On behalf of the Board of Directors I am delighted to present the 28thAnnual Report on performance of the Company during the financial year ending March 312017 together with the Audited Financial Statements.
Your Company is one of the largest and best managed transmission utilities in the worldand continues to set new benchmarks of Financial Physical and Operational performance. FY2016-17 has been yet another year of achievement for the Company. In the area of projectcommissioning the Company recorded a capitalization of approx. '31000 crore (incl.TBCB projects). With commissioning of new transmission assets comprising 9723circuit kilometre (ckm) of Extra High Voltage (EHV) transmission lines and 34696Mega Volt Ampere (MVA) transformation capacity with 12 new sub-stations totaltransmission assets of the Company have increased to 139077 ckm and 289543MVA transformation capacity with 219 substations.
Performance highlights of the Company during FY 2016-17 are briefly mentioned here togive an overview of accomplishments on all fronts:
Capital investment of '24429 crore against a target of ' 23000 crore.
"Excellent" MoU rating notified by Government of India for financialyear 2015-16.
Investment approval accorded for transmission projects worth about '36500crore.
Maintained transmission system availability at 99.79% with number oftripping per line limited at 0.68 for the year.
Revenue from operations of '25716.54 crore (year-on-year increase of24%) and Profit after Tax of '7520.15 crore (year-on-year increase of 26%).
Interim Dividend of '1.00 per share (face value ' 10/- each) has beenpaid and in addition Final Dividend of '3.35 per share for the Financial Year2016-17 recommended subject to approval of shareholders.
Pole-I (1500 MW) of 800kV HVDC Bipole transmission line from Champa -Kurukshetra (route length 1288 ckm) has been commissioned in March 2017.
Inter-regional power transfer capacity of 15000 MW has been added. With thiscumulative inter-regional power transfer capacity of the National Grid stood at 75050 MWat the end of March 2017.
Bagged one more project during the year under Tariff Based Competitive Bidding(TBCB) - 'Establishment of Transmission System for 765kV Eastern Region StrengtheningScheme (ERSS-XVIII)'.
Telecom revenue rose to '503.83 crore (year-on-year increase of 28%).
XII PLAN PERFORMANCE
It is a matter of great pleasure to inform you that against CAPEX target of '110000crore for XII Plan the Company has made a capital expenditure of '112664 crore. Alsothrust was given to completion of projects and total capitalization achieved during XIIPlan is over '117000 crore (including TBCB Projects).
About 46000 ckm of transmission line has been added along with 165000 MVA oftransformation capacity addition in the XII plan. Also cumulative Inter-Regional capacityhas been augmented to 75050 MW against a target of 72350 MW. This will give a huge pushto One Nation - One Grid - One Price.
In FY 2016-17 the Company has shown a stellar financial performance. The FinancialPerformance as compared to the previous year 2015-16 is summarized below:
|Description ||2016-17 ||2015-16# ||Y-o-Y Growth |
|Transmission Charges ||24630.28 ||19808.10 ||24.34 % |
|Consultancy-Sale of Services ||582.43 ||465.46 ||25.13% |
|Telecom ||503.83 ||392.25 ||28.45% |
|Revenue from Operations ||25716.54 ||20665.81 ||24.44% |
|Other Income ||864.92 ||577.49 ||49.77(%) |
|Total Income ||26581.46 ||21243.30 ||25.13% |
|Description ||2016-17 ||2015-16# ||Y-o-Y Growth |
|Profit After Tax (PAT) ||7520.15 ||5948.50 ||26.42% |
|Earnings per Share (') ||14.37 ||11.37 ||26.39% |
|Book Value per Share (') ||95.20 ||83.74 ||13.69% |
|Gross Fixed Assets ||149730.18 ||121336.82 ||23.40% |
|Long Term Borrowings* ||117197.91 ||106254.91 ||10.30% |
|Net Worth ||49807.25 ||43811.23 ||13.69% |
|Debt Equity Ratio ||70:30 ||71:29 || |
|Return on Net Worth ||15.10% ||13.58% ||_ |
* Including current maturities of long term borrowings.
# As per Ind-AS.
For FY 2016-17 the Company has recommended a final dividend of '3.35 per share inaddition to '1.00 per share of interim dividend taking total dividend to '4.35 per share.The final dividend shall be paid after your approval at the Annual General Meeting. Thetotal dividend payout for the year amounts to '2275.74 crore (including an interimdividend of ' 523.15 crore).
The Company owns and operates about 85% of the total EHV/UHV Transmission network ofthe Country. As on 31st March 2017 the transmission assets owned and operatedby the Company stood at 139077 ckm of Extra High Voltage (EHV) transmission linesand 219 nos. EHVAC & High Voltage Direct Current (HVDC) sub-stations with about289543 MVA MVA transformation capacity. During the FY 2016-17 the Companymaintained availability of the transmission network at 99.79% which is comparable tointernational standards. The number of tripping per line (unplanned) was contained to 0.68for the year indicating high reliability of POWERGRID transmission system.
Maintenance activities are planned well in advance and an 'Annual Maintenance Plan' ischalked out for every asset through live line or shutdown maintenance as per technicalfeasibility.
The Company is proactively managing the maintenance and refurbishment of thetransmission assets in order to minimize the tripping of lines especially that caused dueto fog pollution and other natural vagaries. The Company is committed to adopt the bestof technological tools available for better operational performance and in this directionfollowing latest technology has been adopted by the Company:
Adoption of latest condition monitoring techniques for Substation Equipments
State-of-the-art condition monitoring techniques for substation equipments fordetection of defects at incipient stage. These include Frequency Response Analysis forTransformers and Reactors Dynamic Contact Resistance Measurement for Circuit BreakersThird Harmonic Resistive Current measurement for Surge Arrestors Thermo-vision scanningof substation equipments etc. These techniques have proved to be very useful in detectionof defects at an early stage. Preventive/ corrective actions were taken in advance andmajor failures were averted. In addition periodic oil parameter checks Dissolved GasAnalysis (DGA) of Transformers/ Reactors and its bushings particle counts inhibitercontent test are very useful for diagnosis of the problems and life enhancement of theTransformers which POWERGRID implemented successfully.
POWERGRID has introduced process bus architecture by connecting Circuit Breakers &Isolators and CT/ PTs through Optical fibers Ethernet using IEC 61850 protocol foravoiding complex protection control & measurement cables. This will pave ways towardsdigital substations.
State-of-the-art 'National Transmission Asset Management Centre' (NTAMC) atManesar Haryana has been managing 122 substations remotely at the end of FY 2016-17 andpresently 150 substations are being managed remotely. This has made operations smootherand helped in increasing visibility of the various parameters of the grid so as to ensurecontinued availability of the network. Your Company foresees the importance of automationin the transmission sector and NTAMC is a formidable step in that direction.
In order to share knowledge with various power sector agencies within the country andacross the globe the Company organised various National and International conferences andmeets. An International Conference on "Best O&M Practices for EHV and UHV AC& DC Transmission System Assets" was held at Gurgaon. The theme for theconference was 765kV AC UHVDC & GIS Operation & Maintenance. Eminent experts fromCIGRE-France Hydro Quebec-Canada BC Hydro-Canada CRIEPI-Japan TransGrid-CanadaIREQ-Canada UMS Group-USA and AAM Australia participated.
The regional peer group meeting for International Transmission Operation andMaintenance Study (ITOMS-2017) was hosted. The meeting was organised forAsia-Africa-Middle East region and was facilitated by UMS Group USA. Delegates fromdifferent Utilities from Malaysia Oman UAE and USA participated in the conference.
