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1. On behalf of the Board of Directors, it is our pleasure to present the 16th Annual Report together with the Audited financial Statement of PTC India Limited ("the Company") and its subsidiaries for the financial year ended March 31, 2015.
2. Results of operations and State of Company's Affairs
2. Results of operations and State of Company’s Affairs
The trading volumes were higher by 5.71% this year at 37,137 MUs as against 35,130 MUs during the previous year. With a turnover of Rs. 13,149.36 crore (including other income) for the year 2014–15 as against Rs. 11,565.05 crore (including other income) in the Financial Year 2013–14, your Company has earned a Profit After Tax of Rs. 203.10 crore as against Rs. 251.23 crore in the previous year.
The profit after tax of the current year is lower than profit after tax of previous year as during the previous year, Company had net surcharge income of approx Rs.111 crore from long outstanding dues from two state Discoms. Further during FY 2014–15 Company had made a provision of Rs. 33.21 crore on the shares of Teesta Urja Ltd. being valued of Rs. 8.5315 per share (4,39,63294 shares are to be transferred to Govt. of Sikkim and on the balance shares of 18,00,51,706 provision made on conservative basis).
Your Company has two subsidiaries, namely PTC India Financial Services Limited (PFS) and PTC Energy Limited (PEL). The consolidated turnover of the group is Rs. 13,939.19 crore for the Financial Year 2014–15 as against Rs. 12,143.31 crore for the Financial Year 2013–14. The Consolidated Profit After Tax of the Group is Rs. 256.26 crore for the current Financial Year as against Rs. 360.84 crore for the Financial Year 2013–14.
During the year company has changed its accounting policy to recognize surcharge when no significant uncertainty as to measurability or collectability exists from receipt basis. Due to change in accounting policy, both the surcharge on sale of power and trade receivable are higher by Rs. 18.69 crore and Profit for the year is higher by Rs. 12.34 crore (net of tax of Rs. 6.35 crore).
Out of the profits of the Company, a sum of Rs. 60.93 crore has been transferred to General Reserves during the year and total reserves and surplus of the Company are Rs. 2342.55 crore (including securities premium) as on 31st March 2015.
The Board of Directors of your Company is pleased to recommend for your consideration and approval, a dividend @ 22% (which is higher by 10% from the last year) for the Financial Year 2014–15 i.e. Rs. 2.20 per equity share of Rs. 10 each. The dividend, if approved, at ensuing Annual General Meeting will absorb Rs. 78.38 including Dividend Distribution Tax amounting to Rs. 13.26 crore (without netting off credit of Rs. 5.73 crore on dividend received from subsidiary company).
The dividend will be paid to the members whose names appear in the Register of Members as on a record date and in respect of shares held in dematerialized form whose names are furnished by National Securities Depositories Limited and Central Depository (India) Limited as beneficial owners as on record date.
5. Net Worth and Earnings Per Share (EPS)
As on 31st March 2015, net worth of your Company aggregates to Rs. 2638.56 crore as compared to Rs. 2508.41 crore for the previous year thereby registering a growth of 5.19%.
EPS of the Company as on 31.03.2015 stands at Rs. 6.86 in comparison to Rs. 8.49 as on 31.03.2014.
6. Material changes and commitments, if any, affecting the financial position of the Company
There has been no Material changes and Commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statement relate (i.e. March 31, 2015) and the date of the report..
7. Changes in Capital Structure
During the period under review, no change has taken place with regard to capital structure of the Company.
As on 31st March 2015, PTC has Authorized Share Capital of Rs. 750, 00, 00,000 and Paid–Up Capital of Rs. 296,00,83,210/– divided into 296008321 equity shares of Rs. 10 each. The equity shares of your Company are listed on the ‘Bombay Stock Exchange Limited’ (BSE) and ‘The National Stock Exchange of India Ltd.’ (NSE). The promoters i.e. NTPC Ltd. (NTPC), Power Grid Corporation of India Ltd. (POWERGRID), Power Finance Corporation Ltd. (PFC) and NHPC Ltd. (NHPC) individually hold 4.055% each or 16.22% collectively of the paid–up and subscribed equity share capital of your Company and the balance of 83.78% of the paidup and subscribed equity share capital of your Company is held by power sector entities, Financial Institutions, Life Insurance Corporation of India and other Insurance Companies, Banking Institutions, Corporations, Investment Companies, Foreign Institutional Investors, Private Utilities and others including public at large.
