FINAL IM 19.11.2010 - ICICI Direct

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Private & Confidential – Not for Circulation (This is a Disclosure Document prepared in conformity with

Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008)

RURAL ELECTRIFICATION CORPORATION LTD. (A Government of India Undertaking) Regd Office: Core-4, SCOPE Complex, 7 Lodi Road, New Delhi 110003 Tel.:(011) 24365161 Fax. 91-1124360644 E-mail [email protected] Website www.recindia.com & www.recindia.nic.in

(PRIVATE & CONFIDENTIAL)

OFFER DOCUMENT DISCLOSURE DOCUMENT FOR PRIVATE PLACEMENT OF UNSECURED NON-CONVERTIBLE

REDEEMABLE ZERO COUPON BONDS IN THE NATURE OF DEBENTURES OF INR 30000 EACH

AGGREGATING TO ` 250 CRORES WITH GREEN SHOE OPTION TO RETAIN

OVERSUBSCRIPTION

TRUSTEE FOR THE BONDHOLDERS REGISTRAR TO THE ISSUE IDBI Trusteeship Services Ltd. Beetal Financial & Computer Services (P) Ltd. Registered Office Registered Office Asian Building, Ground Floor Beetal House, 3rd Floor, Madangir 17, R Kamani Marg Behind Local Shopping Centre Mumbai – 400 001 New Delhi – 110 062 Tel No. (022) 56311771-3 Tel No. (011) 29961281-83 Fax No. 91-22-56311776 Fax No. 91-11-29961284 E-mail: [email protected] Listing: The Bonds are proposed to be listed on WDM segment of The National Stock Exchange Fund Mobilizers to the Issue:

DEUTSCHE BANK BARCLAYS BANK KOTAK MAHINRA A.K. CAPITAL SERVICES AXIS BANK ICICI SECURITIES PD SPA MERCHANT BANKS LKP SECURITIES DARASHAW & CO. R.R. FINANCE TRUST INVESMENT MONEY MATTERS RELIGARE SECURITIES EDELWEISS CAPITAL

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Disclosure Document (Private & confidential)

TABLE OF CONTENTS

INDEX TITLE

I. DEFINITIONS/ ABBREVIATIONS

II. DISCLAIMER

III. NAME AND ADDRESS OF REGISTERED/ HEAD OFFICE OF THE ISSUER

IV. NAMES AND ADDRESSES OF THE DIRECTORS OF THE ISSUER

V. BRIEF SUMMARY OF BUSINESS/ ACTIVITIES OF ISSUER AND ITS LINE OF BUSINESS

VI

BRIEF HISTORY OF ISSUER SINCE INCORPORATION, DETAILS OF ACTIVITIES INCLUDING ANY REORGANIZATION, RECONSTRUCTION OR AMALGAMATION, CHANGES IN CAPITAL STRUCTURE, (AUTHORIZED, ISSUED AND SUBSCRIBED) AND BORROWINGS

VII. SUMMARY TERM SHEET

VIII.

TERMS OF OFFER (DETAILS OF DEBT SECURITIES PROPOSED TO BE ISSUED, MODE OF ISSUANCE, ISSUE SIZE, UTILIZATION OF ISSUE PROCEEDS, STOCK EXCHANGES WHERE SECURITIES ARE PROPOSED TO BE LISTED, REDEMPTION AMOUNT, PERIOD OF MATURITY, YIELD ON REDEMPTION, DISCOUNT AT WHICH OFFER IS MADE AND EFFECTIVE YIELD FOR INVESTOR)

IX. CREDIT RATING & RATIONALE THEREOF

X. NAME OF DEBENTURE TRUSTEE

XI. STOCK EXCHANGE WHERE SECURITIES ARE PROPOSED TO BE LISTED

XII.

DETAILS OF OTHER BORROWINGS (DETAILS DEBT SECURITIES ISSUED IN THE PAST, PARTICULARS OF DEBT SECURITIES ISSUED FOR CONSIDERATION OTHER THAN CASH OR AT A PREMIUM OR DISCOUNT OR IN PURSUANCE OF AN OPTION, HIGHEST TEN HOLDERS OF EACH CLASS OR KIND OF SECURITIES, DEBT EQUITY RATIO)

XIII. SERVICING BEHAVIOR ON EXISTING DEBT SECURITIES AND OTHER BORROWINGS

XIV. UNDERTAKING REGARDING COMMON FORM OF TRANSFER

XV. MATERIAL EVENT, DEVELOPMENT OR CHANGE AT THE TIME OF ISSUE

XVI. PERMISSION / CONSENT FROM PRIOR CREDITORS

XVII. MATERIAL CONTRACTS & AGREEMENTS INVOLVING FINANCIAL OBLIGATIONS OF THE ISSUER

XVIII. DECLARATION

XIX. ANNEXURES

A. CREDIT RATING LETTER FROM CRISIL

B. CREDIT RATING LETTER FROM ICRA

C. CREDIT RATING LETTER FROM CARE

D. CREDIT RATING LETTER FROM FITCH

E. CONSENT LETTER FROM IDBI TRUSTEESHIP SERVICES LTD.

F. APPLICATION FORM

G. INSTRUCTIONS

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I. DEFINITIONS/ ABBREVIATIONS

AY Assessment Year Board/ Board of Directors

The Board of Directors of Rural Electrification Corporation Ltd. or Committee thereof

Bonds Unsecured Non-Convertible Redeemable Zero Coupon Bonds in the nature of Debentures of INR 30000 each offered through private placement route under the terms of this Disclosure Document

Book Closure/ Record Date

The date of closure of register of Bonds for payment of Redemption Proceeds

CAR Capital Adequacy Ratio CARE Credit Analysis & Research Ltd. CRISIL CRISIL Ltd. CDSL Central Depository Services (India) Ltd. CMD Chairman & Managing Director of REC Debt Securities Non-Convertible debt securities which create or acknowledge indebtedness and include

debenture, bonds and such other securities of the Issuer, whether constituting a charge on the assets of the Issuer or not, but excludes security receipts and securitized debt instruments

Depository A Depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996, as amended from time to time

Depositories Act The Depositories Act, 1996, as amended from time to time Depository Participant A Depository participant as defined under Depositories Act Designated Stock Exchange

National Stock Exchange of India Ltd.

DER Debt Equity Ratio DRT Debt Recovery Tribunal DP Depository Participant EPS Earning Per Share FIs Financial Institutions FIIs Foreign Institutional Investors Financial Year/ FY Period of twelve months period ending March 31, of that particular year FITCH Fitch Ratings India Pvt. Ltd. GoI Government of India/ Central Government HUF Hindu Undivided Family ITSL/ Trustee IDBI Trusteeship Services Ltd. ICRA ICRA Ltd. Issuer/ REC/ Corporation

Rural Electrification Corporation Ltd.

Disclosure Document Disclosure Document dated November 18th, 2010 for Private Placement of Unsecured Non-Convertible Redeemable Zero Coupon Bonds in the nature of Debentures of INR 30000 each aggregating to INR 250 crores with green shoe option to retain oversubscription to be issued by Rural Electrification Corporation Ltd.

I.T. Act The Income Tax Act, 1961, as amended from time to time MF Mutual Fund NRIs Non Resident Indians NSE National Stock Exchange of India Ltd. NSDL National Securities Depository Ltd. PAN Permanent Account Number PAN/GIR Permanent Account Number/ General Index Registration Number INR Indian National Rupee RBI Reserve Bank of India RTGS Real Time Gross Settlement Registrar Registrar to the Issue, in this case being Beetal Financial & Computer Services (P) Ltd.

(“Beetal”) SEB State Electricity Board SEBI The Securities and Exchange Board of India, constituted under the SEBI Act, 1993 SEBI Act Securities and Exchange Board of India Act, 1993, as amended from time to time SEBI Regulations Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations,

2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008 SLR Bonds Statutory Liquidity Ratio Bonds TDS Tax Deducted at Source The Companies Act/ the Act

The Companies Act, 1956 as amended from time to time

The Issue/ The Offer/ Private Placement

Private Placement of Unsecured Non-Convertible Redeemable Zero Coupon Bonds in the nature of Debentures of INR 30000 each aggregating to INR 250 crores with green shoe option to retain oversubscription to be issued by Rural Electrification Corporation Ltd.

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II. DISCLAIMER GENERAL DISCLAIMER This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus and is prepared in accordance with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008. This document does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds to be issued by Rural Electrification Corporation Ltd. (the “Issuer”/ the “REC”/ the “Corporation”) The document is for the exclusive use of the Institutions to whom it is delivered and it should not be circulated or distributed to third party(ies). REC certifies that the disclosures made in this document are generally adequate and are in conformity with the captioned SEBI Regulations. This requirement is to facilitate investors to take an informed decision for making investment in the proposed Issue. However, the investors are requested to make their independent evaluation about REC for investment in REC Zero Bonds. The investors are also advised to make their own decision regarding tax implications of investment and income thereon. DISCLAIMER OF THE SECURITIES & EXCHANGE BOARD OF INDIA This Disclosure Document has not been filed with Securities & Exchange Board of India (SEBI). The Securities have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this document. It is to be distinctly understood that this document should not, in any way, be deemed or construed that the same has been cleared or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the Issue is proposed to be made, or for the correctness of the statements made or opinions expressed in this document. The issue of Bonds being made on private placement basis, filing of this document is not required with SEBI; however SEBI reserves the right to take up at any point of time, with REC, any irregularities or lapses in this document. DISCLAIMER OF THE LEAD ARRANGERS It is advised that REC has exercised self due-diligence to ensure complete compliance of prescribed disclosure norms in this Disclosure Document. The role of the Arrangers in the assignment is confined to marketing and placement of the bonds on the basis of this Disclosure Document as prepared by REC. The Arrangers have neither scrutinized/ vetted nor have they done any due-diligence for verification of the contents of this Disclosure Document. The Arrangers shall use this document for the purpose of soliciting subscription from qualified institutional investors in the bonds to be issued by REC on private placement basis It is to be distinctly understood that the aforesaid use of this document by the Arrangers should not in any way be deemed or construed that the document has been prepared, cleared, approved or vetted by the Arrangers; nor do they in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor do they take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of REC. The Arrangers or any of its directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this document. DISCLAIMER OF THE ISSUER The Issuer confirms that the information contained in this Disclosure Document is true and correct in all material respects and is not misleading in any material respect. All information considered adequate and relevant about the Issue and it has been made available in this Disclosure Document for the use and perusal of the potential investors and no selective or additional information would be available for a section of investors in any manner whatsoever. REC accepts no responsibility for statements made otherwise than in this Disclosure Document or any other material issued by or at the instance of the Issuer REC and anyone placing reliance on any other source of information would be doing so at his/her/their own risk. DISCLAIMER OF THE STOCK EXCHANGE As required, a copy of this Disclosure Document has been submitted to the National Stock Exchange of India Ltd. (hereinafter referred to as “NSE”) for hosting the same on its website. It is to be distinctly understood that such submission of the document with NSE or hosting the same on its website should not in any way be deemed or construed that the document has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor does it warrant that this Issuer’s securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of REC. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.

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III. NAME AND ADDRESS OF REGISTERED/ HEAD OFFICE OF THE ISSUER Name of the Issuer : Rural Electrification Corporation Ltd. Registered/ Head Office/ : Core-4, SCOPE Complex, Corporate Office 7, Lodi Road, New Delhi 110003 Telephone Number : 91-(011) 24369846 / 24361320 / 24365161 Fax Number : 91-11-24365461 Website : www.recindia.com & www.recindia.nic.in E-mail : [email protected]

Statutory Auditors : (i) Bansal & Co., A-6, Maharani Bagh, New Delhi-110065. (ii) K G Somani & Co., 3/15 Asaf Ali Road, 4th Floor, Near Delite Cinema, New Delhi-110002.

IV. NAMES AND ADDRESSES OF THE DIRECTORS OF THE ISSUER The composition of the Board of Directors of REC as date of this Disclosure Document is as under: Sr. No. Name Designation Address 1. Dr. J.M.Pathak, IAS Chairman & Managing

Director C-II / 74, Shahjahan Road, New Delhi -110001.

2. Shri H D Khunteta Director (Finance) A-3 Jal Vidyut Apartments, Sector 21-C, Part-III, Faridabad 121001

3. Shri Guljit Kapur Director (Technical) 49-B, Pocket-A, DDA Flats, Sukhdev Vihar, New Delhi-25.

4. Shri Devender Singh, IAS Government Nominee L-32, Nivedita Kunj, Sector-10, R.K. Puram, New Delhi 110 001

5. Shri Venugopal N. Dhoot Independent Director 90,Manav Mandir, Napean Sea Road, Mumbai-400 006

6. Dr M Govinda Rao Independent Director 1,Academic Staff Quarters,NIPFP, 18/2 Satsang Vihar Marg, Special

Institutional Area, New Delhi-110067

7. Shri P.R.Balasubramanian Independent Director 229, 9A Main, 1st Block, H.R.B.R. Layout, Kalyan Nagar, Bangalore-560043

8. Dr. Devi Singh Independent Director Director’s Bungalow, IIM Campus, Praband Nagar, Off Sitapur Road

Lucknow 226 103 Note: The directors at sl. no. 1,2 &3 hold office at the pleasure of President of India in pursuance of Articles 82(1) & 82(2) of Association of REC. The director at sl. no. 4 holds office at the pleasure of nominating authority i.e., Ministry of Power, Government of India. The directors at sl.no..5, 6, 7 & 8 have been appointed by the Ministry of Power.

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V. BRIEF SUMMARY OF BUSINESS/ ACTIVITIES OF ISSUER AND ITS LINE OF BUSINESS

HIGHLIGHTS OF REC 1. Rural Electrification Corporation Limited (REC) was incorporated on July 25, 1969 under Companies Act,

1956. REC is a Government of India (GOI) Public Sector Enterprise with Net worth of over ` 1, 05,290.44 million as on March 31, 2010.

2. REC was declared as Public Financial Institution under Section 4-A of the Companies Act, 1956, in February 1992 and registered as Non Banking Financial Company under Section 45-IA of the RBI Act 1934 in February 1998. REC has been categorized as Infrastructure Finance Company in February, 2010.

3. Nodal Agency for channelising finance to aid Rajiv Gandhi Gramin Viduti Karan Yojana having the object of achieving 100% rural electrification.

4. REC has been accorded “Nav Ratna” status by GOI by virtue of its professional efficiency and financial strength, which affords greater operational freedom and autonomy in decision-making.

5. More than 100 Lacs single point light connections have been released to households of the rural poor under Kutir Jyoti Programme meant for providing electric light to people living below the poverty line.

OFFICES REC has its Registered Office at New Delhi and has an All India presence through its Branch net work of its 19 Project Offices located in States capitals /other major cities. REC has also 6 Zonal offices. FUNCTIONS The Registered Office at Delhi looks at the matters relating to Planning and Policy formulation, Resource Mobilization, Financial Operations etc. Project/Field offices attend functions relating to preliminary processing of new schemes, monitoring of ongoing schemes, scrutiny of loan claims, recovery of dues and maintain liaison with SEBs and State Governments for effective implementation of RE programme funded by the Corporation. SUBSIDARIES REC presently has three subsidiaries i.e. REC Transmission Projects Company Limited (RECTPCL), REC Power Distribution Company Limited (RECPDCL), and Raichur Sholapur Transmission Company Ltd (RSTCL- incorporated on 19.11.2009). RECTPCL and RSTCL have been incorporated to develop transmission projects in order to promote competition in the transmission sector. RECTPCL has been incorporated as REC’s wholly owned subsidiary and RSTCL have been incorporated as wholly owned subsidiaries of RECTPCL. RECPDCL, our wholly owned subsidiary has been incorporated to operate, distribute and maintain electric supply lines, to develop and manage decentralized distribution generation, undertake consultancy and project works in rural electrification, distribution of power and related transmission works and other similar activities in India and abroad. PRODUCTS AND SERVICES REC offers a comprehensive basket of products to meet the financing needs of its borrowers with respect to rural electrification, strengthening of transmission and distribution, generation projects, working capital needs and bulk loans. In addition REC also offers consultancy and training services to the power sector. A summary of the products and services of REC is given below: Systems Improvement In the 1990s, the power distribution network was inadequate to cater to the rapid increases in power demand. Over the mid 1990s, the Corporation felt the need to provide further impetus to system improvements, and stepped up its support to the system improvement programme. The main objectives of the schemes are:

(i) Reduction in energy losses in the distribution, sub-transmission and transmission systems (ii) Improving the voltage regulation so as to bring it within the prescribed limit (iii) Improving the quality and reliability of supply (iv) Improving the power factor in sub-transmission and distribution systems so as to improve the

available system capacities (v) Providing adequate system support for load development.

