A
Project Study Report
On (SSTPS) SINGRAULI
“WORKING CAPITAL MANAGEMENT” & Analysis of Performance Submitted in Partial Fulfillment for the Award of degree of MASTER OF BUSINESS ADMINISTRATION
Shankara International School of Management & Research Kukas, Jaipur Affileted by (RTU Kota)
Submitted By:
Submitted To:
Vidya Sagar
Ms. Aastha Jain
MBA 3rd Sem.
HOD (MBA)
Cont. No.-09351803696, 09452862824
(2009-2011) 1
PREFACE Management of working capital has always been a fascinating subject from the academic point of view and it must be admitted in the real world situation also efficiency with which working capital is Managed in a concern is of great significance for its overall well being Its growth and decline. Management of working capital is an important aspect of the overall financial management package. This is true in case of Company like N.T.P.C where large chunk of fund invested happens to be in current assets, the paper attempts to working capital Management of N.T.P.C one of the largest electricity generating organization. This issue has been tackled from all point of view using simple tools as well as the norms found in general in any company of the Indian Corporate scenario. The analysis of the company, components wise as well as overall, has been remarkably encouraging over the last five years.
ACKNOWLEDGEMENT 2
A lot of guidance & support was needed to complete this report. It was a work in which, I have seen the external world with same eyes but in different perception. At the outset, I express my profound gratitude to the Director & Faculty of “SHANKARA INERNATIONAL SCHOOL OF MANAGEMENT AND RESEARCH” for their kind co-operation &guidance during my project. I would like to make special note of thanks to Mr. Deepak Dubey for providing me an opportunity for training in Singrauli Super Thermal Power Station (SSTPS) a unit of (National Thermal Power Corporation {N.T.P.C}) and enriching, enlightening me with his valuable insights, innovative ideas and nurturing guidance. I would also like to thank the Director of “SHANKARA INERNATIONAL SCHOOL OF MANAGEMENT AND RESEARCH” Dr. T. K. JAIN & Guide Ms. Aastha Jain (HODMBA) for providing me his expert guidance & direction at every stage of my study, with a deep sense of gratitude that gives this report a right direction into real shape. I am also thankful to my friends who have provided their help & support during accomplishment of this report.
VIDYA SAGAR M.B.A. (3rd sem)
Executive Summary 3
This is to certify that Vidya Kumar Bhart student of “SHANKARA INERNATIONAL SCHOOL OF MANAGEMENT AND RESEARCH, KUKASH, JAIPUR” and has undergone summer training in Singrauli Super Thermal Power Station a unit of National Thermal Power Corporation (N.T.P.C) for a period of six weeks from 21th June to 5th August 2010. During this period the student has worked on the project titled “An Analysis of Working Capital Management” in N.T.P.C. The summer training project is an authentic work done by the student for the partial fulfillment for the award of the degree of MBA of SHANKARA
INERNATIONAL
SCHOOL
OF
MANAGEMENT
AND
RESEARCH,
KUKASH, JAIPUR, RAJASTHAN.
P. Ghosh (Sinner Accountant)
DECLARATION
4
I hereby declare that I have undergone Summer training at NTPC (National Thermal Power Corporation, Singrauli) and completed my summer training Project Work on “An analysis of Working Capital Management of the company” during June21, 2010 to August 5, 2010. This is my original work and not submitted for any other diploma or degree course.
Signature (Vidya SAGAR) MBA 3rd Sem.
TABLE OF CONTENTS 1. NTPC (Introduction)
Page No.
a. Our vision
8 5
b. c. d. e. f.
Corporate mission Corporate objectives Organization chart Corporate Structure of NTPC Different station of NTPC
9 10 14 17 18
2. Performance highlights(2008-09)
19
Joint Ventures
30
3. SSTPS (Introduction) a. b. c. d. e.
36
Financial sections of Singrauli Super Tharmal Power Station New Business Development Chairman Statement Environment Management Global Compact
4. Project design and Research methodology a. b. c. d. e. f. g. h.
Theoretical basis of Working Capital Management (Title) Factors Determining the Size of W.C. Type of W.C. Need of W.C. Objectives Working capital management in N.T.P.C (Sample) Scope of Study Limitation of Study
5. Facts and Findings
42 46 51 58 64 69 70 71 74 76 77 78 82 83 84
6. Analysis and Interpretation: a. b. c. d. e. f.
Current assets Cash Inventory Receivables Loan and advances Current liability
85 86 88 91 94 95
7. SWOT Analysis
96
8. Conclusion
98
9. Suggestions
100
10. Bibliography
101
6
7
INTRODUCTION OF NTPC
OUR VISION
○ To be one of the world ○ Largest and best power utilities ○ Powering India`s growth.
CORE VALUES (COMIT)
○ Customer Focus ○ Organization Pride ○ Mutual Respect and Trust ○
Initiative and Speed
○ Total Quality
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Corporate Mission •
Make available reliable and quality power in increasingly large quantities at competitive prices and ensure timely realization of revenues.
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Adopt a broad based capacity portfolio including hydro power, LNG, nuclear power and non-conventional and eco-friendly.
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Plan and speedily implement power projects using state-of-the-art technologies.
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Be an integrated utility by implementing strategic diversifications in area such as power trading, distribution, transmission, coal mining, coal beneficiation etc.
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Develop a strong portfolio of profitable business in overseas markets including technical services, generation assets etc.
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Lead fundamental and applied research for adoption of State-of-the-art technologies, breakthrough efficiency improvements and new fuels.
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Lead developmental efforts in the Indian Power Sector including assisting state utility reform, policy advocacy etc.
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Be a socially responsible corporate entity with thrust on environmental protection, as utilization community development and energy conservation.
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Continuously attract and develop competent and human resources to match world standards.
Corporate Objective 9
In pursuance of the vision and mission, the following are the corporate objectives of NTPC: To realize the vision and mission, eight key corporate objectives has been identified. These objectives would provide the link between the defined mission and the functional strategies.
Business portfolio growth: •
To further consolidate NTPC`s position as the leading thermal power generation company in India and establish a presence in hydro power segment.
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The broad base the generation mix by evaluating conventional and non-conventional sources of energy to ensure long run competitiveness and mitigate fuel risks.
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To diversify across the power value chain in India by considering backward and forward integration into area such as power trading, transmission, distribution, coal mining, coal beneficiation etc.
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To develop a portfolio of generation assets in international markets.
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To establish a strong services branding in the domestic and international market.
Customer focus: •
To faster a collaborative style of working with customers, growing to be a preferred brand for supply of quality power.
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To expand the relationship with exiting customers by offering a bouquet of services in addition to supply of power. E.g. Trading ,energy-consulting, distributionconsulting, management practices.
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To expand future customer portfolio through profitable diversification into downstream businesses, Intel alia retail distribution and direct supply.
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To ensure rapid commercial decision making, using customer specific information with adequate concern for the interest of the customer.
Agile Corporation: •
To ensure effectiveness in business decisions and responsiveness to change in the business environment by : 10
--Adopting a portfolio approach to new business development. --Continues and co-ordinate assessment of the business environment to identify and respond to opportunities and threats. •
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To develop a learning organization having knowledge-based competitive edge in current and future businesses. To effectively leverage information technology to ensure speedy decision-making across the organization.
Performance Leadership: •
To continuously improve on project execution time and cost in order to sustain long run competitiveness in generation.
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To operate& maintain NTPC stations at par with the best- run utilities in the world with respect to availability, reliability, efficiency, productivity and costs.
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To effectively leverage information Technology to drive process efficiencies.
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To aim for performance excellence in the diversification businesses.
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To embed quality in all systems and processes
Human Resource Development: •
To enhance organizational performance by institutionalizing any objective and open performance management system.
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To align individual and organizational needs and develop business leaders by implementing a career development system.
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To enhance commitment of employee by recognizing and rewarding high performance.
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To build and sustain learning organization of competent world class professionals.
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To institutionalize core values and create a culture of team- building, empowerment, equity, innovation and openness which would motivate employees and enable achievement of strategic objectives.
Financial Soundness: >To maintain and improve the financial soundness of NTPC by prudent management of the financial resources. >To continuously strive to reduce the cost of capital through prudent management of deployed funds, leveraging opportunities in domestic and international financial markets. 11
>To develop appropriate commercial policies and processes this would ensure remunerative tariffs and minimize receivables. >To continuously strive for reduction in cost of power generation by improving operating practices. Sustainable Power Development: •
To contribute to sustainable power development by discharging corporate social responsibilities.
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To lead the sector in the areas of resettlement and rehabilitation and environment protection including effective ash-utilization, peripheral development and energy conservation practice.
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To lead developmental efforts in the Indian power sector through efforts at policy advocacy, assisting customers in reform, disseminating best practices in the operations and management of power plants etc.
Research and Development: •
To pioneer the adoption of reliable, efficient and cost- effective technologies by carrying out fundamental and applied research in alternate fuels and technologies.
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To carry out research and development of breakthrough techniques in power plant construction and operation that can lead to more efficient, reliable and environment friendly operation of power plants in the country.
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To disseminate the technology to other players in the sector and the long run generating revenue through proprietary technologies.
POWERING INDIA’S GROWTH The year 1975 witnessed the birth of an organization that went on to achieve great feats in performance in a sector that was, until the, characterized largely by lack of investment, severe supply shortage and operational practices that made the commercial viability of the sector unsustainable. On November 7, 1975, NTPC came into being and with came a bold way of looking at the power infrastructure that could support the economy, reeling under the oil crisis. Since then, NTPC has led the power sector with the creation of an immensely 12
efficient and reliable power generation infrastructure which was till then largely in the hands of state electricity boards. NTPC was set up in central sector to build, own and operate large thermal power station having unit size of 200MW and 500MW.Capacity addition by NTPC was meant to supplement the efforts of states electricity boars. The first four projects, namely Singrauli, Korba, Ramagundam an Farakka, in four different regions of the country, were already on the drawing board and were to be set up as pithead stations. There was challenges a plenty. The expectations were high and so were the risks. NTPC symbolized of the country suffering from power black-outs, the government of India, which was trying to put an ailing, economy back on track and the World bank, which was supporting the country in many development initiatives. Thus NTPC was created not only to draw the power map of India but also to excel in its performance and set benchmarks for others to follow. It succeeded on both counts. NTPC the largest power company of the country has been consistently powering the growth of India. NTPC quickly upgraded the power system to 500 MW units by synchronizing its first 500 MW units at Singrauli in 1986.It had already broken new grid by employing the high voltage direct current (HVDC) technology for power transmission from Rihand to Delhi in 1984.
Growth of Installed Capacity & Organization Chart
13
NTPC`S share on 31 Mar 2006 in the total installed capacity of the country was 19.51% and it contributed 27.68% of the total power generation the country during 2005-06. An ISO 9001:2000 certified company, it is world`s sixth largest thermal power generator and second most efficient in capacity utilization. The corporation recorded a generation of 149.17 billion units (Bus) in 2003-04 an increase of 5.9% over 2002-03. Rated as one of the “Best companies to work for in India” it has developed into a multi-location and multi-fuel company over the past three decades. Driven by its vision to lead, it has charted out an ambitious growth plan of becoming a 40,000 MW plus company by 2012. Following are the other important highlights of 200304: • • •
•
Total income of more than Rs.25000 Crore Net profit in excess of Rs.5000 Crore A dividend payment of Rs. 1082.3 crore to the Govt. of India Received highest credit rating AAA by CRISIL and LAAA by ICRA for the domestic bonds and international rating for Eurobond
To tap the potential of power sector, it has formed the NTPC Electric Supply Company for power distribution activities. NTPC Vidyut Vihar Nigam, a subsidiary company has been set up for power trading. A powerful initiative for NTPC is its entry into the business of coal mining and coal washeries. NTPC has already entered the hydro sector through its 800 MW Koldam Hydro Power project in Himachal Pradesh. The company is committed to preserve and nurture the environment through the following projects: •
• •
On-line Paryavaran Monitoring System (PMS) introduced All NTPC station are ISO 140001 certified Planted 1.6 crore trees in and around its power stations for balancing the ecosystem 14
•
Nearly 75 lakhs tones of ash was utilized in cement, asbestos, land development and road embankment during 2003-04, which is 23.5%of total ash generation.
A member of Global Compact, a UN initiative, NTPC has undertaken initiatives to create a brighter future for the weaker sections of the society. Pro-active in the field corporate Social Responsibility(CRS), NTPC continues to focus on the resettlement and rehabilitation issue in respect of persons affected by its project.
NTPC plans to establish a foundation for: • • • •
Helping physically changed persons Electrification of remote and rural clusters Preservation and maintenance of historical monuments and Planned response in the time of natural disaster and calamities.
TPC has set new benchmarks for the power industry both in the area of power plant construction and operation. It is providing power at the cheapest average tariff in the country. With its experience and expertise in the power sector, NTPC is extending consultancy services to various organizations in the power business. NTPC is committed to the environment, generating power minimal environmental cost and preserving the ecology in the vicinity of the plants.NTPC has undertaken massive a forestation in the vicinity of its plants. Plantations have increased forest area and reduced barren land . The massive a forestation by NTPC in and around its Ramagundam Power Station (2100 MW) have contributed reducing the temperature in the areas by 3°C.NTPC has also taken proactive steps for ash utilization in 1991, it set up Ash Utilization Division to manage efficient use of the ash produced at its coal stations. This quality of the ash produced is ideal for use in cement, concrete, cellular concrete, building material. A “Centre for Power Efficiency and Environment Protection (CENPEEP)”has been established in the NTPC with the assistance of the United States Agency for International Development(USAID). CENPEEP is efficiency oriented, eco-friendly and eco-nurturing initiative- a symbol of NTPC`s concern towards environmental protection and continued commitment to sustainable power development in India. As a responsible corporate citizen, NTPC is making constant efforts to improve the socio-economic status of the people affected by the projects. Through its Rehabilitation and Resettlement Programs, the company endeavors to improve the overall socio-economic status of Project Affected Persons. NTPC was among the first Public Sector Enterprises to enter into a Memorandum of Understanding (MOU) with the Government in 1987-88. NTPC has been placed under the 15
“Excellent category” (the best category) every year since the MOU system became operative. Recognizing its excellent performance and vast potential, Government of the India has identified NTPC as one of the jewels of Public Sector `Navratans`- a potential global giant. Inspired by its glorious past and vibrant present, NTPC is well on its way to realize its vision of being “A world class integrated power major, powering India`s growth, with increasing global presence”. Gas based capacities had the advantages of lower implementation time cycles along with being more environment friendly.The World Bank approved the funding of the first three gas projects of NTPC at Anta, Auraiya and Kawas as early as in 1984. NTPC`s core business is engineering,construction and operation of power generating plants and also providing consultancy to power utilities in India and abroad. As on date the installed capacity of NTPC is 24,249 MW through it`s 14 coal based (19,980MW), 7 gas based (3,955 MW) and 3 Joint Venture Projects (314 MW). NTPC acquired 50% equity of the SAIL Power Supply Corporation Ltd.(SPSCL).This JV company operates the captive power plants of Durgapur (120 MW), Rourkela(120 MW) and Bhilai (74MW).NTPC also has 28.33% stake in Ratnagiri Gas & Power Private Limited (RGPPL) a joint venture company between NTPC,GAIL,Indian Financial Institutions and Maharashtra SEB Holding Co. Ltd. The present capacity of RGPPL is 740MW.