8. Subsidiaries, Associates and Joint Ventures
Pursuant to sub–section (3) of section 129 of the Companies Act, 2013 (“the Act”), the statement containing the salient features of the financial statement of a company’s subsidiaries and associate companies given in Form AOC–1 as Annexure 1.
PTC India Financial Services Ltd.
PTC India Financial Services Limited (PFS) is a subsidiary of PTC India Limited wherein PTC holds 60% stake. PFS is listed on NSE and BSE and has been classified as Infrastructure Finance Company (IFC) by the Reserve Bank of India.
PFS recorded revenue of Rs. 801.9 crore during FY15 compared to revenue of Rs. 546.2 crore during FY14. Interest income for FY15 stood at Rs. 741.6 crore compared to Rs. 420.0 crore during FY14, thus registering an increase of about 77%. The profit before tax and profit after tax for FY15 stood at Rs. 245.3 crore and Rs. 160.9 crore respectively. Net interest income increased to Rs. 341.4 crore, thereby recording a growth of over 60% during FY15. Earnings per share for financial year stood at Rs. 2.86 per share.
The Board of Directors of PFS has recommended a dividend @ 10% i.e. Re.1.00 per equity share of Rs. 10/– each for the financial year 2014–15.
PTC Energy Ltd.
PTC Energy Limited (PEL) was set up as a subsidiary of PTC India Ltd. To develop asset base taking in to its sphere the developmental activities, fuel intermediation etc.
The vision of PEL is to play a pivotal role in India’s emerging Energy sector through asset base business and as a fuel aggregator.
During October 2009, Company started imported fuel intermediation keeping in view the requirement of imported coal for tolling projects of PTC and third party sale. During FY 2014–15, PEL has imported and sold 0.06 million MT of coal (previous year– 0.43 million MT). The coal revenues for the year are Rs. 17.64 crore (previous year– Rs. 135.94 crore).
PEL had invested Rs. 23.40 crore constituting 48% equity in RS India Global Energy Limited (RSIGEL) with a view to undertake joint development of wind farm in Tamil Nadu. However, it came to PEL’s notice that the Promoters of RS Group made several misrepresentations and induced PEL to invest money as equity in RSIGEL & as per legal advice, the same fall in the domain of criminality and accordingly, PEL has lodged a complaint with the Economic Offence Wing of Delhi Police. PEL is contemplating other legal recourses to recover its investment. Pending outcome thereof, the Company has provided for the diminution in value of investment in RSIGEL (i.e. Rs. 20.40 crore as Rs. 3 crore provided for last year) which resulted in to loss of Rs. 18.44 crore in FY 2014–15 as against the profit after tax of Rs. 0.98 crore in previous year.
PEL is pursuing opportunities for investment in renewable energy sector as it has emerged as most promising business sector in renewable energy space. PFS has a subsidiary namely PFS Capital Advisors Ltd. which is under the process of getting its name Strike off under the fast track exit mode as prescribed by Ministry of Corporate Affairs.
Investment in other Companies (Amount released up to 31st March 2015)
1. Your Company has earlier executed Equity Subscription Agreement (ESA) for investment in Athena Energy Ventures Pvt. Ltd. (AEVPL). As of now, PTC has released Rs. 150 crore. The other investors in this Company are Athena Group and IDFC.
2. Your Company has earlier executed Equity Subscription Agreement (ESA) for investment in Krishna Godavari Power Utilities Limited upto Rs. 40 crore and as of now PTC has released Rs. 37.55 crore.
3. Teesta Urja Limited (TUL) is developing 1200 MW Teesta–III Hydro Electric Project in the State of Sikkim. Your Company has acquired 11% subscribed equity in Teesta Urja Limited and released Rs. 224.02 crore.
The Company is to divest part of its long term investment in TUL so as Govt. of Sikkim can acquire 51% against its present holding of 26%.
