1

BUSINESS PLAN
(From 2011-12 to 2015-16)















GUJARAT STATE ELECTRICITY CORPORATION LIMITED
ADDRESS: VIDHYUT BHAVAN
RACE COURSE
VADODARA 390007
TELEPHONE NO. 0265 2335635
FAX NO. 0265 2340595
E-MAIL: gsecl@gebmail.com
WEB SITE: www.gsecl.in



2
Table of Contents


Table of contents2
Abbreviations.....4
Executive Summary..5
Management and Organization..7
General Company Description...10
Future Expansion..16
Personal Financial Statement..19
Financial Plan20
SWOT Analysis33
Annexures
Appendix-IPerformance Parameters.
Appendix-IIFuel Price
Appendix-III..Generation Available.
Appendix-IV.... Fuel Cost Expenditure.
Appendix-V. Generation Cost .
Appendix-VI. Capex New Projects..
Appendix-VII. Capex R & M
Appendix-VIII Loan.
Appendix-IX Interest Expense..
Appendix-X. Return on Equity...
Appendix-XI. .Total Expenditure.
Appendix-XII. Normative Revenue...
Appendix-XIII... Revenue From Sale of Power
Appendix-XIV Revenue Summary .
Appendix-XVVariable Cost Per Unit Realisation
Appendix-XVIOpearational Analysis ..
Appendix-XVII. P & L and B.S. assumption ..
Appendix-XVIII... Profit & Loss .....
Appendix-XIX...Balance Sheet.....




3

ABBREVIATIONS

GSECL Gujarat State Electricity Corporation Limited
GUVNL Gujarat Urja Vikas Nigam Limited
GEB Gujarat Electricity Board
GERC Gujarat Electricity Regulatory Commission
CERC Central Electricity Regulatory Commission
NLDC National Load Dispatch Centre
SLDC State Load Dispatch centre
UMPP Ultra Mega Power Project
EA Electricity Act as amended from time to time
FI Financial Institute
PFC Power Finance Corporation
EPC Engineering, Procurement and Construction
PPA Power Purchase Agreement
MW Mega Watt
Mus Million Units
Kwh Kilo Watt Hour
PAF Plant Availability Factor
PLF Plant Load Factor
SHR Station Heat Rate
GCV Gross Calorific Value
SOC Specific Oil Consumption
TL Transit Loss






4
EXECUTIVE SUMMARY

Gujarat State Electricity Corporation Limited (GSECL) was registered under the Companies Act, 1956
in 1993 with the objectives to initiate a process of restructuring of Power Sector and to mobilize
resources from the market for adding to the generation capacity of the State and improving quality
and cost of existing generation. The aim was to have increased focus on adding generation
capacity in the State.

In pursuance of the ongoing Power sector reforms, Gujarat Electricity Board has been unbundled
into functional entities with effect from 1
st
April, 2005. Assets of the Board have been segregated into
seven companies One each in Generation and Transmission and four in distribution. A holding
company, Gujarat Urja Vikas Nigam Limited (GUVNL) has also been formed. Apart from co-
ordination functions, GUVNL is also handling trading and bulk supply functions. As a part of the
above exercise, all generation plants of erstwhile GEB have now been transferred to GSECL.

The generation company faces significant challenges and opportunities in wake of various forces
that have been introduced in the business environment since the enactment of the Electricity Act,
2003. These forces range from change in source and mechanism for regulation to introduction of
competition in wholesale as well as retail electricity markets.

A generation company like GSECL that has the goal of serving the burgeoning demand for the
state of Gujarat needs to ensure long-term fuel availability. With capacity addition across the
country, energy security for the state has become one of the key concerns as the demand for fuel
far outstrips the supply. Energy security also needs to address issues of fuel mix and therefore, the
future plans for capacity addition by GSECL.

Apart from utilization of existing assets through life extensions, GSECL will also need to add new
capacities to meet the growing as well as latent demand of the state and also to replace old
plants.

The above strategies for capacity addition and life extension require financing support from
institutional lenders as well as the Government of Gujarat.

Organizational development and institutional strengthening are the other supporting factors that
require management attention in order to transform GSECL into a commercially viable vibrant
organization. Therefore, systemic improvements like business process re-engineering, best practices,
information technology initiatives, performance management system and human resource
development and involvement need to formulated and implemented across the organization in a
standardized manner.

Unbundling and regulatory regime require GSECL to have clear arrangements for sale of power from
its generating stations. Such arrangements will have to be ratified by GERC. Further, GSECL would
need to gear up to meet the performance requirements as specified by the regulator both on
operational and financial parameters. Non performance on any such parameters will result in
financial implications for GSECL.

It is important that GSECL has a complete re-look at its business in view of the current environment to
develop a holistic way forward for the organization. Keeping the above discussion in mind, GSECL
has to develop a comprehensive strategic business plan for the company for the period FY 2010-11
to 2015-16. The business plan in following sections intends to cover the above issues from the
strategic, competitive, financial, commercial and organizational perspectives.



5
Vision & Mission of the company

To generate power by adopting global best practice through
Prof essi onal Excel l ence
Transparency
Val ue Addi ti on
Hi ghest l evel of Producti vi ty
Nati on Bui l di ng
Safet y, Sel f di sci pl i ne

Core values
Customers Sati sfacti on
Parti ci pati ve wor k cul ture
Pri de of bel ongi ngness
Excel l ence
Bei ng ethi cal l y & Soci al l y responsi ve

Vision of the company is
To become one of the most effi ci ent Power Generati ng Compani es gl obal l y.

Quality Policy

We, at GSECL, are committed to achieve leadership position in Electrical Power Generation to,

Manage and Govern Generation of reliable and uninterrupted Quality power, from
Generating Plants as per the requirements of Load Dispatch Centre.
Supporting analysis and planning actions for continually improving plant performance for
generating power at a competitive cost.

The Management shall continually improve and promote Quality execution at all levels through the
Quality Management Systems.





6
Management and Organization

Currently, all shares of GSECL are held by GUVNL (erstwhile GEB) which controls the ownership of all
the state owned power utilities incorporated upon unbundling of GEB. GSECL Board consists of good
blend of persons from diverse field. It consists of senior IAS officers along with independent directors
from diverse field of expertise.

Board of Directors

The Article of Association requires there shall be a minimum of three and a maximum 12 Directors.
The company has currently Seven Directors.
The details regarding Board of directors are as under.

BOARD OF DIRECTORS
Name of Director Official Address
Shri D.J. Pandian, IAS
Chairman.
Principal Secretary
Govt. of Gujarat,
Energy & Petrochemicals Dept.,
Block No. 5 / 5th Floor,
New Sachivalaya ,
Gandhinagar -382 010.
Shri I.P. Gautam, IAS
Director.
Principal Secretary
Urban Department,
New Sachivalaya,
Gandhinagar-382010
Shri Mukesh Puri IAS
Director.
Managing Director ,
Gujarat Urja Vikas Nigam Limited,
Sardar Patel Vidyut Bhavan ,
Race Course ,
VADODARA - 390 007.
Shri P.H.Rana
Director
Director (Technical)
Gujarat Urja Vikas Nigam Limited
Sardar Patel Vidhyut Bhavan,
Race course,
Vadodara-390007
Shri H. P. Desai
Director.
---

Shri B.S. Reuben
Director
---
Shri Gurdeep Singh
Managing Director
Managing Director ,
Gujarat State Electricity Corporation
Limited,
Vidyut Bhavan ,
Race Course , VADODARA-390007.





