Dear Shareholders,                                      aspect of quality as important. But, “Quality of
                                                        Service” ranks first and is supreme. Total
It gives me great pleasure to welcome you all to        commitment to quality is the hallmark of our
this 72nd Annual General Meeting of your                approach. Through quality of systems, quality of
Company.                                                technology and its operation, quality of
                                                        governance, quality of people, quality of power,
The year under review was marked by eventful
                                                        and quality of environment, we aim at improving
developments in India's power industry and by
                                                        the quality of service to our customers. And,
several achievements and accomplishments by
                                                        unflinchingly committed we are to achieve the
the Company. The year also saw the consumer
                                                        best of customer satisfaction and set high service
base of the Company crossing the two million
                                                        standards in the Indian electricity industry.
mark covering a population of nearly 9 million.
                                                         The Economy
The electricity industry is at the threshold of
radical restructuring and reform—from an almost         The year just completed was a year of
                    totally government-controlled,      challenges: the tragedy and disaster caused by
                     monopolistic environment to a      the devastating earthquake in Gujarat and the
                     more competitive, customer-        slow-down caused by under-performance of
                     oriented culture; from a           several segments of the economy. The Gross
                       politically-driven commercial    Domestic Product (GDP) declined to 5.2 per cent
                           approach to transparent      in 2000-01 from 6.4 per cent achieved in the
                             and objective regulation   previous year. Poor agricultural performance and
                              aimed at customer         low growth in the manufacturing and services
                              satisfaction through      sectors resulted in one of the lowest growth rates
                              performance and           in recent years. After a healthy recovery to 8.5
                              growth.                   per cent in the previous year, growth of the
                                                        manufacturing sector declined to 5.6 per cent.
                             In our constant
                                                        Low agricultural growth of a meagre 2.7 per cent
                             drive for excellence
                                                        reportedly depressed industrial growth. The
                             and quest for
                                                        utilities sector of electricity, gas and water supply
                             improvement, we
                                                        too registered lower growth of 4.8 per cent, down
                            have attached utmost
                                                        from 5.2 per cent. On the positive side, foreign
                          importance to all aspects
                                                        exchange reserves improved further to over US$
                         of quality in our business
                                                        43 billion.
                        operations. We not only
                        subjected our service           The industrial sector has not responded to the
                       practices and standards to       various measures introduced in the investor- and
                       the ISO 9002 certification       industry-friendly budget presented by the Union
                       programme, but have also         Finance Minister. The revolutionary budget
                       been constantly raising our      proposals announced by the Union Finance
                             benchmarks on our          Minister included: bold and wide-ranging tax
                             own. We treat every        reforms, labour law reforms, further development


of the capital market and further increase in limits   power utilities with scarce resources are hardly in
for foreign institutional investors—all path-          a position to contribute to growth. The sector is in
breaking steps aimed at second generation              deep crisis and on the verge of collapse. The
reform of India’s economy. The Reserve Bank of         present framework of the industry has failed to
India continues to adopt progressive monetary          deliver.
policies by cutting down interest rates to
stimulate growth. The industrial credit offtake,       It is in this context that the authorities have
however, continues to remain at a low ebb,             recognized the need to introduce structural
leading, in turn, to not a very optimistic growth      reforms in the power sector. There seems to be a
outlook for the current year.                          consensus that any exercise to restructure the
                                                       industry should begin with toning up the power
 The Power Sector                                      supply and distribution. If we ensure that the
                                                       distribution is managed well and right payments
With the present financial health of State             for the power supply are collected on time, all
Electricity Boards, any significant private            those engaged in the process of generation,
investments in the power industry, in the short        transmission and supply of electricity would be
and medium terms, are unlikely. Therefore, for         assured of adequate returns on their
the economy to stage a recovery and sustain the        investments. When that happens, investments
tempo of its growth, there is a dire need to step      will begin to flow into the sector. This calls for
up Government investment in a critical area like       addressing critical issues affecting the industry
power sector.                                          like transmission and distribution losses, proper
                                                       pricing, collection
Further, for the power sector to support the           of bills, productivity
national goal of achieving 8 to 9 per cent growth      of employees and
                                                                                   EQUITY & RESERVES
                                                                                   (Rs. in crores)
for the economy, we need to have                       quality of power               Equity
commensurate additional generating capacity,

