spectrum power generation ltd share price Management discussions

SPECTRUM POWER GENERATION LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS Industry Scenario: The growing importance of India in the global economy and the overall strength of the Asian regions economy have led to increasing levels of output, consumption and investment in India. However Indias significant economic progress remains hampered by the severe shortages of power. The Indian Power Sector is rapidly developing sector being-driven by the demand created by a robust economy, which is expected to grow between 6-8% annually over the next 10 years. India is the worlds seventh largest consumer of electricity and third in Asia, behind China and Japan. As such the future of the Indian Power Industry is on a brighter side. Operations & Maintenance of the Plant: SPGL has taken over the Operations & Maintenance of the plant from Rolls Royce Industrial Power (India) Limited (RRIPIL) on November 23, 2006. The Company has executed an agreement for final settlement of the offshore EPC, Erection Contract, Conditional Suspension and Remedies Agreement and O&M Agreements in respect of the 208 MW Duel Fuel fired Combined Cycle Power Plant, located at Uppada, Kakinada, Andhra Pradesh, with Rolls Royce Industrial Power (India) Limited and Heaton Power Limited on 21st day of December 2006. Almost all the employees of RRIPIL have joined the Company and the Company is now conducting the Operations and Maintenance of its Plant with the same manpower. Financial Restructuring: The Asset Reconstruction Company (India) Limited (Arcil) has acquired more than 75% of secured debt from the secured lenders of the Company. Thereafter Arcil, in its capacity as trustee of various trust(s) in respect of the financial assets pertaining to Spectrum Power Generation Limited, invited Expression of Interest from various bidders. Pinnacle Overseas Assets Limited (POA) has been declared as successful bidder by Arcil to restructure the Debt and Equity Capital of the Company vide a Sanction Letter issued by ARCIL to POA on December 12, 2006. The Board of Directors of the Company have accorded their approval to the Sanction Letter and accordingly the Definitive Agreement was executed on 10th January 2007 in respect of the same.