7
Core Management Team

Besides very senior and expertise Board Members, there shall be a highly experienced persons in the
core management team with a strong technical and commercial back born of the company.

The details of the core management team are as under

Corporate Office Power Station
Shri Gurdeep Singh
Managing Director
Shri D. J. Parmar
Chief Engineer
Wanakbori Thermal Power Station
Shri B. N. Chudasama
Executive Director (Gen)
Shri J. N. Doshi
Chief Engineer,
Gandhinagar Thermal Power Station
Shri M. B. Kaka
Sr. Chief General Manager
(F & A)
Shri M.R.Patel
Chief Engineer,
Ukai Thermal power Station
Shri V. P. Jani
Company Secretary
Shri P.M.Parmar
Chief Engineer,
Sikka Thermal Power Station
Shri A. D. Karpe
Chief General Manager(HR)
Shri M. C. Jain
Chief Engineer,
Kuttch Lignite Thermal Power Station
Shri U.D.Adhvaryu
Chief Engineer (Gen)
Shri S. V. Ladani
Chief Engineer
Utran Gas Based Power Station
Shri I.M. Patel
Add Chief Engineer (P & P)
Shri K.H.Joshi
Add Chief Engineer
Dhuvaran Thermal Power Station


Shri R.C.Valera
I/C Chief Engineer (Civil)
Shri R.D.Makwana
Engineer-In Charge
Kadana Hydro Power Station
Shri H.N. Baxi
I/C Chief Engineer (Fuel)
Shri R. V. Patel
Chief Engineer,
Sardar Sarovar Hydro Power Station












8


GENERAL COMPANY DESCRIPTION

GSECL, the generating company was formed 12 years prior to unbundling indicating a very early
start of the reform process in the state. On the restructuring date, in April 2005, generation capacity
of 4306 MW has been transferred to GSECLs portfolio from GEB with existing generating capacity of
662MW. GSECLs aggregate generating capacity is now 5006 MW. The companys portfolio of
generation has a thermal: hydro mix is in the ratio of 90% to 10%.

GSECL has also started a non conventional Wind energy power plant of 10 MW at Layza and 1.0
MW Solar Plant at Gandhinagar to support of the Tariff policy of the Central as well as State
Government.

The total existing power generating capacities of each power station are as under:
List of GSECL Station along with Capacity, COD and Age as on 01.04.2011
Name of the
station
Unit No Capacity
of the Unit
(MW)
Date of
Commissioning
Age on
01.04.2011
(Years)
Ukai


1 120 29-03-76 35
2 120 23-06-76 35
3 200 21-01-79 32
4 200 11-09-79 32
5 210 30-01-85 26
TOTAL 850
Gandhinagar 1 120 13-03-76 35
2 120 10-04-77 34
3 210 20-03-90 21
4 210 20-07-91 20
5 210 17-03-98 13
TOTAL 870
Wanakbori 1 210 23-03-82 29
2 210 15-01-83 28
3 210 15-03-84 27
4 210 09-03-86 25
5 210 23-09-86 25
6 210 18-11-87 24
7 210 31-12-98 13
TOTAL 1470
Sikka 1 120 26-03-88 23
2 120 31-03-93 18
TOTAL 240
KLTPS 1 70 29-03-90 21
2 70 25-03-91 20
3 75 31-03-97 14
4 75 20-12-09 2
TOTAL 290


Dhuvaran 7- Gas 106.617 28-01-04 7
8-Gas 112.45 01-11-07 4
TOTAL 219.067
Utran GBPS-I TOTAL 135 17-07-93 18
Utran GBPS-II TOTAL 375 08-11-09 2
UTRAN GBPS TOTAL 510
TOTAL GSECL(Gas) 729
TOTAL GSECL
(Thermal)
4449

9

Ukai Hydro 1 75 08-07-74 37
2 75 13-12-74 37
3 75 22-04-75 36
4 75 04-03-76 35
Ukai LBC 1 2.5 08-12-87 24
2 2.5 19-02-88 24
TOTAL 305
Kadana Hydro 1 60 31-03-90 21
2 60 02-09-90 21
3 60 03-01-98 13
4 60 27-05-98 13
TOTAL 240
Panam 1 1 24-03-94 17
2 1 31-03-94 17
TOTAL 2
TOTAL HYDRO 547
Wind Mill 10 01-04-09 2
TOTAL Capacity of
GSECL in MW
5006


The category wise installed Capacity of GSECL is as under.

CATEGORY INSTALLED CAPACITY IN MW
Coal & Lignite Based 3720
Gas Based 729
Hydro Based 547
Others-Wind 10
TOTAL OF GSECL 5006









10
GSECL has independently executed the following projects and put under commercial operation.

Name of Power Station Installed Capacity
Gandhinagar TPS Unit-5 210 MW
Wanakbori TPS Unit-7 210 MW
Dhuvaran CCPP I 107 MW
Dhuvaran CCPP II 112 MW
Utran CCPP II 375 MW
KLTPS Unit-4 75 MW


Performance of the GSECL Power Stations:

Performance Parameters 2006-07 2007-08 2008-09 2009-10 2010-11
Gross Generation (Mus) 27534 29241 28388 28525 27775
Auxiliary Consumption (%) 9.48% 9.30% 9.045 8.84% 9.14%
Plant Availability Factor (%) 70.48% 80.29% 77.68% 77.46% 79.75%
Plant Load Factor (%) 67.53% 76.19% 75.32% 72.48% 67.48%
Station Heat Rate 2758 2738 2705 2692 2671
Specific Oil Consumption 2.68 1.74 2.16 1.69 1.90



Total Generation of the GSECL power plants are as shown below from 2006-07 to 2010-11..















11
The important parameters of Plant Availability of the GSECL power plants are as under from 2005-06
to 2009-10.




The Station Heat Rate has shown as under which is continuously decreasing from 2006-07 to 2010-11.





The Plant Load Factor for the Financial Year 2009-10 was 72.48% and for 2010-11 to 2015-16 is
estimated as 73.50%, 77.34%, 77.77%, 77.57%, 78.08% and 77.75% respectively. So, the gross
generation will be 30341 Mus, 31542 Mus, 34743 Mus, 40943 Mus, 42138 Mus and 459lds80 Mus will be
available for sale to GUVNL.




12
Commercial Arrangements

Under the envisaged sector structure, GSECL will sell all its capacity and energy to the holding and
trading entity, GUVNL. This arrangement has been formalized through PPA with GUVNL with
approval of GERC. The key terms of the PPA are:

The PPA determines a two-part tariff with pre-determined per unit capacity and energy
charges. The capacity charges are applicable to GUVNL only up to energy equivalent of
80% PLF.

The station wise tariff in PPA is based on GERCs terms and conditions of tariff assuming a PAF
and PLF of 80% with 13% Return on Equity.


Fuel:

The company has been making continuous efforts to procure high grade coal as well as washed
coal in addition to regular raw coal supply to meet with the requirement laid down by MOEF,
Government of India notification dated 19.07.97, which restricted ash content to 34% for power
stations, located at more than 1000 Kms distance from the source of supply. GSECL has coal linkage
mainly from South Eastern Coalfields Limited and Western Coalfield for its raw coal requirements. As
the Annual Contracted Quantity with SECL is not sufficient for targeted generation, GSECL has
started using WCL coal at other GSECL TPS over and above contracted for Ukai TPS. GSECL has
successfully tied up with the washery operators for the washing of Mail Line Coal.