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Corporate Structure of NTPC
17
GM(S)
WORKS & CONSTRUCTION O&M CIVIL OPRN. , SUPDT. MGR Plant ST &II(O&E) MPWS BLR. SR. DY.MGR (M.) & A/B SAFETY TOWNSHIP CIVIL CONSTRUCTION ADMIN. SAL P TRG& SB/PSL/S DGM MGR ECDGM CHEMI. DGM TG P&S OPRN. DGM CHP FE. DGM DGM & DGM DGM CMO DGM A CONCUR (M.) ST.(FIN.) (EDP) (FQA) (C&M) (MTP) (TS) IR (HR) (FM) (T/A) (Elect.) (EMG) (C&I) II(M) (O) LAW & D.F .I(INDRL. ES AGM SR.VIG.OFFICER To (O&M) GM(S) V
DIFFERENT STATIONS OF NTPC STATIONS (A) Northern Region Singrauli Rihand Unchahar Tanda (B) National Capital Region Dadari (Coal) Anta (Gas) Auraiya (Gas) Dadari (Gas) Faridabad (Gas) (C) Western Region Korba Vindyachal Kawas (Gas) Jhanor Gandhar (Gas) (D) Eastern Region Farakka
CAPACITY (MW) 4780 2000 1500 840 440 3152 840 413 652 817 430 6653 2100 3260 645 648 5900 1600 18
Kahalgaon Talcher – Kaniha Talcher – Thermal (E) Southern Region Ramagundam Simhadri Rajiv Gandhi CCP (Gas) Total (A+B+C+D+E) =
840 3000 460 3950 2600 1000 350 24435
FINANCIAL HIGHLIGHTS (2008-09) OPERATIONAL EXCELLENCE: >Coal based Stations performed at the highest ever Plant Load Factor(PLF) of 89.43 % compared to 87.54 % last year. >Seven coal based stations (Dadri,Unchahar, Vindhyachal, Simhadri,Rihand, Tanda and Talcher-Kaniha) have achieved more than 90 % PLF. >NTPC Stations generated 188.67 billion Units(BU) - an increase of 10.41 % over the previous year >Contributed 28.50 % of the total electricity generated in the country during 2007-08 with 20.18 % share of the total installed capacity of the nation. >Uninterrupted running of Vindhyachal Unit #3 (210 MW) for 559 days is a new national record. >All the taken over stations operating at more than 85% PLF. >Commendable turnaround at Unchahar project. From a PLF of 18% at the time of takeover to present PLF of 95.59%. Feroze Gandhi Unchahar Thermal Power Station won ‘Asian Power Plant of the Year Award 2006’ instituted by Asian Power Magazine, Hong Kong for overall plant performance. >Singrauli, the flagship station of NTPC completes 25 years of generation. Unit I of Singrauli, a unit of 1982 vintage, registered more than 91 % average PLF during the last decade. ROBUST FINANCIALS: Provisional and unaudited Profit after tax for the year 2008-09 is Rs. 67,264 million as compared to Rs.58, 202 million during the year 2007-08, an increase of 15.57%. 19
Provisional and unaudited Net Sales of Rs 306,387 million during 2008-09 as against Rs. 261,429 million registering an increase of 17.20%. The provisional unaudited gross revenue is Rs. 332,997 million, during 2006-07 as against Rs 287,530 million for the year 2007-08, an increase of 15.81%. >Highest interim dividend @ 24% amounting to Rs. 19789 million during the year. >Highest ever capital expenditure of Rs. 78206 Million during 2006-07. >High Investor Confidence: Standard and Poor’s Ratings Services raised the Corporate Credit Rating of NTPC to ‘Investment Grade’ on the basis of its stand alone credit profile and dominant market share. >Latest Market Capitalization of the company is Rs 1327 billion (US $ 30.75 billion) making it the fourth largest company. >100 % realization of the billing for the fourth year in succession >Loan agreement of US $ 300 million (approximately Rs 13.15 billion) with ADB - first loan syndication deal for an Indian Corporate under the Asian Development Bank’s Complementary Finance Scheme for Sipat and Kahalgaon Stage II. >Loan agreement of US $ 100 million (approximately Rs 4.4 billion) signed with KfW to part finance the expenditure on Renovation and Modernisation of NTPC Power plants. >Term-loan of Rs. 20 billion disbursed by LIC in addition to Bonds of Rs. 15 billion placed with them to finance the capital expenditure of on-going projects. >Term loan of Rs. 15 billion signed with SBI in addition to term loan of Rs. 13 billion signed with various other banks to part finance on-going capacity addition programmes. >In the process of concluding financial tie-ups for about US $ 1.5 billion with international banks and multilateral institutions.
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RAPID GROWTH A) Capacity Addition >Current capacity of 27,404 MW, including 1054 MW from JVs >Plan to be a 50,000 MW plus Company by 2012 and 75,000 MW plus Company by 2017. >Ambitious capacity addition programme of about 22,000 MW during XI th plan and 25,000 MW during XII th plan. >7155 MW added during Xth plan (2002-07) including 740 MW at the Ratnagiri JV and 705 MW acquired at Badarpur from Government of India. >NTPC-Vindhyachal becomes the country’s largest thermal power station with installed capacity of 3,260 MW overtaking NTPC- Talcher Kaniha (3000 MW). >1,360 MW under construction. >Contracts awarded for 3600 MW during 2006-07. Total value of contracts awarded during the year is Rs 113.29 billion, the highest ever for the Company. >Thrust into hydro power generation gathers momentum – Koldam (800 MW) in Himachal Pradesh, Loharinag Pala(600 MW) and Tapovan Vishnugad (520 MW) in Uttarakhand are under construction. >MoU with the Government of Arunachal Pradesh for implementation of two hydro projects– Etalin (4000 MW) and Attunli (500 MW). Survey and investigation studies are in progress. >Successfully revived one block of Ratnagiri Gas and Power Pvt. Ltd. 5 months ahead of schedule in April 2006 within a record time of 5 months. >Site inspection studies commence after the inauguration of site office at Jhajjar for implementation of 1500 MW coal based power plant by ‘Aravali Power Company Private Ltd’, a Joint Venture of NTPC Limited, Haryana Power Generation Corporation Ltd. and Indraprastha Power Generation Company, Delhi.
21
>Vaishali Power Generating Company Ltd.’ incorporated as a JV of NTPC and Bihar SEB and has taken over Muzaffarpur Thermal Power Station (2x110 MW). The JV shall renovate and run the plant. >CCEA approval has been accorded for Nabinagar Thermal Power Project, a JV project of NTPC and the Railways.
B) Fuel Security >Mining Plan of 15 Million Tone Per Annum (MTPA) for NTPC’s first coal mining project at Pakri Barwadih approved by Ministry of Coal. The largest mining capacity plan in the first phase of any mine in India >MoU signed with Coal India Ltd. for jointly promoting one or more JV Companies for undertaking the development, operation and maintenance of Coal Block(s) and Integrated Coal Based Power Plants >MoU signed for creation of a JV Company with Singareni Collieries Company Ltd. (SCCL) for taking up various activities in Coal & Power Sectors in India and abroad. >MoU signed with BEML to associate with BEML in the area of mining through supply of mining equipments and as potential Mine Developer and Operator. >Model Fuel Supply Agreement has been initialed on 29.03.07 with CIL for coal supplies to operating and future power stations.
C) Strategic Initiatives >Company’s MoA under amendment to enable it to enter into nuclear power development. Consultants appointed for the purpose have recommended the roadmap for the initial steps on which activities are going on. >Strategic initiative to enter into manufacturing - JV with Transformers and Electricals Kerala Ltd (TELK). >Collaborative tie-up with Society for Integrated Circuit Technology and Applied Research (SITAR) for identifying the technology provider for LED Lamp manufacturing.
D) Going Global
22
>Memorandum of Agreement signed with the Government of Sri Lanka and Ceylon Electricity Board (CEB) for setting up a 500 MW (2 X 250 MW) coal based thermal power plant in Sri Lanka. >MoU signed with Kyushu Electric Power Co. Inc. (KEPCO), Japan for establishing an alliance for exchange of information and experts from different areas of the business. >Company is in the process of finalizing MoU with the Govt. of Nigeria for setting up power plants against allocation of LNG on long term basis for NTPC plants in India. >A representative office has been opened in Dubai to scout for new business opportunities in the Middle East Region. POWER TRADING >NTPC Vidyut Vyapar Nigam Limited (NVVN) traded 2664 MUs of power as against 1643 MUs in the previous year and posted a gross revenue (unaudited provisional) of Rs. 8812 million as against Rs. 4441 million in the previous year earning a provisional unedited net profit of Rs. 65 million as against Rs. 33 million in the previous year.
GREEN POWER >NTPC has created a green wealth of more than 182 lakh trees till March 2009. >All NTPC stations have been certified with ISO 14001 .by international and national certifying agencies. >All plants are designed keeping in view futuristic norms for Suspended Particulate Matter (SPM) emissions. >Studies conducted through National Remote Sensing Agency, Hyderabad at Ramagundam, Farakka, Korba, Vindhyachal, Rihand and Singrauli reveal significant environmental gains in the vicinity areas as a result of sound environment management practices. >During 2008-09, about 207 lakh tonnes of ash was utilized for productive purposes, which is 53% of ash utilization against MoU target of 42%.
CSR INITIATIVES >Provided support to Hyderabad Eye Research Foundation for three specialized Eye Centers at Bhubaneswar Eye Hospital. >Provided support for setting up a technical polytechnic at Uttarakhand, at Kaladungi, Distt. Nainital. >Total of 424 physically challenged persons are on the rolls of NTPC 23
>To serve and empower the physically challenged and economically weaker sections of the society, NTPC Foundation provides loans/training/medical treatment to physically challenged persons and economically weaker sections in a phased manner.
SECTOR SUPPORT >Under the Partnership in Excellence (PIE) programme launched by MOP, Power plants entrusted to NTPC recorded net increase of approximately 2833 million units during 200809, equivalent to 430 MW capacity additions at 75% PLF. >Distributed Generation (DG) projects commissioned at six Villages in UP, Rajasthan and Chhattisgarh. >Grant Agreement(s) for implementation of nine DG Projects signed between NTPC and PFC. >NTPC is associated in electrification of about 40,000 villages in 6 States under Rajiv Gandhi Gramin Vidyutikaran Yojana. Nearly 3000 villages and 60000 Below Poverty Line households targeted in 2008-09.
WINNING ACCOLADES >Seven projects of NTPC received the National Awards for Meritorious Performance during for the year 2004-05 & 2005-06 from the Prime Minister. >Received MoU Award for Excellence in Performance consecutively for two years (2004-05 and 2005-06) >The Company was adjudged as “The Most Admired Organization in the Public Sector” in a survey conducted by ‘Power Line’ >Received SCOPE Gold Trophy for Best Practices in Human Resource Management. >NTPC won the Golden Peacock National Award for Corporate Social Responsibility in Emerging Economies (Public Sector), 2007. >Ranked as the 494th largest company in the world in the Forbes List of World’s 2000 Largest Companies for the year 2006, retaining its position as the Fifth Largest Company in India. >CMD, NTPC received the 4th Wartsila Mantosh Sondhi Award for outstanding achievements and contributions to the Sector.
OPERATIONAL PERFORMANCE 24
•
• •
The stations of the company recorded a total generation of 188.67 billion Units (BUs), showing an increase of 10.41 % over the previous year’s generation. With a share of 20.18% in the total installed capacity of the country, NTPC generated 28.50% electricity during 2008-09. NTPC stations recorded an all time high PLF of 89.43 % which is highest for any financial year since its inception as compared to 87.54 % last year. Dadri (Coal) recorded the highest PLF of 95.69 %. The other stations to record over 90 % PLF are Unchahar (95.59 %), Vindhyachal (92.75%), Simhadri (92.10%), Rihand (91.90 %), Tanda (91.14%), Talcher Kaniha ( 90.02 % ).
GROSS REVENUE AND PROFIT •
•
Provisional and unaudited net sales of Rs. 306,387 million during the year 2008-09 as against Rs. 261,429 million for the year 2007-08 registering an increase of 17.20%. The provisional and unaudited Gross Revenue is Rs. 332,997 million during 2006-07 as against Rs. 287,530 million for the year 2005-06, an increase of 15.81%. Provisional and unaudited profit after tax for the year 2008-09 is Rs. 67,264 million as compared to Rs. 58,202 million during the year 2007-08, an increase of 15.57%.
BUDGET UTILISATION •
Capital expenditure incurred in 2008-09 on various capital schemes is Rs.78205million. In the previous year 2007-08, capital expenditure incurred was Rs.70189 million.
CAPITAL OUTLAY •
The approved outlay for 2008-09 for capital schemes of NTPC is Rs. 127920 million.
EQUITY •
NTPC stocks continued to attract investors at the stock markets. The stocks closed at Rs. 150.25 at the end of the year as against the opening price of Rs. 134.10. The latest Market Capitalization of the company is Rs. 1327 billion (US $ 30.75 billion) and the company is amongst the top four companies in terms of market capitalization. The company also declared an all time high interim dividend @ 24% of paid-up capital resulting into a dividend payout of Rs. 19789 million.
BORROWINGS •
NTPC has tied up loans from Domestic banks and Financial Institutions aggregating Rs. 203344 million as on 31st March, 2009 for its capacity addition programmes.
•
During the year 2008-09, 3 new loans aggregating to Rs. 28000 million were tied up. An amount of Rs
•
49000 million including Rs 15000 million placed with LIC as Bonds was utilized during 2008-09. 25
•
The cumulative domestic borrowing up to 31st March, 2009 is Rs. 168894 million. Standard & Poor’s have revised outlook on the rating of the company from ‘BB +’ to‘BBB-’.
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During the year, NTPC has received Issuer rating of ‘LAAA’ from ICRA and ‘AAA’ from CRISIL which indicates highest credit quality.
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NTPC has signed an agreement for a term loan of US $ 100 million with KfW of Germany on March 23, 2007 at Frankfurt am Main. This is the first loan provided directly by them to NTPC. The funds would be utilized to part finance the expenditure on Renovation & Modernization of NTPC power plants.
