vision - ptc indiaptcindia.com/files/investor_relation/annual2001.pdf · the capital structure of...

3

VISION✦✦✦✦✦ Promote Power Trading to

optimally utilize theexisting resources

✦✦✦✦✦ Catalyze development ofMega and other PowerProjects including HydroProjects

✦✦✦✦✦ Promote Exchange ofPower with neighbouringcountries

✦✦✦✦✦ Develop power market innot too distant a future

4

● Plan, promote and take up necessary developmentalwork for the power sector, purchase power fromgenerating companies and trade in an optimal manner;

● Plan, promote, develop and establish an efficient,reliable power trading and distribution system, policiesand procedures;

● Engage in business of purchasing, procuring, selling,importing, exporting and trading all forms of electricpower and ancilliary services on commercial basis;

● Own, acquire, establish, operate and maintaingenerating stations and transmission system for supplyto bulk power offtakers;

● Act as agent of public/ private sector enterprises,financial institutions, banks, central government, stategovernments, etc. engaged in planning anddevelopment of power sector, and

● Promote and organise research and development andcarry out consultancy services in power sector andrelated activities.

CORPORATE OBJECTIVES

5

● Facilitate development of Mega and other Inter-State PowerProjects which can generate electricity at competitive tariff;

● Identify probable Buyers and Sellers and tie up the most economicarrangements for both;

● Co-ordinate arrangements for Evacuation System, TransmissionService Agreements, Implementation and Fuel SupplyAgreements;

● Co-ordinate with Regional Electricity Boards, Regional LoadDespatch Centres and POWERGRID for Dispatch, Metering andBilling;

● Structure Payment Security Mechanism, Negotiate and FinalisePower Purchase Agreements with Developers/Suppliers and withBuyers;

● Arrange for Revenue Realisation, Timely Payments and findalternative buyer(s) in default situation;

● Conduct Studies for Transmission Feasibility for transfer ofpower including transfer through displacement;

● Provide Single Window for Buyers and Sellers and Work as Nodalagency for Power Trading across the Border.

PTC�s SERVICES

6

MAP OF INDIA

7

PTC ADOPTS NEW LOGO

The Power Trading Corporation of India Ltd. is thenodal agency for trading of power in India and isthe bridge between producers and consumers ofpower. The logo has been designed to reflect thisorientation.

The 2 half arrows are placed on the periphery of anellipse, denoting the cyclical and non-stop natureof the operations viz. generation and consumptionof power. Trading is the connective, the bridgebetween these two. The halved arrowheads and thetapering tails reflect action and dynamism. The bluecolour of these arrows symbolises stability whichthe Company strives to bring to the power scenario.

Placed centrally within the ellipse is the ‘Power Bolt’the universal symbol of electrical energy. The colourof rising sun for the bolt denotes the growingstrength and progressive outlook of the Company.

Within the ‘Power Bolt’ are the transparent lettersin Roman as well as Devnagri scripts symbolisingtransparency in the Company’s operations. Theletters in Italics introduce an element of action,which is indicative of the Company’s commitmentto development of the power sector.

8

PTC is likely to take over trading of 270 MW of ChukhaHydro Power (Bhutan) very shortly and future tradingopportunities include purchase of power from Tala HydroPower Project (1020 MW) and Kurichhu Hydro PowerProject (60 MW) in Bhutan and some small powerprojects in Nepal.

PTC as Risk MitigatorPTC will act as a Risk Mitigator and shall ensure timelypayment to the power generators. The PaymentSecurity Mechanism for PTC is presently underfinalisation and is likely to have a multi-layer structure.

Opportunities and ConstraintsOne of the main constraints in enhancing trading ofpower has been the present generation tariff, underwhich the fixed charges are also recovered inproportion to energy drawl rather than capacity, whichis not considered conducive to economic operation.Implementation of ABT would encourage short-termand long-term trading and there will be ample avenuesfor the same.

With the new legislation, which is on the anvil, therewould be number of players in the power market, whichwill go a long way in establishing a market driven powertrading in which PTC will have a very significant roleto play.

Financial StatusPTC was incorporated with an authorized capital ofRs 150 Crores. PTC has so far received Rs 24 Crores(60%) as equity from the Promoter Companies(POWERGRID, NTPC and PFC) and equity of Rs 16Crores (40%) has to be raised from the FinancialInstitutions and other Investment Companies. This was asper the Business Plan prepared in May 2000. However,the capital structure of PTC is being reviewed and theequity is being strengthened within the parameters of anoptimal capital base. The Government of India has allo-cated Rs. 50 Crores for PTC in the budget for 2001-02.

PerspectivePower trading scenario in the country is in the nascentstage and is growing. It is expected that power marketswill develop gradually with reforms in the sector.

Unlike in other emerging markets, Indian grids haveconstraints in free transfer of power across the country.Strengthening of grid by construction of EHV

STEERING TOWARDS A COMPETITIVE POWER MARKETTwo major benefits associated with powerinterconnections and trading are improved security ofsupply and better economic efficiency. A constituentsystem rather than depending on its internal resourcescan increase system reliability through the import ofenergy from neighbouring constituent systems.Economic efficiency is improved when theinterconnected areas have load profiles complimentaryto each other, on either daily or seasonal basis. Inaddition to the long-term benefits of planninginfrastructure expansion as an inter-connected powersystem, in real time operation also there is ample scopeto minimize the cost of production of electricity byarranging economic interchanges. Economicinterchanges between entities has been the first stepin opening up electricity supply markets and sharingbenefits of operating efficiencies between utilities. Inan effort to increase the value of such economictrading, the “natural monopoly” structure of electricitysupply industry is being reformed and restructuredworldwide to encourage competition and free trade.The trend is to favour free electricity transactionswithin regions and between countries. In the wake ofthis background, formation of PTC assumesimportance.

Development of ProjectsPTC is presently negotiating Power Purchase Agreements(PPAs) for purchase of power from two large PowerProjects namely, Hirma (3960 MW) in Orissa and Ennore(1850 MW) in Tamil Nadu. In addition, PTC has takenup development of Pipapav Mega Power Project (2000MW) in Gujarat through ICB route. Energy from theseprojects will be sold to only those states, which undertakereform of their power sector. The attractive tariff wouldencourage the states to undertake power sector reformsin order to be the beneficiaries.

Trading of PowerDespite constraints in inter-regional transmission ofpower, PTC has embarked upon trading market albeitin a modest way by organizing purchase of power fromsurplus locations and selling to deficit SEBs. Seasonaldiversity in generation and demand of different powerutilities gives ample opportunities for short term trading.PTC traded energy to the extent of 28.35 MUs in itsfirst year of operation (Financial Year 1999-2000).Trading volume increased to around 45 MUs in thesubsequent year and is expected to be over 1000 MUsin FY 2001-02.

9

STEERING TOWARDS A COMPETITIVE POWER MARKET

transmission highways planned in future will help indevelopment of a national electricity market and a newera could be ushered in whereby trading of power willresult in the best price and reliable electricity for theconsumers.

In such a scenario, not only PTC’s outlook willcontinue to be quite positive and proactive, the companywill make all efforts to take best advantage of theopportunities.