This disinvestment will be of 4,39,63,294 shares which would reduce the shareholding of PTC to 8.48%
4. Your Company has 0.05% equity in M/s. Chenab Valley Power Projects Private Limited (CVPPPL) with NHPC and JKSPDC and as of now PTC has released Rs. 10 lakh.
The Policy for Determining Material Subsidiaries as approved by the Board is available on the company’s website at the link: http://www.ptcindia. com/pdf/Policy%20on%20Determining%20Material%20Subsidiaries.pdf.
9. Related party transactions
During the year, the Company had not entered in to any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the company on Materiality of Related Party Transactions. The Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions as approved by the Board is available on the company’s website at the link http://www.ptcindia.com/pdf/Policy–on–materialityof– Related–Party–Transactions–and–also–on–dealing–with–Related– Party–Transactions.pdf.
10. Directors’ Responsibility Statement
Pursuant to the requirement of clause (c) of sub–section (3) of Section 134 of the Companies Act, 2013, the Board of Directors of your Company confirm that:
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively.
(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
11. Internal Financial Controls
The Company has in place adequate internal financial controls with reference to financial statements. The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, safeguarding of its assets,the prevention of and detection of fraud and errors, the accuracy & completeness of the accounting records and the timely preparation of reliable financial disclosures.
12. Directors & Key Managerial Personnel
In accordance with provisions of the Act and Articles of Association of the Company, Shri Hemant Bhargava, Director would retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re–appointment.
On the recommendation of the Nomination & Remuneration Committee, the Board appointed three Whole time Directors namely Dr. Rajib Kumar Mishra, Shri Ajit Kumar and Shri Arun Kumar who have joined with effect from 24th February 2015, 2nd April 2015 and 16th June 2015 respectively.
The Companies Act, 2013 provides for the appointment of Independent Directors. Accordingly all the Independent Directors i.e. Shri Anil Razdan (up to 8th January 2018), Shri Dipak Chatterjee (up to 14th April 2017), Shri Dhirendra Swarup (up to 8th January 2018), Shri H.L. Bajaj (up to 8th January 2018), Shri Srinivasan Balachandran (up to 31st March 2016) and Shri Ved Kumar Jain (up to 6th December 2016) have been appointed as Independent Directors by shareholders through postal ballot whose result was declared on 25th March 2015. None of the Independent Directors will retire at the ensuing Annual General Meeting.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement entered into with the Stock Exchanges.
The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual directors which include criteria for performance evaluation of the non–executive and executive directors. The overall effectiveness of the Board is measured on the basis of the ratings obtained by each Director and accordingly the Board decides the Appointments, Re–appointments and Removal of the non–performing Directors of the Company. The Company aspires to pay performance linked remuneration to its WTDs/CMD. It is ensured that the remuneration is determined in a way that there exists a fine balance between fixed and incentive pay. On the basis of Policy for Performance Evaluation of Independent Directors, a process of evaluation is being followed by the Board for its own performance and that of its Committees and individual Directors
The performance evaluation process and related tools are reviewed by the "Nomination & Remuneration Committee" on need basis, and the Committee may periodically seek independent external advice in relation to the process. The, committee may amend the Policy, if required, to ascertain its appropriateness as per the needs of the Company. The Policy may be amended by passing a resolution at a meeting of the Nomination & Remuneration Committee.
The Familiarization Programme Module for Independent Directors is put up on the website of the Company at the link: <http://www>. ptcindia.com/pdf/FAMILIARISATION–PROGRAMME–MODULE. pdf
The Policy of the Company on Nomination and Remuneration & Board Diversity is enclosed herewith at Annexure 3.
13. Details of Board meetings
During the year, nine Board meetings were held, details of which are given below:
14. Committees of Board
The details of composition of the Committees of the Board of Directors are as under:–
All the recommendations made by the Audit Committee were accepted by the Board.
