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Project Report
On
Balance Sheet analysis of NTPC Ltd
SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENTOF BACHELOR OF BUSINESS ADMINISTRATION (BBA)
GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY
BBA III (M)
BATCH -2009-2012
Submitted To: Submitted By:
Mrs Tanvi Gupta Name Vijay Thapa
Lecturer Enrolment No. – 00514101709
1
Student’s undertaking
This is to certify that Mr. Vijay Thapa, Enrollment No. – 00514101709 student of
Bachelors Of Business Administration at Jagannath International
Management School, affiliated to Guru Gobind Singh Indraprastha
University has successfully completed the project titled Balnce Sheet Analysis
Of Ntpc Ltd.
I certify that the project has been completed under my guidance ad it is an
authentic work and have never been submitted elsewhere or has not been
sourced through other means.
Mrs Tanvi Gupta By Vijay Thapa
[Internal Project Guide]
2
TO WHOMSOEVER IT MAY CONCERN
This is to certify that VIJAY THAPA student of BBA (2009-12) has completed
his project on “BALANCE SHEET ANALYSIS OF NTPC Ltd” under my
guidance.
His work is up to my satisfaction and worth appreciation.
I wish him all the best for future endeavors.
Mrs. Tanvi Gupta
Project Guide
3
Acknowledgement
I express my gratitude and convey my thanks to all the teachers for their guidance
and motivation to complete this project. I also want to thank Indraprastha
University to give us opportunity to prepare independent projects in our interested
areas i.e. students can choose from ‘Finance, Marketing, Production, Sales and
Human Resource etc
I am also thanks to Mrs. Tanvi Gupta, Internal Project Guide. Her constant
motivation and evaluation enabled me to make this project more analytical and
conclusive.
Vijay Thapa
Enrolment No. – 00514101709
Bachelors of Business Administration
3rd Semester
Jagannath International Management School, Kalkaji
4
CONTENTS
Table Of Content Page No.
Executive Summary 6
Objectives 10
Company’s Profile 12
1) About The Company 13
2) Board Of Directors 15
Research Methodology 21
Secondary Data 23
1) Balance Sheet 24
2) Profit & Loss Account 26
Ratio Analysis 29
i) Liquidity Ratio 31
ii) Solvency Ratio 36
iii) Activity Ratio 42
iv) Profitability Ratio 50
Analysis 60
Cash Flow Statement 63
Analysis Of Cash Flow Statement 65
Income Statement 66
Analysis Of Income Statement 68
Conclusion 70
Bibliography 72
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6
NTPC Limited (NTPC) is an India-based company engaged in the generation of
thermal power. The Company's principal business is generation and sale of bulk
power. Other business includes providing consultancy, project management and
supervision, oil and gas exploration and, coal mining. During the fiscal year
ended March 31, 2009 (fiscal 2009), 66% of total power generation was from
coal stations. During fiscal 2009, the power stations of the Company generated
206.939 billion units of electricity. It has an installed coal-based capacity of
23,895 megawatts comprising 79 units with average fleet age of 18 years. The
Company has acquired 44.6% stake in Transformers and Electricals Kerala Ltd.
(TELK) from Government of Kerala on June 19, 2009.
The Company
NTPC was incorporated in 1975. In the last 31 years, it has grown into the largest
power utility of India. NTPC is the sixth largest thermal power generator in the
World and the Second most efficient utility in terms of capacity utilisation based
on data of 1998.
Consultancy
NTPC provides consultancy in all its aspects of power plant construction and
management right from concept of commissioning and beyond. Combining the
technical, managerial and financial skills, it provides the holistic solutions to
power businesses all over the world.
7
INTRODUCTION
NTPC
Limited or National Thermal Power Corporation Ltd is the largest
thermal power generating company of India. NTPC is the sixth largest thermal
power generator in the world and the second most efficient utility in terms of
capacity utilisation based on data of1998.
NTPC was founded in 1975 to give boost to power development in the
country as a wholly owned company of the Government of India. Presently,
Government of India holds 89.5% equity in the company and the balance
10.5% is held by FIIs, Domestic Banks, Public and others. NTPC is
engaged in engineering, construction and operation of power generating
plants. It also provides consultancy in the area of power plant
constructions and power generation to companies in India and abroad.
NTPC was among the first Public Sector Enterprises to enter into a
Memorandum of Understanding (MOU) with the Government in 1987-88.
Since then, every year, NTPC has been placed under the 'Excellent
category' (the best category). In recognition of its excellent performance and
tremendous potential NTPC has been given the status of " Navratna " by
the Government of India.
SUBSIDIARIES
NTPC Electric Supply Company Ltd (NESCL): NESCL is a wholly owned
subsidiary of NTPC. It was incorporated in August 2002 with the objective to
acquire, establish & operate Electricity Distribution Network in various
circles/cities across India. The company provides consultancy in the area of:
Turnkey execution, Project monitoring, Quality Assurance and Inspection, and
8
Third Party Quality inspection on the behalf of utility.
NTPC Vidyut Vyapar Nigam Ltd. (NVVN): It was formed to cater to and deal
with the vast potential of power trading in the country and optimum capacity
utilisation.
NTPC Hydro Limited (NHL): It was set up in December, 2002 to develop small
and medium sized Hydro Electric Power Projects of up to 250 MW capacity.
Major Achievements of NTPC
Largest thermal power generating company of India.
Sixth largest thermal power generator in the world.
Second most efficient utility in terms of capacity utilization.
One of the nine PSUs to be awarded the status of Navratna.
Provides power at the cheapest average tariff in the country.
9
10
OBJECTIVE
The basic objective of the project is to know the financial position of NTPC Ltd.
By analysing the balance sheet of the company.
The objective was to determine the financial health of the company by finding out
various ratios and analysing the various financial statements of the company like
profit and loss account, balance sheet etc……
11
12
ABOUT THE COMPANY
NTPC Limited (Formerly National Thermal Power Corporation) is the largest
state-owned power generating company in India. Forbes Global 2000 for 2009
ranked it 317th in the world. It is an Indian public sector company listed on
the Bombay Stock Exchange although at present the Government of India holds
84.5%(after divestment the stake by Indian government on 19october2009) of its
equity. With a current generating capacity of 31134 MW, NTPC has embarked on
plans to become a 75,000 MW company by 2017. It was founded on November
7, 1975.
