project report final sjvnl

A STUDY ON RATIO ANALYSIS

WITH REFERENCE TO

SATLUJ JAL VIDYUT NIGAM LIMITED

SUBMITTED IN PARTIAL FULFILMENT

FOR THE AWARD OF DEGREE IN

MASTERS OF BUSINESS ADMINISTRATION

NATIONAL INSTITUTE OF TECHNOLOGY

HAMIRPUR

SUBMITTED BY:

ASHISH BANYAL

MBA 3RD SEMESTER

ROLL NO: 09MB18

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CERTIFICATE

This is to certify that Mr. ASHISH BANYAL of NATIONAL INSTITUTE

OF TECHNOLOGY, HAMIRPUR has successfully completed the project work titled

“ FINANCIAL ANALYSIS ” in partial fulfillment of requirement for the award of POST

GRADUATION DIPLOMA IN BUSINESS MANAGEMENT prescribed by the

NATIONAL INSTITUTE OF TECHNOLOGY, HAMIRPUR

This project is the record of authentic work carried out during the academic

year (2009 – 2011).

Place: Jhakri Sh. J.C.SHARMA

Date: (TRAINING INCHARGE)

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PREFACE

Decision making is a fundamental part of the research process. Decisions regarding that what

you want to do, how you want to do, what tools and techniques must be used for the

successful completion of the project. In fact it is the researcher’s efficiency as a decision

maker that makes project fruitful for those who concern to the area of study.

Basically when we are playing with computer in every part of life, I used it in my project not

for the ease of my but for the ease of result explanation to those who will read this project.

The project presents the financial analysis of SATLUJ JAL VIDYUT NIGAM LIMITED.

I had toiled to achieve the goals desired. Being a neophyte in this highly competitive world of

business, I had come across several difficulties to make the objectives a reality. I am

presenting this hand carved efforts in black and white. If anywhere something is found not in

tandem to the theme then you are welcome with your valuable suggestions.

I believe that my research project report will have been very helpful to the practical

knowledge in the field of financial analysis of any organization.

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DECLARATION

I Mr. ASHISH BANYAL hereby declare that this project is the record of

authentic work carried out by me during the academic year 2009 – 2011 and has not been

submitted to any other University or Institute towards the award of any degree.

Signature of the student

(ASHISH BANYAL)

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ACKNOWLEDGEMENT

These eight weeks at SATLUJ JAL VIDYUT NIGAM LIMITED (SJVNL) have been a great

learning experience. It has been one of the most enriching experience for me to work along

with the employees of one of the best managed organizations, a company rightly considered

as one of the Navratna’s in the public sector of the country.

I am very thankful to Mr. VIVEK BHATNAGAR , Sr. Manager (Finance & Accounts) who

has given me full opportunity to learn the tendering operations executed here. I sincerely

thank the entire staff of SJVNL without whose help we would not be able to complete our

project.

I also like to convey my thanks and gratitude to Dr. P C RYHAL, HOD, NIT HAMIRPUR,

for the guidance and interest evinced throughout the preparation of this project.

I take this opportunity, also to express my love and sincere thanks to my family members and

friends for their support and advice during various stage of work

(ASHISH BANYAL)

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CONTENTS

1. INTRODUCTION TO SUTLUJ JAL VIDYUT NIGAM LTD.

1.1 MISSION & VISION1.2 ORGANIZATIONAL STATUS1.3 NATHPA JHAKRI PROJECT1.4 PROJECT BENEFITS1.5 R&R ACTIVITIES1.6 ENVIRONMENT POLICY1.7 AWARDS & ACHIVEMENTS 1.8 WELFARE ACTIVITIES

2. RESEARCH METHODOLOGY

1 OBJECTIVES OF THE PROJECT REPORT 2 METHODOLOGY

3. ANALYSIS OF FINANCIAL STATEMENTS OF SJVNL

3.1 MEANING OF FINANCIAL STATEMENTS 3.2 TOOLS OF FINANCIAL STATEMENTS

3.2.1 RATIO ANALYSIS 3.2.2 COMPARATIVE FINANCIAL STATEMENTS

4. SUMMARY

5. CONCLUSION

6. SUGGESTION & RECOMENDATIONS

7. LIMITATION OF STUDY

8. BIBLIOGRAPHY

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Chapter 1

INTRODUCTION TO SATLUJ JAL VIDYUT NIGAM LTD

SATLUJ JAL VIDYUT NIGAM LIMITED, a Public sector undertaking is

abbreviated as SJVNL which was previously known as NATHPA JHAKRI POWER

CORPORATION LIMITED. The Satluj Jal Vidyut Nigam Ltd. was incorporated on May 24,

1988 as a joint venture of Government of India and Government of Himachal Pradesh. Its

purpose is to plan, investigate, organize, execute, operate and maintain Hydro- Electric power

projects in Satluj river basin in the state of Himachal Pradesh and at any other place. The

Government of India holds a larger stake in the joint venture than the Government of

Himachal Pradesh. The equity participation of the Governments stands in the ratio of 3:1.

The 1500 MW Nathpa Jhakri Hydro-Electric Project (NJHEP) is the first

project undertaken by SJVNL for execution, a public sector undertaking which was

previously named as NJPC. It has started generating the power in the year 2003, and

providing the same to the Northern state like Punjab, Haryana, Delhi, J&K, H.P, Rajasthan,

Chandigarh, Uttar Pradesh, Uttranchal since then. The name NJPC was derived from the two

villages Nathpa (Distt. Kinnaur) and Jhakri (Distt. Shimla) , in whose vicinity aforesaid

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project was being constructed. But the name has now been changed to Satluj Jal Vidut Nigam

Limited (SJVNL) to take up all the projects falling in the basin of river Satluj in Himachal

Pradesh. Nathpa Jhakri project was conceived as a run of river scheme on river Satluj in

1960’s. Project investigations were started in a big way as far back as 1970’s under central

assistance scheme. The project with a smaller installation of 1020mw (6x170) was techno-

economically cleared by the central water and power commission in 1974, with the power

house located at Jhakri and for design discharge of 284 meter cube/sec. The installation was

limited to 1020mw because a sizable portion of the energy potential of the site was then

considered to be utilized at the site i.e. about 68% in a dependable year and 52% in a mean

year. As it involved a very large diameter (10.15m dia) tunnel, 27.85 km long, in the

Himalayas, it was also mooted that the scheme be split into two stage development i.e. to

construct one power house at Manglad, an intermediate tributary and another powerhouse at

Jhakri.

On detailed examination, the proposal was not found feasible on the geographical

considerations and however, could not take for want of funds. Subsequently, the Government

of India agreed to the execution of this project as a joint venture with Himachal Pradesh, with

dispensation of 12% free power to Himachal Pradesh as a home state. The project had also

been posed to the World Bank by the Government of India in 1985 for financial assistance. A

Preparatory Mission of the bank visited the project site in July, 1985 and later held

discussion, for optimizing power sizing both in regard to the unit size and total capacity

carried out in review by the bank. In addition to the financial assistance from the World

Bank, SJVN has also been financed as loan by a Consortium of European Banks, the Power

Finance Corporation ( PFC ) and various domestic commercial banks.

The company is formed with the Authorized Share capital of is Rs. 4500 crore and its

issued and paid up capital is Rs 4108 crore as on date. The Registered Office of the company

is at Shimla in the state of Himachal Pradesh.

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Besides the social and economic upliftment of the people in its

vicinity, the 1500 MW NJHEP has been designed to generate 6612 MU of electrical energy

in a 90% dependable year with 95 % machine availability. It is also providing 1500 MW of

valuable peaking power to the Northern Grid.

Out of the total energy generated at the bus bar, 12 percent is supplied free of cost to the

home state i.e. Himachal Pradesh. From the remaining 88% energy generation, 25% is

supplied to HP at bus bar rates. Balance power has been allocated to the beneficiary states /

UTs of Northern Region by Ministry of Power, Government of India.

Besides above, an indirect benefit has also accrued to the region

by way of increase in agriculture and industrial production. In addition, the project has

provided gainful employment to a large number of skilled and unskilled workers and has also

opened the landlocked hinterland by providing essential facilities such as schools, hospitals

etc. for the people of the area. Thus, 1500 MW NJHPS has ushered in the social and

economic upliftment of the persons living in the vicinity of the Project i.e. of society at large.

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MISSION:

Satluj Jal Vidut Nigam Ltd. is operating with a mission to plan, investigates, organize,

operate and maintain Hydropower Projects in the Satluj River basin of hydropower projects

in Himachal Pradesh and in any other state, which have potentials.

VISION:

The vision of the Company to make India fountainhead of hydropower and the energy

source of the future by re-organizing development with passion and professionalism for

sustainable viability of corporation on the bedrock of sound commercial principles.

OUR OBJECTIVES:

In the pursuit of above mission, the company had set for itself the following corporate

objectives:

Operating and maintaining power stations with maximum performance efficiency.

Establishing and following sound business, financial and regulatory policies.

Taking up of other hydro power projects.

Completion of the new projects allocated to SJVN in an efficient and cost effective

manner.

Use of the best project management practices for the project implementation by

applying latest universally accepted Project Management Techniques, and by enabling

its Engineers, to become certified Project Managers through further trainings.

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Dissemination of available in-house technical and managerial expertise to other

utilities / projects.

Creating work culture and work environment conducive to the growth and

development of both the organization and the individuals through introduction of

participative management philosophy.

Fulfilling social commitments to the society. Achieving constructive cooperation and

building personal relations with stakeholders, peers, and other related organization.

Striving clean and green project environment with minimal ecological and social

disturbances.

To strive for acquiring Nav Ratna Status.

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ORGANIZATIONAL STATUS:

Public Sector SJVN Limited, a joint venture of the Govt. of India and Govt. of Himachal

Pradesh, is a Central Public Sector Undertaking (CPSU) under the Ministry of Power. The

present authorized capital of SJVN is Rs. 4500 crores which is under revision to Rs. 7000

crores. The present installed capacity of SJVN is 1500 MW. The Corporation has achieved

many milestones in construction, operations and investigations activities of its projects during

the last five years.

A Mini Ratna Company

The Corporation has the distinction of being conferred with the much coveted status "Mini

Ratna: Category-I" status by Government of India within only four years of coming into

commercial operations.

Schedule 'A' Company

Meeting the criteria laid down by the Department of Public Enterprises and qualifying the

qualitative and quantitative parameters viz. investment, capital employed, net sales, profits,

employees, and also factors of national importance, complexities of problems faced, level of

technology adopted prospects for expansion and diversification, competitiveness etc., SJVN

has been upgraded as Schedule 'A' PSU.

