ANALYSIS OF FINANCIAL STATEMENTS

OF

NTPC

Winter Project submitted to Asia-Pacific Institute of Management, New Delhi for the

partial fulfilment of the requirements of the two years full-time

POST GRADUATE DIPLOMA IN MANAGEMENT (PGDM)

BY

ME

Roll No. :

ASIA-PACIFIC INSTITUTE OF MANAGEMENT

3&4, Institutional Area, Jasola, New Delhi 110025

1

DECLERATION

I hereby declare that that the project Report titled “Analysis of Financial

Statements of NTPC” is my own work and has been carried out under the

guidance of Prof. Shiladitya Dasgupta, Faculty, Asia-Pacific Institute of

Management, New Delhi. All care has been taken to keep this Report error free

and I sincerely regret for any unintended discrepancies that might have crept

into this report.

Thank You

Mrinalini

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ACKNOWLEDGEMENT

I express my heartiest feelings of gratitude to my supervisor Prof. Shiladitya

Dasgupta, Faculty- Finance, ASIA PACIFIC INSTITUTE OF MANAGEMENT,

New Delhi for his keen interest, constant encouragement, and sympathetic

attitude, parental advice at every step that enabled us to face and encounter all

the difficulties that came in our way to reach this stage. I shall be highly grateful

to him always.

I would also like to pay thanks to Almighty God for giving us power and the

mind to do work efficiently and effectively.

At last but not the least we are thankful to all the library members and staff of

the computer lab department for every possible help.

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CONTENTS

CHAPTER PAGE No.

ABSTRACT

1. INTRODUCTION 1 to 10

1.1 Background 1

1.2 Objectives 3

1.3 Rational/Relevance of the Study 3

1.4 Scope and Uses of Study

2. CONCEPT AND DEVELOPMENT 11-50

2.1 About NTPC

2.2 Introduction to Ratio Analysis

2.3 Advantages and Limitations of Ratio Analysis

2.4 Various Types of Ratios

3. METHODOLOGY

3.1 Methodology (Sampling details)

3.2 Methodology (Various Ratios)

4. DATA ANALYSIS AND FINDINGS

4.1 Analysis of Classified Data

4.2 Findings / Results

5. LIMITATIONS, SUGGESTIONS AND CONCLUSION

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5.1 Limitations of the Study

5.2 Suggestions

5.3 Conclusion

APPENDICES

Appendix 1

BIBLIOGRAPHY

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Abstract

Introduction

Scenario of Power in India

Growth of economy calls for watching the rate of growth in infrastructure facilities.

Power sector is one of the major aspects of this infrastructure building. Some prominent

people like the Ex Chairman of GE Jack Welch have gone to the extent of saying, “you

don’t have a chance to stand in the 21st century without lots of power………Without

this you miss the next revolution.”

Moreover, the growth rate of demand for power in developing countries is generally higher

than that of GDP. In India, the elasticity ratio was 3.06 in 1st plan, & peaked at 5.11 during

3rd plan and came down to 1.65 in 80’s. For 90’s a ratio of around 1.5 was projected. Hence,

in order to support a growth of GDP of around 7%, the rate of growth of power supply of

10% is required.

If we look at current scenario, electricity consumption in India has more than doubled in the

last decade, outpacing the economic growth. If we analyze the various statistics of Indian

power sector, we will find that the generating capacity has gone up tremendously from a

meager 1712MW in 1950 to a whooping 147000MW today.

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The critical role played by the power industry in the economic progress of a country has to be

emphasized. A self sufficient power industry is vital for a nation to achieve economic

stability

Indian Power Industry

Before Independence

The British controlled the Indian power industry firmly before Independence. Then legal and

policy framework was contributing to private ownership, with not much regulation with

regard to operational safety.

Post Independence

Immediately after Independence, the country was faced with capacity restraint. India adopted

a socialist structure for economic growth and all the major industries were controlled by

public sector enterprises. By 1970's, India had nationalized most of its energy assets, due to

its commitment to social goals. By the late 1980's, the Indian economy felt the strain of the

socialist agenda followed since independence. Faced with a serious deterioration in public

finance and balance of payment crisis, the Union government as part of its policy of

economic liberalization allowed greater investment by private sector in the power industry.

The electricity sector in India is predominantly controlled by Government of India's public

sector undertakings (PSUs). Major PSUs involved in the generation of electricity include

National Thermal Power Corporation (NTPC), National Hydroelectric Power Corporation

(NHPC) and Nuclear Power Corporation of India (NPCI). Besides PSUs, several state-level

corporations, such as Maharashtra State Electricity Board (MSEB), are also involved in the

generation and intra-state distribution of electricity. The Power Grid Corporation of India is

responsible for the inter-state transmission of electricity and the development of national grid.

India is world's 6th largest energy consumer, accounting for 3.4% of global energy

consumption. Due to India's economic rise, the demand for energy has grown at an average of

3.6% per annum over the past 30 years. In March 2009, the installed power generation

capacity of India stood at 147,000 MW while the per capita power consumption stood at 612

kWh. The country's annual power production increased from about 190 billion kWH in 1986

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to more than 680 billion kWH in 2006. The Indian government has set an ambitious target to

add approximately 78,000 MW of installed generation capacity by 2012. The total demand

for electricity in India is expected to cross 950,000 MW by 2030.

Electricity losses in India during transmission and distribution are extremely high and vary

between 30 to 45%. In 2004-05, electricity demand outstripped supply by 7-11%.

Due to shortage of electricity, power cuts are common throughout India and this has

adversely effected the country's economic growth.

Generation

Grand Total Installed Capacity is 147,402.81 MW

Thermal Power

Current installed capacity of Thermal Power (as of 12/2010) is 93,392.64 MW which

is 63.3% of total installed capacity.

Current installed base of Coal Based Thermal Power is 77,458.88 MW which comes

to 53.3% of total installed base.

Current installed base of Gas Based Thermal Power is 14,734.01 MW which is 10.5%

of total installed base.

Current installed base of Oil Based Thermal Power is 1,199.75 MW which is 0.9% of

total installed base. The state of Maharashtra is the largest producer of thermal power

in the country.

Hydro Power

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India was one of the pioneering states in establishing hydro-electric power plants, The power

plant at Darjeeling and Shimsa (Shivanasamudra) was established in 1898 and 1902

respectively and is one of the first in Asia. The installed capacity as of 2008 was

approximately 36647.76. The public sector has a predominant share of 97% in this sector.

