SHAPING INDIA S VIBRANT POWER MARKET 6th Annual Report

Transcription

1 POWER TRADING COMPANY LIMITED SHAPING INDIA S VIBRANT POWER MARKET 6th Annual Report

2 CONTENTS AGM Notice 08 Directors Report 10 Management Discussion and Analysis 13 Auditors Report 16 Balance Sheet 20 Profit and Loss Account 21 Cash Flow Statement 22 Schedules forming part of Balance Sheet 23 Schedules forming part of Profit and Loss Account 26 Notes forming part of the Accounts 27

3 ABOUT US TATA POWER TRADING COMPANY LTD. IS A WHOLLY OWNED SUBSIDIARY OF THE TATA POWER COMPANY LTD. The Tata Power Company is India s oldest and largest private sector power utility with an installed generation capacity of 2,785 MW. The Company has emerged as a pioneer in the Indian power sector, with a track record of performance, customer care and sustained growth. Tata Power has a presence in all areas of power sector viz Generation (thermal, hydro, solar and wind), Transmission and Distribution. Tata Power Trading Company Ltd. was incorporated on 31st December, 2003 and registered as a Limited Company on 16th February, We are the first company in the country to be awarded a power trading license by Central Electricity Regulatory Commission on 9th June, The Category A License that the company had obtained then was upgraded to Category F on 9th June Tata Power Trading Company Ltd. has become a trailblazer in Power trading with a host of innovative initiatives. Tata Power Trading has been at the forefront in shaping India's vibrant power trading market. With access to Technical, Managerial and Financial resources of its parent company, it is uniquely equipped to provide an unmatched range of services, customer care and complete payment security to its customers at the most competitive rates. As an extremely well knit organization, it has domain expertise in all segments of Power Trading whether it be Marketing, Commercial or Operations, supported ably by the Finance, Legal and Administrative functions. In a short span of time after procuring the license, Tata Power Trading has catalyzed the flow of electricity across the length and breadth of the country helping bridge the demand and supply gap of the various utilities.

4 VISION To be the most respected and one of the leading Power Trading Companies in India. MISSION To evacuate power from surplus regions/entities thereby helping them in optimum resource utilization. To serve power customers in deficient States/regions in a reasonable manner. To conduct trading of power in a transparent manner assuring both suppliers and customers of dependable and efficient service. To make power trading business a growth oriented business with good future potential in various regions in India and bordering countries. To emerge viable in a strong competitive environment by using relevant technology and deploying talented people. CORE VALUES Conduct business in accordance with Market Dynamics and yet care for customers and suppliers. Abide by Tata Code of Conduct scrupulously as also the Regulatory guidelines and procedures. Provide opportunities to employees to deliver excellent performance and offer corresponding career progression. Foster team work and mutual respect and strive to accomplish the mission intelligently and diligently. FUELING PROGRESS THROUGH EXPERTISE

5 WE ARE DETERMINED TO DELIGHT ALL OUR CUSTOMERS THRU TRANSPARENT, EFFICIENT AND DEPENDABLE SERVICES IN THE AREAS OF POWER TRADING, FUEL MANAGEMENT, CDM AND RELATED ADVISORY SERVICES. SHAPING INDIA S VIBRANT POWER MARKET

6 BOARD OF DIRECTORS Mr. S. Ramakrishnan Chairman Mr. S. Ramakrishnan holds a B.Tech (Mechanical) degree from IIT, Madras and a Management degree from IIM, Ahmedabad. He joined The Tata Administrative Service in 1972 and during his long tenure handled a multitude of national as well as international projects. He is currently Executive Director (Finance) of The Tata Power Company Ltd. He is also on the Board of several Tata companies. Mr. Amulya Charan Managing Director Mr. Amulya Charan is a B.E. (Mechanical) from the University of Roorkee, India and Post-Graduate Diploma in Business Administration from Indian Institute of Management, Ahmedabad. He has an overall experience of 37 years in various industries, ranging from consumer goods, international marketing, joint venture promotion, automotive components, information technology, telecom and power sector. He has been with The Tata Group since He is also on the Board of several Tata companies. Mr. S. Padmanabhan Director Mr. Sankaranarayanan Padmanabhan, or "Paddy" as he is better known, is the Executive Director (Operations) at Tata Power and is responsible for all the Company's Operations, including the Mumbai Licence Area business and also the Maharashtra Projects. Mr. Padmanabhan brings rich experience in large-scale project build up and delivery, global sourcing and value creation in operational efficiencies. He joined TCS in 1982 as a trainee and progressed into various roles. As the Executive Director & Head Global Human Resources of Tata Consultancy Services Limited (TCS), he drove initiatives at TCS's helm to create a multi-lingual and culturally-diverse global workforce and was responsible for over 100,000 employees worldwide. In his capacity, he achieved the highest retention rates at TCS as compared to the overall Indian IT industry, besides creating a world-class training and learning focused organisation, capable of integrating over 30,000 new employees every year. Mr. Sunil Wadhwa Director Mr. Sunil Wadhwa is the Chief Executive Officer & Executive Director of North Delhi Power Limited (NDPL), a joint venture of Tata Power and Govt. of Delhi. Mr. Wadhwa joined NDPL as Chief Finance Officer in August 2002, when the company started its operations on taking over the erstwhile DVB's distribution business in North/West Delhi. In the last 5 years, NDPL has achieved a record 50% reduction in Aggregate Technical and Commercial Losses, as compared to the opening loss level. Today, NDPL is acknowledged for excellence in service enhancement and innovative consumer friendly interfaces. Mr. Wadhwa has been with Tatas for last 21 years, starting with Hitech Drilling, a joint venture of Tata Group and Schumberger of France in the Oil and Gas drilling business. He was also instrumental in setting up Tata Petrodyne Limited, the oil exploration business of the Tata Group. His last assignment prior to NDPL was with Tata Chemicals as CFO till 2002.