Also Government of India has allotted Coal block to the Gujarat and Maharashtra, so the
generation company of the Gujarat and Maharashtra i.e. GSECL and MAHAGENCO are jointly
developing the coal mines. For the upcoming new projects GSECL will get the coal from this coal
mines.

Use of Imported Coal is also envisaged in blending with indigenous coal to reduce ash content as
well as wear and tear of the machines. Imported coal price vary with change in International coal
Price Index and Foreign Exchange Rate as per CERC guideline.

Lignite:
Price of Lignite is increased by Rs.65 per MT is levied as Mine Closure charges with effect from
01.04.2010. Further, Clean Energy Cess is also levied at the rate of Rs. 50 per MT with effect from
01.07.2010. Hence lignite cost is considerably increased from the current year.

Gas:
GSECL has started procuring Reliance Gas at Utran and Dhuvaran Gas based plants. Dhuvaran
CCPP I is getting GAIL -APM gas of 1.25 Lacs SCMD and 2.50 Lacs SCMD of GAIL-RLNG and balance
requirement by Spot RLNG at the spot rate. Dhuvaran CCPP II is receiving 4.0 LSCMD of RIL Gas and
balance by Spot RLNG.

135 MW Utran plant is getting supply of 2.0 LSCMD from GAIL APM, 2.50 LSCMD from GAIL RLNG
and balance by Spot RLNG. Utran new 375 MW plant receiving gas from RIL and balance from Spot
RLNG





13

FUTURE EXPANSION

Power is an index of the State Government development. If the state is self sufficient in power
generation, its industrial development, agriculture and other sector will flourish. Government of
Gujarat has rolled out ambitious power plants in the state and GSECL is going to install new Power
Plant in the State.

GSECL has also achieved the financial closure for an amount of Rs. 1775 Crores for its 500 MW coal
based power station from M/S Power Finance Corporation Limited New Delhi and EPC contract of
the project has been awarded to M/S BHEL. This new capacity is expected to be commissioned in
the FY 2012-13.

Also the financial closure for SIkka 2 X 250 MW Imported coal base project is achieved from various
commercial banks on consortium basis and the EPC contract of the Sikka project has been awarded
to BHEL. This new capacity is expected to be commissioned in the FY 2013-14

GSECL is also entrusted with the mandate of capacity addition in the States Power Generation to
cater to the future demand of Power.

Investment Plan

Investment Plan forms a critical part of business plan for a corporate entity and even more so for a
generating company considering the size of projects. Investments in a generating company are
largely in three areas
1. Investments in New Capacity Addition
2. Major Renovation and Modernization Projects
3. Minor R & M.
Need for Investments
The need of investments by a generating company arise mainly due to the following reasons
1. New Capacity Addition
a. Rising Demand - The state of Gujarat has huge latent demand that is likely to be catered
by the distribution companies in the near future.

b. Replacement of old plants Most of the plants owned by GSECL are of considerable
vintage. GSECL needs to look at options to replace the same with modern plants to
improve efficiency and reliability.

2. Efficiency Improvement for Ageing Plants (Renovation & Modernization) In the context of
limited financial resources and in order to bridge the gap between demand and supply,
optimum utilization of existing installed capacity in the country to maximize the generation
through Renovation & Modernization (R&M) of existing power plants is considered to be the
most cost effective option. R&M of these plants will require significant investments that need
to be factored into the investment plan of the company.

Elements of Investment Plan

GSECL projects department has prepared a perspective plan for capacity addition as well as
renovation and modernization of existing stations. This section discusses the investment plan and
thereby, determines the quantum of such investments along with the probable sources of finance.

14
Projects considered for financial projections

The investment plan is a critical component of business plan as it determines the future capital
requirements and tentative sources of finance and therefore, forms the basis for future growth of the
company. As discussed in previous sections, the 10th and 11th five-year plans envisage significant
capacity addition in the state. With regard to the status of the envisage projects, it is likely that a
number of projects will spill over to the next plan period.

Financial projections for the business plan have been arrived at based on a list of projects that are
understood to be in advanced stages of planning is as follows
Projects Considered for Financial Projections

Sr.
No.
Name of the Project Capacity
1 1X500 MW Coal based at Ukai TPS 500 MW
2 2x250 MW Imported coal based at Sikka 500 MW
3 1x375 MW Gas based at Duvaran 375 MW
4 1x800 MW Coal based at Wanakbori TPS 800 MW
5 2x800 MW Coal Based at Sinor 1600 MW
6 2x800 MW Coal Based at Dholera 1600 MW
Total 5375 MW

Renovation and Modernization Projects
A task force consisting of experts from CEA, BHEL and ILK was constituted that surveyed various
power stations across the country to identify the defects/reasons for poor performance and to
prepare action plans to address the problems. Based on the reports of Roving Teams, many State
Electricity Boards (SEBs) prepared schemes for attending to the problems identified and included
them in their annual plans. However, lack of adequate funds with some of the States led to lower
priority being given to such programme though there was an urgent need to attend to the
problems of the thermal stations.

Quantum of Investments
The quantum of investments required for the above capacity addition and R&M projects is as
follows
Capital Expenditure for Financial Projections (Rs in Crores)

Sr. No. Name of the Project Capacity Commissioning
Year
Capital
Expenditure
Capacity Addition
1 1X500 MW Coal based at Ukai TPS 500 MW 2012-13 2366
2 2x250 MW Imported coal based at
Sikka
500 MW 2013-14 2420
3 1x375 MW Gas based at Dhuvaran 385 MW 2013-14 1391
4 1x800 MW Coal based at
Wanakbori TPS
800 MW 2015-16 4000
5 2x800 MW Coal Based at Sinor 1600 MW 2016-17 8000
6 2x800 MW Coal Based at Dholera 1600 MW 2016-17 8000
Total Fund Required For Capacity Addition 26177

15

Major R & M and Minor R & M
1 Ukai 541
2 Gandhinagar 11
3 Wanakbori TPS 734
4 Sikka TPS 21
3 KLTPS 1-3 62
4 Utran 135 Mw 33
5 Ukai Hydro 26
Total Fund required For R & M 1428


FINANCIAL HISTORY AND ANALYSIS

Financial performances of GSECL for the last three years are shown as under.
(Rs. In Crores)
Sr.
No.
Particulars FY 2010-11 FY 2009-10 FY 2008-09 FY 2007-08
1 INCOME
1.1 Revenue from Sale of Power 7641.48 7299.48 7101.22 6204.74
1.2 Other Income 199.58 137.89 222.29 129.13
Total 7841.06 7437.37 7323.51 6333.87
2 EXPENDITURE
2.1 Generation and Other Cost 6180.64 5949.23 6130.54 5240.26
2.2 Employees Cost 393.99 382.51 283.42 367.89
2.3 Administrative and Other Cost 59.81 63.90 215.82 74.22
2.4 Interest 429.07 360.17 278.59 280.44
2.5 Depreciation 579.55 514.41 333.71 277.64
Profit Before prior period
adjustment
197.99 167.14 81.41 93.42
3 Prior Period (18.68) (17.87) (0.59) 25.07
Profit Before Tax 179.31 149.26 82.01 68.34
4 Tax 35.77 25.20 11.48 9.10

Profit After Tax 143.54 124.06 70.53 59.24

The above figure shows that the GSECL performance of the GSECL is continuously improving and as
a result, the profitability is increasing year by year.

