WCM of Hisar Project

The IUP Journal of Infrastructure, Vol. IX, No. 2, 201144 2011 IUP. All Rights Reserved.

* Sr. Lecturer (Finance), Amity Business School, Noida 201301, UP, India. E-mail: [email protected]

Anubha Srivastava*

A Study of Working Capital Managementof Hisar Project: Reliance Infrastructure

Limited, India

IntroductionInfrastructure industry is growing at a fast pace in almost all sectors with the developmentand urbanization in the economy. The Indian government is also taking initiatives to developthe infrastructure sector. The construction industry in India has reported an estimated growthof 6.78% in the year 2006. According to a survey report,1 The industry in India is highlyfragmented and has about 300,000 construction companies operating nationwide. Thegovernment has allowed 100% foreign equity in the construction industry. Among the majorinfrastructure projects are the $7-8 bn India-Iran gas pipeline, the $2.8 bn construction oftwo power plants, and the $2.3 bn power project in Tamil Nadu.

Reliance Infrastructures LimitedReliance Infrastructure Ltd. is not only Indias largest private sector enterprise in power utilitybut also the largest private sector player in many other infrastructure sectors. In the power

1 http://business.mapsofindia.com

This case focuses on various facets of working capital management at RIL

at its Engineering, Procurement and Construction (EPC) division, which

mainly deals in power projects. Financial analysis of the company has also

been carried out to know its creditworthiness. Working capital

management involves not only managing the different components of the

current assets, but also managing the current liabilities, or to be more

precise, financing the current assets. There are three main areas in working

capital management and the study focuses on receivables management,

cash management, and inventory management. RIL manages its receivable

accounts through ageing analysis and manages its cash through

management information system. Inventory management is made easier

through the process of high sea sales and sale in transit. An analysis with

respect to the companys competitors is done on a few fronts to further

understand its position in the market.

A Study of Working Capital Management of Hisar Project:Reliance Infrastructure Limited, India

45

sector they are involved in generation, transmission, distribution and trading of electricityand constructing power plants as Engineering, Procurement and Construction (EPC) partners.Reliance Infrastructure distributes more than 28 billion units of electricity to cover 25 millionconsumers across different parts of the country including Mumbai and Delhi in an area thatspans over 1,24,300 sq km. Reliance infrastructure also emerging as one of the leading playersin India in the EPC segment of the power sector with an order book of 8,300 cr, havingexecuted projects worth 10,000 cr in the past four years. They are also executing the first100% private sector power transmission project for western grid with an investment worth2,250 cr. Reliance Infrastructure has significant presence in the field of execution of the

power projects on EPC basis with a strong track record of the execution and commissioningof projects on time. Most of its projects have been executed by Reliance Energy throughits EPC division.

Engineering, Procurement and Construction (EPC) Division2

The EPC division of Reliance Infrastructure was setup in 1966 and was undertaking EPCcontracts on a turnkey basis and other value added services for major public and private sectorprojects both in India and abroad. The division has 10 regional offices in major cities of Indiaand Overseas offices in Dubai, Nepal and Bhutan.

The range of projects include:

Thermal, hydro, co-generation and gas-based power generating stations;

400/132 kV transmission lines and switch yards;

Overhead and underground electrical networks;

Industrial electrification works for petrochemicals, fertilizers, steel, cement plants,refineries, ports and hotels;

Indoor and outdoor illumination works; and

Pre-moulded accessories for extra high voltage electrical cables.

Future Opportunities/Prospects

This company is the largest private sector distributor with 6.5 mn customers because of itshuge power distribution asset in Delhi , Mumbai and Orissa. During last six years it hasmade an investment of 32 bn in distribution infrastructure. The companys Mumbaidistribution assets are the most efficient with less than 11% Aggregate Technical andCommercial losses (AT&C) as compared to Indias average of 35%. There has been alsoreduction in AT&C losses for its Delhi distribution circle from 55% to 20% during the periodof six years i.e., from FY02 to FY08. With increasing demand for privatization of powerdistribution operation by more and more states making this sector more lucrative andattractive and has opened and created huge space for this company. The company has totalgenerating capacity of 940 mw and is looking to stretch it further. The company is executingthree projects worth of 40 bn , which is expected to generate 15% return.

2 http://www.rinfra.com and http://indianpowersector.com

The IUP Journal of Infrastructure, Vol. IX, No. 2, 201146

Nature of the ProblemHistorically, infrastructures companies have managed with very little capital. The infrastructuresector is not capital intensive but working capital intensive. According to Dagar (2008),3

After all, there is a ready market of infrastructure users who have time and againdemonstrated their willingness to pay; the private sectors capacity to fund and executeprojects is hardly in doubt and even the government, at the highest level, believesinfrastructure is the mantra for double digit growth. Indian infrastructure sector does notrequire huge capex to set up manufacturing plants rather it requires a lot of free cash flowsto run the projects e.g., one can implement 1,000 cr project with the net worth of25 cr only. Therefore, the size of project a company can bid for is determined by its net

worth because working capital can be borrowed against the net worth of the company.RIL being a working capital intensive company requires knowing the effect of its currentmethods. The company made a team to study the working capital management and to conducta financial analysis of RIL. The aim is to learn how to manage working capital needs ofthe organization and to learn the different ways through which theoretical learning is appliedpractically in the organization. The project is aimed to learn and gain knowledge of theday-to-day working of the organization as to how does the different decision are taken andon what basis. The project will help in gaining the knowledge of different steps of raisingthe short term funds and their effective management so as to ensure adequate availabilityof funds. The various analyses will help the management to assess the efficiency of theworking capital management of the company.

Objectives To study and analyze working capital management at Reliance Infrastructure Ltd.;

Inventory management

Receivable management

Cash management

To study one of the undergoing projects; and

To suggest some recommendations related to working capital management.

Hisar EPC ProjectReliance Infrastructure bagged a contract from Haryana Power Generation Company Limited(HPGCL) to set up 2*600 MW thermal power plants at Hisar on EPC basis for 4,000 cr(approximately). The completion schedule is 33 months and 36 months for unit 1 andunit 2, respectively, from the date of the notice to proceed i.e., from January 29, 2007 (Exhibit 1).The completion of Hisar Thermal Power Plant project within 27 months shall be a majormilestone in Indias power history. The company has tied up with Shanghai ElectricCorporation (SEC) of China for supply and erection supervision of main power plantequipments i.e., boiler, turbine, and generator and their auxiliaries and station control and

3 Dagar Shalini S (2008), Business Today, September 21, Vol. 17, No. 19, pp. 146-150, 3 p, 7 Color Photographs, 1 Chart.


47

instrumentation (Exhibit 2). The engineering partners for the projects would be Black & Veatchand DCPL of Kolkata.

