CORPORATE OBJECTIVES

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3 VISION Promote Power Trading to optimally utilize the existing resources Catalyze development of Mega and other Power Projects including Hydro Projects Promote Exchange of Power with neighbouring countries Develop power market in not too distant a future 3

4 CORPORATE OBJECTIVES Plan, promote and take up necessary developmental work for the power sector, purchase power from generating companies and trade in an optimal manner; Plan, promote, develop and establish an efficient, reliable power trading and distribution system, policies and procedures; Engage in business of purchasing, procuring, selling, importing, exporting and trading all forms of electric power and ancilliary services on commercial basis; Own, acquire, establish, operate and maintain generating stations and transmission system for supply to bulk power offtakers; Act as agent of public/ private sector enterprises, financial institutions, banks, central government, state governments, etc. engaged in planning and development of power sector, and Promote and organise research and development and carry out consultancy services in power sector and related activities. 4

5 PTC s SERVICES Facilitate development of Mega and other Inter-State Power Projects which can generate electricity at competitive tariff; Identify probable Buyers and Sellers and tie up the most economic arrangements for both; Co-ordinate arrangements for Evacuation System, Transmission Service Agreements, Implementation and Fuel Supply Agreements; Co-ordinate with Regional Electricity Boards, Regional Load Despatch Centres and POWERGRID for Dispatch, Metering and Billing; Structure Payment Security Mechanism, Negotiate and Finalise Power Purchase Agreements with Developers/Suppliers and with Buyers; Arrange for Revenue Realisation, Timely Payments and find alternative buyer(s) in default situation; Conduct Studies for Transmission Feasibility for transfer of power including transfer through displacement; Provide Single Window for Buyers and Sellers and Work as Nodal agency for Power Trading across the Border. 5

6 6 MAP OF INDIA

7 PTC ADOPTS NEW LOGO The Power Trading Corporation of India Ltd. is the nodal agency for trading of power in India and is the bridge between producers and consumers of power. The logo has been designed to reflect this orientation. The 2 half arrows are placed on the periphery of an ellipse, denoting the cyclical and non-stop nature of the operations viz. generation and consumption of power. Trading is the connective, the bridge between these two. The halved arrowheads and the tapering tails reflect action and dynamism. The blue colour of these arrows symbolises stability which the Company strives to bring to the power scenario. Placed centrally within the ellipse is the Power Bolt the universal symbol of electrical energy. The colour of rising sun for the bolt denotes the growing strength and progressive outlook of the Company. Within the Power Bolt are the transparent letters in Roman as well as Devnagri scripts symbolising transparency in the Company s operations. The letters in Italics introduce an element of action, which is indicative of the Company s commitment to development of the power sector. 7

8 STEERING TOWARDS A COMPETITIVE POWER MARKET Two major benefits associated with power interconnections and trading are improved security of supply and better economic efficiency. A constituent system rather than depending on its internal resources can increase system reliability through the import of energy from neighbouring constituent systems. Economic efficiency is improved when the interconnected areas have load profiles complimentary to each other, on either daily or seasonal basis. In addition to the long-term benefits of planning infrastructure expansion as an inter-connected power system, in real time operation also there is ample scope to minimize the cost of production of electricity by arranging economic interchanges. Economic interchanges between entities has been the first step in opening up electricity supply markets and sharing benefits of operating efficiencies between utilities. In an effort to increase the value of such economic trading, the natural monopoly structure of electricity supply industry is being reformed and restructured worldwide to encourage competition and free trade. The trend is to favour free electricity transactions within regions and between countries. In the wake of this background, formation of PTC assumes importance. Development of Projects PTC is presently negotiating Power Purchase Agreements (PPAs) for purchase of power from two large Power Projects namely, Hirma (3960 MW) in Orissa and Ennore (1850 MW) in Tamil Nadu. In addition, PTC has taken up development of Pipapav Mega Power Project (2000 MW) in Gujarat through ICB route. Energy from these projects will be sold to only those states, which undertake reform of their power sector. The attractive tariff would encourage the states to undertake power sector reforms in order to be the beneficiaries. Trading of Power Despite constraints in inter-regional transmission of power, PTC has embarked upon trading market albeit in a modest way by organizing purchase of power from surplus locations and selling to deficit SEBs. Seasonal diversity in generation and demand of different power utilities gives ample opportunities for short term trading. PTC traded energy to the extent of MUs in its first year of operation (Financial Year ). Trading volume increased to around 45 MUs in the subsequent year and is expected to be over 1000 MUs in FY PTC is likely to take over trading of 270 MW of Chukha Hydro Power (Bhutan) very shortly and future trading opportunities include purchase of power from Tala Hydro Power Project (1020 MW) and Kurichhu Hydro Power Project (60 MW) in Bhutan and some small power projects in Nepal. PTC as Risk Mitigator PTC will act as a Risk Mitigator and shall ensure timely payment to the power generators. The Payment Security Mechanism for PTC is presently under finalisation and is likely to have a multi-layer structure. Opportunities and Constraints One of the main constraints in enhancing trading of power has been the present generation tariff, under which the fixed charges are also recovered in proportion to energy drawl rather than capacity, which is not considered conducive to economic operation. Implementation of ABT would encourage short-term and long-term trading and there will be ample avenues for the same. With the new legislation, which is on the anvil, there would be number of players in the power market, which will go a long way in establishing a market driven power trading in which PTC will have a very significant role to play. Financial Status PTC was incorporated with an authorized capital of Rs 150 Crores. PTC has so far received Rs 24 Crores (60%) as equity from the Promoter Companies (POWERGRID, NTPC and PFC) and equity of Rs 16 Crores (40%) has to be raised from the Financial Institutions and other Investment Companies. This was as per the Business Plan prepared in May However, the capital structure of PTC is being reviewed and the equity is being strengthened within the parameters of an optimal capital base. The Government of India has allocated Rs. 50 Crores for PTC in the budget for Perspective Power trading scenario in the country is in the nascent stage and is growing. It is expected that power markets will develop gradually with reforms in the sector. Unlike in other emerging markets, Indian grids have constraints in free transfer of power across the country. Strengthening of grid by construction of EHV 8

9 STEERING TOWARDS A COMPETITIVE POWER MARKET transmission highways planned in future will help in development of a national electricity market and a new era could be ushered in whereby trading of power will result in the best price and reliable electricity for the consumers. In such a scenario, not only PTC s outlook will continue to be quite positive and proactive, the company will make all efforts to take best advantage of the opportunities. 9

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11 CONTENTS Board of Directors 11 Chairman s Statement 12 Directors Report 16 Balance Sheet 26 Profit & Loss Account 27 Schedules 28 Auditors Report 39 Comments of the C&AG of India 41