POWERGRID is committed to ensure cyber security of the critical infrastructure.Information Security Policy and Procedures have been put in place. POWERGRID CorporateOffice has been certified for ISO:27001 Information Security Management System Standard.The Regional Head Quarters are also in the process of being certified for ISO:27001.Compliance to guidelines of CERT-in and NCIIPC have been ensured. In view of possiblerisks due to Cyber-attacks all Grid connected intelligent control equipment are keptisolated (air-gapped) from external data communication systems. Further in large part ofnetworks digital signals controlling operation of critical equipment are kept furtherconfined and isolated by design to prevent any large scale cascade event. A seniorexecutive is designated as POWERGRID's Chief Information Security Officer who reviewsCyber Security preparedness.
In the event of any natural calamity or disaster the Company has been at the forefront in providing relief to the countrymen and has contributed in restoration of power inaffected areas.
Support was promptly extended in Tamil Nadu to restore EHV transmission lines whichwere damaged due to cyclone Vardah near Chennai in December 2016. As an immediate reliefPOWERGRID's Task Force rushed to the affected areas and deployed its Emergency RestorationSystem (ERS) Team for extending necessary assistance to Tamil Nadu Transmission Company(TANTRANSCO).
Relief camps were also organized in cyclone affected areas and relief materials likefood packets water bottles bed sheets Mosquito mats Toilet kits etc. were distributedto about 1000 affected families. Efforts of POWERGRID for extending the timely assistancewere acknowledged and created confidence and goodwill in people.
Your Company is an infrastructure provider and its growth is largely dependent on theefficient implementation of the transmission projects. Your Company has an exceptionalrecord of implementing challenging transmission projects running over hundreds ofkilometres of length across tough terrains and involving socio-economic issues. To ensurethat power evacuation and system strengthening projects complete matching with systemrequirement detailed planning has been done during implementation and progress isreviewed at various levels to take corrective actions. Your Company uses latest projectmanagement tools such as Enterprise Resource Planning (ERP) Integrated Project Managementand Control Systems and regular Project Review meetings are organised at the topmanagement level to proactively assess any obstacles in project execution and its timelyresolution.
Also interactive meet with Industry partners have been organised to continuouslyimprove our performance. Apart from business interactions POWERGRID also felicitatedvarious suppliers/contractors for their performance during FY 2016-17 under differentcategories.
During the year a number of important transmission projects have beencommissioned/completed which inter-alia include:-
800 kV Champa - Kurukshetra HVDC Bi-pole-l(Pole-I) link
Pole-II & III of 800 kV Biswanath Chariyali/Alipurduar - Agra HVDC mutliterminal transmission systems
765 kV double circuit (D/c) Wardha - Nizamabad line
765 kV D/c Gaya- Varanasi line
765 kV D/c Varanasi - Kanpur - Jhatikara line
765 kV D/c Angul - Srikakulam line
765 kV D/c Srikakulam - Vemagiri line (TBCB)
765 kV D/c Raipur - Wardha (2nd) line
765kV D/c Tuticorin - Salem (charged at 400 kV)
400 kV D/c Ranchi - Chandwa - Gaya line.
In the FY 2016-17 the Company continued to show sustained performance in all itsbusiness areas enhancing the value for the shareholders. Your Company has achieved TotalIncome of '26581.46 crore and net profit of '7520.15 crore.
Capital Investment and Fund Mobilization
Your Company made a capital investment (CAPEX) of ' 24429 crore during the year2016-17. For the CAPEX of FY 2016-17 ' 14806 crore was mobilized through privateplacement of bonds & term loan '3037 crore was mobilized through External CommercialBorrowings (ECB)/Suppler credit and '6586 crore was utilized from Internal Resources.
During recent years for financing of CAPEX POWERGRID has mobilized funds frominternal sources and successfully arranged borrowing from domestic as well externalsources at most competitive prevailing rates. The major source of borrowing is privateplacement of domestic bonds. For financing of CAPEX POWERGRID had also tapped othersources which includes commercial bank loans Supplier credit and sovereign guaranteedloan from multilateral funding agencies (ADB World Bank).
As per Central Electrical Regulatory Commission (Sharing of inter-State TransmissionCharges and Losses) Regulations 2010 the Company has been assigned the responsibilityfor carrying out the activities such as raising of transmission charges bills on behalf ofall Inter-State Transmission System (ISTS) Licensees collecting the amount anddistributing the same to them.
Your Company is fulfilling the assigned responsibilities effectively and achievedcollection efficiency above 99% for FY 2016-17.
DEVELOPMENT OF NATIONAL GRID
Towards the strengthening of National Grid a number of inter-regional transmissionlines have been commissioned and more such lines are under construction. In FY 2016-17800kV Champa Pool - Kurukshetra HVDC Pole-I of Bipole-1 (1500MW) Angul-Srikakulum 765kVD/c Wardha - Nizamabad 765kV D/c and 800kV Biswanath Chariali - Agra multi terminalHVDC transmission line with new HVDC terminal at Alipurduar with 1500 MW capacitytransmission systems have been completed. As a result cumulative inter-regional powertransfer capacity of the National Grid has been enhanced from 57450 MW to 75050 MW(about 30% growth) during the FY 2016-17. By the end of 2021-22 the inter-regional powertransfer capacity of the National Grid is likely to be enhanced to about 118000 MW.
The enhancement of transmission capacity due to above inter-regional links hasaugmented pan-India electricity market and during FY 2016-17. Further more than 138billion units (BUs) inter-regional energy transfer was facilitated across the nationwhich is an increase of about 18% over the previous year.
CONNECTIVITY MEDIUM TERM OPEN ACCESS (MTOA) & LONG TERM ACCESS (LTA)
Your Company as Central Transmission Utility (CTU) is the nodal agency for processing& grant of Connectivity Long Term Access (LTA) and Medium Term Open Access (MTOA) tovarious applicants. Relevant regulations procedures guidelines and related documents forConnectivity MTOA and LTA applications and status thereof are available online on ourwebsite.
As of March 31 2017 the Company has granted Connectivity to 136 nos. of eligibleapplications for a quantum of 95800 MW and LTOA/LTA to 204 nos. applications for aquantum of 99260 MW. In addition based on the transmission capacity marginsavailability the MTOA has also been granted to 106 nos. of applications for a quantum of12204 MW cumulative capacity.
The Quality Management System in the Company is an enabler for best practises builtaround the philosophy of prevention rather than detection. To ensure quality whileprocuring goods at competitive prices a lot of effort has been put on quality assuranceand various quality improvement measures have been initiated and implemented to get betterquality products.
During FY 2016-17 Smart inspections amounting to approx ' 20000 crore worth ofmaterial/equipment were carried out to enable record asset capitalization during the year.
With target to move towards zero product inspection as per POWERGRID qualitypolicy inspections at some of the manufacturing units of towers conductor cablestransformer oil etc. have been reduced after thorough process audits at works as perstandardized guidelines. Saved man-days were used for process audits at othermanufacturing units for system improvements. This has contributed to whole sector as such.
Rigorous Field Quality Audits were carried out during the year from CorporateCentre as well as at Regional level to ensure strict implementation of Field QualityPlans. This has ensured better awareness better response from executing agencies andtimely corrective actions. An independent team for Field Quality Assurance has been formedat Corporate Centre to take various preventive and pro-active actions.
'Make in India' initiative has been given a great push during the period. Mostof 765kV Class Transformers/ Reactors and even some of GIS equipment/STATCOM/SVC arepresently being supplied indigenously.
A number of Micro Small & Medium Enterprises have been developed assub-vendors and approved in India for supply of components for various equipmentincluding for new factories set up which in turn have resulted in employment generationin the country.
