Gujarat Industries Power Co Ltd Management Discussions.

Your Company, jointly promoted by Gujarat Electricity Board (GEB) [now Gujarat Urja Vikas Nigam Limited (GUVNL)], Gujarat Alkalies and Chemicals Limited (GACL), Gujarat State Fertilizers and Chemicals Limited (GSFC), and Petrofils Co-operative Limited (PCL) to cater to their captive power requirements, has completed thirty five years on 1st June, 2020, since its establishment in the year 1985.

It is a matter of pride that your Company, which began as the first group captive power plant in the country, has transformed into a dynamic Independent Power Producer (IPP) with total installed generation capacity of 1084.4 MW.


Power Generation in India: [Source: Central Electricity Authority (CEA)]

The total power generation from conventional sources in the country during FY 2019-20 was 1252.61 Billion Units (BUs) (Previous Year 1249.33 BUs) as against the target of 1330.00 BUs for the year i.e. about 94.18% of the target for the year. The annual growth in the energy generation during the FY 2019-20 was marginally higher @ 0.26 % of the generation for same period during last year

i.e. FY 2018-19.

The installed generation capacity in the country, as on 31st March, 2020 was 370107 MW. Coal, with around 56% share, continued to be the primary source of fuel for power generation in India.

Installed Generation Capacity (As on 31/03/2020)

All India


Nuclear Hydro RES@ Grand
Coal/Lignite Gas Diesel Total (Renewable) (MNRE) Total
MW* 205135 24955 510 230600 6780 45699 87028 370107
% 55.43 6.74 0.14 62.31 1.83 12.35 23.51 100

* Figures are rounded off to nearest digit. Source: Central Electricity Authority (CEA)]

Electricity - Capacity Addition and Generation Target Vs. Achievement (2018-19):

The Indian power sector has historically been characterized by demand-supply gap which has been increasing over the years. The National Electricity Plan (NEP) 2007, had projected total capacity addition of 88537 MW, for the 12th Plan (Year: 2012-17) as under:


Hydro Nuclear Total
Coal/Lignite Gas/LNG Total
MW 69800 2540 72340 10897 5300 88537
% 78.84 2.87 81.71 12.31 5.99 100

[Source: Central Electricity Authority (CEA)]

The Indian power sector has historically been characterized by demand-supply gap which has been increasing over the years. The National Electricity Plan (NEP) 2007, had projected total capacity addition of 88537 MW, for the XIIth Plan (Year: 2012-1 7) as under:

(a) Generation Capacity Addition/Achievement for XIIth Plan:


Target Addition (in MW)*


Central State Private Total (in MW)* %
Thermal 14878 13922 43540 72340 91730 126.80
Hydro 6004 1608 3285 10897 5479 50.28
Nuclear 5300 - - 5300 2000 37.73
Total* 26182 15530 46825 88537 99209 112.05

* Figures are rounded off to nearest digit.

[Source : Ministry of Power Annual Report 2018-19].

The Fuel wise capacity addition and achievement beyond XIIth Plan (i.e. for FY 2017-18 and 2018-19) was as follows:


Target (in MW)


2017-18 2018-19 Total (in MW) %
Thermal 11366 7266 18632 14492 77.78
Hydro 1305 840 2145 809 37.71
Nuclear 500 - 500 - -
Total* 13171 8106 21277 15301

* Figures are rounded off to nearest digit.

[Source : MNRE Annual Report].

(b) Electricity Generation (MUs) Target Vs. Achievement for FY 2019-20:

Thermal Hydro Nuclear Bhutan (Import) Total
Target* 1142130 136932 44720 6218 1330000
Achievement up to March, 2019 (MU)* 1044476 155970 46381 5814 1252611
% Ach. 91.45 113.90 103.71 93.50 94.18

* Figures are rounded off to nearest digit. * * Provisional based on Actual cum-Assessment.

[Source: Central Electricity Authority (CEA)]

Thermal Plant Load Factor (PLF):

The average All India Thermal PLF (%) (Coal and Lignite based) was 56.08% for FY 2019-20 as compared to 61.07% for FY 2018-19.

Fuel Availability for Power Generation:

Availability and quality of coal and availability of gas for power sector continued to be a critical issue for thermal generation growth.


