gsecl annual report

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16 th Annual Report 2008-09GUJARAT STATE ELECTRICITY CORPORATION LIMITED

CONTENTS

ORGANISATION 3

POWER PLANTS 4

BOARD OF DIRECTORS 5

CORE TEAM 6

FINANCIAL INSTITUTIONS & BANKERS 7

AUDITORS AND COMPANY SECRETARY 8

NOTICE 9

DIRECTORS’ REPORT 13

AUDITORS’ REPORT 29

BALANCE SHEET 34

PROFIT AND LOSS ACCOUNT 35

CASH FLOW STATEMENT 36

SCHEDULES FORMING PART OF THE BALANCE SHEET 37

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT 44

SIGNIFICANT ACCOUNTING POLICIES 47

NOTES FORMING PART OF FINANCIAL STATEMENTS 54

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE 63

PAGE NO.

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GS CLE

GUJARAT STATE ELECTRICITY CORPORATION LIMITED(A wholly owned Subsidiary of Gujarat Urja Vikas Nigam Ltd.)

SIXTEENTH ANNUAL REPORT2008-2009

REGISTERED OFFICE

“VIDYUT BHAVAN”, RACE COURSE, VADODARA – 390 007WEBSITE : www.gsecl.in EMAIL : [email protected]


http://www.gsecl.in

mailto:[email protected]



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POWER PLANTS

THERMAL POWER STATIONS

GANDHINAGAR

WANAKBORI

SIKKA

UKAI

KUTCH

HYDRO POWER STATIONS

KADANA

PANAM

UKAI

GAS BASED POWER STATIONS

UTRAN

DHUVARAN

OIL BASED POWER STATIONS

DHUVARAN




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BOARD OF DIRECTORS

SHRI D. J. PANDIAN, IAS CHAIRMAN

(W.E.F. 8TH DECEMBER, 2009)

SHRI S. JAGADEESAN, IAS CHAIRMAN

(UPTO 8TH DECEMBER, 2009)

SHRI C. L. MEENA, IAS DIRECTOR

(W.E.F. 8TH OCTOBER,2009)

SHRI I. P. GAUTAM, IAS DIRECTOR

SHRI L. CHUAUNGO, IAS DIRECTOR

PROF. N. VENKITESWARAN DIRECTOR

(UPTO 20TH NOVEMBER, 2008)

SHRI H. P. DESAI DIRECTOR

SHRI M. A. BHATT DIRECTOR

(UPTO 7TH OCTOBER,2009)

SHRI B. S. REUBEN DIRECTOR

SHRI P. H. RANA MANAGING DIRECTOR




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CORE TEAM

CORPORATE OFFICE

v SHRI B. N. CHUDASAMA EXECUTIVE DIRECTOR

v SHRI A. D. KARPE I/C. CHIEF GENERAL MANAGER (HR&A)

v SHRI M. B. KAKA GENERAL MANAGER (F&A)

v SHRI R. C. SHAH CHIEF ENGINEER (P&P)

v SHRI P. M. PARMAR CHIEF ENGINEER, (GENERATION)

v SHRI M. N. PATEL CHIEF ENGINEER (CIVIL)

v SHRI V. P. JANI COMPANY SECRETARY

POWER PLANTS

v SHRI D. N. DHOLAKIYA CHIEF ENGINEER, WANAKBORI

v SHRI J. N. DOSHI CHIEF ENGINEER, GANDHINAGAR

v SHRI R. J. REVAR CHIEF ENGINEER, UKAI

v SHRI M. D. DAVE CHIEF ENGINEER, KLTPS

v SHRI M. D. VYAS CHIEF ENGINEER, SIKKA

v SHRI P. C. PATEL CHIEF ENGINEER, UTRAN

v SHRI D. C. SOLANKI CHIEF ENGINEER, DHUVARAN

v SHRI R. V. PATEL I/C CHIEF ENGINEER, KEVADIA, SSNNL

v SHRI U. H. TRIVEDI ENGINEER IN-CHARGE




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FINANCIAL INSTITUTIONS

AND

BANKERS

FINANCIAL INSTITUTIONS / GOVERNMENT COMPANY

POWER FINANCE CORPORATION LIMITED

RURAL ELECTRIFICATION CORPORATION LIMITED

GUJARAT STATE FINANCIAL SERVICES LIMITED

BANKERS

STATE BANK OF INDIA

CENTRAL BANK OF INDIA

DENA BANK

VIJAYA BANK

BANK OF BARODA

UNION BANK OF INDIA

ALLAHABAD BANK

CANARA BANK

KARUR VYSYA BANK

ORIENTAL BANK OF COMMERCE

KALUPUR COMMERCIAL CO-OPERATIVE BANK




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AUDITORS

AND

COMPANY SECRETARY

STATUTORY AUDITORS

G. K. CHOKSI & CO.CHARTERED ACCOUNTANTS

AHMEDABAD

COST AUDITORS

K. SANKLECHA & ASSOCIATESCOST ACCOUNTANTS

VADODARA

COMPANY SECRETARY

VIJAY P. JANI




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NOTICE is hereby given that the SIXTEENTH ADJOURNED ANNUAL GENERAL MEETING of

the Members of Gujarat State Electricity Corporation Limited will be held on Saturday 30th January,

2010 at 10.00 a.m. at the Registered Office of the Company situated at Vidyut Bhavan, Race

Course, Vadodara-390007 to transact the following business of original Annual General Meeting held

on 23rd December, 2009: -

ORDINARY BUSINESS:

To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2009 and the Profit &

Loss Account for the year ended on that date and the reports of Directors and Auditors along with

the comments of the Comptroller and Auditor General of India thereon.

NOTES:

A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT APROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEM-BER OF THE COMPANY. Proxy in order to be effective must be received by the Company not lessthan 48 hours before the meeting.

By Order of the BoardFor Gujarat State Electricity Corporation Ltd.

V. P. JaniCompany Secretary

NOTICE OF SIXTEENTH ADJOURNED ANNUAL GENERAL MEETINGTO SHAREHOLDERS.

Registered Office :Vidyut Bhavan,Race Course,Vadodara-390Date: 19-01-2010




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Registered Office:Vidyut Bhavan,Race Course,Vadodara-390 007.

Date: 16/12/2009.V. P. Jani

Company Secretary

NOTICE

NOTICE is hereby given that the SIXTEENTH ANNUAL GENERAL MEETING of the Members ofGujarat State Electricity Corporation Limited will be held on Wednesday, the 23rd December, 2009 at12.30 p.m. at the Registered Office of the Company situated at Vidyut Bhavan, Race Course,Vadodara-390007 to transact the following business: -

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2009 and theProfit & Loss Account for the year ended on that date and the reports of Directors andAuditors along with the comments of the Comptroller and Auditor General of India thereon.

2. To appoint a Director in place of Shri I.P. Gautam, IAS who retires by rotation and beingeligible offers himself for re-appointment.

3. To appoint a Director in place of Shri H.P. Desai who retires by rotation and being eligibleoffers himself for re-appointment.

4. To fix the remuneration of M/s. P. Parikh & Associates, Chartered Accountants, Vadodara,appointed as Statutory Auditors of the Company for the F.Y. 2009-10, by the ComptrollerAnd Auditor General of India, New Delhi (C & A G).

SPECIAL BUSINESS:

5. To consider and, if thought fit, to pass the following resolution with or without modification,as an Ordinary Resolution.

“RESOLVED THAT Shri D.J. Pandian, IAS, appointed as an Additional Director of the Companyon 08.12.2009 under Section 260 of the Companies Act, 1956, and who holds such office tillthe conclusion of this Annual General Meeting and is eligible for re- appointment, be and ishereby appointed as a Director of the Company.”




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NOTES:

1 A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO AP-

POINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED

NOT BE A MEMBER OF THE COMPANY. Proxy in order to be effective must be received by

the Company not less than 48 hours before the meeting.

2 The Statutory Auditors, M/s. G.K. Choksi & Co., Chartered Accountants, Ahmedabad, have

been appointed by the Office of the Comptroller & Auditor General of India (CAG) i.e. Central

Government for the current financial year 2008-09, as the Company continues to attract

provisions of Section 617 read with the provisions of Section 619 (2) of the Companies Act,

1956.

3 The Ministry of Corporate Affairs, Government of India, New Delhi has granted the extension of

time for three months i.e. up to 31st December, 2009, to the Company for holding the Sixteenth

Annual General Meeting of the Company, vide its letter No. 9/54/2008-C.L.-V dated 29.09.2009.




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ANNEXURE TO NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 173 OF THE COMPANIES ACT,1956.

In conformity with the provisions of Section 173 of the Companies Act, 1956, the following ExplanatoryStatement sets out all the material facts relating to the Special Business mentioned in the accompanyingNotice and should be taken as forming part of this Notice.

Item No. 5

As per the Article 17 of the Articles of Association of the Company, the GUVNL i.e. the HoldingCompany has a right, in consultation with Government of Gujarat to appoint Chairman of theCompany. Accordingly, the Company has received a letter dated 10th December, 2009, of GUVNLalong with the letter No. GUV-1108-1336-K dated 10th December, 2009 of Government of Gujaratnominating Shri D.J. Pandian, IAS, the Principal Secretary, Government of Gujarat, Energy &Petrochemicals Department, as Chairman of the Company in place of Shri S. Jagadeesan, IAS.

Shri D.J. Pandian, IAS, was appointed as an Additional Director in terms of Section 260 of theCompanies Act, 1956 and holds the office of Director till the conclusion of this Annual GeneralMeeting. Shri D.J. Pandian is a MBA from Madras University. He is a senior IAS Officer havingAdministrative and Corporate experience spanning 25 years. Shri Pandian was the ManagingDirector of Gujarat State Petroleum Corporation (GSPC) from 2001 to 2009. Earlier Shri Pandianwas working on deputation with the World Bank in Washington, D.C. He was Director, ExternalCommercial Borrowing, Ministry of Finance, Government of India during 1995-97.

The Board recommends the appointment as Director.

None of the Directors, except Shri D.J. Pandian, IAS, is interested or concerned in the said Resolution.


Registered Office:Vidyut Bhavan,Race Course,Vadodara-390 007.

Date: 16/12/2009.V. P. Jani

Company Secretary




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DIRECTORS’ REPORT

To,

The Members,

Your Directors are pleased to present their SIXTEENTH ANNUAL REPORT together with the AuditedStatement of Accounts of the Company for the financial year ended 31st March 2009.

(A) FINANCIAL RESULTS

(Rs. in Lacs)Particulars 31.03.2009 31.03.2008Sales 710123 620474Other Income 22229 12914Total Income 732352 633388Total Expenditure 662979 568237Gross Profit 69373 65151Interest 27859 28044Provision for depreciation 33372 27764Profit before extraordinary items 8142 9343Prior period adjustment and taxPrior period adjustment / Extra-Ordinary items (59) 2508Profit Before Tax 8201 6835Less: Provision for current Income Tax 1148 911Provision for Deferred Tax Liability — —Net Profit after Tax 7053 5924Add: Balance brought forward from earlier year 40978 35054Balance carried to Balance Sheet 48031 40978

(B) DIVIDEND

Your Directors have decided not to recommend any dividend on the Equity Shares of theCompany for the F.Y. 2008-09.

(C) INDUSTRY OVERVIEW

Energy is an important input required for economic and social development. India ranks theworld’s sixth largest energy consumer accounting to about 3.5 % of the world’s total annualenergy consumption, but per capita consumption of energy is very low at 631 kwh ascompared to world consumption of 2873 kwh which needs to be increased to meet the goalsof economic and social development. India has been one of the fastest growing economies inemerging markets. Indian economy has posted more than 9% growth for three yearsconsecutively and has seen a decade of more than 7% growth. One of the key factorsbehind any growing country is the energy requirement and supply in that country. As energyplays a very important role in industrial production and common man’s life, it has becomeextremely important to boost the growth in energy segment for the growth of the country.




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The demand of electricity in India is enormous and is growing steadily.

Since independence the Indian electricity sector has grown many folds in size and capacity.The generating capacity under utilities has increased from a meager 1362 MW in 1947 to147965 MW as on 31.03.2009. The capacity addition during 2008-09 was 3454 MW which is31.2 % of target of 11061.2 MW.

The breakup of installed capacity as on 31.03.2009 is as under:

AllIndia Thermal Nuclear Hydro RES Total

Coal Gas Diesel TotalMW 77648.88 14876.61 1199.75 93725.34 4120.00 36877.76 13242.41 147965.41

% age 52.5 10.1 0.8 63.3 2.8 24.9 8.9 100

Sr.No.

ThermalNuclear Hydro RES Total

Coal Gas Diesel Total

01 Northern 18807.5 3531.2 12.99 22351.7 1180.0 13425.2 1766.4 38723.2

02 Western 25652.5 6983.2 17.48 32653.2 1840.0 7448.5 4023.6 45965.3

03 Southern 16882.5 3406.2 939.32 21028.0 1100.0 10954.2 7047.9 40130.0

04 Eastern 16446.4 190.0 17.20 16653.6 0.00 3933.9 227.4 20814.9

05 N. Eastern 60.0 766.0 142.7 968.7 0.00 1116.0 171.0 2255.7

06 Islands 0.0 0.0 70.0 70.0 0.0 0.0 6.1 76.1

07 All India 77648.9 14876.6 1199.8 93725.2 4120 36877.8 13242.4 147965.4

Region

Installed Capacity of India (31-03-2009)

The all India Region wise generating installed capacity (MW) of Power Utilities includingallocated shares in joint & Central Sector Utilities is given hereunder:




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The total electricity generation in the country increased from 704.5 Billion Units (BU) during2007-08 to 723.8 BU during 2008-09. The electricity generation during 2008-09 was 93.44 %of the target of 774.34 BU. During 2008-09, there was 11.1 % energy shortage and 11.9 %peak shortage.

The region wise & overall Power Supply Position during 2008-09 was as under:

Northern 224218 - 10. 8 33034 -10.7

Western 254486 -16.0 37240 -19.0

Southern 204086 -7.5 28340 -7.4

Eastern 82127 -4.6 12901 -9.4

North Eastern 9407 -13.5 1820 -25.4

Overall 774324 -11.0 109809 -11.9

RegionEnergy

Requirement (MUs) Deficit (%) Peak Demand(MW)

Deficit (%)

The Plant Load factor in the country has been steadily increasing over the years representinghigher Utilisation of installed capacity. The average PLF of TPSs of Power Utilities during2008-09 was 77.22 %. The sector wise and overall PLF during 2007-08 & 2008-09 is asunder:

Year Central State Private Overall

2007-08 86.7 71.9 90.8 78.6

2008-09 84.3 71.2 91.0 77.2

The National Electricity Policy envisages “Power for all by 2012” and per capita availability ofPower to be increased to over 1000 units by 2011-12. To achieve this, a total capacityaddition of about 1,00,000 MW is required during 10th & 11th Plan period. To meet the energygeneration requirement of 1038 BU and a peak load of 1,52,746 MW with diversity and 5%spinning reserve, a capacity addition of about 82,500 MW is required during 11th Plan. Basedon the 10th Plan and actual capacity addition of 21,180 MW, a capacity addition of 78,577 MWcomprising of 39865 MW (50.7%) in Central Sector, 27,952 MW (35.6%) in state sector and10,760 MW (13.7%) in private sector has been proposed during the 11th Plan.