The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. In compliance with requirements of Companies Act, 2013 & Listing Agreement, the Company has established a mechanism under its Whistle Blower Policy for employees to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Company's code of conduct or ethics policy. Whistleblowing is the confidential disclosure by an individual of any concern encountered in the workplace relating to a perceived wrongdoing. The policy has been framed to enforce controls so as to provide a system of detection, reporting, prevention and appropriate dealing of issues relating to fraud, unethical behavior etc. The policy provides for adequate safeguards against victimization of director(s) / employee(s) who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. During the year under review, no employee was denied access to Audit Committee.
The whistle blower policy of the Company is available at the link http:// www.ptcindia.com/common/Whistle–Blower–Policy.pdf <http://www.ptcindia.com/common/Whistle–Blower–Policy.pdf>
Details of other committees are provided in Corporate Governance Report forming part of the Board's report.
15. Corporate Social Responsibility
As a good corporate citizen, PTC India Limited (PTC) is committed to ensuring its contribution to the welfare of the communities in the society where it operates, through its Corporate Social Responsibility ("CSR") initiatives.
The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board
The report on CSR Activities/ Initiatives is enclosed as Annexure 2.
The objective of PTC's CSR Policy is to consistently pursue the concept of integrated development of the society in an economically, socially and environmentally sustainable manner and at the same time recognize the interests of all its stakeholders.
To attain its CSR objectives in a professional and integrated manner, PTC shall undertake the CSR activities as specified under the Act.
The CSR policy is available at the link: <http://www.ptcindia.com/pdf/> corporate–social–responsibility–policy.pdf.
The report on CSR activities/initiatives is enclosed at Annexure 3.
16. Risk Management Policy
The Company has developed and implemented a risk management framework that includes the identification of elements of risk which in the opinion of the Board may threaten the existence of the Company. A group Risk Management Policy has been approved. The main objective of this policy is to ensure sustainable business growth with stability and to promote a proactive approach in evaluating, resolving and reporting risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, including the development of a Risk Matrix for each business. Tools like the Risk Matrix will guide decisions on risk related issues.
17. Employees' Stock Option Scheme
Shareholders' approval of the scheme was obtained at the Annual General Meeting held on 6thAugust 2008 for introduction of Employee Stock Option Plan at PTC India Ltd. Two grants have been made under the ESOP 2008.
Disclosures stipulated under the SEBI Guidelines have been made.
Period of Vesting for PTC India Ltd.
As per PTC India Ltd. Employee Stock Option Plan 2008, there shall be a minimum period of 1 (one) year between the grant of options and vesting of options. Subject to participant's continued employment with the Company or the subsidiary and restrictions if any set out in case of terminal events, the Unvested Options shall vest with the Participants over a four year period as per the following schedule.
Exercise Period for PTC India Ltd.
Subject to the conditions laid down for terminal events (death, permanent incapacitation of the employee etc.), the vested options shall be exercisable within a period of 5 (five) years from the first vesting date.
Exercise Period for PFS
Maximum of 3 years from the date of vesting or listing of shares on a recognized stock exchange, whichever is later.
The applicable disclosures as stipulated under SEBI guidelines as on March 31, 2015 with regard to Employees' Stock Options (ESOPs) are enclosed at Annexure 4 to this Report.
The Certificate from the Auditors of the Company that the Scheme has been implemented in accordance with SEBI Guidelines and the resolution passed by the members would be placed at the Annual General Meeting for inspection by members.
18. Particulars of loans, guarantees or Investment u/s 186
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report (Please refer to Note 11 to the standalone financial statement).
19. Extract of Annual Return
Pursuant to section 92(3) of the Companies Act, 2013 ('the Act') and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is enclosed at Annexure 5.
20. Statutory Auditors, their Report and Notes to Financial Statements
M/s K.G. Somani & Co., Chartered Accountants, was appointed as Statutory Auditors of your Company in the 15th Annual General Meeting of the Company to hold office till the conclusion of 17th Annual General Meeting. In terms of first proviso to Section 139 of Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. The Company has received letter from them to the effect that their re–appointment, if made, would be within the prescribed limits under Section 141 of the Companies Act, 2013 and that they are not disqualified for re–appointment and are eligible for appointment.
The Statutory Auditors have audited the Accounts of the Company for the Financial year ended 31st March 2015 and Audited Accounts together with the Auditors' Report thereon are annexed to this report. The observations of the Auditors in their Report on Accounts read with the relevant notes to accounts are self– explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.
