PTC INDIA LIMITED
ANNUAL REPORT 2009-2010
Dear Shareholders, members of PTC Board, Ladies and Gentlemen,
On my behalf and on behalf of the Board of Directors I am pleased to extend
you all, a warm welcome to this 11th Annual General Meeting of your
I recall informing you last year, at the AGM, as to how your economy was
facing the global recession with resilience. Today, all economic indicators
including GDP growth point that those testing and trying times are firmly
behind us. A rapidly recovering economy timed well with Government's thrust
on infrastructure development has helped expand the power sector including
I am happy to report to you the good performance of your company for the
year 2009-10. This is your company's 11th year of operations and it has all
through remained a market leader. Many of the initiatives taken by the
Company right from the beginning and in recent years, for achieving
competitiveness and sustainable growth have begun yielding encouraging
results. Conducive business environment also facilitated our efforts for
creating better shareholder value.
Your company has built its growth on the principles of capacity
enhancement, diversification and increasing footprint, all of which have
been supported by a slew of efficiency improvements, introduction of
innovative products and significant investments in high caliber human
'A small good step is better than the grandest good idea.'
The traded volumes touched an all time high of 18,236 Million Units (MUs),
a 32% rise as compared to 13,825 Million Units (MUs) of the previous year.
With a turnover of Rs.78445 Million (including other income) as against
Rs.66261 Million (including other income) in the financial year 2008-09,
your company registered a Profit After Tax of Rs. 941 Million as against
Rs.908 Million in the previous year The profit after tax would have been
more but for the higher component of taxable income as compared to previous
PTC has always maintained very high standards of physical and financial
performance and thus is considered a credible and reliable player which
will deliver with certainty and quality.
'Value has a value only if its value is valued.'
Given the good performance of the Company, the Board of Directors have
recommended a dividend of 12% per equity share for the financial year 2009-
GROUP FINANCIAL PERFORMANCE
Your company has two subsidiaries, namely PTC India Financial Services Ltd
(77.6% owned) and PTC Energy Ltd. (wholly owned). The consolidated turnover
of the group is Rs.79259 Million (including other income) for the current
financial year as against Rs. 66378 Million (including other income) for
the financial year 2008-09. Consolidated Profit After Tax for the Group
stands at Rs.1073 Million for FY 2009-10 as compared to Rs.941 Million for
the financial year 2008-09.
PTC India Financial Services Limited has sanctioned debt of Rs.20811
Million (Net) with I disbursal of Rs.4487 Million which includes Mezzanine
/Short-Term debt of Rs.3490 Million and has made equity commitments to
various power projects of around Rs.5000 Million with a disbursal of
Rs.3875 Million till 31st July 2010. This will help to create more than
11,000 MW of power generation capacity in the country.
PFS has also raised Rs. 2000 Million during the year through issuance of
NCDs. PFS started Carbon Financing transaction, the first of its kind of
deal in the country, to provide Upfront Carbon Financing against forward
purchase for Certified Emission Reduction (CER) to be generated by the
PTC Energy Ltd executed 107,000 MT of Spot Sale/Purchase of coal during
2009-10 and has tied up 700,000 MT per annum for a period of 5 years
commencing from 2010-11. In addition, PEL has also executed 39,900 MT of
Spot Sale/Purchase of Coal during FY 2010-11.
REVIEW OF PERFORMANCE (QI-FY 10)
I am sure that you would have come to know by now about the encouraging
first quarter (FY 2010-11) performance of your company and the Group.
Trading volume of your company stood at 5747 Million Units as compared to
4204 Miilion Units (MUs) during Q1 FY 2009-10 while Income from Operations
was Rs.27576 Million as compared to Rs. 23717 Million. However, Profit
After Tax was lower from Rs.333 Million to Rs.278 Million on account of
higher taxable income as compared to the corresponding quarter of the
CONTINUOUS REVIEW OF BUSINESS PORTFOLIO
The Company is regularly reviewing its business portfolio so as to ensure
focus on businesses, which are scalable and enjoy inherent competitive
advantage. The business plan of the Company is being monitored using
rigorous management procedures and through introduction of various boutique
and customized solutions/products for its customers. It has consolidated
its position further by introducing innovative products in the market as
and when the market needs it despite stiff competition from trading majors.