besides matching transmission and distribution

facilities. According to the 16th Electric Power       It is heartening to

Survey conducted by the Union Power Ministry,          note that the
about 1,07,000 MW of additional generation             authorities at the

capacity would be needed during the period             highest level have

2002-12 to meet the growing requirement of             recognized these
power. This appears rather difficult, perhaps          systemic and
impossible, to achieve keeping in view our             organizational
performance record of the last 10 years when we        weaknesses and
added less than 40,000 MW. Unmet gaps                  have been
between demand and supply, however, would              deliberating on
have a cascading effect with under-utilization of      effective measures
                                                                                                                       00-01 138
                                                                                              99-00 138
                                                                                             98-9 9 138
                                                                                            97-9 8 138
                                                                                           96-97 138

national assets—large industrial projects,             to be taken in order
information technology endeavours including the        to ensure that such
Internet, the rural economy and other                  actions command
infrastructural facilities. Existing State sector      the authority of law.


                              The Ministry of            x   Profit after tax rose to Rs. 321 crore, a rise
  (Rs. in crores)             Power of                       of 5% from last year's Rs. 307 crore.
                              Government of
                                                 2763    x   Dahanu Power Station achieved an
                              India, it is
                                                             Availability of 92.33% and Plant Load Factor
                              understood, has

                                                             (PLF) of 82.68%.

                              decided to
                              introduce the              x   The customer base of the Company crossed

                              Electricity Bill,              the two million mark covering a population of

                              2001 in the next               nearly 9 million.
                              session of
                              Parliament. The            x   We successfully contained distribution loss
                              Bill has been                  at 11.60%, in keeping with the remarkable
                              widely debated                 trend of steady and consistent decline from
                              and the                        14.95% to 11.50% over the last seven
                              suggestions made               consecutive years.
                              duly incorporated.         x   Vigilance efforts in the Supply Division were
                              While the Bill,                further stepped up by conducting a record
                                98-9 9

                              when enacted, will
                       97-9 8

                                                             number of raids resulting in the detection of

                              aim at achieving               2,887 cases of theft of electricity with
                              healthy growth of              recovery of 19.10 million units.
the power sector, its success will depend greatly
on how seriously and speedily various States             x   The Contracts Division and Engineering
implement the industry reform structure.                     Procurement and Construction (EPC)
                                                             Business Group achieved a turnover of
    Performance Highlights                                   Rs. 511 crore. The Contracts Division
                                                             booked orders worth Rs. 696.41 crore.
The Company’s commitment to the pursuit of
improvement, progress and growth enabled it to           x   BSES Management Institute conducted 103
deliver a sterling performance for yet another               courses on management subjects and
year.                                                        issues related to power generation and
                                                             distribution for its executives and managerial
Let me briefly present highlights of our significant         personnel, as also for a number of other
achievements, as also the forward-looking                    organizations.
measures taken by your Company during the
year.                                                    x   The 7.59 MW Wind Farm Project consisting
                                                             of 33 wind mills achieved a PLF of 29.65%
x      Gross assets of the Company rose to                   compared to around 20%-25% PLF
       Rs. 4,616 crore from Rs. 4,195 crore in the           recorded in cases of most of the wind farms
       previous year.                                        in the country.

x      The turnover rose to Rs. 2,763 crore, up          x   Utility Powertech Limited recorded a
       from Rs. 2,430 crore in the previous year.            turnover of Rs. 38.97 crore, earned a profit