21. Internal Auditors
M/s. GSA Associates & Co., Chartered Accountants, New Delhi were appointed as Internal Auditors of the Company for the Financial Year 2014–15 (w.e.f 1st July 2014) and their reports for the year were submitted to the Audit Committee & Board.
22. Cost Auditors
Cost audit is not applicable to the Company.
23. Secretarial Auditors
In terms of Section 204 of the Act and Rules made there under, M/s. Agarwal S. Associates, Practicing Company Secretaries was appointed to conduct secretarial audit of the Company for the financial year 2014–15. The report of the Secretarial Auditors is enclosed as Annexure 6 to this report. The observation of Secretarial Auditor and reply on the same is given below:
Observation by Secretarial Auditor :
Company's Board composition needs to be in line with Clause 49 (II) of the Listing Agreement as effective from 01st October, 2014.
Reply by the Company
Group of Directors on Corporate Governance has met on 15th May 2015 to consider this aspect and next meeting of this Group shall be called shortly.
24. Human Resources
People are the core assets of the Company. Your Company places engagement, development and retention of talent at its highest priority, to enable achievement of organisational vision.
Your Company has continued to achieve an organisational balance by recruiting limited positions at the top and senior management levels and strengthening the middle and junior management team of professionals.
During the year your Company has given thrust to an organisational development programme and has been developing systems and processes that maximize human potential. Your Company has developed a KRA/KPI based Performance Management System to link and measure individual performance with the organizational performance score card during the year.
Strong governance processes and stringent risk management policies are adhered to, in order to safeguard our stakeholders' interest.
Your company has always maintained healthy, cordial, and harmonious industrial relations at all levels. Despite of competition, the enthusiasm efforts of the employees have enabled the Company to grow at a steady pace.
Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company's thrust is on the promotion of talent internally through job rotation and job enlargement.
25. Internal complaints
An Internal Complaints Committee has been constituted to look into grievance/complaints of sexual harassment lodged by women employees as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year no complained was received no complaint was pending as on 31st March 2015.
26. Management Discussion and Analysis
The world economy is still grappling with the legacy of the global financial crisis. Global growth was lower than expected and picked up marginally in 2014 to 2.6%. The key features of the lack luster global recovery have been accommodative monetary policies, falling commodity prices, and weak international trade. The key policy challenge for developing countries is to adjust monetary and fiscal policies in the short–term while addressing headwinds to growth and implementing structural reforms in the long–term.
The Indian economy is in a recovery mode and grew at 7.3% in 2014–15 compared to the growth rate of 6.8% in 2013–14. We also saw an increase in per capita income at current prices during 2014–15 which rose by 9.2% to Rs. 87,748 as against Rs 80,388 in the previous fiscal. According to a report of World Bank, India is on course to overtake China as the world's fastest growing economy in the next two years. The policy implementation has stepped up during the fourth quarter, supported by opening up of the coal industry to private investors, deregulation of diesel prices, liberalization of labor laws, and linking of cash transfers with efforts to increase financial inclusion.
The power sector in India has witnessed credible growth in FY 201415 meeting the targets for generation growth (8% growth vis–a–vis the targeted 5.77%), capacity addition (installation of 22,566 MW compared to the target of 17,830 MW) and successful auctioning and allocation of a number of coal blocks. However, lower asset utilization (PLF ~66%), peak power deficit, stranded generation capacity and transmission congestion continues to be matters of concern. As on 31st March, 2015, the all India installed capacity stood at 267.6 GW with Coal based capacity at 164.6 GW, Gas based at 23 GW, Nuclear at 5.78 GW, Hydro at 41.2 GW and Renewables at 31.7 GW. Addition of 22,101 ckt km of transmission lines till March 2015 has created better transmission availability and should boost the power market which is still evolving.
In the evolving legislative, policy and regulatory environment, power markets will continue to occupy a central position. Given the challenges of a buildup in suppression of demand and simultaneous capacity addition with stranded assets, the industry needs some quick wins and support of all stakeholders for establishing a path to confidence. There is a need to relook at the inefficient plants which in addition to their primary resource consumptions are also blocking other infrastructure (rail network, evacuation facility etc), which otherwise can be made available for other projects for bringing efficiency in the sector.