With about 198525 MW i.e. 53.64% of the installed capacity of 3701 07 MW as on 31st March, 2020 being contributed by Coal based Power Plants, Coal remains a key fuel for power generation.

As per Energy Generation Programme of Central Electricity Authority (CEA), Coal-based generation is expected to continue to be the predominant source of electricity during the year 202021.

The total coal requirement in the year 2021-22 and 2026-27 has been estimated as 735 MT and 877 MT respectively including imported coal of 50 MT which have been worked out considering 30% reduction in Hydro generation due to failure of monsoon and being supplemented by coal based generation.

(Source:National Electricity Plan -Central Electricity Authority)


Owing to the reducing availability of Natural Gas from the domestic gas fields and also due to increasing cost of Imported R-LNG, the gas based generation had a very marginal growth of 0.26% (in PLF%) during FY2019-20 as compared to corresponding period last year. The installed capacity has been reduced to 24897.46 MW as against 25329.38 MW (reduced by 1.7%- in installed capacity terms).

Gas available from KG basin has been allocated to existing projects only and Power sector has been given third priority in gas allocation after Fertilizer and LPG Sectors.

The Ministry of Power (MoP) has recommended that Power sector be given the highest priority as far as domestic gas allocation is concerned in view of power shortage in the country.

Renewable Energy

Considering the ever increasing electricity demand and inadequate availability of fuel required under conventional methods, there has been dire need to tap various new sources of energy including renewable energy. Further, growing awareness with regard to benefits of clean energy have also prompted renewed focus on renewable energy by all the stakeholders in the energy ecosystem.

Taking into consideration the growing threat of climate change, the need to develop domestic supply options to the maximum extent and the need to diversify energy sources, renewable energy sources continue to remain important to Indias Energy Sector.

The Jawaharlal Nehru National Solar Mission (JNNSM) now named National Solar Mission (NSM) launched in January, 2010 had set a target for development and deployment of 20 GW Solar Power by the year 2022. Thereafter, the GoI revised the target under NSM from 20 GW to 100 GW. (Source: MNRE Annual Report 2019-20).

Renewable Energy accounted for 23.51%, i.e. 87028 MW, of the total installed capacity as on 31-03-2020.[Source: Central Electricity Authority (CEA)].

The Renewable Energy Generation is estimated to contribute about 20.1 % and 24.4 % of the total energy in 2021- 22 and 2026-27 respectively. (Source: National Electricity Plan-Central Electricity Authority)

During the year 2019-20, a total of 7591.99 MW grid connected renewable energy capacity has been achieved during and up to 31.12.2019 as follows:

Wind Power 1879.21 37505.18
Solar Power 5013.00 31379.30
Solar Roof Top 536.88 2333.23
Small Hydro Power 78.40 4671.55
Bio Power 83.00 9861.31
Waste to Power 1.50 139.80
Total 7591.99 85908.37

(Source: MNRE Annual Report 2019-20)

With fuel shortage becoming a reality in the last couple of years, it is imperative for India to have a focused strategy for renewable energy.

The Ministry of New and Renewable Energy (MNRE) has taken several steps to fructify Prime Ministers dream of a clean energy future for the New India. The largest renewable capacity expansion programme in the world is being taken up by India. The Government is aiming to increase share of clean energy through massive thrust in renewables. Core drivers for development and deployment of new and renewable energy in India have been Energy security, Electricity shortages, Energy Access, Climate change etc.

In order to achieve the renewable energy target of 175 GW, including 100 GW Solar and 60 GW Wind Power, by the year 2022, major programmes/schemes on implementation of Solar Park, Solar Roof Top Scheme, Solar Defense Scheme, Solar scheme for CPUs, Solar PV power plants on Canal Bank and Canal Tops, Solar Pump, Solar Rooftop etc. have been launched during the last few years. National Wind-Solar Hybrid Policy was issued on 14/05/201 8 to provide a framework for promotion of large and connected Wind Solar PV Hybrid System.