    of Rs. 1.38 crore and announced a dividend        previous year. As in the past, the Company has
    of 20% for 2000-01.                               the distinction of ranking high in most of the
                                                      parameters of operational performance when
x   BSES Infrastructure Finance Limited earned
                                                      compared to peers in the industry.
    a profit after tax of Rs. 2.61 crore during the
    year and stepped up the dividend to 12% for       Dividend: The Board of Directors has stepped
    2000-01.                                          up dividend to 40% for 2000-2001, in tune with
                                                      the Company’s progressive track record. The
x   ST-BSES Coal Washeries Limited, the joint
                                                      dividend payout including corporate tax would
    venture of the Company, achieved a
                                                      amount to Rs. 61 crore (previous year Rs. 57
    turnover of Rs. 24.79 crore with net profit of
                                                      crore). This is the ninth consecutive year that the
    Rs. 3.67 crore in the very first year of full-
                                                      dividend rate has been stepped up. The
    scale operation and announced a maiden
                                                      Company, as you are aware, has the unique
    dividend of 12% for 2000-01.
                                                      distinction of making uninterrupted dividend
Financial Ratios: The Company continued to            payment ever since its incorporation.
improve on almost all financial and operating
                                                       Operating Performance
ratios, leading to stronger financial fundamentals.
The Debt-equity ratio of the Company further
                                                      The Company could achieve satisfactory
improved to 0.3:1 compared to 0.38:1 of the
                                                      financial results as a result of improved operating
previous year. Return on Fixed assets was
                                                      performance during the year.
15.24% as against 14.56% in the previous year.
                                Earnings per share    Let me now dwell on some of the notable
 NET PROFIT                     was Rs. 22.76 as
 (Rs. in crores)
                                                      achievements of the various Divisions of the
                                compared to Rs.       Company.

                                21.44 per equity

                                share in the          Dahanu Power Station
                                previous year.

                                                      Dahanu Power Station achieved Plant Load
                                Likewise, Cash

                                                      Factor (PLF) of 82.68% (88.70% previous year),
                                Earnings per
                                                      generating 3,621 million units (previous year
                                equity share was
                                                      3,895 MUs). The lower generation and PLF was
                                Rs. 37.05 as

                                                      on account of shutdown of one of the two units
                                compared to Rs.
                                                      for 47 days for annual maintenance. The Plant
                                34.76 per equity
                                                      Availability achieved was 92.33% against
                                share in the
                                                      98.42% in 1999-2000. In the first 3 months of
                                previous year. The
                                                      2001-02, the Power Station has improved its PLF
                                Book Value per
                                                      to 92.60% with Plant Availability of 97.63% (the
                                equity share was
                                                      figures for the corresponding period last year are
                                Rs. 182.48 as

                                                      87.51% and 93.66% respectively). The Power

                                compared to Rs.
                           98-9 9
                  97-9 8

                                                      Station has implemented Enterprise Resource
                                165.60 in the
                                                      Planning (ERP) software across all business


functions. This module covers various areas           quality electromechanical meters for residential
such as maintenance management, purchase,             and commercial consumers.
stores and control resource management. All
environmental parameters were meticulously            The Division continued to make concerted
monitored and kept well within the norms. Ash         efforts, and took a series of actions during the
utilization improved from 5.13% to 8.51%.             year, on various fronts like detection of thefts,
                                                      replacement of defective/stopped meters,
    Supply Division                                   replacement of electromechanical meters by
                                                      static meters and strengthening of the distribution
Modernization and Strengthening of                    network to improve system performance. During
Distribution System: The five-year (1996-2001)        the year, 4,521 raids were carried out, which
programmes of augmenting and modernizing the          resulted in the detection of 2,887 cases of theft
distribution system entailing a capital expenditure   with recovery of 19.10 million units. Due to these
of about Rs. 870 crore were completed. During         efforts, we were successful in holding down
the year, the Company added 30 MVA Power              distribution loss to 11.60%, in keeping with the
Transformer capacity to the existing installed        remarkable trend of steady and consistent
capacity of 1602 MVA. The Supervisory Control         decline from 14.95% to 11.50% over a period of
and Data Acquisition (SCADA) System, which            seven consecutive years.
has become operational, will facilitate reduction
in operation and maintenance expenditure, quick       Consumer service: In order to provide faster
restoration of power supply, improvement in           service to consumers, the Company continues to
quality of consumer services and saving in            make improvements in its service and facilities.
manpower leading to better productivity. Nine         The major measures include decentralizing its
numbers of 150 KVAR microprocessor-based              services by setting up four zonal centres,
Automatic Power Factor correction panels were         arranging regular consumer meets, setting up bill
installed at various distribution substations. High   collection centres throughout the licensed area,
value consumers have been provided with               plying mobile vans for collection of bill payments,
11 KV automatic change-over panel boards for          payment of bills through the internet at Bill
speedy restoration of supply whenever there is
failure in incoming supply. Also, to prevent fire
                                                       SYSTEM LOSS
hazard in multistorey buildings and reduction of
maintenance cost of the distribution                        15.0
                                                                       14.95 %
transformers, ten numbers of 11/0.433 KV 1500               14.5