NTPC's core business is engineering, construction and operation of power
generating plants and providing consultancy to power utilities in India and
abroad.
The total installed capacity of the company is 31134 MW (including JVs) with 15
coal based and 7 gas based stations, located across the country. In addition
under JVs, 3 stations are coal based & another station uses naphtha/LNG as
fuel. By 2017, the power generation portfolio is expected to have a diversified
fuel mix with coal based capacity of around 53000 MW, 10000 MW through gas,
9000 MW through Hydro generation, about 2000 MW from nuclear sources and
around 1000 MW from Renewable Energy Sources (RES). NTPC has adopted a
multi-pronged growth strategy which includes capacity addition through green
field projects, expansion of existing stations, joint ventures, subsidiaries and
takeover of stations.
13
NTPC has been operating its plants at high efficiency levels. Although the
company has 18.79% of the total national capacity it contributes 28.60% of total
power generation due to its focus on high efficiency. NTPC’s share at 31 Mar
2001 of the total installed capacity of the country was 24.51% and it generated
29.68% of the power of the country in 2008-09. Every fourth home in India is lit
by NTPC. 170.88BU of electricity was produced by its stations in the financial
year 2005-2006. The Net Profit after Tax on March 31, 2006 was INR 58,202
million. Net Profit after Tax for the quarter ended June 30, 2006 was INR 15528
million, which is 18.65% more than for the same quarter in the previous financial
year. 2005).
Pursuant to a special resolution passed by the Shareholders at the Company’s
Annual General Meeting on September 23, 2005 and the approval of the Central
Government under section 21 of the Companies Act, 1956, the name of the
Company "National Thermal Power Corporation Limited" has been changed to
"NTPC Limited" with effect from October 28, 2005. The primary reason for this is
the company's foray into hydro and nuclear based power generation along with
backward integration by coal mining.
(NTPC) is in the 138th position in Fortune 500 in 2009.
10 Indian companies make it to FT's top 500
14
BOARD OF DIRECTORS
Shri Arup Roy Choudhury, Chairman & Managing Director since September
2010, has an illustrious career spanning over 32 years of outstanding
contribution in the fields of engineering, general management, strategic
management and business leadership. He is a Graduate in Civil Engineering
from Birla Institute of Technology, Mesra and a Post-Graduate in Management
and Systems from IIT-Delhi. A keen learner of the latest professional
developments, he is currently pursuing a doctorate in ‘Select Study of Project
Performance Metrics in Indian Construction Industry’ from IIT-Delhi.
Shri A.K. Singhal, Director (Finance) since August 2005, a Chartered
Accountant, comes with rich experience of 29 years of Corporate Finance
Management. He is also a member of All India Management Association (AIMA)
and Institute of Internal Auditors (IIA). Prior to joining NTPC in 2001, he was the
Executive Director (Finance) in National Fertilizers Limited (NFL) as head of
Finance & Accounts department. He held various managerial positions in Krishak
Bharati Cooperative Limited (KRIBHCO) and Engineering Projects of India
Limited (EPIL). As Finance Director on the Board of NTPC, he is responsible for
formulating financial strategies and plans to enable the company in achieving its
Vision.
Sh. I.J.Kapoor, Director (Commercial) since December’ 2008 is a Graduate in
Mechanical Engineering and Masters in Business Administration (Marketing). He
joined NTPC in 1978 as 3rd batch Engineering Executive Trainee (EET) and
is the first EET to be on the Board of the Company. He has a rich and varied
experience of over 31 years in the areas of Commercial, Engineering, Contracts
& Materials Management, Consultancy, Cost Engineering, Project co-ordination,
Station Engineering and Quality Assurance & Inspection. Prior to his elevation as
Director (Commercial), he was Regional Executive Director (National Capital),
15
NTPC, responsible for management of ~ 3900 MW generating capacity,
administering more than ¼th of NTPC’s turn over along with project
implementation activities for 2x490 MW at Dadri Stage-II.
Sri B.P. Singh (55 yrs), Director(Projects), is a Graduate in Mining Engineering.
He has rich and varied experience both in coal as well as power sector. He
started his career in 1974 in coal mining sector firstly with Indian Iron & Steel
Company and subsequently joined Bharat Coking Coal Ltd. He joined NTPC Ltd.
in 1981 and worked in various capacities, at Corporate Centre and Power
Projects, in the areas of Fuel Management, Coal Mining & Coal Washery. He
was elevated as Executive Director (Coal Mining & Coal Washeries) in 2004.
Shri D.K. Jain, has taken over the charge as Director (Technical) as on 13th
May 2010. Shri D.K. Jain (58 years) is a graduate in Mechanical Engineering
from IIT, Kharagpur. He joined NTPC Limited in 1978. He has rich and varied
experience of over 35 years in design and execution of large power plants. He
has worked in various capacities in the areas of renovation & modernisation,
engineering and project execution. He was actively involved in design and
engineering of first pit-head super thermal power station of NTPC at Singrauli.
Before his elevation as Director (Technical), he was Executive Director
(Engineering), responsible for identification of sites, taking up feasibilities studies,
design and detailed engineering of coal, gas and hydro power projects. He also
oversees the Mine Planning and Design of NTPC’s Captive Coal Blocks.
Shri P.K. Sengupta is B. Com and FICWA. He has held the position of Director
(Finance) in Eastern Coalfields Limited, Director (Finance) in Coal India Limited
prior to becoming Chairman & Managing Director of Coal India Limited in
January 1995. He has held directorship in Steel Authority of India and Naively
Lignite Corporation as non-official part-time Director. He has expertise in the area
of Financial Management and General Administration. He has been on the Board
16
of the Company with effect from August 26, 2008 as a non-official part - time
director.