The schemes shall cater primarily to the needs of the distribution, sub-transmission and transmission systems of the scheme area for the purpose of system improvement as well as meeting system inadequacies.

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High Voltage Distribution System One such system improvement project is the High Voltage Distribution System (HVDS) sanctioned by REC on a large scale. The projects envisage reduction of the technical and commercial losses by implementation of High Voltage Distribution System (HVDS) in place of conventional Low Voltage Distribution System (LVDS) for all LT feeders feeding agriculture loads. Apart from reducing LT line losses, the voltage profile is improved; failure of Distribution Transformers is reduced leading to improved reliability and quality of power supply to consumer Bulk Loans Keeping in tune with the needs of its borrowers, REC has a category of Bulk Loan portfolio for providing financial assistance to SEBs for the procurement of equipment like Meters, Transformers etc. These schemes allow the Borrowers flexibility about the use of the equipment. Intensification of Electrified Villages The scheme for intensive electrification of villages’ aims at intensive load development for providing connections to consumers in electrified areas, keeping in view the concept of area development to ensure electrification of left out hamlets and dalit bastis in the vicinity of a selected designated unit. This scheme can extend to all districts of a state. Pump set Energisation Programme Loan assistance under the Pump set Energisation Programme shall provide for the energisation of pump sets on well/lift irrigation in a compact area in a selected designated unit. Short Term Loans REC is also providing short-term loans to its borrowers for meeting their working capital requirements such as purchase of fuel for power plant, purchase of power, purchase of material and minor equipment etc. Historically, we offer short-term loan with a maturity of six months to three year. Rajiv Gandhi Grameen Vidyutikaran Yojana Government of India, in April 2005, launched the scheme “Rajiv Gandhi Grameen Vidyutikaran Yojana – Scheme of Rural Electricity Infrastructure and Household Electrification” for the attainment of the National Common Minimum Programme (NCMP) goal of providing access to electricity to all households in five year The scheme is being implemented through the Rural Electrification Corporation (REC). Under the scheme Govt. of India is providing ninety per cent capital subsidy for overall cost of the projects. Initially, approvals for implementation of phase-I of the scheme for capital subsidy of 5000 crores for X Plan period was accorded vide OM dated 18th March 2005 issued by Ministry of Power. 235 projects covering 180,699 villages (68,763 un-electrified and 111936 electrified villages) with the total sanctioned project cost of `. 9,733 crore were sanctioned for implementation by the Ministry of Power in X Plan period. Approvals for continuation of the scheme in XI Plan period for capital subsidy of INR 28,000 crores has been accorded vide OM dated 6th Feb. 2008 issued by Ministry of Power. 338 projects covering 292,767 villages (49,736 un-electrified and 243,031 electrified villages) with the total sanctioned project cost of INR 16,268 crore have been sanctioned for implementation in XI Plan period by the Ministry of Power. Under the scheme, it has been reported that works have been completed for 53,370 villages (including 18,374 un-electrified and 34,996 electrified villages) during 2009-10. Cumulatively, works in 190,858 villages (78,256 un-electrified and 112,602 electrified villages) have been completed under RGGVY up to 31.03.2010. Connections to 100.97 Lakh BPL households have been released cumulatively under the scheme up to 31.03.2010. Generation REC provides funds to SEBs/ State Power Utilities/ Private Sector for generation projects like hydro, thermal (coal and gas based), Renovation & Modernisation, non-conventional etc. REC is also taking up the job of lead financier for the power projects. Previously, REC used to finance generation schemes consisting mainly Mini/ Micro hydro projects. After June 2002 mandate of REC expended to include all generation projects without limits on size or location. There after there has been remarkable growth in the sanctions & disbursements in the Generation schemes.

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During the year 2009-10, the Corporation has already sanctioned 26 nos. of Loans against Generation category, including 5 nos. of additional loan assistance, with total financial outlay of INR 240, 313 million and has also disbursed INR 83,493 million against the ongoing Generation Projects. With these the cumulative sanctions and disbursements since 2002-03 upto 31-03-2010 are INR1038038 million and INR278,885 million respectively. Debt Refinancing The Corporation assists borrowers in the power sector to reduce their cost of borrowings by offering access to a debt-refinancing scheme. Under this scheme, REC 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 re-financing facility is available only for commissioned projects. We offer our refinancing products on the same interest rate terms as our long-term loans; however, the maturity of our debt refinancing products is not later than the maturity of the refinancing indebtedness. OPERATING HIGHLIGHTS Village Electrification 6 out of every 10 villages electrified in the country have been funded by REC. Pump sets Energisation The total number of pump sets energized in the country is about 161.77 lakhs as on 31st January 2010. Out of these energized pump sets, REC financed pump sets constitutes 57% of the national achievement. The programme provides the necessary impetus to the production of agriculture output and to the expansion of agro-based rural industrial sector. With the availability of energized pump sets, the farmers’ dependence on the unpredictable, erratic and inadequate rainfall has substantially reduced and has helped the country to achieve self- sufficiency in food grain production. With REC financing pump sets energization programme resulting in higher agricultural yield, the income of the farmers has increased manifold and many more employment opportunities are created in the villages. The programme also contributes to the saving of diesel by converting diesel pump sets to the electrical pump sets. The programme aims at resource mobilization for pump sets energization in the planned manner and optimum utilization and management of ground water resources. System Improvement In order to improve the efficiency of electrical network especially with respect to reduction of line losses and the voltage profiles, REC has been encouraging implementation and projectisation of the System Improvement programme. To strengthen and improve the Transmission, Sub-transmission and Distribution System in the rural areas and to reduce the T&D losses, REC provides loan assistance to the Power utilities under its System Improvement portfolio. This programme was taken up on a regular basis from the year 1987-88. As value added service, REC provides the power utilities with technical expertise for identifying the system deficiencies and weaknesses and suggesting various alternatives to improve the system, out of which the most cost effective and technically feasible solution is adopted. Dalit Bastis and RE Cooperatives REC accords high priority to the development of Dalit bastis, tribal villages and backward areas. It promotes rural electric cooperatives to encourage decentralization of rural power distribution system. These organizations intensify electrification efforts by involving local consumers These cooperatives help conserve energy and minimize pilferage by functioning on democratic lines. CIRE In Fiscal 1979, we established the Central institute for Rural Electrification at Hyderabad, a training institute established for the purpose of designing and conducting training programmes on various aspects of power transmission and distribution systems and non-conventional energy systems. We have conducted training in broad array of power-related areas, including best technical practices in transmission and distribution systems, legal aspects of power sector operations and power sector accounting. Beginning in Fiscal 2006, CIRE was empanelled to conduct training for foreign nationals. INTERNATIONAL CO-OPERATION & DEVELOPMENT

Japan International Cooperation Agency (JICA) (earlier JBIC)

i) REC entered into a loan agreement with JICA on 31-03-2006 for loan assistance of 20.629 billion Japanese Yen (approx.INR 784 crore at an exchange rate of 100 yen = INR38.00 as on 31-03-2006) under the Official Development assistance (ODA) loan package for implementation of the Rural Electricity Distribution Backbone (REDB) Project, envisaging implementation of 749 nos 33/11 KV new substations and augmentation of 510 substations by the respective state power distribution utilities in the states of Andhra Pradesh, Maharashtra and Madhya Pradesh. Cumulative disbursements to the tune of INR619.62 crores have been

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made to the sub-borrowers and loan amount to the tune of INR614.95 cr. has been drawn from JICA till 31-03-2010, ii) REC entered into a second loan agreement with JICA on 10-03-2008 for ODA loan of 20.902 billion Japanese Yen (approx. INR833 crore at an exchange rate of 100 yen = INR 39.86 as on 10.03-2008) for implementation of transmission system project by Haryana Vidyut Prasaran Nigam Limited (HVPNL) in the state of Haryana with the objective of strengthening the intra-state transmission systems in the state. Implementation of projects has commenced and drawl of loan from JICA commenced during the financial year 2008-09. Disbursements to the tune amount of INR 168.77 have been made to the sub-borrower and loan amount to the tune of INR 168.32 cr. has been drawn from JICA till 31-03-2010.

Indo- German Bilateral Cooperation Programme

i) REC entered into a loan agreement with KfW on 08-08-2006 for ODA loan of 70 Million Euro (approx. INR 418 crore at an exchange rate of 1 Euro = INR 59.74 as on 08-08-2006) under KfW – Energy Efficiency Programme-I for implementation of High voltage Distribution System (HVDS) Project by the Andhra Pradesh Southern Power distribution company Limited (APSPDCL) in the Chittoor and Kadapa districts in the state of Andhra Pradesh. Cumulative disbursements to the tune of INR 440.98 cr. has been made to the sub-borrower and loan amount to the tune of INR 440..05 Cr. has been drawn from KFW till 31-03-2010. ii) REC entered into a second loan agreement with KfW on 16-03-2009 for ODA loan of 70 million Euro (approx. INR.466.13 crore at an exchange rate of 1 Euro =INR 66.59 as on 16.03-2009) under KfW – Energy Efficiency Programme-II for implementation of Energy Efficiency HVDS project by the Uttar Haryana Bijli vitran Nigam Limited ( UHBVNL) in the state of Haryana. The Project Preparatory activities have commenced and drawal of loan from KFW is expected to commence during the financial year 2010-11.

RESOURCE MANAGEMENT REC's principal sources of funds have been (i) borrowings from the Government, (ii) borrowings by way of Government guaranteed SLR bonds (iii) private placement of secured / unsecured bonds, market related borrowings (iv) loans from Commercial Banks, LIC etc. (v) Foreign Currency Loan (vi) internal generation. • Borrowings from the Government The outstanding borrowings from the Government of India mostly represent loans from the Govt. of India granted by way of budgetary support. Since REC has been able to raise resources from the market at most competitive rates, it has not drawn any budgetary support from the GOI in the last 6 year • Government Guaranteed SLR Bonds REC has been permitted by RBI to raise funds by way of SLR bonds guaranteed by the GOI. The bonds are largely taken up by commercial banks and form part of their statutory liquid assets. REC access to this source of finance has been gradually phased out. No SLR Bonds has been raised after 1997-98. • Private Placement of secured / unsecured bonds Subsequent to phasing out of the above two sources of finance, REC has been meeting its funds requirements by way of raising secured bonds i.e., taxable bonds, bonds carrying benefits under Sec 54EC & under Sec. 88 of IT Act, 1961 as also other short term debt instruments. This source of finance is a major source of funds for REC at present. • Loan from Commercial Banks, LIC etc. REC is raising funds from various Commercial Banks and Financial Institutions by way of long terms loans (both secured and unsecured). REC has been granted a term loan of ` 32,000 million by LIC and ` 64,414 million by Commercial Banks. In addition the funds are also raised from Banks and Commercial Paper route for short-term requirements. • Foreign Currency Loan During the financial year ending March 31, 2007, REC entered into a syndicate loan agreement through Standard Chartered Bank, London and DEPFA Investment Bank Limited, Cyprus for arranging loan amounting to JPY 23570 million. Loans under this agreement bear a variable interest at a spread of 48 bps over six months JPY Libor and maturing in 2011.After hedging; REC’s liability has been fixed at a rate of 6.50% p.a. plus withholding tax payable half yearly. As on March 31, 2010, this loan facility was fully drawn and the principal amount outstanding equivalent to ` 20762 million. • Internal Generation Internally generated funds by way of repayment of loans by borrowers & receipt of interest constitute of an important sources of funds for REC.

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VI. BRIEF HISTORY OF ISSUER SINCE INCORPORATION, DETAILS OF ACTIVITIES INCLUDING ANY

REORGANIZATION, RECONSTRUCTION OR AMALGAMATION, CHANGES IN CAPITAL STRUCTURE, (AUTHORIZED, ISSUED AND SUBSCRIBED) AND BORROWINGS

HISTORY SINCE INCORPORATION

Date/ Period Event/ Activity 1969 Incorporation of our Company. 1970 Commenced lending operation to SEBs. 1974 Authorised by the Ministry of Irrigation and Power to finance rural electrification under

the ‘Minimum Needs Programme’. 1979 Central Institute of Rural Electrification set up in Hyderabad. 1980 Deputed engineers to Algeria to train the Algeria’s National Agency for Distribution of

Electricity and Gas on rural electrification. 1988 Launch of Kutir Jyoti and Jal Dhara programmes for rural electrification. 1992 Declared a Public Financial Institution under Section 4A of the Companies Act. 1993 Declared as a Public Financial Institution under section 4-A of the Companies Act. 1993 Entered into MOU with the MoP for the Year 1993-94 for the first time to achieve

certain performance related targets. 1998 Registered as NBFC Under Section 45-IA of the RBI Act. 1999 Received ‘AAA’ rating from CRISIL Limited in relation to our long term domestic

borrowings. 2001 Capital Gains Tax Benefit under section 54-EC of the IT Act to

bonds floated by our Company. Upgradation from Schedule ‘B’ to Schedule ‘A’ Corporation.

2002 Grant of Mini Ratna-I status. 2003 Did not seek assistance from the budget for finances and became a fully self –reliant

organization. 2005 Profit before tax, crossed ` 10,000 million

Paid ` 2,345 milliion as dividend to the GoI Appointed as the nodal agency for RGGVY.

2006 Entered into agreement with Japan International Cooperation Agency for availing a loan facility of JPY 20,629 million

Entered into agreement with KfW, Frankfurt am Main for availing a loan facility of Euro 70 million

2007 Entered into a syndicated facility agreement with Standard Chartered Bank and DEPFA Investment Bank for availing a loan facility of JPY 23,570 million.

2008 Listed our Equity Shares on the Stock Exchanges. 2009 Accorded “Navratna” status by the Department of Public Enterprise, GoI for

our operational efficiency and financial strength, which affords greater operational freedom and autonomy in decision making.

Entered into agreement with Japan International Cooperation Agency for availing a loan of JPY 20,902 million.

Received ‘LAAA’ rating from ICRA Limited in relation to ` 250, 000 million long term borrowing programme for the Fiscal 2010.

Entered into agreement with KFW, Frankfurt am Main for availing a loan facility of Euro 70 million.

2010 REC has been categorized as Infrastructure Finance Company in February, 2010.

CONSTITUTION Rural Electrification Corporation Limited (REC) was incorporated on July 25th 1969 under the Companies Act, 1956. REC is a Government of India (GOI) Public Sector Enterprise with net worth of over `1, 05,290.44 million as on March 31, 2010. It provides financial assistance to State Electricity Boards (SEBs), State Government Departments and Rural Electric Cooperatives for village electrification and energisation of pump sets for increasing agricultural production and to other Centre / State utilities as also the private sector utilities. REC was declared as a Public Financial Institution under section 4-A of the Companies Act, 1956 in February 1992 and registered as Non Banking Financial Company under Section 45-IA of the RBI Act 1934 in February 1998. It is also the nodal agency for channelizing finance to aid the GOI’s social and economic objective of achieving 100% rural electrification by 2012. REC’s importance has been further enhanced by the virtual absence of private sector investments in rural electrification.

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BACKGROUND When India became independent in 1947, electricity was available in a few villages and merely touched a few towns and cities. At the time of launch of five-year development plans in 1951, about 3000 villages were provided electricity and nearly 50000 irrigation pump sets were energized. In 1965-67, India faced a drought during which main focus was to ensure food security by raising the food production. In order to do so, a rural electrification programme was devised for increasing the infra-structural input for agricultural production programmes. To implement the programme effectively REC was set up. REC has been a catalyst for rural development. The Corporation has sanctioned financial assistance of ` 1,795,201 million under 43,619 rural electrification projects so far. About 3.44 lakh villages have been electrified through REC funded schemes. Over 161.77 lacs pump sets stand energized with REC assistance. OWNERSHIP REC is a GOI Public Sector Enterprise. In the past, it has received funding support from the GOI in the form of regular equity infusion, loans, guarantees and allocation of tax-free bonds. REC's Bonds have also been granted status by the RBI. The Government has also allowed raising Capital Gains Tax Exemption Bonds (u/s 54-EC of the Income Tax Act, 1961) and Infrastructure Bonds (u/s 88 of the Income Tax Act). The GOI support has also been forthcoming in the form of State Government Guarantee and access to the Central Plan Appropriation (CPA) for recovering over dues from various SEBs. INDUSTRY OUTLOOK Rural Electrification and transmission and distribution (T&D) are key focus area in the power sector and REC is well placed to service the growing financing needs of this segment. It is a key entity in driving the policy objective of the Ministry of Power in terms of spreading electrical power to rural areas and catalyzing investments in the T&D Sector. REC plans to maintain its position as the dominant financial institution catering to the needs of the State Power Sector entities the T&D side especially for projects catering to the rural and semi -urban areas. REC has diversified its activities by introducing short-term loans for financing the purchase of T&D Equipments. It is also funding private sector/Joint Sector power projects and Centre / State PSUs. It has also taken initiatives to launch new products like debt refinancing & debt swapping to enable its borrowers to reduce their cost of borrowing.

