LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT Report on Summer Training TITLE: Analysis of financial statement In partial fulfillment of the Requirements for the award of Degree of Master of Business Administration Submitted by: Sweta kumari 10904523 DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY PHAGWARA Certificate by the Guide Certificate that this dissertation is based on an original project study by sweta kumara under my guidance. This has not formed basics for the award of any Degree/Diploma by any university. Place : Phagwara(Punjab)
Guide Signature (Mr. Harendra ) Student Declaration I declare that the project titled ‘ ANALYSIS OF FINANCIAL STATEMENT’is an original project done by me and no part of the project is taken from any other project or materials published or otherwise or submitted earlier to any other Collage or university. Student Signature Acknowledgement I take this opportunity to present my votes of thanks to all those guidepost who really acted as lightening pillars to enlighten our way throughout this project that has led to successful and satisfactory completion of this study.Order now
We are really grateful to our guide MR. HARENDRA sir for providing us with an opportunity to undertake this project in this university and providing us with all the facilities. We are highly thankful to Mr. D. N. SONDHI and Mr. R. P. AGRAWAL and Mr. D. K. Mishra for there active support, valuable time and advice, whole-hearted guidance, sincere cooperation and pains-taking involvement during the study and in completing the assignment of preparing the said project within the time stipulated.
Lastly, We are thankful to all those, particularly the various friends , who have been instrumental in creating proper, healthy and conductive environment and including new and fresh innovative ideas for us during the project, their help, it would have been extremely difficult for us to prepare the project in a time bound framework. List of Content • Introduction 1. Introduction Of Company 2. Introduction Of Topic • Research Objectives • Methodology of data collection and tools • Limitations • Analysis and interpretation of data Findings • Conclusion • References LOGO OF DELHI TRANSCO LTD. EXECUTIVE SUMMARY: The project title’ ANALYSIS OF FINANCIAL STATEMENT’ is chosen by me for my project in Delhi Transco limited. A budget is a document that translates plans into money – money that will need to be spent to get your planned activities done (expenditure) and money that will need to be generated to cover the costs of getting the work done (income). It is an estimate, or informed guess, about what you will need in monetary terms to do your work.
The budget is an essential management tool. for my project report I have taken approved budget of this particular company for last two year 2008-09 and 2009-2010. for this purpose I have taken these steps- 1. Selected approved balance sheet of both the last year 2. Then selected department wise approved budget. 3. Then selected cash flow statement 4. Then selected income statement 5. Firstly I have calculated variance and percentage change in variance 6. Analyze the outcomes of the above calculations.
Introduction Electricity plays a vital role in our day-to-day life. It powers our houses, industries, hospitals and in fact our entire economy. Electricity (from the New Latin electricus, “amber-like) is a general term that encompasses a variety of phenomena resulting from the presence and flow of electric charge. When we consider electricity, we usually think of electric power, and that’s how we’ll use the term here. Electricity is energy, and energy can do work.
Electric power, electricity, is used to do things for us, and no modern society exists without it. Electricity is generated at places where it is economical and advantageous to do so, and is transported to places of use through the power grid. Historically speaking the modern electricity industry utility system was first introduced to the world on the opening of Thomas Edison’s Pearl Street Electricity Generating Station on September 4th, 1882 at New York (United States of America).
Insofar as Delhi is concerned, the position is that as per available records, the first diesel Power Station was established in Delhi in the year 1905 when private English Company by name M/s. John Fleming was given permission to generate electricity under the provisions of the Indian Electricity Act 1903. The above mentioned Company was given the responsibility both of generation and distribution of power in a limited manner. That Company after obtaining license nder the provisions of Electricity Act 1903 had set up a small 2 MW Diesel set at Lahori Gate in Old Delhi. Later on, this very Company was converted as Delhi Electricity Supply and Traction Company. In the Year 1911, the power generation was augmented by Steam Generation Station. In the year 1932, the management of Central Power House was handed over to New Delhi Municipal Committee (NDMC). In the field of power generation and distribution, a major break through was achieved in 1939 when Delhi Central Electricity Power Authority (DCEPA) was established.
This Company was responsible for the supply of power to the areas covered by Local Bodies, namely, the Municipal Committees of Delhi, West Delhi and South Delhi, the Notified Area Committees of Red fort, Civil Lines, Mehrauli, Najaf Garh, and the District Board of Delhi. The supply of electricity to the Municipal Committees of Delhi-Shahdara and the Notified Area of Narela was done by different private agencies. In 1947 DCEPA took over a Private Limited Company by name Delhi electric Supply & traction Company Limited.