Shri M.N. Buch is M.A. (History) from Delhi University, M. Phil (Public
Administration) from Indian Institute of Public Administration, Punjab University,
PG Diploma holder in Port Management and Administration from University
College, London and an Indian Administrative Officer of Gujarat Cadre, 1964
batch. He has held various posts in Gujarat Government. He had held the
position of Joint Secretary to the Government of India in Department of Banking,
Ministry of Finance, Additional Secretary to the Ministry of Labour, GOI, Director-
General, Sports Authority of India prior to becoming Member of Public
Enterprises Selection Board, GOI. He has been also on the Board of various
public sector banks. He has wide experience in both Development and
Regulatory Administration at the Central, State and District levels. He has been
on the Board of the Company with effect from August 26, 2008 as a non-official
part - time director.
Shri Shanti Narain is B.Sc (Hons. in Physics) and M.Sc. (Mathematics) from
Delhi University and has pursued Management Development Programme at
British Transport Staff College, UK. He has held various posts in Railways prior
to becoming Member (Traffic), Railway Board. He has key expertise in strategic
management of transport systems with special focus on Railways, involving
planning, marketing, customer relations, monitoring and control of operational
and commercial activities and development of transport infrastructure. He has
been on the Board of the Company with effect from August 26, 2008 as a non-
official part - time director.
Shri Shanti Narain is B.Sc (Hons. in Physics) and M.Sc. (Mathematics) from
Delhi University and has pursued Management Development Programme at
British Transport Staff College, UK. He has held various posts in Railways prior
to becoming Member (Traffic), Railway Board. He has key expertise in strategic
17
management of transport systems with special focus on Railways, involving
planning, marketing, customer relations, monitoring and control of operational
and commercial activities and development of transport infrastructure. He has
been on the Board of the Company with effect from August 26, 2008 as a non-
official part - time director. Company with effect from August 26, 2008 as a non-
official part - time director.
Dr. M. Govinda Rao is Director, National Institute of Public Finance and Policy,
New Delhi. He is also a Member, Economic Advisory Council to the Prime
Minister. His past positions include Director, Institute for Social and Economic
Change, Bangalore and Fellow, Research School of Pacific and Asian Studies,
Australian National University, Canberra, Australia. He has played a number of
advisory roles in various Expert Committees. He has published 12 books and
monographs on various aspects of Public Finance besides technical articles in a
number of journals. He has been on the Board of the Company with effect from
August 26, 2008 as a non-official part - time director.
Shri Adesh Jain is a Bachelor of Science in Mathematics and an Electrical
Engineer from the Indian Institute of Science, Bangalore. He has done his MS in
Control Systems at Carleton University, Ottawa. He has over 40 years of
experience in project oriented work beginning with two state-of-the-art projects in
early 1970’s in USA. In 1973, he returned to India to help the country embark
upon major computerization program. He has also served as the Head of IT and
Project Management Services in BHEL. In 1992, he started the Centre for
Excellence in Project Management. He has been conferred with 6 major awards
in India, including the “Gem of India” award. He is author of the book “New
Dimensions in Project Management”. He has been on the Board of the Company
with effect from January 30, 2009 as a non-official part - time director.
18
Shri Santosh Nautiyal is a Post Graduate in Political Science and Public
Administration. He belonged to Indian Administrative Services (Orissa 1968) and
retired in July 2006 as Chairman (in the rank of Secretary to the Govt. of India,)
National Highway Authority of India. He has held various positions like Additional
Secretary, Govt of India in Department of Consumer Affairs, Principal Secretary
of Government of Orissa, Joint Secretary in Ministry of Steel and Managing
Director in Industrial Promotion and Investment Corporation of Orissa Ltd. He
also served as Chairman of Food Corporation of India and after retirement was
appointed as Chairman of the National Shipping Board constituted by the Central
Government. He has been on the Board of the Company with effect from January
30, 2009 as a non-official part - time director.
Shri Kanwal Nath, is M.Sc. in Physics, and holds PG Diploma in Development
Finance from the University of Birmingham, UK. He has over 37 years of
experience in Indian Audit and Accounts service. He retired as Dy. Comptroller &
Auditor General in February 2007. He has also held position of Joint Secretary &
Financial Adviser (JS & FA) in Ministry of Water Resources and additional charge
of JS & FA, Ministry of Power. He has wide experience in the Audit of
Organizations in Power, Telecommunication and Railway Sector. He has been
on the Board of the Company with effect from January 30, 2009 as a non-official
part - time director.
Shri Arun Kumar Sanwalka is M.Sc (Engg) from UK, I. Mech. (E), UK. and
AMIE (India) – Mech. & Prod. He has held various positions in Indian Railways
and retired from the position of General Manager, Northeast Frontier Railway
after 38 years of service. He has wide expertise in the areas of General
Management & Administration, Transport planning, Project management and
coordination. He has also handled several projects for establishing large
production, maintenance and repair facilities of Indian Railways. He also held the
position of Executive Director (Motive Power), RDSO for several years. He has
19
been on the Board of the Company with effect from January 30, 2009 as a non-
official part - time director.
Shri I.C.P. Keshari, is a Government nominee Director. He graduated with a
Master of Arts degree from Delhi University and holds Junior Research
Fellowship of UGC for Master of Philosophy. Shri Keshari is an Indian
Administrative Services officer of Madhya Pradesh cadre. He is currently Joint
Secretary in the Ministry of Power. Prior to this, Shri Keshari was in the Ministry
of Commerce & Industry and has also held various administrative posts in the
State of Madhya Pradesh and Chhattisgarh. Shri Keshari appointed as a Director
on Board in May, 2009.
Shri Rakesh Jain, born in 1957, is a Government nominee Director in our
Company. He holds Masters Degree in Physics from Delhi University. He is an
officer of Indian Audit & Accounts Service (1981). He is currently the Joint
Secretary & Financial Adviser (JS & FA) in the Ministry of Power and also holds
additional charge of the post of JS & FA of the Ministry of Labor & Employment.
