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LETTER TO SHAREHOLDERS:
It gives me immense pleasure to share with you the progress made by your company during the year 2012–13.
Friends, the Indian economy grew at a lower rate than expected in the financial year ended March 31, 2013. As per the information released by the Central Statistics Office, Ministry of Statistics and Programme Implementation, the growth rate of Gross Domestic Product (GDP) is @ 5% for the fiscal 2012–13. Despite the challenging economic environment, your Company continued to deliver excellent results. In these tumultuous times, your Company has performed exceptionally well due to its strong fundamentals with not only focus on profit but also on the Sectoral development in distribution and sub–transmission areas with innovations.
Indian power sector has witnessed manifold growth in the past. However, many challenges are still ahead to deliver quality and reliable power at the doorstep of consumers. To achieve high projected GDP growth rate for India, importance of power sector cannot be overlooked. Electric power being a critical input to all economic activities be it agriculture, industry, commerce and household, the rapid and inclusive growth is only possible on the access of sustained power supply with reliability & quality.
Your Company has earned the reputation as one of the largest and best managed transmission utilities in the world with its remarkable growth in the last two decades and carries about half of the country's total energy generated.
I am happy to share with you that fiscal 2013 was another year of significant progress. Your Company has put on a remarkable performance on various fronts. On the financial front, the turnover of the Company stands at Rs. 13329 Crore in Fiscal 2013 and Profit after Tax increased to Rs. 4235 Crore, which are 23.6% and 30.1% higher respectively, compared to the previous Fiscal 2012. Our Gross Fixed Assets as on 31st March, 2013 stands at Rs. 80600 Crore as against Rs. 63387 Crore in the last fiscal.
On the operational front, as on 31st March, 2013, your Company owns and operates a transmission network of about 1,00,200 ckt kms of inter–state transmission lines, 167 nos. of EHV & HVDC substations with transformation capacity of about 1,64,763 MVA and wheels about 50% of total power generated in the country. Inter–regional power transfer capacity of National Grid has been enhanced by 2,000 MW in the year and cumulative capacity stood at about 29,750 MW by end of March, 2013. Further, with the commissioning of 765kV S/C Sasaram –Fatehpur line –II in the month of May 2013, the inter–regional power transfer capacity has been increased to 31,850 MW.
I am delighted to share with you that the 1200kV Ultra High Voltage (UHV) AC National Test Station at Bina, Madhya Pradesh was test charged during the year and was dedicated to the Nation by Hon'ble Union Minister of State (l/C) for Power. The field tests are currently under progress.
Under RGGVY, during FY 2012–13, infrastructure was created for electrification in 3,852 villages out of which 146 were un–electrified villages. Service connections were provided to about 1.82 Lakh BPL households. Cumulatively, till March, 2013, infrastructure has been created for electrification of 68,654 villages out of which 32,463 were un–electrified villages and service connection to about 35.37 Lakh BPL households were provided.
Your Company continues to deliver improved performance in all its business areas including Telecom and Consultancy business, enhancing the value for the shareholders.
Friends, today, there is growing realization that business is a crucial member of society. Business and society are deeply interdependent. Business can sustain only if the society is satisfied with its overall contribution to societal well–being. Your Company as a responsible corporate entity realises its obligations and commits itself to Sustainable Development. Your Company has proactively formulated and followed the Environmental and Social Policy & Procedures (ESPP) for the conservation of forests, flora & fauna, resettlement & rehabilitation. Various initiatives have been taken by your Company for reducing carbon footprint, which includes creating Rain Water Harvesting facility in its establishments/ substations, use of energy efficient Light Emitting Diode (LED) bulbs and Solar lights in new substations and setting up of a waste paper recycling plant at Gurgaon sub–station. In addition, new buildings are being constructed as per Green Building norms.
As a part of Corporate Social Responsibility (CSR), your Company is making contribution to the society at large with emphasis on socioeconomic development of areas/ communities primarily in and around its areas of operations and has carried out various community development activities such as Skill Development & Capacity Building, Livelihood generation, healthcare, education, etc. During the FY 2012–13, the Company made an expenditure of Rs. 21.75 Crore [0.67% of Profit After Tax (PAT) of the preceding year] for carrying out about 440 CSR projects including 19 in education sector, 152 in the area of infrastructure for community development, 140 in healthcare and 131 for livelihood. About 1.09 lakh tree saplings were also planted by your Company in different parts of the Country.