The Company in association with MSME Development Institute Okhla New Delhiorganised "National Vendor Development Programme cum Industrial Exhibition for Micro& Small Enterprises for the benefit of MSME sector and thereby promote "Make inIndia" objective of the Govt. of India.
Developed and maintained systems and procedures aligned with integratedmanagement system comprising ISO 9001 for Quality Management System ISO 14001 forEnvironmental Management System and OHSAS 18001 for Occupational Health and SafetyManagement System. The certification has been maintained after rigorous audits by BSIGroup India. Systems were also audited for maintenance of Social Accountability standardSA 8000 Energy Management Systems as per ISO 50001 and for Information SecurityManagement Systems as per ISO 27001.
ENTERPRISE RESOURCE PLANNING
Project "RUPANTAR" the Enterprise Resource Planning (ERP) initiative of theCompany has been implemented successfully and the processes and systems have beenstabilized in all the regions of the Company. Presently majority of the key processesrelated to the business are running on ERP. E-tendering for the domestic bids has alsobeen taken up in ERP system on pilot basis. In order to provide stability and reliabilityto ERP system a Disaster Recovery Centre has been established at Bangalore.
Your Company is always at the forefront for adopting latest advancement in technologyas well as carryout applied research and development activities in pursuit oftechnological excellence in power transmission. Notable amongst them during FY 2016-17 arethe prestigious 1200kV National Test Station utilization of Geographic Information SystemTools and the application of Process Bus Technology in Substation Automation System.
1200kV National Test Station
Your Company has successfully commenced power flow through 1200kV National Test Stationin the month of May 2016. For this project of national importance the Company hascollaborated with Indian equipment manufacturers for getting the 1200kV equipmentdeveloped which have been presently installed charged at 1200kV voltage and loaded atthe test base in Bina Madhya Pradesh for long term field operation and performancemonitoring.
Geographic Information System Tools
Your Company has initiated utilizing Geographic Information System Tools like Bhuvan onpilot basis for mapping its transmission assets for route alignment during planning ofnew transmission lines and for disaster management studies.
Your Company has established an Innovation portal wherein a platform is provided to allits employees to put forth their new and innovative ideas related to technology andmanagement. These ideas are reviewed by the top level management so as to assess thetechno-economic feasibility and benefits.
Process Bus Technology
Gaining experience from the pilot projects on Process Bus Technology at Bhiwadi andNeemrana the Company has initiated the project at Malerkotla substation for retrofittingconventional protection and control schemes with advanced automation systems. The newscheme is expected to ease the maintenance and troubleshoot in future and also restorationtime will be extremely low in case of any eventuality. Also the replacement of largeamount of copper cables with minimal fiber optic cables is expected to optimize spacerequirement.
Your Company continues its journey of delivering value to its stakeholders throughapplications of intelligent technologies towards Smart Grid. Your Company is continuouslyenhancing its abilities through in-house research & demonstration projects in thefield of Smart Grid & Energy Efficiency. It has been continually adding advancedattributes to the utility projects to bolster the success story in the above fields. SmartGrid vertical is expanding its customer base and new projects are getting added makingSmart Grid a promising business area in future.
Your Company has garnered valuable experience in implementation of Smart Gridapplications in last few years and presently providing consultancy for nine (9) projectscovering distribution infrastructure advanced metering infrastructure intelligent outagemanagement electric vehicle charging stations power quality management distributedgeneration net metering etc. Your Company is closely associated with implementation ofSmart Grid at Varanasi & Gurgaon as part of Government's endeavour towards Smart Citydevelopment.
Towards smart transmission your Company is implementing Phasor Measurement Unit (PMU)based Unified Real Time Dynamic State Measurement (URTDSM) project integrating all Stateand Central grids for Wide Area Measurements (WAMS). In addition analytics using PMU dataare being developed in association with IIT Bombay. Synchronized measurements integratedwith high end analytics will facilitate improved monitoring visualization and enhancedsituational awareness of the grid events on real time towards grid reliabilityimprovement.
Your Company is also exploring new opportunities towards implementation of charginginfrastructure for Electric Vehicles as well as venturing into Smart City projects.
Integration of Renewables
Your Company is playing a key role for integration of renewable energy resources intothe grid. A high capacity Green Energy corridor is under implementation by your Companywhich will serve dual purpose to facilitate interconnection of large scale renewable intothe National grid as well as enlarging the balancing area to address renewable volatility.In addition transmission schemes for 7200 MW Ultra Mega Solar Power Parks worth ' 4300crore are also under implementation in various states as part of Green EnergyCorridors-II. Apart from Green Energy Corridor implementation and grid-integration ofultra-mega solar parks it has established country's first grid interactive energy storagepilot project with different battery technologies. The findings of the energy storageproject would be helpful in its large scale deployment to address intermittency andvariability of renewable generation.
Your Company is taking up the challenging and flagship responsibility of establishmentof maiden Renewable Energy Management Centers (REMC) at 11 (eleven) locations in variousRE resource rich state viz. Tamil Nadu Andhra Pradesh Karnataka Maharashtra GujaratMadhya Pradesh Rajasthan regional load dispatch centers at SR WR NR as well as atNational Load Dispatch Centre. This would enable forecasting of renewable resources andefficient management of variable renewable generation ensuring grid stability &security. Upon implementation of REMCs by POWERGRID they will be handed over torespective owners i.e. State LDC/POSOCO.
Your Company has taken a lead role in identification of Energy Efficiency businessopportunities by way of carrying out Energy Audits of various heavy and medium industriesinstitutions commercial establishment municipalities and other water management systemsof canals & irrigation departments. Energy audits undertaken and efficiency measuressuggested by the Company shall enable prevention of CO2 emissions and defer capacityaddition requirement.
Your Company is also a BEE Grade-I Energy Service Company (ESCO) for undertaking energyefficiency projects in various industries and other third party consultancy for baselining work.
Indian power industry is in the age of revolutionary transformations and extensiveadvancements. Equipped with approximately 90 Energy Auditors/Energy Managers your Companyis well prepared to stand as a key enabler in the challenging environment by offeringEnergy Efficiency Solutions. Recently Distribution Companies have been added underPerform-Achieve-Trade (PAT) scheme of GoI. Your Company being one of the pioneers inTransmission Sector and is also dealing in Distribution Sector through RuralElectrification Program of GOI can provide Energy Audits and Energy Efficiency Solutionsin Distribution Sector.
'POWERTEL' - TELECOM SERVICES ON TRANSMISSION INFRASTUCTURE
The Company has been creating value to its shareholders by leveraging its country widetransmission infrastructure for telecom business under the brand name 'POWERTEL'. Theexisting National Long Distance (NLD) and Internet Service Provider - Category 'A'(ISP-'A") licenses have been migrated to Unified License for providing telecomservices.
The Company has established itself as an important player in providing telecombandwidth Virtual Private Network (VPN) internet and other communication services toTelecom Service Providers and enterprise customers. Major achievements during the FY2016-17 are as under:
|Parameter ||End of FY 2015-16 ||End of FY 2016-17 ||% Change |
|Total network Coverage ||36563 km ||41988 km ||(+) 14.8% |
|Number of points present (PoPs) ||595 ||662 ||(+) 11.26% |
Telecom Backbone Availability for the FY2016-17 was 99.9%.
National Knowledge Network (NKN)
Under NKN project devised by Govt. of India which connects knowledge centres acrossthe Country such as Indian Institutes of Technology (IITs) Indian Institute of Science(IISc) etc. on a high speed connectivity 36 links of 10 Gbps each 114 links of1Gbps/100 Mbps and 450 links 100 Mpbs / 1 Gbps have been implemented.
