POWER GRID CORP. Share price

Incorporation of our CompanyIn 1980 the Rajadhyaksha Committee on Power Sector Reforms submitted its report to the Government of India suggesting extensive reforms in the Indian power sector. Based on the recommendations of the Rajadhyaksha Committee in 1981 the Government of India took the policy decision to form a national power grid which would pave the way for the integrated operation of thecentral and regional transmission systems.Pursuant to this decision to form a national power grid our Company was incorporated on October 23 1989 under the Companies Act 1956 as the National Power Transmission Corporation Limited with the responsibility of planning executing owning operating and maintaining the high voltagetransmission systems in the country. We received a certificate for commencement of business on November 8 1990. Subsequently the name of our Company was changed to Power Grid Corporation of India Limited with effect from October 23 1992.Change in Registered OfficeThe Registered Office of our Company is located at B-9 Qutab Institutional Area Katwaria Sarai New Delhi 110 016. The registered office was shifted to its present location from Hemkunt Chambers 89 Nehru Place New Delhi with effect from July 29 1998 pursuant to a resolution of the Board of Directors.Transfer of transmission assets from generating unitsInitially our Company was engaged in the management of the transmission assets owned by the central generating companies such as the National Thermal Power Corporation Limited National Hydro Electric Power Corporation Limited and North-Eastern Electric Power Corporation Limited . In January 1993 the National Thermal Power Corporation Limited the National Hydro Electric Power Corporation Limited and the North-Eastern Electric Power Corporation Limited (Acquisitionand Transfer of Power Transmission Systems) Ordinance ("Power Transmission Systems Ordinance") was enacted pursuant to which the right title and interest of these three power generating companies in relation to the power transmission system comprising of the main transmission lines including the extra high voltage alternative current transmission lines and the HVDC lines and sub-stations owned by them were acquired by the Government of India and transferred to our Company with effect from April 1 1992. Under the Power Transmission Systems Ordinance our Company acquired all the rights liabilities assets leaseholds powers authorities and privileges and all movable and immovable property relating to the power transmission systems owned by the three generating companies. The Power Transmission Systems Ordinance also provided that all employees of the three generating companies who were associated with power transmission systems would be deemed to be the employees of our Company. In April 1993 the Power Transmission System Ordinance became a statute after receiving the assent of the President of India.Transmission assets of Neyveli Lignite Corporation Limited were taken over by our Company with effect from April 1992 under the Neyveli Lignite Corporation Limited (Acquisition and Transfer of Power Transmission System) Act 1994. The transmission assets of Nuclear Power Corporation Limited and Tehri Hydro Development Corporation Limited have also been transferred to our Company with effect from April 1991 and August 1993 respectively pursuant to MoUs executed with our Company.Regional Load Despatch FunctionsIn 1994 the Government of India entrusted our Company with the further responsibility of controlling the existing load despatch centres in the country with a view to achieve better grid management and operation. Pursuant to this decision the control of the five regional load despatch and communication centres was transferred to our Company in a phased manner between 1994 and 1996. Our Company has undertaken the unified load despatch and communication project ("ULDC") under which modernized load despatch facilities have been established in each of the five regional centres. The establishment of a national load despatch centre is also underway. The implementation of the ULDC project has amongst other things caused the reduction of grid disturbances improved grid reliability and facilitated the effective implementation of availability based tariff. Designation as the Central Transmission UtilityOur Company was notified as the Central Transmission Utility by the Government of India onDecember 31 1998. We continue to be the CTU under the Electricity Act 2003 as per the notification issued by the GoI on November 27 2003. Amongst other functions as CTU we are required to (a) undertake transmission of electricity through the inter-state transmission system; (b) discharge all functions of planning and co-ordination relating to inter-state transmission systems along with certain specified authorities and stakeholders; (c) ensure development of an efficient co-ordinated and economical system of inter-state transmission lines for smooth flow of electricity from generating stations to load centres; and (d) provide non-discriminatory open access to its transmission system for use by any licensee or generating company on payment of transmission charges and to any consumer on payment of transmission charges and a surcharge thereon in accordance with the Electricity Act2003.Under the Electricity Act 2003 the CTU is required to undertake the functions of the RLDC and we are therefore responsible for (a) optimum scheduling and despatch of electricity within the region in accordance with the contracts entered into with the licensees or the generating companies operating in the region; (b) monitor grid operations; (c) keep accounts of quantity of electricity transmitted throughthe regional grid; (d) exercise supervision and control over the inter-state transmission system; and (e) carrying out real time operations for grid control and despatch of electricity within the region through secure and economic operation of the