12 As on 25/07/2001 Chairman & Managing Director From - To Shri T.N. Thakur 11/10/ till date Directors Shri P.I.Suvrathan 16/04/ till date Shri Rakesh Nath 18/07/ till date Shri H.L.Bajaj 16/04/ till date Dr. K.K. Govil 09/03/ till date Shri R.D.Kakkar 16/04/ till date Shri S.K.Dube 26/08/ till date Executive Vice President (Projects) Shri Mahendra Kumar Executive Vice President (Finance) Ms. Saroj Punhani Asstt. Company Secretary Shri Rajiv Maheshwari Statutory Auditors M/s K.N. Goyal & Co. Chartered Accountants Bankers State Bank of India Indian Overseas Bank Registered Office 10 th Floor, Hemkunt Chambers, 89, Nehru Place, New Delhi

13 BOARD OF DIRECTORS T.N. Thakur P.I. Suvrathan Rakesh Nath H.L. Bajaj K.K. Govil R.D. Kakkar S.K.Dube 12 13

14 CHAIRMAN S STATEMENT Ladies and Gentlemen, I t gives me a great pleasure to welcome you all to the second Annual General Meeting of the Power Trading Corporation of India Ltd. (PTC). Trading Transactions I am happy to inform you that your Company is moving forward to its goal of establishing a competitive power market in the country. A modest beginning has been made by trading of power to the extent of 100 MW from Punjab to Gujarat during last winter and more recently, flow of power, through PTC, from West Bengal Power Development Corporation Ltd. to Delhi (upto 100 MW) and Haryana (upto 60 MW) and from Malana Power Company Ltd. (70 MW) to Delhi. This is the first time that your Company has entered into Power Purchase Agreement (PPA) with a generating Company in a State and a private sector company for inter-regional / interstate trading of power. The total volume of trading works out to over 1000 MUs of energy for the periods of the Agreements. Your Company has introduced weekly billing and payment system with reasonable, but simple, back up payment security (no State Government guarantee and no escrow) which is working well. Trading with Neighbours Supply of power from Chukha Hydel Project in Bhutan to the six Eastern utilities, which is currently being handled by POWERGRID, will be shortly handed over to your Company. PPA has been signed by the Company with four out of the six utilities and modalities are being 14 worked out with the concerned authorities in Ministry of Power / Ministry of External Affairs for effecting the trading transactions. With Chukha power, trading of power from the Kurichhu Hydel Project (60 MW) in Bhutan is also likely to be handed over. Your Company has been notified as the Nodal Agency for exchange of power between India and Nepal. Nepal is currently a net importer of power from India, however, in a year s time it is likely to export power to India. The Company is getting in touch with the concerned officials of His Majesty s Government of Nepal for tying up future arrangements and sorting out outstanding issues. Utilisation of Existing Resources In its endeavour for optimal utilisation of the existing resources in the power sector, your Company is having dialogue with some State Power Utilities/Departments for trading of their surplus power. Requests have also been received from some Captive Power Plants for similar trading. The Company is in the process of locating customers with diversity in demand so as to ensure offtaking of the entire surplus round the year. Materialisation of such transactions will not only enhance availability of Power but also help in converting the unscheduled exchanges into scheduled exchanges which should result in bringing operational and commercial discipline. Your Company is also considering having Framework Agreements with the State Power Utilities/Departments so that terms and conditions for each transaction are not required to be negotiated every time and decisions about short-term transactions can be taken immediately.

15 CHAIRMAN S STATEMENT Though there are obvious constraints for trade of power in this country concerning credit worthiness of buyers, transmission flexibility & grid reliability, legal position with regard to such trading and authorisation for regulating power supply etc., there is a clear trend of more and more inter-regional transfer of power as would be evident from the following chart :- Energy (MUs) Inter-Regional Energy Exchange It is imperative that more conducive environment is created for flow of power from the surplus to the deficit locations at different points of time in the year. The efforts now being made by your Company in trying to locate the surpluses and the deficits and then effect transactions are indeed steps towards establishment of competitive power market resulting in economic use of the resources and reduction in cost of supply. Both the buyers and the sellers of power, through PTC, are open to all India power market than sticking to one or two buyers/sellers as is the case in bilateral arrangements. Future Trend With implementation of Availability Based Tariff (ABT), the prospects and volume of trade are likely to increase. Presently, your Company is handling trading transactions spanning a few weeks to a year, but I can see that, not in too distant future, dayahead trading will also be initiated when your Company will resort to round the clock operations. With rise in the number and volume of transactions, your Company would consider introducing pool pricing for trading. The Company is also looking forward to sophisticated instruments of trading like forward trading, hedging etc. but obviously it will take time for that kind of a market to develop in India. Value Addition It has been possible to enthuse both the sellers and the buyers of electricity to trade through your Company Year (Source: Central Electricity Authority) because of the value addition by the Company, which can be mentioned inter alia as follows: PTC has a team of professionals having experience in Inter-State Trading, System Operation, Transmission, Generation, Grid Operation, Contracts, Power Purchase Agreements, Other Commercial Aspects and Finance which provides it with the necessary expertise for handling the transactions most effectively. PTC offers the following to its clients:- - Facilitate development of Mega and other Inter- State Power Projects, - Identification of Buyers, Coordination with POWERGRID for Evacuation System, Payment Security Mechanism, Coordination in Implementation and Fuel Supply Agreements, PPAs with Developers and Back to Back PPAs with Buyers, - Development of Power Trading Market providing Single Window for Buyers and Sellers, - Identify probable Buyers and Sellers and tie up most economic arrangements for both, - Coordination with REBs, RLDCs and POWERGRID in Dispatch, Metering and Billing, - Revenue Realisation and finding alternative Buyer in default situation, - Nodal agency for Cross-Border Trading, and - Studies for transmission Feasibility for transfer of power including transfer through displacement. Inter-State Projects As regards development of Inter-State Projects, your Company is currently negotiating PPAs for purchase of power from Hirma Project (3960 MW - domestic coal based) in Orissa and Ennore Project (1850 MW - LNG based) in Tamil Nadu. The process for selection of a developer for Pipavav Project (2000 MW LNG or coal based) in Gujarat is also underway. Power from all these projects will be bought by your Company and sold, through back-to-back multistate PPAs, to the respective SEBs or their successor companies. The other projects which are being looked at by the Company include Maithon (1000 MW) and some 15