Various policy measures have been initiated and special steps taken in addition to providing financial support to various schemes being implemented by the MNRE for achieving the target of renewable energy capacity to 175 GW by the year 2022. These include, inter alia, suitable amendments to the Electricity Act and Tariff Policy for strong enforcement of Renewable Purchase Obligation (RPO) and for providing Renewable Generation Obligation (RGO); setting up of exclusive Solar/Solar & Wind Hybrid Parks; development of power transmission network through Green Energy Corridor project; guidelines for procurement of Solar and Wind Power though tariff based competitive bidding process, National Offshore Wind Energy Policy notified, Repowering of Wind Power Projects, Standards for Deployment of Solar Photovoltaic systems/devices, orders for waiving the Inter State Transmission System charges and losses for interstate sale of Solar and Wind power for projects commissioned by March 2019; identification of large government complexes/buildings for rooftop solar projects; provision of roof top solar and 1 0 percent renewable energy as mandatory under Mission Statement and Guidelines for development of smart cities; incorporating measures in Integrated Power Development Scheme (IPDS) for encouraging distribution companies and making net-metering compulsory and raising funds from bilateral and international donors as also the Green Climate Fund to achieve the target etc. Reserve Bank of India has included renewable energy projects under priority sector lending upto Rs.15.00 crores including lending for grid connected solar rooftop systems.

As a result, a capacity addition of 85.90 GW was set up by December 2019 constituting more than 23 per cent of the total installed capacity. India has 4th and 5th global positions in the wind and solar power deployment respectively. Solar Power capacity has increased by more than 14 times in the last five years from 2630 MW to 37505 MW in December 2019. (Source: MNRE Annual Report 2019-20)



The anticipated power supply position during 2019-20 is presented in the table below:

Power Supply Position in the Country during 2019-20

Particulars Energy (MU) Peak (MW)
Requirement. 1290247 183804
Availability. 1283690 182533
Surplus( + )/Shortage(-). -6557 -1271
%Surplus( + )/Shortage(-). -0.5% -0.7%

[Source:Website of Ministry of Power(MoP) www.po]

The Electricity Generation Target from conventional sources fixed by Ministry of Power (MoP) for FY 2020-21 was as follows:

Electricity Generation Target for FY 2020-21

Thermal Hydro Nuclear Bhutan (Import) Total
Target (BUs) 1138.53 140.36 43.88 7.23 1330.000

[Source: Central Electricity Authority (CEA)].

In order to provide cheaper power to consumers, large size power projects are being developed at different locations by various project developers.

India is endowed with huge renewable sources for energy. Both technology routes for conversion of solar radiation into heat and electricity, Solar Thermal and Solar Photovoltaic (PV), can effectively be harnessed providing huge scalability for solar power in India. With the increased focus on Research and Development for reducing the costs of setting up Solar Power projects and the tariffs being offered for Solar Power, the sector provides bright opportunities.

Your Company has approached various Govt. authorities like MNRE, SECI, NTPC, Port Trust, GoG Departments, etc. to explore opportunities to enhance its Solar and Wind based Power Generation Capacity.

The Company is also exploring business opportunities in the following areas:

• Solar Park

• Solar Roof Top

• Wind Farms

• Energy Audit

• Micro Grid

• Consultancy Services

A dedicated Business Development Cell has been set up to look for new business opportunities.

Key Risks and Concerns:

Power sector is a highly capital intensive industry with long gestation periods before commencement of revenue streams (construction/ commissioning periods of 4-5 years) and an even longer operating period (over 25 years). Since most of the projects have such a long time frame, there are some inherent risks in both the internal and external environment.

The macro economic factors like the growth of the economy, interest rates, as well as the political and economic environment have a significant effect on the business environment and the sector as a whole.

The graduation from the regulated regime to a competitive scenario has made developers conscious of the costs incurred (both capital and operating costs) and delays in equipment delivery schedules due to inadequate manufacturing capacity in the country.

New policies have boosted the security of utilities revenue directly impacting both their willingness and ability to pay for the power purchased. Over the long term, unless Aggregate Technical and Commercial (AT&C) losses are reduced, the ability of state utilities to meet their obligations will be of grave concern.

Considering the proposed capacity addition and the capital intensive nature of power projects, high level of debt financing will be required. The company, sector and group level exposures of various banks and insurance companies need to be increased in order to adequately fund the proposed capacity addition. Your Company is dependent on the domestic market for its business and revenues. The Companys power generating facilities are located in the State of Gujarat and the entire revenue of the Company is derived from the domestic market. These factors may potentially expose the Company to risks of a significant nature to the state of economy. Adverse changes in the Government policies or regulations, the taxes levied by the central or state Governments or removal of tax concessions, exemptions or incentives, or claims by tax authorities may affect the financial condition and operational results of the Company.

