19 th Annual Report

Transcription

1 19 th Annual - GUJARAT STATE ELECTRICITY CORPORATION LTD (A wholly owned Subsidiary of Gujarat Urja Vikas Nigam Limited )

2 BOARD OF DIRECTORS SHRI D.J.PANDIAN,IAS SHRI I.P.GAUTAM, IAS SHRI MUKESH PURI,IAS KUM. S. APARNA, IAS SHRI B.S.REUBEN SHRI H.P.DESAI SHRI P.H.RANA SHRI GURDEEP SINGH CHAIRMAN DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR MANAGING DIRECTOR

3 POWER PLANTS COAL BASED GAS BASED HYDRO Ukai Utran Ukai Gandhinagar Dhuvaran Kadana Wanakbori Panam Sikka Panandhro CORE TEAM Shri B.N. Chudasama Shri M.B.Kaka Shri A.D.Karpe Shri V.P.Jani Shri U.D.Adhvaryu Shri P.M. Parmar Shri H.N.Baxi Shri D.R.Gupte Executive Directors (P&P) Sr.Chief General Manager(F&A) Chief General Manager(HR&A) Company Secretary Chief Engineer(Generation) Chief Engineer (P&P) Chief Engineer (Fuel) Chief Engineer(Civil) AUDITORS STATUTORY AUDITORS : P.PARIKH & ASSOCIATES Chartered Accountants Mumbai COST AUDITORS : Y.S.THAKAR & ASSOCIATES Cost Accountants INTERNAL AUDITORS: VCA & ASSOCIATES K.N.MEHTA & CO AGRWAL & DHANDHANI P.G.PATEL & ASSOCIATES VIJAY N. TEWAR & CO. MULANI KAJAREKAR & CO

4 GUJARAT STATE ELECTRICITY CORPORATION LTD FINANCIAL INSTITUTIONS & BANKERS FINANCIAL INSTITUTIONS / GOVERNMENT COMPANY POWER FINANCE CORPORATION LIMITED RURAL ELECTRIFICATION CORPORATION LIMITED GUJARAT STATE FINANCIAL SERVICES LIMITED NABARD BANKERS CANARA BANK BANK OF BARODA DENA BANK INDIAN BANK INDIAN OVERSEAS BANK STATE BANK OF INDIA SYNDICATE BANK UNION BANK OF INDIA CORPORATION BANK VIJAYA BANK ORIENTAL BANK OF COMMERCE KALUPUR COMMERCIAL CO-OPERATIVE BANK CENTRAL BANK ALLAHABAD BANK KARUR VYSYA BANK ICICI BANK INDUSIND BANK BANK OF INDIA KOTAK MAHINDRA BANK

5 THE MEMBERS OF GUJARAT STATE ELECTRICITY CORPORATION LIMITED 1. We have audited the attached Balance Sheet of Gujarat State Electricity Corporation Limited as at 31 st March, 2012 the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the on these financial statements based 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 assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3 As required by the Companies (Auditor's ) Order, 2003 as amended by the Companies ( India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement 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 promoted by erstwhile Gujarat Electricity Board (GEB) (now known as Gujarat Urja Vikas Nigam Limited (GUVNL) with effect from 1/4/2005) in August, 1993, GUVNL held 100% equity shares of the Company throughout the year under consideration. The Company has entered into Inter Company Agreements and Facility Sharing Agreements with GUVNL and its subsidiary companies for working capital and Term Loans and sharing of certain common facilities viz. Group Gratuity Contribution to LIC. All such arrangements results into multifaceted relation of the Company with GUVNL and other successor entities of holding company. The financial statements are prepared on Going Concern principles and performance of the Company for the year under consideration has been determined after reviewing several long term arrangements of the Company with GUVNL and its subsidiary Companies. (b) arat Electricity Industry Reorganization Transfer of Gandhinagar Thermal Power Station Scheme Electricity Industry Reorganization and Comprehensive Transfer Scheme, has transferred and vested all the assets & liabilities and proceedings of the specified existing and under implementation power stations of GEB to the Company with effect from 1st April In accordance with the above referred schemes, the State Government has notified the values of the assets and liabilities at which these undertakings are transferred to and vested in the Company.