Nuclear Power

Currently, 17 nuclear power reactors produce 4,120.00 MW (2.9% of total installed base).

Renewable Power

Current installed base of Renewable energy is 13,242.41 MW which is 7.7% of total installed

base with the southern state of Tamil Nadu contributing nearly a third of it (4379.64 MW)

largely through wind power.

Power for ALL by 2012

The Government of India has an ambitious mission of POWER FOR ALL BY 2012. This

mission would require that our installed generation capacity should be at least 200,000 MW

by 2012 from the present level of 144,564.97 MW. Power requirement will double by 2020 to

400,000MW.

Today’s environment is a tough environment to survive, with the new industries and the new

sectors coming up so strongly and financially sound. But to gain an extra edge over others

they ought to have an extra or special added advantage.

“Our people are our most important asset.” Nearly every organization report contains a

phrase like this & for good reason. Today, the last great source of competitive advantage is

human capital.

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Rationale

The purpose of the research was to criteria on which investment of the company is raised

every year and a favorable rate of return is arrived at, increasing the net result of the company

as per their budget.

Objective

The study is aimed at:

To gain the overall idea about the organization.

To find out the financial performance of the organization

To find out the future requirement of finance in business

Scope of the Study

The study on the financial statements will help the interested parties to know about the

overall financial health of the company. The ratios are helpful to forecast the future of the

organization based on the past performance.

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Company Profile

Background of NTPC

NTPC – a global giant in power sector

NTPC Limited is the largest power generating company of India. A public sector company, it

was incorporated in the year 1975 to accelerate power development in the country as a

wholly owned company of the Government of India. At present, Government of India holds

89.5% of the total equity shares of the company & the balance 10.5% is held by FIIs,

Domestic Banks, Public and others. Today, it has emerged as an ‘Integrated Power Major’,

with a significant presence in the entire value chain of power generation business.

Based on 1998 data, carried out by Data monitor UK, an ISO 9001:2000 certified

company, NTPC is the 6th largest in terms of thermal power generation & the second

most efficient in terms of capacity utilization amongst the thermal utilities in the world.

Within a span of 33 years, NTPC has emerged as a truly national power company, with

power generating facilities in all the major regions of the country. Driven by its vision to

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lead, it has charted out an ambitious growth plan of becoming a 75000 MW plus company by

2017.

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Vision

“A world class integrated power major, powering India’s growth, with increasing global presence."

Mission

“Develop and provide reliable power, related products and services at competitive prices, integrating multiple energy sources with innovative and eco-friendly technologies and contribute to society.”

BOARD OF DIRECTORS

The Management of the Company is vested with the Board of Directors. In terms of the

Articles of Association of the Company the Board of Directors can have minimum four

Directors and maximum twenty Directors.

The Composition of the Board of Directors is given below

Name Designation

A K Singhal Director (Finance)

B P Singh Director (Projects)

Shanti Narain Director

K Dharmarajan Director

Kanwal Nath Director

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Core Values – BCOMIT

B – Business Ethics

C – Customer Focus (External & Internal)

O – Organizational & Professional Pride

M – Mutual Respect & Trust

I – Innovation & Speed

T – Total Quality for Excellence

A K Sanwalka Director

I C P Keshari Director

D K Jain Director (Technical)

S P Singh Director (Human Resources)

I J Kapoor Director (Commercial)

M N Buch Director

P K Sengupta Director

M Govinda Rao Director

Adesh C Jain Director

Santosh Nautiyal Director

Rakesh Jain Director

Arup Roy Choudhury Chairman and Managing director

N N Misra Director (Operations)

Market Capitalisation of Power Sector Companies(Generation and Distribution)

Company Name

Market Cap Market Cap

(Rs. cr) in %

NTPC 1,45,367.54 36.34206126

Power Grid Corp 44,561.11 11.14033153

Reliance Power 32,216.37 8.054131563

NHPC 29,091.26 7.272850273

Tata Power 28,396.18 7.099079431

Adani Power 25,495.51 6.373908413

Neyveli Lignite 16,768.71 4.192197832

Reliance Infra 16,465.07 4.116287464

JSW Energy 11,644.39 2.911111619

Torrent Power 10,431.66 2.607927648

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SJVN 8,686.92 2.171740533

Jaiprakash Pow 8,298.89 2.074732562

IndiaBPower 4,692.69 1.17317819

GVK Power 4,390.20 1.097555323

KSK Energy Vent 4,095.21 1.023807465

CESC 3,720.78 0.930199511

BF Utilities 2,689.47 0.672370761

Guj Ind Power 1,321.94 0.330486603

Orient Green 1,134.84 0.283711376

Entegra 254.86 0.063715309

Indowind Energy 96.25 0.024062617

Energy Dev 89.93 0.022482609

Suryachakra Pow 88.28 0.022070107

Graphical Presentation of Market Capitalisation

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Achievements

Recognizing its excellent performance and vast potential, Government of the India has

identified NTPC as one of the jewels of Public Sector 'Navratnas'- a potential global giant.

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A) NTPC ranked 317th in the ‘2009, Forbes Global 2000’ ranking of the World’s biggest

companies.

B) NTPC has been rated as one of the top most “Best Employer” of the country for the year

2003, 2004 & 2005 in a row.

C) It has also been rated as one of the “Best Companies to Work for in India” by

Mercer HR Consulting- Business Today Survey 2004, it has developed into a multi-location

and multi-fuel company over the past three decades.

D) NTPC has been awarded No.1, Best Workplace in India among large organizations for

the year 2008, by the Great Places to Work Institute, India Chapter in collaboration with The

Economic Times.

E) Leadership Award for CMD, NTPC in the 4th Global Leadership Summit by Amity

University for Sectoral Excellence in Power industry for his outstanding contribution to the

growth of Indian business & bringing glory to the country through his pioneering leadership.

F) Ranked #1 independent power producer in Asia in the THIRD ANNUAL PLATTS

TOP 250 GLOBAL ENERGY COMPANY AWARDS 2008 for outstanding Global

financial & Industrial performance at the award ceremony in Singapore. The corporation has

been simultaneously ranked #15, overall in Asia amongst the energy companies.

G) NTPC’s excellence in executing power projects & its initiative in Decentralized

Distributed Power Generation has been recognized and awarded at IEEMA Power Awards

2008. NTPC Vindhyachal Stage-III (2x 500MW) has been conferred the IPMA SILVER

MEDAL for Project Excellence by International Project Management

Association, at the IPMA Congress, held in Rome, Italy, for implementation of project in

record time & achieving excellent environmental, economic performance and giving

outstanding support to the local community.