Exhibit 1: Rajiv Gandhi Thermal Power Plant, Hisar, Haryana

Parties to the Contract

Owner : HPGCL

Contractor : Reliance Infrastructure Ltd.

Capacity : 2*600 MW

Letter of Intent: HPGCL confirmed the contractor, Reliance Infrastructure Ltd. about theacceptance of its bid proposal for a lump sum price of 4,000 cr (approx).

The price shall remain firm during the contract period and would be inclusive ofall taxes, duties, levies, freight, insurance, etc.

The commissioning schedule shall be:

Unit 1-33 months.

Unit 2-36 months from the date of issue of letter of intent.

Contract Performance Guarantee

Bank guarantee 10% for timely completion and faithful performance.

Equipment performance guarantee should be given for trouble free performancefor the period of 12 months.

Ocean Transportation

Contractor shall be responsible for the transport of the plant and equipment from the place oforigin to the port of destination (cost such as packaging and the like) shall be at the contractorsexpense.

Contract Price Adjustment

The contract price shall be subject to price adjustment during performance of thecontract to reflect changes in the cost of labor and material equipment, etc.

In case of shipments which are delayed beyond the schedule date for the reasonattributable to the contractors, the price adjustment provision shall not be applicablefor the period of time.

The contractor shall be required to arrange and bear the charges which he has tolawfully obtain as a EPC contractor. Owner shall bear the charges which he has tolawfully obtain as a promoter of coal fired thermal power project.

Effect and Jurisdiction

In the event of the delayed release of advance payment within the stipulated time even afterthe contractor has performed its entire obligation. The date of actual release will be consideredas an effective date of contract.

Contract Price

The price quoted by the contractor in his bid proposal with addition and deletion as given inthe supplementary price by bid proposal and incorporated in the letter of intent for the entirescope of work shall be treated as the contract price.


Exhibit 1 (Cont.)

Liquidated Damage

The contractor shall pay to the owner liquidate damage for the delayed period @ 0.25% oftotal contract price per week of delay or part thereof for a period of four weeks delaysubsequently @ 0.5% of total amount of liquidated damage for the delay, subject to a maximumceiling of 10% of total contract price.

Payment Schedule or Cash Flow Schedule

Any payment under the contract shall be made only after the contractors price breakup isapproved by the owner or engineer.

Training of Owners Personnel

The contractor shall undertake to train at site engineering personnel selected by theowner. Total period shall not be less than 36 man months at manufacturers work andfacilities.

To and fro rail, road or air fare of trainees between the place of posting and the placeof training, shall be borne by the owner. The contractor shall provide the trainingequipment.

Exhibit 2: Terms of Operation Between Reliance Infrastructure Ltd. and ShanghaiElectric (Group) Corporation and Shanghai Electric Group Co. Limited

Parties To The Contract

Owner : HPGCL.

Purchaser : Reliance Infrastructure Ltd.

Contractor : Shanghai Electric (Group) Corporation and Shanghai Electric GroupCompany.

Completion of construction of the facility and the project in the manner as specifiedin the contract 4

The contractor is required to supply the entire equipment as mentioned as per contractprice.

The contractor Shanghai Limited will be entitled to the lump sum of $325.5 mn.

First contract providing equipments Shanghai Electric Group Corporation.

Second contract providing engineering consultancy for BTG Shanghai Electric (Group)Company Limited.

Payment Structure for Equipment

5% of contract price as first initial advance.

5% of contract price as second initial advance.

First-stage payment 65% of the material price for individual package.

Second-stage payment 5% of the material price for individual package.

Third-stage payment 10% of the material price for individual package.

Fourth-stage payment 10% of the contract price shall be paid on final taking overcertificate for the plant.


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Mode of Payment: Telegraphic transfer/swift upon within 10 days of submission of invoice.

Delay of Supply: Contractor shall be liable to pay liquidity damage of 0.3% per week. The totalamount should not exceed maximum of 10% of contract price.

Shortfall in Guaranteed Performance

Less than or up to 15% work will be accepted after imposing the liquidity damage.

Greater than 15% necessary modification should be made to comply withguaranteed requirement.

Spares Specification

Supply equipment for 5 years.

Provide a schedule of recommended spare parts.

The price of spare parts shall remain valid for 12 months from the date of issue of letterof intent.

Spare parts required in addition to the specification should be submitted by thecontractor within 30 days.

The contractor shall ensure the long-term availability of spares covered under thecontract.

In case of emergency the contractor shall make every effort to deliver such spares onmutually agreed time schedule.

The price of all future requirements beyond five years shall be derived from thecorresponding price escalation formula to be furnished by the contractor.

Training of Purchasers Personnel

Total period shall not be less than 24 months at manufacturers place.

The contractor shall provide training equipment during the training period.

Commutation shall be borne by the purchaser.

The contractor shall train purchasers personnel free of cost.

Types of Bank Guarantee

Bank guarantee should be issued from the first class Chinese bank.

Advance Payment Bank Guarantee (ABG) 10% of contract price issued from first classinternational bank.

Contract Performance Bank Guarantee (CPBG) 2.5% of contract price for timelycompletion and the faithful performance of the contract.

Equipment Performance Bank Guarantee (EPBG) 2.5% valid for a period of 15 months.

Supervision

Contractor shall supervise the work and give technical advice and suggestion on thequality of work required during this period.

Contractor should employ skilled technical personnel for the work.

Permits and License: Contractor shall be liable for arranging all permits and license to beobtained for filing the organization.

Progress Report: Contractor shall at his own expense submit the periodic report as and whenrequired.

Exhibit 2 (Cont.)


Working Conditions and Facilities to be Provided by Reliance Infrastructure Ltd.

Purchaser shall free of charge provide contractor technical personnel, an erectionteam of steel turbine and generator accommodation and other necessary facilitiesincluding but not limited suitable furnished bedroom, toilet, and air conditionedworking office, safety ware, necessary working tools, vehicles for transportation,from supervisor's residence to the site.

The contractor shall during the contract period dispatch at his own cost healthyand skilled technical personnel for supervision of the erection in accordance withthe supervision schedule.

The total supervision plan for man month will be 300 man months based on8 h per day on six days per week basis.

