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SUMMER TRAINING PROJECT REPORT

ON

FINANCIAL RATIOS

SUBMITTED IN THE PARTIAL FULFILMENT FOR THE

REQUIREMENT OF THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (MBA)

(2016-2018)

Dr. Y S Parmar University of Horticulture and Forestry,

Nauni, Solan

Submitted By:

Madhur Moksh Sharma

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ACKNOWLEDGEMENT

I take this opportunity to express my gratitude to Mr. Shivanshu Gupta


and Mr. Kulbir Singh who has been instrumental in the successful
completion of this project.
I am thankful to his guidance and constant supervision for providing
necessary information regarding the successful completion of the
project. I would like to express my gratitude towards employees of
SJVN Ltd. for their kind co-operation and encouragement.

The guidance and support received from all the members who
contributed to this project, was vital for the success of the project. I am
grateful for their constant support and help.

MADHUR MOKSH SHARMA

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PREFACE

The training at SJVN Limited involved the day to day working at


Finance department. This project helped me to get the deeper
understanding of the process of Financial Statement Analysis and how
decisions are taken to strengthen the financial position.

For this study previous year Balance Sheets have been taken for trend
analysis and ratio analysis. Main objective in undertaking this project is
to supplement academic knowledge with absolute practical exposure to
day to day functions of the business organization.

Financial analysis which is the topic of this project refers to an


assessment of the viability, stability and profitability of a business. This
important analysis is performed usually by finance professionals in order
to prepare financial or annual reports. These financial reports are made
with using the information taken from financial statements of the
company and it is based on the significant tool of Trend Analysis and
Ratio Analysis. These reports are usually presented to top management
as one of their basis in making crucial business decisions.

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DECLARATION

I Madhur Moksh Sharma student of Dr. Y.S.Parmar


University of Horticulture and forestry, Nauni, hereby declare
that I have completed the project on FINANCIAL RATIOS
of SJVN LTD in Partial Fulfillment of the Requirements for
the Degree in Master of Business Administration Session
(2016-18). The information submitted is true and original to the
best of my knowledge.

Place: MADHUR MOKSH SHARMA


Date: (H-2016-12-MBA)

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CERTIFICATE

This is to certify that the project FINANCIAL RATIOS of


SJVN LTD has been submitted to Dr.Y.S.Parmar University
of Horticulture and Forestry, Nauni by MADHUR MOKSH
SHARMA in partial fulfilment of the requirement for the award
of degree in Masters of business Administration, is a bonafide
work carried out by him under my supervision and guidance and
no part of this work has been submitted for any other degree or
diploma.

(Project Coordinator)
(Project Advisor)

Place:
Date:

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Contents

Sr.No. Title

1. Company Profile.
2. Vision, Mission and Objectives.
3. SJVNLS Projects.
4. Awards and achievements.
5. Organizational structure.
6. SWOT analysis.
7. Activities undertaken at training and personnel learning.
8. Balance sheet of SJVNL As on 31st march 2015-16.
9. Key operation processes.
10. Corporate governance.
11. Conclusion.
12. Reference.

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Company Profile
Brief History:
SJVN a MINI RATNA & Schedule A CPSU under the Ministry of Power, Govt. Of India, is a
joint venture between the Govt. of India & Govt. of Himachal Pradesh. Incorporated in the year
1988, the company is emerging as a power player in the country. The present authorised capital
of SJVN is 7000 crores.

Beginning with single project and single state operations (i.e. NATHPA JHAKRI which is
Indias largest hydroelectric power plant in Himachal Pradesh) the company is presently
implementing hydroelectric projects in Himachal Pradesh, Uttarakhand and Manipur besides
neighbouring countries viz. Nepal and Bhutan. Recently it has taken up survey & investigation of
four hydroelectric projects in Arunachal Pradesh.

SJVN has expanded it horizons and envious to develop into a fully-diversified Transnational
Power Sector Company in all types of conventional and non-conventional form of energy. SJVN
has also signed an MOU with IREDA(Indian Renewable Development Agency ) for the
development of Renewable energy projects on 29th may, 2012.