He has held various important positions such as Director General (Accounts,
Entitlement, Complaints & Information System); Principal Director (Report States)
– Office of Comptroller & Auditor General of India; Accountant General (AG)
(Audit), Rajasthan; AG(AE-II) Madhya Pradesh; Principal Director (Commercial
Audit), Ranchi and Principal Director of Audit, Embassy of India, Washington,
USA.
Shri T. Venkatesh,(48 years) has done his Post Graduation in Mechanical
Engineering and is an Indian Administrative Service officer of 1988 batch of U.P.
Cadre. Prior to his assignment as Jt. Secy. (DOPT) in the Ministry of Personnel &
Public Grievances & Pension, he held various administrative posts including DM
(Bareilly), Commissioner (Gorakhpur) and Secretary (PWD) in the state of Uttar
Pradesh. He is looking after the work of Chief Vigilance Officer of our company
since October, 2009.
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RESEARCH METHODOLOGY
SECONDARY DATA : The methodology used for conducting the research is the
collection and analysis of secondary data; which is the data available in the published
form and is not primary in nature. The following forms of secondary data tools were
used for the research purpose:
1. INTERNET SITES
2. CONCERNED BOOKS
3. PEOPLE
4. MAGAZINES
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23
BALANCE SHEETBalance Sheet
31-Mar-09 %BT 31-Mar-08 %BT 31-Mar-07 %BT
Equity Capital 0.00 0.00 0.00 0.00 82455.00 10.21
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Share Capital 82455.00 7.84 82455.00 9.22 82455.00 10.21
Reserves and Surplus 491246.00 46.69 443931.00 49.66 403513.00 49.96
Loan Funds 345678.00 32.85 271906.00 30.42 244844.00 30.32
Current Liabilities 74391.00 7.07 55483.00 6.21 53235.00 6.59
Provisions 32495.00 3.09 23816.00 2.66 17028.00 2.11
Current Liabilities and Provisions 106886.00 10.16 79299.00 8.87 70263.00 8.70
Total Liabilities and Stockholders Equity (BT) 1052248.00 100.00 893880.00 100.00 807643.00 100.00
Tangible Assets Net 328974.00 31.26 260614.00 29.16 256402.00 31.75
Intangible Assets Net 383.00 0.04 303.00 0.03 63.00 0.01
Net Block 329357.00 31.30 260917.00 29.19 256465.00 31.75
Capital Work In Progress Net 264049.00 25.09 224783.00 25.15 168392.00 20.85
Fixed Assets 593426.00 56.40 485720.00 54.34 424873.00 52.61
Investments 139835.00 13.29 152672.00 17.08 160943.00 19.93
Inventories 32434.00 3.08 26757.00 2.99 25102.00 3.11
Accounts Receivable 35842.00 3.41 29827.00 3.34 12523.00 1.55
Cash and Cash Equivalents 162716.00 15.46 149332.00 16.71 133146.00 16.49
24
Other Current Assets 12961.00 1.23 10475.00 1.17 12154.00 1.50
Current Assets 243953.00 23.18 216391.00 24.21 182925.00 22.65
Loans & Advances 65300.00 6.21 39097.00 4.37 38902.00 4.82
Miscellaneous Expenditure Other Assets 0.00 0.00 0.00 0.00 0.00 0.00
Total Assets (BT) 1052248.00 100.00 893880.00 100.00 807643.00 100.00
25
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P&L Account
Particulars Mar '06 Mar '07 Mar '08 Mar '09
12 mths 12 mths 12 mths 12 mths
Income
Sales Turnover 26,318.60 32,817.3037,302.40
42,196.80
Excise Duty 175.70 185.60 211.40 221.60
Net Sales 26,142.90 32,631.7037,091.00
41,975.20
Other Income 2,897.90 2,875.603,119.70
3,012.80
Stock Adjustments 0.00 0.00 0.00 0.00
Total Income 29,040.80 35,507.3040,210.70
44,988.00
Expenditure
Raw Materials 25.00 23.70 26.80 31.00
Power & Fuel Cost 16,497.10 19,947.6022,160.70
27,292.30
Employee Cost 1,137.50 1,362.602,229.30
2,897.60
Other ManufacturingExpenses
705.10 842.90 920.00 940.00
Selling and Admin Expenses
353.20 410.80 389.80 473.20
Miscellaneous Expenses
247.20 292.40 368.20 394.90
Preoperative Exp Capitalised
-256.40 -418.40 -544.70 -637.40
Total Expenses 18,708.70 22,461.6025,550.10
31,391.60
27
Mar '06 Mar '07 Mar '08Mar'09
12 mths 12 mths 12 mths 12 mths
Operating Profit 7,434.20 10,170.1011,540.90
10,583.60
PBDIT 10,332.10 13,045.7014,660.60
13,596.40
Interest 2,004.60 2,055.701,982.2
01,737.00
PBDT 8,327.50 10,990.0012,678.
4011,859.40
Depreciation 2,047.70 2,075.402,138.5
02,364.50
Other Written Off 1.30 9.90 3.10 3.60
Profit Before Tax 6,278.50 8,904.7010,536.
809,491.30
Extra-ordinary items 633.70 134.20 -114.00 1,305.20
PBT(Post Extra-ord Items)
6,912.20 9,038.9010,422.
8010,796.50
Tax 1,082.40 2,163.702,994.2
02,554.70
Reported Net Profit 5,820.20 6,864.707,414.8
08,201.30
Total Value Addition 18,683.70 22,437.9025,523.
3031,360.60
Preference Dividend 0.00 0.00 0.00 0.00
Equity Dividend 2,308.70 2,638.502,885.9
02,968.30
Corporate DividendTax
323.80 389.60 490.50 501.70
Per share data(annualised)
Shares in issue(lakhs)
82,454.64 82,454.6482,454.
