EXECUTIVE SUMMARY

Power sector being the key infrastructure area it wi be the centre stage !ri"ing In!ia on
higher econo#ic growth $ath% The current a In!ia instae! $ower generation ca$acity as
on &uy' ()*) is *+,+-) M. an! the **
th
$an targete! ca$acity a!!ition is -/'-)) M.
*(
th
$an ai#s at a!!ing *))))) M.% An! !uring the **
th
$an area!y (01)) M. has
been co##issione! an! about ,-/)) M. is un!er construction an! to be co##issione!
in re#aining $art of the **
th
$an% 2owe"er the energy shortage an! $ack shortage sti
continue! to be *)%*3 an! *,%,3 res$ecti"ey gi"en that !e#an! continue! to outstri$
su$$y%
Power 4inance Cor$oration' a go"ern#ent of In!ia un!ertaking is a non banking
financing co#$any' registere! with R5I which $ro"i!es financia assistance to $ower
sector% Power 4inance Cor$oration is a !o#inant $ayer in In!ian $ubic sector in ter#s
of in"est#ent but its #arket shares of ()3 P4C has the status of a $ubic financia
institution that finances an! assists borrowers in the $ower sector% these essentiay e6ists
a ti#e ga$ between foun!s a"aiabe for short ter# in"est#ents fun!s to the tone of *))
crores are a"aiabe $er #onth as sur$us ' thus there arise the nee! for $acing 7
in"est#ent the sur$us fun!s at an o$ti#u# yie! %
Treasury #anage#ent unit 8TMU9 is in charge of the tota short ter# in"est#ent function
at $ower 4inance Cor$oration% these incu!e e#$ane#ent of banks i!entification of
sur$us' e"oution :uotation' #aking the in"est#ent !ecision accor!ing to the $roce!ures
ai! !own etc' the in"est#ent function is gui!e! by o$erationa $oicy as we as the
in"est#ent $oicy o$tion a"aiabe for fun! #anage#ent of fun! !e$oy#ent for the
fun!s in financia in"est#ent as $er $oicy' arrange#ent of fun!s in case of any short fa'
infor#e! by banking unit%
4IXE; ;EP<SITS 84;9
P<.ER 4I=A=CE C<RP<RATI<= #ay $ace fun! in fi6e! !e$osits with sche!ue!
banks with a #ini#u# net worth of RS *)) crore an! ha"ing ca$ita a!e:uacy ratio
8CAP9 as $er re:uire#ent of R5I fro# ti#e to ti#e % 4urther' P4C #ay $ace fun!s in
4;>s with $ubic sector banks without cre!it rating fro# the#% .hoe"er P4C #ay
continue to insist safety rating either for 4;>s or co##ercia !e$osit fro# cre!it rating
agency%
8ike ;RSI?' ICRA'CARE'4ITC2 etc 9 for $ace#ent of fun! in 4; >s with $ri"ate bank
the co#bine! e6$osa i#it of C; an! 4; with $ubic sector an! $ri"ate banks wi be
fi6e! as un!er @
A9 The to$ fi"e e#$anee! nationaiAe! banks seecte! on the basic of there net
worth 8base! on there ast au!ite! account9 wi ha"e an e6$osure of RS *)))
crore each% S5I an! other banks wi ha"e e6$osure i#it as gi"en beow%
59 In case of nu#ber of e#$anee! banks e6cee!s () an! a#ount of in"est#ent is
ess than RS 1)) cores' rotation syste# for caing :uotations is to be foowe! %
4or rotation the :uotation wi be cae! fro# S5I' ten banks out of ist of PSU
banks 8incu!ing subsi!iaries of S5I9' 1 banks fro# other sche!ue banks an! (
banks with who# the fun!s were ast !e$oy#ent at highest rate%
C9 P4C sha u$!ate the $ane e"ery year in the #onth of Se$te#ber B<ctober% The
$ane so !rawn u$on sha re#ain "ai! ti a new one is !rawn an! a$$ro"e!%
;uring the year' if P4C recei"es any re:uest fro# any bank for incusion of its
na#e in the $ane after the finaiAation of the $ane' the bank #ay be incu!e! in
the $ane $ro"i!e! its worth e6cee! the net worth of bank that ha"e the owest net
worth in the $ane% Such a!!itions to the $anes wi be in a!!ition to the banks
area!y e#$anee! for the year%
;9 In the case rating of $ri"ate bank is !own gra!e! beow the highest safety rating'
the cor$oration #ay i#itate action for re#o"ing the sai! banks for the ist of
e#$ane#ent% 4urther in the case the cor$oration is ha"ing 4;>s 7 C; or any
other !e$osits' e"en P4C #ay ha"e to $ay $enaty for the sai! forecosure% The
sai! forecosure wi be !one after taking a$$ro"a of chief #anage#ent !irector
an! wi aso be infor#e! to the boar! of !irector in the #onthy in"est#ent
re$ort% The sai! cause of forecosure #ay be a$$icabe for a ty$es of
in"est#ent in instru#ents re:uiring highest safety fro# banks or other
institutions%
AVERACE CA?CU?ATI<= <4 MUTUA? 4U=;
SAMP?E
S%=< =a#e of
#utua fun!