CONTENTSBoard of Directors 11

Chairman’s Statement 12

Directors’ Report 16

Balance Sheet 26

Profit & Loss Account 27

Schedules 28

Auditors’ Report 39

Comments of the C&AG of India 41

12

As on 25/07/2001

Chairman & Managing Director From - To

Shri T.N. Thakur 11/10/2000 - till date

Directors

Shri P.I.Suvrathan 16/04/1999 - till dateShri Rakesh Nath 18/07/2000 - till dateShri H.L.Bajaj 16/04/1999 - till dateDr. K.K. Govil 09/03/2001 - till dateShri R.D.Kakkar 16/04/1999 - till dateShri S.K.Dube 26/08/2000 - till date

Executive Vice President (Projects)

Shri Mahendra Kumar

Executive Vice President (Finance)

Ms. Saroj Punhani

Asstt. Company Secretary

Shri Rajiv Maheshwari

Statutory Auditors

M/s K.N. Goyal & Co.Chartered Accountants

Bankers

State Bank of IndiaIndian Overseas Bank

Registered Office

10th Floor, Hemkunt Chambers, 89, Nehru Place, New Delhi – 110 019

13

13

BOARD OF DIRECTORS

12

T.N. Thakur

Rakesh Nath

S.K.DubeR.D. Kakkar

H.L. Bajaj

P.I. Suvrathan

K.K. Govil

14

CHAIRMAN�S STATEMENT

worked out with the concerned authorities in Ministry ofPower / Ministry of External Affairs for effecting thetrading transactions. With Chukha power, trading ofpower from the Kurichhu Hydel Project (60 MW) inBhutan is also likely to be handed over.

Your Company has been notified as the Nodal Agencyfor exchange of power between India and Nepal.Nepal is currently a net importer of power from India,however, in a year’s time it is likely to export powerto India. The Company is getting in touch with theconcerned officials of His Majesty’s Government ofNepal for tying up future arrangements and sortingout outstanding issues.

Utilisation of Existing Resources

In its endeavour for optimal utilisation of the existingresources in the power sector, your Company is havingdialogue with some State Power Utilities/Departmentsfor trading of their surplus power. Requests have alsobeen received from some Captive Power Plants forsimilar trading. The Company is in the process oflocating customers with diversity in demand so as toensure offtaking of the entire surplus round the year.Materialisation of such transactions will not onlyenhance availability of Power but also help inconverting the unscheduled exchanges into scheduledexchanges which should result in bringing operationaland commercial discipline.

Your Company is also considering having FrameworkAgreements with the State Power Utilities/Departmentsso that terms and conditions for each transaction are notrequired to be negotiated every time and decisions aboutshort-term transactions can be taken immediately.

Ladies and Gentlemen,

t gives me a great pleasure to welcome you all to thesecond Annual General Meeting of the Power TradingCorporation of India Ltd. (PTC).

Trading Transactions

I am happy to inform you that your Company is movingforward to its goal of establishing a competitive powermarket in the country. A modest beginning has beenmade by trading of power to the extent of 100 MW fromPunjab to Gujarat during last winter and more recently,flow of power, through PTC, from West Bengal PowerDevelopment Corporation Ltd. to Delhi (upto 100 MW)and Haryana (upto 60 MW) and from Malana PowerCompany Ltd. (70 MW) to Delhi. This is the first timethat your Company has entered into Power PurchaseAgreement (PPA) with a generating Company in a Stateand a private sector company for inter-regional / inter-state trading of power. The total volume of trading worksout to over 1000 MUs of energy for the periods of theAgreements.

Your Company has introduced weekly billing andpayment system with reasonable, but simple, back uppayment security (no State Government guarantee andno escrow) which is working well.

Trading with Neighbours

Supply of power from Chukha Hydel Project in Bhutanto the six Eastern utilities, which is currently beinghandled by POWERGRID, will be shortly handed overto your Company. PPA has been signed by the Companywith four out of the six utilities and modalities are being

I

15

CHAIRMAN�S STATEMENTThough there are obvious constraints for trade ofpower in this country concerning credit worthiness ofbuyers, transmission flexibility & grid reliability, legalposition with regard to such trading and authorisationfor regulating power supply etc., there is a clear trendof more and more inter-regional transfer of power aswould be evident from the following chart :-

because of the value addition by the Company, whichcan be mentioned inter alia as follows:

● PTC has a team of professionals having experiencein Inter-State Trading, System Operation,Transmission, Generation, Grid Operation,Contracts, Power Purchase Agreements, OtherCommercial Aspects and Finance which providesit with the necessary expertise for handling thetransactions most effectively.

● PTC offers the following to its clients:-

- Facilitate development of Mega and other Inter-State Power Projects,

- Identification of Buyers, Coordination withPOWERGRID for Evacuation System, PaymentSecurity Mechanism, Coordination inImplementation and Fuel Supply Agreements,PPAs with Developers and Back to Back PPAswith Buyers,

- Development of Power Trading Marketproviding Single Window for Buyers andSellers,

- Identify probable Buyers and Sellers and tie upmost economic arrangements for both,

- Coordination with REBs, RLDCs andPOWERGRID in Dispatch, Metering andBilling,

- Revenue Realisation and finding alternativeBuyer in default situation,

- Nodal agency for Cross-Border Trading, and

- Studies for transmission Feasibility for transferof power including transfer throughdisplacement.

Inter-State Projects

As regards development of Inter-State Projects, yourCompany is currently negotiating PPAs for purchaseof power from Hirma Project (3960 MW - domesticcoal based) in Orissa and Ennore Project (1850 MW -LNG based) in Tamil Nadu. The process for selectionof a developer for Pipavav Project (2000 MW – LNGor coal based) in Gujarat is also underway. Power fromall these projects will be bought by your Companyand sold, through back-to-back multistate PPAs, tothe respective SEBs or their successor companies. Theother projects which are being looked at by theCompany include Maithon (1000 MW) and some

It is imperative that more conducive environment iscreated for flow of power from the surplus to the deficitlocations at different points of time in the year.

The efforts now being made by your Company intrying to locate the surpluses and the deficits and theneffect transactions are indeed steps towardsestablishment of competitive power market resultingin economic use of the resources and reduction in costof supply. Both the buyers and the sellers of power,through PTC, are open to all India power market thansticking to one or two buyers/sellers as is the case inbilateral arrangements.

Future Trend

With implementation of Availability Based Tariff(ABT), the prospects and volume of trade are likelyto increase. Presently, your Company is handlingtrading transactions spanning a few weeks to a year,but I can see that, not in too distant future, day-ahead trading will also be initiated when yourCompany will resort to round the clock operations.

With rise in the number and volume of transactions,your Company would consider introducing poolpricing for trading. The Company is also lookingforward to sophisticated instruments of trading likeforward trading, hedging etc. but obviously it will taketime for that kind of a market to develop in India.

Value Addition

It has been possible to enthuse both the sellers and thebuyers of electricity to trade through your Company

Year(Source: Central Electricity Authority)

Inter-Regional Energy Exchange

En

erg

y (M

Us)

1996-97 1997-98 1998-99 1999-00 2000-01

12000

10000

8000

6000

4000

2000

0

2754

5093

7297

90419874

16

hydel projects. Lenders and investors of these projectssee PTC’s role as essentially that of a risk mitigator,the Payment Security Mechanism for supporting theseProjects is a very important component of the overallfacilitation process.

A number of project developers are approaching yourCompany with indicative proposals for large, mediumand small sized hydropower projects in the HimalayanRange, in Jammu & Kashmir, Himachal Pradesh andUttaranchal, North-Eastern States and other States likeOrissa, and Nepal, as also less costly Thermal PowerProjects. The Company will be in a position to proceedfurther on such projects and start discussions withprobable off-takers of power only after details ofprojects and tariff are known which the intendingdevelopers have been asked to furnish.