6482,454.64
Earning Per Share(Rs)
7.06 8.33 8.99 9.95
Equity Dividend (%) 28.00 32.00 35.00 36.00
Book Value (Rs) 54.53 58.94 65.81 71.55
28
29
As on 31-Mar-09 31-Mar-08 31-Mar-07
Return Related
Return on Total Assets (%) 8.70 11.50 10.90
Return on Networth (%) 14.50 14.60 14.10
Return on Capital Employed (%) 20.00 24.90 19.20
Profitability
Gross Margin (%) 26.90 32.70 32.50
Operating Margin (%) 19.50 25.40 24.50
Net Profit Margin (%) 19.50 20.00 21.00
Adjusted Net Profit Margin (%) 19.80 20.70 21.00
Asset Turnover(x) 0.50 0.50 0.50
Leverage
Debt/Equity ratio (x) 2.19 1.63 0.50
Total Debt/Total Assets (x) 3.04 3.28 0.30
Long term Debt/Networth (x) 0.60 0.50 0.50
Interest Coverage (x) 5.20 6.40 5.10
Liquidity
Current Ratio (x) 2.28 2.72 2.70
Quick Ratio (x) 1.97 2.39 3.00
Cash Ratio (x) 2.20 2.70 2.50
Working Capital
Working Capital to Sales (x) 0.40 0.40 0.40
Working Capital Days (days gross sales) 146.70 157.40 145.10
Receivables (days gross sales) 31.00 29.20 14.00
Creditors (days cost of sales) 61.90 47.50 46.80
FG Inventory (days cost of sales) -- -- --
RM Inventory (days consumption) -- -- --
Cash Flow Indicator
Operating Cash Flow/Sales (%) 23.10 26.40 24.70
30
Per Share
Book Value Per Share (Rs) 59.50 53.80 58.90
Earnings Per Share (Rs) 9.90 9.00 8.30
Dividend Per Share (Rs) 3.60 3.50 3.20
Growth(%)
Total Operating Income 13.16 13.67 22.08
EBITDA -8.52 14.47 25.29
EBIT -12.86 17.44 33.46
Net Profit 10.61 8.01 17.95
Total Assets 16.05 10.47 12.41
(I) Liquidity Ratios
1. Current ratio:-
It establishes a relationship between current assets and current liabilities.
Its objective is to measure the ability of the firm to meet its short term obligations
and to reflect the short term financial solvency of the firm.
FORMULA => CURRENT RATIO = CURRENT ASSETS
CURRENT LIABILITIES
IDEAL RATIO: - 2:1
COMPANY’S CURRENT RATIO TABLE:-
Ratio Year
Years 2008 200931
Current Ratio 216391/79299 243953/106886
Current Ratio 2.72:1 2.28:1
Comments
As we can see in the above ratio table as well as in the graph the current
ratio for the year 2009-10 have decreased as compared to current ratio for
the year 2008-09 but yet it is slightly greater then 2:1. As ideal ratio is always
2:1.
This signifies that the company has better capacity to meet its liabilities or we
32
can say that the company has enough resources to discharge its obligations.
As very high current ratio shows the idleness of the source or funds available
at its disposal.
2. Quick Ratio
It establishes a relationship between quick assets and current liabilities.
Its objective is to measure the ability of the firm to meet its short term obligations.
FORMULA => CURRENT RATIO = LIQUID ASSET/QUICK ASSETS
CURRENT LIABILITIES
QUICK ASSET = CURRENT ASSET – STOCK PREPAID EXPENSES
IDEAL RATIO: - 1:1
COMPANY’S CURRENT RATIO TABLE:-
Ratio Year
Years 2008 2009
Quick Ratio 189634/79299 211519/106886
Quick Ratio 2.39:1 1.97:1
33
Comments:-
As we can see in the above ratio as well as in the graph the quick ratio for
the year, 2009 have decreased as compared to the quick ratio for the
previous year i.e. 2009 but it is slightly greater than 1:1 i.e. 1.97:1. As we
know that the ideal ratio is 1:1
Even if the ratio has decreased but it still represents the good short term
position of the company.
34
WORKING NOTES
Quick Assets = current assets – inventory – prepaid expenses
Quick asset for the year 2008 = 2, 16,391-26,957-0
Quick asset for the year 2008 = 1, 89,434
Quick asset for the year 2009 = 2, 43,953-32,434-0
Quick asset for the year 2009 = 2, 11,519
35
II) Solvency Ratio:-
1. Debt Equity Ratio:-
It establishes a relationship between long-term debts and
shareholder’s funds.
Its objective is to measure the relative proportion of debt and equity in
financing the assets of a firm.
FORMULA => DEBT EQUITY RATIO:- DEBT
EQUITY
IDEAL RATIO:- 2:1
COMPANY’S DEBT EQUITY RATIO TABLE:-
Ratio Year
Years 2008 2009
Debt Equity Ratio 134782/82454 181277/82454
Debt Equity Ratio 1.63:1 2.19:1
36
Comments:-
As we can see in the above ratio as well as in the graph the debt-equity
ratio for the year, 2009 have decreased as compared to the debt equity
ratio for the previous year i.e. 2008
As we know that the ideal ratio is 2:1
Therefore this increase in the debt equity ratio to 2.19 slightly impacts both
the creditors and the firm. Now the firm will enjoy benefits of trading on
equity but there will be a greater risk to the creditors.
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2. Total Assets to Debt Ratio:-
Its establishes a relationship between total assets and long term debts.
Its objectives are to measure the safety margin available to the suppliers
of long term debts. It measures the extent to which the assets can cover
the debt.
Formula => Total Assets to Debt Ratio: Total Assets
Long Term Debts
Ideal Ratio: 2:1
Company Total Asset to Debt Ratio Table:
Ratio Year
Years 2008 2009
Total Asset Debt Ratio 893880/271906 1052248/345678
Total Asset Debt Ratio 3.28 3.04
38
Comments:-
As we can see in the above ratio as well as in the graph the total assets to debt
ratio for the year 2009 have slightly decreased as compared to total assets to
debt ratio for the previous year i.e. 2008. As we know, that ideal ratio is 2:1.
Therefore, this decrease in the total assets to debt equity ratio to 3.04:1 implies
that the company is using less equity then debt, which means less safety
margins for creditors.
39
3. Proprietary Ratio:-
It measures a relationship between proprietors fund and total assets.
Its objectives are to measure how the proprietors have financed the
assets.