FUTURE PORTENTS

After successful implementation, commissioning and operations of the country's largest 1500

MW Nathpa Jhakri Hydro Power Station, the Corporation is implementing a number of hydro

power projects in the state of Himachal Pradesh, Uttarakhand and Manipur besides in

neighboring countries viz. Nepal and Bhutan.

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With the support and guidance of Ministry of Power, Govt. of India, SJVN is thus emerging

as a rising star in the hydro power sector of the country. For its upcoming projects, the

Company proposes to make an investment of over Rs. 23,000 crore in the next 10 years. The

Company has about 4000 MW capacity projects lined up for commissioning by the year

2020.

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NATHPA JHAKRI PROJECT:

Introduction

The 1500 MW, Nathpa Jhakri Hydro Power Station – NJHPS (the largest underground hydro

- electric power Project) was the first project undertaken by SJVN for execution and has since

been commissioned during the 10th Plan.

Prior to formation of SJVN (NJPC), NJHPS was being executed by

Himachal Pradesh State Electricity Board (HPSEB). The generation component of 1500 MW

NJHPS was sanctioned in April 1989 for execution by SJVN (NJPC). SJVN (NJPC)

officially took over NJHPS on August 01, 1991, following an agreement between GOI and

GOHP during July 1991. However, the effective takeover of the NJHPS could result only

during February 1992, due to an agitation by the employees of HPSEB. The Major Civil

Works of NJHPS were awarded during June – Sep. 1993 and the construction works

commenced in early 1994.

Location

Nathpa Jhakri Hydro Power Station – NJHPS, is located in the state of Himachal Pradesh, on

the downstream of wangtoo Bridge and derives its name from the names of two villages in

the Project vicinity - Nathpa in district Kinnaur and Jhakri in district Shimla - in the interiors

of Himachal Pradesh. The Project was conceived as a run-of-river type hydro power

development, harnessing hydro-electric potential of the middle reaches of the river Sutlej, one

of the principal tributaries of the river Indus, in the south west Himalayas. The Project's Dam

has been constructed near village Nathpa and its Power House has been constructed on the

left bank of the river Satluj at village Jhakri. The power house site is about 150 km from the

nearest railhead (narrow gauge), Shimla. The Project stretches over a length of about 50 kms.

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from the Dam site to the Power House site, on the Hindustan-Tibet Road (NH-22), which

also connects the rail head to the Project.

SJVN abides by its moral responsibility for maintaining a safe

environment for all its employees and also those of its contracting agencies. The safety

measures adopted encompass the best codes and practices which are disseminated to all the

employees for ensuring compliance at all levels.

Safety Measures

Due attention is given to health and safety aspects in working areas and because of all such

efforts no untoward accident has been reported since commissioning of the project. Towards

this end, a separate Safety Department is functional at the Project. SJVN had already enrolled

as a corporate member of the National Safety Council (NSC) and availed of the pertinent

safety related information, manuals and literature from the NSC for educational use and

implementation. Safety related training programmes have also been organized in consultation

with NSC. Awareness about safety aspects within and outside the plant areas of the Project

are also imparted by the use of audio-visual methods, including, banners, posters, etc. Safety

related quizzes and other competitive events are also organized from time to time.

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SALIENT FEATURES :

The NJHEP project with an installed capacity of 1500 MW ( 6 X 250 MW ), envisaged

construction of the following major components :

A 62.50 m. high concrete Dam on Satluj river at Nathpa to divert 486 cumecs of water

through four Intakes.

An underground De-silting Complex, comprising four chambers, each 525 m. long,

16.31 m. wide and 27.5 m. deep, which is one of the largest underground complex for the

generation of hydro - power in the World.

A 10.15m dia. and 27.394 km. long Head Race Tunnel, which is one of the longest hydro

power tunnels in the World, terminating in a 21.60 m / 10.20 m dia and 301m deep Surge

Shaft.

Three circular steel lined Pressure Shafts, each of 4.90 m dia and 571 m to 622 m length,

each bifurcating into two near the Power House, to feed six generating units.

An underground Power House with a cavern size of 222 m x 20 m x 49 m having six

Francis Turbine Units of 250 MW each, to utilize a design discharge of 405 cumecs and

a design head of 428 m.

6 nos. vertical axis Francis turbines Generating Units, each of 250 MW, with the total

installed capacity as 1500 MW.

A 10.15 m dia and 982 m long Tail Race Tunnel to discharge the water back into the

river Satluj.

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PROJECT BENEFITS:

Besides the social and economic upliftment of the people in its vicinity, the 1500 MW

NJHEP has been designed to generate 6950.88 MU of electrical energy in a 90%

dependable year with 95 % machine availability. It is also providing 1500 MW of valuable

peaking power to the Northern Grid.

Out of the total energy generated at the bus bar, 12 percent is supplied free of cost to the

home state i.e. Himachal Pradesh. From the remaining 88% energy generation, 25% is

supplied to HP at bus bar rates. Balance power has been allocated to different states / UTs of

Northern Region by Ministry of Power, Government of India, as detailed ahead :

Sl. No.

StateAllocation

(In MW)

Percentage to the installed capacity

1 Haryana 64 4.27

2 Himachal Pradesh * 547 36.47

3 Jammu & Kashmir 105 7.00

4 Punjab 114 7.60

5 Rajasthan 112 7.47

6 Uttar Pradesh 221 14.73

7 Uttaranchal 38 2.53

8 Chandigarh 08 0.53

9 Delhi 142 9.47

10Unallocated quota at the disposal of the

Central Govt. **149 9.93

TOTAL 1500 100

IMPORTANT EVENTS:

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S.No.

Description Date

1. Approval of CEA for an installed capacity of 1020 MW at an estimated cost of Rs.538.38 crores Project to be executed by HPSEB

Feb, 1980

2. Environment Clearance June, 1980

3. Techno-economic clearance obtained from CEA for installed capacity of 1500 MW at an estimated cost of Rs.1649.17 crores at December, 1985 price level

May, 1986

4. Forest Clearance July, 1986

5 PIB Approval Jan, 1988

6. Formation of SJVN May, 1988

7. CCEA approval for installed capacity of 1500 MW March, 1989 at an estimated cost of Rs.1678.02 cores

March, 1989

8. Approval of GOI for execution of NJHPP (6X250 MW) at an estimated cost of Rs.1678.02 crores at September, 1988 price level by SJVN

April, 1989

9. Approval of GOI obtained for receiving the World Bank Assistance of US$ 437 million

April, 1989

10. Signing of the World Bank Loan Agreement May, 1989

11. Effectiveness of the World Bank Loan Jan, 1990

12. Agreement between the Union Minister of State for Power and NES, GOI and the Chief Minister, GOHP Signed

July, 1991

13. Officially take over of NJHPP by SJVN Aug, 1991

14. Effective take over of NJHPP delayed due to agitation By HPSEB Feb., 1992

15. Approval by PIB for RCE-I April, 1993

16. Approval by CCEA for RCE-I June, 1993

17. Major Civil Works Contracts awarded June, 1993

18. Award of Contract for Generating Unit and Associated Equipments Nov, 1994

19. Submission of Revised Detailed Project Report incorporating Revised Cost Estimate of Rs.7179.64 crores and Revised Commissioning Schedule of all six units by March, 2002 to CEA.

May, 1997

20. Approval of Revised Cost Estimates of Rs.7217.05 crores and Revised Commissioning Schedule of all the units of NJHPP by March, 2002 by CEA

Nov, 1997

21. Submission of application for re-categorization and extension of IBRD Loan closing date to the World Bank

Dec,1997

22. Re-categorization and extension of the IBRD Loan upto Dec.31, 1998 by the World Bank

Dec, 1997

23. Pre-PIB Memo for RCE-II submitted to MOP Jun, 1998

24. Pre-PIB Meeting held Jul, 1998

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25. PIB Clearance for RCE-II of Rs 7666.31 crores Nov, 1998

26. CCEA Clearance for RCE-II of Rs 7666.31 crores May, 1999

27. Submission of RDPR - Nov.,2001 incorporating RCE-III of Rs.9083.34 crores at Sept.,2001 price level to MOP/CEA/Planning Commission

Dec, 2001

28. CEA clearance for hard cost (Excluding Claims and Interest During Construction etc.) of RCE-III of Rs.6218.29 crores

Dec, 2002

29. Submission of Pre-PIB Memorandum incorporating RCE-III of Rs.8656.61* crores at Sept.,2002 Price Level to MOP for approval.

(* The reimbursement of cost for providing Inter Connection Facility (ICF) at Jhakri Switch Yard to M/s JHPL for Baspa Satge-II HE Project has been finalised by Central Electricity Authority (CEA) at Rs. 62.86 crores and has been ratified by the Board of Directors of SJVN, which is to be deducted from the Capital Cost of the Project and about Rs.50 crores for extension of cut and cover/Tunnel of Silt Flushing Tunnel is to be added)

April, 2003

30. Ponding of Dam, Charging of Intake, Desilting Chamber no.4 and 27.4 km long HRT and first run of Unit No.5

Aug 28, 2003

31. Synchronisation of Unit No.5 Sept 20, 2003

32. Commissioning (Commercial generation) of Unit No.5 Oct 06, 2003

33. Inauguration of first Unit of the Project (Unit # 5) Oct 14, 2003

34. Synchronisation of Unit No. 6 Nov 23, 2003

35. Commissioning (Commercial generation) of Unit No. 6 Jan 02, 2004

36. Synchronisation (Test Loaded) of Unit No. 4 Jan 22, 2004

37. Synchronisation (Test Loaded) of Unit No. 3 Feb 13, 2004

38. Synchronisation (Test Loaded) of Unit No. 2 Mar 09, 2004

39. Signing of MOU for the year 2004-05 between MOP, Govt. of India and SJVN Ltd.

Mar 29, 2004

40. Commissioning (Commercial generation) of Unit No.4 Mar 30, 2004

41. Synchronisation (Test Loaded) of Unit No. 1 Mar 31, 2004

42. Commissioning (Commercial generation) of Unit No. 3 Mar 31, 2004

43. Commissioning (Commercial Generation) of Unit No. 2 May 06, 2004

44. Commissioning (Commercial Generation) of Unit No. 1 May 18, 2004

43. SJVN gets ISO 9001:2000 Certification Feb 02, 2005

44. Dr. Manmohan Singh, Hon'ble PM of India dedicates NJHEP to the Nation.

May 28,2005

COMMERCIAL:

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OVERVIEW

Besides the social and economic upliftment of the people in the project vicinity, the 1500

MW (6 x 250 MW) NJHPS has been designed to generate 6950.88 MU of electrical energy in

a 90% dependable year with 95% machine availability. Besides, the project has been

designed to give valuable peaking power to the Northern Grid.

