It indeed gives me immense pleasure to welcome you all to the fourth
Annual General Meeting of the Power Trading Corporation of India Ltd.
During the financial year 2002-2003, which is virtually the second year
of its operations, your company exceeded every target by a substantial
degree and introduced many innovations. Its turnover during the year
reached Rs.927.37 Crores as against a target of Rs.850 Crores. The
trading volumes jumped to 4178 MUs, which is a major leap when compared
to 1617 MUs traded last year. Your Company earned a profit before tax
of Rs.19.53 Crores as against Rs. 7.66 Crores last year. The Board of
Directors of your Company declared an interim dividend @ 7% on the
paid-up capital, which is proposed to be treated as the final dividend.
PTCs mode of realization through weekly billing and a simple back up
payment security has been working well. Consequently, PTC has
maintained its unblemished record of no defaults to its suppliers.
Our customers have not only continued to do business through us but
have given us an opportunity to serve them better through identifying
latent opportunities for enhancing the sale or purchase of power.
The trading transactions of PTC now cover all the five electricity
Regions of the country. PTCs major trading partners include
West Bengal, Damodar Valley Corporation, Uttaranchal, Delhi, Haryana,
Malana Power Company, Gujarat, Maharashtra, Goa and Andhra Pradesh.
PTC has entered into deals with timeframes varying from 3 years to 3
days, thus progressively putting into shape the concept of a spot
market in the Indian Power Sector. Your Company has also been able to
put into effect a variety of concepts like time- of-day trading
involving power flows for specific time bands each day during the
contract period. Due to this, the same customer can sell and buy power
in the course of the same day i.e. one can buy power when in deficit
and can sell power when in surplus. Thus the vision of developing a
vibrant power market is gradually taking shape. The concept of
differential pricing of power, introduced by your Company, gives a
significant impetus to the achievement of this vision, as it
meaningfully assigns a market value to power traded at different times
of the day.
Owing to market conditions, PTC has shifted its focus from very large
power projects to small and medium sized projects that are being
promoted by IPPs. Many project developers approach PTC with indicative
proposals for large, medium and small sized hydropower projects located
in the Himalayan Range in India and in Nepal. Some proposals are with
respect to hydel projects located in states like Orissa. Proposals have
also come from competitive thermal power projects. These proposals are
under discussion. MoUs have been signed with developers of projects
like Lower & Middle Kolab hydro power projects in Orissa, Samal hydro
power project in Orissa, Vemagiri Gas based Project in Andhra Pradesh,
besides those of large projects like Maithon Thermal Project in
Jharkhand and West Seti Hydroelectric Project in Nepal.
Keeping in mind its larger role in the Indian Power sector, PTC is
marketing power from these projects to several State Utilities in the
country for long-term purchase. This will further enable your Company
to diversify its portfolio of power purchases, thus lowering its
overall business risk.
It is heartening to note that a commitment by PTC to purchase power
from a private project is being given valuable weightage by the lending
community, as evidenced in the case of one of the above projects where
the lender has also agreed to offer a longer debt service period. This
also augurs well for private project development in our country.
International Trading of Power
PTC is the designated Nodal agency for exchange of power between India
and Nepal. In order to enhance Indo-Nepal power exchanges from the
current low levels, your Company has signed an agreement with POWERGRID
to facilitate construction of the 132 KV Anandnagar-Butwal line, which
will enhance trading of power from Nepal with the power deficit
Northern Region of India. This agreement between a transmission service
provider and a trading company is the first of its kind in the country.
Further, PTC has proposed a tariff mechanism for power exchange with
Nepal on a commercial basis. Besides these initiatives, PTC is also in
discussions with developers of private power projects in Nepal.
Your Company is trading Bhutans surplus power from the Chukha (336 MW)
and Kurichhu (60 MW) projects from October 2002. Trade with Bhutan will
increase significantly with the commissioning of the Tala Hydro Project
(1020 MW) in 2005-06.
Increase in Capital Base
The authorized share capital of your Company has been raised from the
original Rs. 150 crores to Rs. 750 crores. The paid-up capital of your
Company was Rs. 72.5 crores at the end of 2002-03 and is presently Rs.
74.5 crores. Further equity will be raised over a period of time, as
and when necessitated by the business requirements of PTC. For this
purpose, various options including a public issue is on the table.
The four Central Power Sector Organizations i.e. POWERGRID, NTPC, PFC
and NHPC have promoter status in your Company and shall contribute 8%
towards the authorized capital of Rs. 750 Crores. The balance 68% will
be raised from others including corporates, State Utilities, FIs and
Banks, both national and international, and also the public at large.
You will be happy to know that Damodar Valley Corporation, Tata Power
Company and leading Financial Institutions i.e. IDBI, IDFC, LIC, IFCI,
& GIC have picked up equity stake in your Company during the year
2002-03. This is a strong reflection of the market recognition of your
The reforms initiated by the Central Government and by many of the
State Governments should prove to be instrumental in strengthening the
fundamentals of the power sector. In this context, I am reminded of the
words of John P. Kotter The rate of change is not going to slow down
anytime soon. If anything, competition in most industries will probably
speed up even more in the next few decades.
