A Project Report on Ratio Analysis of SJVNL

Submitted in partial fulfilment of the requirement for the award of the degree Of MASTER OF BUSINESS ADMINISTRATION (MBA)

SUBMITTED BY:PRAVEEN KUMAR SHARMA ROLL NO2011PGMB056

SUPERVISED BY:-

ACKNOWLEDGEMENT
I hereby acknowledge the immense contribution of SJVN Ltd. Who has given me an opportunity to work in Finance & Accounts Department. I express my gratitude to Sh. S.L. Sharma and his team for sharing collected observations, writing skills and gracious persistence which kept the things going. This experience combined with the theoretical concepts has a synergic effect of a kind on the individuals development.

PRAVEEN KUMAR SHARMA

PREFACE

The research provides an opportunity to a student to demonstrate application of his/her knowledge, skill and competencies required during the technical session. Research also helps the student to devote his/her skill to analyse the problem to suggest alternative solutions, to evaluate them and to provide feasible recommendations on the provided data. The report is on the topic of RATIO ANALYSIS OF SJVNL. Although I have tried my level best to prepare this report an error free report, every effort has been made to offer the most authenticate position with accuracy.

DECLARATION

I hereby declare that the following documented Project Report Titled- ratio analysis of sjvnl is an authentic work done by me.

The study was undertaken as apart of the course curriculum of MBA fulfilment program of . BAHRA University

PRAVEEN KUMAR SHARMA

CONTENTS:
CHAPTERS CHAPTER-1 HISTORY OF SJVNL A. B. C. CHAPTER-2 INTRODUCTION FEATURES OBJECTIVES SJVNL QUALITY

CHAPTER-3 RESEARCH METHODOLGY FUNCTIONS OF FINANCIAL DEPARTMENT

CHAPTER-4 ANALYSIS AND INTERPRETATION A. i. ii. RATIO ANALYSIS SHORT TERM LONG TERM

CHAPTER-5 CONCLUSION, FINDINGS AND SUGGESTIONS ANNEXURE BIBILOGRAPHY

CHAPTER 1

COMPANY PROFILE Overview of SJVNL:The SJVN Ltd (formerly Satluj Jal Vidyut Nigam Limited-SJVNL ) was incorporated on May 24, 1988 as a joint venture of the Government of India ( GOI ) and the Government of Himachal Pradesh (GOHP) to plan, investigate, organize, execute, operate and maintain Hydro-electric power projects. The present authorized share capital of SJVN is Rs 7000 crores. The Nathpa Jhakri Hydro Electric Power Station NJHPS ( 1500 MW ) was the first project undertaken by SJVN for execution. In addition to the financial assistance from the World Bank, SJVN has also been financed as loan by a Consortium of European Banks, the Power Finance Corporation Unit Unit 6 Unit 5 Unit 4 Unit 3 Unit 2 Unit - 1 ( PFC ) and various domestic commercial banks. Synchronization November 23, 2003 September 29, 2003 January 22, 2004 February 13, 2004 March 09.2004 March 31, 2004 Commercial Generation January 02, 2004 October 06, 2003 March 30, 2004 March 31, 2004 May 06, 2004 May 18, 2004

Besides the social and economic upliftment of the people in its vicinity, the 1500 MW NJHEP has been designed to generate 6612 MU of electrical energy in a 90% dependable year with 95 % machine availability. It is also providing 1500 MW of valuable peaking power to the Northern Grid. Out of the total energy generated at the bus bar, 12 percent is supplied free of cost to the home state i.e. Himachal Pradesh. From the remaining 88% energy generation, 25% is supplied to HP at bus bar rates. Balance power has been allocated to the beneficiary states / UTs of Northern Region by Ministry of Power, Government of India. Besides above, indirect benefits have also accrued to the region by way of increase in agriculture and industrial production. In addition, the project has provided gainful employment to a large number of skilled and unskilled workers and has also opened the landlocked hinterland by providing essential facilities such as schools, hospitals etc. for the people of the area. Thus, 1500 MW NJHPS has