Promulgation of Electricity (Supply)Act 1948:- In the year 1948, electricity (Supply) Act 1948 came into force, which inter-alia provided for the constitution of an electricity Board in the States that was to function as a vertically integrated electricity utility in the entire State, undertaking all the functions of activities related to electricity, which included electricity generation, transmission, distribution, supply, planning coordination and also was to act as regulatory authority for carrying out other functions incidental and ancillary thereto.
In other words, the Electricity (Supply) Act 1948 was entitled to become a monopolistic undertaking in the field of electricity control by an instrument of the state and not by private sector. The principal objective behind the above policy decision of the Government of India in providing for the constitution of State electricity to all, particularly in semi-urban and rural areas because till then the availability of electricity was confined to urban areas and was mainly served by private electricity distribution licenses issued under the Indian electricity Act 1910.
Formation of Delhi State Electricity Board: – In pursuance of the provisions of the Electricity (Supply) Act, 1948, in Delhi, in the year 1951 the Delhi State Electricity Board (DSEB) came into existence and the responsibility of generation and distribution of electricity was taken over by DSEB from DCEPA. The entire staff of DCEPA and other agencies was absorbed by DSEB under the existing terms & conditions of service.
Formation of Delhi Electric Supply undertaking by promulgation of DMC Act 1957:- After the promulgation of the Delhi Municipal Corporation Act 1957, the DSEB was dissolved and the functions of DSEB were taken over by Delhi Electric Supply Undertaking (DESU), which came into existence in 1958. After the formation DESU, the generation and distribution of electricity to all the areas of Delhi came under DESU and the employees of erstwhile DSEB were also absorbed by DESU.
Constitution of Delhi Vidyut Board: – The Government of the National Capital Territory of Delhi vide notification No. F. 11 (10)/92-LSG /PF (II) dated 24. 02. 1997, issued under the Electricity (Supply) Act, 1948, constituted a separate Electricity Board, i. e. the Delhi Vidyut Board (DVB) for the NCT of Delhi w. e. f. 24. 02. 1997 for the purpose of generation and distribution of power to the entire are of NCT of Delhi except the areas falling within the jurisdiction of NDMC and Delhi Cantonment Board.
Practical difficulties in the working of Delhi Vidyut Board:- The activities of Delhi Vidyut Board from its inception, and as a matter of fact even prior thereto when the activities were being undertaken by DESU, were not financially viable on account of several factors affecting the electricity industry including the high level of losses in the system and the revenues being not able to meet the cost with result that like other State electricity Boards, Delhi vidyut Board suffered operating deficit in aggregate to the tune of Rs. 2,386. 72 crore during the period from 1995-96 to 2000-01.
In addition the Delhi Vidyut Board was required to make adequate provision for bad and doubtful debts. The cumulative effect of all these factors was that the Delhi Vidyut Board was not in a position to meet its financial obligations and commitments including the payment for power purchased from generation companies and suppliers, such NTPC Limited, Nuclear Power Corporation Limited, national Hydroelectric Corporation Limited,etc. Unbundling of Delhi Vidyut Board in six entities: – In the recent for alleviating the concerns of consumers in the power sector, some reforms started gaining momentum.
In that very direction with a view to safeguard the overall interests of the consumers GNCTD took some policy initiatives as as a result of which DVB was split into six Companies, viz. , BSES Rajdhani Power Limited, BSES Yamuna Power Limited, North Delhi Power Limited, Delhi Transco Limited, Indraprastha Power Generation Company Limited, and Delhi Power Company Limited, as per the provisions contained in Delhi electricity reform Act 2000 read with Delhi Electricity Reform (Transfer Scheme) Rules 2001. Goal Sarvebhavantu sukhinah(good to all)
Vision Global power in power sector Values Corporate ethics ,trust and commitment learning and development result and exelence ,organizational pride Moto Our pride – stake holder delight Mission To establish operate and maintain secure EHVnetwork on sound commercial principle integarating HRD,R&P,Process reengineering ,creating interactual power maximizing stakeholder delight Present Scenario: – The role of Delhi Transco Limited is confined to arrange and provide transmission network of 400 KV and 220 KV source from Northern Grig.
The present infrastructure for this purpose under 400 KV systems is 4,725 MVA (2520 MVA with DTL and 2205 with Power Grid Corporation). As against this, 220 KV sub Stations have the capacity of 6,300 MVA is available for Delhi.. Achievements • Delhi Transco limited embarked on yatra and ODC with a vision to create global power in power sector. • Vision ,mission statement with goal and values were defind • DTL,has earned profit Rs. 9. 8 cr. as dividend to the gov. • ERP cell estabilished for implementation of ERP project • DTL as been assigned credit rating of A+ by agencies FITCH and CRISIL • DTL raised 200 cr. successfully through delhi Transco bonds. Future Plans: – In the 11th Plan ending 2011-12 the transmission capacity is proposed to be augmented to meet the future requirements. Under 400 KV system, it is proposed to establish new Sub Stations at Mundka, South-East Delhi near Mandi village and East Loni Road with a capacity of 630 MVA each by DTL and also increase the capacity of existing sub-Station at Maharani Bagh by 630 MVA b Power Grid Corporation of India Limited.