Some major awards given to the Company in the areas of environment management &

Corporate Social Responsibility include:

1) 2nd India Power Awards 2009

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Organized by the Council of Power Utilities and KW Conferences Pvt. Ltd.

The award was received by Shri A. C. Chaturvedi, ED(R&R, Safety & CSR) on 17th

November, 2009 at the India Habitat Centre, New Delhi

NTPC awarded in the category of 'Social and Community Impact' of 2nd India Power

Awards 2009 for pioneering in Corporate Social Responsibility strides.

2) CII ITC Sustainability Award

Instituted by CII-ITC Centre of Excellence for Sustainable Development

The award was received by Shri R.C. Shrivastav, Director(HR) from Mr. Jairam Ramesh,

Hon'ble Minister of Environment & Forests during the presentation ceremony held on 26-11-

2009 at India Habitat Centre, New Delhi.

NTPC – CSR has been conferred with CII-ITC Sustainability Award for the Commendation

for Significant Achievement among Large Business Organizations for the year 2009. NTPC

was a worthy winner after a rigorous two-stage assessment including a site visit, followed by

scrutiny by the Awards Jury.

SWOT Analysis

Strengths: -

1. Good corporate Image.

2. Complete range of product for transmission & distribution.

3. Established brand name with executive oriented program.

4. Strong & wide networks of manpower across India.

5. Considered to be having technology & design ability.

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Weakness: -

1. The procurement process in the companies is cumbersome and subject to auditing.

2. Low exposure to the needs & dynamics of distribution business.

3. Role clarity on the requirement of being an equipment supplier or a solution provider.

As there are very few supplier of equipment manufacturing plant.

Opportunities: -

1. Huge Investment leading to greater demand of goods and services.

2. Demand leading to Industry operating at full & over capacity.

3. Better Price realization.

4. Early birds to learn faster and thus achieve repeat orders. Policy to bid from ultra mega

power plant.

5. Vertical integration for supply chain management of coal by acquiring coal blogs.

Threats: -

1. Purchases preference may be extended to distribution sector.

2. Increase in no. of small contractors leading to price war.

3. Emergence of competitors in the market like Schneider, Reliance, Tata etc.

4. Change in government policies for open trade or stock trading or energy trading.

5. Reduce the time lag.

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Ratio Analysis

INTRODUCTION

Financial analysis is the process of identifying the financial strengths and weaknesses of the

firm and establishing relationship between the items of the balance sheet and profit & loss

account.

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Financial ratio analysis is a fascinating topic to study because it can teach us so much about

accounts and businesses. When we use ratio analysis we can work out how profitable a

business is, we can tell if it has enough money to pay its bills and we can even tell whether its

shareholders should be happy!

Ratio analysis can also help us to check whether a business is doing better this year than it

was last year; and it can tell us if our business is doing better or worse than other businesses

doing and selling the same things. In addition to ratio analysis being part of an accounting

and business studies syllabus, it is a very useful thing to know anyway!

The overall layout of this section is as follows: We will begin by asking the question, what do

we want ratio analysis to tell us? Then, what will we try to do with it? This is the most

important question, funnily enough! The answer to that question then means we need to make

a list of all of the ratios we might use: we will list them and give the formula for each of

them.

Once we have discovered all of the ratios that we can use we need to know how to use them,

who might use them and what for and how will it help them to answer the question we asked

at the beginning?

At this stage we will have an overall picture of what ratio analysis is, who uses it and the

ratios they need to be able to use it. All that's left to do then is to use the ratios; and we will

do that step- by-step, one by one.

Ratio analysis

Ratio analysis is one of the techniques of financial analysis to evaluate the financial condition

and performance of a business concern. Simply, ratio means the comparison of one figure to

other relevant figure or figures. According to Myers , “Ratio analysis of financial statements

is a study of relationship among various financial factors in a business as disclosed by a

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single set of statements and a study of trend of these factors as shown in a series of

statements."

Advantages and Uses of Ratio Analysis

There are various groups of people who are interested in analysis of financial position of a

company. They use the ratio analysis to work out a particular financial characteristic of the

company in which they are interested. Ratio analysis helps the various groups in the

following manner:

To work out the profitability: Accounting ratio help to measure the profitability of the

business by calculating the various profitability ratios. It helps the management to

know about the earning capacity of the business concern. In this way profitability

ratios show the actual performance of the business.

To work out the solvency: With the help of solvency ratios, solvency of the company

can be measured. These ratios show the relationship between the liabilities and assets.

In case external liabilities are more than that of the assets of the company, it shows

the unsound position of the business. In this case the business has to make it possible

to repay its loans.

Helpful in analysis of financial statement: Ratio analysis help the outsiders just like

creditors, shareholders, debenture-holders, bankers to know about the profitability and

ability of the company to pay them interest and dividend etc.

Helpful in comparative analysis of the performance: With the help of ratio analysis a

company may have comparative study of its performance to the previous years. In this

way company comes to know about its weak point and be able to improve them.

To simplify the accounting information: Accounting ratios are very useful as they

briefly summarize the result of detailed and complicated computations.

Limitations of Ratio Analysis

In spite of many advantages, there are certain limitations of the ratio analysis techniques and

they should be kept in mind while using them in interpreting financial statements.

The following are the main limitations of accounting ratios:

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Limited Comparability: Different firms apply different accounting policies.

Therefore the ratio of one firm cannot always be compared with the ratio of other

firm.

Some firms may value the closing stock on LIFO basis while some other firms may

value on FIFO basis. Similarly there may be difference in providing depreciation of

fixed assets or certain of provision for doubtful debts etc.

False Results: Accounting ratios are based on data drawn from accounting records.

In case that data is correct, then only the ratios will be correct. For example, valuation

of stock is based on very high price, the profits of the concern will be inflated and it

will indicate a wrong financial position. The data therefore must be absolutely correct.

Effect of Price Level Changes: Price level changes often make the comparison of

figures difficult over a period of time. Changes in price affect the cost of production,

sales and also the value of assets. Therefore, it is necessary to make proper adjustment

for price-level changes before any comparison.

Qualitative factors are ignored: Ratio analysis is a technique of quantitative analysis

and thus, ignores qualitative factors, which may be important in decision making. For

example, average collection period may be equal to standard credit period, but some

debtors may be in the list of doubtful debts, which is not disclosed by ratio analysis.