ushered in the social and economic upliftment of the persons living in the vicinity of the Project i.e. of society at large. SJVNs Future Projects Since the commissioning of the largest underground 1500 MW Hydro Electric Power Project, NJHEP with the gigantic efforts made by its engineers, workers and all its associates, the first project allocated to SJVN, the Corporation expanded its base from a single project to a Multi Project and thereafter from a presence in a single state to a pan- Indian Corporation and established its footprint in the neighbouring countries of Nepal & Bhutan. SJVN is currently constructing the 412 MW Rampur Hydro Electric Project in the state of Himachal Pradesh. SJVN is also implementing three hydro projects (252 MW Devsari, 60 MW Naitwar Mori and 51 MW Jakhol Sankri) in the state of Uttarakhand. Further, SJVN has also been allocated Luhri Hydro Electric Project (775 MW) and Dhaulasidh HEP (66 MW) in the state of Himachal Pradesh for preparation of Detailed Project Report and subsequent execution. Further, SJVN is entering into a Joint Venture for the implementation of 1500 MW Tipaimukh HE Project in Manipur with an equity participation to the extent of 26%. The company has now gone across the borders and has bagged 900 MW Arun III hydroelectric projects in Nepal through, competitive bidding. In addition, the corporation has also been assigned the task of updating/preparing DPRs of two Hydro Electric Projects 600 MW Wangchu HE Project and 650 MW Kholongchu HE Project in Bhutan by Govt. of India. SJVN Venturing into Wind Energy Sector India consumes about 3.7% of world's commercial energy and is ranked as the fifth largest consumer of energy in the world in terms of energy demand. This is despite having one of the lowest per capita energy consumption in the world. Continued economic development and increasing population are pushing up the demand for energy at a higher rate than addition in generation capacity. Peak energy demand is about 12.7% (for Year 2009-10 as per CEA report) more than the total available energy for consumption. The energy demand is expected to grow at 5.2% and to have sustainable development; the electricity energy addition is to be around 10% annually.

With the growing environment consciousness and reserves of the fossils like coal, crude oil, natural gas etc. depleting at faster rate and the vast available renewable recourse had a big role towards meeting up the energy demands of such a vast nation. In view of the advantages SJVN is venturing into the Wind Energy field with an initial addition of 50MW of wind energy by the end of 2012 to promote and develop more renewable resource of energy. In pursuit of the above mission SJVN has already started surveying the various potential locations in India where the wind energy can be exploited economically. The consultant for this new venture of setting up of the 50MW wind Power Project has already submitted the feasibility report for establishing the project with the advantages of various locations.

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 SJVN in an efficient and cost effective manner.

Use of the best project management practices for the project implementation by applying latest universally accepted Project Management Techniques, and by enabling its Engineers, to become certified Project Managers through further trainings.

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.

Striving clean and green project environment with minimal ecological and social disturbances.

To strive for acquiring Nav Ratna Status.

VISION:TO MAKE INDIA A FOUNTAINHEAD OF HYDRO POWER AND THE ENERGY SOURCE OF THE FUTURE BY REORGANIZING DEVELOPMENT WITH PASSION AND PROFESSIONALISM FOR SUSTAINABLE VIABILITY OF THE CORPORATION ON BEDROCK OF SOUND COMMERCIAL PRINCIPLES.

MISSION:TO PLAN, INVESTIGATE, ORGANISE, EXECUTE, OPERATE AND MAINTAIN POWER PROJECTS IN THE SATLUJ RIVER BASIN IN HIMACHAL PRADESH AND AT ANY OTHER PLACE IN INDIA & ABROAD.

SJVNL QUALITY POLICY:SJVNL is committed to continuously strive for quality and fully satisfying customer needs by means of state of the art technology, excellence in engineering and continual improvement in quality management for generating reliable and eco-friendly power.

SJVNL QUALITY OBJECTIVES:-

Maximum efficiency:Operating and maintaining power stations with maximum performance efficiency. Following sound policies:Establishing and following sound business, financial and regulatory policies. Starting more projects:Taking up of other hydro power projects. Cost effective completion:Completion of the new projects allocated to SJVN in an efficient and cost effective manner. Full utilisation of expertise:Dissemination of available in house technical and managerial expertise to other utilises projects. Conducive work culture:Creating work culture and work environment conducive to the growth and development of both, the organisation and the individuals through introduction of participative management philosophy. Social responsibility:Fulfilling social commitments to the society. Achieving constructive cooperation and building personal relations with stakeholders, peers, and other related organisation.

Green business:Striving clean and green project environment with minimal ecological and social disturbances. Aim ratna status:To strive for acquiring NAV ratna status. Quality objectives: To keep the organisation abreast of the latest technology in power generation for its adoption in a phased manner. To monitor and control the quality of work designing of power projects and procurement of equipment. To fulfil the regulatory requirements related to power generation and act as a socially responsible organisation in taking care of the community and the environment.