Similarly, under 220 KV system, augmentation and new addition in capacity to the tune of 1660 MVA under the existing Sub Stations is proposed. Further, new Sub Station at DSIDC Bawana-II (320MVA), Chandrawal (200 MVA), Jhatikara More (320 MVA),. Ridge Valley (320 MVA), Rohini-II (480 MVA), Sultanpuri (320 MVA), Electric lane (200 MVA), Trauma Centre (200 MVA), Wazirpur Industrial Area (320 MVA) and IGI Airport (320 MVA ) are proposed to be established. Thus, the capacity of 2520 MVA and 5940 MVA will be added in the 400 KV system and 220 KV system, respectively.
To sum up, by 2011-12 transformation capacity of 8460 MVA will be added and a total capacity of 19485 MVA will be available to Delhi Delhi Transco limited substations |Parameters |400KV Level |220KV Level | |No. of Subatations |2 |24 | |Transmission Capacity (in MVA) |3150 |6760 | |Transmission Lines (length in Ckt.
Km. ) |227 |575 | Board of directors |NAME |DESIGNATION | |Mr. Rakesh mehta |CMD | |Sh. R. K. Narayan |DIRECTOR | |Sh. V. V.
Bhat |DIRECTOR | |Sh. Dharmendra |DIRECTOR | | Sh. Vijay Dev |DIRECTOR | |Sh. A K Kaul |DIR(OPERATION) | |Sh. Raj K.
Saxena |DIR(HR) | Departments of delhi Transco limited There are 18 department of Delhi Transco Limited. Different departments plays different role in delhi Transco Limited. • CMD secretariats • Director operation • HR consolidated • Commercial and reform • Finance consolidated • Company secretary • Planning • Stores • Legal • Civil • Construction • O&M consolidated • IT • Medical • PRO • CWG(1) • CWG(2) • SLDC • CMD secretariats Delhi Transco limited divided its different types of works under different departments.
These different departments do there concern work so there should maintain proper management inside the organization. CMD secretariat include CMD and all the top level management. • Director operation This particular department includes director of operation and all the activities related to operation and its proper management. An operation traditionally refers to the production of goods and services separately, although the distinction between these two main types of operations is increasingly difficult to make as manufacturers tend to merge product and service offerings.
More generally, Operations Management aims to increase the content of value-added activities in any given process. Fundamentally, these value-adding creative activities should be aligned with market opportunity (see Marketing) for optimal enterprise Performance. According to the U. S. Department of Education, Operations Management the physical and/or technical functions of a firm or organization, particularly those relating to development, production, and manufacturing. Operations Management programs typically include] instruction in principles of general management, manufacturing and production systems, plant management, equipment maintenance management, production control, industrial labor relations and skilled trades supervision, strategic manufacturing policy, systems analysis, productivity analysis and cost control, and materials planning. Objectives of operations management can be categorized into customer service and resource utilization. • HR consolidated This particular department is responsible for all the work related to HR(human resource management).
Departments are the entities organizations form to organize people, reporting relationships, and work in a way that best supports the accomplishment of the organization’s goals. The forward thinking human resource department is devoted to providing effective policies, procedures, and people-friendly guidelines and support within companies. Additionally, the human resource function serves to make sure that the company mission, vision, values or guiding principles, the company metrics, and the factors that keep the company guided toward success are optimized.
Note that some people distinguish a difference between HRM (a major management activity) and HRD (Human Resource Development, a profession). Those people might include HRM in HRD, explaining that HRD includes the broader range of activities to develop personnel inside of organizations, including, e. g. , career development, training, organization development, etc. • Commercial and reform This particular department deal all the topic related to commerce and commercial papers . Commercial may refer to: ? Advertising, commercial messages ? Radio advertisement, via the medium of radio Television advertisement, via the medium of television ? Commerce, the voluntary exchange of goods, services, or both ? Trade, the trading of something of economic value such as goods, services, information or money ? Finance consolidated The Finance Department is responsible for the financial functions and activities of the Council and for the administration of the Council’s fiscal policy. The role and functions of the Finance Department of the Delhi Transco limited is- • Preparation and compilation of Budget estimates, revised estimates • Administration of the Consolidated Fund and Contingency fund of the state. Control of expenditure and economy measures. • Audit and Accounts. • Matters related to creation of posts, fixation of pay and grants-in-aid. • Financing of Five year Plans and expenditure sanctions relating to Plan and Non-Plan Schemes of all departments. • Loans and advances. • Exercise of financial powers delegated by the Governor in case where such powers have not been specifically delegated to other departments and authorities. • Company secretary • A company secretary is a senior position in a private company or public organization, normally in the form of a managerial position or above.