16 CHAIRMAN S STATEMENT hydel projects. Lenders and investors of these projects see PTC s role as essentially that of a risk mitigator, the Payment Security Mechanism for supporting these Projects is a very important component of the overall facilitation process. A number of project developers are approaching your Company with indicative proposals for large, medium and small sized hydropower projects in the Himalayan Range, in Jammu & Kashmir, Himachal Pradesh and Uttaranchal, North-Eastern States and other States like Orissa, and Nepal, as also less costly Thermal Power Projects. The Company will be in a position to proceed further on such projects and start discussions with probable off-takers of power only after details of projects and tariff are known which the intending developers have been asked to furnish. Organisation Your Company believes in a lean organisational structure, is content with low margins to encourage trading and adheres to its developmental role. The Company is in the process of evolving its own culture, ethical business conduct norms like defining Business Policy, Human Resources Development Policy etc. These policies shall support the consistent endeavour to build up and enhance the reputation of the Company. Your Company s philosophy on corporate governance envisages attainment of the highest levels of transparency and accountability in all facets of its operations and in its interaction with all including Clients, Employees, Promoters, Stakeholders and Government. Business Plan The business plan developed and finalized by your Company, in consultation with ICICI, covers an eight-year planning perspective. It is a rolling plan to be reviewed annually, keeping in view the changes in market, competitive, regulatory and other environmental conditions. The last review was done in June According to the business plan, volume of trade is expected to reach a level of MUs in from 2900 MUs in A proposal for providing Payment Security for such levels of transactions along with restructuring of the Company is under consideration of Government of India. Website Your Company has launched its website covering information on PTC profile, Vision, objectives, progress achieved so far on the various Power Projects being developed by PTC and trading activities being undertaken and surplus power available for trading with PTC along with formats to facilitate on-line requisition from both sellers and buyers. This is a step towards development of on-line Power Market. I express my deep appreciation for all the executives and other staff of your Company for the dedicated and sincere services rendered by them in striving towards success. I also express my sincere gratitude and appreciation for the Government of India, specially Ministry of Power, the three Promoter Companies and all my colleague members of the Board for their invaluable support and contribution. I thank you all for making it convenient to attend this Second Annual General Meeting and look forward to continued support and cooperation from you in future as well. Place: New Delhi Date: Power for peace (Tantra Narayan Thakur) Chairman & Managing Director 16

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18 DIRECTORS REPORT To the Members, Power Trading Corporation of India Ltd. I have great pleasure in presenting to you, on behalf of the Board of Directors, the second Annual Report on the activities of Power Trading Corporation of India Ltd. together with the Audited Accounts for the Financial Year Performance Highlights Your Company has been able to improve upon its performance over last year on almost all the fronts. The total amount of power sold was Rs Crores, which is 47.7% higher than Rs 7.71 Crores sold in the year During the year, energy was bought from Maharashtra State Electricity Board and Punjab State Electricity Board and sold to Karnataka Power Transmission Corporation Ltd. and Gujarat Electricity Board, respectively. Such trading opportunities are expected to rise in future and the Company proposes to pursue trading activities vigorously for optimum utilization 18 of existing resources in the country and to meet the demands in the deficit locations. An agreement was signed in February 2001 between the Company and the West Bengal Power Development Corporation Ltd. (WBPDCL) in Eastern Region for purchase of power upto 200 MW for supply to the neighbouring regions. Power upto 150 MW has started flowing from WBPDCL to Delhi and Haryana w.e.f. 12 June Another transaction for short term trading of power from Malana Power Project to Delhi Vidyut Board to the tune of 70 MW has materialized w.e.f. 5 July Trading of power from Chukha Power Project is expected to be taken over by the Company during the year PTC has also received some offers from Captive Power Plants and SEBs / Power Departments for sale of their surplus power and the matter is being pursued. Requests have also been received from some deficit SEBs for purchase of power through PTC on a short-

19 DIRECTORS REPORT term basis and attempt is being made to meet their requirements from the surplus utilities. Financial Performance During the first year of operation, PTC s paid-up capital was Rs 6 Crores with the subscription of the Promoter Companies, viz., Rs 3 Crores from POWERGRID and Rs 1.5 Crores each from NTPC and PFC. However, as envisaged in the Business Plan finalized in May 2000, PTC requires paid-up equity base of Rs 40 Crores upto Financial Year and Rs 61 Crores upto Accordingly, during the year, the Promoter Companies were requested to enhance their equity to Rs 24 Crores (i.e. 60% of Rs 40 Crores). The additional subscription of Rs 18 Crores from the three Promoter Companies has since been received. For the balance Rs 16 Crores, discussions are underway to finalize the terms and conditions of Equity Participation with the FIs viz. ICICI, IDBI, IFCI and IDFC. Further, LIC and GIC have also in principle, agreed to subscribe to the equity capital of PTC to the tune of Rs 4 Crores and Rs 2 Crores, respectively. UTI also have shown positive response. PTC will raise further equity as per requirements from time to time. With widening of equity base, the Company has somewhat better leverage to undertake trading operations. The Company has earned Rs 94 lacs from sale of power and other income during This includes an income of Rs lacs on account of investment of funds in the short-term deposits and intercorporate deposits with various Scheduled Banks. During the Financial Year , the Company has incurred a marginal loss of Rs lacs. The Company has followed prudential Accounting norms and policies, as adopted in the 13 th Board Meeting held on 28 May 2001, while preparing its Accounts for the year During the year, the Company has revised its Accounting policy relating to treatment of expenditure incurred on development of power projects. According to the revised Accounting policy, any expenditure incurred on development of potential power projects shall be carried forward as deferred revenue expenditure to be written off equally in five years beginning with Financial Year Directors Responsibility Statement In pursuance of section 217 (2AA) of the Companies Act, 1956, the Directors make the following responsibility statement: (i) (ii) In the preparation of the Annual Accounts, the applicable Accounting standards have been followed by PTC along with proper explanation relating to material departures; The Directors had selected such Accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company 19

20 DIRECTORS REPORT (iii) (iv) 20 at the end of the Financial Year and of the profit or loss of the Company for that period; Proper and sufficient care was taken by Directors for maintenance of adequate Accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities, and The Annual Accounts were prepared on a going concern basis. Audit Committee The Board of Directors in its 12 th meeting held on 9 March 2001, constituted an Audit Committee in accordance with section 292 (A) of the Companies Act, 1956, consisting of three members, namely Shri H.L. Bajaj, Shri Rakesh Nath and Shri S.K. Dube. Shri H.L. Bajaj has been appointed as the Chairman of the Audit Committee in the first Meeting of the Audit Committee held on 28 May The said Audit Committee has reviewed the Annual Financial Statements, before submission to the Board, as prescribed in section 292 (A) of the Companies Act, Payment Security Mechanism Payment Security Mechanism (PSM) for PTC s long-term PPAs with regard to large projects is under active consideration of the Government of India (GoI). The proposed mechanism, including the process of dip into the central devolution of funds to the states as a fall back arrangement in case of default in payment, is under discussions at different levels in GoI.