Organisation

Your Company believes in a lean organisationalstructure, is content wi th low margins toencourage t rading and adheres to i tsdevelopmental role. The Company is in theprocess of evolving its own culture, ethicalbusiness conduct norms like defining BusinessPolicy, Human Resources Development Policyetc. These policies shall support the consistentendeavour to build up and enhance the reputationof the Company.

Your Company’s philosophy on corporate governanceenvisages attainment of the highest levels oftransparency and accountability in all facets of itsoperations and in its interaction with all includingClients, Employees, Promoters, Stakeholders andGovernment.

Business Plan

The business plan developed and finalized by yourCompany, in consultation with ICICI, covers aneight-year planning perspective. It is a rolling planto be reviewed annually, keeping in view thechanges in market, competitive, regulatory andother environmental conditions. The last reviewwas done in June 2001. According to the businessplan, volume of trade is expected to reach a levelof 76000 MUs in 2009-10 from 2900 MUs in 2001-02. A proposal for providing Payment Security forsuch levels of transactions along with restructuringof the Company is under consideration ofGovernment of India.

Website

Your Company has launched its websitewww.ptcindia.com, covering information on PTCprofile, Vision, objectives, progress achieved so faron the various Power Projects being developed by PTCand trading activities being undertaken and surpluspower available for trading with PTC along withformats to facilitate on-line requisition from bothsellers and buyers. This is a step towards developmentof on-line Power Market.

I express my deep appreciation for all the executivesand other staff of your Company for the dedicatedand sincere services rendered by them in strivingtowards success. I also express my sincere gratitudeand appreciation for the Government of India,specially Ministry of Power, the three PromoterCompanies and all my colleague members ofthe Board for their invaluable support andcontribution.

I thank you all for making it convenient to attend thisSecond Annual General Meeting and look forward tocontinued support and cooperation from you in futureas well.

(Tantra Narayan Thakur)Chairman & Managing Director

Place: New DelhiDate: 25.07.2001

Power for peace

CHAIRMAN�S STATEMENT

18

of existing resources in the country and to meet thedemands in the deficit locations.

An agreement was signed in February 2001 betweenthe Company and the West Bengal PowerDevelopment Corporation Ltd. (WBPDCL) in EasternRegion for purchase of power upto 200 MW for supplyto the neighbouring regions. Power upto 150 MWhas started flowing from WBPDCL to Delhi andHaryana w.e.f. 12 June 2001. Another transaction forshort term trading of power from Malana PowerProject to Delhi Vidyut Board to the tune of 70 MWhas materialized w.e.f. 5 July 2001. Trading of powerfrom Chukha Power Project is expected to be takenover by the Company during the year 2001-02. PTChas also received some offers from Captive PowerPlants and SEBs / Power Departments for sale of theirsurplus power and the matter is being pursued.Requests have also been received from some deficitSEBs for purchase of power through PTC on a short-

DIRECTORS� REPORT

To the Members,Power Trading Corporation of India Ltd.

have great pleasure in presenting to you, on behalfof the Board of Directors, the second Annual Reporton the activities of Power Trading Corporation of IndiaLtd. together with the Audited Accounts for theFinancial Year 2000-2001.

Performance Highlights

Your Company has been able to improve upon itsperformance over last year on almost all the fronts.The total amount of power sold was Rs 11.39 Crores,which is 47.7% higher than Rs 7.71 Crores sold in theyear 1999-2000.

During the year, energy was bought from MaharashtraState Electricity Board and Punjab State ElectricityBoard and sold to Karnataka Power TransmissionCorporation Ltd. and Gujarat Electricity Board,respectively. Such trading opportunities are expectedto rise in future and the Company proposes to pursuetrading activities vigorously for optimum utilization

I

19

term basis and attempt is being made to meet theirrequirements from the surplus utilities.

Financial Performance

During the first year of operation, PTC’s paid-upcapital was Rs 6 Crores with the subscription of thePromoter Companies, viz., Rs 3 Crores fromPOWERGRID and Rs 1.5 Crores each from NTPCand PFC. However, as envisaged in the Business Planfinalized in May 2000, PTC requires paid-up equitybase of Rs 40 Crores upto Financial Year 2000-2001and Rs 61 Crores upto 2001-02. Accordingly, duringthe year, the Promoter Companies were requested toenhance their equity to Rs 24 Crores (i.e. 60% ofRs 40 Crores). The additional subscription of Rs 18Crores from the three Promoter Companies has sincebeen received. For the balance Rs 16 Crores,discussions are underway to finalize the terms andconditions of Equity Participation with the FIs viz.ICICI, IDBI, IFCI and IDFC. Further, LIC and GIChave also in principle, agreed to subscribe to the equitycapital of PTC to the tune of Rs 4 Crores and Rs 2Crores, respectively. UTI also have shown positiveresponse. PTC will raise further equity as perrequirements from time to time. With widening ofequity base, the Company has somewhat betterleverage to undertake trading operations.

The Company has earned Rs 94 lacs from sale ofpower and other income during 2000-01.This includesan income of Rs 70.58 lacs on account of investmentof funds in the short-term deposits and inter-corporate deposits with various Scheduled Banks.

During the Financial Year 2000-01, the Companyhas incurred a marginal loss of Rs 10.21 lacs. TheCompany has followed prudential Accountingnorms and policies, as adopted in the 13th BoardMeeting held on 28 May 2001, while preparing itsAccounts for the year 2000-01. During the year,the Company has revised its Accounting policyrelating to treatment of expenditure incurred ondevelopment of power projects. According to therevised Accounting policy, any expenditureincurred on development of potential powerprojects shall be carried forward as deferredrevenue expenditure to be written off equally in fiveyears beginning with Financial Year 2003-04.

Directors’ Responsibility Statement

In pursuance of section 217 (2AA) of the CompaniesAct, 1956, the Directors make the followingresponsibility statement:

(i) In the preparation of the Annual Accounts,the applicable Accounting standardshave been followed by PTC along withproper explanation relating to materialdepartures;

(ii) The Directors had selected such Accountingpolicies and applied them consistently andmade judgements and estimates that arereasonable and prudent so as to give a true andfair view of the state of affairs of the Company

DIRECTORS� REPORT

20

at the end of the Financial Year 2000-01 andof the profit or loss of the Company for thatperiod;

(iii) Proper and sufficient care was taken byDirectors for maintenance of adequateAccounting records in accordance with theprovisions of the Companies Act, 1956 forsafeguarding the assets of the Company andfor preventing and detecting frauds and otherirregularities, and

(iv) The Annual Accounts were prepared on a goingconcern basis.

Audit Committee

The Board of Directors in its 12th meeting held on9 March 2001, constituted an Audit Committeein accordance with section 292 (A) of the Companies

Act, 1956, consisting of three members, namelyShri H.L. Bajaj, Shri Rakesh Nath and Shri S.K. Dube.Shri H.L. Bajaj has been appointed as the Chairmanof the Audit Committee in the first Meeting of theAudit Committee held on 28 May 2001. The said AuditCommittee has reviewed the Annual FinancialStatements, before submission to the Board,as prescribed in section 292 (A) of the CompaniesAct, 1956.

Payment Security Mechanism

Payment Security Mechanism (PSM) for PTC’slong-term PPAs with regard to large projects isunder active consideration of the Government of India(GoI). The proposed mechanism, including the processof dip into the central devolution of funds to thestates as a fall back arrangement in case of defaultin payment, is under discussions at differentlevels in GoI.

DIRECTORS� REPORT

21

Signing of Development Agreement for Hirma Mega Power Project in Washington DC

Brief Status of the Projects/Activities

Hirma Mega Power Project (6x660 MW) - Orissa

The Development Agreement for the project, on thelines of MoU, was signed on 14 September 2000 inWashington DC during the Prime Minister’s officialvisit to USA.