6 5. Particular attention is drawn to the following: (a) Note 29(a) of Notes forming part of the financial statements regarding the nonregistration of charge on the transferred assets of the Company. (b) Note 31(a) of Notes forming part of the financial statements regarding provision for depreciation for the year at the rates specified by the Central Electricity Regulatory Commission (CERC) as against the rates as per Schedule XIV to the Companies Act, (c) Note 31(c) of Notes forming part of the financial statements regarding the reclassification/re-grouping of installed capital spares. The Company has made issues from the capital spares to plant & machinery. On such issues, the company has to reduce the value of the capital spares and increase the value of plant & machinery. Similarly, the replaced value of capital spares in plant &machinery should be reduced from plant & machinery to the extent of its WDV. However, the Company has not complied with the same and its resultant financial impact could not be ascertained, as the accounting of capital spares is done in lots at the end of each month and not as per purchase of individual capital spares/date-wise. (d) The Company has the policy of impairment testing and accounting for Impairment of all Fixed Assets, if any, once in three years, except in case of Capital Spares. (e) The Company, on receipt of debit note/journal entry amounting to 6, lakhs, from its Holding Company M/s. Gujarat Urja Vikas Nigam Ltd. (GUVNL) for Interest on working capital limits used by the Company, passed a net entry of 5, lakhs in its books (i.e. 6, lakhs debit note/journal entry received from the Holding Company minus 1, lakhs - actual interest paid by the Company to GSFSL for utilization of working capital facilities, which was recovered from its Holding Company). For want of daily product balance of working capital facilities enjoyed by GUVNL on behalf of GSECL, the actual amount of interest on working capital utilized by the company could not be calculated. The same practice is followed in the previous financial years and its resultant financial impact could not be ascertained. (f) During the year, the Company has given a rebate/discount of lakhs and charged interest on delayed payments amounting to lakhs to its Holding Company Gujarat Urja Vikas Nigam Limited (GUVNL) on receipt of debit note/journal entry from GUVNL. In our opinion, the Company has not charged the interest on delayed payments received from GUVNL accurately and also, the amount of rebate is given to GUVNL after considering the indirect payments given by GUVNL as against the rebate to be given only on direct payments received from GUVNL. However, the impact of the same could not be ascertained. Also, the amount of delayed payments to be received from GUVNL could not be ascertained. (g) During the year, Gujarat Urja Vikas Nigam Limited (GUVNL), the Holding Company did not admit the claim of Fuel Cost Adjustment in full based on the quality of coal received at coal based power stations. GUVNL has admitted the fuel cost adjustment based on last three years weighted average GCV as against the actual gross calorific value (GCV) as per the norms of GERC. The difference is not been

7 recognized by the Company. Hence, the impact of the same could not be ascertained. 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, (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 the Company. (f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to para 5 above, read together with notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and 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 31 st March 2012; (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. FOR P. PARIKH & ASSOCIATES CHARTERED ACCOUNTANTS Firm Reg. No W Place: Date: Ashok Rajagiri (Partner) M. No

8 date to the members of Gujarat State Electricity Corporation Limited on the financial statements for the year ended 31 st March, 2012] i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. (b) The Company has a programme of physical verification of its Fixed Assets over a of three years; which in our opinion is reasonable having regard to the size of the Company and nature of its assets. In accordance with this programme, certain Fixed Assets have been physically verified by the management through firm of Chartered accountants specially appointed for the purpose at power stations during the year under review and according to information and explanation given to us, no material discrepancies have been noticed on such verification. (c) As per the information and explanation given to us, during the year the Company has not disposed off any substantial part of Fixed Assets that would affect the going concern assumption. ii. (a) The inventory comprises of coal, oil and stores and spares has been physically verified by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable looking to the size of the Company. (b) In our opinion and according to information and explanation given, the procedure of physically verification of inventory followed by the management is reasonable and adequate in 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 maintained proper records of inventory. The discrepancies noticed on physical verification of inventory have been properly dealt with by the Company in the Books of Accounts. iii. (a) In our opinion and according to the information and explanation given to us, the company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies act, In view of (a) above, sub-clauses (b), (c) and (d) are not applicable. On the strength of a legal opinion obtained by the Company, it has represented that the provisions of section 299, 300 and 301 of the Companies act, 1956 are not attracted to the transactions entered in to by the company with GUVNL and its subsidiaries and are not liable to be listed in the register maintained under section 301 of the Companies act, iv. In our opinion and according to the information and explanation given to us, there are adequate internal control procedures / system commensurate with the size of the

9 Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of electricity and services. Further, on the basis of our examination of the books and records of the Company carried out in accordance with the auditing standards generally accepted in India, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system. v. (a) The Company has entered into contract / arrangements with GUVNL being the holding Company. As per the information and explanations given to us and based on the legal opinion obtained by the Company, the transactions pursuant to these contracts and / or arrangement are not falling under the provisions of section 301 of the Companies Act, 1956 and accordingly these transactions are not entered into the Register maintained under section 301 of the Companies Act, 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 Company has not accepted any deposits within the meaning of Section 58A, 58AA or any other relevant provision 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 audit assignments to practicing firms of Chartered Accountants and this arrangement in conjunction with the existing internal control and checks is in our opinion commensurate with the size of the Company and the nature of its business. viii. We have reviewed the books of account maintained by the Company, pursuant to the Rules made 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 that prima 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 determine whether they are accurate or complete. ix. According to the information and explanation given to us in respect of statutory and other dues: (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 the year. According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 31 st March, 2012 for a more than six months from the date they became payable.