In the United States it is known as a corporate secretary. • The Company Secretary is responsible for the efficient administration of a company, particularly with regard to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the Board of Directors are implemented. • Planning Planning in organizations and public policy is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired goal on some scale.
As such, it is a fundamental property of intelligent behavior. This thought process is essential to the creation and refinement of a plan, or integration of it with other plans, that is, it combines forecasting of developments with the preparation of scenarios of how to react to them. An important, albeit often ignored aspect of planning, is the relationship it holds with forecasting. Forecasting can be described as predicting what the future will look like, whereas planning predicts what the future should look like. • Stores
The complete control on the materials is vested in the Stores Department. The field of materials Management covers the following functions. • Materials planning and programming of procurement and supplies. • Purchasing • Inventory control • Storekeeping and warehousing • Materials handling and transportation • Codification and standardization • Value Analysis • Legal The legal department of a business handles legal issues which may come up in the course of business, ranging from drafting waiver forms for employees to handling lawsuits from angry customers.
Many large companies have a legal department; smaller companies may choose to keep a lawyer or a staff of lawyers on retainer, ensuring that they have rapid access to legal knowledge when they need it. Customers often find themselves interacting with the legal department, especially when they file complaints or indicate that they believe a business is not being operated within the law. • Civil The Civil Division has a major role in providing legal advice on a wide range of legal issues on civil matters to all government bureaus and departments.
The division also represents the government in the conduct of all civil claims and disputes involving the government. The Civil Division comprises four major units: • Advisory • Civil Litigation • Commercial • Planning, Environment, Lands & Housing • Construction This particular department handle different types of construction work related to company. Planning and designing building network to provide optimized connectivity to residential and non-residential govt. buildings of different departments. This department also responsible for Construction, renovation, upgradation and maintenance of residential and non-residential govt. uildings of different departments. • O&M Consolidated This particular department responsible for all the work related to operation and proper maintenance inside the organization. and this particular department responsible for proper maintenance of transformers and different grids. • O&M services are guided by the needs and demand of electricity • Daily operation and maintenance of the plant • Complete plant staffing • Planned and unplanned maintenance services, including parts • Local and remote monitoring and diagnostics Comprehensive training • Environmental health and safety programs • Site documentation and procedure development • Switchgear maintenance and managemen • IT Department of Information Technology is working to put technology to its highest and best use throughout Delhi Transco limited Department/Autonomous bodies to improve the administration of state programmes and services. Proving guidance on technical matters to departments, vetting IT projects and taking department on achieving IT Road Map are the basic jobs of Information Technology Department. • Medical
Department of Medical Health and Family Welfare is committed to provide high quality, affordable and accessible, preventive, curative, promotive and comprehensive health care services to the people of Uttar Pradesh with special focus to the disadvantaged population • PRO • Public relations have been defined as the interaction of a business with its customer base, and or with prospective customers. This interaction can take various forms, which may include events such as trade shows, marketing promotions, customer relations initiatives and other such efforts in which the business and the public interacts. CWG( most recent project) The following are some of the positive outcomes of a successful public relations department: • Attract attention to a company and raise its visibility in a competitive market niche • Generate interest in and enthusiasm for a company’s goods and or services • Create “buzz” when a company introduces new products or services – when people begin to talk about the business, word of mouth can serve as the ideal form of advertising. • Enhance the credibility of a company and polish its image. Defuse a crisis if and when it occurs, minimizing its potential damage. • SLDC There are multiple agencies within a state engaged in generation, transmission, and distribution of electricity. State Load Dispatch Centre monitors these operations and keeps the account of quantity of electricity transmitted through the state grid. SCADA is a part of it. Supervisory Control And Data Acquisition System (SCADA) is a high tech computer system with associated communication network that enables supervision and control of power system network.
Demand for power is increasing very fast due to continual improvement in quality of urban life style as well as expansion of industrial sector. The rapid increase in demand for power is associated with growing level of power system network complexity in terms of need for unified grid operation while maintaining the operational parameters. Further increased openness in the power sector economy has put additional pressure on the power companies to manage the power system resources in the most optimum manner within regulatory constraints imposed by Regulator. To meet the above challenges the need for a Real Time SCADA system in any modern power system utility is indispensable. • The direct benefits of a modern SCADA system are: • Constant access to Real Time picture of entire network showing power system voltage, frequency, MW, MVAR, etc. • Supervision, monitoring and control of power in Real Time. • Optimal operation of power system, i. e. generation and associated resources. • Review of literature 1. According to Utpal Bhaskar (aug 3,2010) Delhi Transco Ltd and the state government had assessed 4,450MW of power demand in the Capital during the CWG in October.
