REC- 1-51.p65 - Rural Electrification Corporation Ltd.

RURAL ELECTRIFICATION CORPORATION LIMITED
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
power sector financing industry is also becoming
increasingly competitive and our profitability and growth
will depend on our ability to compete effectively and
maintain a low effective cost of funds.
5. OUTLOOK
Record capacity additions have been targeted in the 11 th plan
at 78700 MW and CEA estimates addition of 100000 MW in
the 12 th plan. Thus in the 10 year period of the 11 th and 12 th
plans put together power infrastructure is likely to see
investments of over INR 21,316 Billion. The thrust on rural
electrification, renewably energy and decentralised
distributed generation continues. As the economy continues
to grow, the energy consumption in the country is also
growing. Therefore the outlook for the sector continues to
remain bright and vibrant
6. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has formulated various policies and
procedures, as part of its Internal Control System, for orderly
and efficient conduct of its business, including adherence
to management’s policies, safeguarding of assets, prevention
and detection of fraud and error, accuracy and completeness
of the accounting records, and the timely preparation of
reliable financial information.
The Company has a separate Internal Audit Division which
verifies compliance to the policies and procedures framed
by the management. The Internal Audit Division covers all
areas of operations of REC as per the Annual Internal Audit
Programme. The Division helps in improving accuracy and
efficiency of transactions and operations by undertaking
review of controls in built, scrutiny of payments and
expenditure, and examination of financial and technical
records of the Company.
The audit of various Zonal Offices / Project Offices / CIRE
located in different parts of the country and various divisions
of the Company at the Corporate Office are also carried out
on bi-annual, annual and biennial basis.
7. DISCUSSION ON FINANCIAL PERFORMANCE IN
RESPECT OF OPERATIONAL PERFORMANCE
The loan sanctioned during the year 2009-10 was
Rs.45357.36 crore as compared to Rs.40745.84 crore during
the year 2008-09 (excluding subsidy under RGGVY). The
disbursement during the year also increased to Rs.27127.24
crore as compared to Rs.22277.86 crore during the year 2008-
09 (including subsidy under RGGVY).
The amount due for recovery during the year 2009-10 was
Rs.12461.02 crore as compared to Rs. 9788.90 crore during
the previous year. The overdues from defaulting Borrowers
was Rs.166.60 crore as on 31.3.2010. The Company recovered
a total sum of Rs.12496.12 crore during the year 2009-10 as
against Rs. 9796.97 crore during the previous year.
During the financial year, the Company registered an increase
of Rs.1792.59 crore in operational income which went up to
Rs. 6549.76 crore in 2009-10 from Rs. 4757.17 crore during
the year 2008-09. Profit before tax was at Rs.2649.19 crore
in 2009-10 in comparison to Rs.1920.11 crore in 2008-09.
Net profit of the company in 2009-10 is Rs.2001.42 crore, an
increase of Rs.729.34 crore over the previous year. Net worth
of the Company as on 31st March, 2010 is Rs.11080.33 crore.
8. MATERIAL DEVELOPMENT IN HUMAN RESOURCE /
INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER
OF PEOPLE EMPLOYED
In order to professionalize the Executive strength of REC
and also to infuse fresh blood, 09 Executives were appointed
in REC through open advertisement and 16 Executives
through campus recruitment during the year / period from
1.4.2009 to 31.3.2010.
The total manpower at the close of the financial year 2009-
10 i.e. on 31.3.2010 was 673 which includes 370 Executives
and 303 Non-executives.
The company sponsored 95 employees to various training
programmes, workshop etc. within the country and abroad.
In addition, 18 training programmes were conducted in
house, which were attended by 479 employees including 7
programmes at CIRE, Hyderabad exclusively for REC
employees. Taken together, these initiatives enabled the
Company to significantly out-perform MOU targets (as
against 1300 man days we achieved a figure of 2342 for the
year). In order to develop global exposure, several officers
were sent to attend various programmes abroad to countries
viz. Japan, Geneva, Bangladesh etc.
9. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY
Following is the CSR Policy as approved by the Board of
Directors of REC in May, 2008.
“To remain a responsible corporate entity mindful of its
social responsibilities to all stakeholders including
consumers, share holders, employees, local community and
society at large.”
Towards the above objective, REC set aside a sum equivalent
to 0.25 % of Profit after Tax (PAT) of previous fiscal, i.e Rs
318 lakh as allocation towards CSR activities for fiscal 2010.
A separate society by the name “REC Foundation” has been
constituted to take up the CSR work in a strategic and
exclusive manner. A number of proposals are in various
stages including a project to support children who are/have
been victims of communal disruption across the country.
Called “Project Assist” this project is being implemented by
the National Foundation for Communal Harmony (NFCH).
In another initiative, REC sponsored construction of a
Training Centre for physically handicapped persons”, to
provide vocational training to them. The project is being
implemented by Amar Seva Sangam, Chennai. In another
project, REC has contributed three vehicles for distribution
of food under the mid-day meal program for children of
government schools.
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