The first unit of the project has been commissioned on 6.10.2003 with the commissioning of

entire station progressively by 18.5.2004. Since start of operations, the station has generated

20766.035668 MU of electrical energy so far. Out of the total energy generated at the bus-

bar, 12% is supplied free of cost to the home state i.e. Himachal Pradesh. From the remaining

88%, 25% energy is supplied to HP at bus-bar rates and balance power has been allocated to

different states / UTs of Northern Region by the Ministry of Power, Government of India.

The power allocations of the station are as under:

Sl. No. State Allocation (MW)Percentage to the installed

capacity

1. Haryana 64 4.27

2. Himachal Pradesh 547 36.47

3. Jammu & Kashmir 105 7.00

4. Punjab 152 10.13

5. Rajasthan 112 7.47

6. Uttar Pradesh 221 14.73

7. Uttarakhand * *

8. Chandigarh 08 0.53

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9. Delhi 142 9.47

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Unallocated quota at the

disposal of the Central

Govt.

149 9.93

Total 1500 100

* Uttarakhand had surrendered its share of power, which was reallocated by MOP, GOI to

Punjab. Presently, Uttarakhand is buying power out of unallocated quota on requirement

basis for which Power Purchase Agreement has been singed with them.

The Nathpa Jhakri Hydro Electric Project – NJHEP (1500 MW) being a central sector project

of Northern Region, the power being generated is required to be supplied to the beneficiaries

of Northern Region which are essentially nine in total. Power Purchase Agreements (PPAs)

have been signed with all the beneficiaries. The tariff of the station is being regulated by

Central Electricity Regulatory Commission from time to time.

R&R ACTIVITIES:

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SJVN being a responsible corporate citizen is taking utmost care in resettlement and

rehabilitation of its Project Affected Families (PAFs) whose land, house and other assets have

been acquired or source of livelihoods have been affected. It has formulated and adopted

exhaustive R&R plans which are being vigorously implemented in Projects . The basic

objective of the R&R Plans are to increase the socio-economic standard of the PAFs or at

least retain their previous standard. The major components of the plans are providing of

alternative agricultural land, suitable constructed house or cash assistance for construction of

house, employment, financial assistance for self assistance and various infrastructural

facilities in their rehabilitated areas. The Nigam has followed the resettlement and

rehabilitation policy formulated in consultation with Government of Himachal Pradesh to

provide assistance and rehabilitation measures to all those who are affected by the project. Its

various provisions are :

Developed agricultural land to land less Project

affected families (PAFs) equivalent to the area

acquired or 5 bighas which ever is less. This 5 bighas

would include any land left with the family after

acquisition. Allotment of land will be made on the basis of landless certificate issued by

the sub Divisional Magistrate of the concerned area who also acts as R&R Officer of the

Project.

24 houseless families have been provided constructed houses in a well organized

Rehabilitation Colony and 44 houseless families, as per their option, have been provided

cash assistance of Rs. 45,000/- each for constructing houses.

75 displaced shopkeepers from Jhakri, have been provided shop plots in a organized

Market Complex to restart their business.

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Preference of allotment of shops at the shopping complex built at Project site –Jhakri to

the displaced shopkeepers.

Provision for suitable employment to one member of each landless PAFs according to his

capacity and qualifications, subject to availability of vacancy. However, a PAF who has

been allotted a shop or plot will not be eligible for employment.

All these benefits are in addition to land benefit to PAFs under Land acquisition Act 1894.

The salient works under taken under R&R are as below:

Land acquired from 480 families from 22 villages

107 landless families have been provided agricultural land

62 families became landless.

43 families were given cash in lieu of alternative house.

17 families were provided built up house.

41 were provided with land for land benefit.

3 have been provided shops in shopping complex.

61 landless families have been provided regular employment.

45 landless families have been provided alternative package of Rs. 2-3 lacs in lieu of

employment.

53 other project affected families have been provided financial assistance up to Rs.

20,000/- under Income Generation Scheme for self employment.

46 students from PAFs have been provided Merit Scholarship for pursuing Technical

Education.

16 awareness camps for horticulture / veterinary / agriculture practices have been

organized in the affected areas.

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18 schools situated in project-affected villages have been provided infrastructural and

other aids like furniture, teaching aids, sports items etc.

Vehicles from 31 PAFs have been deployed for project works.

9 water supply schemes (WSS) in the affected villages have been provide through HP

IPH Deptt. in lieu of dried up water sources in the area.

32 contractors from PAFs have been provided petty contracts with the project.

A mobile Health van has been put into operation to provide free medical services and

medicines in Project affected villages and surrounding villages.

NJHEP has also carried out following area developmental steps with a view to raise the

quality of the life of the local residents:

Financial assistance of Rs. 17.5 crores to HP Govt. for construction of Rampur by-pass

road.

Finance assistance of Rs. 8 crores to HP Govt. for construction of 200 bedded Mahatma

Gandhi Hospital at Rampur.

Financial Assistance of Rs. 3.5 crores to HP Govt. for construction of road from Dam

site Nathpa to village Nathpa.

Financial assistance of Rs. 75 lacs to HP govt. for construction of helipad at Rampur.

Financial assistance of Rs. 5 lacs to HP Govt. development of parking facility at Bus

Stand Rampur.

Financial assistance of Rs. 50 lacs to HP Govt. for construction of road from village

Jhakri to Dhar Gaura village.

Extension of education and hospital facilities existing at project area to the local people.

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Construction of various link roads in the project areas linking various villages on the

National Highway.

Construction of additional rooms and play grounds for various schools situated in the

project area.

Providing of 5 bighas of land to Jhakri Panchayat for construction of Panchayat Ghar /

Mahila Mandal/Temple etc.

Providing of financial assistance of Rs. 50,000/- each to 9 nos. of Mahila Mandals in the

project affected villages.

Drinking Water facilities in villages Jhakri and Kotla where displaced families were

rehabilitated.

Construction of English medium schools upto class 10+2 (DPS) at Jhakri

Implementation of Infrastructural Development Scheme in Project affected panchayats

with a recurring annual budget of Rs. 1.5 Crores.

Mahila Mandal Bhawan at Puje(Nichar).

Double story building to Govt. Middle School Baro(Sungra)

Room and Hall for Panchayat Bhawan Ponda

Panchayat Bhawan for Tranda Panchayat at Nigulsari(Tranda)

Construction of houses for Rehabilitation for landless/houseless families at Jhakri

Improvement of Dhar Gaura link road

Special repair to the existing Bodh Mandhir Nigulsari

Construction of pucca path/steps from Tayawal to cremation site near river Satluj

Providing chain link fencing to the existing playground of Sr. Sec. School at Jhakri

Construction of playground at village Kinnu

Infrastructural facilities to the Schools : Govt. Primary School Sungra, Govt. Primary

School Wadhal, Govt. Primary SchoolKochari, Govt. Primary School Kotla, Govt.

Primary School Jeori, Govt. High School Wadhal, Govt. Sr. Sec. School Jeori

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Mobile health Van

A mobile health van for the benefits of Project Affected

Families which visits the affected villages for health and

hygiene awareness and treatment since Jan. 2000. So far

20,000 patients have been benefited and a sum of Rs. 25

lacs has been incurred on this activity.

In addition to above salient features the following schemes have been started with specific

aim of care and development of Project Affected Families and local residents.

Income Generation Activities

Support is provided to PAFs for starting Income

Generation Activities such as poultry farm, milk diaries,

taxis etc. A financial assistance is provided under this

activity

Merit Scholarships Scheme for wards of PAFs

SJVN has also started Merit Scholarship scheme for the wards of PAFs who are undergoing

vocational / professional courses in the fields of ITI’s, Diploma in Engineering/

Pharmacy ,Degree in engineering / Medicines .Under this scheme the wards will be provided

scholarship @ Rs. 800/- Per Month to Rs. 1500/Per Month. 15 wards of PAFs are provided

the Merit Scholarship.

Infrastructural Facilities and other aids to School

Infrastructural facilities and other aids in the shape of grants for Primary to Sr. Secondary

level Government Schools within two Project area. Under this scheme financial assistance

26

will be provided to the school so as to improve the infrastructure and other aids such as

books, notebooks, computer, overhead projector, scientific equipment, extension of room

etc., as per the requirements of the school. This scheme is linked to afforestation campaign

also, where school students will be encouraged to plant saplings under a grant.

Compensation of Blast Damages

A compensation of 5.45 crores has been distributed to 5509 nos. local residents whose houses

were affected due to blasting activities. This compensation was assessed by expert scientist of

National Institute of Rock Mechanics and Geologist of Government of H.P.-

Scheme for Restoration of Water Sources

The construction activities of NJHEP extended in districts of Kinnaur and Shimla because of

which water sources and schemes in the vicinity got affected. A sum of Rs. 88 lacs has been

provided to Irrigation & PH Department, GOHP for restoration of dried up water sources and

augmentation of water supply schemes got affected by project activities. A total of Rs. 145

lacs will be provided for this work.

Infrastructural Development Works

SJVNL has spent Rs. 226 lacs on Infrastructural

Development works in project affected area (project

affected Panchayats ) ,where assistance is provided to

affected Panchayats for community development

buildings, school rooms, school play grounds, foot paths,

foot bridges , cremation grounds etc.

Institutional Arrangement for R&R Implementation

Realizing need for proper infrastructure to implement the rehabilitation package, and help the

PAFs to enhance their standard of living, SJVN has established Resettlement and

27

Rehabilitation (R&R) cells at NJHEP & REHP with qualified professionals. Project

Information Centres (PICs) are also operational at Jhakri and Rampur. The PICs are meant to

act as a channel of communication between the local population and the Project Management.

Awareness camp in village

Rural sports and prize distribution

Impact Assessment of R&R Activities in NJHEP.

A study was conducted by Agro Economic Research Centre, HP University, Shimla (HP) on

the impact assessment of Resettlement & Rehabilitation (R&R) plan undertaken by NJHEP.

In the said study, the magnitude indices during 2002 (after the NJHEP Project

Implementation) have been compared with the base line study (situation existing as on 1996)

and with the control sample household data (households in project area which were not

affected by NJHEP).

The findings of the study are:

Family size of the PAFs declined from 7.14 to 5.44 persons per family.

Literacy rate has increased from 58% to 73%.

Average annual household income increased from Rs . 21,648 (at 1996 price level) to

Rs. 76,575, which works out to be Rs. 29,114 in 1996 and Rs. 1,04,640 in 2002 at current

price levels.

Proportion of families lving below poverty line has decreased from 25.6% to 16.8% now.

Average per capita monthly expenditure of PAFs increased from Rs. 575 to Rs. 674,

showing an improvement in their consumption pattern and standard of living.

28

Percentage of workers engaged in regular employment increased from 20% to 30%.

Percentage of workers engaged in business increased from 7% to 9%.

More people live in pucca houses (45% as compared to 21% earlier).

