nkbhargavacompany@yahoo.co.in

STATEMENT OF TAX BENEFITS

Under the current tax laws, the following possible tax benefits, inter alia, will be available to the Bond Holder. This is
not a complete analysis or listing of all potential tax consequences of the subscription, ownership and disposal of the
Bond, under the current tax laws presently in force in India. The benefits are given as per the prevailing tax laws and
may vary from time to time in accordance with amendments to the law or enactments thereto. The Bond Holder is
advised to consider in his own case the tax implications in respect of subscription to the Bond after consulting his tax
advisor as alternate views are possible interpretation of provisions where under the contents of his statement of tax
benefit is formulated may be considered differently by income tax authority, government, tribunals or court. We are
not liable to the Bond Holder in any manner for placing reliance upon the contents of this statement of tax benefits.

A. INCOME TAX

1. Interest from Bond do not form part of Total Income.

a) In exercise of power conferred by item (h) of sub clause (iv) of clause (15) of Section 10 of the
Income Tax Act, 1961 the Central Government vide notification no 52/2011.F.No.178/56/2011-
(ITA-1) dated 23rd September 2011 authorizes our Company to issue during the Financial year
2011-12, tax free, secured, redeemable, non-convertible bonds of rupee 1,000 each in case of
public issue for the aggregate amount of `.5,000 crores subject to the other following conditions
that

i) It shall be mandatory for the subscribers of such bonds to furnish their permanent account
number to the issuer.

ii) The holder of such bonds must register his or her name and holding with the issuer.

iii) The tenure of the bonds shall be ten or fifteen years.

iv) The interest on the bonds shall be not less than hundred basis points lower than the yield on
Government Securities of equivalent residual maturity as reported by the Fixed Income Money
Market and Derivative Association of India, as on the last working day of the month immediately
preceding the month of the issue of the bonds but in the case of a Public issue, the interest on the
bonds shall be not less than 50 basis points lower than the yield on Government Securities of
equivalent residual maturity.

v) The commission on sale shall be capped at a maximum of a flat fee of 1.25% of the issue size;

b) Section 10(15)(iv)(h) to be read with Section 14A(1) provides that in computing the total income of
a previous year of any person, interest payable by any public sector company in respect of such
bonds or debentures and subject to such conditions, including the condition that the holder of such
bonds or debentures registers his name and the holding with that company, as the Central
Government may, by notification in the Official Gazette, specify in this behalf shall not be included;

Section 2(36A) of the IT Act defines Public Sector Company as any corporation established by or
under any state Central, State, Provincial Act or a Government company as defined section 617 of
the companies Act, 1956.

c) Accordingly, pursuant to the aforesaid notification, interest from bond will be exempt from income
tax.

62


d) Since the interest Income on these bonds is exempt, no Tax Deduction at Source is required.

e) Under section 195 of the Income Tax Act, Income Tax shall be deducted from sum payable to non
residents on the long term capital gain and short term capital gain arising on sale and purchase of
bonds at the rate specified in the Finance Act of the relevant year or the rate or rates of the income
tax specified in an agreement entered into by the Central Government under section 90, or an
agreement notified by the Central Government under section 90A, as the case may be.

However under section 196D, No deduction of tax shall be made from income arising by way of
capital gain to Foreign Institutional Investors.

2. CAPITAL GAIN

a) Under section 2 (29A) of the I.T. Act, read with section 2 (42A) of the I.T. Act, a listed Bond is treated
as a long term capital asset if the same is held for more than 12 months immediately preceding the date
of its transfer.

Under section 112 of the I.T. Act, capital gains arising on the transfer of long term capital assets being
listed securities are subject to tax at the rate of 20% of capital gains calculated after reducing indexed
cost of acquisition or 10% of capital gains without indexation of the cost of acquisition. The capital
gains will be computed by deducting expenditure incurred in connection with such transfer and cost of
acquisition/indexed cost of acquisition of the bonds from the sale consideration.

However as per third proviso to section 48 of Income tax act, 1961benefits of indexation of cost of
acquisition under second proviso of section 48 of Income tax Act, 1961 is not available in case of bonds
and debenture, except capital indexed bonds. Thus, long term capital gain tax can be considered 10% on
listed bonds without indexation.

Securities Transaction Tax (STT) is a tax being levied on all transactions in specified securities done
on the stock exchanges at rates prescribed by the Central Government from time to time. STT is not
applicable on transactions in the Bonds.

In case of an individual or HUF, being a resident, where the total income as reduced by the long term
capital gains is below the maximum amount not chargeable to tax i.e. Rs 180,000 in case of all
individuals, Rs.190,000 in case of resident women, Rs 250,000 in case of resident senior citizens and
Rs.500,000 in case of resident very senior citizens, the long term capital gains shall be reduced by the
amount by which the total income as so reduced falls short of the maximum amount which is not
chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at
the rate of ten per cent in accordance with and the proviso to sub-section (1) of section 112 of the I.T.
Act read with CBDT Circular 721 dated September 13, 1995.

A 2% education cess and 1% secondary and higher education cess on the total income tax (including
surcharge for corporate only) is payable by all categories of tax payers.

b) Short-term capital gains on the transfer of listed bonds, where bonds are held for a period of not more
than 12 months would be taxed at the normal rates of tax in accordance with and subject to the provision
of the I.T. Act.

The provisions related to minimum amount not chargeable to tax, surcharge and education cess
described at para 3 above would also apply to such short-term capital gains.

c) Under section 54 EC of the Act and subject to the conditions and to the extent specified therein, long
term capital gains arising to the bondholders on transfer of their bonds in the company shall not be
chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months
from the date of transfer. If only part of the capital gain is so invested, the exemption shall be
proportionately reduced. However, if the said notified bonds are transferred or converted into money
within a period of three years from their date of acquisition, the amount of capital gains exempted earlier
would become chargeable to tax as long term capital gains in the year in which the bonds are transferred
or converted into money. Where the benefit of section 54 EC of the Act has been availed of on

63

investments in the notified bonds, a deduction from the income with reference to such cost shall not be
allowed under section 80 C of the Act.

d) As per the provisions of section 54F of the Income Tax Act, 1961 and subject to conditions specified
therein, any long-term capital gains (not being residential house) arising to Bond Holder who is an
individual or Hindu Undivided Family, are exempt from capital gains tax if the entire net sales
considerations is utilized, within a period of one year before, or two years after the date of transfer, in
purchase of a new residential house, or for construction of residential house within three years from the
date of transfer. If part of such net sales consideration is invested within the prescribed period in a
residential house, then such gains would be chargeable to tax on a proportionate basis.

Provided that the said Bond Holder should not own more than one residential house at the time of such
transfer. If the residential house in which the investment has been made is transferred within a period of
three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier
would become chargeable to tax as long term capital gains in the year in which such residential house is
transferred. Similarly, if the Bond Holder purchases within a period of two years or constructs within a
period of three years after the date of transfer of capital asset, another residential house (other than the
new residential house referred above), then the original exemption will be taxed as capital gains in the
year in which the additional residential house is acquired.

e) The income by way of short term capital gains or long term capital gains (not covered under Section
10(38) of the IT Act) realized by FIIs on sale of security in the Company would be taxed at the
following rates as per Section 115AD of the I.T. Act.

Short term capital gains- 30% (plus applicable surcharge and education cess).
Long term capital gains - 10% without cost indexation (plus applicable surcharge and education cess)

As per section 90(2) of the IT Act, the provision of the IT Act would not prevail over the provision of
the tax treaty applicable to the non-resident to the extent such tax treaty provisions are more beneficial to
the non resident. Thus, a non resident can opt to be governed by the beneficial provisions of an
applicable tax treaty

3. Profit and loss
In case the Bonds are held as stock in trade, the income on transfer of bonds would be taxed as business
income or loss in accordance with and subject to the provisions of the I.T. Act.

4. Taxation on gift

As per section 56(2)(vii) of the I.T. Act, in case where individual or Hindu undivided Family receives bond
from any person on or after 1st October, 2009

A. without any consideration, aggregate fair market value of which exceeds fifty thousand rupees, then the
whole of the aggregate fair market value of such bonds/debentures or;

B. for a consideration which is less than the aggregate fair market value of the Bond by an amount
exceeding fifty thousand rupees, then the aggregate fair market value of such property as exceeds such
consideration;

shall be taxable as the income of the recipient.

Provided further that this clause shall not apply to any sum of money or any property received
(a) from any relative; or
(b) on the occasion of the marriage of the individual; or
(c) under a will or by way of inheritance; or
(d) in contemplation of death of the payer or donor, as the case may be; or
(e) from any local authority as defined in the Explanation to clause (20) of section 10; or
(f) from any fund or foundation or university or other educational institution or hospital or other medical
institution or any trust or institution referred to in clause (23C) of section 10; or
(g) from any trust or institution registered under section 12AA.



64

B. WEALTH TAX

Wealth-tax is not levied on investment in bond under section 2(ea) of the Wealth-tax Act, 1957.

C. Proposals made in Direct Taxes Code

The Honble Finance Minister has presented the Direct Tax Code Bill, 2010 (DTC Bill) on August 30,
2010, which is proposed to be effective from April 1, 2012. The DTC Bill is likely to be presented before the
Indian Parliament thereafter. Accordingly, it is currently unclear what effect the Direct Tax Code would have
on the investors.

For Raj Har Gopal & Co. For N.K.Bhargava & Co.
Chartered Accountants Chartered Accountants
Firms Regn. No.: 002074N Firms Regn. No.: 000429N


G.K. Gupta N.K.Bhargava
Partner Partner
Membership no. 81085 Membership no.080624

Place: New Delhi
Date: 29.11.2011


















65

SECTION IV - ABOUT THE COMPANY
INDUSTRY OVERVIEW

The information in this section has not been independently verified by us, the Lead Managers or any of our or their respective
affiliates or advisors. The information may not be consistent with other information compiled by third parties within or outside
India. Industry sources and publications generally state that the information contained therein has been obtained from sources
it believes to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability
cannot be assured. Industry and Government publications are also prepared based on information as of specific dates and may
no longer be current or reflect current trends. Industry and Government sources and publications may also base their
information on estimates, forecasts and assumptions which may prove to be incorrect. Accordingly, investment decisions
should not be based on such information. Figures used in this section are presented as in the original sources and have not
been adjusted, restated or rounded off for presentation in this Draft Shelf Prospectus.
The Indian Economy
India has an estimated population of 1,189,172,906 people as at July 2011, with an estimated gross domestic product (GDP)
calculated on a purchasing power parity basis of approximately U.S.$ 4.06 trillion in 2010. This makes it the fifth largest
economy in the world in terms of GDP after the European Union, United States of America, China and Japan. (Source: CIA
World Factbook 2011)
In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic
demand - and growth exceeded 8% year-on-year in real terms. (Source: CIA World Factbook 2011). By way of comparison,
the below table illustrates the GDP growth in 2010 for certain other countries:
Country GDP Growth in 2010 (%)*
Singapore 14.5
India 10.4
China 10.3
Brazil 7.5
Japan 3.9
United States 2.8
United Kingdom 1.3
*adjusted for inflation
(Source: CIA World Factbook 2011)
In the past, Indias GDP has grown at an average rate of 8.8% between Fiscal 2003 and Fiscal 2008. As a result of the global
economic downturn, this growth trajectory was impeded in Fiscal 2009, with the growth rate of India's GDP decelerating to
5.9% in the second half of Fiscal 2009, compared to 7.3% in Fiscal 2008. The real GDP growth for 2009-10 was revised
upwards to 7.4 percent from the earlier estimate of 7.2 percent mainly on account of strong growth of 8.6 percent in the fourth
quarter. (Source: RBI, Macroeconomic and Monetary Developments: First Quarter Review: 2009-10 & 2010-11 ("RBI First
Quarter Review")
The Indian economy witnessed robust recovery in growth in the last quarter of fiscal 2010. The Industrial Outlook Survey of
the RBI indicated further improvement in several parameters of the business environment for the three months ended
September 30, 2010. The Professional Forecasters Survey conducted by the RBI in June 2010 places the overall (median)
GDP growth rate for fiscal 2011 at 8.4%, higher than 8.2% reported in the previous round of the survey. (Source:
Macroeconomic and Monetary Developments: First Quarter Review Fiscal 2011).
During the first quarter of Fiscal 2011, India's GDP grew by 8.8%, compared with a growth rate of 6.0% during the first
quarter of Fiscal 2010.
(Source: http://mospi.nic.in/Mospi_New/upload/PRESS_NOTE_Q1_2010_11.pdf accessed on September 3, 2010)

66

THE INDIAN POWER SECTOR
Structure of the I ndian Power Sector
The following diagram depicts the structure of the Indian power industry for generation, transmission, distribution and
consumption:

Legend:
IPPs Independent Power Producer
CPUs Central Power Utilities
SEBs State Electricity Boards
STUs State Transmission Utilities
SPUs State Power Utilities
PGCIL Power Grid Corporation of India
Limited
EDs Electricity Departments
Discoms Distribution Companies

Overview of the I ndian power sector
India has continuously experienced shortages in energy and peak power requirements. According to the Central Electricity
Authority's ("CEA") monthly review of the power sector ("CEA Monthly Review") published in September 2011, the
provisional total energy deficit and peak power deficit was approximately 6.6% and 13.9%, respectively. The shortages in
energy and peak power have been primarily due to the sluggish progress in capacity addition. The Indian economy is based on
planning through successive five year plans ("Five Year Plans") that set out targets for economic development in various
sectors, including the power sector. During the 9th Five Year Plan (1997-2002) ("9
th
Plan"), capacity addition achieved was
19,015 MW, which was 47.5% of the 40,245 MW targeted under the 9
th
Plan. During the course of the 10
th
Five Year Plan
(2002 to 2007) ("10
th
Plan"), capacity addition achieved was 21,180 MW, which was 51.6% of the 41,110 MW targeted under
the 10
th
Plan. (Source: White Paper on Strategy for 11
th
Plan, prepared by the CEA and the Confederation of Indian Industry,
August 2007 (the "White Paper")). The current revised capacity target for the 11
th
Five Year Plan (2007-2012) ("11
th
Plan") is
78,700 MW. As of July 31, 2011, capacity addition achieved over the 11
th
Plan has been 61.02% of the target addition or
48,028.91 MW. The total installed power generation capacity in India was 182344.62 MW as of September 30, 2011. (Source:
CEA Monthly Review (September 2011)
Power Demand in India
Rapid growth of the economy places a heavy demand on electric power. Reforms in the power sector, to make it efficient and
more competitive, have been under way for several years and while there has been some progress, shortage of power and lack
of access continues to be a major constraint on economic growth. The persistent shortages of electricity both for peak power
and energy indicate the need for improving performance of the power sector in the country (Source: website of the Planning
Commission of India ("Planning Commission")).
Although power generation capacity has increased substantially in recent years, it has not kept pace with the continued growth
of the Indian economy, despite low per capita electricity consumption. As set forth below, per capita consumption of power in
India remains relatively low compared to other major economies:
SEBs/SPUs SEBs/STUs
SEBs, EDs, Discoms,
Pvt. Licensees
Agriculture, Domestic,
Commercial, Industries
and Others
Power Trading Companies
Generation Transmission Distribution Consumption
CPUs
Energy Available and
Sold
IPPs & Private Licensees Private Utilities
Transformation,
Transmission &
Distribution Losses
Including Unaccounted
Energy
Captive Captive Consumer Open
PGCIL

67


(Source: IEA, Key World Energy Statistics, 2010)

The low per capita consumption of electricity in India compared to the world average presents significant potential for
sustainable growth in the demand for electric power in India. The total energy consumption in India is estimated to grow to
approximately 1,280 million tonnes of oil equivalent ("Mton") by Fiscal 2030. (Source: World Energy Outlook 2008, IEA).
This implies growth of 3.5% CAGR in India's energy requirement over the next 25-30 years, reflecting the huge potential for
investments in the energy sector in India.
Power Supply in India
Historical Capacity Additions

Each successive Five-Year Plan of the GoI has had increased targets for the addition of power generation capacity. The energy
deficit in India is a result of insufficient progress in the development of additional energy capacity. In each of the last t hree
Five-Year Plans (the 8
th
, 9
th
, and 10
th
Five-Year Plans, covering fiscal 1992 to fiscal 2007), less than 55.0% of the targeted
additional energy capacity level was added. According to the White Paper, India added an average of approximately 20,000
MW to its energy capacity in each of the 9
th
Plan and 10
th
Plan periods.
The total capacity addition during the past 25 years between the 6
th
Five Year Plan and the 10
th
Plan was approximately 92,000
MW. The latest revised target capacity addition for the 11
th
Plan is 78,700 MW (61.02% of which had been achieved as of July
31, 2011) (Source: CEA Monthly Review (July 2011)), and this is expected to result in significant investments in the power
generation sector.
Current Capacity

Out of Indias total installed capacity of 182689.62 MW as on October 31, 2011, the installed capacity of central power sector
utilities, state sector entities and private sector companies accounted for approximately 31.4%, 45.83% and 23.15%,
respectively. The following table sets forth a summary of India's energy generation capacity as of September 30, 2011 in terms
of fuel source and ownership:
(In MW)
Sector Thermal Nuclear Hydro RES* Total
Central 42907.23 4,780.00 8,885.40 0.00 56572.63
State 53041.73 0.00 27296.00 3225.92 83563.65
Private 23092.02 0.00 2525.00 16936.32 42553.34
Total 119040.98 4,780.00 38706.40 20162.24 182689.62
*RES = Renewable energy sources
(Source: CEA Monthly Review (October 2011)




68

Demand-Supply Imbalance in India
The Indian power sector has historically been beset by energy shortages which have been rising over the years. In fiscal 2010,
peak energy deficit was 12.7% and total energy deficit was 10.1%. The demand for electricity has consistently exceeded the
supply, and the demand-supply gap has been widening. The following table provides the peak and normative shortages of
power in India for the periods indicated:
Period Peak
Demand
(MW)
Peak Met
(MW)
Peak
Deficit/
Surplus
(MW)
Peak
Deficit/
Surplus
(%)
Power
Requirement
(MU)
Power
Availability
(MU)
Power
Deficit/
Surplus
(MU)
Power
Deficit/
Surplus
(%)
Fiscal 2003 81,492 71,547 (9,945) (12.2) 545,983 497,890 (48,093) (8.8)
Fiscal 2004 84,574 75,066 (9,508) (11.2) 559,264 519,398 (39,866) (7.1)
Fiscal 2005 87,906 77,652 (10,254) (11.7) 591,373 548,115 (43,258) (7.3)
Fiscal 2006 93,255 81,792 (11,463) (12.3) 631,757 578,819 (52,938) (8.4)
Fiscal 2007 100,715 86,818 (13,897) (13.8) 690,587 624,495 (66,092) (9.6)
Fiscal 2008 108,866 90,793 (18,073) (16.6) 739,345 666,007 (73,338) (9.9)
Fiscal 2009 109,809 96,685 (13,124) (12.0) 774,324 689,021 (85,303) (11.1)
Fiscal 2010 119,166 104,009 (15,157) (12.7) 830,594 746,644 (83,950) (10.1)
Fiscal 2011 (April
December 2010)
119,437 107,286 (12,151) (10.2) 638,181 582, 225 (55,956) (8.8)
(Source: CEA Power Scenario at a Glance, January 2011)

The total Indian power deficit of 10.1% in fiscal 2010 can be compared to power deficits of 11.1% and 9.9% in fiscal 2009 and
fiscal 2008, respectively. Similarly, the total Indian peak deficit of 12.7% can be compared to peak deficits of 12.0% and
16.6% in fiscal 2009 and fiscal 2008 (Source: www.powermin.nic.in).
The deficits in electric energy and peak power requirements vary across different regions in India. The peak deficit was 14.9%
in the western region of the country, followed by 11.6% in the north-eastern region of the country in September 2011. The
larger deficit in the former regions is a result of the slow development progress of additional power generation capacity in
these areas. The following table outlines the peak and normative power shortages in India for the period April 2011
September 2011 across the regions of India:

April 2011 - July 2011
Region Energy (MU) Deficit % Peak Deficit%
Requirement Demand (MW)
Northern 1,41,945 -4.7 42,502 -12.7
Western 1,33,736 -9.2 39,596 -14.9
Southern 1,24,763 -4.9 33,937 -7.2
Eastern 49,847 -4.1 14,374 -3.9
North Eastern 5,720 -9.4 1,920 -11.6
All India 304,286 -6.0 126,830 -13.2
*Provisional
(Source: CEA Monthly Review (September 2011)
Demand Projections

To deliver a sustained economic growth rate of 8.0% through to fiscal 2032, India needs, at the least, to increase its primary
energy supply between three and four times and its electricity generation capacity between five and six times based on fiscal
2004 levels. With fiscal 2004 as a baseline, India's commercial energy supply would need to grow from 5.2% to 6.1% per
annum while its total primary energy supply would need to grow at 4.3% to 5.1% annually. Further, power generation capacity
must increase to around 800,000 MW by fiscal 2032 from the fiscal 2004 capacity levels of around 160,000 MW inclusive of
all captive plants. (Source: Planning Commission, Integrated Energy Policy Report of the Expert Committee on Power, August
2006 (the "IEP report August 2006"). This represents a need for the substantial augmentation of power generation capacity.
Such investment in power generation will require increased investment in power transmission and distribution if the additional
power is to be effectively disseminated among potential customers.






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The table below lays out the projected additional capacity needed by fiscal 2012, fiscal 2017 and fiscal 2022 under different
GDP growth rate scenarios:


Assumed GDP Growth
(%)
Electricity
Generation required
(BU)
Peak Demand
(GW)
Installed
Capacity (GW)
Capacity Addition
Required (GW)*
By fiscal 2012 8.0 1,097 158 220 71
9.0 1,167 168 233 84
By fiscal 2017 8.0 1,524 226 306 157
9.0 1,687 250 337 188
By fiscal 2022 8.0 2,118 323 425 276
9.0 2,438 372 488 339
* Based on the existing installed capacity of 149 GW in India.
(Source: IEP report August 2006)

Future Capacity Additions

11
th
Plan

The MoP's proposed sector-wise and mode-wise capacity addition for the 11
th
Plan is as follows:

Thermal (MW) Nuclear (MW) Hydro (MW) Total (MW)
Central 24,840 3,380 8,654 36,874
State 23,301 0.00 3,482 26,783
Private 11,552 0.00 3,491 15,043
Total 59,693 3,380 15,627 78,700
(Source: CEA Monthly Review (September 2011))
Additionally, the aim for the 11
th
Plan is to achieve a capacity addition of 15,000 MW from renewable fuels. (Source:
www.mnre.gov.in, website of the Ministry of New and Renewable Energy ("MNRE")

The total fund requirement to achieve the 11th Plan target was estimated as ` 10,316.00 billion. This included total estimated
funding of ` 4,108.96 billion for generation projects (including nuclear projects) of which ` 1,237.92 billion was envisaged for
the public sector, ` 2,020.67 billion for the central sector and ` 850.37 billion for the private sector, respectively. This also
includes an estimated ` 1,400.00 billion for transmission system development (with ` 750.00 billion envisaged for the central
sector and ` 650.00 billion for the public sector, respectively). Total fund requirement for the distribution sector (including
rural electrification) during the 11th Plan was estimated at ` 2,870.00 billion, which was only for the public sector. (Source:
White Paper)

12th Five Year Plan (2012-2017) (the "12
th
Plan")
A tentative capacity addition of approximately 100,000 MW has been envisaged for the 12
th
Plan. This comprises an estimated
74,000 MW thermal power, 20,000 MW hydro power, 3,400 MW nuclear power and 2,500 MW from lignite, respectively
(Source: Base Paper, International Conclave on Key Inputs for Accelerated Development of Indian Power Sector for Twelfth
Plan and Beyond, 18-19 August, 2009, organized by the MoP and CEA ("International Conclave August 2009")).
The total fund requirement to achieve the above targeted capacity addition is estimated at ` 11,000.00 billion, with an
estimated ` 4,950.00 billion being required for generation projects, an estimated ` 2,400.00 billion being required for
transmission projects and an estimated ` 3,710.00 billion being required for distribution projects. (Source: International
Conclave August 2009).
POWER TRANSMISSION AND DISTRIBUTION

In India, the transmission and distribution system is a three-tier structure comprised of regional grids, State grids and
distribution networks. The five regional grids, configured on a geographical contiguity basis, enable transfer of power from a
power surplus State to a power deficit State. The regional grids also facilitate the optimal scheduling of maintenance outages
and better co-ordination between power plants. These regional grids are to be gradually integrated to form a national grid,
whereby surplus power from a region could be redirected to another region facing power deficits, thereby allowing a more
optimal utilization of the national generating capacity.

Most inter-regional and inter-State transmission links are owned and operated by Power Grid Corporation of India Limited
though some are jointly owned by the SEBs. State grids and distribution networks are mostly owned and operated by the

70

respective SEBs, STUs, distribution companies, or State governments (through State electricity departments). A direct
consequence of the high Aggregate Technical and Commercial ("AT&C") losses that are experienced by the Indian power
sector is the inadequate financial condition of SEBs and SPUs thereby restricting the SEBs from making any meaningful
investments in generation and the modernization of the transmission and distribution network.

POLICY INITIATIVES AND ECONOMIC REFORMS IN INDIA
Since 1991, India has witnessed reforms across the policy spectrum in the areas of fiscal and industrial policy, trade and
finance. Some of the key reform measures are:
Industrial Policy Reforms: Removal of capacity licensing and opening up various sectors to FDI;
Trade Policy Reforms: Lowering of import tariffs and restrictions on imports, across industries; and
Monetary Policy and Financial Sector Reforms: Lowering interest rates, relaxation of restrictions on fund movement and the
introduction of private participation in insurance sector.
In addition, FDI has been recognized as an important driver of economic growth in the country. The GoI has taken a number of
steps to encourage and facilitate FDI, and FDI is allowed in many key sectors of the economy, such as manufacturing, services,
infrastructure and financial services. For many sectors, 100% FDI is allowed on an automatic basis, without prior approval
from the Foreign Investment Promotion Board.
FDI inflows into India have accelerated since Fiscal 2007. From April 2000 through June 2011, FDI equity inflows into the
services sector (both financial and non-financial) of India amounted to ` 1,299.63 billion (US$ 29,087 million). In addition,
from August 1991 to June 2010, cumulative FDI equity inflows amounted to ` 6,035.26 billion (US$ 138,235 million). FDI
inflows into India were US$ 34,835 million, US$ 37,838 million and US$ 37,763 million and US$ 30,380 million in Fiscal
Years 2008, 2009, 2010 & 2011, respectively, and US$ 13,441 million up to June 2011. (Source: Department of Industrial
Policy and Promotion Fact Sheet, August 1991 to June 2011)
In recent years, in light of persistent power shortages and given the estimated rate of increase in demand for electricity in India,
the GoI has taken significant action to restructure the power sector, increase capacity, improve transmission, sub-transmission
and distribution, and attract investment to the sector. Some of the various strategies and reforms adopted by the GoI and other
initiatives in the power sector in India are summarized below:
Electricity Act, 2003 ("Electricity Act")
The most significant reform package was the introduction of the Electricity Act, which modified the legal framework
governing the electricity sector and was designed to alleviate many of the problems facing Indias power sector and to attract
capital for large scale power projects. The Electricity Act replaced the multiple legislations that previously governed the Indian
electricity sector. The most significant reform under the Electricity Act is the move toward a multi-buyer, multi-seller system,
as opposed to the previous structure which permitted only a single buyer to purchase power from generators. Furthermore,
under the Electricity Act, the regulatory regime is more flexible, has a multi-year approach and allows the Central and State
regulatory commissions greater freedom in determining tariffs, without being constrained by rate-of-return regulations.
National Electricity Policy, 2005
The National Electricity Policy was notified in February 2005. This policy aims at accelerated development of the power
sector, focusing on the supply of electricity to all areas and protecting interests of consumers and other stakeholders, keeping in
view availability of energy resources technology available to exploit these resources, economics of generation using different
resources and energy security issues.
National Tariff Policy, 2006
The National Tariff Policy ("NTP") was notified by the GoI on January 6, 2006. Its main objectives are to:
ensure availability of electricity to consumers at reasonable and competitive rates;
ensure financial viability of the sector and attract investments;
promote transparency, consistency and predictability in regulatory approaches across jurisdictions and minimize
perceptions of regulatory risks; and
promote competition, efficiency in operations and improvement in quality of supply.


71

The NTP stipulates that all future power requirements should be procured competitively by distribution licensees except in
cases of expansion of pre-existing projects or where there is a public sector controlled or owned developer involved. In these
cases, regulators must resort to tariffs set by reference to standards of the Central Electricity Regulatory Commission
("CERC"), provided that expansion of generating capacity by private developers for this purpose will be restricted to a one
time addition of not more than 50% of the existing capacity. Under the NTP, even for public sector projects, tariffs for all new
generation and transmission projects will be decided on the basis of competitive bidding after a certain time period.
Rural Electrification Initiatives
The MoP introduced the Rajiv Gandhi Grameen Vidhyutikaran Yojana ("RGGVY") in April 2005, for achieving the aim of
providing access to electricity to all rural households over a period of four years (Source: website for the MoP). Rural
Electrification Corporation Limited has been appointed the nodal agency for the RGGVY, and the scheme is 90% funded by
Central subsidy and 10% by the States, through their own resources or by seeking financial assistance from financial
institutions. The States were responsible for finalizing their own rural electrification plans, which were to be a roadmap for
generation, transmission, sub-transmission and distribution of electricity within that State to ensure achievement of the scheme
objectives. (Source: MoP Office Memorandum No 44/19/2004 D(RE), dated March 18, 2005).
Ultra Mega Power Projects ("UMPPs")
For meeting the growing needs of the economy, generation capacity in India must rise significantly and sustainably over the
coming decades. There is therefore a need to develop large capacity projects at the national level to meet the requirements of
different States. Development of UMPPs is one step the MoP is taking to meet this objective. Each project is a minimum of
4,000 MW and involves an estimated investment of approximately U.S.$ 4.00 billion. The projects are expected to
substantially reduce power shortages in India. The UMPPs will be awarded to developers on a build-own-operate basis and are
expected to be built at 16 different locations. (Source: website of the MoP) For details, see section titled "Our Business" and
"Regulations and Policies" on pages 75 and 98 respectively of this Draft Shelf Prospectus.
Independent Transmission Projects
The MoP has initiated a tariff based competitive bidding process for independent transmission projects ("ITPs"), which is a
process similar to that followed for UMPPs, for the development of transmission systems through private sector participation.
The ITPs aim to evacuate power from generating stations and transmit the power from pooling stations to other grid stations,
resulting in system strengthening across India. (Source: website of the MoP) For details, see section titled "Our Business" and
"Regulations and Policies" on pages 75 and 98 respectively of this Draft Shelf Prospectus.
Hydro Power Policy 2008

The Hydro Power Policy, 2008, emphasizes increasing private investment in the development of hydroelectric projects. The
policy aims at attracting private funds by encouraging joint ventures with private developers and the use of the IPP model, in
addition to promoting power trading and speeding up the availability of statutory clearances. The policy provides guidelines
for accelerated development of the hydropower industry in India, particularly in the Himalayan States. (Source: Hydropower
Policy 2008, MoP)
National Solar Mission

The MNRE has approved a new policy on development of solar energy in India by the Jawaharlal Nehru National Solar
Mission. The mission recommends the implementation of an installed capacity of 20,000 MW in three stages by the end of the
13
th
Five Year Plan (2017-2022). It proposes to establish a single window investor-friendly mechanism, which reduces risk and
at the same time, provides an attractive, predictable and sufficiently adequate tariff for the purchase of solar power from the
grid. The key driver for promoting solar power would be through a renewable purchase obligation mandated for power
utilities, with a specific solar component. (Source: www.mnre.gov.in)

Restructured Accelerated Power Development and Reform Program ("R-APDRP")

The MoP launched the R-APDRP in July 2008 to extend and restructure the Accelerated Power Development and Reform
Program ("APDRP") beyond the 10
th
Plan and ensure the achievement of better results. R-APDRP was designed to run during
the 11
th
Plan, with projects under the program taken up in two parts. Part-A projects include those for establishment of a
reliable system for the collection of accurate base line data and IT application, for energy auditing. Part-B projects include
regular distribution strengthening projects, to improve the sub-transmission and distribution system. (Source:
www.powermin.nic.in, Website of the MoP; Office Memorandum dated December 22, 2008)


72


Distribution Reform, Upgrades and Management ("DRUM")

The MoP, acting in conjunction with the United States Agency for International Development, have established the DRUM
project in 2004 with the purpose of demonstrating best commercial and technological practices that improve the quality and
reliability of "last mile" power distribution in selected urban and rural distribution circles in India. The project's objectives
include improved power distribution, better availability and quality of electricity, enhanced commercial orientation and drive
and the facilitation of the distribution reform process. (Source: www.powermin.nic.in, website of the MoP; Background Note
on DRUM)

Delivery through Decentralized Management ("DDM")

DDM is an MoP sponsored scheme, launched in March 2005, with the objective of showcasing participatory models of
excellence in distribution in rural areas. It aims to promote public participation, encourage community management and attract
private investment in distribution by establishing distribution franchises and distributed generation projects.

STRUCTURE OF INDIA'S FINANCIAL SERVICES INDUSTRY

The RBI is the central regulatory and supervisory authority for the Indian financial system. The Board for Financial
Supervision, constituted in November 1994, is the principal body responsible for the enforcement of the RBI's statutory
regulatory and supervisory functions. SEBI and the Insurance Regulatory Development Authority regulate the capital markets
and the insurance sectors, respectively.

A variety of financial institutions and intermediaries, in both the public and private sector, participate in India's financial
services industry. These are:
commercial banks;
NBFCs;
specialized financial institutions, such as the National Bank for Agriculture and Rural Development, the Export-Import Bank
of India, the Small Industries development Bank of India and the Tourism Finance Corporation of India;
securities brokers;
investment banks;
insurance companies;
mutual funds; and
venture capital funds.

Debt Market in India

(Source: Economic Survey 2009-2010; Ministry of Finance, Government of India; text available at 9-
10/chapt2010/chapter05.pdf)

(Source: http://indiabudget.nic.in/es2009-10/chapt2010/chapter05.pdf)

The Indian debt market has two segments, namely, the Government securities market and corporate debt market.

Government securities market:
The fresh issuance of GoI dated securities in 2009 amounted to ` 4,89,000 crores as against ` 2,04,317 crores in 2008. The
outstanding dated securities of the GoI increased from ` 14,16,443 crores at the end of December 2008 to ` 18,26,774 crores at
the end of December 2009. Yields on securities showed relatively lower intra-year variations in 2009 as compared with the
previous year. The cut-off yield-to-maturity range on fresh issuances during the year narrowed from 6.24-10.03% in 2008 to
4.86-8.43% in 2009.
The volume of secondary market transactions (outright) in Government securities has improved, with the turnover ratio
(volume of transactions as a ratio of end-period stock) increasing to 1.7 in the calendar year 2009, compared to 1.5 in calendar
year 2008.
In the secondary market, yields on dated government securities hardened during the year, particularly after July 2009,
reflecting the impact of the announcement of a relatively large government borrowing programme for Fiscal 2010. Yields on
dated securities of five and 10 year maturities increased to 7.30% and 7.59% respectively in the end of December 2009 and
from 5.41% and 5.25% respectively, in end-December 2008.


73

Corporate debt market:
Pursuant to the guidelines of the High Level Expert Committee on Corporate Bonds and Securitisation (December 2005) and
the subsequent announcement made in the Union Budget 2006-07, SEBI authorised BSE (January 2007), NSE (March 2007)
and the Fixed Income Money Market and Derivatives Association of India (FIMMDA) (August 2007) to set up and maintain
corporate bond reporting platforms for information related to trading in corporate bonds.
BSE and NSE put in place corporate bonds trading platforms in July 2007 to enable efficient price discovery in the market.
This was followed by operationalization of a DvP-I(trade-by-trade)- based clearing and settlement system for over-the-counter
trades in corporate bonds by the clearing houses of the exchanges. In view of these market developments, the RBI announced
in its Second Quarter Review of the Annual Policy Statement for 2009-10 in October 2009 that the repo in corporate bonds
could now be introduced. The RBI issued the Repo in Corporate Debt Securities (Reserve Bank of India) Directions, 2010, on
January 8, 2010.
Total traded volume in corporate bonds during April-December 2009 was ` 2,42,686 crores, higher by 173.4% over the traded
volume of ` 88,750 crores during April-December 2008. During Fiscal 2010 up to December 2009, the yield on corporate
debt paper with AAA rating for five-year maturity moved in the range of 7.71-8.94%. The spread between yield on five-year
GoI bonds and corporate debt paper with AAA rating with five-year maturity, which was around 330 basis points in the
beginning of 2009, narrowed to 150 basis points by the end of June 2009 and further to around 110 points by the end of
December 2009.
NBFC-I nfrastructure Finance Companies ("I FCs")
In February 2010, the RBI introduced IFCs as a new category of infrastructure funding entities. Non-deposit taking NBFCs
which satisfy the following conditions are eligible to apply to the RBI to seek IFC status:
minimum of 75% of its assets deployed in infrastructure loans;
net owned funds of at least ` 3,000.00 million;
minimum credit rating "A" or equivalent rating by accrediting agencies; and
capital to risk (weighted) assets ratio of 15% (with a minimum Tier 1 capital of 10%).

IFCs enjoy benefits which include a lower risk weight on their bank borrowings (from a flat 100% to 20% for AAA- rated
borrowers), higher permissible bank borrowing (up to 20% of the banks net worth compared to 15% for an NBFC that is not
an IFC), access to external commercial borrowings (up to 50% of owned funds under the automatic route) and relaxation in
their single party and group exposure norms. These benefits would enable a highly rated IFC to raise more funds, of longer
tenor and at lower cost, and in turn to lend more to infrastructure companies.

For more information, see section titled "Regulations and Policies" on page 98 of this Draft Shelf Prospectus..

PROVIDERS OF FINANCE TO THE POWER SECTOR IN INDIA

The primary providers of power sector financing in India are power sector specific government companies, financing
institutions, public sector banks and other public sector institutions, international development institutions and private banks.
Power Sector Specific Government Companies
Our Company was incorporated in July 1986, with the main objective of financing power projects, transmission and
distribution works and the renovation and modernization of power plants.
Besides our Company, the other public sector companies and agencies engaged in financing the power sector are as follows.
For details on our Company, see section titled "Our Business" on page 75 of this Draft Shelf Prospectus.
Rural Electrification Corporation
The Rural Electrification Corporation Limited ("REC") is a government company, which is registered as an NBFC and has
been notified as an IFC. It was established in 1969, under the administrative control of the MoP. Its main objective is to
finance and promote rural electrification projects throughout India. It provides financial assistance to SEBs, State government
departments and rural electric cooperatives for rural electrification projects. REC also promotes and finances rural electricity
cooperatives, administers funds and grants from the GoI and other sources for financing rural electrification, provides
consultancy services and project implementation in related fields, finances and executes small, mini and micro generation
projects as well as larger generation, transmission and distribution power projects, and develops other energy sources. RECs
equity shares are listed on the Stock Exchanges.

74

I ndian Renewable Energy Development Agency
The Indian Renewable Energy Development Agency ("IREDA") is a wholly-owned government company, which is registered
as an NBFC and has been notified as an IFC. It was established in 1987, under the administrative control of the Ministry of
Non-Conventional Energy Sources, GoI, with the objective of promoting, developing and extending financial assistance for
renewable energy and energy efficiency, and energy conservation projects.
Private Financial Institutions
Financial institutions were established to provide medium-term and long-term financial assistance to various industries for
setting up new projects and for the expansion and modernization of existing facilities. These institutions provide fund based
and non-fund based assistance to industry in the form of loans, underwriting, direct subscription to shares, debentures and
guarantees, and therefore compete in the Indian power finance sector. The primary long-term lending institutions include
Infrastructure Development Finance Company Limited, India Infrastructure Finance Company Limited, IFCI Limited, PTC
India Financial Services Limited, Industrial Investment Bank of India Limited and Small Industries Development Bank of
India.
State Level Financial Institutions
State financial corporations operate at the State level and form an integral part of the institutional financing system. State
financial corporations were set up to finance and promote small and medium-sized enterprises. At the State level, there are also
State industrial development corporations, which provide finance primarily to medium-sized and large-sized enterprises.
Examples include Delhi Financial Corporation, Delhi State Industrial Development Corporation Limited, Economic
Development Corporation of Goa, Daman and Diu Limited, Goa Industrial Development Corporation, Western Maharashtra
Development Corporation Limited, Madhya Pradesh State Industrial Development Corporation Limited and Orissa Industrial
Infrastructure Development Corporation. (Source: website for the Council of State Industrial Development and Investment
Corporations of India)
Public Sector Banks and other Public Sector Institutions
Public sector banks are believed to make up the largest category of banks in the Indian banking system. The primary public
sector banks operating in the power sector include the Industrial Development Bank of India, State Bank of India, Punjab
National Bank and the Bank of Baroda. Other public sector entities also provide financing to the power sector. These include
organizations such as the Life Insurance Corporation of India and India Infrastructure Finance Company Limited.
International Development Financial Institutions
International development financial institutions are supportive of power sector reform and of more general economic reforms
aimed at mobilizing investment and increasing energy efficiency. The primary international development financial institutions
involved in power sector lending in India include several international banking institutions such as Japan Bank for
International Cooperation, KfW, the World Bank, the Asian Development Bank ("ADB") and the International Finance
Corporation.
In the early 1990s, the World Bank decided to finance mainly projects in states that "demonstrate a commitment to implement
a comprehensive reform of their power sector, privatize distribution, and facilitate private participation in generation and
environment reforms". Recent loans from the World Bank have gone to support the restructuring of SEBs. In general, the loans
are for rehabilitation and capacity increase of the transmission and distribution systems, and for improvements in metering the
power systems in Indian States that have agreed to reform their power sector.
The overall strategy of the ADB for the power sector is to support restructuring, especially the promotion of competition and
private sector participation. Like the World Bank, the ADB also provides loans for restructuring the power sector in the States
and improving transmission and distribution.



75

OUR BUSINESS

Unless otherwise stated, financial information included in this section for fiscal 2007, 2008, 2009, 2010, 2011 and for the half
year ended September 30, 2011 have been derived from our standalone financial statements for fiscal 2007, 2008, 2009, 2010,
2011 and for the half year ended September 30, 2011. For further information, see section titled Certain Conventions, Use of
Financial I nformation and Market Data and Currency of Presentation Financial I nformation on page 7 of this Draft
Shelf Prospectus.

In this section, unless the context otherwise requires, a reference to the "Company" is a reference to Power Finance
Corporation Limited and unless the context otherwise requires, a reference to "we", "us" and "our" refers to Power Finance
Corporation Limited and its Subsidiaries, joint ventures and associate company, as applicable in the relevant fiscal period, on
a consolidated basis.

Background

We are a leading financial institution in India focused on the power sector. We were established as an integral part of, and
continue to play a strategic role in, the GoIs initiatives for the development of the power sector in India. We work closely with
GoI instrumentalities, State governments and power sector utilities, other power sector intermediaries and private sector clients
for the development and implementation of policies and structural and procedural reforms for the power sector in India. In
addition, we are involved in various GoI programs for the power sector, including acting as the nodal agency for the UMPP
program and the R-APDRP and as a bid process coordinator for the ITP scheme.

We provide a comprehensive range of financial products and related advisory and other services from project
conceptualization to the post-commissioning stage for our clients in the power sector, including for generation (conventional
and renewable), transmission and distribution projects as well as for related renovation and modernization projects. We
provide various fund based financial assistance, including project finance, short-term loans, buyer's line of credit and debt
refinancing schemes, as well as non-fund based assistance including default payment guarantees and letters of comfort. We
also provide various fee-based technical advisory and consultancy services for power sector projects.

We have well established relationships with the GoI and State governments, regulatory authorities, major power sector
organizations, Central and State power utilities, as well as private sector power project developers. We have also strategically
expanded our focus areas to include projects that represent forward and backward linkages to the core power sector projects,
including procurement of capital equipment for the power sector, fuel sources for power generation projects and related
infrastructure development. We also intend to fund power trading initiatives.

Our primary sources of funds include equity capital, internal resources and domestic and foreign borrowings. We currently
enjoy the highest credit ratings of "AAA/Stable" and "ICRA AAA" for our long-term domestic borrowings and "P1+" and
"A1+" for our short-term borrowings from CRISIL (a subsidiary of Standard & Poor's) and ICRA (an affiliate of Moody's),
respectively. International credit rating agencies Moody's, Fitch and Standard & Poor's have granted us long-term foreign
currency issuer ratings of "Baa3", "BBB-" and "BBB-", respectively, which are at par with the sovereign ratings for India.

We are a listed government company and a public financial institution under the Companies Act. We are registered with the
RBI as a non-deposit taking systemically important NBFC ("NBFC") and were classified as an IFC in July 2010. We believe
that our NBFC and IFC classification enables us to effectively capitalize on available financing opportunities in the power
sector in India. In addition, as a government-owned NBFC, loans made by us to Central and State entities in the power sector
are currently exempt from the RBI's prudential lending (exposure) norms that are applicable to other non-government owned
NBFCs. However, we follow prudential lending norms and guidelines approved by the MoP with respect to loans made to
Central and State entities in the Indian power sector, while our loans made to the private sector are generally consistent with
lending (exposure) norms stipulated by the RBI. We believe our classification as an IFC enhances our ability to raise funds on
a cost-competitive basis (including through issuance of Rupee-denominated infrastructure bonds that offer certain tax benefits
to the bondholders), and increase our lending exposures to individual entities, corporations and groups, compared to other
NBFCs that are not IFCs.

We were granted the Navratna status by the DPE in 2007, and have received an "Excellent" rating from the GoI in each of the
last five fiscal years. We were also awarded the India Pride Award 2009 in the NBFC category for excellence among public
sector undertakings, and the Dalal Street Investor Journal PSU Award 2010 for being the Heavy Weight Navratna PSU and the
Fastest Growing Navratna PSU, in the non-manufacturing category. In April 2011, we have also received Gentle Giant, the
Largest Navratna (Non-Manufacturing) award at the 3rd DSIJ PSU Awards and SCOPE Commendation Certificate in the
category of Best Managed Bank, Financial Institution or Insurance Company for the year 2009

We have an established track record of consistent financial performance and growth:

76


Our total loan assets increased from ` 43, 902.83 crores as of March 31, 2007 to 1,10,421.25 crores as of September
30, 2011. As of September 30, 2011, our total loans sanctioned pending disbursement (net of any loan sanctions
cancelled) was ` 1,67,232 crores.
Our total income increased from ` 3,927.65 crores as of March 31, 2007 to `6,084.57 crores as of September 30, 2011
, while our profit after tax increased from ` 986 crores as of March 31, 2007 to ` 1,108.27 crores as of September 30,
2011.
We had gross NPAs of ` 13.16 crores, ` 13.16 crores, ` 13.16 crores, ` 230.65 crores and ` 237.86 crores as of
March 31, 2008, 2009, 2010, 2011 and September 30, 2011, respectively, which represented 0.03%, 0.02%, 0.02%,
0.23% and 0.22%% of our total loan assets, respectively, as of such dates.
Our net worth as of September 30, 2011 was ` 18,717.96 crores.
Our capital adequacy ratio was 18.2%, 15.7% and 18.22% as of March 31, 2010, 2011 and as of September 30, 2011,
respectively.

Recent Developments

"In September 2011, the Company had undertaken a public issue of long term infrastructure bonds' of face value of ` 5000
each at par, in the nature of secured, redeemable, non-convertible debentures for an amount aggregating ` 200 crores with an
option to retain an oversubscription upto the shelf limit (i.e. ` 6,900 crores). These long term infrastructure bonds are
outstanding as on the date of this Draft Shelf Prospectus. The issue opened on September 29, 2011 and closed on November
04, 2011. The date of allotment was November 21, 2011 and the date of refund was November 23, 2011. The listing approval
has been received with approval for trading in these bonds have commenced on BSE Limited on December 2, 2011."
CBDT vide its Notification No. 52/2011 [F.No. 178/56/2011-(ITA 1)] dated September 23, 2011 authorised the Company to
raise Tax Free Bonds aggregating to ` 5,000 crores. Out of the said amount, the Company has already raised through private
placement route vide private placements dated September 28, 2011 and November 1, 2011, an amount aggregating to ` 966.87
crores.
Our Strengths

We believe that the following are our primary strengths:

Comprehensive financial assistance platform focused on the I ndian power sector

We provide a comprehensive range of financial products and related advisory and other services from project
conceptualization to the post-commissioning stage, to our clients in the power sector, including for generation (conventional
and renewable), transmission and distribution projects as well as for related renovation and modernization projects. We
provide various fund-based financial products including long-term project finance, short-term loans, buyer's line of credit and
debt refinancing schemes, as well as non-fund based assistance including default payment guarantees and letters of comfort.
We also provide various fee-based technical advisory and consultancy services for power sector projects.

Strategic role in GoI initiatives and established relationships with power sector participants

We were established as an integral part of, and have played a strategic role in, the GoIs initiatives for the promotion and
development of the power sector in India for more than two decades. We have been involved in the development and
implementation of various policies and structural and procedural reforms for the power sector in India. We are also involved in
various GoI programs for the power sector, including acting as the nodal agency for the UMPP and the R-APDRP and as a bid
process coordinator for the ITP scheme.

As a result, we have developed strong relationships with the Central and State governments, various regulatory authorities,
significant power sector organizations, Central and State power utilities, private sector project developers, as well as other
intermediaries in the power sector. We believe that our wide experience in implementing government policies and programs
provide us with industry expertise that enables us to leverage our project risk assessment capabilities to effectively evaluate
projects, structure appropriate financing solutions, develop effective loan disbursement and project monitoring methodologies,
as well as provide regulatory and related advisory services. We believe we provide value to our clients in various ways, by
supporting their operations as well as providing assistance with long-term reform and restructuring programs. We believe that
this unique positioning enables us to leverage our power sector expertise, our existing large client base and continuing
relationships with government agencies and instrumentalities to be a preferred financing provider for the power sector in India.

Operational flexibility to capitalize on both fundraising and lending opportunities


77

We are registered with the RBI as an NBFC and have also been classified as an IFC. We believe that our NBFC and IFC
classification enables us to be operationally more flexible than some of our competitors and effectively capitalize on available
financing opportunities.

As an NBFC, we are governed by regulations and policies that are generally less stringent than those applicable to commercial
banks, including with respect to liquidity requirements and the requirement to hold a significant portion of funds in relatively
low yield assets, such as government and other approved securities and cash reserves.

In addition, as a government-owned NBFC, loans made by us to Central and State entities in the power sector have been
exempted from RBI's prudential lending (exposure) norms applicable to other non-government owned non-deposit taking
systemically important NBFCs. Such exemptions, unless further extended by the RBI, are currently applicable until March 31,
2012. In compliance with RBI's directive in this regard, we are in the process of formulating and submitting a roadmap (in
consultation with the MoP) to the RBI prior to March 31, 2012, that sets out the manner in which we intend to comply with
(including further capitalization) such prudential regulations of RBI. We follow prudential lending norms and guidelines
approved by the MoP with respect to loans made to Central and State entities in the Indian power sector, while our loans made
to the private sector are generally consistent with lending (exposure) norms stipulated by the RBI.

In July 2010, we were classified as an IFC, which is a distinct category of NBFCs that are primarily engaged in infrastructure
financing. We believe our classification as an IFC enables us to increase our lending exposures to individual entities,
corporations and groups, compared to other NBFCs that are not IFCs. We believe that these are significant competitive
advantages in providing project financing for large, long-gestation power sector projects. For example, an IFC is entitled to
lend up to 25.0% of its Owned Funds to a single borrower in the infrastructure sector, compared to 20.0% of Owned Funds by
other NBFCs categorized as a Loan Company. As an IFC, we are also eligible to raise, under the automatic route (without the
prior approval of the RBI), ECBs up to US$500.00 million each fiscal year, subject to the aggregate outstanding ECBs not
exceeding 50.0% of our Owned Funds. As an IFC, we are also required to maintain CRAR of 15.0% (with a minimum Tier I
capital of 10.0%). For further information relating to the IFC category of NBFCs and differences with non-IFC classified
NBFCs, see section titled "Regulations and Policies" on page 98 of this Draft Shelf Prospectus.

Favourable credit rating and access to various cost-competitive sources of funds

Our primary sources of funds include equity capital, internal resources and domestic and foreign borrowings. CRISIL and
ICRA have granted us the highest credit ratings of "AAA/Stable" and "ICRA AAA", respectively, for our long-term domestic
borrowings and "P1+" and "A1+", respectively, for our short-term borrowings. International credit rating agencies Moody's,
Fitch and Standard & Poor's have provided us long-term foreign currency issuer ratings of "Baa3", "BBB-" and "BBB-",
respectively, which are at par with the sovereign ratings for India.

We believe that our financial strength and our favourable credit ratings enable us to access various cost competitive funding
options. Our borrowings reflect various sources, maturities and currencies, and include bonds and term loans, as well as
commercial paper. Our primary sources of funds are Rupee-denominated bonds and commercial borrowings raised in India. In
addition, as an IFC, we are able to further diversify our borrowings through the issuance of Rupee-denominated infrastructure
bonds that offer certain tax benefits to bondholders. Further, subject to certain restrictions we are also eligible to raise, under
the automatic route (without the prior approval of the RBI), ECBs up to US$500.00 million each fiscal year. We have also
accessed various international funding sources including the World Bank, the Asian Development Bank and Kfw. Our cost of
funds in fiscal 2008, 2009, 2010, 2011 and for the half year ended on September 30, 2011 was 8.0%, 8.7%, 8.1%, 8.2% and
8.93 %, respectively, which we believe is competitive. In addition, historically most of our borrowings have been on an
unsecured basis.



Comprehensive credit appraisal and risk management policies and procedures

We have developed extensive knowledge and experience in the Indian power sector, and believe we have comprehensive credit
appraisal policies and procedures, which enable us to effectively appraise and extend financial assistance to various power
sector projects. We follow a systematic institutional and project appraisal process to assess and mitigate project and credit risk.
We believe our internal processes and credit review mechanisms reduce the number of defaults on our loans and contribute to
our profitability.

We believe that our comprehensive credit appraisal and project monitoring process have resulted in strong collection and
recovery. We had gross NPAs of ` 13.16 crore, ` 13.16 crore, ` 13.16 crore, ` 230.65 crore and ` 237.86 crore as of March
31, 2008, 2009, 2010, 2011 and September 30, 2011, respectively, which represented 0.03%, 0.02%, 0.02%, 0.23% and 0.22%
of our total loan assets, respectively, as of such dates.

78


Track record of consistent financial performance and growth

We believe that we have an established track record of consistent financial performance and growth, which enable us to
capitalize on attractive financing opportunities in the power sector in India. Our total loan assets increased from ` 43,902.83
crores as of March 31, 2007 to ` 1,10,421.25 crores as of September 30, 2011. As of September 30, 2011, our total loans
sanctioned pending disbursement (net of any loan sanctions cancelled) was ` 1,67,232 crores. In addition, our loan asset
portfolio has increasingly become diversified by sector and customer base.

Experienced and committed management and employee base with in-depth sector expertise

We believe we have an experienced, qualified and committed management and employee base. Many of our employees,
particularly senior management, have worked with our Company for significantly long periods. We believe we have an
efficient and lean organizational structure relative to the size of our operations and profitability. Our personnel policies are
aimed towards recruiting talented employees and facilitating their integration into the Company and encouraging the
development of their skills.

Our management has significant experience in the power sector and the financial services industry, which has enabled us to
develop a comprehensive and effective project appraisal process, implement a stringent risk management framework, identify
specific requirements of power sector projects and offer comprehensive financing solutions and advisory assistance to such
projects. The experience of our management together with their strong relationships with government agencies and
instrumentalities and other power sector intermediaries have enabled us to successfully identify attractive financing
opportunities. We believe that our experienced management team has been key to our success and will enable us to capitalize
on future growth opportunities.

Business Strategies

Continue to leverage our industry expertise and relationships to capitalize on the expected growth in the I ndian power
sector

We intend to continue to leverage our industry experience and relationships to provide comprehensive financing solutions for
power sector projects in India. The Indian power sector has historically been characterized by power shortages and relatively
low per capita consumption. According to Mid Term Appraisal Report of the Planning Commission, the projected capacity
addition at the end of the 11th Plan is expected to be 62,374 MW. Similarly, a tentative capacity addition of approximately
100,000 MW has been envisaged for the 12
th
Plan. (Source: International Conclave, August, 2009). The 11th Plan estimated
fund requirements in excess of ` 10,316.00 billion for investment in power generation, transmission and distribution projects
(Source: White Paper) while fund requirements for the 12
th
Plan are estimated in excess of ` 11,000.00 billion (Source:
International Conclave August, 2009). We intend to continue to leverage our industry expertise and ability to develop,
supervise and implement structured financial assistance packages based on specific operational and financial performance
standards to assist otherwise financially weak State Power Utilities ("SPUs") and public sector projects to improve their
financial position. We intend to continue to contribute to the development and implementation of GoI policies relating to the
power sector in India and play an integral role in the supervision of the implementation of reforms by SPUs and government
agencies.


