37807865-Financial-Analysis-of-reliance power-and-tata-power.doc

7/27/2019 37807865-Financial-Analysis-of-reliance power-and-tata-power.doc

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Analysis of financial statement of

two companies

Submitted to:

Anjali sawlani

Submitted by:

Ruchikachakradhari 7

Neeraj ingle 19

unal jagotra !"

Aakash kalbande !#

$ayuri kulkarni %1

&inesh mudaliar %9


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iopasdfghjklzxcvbnmqwertyuiosdfghjklzxcvbnmqwertyuiopasdhjklzxcvbnmqwertyuiopasdfghj

zxcvbnmqwertyuiopasdfghjklzx

bnmqwertyuiopasdfghjklzxcvbmqwertyuiopasdfghjklzxcvbnmqwe 20

Aakash kalbande 25

ayuri kulkarni !"

#inesh mudaliar !$

'(N)*N)S

)+),* -A.*/N(0

(*R+*2/(3/-(2*R/S*')(R %

ey players in industry 4

)A)A/-(2*R5/'($-AN6/(*R+*

2

9

R*,+AN'* -(2*R 5'($-AN6(*R+*2

1"

'($$(N/S+*/ANA,6S+S : 11

8A,AN'* S**) ANA,6S+S 1!

-R(3+) AN& ,(SS ANA,6S+S 1

RA)+(/ANA,6S+S 17

conclusion !4

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Overview,of,Indian,Power,Sector

Power,is,one,of,the,important,sectors,of,any,economy,which,define,its,growth.,In,India,the,powe

r,sector,has,shown,a,significant,growth,since,the,process,of,planned,development,of,the,econo

my,began,in,1950.,Hydropower,and,coal,based,thermal,power,have,been,the,main,sources,of,g

eneration,of,electricity.,Nuclear,power,development,is,at,slower,pace,which,was,introduced,in,la

te,sities.,!he,concept,of,operating,power,systems,on,a,regional,basis,crossing,the,political,bou

ndaries,of,states,was,introduced,in,the,early,sities.,In,spite,of,the,overall,development,that,has,

ta"en,place,,the,gap,between,supply,and,demand,still,remains,huge,due,to,growth,in,demand,fo

r,power,,outstripping,the,growth,in,generation,and,generating,capacity,addition.

.

!he,installed,generation,capacity,in,the,Power,#tilities,in,the,country,as,on,$0.0%.&009,was,150

$&$.'1,().,*egion+wise,and,ategory+wise,brea"+up,of,installed,capacity,is,given,below-

/ll,figures,in,()

S.,NO. Region Hydro,(Renewable) Thermal Nuclear R..S.,!,("NR) Total

1 Northern 1$'&5.15 &&$51.% 110.00 12%%.$2 $2&$.&0

& )estern 2''.50 $$21.&0 1'0.00 '0&$.%& '20$0.$&

$ 3outhern 1099$.1 &&02&.0& 1100.00 20'2.90 '1&1$.10

' 4astern $9$$.9$ 1%%$.5 0.00 &&2.'1 &10&'.9&

5 N.,4astern 111%.00 9%.2' 0.00 121.00 &&55.2'

% Island 0.00 20.0& 0.00 %.11 2%.1$

2 /ll,India $%91%.2% 9%0''.&' '1&0.00 1$&'&.'1 150$&$.'1

,6,*enewable,4nergy,3ources,*43,includes,3mall,Hydro,Pro7ect,3HP,,8iomass,as,

8,,8iomass,Power,8P,,#rban,:,Industrial,waste,Power,#:l,and,)ind,4nergy,

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S+*/(3/-(2*R/+N&;S)R6

!he,total,installed,capacity,in,India,is,calculated,to,be,1'5,55'.92,mega,watt,in,which,25,$2.9$

,mega,watt,5&.5;,is,from,3tate,,','20.99,mega,watt,

$';,from,entre,,and,&1,&'%.05,mega,watt,1$.5;,is,from,Private,sector,initiative.

eneration,capacity,of,1'1,)


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#$,P%&$RS,

Aey,'layer,currently,o'erating,in,the,Indian,'ower,ector,are,National,Thermal,Power,

or'oration,%imited,,Tata,Power,,Nuclear,Power,or'oration,of,India,%imited,,North,ater

n,lectric,Power,or'oration,%imited,,Power,*rid,or'oration,of,India,,etc.,

(a7or,players,in,the,Power,sector,can,be,broadly,divided,into,public,,private,and,international,pri

vate,sectors.