In the last AGM, I had informed you about the various initiatives being
taken up by your company. I would like to share with you some of the
important milestones achieved during the year.
'Great spirits have always found violent opposition from mediocrities. The
latter cannot understand it when a man does not thoughtlessly submit to
hereditary prejudices but honestly and courageously uses his intelligence.'
The mainstay of the business remains short-term bilateral trade including
over Power Exchange. The market for the short-term power has grown
substantially in the last one year. This has been mainly due to the overall
growth and expansion of the short-term business as a share of the total
electricity generated in the country. The total short-term market in the
country in volume terms is more than 30 Billion Units (4.32% of the total
electricity generated) and in monetary terms more than Rs. 15,000 Cr.
The year saw your company's trading volumes touch a record high of 18.236
BU. Domestic business of the Company contributed significantly to this
growth. This was possible as a result of the initiatives taken since the
early days of your company and also due to the continued marketing efforts
and the company's philosophy of being close to the customer and
understanding their emerging needs. Your company entered into agreements
with Chattisgarh and CPPs/IPPs for sale of their surplus power for a 1-3
As an aggregator of capacities, your company provides the benefits of
credit and market risk mitigation, better price fixation for the benefit of
the purchaser, better terms and conditions of supply as well as management
of supply volatility. It is in this context that PTC has focused on the
long-term market through facilitation of power projects being set up by
Independent Power Producers (IPPs) with whom it enters into long-term PPAs
and sells the electricity being generated in the plant to various utilities
through long-term back-to-back PSAs. The total long-term agreements signed
by your company as on March 31st, 2010 stand at 15765 MW, including cross
border trade, on the purchase side and 4960 MW on the sale side. The
cumulative MoUs (14677 MW) are under active negotiation for finalization of
Some of the projects, with which the Company has long term pun purchase
agreements, got commissioned during the year namely 20 MW Samal Hydro
Electric Project, 3x150 MW Baglihar Hydro Electric Project (PTC's share 225
MW). Your company has started trading its share of power from those
projects, This segment would gradually be contributing significantly to our
total trading portfolio.
Your company is actively participating in the bids invited by states such
as Gujarat, Karnataka, Maharashtra, Punjab, and Bihar for long-term
procurement of power through the Case-I competitive biding process. In
total, PTC has qualified for about 2600 MW capacity. A major achievement in
this regard has been your company's success in getting Letter of Award
(LOA) from Karnataka for supply of 1300 MW capacity on long-term basis (25
A number of IPPs have looked up to PTC in terms of support and knowledge it
carries to table their combined view on a number of key issues related to
Case I Tariff Bidding Process to the Appropriate Regulatory Commissions and
the Ministry of Power, Government of India.
Industry and captive capacities are not yet in the mainstream of the power
business. PTC is targeting this segment by encouraging large industries to
generate reliable and quality power under group captive concept to meet
their own requirements as well as generate to sell.
'The human mind has first to construct forms independently before we can
find them in things.'
Your company is by far the most credible player in the bilateral market as
well as on the power exchange. With its subsidiary PFS as co-promoter of
the first power exchange (IEX), PTC continues to play a dominant role in
the exchange as it has the biggest portfolio of State Utilities trading
power on the exchange via traders. A number of captive power plants with
huge power consumption are also trading on the exchange as clients of PTC.
IEX had begun with only day-ahead product but now a number of new products
such as the term-ahead, intra-day transaction, and contingency transactions
have been launched. Further discussions are on to expand the power exchange
market: introducing Renewable Energy Certificates (RECs).
IEX has seen record number of transactions taking place with buy and sale
bids having crossed 100 MUs. Per day transactions have already crossed 80
MUs and are growing by the day. There are close to 320 participants on the
IEX till date.
CHALLENGING REGULATORY ENVIRONMENT
Regulatory environment in the power sector remains a challenge. Though the
trading margins have been relaxed for the cost of energy higher than Rs.3
per kWh, trading margin of 4 paise per kWh continues as earlier for the
cost of power at Rs. 3 per kWh or below.