Balance Sheet of GSECL as on 31
st
March, 2011
(Rs. In Crores)
Source of Funds Amount Application of Funds Amount
Equity Capital 1458.02 Net Fixed Asset 7114.24
Reserves and Surplus 2054.22 Capital Work in Progress 3040.65
Equity pending Allotment 223.00 Investment 20.52
Secured Loan 4208.42 Net Current Asset (100.10)
Unsecured Loan 2131.65
Total Liabilities 10075.31 Total Asset 10075.31


====

16

FINANCING PLAN

Assumptions for Financial Projections
The Strategic Business Plan can portray a correct picture only if the assumptions that have been
used for the purpose of projections are realistic and based on concrete basis. Keeping the above in
mind, the assumptions for the Business Plan have been developed based on the past trends. In
addition, as the FRP had also developed financial projections for GSECL, the FRP assumptions were
also reviewed. The intent was to develop the projections in a manner that provided stretch targets
for improved performance that was achievable on a reasonable level.

Assumptions related to Operational Performance of the GSECL Generation Stations, the elements of
the Profit & Loss Account and the Balance Sheet which have been used in the projections have
been outlined below:

General Assumptions
1. Rate of Inflation has been assumed at 5% p.a. for the purpose of the projections. The same has
been used to inflate the costs for the future period.

2. FY 2009-10 forms the base year for Business Plan Projections. The actual performance
(Provisional Profit & Loss Account) for the base year has been considered as the basis for the
projections of expenses and revenues of the Company. The Balance Sheet as on 1st April 2010
has been used as the starting point for the purpose of projecting financial statements.

3. The Corporate office expenses have been allocated to Power Stations in proportion to the
Installed Capacity.

4. The operational parameters and the cost & recovery related norms set by the Gujarat
Electricity Regulatory Commission (GERC) in its regulation on Terms and Conditions of Tariff for
Generating Stations have been considered for new additions proposed during the plan
period. For the existing plants which were part of the original GSECL, the cost recovery is
assumed as per the terms of the existing PPA. For all the other transferred generating stations,
as the PPA has not been finalized, recovery has been assumed based on the tariff order issued
by GERC as targeted in the Business Plan.
(A) Operational Parameters
The operational parameters for the GSECL generating stations have been based on the estimates
provided by the generation department. Many of the generating stations owned by GSECL are very
old and have lived past their useful life. So it is a challenge for the company to maintain the
performance of the stations at existing levels and improve it to some extent through R & M and other
means. The assumptions for the Operational Parameters have been outlined below:

(1) Plant Availability Factor (PAF)

The Plant Availability Factor for the projection period is derived after considering past performance,
planned outages of generating stations during the plan period, benefits of R&M and also factoring
in unplanned outages based on previous trend. For the new capacity additions during the plan
period, the PAF is taken as 85%.



17
Power Station 2011-12 2012-13 2013-14 2014-15
PAF: Thermal Generation
Existing Power Plants
Ukai (1-5) 75% 75% 75% 75% 74%
Gandhinagar (1-4) 79% 79% 79% 79% 79%
Gandhinagar 5 80% 80% 80% 80% 80%
Wanakbori 1-6 TPS 85% 85% 85% 85% 85%
Wanakbori 7 80% 80% 80% 80% 80%
Sikka TPS 75% 75% 75% 75% 75%
KLTPS 1-3 75% 75% 75% 75% 75%
KLTPS 4 80% 80% 80% 80% 80%
Dhuvaran (Gas 1) 80% 80% 76% 80% 80%
Dhuvaran (Gas 2) 85% 85% 85% 85% 85%
Utran Gas 80% 80% 80% 80% 80%
Utran Extension 80% 80% 80% 80% 80%
Future Additions
Ukai 6 0% 85% 85% 85% 85%
Sikka - Expansion 0% 0% 85% 85% 85%
Dhuvaran (350 MW) 0% 85% 85% 85% 85%
Wanakbori 8 0% 0% 0% 0% 85%
Hydro Generation
Ukai Hydro 80% 80% 80% 80% 80%
Kadana Hydro 80% 80% 80% 80% 80%

(2) Plant Load Factor (PLF)
The Plant Load Factor is based on the past performance of the generating Stations and it also takes
into account the internal targets set by the company for its operational performance. However for
the new capacity additions it has been assumed that the Plant Load Factor will be equal to the
Plant Availability Factor.

Power Station 2011-12 2012-13 2013-14 2014-15 2015-16
Thermal Generation
Existing Power Plant
Ukai (1-5) 75% 75% 74% 75% 74%
Gandhinagar (1-4) 79% 79% 79% 79% 79%
Gandhinagar 5 85% 85% 85% 85% 85%
Wanakbori 1-6 TPS 85% 85% 85% 85% 85%
Wanakbori 7 85% 85% 85% 85% 85%
Sikka TPS 68% 68% 71% 71% 71%
KLTPS 1-3 66% 75% 75% 75% 75%
KLTPS 4 75% 75% 75% 75% 75%
Dhuvaran (Gas 1) 80% 80% 80% 80% 80%
Dhuvaran (Gas 2) 80% 80% 77% 80% 80%
Utran Gas 80% 80% 80% 80% 80%
Utran Extension 80% 80% 80% 80% 80%
Future Additions
Ukai 6 85% 85% 85% 85% 85%
Sikka - Expansion 0% 0% 85% 85% 85%
Dhuvaran (350 MW) 0% 0% 85% 85% 85%
Wanakbori 8 0% 0% 0% 0% 85%
Hydro Generation
Ukai Hydro 13% 13% 13% 13% 13%
Kadana Hydro 6% 6% 6% 6% 6%

18

(3) Auxiliary Consumption:

The auxiliary consumption for the existing generating stations has been assumed based on the
current level of consumption with some improvement over the Business Plan period. For the new
additions planned, the auxiliary consumption is assumed at the levels specified in the Terms and
Conditions of Tariff.