CHAPTER 2

The profile :PROJECT UNDER EXECUTION

Sr. No. 1.

Project Rampur HEP

Installed Capacity 412 MW

State Himachal Pradesh

Projects under Survey and Investigation and DPR Preparation

A. In the State of Himachal Pradesh Sr. No. 1. 2. Project Luhri HEP Dhaulasidh Installed Capacity 775 MW 66 MW

B. In the State of Uttarakhand Sr. No 1. 2. 3. Project Devsari HEP Naitwar Mori HEP Jakhol Sankri HEP Installed Capacity 252 MW 60 MW 51 MW

C. In the State of Manipur Sr. No 1. Project Tipaimukh HEP* Installed Capacity 1500 MW

*This project will be developed by a joint venture company to be established in which SJVN have agreed to take a 26% equity interest, with NHPC Limited and State of Manipur taking 69% and 5% equity interest respectively. D. Projects Abroad Country Nepal Bhutan Bhutan

Sr. No 1. 2. 3.

Project Arun III Wangchu HEP Kholongchu HEP

Installed Capacity 900 MW 600 MW 600 MW

Future Plans:-

The SJVN proposes to add 5000 MW additional capacity by 2014-15. This would require an additional investment of about Rs. 29,000 Crores which shall be met mainly from internal accruals and loans from domestic /multi literal funding agencies. To achieve the target of setting up of additional 5000 MW SJVN is exploring the possibilities of taking up new projects in Himachal Pradesh, Arunachal Pradesh, Nepal and Bhutan.

Profits:-

Authorised Capital Value of Assets Paid Up Capital Projects Completed Projects Under Construction Projects Under Development In 2010-2011 Energy Generated PAF (Plant Availability Factor) Sales Net Profit In 2009-2010 Energy Generated

Rs. 70000 Million Rs 111291 Million 31.03.2011 Rs. 41,366 Million 31.03.2011 1 No. (1500 MW) 1 No. (412 MW) 8 Nos. (3304 MW)

7140.205 MU 98.318% 18126.7 Million 9121.3 Million

7018.81 MU

PAF (Plant Availability Factor) Sales Net Profit Performance Rating In 2008-2009 Energy Generated Capacity Index Sales Net Profit Performance Rating In 2007-2008 Energy Generated Capacity Index Sales Net Profit Performance Rating

98.55% 17697.4 Million 9727.4 Million "Excellent"

6608.691 MU 96.08% 17595.9 Million 10153.2 Million "Excellent"

6449 MU 96.671% 12503.4 Million 7645.10 Million Very Good

ORGANISATIONAL STATUS:Public Sector SJVN Limited, a joint venture of the Govt. of India and Govt. of Himachal Pradesh, is a Central Public Sector Undertaking (CPSU) under the Ministry of Power. The present authorized capital of SJVN is Rs. 4500 crores which is under revision to Rs. 7000 crores. The present installed capacity of SJVN is 1500 MW. The Corporation has achieved many milestones in construction, operations and investigations activities of its projects during the last five years. A Mini Ratna Company The Corporation has the distinction of being conferred with the much coveted status "Mini Ratna: Category-I" status by Government of India within only four years of coming into commercial operations. Schedule 'A' Company Meeting the criteria laid down by the Department of Public Enterprises and qualifying the qualitative and quantitative parameters viz. investment, capital employed, net sales, profits, employees, and also factors of national importance, complexities of problems faced, level of technology adopted prospects for expansion and diversification, competitiveness etc., SJVN has been upgraded as Schedule 'A' PSU. FUTURE PORTENTS After successful implementation, commissioning and operations of the country's largest 1500 MW Nathpa Jhakri Hydro Power Station, the Corporation is implementing a number of hydro power projects in the state of Himachal Pradesh, Uttarakhand and Manipur besides in neighboring countries viz. Nepal and Bhutan. With the support and guidance of Ministry of Power, Govt. of India, SJVN is thus emerging as a rising star in the hydro power sector of the country. For its upcoming projects, the Company proposes to make an investment of over Rs. 23,000 crore in the next 10 years. The Company has about 4000 MW capacity projects lined up for commissioning by the year 2020.

AWARDS AND ACHIVEMENTS

SJVN Awarded Gold Shield For its Meritorious Performance during the year 2010 2011, Indias largest 1500 MW Nathpa Jhakri Hydro Power Station has been awarded Gold Shield by the Ministry of Power, Govt. of India.

