Summer Training Project Report On

FINANCIAL STATEMENT

ANALYSIS OF NTPC

Submitted for the partial fulfillment of the Award Of

Master of Business Administration DEGREE

(Session: 2011-2013) SUBMITTED BY
Varsha shishodia 1103270170

UNDER THE GUIDANCE OF Internal Guide: Mrs. Manisha Gupta

School of management ABES ENGINEERING COLLEGE GHAZIABAD

AFFILATED TO

MAHAMAYA TECHNICAL UNIVERSITY, NOIDA

Declaration

I VARSHA SHISHODIA hereby declare that the work which is being presented in this report entitled FINANCIAL STATEMENT ANALYSIS OF NTPC is an authentic record of my work carried out under the supervision of Mrs Manisha Gupta . The matter embodied in this report has not been submitted by me for the award of any other degree .

Dated:

VARSHA SHISHODIA MBA Department

This is to certify that the above statements made by the candidate are correct to the best of my knowledge .

Prof. Rakesh Passi Head of department Date:

Mrs. MANISHA GUPTA Designation: Assistant professor Department: MBA Date:

ACKNOWLEDGEMENT

I am sincerely thankful to all those people who have been giving me any kind of assistance in the making of this project report.

I express my gratitude to, who has through his vast experience and knowledge has been able to guide me, both ably and successfully towards the completion of the project. I express my gratitude, ABES Engineering College. I would hereby, make most of the opportunity by expressing my sincerest thanks to all my faculty whose teachings give me conceptual understanding and clarity of comprehension, which ultimately made my job more easy. Credit also goes to all my friends whose encouragement kept me in good stead.

Last of all but not the least I would like to acknowledge my gratitude to the respondent without whom this survey would have been incomplete. I am also thankful to authority of NTPC for providing me the information.

VARSHA SHISHODIA ROLL NO-1103270170

Content
PART - 1

1. CHAPTER ONE 1.1 Introduction 1.2 Need of the study 1.3 Objective of study 1.4 Scope of study

PART - 2
2. CHAPTER TWO 2.1 Research methodology 2.2 Limitation 3. CHAPTER THREE 3.1 Descriptive work on subtopic

4. CHAPTER FOUR 4.1 Data Analysis and Interpretation 5. CHAPTER FIVE 5.1Conclusion & Suggestions 6. CHAPTER SIX 6.1 Bibliography

PART - 1

CHAPTER - 1

INTRODUCTION Scenario of Power in India

Growth of economy calls for watching the rate of growth in infrastructure facilities. Power sector is one of the major aspects of this infrastructure building . Some prominent people like the Ex Chairman of GE Jack Welch have gone to the extent of saying, You dont have a chance to stand in the 21st Century without lots of power Without this you miss the next revolution Moreover , the growth rate of demand for power in developing countries is generally higher than that of GDP . In India , the elasticity ratio was 3.06 in 1st plan, & peaked at 5.11 during 3rd plan and came down to 1. 65 in 80s. For 90s a ratio of around 1.5 was projected. Hence, in order to support a growth of GDP of around 7%, the rate of growth of power supply of 10% is required . If we look at current scenario , electricity consumption in India has more than doubled in the last decade , outpacing the economic growth. If we analyze the various statistics of Indian power sector , we will find that the generating capacity has gone up tremendously from a meager 1712 MW in 1950 to a whooping 147000MW today. The critical role played by the power industry in the economic progress of a country has to be emphasized . A self sufficient power economic stability. industry is vital for a nation to achieve

Indian Power Industry

Before Independence
The British controlled the Indian power industry firmly before Independence . Then legal and policy framework was contributing to private ownership , with not much regulation with regard to operational safety .

Post Independence
Immediately after Independence, the country was faced with capacity restraint . India

adopted a socialist structure for economic growth and all the major industries were controlled by public sector enterprises . By 1970's, India had nationalized most of its energy assets, due to its commitment to social goals. By the late 1980's, the Indian economy felt the strain of the socialist agenda followed since independence . Faced with a serious deterioration in public finance and balance of payment crisis , the Union

government as part of its policy of economic liberalization allowed greater investment by private sector in the power industry The electricity sector in India is predominantly controlled by Government of India's

public sector undertakings (PSUs). Major PSUs involved in the generation of electricity include National Thermal Power Corporation (NTPC) , National Hydroelectric Power Corporation (NHPC) and Nuclear Power Corporation of India (NPCI) . Besides PSUs ,several state-level corporations , such as Maharashtra State Electricity Board (MSEB) , are also involved in the generation and intra-state distribution of electricity . The Power Grid

Corporation of India is responsible for the inter-state transmission of electricity and the development of national grid . India is world's 6th largest energy consumer , accounting for 3.4% of global energy consumption . Due to India's economic rise , the demand for energy has grown at average of 3.6% per annum over the past 30 years . In March 2009 , the installed power generation capacity of India stood at 147,000 MW while the per capita power consumption stood at 612 kWh . The country's annual power production increased from about 190 billion kWH in 1986 to more than 680 billion kWH in 2006 . The Indian government has set an ambitious target to add approximately 78,000 MW of installed generation capacity by 2012. The total demand for electricity in India is expected to cross 950,000 MW by 2030 . Electricity losses in India during transmission and

distribution are extremely high and vary between 30 to 45%. In 2004-05, electricity demand outstripped supply by 7-11%. Due to shortage of electricity , power cuts are common throughout India and this has adversely effected the country's economic growth .

Generation
Grand Total Installed Capacity is 147,402.81 MW.

Thermal Power
Current installed capacity of Thermal Power (as of12/2008) 93,392.64MW is 63.3% of total installed capacity. Current installed base of Coal Based Thermal Power is 77,458.88 MW which comes to 53.3% of total installed base. Current installed base of Gas Based Thermal Power is 14,734.01 MW which is 10.5% of total installed base. Current installed base of Oil Based Thermal Power is 1,199.75 MW which is 0.9% of total installed base. The state of Maharashtra is the largest producer of thermal power in the country which

Hydro Power
India was one of the pioneering states in establishing hydro-electric power plants , The power plant at Darjeeling and Shimsa (Shivanasamudra) was established in 1898 and1902 respectively and is one of the first in Asia. The installed capacity as of 2008 was approximately 36647.76. The public sector has a predominant share of 97% in this sector

Nuclear Power
Currently, 17 nuclear power reactors produce 4,120.00 MW (2.9% of total installed base).

Renewable Power
Current installed base of Renewable energy is 13,242.41 MW Which is 7.7% of total installed base with the southern state of Tamil Nadu contributing nearly a third of it (4379.64 MW) largely through wind power .

