ravi shekhar
TRANSCRIPT
-
7/31/2019 Ravi Shekhar
1/64
LOVELY PROFESSIONAL UNIVERSITY
DEPARTMENT OF MANAGEMENT
Summer Training Report
On
WORKING CAPITAL MANAGEMENT OF NTPC
Submittedto
LOVELY PROFESSIONAL UNIVERSITY
In partial fulfillment of the
Requirements for the award of Degree of
Master of Business Administration
Submitted by:
Ravishekhar Kumar Singh
10907207
-
7/31/2019 Ravi Shekhar
2/64
-
7/31/2019 Ravi Shekhar
3/64
NTPC Power plantSingrauli
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.
-
7/31/2019 Ravi Shekhar
4/64
NTPC Power plantSingrauli
ACKNOWLEDGEMENT
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.
I would like to make special thanks to Mr. P. Ghosh 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 my Guide Mr. Amarjit Saini 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.
Ravishekhar Singh
M.B.A. (3rd
sem)
-
7/31/2019 Ravi Shekhar
5/64
NTPC Power plantSingrauli
CONTENTS
ACKNOWLEDGEMENT
EXECUTIVE SUMMARY
REVIEW OF LITERATURE
OBJECTIVE OF THE STUDY
METHODOLOGY
INDIAN POWER INDUSTRY-A RETROSPECT
AN OVERVIEW OF NTPC
SINGRWALI POWER PLANT-A PROFILE OF THE COMPANY
WORKING CAPITAL MANAGEMENT- AN OVERVIEW
COMPARATIVE ANALYISIS OF WORKING CAPITAL
CASH MANAGEMENT ANALYSIS OF NTPC
INVENTORY MANAGEMENT ANALYSIS OF NTPC
FINDINGS
SUGGESTIONS
CONCLUSION
BIBLIOGRAPHY
-
7/31/2019 Ravi Shekhar
6/64
NTPC Power plantSingrauli
EXECUTIVE SUMMARY
LPG or Liberalization, Privatization and Globalization as it is referred in short today have
changed the scenario of corporate world and management of enterprises in our country. It has
now become more important to not just manage an organization but to achieve corporate
excellence simultaneously as the future belongs to learning and performing organizations.
As every business concern irrespective of its size, nature, and age needs funds to carry out
business operations such as purchase of raw materials, payment of wages and other day-to-
day expenses, working capital becomes an important and integral part of business. Working
capital is the life blood and nerve centre of a business because no business can run
successfully without an adequate amount of it. Therefore, to manage working capital in any
sector is a challenging job.The project report titled A Comparative Study on Working Capital Management of
NTPC deals with this matter and is based on the in -house industrial training at Singrawli
Power Plant. Unless organization learn to manage its working capital, success, will be
elusive. Thus, the effectiveness of an organization depends on the strength of its working
capital management as it is core to the whole system. In the context of Indias Power Industry
working capital management holds a greater significance because Power which forms the
backbone of any infrastructural facility, in recent years has become more crucial for
achieving rapid economic growth of our country.
Keeping this background in view, an attempt is made to examine the working capitalpractices in NTPC with special reference to Singrawli Power Plant. The project contain the
basic postulates of working capital, procedures for the analysis of working capital, ratios
being used to define the working capital and the impact of shortcomings in the management
of it . All this had been done to get a clear view of the techniques of working capital
management in Singrawli Power Plant.
-
7/31/2019 Ravi Shekhar
7/64
NTPC Power plantSingrauli
OBJECTIVES OF THE STUDY
To find out the efficiency of working capital management in Singarli power plant
To examine the cash management of NTPC
To evaluate the inventory management of NTPC.
-
7/31/2019 Ravi Shekhar
8/64
NTPC Power plantSingrauli
LITERATURE REVIEW
WORKING CAPITAL MANAGEMENT
Pandey (2005) explains that the management of current assets is similar to fixed assets in the
sense that in both cases a firm analyses their effects on its return and risk. The management
of fixed and current assets, however, differs in three important ways: First, in managing fixed
assets, time is a very important factor; consequently, discounting and compound techniques
play a significant role in capital budgeting and a minor one in the management of current
assets. Second, the large holding of current assets, especially cash, strengthens the firms
liquidity position, but also reduces the overall profitability. Thus, a risk-return trade off is
involved in holding current assets. Third, levels of fixed as well as current assets depend
upon expected sales, but it is only current assets which can be adjusted with sales fluctuations
in the short run. Thus, the firm has a greater degree of flexibility in managing current assets.