7 Mr. Ashok Sethi Director Mr. Ashok Sethi, a metallurgical engineer from IIT, Kharagpur, started his career as a Mechanical Maintenance Engineer at Tata Power s Trombay Thermal Power plant. He was associated with the erection & commissioning of India s first 500 MW thermal unit with multi-fuel firing facility and Quality Assurance & commissioning of second 500 MW unit. Mr. Sethi subsequently headed Mechanical Maintenance, Planning and Coal handling plant O&M for 1330 MW Trombay station. He assumed charge of three Hydro power stations of Tata Power in 2004 and in addition, from 2006 he was also responsible for T&D business area. In 2007, as Sr. General Manager he was heading Commercial Operations covering Regulatory, Corporate Sourcing, Fuel procurement and Customer relations for the License Area-Mumbai. Mr. Sethi assumed charge as Vice President, Mumbai License Area Operations from He is responsible for Thermal & Hydro Stations, Load Control Center, Revenue collection, Customer relations, Demand Side Management and Fuel logistic for its thermal plants. During the above tenure, Mr Sethi has presented number of papers at conferences organized by NITIE, IIPE, NTPC, CII etc. Mr. Sharad Baijal Director (Held post till 3rd June, 2009) Mr. Sharad Baijal graduated from BIT, Mesra (Mech. Engineering) in Joined The Tata Steel in 1981 and worked there for 16 years before joining The Tata Power in He was General Manager-Operation Services (Eastern Region) in The Tata Power Jamshedpur Division and is currently Head (Operations) at CGPL. He has obtained his Post-Graduate Diploma in Business Management (PGDBM) from XLRI in He has his expertise in Power Plants including execution of projects and Operation & Maintenance of the same. Mr. Baijal is Director on the Board of Industrial Energy Limited, a wholly owned company of The Tata Power. He is also a member of Institution of Engineers and qualified External Assessor (EACP) for TBEM. Mr. Baijal is also a Convenor of Energy Panel, Confederation of Indian Industry, Jharkhand Council. Mr. U. S. Bapat Director (Appointed from 3rd June, 2009) Mr. U. S. Bapat is B.E. (Electrical). He has a Post-graduate Diploma in Management and Masters in Marketing Management from Jamunalal Bajaj Institute, Mumbai University. He has overall experience of over 35 years in the Power Industry. He has during the service handled several functions like Engineering and Planning, Transmission and Distribution & Operations and Maintenance & Hydro and Thermal Generation. At present he is Vice President, Operation (Eastern Region) for Tata Power Company Ltd. THE TATA BRAND SYMBOLIZES LEADERSHIP WITH TRUST. ETHICS AND TRUSTWORTHINESS ARE OUR INHERENT ASSETS AND WE STRIVE TO BRING BEST VALUE TO BOTH OUR SUPPLIERS AND CUSTOMERS. WE CONDUCT OUR OPERATIONS WITH PROFESSIONALISM, UNCOMPROMISING INTEGRITY, TRANSPARENCY AND COMMITMENT.

8 COMPANY INFORMATION COMPANY SECRETARY Mr T. N. Ramakrishan AUDITORS Deloitte Haskins & Sells 12, Annie Besant Road Opp. Shivsagar Estate Worli, Mumbai REGISTERED OFFICE Carnac Receiving Station 34, Sant Tukaram Road Carnac Bunder Mumbai CORPORATE OFFICE Tata Power Mahalaxmi Receiving Station Senapati Bapat Marg, Lower Parel Mumbai BANKERS HDFC Bank Ltd. ICICI Bank Ltd. State Bank of India State Bank of Patiala Standard Chartered Bank Limited TATA POWER TRADING HAS GROWN AT A COMPOUNDED AVERAGE GROWTH RATE EXCEEDING 100% SINCE INCEPTION. IT HAS TAKEN AN IMPORTANT POSITION AMONGST THE VARIOUS TRADING COMPANIES AND IS RECOGNIZED AS AN EFFICIENT AND RELIABLE TRADING COMPANY.

9 OUR ESTEEMED CUSTOMERS Our customers comprise of most of the State Utilities, CPPS, IPPs, Merchant Power Plants as well as Industrial Consumers. UTC PSEB HPSEB NDPL BYPL BRPL BHUTAN LAEDCL CAEDCL UAEDCL RDPPC HPPC UPPCL NPCL GUVNL MeSEB MPPTC Tata Steel MSEDCL Tata Power BEST RInfra APPCC CSPDCL GRIDCO WBSEDCL CESC Tata Power Tata Power PCKL KSEB TNEB SUPPLIERS BUYERS SUPPLIERS and BUYERS SUPPLIERS State owned utilities Andhra Pradesh (APPCC) Assam - LAEDCL I CAEDCL I UAEDCL Chhattisgarh (CSPDCL) Gujarat (GUVNL) Himachal Pradesh (HPSEB) Haryana (HPPC) Kerala (KSEB) Madhya Pradesh (MPPTC) Maharashtra (MSEDCL) Meghalaya (MeSEB) Orissa (GRIDCO) Punjab (PSEB) Rajasthan (RDPPC) Tamil Nadu (TNEB) Uttar Pradesh (UPPCL) West Bengal (WBSEDCL) Private Utilities Delhi - NDPL I BYPL I BRPL Maharashtra - The Tata Power Company Ltd. Karnataka - The Tata Power Company Ltd. West Bengal - The Tata Power Company Ltd. I CESC Captive Power Plants (CPPs) Jharkhand - Tata Steel Ltd. CPPs located in various States IPPs located in various States Renewable Energy Plants Sugar Co-gen power plants in various states Bio-mass based plants in various states Small Hydro plants in various states BUYERS State owned utilities Andhra Pradesh (APPCC) Assam - LAEDCL I CAEDCL I UAEDCL Chandigarh (UTC) Gujarat (GUVNL) Haryana (HPPC) Himachal Pradesh (HPSEB) Kerala (KSEB) Karnataka (PCKL) Madhya Pradesh (MPPTC) Maharashtra (MSEDCL) Meghalaya (MeSEB) Orissa (GRIDCO) Punjab (PSEB) Rajasthan (RDPPC) Uttar Pradesh (UPPCL) Tamil Nadu (TNEB) West Bengal (WBSEDCL) Private Utilities Delhi - NDPL I BYPL I BRPL Maharashtra - The Tata Power Company Ltd. BEST RInfra West Bengal - CESC Uttar Pradesh - Noida Power Company Ltd. Graphical representation of map. Not to scale.