Power Station 2011-12 2012-13 2013-14 2014-15 2015-16
Thermal Generation
Existing Power Plant
Ukai (1-5) 10.50% 10.50% 10.50% 10.50% 10.50%
Gandhinagar (1-4) 10.60% 10.60% 10.60% 10.60% 10.60%
Gandhinagar 5 9.00% 9.00% 9.00% 9.00% 9.00%
Wanakbori 1-6 TPS 9.00% 9.00% 9.00% 9.00% 9.00%
Wanakbori 7 9.00% 9.00% 9.00% 9.00% 9.00%
Sikka TPS 11.00% 11.00% 11.00% 11.00% 11.00%
KLTPS 1-3 14.50% 14.50% 14.50% 14.50% 14.50%
KLTPS 4 18.00% 18.00% 18.00% 18.00% 18.00%
Dhuvaran (Gas 1) 5.75% 5.75% 5.75% 5.75% 5.75%
Dhuvaran (Gas 2) 3.00% 3.00% 3.00% 3.00% 3.00%
Utran Gas 4.50% 4.50% 4.50% 4.50% 4.50%
Utran Extension 3.00% 3.00% 3.00% 3.00% 3.00%
Future Additions
Ukai 6 8.50% 8.50% 8.50% 8.50% 8.50%
Sikka - Expansion 0.00% 0.00% 9.00% 9.00% 9.00%
Dhuvaran (350
MW)
0.00% 0.00% 3.00% 3.00% 3.00%
Wanakbori 8 0.00% 0.00% 0.00% 0.00% 6.00%
Hydro Generation
Ukai Hydro 0.90% 0.90% 0.90% 0.90% 0.90%
Kadana Hydro 1.70% 1.70% 1.70% 1.70% 1.70%



(4) Station Heat Rate (SHR):

The Station Heat Rate is a very critical factor in determining the performance of the generating
stations. Among other things the SHR of the generating stations also depends on the vintage of the
plants. The GSECL generating stations being very old have a poorer SHR. It would be nearly
impossible for the existing old stations to adhere to the operational performance norms as finalized
by the GERC. Hence, for the old generating stations, the SHR has been assumed based on the
present performance of the stations. However it is felt that there is still some scope available for
improvement in the performance through better maintenance and carrying out.





19
GSECL has projected Trajectory for Station Heat Rate for the next Five years.
Power Station 2011-12 2012-13 2013-14 2014-15 2015-16
STATION HEAT RATE: Thermal Generation
Existing Power Plant
Ukai (1-5) 2824 2815 2805 2796 2786
Gandhinagar (1-4) 2835 2831 2828 2825 2822
Gandhinagar 5 2525 2525 2525 2525 2525
Wanakbori 1-6 TPS 2656 2654 2651 2649 2649
Wanakbori 7 2525 2525 2525 2525 2525
Sikka TPS 3040 3035 3030 3025 3020
KLTPS 1-3 3513 3510 3506 3503 3500
KLTPS 4 3200 3150 3125 3100 3100
Dhuvaran (Gas 1) 1950 1950 1950 1950 1950
Dhuvaran (Gas 2) 1950 1950 1950 1950 1950
Utran Gas 2225 2225 2225 2225 2225
Utran Extension 1850 1850 1850 1850 1850
Future Additions
Ukai-6 0 2425 2425 2425 2425
Sikka - Expansion 0 0 2500 2500 2500
Dhuvaran (350 MW) 0 0 1850 1850 1850
Wanakbori 8 0 0 0 0 2385



(5) Specific Oil consumption:

The Specific Oil consumption is projected on the basis of the past performance of the power station
and earlier approved by GERC. However for the new stations Specific Oil consumption is taken as
per CERC regulations

Power Station 2011-12 2012-13 2013-14 2014-15 2015-16
Ukai (1-5) 3.00 3.00 3.00 3.00 3.00
Gandhinagar (1-4) 1.50 1.50 1.50 1.50 1.50
Gandhinagar 5 3.50 3.50 3.50 3.50 3.50
Wanakbori 1-6 TPS 1.00 1.00 1.00 1.00 1.00
Wanakbori 7 3.50 3.50 3.50 3.50 3.50
Sikka TPS 4.25 4.25 4.25 4.25 4.25
KLTPS 1-3 3.50 3.50 3.50 3.50 3.50
KLTPS 4 5.25 5.25 5.25 5.25 5.25
Ukai 6 2.00 1.00 1.00 1.00 1.00
Sikka - Expansion 0.00 0.00 2.00 1.00 1.00
Wanakbori 8 0.00 0.00 0.00 0.00 2.00



(B) Fuel related Assumption:

(1) GCV of Fuel:

Coal: Weighted average GCV of the Indigenous, Washed and Imported on the basis of the past
receipt of the coal has been considered and is outlined below.

20

Power Station 2011-12 2012-13 2013-14 2014-15 2015-16
Ukai (1-5) 3,957 3,957 3,957 3,957 3,957
Gandhinagar (1-4) 4,358 4,358 4,358 4,358 4,358
Gandhinagar 5 4,358 4,358 4,358 4,358 4,358
Wanakbori 1-6 TPS 3,906 3,906 3,906 3,906 3,906
Wanakbori 7 3,906 3,906 3,906 3,906 3,906
Sikka TPS 3,749 3,749 3,749 3,749 3,749
KLTPS 1-3 2542 2542 2542 2542 2542
KLTPS 4 2542 2542 2542 2542 2542
Ukai 6 0 4200 4200 4200 4200
Sikka - Expansion 0 0 0 5600 5600
Wanakbori 8
0 0 0 0 4200


Oil: Weighted average GCV of the FO and LDO received during 2009-10 is considered for the
projection and are as below.


Power Station 2011-12 2012-13 2013-14 2014-15 2015-16
Ukai (1-5) 10,469 10,469 10,469 10,469 10,469
Gandhinagar (1-4) 10,509 10,509 10,509 10,509 10,509
Gandhinagar 5 10,509 10,509 10,509 10,509 10,509
Wanakbori 1-6 TPS 10,526 10,526 10,526 10,526 10,526
Wanakbori 7 10,526 10,526 10,526 10,526 10,526
Sikka TPS 10,269 10,269 10,269 10,269 10,269
KLTPS 1-3 10,603 10,603 10,603 10,603 10,603
KLTPS 4 10,900 10,900 10,900 10,900 10,900
Ukai 6 - 10,469 10,469 10,469 10,469
Sikka - Expansion - - 10269 10,269 10,269
Wanakbori 8 - - - - 10,526


Gas: Weighted average GCV of the gas received during the last period 2009-10 is considered as a
base for the projection.

Power Station 2011-12 2012-13 2013-14 2014-15 2015-16
Dhuvaran (Gas 1) 9,606 9,606 9,606 9,606 9,606 9,606
Dhuvaran (Gas 2) 9,700 9,700 9,700 9,700 9,700 9,700
Utran Gas 9,460 9,460 9,460 9,460 9,460 9,460
Utran Extension 9,208 9,208 9,208 9,208 9,208 9,208
Dhuvaran 3 - - - 9,700 9,700 9,700

Fuel Prices:

Fuel price projected for the period 2011-12 to 2015-16 on the basis of the fuel price
actually incurred for 2009-10 and it is at Annexure-II.

21
Revenue Related Assumptions:
Revenue from Sale of Power

It has been assumed that the revenue from sale of power generated by the stations will be
based on the latest tariff order issued by GERC for the performance levels as projected in the
Business Plan. This revenue will be net of the other income that is earned by the individual
generating stations as a infirm power or UI gain/loss.

In case of the PPA governed generating stations, the revenue is calculated as per the terms of
the existing PPA.

For the new additions proposed during the plan period, revenue is calculated as per the Terms
and Conditions issued by the GERC.

Other Income:
Other Income comprises of revenues such as Income from administrative charges of Fly Ash, Loans,
Advances to staff etc, Income from Trading (Sale of stores, scrap etc), Gain on sale of Fixed Assets,
Income from Staff welfare activities, Excess found on Physical verification of fuel and Miscellaneous
Receipts - (i.e. Rentals from Staff Quarter, Firm, Contractors, Income from water charges from
employees, Sale of Tender Forms, Registration Fees, Penalties and other Miscellaneous Income).
Escalation of 5% over the previous year has been assumed for projecting the other income during
the plan period.
Expenditure Related Assumptions:
(1) Repair & Maintenance:-

Expenses projected at an escalation of 5.00% for the period from 2010-11 to 2015-16 on the
basis of actual expenditure of 2009-10 and the actual payment to be done for LTSA.