(Source: www.powermin.nic.in, www.cea.nic.in, www.businesswire.com)

Gujarat has been progressing as one of the leading power generating state in India. As on31.03.2009, Gujarat had total installed capacity of 10427 MW constituting 7.05 % of all IndiaGenerating capacity. The sector wise distribution of installed capacity of Gujarat is – GSECL(4776 MW), Central Sector (3233 MW) and IPPs (2418 MW).


http://www.powermin.nic.in

http://www.cea.nic.in

http://www.businesswire.com)



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Year GSECL Central Private TotalSector Sector

31.03.1985 2692 247 381 3320

31.03.1990 3742 550 410 4702

23.03.1992 4082 780 655 5517

31.03.1997 4414 1293 847 6554

31.03.2002 4927 1532 2156 8615

31.03.2003 4888 1532 2156 8576

31.03.2004 4995 1532 2156 8683

31.03.2005 4995 1532 2156 8683

31.03.2006 4968 1840 2166 8974

31.03.2007 4968 2839 2416 10223

31.03.2008 4766 3001 2418 10185

31.03.2009 4766 3233 2418 10427

Growth of installed capacity of Gujarat (in MW) since 6th plan

The Gujarat State Electricity Corporation Limited (GSECL) is the Prominent Power

Generating Company in Gujarat and dedicated to supply electricity with high reliability for

development and Industrial Growth of Gujarat State throughout its inception in 1960. Today

GSECL owns total installed capacity of 4776 MW (as on 31.03.2009) comprising of 4219 MW

Thermal, 547 MW Hydro & 10 MW Wind. The Thermal capacity comprises of 3430 MW Coal

based, 215 MW Lignite based, 220 MW Oil based & 354 MW Gas based Power Stations. The

GSECL operates seven Thermal & two Hydal Power Plants varying unit from 1 MW to 210

MW in Gujarat which consists of a biggest Thermal Power Station (at Wanakbori) consisting of

seven units each of 210 MW capacity.

The year 2008-09 was another excellent year of performance for GSECL. Total generation

from GSECL Power stations during 2008-09 was 28387.766 MUs.

The generation of electricity (MUs) in Gujarat during 2008-09 is as under:

GSECL : 28387.766 MUs

Central Sector Share : 20376.353 MUs

Private Sector : 20172.375 MUs

Total : 68936.494 MUs




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(D) PERFORMANCE OF THE COMPANY:

(1) Financial:

The total revenue for the year is Rs. 7323.52 Crores, while total operating expenditurefor the year ended 31st March, 2009 is Rs.6629.79 Crores. The profit before interestand tax is Rs.693.73 Crores. Depreciation and interest are Rs.333.72 Crores andRs.278.59 Crores respectively. The profit is Rs.82.01Crores.

(2) Operational:

The generation of electricity (MUs) in Gujarat during 2008-09 is as under:

Power station wise generation of the company is as under :

GSECL : 28387.766 MUs

Central Sector Share : 20376.353 MUs

Private Sector : 20172.375 MUs

Total : 68936.494 MUs

Ukai (Thermal) 4835.07 23.35 4858.43 65.25

Gandhinagar 5966.42 71.21 6037.63 79.22

Wanakbori 11112.78 104.82 11217.59 87.11

Sikka 1409.93 23.18 1433.11 68.17

KLTPS 1270.62 4.55 1275.18 67.71

Dhuvaran (oil) 1187.87 204.19 1392.06 72.23

Dhuvaran (Gas) 1185.51 236.31 1421.82 74.09

Utran (Gas) 869.76 202.72 1072.48 90.69

Ukai (Hy) 466.74 - - -

Kadana (Hy) 83.05 - - -

Total 28387.77 870.36 28708.30 77.68

Power Station Generation DeemedGeneration MUs

Total PLF (%)

Note: Hydro generation is not considered in PLF calculation.

(3) The achievements of GSECL during 2008-09 are as under:§ UTRAN GBPS has been awarded “IEEMA Award” first prize (trophy) at National

level for “Excellence in Gas based Power Generation”.§ Wanakbori TPS has achieved ever highest yearly generation of 11112.775 MUs

with 86.30 % PLF crossing the previous record of 85.34 % (2006-07).§ Wanakbori TPS (Station) has achieved maximum continuous running days from

14.02.09 to 29.03.09 (42 days) crossing previous record of 30 days.§ Wanakbori TPS has achieved ever lowest yearly DM Make up water consumption




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of 1.80 % during Mar 09.§ Wanakbori TPS has achieved ever lowest demurrage hours of 604 hours during

2008-09.§ Wanakbori TPS has achieved ever lowest sp. Oil consumption 0.49 ml/kwh during

2008-09.§ Gandhinagar TPS has achieved ever highest yearly generation of 5966.424 MUs

with 78.29 % PLF.§ Gandhinagar TPS has achieved ever lowest FO consumption of 6409 MT during

2008-09.§ KLTPS (Station) has achieved maximum continuous running days from 14.10.08

to 29.10.09 (16 days).§ Dhuvaran CCPP (I & II) CDM Project has been issued 21526 CERs for the initial &

first verification for the period from 10.02.2008 to 30.04.2008(E) FUEL:

Coal :As you are aware that the Fuel is the most important and critical part of the Companyoperations and therefore the Company is continuously making efforts for improvement in fuelprocurement, management and cost. In the present regulatory regime, Company committedto reduce its fuel cost and perform with better efficiency. During the year, various steps havebeen taken for improvement in availability of coal, its quantity and reduction in cost. Thisincludes better coal linkages, increased use of washed coal and blending of imported coal.Company aimed at 100% beneficiation of low-grade, high-ash indigenous coal as per its long-term fuel strategy and achieved almost 100% beneficiation and supply of washed coal to itsPower Stations in the year 2008-09. To overcome the demand-supply gap of domestic coal,the Ministry of Power, Govt. of India issued targets of import of coal by the SEB’s/ PowerUtilities. In spite of very high prices in the International Coal Market, GSECL imported 1 milliontonnes of coal in the year 2008-09 as against the target of 1.38 million tonnes given by MoP.Thus, by blending of @ 17% of imported coal at Gandhinagar and Sikka Power Stations anda small at quantity at Wanakbori TPS; the Company had met with the directive of MoP,shortages of the domestic coal and also availed the technical benefits with the use of importedcoal.The Company executed Coal Supply Agreements with South Eastern Coalfields Ltd. andWestern Coalfields Limited for GSECL Power Stations. Due to execution of the Agreements,the fuel security for the existing coal-based Power Stations has been ensured to the greatextent.All these steps have contributed to improve the present fuel procurements to ensure regularsupply of quality fuel. This will lead to reduction in cost and better plant performance.Captive Mining:Your Directors are pleased to inform you that to have a fuel security for the future generationexpansion plans, the Company had joined hands together with Mahagenco and incorporateda JVC in the name of “Mahaguj Collieries Ltd.” (MGCL) and MGCL appointed a Mine Developer-cum-Operator for the development of the allotted coal blocks.Gas & Oil :




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For GSECL gas based power stations, company executed gas supply and transportationagreements with GAIL, RIL, NIKO, RGTIL & GSPL to ensure required quantity of gas forexisting units of Dhuvaran and Utran as well as Utran new gas base unit. The Companyexecuted the Gas Supply and Transportation Agreement with RIL-Niko, RGTIL & GSPL forquantities of 4.8 Lacs SCMD for Dhuvaran CCPP-II, 4.1 Lacs SCMD for Utran CCPP-I and 17Lacs SCMD for Utran CCPP-II so as to meet the gas requirement from newly explored KG-D6fields of Reliance.For Dhuvaran LSHS and FO/LDO for other power stations is made available by IOCL as perour requirements during the year.

(F) ASH HANDLING AND UTILISATION:As a part of its continuing efforts towards environment protection and pollution control, theCompany in consultation with TERI (The Energy and Resources Institutes) has developed acomprehensive ash management plan for its gainful utilization.The Company is exploring the possibility/feasibility of enhancing the infrastructure facilities fordry fly ash extraction, collection and evacuation capacity for achieving 100 % fly ash utilizationat its various power stations. Construction of additional dry ash collection facilities is underprogress at Gandhinagar and Ukai power stations.With proper implementation of ash management plan, the off-take of both dry and pond ashhas increased to 32.7% in the year 2008-09 & 35.5% from April 2009 to October 2009 in theyear 2009-10 (from a low of only 5.7% in the year 2001). Gandhinagar TPS has achievedthe highest dispatches 77% followed by Ukai TPS 31%, Sikka TPS 27% and Wanakbori TPS20% (from April 2009 to October 2009 in the year 2009-10).

(G) NEW PROJECTS:Your Directors are pleased to brief you on the New Projects of the Company as under:1.0 370 MW Gas Based Combined Cycle Power Plant at Utran:

The Company is setting up a 370 MW Gas Based Combined Cycle Power Project in theexisting premises. The contract for its installation is awarded to M/s. ALSTOM (Switzerland)Ltd. by inviting Global Competitive Bids. Unit is commissioned in open cycle mode on10.07.2009 and in combined cycle mode on 10.09.2009. The unit has entered intoCommercial Operation since 7th November 2009.

2.0 350+ MW Gas Based Combined Cycle Power Plant at Dhuvaran:The Company has initiated all actions for execution of 350+ MW Gas Based CombinedCycle Power Plant at Dhuvaran in the existing premises. The offer for selection of EPCContractor is invited on Global Competitive Bid (ICB) basis.

3.0 75MW Lignite based Extension Unit – IV at KLTPS, Panandhro:The unit was synchronized on 28.12.2008. All efforts are made by the Company withM/s. BHEL and other Agencies to achieve Commercial Operation Date by December2009.

4.0 2 x 250 MW Coal Based Extension Unit 3 & 4 at Sikka:The Company is in the process of setting up of 2 x 250MW Coal Based Thermal PowerProject as an extension to the existing 2 x 120 MW Thermal Power Station at Sikka. Allthe statutory clearances are obtained. M/s.TCE Consulting Engineers Ltd., Bangaloreare retained as Project consultant. EPC contract with BHEL is executed and 22.5.2007is achieved as Zero date. Design and engineering is commenced. Material supply is




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started. The work could not be started due to additional clearance from MoEF.5.0 500 MW Coal based extension unit No. 6 at Ukai TPS:

To augment generation capacity of the Company, Ukai extension project unit 6 of 500MW capacities has been taken up in available land. EPC contract with BHEL is executedand 06.10.2007 is achieved as Zero date. All statutory clearances have been received.Design and Engineering of the project is commenced, and site works are in progress.The scheduled commissioning of unit 6 is by February 2011.

6.0 10 MW Wind Energy Farm near Village Bayath in Kachchh:As a part of power generation through non conventional resources, the Company hasset up 8 wind mills each of 1.25 MW totaling 10 MW wind energy farm at village Bayathin Kachchh & commissioned in March / May 2008. The Wind farm is operational.

7.0 800 / 600 MW Coal Based Extension unit No. 8 at Wanakbori TPS:The project is identified for execution in 12th FYP. Process for obtaining EnvironmentClearance is in advance stage. Offers for consultant’s appointment are invited.

8.0 Other Power Projects planned by the Company:As part of continually augmenting generating capacity, the Company has approved forcarrying out Feasibility Study Report and preparation of Detailed Project Report for thefollowing projects.a. 2x800 MW Coal Based Projects at Sinor, Dist. Vadodara.b. 4x800 MW Coal Based Projects at Sarakhadi, Dist. Junagadh (expandable to 6x800

MW units).c. 2x800 MW Coal Based Projects at Dahej, Dist. Bharuch.d. 1000 MW Gas Based Combined Cycle Project at Dudhva, Dist. Banaskanta.e. 1000 MW Gas Based Combined Cycle Project at Chandrumana, Dist. Patan.

(H) MAJOR R & M WORKSa. 2 x 120 MW Units 1 & 2 of Ukai TPS:

RLA, CA, LE Study and PET of Ukai Unit 1 & 2 is completed and necessary orders havebeen placed on M/s. BHEL for execution of R&M and LE works. Unit No. 1 R&M and LEworks started in the working of September 2006 and unit – 1 is recommissioned in themonth of May 2008. Unit No. 2 is under shut down since August 2008 for execution ofR & M and LE works by BHEL. Work in all area is under progress.

b. 2 x 120 MW Units 1 & 2 of Gandhinagar TPS:Based on RLA study done by BHEL, works necessary for R&M and LE works wereidentified and order was placed on BHEL. Due to dismal performance in R&M works byBHEL at Ukai, a definite view is being taken whether to go ahead in these works orotherwise.

(I) PROJECT FINANCE:As a part of fund requirements for the new projects of the Company as already mentioned inpara (G&H), the Company is able to successfully tie up the debt requirements for thefollowing new projects at a very competitive rate of interest and other terms and conditions.i) Term loan of Rs. 947.00 Crores sanctioned by M/s. Rural Electrification Corporation

Limited for 370 MW Gas Based CCPP at Utran, Dist. Surat.




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ii) The debt requirement will be firmed up after finalization of project cost for 350 MW GasBased CCPP – III at Dhuvaran, Dist Anand.

iii) Term Loan of Rs. 288.73 Crores has been sanctioned by M/s. Power Finance CorporationLtd., for 75 MW Lignite based Power Plant at Panandhro, Kutchh; Dist. Bhuj.

iv) Term loan of Rs. 1775.00 Crores sanctioned by M/s. Power Finance Corporation for500 MW Coal Based Power Plant at Ukai, Dist. Surat.

v) Term loan of Rs. 1815.00 Crores sanctioned by various Banks for 500 MW ImportedCoal Based Power Plant at Sikka, Dist. Jamnagar.

vi) The Company obtained Term Loan from M/s. Kalupur Commercial Co-Operative BankLtd., Vadodara for Rs. 38.52 Crores for its 10 MW Wind Mills located at Bayed, Kutchh.

vii) Regarding major R&M works at Ukai TPS (Unit 1&2) and Gandhinagar TPS (Unit 1 & 2),the term loan for Rs.208.00 Crores and Rs. 320.00 Crores has been sanctioned by M/s. PFC, respectively.During the year under review the Company has also made arrangements with variousBanks for Working Capital requirements of the Company.