More people have separate bathrooms in households (46% as compared to 21% earlier).

Improvement in the overall living standards of the families due to NJHEP

implementation.

Diversification of income and employment avenues through income generation schemes,

towards business and other self employment activities is taking place.

Improvement in the housing standards, quality of health care due to enhancement of

diagnostic facilities with the introduction of mobile health unit by SJVN.

SJVN has taken measures to strengthen the existing infrastructure facilities, including

health facilities and education and roads, which are providing immense benefits to the

PAF’s in the project area.

Project affected families have received full and adequate compensation. The

compensation amount has been used rationally and judiciously by PAFs. Overall

situation of PAFs is better now.

The above findings by HP University present the sincere and earnest efforts of SJVN to

Implement R&R Plan.

World Bank Appreciation

The World Bank Mission has monitored the R&R activities carried out in NJHEP time and

again and has appreciated the efforts made for rehabilitation of the PAFs as under;

29

“The success of the resettlement activity undertaken in this Project is quite rare for India,

and can be considered as one of the best examples of resettlement implementation in Bank-

Assisted Projects in India. It should be considered as an example for other projects."

30

ENVIRONMENT POLICY:

SJVNL is a supplier of environmentally friendly electric power generation. The Company is

committed to the ownership and operation of generation facilities which contribute to the

reduction of greenhouse gas emissions and which minimise environmental impact both in

construction and operation.

SJVNL will:

Discharge its obligations under the national and State environmental legislations,

regulations, guidelines and directives; and operate in an environmentally responsible

manner.

Strive to minimize the impact of its operations on the environment by means of a

program of continuous improvement.

Identify aspects of activities which have a significant environmental impact as an integral

part of its decision-making and its commitment to prevention pollution.

Develop and maintain adaptive environmental management mechanisms for the

establishment and maintenance of environmental objectives.

Develop and maintain efficient and two-way communication with the local communities,

and partner and assist them in resolving environmental concerns

Respond promptly and effectively to any known significant environmental impacts

caused by operations under its control.

Promote the development of efficient and clean operations procedures.

Promote the efficient use of energy, raw materials and other resources within its

operations.

Manage land under its care with sensitivity, having due regard for local environmental

sensitivities.

31

When appropriate, maintain close liaison with regulators, authorities and environmental

organizations.

Promote environmental awareness among employees, suppliers and contractors.

Educate and train employees to conduct their activities in an environmentally responsible

manner.

Make this policy known and available to the public

In support of this policy, SJVNL will review all new projects for compliance and

conduct regular reviews of existing projects from legal stipulations angle as well as internal

procedures. SJVNL will prepare and maintain procedures to support this policy in the light of

changes in knowledge and understanding. However presently procedures enlisted will act as

guidelines or directives for implementing the Policy.

ENVIRONMENT MANAGEMENT IN SJVNL – A PERSPECTIVE

A diverse developing society such as ours provides numerous challenges in the economic,

social, political, cultural, and environmental arenas. All of these coalesce in the dominant

imperative of alleviation of mass poverty, reckoned in the multiple dimensions of livelihood

security, health care, education, empowerment of the disadvantaged, and elimination of

gender disparities.

a) The “Environment” comprises all entities, natural or manmade, external to oneself,

which provide value, now or perhaps in the future, to humankind. Environmental concerns

relate to their degradation through actions of humans.

b) The present day consensus reflects three foundational aspirations. First, that human

beings should be able to enjoy a decent quality of life; second, that humanity should

become capable of respecting the finiteness of the biosphere; and third, that neither the

32

aspiration for the good life, nor the recognition of biophysical limits should preclude the

search for greater justice in the world.

Environment Policy of SJVN is a response to our commitment to a clean environment,

mandated in the Constitution in Articles 48 A and 51 A (g), strengthened by judicial

interpretation of Article 21. It is recognised that maintaining a healthy environment is not the

state’s responsibility alone, but also that of every citizen.

SJVN’s approach and commitment to deal with environmental and social issues, relating to

its projects, and lays out management procedures to mitigate the same. This includes

framework for identification, assessment, and management of environmental and social

concerns at both organizational and project levels.

SJVNL believes that the Environment Policy is a working and live document, which shall be

upgraded with the changes in the social and environmental governance in the country and

modified in the light of the experiences gained with project implementation of its projects. It

is the logical vehicle to give a human face to the corporate functioning and moves away from

classical cost-benefit approach to the larger realm of corporate social responsibility, while

mainstreaming and up scaling environmental and social concerns. It is dedicated to the firm

commitment and concern of the SJVNL for sustainable development.

33

ENVIRONMENT ISSUES:

ENVIRONMENTAL MANAGEMENT ACTIVITIES OF NJHEP

It is well recognized that hydro power constitutes the cheapest source of power generation in

India even after the recent enormous increases in the cost of the equipment and the

implementation of civil works. The economic advantages of hydro power has been enhanced

in the recent years with the steep increases in the energy costs from fossil fuel and the rapidly

approaching limits to the exploitable resources of such fuels. The importance of hydro

electric development for economic and reliable supply of power is recognized today and

harnessing of hydro power is major initiative of all Indian Governments these days. Being

environment friendly as compared to other sources of power, development of hydro power is

major thrust in Indian context.

The controversy concerning the large versus small dams, fear of earthquakes, silting of

reservoirs, submergence of forests, extinction of "rare" flora and fauna, submergence of

ancient cultural heritage, the prospect of outbreak of diseases like malaria and dislocation of

population are often cited as reasons for abandoning the large hydro projects.

However ,SJVN as a responsible corporate always shown its due concern for this important

issue of Environment and social concern of hydro projects.

SJVN‘s journey to clean and green power started with its maiden initiative of 1500 MW

Nathpa Jhakri Hydro Electric Project on river Satluj in Himachal Pradesh. The project was

successfully commissioned and Environment initiatives taken and Environment Management

activities followed by SJVN have not only commended by The World Bank, but, also by

external independent agencies such as World Environment Foundation, New Delhi and Green

Tech Foundation, New Delhi. These agencies have recognized Environment Management of

34

SJVN in Nathpa Jhakri Hydro Project by awarding “Golden Pea Cock Eco-Innovation

Award-2004”, “Green Tech Silver Award on Environment Management – 2004” and

Greentech Silver Award 2005-06. The Resettlement activities of project affected people were

highly appreciated by the World Bank. The Impact Assessment of R&R Implementation

conducted by agro Economic Research Centre, H.P. University, Shimla has also reported

considerable positive increase in the standard of living, education and health status of Project

affected Families.

The major Environment & Social improvement steps of SJVN in its Nathpa Jhakri Project

and new projects such as Rampur HEP, Luhri HEP and Khab HEP are :

I. Afforestation and Soil Stabilization Works

Soil erosion is a natural process continuing with or without resources development. This may

be due to various climatological anomalies such as flash flood, cloud burst, land slide,

avalanches etc. Hydro Power Projects especially run of the river schemes do not cause

substantial soil erosion. The marginal pressure on the soil erosion during construction can be

compensated by restoration of construction area through levelling, filling of borrow pits and

land scaping etc. Satluj Jal Vidyut Nigam Limited (SJVNL) has taken adequate measures to

offset soil erosion and slips. Soil conservation and slip protection works have been carried

out by constructing check walls, retaining walls, terracing, rock anchors, rock bolts, shot crete

with wire mesh and wire crates etc. . In order to protect the structures of the project a number

of soil erosion/slope stabilization measures have been taken by SJVNL. Depending upon the

structures/geological conditions of the area the soil erosion/ slope stabilization measures were

identified, designed and executed at different locations of the project. This has been

compensated by massive afforestation, soil conservation measures and avenue plantation

which have been got executed through State Forest Department at a cost of Rupees 3.20

35

crores. A total number of more than 7 lacs plants of selected species e.g. Pinus, Roxburghii,

Cedrus Deodara, Euclyptus etc., have been planted. Nurseries have been raised by forest

department at various locations.

Afforestation Sites of NJHEP Nursery Developed in NJHEP

Live slips have been treated by katta crate technique in wire mesh along the contour in

staggered manner. About 145 ha area of land have been treated by this technique and also 27

km. of khad & nallahs prove to flood have been got treated through State Forest Deptt. These

measures have helped to protect the entire unstable slope.

II. Avenue Plantation and Land Scaping

In addition to the compensatory afforestation and environmental protection works, avenue

plantation in and around the project area has also been carried out through State Forest

department with SJVNL funding. Moreover, SJVNL itself and its contractors have also done

avenue plantation for beautification of the area About 20,000 plants of selected species like

Hybuscus, Bottle brush, Alastuna, Tikoma, Kanes etc. are planted on above locations at

Jhakri, Kotla & Nathpa and at project sites like outfall & pot head yard etc.

36

III. Restoration of Dumping Sites & Quarry Area

About 65 lacs cubic metre of muck has been generated from the excavation of this mega

project component. This muck if not handled properly could have adversely affected the

natural resources. In this project the excavated material has been disposed off in ten

designated dumping sites. About 22 lacs cubic meter of muck have been re-utilised for

various purposes in the project area such as construction of playgrounds, roads and benches

etc. The restoration of the dumping sites is very important in order to maintain the ecological

balance and to protect the environment of the area. All the dug out material has been

displaced in dumping areas on natural angle of repose. The toe of the dumped muck has been

protected by constructing wire crates at required locations so that the dumped muck may not

flow to the river and Nallah etc. After completion of the excavation work, dumping sites have

being restored/reclaimed.

Reutilized Muck for play ground Rehabilitated Muck disposal Site

IV. Catchment Area Treatment

The catchment area treatment has been envisaged to ensure that the sediment load do not

increase due to construction and operation of the project and the reservoir life remains at least

to the extent envisaged in the design. The deposited material on the dam is being periodically

flushed out and suspended silt particles are being arrested in desilting chambers and are being

flushed out into the river through a silt flushing tunnel. SJVN has got prepared a CAT Plan

amounting to Rs. 29.57 crores for NJHEP which has been approved by the Govt. of HP and

37

Ministry of Environment & Forest, Govt. of India and is under implementation through HP

State Forest Deptt. So far 6.50 crores have been released for this work so far. Regular

physical inspections are also being carried out. This work will continue for ten years w.e.f.

2002-03.

V. Wild Life Conservation

The animals in this area are mainly musk deer, snow leopard, koklash , khalij, monal, Ibex,

Ghoral etc which have high economic value. It was important to prevent the external threats

to the flora and fauna of this Sanctuary. SJVNL has kept sufficient provision under CAT Plan

for protection measures of the Sanctuary which includes strategies ranging from active

patrolling, implementation of education and awareness programmes which can lead to

participatory method of protection.