The purchaser shall pay the contractor a fixed lump sum which will include oceanfreight to the port of entry into the Indian port. All other payment under thiscontract should be paid through an irrevocable letter of credit payable at site.

Entire payment should be made through 10 days of submission of employees.

Erection Condition: On-Site Agreement

Owners Lien on Equipment: The owner shall have lien on all equipments broughtto the site for the purpose of creation, testing and commissioning of the planttill final acceptance and handing over.

Access to Site and Work on Site: In the execution of work, no person other thanthe contractors representative, subcontractor and workmen shall be allowed accessto work except by the special permission in writing of the engineer or hisrepresentative.

Contractors Field Operation: The contractor shall keep the engineer informed inadvance regarding his field activity plans and schedule for carrying out each partof the work.

Facilities to be Provided by the Owner

The following works and services shall be provided by the owner at no cost to thecontractor:

Space and Electricity: The contractor shall make its own arrangement forconstruction power and further distribution arrangement.

Medical Facilities: The owners medical facilities available at site will beextended for the contractor only if and when available.

Employment of Labor: The contractor shall employ for the work only his regularskilled employees.

Fuel: The fuel required for start up on trial run will be arranged by the owner.


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Facilities to be Provided by the Contractor

General Aspect: Cleaning and unloading of the equipments from the rail orroad transport shall be at the contractors area and charges incurred for defaultof the contractor shall be paid by him.

Owners will not provide any accommodation to the contractors supervisor,engineer or labor.

Tools Tackles and Scaff Holdings: The contractor shall provide at his ownexpense, all the construction equipment, erection tools, machine tools and allassociated protection equipment and appliance required for accomplishingwork under the contract.

Pre-Commissioning Activities and Trial Operation: This will be theresponsibility of the contractor. The contractor shall provide, in addition, testinstrument, calibration device, etc., for successful performance.

Transportation: The contractor will have to at his own risk and expense transportall plant and equipment to the site by suitable mode of transport.

Custom Clearance: The contractor shall at its own expense handle allformalities for custom clearance, including liability of port charges.

Progressive Payment Site Work

All progressive payment for construction and erection work shall be based onmilestone progress achieved.

In case where contract provides for tests whether at the premises or works ofthe contractor or any subcontractor, except where otherwise specified, shallprovide free of charge items such as labor, material, electricity, fuel, water,stores apparatus and instruments which may be reasonably demanded by theinspector to carry out effectively such test on equipment.

The contractor shall demonstrate all guarantees covered herein during guarantee/acceptance test at site in the presence of the owner, all cost should be includedin the bid price. In case of failure of performance guarantee test, the contractorwill replace/modify at no extra cost to the owner.

Receivables Management: Reliance Infrastructure uses debtors aging schedule method formonitoring receivables, i.e., the time within which the credit sales are converted into cash.Ageing schedule is one of the effective tool in the hands of finance division to get a feelof the ongoing receivables that has been not realized from its customers. They expect torealize their receivables within that stipulated period but many a time it does not happen.This gets possible on account of several reasons:

Bill Break Up (BBU) not being approved by the customer.

Dispatch letter not enclosed.


There are some prerequisites for the sale of goods, which are:

Ownership of goods should be transferred (ownership should be transferred beforethe goods reach the site through endorsement of LR).

Rates must be approved. But at times we raise invoices to our customers as apressure building tool in spite of BBU not being approved.

Credit Policy: REL has a credit policy of 30 days from the date of invoicing. An invoiceexceeding 30 days becomes due, beyond 60 days requires managerial attention, and beyond90 days is an alarming situation for the organization. Hence, ageing analysis comes intoeffect. This brings the need for management to gear up for the recoverable amount. RelianceInfrastructure follows a lenient credit policy in Hisar project as it is dealing with a governmentbody and thus has to endure various said formalities before the invoice gets rewarded.It has all terms and conditions predefined with HPGCL and so, there is very little possibilityof invoice not getting paid. Management is assured that no matter a few invoices get delayedbut will be received after the required formalities (such as BBU not approved) are fulfilled.

Process of Receivables Management Obtain the aging of all the Debtor;

Review of contractual norms with the debtors for the payment schedule;

Identify the overdue payments;

Obtain the reasons for the overdue and the follow up actions taken;

Recovery mechanism followed;

Recognition of bad debts; and

Review the difference arising out of escalation and negotiation.

Cash Management: It can be seen from the cash flow statement of Hisar project that netcash inflow is in the negative (Table 1). This means that the payment from the client sideand payment to the vendors is not back to back. RIL is paying to its vendors but not gettingall payment obligations fulfilled from its client.

Work Breakdown Structure: For the purpose of simplifying the process of maintainingaccounts, the entire project has been divided into various WBS elements. WBS is ahierarchical tree structure for defining and organizing the total scope of the structure.The first two levels of the WBS (the root node and Level 2) define a set of planned outcomesthat collectively and exclusively represent 100% of the project scope. At each subsequentlevel, the children of a parent node collectively and exclusively represent 100% of the scopeof their parent node. A well-designed WBS describes planned outcomes instead of plannedactions. Outcomes are the desired ends of the project, and can be predicted accurately; actionscomprise the project plan and may be difficult to predict accurately.4 Hisar Thermal PowerPlant project has been divided into the following WBS elements:

4 http://www.websters-online-dictionary.org


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Table 1: Cash Flow Statement of Hisar Project

Cash Inflow

Opening Balance 234.86

1. 1st 5% Advance Receipt from HPGCL

(a) Against Supply Order Indigenous 75.18 75.18

(b) Against Supply Order Offshore 61.11 61.11

(c) Civil and Str. Steel and ETC 34.78 34.78

Total 171.07 171.07

2. 2nd 5% Advance Receipt from HPGCL

(a) Against Supply Order Indigenous 75.18 75.18

(b) Against Supply Order Offshore 58.68 58.68

(c) Civil and Str. Steel and ETC 34.78 34.78

Total 168.64 168.64

3. Receipt Against RA Bill 1,002.75 135.27 1,138.02

4. Others 0.14 32.14 32.28

Total Inflow 1,342.60 1,342.60

Less: TDS

Less: WCT

Net Inflow (A) 1,342.60 167.41 1,510.01

Cash Outflow

1. Advances Given

(a) REL Contractors 81.08 0.03 81.11

(b) As Security Deposits 5.09 5.09

2. Payment for Material

(a) Imported 652.10 14.86 666.96

(b) Indigenous 508.38 68.54 576.92

3. Payment to Contractors 278.80 46.31 325.11

4. Corporate Ohs. Including Salariesand Wages and Bonus

5. Staff Welfare Expenses 0.04 0.04

6. Insurance 0 0

7. Rent 1.30 0.08 1.38

8. Repairs and Maintenance 0.59 0.05 0.64

DescriptionMarch 3,

2009 to April30, 2009

Till Feb.2009 Total


3 MECH Mechanical

3 ELEC Electrical

3 C&IN Consulting

3 SEFS Site Enabling Facilities

3 ENGG Engineering

3 OVHD Overhead

3 CIVL Civil Supply

3 INS Insurance

3 UEPL Work Orders to UEPL

3 MISC Miscellaneous

3 CONT Contingency

3 HEDG Hedging

The initial budget allotted to various WBS elements, the revised budget and the actualcost as on March 31, 2010 is given below (Table 2):

Table 1 (Cont.)