Nobanee, AlShattarat and Haddad, (2009) suggest measures of the efficiency of working
capital management where optimal levels of inventory, receivables, and payables are
identified, and total holding and opportunities cost are minimized and recalculating the
operating cycle, the cash conversion cycle, and the net trade cycle according to these optimal
points.
INVENTORY MANAGEMENT
Pandey (2005) explained that inventories constitute about 60 per cent of current assets of
public limited companies in India. The manufacturing companies hold inventories in the form
of raw materials, work-in-progress and finished goods. The objective of the inventory
management should be the maximization of the value of the firm. The firm should therefore
consider costs, return and risk factors in establishing its inventory policy.
Rudloff, Fleischmann, Gimpl-Heersink and Taudes (2008) showed that the gains achievable
by integrating pricing and inventory control are usually small for classical demand functions.
-
7/31/2019 Ravi Shekhar
9/64
NTPC Power plantSingrauli
The benefits of integration with inventory control are substantially increased due to the price
dynamics.
MICHALSKI (2009) presents the consequences for the recipients firm that can result fromoperating risk that is related to delivery risk generated by the suppliers.
RECEIVABLE MANAGEMENT
Pandey (2005) explained that trade credit is very important for a business as it serves as a
marketing tool to maintain or expand the firms sales, but it leads to creation of debtors. A
firms investment in accounts receivable depends on volume of credit sales and collection
period. The financial manager can influence volume of credit sales and collection period
through credit policy. Credit policy includes credit standards, credit terms, and collection
efforts.
CASH MANAGEMENT
Pandey (2005) explained that cash is required to meet a firms transactions and precautionary
needs. Management of cash involves three things; first, managing cash flows into and out of
the firm. Second, managing cash flows within the firm. Third, financing deficit or investing
surplus cash and thus, controlling cash balance at a point of time.
Drew and Lazarus (1996) highlighted the principles of cash management propounded in
Thirukkural an Indian work on management written more than 2000 years ago but very
relevant, practicable and consistent with that of the modern thought.
Ran Zhang (2006) examines management of operating cash flows, its causes, and the markets
reaction to such management.
RISK MANAGEMENT
-
7/31/2019 Ravi Shekhar
10/64
NTPC Power plantSingrauli
Risk management is the identification, assessment, and prioritization of risks (defined in ISO
31000 as the effect of uncertainty on objectives, whether positive or negative) followed by
coordinated and economical application of resources to minimize, monitor, and control the
probability and/or impact of unfortunate events or to maximize the realization of
opportunities. Risks can come from uncertainty in financial markets, project failures, legal
liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attacks from
an adversary. (Hubbard, Douglas (2009))
METHODOLOGY
SECONDARY DATA:
For making this project secondary data were required. Following are the sources of secondary
data:-
Annual Reports
Cost & Budget Reports
Creditors Reports
Debtors Reports
Inventory Reports
Cash Report
Raw Materials Report
Production Reports
Sales Reports
The project report titled A Comparative Analysis on Working Capital Management of
Singarli Power Plant required a comparative analysis of working capital patterns followed
in various Years of NTPC.
This study will assist to evaluate the efficiency of working capital management practices inNTPC Power Plant in particular. This in-depth analysis will help the management of the
companies to reduce the unnecessary blockage of funds and make the best possible use of the
available funds. Here in this study, working capitals of the five years have been calculated
sequentially and an effort has been made to indentify the trend of working capital in the past
five years by analyzing the past five years of working capital. In addition to this, certain
ratios have been derived to give a better picture of the efficiency of the management in
dealing with working capital of the plant. The analysis of past five years working capital only
-
7/31/2019 Ravi Shekhar
11/64
NTPC Power plantSingrauli
based on financial data provided by balance sheet. But working capital analysis also needs
some non-financial details. So this in-depth analysis is confined to Singrauli Power Plant
only. Data of five consecutive years are starting from the year 2004-05 to 2008-09.