•
Bonds amounting to Rs. 15000 million were placed with Life Insurance Corporation of India during 2006-07. These bonds have a door to door maturity of 14 years each. Repayment starts in the fifth year for each of the series in 20 equal half yearly installments. In order to provide easy transferability, these bonds have been issued under STRAPP (Separately Transferable Redeemable Principal Parts) structure. The proceeds from the bonds have been utilized to finance the capital expenditure of the projects incurred during the year 2006-07.With issue of Series XXII, XXIII and XXIV Bonds, outstanding amount of Bonds as on 31.03.2007 aggregates to Rs. 59500 millions. Out of which bonds amounting to Rs. 45000 million have been placed with LIC. Part-A of 8.05% Series XIV Secured NonCumulative Non-Convertible Redeemable Taxable Bonds amounting to Rs. 2500 million was redeemed successfully 1st August 2006. Full and final redemption of 13.60% Series XV-C Bonds aggregating Rs 44 million was made 28th September 2006. During the period 01.04.2006 to 31.03.2007 interest rates of Public Deposit Schemes have been revised upwards. The present range of interest effective from 21.12.2006 offered on PDS schemes is 7.25%-7.50%-7.75% for a deposit of period for 1-2-3 years respectively. As on 31.03.2007, there are 604 deposit holders with outstanding deposit amount aggregating to Rs. 328 million.
REALIZATION •
The realization of monthly bills from April, 2008 to March, 2009 was 100%. All the customers have opened and are maintaining LC equal to 105% of average monthly billing as per One – Time Settlement Scheme and are making full payment of current bill.
CAPACITY ADDITION PROGRAMME •
NTPC has adopted multi-pronged growth strategy to become 50,000 MW plus company by the year 2012.The strategy, inter-alia includes capacity addition through green field projects, expansion of existing stations, joint venture and takeover of SEB’s stations. Further, new business opportunities are being continuously explored 26
through environment scanning and new business plans are adopted through midcourse correction. •
NTPC has envisaged 75000 MW plus installed capacity by 2017 and same include significant addition of hydro capacity and forays into Non-conventional and Nuclear power generation.
Capacity added during the year 2008-09 is as follows:1. 1.Vindhyachal-III (2x500 MW) - 1000 MW 2. 2.Unchahar-III (1x210 MW) - 210 MW 3. 3.Kahalgaon-II, Phase-I (2x500 MW) - 500 MW TOTAL – 1710 MW 4. Capacity addition through acquisition (BTPS) - 705 MW 5. Capacity addition through Joint Venture (RGPPL, Dabhol) - 740 MW GRAND TOTAL - 3155 MW Capacity commissioned in X Plan (2002-07):Project (Fuel) / State Capacity (in MW) I. Capacity Commissioned Simhadri (Coal)/A.P. 1000 (500) Talcher-II (Coal)/Orissa 2000( 2000) Ramagundam-III (Coal)/A.P. 500 (500) Rihand-II (Coal)/U.P. 1000 (1000) Unchahar-III (Coal)/U.P. 210 (210) Vindhyachal-III (Coal)/M.P. 1000 (1000) Kahalgaon-II, Phase-I (Coal)/Bihar 1000 (500) Sub-total-I 5710 II. Capacity addition through Joint Venture RGPPL-JV, Dabhol (Gas/Liquid fuel)/Maharashtra 740 (740) Sub-total-II 740 III. Capacity Addition through Acquisition Badarpur TPS (Coal)/Delhi 705 (705) Sub-total-III 705 GRAND TOTAL (I TO III) 7155 27
EMPHASIS ON HYDRO NTPC has been giving increased thrust to hydro development for a balanced portfolio for long term sustainability.1920 MW under implementation at 3 different locations. The hydro project at Koldam (800 MW) is at advanced stages of implementation and first unit is likely to be commissioned by 2008-09. COAL CONSUMPTION NTPC continues to be the Country’s single largest consumer of coal. Its stations consumed 111.02 million tonnes of domestic coal during the year 2008-09 as compared to coal consumed of 101.91 Million tonnes during 2007-08 recording an increase of 8.93%. 2.43 Million tons of imported coal was consumed during 2008 –09 as against 2.93 Million last year COAL MINING NTPC has got the Mining Plan of 15 MTPA for its first coal mining project at Pakri Barwadih. It is the largest ever capacity planned, in the very first phase, in a single mine in the country. For the other coal blocks allotted to NTPC, actions on various other activities have been initiated. As a part of developing strategic alliances as well as deriving technical strengths, NTPC has entered into MoUs with MECL, SCCL and BEML. NTPC has also signed a MoU with CIL for formation of a Joint Venture to undertake development, Operation & Maintenance of coal blocks and integrated coal - based power plants. The areas of immediate cooperation are development of two coal blocks Brahmini (1900 MT and Chicro Patsimal (356 MT) in Jharkhand to be developed and operated as 50 : 50 joint venture between CIL and NTPC. CONSULTANCY WING During the current year (2009-010), the Consultancy Wing secured orders valued at Rs.1933.3 million, including overseas order. The order booking include an order of Rs.600 million from NTPC Tamil Nadu Energy Company Ltd. (NTECL) for design and engineering, contracting, monitoring, quality assurance, inspection services for 2x500 MW Power Plant at Ennore. During the year, Consultancy Wing achieved a provisional turnover of Rs.610 million and booked a provisional net profit of Rs.170 million. The turnover achieved is the highest since inception of Consultancy Wing. NTPC VIDYUT VYAPAR NIGAM LTD. (NVVN) NTPC Vidyut Vyapar Nigam Ltd. a, subsidiary of NTPC transacted business of 2664.31 MUs of power in 2006-07. Estimated net profit after tax (provisional unaudited) is Rs 65 million in comparison to last years profit of Rs 33 million. The turnover of the 28
company during the year was Rs.8812.61 million (provisional unaudited) in comparison to Rs.4441.39 million of previous year.
NTPC ELECTRIC SUPPLY COMPANY LTD. (NESCL) The Provisional turnover of the company for the year 2008-09 is Rs 164.78 million and Profit (after tax) of the company for the year is Rs. 36.89 million. NTPC HYDRO LTD. •
NTPC Ltd., in furtherance of its efforts to take forward the hydro capacity addition and to give exclusive thrust to small and medium sized Hydro Power Projects upto 250MW capacity, has set up a wholly owned subsidiary company named “NTPC Hydro Ltd.” in December, 2002.
•
NTPC Hydro Ltd.’s (NHL) maiden venture, namely LATA-TAPOVAN Project (171MW capacity) is located in Chamoli district of Uttarakhand state. MOEF accorded Environmental Clearance on 21.02.07. Land acquisition activities are in full swing and Notifications under Sections 4, 17 & 6 for private land have already been issued.
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NHL’s second venture is Rammam Stage-III Project (120 MW capacity) and is located in Darjeeling district of West Bengal state. The DPR of this project has been formulated, CEA accorded Techno Economic Clearance (TEC) on 12.09.06 and balance clearances are under progress.
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JOINT VENTURES •
Utility Powertech Ltd. (UPL)
UPL (a Joint Venture Company of NTPC & Reliance Energy) formed to take up assignments of construction, erection and supervision in power sector and other sectors in India and abroad is operating satisfactorily. The Provisional Turnover and Profit (after tax) for the year 2006-07 are Rs. 1759.11 million and Rs. 83.91 million respectively. •
NTPC Alstom Power Services Pvt. Ltd. (NASL)
NTPC Limited has formed a JV Company with ASLTOM POWER GENERATION AG, under the name of “NTPC-ALSTOM Power Services Private Limited (NASL) for taking up Renovation & Modernization assignments of power plants both in India and abroad. The provisional gross revenue for the year 2006-07 is Rs446 million and Profit (after tax) of the company for the year is Rs.29.50 million. •
NTPC-SAIL Power Company (Pvt.) Ltd. (NSPCL)
This joint venture company was formed for operating and maintaining the captive power plants of SAIL. The Provisional turnover of the NSPCL for the year 2006-07 is Rs 1900 Million and Profit (after tax) of the company for the year is Rs.295 Million. The company declared an interim dividend of Rs. 30 Million for the year 2006-07 •
Ratnagiri Gas And Power Pvt. Limited
Ratnagiri Gas and Power Supply Pvt Ltd has been formed as joint venture between NTPC, GAIL, Maharashtra State Electricity Board and Indian Financial institutions with NTPC having a stake of 28.33% for taking over and operating Dabhol Power Project.
NEW JOINT VENTURES:•
Tamil Nadu Electricity Board (TNEB)
NTPC and TNEB have formed a Joint Venture Company under the name of “NTPC Tamil Nadu Energy Company Ltd”. The company was incorporated on 23.05.2003 to set up a coal-based power station of 1000 MW capacity, at Ennore, using Ennoreport infrastructure facilities. Site Specific & other studies have been completed. The Joint Venture Agreement was signed on 22nd January 2006. NIT For the main plant has been issued and the main plant award is expected by May 2007. •
Joint Venture with Railways
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NTPC has signed an MOU with Ministry of Railways on 18.02.2002 for setting up power plant(s) up to 2000 MW capacity to meet the traction and non-traction power requirements of Railways. After studying various sites in India, it has been decided to setup a 1000 MW (4x250 MW) power plant at Nabinagar, in Bihar. CCEA approval has been accorded for the Power Project and ICB permission for Main Plant has been received. •
Joint Venture with BSEB
Vaishali Power Generating Company’ has been incorporated as a JV of NTPC and Bihar SEB and has taken over Muzaffarpur Thermal Power Station (2 x 110 MW). The JV shall renovate and run the plant. •
PIE
Under the Partnership in Excellence programme, 13 stations with an operating capacity of 5050 MW were entrusted to NTPC. Performance turnaround has taken place at eight power stations. The plants entrusted to NTPC recorded an additional generation of power-2833 MUs –corresponding to an equivalent capacity addition of 430 MW, considering Average PLF as 75%. ENERGY TECHNOLOGIES NTPC has set up Energy Technologies Centre with a well-defined mandate to develop and innovate cutting edge technologies to meet the ever-changing scenario in power sector. The centre is working in both fundamental and applied fields with the ultimate objective of commercializing the technologies both within and outside. Setting up of this centre by NTPC meets a long-term need of such a centre in the power sector in India. Energy Technologies has already started its research activities in-house and through networking with established research institutes in India. ENVIRONMENT MANAGEMENT • •
All NTPC stations have been certified with ISO-14001 by reputed International certifying agencies. NTPC has planted a total of more than 18.2 Million trees till March-07 including more than 0.28 million trees planted during the current year 2008-09
ASH UTILIZATION •
•
An all time high 20.7 million tonnes of ash has been utilized for various productive purposes which is 53 % of the total ash generation against MOU target of 42%. The major utilization was in the areas of Cement & Asbestos Industry, Road Embankment, Mine filling, Ash Dyke Raising & Land Development. Ash is also being exported to Middle East, Bangladesh and Nepal from NTPC stations at Simhadri, Farakka and Kahalgaon respectively.
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•
During the year, 66 million ash bricks have been produced and so far more than 370 million ash bricks have been manufactured and utilized for various in- house construction activities.
CORPORATE SOCIAL RESPONSIBILITY (CSR) •
In line with the Corporate Social Responsibility – Community Development (CSRCD) Policy, NTPC has taken up following activities addressing the niche domains of socio-economic issues at National level:-The Global Compact of UN is the largest voluntary corporate responsibility initiative, with nearly 2000 companies participating from over 80 countries. Keenly conscious of its social responsibilities, NTPC became member of Global Compact – an UN initiative for Corporate Social Responsibility (CSR). NTPC confirms its involvement in various CSR activities in line with 10 Global Compact principles and sharing of experiences with the representatives of the world. As a CSR initiative in the field of Health, NTPC has committed to provide support to Hyderabad Eye Research Foundation for three specialized Eye Centres at Bhubaneswar Eye Hospital, Bhubaneswar, and Orissa. Further, in the field of education, NTPC is committed to provide support for setting up a technical polytechnic at Uttarakhand, at Kaladungi, Dist: Nainital. Support for a Women’s Polytechnic at Gopeshwar, Dist: Chamoli has also been committed.
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In Orissa State, NTPC has taken up Developmental works for car parking, water tanks and lighting of approach road for Shree Jagannath Temple, Puri.
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NTPC FOUNDATION NTPC foundation has been established by the company under Indian Trust Act, 1882 for addressing the niche domains of social development at national level through strategic interventions at National Level. NTPC Foundation provides loans/training/medical treatment to physically challenged persons and economically weaker sections in a phased manner. RESETTLEMENT & REHABILITATION NTPC is committed to help the populace displaced for execution of its projects and has been making efforts to improve the Socio – economic status of Project Affected Persons (PAPs). In line with provisions under NTPC R&R Policy, Socio – economic Survey (SES) conducted for Parkri – Barwadih and awarded for Chatti-Bariyatu, Kerandhari, KorbaII-Ash dyke, Dadri-II-water reservoir, Talcher(kaniha)-MGR and Mouda. Implementation of RAP (Rehabilitation Action Plan) for Koldam, Barh, Sipat is under progress. Formulation of RAP is under progress for North-Karanpura, Talcher- Thermal and Parkri Barwadih. Implementation of RAP for Anta-II has been completed in March 2007.Social Impact Evaluation study (SIE) for Sipat awarded to XIDAS, Jabalpur to evaluate the impact of RAP implementation and is under progress. For Simhadri, SIE was conducted by Andhra University, Waltair. SAFETY Looking into the necessity and to ensure the best health and safety performance and the accident free environment, all NTPC Projects / Stations have obtained the OHSAS – 18001 (Occupational Health & Safety Management Systems) certification. NTPC Ramagundam, Dadri, Kahalgaon and Korba station have won the first “Safety Innovation Award 2006” for implementing innovative, Safety and Quality Procedures and Practices. The award is instituted by the Safety and quality forum of Institution of Engineers (India). The award has been conferred to Ramagundam for second year in succession HUMAN RESOURCE MANAGEMENT The total strength of employees of the Corporation stands at 23,663 as on 31.03.2009 as against 21,757 for the year 2007-08 (excluding employees in JVs & Subsidiaries). All efforts were made to improve the manpower utilization. The overall Man : MW ratio for the year is 0.92. TRAINING AND DEVELOPMENT The Power Management Institute (PMI), NTPC’s apex Training and Development Centre conducted 325 training programmes, The number of participants trained both internal and external was 8689. In its effort to go global PMI has organised an international seminar on “Developing Global Business Competencies” at Manchester Business School, 33
UK. In its effort to provide training support to NTPC’s customers, PMI has hosted 15 nos. Distribution Reforms and Upgrades Management Programmes which were attended by 263 SEB participants. EMPLOYEE RELATIONS Industrial Relations in NTPC continued to be cordial and harmonious during the year. Workshops for employee representatives from projects were held, at the apex as well as regional level, to sensitize them of the opportunities, threats and challenges facing the company in the dynamics of an uncertain business environment and to reiterate their significant role in synergizing the potential of the human resource – the sole differentiating factor of competitive advantage in today’s knowledge economy.