DescriptionTill Feb.

2009 Total

9. Bank Charges and Commission 10.29 2.79 13.08and Interest Paid

10. Other Expenses 9.75 1.17 10.92

11. Management Overhead 2.79 0.09 2.88

12. Capital Expenditure 7.71 0.04 7.75

13. Payment for Other Projects 19.54 5.60 25.14

Total Outflow 1,577.46 139.56 1,717.02

Closing Balance 234.86 207.01 207.01

March 3,2009 to April

30, 2009

Table 2: Revenue Versus Cost

Project Object Actual Costs (in cr) Revenue (in cr)

HS/CR 2,312.27 3,379.40

Onshore 332.86 1,458.92

Offshore 1,210.10 1,350.41

Civil 695.48 570.06

Others 73.84


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Inventory Management: Inventory constitutes a sizeable part of the total current assets ofthe company. The popular control techniques which are used by Reliance Infrastructure formitigating the cost and increasing the benefits of optimum inventory holding are high seasale and sale in transit. RIL maintains inventory only of items like steel and cement whichare necessary for its projects. An ageing schedule was prepared in order to segregate theinventory items under the categories:

Fast Moving Stock: An item in the warehouse for less than six months has beenput under this category (Table 3).

Normal Moving Stock: An item in the warehouse for more than six months butless than a year has been put under this category (Table 4).

Slow Moving Stock: An item in the warehouse for more than a year has been putunder this category (Table 5).

The following data shows percent of items under these categories and the amountassociated with them and there has been also a need felt to have comparative study to knowthe amount associated with them (Table 6) This lead to learn the reasons behind less inventorycosts for RIL and the process through which it manipulates the condition in its favor.

It can be seen from the data that the highest percent is that of slow moving stock andleast is of fast moving stock. The collated data provides a holistic view of the movementof stocks. Although, the inventory items i.e. steel and cement are more or less used in everyproject so excess of one is used to compensate for any deficiency in other projects.

Table 3: Ageing Schedule for Fast Moving Stock

Description Fast Moving Stock (%)

Metal SS Sheet 6 mm 41,442,833.85 (18.13093)

Metal CS Sheet 12 mm 1,966,485.99 (0.860323)

Metal CS Sheet 20 mm 1,154,595.30 (0.505127)

Metal Steel Sheet 5 mm IS2062 GRB 1,672,800.90 (0.731838)

Metal Steel Beam MS 350 140 mm 52.4 kg/m 49,385.37 (0.021606)Metal Steel Beam MS 400 140 mm 563,503.41 (0.246529)Metal Steel Sheet 32 mm IS2062 GRB 343,739.83 (0.150384)

Metal Steel Beam MS 600 220 mm 122.4 kg/m 68,361.92 (0.029908)BLDG Steel Reinforced FE500 8 mm 574,695.80 (0.251425)

BLDG Steel Reinforced FE500 16 mm 2,469,456.37 (1.080369)

Excise Duty 4,952,612.04 (2.166731)

Excise Duty Including Cess 20,413,239.37 (8.930641)

Total 75,671,710.15 (33.11)


Table 4: Ageing Schedule for Normal Moving Stock

Description Normal Moving Stock (%)

Cable ARM PVC 11 kV 2C 10 mm 2 AL 171,680.00 (0.075109)

Fuse HV Dropout 11 kV 100 A Base 10 A Fuse 18,808.05 (0.008228)

SWGR Switch 11 kV GOAB 400 A 1P O/D 14,795.00 (0.006473)

CT&PT Unit, F/11 kV, 300/5A, O/D Metering 26,041.37 (0.011393)

Metal Steel Beam MS 300 7.5 mm 44.2 kg/m 1,521,578.55 (0.665679)

Metal Steel Sheet 40 mm IS2062 GRB 771,659.11 (0.337595)





Metal MS Angle 100 100 10 mm IS2062 GRA 263,398.47 (0.115235)


Metal MS Channel ISMC 250 mm IS2062 GRA 2,923,202.57 (1.278879)


Metal Steel Beam MS 500 200 mm 79.4 GRA 2,207,914.90 (0.965946)


BLDG MATRL Cement Portland Ordinary GR43 1,428,569.78 (0.624989)

BLDG MATRL Block Concrete Admixture 2,833,742.34 (1.239741)

METAL Steel Beam ISMC 75 1,212,995.85 (0.530677)

Metal MS Channel ISMC 125 75 mm 1,073,458.43 (0.46963)

Metal MS Channel ISMC 100 mm 1,317,424.75 (0.576364)

BLDG MATRL Cement Portland Pozzolana 15,472,623.01 (6.769158)

Metal Steel Beam 250 125 mm 37.3 kg/m 1,799,273.36 (0.787169)

Grout, Nonshrink (CONBEXTRA GP2) 57,044.80 (0.024957)

Metal MS Angle 110 110 10 mm IS2062 GRA 1,665,697.10 (0.72873)

BLDG Steel Reinforced FE500 10 mm 372,378.13 (0.162913)



Supply of Vibration Isolation System 3,969,211.68 (1.736501)

Total 61,070,347.75 (26.72)


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Table 5: Ageing Schedule for Slow Moving Stock

Description Slow Moving Stock (%)

JNT KIT HS STRT 11 kV 3C 300 mm2 XLPE 20,616.00 (0.009019)

ELINS Meter Trivector 3 PH 3 W 5 A Static 4,271.63 (0.001869)

ELINS Panel APFC 300 kVAR 35 kA 375,768.48 (0.164396)