POWER SECTOR IN INDIA
Power development in India is the key to economic development. The power sector has
been receiving adequate priority ever since the process of planned development in
1950. Hydro power and coal based thermal power have been the main sources of
generating electricity. Nuclear power development is at slower pace, which was
introduced in late 60s. The concept of operating power systems on a regional basis
crossing the place, the power supply industry have been under constant pressure to
bridge the gap between supply and demand.
Since Independence in 1947, Indian Power sector progress has been rapid. From mere
1713 MWs of Installed capacity in 1950 the capacity at the end of March 2007 rose to
124569 excluding capacity of renewable energy. Total generation in April 2006- March
2007 was 659419 GWs in the utility sector. The per capita consumption of electricity
increased from 15 KWHs in 1950 to 619 in 2006-07.
Decades of economic planning in India following independence placed significant
emphasis on the development of the power sector. Electricity generation capacity with
utilities in India had grown from 1713 MW in December 1950 to over 124,287 MW by
March 2006. However, per capita electricity consumption remains much lower than the
world average and even lower than some of the developing Asian economies.
Investment in the sector has not been able to improve access and keep pace with the
countrys growing demand for electricity.
India has the fifth largest generation capacity in the world with an installed capacity of
152 GW as on 30 September 2009, which is about 4 percent of global power
generation. The top four countries, viz., US, Japan, China and Russia together consume
about 49 percent of the total power generated globally. The average per capitaconsumption of electricity in India is estimated to be 704 kWh during 2008-09.
However, this is fairly low when compared to that of some of the developed and
emerging nations such US (~15,000 kWh) and China (~1,800 kWh). The world average
stands at 2,300 kWh. The Indian government has set ambitious goals in the 11th plan
for power sector owing to which the power sector is poised for significant expansion. In
order to provide availability of over 1000 units of per capita electricity by year 2012, it
has been estimated that need-based capacity addition of more than 100,000 MW would
-
7/31/2019 Ravi Shekhar
12/64
NTPC Power plantSingrauli
be required. This has resulted in massive addition plans being proposed in the sub-
sectors of Generation Transmission and Distribution.
India is world's 6th largest energy consumer, accounting for 3.4% of global energy
consumption. Due to Indias economic rise, the demand for energy has grown at anaverage of 3.6% per annum over the past 30 years. In March 2009, the installed power
generation capacity of India stood at 147,000 MW while the per capita power
consumption stood at 612 kWH. The country's annual power production increased from
about 190 billion kWH in 1986 to more than 680 billion kWH in 2006. The Indian
government has set an ambitious target to add approximately 78,000 MW of installed
generation capacity by 2012. The total demand for electricity in India is expected to
cross 950,000 MW by 2030.
About 75% of the electricity consumed in India is generated by thermal power plants,
21% by hydroelectric power plants and 4% by nuclear power plants. More than 50% ofIndia's commercial energy demand is met through the country's vast coal reserves. The
country has also invested heavily in recent years on renewable sources of energy such
as wind energy. As of 2008, India's installed wind power generation capacity stood at
9,655 MW. Additionally, India has committed massive amount of funds for the
construction of various nuclear reactors which would generate at least 30,000 MW. In
July 2009, India unveiled a $19 billion plan to produce 20,000 MW of solar power by
2020.
The Power sector in India is predominantly controlled by the Government of
India's public sector undertakings (PSUs). Major PSUs involved in the generation ofelectricity are National Thermal Power Corporation (NTPC), National Hydroelectric
Power Corporation (NHPC) and Nuclear Power Corporation of India (NPCI). Besides
PSUs, several state-level corporations, such as Maharashtra State Electricity
Board (MSEB), are also involved in the generation and intra-state distribution of
electricity. The Power Grid Corporation of India is responsible for the inter-state
transmission of electricity and the development of national grid.
The Ministry of Power is the apex body responsible for the generation and development
of power in India. This ministry started functioning independently from 2 July, 1992;
earlier, it was known as the Ministry of Energy. The Union Minister of Power at presentis Sushil Kumar Shinde, who took charge of the ministry on the 28th of May, 2009.