KVA and six numbers of 2000 KVA Dry Type                    14.0
                                                                              13.90 %
Transformers were installed.                                13.5

System Loss Reduction: In order to improve
                                                            12.5                        12.49 %
the accuracy of consumption of energy, solid
state meters were installed in place of
                                                                                    11.71 %                                        11.60 %
electromechanical meters for high value                     11.5
                                                                                                  11.58 %       11.53 % 11.50 %
consumption in all the zones. The Division also             11.0
                                                                   93-94   94-95   95-96      96-97     97-98      98-99   99-00   00-01
installed during the year over 2,50,000 good


Junction or through web sites of ICICI Bank                 Rs. 36.30 crore, a 10 MW waste heat recovery
Limited ( and HDFC Bank                   power project valued at Rs. 31.27 crore from
Limited (, collection of                  Kalyani Utilities Development Limited and
cheques in payment of bills at all the Skypak               contracts for T & D projects from Kerala State
drop boxes and payment through Electronic                   Electricity Board valued at Rs. 22.23 crore and
Clearing Service.                                           from Maharashtra State Electricity Board (MSEB)
                                                            valued at Rs. 16.24 crore.
BSES has commissioned the first ever
Interactive Voice Response (IVR) System for                 During the year, EPC Business Group
registering ‘No Supply’ complaints. The Company             successfully commissioned the 7.5 MW Sponge
has installed Touch Screen systems at all the               Iron Kiln exhaust gas fired power plant for
zonal offices for customers to access and browse            Monnet Power Limited at Raipur and 2.5 MW DG
through details of consumption, bills raised and            based power plant for ITC Limited at Bangalore.
payments made in the past 4 years. It has also
laid about 170 kms of Optical Fibre Cable in the             Business Plan
licensed area connecting 48 receiving stations to
                                                            Taking into account the new policy initiatives of the
facilitate connectivity and faster and better
                                                            Government of India and of a number of States, the
operation of the SCADA system.
                                                            structural reforms being introduced in several States
The Electricity Supply Division has designed a              and emerging opportunities, the Company has
customer-friendly web site,              reviewed its strategy and evolved Business Plan
the first of its type to be developed for customers by      2002-2012 which focuses on the core business of
any electricity utility in the country, providing on-line   generation, transmission and distribution. It
services and commercial information about each of           envisages 9,000 MW of generating capacity,
its 2 million customers.                                    development of 3 transmission systems and 6
                                                            distribution networks including the existing one in
 Contracts Division                                         Orissa. In synergy with our areas of core
                                                            competence, the Company would continue to
The Contracts Division including EPC Business               explore complementary roles in coal washeries,
Group further consolidated its capability to take           captive coal mining and telecommunication. The
up EPC contracts for power generation and                   Company would undertake detailed evaluation of the
transmission projects on turnkey basis. The                 emerging business opportunities in all these areas
Division achieved a turnover of Rs. 511 crore and           with a view to seeking profitable business proposals.
gross profit of Rs. 36.92 crore during the year,
and booked orders worth Rs. 696.41 crore.                   Wind Farm: The Company has been operating
These include EPC contract of Rs. 286.50 crore              the wind farm project consisting of 33 wind mills
from Atria Power Limited for combined cycle                 with aggregate capacity of 7.59 MW in
power project in Karnataka, contract for laying             Chitradurg district of Karnataka at the optimum
transmission line from Tamil Nadu Electricity               level with PLF touching 29.65% as against
Board valued at Rs. 28.95 crore, a contract from            around 20%-25% recorded by most of the wind
Karnataka Power Transmission Corporation                    farms in India and attained a generation of
Limited for construction of sub-stations valued at          19.714 million units during the year. The