Strategically expand our business and service offerings

Consultancy and other fee-based services

We intend to continue to increase our focus on our fee-based technical and consultancy services to SPUs, power distribution
licensees, IPPs, public sector undertakings and SERCs. We also intend to continue providing fee-based services for various
GoI programs for the power sector in India, including acting as a nodal agency for UMPP and R-APDRP projects and as a bid
process coordinator for the ITP scheme.

We believe that institutional and regulatory reforms in the Indian power sector and increased investor interest will lead to
consolidation in the power sector. We intend to focus on acquisition advisory services for power sector projects, including the
identification of target projects and potential acquirers for acquisitions and consolidation opportunities, and also provide
techno-commercial appraisal of target projects.

Debt syndication


79

We intend to increase our focus on debt syndication activities in the power sector. We have acted as the lead financial
institution for several projects, and have carried out syndication activities for various projects including with members of the
Power Lenders Club, a group of 21 banks and financial institutions that work together to provide financing for large projects in
the Indian power sector. We intend to continue to target debt syndication opportunities as we believe that our technical
expertise and industry experience, our project appraisal capabilities and our relationship with commercial banks and other
financial institutions enable us to ensure timely financial closure for such projects.

Equity investments

As part of our growth strategy, and subject to receipt of relevant approvals, we are in the process of evaluating potential equity
investment opportunities in power sector projects. We aim to leverage our power sector experience and relationships, existing
client base, our financial strength and lending capability to invest in power sector projects. In addition, we may consider equity
syndication opportunities for power sector projects, which we expect will also increase our fee-based income.

Other initiatives

We are currently in the preliminary stages of evaluating the possibility of establishing or acquiring a bank and are in the
process of appointing a consultant in connection with such initiative.

Broaden our loan asset base and borrower profile

Private sector projects

As of March 31, 2008, 2009, 2010, 2011 and September 30, 2011, 7.5%, 6.8%, 5.2%, 6.8% and 8.7% respectively of our total
loan assets related to private sector projects. We intend to continue to provide financial assistance to private sector generation,
transmission and distribution projects to further diversify our borrower profile.

Hydro projects and renewable energy

We intend to continue to focus on providing financial assistance to hydro projects to facilitate an optimal mix of thermal and
hydro projects in our loan asset portfolio. We have extended loan repayment periods of up to 20 years after moratorium for
hydro projects, effectively increasing the loan tenor for such projects.

We believe that the renewable energy space in India provides significant untapped potential. According to the MNRE, as of
March 31, 2011, India had an aggregate installed capacity of 18,842 MW of renewable energy projects out of an estimated
potential of 87,230 MW (Source: Ministry of New and Renewable Energy, Report, March 2011). The GoI has also launched
the Jawaharlal Nehru National Solar Mission ("JNNSM"), with a target of 20,000 MW grid connected solar power by fiscal
2022. We have strategically increased our focus on renewable energy projects, including solar, wind, biomass and small hydro
projects, to capitalize on the GoIs various renewable energy initiatives. These initiatives include requiring State distribution
utilities to meet certain minimum specified percentage of total power requirements from renewable energy sources and special
tariffs for renewable energy projects.

We intend to continue to provide financing for public and private sector renewable energy generation projects. Until
September 30, 2011, our total loan assets outstanding with regard to renewable energy projects aggregated ` 1293.22 crore. As
of September 30, 2011, 1.17% of our total loan assets and 0.82% of our total loans sanctioned pending disbursement related to
renewable energy projects. In addition, we have been nominated to act as a nodal agency to assist State power utilities in
anticipation of the introduction of CDM projects for the renovation and modernization of old thermal and hydro projects.

Forward and backward linkages to core power sector projects

As of September 30, 2011, 84%8% 5% and 3% of our loan assets related to power generation (excluding corporate loans and
loans given for renovation and modernization to power generation companies) projects, transmission projects and distribution
projects and others respectively. We have strategically expanded our focus areas to include projects that represent forward and
backward linkages to the core power sector projects, including capital equipment for the power sector, fuel sources for power
generation projects and related infrastructure development, as well as power trading initiatives.

Capital equipment manufacturers.

The significant capacity addition in the Indian power sector requires augmentation of equipment manufacturing capacities for
capital equipment for all segments of the power sector: generation, transmission and distribution. We intend to provide

80

financial assistance for manufacturers of equipment used in the power sector, including transmission and distribution
equipment and solar and wind energy generation equipment.

Fuel sources and related infrastructure development.

The GoI has introduced various reforms for the development of fuel sources for thermal power generation projects, including
allocation of coal blocks to public and private sector entities as well as the development of related infrastructure facilities for
the transportation of coal and other fuel sources such as natural gas. We intend to provide financing assistance to fuel supply
projects and related infrastructure development projects.

Power trading

We intend to continue to strategically focus on power trading initiatives in India. In this connection we have made a strategic
investment in PEIL, which is promoted by the NSE and the NCDEX, and operates a national power exchange in India. We
have also entered into a joint venture agreement with NTPC, NHPC and TCS to establish NPEL, which will operate a national
level electronic power exchange. We intend to fund non-speculative purchases of power through such exchanges by some of
our borrowers, particularly public sector power distribution companies.

Continue to develop strategic partnerships and evaluate new business opportunities

We intend to continue to develop partnerships and alliances and evaluate new business opportunities related to the power
sector in India. We are equity shareholders in PTC, which is involved in power trading and related activities. We have also
invested in NPEL and PEIL to encourage power trading initiatives in India. While PEIL has been operating a national level
power trading platform since October 2008, NPEL is yet to commence operation. We have also invested in the Small is
Beautiful fund, which is a SEBI-registered venture capital fund that invests in power generation projects, operated by KSK
Investment Advisor Private Limited, a private sector power project developer. We have also promoted PECAP with various
industry experts to provide advisory services related to equity investments in the power sector in India. We have also jointly
promoted EESL with other government companies focused on the Indian power sector to develop energy efficiency products
and services and provide consultancy services related to CDM, carbon markets and energy efficiency initiatives. In addition, in
October 2010, we have entered into a memorandum of understanding with NPCIL to explore potential financing opportunities
for nuclear power generation projects.

Investment Considerations

Our ability to successfully implement our business plan and growth strategies continue to be subject to various factors,
including the following: concentration on the power sector which has a limited number of borrowers, which are mainly SPUs
and SEBs, many of which have been historically loss making; volatility in interest rates; an inability to obtain sufficient
security or collateral on our loans; our ability to maintain low effective cost of funds; our ability to implement effective risk
management policies and procedures; changes in applicable regulations and policies that adversely affect our business and
industry; various risks associated with the projects we finance and our ability to compete effectively. For further discussion on
weaknesses and threats, and of factors that could adversely affect our future financial condition and results of operations, see
section titled "Risk Factors" beginning on page 9 of this Draft Shelf Prospectus.


Our Products

We provide a comprehensive range of fund based and non-fund based financial products and services from project
conceptualization to the post-commissioning stage to our clients in the power sector.

Our fund based financial assistance includes primarily project finance (both Rupee and foreign currency denominated term
loans), short-term and mini short-term loans. Our product portfolio also includes equipment lease financing, buyers line of
credit, debt refinancing schemes, bridge loans, transitional loans, loans for asset acquisition, bill discounting and a line of
credit for import of coal and other fuel.

We also provide non-fund based assistance including default payment guarantees and letters of comfort.


FUND BASED

Our loan assets are presented as adjusted for any provisions for contingencies made in the respective fiscal periods.


81

The following table sets forth certain information relating to our total loan assets as of the dates indicated:

Particulars As of March 31, As of September 30 2011
2007 2008 2009 2010 2011
` crore % of
total
` crore % of
total
` crore % of
total
` crore % of
total
` crore % of
total
` crore % of
total
Rupee loans
(a) Term Loans 40,142.03 91.4 48,718.99 94.5 61,614.30 95.6 76,010.28 95.2 95,858.70 96.3 105615.55 95.6
(b) Short-term
loans
1,932.53 4.4 1,494.63 2.9 1,604.54 2.5 2,948.99 3.7 2,105.77 2.1 3,252.17 3.0
Foreign
currency loans
770.48 1.8 647.19 1.3 722.10 1.1 499.76 0.6 396.60 0.4 394.87 0.3
Others
(1)
1,057.79 2.4 707.49 1.4 488.04 0.8 396.73 0.5 1,209.66 1.2 1,193.66 1.1
Total 43,902.83 100.0 51,568.31 100.0 64,428.99 100.0 79,855.76 100.0 99,570.74 100 110,421.25 100
Others include equipment leasing, buyers line of credit, loans to equipment manufacturers, asset acquisition schemes and debt
refinancing schemes. Others also include medium-term Rupee loans.

The following table sets forth certain information relating to our total disbursements in the periods indicated:

Particulars Fiscal As of September 30
2011
2007 2008 2009 2010 2011
` crore % of
total
` crore % of
total
` crore % of
total
` crore % of
total
` crore % of
total
` crore % of
total
Term loans
(1)
11,481.00 81.70 13,420.10 82.80 18,057.20 85.80 22,553.60 87.40 29,010.70 85.00 13,332.33 89.58
Short-term
loans
2,366.00
16.80
2,316.00
14.30
2,877.00
13.70
3,114.60
(2)

12.10
4,206.00
12.30 1540.00 10.35
Others
(3)
208.00 1.50 475.00 2.90 120.10 0.50 140.30 0.50 904.60 2.70 11.40 0.07
Total 14,055.00 100.00 16,211.10 100.00 21,054.30 100.00 25,808.50 100.00 34,121.30 100.00 14,883.70 100.00
(1) Term loans include Rupee loans and foreign currency loans and disbursement under the R-APDRP and grants.
(2) Power exchange credit of ` 486.00 million in fiscal 2010 has been included under short-term loan.
Others include equipment leasing, buyers line of credit, loans to equipment manufacturers, asset acquisition schemes
and debt refinancing schemes. Others also include medium-term Rupee loans.

Rupee Term Loans

Project finance rupee term loans accounted for 94.5% 95.6%, 95.2%, 96.3% and 95.65% of our total loan assets as of March
31, 2008, 2009, 2010, 2011 and September 30, 2011, respectively. We generally disburse funds either directly to a supplier of
project equipment or services or by way of reimbursement to the borrower against satisfactory proof of eligible expenditure on
the relevant project, or through the trust and retention account.

We generally implement security and quasi-security arrangements in relation to our Rupee terms loans. Our Rupee term loan
financings are generally secured in the case of public sector clients, including State utilities, either through a charge on the
project assets or by a State government guarantee, or both. In addition to such security or guarantee, most of our loans to
Central and State sector borrowers provide for an escrow mechanism. For private sector clients, our term loan financings are
secured through, among other things, through a first priority pari passu charge on the relevant project assets, collaterals such as
pledges of shares held by promoters and/or personal/corporate guarantees and trust and retention arrangements. For further
information, see section titled "Our Business- Security Risk" on page 92 of this Draft Shelf Prospectus.

Interest rates on Rupee term loans are notified to the borrower from time to time. Specific interest rates may be offered to
certain borrowers based on the merit of the borrower and the relevant project. Typically, there is an option to select interest
rates with reset after every three years or ten years. We believe that our comprehensive credit appraisal and project monitoring
process, and our ability to manage the security and repayment profiles of our loan assets have resulted in strong collection and
recovery.


82

We have raised ` 2,353.61 million through public issue of secured, redeemable, non convertible long term infrastructure bonds,
which were allotted on March 31, 2011. For further details, see section titled "Financial I ndebtedness" on page 133 of this
Draft Shelf Prospectus..

Short-term Loans

We provide short-term loan finance to borrowers to meet their immediate fund requirements. Short-term loans accounted for
2.9%, 2.5%, 3.7%, 2.1% and 2.95%, of our total loan assets as of March 31, 2008, 2009, 2010, 2011 and September 30, 2011,
respectively. These loans are Rupee-denominated and primarily relate to purchase of fuel for power plants; purchase of
consumables and essential spares; emergency procurement/works for generation plants and transmission and distribution
networks in the nature of repair and maintenance works; and purchase of power. We also extend short-term loans against
receivables from distribution companies to transmission companies on account of wheeling/transmission charges.

Short-term loan facilities are typically extended for a period of up to one year. However, we have recently started providing
short-term loans to SPVs in the public sector to meet their working capital requirements.

Foreign Currency Loans

We sanction foreign currency loans based on the capital expenditure requirements of the relevant project, subject to availability
of foreign currency for lending. We provide foreign currency loans to power sector projects for end uses that are permitted
under applicable RBI regulations relating to ECBs. Foreign currency loans represented 1.3%, 1.1%, 0.6%, 0.4% and 0.36% of
our total loan assets as of March 31, 2008, 2009, 2010, 2011 and September 30, 2011, respectively.

The interest rates offered for our foreign currency loans are fixed based on six months U.S. Dollar LIBOR or LIBOR in other
applicable foreign currency. The fixed rate margin over the relevant LIBOR is generally reset at the end of every five years.

Our foreign currency loans are generally secured by, among other security, a first priority pari passu charge on the relevant
project assets, collaterals such as pledges of shares held by promoters, and/or personal/corporate guarantees.

Other Fund Based Financial Assistance

Our product portfolio includes providing a comprehensive range of other fund based financial assistance, including equipment
lease financing, buyers line of credit, loans to equipment manufacturers, asset acquisition schemes, transitional loans and debt
refinancing schemes. We also provide medium-term Rupee loans. These other fund based financial assistance (including
medium-term loans) represented, in the aggregate, 1.4%, 0.8%, 0.5%, 1.2% and 1.08% of our total loan assets as of March 31,
2008, 2009, 2010, 2011 and September 30, 2011, respectively.

Equipment lease financing

We provide lease financing to fund the purchase of major capital equipment and machinery essential for power sector projects
and associated infrastructure projects. Equipment lease financing is extended to various core power sector projects (including
to power utilities), renewable energy projects, as well as associated infrastructure development projects. Equipment lease
financing may be provided up to the entire cost of the relevant equipment.

Buyers line of credit

We provide non-revolving Rupee line of credit for power sector projects in connection with purchase of machinery, equipment
and other capital goods (including accessories and spare parts) on a deferred payment basis.

Loans to equipment manufacturers

We provide short-term loans (up to one year) and medium-term loans (between one and five years) to manufacturers of
equipment or materials that have received firm contracts for power sector projects in India.

Asset acquisition schemes

We provide finance for the acquisition of assets by power sector projects.

Transitional loans


83

Our product portfolio includes providing finance to state sector power projects, primarily to power generation and transmission
companies under restructuring process, to bridge the gap in cash flows during such phase.

Debt refinancing scheme

Under this scheme, we assist borrowers who have borrowed funds from other lending institutions at a higher rate of interest to
refinance their loans at a lower interest rate. The refinancing facility is available only for commissioned projects.

Bill discounting scheme

We operate a bill discounting scheme which enables equipment manufacturers to sell their equipment, machinery, turnkey
projects and capital goods (including accessories and spares supplied along with the machinery to the extent deemed
reasonable) on deferred payment terms to power sector projects.

Corporate loans

We provide financing to existing players in the public and private sector, which enables experienced utilities to leverage the
successful operation of commissioned projects to mobilize funds for equity infusion in new projects.

Loans to grid connected solar PV power generation projects

We provide loans to grid connected solar PV power generation projects that have been approved by the MNRE.

Non Fund Based

We also provide non-fund based assistance including default payment guarantees and letters of comfort.

Default Payment Guarantees

We provide default payment guarantees on behalf of project companies to guarantee their payment obligations. Such
guarantees enable power sector projects to secure financing from other sources, including borrowings from commercial banks,
foreign lenders and debt capital markets. As of September 30, 2011, default payment guarantees issued by us included 0.178
million and U.S.$ 12.64 million in foreign currency guarantees and ` 400 crores rupee denominated guarantees.

Letters of Comfort

We provide comfort letters against our sanctioned term loans to enable borrowers to establish a letter of credit with their
bankers. The letter of comfort is issued only in cases where it is a pre-requisite for engineering, procurement and construction
("EPC") contracts or equipment supply contracts of projects financed by us. The letter of comfort is issued after all other pre-
disbursement conditions have been complied with. As of September 30, 2011, we had outstanding letters of comfort
aggregating ` 5574.64 crores.


Projects We Fund

Our project financing activities have been focused primarily on thermal and hydro generation projects, including financing of
renovation and modernization of existing thermal and hydro electric plants. Transmission and distribution projects financed by
us include system improvement and projects involving provision of shunt capacitors and meters. We also focus on the
promotion and development of other energy sources, including alternate and renewable fuels. As of September 30, 2011, 84 %,
8%, 5% and 3% of our loan assets related to power generation (excluding corporate loans and loans given for renovation and
modernization to power generation companies) projects, transmission projects, distribution projects and renovation and
modernization projects, respectively.

We have strategically expanded our focus areas to include projects that represent forward and backward linkages to the core
power sector projects, including procurement of capital equipment for the power sector, fuel sources for power generation
projects and related infrastructure development, as well as power trading initiatives.

The following table sets forth certain information relating to our loan assets as of the dates indicated, presented according to
the type of project:
Particulars As of March 31, As of September 30
2011 2007 2008 2009 2010 2011

84

` Crore % of
total
` Crore % of
total
` Crore % of
total
` Crore % of
total
` Crore % of
total
` Crore % of total
Generation
- Thermal 19,817.07 45.2 25,340.87 49.1 34,668.26 53.8 45,420.38 56.9 58,579.04 58.8 66539.43 60.3%
- Hydro 10,366.44 23.6 11,418.17 22.1 14,071.76 21.8 14,747.16 18.5 15,181.17 15.2 15267.28 13.8%
- Wind 232.96 0.5 211.67 0.4 191.60 0.3 300.52 0.4 325.97 0.3 321.63 0.3%
- Solar - - - - - - 7 0.0
(1)


32.87 0.0
(1)

46.65 0.0%
Corporate term
loan
- - - - 500.00 0.8 3,500.00 4.4 6,500.00 6.5
7000.00 6.3%
Renovation and modernization (generation)
- Thermal
generation
2,263.31 5.2 2,393.76 4.6 2,563.48 4.0 2,660.31 3.3 2,869.89 2.9
2859.03 2.6%
- Hydro
generation
336.79 0.8 367.46 0.7 343.20 0.5 370.25 0.5 413.39 0.4
399.40 0.4%
Transmission 4,922.63 11.2 6027.64 11.7 6,470.62 10.0 6,228.92 7.8 7,570.46 7.6 8298.52 7.5%
R&M
transmission
3.95 0.0
(1)


20.59 0.0
(1)


23.467 0.0
(1)


27.32 0.0
(1)


25.47 0.0
(1)

19.77 0.0%
Distribution
(Including shunt
capacitor and
metering)
2,504.76 5.7 3261.88 6.3 3,409.46 5.3 3,401.76 4.3 4,701.22 4.7
5029.78 4.6%
Short-term loans 1,932.51 4.4 1486.45 2.9 1,604.54 2.5 2,948.99 3.7 2,105.77 2.1 3257.58 3.0%
Equipment
manufacturing
loan
6.76 0.0
(1)


6.26 0.0
(1)


5.001 0.0
(1)


3.76 0.0
(1)


829.50 0.8
828.88 0.8%
Others
(2)
1,505.21 3.4 1033.54 2.0 577.59 0.9 239.40 0.3 435.98 0.4 553.30 0.5%
Total 43,892.39 100.0 51,568.31 100.0 64,428.99 100.0 79,855.76 100.0 99,570.73 100.0 110421.25 100.00%
(1) Negligible.
(2) Others include buyers line of credit, asset acquisition schemes, debt refinancing schemes, medium-term rupee loans
computerization, project settlement, pre-investment fund, technical assistance project, studies, long-term working
capital loan and interest accrued and due.


The following table sets forth certain information relating to loans disbursed in the periods indicated, presented according to
the type of the project:

Particulars Fiscal As of September
30 2011
2007 2008 2009 2010 2011
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
Generation
- Thermal 7,333.80 52.2 8,290.60 51.1 11,305.60 53.7 13,818.40 53.5 16,544.6
48.5

9,180.00 61.68
- Hydro 1,528.60 10.9 1,830.30 11.3 3,575.50 17.0 2,221.10 8.6 1,733.2 5.1 777.00 5.22
- Solar - - - - - - 7 0.0
(1)
26.4 0.1 15.00 0.10
- Bagasse - - - - - - - - 0 0.00 0.00 0.00
Corporate term loan - - - - 500.00 2.4 3,000.00 11.6 3,000.00 8.8 500.00 3.36
Renovation and modernization (generation)
- Thermal generation 627.50 4.5 380.30 2.3 509.60 2.4 423.10 1.6 561.8 1.6 153.00 1.03
- Hydro generation 37.6 0.3 89.9 0.6 51.50 0.2 72.5 0.3 83.2 0.2 8.00 0.05
Transmission (including
R&M transmission)
1,437.50 10.2 1,976.30 12.2 1296.00 6.2 1,056.00 4.1 2,615.4 7.7 1254.00 8.43
Distribution (including
shunt capacitor and
metering)
657.80 4.7 1,160.90 7.2 610.40 2.9 625.60 2.4 1,825.3 5.3 666.00 4.47
RAPDRP Part-A - - - - 325.00 1.5 1,124.70 4.4 62.4 0.2 17.70 0.12
RAPDRP Part-B - - - - - - 196.40 0.8 2,039.8 6.0 545.00 3.66
RAPDRP Part-A - - - - - - - - 154.6 0.5 87.00 0.58

85

Particulars Fiscal As of September
30 2011 2007 2008 2009 2010 2011
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
SCADA
Short-term loans 2,366.00 16.8 2,316.00 14.3 2877.00 13.7 3,114.60 12.1 4,206 12.3 1540.00 10.35
Equipment manufacturing
loan
- - - - - - - - 827 2.4 0.00 0.00
Others
(2)
66.2 0.5 166.80 1.0 3.70 0.0
(1)
149.10 0.6 441.6 1.3 141.00 0.95
Total 14,055.00 100.0 16,211.10 100.0 21,054.30 100.0 25,808.50 100.0 34,121.3 100.0 14,883.70
0
100.0
(1) Negligible.
(2) Other schemes such as computerization, project settlement studies, buyers line of credit, equipment lease financing, re-bagasse and
loans to manufacturers.

The following table sets forth certain information relating to our loan sanctions pending disbursement (net of any sanctions
cancelled) as of September 30, 2011 presented according to kind of projects:

Particulars As of September 30, 2011
(` Crores)

Thermal Generation
116158.00
Hydro-electric Generation
8941.00
Wind, Solar, Bagasse
744.00
Renovation and Modernizaation of Thermal Power Stations
2305.00
Corporate Term Loan 3000.00
R-APRDP 5962.00
Renovation & Uprating of Hydro Power Projects 339.00
Transmission 18699.00
Distribution 5580.00
Short Term Loan 535.00
Others* 4827.00
Total** 1,67,232.00
* Others include Decentralized Management, Project Settlement, Pre Investment Fund, Technical Assistance Project,
Medium Term Loan, Buyers Line of Credit, Equipment Manufacturing Loan, Loan for Asset Acquisition, Bill Discounting,
Studies, Loan for Redemption of bonds, Purchase of power through PXI, Loan for Promoters Equity and Computerization
etc.
** Excluding APDRP


The following table sets forth information relating to our top ten borrowers (primarily generation companies) in terms of loans
outstanding as of September 30, 2011:

Borrower Loans outstanding
(` Crores)
% of total top-ten outstanding loans
as of September 30, 2011
Borrower 1 9475.81 16%
Borrower 2 7052.69 12%
Borrower 3 6926.27 12%
Borrower 4 5953.28 10%
Borrower 5 5767.50 10%
Borrower 6 5304.27 9%
Borrower 7 5138.77 8%
Borrower 8 4999.25 8%
Borrower 9 4723.47 8%
Borrower 10 4234.02 7%
Total 59575.33 100%


86

Thermal generation projects. We provide finance for thermal energy generation projects in the public and private sector.
Thermal energy generation projects include coal and gas based power plants.

Hydro generation projects. We provide finance for hydro generation projects in the public and private sector. We continue to
focus on providing financial assistance to hydro projects to facilitate an optimal mix of thermal and hydro projects in our loan
asset portfolio. In this connection, we have extended loan repayment periods of up to 20 years after moratorium for hydro
projects, effectively increasing the loan tenor for such projects.

Renewable energy projects. We provide finance to various renewable energy projects, including solar, wind, biomass and
small hydro projects. We provide financing for public and private sector renewable energy generation projects.

Renovation, modernization and life-extension scheme. We provide finance for renovation and modernization and life-extension
projects of old thermal and hydro power plants.

Transmission projects and schemes. We provide financing assistance to several kinds of power transmission projects, including
transmission and sub-transmission schemes, power evacuation lines and transmission links. Transmission projects and schemes
funded by us involve transmission of power within various States and from one region to another region in India, assist in
distribution of power within the State and also relate to transmission loss reduction schemes. These schemes include
construction of new transmission lines, reinforcement of existing transmission lines, new substations, augmentation of
transformer capacities of existing substations, replacement of old and obsolete equipment, and bay extensions.

Distribution, capacitor and metering schemes. We have extended financial assistance to various projects and entities that
establish and upgrade sub-stations and distribution networks in various distribution circles, including for installment of
capacitors and meters to reduce losses and improve revenue generation, and to improve the quality and reliability of power
supply to consumers.

Sector-wise Loan Portfolio

We provide financial assistance to the public sector, which includes Central, State and joint (i.e., companies that have both
State and Central sector participation) sector; and to private sector projects.

The following table sets forth certain information relating to our total loan assets as of the dates indicated, presented according
to sector:
Particulars As of March 31, As of September 30
2011
2007 2008 2009 2010 2011
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
A. Public sector comprising of:
(i) State sector 33,542.83 76.4 39,114.18 75.8 46,438.94 72.1 54,137.59 67.8 64,507.42 64.7 70991.31 64.3%
(ii) Central sector 5,385.70 12.3 6,666.78 12.9 9,283.09 14.4 15,015.21 18.8 20,300.10 20.39 21188.29 19.2%
(iii) Joint sector 1,345.05 3.1 1,897.66 3.7 4,359.63 6.8 6,526.81 8.2 7,990.95 8.03 8622.44 7.8%
B. Private sector 3,618.81 8.2 3,889.68 7.5 4,347.34 6.7 4,176.15 5.2 6,772.27 6.80 9619.21 8.7%
Total 43,892.39 100.0 51,568.31 100.0 64,428.99 100.0 79,855.76 100.0 99,570.73 100.00 110421.25 100.00%













87

The following table sets forth certain information relating to disbursements made in the periods indicated, presented according
to sector:
Particulars Fiscal As of September
30 2011
2007 2008 2009 2010 2011
` Crores % of
total
`
Crores
% of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
`
Crores
% of
total
A. Public sector comprising of:
(i) State sector 11,095.70 78.9 13,049.50 80.5 14,656.50 69.6 15,952.90 61.8 22,656.7 66.4 9,880.00 66.38
(ii) Central
sector
1,491.10 10.6 1,669.70 10.3 3,130.10 14.9 6,351.20 24.6 5,943.6 17.4 1,254.00 8.43
(iii) Joint sector 482.00 3.5 630.00 3.9 2,647.40 12.6 2,449.10 9.5 1,774.7 5.2 2,964.00 19.91
B. Private
sector
986.20 7.0 861.90 5.3 620.30 2.9 1,055.30 4.1 3,746.3 11.0 786.00 5.28
Total 14,055.00 100.0 16,211.10 100.0 21,054.30 100.0 25,808.50 100.0 34,121.3 100.0 14,884.00 100

Institutional Development Role and Government Programs

The GoI and various State governments have undertaken various programs and initiatives for the reform and restructuring of
the power sector in India to ensure adequate supply of electricity at reasonable rates, to encourage private sector participation
and to make the Indian power sector self-sustaining and commercially viable. These institutional and structural and procedural
reforms are aimed at achieving operational and commercial efficiency and improved viability of State power utilities;
improving delivery of services and achieving cost effectiveness through technical, managerial and administrative restructuring
of utilities; creating an environment that will attract private capital, both domestic and foreign, to supplement public sector
investment; operating State power utilities in a manner that enables them to generate sufficient returns to meet operational and
investment requirements; and achieving energy conservation through integrated resource planning, demand side management
and minimizing waste.

We were established as an integral part of, and continue to play a strategic role in, the GoIs initiatives for the development of
the power sector in India. We work closely with GoI instrumentalities, State governments and power sector utilities, other
power sector intermediaries and private sector clients for the development and implementation of policies and structural and
procedural reforms for the power sector in India. In addition, we are involved in various GoI programs for the power sector,
including acting as a nodal agency for the UMPP and the R-APDRP and as a bid process coordinator for the ITP scheme.

Ultra Mega Power Projects (UMPP)

The GoI has introduced the UMPP program with the objective of developing large capacity power projects in India. We have
been designated to act as a nodal agency by the GoI for the development of UMPPs, each with a contracted capacity of 3,500
or above. These UMPPs involve economies of scale based on large generation capacities based at a single location, utilize
super critical technology to reduce emissions, and potentially have lower tariff costs for electricity generated as a result of
these factors and a result of the tariff being based on international competitive bidding processes adopted for the selection of
developers.

The CEA is the technical partner for the development of these UMPPs while the MoP is involved as a facilitator. As of
September 30, 2011, 16 UMPPs have been identified, located in Madhya Pradesh, Gujarat (two), Chhattisgarh, Karnataka,
Maharashtra, Andhra Pradesh (three), Jharkhand (two), Tamil Nadu (two) and Orissa (three). As of September 30, 2011, we
had incorporated a total of 12 wholly-owned SPVs for the UMPPs. In relation to such SPVs, we in conjunction with the MoP
and the CEA will undertake preliminary site investigation activities and obtain appropriate regulatory and other approvals
(including for land, water, the environment and for power selling) necessary to conduct the bidding process for these projects.
Four of these SPVs have been transferred to successful bidders. The remaining SPVs are proposed to be eventually transferred
to successful bidder(s) selected through a tariff based international competitive bidding process in accordance with the
guidelines for Determination of the Tariff By Bidding Process for Procurement of Power by distribution licensees, 2005 as
amended. The successful bidders are then expected to develop and implement these projects.

We earn revenue from our involvement with UMPPs through: (i) interest income on expenditure incurred by us prior to
handing over the relevant SPVs to the successful bidder, which are typically in the form of loans extended by us to these SPVs;
and (ii) fee income. In certain cases, we also hold, on behalf of the SPV, any commitment advances received by the SPV
from the procurer of the project for the purpose of meeting the initial expenses of the SPV. We typically invest any unused
portion of the commitment advances as part of our ongoing investment activities and pay the SPV our average rate of return on
this amount. In addition, we may earn interest income by extending loans in the future to such projects.

88


I ndependent Transmission Projects (I TP)

In April 2006, the MoP introduced a tariff based competitive bidding process for ITPs, similar to that followed for UMPPs, for
the development of transmission systems through private sector participation. We have been nominated as a bid process
coordinator by the MoP for the development of certain ITPs.

Four SPVs, were initially incorporated under ITPs. These SPVs undertake preliminary survey work, identify transmission
routes, prepare survey reports, initiate the processes of land acquisition and forest clearances if applicable, and are also
responsible for conducting the bid process. We earn revenue from our involvement with ITP projects in a manner similar to the
UMPPs. Of the four SPVs, Bokaro-Kodarma Maithon Transmission Company Limited was liquidated in December, 2010 and
another SPV namely, East North Interconnection Company Limited has been transferred to the successful bidder on March 31,
2010. Request for proposals the other two SPVs, Jabalpur Transmission Company Limited ("JTCL") and Bhopal Dhule
Transmission Company Limited ("BDTCL") were issued on August 30, 2010 and September 15, 2010, respectively, and letters
of intent for JTCL and BDTCL were issued to the successful bidder Sterlite Transmission Projects Private Limited on January
19, 2011 and January 31, 2011 respectively. JTCL and BDTCL have been transferred to Sterlite Transmission Projects Private
Limited on March 31, 2011, after obtaining the requisite approvals from our Board, the board of directors of PFCCL and the
MoP.

In addition, the MoP has appointed PFCCL as the bid process coordinator on March 16, 2011 for two ITPs. The board of
directors of PFCCL has on March 24, 2011 approved the proposal for incorporation of two SPVs to facilitate the development
of these two ITPs, which is subject to the approval of our Board. Our Board in its meeting on April 19, 2011 has approved the
incorporation of these two SPVs.

Accelerated Power Development and Reform Programs

The GoI introduced the Accelerated Power Development Program ("APDP") in fiscal 2001 as part of the reform of the Indian
power sector. During the 10th Plan, the GoI subsequently upgraded the APDP program to the Accelerated Power Development
Reform Program ("APDRP") in fiscal 2003. The objectives of this program were to improve the financial viability of state
power utilities, reduce aggregate technical and commercial losses ("AT&C") losses, improve customer satisfaction and
increase the reliability and quality of the power supply by reducing outages and interruptions, with a focus on urban and
industrial areas.

APDRP aimed at reforming the power distribution sector by providing investment and incentives to SEBs and SPUs and
distribution companies to strengthen and improve transmission, sub-transmission systems and distribution networks.

In July 2008, APDRP was restructured and the MoP launched the Restructured Accelerated Power Development and Reforms
Program ("R-APDRP"), with focus on, amongst others, establishment of base line data, fixation of accountability and
reduction of AT&C losses through strengthening and upgrading of transmission, sub transmission and distribution network,
and adoption of IT systems during the 11th Plan.

R-APDRP is required to be implemented in three parts. Part-A focuses on establishment of IT enabled baseline data acquisition
systems and Supervisory Control and Data Acquisition ("SCADA") systems. Part-B aims at reduction in AT&C loss level to
less than 15% on a sustainable basis in five years, by achieving improvements in transmission, sub-transmission and
distribution systems.

We were designated to act as the nodal agency to run APDRP as well as R-APDRP, to provide a single window service under
the program, in coordination with the agencies involved, such as the MoP, Steering Committee, CEA, NTPC, PGCIL, other
statutory bodies (if required) and various consultants to achieve the speedy and timely completion of projects, and
therebyassist the utilities in achieving loss reduction targets. We are paid a 'nodal agency fee' for the services rendered in
running the R-APDRP. In Part-A of the R-APDRP, the GoI will provide 100% of the loan through budgetary support to initiate
the project, which is meant to be converted into a grant if the required base-line data system is established within a stipulated
time frame. The loan provided to state power utilities for R-APDRP Part-A projects shall be converted to grant only on
satisfactorily completing the projects within three years of sanction and verification of the same by such independent agencies.
In Part-B, the GoI will provide funding of up to 25.0% of the project cost in the form of a loan (90% for special category
states), 50.0% of which will be converted into a grant in five equal tranches if the project achieves AT&C loss levels of 15. 0%
on a sustainable basis for a period of five years.

We have appointed a process consultant to assist in running the R-APDRP. We have also empanelled IT consultants ("ITC")
and IT Implementing Agencies ("ITIA") and have formulated an RfP for ITC and model RfP for ITIA. Further, we have
empanelled SCADA/DMS consultants ("SDC"), SCADA Implementing agencies ("SIA") and have formulated a RfP for SDC

89

and model RfP for SIA. In order to monitor the implementation of R-APDRP, a fully dedicated web-portal has been developed
by an IT advisor in consultation with the Company. Third Party Independent Evaluation Agencies for Energy Accounting have
been appointed for all States to verify baseline AT&C losses and AT&C losses, while third party independent evaluation
agencies for IT are in process of being appointed.


The table below shows the cumulative sanctions and disbursements under R-APDRP as on September 30, 2011:

Particulars Amount (in `Crores)
Sanctions 25527.00
Disbursements 4552.00

As of September 30, 2011, the cumulative sanctions under R-APDRP as per the MoPs Steering Committee are ` 25527.00
crores. As of September 30, 2011, the R-APDRP is being implemented in approximately 1401 towns in India. As a majority
our loan portfolio is in the State power sector, improvement of the performance and the financial health of the State power
sector is expected to enhance the quality of our loan assets. The Part-B distribution strengthening projects under R-APDRP
envisages funding of 25.0% of the project cost from the GoI, which we believe will create an opportunity for us to provide the
balance funding for the projects.

Distribution Reform, Upgrades and Management (DRUM)

Distribution Reform, Upgrades and Management ("DRUM") is an Indo-US joint initiative developed by the MoP in
conjunction with the United States Agency for International Development with a planned funding of US$30.00 million. The
objective of DRUM is to demonstrate commercially viable electricity distribution systems that provide reliable power of
sufficient quality to consumers and to establish a commercial framework and a replicable methodology to that adopted by
Indian financial institutions for the provision of non-recourse financing for DRUM activities and programs.

We have been appointed as a principal financial intermediary and provide management support for this initiative. Our
responsibilities include provision of management and implementation support, coordination of all relevant stakeholders, acting
as a financial intermediary and banker for supervision of funds (loans and grants) and developing a mechanism for leveraging
resources of other financial institutions and banks.

Consultancy Services

In addition to our lending activities, we provide various technical consultancy and advisory services for power sector projects.
We provide consultancy and other fee-based services to State power utilities, power distribution licensees, IPPs, public sector
undertakings and SERCs. We also provide fee-based services for various GoI programs, including acting as a nodal agency for
UMPP and R-APDRP projects and as a bid process coordinator for ITP scheme projects. Other consultancy and advisory
services include: bid process coordination for power procurement by distribution licensees through tariff based competitive
bidding process; renewable and non-conventional energy schemes; coal block joint ventures and selection of developers for
coal blocks and linked power projects; project advisory services including selection of an EPC contractor; advisory services
relating to policy reform, restructuring and regulatory aspects; and assistance in relation to capacity building and human
resource development.

We also intend to focus on acquisition advisory services for power sector projects, including identification of target projects
and potential acquirers for acquisitions and consolidation opportunities, and also provide techno-commercial appraisal of target
projects.

Resource Mobilization

Our primary sources of funds include equity capital, internal resources and domestic and foreign borrowings. Our borrowings
reflect various sources, maturities and currencies, and include bonds and term loans, as well as commercial paper. In addition,
historically most of our borrowings have been on an unsecured basis.


90

The following table sets forth certain information relating to our Rupee-denominated and foreign currency denominated
borrowings as at the respective dates indicated:

Particulars
As of March 31, As of September
2011 2007 2008 2009 2010 2011
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
` Crores % of
total
Rupee 31,661.07 94.3 38,413.77 94.5 49,570.65 95.0 64,349.55 95.9 80,636.04 94.2 85485.0 94%
Foreign
currency
(1)

1,923.11 5.7 2,234.04 5.5 2,589.50 5.0 2,758.86 4.1 4,962.53 5.8 5578.5 6%
Total 33,584.18 100.0 40,647.81 100.0 52,160.15 100.0 67,108.41 100.0 85,598.57 100.0 91,063.50 100%
(1) The Rupee equivalents of foreign currency borrowings are based on the bank selling rate at the end of the relevant fiscal period.

Rupee resources

Our primary sources of funds are Rupee-denominated bonds and term loans availed in India.

A significant percentage of our Rupee-denominated borrowings are raised through the issuance of privately placed bonds in
India. As of September 30, 2011, we had outstanding borrowings aggregating ` 68,330.20 Crores in the form of bonds and `
15344.5 Crores in the form of term loans from Indian banks and financial institutions. In addition, we were recently classified
as an IFC, which enables us to further diversify our borrowings through the issuance of Rupee-denominated infrastructure
bonds that offer certain tax benefits to bondholders.

The following table sets forth certain information relating to our Rupee resources as of the dates indicated:
(` Crores)
Particulars
As of March 31, As of September
2011
2007 2008 2009 2010 2011
Non-taxable bonds
(1)
275.50 275.50 125.00 50.00 0.00 235.36
Taxable bonds
(2)
16,136.37 23,267.77 35,354.15 45,751.43 56,136.99 68,330.20
Term loans from Indian
banks and FIs
15,249.21 14,870.50 14,091.50 18,548.12 22,258.00 15,344.5
Interest subsidy from the
GoI
1,231.63 1,066.75 908.94 663.49 451.87 408.88
Total 32,892.71 39,480.52 50,479.59 65,013.04 78,846.86 84,318.94
(1) Bonds that offer certain tax benefits to the bondholders.
(2) Bonds that do not offer any tax benefits to the bondholders.




















91

Foreign currency resources

We have in the past raised foreign currency funds through syndicated loans, loans from multilateral agencies and other sources
such as FCNR(B) loans, which are foreign currency loans for specific end uses (such as infrastructure) and at interest rates
linked to LIBOR. The following table sets forth certain information relating to our foreign currency borrowings by source, as
at the respective dates indicated:

(` Crores)
Particulars As of March 31, As of
September
2011
2007 2008 2009 2010 2011
ADB I and II 214.74 185.95 182.25 113.67 63.28 37.38
ADB new loan 48.87 81.25 110.49 97.66 96.26 104.89
Credit Nationale (now Natexis
Banque)
114.09 117.20 119.38 100.14 97.23 98.57
World Bank 3.00 2.41 2.62 1.87 1.37 1.22
KfW Portion I 62.65 65.71 68.43 58.81 58.86 60.63
KfW Portion II 28.97 23.31 22.12 16.91 14.54 13.72
Fixed Euro Notes 468.64 464.98 476.32 0.00 0.00 0.00
Syndicated loan IV 466.29 0.00 0.00 0.00 0.00 0.00
Syndicated loan V 437.58 406.95 476.00 0.00 0.00 0.00
EDC Canada 12.64 3.86 0.00 0.00 0.00 0.00
FCNR(B) Loans(Long-term) 65.66 160.44 205.80 181.98 180.56 197.20
USPP - 721.98 926.10 820.44 812.52 887.40
Syndicated bank loan VII - - - 1,367.40 1,354.20 1479.00
Syndicated bank loan VIII - - - - 1,114.52 1316.94
Syndicated bank loan IX 1,169.19 1381.54
Total 1,923.11 2,234.04 2,589.50 2,758.86 4,962.53 5578.49

We have recently been classified as an IFC. As an IFC, we are also eligible to raise, under the automatic route (without the
prior approval of the RBI), ECB up to US$500.00 million each fiscal year, subject to the aggregate outstanding ECBs not
exceeding 50.0% of our Owned Funds. In addition, in February 2011 we have availed of a JPY, denominated foreign currency
loan equivalent to US$260.00 million. For further details, see section titled "Financial I ndebtedness" on page 133 of this Draft
Shelf Prospectus..

Credit Ratings

CRISIL Limited (CRISIL) has assigned a credit rating of CRISIL AAA/Stable (pronounced as CRISIL Triple A rating with
stable outlook) vide its letter no. SN/FSR/PFC/2011-12/865 to the long term borrowing programme of the Company
aggregating to ` 38,500 Crores, the present issue of Tax Free Bonds is covered under the said rating amount and CRISIL A1+
(pronounced as CRISIL A One Plus) vide its letter no. SN/FSR/PFC/2011-12/866 to the short term borrowing programme of `
5000 Crores both dated October 13, 2011 (total ` 43,500 crores). Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. ICRA
Limited has by its letter no. D/RAT/2011-2012/P3/20 dated October 21, 2011, assigned a credit rating of ICRA AAA
(pronounced ICRA triple A) to the Long Term Borrowing Programme of the Company aggregating to ` 43,500 crores, during
the financial year 2011-12. Instruments with this rating are considered to have the highest degree of safety regarding timely
servicing of financial obligations. Such instruments carry lowest credit risk.


92

These ratings have factored in considerations such as the GoIs ownership, our strategic importance to the GoI, its comfortable
capitalization, strong market position, adequate resource profile, and sound asset quality despite the poor credit profile of its
key customers.

RISK MANAGEMENT

We have put in place an Integrated Enterprise wide Risk Management (IRM) policy and procedures. IRM policy and
procedures lists all risks we face which may have an impact on profitability / business of the company, their root causes,
existing mitigations factors and action plans for further mitigations, where required. The risks have been prioritized and key
performance indicators identified for measuring and monitoring. A Risk Management Committee of the Board is constituted
for monitoring the risks, mitigations and implementation of action plans.
Important risks faced by our Company are:

Credit Risk
Security Risk
Liquidity Risk
Interest Rate Risk, and
Foreign Currency Risk
Operational Risk

A. Credit Risk

Our Borrowers eligibility criteria place an emphasis on financial and operational strength, capability and competence. While
we encourages certain schemes through differential lending rates, the eligibility criteria and funding decision is always purely
guided by the merit of the project and no funds are pre-allocated.

Our lending policies are set out in its Operational Policy Statement (OPS). In addition, we place emphasis on funding
projects with short lead times as well as on-going projects.


We lends to projects meeting the following criteria:
a) are techno-economically sound with Financial or Economic Rate of Return of not less than 12% (as may be
applicable);*
b) are feasible and technically sound and provide optimal cost solutions for the selected alternative;
c) are compatible with integrated power development and expansion plans of the State / Region / Country;
d) compliance to environmental guidelines, standards and conditions;
e) schemes should have obtained the required clearances;
f) all inputs required for the implementation and operation of the projects are tied up and proper procurement and
implementation plans have been drawn up.

*In case of environmental up-gradation, meter installation, load despatch, computerisation and communication, R&D and
non-conventional energy projects the Rate of Return of 12% i.e (Economic or financial) may not be insisted upon.

We evaluate the credit quality of all the Borrowers by assigning rating on the basis of various financial and non-financial
parameters. Further, Integrated rating (Combination of Entity Rating & Project Rating) is worked out for Private Sector
generation projects. The interest rates, requirement of collateral securities and exposure limits are worked out on the basis of
integrated ratings.

B. Security Risk

We extends financial assistance to those State power utilities which provide confirmation that we would have a priority claim
on the particular utilitys surplus revenue over the loan granted by the State Government to the SEB's. The majority of our
outstanding loans to the state level utilities are secured by charge on assets, some are secured by irrevocable guarantees given
by the respective State Governments. In most of the cases of our Loans, default escrow accounts are used as a measure of
credit enhancement mechanism. Under this arrangement, the borrower along with the escrow bank agrees to route through the
designated account a specified level of cash flow with an arrangement that the escrow agent will directly pay to us in case of
default.

In the case of private power projects, security is normally obtained through first priority pari-passu charge on assets, and Trust
and Retention Account (TRA). In certain cases, collateral securities like personal and corporate guarantees are also insisted

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upon. In the case of private sector Borrowers, the eligibility is assessed on the basis of various factors such as past performance
of the promoters, their experience, capacity to bring in equity, project soundness etc.



C. Liquidity Risk

The Corporation has put in place an effective Asset Liability Management System, constituted an Asset Liability Management
Committee (ALCO) headed by Director (Finance). ALCO monitors risks related to liquidity and interest rate and also
monitors implementation of decisions taken in the ALCO meetings. The liquidity risk is being monitored with the help of
liquidity gap analysis. The Asset Liability Management framework includes periodic analysis of long term liquidity profile of
asset receipts and debt service obligations. Such analysis made every month in yearly buckets for the next 10 years, is being
used for critical decisions regarding the time, volume and maturity profile of the borrowings, creation of new assets and mix of
assets and liabilities in terms of time period (short, medium and long-term).

To ensure that we always has sufficient funds to meet its commitments, our Operational Policy Statement (OPS) requires it to
maintain satisfactory level of liquidity to ensure availability of funds at any time up to three months' anticipated disbursements.
At present surplus funds are invested by way of short-term deposits with banks and mutual funds.

D. Interest Rate Risk

Interest rates are dynamic and dependent on various internal and external factors including cost of borrowing, liquidity in the
market, competitors' rates, movement of benchmarks like AAA bond / Gsec yield, RBI policy changes, etc.

We reviews its lending rates periodically based on prevailing market conditions, borrowing cost, yield, spread, competitors
rates, sanctions & disbursements; etc. Our incremental rupee lending interest rates is normally made with either 3 year or 10
year interest re-set clause.

The interest rate risk is managed by analysis of interest rate sensitivity gap statements, evaluation of Earning at Risk (EaR) on
change of interest and creation of assets and liabilities with the mix of fixed and floating interest rates. In addition, all loan
sanction documents specifically give us the right to vary interest rate on the un-disbursed portion of any loan.


E. Foreign Currency Risk

The Corporation has put in place Currency Risk Management (CRM) policy to manage risks associated with foreign currency
borrowings. The Corporation manages foreign currency risk by lending in foreign currency and through derive products (like
currency forward, option, principal swap, interest rate swap and forward rate agreements) offered by banks, who are authorised
dealers. We Risk Management Committee of senior officers headed by our Executive Director (Finance) and a forex consultant
to guide in hedging. Periodically, once in a quarter, the details of foreign currency exposure, open position and hedging done
are submitted to the Risk Management Committee of the Board, the Audit Committee and the Board of Directors. As on,
September 30, 2011, we have lent in foreign currency or entered into hedging transaction to cover 13.75% of its foreign
currency principal exposure.

F. Operational Risk

Operational risks are risks arising from inadequate or failed internal processes, people and systems or from external events. We
have established systems and procedures to reduce operational risk as outlined below:

Operational controls in project finance activities.

Our Operational Policy Statement, operational guidelines and manuals provide a detailed description of the systems and
procedures to be followed in the course of appraisal, approval, disbursement and recovery of a loan. Various checks and
control measures have been built-in for timely review of the operating activities and monitoring of any gaps in the same. A
significant proportion of the activities are subject to regular monitoring and auditing, including loan sanctions, disbursements
and recovery. In addition to this, many important activities are monitored on a periodic basis.

Operational controls in treasury activities.


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Our Operational Policy Statement and manual for deployment of surplus funds provide a description of operations to be
followed, with suitable exposure and counterparty limits. Compliance with our guidelines is monitored through internal control
and a well-developed audit system including external and internal audits.

Legal risk

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

PRUDENTIAL NORMS

We, being a Government Company, are exempt from applicability of the prudential norm directions of Reserve Bank of India.
However, we have been following our own set of prudential norms, since 2003-04, which have been revised from time to time.
We are following RBI exposure norms for lending to Private Sectors. We have been granted exemption from applicability of
RBI prudential exposure norms till March 2012 in respect of lending to State/Central entities and is required to submit a
roadmap to RBI for achieving adherence to the prudential regulations of RBI, including further capitalization.

Further, we have been classified as an Infrastructure Finance Company (IFC) in July 2010, a new category of NBFC
introduced by RBI. We are required to comply with the eligibility criteria with classification as an IFC, including 15% CRAR
(with a minimum Tier I capital of 10%).

As an IFC, we can avail of the provisions applicable to IFC like additional exposure for lending.

ISO 9001: 2008 CERTIFICATION

Power Finance Corporation Limited, as a whole, has obtained ISO 9001:2008 certification with effect from January 7, 2010,
valid until January 6, 2013, in respect of the following scope:

"To provide financial assistance for projects in the power and allied sectors and recovery of the same. To arrange funds from
domestic and international markets in a cost effective manner and proper utilization of the same through sound fund
management, appraisal, performance analysis, documentation and project monitoring and facilitating institutional reforms."


HUMAN RESOURCE DEVELOPMENT
We are a lean organization and boasts of the highest per employee profitability in the country. As at September 30, 2011, we
have 338 employees of whom 227 are executives. This indicates that the Corporation enjoys a high level of employee
productivity. In recognition of this the Corporation has been conferred with the Dalal Streets First DSIJ Award 2009 in the
category of Highest Profit per Employee.

In the field of Human Resource Development, we stress on the need to continuously upgrade the competencies of its
employees and equip them to keep abreast of latest developments in the sector and industry practices. The Company is in a
knowledge intensive business and is committed to enhance the professional skills and knowledge of its employees. It has in
place a systematic training plan where the training needs are assessed and professional skills are imparted at all levels of
employees through customized training interventions. Our employees have an in-depth exposure to the various fields of the
power sector including critical areas such as project appraisal, project financing, international finance and domestic resource
mobilisation.

We, in its role as a Development Financial Institution has also been supporting State Power Utilities (SPUs) through a variety
of capacity building measures. One such initiative is in the area of need-based training and capacity development to build up
their institutional and managerial capacities in keeping with the increased commercial orientation of these entities. During
financial year 2009-10, we had organized a specialized programme for personnel of various power utilities across the country
on E- Procurement in Power Sector.

We is also functioning as the Principal Implementation Partner under the Distribution Reforms, Upgrades & Management
(DRUM) initiative of Ministry of Power and Government of United States through United States Agency for International
Development (USAID), which focuses on development of the critical Power Distribution Sector. Under this initiative, 125
training programmes were organized during the financial year 2010-11 through which 2875 number of personnel were trained
from various power utilities across the country.


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Corporate Social Responsibility

We are in the process of streamlining its Corporate Social Responsibility (CSR) activities through implementation of
Corporate Social Responsibility Policy in the company. These CSR shall support initiatives which will bring qualitative change
in the daily life of the society/community without comprising on ecological conditions. The company has entered into a
Memorandum of Understanding (MOU) with GoI for spending 0.5% of PAT (Profit after Tax) towards CSR activities as a part
of its Corporate Social Responsibility.

TAXATION

The company enjoys several tax concessions (detailed below), which have aided in reducing the companys tax liability.

Section 36(1)(vii a)(c) of the Act allows deduction of amount not exceeding 5% of total income in respect of any provision
made for bad & doubtful debts.

Section 36(1)(viii) of the Act allows deduction for special reserve created & maintained for an amount not exceeding 20% of
profit derived from business of long term finance.

The above exemptions and provisions and depreciation charges on the leased assets has resulted reduction in tax liability of the
Corporation.

COMPETITION

As the leading financial institution in India dedicated to funding the power sector, we have built up significant expertise in
assessing power projects, as well as developing an ongoing relationship with the State Governments and power utilities. It has
therefore succeeded in establishing a niche position in its field of expertise. In relation to private sector projects, we believe
that it is likely to face competition from Banks and other Indian financial institutions and, possibly from international project
financiers. In view of the currently limited resources to devote to this area and the anticipated scale of financing required in the
Indian power sector, it is anticipated that our business will expand.


Consortium Lending Group

Consortium Lending Group (CLG) has been set up with an aim to give fillip to Consortium Lending Operations, particularly
through the Power Lenders Club (PLC) which has 21 members including LIC, HUDCO and 18 Indian banks. PLC has already
adopted a Common Loan Approach Form and standardized the loan documents for the convenience of the borrowers and
lenders.

RE & CDM Group

The potential of renewable energy to provide clean and sustainable energy is universally accepted. Government of India is
giving high focus for promotion of renewable energy through Electricity Act 2003 and National Electricity Policy. Renewable
energy has been given a central place in Government of Indias National Action Plan on climate change.

The State Electricity Regulatory Commissions (SERCs) in various states are making it mandatory for distribution utilities to
procure minimum percentage of energy from renewable energy generation sources and notifying special tariffs for solar, wind,
biomass and small hydro generation projects for purchase of power by State Power Utilities. To tap the Renewable Energy
business in state and private sector, we are giving the enhanced focus for financing of Renewable Energy Projects. A new
group for RE&CDM has been set up in August 2008 in this regard.

Facilitation Group

The ambitious capacity addition programme of Government of India envisaged for 11
th
& 12
th
Plan and even beyond, requires
augmentation of countrys equipment manufacturing Capacity in all the spheres of power sector viz., Generation, Transmission
and Distribution. Further, existing thermal power projects (coal & gas based) are already facing shortage of fuel (coal & gas)
and have to resort to import of fuel. Based on current projections of demand and supply of fuel, the gap is likely to widen and
there is need to enhance fuel supply so as to ensure efficient utilization of existing capacity as well as proposed/expected
capacity addition in future. Considering these aspects GoI has already initiated steps including the allocation of various coal
blocks/mines to both State Sector as well as private sector entities to develop and produce coal for power sector. The port
facilities are also being enhanced to facilitate more import of coal, gas and oil.


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All these developments offer an opportunity to us to expand its business in these areas i.e., financing of development/
expansion of fuel supply sources (coal, Gas & Oil) and its distribution (rail network, pipelines, ports, jetties etc) and equipment
manufacturing. Recognizing the need and opportunity, we have taken proactive action in this area of business by setting up
Facilitation Group to explore the opportunities of expanding our business in these areas.

Further, removing the biggest bottlenecks i.e., availability of finance for these projects (fuel supply sources development /
expansion and equipment manufacturing) is expected to ensure that the countrys massive capacity addition programme will be
successful which in turn will help us in its core business i.e., financing of various projects in power sectorGeneration,
Transmission and Distribution.