SJVN Ltd. is conferred with the Greentech Environment Excellence Award 2010 SJVN Ltd. is conferred with the Greentech Environment Excellence Award 2010 at the 11th Greentech Environment Global Conference and Expo 2010 held at Hyderabad recently.

SJVN Limited conferred with Scope Gold Medal Award SJVN Limited has been conferrred with the Scope Gold Medal award in Medium Public Sector Enterprises Category

SJVNs CMD Honoured with India Power Award 2010 Shri H.K. Sharma, Chairman & Managing Director of SJVN Limited has been honoured with 3rd India Power Award 2010 by the Council of Power Utilities, New Delhi

SJVN Bags Scope Excellence Award The SCOPE Excellence awards are given in recognition of the contribution of public enterprises

SJVNL is Awarded Scope MoU Exellence Certificate SJVNL is Awarded Scope MoU Exellence Certificate for exemplary performance by SCOPE

SJVNL bags Enterprise Excellance Award for Financial and operations SJVNL bags Enterprise Excellance Award for Financial and operations strength awarded by Indian Institution of Industrial Engineering

SJVNL bags Excellence Award

SJVNL bags Excellence Award for Outstanding contribution to Betterment of Society awarded by Delhi Telgu Academy

SJVNL CMD Honoured with National Achievement Award for Corporate Leadership Shri H.K. Sharma, CMD of public sector Satluj Jal Vidyut Nigam has been conferred National Achievement Award by the All India Achievers Foundation AIAF for Corporate Leadership.

SJVNL CMD Honoured with Leadership Excellence Award for National Development. Shri H.K. Sharma, CMD of public sector Satluj Jal Vidyut Nigam has been conferred Leadership Excellence Award for National Development by Indian Economic Development and Research Association IEDRA.

SJVNL CMD Honoured with Mother India Award for Udyog Pratibha 2006. Shri H.K. Sharma, CMD of public sector Satluj Jal Vidyut Nigam has been conferred Mother India Award for Udyog Pratibha 2006 by the Indian Organisation for Commerce and Industry IOCI for outastanding contribution to the Society and Nation.

SJVN bags two Greentech Awards The Greentech Foundation, New Delhi has once again adjudged the Environmental Management practices adopted by SJVNL in its 1500 MW Nathpa Jhakri Hydro Power Station

SJVNL CMD Honoured with Excellence Award 2007 Shri H.K. Sharma, CMD of public sector Satluj Jal Vidyut Nigam has been conferred Excellence Award 2007

SJVNL bags Green Tech Gold Award in Hydro Power Sector for Public Sector Satluj Jal Vidyut Nigam has been awarded the prestigious 9th Annual Green Tech Environment Excellence GOLD Award 2008

HIND GAURAV AWARD AND GOLD MEDAL Shri H.K. Sharma, Chairman & Managing Director, Satluj Ja l Vidyut Nigam Limited has been awarded Hind Gaurav Award

CHAPTER 3

RESEARCH METHODOLOGY

Research in common language refer to a search for knowledge. Research is a scientific & systematic search for pertinent information a specific topic. In fact research is an scientific way to solve research problem. In it we study the various steps that are generally adopted by the researcher in studying their research problems. The research process consists of a series of closely related activities. At times the first step to be undertaken. Why a research study has undertaken have the research problem has been defined in what & why the hypothesis has been formulated etc are usually answered when we talk to research methodology. This research is based upon facts, reliability data and other environments.

SAMPLE SIZE:-

100 employee of different department were questioned in order to collect primary data. It is 15% employees of SJVNL (New Shimla).

SAMPLE AREA:-

Financial structure

a) Ratio analysis Short term analysis Long term analysis b) Comparative study of balance sheet and p&l a/c

Structure of finance department

Bill-1 Section

Salary Section

Finance Department

Bill-2 Section

Compilation Section

BILL-I SECTION

This department deals with the following subjects:-

AMC Telephone bills Vehicle repair & maintenance bills Hospitality/entertainment bills including credit card of directors. Training or seminar Professional subscription / membership fees DBR Medical bills Medical TA bills Hospital bills Imprest LTC / TA bills Briefcase / newspaper bills All work related to provident fund All work related to pension

BILL-II SECTION

This department deals with the following subjects:-

Closing of accounts and schedules Legal insurance Income tax returns Service tax returns Consultancy provided by the corporation Contractors / suppliers bills New projects Bank guarantees Monthly cash expenditure reports Weekly cash expenditure reports Quarterly performance reports BEs and Res Balmer lawrie bills Rent Reimbursement of vehicle expenses Advance of govt. Dept. Departmental advances Consultants bills Employees reimbursement bills Other partys bills Feeding of JVs, misc PVs Electricity / water bills