10 NOTICE 8 Notice is hereby given that the Sixth Annual General Meeting of the Members of Tata Power Trading Company Limited will be held in the Conference Room of The Tata Power Company Limited, Bombay House, 24, Homi Mody Street, Mumbai on Thursday, 9th day of July 2009 at 3.00 p.m. to transact the following business :- Ordinary Business 1. To receive, consider and adopt the Audited Profit and Loss Account for the period ended 31st March, 2009 and the Balance Sheet as at that date together with the Report of the Directors and the Auditors thereon. 2. To declare dividend on 6% Non-Cumulative Redeemable Preference Shares. 3. To declare dividend on Equity Shares. 4. To appoint a Director in place of Mr. Sunil Wadhwa, who retires by rotation and being eligible offers himself for re-appointment. 5. To appoint a Director in place of Mr. Ashok Sethi, who retires by rotation and being eligible offers himself for re-appointment. 6. To consider and, if thought fit, to pass, with or without modification(s), the following Resolution as an Ordinary Resolution : RESOLVED THAT, subject to the provisions of Sections 224, 225 and other applicable provisions, if any, of the Companies Act, 1956, Messrs Deloitte Haskins & Sells, Chartered Accountants, be and are hereby re-appointed as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to examine and audit the accounts of the Company for the financial year , on such remuneration as may be mutually agreed upon between the Board of Directors of the Company and the Auditors plus reimbursement of service tax, travelling and out-of-pocket expenses. Special Business 7. To appoint a Director in place of Mr. U. S. Bapat, who was appointed as an Additional Director of the Company with effect from 3rd June, 2009 by the Board of Directors and who holds office upto the date of the forthcoming Annual General Meeting of the Company under Section 260 of the Companies Act, 1956 (the Act) and who is eligible for appointment and in respect of whom the Company has received a notice in writing under Section 257 of the Act from a member proposing his candidature for the office of Director. Notes 1. A member entitled to attend and vote is entitled to appoint a proxy to attend AND vote instead of himself and a proxy need not be a member. 2. Proxies, in order to be effective, must be received at the Registered Office of the Company, not less than 48 hours before the commencement of the Annual General Meeting i.e. by 3.00 p.m. on 7th July, Corporate Members are requested to send a duly certified copy of the Board Resolution, pursuant to Section 187 of the Companies Act, 1956, authorising their representative to attend and vote at the Annual General Meeting. 4. Members are requested to bring their admission slips alongwith copy of the report and accounts to the Annual General Meeting. 5. All the documents referred to in the accompanying notice are available for inspection at the Registered Office of the Company on all the working days between 11:00 a.m. to 1:00 p.m. upto the date of the Annual General Meeting. By Order of the Board of Directors, Mumbai, 3rd June, 2009 Registered Office : Carnac Receiving Station 34, Sant Tukaram Road Carnac Bunder Mumbai T. N. RAMAKRISHNAN Company Secretary

11 Explanatory Statement As required by Section 173 of the Companies Act, 1956 (the Act), the following Explanatory Statement sets out all material facts relating to the business mentioned under Item Nos. 7 of the accompanying Notice dated 3rd June, Item No. 7: Mr. U. S. Bapat is an electrical engineer with a Post graduate Diploma in Management (DMS) from Mumbai University and Masters in Marketing Management. He is also a Fellow of Institution of Engineers, India. He has completed 34 years of meritorious service in TATA Power. Key positions held in TATA Power are : Chief Hydro (In-charge of three hydro stations comprising of 447 MW) GM T & D (In-charge of Transmission & Distribution System of TATA Power supplying the city of Mumbai). Sr. GM LA Generation comprising of 1,777 MW (Trombay Thermal 1,330 MW, Hydros 447 MW and Wind 78MW (OLA)). Presently he is Vice President - Operations (Eastern Region) comprising 427 MW Jojobera, 250 MW Haldia and 120 MW Power House No.6 w.e.f 1st October,