The recently introduced comprehensive Electricity Law is expected to
bring about significant attitudinal changes in the Sector as a whole,
as it will not only increase the number of market players but would
also enjoin upon them to adopt a more commercial culture. Open access
to transmission networks, delicensing of generation, graded open access
to distribution and introduction of competition in this area,
recognition of trading as a distinct activity, mandatory establishment
of Regulatory Commissions, compulsory metering are some of the elements
that will surely bring about landmark changes in the Indian Power
The introduction of Availability Based Tariff in most parts of the
country and the stricter implementation of the grid code have already
begun to bear fruit in the form of greater commercial awareness as well
as grid discipline.
PTC envisions the development of an active and vibrant competitive
power market in the foreseeable future. Such a market will have depth
and breadth by virtue of multiple participants coming together to match
selling and buying requirements, and by the availability of multiple
products. The future will see transactions in day-ahead trading.
Sophisticated contracts like forwards, futures and options will be
evolved, and hedging products will be introduced to cover risks
inherent in such contracts. Inherent in the vision are the words of an
unknown thinker Your current safe boundaries were once unknown
For increasing the depth of the market, PTC is looking at getting more
and more State utilities into the trading culture i.e. to understand
the potential benefits to be derived from trading transactions. Your
Company is also looking at the possible opportunities presented by
surplus power available with Captive Power Plants and from pooling of
distributed generation. All these measures would further enable market
participants to achieve greater efficiencies and thus lower the average
cost of power, besides helping to defer some of the costly investments
to the extent of such higher utilisation of extant capacities.
Moving to the scenario of a sufficiently deep and broad power market
will require taking a few intermediate steps, which could include pool
pricing on a regional basis. It would also require building capacity in
a phased manner, starting with establishment of a control room in PTC,
to initially capture online information on power supply positions and
pricing and available transmission capacities. Phased building up of
mirroring capacity in major market participants would logically follow.
Presently, in-house exercises are being completed for developing
specific steps needed to address key market related issues. These
include development of power trading rules, identification of
appropriate Information Technology solutions as well as systems
required for market stability.
Your Company is in the process of making specific suggestions to the
regulatory authorities for creation of an enabling environment for an
effective power market. It has been working on framework agreements to
catalyse electricity trading and for development of projects through
In order to keep up the momentum generated by your Company in 2002-03,
the target volume for the year 2003-04 has been kept at 6150 Million
Units (MUs), as against 5647 MUs projected for the year in the Business
Plan. Consequently, it is envisaged to further increase the capital
base of your Company to support these trading volumes.
Your Company is also considering embarking on new areas of business
like carbon trading, green certificates etc. in order to diversify its
business portfolio. The Vision and the Mission of the Company provide a
strategic direction to the companys efforts and coalesce the efforts
of all its employees towards attainment of super-ordinate goals and
The Knowledge Organization
PTC believes in providing the best working environment for its
employees, most of whom are knowledge workers. In line with this
philosophy, the office space acquired by your Company in Delhi has been
made into a modern office that promotes an open work culture. In order
to create its own cadre of executives, your Company has started
building relationships with premier management institutes in the
country through its campus recruitment process. It is also offering
regular placements in the Companys cadre to deputationists who have
been key partners in progress for PTC.
Your Company has also developed an organization structure appropriate
to its business requirements, in consultation with a leading management
institute. This structure is based on the business processes of the
Company and attempts to address the issues of low response time for
meeting customer demands and identifying new business opportunities. It
forms the framework that promotes the development of a culture where
teamwork and interdependence among employees are valued, thus making
your Company a customer centered and performance oriented organization.
The structure has been implemented successfully and has proved
effective in meeting the changing business requirements of your
Your Company is evolving its culture, focusing on performance based
growth with minimum of hierarchical levels. A sense of ownership and
commitment is fostered through the introduction of a performance linked
incentive. Recognizing the importance of knowledge as its core asset,
knowledge management initiatives have been started, including
Jigyasa, the knowledge site of the Company.
Participation in Exchange Programmes PTC has participated actively in
the South Asian Regional Initiative / Energy (SARI/E) program of the
USAID, which has facilitated greater appreciation of power sector
issues in countries of the South Asian Region i.e. India, Bhutan,
Bangladesh, Sri Lanka and the Maldives, thus leading to evolution of
better solutions from cross-border energy trade. PTC has also
participated in the India Energy Partnership Programme of the USEA. It
is also proposed to have an exchange programme with some other
organizations like NORDPOOL.
These steps will enhance the knowledge base of your Company and should
effectively shorten the learning curve, thus enabling a quicker
fructification of its goal to establish a vibrant power market in the
In keeping with its guiding principle to be a socially responsible
corporate citizen, your Company has always endeavored to support
socially relevant causes. During the year, your Company has continued
to develop relationships with leading NGOs working in areas like child
welfare and problems of the aged.
I express my sincere appreciation to all the members of the PTC team
for the dedicated service rendered by them
without which the Company would not have achieved success in such a
short time. I also express my sincere gratitude and appreciation to the
Government of India, especially the Ministry of Power, the Promoter
Companies and other equity holders, and to all our customers. I also
thank all my colleague members on the Board for their invaluable
support and contributions. I am confident that your Company will
continue to provide valuable service to all its customers, who have
reposed confidence in us and given us the opportunity to serve them.
I thank you all for being with us in this fourth Annual General Meeting
and look forward to your continued support and cooperation in future as
(Tantra Narayan Thakur)
Chairman & Managing Director
Place: New Delhi
Date : 21/5/2003