COMPILATION SECTION

It deals with the following subjects: CERC Assets register Fund management Income tax / wealth tax Interest calculation Bank reconciliation Physical verification Sales accounting / MOU Taxation Cash Compilation of accounts IUT reconciliation Maintenance of bank books and G.I. Feeding of BPVs / JVs etc. Preparation of monthly trial balance & other MIS reports Dealing with various banks HPSEB liaison H.P. secretariat liaison Preparation of cheques of all banks

SALARY SECTION

All works related to HPSEB executives All works relating to SJVN executives All works relating to HPSEB non-executives

All works relating to SJVN supervisors and workmen Diary and dispatch

CAPITAL STRUCTURE OF COMPANY

The financial position of SJVN, for the last 3 years, is as under : ( In Crores) INCOME DETAILS SALES OTHER INCOME TOTAL INCOME PBDIT NET PROFIT DIVIDEND (Excluding Dividend Tax) SHARE CAPITAL RESERVES & SURPLUS 4136.63 3068.89 4108.81 2528.25 4108.81 1938.53 2010-2011 1812.67 143.15 1955.82 1758.57 912.13 330.09 2009-10 1769.74 138.99 1908.73 1622.39 972.74 328.20 2008-09 1759.59 269.65 2029.24 1859.87 1015.32 320.00

Current - Performance (FY: 2010-11) By the end of 31st March, 2011 a gross energy generation of 7140.205 million units during the FY 2010-11 and a revenue earnings of 143.15 Crore) during the period. 1955.82 Crore (Sales 1812.67 Crore + other income

NETWORTH OF SJVN The networth of SJVN for the preceding three years is as under: Year Networth ( in crores) 2006-07 2007-08 2008-09 2009-10 2010-11 4925.29 5406.40 6047.34 6653.76 7205.52

CAPITAL STRUCTURE AND CREDIT WORTHINESS OF SJVN The total credit worthiness in the company in equity, reserves/surplus and loan funds as on 31.03.2011 was 8959.44 Crore. The source wise detail is as under:

1. Paid-up- Capital (a) (b) (c) Total Government of India Govt. of H.P. Others 2666.61 Crore 1055.02 Crore 415.00 Crore 4136.63 Crore

Reserves and Surplus

.3068.89 Crore

Secured Loans Unsecured Loans

900.13 Crore 853.79 Crore

The company is making profits and paying dividends to the share holders. It has the capacity to fund the equity portion of the projects from its internal resources to a considerable extent. The company has developed a good rapport with its creditors with the faultless repayment of loans and as such its creditworthiness has increased over the period of time after the first venture of the company, the Nathpa Jhakri HPS came into operation.

The secondary data used in this project is obtained from the annual report of SJVNL.

For analysis of financial statements the following methods have been used: 1) Ratio analysis 2) Comparative statements 3) Study of cash flow statements

Tools of analysis of financial statements

The tools to carry out financial analysis include:Ratio analysis Comparative statements Cash flow statements

RATIO ANALYSIS:Ratio analysis expresses the relationship between two financial variables taken from financial statements of an accounting periods in the form of ratio. It is a technique of analysing the

financial statements by computation of ratio. The four most important financial dimensions, which a firm would like to analyse are: liquidity, leverage, activity and profitability.

COMPARATIVE FINANCIAL STATEMENT:Comparative financial statements are the statements in which, figures for two or more periods are placed side along with change in figure in absolute and percentage form to facilitate comparison. Both the income statement and position statements are prepared in the form of comparative financial statements. The financial statements are prepared at the end

CASH FLOW STATEMENTS:cash flow statement, also known as statement of cash flows or funds flow statement, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and cash out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals with cash flow statements. People and groups interested in cash flow statements include:

Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses

Potential lenders or creditors, who want a clear picture of a company's ability to repay Potential investors, who need to judge whether the company is financially sound Potential employees or contractors, who need to know whether the company will be able to afford compensation

Shareholders of the business.

ANALYSIS OF SHORT TERM FINANCIAL POSITION OF SJVNL

Two type of ratio can be calculated for measuring short term financial position or short term solvency of the firm.