Formula => Proprietors Ratio: Proprietors Funds *100
Total Assets
Ideal Ratio: Higher the ratio better uses of proprietors funds
Company Proprietor’s Ratio Table:
Ratio Year
Years 2008 2009
Proprietor’s Ratio 443931*100/893880 491246*100/1052248
Proprietor’s Ratio 49.66 46.68
40
Comments:-
As we can see in the above ratio as well as in the graph the total Proprietor’s
Ratio for the year 2009 have slightly decreased as compared to Proprietor’s
Ratio for the previous year i.e. 2008.
Therefore, this decrease in the Proprietor’s Ratio to 46.68% implies that the
Proprietor’s Funds are not using properly i.e. there is some problem while using
funds so the company has to take some decision unless their company will
suffer..
41
III) Activity Ratio:-
1. Capital Turnover Ratio:-
It establishes a relationship between Net sales and Capital Employed.
Its objective is to measure the efficiency with which the capital employed
is utilised.
Formula => Capital Turnover Ratio: - Net Sales
Capital Employed
Ideal Ratio: Higher the ratio, the more efficient the management and
utilization of capital employed.
Company’s Capital Turnover Ratio Table:-
Ratio Year
Years 2008 2009
Capital Turnover Ratio 20 24.9
42
Comments:-
We can see in the above ratio as well as in the graph the capital turnover ratio
for the year, 2009 have increased as compared to the capital turnover ratio for
the previous year i.e.2008
Therefore, the increase in the capital turnover ratio to 24.9 times imply that the
management is trying to work efficiently and capital employed has increased in
the same proportion as the net sales increases. That is why the ratio increases
for the year 2009.
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2. Fixed Assets Turnover Ratio:-
a. I establish a relation between Net sales and fixed assets.
b. Its objective is to determine the efficiency with which the fixed
assets are utilised.
Formula => Fixed Assets Turnover Ratio: - Net Sales
Net Fixed Operating Assets
Ideal Ratio:- Higher the Ratio, the more efficient the management and
utilization of fixed assets and vice versa.
Company Fixed Assets Turnover Ratio Table:-
Ratio Year
Years 2008 2009
Fixed Assets Turnover
Ratio
.50 .50
44
Comments:-
We can see in the above ratio as well as in the graph the fixed asset turnover
ratio for the year 2008 has been the same to the fixed asset turnover ration for
the year 2009.
Therefore, the no change in the fixed asset ratio implies that the company has
not utilised nor over utilised its assets in efficient way.
45
3. Working Capital Turnover Ratio:-
a. This establish a relation between Net sales and working capital.
b. Its objective is to determine the efficiency with which the working
capital is utilised.
Formula => Working Capital Turnover Ratio: - Net Sales
Working Capital
Ideal Ratio: - Higher the Ratio, the more efficient the management and
utilization of fixed assets and vice versa.
Company Working Capital Turnover Ratio Table:-
Ratio Year
Years 2008 2009
Working Capital Turnover
Ratio
.40 .40
46
Comments:-
We can see in the above ratio as well as in the graph, the working capital
turnover ratio in the year 2009 has not increased or decreased as compared to
previous year i.e. 2008 working capital turnover ratios.
This signifies that the company is not utilizing the working capital efficiency in the
year 2009.
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4. Stock Turnover Ratio:-
a. It establishes a relation between Cost of Goods Sold and Average
Inventory.
b. Its objective is to determine the efficiency with which the Inventory
is utilised.
Formula => Stock Turnover Ratio: - Cost Of Goods Sold
Average Inventory
Ideal Ratio: - Higher the Ratio, the more efficient the management and
utilization of fixed assets and vice versa.
Company Stock Turnover Ratio Table:-
Ratio Year
Years 2008 2009
Stock Turnover Ratio 14.60 14.50
48
Comments:-
We can see in the above ratio as well as in the graph, the stock turnover ratio in
the year 2009has decreased as compared to the previous year i.e. 2008 stock
turnover ratios.
This decrease in stock turnover ratio to 14.50 times in the year 2009 might be
due to inventory levels, obsolete inventory and due to this; the firm may incur hgh
carrying costs.
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(IV)Profitability Ratio
A. In relation To Sales
1. Gross Profit Ratio:-
a. It measures a relation between Net sales and Gross Profit.
b. Its objective is to determine the efficiency with which the production
operation is carried out.
Formula => Gross Profit Ratio: - Gross Profit * 100
Net Sales
Ideal Ratio: - Higher the Ratio, the more efficient the management
Company Gross Profit Ratio Table:-
Ratio Year
2008 2009
Gross Profit Ratio 32.70 26.90
Comments:-
We can see in the above ratio as well as in the gross profit ratio in the year 2009
50
has decreased as a compared to previous year i.e. 2008 gross profit ratios.
This decrease in the gross profit ratio in the year 2009 might be due to lower
sales price with constant cost of goods sold.
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2. Net Profit Ratio:-
a. It measures a relation between Net sales and Net Profit.
b. Its objective is to determine the overall profitability due to various
factors.
Formula => Net Profit Ratio: - Net Profit before Tax * 100
Net Sales
Net Profit Ratio: - Net Profit after Tax * 100
Net Sales
Ideal Ratio: - Higher the Ratio, the more efficient the capacity of the firm
and the demand for the product is falling.
Company Net Profit Ratio Table:-
Ratio Year
2008 2009
Net Profit Ratio 20.00 19.50
52
Comments:-
We can see in the above ratio as well as in the graph, the net profit ratio in the
year 2009 have fall down drastically as compared to previous year i.e. 2008.
This decline in the net profit ratio indicates the cost of production is increasing
and also expenses are increasing as a result there is a decline in the net profit so
the company should try to reduce its expenses otherwise the company might
have pay huge amount of money or might be shut down its operations for a
while.
Working Notes
Here we are considering Net profit be equal to net profit before interest and
tax.
B. In Relation to Investment
53
3. Return On Total Assets:-
a. It measures a relation between Net Profit before interest and tax
and total Assets.
b. Its objective is to find out how efficiently the total assets have been
used by the management.