Tariff

Mirant Asia Pacific Limited (MAPL), earlier SouthernEnergy Asia Pacific (SEAP), and Reliance Power Ltd.(RPL) are the sponsors of the Project with net capacityof 3960 MW and the Power is to be shared by thestates of Rajasthan, Punjab, Haryana, Gujarat andMadhya Pradesh.

Vide their order-dated 26 September 2000, CERCawarded tariff for this project according to which thelevelised Fixed Charge will be at Rs 1.3398per kWh at constant prices for 30 years. Thiscorresponds to 74% front-loading at current price andan availability/PLF of 85%. This tariff is determined

DIRECTORS� REPORT

with reference to super critical boiler technology. Heatrate for the super critical boilers will be 2411 kcal/kWh (as against 2460 for sub-critical boilers). Fordispatches above 85% PLF, incentive would bepayable at 1 paise per kWh for every 1% increase.

Fuel Supply Agreement

Mahanadi Coalfields Ltd. (MCL) had identified coalmines in the Ib Valley for supply of 22.4 million tonnesof coal per annum. However, one of the coal minesviz. Kulda project has not been given forest clearanceby the Ministry of Environment & Forests (MOE&F).The matter is being reviewed by them (MOE&F). Even

Projects Underway

✦✦✦✦✦Hirma (3960 MW) in Orissa

✦✦✦✦✦Ennore (1850 MW) in Tamil Nadu

✦✦✦✦✦Pipavav (2000 MW) in Gujarat

22

and the Government of Orissa for provisionof State support like land acquisition,arrangement of water, construction power etc.is another important agreement to be finalisedon priority and is already discussed betweenthe two at the highest level and PTC haveextended necessary help, as required.

Ennore LNG Based Power Project (5x370MW) - Tamil Nadu

Development of this project, based onimported LNG, was taken up by Tamil NaduIndustrial Development Corporation Ltd.(TIDCO) for sale of entire power to TNEB.TIDCO had selected M/s Dakshin BharatEnergy Consortium (DBEC) as the preferredbidder, based on International CompetitiveBidding. However, Tamil Nadu was not in aposition to absorb the entire power from thisproject and MOP advised PTC to locate otherbuyers in the Southern Region for sale of

surplus power. Joint Development Agreement wassigned for the project in Washington DC between PTCand the sponsors on 14 September 2000. The majorstrength of this project is the fixed priceof LNG in US Dollar term for the entire PPA termof 20 years.

Tamil Nadu has confirmed offtake of 750 MW fromthe Project and signed MOU with PTC on 5 October2000. Karnataka had indicated to take a share of 700MW, but they have revised their requirement to 300MW and MOU for the same is yet to be signed. Keralahas shown willingness to take 200 MW. MadhyaPradesh has also indicated willingness to take 400-500 MW if tariff is competitive. Draft MOUs havealready been forwarded to the other SEBs. Thediscussions on PPA with DBEC have been suspendedpending signing of MOUs with the beneficiaries otherthan TNEB and finalisation of the Payment SecurityMechanism.

Pipavav Mega Power Project (2000 MW)-Gujarat

Pursuant to revised Mega Power Policy,pre-qualification proposals were invited for theproject by POWERGRID (on behalf of PTC,pending incorporation of PTC) in January 1999through ICB route. Gujarat and Rajasthan will be

Signing of Joint Development Agreement for Ennore Project in Washington DC

with the development of Kulda mine, there is apossibility of shortfall in coal supply in the initial yearsof operation of the project and there is a suggestion tomeet the shortfall from Talcher. However, efforts arebeing made to tie up the full requirement from Ib Valleymines to avoid transportation of coal from Talcherwhich would result in increase in tariff of the projectas also add transportation risk.

Power Purchase Agreement

The draft Heads of Terms for PPA-1, to be signedbetween PTC and the project Company, were evolvedby PTC’s consultants ICICI and finalized after seriesof discussions amongst the beneficiary States/SEBs,MOP, CEA, PTC, ICICI and MAPL. PPA Committeewas reconstituted by the Ministry of Power in July2000. A number of rounds of discussions have takenplace with the help of commercial and legalconsultants, the last one in April 2001. The discussionson the PPA will be concluded after the PaymentSecurity Mechanism is firmed up and coal supplysources to the power project finalised.

Other Agreements

Implementation Agreement between the Developer

DIRECTORS� REPORT

23

the beneficiaries of the Project with share of1500 MW and 500 MW respectively. Bidders weregiven the choice to structure the Projecton imported fuel, either coal or Liquified NaturalGas (LNG).

CERC issued an order in January 2000 regardingapplicability of Availability Based Tariff (ABT) forCentral Sector Generating Stations of NTPC. Inresponse to the petition filed by PTC in February 2000,CERC issued an order on 9 March 2000 advising thatthe target availability concept may not be applicableto the projects through competitive bidding.Accordingly, PTC filed a petition to CERC on 13 April2000 for approval of bidding methodology, evaluationcriteria, tariff structure, PPA and procedures to befollowed, as covered in the RFP. On the direction ofCERC, PTC had filed Vol.I of amended RFP documenton 31 January 2001. Revision of RFP Vol. II and III isheld up for want of State Support Agreementconditions to be issued by the Government of Gujaratand PSM.

Trading of Power

Indo-Nepal Power Exchange

The power exchange between India and Nepal ispresently at the level of 50 MW and there is a proposalto enhance the exchange to 150 MW.

Government of India, Ministry of External Affairs(MEA), in July 2001, formally intimated His Majesty’sGovt. of Nepal about appointment of PTC as the NodalAgency to deal with matters relating to exchange ofpower between the two countries. PTC has compiledinformation on the power exchanges with Nepal andalso convened a meeting with concerned agencies viz.UPPCL, BSEB, Bihar Irrigation Department, NHPC,POWERGRID and CEA with a view to flag the issuesthat need to be resolved, steps to be taken forformulation of tariff based on commercial principlesand enhancing the power exchange for mutual benefitof both the countries. PTC is also planning to organisean official meeting with Nepal Electricity Authority(NEA) for discussions on various issues such asmodalities for billing and realisation, settlement ofoutstanding dues, techno-economic feasibility forpotential power trade, formulation of tariff for futurepower exchange, etc.

Chukha Power (Bhutan)

Government of India, Ministry of power entrustedpurchase and sale of surplus power from 336 MWChukha H.E. project (CHPC) located in Bhutan(which is being dealt by POWERGRID) to PTC,date for the transfer has to be announced separately.In view of the fact that payment to CHPC has to bereleased within a specified time and PTC being informative stage with a limited Capital base, MOPadvised PTC to arrange for opening of Letter ofCredit by the offtaking SEBs before taking overtrading of Chukha power. PTC has now signedagreements with WBSEB, BSEB, GRIDCO andDVC with provision for payment through LC.The Agreement with Government of Sikkimand Jharkhand SEB is likely to be signed shortly,after which PTC is expected to take over theassignment.

Surplus Power from Punjab to Gujarat

PTC traded 42.325 MU of energy from Punjab toGujarat during the months of November and December2000 with total earnings of Rs 21.09 lacs to theCompany.