1) Liquidity ratio 2) Current assets movements or efficiency ratio LIQUIDITY RATIO:1) Current ratio:

The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. It is expressed as follows:

( rs. in lakhs) Current Liabilities Current Liabilities & provisions Current Assets a) b) Inventories Sundry debtors As on 31/3/2011 132,029 As on 31/3/2011 2,368 26,450 As on31/3/2010 125,409 As on31/3/2010 5,867 18,929

c) d) e)

Cash & Bank Balances Short Term Loans & Advances Other Current Assets Current Assets

206,378 60,478 7,644 303,318

154,239 64,643 5,354 249,032

Current ratio :-

31-3-2011 = 30,3318/132,029 = 2.30

31-3-2010 =249,032/125,409 = 1.98

The current ratio for the year 2011 , 2010 is 2.30, 1.98 respectively. As a conventional rule, a current ratio 2:1 or more considered satisfactory. But a current ratio 2:1 or more considered acceptable. Thus the current ratio of SJVNL is acceptance.

2) Quick ratio:-

Quick ratio, expresses a company's ability to repay short-term creditors out of its total cash. The liquidity ratio is the result of dividing the total cash by short-term borrowings. It shows the number of times short-term liabilities are covered by cash. If the value is greater than 1, it means fully covered. The formula is the following: QR = liquid assets / current liabilities Quick assets = cash & bank balance + other current assets + loans advances + sundry debtors

Current Liabilities Current Liabilities & provisions Quick Assets a) b) c) d) Sundry debtors Cash & Bank Balances Short Term Loans & Advances Other Current Assets Quick Assets

As on 31/3/2011 132,029 As on 31/3/2011 26,450 206,378 60,478 7,644 300,950

As on31/3/2010 125,409 As on31/3/2010 18,929 154,239 64,643 5,354 243,165

Quick ratio: 31/3/2011 = 300,950/132,029 = 2.27

31/3/2010 = 243,165/125,409 = 1.93 Quick ratio 1:1 is considered to represent a satisfactory financial condition.

3) Absolute liquid ratio:-

Absolute liquid ratio = cash &bank balance/ current liabilities ( rs. In lakhs ) As on 31.03.2011 Cash & Bank Balances Current Liabilities 206,378 132,029 As on 31.03.2010 154,239 125,409

Absolute liquid ratio:-

31.03.2011 = 206,378/132,029 = 1.56

31.03.2012 = 154,239/125,409 = 1.22

The absolute ratio for the year 2012, 2010 is 1.56, 1.22 respectively. The norm for this ratio is 50%. Thus we can see that the absolute liquid ratio of SJVNL in 2011 & 2012 is excellent.

EFFECIENY RATIO:-

Working capital turnover ratio:Working capital turnover ratio indicates the velocity of the utilisations of net working capital. This indicates the number of times the working capital is turned over in the course of the year. This ratio measure the efficiency with which the working capital is being used by a firm.

Working capital turnover ratio = sales / working capital Working capital = current assets current liabilities ( Rs. In lakhs ) As on 31.03.2011 Sales Current assets Current Liabilities 181,267 303,318 132,029 As on 31.03.2010 176,974 249,032 125,409

31/3/2011 = 181,267/171289 = 1.058

31/3/2010 = 176,974/123,623 = 1.43

The working capital turnover ratio for the year 2011 & 2012 is 1.058 , 1.43 respectively. Higher the ratio higher the utilisation of funds.

ANALYSIS OF PROFITABILITY RATIO Profit is the difference between revenues and expense over a period of time (usually one year). The profitability ratios are calculated to measures the operating efficiency of the company. It measures the overall efficiency of the business in relations to sales or investments. Profitability ratios measure the company's use of its assets and control of its expenses to generate an acceptable rate of return. The main types of ratio used for profitability analysis are:1) Gross profit ratio 2) Expense ratio 3) Net profit ratio

1) Gross profit:This ratio expresses the relationship between gross profits and sales. It indicates the average spread between the cost of goods sold and the sales revenue. Higher ratios are always considered good and serve as an index of higher profitability. Gross profit ratio = (gross profits/sales) *100 ( Rs. In lakhs ) As on 31.03.2011 Sales Gross profit 181,267 115,620 As on 31.03.2010 176,974 101,747

31/3/2011 = ( 115620/181267)*100 = 63.78%

31/3/2010 = ( 101,747/176,974 )*100 = 57.87%

2) Net profit ratio:Net profit is obtained when operating expenses; interest and taxes are subtracted from the gross profits. Net profit ratio is measured by dividing net profit after tax by sales. ( Rs. In lakhs ) As on 31.03.2011 Sales Net profit 181,267 91,213 As on 31.03.2010 176,974 97,274

31/3/2011 = (91,213/181,267)*100 = 50.31%

31/3/2010 = (97,274/176,974)*100 = 54.96%

These above calculated ratios show the profitability ratio of the SJVNL. There is decrease in profits from the previous year.