CAPITAL STRUCTURE (as on March 31, 2010) (`. in million)

Particulars Amount 1. SHARE CAPITAL a. Authorised Equity Share Capital 1,200,000,000 Equity Shares of INR 10/- each 12,000.00 b. Issued Equity Share Capital 987,459,000 Equity Shares of INR 10/- each 9,874.59 c. Subscribed & Paid-up Equity Share Capital 987,459,000 Equity Shares of INR 10/- each 9,874.59 2. Securities Premium Account

After the Issue

32,236.30

Sl. No.

Year No. of Equity Shares of INR1000 each Allotted

during the Year

Face Value of Shares allotted (`.)

Cumulative Equity Share Capital (`)

1 1969-1970 30,000 3,00,00,000 3,00, 00,000 2 1970-1971 60,000 6,00,00,000 9,00,00,000 3 1971-1972 30,000 3,00,00,000 12,00,00,000 4 1972-1973 80,000 8,00,00,000 20,00,00,000 5 1973-1974 1,10,000 11,00,00,000 31,00,00,000 6 1974-1975 1,90,000 19,00,00,000 50,00,00,000 7 1975-1976 50,000 5,00,00,000 55,00,00,000 8 1976-1977 50,000 5,00,00,000 60,00,00,000 9 1977-1978 70,000 7,00,00,000 67,00,00,000 10 1978-1979 1,00,000 10,00,00,000 77,00,00,000 11 1979-1980 1,00,000 10,00,00,000 87,00,00,000 12 1980-1981 1,30,000 13,00,00,000 100,00,00,000 13 1981-1982 1,00,000 10,00,00,000 110,00,00,000 14 1982-1983 1,00,000 10,00,00,000 120,00,00,000 15 1983-1984 1,00,000 10,00,00,000 130,00,00,000 16 1984-1985 1,10,000 11,00,00,000 141,00,00,000 17 1985-1986 2,00,000 20,00,00,000 161,00,00,000 18 1986-1987 2,60,000 26,00,00,000 187,00,00,000

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19 1987-1988 2,86,000 28,60,00,000 215,60,00,000 20 1988-1989 3,20,000 32,00,00,000 247,60,00,000 21 1989-1990 3,50,000 35,00,00,000 282,60,00,000 22 1990-1991 3,70,000 37,00,00,000 319,60,00,000 23 1991-1993 4,30,000 43,00,00,000 362,60,00, 000 24 1993-1993 2,75,000 27,50,00,000 390,10,00,000 25 1993-1994 5,25,000 52,50,00,000 442,60,00,000 26 1994-1995 4,40,000 44,00,00,000 486,60,00,000 27 1995-1996 4,80,000 48,00,00,000 534,60,00,000 28 1996-1997 4,80,000 48,00,00,000 582,60,00,000 29 1997-1998 4,80,000 48,00,00,000 630,60,00,000 30 1998-1999 5,00,000 50,00,00,000 680,60,00,000 31 1999-2000 - - 680,60,00,000 32 2000-2001 5,00,000 50,00,00,000 730,60,00,000 33 2001-2002 5,00,000 50,00,00,000 780,60,00,000 34 2002-2003 - - 780,60,00,000 35 2003-2004 780,60,00,000 36 2004-2005 - - 780,60,00,000 37 2005-2006 - - 780,60,00,000 38 2006-2007 - - 780,60,00,000 38 2007-2008 78,060,000* 78,06,00,000 858,66,00,000 39 2008-2009 - - 858,66,00,000 40 2009-2010 128,799,000 987,45,90,000 Total 987,459,000 *Share of ` 10/- each

Notes:

1. The paid-up share capital of ` 6596.07 million is held by the Government of India and ` 3278.52 million is held by public.

2. The payments in respect of equity shares allotted annually have been received by way of cheques in favour of REC, which have been duly encashed.

3. At the Extra-Ordinary General Meeting of REC held on 27th September’ 2002, the Equity Shares of REC with denomination of ` 1,000 each were sub-divided into Equity Shares with denomination of ` 10 each.

4. The Corporation has issued 15,61,20,000 shares through IPO (comprising of fresh issue of 78,060,000 Equity shares by REC and offer for sale of 78,060,000 Equity shares by President of India, acting through the Ministry of Power, Government of India ( the “Selling Shareholder”)) in March 2008.

5. The Corporation has issued 171,732,000 shares through FPO (comprising of fresh issue of 128,799,000 Equity shares by REC and offer for sale of 42,933,000 Equity shares by President of India, acting through the Ministry of Power, Government of India (the “Selling Shareholder”)) in March 2010. The Paid-up Share Capital of the Company as on date is INR 9,874,590,000/-. In the Post-FPO Scenario, the Shareholding of the Government of India has reduced from 81.82% (INR7, 025,400,000/-) to 66.80% (INR 6,596,070,000) and the balance 33.20% (INR3, 278,520,000/-) is held by public.

TOP 10 SHAREHOLDERS (as on March 31, 2010)

Sr. No.

Name of Shareholder Address Number of Shares Held

% Share- Holding

1. President of India C/o Joint Secretary (RE), Ministry of Power, Shram Shakti Bhawan,Rafi Marg, New Delhi-110001

659607000 66.80%

2. HSBC Global Investment Funds A/c HSBC Global Investment Funds Mauritius Limited

HSBC Securities Services, 2nd Floor, “SHIV’, Plot No. 139-140B Westgern Exp. Highway, Sahar Road Junction, Vile Parle (East), Mumbai – 400 057

22866511 2.32%

3. Merrill Lynch Capital Markets Espana S.A.S.V.

CITIBANK N.A. Custody Services 3rd Floor, Trent House, G Block Plot No. 60 BKC, Bandra (East) Mumbai - 400051

14658820 1.48%

4. ICICI Prudential Life Insurance Company Ltd.

Deutsche Bank AG, DB House, Hazarimal Somani Marg, Post Box No. 1142, FORT, Mumbai – 400001

12596581 1.28%

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5. HDFC Standard life Insurance Company Ltd.

C/o HDFC Bank Ltd., Custody Services Trade World A – Wing Ground Floor, Kamala Mills Compound S.B. Marg, Lower Parel Mumbai –400013.

10904933 1.10%

6. Morgan Stanley Mauritius Company Ltd.,

HSBC Securities Services, 2nd Floor, “SHIV’, Plot No. 139-140B Western Exp. Highway, Sahar Road Junction Vile Parle (East), Mumbai – 400 057

9830776 1.00%

7. FID Funds (Mauritius) Ltd. CITI Bank N.A., Custody Services, 3rd Floor, Trent House G Block Plot NO. 60 BKC BANDRA East Mumbai 400 051

8779039 0.89%

8. Life Insurance Corporation of India

Investment Department 6th Floor, West Wing, Central Office Yogakshema, Jeevan Bima Marg, Mumbai – 400021

7213874 0.73%

9. Reliance Capital Trustee Co. Ltd. A/c Reliance Diversified Power Sector Fund

Deutsche Bank AG, DB House, Hazarimal Somani Marg, Fort.P.O.No.1142,Mumbai-400001

6623984 0.67%

10. PRU India Equity Open Limited

Deutsche Bank AG, DB House, Hazarimal Somani Marg, Fort.P.O.No.1142,Mumbai-400001

6022660 0.61%

SHAREHOLDING PATTERN (as on March 31, 2010) Sr. No. Category Number of Shares Held % Shareholding

1. President of India 659607000 66.802. Foreign Institutional Investors 176033824 17.833. Mutual Funds 48490447 4.914. Bodies Corporate 46503203 4.715. Resident Individuals 34859233 3.536. Indian Financial Institutions 18144822 1.847. HUF 1703013 0.178. Banks 906411 0.109. Non-Resident Indians 553542 0.05

10. Clearing Members 485702 0.0411. Trusts 171482 0.0212. Foreign Nationals 200 0.0013. Overseas Corporate Bodies 121 0.00

Total 987459000 100.00 • Including 700 shares held by 7 Nominees of President of India

BREIF NOTE ON PUBLIC OFFICER A. INITIAL PUBLIC OFFER (IPO) In February 2008 the Company made an Initial Public Offer (IPO) of 15, 61, 20,000 equity shares of ` 10

each through 100% book-building process with price band of ` .90 to 105 per share. The Issue was priced at ` 105 per share. The Issue comprised of a fresh issue of up to 7, 80, 60,000 equity shares and an Offer for Sale of up to 7,80,60,000 equity shares by the President of India acting through Ministry of Power, Government of India. The Issue got a phenomenal response and it was oversubscribed by about 27 times. The Qualified Institutional Buyers (QIB) portion got subscribed 39.31 times, the Non-Institutional portion 21.88 times, the Retail portion 7.52 times and the Employees Reservation portion 0.9 times. The total number of applications received were 7, 53,768. The Issue was priced at ` 105 per share including a premium of ` 95 per share. The fresh equity shares were allotted on 5th March 2008 and the total amount raised by the Company through IPO was ` 819.63 crore. The proceeds of the fresh issue of equity shares have been utilized for the purpose of the business of the Company as mentioned in the Prospectus. The equity shares of the Company were listed on the National Stock Exchange and Bombay Stock Exchange on 12th March 2008, and requisite Listing Fees have been paid to each of these Stock Exchanges.

In the Post-IPO scenario, the shareholding of the Government of India has reduced from 100% to 81.82%

and balance 18.18% is held by other B. FURTHER PUBLIC OFFER (FPO) Rural Electrification Corporation Limited made a Further Public Offer (FPO) of 171,732,000 Equity Shares

of face value of ` 10 each for cash at price determined through the Alternate Book Building Method under

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Part D of Schedule XI of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. The FPO consisted of a Fresh Issue of 128,799,000 Equity Shares by the company (“Fresh” Issue) and Offer for Sale of 42,933,000 Equity Shares (“Offer for Sale”) by the President of India, acting through the Ministry of Power, Government of India (the “Selling Shareholder”).

The Follow - on Public Offer (FPO) of the Company which opened on 19.02.2010 and closed on

23.02.2010, was subscribed 3.14 times and got overwhelming response as per details given under:-

Category No. of Applications

No. of Shares

Amount (`) No. of times subscription

A Retail Individual Bidders 56561 13598564 2761353888 0.22 B Non Institutional Bidders 418 528229502 10724543420 2.05 C Qualified Institutional Bidders 277 472193190 32292469920 5.51 D Employees 602 296880 57303630 0.85

TOTAL 57858 538911584 45835670858 3.14 The Company and the Selling Shareholder have raised an amount of ` 35,300,434,518.00 by

issuing/transfer of 17,17,32,000 Equity Shares (128,799,000+42,933,000) at different prices as per break-up given below:

Sl. No. Number of Shares Issued

(A) Issue Price per Share (in `)

(B) Total Amount realised (in `)

(C) = (A x B) 1 2,139,510 215 459,994,650 2 340,500 210 71,505,000 3 1,057,050 208 219,866,400 4 2,223,2340 207 4602,094,380 5 106,498,896 206 21,938,772,576 6 25,715,844 203 5,220,316,332 7 13454820 203 2731,328,460 8 293,040 193 56,556,720

TOTAL 171,732,000 35,300,434,518 The issue proceeds have been distributed among the President of India and the Company in 1:3 ratio (i.e.

` 882.51 Crore to the President of India and ` 2647.53 crores to the Company) The proceeds of the fresh issue of equity shares have been utilised for the purpose of the business of the Company as mentioned in the Prospectus.

In the Post-IPO scenario, the shareholding of the Government of India has reduced from 81.82% to

66.80% and balance 33.20% is held by other. BORROWINGS The borrowings of REC as on March 31, 2010 stood as under: Secured Borrowings (` in crores)

Particulars Amount outstanding Borrowings from LIC 3200.00 Borrowings from Banks 1668.43 Borrowings from Financial Institutions 870.00 54 EC Bonds 9950.40 TOTAL 15688.83

Besides the above, an amount of ` 30908.96 crores was outstanding under Secured Borrowings as on March 31, 2010, details of which are as under:

Sl. No.

Series Date of Issue

Date of Maturity

Interest Payment Date

Rate of Interest (%)

Face Value (`in crores)

1 53rd Sr. 3/23/2001 3/23/2011 23-03-2008 7.10 50.000 2 69th Sr. 1/23/2004 1/23/2014 31-03-2008 6.05 535.360 3 72nd Sr. 8/18/2004 8/18/2011 31-03-2008 6.60 113.700 4 73rd Sr. 10/8/2004 10/8/2014 31-03-2008 6.90 233.900 5 75th Sr. 3/17/2005 3/17/2015 17-09-2008 7.20 500.000 6 77th Sr. 6/30/2005 6/30/2015 30-06-2008 7.30 985.500 7 78th Sr. 1/31/2006 1/31/2016 31-01-2008 7.65 1795.700 8 79th Sr. 3/14/2006 3/14/2016 14-09 &14-03 7.85 500.000 9 80th Sr. 3/20/2006 3/20/2016 20-03-2008 8.20 500.000

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10 81st Sr. 1/20/2007 1/20/2017 31-03-2008 8.85 314.800 11 82nd Sr. 28-09-2007 28/09/2017 31-08-2008 9.85 883.100 12 83rd Sr. 28-02-2008 28/02/2018 31-10-2008 9.07 685.200 13 84th Sr. 4/4/2008 4/4/2013 30-11-2008 9.45 1000.000 14 85th Sr. 13/6/2008 13/6/2018 13-06-2009 9.68 500.000 15 86th Sr. 24/7/2008 24/7/2013 24-07-2009 10.75 727.900 16 86th A Sr. 29/7/2008 29/7/2018 29-07-2009 10.70 500.000 17 86th B – Ist Sr. 14/8/2008 14/8/2011 14-08-2009 10.95 934.200 18 86th B – IInd Sr 14/8/2008 14/8/2013 14-08-2009 10.90 354.100 19 86th B - IIIrd Sr 14/8/2008 14/8/2018 14-08-2009 10.85 432.000 20 87-Ist Sr. 30/9/2008 30/9/2013 30-09-2009 10.90 370.2000 21 87-IInd Sr 30/9/2008 30/9/2018 30-09-2009 10.85 657.400 22 87th A - Ist Sr 24/10/2008 24/10/2013 24-10-2009 11.35 249.700 23 87th A - IInd Sr 24/10/2008 24/10/2018 24-10-2009 11.20 36.400 24 87th A - IIIrd Sr 24/10/2008 24/10/2018 24-10-2009 11.15 61.800 25 87th B Sr 3/11/2008 3/11/2011 3-11-2009 11.75 940.900 26 87th C - Ist Sr 26/11/2008 26/5/2010 26-5-2009 11.45 229.100 27 87th C - IInd Sr 26/11/2008 26/11/2010 26-5-2009 11.45 591.500 28 87th C - IIIrd Sr 26/11/2008 26/11/2013 26-11-2009 11.50 860.000 29 88th Sr. 15/01/2009 15/01/2019 15/01/2010 8.65 1495.000 30 89th –I Sr 02/06/2009 02/06/2012 2nd June 7.00 671.50 31 89th – II Sr. 02/06/2009 06/02/2014 2nd June 7.70 255.00 32 90th Sr. 03/08/2009 08/03/2019 3rd August 8.80 2000.00 33 90th A - Ist Sr. 05/08/2009 08/05/2012 5th August 7.15 1000.00 34 90th A – IInd Sr. 05/08/2009 08/05/2014 5th August 8.00 1000.00 35 90th B - Ist Sr. 04/09/2009 09/04/2014 4th September 8.35 883.90 36 90th B –IInd Sr 04/09/2009 09/04/2019 4th September 8.72 868.20 37 90th C - Ist Sr. 06/10/2009 06/10/2012 6th October 7.90 1417.50 38 90th C – IInd Sr. 06/10/2009 06/10/2019 6th October 8.80 1040.00 39 91st – Ist Sr. 17/11/2009 17/11/2012 17th November 7.75 943.00 40 91st - IInd Sr. 17/11/2009 17/11/2019 17th November 8.80 995.90 41 92nd - Ist Sr. 22/01/2010 22/01/2013 22nd January 7.60 924.60 42 92nd -IInd Sr. 22/01/2010 22/01/2020 22nd January 8.65 945.30 43 93rd - Ist Sr. 19/02/2010 19/02/2013 22nd January 7.65 141.50 44 93rd - IInd Sr. 19/02/2010 19/02/2015 22nd January 8.45 443.10

-69th Sr has been redeemed partially (20% of Face Value) for INR133.84 Crores. on 23rd Jan 2010. -87C-I Sr has been redeemed on 26.05.2010. -75th Sr has been redeemed partially for INR50 Crores. on 17.09. 2010. Funds of INR1250 crores were raised by way of Unsecured Bond Sr. 94 in June 2010. Funds of INR2000 crores were raised by way of Unsecured Bond Sr. 95 in July 2010 Funds of INR1150 crores were raised by way of Unsecred Bond Sr 96 in October 2010. All the above borrowings are secured. No directors have given any personal guarantee for

collaterally securing the borrowings. Unsecured Borrowings (`in crores)

Particulars Amount outstandingTerm Loan from Banks 4143.00 Borrowings from Govt. of India 49.42 Short Term Loan from Banks 630.00 Commercial Paper 2450.00 Foreign Currency Borrowings 2076.37 TOTAL 9348.79

Besides the above, an amount of `352.00 crores was outstanding under Unsecured Borrowings as on March 31, 2010, details of which are as under:

SL. SERIES ISSUE DATE

DATE OFMATURITY

INTEREST PAYMENT

DATE

RATE OFINTEREST (%)

FACE VALUE (` in Crores.)