VI. Sustenance of Fisheries

SJVNL has proposed supplementary stocking programme as this is most appropriate. To

achieve this objectives, facilities to produce seeds of snow trout, rainbow trout and brown

trout, are being created at Sangla (District Kinnaur). The medium size flow through system

hatchery and rearing units are being developed to raise fingerlings/yearlings and brood stock.

Since cold water fish is eminable to egg and artificial fertilization, raising of required number

of seeds may not cause much problem. It is also proposed to introduce a new variety of trout

viz. lake trout (Salvelinus mamaycush) from Europeon countries. SJVNL has earmarked Rs.

1.60 crores for creating the necessary infrastructural facilities for production of stockings and

brood stock through HP State Fisheries Department. So far Rs. 75 lacs have been released for

this work and 38 lacs have been spent till date.

38

VII. Control of Water Quality and Water Borne Disease

The increase in the water fringe area provides suitable habitats for the growth vectors of

various diseases specially malaria, diarrhea and jaundice etc. increases the possibility of

communication of water borne diseases. Efforts have been taken by SJVNL to control the

water borne disease in the area by supplying potable water to residents through treatment

processes . In order to prevent water borne diseases with in the SJVN residential complex

proper water treatment plant has been provided to ensure good quality potable water to the

residents. This treatment is being carried out through 1.6 MLD capacity water treatment plant

at project area.

VIII. Medical Infrastructure Development

As a part of infrastructural development, SJVNL has developed a 20 bedded project hospital

at Jhakri and dispensaries at Jeori and Nathpa. . Free medical facilities is also being provided

to all the local villagers of the project vicinity. Adequate vaccination and immunization

facilities are also being provided for workers as well as to the local people free of cost in

project hospital. In addition, SJVNL has also financed Rs. 8.00 crores for 200 bedded State

Govt. hospital at Rampur. This hospital has a separate malaria control cell. This hospital is

feeding to Rampur Tehsil, Ani Tehsil & Distt. Kinnaur and is providing a good medical

facility to the area.

IX. Rehabilitation and Resettlement of the Displaced/Project Affected Families

SJVN has also adopted R&R Plan for rehabilitation of the displaced and project affected

families. Cash compensation has been given to the displaced/ project affected families

(PAFs). In addition to above project affected families are being/has been provided

39

employment, built up house, land, transportation facilities to the new rehabilitation area,

infrastructural facilities and community services under R&R Plan.

X. Providing employment, agricultural land and built up house or cash in lieu of built up house

Under the provision of the plan the landless families are being provided employment, land

and built up house or cash in lieu of built up house. So far 61 nos. of families have been

provided employment, 41 nos. of families have been provided agricultural land, 18 nos.

families have been provided built up house, 43 nos. of families have been provided cash

assistance for construction of houses and 3 nos. of families have been provided shops in

shopping complex, Jhakri .

XI. Mobile Health Van

SJVNL has also launched a Mobile Health Van during January 2000 which is regularly

visiting four days a week in project affected villages of district Shimla and district Kinnaur.

Free medical facility including medicines is being provided through this mobile health Van.

A qualified doctor is always accompanying the van who is also educating the local people for

prevention from diseases like malaria, diarrhea and jaundice etc. A large number of villagers

are being benefited by this mobile health van.

XII. Veterinary and Horticulture Camps

Further SJVNL is also organizing veterinary and horticulture camps in the villages. The

objective of veterinary camps are familiarizing the local people with the technical know how

of the breeds /health/common diseases of their pet animals through expert veterinary doctors.

The objective of horticulture camps are familiarizing the local people with the technical know

how of high crop production, prevention of common diseases of plants etc. To encourage the

40

people for more participation in such camps, SJVNL is also distributing free gifts like sickles,

pruners, multivitamin feed etc. for their pets.

XIII. Income Generation Scheme

The income generation scheme has been introduced for the affected families from whom land

has been acquired but not provided employment by SJVNL. Financial assistance up to Rs.

20,000/- are provided to such families to start small business such as running provisional

shop, dairying, sweater knitting, poultry, piggery etc. So far 47 nos. affected families have

been provided financial assistance under this income generation scheme.

XIV. Concern for Environment for the future projects

SJVN is proactive for is commitment for environment. This can be judged with the fact that

Environment Impact Assessment studies for future project like Luhri HEP, Khab HEP in

Himachal Pradesh and Devsari, Naitwar Mori & Jakhol Sankri in Uttranchal has been

awarded even before actual work of construction to start. Environment Clearance of our 41

MW Rampur HEP has been received and work has started. To improve environment issues

have awarded following studies:

i. Managed River Flow.

ii. Cumulative Impact Assessment of river Satluj in view of hydro development in the

Satluj Basin.

iii. Terrestrial Bio-diversity.

iv. Social Assessment.

The efforts are also on for opting of carbon trading for which proposals are in the final stages

for our future projects.

41

AWARDS & ACHIEVEMENTS:

GREENTECH SILVER AWARD

SJVN has received the Greentech Silver Award for Environmental Excellence in Hydro

Sector in appreciation of Environmental Management Activities for 1500 MW NJHEP by

Greentech Foundation, New Delhi at Goa on 22nd October, 2005.

GOLDEN PEACOCK AWARD

SJVN has received the Golden Peacock Eco-Innovation Award-2004 at World Environment

Congress – Palampur (Himachal Pradesh) for its activity of Reclamation and Re-utilization of

Muck Disposal site under Environment Management Plan of NJHEP, from the World

Environment Foundation, New Delhi on June 11, 2004.


SJVN has received “Greentech Silver Award for Environment Excellence” at Hyderabad on

June 4-6, 2004 from the Greentech Foundation.

ENVIRONMENT GOLD AWARD

SJVN has also received “Excellence Environment & Ecological Implementation Gold Award

” by Jawaharlal Nehru Memorial International Green Land Society - Hyderabad in May,

2005.

42


SJVN has received “Greentech Silver Award for Environment Excellence” at Goa on 31st

August 2006 and 28 August 2007 from the Greentech Foundation.

ISO 14001 –EMS

Our NJHEP has been awarded ISO 14001 – EMS by Bureau of Indian Standard in July 2006.

43

WELFARE ACTIVITIES:

The company respects and cares for its employees and the persons living in the project

vicinity and has extended various schemes for them like:

Establishment of branch of Delhi Public School at Jhakri.

Subsidised Canteen facilities.

Recreational Club with indoor games facilities.

Multidish Antenna System.

Consumer Cooperative Stores.

Distribution of LPG.

Provision of facilities such as Shopping Centre, Bank and Post Office in the Project

Township

Ladies Club

Auditorium

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Chapter 2

RESEARCH METHODOLOGY

OBJECTIVES OF THE PROJECT REPORT:

To determine the short-term financial position of the SJVN Ltd.

To determine the long term financial position of the organization.

To determine the efficiency and earning capacity of the organization with the help of

annual accounts.

To determine the profitability and future prospects of the organization.

46

METHODOLOGY

For the project data can be collected from two sources.

(1) Primary Source

(2) Secondary Source

The data collected from primary source is called primary data. The primary data is original

in character and is obtained by a study specifically designed to fulfill the data needs of the

problem at hand. It is collected through personal interviews, questionnaires or observation.

The secondary sources of data refer to already publish data or data collected by other

agencies. It is second hand data. It is available in published form.

The secondary data used in this project is obtained form the annual accounts of

SJVNL.The data to be used in the study are of secondary in nature i.e. annual accounts of last

four years of SJVNL for financial analysis.

For analysis of financial statements the following methods have been used:

(1) Ratio Analysis

(2) Comparative statements.

(3) Study of cash flow statements

47

Chapter 3 ANALYSIS OF FINANCIAL STATEMENTS OF SJVNL

Analysis of financial statements is a systematic process of the critical examination of

the financial information contained in the financial statements in order to understand and

make decisions regarding the operations of the firm. The analysis of Financial Statements is a

study of relationship among various financial facts and figures as set out in financial

statements, i.e. Balance Sheet and Profit and loss Account.

To fulfill the purpose of financial analysis the Balance Sheet and Profit & loss

account of the years 2005-06, 2006-07, 2007-2008 & 2008-09 have been studied; apart from

this, cash flow statements of the years 2005-06, 2006-07, 2007-2008 & 2008-09 have also

been studied.

To draw conclusion regarding operating efficiency of SJVNL, ratio analysis and

comparative study of financial statements is conducted.

Financial analysis serves the following purposes and that brings out the significance

of such analysis.

(1) Judging the earning capacity or profitability:

On the basis of financial statements, the earning capacity of the business concern may

be computed. In addition to this, the future earning capacity of the concern may be

48

forecasted. All the external users of accounts, specially the investors and potential investors

are interested in this.

(2) Judging the managerial efficiency:

The financial statement analysis helps to pinpoint the area wherein the managers have

shown better efficiency and the areas of inefficiencies. Any favourable and unfavourable

variations can be identified to pin point managerial efficiency or deficiency.

(3) Judging the short term and long term solvency of the concern:

On the basis of financial statement, the solvency of the concern may be judged.

(4) Inter firm comparison:

Financial statements of different enterprises may be analyzed and comparison be

made thereof. The inter-firm comparison helps in assessing own performance as well as that

of others. Inter firm comparison is better carried out if it is based on ratios.

(5) Making forecasts and preparing budgets:

Past financial statement analysis helps a great deal in assessing developments in the

future. It may be possible to forecast the next year’s profit on the basis of earning capacity

shown in the past. Analysis thus helps in preparing budgets.

49

MEANING OF FINANCIAL STATEMENTS

Financial statements are the summarized statements of accounting data produced at

the end of the accounting process by an enterprise through which it communicates accounting

information to the external users. The external users can be investors, lenders, suppliers and

trade creditors, customers, government and their agencies, public at large and employees.

Customarily, a set of financial statements includes: -

(i) A Balance Sheet.

(ii) A Profit and Loss account.

(iii) Schedules and notes forming part of Balance Sheet and Profit and Loss account.

Statement of accounting policies adopted and financial information, which is the

information relating to the financial position of any firm, when presented in a concise and

capsule form, is known as the financial statement.

50

Balance Sheet:

In the simplest form, a balance sheet may be defined to be a statement of

company’s assets and liabilities as on a particular date. It necessarily means the amounts and

values stated against each asset and liability is historical and therefore, they do not reflect the

current values. The assets of the company, fixed assets and current assets, are represented by

the liabilities, long term liabilities and short-term liabilities, and the shared equity, i.e. paid-

up share capital and reserves.

The form of Balance Sheet of a company is prescribed in schedule VI of the

companies Act, 1956.

The main principle is that the Balance Sheet must exhibit a true and fair view

of the financial position of the company at the close of the year concerned. This means

that the position shown should not be better or worse than the actual position. There is no

room for secret reserves or inflated profits.