Last 5years net profits of SJVNL

This figure signifies the steady increase in profits of the SJVN. Although there is decrease in the profits in 2011 but still the SJVNL profits are good. In this figure the profits of last 5years are shown i.e. 2007, 2008, 2009, 2010, and 2011.

Return on investment:The term investments may refer to total assets or net assets. The fund employed in net assets is known as capital employed. Net assets equal net fixed assets plus currents assets minus current liabilities. Alternatively, capital employed is equal to net worth plus total debt. Return on investments = profit before interest and tax/capital employed Capital employed = fixed assets +current assets current liabilities

( Rs. In lakhs ) As on 31.03.2011 PBIT Fixed assets Current assets Current liabilities 115,620 662,059 303,318 132,029 As on 31.03.2010 101,747 693,438 249,032 125,409

31/3/2011 = 115,620/883,348 = 0.13

31/3/2010 = 101,747/817,061 = 0.12

The return on investments during 2010 was 0.12 and in 2011 ROI was 0.13.

ANALYSIS OF LONG TERM FINANCIAL POSITION OR TEST OF SOLVENCY OF SJVNL

The term solvency refers to the ability of SJVNL to meet its long-term obligations. The term solvency ratios indicate a firms ability to meet the fixed interest and the cost and repayment schedules associated with its long term borrowings. Different types of ratios used for test of solvency are as follows: 1) Debt equity ratio 2) Funded debt to total capitalization ratio 3) Proprietary ratio 4) Solvency ratio 5) Fixed assets to net worth ratio 6) Ratio of current assets to proprietors funds

1) Debt equity ratio:Debt equity ratio is also known as external interval equity ratio. It is calculated to measure the relative claims of outsides and the relationship between the owners (i.e. shareholders) against the firms assets. This ratio indicates the relationship between external equities and the internal equities. A higher ratio indicates a risky financial position while a lower ratio indicates safer financial position.

Debt equity ratio = total debt/net worth

Total debt = secured loan + unsecured loans + current liabilities

Net worth = share capital + reserve & surplus miscellaneous Expenditure

( Rs. In lakhs ) As on 31.03.2011 Secured loans Unsecured loans Current liabilities Total Share capital Reserve & surplus Miscellaneous expenditure Total 90,013 85,379 132,029 307,421 413,663 306,889 720,552 As on 31.03.2010 105,397 62,791 125,409 293,597 410,881 254,495 665,376

31/3/2011 = 307,421/7,20552 = 0.43

31/3/2010 = 293,597/665,376 = 0.44

A higher ratio indicates a risky financial position while a lower ratio indicates safer financial position.

2) Funded debt to total capitalization ratio:This ratio establishes a link between the long term funds raised from outsider and total long term funds available in the business. Funded debt to capitalization ratio =( funded debt/ total capitalization)*100 (Rs. In lakhs) As on 31.03.2011 Secured loans Unsecured loans Shareholders fund funded debt 90,013 85,379 720,552 49,889 As on 31.03.2010 105,397 62,791 665,376 65,345

31/3/2011 = (175,392/766,441)*100 = 22.8%

31/3/2010 = (168,188/730,721)*100

= 23.1%

There is no thumb rule for this ratio but it is considered better up to 50% or 55%. The funded debt to capitalization ratio of SJVNL for the years 2011,2010 is 22.8% & 23.1%.

3) Proprietary ratio or equity ratio:This ratio establishes the relationship between shareholders fund to total asset of the firm. The ratio of proprietors fund is an important ratio of determining long term solvency of the firm.

Equity ratio = (shareholders fund/ total assets)*100 Total asset = fixed assets + current assets

( Rs. In lakhs) As on 31.03.2011 Shareholders fund Fixed assets 720,552 662,059 As on 31.03.2010 665,376 693,438

Current assets

303,318

249,032

31/3/2011 = (720,552/965,377)*100 = 74.63%

31/3/2010 = (665,376/942,470)*100 = 70.59% The equity ratio of SJVNL is fluctuating every year. i.e. 74.63%, 70.59% The liquidity ratio of SJVNL is satisfactory.

