Dear Shareholders,

On behalf of the Board of Directors and on my personal behalf, I extend you all a very warm welcome to this 93 rd Annual General Meeting of our Company.

The Annual Report of the Company containing the audited Statement of Accounts, the Directors’ Report, the Report on Corporate Governance and the Management Discussion and Analysis Report, have been circulated and I trust, the same would have been received by you. If you permit, I may take the same as read.

Financial Performance
Let me brief you about the financial performance of the Company during the year 2004-05. The year has been a remarkable one for the Company wherein the Company earned a profit after tax of more than Rs.100 crore for the first time in its history. The profit after tax, at Rs.107 crore, is higher by 129% compared to last year. The turnover of the Company increased to Rs.1335 crore, an increase of 7.9% over last year. This robust financial performance is mainly attributed to a landmark reduction in T&D losses, reduction in power purchase cost, healthy growth in sales and improved efficiency in generation. It gives me great pleasure to inform you that the Board has proposed a dividend of 30% aggregating to Rs.21.66 crore including corporate dividend tax.

Operational Highlights
The operational performance of the Company, the outlook, opportunities and other issues, have been dealt with in detail in the Directors’ Report and the Management Discussion and Analysis Report, already circulated to you. Hence, rather than a detailed enumeration, I would like to mention some of the key highlights of the performance of the Company for the year 2004-05.

It gives me great satisfaction to report that the T&D losses have been reduced to 12.63% in 2004-05, a reduction of 4.05% from 16.68% in the previous year. I would like to take this opportunity to acknowledge the industrious efforts put in by all the employees in the T&D area who by their collective will and team work could achieve such unprecedented results.

The Company continued its focus on Slum Electrification Programme. During the year, more than 55000 slums were given safe and legal electric supply. For upgrading the transmission system, two new 33 KV sub stations were commissioned. Your Company has always taken great pride in its high system reliability and as always has lived up to its reputation. During the year, the power availability was 99.84%, which I can say with some modesty, is amongst the best in the country.

On the generation front, at the beginning of the year, we completed “D” Station retrofitting job thereby increasing its capacity to 120 MW and improving its efficiency. With the availability of gas, after a long time, we were able to commence the generation in Vatwa Plant from the 19 th of May 2004 on gas as I had mentioned in the last AGM.

As a result, the Company was able to improve the Plant Availability Factor (PAF) to 91.61% from 87.75% and Plant Load Factor (PLF) to 82.06% from 68.57% in the previous year. The company achieved the highest ever generation of 3594 MUs.

I would like to place on record that, due to the improvement in efficiencies, the Company has been able to maintain the same tariff since the last three years.

With our current peak demand at 783 MW, we still need to depend upon external sources to bridge the gap between our generation and the peak demand. In order to ensure continuous and reliable power supply to our customers, the Company entered into an agreement with Gujarat Urja Vikas Nigam Limited – the erstwhile Gujarat Electricity Board for purchase of power from 1 st October 2004 to 31 st March 2007.

In the area of customer services, several initiatives were taken during the year like introduction of four Mobile Cash Collection Vans, introduction of Fixed Service Line Charges for providing faster and easier connection, increase in working hours at cash counters and simplification of customer related processes.

Human Resources
On the HR front, there have been some heartening developments which I would like to share with you. Pursuant to an amicable understanding reached between the Company and casual labourers, the industrial court gave an award in the long pending dispute wherein all the casual labourers were made permanent employees. This success has proved that it is possible to settle all pending disputes cordially through the process of dialogue and I personally feel that the era of litigation to solve disputes is over. I look forward to the day when both the employees and the management would sit together and resolve past disputes and more importantly plan for the Company’s progress.

Regulatory Affairs
The Electricity Act provides for operationalizing the various provisions of the Act through the formulation of the rules and regulations by the respective State Electricity Regulatory Commission. The Gujarat Electricity Regulatory Commission (GERC) has already notified regulations prescribing various norms and standards of performance for the licensee. It has also prescribed various regulations like Supply code, Recovery of Expenditure in providing supply, Security Deposit, Power System Management Standards etc. after the end of the year 2004-05 and the same are being complied with by your Company. In fact, GERC is amongst the front runners of the State Electricity Commissions across the country and has taken proactive and pioneering measures in this area.

Torrent Power Generation Limited (TPGL)
You may recall that your Company had strategically decided to promote 1147.5 MW Sugen Combined Cycle Power Plant along with Torrent Power SEC Limited and Torrent Private Limited. The Mega Power Project, being set up with an investment of approximately Rs. 3096 crore, will be funded through a Debt : Equity ratio of 70 : 30. The total equity (including quasi equity) of the project is Rs. 929 crore of which the promoters will subscribe up to 75% equity. The entire debt component of the project has been tied up through a consortium of investors led by Infrastructure Development Finance Company Ltd. (IDFC) and the project has achieved financial closure in September 2004. Your Company has committed an investment up to Rs.250 crore in the equity capital of TPGL, out of which, an amount of Rs.116 crore has already been invested.

I am happy to report that the project is progressing smoothly. TPGL has recently awarded the EPC Contract for the project to Siemens AG. Further, the Torrent Group and Siemens have agreed to form a joint venture to provide Operations and Maintenance (O&M) services to the project. The first phase of the project is scheduled to be commissioned by the 3 rd quarter of 2007. Your Company would benefit immensely by purchasing 25% of the power generated by TPGL.

Future Plans
I would like to take a minute of yours for apprising you of the developments in the power sector and your Company’s plans in relation to these developments. As you would be aware, the Government of India has enacted a forward looking legislation-the Electricity Act 2003, which has thrown up opportunities for private sector players. In addition to leveraging our capability in setting up and operating coal and gas based projects, we would like to play an active role in the distribution sector of various states. However, the fructification of any of the options would depend on the pace of reforms and the intent shown by various states.

Appreciation
Before I conclude my address, I would like to thank our valued customers for their continued support.

I take this opportunity to acknowledge the support and cooperation of Government of Gujarat, Gujarat Urja Vikas Nigam Limited, Financial Institutions and Banks. I would also like to thank all our employees for their commitment and dedication in discharging their duties. My colleagues on the Board have always provided valuable guidance whom I owe my gratitude.

Finally, I am indeed grateful to all the Shareholders for the trust reposed by them in the management of the Company and I am confident of their unflinching and continued support in years to come.

I sincerely thank all of you for your time, attention and patient hearing.

Thank you


This does not purport to be a report on the proceedings of 93rd Annual General Meeting of Torrent Power AEC Limited.