Effect of window-dressing : In order to cover up their bad financial position some

companies resort to window dressing. They may record the accounting data according

to the convenience to show the financial position of the company in a better way.

Procedure (Stages) For Ratio-analysis

Classification of Ratios

Ratios may be classified in a number of ways to suit any particular purpose. Different kinds

of ratios are selected for different types of situations. Mostly, the purpose for which the ratios

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are used and the kind of data available determine the nature of analysis. The various

accounting ratios can be classified as follows:

A. Profitability ratios :

1 Gross profit ratio

2 Net profit ratio

3 Operating ratio

4 Return on shareholders’ investment or net worth

5 Return on equity capital

6 Earnings Per Share Ratio

B. Liquidity ratios :

1 Current ratio

2 Liquid /Acid test / Quick ratio

C. Activity ratios :

1 Inventory/Stock turnover ratio

2 Debtors/Receivables turnover ratio

3 Working capital turnover ratio

4 Fixed assets turnover ratio

D. Leverage ratios or long term solvency ratios :

1 Debt equity ratio

2 Proprietary or Equity ratio

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3 Ratio of fixed assets to shareholders funds

4 Current Assets to Proprietor's Fund Ratio

5 Interest coverage or debt service ratio

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Methodology

Methodology (Sampling details)

Research design

Research design helps in proper collection and analysis of the data. It helps in further

course of action.

Research approaches

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The most appropriate research is descriptive. This is because the goal of the study is

clear research will help to understand to concept better.

Classification of data

Secondary data

₪ This includes the information gathered from various websites.

Sample Size

₪ The sample size selected is of five years i.e. from 2006-2010.

Sampling technique

₪ The sampling procedure employed for this is judgmental sampling a convenience sampling

technique in which elements are based on the judgment of researcher

Software tools used for the data analysis

The software tools used for data analysis in MS WORD & MS EXCEL

Methodology (Ratios Used for Financial Analysis)

A. Profitability ratios:

1. Gross profit ratio (GP ratio ):-

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Gross profit ratio is the ratio of gross profit to net sales expressed as a percentage. It

expresses the relationship between gross profit and sales.

Significance:

Gross profit ratio may be indicated to what extent the selling prices of goods per unit may be

reduced without incurring losses on operations. It reflects efficiency with which a firm

produces its products. As the gross profit is found by deducting cost of goods sold from net

sales, higher the gross profit better it is. There is no standard GP ratio for evaluation.

It may vary from business to business. However, the gross profit earned should be sufficient

to recover all operating expenses and to build up reserves after paying all fixed interest

charges and dividends.

Hence, an analysis of gross profit margin should be carried out in the light of the information

relating to purchasing, mark-ups and markdowns, credit and collections as well as

merchandising policies.

2. Net profit ratio: -

Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage.

Components of net profit ratio:

The two basic components of the net profit ratio are the net profit and sales. The net profits

are obtained after deducting income-tax and, generally, non-operating expenses and incomes

are excluded from the net profits for calculating this ratio. Thus, incomes such as interest on

investments outside the business, profit on sales of fixed assets and losses on sales of fixed

assets, etc are excluded.

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Gross Profit Ratio= (Gross Profit/Net Sales)*100

Net Profit Ratio = Net Profit / Net sales *100

Here, Operating Net Profit = Gross Profit – Operating Expenses such as Office and

Administrative Expenses, Selling and Distribution Expenses, Discount, Bad Debts, Interest

on short-term debts etc.

Significance:

NP ratio is used to measure the overall profitability and hence it is very useful proprietors.

The ratio is very useful as if the net profit is not sufficient, the firm shall not be able to

achieve a satisfactory return on its investment. This ratio also indicates the firm's capacity to

face adverse economic conditions such as price competition, low demand, etc. Obviously,

higher the ratio the better is the profitability. But while interpreting the ratio it should be kept

in minds that the performance of profits also be seen in relation to investments or capital of

the firm and not only in relation to sales.

3. Operating ratio : -

Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is

generally expressed in percentage. It measures the cost of operations per dollar of sales.

This is closely related to the ratio of operating profit to net sales.

Components:

The two basic components for the calculation of operating ratio are operating cost (cost of

goods sold plus operating expenses) and net sales. Operating expenses normally include (a)

administrative and office expenses and (b) selling and distribution expenses.

Financial charges such as interest, provision for taxation etc. are generally excluded from

operating expenses.

Formula of operating ratio:

Where, Cost of Goods Sold = Opening Stock + Purchases + Carriage + Wages + Other Direct

Expenses - Closing Stock

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Operating Ratio = Cost of Goods Sold + Operating Expenses/ Net Sales *100

Operating Expenses = Office and Administration Exp. + Selling and Distribution Exp. +

Discount + Bad Debts + Interest on Short- term loans

Significance:- Operating Ratio is a measurement of the efficiency and profitability of the

business enterprise. The ratio indicates the extent of sales that is absorbed by the cost of

goods sold and operating expenses. Lower the operating ratio is better, because it will leave

higher margin of profit on sales.

4. Return on share holder’s investment:-

It is the ratio of net profit to share holder's investment. It is the relationship between net profit

(after interest and tax) and share holder's/proprietor's fund. This ratio establishes the

profitability from the share holders' point of view. The ratio is generally calculated in

percentage.

Components:

The two basic components of this ratio are net profits and shareholder's funds.

Shareholder's funds include equity share capital, (preference share capital) and all reserves

and surplus belonging to shareholders. Net profit means net income after payment of interest

and income tax because those will be the only profits available for share holders.

Formula of return on shareholder's investment or net worth Ratio:

Significance:

This ratio is one of the most important ratios used for measuring the overall efficiency of a

firm. As the primary objective of business is to maximize its earnings, this ratio indicates the

extent to which this primary objective of businesses being achieved. This ratio is of great 31

Return on Net Worth= {(Net Profit after Tax – Preference Dividend)/Shareholder’s Fund}*100

importance to the present and prospective shareholders as well as the management of the

company.

5. Return on Equity Capital (ROEC) Ratio

In real sense, ordinary shareholders are the real owners of the company. They assume the

highest risk in the company. (Preference share holders have a preference over ordinary

shareholders in the payment of dividend as well as capital. Preference share holders get a

fixed rate of dividend irrespective of the quantum of profits of the company). The rate of

dividends varies with the availability of profits in case of ordinary shares only. Thus ordinary

shareholders are more interested in the profitability of a company and the performance of a

company should be judged on the basis of return on equity capital of the company. Return on

equity capital which is the relationship between profits of a company and its equity, can be

calculated as follows:

Formula of return on equity capital or common stock:

Formula of return on equity capital ratio is:

Components:

Equity share capital should be the total called-up value of equity shares. As the profit used for

the calculations are the final profits available to equity shareholders as dividend, therefore the

preference dividend and taxes are deducted in order to arrive at such profits.