For its meritorious performances during the year 2010-11, the companys 1500 MW Nathpa
Jhakri power station was awarded GOLD SHIELD by the Ministry of Power in the Category
of Performance of Hydro Power Station.

The present installed capacity of SJVN is 1500 MW. The capacity addition under various stages
of implementation by the corporation is 5421 MW (412 MW- under construction, and 4829 MW
under various stages of clearance).

SJVN is committed to generating reliable and eco-friendly power by State of Art Technology,
excellence in engineering and continual improvement in quality management. SJVN, as an IT
savvy cooperation has established and is following sound business, financial and regulatory
policies. SJVN believes that employees are its most valuable assets and has evolved growth
oriented Human Resource Development Strategy.

SJVN A MINI RATNA COMPANY


SJVN was conferred with the prestigious MINI RATNA: Category-I status by the Government
of India in the year 2008 within only four years of coming into commercial operations.

SJVN SCHEDULE A COMPANY


Meeting the criteria lay down by the Department of Public Enterprise and qualifying the
quantitative parameters viz. investment, capital employed, net sales, profits, employees, and also
factors of national importance, complexities of problems faced, and level of technology adopted

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prospects for expansion and diversification, competitiveness etc. SJVN was upgraded as
Schedule A PSU in 2008.

Companys Vision, Mission & Objectives:

Vision:
To make SJVNL a vanguard of energy sector and make India the energy source of the future by
reorganizing socio-economic development with passion and professionalism for sustainable
viability of the corporation on bedrock of sound commercial principles. Towards the end of
sustainable development of project areas and owning corporate social responsibility, adoption of
peoples' empowerment by education.

Mission:
To plan, investigate, organize, execute, operate and maintain power projects, evacuate &
distribute power and explore, arrange & exploit resource inputs in India and abroad
In the pursuit of above mission, the company had set for itself the following corporate.

Objectives:
Operating and maintaining power stations with maximum performance efficiency.
Establishing and following sound business, financial and regulatory policies.
Taking up of other hydro power projects.
Completion of the new projects allocated to SJVNL in an efficient and cost effective
manner.
Dissemination of available in-house technical and managerial expertise to other utilities /
projects.
Creating work culture and work environment conducive to the growth and development
of both the organization and the individuals through introduction of participative
management philosophy.
Fulfilling social commitments to the society. Achieving constructive cooperation and
building personal relations with stakeholders, peers, and other related organization.

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Striving clean and green project environment with minimal ecological and social
disturbances.
To strive for acquiring Nav Ratna Status.
To explore diversification opportunities in Thermal, Nuclear or any other power
generation projects including exploitation of resource inputs such as coal mining.
To take up transmission and distribution business to take up power trading to sell power
produced from merchant power stations.
To manage load dispatch centres.

Developmental activities:
The main developmental activities are these projects are diversified into thermal, Solar and wind
projects.
These projects are now spread in the country as well as outside the country.

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Nathpa Jhakri Hydroelectric Project
The Nathpa Jhakri Hydroelectric Station of 1500 MW capacity is the countrys largest
hydropower plant. The run of the river project is located on River Sutlej, a major tributary on the
Indus basin, in Shimla district of Himachal Pradesh in North India. The Nathpa Jhakri plant is
designed to generate 6950.88 (6612) million units of electricity each year but quality
management at the plant has enabled generation to exceed yearly targets.

A Memorandum of Understanding for execution of the Nathpa-Jhakri project was signed


between Government of India and Government of Himachal Pradesh in July, 1991.

The Nathpa Jhakri Hydroelectric project has been financed on a 50:50 debt equity ratio basis.
The project had the backing of World Bank. The project was completed at a cost of Rs 8187
Crore.

The Nathpa Jhakri project was commissioned in May, 2004 and officially dedicated to the nation
by Prime Minister Manmohan Singh on May 28, 2005.