SCENARIO OF POWER IN INDIA
http://en.wikipedia.org/wiki/Sushilkumar_Shindehttp://en.wikipedia.org/wiki/Sushilkumar_Shinde -
7/31/2019 Ravi Shekhar
13/64
NTPC Power plantSingrauli
Growth of economy calls for watching the rate of growth in infrastructure facilities. Power
sector is one of the major aspects of this infrastructure building. Some prominent people like
the Ex Chairman of GE Jack Welchhave gone to the extent of saying, you dont have a
chance to stand in the 21stcentury without lots of powerWithout this you miss
the next revolution.
Moreover, the growth rate of demand for power in developing countries is generally higher
than that of GDP. In India, the elasticity ratio was 3.06 in 1 st plan, & peaked at 5.11 during 3rd
plan and came down to 1.65 in 80s. For 90s a ratio of around 1.5 was projected. Hence, in
order to support a growth of GDP of around 7%, the rate of growth of power supply of 10%
is required.
If we look at current scenario, electricity consumption in India has more than doubled in the
last decade, outpacing the economic growth. If we analyze the various statistics of Indian
power sector, we will find that the generating capacity has gone up tremendously from a
meager 1712MW in 1950 to a whooping 147000MW today.
The critical role played by the power industry in the economic progress of a country has to be
emphasized. A self sufficient power industry is vital for a nation to achieve economic
stability.
INDIAN POWER INDUSTRY
Before Independence
-
7/31/2019 Ravi Shekhar
14/64
NTPC Power plantSingrauli
The British controlled the Indian power industry firmly before Independence. Then legal and
policy framework was contributing to private ownership, with not much regulation with
regard to operational safety.
Post Independence
Immediately after Independence, the country was faced with capacity restraint. India adopted
a socialist structure for economic growth and all the major industries were controlled by
public sector enterprises. By 1970's, India had nationalized most of its energy assets, due to
its commitment to social goals. By the late 1980's, the Indian economy felt the strain of the
socialist agenda followed since independence. Faced with a serious deterioration in public
finance and balance of payment crisis, the Union government as part of its policy of
economic liberalization allowed greater investment by private sector in the power industry.
The electricity sector in India is predominantly controlled by Government of India's public
sector undertakings (PSUs). Major PSUs involved in the generation of electricity include
National Thermal Power Corporation (NTPC), National Hydroelectric Power Corporation
(NHPC) and Nuclear Power Corporation of India (NPCI). Besides PSUs, several state-level
corporations, such as Maharashtra State Electricity Board (MSEB), are also involved in the
generation and intra-state distribution of electricity. The Power Grid Corporation of India is
responsible for the inter-state transmission of electricity and the development of national grid.
India is world's 6th largest energy consumer, accounting for 3.4% of global energy
consumption. Due to India's economic rise, the demand for energy has grown at an average of
3.6% per annum over the past 30 years. In March 2009, the installed power generation
capacity of India stood at 147,000 MW while the per capita power consumption stood at 612
kWH. The country's annual power production increased from about 190 billion kWH in 1986
to more than 680 billion kWH in 2006. The Indian government has set an ambitious target to
http://en.wikipedia.org/wiki/KWHhttp://en.wikipedia.org/wiki/KWHhttp://en.wikipedia.org/wiki/KWH -
7/31/2019 Ravi Shekhar
15/64
NTPC Power plantSingrauli
add approximately 78,000 MW of installed generation capacity by 2012. The total demand
for electricity in India is expected to cross 950,000 MW by 2030.
Electricity losses in India during transmission and distribution are extremely high and varybetween 30 to 45%. In 2004-05, electricity demand outstripped supply by 7-11%. Due to
shortage of electricity, power cuts are common throughout India and this has adversely
effected the country's economic growth.
Generation
Grand Total Installed Capacity is 147,402.81 MW
Thermal Power
Current installed capacity of Thermal Power (as of 12/2008) is 93,392.64 MW which is
63.3% of total installed capacity.
Current installed base of Coal Based Thermal Power is 77,458.88 MW which comes
to 53.3% of total installed base.
Current installed base of Gas Based Thermal Power is 14,734.01 MW which is 10.5%of total installed base.