D,+,eneration,D!,+,!ransmission,D?,E,?istribution

Source+,"initry,of,Power,,a'italine

PO%I$

100;,F?I,permitted,in,eneration,,!ransmission,:,?istribution,+,the,overnment,is,"ee

n,to,draw,private,investment,into,the,sector

Policy,framewor"-,4lectricity,/ct,&00$,and,National,4lectricity,Policy,&005

Incentives-,Income,ta,holiday,for,a,bloc",of,10,years,in,the,first,15,years,of,operation


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%-PRINT,O,"INISTR$

!he,(inistry,of,Power,has,set,a,goal,+,(ission,&01&-,Power,for,/ll.

/,comprehensive,8lueprint,for,Power,3ector,development,has,been,prepared,encompassing,an

,integrated,strategy,for,the,sector,development,with,following,ob7ectives-+

3ufficient,power,to,achieve,?P,growth,rate,of,;

*eliable,of,power

uality,power

ptimum,power,cost

ommercial,viability,of,power,industry

Power,for,all

Strategie,To,&chieve,The,Ob/ective+,

Power,eneration,3trategy,with,focus,on,low,cost,generation,,optimiJation,of,capacity,utiliJation

,,controlling,the,input,cost,,optimisation,of,fuel,mi,,!echnology,up,gradation,and,utiliJation,of,N

on,onventional,energy,sources,

Tranmiion,Strategy,with,focus,on,development,of,National,rid,including,Interstate,connec

tions,,!echnology,up,gradation,:,optimiJation,of,transmission,cost.

0itribution,trategy,to,achieve,?istribution,*eforms,with,focus,on,3ystem,up,gradation,,loss,r

eduction,,theft,control,,consumer,service,orientation,,@uality,power,supply,commercialiJation, ,?

ecentraliJed,distributed,generation,and,supply,for,rural,areas

Regulation,Strategy,aimed,at,protecting,onsumer,interests,and,ma"ing,the,sector,commercia

lly,viable

inancing,Strategy,to,generate,resources,for,re@uired,growth,of,the,power,sector,onservatio

n,3trategy,to,optimise,the,utiliJation,of,electricity,with,focus,on,?emand,3ide,management,,>oa

d,management,and,!echnology,up,gradation,to,provide,energy,efficient,e@uipment,B,gadgets.

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ommunication,Strategy,for,political,consensus,with,media,support,to,enhance,the,general,pu

blic,awareness.

Roadblocks/in/-ower/Sector/&e


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'ompany olectricity oard )9=>*!

Its international presence incl-des strategic in&estments in Indonesia thro-gh 3#? stae in coalmines and a geothermal proect@ in =ingapore thro-gh Tr-st >nergy ;eso-rces to sec-ritise coal

s-pply and the shipping o coal or its thermal power generation operations@ in =o-th Arica

thro-gh a oint &ent-re called B"ennergi to de&elop proects in 6 dierent co-ntries in Arica@

in A-stralia thro-gh in&estments in enhanced geothermal and clean coal technologies and inh-tan thro-gh a hydro proect in partnership with The ;oyal (o&ernment o h-tan! %ith its

trac record o technology leadership, proect eCec-tion eCcellence, world class saety processes,c-stomer care and dri&ing green initiati&es, Tata Power is poised or a m-lti.old growth and

committed to lighting -p li&es or generations to come!

()*R 8;S+N*SS*S:

)ata -ower )rading 'ompany ,imited =)-)',>, a wholly owned s-sidiary, is the irst

company to ha&e een awarded a power trading licence y the "entral >lectricity ;eg-latory"ommission enaling it to carry o-t transactions all o&er India!

)he Strategic *ngineering &i/It has een in operation or o&er 3# years and has

een p-rs-ing de&elopment and prod-ction acti&ities or the Indian deence sector! D&er E#? othe companys strategic electronic eorts are eCec-ted or the deence sector! The di&ision has

long.standing relationships with the Armed


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)ata -ower Solar/ It is a ##? s-sidiary o Tata Power, and is a maret leader in =olar

Photo&oltaic technology in India with a t-rno&er o ;s!47 crores in ;* certiicates toa-gment its re&en-es!

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'($-AN6/'($-AR+S+(N:/'($$(N/S+*/ANA,6S+S

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)A)A/-(2*R

Reliance power

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ANA,6S+S:

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'($$(N/S+*/-?,/S)A)*$*N)S

)ata/-ower:

Reliance power

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ANA,6S+S:

perating,profit,margin,fortata,has,dropped,from,&$.%$,to,&0.'2;,over,the,years.,For,reliance,p

ower,,it,has,,increased indicating reduced operating epenses

,.,Interest,as,a,percentage,of,net,income,has,,dropped,fffForreliancepowerwhereas,it,has,stayed

,nearly,contant,for,tata,power.,!his,shows,a,decrease,in,dependence,on,loans,by,reliance

power,as,interest,payments,are,directly,proportional,to,the,debt,of,a,company.