A#ount of
in"est#ent
8*9
Perio!
8in !ays9
8(9
Rate of
interest 8=et
of ta6 in 39
8,9
A#ount
DPerio!
DRate
0E8*D(D,9
A#ountDPerio!
1E8*D(9
* M4* 0-%)) *( +%1F ,-*+%-+ 1+0%))
*)%)) *- +%+) **((%)) *-)%))
0,%)) *F +%1F 1,/0%), /*-%))
*%F+ - +%+* F)%+F *,%-(
0*%0+ + +%+) *+0*%/( (0/%-+
*))%)) * +%,* +,*%)) *))%))
( M4( *1%)) 0 +%0F ,/F%0) +)%))
/1%)) 1 +%0- (-0F%-1 0(1%))
, M4, (%)) , +%,+ ,/%*+ +%))
,-%)) 0 +%,0 F,/%,( 0/%))
/%)) 1 +%,* (1(%0) 0)%))
,1%)) F +%(+ *F-*%F) ,*1%))
*/%)) *) +%(- **(/%+) */)%))
0-%)) 0 +%(, **-*%(0 *//%))
0 M40 *))%)) *F +%1F *(1(*%)) *F))%))
F)%)+ * +%,F 1-1%0/ F)%)+
1 M41 *)%)) ** +%+* -(-%*) **)%))
,(%(+ *( +%1) (1*+%(/ ,/-%*(
1-%-0 + +%1+ ((-(%+1 ,0+%00
,F/,/%1/ +)F%*)
.eighte! A"erage Rate of InterestE
A#ount X Perio! X Rate
A#ount X Perio!
+%1(3
<n the basis of the abo"e' #onthy a"erage returns ha"e been tabuate! beow@G
Month .eighte! rate 3 8=et of Ta69
AugG*) 0%(-
Se$G*) 0%-)
<ctG*) 1%(+
=o"G*) 1%0)
;ecG*) 1%,F
&anG** +%)F
4ebG** +%,(
MarG** +%01
A$rG** +%0*
MayG** +%1F
&unG** +%,*
&uG** +%1+
AugG** +%+,
Se$G** +%1*
<ctG** +%/*
=o"G** +%-F
;ecG** +%/(
&anG*( -%*)
4ebG*( -%*1
MarG*( -%,,
A$rG*( -%,0
MayG*( -%0F
&unG*( -%*)
&uG*( +%F1
AugG*( +%-0
Se$G*( +%1(
<ctG*( +%,*
=o"G*( +%,*
;ecG*( +%(1
&anG*, +%0-
4ebG*, +%,
MarG*, +%0/
A$rG*, +%0/
MayG*, +%(+
&unG*, 1%F0
19 The #onthy returns gi"en abo"e ha"e been further a"erage! to arri"e at yeary return
which is as un!er@G
Perio! Returns 8 =et of Ta69
()*)G()** 1%-*3
()**G()*( +%-,3
()*(G()*, +%-F3
4IXE; ;EP<SITS I= ?AST T2REE YEAR AT VARI<US RATE
SAMP?E CA?CU?ATI<=
=a#e of
5ank
A#t of
In"est#ent
8in crores9
Perio! 8in
!ays9
Rate of
Interest
839
8Cross of
Ta69
A#ountDPeriD
<!DRate
A#ountDPerio!