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AWARDS
Unchahar station of NTPC received the coveted Asian Power Plant of the Year Award, 2006 for Efficiency, Environment, Operational Characteristics and Business Management.
NTPC bags Seven National Awards for Meritorious Performance. Ranked Top Awardees for MoU Award for Excellence in Performance by Govt. of
India. NTPC has been ranked first as per total income in the Power – Generation,
Transmission, Distribution Sector among India’s Top 500 companies for the year 2006 by Dun & Bradstreet. NTPC identified as the 2006 Platt’s Top 250 Global Energy Company. Four NTPC stations received the CII Exim Bank Excellence Award 2006. PMI, NTPC has bagged the prestigious Golden Peacock National Training Award ,
2006, for 4th year in succession. NTPC won the Golden Peacock National Award for Corporate Social Responsibility in Emerging Economies (Public Sector), 2007. Won the SCOPE Meritorious Award for Best Practices in Human Resource Management. CMD, NTPC received the 4th Wartsila Mantosh Sondhi Award for outstanding
achievements and contributions to the Sector.
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SSTPS (INTRODUCTION) The year 1975 witnessed the birth of an organization that went on to achieve great feats in performance in a sector that was,until then,characterized largely by lack of investment, severe supply shortage and operational practices that made the commercial viability of the sector unsustainable. On November 7 1975, NTPC came into being and with it came a bold way of looking at the power infrastructure that could support the economy, then reeling under the oil crisis. Since then, NTPC has led the power sector with the creation of an immensely efficient and reliable power generation infrastructure which was till then largely in the hands of state electricity boards. NTPC was set up in the central sector to build, own and operate large thermal power stations which unit size of 200 MW and 500MW. Capacity addition by NTPC was meant to supplement the efforts of state electricity boards (SEBs).The first four projects, namely, singrauli, Korba, Ramagundam, Farakka, in four different regions of the country, were already on the drawing board and were to be set up as pit-head stations. There were challenges aplenty. The expectations were high and so were the risks. NTPC symbolized hope of the country suffering from crippling power black-outs, the government of India, which was trying to put an ailing, economy back on track and the World Bank, which was supporting the country in many development initiatives. Thus, NTPC was created not only to redraw the power map of India but also to excel in its performance and set benchmarks for others to follow. It succeeded on both counts. In 1978 it was a clean state.Until the first sketches of an idea were scribbled on it. And them, in no time, it seems, what was a dream became a reality–power. Today, Singrauli stands tall among India’s foremost power plants. Cleared by the Government of India on 8th Dec.76, the project began to take shape in early’78. An intrepid group of site engineers, supervisors and workmen braved the elements to lay the foundations of what at the time was thought to be a dream. By mid 1978, the first T.G raft connecting, a very precise and massive task was completed.By Nov. 78, the erection of the first steam generator had commissioned. In Nov.’79, the first major mile-stone in the erection of the main plant was reached with the boiler drum of unit–I being lifted successfully, signaling the commencement of pressure parts erections.
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By June’80 the turbine installation work had already begun, and in Sept.’81, the boiler was lit up and the cleaning process completed by Oct.’81. Finally on 13th Feb.’1982 the turbine was steam rolled and the first unit of NTPC was successfully synchronized with the Northern Grid at Shaktinagar. The peak load of 200MW was touched in April’82. The fifth and last one on 20th Feb.’84, bringing the curtain down on stage –I of the project.
The second phase:The second phase has begun even before the first ended. In Jan.’83, work on the main plant for two 500MW units had already begun. In mid’83, the boiler erection work had commenced.Careful planning and thorough checks were going into the execution of this work the first coal fired unit of 500MW, only the second of its size in India. Mid way through 1985, another development took place at singrauli- Shaktinagar came on the railway map of India, assisting greatly in transportation of heavy equipment as well as bulk materials to the SSTPS. With everything going like clock work, the pace of work increase and in May’86, another milestone was achieved when the first 500MW boiler was lit up. On 23rd Dec’86 success followed, with the unit being synchronized a month ahead of schedule the first 500MW unit in the public sector. At the same time the second 500MW unit was steadily taking shape. The experience gained on the first 500MW unit was put to good use and the unit was brought to synchronization swiftly, more than two months ahead of schedule. The day was 23rd Nov. 1987; the crowning glory was the fact that the unit was coal fired on 31 st Dec.’1987 within 37days from the date of synchronization.
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SINGRAULI AT A GLANCE 1-Project - SINGRAULI SUPER THERMAL POWER STATION (2000MW) 2- Location - Sub-Divisional Office
: Delhi
- District & State
: Sonebhadra (U.P.)
- Nearest major road head
: Shaktinagar & Renukoot.
- Nearest Helipad
: Shaktinagar (U.P.)
- Nearest Airport
; Singrauli (M.P.)
3- Capacity in MW:
Stage-I
Stage-II
Total
600MW
1400MW
2000MW
(3x200)
(2x200) +(2x500)
4- Associated Transmission System:Stage –I (600MW):
Singrauli – Obra, Kms 57 (Approx) Singrauli – Kanpur, Kms 455(Approx)
Stage-II(1400MW):
Singrauli- Lucknow, Kms 405 (Approx) Muradabad-Muradabad Kms332 (Approx) Muradabad-Muradnagar Kms132 (Approx) Muradnagar-Panipat Kms87 (Approx) Singrauli – Kanpur Kms 422 (Approx) Kanpur- Agra- Jaipur Kms 499 (Approx) Total Kms 2389
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5- Approval Date: Stage – I (600MW) December’76 Stage - II (1400MW) July’79 Associated Transmission line system- January’78 (Stage – I) January’81 (Stage - II) Government approval for 2000MW obtain on 08/01 /1987 7- Coal/ Gas source:
Jayant Mine and Singrauli Coal fields.
8- Cooling water:
Rihand Reservior (200 cusecs consumptive water) once through cooling system.
9- External Financing: (World Bank) :-
Stage-I
Stage-II
US$ 150
US$ 300
10- Allocation of power: UP
SEB
:850MW
Tariff – 35.50
Rajsthan
SEB
:300MW
Gen. Station 35.50p/Kwh
Panjab
SEB
:200MW
(base tariff Fuel price
Hariyana SEB
:200MW
Adjustment, 7.43p/Kwh for TL system)
Delhi
:150MW
Gen.Cost 29.0p/Kwh
ESU
Unallocated SEB
:300MW
11-Commissioning Date:
(Actual/ Anticipated)
Unit- 1 (200MW)
- Feb. 82 Actual: Singrauli –Obra, March 82
Unit- 2 (200MW)
- Nov.82 Actual: Singrauli- Kanpur-I, Nov.82
Unit- 3 (200MW)
- March83 Actual; Singrauli- Lucknow, Feb.86
Unit- 4 (200MW)
- Nov. 83 Actual: Lucknow- Muradabad, May 86
Unit- 5 (200MW)
- Feb. 84 Actual: Muradabad- muradnagar, May 86
Unit- 6 (500MW)
- Dec. 86 Actual: Muradnagar- Panipat, Nov. 84 39
Unit- 7 (500MW)
- Nov.87 Actual: Singrauli- Kanpur-II, March 87 : Kanpur- Agra- Jaipur, Nov. 86
12- Water pollution clearance: Consent order for air and water pollution obtained: Renewal for’89 under progress.
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FINANCIAL SECTIONS Different sections of Singrauli Super thermal power Station (SSTPS) Finance Department's. This section Work on a system that is online integrated material and Finance accounting system (OLIMFAS). The language of the system is Indresh. The new programme coming in one or two year is enterprise resource planning system (ERP). Work-maintenance of fixed assets, make register. Provide depreciation threw its Stateline method on the fixed assets. When the Value of assets comes down 5% of its total value than no depreciation will charge on the assets. The rate of depreciation giving by central electricity authority (CEA). This section also make budget-Firstly a cost centre is allocated in each department and each cost centre is handle by a responsibility centre. They make estimation and give to book and budget section. This section collects all estimation from each responsibility centre and make final estimation and send it to corporate office then corporate office finalize this budget estimate. In each six-month the budget estimate is revised and if any change are required then it sent to corporate office and then it finalize. All these things done with the help of planning and system department. 1. BOOKS & BUDGET: The main work of this section is accounting and maintaining the register of finance. Another function done by this section is auditing for which the accountants are outsources by the NTPC. The main audits conducted by the company are: 1. Internal audit & Statutory audit:- mainly done by the outsources accountants. It is
done quarterly or as per the need. 2. Controller & Auditor general of India audit- This audit done by controller’s attorney general of India. This is the audit of balance sheets. 3. Proprietary audit-This audit is done for check the system to see that all going properly or not. It is done once in five-year. 4. Cost audit:-From2005-2006 company start cost audit. It handles the cash. These departments send the estimation for cash requirement, to the corporate office weekly and daily basis and also tell why it is required. Also interface with banks, make payment and receive payment. 42
Take custody of monetary and non-monetary instrument for security. It is also take bank guarantee for performance; it is also called documentary credit. 2. COMMERCIAL SECTIONThis section does the accounting of sales of the project. It makes oil and coal payment voucher. It also maintain priced store ledger (PSL). 3. STORE BILLS SECTIONThis section does the payment of inventory as per terms of purchase order, advance and final payment and maintains account. Make advance schedule and material under inspection schedule. It also makes insurance payment, transporters payment, premium and claims. 4- VETTING AND CONCURRENCEThe work of this Section is as follows (a) Contract and Purchase estimation – If we purchase any goods in second time then last price is based. If we purchase first time then User give budget offer. (b) Vetting of competitive statement then we calculate Land Price. (c) Vetting of Draft Purchase Order. (d) Finance Concurrence. 5-PRICED STORE LEDGER (PSL) SECTIONThis section do the physical inventory valuation. The method of valuation is monthly moving weighted average. This valuation is done in every month. There are some tools for PSL: 1-(SRV) Store Received Voucher on invoice value 2-(MRN) Material Return Note. 3-(SIV) Store Issue Voucher. 4-(MTN) Material Transfer Note. This department gives the reports in various topic like-XYZ, ABC and VED analysis report, and non-moving item report. And also done physical verification of stock every year. 43
6-WORKS BILL SECTION– This Section does the payment of services taken by SSTPS like Maintenance Contracts. The payment made on Running Bill on the basis of Measurement Book. Also do the final payment and take Penalties and return there Securities. This section also do the capitalization were work is going on. The work not had done fully completed Show under Capital Work In Progress Account (CWIP). When this work complete then CWIP to Fixed Assets. Incidental Expenditure during Construction (IEDC) and Interest During Construction (IDC) add in CWIP Account. Renovation and Modernization Work is going on four Station i.e. Singrauli, Korba, Ramagundam and Farakka. And the work of Renovation and Modernization handle by this Section. Method of Renovation and Modernization(1) Old assets replace threw new assets. (2) Totally new assets if life of assets is end. (3) Improve the efficiency of Machines. (4) Increase the life of Machine 7-ESTABLISHMENT SECTION – This Section give the Salary and recover the PPF amount, House rent, Electricity charge, Club expenses and Income tax from employees. This section also deals with Loan & Advances given to employees. Some type of Loans provide by NTPC to its employee(1) Furniture or Household loan up-to 9000 for Non-Executives, 15000 for Assistant Managers and 25000 for Managers. (2) Multipurpose loan it is equal to the Basic pay. (3) Convenience loan for Car, Bike. (4) House Advances Maximum 750000 (5) Computer loan Maximum 40000 44
Advances are Traveling advances; Leave travel Conation, Medical Conation. There is a recovery system. First recover the Principal then recover the Interest and there is no interest charge on interest. 8-MISCELLANEOUS SECTION– This section makes the payment of Non-Oriented contract payment. Deal with Petty Cash. Telephone bills, Entertainment expenses paid by this Section.
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NTPC, with a rich experience of engineering, constructing and operating over 26,000 MW of thermal generating capacity, is the largest and one of the most efficient power companies in India, having operations that match the global standards. NTPC has identified Joint Ventures, strategic alliances as well as acquisitions and diversifications as viable and desired options for its business development. NTPC looks for opportunity to create such joint ventures and strategic alliances, in the entire value chain of the power business. NTPC as a partner endows the Joint Venture Alliances with a winning edge. Acquisitions and Diversifications in the areas related to the core business not only ensure growth but also add to the robustness of the company. Diversification is carried out either directly or through subsidiaries/JVs.
JOINT VENTURE PARTNERS: The following joint venture companies have been formed so far: NTPC -ALSTOM POWER SERVICES PVT. LTD. (NASL) (Incorporated in 1999 and formerly known as NTPC-ABB ALSTOM POWER SERVICES PVT. LTD) OBJECTIVE:
Undertake Renovation & Modernisation of power stations in India and other SAARC countries
PROMOTERS' NTPC: 50% EQUITY:
ALSTOM Power Generation AG : 50%
UTILITY POWER TECH LTD (Incorporated in 1996) This JV has been promoted with Reliance Energy Limited (formerly BSES Limited) a private sector Indian power company. OBJECTIVE:
To undertake project construction, erection and supervision in power sector and other sectors in India and abroad
PROMOTERS' NTPC: 50% EQUITY:
REL: 50%
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PTC(India) Ltd (Incorporated in 1998) This JV has been promoted with Power Grid Corporation of India Ltd (PGCIL), a Government owned transmission major in India. Power Finance Corporation (PFC), a power sector finance company owned by the Government of India and National Hydro Electric Power Corporation Ltd. (NHPC), a Government owned hydro power utility. OBJECTIVE:
To trade, import, export and purchase power from identified power projects and sell it to identified SEBs/others
PROMOTERS' NTPC: 8% Tata Power: 10% EQUITY:
PGCIL: 8% DV: 10% PFC: 8% FII: 18.5% NHPC: 8%
NTPC-SAIL POWER COMPANY (PVT) LTD (NSPCL) NSPCL, the Joint Venture Company of NTPC and SAILwith 50:50 equity participation,stood merged with BESCL(Bhilai Electric Supply Co. Pvt Ltd, another JV Co. of NTPC and SAIL with 50:50 equity participation.) w.e.f 2nd August 2006,as per the scheme of Amalgamation approved by High Court of Delhi. As a result of aforesaid merger of BESCL in NSPCL, all properties, licenses, permissions, debt, liabilities etc. with respect to BESCL now stand vested in NSPCL. OBJECTIVE:
To supply power to the Bhilai, Durgapur and Rourkela Steel Plant of Steel Authority of India Limited (SAIL) from its Coal based power stations at Bhilai (Chhattisgarh), 2x30MW+1X14MW, Durgapur (West Bengal) 2x60MW and Rourkela (Orissa) 2x60 MW. For the purpose of its business development, NSPCL is carrying out the expansion of its installed capacity at Bhilai, by implementation of 500MW (2x250MW) power plant.