However certain initiatives such as development of power market through
adequate grid augmentation, facilitating non-discriminatory open access to
grid and ensuring grid discipline are having a positive impact on the power
market and its growth.
Comprehensive regulation have been brought on new transmission tariff
design that is expected to be market- friendly and on renewable energy
certificates, which hopefully will give a strong push towards bringing
renewable energy sources into the mainstream.
'Let's take jargon out of words and let's uncomplicate things.'
CROSS BORDER FOOTPRINT
The Company in recent years has successfully done transactions I with
Bhutan and Nepal. Your company has taken several significant initiatives to
make its mark on the power market of the Indian subcontinent due to the
tremendous potential that exists in this region.
AN OUTLOOK FOR THE FUTURE
The Company is optimistic about the business prospects and about its
capabilities to leverage them for your benefit. Government's thrust on
capacity expansion coupled with enthusiasm of the Independent Power
Producers augers well for the power sector which will lead to over all
growth of the sector.
In this regard, your company has adopted a holistic approach of developing
the power sector by staying at the helm of affairs. This can be seen by the
various initiatives PTC has entered into.
'My grandfather once told me that there were two kinds of people: those who
do the work and those who take the credit He told me to try to be in the
first group; there was much less competition.' Indira Gandhi.
RENEWABLE SOURCES OF ENERGY
PTC recognizes the fact that fossil-based fuel would be under increasing
pressure due to climate change issues. Prime Minister's National Action
Plan for Climate Change offers tremendous opportunities for the market to
develop renewable energy, particularly solar and also energy efficiency
projects. This area of business we see as becoming very significant in the
next few years.
PTC, through its subsidiaries and affiliates, is exerting efforts to bring
into its fold renewable and energy efficiency projects. PTC has joined
hands with Bureau of Energy Efficiency (BEE) towards fulfillment of
National Mission for enhanced energy efficiency by signing a MoU on Energy
Efficiency Financing Platform (EEFP). The MoU will strengthen the platform
that seeks to overcome barriers to financing energy efficiency projects
through risk sharing strategies and capacity up-gradation of financial
'Work for a cause, not for applause; live life to express, not to impress.
Don't strive to make your presence noticed, make your absence felt'.
PTC India Financial Services Ltd. (PFS), has been promoted by PTC India Ltd
(PTC) as a company incorporated under the companies Act, 1956, and
registered with RBI as a NBFC. It has been set up as a special purpose
investment vehicle to provide total financing solutions to the energy
Recently PFS has been accorded the status of Infrastructure Finance Company
'IFC' from Reserve Bank of India. This is a new category of NBFCs announced
by RBI in February, 2010. Infrastructure Finance Companies are allowed to
have higher exposure for lending and investment to a single borrower or a
group of borrowers.
PTC Energy Ltd (PEL), has been mandated into the business of generation,
distribution, transmission and deal in electricity and all form of energy
including sale and purchase of energy, coal/fuels, conversion of coal/fuels
into electricity through Power Tolling Arrangements, fuel linkages, as well
as explore the scope in the energy efficiency arena. The fuel particularly
coal linkages in the domestic market are fast becoming critical and thus
PTC intends to arrange for fuel linkages on a king term basis with suitable
tie-ups with overseas mining agencies for power projects being set up in
the coastal regions of India based on imported coal and enhance our
endeavour to promote power tolling as a vital area of activity.
According to latest estimates the Indian power market needs funding of US$
600bn over a seven year period, which provides a significant opportunity
for private equity to lead the initial investments. Since PTC as a Group
already has a deliverable pipeline, we are confident that we will be able
to deploy capital quickly with the limited financing avenues available.
Indian energy market, characterised by a lack of capital, rising demand and
a strong and non-discriminatory regulatory framework, presents a compelling
investment opportunity to the investor community worldwide. It is expected
that India will become the 3rd largest electricity market globally by 2030.
There is also a huge opportunity for private sector participation to bridge
the significant deficits which currently exist in the market. Thus to
realise this potential, your company has launched a close ended fund, the
PTC Ashmore India Energy.