Profit and loss Account:

A profit and loss account shows the net result of business operations

during an accounting period. It is a report of carrying on the business during a certain period.

The companies Act, 1956 has not prescribed any standard form in which the profit & loss

account is to be prepared. However, the particulars & information to be given in the profit

and loss account are laid in schedule VI, Part II of the companies Act, 1956. As a result, in

practice, Profit and loss Account is prepared in different forms based on the needs of the

business and type of industry. Whatever form of profit and loss account may be, various

items of income and expenditure of the business should be under the most convenient heads

51

of accounts. The profit & loss A/c must exhibit a true and fair view of the profit or loss of the

company during the year under reference.

Notes to Accounts:

Notes to accounts is the statement attached to the financial statements

containing additional information required to be disclosed in terms of schedule VI of the

Companies Act. Schedules have the details of amounts in the Balance Sheet and Profit &

Loss A/c, while the notes are the statement of accounting policies adopted and explanation of

material information.

52

TOOLS OF ANALYSIS OF FINANCIAL STATEMENTS

The tools to carry out financial analysis include:

A. Ratio Analysis.

Analysis of short-term financial position

Analysis of profitability

Analysis of long-term financial position

B. Comparative Financial statements.

Comparative analysis of balance sheet of preceding four years

Analysis of profit and loss account of preceding four years

53

A. RATIO ANALYSIS:

Ratio analysis expresses the relationship between two financial variables taken from

financial statements of an accounting period in the form of ratio. It is a technique of

analyzing the financial statements and refers to analysis of financial statements by

computation of ratios. In other words, ratio analysis is a process of determining and

interpreting relationship between the items of financial statements to provide a meaningful

understanding of the performance and financial positions of an enterprise. Ratios can be

regarded as the true test of earning capacity, financial soundness and operating efficiency of a

business organization.

A financial ratio is a comparison between one bit of financial information and

another. Consider the ratio of current assets to current liabilities, which we refer to as the

current ratio. This ratio is a comparison between assets that can be readily turned into cash—

current assets—and the obligations that are due in the near future—current liabilities. A

current ratio of 2 or 2:1 means that we have twice as much in current assets as we need to

satisfy obligations due in the near future.

The four most important financial dimensions, which, a firm would like to analyse

are: Liquidity, Leverage, Activity and Profitability.

54

ANALYSIS OF SHORT –TERM FINANCIAL POSITION OF SJVNL:

Two types of ratios can be calculated for measuring short-term financial position or short-

term solvency of a firm.

1. LIQUIDITY RATIOS

2. CURRENT ASSETS MOVEMENT OR EFICIENCY/ACTIVITY RATIO

LIQUIDITY RATIOS:

Liquidity reflects the ability of a firm to meet its short-term obligations using

those assets that are most readily converted into cash. Assets that may be converted into

cash in a short period of time are referred to as liquid assets; they are listed in financial

statements as current assets. Current assets are often referred to as working capital, since

they represent the resources needed for the day-to-day operations of the firm’s long-term

capital investments. Current assets are used to satisfy short-term obligations, or current

liabilities. The amount by which current assets exceed current liabilities is referred to as

the net working capital.

The most common ratios which indicate the extend of liquidity are:

1. Current Ratio.

2. Quick or Acid test ratio.

55

CURRENT ASSETS MOVEMENT OR EFFICIENCY/ACTIVITY RATIO:

Activity ratios are employed to evaluate the efficiency with which the firm manages

and utilizes its assets. Activity ratio, thus, involve a relationship between sales and assets.

A proper balance between sales and assets generally reflects that assets are managed well.

Several efficiency ratios can be calculated to judge the effectiveness of asset utilization

these are:

1. Inventory turnover ratio.

2 Debtors turnover ratio.

3. Working capital turnover ratio.

Inventory turn over ratio and debtors turn over ratio cannot be calculated efficiently due to

the fact that SJVNL does not have large amount of stock of material in the inventory because it

does not produce any article from raw material. Amount of inventory shown in the balance sheet

includes spares and capital store which have been used in the repair and maintenance of

generating machinery. Similarly, debtors turn over ratio cannot be calculated due to the reason

that SJVNL does not have any credit sale. The sale of energy generally collected within seven

days from the date of billing. So, in this case only working capital turn over ratio is applicable

and calculated below:

56

1. LIQUIDITY RATIOS

Current Ratio:

This ratio is an indicator of the firm’s commitment to meet its short-term liabilities.

Current assets mean assets that will either be used up are converted into cash within a year’s

time are normal operating cycle of the business, whichever is longer. Current liabilities mean

liabilities payable within a year are operating cycle, whichever is longer, out of the existing

current assets are by creation of current liabilities. It is expressed as follows:

1. CURRENT RATIO :

CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITIES

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Inventories 6255 5871 5363 5585

Sundry Debtors

60833 14082 11609 36318

Cash & Bank Balances

13335 62104 69360 127144

Other current assets

417 2353 3286 8257

Loans & advance

19418 32633 66626 46246

Total Current

assets

100258 117043 156244 223550

Current liabilities & Provisions.

63926 71017 108181 124165

CURRENT RATIO ON

57

31stMARCH 2006 = 100258 = 1.568 63926

31stMARCH 2007 = 117043 = 1.648 71017

31stMARCH 2008 = 156244 = 1.444 108181

31stMARCH 2009 = 223550 = 1.800 124165

As a conventional rule, a current ratio 2:1 or more is considered satisfactory. But a

current ratio upto 1:1 is considered acceptable. Thus, the current ratio of SJVNL is

acceptable.

2. QUICK OR ACID TEST RATIO:

An alternative to the current ratio is the quick ratio, also called the acid-test ratio,

which uses a slightly different set of current accounts to cover the same current liabilities as

in the current ratio. In the quick ratio, the least liquid of the current asset accounts, inventory,

is excluded. Hence:

QUICK RATIO = CURRENT ASSETS – INVENTORY CURRENT LIABILITIES

QUICK RATIO ON

58

31stMARCH 2006 = 100258-6255 = 94003 = 1.470 63926 63926

31stMARCH 2007 = 117043-5871 = 111172 = 1.565 71017 71017

31stMARCH 2008 = 156244-5363 = 150881 = 1.394 108181 108181

31stMARCH 2009 = 223550-5585 = 217965 = 1.755 124165 124165

Quick ratio 1:1 is considered to represent a satisfactory current financial condition.

The SJVNL has quick ratio’s 1.470, 1.565, 1.394, 1.755 which is satisfactory .Thus SJVNL

can quietly meets its obligations.

2006 2007 2008 20090

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

LIQUIDITY RATIOS

CURRENT RATIOQUICK RATIO

2. CURRENT ASSETS MOVEMENT OR EFFICIENCY/ACTIVITY RATIO :

59

Working capital turnover ratio indicates the velocity of the utilizations of net

working capital. This ratio indicates the number of times the working capital is turned over in

the course of a year. This ratio measures the efficiency with which the working capital is

being used by a firm.

Working capital turnover ratio = Sales

Working Capital

Working Capital = Current assets- Current liabilities.

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Sales 137151 161823 150426 188660

Current Assets

100258 117043 156244 223550

Current liabilities

63926 71017 108181 124165

Working capital

36332 46026 48063 99385

WORKING CAPITAL TURNOVER RATIO ON

31stMARCH 2006 = 137151 = 3.775 36332

31stMARCH 2007 = 161823 = 3.515 46026

31stMARCH 2008 = 150426 = 3.268 48063

31stMARCH 2009 = 188660 = 1.898 99385 The working capital turnover ratio for the year 2006 is 3.775 and for the year 2007,

it is 3.515. It is low in year 2007 as compared to 2006. The working capital Ratio has further

60

decreased in 2008 which is 3.268. But in 2009 it has decreased, which is 1.898, this shows

under utilization and mis-management of funds.

2006 2007 2008 20090

0.5

1

1.5

2

2.5

3

3.5

4 3.7753.515

3.268

1.89799999999999

Efficiency Ratio

Working capital ratio

61

ANALYSIS OF PROFITABILITY:

Profit is the difference between revenues and expenses over a period of time (usually

one year). The profitability ratios are calculated to measure the operating efficiency of the

company. It measures the overall efficiency of the business in relation to sales or investment.

The main types of ratios used for profitability analysis are:

1. Gross Profit Ratio

2. Expenses Ratio

3. Net Profit Ratio.

4. Earning Per-Share (EPS).

5. Return on Investment (ROI).

Gross Profit Ratio:

This ratio expresses the relationship between gross profit and sales. It indicates the

average spread between the cost of goods sold and the sales revenue. Higher ratio is always

considered good and serves as an index of higher profitability.

Gross Profit Ratio = (Gross Profit x 100) Sales

Gross Profit = sales – (generation, Administration

& other expenses)

62

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Sales 137151 161823 150426 188660

Generations administrations

and other expenses

13539 14010 10643 17135

Gross Profit 123612 147813 139783 171525

GROSS PROFIT RATIO ON:

31stMARCH 2006 = 123612 × 100 = 90.128% 137151

31stMARCH 2007 = 147813 × 100 = 91.342% 161823

31stMARCH 2008 = 139783 × 100 = 92.925% 150426

31stMARCH 2009 = 171525 × 100 = 90.917% 188660

63

Administrative and Office Expenses Ratio:

Expenses Ratio = (Administrative & office expenses x 100) Sales

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Generations

administration& other

expenses

13539 14010 10643 17135

Sales 137151 161823 150426 188660

EXPENSES RATIO ON:

31stMARCH 2006 = 13539 × 100 = 9.871% 137151

31stMARCH 2007 = 14010 × 100 = 8.657% 161823

31stMARCH 2008 = 10643 × 100 = 7.075% 150426

31stMARCH 2009 = 17135 × 100 = 9.082% 188660

The administrative expenses ratio for the year 2006, 2007, 2008 & 2009 is

9.871%, 8.657%, 7.075%, 9.082% respectively. Expenses Ratio’s has decreased in the year

2007 & 2008 as compared to 2006 but in 2009 it has increased.

64

Net Profit Ratio:

Net profit is obtained when operating expense; interest and taxes are subtracted from

the gross profit. The net profit ratio is measured by dividing Net Profit after tax by sales.

Net profit Ratio = Net profit after tax Sales

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Net Profit after tax

49821 73271 76451 101532

Sales 137151 161823 150426 188660

NET PROFIT RATIO ON:

31stMARCH 2006 = 54162 × 100 = 36.325% 137151

31stMARCH 2007 = 73271 × 100 = 45.278% 161823

31stMARCH 2008 = 76451 × 100 = 50.823% 150426

31stMARCH 2009 = 101532 × 100 = 53.817% 188660

The Net Profit ratio for the year 2006, 2007, 2008 & 2009 is 36.325 %, 45.278%,

50.823%, and 53.817% respectively. This shows that the profitability has increased

continuously.

