The Directors hereby present their Eighty-fourth annual report on the
business and operations of the Company and the statement of accounts
for the year ended 31st March, 2000.
The summarised financial results are : Previous Year
The profit before tax and after providing
for depreciation amounted to 198,64,78,397 150,19,88,087
Less : Provision for taxation 58,17,78,157 49,83,93,731
Profit after tax and before statutory
appropriations 140,47,00,240 100,35,94,356
Less : Statutory appropriations 15,49,23,572 9,86,32,067
Distributable Profit 124,97,76,668 90,49,62,289
which the Directors have appropriated to :
(i) Proposed Dividend 3,29,82,845 24,44,12,158
(ii) Interim Dividend 24,40,73,053 Nil
(iii) Net provision for Dividend for
earlier years 2,183 Nil
(iv) General Reserve 45,00,00,000 30,00,00,000
leaving a balance carried forward of 52,27,18,587 36,05,50,131
The Directors declared an interim
dividend for the year 1999-2000 at Rs.
3.70 per share on Equity Shares
(including 59,450 shares not allotted but
held in abeyance) (1998-99 Rs. 3.70 per
share) 24,40,73,053 Nil
The Directors recommend a final dividend
of Re. 0.50 per share, if declared by the
shareholders at the Annual General
Meeting 3,29,82,845 24,44,12,158
The Directors recommend payment of
dividend for the year ended 31st March,
1999 on Equity Shares, which were as on
31st March, 1999 forfeited, which
forfeiture was annulled by the Board of
Directors on 31st January, 2000 2,183 Nil
POWER SECTOR OUTLOOK
During the current year, power sector reforms have been gaining
momentum. In order to accelerate the reforms and the ultimate
privatisation of the State Electricity Boards (SEBs), the Government of
India is introducing a new Electricity Bill 2000. Several States
including Maharashtra have initiated the reform process of
corporatisation of the SEBs. The Maharashtra Electricity Regulatory
Commission has already started functioning. Tata Electric Companies
with their past record and experience will therefore be having
increasing opportunities for accelerated growth. In the recent past,
Tata Electric Companies have grown from being a Maharashtra-based power
company supplying Mumbai area, to a national player, presently
operating in Karnataka, Bihar and Madhya Pradesh. In the current phase
of reforms, Tata Electric Companies will be targeting much larger
projects in various States.
The Board of Directors has approved a scheme to merge the Company and
The Tata Hydro-Electric Power Supply Company Limited with The Tata
Power Company Limited. Based on an independent valuation, the Board
approved a swap ratio of 4 shares in The Tata Power Company Limited for
5 shares of the Company. The merger will result in a much stronger
Balance Sheet, greater leverage for Tata Electric to participate in
large projects and from the investors' view point it will also improve
liquidity. The change in stamp duty structure facilitated the merger
during the current year.
The outlook of demand in Mumbai for power generated by Tata Electric is
encouraging. Because other generation capacities for Mumbai are fully
loaded, further growth in electricity demand of 4-6% per annum in
Mumbai will accrue to the Companies. TEC have accelerated their direct
marketing initiatives and have set up consumer substations at different
load centres in North Mumbai.
Tata Electric Companies' on-going projects are being implemented to
schedule. The refurbishments of the 3x24 MW Hydro Units at Bhivpuri
were completed and commissioned during the financial year. The 2x120
MW Units at Jamshedpur are also progressing as per schedule with the
first Unit due to be commissioned by December, 2000. The plant and
equipment for 80 MW Unit at Belgaum has been delivered at site and the
erection activities are progressing to schedule for commissioning by
the year-end. The operations of the 67.5 MW Unit at Jamshedpur have
also been at a very high level with Plant Load Factor of 91%. Overall,
the whole year has been of steady progress for Tata Electric which has
contributed to the very good results.
A) FINANCIAL HIGHLIGHTS
The distributable profits for the year were higher at Rs. 125 crores as
compared to Rs. 91 crores for the previous year. In the last ten
years, the Company has been achieving higher record profits each year,
resulting in a compound annual growth of 32%.The Company declared an
interim dividend of 37% during the year and has recommended a final
dividend of 5%.
The Companies once again made the returns allowed under the Electricity
(Supply) Act, 1948 for the 51st year in succession. Profit from the
captive power plants continues to increase due to higher performance
levels at Jojobera and Wadi Stations.