National Optical Fibre Network (NOFN)
As a part of digital India initiative of the Govt. to connect 250000 Gram Panchayats(GP) in the Country by utilizing existing fibres BSNL Railtel & POWERGRID are layingoptical fibre cables to connect to Gram Panchayats wherever necessary. In the revisedscope the Company has been allotted work for development of NOFN network in States ofAndhra Pradesh Telangana Himachal Pradesh Jharkhand & Odisha by Bharat BroadbandNetwork Limited (BBNL) covering about 36000 GPs. Upto the FY 2016-17 6699 GPs have beenconnected through incremental fiber. Further 4454 GPs have been connected End to End andbroadband is operational in 1133 GPs.
Multiprotocol Label Switching (MPLS) System
Connectivity to Enterprise Segment Customers is provided on POWERGRID's MPLS Cloud.POWERGRID provides both Layer-2 and Layer-3 VPNs with port capacity ranging from 2Mbps to10Gbps. POWERGRID also provides reliable Internet Connectivity solutions over its Internetcloud of different capacities ranging from 2Mbps to 1Gbps. POWERGRID is peered with globalcontent providers for providing IP Transit services to ISPs. The IP Transit servicereduces cost and enhances service quality of hosted content for ISPs and in turn enablesthem to offer better internet services at lower price to their users. Company's extensivebackbone telecom network with its local access partners has eliminated the locationdisadvantage of small towns towards accessibility and affordability of high speedinternet. It has the potential to bridge the so called digital divide and be a changeagent towards realizing the vision of "Digital India". Towards this MPLS VPN /Internet deals have been signed with a number of important domestic customers.
BUSINESS DEVELOPMENT & CONSULTING SERVICES
Your Company has developed the expertise in its core areas of power transmissionsub-transmission distribution management load dispatch and communication (LD&C)Smart grid etc. Leveraging its capacity and experience as a consultant the Company isexecuting works with a project cost of '17000 crore on pan-India basis.
During FY 2016-17 the Company has achieved domestic consultancy revenue of ' 582.43crore which is 25% higher w.r.t. previous years revenue of ' 465.46 crore.
During 2016-17 26 nos. Consultancy assignments have been acquired on domestic fronthaving estimated Project cost of ' 1500 crore. Some of the major assignments baggedinclude Railway track electrification works for four different Zonal Railways &Techno-managerial services for implementation of 220kV & 132kV transmission system forRailways.
Presently Track Electrification of 761 rkm (with ' 890 crore estimated project costunder Central Railway East Central Railway South East Central Railway & South WestRailway) has been entrusted to POWERGRID in Nov'16. Actions for award of works andexecution thereafter on all four sections under different Railways zones have beentaken-up with active co-operation from Indian Railways. It is expected that successfulexecution of these electrification works by POWERGRID shall pave the way for getting moresuch consultancy business from Indian Railways keeping the long term railwayselectrification targets in India and shall further add to existing consultancy orderbasket.
Further the Company is also providing consultancy services to Railways for numeroustransmission lines and substations (with estimated approximately project cost of about '358 crore) for providing up-stream transmission connectivity for traction substations ofRailways.
POWERGRID is executing Govt. of India's important projects in difficult geographicterrain areas of NER and State of J&K.
North Eastern Region Power System Improvement Project (NERPSIP)
POWERGRID is implementing transmission and distribution works under NERPSIP in statesof Assam Meghalaya Manipur Mizoram Nagaland & Tripura which is being funded by GOIand World Bank (50:50 Basis) at a sanctioned cost of ' 5111.33 crore. The projectenvisages construction of 34 nos. new EHV sub-stations along with 2114 km. of EHVtransmission lines and 85 nos. new Distribution Sub-stations along with 1891 km. of 33 kVtransmission lines.
Comprehensive Scheme for Strengthening of Transmission & Distribution System forArunachal Pradesh & Sikkim
POWERGRID is implementing transmission & distribution works under ComprehensiveScheme for Strengthening of T&D system- Arunachal Pradesh & Sikkim which is beingfunded by GOI at a sanctioned cost of ' 4754.42 crore. The project envisages constructionof 43 nos. New EHV sub-stations along with 2493 km. of EHV transmission lines and 70 nos.new distribution substations along with 1923 km. of 33kV transmission lines.
Connectivity of Leh/ Kargil Area with NR Grid at 220 kV level
To provide grid connectivity and reliable power supply to the strategically importantLadakh region Govt. of India's 220kV Srinagar - Drass - Kargil - Khalsti - Leh Line &associated system is being implemented by POWERGID on consultancy basis at a sanctionedcost of about '1788 crore.
In addition other important consulting assignments under implementation includestrengthening of transmission network in Delhi and execution of transmission system forevacuation of power from Lalitpur power plant of Uttar Pradesh.
On the International front your Company has so far established footprints in 19countries. At present a total of 14 projects are going-on in various countries.
A Memorandum of Co-operation with Norwegian Centre of Expertise (NCE) - Smart EnergyMarkets has been signed by the Company which envisages cooperation between NCE Norway andPOWERGRID to work in fields of Smart Grid Capability development and other related areas.
Also the Company signed a Contract Agreement with Fiji Electricity Authority forConsultancy Assignment for Design and Preparation of Tender Specification for theconstruction of the 132kV Transmission Line 132kV Switching Station and 132/33kVsubstation in Fiji.
The Company signed an MoU with Abu Dhabi Water & Electricity Authority (ADWEA). TheMoU inter-alia envisages cooperation between ADWEA & its group companies and POWERGRIDto work in areas like smart grid EHV transmission technologies etc. & providingcapability development and training in the fields of Operation and Maintenance PowerTransmission and Distribution. POWERGRID shall also assist ADWEA in setting up an advanced'World Class Capability Development Institute in UAE.
Under the Indian Technology and Economic Co-operation (ITEC) scheme of MEA GoI atotal of sixty International / African participants are proposed to be trained in thecalendar year 2017. With this platform POWERGRID is likely to forge long term relationsand acquaintances with decision makers and other executives from International Utilities.Apart from getting regular business for POWERGRID Academy of Leadership (PAL) thisopportunity will also showcase Company's capacity building prowess in Internationalmarkets to secure further International Business in Consultancy /EPC contracts.
The electrical interconnections with neighbouring countries Nepal Bhutan andBangladesh are being further strengthened for increased exchange of power. Some of theupcoming and planned interconnections are as under:
Between India and Nepal
Gorakhpur New (India) - New Butwal (Nepal) 400kV D/c (Quad) line - Planned
Between India and Bhutan
For evacuation of power from various upcoming hydro power projects (HEPs) inBhutan Punatsangchu-I HEP (Bhutan) - Alipurduar (India) and Jigmeling - Alipurduar 400kVD/c (Quad) lines - under implementation.
Between India and Bangladesh
Baharampur (India) - Bheramara (Bangladesh) 400kV D/c 2nd line -under implementation
Katihar (India) - Parbotipur (Bangladesh) - Bornagar (India) 765 kV D/c line (tobe initially operated at 400 kV) along with 500 MW HVDC Back-to-Back terminal atParbotipur (another 500 MW terminal would be installed with 765 kV operation of the line)- Planned.
CONTRIBUTION IN DISTRIBUTION REFORMS
Rural Electrification (RE)
Under Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) scheme for rural electricityinfrastructure and household electrification your Company has been executinginfrastructure work for rural electrification.
