Electricity Industry Structure &

Regulations
(EISR)
(PM-2207)
Power Finance
Corporation Ltd.
(Funding For Brighter
tomorrow)
Presented by-
Ravi Mehrotra
Angshuman Rudra
Dhruv Srivastav
Vishal kumar
 Power Finance
Corporation Ltd.

 Overview of PFC Company Analysis

 About PFC Financial & Non-financial
 Mission, Vision & products & services
Objectives Lending rates
 Accomplishments & Disbursement
Ratings Strategy so far
 Products & Services Know Your Customer(KYC)
 Ultra Mega Power Fair Practice Code(FPC)
projects Partnership in
 Nodal agency
Independent Excellence(PIE)
Transmission projects Financial Analysis
 Support to Non- Sanctions & Disbursements
conventional Energy FFS & P/L account analysis
sources Negligible NPAs
 Offices & Clients
The SWOT analysis
 Structure of the The road ahead
Organisation Q & A session
 Power Finance
Corporation Ltd.

PFC was set up in July 1986 as a Financial Institution

(FI) dedicated to Power Sector financing and
committed to the integrated development of the
power and associated sectors. The Corporation
was notified as a Public Financial Institution in
1990 under Companies Act, 1956. The
Corporation was registered as a Non Banking
Financial Company by RBI and has been 
conferred with the status of  Nav-Ratna PSU  by
Govt. of India on 22nd June, 2007. 
 Power Finance
Corporation Ltd.

 Corporate Vision
To be the leading institution in financing for sustainable
development of Indian power sector & its linkages with an
eye on global operations.

 Corporate Mission
To become the most preferred Financial Institution in power &
financial sectors providing best products and services;
promote efficient investments in Power Sector to enable
availability of required quality power at minimum cost to
consumers; reach out to global financial system for
financing power development; act as a catalyst  for
reforming  India's Power Sector; and  build human assets
 Power Finance
Corporation Ltd.

o To provide financial resources & encourage flow of

investments to the power & associated sectors.
o To work as a catalyst to bring improvements in
streamlining the functions of its borrowers in the areas
of technical, financial & managerial to ensure
optimum utilisation of available resources
o To mobilise various resources viz. domestic &
international at competitive rates.
o To strive for up gradation of skills in power sector for
effective & efficient growth of the sector.
o To maximise the rate of return through efficient
operations & introduction of innovative financial
instruments & services of the power sector.
 Power Finance
Corporation Ltd.
Conferred with the ‘Navaratna’ status on 22nd June, 2007.

ISO 9001-2000 certified Quality Management System of

Project Division.

‘Highest safety’ ratings by CRISIL & ICRA for resource

mobilisation.

International Credit ratings has been pegged at that of

‘Sovereign’ by Standard & Poor’s(S&P), Moody’s &
FITCH.

‘Golden Peacock’ award for excellence in Corporate

Governance (National Category), 2007.

IPO launched on February, 2007 was oversubscribed 77

 Power Finance
Corporation Ltd.
PFC is providing large range of Financial Products and Services
like
 Project Term Loan
 Lease Financing
 Direct Discounting of Bills,
 Short Term Loan
 Consultancy Services etc.
for various Power projects in Generation, Transmission,
Distribution sector as well as for Renovation & Modernisation of
existing power projects.

Ministry of Power, Central Electricity Authority and PFC are

working together to facilitate development of Ultra Mega Power
Projects with the capacity of about 4000 MW each under Tariff
based competitive bidding route. Being large in size, these
projects will meet the power needs of number of states
 Power Finance
Corporation Ltd.