Equity Funding

Equity investment business is generally considered as a logical extension of debt business. We are endeavouring to make a
mark in the area of equity investment so as to capitalize on its vast domain experience that it has attained during its over 20
years of operations in power sector debt financing. We aim to leverage its financial strength, large debt providing capability
and power sector expertise to invest in equity of attractive power projects. Further, we also intend to enter equity syndication
business so as to expedite early financial closure of projects leading to faster capacity addition. This would help us to enhance
its fee-based income also. Over a period of time, we endeavour to build an equity portfolio of power assets which could
provide consistent gains in the form of dividend and/or capital appreciation. In this direction, we have recently established an
Equity Funding Group to facilitate and develop this business area.

Our plans to increase its disbursements will require us to raise more funds from new as well as existing sources. We aim to
become major player in the financing of private sector power projects in India. Given its expansion plans, we seek to tap new
markets and diversify sources for raising resources for on-lending purposes.

As a development financial institution, we are also concerned with the balanced development of the Indian power sector and
looks to involve itself in the development of the Indian power sectors policy and regulatory framework. We aim to enhance
its role in influencing grass root reforms to set the basis for overall privatisation.

Acquisition Advisory Services

The development of institutional and regulatory mechanism has improved the viability of power sector. Power exchange has
created immense investor interest in merchant power due to higher margins. Not only the existing players have drawn up
ambitious investment plans, but new players are also entering the sector in a big way. Going forward, there would be an
increased participation of private sector players in the power sector development based on future requirement of the sector. The
new players may set up new power projects or acquire power projects under implementation/completed stage.

There is increasing trend in demand supply gap which is creating the requirement of procurement of power from private sector
through competitive bidding as well. Besides, there is high demand for efficiency and economies in the generation which will
lead to the lower cost of tariff. Open access and power trading are likely to bring in fierce competition in future. The above
demanding situation is likely to lead to consolidation in the power sector and hence, there is need for projects / partners for
mergers & acquisitions in order to bring in synergies & economies of scale.

It is in this area, we have created Acquisition Advisory Services Unit. The broad scope of services offered by us through this
unit would include; identification of target projects for acquisition/mergers; preliminary due diligence of the projects; detailed
techno-commercial appraisal of projects, finding out the partners for merger and acquisition, etc. with overall objective of the
growth of the sector.

As a futuristic thinking, an initiative has been taken to examine the possibility of establishing or acquiring a bank. In this
regard, we are in the process of appointment of Consultant for Exploring the Possibility of Acquisition of a Bank or
Establishing a Bank.

Properties

Our registered office is located at Urjanidhi, 1, Barakhamba Lane, Connaught Place, New Delhi 110 001. We had entered
into a memorandum of agreement dated February 5, 2002 with the President of India in relation to our registered office
premises, pursuant to which we were required to execute a perpetual lease upon completion of construction of the building
where our registered office is situated. There are two residential premises owned by us in New Delhi measuring 300 sq. yds.
each, which were owned by us vide two separate sale deeds both dated August 26, 1997, having registration no. 8669 & 8668,
both registered on September 01, 1997 from The President of India through The Director, Ministry of Finance, Department of
Revenue, CBDT, New Delhi in Greater Kailash-II and Jangpura Extension, respectively. In addition to the above, we also have

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two regional offices in Mumbai and Chennai. Our Mumbai office admeasuring 1524 sq. ft. has been taken on Lease & License
vide Agreement dated January 11, 2011 for a limited period of eleven months commencing from January 06, 2011. Our
Chennai office admeasuring about 1520 sq. ft. has been taken on rent via rent agreement dated February 16, 2011 for a period
of 3 years commencing from March 01, 2011. Further, we had taken on lease a property situated at Guwahati, Assam for our
office premises vide lease deed dated August 04, 2010 for a period of three years commencing from July 20, 2010.





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REGULATIONS AND POLICIES

Our Company is a systemically important, non-deposit taking NBFC and is notified as a public financial institution under
section 4A of the Companies Act and also classified as Infrastructure Finance Company by RBI vide its letter dated July 28,
2010. The business activities of NBFCs and public financial institutions are regulated by various RBI regulations. However,
our business operations are not regulated by the RBI regulations applicable to NBFCs and public financial institutions,
pursuant to an amendment to the NBFC regulations [Ref: DNBS. (PD).CC.No.12/02.01/99-2000] dated January 13, 2000
whereby the RBI exempt government companies, conforming to section 617 of the Companies Act from the applicability of the
provisions of the RBI Act relating to maintenance of liquid assets, creation of reserve funds and the directions relating to
acceptance of public deposits and prudential norms.
Taxation statutes such as the Income Tax Act, 1961, Central Sales Tax Act, 1956 and applicable local sales tax statutes, and
other miscellaneous regulations and statutes, apply to us as they do to any other Indian company. The statements below are
based on the current provisions of Indian law, and the judicial and administrative interpretations thereof, which are subject to
change or modification by subsequent legislative, regulatory, administrative or judicial decisions.
The following are the significant laws and regulations that govern our operations:
A. NBFC REGULATIONS
The Reserve Bank of India Act, 1934 (RBI Act)
The RBI is entrusted with the responsibility of regulating and supervising activities of NBFCs by virtue of the power vested in
it under Chapter IIIB of the RBI Act. The RBI Act defines an NBFC under Section 45-I (f) as:
(i) a financial institution which is a company;
(ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under
any scheme or arrangement or in any other manner, or lending in any manner;
(iii) such other non-banking institution or class of such institutions, as the Bank may, with the previous approval of the
Central Government and by notification in the Official Gazette, specify.
A financial institution and a non- banking institution have been defined under Sections 45-I(c) and 45-I(e) of the RBI Act,
respectively.
The RBI has clarified through a press release (Ref. No. 1998-99/1269) dated April 8, 1999, that in order to identify a particular
company as an NBFC, it will consider both the assets and the income pattern as evidenced from the last audited balance sheet
of the company to decide its principal business. The company will be treated as an NBFC (a) if its financial assets are more
than 50 per cent of its total assets (netted off by intangible assets); and (b) income from financial assets should be more than 50
per cent of the gross income. Both these tests are required to be satisfied as the determinant factor for principal business of a
company.
The RBI Act mandates that no NBFC shall commence or carry on the business of a non-banking financial institution without
obtaining a certificate of registration (CoR) and having a minimum net owned fund of ` 20 million.. In case an NBFC does
not accept deposits from the public (NBFCND), it shall obtain a CoR without authorization to accept public deposits. All
NBFCs are required to submit a certificate from their statutory auditors every year to the effect that they continue to undertake
the business of a non-banking financial institution, thereby requiring them to hold a CoR. The NBFC must also have a
minimum net owned fund of ` 20 million.
As per the Master Circular, DNBS. PD. CC. No. 148 /03. 02.004/2009-10 dated July 1, 2009, issued by the RBI summarising
its Notifications, NBFCs which are housing finance institutions, merchant banking companies, micro finance companies,
mutual benefit companies, government companies, venture capital fund companies, insurance companies, stock exchanges,
stock brokers or sub-brokers, nidhi companies, chit companies, securitization companies and mortgage guarantee companies
have been exempted from complying with certain specified provisions of the RBI Act.
Public Deposit Regulations
As per the RBI Master Circular No. DNBS (PD) CC No. 143/03.02.001/2009-10) dated July 1, 2009, which summarises RBI
Regulations, certain NBFC-NDs are entitled to certain exemptions from the norms and conditions stipulated on NBFCs taking
deposits. In order to benefit from these exemptions, the board of directors of the NBFC-ND must pass a resolution within
certain stipulated time period.

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Certain finance companies including inter alia merchant banking companies, government companies, insurance companies and
companies doing business as a stock broker or sub-broker, are exempt from the requirement of obtaining a CoR or complying
with the Public Deposit Regulations.
Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions,
2007 (Non-Deposit Accepting or Holding Prudential Norms 2007)
The RBI by notification dated February 22, 2007 notified the Non-Banking Financial (Non-Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007 ("Non-Deposit Accepting or Holding Prudential Norms
2007"), which contain detailed directions on prudential norms for a NBFC-ND. Para 1(3)(iv) of the Non-Deposit Accepting
or Holding Prudential Norms 2007, exempts government companies, conforming to Section 617 of the Companies Act and
not accepting/ holding public deposit from applicability of Non-Deposit Accepting or Holding Prudential Norms 2007, except
to such extent as specified therein.
In March 2007, our Company initiated discussion with the MoP that our Company should be exempted from the applicability
of NBFC Prudential Norms. This was taken up by the MoP with the RBI through a series of communication commencing from
April 2007, wherein MoP requested the RBI to keep our Company outside the purview of the NBFC Prudential Norms.
In December 2007, the RBI directed our Company to submit a road map for compliance with the NBFC prudential norms. The
MoP, through its letter dated June 24, 2008, forwarded the roadmap prepared by our Company in relation to compliance with
NBFC 2006 to the RBI wherein our Company agreed to follow exposure norms for private sector utilities with immediate
effect.
Thereafter, the RBI by its letter dated July 31, 2009, directed our Company to comply with the RBI prescribed prudential
norms on exposure norms in respect of all new transactions entered into by our Company. Subsequently through various letters
to RBI and MoP, our Company requested for extension of exemption from exposure norms in respect of government sector
utilities. Thereafter, upon receipt of recommendations from MoP and MoF, the RBI pursuant to its letter dated March 18, 2010
(Exemption Letter), granted extension of the exemption to our Company from the applicability of the prescribed prudential
exposure norms in respect of lending to Central and State government entities in the power sector until March 31, 2012. Under
the Exemption Letter, our Company was required to submit a roadmap to RBI for achieving adherence to the prudential
regulations prescribed by RBI, including further capitalisation. Further, the RBI advised that State Government guaranteed
loans of our Company, which have not remained in default may be assigned a risk weight of 20%. However, if the loans
guaranteed by the State Governments have remained in default for a period of more than 90 days, a risk weight of 100% should
be assigned.
Prudential Norms
As per the Master Circular, DNBS (PD) CC No.225/ 03.02.001/ 2011-12) dated July 1, 2011 issued by the RBI summarising
its Directions (Prudential Norms), the RBI has issued detailed directions on prudential norms, which inter alia, prescribe
guidelines on income recognition, asset classification and provisioning requirements applicable to NBFCs, exposure norms,
constitution of audit committee, disclosures in the balance sheet, requirement of capital adequacy, restrictions and
concentration of credits and investments. The Prudential Norms are not applicable to an NBFC, being an investment company,
provided it is (i) holding investments in the securities of its group/ holding/ subsidiary companies and book value of such
holding is not less than 90% of its total assets and it is not trading in such securities (ii) not accepting/holding public deposit,
and (iii) is not a systemically important NBFC-ND. Further, the Prudential Norms do not apply, except to such extent as
specified therein, to NBFCs which are government companies under Section 617 of the Companies Act and not accepting /
holding public deposit..
Systemically I mportant NBFCs -ND
Under Section 2 (1) (xix) of the Prudential Norms, all NBFCs ND with an asset size of ` 1,000 million or more as per the last
audited balance sheet will be considered as a systemically important NBFC ND (NBFC-ND-SI). All NBFCsNDSI are
required to maintain a minimum Capital to Risk Assets Ratio (CRAR) of 10% On and from April 1, 2007, an NBFCNDSI
is not allowed to:
a) lend to (i) any single borrower exceeding 15% of its owned fund; and (ii) any single group of borrowers exceeding 25% of
its owned fund;
b) invest in (i) the shares of another company exceeding 15% of its owned fund; and (ii) the shares of a single group of
companies exceeding 25% of its owned fund;
c) lend and invest (loans/investments taken together) exceeding (i) 25% of its owned fund to a single party; and (ii) 40% of its
owned fund to a single group of parties.

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Pursuant to a notification issued by the RBI on October 29, 2008 (Notification No. DNBS (PD) CC. No.131 /03.05.002 / 2008-
2009) NBFCs-ND-SIs may augment their capital funds by the issuance of perpetual debenture instruments in accordance with
certain specified guidelines. Further, as per a press release dated October 31, 2008 (Press Release: 2008-2009/602), the RBI
has permitted NBFCs-ND-SIs to raise short term foreign currency borrowings, under the approval route subject to certain
conditions namely, (a) the NBFCs-ND-SIs would need to comply with the prudential norms on capital adequacy and exposure
norms; (b) multilateral or bilateral financial institutions, reputable regional financial institutions, international banks and
foreign equity holders with minimum direct equity holding of 25% would need to be the lenders; (c) the funds raised should be
used only for refinancing of short term liabilities and no fresh assets should be booked out of the resources; (d) the maturity of
the borrowing should not exceed three years; (e) the maximum amount should not exceed 50% of the net owned funds or USD
10 million (or its equivalent), whichever is higher; (f) the all-in-cost ceiling should not exceed 6 months LIBOR + 200 basis
points; and (g) the borrowings should be fully swapped into Rupees for the entire maturity.
KYC Guidelines
The RBI has extended the Know Your Customer (KYC) guidelines to NBFCs and advised all NBFCs to adopt the same with
suitable modifications depending upon the activity undertaken by them and ensure that a proper policy framework of anti-
money laundering measures is put in place. The KYC guidelines includes customer identification procedures, monitoring of
transactions and risk management, adherence to KYC guidelines and the exercise of due diligence by persons authorised by the
NBFC, including its brokers and agents.
Corporate Governance Guidelines
Pursuant to an RBI Circular dated May 8, 2007, all NBFC-ND-SIs are required to adhere to certain corporate governance
norms including constitution of an audit committee, a nomination committee, a risk management committee and certain other
norms in connection with disclosure and transparency and connected lending.
Norms for excessive interest rates
In addition, the RBI has, pursuant to its notifications dated May 24, 2007 (Notification DNBS. PD/CC. No. 95/ 03.05.002/
2006-07) and January 2, 2009 (Notification No. DNBS. 204 / CGM (ASR)-2009) requested all NBFCs to put in place
appropriate internal principles and procedures in determining interest rates and processing and other charges. The board of
directors of each NBFC shall adopt an interest rate model taking into account relevant factors such as cost of funds, margin and
risk premium and determine the rate of interest to be charged for loans and advances. The rates of interest and the approach for
gradation of risks shall have to be made available on the websites of the companies or published in the relevant newspapers.
Further, the rates of interest should be annualised rates so that borrowers are aware of the exact rates that would be charged to
the account.
Government companies
The RBI vide its notification (No. DNBS. 193/ DG (VL) - 2007) dated February 22, 2007 has exempt government companies,
conforming to Section 617 of the Companies Act, from the applicability of the Non Banking Financial (Deposit Accepting or
Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007. Further, the RBI vide notification (No. DNBS (PD)
CC No. 96/ 03.02.01/ 2007-08) dated July 2, 2007 has exempt government companies, conforming to Section 617 of the
Companies Act, from the Public Deposit Regulations.
B. CLASSIFICATION OF INFRASTRUCTURE FINANCE COMPANIES
Pursuant to the RBI circular dated February 12, 2010, a fourth category of NBFC known as IFC was introduced. Prior to
the inclusion of IFCs, three categories of NBFCs existed, namely, asset finance companies, loan companies and
investment companies. An IFC is defined as an NBFC-ND that fulfils the following criteria:
(i) a minimum of 75 per cent of its total assets should be deployed in infrastructure loans, as defined in Para 2(viii) of the
Non-Deposit Accepting or Holding Prudential Norms 2007;

(ii) net owned funds of ` 3,000 million or above;

(iii) minimum credit rating 'A' or equivalent of CRISIL, FITCH, CARE, ICRA, or equivalent rating by any other
accrediting rating agencies; and

(iv) CRAR of 15% (with a minimum tier I capital of 10%)


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IFCs may exceed the concentration of credit norms applicable to NBFC-ND- SI under Para 18 of the Non-Deposit
Accepting or Holding Prudential Norms, 2007, as under:
(i) in lending to
(a) any single borrower by 10% of its owned fund i.e., total of 25% of its owned fund; and
(b) any single group of borrowers by 15% of its owned fund i.e., total of 40% of its owned fund;
(ii) in lending and investing in (loans/investments taken together) by
(a) 5% of its owned fund to a single party i.e., total of 30% of its owned funds; and
(b) 10% of its owned fund to a single group of parties i.e., total of 50% of its owned funds.
IFCs are eligible to avail, under the automatic route (without prior approval of RBI), ECBs up to US$ 500 million each
fiscal year subject to maximum of 50% of their owned funds, from recognised lenders under the automatic route.
Laws relating to I ssuance of I nfrastructure Bonds
The GoI has, pursuant to notification dated September 9, 2011 (Notification) issued by it, specified certain bonds as
long-term infrastructure bonds (Infrastructure Bonds) for the purposes of Section 80CCF of the IT Act. As per the
Notification, the Infrastructure Bonds can be issued by the following: (i) Industrial Finance Corporation of India; (ii) Life
Insurance Corporation of India; (iii) Infrastructure Development Finance Company Limited; and (iv) an NBFC classified
as an IFC by the RBI, during the financial year 2010-11. The volume of issuance during the financial year shall be
restricted to 25% of the incremental infrastructure investments made by the issuer during the financial year 2009-10 and
investment for the purposes of the aforesaid limit shall include loans, bonds, other forms of debt, quasi-equity,
preference equity and equity. The Infrastructure Bonds shall have a tenure of a minimum period of 10 years with a
minimum lock-in period of 5 years, after which investors may exit either through the secondary market or through a
buyback facility specified by the issuer in the issue document at the time of issue. The Infrastructure Bond shall also be
allowed to be pledge or lien or hypothecation for obtaining loans from scheduled commercial banks, after the lock-in
period.
The yield of the Infrastructure Bond shall not exceed the yield on government securities of corresponding residual
maturity, as reported by the fixed income money market and derivatives association of India as on the last working day of
the month immediately preceding the month of the issue of the Infrastructure Bonds. The proceeds of the Infrastructure
Bonds shall be utilised towards infrastructure lending as defined in the guidelines issued by the RBI.
Laws relating to I ssuance of Tax Free Bonds
The GoI has, pursuant to notification dated September 23, 2011 (Notification) issued by it, specified certain bonds as
Tax free, secured, redeemable, non-convertible bonds having benefit under Section 10(15)(iv)(h) of the IT Act. As per the
Notification, the Tax Free Bonds can be issued by the following entities: (i) National Highways Authority of India
(NHAI); (ii) Indian Railway Finance Corporation Limited (IRFC); (iii) Housing and Urban Development Corporation
Limited (HUDCO); and (iv) Power Finance Corporation Limited (PFC), during the financial year 2011-12 aggregating to
` 10,000 crore for NHAI & IRFC and to ` 5,000 crore for HUDCO and PFC. The face value of such bonds shall be ` 1000
in case of public issue and ` 1,00,000 each in other cases. It shall be mandatory for the subscribers to furnish their
Permanent Account Number to the issuer. The Tax Free Bonds shall have tenure of ten or fifteen years. The interest on
such bonds shall be not less than hundred basis points lower than the yield on Government Securities of equivalent
residual maturity as reported by the Fixed Income Money Market and Derivative Association of India, as on the last
working day of the month immediately preceding the month of the issue of the bonds but in the case of a Public issue, the
interest on the bonds shall be not less than 50 basis points lower than the yield on Government Securities of equivalent
residual maturity. The benefit under the said section shall be admissible only if the holder of such bonds registers his or
her name and the holding with the respective entities mentioned above.


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C. REGULATION OF FOREIGN INVESTMENT
FEMA Regulations
Foreign investment in India is governed primarily by the provisions of the FEMA which relates to regulation primarily by the
RBI and the rules, regulations and notifications there under, and the policy prescribed by the Department of Industrial Policy
and Promotion, GoI which is regulated by the FIPB.
The RBI, in exercise of its power under the FEMA, has notified the Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident Outside India) Regulations, 2000 (FEMA Regulations) to prohibit, restrict or regulate, transfer
by or issue security to a person resident outside India. As laid down by the FEMA Regulations, no prior consent and approval
is required from the RBI, for FDI under the automatic route within the specified sectoral caps. In respect of all industries not
specified as FDI under the automatic route, and in respect of investment in excess of the specified sectoral limits under the
automatic route, approval may be required from the FIPB and/or the RBI. Additionally, under the FEMA Regulations if a
person resident in India proposes to transfer to a person resident outside India, any shares of an Indian company by way of
sale, approval of the GoI is required for such transfer, which is to be followed up by an approval from the RBI.
FDI Policy
As per Consolidated FDI Policy effective from October 1, 2011, transfer of shares from resident to non resident by way of sale
in financial services sector requires prior permission of Reserve Bank of India which was earlier allowed under the automatic
route subject to the sectoral policy on FDI.
However, foreign direct investment in NBFCs engaged in leasing and finance fall under the automatic approval route for
FDI/NRI investment up to 100%.
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000
The RBI in exercise of its power under the FEMA, has notified the Foreign Exchange Management (Borrowing or Lending in
Foreign Exchange) Regulations, 2000 (Regulations) to regulate the borrowing and lending in foreign exchange by a person
resident in India. Pursuant to the Regulations, the RBI issued guidelines regulating external commercial borrowings from time
to time. An External Commercial Borrowing (ECB) refers a to commercial loan, in the form of a bank loan, buyers credit,
suppliers credit, securitised instrument availed from Non Resident lenders with minimum average maturity of three years.
Under the current policy, an ECB can be accessed from internationally recognized sources under two routes, viz., (i) automatic
route and (ii) the approval route. The guidelines regulate the maintenance of prudent limits for total external borrowings, end
use, all in cost ceilings, reporting requirements amongst other terms of borrowing. Under the current ECB policy, our
Company is required to take the prior approval of the RBI for availing an ECB.
D. EXTERNAL COMMERCIAL BORROWINGS
The current policy of the RBI directly relating to External Commercial Borrowing (ECB) is embodied in the Foreign
Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, as amended from time to time and as
summarised under the Master Circular No. 09/2011-12 dated July 1, 2011 (ECB Master Circular). The ECB Guidelines state
that ECB refers to commercial loans in the form of bank loans, buyers credit, suppliers credit and securitized instruments
(e.g., floating rate notes and fixed rate bonds) availed from non-resident lenders with a minimum average maturity of three
years. Funds received by an Indian company from the issue of preference shares, whether nonconvertible, optionally
convertible or partially convertible, or the issue of debentures that are not mandatorily and compulsorily convertible into equity
shares are considered debt, and accordingly, all norms applicable to ECBs (including those relating to eligible borrowers,
recognised lenders, amount and maturity and end-use stipulations) apply to such issues.
ECB can be accessed under two routes, viz. (i) automatic route, and (ii) approval route. The ECB Guidelines are subject to
amendment from time to time. Investors are urged to consult their own advisors in connection with the applicability of any
Indian laws or regulations.
Automatic route
Under the automatic route, the following are the recognised borrowers viz. (i) corporates including those in hotel, hospital,
software sectors (registered under the Companies Act except financial intermediaries, such as banks, financial institutions,
housing finance companies and NBFCs, (ii) units in special economic zones, and (iii) non-government organizations engaged
in micro finance activities. Individuals, Trusts and non-profit making organizations are not eligible to raise ECB Similarly the
recognised lenders are as follows viz. (i) international banks, (ii) international capital markets, (iii) multilateral financial
institutions / regional financial institutions and Government owned development financial institutions,, (iv) export

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credit agencies, (v) suppliers of equipment, (vi) foreign collaborators and (vii) foreign equity holders (other than erstwhile
Overseas Corporate Bodies). A foreign equity holder to be eligible as recognized lender under the automatic route would
require minimum holding of paid up equity in the borrower company as set out below:
(a) For ECB up to USD 5 million - minimum paid up equity of 25 per cent held directly by the lender, and
(b) For ECB more than USD 5 million - minimum paid up equity of 25 per cent held directly by the lender and debt-equity
ratio not exceeding 4:1 (i.e., the proposed ECB not exceeding four times the direct foreign equity holding)
Approval route
Certain proposals for ECB are covered under the approval route, including (a) ECB with minimum average maturity of five
years by NBFCs from multilateral financial institutions and others; (b) Infrastructure Finance Companies (IFCs) i.e. Non-
Banking Financial Companies (NBFCs), categorized as IFCs, by the Reserve Bank, are permitted to avail of ECBs, including
the outstanding ECBs, beyond 50 per cent of their owned funds, for on-lending to the infrastructure sector as defined under the
ECB policy, subject to their complying with the following conditions: i) compliance with the norms prescribed in the DNBS
Circular DNBS.PD.CCNo.168 / 03.02.089 / 2009-10 dated February 12, 2010 ii) hedging of the currency risk in full; and (c)
special purpose vehicles, or any other entity notified by the RBI, set up to finance infrastructure companies/ projects
exclusively.
The recognized lenders are as follows viz. (i) international banks, (ii) international capital markets, (iii) multilateral financial
institutions, (iv) export credit agencies, (v) suppliers of equipment, (vi) foreign collaborators, and (vii) foreign equity holders
(other than erstwhile overseas corporate bodies). ECB can also be raised, under the approval route, from foreign equity holder
where the minimum paid up equity held directly by the foreign equity lender is 25 per cent but ECBs: equity ratio exceeds 4:1
(i.e. the amount of the proposed ECB exceeds four times the direct foreign equity holding).
E. LEGISLATIVE FRAMEWORK FOR RECOVERY OF DEBTS
Securitisation and Reconstruction of Financial Assets and Enforcement of Security I nterest Act, 2002
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation
Act) provides the powers of seize and desist to banks and grants certain special rights to banks and financial institutions to
enforce their security interests. The Securitisation Act provides that a secured creditor may, in respect of loans classified as
non-performing in accordance with RBI guidelines, give notice in writing to the borrower requiring it to discharge its liabilities
within 60 days, failing which the secured creditor may take possession of the assets constituting the security for the loan, and
exercise management rights in relation thereto, including the right to sell or otherwise dispose of the assets.
Under the Securitisation Act, all mortgages and charges on immovable properties in favour of banks and financial institutions
are enforceable without intervention of the courts. The Securitisation Act also provides for the establishment of asset
reconstruction companies regulated by RBI to acquire assets from banks and financial institutions. A bank or financial
institution may sell a standard asset only if the borrower has a consortium or multiple banking arrangements, at least 75% by
value of the total loans to the borrower are classified as non-performing and at least 75% by value of the banks and financial
institutions in the consortium or multiple banking arrangements agree to the sale. The banks or financial institution selling
financial assets should ensure that there is no known liability devolving on them and that they do not assume any operational,
legal or any other type of risks relating to the financial assets sold. Furthermore, banks or financial institutions may not sell
financial assets at a contingent price with an agreement to bear a part of the shortfall on ultimate realisation. However, banks or
financial institutions may sell specific financial assets with an agreement to share in any surplus realised by the asset
reconstruction company in the future. While each bank or financial institution is required to make its own assessment of the
value offered in the sale before accepting or rejecting an offer for purchase of financial assets by an asset reconstruction
company, in consortium or multiple banking arrangements where more than 75% by value of the banks or financial institutions
accept the offer, the remaining banks or financial institutions are obliged to accept the offer.
Recovery of Debts Due to Banks and Financial I nstitutions Act, 1993
The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Debts Recovery Act) provides for establishment
of Debt Recovery Tribunals for expeditious adjudication and recovery of debts due to any bank or public financial institution
or to a consortium of banks and public financial institutions. Under the Debts Recovery Act, the procedures for recoveries of
debt have been simplified and time frames been fixed for speedy disposal of cases. Upon establishment of the Debts Recovery
Tribunal, no court or other authority can exercise jurisdiction in relation to matters covered by the Debts Recovery Act, except
the higher courts in India in certain circumstances.


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F. LABOUR LAWS
The Payment of Gratuity Act, 1972
The Payment of Gratuity Act, 1972 (the Gratuity Act) establishes a scheme for the payment of gratuity to employees
engaged in every factory, mine, oil field, plantation, port and railway company, every shop or establishment in which ten or
more persons are employed or were employed on any day of the preceding twelve months and in such other establishments in
which ten or more persons are employed or were employed on any day of the preceding twelve months, as the central
government may, by notification, specify. Penalties are prescribed for non-compliance with statutory provisions.
Under the Gratuity Act, an employee who has been in continuous service for a period of five years will be eligible for gratuity
upon his retirement, resignation, superannuation, death or disablement due to accident or disease. However, the entitlement to
gratuity in the event of death or disablement will not be contingent upon an employee having completed five years of
continuous service. The maximum amount of gratuity payable may not exceed ` 0.35 million.
Employees Provident Fund and Miscellaneous Provisions Act, 1952
The Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act) provides for the institution of
compulsory provident fund, pension fund and deposit linked insurance funds for the benefit of employees in factories and other
establishments. A liability is placed both on the employer and the employee to make certain contributions to the funds
mentioned above.
Shops and Establishments legislations in various states
The provisions of various Shops and Establishments legislations, as applicable, regulate the conditions of work and
employment in shops and commercial establishments and generally prescribe obligations in respect of inter alia registration,
opening and closing hours, daily and weekly working hours, holidays, leave, health and safety measures and wages for
overtime work.
The Minimum Wages Act, 1948
It provides for minimum wages in certain employments. The Central and the State Governments stipulate minimum wages,
calculated based on the basic requirement of food, clothing and housing required by an average Indian adult.
The I ndustrial Disputes Act, 1947
It provides the procedure for investigation and settlement of industrial disputes. When a dispute exists or is apprehended, the
appropriate Government may refer the dispute to a labour court, tribunal or arbitrator, to prevent the occurrence or continuance
of the dispute, or a strike or lock-out while a proceeding is pending. The labour courts and tribunals may grant appropriate
relief including ordering modification of contracts of employment or reinstatement of workmen. The Industrial Disputes
(Amendment) Bill 2010 passed by the Rajya Sabha on August 3, 2010, proposes to, among other things, provide direct access
for workmen to labour courts or tribunals in case of individual disputes, expand the scope of qualifications of presiding officers
of labour courts or tribunals, constitute grievance settlement machineries in any establishment having 20 or more workmen.
G. TAX LAWS
Income Tax Act, 1961
Income Tax Act, 1961 is applicable to every Domestic /Foreign Company whose income is taxable under the provisions of this
Act or Rules made there under depending upon its Residential Status and Type of Income involved.
Value Added Tax, 2005
Value Added Tax (VAT) is charged by laws enacted by each State on sale of goods affected in the relevant States. VAT is a
multi-point levy on each of the entities in the supply chain with the facility of set-off of input tax that is the tax paid at the
stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer. Only the value addition in the
hands of each of the entities is subject to tax. VAT is not chargeable on the value of services which do not involve a transfer of
goods. Periodical returns are required to be filed with the VAT Department of the respective States by the Company.



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Central Sales Tax Act, 1956
In accordance with the Central Sales Tax Act, every dealer registered under the Act shall be required to furnish a return in
Form I (monthly/ quarterly/ annually) as required by the State Sale Tax laws of the assessing authority together with treasury
challan or bank receipt in token of the payment of taxes due.
Service Tax
Service tax is charged on taxable services as defined in Chapter V of Finance Act, 1994, which requires a service provider of
taxable services to collect service tax from a service recipient and pay such tax to the Government.
H. LAWS RELATING TO INTELLECTUAL PROPERTY
In India, trademarks enjoy protection both statutory and under common law. The Trademarks Act, 1999 (Trademarks Act)
and the Copyright Act, 1957 amongst others govern the law in relation to intellectual property, including brand names, trade
names and service marks and research works. The Trademark Act governs the statutory protection of trademarks in India. The
Trademarks Act governs the registration, acquisition, transfer and infringement of trademarks and remedies available to a
registered proprietor or user of a trademark. The registration of a trademark is valid for a period of 10 years, and can be
renewed in accordance with the specified procedure.
I. OTHER GOVERNMENT INITIATIVES APPLICABLE TO OUR COMPANY
Restructured Accelerated Power Development and Reform Programme (R-APDRP)
The GoI introduced the Accelerated Power Development Program ("APDP") in fiscal 2001 as part of the reform of the Indian
power sector. During the 10th Plan, the GoI subsequently upgraded the APDP program to the Accelerated Power Development
Reform Program ("APDRP") in fiscal 2003. In July 2008, APDRP was restructured and the MoP launched the Restructured
Accelerated Power Development and Reforms Program ("R-APDRP")
The R-APDRP is a GoI initiative launched for implementation during the XI five-year plan. The focus of the programme is the
actual demonstrable performance in terms of sustained loss reduction, establishment of reliable and automated systems for
collection of accurate and reliable baseline data, and adoption of information technology (IT) in the areas of energy
accounting and implementation of regular distribution strengthening project. The programme envisaged objective performance
evaluation of utilities in terms of aggregated technical and commercial losses ("AT&C") losses.
Our Company was designated as the nodal agency for operationalising and implementing the R-APDRP under the overall
guidance of MoP, GoI, pursuant to MoP Order dated August 6, 2008. Our Company acts as a single window service and co-
ordinates with the main stakeholders involved such as MoP, GoI, APDRP steering committee, CEA, financial institutions,
utilities and various consultants. The funds under R-APDRP are provided to the state power utilities/ distribution companies,
through our Company.
The R-APDRP proposes to cover urban areas towns and cities with a population of more than 30,000 (10,000 in case of
special category states comprised of all North East States, Sikkim, Uttarakhand, Himachal Pradesh and Jammu and Kashmir).
Additionally, in certain high-load density rural areas, separation of agricultural feeders from domestic and industrial feeders
and separation of high voltage distribution system (HVDS) (11kV) will be conducted.
Projects under R-APDRP will be taken up in two parts, i.e., Part A and Part B. Part A will cover projects for establishment of
baseline data and IT applications for energy accounting/ auditing and consumer services which inter-alia include geographic
information system mapping, metering of distribution transformers and feeders, and automatic data logging for all distribution
transformers and feeders and supervisory control and data acquisition, asset mapping of the entire distribution network at and
below the 11kV transformers, management information system, redressal of consumer grievance, and establishment of IT
enabled consumer service centers etc. Establishment of supervisory control and data acquisition ("SCADA") systems is also
envisaged under Part-A of the scheme for towns having population greater than 400,000 as per 2001 census and also having
annual energy input greater than 350 million units. Further, the base line data and required system shall be verified by third
party independent evaluating agencies (TPIEA) appointed by the MoP. Part B will cover system improvement, regular
distribution strengthening projects and augmentation which inter-alia includes renovation, modernization and strengthening of
11 kV level substations, transformers/ transformer centers, load bifurcation, feeder separation, load balancing, HVDS (11kV),
and aerial bunched conductoring in dense areas.
In order to ascertain the eligibility criteria for assistance under R-APDRP, the States/ utilities are required to sign a
quadripartite agreement and commit the following:
(a) Constitute the State Electricity Regulatory Commission;

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(b) Commit a time frame for introduction of measures for better accountability at all levels in the project area;
(c) Achieve the below mentioned target of AT&C loss reduction at the entire utility level every year starting one year
after the year in which first project of Part A is completed:
(i) Utilities having AT&C loss above 30% are to reduce AT&C losses by 3% per year; and
(ii) Utilities having AT&C loss below 30% are to reduce AT&C losses by 1.5% per year.
(d) Devise a suitable incentive scheme for staff linking to achievements of 15% AT&C loss in the project area;
(e) Initially, the utilities need to provide data for three billing cycles to establish baseline data which would then be
considered for conversion of loan into grant;
(f) The following are prerequisites to compute initial loss levels and start Part B schemes:
(i) all input points to be identified and metered with downloadable meters for energy inflow accounting in scheme
area;
(ii) all outgoing feeders to be metered in substation with downloadable meters;
(iii) scheme area to be ring fenced i.e., export and import meters for energy accounting to be ensured; and
(iv) arrangement to be for measuring total energy flow in the rural load portion of the project area by ring fencing, if
the rural load feeder is not segregated.
(g) Subsequently, the utilities are to submit the previous years (as of March 31) AT&C loss figures of the identified
project area as verified by an independent agency appointed by MoP, and our Company by June 30 annually.
Utilities shall prepare detailed project reports (DPRs) in two parts i.e., Part A and Part B, for each project area and
forwarding the DPRs to our Company indicating the order of priority of the projects. Utilities may appoint IT consultants
through bidding from an open bidding process from the panel of IT and SCADA/ DMS consultants prepared by our
Company for preparing DPRs of Part A projects and for handholding utilities from concept to commissioning of these
projects. These DPRs will be validated and appraised techno-commercially by our Company and will then be submitted to
the APDRP Steering Committee for approval. Similarly, IT implementing agencies and SCADA implementation agencies/
SCADA implementation agencies shall be empanelled agencies by our Company and MoP after observing codal
formalities. Utilities shall appoint IT implementing agencies/ SCADA implementing agencies from the panel through
bidding process for turnkey implementation of respective IT/ SCADA projects. Further, the MoP shall appoint third party
independent evaluation agencies-energy accounting ("TPIEA-EA") through our Company for verifying base figure of
AT&C loss of the project area, establishment of base line data system, and annual AT&C loss figures of project areas and
state power utilities/ distribution companies. Similarly, our Company / MoP shall appoint TPIEA-IT for verification of
implementation of Part A IT and SCADA projects.

The GoI loan is granted and disbursed through our Company in line with its disbursement policy. The funding mechanism
is as follows:
Initially, GoI will provide 100% loan for approved projects under Part-A of the scheme including information technology
applications on terms decided by the MoF. The loan along with the accrued interest shall be converted into a grant after
establishment of the required baseline data system and verification by a TPIEA. The aforesaid system is to be achieved
within a period of 3 years from the date of the sanctioning of the project, failing which the concerned utility will have to
bear the loan and interest repayment.
Further, GoI will provide 25% for approved projects under Part-B of the scheme (90% for special category states), the
balance loan shall be raised from financial institutions namely our Company, Rural Electrification Corporation Limited,
multi-lateral institutions and/ or own resources, the terms of which shall be of the financial institutions. Up to 50% (90%
for special category states) of the loan provided shall be converted into a grant progressively on achievement of AT&C
loss reduction targets. Such conversion shall take place annually based on the AT&C loss figures of the project area as on
March 31, verified by the TPIEA.
Ultra Mega Power Projects (UMPPs)
The development of UMPPs has been identified as a thrust area by the MoP. The UMPPs have a contracted capacity of
3,500 MW or more. These projects are proposed to meet the power needs of a number of States / distribution companies

107

and are being developed on a Build, Own, and Operate (BOO) basis. The identification of the project developer for
these projects is being done through and international competitive bidding process under "Guidelines for determination of
tariff by bidding process for procurement of power by distribution licensees", issued by MoP.
Some of the salient features of an UMPP are as follows:
(i) use of super critical technology with a view to achieve high levels of fuel efficiency resulting in saving of fuel and
lower green-house gas emissions;
(ii) flexibility in unit size subject to adoption of specified minimum supercritical parameters; and
(iii) integrated power project with dedicated captive coal blocks for pithead projects;

Our Company has been identified as the nodal agency by the MoP, for implementation of this initiative under which our
Company sets up special purpose vehicles (SPVs), in form of its wholly owned subsidiaries, to act as authorised
representatives of the procurers (distribution companies of the power procuring states). Such SPVs undertakes, amongst
others, the following key activities:
Preparation of project report, preparation of rapid environment impact assessment report;
Undertaking international competitive bidding, document preparation and evaluation;
Acquisition of land for the project;
Obtaining coal blocks for pit-head projects;
Getting clearance regarding allocation of water by the State governments for pithead locations;
Approval for use of sea water from Maritime Board/ other government agencies for coastal locations;
Obtain clearance from the State Pollution Control Board, initiate forest clearance etc. as are required for the project
and for the coal mines, followed by environment and forest clearances from the Central Government;
Tie up the off-take/ sale of power;
Finalise request for qualification (RFQ)/ request for proposals (RFP) documents in consultation with States /
bidders; and
Carry out RFQ/ RFP process and award of project pursuant to which such SPV are transferred to successful bidders.

For selection of a developer for the UMPPs, a two stage selection process has been adopted as per the provisions of the
competitive bidding guidelines. The first stage of bidding involves the RFQ containing qualifying criteria for selection of
bidders. The response to RFQ documents, submitted by the bidders are evaluated to identify those bidders who will be
eligible to participate in the second stage of the process. The second stage of the bidding process involves RFP, wherein
bids are invited from the bidders so qualified. After evaluation of the bids received from the bidders, the successful bidder
is identified on the basis of the lowest levellised tariff.
For details pertaining to the SPVs established under the UMPP initiative, see section titled History and Certain
Corporate Matters on page 109 of this Draft Shelf Prospectus..
Independent Transmission Projects (I TPs)
In April 2006, the MoP initiated a tariff based competitive bidding process for ITPs, for the development of transmission
systems through private sector participation. The objective of this initiative is to develop transmission capacities in India
and to bring in the potential investors after developing such projects to a stage having preliminary survey work,
identification of route, preparation of survey report, initiation of process of land acquisition, initiation of process of
seeking forest clearance, if required, and to conduct bidding process.
PFC Consulting Limited, a wholly owned subsidiary of our Company has been nominated as a bid process coordinator
by MoP, for the development of ITPs entrusted to PFCCL.

For further details on the SPVs under the ITP program, see section titled History and Certain Corporate Matters on
page 109 of this Draft Shelf Prospectus.


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Governmental Registrations & Approvals
The company has obtained the following registrations and approvals:
1. Registration under section 45 IA of the RBI Act, 1934 to carry on the business of non-banking financial institution
(NBFC) vide registration no. 14.00004 dated February 10, 1998.
2. Registration under section 45 IA of the RBI Act, 1934 for classifying as Infrastructure Finance Company vide
registration no. B-14.00004 dated July 28, 2010.
3. PAN No. AAACP1570H allotted by the Income Tax Department.
4. TAN No. DELP08697D allotted by the Income Tax Department.
5. Service Tax Registration for Delhi office, having registration no. AAACP1570HST001.
6. Registration under Delhi Value Added Tax for Delhi office, having registration no. 07863002828.
7. Registration under Maharashtra Value Added Tax for Mumbai office, having registration no. 27620014060V.
8. Registration under Maharashtra State Tax on Professions, Trade, Callings and Employment Act, 1975 for Mumbai
office, having registration no. 27620014060P and 99241694479P.
9. Registration under Rajasthan Value Added Tax for Rajasthan office, having registration no. 08641608994.
10. Registration under Central Sales Tax Act, 1956 for Rajasthan office, having registration no. 08641608994.
11. Registration no. PTNAN 10151CG015-0003 under Professional Tax for Chennai office.
12. Relaxation under Employees Provident Funds & Miscellaneous Provisions Act, 1952 by RPFC, Delhi vide letter no.
E/DL/14037/Relaxed/318 for setting up PFCs own PF Trust.
13. Approval of Gratuity Fund under Income Tax Act, 1961, having reference no. CIT-III/G.F./D/95-96/172.
14. Registration under Indian Trade Unions Act, 1926 of PFC Employees Union having reference no. No. 4153.
15. Exemption from RBI prudential norms vide reference no. DNBS.CO.ZMD-N/4984/14.16.2009/2009-2010.
16. Registration in Class 36 of the PFC logo under Trademarks Act, 1999, having Trademark No. 1758496 and
Certificate of Registration No. 934501.
17. Registration in Class 41 of the PFC logo under Trademarks Act, 1999, having Trademark No. 1758495 and
Certificate of Registration No. 934516.
18. Registration in Class 42 of the PFC logo under Trademarks Act, 1999, having Trademark No. 1758497 and
Certificate of Registration No. 936176.
19. Registration of the copyright of Companys logo under Section 45 of the Copyright Act, 1957, having registration no.
A 649691/2003


109

HISTORY AND CERTAIN CORPORATE MATTERS

Our Company was incorporated on July 16, 1986 under the Companies Act as a public limited company registrered with the
ROC, National Territory of Delhi and Haryana and received our certificate for commencement of business on December 31,
1987. The GoI incorporated our Company as a financial institution in order to finance, facilitate and promote power sector
development in India with the President of India holding 100% of our equity share capital at the time of incorporation and at
present its shareholding is 73.72%. Our Company was notified as a public financial institution under Section 4A of the
Companies Act, 1956 on August 31, 1990.
For details in relation to our business activities and investments, see section Business on page 75 of this Draft Shelf
Prospectus.
Changes in registered office
At the time of incorporation, the registered office of our Company was situated at Room No. 627, Shram Shakti Bhawan, Rafi
Marg, New Delhi 110 001, Insdia. Later on, the registered office of our Company shifted to Chandralok, 36, Janpath, New
Delhi 110 001, India on March 25, 1988. Subsequently, the registered office of our Company shifted to Urjanidhi Building, 1-
Barakhamba Lane, Connaught Place, New Delhi 110001, India on September 23, 2006 for ensuring administrative and
operational facility.
Major events
Year Event
1986
Incorporation of our Company.
1987
Certificate of commencement of business received.
1988
Commencement of lending activities; and
Evolved broad operational policies identifying priority areas for providing financial assistance and
formulated short term, medium term and long-term strategies for operations.
1989
Provided first guarantee to M/s Mitsui and Company, Japan for payment of principal for Rupees equivalent
to Japanese Yen 27.39 billion for supplier credit made available to UPSEB for the 1,000 MW Anpara B
Thermal Power Project.
1990
Declared as a public financial institution under section 4A of Companies Act.
1991
Conferred with a license to deal in foreign exchange in the power sector.
1992
Project on Energy Management Consultation and Training (EMCAT) made operational with the objective
to bring about improvement in the efficiency of the energy supply component of the power sector with the
help of USAID.
1993
First MoU with GoI in relation to operational targets and rated excellent on the basis of all round
performance.
1994
Company declared maiden dividend to the GoI.
1996
Started funding private power projects.
1998
Registered as a NBFC;
Declared a Mini Ratna (Category I); and
Promoted PTC Limited as joint venture with NTPC and PGCIL.
1999
Launched consultancy services in order to provide consultancy services to both state owned and private
power utilities for the power and financial sectors.
2003
Appointed by the MoP as a nodal agency to fund the India Power Fund scheme to catalyze the process of
fresh equity investment in the power sector.
2004
Project appraisal system certified as ISO 9001.
2005
Entered into MoU with LIC and ten leading public sector banks for consortium financing of power
projects.
2006
Set up five subsidiary companies for developing UMPPs; and
Our disbursement crossed ` 100,000 million.
2007
Incorporated two more subsidiary companies for developing UMPP and two transmission companies.
Listing of our Equity Shares on the Stock Exchanges; and

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Declared a Navratna PSU on June 22, 2007.
2008
Appointed as nodal agency for APDRP.
Three of the SPVs namely Coastal Gujarat Power Limited (CGPL) for Mundra UMPP in Gujarat, Sasan
Power Limited (SPL) for Sasan UMPP in Madhya Pradesh and Coastal Andhra Power Limited (CAPL) for
Krishnapatnam UMPP in Andhra Pradesh were transferred to the successful bidders. CGPL was
transferred to the Tata Power Company Limited on April 22, 2007 while SPL and CAPL were transferred
to Reliance Power Limited on August 7, 2007 and January 29, 2008 respectively. The bid process for
Tilaiya UMPP in Jharkhand has been won by Reliance Power Ltd and was transferred to the same on
February 12, 2009; and
Further, PFC Consulting Limited was formed for undertaking consultancy assignment under power sector.
2009 Tilaiya UMPP awarded to Reliance Power.
Jharkhand Integrated Power Limited SPV/subsidiary established for Tilaiya UMPP in Jharkhand
transferred to the successful bidder.
PFCCL appointed as the bid process coordinator for ITPs
Launch of R-APDRP website; and
PFC in the list of Top 500 Global Financial Brands 2009.
2010 ISO 9001:2008 Certification.
Status of NBFC-ND-IFC from RBI in July 2010; and
Received Heavy Weight Navaratna Award & Fastest Growing Navaratna.
2011 Public issue of long term infrastructure bonds u/s 80CCF of Income Tax Act, 1961 for Fiscal 2010-2011;
Further Public Offer (FPO) of equity shares of our Company and
Public issue of long term infrastructure bonds u/s 80CCF of Income Tax Act, 1961 for Fiscal 2011-2012
(i.e.Tranche-1)

Awards and Recognitions
PFC has been entering into Memorandum of Understanding (MoU) with Government of India since 1993-94 and has been
consistently rated in the highest category of Excellent since then (rated Very Good in 2004-05). After that PFC has been rated
among the Top 10 PSUs for the years 1998-99, 1999-2000, 2001-2002, 2002-2003 and 2003-2004. PFC was conferred with the
Mini Ratna (category I) status in the year 1998. Followed by this, the Corporation was accorded the covetous status of
Navratna in 2007 to facilitate enhanced operational autonomy. Further, all the three divisions namely, Projects, Finance and
ID&A are ISO 9001: 2000 certified.
PFC has received the following awards in the recent past:
Gentle Giant, the Largest Navratna (Non-Manufacturing) award at the 3rd DSIJ PSU Awards on April 21, 2011 by
DSIJ;
SCOPE Commendation Certificate in the category of Best Managed Bank, Financial Institution or Insurance
Company for the year 2009-2010 during the public sector day ceremony on April 11, 2011;
Global HR Excellence Award in the category of Institution Building Award during the World HR Congress 2011 on
February 11, 2011;
Heavy Weight Navaratna Award (Non Manufacturing) and the Fastest Growing among Navaratna during the 2nd
PSU Awards 2010;
3rd KPMG- Infrastructure Today Award 2010 in the category of Most Admired Central Entity in power Sector;
India Power Award 2010 for the Integrated Development of Power and Associated Sector organized by Council of
Power Utilities on November 11, 2010;
ICT for India Award for excellence in performance for R-APDRP during the Digital Inclusion Day organized jointly
by SKOCH Consultancy and Department of Information and Technology, Government of India, on September 22, 2010;
Asia Pacific HRM award for leading HR Practices in Learning & Human Capital Development during the Asia
Pacific HRM Congress at Bangalore on September 3, 2010;
Indias Pride Award 2010 in the category of Financial Catalyst of the year organized by Dainik Bhaskar;

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Gold award for excellence in PSUs in Non Banking Financial Institution 2009 by India Pride awards with DNA;
India Power Award 2009 in the category of Innovative Financing by the Council of Power Utility on November 17,
2009;
Dalal Streets First DSIJ Award 2009 in the category PSU having the highest profit per employee;
Prestigious KPMG Infrastructure Today Award 2008 for Most Admired Government Enabler power Category;
India Power Award 2008 for PFCs role & association as implementation agency with Distribution Upgrades &
management (DRUM) Programme of Government of India; and
Ranked 2
nd
on the basis of Total Income in FIs/NBFCs/Financial Sector category in Dun & Bradstreets Indias Top
500 Companies 2007.
Our Main Objects
Our main objects, as contained in Clause III A of our Memorandum of Association, are:
To finance power projects, in particular thermal and hydroelectric projects;
To finance power transmission and distribution works;
To finance renovation and modernization of power plants aimed at improving availability and performance of
such plants;
To finance system improvement and energy conservation schemes;
To finance maintenance and repair of capital equipment including facilities for repair of such equipment, training
of engineers and operating and other personnel employed in generation, transmission and distribution of power;
To finance survey and investigation of power projects;
To finance studies, schemes, experiments and research activities associated with various aspects of technology in
power development and supply;
To finance promotion and development of other energy sources including alternate and renewable energy
sources;
To promote, organize or carry on consultancy services in the related activities of the Company;
To finance manufacturing of capital equipment required in power sector; and
To finance and to provide assistance for those activities having a forward and backward linkage, for the power
projects, including but not limited to, such as development of coal and other mining activities for use as a fuel in
power project, development of other fuel supply arrangements for power sector, electrification of railway lines,
laying of railway lines, roads, bridges, ports and harbours, and to meet such other enabling infrastructure facilities
that may be required.
The main objects clause and the objects incidental or ancillary to the main objects of our Memorandum of Association enable
us to undertake our existing activities and the activities for which the funds are being raised through this Issue.

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Changes in our Memorandum of Association
Since our incorporation, the following changes have been made to our Memorandum of Association:
Date of Amendment Details
January 18, 1991 Amendment in Clause V of the Memorandum of Association altering the authorised capital
of our Company to increase in authorized share capital of our Company from ` 1,000 crore
comprising of 1 crore shares of ` 1,000 each to ` 2,000 crore comprising of 2 crore
shares of ` 1,000 each.
October 30, 2001 Alteration in the objects clause of the Memorandum of Association by insertion of the
following as Clause 10 and 11 immediately after existing Clause 9. The clauses read as
follows:

10. To finance manufacturing of capital equipment required in power sector.

11. To finance and to provide assistance for those activities having a forward and backward
linkage, for the power projects, including but not limited to, such as development of coal
and other mining activities for use as a fuel in power project, development of other fuel
supply arrangements for power sector, electrification of railway lines, laying of railway
lines, roads, bridges, ports and harbours and to meet such other enabling infrastructure
facilities that may be required.
September 26, 2002 Amendment in Clause V of the Memorandum of Association altering the authorised capital
of our Company to ` 2,000 crore divided into 2,000,000,000 shares of ` 10 each on account
of splitting of equity shares of ` 1,000 each to ` 10 each.
September 13, 2006 Amendment in Clause 3 of the objects incidental or ancillary to the attainment of the main
objects clause. The words with the previous consent of the President of India were
deleted in the clause and the amended clause reads as follows:

To borrow, for purposes of the Company, foreign currency or to obtain foreign lines of
credit including commercial loans from any bank or financial institution or
Government/Authority in India or abroad.

Holding Company
We do not have a holding company.
Our Subsidiaries
As on date of this Draft Shelf Prospectus, our Company has twelve Subsidiaries, the details of which are as follows:
A. PFC Capital Advisory Services Limited (PFCCASL)

PFCCASL is a wholly owned subsidiary of our Company. PFCCASL was incorporated on July 18, 2011 under the
Companies Act, 1956 with an authorized share capital of ` 1,00,00,000 divided into 10,00,000 equity shares of ` 10 each. The
registered office of PFCCASL is located at "Urjanidhi", 1, Barakhamba Lane, Connaught Place, New Delhi 110 001, India. It
is engaged in the business to syndicate and make financial arrangements for the Projects/enterprises in the areas of power,
energy, infrastructure and other industries.

B. PFC Green Energy Limited (PFCGEL)

PFCGEL is a wholly owned subsidiary of our Company. PFCGEL was incorporated on March 30, 2011 under the Companies
Act, 1956 with an authorized share capital of ` 12,000,000,000 divided into 1,000,000,000 equity shares of ` 10 each and
200,000,000 preference shares of ` 10 each. The registered office of PFCGEL is located at "Urjanidhi", 1, Barakhamba Lane,
Connaught Place, New Delhi 110 001, India. The name of the Company was changed from Power Finance Corporation Green
Energy Limited to PFC Green Energy Limited, by a special resolution passed in terms of Section 21 of the Companies Act,
1956 and a fresh certificate of incorporation, consequent upon change of name of Company, was issued on July 21, 2011.
PFCGEL has been incorporated to focus on financing renewable energy projects. As on date of this Draft Shelf Prospectus, our
Company (including its nominees) holds 100% of the issued and paid up equity capital of PFCGEL.

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C. PFC Consulting Limited (PFCCL)
PFCCL is a wholly owned subsidiary of our Company. PFCCL was incorporated on March 25, 2008 under the Companies Act
with an authorized share capital of ` 500,000 divided into 50,000 equity shares of `10 each. The registered office of PFCCL is
located at First Floor, "Urjanidhi", 1, Barakhamba Lane, Connaught Place, New Delhi 110 001, India. PFCCL has been
incorporated to carry on, promote and organize consultancy services related to the power sector. Presently, the consultancy
services being undertaken by PFCCL comprise of assignments from State Power Utilities, Licensees/IPPs, State Government,
PSUs and SERCs. As on date of this Draft Shelf Prospectus, our Company (including its nominees) holds 100% of the issued
and paid up equity capital of PFCCL.
D. Power Equity Capital Advisors Private Limited (PECAP)
PECAP was incorporated on March 25, 2008 under the Companies Act with an authorized share capital of ` 10,00,000 divided
into 1,00,000 equity shares of `10 each. The registered office of PECAP is located at First Floor, "Urjanidhi", 1, Barakhamba
Lane, Connaught Place, New Delhi 110 001, India. PECAP has been incorporated to provide advisory services pertaining to
equity investments in the Indian power sector. Our Company has acquired the 70% stake in PECAP on October 11, 2011 in
addition to the 30% stake in PECAP already held by our Company. Therefore, as on date of this Draft Shelf Prospectus, our
Company (including its nominees) holds 100% of the issued and paid up equity capital of PECAP and PECAP has become
wholly owned subsidiary of our Company.