21 DIRECTORS REPORT Brief Status of the Projects/Activities Hirma Mega Power Project (6x660 MW) - Orissa The Development Agreement for the project, on the lines of MoU, was signed on 14 September 2000 in Washington DC during the Prime Minister s official visit to USA. Tariff Mirant Asia Pacific Limited (MAPL), earlier Southern Energy Asia Pacific (SEAP), and Reliance Power Ltd. (RPL) are the sponsors of the Project with net capacity of 3960 MW and the Power is to be shared by the states of Rajasthan, Punjab, Haryana, Gujarat and Madhya Pradesh. Vide their order-dated 26 September 2000, CERC awarded tariff for this project according to which the levelised Fixed Charge will be at Rs per kwh at constant prices for 30 years. This corresponds to 74% front-loading at current price and an availability/plf of 85%. This tariff is determined Projects Underway Hirma (3960 MW) in Orissa Ennore (1850 MW) in Tamil Nadu Pipavav (2000 MW) in Gujarat with reference to super critical boiler technology. Heat rate for the super critical boilers will be 2411 kcal/ kwh (as against 2460 for sub-critical boilers). For dispatches above 85% PLF, incentive would be payable at 1 paise per kwh for every 1% increase. Fuel Supply Agreement Mahanadi Coalfields Ltd. (MCL) had identified coal mines in the Ib Valley for supply of 22.4 million tonnes of coal per annum. However, one of the coal mines viz. Kulda project has not been given forest clearance by the Ministry of Environment & Forests (MOE&F). The matter is being reviewed by them (MOE&F). Even Signing of Development Agreement for Hirma Mega Power Project in Washington DC 21

22 DIRECTORS REPORT Signing of Joint Development Agreement for Ennore Project in Washington DC with the development of Kulda mine, there is a possibility of shortfall in coal supply in the initial years of operation of the project and there is a suggestion to meet the shortfall from Talcher. However, efforts are being made to tie up the full requirement from Ib Valley mines to avoid transportation of coal from Talcher which would result in increase in tariff of the project as also add transportation risk. Power Purchase Agreement The draft Heads of Terms for PPA-1, to be signed between PTC and the project Company, were evolved by PTC s consultants ICICI and finalized after series of discussions amongst the beneficiary States/SEBs, MOP, CEA, PTC, ICICI and MAPL. PPA Committee was reconstituted by the Ministry of Power in July A number of rounds of discussions have taken place with the help of commercial and legal consultants, the last one in April The discussions on the PPA will be concluded after the Payment Security Mechanism is firmed up and coal supply sources to the power project finalised. Other Agreements Implementation Agreement between the Developer 22 and the Government of Orissa for provision of State support like land acquisition, arrangement of water, construction power etc. is another important agreement to be finalised on priority and is already discussed between the two at the highest level and PTC have extended necessary help, as required. Ennore LNG Based Power Project (5x370 MW) - Tamil Nadu Development of this project, based on imported LNG, was taken up by Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) for sale of entire power to TNEB. TIDCO had selected M/s Dakshin Bharat Energy Consortium (DBEC) as the preferred bidder, based on International Competitive Bidding. However, Tamil Nadu was not in a position to absorb the entire power from this project and MOP advised PTC to locate other buyers in the Southern Region for sale of surplus power. Joint Development Agreement was signed for the project in Washington DC between PTC and the sponsors on 14 September The major strength of this project is the fixed price of LNG in US Dollar term for the entire PPA term of 20 years. Tamil Nadu has confirmed offtake of 750 MW from the Project and signed MOU with PTC on 5 October Karnataka had indicated to take a share of 700 MW, but they have revised their requirement to 300 MW and MOU for the same is yet to be signed. Kerala has shown willingness to take 200 MW. Madhya Pradesh has also indicated willingness to take MW if tariff is competitive. Draft MOUs have already been forwarded to the other SEBs. The discussions on PPA with DBEC have been suspended pending signing of MOUs with the beneficiaries other than TNEB and finalisation of the Payment Security Mechanism. Pipavav Mega Power Project (2000 MW)-Gujarat Pursuant to revised Mega Power Policy, pre-qualification proposals were invited for the project by POWERGRID (on behalf of PTC, pending incorporation of PTC) in January 1999 through ICB route. Gujarat and Rajasthan will be

23 DIRECTORS REPORT the beneficiaries of the Project with share of 1500 MW and 500 MW respectively. Bidders were given the choice to structure the Project on imported fuel, either coal or Liquified Natural Gas (LNG). CERC issued an order in January 2000 regarding applicability of Availability Based Tariff (ABT) for Central Sector Generating Stations of NTPC. In response to the petition filed by PTC in February 2000, CERC issued an order on 9 March 2000 advising that the target availability concept may not be applicable to the projects through competitive bidding. Accordingly, PTC filed a petition to CERC on 13 April 2000 for approval of bidding methodology, evaluation criteria, tariff structure, PPA and procedures to be followed, as covered in the RFP. On the direction of CERC, PTC had filed Vol.I of amended RFP document on 31 January Revision of RFP Vol. II and III is held up for want of State Support Agreement conditions to be issued by the Government of Gujarat and PSM. Trading of Power Indo-Nepal Power Exchange The power exchange between India and Nepal is presently at the level of 50 MW and there is a proposal to enhance the exchange to 150 MW. Government of India, Ministry of External Affairs (MEA), in July 2001, formally intimated His Majesty s Govt. of Nepal about appointment of PTC as the Nodal Agency to deal with matters relating to exchange of power between the two countries. PTC has compiled information on the power exchanges with Nepal and also convened a meeting with concerned agencies viz. UPPCL, BSEB, Bihar Irrigation Department, NHPC, POWERGRID and CEA with a view to flag the issues that need to be resolved, steps to be taken for formulation of tariff based on commercial principles and enhancing the power exchange for mutual benefit of both the countries. PTC is also planning to organise an official meeting with Nepal Electricity Authority (NEA) for discussions on various issues such as modalities for billing and realisation, settlement of outstanding dues, techno-economic feasibility for potential power trade, formulation of tariff for future power exchange, etc. Chukha Power (Bhutan) Government of India, Ministry of power entrusted purchase and sale of surplus power from 336 MW Chukha H.E. project (CHPC) located in Bhutan (which is being dealt by POWERGRID) to PTC, date for the transfer has to be announced separately. In view of the fact that payment to CHPC has to be released within a specified time and PTC being in formative stage with a limited Capital base, MOP advised PTC to arrange for opening of Letter of Credit by the offtaking SEBs before taking over trading of Chukha power. PTC has now signed agreements with WBSEB, BSEB, GRIDCO and DVC with provision for payment through LC. The Agreement with Government of Sikkim and Jharkhand SEB is likely to be signed shortly, after which PTC is expected to take over the assignment. Surplus Power from Punjab to Gujarat PTC traded MU of energy from Punjab to Gujarat during the months of November and December 2000 with total earnings of Rs lacs to the Company. Trading Highlights MUs (MSEB to KPTCL-Jindal Vijaynagar Steel) MUs (MSEB to KPTCL-Jindal Vijaynagar steel) MUs (PSEB to GEB) MUs (till 16/07/01- from WBPDCL to DVB and HVPNL) MUs (till 16/07/01-from Malana to DVB) over 1000 MUs (expected) 23

