ASSET LIABILITY MANAGEMENT & FINANCIAL ANALYSIS

AT NTPC

By:
ISHA ASTHANA
A30101909145

INDUSTRY GUIDE: FACULTY GUIDE:

Mr.A.P.DASH Ms.KAMALDEEP
Sr.FACULTY KAUR
 INDUSTRY PROFILE
The electricity sector in India is predominantly controlled the
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 involved in the
generation and intra state generation of electricity. The Power Grid
Corporation of India is responsible for the inter-state transmission of
electricity and the development of national grid.
Power development is the key to economic development.
The power sector has been receiving adequate priority ever seen
the process of planned development began in 1950. Hydro-power
and coal based thermal power have been the main sources of
generating electricity.
The electricity services in India were generally provided
by the State Electricity Boards (SEBs), as it was believed that being
under the control of the State governments, they could protect the
consumer interests against exploitation.
 COMPANY PROFILE
NTPC Limited is the largest thermal power generating company of
India. A public sector company wholly owned by Government of
India, it was incorporated in the year 1975 to accelerate power
development in the country. Within a span of 30 years, NTPC has
emerged as a truly national power company, with power generating
facilities in all the major regions of the country with an installed
capacity of 28,644 MW through 26 power stations including 4
stations operated under joint venture companies. Recognizing its
excellent past performance and its vast potential, the Govt. of the
India has identified NTPC as one of the ‘Maharatnas'- a potential
global giant.

NTPC’s core business is engineering, construction and

operation of power generating plants and providing consultancy to
power utilities in India and abroad. NTPC has emerged as an
integrated Power Major with presence in Hydro Power, Coal Mining
and Oil & Gas exploration.
Contd..

At present, Government of India holds 89.5% of the total equity shares of

the company and the balance 10.5% is held by FIIs, Domestic Banks,
Public and others. Within a span of 30 years, NTPC has emerged as a
truly national power company, with power generating facilities in all the
major regions of the country.

Today, NTPC is the largest power generating company in

India and contributes one-fourth of the thermal energy generated in the
country. It has 463 rank in the World Top Class 2000 Companies which
has improved from the last year rank i.e. 486. Over all these years NTPC
has been an organization which has delivered expected performance in
all the spheres of its business activities and meeting all the challenges
for growth and operation through adoption of excellent management
system and practices.
 OBJECTIVES
 To find out financial performance of the organization by the ratio
analysis.
 To see how assets and liabilities are managed by the comparative
analysis of balance sheet.
 To gain the overall idea about the organization.
 To gain knowledge about the functioning of the finance
department.
 To gain and enhance different managerial skills.
 To find out importance of finance in business.
 For gaining maximum experience and exposure in the company.
 Depending on my study, suggest some new innovative ideas
which may be beneficial to the organization.
 FINDINGS
Through ratio analysis I found:
 NTPC has high liquidity because of high value of CURRENT RATIO. The
company can easily fulfill the short-term liability.
3.5
3
2.5
2
1.5
1
0.5
0
2005 2006 2007 2008 2009

There is a clear rise in current ratio in the year 2005-07. In years 2008,09 &10
the ratio is 2.42, 2.36 & 2.89 respectively.
Contd…

 The satisfactory quick ratio is 1:1 which NTPC has managed to

maintain.
3

2.5

1.5

0.5

0
2005 2006 2007 2008 2009

 In the year 2005 it has maintained the ratio to 1.44 and in the year
2006 it has maintained 1.84.
Contd…

 The gross profit margin shows a decreasing trend.

40
35
30
25
20
15
10
5
0
2005 2006 2007 2008 2009

The Gross profit of NTPC was 37.10% in 2005 it had fallen to 32.62% in
2006. But in 2007 it had gone up to 33.28% which shows the company
earned profit. But in 2008 it had fallen to 25.31%. In year 2009 it had fallen
up to 19.48%.
Contd…

 The Net Profit Margin is used to measure the overall profitability of the
organization.
25

20

15

10

0
2005 2006 2007 2008 2009

 The net profit ratio of NTPC was 23.20% in 2005 it had fallen up to 20.20%
in 2006. In 2007 it had fallen down to 19.39%. Further it had fallen to
18.51% in 2008 and again in year 2009 it had fallen down to 18.11%.
Contd…

 Operating ratio shows the operational efficiency of the business. Lower

operating ratio shows higher operating profit and vice versa. The NTPC
shows quite good ratio.
35
30
25
20
15
10
5
0
2005 2006 2007 2008 2009

 In the graph Operating Ratio of NTPC was 32.30% in 2005 it had fallen up
to 28.40%.in 2006. In 2007 it had gone to 31.13%. Further it had fallen to
31.07% in 2008 and again in year 2009 it had fallen down up to 25.11%
which shows company earned maximum profit.
Contd…

 The debt equity ratio is used to ascertain soundness of the long term
financial policies of the company.

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2005 2006 2007 2008 2009

 We can easily point out that there is a sharp rise in the debt-equity ratio
from 2005-06 to 2007- 08. From the above data we conclude that the
company has less debt it can also payoff the current obligations very easily.
Contd…

 The stock turnover ratio has shown an increasing trend which states that the
inventories are properly utilized by NTPC.
40
35
30
25
20
15
10
5
0
2005 2006 2007 2008 2009

 We can see in graph in 2005-06 inventory was 14.08 and in 2006-07 the
ratio had fallen to 12.3. In 2007-08 this ratio increases to 14.10. In 2008-09
the ratio increased to 33.59
Contd…
 There is a scope of improvement in
the management of assets and
liabilities.
2005 1.37
 From the above calculated ratio we
can see that in the year 2005 the ratio 2006 1.55
is 1.37:1 which means that from 1.37
of long term funds only 1 is invested
in creation of long term assets and 2007 1.77
rest .37 is invested in other sources.
For the other years the ratio kept on
increasing. In the year 2009 the ratio 2008 1.96
is 1.99:1 which is near to 2 and here
it shows the scope of improvement in
utilization of the long term funds in 2009 1.99
necessarily creation of new projects
and long term assets. If the
improvement is not made, it might
lead to some risk in future.
 RECOMMENDATIONS
 The company is financially sound and has sufficient funds
so now NTPC should now invest in buying upgraded
machineries.

 NTPC should adopt ALM in its organization as there is scope

of improvement in managing their assets and liabilities.

 NTPC in order to adopt ALM, need to bring down the

financing of Current Assets through the Long-Term
Liabilities.
THANK YOU….