(J) ENERGY CONSERVATION:1. The Energy Audit of 5 No. of units i.e. Gandhinagar TPS Unit#4, Wanakbori TPS

Unit#6 & Unit#7, KLTPS Unit#2 and Dhuvaran CCPP - II has been carried out duringthe year 2008-09. The final energy audit report of Wanakbori TPS Unit#6 & Unit#7 isalready received and for balance units, the final report is pending for submission fromenergy audit agency.The implementation of recommendations suggested by energy audit agency in theenergy audit report of 10 No. of units for which energy audit had been carried outduring the year 2007-08 are implemented and due to which saving of approx. 24461730KWH and 51027 MT Coal per annum is observed.For the year 2009-10, the energy audit of 8 No. of units is planned and for which thework is in progress.

2. Standardization:Company has achieved ISO 9001 & ISO 14001 certification for all the Thermal Powerstations. The Company is in process of achieving the OHSAS- 18001:2007 for allThermal and Hydro Power stations.

3. Clean Development Mechanism:The Company owns Gas Based Combined Cycle Power Plant of Capacity 219.067 MW(Unit I – 106.617 MW & Unit II – 112.45 MW) at Dhuvaran and 374.57 MW capacityat Utran. Also the Wind Energy Project of 10 MW capacity near Mandvi (Kutch) hasbeen commissioned by Company to provide clean power.To mitigate the impact of climate change, the Company has got registered the DhuvaranCCPP as CDM project on 4.2.2008 and taken up CDM Project Development of UtranCCPP with UNFCCC under Kyoto Protocol.The crediting period for Dhuvaran starts from 10.02.2008. The initial & first periodicverification for the period from 10.02.2008 to 30.04.2008 has been completed. Thesecond periodic verification for the period 1.5.2008 to 31.10.2008 is under progress.The CDM Project development of Wind Energy Project at 10 MW capacity is taken upby Gujarat Urban Development Corporation (GUDC), Gandhinagar.




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(K) ENVIRONMENT, SAFETY AND TRAINING:The Company is committed towards preservation of environment in and around surroundingregions of the power plants. To look after the environment related activities, the Companyhas formed Environment cell at corporate office and also at all thermal power stations. As apart of corporate responsibility towards environment preservation, the Company is committedfor implementation of various statutory requirements.For the control of various sources of pollution generated from the power plant the Companyhas installed pollution control systems since commissioning of the power plants. High efficiencyElectro Static Precipitators are provided for control of particulate matter (PM) generated dueto burning of coal in boiler in all the power generating units. ESPs are the best availabletechnology at present to control ash particles from the gas. The Company has also installedflue gas conditioning system at some of the units of Ukai TPS, Wanakbori TPS and GandhinagarTPS. This system includes conditioning of flue gas with the help of NH3 before the ESPs toimprove the collection of fine ash particles in ESPs. This has helped in reduction of particulatematter emission into atmosphere. However, for future reduction of PM at these TPSs,Company has published note as expression of interest. For control of Nitrogen Oxides Coalbased thermal power stations are provided with low NOx burners and Gas turbines areprovided with DM water injection and OFA. Opacity meters are installed at all the units forcontinuous measurement of Particulate matters emitted into atmosphere.All the Thermal Power Stations of the Company are ISO 9001 and ISO 14001 certified. TheCompany is in the process of obtaining OHSAS 18001:2007 certification for maintaining theOccupational Health and Safety Systems for all the thermal and hydro power stations.Greenbelt is designed properly around the emission source, serving thereby a second line ofpollution control. The trees having dense spreading canopy are selected among the locallyknown indigenous varieties for sufficient width. A massive plantation work has been done inthe premises of power stations and residential colony. Plantation is also carried out onabandoned ash dyke area to prevent fugitive dust emission.The Company has identified the possibility of recirculation and reutilization of liquid wastegenerated for the power plants and implemented interconnection of various effluent drainsthereby reducing numbers of effluent discharge points and also reutilization of waste water inplant uses thereby reduction of fresh water requirements. In new power projects theCompany is planning for high concentration ash slurry disposal system which requires lessquantity of water.SAFETYThe Company is in the process of carrying out safety audit of all the Power Stations throughcompetent auditors like National Safety Council etc.TRAININGTo enhance employee productivity and in house skills, intensive thrust is given to imparttraining to maximum number of employees in all the cadres i. e. class I to class IV. Total 3763employees imparted training during the year.

(L) e-URJA SYSTEM:e-Urja system is the IT based system for Effective Enterprise Resource Management byintegration of different resources of an organisation. Different modules are designed basedon functional requirement in all areas of organisation. The main modules are HR module,Account & Payable module, Purchase module, Inventory Management module, Oracle Process




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Manufacturing module, Enterprise Asset Management module, Project module, FuelManagement module etc. The e urja system is implemented across the company.All the modules are made functional and the progress of all the modules is continuouslyreviewed and monitored. The usage of e-Urja system has contributed to overall improvementin all the areas of Company by saving time, reducing duplication, availability of data of allStations at finger tips. The implementation of e-Urja results in increase in employee productivityand the streamlining of processes help in timely procurement of materials & effective decisionmaking.

(M) JOINT VENTURE PROJECTS:As you are aware that the Company has joined hands together with the Generation Companyof the State of Maharashtra i.e. Mahagenco for joint allocation of coal blocks for developmentand sharing of coal. The Ministry of Coal, Government of India has approved allotment oftwo coal blocks viz. (i) Mahanadi and (ii) Machhakata jointly to the Company and MAHAGENCOfor the Captive Mining which would hold the mining lease from the Government of India andto undertake all the activities for the development of allotted coal mining blocks. The Companycalled “Mahaguj Collieries Ltd.” (MGCL) is formed as a joint venture Company and incorporatedand registered with the Registrar of Companies, Mumbai. The development activities of themining blocks at Mahanadi and Machhakata blocks have been undertaken by MGCL with atarget to provide required fuel linkage for the new project of Ukai Extension (1x500 MW) andWanakbori Extension (1x800 MW). MGCL had invited tender for appointment of MineDevelopment Operator (MDO). Accordingly the necessary LoI has already been issued tothe Mine Development Operator and the required work has already been started at site.

(N) INSURANCE:The Company has covered the assets of Five Power Plants viz. Gandhinagar Unit-V, WanakboriUnit-VII, Dhuvaran GBCCPP I & II and Utran GBCCPP-I under Industrial All Risk Policy sincetheir inception. The Company has also covered the assets of the transferred Power Plants oferstwhile GEB under appropriate insurance coverage as per the policy followed by erstwhileGEB.

(O) CHAIRMAN:Pursuant to Notification No. GUV-1108-1336-K dated 10.12.2009 of Government of Gujaratand letter No. GSECL/CHAIRMAN/2009/269 dated 10.12.2009 of GUVNL, Shri D.J. Pandian,IAS was appointed as Chairman of the Company in place of Shri S. Jagadeesan, IAS, whohas tendered his resignation.

(P) DIRECTORS:As per the provisions of the Companies Act and the Articles of Association of the Company,Shri I.P. Gautam, IAS and Shri H.P. Desai shall retire by rotation at the forthcoming AnnualGeneral Meeting and are eligible for re-appointment as Directors of the Company. TheCompany has received a letter No. GUV-102009-4653-K-I dated 05.10.2009 of Governmentof Gujarat nominating Shri C.L. Meena, IAS, Secretary (Expenditure) as Director on theBoard of the Company in place of Shri M.A. Bhatt.

(Q) AUDITORS:The Company is a Government Company under the provisions of Section 617 of the CompaniesAct, 1956. The Comptroller and Auditor General of India, New Delhi, vide their letter No. CA.V/COY/GUJARAT-GSECL (1) / 519 dated 09.09.2009 has appointed M/s. P. Parikh & Associates,




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Chartered Accountants, Vadodara as Statutory Auditors of the Company to audit the accountsfor the current financial year i.e. 2009-10.

(R) AUDITOR’S REPORT:The notes to the accounts referred to in the Auditor’s Report are self-explanatory andtherefore, do not call for any further comments. The Report/Comments of the Comptrollerand Auditor General of India pursuant to Section 619(u) of the Companies Act, 1956 areawaited and the same shall be sent as such as received alongwith management replies toeach comment as an Addendum forming part of this Report.

(S) COST AUDIT:Subsequent to Department of Company Affairs notifying Cost accounting Records (ElectricityIndustry) Rules, 2001 in December 2001, the Cost Audit Branch of the Ministry of CompanyAffairs issued orders dated 23rd December 2005 directing audit of the cost accounts maintainedat the Company’s power stations, from the financial year 2005-06 onwards.M/s. Kailash Sankhlecha & Associates, Vadodara, were appointed as the Cost Auditors for thefinancial year 2008-09 with the approval of the Central Government for conduct of cost auditand have submitted the Cost Audit Report in the terms of the said orders and Cost Audit(Report) Rules, 2001.

(T) AUDIT COMMITTEE:Pursuant to the provisions of 292A of the Companies Act, 1956, the Audit Committee reviewedthe present Internal Control System, Internal Audit Report of the Internal Auditors of theCompany, their observations and Company’s response thereto and Action Taken Report, forthe year under review.The Audit Committee of the Board of Directors of the Company comprises of the Directorsnamely, Shri I.P. Gautam, IAS, the Chairman of the Committee, appointed in place of Prof. N.Venkiteswaran who has tendered his resignation and other Directors are Shri L. Chuaungo,IAS, Shri H.P. Desai & Shri P.H. Rana.The meetings of the Audit Committee were held on 25.06.2008, 18.08.2008, 29.11.2008 &07.10.2009 to review Internal Control System and Internal Audit Report of the InternalAuditors of the Company. The Audit Committee considered and reviewed the Audited AnnualAccounts of the Company for the financial year 2008-09 along with the Audit Report on thesame by the Statutory Auditors of the Company, for submission to the Board of Directors forits consideration and approval, in their meeting held on 8th October, 2009.

(U) DISCLOSURES:[a] Particulars of Employees:

There was no employee earning an aggregate remuneration of Rs.2,00,000/- permonth or Rs.24,00,000/- per annum and hence the information in this regard betreated as NIL.

[b] Technology Absorption:The disclosure of particulars as per Form - B is given in the Annexure.

[c] Foreign Exchange Earning and Outgo:During the year under review, there was no foreign exchange earning and the outgowas of Rs.468.72 Crores.




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[d] Directors’ Responsibility Statement:Pursuant to Provisions of amended Section 217 (2AA) of the Companies Act, 1956 theDirectors hereby confirm as under: -1 that in the preparation of the annual accounts, the applicable accounting standards

have been followed along with proper explanation relating to material departures.2 that the Directors have selected such accounting policies and applied them

consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of the affairs of the Company at theend of the financial year and of the Balance Sheet as at 31st March, 2009 and ofthe Profit & Loss account for the same period.

3 that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provision of the Act, forsafeguarding the assets of the Company and for preventing and detecting fraudand other irregularities.

4 that the Directors have prepared the annual accounts on a going concern basis.(V) ACKNOWLEDGEMENT:

Your Directors place on record their grateful appreciation of the guidance, support and assistanceextended by the Government of Gujarat and the erstwhile Gujarat Electricity Board. TheBoard records with appreciation the unstinted support received from the Government of Indiain particular the Central Electricity Authority, Government of Gujarat, Financial Institutions andBanks like IDBI, IFCI and IIBI, Power Finance Corporation Ltd., State Bank of India, CentralBank of India, Bank of Baroda, Bank of India, Union Bank, Indian Overseas Bank, OrientalBank of India and Vijaya Bank for their valuable support in respect of the Projects underimplementation and other facilities. The Board also appreciates the efforts and dedication toduties by officers and staff at all levels of the Company.

For and on behalf of the BoardRegistered Office:Vidyut Bhavan,Race Course,Vadodara-390 007.

Date: 08/12/2009.

Sd/-(D. J. Pandian, IAS)

Chairman




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1. Efforts, in brief, made towards : The Company is making continuous effortstechnology absorption, adaptation and for absorption of latest technology in theinnovation. field of Operation and Maintenance of

Thermal Power Plants. Frequent visits tooperating thermal power plants are arrangedfor enhancement of technical knowledge.Latest WS-POSE system has been adoptedfor Control & Instrumentation of the plant.In this system, all controls are made throughMicro Processor based computerized systemresulting in maximised efficiency. Thissystem also includes SOE & DAS by which acomputerized analysis can be obtained forany occurrence in the plant.

2. Benefits derived as a result of the : a.) Reduction in total shutdown time of theabove efforts. plant, which results in higher PLF and

availability of the plant, leading to betterperformance.

b.) Enables the Company to carry out plantmaintenance with in-house expertise inmaintenance.

3. Imported Technology : ----

1. Specific area in which R&D carried : ----out by the Company.

2. Benefits derived as a result of the : ----above R&D.

3. Future plan of action. : ----

4. Recurring Expenditure. : ----

ANNEXURE TO DIRECTORS’ REPORT

FORM – B

Disclosure under the Companies (Disclosure of particulars in the Report of Board ofDirectors) Rules, 1988.

Disclosure of particulars with respect to Technology Absorption.

[a] Research & Development (R&D)

[b] Technology absorption, adoption & innovation




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Comments of the Comptroller & Auditor General of India under Section 619(4) of theCompanies Act, 1956 on the Accounts of Gujarat State Electricity Corporation Limited,Vadodara for the year ended 31 March 2009 and Replies of the Company.

ADDENDUM TO DIRECTORS’ REPORT

Comments of C & AG Reply by Company

(A) Profit & Loss Account

1.Employee cost (Schedule-15)

Discount for prompt payment of bills(Rs.174.55 crores).

The above balance represents rebate given toGujarat Urja Vikas Nigam Limited, Vadodara (theHolding Company) for payment of bills raisedduring 2008-09. Rebate was payable if paymentis made within seven days of raising the bill asper clause 7.5 of the power purchaseagreement(s) (PPA). However, during review ofthe payments received by the Company, it wasobserved that neither the whole nor the partpayments for the bills raised were received withinthe said period of seven days. Therefore, as perPPA terms the Company has incorrectlyrecognized rebate of Rs.174.55 crore for promptpayment. This has resulted in understatementof profit and understatement of debtors byRs.174.55 crore.

2. Unsecured Loan (Schedule 5 )

Term Loan from Financial Institutions(Rs.2546.61 crore)

The Company has disclosed interest accrued anddue Rs. 2.68 crore on the above loan along withinterest accrued and due on secured loan. Thishas resulted in understatement of interestaccrued and due for unsecured loans andoverstatement of interest accrued and due ofsecured loan by Rs. 2.68 crore.

The Company receives payment towards day to dayexpenditure from GUVNL ( the Holding Company) inaddition to payment directly made for GSECL, to banks,Financial Institutions and other agencies.

The net effect of both the transaction is the amountpayable by Company to GUVNL at the end of everymonth. Thus, rebate extended by the company is inorder.

Though it has no effect on profit & loss orliabilities of the Company, it is noted forimplementation in future.

