SYNOPSIS ON A COMPREHENSIVE STUDY OF FINANCIAL STATEMENTS OF POWER SECTOR COMPANIES IN INDIA (NTPC, RELIANCE ENERGY, TATA POWER) WITH

REGARD TO OPERATING REVENUES, PROFITABILITY RATIOS AND LEVERAGE RATIOS.

TOWARDS THE PARTIAL FULFILLMENT OF MASTERS OF BUSINESS ADMINISTRATION

Submitted to

KURUKSHETRA UNIVERSITY, KURUKSHETRA

2008-2010

Under The Guidance of: Ms. Neetu Mehandiratta Lecturer, Deptt. of MBA MAIMT, Jagadhri

Submitted by: Pranav Garg MBA-Final Year Roll No.-611

MAHARAJA AGRASEN INSTITUTE OF MANAGEMENT & TECHNOLOGY JAGADHRI 135 003

INTRODUCTION
Over the course of the Tenth Five Year Plan (200207) accretion to power capacity had fallen well behind the targets set in the Plan, as indeed had been the case in previous plan periods as well. However, since economic growth was also lower, the delay in commissioning power capacity may have exacted a lesser cost on potential growth. With economic growth taking off in the Tenth Plan period, the constraints imposed by project delays in the power sector impose a more direct and severe constraint on the ability of the economy to sustain high rates of growth. In 2007/08 the anticipated increase in power generation capacity was 12,039 MW much of which is a spill-over from delays in previous years. Till the end of December 2007, 6375 MW was actually completed. Optimistic estimates suggest that in the balance part of the year a further 4429 MW would be commissioned, bringing the annual total to 10,804 MW, which would be about 10% short of what was planned. It may be remembered that over the past several years considerable direct intervention and administrative pressure has been brought to bear on accelerating power capacity creation. Thus, there are two ways to look at what has happened in 2007/08. One is to bemoan the extent of the shortfall and the other is to note that the annual increment of about 10,000 MW is more than double that achieved in previous years. Another 10,000 MW of generation capacity is expected to be added in 2009-10.. The marked step up in addition to installed capacity was not enough to make a significant dent on power supply deficits on account of increasing demand. At the all-India level, the power supply deficit for the period AprilNov. 2007/08 was 7.9% (it was 8.4% during the same period last year); the deficit was highest in the western and northern regions of the country at 13.2% and 8.0% respectively (corresponding to 12.7% and 11.4% in the same period last year).

FINANCIAL ANALYSIS
The term Financial Analysis, also known as analysis and interpretation of financial statements, refers to the process of determining financial strengths and weaknesses of the firm by establishing strategic relationship between the items of the balance sheet .profit and loss and other operative data. Analyzing financial statements, according to Metcalf and Titard , is a process of evaluating the relationship between component parts of a financial statement to obtain a better understanding of a firms position and performance. The analysis of financial statements is to bring out the mystery behind the figures in financial statements.

METHODS OR DEVICES OF FINANCIAL ANALYSIS

A number of methods or devices are used to study the relationship between different statements. An effort is made to use those devices which clearly analyse the position of the enterprise. The following methods of analysis are generally used: (1) Comparative Statements; (2) Trend Analysis; (3) Common size statements; (4) Funds Flow Analysis; (5) Cash Flow Analysis; (6) Ratio Analysis; (7) Cost Volume-Profit Analysis.

RATIONAL OF THE STUDY

As we are experiencing that power is biggest problem in India. Due to lacking in this sector India is far behind the developed countries. In my study I have included Indias three biggest power sector companies they are indulge in power generation, transmission and distribution. Financial statements show the real picture of the companies functions, operations, liabilities and assets. Study of their financial statements shows growth of the companies, that they are earning good profit and as well as distributing good amount of dividends. In my study I tried to cover all the financial aspects and throw a light on the profitability of the companies which shows that there is so much potential in the power sector in India. My study also tried to correlate the good earnings of the companies and condition of power sector in India.