(2) Employee Cost:-

Expenses projected at an escalation of 10.00% for the period from 2010-11 to 2015-16 on the
basis of actual expenditure of 2009-10 with the consideration of regular increment of 3.00%
and normal rise of DA.

(3) Administrative and General Expenses:

Expenses projected at an escalation of 5.00% for the period from 2010-11 to 2015-16 on the
basis of actual expenditure of 2009-10.

(4) Depreciation:-

Previously the GEB was governed by the provisions of the Indian Electricity (Supply) Act, 1948.
The rates mentioned in this act were used for calculation of the depreciation on its assets.
After the enactment of the Electricity Act 2003 and with the corporatization of the
companies they will also be governed by the provisions of the Companies Act as well as the
EA 2003.Also CERC has issued schedule for Rate of Depreciation in line with the Company
Act 1956. Hence depreciation for the business plan period is considered @ 5.28% on the
average of the opening and closing gross block of assets.

(5) Interest on Loan:-
The tenure for repayment of the loans is assumed as 10 years and the rate of interest as
10.50% which is the weighted average of interest rates of all the loans. For the loans that
pertain to the existing and transferred loan of GUVNL, the terms of the loans are known and
hence the interest and repayment is computed based on the same.

22

Interest and Finance Charges New Loans

GSECL will require significant amount of debt financing considering the capacity addition
plans. For the projections, interest rate of 9.50% & 10.75% has been assumed for capital
expenditure financing for capacity additions as well as renovation & modernization projects.
The main sources of finance, as identified by finance department of GSECL, are Commercial
Banks, PFC and REC.


Financial Projections for Business Plan Period
Energy Generation
Based on the projections for Plant Load Factor, Auxiliary Consumption and Commissioning Schedule
of Future Additions, the Net Generation for existing as well as future stations is determined.


Net Generation (MU) 2011-12 2012-13 2013-14 2014-15 2015-16
Thermal Generation
Existing Power Plants
Ukai TPS 5,012 4,998 4,998 4,998 5,012
Gandhinagar 1-4 4,094 4,083 4,083 4,083 4,094
Gandhinagar 5 1,427 1,423 1,423 1,423 1,427
Wanakbori 1-6 8,561 8,538 8,538 8,538 8,561
Wanakbori 7 1,427 1,423 1,423 1,423 1,427
Sikka 1,276 1,272 1,329 1,329 1,332
KLTPS 1-3 1,066 1,208 1,208 1,208 1,211
KLTPS 4 405 404 404 404 405
Dhuvaran 7 706 704 704 704 706
Dhuvaran 8 767 764 736 764 767
Utran 135 MW 906 904 904 904 906
Utran 375 MW 2,553 2,546 2,546 2,546 2,553
Sub-total 28,200 28,267 28,295 28,324 28,401
Future Additions
Ukai 6 0 2,567 3,407 3,407 3,416
Sikka - Expansion 4 0 0 2,553 3,388 3,397
Dhuvaran (350 MW) 0 0 2,041 2,708 2,716
Wanakbori 8 0 0 0 0 1,872
Sub-total - 2,567 8,000 9,503 11,401
Hydro Generation
Ukai Hydro 345 344 344 344 344
Kadana Hydro 125 125 125 125 125
Sub-total 471 469 469 469 469
Total Net Generation 28,670 31,303 36,764 38,296 40,271



Variable Cost (Expense)
Based on the fuel costs, auxiliary consumption and station heat rate, the Expense of variable cost
per unit for each of the stations works out as follow:



23



Sr. No.
Variable Cost
(Rs. / kWH) 2011-12 2012-13 2013-14 2014-15 2015-16
1 Ukai TPS 1.79 1.79 1.78 1.78 1.77
2 Gandhinagar 1-4 2.44 2.43 2.43 2.43 2.42
3 Gandhinagar 5 2.18 2.18 2.18 2.18 2.18
4 Wanakbori 1-6 2.13 2.13 2.13 2.13 2.13
5 Wanakbori 7 2.07 2.07 2.07 2.07 2.07
6 Sikka 2.78 2.77 2.77 2.76 2.76
7 KLTPS 1-3 1.30 1.30 1.30 1.30 1.30
8 KLTPS 4 1.36 1.35 1.34 1.33 1.33
9 Dhuvaran 7 2.48 2.48 2.48 2.48 2.48
10 Dhuvaran 8 2.39 2.39 2.39 2.39 2.39
11 Utran 135 MW 2.46 2.46 2.46 2.46 2.46
12 Utran 375 MW 2.07 2.07 2.07 2.07 2.07
13 Ukai 6 1.70 1.79 1.88 1.97 2.07
14 Sikka Expansion 0 0 1.79 1.88 1.96
15 Dhuvaran (350 MW) 0 0 2.38 2.50 2.62
16 Wanakbori 8 0 0 0 0 1.63
Total Per Unit Cost 2.14 2.11 2.23 2.29 2.29

Total Fuel Cost projected

(Rs. In Crores)
Sr.
No.
Name of Power
Stations
2011-12 2012-13 2013-14 2014-15 2015-16
1 Ukai TPS 899 894 891 888 887
2 Gandhinagar 1-4 997 993 992 991 993
3 Gandhinagar 5 312 311 311 311 312
4 Wanakbori 1-6 1,826 1,820 1,818 1,816 1,821
5 Wanakbori 7 296 295 295 295 296
6 Sikka 354 353 368 367 367
7 KLTPS 1-3 139 157 157 157 157
8 KLTPS 4 55 54 54 54 54
9 Dhuvaran 7 175 175 175 175 175
10 Dhuvaran 8 183 183 176 183 183
11 Utran 135 MW 223 223 223 223 223
12 Utran 375 MW 529 527 527 527 529
13 Ukai 6 0 449 626 657 691
14 Sikka - Expansion 0 0 995 1374 1446
15 Dhuvaran (375 MW) 0 0 401 533 534
16 Wanakbori - 8 0 0 0 0 310
Total Cost 5,989 6,434 8,008 8,549 8,978


Total Projected Revenue
The revenue is calculated on the basis of GERC approved parameters and the
same projected on the basis of latest GERC tariff order and for the new projects
parameters as per Terms and condition of GERC regulation is implemented.



24
(Rs in Crores)
Revenue 2011-12 2012-13 2013-14 2014-15 2015-16
Ukai TPS 1,118 1,148 1,186 1,198 1,200
Gandhinagar 1-4 1,245 1,242 1,241 1,241 1,244
Gandhinagar 5 401 401 402 403 405
Wanakbori 1-6 2,171 2,206 2,254 2,271 2,274
Wanakbori 7 383 383 384 385 387
Sikka TPS 475 474 488 487 487
KLTPS 1-3 351 370 369 367 366
KLTPS 4 178 175 172 170 167
Dhuvaran CCPP I 231 226 225 230 227
Dhuvaran CCPP II 250 249 241 247 247
Utran 135 MW 267 268 269 269 270
Utran Expansion 375 MW 820 809 801 793 789
Ukai -6 - 912 1,136 1,158 1,184
Sikka Expansion - - 1,451 1,877 1,939
Dhuvaran CCPP III - - 734 846 840
Wanakbori 8 - - - - 621
Ukai Hydro 24 25 25 25 25
Kadana Hydro 65 64 63 62 62
Total Revenue

7,980 8,952 11,441 12,031 12,733



Profit and Loss Account
On the basis of above working profit and loss of GSECL is worked out as under.

