Ladies and Gentlemen, CMD s Speech for 17 th AGM It is my privilege to welcome you all to the 17 th Annual General Meeting of PTC India Ltd. I express my sincere gratitude to all of you for your confidence and continued support. It is your confidence that has enabled us to remain the market leader and go from strength to strength every year. The company s accounts for the year ending 31 st March 2016 along with Directors Report and the Auditors Report have already been circulated. With your permission, I would like to take them as read. Macro Outlook India - Asia s third-largest economy maintains its growth rate at 7.6% for FY16, even as emerging markets like China, Russia and Brazil are slowing down. Indian economy crossed the USD 2.02 trillion mark, compared to USD 1.9 trillion in the previous year supported by improved agriculture output, better manufacturing, mining, electricity production and lower interest rates leading to higher consumption. On the flip side, economy is still under financial stress due to low capacity utilization, lower offtake and consequent NPAs. The baseline projection for global economic growth in 2016 is a modest 3.2%, broadly in line with last year. The recovery is projected to strengthen in 2017 and beyond, driven primarily by emerging markets and developing economies, as conditions in stressed economies start gradually to normalize. Industry Outlook Power sector observed a significant increase in the generation capacity during FY16 with an addition of 30.42 GW and reached to 298 GWs by March 2016. Power supply situation improved with
energy deficit decreasing from 3.6% to 2.1% and peak deficit decreasing from 4.7% to 3.2% with an improvement in the transmission system and availability of fuel. During FY2015-16, the electricity generation in India increased by 5.6% to 1,108 BUs from 1,049 BUs during FY15 and trading constituted 10% of the generation when short term bilateral trades, exchange traded power and the surrogate for trades i.e. Unscheduled Interchange are taken together. FY16 observed a substantial 16.4% increase in the traded volumes as compared to FY15 from 99 BUs to 115.23 BUs. Looking at the challenges, the single most important issue impeding the growth of the power market is lack of demand due to stressed financial health of the Discoms. The initiatives taken by government to improve the sector like UDAY, New Tariff Policy, and coal rationalization & allocation policy are aimed at improving the offtake and availability of power at affordable prices. These measures shall take more time to revive the sector fully. The focus of the power sector reforms now is distribution system. Efficiency measures such as IT enablement, automation, demand side management and capacity building along with financial restructuring are key implementation areas. Operational Performance FY 2015-16 Let me share some of the highlights of Financial Year 2015-16 of your company. Your company maintained its leadership position with a market share of 35% in the power trading business. During FY16, your company s trading volumes increased by 14% to 42,372 MUs as compared to 37,137 MUs during FY15. This year your company s Profit After Tax (PAT) was up by 15% to Rs. 233.61 Crores from Rs. 203.10 Crore during FY15. There has been reduction in the tariffs in the power market, due to which, despite a
substantial increase in the volumes, total revenue of your company decreased by 2.1% to Rs. 12,798.72 Crores from Rs. 13,081.65 Crores in FY15. However, Operating Margin was up by 14% to Rs. 349.56 Crores as against Rs. 306.43 Crore in FY15 and also the net margin realization improved to 5 paisa from 4.6 paisa in FY15 displaying an increase of 8.6%. There has been an important policy shift initiated by Ministry of Power (MoP) in short term power trading business, namely the launch of an e bidding platform, the Discovery of Efficient Electricity Prices (DEEP) online bidding portal. As a knowledge driven company with transparent business practices, your company is benefiting from the adoption of this platform. Your company has been successful in more than 35% of the total business transacted on the DEEP platform. Dividend Your Board of Directors have recommended dividend @25% i.e. Rs 2.50 per Equity Share as compared to the dividend @22% i.e. Rs 2.20 per share in the previous year. Financial Performance of the PTC Group Your company s subsidiaries PTC India Financial Services Limited (PFS) and PTC Energy Limited (PEL) are on a high growth path. The consolidated turnover of the group is Rs. 14,038.26 crore for the Financial Year 2015-16 as against Rs. 13,939.19 crore for the Financial Year 2014-15. The consolidated Profit After Tax (PAT) of the Group is Rs. 430.25 crore in this Financial Year as against Rs. 256.26 crore in the previous financial year.