DIRECTORS� REPORT

Trading Highlights

1999-00● 28.35 MUs (MSEB to KPTCL-Jindal

Vijaynagar Steel)

2000-01● 1.44 MUs (MSEB to KPTCL-Jindal

Vijaynagar steel)● 42.325 MUs (PSEB to GEB)

2001-02● 66.67 MUs (till 16/07/01- from WBPDCL

to DVB and HVPNL)● 12.47 MUs (till 16/07/01-from Malana

to DVB)● over 1000 MUs (expected)

24

Surplus Power from WBPDCL

PTC has signed an agreement with WestBengal Power Development Corporation Ltd.(WBPDCL) for purchase of power upto200 MW til l February 2002. Power to theextent of around 150 MW (about 3 MU energydaily) started flowing w.e.f. 12 June 2001 and soldto Delhi Vidyut Board and Haryana Vidyut PrasaranNigam.

Malana Power

Malana Power Company Ltd. (MPCL)’s 86 MWMalana Hydro Power Project in Himachal Pradeshhas started generating power w.e.f. 5 July 2001.PTC has signed an agreement with MPCL forpurchase of their entire power (after adjustment offree power admissible to HP Government and lossesin the HPSEB transmission system) for a period ofone year after commencement of generation.Memorandum of Understanding has also beensigned with Delhi Vidyut Board for sale of the above

power. About 1 to 1.5 MU are being supplied dailyto DVB w.e.f. 5 July 2001.

Other Trading Opportunities

PTC has taken up with GRIDCO, Maharashtra StateElectricity Board, Chattisgarh State ElectricityBoard, Punjab State Electricity Board andGovernment of Goa for trading of their surpluspower. Some captive power plants have alsoapproached the Company for trading of theirsurplus power and possibilities are being exploredfor the same.

Energy Conservation, Technology Absorption,Forex Earnings & Outgo etc.

PTC being engaged in trading of power, particularsrelating to conservation of energy and technologyabsorption are not really applicable to it. The Companyhas incurred an expenditure of Rs 52.36 lacs in foreignexchange on engagement of consultants etc. duringthe financial year 2000-2001.

Malana Hydro Power Project, Himachal Pradesh

DIRECTORS� REPORT

25

Website

PTC’s Website (www.ptcindia.com) was launched on8 February 2001 containing information on PTC’sprofile, vision, details of projects, trading activities,financial details, Buyers & Sellers’ registration etc.in order to facilitate on-line trading. Buyers and Sellersare now able to approach PTC for power transactionsthrough this website. For this, standard formats havebeen devised and put on the Website. PTC is receivingfairly good response from the buyers as also from thesellers. Regional coordinators have been identified torespond promptly to the queries. Website is regularlyupdated to ensure that the latest information about theCompany is made available to the stake holders.

Business Plan

Keeping in view the objectives of PTC, a Business Planhad been prepared in May 2000, by PTC’s Consultants-ICICI, which was to be reviewed every year in the

backdrop of vast changes taking place in the energysector. Accordingly, ICICI was entrusted with the taskof assisting PTC in revising the earlier Business Plan forshort and medium terms to take into account the revisedestimates of future trading opportunities as also thechanges in assumptions with respect to the present statusof development of Mega Power Project in the country.The draft Business Plan was discussed in the 13th BoardMeeting and suggestions regarding optimal level ofliquidity required by PTC for its operations have beenincorporated by the consultant. Accordingly, the draftBusiness Plan would now be discussed with the potentialinvestors, finalised based on the feedback thereof andaccordingly would then be adopted for implementation.

Manpower

At present, all the employees working in PTC are ondeputation from the Promoter Companies like NTPC,POWERGRID, Government of India and other Power

Hon’ble Minister of Power, Shri Suresh Prabhu inaugurating PTC Website

DIRECTORS� REPORT

utilities like NHPC except one Asstt. CompanySecretary who is on the Company’s rolls. Theemployees’ relations in the Company have been veryharmonious and constructive. All employeeshave regular interaction with the management atdifferent levels.

Particulars of the Employees

During the Financial Year 2000-2001, no employeewas employed for full or part of the year who was inreceipt of gross remuneration in excess of Rs 12 lacsper annum or Rs 1 lac per month.

Auditors

M/s. K.N. Goyal & Co., Chartered Accountants wereappointed as Statutory Auditors of the Company forthe Financial Year 2000-2001 by C&AG of India. TheStatutory Auditors have audited the Accounts of theCompany for the Year ended 31 March 2001 andAudited Accounts together with the Auditors’ Reportthereon are annexed to this report. It is gratifying to

note that there are no qualifying remarks fromStatutory Auditors on the Accounts of the Company.

Review of Accounts by the C&AG of India

The Comptroller & Auditor General of Indiahas no comments upon or supplement to theAuditors’ Report under section 619(4) of theCompanies Act, 1956 on the Accounts of theCompany for the year 2000-01 and his report isenclosed at Annexe-I.

Board of Directors

As per the Articles of Association of the Company,the first Directors of the Company retired at the firstAnnual General Meeting of the Company held on11 October 2000. Shri P.I. Suvrathan, H.L. Bajaj,R.D. Kakkar and S.K. Dube were appointed as part-time Directors of the Company in the first AnnualGeneral Meeting of the Company. Dr. K.K. Govil,Director (Projects), PFC joined the Board of theCompany on 9 March 2001.

The PTC Team

DIRECTORS� REPORT

Acknowledgements

The Board of Directors acknowledge with deepappreciation the co-operation received from theGovernment of India, particularly the Ministry ofPower, three Promoter Companies viz. Power GridCorporation of India Ltd., National Thermal PowerCorporation Ltd. and Power Finance Corporation Ltd.,State Electricity Boards, State Governments, RegionalElectricity Boards, Central Electricity Authority andCentral Electricity Regulatory Commission.

The Board also acknowledges with thanks theconstructive suggestions received from C&AG of Indiaand the Statutory Auditors during the Audit process.

The Board wishes to place on record its appreciationfor efforts and contribution made by the employeesat all levels which made possible the significantachievements during the very second year of theCompany.

DIRECTORS� REPORT

For and on behalf of the Board of Directors

(Tantra Narayan Thakur)Chairman & Managing Director

Place: New DelhiDate: 25.07.2001

26

AS AT 31st MARCH 2001

(Amount in Rs.)

As at As atSchedule 31.3.2001 31.3.2000

SOURCES OF FUNDSShareholders’ FundsShare Capital A 60,000,100 60,000,100Share Application Money (Pending allotment) 180,000,000 -

Total 240,000,100 60,000,100

APPLICA TION OF FUNDSFixed Assets BGross Block 4,979,727 1,164,948Less: Depreciation 980,092 159,580

Net Block 3,999,635 1,005,368

Current Assets, Loans and Advances CSundry Debtors 1,706,250 -Cash and Bank Balances 209,238,179 68,084,795Other Current Assets 4,536,528 1,505,422Loans & Advances 22,603,196 1,380,508

238,084,153 70,970,725

Less: Current Liabilities & Provisions DCurrent Liabilities (29,983,078) (16,633,708)Provisions (13,387,321) (5,496,274)

Net Current Assets 194,713,754 48,840,743

Miscellaneous Expenditure E 39,665,562 9,554,270Profit and Loss Account 1,621,149 599,719

Total 240,000,100 60,000,100

Sd/- Sd/- Sd/-(Saroj Punhani) (Rakesh Nath) (Tantra Narayan Thakur)

Executive Vice President(F) Director (Operations) Chairman & Managing Director

As per our Report attached Sd/-For K.N.Goyal & Co., (Rajiv Maheshwari)Chartered Accountants Asstt. Company Secretary

Date : 28 May 2001 Sd/-Place : New Delhi (K. N. Goyal)

Partner

BALANCE SHEET

Significant Accounting Policies HNotes to the Accounts I

Schedule ‘A’ to ‘I’ form an integral part of Accounts.