RHEP
RAMPUR HYDRO ELECTRIC PROJECT
The Rampur project with a generation potential of 412 MW is located on River Satluj, a major
tributary of Indus basin, in Shimla and Kullu district of Himachal Pradesh in North India. The
project is designed as a cascade run of the river plant to Indias largest hydroelectric power plant,
the 1500 MW Nathpa Jhakri plant. The Rampur project has the potential to generate 1969.68
million units of electricity each year.

The Rampur Hydroelectric Project involves financing of the project on a 70:30 debt-equity ratio
basis. The Rampur Project is backed by the World Bank. Construction of Rampur Project began
in February, 2007 and all the six units of 68.67 MW each is scheduled to be commissioned by
March 2014.The Rampur Project is a very environment friendly project as it does not involve
construction of any diversion dam or any de-silting chambers and does not inundate any land.

Luhri Hydro Electric Project

The Luhri Project with a generation potential of 588 MW is located on River Satluj, a major
tributary of Indus basin, in Shimla/Kullu/Mandi district of Himachal Pradesh in North India. The
project is designed as a standalone run of the river project. The Luhri project has the potential to
generate 2244 million units in a 90% dependable year. The Memorandum of Understanding for

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execution of Luhri project was signed with the Government of Himachal Pradesh on October 27,
2008.

The estimated cost of the project at January, 2013 price level is Rs. 7137.02 crores. The Project
shall be financed on 70:30 debt equity ratios. The equity portion is to be shared between the
Govt. of India (GOI) and govt. of Himachal Pradesh (GOHP).

Devsari Hydro Electric Project


The Devsari project with a generation potential of 252 MW is located on River Pinder, on Ganga
basin, in Chamoli district of Uttarakhand state in North India. The project is designed as a
standalone run of the river project. The Devsari project has the potential to generate 936.90
million units of electricity each year.

A Memorandum of Understanding for execution of Devsari project was signed with the
Government of Uttarakhand on November 21, 2005.The Devsari Hydroelectric Project involves
financing of the project on a 70:30 debt-equity ratio basis. The estimated cost of the project at
June, 2012 price levels is Rs 1790.09 crores. Construction period of the project is 5 years.

Naitwar Mori Hydro Electric Project

The Naitwar Mori Project with a generation potential of 60 MW is located on River Tons, a
major tributary of River Yamuna on the Ganga basin, in Uttarkashi district of Uttarakhand state
in North India.

The project is designed as a standalone run of the river project. The Naitwar Mori project has the
potential to generate 265.5 million units of electricity each year.

A Memorandum of Understanding for execution of Naitwar Mohri project was signed with the
Government of Uttarakhand in November 21, 2005.The Naitwar Mori Hydroelectric Project
involves financing of the project on a 70:30 debt-equity ratio basis. The estimated cost of the
project at March 2012 price levels is Rs 664.6 crores. Construction period of Naitwar Mori
project is 4 years.

Jakhol Sankri Hydro Electric Project

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The Jakhol Sankri Project with a generation potential of 51 MW is located on River Supin, a
tributary of River Tons and part of River Yamuna on the Ganga basin, in Uttarkashi district of
Uttarakhand state in North India.

The project is designed as a standalone run of the river project. The Jakhol Sankri project has the
potential to generate 216.26 million units of electricity each year. A Memorandum of
Understanding for execution of Jakhol Sankri project was signed with the Government of
Uttarakhand in November 21, 2005. Construction period of Jakhol Sankri project is 48 months.

Arun III Hydro Electric Project


Memorandum of Understanding (MOU) was signed with the Govt. of Nepal for the execution of
900 MW Arun III HE Project on 02.03.2008. Proposed to be located in the Sankhuwasabha
Distt. of Nepal which is 657 Km from Kathmandu via Birat Nagar. The Survey license for
generation was issued by Govt. of Nepal during July 2008 & extended up to 17.07.2013. TOR
clearance for IEE of roads issued by Govt. of Nepal on 20.04.2010.