Aug. 03–NEW DELHI — The government’s plans to create a sizeable cushion to tide over any power shortage that could arise during the Commonwealth Games (CWG) suffered a setback following a delay in commissioning two proposedSunitsSof 500MW each. The government, which had initially envisaged surplus power availability of 1,200MW, is still confident that it will be able to manage demand. 2. According to Bhadra sinha( feb 15 ,2010) In a setback to Delhi Government’s power ministry, the Appellate Tribunal for Electricity has slapped a fine of Rs 2. lakh on its generating unit (Delhi Transco Limited) for overdrawing power from the grid on four occasions between January and October 2008. Asking the CERC to review UI rates every six months, the tribunal said: “The UI rates below 50 Hz frequency need to be so fixed as to discourage over-draws. In our view, existing UI rates do not achieve this purpose, as the frequency is likely to slide down rapidly to dangerous levels due to over-draws, under low frequency levels. ” 3. According to Accord Fintech. ( Feb 1, 2010. Areva T&D India Ltd has informed BSE regarding a Press Release dated February 01, 2010 titled Areva awarded 2 major GIS Substations orders by Delhi Transco Ltd(DTL)Press Release:AREVA’s Transmission and Distribution (T&D) division has recently won two major Orders from the Delhi Transco Ltd (DTL) for 220/33 kV GIS Substations, to be in stalled at f Mathur Lane and AIIMS trauma Centre in Delhi Both turnkey orders include Design, Engineering, Manufacturing, Testing and Commissioning of 220/33kv Substation Packages.
Delhi Transco Limited (DTL) is the State Transmission utility for the National CapitalTerritory of Delhi. It is responsible for the transmission of power at 220kv and 400 kV level and for upgrading, operating and maintaining the Extra High Voltage network. The existing network of DTL consists of a 400KV ring around the periphery of Delhi interlinked with the 220KV network spread all over the city. 4. According to Anil Sasi (December 20, 2003) in his article, For most Indians it will sound like an impossible dream. Imagine having a choice of companies from which to buy electricity.
Imagine urban India with fewer power blackouts and no need for equipment like inverters and voltage stabilisers. It’s tough to imagine, But a brighter future could be closer than anybody imagines. Take a look at how Mumbai-based power giant BSES (its name will soon be changed to Reliance Energy) sees the future. Last month, BSES applied for permission to supply power to the NDMC area of Delhi — the part where the prime minister and all the politicians live. BSES plans to set up parallel lines in the district and compete with the New Delhi Municipal Council, which supplies power in the district currently.
BSES has other high-voltage plans for the future. It has already kicked up a storm by applying for permission to supply power to south Mumbai where it will compete with the Bombay Electric Supply and Transport Undertaking. BSES would, however, have to set up its own parallel network in the BEST area since the new Electricity Act 2003 does not allow utilities to use lines where a local body (BEST is an independent body under Brihanmumbai Municipal Corporation) is the sole power supplier. . According to Himanshi Dhawan, ( Aug 14, 2010) With a spate of reports indicating corruption in Commonwealth Games projects and contracts, the Central Information Commission (CIC) has asked Delhi government and NDMC to put online information related to tenders, work awarded, consultants appointed and deadlines. CWG contracts and tenders have come under the scanner with CAG and CVC closely looking at the tenders awarded by agencies like PWD, NDMC and CPWD. 6.
According to Bharti vohara(july13,2010) New Delhi, (IANS) The Delhi cabinet Monday decided to meet the long-pending demand of the teachers of its technical institutions and polytechnics for pay scales as per the recommendations of the Sixth Pay Commission. At a meeting chaired by Chief Minister Sheila Dikshit, the cabinet also decided to convert a loan of Rs. 239 crore into equity of Delhi Transco Limited (DTL), keeping in view its planned capital expenditure for the October Commonwealth Games. . According to Varun yadav(feb 25,2009) Electricity can be derived from a number of sources these days and the call for renewable technology in response to environmental pressures means the list is getting longer. Coal, gas-fired or nuclear generation stations have been the primary methods so far but wind, wave or solar power are beginning to make their mark. The measurement of kV, at which electricity is generated, varies around the world from country to country, region to region.
A review of power generation and distributed and the effect it might have on power quality (alongside other environmental, political and social unrest that may have an effect) has a baring on the size and type of uninterruptible power supply that may be ideally suitable to an installation. 8. By Atmanand (aug 9,2010) Delhi was the second state after Orissa to privatise the distribution sector. Since the transmission period ended three years ago, an assessment of Delhi’s power reforms experience would be in order, especially to see how far it meets the objectives of the Electricity Act 2003.