Generation of Power at the Companys Power Stations can be adversely affected due to various factors including nonavailability of natural Gas from domestic gas fields, high cost of R-LNG, lignite/fuel, grid disturbances, load management in the grid, lower off-take by Participating Units. Your Company has entered into Agreements with gas suppliers for adequate supply of fuel for its gas-based Power Stations at Vadodara Plant. However, the dwindling supplies from domestic gas fields at present and increasing price of imported R-LNG shall have a considerable impact on the generation at Vadodara Plants. To remain unaffected by the grid disturbances, your Company has developed systems to isolate its Power Stations from the grid. To mitigate the concerns, the external environment is monitored and the internal environment is managed on a continuous basis.


The Company at present has a combined installed capacity of 1084.4 MW at various locations in Gujarat as follows:

Power Plants Installed capacity (MW)
A. Non Renewable
Vadodara Station - I. 145
Vadodara Station - II. 165
Surat Lignite Power Plant (SLPP), Village Nani Naroli, Taluka Mangrol, Dist. Surat - Phase I & II. 500
Sub Total (A) 810
B. Renewable
Vastan, Taluka Mangrol, Dist. Surat. 05
1 MW Distributed Solar Power Plants at Amrol, Dist. Anand and Vastan, Dist. Surat. 02
Gujarat Solar Park, Charanka, Dist. Banaskantha. 80 75
Wind Farms
Kotadapitha, Dist. Amreli. 15
Nakhatrana, Dist. Kutch. 21
Rojmal, Dist. Botad 26
Kuchhdi, Dist. Porbandar 50.4
Sub Total (B) 274.4
GRAND TOTAL (A+B) 1084.4

*100 MW Solar Power Project under implementation at

Raghanesda, Dist. Patan.


Your Company has put in place internal control systems and processes commensurate with its size and scale of operations.

Few recent initiatives in that direction are given below:

1. Implementation of an Enterprise Resource Planning (ERP) System developed by SAP for better control on cash flows, costs, automation of procurement processes and digital office after a comprehensive study of various functionalities. This System has control processes designed to take care of various audit requirements;

2. Technical up gradation of servers and functional modules of SAP ERP;

3. Central Data Monitoring Cell has been set up for monitoring of operations data for plants and projects under Solar and Wind at various locations;

4. Centralization of processes wherever feasible, with IT support, to reduce cycle time and avoid repetition of activities.

In addition, the Company has a system of Internal Audit and Review through external independent firm of Chartered Accountants. Pre-audit of payments is being carried out by an internal team of Accountants as well as by external Agencies which oversee the implementation and adherence to various systems and processes and preparation of Financial Statements as per Generally Accepted Principles and Practices. The internal control measures such as defining various levels of the authority through delegation of powers, well laid down procurement procedures, checks and balances in the financial system to safeguard the assets, budgetary controls and variance analysis are in place.

The procurement and operational maintenance activities are planned well in advance to avoid any possible risk of late delivery of materials/inputs, delay in attending to maintenance needs etc. Your Company stores and maintains all the relevant data and information as a back-up, to avoid any possible risk of loss of any important business data.

A qualified and independent Audit Committee of Directors periodically reviews the internal audit reports.


These financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (the Act) (to the extent notified) except in so far as the said provisions are inconsistent with the provision of the Electricity Act, 2003 and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 1 33 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.

Your Companys total income for the year ended 31st March, 2020 was Rs.142072 Lakhs as compared to Rs.152427 Lakhs in the previous year.

The total income of the current year includes earnings from sale of electrical energy of Rs.137350 Lakhs as compared to Rs.140056 Lakhs recorded in the previous year.

The Profit Before Tax was Rs.30538 Lakhs as compared to Rs.22828 Lakhs (after exceptional item) in the previous year.

The Net Profit of Rs.24798 Lakhs has been arrived at after taking into account the Current Income Tax expense Rs.5461 Lakhs and Deferred Tax expense of Rs.279 Lakhs.