12 DIRECTORS REPORT TO THE MEMBERS, The Directors are pleased to present their Sixth Annual Report on the business and operations of the Company and the statement of accounts for the year ended 31st March, FINANCIAL RESULTS FY 2009 (Rupees Crores) FY 2008 (Rupees Crores) (a) Revenue from Power Supply 2, (b) Income from Advisory Services/Consultancy (c) Other Income (d) Total Income 2, (e) Cost of Power Purchased 2, (f) Operating, Administration and other finance charges (g) Total Expenditure 2, (h) Profit Before Taxes (i) Provision for Taxation (j) Net Profit After Tax (k) Balance brought forward from the previous year (l) Balance which the Directors have appropriated as under to : (i) Proposed Preference Dividend (ii) Proposed Equity Dividend (iii) Additional Income-tax on Dividend (iv) General Reserve Total (m) Balance carried to Balance Sheet In its fourth full year of operation, the Company traded 2,996 MUs as compared to 1,711 MUs during the previous year, an increase of 75%. Revenues of the Company also increased by 146% from Rs crores to Rs. 2, crores. The Company has a CAGR of 151% in terms of power traded. In addition, to power trading business the Company also provided consultancy services for Energy Management, Project Analysis and Clean Development Mechanism (CDM). The Company earned revenues of Rs crore from advisory services/consultancy business during the year. During the year, Net Profit After Tax increased from Rs crores to Rs crores as compared to the previous year, an increase of 77%. The Company s short-term credit facility from banks was rated as BBB+ by Fitch Rating Agency. 2. DIVIDEND The Board has recommended a dividend of Rs. 2/- per share on Equity Shares (20%) same as last year, and Rs. 0.60/- per share on Cumulative Redeemable Preference Shares (6%) same as last year, for the year ended 31st March, 2009 for approval by the members. 3. DIRECTORS In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Sunil Wadhwa and Mr. Ashok Sethi retire by rotation. Mr. Sunil Wadhwa and Mr. Ashok Sethi being eligible offer themselves for re-appointment.

13 Mr. U. S. Bapat was appointed as Additional Director of the Company with effect from 3rd June, 2009 in accordance with Article 112 of the Articles of Association of the Company and Section 260 of the Companies Act, Mr. U. S. Bapat holds office only up to the date of the forthcoming Annual General Meeting and a notice under Section 257 of the Companies Act, 1956 has been received from a member signifying his intention to propose appointment of Mr. U. S. Bapat as a Director. Mr. Sharad Baijal resigned as Director with effect from 3rd June, 2009 The Board has placed on record its appreciation of the valuable contribution made to the Company by Mr. Sharad Baijal. None of the Directors of the Company are disqualified under Section 274 (1) (g) of the Companies Act, AUDITORS Members would be requested, as usual, to appoint Auditors for the current year and authorise the Board of Directors to fix their remuneration. Messrs Deloitte Haskins & Sells (DHS), the present Auditors who retire at the conclusion of the forthcoming Annual General Meeting are eligible for re-appointment and have expressed their willingness to be re-appointed and have given a certificate to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Act. 5. DISCLOSURE OF PARTICULARS Particulars of Employees: Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, regarding employees is not applicable as all the managers, executives and officers are employees of The Tata Power Co. Ltd. and are deputed to the Company. 6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The Company does not fall under any of the industries covered by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, Hence, the requirements of disclosure in relation to Conservation of Energy and Technology Absorption are not given. 11 While there were no foreign exchange earnings, the outgo during the year was Rs. 77,59,491/- (Rs. 2,81,550/-) on account of implementation Power Management System software platform and travelling expenses for employees. 7. CORPORATE GOVERNANCE Board of Directors of the Company has constituted Audit and Remuneration committees, even though it is not a listed company. The Company has an Audit Committee comprising of three Directors, viz. Mr. S Ramakrishnan, Mr. Amulya Charan and Mr. Sunil Wadhwa. Mr. S Ramakrishnan is the Chairman of the Audit Committee. The Company has a Remuneration Committee comprising of three Directors, viz. Mr. S. Ramakrishnan Mr. S. Padmanabhan, and Mr. Sunil Wadhwa. Mr S. Ramakrishnan is the Chairman of the Remuneration Committee. The Company has a Finance Committee comprising of three Directors, viz. Mr. S. Ramakrishnan Mr. Amulya Charan, and Mr. Ashok Sethi. Mr. S. Ramakrishnan is the Chairman of the Finance Committee. 8. SOCIAL RESPONSIBILITY The Company is committed to discharging its responsibility as a good corporate citizen. As part of its social responsibility, the Company conducted following activities:

14 In the spirit of International Women s Day, the Company jointly with The Tata Power Company Ltd. (Tata Power) conducted a workshop for lady employees, working at Trombay. The theme of the workshop was Women s Safety, Fitness and Health. Relevant topics like personal safety, safety awareness, physical/mental conditioning and work ergonomics were discussed. Female trainees were given special advice about being assertive and self confident. A training workshop on Quick Response Tactics was conducted by the Company jointly with Tata Power for Fire and Security departments at Trombay. They were imparted practical training in developing alertness, agility, physical reflexes and mental focus. Participants also received special instruction in unarmed combat to tackle antisocial elements. The Company also conducted a workshop on Personal Safety, Unarmed Combat and Positive Attitude for police personnel in Mumbai and Pune. The Company has identified initiatives to promote health care and energy conservation. An internal committee led by the Managing Director will drive the implementation of the identified initiatives. 9. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm that :- 12 i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures; ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have 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 at the end of the financial year and of the profit of the Company for that period; iii) iv) they have taken proper and sufficient care to the best of their knowledge and ability for the 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 fraud and other irregularities; they have prepared the annual accounts on a going concern basis. 10. ACKNOWLEDGEMENT The Directors thank the Ministry of Power, CERC the concerned state governments and all concerned statutory, including regulatory authorities. The Directors also thank The Tata Power Company Limited, Company s customers, vendors, business associates and bankers for the support to the Company. The Directors appreciate and value the contribution made by every member of the Tata Power Trading family. On behalf of the Board of Directors, Mumbai, 3rd June, 2009 S. Ramakrishnan Chairman