PFS recorded a revenue of Rs 1,186.9 Crore during FY16 as compared to revenue of Rs 801.9 crore during FY15. Profit after tax for FY16 stood at Rs 391.1 crore. PFS is strategically positioned as a niche player in the power and infrastructure financing space. Presently, more than 40% of its investment portfolio is in the renewable energy segment. PEL was set up to develop an asset base of power projects and also fuel intermediation. PEL has commissioned two wind power projects with cumulative capacity of 50 MW in Madhya Pradesh. Cross Border Power Trade Cross-border trades have always been of a significant part of your company s business. I am happy to inform you that, your company is engaged with Nepal, Bhutan & Bangladesh for cross border transactions and together they have contributed around 7,150 MUs (16.88%) of the total traded volumes. Further, your company has signed Power Purchase Agreement (PPA) for 40 MW for medium term supply to Bangladesh for 2 years. Your company is also engaged in capacity building programmes in the area of Power Trading for officials from Nepal, Bhutan, Bangladesh and Afghanistan. New Business Avenues: Your company has been focusing on new businesses to cater to the dynamic needs of the industry and customers. PTC Retail, which was set up for facilitating power supply to the industrial and commercial consumers, has been growing at a fast pace. The retail business traded 7,189.62 MUs in the FY 2015-16. We have added reputed
organizations such as Delhi Metro Rail Corporation, Indian Railways, SAIL, Reliance Industries, ACC Cements etc. in our client list. Your company has increased its presence in the portfolio management business for Utilities, as it executed/extended agreements with Jharkhand Bijli Vitran Nigam Limited, Indian Railways and New Delhi Municipal Corporation for managing their power portfolios. Your company has also diversified by having a footprint in the energy efficiency space, and is supporting DELP schemes (Govt. of India s flagship project) in four States viz Maharashtra, UP, Himachal Pradesh and Rajasthan as a project management consultant. Similar services are being provided in street lighting projects in two circles in Andhra Pradesh. Your company has mapped its potential and identified key areas for delivering knowledge-based value by rendering advisory services. As part of the advisory services, your company assisted petroleum refineries in assessing feasible transmission connectivity for optimized power procurement, contract structuring and transaction advisory in procurement of power through open access. Your company partnered with the British High Commission under its Prosperity Fund Programme for preparing the Indian power market for carriage and content separation through collaboration with the UK. PTC worked in close association with key stakeholders in preparing the Indian business of supply licensee (introduced in draft Amendment to Electricity Act 2003) in India and undertook pilot studies for TPDDL (Delhi) and PSPCL (Punjab). The industry is shifting towards environment friendly sources of energy and your company has also made substantial progress in this arena. Your company entered into an MoU with Solar Energy Corporation of India (SECI) for sale and purchase of power
generated from 3,000 MW solar projects for onward sale on long term basis for 25 years. Your company is also supporting SECI in managing the operational and commercial aspects of solar energy being traded through SECI under JNNSM Phase-I. The total volume facilitated for SECI was 973 MUs in FY16. Further, CRISIL has awarded highest MNRE GRADE SP 1A to your company indicating the company has Highest Performance Capability and Highest Financial Strength to undertake projects in Solar PV technology. Talent Management People are the core assets of the Company. Your Company places development and retention of talent at its highest priority. Your Company has continued to achieve an organizational balance by recruiting limited positions at the top and senior management levels and strengthening the middle and junior management team of professionals. During the year, your company continued to provide thrust to its organizational development programme and has been developing systems and processes that maximize human potential. Your company has further refined its KRA/KPI based Performance Management System to link and measure individual performance with the organizational performance score card during the year. An Internal Complaints Committee is in place to look into any grievances/complaints of sexual harassment lodged by women employees as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Corporate Social Responsibility As a responsible corporate, your company is committed to the welfare of the communities in the society where it operates, through its Corporate Social Responsibility initiatives. In this endeavor, PTC
Group Companies PTC, PFS and PEL have joined hands for the CSR initiatives in the areas of environment, sanitation and skill development. As part of its CSR initiatives, PTC signed an MOU with South Delhi Municipal Corporation for adoption of part of Bhikaji Cama Place under the Swachh Bharat program and the project is working successfully. To uplift the social status of underprivileged, PTC has initiated projects on promotion of education, gender equality and women empowerment at Village Basai, Gurgaon. Your company has also taken up skill development projects to enhance the livelihood of underprivileged strata of society at wind power project sites in Ratlam, Madhya Pradesh. Your company also contributed to The Prime Minister s National Relief Fund towards relief for Nepal, Bihar, West Bengal & Uttar Pradesh earthquake affected people. Acknowledgement I wish to end with a note of thanks to our valued customers, both domestic and international for their continued support. We would not have reached this position without the encouragement & support received from all our shareholders and members of the Board. We also wish to express our gratitude towards the Ministry of Power, MNRE and Ministry of External Affairs, Government of India, our promoters viz. NTPC, POWERGRID, PFC and NHPC, Financial Institutions and banks for their unflinching support to the Company and its initiatives. We would also like to thank our collaborators for their help and assistance, which has provided a great fillip to us to pursue our efforts. Let me conclude by quoting Steve Jobs Great things in business are never done by one person. They're done by a team of people. In the context of PTC, team PTC is working at its best to fulfil expectations of its stakeholders. We will continue to look for
innovative solutions by convergence of technology, ideas and people to create a better future. I once again thank you for being with us this afternoon. Date: 28 th September, 2016 Place: New Delhi (Deepak Amitabh)