PROMOTERS' NTPC: 50% EQUITY:
SAIL : 50% 47
NTPC TAMIL NADU ENERGY COMPANY LIMITED This JV was incorporated on 23rd May, 2003 with Tamil Nadu Electricity Board, a State run Electricity Board in the State of Tamil Nadu engaged in generation, transmission and distribution of electricity. OBJECTIVE:
To set up a 1000 MW coal based power station at Ennore in Tamil Nadu utilising the existing infrastructure facility at Ennore and supply power mainly to Tamil Nadu and the states of Kerala, Karnataka and Pondicherry.
PROMOTERS' NTPC: 50% EQUITY:
TNEB : 50%
VAISHALI POWER GENERATING COMPANY LIMITED This JV was incorporated on with Bihar State Electricity Board, a State run Electricity Board in the State of Bihar, engaged in generation, transmission and distribution of electricity. OBJECTIVE:
To take over Muzaffarpur Thermal Power Station (2x110MW), a coal based power station at Kanti, for carrying out restoration, R&M and supplying power mainly to the state of Bihar.
PROMOTERS' NTPC: 51-74% EQUITY:
BSEB : 26-49%
ARAVALI POWER COMPANY PRIVATE LTD (Joint Venture Agreement was signed on 14.12.2006 among NTPC Ltd,Indrapastha Power Generatuion Company Ltd.(IPGCL) and Haryana Power Generation Company Ltd.(HPGCL).The Company was Incorporated on 21.12.2006. OBJECTIVE:
To set up a coal-based power station of 1500MW capacity in Distt. Jhajjar, Haryana, in joint venture with IPGCL and HPGCL.
PROMOTERS' NTPC-50%, IPGCL-25%, HPGCL-25% EQUITY:
PROPOSED JOINT VENTURES: 1.0 INDIAN RAILWAYS 48
MOU signed on 18th February 2002. Indian Railways are the largest rail network in Asia and the world's second largest under one management. OBJECTIVE:
To set up power stations to meet traction and nontraction power requirement of Indian Railways.
LIKELY EQUITY
Yet to be finalized
CONTRIBUTION FROM PROMOTERS 2.0 SINGARENI COLLIERIES COMPANY LTD(SCCL) MOU was signed between NTPC and SCCL on 23.08.2006 OBJECTIVE:
To promote one or more Joint Venture Companies for undertaking acquisition of coal/lignite mine blocks including exploration, development, mining, beneficiation, processing, operation & maintenance, development, operation & maintenance and selling electricity generation thereof, besides providing consultancy services.
LIKELY EQUITY
50% by each Company in the individual Joint Venture
CONTRIBUTION
Company
FROM PROMOTERS
ACQUISITION: Business development through Acquisition serves both NTPC's own commercial interest as well as the interest of the Indian economy. Taking over being a part of the acquisition process, is also an opportunity for NTPC to add to its power generation capacity through minimal investment and very low gestation period. NTPC has, over the years, acquired the following three power stations belonging to other utilities/SEBs and has turned around each of them using its corporate abilities. POWER STATIONS TAKEN OVER 2x210 MW FEROZE GANDHI
YEAR
UNCHAHAR THERMAL POWER
1991
STATION 4x60 MW + 2x110 MW TALCHER
1995
ORIGINAL OWNER UP RajyaVidyut Utpadan Nigam of Uttar Pradesh Orissa State Electricity
THERMAL POWER STATION Board 4x110 MW TANDA THERMAL POWER 2000 UP State Electricity Board 49
STATION 705MW Badarpur Thermal Power
2006 Central Electricity Authority
Station
CHAIRMAN'S STATEMENT FOR THE YEAR 2008-09 IN 31ST ANNUAL GENERAL MEETING Dear Shareowners, It is my great privilege to welcome you all to this 31st Annual General Meeting of your Company - NTPC Limited. Leveraging its strong fundamentals, your Company has been setting new benchmarks in all aspects of developing power projects and operating power stations, both on quantitative and qualitative parameters. Your Company enjoys a robust corporate image and sustained confidence of investors. With appropriate strategies and their effective implementation, your Company is well on course to become a world-class integrated power major. The sense of belonging, organizational pride, commitment and competencies of members of 'Team NTPC' enable the Company to translate sound strategies into excellent execution. This enables the Company to post impressive performance records year after year and further enhance its brand equity. Scaling New Summits I am glad to share with you the impressive performance your Company has achieved during the year 2006-07 attaining all time high physical and financial levels. •
Top line (total income) growth by 20.59%, rising to Rs. 353,807 million from Rs. 293,393 million in the previous year.
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Bottom line (net profit after tax) growth of 17.95%, reaching Rs. 68,647 million from Rs. 58,202 million in the previous year. 50
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Strong cash flow with 100% realization of billing for the 4th consecutive year.
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Highest ever generation of 188.674 billion units, an increase of 10.41% over the previous year's generation of 170.880 billion units.
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Highest ever capacity utilization (PLF) of 89.43% in coal based power plants as compared to 87.54% during the previous year; Capacity utilization at Gas Stations improved substantially from 65.81% in the previous year to 71.90%.
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A new national record of 559 days of uninterrupted running set by Unit # 3 of Vindhyachal Super Thermal Power Station.
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MoU Award for Excellence in Performance for the years 2004-05 and 2005-06 received in the year 2006-07; excellent rating for the 20th consecutive year since inception of the MoU System by Government of India.
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National Awards for Meritorious Performance for 7 Stations for the years 2004-05 and 2005-06 received in the year 2006-07 from the Prime Minister.
Strong Macro- Economic Scenario During the 10th Plan period (2002-07), the country achieved its highest ever GDP growth rate of 7.6%. GDP growth for the year 2006-07 was 9.4%. During the 11th Plan (2007-12), the country aims to achieve faster and more inclusive growth. GDP growth target for the 11th Plan is 9% and the growth is expected to reach double digit by the end of the Plan. The economic boom will fuel power demand at a fast pace. The power sector has to cope with the demand and facilitate the unprecedented economic growth. NTPC: The Lead Player NTPC is playing a pre-eminent part in strengthening the powerbase of the country's economic growth. Aligning its corporate strategies to national priorities, market dynamics, environment protection, social responsibility and ethics, your Company has been demonstrating consistently high performance. Our growth and performance so far has emboldened us to think big and think integrated. Your Company aspires to 'power the nation' through a five pronged strategy: I. Rapid and High Quality Integrated Growth II. Exceptional Operating Performance III. Commercial Focus and Market Agility IV. High Performance Team Work and Building a Strong Team of Power Professionals 51
V. Comprehensive Change Management.
Rapid and High Quality Integrated Growth The growth spectrum of your Company will not only cover capacity addition which is its core growth area, but will also focus on backward and forward integration along the entire energy value chain, commencing upstream with coal mining and culminating downstream into direct sales to consumers. Dimensions of quality have been embedded into the growth strategies of your Company. Fuel Supply, Fuel Security and Fuel Economics Fuel is the primary input for power generation and accounts for the lion's share in the cost of generation. During the financial years 2005-06 and 2006-07, your Company’s expenditure on fuel constituted 88% of operations related expenditure. Although expenditure on fuel is allowed to be passed through to the customer, your Company is taking strategic actions to ensure adequate fuel supply at optimum price.. In order to mitigate the shortages in gas supply at the existing gas based stations, your Company began spot-procurement of re-gasified LNG in June 2006. This has resulted in improvement of capacity utilization of Gas Stations from 65.81% during 2005-06 to 71.90% during 2006-07. For meeting long term arrangements of gas supply, options are being explored for participation in the gas value chain including opportunities abroad. 'Gas for Power' An MoU has been signed with the Government of Nigeria for supply of at least 3 million tons of LNG per annum at reasonable prices on a long term basis for a period of 25 years to be used by your Company in its power stations in India. In return, NTPC will set up a 700 MW gas based power station and a 500 MW coal fired power station in Nigeria. This would be a win-win arrangement, with the Company augmenting gas supplies for its operations and Nigeria benefiting from the proven project implementation competence of NTPC.
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Taking Global Strides Leveraging its strong engineering and project management expertise, the consultancy wing of your Company is exploring business opportunities abroad. In addition to the MoU with Nigeria for procurement of gas in lieu of setting up power plants in that country, and exploring options for coal and gas business abroad, your Company has signed a Memorandum of Agreement with the Government of Sri Lanka and Ceylon Electricity Board under which it will set up a 500 MW coal based power station in Sri Lanka. It has also set up an Office in Dubai to explore business opportunities in the MiddleEast. Commercial Focus and Market Agility With its effective commercial strategies, your Company has been realizing 100% of billing for four consecutive years. This has resulted in strong cash flow situation for the Company with all the consequent business advantages. This has been made possible by our effective customer relationship management. Your Company believes that it has an important stake in the financial strength of its customers. Hence, we reach out to our customers with training interventions and other support services in several areas including engineering services, project management, operation of power plants, etc. Further, Merchant Power Plants will be able to utilize the opportunity to sell power in the de-regulated market. During the 11th Plan, your Company will be developing about 2000 MW as merchant plant capacity. Our trading subsidiary NTPC Vidyut Vyapar Nigam Ltd. (NVVN) will sell the power from these merchant plants. High Performance Team Work and Building Strong Team of Power Professionals Our strength is our people. Our strength is the knowledge capital we have. Our strength is the skill of our people. Our strength is the commitment, competence and culture of our people. Having one of the strongest teams of power professionals, we are engaged in the endeavour to reach world-class excellence. 'A collaborative work culture with accountability' is an important feature of your Company’s success. Your Company is engaged in canalizing emotional and intellectual energy of every employee of NTPC, which is one great big family. Each member of Team NTPC is sensitized to act as an owner. Organizational pride is a very strongly shared value among employees. Your Company has been placed among the best employers in the country in a number of highly prestigious surveys. The HR Vision of 53
your Company is, “to enable our people to be a family of committed world class professionals, making NTPC a learning organization”. In order to attract and retain talent, your Company has initiated a number of HR measures which include revisiting social security schemes, performance linked incentive, employee development programmes, etc.Your Company continually seeks to manage the aspirations of its employees through innovative HR practices and empower them to help the Company achieve its goals. Comprehensive Change Management Our transformation agenda is aimed at effectively achieving and managing the exponential and diversified growth in a dynamic business scenario. Your Company is engaged in enhancing empowerment, especially at the regional level. It is revisiting the scheme of delegation of power and aligning the executives to the new business requirements through intensive programmes in areas like leadership development. Corporate Governance - Part of NTPC's DNA Transparency and sound governance make our investors and shareholders, including small shareholders, feel very confident about their valuable resources invested with us. Our governance practices are acknowledged for their soundness and are also awarded by prestigious forums. Our globally acknowledged excellence and exceptional success has been achieved as much through our steadfast commitment to ethics and governance as through systems and people. Your Company’s value based work culture is a major factor behind its enduring success and robust image.Your Company has taken proactive steps for setting up appropriate governance systems and processes. Transparency, accountability, fairness and intensive communication with stakeholders are integral to its functioning. It believes in system driven performance and performance oriented systems. It has successfully blended growth and efficiency with governance and ethics. Corporate Social Responsibility – an article of faith for NTPC Vitally engaged in the endeavour of nation building, your Company is not only a partner in powering India’s growth, it is also a partner in making Indian society more humane and just. Corporate Social Responsibility is an article of faith for NTPC. This spirit of giving back to the society has led NTPC to transform the socio-economic status of Project Affected Persons (PAPs) and undertake community development programmes in and around its 54
projects. The NTPC Foundation for Corporate Social Responsibility addresses specific domains of promoting socio economic reliance among physically challenged persons. The Vision of the Foundation is"To serve and empower the physically challenged and economically weaker sections of the society". The Foundation is engaged in taking up activities for basic education, health care, income generating schemes for the physically challenged persons and weaker sections of the society, promoting schemes to enhance employability, hospitals for terminally ill patients, old age homes, infrastructure facilities for rural areas, relief measures during national calamities and epidemics, micro financing, job oriented training and skill upgradation and other social welfare and charitable services to needy people. Your Company also promotes distributed power generation schemes for overall societal benefits. The small power generation units set up in remote villages with the help of NTPC have transformed the social and economic outlook of people in those backward areas. Commitment to Sector Reform and Improvement With firm conviction that a stronger sector means better business environment for your Company, we are contributing to sectoral reform and development initiatives of the Government. Under the Accelerated Power Development and Reform Programme (APDRP) and the Rajiv Gandhi Grameen Vidyuteekaran Yojana, the Company is providing major support in achieving sectoral targets. Under the 'Partners in Excellence (PIE) Programme' launched by the Ministry of Power to improve the performance of underperforming power stations of State utilities through peer interaction, NTPC has brought about performance turnaround in 13 stations that were entrusted to it, having operating capacity of 5,050 MW. Additional generation of 2,833 million units in the NTPC assisted stations corresponds to equivalent capacity addition of 430 MW at 75% average PLF. One of the major issues to be addressed in order to ensure timely implementation of the projects during the 11th Plan and beyond include manpower development and training facilities commensurate with the large capacity addition. Your organization will contribute in building up a large-scale manpower pool for the power sector by providing training infrastructure and organizing sector specific training to ensure availability of skilled manpower. Powering Ahead
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In the past, your Company has been a catalyst of change in the power sector. Today, the Company is a catalyst of development. And, in the future it will be a catalyst for growth. Our success in the past and our confidence in the future lies on the bedrock of the culture, commitment and competence of the members of 'Team NTPC'. I convey, on behalf of the entire Board, our appreciation and gratitude to our colleagues for their performance and their enduring contribution, for their performance that has created lasting value. Building upon its heritage of values and high performance, your Company is aiming higher, delivering more and reaching further. Powering ahead with collective passion of an inspired team: •
We strive to make your Company one of the world's most admired companies.
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We pledge to serve the community and the environment with utmost sensitivity and care.