24 DIRECTORS REPORT Surplus Power from WBPDCL PTC has signed an agreement with West Bengal Power Development Corporation Ltd. (WBPDCL) for purchase of power upto 200 MW till February Power to the extent of around 150 MW (about 3 MU energy daily) started flowing w.e.f. 12 June 2001 and sold to Delhi Vidyut Board and Haryana Vidyut Prasaran Nigam. Malana Power Malana Power Company Ltd. (MPCL) s 86 MW Malana Hydro Power Project in Himachal Pradesh has started generating power w.e.f. 5 July PTC has signed an agreement with MPCL for purchase of their entire power (after adjustment of free power admissible to HP Government and losses in the HPSEB transmission system) for a period of one year after commencement of generation. Memorandum of Understanding has also been signed with Delhi Vidyut Board for sale of the above power. About 1 to 1.5 MU are being supplied daily to DVB w.e.f. 5 July Other Trading Opportunities PTC has taken up with GRIDCO, Maharashtra State Electricity Board, Chattisgarh State Electricity Board, Punjab State Electricity Board and Government of Goa for trading of their surplus power. Some captive power plants have also approached the Company for trading of their surplus power and possibilities are being explored for the same. Energy Conservation, Technology Absorption, Forex Earnings & Outgo etc. PTC being engaged in trading of power, particulars relating to conservation of energy and technology absorption are not really applicable to it. The Company has incurred an expenditure of Rs lacs in foreign exchange on engagement of consultants etc. during the financial year Malana Hydro Power Project, Himachal Pradesh 24

25 DIRECTORS REPORT Hon ble Minister of Power, Shri Suresh Prabhu inaugurating PTC Website Website PTC s Website ( was launched on 8 February 2001 containing information on PTC s profile, vision, details of projects, trading activities, financial details, Buyers & Sellers registration etc. in order to facilitate on-line trading. Buyers and Sellers are now able to approach PTC for power transactions through this website. For this, standard formats have been devised and put on the Website. PTC is receiving fairly good response from the buyers as also from the sellers. Regional coordinators have been identified to respond promptly to the queries. Website is regularly updated to ensure that the latest information about the Company is made available to the stake holders. Business Plan Keeping in view the objectives of PTC, a Business Plan had been prepared in May 2000, by PTC s Consultants- ICICI, which was to be reviewed every year in the backdrop of vast changes taking place in the energy sector. Accordingly, ICICI was entrusted with the task of assisting PTC in revising the earlier Business Plan for short and medium terms to take into account the revised estimates of future trading opportunities as also the changes in assumptions with respect to the present status of development of Mega Power Project in the country. The draft Business Plan was discussed in the 13 th Board Meeting and suggestions regarding optimal level of liquidity required by PTC for its operations have been incorporated by the consultant. Accordingly, the draft Business Plan would now be discussed with the potential investors, finalised based on the feedback thereof and accordingly would then be adopted for implementation. Manpower At present, all the employees working in PTC are on deputation from the Promoter Companies like NTPC, POWERGRID, Government of India and other Power 25

26 DIRECTORS REPORT utilities like NHPC except one Asstt. Company Secretary who is on the Company s rolls. The employees relations in the Company have been very harmonious and constructive. All employees have regular interaction with the management at different levels. Particulars of the Employees During the Financial Year , no employee was employed for full or part of the year who was in receipt of gross remuneration in excess of Rs 12 lacs per annum or Rs 1 lac per month. Auditors M/s. K.N. Goyal & Co., Chartered Accountants were appointed as Statutory Auditors of the Company for the Financial Year by C&AG of India. The Statutory Auditors have audited the Accounts of the Company for the Year ended 31 March 2001 and Audited Accounts together with the Auditors Report thereon are annexed to this report. It is gratifying to The PTC Team note that there are no qualifying remarks from Statutory Auditors on the Accounts of the Company. Review of Accounts by the C&AG of India The Comptroller & Auditor General of India has no comments upon or supplement to the Auditors Report under section 619(4) of the Companies Act, 1956 on the Accounts of the Company for the year and his report is enclosed at Annexe-I. Board of Directors As per the Articles of Association of the Company, the first Directors of the Company retired at the first Annual General Meeting of the Company held on 11 October Shri P.I. Suvrathan, H.L. Bajaj, R.D. Kakkar and S.K. Dube were appointed as parttime Directors of the Company in the first Annual General Meeting of the Company. Dr. K.K. Govil, Director (Projects), PFC joined the Board of the Company on 9 March 2001.

27 DIRECTORS REPORT Acknowledgements The Board of Directors acknowledge with deep appreciation the co-operation received from the Government of India, particularly the Ministry of Power, three Promoter Companies viz. Power Grid Corporation of India Ltd., National Thermal Power Corporation Ltd. and Power Finance Corporation Ltd., State Electricity Boards, State Governments, Regional Electricity Boards, Central Electricity Authority and Central Electricity Regulatory Commission. The Board also acknowledges with thanks the constructive suggestions received from C&AG of India and the Statutory Auditors during the Audit process. The Board wishes to place on record its appreciation for efforts and contribution made by the employees at all levels which made possible the significant achievements during the very second year of the Company. For and on behalf of the Board of Directors Place: New Delhi Date: (Tantra Narayan Thakur) Chairman & Managing Director

28 BALANCE SHEET AS AT 31 st MARCH 2001 (Amount in Rs.) As at As at Schedule SOURCES OF FUNDS Shareholders Funds Share Capital A 60,000,100 60,000,100 Share Application Money (Pending allotment) 180,000,000 - Total 240,000,100 60,000,100 APPLICATION OF FUNDS Fixed Assets B Gross Block 4,979,727 1,164,948 Less: Depreciation 980, ,580 Net Block 3,999,635 1,005,368 Current Assets, Loans and Advances C Sundry Debtors 1,706,250 - Cash and Bank Balances 209,238,179 68,084,795 Other Current Assets 4,536,528 1,505,422 Loans & Advances 22,603,196 1,380, ,084,153 70,970,725 Less: Current Liabilities & Provisions D Current Liabilities (29,983,078) (16,633,708) Provisions (13,387,321) (5,496,274) Net Current Assets 194,713,754 48,840,743 Miscellaneous Expenditure E 39,665,562 9,554,270 Profit and Loss Account 1,621, ,719 Total 240,000,100 60,000,100 Significant Accounting Policies H Notes to the Accounts I Schedule A to I form an integral part of Accounts. Date : 28 May 2001 Place : New Delhi 26 Sd/- Sd/- Sd/- (Saroj Punhani) (Rakesh Nath) (Tantra Narayan Thakur) Executive Vice President(F) Director (Operations) Chairman & Managing Director As per our Report attached Sd/- For K.N.Goyal & Co., (Rajiv Maheshwari) Chartered Accountants Asstt. Company Secretary Sd/- (K. N. Goyal) Partner