10 (b) According to the information and explanation given to us, there are no dues of Income Tax, Customs Duty, Wealth Tax, Service Tax and Cess, which have not been deposited on account of any dispute. x. The Company does not have any accumulated losses as at the end of the financial year. The company has not incurred cash losses during the current year and the immediately preceding financial year. xi. Based on our audit procedures and on the information and explanation given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions and banks in respect of the existing loans, which were originally raised by the Company. As regards the loans transferred from GUVNL, we have been informed that the same have been serviced by GUVNL on behalf of the Company and in view of the above we are not in a position to opine whether the Company has defaulted in repayment in dues to Financial Institutions and Banks. xii. Based on our examination of documents and records and according to the information and explanations given to us, we are of the opinion that the Company has not granted any loans and / or advances on the basis of security by way of pledge of shares, debentures and other securities. 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 has not 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 books of the Company by debit to GUVNL Account and the repayments and interest thereon are reimbursed by the company to GUVNL by crediting GUVNL Account without any actual cash inflow or outflow. In view of the above and in absence of the relevant information as regards the purpose and other terms and conditions of loans availed through GUVNL, we are unable to comment on the application of such loans for the purpose for which they were obtained. (b) In case of loans directly raised by the Company during the year, on the basis of records examined by us, and relying on the information compiled by the Company for Co-relating funds raised for the end use of the term loan, the Company has, prima facie, applied the loans for the purpose for which they were obtained.

11 xvii. The Company has raised its allocated term loans through GUVNL and for the reasons given in clause xvi above, it is not possible for us to ascertain whether funds raised on short term basis have been used for long term investment. However, funds raised by the Company on long term basis have been applied for long term investment. xviii. Based on a legal opinion obtained by the company, the provisions of section 301 of the Companies Act, 1956 are not applicable to the company. In view of the above, this clause is not applicable. xix. The liabilities under the bonds issued by the erstwhile GEB transferred to the Company are secured either by a charge over the assets and / or by a guarantee by Government of Gujarat. 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 knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year. FOR P. PARIKH & ASSOCIATES CHARTERED ACCOUNTANTS Firm Reg. No W Place: Date: Ashok Rajagiri (Partner) M. No

12 19th Annual BALANCE SHEET AS AT 31 st MARCH, 2012 I II Particulars Notes current reporting () (` IN LAKHS) previous reporting ( ) EQUITY AND LIABILITIES 1 Shareholder's Funds a Share Capital 2 145, , b Reserves and Surplus 3 222, , Share Application money pending allotment 4 22, , Non Current Liabilities a Long Term Borrowings 5 566, , b Other long term liabilities 6 60, , c Long term provisions 7 13, , Current Liabilities a Short Term Borrowings 8 93, , b Trade Payables 9 45, , c Other current liabilities , , d Short Term Provisions 11 24, , ASSETS 1 Non Current Assets a Fixed asset TOTAL 1,389, ,234, (i) Tangible Asset , , (ii) Capital Work in Progress 411, , b Non-curent investments 13 2, , c Long Term Loans & Advances 14 29, , d Other non current assets 15 18, , Current Assets a Inventories 16 54, , b Trade receivables , , c Cash and cash equivalents , d Short term loans and advances 19 23, , e Other current assets 20 6, , See accompanying notes forming part of the financial statements. 1 to 49 TOTAL 1,389, ,234, As per attach report of even date FOR P.PARIKH & ASSOCIATES. CHARTERED ACCOUNTANTS Firm Reg.No W FOR AND ON BEHALF OF THE BOARD ASHOK RAJAGIRI D.J.PANDIAN GURDEEP SINGH Partner Chairman Managing Director Mem.No M.B.KAKA V.P.JANI Sr.Chief Genaral Manager (F&A) Company Secretary Place: Date : Place: Date:

13 GUJ GUJARAT STATE ELECTRICITY CORPORATION LIMITED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 st MARCH 2012 Particulars Notes current reporting () 19th Annual (` In Lakhs) previous reporting ( ) I Revenue from Operations , , II Other Income 22 8, , III Total Revenue (I+II) 864, , IV Expenses Cost of Fuel consumed , , Employees benefit expense 24 42, , Finance Cost 25 47, , Depreciation & Amortization Expenses 12 61, , Other Expenses 26 45, , V Total Expenses 846, , Profit before Exceptional, Extra oridenery Items, Prior Items & Tax 17, , VI Exceptional Items 27 4, , VII Prior Period Adjustment , VIII Profit before tax 21, , IX Tax Expenses ( 1 ) Current Tax 4, , X Profit for the 17, , XI Earning Per Share (in Rs.) 1.Basic Diluted See accompanying notes forming part of the financial statements. 1 to 49 As per attach report of even date FOR P.PARIKH & ASSOCIATES. CHARTERED ACCOUNTANTS Firm Reg.No W FOR AND ON BEHALF OF THE BOARD ASHOK RAJAGIRI Partner Mem.No Place: Date : D.J.PANDIAN Chairman M.B.KAKA Sr.Chief General Manager Place: Date: GURDEEP SINGH Managing Director V.P.JANI Company Secretary

14 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 st MARCH th Annual (` in lakhs) current reporting () previous reporting ( ) Cash Flow from Operating Activities Net Profit Before Tax 21, , Adjustments For: Add / (Less) : Loss on disposal of Fixed Assets Profit on Sale of Fixed Assets (20.98) (672.85) Depreciation Interest and financing charges Dividend Received (110.15) (110.15) Prior Period Adj relating to Investment & Financing Activites , Operating Profit Before Working Capital Changes Adjustments for Changes in Working Capital (Increase) /Decrease In Inventories ( ) (Increase) /Decrease In Trade Receivable ( ) (Increase) /Decrease In Loan & advances ( ) ( ) Increase /(Decrease) In Trade Payables and other liabilities ( ) (Increase) /Decrease In Other Current Assets ( ) CASH GENERATED FROM OPERATIONS Direct Tax Paid (Net of Refund) ( ) ( ) A. NET CASH FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (Including interest cost) ( ) ( ) Advances for Capital Assets ( ) ( ) Loan to Joint Venture Co. ( ) (81.21) Sale of Fixed Assets Dividend/Interest Received Investment 0.00 (0.05) B. NET CASH FROM INVESTING ACTIVITIES ( ) ( ) CASH FLOW FROM FINANCING ACTIVITIES Equity Share Capital ( Repayment) / Proceeds From Borrowings Interest Paid ( ) ( ) C. NET CASH FROM FINANCING ACTIVITIES 47, , NET INCREASE IN CASH & CASH EQUIVALENTS(A+B+C) CASH AND CASH EQUIVALENT AS AT (OP.BAL) CASH AND CASH EQUIVALENT AS AT (CL.BAL) Note: Purchase of Fixed Assets include Movement in capital works in progress. FOR P.PARIKH & ASSOCIATES. Chartered Accountants Firm Reg.NO W ASHOK RAJAGIRI Partner Mem.No PARTICULARS FOR AND ON BEHALF OF THE BOARD D.J.PANDIAN Chairman ( ) GURDEEP SINGH Managing Director M.B.KAKA V.P.JANI Sr.Chief General Manager(F&A) Company Secretary Palace: Palace : Date : Date :

15 19th Annual GGGGGGGG[Type text] [Type text] [Type text] Note 1 SIGNIFICANT ACCOUNTING POLICIES I. Basis of Preparation of Financial Statements (a) (b) The Company is a Public Limited Company registered under the Provisions of The Companies Act, 1956 and has applied provisions of the said act for the preparation of its financial statements, unless otherwise stated. The financial statements are prepared and presented under the historical cost convention on accrual basis of accounting as going concern, in accordance with the accounting principles generally accepted in India and comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India. Accounting policies have been followed consistently except stated specifically. The Government of Gujarat, under the provisions of the Gujarat Electricity Industry (Reorganization and Regulation) Act, 2003 had framed the Gujarat Electricity Industry Reorganization 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 and vesting of all Assets, Liabilities and Proceedings of all the power stations of erstwhile Gujarat Electricity Board and revesting the same in the Company. The Government of Gujarat vide Notification No.GEB K dated March 31, 2005, has declared the date of transfer under the schemes referred to above as final with effect from 01/04/2005. In pursuance of the said notification and the final transfer of functions and activities relating to, generation of power to the Company, the entire operations have been undertaken by the Company (GSECL) with effect from 01/04/2005 and, the opening balance sheet of the company has been accordingly incorporated as on in the books of accounts of the company. (c) The material known liabilities are provided for on the basis of available information / estimates unless otherwise stated. II. Use of Estimates The presentation of financial statements requires certain estimates and assumptions. These estimates and assumptions affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting. Difference between the actual result and estimates are recognized in the in which the results are known/ materialized.