During FY 2016-17 infrastructure was created for electrification in 4365 nos. ofpartially electrified / un-electrified villages. Service connections were provided toabout 77000 BPL households. Cumulatively till March 2017 infrastructure has beencreated for electrification of about 79000 villages in 70 districts of 9 states. Furtherservice connections have been provided to about 37.5 lakh BPL households cumulatively.
Presently RE work in Uttar Pradesh (UP) and Odisha assigned to POWERGRID under XI PlanPhase-II/ XII Plan are under implementation. In Odisha RE work in 15 districts at anestimated cost of around ' 1800 crore involving electrification of about 11900 villages(Un-electrified villages-590 and Partially electrified villages 11307) and providingservice connections to about 3 lakh BPL households is under progress and expected to becompleted by March'18. In UP RE work of 4 districts at an estimated cost of around ' 500crore is expected to be completed by Dec.'17.
Integrated Power Development Scheme (IPDS)
The implementation of IPDS work in Old Kashi area of Varanasi Town assigned byPurvanchal Vidyut Vitaran Nigam Limited (PuVVNL) involves conversion of existing overheaddistribution network to underground and connecting to existing consumer connection to thenew underground system. So far 1000 km cabling work has been completed out of total scopeof 1340 km. Further 30000 consumers have also been connected to the new undergroundsystem.
OUR PEOPLE OUR STRENGTH
Talent Acquisition & Development
Your Company places human resource as key to its growth. During the year 2016-17profit per employee has been increased to ' 80.46 lakh from ' 65.68 lakh in previous year.Also during the year circuit kilometer per employee and MVA per employee have gone up to14.86 ckm &
30.87 MVA from 14.25 ckm & 28.15 MVA respectively in previous year.
Human Resource Development through its training development interventions have played akey role to upgrade the workforce to adopt new technologies systems and practices andmake the workforce ready to face the future challenges.
In the year 2016-17 the Company has conducted organisation wide training programmes andother systems & process development interventions based on Organisation NeedAssessment (ONA) & Competency Based Training Needs Assessment (CBTNA). To this endthe Company has provided training to its employees in-line with National Training Policy.
As a part of system upgradation this year in consultation with the experts from allbusiness verticals across the Company the functional and behavioural competencies wereupdated. The online training portal has also been upgraded to capture functional &behavioural competencies and the same were validated at two levels through onlineworkflows.
Competencies were revisited & customised training basket was offered online toemployees to capture their relevant training choices.
Considering the vast number of projects including of joint ventures and subsidiariesbeing executed by POWERGRID skills sets of employees of POWERGRID and stakeholders arebeing upgraded on continuous basis. Notably the Company is providing training for policyprocedures & system up gradation to power utilities in North Eastern Region.
POWERGRID Academy of Leadership (PAL) a state-of-the-art world-class Institute atManesar has been providing a wide range of training including induction hands-onmanagerial and behavioural programs to employees in POWERGRID and various power utilitiesat national and international levels.
Appreciating the notable people practices the Company has been recognized as one ofthe India's Best Companies to Work by the Great Place to Work Institute and its rank hasbeen upgraded to 31 from last year 58 out of 700+ companies. It has also been conferredwith 'Innovative Training Practices' award by ISTD.
The Company is continuously working on formulating new welfare policies and amendingthe existing ones to meet the changing needs for its employees. Issues related to workmenare successfully addressed through the National and Regional Bipartite Committee(PNBC/PRBC) a joint consultative forum comprising management and workmen representatives.Cultural Programmes are regularly conducted for promoting healthy community living.Various festivals like Diwali Holi New Year Raising Day etc. are celebratedcollectively by organising Milan Samaroh cultural activities etc.
The Company also organises Intra & Inter-regional Sports Competitions for KabaddiCricket Volleyball Chess and Badminton etc. and participates in the Inter-PSU Sportsmeets as well. Your Company's team has emerged winners in Table Tennis NationalManagement Games and other sports meets and bagged a number of awards.
The 3rd International Day of Yoga was celebrated in all offices of POWERGRIDby organising practise sessions and behavioural sessions through informative talks onYoga. Employees and their families participated in large numbers and benefited.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibitions and Redressal) Act 2013 and Rules made thereunder the company hasconstituted Internal Complaint Committee (ICC) to redress complaints received regardingsexual harassment. POWERGRID has been conducting training / workshop both for male andfemale about issues and law pertaining to Sexual harassment. Last year POWERGRID hasconducted 07 such training programmes across the organization covering 189 employees.During the F.Y. 2016-17 two complaints of Sexual harassment have been received and thesame have been disposed.
Citizen's Charter has been formulated for the Company providing a visible front of itsvision mission objectives Company profile commitments expectations from citizensIntegrated Management Policy services offered values and standards of services accessto information and grievance redressal. The updated Citizens' Charter is available onPOWERGRID website.
IMPLEMENTATION OF OFFICIAL LANGUAGE (RAJBHASHA)
In pursuance of Govt. of India's Rajbhasha Policy to promote Indian languages andRajbhasha 'Hindi' it has made all round efforts to integrate and promote use of Hindi inits works at all levels. POWERGRID has proved its commitment to ensure the implementationof Rajbhasha.
To ensure the increased use of Official language various activities such as AnuvaadAbhyaas Karyakram (Translation Practice Programme) Workshops Trainings motivationalprogrammes are organized at every unit of the Company. Computer trainings are beingimparted to enhance the working knowledge in Hindi on computers. Hindi classes are alsobeing organized for non-Hindi speaking employees through Hindi Teaching Scheme. Lectureson heritage social and cultural concerns are also being delivered by eminent scholars onregular basis to change the mindset of the employees for working in Hindi.
Various activities are undertaken to publicize Hindi. Every year Akhil BhartiyaRajbhasha Sammelans Kavi Sammelans (Poetry sessions) Plays publication of monthlyarticles in Hindi via emails Sending wishes/informations via Hindi SMS on differentoccasions such as Hindi Diwas Diwali Holi and Eid etc. are most prominent among those.Also various competitions throughout the year with special emphasis during HindiPakhwada along with departmental meetings as well as OLIC meetings are also beingconducted. Your Company has established one of the best Hindi libraries at CorporateCentre along with 100 other Hindi Libraries at various establishments of the Companywhere popular/literary Magazines and News Papers have been made available for theemployees.
Attractive incentive schemes for employees working in Hindi have been implemented asper the government guidelines. Also various awards and reward schemes have beenintroduced to encourage employees to actively participate in promotion of Hindi bycontributing to articles/write-ups for in-house magazines reading library books etc.
The effort made by the Company has been applauded in several forums during the year2016-17 which includes Rajbhasha Shields consecutively for two years at the annual meet ofHindi Advisory Committees convened by MoP on 08.01.2017. Various awards have been given bydifferent Town Official Language Implementation Committee (TOLICs) under the aegis ofMinistry of Home Affairs Govt. of India regarding best Implementation of OfficialLanguage. Also POWERGRID's efforts were applauded during various inspections anddiscussions done by Hon'ble Committee of Parliament on Official Language on differentoccasions.
RIGHT TO INFORMATION
In order to promote transparency and accountability an appropriate mechanism has beenset up across the Company in line with 'Right to Information Act 2005'. Your Company hasnominated CPIO/ Appellate Authorities at its Corporate Office and Regional offices acrossthe Country to provide required information to the citizens under the provisions of Act.In FY 2016-17 all 346 RTI applications received were disposed of timely. The variousappeals received under the Act were also addressed suitably.
COMMITMENT TO TRANSPARENCY & VIGILANCE FUNCTION
Your Company advocates the principles of Good Governance Transparency Probity andEthics in its management functioning. The Vigilance Department of POWERGRID functions asan integral part of the management. The department ensures that best ethical practices arefollowed in the organization.