Power for ALL by 2012

The Government of India has an ambitious mission of POWER FOR ALL BY 2012. This mission would require that our installed generation capacity should be at least 200,000MW by 2012 from the present level of 144,564.97 MW. Power requirement will double by 2020 to 400,000MW. Todays environment is a tough environment to survive, with the new industries and the new sectors coming up so strongly and financially sound. But to gain an extra edge over others they ought to have an extra or special added advantage. Our people are our most important asset. Nearly every organization report contains a phrase like this & for good reason. Today, the last great source of competitive advantage is human capital.

INTRODUTION OF NTPC

BOARD OF DIRECTORS S.NO. NAME DESIGNATION DATE OF APPOINTMENT

Functional directors
1.
2. Shri R.S.Sharma Chairman & Managing Director Director (Operations) 01.04.2008

Shri Chandan Roy

01.01.2009

3. 4. 5.

Shri. I J kapoor Shri R.K. Jain Shri A.K. Singhal

Director (Commercial) Director (Technical) Director (Finance)

08.10.2008 05.05.2008 01.08.2007

Part-Time Official Directors

1. Shri M. Shaoo Joint Secretary and Financial Advisor Ministry of Power, Government of India Joint m Secretary (Thermal)Ministry of Power, Government of India 11.07.2007

2.

Shri Harish Chandra

11.07.2008

Vision
A world class integrated power major, powering Indias growth, with increasing global presence."

Mission
Develop and provide reliable power, related products and services at competitive prices, integrating multiple energy sources with innovative and eco-friendly technologies and contribute to society.

Core Values BCOMIT

B Business Ethics C Customer Focus (External & Internal) O Organizational & Professional Pride M Mutual Respect & Trust I Innovation & Speed T Total Quality for Excellence

Background of NTPC
NTPC a global giant in power sector NTPC Limited is the largest power generating company of India. A public sector company, it was incorporated in the year 1975 to accelerate power development in the country as a wholly owned company of the Government of India. At present, Government of India holds 89.5% of the total equity shares of the company & the balance10.5% is held by FIIs, Domestic Banks, Public and others. Today, it has emerged as an Integrated Power Major , with a significant presence in the entire value chain of power generation business. Based on 1998 data, carried out by Data monitor UK, an ISO 9001:2000 certified company, NTPC is the 6th largest in terms of thermal power generation & the second most efficient in terms of capacity utilization amongst the thermal utilities in the world Within a span of 33 years, NTPC has emerged as a truly national power company, with power generating facilities in all the major regions of the country. Driven by its vision to lead, it has charted out an ambitious growth plan of becoming a 75000 MW plus company by 2017.

GROWTH RATE
Growth in electricity generation has decelerated to 6.6 per cent from 7.5 per cent in the corresponding period in 2008-09 , the Economic Survey tabled in the Parliament by finance minister P. Chidambaram said. The government is expecting 9.5 per cent growth per annum in the power sector in the11th Five Year Plan .

Achievements
Recognizing its excellent performance and vast potential, Government of the India has identified NTPC as one of the jewels of Public Sector ' Navratnas' - a potential globalgian. NTPC ranked 317th in the 2009, Forbes Global 2000 ranking of the Worlds biggest companies.

NTPC has been rated as one of the top most Best Employer of the country for the year 2003,2004 & 2005 in a row .

It has also been rated as one of the Best Companies to Work for in India by Mercer HR Consulting- Business Today Survey 2004, it has developed into a multi-location and multi-fuel company over the past three decades.

NTPC has been awarded No.1, Best Workplace in India among large organizations for the year 2008, by the Great Places to Work Institute, India Chapter in collaboration with The Economic Times

Leadership Award for CMD, NTPC in the 4Th

Global Leadership Summit by Amity

University for Sectoral Excellence in Power industry for his outstanding contribution to the growth of Indian business & bringing glory to the country through his pioneering leadership

 Ranked #1 independent power producer in Asia in the THIRD ANNUAL PLATTSTOP 250 GLOBAL ENERGY COMPANY AWARDS 2008 for outstanding Global financial & Industrial performance at the award ceremony in Singapore. The corporation has been simultaneously ranked #15, overall in Asia amongst the energy companies

NTPCs excellence in executing power projects & its initiative Decentralized Distributed Power Generation has been recognized and awarded at IEEMA Power Awards 2008. NTPC Vindhyachal Stage-III (2x 500MW) has been conferred the IPMASILVER MEDAL for Project Excellence by International Project Management Association, at the IPMA

Congress, held in Rome, Italy, for implementation of project in record time & achieving excellent environmental, economic performance and giving outstanding support to the local community. Some major awards given to the Company in the areas of environment management & Corporate Social Responsibility include:

Organization Structure of NTPC

Location of NTPC Plants

CORPORATE OBJECTIVES

In pursuance of the Vision and Mission, the following are the Corporate Objectives of NTPC To realise the vision and mission, few corporate objectives have been identified. The objectives would provide the link between the defined mission and the functional strategies.

ENVIRONMENT PROTECTION:
Every aspect of environment protection is considered and optimum solutions are arrived at

Discharge of Ash in to atmosphere in minimized. An electrostatic precipitator with an efficiency of more than 99.5% has been installed and even balanced flue is discharged into atmosphere through a very high chimney to ensure that the density of pollutants remains as well below the laid down norms. The Ash collected is made into slurry and pumped into a well designed Ash dyke who ensures that the ash particles settle down. The clear water from the ash pond over flows through a weir into a second setting point called the clarifier and thereafter into the reservoir. A dense green belt has been developed between the plant and the township to minimize poll

PARTICIPATIVE MANAGEMENT:

The concept of workers participation in management was introduced in the project in sept98. at present four shop floor council and one joint plant council (JPC) are functioning in which representative of various unions/associated and management together decide on various issues brought out before the council.

CORPORATE SOCIAL RESPONSIBILITY

The corporate social responsibility community development (CSR-CD) policy of the company has been approved by the board of directors. Under the CSR-CD policy, the company will establish a foundation, to be known as NTPC foundation, for social development at the national level. The foundation would inter alia establish a development center for physically challenged person, with a view to facilitate economic self reliance. Other activities planned for the foundation are: promoting distributed generation schemes, supporting conservation of national monuments, providing relief and Assistance during national calamities etc. action is underway for registration of the foundation under the Indian trust act.

BUSINESS PROFIT GROWTH

 To consolidate NTPC position as the leading thermal power generation company in India and establish a presence in hydro power segment. To broad base the generation mix by evaluating conventional and non-conventional sources of energy to ensure long run competitiveness and mitigate fuel risk. To diversify across the power value chain in India by considering backward and forward integration into areas such as power trading, transmission, distribution, coal mining, coal beneficiation etc. To develop a portfolio of generation assets in international markets. To establish a strong services brand in the domestic and international market.

CUSTOMER FOCUS
To foster a collaborative style of working with the customer, growing to be a preferred brand for supply of quality power. To expand a relationship with existing customers by offering a bouquet of services in addition to supply of power. To expand the future customer portfolio through profitable diversification into downstream business, inter alia retail distribution and direct supply. To ensure rapid commercial decision making, using customer specific information, with adequate concern for the interests of the customer.