16 19th Annual GGGGGGGG[Type text] [Type text] [Type text] III. 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 Electricity Board are stated as specified in said Notification No.GEB K dated March 31, 2005 issued by the Government of Gujarat. 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 to such projects/ expansions/renovation and modernization are capitalized. Recoveries of liquidated damages for construction delays are recorded as a reduction in the related project s construction costs as and when accepted/settled. (b) (c) The amounts contributed towards the cost of Dam and Canal in respect of Ukai Power station transferred to the Company as per the scheme of restructuring of erstwhile Gujarat Electricity Board is treated as Capital Expenditure and is depreciated as Hydraulic work dam, slipway etc. The Company is capitalizing the capital spares purchased initially with the equipment or purchased subsequently in accordance with the provisions of Accounting Standard 10 read with Accounting Standard Interpretation 2 issued by the Institute of Chartered Accountants of India. IV. Capital Work In Progress (a) (b) (c) (d) (e) Cost of material consumed, erection charges and the incidental expenses incurred for the project, pending for capitalization are shown as capital work in progress till the capitalization of assets/project. In case of Capital Work in Progress for work against Deposits/work contract where the final settlement of bills with contractor is yet to be effected, capitalization is done on provisional basis subject to necessary adjustment in the year of final settlement. Claims for price variation/exchange rate variation in case of capital contracts are accounted for on acceptance thereof by the Company. A portion of overhead expenses of Corporate Office and Plant Offices determined on rational basis are allocated to the project, pro-rata to their capital expenditure for the year and the same are apportioned to respective capital work in progress accounts on the basis of accretion thereto. Capital Expenditure on assets not owned by the Company are reflected in fixed assets and the same are depreciated at relevant rates. (f) The cost incurred and revenue generated during the Trial Run Stage of the Project/Power Station are capitalized.

17 19th Annual GGGGGGGG[Type text] [Type text] [Type text] V. Borrowing Cost Borrowing cost including interest, guarantee fees, commitment charges etc., that is directly attributable to the acquisition, construction or production of a qualifying asset is capitalized as part of the cost of that asset up to the project is commissioned or asset is put to use. The borrowing cost incurred on common funds borrowed generally and used for the purpose of obtaining a qualifying asset, is apportioned on rational basis, the remaining borrowing cost is charged to revenue. VI. Impairment of Assets The impairment of Assets i.e. The cash generating unit as defined in accounting standard-28 issued by The Institute of Chartered Accountants of India on Impairment of Assets are identified at the balance sheet date with respect to carrying amount of the asset vis-à-vis its estimated revenue generation during balance useful life of that asset and the loss, if any, is recognized in profit & loss account. Impairment loss, if any, to be reversed subsequently is accounted for in the year of reversal. The company has adopted the policy of carrying out impairment test once in every t hree financial years. VII. Depreciation and Amortisation (a) (b) (d) The Company is providing depreciation on straight line method on pro rata basis at the rates specified by the Central Electricity Regulatory Commission (CERC), the statutory authority established under the Electricity Act, 2003, in terms of notification No. 23/2/2005 R & R (Vol. III) dated 6 th January, 2006 issued by the Ministry of Power, Government of India. Capital spares with the company are mostly capable of being used in the group of power stations with near identical or similar technology using similar plants and machineries and are expected to be used during more than one accounting. These spares are, therefore, depreciated over the residual useful life of the plant in accordance with Accounting Standard 10 issued by The Institute of Chartered Accountants of India. Plant & Machinery, loose tools and items of any appliances included under different head of assets costing Rs.5,000/- or less are charged to the revenue account. VIII. Investments Investments are classified into current and long term investments. Current investments are stated 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 is not temporary in nature in the opinion of the management.

18 19th Annual GGGGGGGG[Type text] [Type text] [Type text] IX. Inventories (a) (b) (c) (d) The Inventories of Coal and Oil are valued at lower of grade based purchase cost plus freight and other fuel related cost on monthly weighted average basis or net realisable value (NRV). Stores and spares are valued at lower of the weighted average cost inclusive of freight and other allocable overheads or net realisable value. Scrap/Obsolete assets are valued at estimated cost or net realisable value, whichever is less. Coal, Oil and Stores and spares in Transit are valued at Cost plus Freight and other Incidental expenses. X. Retirement Benefits (a) The Company has Defined Contribution Plan for its employees retirement benefit comprising of provident fund (administered through trust) and, Employees Pension Scheme and Employees Death Linked Insurance scheme. (i) (ii) The company and eligible employees make monthly contributions to provident fund trust equal to specified percentage of the covered employees salary. The amounts towards accrued liabilities for pension to employees are deposited with the Regional Provident Fund Commissioner office as per provisions of Employee Pension Act. The company has no further obligations to the above referred plans beyond its monthly contributions. (b) The Defined Benefit Plan comprising of Gratuity (administered through trust and funded through Life Insurance Corporation of India) and Leave Encashment. The liability for the gratuity and leave encashment is determined and accrued on the basis of independent actuarial valuation done at year end. XI. Revenue Recognition (a) Energy sales are recognised on the basis of amount of invoices for supply of energy determined in accordance with the Techno-Commercial parameters approved in the relevant Power Purchase Agreement/Tariff orders by Gujarat Electricity Regulatory Commission. Revenue is recognised when there is no significant uncertainty as to the measurability and ultimate collection. In case of Unscheduled Interchange (UI) charges income, the similar treatment is given.