15 MANAGEMENT DISCUSSION AND ANALYSIS 1. INDUSTRY OVERVIEW Electricity Act, 2003 recognised Power Trading as a new segment apart from generation, transmission and distribution. Since then, Power Trading has been continuously evolving and proving. Newer concepts like Banking of Power, Power Exchange, Power Distribution Franchisees, etc. are developed in the Power Trading Industry in India. The competition has also grown fierce due to increase in number of licensed traders from 13 in FY to 43 in FY However total power traded as compared to total power generation in India is only about 4% to 5%. 2. OPPORTUNITIES & THREATS 2.1 Power Trading: India being developing country, its economy is growing at about 8% to 9%. Due to rapid urbanization and change in the lifestyle of the people, the demand for power is increasing. At present, India has Power deficit of 10% to 12%. Uneven development of power sector and seasonal variations in the various parts of the Country has created opportunities for Power trading in India. Government has also taken various regulatory initiatives and introduced favourable policies to attract private investment which has resulted in many Captives and Independent Power Plants come up. Power trading industry has good potential in India to prosper and fulfill the Short-term and Long-term demand of the various Consumers. i) Short-Term Power Trading The Company is actively involved in meeting the Short-Term Power requirement of various State Utilities and Distribution Companies (Discoms) by procuring the power from surplus States, Captive Power Plants (CPPs), Liquid Fuel based Power Plants and Renewable Energy Sources including small hydro power plants. 13 In India, most of the Discoms are required to buy a certain percentage of power from renewable sources. The Company is playing an active role in procuring renewable energy for many Discoms. It has traded approximately 10% green power of the total power traded during the year. The Company has also acted as power procurer for three franchisees in the State of Maharashtra in Pune, Navi Mumbai and Thane area. The Company is actively pursuing the opportunity for being a preferred power procurer for new franchisees that are being established. ii) Long-Term Power Trading: The Company has created long-term sources by tying up with power projects located across the country and include thermal power projects based on linked coal and imported coal, run of the canal hydro power plants, run of the river hydro power plants, renewable sources such as bagasse based cogeneration power plants, biomass based power plants and municipal solid waste based Power Plants. Long-term power trading business is expected to hedge the risk of erosion of short-term power trading on account of trend of increasing volume of short-term trade shifting to the power exchanges.

16 iii) Trading through Power Exchange: CERC has permitted trading of Electricity through Power exchange w.e.f. June Currently, two exchanges viz. Indian Energy Exchange (IEX) and Power Exchange of India (PXI) are in operation in India which facilitate an automated on-line platform for physical day-ahead contracts. Tata Power Trading is a registered Trading Cum Clearing Member of both exchanges. It trades Power through these Exchanges on behalf of its clients. This is one more platform for Tata Power Trading to optimize the sale of power from its esteemed clients in the market by securing most remunerative rates in the day-ahead market. Skilled experts in real time dispatch in our operations department and our Control Centre ensures high level of dependable power transactions. In FY 2009, the Company has traded 460 MUs through exchanges. 2.2 Energy Management The Company was appointed as an adviser for six months by The Brihan Mumbai Electricity Supply and Transport Undertaking (BEST) for managing their power surplus/deficit from 1st January, The assignment also included training managers from BEST for power procurement and scheduling activities Fuel Management Services The Company along with The Tata Power Company has an expertise and extensive relations with coal suppliers in India as well as outside India. The Company plans to offer services related to coal procurement and freight facilitation thereby contribute to project success. The Company with the backing of its parent, The Tata Power Company Ltd., has access to various fuel sources. 2.4 Clean Development Mechanism (CDM) There has been an increasing concern for reducing green house gas emissions all over the world. The Company has planned to exploit this opportunity and has developed a team of professionals with a high level of technical and financial expertise, engaged in providing CDM Advisory Services to renewable energy projects. Currently, the Company offers Clean Development Mechanism Approval Services, Carbon Portfolio Management Services and Structured Financial Solutions with CDM. 2.5 Advisory Services The Company offers Techno-Commercial Advisory/Consultancy Services to Discoms/ CPPs/ IPPs on matters pertaining to power dispatch, scheduling, evacuation, project formulation, operation and maintenance. The Company deploys its staff to provide end to end solution and also to train the staff of the client. 3. SEGMENT-WISE REVIEW OF THE COMPANY S BUSINESS The Company is primarily engaged in the business of power trading spanning across all parts of India. The Company has also started consultancy business. Power purchased from Particulars Total Trade Discoms Power Exchanges CPPs, Co-gens & IPPs MUs Traded ,668 2,996

17 Particulars Power Trading Consultancy Revenue Generated (Rs. Crores) 2, OUTLOOK Government of India (GoI) is encouraging the concept of Merchant Power Plants to meet the continuously growing demand in the country. This would help in developing a robust power trading business in the country. The Company has also obtained membership of the Indian Energy Exchange and Power Exchange India. The advent of power trading exchange will result in an efficient price discovery mechanism. The outlook for FY looks to be healthy with good scope for growth. Already, good quantum of power has been tied up through long-term agreements. 5. RISK AND CONCERNS Regulated margins continue to be a concern for the Company considering the increase in input costs. The Company is also concerned about increasing cost of power per unit which has lead to additional trading exposure and increased requirement of working capital. 6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company since its incorporation has been on a periodic basis reviewing its Internal Controls and updating its manuals for various processes like Accounting, Commercial, Tendering, Operations, etc. Internal Audit is conducted on an annual basis by qualified auditors, covering various areas. The Company is implementing a power management system to strengthen its Internal Control systems DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE The financial performance has been very much in line with the operational performance as stated in the section on segments above. The revenue streams have been in accordance with the plans. As for the operational performance, since the power flow has to be monitored on round-the-clock basis, a good amount of emphasis has been laid on staffing in the operation area. 8. MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED Over a period of Five years, since operations have begun, it has been realized that timely action with a high level of accuracy and precision are the key to success of this business. In this context, talented and qualified manpower plays a vital role. The management is pleased to inform that the attrition rate is quite reasonable and the management has been making serious efforts towards staff recruitment, training and retention.