For and on behalf ofComptroller & Auditor General of India

For and on behalf of the Board of DirectorsGujarat State Electricity Corporation Limited

(D. J. Pandian)ChairmanAccountant General




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Comments of the Comptroller and Auditor General of India under section 619(4) of theCompanies Act, 1956 on the accounts of Gujarat State Electricity Corporation Limitedfor the year ended on 31 March 2009.The preparation of financial statements of Gujarat State Electricity Corporation Limited for the yearended 2009 in accordance with the financial reporting framework prescribed under the CompaniesAct. 1956 is the responsibility of the management of the company. The statutory auditor appointedby the Comptroller and Auditor General of India under Section 619(2) of the Companies Act. 1956 isresponsible for expressing opinion on these financial statement under section 227 of the CompaniesAct, 1956 based on independent audit in accordance with the auditing and assurance standardsprescribed by their professional body the Institute of Chartered Accountants of India. This is statedto have been done them vide their Auditor Report dated 08 October 2009.I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementaryaudit under section 619(3) (b) of the Companies Act, 1956 of the financial statements of GujaratState Electricity Corporation Limited for the year ended 2009. This supplementary audit has beencarried out independently without access to the working papers of the statutory auditors and islimited primanly to inquiries of the statutory auditors and company personnel and a selectiveexamination of some of the accounting records. Based on my supplementary audit, I would like tohighlight the following significant matters under section 619(4) of the Companies Act, 1956 whichhave come to my attention and which in my view are necessary for enabling a better understandingof the financial statements and the related Audit Report.Comments on ProfitabilityProfit & Loss AccountExpenditureEmployees cost (Schedule 15)Discount for prompt payment of bills (Rs. 174.55 Crore)The above balance represents rebate given to Gujarat Urja Vikas Nigam Limited, Vadodara (theHolding Company) for payment of bills raised during 2008-09. Rebate was payable if payment ismade within seven days of raising the bill as per clause 7.5 of the power purchase agreement(s)(PPA). However, during review of the payments received by the Company, it was observed thatneither the whole nor the part payments for the bills raised were received within the said period ofseven days. Therefore, as per PPA terms the Company has incorrectly recognised rebate of Rs.174.55 crore for prompt payment. This has resulted in understatement of profit and understatementof debotors by Rs. 174.55 crore.Comments on Disclosure2. Unsecured Loan (Schedule 5)

Term Loan from Financial Institution (Rs.2,546.61 Crore)The Company has disclosed Interest accrued and due Rs. 2.68 crore on the above loan alongwith interest accrued and due on secured loan. This has resulted in understatement of interestaccrued and due for unsecured loans and overstatement of interest accrued and due ofsecured loan by Rs. 2.68 crore.

For and on behalf of theComptroller & Auditor General of India

Accountant GeneralDated : 31/12/2009Place : Ahmedabad




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1. We have audited the attached Balance Sheet of Gujarat State Electricity Corporation Limited asat 31st March, 2009 the Profit and Loss Account and the Cash Flow Statement for the yearended on that date annexed thereto. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statementsbased on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India.Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatements. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

3 As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies(Auditor’s Report) (Amendment) Order, 2004, issued by the Government of India in terms ofsub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Without qualifying our opinion, attention is invited to the following:

(a) As a part of efforts towards restructure of power sector, the Company has been promotedby erstwhile Gujarat Electricity Board (GEB) (now known as Gujarat Urja Vikas NigamLimited (GUVNL) with effect from 1/4/2005) in August, 1993, GUVNL held 100% equityshares of the Company throughout the year under consideration. The Company hasentered into Inter Company Agreements and Facility Sharing Agreements with GUVNL andits subsidiary companies for working capital and Term Loans and sharing of certain commonfacilities viz. Group Gratuity Contribution to LIC. All such arrangements results into multifacetedrelation of the Company with GUVNL and other successor entities of holding company.

The financial statements are prepared on Going Concern principles and performance ofthe Company for the year under consideration has been determined after reviewingseveral long term arrangements of the Company with GUVNL and its subsidiary Companies.

(b) The Government of Gujarat in pursuance to the scheme called “Gujarat Electricity IndustryReorganization Transfer of Gandhinagar Thermal Power Station Scheme 2003” and “GujaratElectricity Industry Reorganization and Comprehensive Transfer Scheme, 2003” hastransferred and vested all the assets & liabilities and preceedings of the specified existingand under implementation power stations of GEB to the Company with effect from 1stApril 2005.

In accordance with the above referred schemes, the State Government has notified thevalues of the assets and liabilities at which these undertakings are transferred to andvested in the Company.

(c) Upon reconciliation of balances in the accounts of GUVNL, the company has identified andmatched the receipt of funds during the year under review against the invoices of sale ofelectricity. In response to demand of GUVNL and in pursuance of power purchase agreementthe company has allowed discount for prompt payments of bills to the tune of Rs. 17455.10lacs to GUVNL

AUDITORS’ REPORT TO MEMBERS OF GUJARAT STATE ELECTRICITYCORPORATION LIMITED




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5. Particular attention is drawn to the following:(a) Note No. 1(a) of Schedule 20 to the financial statements regarding the non registration of

charge on the transferred assets of the Company.(b) Note No. 1(b) of Schedule 20 to the financial statements regarding classification of Loans

transferred by GUVNL under FRP on 1st April 2005 which has been considered andclassified as unsecured loans in financial statements.

(c) Note No. 4(a) of Schedule 20 regarding provision for depreciation for the year at the ratesspecified by the Central Electricity Regulatory Commission (CERC) as against the rates asper Schedule XIV to the Companies Act, 1956 resulting in to provision of depreciation lowerby Rs. 78.68 crores and over statement of profit by like amount.

(d) Note No. 12 of Schedule 20 to the financial statements in respect of Balances due to /from suppliers, railways, contractors, collieries, creditors, advances & receivables / payablebeing subject to confirmation and / or reconciliation with the parties.

6. Further to our comments in the Annexure referred to above, we report that :(a) we have obtained all the information and explanations which, to the best of our knowledge

and belief, were necessary for the purposes of our audit;(b) in our opinion, proper books of account as required by law have been kept by the Company

so far as appears from our examination of those books;(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with

by this report are in agreement with the books of account;(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement

dealt with by this report comply with the Accounting Standards referred to in sub-section(3C) of Section 211 of the Companies Act, 1956;.

(e) The Company, being a Government Company, in view of the Notification No.GSR 829(E)dated 21st October 2003 issued by the Government of India, the provisions of clause (g)of sub- section (1) of section 274 of the Companies Act, 1956, are not applicable to theCompany.

(f) in our opinion and to the best of our information and according to the explanations given tous, the said accounts, subject to para 5 above, read together with notes thereon give theinformation required by the Companies Act, 1956 in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India :(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st

March 2009;(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year

ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on

that date.

sd/-(Sandip A. Parikh)

PartnerM. No. 40727

For G. K. Chokshi & Co.,Chartered Accountants

PLACE : AhmedabadDATE : 08th October, 2009




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ANNEXURE TO THE AUDITORS REPORT[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of Gujarat StateElectricity Corporation Limited on the financial statements for the year ended 31st March, 2009]

i. (a) The Company has maintained proper records showing full particulars including quantitativedetails and situation of Fixed Assets.

(b) The Company has a programme of physical verification of its Fixed Assets over a periodof three years; which in our opinion is reasonable having regard to the size of the Companyand nature of its assets. In accordance with this programme, certain Fixed Assets havebeen physically verified by the management through firm of Chartered accountants speciallyappointed for the purpose at power stations during the year under review and accordingto information and explanation given to us, no material discrepancies have been noticedon such verification.

(c) As per the information and explanation given to us, during the year the Company has notdisposed off any substantial part of Fixed Assets that would affect the going concernassumption.

ii (a) The inventory comprises of coal, oil and stores and spares has been physically verified bythe management at reasonable intervals except inventory of stores and spares at UkaiThermal Power Station. In our opinion, the frequency of verification is reasonable, lookingto the size of the Company.

(b) In our opinion and according to information and explanation given, the procedure ofphysical verification of inventory followed by the management is reasonable and adequatein relation to the size of the Company and nature of its business.

(c) In our opinion and according to explanation given to us, the Company has maintainedproper records of inventory, except at Wanakbori and Kutchh Lignite Thermal PowerStations where maintenance of inventory records needs to be strengthened. Thediscrepancies noticed on physical verification of inventory have been properly dealt with bythe Company in the Books of Accounts.

iii. (a) In our opinion and according to the information and explanation given to us, the companyhas not granted any loans secured or unsecured to companies, firms or other partiescovered in the register maintained under section 301 of the Companies act, 1956.In view of (a) above, sub-clauses (b), (c) and (d) are not applicable.

(e) In our opinion and according to the information and explanation given to us, the companyhas not taken any loans, secured or unsecured from companies, firms or other partiescovered in the register maintained under section 301 of the Companies act, 1956.In view of (e) above, sub-clauses (f) and (g) are not applicable.On the strength of a legal opinion obtained by the Company, it has represented that theprovisions of section 299, 300 and 301 of the Companies act, 1956 are not attracted tothe transactions entered in to by the company with GUVNL and its subsidiaries and arenot liable to be listed in the register maintained under section 301 of the Companies act,1956.

iv. In our opinion and according to the information and explanation given to us, there are adequateinternal control procedures / system commensurate with the size of the Company and thenature of its business with regard to purchase of inventory, fixed assets and with regard to saleof electricity and services. However, the controls regarding maintenance of inventory records,prompt recording of inventory and financial transactions and settlement of advance payments




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to contractor / suppliers needs to be strengthened.Further, on the basis of our examination of the books and records of the Company carried outin accordance with the auditing standards generally accepted in India, we have neither comeacross nor have been informed of any continuing failure to correct major weaknesses in theaforesaid internal control system.

v. (a) The Company has entered into contract / arrangements with GUVNL being the holdingCompany. As per the information and explanations given to us and based on the legalopinion obtained by the Company, the transactions pursuant to these contracts and / orarrangement are not falling under the provisions of section 301 of the Companies Act,1956 and accordingly these transactions are not entered into the Register maintainedunder section 301 of the Companies Act, 1956.In view of (a) above, sub-clause (b) is not applicable.

vi. In our opinion and according to the information and explanations given to us, the Companyhas not accepted any deposits within the meaning of Section 58A, 58AA or any other relevantprovision of the Companies act, 1956, and the rules framed there under.

vii. The Company has an in house Internal Audit System and it has also assigned internal auditassignments to practicing firms of Chartered Accountants and this arrangement in conjunctionwith the existing internal control and checks is in our opinion commensurate with the size of theCompany and the nature of its business.

viii. We have reviewed the books of account maintained by the Company, pursuant to the Rulesmade by the Central Government of India, for the maintenance of cost records under clause(d) of sub section (1) of section 209 of the Companies act, 1956 and are of the opinion thatprima facie, the prescribed accounts and records have been made and maintained.We have not, however, made a detailed examination of the records with a view to determinewhether they are accurate or complete.

ix. According to the information and explanation given to us in respect of statutory and otherdues:(a) The Company is generally regular in depositing undisputed statutory dues, including Provident

Fund, investor Education and Protection Fund, Income Tax, Wealth Tax, Service Tax,Custom Duty, Cess and other statutory dues with the appropriate authority during theyear. According to the information and explanations given to us, there are no undisputedamounts payable in respect of such statutory dues which have remained outstanding asat 31st March, 2009 for a period more than six months from the date they becamepayable.

(b) According to the information and explanation given to us, there are no dues of IncomeTax, Customs Duty, Wealth Tax, Service Tax and Cess, which have not been depositedon account of any dispute.

x. The Company does not have any accumulated losses as at the end of the financial year. Thecompany has not incurred cash losses during the current year and the immediately precedingfinancial year.

xi. Based on our audit procedures and on the information and explanation given by themanagement, we are of the opinion that the Company has not defaulted in repayment ofdues to financial institutions and banks in respect of the existing loans, which were originallyraised by the Company. As regards the loans transferred from GUVNL, we have been informedthat the same have been serviced by GUVNL on behalf of the Company and in view of the




33


above we are not in a position to opine whether the Company has defaulted in repayment indues to Financial Institutions and Banks.

xii. Based on our examination of documents and records and according to the information andexplanations given to us, we are of the opinion that the Company has not granted any loansand / or advances on the basis of security by way of pledge of shares, debentures and othersecurities.

xiii. The provisions of any special statues applicable to chit fund, nidhi and mutual benefit funds/societies are not applicable to the Company.

xiv. Based on examination of the accounts and as per the information and explanation given to us,the Company is not dealing or trading in shares, securities, debentures and other investments.

xv. In our opinion and according to the information and explanation given to us, the company hasnot given any guarantee in respect of loans taken by others from banks or financial institutions.

xvi. (a) Term loans raised by GUVNL on behalf of the company have been accounted in the booksof the Company by debit to GUVNL Account and the repayments and interest thereon arereimbursed by the company to GUVNL by crediting GUVNL Account without any actualcash inflow or outflow. In view of the above and in absence of the relevant information asregards the purpose and other terms and conditions of loans availed through GUVNL, weare unable to comment on the application of such loans for the purpose for which theywere obtained.

(b) In case of loans directly raised by the Company during the year, on the basis of recordsexamined by us, and relying on the information compiled by the Company for Co-relatingfunds raised for the end use of the term loan, the Company has, prima facie, applied theloans for the purpose for which they were obtained.

xvii. The Company has raised its allocated term loans through GUVNL and for the reasons given inclause xvi above, it is not possible for us to ascertain whether funds raised on short term basishave been used for long term investment. However, funds raised by the Company on longterm basis have been applied for long term investment.

xviii. Based on a legal opinion obtained by the company, the provisions of section 301 of theCompanies Act, 1956 are not applicable to the company. In view of the above, this clause isnot applicable.

xix. The liabilities under the bonds issued by the erstwhile GEB transferred to the Company aresecured either by a charge over the assets and / or by a guarantee by Government ofGujarat.

xx. The Company has not raised any money by public issue during the year.xxi. We have informed that the vigilance department of the company is regularly investigating

frauds and other irregularities involved in the company’s transaction. To the best of our knowledgeand belief and according to the information and explanation given to us, no fraud on or by theCompany has been noticed or reported during the year.