EXPECTED CONTRIBUTION OF STUDY

Electricity generation has recorded a growth rate of 7.5 per cent in April- December this year. However, as we complete the Tenth Plan, we would have added only 23,163 MW of additional capacity in the five year period including 16,339 MW added in the three years beginning 2004-05. Whole world identify that India is a best destination of opportunity investment, we are adding millions of dollars in terms of FDI and FII. But India is still lacking in the power sector, the basic problem is generation and transmission. Demand of power is increasing more than the supply of that. Indias all power sector companies are doing very good business despite of surviving in a lacking sector, these companies has different ways to earn profit like they compensate loss of one business with its profitable business and retain themselves in the market. Although NTPC is a biggest government company for generating the electricity other private players are make them able to sustain in the market with their good financial policies. So I want to study Indias biggest power companies (NTPC, RELIANCE ENERGY, TATA POWER) their financial statements gives me a great exposure in financial understanding that how they are managing a sound flow of money in that surviving sector.

OBJECTIVES OF STUDY

Main objective of my study is to understand the effect of power sector growth on the financial statements of major companies. To understand the financial growth of these companies. To analyze the statements, with financial tools. To understand the growth of these companies with regard to the growth of power sector in India.

LITERATURE REVIEW
TEXT BOOKS
Jain T.R from these pages help me to understand the meaning of my statistical tools and also help in applying them. Goel D.K: this text book helps me out to understand the meaning of different ratios and their meaning. A.Bernstein Leobold and J.wild John: This text book helps me to understand the major concept like debt equity ratio and retained earnings. Gupta Shashi K. & Sharma R.K form this book I have cleared my financial concepts and their meanings. Maheshwari S.N5: from the above pages I got light on some analytical tools. Kothari C.R6: this book helps me to know the meaning of various steps in the marketing research. Beri G. C7: this book give me the knowledge of basic meaning of research that what it means and what are its limitations. Luck J. David8 : from this book I got light on the meaning of the marketing research. Gupta S.P9 : this book helps me in understanding the meaning and application of statistical tools. Gupta R.L. & Gupta V.K10 : this book helps me in applying the analytical tools. Pandey I.M11 :from this book I got the interpretation of various parameters. Sharma R.K12,: help me to clear the meaning of various terms in the financial statements. Khan & Jain13 :helps me to clear the meaning of operating activities, non operating activities etc.

MAGAZINES
Hanumantha.P14, Capital inflows in power sector in India, and by that I came to know that how much capital inflow is coming through different sources Reserve bank of India bulletin,15 article on condition of power sector in India. In this article current capacity and capital flows are discussed. Annual report 2006-07, RBI bulletin,16, electricity generation target and achievement in 10th five year plan. In this governments policies regarding power sector is given and also their future perspective. Laxmi Vijay S, ICFAI reader,17, financial growth of power sector, in this growth of capacity, generation, distribution are given. Vasudevan A, Economic and political weekly18 XLI-2, private performance in power sector in India. Business World,19 in these pages I got information about how much electricity in needed and how much is produced in India. Sampling, Business Research20 , from these pages i read theory about research methodology. By that I know what is the process of research and what steps to be followed in the research.

Kurrukshetra Journel , 21 By J.S. Grill Rao i read the article the power sector the power sector in this lackings and challenges of power sector are given.

Trends, Business Today22.on these pages i got the financial position of power companies in India.

Business World Economy23 on these pages i got information about worldwide power sector

information. By that I found the power sector condition in foreign countries.

RESEARCH METHODOLOGY
Research methodology is systematically solving the research problem. It may be understand as science of studying how research is done scientifically. In it we study the various steps that are generally adopted by the researcher in studying his research problem along with logic behind them So we should consider the following steps in research methodology: Meaning of research Problem statement Research design Sample design Data collection Analysis and Interpretation of data7

PROBLEM STATEMENT:
To know the financial growth of power sector companies (NTPC, RELIANCE ENERGY, TATA POWER) on different criteria & to understand with regard to current situation of power sector in India.