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We resolve to maximize value for our stakeholders
Harmony between man and environment is the essence of healthy life and growth. Therefore, maintenance of ecological balance and a pristine environment has been of utmost importance to NTPC. It has been taking various measures discussed below for mitigation of environment pollution due to power generation. Environment Policy & Environment Management System Driven by its commitment for sustainable growth of power, NTPC has evolved a well defined environment management policy and sound environment practices
56
for minimising environmental impact arising out of setting up of power plants and preserving the natural ecology. National Environment Policy: At the national level, the Ministry of Environment and Forests had prepared a draft Environment Policy (NEP) and the Ministry of Power along with NTPC actively participated in the deliberations of the draft NEP. The NEP 2006 has since been approved by the Union Cabinet in May 2006. NTPC Environment Policy: As early as in November 1995, NTPC brought out a comprehensive document entitled "NTPC Environment Policy and Environment Management System". Amongst the guiding principles adopted in the document are company's proactive approach to environment, optimum utilisation of equipment, adoption of latest technologies and continual environment improvement. The policy also envisages efficient utilisation of resources, thereby minimising waste, maximising ash utilisation and providing green belt all around the plant for maintaining ecological balance. Environment Management, Occupational Health and Safety Systems: NTPC has actively gone for adoption of best international practices on environment, occupational health and safety areas. As a result of pursuing these practices, all NTPC power stations have been certified for ISO 14001 & OHSAS 18001 by reputed national and international Certifying Agencies. Pollution Control Systems While deciding the appropriate technology for its projects, NTPC integrates many environmental provisions into the plant design. In order to ensure that NTPC comply with all the stipulated environment norms, various state-of-the-art pollution control systems / devices as discussed below have been installed to control air and water pollution. Electrostatic Precipitators: The ash left behind after combustion of coal is arrested in high efficiency Electrostatic Precipitators (ESPs) and particulate emission is controlled well within the stipulated norms. The ash collected in the ESPs is disposed to Ash Ponds in slurry form. Flue Gas Stacks: Tall Flue Gas Stacks have been provided for wide dispersion of the gaseous emissions (SOX, NOX etc) into the atmosphere. 57
Low-NOX Burners: In gas based NTPC power stations, NOx emissions are controlled by provision of Low-NOx Burners (dry or wet type) and in coal fired stations, by adopting best combustion practices. Neutralisation Pits: Neutralisation pits have been provided in the Water Treatment Plant (WTP) for pH correction of the effluents before discharge into Effluent Treatment Plant (ETP) for further treatment and use. Coal Settling Pits / Oil Settling Pits: In these Pits, coal dust and oil are removed from the effluents emanating from the Coal Handling Plant (CHP), coal yard and Fuel Oil Handling areas before discharge into ETP. DE & DS Systems: Dust Extraction (DE) and Dust Suppression (DS) systems have been installed in all coal fired power stations in NTPC to contain and extract the fugitive dust released in the Coal Handling Plant (CHP). Cooling Towers: Cooling Towers have been provided for cooling the hot Condenser cooling water in closed cycle Condenser Cooling Water (CCW) Systems. This helps in reduction in thermal pollution and conservation of fresh water. Ash Dykes & Ash Disposal Systems: Ash ponds have been provided at all coal based stations except Dadri where Dry Ash Disposal System has been provided. Ash Ponds have been divided into lagoons and provided with garlanding arrangements for change over of the ash slurry feed points for even filling of the pond and for effective settlement of the ash particles. Ash Water Recycling System: Further, in a number of NTPC stations, as a proactive measure, Ash Water Recycling System (AWRS) has been provided. In the AWRS, the effluent from ash pond is circulated back to the station for further ash sluicing to the ash pond. This helps in savings of fresh water requirements for transportation of ash from the plant. The ash water recycling system has already been installed and is in operation at Ramagundam, Simhadri, Rihand, Talcher Kaniha, Talcher Thermal, Kahalgaon, Korba and Vindhyachal. The scheme has helped stations to save huge quantity of fresh water required as make-up water for disposal of ash.
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Dry Ash Extraction System (DAES): Dry ash has much higher utilization potential in ash based products (such as bricks, aerated autoclaved concrete blocks, concrete, Portland pozzolana cement, etc.). DAES has been installed at Unchahar, Dadri, Simhadri, Ramagundam, Singrauli, Kahalgaon, Farakka, Talcher Thermal, Korba, Vindhyachal, Talcher Kaniha and BTPS. Waste Management: Various types of wastes such as Municilal or domestic wastes, hazardous wastes, Bio-Medical wastes get generated in power plant areas, plant hospital and the townships of projects. The wastes generated are a number of solid and hazardous wastes like used oils & waste oils, grease, lead acid batteries, other lead bearing wastes (such as garkets etc.), oil & clarifier sludge, used resin, used photo-chemicals, asbestos packing, e-waste, metal scrap, C&I wastes, electricial scrap, empty cylinders (refillable), paper, rubber products, canteen (bio-degradable) wastes, buidling material wastes, silica gel, glass wool, fused lamps & tubes, fire resistant fluids etc. These wastes fall either under hazardous wastes category or non-hazardous wastes category as per classification given in Government of India’s notification on Hazardous Wastes (Management and Handling) Rules 1989 (as amended on 06.01.2000 & 20.05.2003). Handling and manegement of these wastes in NTPC stations have been discussed below. Bio-Medical Waste Management: Hospital (or Bio-medical) wastes get generated from hospitals and they include urine bags, human anatomical wastes, plaster of paris waste, empty plastic bottles of water & glucose, blood & chemical mixed cotton, blood & urines tubes etc. these wastes are segregated and are placed in buckets of different colours as per the notification for BioMedical Waste (Management & Handling) Rules. The seggregated bio-medical wastes are either disposed through the SPCB approved agency or they are treated in autoclaves before disposal into bio-medical waste disposal pits. The treated bio-medical waste is spread uniformly and covered with 10 cm thick soil in bio-medical waste disposal pits. Land Use / Bio-diversity: As a policy, NTPC lays special emphasis on land use and Bio-diversity by way of development of green belts, energy plantations, reclmation of abandoned Ash Ponds and EIA and ecological monitoring in the project areas and its surroundings. Reclamation of Abandoned Ash ponds:
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The reclamation of abandoned ash pond sites is a challenging task. NTPC has reclaimed temporary ash disposal areas at some of its projects namely Ramagundam, Talcher Thermal, Rihand, Singrauli and Unchahar through plantation and converted these sites into lush green environments. Extensive plantations have also been undertaken on dry ash mound at NTPC-Dadri. It is planned to reclaim all the abandoned ash disposal areas by plantation. Green Belts, Afforestation & Energy Plantations: What’s more, in a concerted bid to counter the growing ecological threat, NTPC is undertaking a forestation programmes covering vast areas of land in and around its projects. Appropriate afforestation programmes for plant, township and green belt areas of the project have been implemented at all projects. Environment Impact Asssement Studies: Environmental Impact Assessment (EIA) Studies are inevitably undertaken to evaluate potential negative impacts as well as to formulate Environmental Management Plans to overcome the identified impacts. Based on the recommendations of Environmental Impact Assessment Study and Environmental Management Plan (EMP) and the conditions stipulated in the clearances from Ministry of Environment and Forests and State Pollution Control Boards.These studies consists of impact assessment in the area of the land use, water use, socio-economic aspects, soil, hydrology, water quality, meteorology, air quality, terrestrial and aquatic ecology and noise. These studies are conducted before starting the construction as well as after operation of the plant and gives comprehensive status of the environment as existed before construction as well as in the post operational stages of the project. Apart from project specific EIA studies, Regional Environmental Assessment studies have been conducted for Integrated Development of Singrauli, Korba and Ramagundam areas. Such studies are of first of their kind in India and probably very few such studies have been undertaken in other countries. Socio-economic Studies: Detailed socio-economic studies are undertaken to establish the socio-economic status of project affected persons and rehabilitation and resettlement plans are drawn in consultation with the state government. Rehabilitation and resettlement options include land for land (subject to availability), limited jobs with NTPC and contractors and self
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employment schemes. In addition, NTPC also undertakes community development activities in the surrounding villages. Use of Waste Products & Services -Ash Utilization: Ash is the main solid waste which is put into use for various products and services. NTPC has adopted user friendly policy guidelines on ash utilization. In order to motivate entrepreneurs to come forward with ash utilization schemes, NTPC offers several facilities and incentives. These include free issue of all types of ash viz. Dry Fly Ash / Pond Ash / Bottom Ash and infrastructure facilities, wherever feasible. Necessary help and assistance is also offered to facilitate procurement of land, supply of electricity etc from Government Authorities. Necessary techno-managerial assistance is given wherever considered necessary. Besides, NTPC uses only ash based bricks and Fly Ash portland pozzolana cement (FAPPC) in most of its construction activities. Demonstration projects are taken up in areas of Agriculture, Building materials, Mine filling etc. The utilization of ash and ash based products is progressively increasing as a result of the concrete efforts of these groups. Advanced / Eco-friendly Technologies: NTPC has gained expertise in operation and management of 200 MW and 500 MW Units installed at different Stations all over the country and is looking ahead for higher capacity Unit sizes with super critical steam parameters for higher efficiencies and for associated environmental gains. At Sipat, higher capacity Units of size of 660 MW and advanced Steam Generators employing super critical steam parameters have already been implemented as a green field project. Higher efficiency Combined Cycle Gas Power Plants are already under operation at all gas-based power projects in NTPC. Advanced clean coal technologies such as Integrated Gasification Combined Cycle (IGCC) have higher efficiencies of the order of 45% as compared to about 38% for conventional plants. NTPC has initiated a techno-economic study under USDOE / USAID for setting up a commercial scale demonstration power plant by using IGCC technology. These plants can use low grade coals and have higher efficiency as compared to conventional plants.
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INTRODUCTION Globalization has brought significant advantages to countries and business around the world but the benefits have spread unequally both within and among countries. While the rules favoring global market expansion have grown more robust, the rules intended to promote equally valid social objectives viz. in the areas of human rights, labour standards and environment lag behind and in some cases actually have become weaker. In order to promote Corporate Social Responsibility and citizenship in the new global marketplace, UN Secretary General, Mr. Kofi Annan first proposed the Global Compact at Davos in Jan'99. It was thus created to help organisations redefine their strategies and course of actions so that all people can share the benefits of globalisation, not just a fortunate few. The Global Compact’s operational phase was launched at UN Headquarters in New York on 26 July 2000. and has since then focussed its efforts on achieving practical results and fostering the engagement of business leaders in the direction. Through the power of collective action, the Global Compact seeks to promote responsible corporate citizenship so that business can be part of the solution to the challenges of globalisation. In this way, the private sector – in partnership with other social actors – can help realize the Secretary-General’s vision: a more sustainable and inclusive global economy. The Global Compact is a network. At its core are the Global Compact Office and six UN agencies: •
Office of the High Commissioner for Human Rights;
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United Nations Environment Programme;
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International Labour Organization;
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United Nations Development Programme;
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United Nations Industrial Development Organization; and
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United Nations Office on Drugs and Crime. 62
The Global Compact involves all the relevant social actors: governments, who defined the principles on which the initiative is based; companies, whose actions it seeks to influence; labour, in whose hands the concrete process of global production takes place; civil society organizations, representing the wider community of stakeholders; and The United Nations, the world's only truly global political forum, as an authoritative convener and facilitator. THE TEN PRINCIPLES OF GLOBAL COMPACT The Global Compact's ten principles in the areas of human rights, labour, the environment and anti-corruption enjoy universal consensus and are derived from: •
The Universal Declaration of Human Rights
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The International Labour Organization's Declaration on Fundamental Principles and Rights at Work
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The Rio Declaration on Environment and Development
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The United Nations Convention Against Corruption
The Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption: Human Rights •
Principle 1 : Business should support and respect the protection of internationally proclaimed human rights; and
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Principle 2 : Make sure that they are not complicit in human rights abuses.
Labour •
Principle 3 : Business should uphold the freedom of association and the effective recognition of the right to collective bargaining;
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Principle 4 : The elimination of all forms of forced and compulsory labour;
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Principle 5 : The effective abolition of child labour; and
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Principle 6 : The elimination of discrimination in respect of employment and occupation.
• Environment •
Principle 7 : Business should support a precautionary approach to environmental challenges; 63
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Principle 8 : Undertake initiatives to promote greater environmental responsibility; and
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Principle 9 : Encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption •
Principle 10 : Business should work against corruption in all its forms, including extortion and bribery.
PARTICIPATION BY NTPC Due to keenness of UN that this movement takes root in India, some business leaders took the initiative and organised a meeting of select business leaders in Mumbai in Dec' 2000. NTPC as a prominent business and community leader in the power sector was also invited to the meeting and thus engage/associate itself with Global Compact. Following this meeting which was attended by CMD NTPC, NTPC agreed to be associated with the Global Compact. In his letter in May 2001 CMD addressed to Mr. Kofi Annan, Secretary General, UN formally expressed its support for the Global Compact and its commitment to take action in this regard. NTPC expresses its continued support for the Global Compact and its commitment to take action in this regard. The principles of GC are regularly communicated to all employees through in-house magazines, internal training programmes and posters. NTPC along with major corporate in India took the lead and founded Global Compact Society of India in the year 2003. Further, NTPC as founder member of Global Compact Society took the lead for organizing the 1st national convention on “Excellence in Corporate Citizenship and Global Compact” on 27th July 2004 at New Delhi.
UNGC - Communications on Progress NTPC expresses its continued support for the Global Compact and its commitment to take action in this regard, as was communicated by the Chairman & Managing Director, NTPC in his letter dated May 29, 2001 addressed to Secretary General, United Nations. NTPC has posted the brief of Global Compact and its commitment to the principles of GC on its website at www.ntpc.co.in. The principles of GC were also communicated to all employees through in - house magazines, internal training programmes and posters. Director (HR) of NTPC has been nominated as Vice President, Northern Region for Global 64
Compact Society, India. Human Rights: Principle 1-2 Most of NTPC's operating power stations are located in remote rural areas which are socioeconomically backward and deficient in the basic civic amenities. NTPC, as responsible corporate citizen has been addressing the issue of community development is the neighbourhood areas of its stations, which had been impacted due to establishment of the project. Under this policy, during 2006-07, NTPC allocated a fund of Rs.62.049 million to 20 operating stations for carrying out comprehensive Community Development work in the area of health, education, drinking water and peripheral development. In addition, Quality Circles (QCs) have been started in neighborhood villages of 10 stations. The NTPC employees participate in various CD activities through Employee Voluntary Organization for Initiative in Community Empowerment (EVOICE). NTPC also recognizes that generation of power is key to development, particularly in the remote and far-flung places where the power is either not available or is in acute shortage. The Decentralized Distributed Generation and Supply (DDGS) of power is a plausible solution. Under its CD initiatives, NTPC supported for preparation of 45 Detailed Project Reports (DPRs), for insurance of the commissioned DG projects and for bridging the gap between the total project cost and the grant received from external funding agencies in respect of 11 Distributed Generation (DG) Projects. NTPC supported various Institutions/ Bodies and undertook initiatives for major activities as detailed below: i.