(Sandip A. Parikh)Partner

M. No. 40727

For G. K. Chokshi & Co.,Chartered Accountants

PLACE : AhmedabadDATE : 08th October, 2009




34


BALANCE SHEET AS AT 31ST MARCH , 2009

SOURCES OF FUNDSShareholders’ FundsShare Capital 1 91 297.24 57 330.01Equity Pending Allotment 2 36 956.60 1 43 168.94Reserves and Surplus 3 1 53 661.18 47 933.57

2 81 915.02 2 48 432.52Loan FundsSecured Loans 4 2 35 432.44 1 34 488.75Unsecured Loans 5 2 54 661.49 2 23 105.20

4 90 093.93 3 57 593.95Total 7 72 008.95 6 06 026.47

APPLICATION OF FUNDSFixed Assets 6Gross Block 7 89 545.95 7 43 612.42Less: Accumlated Depreciation 2 67 426.23 2 31 468.37Net Block 5 22 119.72 5 12 144.05Capital Work in Progress 3 13 746.81 1 45 210.86

8 35 866.53 6 57 354.91Investments 7 2 052.00 2 052.00Current Assets, Loans and AdvancesInventories 8 39 940.05 34 154.90Sundry Debtors 9 1 17 381.99 62 930.49Cash and Bank Balances 10 120.83 569.23Loans and Advances 11 42 321.32 73 018.63

1 99 764.19 1 70 673.25Less:Current Liabilities and Provisions 12Current Liabilities 2 53 381.83 2 15 780.14Provisions 12 291.94 8 273.54

2 65 673.77 2 24 053.68Net Current Assets (65 909.58) ( 53 380.44)

Total 7 72 008.95 6 06 026.47Significant Accounting Policies 19Notes to the Financial Statements 20

PARTICULARS SCHEDULEAS AT 31ST

MARCH, 2008AS AT 31ST MARCH, 2009

[ RS. IN LAKHS]

Schedules referred to above and notes attached thereto form an integral part of Balance SheetAs per attach report of even dateFOR G. K. CHOKSI & CO. FOR AND ON BEHALF OF THE BOARDChartered AccountantsSANDIP A. PARIKH S. JAGADEESAN P. H. RANA L. CHUAUNGOPartner Chairman Managing Director DirectorMem. No. 40727

R.G. SHETH V. P. JANISr. Chief General Manager (F & A) Company Secretary

Place: Ahmedabad Place: VadodaraDate: 08-10-2009 Date: 08-10-2009




35


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH , 2009

INCOMESale of Electrical Energy 7 10 122.63 6 20 473.87Other Income 13 22 229.02 12 913.64

7 32 351.65 6 33 387.51EXPENDITUREGeneration and Other cost 14 6 13 054.40 5 24 025.68Employees Cost 15 28 342.51 36 789.60Administrative and Other Expenses 16 21 582.15 7 422.05

6 62 979.06 5 68 237.33Profit before depreciation and interest 69 372.59 65 150.18Interest 17 27 859.07 28 043.62Depreciation and impairment 33 371.68 27 764.00

61 230.75 55 807.62Profit before prior period adjustments 8 141.84 9 342.55Prior Period Adjustments 18 (59.53) 2 507.88Profit before tax 8 201.37 6 834.67Provision for TaxationCurrent 1 013.78 785.00[Net of excess provision of earlier yearsRs. 11.29 lacs (P.Y. Rs. NIL)]Wealth Tax 0.00 0.06Fringe Benefit Tax 134.23 125.49

1 148.01 910.55Profit after tax 7 053.36 5 924.12Balance brought forward from earlier year 40 978.17 35 054.05Balance carried to balance sheet 48 031.53 40 978.17Earnings Per Share - Basic 0.77 1.03Earnings Per Share - Diluted 0.59 0.88Significant Accounting Policies 19Notes to the Financial Statements 20

PARTICULARS SCHEDULENUMBER Year ended

31st March, 2008Year ended

31st March, 2009

[ RS. IN LAKHS]

Schedules referred to above and notes attached thereto form an integral part of Profit and Loss AccountAs per attach report of even dateFOR G. K. CHOKSI & CO. FOR AND ON BEHALF OF THE BOARDChartered AccountantsSANDIP A. PARIKH S. JAGADEESAN P. H. RANA L. CHUAUNGOPartner Chairman Managing Director DirectorMem. No. 40727






36


CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009

A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit/(Loss) before Tax 8201.37 6834.67Add/(Less) : Adjustments forProfit on sale of Fixed Asset (1876.99) (0.19)Depreciation 33371.68 27764.00Interest and Guarantee Fees 27859.07 28043.62Interest/Dividend received (141.96) (79.25)Prior period adjustments related to Investing 1249.41 1888.31& Financing ActivitiesOperating Profit before Working Capital Changes 68662.58 64451.16Add/(Less) : Adjustments for working capital changesTrade & Other Receivables (54241.41) (35958.09)Inventories (5785.15) 1620.83Trade Payables and other liabilities 39845.48 28326.54Loans and Advances 31450.57 13363.63Cash Generated from operations 79932.07 71804.07Direct taxes paid (Net of netfunds) (952.13) (1708.81)Net cash generated from operations : 78979.94 70095.26

B NET CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (including interest cost) (213716.92) (104024.03)Proceeds from Sale of Fixed Asset 1948.36 528.21Interest/Dividend received 141.96 79.25Investment 0.00 0.00Net cash used in investing activities : (211626.60) (103416.57)

C CASH FLOW FROM FINANCING ACTIVITIES(Repayment)/Proceeds from borrowings 132499.98 44432.26Increase / (Decrease) in Equity 26956.60 10000.00Capital Grant received from Government of Gujarat 0.00 3817.62Interest and Guarantee Fees paid (27258.32) (28945.04) Net cash generated from financing activities : 132198.26 29304.84

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (448.40) (4016.47)CASH AND CASH EQUIVALENTS AS AT APRIL 1, 2008 569.23 4585.69CASH AND CASH EQUIVALENTS AS AT MARCH 31, 2009 120.83 569.23

PARTICULARS YEAR ENDED31ST MARCH, 2008

YEAR ENDED31ST MARCH, 2009

[ RS. IN LAKHS]

As per attach report of even dateFOR G. K. CHOKSI & CO. FOR AND ON BEHALF OF THE BOARDChartered AccountantsSANDIP A. PARIKH S. JAGADEESAN P. H. RANA L. CHUAUNGOPartner Chairman Managing Director DirectorMem. No. 40727



Notes 1. Purchase of Fixed Assets includes the movement in Capital Work-in-progress.2. Previous year figures have been regrouped, reclassified and reworked wherever necessary for comparative purpose.




37


SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH , 2009

Authorised

350,00,00,000 (P.Y. : 350,00,00,000) Equity Share of Rs.10/- each 3 50 000.00 3 50 000.00

Issued, Subscribed and Paid up

912,972,424 (P.Y. : 573,300,070) Equity Shares of Rs 10/- each 91 297.24 57 330.01

Total 91 297.24 57 330.01

PARTICULARS As at 31st

March, 2009

[ RS. IN LAKHS]

SCHEDULE: 1SHARE CAPITAL

As at 31st

March, 2008

Note:1 Of the above, 912,972,424 (P.Y.573,300,070) Equity Shares are held by

“Gujarat Urja Vikas Nigam Ltd.”, the holding Company (GUVNL).2 Of the above 330,672,354 Equity Shares of Rs. 10/- each have been

issued at premium in consideration for transfer of genaration undertakingsof erstwhile GEB (now GUVNL) as referred to in Note no. 2 of Schedule - ‘20’.

3 Of the above 44,40,00,070 Equity Shares of Rs. 10/- each were allotted atpar to erstwhile GEB (now GUVNL) on conversion of Unsecured Loanamounting to Rs. 44,400.01 Lacs.

SCHEDULE: 2EQUITY PENDING ALLOTTMENT

SCHEDULE: 3RESERVES AND SURPLUS

(Refer Note no. 2 of Schedule no. 20)Equity Share Pending Allocation 0.00 1 32 268.94Equity Share Application Money 36 956.60 10 900.00

Total 36 956.60 1 43 168.94


March, 2009

[ RS. IN LAKHS]

As at 31st

March, 2008

Capital Reserve (Capital Grant under FRP)Opening Balance 6 955.40 3 137.78Add : Addition during the Year 0.00 3 817.62

6 955.40 6 955.40Less : Transfer / Adjusted during the year 527.46 0.00

6 427.94 6 955.40Share Premium 99 201.71 0.00(Refer note no. 2(a) of schedule No. 20)Balance in Profit and Loss Account 48 031.53 40 978.17

Total 1 53 661.18 47 933.57

PARTICULARS As at 31st March, 2009

[ RS. IN LAKHS]

As at 31st

March, 2008




38


SCHEDULE: 4SECURED LOANS

(Refer Note No. 1 (a) of Schedule 20)Term Loan from Financial InstitutionPower Finance Corporation Limited 1 12 217.37 87 206.85Rural Electrification Corporation Limited 81 519.72 38 443.88

1 93 737.09 1 25 650.73Term Loan from BanksOriental Bank of Commerce 29 370.89 0.00Kalupur Commercial Co. Op. Bank Ltd. 3 362.58 0.00

32 733.47 0.00Working capital loans from Banks 8 414.22 8 486.74Interest accrued and due 547.66 351.28

Total 2 35 432.44 1 34 488.75


[ RS. IN LAKHS]

As at 31st

March, 2008

NOTE:1 The above term loans are secured by first charge by way of hypothication on the whole of the movable

properties of the company including its movable plant and machinery, machinery spares, tools and accessoriesand other movables both present and future (save and except book debts) for following power generatingunits namely :(a) Ukai R & M Unit I & II(b) Gandhinagar Unit I & II(c) KLTPS Unit I & II(d) Ukai Unit VI(e) Sikka TPS Unit III & IV(f) Utran CCPP - 374 MW(g) Wind Mill 10 MW at Bayth(h) Minor R & M Scheme of RECThe above term loans are further secured by way of mortgage on all immovable properities, both presentand future for the following power generating units namely :(a) Gandhinagar Unit I, II, & IV(b) Wanakbori Unit VII(c) Utran(d) Dhuvaran Unit I & II(e) KLTPS Unit IV(f) Ukai TPS Unit I & II(g) Utran 370 MWThe loans for Gandhinagar Unit V, Wanakbori Unit VII & Utran are further guarenteed by the Guarantee ofGovernment of Gujarat.

2 The working capital loans from banks are secured by way of hypothication of all current assets of thecompany viz. Coal, Oil, Comsumbale Spares and Stores, Bills receivables and Book debts.

3 Repayable within a year Rs.16,320.41 lacs (Previous year Rs. 13,388.09 lacs)





39


SCHEDULE: 5UNSECURED LOANS

Power Finance Corporation Limited 19 545.82 25120.64

Gujarat State Financial Services 30 000.00 0.00

(Refer note no. 1 (a) of Schedule no. 20)

Loans transferred from GUVNL

(Refer note no. 1 (b) of Schedule no. 20)Term Loan from Financial Institution :

Power Finance Corporation Limited 0.00 0.00

Bonds 74 185.46 88 374.66

Central Electricity Authority 9.46 9.46

Rural Electrification Corporation Limited 3 712.10 7 079.84

Gujarat State Financial Services 48 180.28 22 478.81

Gujarat Industries Power Company Limited 0.00 914.00

1 26 087.30 1 18 856.77

Term Loan from Banks :Central Bank of India 895.26 2 266.34

Dena Bank 7 548.83 5 606.71

Union Bank of India 4 168.82 2 285.00

Allhabad Bank 3 656.00 4 341.50

Karnataka Bank 3 188.14 1 142.50

Indian Overseas Bank 4 905.20 6 498.19

Oriental Bank of Commerce 1 158.12 1 889.57

State Bank of India 20 641.99 23 718.49

State Bank of Saurastara 1 266.32 1 688.42

Bank of Baroda 21 596.30 21 274.10

Canara Bank 5 138.65 0.00

Karur Vysya Bank 1 284.66 0.00

75 448.29 70 710.82

2 01 535.59 1 89 567.59

Deferred payment Guarantee 3 580.08 8 416.97

Total 2 54 661.49 2 23 105.20


[ RS. IN LAKHS]

As at 31st

March, 2008


Note :Amount repayable within a year Rs. 82,324.95 lacs (Previous year Rs. 54,862.00 lacs).




40


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41


SCHEDULE: 7INVESMENTS (LOAG TERM, NON TRADE)


QuotedGujarat State Petronet Ltd. 550.00 550.0055,00,000 Equity Shares of Rs. 10/- each fully paid

Gujarat Industries Power Company Limited 1 500.00 1 500.0022,05,882 Equity Shares of Rs. 10/- each fully paidat premium of Rs. 58/- per share

UnquotedMahaguj Collieries Ltd. (Joint Venture Company) 2.00 2.0020,000 Equity Shahres of Rs. 10/- each fully paid Total 2 052.00 2 052.00


March, 2009

[ RS. IN LAKHS]

As at 31st

March, 2008

Note :Aggregate Market value Rs.2980.88 lacs (Previous year Rs. 5,077.95 lacs)

SCHEDULE: 8INVENTORIES

As valued and certified by the Management(Refer para 9 of Schedule no. 19 for valuation)Fuel 19 700.79 20 073.81Store and Spares 13 557.28 11 249.92Scrap Materials 2 176.63 2 078.46Materials in Transit 4 505.35 752.71[Including materials pending inspection Rs. 746.24 lacs (P.Y. Rs. 616.07 lacs)] -- --

Total 39 940.05 34 154.90


March, 2009

[ RS. IN LAKHS]

As at 31st

March, 2008

SCHEDULE: 9SUNDRY DEBTORS

Unsecured, Considered goodDebts outstanding for the period exceeding six months 0.00 0.00Others 1 17 381.99 64 618.16

1 17 381.99 64 618.16Less :Provision for loss on dispute 0.00 1 687.67

Total 1 17 381.99 62 930.49


March, 2009

[ RS. IN LAKHS]

As at 31st

March, 2008

Note :Due from holding company Rs.117171.90 lacs (Previous year Rs. 64308.48 lacs)




42


SCHEDULE: 10CASH AND BANK BALANCES


Cash and Stamp on hand 3.11 26.10Balance with Scheduled Banks- In Current Accounts 49.97 220.16Remittance in Transit 67.75 322.97

Total 120.83 569.23


March, 2009

[ RS. IN LAKHS]

As at 31st

March, 2008

SCHEDULE: 11LOANS AND ADVANCES

(Unsecured, considered good unless otherwise stated)Loan to Joint Venture Company 879.10 0.00

Advances recoverable in cash or in kind or for value to be receivedClaims and receivablesFuel related (Refer note no. 3 of Schedul-‘20’) 9 656.70 34 905.33

Others 0.72 5.84Advances to / for and recoverable from

O & M Supplies and Works 22 116.11 27 764.66Staff (including interest receivable) 4 322.66 4 076.29

Other (Including Employees) 36.16 7.44Deposits / Balances withGovernment and Local Bodies 159.28 451.44

Others 2 571.93 3 223.53Advance Tax, TDS and FBT 3 438.96 2 475.61

Prepaid Expenses 199.36 305.60Inter Company Receivable 10.64 61.25Other Receivable 129.70 198.69

43 521.32 73 475.68Less :Provision for doubtful advances 1 200.00 457.05

Total 42 321.32 73 018.63


March, 2009

[ RS. IN LAKHS]

As at 31st

March, 2008

Note :Housing and Vehicle advances to staff are secured against respective assets