29 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 st MARCH 2001 (Amount in Rs.) Year ended Period ended Schedule INCOME Electricity Sales 113,939,640 77,126,174 Service Charges 2,326,177 4,752,347 Incidental Income-Sale of Tender Documents - 5,492,750 Interest Earned (Gross Tax Deducted at Source Rs.1,583,652 Previous year Rs.897,079) 7,058,982 4,105,271 Foreign Currency Fluctuation (net) 644,176 - Excess Provisions Written Back 1,221,742 - Total 125,190,717 91,476,542 EXPENDITURE Electricity Purchase 113,903,568 76,417,448 Employee Cost F 5,513,338 5,178,881 Other Expenses G 4,037,875 7,359,438 Total 123,454,781 88,955,767 Net Profit/(Loss) before Amortization, Depreciation & Prior Period Items 1,735,936 2,520,775 Amortization & Write Off- Preliminary Expenses 915, ,992 Pre-acquisition Developmental Expenditure 1,189,075 1,189,075 Miscellaneous Pre-incorporation Expenses - 295,347 Deferred Revenue Expenditure-Strategic Planning 381, ,500 Depreciation 318, ,580 Prior Period Expenses 229,265 - Net Loss Before Taxation (1,298,430) (322,719) Provision for taxation - (277,000) Adjustment of taxes relating to earlier year 277,000 - Net Loss After Taxation (1,021,430) (599,719) Balance as per Last Account (599,719) - Balance carried to Balance Sheet (1,621,149) (599,719) Date : 28 May 2001 Place : New Delhi Sd/- Sd/- Sd/- (Saroj Punhani) (Rakesh Nath) (Tantra Narayan Thakur) Executive Vice President(F) Director (Operations) Chairman & Managing Director As per our Report attached Sd/- For K.N.Goyal & Co., (Rajiv Maheshwari) Chartered Accountants Asstt. Company Secretary Sd/- (K. N. Goyal) Partner 27

30 SCHEDULES-FORMING PART OF ACCOUNTS (Amount in Rs.) As at As at SCHEDULE A SHARE CAPITAL Authorised 150,000,000 equity shares of Rs.10/- each 1,500,000,000 1,500,000,000 Issued 24,000,010 Equity Shares of Rs.10/- each 240,000,100 60,000,100 Subscribed & Paid Up 6,000,010 equity shares of Rs.10/- each fully paid up 60,000,100 60,000,100 Total 60,000,100 60,000,100 28

31 SCHEDULE B FIXED ASSETS GROSS BLOCK DEPRECIATION NET BLOCK As at Additions Sales/ As at Up to For the Adjustments Up to As at As at DESCRIPTION 31/3/2000 Adjustments 31/3/ /3/2000 Year 31/3/ /3/ /3/2000 Furniture & Fixtures 637, , ,126,048 40, , , , ,702 Vehicles 470, ,175 (470,902) 533,175 90,760 92,285 (116,106) 66, , ,142 Office Equipments 56,185 3,272,601 (8,282) 3,320,504 28, ,501 (8,282) 619,880 2,700,624 27,524 Total 1,164,948 4,293,963 (479,184) 4,979, , ,900 (124,388) 980,092 3,999,635 1,005,368 Less : Developmental Expenditure on potential Power Projects transferred to Deferred Revenue Expenditure (626,863) Balance 318,037 (Amount in Rs.) Previous Year 0 1,164, ,164, , ,580 1,005,368 0 SCHEDULES-FORMING PART OF ACCOUNTS 29

32 SCHEDULES-FORMING PART OF ACCOUNTS (Amount in Rs.) As at As at SCHEDULE C CURRENT ASSETS, LOANS & ADVANCES i. Sundry Debtors (Unsecured, considered good) Due for less than six months 1,706,250 - ii. Cash & Bank Balances Cash, Stamps & Imprest Balance with Scheduled Banks - Term Deposits 192,047,924 67,858,266 Current Accounts 17,034, ,241 Cheques in Hand 156,005 - iii. Other Current Assets 209,238,179 68,084,795 Interest accrued 4,536,528 1,505,422 iv. Loans & Advances (Unsecured, considered good) Loans - Inter Corporate Deposits 13,000,000 - Employees 1,425,998 - Advances recoverable in cash or kind or for value to be received Due from Employees 284, ,198 Others 5,297, ,231 Deposits with Custom, Port Trust & Other Authorities 115,000 21,000 Prepaid taxes 2,480, ,079 22,603,196 1,380,508 Total 238,084,153 70,970,725 30

33 SCHEDULES-FORMING PART OF ACCOUNTS (Amount in Rs.) As at As at SCHEDULE D CURRENT LIABILITIES & PROVISIONS (i) Current Liabilities Sundry Creditors 20,033,029 1,131,911 Advances from Customers - 4,038,928 Book Overdraft (Bank) 3,924,765 - Security Deposit Received 5,000 - Other Liabilities - Towards Promoters 3,906,572 11,277,615 - Statutory Liabilities 2,113, ,254 (ii) Provisions SCHEDULE E 29,983,078 16,633,708 - Pay Revision 40,000 1,800,000 - Retirement Benefits 59, ,346 - Taxation - 277,000 - Expenses to promoters 2,705,079 2,800,000 - Others 10,582, ,928 13,387,321 5,496,274 Total 43,370,399 22,129,982 MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) (A) Deferred Revenue Expenditure - (i) Developmental Expenditure on potential Power Projects 32,123,204 - (ii) Pre-Acquisition Developmental Expenditure 3,567,227 4,756,302 (iii) Strategic Planning 1,227,155 1,134,000 36,917,586 5,890,302 (B) Preliminary Expenses 2,747,976 3,663,968 Total 39,665,562 9,554,270 31

34 SCHEDULES-FORMING PART OF ACCOUNTS (Amount in Rs.) Year ended Period ended SCHEDULE F EMPLOYEE COST Salaries, Allowances & Benefits 13,204,972 4,286,218 Contribution to Provident & Other Funds 1,115, ,015 Gratuity & Leave Encashment 1,171, ,346 Staff Welfare Expenses 888, ,302 16,380,361 5,178,881 Less : Developmental Expenditure on potential Power Projects transferred to Deferred Revenue Expenditure (10,867,023) - Total 5,513,338 5,178,881 SCHEDULE G OTHER EXPENSES Reimbursement of Expenses on Office premises/utilities 3,959,782 2,800,000 Remuneration & Expenses on Consultants 390,529 2,628,628 Advertisement 463,531 - Communication 998, ,893 Business Development 420, ,252 Travelling and Conveyance Expenses 2,641, ,505 Printing & Stationery 675, ,557 Fees & Expenses to Directors 80, ,428 Legal Expenses - 220,840 Auditors Remuneration Statutory Audit fees 21,000 10,500 Tax Audit fees 9,450 - Taxation Matters 22,000 - Other Matters 26,250 - Out of Pocket Expenses 5,326 - Other General Expenses 1,363, ,835 Less : Developmental Expenditure on potential Power 11,077,087 7,359,438 Projects transferred to Deferred Revenue Expenditure (7,039,212) - Total 4,037,875 7,359,438 32