1 22-Series 12/27/1990 12/27/2010 27-06&27-12 11.50 49.000 2 23-I Series 12/5/1991 12/5/2011 05-06&05-12 12.00 22.650 3 23-II Series 2/21/1993 2/21/2012 21-08&21-02 12.00 30.350 4 74- Series 12/31/2004 12/31/2014 30-06&31-12 7.22 250.000

None of the above Borrowings (secured/unsecured) have been issued for consideration other than cash.

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VII. SUMMARY TERM SHEET Issuer Rural Electrification Corporation Ltd.

Issue Size INR 250 cr. with a green shoe option to retain oversubscription

Instrument Unsecured Non Convertible Redeemable Zero Coupon Bond in the nature of Debentures notified under section 2 (48) of the Income Tax Act, 1961

Mode of Placement On Private Placement Basis to all Eligible Investors

Issuance/ Trading In Demat Mode

Credit Rating ‘AAA/Stable’ by CRISIL, ‘LAAA’ by ICRA, ‘AAA(ind)’ by FITCH and ‘CARE AAA’ by CARE

Face / Redemption Value INR 30,000 per Bond

Issue Price INR 13,578 per Bond

Discount INR 16,422 per Bond

Minimum Subscription INR 500 Bonds and in multiples of 10 Bond thereafter

Tenure 10 years from the deemed date of allotment

Put & Call Option None

Redemption/ Maturity At Par, at the end of 10 years from the deemed date of allotment

Redemption Date 15.12.2020

Implicit Yield to Maturity 8.25%(per annum)

Listing Proposed on the Wholesale Debt Market (WDM) Segment of the National Stock Exchange of India Ltd. (NSE)

Trustee IDBI Trusteeship Services Ltd. (ITSL) has been appointed by REC to act as Trustees for and on behalf of the holder(s) of the Bonds

Depository National Securities Depository Ltd. and Central Depository Services (India) Ltd.

Registrars Beetal Financial & Computer Services (P) Ltd.

Collecting Banks HDFC Bank & AXIS Bank

Interest on Application Money *

Atthe rate of YTM i.e. 8.25% p.a. from the date of credit in REC account till the the Deemed Date of Allotment

Settlement Payment of Face Value shall be made by way of cheque(s) redemption warrant(s)/ demand draft(s)/ credit through RTGS system

Mode of Subscription Cheque(s)/ demand draft(s) may be drawn in favour of “Rural Electrification Corporation Limited – Bond Issue" and crossed “Account Payee Only” payable at par at designated centers mentioned elsewhere in the Disclosure Document or remittance through RTGS as per details given in application form

Refund /Rejection In case the subscription exceeds the amount permitted by CBDT, allotment would be made on a first come first serve basis and the excess subscription would be refunded with interest at the rate of YTM finalized from the date of credit in REC account till the date of refund. However, it would be REC’s endeavor to avoid such a situation as far as possible by closing the Issue when it reaches close to the permitted collections. In case subscription is refunded for incomplete details or for any other fault of the applicant no interest would be paid.

Taxability No tax at source would be deducted by REC in terms of Section 194 A(3) of the Income Tax Act. 1961 on the income which is paid or payable. The said income will be treated as capital gains as per the current income tax law and capital gains tax, if any, will be payable by the investor directly to the Income Tax Authorities. However, tax will be deducted at source in the case of NRIs under section 195 of the Income Tax Act, 1961. Disclaimer: Investors are advised to consult their tax consultants in regard to taxability. Tax laws are subject to change by the tax Authorities. REC will not be responsible in this regard.

Issue Opens on 18th November 2010

Issue Closes on 30th November 2010

Deemed Date of Allotment

15th December 2010

17


^ REC reserves its sole and absolute right to modify (pre-pone/ postpone) the issue opening/ closing/ pay-in date(s) without giving any reasons or prior notice. In such a case, investors shall be intimated about the revised time schedule by REC. REC also reserves the right to keep multiple Deemed Date(s) of Allotment at its sole and absolute discretion without any notice.

REC does not intend to create sinking fund for annual accrued interest on year to year basis.

VIII. TERMS OF OFFER (DETAILS OF DEBT SECURITIES PROPOSED TO BE ISSUED, MODE OF ISSUANCE, ISSUE SIZE, UTILIZATION OF ISSUE PROCEEDS, STOCK EXCHANGES WHERE SECURITIES ARE PROPOSED TO BE LISTED, REDEMPTION AMOUNT, PERIOD OF MATURITY, FACE VALUE, ISSUE PRICE, EFFECTIVE YIELD FOR INVESTORS)

PRIVATE PLACEMENT OF UNSECURED NON-CONVERTIBLE REDEEMABLE ZERO COUPON BONDS IN THE NATURE OF DEBENTURES OF RS.`30,000 EACH AGGREGATING TO ` 250 CRORES WITH GREEN SHOE OPTION TO RETAIN OVERSUBSCRIPTION.

Eligibility of REC to come out with the issue

REC, its Directors and authorised Officers have not been prohibited from accessing the debt market under any order or directions passed by SEBI/any other Government authority.

Issue Size Rural Electrification Corporation Ltd. (the ‘Issuer’ or “REC”) proposes to raise INR 250 crores with a green shoe option to retain oversubscription through issue of Unsecured Non-Convertible Redeemable Zero Coupon Bonds in the nature of Debentures (hereinafter referred to as ”Bonds”) of the face value of INR 30,000 each by way of private placement ('the Issue’).

Registration and Government Approvals This present issue of Bonds is being made in accordance with extant guidelines for floatation of PSU Bonds as amended from time to time. The Corporation can undertake the activities proposed by it in view of the present approvals and no further approval from any government authority(ies) is required by the Corporation to undertake the proposed activities save and except those approvals which may be required to be taken in the normal course of business from time to time.

Authority for the Placement The Issue is made pursuant to Article 84(21), 84 - A, 84 - B of the Articles of Associations of Rural Electrification Corporation Limited and has been authorized by the Board of Directors of REC by the resolutions passed at its 369th meeting held on October 25th, 2010. The proposed bond issue is within the overall borrowing limit approved in the Annual General Meeting of the shareholders of the Corporation held on 8th September 2010. REC can issue the bonds proposed by it in view of the present approvals and no further approvals in general from any Government Authority are required by REC to undertake the proposed activity. Objects of the Issue The Issue is for augmenting the medium to long-term rupee resources of REC for the purpose of carrying out its functions authorised under the object clause of the Memorandum of Association of REC. The Main Object Clause of REC as contained in the Memorandum of Association and Articles of Association of REC enables REC to undertake the activities for which the funds are being raised in the present issue. Also, the main objects of REC as contained therein, adequately cover its existing and proposed activities. The funds raised by way of the issue will be utilized for various operations of REC. Utilisation of Issue Proceeds The funds raised through this private placement are not meant for any specific project as such and therefore the proceeds of this Issue shall be utilized for the regular business activities of REC. REC is managed by professionals under the supervision of its Board of Directors. Further, REC is subject to a number of regulatory checks and balances as stipulated in its regulatory environment. Therefore, the management shall ensure that the funds raised via this private placement shall be utilized only towards satisfactory fulfilment of the Objects of the Issue. REC further confirms that the proceeds of the current issue of Bonds shall not be used 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. Minimum Subscription As the current issue of Bonds is being made on private placement basis, the requirement of minimum subscription shall not be applicable and therefore REC shall not be liable to refund the issue subscription(s)/ proceed(s) in the event of the total issue collection falling short of issue size or certain percentage of issue size.

18


Nature of Bonds The Bonds are to be issued in the form of Unsecured Non-Convertible Redeemable Zero Coupon Bonds in the nature of Debentures on private placement. Put & Call Option Neither the bondholder(s) shall have any right to exercise put option nor the Corporation shall have right to exercise Call Option, in part or in whole, before maturity of Bonds.

Face Value, Issue Price, Effective Yield for Investor Each Bond has a face value of INR 30,000/- and issued at INR 13578/-. The Bonds shall be redeemable at par i.e. for INR 30,000/- per Bond. Since there is discount of INR 16,422 on face value of the Bonds, the effective yield for the investors shall be 8.25% per annum on the Bonds. Terms of Payment The Issue Price of the Bonds applied for is to be paid along with the Application Form. Investor(s) need to send in the Application Form and the cheque(s)/ demand draft(s)/ RTGS for the full Issue Price of the Bonds applied for.

Face Value per Bond Minimum Application for Amount Payable on Application per Bond INR 30,000/-. 500 Bond and in multiples

of 10 Bond thereafter INR 13,578/-.

Deemed Date of Allotment All benefits to the Bondholder(s) will accrue from and including i.e. 15th December, 2010, which shall be the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment. REC reserves the right to keep multiple allotment date(s)/ deemed date(s) of allotment at its sole and absolute discretion without any notice. In case if the issue closing date is changed (pre-pond/ postponed), the Deemed Date of Allotment may also be changed (pre-pond/ postponed) by REC at its sole and absolute discretion.

Bond Certificate(s)/ Refund Order(s)/ Issue of Letter(s) of Allotment The beneficiary account of the investor(s) with National Securities Depository Ltd. (NSDL)/ Central Depository Services (India) Ltd. (CDSL)/ Depository Participant will be given initial credit within 15 days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all-statutory formalities, such credit in the account will be akin to a Bond Certificate.

Issue of Bond Certificate(s) The Bonds since issued in electronic (dematerialized) form, will be governed as per the provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules notified in respect thereof. The Bonds shall be allotted in DEMAT form only.

Depository Arrangements REC has entered into depository arrangements with National Securities Depository Limited (NSDL) and Central Depository Services Ltd. (CDSL). The securities shall be issued in dematerialized form as per the provisions of Depositories Act, 1996 (as amended from time to time). REC has signed two tripartite agreements in this connection viz.

1. Tripartite Agreement dated 26.02.2008 between REC, National Securities Depository Limited (NSDL) and the Registrar i.e., M/s Beetal Financial & Computers Services Pvt. Ltd.

2. Tripartite Agreement dated 26.02.2008 between REC, Central Depository Services Limited (CDSL) and the Registrar M/s Beetal Financial & Computers Services Pvt. Ltd.

Investors can hold the bonds only in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time.

Procedure for applying for Demat Facility 1. Investor(s) should have / open a Beneficiary Account with any Depository Participant of NSDL

or CDSL.

2. For allotment of Bonds in dematerialized form, the beneficiary account number and depository participants ID shall be specified in the relevant columns of the Application Form.

3. If incomplete/incorrect beneficiary account details are given in the application form which do not match with the details in the Depository system, the allotment of Bonds shall be held in abeyance till such time satisfactory Demat account details are provided by the investor.

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4. The Bonds allotted to investor in dematerialized form would be directly credited to the Beneficiary Account as given in the application form after verification. Allotment advice/refund order (if any) would be sent directly to the applicant by the Registrars to the Issue but the confirmation of the credit of the Bonds to the investor’s Depository Account will be provided to the investor by the investor’s Depository Participant.

5. The redemption proceeds with respect to the Bonds held in dematerialized form would be paid to those bondholders whose names appear on the list of beneficial owners given by the depositories to REC as on the Record Date. In case, the beneficial owner is not identified by the depository on the Record Date due to any reason whatsoever, REC shall keep the payment in abeyance till such time the beneficial owner is identified by the depository and intimated to REC. On receiving such intimation, REC shall remit the payment without any interest or other benefits from the date of maturity to the beneficiaries identified, within a period of 15 days from the date of receiving such intimation.

6. Investors may please note that the Bonds in Demat form can be traded only on the stock exchanges having electronic connectivity with NSDL or CDSL.

Fictitious applications In terms of the Section 68 A of the Companies Act, 1956, any person who makes, in a fictitious name, an application to a body corporate for acquiring, or subscribing to, the bonds, or otherwise induced a body corporate to allot, or register any transfer of, bonds therein to them, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to 5 years.

Market Lot The market lot will be one Bond (“Market Lot”). Since the Bonds are being issued only in dematerialised form, the odd lots will not arise either at the time of issuance or at the time of transfer of Bonds.

Trading of Bonds The marketable lot for the purpose of trading of Bonds shall be ONE BOND. Trading of Bonds would be permitted in Demat mode only in standard denomination of INR 30000 and such trades shall be cleared and settled in recognised stock exchange(s) subject to conditions specified by SEBI. In case of trading in Bonds which has been made over the counter, the trades shall be executed and reported on a recognized stock exchange having a nation wide trading terminal or such other platform as may be specified by SEBI.

Mode of Transfer of Bonds Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant.

Transfer of Bonds to and from NRIs/ OCBs, in case they seek to hold the Bonds and are eligible to do so, will be governed by the then prevailing guidelines of RBI. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/ redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with REC.

Interest on Application Money Interest @ 8.25% p.a. (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to all the applicants on the application money for the Bonds. Such interest shall be paid from the date of credit of the proceeds to REC account up to the Deemed Date of Allotment. Where the entire subscription amount has been refunded, the interest on application money will be paid along with the Refund Order. Where an applicant is allotted lesser number of bonds than applied for, the excess amount paid on application will be refunded to the applicant along with the interest on refunded money.

The interest cheque(s)/ demand draft(s) for interest on application money (along with Refund Orders, in case of refund of application money, if any) shall be dispatched by REC within 15 days from the Deemed Date of Allotment and the relative interest warrant(s) along with the Refund Order(s), as the case may be, will be dispatched by registered post to the sole/ first applicant, at the sole risk of the applicant.

Record Date Record date for redemption of Bonds will be 30 days prior to the date of Maturity. The redemption proceeds shall be paid to the person whose name appears as sole/first in the register of bondholders/beneficiaries position of the Depositories on record date. Tax Liability No tax at source will be deducted by REC in terms of Section 194 A (3) of the Income Tax Act 1961 on the income, which is paid or payable. The said income will be treated as capital gains and capital gains tax, if any, will be payable by the investors directly to the Income Tax Authorities. However, tax will be deducted at source

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in case of NRIs under Section 195 of as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source. The investor(s) desirous of claiming exemption from deduction of income tax at source on the interest on application money are required to submit the necessary certificate(s), in duplicate, along with the Application Form in terms of Income Tax rules. Regarding tax deduction at source and the requisite declaration forms to be submitted, prospective investors are advised to consult their own tax consultant(s).