65

2006 2007 2008 20090.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

90.13% 91.34% 92.93% 90.92%

9.87% 8.66% 7.07% 9.08%

36.33%

45.28%50.82%

53.82% GROSS PROFIT RATIO EXPENSES RATIO NET PROFIT RATIO

Earnings per Share:

The profitability of a firm from the point of view of ordinary shareholders can be measured in

terms of number of equity shares. This is known as Earnings per share (EPS).

Basic earnings per share are earnings divided by the average number of shares

outstanding, which is the previous standard’s simple earnings per share. Diluted earnings

per share are earnings divided by the number of shares outstanding considering all dilutive

securities (e.g., convertible debt, options), which is the previous standard’s fully diluted

earnings per share.

It is calculated as follows:

Earnings per share = Profit after Tax Number of ordinary shares outstanding

66

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Profit after

tax49821 73271 76451 101532

Number of ordinary shares

outstanding

410881 410881 410881 410881

EARNING PER SHARE (EPS) ON:

EQUITY SHARE OF RS 1000 EACH

31stMARCH 2006 = 49821 × 1000 = 121.254 [Basic and Diluted] 410881




As we can see from the figures that the earning per share (EPS) has increased

from Rs 121.254 in 2006 to Rs 247.108 in 2009 which shows company has increased their

earning on per share by Rs. 125.854 in a period of 4 years.

67

2006 2007 2008 20090

50

100

150

200

250

300

121.254

178.326000000001186.066

247.108

EARNING PER SHARE (EPS)

EARNING PER SHARE (EPS)

Return on Investment:

Return on Investment (ROI) is the most important ratio of all. It is the

percentage of return on funds invested in the business by its owners. In short, this ratio tells

the owner whether or not all the effort put into the business has been worthwhile.

The ROI is calculated as follows:

Return on investment = Net profit after tax Capital employed

Capital employed = Fixed assets + current assets - current liabilities

68

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Net Profit after tax

49821 73271 76451 101532

Fixed Assets 718460 698923 765065 804528

Current Assets

100258 117043 156244 223550

Current liabilities

63926 71017 108181 124165

Capital Employed

754792 744949 813128 903913

RETURN ON INVESTMENT ON

31stMARCH 2006 = 49821 = 0.066 754792

31stMARCH 2007 = 73271 = 0.098 744949

31stMARCH 2008 = 76451 = 0.094 813128

31stMARCH 2009 = 101532 = 0.112 903913

The Return on Investment (ROI) for the year 2006, 2007, 2008 & 2009 is 0.066, 0.098,

0.094, and 0.112 respectively. The Return on Investment (ROI) during the year 2006, 2007

and 2008 has increased because of increase in profitability. But in 2009 return on Investment,

decreased due to losses incurred .

69

ANALYSIS OF LONG-TERM FINANCIAL POSITION OR TEST OF SOLVENCY

OF SJVNL

The term solvency refers to the ability of SJVNL to meet its long-term obligations.

The long-term solvency ratios indicate a firm’s ability to meet the fixed interest and cost and

repayment schedules associated with its long-term borrowings.

The main types of ratios used for analysis of test of solvency are as follows:

1) Debt Equity ratio

2) Funded Debt to Total Capitalization Ratio

3) Proprietary Ratio

4) Solvency Ratio

5) Fixed Assets to Net worth Ratio

6) Ratio of Current Asset to Proprietors Funds

70

DEBT-EQUITY RATIO:

Debt-equity ratio is also known as external interval equity ratio. It is calculated to

measure the relative claims of outsides and the relationship between the owners (i.e.

shareholders) against the firm’s asset. This ratio indicates the relationship between external

equities and the internal equities. A higher ratio indicates a risky financial position while a

lower ratio indicates safer financial position.

Debt- Equity Ratio = Total DebtNet worth

Total Debt = Secured loan + Unsecured loan + Current liabilities

Net worth = Share capital + reserve & Surplus - Miscellaneous expenditure

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Secured loans 268284 218683 171093 130751

Unsecured loans

39989 33737 30915 83493

Current liabilities

63926 71017 108181 124165

Total 372199 504840 310189 338409

Share capital 410881 410881 410881 410881

Reserve & Surplus

35879 81854 129759 193853

Miscellaneous expenditure

241 206 ----- -----

Total 446519 492529 540640 604734

DEBT-EQUITY RATIO ON

71

31stMARCH 2006 = 372199 = 0.833 446519

31stMARCH 2007 = 504840 = 1.024 492529

31stMARCH 2008 = 310189 = 0.573 540640

31stMARCH 2009 = 338409 = 0.559 604734

The Debt-Equity ratio for the year 2006, 2007, 2008 & 2009 is 0.833, 1.024, 0.573,

and 0.559 respectively. A higher ratio indicates a risky financial position while a lower ratio

indicates safer financial position. In India this ratio may be taken as acceptable if it is 2:1

although, now-a- days, lending institution prefers it to be 1:1. So we see that the Debt. Equity

ratio of SJVNL is not acceptable, which shows that company doesn’t meet its long term

liabilities.

FUNDED DEBT TO TOTAL CAPITALISATION RATIO:

This ratio establishes a link between the long term funds raised form outsiders

and total long-term funds available in the business.

Funded debt to Total Capitalisation ratio = Funded debt x 100 Total Capitalization

Funded Debt = Secured loans + Unsecured loans

72

Total Capitalization = Shareholder’s fund + Funded debt

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Shareholder’s

fund446760 492735 540640 604734

Secured loans 268284 218683 171093 130751Unsecured

loans39989 33737 30915 83493

Funded debt 308273 252420 202008 214244Total

capitalisation893520 985470 1081280 1209468

FUNDED DEBT TO TOTAL CAPITALISATION RATIO ON

31stMARCH 2006 = 308273 × 100 = 34.500% 893520

31stMARCH 2007 = 252420 × 100 = 25.614% 985470

31stMARCH 2008 = 202008 × 100 = 18.682% 1081280

31stMARCH 2009 = 214244 × 100 = 17.713% 1209468

There is no thumb rule for this ratio but it is considered better upto 50 or 55%. The

funded debt to total capitalisation ratio of SJVNL for the years 2006, 2007, 2008 & 2009 is

34.500%, 25.614%, 18.682%, and 17.713%. The funded debt to total capitalization ratio

declined in 2007, 2008 and 2009 because of decrease in the amount of secured and unsecured

loan for the purpose of funding.

73

PROPRIETARY RATIO OR EQUITY RATIO:

This ratio establishes the relationship between shareholders fund to total asset of the

firm. The ratio of proprietor’s funds is an important ratio of determining long-term solvency

of the firm.

Equity Ratio = Shareholders Fund Total assets

Total Assets = Fixed Assets + Current Assets.

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Shareholder’s

Fund446760 492735 540640 604734

Fixed Assets 718460 698923 765065 804528

Current Assets

100258 117043 156244 223550

Total Assets 818718 815966 921309 1028078

EQUITY RATIO ON

31stMARCH 2006 = 446760 × 100 = 54.568% 818718

31stMARCH 2007 = 492735 × 100 = 60.386% 815966

31stMARCH 2008 = 540640 × 100 = 58.681% 921309

31stMARCH 2009 = 604732 × 100 = 58.821% 1209468

74

The Equity Ratio for the year 2006, 2007, 2008 & 2009 is 54.568%, 60.386%,

58.681%, and 58.821% respectively. The long-term solvency position of the SJVNL was not

very satisfactory earlier in 2006 but it has increase in 2007 and is almost consistent

afterwards. Therefore the liquidity of SJVNL is improving.

SOLVENCY RATIO:

This ratio indicates the relationship between total liabilities to outsider’s total assets of

a firm and can be calculated as:

Solvency Ratio = Total liabilities to outsiders Total Assets

Total liabilities to outsiders = Secured loans + Unsecured loans + Current liabilities

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Secured loans 268284 218683 171093 130751Unsecured loans

39989 33737 30915 83493

Current liabilities

63926 71017 108181 124165

Total liabilities to outsiders

372199 504840 310189 338409

Total Assets 818718 815966 921309 1028078

75

SOLVENCY RATIO ON

31stMARCH 2006 = 372199 = 0.454 818718

31stMARCH 2007 = 504840 = 0.618 815966

31stMARCH 2008 = 310189 = 0.336 921309

31stMARCH 2009 = 338409 = 0.329 1028078

The solvency ratio for the years 2006, 2007, 2008 & 2009 is 0.454, 0.618, 0.336, and 0.329

respectively. It has been decreased in 2008, 2009 because of repayment of loans resulting in

decrease in Total liabilities to outsiders. The solvency ratio of SJVNL is satisfactory.

FIXED ASSETS TO NET WORTH RATIO:

This ratio establishes the relationship between fixed assets and shareholder’s fund and

indicates the extent to which shareholder’s funds are sunk into the fixed assets.

Fixed assets to net worth ratio = Fixed assets (after depreciation) x 100 Shareholders fund

76

IN LAKH31stMARCH

200631stMARCH

200731stMARCH

200831stMARCH

2009Shareholder’s

fund446760 492735 540640 604734

Fixed Assets 718460 698923 765065 804528

FIXED ASSETS TO NET WORTH RATIO ON

31stMARCH 2006 = 718460 × 100 = 160.815% 446760

31stMARCH 2007 = 698923 × 100 = 141.845% 492735

31stMARCH 2008 = 765065 × 100 = 141.511% 540640

31stMARCH 2009 = 804528 × 100 = 133.038% 604732

There is no thumb rule for this ratio. Fixed asset to net worth ratio has been declined year by

year because of increased profitability and decrease in the value of fixed asset due to

depreciation.

RATIO OF CURRENT ASSETS TO PROPRIETORS FUND:

The ratio indicates the extent to which proprietor’s funds are invested in current

assets.

Ratio of current assets to proprietor’s fund = Current assets x 100 Share holder’s fund

IN LAKH31stMARCH 31stMARCH 31stMARCH 31stMARCH

77

2006 2007 2008 2009Current Assets

100258 117043 156244 223550

Shareholders fund

446760 492735 540640 604734

RATIO OF CURRENT ASSETS TO PROPRIETORS FUND ON

31stMARCH 2006 = 100258 × 100 = 22.441% 446760

31stMARCH 2007 = 117043 × 100 = 23.753% 492735

31stMARCH 2008 = 156244 × 100 = 28.899% 540640

31stMARCH 2009 = 223550 × 100 = 36.966% 604732

Ratio of current assets to proprietor’s fund of SJVNL has increased year after year. It

indicates that in each year proprietor’s funds are more invested as compared to last year

because of increased profitability of the concern as more & more proprietor funds are

invested in Current Assets.