,

?epreciation,margin,also,has,consistently,dropped,as,a,percentage,of,net,income,for,both,comp

anies.,

P8!,margin,has,decreased,for,!ata,Power,,and,in,the,case,of,reliancepower

there,was,a,reduction

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R&TIO,&N&%$SIS

i2ed,aet,turnover,ratio+

!his,financial,ratio,is,used,to,determine,the,efficiency,of,use,of,the,fied,assets.,It,is,the,ratio,of,

sales,to,the,total,fied,assets.

%ixed Assets &urnover 'atio

0(0"

0(2)

0(!"

0

0(05

0("

0("5

0(2

0(25

0(!

0(!5

20"0 20"" 20"2

(reliance power)

series

0(*+

0($)

0()$

0

0(2

0(+

0(,

0(*

"

"(2

20"0 20"" 20"2

(tatapower)

series

!ata,Power,has,consistently,been,having,better,fied,asset,usage,efficiency,compared,to,relian

cepower.,

!his,shows,reliancepoweris,not,utiliJing,its,fied,assets,in,accordance,with,their,potential.,8ut,a,

very,high,turnover,ratio,can,also,mean,that,the,company,is,ill,prepared,for,scaling,up,operations

,to,meet,increased,demand,and,that,it,is,maintaining,bare,minimum,fied,assets.

Total,aet,turnover,ratio+This,inancial,ratio,is,-sed,to,determine,the,eiciency,o,-se,o,th

e,companys,assets!,It,is,the,ratio,o,sales,to,the,total,assets!

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&otal Assets &urnover 'atio

0(0+

0(0,

0

0(0"

0(02

0(0!

0(0+

0(05

0(0,

0(0)

20"0 20"" 20"2

(reliance power)

series

0(52

0(5+

0(,"

0(+,

0(+*

0(5

0(52

0(5+

0(5,

0(5*

0(,

0(,2

20"0 20"" 20"2

(tatapower)

series

Tata,Power,has,een,

perorming,etter,here,as,well!,Total,asset,t-rno&er,taes,into,acco-nt,the,c-rrent,assets,as,well!,


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?ebtorsL,turnover,ratio,is,a,measure,of,how,@uic"ly,the,company,is,able,to,recover,money,from,

debtors.,!ata,powerLs,ratio,has,increased,comparedtoreliancepower. ,!his,shows,it,has,had,mor

e,succesful,collections,from,debtors.,/,high,ratio,doesnLt,necessarily,mean,its,good.,It,could,me

an,that,the,company,is,following,strict,credit,policy,with,its,customers,which,might,lead,to,loss,of

,mar"et,share.,!his,ratio,should,be,viewed,with,respect,to,the,average,in,the,industry.

urrent,Ratio,+

!his,ratio,mainly,gives,an,idea,of,the,companyGs,ability,to,pay,bac",its,short+term,liabilities,

debt,and,payables,with,its,short+term,assets,

cash,,inventory,,receivables.,!he,higher,the,value,of,the,current,ratio,,more,capable,the,comp

any,is,of,paying,its,obligations.,/n,ideal,current,ratio,is,&.,!he,ratio,of,&,is,considered,as,safe,m

argin,of,solvency,due,to,the,fact,that,if,the,current,assets,are,reduced,to,half,,then,also,the,credi

tors,will,be,able,to,get,their,payments,in,full.,/,very,high,current,ratio,is,also,not,desirable,since,i

t,means,less,efficient,use,of,funds.

current ratio

"(2

0($+

"("

0

0(2

0(+

0(,

0(*

"

"(2

"(+

20"0 20"" 20"2

current ratio(tatapower)

series

0(+)

"($+

"(!5

0

0(5

"

"(5

2

2(5

20"0 20"" 20"2

current

ratio(reliancepower)

series

!his,is,one,of,the,mos

t,important,ratios,for,evaluating,a,companyLs,short,term,li@uidity.,reliance power

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has,had,a,higher,ratio,for,,years&011and&01&,compared,to,!ata,power.,/,high,ratio,is,desirable

,as,it,indicates,that,the,company,can,meet,its,short,term,liabilities.,8ut,too,high,a,ratio,can,mean

,that,current,assets,arenLt,being,utiliJed,efficiently,,upto,their,potential.,!his,ratio,should,not,be,v

iewed,independently,but,in,con7unction,with,the,industry,average.

@uick Ratio

0iF-id,ratio,is,a,more,stringent,test,or,liF-idity!,It,eCcl-des,in&entory,and,prepaid,eCpenses,as,a,

c-rrent,asset!,This,is,eca-se,it,taes,time,or,con&ersion,o,these,assets,into,cash!,In&entory,needs,to,e,con&erted,into,inished,goods,,then,sold,and,then,cash,has,to,e,realised,rom,detors!,,,

;eliancepowerha&ing,higher,ratio,c-rrently!,

This,ratio,again,needs,to,e,&iewed,with,respect,to,ind-stry,a&erage!

quick ratio

"(2,

"("

"(")

"

"(05

"("

"("5

"(2

"(25

"(!