18 AUDITORS REPORT TO THE MEMBERS OF TATA POWER TRADING COMPANY LIMITED 1. We have audited the attached Balance Sheet of TATA POWER TRADING COMPANY LIMITED as at 31st March, 2009, Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall financial presentation. We believe that our audit provides a reasonable basis for our opinion As required by the Companies (Auditor s Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above: (a) 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; (b) (c) (d) in our opinion, proper books of account as required by law have been kept by the Company, so far as it appears from our examination of those books; the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; in our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

19 (e) in our opinion and to the best of our information and according to explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India : (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009; (ii) (iii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. 5. On the basis of the written representations from the directors as on 31st March, 2009, taken on record by the Board of Directors, none of the directors is disqualified as of 31st March, 2009 from being appointed as a director under Section 274 (1)(g) of the Companies Act, For Deloitte Haskins & Sells Chartered Accountants N. Venkatram Partner Mumbai, 7th May, 2009 Membership No

20 ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date) (i) The nature of the Companies business/activities during the year is such that the Clauses (ii), (vi), (x), (xii), (xiii), (xiv), (xv), (xvi), (xviii), (xix) and (xx) of the Companies (Auditor s Report) Order, 2003 are not applicable. (ii) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) (c) As explained to us the assets have been physically verified by the management, in accordance with the established system of periodical verification of fixed assets. In our opinion, the frequency of verification is reasonable considering the size of the operations of the Company. No material discrepancies between the book records and the physical records were noticed in respect of the assets physically verified. In our opinion a substantial part of the fixed assets has not been disposed off by the Company during the year. 18 (iii) (iv) (v) (vi) (vii) According to the information and explanations given to us, the Company has neither granted nor taken any loans secured or unsecured, to or from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, Accordingly, Clause (iii) b, (iii) c, (iii) d, (iii) f and (iii) g of the Order are not applicable. In our opinion and according to the information and explanations given to us there are adequate internal control systems commensurate with the size of the Company and the nature of its business for purchase (including fixed assets)/sale of services, and we have not observed any continuing failure to correct major weakness in such internal controls. According to the information and explanations given to us, the Company has not entered into any contracts or arrangement with parties, which needs to be entered in the register maintained under Section 301 of the Companies Act, In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the management have been commensurate with the size of the Company and nature of its business. As informed to us by the management, Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, (viii) (a) According to the information and explanations given to us and according to the books and records as produced and examined by us, the Company has been generally regular in depositing undisputed statutory dues, including provident fund, income tax, sales tax, service tax, cess and any other material statutory dues with the appropriate authorities during the year. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, service tax and cess were in arrears as at 31st March, 2009 for a period of more than 6 months from the date they became payable.

21 (b) According to the information and explanations given to us there are no unpaid disputed amounts payable in respect of income tax, sales tax, service tax, and cess as at 31st March, (ix) (x) (xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or to debenture holders during the year. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, funds raised on a short term basis have, prima facie, not been used during the year for long-term investments. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year. For Deloitte Haskins & Sells Chartered Accountants N. Venkatram Partner Mumbai, 7th May, 2009 Membership No

22 BALANCE SHEET AS AT 31st MARCH, FUNDS EMPLOYED : Schedule As at 31st March, 2009 As at 31st March, 2008 Rupees Rupees Rupees 1. SHARE CAPITAL A 200,000, ,000, RESERVES AND SURPLUS B 124,767,696 65,780, UNSECURED LOANS C 27,695,438 TOTAL 324,767, ,475,780 APPLICATION OF FUNDS : 4. FIXED ASSETS D a. Gross Block 3,638,944 2,892,400 Less: Depreciation to date 947, ,208 2,691,585 2,265,192 b. Capital Work-in-Progress 10,712,805 13,404,390 2,265, INVESTMENTS E 1,056,838 10, DEFERRED TAX ASSET (Net) 3,848,800 1,776, CURRENT ASSETS, LOANS AND ADVANCES F Sundry Debtors 1,271,768, ,005,968 Cash and Bank Balances 380,019,114 82,655,435 Loans and Advances 11,081,577 13,770,681 Less : 8. CURRENT LIABILITIES AND PROVISIONS G 1,662,869, ,432,084 Current Liabilities 1,337,184, ,013,439 Provisions 19,226,867 17,315,260 1,356,411, ,328,699 NET CURRENT ASSETS 306,457, ,103, MISCELLANEOUS EXPENDITURE (to the extent not written off) H 320,331 TOTAL 324,767, ,475,780 Notes forming part of the Accounts I As per our report of even date attached. For and on behalf of the Board S. Ramakrishnan Chairman For Deloitte Haskins & Sells Amulya Charan Managing Director Chartered Accountants N. Venkatram T. N. Ramakrishnan Secretary Partner Mumbai, 7th May, 2009 Mumbai, 7th May, 2009