An issue which was unresolved for the last couple of years, was
regarding the fair sharing of standby charges. The Government of
Maharashtra, through its Order, has directed that your Company and its
distribution licensee share the standby charges at the same rates and
conditions as charged by MSEB to TEC. While awaiting receipt of the
payment, the Companies have taken this into account for the year ended
31st March 2000.
In anticipation of our growth plans, your Companies had raised funds
which were, as expected, surplus till absorbed by the Companies'
capital expenditure and investment plans. This temporary surplus has
been judiciously deployed generating a non-recurring income of Rs. 48
crores through buy-back of Yankee Bonds of U.S. $ 60 million, purchase
and sale of mutual fund units and securities. At the year end, the
surplus accumulated generation of previous years have been
substantially invested in projects and long-term strategic investments.
It is expected that the remaining surplus funds would also be shortly
deployed and yield operating income for the Companies.
The rate of return was delinked from the bank rate for investments made
after 1-4-1999 and is pegged at 16% per annum. The Companies are
continuing their efforts to delink the rate for the earlier periods
The draft Electricity Bill 2000 has proposed a market- based pricing to
be approved by the Regulator as part of the Government's effort to make
the power sector a competition driven sector.
The Companies continue to maintain the highest rating of AAA and LAAA
awarded by CRISIL and ICRA respectively for its borrowings. During the
year, the Company issued Debentures aggregating to Rs.115.50 crores on
private placement basis.
The total deposits and loans from the public, shareholders and
employees outstanding as on 31st March 2000 amounted to Rs.1 5.05
crores. 521 deposits amounting to Rs. 41.54 lakhs matured, but had not
been claimed or renewed by the depositors as on that date. Out of
these, 107 deposits amounting to Rs.8.61 lakhs have since been renewed
The notes to the accounts referred to in the Auditors' Report are
self-explanatory and, therefore, do not call for any further comment.
Hydro generation of the Companies was at a high of 1613 Million Units
(MUs) during the year as compared to 1350 MUs in 1998-99.
At Bhivpuri Generating Station, installation of the three new 24 MW
Units of improved efficiency was successfully completed together with
the commissioning of a new penstock. This would enable generation of
about 25 MUs additional energy every year, from the same amount of
water, due to better efficiency of the turbines and lower friction
losses in the penstocks.
The first phase of the kundli Water Augmentation Scheme was also
completed and about 23 MUs of additional energy was generated.
Trombay Thermal achieved a thermal generation of 7360 MUs in 1999-2000
as compared to 7670 MUs in the previous year. The thermal units
operated with an overall plant availability of 88.9% as compared to 84%
Power System Improvements
The transmission and distribution losses in the Tata Electric System
for the year were again at an all time low of 2.2% (2.3% for the
previous year), which indicates a very well designed and maintained
The transmission and distribution network was strengthened to maintain
the reliability of power supply. The highlights are as under :
An additional 110 kV line between Trombay Thermal Power Station and
Parel Receiving Station, using existing 110 kV network which will
enhance the capacity of Parel Receiving Station.
The existing transmission and distribution network has been further
strengthened during the year to maintain the reliability of power
supply by commissioning of two new sub-stations at Bandra-Kurla Complex
and at Bandra-BMC Pumping Station, addition of new high voltage cables,
transmission lines, shunt capacitors, SCADA systems, replacement of
circuit breakers, etc. at various generating and receiving stations.
Electronic Research and Development
Electronic Research and Development Services forged ahead with the
initiation/award of several repeat orders for the supply of Rugged
Computers, Fault Tolerant Systems, High Performance Graphics
Workstations and Platform Hoisting and Retraction Systems during the
year. Orders have also been received from CLW, Indian Railways for the
supply of sub-systems for Locomotives.
The Companies' proposal for setting up a 220 kV
Receiving Station at Backbay has been cleared by all Government
agencies and construction of the Receiving Station and 220 kV
underground transmission lines and fibre optic network from Dharavi
Receiving Station to Backbay along the Western side of the city is in
an advanced stage.