PERFORMANCE LEADERSHIP

 To continuously improve on project execution time and cost in order to sustain long run
competitiveness in generation.

To operate & maintain NTPC stations at par with the best run utilities in the world with
respect to availability, reliability, efficiency, productivity and costs. To effectively leverage information technology to drive process efficiency. To aim for performance excellence in the diversification business. To embed quality in all system and processes

FINANCIAL SOUNDNESS
To maintain and improve the financial soundness of NTPC by prudent management of the financial resources. To continuously strive to reduce the cost of capital through prudent management of deployed funds, leveraging opportunities in domestic and international financial markets. To develop appropriate commercial policies and processes which would ensure enumerative tariffs and minimize receivables? To continuously strive for reduction in cost of power generation by improving operating practices .

DIVERSIFIED GROWTH

NTPCs quest for diversification started with its foray into Hydro Power. It has, since then, been moving towards becoming a highly diversified company through backward, forward and lateral integration. The company is well on its way to becoming an Integrated Power Major, having entered Hydro Power, Coal Mining, Power Trading, Equipment Manufacturing and Power Distribution. NTPC has made long strides in developing its Ash Utilization business. In its pursuit of diversification, NTPC has also developed strategic alliances and joint ventures with leading national and international companies.

Hydro Power: In order to give impetus to hydro power growth in the country and to have a balanced portfolio of power generation, NTPC entered hydro power business with the 800 MW Koldam hydro projects in Himachal Pradesh. Two more projects have also been taken up in Uttarakhand. A wholly owned subsidiary, NTPC Hydro Ltd., is setting up hydro projects of capacities up to 250 MW.

Coal Mining: In a major backward integration move to create fuel security, NTPC has ventured into coal mining business with an aim to meet about 20% of its coal requirement from its captive mines by 2017. The Government of India has so far allotted 7 coal blocks to NTPC, including 2 blocks to be developed through joint venture route. Coal Production is likely to start in 2009-10.

Power Trading: 'NTPC Vidyut Vyapar Nigam Ltd.' (NVVN), a wholly owned subsidiary was created for trading power leading to optimal utilization of NTPCs assets. It is the second largest power trading company in the country. In order to facilitate power trading in the country, National Power Exchange Ltd., a JV between NTPC, NHPC, PFC and TCS has been formed for operating a Power Exchange.

Ash Business: NTPC has focused on the utilization of ash generated by its power stations to convert the challenge of ash disposal into an opportunity. Ash is being used as a raw material input for cement companies and brick manufacturers. NVVN is engaged in the business of Fly Ash export and sale to domestic customers. Joint ventures with cement companies are being planned to set up cement grinding units in the vicinity of NTPC stations.

Power Distribution: NTPC Electric Supply Company Ltd. (NESCL), a wholly own ed subsidiary of NTPC, was set up for distribution of power. NESCL is actively engaged in Rajiv Gandhi Garmin Vidyutikaran Yojanaprogramme for rural electrification and also working as 'Advisor cum Consultant' for Ministry of Power for implementation of Accelerated Power Development and Reforms Programmer (APDRP) launched by Government of India.

Equipment Manufacturing:

Enormous growth in power sector necessitates

augmentation of power equipment manufacturing capacity. NTPC has formed JVs with BHEL and Bharat Forge Ltd. for power plant equipment manufacturing. NTPC has also acquired stake in Transformers and Electricals Kerala Ltd. (TELK) for manufacturing and repair of transformers.

Strength
MAHARATNA Company High Credit rating Consistently high level of performance Strong and dedicated work force

Strong CORE values ISO-9001 Quality Management system accreditation

Weakness
Tall hierarchy Centralize command and control High level of inventory Lack of inter unit coordination Financial constraints

Opportunities
Huge growth opportunities No major competitor within the country Strong government support R&M consultancy

Threat
Stringent environmental norms and standards. Competitive environment from MNCs and TNCs. Cultural barriers. Lack of experts in key areas. Poor Customer focus in spite of being the first Core value.

POWER GENERATION

Presently, NTPC generates power from Coal and Gas. With an installed capacity of 31,704 MW, NTPC is the largest power generating major in the country. It has also diversified into hydro power, coal mining, power equipment manufacturing, oil & gas exploration, power trading & distribution. With an increasing presence in the power value chain, NTPC is well on its way to becoming an Integrated Power Major.

Installed Capacity

NO. OF PLANTS NTPC Owned

Coal Gas/Liquid Fuel Total 15 7 22

CAPACITY (MW)
24,885 3,955 28,840

Owned By JVs
Coal & Gas Total

5 27

2,864 31,704

Regional Spread of Generating Facilities

REGION
Northern Western Southern Eastern JVs Total

COAL
7,525 6,360 3,600 7,400 924 25,809

GAS
2,312 1,293 350 1,940 5,895

TOTAL
9,837 7,653 3,950 7,400 2,864 31,704

Coal Based Power Stations

COAL BASED(Owned STATE by NTPC)

1. Singrauli 2. Korba 3. Ramagundam 4. Farakka 5. Vindhyachal 6. Rihand 7. Kahalgaon 8. NCTPP, Dadri 9. Talcher Kaniha 10. Feroze Gandhi, Unchahar 11. Talcher Thermal 12. Simhadri 13. Tanda 14. Badarpur 15. Sipat-II Total Uttar Pradesh Chhattisgarh Andhra Pradesh West Bengal Madhya Pradesh Uttar Pradesh Bihar Uttar Pradesh Orissa Uttar Pradesh Orissa Andhra Pradesh Uttar Pradesh Delhi Chhattisgarh

COMMISSIONED CAPACITY(MW)
2,000 2,100 2,600 1,600 3,260 2,000 2,340 1,330 3,000 1,050 460 1,000 440 705 1,000 24,885

Coal Based Joint Ventures:

COAL BASED (Owned by STATE JVs)
1. Durgapur 2. Rourkela 3. Bhilai 4. Kanti Total West Bengal Orissa Chhattisgarh Bihar

COMMISSIONED CAPACITY
120 120 574 110 924

Gas/Liquid Fuel Based Power Stations

GAS BASED (Owned by NTPC)

STATE

COMMISSIONED CAPACITY(MW)
413 652 645 817 648 350 430 3,955

1. Anta Rajasthan 2. Auraiya Uttar Pradesh 3. Kawas Gujarat 4. Dadri Uttar Pradesh 5. Jhanor-Gandhar Gujarat 6. Rajiv Gandhi CCPP Kayamkulam Kerala 7. Faridabad Haryana Total

Gas Based Joint Ventures:

COAL BASED STATE (Owned by JVs)
1. RGPPL Total Maharashtra

COMMISSIONED CAPACITY
1940 1940

Hydro Based Power Projects (Under Implementation)

HYDRO BASED

STATE

APPROVED CAPACITY(MW)
800 600 520 1,920

1. Koldam (HEPP) Himachal Pradesh 2. Loharinag Pala (HEPP) Uttarakhand 3. Tapovan Vishnugad (HEPP) Uttarakhand Total

OPERATIONS

In terms of operations, NTPC has always been considerably above the national average. The availability factor for coal based power stations has increased from 89.32% in 1998-99 to 91.76% in 2009-10, which compares favorably with international standards. The PLF has increased from 76.6% in 1998-99 to 90.81% during the year 2009-10.