23 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009 Schedule Current Year Previous Year Rupees Rupees Rupees INCOME : 1. Revenue 1 21,719,253,571 8,821,147, Other Income 2 13,148,154 13,966,062 TOTAL INCOME 21,732,401,725 8,835,113,233 EXPENDITURE 3. Cost of Power Purchased 21,901,722,535 8,885,271,356 Less : Cash Discount Earned 349,166, ,545,576 21,552,555,556 8,724,725, Operating and Administration expenses 3 64,623,994 51,775, Depreciation 320, , Interest 4 586,960 85,224 TOTAL EXPENDITURE 21,618,086,661 8,776,886,501 PROFIT BEFORE TAXES 114,315,064 58,226, PROVISION FOR TAXATION a) Current Tax 39,000,000 16,991,000 b) Deferred Tax (2,072,800) (1,876,400) c) Fringe Benefit Tax 800, ,624 37,727,200 15,901, PROVISION FOR TAXATION IN RESPECT OF EARLIER YEARS a) Current Tax 285,250 (642,060) 38,012,450 15,259,164 PROFIT AFTER TAXES CARRIED TO BALANCE SHEET 76,302,614 42,967,568 APPROPRIATIONS 9. Dividend on: Preference Shares - Proposed 10,800,000 10,800,000 Equity Shares - Proposed 4,000,000 4,000,000 14,800,000 14,800, Additional Income Tax on Dividend 2,515,260 2,515, Transfer to General Reserve 6,000,000 3,500,000 23,315,260 20,815, BALANCE CARRIED TO BALANCE SHEET 52,987,354 22,152, Basic and Diluted Earning Per Share (in Rs.) (Face Value Rs.10) Notes forming part of the Accounts I 21 As per our report of even date attached. For and on behalf of the Board S. Ramakrishnan Chairman For Deloitte Haskins & Sells Amulya Charan Managing Director Chartered Accountants N. Venkatram T. N. Ramakrishnan Secretary Partner Mumbai, 7th May, 2009 Mumbai, 7th May, 2009

24 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, Year ended 31st March, 2009 Year ended 31st March, 2008 Rupees Rupees Rupees Rupees A. Cash Flow from Operating Activities Profit before Taxes 114,315,064 58,226,732 Adjustments for: Depreciation 320, ,860 Interest 586,960 85,224 Dividend from Current Investments (9,000,078) (13,896,584) Profit on Sale of Current Investments (24,168) (2,600) Miscellaneous Expenditure written off 320, ,332 Provision for Doubtful debts 6,427,252 5,665,266 (1,369,552) (7,528,502) Operating Profit before Working Capital Changes 112,945,512 50,698,230 Adjustments for: Trade and Other Receivables (683,032,658) (351,679,623) Trade and Other Payables 954,171, ,014, ,138,497 (204,664,835) Net Cash Generated/(Used) from Operations 384,084,009 (153,966,605) Taxes Paid (including Fringe Benefit Tax) (37,641,603) (18,692,192) (37,641,603) (18,692,192) Net Cash from/(used in) Operating Activities A 346,442,406 (172,658,797) B. Cash Flow from Investing Activities Purchase of Fixed Assets and CWIP (11,459,349) (896,687) Purchase of Investment (11,205,635,342) (7,170,867,141) Sale of Investment 11,204,613,544 7,376,651,834 Dividend Income 9,000,078 13,896,584 (3,481,069) 218,784,590 Net Cash from/(used in) Investing Activities B (3,481,069) 218,784,590 C. Cash Flow from Financing Activities Dividend Paid (14,800,000) Dividend Tax Paid (2,515,260) Proceeds from Borrowings 825,000, ,195,438 Repayment of Borrowings (852,695,438) (227,500,000) Interest Paid (586,960) (72,224) (45,597,658) 27,623,214 Net Cash from/(used in) Financing Activities C (45,597,658) 27,623,214 Net Increase in Cash and Cash Equivalents (A + B + C) 297,363,679 73,749,007 Cash and Cash Equivalents as at 1st April, ,655,435 8,906,428 Cash and Cash Equivalents as at 31st March, ,019,114 82,655,435 As per our report of even date attached. For and on behalf of the Board S. Ramakrishnan Chairman For Deloitte Haskins & Sells Amulya Charan Managing Director Chartered Accountants N. Venkatram T. N. Ramakrishnan Secretary Partner Mumbai, 7th May, 2009 Mumbai, 7th May, 2009

25 SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH, 2009 As at 31st March, 2009 As at 31st March, 2008 Rupees Rupees Rupees SCHEDULE A SHARE CAPITAL AUTHORISED CAPITAL 10,000,000 Equity Shares of Rs. 10 each 100,000, ,000,000 18,000,000 6% Non-Cumulative Redeemable Preference Shares of Rs. 10 each 180,000, ,000, ,000, ,000,000 ISSUED SUBSCRIBED AND PAID UP 2,000,000 Equity Shares of Rs.10 each fully paid 20,000,000 20,000,000 (The Company is a wholly owned subsidiary of The Tata Power Company Limited) 18,000,000 6% Non-Cumulative Redeemable Preference Shares of Rs.10 each fully 180,000, ,000,000 paid held by the holding company. (These shares would be redeemable at par at the end of the ten years from the date of allotment i.e. 24th May, 2005) 200,000, ,000,000 SCHEDULE B RESERVES AND SURPLUS GENERAL RESERVE Opening Balance 8,000,000 4,500,000 Add : Transfer from Profit and Loss account 6,000,000 3,500,000 14,000,000 8,000,000 PROFIT AND LOSS ACCOUNT Opening Balance 57,780,342 35,628,034 Add : Profit for the Period 52,987,354 22,152,308 Closing Balance 110,767,696 57,780, ,767,696 65,780,342 SCHEDULE C UNSECURED LOAN: Temporary overdrawn balances in Bank Current A/c 27,695,438 27,695, SCHEDULE D fixed Assets Particulars GROSS BLOCK DEPRECIATION NET BLOCK As at 1st April, 2008 Additions for the Year Deductions for the Year As at 31st March, 2009 As at 1st April, 2008 For the Year Deductions for the Year As at 31st March, 2009 As at 31st March, 2009 As at 31st March, 2008 Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees A TANGIBLE ASSETS 1 Computers 910, ,487 1,389, , , ,311 1,037, ,703 2 Furniture, Fixtures 617, , , ,573 35, , , ,118 and Office Equipment 3 Motor Vehicles 1,364,421 1,364, , , , ,751 1,040, ,892, ,544 3,638, , , ,359 2,691,585 2,265, ,995, ,687 2,892, , , ,208 2,265,192