The Government of India is working on a mission to achieve electrification of remaining 20,000 villages by 2020 through measures like off–grid solar power generation. The aim is to extend 24 hour power supply to each household by 2022. Capacity addition for both thermal and renewable energy has been planned to achieve this target along with distribution reforms.
Presently, Long term power market is saddled with many problems such as demand supply mismatch in long term horizon, revision in Standard Bidding Documents for procurement of power, challenges in fuel supplies and disputes related to compensatory tariff etc. and resolution of same may
take substantial time. In this scenario, it becomes pertinent for stakeholders to explore the medium term window which may take care up to 3–7 years. The 3–7 years span shall be a good period for assessing revenue certainty, tariff reset, matching of demand supply and other key factors for power sector. The medium term market provides an opportunity to venture into new areas in the fast evolving Power Market.
On a regulatory and policy framework, The Amendments to the Electricity Act –2003 which is presently at Parliamentary Standing Committee on Energy, provides for newer opportunity for your company in scaling up energy business. The amendment shall encourage competition in supply of power to retail consumers through separation of carriage and content, we feel, it is imperative to progressively reduce and eliminate cross subsidy surcharge in a definitive timeline for success of this model. The regulatory and policy change shall bring in transparent business competitiveness in electricity market which shall have deep impact in broadening the market for your company.
Renewable Energy is expected to be a significant part of the future of our industry. However, grid connectivity and availability, ancillary services and creation of market for renewable energy are essential. There is also a need to strengthen Renewable Energy Certificate (REC) market. Enabling alternative markets such as bilateral trade of RECs through traders will help creating more liquidity.
The policy level developments in the power sector are opening up many opportunities for business and investment in particular the opportunities in coal mining, supply to retail consumers, energy efficiency services and development of renewable energy projects. Your company endeavors to create value for its business from such opportunities.
The power market in the year has been a summation of trends caused by the industry's transient state, leading to volatility in short term traded volumes. The overall Short Term Power Market in FY15 contracted by about 5% from 105 BUs in FY14 to 99 BUs in FY15. The Bilateral Trades (Traders +TAM) contracted by about 4%, Power Exchanges (PXs) by ~5% and UI by ~9%. Bilateral Trades constituted ~51.6%, Power Exchanges ~19% and UI ~19.6% of the Short Term Market.
Despite the volatility in the power market, your company has maintained its leadership position with a market share of 39% (including Cross Border Trades). In FY15, your company's trading volumes are higher by 6% to 37,137 MUs compared to 35,130 MUs in FY14. Due to grid constraints between WR–NR, NEW–SR and also in S1–S2, the power flow was restricted resulting in a traded volume loss of about 11 BUs.
Your company continues to consolidate in its core trading business with improvement in average margin realizations. The average margin realized by PTC from its trading operations was 4.6 Paisa / unit compared to 4.1 paisa / unit in FY14 an increase of 11%.
In the medium–term business, there are significant developments. Power flow of 100 MW to a state in the Southern–Region on medium–term basis has commenced during the year. Further, power flow for the long term to State in the Northern–Region for 361 MW has been preponed from originally scheduled FY17 to FY 16.
In addition to the above, Power Sale Agreements had earlier been executed by PTC with various State Utilities/Procurers for sale of total 704 MW power from 1000 MW (4x250 MW) JP Karcham Wangtoo Project. During the year, your company has successfully operationalized 504 MW out of this to various Distribution Companies in the Northern Region.
Cross–border transactions remain a vital part of the portfolio of your company and has contributed to more than 18% of the total traded volumes in FY15. The Cross–border trade with Bhutan in FY15 was 4,966 MUs and with Nepal was 155 MUs. Increasing the same focus, we have signed PPA from a 118 MW hydro project in Bhutan. The agreement was signed after PTC winning the tender floated by the developer. Further, your company has executed Back–to Back sale agreement for sale of power from the project on long term basis with a State in NER on 10th Dec, 2014. We are also supplying 250 MW power to Bangladesh resulting in trading volume of 1624 MUs.