27

FOR THE YEAR ENDED 31st MARCH 2001

(Amount in Rs.)

Year ended Period endedSchedule 31.3.2001 31.3.2000

INCOMEElectricity Sales 113,939,640 77,126,174Service Charges 2,326,177 4,752,347Incidental Income-Sale of Tender Documents - 5,492,750Interest Earned (Gross Tax Deducted at SourceRs.1,583,652 Previous year Rs.897,079) 7,058,982 4,105,271Foreign Currency Fluctuation (net) 644,176 -Excess Provisions Written Back 1,221,742 -

Total 125,190,717 91,476,542

EXPENDITUREElectricity Purchase 113,903,568 76,417,448Employee Cost F 5,513,338 5,178,881Other Expenses G 4,037,875 7,359,438

Total 123,454,781 88,955,767Net Profit/(Loss) before Amortization,Depreciation & Prior Period Items 1,735,936 2,520,775

Amortization & Write Off-Preliminary Expenses 915,992 915,992Pre-acquisition Developmental Expenditure 1,189,075 1,189,075Miscellaneous Pre-incorporation Expenses - 295,347Deferred Revenue Expenditure-Strategic Planning 381,997 283,500

Depreciation 318,037 159,580Prior Period Expenses 229,265 -

Net Loss Before Taxation (1,298,430) (322,719)

Provision for taxation - (277,000)Adjustment of taxes relating to earlier year 277,000 -

Net Loss After Taxation (1,021,430) (599,719)

Balance as per Last Account (599,719) -

Balance carried to Balance Sheet (1,621,149) (599,719)

PROFIT & LOSS ACCOUNT





Partner

28

(Amount in Rs.)

As at As at31.3.2001 31.3.2000

SCHEDULE ‘A’

SHARE CAPITAL

Authorised150,000,000 equity shares of Rs.10/- each 1,500,000,000 1,500,000,000

Issued24,000,010 Equity Shares of Rs.10/- each 240,000,100 60,000,100

Subscribed & Paid Up6,000,010 equity shares of Rs.10/- eachfully paid up 60,000,100 60,000,100

Total 60,000,100 60,000,100

SCHEDULES-FORMING PART OF ACCOUNTS

29


SCHEDULE ‘B’

FIXED ASSETS

GROSS BLOCK DEPRECIATION NET BLOCK

As at Additions Sales/ As at Up to For the Adjustments Up to As at As atDESCRIPTION 31/3/2000 Adjustments 31/3/2001 31/3/2000 Year 31/3/2001 31/3/2001 31/3/2000

Furniture & Fixtures 637,861 488,187 0 1,126,048 40,159 253,114 0 293,273 832,775 597,702Vehicles 470,902 533,175 (470,902) 533,175 90,760 92,285 (116,106) 66,939 466,236 380,142Office Equipments 56,185 3,272,601 (8,282) 3,320,504 28,661 599,501 (8,282) 619,880 2,700,624 27,524

Total 1,164,948 4,293,963 (479,184) 4,979,727 159,580 944,900 (124,388) 980,092 3,999,635 1,005,368

Less : DevelopmentalExpenditure on potentialPower Projectstransferred to DeferredRevenue Expenditure (626,863)

Balance 318,037

Previous Year 0 1,164,948 0 1,164,948 0 159,580 0 159,580 1,005,368 0

(Amount in Rs.)

30

(Amount in Rs.)

As at As at31.3.2001 31.3.2000

SCHEDULE ‘C’

CURRENT ASSETS, LOANS & ADVANCES

i. Sundry Debtors(Unsecured, considered good)

Due for less than six months 1,706,250 -

ii. Cash & Bank Balances Cash, Stamps & Imprest - 288

Balance with Scheduled Banks -Term Deposits 192,047,924 67,858,266Current Accounts 17,034,250 226,241

Cheques in Hand 156,005 -

209,238,179 68,084,795

iii. Other Current Assets

Interest accrued 4,536,528 1,505,422

iv. Loans & Advances(Unsecured, considered good)

Loans -Inter Corporate Deposits 13,000,000 -Employees 1,425,998 -

Advances recoverable in cash or kindor for value to be received

Due from Employees 284,206 298,198Others 5,297,261 164,231

Deposits with Custom, Port Trust & OtherAuthorities 115,000 21,000

Prepaid taxes 2,480,731 897,079

22,603,196 1,380,508

Total 238,084,153 70,970,725


31

SCHEDULE ‘E’

MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)

(A) Deferred Revenue Expenditure -

(i) Developmental Expenditure on

potential Power Projects 32,123,204 -

(ii) Pre-Acquisition Developmental

Expenditure 3,567,227 4,756,302

(iii) Strategic Planning 1,227,155 1,134,000

36,917,586 5,890,302

(B) Preliminary Expenses 2,747,976 3,663,968

Total 39,665,562 9,554,270

(Amount in Rs.)

As at As at31.3.2001 31.3.2000

SCHEDULE ‘D’

CURRENT LIABILITIES & PROVISIONS

(i) Current Liabilities

Sundry Creditors 20,033,029 1,131,911 Advances from Customers - 4,038,928 Book Overdraft (Bank) 3,924,765 - Security Deposit Received 5,000 -

Other Liabilities- Towards Promoters 3,906,572 11,277,615- Statutory Liabilities 2,113,712 185,254

29,983,078 16,633,708

(ii) Provisions

- Pay Revision 40,000 1,800,000- Retirement Benefits 59,632 507,346- Taxation - 277,000- Expenses to promoters 2,705,079 2,800,000- Others 10,582,610 111,928

13,387,321 5,496,274

Total 43,370,399 22,129,982


32

SCHEDULE ‘F’

EMPLOYEE COST

Salaries, Allowances & Benefits 13,204,972 4,286,218Contribution to Provident & Other Funds 1,115,428 212,015Gratuity & Leave Encashment 1,171,916 507,346Staff Welfare Expenses 888,045 173,302

16,380,361 5,178,881

Less : Developmental Expenditure on potential PowerProjects transferred to Deferred RevenueExpenditure (10,867,023) -

Total 5,513,338 5,178,881

(Amount in Rs.)

Year ended Period ended31.3.2001 31.3.2000

SCHEDULE ‘G’

OTHER EXPENSES

Reimbursement of Expenses on Office premises/utilities 3,959,782 2,800,000Remuneration & Expenses on Consultants 390,529 2,628,628Advertisement 463,531 -Communication 998,659 184,893Business Development 420,394 400,252Travelling and Conveyance Expenses 2,641,091 199,505Printing & Stationery 675,941 246,557Fees & Expenses to Directors 80,000 101,428Legal Expenses - 220,840

Auditors’ RemunerationStatutory Audit fees 21,000 10,500Tax Audit fees 9,450 -Taxation Matters 22,000 -Other Matters 26,250 -Out of Pocket Expenses 5,326 -

Other General Expenses 1,363,134 566,835

11,077,087 7,359,438Less : Developmental Expenditure on potential Power

Projects transferred to Deferred RevenueExpenditure (7,039,212) -

Total 4,037,875 7,359,438


33

SCHEDULE- H

SIGNIFICANT ACCOUNTING POLICIES

1. Basis of preparation of Accounts

These financial statements are prepared under the historical cost convention and in accordance with

applicable Accounting Standards in India. The financial statements adhere to the relevant

presentational requirement of the Companies Act, 1956.