19 19th Annual GGGGGGGG[Type text] [Type text] [Type text] (b) Income from sale of scrap, administration charges of fly ash, Interest income, Income on O & M contract and Carbon Emission Reduction (CERs) are accounted for on accrual basis and insurance claims and dividend are accounted for on their receipt. XII. Expenditure All expenses are reflected in revenue accounts under their natural heads. Expenses shown under the generation of power, repairs & maintenance, employee cost, depreciation, administration and general expenses and interest and finance charges, are disclosed separately. In case of Long Term Service Contract entered into for the maintenance of the plants, yearly provisions are made for the expenditure to be incurred. XIII. Grant from the Government (a) (b) (c) (d) In accordance with the Accounting Standard 12 on Accounting for Government Grants, issued by The Institute of Chartered Accountants of India, Grants and Subsidies received from Government are recognised on reasonable certainty of its realisability. Grant and subsidies received for the specific assets are reduced from the cost of concerned specific assets. Capital Grants received under Financial Restructuring Plan (FRP) as promoters Contributions are treated as Capital Reserve forming part of Shareholders Fund. Grants & Subsidies on Revenue account are disclosed separately as Income in the Profit & Loss Account. XIV. Taxation Current Tax provision is determined on the basis of estimated taxable income under the Income Tax Act, 1961 after considering permissible tax exemption, and reduction/disallowance. In the absence of any prospective taxable income for the year, the tax liability is calculated at the minimum alternate tax rate under section 115JB of the Income Tax Act, XV. Transactions in Foreign Currency (a) (b) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction. Any income or expense on account of exchange rate difference either on settlement or on transaction is recognised in the profit and loss account.

20 19th Annual GGGGGGGG[Type text] [Type text] [Type text] XVI. Prior Period Items and Extra - Ordinary Items Adjustments arising due to errors or omission in the financial statements of earlier years are accounted as Prior Period Items. Items of Income & Expenditure, which are not of recurring nature viz., damages due to floods, earth quakes etc., are disclosed as Extra Ordinary items. XVII. Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

21 19th Annual 2. SHARE CAPITAL Notes forming part of the Financial Statements. (` In Lakhs) Particulars current reporting () previous reporting ( ) Authorised 350,00,00,000 (P.Y. : 350,00,00,000) Equity Share of Rs. 10/- each 350, , Issued Share Capital Equity shares of Rs. 10 each fully paid up Subscribed and fully paid up 145,80,22,424(P.Y. 145,80,22,424) Equity Shares of Rs 10/- each fully paid held by the holding Company Gujarat Urja Vikas Nigam Limited and its nominees Total 148, , , , , , Of the above, 145,80,22,424 Equity Shares are held by "Gujarat Urja Vikas Nigam Ltd ", the holding Company (GUVNL) & its nominess. 2.Of the above 330,672,354 Equity shares of Rs. 10/- each have been issued at premium as specified in Govt.GR GHU- (203)-GUV K Dtd for transfer of generation undertaking of erstwhile GEB (now GUVNL) 3.Of the aove 44,40,00,070 Equity Shares of Rs 10/- each were allotted at par to erstwhile GEB (now GUVNL) on conversion of Unsecured Loan amounting to Rs. 44,400,01 lakhs. Reconciliation of number of Shares outstanding at the end of year is setout below. Particulars Equity Shares at the beginning of the year Add : Shares issued on right basis to Gujarat Urja Vikas Nigam Limited Equity Shares at the end of the year As at 31st March 2012 No. of Shares As at 31st March 2011 No. of Shares 1,458,022, ,972, ,050,000 1,458,022,424 1,458,022, RESERVES AND SURPLUS Particulars ` IN LAKHS current reporting () previous reporting ( ) Capital Reserve (Capital Grant under FRP) 31, , Share Premium 99, , Surplus As per last Balance Sheet 74, , Add: Balance of profit from Profit & Loss A/c. 17, , Total 92, , , ,

22 19th Annual Notes forming part of the Financial Statements. 4. SHARE APPLICATION MONEY PENDING ALLOTMENT ` IN LAKHS Particulars current reporting () previous reporting ( ) Equity Share Application Money 22, , Total 22, , (a) The Company has issued 5,57,50,000/- equipty share of Rs. 10/- each at cash with premium of Rs. 30 /-per share to M/s. Gujarat Urja Vikas Nigam Ltd.during the month of July'12 for pending share application money since March-2011 & company has sufficient authorised share capital for issuing equity shares. 2

