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.
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.
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.
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.
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
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.
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.
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
I sincerely thank all of you for your time, attention and patient
This does not purport to be a report on the proceedings of
93rd Annual General Meeting of Torrent Power AEC Limited.