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AP Goyal ShimlaUniversity
Session 2017-2019
Jitender Saumta
RollNo-17001712
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HIMANCHAL PRADESH POWER CORPORATION LIMITED
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DECLARATION
I further declare that it has not been submitted elsewhere by any other
person in any of the institutes for the award of any degree or diploma.
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Acknowledgement
Jitendre Saumta
17001712
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CONTENT
CHAPTER 1 INTRODUCTION
3.2 Sampling
CHAPTER 5 FINDING
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CHAPTER 6 CONCULSIONS AND SUGGESTIONS
6.1 Conclusion
6.2 Suggestions
REFERENCE
ANNEXURE
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INTRODUCTION
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1.2 Introduction to Company
Background
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HPPCL has following Projects in hand:
Mission:
Aim:
Target:
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DIVERSIFICATION
2011-12 0.50
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2012-13 1477.45
2013-14 26062
2014-15 38997.82
2015-16 63934.82
2016-17 78934.89
2017-18 92972.71
(MW)
TOTAL 856 MW
2. Chirgaon-Majhgao HEP 60 MW
8. Chanju HEP 48 MW
TOTAL 1026 MW
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C. Projects under Pre-feasibility Stage:
TOTAL 882 MW
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2. Gyspa Dam Project 300 MW
TOTAL 340 MW
E. Thermal Projects:
ORGANISATION STRUCTURE
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18
WORKING
OF
FINANCE
DEPARTMENT
FINANCE DEPARTMENT
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FINANCE DEPARTMENT
A brief detail of the above departments is given in the following
sections:
Under the Banking Section all the matters relating to banking and
Bank Reconciliation Statement (BRS) is dealt with. Here it is
important to understand what BRS is. A BRS is a statement
prepared by organizations to reconcile the balance of cash at bank
in a company’s own records with the bank statement on a
particular date.
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The difference between the two records on a given date may arise
because of the following:
Also in HPPCL all the spare funds are kept in various banks as
Fixed Deposit Receipts (FSRs). Following is an indicative list of
the banks with which HPPCL maintains its bank accounts:
HDFC Bank
Punjab National Bank
State Bank of Patiala
Axis Bank
Corporation Bank
IndusInd Bank
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The External Funding section will deal with all the funds
received from ADB (Asian Development Bank) and World
Bank in future. This will include all the issues pertaining to
finance approved by both the financial bodies.
At all times care is taken to ensure that the entire budget are in
compliance with DPR. Correction of overestimation and
underestimation is also made by the budgeting team.
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Following are the items which are submitted by Concurrence
wing:
V. ESTABLISHMENT DIVISION:
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whether to a contractor or firm hired vehicle, office stationery are
dealt by this wing.
Basic Pay
Dearness Pay
Interim Relief
Total
Dearness Allowance (based on fixed percentage)
House Rent Allowance (HRA)
Capital allowance
Livery Allowance
Washing, Electricity Allowance
Special Section Allowance
Arrears
Total
Less Pension
Gross
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PROJECT
ON
FINANCIAL
ANLYSIS AND
LOAN
STURCTURE
OF HPPCL
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1.3 Introduction to Topic
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6. Employees (i) Profitability, (ii) Financial Position
RATIO ANALYSIS:-
Ratio analysis is a process of computing, determining and presenting the
relationship of items of financial statement to provide a meaningful
understanding of the performance and financial position of a business concern.
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According to Myers, “ Ratio analysis is a study of relationship among various
financial factors in business.”
5. Helpful in comparison
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Disadvantages of Ratio Analysis:-
1. False accounting data give false ratio
3. Limited comparability
Classification of Ratios
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1. Liquidity Ratios: - These ratios are used to assess the short –
term financial position of the firm. These ratios indicate the
firm’s ability to meet its current obligations out of current
resources. The bankers, suppliers of goods and other short
term creditors are interested in the liquidity of the firm.