(Rs in Crores)
Year ending 31 March 2011-12 2012-13 2013-14 2014-15 2015-16
Income
Revenue from Generation of Power 7,980 8,952 11,441 12,031 12,733
Other Income 148 148 148 148 148
Total Income 8,128 9,100 11,589 12,179 12,881
Expenses
Fuel Expenses 5,989 6,434 8,008 8,549 8,978
O & M Expenses 918 1,075 1,341 1,447 1,598
Repairs & Maintenance 303 352 440 461 483
Employee Costs 436 514 623 685 771
Admin & General Expenses 73 91 114 119 131
Water Charges 107 118 165 181 213
Total Expenses 6,907 7,509 9,350 9,996 10,576
PBDIT
1,222 1,591 2,240 2,183 2,305
Interest & financial Charges 421 562 928 845 877
Depreciation 534 680 910 921 992
Profit Before Tax
(Before Other Adjustments)
267 349 401 417 436
Taxation 53 70 80 83 87
Profit after Tax (PAT) 214 279 321 334 349


Profitability has direct linkage with the addition of new plants. This is primarily on account of savings
available in operations of these plants vis--vis the norms approved by GERC. However, it needs to
be noted that the same profits would not be available in case there is non-performance of any
generation stations.


25
It has been assumed that GSECL would be able to manage all future capacity additions with the
existing level of workforce (assuming that retiring employees would get replaced by relatively lower
cost fresh employees) and existing manpower costs (suitably inflated). Any increase on this account
would therefore result in reductions of any margins available on this account.


Projected Balance Sheet

The projected Balance Sheet of GSECL is shown for the period of 2011-12 to 2015-16
and the assumptions are in Annexure XVII.


ASSETS 2011-12 2012-13 2013-14 2014-15 2015-16
Gross Fixed Assets 12,976.84 13,242.74 17,915.89 18,304.79 22,324.79
Less : Accum.Depreciation 4,264.66 4,944.75 5,855.10 6,775.63 7,767.58
Net Fixed Assets (A) 8,712.18 8,297.99 12,060.79 11,529.16 14,557.21
Capital Works-in-Progress (B) 5,171.01 9,880.26 10,596.01 15,727.11 15,627.11
Investments 20.52 20.52 20.52 20.52 20.52
Total other Assets (C) 20.52 20.52 20.52 20.52 20.52
Stocks 490.85 547.04 681.10 720.90 757.90
Net Stocks 490.85 547.04 681.10 720.90 757.90
Receivables against supply of Power 1,383.08 1,491.98 1,906.89 2,005.08 2,122.20
Net Receivables from Sale of Power 1,383.08 1,491.98 1,906.89 2,005.08 2,122.20
Cash and Bank Balance 0.72 0.73 0.75 0.76 0.78
Loans and Advances 9.09 9.09 9.09 9.09 9.09
Loan to Joint Venture Company 119.77 128.67 160.16 170.98 179.56
Fuel Supplies 242.63 281.88 352.40 369.02 386.47
Loans - Advances for O&M
Supplies/Works
50.52 67.46 111.37 101.44 105.29
Loans - Advances for Staff and others 83.25 87.41 91.78 96.37 101.19
Total Current Assets (D) 2,379.91 2,614.26 3,313.54 3,473.64 3,662.48
Total Assets (A+B+C+D+E)
16,283.61 20,813.02 25,990.86 30,750.43 33,867.32
LIABILITIES 2011-12 2012-13 2013-14 2014-15 2015-16
Equity Capital 1,979.91 2,967.13 4,038.22 5,140.22 5,922.22
General Reserve 997.06 1,276.37 1,597.74 1,931.63 2,280.62
Capital Reserve 1,556.30 1,555.30 1,805.30 1,805.30 2,055.30
Total Net worth (A) 4,533.27 5,798.80 7,441.26 8,877.14 10,258.14
Existing Loans - GSECL 7,784.26 11,772.19 15,355.00 18,730.00 20,484.00
Loans from Residual GEB assigned 1,044.87 940.38 846.35 761.71 685.54
Total Long Term Loans (B) 8,829.13 12,712.58 16,201.35 19,491.71 21,169.54
Bill Discounting Under LC 40.27 42.29 44.40 46.62 48.95
Cash Credit Line 132.99 146.29 160.92 177.01 194.71
Other Working Capital Borrowings 1.31 1.44 1.58 1.74 1.91
Total Short Term Loans (C) 174.57 190.02 206.90 225.37 245.58
Fuel Related Liability 367.50 348.88 325.32 285.58 229.86
Liability for Capital Supplies/Works 26.25 27.56 28.94 30.39 31.91
Liability for O&M Supplies/Works 57.12 59.98 62.98 66.12 69.43
Staff related liabilities 33.23 34.89 36.64 38.47 40.39
Deposits and retentions 263.24 276.40 290.22 304.73 319.97
Other Current liabilities 1,825.35 1,181.86 1,205.49 1,229.60 1,291.08
Provisions for Liability 173.66 182.34 191.46 201.03 211.08
Total Current Liabilities (D) 2,746.35 2,111.90 2,141.04 2,155.93 2,193.73
Total Liabilities (A+B+C+D) 16,283.32 20,813.29 25,990.55 30,750.16 33,866.99


26
SWOT ANALYSIS

SWOT analysis refers to a scan of the internal and external environment of an organization. Such
a scan highlights an organizations strengths & weaknesses (internal scan) and the opportunities
& threats (external scan) from the business environment. The SWOT analysis enables an
organization to develop a strategy that seeks to address its weaknesses and build on its strengths
to capitalize on the opportunities available to it.

The SWOT analysis provides an opportunity to understand an organizations capabilities and
resources and therefore, provides key input to strategy formulation and selection. The SWOT can
also be utilized for organizational development activities as it brings to fore the areas that need
improvement.


Approach
The SWOT analysis for GSECL has been carried out based on our assessment of the respective
components that is Strengths, Weaknesses, Opportunities and Threats. Strengths and
weaknesses of GSECL have been identified based on operational and financial performance of
the company and our assessment of key business processes and human resource aspects.

Opportunities and threats have been identified have been identified after analyzing the business
environment, potential competition and the issues and challenges that face the company in the
market that is evolving rapidly and will continue to do so in the foreseeable future. The
companys business environment has been analysed in terms of sector reform and regulations,
EA 2003, Government of Gujarat role in the sector and business relationship with other important
market players.

Strengths of GSECL
1. Clean Balance Sheet As per the proposed Financial Restructuring Plan, the
accumulated losses of all the sector entities will be set off against reinstatement of
assets and therefore, all the sector entities will start operations will clean balance
sheets. The clean balance sheet provides an opportunity to GSECL to leverage its
balance sheet.
SWOT Analysis
Strengths Weaknesses
Internal Scan
Opportunities Threats
External Scan
Environmental Scan


27

2. Financial Management
a. Interest and Financing Costs - The average interest rate of debt liability allocated
of GSECL is to be around 10.50%. Top management and finance managers of the
GSECL have been able to restructure high cost debts of about Rs 1200 crores leading
to a saving of Rs 80 crores.

b. Fuel Costs are the biggest cost component for GSECL contribution about 78% of the
total costs. GSECL has been making persistent efforts to reduce the fuel costs (per Kcal)
and has achieved significant reductions in cost.

c. The fuel cost reduction measures include washed coal utilization, imported coal usage,
persistent negotiations with suppliers. Such steps and the results therein indicate a
strong understanding of the markets and excellent negotiations.