26 SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH, 2009 SCHEDULE E INVESTMENTS OTHER INVESTMENTS - UNQUOTED - CURRENT Opening (Units) Purchased (Units) Sold (Units) Closing Balance (Units) Face Value as at 31st March, 2009 Cost as at 31st March, 2009 Cost as at 31st March, 2008 Rupees Rupees Rupees a) Templeton India Liquid Fund 1,087 47,804,956 47,700, ,683 1,056,830 1,056,838 10,872 1,056,838 10, During the year, the Company acquired and sold the following Investments: Particulars No. of units Purchase Cost a) Birla Sun Life Cash Plus - Instl. Prem. 269,924,793 2,704,511,468 b) HDFC Cash Management Fund - Saving Plan 154,270,614 1,640,883,954 c) HDFC Liquid Fund Premium Plan 28,214, ,097,406 d) UTI Liquid Cash Plan Institutional 865, ,449,739 e) UTI Fixed Income Interval Fund 500,000 5,000,000 f) UTI Money Market Fund 9,183, ,102,330 g) ICICI Prudential Institutional Liquid Plan 416,332,308 4,163,531,251 h) SBI Premium Liquid Fund 36,056, ,736,667 i) SBI Magnum Insta Cash Fund 32,431, ,232,234 j) Tata Liquid Super High Investment Fund 143, ,085,485 10,927,630,534 As at 31st March, 2009 As at 31st March, 2008 Rupees Rupees Rupees SCHEDULE F CURRENT ASSETS, LOANS AND ADVANCES a) Sundry Debtors (Unsecured) Debts outstanding for more than six months 11,318,685 5,677,249 Other Debts 1,272,542, ,993,985 Sundry Debtors 1,283,860, ,671,234 Less : Provision for Doubtful debts 12,092,518 5,665,266 1,271,768, ,005,968 Note: Sundry Debtors considered good 1,271,768, ,005,968 Sundry Debtors considered doubtful 12,092,518 5,665,266 1,283,860, ,671,234 b) Cash and Bank Balances Current Accounts with Scheduled Banks 380,019,114 82,655,435 Total Current Assets 1,651,787, ,661,403 c) Loans and Advances Unsecured Considered good-unless otherwise stated (i) Other Advances 1,067,006 3,234,641 (ii) Deposits 10,014,571 10,004,000 (iii) Advance Payment of Taxes (Net) 532,040 Total Loans and Advances 11,081,577 13,770,681 Total Current Assets, Loans and Advances 1,662,869, ,432,084

27 SCHEDULES FORMING PART OF THE BALANCE SHEET AT AT 31ST MARCH, 2009 As at 31st March, 2009 As at 31st March, 2008 Rupees Rupees Rupees SCHEDULE G CURRENT LIABILITIES AND PROVISIONS CURRENT LIABILITIES Sundry Creditors - Micro and Small Enterprises (Refer Note No. 2 to Schedule I ) Sundry Creditors - Others 1,332,675, ,379,521 Deposit received from Customers 1,935,000 Other Liabilities 2,574, ,918 Total Current Liabilities 1,337,184, ,013,439 PROVISIONS Provision for Taxation (Net) 1,911,607 Provision for Proposed Dividends 14,800,000 14,800,000 Provision for Additional Income Tax on Dividends 2,515,260 2,515,260 Total Provisions 19,226,867 17,315,260 Total Current Liabilities and Provisions 1,356,411, ,328,699 SCHEDULE H MISCELLANEOUS EXPENDITURE (to the extent not written off) Opening Balance 320, ,663 Amount Written off During the period 320, ,332 Closing Balance 320,331 25

28 26 SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009 Current Year Previous Year Rupees Rupees Rupees SCHEDULE 1 REVENUE a) Revenue from Power Supply 22,021,314,142 8,952,941,269 Less: Cash Discount allowed 348,400, ,292,536 21,672,913,305 8,798,648,733 b) Income from Advisory Services 9,035,498 4,700,000 c) Compensation Accrued (Net) 37,304,768 3,489,000 d) Miscellaneous revenue (Net) 14,309,438 21,719,253,571 8,821,147,171 SCHEDULE 2 OTHER INCOME a) Dividend from Current Investments 9,000,078 13,896,584 b) Profit on sale of Current Investments 24,168 2,600 c) Delay Payment Charges received 4,123,908 66,878 13,148,154 13,966,062 SCHEDULE 3 OPERATION AND ADMINISTRATION EXPENSES a) Payments to and Provision for Employees Salaries 12, ,479 Contribution to Provident Fund 36,520 Leave Encashment 121,733 Welfare Expenses 30,421 12, ,153 b) Stores, Oil etc. consumed 715,084 84,660 c) Rental of Land, Buildings, Plant and Equipments etc. 3,989, ,292 d) Repairs and Maintenance to Furniture, Vehicles etc. 175, ,199 e) Other Operation Expenses 17,157,820 11,777,319 f) Auditor s Remuneration (Refer Note 3 of Schedule I ) 1,584,930 1,552,253 g) Cost of Services Procured 17,900,373 17,520,206 h) Miscellaneous Expenses 14,728,217 13,054,452 i) Amount Written off - Miscellaneous Expenditure (Schedule H ) 320, ,332 j) Insurance 27,410 36,505 k) Bad Debts 1,584,679 - l) Provision for Doubtful Debts (Net) 6,427,252 5,665,266 64,623,994 51,775,637 SCHEDULE 4 INTEREST AND FINANCE CHARGES a) Interest on Short Term Borrowings 529,128 72,224 b) Interest on delayed payment of Advance Tax 57,832 13, ,960 85,224