CONN Earth PIPE GI PERFO 40 mm 2.5 m 49,389.78 (0.021608)

Cable INSUL PIN 11 kV 10 kN Creep 280/320 mm 14,936.05 (0.006534)

Cable INSUL DISC 11 kV 70 kN Creep 280/320 mm 47,257.56 (0.020675)

ELINS Meter Energy 3PH 4 W-/5 A Static 38,387.70 (0.016794)

Cable INSUL DISC Hardware DOG 11,712.87 (0.005124)

Fuse, Drop Out, 11 kV, 400 A Base, 200 A Fuse 16,023.48 (0.00701)

Channel, TYP:11GB3, F/Mounting Goab Switch 16,716.00 (0.007313)

CONN Earth Electrode MS 40 mm 8,855,003.71 (3.873998)

Junction Box 4WAY F/ SP33 Steel Pole 58,033.36 (0.025389)

Metal MS Angle 25 25 3 mm 1,176,000.00 (0.514491)



Metal MS Sheet 6 mm Chequered IS2062 GRB 323,398.18 (0.141484)

Metal MS Angle Different Sizes 92,551.84 (0.040491)






Metal Steel Column MS 305 305 mm 97 GRA 147,976.59 (0.064739)

Metal Steel Column MS 254 254 mm 73 GRA 1,004,812.39 (0.439598)

Metal MS Bar Round TMT 28 mm IS1786 FE415 15,114,845.47 (6.612633)

Metal MS Bar Round TMT 32 mm IS1786 FE415 12,098,614.95 (5.293054)

Metal Steel Column MS 203 203 mm 71 kg/m 1,359,406.98 (0.59473)



Total 91,833,251.26 (40.17)


Table 6: Comparison of Ageing Schedule for All Three Types of Stock

Fast Moving Stock (%) Normal Moving Stock (%) Slow Moving Stock (%)

41,442,833.85 (18.13093) 171,680.00 (0.075109) 20,616.00 (0.009019)

1,966,485.99 (0.860323) 18,808.05 (0.008228) 4,271.63 (0.001869)

1,154,595.30 (0.505127) 14,795.00 (0.006473) 375,768.48 (0.164396)

1,672,800.90 (0.731838) 26,041.37 (0.011393) 49,389.78 (0.021608)

49,385.37 (0.021606) 1,521,578.55 (0.665679) 14,936.05 (0.006534)

563,503.41 (0.246529) 771,659.11 (0.337595) 47,257.56 (0.020675)

343,739.83 (0.150384) 2,145,267.52 (0.938539) 38,387.70 (0.016794)

68,361.92 (0.029908) 1,975,718.58 (0.834362) 11,712.87 (0.005124)

574,695.80 (0.251425) 1,111,247.72 (0.486163) 16,023.48 (0.00701)

2,469,456.37 (1.080369) 1,323,356.36 (0.578959) 16,716.00 (0.007313)

263,398.47 (0.115235) 8,855,003.71 (3.873998)

819,958.57 (0.358726) 58,033.36 (0.025389)

2,923,202.57 (1.278879) 1,176,000.00 (0.514491)

7,893,316.50 (3.453267) 1,266,579.45 (0.554127)

2,207,914.90 (0.965946) 1,203,653.43 (0.526589)

2,587,646.10 (1.132076) 323,398.18 (0.141484)

1,428,569.78 (0.624989) 92,551.84 (0.040491)

2,833,742.34 (1.239741) 322,547.12 (0.141112)

1,212,995.85 (0.530677) 81,726.52 (0.035755)

1,073,458.43 (0.46963) 806,185.05 (0.3527)

1,317,424.75 (0.576364) 1,381,384.80 (0.604346)

15,472,623.01 (6.769158) 273,347.21(0.119587)

1,799,273.36 (0.787169) 147,976.59 (0.064739)

57,044.80 (0.024957) 1,004,812.39 (0.439598)

1,665,697.10 (0.72873) 15,114,845.47 (6.612633)

372,378.13 (0.162913) 12,098,614.95 (5.293054)

3,137,034.58 (1.372429) 1,359,406.98 (0.59473)

3,878,507.04 (1.696818) 1,041,453.27 (0.455628)

3,969,211.68 (1.736501) 41,707,430.92 (18.24669)

20,413,239.37 (8.930641) 4,952,612.04 (2.166731)

50,305,858.74 (22.008) 81,483,587.12 (35.6485) 96,785,863.30 (42.343)


59

Status of Working Capital: The net working capital has decreased from 2006 to 2009 (Table 7).The liabilities has increased whereas assets have decreased. We can see that decrease in currentassets is mostly in cash and loans and advances. This marks poor on the liquidity positionof the company as well. And also indicates that the company is not taking any loans or askingfor advance payments from its clients thus reduction in loans and advances.

Ratio Analysis: Credit manager will calculate a few key ratios to interpret whether accountsreceivable are under control or in danger. Further he should take a long-term as well as shortterm approach to the business. Profitability (Tables 8 to 12) of the firm largely depends uponthe operational and financial structure of the company, when these two structures are strongenough there is no need to worry but if the financial structure is weak and operational isgood, company may have to redesign its capital structure again, the situation will worsenif the operational structure is not good and financial structure is good, in such a case pooroperational structure will soon eat into the hitherto financial structure. According toHrishikesh Bhattacharya,5 Although working capital management, particularly its receivablescomponent, apparently takes on a short term approach, commitment to a particularreceivables policy and the customer-relationship that emanates from it are long-term in natureis strong, then chance of its revival is bleak. The poor operating structure would soon eatinto the hitherto good financial structure.

Operating ManagementFixed Assets Turnover Ratio

The ratio is used to evaluate the long-term state of the business. For a capital intensive firmlike RIL, the ratio should be above 5, but it has remained below 5 for the studied period.

Table 7: Calculation of Working Capital

Particulars 2005-06 2006-07 2007-08 2008-09

Current Assets

Inventories 295.05 353.09 300.29 440.68

Debtors 1,092.79 930.96 1,351.41 1,523.33

Cash and Bank Balance 5,652.90 6,045.37 87.65 251.01

Loan and Advances 3,161.69 1,170.11 645.58 1,012.05

Other Current Advances 312.90 140.91 6,636.53 5,576.56

A. Total (Gross Working Capital) 10,515.33 8,640.44 9,021.46 8,803.63

Current Liabilities

Provisions 643.14 409.61 778.43 766.25

Current Liability 1,570.82 1,478.14 2,599.38 4,655.50

B. Total 2,213.96 1,887.75 3,377.81 5,421.75

Net Working Capital (A B) 8,301.37 6,752.69 5,643.65 3,381.88

5 Hrishikesh Bhattacharya (2009), Working Capital Management: Strategies and Technique, p. 16, Chapter 1,2nd Edition, PHI Learning.