A key objective of Delhi’s power sector reforms was to make the distribution sector financially sustainable. The Delhi Vidyut Board’s annual financial losses had reached a staggering Rs 1,200 crore when it was privatised. 9. By Joseph C. Bright (18 NOV,2009) The Pennsylvania Supreme Court held that after deregulation of the electricity industry, charges by a distribution company for the transmission of electricity and for stranded costs are taxable for Sales and Use Tax purposes. Apparently, the General Assembly made a mistake in the Competition Act.
Notwithstanding its general intention not to shift the burdens among classes of users, it failed to amend the definition of electricity for Sales and Use Tax purposes to include in the tax base charges by a distributor, while it did include them for Gross Receipts Tax purposes in the RNR Tax. In rescuing the General Assembly from its error, the Supreme Court made strikingly incorrect statements about tax law which, if taken seriously, will come back to haunt taxpayers, the government, and the courts alike. 10.
By Nishtha Chugh(aug 14,2004) The 10 million inhabitants of the National Capital Territory of Delhi have reeled under power cuts every summer for decades. Two years after the privatisation of the Delhi Vidyut Board (DVB), nothing seems to have changed. Ironically, Delhi residents are unaware of a key fact: barring the occasional disruption, the new private distributors who supply electricity to the country’s capital have had surplus power to draw from all summer. The peak demand for power this year was easily met even though it rose by nearly 6. 8 per cent to the highest level in the last 10 years.
There is more: transmission losses recorded by Delhi Transco Limited (DTL), the State transmission utility, have actually halved since last year. Research design Problem definition • To know about the reason behind the static growth of the company . • To know about the working process of the company. • To know about the expension of the company. Objective of the study The main objective of my Project study which is being conducted by me for the last 1 and half month are as follow- • To know about the over all financial condition of the company To know about the financial changes within the organization year by year. • To know about the impact of financial condition on the profitability of company Research methodology It is a descriptive type of research which is of empirical ,quantitative and historical nature. Primary data It is a live data which I have collected from the finance department and by interaction with the employes in different department specially finance department. The main source of primary data for my project was questioner and personal interview. Primary data will help in interpretation of the problem and drawing conclusions.
Secondary data Secondary data will be another important source of data on which the present dissertation is based. I have collected the secondary data from various published and unpublished sources. The researcher used following sources for collection of secondary data I. Internet Browsing. II. Various Research Journals and Newspapers. III. Articles Limitation 1. The topic under study has wider scope and implications. This cannot be fully comprehended in the short period available in view of complex and dynamic environment. 2. Lack of access to company specific information. 3.
The data used is historical i. e. the financial statements used for the study Research schedule It’s a six week training in this particular company. Work plan Time devoted to this project will be 6 weeks 1. Collection of data for couple of weeks. 2. Analysis of data for a week 3. Interpretation of data for couple of weeks 4. Written Presentation of findings and recommendations: a couple of weeks. Analysis and interpretation of data Acid Test ratio:A stringent test that indicates whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory.
The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets. Interpretation Companies with ratios of less than 1 cannot pay their current liabilities and should be looked at with extreme caution. Furthermore, if the acid-test ratio is much lower than the working capital ratio, it means current assets are highly dependent on inventory. In above mention graph it is reflecting that company Acid Test ratio is constantly lesser than industry ratio and from 2005 to 2007 its in decline phase in comparison to 2008-09 period.
In later phase company shows some consolidation in its liquidity position. Current ratio:A liquidity ratio that measures a company’s ability to pay short-term obligations. Current ratio: Current asset/ Current liability Also known as “liquidity ratio”, “cash asset ratio” and “cash ratio” Interpretation: The ratio is mainly used to give an idea of the company’s ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations.
A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt – as there are many ways to access financing – but it is definitely not a good sign. The current ratio can give a sense of the efficiency of a company’s operating cycle or its ability to turn its product into cash. Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they are unable to alleviate their obligations.
Because business operations differ in each industry, it is always more useful to compare companies within the same industry. This ratio is similar to the acid-test ratio except that the acid-test ratio does not include inventory and prepaids as assets that can be liquidated. The components of current ratio (current assets and current liabilities) can be used to derive working capital (difference between current assets and current liabilities). In above mention graph is stating that company current ratio is lower than 1 through out the period as well as it is quit low in comparison to industry.
Hence company should be more cautious for its short term liabilities. An accounting measure used to quantify a firm’s effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets . Account Receivable turnover : Net Credit Sales/Average accounts receivables Interpretation By maintaining accounts receivable, firms are indirectly extending interest-free loans to their clients. A high ratio implies either that a company operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient.