Emphasis on Preventive Vigilance
Although the Vigilance Department performs preventive proactive as well as punitivefunction to strengthen the organizational process and to minimize the malpractices in thevarious systems and activities of the organization the main emphasis is laid onpreventive and proactive vigilance. While Preventive Vigilance focuses on whether theright type of systems exist or need to be re-engineered proactive vigilance aims at theidentification of opportunities and in taking pro-active action against potential threats.During the period 40 Surprise inspections and 50 CTE Type inspections/Process-on-lineinspections were conducted. Pursuant to Vigilance inspections andobservations/recommendations many System Improvements in various functions of theorganisations have been taken up.
Preventive Vigilance Workshops as part of Capacity Building: As part of CapacityBuilding Workshops on Preventive Vigilance were conducted at the Corporate Centre as wellas at various Regions of the Corporation. During the period 20 Preventive workshops wereconducted for 579 non-vigilance executives. Also 6 RTI Workshops were organized for 175employees of the Corporation. The Preventive Vigilance Workshops contain module of EthicsManagement which enable the employees to identify and deal with ethical problemsdeveloping their moral intuitions which are implicit in everyday choices and actions.
Vigilance Awareness Week 2016: As per the directive of the Central VigilanceCommission this year the Vigilance Awareness Week was organized in POWERGRID from 31stOctober to 5th November 2016. The weeklong activity started with theadministration of pledge to all employees by CMD CVO and all Directors. Theorganization's website was used to propagate the message and also to encourage theemployees to participate in the e-pledge. Eminent speakers were invited including Dr.T.M. Bhasin Vigilance Commissioner who addressed the employees at POWERGRID CorporateCentre and also inaugurated the in-house journal of the Vigilance Department 'Candour' onthe occasion.
During the Vigilance Awareness Week 2016 vendors' meets were organized and suchmeets/camps were utilized for interaction with the vendors and taking feed-back from them.POWERGRID organized events in 121 colleges and 115 schools across the country. At manyrural areas Gram Sabhas were also organized as directed by the Central VigilanceCommission to spread the message of the Commission. The media like Doordarshan NewsChannels FM Radio channel were also engaged to disseminate the message of the Commissionin encouraging citizens to take the Integrity Pledge. POWERGRID also organized streetplays by engaging reputed theatre groups to propagate the theme of the Commission.Simultaneously at many places roadshows were also organized involving employees and theirfamilies and in many places involving school and college students.
ENVIRONMENT AND SOCIAL MANAGEMENT
POWERGRID being a responsible corporate entity always endeavours to protect andconserve environment in areas of its activities from inception to operation stage. Itdeveloped a comprehensive Environmental and Social Policy & Procedures (ESPP) in 1998and has upgraded the same from time to time in line with the international bestpractices to pre-empt possible environmental and social issues. Recently AsianDevelopment Bank (ADB) accepted POWERGRID's ESPP under its policy of "CountrySafeguard System" (CSS) as the first organization in the Asia whose safeguard systemhas been recognized to match international good practices. The World Bank too has accordedits acceptance for ESPP under their policy of Use of Country System (UCS) in 2009. Withthis POWERGRID has now attained the unique distinction of becoming the first organizationin the world whose safeguard policy (ESPP) has been accepted by two major multilateralagencies viz. The World Bank & ADB.
POWERGRID is also pioneer in the field of Sustainability Reporting in the Indian PowerSector published its 3rd biennial Sustainability Report in September 2015.This report also attained the highest possible rating of "A+" and alsoexternally assured by accredited assurance provider M/s Intertek India Private Limitedbased on Global Reporting Initiative (GRI-G3) guidelines including Electric UtilitiesSector Supplement (EUSS) and International Standards like Accountability UK Standard AA1000 APS (2008) and AA1000 SES (2011). The 4th such report is under preparationfollowing the GRI-G4 guidelines.
POWERGRID is fully conscious of the need to conserve natural resources and avoidsforest ecological sensitive areas like Wildlife Sanctuaries/ National Parks/BiosphereReserves and Coastal Regulation Zone areas as far as possible through optimization ofroute alignment. Through careful route selection POWERGRID completely avoided NongkhyllemWildlife Sanctuary in Meghalaya for 220kV D/c Byrnihat-Mawngap-New Shillong line underNERPSIP. However in case of 765kV D/c Bhuj - Banaskantha line where avoidance of Wild AssSanctuary in Gujarat couldn't be possible due to its strategic location and sizePOWERGRID carried out Biodiversity Assessment Studies by Independent Experts andimplementing specific mitigation measures to minimize adverse impact onwildlife/biodiversity of areas. Following the basic principle of avoidance &minimization involvement of forest has been reduced progressively from 6% in 1998 to2.26% at present. However in some cases where involvement of forest area becomesunavoidable forest clearance is obtained under Forest (Conservation) Act 1980.
Apart from above the Company has taken various initiatives to fulfil its commitmenttowards the goal of sustainable development and to address the possible environmentalexternalities associated with its business processes. Key initiatives in this regard are:
Design & Installation of innovative towers such as multi-circuit & poletowers in lines have not only conserved the precious Right of Way
(RoW) but also substantially reduced felling of trees as well as facilitatedconservation of wildlife in ecologically sensitive areas.
Installation of Gas Insulated Switchyard (GIS) instead of Air InsulatedSwitchyard (AIS) in the vicinity of habitation/town areas substantially reduce landrequirement and also helped in conservation of precious land resource.
Rain Water Harvesting in all new substations not only conserved precious waterresources but also enhanced ground water table in the areas of near vicinity.
Installation of LED bulbs & solar street lighting in substation fuelcatalysts devices for DG sets etc.
Installed a 40kWp Solar PV System at RHQ Building Nagpur in addition to 50kWpSolar PV System at Gurgaon Office Complex resulted in reduction of about 47 tons of CO2annually.
Also more than 15000 trees were planted in 175 locations.
The Company is providing professional and financial support to Varanasi NagarNigam for efficient and effective collection storage transportation system anddecentralized composting for MSW Waste in 25 wards of Varanasi.
Renovation of village ponds.
Using fly ash bricks wherever possible for construction of new buildings.
Procurement from Micro & Small Enterprises (MSEs)
The Government of India has notified a Public Procurement Policy for Micro and SmallEnterprises (MSEs) Order 2012. In terms of the said policy the total eligible value ofannual procurement of goods produced and services rendered by MSEs (including MSEs ownedby SC/ ST entrepreneurs) during financial year 2016-17 was ? 3410 Crore. The totalprocurement form MSEs (including MSES owned by SC/ST entrepreneurs) was ? 777 Crore(22.79%).
Total eligible value of annual procurement of goods produced and services rendered byMSEs (including MSES owned by SC/ST entrepreneurs) for financial year 2017-18 is projectedto be in the range of ? 1000 Crore.
For enhancement of procurement from MSEs annual procurement plan along with otherrelevant details related to procurement from MSEs are uploaded on POWERGRID's website forbenefits of MSEs. Further to look into and address the grievances/concerns raised by anyMSEs a high level committee is also in place in the organization. A nodal officer is alsodesignated to look into the aspects related to procurement from Micro & SmallEnterprises owned by SC/ST Entrepreneurs.
Your Company has been participating and organizing MSEs related programmes on regularbasis.