Redemption The face value of the Bond will be redeemed at par, on the expiry of 10 years from the deemed date of allotment. The Bond will not carry any obligation, for interest or otherwise, after the date of redemption. The Bonds which are held in the Dematerialised Form shall be taken as discharged on payment of the redemption amount by REC on maturity to the registered Bondholders whose name appear in the Register of Bondholders on the record date. Such payment will be a legal discharge of the liability of the Bank towards the Bondholders. In case if the redemption date falls on a day which is not a Business Day (“Business Day being a day on which Commercial Banks are open for Business in the city of Delhi), then the payment due shall be made on the next Business Day but without liability for making payment of interest for the intervening period. Settlement/ Payment on Redemption Payment on redemption will be made by way of cheque(s)/ redemption warrants(s)/ demand draft(s)/ credit through RTGS system in the name of the Bondholders whose name appear on the List of Beneficial Owners given by Depository to REC as on the Record Date/ Book Closure Date. The Bonds shall be taken as discharged on payment of the redemption amount by REC on maturity to the list of Beneficial Owners as provided by NSDL/ CDSL/ Depository Participant. Such payment will be a legal discharge of the liability of REC towards the Bondholders. On such payment being made, REC shall inform NSDL/ CDSL/ Depository Participant and accordingly the account of the Bondholders with NSDL/ CDSL/ Depository Participant shall be adjusted. REC’s liability to the Bondholders towards all their rights including for payment or otherwise shall cease and stand extinguished from the due date of redemption in all events. Further REC will not be liable to pay any interest or compensation from the date of redemption. On REC dispatching/ crediting the amount to the Beneficiary(ies) as specified above in respect of the Bonds, the liability of REC shall stand extinguished. Right of Bondholder(s) Bondholder is not a shareholder. The Bondholders will not be entitled to any other rights and privilege of shareholders other than those available to them under statutory requirements. The Bond(s) shall not confer upon the holders the right to receive notice, or to attend and vote at the General Meeting of the Company. The principal amount will be paid to the registered Bondholders only, and in case of Joint holders, to the one whose name stands first.

Besides the above, the Bonds shall be subject to the provisions of the Companies Act, 1956, the Articles of Association of REC, the terms of this bond issue and the other terms and conditions as may be incorporated in the Trust deed and other documents that may be executed in respect of these Bonds.

Effect of Holidays Should any of dates defined above or elsewhere in the Disclosure Document, excepting the Deemed Date of Allotment, fall on a Saturday, Sunday or a Public Holiday, the next working day shall be considered as the effective date(s). List of Beneficial Owners REC shall request the Depositories to provide a list of Beneficial Owners as at the end of the Record Date. This shall be the list, which shall be considered for payment of redemption proceeds. Succession In the event of the demise of the sole/first holder of the Bond(s) or the last survivor, in case of joint holders for the time being, REC will recognize the executor or administrator of the deceased Bondholder, or the holder of succession certificate or other legal representative as having title to the Bond(s). REC shall not be bound to recognize such executor or administrator, unless such executor or administrator obtains probate, wherever it is necessary, or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. REC may, in its absolute discretion, where it thinks fit, dispense with production of probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Bond(s) standing in the name of the deceased Bondholder on production of sufficient documentary proof or indemnity.

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Where a non-resident Indian becomes entitled to the Bond by way of succession, the following steps have to be complied: a. Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that the Bond was

acquired by the NRI as part of the legacy left by the deceased holder. b. Proof that the NRI is an Indian National or is of Indian origin. Such holding by the NRI will be on a non-repatriation basis. Who Can Apply The following categories are eligible to apply for this private placement of Bonds: • Financial Institutions. • Companies, including NBFCs and RNBFCs, Body Corporate registered under the applicable laws in India

and authorized to invest in bonds. • Insurance Companies. • Mutual Funds. • Provident Funds, Superannuation Funds, Gratuity Funds. • Trusts authorized to invest in the Bonds. • Resident Indian Individuals. • HUF through Karta of the HUF (Such Applications will be treated at par with applications of Individuals).

However, out of the aforesaid class of investors eligible to invest, this Information Memorandum is intended solely for the use of the person to whom it has been sent by REC for the purpose of evaluating a possible investment opportunity by the recipient(s) in respect of the securities offered herein, and it is not to be reproduced or distributed to any other persons (other than professional advisors of the prospective investor receiving this Information Memorandum from REC) The applications must be accompanied by certified true copies of (1) Memorandum and Articles of Association/ Constitution/ Bye-laws (2) Resolution authorizing investment and containing operating instructions (3) Specimen signatures of authorized signatories and (4) Necessary forms for claiming exemption from deduction of tax at source on the interest on application money. Application under Power of Attorney or by Limited Companies In case of applications made under a Power of Attorney or by a Limited Company or a Body Corporate or Registered Society or Mutual Fund, and scientific and/or industrial research organizations or Trusts etc, the relevant Power of Attorney or the relevant resolution or authority to make the application, as the case may be, together with the certified true copy thereof along with the certified copy of the Memorandum and Articles of Association and/or Bye-Laws as the case may be must be attached to the Application Form or lodged for scrutiny separately with the photocopy of the Application Form, quoting the serial number of the Application Form and REC’s branch where the application has been submitted, at the office of the Registrars to the Issue after submission of the Application Form to REC’s bankers to the issue or any of their designated branches as mentioned on the reverse of the Application Form, failing which the applications are liable to be rejected. Such authority received by the Registrars to the Issue more than 10 days after closure of the subscription list may not be considered. Mode of Subscription/ How to Apply This being a Private Placement Offer, Investors who are established/Resident in India and who have been addressed through this Communication directly, only are eligible to apply. Copies of Information Memorandum and Application form may be obtained from the Registered Office of REC Ltd. Applications for the Bonds must be in the prescribed form (enclosed) and completed in BLOCK LETTERS in English and as per the instructions contained therein.

Applications complete in all respects must be submitted before the last date indicated in the issue time table or such extended time as decided by REC, at any of the designated collection centres, accompanied by the subscription amount by way of cheque(s)/draft(s) drawn on any bank including a co-operative bank which is situated at and is a member of the Bankers’ clearing house located at a place where the application form is submitted. The Original Applications forms (along with all necessary documents as detailed in the memorandum of information), pay-in slip and other necessary documents should be sent to corporate office through respective Arrangers at New Delhi on the same date. Outstation cheque(s)/Bank draft(s) drawn on Bank(s) not participating in the clearing process at the designated clearing centres will not be accepted. Money orders/postal orders will also not be accepted. Investors in centers, which do not have any bank, including a Co-operative Bank, which is a member or sub member of the Banker’s clearing house located at the above mentioned centers would be required to make payment only through Demand Draft payable at any one of the above mentioned centers. The Corporation assumes no responsibility for any applications/cheques/ DDs lost in mail. All cheques /drafts should be in favour of “Rural Electrification Corporation Ltd. – Bond Issue” and crossed “Account Payee only”. The entire amount of INR 30,000(INR Thirty Thousand only) per bond is payable on application.

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Applications should be for the number of bonds applied by the Applicant. Applications not completed in the said manner are liable to be rejected. The name of the applicant’s bank, type of account and account number must be filled in the Application Form. This is required for the applicant’s own safety and these details will be printed on the refund orders and interest/ redemption warrants. The applicant or in the case of an application in joint names, each of the applicant, should mention his/her Permanent Account Number (PAN) allotted under the Income-Tax Act, 1961 or where the same has not been allotted, the GIR No. and the Income tax Circle/Ward/District. As per the provision of Section 139A(5A) of the Income Tax Act, PAN/GIR No. needs to be mentioned on the TDS certificates. Hence, the investor should mention his PAN/GIR No. In case neither the PAN nor the GIR Number has been allotted, the applicant shall mention “Applied for” and in case the applicant is not assessed to income tax, the applicant shall mention ‘Not Applicable’ (stating reasons for non applicability) in the appropriate box provided for the purpose. Application Forms without this information will be considered incomplete and are liable to be rejected. Unless the Issuer Corporation specifically agrees in writing with or without such terms or conditions it deems fit, a separate single cheque/ demand draft must accompany each Application Form. Applicants are requested to write their names and application serial number on the reverse of the instruments by which the payments are made. All applicants are requested to tick the relevant column “Category of Investor” in the Application Form. Public/ Private/ Religious/ Charitable Trusts, Provident Funds and Other Superannuation Trusts and other investors requiring “approved security” status for making investments. For further instructions, please read General Instructions along with the Application Form carefully. FORCE MAJEURE REC reserves the right to withdraw the issue prior to the closing date in the event of any unforeseen development adversely affecting the economic and regulatory environment. REC reserves the right to change the Issue Schedule. Acknowledgements No separate receipts will be issued for the application money. However, arrangers receiving the duly completed Application Form will acknowledge receipt of the application by stamping and returning to the applicant the Acknowledgement slip at the bottom of each Application Form. Applications under Power of Attorney A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/ document, if any, must be lodged along with the submission of the completed Application Form. Further modifications/ additions in the power of attorney or authority should be notified to the Corporation or to its Registrars or to such other person(s) at such other address(es) as may be specified by the Corporation from time to time through a suitable communication. Application by Mutual Funds In case of applications by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the Asset Management Company/ Trustees/ Custodian clearly indicate their intention as to the scheme for which the application has been made. Right to Accept or Reject Applications REC reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. The application forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: a. Number of bonds applied for is less than the minimum application size; b. Applications exceeding the issue size; c. REC account details not given; d. Details for issue of bonds in electronic/ dematerialised form not given; PAN/GIR and IT

Circle/Ward/District not given; e. In case of applications under Power of Attorney by limited companies, corporate bodies, trusts, etc.

relevant documents not submitted; In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted.

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PAN/GIR Number All applicants should mention their Permanent Account Number or the GIR Number allotted under Income Tax Act, 1961 and the Income Tax Circle/ Ward/ District. In case where neither the PAN nor the GIR Number has been allotted, the fact of such a non-allotment should be mentioned in the Application Form in the space provided. Signatures Signatures should be made in English or in any of the Indian Languages. Thumb impressions must be attested by an authorized official of a REC or by a Magistrate/ Notary Public under his/her official seal. Nomination Facility As per Section 109 A of the Companies Act, 1956, only individuals applying as sole applicant/Joint Applicant can nominate, in the prescribed manner, a person to whom his Bonds shall vest in the event of his death. Non-individuals including holders of Power of Attorney cannot nominate. Bondholder not a Shareholder The bondholders will not be entitled to any of the rights and privileges available to the shareholders If, however, any resolution affecting the rights attached to the Bonds is placed before the members of REC, such resolution will first be placed before the bondholders for their consideration. Modification of Rights The rights, privileges, terms and conditions attached to the Bonds may be varied, modified or abrogated with the consent, in writing, of those holders of the Bonds who hold at least three fourth of the outstanding amount of the Bonds or with the sanction accorded pursuant to a resolution passed at a meeting of the Bondholders, provided that nothing in such consent or resolution shall be operative against REC where such consent or resolution modifies or varies the terms and conditions of the Bonds, if the same are not acceptable to REC. Future Borrowings REC shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form as also issue Bonds/ Debentures/ Notes/ other securities in any manner with ranking as pari-passu basis or otherwise and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions as REC may think appropriate, without the consent of, or intimation to, the Bondholder(s) or the Trustees in this connection. Bond/ Debenture Redemption Reserve As per clarification issued by the Department of Company Affairs, Govt. of India vide no.6/3/2001-CL.V dated 18.4.2002, DRR is not required to be created in the case of privately placed debentures issued by NBFC’s registered with the RBI under section 45-IA of the RBI ( Amendment ) Act, 1997. REC being a financial institution has been raising resources from domestic market, which are being utilized for the purpose to meet its operational needs, financing and promoting power generation, transmission and distribution projects in the country and pump sets energisation and system improvement programmes.. REC has appointed a trustee to protect the interest of the investors. Notices All notices required to be given by REC or by the Trustees to the Bondholders shall be deemed to have been given if sent by ordinary post/ courier to the original sole/ first allottees of the Bonds and/ or if published in one All India English daily newspaper and one regional language newspaper. All notices required to be given by the Bondholder(s), including notices referred to under “Payment of Interest” and “Payment on Redemption” shall be sent by registered post or by hand delivery to REC or to such persons at such address as may be notified by REC from time to time. Tax Benefits to the Bondholders of REC The holder(s) of the Bonds are advised to consider in their own case, the tax implications in respect of subscription to the Bonds after consulting their own tax advisor/ counsel. Disputes & Governing Law The Bonds are governed by and shall be construed in accordance with the existing laws of India. Any dispute arising thereof will be subject to the jurisdiction of district courts of Delhi. Investor Relations and Grievance Redressal Arrangements have been made to redress investor grievances expeditiously as far as possible, REC endeavors to resolve the investors grievances within 30 days of its receipt. All grievances related to the issue quoting the Application Number (including prefix), number of bonds applied for, amount paid on application and Bank and Branch/REC collection centre where the Application was submitted, may be addressed to the Resource Mobilization Unit at the Head office. All investors are hereby informed that the company has appointed a Compliance Officer who may be contracted in case of any problem related to this issue.

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COMPLIANCE OFFICER AND COMPANY SECRETARY Shri B. R. Raghunandan, ED & Company Secretary, Rural Electrification Corporation Limited, Core – 4 SCOPE Complex, Lodi Road, New Delhi –110 003, Tel. ; 011 24367305 The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the Demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc. IX. CREDIT RATING & RATIONALE THEREOF CRISIL has assigned a rating of "AAA/Stable” (Pronounced "Triple A with Stable outlook") to these bonds indicating the highest degree of safety with regard to timely payment of interest and principal vide their letter dated November 15, 2010, ICRA vide it letter dated November 18, 2010 has assigned ‘LAAA’ (Pronounced "L triple A ") rating. This is the highest-credit-quality rating assigned by ICRA. The rated instrument carries lowest credit risk. Fitch vide, letter dated November 16, 2010 has assigned ‘AAA’ (Ind) rating. The outlook on the ratings is stable. CARE Rating vide letter dated November 16, 2010 has assigned CARE AAA (Triple A) rating. (Copies of rating letters from CRISL, ICRA, FITCH and CARE are enclosed as Annexure to the Disclosure Document) Other than the four credit ratings mentioned hereinabove, REC has not sought any other credit rating from any other credit rating agency(ies) for the Bonds offered for subscription under the terms of this Disclosure Document. The above ratings are not a recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agencies and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The rating agencies have the right to suspend, withdraw the rating at any time on the basis of new information etc. X. NAME OF DEBENTURE TRUSTEE In accordance with the provisions of Section 117B of the Companies Act, 1956 (1 of 1956) and Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, REC has appointed IDBI Trusteeship Services Ltd. (ITSL) to act as Trustees (“Trustees”) for and on behalf of the holder(s) of the Bonds. The address and contact details of the Trustees are as under: IDBI Trusteeship Services Ltd. Registered Office, Asian Building, Ground Floor, 17, R Kamani Marg, Mumbai – 400 001. Tel No. (022) 56311771-3. Fax No. 91-22-56311776. E-mail: [email protected] A copy of letter from IDBI Trusteeship Services Ltd. conveying their consent to act as Trustee for the current issue of Bonds is enclosed elsewhere in this Disclosure Document. REC hereby undertakes that a Trust Deed shall be executed by it in favour of the Trustees within three months of the closure of the Issue. The Trust Deed shall contain such clauses as may be prescribed under section 117A of the Companies Act, 1956 and those mentioned in Schedule IV of the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993. Further the Trust Deed shall not contain any clause which has the effect of (i) limiting or extinguishing the obligations and liabilities of the Trustees or REC in relation to any rights or interests of the holder(s) of the Bonds, (ii) limiting or restricting or waiving the provisions of the Securities and Exchange Board of India Act, 1993 (15 of 1993); Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and circulars or guidelines issued by SEBI, (iii) indemnifying the Trustees or REC for loss or damage caused by their act of negligence or commission or omission. The Bondholder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem necessary or require to be done in the interest of the holder(s) of the Bonds. Any payment made by REC to the Trustees on behalf of the Bondholder(s) shall discharge REC pro tanto to the Bondholder(s). The Trustees shall protect the interest of the Bondholders in the event of default by REC in regard to timely payment of interest and repayment of principal and shall take necessary action at the cost of REC. No Bondholder shall be entitled to proceed

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directly against REC unless the Trustees, having become so bound to proceed, fail to do so. In the event of REC defaulting in payment of redemption proceeds, any distribution of dividend by REC shall require approval of the Trustees. XI. STOCK EXCHANGE WHERE SECURITIES ARE PROPOSED TO BE LISTED The Unsecured Non-Convertible Redeemable Zero Coupon Bonds Bonds in the nature of Debentures are proposed to be listed on the Wholesale Debt Market (WDM) Segment of the National Stock Exchange of India Ltd. (“NSE”). REC shall make an application to the NSE to list the Bonds to be issued and allotted under this Disclosure Document and complete all the formalities relating to listing of the Bonds within 70 days from the date of closure of the Issue. If such permission is not granted within 70 days from the date of closure of the Issue or where such permission is refused before the expiry of the 70 days from the closure of the Issue, REC shall forthwith repay without interest, all monies received from the applicants in pursuance of the Disclosure Document, and if such money is not repaid within 8 days after REC becomes liable to repay it (i.e. from the date of refusal or 70 days from the date of closing of the subscription list, whichever is earlier), then REC and every director of REC who is an officer in default shall, on and from expiry of 8 days, will be jointly and severally liable to repay the money, with interest at the rate of 15 per cent per annum on application money, as prescribed under Section 73 of the Companies Act, 1956.