A low ratio implies the company should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm. In above graph company ratio is quit higher than industry norms it means company have very strong credit policy and they need to follow that in more proper manner. In graph of collection receivables its clearly showing that company is performing far better than industry in term of collection days. Inventory turnover ratio: A ratio showing how many times a company’s inventory is sold and replaced over a period. Sales/ Inventory :cost of good sales/average inventory Interpretation Although the first calculation is more frequently used, COGS (cost of goods sold) may be substituted because sales are recorded at market value, while inventories are usually recorded at cost. Also, average inventory may be used instead of the ending inventory level to minimize seasonal factors. This ratio should be compared against industry averages. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying.
In graph its reflecting that company inventory turnover ratio is low than industry through out the 5 years and its a point of concern for company future growth. Company need to make new strategy for sales policy or review its sales policies for better result. Asset turnover ratio: it implies that the revenue generated on the total assets. Revenue/ total assets. Companies with low profit margins tend to have high asset turnover, those with high profit margins have low asset turnover – it indicates pricing strategy
This ratio is more useful for growth companies to check if in fact they are growing revenue in proportion to sales. This ratio is useful to determine the amount of sales that are generated from each peny of assets. As noted above, companies with low profit margins tend to have high asset turnover, those with high profit margins have low asset turnover. Delhi transco ltd. ‘s asset turnover seems to be relatively low, meaning that it makes a high profit margin on its products. For companies in the retail industry you would expect a very high turnover ratio – mainly because of cutthroat and competitive pricing.
Gross profit Margin A financial metric used to assess a firm’s financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. Gross margin : (Revenue – COGS)/Revenue Interpretation: This metric can be used to compare a company with its competitors. More efficient companies will usually see higher profit margin. In graph company performance is as same as industry through out the period of 5 years, its showing that company have to maintain the same policy for his future growth.
Net profit margin: A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every rupee of sales a company actually keeps in earnings. Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Also known as Net Profit Margin. Interpretation: Looking at the earnings of a company often doesn’t tell the entire story. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving.
For instance, if a company has costs that have increased at a greater rate than sales, it leads to a lower profit margin. This is an indication that costs need to be under better control. In graph company profit margin almost same as industry for the last 5 years and its very competitive. Hence company need to make a review on its policy for future margin. Return on total assets A ratio that measures a company’s earnings before interest and taxes (EBIT) against its total net assets. The ratio is considered an indicator of how effectively a company is using its assets to generate earnings before contractual obligations must be paid.
The greater a company’s earnings in proportion to its assets (and the greater the coefficient from this calculation), the more effectively that company is said to be using its assets. in the above mentioned graph indicates that company’s return on assets less then industry. so this implies that company is not properly utilisisng its assets. Return on equity : The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.
ROE is expressed as a percentage and calculated as : Net income / Shareholders equity. Interpretation The ROE is useful for comparing the profitability of a company to that of other firms in the same industry. There are several variations on the formula that investors may use: 1. Investors wishing to see the return on common equity may modify the formula above by subtracting preferred dividends from net income and subtracting preferred equity from shareholders’ equity, giving the following: return on common equity (ROCE) = net income – preferred dividends / common equity. . Return on equity may also be calculated by dividing net income by average shareholders’ equity. In graph company return on equity is lower than industry by 10%. This is a alarming situation for company and it need to review its business policy to increase its ROE from 30% to minimum industry norms. Debt to equity : A measure of a company’s financial leverage calculated by dividing its total liabilities by stockholders’ equity. It indicates what proportion of equity and debt the company is using to finance its assets. Total liabilities/ Shareholders Equity Company debt equity ration is very low in comparison to industry hence from shareholders point of view company is quite safe for investment. In this analysis company’s current assets is less then current liabilities which creates adverse effect on liquidity which also harms its working capital so that why its operation is badly effected. The growth rate of net fixed assets is less than the liability this condition adversely affect the profitability margin of the company’s long term goal.