43


SCHEDULE: 12CURRENT LIABILITIES & PROVISIONS

Current LiabilitiesLiabilities for / related toFuel 29 886.46 66 296.02Capital Supplies / Works 440.41 1 054.59O & M Supplies / Works 6 030.50 4 066.77Staff (inclusive of welfare schemes) 2 821.86 2 757.35Expenses 17 275.85 16 309.41Deposit and Retention from Supplier/Contractor 36 906.46 13 645.94Interest accrued but not due 8 433.44 7 818.06Inter Company Payable 1 23 171.12 79 286.24Provision for Expenses 28 247.11 24 281.34Other Liabilites 168.62 264.42

2 53 381.83 2 15 780.14ProvisionsLeave Encashment Liability 9 367.59 6 508.42TaxationIncome Tax 2 789.91 1 764.91Fringe Benefit Tax 134.23 0.00Wealth Tax 0.21 0.21

12 291.94 8 273.54Total 2 65 673.77 2 24 053.68


[ RS. IN LAKHS]

As at 31st

March, 2008





44


SCHEDULE: 13OTHER INCOME

Interest (Tax deducted at Source Rs. 12.22 lacs)On Fixed Deposit 59.31 40.53On Advances to Staff 225.05 237.32Others 1.17 0.00

285.53 277.85Dividend 82.65 38.72Operation and Maintenance 1 457.02 1 013.55Penalties recovered from Suppliers / Contractors 647.45 454.68Insurance Claims / Refunds 0.00 3 217.06Income from sale of scrap / stores 119.11 464.32Profit on sale of assets 1 876.99 0.19Provisions no longer required 9 581.02 825.90Miscellaneous Receipts 8 179.25 6 621.37

Total 22 229.02 12 913.64

PARTICULARS Year ended March 31, 2009

[ RS. IN LAKHS]

Year endedMarch,31 2008

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED MARCH 31, 2009

SCHEDULE: 14GENERATION AND OTHER COST

Materials/ Fuel consumedCoal 4 27 292.08 3 86 933.37Oil 72 137.35 53 902.06Gas 75 309.84 52 537.68Water 9 689.89 6 409.36

5 84 429.16 4 99 782.47Other Fuel related cost (Refer note no.3(b) of Schedule ‘20’) 8 155.53 9 880.20Lubricants and Consumables 1 272.36 677.20Station Supplies 342.33 9770.22 137.41Repair and MaintenancePlant and Machinery 14 244.70 9 813.17Building and Civil Works 4 334.45 3 650.31Others 275.87 84.92

18 855.02 13 548.40Total 6 13 054.40 5 24 025.68


[ RS. IN LAKHS]





45


SCHEDULE: 15EMPLOYEES COST


Salary, Wages and Bonus 26 766.02 35 598.13Contribution to Provident and Other Funds 1 855.18 1 812.91Retirement and other benefits 6 062.32 2 987.90Staff Welfare 1 075.12 857.32

35 758.64 41 256.26Less: Allocated to Capital Works 7 416.13 4 466.66

Total 28 342.51 36 789.60

PARTICULARS Year endedMarch,31 2009

[ RS. IN LAKHS]


SCHEDULE: 16ADMINISTRATION & OTHER EXPENSES

Rent, Rates and Taxes 209.43 267.63Insurance 328.80 529.26Communication 146.95 104.50Fees and Legal 409.93 1 666.58Auditor’s Remuneration 17.65 17.98Travelling and Conveyance 161.50 166.51Other Expenses 2 584.00 2 966.09Discount for prompt payment of bills 17 455.10 0.00Provision for bad advances / loss on dispute 742.95 2 144.72

22 056.31 7 863.27Less: Allocated to Capital Works 474.16 441.22

Total 21 582.15 7 422.05

PARTICULARS Year endedMarch,31 2009

[ RS. IN LAKHS]





46


SCHEDULE: 17INTEREST & FINANCIAL CHARGES

InterestOn Bonds and Other Fixed Loans 40 631.38 27 077.60Others 200.73 5 415.31

40 832.11 32 492.91Financial ChargesGuarantee Fees / Charges 998.22 1 302.35Bank Charges and Commission 560.92 424.56Others 135.63 0.00

1 694.77 1 726.9142 526.88 34 219.82

Less:- Allocated to Capital Works 14 667.81 6 176.20Total 27 859.07 28 043.62


[ RS. IN LAKHS]



SCHEDULE: 18PRIOR PERIOD ADJUSTMENTS

IncomeOther Income 600.04 107.49Interest 863.58 1 196.45Excess provision written backDepreciation 80.85 1 313.36Others 133.57 23.22

1 678.04 2 640.52ExpensesOther generation cost 93.11 0.00Material related cost 77.57 0.00Employee cost 111.71 0.00Head Office Supervision Charges 0.00 1 865.63Miscellenous 0.00 129.58Depreciation 1 315.63 2 408.92Interest 14.63 123.47Others 5.86 620.80

1 618.51 5 148.40Net Expenses / (Income) : (59.53) 2 507.88

PARTICULARSYear ended March 31, 2009

[ RS. IN LAKHS]





47


SCHEDULE – 19 SIGNIFICANT ACCOUNTING POLICIES

1. Basis Preparation of Financial Statements

(a) The Company is a Public Limited Company registered under the Provisions of CompaniesAct, 1956 and has applied provision of the said act for preparation of its financialstatements, unless otherwise stated. The financial statements are prepared and presentedunder the historical cost convention on accrual basis of accounting as going concern, inaccordance with the accounting principles generally accepted in India and comply withthe mandatory Accounting Standards issued by the Institute of Chartered Accountantsof India. Accounting policies have been followed consistently except stated specifically.

(b) The Government of Gujarat, under the provisions of the Gujarat Electricity Industry(Reorganization and Regulation) Act, 2003 had framed the “Gujarat Electricity IndustryReorganization and transfer of Gandhinagar Thermal Power Station Scheme, 2003” and“ The Gujarat Electricity Industry Reorganization and Comprehensive Transfer Scheme,2003” for the purpose of providing and giving effect to the comprehensive transfer andvesting of all Assets, Liabilities and Proceedings of all the power stations of erstwhileGujarat Electricity Board in the Government and revesting the same in the Company.

The Government of Gujarat vide Notification No.GEB-1105-1749-K dated March 31,2005, has declared the date of transfer under the schemes referred to above as finalwith effect from 01/04/2005. In pursuance of the above Government notification andthe final transfer of functions and activities relating to, generation of power to theCompany, the entire operations have been undertaken by the Company (GSECL) witheffect from 01/04/2005.

The Government of Gujarat issued notification No.GHU-2006-91-GUV-1106-590-K dated3rd October, 2006 notifying the Final opening balance sheet of the Company as on 01/04/2005 containing the values of the assets and liabilities of the generation activitieswhich stood transferred from erstwhile Gujarat Electricity Board to the Company asspecified in Schedule ‘A’ appended to the said notification and the existing company’sown undertaking as on 31/03/2005 as per the Financial Restructuring Plan (FRP) approvedby the Government of Gujarat. This opening balance sheet of the Company has beenaccordingly incorporated as on 01/04/2005 in the books of accounts of the Company.

In accordance with the above notification, aggregate values, as on 01/04/2005, of theblocks of Fixed Assets (gross values, accumulated depreciation and net value)Investments, Current Assets, Long term and Short term loans and Current Liabilities ofgeneration undertaking (of eight Power Stations) of erstwhile Gujarat Electricity Boardstands transferred to company. The values of various assets and liabilities belonging tothe company (existing undertaking) as on 31/03/2005 have also been incorporated inthe books of accounts of the Company.

The Notification dated 03/10/2006 issued by the Government of Gujarat has not specifiedthe values of individual items of these Assets and Liabilities. The management hastherefore adopted following procedures for assigning values to individual items.




48


(i) The individual items of Fixed Assets have been assigned gross value as per theFixed Assets registers maintained at the Power Stations. The reduced amounts ofaccumulated depreciation and the consequent enhanced net values under TransferScheme vide Government Notification dated 3rd October, 2006 referred to abovehave been allocated in accordance with the exercise carried out and the reportsubmitted by a firm of Chartered Accountants to the Company.

(ii) Long term and short term borrowings, which are directly identifiable with thegeneration undertaking, have been transferred to the Company as such. Howeverthe borrowings of erstwhile Gujarat Electricity Board that were common for generation,transmission and distribution functions and not identifiable with any specificundertaking have been apportioned by the Government of Gujarat and the totalamounts of long term and short term loans including the identifiable loans havebeen transferred to the company at aggregate values respectively vide thenotification dated 03/10/2006 referred to above. In absence of specific Governmentorder for apportionment of Secured Loans under clause 3(2) of Gujarat ElectricityIndustries (Reorganization and Regulation Act, 2003) or the Multilateral Facility andSecurities Sharing Agreement between Gujarat Urja Vikas Nigam Limited transfereecompanies and Lenders, these loans have been considered as Unsecured allocatedLoans from Gujarat Urja Vikas Nigam Limited.

(iii) The investments held by erstwhile Gujarat Electricity Board pertaining to Companyhave been identified and transferred to the Company at book values as on 31/03/2005 as per erstwhile Gujarat Electricity Board’s Books of Accounts.

(iv) The aggregate values of Current Assets and Current Liabilities as per notificationdated 3rd October’06 have been divided and allocated to individual items of CurrentAssets and Current Liabilities by the management on the basis of their respectivevalues (balances) on 31/03/2005 in the plant wise books of accounts / registersof erstwhile Gujarat Electricity Board maintained at their Power Stations.

(v) The consideration specified in FRP notification dated 03/10/2006 for the transfer ofundertaking comprising of the values of Assets and Liabilities and the proceedingrelating to generation activities of erstwhile Gujarat Electricity Board as specified inthe transfer schemes is to be discharged by the company in the form of EquityShares of Rs.10/- each fully paid for consideration other than cash to Gujarat UrjaVikas Nigam Limited, the successor (holding) company as may be directed by theGovernment of Gujarat under the Transfer schemes. The Company has alreadymade a reference to Gujarat Urja Vikas Nigam Limited who has already approachedGovernment of Gujarat in this regard. Decision from Government is awaited.

(vi) The opening values of Assets and Liabilities of existing undertaking of the companyas on 31/03/2005 have been incorporated as such, except that all the equityshares held by erstwhile Gujarat Electricity Board in the company stood transferredin the name of Gujarat Urja Vikas Nigam Limited as per the notification dated 03/10/2006.

(vii) In accordance with provisions of Clause 4.5 and the notification No. GEB-1104-7318-K dated 31/12/2004 issued by the Government of Gujarat, Services of allthe employees of erstwhile Gujarat Electricity Board were transferred on “as is




49


where is” basis with the same salary structure and service conditions to the transfereecompanies pending the exercise of option by the employee and the issue of finalabsorption orders by the Government of Gujarat.

The Government of Gujarat issued final absorption orders vide Notification No.GUV-1105-5163-K dated 29/09/2005 and accordingly concerned employees werefinally transferred to and absorbed in the Company w.e.f. 01/10/2005

(c) The material known liabilities are provided for on the basis of available information estimatesunless otherwise stated.

2. Use of Estimates

The presentation of financial statements requires certain estimates and assumptions. Theseestimates and assumptions affect the reported amount of assets and liabilities on the date ofthe financial statements and the reported amount of revenues and expenses during thereporting period. Difference between the actual result and estimates are recognized in theperiod in which the results are known / materialized.

3. Fixed Assets

(a) Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation.The Fixed Assets of transferred generating undertaking of erstwhile Gujarat ElectricityBoard are stated as specified in Para 1(b)(i) above.

In case of Fixed Assets for new projects / extensions / renovation and modernization,the related expenses and interest cost up to the date of commissioning attributable tosuch projects / expansions / renovation and modernization are capitalized.

Recoveries of liquidated damages for construction delays are recorded as a reduction inthe related project’s construction costs as and when accepted/settled.

(b) Fixed Assets of the Utran Power Station, acquired during 2002 for a lump sum purchaseconsideration, have been stated at such cost of acquisition. The total Cost of acquisitionof such Fixed Assets has been apportioned to various items of Assets, comprised insuch total Assets acquired as a whole, on the basis of apportionment done by anindependent valuer as provided in and in compliance with Accounting Standard 10“Accounting for Fixed Assets” issued by the Institute of Chartered Accountants of India.The incidental expenditure incurred by the Company for acquisition of the Utran PowerStation has also been allocated to various assets in the ratio of apportioned cost ofindividual assets.

(c) The amounts contributed towards the cost of Dam and Canal in respect of Ukai Powerstation transferred to the Company as per the scheme of restructuring of erstwhileGujarat Electricity Board is treated as Capital Expenditure and is depreciated as “Hydrolicwork dam slipway etc.”

(d) The Company is capitalizing the capital spares purchased initially with the equipment orpurchased subsequently in accordance with the provisions of Accounting Standard 10read with Accounting Standard Interpretation 2 issued by the Institute of CharteredAccountants of India.




50


4. Capital Work In Progress

(a) Cost of material consumed, erection charges and the incidental expenses incurred forthe project, pending for capitalization are shown as capital work in progress till thecapitalization of assets / project.

(b) In case of Capital Work in Progress for work against Deposits / work contract where thefinal settlement of bills with contractor is yet to be effected; capitalization is done onprovisional basis subject to necessary adjustment in the year of final settlement.

(c) Claims for price variation / exchange rate variation in case of capital contracts areaccounted for on acceptance thereof by the Company.

(d) A portion of overhead expenses of Corporate Office and Plant office determined onrational basis are allocated to the project pro-rata to their capital expenditure for theyear and the same are apportioned to respective capital work in progress accounts onthe basis of accretion thereto.

(e) Capital expenditure on assets not owned by the Company are reflected in fixed assetsand the same are depreciated at relevant rates.

(f) The cost incurred and revenue generated during the Trial Runs Stage of the Project /Power Station are capitalized.

5. Borrowing Cost

Borrowing cost including interest, guarantee fees commitment charges etc., that is directlyattributable to the acquisition, construction or production of a qualifying asset is capitalized aspart of the cost of that asset up to period the project is commissioned or asset is put to use.The borrowing cost incurred on common funds borrowed generally and used for the purposeof obtaining a qualifying asset, is apportioned on rational basis, the remaining borrowing cost ischarged to revenue.

6. Impairment of Assets

The impairment of Assets i.e. “The cash generating unit” as defined in accounting standard-28issued by Institute of Chartered Accountants of India on “Impairment of Assets” are identifiedat the balance sheet date with respect to carrying amount of the asset vis-à-vis its estimatedrevenue generation during balance useful life of that asset and the loss, if any, is recognized inprofit & loss account. Impairment loss, if any to be reversed subsequently is accounted for inthe year of reversal.

The company has adopted the policy of carrying out impairment test once in the span ofevery three financial years.

