Distribution companies with best profitability (state discom) - Uttar Gujarat Vij Company

The Government of Gujarat unbundled and restructured the Gujarat Electricity Board with effect from April 1, 2005. The generation, transmission and distribution businesses of the erstwhile Gujarat Electricity Board were transferred to seven successor companies, namely Gujarat Urja Vikas Nigam (GUVNL)- the holding company, Gujarat State Electricity Corporation (GSECL)- generation company, Gujarat Electricity Transmission Corporation (GETCO)- transmission company and four power distribution companies namely, Dakshin Gujarat Vij Company (DGVCL), Uttar Gujarat Vij Company (UGVCL), Paschim Gujarat Vij Company (PGVCL) and Madhya Gujarat Vij Company (MGVCL).

Key Strengths
- Consistent track record of profitable operations aided by cost reflective tariffs, healthy cash collections and adequate subsidy support from the state government.
- Comfortable cost coverage ratio and capital structure.
- Healthy cash collections from the consumers, also aided by satisfactory AT&C loss levels which remained at 9 per cent for FY 2017.
- Fuel and Power Purchase Cost Adjustment (FPPCA) framework is operational, allowing an increase in cost to be recovered from the consumers quarterly.
- Regulatory clarity in place.
- Timely submission of audited accounts by September, 2017.

Key Concerns
Subsidy dues receivable from GoG built-up from Rs 7.27 billion as on March 31, 2010 to Rs 46.64 billion as on March 31, 2017, due to lower budgetary allocation than actual subsidy claims.On annual basis, the actual subsidy received has always been 100 per cent of the budgetary allocation and in FY 2016-17, GUVNL has stopped accounting for the unpaid subsidy. However, the budgetary allocation has been lower than the actual claim leading to an increase in the outstanding subsidies.

Key Actionable
- Continue to maintain low level of AT&C losses as well as high collection efficiency.
- To improve subsidy collection levels and clear the pending subsidy claims from the Government of Gujarat through higher budget provision going forward. ò Leverage benefits available under UDAY.