 Company proposes to increase the PLF to 36%           (SBCW), our joint venture, produced around
 by making some modifications including                16 lakh metric tonnes of washed coal which was
 relocating and reblading of machines.                 supplied mainly to the Company’s Power Station
                                                       at Dahanu. This has greatly reduced
 Saphale Project: In order to meet the growing         dependence on imported coal. The Gujarat
 demands for energy and the widening demand            Electricity Board (GEB) has placed a trial order
 and supply gap in the State of Maharashtra and        for the processing of raw coal and supplying 1.50
 especially in the commercial city of Mumbai, the      lakh metric tonnes of washed coal. The
 Company has been following up with various            Company achieved a turnover of Rs. 24.79 crore
 authorities to obtain clearances for the              with net profit of Rs. 3.67 crore in the very first
 implementation of the 495 MW combined cycle           year of full-scale operation. The Company
 power plant at Saphale near Dahanu. MSEB has          declared a maiden dividend at 12% on its equity
 given the necessary clearance under Section 44        shares.
 of the Electricity (Supply) Act, 1948, to the
 project, requiring the Company to execute it in       BSES Kerala Power Limited, a joint venture
 two phases. The Union Ministry of Petroleum has       with Kerala State Industrial Development
 allocated gas for the first phase. The Company is     Corporation Limited (KSIDC), successfully
 following up with the Central Electricity Authority   synchronized all the 3 units of the open cycle
 for obtaining techno-economic clearance and           mode and completed trial operation of all the
 with the Ministry of Petroleum and Natural Gas        three gas turbine generators. During the
 for adequate quantity of gas at an appropriate        year, the station generated about 153 million
 price.                                                units.

 BSES Telecom Limited, a wholly-owned                  BSES Andhra Power Limited (BAPL), a
 subsidiary of the Company, has completed the          subsidiary of the Company, continues to make
 execution of primary network contract awarded         satisfactory progress on its 220 MW gas-based
 by BSES and has completed Phase - I of the            power project at Samalkot near Kakinada port
 secondary network (connecting Receiving               of Andhra Pradesh. BAPL will supply power,
 Stations with the substations of BSES). The           based on the Power Purchase Agreement
 Internet Services Division expanded the area of       (PPA), to APTRANSCo. The Union Ministry of
 its services in the suburbs of Mumbai. The            Power and Natural Gas has allocated 100%
 Company has also launched an educational              natural gas linkage. The debt funding for the
 portal targeting school students in Mumbai. The       project has been worked out with a consortium
 construction of the plant to manufacture tamper-      of banks. All the major equipment like gas
 proof single phase electronic meters in the Union     turbine, steam turbine, generators, boiler
 Territory of Dadra is nearing completion. Meters      modules, generator transformers have already
 produced here have already been placed on trial       arrived at site and are under erection. The
 runs in various consumer premises.                    erection activities are in full swing so as to
                                                       complete commissioning of open cycle plant by
 ST-BSES Coal Washeries Limited: The Coal              end of September 2001 and combined cycle
 Washery of ST-BSES Coal Washeries Limited             operations by end of March 2002.


Maithon Power Limited, a joint venture with             its 250 MW          EQUITY DIVIDEND *
Damodar Valley Corporation, continues to pursue         lignite based       (Rs. in crores)
the necessary clearances for its 1000 MW coal-          power project

based pithead thermal power project at Maithon          proposed to be                  32%

Right Bank in Dhanbad district of Jharkhand             set up at                  30%
State. The project has been accorded the status

                                                        Srimushnam in
of Mega Power Project and will be eligible for all

                                                        Tamil Nadu.