MANAGEMENT DISCUSSION AND ANALYSIS
In addition to the issues in the Directors' Report some issues have been brought outin report on Management Discussion and Analysis placed at Annexure-I.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as stipulated under Regulation 34 (2) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is given inAnnexure-II and forms part of the Annual Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As per requirements of disclosures under Section 134(3) (m) of Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 information relating to conversationof energy technology absorption and foreign exchange earnings and outgo information isgiven in Annexure-III to this Report.
RISK MANAGEMENT POLICY
Information on Risk Management Framework is covered in the Management Discussion andAnalysis Report at Annexure-I of this Report.
INTERNAL FINANCIAL CONTROLS AND ADEQUACY
The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its businesses including adherence to the Company's policies the safeguardingof its assets the prevention and detection of frauds error reporting mechanism theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial disclosures.
STATUTORY AUDITORS OF THE COMPANY
The Statutory Auditors of your Company are appointed by the Comptroller & AuditorGeneral of India. M/s S. K. Mittal & Co. M/s R. G. N. Price & Co. M/s Kothari& Co. and M/s Parakh & Co. were appointed as Joint Statutory Auditors for thefinancial year 2016-17.
The Statutory Auditors have given an unqualified report. The report is self-explanatoryand does not require any further comments by the Board.
COMPTROLLER AND AUDITOR GENERAL'S COMMENTS
Company has received 'NIL' comments on the accounts for the year ended March 31 2017by the Comptroller and Auditor General of India under Section 143(5) of the Companies Act2013. Copy of the same is attached in Annexure - IV to this report.
Kumar Naresh Sinha & Associates Practising Company Secretary has conductedSecretarial Audit of the Company for the financial year ended March 31 2017. The report& observations of the Secretarial Auditor and Explanation by the Board thereon formspart of this Annual Report (Annexure-V).
COST AUDITORS OF THE COMPANY
Your Company appointed M/s K. G. Goyal & Associates Cost Accountants and M/s R. M.Bansal & Co. Cost Accountants as Cost Auditors for the Financial Year (FY) 2016-17under Section 148 of the Companies Act 2013.
The Cost Audit Reports for the FY 2016-17 will be filed with the Cost Audit BranchMinistry of Company Affairs before due date i.e. September 27 2017.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134 (3) (a) of the Companies Act 2013 an extract of theannual return in the prescribed format in MGT-9 is given as Annexure VI of this Report.
Your Company's composition of Board of Directors underwent some changes during the year2016-2017. During the year Shri K. Sreekant assumed the charge of Director (Finance) witheffect from 1st September 2016. Shri R. T. Agarwal demitted the office ofDirector (Finance) on 31st August 2016 upon attaining the age ofsuperannuation. The Board placed on record appreciation and gratitude to Shri R. T.Agarwal for the significant contribution and support to the Company extended as Director(Finance).
Shri Prabhakar Singh assumed the charge of Director (Projects) with effect from 8thFebruary 2017. Prior to his appointment Shri R. P. Sasmal Director (Operations) washolding additional charge of Director (Projects).
Shri Tse Ten Dorji and Smt. Jyotika Kalra were appointed as non-official part timeDirectors (Independent Director) w.e.f. 16th February 2017. Smt. JyotikaKalra consequent to her appointment as member of the National Human Rights Commissionhas resigned from the post of Independent Director with effect from 6th April2017.
Smt. Jyoti Arora and Dr. Pradeep Kumar on being relieved from the Ministry of Power on5th July 2017 (A/N) and 31st July 2017 (A/N) respectively haveceased to be Directors on the Board of POWERGRID in terms of Article 31(iv) of theArticles of Association of POWERGRID. The Board placed on record appreciation andgratitude to Smt. Jyoti Arora and Dr. Pradeep Kumar for their contribution and support tothe Company.
Ministry of Power vide its Order No. 25-11/4/2017-PG dated 3rd August 2017has conveyed the appointment of Smt. Shalini Prasad Additional Secretary Ministry ofPower as Part-time Director (Government Nominee Director) in place of Smt. Jyoti Arora.
In accordance with the provisions of Section 160 of the Companies Act 2013 read withArticle 31(iii) of the Articles of Association of the Company Shri Ravi P. SinghDirector (Personnel) shall retire by rotation at the ensuing Annual General Meeting ofyour Company and being eligible offers himself for re-appointment.
NUMBER OF MEETINGS OF THE BOARD
Board of Directors met 13 times during the financial year 2016-2017. Details regardingdates and attendance of the Board meetings are provided in the Report on CorporateGovernance which forms part of this report.
COMMITTEES OF THE BOARD
POWERGRID's has Audit Committee CSR Committee and other Committees. The compositionand scope of the Committees are provided in the Report on Corporate Governance.
A report on the Corporate Governance (Annexure-VII) forming part of this reporttogether with the Certificate thereon is given in Annexure- VIII to this Report.
DECLARATION BY INDEPENDENT DIRECTORS
During the year all the Independent Directors have met the requirements specifiedunder Section 149 (6) of the Companies Act 2013 for holding the position of 'IndependentDirector' and necessary declaration from each Independent Director under Section 149 (7)was received.
PERFORMANCE EVALUATION OF DIRECTORS
Ministry of Corporate Affairs (MCA) vide General Circular dated 5th June2015 has exempted Government Companies from the provisions of Section 178 (2) whichrequires performance evaluation of every Director by the Nomination & RemunerationCommittee where Directors are evaluated by the Ministry or Department of the CentralGovernment which is administratively in charge of the Company or as the case may be theState Government as per its own evaluation methodology. Similar exemption has beenrequested from SEBI under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 which is under consideration.
Further MCA vide notification dated 05th July 2017 has also amended theCode for Independent Directors as per which the performance evaluation of the Board bythe Independent Directors has been exempted for Government companies.
The appointment tenure and remuneration of Directors are decided by the President ofIndia. Remuneration paid to Chairman & Managing Director and Functional Directors areas per terms and conditions determined by the Department of Public Enterprises (the DPE)Government of India. The DPE has also laid down a mechanism for performance appraisal ofall Functional Directors. Independent Directors are paid only sitting fee per Board /Committee meeting attended.
POWERGRID enters into Memorandum of Understanding (MoU) with Ministry of Power (MoP)every year wherein Company is evaluated on various financial and non-financial parameters.The performance of the Company and Board of Directors are evaluated by the DPE in terms ofMoU entered into with MoP.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
POWERGRID has framed a policy on the remuneration of the Directors Key ManagerialPersonnel and employees as required under the provisions of Section 178 of the Act. Thesaid policy is available on our website at:
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans Guarantees or investments under Section 186 of the Companies Act 2013 form partof the notes to financial statements (Note No. 60) provided in this Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties referred to in Section188 (1) of the Companies Act 2013 in the prescribed Form AOC-2 are given as Annexure IXof the Directors' Report. Further attention of the members is drawn on Note No. 60 of theFinancial Statements which sets out related party disclosure.
PARTICULARS OF EMPLOYEES
As per provisions of Section 197(12) of the Companies Act 2013 read with the Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 everylisted company is required to disclose the ratio of the remuneration of each Director tothe median employee's remuneration and details of employees receiving remunerationexceeding limits as prescribed from time to time in the Directors' Report.
However as per notification dated 5th June 2015 issued by the Ministry ofCorporate Affairs Government Companies are exempted from complying with provisions ofSection 197 of the Companies Act 2013. Therefore such particulars have not been includedas part of Directors' Report.
SUBSIDIARIES AND JOINT VENTURES
During the year shares of Power System Operation Corporation Limited (POSOCO) weretransferred to Government of India on 2nd January 2017. As on 31stMarch 2017 POWERGRID had 11 subsidiaries.
There is no change in the number of joint ventures during the year. Further a statementcontaining salient features of the financial statements of our subsidiaries in theprescribed format AOC-1 is enclosed as Annexure X.