Significance:

This ratio is more meaningful to the equity shareholders who are interested to know profits

earned by the company and those profits which can be made available to pay dividends to

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Return on Equity Capital = {(Net profit after tax- Preference dividend)/Equity share capital}*100

them. Interpretation of the ratio is similar to the interpretation of return on shareholder's

investments and higher the ratio better is.

6. Earnings per Share (EPS) Ratio:- Definition:

Earnings per share ratio (EPS Ratio) are a small variation of return on equity capital ratio and

are calculated by dividing the net profit after taxes and preference dividend by the total

number of equity shares.

Formula of Earnings per Share Ratio:

The formula of earnings per share is:

B. Liquidity Ratios

1. Current Ratio:

This ratio explains the relationship between current assets and current liabilities of a business.

Formula:

Current Assets:-‘Current assets’ includes those assets which can be converted into cash with

in a year’s time.

Current Assets = Cash in Hand + Cash at Bank + B/R + Short Term Investment +

Debtors(Debtors – Provision) + Stock(Stock of Finished Goods + Stock of Raw Material

+ Work in Progress) + Prepaid Expenses.

Current Liabilities :- ‘Current liabilities’ include those liabilities which are repayable in a

year’s time.

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Earnings Per Share= Net Earnings /Number of shares outstanding

Current Ratio = Current Assets/ Current Liabilities

Current Liabilities = Bank Overdraft + B/P + Creditors + Provision for Taxation +

Proposed Dividend + Unclaimed Dividends + Outstanding Expenses + Loans Payable

within a Year.

Significance :- According to accounting principles, a current ratio of 2:1 is supposed to be an ideal ratio.

It means that current assets of a business should, at least, be twice of its current liabilities. The higher ratio indicates the better liquidity position. The firm will be able to pay its current liabilities more easily. If the ratio is less than 2:1, it indicates lack of liquidity and shortage of working capital.

The biggest drawback of the current ratio is that it is susceptible to “window dressing”. This ratio can be improved by an equal decrease in both current assets and current liabilities.

2. Quick Ratio

Quick ratio indicates whether the firm is in a position to pay its current liabilities within a month or immediately.

Formula:

‘Liquid Assets’ means those assets, which will yield cash very shortly.

Liquid Assets = Current Assets – Stock – Prepaid Expenses

Significance :- An ideal quick ratio is said to be 1:1. If it is more, it is considered to be better. This ratio is a better test of short-term financial position of the company.

C. Activity Ratio or Turnover Ratio

Activity Ratio or Turnover Ratio:- These ratio are calculated on the bases of ‘cost of sales’ or

sales, therefore, these ratio are also called as ‘Turnover Ratio’. Turnover indicates the speed

or number of times the capital employed has been rotated in the process of doing business.

34

Quick Ratio = Liquid Assets/ Current

Higher turnover ratio indicates the better use of capital or resources and in turn lead to higher

profitability.

It includes the following :

a. Stock Turnover Ratio:- This ratio indicates the relationship between the cost of goods during the year and average stock kept during that year.

Formula:

Here, Cost of goods sold = Net Sales – Gross Profit

Average Stock = Opening Stock + Closing Stock/2

Significance:- This ratio indicates whether stock has been used or not. It shows the speed with which the stock is rotated into sales or the number of times the stock is turned into sales during the year.

The higher the ratio, the better it is, since it indicates that stock is selling quickly. In a business where stock turnover ratio is high, goods can be sold at a low margin of profit and even than the profitability may be quite high.

b. Debtors Turnover Ratio :- This ratio indicates the relationship between credit sales and average debtors during the year :

Formula:

While calculating this ratio, provision for bad and doubtful debts is not deducted from the debtors, so that it may not give a false impression that debtors are collected quickly.

Significance :- This ratio indicates the speed with which the amount is collected from debtors. The higher the ratio, the better it is, since it indicates that amount from debtors is being collected more quickly. The more quickly the debtors pay, the less the risk from bad- debts, and so the lower the expenses of collection and increase in the liquidity of the firm.

35

Stock Turnover Ratio = Cost of Goods Sold / Average Stock

Debtor Turnover Ratio = Net Credit Sales / Average Debtors + Average B/R

By comparing the debtors turnover ratio of the current year with the previous year, it may be assessed whether the sales policy of the management is efficient or not.

c. Working Capital Turnover Ratio:

Definition:

Working capital turnover ratio indicates the velocity of the utilization of net working capital.

This ratio represents the number of times the working capital is turned over in the course of

year and is calculated as follows:

Following formula is used to calculate working capital turnover ratio

The two components of the ratio are cost of sales and the net working capital. If the

information about cost of sales is not available the figure of sales may be taken as the

numerator. Net working capital is found by deduction from the total of the current assets the

total of the current liabilities.

Significance:

The working capital turnover ratio measures the efficiency with which the working capital is

being used by a firm. A high ratio indicates efficient utilization of working capital and a low

ratio indicates otherwise. But a very high working capital turnover ratio may also mean lack

of sufficient working capital which is not a good situation.

d. Fixed asset Turnover Ratio:

This ratio reveals how efficiently the fixed assets are being utilized.

Formula:-

36Fixed Assets Turnover Ratio = Cost of Goods Sold/ Net Fixed Assets

Working Capital turnover Ratio = Cost Of Sales/Net Working Capital

Here, Net Fixed Assets = Fixed Assets – Depreciation

Significance:- This ratio is particular importance in manufacturing concerns where the investment in fixed asset is quit high. Compared with the previous year, if there is increase in this ratio, it will indicate that there is better utilization of fixed assets. If there is a fall in this ratio, it will show that fixed assets have not been used as efficiently, as they had been used in the previous year.

D. Leverage or capital structure ratio

Leverage or Capital Structure Ratio :- This ratio disclose the firm’s ability to meet the interest costs regularly and Long term indebtedness at maturity.

These ratio include the following ratios :

1. Debt Equity Ratio:- This ratio can be expressed in two ways:

First Approach : According to this approach, this ratio expresses the relationship between long term debts and shareholder’s fund.