regional grid in accordance with the grid standards and grid code.However the National Electricity Policy states that the existing arrangement of CTU operating theRLDCs shall be reviewed by the Government of India based on the experience of working with theexisting arrangement and that a view on this aspect would be taken by December 2005.Mini RatnaOn October 14 1998 our Company was notified as a Mini Ratna (Category I) company by theGovernment of India. As a Mini Ratna company we are eligible for enhanced delegation of powers to our Board including (a) power to incur capital expenditure without governmental approval up to Rs. 5000 million or equal to our net worth whichever is less (b) power to establish joint ventures and subsidiaries with an equity investment up to 15% of our net worth for a single project subject to a maximum of Rs. 5000 million. The overall ceiling on all investments shall be 30% of our net worth and (c) power to enter into mergers and acquisitions subject to certain conditions.Role in distribution reforms and rural electrificationIn 2001 our Company was assigned the role of an advisor-cum-consultant by the Government ofIndia for implementation of the Accelerated Power Development and Reform Programme ("APDRP") in 18 states. The objective of the APDRP is to give impetus to reforms in the power distribution sector and the responsibility of our Company extends to providing assistance to state power utilities in formulation of detailed project reports ("DPRs") to technically examine the DPRsand recommend the same to the MoP and to monitor the implementation of the schemes thecommercial performance and reform measures undertaken by the state power utilities in the assigned geographical areas. Our Company has also entered into bilateral agreements with seven state power utilities to implement certain APDRP schemes.Additionally our Company has been assigned a significant role in relation to implementation ofprojects under the Rajiv Gandhi Grameen Vidyutkaran Yojana programme ("Rural ElectrificationProgramme") for accelerated electrification of rural households to be undertaken in association with REC the concerned state government and state power utility. For further details refer to the paragraph entitled "Material Agreements" on page 366 of this Draft Red Herring Prospectus.Major eventsIn addition to events described hereinabove the following table illustrates the major events in the history of our Company since its incorporation in 1989.Year Event1989 Our Company was incorporated as the National Power Transmission Corporation.1992 Transmission assets from National Thermal Power Corporation Limited National Hydroelectric Power Corporation Limited and North-Eastern Electric Power Corporation Limited were transferred to our Company pursuant to legislation promulgated by the Parliament.1992 The name of our Company was changed from National Power Transmission Corporation to Power Grid Corporation of India Limited.1993 Transmission assets of Tehri Hydro Development Corporation Limited were transferred to our Company pursuant to a memorandum of understanding executed between the parties. 1994 Our Company took over the management of the Southern Regional Load Despatch Centre.1994 Our Company entered into a memorandum of understanding with the Ministry of Power Government of India which is revised annually. We achieved the highest rating of ?Excellent? under the memorandum of understanding.1995 Our Company took over the management of the Eastern Regional Load Despatch Centre and the North Eastern Load Despatch Centre.1996 Our Company took over the management of the remaining two regional load despatch centres namely the Northern Regional Load Despatch Centre and the Western Load Despatch Centre.1998 Our Company formulated an Environment and Social Policy and Procedures code to deal with environmental and social issues relating to its transmission projects. 1998 Our Company was formally notified as a Central Transmission Utility by the Government of India.1998 Our Company was declared as a Mini Ratna Category I public sector undertaking by the Government of India.2001 Our Company was granted Infrastructure Provider II license (IP II) from the Department of Telecommunications Government of India to pursue leasing of bandwidth capacity to various customers on its telecommunications network.2002 The unified load dispatch and communications schemes for the northern and southern regions were commissioned.2002 Our Company was appointed as the Advisor-cum-Consultant under the Accelerated Power Development Reform Program by the Ministry of Power Government of India for power sector reforms.2002 The Sasaram HVDC back to back transmission system developed by our Company was commissioned leading to the completion of the first phase of the construction of the National Grid.2002 The 2000 MW Talchar-Kolar bipolar HVDC link developed by our Company was commissioned.2003 Our Company entered into a joint venture arrangement with The Tata Power Company Limited implementing a part of the entire transmission system associated with Tala Hydro-Electric Project which was the first public-private sector initiative in the transmission sector.2003 The 400 KV Raipur-Rourkela line transmission line developed by our Company was commissioned and the Western region Eastern Region and North-Eastern Region begin operating in a synchronised manner with a cumulative capacity of 50000 MW2003 Our Company secured its first international consultancy contract from Bhutan Telecommunications2005 The unified load dispatch and communications scheme for the eastern region was commissioned.2006 The unified load dispatch and communications scheme for the western region was commissioned.2006 Our Company entered into an agreement with Rural Electrification Corporation Limited and certain state governments and state utilities for undertaking rural electrification works under the Rajiv Gandhi Grameen Vidyutkaran Yojana in nine states.