Current installed base of Oil Based Thermal Power is 1,199.75 MW which is 0.9% of
total installed base.
The state of Maharashtra is the largest producer of thermal power in the country.
Hydro Power
India was one of the pioneering states in establishing hydro-electric power plants, The power
plant at Darjeeling and Shimsa (Shivanasamudra) was established in 1898 and 1902
respectively and is one of the first in Asia. The installed capacity as of 2008 was
approximately 36647.76. The public sector has a predominant share of 97% in this sector.
-
7/31/2019 Ravi Shekhar
16/64
NTPC Power plantSingrauli
Nuclear Power
Currently, 17 nuclear power reactors produce 4,120.00 MW (2.9% of total installed base).
Renewable PowerCurrent installed base of Renewable energy is 13,242.41 MW which is 7.7% of total installed
base with the southern state of Tamil Nadu contributing nearly a third of it (4379.64 MW)
largely through wind power.
Power for All by 2012
The Government of India has an ambitious mission of POWER FOR ALL BY 2012. This
mission would require that our installed generation capacity should be at least 200,000 MW
by 2012 from the present level of 144,564.97 MW. Power requirement will double by 2020 to
400,000MW.
Todays environment is a tough environment to survive, with the new industries and the new
sectors coming up so strongly and financially sound. But to gain an extra edge over others
they ought to have an extra or special added advantage.
Our people are our most important asset. Nearly every organization report contains a
phrase like this & for good reason. Today, the last great source of competitive advantage is
human capital.
The pressure for Human Resource (HR) departments to deliver increased business value is
growing. Executives are seeking to reduce costs, streamline processes, & free up resources to
focus more on core competencies. Business stakeholders need support from HR departments
to meet human capital demands to drive innovation and growth. Managers want up-to-date
employee information at their fingertips. Employees want the ability to check benefits, track
administrative paperwork, and plan their own retirement accounts
-
7/31/2019 Ravi Shekhar
17/64
NTPC Power plantSingrauli
AN OVERVIEW OFNATIONAL THERMAL POWER CORPORATION.
AN INTRODUCTION:
NTPC Limited is the largest thermal power generating company of India. A public
sector company wholly owned by Government of India, it was incorporated in the year
1975 to accelerate power development in the country. Within a span of 30 years, NTPC
has emerged as a truly national power company, with power generating facilities in all
the major regions of the country.
Recognizing its excellent past performance and its vast potential, the Govt. of the India
has identified NTPC as one of the 'Navratnas'- a potential global giant and also it is
going to be identified as one of the Maharatna- giant among the 'Navratnas'. NTPC
Limited is the largest thermal power generating company of India. A public sectorcompany, it was incorporated in the year 1975 to accelerate power development in the
country as a wholly owned company of the Government of India.
At present, Government of India holds 89.5% of the total equity shares of the company
and the balance 10.5% is held by FIIs, Domestic Banks, Public and others. Within a
span of 30 years, NTPC has emerged as a truly national power company, with power
generating facilities in all the major regions of the country.
-
7/31/2019 Ravi Shekhar
18/64
NTPC Power plantSingrauli
Based on 1998 data, carried out by Data monitor UK, NTPC is the 6th largest in terms
of thermal power generation and the second most efficient in terms of capacity
utilization amongst the thermal utilities in the world.
The Group's principal activity is to generate and sell power to state utilities. It also
provides consultancy to power utilities and maintains power stations. The Group
operates in two segments, namely, Power Generation and Others. The Power generation
segment includes generation and sale of bulk power to SEBs/State utilities. Other
business includes providing consultancy, project management and supervision, oil and
gas exploration and coal mining.
In the Forbes list of World's 2000 largest companies, 2008, NTPC occupies 317th
place. With a current generating capacity of 30,144 MW, NTPC has embarked on plans
to become a 75,000 MW company by 2017.
Presently, Government of India holds 89.5% equity in the company and the balance
10.5% is held by FIIs, Domestic Banks, Public and others.