The 220 kV Receiving Station is scheduled to be commissioned by March
2001 which will enhance the reliability of power supply to South
Mumbai, as it would complete the Ring Distribution system for Mumbai
Trombay Repowering Project
TEC have submitted a proposal to the Maharashtra Government to re-power
their existing two 500 MW multifuel fired Thermal Units by the
installation of 2x225 MW Gas Turbines. This project is unique insofar
as it offers the users of Mumbai the lowest capital cost for additional
power required for Mumbai. Against a norm of about Rs.3 crores per MW,
this project will cost only Rs.1.9 crores per MW for an additional
generation of 450 MW. Further, it will improve efficiencies of the
existing plants and ultimately result in more competitive power tariff.
It is also more environment-friendly and being nearest to the city will
enable is landing, protecting the consumers from power breakdowns in
the Western Grid. The Companies are also actively pursuing
opportunities for increasing the distribution business in the State.
2x120 MW Units at Jojobera Station
A substantial part of the project activities (68%) for Unit II of 120
MW has been completed. Hydro Test of the first Boiler has been
successfully done on 24th January 2000. All the materials required for
successful commissioning of the Unit by December 2000 are now at
Jojobera site and work on all the fronts is progressing satisfactorily.
Drum lifting for the Unit No. III of 120 MW had been successfully done
in the month of March 2000 and the first Unit will be commissioned by
the year end.
As already stated earlier, the exercise of re-powering the existing 500
MW Units at Trombay will provide the Mumbai consumer with low cost
power by improving the efficiency of the existing Units 5 and 6.
TEC have a long-term strategic interest in the Liquid Natural Gas (LNG)
industry as it will offer their Thermal Power Plant at Trombay greater
fuel economy, efficiency and is a cleaner fuel from the environmental
point of view. It will also provide fuel for re-powering the existing
two 500 MW Units. A joint venture company, India Natural Gas Company
Limited (INDIGAS) with TOTALFINA Elf of France has been formed. A
Joint Co-operation Agreement has also been signed with Gas Authority of
India Limited (GAIL) for their participation as equal partner in the
joint venture company.
After persistent efforts, the Companies have been awarded a Build, Own,
Operate and Transfer License by Mumbai Port Trust. The jetty will
ensure timely supplies of fuels for Trombay Thermal Power Station. The
implementation will be taken up concurrently with the LNG facilities.
1000 MW Mangalore Power Project
The Government of Karnataka has approved TEC's participation as
co-promoters (with 30% equity stake) in the 1000 MW Mangalore Power
Project (MPC) with China Light & Power- Power International. Efforts
are on to evolve a suitable payment security structure for MPC and
progress the further development of this major project.
The project is among the eight major projects identified by the
Government of India and has several positive features. Firstly, being
coal-based, the fuel pricing is more stable. All statutory clearances
are in place and the counter guarantee has also been cleared by the
Government of India. The Karnataka Government is considering alternate
to the escrow mechanism after which the project would be moving forward
with greater momentum.
An additional 110 TPH boiler along with 25 MW Unit 3 is being added to
increase the capacity of the existing power plant to 75 MW.
TELECOM AND BROADBAND BUSINESS
TEC are poised to exploit the potential of exponential growth in
broadband business in India. The city of Mumbai accounts for 30% of
the national e-business traffic. TEC already have a 400 kms. Optic
Fibre Network and an additional 1200 kms. Right of Way for further
development in Mumbai, which would cover the entire Greater Mumbai
including the commercial, residential and industrial centres in the
TEC will spearhead the Tata Group's thrust into telecom infrastructure
and will synergise their activities with other Group companies, to
optimally exploit the potential of the Communications and Information
Systems Business Sector.
You will see that Tata Electric is aiming to become a much larger
national player in the power sector and into interrelated
infrastructure like LNG and broadband/communication businesses.
TATA GROUP PURPOSE
Our purpose in TATA is to improve the quality of life in India. Tatas
do this through leadership in sectors of National Economic significance
to which they bring unique set of capabilities. The heritage of
returning to society what we earn evokes Trust among consumers,
employees, shareholders and the community. This heritage will be
continuously enriched by formalising the high standards of behaviour
expected from employees and the Companies. The Tata name is a unique
asset representing leadership with Trust. Leveraging this asset to
enhance group synergy and become globally competitive is the route to
sustained growth and long term success.
12.0 OUR VALUES
The five Tata values are :
We must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.
We must be caring, showing respect, compassion and humanity for our
colleagues and customers around the world, and always working for the
benefit of India.