facilities available to such projects. To firm up the   TICAPCO is also
generation tariff so that the PPA with Power            in close liaison
Trading Corporation of India Limited (PTC) could        with the other
be finalized, necessary engineering followed by         authorities
tendering process is in progress in order to
                                                        concerned for
obtain the most competitive EPC price.
                                                        obtaining the
BSES Infrastructure Finance Limited, a                  remaining
wholly-owned subsidiary of the Company, earned          clearances to the
a profit after tax of Rs. 2.61 crore and declared       project. The
dividend at 12% on its equity shares. The               Company has

                                                                                                           98-9 9
                                                                                                  97-9 8
Company advises associated companies of                 also approached
                                                                             * Proposed
BSES on capital structuring and deployment of           PTC for entering
short-term surplus funds. It negotiates long-term       into a PPA to channelize sale of power to
loans, lease financing and syndicated placement         other States.
of securities for funding the various projects
being implemented by the associate companies            Distribution Companies in Orissa: The
of BSES.                                                3 distribution companies of Orissa viz. North
                                                        Eastern Electricity Supply Company of Orissa
Utility Powertech Limited (UPL), a joint venture        Limited (NESCO), Southern Electricity Supply
with National Thermal Power Corporation Limited         Company of Orissa Limited (SOUTHCO) and
(NTPC), recorded a turnover of Rs. 38.97 crore          Western Electricity Supply Company of Orissa
and earned a profit of Rs. 1.38 crore. The              Limited (WESCO), all subsidiaries of the
Company declared a dividend of 20% on the               Company, have taken several proactive
equity capital of the Company. The Company has          measures for improving reliability and quality of
established site offices at various project sites of    supply including strengthening of the
NTPC and received Operation and Maintenance             distribution network and development of model
contracts worth Rs. 40 crore. It has successfully       towns. These Companies have undertaken
commissioned non-conventional energy projects
                                                        massive metering programme to cover all the
on contract basis in various places.
                                                        consumers during 2001-2002. Utmost attention
Tamil Nadu Industries Captive Power                     is focused on reducing distribution losses and
Company Limited (TICAPCO), a subsidiary of              stepping up collection of bills. Distribution
the Company, is following up techno-economic            losses have been reduced from around 48-
clearance from the Central Electricity Authority to     50% in 1998-99 to 42% during 2000-01.


     Human Resource Development                                      Executive Exchange Programme under the
                                                                     United States Energy Association, International
 With a view to nurturing the skills of our                          Institute of Education (IIE) under USAID Energy
 employees, the Company conducted through its                        Training Programmes, which was attended by
 Management Institute 103 programmes during                          senior executives of energy companies from
 the year in which most of our officers (over 2,000                  South-Asian countries.
 participants including multiple participations)
 took part. The programmes covered areas like                        The Company in association with International
 technology, quality, customer service, distribution                 Institute for Sustainable Future organized an
 system, environment, HRD, etc. The Technical                        International Conference on Sustainable Energy
 Training Centres at Versova of the Electric                         and Environment and environmental experts
 Supply Division and of the Generation Division at                   from several countries participated in the
 Dahanu conducted around 160 programmes                              programme.
 during the year on generation, distribution
 system and related subjects, which more than                         Investor Care
 1,700 staff members attended.
                                                                     Your Company continued to take a series of
 The Company, in tune with its belief that human                     proactive and innovative initiatives to extend the best
 resources are the Company’s best and most                           of facilities to the shareholders of the Company. The
 precious assets, confers Meritorious                                major steps taken during the year were:
 Performance Awards to deserving members of
                                                                     x    ISO 9002 certification to the quality manuals
 the staff in recognition of their services and to
                                                                          and standards of Investor Service Centre.
                                   encourage them to
   GROSS ASSETS                    contribute to the
   (Rs. in crores)                                                   x    All-round improvements in the functioning of
                                   progress,                              Investor Service Centre resulting in decline

                                   prosperity and                         in investors’ grievances for the fourth year in
                                   growth of the

                                                                          succession to 1,198 during the year under

                                   organization.                          review, down from 6,585 in 1997-98, 5,025
                                   During the year 45                     in 1998-99 and 1,760 in 1999-2000.