My research design is descriptive because the problem statement is based on the present situation of power sector companies. Descriptive research:
This portrays the particular characteristics of a particular individual situation or a group

Meaning of Research

Research is defined as a scientific & systematic search for pertinent information on a specific topic. Research is an art of scientific investigation. Research is a systemized effort to gain new knowledge. It is a careful inquiry especially through search for new facts in any branch of knowledge. The search for knowledge through objective and systematic method of finding solution to a problem is a research.8

PROBLEM STATEMENT 3
The research problems, in general, refers to sum difficulty with a researcher experience in the contest of either a particular or a theoretical situation and want to obtain a salutation for same. The present project has been undertaken to do the comparative Analysis of HDFC BANK with ICICI BANK and AXIS BANK.

RESEARCH DESIGN9
A research is the arrangement of the conditions for the collections and analysis of the data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact, the research is design is the conceptual structure within which research is conducted; it constitutes the blue print of the collection, measurement and analysis of the data. As search the design includes an outline of what the researcher will do from writing the hypothesis and its operational implication to the final analysis of data.5 The design is such studies must be rigid and not flexible and most focus attention on the following; o What is the study about? o Why is the study being made? o Where will the study be carried out? o What type of data is required? o Where can be required data be found? o What period of time will the study include? o What will be sample design?

o What techniques of data collection will be used? o How will the data be analyzed? o In what style will the report be prepared?

Research Design can be categorized as:13

TYPES OF RESEARCH DESIGN

EXPLORATORY RESEARCH DESIGN

DESCRIPTIVE & DIAGNOSTIC RESEARCH DESIGN

EXPERIMENTAL RESEARCH DESIGN

The present study is exploratory in nature, as it seeks to discover ideas and insight to brig out new relationship. Research design is flexible enough to provide opportunity for considering different aspects of problem under study. It helps in bringing into focus some inherent weakness in enterprise regarding which in depth study can be conducted by management.

SAMPLING DESIGN:
A sample design is a definite plan for obtaining a sample from the sampling frame. It refers to the technique or the procedure that is adopted in selecting the sampling units from which inferences about the population is drawn. Sampling design is determined before the collection of the data. Several decisions have to be taken in context to the decision about the appropriate sample selection so that accurate data is obtained and efficient results are drawn. Following questions have to be considered while sampling design-9 What is the relevant population? What is the parameter of interest?

What is the sampling frame? What is the type of sample? What sample size is needed? How much will it cost?

The sample size of past Three year is taken for proper study of Comparative Financial Analysis of HDFC BANK with ICICI BANK and AXIS BANK.

DATA COLLECTION 9
After the research problem has been identified and selected the next step is to gather the requisite data. While deciding about the method of data collection to be used for the researcher should keep in mind two types of data VIZ. primary and secondary

TYPES OF DATA

PRIMARY DATA:9 DATA

PRIMARY

SECONDRY DATA

The primary data are those, which are collected afresh and for the first time, and thus happened to be original in character. We can obtain primary data either through observation or through direct communication with respondent in one form or another or through personal interview.3 Types of Primary Data Observation Method Interview Method Questionnaire Method Schedule Method

SECONDARY DATA:-9
The secondary data on the other hand, are those which have already been collected by someone else and which have already been passed through

the statistical processes. When the researcher utilizes secondary data then he has to look into various sources from where he can obtain them. For example Books, magazines, newspapers, Internet, publications and reports etc.3

In the present study I have made use of secondary data collected from their website and from their records.

Analysis and Interpretation of Data3

The data collected in the aforesaid manner have been tabulated in condensed form to draw the meaningful results. The different techniques are adopted to analyze the data. All the data and material is arranged through internal resources and the last part of the project consists of the conclusions drawn from the report, a brief summary and recommendation are giving the final touch to the report by stating a conclusion.2