1. Current Ratio
2. Liquid Ratio
1. Debt-equity ratio
2. Equity ratio
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3. Turnover ratio:-Turnover means ‘sales’, so these ratios are
calculated on the basis of ‘cost of goods sold’ or ‘sales’. These ratios
are also known as ‘Performance ratios’ or ‘Activity ratios’. These
ratios indicate how efficiently the total capital, fixed assets and stock
of the business are profitably used.
Here in the present study only liquidity and solvency ratio has been
calculated because the company is in its pre construction stage and
there is no relevant data about gross profit, net sales, COGS etc.
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LOAN STRUCTURE
2. Loan funds
a. The company has not taken any loan from the financial
institution or banks or through issue of debenture.
Loan Fund
As at As at
31/03/2013 31.03.2012
Secured Loans
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Unsecured Loans
83975000
TOTAL 751628008 0
LOAN FUND:
The company availed Rs. 280.02 Crore and Rs 255 Crore loan for
different projects.
As at 31.03.2014 As at 31.03.2013
SECURED LOAN
UNSECURED LOAN
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PFC Loan 255,000,000 380,367,833
LOAN FUNDS:
The corporation has availed term loan of Rs. 62.34 Crore from HP
Govt. ADB (Asian Development Bank).The following Schedule of loan
capital shows the details.
As at As at 31.03.2014
31.03.2015
Secured Loan
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TOTAL 1,14,88,55,446 54,71,64,252
LOAN FUNDS:
H.P Govt. (ADB) provided the corporation with Rs. 247.64 Crores as
term loan. The schedule of loan fund shows the detail:
As at 31.03.2016 31.03.2015
Secured Loans
LOAN FUNDS
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Rs. 721.19 Crores was availed from HP State Govt. (ADB). The
schedule of loan fund is given below:
As at As at 31.03.2016
31.03.2017
SECURED LOANS
As at As at 31.03.2017
31.03.2018
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SECURED LOANS
To know the financial soundness and to have an overview of the fast trends.
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RESEARCH METHODOLOGY
1.1 Research Design
A research design is the set of methods and procedures used in collecting and analyzing
measures of the variables specified in the research problem research. The design of a study
defines the study type (descriptive, correlation, semi-experimental, experimental, review,
meta-analytic) and sub-type (e.g., descriptive-longitudinal case study), research
problem, hypotheses, independent and dependent variables, experimental design, and, if
applicable, data collection methods and a statistical analysis plan. A research design is a
framework that has been created to find answers to research questions .
Research method:-
Profitability ratio
Turnover ratio
Solvency Ratios
Liquidity Ratios
1.2 Sampling
Sampling unit
A sampling unit is one of the units into which an aggregate is divided for the
purpose of sampling, each unit being regarded as individual and indivisible
when the selection is made.
Sampling size
Sample size is a term used in market research for defining the number of
subjects included in a sample. By sample, we understand a group of subjects
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that is selected from the general population and is considered a representative
of the true population for that specific study.
For example, if we want to predict how the population in a specific age group
will react to a new product, we can first test it on a sample, that is
representative for the targeted population. The sample size, in this case, will
be given by the number of people in that age group that will be surveyed.
Sampling method
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stratums might be males and females, or managers and non-managers. The
researcher first identifies the relevant stratums and their actual representation
in the population. Random sampling is then used to select a sufficient number
of subjects from each stratum. "Sufficient" refers to a sample size large enough
for us to be reasonably confident that the stratum represents the population.
Stratified sampling is often used when one or more of the stratums in the
population have a low incidence relative to the other stratums.
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. The process by which sense and meaning are made of the data gathered in
qualitative research, and by which the emergent knowledge is applied to
clients' problems. This data often takes the form of records of group
discussions and interviews, but is not limited to this.
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3 DATA ANALYSIS AND INTERPRETATION
1. Liquidity ratio:-
It is calculated as:-
A ratio equal or near to the thumb of 2:1 i.e. current assets double
the current liabilities is corrected satisfactory.