                                   employees and 7                   x    Speedy transfer of shares (in 5 to 7 days)
                                   group awards                           and confirmation of dematerialization of
                                   were presented to                      shares (in 4 to 5 days).
                                   various divisions
                                   and departments.                  x    Remittance of dividend through Electronic
                                                                          Clearing Service (ECS) at major cities of India.
                                               Management            x    Webcast of the highlights of the proceedings
                                               Institute (BMI) had        of the Annual General Meeting on the
                                               the privilege of           Internet. Nearly 1,50,000 investors visited
                      98-9 9

                                               hosting at the             the site for information
             97-9 8

                                               Institute the first        on the deliberations of the Meeting.


x   First to obtain ET rating by making available     aftermath of the earthquake that struck parts of
    its Annual Reports in soft copy on the portal     Gujarat, BSES rushed teams of its executives,
    of The Economic Times.                            engineers and skilled workforce to the quake-
                                                      affected areas and speedily restored electricity
The equity shares of the Company are now              supply there. The effort put in by our team was
subjected to trading in rolling settlement scheme     lauded by the Chairman and senior officials of
which I hope, would facilitate faster settlement of   Gujarat Electricity Board. In addition, BSES
transactions and payments.                            organized a 3-day drive for collection of relief
                                                      materials in Mumbai, which were immediately
Your Company would continue to seek superior          despatched to the affected areas.
service standards and extend commensurate
service to our investors, so as to live up to the     BSES also took up a turnkey contract on no-
trust and confidence reposed in us by them.           profit basis for the construction of more than six
                                                      hundred houses in Dudhai of Bhuj district,
 Environment                                          Gujarat in association with a social welfare
                                                      organization. The township of these houses was
Our care and concern for the environment
                                                      completed in 100 days and dedicated to the
continue to be recognized and appreciated, with
                                                      residents of the village by the Hon’ble Prime
awards from prestigious institutions. During the
                                                      Minister. BSES, with contributions from its
year, the Company was honoured with the
                                                      employees and matching contribution from the
Millennium Business Award for environmental
                                                      Company, constructed a community centre which
excellence from International Chamber of
                                                      also was inaugurated by the Hon’ble Prime
Commerce & United Nations Environment                 Minister. From these contributions, BSES also
Programme, FICCI Award 2000 for                       completed construction of a 30-room secondary
environmental excellence and Indo-German              school in the same township in Dudhai.
Greentech Foundation award for environmental
excellence.                                           Work on the 100-bed BSES Municipal Hospital in
                                                      Mumbai is in an advanced stage of completion.
The Dahanu Power Station continues to comply          The Company also provided an ambulance to a
with the stringent operational norms laid down by     local charitable institution.
the regulatory authorities. These norms which
form part of our environmental management             The Company constructed and handed over an
system were subjected to periodical surveillance      Audiometry room to a school for the deaf and
audit under ISO-14001 certification programme         dumb children of Dahanu. BSES also
by the certifying body Bureau Veritas Quality         constructed a community hall for Dahanu
International.                                        Municipality.

 Social Responsibilities                              When nearly 100 adults and children of
                                                      Asangaon were struck by food poisoning, the
The Company continued to contribute to                Company rushed in medicines and an
community welfare measures and took up                ambulance to the village. This timely help has
several social initiatives. Immediately in the        saved the lives of the affected people.


 The Company participated in the Pulse Polio        authorities had recommended principles of good
 programme by providing transportation facilities   governance practices. Effective from the year
 to Primary Health Centres and also to Cottage      under review, stock exchanges have identified
 Hospital. BSES organized an eye camp at            certain listed companies including BSES for
 Dahanu for about 500 people including children.    implementation of conditions of corporate
 Spectacles and medicines were provided free of     governance specified by SEBI on the
 cost and cataract operations were performed for    recommendations made by the Kumar
 the needy.                                         Mangalam Birla Committee. Your Company is in
                                                    compliance with these conditions and in several
     Corporate Governance                           matters, our compliance practices transcend the
                                                    principles laid down by statute and the
 In no other industry is the need for sound
                                                    regulatory authorities. BSES regularly reviews
 corporate governance felt as seriously as in the
                                                    and revises its disclosure and governance
 power industry. And never before has the
                                                    practices in keeping with the emerging global
 relevance and importance of such practices in
 the electricity business been recognized as now,
 against the backdrop of the reforms being          In appreciation of our contribution in evolving
 introduced in the sector. Poor governance          healthy governance practices, the Company was
 practices have negatively impacted the             awarded the Golden Peacock Award by the
 performance of power utilities and resulted in     Institute of Directors. Your Company is
 systemic weaknesses and problems at the            committed to further raising the levels of
 national level. It is in the management of this    disclosure and being more transparent in
 sector, above all the other sectors of the         dissemination of information on our performance
 economy, that there is a dire need for the         and prospects.
 introduction of good corporate governance
 practices.                                          Quality