Table 8: Profitability Ratios

Profitability Ratios March 2009 March 2008 March 2007 March 2006 March 2005

Operating Margin 4.50 8.49 8.64 19.27 16.18

Gross Profit Margin 1.96 4.96 4.46 8.73 4.65

Net Profit Margin 10.73 15.34 12.43 14.39 11.64

Adjusted Cash Margin 8.93 11.41 12.71 23.83 17.90

Reported Return on Net Worth 10.81 10.57 9.27 9.24 10.36

Return on Long-Term Funds 9.66 9.67 9.45 9.04 5.85

Return on Investments 12.50 12.10 7.20 7.40 6.20

Table 9: Leverages Ratios

Leverages Ratios March March March March March2009 2008 2007 2006 2005

Long-Term Debt/Equity 0.14 0.06 0.16 0.41 0.71

Total Debt/Equity 0.69 0.48 0.67 0.60 0.74

Owners Fund as Percentage 58.96 67.19 59.59 62.23 57.31of Total Source

Fixed Assets Turnover Ratio 1.40 0.99 0.97 0.72 0.80

Table 10: Liquidity Ratios

Liquidity Ratios March March March March March

2009 2008 2007 2006 2005

Current Ratio 1.55 2.47 3.93 4.25 3.94

Current Ratio (Inc. ST Loans) 0.74 1.06 1.51 2.09 3.58

Quick Ratio 1.45 2.37 3.82 4.07 3.75

Inventory Turnover Ratio 55.96 40.26 32.87 19.60 31.27

Table 11: Component Ratios

Component Ratios March March March March March

2009 2008 2007 2006 2005

Material Cost Component 44.32 39.50 26.96 27.67 24.57(Percentage Earnings)

Selling Cost Component 1.79 2.36 2.32 0.21 0.23

Exports as Percentage of Total Sales 0.96 0.01 0.02

Long-Term Assets/Total Assets 0.63 0.53 0.27 0.23 0.24

Bonus Component 3.57 3.43 3.53 3.80 4.35in Equity Capital (%)


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Although the ratio is showing an increasing trend throughout, this can be attributed to asubstantial increase in its net sales. The low ratio can also be because of poor liquidity,which is a case during the growth phase of a firm. It is also evident in growing currentliabilities and reducing assets of the company through years.

Return on Investments (ROI)

The ultimate strength of a business lies not only on a consistently good margin on salesbut also on sales generation capacity of the assets of the firm. In fact, this is the mostcomprehensive ratio for judging the operating strength of a business, as it translates thefinancial objective of a firm into such operating terms as selling prices, profit margins, salesturnover, production costs and capital equipments. Performance of the company against astandard minimum of 12% is encouraging. The trend is also on the increase which furtherputs the operating strength of the company on the positive side.

Gross Profit Ratio

This ratio of Reliance Infrastructure Limited has shown a downward trend. This is so becausesome of its projects are in their initial stages, much of funds has been used in these projects,but there has not been any revenue generation because of them, thus the gross profit ratiohas been declining.

Equity-Total Debt Ratio

A high long-term debt equity ratio is unfavorable because it indicates possible difficulty inmeeting long-term debt obligations. Reliance Infrastructure has a current ratio of 0.14 whichhas increased from 0.06. It is less than the industry average of 0.33.

Inventory Turnover Ratio

Reliance has an inventory turnover ratio of 12.92 which is higher than the industry averageof 8. This depicts the efficiency of the firm in managing its inventory and the speed withwhich it travels within the company to produce sales.

Receivables Turnover Ratio and Average Collection Period

The ratio (Table 13) shows an increasing trend and average collection period has alsodecreased. This tells us that trade credit management is improving in the company and itis better for the liquidity position of the company as well.

Table 12: Coverage Ratios

Coverage Ratios March March March March March

2009 2008 2007 2006 2005

Interest Cover 3.75 5.44 4.47 3.41 3.65

Total Debt to Owners Fund 0.74 0.61 0.68 0.49 0.7

Financial Charges Coverage Ratio 4.25 4.13 4.76 6.88 7.30

Financial Charges Coverage Ratio (Post-Tax) 5.19 5.23 5.16 6.57 8.41


Payable Turnover Ratios and Average Payments PeriodCreditors turnover ratio (Tables 14 and 15) is showing increasing and decreasing trend bothand payable period is also first increasing and then decreasing.

Table 13: Details of Debtors, Creditor and Sales

2008-09 2007-08 2006-07 2005-06 2004-05

Debtors 1,523.33 1,351.41 1,209.88 1,092.79 930.96

Sales 9,696.53 6,364.25 5,709.91 4,012.64 4,133.72

Creditors 1,618.64 1,106.86 1,160.65 662.05 739.09

Table 14: Turnover Ratios

2008-09 2007-08 2006-07

Debtors Turnover Ratio 6.75 4.970 5.314

Creditors Turnover Ratio 5.42 3.090 4.712

Average Collection Period 54.11 73.447 68.691

Average Payable Period 67.33 118.126 77.459

Table 15: Details of Sales, Debtors and Bad Debts

2008-09 2007-08 % Change

Debtors 1,523.33 1,351.41 13

Bad Debts 92.94 34.47 170

Sales 9,696.53 6,364.25 52

In Reliance Infrastructure debtors are the major portion of working capital. As explainedearlier the company uses ageing method to collect its money from debtors. Since the projectshave long gestation period, company has to arrange money from somewhere, and its theirpolicy to collect money from the client after regular interval after completion of a certainstage of work. In lieu of these policies we can see that the company has brought its currentratio and quick ratio to the industry standard. Inventory turnover ratio is very high as thecompany doesnt store any inventory. As soon as the material reaches port they are transferredto the clients store houses as per contract to save on taxes. The major inventory comprisesof steel and cement which are used in different projects. Comparing debtors and creditors,earlier debtors were higher than creditors, because BBUs were different for creditors anddebtors. However, now the company has changed its policies and is trying to match up BBUsfor both so that they have lower creditor than debtor, result is apparently visible in the annualreport of 2008-09. The companys creditors collection period is higher than debtors whichis a good sign.