2. Fixed Assets

i. Fixed Assets are stated at original cost less accumulated depreciation. Cost of acquisition is inclusive

of freight, duties and taxes and incidental expenses related to acquisition, installation and

commissioning.

ii. Depreciation is provided on Written Down Value method as per the rates and the manner prescribed

in the Schedule XIV to the Companies Act, 1956. In respect of the assets costing Rs. 5,000/- or

below, depreciation is provided at 100%.

3. Revenue

i. Revenue from sale of power is accounted for based on rates agreed with the beneficiaries, excluding

service charges wherever separately indicated in the agreement.

ii. Service charges include transaction fee charged under the contracts of purchase and supply of

power.

iii. Revenue in the form of Management and/or Success Fee for services rendered in relation to

development work of potential Power Projects is recognised when such fee is assured and

determinable under the terms of the respective contract.

4. Expenditure

i. Developmental Expenditure in relation to potential Power Projects is carried forward as Deferred

Revenue Expenditure to be written off equally in five years beginning with the financial year 2003-

04 when it is expected that significant developmental work would get concluded and the Preparatory

Stage would end. Such expenditure comprises of payments to consultants, legal expenses, salaries

and allowances to employees engaged in the developmental activities, other direct expenses and

allocation of common expenses in proportion to the employee cost and is net of incidental revenue

arising from sale of tender documents, processing fee, etc.

ii. Pre-acquisition Development Expenditure i.e. payment towards developmental expenditure on

potential Power Projects (net of revenue earned thereagainst) in respect of the period prior to take

over of the developmental work by the Corporation is treated as ‘Deferred Revenue Expenditure’ to

be written off equally in five years from the year of take over.


34

iii. Payments to consultants, other than those related to potential Power Projects, where the aggregate

value of assignment exceeds Rs.10,00,000 and benefit of which is expected to accrue over a number

of years are treated as Deferred Revenue Expenditure to be written off over a period of 5 years .

iv. Preliminary Expenses are amortized over a period of 5 years.

v. Prepaid and prior-period items up to Rs. 5000/- are accounted to natural heads of accounts.

5. Retirement Benefits

i. Liability towards retirement benefits to employees of the Corporation in respect of gratuity and

leave encashment is accounted for on actuarial valuation basis.

ii. Liability in respect of gratuity, leave encashment and provident fund of employees on deputation

with the Corporation are accounted for on the basis of charges raised by the parent organisations.

6. Foreign Exchange

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the

transaction. Liability / receivables on account of foreign currency are converted at the exchange

rates prevailing as at the end of the year and gains / losses thereon are taken to the Profit & Loss

Account, except in case of liabilities relating to fixed assets, which are adjusted to the cost of

acquisition of the asset.


35

SCHEDULE-I

NOTES TO THE ACCOUNTS

1. Figures of the current year are not strictly comparable with those of the previous year as the previous yearwas the first year of the Corporation and the accounts of the previous year were drawn for a period of11 months and 15 days.

2. The Corporation has changed its accounting policy with respect to treatment of developmental expenditureincurred on potential Power Projects. In the preceding year, such expenditures were being dealt with basedon the terms of individual Proposals. The expenditures were treated as ‘Deferred Revenue Expenditure’ onlyin cases where the Proposals envisaged payment of Management Fee to the Corporation. Otherwise, theexpenditures were charged to the Profit & Loss Account.

Previous year was the first year of operation of the Corporation and the developmental activities havecommenced in full swing in the current year. Developmental Expenditure relate to addressing of key issueslike the Payment Security Mechanism, framing of the Power Purchase Agreements, fixation of Tariff,modalities of purchase and sale, etc. These key issues are relevant to all the potential Power Projects and areone-time expenditures incurred to prepare and equip the Corporation to purchase and sell power of allpotential Power Projects effectively in the future. The present trading operations of the Corporation are shortterm in nature. It is, therefore, considered appropriate to change the Accounting Policy to defer all thedevelopmental costs till the end of the Preparatory Stage. The Accounting Policy has, therefore, been changedand all Developmental Expenditure, net of incidental income, are treated as ‘Deferred Revenue Expenditure’to be written off equally in five years beginning with the financial year 2003-04 as it is expected that significantdevelopmental work would get concluded by that year.

Had the Corporation not changed the Accounting Policy as above and accounted for DevelopmentalExpenditure on the same basis as in the preceding year, loss for the year would have been higher byRs.29,157,705/-.

3. As per the Revised Mega Power Policy of the Government of India, the Corporation has taken over alldevelopmental work in respect of various Mega Power Projects from Power Grid Corporation of IndiaLimited (POWERGRID). Reimbursement of expenditure to POWERGRID towards developmentalexpenditure incurred prior to take over of the work has been accounted for to the extent intimated, pendingfinal reconciliation and confirmation of accounts. A Memorandum of Understanding between the Corporationand POWERGRID in respect of the said work is also under finalization.

4. Ministry of Power had directed that the Corporation will take over the trading of Power between M/s. ChukhaHydel Power Corporation Limited, Bhutan and the State Electricity Boards of certain Eastern states witheffect from 1.7.1999. However, pending execution of the agreements and advice from Government of Indiato the Royal Government of Bhutan, trading is being continued to be undertaken by and accounted for byM/s. Power Grid Corporation of India Ltd.

5. The terms of award of Consultancy work to ICICI Ltd. for Hirma Power Project prescribes payment of fee toICICI on recovery from the beneficiary State Electricity Boards. The value of services availed has exceededthe contract value because of increase in scope of work. Advances include Rs.10,37,500/- debited for recoveryfrom the State Electricity Boards in respect of the additional work which is subject to confirmation by theState Electricity Boards.

6. Names of small scale industrial undertakings to whom the Corporation owes a sum exceeding Rs. 1 lac,which was outstanding for more than 30 days as at the Balance Sheet date- None.

7. Audit Fee is subject to approval by the shareholders in general meeting.

8. Estimated amount of capital commitments – Nil. (Previous Year Nil).

9. Claims not acknowledged as debts – Rs.20,99,329/- (Previous Year Rs11,99,329/-).

10. No provision for income tax is considered necessary in view of losses.


36

11. Quantitative information in respect of purchase and sale of power:

Qty. in MUs Value in Rupees

31.3.2001 31.3.2000 31.3.2001 31.3.2000

Purchase 43.77 28.35 113,903,568 76,417,448

Sales 43.77 28.35 113,939,640 77,126,174

12. Remuneration to Directors(including Chairman & Managing Director)

31.3.2001 31.3.2000

Rs. Rs.Salary, Allowances & Benefits 222,266 61,428Contribution to Pension Fund 15,939 -Leave Salary Contribution 10,445 -Directors’ Sitting Fees 80,000 40,000

a. The above remuneration includes benefits drawn by the Director (Operations) who took over additional chargew.e.f. 18.7.2000. However, pending formal appointment and approval by the Competent Authority, he continuesto draw remuneration from his parent organisation. No provision is considered necessary in respect of hisremuneration.

b. In addition to the above remuneration, the whole time Directors have been allowed the use of staff car includingprivate journey on payment of Rs.780/- p.m. as contained in the Ministry of Finance (BPE), Circular No. (18)/pc164 dt. 29/11/1964 as amended.

13. Expenditure in foreign currency:(on accrual basis) 31.3.2001 31.3.2000

Business Development - 35,080Payment to Consultants 4,948,669 707,846Travelling 287,395 -

14. Income earned in foreign exchange - 542,750

15. Figures of the previous year have been regrouped/reclassified wherever considered necessary toconform to current year’s classification.