35 SCHEDULES-FORMING PART OF ACCOUNTS SCHEDULE- H SIGNIFICANT ACCOUNTING POLICIES 1. Basis of preparation of Accounts These financial statements are prepared under the historical cost convention and in accordance with applicable Accounting Standards in India. The financial statements adhere to the relevant presentational requirement of the Companies Act, Fixed Assets i. Fixed Assets are stated at original cost less accumulated depreciation. Cost of acquisition is inclusive of freight, duties and taxes and incidental expenses related to acquisition, installation and commissioning. ii. Depreciation is provided on Written Down Value method as per the rates and the manner prescribed in the Schedule XIV to the Companies Act, In respect of the assets costing Rs. 5,000/- or below, depreciation is provided at 100%. 3. Revenue i. Revenue from sale of power is accounted for based on rates agreed with the beneficiaries, excluding service charges wherever separately indicated in the agreement. ii. iii. Service charges include transaction fee charged under the contracts of purchase and supply of power. Revenue in the form of Management and/or Success Fee for services rendered in relation to development work of potential Power Projects is recognised when such fee is assured and determinable under the terms of the respective contract. 4. Expenditure i. Developmental Expenditure in relation to potential Power Projects is carried forward as Deferred Revenue Expenditure to be written off equally in five years beginning with the financial year when it is expected that significant developmental work would get concluded and the Preparatory Stage would end. Such expenditure comprises of payments to consultants, legal expenses, salaries and allowances to employees engaged in the developmental activities, other direct expenses and allocation of common expenses in proportion to the employee cost and is net of incidental revenue arising from sale of tender documents, processing fee, etc. ii. Pre-acquisition Development Expenditure i.e. payment towards developmental expenditure on potential Power Projects (net of revenue earned thereagainst) in respect of the period prior to take over of the developmental work by the Corporation is treated as Deferred Revenue Expenditure to be written off equally in five years from the year of take over. 33

36 SCHEDULES-FORMING PART OF ACCOUNTS iii. iv. Payments to consultants, other than those related to potential Power Projects, where the aggregate value of assignment exceeds Rs.10,00,000 and benefit of which is expected to accrue over a number of years are treated as Deferred Revenue Expenditure to be written off over a period of 5 years. Preliminary Expenses are amortized over a period of 5 years. v. Prepaid and prior-period items up to Rs. 5000/- are accounted to natural heads of accounts. 5. Retirement Benefits i. Liability towards retirement benefits to employees of the Corporation in respect of gratuity and leave encashment is accounted for on actuarial valuation basis. ii. Liability in respect of gratuity, leave encashment and provident fund of employees on deputation with the Corporation are accounted for on the basis of charges raised by the parent organisations. 6. Foreign Exchange Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Liability / receivables on account of foreign currency are converted at the exchange rates prevailing as at the end of the year and gains / losses thereon are taken to the Profit & Loss Account, except in case of liabilities relating to fixed assets, which are adjusted to the cost of acquisition of the asset. 34

37 SCHEDULES-FORMING PART OF ACCOUNTS SCHEDULE-I NOTES TO THE ACCOUNTS 1. Figures of the current year are not strictly comparable with those of the previous year as the previous year was the first year of the Corporation and the accounts of the previous year were drawn for a period of 11 months and 15 days. 2. The Corporation has changed its accounting policy with respect to treatment of developmental expenditure incurred on potential Power Projects. In the preceding year, such expenditures were being dealt with based on the terms of individual Proposals. The expenditures were treated as Deferred Revenue Expenditure only in cases where the Proposals envisaged payment of Management Fee to the Corporation. Otherwise, the expenditures were charged to the Profit & Loss Account. Previous year was the first year of operation of the Corporation and the developmental activities have commenced in full swing in the current year. Developmental Expenditure relate to addressing of key issues like the Payment Security Mechanism, framing of the Power Purchase Agreements, fixation of Tariff, modalities of purchase and sale, etc. These key issues are relevant to all the potential Power Projects and are one-time expenditures incurred to prepare and equip the Corporation to purchase and sell power of all potential Power Projects effectively in the future. The present trading operations of the Corporation are short term in nature. It is, therefore, considered appropriate to change the Accounting Policy to defer all the developmental costs till the end of the Preparatory Stage. The Accounting Policy has, therefore, been changed and all Developmental Expenditure, net of incidental income, are treated as Deferred Revenue Expenditure to be written off equally in five years beginning with the financial year as it is expected that significant developmental work would get concluded by that year. Had the Corporation not changed the Accounting Policy as above and accounted for Developmental Expenditure on the same basis as in the preceding year, loss for the year would have been higher by Rs.29,157,705/-. 3. As per the Revised Mega Power Policy of the Government of India, the Corporation has taken over all developmental work in respect of various Mega Power Projects from Power Grid Corporation of India Limited (POWERGRID). Reimbursement of expenditure to POWERGRID towards developmental expenditure incurred prior to take over of the work has been accounted for to the extent intimated, pending final reconciliation and confirmation of accounts. A Memorandum of Understanding between the Corporation and POWERGRID in respect of the said work is also under finalization. 4. Ministry of Power had directed that the Corporation will take over the trading of Power between M/s. Chukha Hydel Power Corporation Limited, Bhutan and the State Electricity Boards of certain Eastern states with effect from However, pending execution of the agreements and advice from Government of India to the Royal Government of Bhutan, trading is being continued to be undertaken by and accounted for by M/s. Power Grid Corporation of India Ltd. 5. The terms of award of Consultancy work to ICICI Ltd. for Hirma Power Project prescribes payment of fee to ICICI on recovery from the beneficiary State Electricity Boards. The value of services availed has exceeded the contract value because of increase in scope of work. Advances include Rs.10,37,500/- debited for recovery from the State Electricity Boards in respect of the additional work which is subject to confirmation by the State Electricity Boards. 6. Names of small scale industrial undertakings to whom the Corporation owes a sum exceeding Rs. 1 lac, which was outstanding for more than 30 days as at the Balance Sheet date- None. 7. Audit Fee is subject to approval by the shareholders in general meeting. 8. Estimated amount of capital commitments Nil. (Previous Year Nil). 9. Claims not acknowledged as debts Rs.20,99,329/- (Previous Year Rs11,99,329/-). 10. No provision for income tax is considered necessary in view of losses. 35

38 SCHEDULES-FORMING PART OF ACCOUNTS 11. Quantitative information in respect of purchase and sale of power: Qty. in MUs Value in Rupees Purchase ,903,568 76,417,448 Sales ,939,640 77,126, Remuneration to Directors (including Chairman & Managing Director) Rs. Rs. Salary, Allowances & Benefits 222,266 61,428 Contribution to Pension Fund 15,939 - Leave Salary Contribution 10,445 - Directors Sitting Fees 80,000 40,000 a. The above remuneration includes benefits drawn by the Director (Operations) who took over additional charge w.e.f However, pending formal appointment and approval by the Competent Authority, he continues to draw remuneration from his parent organisation. No provision is considered necessary in respect of his remuneration. b. In addition to the above remuneration, the whole time Directors have been allowed the use of staff car including private journey on payment of Rs.780/- p.m. as contained in the Ministry of Finance (BPE), Circular No. (18)/pc 164 dt. 29/11/1964 as amended. 13. Expenditure in foreign currency: (on accrual basis) Business Development - 35,080 Payment to Consultants 4,948, ,846 Travelling 287, Income earned in foreign exchange - 542, Figures of the previous year have been regrouped/reclassified wherever considered necessary to conform to current year s classification. 16. Schedules A to I form an integral part of accounts. Date : 28 May 2001 Place : New Delhi 36 Sd/- Sd/- Sd/- (Saroj Punhani) (Rakesh Nath) (Tantra Narayan Thakur) Executive Vice President(F) Director (Operations) Chairman & Managing Director As per our Report attached Sd/- For K.N.Goyal & Co., (Rajiv Maheshwari) Chartered Accountants Asstt. Company Secretary Sd/- (K. N. Goyal) Partner