Integration of Renewable Energy Resources with grid is the top priority worldwide for energy security and also for carbon emission reduction. Government of India is taking various initiatives in the area of renewable energy capacity addition and about 42 GW of generation is envisaged in XII Plan. Your Company has taken a lead initiative and developed a comprehensive master plan for integration of renewable energy generation coming up country–wide in XII plan into the grid through Green Energy Corridors. The plan covers both intra–state & interstate transmission systems along with issues for grid interconnection of intermittent and variable renewable generation and its mitigation measures. The report on "Green Energy Corridors" was released in September, 2012 jointly by Ministry of Power and Ministry of Non–conventional & Renewable Energy.
Your Company continues to take pioneering steps in bringing Smart Grid Technology in all facets of power supply value chain in the country. First Smart Grid Control Center in the country has been established at Puducherry by your Company through open collaboration with more than 70 organizations & academic institutions. Under this, important Smart Grid attribute i.e. Advanced Metering Infrastructure (AMI) has been implemented and other functionalities like Outage Management System, Demand Response, Microgrid etc. are being taken up in a progressive manner. In addition, efficient street light management system has been implemented at Puducherry which has resulted in reduction of energy consumption for street lighting by about 15%. Further, development of Smart Home Energy Management System is being carried out in association with NT, Kharagpur to facilitate consumers in energy management process through remote operation. Towards implementation of Smart Grid Technology in transmission, the Company has executed Wide Area Measurement System (WAMS) pilot project in all the five (5) regions across the country. Under this initiative, presently about 52 Phasor Measurement Units (PMUs) are in operation, facilitating dynamic real time measurements and better visualization of power system which are useful in monitoring safety & security of the grid along with enhanced situational awareness and swiftness in taking control/corrective actions. Various distribution utilities/cities have also expressed their interest in Smart Grid implementation for which Detailed Project Report has been prepared by your Company and handed over to them for implementation.
Your Company continues to explore new opportunities for raising long tenure debt from both domestic and international market, for meeting its capex–programme in XII Plan. In addition to debt funding from multilateral funding agencies like the World Bank and ADB, your Company has availed loan from International Finance Corporation (IFC) and Infrastructure Crisis Facility Debt Pool Limited Liability Partnership (ICF Debt Pool LLP) for an amount of US$270 million for funding various transmission projects, during the year.
I am happy to share that your Company made its maiden foray into foreign currency Bond market during the year which received an overwhelming response from the investing community and was over–subscribed nearly 19 times. Your Company has raised US$500 million through issuance of 10 year Foreign Currency Bonds (FCB) at an attractive coupon rate of 3.875% p.a. and the Bonds are listed in Singapore Stock Exchange.
For the first time, your Company was rated by International credit rating agencies, Standard & Poor's Rating Services (S&P) and Fitch Ratings. Both the agencies rated your Company at BBB – (outlook negative) consistent with India's Sovereign rating. Consequent upon revision of Sovereign rating to 'Stable' from 'Negative' recently by 'Fitch Ratings', the rating of your Company now stands as BBB– (outlook Stable).
For inclusive growth in Power Sector, the development of sub–transmission system in the State(s) is also important. As a partner to development, your Company has joined hands with the State Transmission Utilities of Bihar and Odisha and has formed Joint Venture Companies (JVCs) namely Bihar Grid Company Limited with Bihar State Power (Holding) Company Limited and Kalinga Bidyut Prasaran Nigam Private Limited with Odisha Power Transmission Corporation Limited, on 50:50 equity participation basis for development of Intrastate Transmission System in the States of Bihar & Odisha, respectively.
Your Company is proud to receive continuous industry recognition. The list of awards and accolades constantly grows. Your Company has been selected for 'MoU excellence award' for FY 2010–11 by Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises for being the top performer in the Energy Syndicate. Your Company has also been conferred other prestigious awards during the year which included the 4th DSIJ PSU Awards 2012 for "Fastest Growing Navratna in non–manufacturing category" by Dalai Street Investment Journal; and "3rd Rajeev Gandhi Excellence Award 2011" under the 'Best Power Company of the Year' Category by an NGO "Pehchan". Recently, your Company has been conferred the 'Special Jury Award for Lasting Impact on Indian Economy' in the Governance Now PSU Awards, 2013.
On behalf of the Company, I thank each shareholder for their continued support & trust placed in the Company. I would also like to record my appreciation to all employees, for their contribution towards the performance of the Company. I am confident that with the dedicated & committed employees and valuable support & guidance of our esteemed shareholders, the Company will continue to fulfill its responsibilities and ensure enhancing value to its stakeholders.
With best wishes,
(R. N. Nayak)
Chairman & Managing Director
Place: New Delhi