We must constantly strive to achieve the highest possible standards in
our day-to-day work and in the quality of the goods and services we
We must work cohesively with our colleagues across the group and with
our customers and partners around the world, building strong
relationships, based on tolerance, understanding and mutual
We must continue to be responsible, sensitive to the countries,
communities and environments in which we work, always ensuring that
what comes from the people goes back to the people many times over.
The name TATA says it all. It encompasses the lowest common Tata
denominator the way others see us
The basic philosophy of corporate governance in the Companies is to
have fidelity and transparency, keeping in view the needs and interests
of other stakeholders. The Companies believe that good corporate
practices enable the Board to direct and control the affairs of the
Companies in an efficient manner and to achieve their ultimate goal of
maximising the stakeholder value. Realising this,the Companies have
adopted many practices over the last few years, prior to the same being
made mandatory, viz. Constitution of an Audit Committee, Remuneration
Committee, etc. The Companies are committed to transparency in all
their dealings and to provide better services and place uncompromising
emphasis on integrity and regulatory compliance.
The Internal Audit Department reports any significant findings to the
Audit Committee comprising of non-executive Directors. The Committee
met 5 times during the year to review the audit observations, adequacy
of actions taken and followed up implementation of corrective actions.
The Committee also met the Companies' statutory auditors to ascertain
their views on the adequacy of internal control systems in the
The Companies have adopted the Tata Code of Conduct which entitles them
to use the Tata Brand name. All the officers of the Companies have
pledged compliance with the Code of Conduct which prescribes the manner
in which the employees will conduct the Companies' business.
TATA BUSINESS EXCELLENCE MODEL
In order to enhance the level of service to our customers and improve
the overall organisational performance, the Companies have been
following the JRD QV Business Excellence Model since 1995. The Tata
Quality Management Services (TQMS), a division of Tata Sons Ltd.,
conducts the assessment of all companies in the group on the basis of
this model. There has been a steady improvement in our performance.
YEAR 2000 (Y2K) COMPLIANCE
The proactive steps taken by the Companies ensured that there was no
disruption to its computer systems at the time of roll over to the year
In line with the Company's constant endeavour to provide best possible
services to the Shareholders, the Equity Shares of the Company
effective 29-10-1999 are now also available for dematerialisation under
the depository system operated by Central Depository Services (India)
Ltd. in addition to National Securities Depository Ltd. The
Shareholders can now have the benefit of multiple depository system in
22 kV/11 kV Ring Main Units have been installed at consumer nodes for
improving reliability of distribution.
Programmable logic controllers have been used for automation of new 3 x
24 MW hydro units at Bhivpuri.
ENERGY CONSERVATION, ENVIRONMENT PROTECTION AND COMMUNITY DEVELOPMENT
As a result of replacement of old 12 MW Units by new and more efficient
24 MW Units at Bhivpuri Hydro Generating Station, the efficiency of the
Generating Station has increased by about 8%. Similar work is in
progress at Khopoli Generating Station.
The Companies have always been conscious about the environment
protection and the community development programmes in their area of
operation. The Companies have undertaken eco-restoration and
eco-development programme in the catchment areas of their lakes in
Mawal and Mulshi Talukas which are located in the ecologically fragile
and sensitive areas of Western Ghats and are considered to be the hot
spots of Bio-diversity. Over the past 30 years, the Companies have
planted over 70 lakhs saplings of 60 tree species on the hill slopes in
the catchment areas. It is planned to plant a further 5.2 lakhs
saplings during the monsoon of 2000 in the lake catchment areas. The
above programme of afforestation was intensified in 1995 and the
Companies have been planting over 6 lakhs trees mainly evergreen and
indigenous species under the guidance of an expert committee. The
surrounding hills have not only become green and aesthetically
picturesque but also attracting different species of birds and animals.
The Companies are conducting a comprehensive School Environment
Education Programme with the help of Bharti Vidyapeeth Environment
Education and Research Institute, Pune. This non-formal environment
education programme is designed to bridge the gap between the syllabus,
the classroom teaching and real life issues related to environment
concerns. This has helped to develop among the student community the
new values pertaining to conservation of natural resources. The
Companies also conduct workshops for capacity building in teachers for
imparting environment education.
Establishment of an Environment Interpretation Centre to create general
awareness in people is under consideration.