Letter of intent issued on 23.05.2010 to carry out infrastructure work at Dam & Power House
site. Detailed Project Agreement is in the process of examination by GoN before signing. FSR &
commercial viability for 900 MW was approved by CEA on 23.02.2010. Final DPR submitted to
CEA on 31.03.2011 and under examination for vetting.

Dhaulasidh Hydro Electric Project


The Dhaulasidh Project with a generation potential of 66 MW is located on River Beas, part of
the Indus basin, in Hamirpur district of Himachal Pradesh in North India. The project is designed
as a run of the river project with a small live storage that would be utilized for peaking power
during the lean season. The Dhaulasidh project design holds potential of generating 253.18
million units of electric energy each year

The Dhaulasidh Hydroelectric Project involves financing of the project on a 70:30 debt-equity
ratio basis. The estimated cost of the project at June, 2012 price levels is Rs 774.1 crores
including IDC. Construction period of the project is 54 months.

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Wangchu Hydro Electric Project
Wangchu HEP with the revised installed capacity of 570 MW as a run of river scheme on the
river Wangchu in Bhutan will annually generate 1968.55 MU of energy.

DPR is submitted to CEA/MOE (RGoB) on dated 30.12.11 and under examination. A


presentation was given to RGoB authorities on 13.04.12. The Project shall be financed on 70: 30
debt equity ratios.

Kholongchu Hydro Electric Project


Kholongchu HEP with the installed capacity of 600 MW on the river Kholongchu in Bhutan will
annually generate 2568.88 MU of energy.

The DPR was submitted to CEA for vetting in March 2011 and is under examination &
approved in principle by CEA on 05.11.2012. RGoB approved DPR on 23.05.2013.The
formation of SPV for the execution of the project is underway .The Project shall be financed on
70: 30 debt equity ratio.

Hydroelectric Energy
Hydroelectric energy is made by moving water. Hydro comes from the Greek word for water.
Hydroelectric energy has been in use for thousands of years. Ancient Romans built turbines,
which are wheels turned by flowing water. Roman turbines were not used for electricity, but for
grinding grain to make flour and breads.

Water mills provide another source of hydroelectric energy. Water mills, which were common
until the Industrial Revolution, are large wheels usually located on the banks of moderately
flowing rivers. Water mills generate energy that powers such diverse activities as grinding grain,
cutting lumber, or creating hot fires to create steel.

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Harnessing Hydroelectricity

To harness energy from flowing water, the water must be controlled. A large reservoir is created,
usually by damming a river to create an artificial lake, or reservoir. Water is channeled through
tunnels in the dam.

The energy of water flowing through the dam's tunnels causes turbines to turn. The turbines
make generators move. Generators are machines that produce electricity.

Engineers control the amount of water let through the dam. The process used to control this
flow of water is called the intake system. When a lot of energy is needed, most of the tunnels to

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the turbines are open, and millions of gallons of water flow through them. When less energy is
needed, engineers slow down the intake system by closings one of the tunnels.

During floods, the intake system is helped by a spillway. A spillway is a structure that allows
water to flow directly into the river or other body of water below the dam, bypassing all tunnels,
turbines, and generators. Spillways prevent the dam and the community from being damaged.
Spillways, which look like long ramps, are empty and dry most of the time.

Hydro Potential

INDIA is endowed with economically exploitable and viable hydro potential assessed to be
about 84,000 MW at 60% load factor (1,48,701 MW installed capacity). In addition, 6780 MW
in terms of installed capacity from Small, Mini, and Micro Hydel schemes have been assessed.
Also, 56 sites for pumped storage schemes with an aggregate installed capacity of 94,000 MW
have been identified. However, only 19.9% of the potential has been harnessed so far.

Advantages of Hydro power

A renewable source of energy - saves scarce fuel reserves.


Non-polluting and hence environment friendly.
Long life - The first hydro project completed in 1897 is still in operation at Darjeeling.
Cost of generation, operation and maintenance is lower than the other sources of energy.
Ability to start and stop quickly and instantaneous load acceptance/rejection makes it suitable to
meet peak demand and for enhancing system reliability and stability.
Has higher efficiency (over 90%) compared to thermal (35%) and gas (around 50%).
Cost of generation is free from inflationary effects after the initial installation.
Storage based hydro schemes often provide attendant benefits of irrigation, flood control,
drinking water supply, navigation, recreation, tourism, pisciculture etc.
Being located in remote regions leads to development of interior backward areas (education,
medical, road communication, telecommunication etc.)