16. Schedules A to I form an integral part of accounts.






Partner

37

BALANCE SHEET ABSTRACT AND COMPANY’S GENERALBUSINESS PROFILE

I Registration Details

Registration Number 55-99328 State Code 55

Balance Sheet Date 31 03 2001

Date Month Year

II Capital raised during the year

(Amount in Rs. Thousands)

Public Issue Rights Issue

Nil Nil

Bonus Issue Private Placement

Nil 180,000

III Position of Mobilisation and Deployment of Funds

(Amount in Rs. Thousands)

Total Liabilities Total Assets

283,370.50 283,370.50

Sources of Funds

* Paid-up Capital Reserves & Surplus

240,000.10 Nil

* including share application money pending allotment

Secured Liabilities Unsecured Loans

Nil Nil

Application of FundsNet Fixed Assets Investments

3,999.64 Nil

Net Current Assets Misc. Expenditure

194,713.75 39,665.56

Accumulated Losses

1,621.50

INFORMATION PURSUANT TO PART IV OF SCH. VI OF THE COMPANIES ACT 1956

38

IV Performance of Company (Amount in Rs. Thousands)

Turn Over * Total Expenditure

125,190.72 126,489.15

Profit/Loss before tax Profit/Loss after tax

(-) 1,298.43 (-) 1,298.43

* including ‘Other Income’

Earnings per Share in Rs. Dividend rate%

Nil Nil

V Generic Names of Three Principal Products/

Services of Company (as per monetary terms)

Product Description Item Code Number

1. Trading of Power Not applicable

2. To act as ‘facilitator’ for Not applicable

development of Mega Power

Project

Sd/- Sd/- Sd/-(Rajiv Maheshwari) (Saroj Punhani) (Rakesh Nath)

Asstt. Company Secretary Executive Vice President (F) Director (Operations)

Sd/-(T.N. Thakur)

Chairman & Managing Director

INFORMATION PURSUANT TO PART IV OF SCH. VI OF THE COMPANIES ACT 1956

39

TO THE MEMBERS OF POWER TRADING CORPORATION OF INDIA LIMITED

We have audited the attached Balance Sheet of POWER TRADING CORPORATION OF INDIA LIMITEDas at 31st March 2001 and the Profit & Loss Account for the period ended on that date annexed thereto andreport as under:

1. As required by the Manufacturing and other Companies (Auditors’ Report) Order, 1988 issued by theCompany Law Board in terms of section 227(4A) of the Companies Act, 1956, we enclose in theAnnexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to the comments in the Annexure referred to in paragraph 1 above:

i. We have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit.

ii. In our opinion, proper books of account as required by law have been kept by the Company so faras appears from our examination of such books.

iii. The Balance Sheet and Profit & Loss Account referred to in this report are in agreement with thebooks of accounts.

iv. In our opinion, the Profit & Loss Account and Balance Sheet comply with the mandatoryaccounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

v. On the basis of written representations received from the Directors and taken on record by theBoard of Directors, we report that none of the Directors is disqualified from being appointed as aDirector in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us,the said Accounts read together with the notes thereon, give the information required by theCompanies Act, 1956 in the manner so required and give a true and fair view:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st

March, 2001; and

b. in the case of the Profit & Loss Account, of the loss of the Company for the year ended onthat date.

Date: 28 May 2001For K.N. GOYAL & Co.,Chartered Accountants

Sd/(K.N.GOYAL)

Partner

AUDITORS� REPORT

40

(Referred to in paragraph (1) of Report of even date)

1. The Company has maintained proper records showing full particulars including quantitative details andsituation of fixed assets. The fixed assets have been physically verified by the Management during theperiod and no material discrepancies were noticed on such verification.

2. None of the fixed assets have been revalued during the period.

3. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties listedin the register maintained under section 301 of the Companies Act, 1956 or from companies under the samemanagement within the meaning of section 370(1-B) of the Companies Act, 1956.

4. The Company has not granted any loans, secured or unsecured to companies, firms or other parties listed inthe register maintained under section 301 or to companies under the same management as defined undersection 370(1-B) of the Companies Act, 1956.

5. The Company has not granted any loans or advances in the nature of loans except to employees whereprincipal and interest, wherever applicable, are being recovered as stipulated.

6. In our opinion, there are adequate internal control procedures commensurate with the size of the Companyand nature of its business with regard to purchase of equipments and other assets.

7. The Company has not made any purchase or sale of goods or services in pursuance of contracts orarrangements with parties listed in the register maintained under section 301 of the Companies Act, 1956,and aggregating during the period to Rs. 50,000/- or more in respect of each party.

8. The Company has not accepted any deposits to which the provisions of section 58A of the Act or the Rulesframed thereunder apply.

9. The Company has constituted an Internal Audit Team during the year, but no formal report on the audit hasbeen submitted.

10. All the employees working for the Company, except one, are on deputation with the Company and inrespect of these employees, provident fund dues were generally being remitted in time to the parentorganisation. Provident Fund and Employees’ State Insurance dues were not applicable to the Companyduring the year under report.

11. As explained to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customsduty or excise duty were outstanding as at 31st March 2001, for a period of more than six months.

12. According to the information and explanations given to us, no personal expenses of employees or Directorshave been charged to revenue account other than those payable under contractual obligations or in accordancewith generally accepted business practice.

13. In respect of services rendered:a) The nature of services rendered do not involve consumption of materials.b) Considering the nature of services rendered, it is not considered necessary by the management to

allocate man-hours consumed to the relative jobs.

14. The nature of goods traded by the Company is such that there can be no question of any damaged goods.

15. Clauses (iii), (iv), (v), (vi), (xii), (xiv), (xvi) and (xx) of paragraph 4A of the aforesaid Order were notapplicable to the Company.

Date: 28 May 2001 For K.N.GOYAL & Co.,Chartered Accountants

Sd/-(K.N. GOYAL)

Partner

ANNEXURE TO THE AUDITORS� REPORT

41

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION619(4) OF THE COMPANIES ACT, 1956, ON THE ACCOUNTS OF POWER TRADINGCORPORATION OF INDIA LIMITED, FOR THE YEAR ENDED 31 st MARCH, 2001

I have to state that the Comptroller and Auditor General of India has no comments upon or supplement to theAuditors’ Report under Section 619(4) of the Companies Act, 1956, on the accounts of Power Trading Corporationof India Limited, New Delhi, for the year ended 31st March, 2001.

Sd/-(Revathi Bedi)

Principal Director of Commercial Auditand Ex-officio Member, Audit Board-III,

New DelhiPlace: New DelhiDate: 17 July 2001

ANNEXURE-I TO THE DIRECTORS� REPORT

42

ORGANISATIONAL STRUCTURE

CMD

Advisor Corporate Planning

Director (Opn.)

Exe. V.P. (Fin./P&A) Exe. V.P. (Proj.) Exe. V.P. (Comml.)

HR Contracts & Legal Trading

Co. Sectt. Mega Projects Commercial

A/Cs & Fin. Control Other Thermal Projects

Admn. & Procurement Other Hydro Projects

Financial Analysis(PPA)

43

�Success is not to be measured so muchby the achievement but by the obstacles

overcome in the process�.

45

Power Grid Corporation of India Ltd.B-9, Qutab Institutional Area,Katwaria Sarai,New Delhi-110 016

National Thermal Power Corporation Ltd.NTPC Bhawan,7, Institutional Area, Lodi Road,SCOPE Complex,New Delhi- 110 003

Power Finance Corporation Ltd.Chandralok Building,36, Janpath,New Delhi- 110 001

PROMOTER COMPANIES