Your company is continuously exploring and developing new businesses. PTC Retail business unit is one such initiative that caters to industrial and commercial consumers by facilitating competitive supply of power to optimize their power procurement costs. It is expanding its business area and clients, adding institutions like Airport Authority of India and Delhi Metro Rail Corporation in its portfolio. The retail business has traded 3.4 BUs in the financial year.
Further, your company has been granted funds from prosperity fund by the British High Commission on behalf of Government of United Kingdom for preparing the Indian power market for carriage and content separation through collaboration with the UK. PTC will be working in close association with key stakeholders in implementing business of supply licensee (introduced in draft Amendment to Electricity Act 2003) in India. Regulatory provisions envisaged for increasing competition in power supply business are expected to provide larger avenues in future.
Your company is also facilitating scheduling of solar power, a first of its kind transaction, for 750 MW solar projects to be set up under the VGF scheme issued by Solar Energy Corporation of India. Your company has also signed an MoU with MNRE & NIWE, along with NTPC, POWERGRID, PFC, IREDA and GPCL for undertaking development of offshore wind power project and its evacuation and integration into grid. We are aiming towards building a strong environmental stewardship in our business strategy in line with government's focus on renewable energy.
Your company has also taken a step towards increasing its presence in the energy efficiency sector. We are providing project management consultancy for street lightning projects in two identified circles in a Southern Region State. We are making efforts to execute various energy efficiency projects for delivering a range of products and services to consumers. Further, your company is providing advisory solutions to petroleum refineries and other bulk consumers for enhancing their grid transmission capacity. The solutions will enable them reap market benefits of the Open Access Market.
Our subsidiaries have also shown noteworthy progress during the year. PTC India Financial Services Ltd. (PFS) recorded revenue of t 8,019 million during FY15 compared to revenue of Rs 5,462 million during FY14. Interest income for FY15 stood at Rs 7,416 million compared to Rs 4,200 million during FY14, thus registering an increase of about 77%. The profit before tax and profit after tax for FY15 stood at Rs 2,453 million and t 1,609 million respectively. Net interest income increased to Rs 3,414 million, thereby recording a growth of over 60% during FY15. Earnings per share for the financial year were at Rs 2.86 per share.
PTC's other subsidiary is PTC Energy Ltd.(PEL). During FY 2014–15, PEL imported and sold 0.06 million MT of coal as against 0.43 million MT in FY 2013–14. PEL is actively exploring the opportunities for investment in to renewable energy sector.
Going forward, your company's focus is on balanced development of trading business portfolio for sustained growth with a strategy to maintain and enhance presence in multiple business segments like for the utilities as well as to the non–utilities (retail). Long term volume is expected to move to more than 50% of total trading volume in 2–3 years from ~40% in 2014–15. We expect steady growth in business volumes backed by a robust business model, built on multiple segments. Your company is well positioned to benefit from improvements in policy & regulatory environment with its strong balance sheet, robust cash flows, and experience from a 16 years' operating history.
Your Company has completed another significant year of its operations. Trading volumes of your company have grown by maintaining the continuous interaction with customers, providing innovative solutions and managing the key power portfolio of some states. Your Company remains the front runner in the power trading market. PTC achieved the highest trading volume of 37,137 MUs during FY 2014–15 against the previous year's figure of 35130 MUs which is growth of 6% over the previous year. PTC achieved Short term trading volume of 11,137 MUs during 2014–15 despite of severe transmission constraints on various interregional links. The Company also carried out a significant number of energy banking transactions during the year which has contributed to the overall trading volume.
PTC's volume on power exchanges during 2014–15 reached 9,658 MUs against the previous year figure of 8,088 MUs which has seen an increase of 19.4% over the previous year.
Your Company extended its existing agreements with Government of Himachal Pradesh, Tripura and various CPPs/IPPs for sale of their surplus power. Negotiations are in the advance stage with some other surplus States/Utilities for signing agreements on similar lines. Your company has also been able to add many other utilities and CPP/IPPs as clients both through Bilateral and Power exchange routes. The remarkable additions to the list of clientele are Nagaland, Meghalaya, Manipur etc.