E. Subsidiaries incorporated under the programmes of Government of India
(I) Subsidiaries incorporated under the Ultra Mega Power Project Program
The GoI has appointed our Company as the nodal agency to facilitate the development and construction of potential UMPPs in
India, i.e. mega super thermal power projects with a contracted capacity of 3,500 MW or more. So far, 16 such UMPPs have
been identified, and are proposed to be located in the States of Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Andhra
Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu.
Accordingly, 12 SPVs in the form of wholly owned subsidiaries had been incorporated to undertake preliminary site
investigation activities necessary for preparation of project information reports, and obtain applicable linkages, clearances and
approvals required for conducting a tariff based competitive bidding process for selection of developers for the UMPPs. All
such SPVs/ subsidiaries have been incorporated under the Companies Act with an authorized share capital of ` 500,000 each
divided into 50,000 equity shares of ` 10 each. The registered office of all such SPVs/ subsidiaries is located at First Floor,
"Urjanidhi", 1, Barakhamba Lane, Connaught Place, New Delhi 110 001, India. Eventually, these SPVs are to be transferred to
the successful bidder(s) selected through tariff based international competitive bidding process.

Out of the aforesaid 12 SPVs, four SPVs namely Coastal Gujarat Power Limited for Mundra UMPP in Gujarat, Sasan Power
Limited for Sasan UMPP in Madhya Pradesh, Coastal Andhra Power Limited for Krishnapatnam UMPP in Andhra Pradesh
and Jharkhand Integrated Power Limited for Tilaiya UMPP in Jharkhand have been transferred to the successful bidders.

The dates of incorporation of the remaining eight subsidiaries are mentioned herein below.

S.
No.
Name of the SPV/ Subsidiary Date of
Incorporation
1. Chhattisgarh Surguja Power Limited (formerly known as Akaltara Power
Limited)
February 10, 2006
2. Coastal Karnataka Power Limited February 10, 2006
3. Coastal Maharashtra Mega Power Limited March 1, 2006
4. Orissa Integrated Power Limited August 24, 2006
5. Coastal Tamil Nadu Power Limited January 9, 2007
6. Sakhigopal Integrated Power Company Limited May 21, 2008
7. Ghogarpalli Integrated Power Company Limited May 22, 2008
8. Tatiya Andhra Mega Power Limited April 17, 2009

Our Company, (including through its nominees), holds 100% of the issued and paid up equity share capital of the aforesaid
eight SPVs/ subsidiaries.

(II) Subsidiaries incorporated under the Independent Transmission Projects Program

The MoP, has initiated the tariff based competitive bidding process for the development of transmission systems through

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private sector participation. For further details on ITPs, see sections titled Our Business and Regulations and Policies on
pages 75 and 98 respectively of this Draft Shelf Prospectus.

Our Subsidiary, PFCCL has been nominated by MoP as a bid process co-ordinator for selection of developers for ITP by MoP.
Consequently, 4 SPVs were incorporated in the form of wholly owned subsidiaries, for among other things, to undertake
preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition,
initiation of process of seeking forest clearance, as and where required and for conducting the bid process. All such SPVs/
subsidiaries were been incorporated under the Companies Act with an authorized share capital of ` 500,000 each divided into
50,000 equity shares of ` 10 each. The registered office of all such SPVs/ subsidiaries was located at First Floor, Urjanidhi,
1, Barakhamba Lane, Connaught Place, New Delhi - 110 001, India.

One Such SPV/subsidiary namely Bokaro-Kodarma Maithon Transmission Company Limited was liquidated on December,
2010 and another SPV namely, East North Interconnection Company Limited was transferred to the successful bidder on
March 31, 2010. Further, the remaining two SPVs, namely Jabalpur Transmission Company Limited and Bhopal Dhule
Transmission Company Limited were transferred to the successful bidder, namely Sterlite Transmission Projects Private
Limited, on March 31, 2011.

In addition to the above, PFCCL has also been appointed as bid process coordinator for transmission systems associated with
independent power producers of (a) the Nagapattinam/ Cuddalore area Package A (Nagapattinam pooling station Salem
765 Kv D/c line, Salem Madhugiri 765 Kv S/c line), and (b) the Nagapattinam/ Cuddalore area Package C (Madhugiri
Narendra 765 Kv D/c line, Kolhapur Padghe 765 Kv D/c line (one circuit kilometer via Pune)). Further, subject to approval
of the Company, the board of directors of PFCCL in their meeting held on March 24, 2011, approved the proposal for
incorporation of two SPVs for facilitating development of the aforesaid transmission systems. Out of which one such SPV has
been incorporated on May 20, 2011 in the name of Nagapattinam-Madhugiri Transmission Company Limited (NMTCL)
having its registered office at First Floor, Urjanidhi, 1, Barakhamba Lane, Connaught Place, New Delhi - 110 001, India.
NMTCL is incorporated to plan, promote and develop an integrated and efficient power transmission system network and to
purchase and sale of power in accordance with the policies, guidelines and objectives laid down by the Central Government
from time to time. That as on date, PFCCL including through its nominees, holds 100% of the issued and paid up equity share
capital of NMCTL.

The securities of PFCGEL, PFCCL and the aforesaid SPVs/ subsidiaries incorporated under the UMPP scheme are not listed
on any stock exchange in India or overseas. Further none of such SPVs/ subsidiaries including PFCGEL and PFCCL are either
a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985,as amended, or are subject
to a winding-up order.

Further, in accordance with paragraph 11 of Accounting Standard 21, the financial statements of the subsidiaries incorporated
under the UMPP are not consolidated with our Company.

Joint Ventures, Associate Companies and Investments

As on date of this Draft Shelf Prospectus, the following are the details of our joint ventures, associate companies and
investments:

Joint Ventures

We have entered into two joint venture arrangements, pursuant to which the following joint venture companies have been
incorporated:
(A) National Power Exchange Limited (NPEL)

On September 3, 2008, our Company entered into a joint venture agreement with National Thermal Power Corporation
Limited (NTPC), NHPC Limited (NHPC) and Tata Consultancy Services Limited (TCS) for incorporation of NPEL
(NPEL JVA) to operate a power exchange at a national level and to facilitate, promote, assist, regulate and manage dealings
in power. Consequently, NPEL was incorporated as a public limited company under the Companies Act, on December 11,
2008, with an authorized capital of ` 500,000,000. The registered office of NPEL is located at Scope Complex, 7, Institutional
Area, Lodhi Road, New Delhi 110 003, India. As on March 31, 2011, our Company holds 21,87,015 equity shares
aggregating to 16.66% of the total issued and paid up equity capital of NPEL.

The key terms of the NPEL JVA are set forth below:

Share capital and subscription: In case the authorized share capital of NPEL is increased beyond ` 500,000,000, all parties to

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the NPEL JVA including our Company will not be under an obligation to subscribe to such increased authorized capital.
Subscription to such increased authorized share capital shall be done through a supplemental agreement which will form part
of the NPEL JVA. The equity shareholding of NPEL shall at all times be as follows:

1. 50% of the paid up share capital of NPEL shall always be held by government entities including NTPC, NHPC and
our Company.

2. The remaining 50% of the paid up share capital of NPEL shall be held by non-government entities/ private entities
including TCS.

However, no shareholder, at any point of time, will hold more than 25% of the paid-up share capital of NPEL.

Board of directors: The total strength of the board of directors is required to be between 3 and 15 directors. As long as our
Company holds at least 10% of the paid-up equity share capital of NPEL, our Company will have the right to nominate a non-
executive director on the board of directors of NPEL and shall also determine the period for which such director will hold
office. We currently have one nominee director on the Board of NPEL.

Reserved matters: Except with the affirmative vote of the majority of directors, including the affirmative vote of at least one
director nominated by each party to the NPEL JVA, neither can the board of directors of NPEL, a committee thereof, its chief
executive officer, nor can any other person acting on behalf of NPEL take any action with respect to among other things the
following matters:

(a) The annual revenue budget of NPEL;
(b) Winding up of NPEL;
(c) Any matter relating to the transfer, sale, lease, exchange, mortgage and/or disposal otherwise of the whole or
substantially the whole, of the undertaking of NPEL or part thereof;
(d) Increase or alter the authorized or issued share capital of NPEL;
(e) Change in the name of NPEL;
(f) Entering into any profit sharing, or any share option or other similar schemes for the benefit of the officers and other
employees of NPEL; and
(g) Any matter relating to the promotion of new company(ies) including formation of subsidiary company(ies), entering
into partnership and/or arrangement of sharing profits, taking or otherwise acquiring and holding shares in any other
company.

Non-compete: NPEL shall not compete with the business activities of any other party, without the prior consent of the
concerned party. No party shall, either directly or indirectly, compete with the business activities of NPEL, without the prior
written consent of all other parties. Further, no party shall, either directly or indirectly, subscribe to such number of shares of
any organization/ entity, competing with the business of NPEL, which shall entitle such party to exercise control over such
organization/ entity. Moreover, in such an eventuality, the relevant party shall relinquish its rights to nominate director on the
board of NPEL.

Further, our Company and TCS shall not be trading members of the power exchange to be set up by NPEL.

Transfer of shares: Unless otherwise mutually agreed, none of the parties will transfer or otherwise encumber its shareholding
in NPEL for a period of five years (Lock in Period) from the date of commencement of trading operations on power
exchange or the date when NPEL issues shares to the public at large through an initial public offering, whichever is earlier.
After the Lock-in Period, if any party intends to transfer any equity shares to a third party, the selling party shall first offer such
equity shares to other parties in proportion to their shareholding, at book or fair value, whichever is higher. If the non-selling
parties do not accept the offer, the selling party will be entitled to transfer the offered equity shares to the proposed transferee
on terms no more favourable and at a price not higher than that offered to the non-selling party.

Termination of rights: If any party ceases to hold at least 10% of the paid-up share capital of NPEL, all rights of such party
under the agreement will terminate. In the event of any promoter ceases to be a promoter by mutual consent, the non exiting
parties will have an obligation to purchase and/or to name a purchaser of all the shares and any financial interest of the exiting
party, at a fair value determined by an independent chartered accountant. In the event of termination of the NPEL JVA due to
breach by any party, the defaulting party shall offer the shares held by it to the non-defaulting parties in proportion to their
respective shareholdings at a price equivalent to 80% of the fair value of such shares.

(B) Energy Efficiency Services Limited (EESL)

We have entered into a joint venture agreement with National Thermal Power Corporation (NTPC), Power Grid

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Corporation of India Limited (PGCIL) and Rural Electrification Corporation Limited (REC) on November 19, 2009 for
incorporation of Energy Efficiency Services Limited (the EESL JVA) as an implementation arm of the National Mission of
Enhanced Energy Efficiency, which is a part of the National Action Plan on Climate Change.

EESL was incorporated as a public limited company on December 10, 2009 under the Companies Act with the registered
office located at 4
th
Floor, Sewa Bhawan, R. K. Puram, New Delhi - 110066. EESL is authorized to engage in the business of
carrying on and promoting the implementation of energy efficiency projects in India and abroad. The authorized share capital
of EESL is ` 1,900,000,000 divided into 190,000,000 equity shares of ` 10 each and the paid up share capital of EESL is `
25,000,000 million (divided into 2,500,000 equity shares of ` 10 each). As on March 31, 2011 our Company holds 625,000
equity shares in EESL, aggregating to 25% of the total issued and paid up share capital of the EESL

The key terms of the EESL JVA are set forth below:

Share capital and subscription: We are required to maintain our shareholding in EESL by subscribing to any future issue of
equity shares of EESL, in proportion to our current share holding. However, no shareholder, at any point of time, can hold
more than 40% of the paid-up equity share capital of EESL. In the event of non-subscription of equity by any of the parties to
EESL JVA, the share capital contribution of such non-subscribing party will be paid by the remaining parties in proportion to
their then existing shareholding.

Board of directors: The total strength of the board of directors is required to be between 4 and 15 directors. As long as any
shareholder holds at least 10% of the paid-up equity share capital of EESL, such shareholder will have the right to nominate a
director on the board of directors of EESL and shall also determine the period for which its respective nominees will hold
office. Nomination of the non-executive chairman, to be appointed for a period of two years, is required be rotated amongst our
Company, NTPC, PGCIL and REC with NTPC nominating the first chairman. Further, the MoP will have the right to
nominate two part-time directors on the board of EESL. Currently, we have one nominee director on the Board of EESL.

Reserved matters: Except with the affirmative vote of the majority of directors including the affirmative vote of at least one
director nominated by each party to the EESL JVA, neither can the board of directors of EESL, a committee thereof, its chief
executive officer, nor can any other person acting on behalf of EESL, take any action with respect to among other things the
following matters:

(a) The annual revenue budget of EESL;
(b) Winding up of EESL;
(c) Any matter relating to the transfer, sale, lease, exchange, mortgage and/or disposal otherwise of the whole or
substantially the whole, of the undertaking of EESL or part thereof;
(d) Increase or alter the authorized or issued share capital of EESL;
(e) Induction of new investors;
(f) Change in the name of EESL;
(g) Entering into any profit sharing, or any share option or other similar schemes for the benefit of the officers and other
employees of EESL; and
(h) Any matter relating to the promotion of new company(ies) including formation of subsidiary company(ies), entering
into partnership and/or arrangement of sharing profits, taking or otherwise acquiring and holding shares in any other
company.

Transfer of shares: Unless otherwise mutually agreed, none of the parties will transfer or otherwise encumber its shareholding
in EESL for a period of five years from the date of incorporation. After the lock-in period if any party intends to transfer any
equity shares to a third party, the selling party is required to first offer such equity shares to the remaining parties in proportion
to their shareholding, at book or fair value, whichever is higher. If the non-selling parties do not accept the offer, the selling
party will be entitled to transfer the offered equity shares to the proposed transferee on terms no more favourable and at no
higher price than those offered to the non-selling party.

Termination of rights: If any party ceases to hold at least 10% of the paid-up share capital of EESL, all rights of such party
under the agreement will terminate. In the event of termination of the EESL JVA by mutual consent, the non exiting parties
will have an obligation to purchase and/or to name a purchaser of all the shares and any financial interest of the exiting party,
at a fair value determined by an independent chartered accountant. In the event of termination of the EESL JVA due to breach
by any party, the defaulting party shall offer the shares held by it to the non-defaulting parties in proportion to their respective
shareholdings at a price equivalent to 80% of the fair value of such shares

Competition: EESL will not take up any renovation and modernization business in power plants in India and the SAARC
countries.


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Investments

(A) PTC I ndia Limited (formerly known as Power Trading Corporation of India Limited) (PTC)

PTC was incorporated as a joint venture company on April 16, 1999, under the Companies Act, and received its certificate of
commencement of business on July 15, 1999. PTC is engaged in the business of purchasing, selling, importing, exporting and
trading all forms of electricity, power and ancillary activities.
Pursuant to a promoters agreement dated April 8, 1999, PTC was promoted by PGCIL, NTPC and our Company.
Consequently, through a supplementary agreement dated November 29, 2002 (together with the original agreement referred to
as (Promoters Agreement) NHPC also became a promoter of PTC. The key terms of the Promoters Agreement are as
follows:
Share capital and subscription: The initial authorized share capital of PTC is ` 7,500,000,000 divided into 750,000,000 equity
shares of ` 10 each of which our Company is entitled to hold 8% and is also entitled to subscribe to additional shares offered
by PTC. Our Company presently holds 12,000,000 shares in PTC aggregating to 4.07% of the total issued and paid up capital.
The Promoters Agreement is irrevocable until the entire authorised capital of PTC of ` 7,500,000,000 is fully paid-up unless
all parties mutually agree to terminate it. Further, if a party fails to subscribe to its agreed proportion then it is liable to pay
interest @ 18% p.a. for the period until the payment is made.
Board of directors: As long as our Company holds 8% of the equity shares of PTC, our Company has the right to nominate one
part-time director on the board of directors of PTC. However despite our shareholding in PTC being below 8%, we have one
director on the Board of PTC. The chairman and managing director of PTC is required to be appointed upon the consent of the
chairman and managing director of PGCIL, NTPC, NHPC and our Company. Currently, we have one nominee director on the
Board of PTC.
Transfer of shares: No party can sell, transfer, assign, mortgage or otherwise encumber its shareholdings in PTC for initial
period of 12 years from the date of incorporation of the PTC. After the lock-in period if a party intends to transfer any equity
shares to a third party, the selling party is required to first offer such equity shares to the remaining parties in proporti on to
their shareholding. If the non-selling parties do not accept the offer, the selling party will be entitled to transfer the offered
equity shares to the third party on terms no more favourable and at no higher price than those offered to the non-selling party.

(B) Power Exchange India Limited (PEIL)

Power Exchange India Limited is a joint venture company promoted by National Stock Exchange Limited (NSE) and
National Commodity & Derivatives Exchange Limited (NCDEX) for setting up, operationalising and managing a national
level power exchange in India (Power Exchange).

For ensuring a wider representation of the power sector, in line with the regulatory intent and directions and recognising the
need for additional capital infusions, our Company was invited by NSE and NCDEX to invest in PEIL.

Consequently, our Company entered into a share subscription and shareholders agreement (Agreement) with NSE and
NCDEX on February 24, 2009 for subscribing to the equity shares of PEIL. Pursuant to which our Company presently holds
1,750,000 equity shares aggregating to 4.37% of the total issued and paid up share capital of the PEIL.

The key terms of the Agreement are set forth below:

Share capital and subscription: Under the Agreement, our Company is required to maintain an equity shareholding of 7% of
the total issued and paid up share capital of PEIL.

Board of directors: The total strength of the board of directors shall not exceed 12 directors. Our Company shall have the right
to nominate a director on the board only if it holds 10% or more shares in PEIL. Presently, our Company holds less than 10%
shareholding in the PEIL, and therefore our Company does not have any nominee director on the board of PEIL.

Transfer of shares: Unless otherwise mutually agreed, none of the parties can transfer or otherwise encumber its shareholding
in PEIL for a period of three years from the date of first day of trading operation on the power exchange or till the date PEIL
undertakes an initial public offering, whichever is earlier. Neither party can, without obtaining prior written consent of the
other parties, sell or transfer all or any part of its shares in PEIL to any other person or any shareholder. If any shareholder
other than NSE and NCDEX intends to transfer any equity shares to a third party prior to the initial public offering, such shares
shall be first offered to NSE and NCDEX at the fair market value. If NSE and NCDEX decline to purchase the offered shares,
the selling party shall offer the shares to the other shareholders of PEIL pro rata to the shares held by them to the extent of a

118

maximum shareholding of 7% of the total issued and paid-up capital of PEIL. Upon refusal of such shareholder the selling
party is free to sell the offered shares to a third party, who is not a competitor of PEIL.

If any time prior to initial public offering, NSE and NCDEX decide to sell their shares at a value more than the par value of `
10 per share, the remaining shareholders shall also be entitled to sell their shares on pro rata basis to the shares offered, on the
same terms and conditions, subject to the terms and conditions of the Agreement.

Our Company cannot in any manner or form, create any encumbrances on the shares held in PEIL during the subsistence of the
Agreement, without the prior express written consent of PEIL.

Events of default: In the event of default committed by any party as listed in the Agreement and failure to remedy such default
in the prescribed time or till reference for arbitration is made, such defaulting party will not receive any dividend, interest or
any other payment or returns on its shares.

Non-compete and exclusivity: Until the time PEIL undertakes an initial public offering, the shareholders other than NSE and
NCDEX can not directly or through any affiliate hold equity or make any other form of investment of any kind, in the same
business as that of PEIL or similar to that of a Power Exchange without prior written approval of PEIL.

(C) Small is Beautiful Fund (SIB Fund)

Our Company invested in SIB Fund pursuant to contribution agreement dated March 24, 2004 (Contribution Agreement)
entered between KSK Trust Private Limited, KSK Energy Ventures Limited and our Company. As on September 30, 2011 the
net outstanding contribution of our Company is ` 8.73 crores aggregating to 9.74% stake in SIB Fund of our Company. The
net asset value per unit of SIB Fund as on september 30, 2011is ` 9.95. SIB Fund is engaged in making equity and equity
related investments, amongst others, in project companies operating in the business of power generation in Indian power sector
with an intent to invest in power projects less than 100 MW, based on renewable sources or for captive consumption.

Material Agreements
Memorandum of Understanding with the Ministry of Power, Government of I ndia
We enter into an annual memorandum of understanding with the MoP (MoP MoU), which provides for the exercise of
enhanced autonomy by delegation of financial powers to our Company. The MoP MoU for the year 2011-2012 provides that
MoP would provide required assistance in getting resolved issues requiring inter ministerial consultations in relation to
mobilization of cheaper financial resources which may include raising of tax free bonds/SLR bonds/taxable
bonds/infrastructure bonds/bonds u/s 54EC of IT Act, loans from banks/institution and ECB/Direct World Bank/ Asian
Development Bank loans.
Under the terms of MoP MoU for the year 2011 2012 we are among other things required to undertake the following
activities:
1. Work as a catalyst to bring institutional improvement in streamlining the functions of its borrowers in the areas of
financial, technical and managerial to ensure optimum utilization of available resources;
2. Develop ultra mega power projects, and play a lead role in setting up shell companies in the name of projects for
implementation of transmission and hydro power projects to be developed through competitive bidding route; and
3. Provide financial resources and to encourage flow of investments to power and associated sectors.

Further, our Board of Directors are required to review the performance under each target on a monthly basis and our Board of
Directors and MoP are required to review our performance under each target on a quarterly basis.
The MoP MoU 2011- 2012 is in force and operational beyond 2011-2012 until it is modified by the signing of the subsequent
memorandum of understanding with the MoP.
Memorandum of Understanding with the Nuclear Power Corporation of I ndia Limited
Our Company has entered into a memorandum of understanding dated October 28, 2010, with the Nuclear Power Corporation
of India Limited ("NPCIL") (NPCIL MoU), to examine the feasibility of providing debt financing and other services by our
Company to NPCIL for setting up of nuclear power projects. Our Company may (i) facilitate loan towards equity requirements
in respect of new nuclear power projects against security of commissioned project subject to detailed due diligence within the
prevailing policy frame work; (ii) consider direct equity stake in the nuclear power projects of NPCIL within the policy
framework. Further our Company may provide consultancy services, through our subsidiary PFC Consulting Limited, at
various stages of projects undertaken by NPCIL starting with site identification and related clearances etc.

119

The NPCIL MoU is valid up to March 31, 2013 unless extended by mutual consent. The parties have an option to terminate the
NPCIL MoU after giving one month notice in writing to the other party.
Further, apart from our various arrangements with our lenders, which we undertake in the ordinary course of our business, our
Company does not have any other material agreement.

120

MANAGEMENT
Board of Directors
As per the Articles of Association of the Company, the number of directors of the company shall not be less than three and
more than twelve. The general superintendence, direction and management of the affairs and business of our Company is
vested in the Board of Directors who shall exercise all powers and do all acts and deeds, as the company is authorized to
exercise and do, except those which can be exercised by the company in the general meeting, as per the Companies Act, 1956
or its Memorandum and Articles of Association.
Presently, there are nine Directors on our Board consisting of three executive directors and six non-executive directors
including one government nominee & five non-official part-time directors as independent directors, as per office order of
Government of India. The appointment, as well as terms and conditions of whole-time directors including chairman and
managing director are also approved by Government of India vide their respective office orders.
The details of Board of Directors as on the date of the Draft Shelf Prospectus are as follows:
S
No.
Name, Fathers name, Designation, Date of
Appointment, DIN, Nationality & Age
Address Other Directorships
1. Mr. Satnam Singh

Fathers name: Mr. Daulat Ram
Designation: Chairman & Managing Director
Date of Appointment: August 01, 2008
DIN: 00009074
Nationality: Indian
Age: 53 years
B-2/2378, Vasant
Kunj,
New Delhi 110 070,
India.
PFC Consulting Ltd.
PFC Green Energy Limited
PFC Capital Advisory Services Limited

2. Mr. Mukesh Kumar Goel

Fathers name: Mr. Madho Ram Goel
Designation: Director (Commercial) and
Whole-time director
Date of Appointment: July 27, 2007
DIN: 00239813
Nationality: Indian
Age: 55 years
278D, Pocket-2,
Mayur Vihar, Phase 1,
Delhi, 110091,
India
PTC India Ltd.
Orissa Integrated Power Ltd.
Sakhigopal Integrated Power Company
Ltd.
Ghogarpalli Integrated Power Company
Ltd.
PFC Consulting Ltd.
Tatiya Andhra Mega Power Ltd.
PTC India Financial Services Ltd.
PFC Green Energy Limited.
3. Mr. Radhakrishnan Nagrajan

Fathers name: Late Mr. S. Radhakrishnan
Designation: Director (Finance) and Whole-
time director
Date of Appointment: July 31, 2009
DIN: 00701892
Nationality: Indian
Age: 54 years
Flat No. 3C, Pocket
A - 10, Kohinoor
Apartments,, Kalkaji
Extn.,
New Delhi, 110019,
India
Coastal Tamil Nadu Power Ltd.
Coastal Maharashtra Mega Power Ltd.
PFC Consulting Ltd.
National Power Exchange Ltd.
PFC Green Energy Limited.
PFC Capital Advisory Services Limited
4. Mr. Devender Singh

Fathers name: Mr. Karan Singh Panwar
Designation: Government Nominee Director
Date of Appointment: March 05, 2009
DIN: 01792131
Nationality: Indian
Age: 49 years
E-244, Naraina
Vihar,
New Delhi, 110028,
India
Rural Electrification Corporation Ltd.
Energy Efficiency Services Ltd.

5. Mr. Ravindra Harshadrai Dholakia

Fathers name: Mr. H.L. Dholakia
Designation: Independent Director
Date of Appointment: December 22, 2009
DIN: 00069396
Nationality: Indian
313, Indian Institute
of Management
(IIM), Vastrapur,
Ahmedabad, 380015,
India
The State Trading Corporation of India
Ltd.
Mundra Port & Special Economic Zone
Ltd.


121

Age: 58 years
6. Mr. P. Murali Mohana Rao

Fathers name: Mr. P. Viswanatham
Designation: Independent Director
Date of Appointment: December 22, 2009
DIN: 01909611
Nationality: Indian
Age: 53 years
Plot No. 61, Avanthi
Nagar, Basheerbagh,
Hyderabad, 500029,
India
NIL
7. Mr. Suresh Chand Gupta

Fathers name: Late Mr. O.P. Gupta
Designation: Independent Director
Date of Appointment: February 25, 2010
DIN: 00541198
Nationality: Indian
Age: 57 years
20, Shri Ram Road,
Civil Lines,
Delhi - 110054,
India.
UAE Exchange & Financial Services Ltd.
Union KBC Asset Management Company
Private Limited
8. Mr. Ajit Prasad

Fathers name: Mr. M. M. Prasad
Designation: Independent Director
Date of Appointment: October 08, 2010
DIN: 03302219
Nationality: Indian
Age: 53 years
A-640, Sarita Vihar,
New Delhi, 110044,
India
NIL
9. Mr. Krishna Mohan Sahni

Fathers name: Late Shri A.D. Sawhney
Designation: Independent Director
Date of Appointment: December 31, 2010
DIN: 02103128
Nationality: Indian
Age: 64 years
House No.38,
Pocket 2,
Jasola Vihar,
New Delhi, 110025,
India
Omnibus Industrial Development
Corporation of Daman Diu and Dadra
Nagar Haveli Limited

National Multi Commodity Exchange of
India Ltd.



All our Directors are appointed by the President of India acting through the MoP, who is our major shareholder presently
holding 73.72% of the paid-up equity share capital of our Company. Besides this, there are no arrangements or understanding
with major shareholders, customers, suppliers or others, pursuant to which any of the Directors were selected as a Director or
member of the senior management.

Brief Profiles of the Directors is given below:

Mr. Satnam Singh, 53 years, is the Chairman and Managing Director of our Company since August 1, 2008. He joined the
Board as director (Finance and Financial Operations) on February 1, 2005. Mr. Singh heads our Company and provides
strategic direction and guidance to all activities of our Company. Mr. Singh joined our Company in 1996. Mr. Singh holds a
Bachelors degree in Commerce from Guru Nanak Dev University, Amritsar and a Masters degree in Business Administration
from Panjab University. Mr. Singh has experience in the power and financial sectors. He was involved in the IPO of our
Company in 2007. He was director (Finance and Financial Operations) on the Board when our Company transitioned from a
Mini-Ratna to a Navratna company. He was a member of the APDRP Steering Committee constituted by the GoI. He has
been nominated to be a part of a high level panel approved by the Prime Minister of India on "Financial Position of
Distribution Utilities" to suggest measures to improve the viability of the power distribution sector. He is also the member of a
High Level Committee on Financing Infrastructure constituted under the chairmanship of Dr. Rakesh Mohan. He has been
conferred with various awards namely "Power Today Person of the Year, 2010", he was admitted as "Distinguished
Fellowship" by the Institute of Directors, "Bharat Siromani Award" for the year 2008-2009 and "CEPM PMA Honorary
Fellowship Award".

Mr. Mukesh Kumar Goel, 55 years, is the Director (Commercial) and is in-charge of commercial division. He joined the
Board on July 27, 2007. He holds a Bachelors degree in Technology (Electrical Engineering) from Kanpur University. Mr.
Goel has experience in the power sector of over two decades. Prior to joining our Company on November 22, 1988, he worked
with NHPC Limited. He has been involved in introducing reforms in SPUs, steering R-APDRP of the GoI and overseeing the
human resource functioning, information technology and legal activities of our Company.

122

Mr. Radhakrishnan Nagarajan, 54 years, is the Director (Finance) and is responsible for all functions of the finance
division. He joined the Board on July 31, 2009. He holds a Bachelors degree in Commerce from University of Madras and is a
qualified Chartered Accountant, Cost Accountant and a certified associate of the Indian Institute of Bankers. Mr. Nagarajan
has experience in the financial sector, having worked with Andhra Bank and our Company in various positions. He joined our
Company in 1994 and has been holding the post of executive director (Finance) since January 2008 during which he was
overseeing various business activities relating to IPO, resource mobilization, banking, treasury, disbursement, recovery,
internal audit, power exchange, asset liability and risk management.
Mr. Devender Singh, 49 years, is a nominee Director of the GoI and is presently the joint secretary to the MoP. He joined the
Board on March 5, 2009. Mr. Singh is a 1987 batch IAS officer of the Haryana cadre. He holds a Bachelors degree in
Electronics and Communication from the Delhi College of Engineering, Delhi and a Masters degree in Business
Administration from the Indian Institute of Management (IIM), Ahmedabad. Mr. Singh has an experience of working in
various government departments such as in the capacity of managing director of Haryana Dairy Development Cooperative
Federation Limited and Haryana State Cooperative Supply and Marketing Federation Limited, Chandigarh and also as director
of the Department of Industries and Mines, deputy commissioner of Gurgaon and deputy commissioner of Karnal.

Mr. Ravindra Harshadrai Dholakia, 58 years, is an Independent Director. He joined the Board on December 22, 2009. Mr.
Dholakia was a post Doctoral Fellow in the University of Toronto and holds a PhD degree from Maharaja Sayajirao University
of Baroda. He is a professor of Economics and Public Systems at IIM, Ahmedabad and has been on the faculty of IIM-
Ahmedabad since 1985. He has experience in teaching economics to different groups such as students, executives,
policymakers and senior government officers. He was a member of the 6
th
Central Pay Commission in India and has written
several monographs, books, research papers published in journals of national and international repute.

Mr. P. Murali Mohana Rao, 53 years, is an Independent Director. He joined the Board on December 22, 2009. Mr. Rao holds
a Bachelor's degree in Commerce from Andhra University and is a qualified Chartered Accountant. He has been practicing for
over 25 years.

Mr. Suresh Chand Gupta, 57 years, is an Independent Director. He joined the Board on February 25, 2010. Mr. Gupta is a
qualified Chartered Accountant and holds a Bachelors degree in Commerce from Punjab University, Chandigarh as well as a
Bachelors degree in Law from University of Delhi. In the past, he has held directorships in various banks and companies. He
is also a senior partner in a chartered accountancy firm.
Mr. Ajit Prasad, 53 years, is an Independent Director. He joined the Board on October 8, 2010. He holds a Masters degree in
Economics from University of Delhi and a Post Graduate Diploma in Management from the International Management
Institute. He also holds a Ph.D. from Patna University. He has been involved with various organizations as an academician. His
publications and research interests are in the areas of corporate planning, strategic thinking and governance along with a focus
on ethics and corporate social responsibility.
Mr. Krishna Mohan Sahni, 64 years, is an Independent Director. He joined the Board on December 31, 2010. He holds a
Bachelors degree in English literature and a Masters degree in History from University of Delhi. He is a 1969 batch IAS
officer of the Union Territory cadre. He has held various positions such as Secretary to the Ministry of Labour and
Employment, GoI, additional secretary to Ministry of Agriculture, GoI, principal secretary to the General Administration
Department and Tourism, Government of Delhi, principal secretary (Power), GoI, chairman and managing director of Delhi
Transco Limited and Delhi Financial Corporation, managing director of Delhi Tourism Development Corporation Limited
(now known as Delhi Tourism and Transportation Development Corporation Limited) and Delhi State Industrial Development
Corporation Limited (now known as Delhi State Industrial and Infrastructure Development Corporation Limited).
Relationship with other Directors
None of the Directors of the company are, in any way, related to each other.
Borrowing Powers of our Directors
Subject to the Memorandum and Articles of Association of our Company, the Shareholders at its 25
th
annual general meeting
held on September 28, 2011, passed a resolution under Section 293(1)(d) of the Act, according approval to the Board of
Directors of the company, for borrowings upto a total amount of ` 2,00,000 crores (Rupees two lakh crore only) in Indian
rupees and in any foreign currency equivalent to US $ 4 billion (four billion US Dollars only), for the purpose of the business
of the company. The aggregate value of the Bonds offered under this Draft Shelf Prospectus, together with the existing
borrowings of our Company, is within the approved borrowing limits of ` 2,00,000 crores (Rupees two lakh crores only).
The Issue of Bonds offered under this Draft Shelf Prospectus is being made pursuant to the resolution passed by the Board of
Directors at its Meeting held on [].

123

Shareholding of Directors
Sr. No. Name of Director No. of Shares
1 Mr. Satnam Singh 25,155
2 Mr. M.K. Goel 10,283
3 Mr. R. Nagarajan 25,200
4 Mr. Devender Singh* 700
*Holding Equity Shares in our Company as a nominee of our Promoter i.e. President of India acting through the MoP.
For further details of our shareholding pattern, refer to Capital Structure on page 55 of this Draft Shelf Prospectus.
As per Articles of Association of the company, directors are not required to hold any qualification shares.
Details of Appointment and Term of our Directors
S.
No.
Name of Director MoP Order No. Term
1. Mr. Satnam Singh No. 8/3/2007 PF dated
August 7, 2008
*

5 years with effect from August 1, 2008 or until the date of
superannuation or until further orders, whichever event occurs
earliest.
2. Mr. Mukesh Kumar
Goel
No. 8/1/2006-PFC dated
July 27, 2007
5 years with effect from the date of taking charge of the post or
until the date of superannuation or until further orders, whichever
event occurs earliest.
3. Mr. Radhakrishnan
Nagarajan
No. 8/1/2008 PF dated
July 31, 2009
5 years with effect from the date of taking charge of the post or
until the date of superannuation or until further orders, whichever
event occurs earliest.
4. Mr. Devender Singh No. 1/1/2009 Adm.II
dated March 5, 2009

With effect from March 5, 2009 and until further orders.
5. Mr. Ravindra
Harshadrai Dholakia
No. 8/1/2009 PF Desk
dated December 22,
2009
3 years with effect from December 22, 2009 or until further
orders, whichever event occurs earliest.
6. Mr. P. Murali
Mohana Rao
No. 8/1/2009 PF Desk
dated December 22,
2009
3 years with effect from December 22, 2009 or until further
orders, whichever event occurs earliest.
7. Mr. Suresh Chand
Gupta
No. 8/1/2009 PF Desk
dated February 25, 2010
3 years with effect from February 25, 2010 or until further orders,
whichever event occurs earliest.
8. Mr. Ajit Prasad No. 8/1/2009 PF Desk
dated October 8, 2010
3 years with effect from October 8, 2010 or until further orders,
whichever event occurs earliest.
9. Mr. Krishna Mohan
Sahni
No. 8/1/2009 PF Desk
dated December 31,
2010
3 years with effect from December 31, 2010 or until further
orders, whichever event occurs earliest.
* Read with MoP Order No. 8/3/2007-PF dated June 27, 2008
Remuneration of Directors
A. Managing Director and Whole Time Directors
The following table sets forth the details of remuneration paid to the Whole Time Director during the Fiscal 2011:


(In ` crores)
Name of the Director Salary Company contribution Total

124

to Provident Fund
Mr. Satnam Singh 0.36 0.02 0.38
Mr. M.K. Goel 0.38 0.02 0.40
Mr. R. Nagarajan 0.31 0.02 0.33

B. Independent Directors
The Independent Directors do not have any material pecuniary relationship or transaction with the company. However, they
were paid sitting fee for attending the meetings of the Board of Directors and Committee of Directors, as set forth under the
following table, during the Fiscal 2011:
(In ` crores)
Name of the Independent
Director
Sitting Fees Total
Board Meetings Committee Meetings
Mr. Ravindra H. Dholakia 0.02 0.03 0.05
Mr. P. Murali Mohana Rao 0.02 0.03 0.05
Mr. S.C. Gupta 0.02 0.01 0.03
Mr. Ajit Prasad 0.01 0.01 0.02
Mr. Krishna Mohan Sahni 0.005 0.001 0.006

Mr. Devender Singh, being a nominee of the GoI, is not entitled to remuneration or sitting fee or any other remuneration from
our Company.
Changes in our Board during the last three years
The changes in our Board in the last three years are as follows:
Name Date of Appointment Date of Cessation Particulars
Mr. Devender Singh March 05, 2009 - Government nominee
Mr. Rajeev Sharma March 09, 2009 November 29, 2011
Appointment/
Cessation
Mr. Rakesh Jain June 25, 2009 January 6, 2011
Nomination
withdrawn by GoI
Mr. B.K. Mittal June 29, 2006 June 28, 2009 Cessation
Mr. G.P. Gupta June 29, 2006 June 28, 2009 Cessation
Mr. S. K. Bhargava June 29, 2006 June 28, 2009 Cessation
Mr. P.G. Apte June 29, 2006 June 28, 2009 Cessation
Mr. R. Nagarajan July 31, 2009 - Appointment
Mr. P. Murali Mohana Rao December 22, 2009 -
Appointment
Mr. R.H. Dholakia December 22, 2009 - Appointment
Mr. S.C. Gupta February 25, 2010 - Appointment
Mr. Ajit Prasad October 08, 2010 - Appointment
Mr. Krishna Mohan Sahni December 31, 2010 - Appointment

Interests of our Directors
Except as otherwise stated in Financial Statements Related Party Transactions our company has not entered into any
contract, agreements and arrangement during the two years preceding the date of this Draft Shelf Prospectus in which the
directors are interested directly or indirectly and no payments have been made to them in respect of such contracts or
agreements.
All our Directors, including our independent Directors, may be deemed to be interested to the extent of fees, if any, payable to
them for attending meetings of the Board or a committee thereof, as well as to the extent of other remuneration and
reimbursement of expenses payable to them.
Our Directors, may also be regarded as interested, to the extent they, their relatives or the entities in which they are interested
as directors, members, partners or trustees, are allotted Bonds pursuant to this Issue, if any.

Corporate Governance

125

Our Equity Shares are listed on the Stock Exchanges and our Company has adopted corporate governance practices in
accordance with Clause 49 of the Equity Listing Agreements, entered into with the Stock Exchanges.
Our Company did not comply with certain provisions of the Equity Listing Agreements relating to composition of board of
directors for certain quarters of 2010. However, as on the date of this Draft Shelf prospectus, our Company is in compliance
with the requirements of Clause 49 of the Equity Listing Agreements in relation to the composition of its board of directors.
Presently, our Board has 10 directors, of which 5 are Independent Directors.

We have constituted an Audit Committee and a Shareholders and Investor Grievance Committee as per the requirements of
Clause 49 of the Equity Listing Agreements. Whilst the constitution of Remuneration Committee is not mandatory under the
Equity Listing Agreements, we have constituted a Remuneration Committee in accordance with the guidelines issued by DPE
which are applicable to all central public sector enterprises.

Our Board functions either as a full Board or through various committees constituted to oversee specific operational areas.

Committees of Board of Directors
Our Board has constituted the following committees of Directors:
i.) Audit Committee
ii.) Remuneration Committee
iii.) Shareholders/Investors Grievance Committee
iv.) Loans Committee
v.) Committee of Functional Directors
vi.) Risk Management Committee
vii.) Committee of Directors for Investment in IPO of Central Power Sector Undertakings (CPSUs)
viii.) Ethics Committee
ix.) CSR Committee



The details of these committees are set forth below:
A. Audit committee
The audit committee met 9 times during the fiscal 2011. As on date, the Audit Committee comprises of the following
members:
1. Mr. P. Murali Mohana Rao Chairman
2. Mr. Ravindra H. Dholakia Member
3. Mr. Ajit Prasad Member
Scope and terms of reference

The role and terms of reference of Audit Committee is in line with the requirements of Clause 49 of the Listing Agreement
read with Section 292A of the Companies Act, 1956. The terms of reference of the Audit Committee includes the following:
To investigate any activity within its terms of reference.
To seek information from any employee.
To obtain legal or other professional advice.
To secure attendance of outsiders with relevant expertise, if it is considered necessary.
Oversight of the companys financial reporting process and disclosure of its financial information to ensure that the
financial statement is correct, sufficient and creditable.
Recommending the appointment and removal of external auditors, fixation of audit fee and also approval for payment for
any other services.
Reviewing with management the annual financial statement before submission to the Board, focusing primarily on :-
Any change in accounting policy and practices.
Major accounting entries based on exercise of judgment by the management.
Qualification in draft audit report.

126

Significant adjustment arising out of audit.
Compliance with accounting standard.
Compliance with Stock Exchange and Legal requirement concerning financial statement.
Any related party transaction i.e. transaction of the Company of material nature, with promoters or the management,
their subsidiary or relatives etc. that may have potential conflict with the interest of the company at large.
Matters required to be included in the Directors Responsibility Statement to be included in the Boards report in
terms of clause (2AA) of section 217 of the Companies Act, 1956

Reviewing with management, external and internal auditor, the adequacy of internal control system and suggestion for
implementation for the same.
Reviewing the adequacy of internal audit function including the structure of internal audit department, staffing and
seniority of the officials heading the departments, reporting structure coverage and frequency of internal audit.
Discussion with internal auditor and significant finding and follow up thereon.
Reviewing the findings of any internal investigation by the internal auditors into matters where there is suspected fraud or
irregularity or a failure of internal control system of a material nature and reporting the matters to the Board.
Discussion with external auditor before the audit commences, and nature of scope of audit as well as post audit discussion
to ascertain any area of concern.
Reviewing the companies financial and risk management policy.
To look into the reasons for substantial default in the payment to the depositors, debentures holders, shareholders and
creditors.
It shall have discussion with auditors periodically about internal control system, the scope of audit including the
observation of the auditors & review the quarterly, half yearly & annual financial statement before submission to the
Board, it shall ensure compliance of internal control system.
Approval of payment to statutory auditors for any other services rendered by statutory auditors.
Reviewing the Management discussion and analysis of financial condition and results of operations.
Formulation of Whistle Blower Policy and recommending the same to Board for approval and review the functioning of
the Whistle Blower Mechanism and also to protect the Whistle Blowers.
Reviewing the follow up action on the audit observation of the C&AG audit.
Reviewing the follow up action taken on the recommendations of Committee on Public Undertakings (COPU) of the
Parliament.
Reviewing, with the management, the statement of uses/application of funds raised through an issue (public issue, rights
issue, preferential issue etc.), the statement of funds utilized for purposes other than those stated in the offer
document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a
public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.
B. Remuneration Committee
The remuneration committee met 6 times during the fiscal 2011. As on date, the Remuneration Committee comprises of the
following members:

Mr. Ravindra H. Dholakia Chairman
Mr. P. Murali Mohana Rao Member
Mr. S.C. Gupta Member
Mr. M.K. Goel, Director (ID&A) Permanent Invitee
Mr. R. Nagarajan, Director (F&FO) Permanent Invitee

Scope and terms of reference
The appointment of Directors and payment of their remuneration are decided by President of India as per the Articles of
Association of the Company. However, in line with the requirement under Department of Public Enterprises (DPE) guidelines
for implementation of revised pay scales, the company constituted a Remuneration Committee on 29th January, 2010 headed
by an Independent Director to decide the quantum of annual/variable pay and policy for its distribution across the executives
and non unionized supervisors, within the prescribed limits.
C. Shareholders/Investors Grievance Committee
The Shareholders/Investors Grievance committee met 3 times during the fiscal 2011.As on date, the Shareholders Grievance
Committee comprises of the following members:

Mr. P. Murali Mohana Rao Chairman

127

Mr. M. K. Goel Member
Mr. R. Nagarajan Member

Scope and terms of reference

The Company has a Shareholders/Investors Grievance Committee of Directors to look into the redressal of the complaints of
investors such as delay in transfer of shares, non-receipt of annual report/dividend etc.
D. Loans Committee
The Loans Committee met 3 times during the Fiscal 2011. As on date, the Committee comprises of the following members:
Mr. Satnam Singh Chairman
Mr. Devender Singh Member
Mr. M.K. Goel Member
Mr. R. Nagarajan Member
Mr. K.M. Sahni Member

Scope and terms of reference

The Loans Committee of the Directors has been constituted for sanctioning of financial assistance up to ` 500 crore to
individual schemes or projects including enhancement of financial and lease assistance and relaxation of eligibility conditions,
subject to overall ceiling of ` 10,000 crore in a financial year.
E. Committee of Functional Directors
The Committee of Functional Directors met 4 times during the fiscal 2011. As on date, the Committee comprises of the
following members:
Mr. Satnam Singh Chairman
Mr. M.K. Goel Member
Mr. R. Nagarajan Member

Scope and terms of reference

The Committee of Functional Directors has been constituted for (i) sanctioning of financial assistance upto ` 100 crore to
individual schemes or projects including enhancement of financial and lease assistance and relaxation of eligibility conditions,
subject to overall ceiling of ` 4,000 crore in a financial year. (ii) relaxation of eligibility and other conditions of sanction as
mentioned in the operational policy statement and other policy framed by the Board in respect of financial assistance up to `
100 crore for individual schemes/ projects, including the loans already sanctioned; and (iii) sanction of lease assistance within
the overall policy framed by Board above ` 20 crore and up to ` 50 crore.
F. Risk Management Committee
The Risk Management Committee met 43 times during the fiscal 2011. As on date, the Committee comprises of the following
members:
Mr. M.K. Goel Chairman
Mr. R. Nagarajan Member
*The unit head of AL&RM unit to be the Secretary of the Risk Management Committee

Scope and terms of reference
The Risk Management Committees main function is to monitor various risks likely to arise and to examine the various risk
management policies and practices adopted by the Company. Also to initiate action for mitigation of risk arising in the
operation and other related matters of the Company.


G. Committee of Directors for Investment in IPO of Central Power Sector Undertakings (CPSUs)

128

The Committee of Directors for Investment in IPO of Central Power Sector Undertakings (CPSUs) met once during the fiscal
2011. As on date, the Committee comprises of the following members:
Mr. Satnam Singh Chairman
Mr. R. Nagarajan Member
Mr. K.M. Sahni Member

Scope and terms of reference

The Committee for Investment in IPO of Central Power Sector Undertakings (CPSUs) is formed for approving equity
investment in IPOs of CPSUs and also other related matters like exit/sale decisions, the number of shares to be applied through
IPO, individual investment limit in each company on case to case basis, etc.
H. Ethics Committee
Ethics Committee was formed on [.].As on date, the Committee comprises of the following members:
Mr. Satnam Singh Chairman
Mr. R.H. Dholakia Member
Mr. Ajit Prasad Member

Scope and terms of reference

1. To ensure that ethical business practices are being followed in managing the affairs of the Company.
2. To ensure that all business dealings with clients and suppliers are carried out with utmost transparency and integrity and
the companys interest is not compromised.
3. To ensure that the business and affairs of the Company are carried out in accordance witht the applicable laws, rules and
regulations.
4. To ensure that all the disclosures made by the company are full, fair, accurate and timely and does not in any way harm,
defame or discredit the Company.
5. To monitor the implementation of the Code of Conduct and recommend additions/deletions in the code to the Board of
Directors.

I. CSR Committee
CSR Committee was formed on [.]. As on date, the Committee comprises of the following members:
Mr. K.M. Sahni Chairman
Mr. P. Murali Mohana Rao Member
Mr. M.K. Goel Member

Scope and terms of reference

The CSR Committee is formed to oversee the CSR activities of the Corporation and to make recommendation to the Board for
taking up various CSR projects and concerned CSR Unit Head will be the coordinator for the said Committee.
Payment or Benefit to Officers of our Company
Our Company follows a pay structure in conformity with the guidelines issued by DPE from time to time. Our Company also
has in place various incentive schemes as a part of its compensation strategy to increase productivity and reward performance.
Monetary benefits are paid to the employees on the basis of their individual and group performance.
Further, except certain post retirement medical benefits and statutory benefits on superannuation, no officer of our Company is
entitled to any benefit on superannuation.
Our Board and shareholders have approved an employee stock option scheme, in compliance with the
ESOP guidelines. However, no options have been granted under such scheme titled PFC ESOP 2010, as on date.
On retirement, our employees are entitled to superannuation benefits. No officer or other employee of our Company is entitled
to any benefit on termination of his employment in our Company, other than statutory benefits such as provident fund and
gratuity in accordance with the applicable laws.

129


Management Organisation Structure






Chairman &
Managing
Director
Vigilance
Corporate
Planning
PFC
Consulting
Commercial
Division
Projects
Division
Finance
Division
Internal
Audit
Entity Appraisal &
Legal
R-APDRP
MS &
Administration
M
S
P
R
H
R
S
S
R
R
Adminis
tration
EBM,
Library
Technical
Pool
Consortiu
m Lending
Project
Monitoring
Ren.
Energy &
State
Incharges
Reg. Office
South &
EIG &
FP
Corp.
Accts.
Taxati
on
Fund
Mgmt. &
Corp.
Risk
Acquisitio
n
Recov
ery
Po
lic
Di
sb
AL&
RM
EA & EC
RM (F) &
DS (D)
Fin.
Syste
Company
Secretariat
Fin.
Group
Lending
Conc.
RM (D) &
DS (F)
RM
(Public

130


Abbreviations:-
R-APDRP: Restructured-Accelerated Power Development & Reforms Programme, MS: Management System, PR: Public
Relations, HR: Human Resources, SSA: State Sector Analysis, RR: Reform & Review, EBM: Estate and Building Management,
FG: Facilitation Group, Ren. Energy & CDM: Renewable Energy & Clean Development Mechanism, Reg. Office: Regional
Office, Fin. Group: Finance Group, EIG & FP: Equity Investment Group and Financial Products, Corp. Accts.: Corporate
Accounts, Fund Mgmt. & Banking: Fund Management & Banking, Corp. Risk Assurance: Corporate Risk Assurance, AL &
RM: Asset Liability and Risk Management, Disb.: Disbursement, Fin. System: Financial System, RM (D) & DS (F).: Resource
Mobilization (Domestic) & Debt Servicing (Foreign), RM (F) & DS (D): Resource Mobilization (Foreign) & Debt Servicing
(Domestic), RM (Public Issue): Resource Mobilization (Public Issue), EA & EC.: Establishment Accounts & Establishment
Concurrence, Lending Conc.: Lending Concurrence








131

STOCK MARKET DATA FOR OUR EQUITY SHARES/DEBENTURES

The stock market data for the Equity Shares/non-convertible debentures issued by our Company listed on the NSE and /or BSE
are set forth below. Stock market data for issued debentures which are listed only on NSE has been given separately. The
debentures for which data is not stated are infrequently traded on the respective stock exchange(s).

1. Equity Shares

Our Companys Equity Shares are listed on the BSE and NSE.

As our Companys shares are actively traded on the NSE and BSE, stock market data has been given separately for each of
these Stock Exchanges.

1. The high and low closing prices recorded on NSE (as applicable) during the last three years and the number of equity
shares traded on the days the high and low prices were recorded are stated below.

NSE
Year
ended
March 31
High
(`)
Date of
High
Volume on
date of high
(no. of
equity
shares)
Low
(`)
Date of Low Volume on
date of low
(no. of equity
shares)
*Average
price for
the year
(`)
2011 380.60 October 13, 2010 383,682 220.85 March 22, 2011 1,256,092 304.83
2010 282.70 January 14, 2010 849,406 134.50 April 13, 2009 1,187,117 224.18
2009 186.55 May 5, 2008 5,948,464 90.65 October 27, 2008 244,403 130.17
Source: www.nseindia.com
*Average computed based on number of trading days during the year

2. The high and low prices and volume of equity shares traded on the respective dates during the last six months are as
follows:

NSE
Month High
(`)
Date of
High
Volume on
date of high
(no. of
equity
shares)
Low
(`)
Date of Low Volume on
date of low
(no. of equity
shares)
Average
price for
the
month*
(`)
November,
2011
170.35 November 8,
2011
3,230,446 154.60 November 1,
2011
2,944,910
163.33
October
2011
155.35 October 28, 2011 2,534,793 133.50 October 5, 2011
2,407,787
145.79
September
2011
163.95 September 21,
2011
3,191,031 142.35 September 12,
2011
1,262,379
151.1
August
2011
187.85 August 1, 2011 2,137,916 133.05 August 26, 2011
4,185,307
161.51
July 2011 216.85 July 18, 2011 8,003,233 184.15 July 29, 2011
4,982,644
200.39
June 2011 205.20 June 2, 2011 3,136,014 170.95 June 21, 2011
4,206,632
190.80

Source: www.nseindia.com
*The average price has been computed based on the daily closing price of equity shares.


132


3. The high and low closing prices recorded on BSE (as applicable) during the last three years (or such lesser period as may
be applicable) and the number of equity shares traded on the days the high and low prices were recorded are stated below.

BSE
Year
ended
March 31
High
(`)
Date of
High
Volume on
date of high
(no. of
equity
shares)
Low
(`)
Date of Low Volume on
date of low
(no. of equity
shares)
*Average
price for
the year
(`)
2011 379.9 October 13, 2010 57,162 221.35 March 22, 2011 110,631 304.62
2010 281.75 January 14, 2010 215,358 134.50 April 13, 2009 222,346 224.07
2009 186.65 May 5, 2008 2,173,420 90.40 October 27, 2008 412,604 130.12
Source: www.bseindia.com
*Average computed based on number of trading days during the year

4. The high and low prices and volume of equity shares traded on the respective dates during the last six months are as
follows:

BSE
Month High
(`)
Date of
High
Volume on
date of high
(no. of
equity
shares)
Low
(`)
Date of Low Volume on
date of low
(no. of equity
shares)
Average
price for
the
month*
(`)
November
2011
170.55 November 8, 2011 4,69,559 154.7 November 1,
2011
4,86,933 163.30
October
2011
155.15 October 28, 2011 509,419 133.45 October 5, 2011 288,995 145.82
September
2011
163.90 September 21,
2011
539,066 142.70 September 12,
2011
558,403 151.14
August
2011
187.65 August 1, 2011 244,798 132.90 August 26, 2011 748,769 161.50
July 2011 216.85 July 18, 2011 775,247 184.15 July 29, 2011 623,336 200.28
June 2011 205.05 June 2, 2011 998,673 171.00 June 21, 2011 311,392 190.72
Source: www.bseindia.com
*The average price has been computed based on the daily closing price of equity shares.