As on date, NTPC's total installed capacity is 27, 904 MW. NTPC's coal based power
stations are at: Singrauli (Uttar Pradesh), Korba (Chattisgarh), Ramagundam (Andhra
Pradesh), Farakka (West Bengal), Vindhyachal (Madhya Pradesh), Rihand (Uttar
Pradesh), Kahalgaon (Bihar), NTCPP (Uttar Pradesh), Talcher (Orissa), Unchahar (Uttar
Pradesh), Simhadri (Andhra Pradesh), Tanda (Uttar Pradesh), Badarpur (Delhi), and
Sipat (Chattisgarh). NTPC's Gas/Liquid based power stations are located at: Anta(Rajasthan), Auraiya (Uttar Pradesh), Kawas (Gujarat), Dadri (Uttar Pradesh), Jhanor-
Gandhar (Gujarat), Rajiv Gandhi CCPP Kayamkulam (Kerala), and Faridabad
(Haryana). NTPC's Power Plants with Joint Ventures are located at Durgapur (West
Bengal), Rourkela (Orissa), Bhilai (Chhattisgarh), and RGPPL (Maharastra).
-
7/31/2019 Ravi Shekhar
19/64
NTPC Power plantSingrauli
Growth of NTPC installed capacity and generation
SUBSIDIARIES OF NTPC
NTPC Electric Supply Company Ltd (NESCL): NESCL is a wholly owned
subsidiary of NTPC. It was incorporated in August 2002 with the objective to acquire,
establish & operate Electricity Distribution Network in various circles/cities across
India. The company provides consultancy in the area of: Turnkey execution, Project
monitoring, Quality Assurance and Inspection, and Third Party Quality inspection on the
behalf of utility.
NTPC Vidyut Vyapar Nigam Ltd. (NVVN):It was formed to cater to and deal
with the vast potential of power trading in the country and optimum capacity utilization.
NTPC Hydro Limited (NHL):It was set up in December, 2002 to develop smalland medium sized Hydro Electric Power Projects of up to 250 MW capacities.
-
7/31/2019 Ravi Shekhar
20/64
NTPC Power plantSingrauli
NEW PLANTS OF NTPC
The company has formulated a long term Corporate Plan for 15 years upto 2017. The
Corporate Plan seeks to integrate the Companys vision, mission and strategies for growthwith the national plans and to provide the company the cutting edge in the emerging
competitive environment. NTPC is targeting to become a 75,000 MW Plus company by
2017.
(A) Projects approved and under construction for commissioning by 2012 - 13360 MW
Project
(State)
Capacity Under
Construction
(MW)
Fuel
Kahalgaon Stage II Phase I (Bihar) 500 (1x500) Coal
Kahalgaon Stage II Phase II (Bihar) 500 (1x500) Coal
SipatI(Chhattisgarh) 1980 (3x660) Coal
SipatII (Chhattisgarh) 500 (1x500) Coal
Barh - I (Bihar) 1980 (3x660) Coal
Korba-III (Chhattisgarh) 500 (1x500) Coal
Bhilai Exp. Power Project,
JV with SAIL (Chhattisgarh)
500 (2x250) Coal
NCTPP-II, Dadri, Uttar Pradesh 980 (2x490 MW) Coal
Farakka III, West Bengal 500 (1 X 500) Coal
Simhadri - II,Andhra Pradesh 1000 (2x500) Coal
Vallur (JV with TNEB), Tamil Nadu 1000 (2x500) Coal
Aravali Super Thermal Power Project, Jhajjar (JV with
Haryana & Delhi)1500 (3x500) Coal
Koldam HEPP(Himachal Pradesh) 800 (4x200) Hydro
-
7/31/2019 Ravi Shekhar
21/64
NTPC Power plantSingrauli
Loharinag Pala HEPP(Uttaranchal) 600 (4x150) Hydro
Tapovan Vishnughad(Uttaranchal) 520 (4x130) Hydro
Total 13360
B) New projects being pursued for benefits starting in the 11th Plan capacity addition
for Eleventh Plan and beyond
In addition to the above on-going projects, proposals for a host of new power projects as
given below are being pursued for benefits starting in the 11th plan subject to timely linkages,
clearances/approvals.
Sl.