20"0 20"" 20"2

quick ratio

ratio(tatapower)

series

0(+2

2(2,

"(!2

0

0(5

"

"(5

2

2(5

20"0 20""20"2

quick ratio(reliancepower)

series

0ebt,to,e4uity,ratio

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This,ratio,shows,how,m-ch,a,company,has,relied,on,det,as,a,so-rce,o,inancing!,As,we,see,,tat

a,power,has,consistently,een,ha&ing,a,higher,ratio,indicating,it,has,relied,on,det,more,than,reli

ancepower,

reliance power,has,een,relati&ely,more,conser&ati&e,and,relied,on,owners,eF-ity,more!

debt to equity ratio

"(* "()5

2(25

0

0(5

"

"(5

2

2(5

20"0 20"" 20"2

(tatapower)

series

0("5

0(++

0(*!

0

0("

0(20(!

0(+

0(5

0(,

0()

0(*

0($

20"0 20""20"2

(reliancepower)

series

Interet,coverage,ratio+

/,ratio,used,to,determine,how,easily,a,company,can,pay,interest,on,outstanding,debt.,!

he,interest,coverage,ratio,is,calculated,by,dividing,a,companyGs,earnings,before,interest,and,taes,48I!,of,one,period,by,the,companyGs,interest,epenses,of,the,same,period-

interest coverage ratio

!(2!

+(,+

2(*"

0

"

2

!

+

5

20"0 20"" 20"2

(tatapower)

series

")(2)

2(25 +(2

0

5

"0

"5

20

20"0 20"" 20"2

(reliancepower)

series

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Interset co&erage ortata power is slightly etter or reliance as compared to tata power c-rrently

Profitability ratio+ Profitability ratios help you evaluate your companyGs

ability to generate profits

O'erating margin

It indicates the efficiency with which management produces each unit of a

product i.e.

by controlling the cost of sales.

perating profit margin for reliance power is better than tata power indicating

better profitability

-perating .rofit argin/1

+*$($,

2+(,,!0(*$

,00

500

+00

!00

200

"00

0

"00

20"0 20"" 20"2

(reliance power)

series

"0(),

2!(,220(+,

"5

"0

50

5

"0

"5

20

25

!0

20"0 20"" 20"2

(tatapower)

series

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34& .rofit argin/1

"0(!"0(,

+(""

,

+

2

0

2

+

,

*

"0

"2

20"020""20"2

(tatapower)

series

2)+(!!

55(5$ !"(!20

50

"00

"50

200

250

!00

20"0 20"" 20"2

(reliancepower)

series

Net 'rofit margin-Net profit margin is a "ey ratio of profitability. It is veryuseful when comparing companies in similar industries. / higher net profit

margin means that a company is more efficient at converting sales into

actual profit.

Net profit margin is better for reliance power than tata power indicating how

efficiently they convert sales into profit

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Return on ca'ital em'loyed+

'eturn -n apital 4mployed/1

"!(+$

"0(!5$(2$

0

2+

,

*

"0

"2

"+

",

20"020""20"2

(tatapower)

series

0()2

"($5

!(*)

0

0(5

"

"(5

2

2(5

!

!(5

+

+(5

20"0 20"" 20"2

(reliancepower)

series

*eturn on capital employed *4 is a measure of the returns that a

business is achieving from the capital employed, usually epressed in

percentage terms.

*oce is better for tata power than reliance indicating better returns on

capital employed

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Tata Power Per share ratio

Adjusted 4.6 /'s1 +(!2

Adjusted cash 4.6/'s1

,()!

'eported 4.6 /'s1 +($!

'eported cash 4.6/'s1

)(!!

#ividend per share "(25

-perating profit pershare /'s1

)(55

7ook value /excl rev

res1 per share 4.6/'s1

+$(5+

7ook value /incl revres1 per share 4.6

/'s1+$(5+

3et operatingincome per share 4.

/'s1!,(""

Reliance Power Pershare ratio

Adjusted 4.6 /'s1 0(+"

Adjusted cash 4.6 /'s1 0(+2

'eported 4.6 /'s1 "(""

'eported cash 4.6 /'s1 "("2

#ividend per share

-perating profit per share/'s1

0(!2

7ook value /excl rev res1

per share 4.6 /'s15)(+

7ook value /incl rev res1per share 4.6 /'s1

5)(+

3et operating income pershare 4.6 /'s1

0(2!

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-3896:-3

&ata .ower is best option for investment

than 'eliance .ower

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37807865-Financial-Analysis-of-reliance power-and-tata-power.doc

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