The stock market data for the nonconvertible debentures issued by our Company listed on the BSE and NSE is appended as
Annexure -III





133

FINANCIAL INDEBTEDNESS
As on 30th September, 2011, we had outstanding secured borrowings of approximately ` 90827.66 crores and unsecured
borrowings of ` 235.36 crores:
Bonds Outstanding as on 30.09.2011 Issued by our Company:
Set forth below is a brief summary of our significant outstanding bonds as on September 30, 2011 together with a brief
description of certain significant terms of such financing arrangements.
(i) Taxable Bonds (secured by means of government guarantee):
Our Company has issued government guaranteed bonds, on private placement basis outstanding as on September 30, 2011
aggregating to ` 22 Crores. The details of these bonds are as follows:
Sl.
No:
Nature of the Bonds Interest/Coupon Rate Redemption Amount (in `crores)
1. 12% SLR BONDS IV SERIES 12% 10-02-2012 22.00

(ii) Other Taxable Bonds issued by our Company:
Our Company has issued Taxable bonds, on private placement basis outstanding as on 30.09.2011 are below mentioned series
aggregating to ` 68330.20 Crores. The details of these bonds are as follows:
Taxable Non- Convertible Redeemable Bonds (Unsecured):
Sl.
No:
Name of the Trustee Nature of Bonds Interest/C
oupon
Rate p.a.
Redempti
on
Amount
(in
`crores)
1. United Bank of India 9.70% TAXABLE BOND
(UNSECURED)
9.70% 23-Nov-11 53.10
2 United Bank of India 9.25% XI TAXABLE BONDS
(UNSECU
9.25% 20-Feb-12 744.08
3 IDBI Trusteeship Services Ltd. 6.80% TAXABLE BONDS -XXIA 6.80% 02-Nov-11 86.00
4 IDBI Trusteeship Services Ltd. 7.00% TAXABLE BONDS -XXII 7.00% 24-Dec-11 694.30
5 IDBI Trusteeship Services Ltd. 7.00% TAXABLE BONDS -XXIB 7.00% 02-Nov-14 168.80
6 IL&FS Trust Co. Ltd. 9.60% TAXABLE BOND 13TH
SERIES
9.60% 16-May-17 125.00
7 IL&FS Trust Co. Ltd. 9.60% TAXABLE BOND 13TH
SERIES
9.60% 24-May-17 65.00
8 IL&FS Trust Co. Ltd. 8.21% TAX US BONDS -17TH 8.21% 03-Oct-11 25.00
9 IL&FS Trust Co. Ltd. 8.21% TAX US BONDS -17TH 8.21% 03-Oct-12 25.00
10 IL&FS Trust Co. Ltd. 8.21% TAX US BONDS -17TH 8.21% 03-Oct-13 25.00
11 IL&FS Trust Co. Ltd. 8.21% TAX US BONDS -17TH 8.21% 03-Oct-14 25.00
12 IL&FS Trust Co. Ltd. 8.21% TAX US BONDS -17TH 8.21% 03-Oct-15 25.00


134

Sl.
No:
Name of the Trustee Nature of Bonds Interest/C
oupon
Rate p.a.
Redempti
on
Amount
(in
`crores)
13 IL&FS Trust Co. Ltd. 8.21% TAX US BONDS -17TH 8.21% 03-Oct-16 25.00
14 IL&FS Trust Co. Ltd. 8.21% TAX US BONDS -17TH 8.21% 03-Oct-17 25.00
15 IL&FS Trust Co. Ltd. 7.87% XVIII SERIES BONDS(2017) 7.87% 13-Nov-11 25.00
16 IL&FS Trust Co. Ltd. 7.87% XVIII SERIES BONDS(2017) 7.87% 13-Nov-12 25.00
17 IL&FS Trust Co. Ltd. 7.87% XVIII SERIES BONDS(2017) 7.87% 13-Nov-13 25.00
18 IL&FS Trust Co. Ltd. 7.87% XVIII SERIES BONDS(2017) 7.87% 13-Nov-14 25.00
19 IL&FS Trust Co. Ltd. 7.87% XVIII SERIES BONDS(2017) 7.87% 13-Nov-15 25.00
20 IL&FS Trust Co. Ltd. 7.87% XVIII SERIES BONDS(2017) 7.87% 13-Nov-16 25.00
21 IL&FS Trust Co. Ltd. 7.87% XVIII SERIES BONDS(2017) 7.87% 13-Nov-17 25.00
22 IL&FS Trust Co. Ltd. ZERO COUPON BOND 8.10% 30-Dec-22 312.52
23 The Western India Trustee &
Executor Co. Ltd.
7.00%TAXABLE BOND XXIII SERIES 7.00% 05-Jul-12 202.70
24 The Western India Trustee &
Executor Co. Ltd.
7.6% TAXABLE BOND SERIES XXV 7.60% 30-Dec-15 1734.70
25 The Western India Trustee &
Executor Co. Ltd.
7.95% XXVI BOND SERIES 7.95% 24-Feb-16 461.80
26 The Western India Trustee &
Executor Co. Ltd.
8.20% TAXABLE BONDS XXVII-A 8.20% 17-Mar-16 1000.00
27 The Western India Trustee &
Executor Co. Ltd.
8.09% TAXABLE BONDS XXVII-B 8.09% 17-Mar-13 850.00
28 IDBI Trusteeship Services Ltd. 8.85% TAXU BOND SERIES XXVIII 8.85% 31-May-21 600.00
29 IDBI Trusteeship Services Ltd. 8.80% TAXU BONDS SERIES XXIX 8.80% 07-Sep-16 250.00
30 The Western India Trustee &
Executor Co. Ltd.
7.95% XXVI BOND SERIESXXVI 7.95% 24-Feb-16 800.00
31 IDBI Trusteeship Services Ltd. 8.49% BOND SERIES XXX 8.49% 09-Oct-11 480.00
32 IDBI Trusteeship Services Ltd. 8.78%TAXU BONDS-XXXI-ASERIES 8.78% 11-Dec-16 1451.20
33 IDBI Trusteeship Services Ltd. 9.25% TAXU BOND SERIES XXXII 9.25% 19-Feb-12 578.50
34 IDBI Trusteeship Services Ltd. 9.80 TAXU BOND SERIES XXXIII-A 9.80% 22-Mar-12 122.00
35 IDBI Trusteeship Services Ltd. 9.90%TAXU BOND SERIES XXXIII-B 9.90% 22-Mar-17 561.50
36 IDBI Trusteeship Services Ltd. 9.90% TAXU BOND SERIES XXXIV 9.90% 30-Mar-17 500.50
37 The Western India Trustee &
Executor Co. Ltd.
9.96%.TAXU BOND SERIES- XXXV 9.96% 18-May-17 530.00
38 The Western India Trustee & 10.00% TAXU BONDSERIES-XXXVI- 10.00% 15-Jun-12 436.30

135

Sl.
No:
Name of the Trustee Nature of Bonds Interest/C
oupon
Rate p.a.
Redempti
on
Amount
(in
`crores)
Executor Co. Ltd. B
39 The Western India Trustee &
Executor Co. Ltd.
9.80%-TAXU BOND SERIES-XXXVIII 9.80% 20-Sep-12 1862.00
40 The Western India Trustee &
Executor Co. Ltd.
9.22% TAXU BOND SERIES-XLB 9.22% 28-Dec-12 510.00
41 The Western India Trustee &
Executor Co. Ltd.
9.28% TAXU BOND SERIES-XLC 9.28% 28-Dec-17 650.00
42 The Western India Trustee &
Executor Co. Ltd.
8.94% TAX U BOND SERIES XLI-B 8.94% 15-Jan-13 265.00
43 The Western India Trustee &
Executor Co. Ltd.
9.03% TAXU BOND SERIESXLII-B 9.03% 15-Feb-13 319.00
44 The Western India Trustee &
Executor Co. Ltd.
9.30% TAX U BONDSERIES XLIII-B 9.30% 12-Mar-13 271.60
45 The Western India Trustee &
Executor Co. Ltd.
9.40% TAX U BOND SERIES XLIV 9.40% 25-Mar-13 1260.30
46 IDBI Trusteeship Services Ltd. 9.60% BOND SERIES XLVII-B 9.60% 09-Jun-13 495.30
47 IDBI Trusteeship Services Ltd. 9.68% BOND SERIES XLVII-C 9.68% 09-Jun-18 780.70
48 IDBI Trusteeship Services Ltd. 10.70% TAXUBOND(XLVIII-B)2013_ 10.70% 15-Jul-13 217.40
49 IDBI Trusteeship Services Ltd. 10.55% TAXUBOND(XLVIII-C)-2018 10.55% 15-Jul-18 259.70
50 IDBI Trusteeship Services Ltd. 10.90%-TAXU BONDS-XLIX-A 10.90% 11-Aug-13 313.60
51 IDBI Trusteeship Services Ltd. 10.85%-TAXU BONDS-XLIX-B 10.85% 11-Aug-18 428.60
52 IDBI Trusteeship Services Ltd. 10.75% TAXU BONDS-L-B 10.75% 25-Aug-13 78.40
53 IDBI Trusteeship Services Ltd. 10.70% TAXU BONDS-L-C 10.70% 25-Aug-15 80.80
54 IDBI Trusteeship Services Ltd. 11.10% TAXU BONDS-LI-B 11.10% 15-Sep-13 594.00
55 IDBI Trusteeship Services Ltd. 11.00% TAXU BONDS-LI-C 11.00% 15-Sep-18 3024.40
56 IDBI Trusteeship Services Ltd. 11.40%TAXU BONDS SERIES LII-A 11.40% 28-Nov-13 662.70
57 IDBI Trusteeship Services Ltd. 11.30% TAXU BOND SERIES LII-B 11.30% 28-Nov-15 5.80
58 IDBI Trusteeship Services Ltd. 11.25% TAXU BOND SERIES LII-C 11.25% 28-Nov-18 1950.60
59 IDBI Trusteeship Services Ltd. 8.90% TAXU BOND SERIES 54-A 8.90% 16-Feb-14 196.50
60 IDBI Trusteeship Services Ltd. 6.90% TAXU BOND SERIES-55A 6.90% 11-May-12 877.00
61 IDBI Trusteeship Services Ltd. 7.50% TAXU BOND SERIES-55B 7.50% 11-May-14 146.90
62 IDBI Trusteeship Services Ltd. 7.20%TAXU BOND SERIES-56 7.20% 09-July-12 525.00

136

Sl.
No:
Name of the Trustee Nature of Bonds Interest/C
oupon
Rate p.a.
Redempti
on
Amount
(in
`crores)
63 IDBI Trusteeship Services Ltd. 8.60% TAX BOND SERIES-57B 8.60% 07-Aug-14 866.50
64 IDBI Trusteeship Services Ltd. 8.60% TAX BOND SERIES-57B 8.60% 07-Aug-19 866.50
65 IDBI Trusteeship Services Ltd. 8.60% TAX BOND SERIES-57B 8.60% 07-Aug-24 866.50
66 IDBI Trusteeship Services Ltd. 7.75% TAX BOND SERIES-58A 7.75% 17-Sep-12 100.00
67 IDBI Trusteeship Services Ltd. 8.45% TAX BOND SERIES-58B 8.45% 17-Sep-14 331.10
68 IDBI Trusteeship Services Ltd. 8.45% TAXU BOND SERIES-59A 8.45% 15-Oct-14 288.20
69 IDBI Trusteeship Services Ltd. 8.80% TAXU BOND SERIES-59B 8.80% 15-Oct-19 1216.60
70 IDBI Trusteeship Services Ltd. INCMTBMK+135BSP TAXU BOND
SERI
8.47% 20-Nov-12 175.00
71 IDBI Trusteeship Services Ltd. INCMTBMK+179BSP TAXU BOND
SERI
8.91% 20-Nov-19 925.00
72 IDBI Trusteeship Services Ltd. 8.50% TAXU BOND SERIES-61 8.50% 15-Dec-14 351.000
73 IDBI Trusteeship Services Ltd. 8.50% TAXU BOND SERIES-61 8.50% 15-Dec-19 351.00
74 IDBI Trusteeship Services Ltd. 8.50% TAXU BOND SERIES-61 8.70% 15-Dec-24 351.00
75 IDBI Trusteeship Services Ltd. 8.70% TAXU BOND SERIES-62A 8.70% 15-Jan-20 845.40
76 IDBI Trusteeship Services Ltd. 8.80% TAXU BOND SERIES-62B 8.80% 15-Jan-25 1172.60
77 IDBI Trusteeship Services Ltd. 8.90% TAXU BONDS SERIES-63 8.90% 15-Mar-15 184.00
78 IDBI Trusteeship Services Ltd. 8.90% TAXU BONDS SERIES-63 8.90% 15-Mar-20 184.00
79 IDBI Trusteeship Services Ltd. 8.90% TAXU BONDS SERIES-63 8.90% 15-Mar-25 184.00
80 IDBI Trusteeship Services Ltd. 8.95% TAXU BOND SERIES-64 8.95% 30-Mar-15 492.00
81 IDBI Trusteeship Services Ltd. 8.95% TAXU BOND SERIES-64 8.95% 30-Mar-20 492.00
82 PNB Investment Services Ltd 8.95% TAXU BOND SERIES-64 8.95% 30-Mar-25 492.00
83 PNB Investment Services Ltd 8.70% TAXU BONDS SERIES-65 8.70% 14-May-15 1337.50
84 PNB Investment Services Ltd 8.70% TAXU BONDS SERIES-65 8.70% 14-May-20 162.50
85 PNB Investment Services Ltd 8.70% TAXU BONDS SERIES-65 8.70% 14-May-20 1175.00
86 PNB Investment Services Ltd 8.70% TAXU BONDS SERIES-65 8.70% 14-May-25 1337.50
87 PNB Investment Services Ltd 8.65%TAXUBONDS SERIES-66-A 8.65% 15-Jun-20 500.00
88 PNB Investment Services Ltd 8.75% TAXU BONDS SERIES-66-B 8.75% 15-Jun-25 1532.00
89 PNB Investment Services Ltd 8.85% TAXU BONDS SERES-66-C 8.85% 15-Jun-30 633.00
90 PNB Investment Services Ltd 7.10% TAXU BONDS SERIES 67 7.10% 15-Jul-12 1100.00

137

Sl.
No:
Name of the Trustee Nature of Bonds Interest/C
oupon
Rate p.a.
Redempti
on
Amount
(in
`crores)
91 PNB Investment Services Ltd 8.25%TAXU BONDS SERIES 68-A 8.25% 15-Jul-15 147.00
92 PNB Investment Services Ltd 8.70% TAXU BONDS SERIES 68-B 8.70% 15-Jul-20 1424.00
93 PNB Investment Services Ltd 7.89% TAXABLE BONDS SERIES 69 7.89% 15-Sep-12 950.00
94 PNB Investment Services Ltd 8.78% TAXU BONDS SERIES 70 8.78% 15-Nov-20 1549.00
95 PNB Investment Services Ltd 9.05% TAXABLE BONDS-71 9.05% 15-Dec-20 192.70
96 PNB Investment Services Ltd 9.05% TAXABLE BONDS-71 9.05% 15-Dec-25 192.70
97 PNB Investment Services Ltd 9.05% TAXABLE BONDS-71 9.05% 15-Dec-30 192.70
98 PNB Investment Services Ltd 8.97% TAXU BOND SERIES 72-A 8.97% 15-Jan-18 144.00
99 PNB Investment Services Ltd 8.99% TAXU BOND SERIES 72-B 8.99% 15-Jan-21 1219.00
100 PNB Investment Services Ltd 9.18% TAXU BOND SERIES 73 9.18% 15-Apr-21 1000.00
101 PNB Investment Services Ltd 9.70% TAXU BOND SERIES 74 9.70% 09-Jun-21 1693.20
102 PNB Investment Services Ltd 9.64% TAX BOND SERIES 75-A 9.64% 29-Jun-14 555.00
103 PNB Investment Services Ltd 9.62% TAX BONDS SERIES 75-B 9.62% 29-Jun-16 360.00
104 PNB Investment Services Ltd 9.61% TAX BONDS SERIES 75-C 9.61% 29-Jun-21 2084.70
105 PNB Investment Services Ltd 9.36% TAXU BOND SERIES 76-A 9.36% 01-Aug-21 2589.40
106 PNB Investment Services Ltd 9.46% TAXU BOND SERIES 76-B 9.46% 01-Aug-26 1105.00
107 PNB Investment Services Ltd 9.41% TAXU BOND SERIES 77-A 9.41% 01-Sep-16 1083.60
108 PNB Investment Services Ltd 9.45% TAXU BOND SERIES 77-B 9.45% 01-Sep-26 2568.00
109 PNB Investment Services Ltd 9.43% TAXU BOND SERIES-78 A 9.43% 23-Sep-13 655.00
110 PNB Investment Services Ltd 9.44% TAXU BOND SERIES 78-B 9.44% 23-Sep-21 1180.00
Total 68330.2
0

Long Term Infrastructure Bonds (Secured):
Sl.
No:
Name of the Trustee Nature of Bonds Interest/Cou
pon Rate p.a.
Redemption Amount (in
`crores)
1 GDA Trustee &
Consultancy Pvt. Ltd
INFRA BONDS SERIES
1
8.30% 31-MAR-21 66.84
2 GDA Trustee &
Consultancy Pvt. Ltd
INFRA BONDS SERIES
2
8.30% 31-MAR-21 139.67
3 GDA Trustee &
Consultancy Pvt. Ltd
INFRA BONDS SERIES
3
8.30% 31-MAR-26 6.13

138

4 GDA Trustee &
Consultancy Pvt. Ltd
Infra Bonds Series- 4 8.30% 31-MAR-26 22.72
Total 235.36

C Foreign currency Loans/Bonds availed/Issued by our Company
Nature of Borrowings Amount (in `crores)
Foreign currency loan from ADB under CFS 37.38
Bilateral credit from Credit National France 98.57
Loan from World Bank 1.22
Loan from KFW 60.63
Loan from KFW portion II 13.72
Loan from ADB ( New loan) 104.89
6.61% Senior Notes ( USPP-1) 887.40
Syndicated Bank Loan- VII 1479.00
Syndicated Bank Loan- VIII 1316.94
Syndicated Bank Loan- IX 1381.54
Total 5381.29

D Rupee Term Loan availed by our Company
Term Loan (Unsecured)
Nature of Borrowings Amount (in `crores)
BANK OF INDIA-VIII 250.00
BANK OF INDIA-VIII 550.00
BANK OF INDIA-VIII 200.00
BANK OF MAHARAHTRA-V 300.00
UNITED BANK-II 250.00
PUNJAB & SIND BANK II 375.00
SYNDICATE BANK-V 150.00
HDFC BANK-IV 250.00
HDFC BANK-IV 250.00
CHINATRUST COMMERCIAL BANK 14.50
UNION BANK-VII 400.00
PUNJAB & SIND BANK-III 190.00
CANARA BANK-X 500.00
BANK OF BARODA-IV 1,000.00
UCO BANK-VI 500.00
UCO BANK-VII 400.00
STATE BANK OF TRAVANACORE-V 300.00
SYNDICATE BANK-VI 180.00
BANK OF MAHARASHTRA-VI 200.00
STATE BANK OF MYSORE-VII 200.00
BANK OF BARODA-V 500.00
IIFCL 630.00

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CANARA BANK-XI 500.00
INDIAN BANK-II 500.00
VIJAYA BANK-II 700.00
UNON BANK-VIII 500.00
UNON BANK-VIII 370.00
UNON BANK-VIII 175.00
UNON BANK-VIII 35.00
THE RATNAKAR BANK LTD. 40.00
CANARA BANK-XII 75.00
CANARA BANK-XII 425.00
PUNJAB AND SIND BANK-IV 335.00
BANK OF MAHARASHTRA-VII 200.00
UNITED BANK OF INDIA-III 250.00
VIJAYA BANK-III 250.00
UNION BANK OF INDIA-9 180.00
UNION BANK OF INDIA-9 230.00
UNION BANK OF INDIA-9 110.00
UNION BANK OF INDIA-9 320.00
UNION BANK OF INDIA-9 60.00
IIFCL-II 1,000.00
CANARA BANK - 13 500.00
BANK OF BARODA - VI 1,000.00
Total 15344.50



E. Foreign Currency Loans (FCNR(B) from banks)

Name of Lender(s) Amount (in `crores)
Union Bank of India ( Term loan of US$ 40 million though sanction letter dated June 2,
2010 and term loan agreement dated June7, 2010
197.20

Servicing behaviour on existing debt securities, payment of due interest on due dates on term loans and debt securities
As on the date of this Draft Shelf Prospectus, there have been no defaults in payment of principal or interest on any term loan
or debt securities issue by the company in the past.


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SECTION V LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS

Except as described below, there are no outstanding litigations, suits or criminal or civil prosecutions, proceedings or tax
liabilities against us, our Directors, our Subsidiaries, that would have a material adverse effect on our business and there are no
defaults, non-payment or overdue of statutory dues, institutional / bank dues and dues payable to holders of any debentures,
bonds and fixed deposits that would have a material adverse effect on our business other than unclaimed liabilities against us,
our Directors, our subsidiaries, as of the date of this Draft Shelf Prospectus.
A. PENDI NG LI TI GATI ON AGAI NST OUR COMPANY:
1. Criminal Cases
The Union of India filed a criminal miscellaneous writ petition (No. 28928 of 2009) before the Allahabad High Court
praying for issuance of directions to the Central Bureau of Investigation to expeditiously complete its investigation
pertaining to a fraudulent transfer of securities from a dematerialised account(Demat) as well as for further issuance of
directions to our Company and certain other respondents to disallow any further transfer of the securities and to freeze the
account where the sale proceeds of the aforesaid securities/ bonds are deposited during the pendency of the writ. Our
Company has been included as a proforma party as certain bonds issued by it were a part of the securities which were
allegedly fraudulently transferred from the Demat account.
2. Consumer Complaints
(i) We are involved in a consumer complaint filed by Mr. Bir Singh Kaushik in the District Consumer Disputes Redressal
Forum at Rohtak. The complainant has raised a consumer dispute alleging deficiency of services on the part of our
Company for lesser payment of ` 8,346 alongwith interest @ 18% p.a. from the date of its accrual till its realization and
question the ature of bonds i.e. cummalative/non-cummlative. The complainant has also praye2d for payment of
compensation of ` 50,000/- on account of harassment, mental tension, inconvenience and financial loss caused along with
litigation expenses amounting to ` 5,500/-. The next date of hearing in the matter is January 18, 2012 for filing evidence
by Complinant.

(ii) A Compliant has been filed by Mr. Ashok Kumar Goel at Muzaffarnagar alleging the deficiency on the part of our
Company (Opposite Party No. 1) and Karvy Computershare Private Limited (Opposite Party No. 2) for non-allotment of
shares. The Complainant had applied for allotment of 700 shares in the follow on public offer of our Company vide
application no. 36872669 and paid the required application money by a cheque of HDFC Bank dated May 12, 2011 for an
amount of ` 1,42,000. The issue price of shares was ` 203, the amount payable for 700 shares was ` 1,42,100, whereas the
amount amount paid was ` 1,42,000. Hence the application was rejected on technical ground being insufficient funds .
Refund amount of Rs. 1,42,000 was credited through NECS to the bank account of the Complainant on May 26, 2011.
The complainant has demanded ` 5,000 on account of financial loss caused to him and ` 25,000 as compensation for the
mental agony suffered by him. The next date fixed is December 12, 2011 for filing evidence on behalf of the Complianant.

3. Miscellaneous proceedings involving our Company
i) Tata Power Co. Ltd. vs. Union of I ndia & Others
The Tata Power Company Limited filed a special leave petition (No. 11586 of 2009) before the Supreme Court of India,
against the final judgment and order dated April 13, 2009 of the High Court of Delhi (No. 62 of 2009), dismissing the writ
petition filed by the Tata Power Company Limited challenging the award of the contract for the Sasan UMPP by GoI to
Reliance Power Limited. The Tata Power Company Limited alleged that the GoI had, subsequent to the award of the
contract, made changes in the terms/ basis on which tenders had been invited and made, which conferred enormous benefit
to Reliance Power Limited. Our Company, being the nodal agency for implementation of UMPPs, has been included as a
proforma party. The matter is likely to be listed for next hearing in the month of February 2012.
ii) M. Ravi vs. Union of I ndia & Others
M.Ravi, an employee of our Company who has joined the corporation on July 22, 1988, as Dy. Manager Finance, was
suspended for alleged involvement in irregular transfer of funds during the period July 1990 to May 1991. Because of this
he was rejected for the promotion for the post of Manager. He has filed a writ petition no. 8174 of 2010 before the Delhi
High Court, against the decision of the Respondents No. 1 (Union of India), for rejection of his promotion. In his petition
he has prayed that the Honble High Court to direct for quashing his suspension order and promoting him as General


141

Manager w.e.f. July 01, 2005 along with all consequential and financial benefits. Last date fixed for hearing in the matter
was May 20, 2011. Twelve weeks time has been given to our Company for filing reply. Our Company has filed its reply
and the court has ordered rule nisi. Next date of hearing is not yet fixed.
iii) Korea Electric Power Data Network Company Ltd. vs. The Government of Kerla and others
Korea Electric Power Data Network Company Limited, filed a writ petition (No. 311 of 2011) in the High Court of Kerala
challenging the order dated December 27, 2010 of the Government of Kerala wherein it cancelled the sanction accorded to
the Kerala State Electricity Board to entrust the implementation of the IT system for 43 towns in Kerala under Part A of
the R-APDRP scheme to the petitioner. The petitioner also prayed for grant of stay on the aforesaid order. The High Court
of Kerala has awarded a stay on the order dated December 27, 2010, by its order dated January 5, 2011. Our Company
being the designated nodal agency for implementing the R-APDRP scheme has prepared the guidelines for selection of an
ITIA under the guidance of the MoP, has been included as a proforma party to the writ petition. Final arguments have
taken place but the Court has reserved its judgment.

iv) Kuljit Singh and Another vs. Power Finance Corporation & Another
M/s Kuljit Singh and Another has filed writ petition no. 5146/2011 in the Delhi High Court, challenging the debarment of
our Company vide order dated July 19, 2011 and Show Cause Notice dated June 20, 2011 and letter dated July 14, 2011
issued by our Company in respect of debarment of E&Y for acts of omission and commission in the evaluation of Sasan
UMPP RFQ/RFP bids. The court after hearing parties directed that the counter affidavit be filed within 6 weeks and
rejoinder before the next date of hearing. The court has stayed the operation of the order dated July 19, 2011with the
clarification that such stay would however not entitle the petitioner to deal with the respondent no. 1 i.e. our Company.
The court also stated that if our Company intends to put up the order of black listing in its website, leave of court for the
same shall have to be obtained. E&Y has also filed two miscellaneous applications; (i) for stay of show cause notice
issued by respondent no. 2 i.e. Ministry of Power and (ii) for amendmend in the orginal writ petition filed by them. The
Court was pleased to adjourn the matter to November 04, 2011 to hear the matter on all petition/application. Our company
has filed its reply to the miscellaneous applications.
B. LI TI GATI ON PREFERRED BY OUR COMPANY
i) Our company had filed a money recovery suit (No. 734/04) in the court of Addl. District Judge, Tis Hazari, Delhi for
recovery of ` 9,07,440 against Mr. Mukesh Kumar Gupta, on account of his failing to clear dues outstanding against him.
The said suit was decreed ex-parte in favour of our Company by the order of the Addl. District Judge dated December 3,
2005, for an amount of ` 907,440 with interest @ 4.5% from the date of suit till the date of decree and future interest @
4.5% from the date of decree till the date of realization along with the cost of suit. We had filed an execution petition (No.
35/2006) before the Court of Civil Judge, Ghaziabad on July 27, 2007. The last date of hearing was fixed on September
30, 2011 and the advocate was directed to appraise the developments.

ii) Our company has filed an Original Application (OA No. 153/2011) u/s 19 of The Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 against Om Shakti Renergies Limited and Others (Defendants) before the Debt
Recovery Tribunal II, New Delhi on June 22, 2011 for recovery of a sum of ` 13.94 crores. The defendants has availed
the financial assistance for the project envisaging setting up of 6 MW biomass based generation of electricity project in
Pannur Village, Chitoor District, Andhra Pradesh from our Company, which they failed and neglected to repay. Our
Company has prayed for payment of outstanding loan of ` 13.94 crores. DRT has issued notice on the basis of Original
Application upon the defendants. In the last hearing, the matter had to come up for the Service Report (filing an Affidavit
about due service of issued notices upon the given addresses of Defendants) before the Learned Registrar, which was duly
filed. The next date of hearing in the matter is November 18, 2011 for filing the Second Service Report by our Company.


C. INCOME TAX APPEALS PREFERRED BY THE COMPANY & APPEALS MADE BY TAX AUTHORITIES

1. Assessment Year 2001-2002
The Additional Commissioner of Income Tax, Range 14, New Delhi raised a demand via order dated November 28, 2003
as rectified by order dated March 29, 2004 and August 27, 2004 on the grounds of disallowance of deduction u/s
36(1)(viia)( c) for provision for bad and doubtful debts and partial disallowance of deduction u/s 36(1)(viii) for special
reserve and exempted income u/s 10(23G). On an appeal to the CIT (Appeals) our claim was partly allowed vide order
dated October 1, 2004. We have filed an appeal (Appeal No: 5347/DEL/04) before the ITAT, New Delhi on December 8,
2004. The ITAT, New Delhi gave us partial relief vide its order dated 25 June 2009. Being aggrieved, we have preferred
an appeal before Honble High Court, New Delhi on 17 November 2009, which was dismissed with a right of revival on

142

receipt of COD approval. The same was granted only in respect of special reserve on upfront fees. Now in view of
Supreme Court judgement, COD approval is not required. Therefore the application for revival of appeal on all issues has
been filed. The appeal is yet to be admitted. The amount in dispute is `5.13 crores which was deposited by us.

2. Assessment Year 2003-2004
i) In its order dated 31 August 2009, the ITAT did not deal with the issue of allocation of expenses to certain ineligible
incomes for the purpose of computing special reserve u/s 36(1)(viii). We preferred a miscellaneous application (MA
No. 22/Del/2010) u/s 254(2) of the Act for rectification before the ITAT, Delhi. The ITAT, Delhi allowed the
miscellaneous application but decided the same against us on the ground that the issue was not raised before the
CIT(A) and there was no request for admission of the same as an additional ground. Aggrieved by the aforesaid order
we have filed an appeal before the Honble High Court on November 01, 2010, which is pending.. The amount in
dispute is `0.08 crores which was deposited by us.

3. Assessment Year 2004-2005
i) The Additional Commissioner of Income Tax, Range 14, New Delhi raised a demand against us via order dated
January 31, 2005 as rectified by order dated February 15, 2005 while disallowing deduction on provision for bad and
doubtful debts u/s 36(1)(viia)(c), partly disallowed deduction in relation to the special reserve u/s 36(1)(viii) and
exempted income u/s 10(23G) and making addition of income not recognised in the books of accounts. We have filed
an appeal on March 01, 2005 before the CIT (Appeals), New Delhi. The CIT (Appeals) X, New Delhi vide order
dated March 25, 2010 gave us partial relief. Afterthat, we have preferred an appeal before Income Tax Appellate
Tribunal (ITAT) (Appeal No. 2446/Del-2010) on May 21, 2010, against the order of CIT (Appeal) which was
dismissed with a right of revival on receipt of COD approval. Now in view of Supreme Court judgement, COD
approval is not required. Therefore the application for revival of appeal on all issues has been filed before ITAT,
which has been allowed and the appeal is pending. The amount in dispute is `7.37 crores which was deposited by us.

ii) The Additional Commissioner of Income Tax, LTU, New Delhi also filed an appeal (Appeal No. 2877/Del-2010)
before Income Tax Appellate Tribunal (ITAT) on June 09, 2010 against the order of CIT (Appeals) X, New Delhi
granting us relief of ` 22.22 crore by allowing allocation of expenses to ineligible incomes for the purpose of
computing special reserve. The same was dismissed with a right of revival on receipt of COD approval. Now in view
of Supreme Court judgement, COD approval is not required. Therefore the application for revival of appeal has been
filed before ITAT, which has been allowed and the appeal is pending and the matter is pending.

4. Assessment Year 2005-2006
i) The Additional Commissioner of Income Tax, Range-14, New Delhi raised a demand against us vide order dated July
27, 2006 while partly disallowing deductions for provision for bad and doubtful debts u/s 36(1)(viia)( c), special
reserve u/s 36(1)(viii) and exempted income u/s 10(23G). We have filed an appeal on August 25, 2006 before the CIT
(Appeals) XVII, New Delhi. The CIT (Appeals) XVII, New Delhi vide order dtd June 21, 2010 gave us partial
relief. After that, we have preferred an appeal before Income Tax Appellate Tribunal (ITAT) on September 01, 2010,
against the order of CIT (Appeal) which is pending. The amount in dispute is `8.30 crores which was deposited by us.

ii) The Assistant Commissioner of Income Tax, LTU, New Delhi filed an appeal (Appeal No. 4231/Del-2010) before the
Income Tax Appellate Tribunal (ITAT) on September 10, 2010 against the order of CIT (Appeals) XVII, New Delhi
granting us relief of `21.13 crores by allowing of allocation of expenses to ineligible incomes for the purpose of
computing special reserve. The appeal is pending.

iii) The Assistant Commissioner of Income Tax, LTU, New Delhi raised a demand against us vide order dated December
27, 2010 on the ground of addition of translation gain and disallowing prior period expenses. Being aggrieved, we
have filed an appeal on 27 January 2011 before the Commissioner of Income Tax (Appeals), LTU which is pending.
The amount in dispute is `9.24 crores which was deposited by us.

5. Assessment Year 2006-2007
i) The Additional Commissioner of Income Tax, Range-14, New Delhi raised a demand against us vide order dated
December 31, 2007 while partly disallowing deductions for provision for bad and doubtful debts u/s 36(1)(viia)(c ),
special reserve u/s 36(1)(viii) and exempt income u/s 10 (23G. We have filed an appeal on February 13, 2008 before
the CIT (Appeals) XVII, New Delhi. The CIT (Appeals) XVII, New Delhi vide order dtd June 21, 2010 gave us
partial relief. Being aggrieved, we have preferred an appeal on September 01, 2010 before Income Tax Appellate
Tribunal, Delhi Benches at New Delhi, which is pending. The amount in dispute is `5.56 crores which was deposited

143

by us.

ii) The Assistant Commissioner of Income Tax, LTU, New Delhi filed an appeal (Appeal No. 4232/Del-2010) before the
Income Tax Appellate Tribunal on September 10, 2010 against the order of CIT (Appeals) XVII, New Delhi
granting us relief of `21.68 crores by allowing of allocation of expenses to ineligible incomes for the purpose of
computing special reserve. The appeal is pending.

6. Assessment Year 2007-2008
The Deputy Commissioner of Income Tax, LTU, New Delhi raised a demand of ` 1.38 crores against us vide order dated
December 29, 2009 partly disallowing deduction in relation to the provision for special reserve and also disallowing the
expenses incurred under section 14A read with Rule 8D in respect to dividend income earned by us. We have filed an
appeal on January 21, 2010 before the CIT (Appeals) LTU , New Delhi, which is pending. The demand was deposited
by us.
7. Assessment Year 2008-2009
The Additional Commissioner of Income Tax, LTU, New Delhi raised a demand of ` 6.51 crore against us vide order
dated December 23, 2010 while partly disallowing deduction in relation to the provision for special reserve We have filed
an appeal on January 27, 2010 before the CIT (Appeals) LTU, New Delhi which is pending. The demand was deposited
by us.
Material Developments:
There have not arisen, since the date of the last financial statements dated September 30, 2011 disclosed in this Draft Shelf
Prospectus, any other circumstances which materially and adversely affect or are likely to affect our performance, profitability
or prospects, within the next 12 months.





























144

OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue
The Board of Directors, at their meeting held on September 28, 2011 have approved the Issue of tax free bonds in one or
more tranche(s), of secured, redeemable, non-convertible, cumulative/ non-cumulative debentures of face value of ` 1,000
each, having benefits under Section 10(15)(iv)(h) of the Income Tax Act, for an amount up ` 5000 crores, subject to the
provisions of the Notification.
In accordance with the terms of the Notification, the aggregate volume of the issue of Bonds (having benefits under Section
10(15)(iv)(h) of the Income Tax Act) by the Company during the Fiscal 2012 shall not exceed ` 5,000 crore including
oversubscription, if any, out of which, the Company has already raised through private placement route vide private
placements dated September 28, 2011 and November 1, 2011, an amount aggregating to ` 966.87 crores. Thus, the Company
shall issue Tax Free Bonds in one or more tranche(s), on or prior to March 31, 2012, for the balance amount of ` 4033.13
crores as approved by the Board.
Eligibility to make the Issue
The Company, the persons in control of the Company or its promoter have not been restrained, prohibited or debarred by SEBI
from accessing the securities market or dealing in securities and no such order or direction is in force.
Consents
Consents in writing of the Directors, the Compliance Officer, the Statutory Auditors, Bankers to the Company, Bankers to the
Issue, Lead Managers, Registrar to the Issue, Legal Advisors to the Issue, Credit Rating Agencies and the Debenture Trustee
for the Bondholders, to act in their respective capacities, have been obtained and shall be filed along with a copy of each
tranche prospectus with the RoC.
The Company has appointed GDA Trustee & Consultancy Limited as Debenture Trustee under regulation 4(4) of the SEBI
Debt Regulations. The Debenture Trustee has given its consent to the Company for its appointment under regulation 4(4) and
also in all the subsequent periodical communications sent to the holders of debt securities.

Expert Opinion
Except the letters dated October 13, 2011 and October 21, 2011 issued by CRISIL and ICRA, respectively, in respect of the
credit rating for the Bonds, and the report dated November 29, 2011 respectively on our audited standalone and consolidated
financial statements for the financial year March 31, 2007, 2008, 2009, 2010, 2011, the report dated November 9, 2011 on
Audited standalone and consolidated financial statements of the Company for the half year ended September 30, 2011 and
statement of tax benefits dated November 29, 2011 issued by Raj Har Gopal & Co. and N.K. Bhargava & Co., Statutory
Auditors of the Company, the Company has not obtained any expert opinion.

Common Form of Transfer
There shall be a common form of transfer for the Bonds held in physical form and relevant provisions of the Companies Act
and all other applicable laws shall be duly complied with in respect of all transfer of the Bonds and registration thereof.
Minimum Subscription
Under the SEBI Debt Regulations, the Company is required to stipulate a minimum subscription amount which it seeks to
raise. The consequence of minimum subscription amount not being raised is that the Issue shall not proceed and the application
moneys received are refunded to the Applicants.
The company has decided to set no minimum subscription for the issue.
No Reservation or Discount
There is no reservation in this Issue nor will any discount be offered in this Issue, to any category of investors.


145

Previous Public or Rights Issues by the Company during last five years
In February 2007, the company came out with a public issue of 117,316,700 equity shares of ` 10/- each at a premium of ` 75/-
each. The issue opened on January 31, 2007 and closed on February 06, 2007. The date of allotment and the date of refund
was February 19, 2007. The Equity shares offered pursuant to such issue were listed on February 23, 2007 on the stock
exchange.
In February 2011, the Company had also undertaken a public issue of long term infrastructure bonds' of face value of ` 5000
each at par, in the nature of secured, redeemable, non-convertible debentures for an amount upto ` 5300 Crores. These long
term infrastructure bonds are outstanding as on the date of this Draft Shelf Prospectus. The issue opened on February 24, 2011
and closed on March 22, 2011. The date of allotment and the date of refund was March 31, 2011. The long term infrastructure
bonds offered pursuant to such issue were listed on April 13, 2011 on the stock exchange.
In May 2011, the company came out with a Further Public Offer of 229,553,340 equity shares of ` 10/- each at a premium of `
193 each, comprising of Fresh Issue of 172,165,005 Equity Shares and an Offer for Sale of 57,388,335 Equity Shares
alongwith an Employee Reservation Portion of 275,464 Equity Shares. Discount of 5% to the Issue Price being ` 10.15 per
Equity Share determined pursuant to completion of the Book Building Process was offered to Eligible Employees and to
Retail Bidders. The issue opened on May 10, 2011 and closed on May 12, 2011 for QIB bidders and May 13, 2011 for all other
bidders. The date of allotment was May 24, 2011 and the date of refund was May 24, 2011. The Equity shares offered
pursuant to such issue were listed on May 27, 2011 on the stock exchange.
In September 2011, the Company had again undertaken a public issue of long term infrastructure bonds' of face value of `
5000 each at par, in the nature of secured, redeemable, non-convertible debentures for an amount aggregating ` 200 crores
with an option to retain an oversubscription upto the shelf limit (i.e. ` 6,900 crores). These long term infrastructure bonds are
outstanding as on the date of this Draft Shelf Prospectus. The issue opened on September 29, 2011 and closed on November
04, 2011. The date of allotment was November 21, 2011 and the date of refund was November 23, 2011.
There has been no further public or right issue after that.
Commission or Brokerage on Previous Public Issues
Our Company has incurred an aggregate amount of ` 2.87 crores plus service tax on account of fees for underwriting and
selling commission in relation to its issue of long term infrastructure bonds undertaken in fiscal 2011.
Change in auditors of Our Company during the last three years
For Fiscal 2008 and 2009, Bansal Sinha & Co., Chartered Accountants were the statutory auditors of our Company. In Fiscal
2009 and 2010, our Board appointed, as approved by the Office of Comptroller and Auditor General of India, K.K. Soni &
Co., Chartered Accountants as our statutory Auditors. In Fiscal 2010, our Board appointed, as approved by the Office of
Comptroller and Auditor General of India, Raj Har Gopal & Co., Chartered Accountants as our Statutory Auditors, jointly with
K.K. Soni & Co. In Fiscal 2011, our Board appointed, Mehra Goel & Co., Chartered Accountants, as approved by the Office of
Comptroller and Auditor General of India, in place of K.K. Soni & Co. Our financial statements for the Fiscal March 31, 2011,
were audited jointly by Raj Har Gopal & Co., Chartered Accountants and Mehra Goel & Co., Chartered Accountants. In Fiscal
2012, our Board appointed, as approved by the Office of Comptroller and Auditor General of India, N.K. Bhargava & Co.,
Chartered Accountants as our statutory auditor in place of Mehra Goel & Co.
Revaluation of assets
Our Company has not revalued its assets in the last five years.
Utilisation of Proceeds
The proceeds of the Issue shall be utilised towards lending purposes, debt servicing and working capital requirements.. We
shall utilize the Issue proceeds only upon creation of security as stated in this Draft Shelf Prospectus in the section titled
Terms of the Issue Security and after permission or consent for creation of security pursuant to the terms of the
Debenture Trust Deed sought to be provided as Security. The Issue proceeds shall not be utilized for providing loan to or
acquisition of shares of any person who is part of the same group or who is under the same management. Further, the end-use
of the proceeds of the Issue, duly certified by the statutory auditors of the Company, shall be reported in the annual reports of
our Company and other reports issued by our Company to relevant regulatory authorities, as applicable.


146

Statement by the Board of Directors:
(i) All monies received out of the each Tranche Issue of the Bonds to the public shall be transferred to a separate bank
account other than the bank account referred to in sub-section (3) of section 73 of the Companies Act;
(ii) Details of all monies utilised out of the each Tranche Issue referred to in sub-item (i) shall be disclosed under an
appropriate separate head in our Balance Sheet indicating the purpose for which such monies were utilised; and
(iii) Details of all unutilised monies out of the each Tranche Issue referred to in sub-item (i), if any, shall be disclosed
under an appropriate separate head in our Balance Sheet indicating the form in which such unutilised monies have
been invested.

The funds raised by us from previous bonds issues have been utilised for our business as stated in the respective offer
documents.
Disclaimer clause of BSE
The disclaimer clause as intimated by BSE shall be included here.
Disclaimer clause of RBI
RBI does not accept any responsibility or guarantee about the present position as to financial soundness of the Company or
correctness of any of the statements or representations made or opinions expressed by the Company and for repayment of
deposits or discharge of liabilities by the Company.
Listing
The Bonds will be listed on BSE. We have applied to BSE for obtaining its in-principle approval for listing simultaneously
with the filing of the Draft Shelf Prospectus. If permission to deal in and for an official quotation of the Bonds is not granted
by BSE, the Company will forthwith repay all moneys received from the Applicants in terms of the relevant tranche
prospectus. If such money is not repaid within eight days after the Company becomes liable to repay it (i.e. from the date of
refusal or within seven days from the Tranche Issue Closing Date, whichever is earlier), then the Company and every Director
of the Company who is an officer in default shall, on and from such expiry of eight days, be liable to repay the money, with
interest at the rate of 15% p.a. on application money, as prescribed under Section 73 of the Companies Act.
The Company shall use best efforts to ensure that all steps for the completion of the necessary formalities for listing at BSE
will be taken within fifteen Working Days from the date of Allotment.
Dividend
The company has consistently paid dividend of 22.63%, 35%, 40%, & 45% for the financial years ended March 2007, March
2008, March 2009 & March, 2010 respectively. Total dividend for the financial year 2010-11 is ` 50% (interim dividend of
35% and final dividend of 15%) per equity share of ` 10 each on the pre issue share capital of ` 1147.77 crore and 15% (final
dividend) on the additional share capital of ` 172.16 crore issued in May 2011.

Mechanism for redressal of investor grievances
Karvy Computershare Private Limited has been appointed as the Registrar to the Issue to ensure that investor grievances are
handled expeditiously and satisfactorily and to effectively deal with investor complaints. All grievances relating to the Issue
should be addressed to the Registrar to the Issue and the Compliance Officer giving full details of the Applicant, number of
Bonds applied for, amount paid on application and Bankers to the Issue / Designated Collection Centre / Agent to which the
application was submitted.



147

SECTION VI ISSUE RELATED INFORMATION
ISSUE STRUCTURE

The GoI, by virtue of power conferred upon it under Section 10(15)(iv)(h) of the Income Tax Act, 1961, has issued
Notification No. 52/2011.F.No.178/56/2011-(ITA.1) dated September 23, 2011 authorising PFC to issue the said Bonds upto
an aggregate amount of ` 5,000 crores during the financial year 2011-12.

The Company has already raised Tax Free Bonds through private placement for a sum of ` 966.87 crores till date, hence the
public issue for balance amount of ` 4033.13 crores. PFC shall issue the Bonds upto an aggregate amount of ` 4033.13 crore
through this issue during the financial year 2011-12 out of the amount of ` 5,000 crores, as approved by its Board vide its
resolution dated September 28, 2011.

The following are the key terms of the Bonds. This section should be read in conjunction with, and is qualified in its
entirety by, more detailed information in Terms of the I ssue on page 151 of this Draft Shelf Prospectus.

The key common terms and conditions of the Bonds are as follows:
Particulars Terms and Conditions
Minimum Application Size The minimum number of Bonds per application form will be calculated on
the basis of the total number of Bonds applied for under each such
Application Form and not on the basis of any specific option
Mode of allotment Both in dematerialised form as well as in physical form
Terms of Payment Full amount on application
Trading Lot 1 (one) Bond
Who can Apply Category 1:
Public Financial Institutions, Statutory Corporations, Commercial Banks,
Co-operative Banks and Regional Rural Banks, which are authorised to
invest in the Bonds;
Provident Funds, Pension Funds, Superannuation Funds and Gratuity Fund,
which are authorised to invest in the Bonds;
Insurance companies registered with the IRDA;
National Investment Fund;
Mutual Funds;
Foreign Institutional Investors (including sub-accounts)
Companies; bodies corporate and societies registered under the applicable
laws in India and authorised to invest in the Bonds;
Public/private charitable/religious trusts which are authorised to invest in
the Bonds;
Scientific and/or industrial research organisations, which are authorised to
invest in the Bonds;
Partnership firms in the name of the partners;
Limited liability partnerships formed and registered under the provisions of
the Limited Liability Partnership Act, 2008 (No. 6 of 2009)
Category II:
The following investors applying for an amount aggregating to above ` 5 lakhs
across all Series in each tranche
Resident Indian individuals;
Hindu Undivided Families through the Karta and
Non Resident Indians on repatriation as well as non-repatriation basis.

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Category III:
The following investors applying for an amount aggregating to upto and
including ` 5 lakhs across all Series in each tranche
Resident Indian individuals;
Hindu Undivided Families through the Karta and
Non Resident Indians on repatriation as well as non-repatriation basis.

Participation by any of the above-mentioned investor classes in this Issue will be subject to applicable statutory and/or
regulatory requirements. Applicants are advised to ensure that applications made by them do not exceed the investment
limits or maximum number of Bonds that can be held by them under applicable statutory and/or regulatory provisions.
In case of Application Form being submitted in joint names, the applicants should ensure that the de-mat account is also held in the
same joint names, and the names are in the same sequence in which they appear in the Application Form.
Applicants are advised to ensure that they have obtained the necessary statutory and/or regulatory
permissions/consents/approvals in connection with applying for, subscribing to, or seeking allotment of Bonds pursuant to
the Issue.
For further details, please see I ssue Procedure on page 162 of this Draft Shelf Prospectus.

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TERMS AND CONDITIONS IN CONNECTION WITH THE BONDS
Nature of the Bonds
The Bonds being issued are in form of Tax Free Secured Redeemable Non Convertible Bonds in the nature of Debentures of face
value of ` 1000 each having tax benefits under Section 10(15)(iv)(h) of the Income Tax Act, 1961, to be issued by Company in
terms of this Draft Shelf Prospectus and the respective Tranche Prospectus(es). The Bonds shall bear a fixed rate of interest
payable on an [] basis, as set out in the respective Tranche Prospectus(es).


The terms of each Series of Bonds** are set out below:
Options
Series of Bonds*
Tranche [] Series [] Tranche [] Series []
**Tenor
10 Years 15 Years
Redemption Date
10 Years from the Deemed Date of Allotment 15 Years from the Deemed Date of
Allotment
Redemption Amount
(`/Bond)
Repayment of the Face Value plus any interest
that may have accrued at the Redemption Date
Repayment of the Face Value plus any
interest that may have accrued at the
Redemption Date
Frequency of Interest
Payment
As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
Minimum
Application Size
As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
In Multiples of As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
Face Value (`/Bond) ` 1,000.00 ` 1,000.00
Issue Price (`/Bond) ` 1,000.00 ` 1,000.00
Mode of Interest
Payment
Through various modes available* Through various modes available*
Coupon Rate (%) p.a. As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
Annualized Yield As specified in the Tranche Prospectus for a
particular Series of Bonds
As specified in the Tranche Prospectus for a
particular Series of Bonds
Nature of
Indebtedness and
Ranking
The claims of the Bondholders shall rank pari
passu with other secured creditors having a
charge over the on the book debts of the
company and/or identified immovable
property as may be agreed between the
Company and the Debenture Trustee,
pursuant to the terms of the Debenture Trust
Deed and such claims shall be superior to the
claims of any unsecured creditors
The claims of the Bondholders shall rank
pari passu with other secured creditors
having a charge over the on the book debts of
the company and/or identified immovable
property as may be agreed between the
Company and the Debenture Trustee,
pursuant to the terms of the Debenture Trust
Deed and such claims shall be superior to the
claims of any unsecured creditors
CBDT vide its
Notification No.
52/2011 [F.No.
178/56/2011-(ITA 1)]
dated September 23,
2011 authorised the
Company to raise Tax
Free Bonds
aggregating to ` 5,000
CRISIL Limited (CRISIL) has assigned a
rating of CRISIL AAA/Stable (pronounced
CRISIL Triple A rating with stable outlook)
to the long term borrowing programme of `
38,500 Crores and CRISIL A1+ (pronounced
as CRISIL A One Plus) to the short term
borrowing programme of ` 5000 Crores and
ICRA Limited has assigned a rating of ICRA
CRISIL Limited (CRISIL) has assigned a
rating of CRISIL AAA/Stable (pronounced
CRISIL Triple A rating with stable
outlook) to the long term borrowing
programme of ` 38,500 Crores and CRISIL
A1+ (pronounced as CRISIL A One Plus) to
the short term borrowing programme of `
5000 Crores and ICRA Limited has assigned

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Options
Series of Bonds*
Tranche [] Series [] Tranche [] Series []
crores out of which,
the Company has
already raised funds
through two private
placements vide
documents dated
September 28, 2011
and November 1,
2011, respectively,
aggregating to an
amount of ` 966.87
crores. Thus, the
Company proposes to
raise the balance
amount of ` 4033.13
crores through public
issue of Tax Free
Bonds in one or more
tranche(s), prior to
March 31, 2012.
Credit Rating
AAA (pronounced ICRA triple A) to the long
term borrowing programme of ` 43,500
crores, during the financial year 2011-12
a rating of ICRA AAA (pronounced ICRA
triple A) to the long term borrowing
programme of ` 43,500 crores, during the
financial year 2011-12
*Number of Series of Bonds will be decided at the Tranche Prospectus(es) stage
** Our Company shall allocate and allot Bond Series bearing longest maturity to all valid applications, wherein the applicants
have not indicated their choice of the relevant Bond Series.

Terms of Payment
The entire Face Value per Bond is payable on Application. In the event of Allotment of a lesser number of Bonds than applied
for, the Company shall refund the amount paid on application to the Applicant, in accordance with the terms of the respective
tranche prospectus.


151

TERMS OF THE ISSUE

The Bonds being offered as part of the Issue are subject to the provisions of the SEBI Debt Regulations, the Companies Act,
CBDT Notification No. 52/2011.F.No.178/56/2011-(ITA.1) dated September 23, 2011, the terms of this Draft Shelf
Prospectus, the Shelf Prospectus, the Tranche Prospectus(es), the Application Form, the terms and conditions of the Trustee
Agreement and the Debenture Trust Deed, other applicable statutory and/or regulatory requirements including those issued
from time to time by SEBI/the GoI /BSERBI, and/or other statutory/regulatory authorities relating to the offer, issue and listing
of securities and any other documents that may be executed in connection with the Bonds.

1) Authority for the Issue

The GoI, by virtue of power conferred upon it under Section 10(15)(iv)(h) of the Income Tax Act, 1961, has issued
Notification No. 52/2011.F.No.178/56/2011-(ITA.1) dated September 23, 2011 authorising PFC to issue the said
Bonds upto an aggregate amount of ` 5,000 crores during the financial year 2011-12.

PFC shall issue the Bonds upto an aggregate amount of ` 4033.13 crore through this issue during the financial year
2011-12 out of the amount of ` 5,000 crores, as approved by its Board vide its resolution dated September 28, 2011.
The Company has already raised Tax Free Bonds through private placement for a sum of ` 966.87 crores till date,
hence the public issue for balance amount of ` 4033.13 crores.

2) Issue and Status of Bonds

2.1. Public Issue of Tax free, Secured Redeemable Non Convertible Bonds in the nature of Debentures having tax
benefits under Section 10(15) (iv) (h) of the Income Tax Act, 1961 not exceeding ` 4033.13 crores at par in
one or more tranches in the financial year 2011-12.

2.2. The Bonds shall be secured pursuant to a Debenture Trust Deed and underlying security documents. The
Bondholders are entitled to the benefit of the Debenture Trust Deed and are bound by and are deemed to have
notice of all the provisions of the Debenture Trust Deed. PFC is issuing the Bonds in accordance with the
Notification No. 52/2011.F.No.178/56/2011-(ITA.1) dated September 23, 2011 issued by CBDT.

The Bonds are issued in the form of tax-free, secured, redeemable, non-convertible bonds in the nature of debenture
and shall rank pari passu inter se, and subject to any obligations under applicable statutory and/or regulatory
requirements, shall also, with regard to the amount invested, be secured by creating a charge on the book debts
of the company and/or identified immovable property by a first /pari passu charge, as may be agreed between the
Company and the Debenture Trustee, pursuant to the terms of the Debenture Trust Deed.

2.3. The claims of the Bond holders shall be superior to the claims of any unsecured creditors, subject to
applicable statutory and/or regulatory requirements and shall rank pari passu to the claims of the secured
creditors of PFC secured against the aforesaid assets/properties. (to be confirmed)

3. Form, Face Value, Title and Listing etc

3.1.1. Form of Allotment

The Allotment of the Bonds shall be in a dematerialized form as well as physical form. PFC has made
depository arrangements with CDSL and NSDL for the issuance of the Bonds in dematerialized form,
pursuant to the tripartite agreement dated April 26, 2006 among PFC, CDSL and the Registrar to the Issue
and the tripartite agreement dated May 16, 2006 among PFC, NSDL and the Registrar to the Issue
(collectively, Tripartite Agreements).

PFC shall take necessary steps to credit the Depository Participant account of the Applicants with the number
of Bonds allotted in dematerialized form. The Bondholders holding the Bonds in dematerialised form shall
deal with the Bonds in accordance with the provisions of the Depositories Act, 1996 (Depositories
Act) and/or rules as notified by the Depositories from time to time.

3.1.2. The Bondholders may rematerialize the Bonds issued in dematerialized form, at any time after Allotment, in

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accordance with the provisions of the Depositories Act and/or rules as notified by the Depositories from
time to time.

3.1.3. In case of Bonds issued in physical form, whether on Allotment or on rematerialization of Bonds Allotted in
dematerialized form, PFC will issue one certificate for each Series of the Bonds to the Bondholder for the
aggregate amount of the Bonds that are held by such Bondholder (each such certificate, a Consolidated
Bond Certificate). In respect of the Consolidated Bond Certificate(s), PFC will, on receipt of a request from
the Bondholder within 30 days of such request, split such Consolidated Bond Certificate(s) into smaller
denominations in accordance with the applicable regulations/rules/act, subject to a minimum denomination
of one Bond. No fees will be charged for splitting any Consolidated Bond Certificate(s) and any stamp duty,
if payable, will be paid by the Bondholder. The request to split a Consolidated Bond Certificate shall
be accompanied by the original Consolidated Bond Certificate(s) which will, on issuance of the split
Consolidated Bond Certificate(s), be cancelled by PFC.