Khirvire Wind Power Project in Maharashtra - 47.6 MW

Letter of Award (LoA) for the Khirvire Wind Power Project has been issued to M/s Gamesha
Wind Turbines Pvt Limited, Chennai on 19.10.2012. The Scheduled Commissioning for the

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project is 18.08.2013.The Contract Agreement for the project has been signed on 14.12.2012.

Solar Power Project

Solar PV Project in Gujarat - 5 MW

DPR has been prepared by M/s Gujarat Power Corp. Ltd. for 5 MW Solar PV Plant for plot no.
89 as allocated to SJVN at Charnka Solar Park. The land of 25.95 acres has been blocked at the
above mentioned plot by M/s GPCL in favour of SJVN.
The 5 MW solar power project is expected to generate approximately 8.02 MU per year. The
project is to be registered under REC mode.
The project involves financing of the project on a 70:30 debt-equity ratio basis.

Buxar Thermal Power Project (1320)

Public sector enterprise SJVN has acquired 100 per cent equity in Buxar Bijlee Company and it
has been allotted a coal block in the Deocha-Pachami belt in West Bengal for its upcoming
1,320-MW power plant at Chausa in Bihar.

A memorandum of understanding (MOU) was signed in January 2013 for the joint venture
between SJVN and Bihar Power Infrastructure Company. Based on supercritical technology, the
project will have two generating units of 660MW each of these will produce 9,090 million units
of electricity annually.

ISO 9001-2008 Certification


In order to develop SJVN as a world class company in the power sector, ISO-9001-2008
certification has been achieved and efforts are being made throughout the organization to
promote all round efficiency and professionalism in the work culture. Further, efforts are being
made for creating cohesive and conducive work culture in the organization.

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Analysis of the financial statement of the year ended 31st march, 2016:
It is an attempt to analyze the data collected from the financial statement of the Satluj Jal
Vidyut Nigam (SJVN) Ltd. Effort have been made to analyze and interpret the financial
position of Satluj Jal Vidyut Nigam (SJVN) Ltd.

Balance Sheet:

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ANALYSIS OF THE BALANCE SHEET
SHAREHOLDERS FUND:-
There is no increase or decrease in share capital 2009-10. The reserve and surpluses has been
increased in 2015-16.

LOANS FUNDS:-

There is increase in long term borrowing and long term provisions in 2015-2016.

FIXED ASSETS:-
The net block of fixed assets has been decreased. Due to increase in depreciation.

CURRENT ASSETS:-
Cash and bank , loans and advances and other current assets increases in 2015-2016.

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Profit and Loss Statement:

INTERPRETATION
The Above profit and loss account shows that there is an constant increase in sales till 2015 but
in 2016 sales decreases due to some reasons.

In 2016 there is high increase in investment which is a big difference till now. It shows a bright
future of the company and will get high profits in the future.

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There is constantly increase in the dividend which is good for the investors and also increase in
the employees benefits expenses which is good for the employees. It is very important for
organization to maintain dividend and employees benefits expenses.

There is also constantly increase in the long term borrowings which is for the growth and
development of the company which is very important.

There is no increase or decrease in share capital. The reserve and surpluses has been constantly
increased during past five years.

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The above cash-flow statement shows that during the year 2016, net cash from operating
activities worth Rs. 220812 lakh was generated and in 2015 it was 148226 lakh.

Net cash used in investing activities in 2016 was worth Rs. 47580 lakh and in 2015 it was 27714
lakh.

Net cash used in financing activities in 2016 was worth Rs. 70455 lakh and in 2015 it was 76428
lakh.

There was a net increase in cash and cash equivalents in 2016 by Rs. 388409 lakh and in 2015 it
was 285632.
In the year of 2016, there is increase in cash and cash equivalents which is better than 2015.