AAA +%0F ,) (%-1 1,1%0(1 *F0%-
555 ()%)) ,) (%-1 *+1) +))
CCC +,%F- 0/ ,%1* *)---%++1+ ,)-)%1+
;;; F-%,/ 01 ,%1) *1,,-%,1 0,/(%*
EEE (*%/+ 01 ,%1) ,00(%F1 F/,%-
444 (+)%1) *0 ,%(1 **/1(%-1 ,+0-
CCC 1+%)1 *0 ,%1) (-0+%01 -/0%-
1(+%(1 0+,0(%1F)+ *,++(%-+
Month .eighte! A"erage Month .eighte! A"erage
Rate 3 Rate 3
4inancia Year ()*)G()**
A$rG*) ,%0- <ctG*) +%,*
MayG*) ,%,F =o"G*) -%00
&unG*) 0%+0 ;ecG*) /%*-
&uyG*) 1%,- &anG** -%(/
AugG*) 1%,- 4ebG** -%,F
Se$tG*) -%)+ MarG** *)%(0
4inancia year ()**G()*(
A$rG** +%/, <ctG** /%,/
MayG** F%*- =o"G** F%*1
&unG** F%-( ;ecG** F%0(
&uG** -%F- &anG*( F%(,
AugG** /%+- 4ebG*( F%10
Se$G** / MarG*( *(%*0
4inancia year ()*(G()*,
A$rG*( /%F/ <ctG*( /%),
MayG*( F%+* =o"G*( -%F/
&unG*( F%0/ ;ecG*( /%(1
&uG*( /%++ &anG*, /%)*
AugG*( /%*0 4ebG*, /
Se$G*( -%F( MarG*, F%+/
The abo"e rates ha"e been further a"erage! to arri"e at yeary weighty a"erage! rate
which are as un!er@G
Perio! .eighte! A"erage
Returns
()*)G()** +%,03
()**G()*( F%)*3
()*(G()*, /%1+3
REC<MMA;ATI<=
As $er the go"ern#ent reguations' the $ubic sector enter$rises shou! obser"e the
foowing gui!eines in regar! to in"est#ent of sur$us fun!s%
;e$oy#ent shou! be #a!e ony in instru#ents with #a6i#u# safety%
There shou! be a $ro$er co##ercia a$$reciation before any !e$oy#ent
!ecision of sur$us fun!s is taken% The sur$us a"aiabiity #ay be worke! out for
a $erio! of #ini#u# one year at any $oint of ti#e%
4un!s shou! not be in"este! by $ubic sector enter$rises at a $articuar rate of
interest for a $articuar $erio! of ti#e whie $ubic sector enter$rise is resorting to
borrowing at an e:ua or higher rate of interest for its re:uire#ents for the sa#e
$erio! of ti#e%
;e$oy#ent !ecision shou! be base! on soun! co##ercia Hu!ge#ents%the
a"aiabiity shou! be worke! out base! on cash fow esti#ate! taking into
account working ca$ita re:uire#ents' re$ace#ent of assets an! other foreseeabe
!e#an!s%
The re#aining $erio! of #aturity of any instru#ent shou! not e6cee! one year
fro# the !ate of in"est#ent where the !e$oy#ent is #a!e in an instru#ent
area!y issue!%
.here the !e$oy#ent is #a!e in an instru#ent newy issue!' the fina #aturity
of the instru#ent shou! not e6cee! one year' howe"er ony in the case of ter#
!e$osits with banks' it can be u$to , year%
<5SERVATI<=S
My short e6$erience at Power 4inance Cor$oration i#ite! gi"es #e ani#$ression that is
one of the argest $ower finance enter$rise in In!ia%
It ho!s a "ibrant organiAationa cuture where the #e#ber e6ercises a share! #eaning'
which !istinguishes this organiAation fro# other% The !istinguishing characteristics *
cou! $ick u$ are@
Coo! :uaity #anage#ent
It is one of the ea!ing go"ern#ent of In!ia un!ertaking%
.e estabishe!' ong stan!ing reation in the $ower sector in!ustry%
I#$e#enting agency for sche#es incu!ing ACISP I API;RP
2ighest cre!it rating by the cre!it rating agencies of In!ia
Power sector $resents significant in"est#ent o$$ortunities%
Sector e6$ertise for consuting an! $ro"i!ing in"est#ent gateways for !o#estic
an! e6terna financia agencies%
=ew business o$$ortunities to co"er the range of acti"ities in the $ower sector%
C<=C?USI<=
As $er the anaysis !one we can concu!e that there is a wi!e sco$e for the co#$any
to in"est in' such as@
In a stabe #arket the fun! #anage#ent unit if focuses #ore on #utua
fun!s can get better o$$ortunities for !e$oy#ent an! earn a high rate of
return on !e$oy#ent%
Power 4inance Cor$oration aso e6$ores $ossibiity of !e$oying its
sur$us fun! in C5?< 8CoateraiAe! 5orrowings an! ?en!ing
<bigations9 #arket% It wi $ro"i!e higher i:ui!ity aong with #arket
inke! return% 2owe"er this wi re:uire! a$$ro"a !e$art#ent of $ubic
enter$rises 8;PE9% It un!erstoo! P4C has area!y taken a issue with the
go"ern#ent%
The #oney #arket #utua fun!s is aso goo! o$tion as it $ro"i!e high rate
of return in co#$arison with the fi6e! !e$osits an! has a huge #arket to
$ay in an! in"est#ent can be easiy #a!e !uring re:uire#ent of cash' it
can easiy be cashe! %
The !e$art#ent thus has a nu#ber of "arious other o$tion on which they
can concentrate an! focus on the tren!s so that the in"est#ent cou! be
#a!e an! high yie! can be earne!%
5I5?I<CRAP2Y
www%in!iago"%in
www%wii$e!ia%co#
www%in"esto$e!ia%co#
www%!$e%nic%in
www%rbi%org%in
P4C Annua Re$ort 8()**G*(9
P4C 5rochures
P4C Manua on 4un! Manage#ent I 5anking Unit%
In$uts $ro"i!e! by the Cui!e%
Returns !ata for in"est#ent #a!e by P4C ?t!%in 4i6e! ;e$osits an! Mutua
4un!s%
T<P P?AYERS I= T2E P<.ER
SECT<R
=TPC Pubic Sector
8State I Centra9
Power Cri!
Cor$oration
Reiance
Infrastructure
Pri"ate Sector
TATA Power