3.2. Face Value

The face value of each Bond is ` 1,000.

3.3. Title

3.3.1 In case of:

i) Bonds held in the dematerialized form, the person for the time being appearing in the register
of beneficial owners maintained by the Depositories; and

ii) the Bond held in physical form, the person for the time being appearing in the Register
of Bondholders (as defined below) as Bondholder,

shall be treated for all purposes by PFC, the Debenture Trustee, the Depositories and all other persons
dealing with such person as the holder thereof and its absolute owner for all purposes whether or not it is
overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, theft or loss
of the Consolidated Bond Certificate issued in respect of the Bonds and no person will be liable for so
treating the Bondholder.

1.3.2. No transfer of title of a Bond will be valid unless and until entered on the Register of Bondholders or the
register of beneficial owners, maintained by the Depositories and/or PFC or the Registrar to the Issue prior
to the Record Date. In the absence of transfer being registered, interest and/or Maturity Amount, as the case
may be, will be paid to the person, whose name appears first in the Register of Bondholders maintained by
the Depositories and/or PFC and/or the Registrar to the Issue, as the case may be. In such cases, claims, if
any, by the purchasers of the Bonds will need to be settled with the seller of the Bonds and not with PFC or
the Registrar to the Issue.

3.4. Listing

The Bonds will be listed on BSE. BSE has given their in-principle listing approval by its letters dated [] and []
respectively. The Designated Stock Exchange for the Issue is BSE.

3.5. Market Lot

3.5.1. The Bonds shall be allotted in physical as well as dematerialized form. As per the SEBI Debt Regulations,
the trading of the Bonds shall be in dematerialised form only. Since, the trading of Bonds is in dematerialize
form, tradable lot is one Bond (Market Lot).

3.5.2. For details of Allotment, please refer I ssue Related I nformation I ssue Structure beginning on page 147
of this Draft Shelf Prospectus.



153

3.6. Procedure for Rematerialisation of Bonds

Bondholders who wish to hold the Bonds in physical form, after having opted for allotment in dematerialised
form may do so by submitting a request to their Depository Participant, in accordance with the applicable
procedure stipulated by the Depository Participant.

4. Transfer of the Bonds, Issue of Consolidated Bond Certificates, etc.

4.1. Register of Bondholders

PFC shall maintain at its registered office or such other place as permitted by section 152A of the Companies
Act a Register of Bondholders containing such particulars of the legal owners of the Bonds. Further, the
register of beneficial owners maintained by Depositories for any Bond in dematerialized form under Section
11 of the Depositories Act shall also be deemed to be a Register of Bondholders for this purpose.

4.2. Transfers

4.2.1 Transfer of Bonds held in dematerialized form:

In respect of Bonds held in the dematerialized form, transfers of the Bonds may be effected, only
through the Depositories where such Bonds are held, in accordance with the provisions of the
Depositories Act and/or rules as notified by the Depositories from time to time. The Bondholder
shall give delivery instructions containing details of the prospective purchasers Depository
Participants account to his Depository Participant. If a prospective purchaser does not have a
Depository Participant account, the Bondholder may rematerialize his or her Bonds and transfer
them in a manner as specified in 4.2.2 below.

4.2.2 Transfer of Bonds in physical form:

The Bonds may be transferred by way of a duly executed transfer deed or other suitable
instrument of transfer as may be prescribed by PFC for the registration of transfer of Bonds.
Purchasers of Bonds are advised to send the Consolidated Bond Certificate to PFC or to such
persons as may be notified by PFC from time to time. If a purchaser of the Bonds in physical form
intends to hold the Bonds in dematerialized form, the Bonds may be dematerialized by the
purchaser through his or her Depository Participant in accordance with the provisions of the
Depositories Act and/or rules as notified by the Depositories from time to time.

4.3. Formalities Free of Charge

Registration of a transfer of Bonds and issuance of new Consolidated Bond Certificates will be
effected without charge by or on behalf of PFC, but on payment (or the giving of such indemnity as PFC
may require) in respect of any tax or other governmental charges which may be imposed in relation to such
transfer, and PFC being satisfied that the requirements concerning transfers of Bonds, have been
complied with.


4.4 Debenture Redemption Reserve (DRR)

Pursuant to Regulation 16 of the SEBI Debt Regulations and Section 117C of the Companies Act, any company that
intends to issue debentures to create a DRR to which adequate amounts shall be credited out of the profits of the
company until the redemption of the debentures. Further, the Ministry of Company Affairs (MCA) has, through its
circular dated April 18, 2002, specified that public financial institutions shall create a DRR to the extent of 50% of the
value of the debentures issued through public issue. Accordingly, the Company shall create DRR of 50% of the value
of Bonds issued and allotted in terms of the Tranche Prospectus(es), for the redemption of the Bonds. The Company

154

shall credit adequate amounts to the DRR from its profits every year until the Bonds are redeemed. The amounts
credited to the DRR shall not be utilized by the Company for any purpose other than for the redemption of the Bonds.
5. Application Amount

The Bonds are being issued at par and full amount of face value per Bond is payable on application. Eligible
Applicants can apply for any amount of the Bonds subject to a minimum application size of [] Bonds, across any of
the Series(s) or a combination thereof. The Applicants will be allotted the Bonds in accordance with the Basis of
Allotment.

6. Deemed Date of Allotment

Deemed Date of Allotment shall be the date on which the Board of Directors of the Company or any Committee
thereof approves the Allotment of the Bonds for each Tranche Issue.All benefits under the Bonds including payment
of interest will accrue to the Bondholders from the Deemed Date of Allotment. Actual Allotment may occur on a date
other than the Deemed Date of Allotment.

7. Subscription

7.1 Period of Subscription

The Issue shall remain open for the period mentioned below:

Issue Opens on As specified in the Tranche Prospectus
Issue Closes on As specified in the Tranche Prospectus

The subscription list for the Issue shall remain open for subscription at the commencement of banking hours and
close at the close of banking hours, with an option for early closure (subject to the Issue being open for a minimum of
3 days) or extension by such period, upto a period of 30 days from the date of opening of the Issue, as may be
decided by the Board of Directors/ Committee of the Company. In the event of such early closure of the subscription
list of the Issue, our company shall ensure that public notice of such early closure is published on or before the day of
such early date of closure through advertisement/s in a leading national daily newspaper.


7.2 Underwriting

The Issue is not underwritten.

7.3 Minimum Subscription

In terms of the SEBI Debt Regulations, an issuer undertaking a public issue of debt secur ities is
required to disclose the minimum amount of subscription that it proposes to raise in the Issue in the
offer document. In the event that an issuer does not receive the minimum subscription disclosed in the
offer, all application monies received in the public issue are required to be refunded forthwith. There is
no minimum subscription amount for the issue.


8. Interest

8.1. Interest

Tranche [] and Series [] and Tranche [] and Series [] Bonds shall carry interest at the coupon rate of
[]% and []% p.a., respectively, payable annually/semi-annually (as may be specified in the Tranche
Prospectus(es) from, and including, the Deemed Date of Allotment up to, but excluding their respective
Maturity Dates, payable on the Interest Payment Dates (to be specified in the Tranche Prospectus(es), to the
Bondholders as of the relevant Record Date.

155


8.2. Day Count Convention

Interest shall be computed on an actual/actual basis on the principal outstanding on the Bonds.

8.3. Interest on Application Money

8.3.1 Interest on application monies received which are used towards allotment of Bonds

We shall pay interest on application money on the amount allotted, subject to deduction of income
tax under the provisions of the Income Tax Act, 1961, as amended, as applicable, to any applicants
to whom Bonds are allotted pursuant to the Issue from the date of realization of the
cheque(s)/demand draft(s) or 3 (three) days from the date of banking of the application (being the
date of submission of each application as duly acknowledged by the Bankers to the Issue)
whichever is later upto one day prior to the Deemed Date of Allotment, at the rate of []% per
annum.


We may enter into an arrangement with one or more banks in one or more cities for direct credit of
interest to the account of the applicants. Alternatively, the interest warrant will be dispatched along
with the Letter(s) of Allotment at the sole risk of the applicant, to the sole/first applicant.

8.3.2 Interest on application monies received which are liable to be refunded

We shall pay interest on application money which is liable to be refunded to the applicants in
accordance with the provisions of the SEBI Debt Regulations, or other applicable statutory and/or
regulatory requirements, subject to deduction of income tax under the provisions of the Income
Tax Act, 1961, as amended, as applicable, from the date of realization of the cheque(s)/demand
draft(s) or 3 (three) days from the date of receipt of the application (being the date of presentation
of each application as acknowledged by the Bankers to the Issue) whichever is later upto one day
prior to the Deemed Date of Allotment, at the rate of []% per annum. Such interest shall be paid
along with the monies liable to be refunded. Interest warrant will be dispatched/credited (in case of
electronic payment) along with the Letter(s) of Refund at the sole risk of the applicant, to the
sole/first applicant.

Provided that, notwithstanding anything contained hereinabove, PFC shall not be liable to pay any
interest on monies liable to be refunded in case of (a) invalid applications or applications liable to
be rejected, and/or (b) applications which are withdrawn by the applicant. Please refer to
Rejection of Application at page 155 of this Draft Shelf Prospectus.



9. Redemption

9.1 The face value of the Bonds will be redeemed at par, on the respective Maturity Dates of each of the Bond
Series.

9.2 Procedure for Redemption by Bondholders

The procedure for redemption is set out below:

9.2.1 Bonds held in electronic form:

No action is required on the part of Bondholders at the time of maturity of the Bonds.

9.2.2 Bonds held in physical form:

No action will ordinarily be required on the part of the Bondholder at the time of redemption, and the

156

Maturity Amount will be paid to those Bondholders whose names appear in the Register of
Bondholders maintained by PFC on the Record Date fixed for the purpose of redemption. However,
PFC may require the Consolidated Bond Certificate(s), duly discharged by the sole holder or all the
joint-holders (signed on the reverse of the Consolidated Bond Certificate(s)) to be surrendered for
redemption on Maturity Date and sent by the Bondholders by registered post with
acknowledgment due or by hand delivery to the Registrar to the Issue or PFC or to such persons
at such addresses as may be notified by PFC from time to time. Bondholders may be requested to
surrender the Consolidated Bond Certificate(s) in the manner stated above, not more than three
months and not less than one month prior to the Maturity Date so as to facilitate timely payment.

10. Payments

10.1 Payment of Interest on Bonds

Payment of interest on the Bonds will be made to those Bondholders whose name appears first in the
Register of Bondholders maintained by the Depositories and/or PFC and/or the Registrar to the Issue, as the
case may be as, on the Record Date.

10.2 Record Date

The record date for the payment of interest or the Maturity Amount shall be 15 days prior to the date on
which such amount is due and payable (Record Date). In case of redemption of Bonds, the trading in the
Bonds shall remain suspended between the record date and the date of redemption.

10.3 Effect of holidays on payments

If the date of interest payment or redemption falls on a Saturday, Sunday or a public holiday in Delhi or
any other payment centre notified in terms of the Negotiable Instruments Act, 1881, the succeeding
Working Day will be considered as the effective date. In case the date of payment of interest or principal or
any date specified falls on a holiday, the payment will be made on the next Working Day, without any interest
for the period overdue.

10.4. Whilst PFC will use the electronic mode for making payments, where facilities for electronic mode of
payments are not available to the Bondholder or where the information provided by the Applicant is
insufficient or incomplete, PFC proposes to use other modes of payment to make payments to the
Bondholders, including through the dispatch of cheques through courier, or registered post to the address
provided by the Bondholder and appearing in the Register of Bondholders maintained by the Depositories
and/or PFC and/or the Registrar to the Issue, as the case may be as, on the Record Date. In the case of
payment on maturity being made on surrender of the Consolidated Bond Certificate(s), PFC will make
payments or issue payment instructions to the Bondholders within 30 days from the date of receipt of the duly
discharged Consolidated Bond Certificate(s). PFC shall pay interest at [ ] p.a., over and above the coupon
rate of the relevant Bonds, in the event that such payments are delayed beyond a period of eight days
after PFC becomes liable to pay such amounts.

10.5 PFCs liability to the Bondholders including for payment or otherwise shall stand extinguished from the
Maturity Date or on dispatch of the amounts paid by way of principal and/or interest to the Bondholders.
Further, PFC will not be liable to pay any interest, income or compensation of any kind accruing subsequent
to the Maturity Date.

11. Manner and Mode of Payment

11.1 Manner of Payment:

All payments to be made by PFC to the Bondholders shall be made in any of the following manners:

11.1.1 For Bonds applied or held in electronic form:

The bank details will be obtained from the Depositories for payments. Investors who have applied or

157

who are holding the Bond in electronic form, are advised to immediately update their bank account
details as appearing on the records of their Depository Participant. Failure to do so could result in
delays in credit of the payments to investors at their sole risk and neither the Lead Managers nor
PFC shall have any responsibility and undertake any liability for such delays on part of the investors.

11.1.2 For Bonds held in physical form

The bank details will be obtained from the Registrar to the Issue for effecting payments.

11.2 Modes of Payment

The mode of interest/refund/redemption payments shall be undertaken in the following order of preference:

11.2.1 Direct Credit

Applicants having bank accounts with the Refund Bank, as per the demographic details received
from the Depositories shall be eligible to receive refunds through direct credit. Charges, if any,
levied by the Refund Bank for the same would be borne by PFC.

11.2.2 NECS

Through NECS for Applicants having an account at any of the centers notified by the RBI. This
mode of payment will be subject to availability of complete bank account details including the
Magnetic Ink Character Recognition (MICR) code as appearing on a cheque leaf, from the
Depositories.

PFC shall not be responsible for any delay to the Bondholder receiving credit of interest or refund
or Maturity Amount so long as PFC has initiated the process in time.

11.2.3 Real Time Gross Settlement (RTGS)

Applicants having a bank account with a bank branch which is RTGS enabled as per the information
available on the website of RBI and whose payment amount exceeds ` 2.00 lacs shall be eligible to
receive refund through RTGS, provided the demographic details downloaded from the Depositories
contain the nine digit MICR code of the Applicants bank which can be mapped with the RBI data
to obtain the corresponding Indian Financial System Code (IFSC). Charges, if any, levied by the
Refund Bank for the same would be borne by us. Charges, if any, levied by the Applicants
bank receiving the credit would be borne by the Applicant.

11.2.4 National Electronic Fund Transfer (NEFT)

Payment of refund shall be undertaken through NEFT wherever the Applicants bank branch is
NEFT enabled and has been assigned the IFSC, which can be linked to an MICR code of that
particular bank branch. IFSC Code will be obtained from the website of RBI as on a date prior
to the date of payment of refund, duly mapped with an MICR code. Wherever the Applicants have
registered their MICR number and their bank account number while opening and operating the
beneficiary account, the same will be duly mapped with the IFSC Code of that particular bank
branch and the payment will be made to the Applicants through this method. The process flow in
respect of refunds by way of NEFT is at an evolving stage and hence use of NEFT is subject to
operational feasibility, cost and process efficiency and the past experience of the Registrar to the
Issue. In the event NEFT is not operationally feasible, the payment would be made through any
one of the other modes as discussed in this section.

11.2.5 Cheques or Demand drafts

By cheques or demand drafts made in the name of the Bondholders whose names appear in the
Register of Bondholders as maintained by PFC and/or as provided by the Depositories. All Cheques

158

or demand drafts as the case may be, shall be sent by registered/speed post at the Bondholders sole
risk.

11.3 Printing of Bank Particulars

As a matter of precaution against possible fraudulent encashment of refund orders and interest/redemption
warrants due to loss or misplacement, the particulars of the Applicants bank account are mandatorily
required to be provided for printing on the orders/warrants. Applications without these details are liable to be
rejected. However, in relation to Applications for dematerialised Bonds, these particulars will be taken
directly from the Depositories. In case of Bonds held in physical form either on account of rematerialisation
or transfer, the Bondholders are advised to submit their bank account details with the Registrar to the Issue
before the Record Date, failing which the amounts will be dispatched to the postal address of the
Bondholders. Bank account particulars will be printed on the orders/warrants which can then be deposited
only in the account specified.

12. Special Tax Benefit

For the details of tax benefits, please refer to chapter Statement of Tax Benefits on page 61in this Draft Shelf
Prospectus.

13. Taxation

The Bonds are tax free in nature and the interest on the Bonds will not form part of the total income. For further
details, please refer to chapter Statement of Tax Benefits on page 61 in this Draft Shelf Prospectus.

14. Security

The Bonds issued by the Company will be secured by creating a charge on the book debts of the company and/or
identified immovable property by a first /pari passu charge, as may be agreed between the Company and the Debenture
Trustee, pursuant to the terms of the Debenture Trust Deed. PFC will create security in favour of Debenture Trustee
pursuant to the terms of Draft Shelf Prospectus/ Shelf Prospectus/ Tranche Prospectus(es

15. Events of Default

15.1 The Debenture Trustee at its discretion may, or if so requested in writing by the holders of not less than 75%
in principal amount of the Bonds then outstanding or if so directed by a Special Resolution shall (subject to
being indemnified and/or secured by the Bondholders to its satisfaction), give notice to PFC specifying that the
Bonds and/or any particular Series of Bonds, in whole but not in part are and have become due and repayable
at the Early Redemption Amount on such date as may be specified in such notice inter alia if any of the events
listed in 15.2 below occur.

15.2 The complete list of events of default shall be as specified in the Debenture Trust Deed.

15.3 The Early Redemption Amount payable on the occurrence of an Event of Default shall be as detailed in
the Debenture Trust Deed.

15.4 If an Event of Default occurs which is continuing, the Debenture Trustee may with the consent of the
Bondholders, obtained in accordance with the provisions of the Debenture Trust Deed, and with a prior
written notice to PFC, take action in terms of the Debenture Trust Deed.

15.5 In case of default in the redemption of Bonds, in addition to the payment of interest and all other monies
payable hereunder on the respective due dates, PFC shall also pay interest on the defaulted amounts.

16. Bondholders Rights, Nomination, etc.

16.1 Rights of Bondholders

Some of the significant rights available to the Bondholders are as follows:

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a) The Bonds shall not, except as provided in the Companies Act, confer on Bondholders any rights or
privileges available to members of the Company including the right to receive notices or annual
reports of, or to attend and / or vote, at the Companys general meeting(s). However, if any resolution
affecting the rights of the Bondholders is to be placed before the shareholders, such resolution will
first be placed before the concerned registered Bondholders for their consideration. In terms of
Section 219(2) of the Companies Act, Bondholders shall be entitled to a copy of the balance sheet on
a specific request made to the Company.

b) The rights, privileges and conditions attached to the Bonds may be varied, modified and/or abrogated
with the consent in writing of the holders of at least three-fourths of the outstanding amount of the
Bonds or with the sanction of a Special Resolution passed at a meeting of the concerned
Bondholders, provided that nothing in such consent or resolution shall be operative against PFC,
where such consent or resolution modifies or varies the terms and conditions governing the Bonds, if
modification, variation or abrogation is not acceptable to PFC.

c) The registered Bondholder or in case of joint-holders, the person whose name stands first in
the Register of Bondholders shall be entitled to vote in respect of such Bonds, either by being
present in person or, where proxies are permitted, by proxy, at any meeting of the concerned
Bondholders summoned for such purpose and every such Bondholder shall be entitled to one vote on
a show of hands and on a poll, his or her voting rights shall be in proportion to the outstanding
nominal value of Bonds held by him or her on every resolution placed before such meeting of the
Bondholders.

d) Bonds may be rolled over with the consent in writing of the holders of at least three-fourths of the
outstanding amount of the Bonds or with the sanction of a Special Resolution passed at a meeting of
the concerned Bondholders after providing at least 21 days prior notice for such roll-over and in
accordance with the SEBI Debt Regulations. PFC shall redeem the Bonds of all the Bondholders,
who have not given their positive consent to the roll-over.

The above rights of Bondholders are merely indicative. The final rights of the Bondholders will be
as per the terms of this Draft Shelf Prospectus, respective Tranche Prospectus(es) and Debenture
Trust Deed to be executed by PFC with the DebentureTrustee.

Special Resolution for the purpose of this section is a resolution passed at a meeting of Bondholders
of at least three-fourths of the outstanding amount of the Bonds, present and voting.

16.3 Succession

Where Bonds are held in joint names and one of the joint holders dies, the survivor(s) will be recognized
as the Bondholder(s) in accordance with the applicable laws. It will be sufficient for PFC to delete the
name of the deceased Bondholder after obtaining satisfactory evidence of his death, provided that a third
person may call on PFC to register his name as successor of the deceased Bondholder after obtaining
evidence such as probate of a will for the purpose of proving his title to the Bonds. In the event of demise of
the sole or first holder of the Bonds, PFC will recognize the executors or administrator of the deceased
Bondholders, or the holder of the succession certificate or other legal representative as having title to the
Bonds only if such executor or administrator obtains and produces probate of will or letter of administration
or is the holder of the succession certificate or other legal representation, as the case may be, from an
appropriate court in India. The Board of Directors of PFC in their absolute discretion may, in any case,
dispense with production of probate of will or letter of administration or succession certificate or other legal
representation.

16.4 Nomination Facility to Bondholder

16.4.1 The sole Bondholder or first Bondholder, along with other joint Bondholders (being individual(s))
may nominate any one person (being an individual) who, in the event of death of the sole holder or
all the joint-holders, as the case may be, shall become entitled to the Bond. A person, being a
nominee, becoming entitled to the Bond by reason of the death of the Bondholders, shall be entitled

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to the same rights to which he will be entitled if he were the registered holder of the Bond. Where
the nominee is a minor, the Bondholders may make a nomination to appoint any person to become
entitled to the Bond(s), in the event of his death, during the minority. A nomination shall stand
rescinded on sale of a Bond by the person nominating. A buyer will be entitled to make a fresh
nomination in the manner prescribed. When the Bond is held by two or more persons, the nominee
shall become entitled to receive the amount only on the demise of all the Bondholders. Fresh
nominations can be made only in the prescribed form available on request at PFCs administrative
office or at such other addresses as may be notified by PFC.

16.4.2 The Bondholders are advised to provide the specimen signature of the nominee to PFC to expedite
the transmission of the Bond(s) to the nominee in the event of demise of the Bondholders. The
signature can be provided in the Application Form or subsequently at the time of making fresh
nominations. This facility of providing the specimen signature of the nominee is purely optional.

16.4.3 Any person who becomes a nominee under any applicable laws shall on the production of such
evidence as may be required by PFCs Board, as the case may be, elect either:

(a) to register himself or herself as the holder of the Bonds; or

(b) to make such transfer of the Bonds, as the deceased holder could have made.
16.4.4 Notwithstanding anything stated above, Applicants who are allotted bonds in dematerialized form
need not make a separate nomination with PFC. Nominations registered with the respective
Depository Participant of the Bondholder will prevail. If the Bondholders require changing their
nomination, they are requested to inform their respective Depository Participant. For Applicants
who opt to hold the Bonds in physical form, the Applicants are require to fill in the details for
nominees as provided in the Application Form.

16.4.5 Further, the Companys Board or Committee of Directors, as the case may be, may at any time give
notice requiring any nominee of the deceased holder to choose either to be registered himself or
herself or to transfer the Bonds, and if the notice is not complied with, within a period of 90 days,
the Companys Board or Committee of Directors, as the case may be, may thereafter withhold
payment of all interests or other monies payable in respect of the Bonds, until the requirements of
the notice have been complied with.


17. Debenture Trustee

17.1 PFC has appointed GDA Tr u s t e e &Co n s u l t a n c yLi mi t e d to act as the Trustee for the
Bondholders. PFC intends to enter into a De b e n t u r e Trust Deed with the De b e n t u r e Trustee, the
terms of which will govern the appointment and functioning of the De b e n t u r e Trustee and shall specify
the powers, authorities and obligations of the De b e n t u r e Trustee. Under the terms of the De b e n t u r e
Trust Deed, PFC will covenant with the De b e n t u r e Trustee that it will pay the Bondholders the principal
amount on the Bonds on the relevant Maturity Date and also that it will pay the interest due on Bonds on the
rate specified under the respective Tranche Prospectus(es) under which allotment has been made.

17.2 The Bondholders shall, without further act or deed, be deemed to have irrevocably given their consent to the
De b e nt ur e Trustee or any of their agents or authorised officials to do all such acts, deeds, matters and
things in respect of or relating to the Bonds as the Trustee may in their absolute discretion deem necessary or
require to be done in the interest of the Bondholders. Any payment made by PFC to the De b e n t ur e
Trustee on behalf of the Bondholders shall discharge PFC pro tanto to the Bondholders. All the rights and
remedies of the Bondholders shall vest in and shall be exercised by the De b e nt u r e Trustee
without reference to the Bondholders. No Bondholder shall be entitled to proceed directly against PFC unless
the De b e nt ur e Trustee, having become so bound to proceed, failed to do so.

17.3 The De b e nt ur e Trustee will protect the interest of the Bondholders in the event of default by PFC in
regard to timely payment of interest and repayment of principal and they will take necessary action at PFCs
cost. Further, the De b e nt u r e Trustee shall ensure that the assets of PFC are sufficient to discharge the
principal amount at all time under this Issue.

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18. Miscellaneous

18.1 Loan against Bonds
The Bonds can be pledged or hypothecated for obtaining loans.

18.2 Lien
PFC shall have the right of set-off and lien, present as well as future on the moneys due and payable to the
Bondholder or deposits held in the account of the Bondholder, whether in single name or joint name, to the
extent of all outstanding dues by the Bondholder to PFC.

18.3 Lien on Pledge of Bonds
Subject to applicable laws, PFC, at its discretion, may note a lien on pledge of Bonds if such pledge of
Bond is accepted by any bank, institution or others for any loan provided to the Bondholder against pledge of
such Bonds as part of the funding.

18.4 Joint-holders
Where two or more persons are holders of any Bond (s), they shall be deemed to hold the same as joint
holders with benefits of survivorship subject to applicable laws.

18.5 Sharing of Information
PFC may, at its option, use its own, as well as exchange, share or part with any financial or other information
about the Bondholders available with PFC, its SPVs and affiliates and other banks, financial institutions,
credit bureaus, agencies, statutory bodies, as may be required and neither PFC nor its SPVs and affiliates nor
their agents shall be liable for use of the aforesaid information.

18.6 Notices
All notices to the Bondholders required to be given by PFC or the Trustee shall be published in one
national daily newspaper having wide circulation and/or, will be sent by post/courier to the registered
Bondholders from time to time.

18.7 Issue of Duplicate Consolidated Bond Certificate(s)
If any Consolidated Bond Certificate is mutilated or defaced it may be replaced by PFC against the surrender
of such Consolidated Bond Certificates, provided that where the Consolidated Bond Certificates are mutilated
or defaced, they will be replaced only if the certificate numbers and the distinctive numbers are legible.

If any Consolidated Bond Certificate is destroyed, stolen or lost then on production of proof thereof to the
Issuers satisfaction and on furnishing such indemnity/security and/or documents as we may deem adequate,
duplicate Consolidated Bond Certificate(s) shall be issued.

The above requirement may be modified from time to time as per applicable law and practice.

18.8 Future Borrowings
PFC shall be entitled at any time in the future during the term of the Bonds or thereafter to borrow or raise
loans or create encumbrances or avail of financial assistance in any form, and also to issue promissory notes
or bonds or any other securities in any form, manner, ranking and denomination whatsoever and to any
eligible persons whatsoever, subject to applicable consent, approvals or permission that may be required
under any statutory/regulatory/contractual requirement and to change its capital structure including through
the issue of shares of any class, on such terms and conditions as PFC may deem appropriate, without
requiring the consent of, or intimation to, the Bondholders or the Debenture Trustee in this connection.

18.9 Jurisdiction
The Bonds, the Trust Deed and other relevant documents shall be governed by and construed in accordance with the
laws of India. For the purpose of this Issue and any matter related to or ancillary to the Issue the Courts of New
Delhi, India shall have exclusive jurisdiction.

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PROCEDURE FOR APPLICATION
PFC and the Lead Managers would not be liable for any amendment, modification or change in applicable law, which may
occur after the date of this Draft Shelf Prospectus. Investors are advised to make their independent investigations and ensure
that their Application does not exceed the investment limits or maximum number of Bonds that can be held by them under
applicable law or as specified in the Draft Shelf Prospectus and the respective Tranche Prospectus(es).

Availability of Prospectus and Application Forms
The abridged prospectus containing salient features of the Prospectus together with Application Forms and copies of the
Prospectus may be obtained from our Registered Office and Corporate Office, Lead Managers to the Issue, Consortium
Members for marketing of the Issue, the Registrar to the Issue, as mentioned on the Application Form.

In addition, Application Forms would also be made available to BSE where listing of the Bonds is sought.

We may provide Application Forms for being filled and downloaded at such websites as we may deem fit.

WHO CAN APPLY

The following categories of persons are eligible to apply in the Issue:

Category I:

Public Financial Institutions, Statutory Corporations, Commercial Banks, Co-operative Banks and Regional Rural Banks,
which are authorised to invest in the Bonds;

Provident Funds, Pension Funds, Superannuation Funds and Gratuity Fund, which are authorised to invest in
the Bonds; Insurance companies registered with the IRDA;

National Investment Fund;

Mutual Funds;

Foreign Institutional Investors (including sub-accounts);

Companies; bodies corporate and societies registered under the applicable laws in India and authorised to invest in the Bonds;

Public/private charitable/religious trusts which are authorised to invest in the Bonds;

Scientific and/or industrial research organisations, which are authorised to invest in the Bonds;

Partnership firms in the name of the partners;

Limited liability partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No.
6 of 2009)

Category II:

The following investors applying for and amount aggregating to above ` 5 lakhs across all Series in each tranche

Resident Indian individuals;
Hindu Undivided Families through the Karta and
Non Resident Indians on repatriation as well as non-repatriation basis.

Category III:

The following investors applying for and amount aggregating to upto and including 5 lakhs across all Series in each
tranche

Resident Indian individuals;

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Hindu Undivided Families through the Karta and
Non Resident Indians on repatriation as well as non-repatriation basis.

Note: Participation of any of the aforementioned persons or entities is subject to the applicable statutory and/or regulatory
requirements in connection with the subscription to Indian securities by such categories of persons or entities.

Applicants are advised to ensure that applications made by them do not exceed the investment limits or maximum
number of Bonds that can be held by them under applicable statutory and/ or regulatory provisions.
Applicants are advised to ensure that they have obtained the necessary statutory and/or regulatory
permissions/consents/approvals in connection with applying for, subscribing to, or seeking allotment of Bonds
pursuant to the Issue.
The Lead Managers, their associates and affiliates are permitted to subscribe in the Issue.

The information below is given for the benefit of the investors. PFC, the Lead Managers are not liable for any amendment or
modification or changes in applicable laws or regulations, which may occur after the date of this Draft Shelf Prospectus.

Applications cannot be made by:

a) Minors without a guardian name;
b) Foreign nationals;
c) Persons resident outside India other than NRIs ;
d) Overseas Corporate Bodies

Applications by FII
A registered Foreign Institutional Investor who purchases the Bonds under this Issue shall make the payment for purchase of
such securities either by inward remittance through normal banking channels or out of funds held in Foreign Currency Account
or Non-resident Rupee Account maintained by the Foreign Institutional Investor with a designated branch of an authorised
dealer in terms of the applicable regulations governing the same.

The Issuer does not make any representations and does not guarantee eligibility of any foreign investor, including inter-
alia NRIs and FIIs for investment into the Issue either on a repatriation basis or on a non-repatriation basis. All foreign
Investors have to verify their eligibility and ensure compliance with all relevant and applicable RBI - FEMA
notifications and guidelines as well as all relevant and applicable SEBI guidelines, notifications and circulars pertaining
to their eligibility to invest in the Issue at the stage of investment in every tranche, at the time of remittance of their
investment proceeds as well as at the time of disposal of the Bonds. The Issuer will not check or confirm eligibity of
such investments into the Issue.

Investments by FIIs

As per the current regulations, the following restrictions are applicable for investments by FIIs:

The present limit for investment in corporate debt Instruments like non-convertible debentures/bonds by FIIs is USD 25
billion. Following the announcement by the Union Finance Minister Shri. Pranab Mukherjee in his budget 2011-12, the
Government in consultation with the regulators had raised the limit for FII investment in long-term corporate
bonds issued by companies in the infrastructure sector from USD 5 billion to USD 25 billion. This scheme was
operationalised vide SEBI circular CIR/IMD/FIIC/5/2011 dated March 31, 2011. The present limit for investment in
corporate debt Instruments like non-convertible debentures / bonds by FIIs is USD 25 billion as per SEBI circular
CIR/IMD/FIIC/18 /2011, dated September 30, 2011, which is split as follows :

i. USD 3 billion is separate for Qualified Foreign Investor (QFI) investing through the mutual fund route. With regard
to the carve out investment limits of USD 5 billion out of the remaining USD 22 billion for FII investments in Long-
term infrastructure bonds the investment limits are provided in the subsequent paragraphs (ii and iii);

ii. FIIs can invest in long-term infra bonds, subject to the USD 5 billion limit, in bonds which have an initial maturity of
five years or more at the time of issue and residual maturity of one year at the time of first purchase by FIIs. These
investments are subject to a lock-in period of one year. FIIs can, however, trade amongst themselves but cannot sell to
domestic investors during the lock-in period of one year;

iii. Further, FIIs can invest in Long-term infrastructure bonds which have an initial maturity of five years or more at the
time of issue and residual maturity of three years at the time of first purchase by FIIs. These investments are also

164

subject to a lock-in period of one year. During the one -year lock-in period FIIs can trade amongst themselves but
cannot sell to domestic investors. FII investments are subject to all RBI notifications governing the same including the
RBI circular RBI/2011 -12/244 dated November 3, 2011. Additionally, there has been an increase in the FII investment
limit in corporate bonds by USD$ 5 billion, raising the overall cap to US $ 20 Billion. This incremental limit can be
invested in listed corporate bonds vide SEBI Circular CIR/IMD/FIIC/20/2011, dated November 18, 2011.


Subject to compliance with all applicable Indian laws, rules, regulations guidelines and approvals in terms of Regulation
15A(1) of the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended (the
SEBI FII Regulations), an FII, as defined in the SEBI FII Regulations, may issue or otherwise deal in offshore derivative
instruments (as defined under the SEBI FII Regulations as any instrument, by whatever name called, which is issued overseas
by an FII against securities held by it that are listed or proposed to be listed on any recognized stock exchange in India, as its
underlying) directly or indirectly, only in the event (i) such offshore derivative instruments are issued only to persons who are
regulated by an appropriate regulatory authority; and (ii) such offshore derivative instruments are issued after compliance with
know your client norms. An FII is also required to ensure that no further issue or transfer of any offshore derivative
instrument is made by or on behalf of it to any persons that are not regulated by an appropriate foreign regulatory authority as
defined under the SEBI FII Regulations.

Further, as per FEMA, an FII may purchase, on repatriation basis, these Bonds, either directly from the issuer of such
securities or through a registered stock broker on a recognised stock exchange in India; Provided that

i) the FII shall restrict allocation of its total investment between equity and debt instruments (including dated Government
Securities and Treasury Bills in the Indian capital market) in the ratio of 70:30, and

ii) if the FII desires to invest upto 100 per cent in dated Government Securities including Treasury Bills, nonconvertible
debentures/bonds issued by an Indian company, it shall form a 100% debt fund and get such fund registered with SEBI.

Applications by NRIs
We propose to issue Bonds to NRIs on a repatriable as well as non-repatriable basis. NRI applicants should note that
only such applications as are accompanied by payment in Indian Rupees only shall be considered for Allotment. An
NRI can apply for Bonds offered in the Issue subject to the conditions and restrictions contained in the FEMA (Borrowing or
Lending in Rupees) Regulations, 2000, and other applicable statutory and/or regulatory requirements
including the interest rate requirement as provided in the CBDT Notification. Allotment of Bonds to NRIs shall be
subject to the application monies paid by the NRI as described below:

1. In case of NRIs applying under repatriation basis: If it is received either by inward remittance of freely convertible
foreign exchange through normal banking channels i.e. through rupee denominated demand drafts/cheque drawn on a bank in
India or by transfer of funds held in the investors rupee denominated accounts i.e. Non Resident External (NRE) account
maintained with an RBI authorised dealer or a RBI authorised bank in India.

2. In case of NRIs applying under non-repatriation basis: If it is received either by inward remittance of freely convertible
foreign exchange through normal banking channels i.e. through rupee denominated demand drafts/cheque drawn on a bank in
India or by transfer of funds held in the investors rupee denominated accounts i.e.. Non-resident Ordinary (NRO) account and
Non Resident External (NRE) maintained with an RBI authorised dealer or a RBI authorised bank in India.

The Issuer does not make any representations and does not guarantee eligibility of any foreign investor, including inter-
alia NRIs and FIIs for investment into the Issue either on a repatriation basis or on a non-repatriation basis. All foreign
Investors have to verify their eligibility and ensure compliance with all relevant and applicable RBI - FEMA
notifications and guidelines as well as all relevant and applicable SEBI guidelines, notifications and circulars pertaining
to their eligibility to invest in the Issue at the stage of investment in every tranche, at the time of remittance of their
investment proceeds as well as at the time of disposal of the Bonds. The Issuer will not check or confirm eligibity of
such investments into the Issue.

Issue and Allotment of Bonds to NRI applicants:


We confirm that:

i. the rate of interest on each series of Bonds does not exceed the prime lending rate of the State Bank of India as on the date on
which the resolution approving the Issue was passed by our Board, plus 300 basis points;


165

ii. the period for redemption of each series of Bonds is not less than 3 years;

iii. PFC does not and shall not carry on agricultural /plantation /real estate business/Trading in Transferable Development
Rights (TDRs) and does not and shall not act as Nidhi or Chit Fund company;

iv. We will file the following with the nearest office of the Reserve Bank, not later than 30 days from the date -

A. of receipt of remittance of consideration received from NRIs in connection with the Issue, full details of the
remittances received, namely; (a) a list containing names and addresses of each NRI applicant who have remitted
funds for investment in the Bonds on non-repatriation basis and repatriation basis, (b) amount and date of receipt
of remittance and its rupee equivalent; and (c) names and addresses of authorised dealers through whom the
remittance has been received; The application money for the Bonds has to be paid in cheque or demand drafts
only, in rupee denominated currency only; and

B. of closure of the Issue, full details of the monies received from NRI applicants, namely; (a) a list containing names
and addresses of each NRI allottee and number of Bonds issued to each of them on non-repatriation basis and
repatriation basis, and (b) a certificate from our compliance officer that all provisions of the FEMA Act, and rules
and regulations made thereunder in connection with the issue of non-convertible debentures have been duly
complied with.

In case of NRIs applying under repatriation basis, if it is received either by inward remittance of freely convertible foreign
exchange through normal banking channels i.e. through rupee denominated demand drafts/cheque drawn on a bank in India or
by transfer of funds held in the investors rupee denominated accounts i.e. Non-Resident External (NRE) account maintained
with an RBI authorised dealer or a RBI authorised bank in India.

In case of NRIs applying under non-repatriation basis: If it is received either by inward remittance of freely convertible foreign
exchange through normal banking channels i.e. through rupee denominated demand drafts/cheque drawn on a bank in India or
by transfer of funds held in the investors rupee denominated accounts i.e.. Non-resident Ordinary (NRO) account and Non
Resident External (NRE) maintained with an RBI authorised dealer or a RBI authorised bank in India.

We further confirm that the monies received from NRIs who are allotted Bonds pursuant to the Issue, will not be utilised for
any investment, whether by way of capital or otherwise, in any company or partnership firm or proprietorship concern or any
entity, whether incorporated or not, or for the purpose of re-lending.


Applications by Mutual Funds

In terms of the SEBI (Mutual Funds) Regulations, 1996, as amended, no mutual fund scheme is allowed to invest more than
15% of its net asset value (the NAV) in debt instruments issued by a single company, which are rated not below investment
grade by a credit rating agency authorised to carry out such activity. Such investment limit may be extended to 20% of the
NAV of the scheme with the prior approval of the Board of Trustees and the Board of Asset Management Company (the
AMC).

A separate Application can be made in respect of each scheme of an Indian mutual fund registered with SEBI and such
Applications shall not be treated as multiple Applications. Applications made by the AMCs or custodians of a Mutual Fund
shall clearly indicate the name of the concerned scheme for which Application is being made. In case of Applications made by
Mutual Fund registered with SEBI, a certified copy of their SEBI registration certificate must be submitted with the
Application Form. The Applications must be also accompanied by certified true copies of (i) Trust Deed (ii) resolution
authorising investment and containing operating instructions and (iii) specimen signatures of authorized signatories. Failing
this, PFC reserves the right to accept or reject any Application in whole or in part, in either case, without assigning any reason
thereof.

Application by Commercial Banks, Co-operative Banks and Regional Rural Banks

Commercial banks, Co-operative banks and Regional Rural Banks can apply in the Issue based upon their own investment
limits and approvals. The Application must be accompanied by certified true copies of (i) a board resolution authorising
theinvestment; (ii) a letter of authorisation. Failing this, PFC reserves the right to accept or reject any Application in whole or
in part, in either case, without assigning any reason thereof.




166

Application by Insurance Companies

In case of Applications made by insurance companies registered with the Insurance Regulatory and Development Authority, a
certified true copy of certificate of registration issued by Insurance Regulatory and Development Authority must be attached to
the Application Form. Each Application must be accompanied by certified copies of (i) the Applicants memorandum of
association and articles of association; (ii) a power of attorney; (iii) a resolution authorising the Application and containing
operating instructions; and (iv) specimen signatures of authorized signatories. Failing this, PFC reserves the right to accept or
reject any Application in whole or in part, in either case, without assigning any reason thereof.

Application by Trusts

In case of Applications made by trusts, settled under the Indian Trusts Act, 1882, as amended, or any other statutory and/or
regulatory provision governing the settlement of trusts in India, must submit a (i) certified copy of the registered instrument for
creation of such trust, (ii) Power of Attorney, if any, in favour of one or more trustees thereof, (iii) such other documents
evidencing registration thereof under applicable statutory/regulatory requirements.
Failing this, PFC reserves the right to accept or reject any Applications in whole or in part, in either case, without assigning
any reason thereof.

Further, any trusts applying for Bonds pursuant to the Issue must ensure that (a) they are authorised under applicable
statutory/regulatory requirements and their constitution instrument to hold and invest in bonds, (b) they have obtained
all necessary approvals, consents or other authorisations, which may be required under applicable statutory and/or
regulatory requirements to invest in bonds, and (c) applications made by them do not exceed the investment limits or
maximum number of Bonds that can be held by them under applicable statutory and or regulatory provisions.

Applications under Power of Attorney

In case of Investments made pursuant to a power of attorney or by limited companies, corporate bodies, registered societies,
FIIs, Mutual Funds, insurance companies and provident funds (subject to applicable law) and pension funds, a certified copy of
the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the
memorandum of association and articles of association and/or bye laws must be lodged along with the Application Form.

Application Size

Applications are required to be for a minimum of [] Bond and multiples of [] Bond thereafter.

Application Form

The prescribed colour of the Application Form for the various categories is as follows:

CATEGORY
COLOUR OF APPLICATION FORM
Following investors under Category I: Public
Financial Institutions, Statutory Corporations,
Commercial Banks,
Co-operative Banks and Regional Rural Banks,
Provident Funds, Pension Funds, Superannuation
Funds and Gratuity Fund, which are authorised to
invest in the Bonds, Insurance companies registered
with the IRDA, National Investment Fund, Mutual
Funds and Foreign Institutional Investors which are
eligible to invest in the Bonds

[]
Eligible NRIs applying on repartriation basis under
Category II and III.

[]
All other category of Investors eligible to invest in the
Issue that are not covered above.

[]


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Instructions for Completing the Application Form
Applications should be:
(a) Made only in the prescribed Application Form.
(b) Completed in block letters in English as per the instructions contained in the Tranche Prospectus(es) and in the
Application Form, and are liable to be rejected if not so completed. Applicants should note that the Bankers to the
Issue will not be liable for errors in data entry due to incomplete or illegible Application Forms.
(c) In single name or in joint names (not more than three, and in the same order as their Depository Participant details (in
case of applicants opting for allotment in dematerialized form) and should be applied by Karta in case of HUF

(d) Applications are required to be for a minimum of [] Bond and in multiples of [] Bond thereafter.
(e) Thumb impressions and signatures other than in English/ Hindi/ Gujarati/ Marathi or any of the other languages
specified in the Eighth Schedule to the Constitution of India must be attested by a Magistrate or Notary Public or a
Special Executive Magistrate under his official seal.
(f) All Application Forms duly completed together with cheque/bank draft for the amount payable on application must be
delivered before the closing of the subscription list to any of the Bankers to the Public Issue or collection centre(s) as
may be specified before the closure of the Issue. No receipt would be issued for the Application money. However, the
Bankers to the Issue and/ ortheir branches receiving the applications, on receiving the Applications will acknowledge
receipt by stamping (mandatorily having a date stamp) and returning the acknowledgment slip to the Applicant.

(g) Every applicant should hold valid Permanent Account Number (PAN) and mention the same in the Application Form.
(h) All applicants are required to tick the relevant column of Category of Investor in the Application Form.

All Applications by Public Financial Institutions, Statutory Corporations, Commercial Banks, Cooperative
Banks and Regional Rural Banks, Provident Funds, Pension Funds, Superannuation Funds and Gratuity
Fund, Insurance companies registered with the IRDA, National Investment Fund, Mutual Funds and Foreign
Institutional Investors applicants shall be received only by the Lead Managers and their respective affiliates.

(i) APPLICANTS MAY NOTE THAT THE ALLOTMENT SHALL ON FIRST CUM FIRST SERVE BASIS ONLY
AS DESCRIBED UNDER THE HEADING-BASIS OF ALLOTMENT.

(j) Applications for all the Series of Bonds may be made in a single Application Form only.

PFC would allot Tranche [] Series [] Bonds which have the longest maturity to all valid applications, wherein the
applicants have not indicated their choice of the relevant series of Bonds in their Application Form.

General Instructions
DOs
1. Check if you are eligible to apply.

2. Read all the instructions carefully and complete the Application Form.

3. Applications are required to be in single or joint names (not more than three).

4. If Allotment of Bonds is sought in the dematerialised form, ensure that the details about the Depository Participant
and Beneficiary Account are correct and the beneficiary account is active.

5. In case of an HUF applying through its Karta, the Applicant is required to specify the name of an Applicant in the
Application Form as XYZ Hindu Undivided Family applying through PQR, where PQR is the name of the Karta.


6. Ensure that the Applicants name(s) given in the Application Form is exactly the same as the name(s) in which the
beneficiary account is held with the Depository Participant. In case the Application Form is submitted in joint names,
ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which
they appear in the Application Form

7. Ensure that you mention your PAN allotted under the IT Act, Please note that it is mandatory for all applicants to
furnish their PAN number as per CBDT Notification.

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8. Ensure that the Demographic Details as provided in the Application Form are updated, true and correct in all respects.

9. Ensure that you have obtained all necessary approvals from the relevant statutory and/or regulatory
authorities to apply for, subscribe to and/or seek allotment of Bonds pursuant to the Issue.

10. Applicants Bank Account Details: The Bonds shall be allotted in dematerialised and physical form.
For instructions on how to apply for Allotment in the physical form, see Procedure for Application Application
for Allotment of Bonds in the physical form on page 152. In case of Allotment in dematerialised form, the Registrar
to the Issue will obtain the Applicants bank account details from the Depository. The Applicant should note that on
the basis of the name of the Applicant, Depository Participants name, Depository Participants identification number
and beneficiary account number provided by them in the Application Form, the Registrar to the Issue will obtain from
the Applicants beneficiary account, the Applicants bank account details. The Applicants are advised to ensure that
bank account details are updated in their respective beneficiary accounts as these bank account details would be
printed on the refund order(s), if any. Failure to do so could result in delays in credit of refunds to Applicants at the
Applicants sole risk and neither the Lead Managers nor our Company nor the Refund Bank nor the Registrar to the
Issue shall have any responsibility and undertake any liability for such delay.

11. Applications under Power of Attorney: Unless the Company specifically agree in writing, and subject to such terms
and conditions as the Company may deem fit, in the case of Applications made under power of attorney, a certified
copy of the power of attorney is required to be lodged separately, along with a copy of the Application Form at the
office of the Registrar to the Issue simultaneously with the submission of the Application Form, indicating the name
of the Applicant along with the address, Application number, date of submission of the Application Form, name of the
bank and branch where it was deposited, cheque/demand draft number and the bank and branch on which the
cheque/demand draft was drawn.

12. Permanent Account Number: All Applicants should mention their PAN allotted under the Income Tax Act in the
Application Form. In case of joint applicants, the PAN of the first Applicant should be provided and for investors
other than individual, PAN of such other investor should be provided. The PAN would be the sole identification
number for participants transacting in the securities markets, irrespective of the amount of the transaction. Further as
Per CBDT notification it is mandatory for all subscribers to provide their PAN number to PFC. Any Application Form
without the PAN is liable to be rejected. Applicants should not submit the GIR Number instead of the PAN as the
Application is liable to be rejected on this ground.

13. Joint Applications: Applications may be made in single or joint names (not exceeding three). In the case of joint
Applications, all payments will be made out in favour of the first Applicant. All communications will be addressed to
the first named Applicant whose name appears in the Application Form at the address mentioned therein.
14.
Multiple Applications: An Applicant may make multiple applications for the total number of Bonds required and the
same shall be considered valid. For the purposes of allotment of Bonds under the Issue, applications shall be grouped
based on the PAN, i.e. applications under the same PAN shall be grouped together. Two or more applications will be
deemed to be multiple applications if the sole or first applicant is one and the same. For the sake of clarity, two or
more applications shall be deemed to be a multiple application for the aforesaid purpose if the PAN number of the
sole or the first applicant is one and the same.

15. Applicants are requested to write their names and Application serial number on the reverse of the instruments by
which the payments are made.

16. All Applicants are requested to tick the relevant column Category of Investor in the Application Form.

17. Ensure that the Applications are submitted to the Bankers to the Issue and/ or their branches receiving the
applicationsas may be specified before Issue Closing Date.

DONTs
1. Do not make an application for lower than the minimum Application size.

2. Do not pay the Application Amount in cash, by money order or by postal order or by stock-invest.

3. Do not send Application Forms by post; instead submit the same to a Bankers to the Issue or any of their branches
receiving the applicationsonly.

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4. Do not submit the GIR number instead of the PAN, as the Application Form is liable to be rejected on this ground.

5. Do not submit the Application Forms without the full Application Amount for the number of Bonds applied for.

6. Do not fill up the Application Form such that the Bonds applied for exceeds the issue size and/or investment limit or
maximum number of Bonds that can be held under the applicable laws or regulations or maximum amount
permissible under the applicable regulations;

For further instructions, investors are advised to read the relevant tranche prospectus and Application Form carefully.
Applications for Allotment of Bonds in the physical form
Applicant(s) who wish to subscribe to, or hold, the Bonds in physical form can do so in terms of Section 8(1) of the
Depositories Act and the Company is obligated to fulfill such request of the Applicant(s). Accordingly, any Applicant who
wishes to subscribe to the Bonds in physical form shall undertake the following steps:
(i) Please complete the Application Form in all respects, by providing all the information including PAN and
demographic details. However, do not provide the Depository Participant details in the Application Form. The
requirement for providing Depository Participant details shall be mandatory only for the Applicants who wish to
subscribe to the Bonds in dematerialised form.
(ii) Please provide the following documents along with the Application Form:
(a) Self-attested copy of the PAN card;
(b) Self-attested copy of the proof of residence. Any of the following documents shall be considered as a
verifiable proof of residence:
ration card issued by the GoI; or
valid driving license issued by any transport authority of the Republic of India; or
electricity bill (not older than three months); or
landline telephone bill (not older than three months); or
valid passport issued by the GoI; or
Voters Identity Card issued by the GoI; or
passbook or latest bank statement issued by a bank operating in India; or
leave and license agreement or agreement for sale or rent agreement or flat maintenance bill;

(c) Self-attested copy of a cancelled cheque of the bank account to which the amounts pertaining to payment of
refunds, interest and redemption, as applicable, should be credited.
The Applicant shall be responsible for providing the above information accurately. Delays or failure in credit
of the payments due to inaccurate details shall be at the sole risk of the Applicants and neither the Lead
Managers nor the Company shall have any responsibility and undertake any liability for the same.
Applications for Allotment of the Bonds in physical form, which are not accompanied with the aforestated
documents may be rejected at the sole discretion of the Company.
In relation to the issuance of the Bonds in physical form, note the following:
(i) An Applicant has the option to seek Allotment of Bonds in either electronic or physical mode. No partial Application
for the Bonds shall be permitted and is liable to be rejected.
(ii) In case of Bonds that are being issued in physical form, the Company will issue one certificate to the Bondholder for
the aggregate amount of the Bonds that are applied for (each such certificate a Consolidated Bond Certificate).
(iii) Any Applicant who provides the Depository Participant details in the Application Form shall be allotted the
Bonds in dematerialised form only. Such Applicant shall not be allotted the Bonds in physical form.
(iv) No separate Applications for issuance of the Bonds in physical and electronic form should be made. If such
Applications are made, the Application for the Bonds in physical mode shall be rejected. This shall be considered as a
ground for technical rejection.

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(v) The Company shall dispatch the Consolidated Bond Certificate to the address of the Applicant provided in the
Application Form after completion of requisite procedure.
All terms and conditions disclosed in the relevant tranche prospectus in relation to the Bonds held in physical form pursuant to
rematerialisation shall be applicable mutatis mutandis to the Bonds issued in physical form.

Applications for Allotment of Bonds in the dematerialised form

As per the provisions of the Depositories Act, the Bonds can be held in dematerialised form, i.e., they shall be fungible and be
represented by a statement issued through electronic mode. In this context, the Tripartite Agreements have been executed
between our Company, the Registrar to the Issue and the respective Depositories for offering depository option to the
Bondholders.

(a) All Applicants can seek Allotment in dematerialised mode or in physical form. Applications made for receiving
Allotment in the dematerialised form without relevant details of his or her depository account are liable to be rejected.
(b) An Applicant applying for the Bonds must have at least one beneficiary account with any of the Depository
Participants of either of the Depositories, prior to making the Application.
(c) The Applicant must necessarily fill in the details (including the Beneficiary Account Number and Depository
Participants identification number) appearing in the Application Form.
(d) Allotment to an Applicant will be credited in electronic form directly to the beneficiary account (with the Depository
Participant) of the Applicant.
(e) Names in the Application Form should be identical to those appearing in the account details in the Depository. In case
of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the
Depository.
(f) If incomplete or incorrect details are given under the heading Applicants Depository Account Details, in the
Application Form, it is liable to be rejected.
(g) The Applicant is responsible for the correctness of his or her demographic details given in the Application Form vis-
-vis those with his or her Depository Participant.
(h) Bonds in electronic form can be traded only on the stock exchanges having electronic connectivity with the
Depositories. BSE and NSE, where the Bonds are proposed to be listed, have electronic connectivity with the
Depositories.
(i) The trading of the Bonds shall be in dematerialised form only.
Allottees will have the option to re-materialise the Bonds so Allotted as per the provisions of the Companies Act and the
Depositories Act.
In addition to the above, certain additional documents are required to be submitted by the following entities:

(a) With respect to Investments by FIIs and Mutual Funds, a certified copy of their SEBI registration certificate must be lodged
along with the Application Form.

(b) With respect to Investments by insurance companies registered with the Insurance Regulatory and Development
Authority, in addition to the above, a certified copy of the certificate of registration issued by the Insurance Regulatory and
Development Authority must be lodged along with the Application Form.

(c) With respect to Investments made by limited liability partnerships registered under the Limited Liability Partnership Act,
2008, a certified copy of certificate of registration issue




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PAYMENT INSTRUCTIONS
Escrow Mechanism
The Company shall open Escrow Account(s) with one or more Escrow Collection Bank(s) in whose favour the Applicants
shall make out the cheque or demand draft in respect of his or her Application. Cheques or demand drafts received for the
Application Amount from Applicants would be deposited in the Escrow Account.
The Escrow Collection Banks will act in terms of the tranche prospectus(es) and the Escrow Agreement. The Escrow
Collection Banks, for and on behalf of the Applicants, shall maintain the monies in the Escrow Account until the creation of
security for the Bonds. The Escrow Collection Banks shall not exercise any lien whatsoever over the monies deposited therein
and shall hold the monies therein in trust for the Applicants. On the Designated Date, the Escrow Collection Banks shall
transfer the funds represented by Allotment of the Bonds from the Escrow Account, as per the terms of the Escrow Agreement,
into the Public Issue Account maintained with the Bankers to the Issue, provided that the sums received in respect of the Issue
will be kept in the Escrow Account and the Company will have access to such funds only after creation of security for the
Bonds. The amount representing the Applications that have been rejected shall be transferred to the Refund Account. Payments
of refund to the Applicants shall be made from the Refund Account are per the terms of the Escrow Agreement and the tranche
prospectus(es).
Accordingly, PFC shall open and maintain a separate escrow account with the Escrow Collection Bank(s) in connection with
all application monies received from NRIs (NRI Escrow Account). All application monies received from NRI applicants
shall be deposited in the NRI Escrow Account maintained with each Escrow Collection Bank. Upon creation of security as
disclosed in the Debenture Trust Deed, the Escrow Collection Bank(s) shall transfer the monies from the NRI Escrow
Accounts to a separate bank account, (NRI Account), which shall be different from the Public Issue Account. PFC shall at
all times ensure that any monies kept in the NRI Escrow Account and/or the NRI Account shall be utilised only in accordance
with applicable statutory and/or regulatory requirements.