Analysis of the Annual Report for the year ended 31st March 2016:
1. System Accounting:
The financial statements are prepared according to the historical cost convention on accrual basis
in line with the generally accepted accounting principles in India and the provisions of the
companies act 2013, including accounting standards notified there under as emended from time
to time.

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2. Fixed Assets:
Fixed assets are started at historical cost less accumulated depreciation and any
impairment in value. Where final settlement of bills with contractors is pending/under
dispute, capitalisation is done on estimated/ provisional basis subject to necessary
adjustment in the year of financial settlement.
Payments made provisionally towards compensation and other expenses relatable to land
in possession are treated as cost of land.
Assets and equipments declared surplus are shown at lower of book value and net
realisable value.

3. Income:
Sale of energy is accounted for based on tariff approved by the Central Electricity
Regulatory Commission(CERC) except for sale of end power energy which is accounted
for on the basis of tariff rates notified by electricity regulatory authorities of respective
states as amended from time to time.
The incentives/ disincentives are accounted for based on the norms notified/approved by
the central electricity regulatory commission.
Income arises from carbon credit is recognised on transfer/sales of carbon credits i.e
when there is certainty regarding ultimate collection.

4. Employees Benefit:
Companies contribution towards defined contribution pension schemes for employees is
accounted for on accrual basis.

5. Taxes on Income:
Taxes on income are determined on the basis of taxable income under the income tax act
1961.

6. Cash Flow Statement:


Cash flow statement is prepared in accordance with the indirect method prescribed in
accounting standards (AS)-3 Cash Flow Statements.

7. Depreciation & Amortisation:


Depreciation is charged on straight line method following the rates and methodology
notified by the central electricity regulatory commission (CERC) for the purpose of
fixation of tariff as emended from time to time, except in case of:
(i) Mobile phones which are depreciated @25%p.a.

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(ii) Computers and peripherals which are to be depreciated fully (100%) in three years.
Depreciation on assets declared surplus/absolute is provided till the end of the month in
which such declaration is meet
Assets costing RS.5000/- or less are depreciated fully in the year of procurement.

8. Investments:
Current investments are valued at lower of cost and fair value.

9. Inventories:
Stores issued for operation and maintenance but lying unused at site are treated as part of
inventory.
Inventories are valued at lower of cost arrived at on weighted average basis and net
realisable value.
Scrap is accounted for as and when sold.

10. Foreign Currency transactions:


Foreign currency transactions are initially recorded at the rates of exchange ruling at the
date of transactions.

11. Provisions contingent Liabilities& contingent assets:


Provisions involving substantial degree of estimation in measurement are recognised
when there is a present obligation as a result of past events and it is probable that there
will be outflow of resources. Contingent liabilities are not recognised, but are disclosed
in the notes. Contingent assets are neither recognised nor disclosed in the financial
statements.

Key operation process


A business or operational process is an organized set of activities or tasks that produces a
specific service or product. The process of providing a haircut often has three main parts.

Key operation of SJVN can be explained by giving brief about the management of different
departments in this organization.

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Key Operational Process:

SJVN

Finance Contract C & SO Company


Deptt. Deptt.
secretariat

HR Deptt. Legal
Deptt. Corporate
planning

Salary
Finance Deptt. Employees related claim (telephone bills,
medical , travelling alliance)

Recruitment
H R Deptt. Establishment
Estate

ECD(Electrical contract department)


Contract Deptt.
Civil contract department

Manages all legal issues and policies of


Legal Deptt.
the organisation

Organises all the meeting in the


Company
organization (board of directors meeting,
secretariat
employee meetings, etc)

Commercial & system operation


C & SO manages
25all the bills of the organisation.
SWOT Analysis:

Strengths:
Qualified and professional employee.
Working culture.
Policies of SJVN
Expertise in Hydro electric projects.
Sufficient/ Surplus Funds.
Backing of central as well as state government.

Weakness:
Dependency on single project.
Clashes of the joint ventures.