Long Term Agreements for Purchase of power
(A) Commissioned Projects
i. Power Projects commissioned before FY 2014–15 – The existing Long–term arrangements where projects have been commissioned before FY 201415:1912 MW
ii. Power Projects commissioned during FY 2014–15 – The Long–term arrangements where projects commissioned in FY 2014–15: 340 MW
(iii) Power Projects Expected to be commissioned in FY 2015–16 – Pipeline which would be commissioned in FY 2015–16: 1231 MWs
(B) Power Purchase Agreements finalized in 2014–15
During the year, PTC entered into Power Purchase Agreements with M/s. Tangsibji Hydro Energy Limited (THyE) for about 118 MW power from their Nikachu hydro power project being developed in Bhutan, through a Competitive Bidding Process.
PTC has in its portfolio long term Power Purchase Agreements (PPAs) with the generators for a cumulative capacity of about 11,586 MW for further sale of power to Discoms which includes Cross–Border power trade. The projects are based on domestic coal, imported coal, gas and hydro and other renewable energy resources.
(C) Memorandum of Understanding / Agreement finalized in 2014–15
In addition to the above projects, PTC has also signed MoUs/MoAs with number of Project developers during FY 2014–15 for purchase of power aggregating to approximately 120 MW. Cumulative MoUs/MoAs at the end of the year by PTC is around 8,500 MW based on domestic coal, imported coal, wind and hydro resources.
Agreements for Sale of Power
As per the Tariff Policy of Government of India, the long term power procurement by the SEBs/ DISCOMs has to be necessarily done through competitive bidding. As such, sale of power to the State Utilities has to be through participation in the bidding process. Till now, PTC has participated in competitive bids invited by State Utilities/Private Discoms like Rajasthan, UP, AP, MP, Kerala and Tamil Nadu (Long term and Medium term) and has bid for about 4,379 MW aggregate capacities.
I. Power Sale Agreements (PSAs) executed during FY 2014–15
i). PTC has executed Power Sale Agreement with Assam Power Distribution Company Limited (APDCL) for the total contracted capacity of about 85 MW to be purchased from 118 MW Hydro power project being developed by M/s. Tangsibji Hydro Energy Limited (THyE) in Bhutan. The Power flow under the PSA is expected to commence during FY 2019–20.
27. Particulars of Employees
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act the read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are as given below:
(i) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 2014–15 & the percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;
The Remuneration for the purpose of this table is defined as Total Cost to the Company (TCC) which includes variable Performance related pay.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of employee's of the Company employed throughout the year was in receipt of remuneration which was not less than sixty lakh rupees are given at the end of this report.
28. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo
As your Company is engaged in the activity of trading of power and other related activities, the particulars relating to conservation of energy and technology absorption respectively are not applicable to it.
Foreign exchange earnings and Outgo
During the year, the total foreign exchange used was Rs. 1.58 crore and the total foreign exchange earned was t 852.79 crore.
29. Other Disclosures
i) Significant and material orders
There are no significant or material orders were passed by Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.
ii) Transfer of Amounts to Investor Education and Protection Fund
Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. 26th September, 2014), with the Ministry of Corporate Affairs.
iii) Fixed Deposits
Your Company has not accepted any deposits from public in terms of provisions of Companies Act, 2013. Thus, no disclosure is required relating to deposits under Chapter V of Companies Act, 2013.
Your Directors state that no disclosure or reporting in respect of the following items as there were no transactions on these items during the year under review:
> Issue of equity shares with differential rights as to dividend, voting or otherwise.
^ Issue of shares (including sweat equity shares) to employees of the Company under any scheme.
> Neither Managing Director nor the Whole time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
Your Directors place on record their appreciation for employees at all levels, who have contributed to the growth and performance of your Company.
Your Directors also thank the Promoters, Govt. of India, Regulatory Authorities, Central Electricity Authority, clients, vendors, bankers, shareholders and advisors of the Company for their continued support.
Your Directors also thank the Central and State Governments, and other statutory authorities for their continued support.
For and on behalf of the Board
PTC India Limited
Chairman & Managing Director DIN:01061535
Place: New Delhi