PFC shall open and maintain a separate escrow account with the Escrow Collection Bank(s) in connection with all application
monies received from FIIs (FII Escrow Account). All application monies received from FII applicants shall be deposited in
the FII Escrow Account maintained with each Escrow Collection Bank. Upon creation of security as disclosed in the
Debenture Trust Deed, the Escrow Collection Bank(s) shall transfer the monies from the FII Escrow Accounts to a separate
bank account, (FII Account), which shall be different from the Public Issue Account. PFC shall at all times ensure that any
monies kept in the FII Escrow Account and/or the FII Account shall be utilised only in accordance with and subject to the
restrictions provided in applicable statutory and/or regulatory requirements.

Method of payment of purchase consideration for FII

FIIs shall make the payment for purchase of such securities either by inward remittance through normal banking channels or
out of funds held in Foreign Currency Account or Non-resident Rupee Account maintained by the Foreign Institutional
Investor with a designated branch of an authorised dealer with the approval of Reserve Bank of India. The payment of the
application money shall be made in cheque or demand draft in rupee denominated currency only.

Payment into Escrow Account
Each Applicant shall draw a cheque or demand draft or remit the funds electronically through the mechanisms for the
Application Amount as per the following terms:
(a) All Applicants would be required to pay the full Application Amount for the number of Bonds applied for, at the time
of the submission of the Application Form.
(b) The Applicants shall, with the submission of the Application Form, draw a payment instrument for the full
Application Amount in favour of the Escrow Account and submit the same to Bankers to the Issue. If the payment is
not made favouring the Escrow Account along with the Application Form, the Application shall be rejected.
(c) The payment instruments for payment into the Escrow Account should be drawn in favour of [].
(d) The payment instrument from NRI applicants shall be payable in the NRI Escrow Account [].
(e) The payment instrument from FII applicants shall be payable in the FII Escrow Account [].

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(f) The monies deposited in the Escrow Account will be held for the benefit of the Applicants until the Designated Date.
(g) On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow Account as per the
terms of the Escrow Agreement into the Public Issue Account with the Bankers to the Issue. The Escrow Collection
Bank shall also refund all amounts payable to Applicants whose Applications have not been allotted Bonds.
(h) Payments should be made by cheque, or a demand draft drawn on any bank (including a co-operative bank), which is
situated at, and is a member of or sub-member of the bankers clearing house located at the centre where the
Application Form is submitted. Outstation cheques/bank drafts drawn on banks not participating in the clearing
process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected.
(i) Cash/ stock-invest/money orders/ postal orders will not be accepted.
Submission of Application Forms
All Application Forms duly completed and accompanied by account payee cheques or drafts shall be submitted to the
designated collection banks during the Issue Period.
No separate receipts shall be issued for the money payable on the submission of Application Form. However, the collection
banks will acknowledge the receipt of the Application Forms by stamping and returning to the Applicants the
acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Application Form for the records of the
Applicant.
Applications shall be deemed to have been received by us only when submitted to Bankers to the Issue at their designated
branches as detailed above and not otherwise.

All applications by Public Financial Institutions, Statutory Corporations, Commercial Banks, Co-operative Banks and
Regional Rural Banks, Provident Funds, Pension Funds, Superannuation Funds and Gratuity Fund, Insurance
companies registered with the IRDA, National Investment Fund, Mutual Funds and Foreign Institutional Investors
should be made in the form prescribed for these applicants and shall be received only by the Lead Managers and their
respective affiliates.

Online Applications

Lead Managers may decide to offer an online Application facility for the Bonds, as and when permitted by applicable laws,
subject to the terms and conditions prescribed. Accordingly, the investors may download forms for this use and submit the
same together with cheques/demand drafts to the Bankers to the Issue and their collecting centres. However, Public Financial
Institutions, Statutory Corporations, Commercial Banks, Co-operative Banks and Regional Rural Banks, Provident Funds,
Pension Funds, Superannuation Funds and Gratuity Fund, Insurance companies registered with the IRDA, National Investment
Fund, Mutual Funds and Foreign Institutional Investors can apply only through [] coloured physical application forms
provided by the Lead Managers and their respective affiliates.
Other Instructions

A. Joint Applications

Applications may be made in single or joint names (not exceeding three). In the case of joint applications, all payments will be
made out in favour of the first applicant. All communications will be addressed to the first named applicant whose name
appears in the Application Form and at the address mentioned therein.

B. Additional/Multiple Applications

An applicant is allowed to make one or more applications for the Bonds for the same or other series of Bonds, subject to a
minimum application size of [] bonds and in multiples of [] bonds, for each application. Any application for an amount
below the aforesaid minimum application size will be deemed as an invalid application and shall be rejected. However, any
application made by any person in his individual capacity and an application made by such person in his capacity as a karta of
a Hindu Undivided family and/or as joint applicant, shall not be deemed to be a multiple application.

For the purposes of allotment of Bonds under the Issue, applications shall be grouped based on the PAN, i.e. applications under
the same PAN shall be grouped together and treated as one application. Two or more applications will be deemed to be
multiple applications if the sole or first applicant is one and the same. For the sake of clarity, two or more applications shall be

173

deemed to be a multiple application for the aforesaid purpose if the PAN number of the sole or the first applicant is one and the
same

C. Depository Arrangements

We have entered into Tripartite Agreement dated May 16, 2006 among us, the Registrar to the Issue and NSDL and dated
April 16, 2006, among us, the Registrar to the Issue and CDSL, respectively for offering depository option to the investors and
for issue and holding of the Bonds in dematerialised form.

As per the provisions of the Depositories Act, 1996, the Bonds issued by us can be held in a dematerialized form as described
under the heading - Applications for Allotment of Bonds in dematerialized form in this chapter

D. Communications

All future communications in connection with Applications made in the Issue should be addressed to the Registrar to the Issue,
quoting all relevant details regarding the Applicant and its Application.
Applicants can contact our Compliance Officer as well as the contact persons of the Lead Managers and the Registrar to the
Issue in case of any Issue related problems such as non-receipt of allotment advice/credit of Bonds in the Depositarys
beneficiary account/refund orders, etc.
Rejection of Applications
The Company reserves its full, unqualified and absolute right to accept or reject any Application in whole or in part and in
either case without assigning any reason thereof.
Application would be liable to be rejected on one or more technical grounds, including but not restricted to:
Number of Bonds applied for is less than the minimum Application size;

Applications not duly signed by the sole/joint Applicants;

Application amount paid not tallying with the number of Bonds applied for;

Applications for a number of Bonds which is not in a multiple of one;

Investor category not ticked;

Bank account details not given;

Applications by persons not competent to contract under the Indian Contract Act, 1872, as amended, including a
minor without a guardian name;

In case of Applications under Power of Attorney where relevant documents not submitted;

Application by stock-invest or accompanied by cash / money order / postal order;

Applications without PAN; and

GIR number furnished instead of PAN;

Applications for amounts greater than the maximum permissible amounts prescribed by applicable regulations;

Applications by persons/entities who have been debarred from accessing the capital markets by SEBI;

Applications by any persons outside India, barring applications made by NRIs on a non-repatriable and applications
made by NRIs under a repatriable basis and FIIs as described above;

For option to hold Bonds in electronic/dematerialised form, Depository Participant identification number, Client ID
and PAN mentioned in the Application Form do not match with the Depository Participant identification number,
Client ID and PAN available in the records with the depositories;

174


Application under power of attorney or by limited companies, corporate, trust etc., where relevant documents are not
submitted;

Address not provided in case of exercise of option to hold Bonds in physical form;

Copy of KYC documents not provided in case of option to hold Bonds in physical form; and

Public Financial Institutions, Statutory Corporations, Commercial Banks, Co-operative Banks, Regional Rural Banks,
Provident Funds, Pension Funds, Superannuation Funds and Gratuity Fund, Insurance companies registered with the
IRDA, National Investment Fund, Mutual Funds and Foreign Institutional Investors applications not procured by the
Lead Managers or their respective affiliates.

Applications made by investors belonging to a particular Category on an application form meant for other applicants
and vice-versa.

The collecting bank shall not be responsible for rejection of the Application on any of the technical grounds mentioned above.
Application Forms received after the closure of the Issue shall be rejected.
In the event, if any Bond(s) applied for is/are not Allotted, the Application monies in respect of such Bonds will be refunded,
as may be permitted under the provisions of applicable laws.

Basis of Allotment
The subscription list for the Issue shall remain open for subscription at the commencement of banking hours and close at the
close of banking hours, with an option for early closure (subject to the Issue being open for a minimum of 3 days) or extension
by such period, upto a period of 30 days from the date of opening of the Issue, as may be decided by the Board of Directors/
Committee of the Company. In the event of such early closure of the subscription list of the Issue, our company shall ensure
that public notice of such early closure is published on or before the day of such early date of closure through advertisement/s
in a leading national daily newspaper.
PFC shall finalise the Basis of Allotment in consultation with the Lead Managers and the Designated Stock Exchange and in
compliance with the aforementioned provisions of the relevant Tranche Prospectus. The Designated Stock Exchange along
with PFC, Lead Managers and the Registrar shall be responsible for ensuring that the Basis of Allotment is finalised in a fair
and proper manner.

Grouping of Applications and Allocation Ratio:

Applications received from various applicants shall be grouped together on the following basis:

i) Applications received from Category I applicants: Applications received from Category I, shall be grouped together,
(Category I Portion);

ii) Applications received from Category II applicants: Applications received from Category II shall be grouped together,
(Category II Portion);

iii) Applications received from Category III applicants: Applications received from Category III applicants shall be grouped
together, (Category III Portion).

For removal of doubt, Category I Portion, Category II Portion and the Category III Portion are individually referred to as
Portion and collectively referred to as Portions

For the purposes of determining the number of Bonds available for allocation to each of the abovementioned Categories, PFC
shall have the discretion of determining the number of Bonds to be allotted over and above the Base Issue Size, in case PFC
opts to retain any oversubscription in the Issue upto the Shelf Limit of ` 5,00,000 lakhs. The aggregate value of Bonds decided
to be allotted over and above the Base Issue Size, (in case PFC opts to retain any oversubscription in the Issue), and/or the
aggregate value of Bonds upto the Base Issue Size shall be collectively termed as the Overall I ssue Size.

175


Basis of Allotment for Bonds

(a) Allotments in the first instance:

i. Applicants belonging to the Category I, in the first instance, will be allocated Bonds upto []% of Overall Issue Size on first
come first serve basis (determined on the basis of date of receipt of each application duly acknowledged by the Bankers to the
Issue);

ii. Applicants belonging to the Category II, in the first instance, will be allocated Bonds upto []% of Overall Issue Size on
first come first serve basis (determined on the basis of date of receipt of each application duly acknowledged by the Bankers to
the Issue);

iii. Applicants belonging to the Category III, in the first instance, will be allocated Bonds upto []% of Overall Issue Size on
first come first serve basis (determined on the basis of date of receipt of each application duly acknowledged by the Bankers to
the Issue);

Allotments, in consultation with the Designated Stock Exchange, shall be made on a first-come first-serve basis, based on the
date of submission of each application to the Bankers to the Issue, in each Portion subject to the Allocation Ratio.

(b) Under Subscription:

If there is any under subscription in any Portion, priority in allotments will be given in the following order:

i. Category III Portion
ii. Category II Portion
iii. Category I Portion

on a first come first serve basis within each Portion.

(c) For each Portion, all applications received on the same day by the Bankers to the Issue would be treated at par with each
other. Allotment to applications received on the same date would be on proportionate basis, where Bonds applied for exceeds
Bonds to be allotted for each Portion respectively.

(d) Minimum allotments of 1 Bond and in multiples of 1 Bond thereafter would be made in case of each valid application.

(e) Allotments in case of oversubscription:

In case of an oversubscription, allotments to the maximum extent, as possible, will be made on a first-come first-serve basis
and thereafter on proportionate basis, i.e. full allotment of Bonds to the applicants on a first come first basis up to the date
falling 1 (one) day prior to the date of oversubscription and proportionate allotment of Bonds to the applicants on the date of
oversubscription (based on the date of submission of each application to the Bankers to the Issue, in each Portion).

(f) Proportionate Allotments:

For each Portion, on the date of oversubscription:

i. Allotments to the applicants shall be made in proportion to their respective application size, rounded off to the nearest
integer,

ii. If the process of rounding off to the nearest integer results in the actual allocation of Bonds being higher than the Issue size,
not all applicants will be allotted the number of Bonds arrived at after such rounding off. Rather, each applicant whose
allotment size, prior to rounding off, had the highest decimal point would be given preference,

iii. In the event, there are more than one applicant whose entitlement remain equal after the manner of distribution referred to
above, PFC will ensure that the basis of allotment is finalised by draw of lots in a fair and equitable manner.

(g) Applicant applying for more than one series of Bonds:

If an applicant has applied for more than one series of Bonds, and in case such applicant is entitled to allocation of only a part
of the aggregate number of Bonds applied for, the Series-wise allocation of Bonds to such applicants shall be in proportion to

176

the number of Bonds with respect to each Series, applied for by such applicant, subject to rounding off to the nearest integer, as
appropriate in consultation with Lead Managers and Designated Stock Exchange.

All decisions pertaining to the basis of allotment of Bonds pursuant to the Issue shall be taken by PFC in consultation with the
Lead Managers and the Designated Stock Exchange and in compliance with the aforementioned provisions of this Draft Shelf
Prospectus.

PFC has the discretion to close the Issue irrespective of whether any of the Portion(s) are fully subscribed.

PFC would allot Tranche [] Series [] Bonds to all valid applications, wherein the applicants have not indicated
their choice of the relevant Series of Bonds.

Allotment Advice/Refund Orders

The unutilised portion of the application money will be refunded to the applicant by an A/c Payee cheque/demand draft. In
case the at par facility is not available, PFC reserves the right to adopt any other suitable mode of payment. We may enter into
an arrangement with one or more banks in one or more cities for refund to the account of the applicants through Direct
Credit/RTGS/NEFT.

PFC shall credit the allotted Bonds to the respective beneficiary accounts/dispatch the Letter(s) of Allotment or Letter(s) of
Regret/Refund Orders to all applicants by Registered Post/Speed Post at the applicants sole risk, within 30 days from the date
of closure of the Issue.


Further,

a) Allotment of Bonds offered to the public shall be made within a time period of 30 days from the date of closure of the Issue;

b) Credit to demat account will be given within 2 working days from the date of allotment

c) Interest at a rate of 15 per cent per annum will be paid if the allotment has not been made and/or the Refund Orders have not
been dispatched to the applicants within 30 days from the date of the closure of the Issue, for the delay beyond 30 days.

d) PFC will provide adequate funds to the Registrars to the Issue, for this purpose.

Filing of the tranche prospectus(es) with the Stock Exchanges

A copy of the tranche prospectus(es) shall be filed with the BSE.

Pre-Issue Advertisement

PFC shall, on or before the Issue Opening Date, publish a pre- Issue advertisement, in the form prescribed by the SEBI Debt
Regulations, in one national daily newspaper with wide circulation.
IMPERSONATION
Attention of the Applicants is specifically drawn to the provisions of sub-section (1) of Section 68 A of the Companies
Act, which is reproduced below:
Any person who:
(a) makes in a fictitious name, an application to a company for acquiring or subscribing for, any shares therein, or
(b) otherwise induces a company to allot, or register any transfer of shares, therein to him, or any other person in a
fictitious name, shall be punishable with imprisonment for a term which may extend to five years.
Listing
The Bonds will be listed on BSE
If the permission to deal in and for an official quotation of the Bonds are not granted by BSE, we shall forthwith repay, without
interest, all such moneys received from the Applicants in pursuance of the tranche prospectus(es).

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The Company shall use best efforts to ensure that all steps for the completion of the necessary formalities for listing at the
Stock Exchanges are taken within fifteen Working Days from the date of Allotment.
Utilisation of Application Money
The sums received in respect of the Issue will be kept in the Escrow Account and the Company will have access to such funds
only after creation of security for the Bonds and as per applicable provisions of law(s), regulations and approvals.PFC shall at
all times ensure that any monies kept in the NRI Escrow Account shall be utilised only in accordance with the FEMA
(Borrowing and Lending in Rupees) Regulations, 2000 and other applicable statutory and/or regulatory requirements.

Undertaking by the Issuer

We undertake that:

(a) the complaints received in respect of the Issue shall be attended to by us expeditiously and satisfactorily;

(b) we shall take necessary steps for the purpose of getting the Bonds listed within the specified time;

(c) the funds required for dispatch of refund orders/allotment advice/certificates by registered post shall be made
available to the Registrar to the Issue by the company;

(d) necessary co-operation to the credit rating agency(ies) shall be extended in providing true and adequate information
until the debt obligations in respect of the Bonds are outstanding;

(e) we shall forward the details of utilisation of the funds raised through the Bonds duly certified by our statutory
auditors, to the Debenture Trustee at the end of each half year;

(f) we shall disclose the complete name and address of the Debenture Trustee in our annual report; and

(g) we shall provide a compliance certificate to the Debenture Trustee (on an annual basis) in respect of compliance with
the terms and conditions of issue of Bonds as contained in the tranche prospectus(es).

(h) We shall make necessary disclosures/ reporting under any other legal or regulatory requirement as may be required by
the company from time to time.



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SECTION VII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF THE COMPANY

Pursuant to Schedule II of the Companies Act and the SEBI Guidelines, the main provisions of the Articles of Association
relating to voting rights, dividend, lien, forfeiture, restrictions on transfer and transmission of Equity Shares or debentures
and/or their consolidation/splitting are as detailed below. Please note that each provision herein below is numbered as per the
corresponding article number in the Articles of Association and defined terms herein have the meaning given to them in the
Articles of Association.

SHARE CAPITAL
Capital
4. The Authorised Share Capital of the company is ` 20,00,00,00,000 (Rupees Two thousand crores) divided into
2,00,00,00,000 (Two hundred crores) equity shares of ` 10/- (Rupees Ten) each.
Companys Shares not to be purchased
5. Except to the extent allowed by Section 77, no part of the funds of the company shall be employed in the purchase of
or in loans upon the security of the companys shares.
Buy Back of the Shares of the Company
5A. Notwithstanding, any thing contained in Article 5, the Company may buy back the shares of the Company to the
extent and in the manner allowed under Section 77A of the Companies Act, 1956.
Allotment of Shares
6. Subject to the provisions of Section 81 of the Act and these articles, the shares in the capital of the Company for the
time being shall be under the control of the Board of Directors who may issue, allot or otherwise dispose of the same
to such persons, in such proportions and on such terms and conditions and either at a premium or at par or (Subject to
the compliance with the provisions of Section 79 of the Act) at a discount and at such time as they may from time to
time think fit and subject to provisions of Section 77A of the Act with the sanction of the company in the General
Meeting to give to any person or persons the option or right to call for any shares either at par or premium during such
time and for such consideration as the Directors think fit, and may issue and allot shares in the capital of the Company
on payment in full or part of any property sold and transferred or for any services rendered to the Company in the
conduct of its business and any shares which may so be allotted may be issued as fully paid-up shares and if so issued
shall be deemed to be fully paid shares.
Provided that option or right to call of shares shall not be given to any person or persons without the sanction of the
Company in General Meeting.
CERTIFICATES
Share Certificate
7. The Certificates of title to shares shall be issued in accordance with provision of the Companies (Issue of Share
Certificate) Rules, 1960.
Members right to Certificates
8. (i) Subject to the requirements of the listing agreement and the bye laws of the stock exchanges, every member shall
be entitled, without payment, to one or more certificates in marketable lots, for all the shares of each class or
denomination registered in his name, or if the directors so approve (upon paying such fees as the directors may from
time to time determine) to several certificates, each for one or more such shares and the Company shall complete and
have ready for delivery such certificates within three months from the date of allotment unless the condition of issue
thereof otherwise provide, or within one month of the receipt of application of registration of transfer, transmission,
sub-division, consolidation or renewal of any of its shares as the case may be. Every certificate of share shall be under
the seal of the Company and shall specify the number and distinctive number of shares in respect of which it is issued
and amount paid up thereon and shall be in such form as the directors may prescribe or approve.
Provided that in case of securities held by the member in dematerialized form no share certificate shall be issued.

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(ii) In respect of share or shares held jointly by several persons, the Company shall not be bound to issue more than
one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all.
Issue of new share certificates in place of one defaced, lost or destroyed
9. If any security certificate be worn out, defaced, mutilated or torn or if there be no further space on the back thereof for
endorsement of transfer upon production and surrender thereof to the Company, a new certificate may be issued in
lieu thereof, and if any certificate be lost or destroyed then upon proof thereof to the satisfaction of the Company and
on execution of such indemnity as the Company deem adequate, being given, a new certificate in lieu thereof shall be
given to the party entitled to such lost or destroyed certificate. Every certificate under the Articles shall be issued
without payment of fees.
Provided that notwithstanding what is stated above the directors shall comply with such rules or regulations or
requirements of any stock exchange or the rules made under the Act or the rules made under Securities Contracts
(Regulation) Act, 1956 or any other Act, or rules applicable in this behalf.
The provision of this Article shall mutatis mutandis apply to the debentures of the Company.
CALLS
Calls on shares
10. The Board may, from time to time, make calls upon the members in respect of any moneys unpaid on their shares and
specify the time or times of payments, and each member shall pay to the Company at the time or times so specified the
amount called on his shares.
Provided, however, that the Board may, from time to time, at its discretion extend the time fixed for the payment of
any call and may extend such time to allow any of the members whom for residence at a distance or other cause, the
Board may deem entitled to such extension, but no member shall be entitled to such extension save as a matter of
grace and favour.
When interest on call payable.
11. If a sum payable in respect of any call be not paid on or before the day appointed for payment thereof the holder for
the time being or allottee of the share in respect of which a call shall have been made, shall pay interest on the same at
such rate not exceeding 5 (five) per cent per annum as the Board shall fix from the day appointed for the payment
thereof to the time of actual payment, but the Board may waive payment of such interest wholly or in part.
Payment in anticipation of calls may carry interest.
12. The Directors may, if they think fit subject to the provision of section 92 of the Act, agree to and receive from any
member willing to advance the same, whole or any part of the moneys due upon the shares held by him beyond the
sums actually called for, and upon the amount so paid or satisfied in advance, or so much thereof as from time to time
exceeds the amount of the calls then made upon the shares in respect of which such advance has been made, the
Company may pay interest at such rate, as may be decided by directors provided that money paid in advance of calls
shall not confer a right to participate in profits or dividend. The Directors may at any time repay the amount so
advanced.
The members shall not be entitled to any voting rights in respect of the moneys so paid by them until the same would
but for such payment, become presently payable.
The provisions of these Articles shall mutatis-mutandis apply to the calls on debentures of the Company.
Joint-holders liability to pay.
13. The joint-holders of a share shall be jointly and severally liable to pay all calls in respect thereof.




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FORFEITURE, SURRENDER AND LIEN
Companys Lien on shares
14. The Company shall have a first and paramount lien upon all the shares (other than fully paid-up shares and in case of
partly paid shares the Companys lien shall be restricted to moneys called or payable at a fixed time in respect of such
shares) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale
thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares
and no equitable interest in any share shall be created except upon the footing and condition that this Article will have
full effect. Any such lien shall extend to all dividends, bonuses and interest from time to time declared/accrued in
respect of such shares. Unless otherwise agreed the registration of a transfer of shares shall operate as a waiver of the
Companys lien, if any, on such shares/debentures. The Directors may at any time declare any shares wholly or in part
to be exempt from the provisions of this clause.
TRANSFER AND TRANSMISSION OF SHARES
Register of transfer.
21. The Company shall keep a book to be called register of transfers and therein enter the particulars of several transfers
or transmission of any share.
Transfer & Transmission of Shares
22. Subject to the provisions of the Listing Agreements between the Company and the Stock Exchanges, in the event that
the proper documents have been lodged, the Company shall register the transfer of securities in the name of the
transferee except:
(i) When the transferee is, in exceptional circumstances, not approved by the Directors in accordance with the provisions
contained herein;
(ii) When any statutory prohibition or any attachment or prohibitory order of a competent authority restrains the
Company from transferring the securities out of the name of the transferor;
(iii) When the transferor object to the transfer provided he serves on the Company within a reasonable time a prohibitory
order of a court of competent jurisdiction.
Notice of refusal to register transfer
23. Subject to the provisions of Section 111 and 111A of the Act, the provisions of the Listing Agreements with the Stock
Exchange and Section 22A of the Securities Contracts (Regulation) Act, 1956, the Directors may, at their own
absolute and uncontrolled discretion and by giving reasons, decline to register or acknowledge any transfer of shares
whether fully paid or not and the right of refusal, shall not be affected by the circumstances that the proposed
transferee is already a member of the Company but in such cases, the Directors shall within one month from the date
on which the instrument of transfer was lodged with the Company, send to the transferee and transferor a notice of the
refusal to register such transfer provided that registration of transfer shall not be refused on the ground of the
transferor being either alone or jointly with any other person or persons indebted to the Company on any account
whatsoever except when the Company has a lien on the shares. Transfer of shares/debentures in whatever lot shall not
be refused.
Company not bound to recognize any interest in shares other than that of the registered holders.
24. Save as herein otherwise provided the Board shall be entitled to treat the person whose name appears on the register of
members as the holder of any share as the absolute owner thereof and accordingly shall not (except as ordered by a
court of competent jurisdiction or as by law required) be bound to recognize any benami trust or equity or equitable
contingent or other claim to or interest in such share on the part of any person, whether or not it shall have express or
implied notice thereof.
Execution of transfer
25. The instrument of transfer of any share in the Company shall be executed both by the transferor and the transferee, and
the transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register
of members in respect thereof.

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Instrument of Transfer
25A The instrument of transfer in case of shares held in physical form shall be in writing and all provisions of section 108
of the Companies Act, 1956 and statutory modification thereof for the time being shall be duly complied with in
respect of all transfer of shares and registration thereof.
Form of transfer
26. A common form of transfer of shares or debentures as the case may be, shall be used by the Company.
Transfer to be left at office and evidence of title to be given
27. Every instrument of transfer shall be left at the office for registration accompanied by the certificate of the shares to be
transferred and such evidence as the Company may require to prove the title of the transferor, or his right to transfer
the shares. All instruments of transfer shall be retained by the company but any instrument of transfer which the Board
may decline to register shall be returned to the person depositing the same.
Transmission by operation of law.
28. Nothing contained in Article 22 shall prejudice any power of the company to register as shareholder any person to
whom the right to any shares in the company has been transmitted by operation of law.
Fee on transfer
29. No fee shall be charged for registration of transfer, transmission, probate, succession certificate and letters of
administration, certificate of death or marriage, power of attorney or similar other document.
When transfer books and register may be closed
30. The transfer books and register of members or register of debenture holders may be closed for any time or times not
exceeding in the aggregate 45 days in each year but not exceeding 30 days at a time, by giving not less than seven days
previous notice and in accordance with Section 154 of the Act.
Boards right to refuse registration
31. Subject to the provision of Act, the Board shall have the same right to refuse to register a person entitled by
transmission to any shares or his nominee, as if he were the transferee named in the ordinary transfer presented for
registration.
INCREASE, REDUCTION AND ALTERATION OF CAPITAL
Transfer & Transmission of bonds/debentures
32. Unless otherwise provided the Act or rules made there under or any notification/ guidelines/ instructions/ of the Govt.
of India in that behalf, the procedures for transfer and transmission of shares shall mutatis mutandis apply to transfer
and transmission of debentures/bonds.
Nomination
32A. 1. Every Share/Bond/Debenture holder and a Depositor under the Companys Public Deposit Scheme (Depositor) of
the company may at any time, nominate in the prescribed manner a person to whom his Shares/Bonds/Debentures or
deposits in the company shall vest in the event of his death.
2. Where the Shares or Bonds or Debentures or Deposits in the company are held by more than one person jointly, the
joint holder may together nominate, in the prescribed manner a person to whom all the rights in the shares or bonds or
debentures or deposits in the company as the case may be shall vest in the event of death of all the joint holders.
3. Notwithstanding anything contained in any other law for the time being in force or in disposition, whether
testamentary or otherwise, in respect of such Shares/Bonds/Debentures or Deposits in the company, where
nomination made in the prescribed manner purport to confer on any person the right to vest the share/bond/debentures
or deposits in the company, the nominee shall on the death of the Share/Bond/Debentures holder or a depositor, as the
case may be, on the death of the joint holders become entitled to all the rights in such shares/bonds/debentures or
deposits, as the case may be, all the joint holders in relation to such share/bonds/debentures or deposits, to the
exclusion of all persons, unless the nomination is varied, cancelled in the prescribed manner.

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4. Where the nominee is minor, it shall be lawful for the holder of the share/bonds/debentures or deposits, to make the
nomination to appoint, in the prescribed manner, any person to become entitled to shares/bonds/debentures or
deposits, in the company, in the event of his death, during the minority.
Transmission of securities by Nominee
32B. A nominee upon production of such evidence as may be required by the Board and subject as hereinafter provide,
elect, either-
1. to be registered himself as holder of the share/bonds/debentures or deposits, as the case may be; or
2. to make such transfer of the share/bonds/debentures or deposits, as the case may be, as deceased
share/bond/debenture holder or depositor, could have made;
3. if the nominee elects to be registered as holder of the share/bonds/debentures or deposits, himself, as the case
may be, he shall deliver or send to the company a notice in writing signed by him stating that he so elects and
such notice shall be compiled with the death certificate of the deceased share/bond/debenture holder, or depositor,
as the case may be;
4. a nominee shall be entitled ti the same dividends and other advantages to which he would be entitled to, if he
were the registered holder of the share/bond/debentures or deposits, except that he shall not, before being
registered as a member in respect of his share/bond./debenture or deposit be entitled in respect of it to exercise
any right conferred by membership in relation to meetings of the company.
Provided further that the Board may, at any time, give notice requiring any such person to elect either to be registered
himself or to transfer the share/bind/debenture or deposits, and if the notice is not complied with within 90 days, the
Board may thereafter withhold payment of all dividends, bonuses or other moneys payable or rights accruing in
respect of the share/bond/debenture or deposits, until the requirements of the notice have been complied with.
Increase of Capital
33. Subject to the provisions of the Act the Company in General Meeting, may increase the share capital by such sum to
be divided into shares of such amount as the resolution shall prescribe.
On what condition new shares may be issued
34. New shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the
general meeting resolving upon the creation whereof shall direct. Provided that no shares (not being preference share)
shall be issued carrying voting right or rights in the Company as to dividend, capital or otherwise, which are
disproportionate to the rights attaching to the holders of other shares (not being preference shares).
How far new shares to rank with shares in original capital.
35. Except so far as otherwise provided by the conditions of issue, or by these articles, any capital raised by the creation
of new shares shall be considered part of the original capital and shall be subject to the provisions herein contained
with reference to the payment of calls and instalments, transfer and transmission, lien, voting, surrender and
otherwise.
New shares to be offered to members
36. The new shares (resulting from an increase of capital as aforesaid) may be issued or disposed of by the directors to
such persons and on such terms and conditions as they think fit.
Further issue of Shares
36A.1. Where at the time after the expiry of two years from the formation of the Company or at time after the expiry of one
year from the allotment of shares in the Company made for the first time after its formation, whichever is earlier, it is
proposed to increase the subscribed capital of the Company by allotment of further shares either out of the unissued
capital or out of the increased share capital then:
a) Such further shares shall be offered to the persons who at the date of the offer, are holders of the equity shares of the
Company, in proportion as near as circumstances admit, to the capital paid-up on that shares at the date.
b) Such offer shall be made by a notice specifying the number of shares offered and limiting a time not being less than
thirty days from the date of the offer and the offer if not accepted, will be deemed to have been declined.
c) The offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares

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offered to them in sub clause (b) hereof shall contain a statement of this right, provided that the directors may decline,
without assigning any reason to allot any shares to any person in whose favour any member may renounce the shares
offered to him.
d) After expiry of the time specified in the aforesaid notice or on receipt of earlier intimation from the person to whom
such notice is given that he declines to accept the shares offered, the Board of Directors may dispose off them in such
manner and to such person(s) as they may think, in their sole discretion, fit.
2. Notwithstanding anything contained in sub-clause (1) hereof, the further shares aforesaid may be offered to any
person (whether or not those persons include the persons referred to in clause (a) of sub-clause (1) hereof in any
manner whatsoever:
a) If a special resolution to that effect is passed by the Company in General Meeting, or
b) Where no such special resolution is passed, if the votes cast (whether on a show of hands or on a poll as the case may
be) in favour of the proposal contained in the resolution moved in the general meeting (including the casting vote, if
any, of the chairman) by the members who, being entitled to do so, vote in person, or where proxies are allowed, by
proxy, exceed the votes, if any, cast against the proposal by members, so entitled and voting and the Central
Government is satisfied on an application made by the Board of Directors in this behalf the proposal is most
beneficial to the Company.
3. Nothing in sub-clause (c) of (1) hereof shall be deemed:
a) To extend the time within which the offer should be accepted; or
b) To authorize any person to exercise the right of renunciation for a second time on the ground that the person in whose
favour the renunciation was first made has declined to take the shares comprised in the renunciation.
4. Nothing in this Article shall apply to the increase of the subscribed capital of the Company caused by the exercise of
an option attached to the debenture issued or loans raised by the Company:
i) To convert such debentures or loans into shares in the Company, or
ii) To subscribe for shares in the Company (whether such option is conferred in these Articles or otherwise)
Provided that the terms of issue of such debentures or the terms of such loans include a term providing for such option and
such term
a) either has been approved by the Central Government before the issue of the debentures or the raising of the loans or is
in conformity with the rules, if any, made by that Government in this behalf; and
b) in the case of debentures or loan or other than debentures issued to or loans obtained from Government in this behalf,
has also been approved by a special resolution passed by the Company in General Meeting before the issue of the
debentures or raising of the loans.
Reduction of Capital etc.
37. Subject to provision of section 100-104 of the Act, the Company may, from time to time, by special resolution, reduce
its capital by paying off capital or cancelling capital which has been lost or is un-represented by available assets or is
superfluous or by reducing the liability on the shares or otherwise as may deem expedient, and capital may be paid off
upon the footing that it may be called upon again or otherwise, and the Board may, subject to the provisions of the
Act, accept surrender of shares.
Sub-division and consolidation of shares
38. Subject to the provisions of the Act, the Company in general meeting may, from time to time sub-divide or
consolidate its shares or any of them and exercise any of the other powers conferred by sub-section (i) (a) to (e) of
section 94 of the Act and shall file with the registrar such notice of exercise of any such powers as may be required by
the Act.
De-materialization of securities
38A.a) Notwithstanding anything contained in these Articles, the Company shall be entitled to dematerialize or rematerialize

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its shares, debentures and other securities (both present and future) held by it with the Depository and to offer its
shares, debentures and other securities for subscription in a dematerialized form pursuant to the Depositories Act,
1996 and the Rules framed thereunder, if any.
b) Every person subscribing to securities offered by the Company shall have the option to receive the security certificate
or to hold the securities with a Depository. Such a person who is the beneficial owner of securities can at any time opt
out of a Depository, if permitted by law, in respect of any security and the Company shall, in the manner and within
the time prescribed provided by the Depositories Act, 1996 issue to the beneficial owner the required Certificates of
Securities.
If a person opts to hold his security with a depository, then notwithstanding anything to the contrary contained in the
Act or in these Articles, the Company shall intimate such Depository the details of allotment of the security and on
receipt of the information, the Depository shall enter in its record the name of the allottee as the beneficial owner of
the security.
c) All securities held by a Depository shall be dematerialized and shall be in fungible form. Nothing contained in
Sections 153 of the Act shall apply to a Depository in respect of securities held by it on behalf of the beneficial
owners.
(d)(i) Notwithstanding anything to the contrary contained in the Act or in these Articles, a depository shall be deemed to be
the registered owner for the purposes of effecting transfer of ownership of security on behalf of the beneficial owner.
(ii) Save as otherwise provided in (i) above, the Depository as the registered owner of the securities shall not have any
voting rights or any other rights in respect of the securities held by it.
(iii) Every person holding securities of the company and whose name is entered as the beneficial owner in the records of
the Depository shall be deemed to be a member/ debenture holder, as the case may be, of the company. The beneficial
owner of securities shall be entitled to all the rights and benefits and be subject to all the liabilities in respect of his
securities which are held by a Depository.
(a) Notwithstanding anything to the contrary contained in the Act or in these Articles to the contrary where securities are
held in a Depository, the records of the beneficial ownership may be served by such Depository on the Company by
means of electronic mode or by delivery of floppies or discs.
(b) Nothing contained in the Act or in these Articles, shall apply to a transfer or transmission of Securities where the
company has not issued any certificates and where such Shares or Debentures or Securities are being held in a
electronic and fungible form in a Depository. In such cases the provisions of the Depositories Act, 1996 shall apply.
(c) Notwithstanding anything to the contrary contained in the Act or these Articles, after any issue where the securities
are dealt with by a Depository, the company shall intimate the details thereof to the depository immediately on
allotment of such securities.
(d) Nothing contained in the Act or in these Articles regarding the necessity of having distinctive numbers for securities
issued by the Company shall apply to securities held by a Depository.
(iv) Notwithstanding anything contained in these Articles the Company shall have the right to issue Securities in a public
offer in dematerialized form as required by applicable laws and subject to the provisions of applicable law, trading in
the Securities of the Company post-listing shall be in the demat segment of the relevant Stock Exchanges, in
accordance with the directions of SEBI, the Stock Exchanges and the terms of the listing agreements to be entered
into with the relevant Stock Exchanges.
MODIFICATION OF CLASS RIGHTS
Power to modify rights of different classes of shareholders.
39. If at any time, the capital, by reason of the issue of preference shares or otherwise, is divided into different classes of
shares all or any of the rights and privileges attached to each class may, subject to the provisions of Sections 106 and
107 of the Act be modified, abrogated or dealt with by agreement between the company and by any person purporting
to contract on behalf of that class, provided such agreement is (a) ratified in writing by the holder of at least three-
fourth of the nominal value of the issued shares of that class or (b) confirmed by a special resolution passed at a
separate general meeting of the holders of shares of that class and all the provisions hereinafter contained as to general
meeting shall mutatis mutandis apply to every such meeting, except that the quorum thereof shall be members holding
or representing by proxy one-fifth of the nominal amount of the issued shares of that class. This article is not by

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implication to curtail the power of modification which the company would have if the article was omitted.
BORROWING POWERS
Power to borrow
40. Subject to the provisions of the act and regulations made there under, the Board of Directors may, from time to time,
by resolutions passed at a meeting of the Board, accept deposit, or borrow from the Members, either in advance of
calls or otherwise, or accept deposits from public and may raise and secured the payment of such sum or sums in such
manner and upon such terms and conditions in all respect as the think fit and in particular by the issue of bonds,
perpetual or redeemable debenture stock, or any mortgage or charge or other security on the undertaking or the whole
or any part of the property of the company (both present and future) including its uncalled capital for the time being.
Subject to Section-76 of Companies Act, the Board may authorise payment of underwriting or such other commission
and brokerage as may be appropriate.
Securities may be assignable free from equities
41. Debenture, debenture stock, bond or other securities, may be made assignable free from any equities between the
Company and the persons to whom the same be issued.
Issue of debentures etc. at discount or with special privilege
42. Subject to section-117 of the act, any debenture, debenture stock, bond or other securities may issued at discount,
premium or otherwise, and with any special privilege as to redemption, surrender, drawings and allotment of shares
attending (but not voting) at the general meeting, appointment of directors and otherwise debenture with the right to
conversion into or allotment of shares shall be issued only with the consent of the Company in the general meeting by
a special resolution.
Persons not to have priority over any prior charge
43. Whenever any uncalled capital of the Company is charged all persons taking any subsequent charge thereon shall
taken the same subject to prior charge and shall not be entitled by notice to the shareholders or otherwise, to obtain
priority over such prior charge.
GENERAL MEETINGS
Annual General Meetings.
44. The first annual general meeting of the company shall be held within 18 months from the date of its incorporation and
thereafter the next general meeting of the company shall be held within 6 months after the expiry of the financial year
in which the first annual general meeting was held and thereafter an annual general meeting shall be held by the
company within 6 months after the expiry of each financial year, in accordance with the provisions of Section 166 of
the Act. Such general meetings shall be called Annual General Meetings.
Extraordinary General Meetings.
45. All general meetings other than Annual General Meetings shall be called Extraordinary General Meetings. The
Board may whenever it thinks fit, and they shall when so required by the President or on the requisition of the holders
of not less than one tenth of the paid up share capital of the company upon which all calls or other sums then due have
been paid, forthwith proceed to convene an extraordinary general meeting of the company and in case of such
requisition the following provisions shall have effect:
(i) The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the
office and may consist of several documents in like form each signed by one or more requisitionists.
(ii) If the Board does not proceed within 21 days from the date of deposit of valid requisition to call a meeting on a day
not later than 45 days from such date the meeting may be called by such of the requisitionists as represent either
majority in value of the paid up share capital held by all of them or not less than one-tenth of such of the paid up share
capital of the company as is referred to in clause (a) of sub-section (4) of Section 169 of the Act whichever is less.
(iii) Any meeting convened under this article by the requisitionists shall be convened in the same manner as nearly as
possible as that in which meetings are to be convened by the Board.

186

If, after a requisition has been received, it is not possible for a sufficient number of Directors to meet in time so as to
form a quorum, any Director may convene an extraordinary general meeting in the same manner as nearly as possible
as that in which meetings may be convened by the Board.

Notice of Meeting.
46.(a) A general meeting of the Company may be called by giving not less than 21 days notice in writing.
(b) A general meeting may be called after giving shorter notice than that specified in sub-clause (a) if consent is accorded
thereto:
(i) in the case of an annual general meeting by all the members entitled to vote thereat; and
(ii) in the case of any other meeting by members of the company holding not less than 95 per cent of such part of the
paid-up share capital of the company as gives a right to vote at the meeting.
Provided that where any members of the Company are entitled to vote only on some resolution or resolutions to be
moved at a meeting and not on the others, those members shall be taken into account for the purpose of this sub-
clause in respect of the former resolution or resolutions and not in respect of the latter.
Business at the Annual General Meeting.
54.(a) In the case of an Annual General Meeting, all business to be transacted at the meeting shall be deemed special, with
the exception of business relating to:
(i) the consideration of accounts, Balance Sheet and report of the Board of Directors and Auditors;
(ii) the declaration of a dividend;
(iii) the appointment of Directors in the place of those retiring; and
(iv) the appointment of, and the fixing of remuneration of the Auditors; and
(b) In the case of any other meeting all business shall be deemed special.
Explanatory statement to be annexed to the notice.
55.(i) Where any items of business to be transacted at the meeting are deemed to be special as aforesaid, there shall be
annexed to the notice of the meeting a statement setting out all material facts concerning each item of business,
including in particular the nature of the concern or interest, if any, therein, of every Director, and the Manager, if any.
Provided that where any item of special business as aforesaid to be transacted at a meeting of the company relates to,
or affects any other company, the extent of shareholding interest in that other company of every Director, and
Manager, if any, of the Company shall also be set out in the statement if the extent of such shareholding interest is not
less than twenty per cent of the paid-up share capital of that other Company.
(ii) Where any item of business consists of the according of approval to any document by the meeting, the time and place
where the document can be inspected shall be specified in the statement aforesaid.
PROCEEDINGS AT GENERAL MEETINGS
Quorum
56.(i) No business shall be transacted at any general meeting unless a quorum of members is present at the time when the
meeting proceeds to business.
(ii) Five members present in person or by duly authorized representative shall be quorum for a General Meeting of the
Company.
Right of President to appoint any person as his representative.
57.(i) The President, so long as he is a shareholder of the company may, from time to time, appoint such person as he thinks

187

fit (who need not be member of the company) to represent him at all or any meetings of the company.
(ii) Any one of the persons appointed under sub-clause (i) of this article who is personally present at the meeting shall be
deemed to be member entitled to vote and be present in person and shall be entitled to represent the President at all or
any such meeting and to vote on his behalf whether on a show of hands or on a poll.
(iii) The President may, from time to time, cancel any appointment made under sub-clause (i) of this article and make
fresh appointments.
(iv) The production at the meeting of an order of the President, evidenced as provided in the Constitution of India, shall be
accepted by the company as sufficient evidence of any such appointment or cancellation as aforesaid.
(v) Any person appointed by the President under this article may, if so authorised by such order, appoint a proxy whether
specially or generally.
Chairman of general meeting.
58. The Chairman of the Board of Directors shall be entitled to take the chair at every general meeting or if there be no
such chairman, or if at any meeting he shall not be present within 15 minutes after the time appointed for holding such
meeting or is unwilling to act as chairman, the members present shall choose another Director as chairman, and if no
Director shall be present or, if all the Directors present decline to take the chair, then the members present shall
choose one of the members to be chairman.
Proceeding when quorum not present.
59. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon
any requisition of the members, shall be dissolved but in any other case it shall stand adjourned to the same day in the
next week not being a public holiday (but if the same be a public holiday the meeting shall stand adjourned to the
succeeding date of such public holiday) at the same time and place, or to such other day and at such other time and
place as the Board may determine and if at such adjourned meeting a quorum is not present within half an hour from
the time appointed for the meeting, those members who are present shall be a quorum and may transact the business
for which the meeting was called.
How questions to be decided at meetings.
60. Every question submitted to a meeting shall be decided in the first instance by a show of hands, and in the case of an
equality of votes the chairman shall, both on a show of hands and at a poll (if any), have a casting vote in addition to
the vote to which he may be entitled as a member.
What is to be evidence of the passing of resolution where poll not demanded.
61. At any general meeting resolution put to vote of the meeting shall be decided on a show of hands, unless a poll is,
before or on the declaration of the result of the show of hands, demanded by a member present in person or proxy or
by duly authorised representative, and unless a poll is so demanded, a declaration by the chairman that resolution has,
on a show of hands been carried or carried unanimously or by particular majority or lost, and an entry to that effect in
the book of proceedings of the company shall be conclusive evidence of the fact, without proof of the number or
proportion of the votes recorded in favour of or against that resolution.
Poll
62. If a poll is duly demanded, it shall be taken in such manner and at such time and place as in accordance with Sections
179 and 180 of the Act.
Power to adjourn general meeting.
63. The chairman of a general meeting may, with the consent of the meeting, adjourn the same from time to time and
from place to place but no business shall be transacted at any adjourned meeting other than the business left
unfinished at the meeting from which the adjournment took place.
In what cases poll taken without adjournment
64. Subject to the provisions of Section-180 of the Act, any poll duly demanded on the election of a chairman of a
meeting or any question of adjournment shall be taken at the meeting and without adjournment.

188

Business may proceed not withstanding demand of poll
65. The demand of a poll shall not prevent the continuation of a meeting for the transaction of any business other than the
question on which a poll has been demanded.
Chairmans decision conclusive
66. The chairman of any meeting shall be the sole judge of the validity of every vote tendered at such meeting. The
chairman present at the taking of a poll shall be the sole judge of the validity of every vote tendered at such poll.
VOTES OF MEMBERS
Votes
67. Every member entitled to vote and present in person or by proxy shall have one vote on a show of hands and upon a
poll one vote for each share held by him.
Postal Ballot
69A. Notwithstanding anything contained in the Articles of the Company, the Company do adopt the mode of passing
resolutions by the members of the Company by means of Postal Ballot (which includes voting by electronic mode)
and/or other ways as may be prescribed in the Companies (Passing of Resolutions by Postal Ballot) Rules, 2001 in
respect of the matters specified in said Rules as modified from time to time instead of transacting such business in a
general meeting of the company subject to compliances with the procedure for such postal ballot and/or other
requirements prescribed in the rules in this regard.
BOARD OF DIRECTORS
Number of Directors
80. Until otherwise determined in a general meeting the number of Directors of the company shall not be less than three
and not more than twelve. The Directors are not required to hold any qualification shares.
Appointment of Chairman, Managing Director and other Directors
81.(1) The President shall appoint one of the Directors as the Chairman and shall appoint other Directors in consultation
with the Chairman provided that no such consultation is necessary in respect of Government representatives on the
Board of Directors of the company. The Directors (including the Chairman/Managing Director) shall be paid such
salary and/or allowance as the President may from time to time determine.
(2) The President may from time to time appoint a Managing Director and other whole-time Director/ Directors on such
terms and remuneration (whether by way of salary or otherwise) as he may think fit.
(3) All the Directors of the Corporation except the Chairman, the Managing Director/whole-time Directors and the
Government representatives on the Board of Directors shall, unless otherwise specified in their order of appointment,
retire at the end of three years from the date of their appointment. The Directors so retired will be eligible for
reappointment.
(4) Subject to the relevant provisions of the Act, the President shall have the right to remove or dismiss the Chairman, the
Managing Director/whole-time Director and the Directors for any reasons whatsoever and shall have the right to fill in
any vacancy in the office of the Chairman, Managing Director/whole-time Director or the Directors caused by
removal, dismissal, resignation, death or otherwise.
(5) Subject to the provisions of Section 292 of the Companies Act, the Board of Directors may, from time to time, entrust
and confer upon the Chairman or Managing Director for the time being such of the powers as they may think fit and
may confer such powers for such time and to be exercised for such objects and purposes and upon such terms and
conditions and with such restrictions as they may think expedient and may, from time to time, revoke, withdraw, alter
or vary all or any of such powers.
Disclosure of interest and interested Directors not to participate or vote in Boards proceedings
82.(i) Every Director of the company shall disclose the nature of his concern or interest in accordance with the provisions of
Section 299 of the Act.

189

(ii) No Director of a company shall, as a Director, take any part in the discussion of or vote on, any contract or
arrangement entered into or to be entered into, by or on behalf of the company, if he is in any way, whether directly or
indirectly, concerned or interested in the contract or arrangement; nor shall his presence count for the purpose of
forming a quorum at the time of any such discussion or vote; and if he does vote, his vote shall be void as provided in
Section 300 of the Act.
Disqualifications of and vacating of office by Directors
83. A person shall not be capable of being appointed as a Director of the company if he suffers from any of the
disqualifications enumerated in Section 274 of the Act.
The office of a Director shall be vacated if any of the conditions set out in Section 283 of the Act comes to happen.
This is without prejudice to the right of the President to remove any Director without assigning any reason
whatsoever.
Alternate Director
84. The President may, in consultation with the Chairman of the company, and subject to Section 313 of the Act, appoint
an alternate Director to act for a Director during the absence of the Director from the State, in which meetings of the
Board are ordinarily held, for a period of not less than three months.
Powers of Chairman
85. (a) The Chairman shall reserve for the decision of the President any proposal or decision of the Board of Directors in any
matter which in the opinion of the Chairman is of such importance as to be reserved for the approval of the President.
No action shall be taken by the company in respect of any proposal or decision of the Board of Directors reserved for
approval of the President as aforesaid until his approval to the same has been obtained.
(b) Without prejudice to the generality of the other provisions contained in these Articles, the Board shall reserve for the
decision of the President any matter relating to:
(i) The Companys revenue budget in case there is an element of deficit, which is proposed to be met by
obtaining funds from the Government.
(ii) Winding up of the Company.
(iii) Sale, lease, disposal or otherwise of the whole or substantially the whole of the undertaking of the company.
(iv) Any other matter which in the opinion of the Chairman and Managing Director be of such importance as to
be reserved for the approval of the President.
Right of the President
86. Notwithstanding anything contained in all these Articles the President may from time to time issue such directives or
instructions as may be considered necessary in regard to conduct of business and affairs of the company and in like
manner may vary and annul any such directive or instruction. The Directors shall give immediate effect to the
directives or instructions so issued. In particular, the President will have the powers:
(i) To give directives to the Company as to the exercise and performance of its functions in matters involving national
security or substantial public interest.
(ii) To call for such returns, accounts and other information with respect to the property and activities of the company as
may be required from time to time.
(iii) To determine in consultation with the Board annual, short and long term financial and economic objectives of the
Company.
Provided that all directives issued by the President shall be in writing addressed to the Chairman. The Board shall
except where the President considers that the interest of national security requires otherwise incorporate the contents
of directives issued by the President in the annual report of the Company and also indicate its impact on the financial
position of the Company.


190

General powers of the company vested in Directors
88. (i) Subject to the provisions of the Act and these articles, the Board of Directors of the company shall be entitled to
exercise all such powers and to do all such acts and things as the company is authorised to exercise and do.
Provided that the Board shall not exercise any power or do any act or thing which is directed or required whether by
the Act or any other Act or by the Memorandum and Articles of the company in general meeting.
Provided further that in exercising any such power or doing any such act or thing, the Board shall be subject to the
provisions contained in that behalf in the Act or any other Act or in Memorandum and Articles of the company, or in
any regulations not inconsistent therewith and duly made there under, including regulations made by the company in
general meeting.
(ii) No regulation made by the company in general meeting shall invalidate any prior act of the Board which would
have been valid if that regulation had not been made.
RESERVE AND DIVIDEND
Division of Profit
101. (i) The profits of the Company available for payment of dividend subject to any special rights relating thereto created or
authorised to be created by these Articles of Association and subject to the provisions of the Act and Articles of
Association as to the reserve fund and amortisation of capital shall be divisible among the members in proportion to
the amount of capital paid-up by them respectively. Provided always that (subject as aforesaid) any capital paid-up on
a share during the period in respect of which a dividend is declared shall only entitle the holder of such share to an
apportioned amount of such dividend as from the date of payment.
(ii) No dividend shall be declared or paid by the company for any financial year except out of profits of the company for
that year arrived after providing for the depreciation in accordance with the provisions of sub-section (2) of section
205 of the Act or out of profits of the company for any previous financial year or years arrived after providing for the
depreciation in accordance with applicable laws and remaining undistributed or out of both or out of moneys provided
by the government for the payment of dividend in pursuance of a guarantee given by the government. No dividend
shall carry interest against the company.
(iii) For the purpose of the last preceding article, the declaration of the directors as to the amount of the profits of the
company shall be conclusive.
(iv) Subject to the provisions of section 205 of the Act as amended, no dividend shall be payable except in cash.
(v) A transfer of shares shall not pass the right to any dividend declared thereon after transfer and before the registration
of the transfer.
(vi) Any one of the several persons who are registered as the joint holders of any share, may give effectual receipts for all
dividends and payments on accounts of dividends in respect of such shares.
(vii) Unless otherwise directed any dividend may be paid by cheque or demand draft or warrant or such other permissible
means to the registered address of the member or person entitled or in the case of joint holding, to the registered
address of that one whose name stands first in the register in respect of joint holding and every cheque, demand draft
or warrant so sent shall be made payable to the member or to such person and to such address as the shareholder or
the joint shareholders in writing may direct.
The Company in General Meeting may declare a dividend
102. The company in General meeting may declare a dividend to be paid to the members according to their respective
rights and interest in the profits and may fix the time for payment but no dividend shall exceed the amount
recommended by the Board.
Interim Dividend
103. The Directors may, from time to time, pay to the members such interim dividends as in their judgement the position
of the Company justifies.


191

Unpaid or unclaimed dividend
103.A There shall not be any forfeiture of unclaimed dividends and the company shall comply with the applicable provisions
of the Act relating to transfer of unclaimed and unpaid dividend to the Investor Education and Protection Fund or to
any such other fund as may be required under applicable laws.
WINDING UP
Distribution of assets on winding up
113. If the company shall be wound up and the assets available for distribution among the members as such shall be
insufficient to repay the whole of the paid up capital, such assets shall be distributed so that as nearly as may be the
losses shall be borne by the members in proportion to the capital paid up or which ought to have been paid up, at the
commencement of the winding up of the shares held by them respectively. And if in a winding up, the assets available
for distribution among the members shall be more than sufficient to repay the whole of the capital paid up at the
commencement of the winding up, the excess shall be distributed amongst the members in proportion to the capital at
the commencement of the winding up, paid up or which ought to have been paid up on the shares held by them
respectively. But this clause is to be without prejudice to the rights of the holders of shares issued upon special terms
and conditions.










