Torrent Power

The directors have pleasure in presenting the 4th Annual Report of the
 Company together with the Audited Accounts for the year ended on 31st
 March, 2008.
 
 1.  Highlights
 
 The key highlights of the operations for the financial year 2007-08:
 
 - All round improvement in the performance of the Company illustrated
 by: - 
 
 Increase in turnover by          30.34%
 Increase in PBDIT by              36.30%
 Increase in PAT   by              47.19%
 
 * Further reduction in T&D losses in Ahmedabad, Gandhinagar and Surat
 distribution circle to 8.75% - lowest in the country.
 
 * Operations in Bhiwandi Distribution Franchise area stabilised.
 
 * Commissioning of 1147.5 MW SUGEN project, though delayed due to
 reasons beyond control, expected to commence generation in 2008-09.
 
 * SUGEN project approved for Clean Development Mechanism (CDM) Benefits
 by UNFCCC.
 
 2.  Financial Results, Accounts and Dividend
 
 A summary of the financial results for the year under review is as
 under:
 
                                                           (Rs. Crores)
                                For the year          Forthe six months
 Particulars                       ended on              ended on
                             31st March, 2008          31st March, 2007
 
 Total Income                       3722.00               1446.35
 Gross Profit before 
 Depreciation, Interest and Tax      584.29                214.34
 Depreciation                        147.94                 65.22
 Interest                             59.78                 19.43
 Profit before Tax                   376.57                129.69
 Current Tax                          79.77                 16.77
 Deferred Tax                         61.22                 40.60
 Fringe Benefit Tax                    1.06                  0.54
 Shortfall in provision for 
 Taxation for earlier years           23.28                  0.02
 Profit After Tax                    211.24                 71.76
 Balance brought forward             127.87                 82.73
 Balance Available for 
 appropriation                       339.11                154.49
 Appropriations
 Transfer to General Reserve         140.00                  5.07
 Interim Dividend                       -                   18.90
 Proposed Dividend                    56.69                   -
 Dividend Distribution Tax             9.64                  2.65
 Balance carried to Balance Sheet    132.78                127.87
                                     339.11                154.49
 
 Data for the current accounting year is not comparable with the data
 for the earlier period as the current accounting period is for the full
 year while the previous accounting period was for 6 months. During the
 current year, the financials include impact of Bhiwandi operations for
 the full year in comparison with its impact being reflected in the
 financials of the previous period for a part of the period.
 
 3.  Dividend
 
 The Board of Directors is pleased to recommend a dividend @ 12% i.e.
 Rs. 1.20 per equity share on 47,24,48,308 equity shares of Rs. 10 each
 for the financial year 2007-08, amounting to Rs. 56.69 Crores.  With
 Dividend Distribution Tax of Rs. 9.64 Crores, the total outflow on
 account of dividend works out to Rs. 66.33 Crores.
 
 4.  Operations
 
 Ahmedabad Generation and Ahmedabad and Surat Distribution The sales for
 Ahmedabad and Surat have increased from 3325 MUs (6 months) to 7510 MUs
 (12 months) registering a healthy growth of 12.94 % over the previous
 financial period on an annualised basis.  Simultaneously, the number of
 consumers also increased from 20.19 lacs to 20.87 lacs. This growth is
 due to healthy economic growth, reduction in T&D losses and continued
 focus on Slum Electrification under which 16797 new connections were
 released during the year. The sustained and concentrated efforts in
 theft reduction, efficient billing system, slum electrification and
 strengthening of the distribution network led to further reduction in
 T&D losses which are now lowest in the country.  The system demand for
 these areas increased to 1408 MW which was met through the Companys
 own generation as well as import of power.
 
 The generation plant of the Company continued to perform in an
 excellent manner registering the PAF and PLF of 95.33% and 90.59%
 respectively.  The availability of gas for Vatva plant and price
 thereof has become an issue of concern. During the year under report,
 the Company could get only 78% of its requirement. The price also went
 up substantially resulting into the levy of higher Fuel Price and Power
 Purchase Adjustment Charge on the consumers.  The price has gone up
 further and will have impact on the FPPPA and the working of 2008-09.
 Continuing the process of strengthening the distribution network, the
 Company added 321 Distribution Transformers of I I kV at Ahmedabad,
 Gandhinagar and Surat. The Company also commissioned the first phase of
 220 kV Transmission Lines project at Surat which will help Surat
 Distribution area to receive power from SUGEN project.
 
 Bhiwandi Distribution
 
 The Company demonstrated its ability to efficiently manage the
 distribution business by stabilising the operations of Bhiwandi area in
 Maharashtra where the Company has been appointed as a Distribution
 Franchise. The sales in Bhiwandi area amounted to 1908 MUs during the
 financial year to about 1.6 lac consumers.
 