Opportunities:
Global Presence.
Huge Demand & Supply gap.
Employee Recuiretment.
No financial crunches.

Threats:
Dependency on one single products.
High level of earthquakes.
Competition with the different firms, change in the government policies & increase in the
cost of production.

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Methodology for SWOT Analysis:

Strengths: attributes, characteristics and factors that give competitive advantage to the businessFor
example, considerable brand value of the business, cash reserves, first mover advantage and exclusive
access to unique resources are major strengths that contribute to competitive advantage of the business.

Internal

Weaknesses: attributes, characteristics and factors that weaken competitiveness of the business in the
market place. A history of defective products, presence of huge debts and high employee turnover are
examples of major weaknesses that a company may have.

Opportunities: favorable situations and factors that can strengthen competitive advantage of the business
or provide the business with new sources of competitive advantage. The list of major opportunities for a
business may include new product development, finding new customer segment for existing products,
opportunities for further cost reductions thanks to creativity and technological innovations and others.

External

Threats: unfavorable situations and factors that could create problems for the business compromising its
competitive advantage to a certain extent. The most noteworthy threats faced by businesses include, but
not limited to the loss of key members of workforce, Increase in the prices of raw resources, patent
infringement and other lawsuits against the company and others.

SWOT analysis has important practical implications. Specifically, with findings of SWOT
analysis in their hands, the senior level management identify and built upon their strengths,
discover new opportunities and work upon eliminating or minimising threats to the business.
Accordingly, SWOT can be a powerful aid for senior level management to develop appropriate
strategy for the business.

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Activities undertaken during training

Week 1: Introduction and Topic discussions.

Week 2: Companys profile and discussions.

Week 3: SWOT analysis of company and detailed study of given topic.

Week 4: SWOT analysis of company and detailed study of given topic.

Week 5: Detailed study of topic and Report making.

Week 6: Report submission, viva-voce by head of department.

These are the activities undertaken during the training at SJVNL. While undertaking these
activities, we got ample of opportunities for personnel learning.

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Introduction to Financial Ratio:

Ratios is the powerful tool of financial analysis. A ratio is defined as the indicated quotient of
two mathematical expressions and as the relationship between two or more things. In
financial analysis, a ratio is used as a benchmark for evaluating the financial positions and
performance of the firm. The absolute accounting figures reported in the firms financial
statements do not provide a meaningful understanding of the performance and financial positions
of the firms. An accounting figure conveys meaning when it is related to some other relevant
information. For example, rs 5 cr. Net profit may look impressive, but the firms performance
can said to be good or bad only when the net profit figure is related to the firms investment. The
relationship between two accounting figures, expressed mathematically, is known as financial
ratio. Ratios help to summarise large quantity of financial data and to make qualitative
judgement about the firms financial performance. For example, consider current ratio. It is
calculated by dividing current assets by current liabilities; the ratios indicate a relationship- a
quantified relationship between current assets and current liabilities. This relationship is an index
or yardstick which permits a qualitative judgement to be formed about the firms ability to meet
its current obligations. It measure the firms liquidity. The greater ratio, the greater firms liquidity
and vice versa. The point to note is that a ratio reflecting a quantitative relationship helps to form
a qualitative judgement.

1. CURRENT RATIO:

Current Ratio = Current Assets/Current Liabilities

Current ratio as on 2015 are


Current Assets = 479806
Current Liabilities = 99268
Ratio = 479806/99268 =4.83

Current ratio as on 2016 are


Current assets = 547042
Current Liabilities = 89826
Ratio = 547042/89826 = 6.01

INTERPRETATION: Ratio is representing an increase over the period of years. An


increase in the current ratio represents improvement in the liquidity position of the firm.