During the year, Gross Block has increased by Rs.23238 Lakhs. The increase was mainly due to capitalization of balance 50 MW Solar Power Plant at Charanka.

The total dividend payout (proposed) for the year @ Rs.2.90 per Equity Share is Rs.4386 Lakhs.

As on 31st March 2020, the net worth of the Company stood at Rs.274807 Lakhs as against Rs.257074 Lakhs as at the end of previous financial year ended on 31st March, 201 9.


Key Ratios 2019-20 2018-19 % Variance* Explanation
Debtors Turnover 0.14 0.15 8%
Inventory Turnover 0.12 0.12 0%
Interest Coverage Ratio 8.26 11.53 28% As against reduction in interest cost by 1 %, there was a 29% decrease in EBIT.
Debt Equity Ratio 0.16 0.20 19% The Ratio has reduced as net reduction in long term borrowings is by 2.75 times as compared to previous year.
Operating Profit Margin (%) 31% 33% -7%
Net Profit Margin (%) 22% 16% 37% During the preceding previous year 2018-19, there was a loss on extinguishment of investment in Associate, which has resulted in lower profits. (Refer note 43 to financial statements).
Return on Net Worth 11% 9% 25% During the preceding previous year 2018-19, there was a loss on extinguishment of investment in Associate, which has resulted in lower profits. (refer note 43 to financial statements)
* Positive Figure indicates Favorable Variance.


As approved by the Board of Directors of your Company the process of Voluntary Liquidation of GIPCL Projects & Consultancy Company Limited (GIPCO) was initiated under the Insolvency and Bankruptcy Code, 2016 by making an application to the Ahmedabad Bench of National Company Law Tribunal (NCLT) and after hearing in the matter, the Honble NCLT passed an Order dated 06th January, 2020 ordering the dissolution of GIPCO.


Humans Resources are considered as one of the most critical resource in the business which can be continuously improved to maximize the effectiveness of the Organization. Human resources build the Enterprise and a sense of belonging inculcates the spirit of dedication and loyalty amongst them towards strengthening the Companys sustainable growth. All personnel continue to have healthy, cordial and harmonious approach thereby enhancing their contribution to the Company. The strength of your Company lies in its team of highly competent and highly motivated personnel. This has made it possible for your Company to make significant improvements and progress in all areas of activities.

During the year 2019-2020, the Company maintained its high standards of Safety. Your Directors place on record their sincere appreciation for the unstinting efforts and contribution put in by the employees of the Company.

The Company continued in its endeavor to impart appropriate and relevant training to its employees to upgrade their skills to meet the challenges that are ahead and to enhance their performance. The Company has also taken up an exercise on career growth and planning by identifying potentials and training needs of employees by engaging professionals in the field.

With an objective of motivating the workforce and to increase their skill sets to meet future business requirements various initiatives have been undertaken.

The industrial relations remained cordial throughout the year both at Vadodara and at SLPP Plants.


Being a conscientious corporate body, your Company has been actively involved in the socio-economic development and welfare of the people living around the Power Plants at Vadodara and SLPP through Society for Village Development in Petrochemicals Area (SVADES) at Vadodara and through Company promoted NGO - Development Efforts for Rural Economy and People (DEEP) at SLPP. Your Company has also undertaken CSR initiatives in and around the Villages where its Renewable Energy Projects, both Wind and Solar are situated. Major Corporate Social Responsibility (CSR) initiatives by your Company revolve around building community infrastructure, focus on women empowerment and their role in development. Interventions include Health, Education, Livelihood Development and Village Infrastructure Development like roads, Culvert, multi-purpose shed, class rooms, sanitation etc. in surrounding villages.


Your Directors take this opportunity to express their appreciation for the co-operation and assistance received from the Promoters, Government, Local Government bodies, Financial Institution, the Companys Bankers, Electricity Companies, employees, Customers, Suppliers, Investors and all other stakeholders. Your Directors express gratitude to the investors for their confidence reposed in the Company.


Statements in the Management Discussion and Analysis forming part of the Boards Report, describing the objectives, projections, estimates, expectation and predictions of the Company may be "Forward Looking" statements within the meaning of applicable security regulations and laws. These statements are based on certain assumptions and expectations of future events. The Company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.