Conservation of endangered species of flora and fauna, distribution of
fruit trees and providing fingerlings of fast growing fish species free
of cost to village panchayats to augment the village income, improve
the quality of water of village ponds and to create employment
opportunities, provision of drinking water for the panchayats from the
Companies' Lakes and by tankers and bullock carts to drought prone
villages on request from the Government, construction of Primary
schools and providing medical aid in rural areas by organising medical
camps with the help of Doctors of Rotary Club are some of the
activities undertaken by the Companies for the environmental protection
and community development.
TRAINING AND HUMAN RESOURCE DEVELOPMENT
The Training and Human Resource Development functions have been
re-aligned to the organisation's overall business plans, in order to
meet the current and future challenges facing the organisation.
Training programmes have been restructured with a renewed focus to
orient employees to the changing environment and growing competition.
Employee Satisfaction Survey and 360 Degree Feedback processes have
been introduced to identify areas for improvement in the organisation
and its human resources effectively.
The Driving Force
People have always been Tata Electric's greatest asset, and the
industrial harmony amidst their employees and the Companies' Union, has
enabled the Companies to face and overcome many challenges several
times. A long-term agreement was signed with the Union during the
year. This spirit will enable the Companies to continue to play a
significant role in the development of our nation.
FOREIGN EXCHANGE EARNINGS/OUTGO
Foreign exchange earnings of the Company amounted to Rs. 32 crores in
the year under review, whereas the outgoings during the year were Rs.
234 crores, mainly on account of purchase of equipment, repayment of
foreign currency loans and interest thereon and fuel purchases of
The overall approach to safety has been made more scientific in terms
of introduction of safety audit by external agency, regular training
programmes on first aid, general safety and fire fighting and
installation of gas leakage detection system in the gas handling zones
at Trombay. The compliance of safety both statutory or otherwise is
DISCLOSURE OF PARTICULARS
Particulars required by the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 are given in the prescribed
format as Annexure I to the Directors' Report.
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 given in Annexure II to
the Directors' Report.
Dr S Ganguly stepped down as Vice-Chairman of the Company. He also
resigned from the Board of the Company with effect from 9th June 2000.
The Board placed on record its appreciation of the valuable
contribution made to the Company by Dr Ganguly.
Mr Asoke Basak, a Director of the Company, resigned on 12th June 2000.
The Board placed on record its appreciation of the valuable
contribution made to the Company by Mr Basak.
In accordance with the requirements of the Companies Act, 1956 and the
Articles of Association of the Company, Mr H N Sethna and Mr N B Godrej
retire by rotation and are eligible for re-appointment.
Members will be requested as usual to appoint Auditors and to authorise
the Board of Directors to fix their remuneration. In this connection,
the attention of the Members is invited to Item No.7 of the Notice and
its relative Explanatory Statement.
Members will also be requested to pass a resolution (vide Item No.8 of
the Notice) authorising the Board of Directors to appoint
Auditors/Branch Auditors/Accountants for the purpose of auditing the
accounts maintained at the Branch Offices of the Company in India and
Form for disclosure of particulars with respect to technology
Research & Development (R&D)
1. Specific areas in which R&D carried out by the Company :
Electronic Systems and Software Development.
2. Benefits derived as a result of the above R&D :
Indigenous capabilities towards providing optimal, custom- designed
hardware and software solutions for the Industry.
3. Future Plan of Action :
(a) Offer Design and Consultancy Services in Hardware and Software.
(b) Implement a major initiative towards seeking global opportunities
in System Software.
4. Expenditure on R&D : (Rs. lakhs)
(a) Capital : 6.39
(b) Recurring : 24.80
(c) Total : 31.19
Technology absorption, adaptation and innovation
1. Efforts, in brief, made towards technology absorption, adaptation
and innovation :
Implementation of IEEE 12207 standards and use of Case Tools for
establishing an advanced software design, development and documentation
2. Benefits derived as a result of the above efforts :
Core Competencies in servicing global software opportunities.
3. In case of imported technology (imported during the last 5 years
reckoned from the beginning of the financial year) following
information may be furnished :
a) Technology imported : None
b) Year of import : NA
c) Has technology been fully absorbed? : NA
d) If not fully absorbed, areas where : NA
this has not taken place, reasons
therefor and future plans of action