Formula:

Long Term Loans:- These refer to long term liabilities which mature after one year. These include Debentures, Mortgage Loan, Bank Loan, Loan from Financial institutions and Public Deposits etc.

Shareholder’s Funds :- These include Equity Share Capital, Preference Share Capital, Share Premium, General Reserve, Capital Reserve, Other Reserve and Credit Balance of Profit & Loss Account.

Second Approach : According to this approach the ratio is calculated as follows:-

Formula:

37

Debt Equity Ratio=Long term Loans/Shareholder’s Funds or Net Worth

Debt equity ratio is calculated for using second approach.

Significance :- This Ratio is calculated to assess the ability of the firm to meet its long term liabilities. Generally, debt equity ratio of is considered safe.

If the debt equity ratio is more than that, it shows a rather risky financial position from the long-term point of view, as it indicates that more and more funds invested in the business are provided by long-term lenders.

The lower this ratio, the better it is for long-term lenders because they are more secure in that case. Lower than 2:1 debt equity ratio provides sufficient protection to long-term lenders.

2. Proprietary or Equity Ratio:

This is a variant of the debt-to-equity ratio. It is also known as equity ratio or net worth to

total assets ratio. This ratio relates the shareholder's funds to total assets. Proprietary /

Equity ratio indicates the long-term or future solvency position of the business.

Formula of Proprietary/ Equity Ratio:

Components:

Shareholder's funds include equity share capital plus all reserves and surpluses items.

Total assets include all assets, including Goodwill. Some authors exclude goodwill from total

assets. In that case the total shareholder's funds are to be divided by total tangible assets. As

the total assets are always equal to total liabilities, the total liabilities, may also be used as the

denominator in the above formula.

Significance:

38

Debt Equity Ratio=External Equities/internal Equities

Proprietary Ratio = Shareholder’s Funds/ Total Assets

This ratio throws light on the general financial strength of the company. It is also regarded as

a test of the soundness of the capital structure. Higher the ratio or the share of shareholders in

the total capital of the company better is the long-term solvency position of the company. A

low proprietary ratio will include greater risk to the creditors.

3. Fixed Assets to Proprietor's Fund Ratio: Definition:

Fixed assets to proprietor’s fund ratio establish the relationship between fixed assets and

shareholders’ funds. The purpose of this ratio is to indicate the percentage of the owner's

funds invested in fixed assets.

Formula:

The fixed assets are considered at their book value and the proprietor's funds consist of the

same items as internal equities in the case of debt equity ratio.

Significance:

The ratio of fixed assets to net worth indicates the extent to which shareholder's funds are

sunk into the fixed assets. Generally, the purchase of fixed assets should be financed by

shareholder's equity including reserves, surpluses and retained earnings. If the ratio is less

than 100%, it implies that owners’ funds are more than fixed assets and a part of the working

capital is provided by the shareholders. When the ratio is more than the 100%, it implies that

owners’ funds are not sufficient to finance the fixed assets and the firm has to depend upon

outsiders to finance the fixed assets. There is no rule of thumb to interpret this ratio by 60 to

65 percent is considered to be a satisfactory ratio in case of industrial undertakings.

39

Fixed Assets to Shareholder’s Fund: Fixed Assets/ Shareholder’s Fund

4. Current Assets to Proprietor's Fund Ratio:

Current Assets to Proprietor’s Fund Ratio establishes the relationship between current assets

and shareholder's funds. The purpose of this ratio is to calculate the percentage of

shareholder’s funds invested in current assets.

Formula:

Significance:

Different industries have different norms and therefore, this ratio should be studied carefully

taking the history of industrial concern into consideration before relying too much on this

ratio.

5. Interest Coverage Ratio:

This ratio is also termed as ‘Debt Service Ratio’. This ratio is calculated as follows:

Formula:

Significance :- This ratio indicates how many times the interest charges are covered by the profits available to pay interest charges.

This ratio measures the margin of safety for long-term lenders.

This higher the ratio, more secure the lenders is in respect of payment of interest regularly. If profit just equals interest, it is an unsafe position for the lender as well as for the company also , as nothing will be left for shareholders.

An interest coverage ratio of 6 or 7 times is considered appropriate.

40

Interest Coverage Ratio = Net Profit before charging interest and tax / Fixed Interest Charges

Current Assets to Proprietor’s Fund Ratio:

Current Assets / Shareholder’s Fund

41

Data Analysis

Profitability Ratios

1. Gross Profit Ratio

Year Gross Profit Margin

2005-2006 32.62

2006-2007 33.28

2007-2008 25.31

42

2008-2009 19.48

2009-2010 21.1

Gross Profit Margin on NTPC was 32.62% in 2005-2006 it went upto 33.28 in 2006-2007 but than it had fallen for consecutive 2 yrs to reach to the levelof 19.48 in 2008-09. It showed some improvement in 2009-10 but reached only till 21.1% not even close to the earlier levels. The reduction in the profits could be due to inefficiency or even may be because on the global economic slow down. But even in the slowdown period it was enough to recover the operating expenses and maintain reserves

2. Net Profit Ratio

Year Net Profit Margin

2005-2006 20.2

2006-2007 19.39

2007-2008 18.51

43

2008-2009 18.11

2009-2010 17.72

The net profit margin for NTPC for the year 2005-06 was 20.2 since then it has been decreasing constantly reaching a level of 17.72 in the year 2009-10. The constant fall in the net profit shows loss to the proprietors.

3. Operating Ratio

Year Operating Ratio

2005-2006 28.4

2006-2007 31.13

2007-2008 31.07

44

2008-2009 25.11

2009-2010 26.81

Operating Profit Margin for NTPC for the Year 2005-06 has been 28.4% then it showed some

improvement for the next two years by reaching upto the level of 31.07% in the year 2007-08

but slipped to 25.11% in the year 2008-2009 then again recovered in 2009-10 and reached to

26.81%.