23 19th Annual Notes forming part of the Financial Statements. 5. LONG TERM BORROWINGS Particulars ` IN LAKHS current reporting () previous reporting ( ) SECURED LOANS A. Term Loan from Financial Institution Power Finance Corporation Limited 226, , Rural Electrification Corporation Limited , , B. Term Loan from Bank Oriental Bank of Commerce 38, , Indian Bank 6, , Dena Bank 24, , Corporation Bank 10, , Syndicate Bank 8, , Canara Bank 14, , Allahabad Bank 19, , Kalupur Commercial Co.Op.Bank Ltd 1, , Bank of Baroda 20, , Vijya Bank 24, , Union Bank 24, National Bank for Agriculture & Rural Development 1, , , C. Deffered payment Guarantee D. Loans transferred from GUVNL Term Loan from Banks: Dena Bank Union Bank of India Allahabad Bank Indian Overseas Bank Canara Bank , Syndicate Bank Total Long Term Secured 422, , UNSECURED LOANS A. Term Loan from Financial Institution/Banks: Power Finance Corporation Limited 3, , Gujart State Financial Services Limited 100, , , , B. Loans transferred from GUVNL Bonds. 39, , Term Loan from Financial Institution: Gujarat State Financial Services Limited , Total Long Term Unsecured 143, , Total (Long Term Secured+Unsecured) 566, ,

24 19th Annual Name of FIs/ Banks Notes forming part of the Financial Statements. 1. The above Term Loans (referred at A, B and C ) are secured by way of hypothecation on the w hole of movable properties of the company including its movable plant and machinery, machinery spares, tools and acc essories and other movables, both present and future (save and except book debts) for power generating units of the co mpany, namely Ukai unit 1 & 2, Gandhinagar unit 1 & 2 and KLTPS unit no. 1 & 2 for R&M schemes, KLTPS unit 4, Ukai unit 6, Sik ka unit 3 & 4, Utran CCPP II, Dhuvaran -III, Nabard Loan for Solar project,ubi 56 for short fall in loan of KLTPS-IV /DHR-II as well as Wind Mill 10 MW towards expansion projects of the company. Similarly, the company has raised Term Loan against hypot hecation of assets for various minor R&M schemes. Loan for Utran 135 MW of Rs Crores from PFC- Unsecured during is covered by mortage of Assetes and is consider as Secured loan. 2. The above term loans are further secured by way of mortgage on all immovable properties, both pre sent and future in respect of the power stations of the company as stated above. 3. The working capital loans from banks are secured by way of hypothecation on all current assets of the compnany viz. coal, oil, consumable spares and stores, bills receivable and book debt. 4.Repayment terms & maturity of long term loans. Out Standing Amt.as on Maturity Period from (in Month) Amount of Instalments per Quarter. Out Standing Amt.as on Secured A-Power Finance Corporation 1-KLTPS - I & II GNR R & M Ukai Unit - VI Ukai R & M I & II KLTPS - IV DHN - II DHN - I PFC -KLTPS IV UTRAN 135MW B-Banks. 1-Oriental Bank of Commerce Indian Bank Dena Bank Dena Bank-Sikka project Dena Bank-Utran Power plan Dena Bank-Dhuvaran Projec Corporation Bank Syndicate Bank Canara Bank Canara Bank-Sikka Project Canara Bank-Dhuvaran Proje Allahabad Bank Allahabad Bank-Sikka Projec Allahabad Bank-Utran Projec Kalupur Commercial Co.Op.Bank Ltd Bank of Baroda Bank of Baroda-Utran power Bank of Baroda-Dhuvaran pr Vijya Bank Vijya Bank-Utran Power plan Vijya Bank-Dhuvaran projec Union Bank of India Union Bank of India-Dhuvar Union Bank of India-KLTPS Nabard-Solar Project C-Loan Transferred from GUVNL. 1-GUVNL - Syndicate Bank GUVNL - DENA BANK