 The system peak demand for Bhiwandi distribution area was 571 MW which
 was met through purchase of 2620 MUs from Maharashtra State Electricity
 Distribution Company Limited. However, it must be noted that this
 system peak demand is a restricted demand due to load shedding of
 around 200 MW which is in effect round the clock at Bhiwandi.  The
 Company put in concentrated efforts to upgrade and strengthen the
 network in the area as well as improve the metering and billing
 efficiency (a) to serve the consumers of the Bhiwandi circle better (b)
 to make the network robust and (c) to bring down the AT&C losses. The
 Company has enhanced the distribution transformation capacity by more
 than 100 MVA by putting in 889 new 22 kV Distribution transformers as
 well as by increasing the capacity of the existing transformers, 31
 kms. of 22 kV overhead lines and 65 kms. of underground feeders were
 also added during the year. More than 92,000 meters were replaced at
 the customer premises during the period.
 
 5.  A Mega Strategic Initiative - 1147.5 MW SUGEN Power Project
 
 The prestigious SUGEN Mega Power Project of 1147.5 MW capacity is being
 implemented to secure long term reliable source of supply for the
 distribution business of the Company. Unfortunately, the EPC
 Contractor, Siemens, is lagging behind in the progress of the project
 and there is a delay in the commissioning of the same. It is now
 expected that it will commence generation during the financial year
 2008-09. An amount of Rs. 2537 Crores has been spent on the project out
 of which Rs. 1707 Crores have been financed by Term Loans. The Company
 has tied-up its entire requirement for the gas. It has also entered
 into a Gas Transportation Agreement and thus, has made an arrangement
 for bringing gas to the site. However, with the increase in the crude
 oil prices and gas situation at domestic and international level, the
 price of the gas remains volatile and uncertain.
 
 The Company is happy to inform that as a result of considerable
 efforts, SUGEN project has been approved for Clean Development
 Mechanism (CDM) benefits. Consequently, SUGEN plant will be eligible to
 earn Carbon Credits (CERs) once the generation commences. It is
 heartening to note that the methodology proposed for CDM by the Company
 has been accepted by UNFCCC for evaluation of gas based power
 generation projects in future.
 
 Evacuation arrangement for SUGEN project
 
 The subsidiary of the Company, Torrent Power Grid Limited (TPGL) - a
 Joint Venture with Power Grid Corporation of India Limited (PGCIL) -
 has completed the first phase of evacuation arrangement by construction
 of 26 kms. Gandhar-Vapi LILO. The work for 400 kV Double Circuit
 Transmission line from SUGEN to Pirana (Ahmedabad) is in progress. The
 Company also has installed transmission lines to connect SUGEN plant
 with Kim sub-station of GETCO. Three 220 kV Double Circuit lines from
 SUGEN to Surat and two 220 kV receiving sub-stations are complete and
 energised to take care of transmission of power to meet Surat
 requirement.
 
 6.  Consumers satisfaction
 
 The Company has continued its stress on becoming consumer centric
 organisation.  To this end, the Company has taken various steps to
 improve the customers services by revising various systems and
 processes.  It has introduced many new features to cater the
 requirement of consumers and respond to the consumers quickly and in a
 better way. The Company has established better performance than the
 standards of performance prescribed by Gujarat Electricity Regulatory
 Commission.
 
 7.  New Generation Projects
 
 The Company has a long-term strategic growth plan, in order to enable
 it to capitalise on opportunities.  The Company is currently pursuing
 development of several projects for achieving growth. These are:
 
 A.  SUGEN Expansion
 
 The Company is planning to increase its project capacity by additional
 3000 MW. SUGEN II and SUGEN III both will add 1500 MW in each phase at
 SUGEN site. Land adjacent to SUGEN project has been identified and
 acquisition process for the same has commenced.
 
 B.  Dahej
 
 The Company has been named as co-developer for Dahej SEZ near Bharuch
 in Gujarat state and is authorised to put up generation project upto
 1500 MW. The Company is planning to set up approximately 400 MW gas
 based combined cycle power plant in the first phase through a new
 Special Purpose Vehicle, Torrent Energy Limited. The Contour survey &
 Geo-Technical investigation for the project has been completed.
 Further, bids have been invited under international competitive bidding
 process for awarding EPC contract.
 
 C.  Pipavav
 
 The Company is planning to set up a 2000+ MW coal based thermal power
 project in Pipavav in Amreli District of Gujarat. Torrent Pipavav
 Generation Limited has been incorporated as a subsidiary of the Company
 for development of the project. Land for the project is under
 possession of Gujarat Power Corporation Limited which will be
 transferred to the Company. Fuel will be supplied from Baitarni Coal
 Block in Talchar Coal Field, Orissa.
 
 D.  Morga
 
 The Companys bid to supply power to GMDC on the basis of coal to be
 supplied by GMDC from Morga-ll Coal Block, Chhattisgarh has been
 accepted. The Company is planning to set up 1,000+ MW coal based
 thermal power project in Chhattisgarh for this purpose. A Memorandum of
 Understanding (MOU) has been signed with the Chhattisgarh government
 and Chhattisgarh-State Electricity Board for development of the
 project.
 
