Ladies and Gentlemen
It gives me great pleasure to welcome you all to the 32nd Annual GeneralMeeting of your Company. It is indeed a privilege to share that your Company has completed30 successful and glorious years of business operations. I thank the previous CMDs andDirectors for making PFC as one of the prominent lenders in the financing sector. I wouldalso like to take this opportunity to thank Ministry of Finance and Ministry of PowerGovernment of India to have granted the permission to your Company to raise funds throughcapital gains tax bonds under section 54 EC of Income Tax Act.
Last year was an important year for the Indian Economy. Indian Economy is alreadyroaring back to recovery as landmark reforms like Goods and Services Tax (GST) Insolvencyand Bankruptcy Code (IBC) and Real Estate Regulation Act (RERA) are yielding results.International rating agency Moody's upgraded India's rating by a notch in 2017-18 for thefirst time in 14 years and changed the outlook from stable to positive. During the yearIndia also made impressive gains in the World Bank's global rankings on "Ease ofDoing Business" as it moved up 30 notches entering the league of top 100 performers.World Bank Group's latest report "Doing Business 2018: Reforming to CreateJobs" recognized India as one of the top 10 improvers having implemented 8 out ofthe 10 Doing Business Indicators. Successful implementation of the Government of India'sflagship schemes like Mudra and Housing for All by 2022 has also added to the growth inGDP. Reserve Bank of India (RBI) has projected GDP growth rate at 7.4% in 2018-19.Meanwhile the World Bank has pegged its growth forecast for India at 7.3% in 2018-19 andat 7.5% for next two years.
Along with the Indian Economy India's electricity sector is going through atransformational phase with growing emphasis on meeting power requirements from cleanenergy sources like solar and wind in order to contain the country's carbon footprint andsupport global community's fight against the climate change. India became a net exporterof electricity for the first time and 7203 million units were supplied to NepalBangladesh and Myanmar in the last financial year. India's rank improved to 29 in 2018from 105 in 2013 on World Bank's 'Ease of Geffing Electricity' Ranking. All un-electrifiedvillages have been electrified and the government is gearing up to take electricity toevery household and fulfill its promise of universal electricity access in the country by31st December 2018. India also emerged as the third largest solar market inthe world in 2017 behind China and the US.
However the conventional projects have faced rough weather over the last two years andthis has posed quite a few challenges to your Company. However we are happy to share thatPFC continues to maintain its position as the lead financier in Indian Power Sector inspite of the vexing sector related issues and 'stressed assets' issue which have beenhaunting the Banks and Financial Institutions for quite some time now. With the changingbusiness paradigm your company has realigned its strategy to maintain its dominantposition in the power financing space. Your company made maiden venture into financing ofthe power components in irrigation projects of Telangana and funding of a Waste to EnergyProject. Alongside the Company has made significant jump of 260% in disbursements torenewable projects and almost 100% increase in refinancing business.
During the FY 2017-18 your Company posted a net profit of 7 5855 crore with the loanassets registering a healthy double digit growth of 14% along with highest ever sanctionsof 7 116233 crore and highest ever disbursement of 7 64414 crore. On the borrowingfront your Company borrowed 7 78000 crore during the year and made significant headwayin diversifying its borrowing portfolio by raising almost USD 1.7 billion in ForeignCurrency Loans which is 14% of borrowing in FY18. These loans included PFC's first everGreen Bond issue for USD 400 million which was priced very competitively FCNR(B) loansand syndicated loans. Your Company also managed to refinance its existing Foreign CurrencyLoans to reduce the cost of borrowing. The domestic borrowings portfolio was alsodiversified by raising funds through private placement of bonds and capital gain tax bondsunder section 54 EC of the Income Tax Act. The domestic borrowings were at a competitivemarginal cost of 7.37% which were below the Reuters' benchmark rates. As a result of allthese combined initiatives Average Cost of Funds reduced by 23 basis points from 8.41% to8.18%.
Your Company is a socially responsible corporate entity which is committed to improvingthe quality of life of the society at large by undertaking projects for SustainableDevelopments mainly focusing on fulfillment of power and energy needs of the society.Your Company has actively implemented wide range of CSR schemes in the field of solarenergy skill development sanitation health environment sustainability and alsocontributed towards the cause of the differently abled section of the society. Out of thetotal CSR budget of about 7 150 crore for FY 2017-18 PFC has disbursed 7 118 crore. YourCompany is already participating in Swachh Bharat Mission and contributing in the SwachhBharat Kosh. Going forward PFC's emphasis will also be on the social schemes of nationalinterest.
