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Background and Business DescriptionReliance Power Limited is a part of theReliance Group, one of Indias largest business houses. The group operates across multiple sectors,including telecommunications, financial services, media and entertainment, infrastructure and energy. The energy sector companies includeReliance Infrastructureand Reliance Power.Reliance Power has been established to develop, construct and operate power projects both inIndia as well as internationally. The Company on its own and through its subsidiaries has a portfolio of over 35,000 MW of power generation capacity, both in operation as well as capacity under development.

Details of Shareholding

Shareholder% Holding

No. of Shares2012

Reliance Infrastructure Limited102444819336.52%

AAA Project Ventures Private Limited53738790119.16%

Reliance Enterprises And Ventures Private Limited2677763319.55%

AAA International Capital Private Limited2677763319.55%

Reliance Capital Ltd41178230.15%

Reliance Innoventures Private Limited9163060.03%

Kokila D. Ambani4657920.02%

Anil Ambani4174390.01%

Jai Anmol A Ambani4 12 7080.01%

Tina A Ambani1 25 0000.00%

Sonata Investments Limited1 0000.00%

Master Jai AnshulA. Ambani (through Father and natural guardian Shri Anil D. Ambani)250.00%

Company StrategyReliance Power intend to focus on reducing the cost of power generation by acquiring and developing captive fuel sources that will insulate us from the volatility in the market price of fuel and thus allow us to leverage our operating efficiencies. Reliance Power is doing this bypursuing economies of scale, securing favourable financing and sharing resources among various power projects and with their affiliates.

Securing adequate supplies of fuel is critical to the success of a power project. Reliance Power is taking proactive steps to ensure access to sufficient coal reserves domestically and globally by investing in additional overseas opportunities that are a strategic fit with their business. While they have secured fuel supplies for their entire coal-fired portfolio, they will continue to strive to control the entire supply chain to ensure continued and uninterrupted availability and enable them to control costs.

Reliance Powerintends to locate their power projects and enter into off-take arrangements in power deficit regions that typically support higher market-wide tariffs. They will continue to concentrate their off-take arrangements on the Western and Northern regions of India, which they believe will comprise the bulk of power demand in India. Reliance Power also intends to focus on their merchant off-take sales in these two regions to derive better returns on power generated from their projects.

Financial trendsThe analysis of companys standalone financial performance is as below: (Rs. In Billion)For the period ended March 31.20122011

Total operating income (TOI)2.7671.918

EBIDTA1.3711.092

Depreciation0.1210.100

PBT0.9520.772

PAT0.8670.760

Net fixed assets33.5617.86

Loans and advances Long Term5.0187.448

Loans and advances Short Term1.8701.203

Long term debt (LTD) (A)14.2625.525

Short term debt (STD) (B)3.8922.127

Working Capital Bank Finance (C)0.000.00

Guarantee* (D)0.000.00

Total Debt (A+B+C+D)18.1557.652

Total Current Assets5.6998.029

Total Current Liabilities 3.5523.135

Net working capital2.1464.894

Total Operating income (TOI)The TOI has increased from Rs. 1.918Billion in FY2011 to Rs. 2.767 Billionin FY2012, recording an increment of 44.26% over the previous year. The growth in the revenue was mainly on account of full scale production at all plants due and rise in demand of electricity.

ProfitabilityIn FY2012, reported decrease in EBIDTA margin from 49.54% in FY2011 to 56.93% in FY2012 on account of decreased operating margin and trading. This was primarilydue toincrease in material cost as all the power equipments are imported from China so margin reduced.

Sustainability of non-operating incomeThe company has earned non-operating income of Rs. 1.958Billion FY2012 as compared to Rs. 1.049 Billion in FY2011. The increase in income is on account of increase in dividend income and foreign currency transaction & translation.

Liquidity ratioLiquidity ratios20122011

Current Ratio31.8026.50

Quick Ratio31.8074.44

Inventory Turnover Ratio--

LeverageAs on March 31, 2011, leverageratio of 0.10. Thus, it is a debt free company and hence has low leverage.

Profitability RatiosProfitability ratios20122011

Operating Margin (%)-ve-ve

Gross Profit Margin (%)-ve-ve

Net Profit Margin (%)92.5198.06

Adjusted Return On Net Worth (%)0.710.39

Reported Return On Net Worth (%)1.931.72

Return On long Term Funds (%)1.080.61

Market, Market Position and CompetitionDemand Supply ScenarioThe Indian power sector has grown significantly since 1947 and India today is the third largest producer of power in Asia. The power generating capacity has increased from 1,362 MW in 1947 to over 160,000 MW by mid of 2011. Despite significant growth in electricity generation over the years, the shortage of power continues to exist primarily on account of growth in demand for power outstripping the growth in generation and capacity additions in power generation.Historically, India has experienced shortages in energy and peak power requirements. The average energy deficit was 9.1% and the average peak power deficit was 12.8% between FY2003 and FY2010. The gap between demand and supply has not decreased in the last few years, leading to persistent power shortages.Market PositionReliance Power portfolio of projects includesthose in operation, those under construction and projects under development. Together, it constitutes aninstalled capacity of over 35,000 MW which isnearly 20% of Indias current installed generation capacity. Reliance Power is the largest and the only power generation company in India to have bagged three of the four Ultra Mega Power Projects (UMPP) awarded by the Government of India till date.

CompetitionIn the largest-ever deal between an Indian and a Chinese company, Reliance Power and Chinese power equipment maker Shanghai Electric (SEC) on Thursday signed an USD 8.29 Billion agreement in Shanghai for the supply of 36 coal-fired plants to Reliance Power, with a combined capacity of 24,000 MW. This strategic deal would help Reliance Power to emerge as ''the most valuable power company in India in the coming years. Chinese financial institutions had financed it. The Chinese banks and FIs are also talking to other infrastructure companies in India for financing their deals involving Chinese exports. Thus apart from its size, Reliance ADAG's contract with SEC is also significant because it could become a trendsetter of sorts, encouraging other Indian power companies to shop for capital equipment in a country that is already on its way to becoming one the world's largest suppliers of key capital equipment for the core infrastructure sector.Principal CompetitorsThe main competitors are Jindal Power Ltd, GMR Energy Ltd, GVK Energy Ltd, Lanco Power Ltd, Adani Power Ltd. The technology adapted by Reliance Power of procuring the power equipments from China is followed by above mentioned competitors. So along with Reliance Power, these are strong competitors in the Indian Power sector market.

Recent Developments in Power SectorEfficient infrastructure is a pre-requisite for sustainable andinclusive economic growth and it holds the key to globalcompetitiveness of the Indian economy. The direct correlation between electricity and economic growth is widelyacknowledged. India needs power to grow and for that reasonthe sector presents a massive opportunity.The private sector has underscored its central role in sustainingpower sector investments, with over 50 per cent of the capacityaddition in the 11th five-year plan by the private sector. TheElectricity Reforms which started in the 1990s, and took greatershape with the Electricity Act 2003, have been able to attractprivate independent power producers and accelerated capacityaddition. However, the biggest challenge facing the power sectoris fuel availability and pricing. This requires immediate attentionof the government and there are clear indications that theadministration is seized of the matter. The other area of hugeconcern for the power sector is distribution reforms, which arecritical for the sector to gather and maintain growth momentum.Again, there is growing realization in the government thatdistribution reforms cannot be delayed any further. The Govt. has recommended pragmatic ways ofreviving electricity distribution Companies by passing the onus ofrepaying loans to respective state governments, instructing thestates to ramp up transmission and distribution efficiency and foran allotment of distribution areas on a franchisee basis.