78

SOLVENCY RATIO’S

2006 2007 2008 20090

0.2

0.4

0.6

0.8

1

1.2

0.833000000000001

1.024

0.573 0.5590.545

0.603000000000001 0.586 0.588

0.454

0.618000000000004

0.336000000000003

0.329000000000003

DEBT-EQUITY RATIOEQUITY RATIOSOLVENCY RATIO

79

B. COMPARATIVE FINANCIAL STATEMENTS

Comparative financial statements are the statements in which, figures for two or more

periods are placed side by side along with change in figures in absolute and percentages form

to facilitate comparison. Both the Income statement (Profit and Loss Account) and Position

statement (Balance Sheet) are prepared in the form of comparative financial statements. The

financial statements are prepared at the end of the year.

Comparative financial statement is a tool of financial analysis that depicts change in each

item of the financial statement in both absolute amount and percentage term, taking the item

in preceding accounting period as base.

80

Particulars As on31-03-2006

As on31-03-2007

As on31-03-2008

As on31-03-2009

Increase/Decrease2006-07

Increase/

Decrease2007-08

Increase/ Decrease 2008-09

% age2006-

07

% age2007-

08

% age2008-

09

Sources of funds

a) Share Capital 410881 410881 410881 410881 0 0 0 0 0 0

b) reserve & Surplus 35879 81854 129759 193853 45975 47905 64094 128% 59% 49%

a) Secured loans 268284 218683 171093 130751 -49601 -47590 -40342 -18% -22% -24%b) Unsecured loans 39989 33737 30915 83493 -6252 -2822 52578 -16% -8% 170%

a) Gross Block 797261 817771 845184 862455 20510 27413 17271 3% 3% 2%

b) Less: depreciation 90941 136726 112438 130511 45785 -24288 18073 50% -18% 16%

c) Net Block 706320 681045 732746 731944 -25275 51701 -802 -4% 8% 0%

d) Capital work in progress 8868 14785 26098 56922 5917 11313 30824 67% 77% 118%

e) Advances for capital works 3076 1735 6155 15599 -1341 4420 9444 -44% 255% 153%

F) Construction Stores and Spares 196 1358 66 63 1162 -1292 -3 593% -95% -5%

Investments ------ ------ ------ ------

Current Assets, Loans & Advances

81

2. Comparative Statement of Balance Sheet of SJVNL for the Years 2006, 2007, 2008 & 2009:

(Rs in LAKH)

a) Inventories 6255 5871 5363 5585 -384 -508 222 -6% -9% 4%b) Sundry Debtors 60833 14082 11609 36318 -46751 -2473 24709 -77% -18% 213%

c) Cash & Bank Balance 13335 62104 69360 127144 48769 7256 57784 366% 12% 83%

d) Other current Assets 417 2353 3286 8257 1936 933 4971 464% 40% 151%

e) Loans & Advances 19418 32633 66626 46246 13215 33993 -20380 68% 104% -31%

Less: Current Liabilities & Provisions

a) Liabilities 34431 33943 54274 49823 -488 20331 -4451 -1% 60% -8%b) Provisions 29495 35374 53907 74342 5879 18533 20435 20% 52% 38%

Miscellaneous Expenditure 241 206 ---- ---- -35 ---- ---- -15% ---- ----

82

ANALYSIS OF COMPARATIVE BALANCE SHEET OF 2006, 2007, 2008, 2009:

SHAREHOLDERS FUND:

There is no increase or decrease in share capital in 2006, 2007, 2008, and 2009. The

reserves and surpluses has been increased by Rs. 45975 lakh in 2006-07, Rs 47905 lakh in

2007-08, Rs 64094 lakh in 2008-09.

LOAN FUNDS:

During 2006, secured loans are worth Rs. 268284 lakh. In 2007 it was Rs 218683

lakh, it has been decreased by 18% due to repayment. In 2008 it further decreased by 22% i.e.

Rs 171093 lakh and In 2009 it was Rs 130751 lakh(decreased by 24%).

In 2006 unsecured loans was worth Rs 39989 lakh, which further goes on decreasing

till 2008 to Rs 30915 lakh. But in 2009 unsecured loans are worth Rs 83493 lakh (increase by

170%).

FIXED ASSETS:

The net block of fixed assets has been decreased by 4% in 2007 as compared to 2006

due to increase in depreciation. But in 2008 it got increased by 8 % i.e. Rs 732746 lakh due to

decrease in depreciation and it remains same in 2009.

83

CAPITAL WORK IN PROGRESS:

The capital work in progress has been increased by 67% in 2007 as compared to

2006 and it goes on increasing till 2009 which was Rs 56922 lakh. In the same way

construction stores and spares are increased by 593% in 2007 as compared to 2006 and it

decreased by 95% in the year 2008 and by 5% in 2009 which is Rs 63 lakh.

CURRENT ASSETS LOANS & ADVANCES:

All the current assets have been increased except by loans and advances because

Balances has been utilized for the repayment of loans and advances.

CURRENT LIABILITIES AND PROVISIONS:

Current liabilities has shown a decrease of 1% in the year 2007 as compared to the

year 2006 which were Rs 34431 lakh. But in 2008 it got increased by 60% i.e. Rs 54272 lakh.

In 2009 there was a further decrease of 8%.

84

Particulars As on 31-03-2006

As on 31-03-2007

As on 31-03-2008

As on 31-03-2009



Increase/ Decrease 2008-09

% age2006-07

% age 2007-08

% age 2008-09

Sales 137151 161823 150426 188660 24672 -11397 38234 18% -7% 25%

Other Income 2028 4753 33187 26965 2725 28434 -6222 134% 598% -19%

Generations, Administrations & other expenses

13539 14010 10643 17135 471 -3367 6492 3% -24% 61%

Interest & Finance charges

30883 27118 28818 33249 -3765 1700 4431 -12% 6% 15%

Provisions 591 25 15 823 -566 -10 808 -96% -40% 5387%

Prior Period Adjustment (Net)

1792 3773 55034 198 1981 51261 -54836 111% 1359% -100%

Profit before tax 54361 82581 88423 128590 28220 5842 40167 52% 7% 45%

Profit after tax 49821 73271 76451 101532 23450 3180 25081 47% 4% 33%

85

2. Comparative Statement of Profit & Loss Account of SJVNL for the Years 2006, 2007, 2008 & 2009:

(Rs in LAKH)

SUMMARY

Financial statement analysis is largely is a study of the relationship among the various

financial factor in a business as disclosed by a single set of statements and a study of the

trend of these factors as shown in a series of statement. Financial analysis is a powerful

mechanism which helps in ascertaining the strengths and weakness of any organization.

Comparative analysis of the financial statements along with the cash flow statement and a

ratio analysis help a company to know how it has fared as compared to its earlier results. It

helps a company to analyze the growth pattern it has achieved.

It has helped in ascertaining the strengths and weakness in the operation and financial

position of SJVNL by comparing the financial statements of 2006, 2007, 2008 and 2009 of

SJVNL. It can be evident that SJVNL has a good liquidity position and long term financial

position of the company is also satisfactory. It is a growing organization, which can be seen

from the profit of the last four years.

The analysis and the training as a whole have helped a lot to understand the corporate

environment and the importance of financial analysis in deciding the future course of action.

86

CONCLUSION

Summarizing the above, the Following conclusion can be drawn:

The short-term financial position of the company is more than satisfactory especially in FY

2008-09 as it is seen from current ratio and quick ratio. It implies that current liability can be

comfortable paid out of the current assets. It also shows that company has enough cash and

bank balances to meet out any contingency that may arise in future. It has been seen that the

cash and bank balances have increased a lot in FY 2008-09. A part of it may be idle and can

be invested further.

The profitability position of the company is very good. The profit earned in the future more

and more invested can be done in other projects. It also affects the shareholder in respect of

the distribution of profit.

Long- term financial position of the company is going to be better day by day as it is seen

from the debt equity ratio which shows that outsider loans are continuously decreasing as

compared to insider’s fund. Large amount of the loans have been rapid. In the next five to ten

years, the company has nothing to remain as a loan if this rate of repayment of loans

continues.

The comparative analysis of the balance sheets and profit and loss account of the last four

years shows the trend of different items of the balance sheet and profit and loss account in

terms of rupees and percentage which shows that in the balance sheet, assets are having a

increasing trend and liabilities are having a decreasing trend as compared to previous year.

The analysis of cash flow statements shows the cash position of the company and past

behaviour of cycle and controlling the uses of cash in future. The cash flow statement of the

company shows that the inflow of cash largely from operating activities and outflow of cash

from financing activity due to repayments of loans.

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SUGGESTIONS & RECOMENDATIONS

In order to further improvement in profits and to maintain short-term & long-term financial

position, the following suggestions have been made:-

SJVN ltd. has good track record of profits as seen from last two years profits & loss

account. The generation, administration and other expenses are increasing thereby the

gross profit ratio has been declined. SJVNL should have make efforts to control the

generation, administration &other expenses so that it will not increase in future.

SJVNL has been paying large amount of interest & finance charges to the different

financial institutions. It has been suggested that SJVNL should restructure their loan

plan so that the advantage of fluctuating interest rate should have been taken from the

present competitive financing market. The company should try to restructure those

loans on which higher rate of interest have been paid till now.

Amount of current liabilities has been continuously increasing which have an adverse

effect on the short-term financing position of the company. As seen from the

generation process, it has been seen that not much amount of material is needed to

generate energy. Besides, this current liability is increasing. So it is suggested that

SJVNL should take care of not to increase the amount of current liabilities in future.

Long-term financial position of the SJVNL is satisfactory. To make it better it is

suggested that loans should be paid within next five to ten years, as seen from the last

year cash flow statement that the company is paying large amount of loans since the

year 2005-06. It is suggested that company should use its own funds in a better way,

so that its long-term financing position should be better in future.

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LIMITATION OF STUDY

First-it was not possible to study various aspect of the organization in detail.

Employees were apprehensive of secrecy data therefore hesitated in disclosing all the

data regarding some of the points concerning to this study.

As this is a general study, hypothesis could not be drawn.

Some executives could not afford time because of their busy schedule

The time was a big constraint as the two months was a short span of time. As the

respondents are on high designations, reaching them was hectic task.

The respondents were to be reached through emails and by personals and the time

were not enough get the response about the quarries and doubts raised

89

BIBLIOGRAPHY:

Annual Report of SJVNL 2005-06




Corporate Finance - Financial Management and Analysis by FRANK J. FABOZZI

&PAMELA P. PETERSON.

Financial management by I.M. PANDEY

Website of SJVNL (www.sjvn.nic.in)

www.google.com

http://money.rediff.com

90

http://money.rediff.com/

http://www.google.com/

http://www.sjvn.nic.in/

project report final sjvnl

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