25 19th Annual Notes forming part of the Financial Statements. 3-GUVNL - IOB GUVNL - SBI GUVNL - BOB GUVNL - ALLAHABAD GUVNL - UNION GUVNL - CANARA BANK Name of FIs/ Banks Out Standing Amt.as on Maturity Period from (in Month) Amount of Instalments per YEAR Out Standing Amt.as on A-Deffered Payment Guarantee Name of FIs/ Banks Maturity Period Out Standing Amt.as from Amount of Out Standing Amt.as on (in Month) Instalments per YEAR on A-REC Un Secured A-Power Finance Corporation 1-R & M of Wanakbori TPS R & M of Gandhinagar TPS R & M of Ukai TPS R & M of Wanakbori TPS R & M Sikka TPS (2x120 MW) R & M of KLTPS (2x70 MW) RLA & LE study/works of GTPS R & M of Gandhinagar TPS-2x120+2x210 MW RLA GTPS RLA & LE study/works of GTPS B-Gujarat State Financeial Services. 1-GSFS GSFS GSFS C-Loan Transferred from GUVNL. 1-GUVNL - KARNATAKA Bank GUVNL - GSFS GUVNL - BONDS Loans transferred from GUVNL ( referred at D above) -bonds raised by erstwhile GEB will be repaid by March MATURITY OF PUBLIC BONDS. BOND with ROI % Series-Vl Option-II % Series-Vl Option- III % Series-Vl Option- III % Series-VII option-ii % Series-VII option-iii % Series-Vlll % Series-lX % Series-X Loan from Indian Overseas Bank (outstanding Rs.20 Crores) is secured against the 1st hypothecation c harge on the assets of Dhrangadhra and Surendranagar O & M Division of PGVCL. 5

26 19th Annual 6. OTHER LONG TERM LIABILITIES Notes forming part of the Financial Statements. Loan from Indian Overseas Bank (outstanding Rs Crores) is secured against the 1st hypothecati on charge on the assets of Vijapur, Mehsana & Chhatral Tr. Division of GETCO. Loan from Union Bank of India (outstanding Rs.10 Crores) is secured against the 1st hypothecation ch arge on the assets of Soja, Dhansura & Chhatral Tr. Division of GETCO. Loan from Allahabad Bank (outstanding Rs.30 Crores) is secured against the 1st hypothecation charge on the assets of Sabarmati, Gandhinagar & Bavla O & M Division of UGVCL. Loan from Canara Bank (outstanding Rs Crores) is secured against the extension hypothecation charge on the assets of Godhra and Baroda O&M Divisions of MGVCL. Loan from Dena Bank (outstanding Rs Crores) is secured against the 1st hypothecation charge on the assets of Amreli, Dhasa, & Vartej Tr.Divisions of GETCO. Cash Credit limit is secured against the I st hypothecation charge in favour of UCO Bank Consortium on the Stocks and Book Debts of all the Companies except UGVCL ranking pari-passu and in favour of SBI Consortium in case of UGVC L. Particulars current reporting () previous reporting ( ) Liabilities for Capital Supplies / works 3, , Staff Welfare Scheme 3, , Deposit and Retention from Supplier And contractor 53, , TOTAL 60, , LONG TERM PROVISIONS Particulars current reporting () previous reporting ( ) Provision for Employees benefits ( Leave Encashment) 13, , TOTAL 13, , SHORT TERM BORROWINGS Particulars ` IN LAKHS current reporting () ` IN LAKHS ` IN LAKHS previous reporting ( ) Secured Working Capital Loan from Bank Cash Credit 2, , Unsecured Loan Term Loan from Financial Instituation/Bank Union Bank of India 40, , Bank of Baroda 29, , Gujarat State Financial Services Limited 6, , Purchase bill discounting 14, , , Total Short Term Borrowings Secured+Unsecured Loan 93, ,

27 19th Annual Notes forming part of the Financial Statements. 9. TRADE PAYABLE Particulars current reporting () ` IN LAKHS previous reporting ( ) Fuel : Coal 42, , Gas 2, , Oil TOTAL 45, ,

28 19th Annual Notes forming part of the Financial Statements. 10. OTHER CURRENT LIABILITIES Particulars current reporting () ` IN LAKHS previous reporting ( ) O&M Supplies/Works 3, , Staff Expenses 3, Deposit Interest accrued and due 1, , Interest accrued but not due 10, , Inter Company Payable 101, , Other Liabilities 4, , , , Current maturities of Long Term Debt: A Term Loan from Financial Institution Power Finance Corporation Limited 15, , Rural Electrification Corporation Limited Gujarat State Financial Services Limited 23, , B. Term Loans from Bank 39, , Dena Bank 2, , Allahabad Bank 1, , Kalupur Commerical Co-operative Bank Ltd Bank of Baroda 2, , Vijaya Bank 3, , National Bank for Agriculture & Rural Development Union Bank of India 2, Deferred payment Gurantee , , C. Loan Transferred from GUVNL (i) Term Loan from Banks Dena Bank , Union Bank of India Allahabad Bank Indian Overses Bank Canara Bank 2, , Syndicate Bank , State Bank of India , Bank of Baroda , Karanataka Bank , , , (ii) Bonds 7, , (iii) Term Loan from Financial Institutation Gujarat State Financial Services Limited 3, , , , TOTAL 194, ,