For 2016:-
For 2017:-
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Current ratio = 42,518.49/10,329.48 = 4.12:1
Interpretation:-
The ideal current ratio for any firm is 2:1. The current ratio of the
company is more that the ideal ratio but the current ratio of
company for last two years has decreased from 2016 to 2017.
b. Liquid ratio: - It is also known ‘quick ratio’ and ‘acid test ratio’,
because it measures the firm’s capacity to pay off current obligation
immediately. Liquid ratio of quick ratio is a relationship of liquid
asset or quick assets with the current liabilities. It is calculated as
follows:
Liquid assets are those assets which are either in the form of cash or
cash equivalents or can be converted into cash within a very short
period without a loss of value. All current assets except stock and
prepaid expenses are included in the liquid assets.
Interpretation:-
As per the rule of thumb the ideal quick ratio for a company is 1:1.
Here the quick ratio of the company is higher than the ideal quick
ratio but it has decreased from 2016 to 2017.
This ratio is also known as Super Quick Ratio or cash position ratio.
This ratio establishes a relationship between absolute liquid assets
and current liabilities, There are two components of this ratio, which
are as under:
(a) Absolute liquid assets, which mean marketable securities, cash in
hand and bank balance.
(b) Current liabilities
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This ratio is used to examine absolute liquid position of the firm. If
this ratio is 1:1 it indicates that the firm has enough cash to pay to its
creditors. Secondly, it‘s also shows that the firm is not paying
attention towards credit purchases and avoids the use of short-term
loan from bank.
For 2016:
For 2017 :
Interpretation:-
B Solvency Ratio-
48Or
= Debt / Equity
For 2016
For 2017
Interpretation:-
Or
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For 2016 :-
For 2017
Interpretation –
Solvency Ratio: - This ratio is a small variant of equity ratio. This ratio
indicates the relationship between the total liabilities to outsiders to
total assets of a firm.
For 2016
For 2017
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Total liabilities to outsiders = Rs. 110864.74 lacs
Interpretation:-
For 2016
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Ratio analysis for 2017-2018
Liquid ratio:-
1. Current ratio:
=current assets/current liabilities
For 2017
Current assets = Rs 42518.49 lacs
Current liabilities = Rs 10329.48 lacs
Current ratio = 42518.49/10329.48 =4.12:1
For 2018
Current assets =Rs 45408.71 lacs
Current liabilities = Rs 21277.43 lacs
Current ratio = 45408.71/21277.43 =2.13:1
2. Quick ratio:
=quick assets/current liabilities
For 2017
Quick assets = Rs 41652.85 lacs
Current liabilities = Rs 10329.48 lacs
Quick ratio = 41652.85/10329.48 =4.03:1
For 2018
Quick assets =Rs 45034.78 lacs
Current liabilities = Rs 21277.43 lacs
Quick ratio = 45034.78/21277.43 =2.11:1
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3. Absolute liquid ratio:
=absolute liquid assets/current liabilities
For 2017
Absolute liquid assets = Rs 39185.49 lacs
Current liabilities = Rs 10329.48 lacs
Absolute liquid ratio = 39185.49/10329.48 =3.79:1
For 2018
Absolute liquid assets =Rs 29306.31 lacs
Current liabilities = Rs 21277.43 lacs
Absolute liquid ratio = 29306.31/21277.43 =1.37:1
Solvency ratio:-
1. Debt-equity ratio:
=outsider funds/shareholders fund
For 2017
Outsider fund = Rs 110909.74
Shareholders fund = Rs 79676.25
Debt equity ratio = 110909.74/ 79676.25 = 1.39:1
For 2018
Outsider fund = Rs. 160144.25 lacs
Shareholders fund = Rs 100288.96
Debt equity ratio = 160144.25 / 100288.96 = 1.59:1
Proprietary ratio
Share holders fund / total assets * 100
For 2017
Shareholders fund = Rs. 79676.25
Total assets = Rs. 190585.99