The table below shows that while the installed capacity has increased by 62.15% in the last twelve years the generation has increased by 99.84%.

DESCRIPTION
Installed Capacity Generation

UNIT
MW MUs

1998-99
17,786 1,09,505

2009-10
28,840 2,18,840

% OF INCREASE
62.15 99.84

Excluding JVs and Subsidiaries

The table below shows the detailed operational performance of coal based stations over the years.

OPERATIONAL PERFORMANCE OF COAL BASED NTPC STATIONS

Generation(BU) 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 218.84 206.94 200.86 188.67 170.88 159.11 149.16 140.86 133.20 130.10 118.70 109.50 PLF(%) 90.81 91.14 92.24 89.43 87.52 87.51 84.40 83.57 81.11 81.80 80.39 76.60 Availability Factor(%) 91.76 92.47 92.12 90.09 89.91 91.20 88.79 88.70 89.09 88.54 90.06 89.36

Renewable & Distributed Generation

Renewable Energy
Renewable energy (RE) is being perceived as an alternative source of energy for Energy Security and subsequently Energy Independence by 2020. Renewable energy technologies provide not only electricity but offer an environmentally clean and low noise source of power. NTPC plans to broad base generation mix by evaluating conventional and non-conventional sources of energy to ensure long run competitiveness and mitigate fuel risks.

Portfolio of Renewable Power

NTPC has also formulated its' business plan of capacity addition of about 1,000 MW thru renewable resources.

RENEWABLE ENERGY SOURCES

1. 2. 3. 4. 5. 6. Wind energy Farms Small Hydro Project Solar PV Power Project Solar Thermal Biomass Power Project Geothermal Power Project Total

CAPACITY
650 MW 300 MW 5 MW 10 MW 15 MW 30 MW 1,010 MW

Distributed Generation
Indias ambitious growth plans require inclusion of all sectors, especially the rural sector where two third of our population lives. Such economic development cannot be achieved without availability of energy and subsequently efficient energy management which is crucial for rural development. As per census 2001, about 44% of the rural households do not have access to electricity. Some of the villages are located in remote & inaccessible areas where it would be either impossible or extremely expensive to extend the power transmission network.

Objective

Implementation of distributed generation projects using locally available renewable resources such as biomass, wind, solar, micro hydel, bio-fuel etc.

Training & capacity building of local community to enable them to independently manage, operate & maintain the plant To ensure viability and long term sustainability of DG projects

Integrated growth & development of rural areas by enhancing employment education, income generation & livelihood opportunities

To ensure implementation of various technologies as demo/pilot project.

Future Additions Capacity

NTPC has formulated a long term Corporate Plan upto 2017. In line with the Corporate Plan, the capacity addition under implementation stage is presented below:

PROJECT

STATE

MW
980 500 1980 500 1500 1000 1000 500 750 1000 1000 1000 1000 1320

Coal
1. 2 3 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. NCTPP II ( 2 x 490) Uttar Pradesh Korba III ( 1 x 500) Chhattisgarh Sipat I (3 x 660) Chhattisgarh Farakka III ( 1 x 500) West Bengal Indira Gandhi STPP- JV with IPGCL & HPGCL ( 3 x Haryana 500) Simhadri II ( 2 x 500) Andhra Pradesh Vallur I -JV with TNEB ( 2 x 500) Tamilnadu Vallur Stage-I Phase-II -JV with TNEB ( 1 x 500) Tamilnadu Bongaigaon(3 x 250) Assam Mauda ( 2 x 500) Maharashta Rihand III(2X500) Uttar Pradesh Vindhyachal-IV (2X500) Madhya Pradesh Nabinagar TPP-JV with Railways (4 x 250) Bihar Barh II (2 X 660) Bihar

Hydro

1. Koldam HEPP ( 4 x 200) 2. Loharinag Pala HEPP ( 4x 150) 3. Tapovan Vishnugad HEPP (4 x 130) Total

Himachal Pradesh 800 Uttarakhand 600 Uttarakhand 520 17930

FINANCIAL MANAGEMENT IN LARGE POWER PROJECTS

In power project are extremely capital intensive and before large resources are committed to scheme a detailed feasibility study needs to be prepared covering the need for the project, the demand projections, the alternatives of site location, the board parameters of the plant and equipment, the cost estimate and the viability of the scheme. The NTPC Ltd. One of the largest power sectors in the country has its objectives to manage the financial operation in accordance with sound commercial utility practices and to generate return as per government guidelines.

FINANCIAL MANAGEMENT IN NTPC

NTPC has registered a phenomenal growth since its incorporated on November 7.1975 its gigantic investment plant to contract super thermal stations involve a tremendous responsible on the corporation the resources and utilize these with great degree of prudence and economic judgment so that the goals of the corporation are reached at least cost. The function can be describe as a function concerned with raising resources at least cost, optimizing the use of its resources, maximizing profits and minimizing losses.

The finance function therefore covers broadly

1. Financial planning involving acquisition and administration of funds. 2. Planning and control of expenditure and operation. 3. Payment of bills and wages. 4. Accounting according to generally accepted accounting principles. 5. Inventory control.

6. Internal audit & cost audit. 7. Management information, statistics, taxes, etc.

All finance activity commences with an investment proposal which calls for a financial appraisal of a project. Project is approved as the following basis.

Cost estimates
Feasibility report of the project is prepared based on the cost of similar units prevailing at the time of preparation of projects reports of the latest cost are not available, the same should be calculated. Collection of data with regard to be the cost of various equipments should form part of a continuous planning so that realistic cost estimates is made for the project. Rates for civil works are generally based on CPWD schedule of rates with reasonable premium there on.

Cost of generation
The financing of the public sector companies is generally based on a debt equity ratio of 1:1 the general rate of interest chargeable the central government on loan component is 10.5%. the plant live as provided under the electricity supply act 1948 is 25 years and depreciation based on this period has to be calculated on straight- line method on 90% of the cost of fixed assets.