PFC has incorporated two wholly owned subsidiary companies to act

as a SPV for developing two projects as of now. The SPVs would
transferred to the successful bidders who would implement the
projects to be selected through the process of International
competitive bidding
• Project I
Transmission strengthening for NR for enabling import of Power from
NER/ER by NR (Target Year – 2009-10)
• Project II
Evacuation System for Maithon RB (1000 MW), Kodarma (1000MW),
Mejia(1000MW) and Bokaro Extn (500MW-Target year – 2009-11)
 Power Finance
Corporation Ltd.

o PFC is giving priority in financing of new renewable energy

generation projects viz. wind firms, small hydro plants, bio-
mass projects etc.

o PFC is also targeting financing of Captive power plants

including co-generations.

o PFC assists State Power Utilities in preparation of CDM projects

for R&M of old thermal & hydro generation projects.

o PFC is taking necessary action for capacity building of State

Power Utilities & had identified 10 R&M projects for getting
benefits under CDM in coordination with various State power
Utilities.
 Power Finance
Corporation Ltd.

Registered Office Regional Office (West)

Power Finance Corporation Power Finance
Ltd. Corporation Ltd.
'Urjanidhi', Ground Floor, Moonlight
1, Barakhamba Lane, Building,158 Maharishi
Connaught Place Karve Road, Churchgate, 
New Delhi-110 001 Mumbai-400 020
 
  Regional Office
(South)
Power Finance
Corporation Ltd.
1st Floor (Rear Side), 
SPS Building, New
No.185, Old
No.137,Anna Salai,
Chennai- 600 002
 Power Finance
Corporation Ltd.

o State Electricity Boards

o State Power Utilities
o State Electricity/Power Departments
o Other State Departments (like Irrigation Department)
engaged in the development of power projects
o Central Power Utilities
o Joint Sector Power Utilities
o Equipment Manufacturers
o Private Sector Power Utilities
 Power Finance
Corporation Ltd.

Organization
The corporation is run by a Board of Directors which is the
highest  decision making body.  It works through a hierarchy of
whole time executives and employees.  The number of
employees currently employed in managerial capacity
including whole time Chairman and Managing Director and
Directors stand at 183, while those in non-managerial capacity
stand at 129, total being 312.
The powers and duties of its officers and employees
Adequate institutional arrangements exist to enable the
officers and employees of the corporation discharge their
duties satisfactorily vis-à-vis various clients, customers and
business associates. The scheme of empowerment through the
instrument of delegation of power ensures that various issues
related to disposal of business and serving clients and
 Power Finance
Corporation Ltd.
Function and duties
The function and duties of the corporation in relation its customer
and clients include providing a range of services and products in
the area of 
(a) Financial and fund based services;
(b) Institutional Development services; and
(c) Others including fee based consultancy services.
The procedure followed in the decision
making process
The procedure followed in the decision making process, including
channels of supervision and accountability.
Overall management of the Company is vested with the Board of
Directors of the Company. The Board of Directors is the highest
decision making body within the Company.
Instrument of delegation of power broadly flows from top-downwards
with Board of Directors in its capacity of being the highest decision
making body having powers to dispose of business decision and
 Power Finance
Corporation Ltd.
The norms set for the discharge of functions
The functions of the corporation are sought to be discharged in an
efficient and effective manner through a variety of norms, rules
and guidelines set for the purpose, such as –
(a) Adherence to Business ethics,
(b) Zeal to Excel and Zest for Change,
(c) Focus on Customer requirements,
(d) Strict adherence to Commitments,
(e) Adherence to Prudential norms of the corporation,
(f) Compatibility with national plans and priorities, availability &
adequacy of all inputs needed to judge Financial & Techno
economic viability as also necessary and appropriate
clearances, 
(g) Integrity and fairness in all matters,
(h) Respect for Dignity and Potential of Human beings.
(i) Ensure speed of response,
(j) Foster Learning, Creativity & Teamwork.
 Power Finance
Corporation Ltd.
The following are the general documents which
are held by the department for effective  &
efficient working of its operations:
1 Articles of Association and Memorandum of Association.
2 Manuals developed for conducting of business and work.
a)       HR manual,
b)       Servicing manual (Domestic and International),
c)       Procurement manual,
d)       Vigilance manual,
e)       Resource Mobilization Manual (Domestic and
International),
f)         Investment Manual,
g)       Risk Management Policy etc.
3 Operational Policy Statements.
 Power Finance
Corporation Ltd.
Products & Services:-
Financial Products & Services
 Project Term Loan (Rupee and Foreign Currency)
 Short Term Loan
 Short/Medium Term Loan to Equipment Manufacturers
  Direct Discounting of Bills Scheme - For Buyers 
 Direct Discounting of Bills Scheme - For Sellers
 Lease Financing Scheme
 Buyer's Line of Credit Non-financial Services
 Debt Refinancing Scheme Guarantee
Consultancy
 Asset acquisition Scheme
 Project Rupee Bridge Loan Scheme Services
 Line of Credit for Import of Coal
 Assistance for Studies/Consultancies/Training
 Power Finance
Corporation Ltd.
Acting as an instrument for ushering in
reforms in the state utilities.
PFC has been providing support to help power utilities improves
their technical, financial and managerial skills to make this vital
sector of economy efficient, self sustaining and to adapt itself to
the dynamic changes taking place.