(Formula)
Return On Total Assets: - Net Profit Before Interest and Tax *100
Total Assets
Ideal Ratio: - Higher the Ratio, the more efficient the management and
utilisation of total assets.
Company Net Profit Ratio Table:-
Ratio Year
2008 2009
Net Profit Ratio 11.50 8.70
Comments:-
We can see in the above ratio as well as in the graph, the return on total assets
in the year 2009 have decreased as compared to previous year i.e. 2008 return
on total assets.
54
This decrease in the return on total assets to 1.87% in the current year implies
that the management is not efficient enough and the assets are not utilized
properly.
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4. Return On Capital Employed/ Return On Investment(ROI):-
a. It measures a relation between Capital Employed and Net Profit
before Interest and Tax.
b. Its objective is to find out how efficiently the long term funds
supplied by the creditors and shareholders have been used.
(Formula)
Return on Investment: - Net Profit before Interest and Tax * 100
Capital Employed
Ideal Ratio: - Higher the Ratio, the more efficient the management and
utilisation of capital employed.
Company’s Return on Investment Table:-
Ratio Year
2008 2009
Net Profit Ratio 14.60 14.50
56
Comments:-
We can see in the above ratio as well as in the graph, the return on investment in
the year 2009 have decreased as compared to previous year i.e. 2008 return on
investment of 14.60%
This decrease in the return on investment implies that the management is not
working efficiently and capital employed is not utilized at its fullest.
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5. Return On Shareholders Fund:-
a. It measures a relation between Shareholder’s Fund and Net Profit
after Interest and Tax.
b. Its objective is to find out how efficient the management and
utilization of shareholder’s have been used.
Formula => Return on Net Worth: - Net Profit after Interest and Tax * 100
Shareholder’s Fund
Ideal Ratio: - Higher the Ratio, the more efficient the management and
utilization of shareholders funds.
Company’s Return On Net Worth Table:-
Ratio Year
2008 2009
Return On Shareholder’s Fund 14.60 14.50
Comments:-
As we can see in the above ratio as well as in the graph, the return on
shareholder’s Funds in the year 2009 have changed slightly as compared to
previous year i.e. 2008 Return On shareholder’s Fund of 14.6058
This change in the Return on shareholder’s Funds is a danger for the company as
there is no proper utilization of shareholder’s funds.
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60
Analysis
1. Company’s Current ratio has declined from 2.39 to 1.97 in the year 2009. But yet
it is above ideal ratio of 2:1. As in previous year the current ratio is too high which
shows that the company has idle funds available at its pocket. But now in this
year i.e.2008 this high ratio slows down. As a result we can say that now there is
good margin for short term creditors.
2. Now again we see in the case of Quick Ratio that this year 2009 this ratio has
declined to 1.97:1 as compared to previous year having quick ratio to be equal to
2.39:1 which is too high than the ideal ratio of 1:1. As we can see in the profit and
loss account the amount of debtors is the chief reason for the decline in this ratio.
So this makes the ratio as a satisfactory ratio.
3. Company’s debt equity ratio has slightly increased from the previous year having
ratio of 1.63:1 which makes ratio a safety margin for the creditors since the
owner’s equity is treated as a margin of safety by creditors.
4. Company’s Total Assets to debt ratio has decreased from 3.28:1 to 3.04:1 which
means less safety for short term as well as long term creditors as owner’s equity
is treated as margin of safety by creditors.
5. Proprietary Ratio of the company has declined from 49.66% to 46.68% in the
year 2009. It means now the assets of the firm are not financed out of
proprietor’s funds.
6. Company’s Capital Turnover Ratio has increased from 20.00 to 24.9 times in the
year 2009. This shows that company is on the path of using capital employed
efficiently and the management is also becoming efficient. Now this is positive
sign for the company.
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7. In year 2008 company’s fixed turnover ratio did not changed at all. It was .50
times in 2008 and still .50 times in 2009. There is no direct relationship between
sales and fixed assets.
8. In the year 2009 company’s working capital ratio didn’t increase at all. It means
management didn’t become more efficient and firm has no ability to generate
sales per rupee of working capital.
9. Company’s stock turnover Ratio didn’t move from .50 times.
If there is decline it is due to excessive inventory levels.
Slow moving and obsolete inventory etc.
As a result the firm may have to incur high carrying costs.
10. In the year 2009 the company’s net profit ratio has declined as compared to net
profit ratio in the year 2008 which is 20.00%. Due to this decline in the net profit
ratio there is a danger for the company with regard to future adverse economic
conditions.
11.Due to decline in net profit ratio last year i.e. 2009 return on total assets also
decreases which is shows that the management is not utilizing the total assets
efficiently.
12.Due to decline in the net profit before interest and tax in the year 2009 return on
investment also declines to 8.70%. this shows that the capital employed is not
utilized properly.
13. Decline in company’s return on net worth in the year 2009 is very low compared
to 2008 which is 14.60% declined. But in this year this goes down to 14.50% it
shows that the management is not taking this issue as serious issue as a result
inefficient utilisation of shareholder’s funds. This decline is also due to increase in
house tax which reduces the net profit.
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Cash Flow of NTPC ------------------ in Rs. Cr. -------------------
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Net Profit Before Tax 6271.20 8896.50 10529.40 9467.80 10807.60
Net Cash From Operating Activities 6206.40 8065.30 10171.10 9688.10 10594.20
Net Cash (used in)/from
Investing Activities-2713.60 -3145.80 -6203.80 -7500.40 -10497.70
Net Cash (used
in)/from Financing Activities-1099.70 -76.30 -2348.70 -849.30 -1908.60
Net (decrease)/increase In Cash
and Cash Equivalents2393.10 4843.20 1618.60 1338.40 -1812.10
Opening Cash & Cash Equivalents 6078.30 8471.40 13314.60 14933.20 16271.60
Closing Cash & Cash Equivalents 8471.40 13314.60 14933.20 16271.60 14459.50
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The cash flow statement shows how much cash comes in and goes out of the
company over the quarter or the year.