EPS also decreases due to which its share value get also declined and due to this investors start deinvesting . this is bad for the positioning of the company in the stock market. The rate of COGS increases year by year which effects there profitability and operation. They have to reduce there operating cost for long tern profitability. Finding and conclusion Based on financial statement and information provided to me during my training period Company’s financial position is not appropriate and they have more liabilities in comparison to assets. and company should reduce there operating expences. orking process within the organization is not properly there should be proper time management and companies expansion also get affected due to the sharp fall in market capitalization. Fixed Assets: The company is maintaining proper record showing full particulars, including quantitative details and situation of fixed assets. b. As verification report the provision for dismantled equipment amount to Rs 3. 10 crore has been made in the book during the year. 1. The company has made a policy during FY 2006-07 to physically verified the fixed assets in phase manner as follows:
FY 2006-07 : Sub-station and transmission Assets. FY 2007-08 : Building and vehicles. FY 2008-09 : Computer and other assets. Suggestion: The frequency of physical verification is required. Inventries: a. Inventries has been physically verified during the year at Mehrauly being the main store of the company. During the year unserviceable item of Rs 1. 8 crore were identified and the same were properly dealt with in the account. b. Procedures followed by the management of physical verification of inventry are reasonable and adequate in relation to the size of the company and the nature of its bussiness. . Company id maintaining proper records of its inventrory. Loans and Advances: . The company has taken secured loan of Rs 153. 00 crore from its holding company . The payment of principle and interest are regular. Fixed Deposit: As per the information given to me the company has not accepted any deposit from the public. Internal Audit : The company has engaged the service of a practicing firm of chartered Asccountents for internal audit for the financial year 2008-2009 on periodical basis. Cost records:
Company has maintaining its cost records as per as company act 1956. Statutory Dues: a. The company is genarally regular in depositing statutory dues to the appropriate authorities. b. I were informed that there were no undisputed amount payable in respect of Provident fund, Investor education protection fund, Employees state insurance, Income tax , wealth tax, VAT , Custom Duty and excise duty, cess and any other statutory dues which were outstanding as at 31st march 2009 for a period of more than 6 month from the date they become payable. c.
The company accumulated losses at the end of the financial year are more than 50 % of its net worth and it has not incurred cash losses in the current and immediate proceeding financial period. d. As informed to me , the company has not defaulted in repayment of dues to any financial institution , bank debenture holders, etc. e. the company has not granted any loans and advances on the basis of securities by way of pledge of shares, debentures and other securities. f. the company is not dealing in or trading in shares , securities , debenture and other investments. g.
The company did not have any outstanding debenture during the year. h. The company has not raise any money through IPO. 8- Considering the continuous improvement of company financial position, the company is proposing the dividend @. 25% of paid up equity share capital. Therefore dividend proposed and dividend distribution tax payable thereon has been amounting to RS 9. 08 crore and Rs 1. 54 crore respectivly out of profit after tax of current year. 9 As per the Assessment order pas by IT Assessing authorities for the FY 2005-06 , the brought forward losses Rs 3537. 7 crore have been disallowed for carry forward assuming the delay in submission of returns for previous years. 10. Expenditure in Foreign Currency. Travelling expence 2009 : 41. 45 lacs 2008 : 25. 36 lacs Contingent liabilities: The contingent liabilities on account of arbitration/court cases is Rs 6432 lacs plus interest (previous year Rs 30273. 4 lacs plus interest ) against the counter claims of the company amounting to Rs 92138. 73 lacs. 12. The Department of Income tax has raised a demand of Rs 3. 19 crore for FY 2004-05 in connection with the matter of TDS. 3. Estimated value of contract remaining to be executed on Capital Account (net of advance)and not provided for as at 31st march 2009 amount to Rs 212. 26 crore (Previous year 239. 17 crore). 14. Expences recognized during the year 2008-09. Under salaries and wages. Suggestion • Time to time physical check up of financial condition • There should be proper time management • Auditing in presence of a team • Company’s should reduce its operating cost for gaining long term profitability Reference material • www. dtl. gov. in • www. google . com • Spandan shaktipunj Managerial accounting by R. K. Sharma • The economics times • The times of india Articles and report • Utpal Bhaskar –“CWG could face fresh problem over power”(aug 3,2010) • Accord Fintech – “Areva awarded 2 major GIS Substations orders by Delhi Transco Ltd (DTL)” ( Feb 1, 2010. ) • Anil Sasi – “A return to power” (December 20, 2003) Himanshi Dhawan, “Put projects info online, says CIC” ( Aug 14, 2010) • Bharti vohara –Delhi technical institutes teachers get pay hike (july13,2010) • Varun yadav –“Uninterruptible Power Supply – Electricity Generation Distribution” (feb 25,2009) Atmanand -“Now, prepare for the maturation phase” (aug 9,2010) • Nishtha Chugh -“ Delhi’s power woes” (aug 14,2004) websites • http://imworld. rediff. com/money/2003/dec/20spec. htm • http://in. biz. yahoo. com/100808/50/baw2yo. html • http://www. livemint. com/2010/08/02231210/CWG-could-face-fresh-problem-o. html • http://content. magicbricks. com/400-shanties-near-delhis-barapullah-nullah-to-be-demolished • http://www. hinduonnet. com/fline/fl2117/stories/20040827001005200. htm • http://www. ribuneindia. com/2007/20070415/delhi. htm#5 • http://timesofindia. indiatimes. com/india/Put-projects-info-online-says-CIC/articleshow/6308546. cms • http://www. indiavision. com/news/article/national/78001/ • http://www. articlesbase. com/technology-articles/uninterruptible-power-supply-electricity-generation-distribution-789153. html • http://www. mondaq. com/unitedstates/article. asp? articleid=89522 ———————–