In Uttarakhand, NTPC is committed to provide support for setting up a technical polytechnic at Kaladungi, Dist. Nainital.
ii. In Kerala, NTPC has committed to provide support to Allapuzha medical College
Hospital for one dialysis machine. The hospital will provide free medical facilities to the economically under privileged patients. iii. In Orissa, NTPC has taken up Developmental works for Car parking, Water tanks
and Lighting of approach road for Shree Jagannath Temple, Puri, a renowned cultural heritage site. iv. Further in the field of Health, NTPC has committed to provide support to Hyderabad
Eye Research Foundation for three specialized Eye Centers at Bhubneswar Eye 65
Hospital, Bhubneswar, Orissa. These Centers will provide free medical facilities to the economically under privileged patients. v. NTPC has also committed support to Centre of the Study of Values, Udaipur for
assistance in self reliance for 200 tribal girls/ women in tribal area of Jhamar Kotra in Udaipur District, Rajasthan. vi. NTPC supported and participated in the "Ability Mela" organized by Business &
Community Foundation, Delhi for the benefit of Persons with Disability. Labour Standard: Principle 3-6 For addressing the issue of labour standard in comprehensive manner, NTPC has decided to adopt international standards like SA-8000 and OHSAS-18001. During the year 2006-07, two of the NTPC stations viz Unchahar and Vindhyachal received SA-8000 accreditation. Anta, Auraiya, Badarpur, Faridabad, Kayamkulam, NCPP– Dadri, Ramagundam, Simhadri, Talcher-Thermal and Tanda are already accredited in the previous years. All the 20 operating Stations of NTPC have already obtained accreditation under OHSAS 18001. During 2006-07 seven stations viz. Anta, Kahalgaon, Kayamkulam, Korba, Ramagundam, Simhadri, and Singrauli have been re-certified under OHSAS 18001. Surveillance audits were conducted for OHSAS 18001 for all other stations. Environment: Principle 7-9 Towards its commitment to environment NTPC has decided to adopt ISO-14001 and all its 20 operating stations have obtained accreditation for ISO-14001. During the year 2006-07, six stations viz. Kayamkulam, Korba, Ramagundam, Simhadri, Singrauli and Tanda stations have been re-certified under ISO 14001. Surveillance audits were conducted for ISO-14001 for all other stations.
RESEARCH METHODOLOGY Sampling: There are following steps in my sampling design:1. Type of universe: The first step in developing any sample design is to clearly define the set of objects, technically called the universe, to be studied. It is the finite universe because the numbers of items is certain I do as following. 2. Sampling unit decision has to be taken concerning a sampling unit before selecting sample. Sampling unit is following;66
Financial Department, Township Administration, Finance & Account, Civil/ Electrical Maintenance Department, Control & Instrumentation, Fuel Management, Human Resources and Electrical Office. Above are all the sampling units that are used by me for study.
RESEARCH INSTRUMENTS While doing the research on working capital management, I use some documents that are given below:1- NTPC Financial Reports. 2- News Magazine of NTPC. 3- Journals of NTPC (SSTPS). 4- Shakti Sandesh Magazine.
5- Reports of NTPC. 6- NTPC annual Reports –
26th Edition
–
27th Edition
–
28th Edition
–
29th Edition
–
30th Edition
Theoretical basis of Working Capital Management (Title) Working capital is the amount of funds necessary to cover the cost of operating the enterprise. It also refers to some total of all current assets employed in the business process, which is known as Gross Working capital concept. Gross concepts of working capital are useful in making correct estimate of working capital needs of the firms. Net working capital is the portion of current assets(C.A) which can not be financed by current liabilities(C.L).
W.C.= C.A. – C.L. 67
Constituents of Working capital :1) CURRENT ASSETS: It refers to the assets which are used for day to day business
operations of the firm. It mainly constitutes of the following: a) Inventories:- It represents all the raw materials and components of work in
progress and finished goods. b) Trade debtors:- It comprises credit sales to customers. c) Prepaid expense:- The expenses which have been paid for goods and
services whose benefit have yet to be received. d) Loan and advances:- Loan and advances given by the firm to other firm for a
very short period of time. e) Investments:- Is short term. It is surplus funds invested in the government
security share and short term bond. f) Cash and Bank balances:-
Assets represents cash in hand and at bank which is reserved for meeting the operational requirement.
1) CURRENT LIABILITIES :- It is a part of working capital represent obligation which
the firm has to clear to the outside parties in a short period generally with in a year and this is mainly comprise of the following: a) Sundry credit:- Liabilities which are steam out of purchases of raw material
on credit terms usually for a period of one or two months. b) Bank o/d;- Withdrawals in excess of credit balance standing in the firm’s
currents a/c with the banks. c) Short term loans:- short term borrowing by the firms from bank and other
firm’s part of C.L as short terms loans.
WORKING CAPITAL CYCLE
CASH
68
RECEIVABLES
MATERIALS
FINISHED GOODS
FACTORS DETERMINING THE SIZE OF WORKING CAPITAL There may be various factors which can be determine the size of the working capital :1) Nature of Business:- Magnitude of working capital business enterprise is to a
considerable degree of function of the nature and character of the business.e.g.: a) In enterprise engaged in the manufacturing of essential product of daily consumption would need less amount of working capital. b) If the enterprise dealing in luxuries product it will require a large reserve
of net working capital.
1) Size of business:- Requirement of working capital can also be determined by the
size of the business. Firms engaged in the same line of business activity may have different working capital requirement because of varying business size.e.g.; a) 10 – 20 % of W.C is required in Hotels and restaurants. b) 20 – 30 % of W.C in services and semi manufacturing organizations. c) 80 – 90 % of W.C in hi-tech or heavy industry like steel , cement etc. 1) Production Cycle: - Time lag between procurement of raw material to collection of
cash.e.g.; a) Bakery industry—regular basis of requirement of W.C. b) Many venture projects require high amount of W.C but the W.C is precollected. 1) Business cycle: - Business cycle of the enterprise also determines the W.C
requirement. →In times of economic and business oscillations, the management has to carry enough W.C to handle the situation of the upward and downward swings.
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2) Production policy: - W.C requirements also depends upon the various production
policy adopted by the business organization.e.g.; a) Line Vs Batch production policy b) Seasonals Vs Bulk
→Progressive accumulation of stock affects the requirements of W.C .Higher The accumulation, higher is the W.C requirement. e.g.; Automobile sector →Diversification of the business also require the high amount of W>C> 1) Credit policy: - Credit policy adopted by the firm also affect the W>C requirements.
• • • • •
→It may depend on the:Economy conditions Prevailing trade practices Collection procedure Customer patronage Terms of creditors Vs terms of debtors
1) Growth & expansion of the company: - As a company grows, it is logical to expect
that a larger amount of W.C is required. → It is very difficult to determine precisely the relationship between the growth in the volume of the business of the company and increase in the working capital. 8) Vagaries (deliberation/factors) in supply of R.M:• Regular basis of supply of R.M, the W.C is constant • Sporadic supply of R.M, the W.C is not constant. 9) Profit level: - Higher profit margin would improve the prospects of generating more internal funds thereby contributing to the W.C. → Profit level of any enterprise depends on the:• Nature of the product • Market holding • Intensity of completion • Effective quality management .e.g.:- Marico created its monopoly so the W.C requirement is very less for monopoly company, because their profit level is very high. 10) Level of taxes: - Level of taxes also decides the requirement of W.C. 11) Price level changes:- Changes in the price level also affect the the W.C.
requirements of
→ rising prices necessitate the use of more funds for maintaining an existing level of activity. 12) Depreciation 70
13) Operating efficiencies
TYPES OF W.C. There are two types of W.C, which are as follows:1) Fixed / Regular / Permanent W.C.:- any business activity dose not comes to an end
after the realization of cash from customer. →For the company having continuous business process, regular supply of W.C requirement. →Fixed W.C is determined at the starting of the project planning. 2) Variable / Temporary W.C:- It fluctuates with the demand.
→ Any amount over and above the permanent level of W.C is temporary, fluctuating or variable W.C. →A amount of W.C needed to meet fluctuations in demand consequent upon changes in production and sales as a result of seasonal changes.
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Temporary W.C
Permanent W.C.
Approaches of W.C.:1)
Hedging / Matching ;→The hedging approaches suggest that long-term funds should be used to finance the fixed proportion of C.A requirements which are required in a certain amount for a given level of operation. →Purely temporary requirements, the seasonal variations over and above the permanent financing needs should be appropriately financed with short term funds(C.L) →This approach, therefore divides the requirements of total funds into permanent and seasonal components, each being financial by a different source.
Variable C.A.
Non-Variable C.A.
S.T. financing
L.T. financing
Fixed assets
2)
Conservative approach:→ This approach suggests that the estimated requirement of total funds should be met from long- term funds should be restricted to only emergency situations or when there is an unexpected outflow of funds. Variable C.A.
Non-Variable C.A. 72
S.T. financing
L.T. financing
Fixed assets
3)
Aggressive approach:- Suggests that any firm has to use less long-term funds. →According to this, L.T funds should not be used to finance the whole permanent W.C. →Some part of permanent W.C should be financed from S.T funds. →Risk is high in this ratio. Variable C.A S.T. financing Non-Variable C.A
Fixed assets
L.T. financing
NEED OF WORKING CAPITAL Essentially sales generate working capital so long as cash, costs and expenses are less than sales income. However sale is not immediately converted into cash. There is a time gap between conversion of goods and receipt of cash. Working capital is required for this period in order to maintain the satisfactory level or run the firm for production of finished goods to sales of goods. So, corporation generally maintain the working capital an opposition to purchase raw material, pay salaries to employees and wages, administrative expenses, warehousing expenses and other expenses required for manufacturing the finished good to be sold to the consumer. The determination of working capital cycle is helpful for budgeting or forecasting and improving previous working capital ratio.
IMPORTANCE OF WORKING CAPITAL Investment in fixed assets are not sufficient to run the business operation. Working capital is blood of any firm which is need to purchase raw materials, pay salaries and wages, administrative expenses and day to day requirements. 1. Any corporation’s profitability depend on the effective working capital management.
2. Working capital is necessary for taking decision regarding long term investment. 73
3. It helps to know about loans & advances ,cash and debtors of the company 4. It is also helpful in minimize cost and expenses.
OBJECTIVE OF THE PROJECT
To analyses factors that considers their (Tata Power) working capital requirement.
To understand Working Capital Policies.
To analyses Inventory management of Tata Power Company Limited.
To study the general problems faced in Supply Chain.
To analyses the financial statement of Tata Power.
Others Objectives: 1) To identify the financial strengths & weakness of the company. 2) Through the net profit ratio & other profitability ratio, understand the profitability of the company. 3) Evaluating company s performance relating to financial statement analysis. 4) To know the liquidity position of the company with the help of current ratio.
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5) To find out the utility of financial ratio in credit analysis & determining the financial capacity of the firm
WORKING CAPITAL MANAGEMENT IN NTPC (Sample) 1) NET WORTH The net worth of the company at the end of fiscal 2009 was Rs.449,587 million an increase of Rs.31,824 million over the previous year mainly due to retained earnings. 2) LOAN FUNDS Our loans outstanding as March 31, 2009 stood at Rs.201, 973 million in comparison to Rs.170,878 million as at March 31, 2008. A summary of the loans outstanding is given below: Secured loans Bonds Foreign Currency Terms loans Other Sub-total Unsecured loans Fixed deposits Bonds Foreign Currency Bonds/Notes Foreign Currency Terms loans Rupee term loans
2009
2008
% change
47,044
32,077
47%
10,274 9 57,327
12,319 11 44,407
-17% -18% 29%
778
4,159 5000
-81% -100%
22,475
8,814
155%
33,336 87,821
32,608 75,339
2% 17%
75
Loans from government of India 236 551 -57% Sub-total 144,646 126,471 14% Total 201,973 170,878 18% The change in the loans outstanding is mainly because of the borrowings and repayments made during the year. During the year the company issued one series of rupee denominated bonds through private placement amounting to Rs.10, 000 million. The bonds have been issued for a period of 14 year with redemptions in equal semi-annual installments beginning at the end of three years. The debt to equity ratio at the end of fiscal 2006 of the company went up to 0.45 from 0.41 at the end the previous fiscal. 3) FIXED ASSETS During the year we added Rs.29,334 million to our gross block mainly on account of capitalization of capital works in progress pertaining to projects which were commercialized during the year. With capital expenditure being incurred on various on-going projects the capital work in progress has shown a substantial increase.
Gross block Net block Capital work-in-progress Construction stores advances Total fixed assets
2009 460,396 230,895 103,999 and 32,341
2008 431,062 223,148 67,063 32,189
%change 7% 3% 55% 0%
367,235
322,400
14%
4) INVESTMENTS Investments comprise bonds issued by various state governments under the onetime settlement scheme, equity investments in joint venture and subsidiary companies and investments out of surplus cash in various instruments as per the policy of the company. The break-up of investments is as follows: Bonds issued under one time settlement scheme Investments in joint ventures Investment in subsidiaries Investment of surplus cash in various instruments Others Bonds against dues Investments of development surcharge
2009
2008
171,762
164,107
6,818
1,318
304
252
8,508
32,504
5,306
7,428 76
on behalf of customers Total investments
193 192,891
2,368 207,977
5) CURRENT ASSETS The current assets and current liabilities as at March 31,2009 and March 31,2008 and the changes therein were as follows: 2009 Current assets
Amount
2008
%of current Amount assets
Change %
%of current Amount assets
Inventories 23,405 15% 17,819 14% 5,586 31% Sundry debtors 8,678 6% 13,747 11% -5,069 -37% Cash and Bank balances 84,714 54% 60,783 47% 23,931 39% Other Current assets 10,161 6% 9,764 7% 397 4% Loans and advances 30,287 19% 26,993 21% 3,294 12% Total current assets 157,245 100% 129,106 100% 28,139 22% A major part of current asset comprised cash and bank balances. As at March31,2009, the cash and bank balances stood at Rs. 84,714 million being 54% of the total current assets in comparison to Rs. 60,783 million as at March 31,2008 which was 47% of the total current assets as on the date. Of these, Rs. 82,887 million were kept as term deposits with banks as on March 31, 2009 while the term deposits for the last year Rs. 57,050 million. The next largest component of our current assets is Loans and Advances which mainly include a sum of Rs. 9,573 million as loan to the government of Delhi subsequent to the conversion of the dues of Delhi Vidyut Board into loan under the one-time-settlement scheme. The government of Delhi pays us 8.5% tax-free interest on these Bonds. The other loans and advances to employees given for various purposes such as building of house, purchase of vehicles etc. as per the policies of the company. Inventories as at March 31, 2009 were Rs. 23,405 million being 15% of current assets as against Rs. 17,819 million as on March 31, 2008 which was 14% of the current assets as on that date. Our inventories mainly comprise components and spares and coal which we maintain for operating our plants. Components and spares were Rs. 12,894 million as against Rs. 11,904 million in the last year. Coal inventories amounted to Rs. 7,476 million as against Rs. 3,115 million in the previous year indicating improved coal supply position.