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Proprietary ratio = 79676.25/ 190585.99 *100 = 41.80 %
For 2018
Shareholders funds = Rs. 100288.96
Total assets = Rs 260433.20
Proprietary ratio = 100288.96 / 260433.20 *100 = 38.50%
Solvency ratio
= Total liabilities to outsiders/ total assets * 100
For 2017
Total liabilities to outsiders = Rs. 110909.74
Total assets = Rs. 190585.99
Solvency ratio = 110909.74/190585.99*100 = 58.19%
For 2018
Total liabilities to outsiders = Rs. 160144.25
Total assets = Rs. 260433.20
Solvency Ratio = 160144.25/ 260433.20 *100 = 61.49%
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Total assets = Rs. 190585.99
Proprietary Ratio = 79
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4. CASH FLOW STATEMENT FOR YEAR ENDED 31/03/2018
Depreciation
Depreciation 1,114.18
1114.18 472.05
472.05
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Closing cash and equivalents 27,880.45 39,185.49
Interpretation :-
a) Operating activities:-
1) From the operating activities we can conclude that depreciation
charges has been increased from Rs. 472.05 lacs in 2017 to Rs.
1114.18 lacs in 2018. It shows that there is an increase in fixed
assets of company.
2) The finance charges have decreased from Rs. ( 4946.50) lacs in
2017 to Rs. ( 8538.56 ) lacs in 2018. It shows that there is a
decrease in finance charges because corporation is not able to
borrow funds from outsiders.
3) There is an increase in inventories. The inventories have increased
from Rs. 11.45 lacs in 2017 to Rs. 19.88 lacs in 2018.
4) There is an increase in other current assets. Other current assets
have increased from rate (52.26) lacs in 2017 to Rs 471.83 lacs in
2018.
5) There is decrease in loan and advances. The loan and advances
have decreased from Rs (299.73) lacs in 2017 to (14365.75) lacs in
2018. It shows that loan and advances from hppcl have recovered
to large extent.
6) The long term provision has increased from Rs 62.06 lacs in 2017
to Rs. 1144.80 lacs in 2018. It shows there is an increase in
provision to protect the interest of employee.
7) There is an increase in other current liabilities . The other current
liabilities have increased from Rs. 4310.40 lacs in 2017 .
b) Cash flow from Investing activities
1) The net expenditure on fixed assets has increased from Rs.
(7618.91) in 2017 to Rs (3803.01) lacs in 2018 it shows that there
is an increase in fixed assets of the company.
2) The net expenditure on CWIP has decreased from Rs. ( 45096.81)
lacs in 2017 to Rs (55975.31) lacs in 2018.
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3) The investment in Himachal EMTA power limited has decreased
from Rs. (52770.72) lacs in 2017 to Rs. (59853.82) lacs in 2018.
2)Borrowings refer to the funds which the company has borrowed from
outsiders. Borrowings have decreased from Rs. ( 510.17) lacs in 2017 to Rs.
(580.22) lacs in 2018.
3) Proceeds from borrowing include the interest which the company has paid
on borrowed from outsiders. There is decrease in proceeds from borrowing.
Proceeds from borrowing has decreased from Rs. 47355.83 lacs in 2017 to Rs.
37721.98 lacs in 2018.
4) There is a decrease in cash of Rs 11305.04 during the year. The opening cash
and cash equivalent has decreased from Rs. 39185.49 lacs to Rs. 277880.45
lacs during the year.
Depreciation
Depreciation 1,114.18
472.05 472.05
406.94
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Loan and Advances (299.73) (6682.07)
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5 FINDING
This project I calculate some ratios; these ratios are very useful to interpret financialposition
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Bibliography
Following websites were referred: -
1. www.wikipedia.com
2. http://profit.ndtv.com/stock/hppc-
ltd_hppcl/financials.
3. www.indianfoline.com/company/hppc-
ltd/summary/12076.
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