7. Depreciation and Amortisation

(a) Depreciation is provided on straight line method on pro rata basis at the rates specifiedby the Central Electricity Regulatory Commission (CERC), the statutory authority establishedunder the Electricity Act, 2003, in terms of notification No. 23.2 / 2205 R & R (Vol. III)dated 6th January, 2006 issued by the Ministry of Power, Government of India.

(b) Up to the financial year 2003-04, Company had provided depreciation on straight linemethod as per the provision of Electricity (Supply) Act 1948 and the rules there under as




51


per the notification F.O.266 (3) dated 29/03/1994 issued by Ministry of Power, Governmentof India. The Electricity Act 2003; replaced and repealed the Electricity (Supply) Act1948 and this new Act does not prescribe rates of depreciation on fixed assets. TheCompany therefore provided the depreciation on straight-line basis at rates as perSchedule XIV of the Companies Act, 1956 for the year 2004-2005.

(c) Capital spares with the company are mostly capable of being used in the group of powerstations with near identical or similar technology using similar plants and machineries andare expected to be used during more than one accounting period. These spares are,therefore, depreciated over the residual useful life of the plant in accordance with AccountingStandard 10 issued by Institute of Chartered Accountants of India.

(d) Plant & Machinery, loose tools and items of any appliances included under different headof assets costing Rs.5000/- or less are charged off to the revenue account.

8. Investment

Investments are classified in to current and long term investments. Current investments arestated at the lower of cost and fair value. Long term investments are stated at cost price.Provision for diminution in the value of Long Term Investment is made only if; such decline isnot temporary in nature in the opinion of the management.

9. Inventories

(a) The Inventories of Coal and Oil are valued at lower of grade based purchase cost plusfreight and other fuel related cost on monthly weight average basis or net realisablevalue (NRV).

(b) Stores and spares are valued at lower of the weighted average cost inclusive of freightand other allocable overheads or net realisable value.

(c) Scrap / obsolete assets are valued at estimated cost or net realisable value whichever isless.

(d) Coal, Oil and Stores and spares in Transit are valued at Cost plus Freight and otherIncidental expense.

10. Retirement Benefits

(a) The Company has Defined Contribution Plan for its employees’ retirement benefitcomprising of provident fund (administered through trust and funded separately throughLife Insurance Corporation of India), Employees’ Pension Scheme and Employees DeathLinked Insurance.

(i) The company and eligible employees make monthly contributions to providentfund trust equal to specified percentage of the covered employees’ salary.

(ii) The amounts towards accrued liabilities for pension to employees are depositedwith the Regional Provident Fund Commissioner office as per provision of EmployeePension Act.

The company has no further obligations to the above referred plans beyond its monthlycontributions.

(b) The Defined Benefit Plan comprising of Gratuity (administered through trust), and Leave




52


Encashment. The liability for the gratuity and leave encashment is determined andaccrued on the basis of independent acturial valuation done at year end.

11. Revenue Recognition

(a) Energy sales are recognised on the basis of amounts of invoices for supply of energydetermined in accordance with the Techno-Commercial parameters approved in therelevant Power Purchase Agreement / Tariff orders by Gujarat Electricity RegulatoryCommission. Revenue is recognised when no significant uncertainty as to the measurabilityand ultimate collection.

(b) Income from scrap, administration charges of fly ash and Interest income are accountedon accrual basis and insurance claims and dividend are accounted on their receipt.

(c) Income on O & M contract and carbon emission reduction (CERs) is accounted onaccrual basis.

12. Expenditure

All expenses are reflected in revenue accounts under their natural heads. Expenses shownunder the generation of power, repair & maintenance, the employee cost, depreciation,administration and general expenses and interest and finance charges, which are disclosedseparately.

13. Grant from the Government

(a) In accordance with the Accounting Standard 12 on ‘Accounting for government Grantsissued by the Institute of Chartered Accountants of India, Grants and Subsidies receivedfrom Government are recognised on reasonable certainty of its realisability.

(b) Grant and subsidies received for the specific assets are reduced from the cost ofconcerned specific assets.

(c) Capital Grants received (Capital support Under FRP) as promoters Contributions aretreated as Capital Reserve forming part of “ Shareholders Fund “

(d) Grants & Subsidies on Revenue account are disclosed separately as Income in the Profit& Loss Account.

14. Taxation

(a) Current Tax provision determined on the basis of estimated taxable income under theIncome Tax Act, 1961 after considering permissible tax exemption, reduction / disallowance.In the absence of any prospective taxable income for the year, the tax liability iscalculated at the minimum alternate tax rate under section 115JB of the Income TaxAct, 1961.

(b) The Deferred Tax is recognised, subject to the consideration of prudence, on timingdifferences, being the difference between taxable incomes and accounting incomethat originate in one period and are capable of reversal in one or more subsequentperiod using the tax rates and laws that have been enacted or substantively enactedas at the balance sheet date.

Deferred tax assets are recognised on unabsorbed depreciation and carry forward oflosses based on virtual certainty that sufficient future taxable income will be available




53


against which such deferred tax assets can be realised. Deferred tax on timing differencesother than those referred above is recognised and carried forward only to the extentthat there is reasonable certainty that sufficient future taxable income will be availableagainst which such assets can be realised.

(c) Provision for fringe benefit tax is made on the basis of estimated taxable liabilities for theyear.

15. Transactions in Foreign Currency

(a) Transactions denominated in foreign currencies are normally recorded at the exchangerate prevailing at the time of the transaction.

(b) Monetary items denominated in foreign currencies at the year end are restated at theyear end rates.

(c) Any income or expense on account of exchange difference either on settlement or ontransaction is recognised in the profit and loss account.

16. Prior Period Items and Extra - Ordinary Items

Adjustments arising due to errors or omission in the financial statements of earlier years areaccounted under “Prior Period”. Items of Income & Expenditure, which are not of recurringnature viz., damages due to floods, earth quakes etc. are disclosed as extra ordinary items.

17. Provision, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized whenthere is a present obligation as a result of past events and it is probable that there will be anoutflow of resources. Contingent liabilities are not recognized but are disclosed in the notes.Contingent assets are neither recognized nor disclosed in the financial statements.




54


SCHEDULE - ‘20’ NOTES TO THE FINANCIAL STATEMETNSFORMING PART OF ACCOUNTS

1. Secured and Unsecured Loans

(a) Loans directly raised by company:

The company has raised loans, secured and unsecured, from the financial institutionsnamely Power Finance Corporation Limited, Rural Electrification Corporation Limited andGujarat State Financial Services Limited. Out of such outstanding loans as at year endaggregating to Rs. 2132.82 crores, the loans of Rs. 1937.37 crores are secured againstthe charge / security of fixed assets more particularly described under schedule 4“Secured Loans”. The charge in respect thereof has been registered with Registrar ofCompanies. The balance amount of Rs. 195.45 crores received from PFC has beenclassified as Unsecured Loans though guaranteed by Government of Gujarat as thecompany is yet to issue Indemnity Bond to Government of Gujarat and / or still in theprocess of offering security of its own assets against the aforesaid Unsecured Loans.

The Company has also raised long term finance from Oriental Bank of Commerce andKalupur Commercial Co-op. Bank Ltd. amounting to Rs. 293.71 Crores and Rs. 33.63crores respectively, aggregating to Rs. 327.34 crores, which have been secured againstcharge / security of fixed assets, more particularly described under schedule-4 “SecuredLoans”. The Company has also raised short term finance amounting to Rs.300.00crores from Gujarat State Financial Services Limited., which has been classified as“Unsecured Loans”, under Schedule-5.

(b) Loan transferred under the FRP Scheme as on 01/04/2005:

The outstanding balances as on 31/03/2009, in respect of loans transferred under FRPScheme have been considered as unsecured allocated loans from Gujarat Urja VikasNigam Limited in the absence of specific Government order for apportionment of securedloans under Clause 3(2) of the Gujarat Electricity Industrial (Re-organisation & Regulation)Act and Comprehensive Transfer Scheme, 2003 or Multilateral Facility and SecuritiesSharing Agreement between Gujarat Urja Vikas Nigam Limited, transferee companiesand Lenders. Out of several loans raised by Gujarat Urja Vikas Nigam Limited during theyear under review for common usage of transferee companies, the loan amounting toRs.838.61 crores have been apportioned to the company as per intimation receivedfrom Gujarat Urja Vikas Nigam Limited.

2. Equity pending allotment

(a) In pursuance to Notification No. GHU-(203)-GUV-1106-590-K dated 12th December2008, the consideration amounting to Rs. 1322.69 crores payable by the Company toGujarat Urja Vikas Nigam Ltd. (as per FRP Notification dtd. 3rd October 2006) fortransfer of generation undertakings of erstwhile GEB, which was hitherto appeared underthe equity share capital Suspense Account, has now been adjusted in accordance withthe Resolution passed by the Board of Directors in the Board Meeting held on 30thJanuary 2009, by crediting the sum of Rs. 330.67 crores to equity share capital and Rs.992.02 crores to share premium account.

(b) On receipt of approval from competent authority and in accordance with the Resolution




55


passed by Board of Directors in its meeting held on 30th January 2009, out of the sumof Rs. 109 Crores received from Gujarat Urja Vikas Nigam Ltd., which was hithertoclassified as share application money, the sum of Rs.9 crores has been credited to sharecapital account. Further, pending approval for allotment of issuance of shares fromGovt. of Gujarat, the sum of Rs. 369.57 crores received from Gujarat Urja Vikas NigamLtd. towards equity has been classified as share application money.

3. Claim Settlement / Pending Reconciliation

(a) Subsequent to year end, the balances in the accounts of coal suppliers namely SouthEastern Coalfield Limited and Western Coalfield Limited, which were hitherto pending forreconciliation and necessary adjustments, have been reconciled for the period ended upto March 2009. The necessary adjustments upon reconciliation, if any, would be madein the year of reconciliation.

(b) The grade difference for coal purchased on the basis of unilateral sample by coalsuppliers at the time of loading or by erstwhile Gujarat Electricity Board at the time ofreceipt of coal during the past several years had resulted into claims and counter claimsbetween erstwhile Gujarat Electricity Board, the company and coal suppliers. Such gradedifference claims together with coal related claims and other recoveries from the collierieshave been settled pursuant to the final settlement with Western Coalfield Limited arrivedat during the year. Consequent to such settlement, the sum to the tune of Rs. 7.78crores has been credited to Profit and Loss account for the year. Further, necessaryprovisions in respect of claims against companies, pending final settlement, have alsobeen appropriately made in the Books of Accounts.

(c) During the year under review, the company has booked net loss of Rs. 25.20 croresdue to inter unit adjustment of 13220 wagons given by Railways for pending missingwagon claims of the company for the period from December 2005 to March 2008towards coal cost and freight, which were hitherto shown as receivables on the account.

4. Fixed Assets and Depreciation

(a) Adhering to significant accounting policy, the depreciation on assets is provided at ratesprescribed by Central Electricity Regulatory Commission (CERC), which are lower thanthe rates as referred to in Schedule-XIV to the Companies Act, 1956 and as a result,depreciation provided for the year is lower by Rs. 78.68 crores. The company is yet toreceive the permission of Company Law Board sought by the company in respect ofcharging depreciation at the rates lower than rates referred to in schedule XIV to theCompanies Act, 1956.

(b) In response to appointment of external agency to carry out technical evaluation ofassets to estimate the remaining useful life of its power generating plants, the Companyhas received the report substantiating the fact that depreciation charged on Company’sassets is adequate, in view of ongoing renovation and modernisation schemes implementedfor various plants.

(c) Adhering to significant Accounting Policy on impairment of assets and based on reportsby independent consultant on impairment of various assets of the Company, the loss onimpairment to the tune of Rs.14.40 lacs has been recognized in the Profit & LossAccount for the year under review.




56


5. Employee Benefits

(a) Defined contribution to provident fund, employee pension scheme and Employees DeathLinked Insurance.

The company makes contribution towards Employees’ Provident Fund, Employees’ PensionScheme and Employees Death Linked Insurance. In accordance with the provisions ofthese schemes, the Company is required to contribute a specified percentage of payrollcosts. The Company has, during the year, recognized the sum of Rs. 18.55 crores (P.Y.Rs. 17.94 crores) as expense towards contributions to these plans.

(b) Defined contribution towards retirement benefits:

The following table sets out the status of the gratuity and leave encashment schemeplans as at 31st March, 2009.

Particulars 2008-09 2007-08 2008-09 2007-08Changes in the present value of obligationPresent value of obligation (Opening) 9831.76 8413.38 6508.42 6693.68Interest cost 786.54 673.07 520.67 535.49Past service cost NIL NIL NIL NILCurrent service cost 187.81 228.39 298.56 207.43Curtailment Cost / (Gain) NIL NIL NIL NILSettlement Cost / (Gain) NIL NIL NIL NILBenefits paid (639.10) (697.99) (399.99) (393.47)Actuarial (Gain) / Loss 1437.63 1214.90 2439.93 (534.71)Present value of obligation (Closing) 11604.64 9831.76 9367.59 6508.42Changes in the fair value of plan assetsPresent value of plan assets (Opening) 3918.18 2554.84 NIL NILExpected return on plan assets 402.79 280.42 NIL NILActuarial Gain / (Loss) (40.64) (39.08) NIL NILEmployers Contributions 1275.63 1819.98 NIL NILEmployees Contributions NIL NIL NIL NILBenefits paid (639.10) (697.99) NIL NILFair Value of Plan Assets (Closing) 4916.85 3918.18 NIL NILPercentage of each category of planassets to total fair value of plan assetsat the year endBank Deposits (Special Deposit Scheme,1975) NIL NIL NIL NILDebt Instruments NIL NIL NIL NILAdministered by Life Insurance 100% 100% - -Corporation of IndiaOthers NIL NIL NIL NILReconciliation of the present value ofdefined benefit obligation andthe fair value of assetsPresent value of funded obligation 4916.85 3918.18 NIL NILas at the year end

(Rs. In Lakhs)Gratuity Leave Encashment




57


(Rs. In Lakhs)

Fair value of plan assets as at year end 4916.85 3918.18 NIL NILFunded (Asset)/ Liability recognised NIL NIL NIL NILin the balance sheetPresent value of unfunded 6687.79 5913.58 9367.59 6508.42obligation as at the year endUnrecognised past service cost NIL NIL NIL NILUnrecognised Actuarial (Gains) / Losses NIL NIL NIL NILUnfunded net liability recognised 6687.79 5913.58 9367.59 6508.42in the balance sheetAmount recognised in the balance sheet(Through holding company GUVNL)Present value of obligation as at the year end 11604.64 9831.76 9367.59 6508.42Fair value of plan assets as at the year end 4916.85 3918.18 NIL NIL(Asset) / Liability recognized (6687.79) (5913.58) (9367.59) (6508.42)in the balance sheetExpenses recognised in theprofit & loss accountCurrent service cost 187.81 228.39 298.56 207.43Past service cost NIL NIL NIL NILInterest cost 786.54 673.07 520.67 535.49Expected return on plan assets (402.79) (280.42) NIL NILCurtailment Cost / (Credit) NIL NIL NIL NILSettlement Cost / (Credit) NIL NIL NIL NILNet Actuarial (Gain) / Loss 1478.27 1253.98 2434.93 (534.71)Employee’s Contribution NIL NIL NIL NILTotal expenses recognised in the ($) 2049.84 1875.02 (*) 3259.16 (@) 208.21profit and loss accountPrincipal actuarial assumption(Rate of Discounting)Rate of discounting 8.00% 8.00% 8.00% 8.00%Expected return on plan assets 9.50% 9.00% - -Rate of increase in salaries 5.00% 5.00% 5.00% 5.00%Attrition Rate 3% to 1% 3% to 1% - 3% to 1%(Employees opting for early retirement)

Particulars 2008-09 2007-08 2008-09 2007-08

($) Actual debit to Profit & Loss A/c. is lower by Rs. 1.73 lacs due to credit ofgratuity contribution received of Rs. 1.89 lacs from SSNNL for employees of theCompany on deputation and gratuity paid by Company for uncovered employeesfor Rs. 0.16 lacs.