4. Return On Shareholder’s Investment

Year Return on Net worth

2005-2006 12.95

2006-2007 14.13

45

2007-2008 13.66

2008-2009 13.9

2009-2010 13.69

Return on Net worth for NTPC in the year 2005-06 has been 12.95 then it

5. Return on Equity Capital

Year Return on Equity Capital

2005-2006 0.71

2006-2007 0.8346

2007-2008 0.9

2008-2009 1

2009-2010 1.06

6. Earnings Per Share

Year EPS

2005-2006 7.06

47

2006-2007 8.33

2007-2008 8.99

2008-2009 9.995

2009-2010 10.59

Liquidity Ratios

1. Current Ratio

Year Current Ratio

48

2005-2006 2.11

2006-2007 2.42

2007-2008 2.36

2008-2009 2.89

2009-2010 2.81

2. Quick Ratio

Year Quick Ratio

2005-2006 1.84

49

2006-2007 2.18

2007-2008 2.16

2008-2009 2.59

2009-2010 2.5

Activity Ratios

1. Inventory Turnover Ratio

50

Year Inventory Turnover Ratio

2005-2006 12.31

2006-2007 14.1

2007-2008 33.59

2008-2009 28.21

2009-2010 27.54

2. Debtors Turnover Ratio

Year Debtors Turnover Ratio

51

2005-2006 23.32

2006-2007 30.78

2007-2008 17.52

2008-2009 12.78

2009-2010 9.06

3. Working Capital Turnover Ratio

Year Working Capital Turnover Ratio

52

2005-2006 131.98

2006-2007 167.21

2007-2008 171.01

2008-2009 173.56

2009-2010 154.07

4. Fixed Assets Turnover Ratio

53

Year Fixed Assets Turnover Ratio

2005-2006 0.76

2006-2007 0.82

2007-2008 0.7

2008-2009 0.67

2009-2010 0.7

Leverage Ratios

1. Debt Equity Ratio54

Year Debt Equity Ratio

2005-2006 0.46

2006-2007 0.52

2007-2008 0.5

2008-2009 0.59

2009-2010 0.59

2. Proprietary Ratio

Year Proprietary Ratio

55

2005-2006 0.69

2006-2007 0.66

2007-2008 0.66

2008-2009 0.63

2009-2010 0.63

3. Ratio of Fixed assets to shareholder’s fund

56

Year Fixed Assets to Shareholder's Fund

2005-2006 0.51

2006-2007 0.53

2007-2008 0.48

2008-2009 0.56

2009-2010 0.54

4. Current Assets to Proprietor’s Fund

57

Year Current Assets to Shareholders Fund

2005-2006 0.075

2006-2007 0.093

2007-2008 0.11

2008-2009 0.12

2009-2010 0.17

5. Interest Coverage Ratio

58

Year Interest Coverage Ratio

2005-2006 11.59

2006-2007 9.49

2007-2008 10.28

2008-2009 11.91

2009-2010 12.18

Findings:

59

60

Limitations

61

The Limitations for the research are

The data analysed that is the financial statements for the five years is not exhaustive to determine the future performance on the company.

The data analysed is only quantitative and not qualitative like the human resource available to the company in the form of its management.

The factors analysed are only the internal factors the external factors that is the effect of the changes in the economy are not considered.

62

Conclusion

63

The electricity supply has been in the public domain in most of the developing countries.

Under public ownership, the sector has not been able to catch up with the growing demand

for electricity. The operational inefficiency and financial losses often lead to poor quality of

supply and underinvestment. A wave of reforms has swept through a number of developing

countries. These reforms were primarily targeted to improve the performance of the state

owned companies and to provide a conducive atmosphere for private investment in the sector.

The erstwhile vertically integrated SEBs in India has been riddled with inefficiencies due to a

lack of accountability and administrative bottlenecks. Reforms in the Indian power sector

were initiated to restructure the SEBs and to set up independent regulatory institutions.

The Electricity Act 2003 led to deepening of the reform process by enabling competition in

the wholesale electricity market and retail electricity supply, in phases. Thirteen SEBs have

so far unbundled into separate generation, transmission and distribution companies.

Beginning with the establishment of an independent regulatory commission in Orissa in

1996, the SERCs have been set up in all states. Some of the smaller states in the North East

have established a Joint Electricity Regulatory Commission. The process of tariff

determination has become more transparent and limited tariff rationalization has been

undertaken against consumer opposition and political meddling.

The emerging competition in the bulk power market and phased direct access to large

consumers is aimed at reducing the risks associated with sales to financially weak state

utilities. The policy and regulatory developments are promising, but more needs to be done to

improve the performance of distribution utilities. Amongst other factors, the autonomy to

manage these utilities in a commercial manner remains a key issue. In the long-run, the

state’s objectives are best served by nurturing a financially sustainable sector that can

improve access for poor and rural consumers. This research undertook a review of the policy

and regulatory developments in the Indian power sector. A review of the literature and a

comparative policy analysis helped us to unravel some of the lessons to be learned for the

process of reform in developing countries in general. The initial phase of power sector reform

in India allowed commercially-oriented IPPs to sell power to financially weak SEBs, which

do not rely on sound commercial principles. This marriage of convenience is not sustainable.

The initial phase of reforms in developing countries should be aimed to restructure the sector

64

and to set up an independent regulator. As private participation grows, it would be suitable to

introduce competition in the sector. This would not only help lower the cost of power

purchase, it would also provide greater incentive for performance improvement. The

experience of private sector investment in Latin American countries relied on the introduction

of commercial interest in the bulk power market by inviting IPPs as well as introducing

commercial principles at the end of buyer utilities through their divestiture.

The experience in East Asia and Latin America suggests that macroeconomic stability

remains a key to attracting sustainable and increased investment in the infrastructure sectors.

India continues to demonstrate macroeconomic stability along with prudent currency

management. Future growth prospects in the power sector hold substantial potential for

private investment. However, the financial performance of the state owned distribution

utilities remains a key concern for investors. A positive outcome of existing distribution

privatization programs would guide such future plans, which remain politically sensitive. The

regulatory challenge is to provide incentives for improvement in technical efficiency and

financial performance. The unavailability of sovereign guarantees can be adequately

addressed if state utilities become viable through greater commercialization, if not

privatization. Inability of the domestic capital market to provide long-term debt for the power

sector needs to be adequately addressed by encouraging contractual saving through life

insurance and pension funds, and channel zing these for the power sector. Securitization of

project loans after the construction period and development of secondary bond market would

help garner funds for investment in the sector. The long-term interest of the consumers can

only be served if reasonably priced electricity is available over the long-run. Political

interests would best be served by depoliticizing tariffs, which would be beneficial to

consumers in the long-term through improved quality and reliability of supply. Given the

objective to electrify all villages by 2010 and to double the generating capacity in the country

by 2012, the need to improve the policy environment and strengthen the regulatory

framework cannot be ignored.

65

APPENDIX

66

Balance Sheet of NTPC (in Rs. Cr.)

  Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Sources Of Funds          

Total Share Capital 8,245.50 8,245.50 8,245.50 8,245.50 8,245.50

Equity Share Capital 8,245.50 8,245.50 8,245.50 8,245.50 8,245.50

Share Application Money 0 0 0 0 0

Preference Share Capital 0 0 0 0 0

Reserves 36,713.20 40,351.30 46,021.90 50,749.40 55,478.60

Revaluation Reserves 0 0 0 0 0

Networth 44,958.70 48,596.80 54,267.40 58,994.90 63,724.10

Secured Loans 6,173.50 7,479.60 7,314.70 8,969.60 9,079.90

Unsecured Loans 14,464.60 17,661.50 19,875.90 25,598.20 28,717.10

Total Debt 20,638.10 25,141.10 27,190.60 34,567.80 37,797.00

Total Liabilities 65,596.80 73,737.90 81,458.00 93,562.70 1,01,521.10

  Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Application Of Funds

Gross Block 45,917.60 50,604.20 53,368.00 62,353.00 66,663.80

Less: Accum. Depreciation 22,950.10 25,079.20 27,274.30 29,415.30 32,088.80

Net Block 22,967.50 25,525.00 26,093.70 32,937.70 34,575.00

Capital Work in Progress 13,756.00 16,962.30 22,478.30 26,404.90 32,290.60

Investments 19,289.10 16,094.30 15,267.20 13,983.50 14,807.10

Inventories 2,340.50 2,510.20 2,675.70 3,243.40 3,347.70

Sundry Debtors 867.8 1,252.30 2,982.70 3,584.20 6,651.40

Cash and Bank Balance 176.8 750.1 473 271.8 634

Total Current Assets 3,385.10 4,512.60 6,131.40 7,099.40 10,633.10

Loans and Advances 6,555.10 8,781.70 9,936.20 7,826.10 6,357.10

Fixed Deposits 8,294.60 12,564.50 14,460.20 15,999.80 13,825.50Total CA, Loans & Advances 18,234.80 25,858.80 30,527.80 30,925.30 30,815.70

Deffered Credit 0 0 0 0 0

Current Liabilities 4,910.30 5,422.20 5,548.40 7,439.20 7,896.80

Provisions 3,740.30 5,280.30 7,360.60 3,249.50 3,070.50

67

Total CL & Provisions 8,650.60 10,702.50 12,909.00 10,688.70 10,967.30

Net Current Assets 9,584.20 15,156.30 17,618.80 20,236.60 19,848.40

Miscellaneous Expenses 0 0 0 0 0

Total Assets 65,596.80 73,737.90 81,458.00 93,562.70 1,01,521.10

 

Contingent Liabilities 16,429.80 25,218.80 29,361.80 66,083.20 40,044.00

Book Value (Rs) 54.53 58.94 65.81 71.55 77.28

Profit & Loss account of NTPC ------------------- in Rs. Cr. -------------------

  Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Income        

Sales Turnover 26,318.60 32,817.30 37,302.40 42,196.80 46,623.60

Excise Duty 175.7 185.6 211.4 221.6 245.9

Net Sales 26,142.90 32,631.70 37,091.00 41,975.20 46,377.70

Other Income 2,897.90 2,875.60 3,119.70 3,012.80 2,872.80

Stock Adjustments 0 0 0 0 0

Total Income 29,040.80 35,507.30 40,210.70 44,988.00 49,250.50

Expenditure        

Raw Materials 25 23.7 26.8 31 31.1

Power & Fuel Cost 16,497.10 19,947.60 22,160.70 27,292.30 29,689.10

Employee Cost 1,137.50 1,362.60 2,229.30 2,897.60 2,946.80

Other Manufacturing Expenses 705.1 842.9 920 940 1,096.60

Selling and Admin Expenses 353.2 410.8 389.8 473.2 578.5

Miscellaneous Expenses 247.2 292.4 368.2 394.9 436.4

Preoperative Exp Capitalised -256.4 -418.4 -544.7 -637.4 -866.9

Total Expenses 18,708.70 22,461.60 25,550.10 31,391.60 33,911.60

           

  Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

           

Operating Profit 7,434.20 10,170.10 11,540.90 10,583.60 12,466.10

68

PBDIT 10,332.10 13,045.70 14,660.60 13,596.40 15,338.90

Interest 2,004.60 2,055.70 1,982.20 1,737.00 1,861.90

PBDT 8,327.50 10,990.00 12,678.40 11,859.40 13,477.00

Depreciation 2,047.70 2,075.40 2,138.50 2,364.50 2,650.10

Other Written Off 1.3 9.9 3.1 3.6 4.3

Profit Before Tax 6,278.50 8,904.70 10,536.80 9,491.30 10,822.60

Extra-ordinary items 633.7 134.2 -114 1,305.20 616.1

PBT (Post Extra-ord Items) 6,912.20 9,038.90 10,422.80 10,796.50 11,438.70

Tax 1,082.40 2,163.70 2,994.20 2,554.70 2,682.70

Reported Net Profit 5,820.20 6,864.70 7,414.80 8,201.30 8,728.20

Total Value Addition 18,683.70 22,437.90 25,523.30 31,360.60 33,880.50

Preference Dividend 0 0 0 0 0

Equity Dividend 2,308.70 2,638.50 2,885.90 2,968.30 3,133.20

Corporate Dividend Tax 323.8 389.6 490.5 501.7 527.6

Per share data (annualised)          

Shares in issue (lakhs) 82,454.64 82,454.64 82,454.64 82,454.64 82,454.64

Earning Per Share (Rs) 7.06 8.33 8.99 9.95 10.59

Equity Dividend (%) 28 32 35 36 38

Book Value(Rs) 54.53 58.94 65.81 71.55 77.28

69

Cash Flow of NTPC ------------------- in Rs. Cr. -------------------

 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Net Profit Before Tax 6271.2 8896.5 10529.4 9467.8 10807.6

Net Cash Flow From Operating Activities 6206.4 8065.3 10171.1 9688.1 10594.2

 -

2713.6 -3145.8 -6203.8 -7500.4 -10498Net Cash (used in)/from Investing Activities

           

Net Cash (used in)/from Financing Activities-

1099.7 -76.3 -2348.7 -849.3 -1908.6

           

Net (decrease)/increase In Cash and Cash Equivalent 2393.1 4843.2 1618.6 1338.4 -1812.1

           

Opening Cash & Cash Equivalents 6078.3 8471.4 13314.6 14933.2 16271.6

Closing Cash & Cash Equivalents 8471.4 13314.6 14933.2 16271.6 14459.5

70