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2. QUICK RATIO:
Quick Ratio = (Current assets Inventories)/Current Liabilities

Quick ratio as on 2015 are


Current assets = 479806
Inventories = 3678
Current Liabilities = 99268
Ratio = (479806- 3678)/99268 = 4.79

Quick ratio as on 2016 are


Current assets = 547042
Inventories = 3865
Current Liabilities = 89826
Ratio = (547042 3865)/89826 = 6.04

INTERPRETATION: It can be seen that the companys Quick Ratio is increasing overall
and shows a satisfactory performance. The Quick Ratio of the company is more than the normal
standard of 1.1 which means liquid assets are quick sufficient to provide a cover to the current
liabilities.

3. DEBT EQUITY RATIO:


Debt Equity Ratio = Net Worth / total assets

Debt Equity as on 2016 are


Net worth = 1106386
Total debt = 341784
Ratio = 1106386/341784 = 3.23

Debt equity as on 2015 are


Net worth = 1020304
Total assets = 339873
Ratio= 1020304/339873 = 3.30

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INTERPRETATION: As dept equity ratio represents the relationship of owners funds to
total debt and there is increase in equity ratio of SJVN LTD, which shows a better long term
solvency position of the company

4. DEBTORS TURNOVER RATIO:


Debtors turnover ratio = Sales/debtors

Ratio as on 2015 are


Sales = 281753
Debtors 150708
Ratio = 281753/ 150708 = 1.86

Ratio as on 2016 are


Sales = 249849
Debtors = 113200
Ratio = 249849/113200 = 2.20

INTERPRETATION: It shows that it is increasing which shows an improvement in


management of debtors and liquid debtors.

5. CREDITORS TURNOVER RATIO:


Creditors turnover ratio = sales / creditors

Ratio as on 2015 are


Sales = 281753
Creditors = 1464
Ratio = 281753/1464 = 192.45

Ratio as on 2016 are


Sales = 249849
Creditors = 1721
Ratio = 249849/1721 = 145.17

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INTERPRETATION: As we know, higher the ratio better it is and lower the ratio, less
favourable it is for the organization. , in year from 2015 to2016 ratio is declining. This shows
relatively poor velocity with which the creditors are turned over in relation to purchases.

6. INVENTORY TURNOVER RATIO:


Inventory turnover ratio = sales/ Invetories

Ratio as on 2015 are


Sales = 281753
Inventories 3678
Ratio = 281753/3678= 76.60

Ratio as on 2016 are


Sales = 249849
Inventories = 3865
Ratio = 249849/3865 = 64.64

INTERPRETATION: there are no rules of thumb for interpreting the inventory turnover
ratio. Generally higher inventory turnover ratio is considered good. As ratio is decresing 76.60 to
64.64 from 2015 to 2016, it shows that firm finds some difficulty to convert stock into sales.

7. WORKING CAPITAL RATIO:


Working capital ratio = sales/ net working capital
Where working capital = current assets- current liabilities

Ratio as on 2015 are


Sales= 281753
W.C = Current assets current liabilities
= 479806 99268
= 380538

Ratio as on 2016 are

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Sales = 249849
W.C = Current assets Current Liabilities
= 547042 89826
= 457216
Ratio = 249849/457216 = 0.54

8. GROSS PROFIT RATIO:


Gross profit ratio = gross profit/total sales
Where gross profit = sales COGS

Ratio as on 2015 are


Gross profit = Sales COGS
= 28173 217614
= 64139
Sales = 281753
Ratio = 64139/281753 = 0.22

Ratio as on 2016 are


Gross profit = Sales COGS
= 249849 157751
= 92098
Sales = 249849
Ratio = 92098/249849 = 0.36

INTERPRETATION: It depicts that gross profit ratio increases which shows the firms
cost of goods sold has increase, which is good for the company.

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Conclusion:

This project of Ratio analysis in the production concern is not merely a work of the project. But a
brief knowledge and experience of that how to analyze the financial problem of the firm. The
study undertaken has brought into the light of the following conclusions. According to this
project I came to know that from the analysis of financial statements it is clear that SJVN Ltd.
Have been incurring profit during the period of the study. So the firm should focus on getting of
more profit in the coming year by taking care internal as well as external factors.

References:

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1. www.sjvn.nic.in.

2. www.powermin.nic.in

3. SJVN Library

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