In connection with listing of Bonds with NSE, REC hereby undertakes that: (a) It shall comply with conditions of listing of Bonds as may be specified in the Listing Agreement with

NSE. (b) Ratings obtained by REC shall be periodically reviewed by the credit rating agencies and any revision in

the rating shall be promptly disclosed by REC to NSE. (c) Any change in rating shall be promptly disseminated to the holder(s) of the Bonds in such manner as

NSE may determine from time to time. (d) REC, the Trustees and NSE shall disseminate all information and reports on Bonds including

compliance reports filed by REC and the Trustees regarding the Bonds to the holder(s) of Bonds and the general public by placing them on their websites.

(e) Trustees shall disclose the information to the holder(s) of the Bonds and the general public by issuing a press release in any of the following events: (i) default by REC to pay interest on Bonds or redemption amount; (ii) revision of rating assigned to the Bonds;

(f) The information referred to in para (e) above shall also be placed on the websites of the Trustees, REC, NSE.

XII. DETAILS OF OTHER BORROWINGS (DETAILS DEBT SECURITIES ISSUED IN THE PAST, PARTICULARS OF DEBT SECURITIES ISSUED FOR CONSIDERATION OTHER THAN CASH OR AT A PREMIUM OR DISCOUNT OR IN PURSUANCE OF AN OPTION, HIGHEST TEN HOLDERS OF EACH CLASS OR KIND OF SECURITIES, DEBT EQUITY RATIO)

1. DETAILS OF DEBT OUTSTANDING (As on March 31, 2010) ( ` in million)

1. Term Loans from Banks/ Institutions 25,384.29 (Secured against the receivables 2. LOAN FROM LIFE INSURANCE CORPORATION OF INDIA (LIC) 32,000.00 (Secured against receivables 3. ISSUE OF BONDS ((Secured by charge against receivables and/ immovable property at Maharashtra & Delhi as per the terms of the private placement and to the satisfaction of the respective Trustees)

I. TAXFREE SECURED BONDS Long Term 7.10% Redeemable at par on 23.03.2011 ( 53rd Series) 500.00 II TAXABLE SECURED BONDS 6.05% Redeemable at par on 23.01.2014 (69th series) 5,353.60 6.60% Redeemable at par on 18.08.2011 (72nd series) 1,137.00 6.90% Redeemable at par on 08.10.2014 (73rd series) 2,339.00 7.20% Redeemable at par on 17.03.2015 (75th series) 5,000.00 7.30% Redeemable at par on 30.06.2015 (77th series) 9,855.00 7.65% Redeemable at par on 31.01.2016 (78th series) 17,957.00 7.85% Redeemable at par on 14.03.2016 (79th series) 5,000.00 8.20% Redeemable at par on 20.03.2016 (80th series) 5,000.00 8.85% Redeemable at par on 20.01.2017 (81st series) 3,148.00 9.85% Redeemable at par on 28.09.2017 (82nd series) 8,831.00 9.07% Redeemable at par on 28.02.2018 (83rd series) 6,852.00

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9.45% Redeemable at par on 04.04.2013 (84th series) 10,000.00 9.68% Redeemable at par on 13.06.2018 (85th series) 5,000.00 10.75% Redeemable at par on 24.07.2013 (86th series) 7,279.00 10.70% Redeemable at par on 29.07.2018 (86th A series) 5,000.00 10.95% Redeemable at par on 14.08.2011 (86th B-I series) 9,242.00 10.90% Redeemable at par on 14.08.2013 (86th B-II series) 3,541.00 10.85% Redeemable at par on 14.08.2018 (86th B-III series) 4,320.00 10.90% Redeemable at par on 30.09.2013 (87th-1st series) 3,702.00 10.85% Redeemable at par on 30.09.2018 (87th – IInd series) 6,574.00 11.35% Redeemable at par on 24.10.2013 (87 A 1st series) 2,497.00 11.20% Redeemable at par on 24.10.2018 (87 A IInd series) 364.00 11.15% Redeemable at par on 24.10.2018 (87 A IIIrd series) 618.00 11.75% Redeemable at par on 03.11.2011 (87 B series) 9,409.00 11.45% Redeemable at par on 26.05.2010 (87C 1st series) 2,291.00 11.45% Redeemable at par on 26.11.2010 (87C IInd series) 5,915.00 11.50% Redeemable at par on 26.11.2013 (87C IIIrd series) 8,600.00 8.65% Redeemable at par on 15.01.2019 (88th series) 14,950.00 7.00% Redeemable at par on 02.06.2012 (89-I Series) 67,150.00 7.70% Redeemable at par on 02.06.2014-(89-II Series) 25,500.00 8.80% Redeemable at par on 03.08.2019 (90 Series) 200,000.00 7.15% Redeemable at par on 05.08.2012 (90A-I-Series) 100,000.00 8.00% Redeemable at par on 05.08.2014 (90A-II-Series) 100,000.00 8.35% Redeemable at par on 04.09.2014 (90B-I-Series) 88,390.00 8.72% Redeemable at par on 04.09.2019 (90B-II-Series) 86,820.00 7.90% Redeemable at par on 06.10.2012 (90C-I-Series) 141,750.00 8.80% Redeemable at par on 06.10.2019 (90C-II-Series) 104,000.00 7.75% Redeemable at par on 17.11.2012 (91-I-Series) 94,300.00 8.80% Redeemable at par on 17.11.2019 (91-II-Series) 99,590.00 7.60% Redeemable at par on 22.01.2013 (92-I-Series) 92,460.00 8.65% Redeemable at par on 22.01.2020 (92-II-Series) 94,530.00 7.65% Redeemable at par on 19.02.2013 (93-I-Series) 14,150.00 8.45% Redeemable at par on 19.02.2015 (93-II-Series) 44,310.00 CAPITAL GAIN BONDS Capital Gain Tax Exemption Bonds Redeemable at par – Series –IV 13.18 Capital Gain Tax Exemption Bonds Redeemable at par – Series –V 4,248.16 Capital Gain Tax Exemption Bonds Redeemable at par – Series –VI 5,362.85 Capital Gain Tax Exemption Bonds Redeemable at par – Series –VII 34,027.44 Capital Gain Tax Exemption Bonds Redeemable at par – Series – VIII(08-09) 25,252.33 Capital Gain Tax Exemption Bonds Redeemable at par – Series – VIII(09-10) 30,577.76 Total Secured Loans 462435.61 Due for Repayment/redemption within next year 64070.26

Notes to Schedule No. 3:-

Secured loan of ` 46, 24,356.06 lacs includes:-

a) Taxable secured bonds of series 91 to 93 amounting to ` 4,39,340 lacs for which the formalities for execution of mortgage / hypothecation deed and creation of charges are under process.(Completed as on

date) b) (i) 64th Series of Bonds has been redeemed on 27th September 2009.

(ii) 66th Series of Bonds has been redeemed on 31st January 2010. (iii) 41st Series of Bonds has been redeemed on 22nd February 2010.

(iv) Charge vacation for Bond Series 41st is under process. (Completed as on date). (v) 69th Series of Bonds (20% - Ist Installment) has been redeemed on 23rd January 2010 and

balance Is redeemable in 4 equal installments at the end of 7th, 8th, 9th and 10th year respectively.

(vi) 87A-II series of bonds have put/call option at the end of 5 years, i.e. 24.10.2013..INR 272 Crores of 72nd Bonds was redeemed on 18.08.09 on put option exercised by the Bond holders and balance of INR113.70 crores of 72nd Bond Series is redeemable on 18.08.2011.

c) 73rd and 77th series are redeemable at par in 5 equal installments at par at the end of 6th, 7th, 8th, 9th and 10th year respectively.

d) 75th series of Bonds shall be redeemed at par in 10 equal installments at half yearly intervals from 5-1/2 years to 10 years by way of STRPPs.

27


e) 78th, 79th, 80th, 81st, 82nd, 83rd, 85th , 86 A, 86 B-III, 87-II, 87 A-II, 87 A-III, 88th, 90th, 90 B-II, 90 C-II, 91-II & 92-II series are redeemable at par at the end of 10 years i.e. 31.01.2016, 14.03.2016, 20.03.2016, 20.01.2017, 28.09.2017 , 28.02.2018, 13.06.2018, 29.07.2018, 14.08.2018, 30.09.2018, 24.10.2018, 24.10.2018, 15.01.2019, 03.08.2019, 04.09.2019, 06.10.2019, 17.11.2019 & 22.01.2020 respectively.

f) 84th, 86th, 86B-II, 87-I, 87 A-I, 87 C -III, 89-II, 90 A-II, 90 B -I & 93-II series are redeemable at par at the end of 5 years i.e. 04.04.2013, 24.07.2013, 14.08.2013, 30.09.2013, 24.10.2013, 26.11.2013, 02.06.2014, 05.08.2014, 04.09.2014 & 19.02.2015 respectively.

g) 86 B-I, 87 B, 89-I, 90 A-I, 90 C-I, 91-I, 92-I & 93-I series are redeemable at par at the end of 3 years i.e. 14.08.2011, 03.11.2011, 02.06.2012, 05.08.2012, 06.10.2012, 17.11.2012, 22.01.2013 & 19.02.2013 respectively.

h) 87 A-I series of bonds have put/call options at the end of 3 years i.e. 24.10.2011

i) 87 C-I series is redeemable at par at the end of 18 months i.e. 26.05.2010.

j) 87 C-II series is redeemable at par at the end of 24 months i.e. 26.11.2010.

K) Capital Gains Tax Exemption Bonds are issued for tenure of 3/5/7 years at the rates of 5.15% to 8.70% payable semi-annually / annually & with cumulative options. These bonds have put/call option at the end of 3/5 years In the current year (09-10) Capital Gain Exemption Bond Issue Sr VIII (09-10) has a 3 years tenor at 6.25% payable annually. Infrastructure bonds have been issued for tenure of 3 to 5 years at different interest rates varying between 6.00% to 9.00% payable annually. These bonds have put option at the end of 3/5 years from the date of allotment.

(As on March 31, 2010)

(` in million) (B) UNSECURED LOANS LOAN FROM GOVERNMENT OF INDIA 494.18 TERM LOANS

(a) Long Term Loan From Banks

41430.00

(b) Short term Loan from Banks - FOREIGN CURRENCY BORROWINGS ECB – Syndicated Loan from Banks 8702.63 JBIC Loan – Govt. of India Guaranteed 7883.92 KFW Loan – Govt. of India Guaranteed 4177.17 Commercial Paper 24500.00 LOAN THROUGH BONDS (Non-Cumulative, Guaranteed by Government of India)

11.5% Redeemable at par on 27.12.2010 (22nd Sr.) 490.00 12% Redeemable at par on 05.12.2011 (23rd Sr. – I) 226.50 12 % Redeemable at par on 21.02.2012 (23rd Sr. – 2) 303.50 Other Bonds

7.22% Redeemable at par on 31.12.2014 (74th Sr.) 2500.00 TOTAL UNSECURED LOANS 97007.90Due for repayment/redemption within next year 36082.82 Notes: Bonds for INR 0.2 million are held as on 31.03.2009 by REC Ltd. CP Fund Trust. Principal terms of Loans and Assets charged as security

28


(Position as on 1.10.2010) Sl. No.

Bond Series Amount

(INR)

Assets charged as Security Principal terms of issue in brief

1 53rd Tax Free REC Bonds

50 crores (i) Hypothecation of Book debts relating to U. P. SEB aggregating to INR 63.15 Crore for scheme sanctioned up to 31.03.01

(ii) Mortgage of immovable property (a) Flat No. N 209 in ‘c’ wing in Neptune Building Village Oshiwara, Taluka Andheri Mumbai.

(b) Flat No. B 203 in Venus Building Village Oshiwara, Taluka Andheri Mumbai.

Debenture Trustee : Vijaya Bank 1st charge in respect of book debts present & future. Rate of interest 7.10%. Repayable on 23.03.2010 Value of securities at all time to be atleast 1.25 times of the outstanding value of bonds.

2 69th Taxable REC Bonds

669.20 crores

I. Hypothecation of book debts relating to Rajasthan Rajya Vidyut Prasaram Nigam Ltd., Jaipur aggregating to INR 836.50 crore and outstanding as on 20.02.04.

II. Mortgage of premises bearing Nos. 51, 52/58-B, 5th Floor, Mittal Tower situated on Plot no. 210 bearing cadastral surve No. 1957 of Colaba Div. in Block II of Backbay Scheme, Nariman Point, Mumbai – 400005.

Debenture Trustee: IL&FS Trustee Co. Ltd. Rate of Interest 6.05% payable annually on the face value of the bonds. 20% of the face value shall be redeemed at par at the end of each 6th/ 7th / 8th / 9th & 10th year respectively from the deemed date of allotment.

3 72nd Taxable REC Bonds

585.50 crores

1. Hypothecation of book debts relating to Maharashtra State Elecy. Board, Mumbai aggregating to INR732.00 crore and outstanding as on 30.09.04.

2. Mortgage of premises bearing Nos. 51, 52/58-B, 5th Floor, B-wing, Mittal Towers situated on Plot no. 210 bearing cadastral surve No. 1957 of Colaba Div. in Block II of Backbay Scheme, Nariman Point, Mumbai – 400005.

Debenture Trustee: IDBI Trusteeship Services Ltd. Rate of Interest 6.60% payable annually on the face value of the bonds. The Bonds shall be redeemed in one installment on the expiry of seven years from the deemed date of allotment.

4 73rd Taxable REC Bonds

233.90 crores

1. Hypothecation of book debts relating to Rajasthan Rajya Vidyut Prasaram Nigam Ltd., Jaipur aggregating to INR 293 crore and outstanding as on 30.09.2004.

2. Mortgage of premises bearing Nos. 51, 52/58-B, 5th Floor, B-wing, Mittal Towers situated on Plot no. 210 bearing cadastral surve No. 1957 of Colaba Div. in Block II of Backbay Scheme, Nariman Point, Mumbai – 400005.

Debenture Trustee: IDBI Trusteeship Services Ltd. Rate of Interest 6.90% payable annually on the face value of the bonds. 20% of the face value shall be redeemed at par at the end of each 6th/ 7th / 8th / 9th & 10th year respectively from the deemed date of allotment.

5 75th Taxable REC Bonds

500.00 crores

Hypothication of book debts relating to APGENCO, HVPNL, HPSEB,ARUNACHAL PRADESH, MANIPUR, aggregating to INR 652.00 crore and outstanding as on 31.12.2004.

Mortgage of premises bearing no. 51,52/58-B, 5th Floor, B-wing Mittal Towers situated on Plot No. 210, property bearing Cadastral Survey no. 1957 of Colaba Division in Block II of Backbay Scheme Nariman Point, Mumbai-400005.

Debenture Trustee: IDBI Trusteeship Services Ltd. Rate of Interest 7.20% payable annually on the face value of the bonds. 10 instalment of 10% of the face value shall be redeemed at par at the end of each 5 ½ 6th/ 6½, 7th / 7½ / 8th / 8½ / 9th / 9½ & 10th year respectively from the deemed date of allotment.