4) Solvency ratio:This ratio indicates the relationship between total liabilities to outsiders total assets of a firm and can be calculated as:Solvency ratio = total liabilities to outsider/ total assets Total liabilities to outsiders = secured loans + unsecured loans + current liabilities (Rs. In lakhs)

As on 31.03.2011 Secured loans Unsecured loans Current liabilities Fixed assets Current assets 90,013 85,379 132,029 662,059 303,318

As on 31.03.2010 105,397 62,791 125,409 693,438 249,032

31/3/2011 = 307,421/965,377 =0.32

31/3/2010 = 293,597/942,470 = 0.31 The solvency ratio for the year 2011, 2010 is 0.32, 0.31 . This is satisfactory.

5) Fixed assets to net worth ratio:This ratio establishes the relationship between fixed assets and shareholders fund and indicates the extent to which shareholders funds are sunk into the fixed assets.

Fixed assets to net worth ratio = (fixed assets (after depreciation) /shareholders funds)*100 ( Rs. In lakhs) As on 31.03.2011 Shareholders fund Fixed assets after depreciation 720,552 662,059 As on 31.03.2010 665,376 639,438

31/3/2011 = (662,059/720,552)*100 = 91.88%

31/3/2010 = (639,438/665,376)*100 = 96.10% There is no thumb rule for this ratio. Fixed asset ratio to net worth ratio has increase year by year.

6) Ratio of current assets to proprietors fund :This ratio indicates the extent to which proprietors funds are invested in current assets. Ratio of current assets to proprietors fund = (current Assets/shareholders Fund )*100 ( Rs. In lakhs) As on 31.03.2011 Shareholders fund Current assets 720,552 303,318 As on 31.03.2010 665,376 249,032

31/3/2011 = (303,318/720,552)*100 = 42.09%

31/3/2010 = (249,032/665,376)*100 = 37.42% This ratio shows the satisfactory position of the SJVNL. This indicates the more investments of funds in current assets.

GRAPHICAL REPRESENTATION :-

CONCLUSION:Summarizing the above, the following conclusion can be drawn:The short term financial position of the company is satisfactory as it seen from the current ratio and quick ratio. It implies the current liability can be comfortable paid out of the current assets. It also shows that the company has enough cash and bank balances to meet out contingency that may arise in future.

The profitability position of the company is very good. The profit earned in the reserve and surplus so that in future more and more investments can be done in other projects. It is also affects the shareholder in respect of distribution of profits.

Long term financial position of the company is going to the better day by day as it is seen from the debt equity ratio which shows that outsiders loans are continuously decreasing as compare to insiders fund. Large amount of loans has been repaid in last two years. In next 5-10 years the company has nothing to remain as a loan if this rate of repayment of loan continues. In the near future the company will have large amount of own funds as compare to outsider liabilities

SUGGESTIONS In order to further improvements in profits and to maintain short term liabilities & long term liabilities financial position, the following suggestions have been made:No doubt, SJVNL has good track record of profits as seen from last two years profits & loss account. The generation, administration and other expenses are increasing thereby the gross profit ratio has been declined. SJVNL should have make efforts to control the generation, administration & other expenses so that it will not increase in future. SJVNL has been paying large amount of interest & finance charges to the different financial institutions. It has been suggested that SJVNL should restructure their loan plan, so that the advantages of fluctuating interest rate should have been taken from the present competitive financial market. The company should try to reconstruct those loans on which higher rate of interest have been paid till now. Amount of current liabilities has been continuously increasing which have an adverse effect on the short term financial position of the company. As seen from the generation process, it has been seen that not much amount of material is needed to generate energy. Besides, this current liability is increasing. So that it is suggested, SJVNL should take care of not to increase the amount of current liabilities in future. Long term financial position of the SJVNL is satisfactory. To make it better it is suggested that loans should be paid within next 5-10years, as seen from the last year cash flow statements that the company is paying large amount of loans. it is suggested that the company should use its own funds in a better way, so that its long term financial position should be better in use.

ANNEXURES

NATHPA JHAKRI PROJECT

HYDRO DAM PROJECT OF SJVNL

BIBLIOGRAPHY

Annual reports of 2009-10 Annual reports of 2010-11 Annual reports of 2011-12 Memorandum of understanding Detailed project reports Expenditures reportss

Websites: www.sjvn.nic.in www.wikipedia.com www.google.com www.valueresearchonline.com www.myiris.com www.amfiindia.com www.sebiindia.com www.indianfoline.com

Books: Financial management by I. M. PANDEY Security analysis and portfolio management Financial management P.S.CHANDRA