CORPORATE SOCIAL RESPONSIBILITY
Your Company believes in Corporate Social Responsibility (CSR) as a commitment to itsstakeholders to conduct business in an economically socially and environmentallysustainable manner that is transparent and ethical. Stakeholders include persons directlyimpacted by the activities of the Company local communities environment and society atlarge. It primarily focuses on inclusive social-economic growth for development ofmarginalized and under-privileged sections of the society residing around its areas ofoperation. With this approach your Company carries out various CSR activities with thruston Rural Development/Infrastructural Development Skill Development Health EducationEnvironment etc.
During the FY 2016-17 your Company spent '147.27 crore and sanctioned 171 nos. of CSRProjects costing about 180 crore to be executed in next 2-3 years.
During the year your Company completed the construction of the 'POWERGRID VishramSadan' at J.P. Apex Trauma Centre AIIMS New Delhi.
Also your Company has participated in the 'Swachh Bharat Abhiyaan'. POWERGRIDemployees and their family members in more than 150 locations across the countryvoluntarily undertook 'Shram Daan' and contributed more than 60000 manhours towards thisend. Further POWERGRID has contributed an amount of '30 crore to the "Swachh BharatKosh" of the Govt. of India.
A number of employees of your Company pledged to Donate their Organs and alsoparticipated in voluntary blood donation camps organized by the Company.
During the year your Company has contributed to the National Skill Development Fundfor imparting skill development training to youths through National Skill DevelopmentCorporation India (NSDC). As part of this endeavor more than 3500 youths have been trainedin various trades in 24 locations across the country. Further to impart high-end trainingto youths POWERGRID tied up with CIPET Indo Danish Tool Rooms (IDTR) Jamshedpur IndoGerman Institute for Advanced Technology (IGIAT) Vizag Indo German Tool Room (IDTR)Indore. In 10 such locations more than 1100 youths were trained and most of them weregainfully employed.
The project of 'Improving Rural Livelihoods through Farmer-centric Integrated WatershedManagement' on 10000 hectares of land in Kurnool (Andhra Pradesh) & Kudgi (Karnataka)through ICRISAT (The International Crops Research Institute for the Semi-Arid Tropics) arealso under progress satisfactorily. The various initiatives under this project haveresulted in improvement of Crop productivity by 15-22% resulted in conservation of about45000 m3 of water.
Further scholarships to more than 1200 students of Assam & Manipur in NER havebeen provided through National Foundation for Communal Harmony (NFCH) to continue theireducation. Also scholarships to 75 talented footballers through Subroto Mukherjee Sports& Educational Society of the Indian Air Force for pursing their talent in footballhave been provided. A Working Women Hostel is being constructed at Nuh Haryana under CSRfor the benefit of women. Also Boy's hostel at Pt. Ravishankar Shukla University Raipurwas completed and formally handed over.
Besides a large number of projects involving infrastructure development in Rural Areaslike Installation of solar street lights handpumps Drinking water facility Water storageand distribution network construction of Community Centres Internal Roads culvertsconstruction of class rooms toilets supply of desk & benches in village schoolsProviding ambulances conducting health check-up camps infrastructure support ingovernment hospitals/Community Health Centre/Primary Health Centre were also undertakenduring FY 2016-17.
Details of the CSR policy are available on our website athttp://10.100.18.171/sites/default/files/CSR Policy 2015 0.pdf. The Annual Report on ourCSR activities is enclosed as Annexure XI of the Boards' Report.
DIVIDEND DISTRIBUTION POLICY
As per regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (the Listing Regulations) the top 500 listed companies shall formulatea Dividend Distribution Policy. Accordingly the policy was adopted to set out theparameters and circumstances that will be taken into account by the Board in determiningthe distribution of dividend to its shareholders and/or retained profits earned by theCompany. The policy is also available on the Company's website:
SIGNIFICANT MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts ortribunal impacting the going concern status and Company's operations in future.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Sections 134(3)(c) & 134(5) of the Companies Act 2013 yourDirectors confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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;
(e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
(f) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
ACCOLADES & AWARDS
The exemplary performance of the Company has been acknowledged and praised by the Govt.of India and other prestigious organisations & institutions in form of various awards/accolades in various categories from time to time.
During FY 2016-17 the Company has been conferred following important awards/accolades:
As per Platts Top 250 Global Energy Company Rankings - Fastest Growing Electric Utilityin Asia for three successive years (2016 2015 and 2014).
CBIP Award 'Best Performing Transmission Utility 2016'.
'Clean Energy Award'- 2016 for best power transmission Utility Company in India for itsremarkable efforts in the field of sustainable development and promoting clean energytransmission in India by AI Global UK.
'Gold Trophy for Top Exporter in the Medium category' of the year 2013-14 byEngineering Exports Promotion Council (EEPC) under the aegis of Ministry of Commerce.
'Best Risk Management Practise' Award at the 3rd India Risk Management Wardsin PSU category by CNBC TV18. This award is given to the firms who have significantlyadded to the understanding and practise of Risk Management.
'Industry Excellence Awards 2017' in the category of 'Energy & Power' on theoccasion of BRICS International Conclave for MSMEs & start-ups organised by 'Stepup360'& BRICS International Forum" and supported by MSME-DI New Delhi.
'North American Synchrophasor Initiative (NASPI) Award' for Outstanding Utility during2016-17.
"Delhi Management Association Award 2016" for "Improving RuralLivelihoods and Protecting Environment through Farmer-centric Integrated WatershedManagement" under CSR
"SCOPE Award 2016" for "Innovative Stakeholders Engagement" byPOWERGRID.
Our Board of Directors would like to express their deep sense of appreciation for theguidance and co-operation received from Government of India particularly Ministry ofPower Ministry of Finance Ministry of Home Affairs Ministry of External AffairsMinistry of Statistics and Programme Implementation Ministry of Environment &Forests Ministry of Corporate Affairs Central Electricity Regulatory CommissionAppellate Tribunal for Electricity Central Electricity Authority NITI Aayog Departmentof Public Enterprises Regional Power Committees and other con-cerned Govt.departments/agencies at the Central and State level as well as from Securities andExchange Board of India National Stock Exchange of India Ltd. and BSE Ltd. Mumbaiwithout whose active support the achievements of the Corporation during the year underreview would not have been possible.
Special thanks to our valued customers State Governments and State power utilities andother clients who have awarded various consulting works and reposed faith in Company'scapability to handle them. The Board also appreciates the contribution of ContractorsVendors and Consultants for successful implementation of various projects by the Company.
Our Directors also acknowledge the valuable suggestions and guidance received from thestatutory auditors during the audit of accounts of the Company for the year under review.The Board also conveys its sincere thanks to national/ international financialinstitutions/ multilateral Financial Institutions (The World Bank & Asian DevelopmentBank)/ Banks/ national (CARE ICRA & CRISIL) & international (Standard & Poorand Fitch Ratings) credit rating agencies for their assist-ance continued trust andconfidence reposed by them on POWERGRID.
On behalf of Board of Directors I would like to place on record our deep appreciationof the dedicated efforts and valuable services rendered by the members of the POWERGRIDFamily in the Company's achievements during the year 2016-17. I would also like to thankthe Executive team for their strong leadership the employee unions for their support andall our employees for their commitment and enthusiasm to achieve our aim to be the world'spremier transmission utility.
| ||For and on behalf of the Board of Directors |
| ||(I. S. Jha) |
| ||Chairman & Managing Director |
|Place: New Delhi || |
|Date: 9th August 2017 || |