29


7 54EC-Series V 4000 Crores Mortage of premises bearing Nos. 51, 52/58-B, 5th Floor, Mittal Tower situated on Flat No. 1957 of Colaba Div. in Block II of Backbay Scheme, Nariman Point, Mumbai – 400005

Mortgage of Flat No.641, Asiad Games Village Complex, New Delhi

Hypothecation of current assets i.e. boom debts amounting to INR496.06 Crores pertaining to the State and Entities of Meghalaya.

Trustees IL&FS Trust Company Limited

Interest will be paid annually on 31st March every year at coupon rate of 5.50% p.a. Redemption at par at the end of 5 years from the deemed date of allotment, put/call option at the end of 3 Iyears

8 77th

Taxable

REC Bonds

985.50 crores

Mortgage of Premises bearing no. 640 situated at Asiad Games Village Complex, New Delhi

Hypothication of book debts relating to APTRANSCO up to INR 1232 crore and outstanding as on 30.06.2005

Debenture Trustee: IDBI Trusteeship Services Ltd. Rate of Interest 7.30% payable annually on the face value of the bonds. The Bonds shall be redeemed in one installment on the expiry of three years from the deemed date of allotment.

9 78th Series 1795.70 crores

Mortgage of Premises bearing no. 640 situated at Asiad Games Village Complex, New Delhi

Hypothication of book debts in the nature of ST Loan due from various SEBs and SSBs amounting to INR2245 Crores.

Debenture Trustee: IDBI Trusteeship Services Ltd.Interest @7.65% p.a payable annually on 31st Jan every year starting from the date of allotment; Redemption at par on the expiry of 10 years from the date of allotment . No put/call option available.

10 79th Series 500 Crores Mortgage of Premises bearing no. 640 situated at Asiad Games Village Complex, New Delhi

Hypothication of book debts in the nature of ST Loan due from various SEBs and SSBs amounting to INR625 Crores

Debenture Trustee: IDBI Trusteeship Services Ltd. Interest @7.85% p.a payable semi-annually on 14th March and 14th Sept every year starting from the date of allotment; Redemption at par on the expiry of 10 years from the date of allotment . No put/call option available.

11 80th Series 500 Crores Mortgage of Premises bearing no. 640 situated at Asiad Games Village Complex, New Delhi

Hypothication of book debts in the nature of ST Loan due from various SEBs and SSBs amounting to INR625 Crores

Debenture Trustee: IDBI Trusteeship Services Ltd. Interest @8.20% p.a payable annually on 20th March every year starting from the date of allotment; Redemption at par on the expiry of 10 years from the date of allotment . No put/call option available.

12 54EC-VI Series

4500 Crores Mortgage of Premises bearing no. 641 situated at Asiad Games Village Complex, New Delhi

Hypothecation of current assets i.e. boom debts amounting to INR2271.30 Crores pertaining to the State and Entities of Uttaranchal.

Debenture Trustee: IL&FS Financial Services Ltd .Interest @5.50% p.a payable annually on 30th June every year. Redemption at par on the end of 5 years from the date of allotment.

13. 81st Series 314.80 crores

Mortgage of Flat No. 640, Asiad Games Village Complex, New Delhi

Hypothecation of book debts of various SEBs and SSBs amounting to INR393.50 Crores

Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 8.85% P.a payable annually on 31st March every year starting from date of allotment. Redemption at par on the expiry of 10 years from the date of allotment.

14. 54 EC-VII

Series

8000 Crores Mortgage of Flat No. 640, Asiad Games Village Complex, New Delhi

Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 5.50% P.a payable annually on 30th June every year. The first interest payment from the date of credit to REC account upto 29th June 2008 in respect of allotments made upto 31st March 2008 will be made on 30th June 2008.

30


15. 82nd Series 883.10 Crores

Mortgage of Flat No. 640, Asiad Games Village Complex, New Delhi

Hypothecation of book debts of NTPC-SAIL Power Company Ltd., Jaypee Karchan Hydro Corporation Ltd, Lanco Amarkantak Pvt. Ltd, Teesta Urja Ltd amounting to INR1104 Crores

Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 9.85% p.a. for a tenure of 10 years from the deemed date of allotment. The face value of the Bonds will be redeemed at par at the expiry of 10 years from the deemed date of allotment.

16. Pooling of Securities

47549 Crores

First Pari passu charge by way of hypothecation in favour of secured parties of all the Company’s receivables( except ILFS Hypothecated Receivables)

1. IDBI Trusteeship Services Limited as Bond Trustee -1

2. IDBI Trusteeship Services Limited as Security Trustee on behalf of other lenders

3. IL&FS Trust Company Limited as Bond Trustee-2

17. 83rd Series 685.20 Crores

Mortgage of Flat No. 640, Asiad Village Complex, New Delhi

Interest @ 9.07% per annum for a tenure of 10 years from the deemed date of allotment.

18 54 EC VIII

(08-09)

4000 Crores Mortgage of Flat No. 640, Asiad Village Complex, New Delhi

Debenture Trustee: IDBI Trusteeship Services Ltd.: The Interest will be payable on an annual basis on 30th June every year. The first interest payment from the date of credit to REC account upto 29th June 2009 in respect of allotments made upto 31st March 2009 will be made on 30th June 2009.

19 84TH Series 1000 Crores Mortgage of Flat No. 640, Asiad Village Complex, New Delhi

Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 9.45% p.a. for a tenure of 5 years from the deemed date of allotment. The face value of the bonds shall be redeemed at par at the end of 5 years from the deemed date of allotment.

20 85th Series 500 Crores Mortgage of Flat No. 640, Asiad Village Complex, New Delhi


21 86th Series 727.90 Crores



22 86 A Series 500 Crores Mortgage of Flat No. 640, Asiad Village Complex, New Delhi


31


23 86 B Series 1710.3 Crores


Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 10.95% p.a. for a tenure of 3 years in option I, 10.90% p.a. for a tenure of 5 years in option II & 10.85% p.a. for a tenure of 10 years in option III. The face value of the bonds shall be redeemed at par at the end of 3, 5, 10 years in option I, II, III respectively.

24 87 Series 1027.60 Crores


Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 10.90% p.a. for a tenure of 5 years in option I, &10.85% p.a. for a tenure of 10 years in option II. The face value of the bonds shall be redeemed at par at the end of 5, 10 years in option I, II, respectively.

25 87A Series 347.90 Crores


Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 11.35% p.a. for a t tenure of 5 years in option I, 11.20% p.a. for a tenure of 10 years in option II & 11.15% p.a. for a tenure of 10 years in option III. The face value of the bonds shall be redeemed at par at the end of 5 10 & 10 years in option I, II, III respectively.

26 87B Series 940.90 Crores


Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 11.75% p.a. for a tenure of 3 years The face value of the bonds shall be redeemed at par at the end of 3 years

27 87C Series 1680.60 Crores


Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 11.45% p.a. for a tenure of 18 Months in option I, 11.45% p.a. for a tenure of 2 years in option II & 11.50% p.a. for a tenure of 5 years in option III. The face value of the bonds shall be redeemed at par at the end of 1.5, 2,& 5 years in option I, II, III respectively. (Series 87C-I, since redeemed, vacation of charge is under process)



Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 8.65% p.a. for a tenure of 10 years The face value of the bonds shall be redeemed at par at the end of 10 years .



Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 7.00% p.a. for a tenure of 3 years in option I, 7.70% p.a. for a tenure of 5 years in option II . The face value of the bonds shall be redeemed at par at the end of 3, & 5 years in option I, II, respectively.

30 90 Series 2000 Crores Mortgage of Flat No. 640, Asiad Village Complex, New Delhi

Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 8.80% p.a. for a tenure of 10 years . The face value of the bonds shall be redeemed at par at the end of 10 years

32


31 90A Series 2000 Crores Mortgage of Flat No. 640, Asiad Village Complex, New Delhi

Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 7.15% p.a. for a tenure of 3 years in option I, 8.00% p.a. fora tenure of 5 years in option II . The face value of the bonds shall be redeemed at par at the end of 3, & 5 years in option I, II, respectively.

32 90B Series 1752.10 Crores


Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 8.35% p.a. for a tenure of 5 years in option I, 8.72% p.a. for a tenure of 10 years in option II . The face value of the bonds shall be redeemed at par at the end of 5 & 10 years in option I, II, respectively.

33 90C Series 2457.50

Crores



34 91 Series 1938.90

Crores





Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 7.60% p.a for a tenure of 3 years in option I, 8.65% p.a. for a tenure of 10 years in option II . The face value of the bonds shall be redeemed at par at the end of 3, & 10 years in option I, II, respectively.

36 93 Series 584.60

Crores


Debenture Trustee: IDBI Trusteeship Services Ltd.: Interest @ 7.65% p.a for a tenure of 3 years in option I, 8.45% p.a. for a tenure of 5 years in option II . The face value of the bonds shall be redeemed at par at the end of 3, & 5 years in option I, II, respectively.

37 54 EC VIII(09-10)

6000 Crore Mortgage of Flat No. 640, Asiad Village Complex, New Delhi

Debenture Trustee: IDBI Trusteeship Services Ltd.: The Interest will be payable on an annual basis on 30th June every year. The first interest payment from the date of credit to REC account upto 29th June 2010 in respect of allotments made upto 31st March 2010 will be made on 30th June 2010.

2. DEBT EQUITY RATIO

(` in million) Particulars Pre-Issue

(as on March 31, 2010 Post Issue of present Bonds of INR 500 crore Plus Green shoe option Considering borrowings

33


till March 31, 2010 Debt: Short Term Debt 25,000.00 25,000.00 Long Term Debt 5,34,482.28 5,34,982.28 Total Debt 5,59,482.28 5,59,982.28 Shareholders’ Fund Share Capital 9,874.59 9,874.59 Reserve & Surplus 1,00,928.76 1,00,928.76 Net Reserve ( Net of Revaluation ) 1,10,803.35 1,10,803.35 (-) Reserve for Bad & Doubtful Debts u/s 36(1)(viia)[c] of I.T.Act,1961

4,512.91

4,512.91

Adjustments made as per SEBI guidelines - - Net Worth 1,05,290.44 1,05,290.44 Long Term Debt/Net Worth 5.31 5.32 3. HIGHEST 10 HOLDERS OF EACH CLASS AND KIND OF SECURITIES

A. TOP 10 EQUITY SHAREHOLDERS (as on March 31, 2010) Details given above.

Details given under point no. VI

B. TOP 10 HOLDERS OF INSTITUTIONAL BONDS SERIES (as on March 31, 2010)

Sr. No. Name of Bondholder Address Number of Bonds Held**

1. LIFE INSURANCE CORPORATION OF INDIA

INVESTMENT DEPARTMENT, 6TH FLOOR, WEST WING CENTRAL OFFICE YOGAKSHEMA JIEEVAN BIMA MARG, MUMBAI – 400 021

38970

2 STATE BANK OF INDIA

SECURITIES SERVICES BRANCH, 2ND FLOOR, MUMBAI MAIN BRANCH, MUMBAI SAMACHAR MARG, MUMBAI – 400 023

14450

3 CBT EPF EPS A/C HSBC AMC LTD.

HDFC BANK LTD., CUSTODY SERVICES, LODHA – 1 THINK TECHNO CAMPUS,. OFF. FLR 8 NEXT TO KANJUR MARG STATION, EAST MUMBAI - 400 042

9249

4 RELIANCE INDUSTRIES LIMITED

MAKER CHAMBERS, NARIMAN POINT MUMBAI – 400 001

8950

5 CBT EPF EPS A/C ICICI PRUDENTIAL AMC LTD.

HDFC BANK LTD., CUSTODY SERVICES, LODHA – 1 THINK TECHNO CAMPUS,. OFF. FLR 8 NEXT TO KANJUR MARG STATION, EAST MUMBAI - 400 042

7669

6 COAL MINES PROVIDENT FUND

C/O ICICI SECURITIES PRIMARY, DEALERSHIP LTD., ICICI CENTRE, H.T. PAREKH MARG, CHURCHGATE MUMBAI – 400 020

7515

7. ICICI PRUDENTIAL LIFE INSUFRANCE CO. LTD.

DEUTCHE BANK A.G. DB HOUSE HARZARIOMAL SOMANI MARG, POST BOX NO. 1142, FORT, MUMBAI – 400 001

5720

8. AXIS BANK LTD. A WING, 3RD FLOOR BEZZOLA COMPLEX, SUMAN NAGAR, SION TROMBAY ROAD, CHEMBUR, MUMBAI - 400071

5264

9 BAJAJ ALLIANZ LIFE INSURANCE COMPANY LTD.

DEUTCHE BANK A.G. DB HOUSE HARZARIOMAL SOMANI MARG, POST BOX NO. 1142, FORT, MUMBAI – 400 001

5250

10 ARMY GROUP INSURANCE FUND

AGI BHAWAN, RAO TULARAM MARG, POST VASANT VIHAR, NEW DELHI – 110 057

4500

** EQUIVALENT OF BONDS OF FACE VALUE OF ` 10 LAKHS EACH.

A. TOP 10 HOLDERS OF 54EC BONDS SERIES (as on March 31, 2010) Sr. No.

Name of Bondholder Address Number of Bonds Held

1 THE TATA POWER COMPANY LTD

CORPORATE CENTER BLOCK B 34 SANT TUKARAM ROAD, CARNAC BANDRA MUMBAI – 400 009

21990

34


2 ZUARI INDUSTRIES LIMITED

JAI KISSAN BHAWANZUARI NAGARGOA 305000

3 HINDUSTAN LEVER LIMITED

HINDUSTAN LEVER HOUSE165/166 BACKBAYRECLAMATION MUMBAI

213000

4 GLAXOSMITHKLINE PHARMACEUTICALS LIMITED

NO 252 DR ANNIE BESANT ROADWORLIMUMBAI 197000

5 KIRLOSKAR BROTHERS LIMITED

UDYOG BHAVANTILAK ROADPUNE 88000

6 GRAPHITE INDIA LIMITED

31 CHOWRINGHEE ROADKOLKATA 87000

7 THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD

INM TRY SERVICES, 2ND FLOOR52/60, M G ROAD, FORT MUMBAI

82200

8 MERCK LIMITED SHIVSAGAR ESTATE 'A'DR. ANNIE BESANT ROADWORLI MUMBAI

65500

9 CIBA INDIA LTD MR SANDEEP MURARKA, MS BHAVISHA JAJODIA PLOT 37 CHANDIVALI FARM ROAD CHANDIVALI ANDHERI EAST MUMBAI

57000

10 RADHA MADHAV INVESTMENT LTD

11 A , MITTAL CHAMBERS, NCPA MARG, NARIMAN POINT, MUMBAI

53100

5. PARTICULARS OF DEBT SECURITIES ISSUED (I) FOR CONSIDERATION OTHER THAN CASH,

WHETHER IN WHOLE OR PART, (II) AT A PREMIUM OR DISCOUNT, OR (III) IN PURSUANCE OF AN OPTION

REC hereby confirms that it has not issued any shares or debt securities or agreed to issue any shares or debt securities for consideration other than cash, whether in whole or in part, at a premium or discount or in pursuance of an option since inception. XIII. SERVICING BEHAVIOR ON EXISTING DEBT SECURITIES AND OTHER BORROWINGS REC hereby confirms that: a) The main constituents of REC’s borrowings have been in the form of borrowings from Banks and Financial

Institutions, Bonds etc. b) REC has been servicing all its principal and interest liabilities on time and there has been no instance of

delay or default since inception. c) REC has neither defaulted in repayment/ redemption of any of its borrowings nor affected any kind of roll

over against any of its borrowings in the past. XIV. UNDERTAKING REGARDING COMMON FORM OF TRANSFER The Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/ redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with REC. REC undertakes that it shall use a common form/ procedure for transfer of Bonds issued under terms of this Disclosure Document.