Government of India has launched various initiatives for resolving issues confrontingthe sector. Ujwal DISCOM Assurance Yojana (UDAY) has led to improvement in operational andfinancial performance of DISCOMs with accrued savings of 7 20000 crore by March 2018 onaccount of interest benefits due to takeover & restructuring of loans. Government aimsto achieve the target to bring down the AT&C losses to the level of 15% by March 2019from the current level of 18.75%.
Pradhan Mantri SahajBijli Har GharYojana (SAUBHAGYA) was launched for takingelectricity to every household in the country. Over 7 16000 crore has been allocated forthe scheme which envisages providing electricity connections to 4 crore families in ruraland urban areas by December 2018 with free of cost electricity connections to BelowPoverty Line (BPL) families. Demand is expected to be increased to the tune of 28000 MWpost implementation of this scheme. Also under Deen Dayal Upadhyaya Gram Jyoti Yojana100% village electrification of all census villages has been achieved and it hastranslated into higher demand for power.
Integrated Power Development Scheme (IPDS) for which PFC is the Nodal Agency hasgreatly helped improve billing and collection efficiency of the power utilities and we areable to do Energy Audit and instantly know the AT&C loss level of a particular town.There is a common complaint number '1912' which is operational in almost all the utilitiesof the country today. Your Company has sanctioned projects of 7 2637 crore during FY2017-18 and 7 28671 crore cumulatively under IPDS. Disbursements were to the tune of 72479 crore during FY 2017-18 and 7 5139 crore cumulatively to the State Utilities forprojects sanctioned under IPDS. Under R-APDRP your Company has sanctioned projects of 737523 crore cumulatively for 1405 towns under Part-A IT 59 towns under Part-A (SCADA)and 1227 towns under Part-B of R-APDRP. Disbursements were 7 962 crore during FY 2017-18and 7 11150 crore cumulatively to the State Utilities for projects sanctioned underR-APDRP.
To tackle the issue of stressed assets in Power Sector Gol had launched the SHAKTIscheme to provide coal to the stressed power projects. SHAKTI covers projects which havePPAs but do not have Fuel Supply Agreements in place and also those which do not havePPAs. The objective of this scheme is to eliminate the stress in generation utilities.Also a Pilot Scheme for mid-term PPA for stressed projects has been launched by theMinistry of Power for which PFCCL our subsidiary Company is the Nodal Agency and PTC isthe aggregator to purchase power for three years from commissioned projects with no PPA.Bids for 1900 MW were received from eligible bidders at a tariff of 7 4.24 per unit. Theseinitiatives will help the projects to sell power on consistent basis and resolve thestress going forward.
Other initiatives have also been taken in the sector to tackle stress like introductionof 'SAMADHAN' 'PARIWARTAN' and SASHAKT schemes. Further Govt of India has also formed aHigh Level Empowered Committee to resolve Power Sector issues which is headed by theCabinet Secretary to the Government of India along with other key officials. AlsoInter-Creditor Agreement has been signed between lenders which will expedite the decisionmaking process in the consortium and therefore help in expeditious resolution of stress.
Government of India aims to add 175 GW of renewable capacity by 2022 involving anestimated investment of 7 6 lakh crore. PFC targets to tap significant market share ofthis business opportunity. Additionally your Company intends to diversify its loanportfolio which includes sewage treatment plants coal mining railways electrificationfunding smart cities infrastructure electric charging infrastructure for promotinge-vehicles battery manufacturing units for solar projects mini and micro grid fordistributed generation and schemes for energy efficiency improvements etc. Your Company isalso targeting refinancing business of commissioned assets.
Your Company's philosophy of Corporate Governance stems from its belief that the spiritof good governance lies in adherence to highest standards of transparency accountabilityethical business practices compliance of law in true letter and spirit adequatedisclosures corporate fairness social responsiveness and commitment to the organizationto meet stakeholders aspirations and societal expectations.
I am extremely thankful to the shareholders who have reposed faith in us. My sincereand heartfelt thanks go out to the Hon'ble Union Minister of State (l/c) for Power &New and Renewable Energy and officials of the Ministry of Power for their continuedsupport and guidance. I am also truly grateful to Board of Directors Investors and ValuedClients for their support.
I also convey my gratitude to Ministry of Finance Reserve Bank of India Department ofPublic Enterprises Securities and Exchange Board of India National Stock Exchange ofIndia Limited Bombay Stock Exchange Ltd. NITI Aayog CEA C&AG Statutory AuditorsRegistrars various Commercial Banks Financial Institutions and other concernedGovernment Department/Agencies at the Central and State level for their continued support.I also appreciate the continuous and unwavering support by our partners in the Print andElectronic Media.
Finally I must thank all the employees without whose continuous and untiring effortsnone of this would have been possible.
Chairman & Managing Director