Credit Scoring

A credit score is calculated for RIL based on the ratios analyzed above. But there are fewmajor points which a user of credit scoring model should bear in mind.


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No credit scoring model has universal applications. So, a firm must develop itsown model and update it periodically with the experience gathered from its usage.

Ratios or set of ratios also do not enjoy universality. The model developed shouldbe put to constant scrutiny and review to perfect the ratio set.

Trend of a ratio is more important than its absolute value. Therefore, ratios forfive years have been taken for eight ratios and three years for two in order to discernthe trend.

An objective credit scoring model should be supplemented by subjective analysis.Complete reliance on credit scoring model may defeat the very purpose of creditscoring as an instrument of credit decisions.

Framework for a Credit Scoring Model (Table 16) Ten ratios have been taken for the model and divided in two parts: operating

management and financial management.

Table 16: Credit Scoring

Operating Management

1. Fixed Assets Turnover Ratio 0.83 1.12 5 0.43 0.43

2. Return on Investments 6.93 10.6 12 0.41 0.82

3. Gross Profit Ratio 5.95 3.79 20 0.31 0.93

Sub Total (A) 1.32/6 = 0.22

Financial Management

1. Total Debt Equity Ratio 0.67 0.61 0.33 0.76 0.76

2. Long-Term Debt Equity Ratio 0.43 0.12 0.60 1.52 3.04

3. Current Ratio 4.04 2.65 1.50 0.42 1.26

4. Inventory Turnover Ratio 27.91 43.03 8.00 4.92 19.68

5. Interest Coverage Ratio 3.84 4.55 1.75 1.78 8.90

6. Receivables Turnover Ratio 5.14 5.86 6.00 0.12 0.72

7. Creditors Turnover Ratio 3.9 4.26 4.00 0.16 1.12

Sub Total (B) 35.48/28 = 1.27

Credit Score= [A+B]/2 = 0.745

Categorization of trade credit customers

Category Excellent Very Good Good Fair Doubtful Poor

Credit Score 1.00-0.85 0.84-0.74 0.73-0.63 0.62-0.52 0.51-0.41 0.40 andBelow

S. No.and

WeightRatio MA1 MA2 S Score

WeightedScore


Moving Average (MA1) is calculated for first three years and then MA2 is calculatedfor last three years.

Framework is presented in Exhibit 1. The serial number is also the weight assigned.Weights are assigned according to the importance given to the ratios as a corporatemanager. It can be different for a loan officer.

Score of RIL is calculated by using the following formula:

2)( 1

t

tt

SMMSM

where Mt = Moving average for current period.

Mt1 = Moving average for immediately preceding period.

S = Standard value of ratio.

It is clear that with a credit score of 0.745, RIL falls in the category of Very goodcustomers and will be considered creditworthy by credit givers.

Comparison of RIL with Its Competitors: If we compare the current ratios (Table 17 andFigure 1) of RIL with the rivals it can be seen that during last five years RIL has broughtdown the ratio to 3.94:1.55.

Table 17: Current Ratio

March 2009 March 2008 March 2007 March 2006 March 2005

REL Infra 1.55 2.47 3.93 4.25 3.94

Adani Power 1.78 0.89 0.21 0.46 6.00

NTPC 2.89 2.36 2.42 2.11 1.72

Tata Power 2.10 2.04 2.25 2.22 1.90

Figure 1: Comparative Current Ratio

7

6

5

4

3

2

1

0March2005

March2006

March2007

March2008

March2009

REL Infra Adani Power NTPC Tata Power


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Quick Ratios: So far, as this ratio (Table 18 and Figure 2 ) is concerned RIL is showinga decreasing trend during last five years but Adani powers ratio is showing decreasing trendtill year 2007 but after that it has gone up.

Table 18: Quick Ratio


REL Infra 1.45 2.37 3.82 4.07 3.75

Adani Power 1.78 0.89 0.21 0.46 6.00

NTPC 2.59 2.16 2.18 1.84 1.44

Tata Power 1.77 1.75 2.00 1.85 1.64

Table 19: Comparative Financial Data for March 2010

RIL NTPC Power Grid Tata Power

Sales 10027.26 48221.32 7127.45 7098.27

PAT 1151.69 8728.20 2040.94 947.65

Equity 244.91 8245.46 4208.84 237.33

OPM% 19.04 31.82 86.28 30.20

NPM% 11.49 18.10 28.63 13.35

RONW 470.25 13.98 12.80 9.48

EPS 51.11 10.59 4.85 40.77

CEPS 60.08 13.80 9.55 60.07

Figure 2: Comparative Quick Ratio

REL Infra Adani Power NTPC Tata Power

March2005

March2006

March2007

March2008

March2009

7

6

5

4

3

2

1

0

Comparative Financial Information: During March 2010 RIL turnover (Table 19) was secondhighest after NTPC and EPS of RIL was highest among all in March 2010.


Some Key Learnings The study of contract between RIL and HPGCL lead to learning important terms

like bank guarantee, liquidation deposits, turnkey contract.

Each project is compared with previous ones in order to not make the same mistakesand to take out key points to be able to negotiate with the same client. Here,Hisar was compared with Yamunanagar project since both are from the same client.

One of the assignments was to compare the payments done by client and paymentdone to the vendors, record the mismatch and prepare a summary. This showsthe importance of proper documentation and an information system.

The difference in approach towards different clients viz., private, public,government.

RIL pays attention to paying its vendors on time. Earlier the payment from clientand to the vendors was back to back on a weekly basis. But then due to sometechnical glitches client deferred its payments, but RIL continued paying itsvendors. In fact, an assignment required us to calculate the percent of billing doneby the vendors. If the purchase order has been given and still the billing is notcomplete, respective vendors were contacted to know the reason. This tells thatthe company wants to keep a good relationship with their vendors, which canbe helpful in future to ask for deference in payment.

Importance of documents like lorry receipt for sale in transit or bill of lading andagreement for high sea sales.

ConclusionWorking capital is an important source of fund for the company in the absence of which,the company may not fulfil its obligations on time. Therefore, it should be given dueimportance and treated as an integral part of overall corporate management functions. It isalso very important to evaluate cause and effect relationship of every activity of themanagement to assess its impact on working capital. During the course of the project, impactof various causes is seen on the ongoing projects. Type of client, type of project, other ongoingprojects and many other events affect the working capital of a company. Management cancontrol the cost of bank interest up to some extent to support additional sales growth orinvestments by negotiating with their vendors and effective working capital management.Reliance Infrastructure has good industrial relationship and it has worked to maintain this.It has also ventured into many turnkey projects of the government, which has increased thegoodwill of the company. The cash and bank balance have decreased but this can be attributedto mega power projects taken over by the company. The company is following a conservativepolicy in maintaining its current assets and it can be said that the overall performance ofthe company is good with an effective working capital management being an integral partof its system.