FINANCIAL ANALYSIS INTRODUCTION

Financial analysis is the process of identifying the financial strengths and weaknesses of the firm and establishing relationship between the items of the balance sheet and profit &loss account .Financial ratio analysis is a fascinating topic to study because it can teach us so much about accounts and businesses. When we use ratio analysis we can work out how profitable a business is, we can tell if it has enough money to pay its bills and we can even tell whether its shareholders should be happy !Ratio analysis can also help us to check whether a business is doing better this year than it was last year; and it can tell us if our business is doing better or worse than other businesses doing and selling the same things. In addition to ratio analysis being part of an accounting and business studies syllabus, it is a very useful thing to know any way! The overall layout of this section is as follows: We will begin by asking the question, what do we want ratio analysis to tell us? Then, what will we try to do with it? This is themost important question, funnily enough! The answer to that question then means we need to make a list of all of the ratios we might use: we will list them and give the formula for each of them. Once we have discovered all of the ratios that we can use we need to know how to use them, who might use them and what for and how will it help them to answer the question we asked at the beginning? At this stage we will have an overall picture of what ratio analysis is, who uses it and the ratios they need to be able to use it. All that's left to do then is to use the ratios; and we will do that step- by-step, one by one

Need of the study

How has the business performed during the year How is the financial condition of the company How investment activities have performed during the year How does the unit stand in comparison to the industry Preparation of Forecasts Evaluation of SBUs and departments Credit rating

OBJECTIVES OF STUDY

MAJOR OBJECTIVES
To understand the financial position if NTPC/RHSTPP

ANCILLARY OBJECTIVES
1. To identify the financial soundness of NTPC 2. To check the liquidity condition of NTPC 3. To show the trend of sales for the five years of NTPC 4. To show the trend of working capital for last five years of NTPC.

To enable the researcher to have an insight with the financial statement and to develop analytical ability use ratio analysis as the Financial Statement Analysis.

SCOPE OF THE STUDY

FORM THE COMPANY POINT OF VIEW

The study enables to analysis the financial performance. The study enables the company to assess the liquidity position and its various drawbacks.

HELP IN DECISION MAKING

Financial statements are prepared primarily for decision making. With the help of Ratio analysis in the financial statement to take effective decision making.

HELPS IN FINANCIAL FORECASTING AND PLANNING

Ratio analysis is one of the powerful tool help in financial forecasting and planning. Planning looking ahead and ratio calculated for the number of years work as guide for the future.

HELPS IN CONTROL
Ratio analysis even helps in making effective control of the business, standard ratio can be based upon performance financial statements and variance can be found by comparing actual data with standards. If any deviation is raised to take a corrective action at the right time.

UTILITY OF SHAREHOLDERS / INVESTORS

Investor in the company will like to assess the financial position of the concern where he is going to invest. His first Interest will be the security of his investment and the return in the form of dividend and interest. For that purpose he will try to assess the value of fixed assets and the loan rose against them. The investors will feel satisfied only if the concern has sufficient amount of assets. Profitability ratio will be useful to determine profitability position.

UTILITY TO CREDITORS
The creditors or the supplier extends short-term credit to the concern. They are interested to know whether financial position of the firm warrants their payments. To analyses the current ratio helps the position of the firms current assets and currents liabilities.

UTILITY TO EMPLOYEES
The employee interested in the financial position of the concern especially profitability. There wages increases and amount of fringe benefits are related to the volume profits earned by the concern.

UTILITY TO THE GOVERNMENT

Government interested to know the overall strength of the industry various financial statements published by industrial units and use to calculate ratio for determining the short term. Long term and overall financial position of the concern profitability indexes can also be prepared with help of the ratio.

PART - 2

CHAPTER - 2

RESEARCH METHODOLOGY
The information was collected from various sources which are listed below: For the official document. From records and manuals of different departments of the organizations. From a close observation of the functioning of various departments of the organizations. Last but not least, knowledge, both negative and positive precipitated through informal discussions with the employees of different departments.

RESEARCH METHODOLOGY Plan of study:A proper and systematic approach is essential in any project work. Proper planning should be conducting the data collection, completion and presentation of the project .Each and every step must be so planned that it leads to the next step automatically. This systematic approach is a blend a planning and organization and major emphasis is given to independences of various steps.

The plan of this study is as follows

Research purpose
The purpose of the research was to criteria on which investment of the company is raised every year and a favorable rate of return is arrived at, increasing the net result of the company as per their budget.

Research objective
The main objective the research is: To know the investment decisions To analyze the investment depending on internal rate of return.

Research design
Research design helps in proper collection and analysis of the data. It helps in further course of action.

Research approaches
The most appropriate research is descriptive. This is because the goal of the study is clear research will help to understand to concept better.

Classification of data
Primary data This includes the information collected mainly from the office. This has served as primary source of data for this study Secondary data This includes the information gathered from various website .Sample Size The sample size selected is of four years

 Sampling technique
The sampling procedure employed for this is judgmental sampling a convenience sampling technique in which elements are based on the judgment of researcher Software tools used for the data analysis The software tools used for data analysis in MS WORD & MS EXCEL

Research tools
Graphs and tables are used as the research tools in the project work.

LIMITATIONS

1. Since time available is only six weeks for the project work, a detailed analysis was not possible. 2. The researcher was not able to focus on qualification factors, which influences the financial position of the organization. 3. The study was limited to . So the result could not be generalized to macro level. 4. Ratio analysis is only tools used for the financial statement analysis. 5. Since the finance and accounting in an organization being a very sensitive area, analysis is based on assumed, date of NTPC. 6. As the study is only for one particular company. Inter firm comparison is not possible.

CHAPTER 3

DESCRIPTIVE WORK ON SUBTOPIC OF STUDY

WORKING CAPITAL MANAGEMENT

What is Working Capital?

Working capital is how much in liquid assets that a company has on hand. Working scapital is needed to pay for planned and unexpected expenses, meet the short-term obligations of the business, and to build the business

Introduction Working capital management is divided into four section. The first section explains the nature of working capital in terms of the basic concepts, strategies and policies of working capital management. The trade-off between profitability and risk is elaborated in section 2. The determination of financing mix is explained in Section 3. The major points are recapitulated in the last Section.

Nature of working capital Working capital management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the interrelationship that exists between them. The term current assets refer to those assets which in the ordinary course of business can be, or will be, converted into cash within one year without undergoing a diminution in value and without disrupting the operations of the firm. The major current assets are cash, marketable securities, accounts receivable and inventory. Current liabilities are those liabilities which are intended, at their inception, to be paid in the ordinary course of business, within a year, out of the current

assets or earnings of the concern. The basics current liabilities are accounts payable, bills payable, bank overdraft, and outstanding expenses. The goal of working capital management is to manage the firms current assets and liabilities in such a way that a satisfactory level of working capital is maintained. Concepts and Definitions of Working Capital There are two concepts of working capital Gross and Net.

Goss working capital, also referred to as working capital, means the total current assets.

