The profit margins of Gujarat Urja Vikas Nigam Limited (GUVNL), the state’s apex electricity body, fell for the third year in a row, with the company reporting a profit of Rs 64.55 crore for the fiscal year 2021-22, 32% lower than the previous year.
According to the annual report tabled in the Gujarat Assembly during the recently concluded budget session, the company’s bottom line, which is in the business of bulk purchase and sale of power, appears to have been impacted by expensive electricity purchased during the year.
In 2019-’20, the GUVNL reported a profit of Rs 106.29 crore, which dipped to Rs 94.88 crore during the pandemic in 2020-’21.
GUVNL reported a 26.86% increase in revenue from power sales compared to the previous year, totaling Rs 11,519 crore. However, there was a simultaneous 28.29% increase in power purchase expenditure, which was Rs 12,242.59 crore in 2021-’22.
“The per unit power purchase cost increased to Rs 5.1 than the previous year, while the per unit realisation increased to Rs 5 from Rs 4.59 in the previous year,” the company stated in the report.
Citing “post-pandemic recovery”, the GUVNL stated that there was a surge in power demand from September 2021 along with constraints in supply caused due to heavy rain in mining areas and exorbitant increase in cost of imported coal, which the GUVNL said went up from USD 87 per metric tonne in April 2021 to USD 200-215 metric tonne in November 2021.
“In view of exorbitant increase in imported coal price, the cost of power from imported fuel projects increased considerably during the year,” GUVNL stated adding that it had to arrange power from short-term markets and exchanges.
During the fiscal year 2021-22, GUVNL purchased 14,647 million units from power exchanges at an average rate of Rs 5.2 per unit, compared to 6,166 million units at Rs 3.57 per unit in 2020-21. According to the company, as part of its strategic cost-cutting measures, GUVNL purchases power from short-term markets when the rate of power available in the market is lower than the rate of power available in its own generating stations.
The consolidated annual accounts of GUVNL and its six subsidiaries, one associate — Gujarat Industries Power Company Ltd — and a joint venture (Mahaguj Collieries Ltd), show a similar trend where profits for the year 2021-22 fell by 11 per cent to Rs 1,711 crore.
Investments in IL & FS and other entities
According to GUVNL’s annual report, GEB’s Contributory Provident Fund Trust, which manages the PF accumulations of all GUVNL and its six subsidiaries, has invested Rs 165 crore from its corpus in IL & FS Group Companies such as IL & FS Transport Network Ltd, IL & FS and IL & FS Financial Services Ltd.
Pointing that IL & FS Group companies stopped payments of interest to the trust after passing through a financial crisis in 2018, GUVNL stated, “Full recovery of principal and interest from IL&FS has become doubtful for the Trust. Therefore, GUVNL being the parent establishment of the Trust, has withheld during financial year 2019-’20, a total amount of Rs 182 crore (towards principal and interest) from monthly power purchase bills of seven IL&FS Group companies, with whom the company is having Power Purchase Agreements. Subsequently, GUVNL has transferred this entire retained amount of Rs 182 crore to the Trust in March 2020,” the report added.
GUVNL also stated that the Trust invested an additional Rs 173 crore from its corpus in Punjab State Industrial Development Corporation Ltd, Punjab Finance Corporation Ltd, Reliance Capital Ltd, Reliance Home Finance Ltd and Dewan Housing Finance Ltd.
“Due to financial crisis in these organisations, they have stopped payment of interest and repayment of principal to the Trust,” GUVNL stated adding that so far only Rs 39 crore has been recovered from DHFL.