Recommendations If the days past due is 30 days, the situation is serious but still may not be out

of control. Past payment records can be examined. If it is a regular feature,


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the company may decide that no further than a mild warning letter will do.If, however, the delay is occurring for the first time, a direct contact with thecustomer is required to know the reasons behind the unusual delay.

If the days past due is more than 60 days, the situation is serious. Further topmanagement should be contacted and future processes should be stopped.The credit manager should have patience and try to find out new

If the payment is due for more than 90 days, all deliveries should be stopped.The account may be on the brink of becoming bad debt. It has to be closelymonitored with a view to collecting as much payment as possible.

The goal must be that all priority outflows be met fully out of operating cash flowswhile all discretionary outflows be met with the balance in conjunction with thefinancial flows.

Mismatch between the current receipts and current payments should be reducedas much as possible.

Limitation of the StudyThe study and analysis is based on the figures available in the annual report of the organizationand quarterly results published by the company. Time has been again a constraint in thisstudy for covering huge infrastructure sector.

Other websiteswww.ntpc.com

www.tatapower.com

www.adanipower.com

1: Balance Sheet for the Period 2005-2009

Annexure

Sources of Funds

Owners Fund

Equity Share Capital 226.07 235.62 228.57 212.36 185.61

Share Application Money 783.49 783.49 88.24 568.01

Preference Share Capital

Reserves and Surplus 10,308.14 10,024.16 8,412.74 6,820.51 4,834.10

Loan Funds

Secured Loans 1,848.33 1,125.00 1,435.00 1,919.81 785.00

Unsecured Loans 5,483.85 3,884.04 4,423.32 2,347.12 2,953.67

Total 18,649.88 16,052.31 14,499.63 11,388.04 9,326.39



Annexure (Cont.)1: Balance Sheet for the Period 2005-2009

March 2009

Uses of Funds

Fixed Assets

Gross Block 6,922.69 6,396.14 5,898.36 5,470.61 5,172.97

Less: Revaluation Reserve 589.74 643.69 697.93 752.17 752.17

Less: Accumulated Depreciation 3,582.52 3,328.56 3,082.49 2,814.55 2,452.85

Net Block 2,750.43 2,423.89 2,117.94 1,903.89 1,967.95

Capital Work-in-Progress 564.42 568.92 288.49 217.65 192.19

Investments 12,147.10 7,664.36 2,511.88 1,192.74 696.22

Net Current Assets

Current Assets, 8,972.41 9,073.85 12,849.04 10,559.79 8,668.18Loans and Advances

Less: Current 5,784.48 3,678.71 3,267.72 2,486.03 2,198.15Liabilities and Provisions

Total Net Current Assets 3,187.93 5,395.14 9,581.32 8,073.76 6,470.03

Miscellaneous ExpensesNot Written

Total 18,649.88 16,052.31 14,499.63 11,388.04 9,326.39

Notes:

Book Value of Unquoted 5,130.99 4,336.92 942.53 189.31 605.63Investments

Market Value of Quoted 16,398.06 33,986.71 1,601.17 1,007.47 97.78Investments

Contingent Liabilities 3,934.79 3,237.54 1,992.48 658.86 582.65

Number of Equity Shares 2260.70 2365.30 2285.30 2123.20 1855.73Outstanding (Lakh)

March 2008 March 2007 March 2006 March 2005

2: Profit Loss Account for the Period 2005-2009

Income

Operating Income 9,640.16 6,331.50 5,752.47 3,963.97 4,156.73

Expenses

Material Consumed 4,272.53 2,501.51 1,601.86 1,031.93 1,030.04

Manufacturing Expenses 3,308.95 2,403.59 2,919.43 1,710.82 2,036.25

Personnel Expenses 536.62 367.95 290.35 212.80 201.68

Selling Expenses 173.26 149.89 133.48 8.35 9.84



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Reference # 27J-2011-06-04-01

3: Cash Flow Details for the Period 2005-2009

Profit Before Tax 1,193.43 1,151.70 872.37 781.47 569.64

Net Cashflow-Operating Activity 892.64 246.97 1,118.65 380.87 420.89

Net Cash Used in Investing Activity 992.67 2,611.77 6,824.35 2,103.60 1,985.68

Net Cash Used in Fin. Activity 263.16 276.53 2,228.72 1,330.26 2,778.64

Net Inc./Dec in Cash and Equivalent 163.13 2,088.27 3,476.98 393.37 5,185.21

Cash and Equivalent Begin of Year 87.88 2,175.92 5,652.90 6,045.37 860.16

Cash and Equivalent End of Year 251.01 87.65 2,175.92 5,652.00 6,045.37


Annexure (Cont.)2: Profit Loss Account for the Period 2005-2009

March2009

March2008

March2007

March2006

March2005

Administrative Expenses 914.40 371.00 310.24 235.88 206.32

Expenses Capitalized

Cost of Sales 9,205.76 5,793.94 5,255.36 3,199.78 3,484.13

Operating Profit 434.40 537.56 497.11 764.19 672.60

Other Recurring Income 971.07 738.58 695.22 555.24 311.84

Adjusted PBDIT 1,405.47 1,276.14 1,192.33 1,319.43 984.44

Financial Expenses 330.50 308.76 250.32 191.88 134.82

Depreciation 244.88 222.94 240.06 417.83 479.26

Other Write Offs

Adjusted PBT 830.09 744.44 701.95 709.72 370.36

Tax Charges 126.89 160.37 122.07 50.58 49.50

Adjusted PAT 703.20 584.07 579.88 659.14 320.86

Non-Recurring Items 310.12 258.77 103.05 14.22 61.00

Other Noncash Adjustments 127.41 241.79 157.92 65.14 5.46

Reported Net Profit 1,140.73 1,084.63 840.85 579.78 387.32

Earnings Before Appropriation 1,915.59 1,443.91 1,116.78 780.09 509.87

Equity Dividend 157.69 147.73 121.12 104.62 87.21

Preference Dividend

Dividend Tax 26.80 25.11 20.58 14.87 11.74

Retained Earnings 1,731.10 1,271.07 975.08 660.60 410.92

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