(à) Actual debit to Profit & Loss A/c. is lower by Rs. 0.95 lacs due to contributionreceived from employees on deputation at SSNNL.

(@) Actual debit to Profit & Loss A/c. is higher by Rs. 185 lacs due to reversal ofexcess provision for the previous year.




58


6. Borrowing and other cost related to project

During the year under consideration the Company has capitalized borrowing costs amountingto Rs. 146.68 crores in accordance with the Accounting Standard 16 “Borrowing Costs” issuedby the Institute of Chartered Accountants of India.

The Company has also capitalized Rs. 78.90 crores being the aggregate of the employee costand administration cost of Projects Department and other general administration costs whichare apportioned to the ongoing projects and renovation and modernization schemes.

7. Segment Reporting

The company’s primary business segment is Generation and Distribution of Electricity. Basedon the guiding principles given in Accounting Standard 17 on “Segment Reporting” issued by theInstitute of Chartered Accountants of India, this activity falls within a single primary businesssegment and accordingly the disclosure requirements of Accounting Standard 17 in this regardare not applicable.

8. Related party disclosures

Based on opinion obtained from eminent consultant and in accordance with the AccountingStandard 18 “Related Party Disclosures” issued by the Institute of Chartered Accountants ofIndia, the disclosure related to the transactions with the related parties is not required andtherefore such disclosures are not made.

9. Earning per share

Earning per share is calculated by dividing the profit attributable to the equity shareholders bythe weighted average number of equity shares outstanding during the year. Numbers used forcalculating basic and diluted earnings per equity share does not include the amount of EquitySuspense Account are as stated below:

Particulars 2008-09 2007-08

1. Profit after tax, prior period adjustments and 7053.36 5924.12Extra-ordinary Items (Rupees in lacs)

2. Number of equity shares 912972424 573300070

3. Face value per share (Rs.) 10.00 10.00

4. Earnings per Share (Basic) 0.77 1.03

5. Number of dilutive potential equity shares 1201173268 670738426

6. Earnings per Share (Diluted) 0.59 0.88

10. Taxation

(i) According to the legal opinion of an eminent tax consultant, the Company is eligible forthe benefit of carry forward of business losses and unabsorbed depreciation of theerstwhile Gujarat Electricity Board under section 72(A) of the Income Tax Act, 1961read with Central Government Gazette Notification No. SO-1159(E) dated 26/12/2000.




59


The apportioned amount of Rs. 65474.83 lacs and Rs. 52193.00 lacs being carry forwardof losses and unabsorbed depreciation respectively for the Company interalia have beenapplied to work out the current tax liabilities as well as deferred tax for the year.

(ii) Current Taxation

In the absence of any taxable income for the year, the tax liability is calculated atMinimum Alternate Tax under Section 115JB of Income Tax 1961 and provision ofRs.1025.00 lacs has been made for the same.

(iii) Deferred Taxation

The company is entitled to setoff of carried forwarded losses and unabsorbed depreciationagainst the future taxable income under the Income-tax Act. As a matter of prudenceand in the absence of virtual certainty, company is not recognizing the deferred taxassets in respect of carried forward losses and unabsorbed depreciation as provided byAccounting Standard 22 “Accounting for Taxes on Income”, issued by the Institute ofChartered Accountants of India. Deferred tax assets in respect of other timing differencesis also not recognised as in the opinion of the management there will be no futuresufficient income to recover such deferred tax asset.

Particulars 2008-09 2007-08

(A) Contingent Liabilities not provided for in respect of :

(i) Claim against the company not acknowledged as debt. 207.85 173.94(employees related matters)

(ii) Disputed Income-tax Matters 7.17 1.00

(iii) Claims from lessor for disallowance of 173.97 173.97depreciation on leased assets

(iv) Revision in rates of water supplies 94.30 98.86

(v) Stamp duty on share certificates to - 1.63be issued to Gujarat Urja Vikas Nigam Ltd.

(vi) Claims against Company pending Court Orders. 0.42 2.55

(B) Capital Commitments

Estimated amount of contract remaining to the 310.41 1294.11executed on capital accounts (Net of Advances)

(Rs. In Crores)

11. Contingent Liabilities and Capital Commitments

12. The amounts receivable (Dr.) from and payable (Cr.) to various parties, suppliers, contractorsetc. on various accounts, which are carried in various Suspense Accounts / Registers at plants,more particularly, those transferred to Company under transfer scheme as on 1-4-2005,required thorough scrutiny to ascertain the precise break up and supporting documents to




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establish the claims by and / or against the Company of these parties. Though, the Companyhas adopted practice of circulating and obtaining confirmation from the parties concerned atthe year end, the Company has received the response from few of them; whereas, manyparties have not yet responded. Pending such confirmations and aforesaid reconciliations, theCompany has identified long outstanding debits and credits, neither recoverable nor payable,to the tune of Rs.742.95 lacs. The Company is in the process of obtaining approval ofcompetent authority to write off such identified balances. Pending approval, the Company hasmade the provision for bad advances amounting to Rs.742.95 lacs during the year underreview.

13. (a) Subsequent to year end, the Company has arrived at the settlement with recognizedemployees’ unions on chartered of demands submitted by them for wage revision,effective from 1st January 2006. Pursuant to such settlement, the additional liability inrespect of wage arrears has been ascertained to the tune of Rs. 14395.23 lacs; whichhas been adjusted against the provisions made in earlier years. The excess provision tothe tune of Rs. 5246.97 lacs has been written back under the Head “Provision no longerrequired” to profit & loss account for the current year.

(b) Subsequent to year end, the cooling tower at Kutchh Lignite Thermal Power Stationcollapsed which has resulted into a loss amounting to Rs. 1075.59 lacs. The necessaryadjustments in respect thereof shall be made in the books of accounts in the year ofevent.

14. Pursuant to discussions held at the meeting on 13th May 2008 between GMDC, GUVNL andthe Company, as agreed upon, the rate of lignite supplied by GMDC was revised and re-fixedat Rs. 475/- per MT plus royalty and VAT as applicable; as against Rs. 780/- per MT, dulyapproved by GERC vide its order No. 896/2006 dated 13th March’07. This pre-revised rate ofRs. 780 per MT was taken into consideration while raising the invoices for sale of electricalenergy by KLTPS unit of the Company for the financial year 2007-2008. Consequent to suchrevision and in response to demand of GUVNL vide its letter No. CFM (IPP)/ 1349 dated 29-9-’08, the Company had reversed sales to the extent of Rs. 24.14 Crores in the financialyear 2007-08. During the year under review, on receipt of approval vide letter No. MCR-342007-1125 dated 29-12-2008 from Govt. of Gujarat, the Company has adjusted its fuelcost to the tune of Rs. 24.14 Crores by corresponding debit to GMDC account.

15. The company is in the process of reconciling bank collection account maintained at KutchhLignite Thermal Power Station and remittance in transit for Kadana and Wanakbori TharmalPower Stations. In the opinion of the management the impact on financial statements for theyear under review will not be material.

16. The company has reconciled the balances in the accounts of GUVNL during the year underreview which was hitherto under reconciliation and final adjustments in respect thereof. Consequentupon reconciliation the company has identified the receipt of funds, within the time framereferred to in Power Purchase Agreement and matched such receipts against invoices for saleof electricity raised by the company. Therefore in response to demand of GUVNL and inpursuance of Power Purchase Agreement, the company has allowed the discount/rebate tothe tune of Rs. 17455.10 lacs to GUVNL.




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17. Remuneration to Managing Director

Sr. Particulars 2008-09 2007-08No.

(Rs. In Lakhs)

1. Salaries & Allowances 5.10 10.712. Contribution to P.F. & Other Funds 0.53 1.293. Value of Perquisites 0.50 1.41

Total: 6.13 13.41


(Rs. In Lakhs)

1. Statutory Audit Fees 17.65 17.982. Out of Pocket Expenses 0.82 —

Total: 18.47 17.98Note : Inclusive of Service Tax

18. Statutory Auditor Remuneration

Sr. Power Plants 2008-09 2007-08No.

1. Installed Capacity (MW) 4776 47662. Gross Generation ( in MUs) 28387 292413. Auxiliary Consumption (in MUs) 2523 26094. Units Sold (in MUs) 25937 26669

19. The particulars in respect of generation of electricity, units sold and consumption of fuel areas under:

A. Generation of Electricity and Units Sold

(Rs. In Cores)B. Consumption of Fuel

Sr. Particulars 2008-09 2007-08No. Qty. Amount Qty. Amount

1. Consumption of Coal & Lignite ( in ‘000 MT) 18046.29 4279.15 17796.32 3869.33

2. Consumption of Gas (Lacs SCM) 4353.83 753.09 4688.15 525.38

3. Consumption of LSHS (in ‘000 Liters) 402.64 547.54 383.71 539.02

Note:-Installed capacity is as certified by the Management and has not been verified by theAuditors, this being a technical matter.




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20. Expenditure in foreign currency


(Rs. In Cores)

1. Earnings in Foreign Currency NIL NIL2. Remittances in Foreign Currency 468.72 2.713. CIF Value of Imports 437.22 2.714. Foreign Traveling NIL NIL

21. The company has initiated the process of obtaining the confirmation from suppliers who haveregistered themselves under the Micro, Small and Medium Enterprises Development Act,2006 (MSMED Act, 2006). However, in the absence of relevant information relating to thesuppliers registered under the Micro, Small and Medium Enterprises (Development) Act,2006, the balance due to Micro, Small and Medium Enterprises at year end and interest paidor payable under MSMED Act, 2006 during the year could not be compiled and disclosed.

22. Statement of Management

(a) The current assets, loans and advances are good and recoverable and areapproximately of the values, if realized in the ordinary courses of business unless andto the extent stated other wise in the Accounts. Subject to the notes regardingdepreciation, other notes and the method of accounting followed by the Company,provision for all known liabilities is adequate and not in excess of amount reasonablynecessary. There are no contingent liabilities except those stated in the notes.

(b) Balance Sheet, Profit & Loss Account and Cash Flow statement read together withthe schedules to the accounts and notes thereon, are drawn up so as to disclose theinformation required under the Companies Act, 1956 as well as give a true and fairview of the statement of affairs of the Company as at the end of the year andresults of the Company for the year under review.

23. Previous year figures have been regrouped, reclassified and reworked wherever necessaryfor comparative purpose.

FOR G. K. CHOKSI & CO. FOR AND ON BEHALF OF THE BOARDChartered AccountantsSANDIP A. PARIKH S. JAGDEESAN P. H. RANA L. CHUAUNGOPartner Chairman Managing Director DirectorMem. No. 40727






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I. Registration Details:

Registration No. 19988, State Code 04

Balance Sheet Date 31st March, 2009

II. Capital Raised during the year (Amount in Rs. Lacs)

Public Issue: — Right Issue: —

Bonus Issue: — Private Placement : 33967.23

III. Position of mobilisation and Deployment of Funds (Amount in Rs. lacs)

Total Liabilities 7 72 008.95 Total Assets 7 72 008.95

Sources of Funds Application of Funds

Paid-up Capital 91 297.24 Net Fixed Assets 8 35 866.53

Equity Pending Allotment 36 956.60 Investments 2 052.00

Reserve and Surplus 1 53 661.18 Net Current Assets (65 909.58)

Secured Loan 2 35 432.44 Misc. Expenditure —

Unsecured Loan 2 54 661.49 Accumulated Losses —

IV. Performance of Company (Amount in Rs. lacs)

Turnover and Other Income 7 32 351.65 Total Expenditure 7 24 150.28

(+) Profit/(Loss) before tax 8 201.37 (+) Profit/(Loss) after tax 7 053.36

Earning per share (Rs.) 0.77 Dividend Rate —

V. Generic names of principal products services of company (as per monetary terms)

Product/Service Description Item code No.

Generation of Electricity Not Applicable

BALANCE SHEET ABSTRACTS AND COMPANY’S GENERAL BUSINESS PROFILE ASREQUIRED PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956

FOR AND ON BEHALF OF THE BOARD

S. JAGADEESAN P. H. RANA L. CHUAUNGOChairman Managing Director Director


Place: VadodaraDate: 08-10-2009




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PROXY FORMGUJARAT STATE ELECTRICITY CORPORATION LIMITED

Regd. Office: Vidyut Bhavan, Race Course, Vadodara - 390007.I We of being a member/members of the above named Company hereby appoint

of

or failing him of as my/our proxy to attend and vote for me/us on my/our behalf at

the Fourteenth Annual General Meeting of the Company to be held on Wednesday, the 23rd December,2009 at 12.30 P.M. and at any adjournment thereof.

Signed Revenue Stamp

Note : Proxy Forms must reach the Company’s Registered Office not less than 48 hours before the meeting.

ATTENDANCE SLIPGUJARAT STATE ELECCTRICITY CORPORATION LIMITED

Regd. Office : Vidyut Bhavan, Race Course, Vadodara - 390007.(To be handed over at the entrance of the Meeting Hall)

Name of the Shareholder Folio Number(in Block Letters)

Name of the Proxy(In Block Letters, to be filled in if the Proxy attends instead of the Member)

No. of Shares held : I hereby record my presence at the Fourteenth Annual General Meeting held on Thursday, the 23rd December,2009 at 12.30 P.M. at the Regd. Office at Vadodara and at any adjournment thereof.

Member / Proxy Signature

NOTES :1. To be signed at the time of handing over this slip.2. Members intending to require information about accounts to be explained in the Meeting are requested

to inform the Company in writing, at least seven days in advance of their intention to do so, so thatthe papers relating thereto may be made available.

3. Shareholders are requested to advise, indicating their folio numbers, the changes in their address, ifany, to the Company.




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