6) CURRENT LIABILITIES Our current liabilities as at March 31, 2009 were Rs. 49,102 million as against Rs. 52,306 million in the previous year. Our current liabilities mainly comprise creditors for capital expenditure, creditors for supply of goods and services, deposits and retention money from contractors. The liabilities for these at the end of the year stood at Rs. 36,057 million as 77
against Rs. 33,168 million in the previous year. Besides these, we also owed a sum of Rs. 9,886 million to our customers as against Rs. 14,431 million in the previous year. These sums include amount payable to the customers since we are billing our customers for electricity on provisional tariffs as per directions of CERC, which are higher than the tariffs estimated by us as per CERC Regulations. These amounts would be paid or adjusted against future billings as and when the final tariff for various stations are determined by the regulator. Current assets
2009 2008 Amount %of current Amount assets
Liabilities 49,102 Provisions 12,300 Total Current liabilities 61,402
Change %of current Amount assets
%
80% 20%
52,306 15,161
78% 22%
-3,204 -2,861
-6% -19%
100%
67,467
100%
-6,065
-9%
7) PROVISIONS As at March 31, 2009 we had provisions for certain liabilities outstanding amounting Rs. 12,300 million as against Rs. 15,161 million on 31 March, 2008. This mainly comprised Rs. 6,596 million as proposed dividend which we would be paying to our shareholders after they approve the same in the shareholders after they approve the same in the shareholders` meeting. We also had a provision outstanding of Rs. 4,770 million towards retirement benefits payable to our employees. 8) CASH FLOWS The cash and cash equivalents and cash flows on various activities for the past five years are tabulated below: Our net cash from operating activities for the year ended March 31, 2009 increased by 22% from the previous year. The net cash from operating activities was Rs. 62,064 million as against Rs. 50,998 million for the previous year. Our net cash used in investing activities decreased to Rs. 27,136 million in fiscal 2009 from Rs. 64,136 million in the previous year. Cash flows on investing activities arise from expenditure on setting up power projects, investment of surplus cash in various securities, investment of development surcharge recovered from customers, investments in joint ventures and subsidiaries. The cash utilized for purchase of fixed assets increased by 25% from Rs. 53,699 million in the previous year to Rs. 66,956 million during this year. Cash was also realized on maturity of certain investments during the year. During the year we used Rs. 10,997 million of cash on financing activities. In the previous year we had a net inflow of Rs. 7,570 million from financing activities mainly due to receipt of Rs. 26,841 million as proceeds from our initial public offering of shares. During the current year we had inflow of Rs. 29,592 million in the previous year. The cash used for repayment of long term borrowings this year was Rs. 17,131 million as against Rs. 13,242 78
million repaid in the previous year. The cash used for paying dividend and the tax thereon was Rs. 30,087 million as against Rs. 23,397 million in the previous year.
Opening cash and Cash equivalents Net cash from operating activities Net cash used in investing activities Net cash flow from financing activities Intangibles Change in cash and cash equivalents Closing cash and cash equivalents
For the year ended march 31st 2009 2008 2007
2006
2005
60,783
66,351
23,894
13,659
12,015
62,064
50,998
58,118
47,402
29,372
27,136
64,136
24,597
31,881
28,377
10,997
7,570
8,873 63
5,271 15
630 19
23,931
5,568
42,457
10,235
1,644
84,714
60,783
66,351
66,351
13,659
SCOPE OF THE STUDY The scope of the study is identified after and during the study is conducted. The study of working capital is based on tools like:➢ trend Analysis ➢ Ratio Analysis ➢ working capital leverage ➢ operating cycle etc
Further the study is based on last 5 years Annual Reports of Singrauli super Tharmal Power (NTPC). And even factors like Competitors’ analysis, industry analysis were not considered while preparing this project.
79
LIMITATION OF THE STUDY Working capital and Analysis of Financial Statements is powerful tool of determining company’s strength and weakness. But the analysis is based on the information available in the financial statements, which are as follows: It is only a study of interim report. Working capital study is only based upon monetary information and nonmonetary factors are ignored. It does not consider change in price level. As working capital is prepared on the basis of going concern, it does not give extract position. Thus accounting concept and conventions causes a serious limitation to financial analysis. Analysis is only a mean and not an end in itself. Different people may interpret the same analysis in different ways. Due to non availability of annual report of 2009 we could not compare NTPC and Tata Power
Others Limitations Following limitations were encountered while preparing this project: 1) Limited data:-
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This project has completed with annual reports; it just constitutes one part of data collection i.e. secondary. There were limitations for primary data collection because of confidentiality. 2) Limited period:This project is based on five year annual reports. Conclusions and recommendations are based on such limited data. The trend of last five year may or may not reflect the real working capital position of the company 3) Limited area:Also it was difficult to collect the data regarding the competitors and their financial information. Industry figures were also difficult to get.
CHAPTER -2 WORKING CAPITAL OVERALL TURNOVER RATIO 1. CURRENT RATIO Current Ratio = Current Assets Current Liabilities Year
2004-05
2005-06
2006-07
2007-08
2008-09
Current Assets
16799
194132
135468
129073
157245
Current Liabilities
31881
34202
65244
52306
49102
2.0
2.4
Ratio
0.52
0.94
2. QUICK RATIO Quick Ratio =
Current Assets – Inventory Current Liabilities
81
3.2
Year
2004-05
2005-06
2006-07
2007-08
2008-09
Inventory
157596
176420
118088
111296
133840
Current Liabilities
31881
34202
65244
52306
49102
4.9
5.1
1.8
2.1
2.7
Ratio
CHAPTER-3 CASH MANAGEMENT IN NTPC: 1. Cash To Current Assets-
Cash to current assets (Cash Ratio) =
Cash Current Assets
(In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Cash
12048
5447
6091
60783
84714
Current Assets
16799
194132
135468
129073
157245
Ratio
0.717
0.028
0.044
0.47
0.53
2. Cash Turnover Ratio:
Cash Turnover Ratio =
Interest & Finance Charges Average cash balance (In Million)
Year
2004-05
2005-06
2006-07
2007-08
2008-09
Interest & Finance Charges
8677
9916
33697
16955
17632
Average Cash Balance
7939.025
8747.79
5769
33437
72748.5
Ratio
1.09
1.13
5.84
0.5
0.24
82
3. Cash holding Period Cash holding period =
365 x Average Balance of Cash Interest & Finance Charge (In Million)
Year
2004-05
2005-06
2006-07
2007-08
2008-09
Average Cash Balance
7939.025
8747.79
5769
33437
72748.5
Interest & Finance Charges
8677
9916
33697
16955
17632
Days
334
322
62
720
1506
4. Cash to Current Liabilities Cash to Current Liabilities =
Cash
Current liabilities (In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Cash
12048
5447
6091
60783
84714
34202
65244
52306
49102
0.15
0.09
1.16
1.72
Current Liabilities 31881 Ratio
0.37
83
INVENTORY MANAGEMENT IN NTPC 1. Inventory to total Current Assets Inventory to total current assets =
Inventory
(In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Inventory
20176
17712
17380
17777
23405
Current Assets
177772
194132
135468
129073
157245
Ratio
0.11
0.09
0.12
0.13
0.14
Total Current assets
2. Inventory holding period:
Inventory holding period = 365 x Avg. Inventory Cost of goods sold (In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Average Inventory
19265.93
18944
17546
17578.5
20612
Cost Of Goods Sold
30189
30319
30497
30622
36335
Days
233
228
219
210
207
84
3. Inventory turnover ratio Inventory turnover ratio = Cost of Goods sold Average Inventory (In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Cost Of Goods Sold
30189
30319
30409
30622
36335
Average Inventory
19265.93
18944
17556
17578.5
20612
Ratio
1.56
1.6
1.73
1.74
1.76
4. Fuel to total Inventory Fuel to total Inventory =
Inventory Fuel
(In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Inventory
20176
17712
17380
17777
23405
Fuel
6757
5015
4407
4583
9053
Ratio
2.99
3.53
3.94
3.88
2.58
2007-08
2008- 09
5. Components and Spares in NTPC Inventory to Spares =
Inventory Spares
(In Million) Year
2004-05
2005-06 85
2006-07
Inventory
20176
17712
17380
17777
23405
Spares
12003
11390
11742
11869
12894
Ratio
1.68
1.56
1.48
1.50
1.81
RECEIVABLE MANAGEMENT IN NTPC 1. Receivable collection period:-
Receivable collection period =
365 x Avg. bal. of Receivable
(In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Average Receivables
105589.7
119838.5
64524
9223
11212.5
Sales
178153
190475
188591
225402
261153
Day
216
230
125
15
16
Total sales
2. Receivable turnover ratio Receivable turnover ratio =
Sales
(In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Sales
178153
190475
188591
225402
261153
Average Receivables
105589.7
119838.5
64524
9223
11212.5
Ratio
1.69
1.59
2.92
24.44
23.29
Average Receivable 86
3. Receivable to total Current Assets Receivable to Current assets = Receivable Current Assets (In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Receivable
115328
124349
4699
13747
8678
Current Assets
177772
194132
135468
129073
157245
Ratio
0.65
0.64
0.03
0.11
0.05
4. Receivable to cash Receivable to cash =
Receivable Cash
(In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Receivable
115328
124349
4699
13747
8678
Cash
12048
5447
6091
60783
84714
Ratio
9.57
22.8
0.77
0.22
0.10
87
LOANS AND ADVANCES IN NTPC
Loans and Advances to total current assets Loans & advances =
Loans & Advances Current Assets
(In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Loan & Advances
24742
21482
27279
27052
30287
Current Assets
177772
194132
135468
129073
157245
Ratio
0.14
0.11
0.20
0.21
0.19
88
CHAPTER 4 CURRENT LIABILITES:Current Liabilities = Current Liabilities
(In Million) Year
2004-05
2005-06
2006-07
2007-08
2008-09
Current Liabilities
31881
34202
65244
52306
49102
Profit
35396
36075
71532
58070
58202
Ratio
0.9
0.94
0.91
0.9
0.84
Profit
SWOT ANALYSIS OF NTPC STRENGTH OF NTPC: • The company has kept with itself sufficient liquid funds to meet any kind of cash requirement. • Efficient working capacity of plants. • Efficient and timely completion of projects. 89
• A minimum risk factor. • Best-integrated project management systems. • Company with an excellent record and high profits. • An early starter-more than 30 years experience in power sector. • Highly motivated and dedicated workers and officers- no industrial relations problem. • Excellent growth prospects with significant additions, modifications and Replacement Efficient and timely completion of projects. A minimum risk factor. Best-integrated project management systems. •Company with an excellent record and high profits.An early starter-more than 30 years experience in power sector. •Highly motivated and dedicated workers and officers- no industrial relations problem. •Excellent growth prospects with significant additions, modifications and replacements. •Employee-friendly personnel policies. •Low project cost of NTPC’s plants.
WEAKNESSES OF NTPC: •Depleting raw materials. •Some of the Plant have become old and need investment in Renovation & Modernization.
OPPURTUNITIES: •Demand and supply gap. •Upcoming hydro and nuclear sector. •Huge opportunity in consultancy services.
THRETS:90
•Rising prices of raw materials •Huge competition from SEB’s, Reliance Energy, Tata power and other Private Development. •Coming up of other sources of power Rising prices of raw materials •Huge competition from SEB’s, Reliance Energy, Tata power and other Private Development. •Coming up of other sources of power. •Huge Capital requirement for expansion, diversification, horizontal & vertical integration and R & M.
CONCLUSION Summarizing the overall project work done during these 45 Days, it can be said that the project was a good learning experience. Through it, I got an opportunity to communicate with entire staff of Finance department as well as MIS department. The entire staff of finance department was very cooperative and they helped me in all the phases of my project. I also got the opportunity to learn about inventory management at the same time problems faced by the Singarauli Super Thermal Power Station (NTPC).
91
These 45 Days has given me an opportunity to conceptualize and implement a new initiative. I learned how to interpret working capital and ratio analysis with the help of guidance given by Mr. P. Ghosh Head of Accounts Department. There were lot of difficulties in the beginning of the project but slowly it got the grip on the road towards future.
RECOMMENDATIONS AND SUGGESTIONS • NTPC can match Tata Power Company Limited the gigantic if it undertakes certain measures to utilize the resources in an optimum manner. •Considering the Liquidity part, both the companies have the current and the quickratios well above the generally accepted norm. Both are financially stable to meetthe short term obligations.
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•Under Asset Management, NTPC needs to improve the day’s sales outstanding ratio. A large part of its working capital is blocked by debtors. NTPC needs to revise its credit policy and improve its collection mechanism. •Efforts are needed to be taken to increase the operating profit and the net profit by reducing operating expenses. Hedging can be tried as an option against rising fuel price. This might help to control the operating expenses. •Efforts must be taken to use the assets in optimum way to get better returns. Regular maintenance, replacing the old obsolete assets with new assets will facilitate optimum utilization.
Others Suggestions 1) It can be said that overall financial position of the company is normal but it is required to be improved from the point of view of profitability. 2) Net operating cycle is increasing that means there is a need to make improvements in receivables/debtors management. 3) Company should stretch the credit period given by the suppliers. 4) Company should not rely on Long-term debts. 5) Company should try to increase Volume based sales so as to stand in the competition.
BIBLIYOGRAPHY (DATA COLLECTION) Primary Data Collection: Primary Data are the Data that are new and he observes by investigator. This data are not present in the organization in the form of documents and secondary data. All primary data are the most valuable things to the researcher and researcher must careful under finding the primary data. Because this is the root of main findings of the report and they represent the all whole findings. 93
Primary data are that which is observed by researcher in first time.
Secondary data collection: Under doing the research on incentive scheme I collect the following things: •
I got the knowledge of working capital management, NTPC through reading the Financial Policy file.
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Through reading annual reports of NTPC:i. 26th Edition ii.27th Edition iii.28th Edition iv.29th Edition v.30th Edition
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From NTPC Financial Reports.
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News Magazine of NTPC.
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Journals of NTPC (SSTPS).
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Shakti Sandesh Magazine.
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Reports of NTPC.
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THANK YOU
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