Net working capital can be defined in two ways: The most common definition of net working capital (NWC) is the difference between current assets and current liabilities; and Alternate definition of NWC is that portion of current assets which is long-term funds. The three basic measures of firms overall liquidity are 1. the current ratio, 2. the acid-test ratio, 3. the net working capital. financed with

Ratio analysis
Ratio analysis is one of the techniques of financial analysis to evaluate the financial condition and performance of a business concern. Simply, ratio means the comparison of one figure to other relevant figure or figures. According to Myers , Ratio analysis of financial statements is a study of relationship among various financial factors in a business as disclosed by a single set of statements and a study of trend of these factors as shown in a series of statements.

"Advantages and Uses of Ratio Analysis

To workout the profitability: Accounting ratio help to measure the profitability of the business by calculating the various profitability ratios. It helps the management to know about the earning capacity of the business concern. In this way profitability ratios show the actual performance of the business.

To workout the solvency: With the help of solvency ratios, solvency of the company can be measured. These ratios show the relationship between the liabilities and assets. In case external liabilities are more than that of the assets of the company, it shows the unsound position of the business. In this case the business has to make it possible to repay its loans

Helpful in analysis of financial statement: Ratio analysis help the outsiders just like creditors, shareholders, debenture-holders, bankers to know about the profitability and ability of the company to pay them interest and dividend etc.

 Helpful in comparative analysis of the performance: With the help of ratio analysis a company may have comparative study of its performance to the previous years. In this way company comes to know about its weak point and be able to improve them

To simplify the accounting information: Accounting ratios are very useful as they briefly summarize the result of detailed and complicated computations.

Limitations of Ratio Analysis

In spite of many advantages, there are certain limitations of the ratio analysis techniques and they should be kept in mind while using them in interpreting financial statements. The following are the main limitations of accounting ratios: Limited Comparability: Different firms apply different accounting policies .Therefore the ratio of one firm cannot always be compared with the ratio of other firm .Some firms may value the closing stock on LIFO basis while some other firms may value on FIFO basis. Similarly there may be difference in providing depreciation of fixed assets or certain of provision for doubtful debts etc False Results :Accounting ratios are based on data drawn from accounting records .In case that data is correct, then only the ratios will be correct. For example, valuation of stock is based on very high price, the profits of the concern will be inflated and it will indicate a wrong financial position. The data therefore must be absolutely correct.

Effect of Price Level Changes :Price level changes often make the comparison of figures difficult over a period of time. Changes in price affect the cost of production, sales and also the

value of assets. Therefore, it is necessary to make proper adjustment for price-level changes before any comparison

Qualitative factors are ignored: Ratio analysis is a technique of quantitative analysis and thus, ignores qualitative factors, which may be important in decision making. For example, average collection period may be equal to standard credit period, but some debtors may be in the list of doubtful debts, which is not disclosed by ratio analysis. Effect of window-dressing : In order to cover up their bad financial position some companies resort to window dressing. They may record the accounting data according to the convenience to show the financial position of the company in a better way.

Procedure (Stages) For Ratio-analysis

Classification Of Ratios Ratios may be classified in a number of ways to suit any particular purpose. Differentkinds of ratios are selected for different types of situations. Mostly, the purpose for whichthe ratios are used and the kind of data available determine the nature of analysis. Thevarious accounting ratios can be classified as follows: A.Profitability ratios : 1 Gross profit ratio 2 Net profit ratio 3 Operating ratio 4 Return on shareholders investment or net worth 5 Return on equity capital 6 Earnings Per Share Ratio 7 Price earnings ratio

B. Liquidity ratios: 1 Current ratio 2 Liquid /Acid test / Quick ratio C. Activity ratios : 1 Inventory/Stock turnover ratio 2 Debtors/Receivables turnover ratio 3 Working capital turnover ratio 4 Fixed assets turnover ratio D. Leverage ratios or long term solvency ratios : 1 Debt equity ratio 2 Proprietary or Equity ratio 3 Ratio of fixed assets to shareholders funds 4 Current Assets to Proprietor's Fund Ratio 5 Interest coverage or debt service ratio

YEAR GROSS PROFIT NET SALES R

RATIO

YEAR NET PROFI

CHAPTER - 4

DATA ANALYSIS AND INTERPRETATION Period of study

The period of study for the project report is five year from 2007-2011 and analysis of trend value of the sales and working capital is five years from 2007-2011.

PROFITABILITY RATIO
Efficiency of business is measured by the profitability. Profit as compared to the capital employed indicates profitability of the concern. Various profitability ratio are gross profit, net profit, operating profit ratio etc.

1.GROSS PROFIT RATIO

Gross profit ratio is define as the relationship between the gross on the one hand and sales on other hand. The ratio is calculated by dividing the gross profit by net sales and represented in percentage . Gross Profit Ratio= (Gross Profit/Net Sales)*100

year
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Gross Profit Margin

33.28 25.31 19.48 21.1 33.28

Gross profit margin

35 30 25 20 15 10 5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Gross profit margin

COMMENT
Gross Profit Margin on NTPC was 33.28% in 2006-2007 but then it had fallen for consecutive 2 yrs to reach to the level of 19.48 in 2008-09. It showed some improvement in2009-10 but reached only till 21.1% not even close to the earlier levels. The reduction in the profits could be due to inefficiency or even may be because on the global economic slowdown. But even in the slowdown period it was enough to recover the operating expenses and maintain reserve. In 2010 it showed a tremendous increase and augmented to the level of 33.28%.

2.NET PROFIT RATIO

Net profit ratio is defined as the relationship between the net profit on the one hand and sales on other hand. The ratio is calculated by dividing the net profit by net sales and represented in percentage.

Net profit

Gross Profit + Other Income - Expenses and Depreciation and Provision

Net profit ratio

Net Profit x 100 Net Sales

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Net profit margin

19.39 18.51 18.11 17.72 15.85

net profit margin

25

20

15 net profit margin 10

0 2006-07 2007-08 2008-09 2009-10 2010-11

COMMENT
The net profit margin for NTPC for the year 2006-07 was 19.39 since then it has been decreasing constantly reaching a level of 15.85 in the year 2010-11 .The constant fall in the net profit shows loss in proprietors .

3.OPERATING PROFIT RATIO

Operating ratio is defined as the relationship between the cost of goods sold + operating expenses on the one hand and sales on other hand. The ratio is calculated by dividing the operating cost by net sales and represented in percentage.

Operating cost =

Cost of goods sold + Operating expenses

Operating profit ratio

Operating x 100 Net Sales

Year
2006-07 2007-08 2008-09 2009-10 2010-11

Operating ratio
31.13 31.07 25.11 26.81 23.01

operating ratio
35 30 25 20 15 10 5 0 2006-07 2007-08 2008-09 2009-10 2010-11 operating ratio

COMMENT
Operating Profit Margin for NTPC for the Year 2006-07 and 2007-08 has been31.3 % and31.07 respectively but slipped to 25.11% in the year 2008-2009 then again recovered in 2009-10 and reached to 26.81%. But again went down to 23.01% which is a good indicator leaving higher margins of profit on sales. .