Utility Development Plans.

– Operational and Financial Action Plan (OFAP)
OFAP document based on diagnostic study encompasses in
different areas of functioning of the power utilities.

 Reforms & Restructuring of SEBs.

PFC has been actively persuading State Govt. to reforms and
restructuring of their power sector in order to make them
 Power Finance
Corporation Ltd.
Guarantee Assistance
PFC issues guarantees on behalf of projects to guarantee their payment
obligations. The guarantees enable projects to secure financing from a
wider spectrum of sources at more competitive rates, including
borrowings from commercial banks, foreign lenders and the debt
capital markets.
Purpose of Guarantee Assistance
To provide non-fund based assistance by way of guarantees for
performance of activities/contractual obligations under agreements
such as guarantee for performance under Fuel Supply Agreement for
facilitating procurement of raw material like gas, oil, coal or any other
form of fuel.
Types of guarantees :-
(i) State / Central Government Guarantee
(ii) Charge on assets
(iii) Corporate Guarantee
(iv) Personal Guarantee of Promoters
(v) Pledge of shares
 Power Finance
Corporation Ltd.
Range of Services offered by PFC Consultancy
Services

Since operationalisation of PFC's Consultancy Services Unit in

October 1999, it has grown many folds to provide
consultancy services at competitive prices.
The Range of Services offered addresses the following
aspects:
1. Restructuring and Reform activities, and assistance to
reformed entities.
2. Financial Management of resources, including
mobilization and accounting systems.
3. Risk Assessment, feasibility analysis, project structuring
and development of
appropriate solutions for improving efficiency.
4. Development of sustainable Human Resources Plans.
5. Communication and information dissemination.
6. Information Management systems.
 Power Finance
Corporation Ltd.
Lending rates
Circular regarding revised interest rates applicable w.e.f. 3rd
March,2007
Interest Rates with 3 / 10 year reset provision for Rupee Term
Loan (RTL) have been revised upward by 75 bps across the board
from their existing level.
Circular regarding revision of interest rate for Short Term Loans
w.e.f. 10th November,2007
It has been decided that the interest rate for Short Term Loan
(STL) shall be reduced by 50 bps from 11.25% p.a. to 10.75% p.a.
on disbursements and rollovers made/to be made on or after
10.11.2007
Disbursement By PFC
PFC makes the disbursement in the following manner:
a) Direct Payment to Supplier/contractor
b) Reimbursement Claim to borrower
 Power Finance
Corporation Ltd.

PFC’s customers, for the purpose of KYC, are categorized as under:

 Lending side customers
 Borrowing side customers
Lending side customers (borrowers) would include state utilities and
IPPs. Borrower side customers (investors) include banks,
institutions, trusts, corporates etc.
Benefits of KYC
 Customer Acceptance Policy and Customer Identification
 Monitoring of Transactions
 Risk Management
 Customer Education
 Power Finance
Corporation Ltd.
PFC has developed the Fair Practices Code (FPC) for its lending
operations based on the RBI guidelines, which intends to provide
assurance to all the borrowers of the Company’s commitment to
fair dealing and transparency in its businesses transactions. The
Fair Practices code developed by PFC applies to the following
areas:
•    Application  and processing of Loans
•    Loan appraisal and terms & conditions
•    Disbursement of Loans.