Cash Flows from Operating Activities
This section shows how much cash comes from sales of the company's goods
and services, less the amount of cash needed to make and sell those goods and
services. Investors tend to prefer companies that produce a net positive cash
flow from operating activities. High growth companies, such as technology firms,
tend to show negative cash flow from operations in their formative years. At the
same time, changes in cash flow from operations typically offer a preview of
changes in net future income. Normally it's a good sign when it goes up. Watch
out for a widening gap between a company's reported earnings and its cash flow
from operating activities. The net income is higher than cash flow in year 2010,
the company is speeding or slowing its booking of income or costs.
Cash Flows from Investing Activities
This section largely reflects the amount of cash the company has spent
on capital expenditures, such as new equipment or anything else that needed to
keep the business going. It also includes acquisitions of other businesses and
monetary investments such as money market funds.
Cash Flow From Financing Activities
This section describes the goings-on of cash associated with outside financing
activities. Typical sources of cash inflow would be cash raised by selling stock
and bonds or by bank borrowings. Likewise, paying back a bank loan would
show up as a use of cash flow, as would dividend payments and common stock
repurchases.
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31-Mar-
09(12)
31-Mar-
08(12)
31-Mar-
07(12)
Profit / Loss A/C Rs mn %OI Rs mn %OI Rs mn %OI
Net Sales (OI) 419765.00 100.00 370936.00 100.00 326335.00 100.00
Material Cost 310.00 0.07 268.00 0.07 237.00 0.07
Increase Decrease Inventories 0.00 0.00 0.00 0.00 0.00 0.00
Personnel Expenses 25012.00 5.96 19289.00 5.20 11908.00 3.65
Manufacturing Expenses 281563.00 67.08 229985.00 62.00 208109.00 63.77
Gross Profit 112880.00 26.89 121394.00 32.73 106081.00 32.51
Administration Selling and Distribution
Expenses7291.00 1.74 5975.00 1.61 5255.00 1.61
EBITDA 105589.00 25.15 115419.00 31.12 100826.00 30.90
Depreciation Depletion and
Amortisation23645.00 5.63 21385.00 5.77 20754.00 6.36
EBIT 81944.00 19.52 94034.00 25.35 80072.00 24.54
Interest Expense 20229.00 4.82 17981.00 4.85 19806.00 6.07
Other Income 32963.00 7.85 29241.00 7.88 28699.00 8.79
Pretax Income 94678.00 22.56 105294.00 28.39 88965.00 27.26
Provision for Tax 11582.00 2.76 28401.00 7.66 20427.00 6.26
Extra Ordinary and Prior Period Items
Net-1083.00 -0.26 -2745.00 -0.74 109.00 0.03
Net Profit 82013.00 19.54 74148.00 19.99 68647.00 21.04
Adjusted Net Profit 82013.00 19.54 74148.00 19.99 68647.00 21.04
Dividend - Preference 0.00 0.00 0.00 0.00 0.00 0.00
Dividend - Equity 29683.00 7.07 28859.00 7.78 26385.00 8.09
67
The income statement is basically the first financial statement you will come
across in an annual report or quarterly Securities And Exchange
Commission (SEC) filing. It also contains the numbers most often discussed
when a company announces its results -numbers such as
revenue, earnings and earnings per share. Basically, the income
statementshows how much money the company generated (revenue), how much
it spent (expenses)andthedifference between the two (profit) over a certain time
period.
NET SALES
Revenue, also commonly known as sales, is generally the most straightforward
part of the income statement. Often, there is just a single number that represents
all the money a company brought in during a specific time period, although big
companies sometimes break down revenue by business segment or geography.
The company have improved profitability by increasing sales revenue for the year
2009.
EXPENSES
There are many kinds of expenses, but the two most common are the cost of
goods sold (COGS) and selling, general and administrative expenses (SG&A).
Cost of goods sold is the expense most directly involved in creating revenue. It
represents the costs of producing or purchasing the goods or services sold by
the company.
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Profits = Revenue - Expenses
Profit, most simply put, is equal to total revenue minus total expenses. However,
there are several commonly used profit subcategories that tell investors how the
company is performing. Gross profit is calculated as revenue minus cost of sales.
Operating profit is equal to revenues minus the cost of sales and SG&A. This
number represents the profit a company made from its actual operations, and
excludes certain expenses and revenues that may not be related to its central
operations. High operating margins can mean the company has effective control
of costs, or that sales are increasing faster than operating costs. Operating profit
also gives investors an opportunity to do profit-margin comparisons between
companies that do not issue a separate disclosure of their cost of goods sold
figures (which are needed to do gross margin analysis). Operating profit
measures how much cash the business throws off, and some consider it a more
reliable measure of profitability since it is harder to manipulate with accounting
tricks than net earnings.
Net income generally represents the company's profit after all expenses,
including financial expenses, have been paid. This number is often called the
"bottom line" and is generally the figure people refer to when they use the word
"profit" or "earnings".
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70
Conclusion
After analyzing the Ratios, Balance sheet, Income statement, Cash Flows, I
came to the conclusion that NTPC (National Thermal Power Corporation) ltd.
From the past 2 years there is an increase in the profit of the company NTPC
Ltd.
This is due to high efficiency of the management of the company and resources
have been utilized properly in this year 2009-10.
So we can say that company is taking this issue of making the company more
efficient and effective through proper management in the future. And the issue of
making the company more indulge in social services and less focussing on profit
making.
The company more and more achievement has made the company liable to
show better improvement in the nest few years.
So overall company’s performance is satisfactory.
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Bibliography
BOOKS
Maheshwari, S.N.; Principles of Management Accounting, Sultan Chand & Sons, 2003 Fourteenth Edition
Bhattacharya, S.K. & Dearden; Accounting for Management – Text and Cases, Vikas Publishing House, 2003 Third Edition.
Pandey, I.M.; Management Accounting, Vikas Publishing House, 2003 Third Edition.
SITES
http://www.bseindia.com
http://en.wikipedia.org/wiki/National_Thermal_Power_Corporation
https://www.ntpc.co.in/
http://www.moneycontrol.com/financials/ntpc/balance-sheet/NTP
http://money.rediff.com/companies/ntpc-ltd/15130025/balance-sheet
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