XV. MATERIAL EVENT, DEVELOPMENT OR CHANGE AT THE TIME OF ISSUE REC hereby declares that there has been no material event, development or change at the time of issue which may affect the issue or the investor’s decision to invest/ continue to invest in the debt securities of REC. XVI. PERMISSION/ CONSENT FROM PRIOR CREDITORS The Corporation hereby confirms that it is entitled to raise money through current issue of Bonds without the consent/ permission/ approval from the Bondholders/ Trustees/ Lenders/ other creditors of REC. The Corporation hereby undertakes that it shall seek consent from the existing charge holders for creating of

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security for the Bonds on pari- passu basis. In future, the Trustees shall provide consent to create pari-passu charge subject to Corporation’s complying with the requisite terms of the Bonds issued. XVII. MATERIAL CONTRACTS & AGREEMENTS INVOLVING FINANCIAL OBLIGATIONS OF THE

ISSUER By very nature of its business, REC is involved in a large number of transactions involving financial obligations and therefore it may not be possible to furnish details of all material contracts and agreements involving financial obligations of REC. However, the contracts referred to in Para A below (not being contracts entered into in the ordinary course of the business carried on by REC) which are or may be deemed to be material have been entered into by REC. Copies of these contracts together with the copies of documents referred to in Para B may be inspected at the Head Office of REC between 10.00 a.m. and 2.00 p.m. on any working day until the issue closing date. A. MATERIAL CONTRACTS a. Copy of letters appointing Arrangers to the Issue. b. Copy of letter appointing Registrar and Transfer Agents and copy of MoU entered into between REC and

the Registrar. c. Copy of letter appointing IDBI Trusteeship Services Ltd. (ITSL) as Trustees to the Bondholders B. DOCUMENTS a. Memorandum and Articles of Association of REC as amended from time to time. b. Board Resolution dated March 19th, 2010 authorizing issue of Bonds offered under terms of this

Disclosure Document. c. Letter of consent from IDBI Trusteeship Services Ltd. for acting as Trustees for and on behalf of the

holder(s) of the Bonds. d. Letter of consent from Beetal Financial & Computer Services (P) Ltd. for acting as Registrars to the Issue. e. Copy of application made to the NSE for grant of in-principle approval for listing of Bonds. f. Letter from CRISIL conveying the credit rating dated November 15, 2010for the Bonds of REC and the

rating rationale pertaining thereto. g. Letter from CARE conveying the credit rating dated November 16, 2010for the Bonds of REC and the

rating rationale pertaining thereto. h. Letter from FITCH conveying the credit rating dated November 16, 2010for the Bonds of REC and the

rating rationale pertaining thereto. i. Letter from ICRA conveying the credit rating dated November 18, 2010 for the Bonds of REC and the

rating rationale pertaining thereto. j. Tripartite Agreement between REC, NSDL and Beetal Financial & Computer Services (P)Ltd. for issue of

Bonds in dematerialised form. k. Tripartite Agreement between REC, CDSL and Beetal Financial & Computer Services (P)Ltd. for issue of

Bonds in dematerialised form. XIX. ANNEXURES

A. APPLICATION FORM ALONGWITH GENERAL INSTRUSCTIONS

As enclosed

B. CONSENT LETTER OF TRUSTEE As enclosed

C. CREDIT RATING LETTERS AND RATIONALE

As enclosed

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RURAL ELECTRIFICATION CORPORATION LIMITED

(A Government of India Enterprise) Regd office: Core-4, SCOPE Complex, 7 Lodi Road, New Delhi - 110 003

APPLICATION FORM FOR PRIVATE PLACEMENT OF UNSECURED NON CONVERTIBLE REDEEMABLE ZERO COUPON BONDS IN THE NATURE OF DEBENTURES. ISSUE OPENS ON: 18-11-2010 CLOSING ON 30-11.2010 Date of Application __________ Dear Sirs, Having read and understood the contents of the Information Memorandum of Private Placement dated November 18th 2010, I/We apply for allotment to me/us of the Bonds. The amount payable on application as shown below is remitted herewith. I/We bind myself/ourselves by the terms and conditions as contained in the Memorandum of Private Placement.

BONDS APPLIED FOR (INR 30,000 each per bond) FOR BANK USE ONLY 10 Years

No.of bonds (in figures) Date of receipt of application

No.of bonds (in words) Date of receipt of cheque Amount (INR) (in figures) Date of clearance of cheque Amount (INR) (In words) PARTICULARS OF DP ID RTGS/Cheque/FT/ DD drawn on (Name of Bank and Branch)

Cheque/Demand Draft No./UTR No. in case of RTGS/ A/c no. Incase of FT, fund transfer Date

DP ID No.

Client ID No. Tax status of the Applicant (please tick one) 1. Non Exempt 2. Exempt under: Self-declaration Under Statute Certificate from I.T. Authority We apply as (tick whichever is applicable) PAYMENT PREFERENCE 1. Financial Institution 2. Company 3. Insurance Company 4. NBFC/RNBFC 5. Body Corporate 6. Mutual Fund 7. Religious/Charitable Trust 8. P.F/G.F. Fund 9. Individual/HUF 10. Others (_______) FIRST / SOLE APPLICANT’S NAME IN FULL: Tax payer’s PAN or GIR No. if allotted IT Circle/ Ward/ District SECOND APPLICANT’S NAME IN FULL: Tax payer’s PAN or GIR No. if allotted IT Circle/ Ward/ District MAILING ADDRESS IN FULL (Do not repeat name) (Post Box No. alone is not sufficient) Pin Tel Fax CONTACT PERSONS DETAILS NAME DESIGNATION TEL. NO. FAX NO. Email

TO BE FILLED IN BY THE APPLICANT(S) Name of the Authorized Signatory(ies) Designation Signature ……………………………………………..………………… TEAR ….…………………………………………………..................................

General Instructions Investors are advised to comply with the following General Instructions:

1. Application must be for a minimum size of INR150 Lacs and in multiple of INR 3 lac thereafter.

(Tick one) Cheque / Draft Payable at ___________

RURAL ELECTRIFICATION CORPORATION LIMITED Regd office: Core-4, SCOPE Complex, 7, Lodhi Road, New Delhi - 110 003

Application Form for UNSECURED NON CONVERTIBLE REDEEMABLE ZERO COUPON BONDS in the Nature of Debentures. (To be filled by the Applicant) ACKNOWLEDGEMENT SLIP Received from _________________________________ an application for _____________ Bonds Address_______________________________________ cheque/ draft /utr no.________ dated ________ _____________________________________________ Drawn on _________________________________ _________________________________________ for INR (in figures)___________________________ _______________ Pin Code ______________________ for INR (in words) ___________________________

STAMP

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2. Application must be in the name of Resident Individuals, NRIs, Companies, Statutory Corporations or Financial Institutions, Provident/Superannuation/Gratuity Fund or Societies/ Trusts authorized to invest in Bonds. Application in the name of partnership firms, individuals or Trusts (unless the Trust is registered under the Societies Registration Act of 1860 and is authorized under its constitution to invest in Bonds of Corporation) will not be accepted.

3. Application must be completed in full BLOCK LETTER IN ENGLISH except in case of signature. Applications, which are not complete in every respect, are liable to be rejected.

4. Signature should be in English or Devnagri scripts. Signatures in scripts other than these must be authenticated by a Magistrate or a Special Executive Magistrate.

5. Payments may be made by RTGS or cheque or bank draft drawn in favour of “Rural Electrification Corporation Limited – Bond Issue” and marked ‘A/c Payee only’.

6. Cheque or bank draft should be drawn on a scheduled bank at Delhi/ New Delhi or Mumbai. 7. The Cheques/Demand Drafts along with a photocopy of the application Form should be deposited at any of

the Bank Branches mentioned below. 8. In cases of PF, Pension Fund, Gratuity Fund etc exemption from TDS shall be granted against

Income Tax Recognition Certificate granted by Income Tax Authorities. In case of mutual funds/Gratuity, Provident & Pension Funds exemption from TDS shall be granted only against Certificate u/s 10(23D) of the Income Tax Act / Recognition Certificate or self declaration made by the Investors in Form 15G (in Duplicate).

9. The Original Application Form must be accompanied with duly filed up “KNOW YOUR CUSTOMER FORM” as enclosed along with documents in support.

10. The Original Application Form along with relevant documents should be forwarded to the Corporate Office, REC by Courier on the same day the application money is deposited in the Bank. A copy of PAN Card must accompany the application.

11. Collection Bank Branches: The amount along with photocopy of the Application may be deposited a. In Axis Bank branches. For any further clarification on banking /RTGS please contact: Shri.

Jayanta Lahiri / Shri Amit Mishra Mob: 9873403311 / 9818333691 b. In HDFC Bank branches. For any further clarification on banking /RTGS please contact: Shri.

Anand Somiah / Ms Kulpreet Ph. No. 011 – 41393152 / 33. Mob : 9313003124/9350675082. 12. A separate cheque or bank draft must be accompanied with each application form. 13. Investor/Arranger should not lodge cheque directly into any current a/c of REC with HDFC Bank. Don’t

quote any account no. at the time of cheque / draft lodgment. 14. In the event of bonds offered being over subscribed, the same will be allotted in such manner and proportion

as may be decided by the committee constituted by the Corporation. 15. The bonds shall be issued in De-mat form only and subscribers may carefully fill in the details of Client ID/

DP ID. 16. In the case of application made under Power of Attorney or by limited companies, corporate bodies

registered societies, trusts etc., following documents (attested by Company Secretary /Directors) must be lodged along with the application or sent directly to REC along with a copy of the Application Form.

a. Certificate of Incorporation and Memorandum & Articles of Association b. Resolution of the Board of Directors/Trustee and identification of those who have authority to

operate c. Power of attorney granted to its managers, officers or employees to transact business on its behalf d. Any officially valid document to identify the trustees, settlers, beneficiaries and those holding Power

of Attorney e. Resolution of the managing body of the foundation / association f. Certificate of registration g. Telephone Bill h. PAN (otherwise exemption certificate by IT authorities)

17. The attention of applicants is drawn to Sub-Section (i) of Section 68-A of the Companies Act, 1956, which is reproduced below:

Any person who" a. make in a fictitious name an application to a Corporation for acquiring for any shares therein or b. otherwise induces a Corporation to allot or register any transfer of shares therein to him or any other

person in fictitious name, shall be punishable with imprisonment for a term which may extend to five years

Note: Any further communications in connection with this application should be addressed to Shri B.K.Johar, Dy. General Manager (Finance) or Shri Pawan Jasrai, Manager (Finance) of this Corporation at its Registered Office.

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AXIS Bank instructions –` (A) Beneficiary Details- AXIS Bank : Beneficiary Name Rural Electrification Corporation Ltd. Credit Account No. 007010200051226Centre( Location) New Delhi Main Branch Bank Axis Bank Ltd. Branch Statesman House, Barakhamba Road, CP, New Delhi -110001 Account Type Current IFSC Code UTIB0000007

Remittance Details : Amount ( in figures) ` Amount ( in words) Rupees Remarks / Narration (MANDATORY)

CODE-RECBOND, APPLICANT’S NAME, APPLICATION NO, REC Bond ISSUE SERIES- (96)

a) All RTGS RELATED applications to be faxed and copy sent to below mentioned on same day. Please confirm receipt of fax from below mentioned Axis Bank officials over phone numbers mentioned below. In case application is NOT faxed to below mentioned office SAME DAY it will effect reconciliation and allotment process of Bonds

Mr. JAYANTA LAHIRI /Mr. AMIT MISHRA Statesman House, Barakhamba Road, Connaught Place, New Dellhi - 110001 Ph : 011- 23311159 / 011-23311013 /011-23311051 Cell : 9873403311 / 9818333691 Fax ; 011-23311054

b) Please Note: Axis Bank IFSC Code is UTIB0000007 c) Investor must quote the UTR Number and date in application form

HDFC Bank instructions – A) For investment via local cheque/ transfer cheque/ DD instruments Investor / Arranger in REC Bond Series (issue open on 08.01.2010 and closes on 15.01.2010) 1) Investor / Arranger to lodge PHOTOCOPY of application and Cheque (local payment/

HDFC Bank transfer cheque with designated branches of HDFC Bank within clearing cut off time.

2) Please lodge only with BTI/CMS counter in designated HDFC Bank branch. 3) Do not lodge original application with bank.

B) For investment via RTGS : (IFSC CODE IS HDFC0000003) 1) Investors to ask their remitting bank to mention following Beneficiary Details- Beneficiary Name Rural Electrification Corporation Ltd.- Bond Account Credit Account No. 00030350004616 Centre( Location) New Delhi Bank HDFC Bank Ltd. Branch Suryakiran Branch, KG Marg, New Delhi Account Type Current IFSC Code HDFC0000003

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Remittance Details : Amount (in figures) ` Amount ( in words) Rupees Remarks / Narration (MANDATORY)

CODE: RECBOND, Investor Name & Number of Bonds applied, Application No, REC Bond Series 95

C) Application Handling (Mandatory for all applications)

1. Please fax copy of filled application to HDFC bank Mumbai number 022-25799801 2. Please insure to mention UTR number on top of application for investment via RTGS

before faxing to HDFC bank Mumbai. 3. Please call HDFC bank Mumbai officials mentioned below to seek confirmation of fax

sent. Caution:- In case application is NOT faxed SAME DAY it will effect reconciliation and allotment process of Bonds HDFC bank (Mumbai – Controlling office) contact number

Name Board Telephone

Fax no. E-Mail address

Deepak Rane 022-30752938 022-25799801 [email protected] Uday Dixit 022-30752937 022-25799801 [email protected] Menon 022-30752939 022-25799801 [email protected] Jadav 022-30751902 022-25799801 [email protected] Prabhu 022-30751901 022-25799801 [email protected]

D) Investor to call and Send the UTR number after processing RTGS request to REC- Mr.Pawan Jasrai (011-43091598) at fax 011-24365461

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RURAL ELECTRIFICAITON CORPORATION LIMITED

KNOW YOUR CUSTOMER FORM (CORPORATE – INVESTOR) FORM-1 1). Name of the Company 2). Principal place of business 3). Mailing Address (with telephone and fax nos.) Documents in support ( copies attested by Company Secretary / Directors): (i) Certificate of incorporation and Memorandum & Articles of Association (ii)Resolution of the Board of Directors and identification of those who have authority to operate (iii)Power of Attorney granted to its managers, officers of employees to transact business on its behalf (iv) Copy of PAN allotment letter (v) Copy of the telephone bill Signature of Authorized Signatories 1)_________________ 2)_________________ 3)_________________

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RURAL ELECTRIFICAITON CORPORATION LIMITED

KNOW YOUR CUSTOMER FORM (FOR INVESTOR) FORM-2

1). Nature of Individual/HUF/Corporate/Fir/Trust/Funds etc.

2) PAN/DIN (Issued by MCA, Wherever applicable) _________________________________

3). Permanent Address (with telephone and fax nos.) In case of Individual and HUF

4). Business/Mailing Address (with telephone and fax nos.) wherever applicable

5). Nature of Business _______________________________________________

6). Source of Funds __________________________________________________________________

Signature (a) For Resident Indian Nationals

Documents in support of Name and Address (Copies attested by Gazeted Officer/Notary/Self Attested in case of Individual Only)

PAN Card and any one of the following

( i )Ration Card (ii) Passport (iii) Driving Licence (iv) Identity Card Issued by any institution (v) Copy of the electricity bill or telephone bill showing residential address (vi) Any document or communication issued by any authority of the Central Government, State Government or local bodies showing residential address (vii) voters identity card.

(b) For Foreign Nationals / NRIs etc. ( i ) Passport-Mandatary (ii) Driving Licence

( c ) For Corporate-Investor Documents in support (Copies attested by Company Secretary/Director

( i ) Certificate of incorporation and Memorandum & Articles of Association (ii) Resolution of the Board of Directors and Identification of those who have authority to operate (iii) Power of Attorney granted to its managers, officers or employees to transact business, on its behalf (iv() Copy of PAN/PAN Allotments letter.

(d ) For Partnership Firms-Investor

Documents in support (Copies attested by Notary) ( i ) Registration certificate, if registered (ii) Partnership deed (iii) Power of Attorney granted to a partner or an

employee of the firm to transact business on its behalf (iv) Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses (v) Telephone bill in the name of firm / partners (vi) Copy of PAN / PAN Allotment letter.

(e) Trust & Foundations-Investor

Documents in support (Copies attested by Notary) ( i ) Certificate of registration, if registered (ii) Power of Attorney granted to transact business on its behalf (iii) Any

officially, valid document to identify the Trustees, Setelors, Beneficiaries and those holding Power of Attorney, Founders / Managers/Directors and their addresses (iv) Resolution of the managing body of the Foundation / Association (v) Telephone bill (vi) Copy of PAN/PAN Allotment letter (otherwise exemption certificate issued by IT Authorities)

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