4. RETURN ON SHAREHOLDERS INVESTMENT

It is the ratio of net profit to share holder's investment. It is the relationship between net profit (after interest and tax) and share holder's/proprietor's fund. This ratio establishes the profitability from the share holders' point of view. The ratio is generally calculated in percentage.

Operating Ratio = Cost of Goods Sold + Operating Expenses/ Net Sales *100

Year
2006-07 2007-08 2008-09 2009-20 2010-11

Return on net worth

14.13 13.66 13.9 13.69 13.31

Return on Net worth

14.2 14 13.8 13.6 13.4 13.2 13 12.8 2006-07 2007-08 2008-09 2009-10 2010-11 return on net worth

COMMENT
Return on Net Worth for NTPC in the year 2006-07 has been 14.13 then it decreased to 13.66% in 2007-08 , since then it has been almost constant to 13.31 % to 2010-11 .

5 . EARNINGS PER SHARE

EPS ration are small variation of return on equity capital ratio and calculated by dividing the Net profit after tax and preference dividend by Total number of shares .

Earnings Per Share= Net Earnings /Number of shares outstanding

Year
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 8.33 8.99 9.995 10.59 11.04

EPS

EPS
12 10 8 6 4 2 0 2006-07 2007-08 2008-09 2009-10 2010-11

EPS

COMMENT
The Earning per share of NTPC was 8.33 in 2006-07 which increased up to the level of the level of 11.04 in 2010-11. This augmentation is a good indicator for the shareholders.

ACTIVITY RATIO/TURNOVER RATIO

Turnover ratio is calculated sales and goods sold to working capital and debtors turnover ratio.

1. INVENTORY TURNOVER RATIO

It establishes the relationship between the costs of goods sold to average stock. It is calculated by dividing cost of goods sold by average stock.

Stock turnover ratio

Cost of goods sold Average stock

Average stock

Opening stock - Closing stock

Cost of goods sold = Opening stock + Purchase - Closing stock

Year
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Inventory turnover ratio

14.1 33.59 28.21 27.54 29.18

Inventory turnover ratio

40 35 30 25 20 15 10 5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Inventory turnover ratio

COMMENTS
Inventory turnover ratio in 2006-07 was 14.10 which increased to 33.59 in 2007-08 which indicates that stock has been used effectively. But decreased to 29.18 in 2010-11. The higher ratio indicates that stock is sold quickly.

2. DEBTORS TURNOVER RATIO

It establishes the relationship between the net annual credit sales to the average debtors. It is calculated by dividing the net sales by average debtors.

Average debtors

Opening debtors + Closing debtors 2

Debtors turnover ratio

Net sales Average debtor

Year
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Debtors Turnover Ratio

30.78 17.52 12.78 9.06 7.54

Debtors turnover ratio

35 30 25 20 15 10 5 0 Category 1 2007-08 2008-09 2009-10 2010-11 Debtors turnover ratio

COMMENT
The Debtors Turnover ratio in 2006-07 is 30.78 and reduced constantly from 17.52 in 2007-08 to 12.78 in 2008-09. There is a substantial decrease in debtors turnover ratio to 7.54 in2010-011. This indicates that the amount is not collected at a faster pace from the debtors.

3. INVESTMENT TURNOVER RATIO

Return earned on a capital invested in a business is termed as investment turnover ratio. Following formula is used to calculate investment turnover ratio:

Investment turnover Ratio = Sales/Net Worth + Long Term liabilities

Year
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Investment Turnover Ratio

30.51 33.59 28.21 27.54 29.18

Investment turnover ratio

40 35 30 25 20 15 10 5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Investment turnover ratio

COMMENT
The Investment turnover ratio in 2006-07 was 30.51 which increased to 33.59 in 2007-08 and is constantly decreasing to 29.18 in 2010-11. This indicates that earlier funds were placed properly earlier but the efficiency has reduced from the past years.

4 . TOTAL ASSETS TURNOVER RATIO

The total asset turnover ratio measures the ability of a company to use its assets to generate sales. The total asset turnover ratio considers all assets including fixed assets, like plant and equipment, as well as inventory and accounts receivable. Formula:-

Total Assets Turnover Ratio = Net sales/ Total Assets

Net Fixed Assets = Fixed Assets Depreciation

Year
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Total Assets Turnover Ratio

0.44 0.46 0.45 0.46 0.49

Total assets turnover ratio

0.5 0.49 0.48 0.47 0.46 0.45 0.44 0.43 0.42 0.41 2006-07 2007-08 2008-09 2009-10 2010-11 Total assets turnover ratio

COMMENT
The asset turnover ratio has increased from 0.44 in 2006-07 to 0.49 in 2010-11, which has been apparantly constant indicating constant use of assets to generate sales.

SHORT TERM FINANCIAL POSITION RATIO

Short term financial position such as current ratio, liquidity ratio, creditors turnover ratio, debtors turnover ratio is calculated. It means the ability concern to meet current liabilities.

1. CURRENT RATIO
It is define as the relationship between current assets and current liabilities. It is calculated as below.

Current Ratio

Current Assets Current Liabilities

Year
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Current ratio
2.42 2.36 2.69 2.81 2.59

Current ratio
2.9 2.8 2.7 2.6 2.5 2.4 2.3 2.2 2.1 2006-07 2007-08 2008-09 2009-10 2010-11 Current ratio

COMMENTS
The Current ratio of NTPC is ideal since 2.42 in 2006-07 to 2.59 in 2010-11 . The company is in better position to pay its current liabilities .

2. QUICK RATIO

Quick ratio is also known as liquid ratio as well as acid test ratio. The term liquidity refers to the ability of firm to pay short term obligation. It is the relationship between the liquid assets to current liabilities Quick assets is equal to current assets mines stock. It is calculated as below.

Quick ratio

Quick assets Currents liabilities

Year
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Quick Ratio
2.18 2.16 2.59 2.5 2.32

Quick ratio
2.7 2.6 2.5 2.4 2.3 2.2 2.1 2 1.9 2006-07 2007-08 2008-09 2009-10 2010-11 Quick ratio

COMMENTS

The Quick ratio of NTPC in 2006-07 was 2.18 which is constant or rather has increased a bitto 2.32 in 2010-2011. The Quick ratio is greater than the ideal i.e. 1:1 which is a goodindicator of the companys position.

LEVERAGE RATIO
This ratio disclose the firms ability to meet the intrest cost regularly and long term debtedness at maturity .