3. Operations Know-how GSECL boasts a strong operational know how in form of
experienced engineers at power stations. GSECL rotated its engineers between power
stations and also to corporate offices, imparting greater technical knowhow and
widening the skill base of the concerned.
4. Entrepreneurial Orientation GSECL management has taken significant strides in
new areas like captive mining, usage of washed coal, negotiating with suppliers,
bringing in better practices, fly ash utilization and have also been able to achieve year-
on-year operational targets to an admirable extent. Such entrepreneurial top
management shall be a key strength for GSECL in the future as well.
Weaknesses of GSECL
1. Accounting and Record Management Departmental record keeping
systems of GSECL have developed into stand-alone systems as inter departmental
data validation has not been maintained. Therefore, the information available with
various departments, especially with regard to numeric data, does not match and
the differences are seldom reconciled. In order to be able to take quick & firm
decisions and to monitor the progress, management as well as the executives of the
company require accurate information. Therefore, this is an area where significant
improvements required.

2. Legacy Systems The IT systems implemented at GSECL are again stand alone
and of considerable vintage. The same needs to be updated with the latest systems
for integrated information management.

3. Lack of Commercial Focus in Business Units Though the technical
knowhow amongst power stations staff is commendable, the focus of operations has
been limited to technical performance of the stations. The same is a result of lack of
commercial focus in state electricity boards. Now, with competitive forces gaining
ground and introduction of financial mechanism to incentivize grid discipline (ABT
Regime), the operating as well as managing staff at power stations needs to be
aware and responsive to commercial.

4. Operations and Maintenance Performance Inspite of significant know how,
the operating performance of the power stations has not been up to the mark. A
large part of the reason for sub-optimal performance is the vintage of the plants.
Other than that lack of sufficient spare capacity and paucity of funds resulted in

28
poor operation and maintenance practices, which have now become a vicious
circle.

Opportunities for GSECL
1. Sale of power outside Gujarat The Electricity Act, 2003 provides for open
access to transmission network and identifies trading as a separate activity. This
provides significant opportunity for GSECL to sell power outside the state to other
utilities or even to high value consumers. For the same, the company might look at
tying up sale of traded power through the state owned power trader, GUVNL.

2. Joint Ventures present a suitable opportunity to bring in private and public
partnership in generation. Specific advantages of joint ventures include reduction in
capital requirements for power sector, greater efficiency of private management
and perceived payment security to private investors. Joint ventures can also be
explored with other state utilities especially the ones which have fuel reserves.

3. Captive Mining Fuel quality, cost and reliability are major issues facing the
power sector, especially generating companies that are largely dependent on coal.
Under the Coal Mines (Nationalisation) Act, 1973 coal mining is exclusively reserved
for the public sector. By an amendment to the Act in 1976, two exceptions to this
policy were introduced viz. (i) captive mining by private companies engaged in
production of iron and steel and (ii) sub-lease for coal mining to private parties in
isolated small pockets not amenable to economic development and not requiring
rail transport, were allowed. The Act was further amended w.e.f. 9.6.1993 to allow
private sector participation in coal mining for generation of power, for washing of
coal obtained from a mine or for other end uses to be notified by Government from
time to time. This presents an opportunity for GSECL to bid for suitable mining blocks
as the same improve the energy security position of the state and likely costs too.

4. Fly Ash Utilisation A useful bye-product, ash in the form of fly ash, bottom or
pond ash is available at the Coal and Lignite based thermal Power Plants. Ash in its
natural form may not be free from likely environmental hazards. The protection from
environmental hazards that can be anticipated necessitate ash utilization in a variety
of ways. It needs to be utilized in various ways and applications. Further, Indigenous
coal has high ash content, sometimes as high as 40%. Therefore, ash handling is a
major area of concern for most coal based power stations. Till recently, fly ash was
utilised for landfills, raising ground levels and land reclamation as well as for cement
production. However, none of these activities were in economic interest of the
generating companies. Going forward, GSECL needs to look at recovering handling
and administration costs for fly ash disposal.

5. Integrated Information Management The erstwhile GEB has initiated the
process of implementing an end-to-end IT solution for the sector. The solution will now,
post unbundling, be implemented across all companies on a common platform. The
implementation presents an opportunity to change the way GSECL does business as
it holds the key to its effectiveness and the efficiency improvements it brings about
and therefore, should be taken seriously. A key component of the implementation
process is the set of teams formed to assist TCS, the implementation agency, in
studying the existing system and arriving at the re-engineered business processes.


29
Threats for GSECL
1. Captive Power Generation Generation de-licensing and open access to
transmission that is allowed by EA 2003 would provide the opportunity for large
consumers to build their own plants to meet their consumption needs and sell excess
power in the market. The national tariff policy further accentuates the threat by
suggesting captive power plants as a source of power for state utilities. This is a real
threat to GSECL as captive generation is economically feasible and provides
significant financial benefit compared to the industrial tariffs in the state. The new
provision for group captive generation has heightened the threat substantially.
GSECL will mainly be affected due to lower PLF and therefore, lower efficiency of the
power plants.

2. Cheaper Sources of Power With significant capacity addition across the
country, GSECL plants are likely to fall further below in the merit order and therefore,
face serious competition. Considering the distances from coal sources, limited hydro
potential and increasing process of gas, GSECL needs to take steps to reduce fuel
costs and improve operational efficiency in order to be able to face competition.
Traded power sought as an opportunity in previous section, doubles up as a threat to
GSECL.

3. Regulatory Provisions As the regulatory provisions get stricter by the year,
GSECL needs to ensure that such targets are met, thereby avoiding financial losses
due to under performance.

4. Fuel Supply
a. Coal - With the opening up of generation function to private sector and capacity
addition by state and central sector, Coal India Limited and Neyveli Lignite
Corporation Limited, the major producers of coal and lignite in the public sector, are
experiencing resource constraints. The coal reserves of the country are enough to last
for another 230 years. However, the production is abysmally low and simply not
enough to meet the growing demand. The much-needed reforms initiated in the
coal sector have hardly found takers within the industry. It is unlikely that the state
owned companies will either give up their monopoly or bring in the required
investments or efficiencies into the sector.

b. Gas has emerged as a new frontier for energy supply in the country. The demand for
growth is likely to grow rapidly for next decade at the least. Current supply positions,
however, are extremely limited. Availability of gas, however, has also been tackled
through imports of RLNG at Dahej and proposed imports from other LNG terminals
under development. Development of transportation infrastructure and pricing
mechanism appear to be critical issues other than availability.

c. The above developments are likely to have an impact on fuel prices as well as
quality. Therefore, fuel prices, quality and assurance appear to significant forces of
threat for GSECL.

5. Environment Regulations Changes in environmental regulations could create
financial burdens to GSECLL that may render its plants, especially coal-fired plants,
less competitive due to higher operating costs to control emissions, the costs of
rehabilitation.