Infrastructure Fund in joint venture with Ashmore (PTC: Ashmore:: 40:60 in
the Asset Management Company).
The Fund will provide equity financing to power projects across all energy
related sectors in India. As a way of meeting the widening demand supply
gap in India, the Fund will target the private sector to lead the initial
investments and exit through strategic sales and public markets once assets
mature. In order to secure various exit channels the portfolio will contain
an optimum mix of holding and asset companies.
Your company has invested and nurtured human capital as it believes that
the success of the company is ascribed to the quality of its human capital.
Being the market leader in the power trading sector has also put us in an
PTC has also recognized the aspirations of many youngsters who want to work
for India's leading power trading company in the area of energy management.
Thus over the years, PTC has institutionalized the process of 'Campus to
Corporate' where talent is sourced from leading B-Schools across India.
These young professionals are given a chance to exhibit their potential and
contribute towards growth of the Company.
The foremost challenge facing us all the time is of attracting good talent
and retaining them. Your company has launched many initiatives like a
robust career progression, accelerated career progression for star
employees, compensation reviews, strengthening of performance review
processes, high focus on development of organizational competencies,
developing potential through training and development programs. These
professionals are also exposed to leadership programs such as awakening of
self where they are able to identify their own potential. However,
retaining them with PTC given the kind of compensation package that the
Company offers remains a big challenge over the years, your company has
indeed suffered on account of really good and motivated employees leaving
as they were not well compensated.
It is a matter of pride for me to lead this highly motivated and talented
team of young professionals who are exploring and bringing in fresh and new
ideas which challenge the way things are normally done.
'Six essential qualities that are the key to success. Sincerity, personal
integrity, humility, courtesy, wisdom and charity.'
Amidst wide spread corporatization, your company has always proactively
tried to fulfil its obligation towards society in the same vein as it has
worked towards enhancing shareholder value. Your company has gained) the
deputation of a humane company. It continues to pursue efforts and
initiative to contribute to the society with same enthusiasm with which it
conducts its business. The Company attempts to address issues related to
environment, education, health facilities, victims of natural disasters
The employees of your company responded to the pain and distress of the
victims of the Leh Flash floods recently by contributing to the Prime
Ministers National Relief Fund.
Transparency and accuracy are the hallmarks of good corporate, governance.
We at PTC have strong commitment towards both. We are continuously working
at providing true and fair picture of the business and the practices being
followed in the company. The same is reflected through our effort to
provide quality disclosures. Annual Reports have been not just a window but
a door to enter and see the working of our company.
During the year, on several occasions, I and my colleagues had the chance
to meet the members of the investor community, press y and other
stakeholders and have provided them with maximum information on your
company's plans, businesses, goals and values. All information about your
company is regularly updated on its portal www.ptcindia.com I would like to
encourage all of you to visit the site regularly to update yourself with
the latest development of your company.
The buoyancy in the market especially the power sector promises to bring in
more opportunities for us to demonstrate our capabilities the way we have
done in the past. This will not be possible however without the
encouragement and support of all.
Thus before I conclude, I would like to express my sincere appreciation to
our employees who deliver the value experience to our customers and
stakeholders each day. Their sincere dedication and the hard work are
invaluable contribution to your company's performance. The Company's
pursuit towards demonstrating its unique advantage would not be possible
without the support of my colleagues, customers, business associates,
shareholders, members of the Board. I take this opportunity to express my
sincere appreciation and thanks to the members of the Board of Directors,
to the Ministry of Power and the Ministry of External Affairs, Government
of India, our original promoters, NTPC, POWERGRID, NHPC, PFC, the financial
institutions and banks and to our valued customers for their invaluable
support and co-operation in the year gone by and I do look forward to the
same in the years to come. I am grateful for their continued confidence in
the management and expect to receive their full support and patronage to
achieve our business objectives.
I would now like to thank you all for your continued support and for
finding time to be with us at this moment.
Place: New Delhi Shri. Tantra Narayan Thakur
Date : September 23, 2010 Chairman and Managing Director
Source at: The Financial Express
Date : September 24, 2010.