1. DEBT EQUITY RATIO

This ratio express the relationship between the longterm debt and shareholders funds

Debt equity ratio = long term debt/ shareholders fund

Year
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Debt equity ratio

0.52 0.5 0.59 0.59 0.63

debt equity ratio

0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 2009-10 2010-11 debt equity ratio

COMMENT
The debt equity ratio of 2:1 is considered ideal and lower the ratio safe is the position of the company in terms of long term lenders. The Debt-Equity ratio in 2006-07 is 0.52 and is on increase to a level of 0.63 in 2010-2011

2. FIXED ASSETS TURNOVER RATIO

This ration measures the efficiency and profit earning capacity of the concern

Fixed assets turnover ratio= cost of sales / net fixed assets

Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Fixed turnover ratio 0.64 0.69 0.67 0.69 0.76

fixed assets turnover ratio

0.78 0.76 0.74 0.72 0.7 0.68 0.66 0.64 0.62 0.6 0.58 2006-07 2007-08 2008-09 2009-10 2010-11 fixed assets turnover ratio

COMMENT
Higher the fixed assests turnover ratio better for the company indicating the better utilization of fixed assets .it was 0.64 in 2006-07 which is on constant increase since then to a level of 0.76 in 2010-11 .This implies that fixed assets are being used effectively .

3. Interest coverage ratio

This ratio is also termed as Debt Service Ratio . This ratio is calculated as follows :

Interest coverage ratio = net profit before charging interest and taxes / fixed interest charges .

Year
2006-07 2007-08 2008-09 2009-10 2010-11

Interest coverage ratio

9.49 10.28 11.91 12.18 10.65

interest coverage ratio

14 12 10 8 6 4 2 0 2006-07 2007-08 2008-09 2009-10 2010-11 interest coverage ratio

COMMENT

Interest Coverage ratio of 6-7 is considered most appropriate but interest coverage ratio of NTPC is 9.49 in 2006-07 and is on a constant increase since then to 12.18 in2009-10 but decreased in 2010-11 to 10.65. this implies regular payment of interest to the lenders.

TRENDS OF WORKING CAPITAL FOR THE YEAR

(2007-2011)

Year

Working capital (Y)

X^2

XY

Trend value (Y=a+ bx)

2007-08 9 2008-09 59 2009-10 59 2010-11 211

-2 -1 0 1

4 1 0 1

-18 -59 0 211

39.84 62.17 84.50 106.83

a = EY
N

(N = Number of years)

b = EXY EX^ 2

a = 338
4

b = 134 6

a = 820 5

b = 22.33

a = 84.5

COMMENT
From the above table analysis there is a increasing trend in working capital this is a good sign of progress. It has increased from 39.84 to 106.83.

TRENDS OF SALES FOR THE YEAR (2007-2011)

(Rs. In Crores) Year 2007-08 2008-09 2009-10 2010-11 Sales 1298 2234 2731 2997 X -1 0 1 2 X^2 1 0 1 2 XY -1298 0 2731 11988 Trend sales 78 2315 4552 6789

a = EY
N

(N = Number of years)

b = EXY EX^ 2

a = 9260
4

b = 13421 6

a = 2315

b = 2237

COMMENTS
From the above table analysis there is an increasing trend in the trend values of NTPC for the oats four years. Though the sales were less in the year 2007-08 still it shows an increasing.

CHAPTER - 5

Conclusion & suggestion FINDINGS :

1. PROFITABILITY RATIO
Gross

2. TURNOVER RATIO
Inventory turnover ratio is high in 2010-11. The first four year Debtor turnover ratio is high indicating much of the receivable are outstanding. The high debtors turnover has more chances for bad debts. The turnover position fair creditors turnover ratio is low in 2007-08 , the payment period is not high.

3. LIQUIDITY POSITION
Current ratio is 2.1 in 2010-11, it is above standard normal level. It implies that the company invests large amount in both current assets and current liabilities. The liquidity ratio in 2007-08 is 0.44 and in 2010-11 is 0.68

4. LEVERAGE RATIO
The debt equity is not mentioned here because the debt and equity are issued at the corporate level and it keeps record at corporate office at Delhi.

SUGGESTIONS

1. To see that the company inventories is at maximum level in order to increase the inventory turnover to institute inventory management. 2. Creditor turnover should be improved to set a high period. 3. The Debtors turnover should be increased to maintain collection period 4. Liquidity ratio is all above the standard norms the company should make planning to minimize the current assets and current liabilities investment. 5. Operating expenses ere low and this increases the operating profit of the company. 6. Return on investment is in declining trend and hence care must be taken to increase net profit and capital employed by the company.

CONCLUSIONS

1. It should be borne in mind that the tool applied in the study to analysis the efficiency and effectiveness in financial management is most appropriate ones. 2. The firm NTPC Liquidity position in terms of short term and long term are good. 3. The efficiency of the company is also good. 4. The above analysis enables the company to understand the financial position and financial soundness of NTPC

CHAPTER- 6

Bibliography

BOOKS-: 1. Siddique S.A, Financial Analysis (2005), Laxmi publications, New Delhi. 2. Pandey I.M, Financial Management(2005), Vikas publishing house Pvt Ltd, New Delhi. 3. Tulsian P.C, Financial Analysis(2003), Pearson education, Delhi. 4. Kothari C.R, Research Methodology(2009), New age international,

WEBSITES

1. http://www.bseindia.com 2. http://en.wikipedia.org/wiki/National_Thermal_Power_Corporation 3. https://www.ntpc.co.in/ 4. http://www.moneycontrol.com/financials/ntpc/balance-sheet/NTP 5. http://money.rediff.com/companies/ntpc-ltd/15130025/balance-sheet

Mar` 11 Capital and Liabilities Owners' Fund Equity Share Capital Share Application Money Preference Share Capital Reserves & Surplus Loan Funds Deposits Borrowings made by the bank Other Liabilities & Provisions Total 8245.5 0 0 50749.4 0 0 10688.7 69683.6

Mar` 10

Mar` 09

Mar` 08

Mar` 07

8245.5 0 0 46021.9 0 0 12909 67176.4

8245.5 0 0 40351.3 0 0 10702.5 59299.3

8245.5 0 0 36713.2 0 0 8650.6 53609.3

8245.5 0 0 33530.8 0 0 8561.3 50337.6

Assests Cash & Balances with RBI Money at call and Short Notice Investments Advances Fixed Assets Gross Block Less: Revaluation Reserve Less: Accumulated Depreciation Net Block Capital Work-in-progress Other Assets Miscellaneous Expenses not written off Total Note Contingent liabilities 16271.6 0 13983.5 0 62353 0 29415.3 32937.7 26404.9 30925.3 0 69683.6 66083.2 14933.2 0 15267.2 0 53368 0 27274.3 26093.7 22478.3 30527.8 0 67176.4 29361.8 13314.6 0 16094.3 0 50604.2 0 25079.2 25525 16962.3 25858.8 0 59299.3 25218.8 8471.4 0 19289.1 0 45917.6 0 22950.1 22967.5 13756 18234.8 0 53609.3 16429.8 6078.3 0 20797.7 0 42996.1 0 20791.4 22204.7 10038.6 14721.8 0 50337.6 16680

Book Value of Unqouted Investment Market Value of Qouted Investment

13785 275.5

15453.1 304.3

18008.2 316.4

18409.6 951.6

17684.9 3524.9