 Recognizing this requirement, your Company         The Company continues to lay sharp focus on
 has been in the forefront in adopting good         adherence to sound policies and practices of
 governance principles. In fact, your Company       quality management, as recognized by an
 was among the select few which had taken early     international agency. Having secured ISO 14001
 initiatives to benchmark their governance          certification of the environment management
 practices with the best of such standards set at   policy of the Dahanu Power Station, during the
 both national and international levels. At home,   year we enlarged the functional areas covered by
 the Confederation of Indian Industry had laid      the ISO certification programme. Thus, our ISO
 down the Desirable Code of Corporate               9002 certification now not only covers the major
 Governance and abroad, several committees,         functional areas but also extends to finance,
 prominent among them being the Sir Adrian          human resource management, secretarial
 Cadbury Committee, set up by various               department and investor service.


Under the ongoing programme, your Company               Powerman of the Millennium Year”, the
carried out its own extensive technical audits in       award instituted by National Foundation of
various Departments while periodical surveillance       Indian Engineers (NAFEN).
audits were undertaken by the certifying body,
                                                    x   I was also presented with the “Power
Bureau Veritas Quality International.
                                                        Convergence Visionary Award” by
 Rankings and Recognitions                              Independent Power Producers Association
                                                        of India and National Power Training
The various initiatives taken and significant           Institute.
progress made by the Company, particularly our
commitment to sound performance in
environmental management, continue to earn
                                                    While concluding, I wish to appreciate the
laurels. During the year, we were honoured with
                                                    sincere and dedicated service rendered by
the following awards and recognitions:
                                                    employees at all levels and the constructive co-
                                                    operation extended by the staff unions and the
x   The “Millennium Business Award” was
                                                    officers’ Association. I thank, on behalf of the
    conferred on BSES by the United Nations
                                                    Company and on my own behalf, the
    Environmental Programme (UNEP) and
                                                    Maharashtra Electricity Regulatory
    International Chamber of Commerce (ICC)
                                                    Commission, the financial institutions, banks,
    for environmental achievements.
                                                    authorities of the Government of India such as
x   The FICCI Award, 2000 on “Environment           Ministry of Finance, Ministry of Power, CEA,
    Protection & Energy Conservation” was           Ministry of Coal, Ministry of Environment and
    conferred on BSES in recognition of             Forests, Coal India Limited, the Government of
    “Corporate Initiative in the Field of           Maharashtra, particularly the Energy and
    Environment, Conservation & Pollution           Environment Department, Pollution Control
    Control” and presented by the Hon’ble Prime     Board, Dahanu Taluka Environment Protection
    Minister Shri Atal Bihari Vajpayee, at the      Authority (DTEPA), Maharashtra State
    annual convention of the Federation of Indian   Electricity Board and The Tata Power Company
    Chamber of Commerce and Industry (FICCI).       Limited as well as the World Bank, International
                                                    Finance Corporation (Washington) and USAID
x   The Indo-German Annual Environment              for their continued support and unstinted
    Excellence Award – 2000 by Greentech            co-operation.

x   The prestigious Golden Peacock Award for
    its pursuit of “Excellence in Corporate
    Governance” by Institute of Directors (IOD).

x   I was presented by Shri Suresh P. Prabhu,                                           R V Shahi
    Hon’ble Union Power Minister, the “Best         10th July, 2001   Chairman & Managing Director


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