192

SECTION VIII OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by the Company or
entered into more than two years before the date of this Draft Shelf Prospectus) which are or may be deemed material have
been entered or are to be entered into by the Company. These contracts and also the documents for inspection referred to
hereunder, may be inspected on Working Days at the Registered and Corporate Office of the Company situated at Urjanidhi,
1, Barakhamba Lane, Connaught Place, New Delhi 110 001, India, from 10.00 a.m. and 12.00 noon on any working day
(Monday to Friday) during which issue is open for public subscription under the respective tranche prospectus(es).
MATERIAL CONTRACTS
1. Memorandum of Understanding dated December 1, 2011, between the Company and the Lead Managers.
2. Memorandum of Understanding dated November 28, 2011 between the Company and the Registrar to the Issue.
3. Appointment Letter dated November 3, 2011 for the appointment of Debenture Trustee for the Bondholders.
4. Escrow Agreement dated [] between the Company, the Registrar, the Escrow Collection Bank(s), and the Lead
Managers.
5. Tripartite Agreement dated April 26, 2006, between CDSL, the Company and the Registrar to the Issue.
6. Tripartite Agreement dated May 16, 2006 between NSDL, the Company and the Registrar to the Issue.
MATERIAL DOCUMENTS
1. Memorandum and Articles of Association of the Company, as amended to date.
2. Resolution passed at 291
st
Meeting of the Board of Directors held on September 28, 2011 approving the borrowing
programme of ` 43,500 crores for the year 2011-12 and authorizing the Chairman & Managing Director to exercise
powers in relation to raising of debt issues.
3. Board resolution dated September 28,2011, approving the Issue and related matters.
4. Copy of shareholders resolution dated September 28, 2011 u/s 293 (1) (a) and 293 (1) (d) for borrowing limit and
creation of security respectively
5. CRISIL Limited (CRISIL) has assigned a rating of CRISIL AAA/Stable (pronounced as CRISIL Triple A rating
with stable outlook) vide its letter no. SN/FSR/PFC/2011-12/865 to the long term borrowing programme of `38,500
Crores and CRISIL A1+ (pronounced as CRISIL A One Plus) vide its letter no. SN/FSR/PFC/2011-12/866 to the
short term borrowing programme of `5000 Crores both dated October 13, 2011 and ICRA Limited has by its letter no.
D/RAT/2011-2012/P3/20 dated October 21, 2011, assigned a rating of ICRA AAA (pronounced ICRA triple A) to the
Long Term Borrowing Programme of ` 43,500 crores, during the financial year 2011-12.
6. Consents of each of the Directors, Lead Managers, Legal Advisors to the Issue, Registrar to the Issue, Bankers to the
Issue, Bankers to the Company, the Debenture Trustee for the Bonds and the Credit Rating Agencies to include their
names in the Draft Shelf Prospectus, in their respective capacities.
7. Consent of the Auditors, for inclusion of their name and the report on the Accounts in the form and context in which
they appear in the Draft Shelf Prospectus and their statement on tax benefits mentioned herein.
8. Auditors Report dated November 29, 2011 on standalone financial statements prepared under Indian GAAP for the
financial year March 31, 2007, 2008, 2009, 2010, 2011 and consolidated financial statements prepared under Indian
GAAP for the financial year 2009, 2010, 2011.
9. Audited standalone and consolidated financial statements of the Company November 9, 2011 for the half year ended
September 30, 2011
10. Notification No. 52/2011. F. No. 178/56/2011 - (ITA.1) dated September 23, 2011 issued by the Central Board of
Direct Taxes, Department of Revenue, Ministry of Finance, Government of India Annual Report of the Company for
the last five Fiscals.
11. In-principle listing approval from BSE vide their letter no. [] dated [].
12. Due Diligence Certificate dated [] filed by the Lead Managers with SEBI.
13. Due Diligence Certificate dated [] from the Debenture Trustee.
Any of the contracts or documents mentioned above may be amended or modified at any time, without reference to the
Bondholders, in the interest of the Company in compliance with applicable laws.

193

DECLARATION
We, the Directors of the Company, certify that all applicable legal requirements in connection with the Issue, including under
the Companies Act, the SEBI Debt Regulations, and all relevant guidelines issued by SEBI, the Government of India and any
other competent authority in this behalf, have been duly complied with, and that no statement made in this Draft Shelf
Prospectus contravenes such applicable legal requirements.
We further certify that this Draft Shelf Prospectus does not omit disclosure of any material fact which may make the
statements made therein, in light of circumstances under which they were made, misleading and that all statements in this Draft
Shelf Prospectus are true and correct.
Signed by all the Directors of the Company
1. Mr. Satnam Singh


2. Mr. Mukesh Kumar Goel


3. Mr. Radhakrishnan Nagarajan


4. Mr. Devender Singh


5. Mr. Ravindra Harshadrai Dholakia


6. Mr. P. Murali Mohana Rao


7. Mr. Suresh Chand Gupta


8 Mr. Ajit Prasad


9. Mr. Krishna Mohan Sahni


Place: New Delhi
Date:


Raj Har Gopal & Co. N.K.Bhargava & Co.
Chartered Accountants, Chartered Accountants,
412, Ansal Bhawan, C-31, Ist Floor, Acharya Niketan,
16, K.G. Marg Mayur Vihar Phase-I
New Delhi 110 001 New Delhi 110 091.
Ph no.011 41520698,41520699 Ph no. 011 22752376
E-mail:rajhargopal@hotmail.com E-mail: nkbhargavacompany@yahoo.co.in


AUDITORS REPORT

The Board of Directors
Power Finance Corporation Limited,
Urjanidhi, 1, Barakhamba Lane,
Connaught Place,
New Delhi-110001

Dear Sir,

Re: Proposed public issue by the Power Finance Corporation (Issuer) of Tax Free Bonds (the
Bonds) of face value of ` 1,000 each, in the nature of secured, redeemable, non-convertible
debentures, up to ` 4033.13 Crores (Issue) by way of issuance of Bonds at par in one or more
tranches.

1. We have examined the financial information of POWER FINANCE CORPORATION
LIMITED (the Company) annexed to this report and initialed by us for identification purposes
only. The said financial information has been prepared by the Company in accordance with the
requirements of paragraph B(1) of Part II of Schedule II to the Companies Act, 1956 (the Act)
and the Securities and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008 (SEBI Regulations) as amended issued by the Securities and Exchange
Board of India, in pursuance of Section 11 of the Securities and Exchange Board of India Act,
1992, and related clarifications and in terms of our engagement letter dated 28
th
November, 2011
in connection with the Companys Proposed Issue of secured, redeemable, non-convertible
debentures, having Benefits Under Section 10(15)(iv)(h) of the Income Tax Act, 1961.

2. Financial Information as per Audited Financial Statements

We have examined the attached Statements of Assets and Liabilities of the Company for the
financial year as at 31st March, 2007 to 31st March, 2011 (Annexure I), Statement of Profits of
the Company for the financial years from 31st March, 2007 to 31st March, 2011 (Annexure II),
and Statement of Cash Flows of the Company for the financial years from 31st March, 2007 to
31st March, 2011 (Annexure III), collectively referred to as Audited Standalone Financial
Information. The Audited Standalone Financial Information have been extracted from the audited
financial statements of the Company. The financial statements of the Company for the year ended
31
st
March 2011 have been audited by Raj Har Gopal & Co., Chartered Accountants jointly with
Mehra Goel & Co., Chartered Accountants, for the year ended 31st March,2010 by Raj Har Gopal
& Co., Chartered Accountants jointly with K.K. Soni & Co., Chartered Accountants, for the year


ended March 31, 2009 by K.K. Soni & Co., Chartered Accountants and for the years ended 31st
March , 2008 and 31st March, 2007 have been audited by Bansal Sinha & Co., Chartered
Accountants. The Financial statements for the year as at 31st March, 2007 to 31st March, 2011
have been adopted by the members. Based on our examination of these Audited Financial
Information, we state that:

i. These have to be read in conjunction with the Significant Accounting Policies and Notes to
the Accounts given in Annexure IV and V respectively to this report.

ii. The figures of earlier years / periods have been regrouped (but not restated retrospectively
for change in any accounting policy), wherever necessary, to confirm to the classification
adopted for the Audited Financial Information.

iii. There are no extraordinary items that need to be disclosed separately in the Audited
Financial Information.

iv There is no qualification in the auditors report on the Standalone financial statements for
the year ended 31
st
March, 2011 that require adjustments to the Audited Financial
Information.

v. There are qualifications in the auditors report on standalone financial statements as on and
for the year ended 31
st
March 2010 that require adjustments to the Audited Standalone
Financial Information, which has not been given effect to, is as under:

a) Power Finance Corporation Limited (The Company) pursuant to the opinion of the Expert
Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI) provided
Deferred Tax Liability (DTL) on special reserve created under section 36(1) (viii) of the
Income Tax Act, 1961 in the year 2004-05, by charging Profit & Loss Account with Rs.142.87
crores and debiting the Free Reserves by Rs 745.14 crores (for creating DTL for the years
1997-98 to 2003-04). Since, then the Company continued to provide DTL till the end of March,
2008 by charging Profit & Loss Account. The total amount towards DTL upto 31
st
March, 2008
comes to Rs.1228.38 crores. The Company during the year 2008-09 reversed the DTL provided
in earlier years amounting to Rs. 1228.38 crores and also did not provide DTL amounting to
Rs. 291.21 crores (including Rs. 133.28 crores for the year 2008-09)in the current year,
contrary to, opinions expressed by the EAC of the ICAI on two occasions dated 23.11.2004 and
18.05.2006, clarification furnished in July,2009 by the ICAI on the request of the Comptroller
and Auditor General of India and mandatory provisions of Accounting Standard-22

In view of the facts and circumstances placed before us, the profits and Free Reserves of the
company are overstated by Rs 774.45 crores and Rs 745.14 crores (previous year Rs. 616.52
crores and Rs. 745.14 crores), respectively and DTL has been understated by Rs. 1519.59
crores (previous year Rs. 1361.66 crores).
b) As regards the liability of Rs.663.49 crores (previous year Rs.908.94 crores) shown as Interest
Subsidy Fund from GOI in the Balance Sheet, received under Accelerated Generation and
Supply Program (AG&SP) Scheme from the Ministry of Power, Government of India, the
Company has estimated the net excess amount of Rs.166.25 crores (previous year Rs.283.14


crores) and Rs. 209.97 crores (previous year Rs.44.27 crores) as at 31
st
March 2010, for IX and
X plan respectively. This net excess amount is worked out on overall basis and not on
individual basis and may vary due to change in assumptions, if any, during the projected
period such as changes in moratorium period, repayment period, loan restructuring, pre
payment, interest rate reset, etc. Hence, the impact of this excess, if any could not be
determined. As such we are not in a position to express our opinion thereon.

vi. There are qualifications in the auditors report on standalone financial statements as on and
for the year ended 31
st
March 2009 that require adjustments to the Audited Standalone
Financial Information, which has not been given effect to, is as under:

a) Power Finance Corporation Limited (The Company) pursuant to the opinion of the Expert
Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI) provided
Deferred Tax Liability (DTL) on special reserve created under section 36(1) (viii) of the
Income Tax Act, 1961 in the year 2004-05, by charging Profit & Loss Account with Rs.142.87
crores and debiting the Free Reserves by Rs 745.14 crores (for creating DTL for the years
1997-98 to 2003-04). Since, then the Company continued to provide DTL till the end of March,
2008 by charging Profit & Loss Account. The total amount towards DTL upto 31st March,
2008 comes to Rs.1228.38 crores. During the current year the Company has not provided the
DTL amounting to Rs133.28 crores and has also reversed the DTL provided in earlier years
amounting to Rs 1228.38 crores, contrary to the opinions expressed by the EAC of the ICAI (on
two occasions dated 23.11.2004 & 18.05.2006) and contrary to the mandatory provisions of
existing Accounting Standard- 22.

In view of the facts and circumstances placed before us, the profits and Free Reserves of the
company are overstated by Rs 616.52 crores and Rs745.14 crores, respectively and DTL has
been understated by Rs. 1361.66 crores.

b) As regards the liability of Rs.908.94 crores (previous year Rs.1066.75 crores) shown as
Interest Subsidy Fund from GOI in the Balance Sheet, received under Accelerated
Generation and Supply Program (AG&SP) Scheme from the Ministry of Power, Government of
India, the Company has estimated the net excess amount of Rs.283.14 crores (previous year
Rs.253.47 crores) and Rs.44.27 crores (previous year Rs.52.49 crores) as at 31st March 2009,
for IX and X plan respectively. This net excess amount is worked out on overall basis and not
on individual basis and may vary due to change in assumptions, if any, during the projected
period such as changes in moratorium period, repayment period, loan restructuring, pre
payment, interest rate reset, etc. Hence, the impact of this excess, if any could not be
determined. As such we are not in a position to express our opinion thereon.


vii. There are qualifications in the auditors report on standalone financial statements as on and
for the year ended 31
st
March 2008 that require adjustments to the Audited Standalone
Financial Information , which has not been given effect to, is as under:

a) As regards the liability of Rs.1066.75 crores, shown as Interest Subsidy Fund from GOI in the
Balance Sheet, received under Accelerated Generation and Supply Program (AG&SP) Scheme


from Ministry of Power, Government of India, the corporation estimated the net excess
amount of Rs. 253.47 crores and Rs. 52.49 crores as at 31/03/2008 for IXth & Xth plan
respectively. This net excess amount is worked out on overall basis & not on individual basis
& may vary due to change in assumptions, if any during the projected period such as changes
in moratorium period, repayment period, loan restructuring, pre payment, interest rate reset
etc. Hence the impact of this excess, if any, could not be ascertained as such not commented
upon.
b) Some of the balances shown under loans, advances and other debits/credits in so far as these
have since not been confirmed, realised, discharged or adjusted are subject to reconciliation.
The effect of above item Nos. (a) and (b) above on the Companys accounts is not
ascertainable for the reasons explained in the respective notes.

viii. There are qualifications in the auditors report on standalone financial statements as on and
for the year ended 31
st
March 2007 that require adjustments to the Audited Standalone
Financial Information, which has not been given effect to, is as under:

a) As regards the liability of Rs.123162.90 lacs, shown as Interest Subsidy Fund from GOI in
the Balance Sheet, received under Accelerated Generation and Supply Program (AG&SP)
Scheme from Ministry of Power, Government of India, the excess/shortage in the Interest
Subsidy Fund , if any, could not be ascertained as such not commented upon.

b) Some of the balances shown under loans, advances and other debits/credits in so far as these
have since not been confirmed, realised, discharged or adjusted are subject to reconciliation.
The effect of item Nos. (a) and (b) above on the Companys accounts is not ascertainable for
the reasons explained in the respective notes.
3. We have also examined the Statements of Consolidated Assets and Liabilities of the
Company for the financial years as at 31st March, 2009 to 31st March, 2011 (Annexure XII),
Statement of Consolidated Profits of the Company for the financial years from 31st March, 2009
to 31st March, 2011 (Annexure XIII), and Statement of Consolidated Cash Flows of the
Company for the financial years from 31st March, 2009 to 31st March, 2011 (Annexure XIV),
collectively referred to as Audited Consolidated Financial Information. The Audited
Consolidated Financial Information have been extracted from the audited financial statements of
the Company. The Consolidated financial statements for the year ended 31st March 2011 have
been audited by Raj Har Gopal & Co., Chartered Accountants jointly with Mehra Goel & Co.,
Chartered Accountants, for the year ended 31st March, 2010 by Raj Har Gopal & Co., Chartered
Accountants jointly with K.K. Soni & Co., Chartered Accountants and for the year ended March
31, 2009 by K.K. Soni & Co., Chartered Accountants. The financial statements for the year as at
31
st
March, 2009 to 31
st
March, 2011 have been adopted by the members. Based on our
examination of these Audited Consolidated Financial Information, we state that:

i. These have to be read in conjunction with the Significant Accounting Policies and Notes to
the Accounts given in Annexure XV and XVI respectively to this report.



ii. The figures of earlier years / periods have been regrouped (but not restated retrospectively
for change in any accounting policy), wherever necessary, to confirm to the classification
adopted for the Audited Financial Information.

iii. There are no extraordinary items that need to be disclosed separately in the Audited
Financial Information.

iv There is no qualification in the auditors report on the Consolidated financial statements for
the year ended 31
st
March, 2011 that require adjustments to the Audited Consolidated
Financial Information.

v. There are qualifications in the auditors report on the Consolidated financial statements for
the year ended 31
st
March 2010 that require adjustments to the Audited Consolidated
Financial Information, which has not been given effect to, is as under:

a) Power Finance Corporation Limited (The Company) pursuant to the opinion of the Expert
Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI) provided
Deferred Tax Liability (DTL) on special reserve created under section 36(1) (viii) of the
Income Tax Act, 1961 in the year 2004-05, by charging Profit & Loss Account with Rs.142.87
crores and debiting the Free Reserves by Rs 745.14 crores (for creating DTL for the years
1997-98 to 2003-04). Since, then the Company continued to provide DTL till the end of March,
2008 by charging Profit & Loss Account. The total amount towards DTL upto 31
st
March, 2008
comes to Rs.1228.38 crores. The Company during the year 2008-09 reversed the DTL provided
in earlier years amounting to Rs. 1228.38 crores and also did not provide DTL amounting to
Rs. 291.21 crores (including Rs. 133.28 crores for the year 2008-09 )in the current year,
contrary to, opinions expressed by the EAC of the ICAI on two occasions dated 23.11.2004 and
18.05.2006, clarification furnished in July,2009 by the ICAI on the request of the Comptroller
and Auditor General of India and mandatory provisions of Accounting Standard-22.
In view of the facts and circumstances placed before us, the Profits and Free Reserves of the
Company are overstated by Rs 774.45 crores and Rs 745.14 crores (previous year Rs. 616.52
crores and Rs. 745.14 crores), respectively and DTL has been understated by Rs. 1519.59
crores (previous year Rs. 1361.66 crores).
b) As regards the liability of Rs.663.49 crores (previous year Rs.908.94 crores) shown as Interest
Subsidy Fund from GOI in the Balance Sheet, received under Accelerated Generation and
Supply Program (AG&SP) Scheme from the Ministry of Power, Government of India, the
Company has estimated the net excess amount of Rs.166.25 crores (previous year Rs.283.14
crores) and Rs. 209.97 crores (previous year Rs.44.27 crores) as at 31
st
March 2010, for IX and
X plan respectively. This net excess amount is worked out on overall basis and not on
individual basis and may vary due to change in assumptions, if any, during the projected
period such as changes in moratorium period, repayment period, loan restructuring, pre
payment, interest rate reset, etc. Hence, the impact of this excess, if any could not be
determined. As such we are not in a position to express our opinion thereon.



vi There are qualifications in the auditors report on Consolidated financial statements as on
and for the year ended 31
st
March 2009 that require adjustments to the Audited Consolidated
Financial Information, which has not been given effect to, is as under:

a) Power Finance Corporation Limited (The Company) pursuant to the opinion of the Expert
Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI) provided
Deferred Tax Liability (DTL) on special reserve created under section 36(1) (viii) of the
Income Tax Act, 1961 in the year 2004-05, by charging Profit & Loss Account with Rs.142.87
crores and debiting the Free Reserves by Rs 745.14 crores (for creating DTL for the years
1997-98 to 2003-04). Since, then the Company continued to provide DTL till the end of March,
2008 by charging Profit & Loss Account. The total amount towards DTL upto 31st March, 2008
comes to Rs.1228.38 crores. During the current year the Company has not provided the DTL
amounting to Rs.133.28 crores and has also reversed the DTL provided in earlier years
amounting to Rs 1228.38 crores, contrary to the opinions expressed by the EAC of the ICAI (on
two occasions dated 23.11.2004 & 18.05.2006) and contrary to the mandatory provisions of
existing Accounting Standard- 22.

In view of the facts and circumstances placed before us, the profits and Free Reserves of the
company are overstated by Rs 616.52 crores and Rs745.14 crores, respectively and DTL has
been understated by Rs 1361.66 crores.

b) As regards the liability of Rs.908.94 crores (previous year Rs.1066.75 crores) shown as
Interest Subsidy Fund from GOI in the Balance Sheet, received under Accelerated
Generation and Supply Program (AG&SP) Scheme from the Ministry of Power, Government of
India, the Company has estimated the net excess amount of Rs.283.14 crores (previous year
Rs.253.47 crores) and Rs.44.27 crores (previous year Rs.52.49 crores) as at 31st March 2009,
for IX and X plan respectively. This net excess amount is worked out on overall basis and not
on individual basis and may vary due to change in assumptions, if any, during the projected
period such as changes in moratorium period, repayment period, loan restructuring, pre
payment, interest rate reset, etc. Hence, the impact of this excess, if any could not be
determined. As such we are not in a position to express our opinion thereon.

4. We have examined these financial statements (standalone as well as consolidated) taking
into consideration the guidance note on reports in company prospectus (Revised) issued by
the Institute of Chartered Accountants of India, except that these financial statements have
not been adjusted for changes in accounting policies retrospectively in the respective
financial years to reflect the same accounting policies for all the reporting periods and for
adjustments of amounts pertaining to previous years in the respective financial years to
which they relate.


5. Other Financial Information of the Company:

We have examined the following information relating to the Company as at and for each of the
years ended 31st March, 2011, 31st March, 2010, 31
st
March 2009, 31
st
March 2008 and 31
st



March 2007 proposed to included in the Prospectus as approved by the Board of Directors
annexed to this report:

i. Significant Accounting Policies on the Audited Standalone Financial Statements as at and
for each of the years ended 31st March, 2011, 31st March, 2010, 31
st
March 2009, 31
st

March 2008 and 31
st
March 2007 (Annexure IV)

ii. Significant Notes to Accounts on the Audited Standalone Financial Statements as at and for
each of the years ended 31st March, 2011, 31st March, 2010, 31
st
March 2009, 31
st
March
2008 and 31
st
March 2007 (Annexure V)

iii. Related Party Information as at and for each of the years ended 31st March, 2011, 31st
March, 2010, 31
st
March 2009, 31
st
March 2008 and 31
st
March 2007 (Annexure VI)

iv. Statements of Accounting Ratios as at and for each of the years ended 31st March, 2011,
31st March, 2010, 31
st
March 2009, 31
st
March 2008 and 31
st
March 2007 (Annexure VII)

v. Statement of the Dividend as at and for each of the years ended 31st March, 2011, 31st
March, 2010, 31
st
March 2009, 31
st
March 2008 and 31
st
March 2007 (Annexure VIII)

vi. Statement of Tax Shelter as at and for each of the years ended 31st March, 2011, 31st
March, 2010, 31
st
March 2009, 31
st
March 2008 and 31
st
March 2007 (Annexure IX)

vii. Capitalization statement as at and for each of the years ended 31st March, 2011, 31st March,
2010, 31
st
March 2009, 31
st
March 2008 and 31
st
March 2007 (Annexure X)

viii. Details of Contingent Liabilities as at and for each of the years ended 31st March, 2011,
31st March, 2010, 31
st
March 2009, 31
st
March 2008 and 31
st
March 2007 (Annexure XI)

ix. Significant Accounting Policies on the Audited Consolidated Financial Statements as at and
for each of the years ended 31st March, 2011, 31st March, 2010 and 31
st
March 2009
(Annexure XV)

x. Significant Notes to Accounts on the Audited Consolidated Financial Statements as at and
for each of the years ended 31st March, 2011, 31st March, 2010 and 31
st
March 2009.
(Annexure XVI)

xi. Related Party Information (Consolidated) as at and for each of the years ended 31st March,
2011, 31st March, 2010 and 31
st
March 2009.(Annexure XVII )

xii. Statements of Accounting Ratios (Consolidated) as at and for each of the years ended 31st
March, 2011, 31st March, 2010 and 31
st
March 2009 (Annexure XVIII)

xiii. Capitalization statement (Consolidated) as at and for each of the years ended 31st March,
2011, 31st March, 2010 and 31
st
March 2009 (Annexure XIX)



xiv. Details of Contingent Liabilities (Consolidated) as at and for each of the years ended 31st
March, 2011, 31st March, 2010 and 31
st
March 2009 (Annexure XX)

6. Based on our examination of these Audited Financial Information, we state that in our opinion,
the Financial Information as per the Audited Financial Statements and Other Financial
Information of the Company mentioned above, as at and for each of the years ended 31st March,
2011, 31st March, 2010, 31
st
March 2009, 31
st
March 2008 and 31
st
March 2007 have been
prepared in accordance with Part II B of Schedule II of the Act and the SEBI Regulations.

7. This report should not, in any way, be construed as a reissuance or redating of any of the previous
audit reports nor should this be construed as a new opinion on any of the financial statements
referred to herein.

8. This report is intended solely for your information and for inclusion in the Letter of Offer, in
connection with the Proposed Issue of secured, redeemable, non-convertible debentures, having
Benefits Under Section 10(15)(iv)(h) of the Income Tax Act, 1961 and is not to be used, referred
to or distributed for any other purpose without our prior written consent.

9. We have no responsibility to update our report for events and circumstances occurring after the
date of the report for the financial position, results of operations or cash flows of the company as
of any date or year subsequent to March 31
st
, 2011.


For Raj Har Gopal & Co. For N.K.Bhargava & Co.
Chartered Accountants Chartered Accountants
Firms Regn. No.: 002074N Firms Regn. No.: 000429N


G.K. Gupta N.K.Bhargava
Partner Partner
Membership no. 81085 Membership no.080624

Place: New Delhi
Date: 29.11.2011
ANNEXURE - I
POWER FINANCE CORPORATION LIMITED
Statement of Assets & Liabilities
Description
Schedule
Number
As at
31.03.2011
As at
31.03.2010
As at
31.03.2009
As at
31.03.2008
As at
31.03.2007
I . SOURCES OF FUNDS


(1) Share Holder's Funds


(a) Share Capital 1 1147.77 1147.77 1147.77 1147.77 1147.77

(b) Reserves & Surplus 2 14034.72 12113.02 10360.05 8182.08 7445.32

15182.49 13260.79 11507.82 9329.85 8593.09

(2) Loan Funds 3

Secured Loans 235.36 0.00 0.00 0.00 0.00

Unsecured Loans 85363.21 67108.41 52160.15 40647.81 33584.18

85598.57 67108.41 52160.15 40647.81 33584.18

(3)
Interest Subsidy Fund
from GOI
451.87 663.49 908.94 1066.75 1231.63

(4)
Deferred Tax Liablity
(Net of Asset )
82.97 46.95 55.48 1240.25 1142.59

Total 101315.90 81079.54 64632.39 52284.66 44551.49
II . APPLICATION OF FUNDS


(1) Fixed Assets 4


Gross Block 98.94 93.21 97.33 374.86 375.84

Less : Depreciation /
Amortization
24.51 20.44 22.18 297.86 294.39

Net Block 74.43 72.77 75.15 77.00 81.45

Capital Works in
Progress
2.28 1.73 0.00 0.00 0.00

(2) Investments 5 53.88 31.43 35.86 65.59 58.88

(3) Loans 6 99570.74 79855.76 64428.99 51568.31 43902.83

(4) Net Current Assets


Current Assets, Loans
& Advances - (A)
7


(a) Cash & Bank
Balances
2350.26 1394.30 392.23 695.33 507.67

(b) Other Current
Assets
1941.87 1592.76 1340.57 1055.86 1106.11

(c) Loans & Advances 640.58 491.12 445.87 209.80 282.95

4932.71 3478.18 2178.67 1960.99 1896.73

Less : Current
Liabilities &
Provisions - (B)
8


(a) Current Liabilites 3021.47 2124.52 1860.59 1216.22 1187.87

(b) Provisions 296.87 235.71 225.69 171.01 200.53

3318.34 2360.23 2086.28 1387.23 1388.40


Net Current Assets
(A) - (B)
1614.37 1117.95 92.39 573.76 508.33


(6)
MISCELLANEOUS
EXPENDITURE

(To the extent not
written-off)


Miscellaneous
Expenses
0.20 0.00 0.00 0.00 0.00


Total 101315.90 81079.64 64632.39 52284.66 44551.49



ANNEXURE - II
POWER FINANCE CORPORATION LIMITED
Statement of Profits
(Rs. in crore)
Description
Schedule
Number
Year
ended
31.03.2011
Year
ended
31.03.2010
Year
ended
31.03.2009
Year
ended
31.03.2008
Year ended
31.03.2007
INCOME
Operating Income 9 10128.49 8002.10 6557.37 5029.28 3816.67
Other Income 10 32.07 74.76 26.17 10.76 9.42
Exchange Risk
Management Account
written back

101.56
Total 10160.56 8076.86 6583.54 5040.04 3927.65
EXPENSES
Interest and other charges 11 6423.90 4912.24 4432.92 3143.74 2334.77
Bond Issue Expenses 12 63.05 43.79 65.68 38.82 33.23
Personnel &
Administration
and Other Expenses
13 92.62 106.04 86.71 81.24 53.84
Depreciation 4 4.28 3.38 3.84 4.48 3.77
Amortization of Intangible
Assets
4 0.77 0.43 0.28 0.02 0.02
Provision for
Contingencies
31.79 -0.57 2.17 -10.21 -4.85
Provision for decline in
value of investments
-0.06 -1.52 1.49 -0.24 -0.01
Total 6616.35 5063.79 4593.09 3257.85 2420.77
Profit for the year 3544.21 3013.07 1990.45 1782.19 1506.88
Less(-) / Add(+) : Prior
Period adjustments
14 -0.07 0.13 0.02 5.21 -0.02
Profit before tax 3544.14 3013.20 1990.47 1787.40 1506.86
Less(-) / Add(+) : Provision
for Taxation
- Current Year :-
- Tax -898.99 -800.27 -492.02 -481.98 -333.54
- Earlier Years :-
- Tax 10.45 135.79 32.61 -0.04 -14.31
Less / Add : Deferred tax
liability(-) / Asset(+)
- Current Year -36.02 8.53 -43.61 -97.65 -172.05
- Reversal of DTL of
Earlier Years
483.24

Less(-) / Add(+) : Provision
for fringe benefit tax
0.00 0.00 -0.73 -0.97 -0.82
Profit after tax available
for appropriations
15 2619.58 2357.25 1969.96 1206.76 986.14



SCHEDULE - 1
SHARE CAPITAL
(Rs. in crore)
Description
As at
31.03.2011
As at
31.03.2010
As at
31.03.2009
As at
31.03.2008
As at
31.03.2007
Authorised :
200,00,00,000 Equity shares of
Rs.10/- each 2000.00 2000.00 2000.00 2000.00 2000.00
Issued, subscribed and paid up :
114,77,66,700 Equity shares of
Rs.10/- each fully paid-up
1147.77 1147.77 1147.77 1147.77 1147.77
TOTAL 1147.77 1147.77 1147.77 1147.77 1147.77


SCHEDULE - 2
RESERVES & SURPLUS
(Rs. in
crore)
Description
As at
31.03.2011
As at
31.03.2010
As at
31.03.2009
As at
31.03.2008
As at
31.03.2007
Reserve for Bad & doubtful debts u/s
36(1)(viia)(c) of Income-Tax Act,1961
Opening balance
842.07 718.15 641.69 550.72 472.20
Add : Transfer from Profit & Loss Account
142.47 123.92 76.46 90.97 78.52
Add : Transfer from Surplus in Profit &
Loss Account *
0.34 0.00 0.00 0.00 0.00
984.88 842.07 718.15 641.69 550.72
Special Reserve created u/s 36(1)(viii) of
Income Tax Act, 1961 upto Financial
Year 1996-97
599.85 599.85 599.85 599.85 599.85
Special Reserve created and maintained
u/s 36(1)(viii) of Income Tax Act, 1961
from Financial Year 1997-98
Opening balance
4574.64 4006.03 3613.94 3302.10 2800.63
Add : Transfer from Profit & Loss Account
634.32 568.61 346.23 311.84 501.47
Add : Transfer from Surplus in Profit &
Loss Account *
0.27 0.00 45.86 0.00 0.00
Add : Transfer from Profit & Loss Account
(Balance Sheet head) ***
7.92 0.00 0.00 0.00 0.00
Less: Transfer to Surplus in Profit & Loss
Account ****
12.83 0.00 0.00 0.00 0.00
5204.32 4574.64 4006.03 3613.94 3302.10
Securities Premium Account
Opening balance
851.10 851.10 851.10 851.10 0.00
Add : Proceeds on Issue of shares (IPO)
879.88
Less : IPO expenses
28.78
851.10 851.10 851.10 851.10 851.10
General Reserve
Opening balance
2031.97 1795.97 1615.41 1494.41 1395.41
Add : Transfer from Profit & Loss Account
262.00 236.00 197.00 121.00 99.00
Less : Transfers to Special Reserve under
Income Tax Act, 1961
0.00 0.00 16.44 0.00 0.00
2293.97 2031.97 1795.97 1615.41 1494.41
Debeture Redemption Reserve
Opening balance
0.00 0.00 0.00 0.00 0.00
Add : Transfers from Profit & Loss
Account 0.06 0.00 0.00 0.00 0.00
0.06 0.00 0.00 0.00 0.00
Surplus in Profit and Loss Account
Opening balance
3213.39 2388.95 860.09 647.14 639.62
Add : Transfer from Profit & Loss Account
882.18 824.44 813.14 212.95 7.52
Add : Adjustments during the current year
** 0.67 0.00 745.14 0.00 0.00
Add : Transfers from Special Reserve
under Income Tax Act, 1961 ****
12.83 0.00 0.00 0.00 0.00
Less : Transfers to Reserve for Bad &
doubtful debts and Special Reserve under
Income Tax Act, 1961 *
0.61 0.00 29.42 0.00 0.00
Less : Transfers to Special Reserve under
Income Tax Act, 1961 ***
7.92 0.00 0.00 0.00 0.00
4100.54 3213.39 2388.95 860.09 647.14
TOTAL 14034.72 12113.02 10360.05 8182.08 7445.32
* Transferred to match the deduction claimed as per the Income tax return for the Assessment Year 2010-11.
** On account of reversal of excess corporate dividend tax provided for during the FY 2009-10.
*** Additional special reserve created for AY 2009-10 to match with our claim as per revised return
.
**** Surplus special reserve has been reversed due to pre payment of loans before five years .
Note : All the notes mentioned above pertain to the Financial Year 2010-
11.

SCHEDULE - 3
LOAN FUNDS

(Rs. in
crore)
Description
As at
31.03.201
1
As at
31.03.201
0
As at
31.03.200
9
As at
31.03.200
8
As at
31.03.2007
A Secured

I. Bonds

a)
Infrastructure Bonds (Refer Note
1)
235.36 0.00 0.00 0.00 0.00

Sub Total - A 235.36 0.00 0.00 0.00 0.00
B Unsecured

I. Bonds


a)
Bonds Guaranteed by the
Government of India (Refer Note
2)
22.00 42.00 62.00 82.00 96.51

b)
Other Bonds (Refer Note 3 to
13)
55879.64 45759.43 35417.15 23461.27 16315.36

c)
Foreign Currency Notes (Refer
Note 15)
812.52 820.44 1402.42 1186.96 468.63

56,714.16 46,621.87 36,881.57 24,730.23 16,880.50
II
.
Loans


a) Long Term Loans (Refer Note 16)


(i)
Foreign Currency Loans from
Foreign banks / Institutions
( Guaranteed by the Govt. of
India )
331.54 389.04 505.28 479.69 484.95

(ii)
Syndicated Foreign Currency
Loans from banks / Institutions
3637.91 1367.40 476.00 406.95 903.87

(iii
)
Foreign Currency Loans (
FCNR(B) from banks )
180.56 181.98 205.80 160.44 65.65

(iv
)
Rupee Term Loans ( From Banks
)
17078.00 14793.00 11891.50 11240.50 11613.21

(v)
Rupee Term Loans ( From
Financial Institutions )
1130.00 1430.00 800.00 1150.00 1325.00

22,358.01 18,161.42 13,878.58 13,437.58 14,392.68

b
)
Short Term Loans


(i)
Rupee Term Loans ( From Banks
)
2100.00 0.00 400.00 2480.00 1840.00

(ii)
Rupee Term Loans ( From
Financial Institutions )
0.00 0.00 0.00 0.00 100.00

(iii
)
Foreign Currency Loans (
FCNR(B) from banks )
0.00 0.00 0.00 0.00 0.00

(iv
)
Commercial Paper 1950.00 650.00 1000.00 0.00 200.00

(v)
Working Capital Demand
Loan/OD/CC/Loan Against
FD/Line of Credit
2241.04 1675.12 0.00 0.00 171.00

6,291.04 2,325.12 1,400.00 2,480.00 2,311.00

Sub Total - B 85363.21 67108.41 5 2160.15 40647.81 33584.18

Total (A + B) 85598.57 67108.41 52160.15 40647.81 33584.18

Notes to Schedule 3 (pertaining to Loans outstanding as at 31.03.2011) :
1 The details of Infrastructure Bonds outstanding as at 31.03.2011 are as follows:

Bond Series
Date of
allotment
Amount
(Rs. in
crore)
Redemption details

Infrastructure
Bonds
Series-1
31.03.2011 66.84
They are re deemable at par, one date, being the date
falling ten years from the Date of allotment and / or are
redeemable at par, one date, being the date falling five
years and one day from the Date of Allotment on
exercising the put option by the bondholders.

Infrastructure
Bonds
Series-2
31.03.2011 139.67
They are redeemable at par with cumulative interest and
interest on application interest compounded annually, one
date, being the d ate falling ten years from the date of
allotment and / or are redeemable at par with cumulative
interest and interest on a pplication interest compounded
annually, one date, being the date falling five years and
one day from the date of allotment on exercising the put
option by the bondholders.

Infrastructure
Bonds
Series-3
31.03.2011 6.13
They are re deemable at par, one date, being the date
falling fifteen years from the date of allotment and / or are
redeemable at par, one date, being the date falling seven
years and one day from the date of allotm ent on
exercising the put option by the bondholders.

Infrastructure
Bonds
Series-4
31.03.2011 22.72
They are redeemable at par with cumulative interest and
interest on application interest compounded annually, one
date, being the date falling fifteen years from the date of
allotment and / or are redeemable at par with cumulative
interest and interest on a pplication interest compounded
annually, one date, being the date falling seven years and
one day from the date of allotment on exercising the put
option by the bondholders.
2 The details of Government guaranteed bonds outstanding as at 31.03.2011 are as follows:

Bond Series
Amount
(Rs. in
crore)
Date of
Redemption

12.00 %
Bonds - IV
Series
22.00 10.02.2012

3 9.70% Taxable Unsecured redeemable bonds 2011 - X Series of R s.354.00 crore are issued with separately
transferable redeemable principal parts (STRPP) with each bond bearing a total face value of Rs.1,00,00,000 each
comprising 7 detachable and separately transferable principal parts - I and VII parts of Rs.15,00,000/- each and II
to VI parts of Rs.14,00,000/- each. The separate principal parts are designated as A,B,C,D,E,F and G. Parts A,B,C,
D, E & F amounting to Rs.53.10 crore, Rs.49.56 crore, Rs.49.56 crore, Rs.49.56 crore, 49.56 crore & Rs. 49.56
crore r espectively have been redeemed on 23 .11.2005, 23.11.2006, 23.11.2007, 23.11 .2008, 23.11.2009 &
23.11.2010 respectively. The separate principal parts designated as F and G will be redeemed at par as follows:

PART
Date of
Redemption
Amount (Rs. in crore)

G 23.11.2011 53.10
4 9.25% Taxable non-cummulative Unsecured redeemable Bonds 2012- XI Series of Rs.774.97 crore have been
alloted on 20.02.2002. They are redeemable at par on the expiry of 10 years from the date of allotment and / or are
redeemable at par aft er expiry of 7 y ears on e xercising the put or call option by the bondholders or by the
Company. Put option for Rs.30.89 crore has been exercised by the bondholders on 20.02.2009.

5 9.60% Taxable non-cummulative Unsecured redeemable Bonds 2017 - XIII Series of Rs. 125.00 crore and
Rs.65.00 crore have been alloted on 16.5.2002 and 24.5.2002 respectively. They a re redeemable at par on the
expiry of 15 years from the date of allotment.

6 8.21% Taxable non-cummulative Unsecured redeemable Bonds 2017 - XVII Series of Rs. 250.00 crore have been
alloted on 03.10.2002. They are redeemable in 10 equal annual instalments beginning from the date next to the
expiry of the 6th year afte r an initial moratorium period of 5 years from the date of allotment. An amount of
Rs.25.00 crore each am ounting to Rs. 75 crore was redee med on 03.10.2008 , 03.10.2009 and 03.10.2010
respectively. The date and the amount of the bonds to be redeemed are as follows :-

Date of
Redemption
Amount
(Rs. in
crore)

3.10.2011 25.00
3.10.2012 25.00
3.10.2013 25.00
3.10.2014 25.00
3.10.2015 25.00
3.10.2016 25.00
3.10.2017 25.00
7 7.87% Taxable non-cummulative Unsecured redeemable Bonds 2017 - XVIII Series of Rs. 250.00 crore have been
alloted on 13.11.2002. They are redeemable in 10 equal annual instalments beginning from the date next to the
expiry of the 6th year afte r an initial moratorium period of 5 years from the date of allotment. An amount of
Rs.25.00 crore each am ounting to Rs. 75 crore was redeemed on 13 .11.2008, 13.11.2009 & 13.11.2010
respectively . The date and the amount of the bonds to be redeemed are as follows :-

Date of
Redemption
Amount
(Rs. in
crore)

13.11.2011 25.00
13.11.2012 25.00
13.11.2013 25.00
13.11.2014 25.00
13.11.2015 25.00
13.11.2016 25.00
13.11.2017 25.00
8 Zero Coupon unsecured Taxable Bonds 2022-XIX Series of Rs. 300.56 crore (previous year Rs. 278.04 crore) are
redeemable at face value of Rs.750.00 crore on 30.12.2022 [(net of Unamortised Interest of Rs. 449.44 crore (
previous year Rs.471.96 crore )].
9 6.80% Taxable non cummmulative unsecured redeemable Bonds 2011 - XXI - A Series of Rs.301.00 crore have
been alloted on 02.11.2004. They are redeemable at par on expiry of 7 years from the date of allotment and / or are
redeemable at par after the expiry of 5 years on exercising the ' put or call option ' by the bondholders or by the
Company. Put option for Rs.215 crore has been exercised by the bondholders on 02.11.2009.
10 7.00% Taxable non cummmulative unsecured redeemable Bonds 2014 - XXI - B Series of Rs.168.80 crore have
been alloted on 02.11.2004. They are redeemable at par on expiry of 10 years from the date of allotment and / or
are redeemable at par after the expiry of 7 years on exercising the ' put or call option ' by the bondholders or by the
Company.
11 7.00% Taxable non cummmulative unsecured redeemable Bonds 2011 - XXII Series of Rs.1040.70 crore have
been alloted on 24.12.2004. They are redeemable at par on expiry of 7 years from the date of allotment and / or are
redeemable at par after the expiry of 5 years on exercising the ' put or call option ' by the bondholders or by the
Company. Put option for Rs.346.40 crore has been exercised by the bondholders on 24.12.2009.
12 7.00% Taxable non cummmulative unsecured redeemable Bonds 2012 - XXIII Series of Rs.349.90 crore have
been alloted on 05.07.2005. They are redeemable at par on expiry of 7 years from the date of allotment and / or are
redeemable at par after the expiry of 5 years on exercising the ' put or call option ' by the bondholders or by the
Company. Put option for Rs.147.20 crore has been exercised by the bondholders on 05.07.2010.
13 The details of unsecured Taxable (Non cumulative) Bonds series XXIV to LXXI are as follows :

Bond Series Coupon Rate Date of Redemption
Amount
(Rs. in crore)
XXV Series 7.60% 30.12.2015 1734.70
XXVI Series 7.95% 24.02.2016 1261.80
XXVII - A Series 8.20% 17.03.2016 1000.00
XXVII - B Series 8.09% 17.03.2013 850.00
XXVIII Series 8.85% 31.05.2021 600.00
XXIX - A Series 8.80% 07.09.2016 250.00
XXIX - B Series 8.55% 07.09.2011 300.00
XXX Series 8.49% 09.10.2011 480.00
XXXI - A Series 8.78% 11.12.2016 1451.20
XXXII Series 9.25% 19.02.2012 578.50
XXXIII - A Series 9.80% 22.03.2012 122.00
XXXIII - B Series 9.90% 22.03.2017 561.50
XXXIV Series 9.90% 30.03.2017 500.50
XXXV Series 9.96% 18.05.2017 530.00
XXXVI - B Series 10.00% 15.06.2012 436.30
XXXVIII Series 9.80% 20.09.2012 1862.00
XL - B Series 9.22% 28.12.2012 510.00
XL - C Series 9.28% 28.12.2017 650.00
XLI - B Series 8.94% 15.01.2013 265.00
XLII - B Series 9.03% 15.02.2013 319.00
XLIII - B Series 9.30% 12.03.2013 271.60
XLIV Series 9.40% 25.03.2013 1260.30

XLVI Series
MIBOR +
215 bps
29.05.2011 475.00

XLVII - A Series 9.55% 09.06.2011 450.60
XLVII - B Series 9.60% 09.06.2013 495.30
XLVII - C Series 9.68% 09.06.2018 780.70
XLVIII - A Series 10.75% 15.07.2011 571.50
XLVIII - B Series 10.70% 15.07.2013 217.40
XLVIII - C Series 10.55% 15.07.2018 259.70
XLIX - A Series 10.90% 11.08.2013 313.60
XLIX - B Series 10.85% 11.08.2018 428.60
L - A Series 10.85% 25.08.2011 143.00
L - B Series 10.75% 25.08.2013 78.40
L - C Series 10.70% 25.08.2015 80.80
LI - A Series 11.15% 15.09.2011 495.20
LI - B Series 11.10% 15.09.2013 594.00
LI - C Series 11.00% 15.09.2018 3024.40
LII - A Series 11.40% 28.11.2013 662.70
LII - B Series 11.30% 28.11.2015 5.80
LII - C Series 11.25% 28.11.2018 1950.60
LIV - A Series 8.90% 16.02.2014 196.50
LV - A Series 6.90% 11.05.2012 877.00
LV - B Series 7.50% 11.05.2014 146.90
LVI Series 7.20% 09.07.2012 525.00
LVII - B Series 8.60% 07.08.2014 866.50
8.60% 07.08.2019 866.50
8.60% 07.08.2024 866.50
LVIII - A Series 7.75% 17.09.2012 100.00
LVIII - B Series 8.45% 17.09.2014 331.10
LIX - A Series 8.45% 15.10.2014 288.20
LIX - B Series 8.80% 15.10.2019 1216.60

LX - A Series
1 year
INCMTBMK +
135 bps
20.11.2012 175.00


LX - B Series
1 year
INCMTBMK +
179 bps
20.11.2019 925.00

LXI - Series 8.50% 15.12.2014 351.00
8.50% 15.12.2019 351.00
8.50% 15.12.2024 351.00
LXII - A Series 8.70% 15.01.2020 845.40
LXII - B Series 8.80% 15.01.2025 1172.60
LXIII - Series 8.90% 15.03.2015 184.00
8.90% 15.03.2020 184.00
8.90% 15.03.2025 184.00
LXIV - Series 8.95% 30.03.2015 492.00
8.95% 30.03.2020 492.00
8.95% 30.03.2025 492.00
LXV - Series 8.70% 14.05.2015 1337.50
8.70% 14.05.2020 162.50


1 year
INCMTBMK +
98 bps
14.05.2020 1175.00



1 year
INCMTBMK +
63.5 bps
14.05.2025 250.00

8.70% 14.05.2025 1087.50

LXVI - A Series
3 year
INCMTBMK +
87.50 bps
15.06.2020 500.00


LXVI - B Series
3 year
INCMTBMK +
84.25 bps
15.06.2025 700.00

8.75% 15.06.2025 832.00
LXVI - C Series 8.85% 15.06.2030 633.00
LXVII Series 7.10% 15.07.2012 1100.00
LXVIII - A Series 8.25% 15.07.2015 147.00
LXVIII - B Series 8.70% 15.07.2020 1424.00
LXIX - Series 7.89% 15.09.2012 950.00
LXX Series 8.78% 15.11.2020 1549.00
LXXI - A Series 9.05% 15.12.2020 192.70
LXXI - B Series 9.05% 15.12.2025 192.70
LXXI - C Series 9.05% 15.12.2030 192.70
LXXII - A Series 8.97% 15.01.2018 144.00
LXXII - B Series 8.99% 15.01.2021 1219.00
14 As at 31.03.2011, Bonds of Rs.3.40 crore (previous year Rs.3.42 crore) are held by PFC Ltd. Employees Provident
Fund Trust and Bonds of Rs.0.70 crore (previous year Rs.0.70 crore) are held by PFC Ltd. Gratuity Trust.
15 Foreign currency 6.61 % Senior Notes (USPP - I) of USD 180 million amounting to Rs.812.52 crore (previous
year Rs.820.44 crore) are redeemable at par on 05.09.2017.
16 Long term loans due for repayment within one year are Rs. 3513.50 crore (previous year Rs.5256.62 crore).

SCHEDULE - 4
FIXED ASSETS

(Rs. in
crore)
Description
GROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK
As at
31.03.201
1
As at
31.03.20
10
As at
31.03.20
09
As at
31.03.2
008
As at
31.03.2
007
As at
31.03.2
011
As at
31.03.2
010
As at
31.03.2
009
As at
31.03.2
008
As at
31.03.2
007
As at
31.03.2
011
As at
31.03.2
010
As at
31.03.2
009
As at
31.03.2
008
As at
31.03.200
7
I.
TANGIBLE
ASSETS :

Owned Assets




Land (Freehold)
2.59 2.59 2.59 2.59 2.59 0.00 0.00 0.00 0.00 0.00 2.59 2.59 2.59 2.59 2.59

Land (Leasehold)
37.87 38.33 38.33 38.33 38.33 0.00 0.00 0.00 0.00 0.00 37.87 38.33 38.33 38.33 38.33

Buildings
24.14 24.14 24.14 23.96 24.15 5.33 4.34 3.30 2.20 1.07 18.81 19.80 20.84 21.76 23.08

EDP Equipments
11.22 7.33 6.68 6.58 7.12 7.03 6.07 5.43 4.70 4.39 4.19 1.26 1.25 1.88 2.73

Office and other
equipments 11.59 11.21 11.06 10.78 10.91 6.04 5.19 4.25 3.15 2.21 5.55 6.02 6.81 7.63 8.70

Furniture & Fixtures
7.19 7.02 6.88 6.82 6.87 4.44 3.87 3.20 2.39 1.52 2.75 3.15 3.68 4.43 5.35

Vehicles
0.13 0.18 0.18 0.18 0.29 0.11 0.15 0.14 0.12 0.16 0.02 0.03 0.04 0.06 0.13
Sub total 94.73 90.80 89.86 89.24 90.26 22.95 19.62 16.32 12.56 9.35 71.78 71.18 73.54 76.68 80.91

Leased Assets


Plant & Machinery
0.00 0.00 5.47 285.46 285.46 0.00 0.00 5.47 285.46 285.46 0.00 0.00 0.00 0.00 0.00

Lease Adjustment
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.27 -0.51 0.00 0.00 0.00 0.27 0.51

Total
94.73 90.80 95.33 374.70 375.72 22.95 19.62 21.79 297.75 294.30 71.78 71.18 73.54 76.95 81.42
II.
Intangible Assets :


Purchased Software
(Useful Life - 5
years) 4.21 2.41 2.00 0.16 0.12 1.56 0.82 0.39 0.11 0.09 2.65 1.59 1.61 0.05 0.03
III.
Capital Works in
Progress -
Intangible Assets ** 2.28 1.73 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.28 1.73 0.00 0.00 0.00
** Software Applications - Purchased and under
implementation
Note : The building has been capitalised on the basis of estimated value of work done as Final bills are not yet settled.
SCHEDULE 5
INVESTMENTS
(Rs. in crore)
Description
As at
31.03.2011
As at
31.03.2010
As at
31.03.2009
As at
31.03.2008
As at
31.03.2007
A. Long Term Investments
(Trade - Unless otherwise
specified)


- Valued at Cost

1,20,00,000 Equity Shares of
Rs.10/- each fully paid up of PTC
Ltd. (Quoted) 12.00 12.00 12.00 12.00 12.00

21,87,015 Equity Shares of
Rs.10/- each fully paid up of
National Power Exchange Ltd.
(Unquoted - Non Trade)
2.19 0.83 0.83 0.00 0.00

17,50,000 Equity Shares (Face
value of Rs.10/- each) of Power
Exchange India Ltd. (Unquoted -
Non Trade) 1.75 1.75 0.00 0.00 0.00

6,25,000 Equity Shares (Face
value of Rs.10/- each) of Energy
Efficiency Services (P) Ltd.
(Unquoted - Non Trade) 0.63 0.63 0.00 0.00 0.00

4,65,000 Equity Shares of Rs.10/-
each fully paid up of Subsidiaries
/ Associates (Unquoted - Non
Trade) 0.47 0.47 0.47 0.40 0.50

3,089 14.50% Bonds of
Rs.1,00,000/- each of ICICI Bank
Ltd. (Unquoted - Non Trade)
0.00 0.00 0.00 30.89 30.89

8,330 4% Bonds of Rs.100/- each
of IMP Power Ltd. (Unquoted -
Non Trade) 0.08 0.08 0.08 0.08 0.00
- Valued at Cost (Less
diminution, if any, other than
temporary)


87,33,788 Units of " Small is
Beautiful " Fund of KSK
Investment Advisor Pvt. Ltd.
(Face value per unit is Rs. 10)
(Unquoted - Non Trade)
8.73 12.08 14.47 14.47 15.99

Less : Provision for diminution
0.18 0.24 1.32 0.26 0.50
8.55 11.84 13.15 14.21 15.49
- Valued at Cost (NPAs)

50,000 Equity Shares of Rs.10/-
each fully paid up of subsidiaries
(Unquoted - Non Trade)
0.00 0.05 0.00 0.00 0.00

Less : Provision for contingencies
0.00 0.05 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
B. Current Investments - Valued
scrip wise at lower of cost or
market Price (Trade - Unless
otherwise specified)


Equity Shares (Quoted)
3.83 3.83 8.01 8.01 0.00

Less : Provision for diminution
0.00 0.43 0.00 0.00
3.83 3.83 7.58 8.01 0.00
C. Application Money pending
allotment of Shares
2,43,80,000 Equity shares (face
value of Rs. 10 each) of energy
Efficiency Services Pvt. Ltd.
(Unquoted - Non trade)
24.38 0.00 1.75 0.00 0.00

TOTAL 53.88 31.43 35.86 65.59 58.88
Note : The number of units appearing in the description column pertains to the Investments as at 31.03.2011.


SCHEDULE - 6
LOANS
(Rs. in crore)
Description
As at
31.03.2011
As at
31.03.2010
As at
31.03.2009
As at
31.03.2008
As at
31.03.2007
I. Secured Loans
a) Considered Good

Rupee Term Loans (RTLs) to State
Electricity Boards, State Power
Corporations,Central Public Sector
Undertakings and State Governments
57995.39 45930.19 35309.17 22667.89 19169.31
RTLs to Independent Power Producers
3999.46 2699.27 3480.59 2537.55 2366.44

Foreign Currency Loans to Independent
Power Producers / State Electricity
Boards 324.30 406.11 587.85 520.85 616.29

Working Capital Loans to State
Electricity Boards and State Power
Corporations 500.00 0.00 0.00 0.00 0.00
Buyer's Line of Credit
11.41 19.94 47.97 76.01 104.04
Medium Term Loans
0.00 0.00 30.80 53.90 290.00
Lease Financing to Borrowers
131.37 300.52 191.60 211.67 232.96
RTLs to Equipment Manufacturers
2.50 3.76 5.01 6.26 0.00

Translation Loss on Foreign Currency
Loans on back to back basis
Recoverable from Sub-
borrowers/ERMA
0.00 0.00 0.00 0.00 0.00

Incomes accrued & due on loans
8.54 1.93 14.70 4.62 25.00

62972.97 49361.72 39667.69 26078.75 22804.04
b) Others

RTL to Independent Power Producers -
Projects under implementation
700.00 0.00 0.00 0.00 0.00
Less: Provision for contingencies
2.80 0.00 0.00 0.00 0.00
697.20 0.00 0.00 0.00 0.00

RTL to Independent Power Producers -
NPA
8.92 8.92 8.92 8.92 8.92
Less: Provision for contingencies
8.92 2.68 2.68 1.78 0.89
0.00 6.24 6.24 7.14 8.03

FCLs Independent Power Producers -
NPA
0.00 0.00 0.00 0.00 0.00
Less: Provision for contingenci