 8.  Human Resources & Industrial Relations
 
 During the financial year 2007-08, the Company amicably entered into a
 wage settlement agreement with its employees union at Surat for a three
 year period upto 31st December, 2009. The settlement not only addressed
 the issues like revision of pay scales, allowances, benefits, changes
 in service conditions etc but it also helped the Company to resolve
 other long outstanding issues.  The Company also entered into a
 settlement agreement with the employees union to end 10 industrial
 disputes involving contract labourers, apprentices, township council
 employees, voucher category employees and fly ash division employees.
 
 9.  Subsidiaries
 
 The Company has two subsidiary companies namely; Torrent Power Grid
 Limited and Torrent Pipavav Generation Limited. Statement giving
 details prescribed by the Ministry of Corporate Affairs under Section
 212of the Companies Act, 1956 forms part of the Annual Report.
 
 10. Directors
 
 Shri S. K. Barua was appointed as an Independent Director on the Board
 effective from 29th January, 2008, in the casual vacancy caused by the
 resignation of Dr. Bakul H. Dholakia. Smt. V L. Joshi, IAS resigned
 from the Board effective from 15th April, 2008. The Board places on
 record its appreciation for the valuable services rendered by Dr. Bakul
 H. Dholakia and Smt. V L. Joshi, IAS during their tenure as Directors
 of the Company.  Shri Samir Mehta and Shri S. B. Kunwar retire by
 rotation at the ensuing Annual General Meeting. Being eligible, they
 have offered themselves for re-appointment.  For perusal of the
 shareholders, a brief resume of the Directors being re-appointed,
 nature of their expertise, their shareholding in the Company and other
 relevant details are given in the explanatory statement to the Notice.
 The Board of Directors recommends their re-appointment.
 
 11. Corporate Governance
 
 The governance philosophy of the Company rests on five basic principles
 viz. protection of rights and interest of shareholders, equality in
 treatment of all shareholders, disclosure of timely and accurate
 information, strategic guidance and effective monitoring by the Board
 and accountability of the Board to the Company and its shareholders.  A
 Management Discussion and Analysis Report forms part of this report.  A
 report on Corporate Governance is also included as a part of the annual
 report. Certificate of the Auditors regarding compliance with the
 Corporate Governance code is also attached to this annual report.
 
 12. Auditors
 
 M/s. C. C. Chokshi & Co., Chartered Accountants, Statutory Auditors
 retire at the ensuing annual general meeting and are eligible for
 re-appointment. They have furnished a certificate regarding their
 eligibility for re-appointment as the Statutory Auditors of the
 Company, pursuant to Section 224 (IB) of the Companies Act, 1956.  The
 observations made in the Auditors Report are self-explanatory and,
 therefore, do not call for any further comments.
 
 13. Directors Responsibility Statement
 
 In terms of Section 217 (2AA) of the Companies Act, 1956, in relation
 to financial statements for the year 2007-08, the Board of Directors
 states that:
 
 i. In the preparation of the annual accounts, the applicable accounting
 standards have been followed alongwith proper explanation relating to
 material departures, if any;
 
 ii. Reasonable and prudent accounting policies have been adopted in
 preparation of the financial statements, that they have been
 consistently applied and that reasonable and prudent judgments and
 estimates have been made in respect of items not concluded by the year
 end, so as to give a true and fair view of the state of affairs of the
 Company as at 31st March, 2008 and of the profit for the year ended on
 31.st March, 2008;
 
 iii. Proper and sufficient care has been taken for maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956, for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities; and
 
 iv The financial statements have been prepared on a going concern
 basis.
 
 14. Conservation of Energy, Technology Absorption, Forex Earnings &
 Outgo The details relating to technology absorption, foreign exchange
 earnings and outgo required to be disclosed under the Companies
 (Disclosure of Particulars in the report of the Board of Directors)
 Rules, 1988, are given in the annexure to and forms part of this
 report.
 
 15. Particulars of Employees
 
 The information required under Section 217 (2A) of the CompaniesAct,
 1956, read with the Companies (Particulars of Employees) Rules, 1975,
 as amended, forms part of this report. As per the provisions of Section
 219 (I) (b) (iv) of the Companies Act, 1956, the report is being sent
 to all the shareholders of the Company excluding the aforesaid
 information. Any shareholder interested in obtaining the particulars
 may obtain it by writing to the Company Secretary of the Company.
 
 16. Appreciation and Acknowledgements
 
 The Directors are pleased to place on record their appreciation for the
 continued guidance and support provided by the Central Government,
 Government of Gujarat, Gujarat Urja Vikas Nigam Limited, Government of
 Maharashtra, Maharashtra State Electricity Distribution Company
 Limited, Maharashtra State Electricity Transmission Company Limited,
 Power Grid Corporation of India Limited, Gujarat Power Corporation
 Limited, financial institutions and banks. The Board recognises the
 contribution of the esteemed consumers in the growth of the Company and
 takes this opportunity to pledge the Companys commitment to serve
 them. The Board also would particularly like to express great
 appreciation for the understanding and support extended by the
 employees at all levels and the shareholders.  
 
                            For and on behalf of the Board of Directors
 
 
 Ahmedabad                                                 Sudhir Mehta
 15th May, 2008                                                Chairman