39 INFORMATION PURSUANT TO PART IV OF SCH. VI OF THE COMPANIES ACT 1956 BALANCE SHEET ABSTRACT AND COMPANY S GENERAL BUSINESS PROFILE I Registration Details Registration Number State Code 55 Balance Sheet Date Date Month Year II Capital raised during the year (Amount in Rs. Thousands) Public Issue Rights Issue Nil Nil Bonus Issue Private Placement Nil 180,000 III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities Total Assets 283, , Sources of Funds * Paid-up Capital Reserves & Surplus 240, Nil * including share application money pending allotment Secured Liabilities Unsecured Loans Nil Nil Application of Funds Net Fixed Assets Investments 3, Nil Net Current Assets Misc. Expenditure 194, , Accumulated Losses 1,

40 INFORMATION PURSUANT TO PART IV OF SCH. VI OF THE COMPANIES ACT 1956 IV Performance of Company (Amount in Rs. Thousands) Turn Over * Total Expenditure 125, , Profit/Loss before tax Profit/Loss after tax (-) 1, (-) 1, * including Other Income Earnings per Share in Rs. Nil Dividend rate% Nil V Generic Names of Three Principal Products/ Services of Company (as per monetary terms) Product Description Item Code Number 1. Trading of Power Not applicable 2. To act as facilitator for Not applicable development of Mega Power Project Sd/- Sd/- Sd/- (Rajiv Maheshwari) (Saroj Punhani) (Rakesh Nath) Asstt. Company Secretary Executive Vice President (F) Director (Operations) Sd/- (T.N. Thakur) Chairman & Managing Director 38

41 AUDITORS REPORT TO THE MEMBERS OF POWER TRADING CORPORATION OF INDIA LIMITED We have audited the attached Balance Sheet of POWER TRADING CORPORATION OF INDIA LIMITED as at 31 st March 2001 and the Profit & Loss Account for the period ended on that date annexed thereto and report as under: 1. As required by the Manufacturing and other Companies (Auditors Report) Order, 1988 issued by the Company Law Board in terms of section 227(4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. 2. Further to the comments in the Annexure referred to in paragraph 1 above: i. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. ii. iii. iv. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books. The Balance Sheet and Profit & Loss Account referred to in this report are in agreement with the books of accounts. In our opinion, the Profit & Loss Account and Balance Sheet comply with the mandatory accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, v. On the basis of written representations received from the Directors and taken on record by the Board of Directors, we report that none of the Directors is disqualified from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, vi. In our opinion and to the best of our information and according to the explanations given to us, the said Accounts read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view: a. in the case of the Balance Sheet, of the state of affairs of the Company as at 31 st March, 2001; and b. in the case of the Profit & Loss Account, of the loss of the Company for the year ended on that date. Date: 28 May 2001 For K.N. GOYAL & Co., Chartered Accountants Sd/ (K.N.GOYAL) Partner 39

42 ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph (1) of Report of even date) 1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. The fixed assets have been physically verified by the Management during the period and no material discrepancies were noticed on such verification. 2. None of the fixed assets have been revalued during the period. 3. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 or from companies under the same management within the meaning of section 370(1-B) of the Companies Act, The Company has not granted any loans, secured or unsecured to companies, firms or other parties listed in the register maintained under section 301 or to companies under the same management as defined under section 370(1-B) of the Companies Act, The Company has not granted any loans or advances in the nature of loans except to employees where principal and interest, wherever applicable, are being recovered as stipulated. 6. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of equipments and other assets. 7. The Company has not made any purchase or sale of goods or services in pursuance of contracts or arrangements with parties listed in the register maintained under section 301 of the Companies Act, 1956, and aggregating during the period to Rs. 50,000/- or more in respect of each party. 8. The Company has not accepted any deposits to which the provisions of section 58A of the Act or the Rules framed thereunder apply. 9. The Company has constituted an Internal Audit Team during the year, but no formal report on the audit has been submitted. 10. All the employees working for the Company, except one, are on deputation with the Company and in respect of these employees, provident fund dues were generally being remitted in time to the parent organisation. Provident Fund and Employees State Insurance dues were not applicable to the Company during the year under report. 11. As explained to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty or excise duty were outstanding as at 31 st March 2001, for a period of more than six months. 12. According to the information and explanations given to us, no personal expenses of employees or Directors have been charged to revenue account other than those payable under contractual obligations or in accordance with generally accepted business practice. 13. In respect of services rendered: a) The nature of services rendered do not involve consumption of materials. b) Considering the nature of services rendered, it is not considered necessary by the management to allocate man-hours consumed to the relative jobs. 14. The nature of goods traded by the Company is such that there can be no question of any damaged goods. 15. Clauses (iii), (iv), (v), (vi), (xii), (xiv), (xvi) and (xx) of paragraph 4A of the aforesaid Order were not applicable to the Company. Date: 28 May For K.N.GOYAL & Co., Chartered Accountants Sd/- (K.N. GOYAL) Partner

43 ANNEXURE-I TO THE DIRECTORS REPORT COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956, ON THE ACCOUNTS OF POWER TRADING CORPORATION OF INDIA LIMITED, FOR THE YEAR ENDED 31 st MARCH, 2001 I have to state that the Comptroller and Auditor General of India has no comments upon or supplement to the Auditors Report under Section 619(4) of the Companies Act, 1956, on the accounts of Power Trading Corporation of India Limited, New Delhi, for the year ended 31 st March, Place: New Delhi Date: 17 July 2001 Sd/- (Revathi Bedi) Principal Director of Commercial Audit and Ex-officio Member, Audit Board-III, New Delhi 41

44 42 ORGANISATIONAL STRUCTURE CMD Advisor Corporate Planning Director (Opn.) Exe. V.P. (Fin./P&A) Exe. V.P. (Proj.) Exe. V.P. (Comml.) HR Contracts & Legal Trading Co. Sectt. Mega Projects Commercial A/Cs & Fin. Control Other Thermal Projects Admn. & Procurement Other Hydro Projects Financial Analysis (PPA)

45 Success is not to be measured so much by the achievement but by the obstacles overcome in the process. 43

46 44

47 PROMOTER COMPANIES Power Grid Corporation of India Ltd. B-9, Qutab Institutional Area, Katwaria Sarai, New Delhi National Thermal Power Corporation Ltd. NTPC Bhawan, 7, Institutional Area, Lodi Road, SCOPE Complex, New Delhi Power Finance Corporation Ltd. Chandralok Building, 36, Janpath, New Delhi