PFC has put in place a Grievance Redressal Mechanism.

Citizens/Consumer have a right to approach concerned officers to
settle grievances if they have any.
A senior officer is designated as Director (Public Grievances) who is
 Power Finance
Corporation Ltd.

In order to keep pace with emerging market

requirements PFC has taken several new initiatives.
Some of the key policies introduced are:
 Financing of Spares & Services under Partnership in
Excellence.

 Rating & categorization mechanism for State sector

entities.

 PFC introduced special Interest rates to renewable

projects to have business growth in this segment.

 Extending special interest rates in case of large

Generation project loans, volume discount in case of
loans for Transmission & distribution Schemes & Rebate
in Interest rates after commissioning in case of
 Power Finance
Corporation Ltd.
 Power Finance
Corporation Ltd.
 Power Finance
Corporation Ltd.
FUNDS FLOW STATEMENT AS AT 31st MARCH 2007(Rs.
In Lakhs)
Description As at 31.03.2007 As at
31.03.2006
I . SOURCES OF FUNDS
Share Holder’s Funds 859308.91
693815.59
Loans Funds 3358418.22 2692481.91
Deferred Tax Liablity (Net of Asset ) 114259.48 97054.70
Interest Subsidy Fund from GOI 123162.90
120032.99
Total 4455149.51 3603385.19
2. APPLICATION OF FUNDS
Fixed Assets 8142.30
5531.68
Investments 5887.88 1651.09
Loans 4390282.94 3560253.15
Current Assets, Loans & Advances 262024.51 178533.59
 Power Finance
Corporation Ltd.
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH
2007(Rs. In lakhs)

Description Year ended 31.03.2007 Year ended

31.03.2006
INCOME 392765.15 312758.63
EXPENSES 241609.87 187261.39___________
Profit for the year 151155.28
125497.24___________
Profit before tax (PBT) 151153.28 126483.35___________
Profit after tax(PAT) 98613.89
97095.01____________
Earning Per Share(EPS) 9.46 9.42
(Face Value-Rs.10 each)

D/P Ratio= 25%

ROE= 86%
 Power Finance
Corporation Ltd.

 During the year ended 31st March, 2007, the Company

recorded a significant 25.58% growth in total revenue.

 The total loan assets (net of provision) grew by 23.31%

 The net worth of the Company grew by 24.37%

 Net NPAs as % of Loan Assets decreased to 0.06% as against

0.20% in the year 2005-06.

 Profit before Tax (PBT) grew by 19.5%.

 However, Profit after Tax (PAT) grew marginally by 1.56% from

Rs.970.95 crore in the year 2005-06 to Rs.986.14 crore in the
year 2006-07.
 Power Finance
Corporation Ltd.
Weaknes
Strength
#Unique Player s
#Strong Financial #Internal Control
# Growth Acceleration #PSU-Bureaucracy
#Backed by Ministry #RBI norms
#ECB Restrictions

Opportunities
Threats
#Accessing Funds
#Tariff based bidding #Cheap Interest
# UMPPs Rate
# Transmission Service # Dependence on a
#The 11th plan single Sector
 Power Finance
Corporation Ltd.
• In the years ahead, PFC intends to continue
to encourage and promote reforms in the
power sector.
• Looking at the size of investment
requirements, PFC wants to diversify its
portfolio & expand its services.
• Plans are also afoot to further promote and
develop Consulting and Advisory services.
• PFC is also contemplating to explore
opportunities available in the area of Private
equity investment with an objective to
bridge the last mile equity gap of Private
power projects in India.
 Power Finance
Corporation Ltd.
• www.google.co.in
• www.pfc.gov.in
• www.thehindubusinesslin
e.com
• www.economictimes.com
• Financial Management.
–I.M.Pandey.
• Google search on 21st
Annual General Meeting
of PFC.