No.Project/ State
Capacity
(MW)Fuel
1 Mauda, Maharastra 1000 Coal
2 Bongaigaon TPP, Assam 750 Coal
3 Barh-II, Bihar 1320 Coal
4 Nabinagar-JV with Railways-Bihar* 1000 Coal
5 North Karanpura, Jharkhand 1980 Coal
6 Rihand - III 1000# Coal
7 Kawas-II CCPP, Gujarat@ 1300 Gas/LNG
8 Jhanor Gandhar-II CCPP, Gujarat@ 1300 Gas/LNG
-
7/31/2019 Ravi Shekhar
22/64
NTPC Power plantSingrauli
NTPC IN SINGRAULI
NTPC/Singrauli, the flagship station of NTPC is situated in Sonebhadra District of Uttar
Pradesh. It has five Units of 200 MW (Turbine: KWU design, Boiler: Combution
Engineering Design) and two Units of 500 MW (Turbine: KWU design; Boiler: Combustion
Engineering Design). Condenser cooling system of all units is open system. It takes water
from Govind Ballabh Pant Reservoir and releases in the same reservoir after a distance of
around 10 KM through open canal. NTPC, Singrauli has its own MGR (Merry Go Round)
system for transportation of coal from NCL Jayant mines. Electricity generated from this
plant goes to northern grid (UP,Harayana,Delhi,Rajsthsan,Panjab, J&K,HP&
Uttaranchal).Start up power can be taken from Rihand hydle or from NTPC,Vindhyachal
(Western grid ). Earlier Whole ash generated was disposed in ash dyke in slurry form. Now
part of ash is being disposed in dry form for brick manufacturing and some part is provided to
cement Manufacturers. The first unit of the station was commissioned in 1982 and the last
one in 1987.Since then NTPC, Singrauli is serving the nation day and night.
During the initial period of operation NTPC Singrauli faced many operational
problems in running the units of 200MW and 500MW. Experienced personnel for running
200MW sets with NTPC at that time were very few and for 500MW sets, were almost nil.
Over the year of operation NTPC, Singrauli has not only overcome the operational problems
but has also developed best practices which are very much useful for future NTPC stations
and have been implemented in other station also.
-
7/31/2019 Ravi Shekhar
23/64
NTPC Power plantSingrauli
SINGRAULI THERMAL POWER PROJECT
1-LOCATION
SUB-DIVISIONAL OFFICE : DUDHI
DISTRICT & STATE : SONEBHADRA, UTTER PRADESH
NEAREST MAJOR ROADHEAD : PIPRI-SINGRAULI
NEAREST MAJOR RAILHEAD : SHAKTINAGAR & RENUKOOT
NEAREST AIRPORT : VARANASI
2- CAPACITY IN MW : STAGE-1 STAGE-2 TOTAL
(MEGA WATT) 600 MW 1400 MW 2000 MW
(3 x 200) (2 x 200+2 x 500 )
Major Achievements of NTPC
Largest thermal power generating company of India.
Sixth largest thermal power generator in the world.
Second most efficient utility in terms of capacity utilization. One of the nine PSUs to be awarded the status of Navratna.
Provides power at the cheapest average tariff in the country.
-
7/31/2019 Ravi Shekhar
24/64
NTPC Power plantSingrauli
HISTORY OF NTPC
1975
IIncorporated in November
1977
NNTPC acquired the first patch of land at Singrauli.
TThe first batch of executive trainees joined the company
1978
TTakeover of management of the Badarpur project
CConstruction of the first transmission network Sanghrauli- Korba- Kanpur of 400 KV
systems started
1982
PPower Management Institute, Delhi, a centre for education was established
1983
IIn the very first year of commercial operation , NTPC earned a profit of Rs 4.51 crore
in the financial year 1982-83
1985 TThis year marked the completion of decade (1975-1985) of NTPCs existence. NTPC
achieved a generating capacity of 220 MW by commissioning 11 units of 200 MW each
at its various projects in country
TThe government of India approved the setting of three gas based combine cycle
projects by NTPC in Kawat in Gujrat, Auraiya in Uttar Pradesh and Anta in Rajasthan.
For these projects, the World Bank agreed to provide US$ 485 million, which was the
largest single loan in the history of bank.
1987
CCrossed the 5000 MW capacity mark
1989
CConsultancy division launched
-
7/31/2019 Ravi Shekhar
25/64
NTPC Power plantSingrauli
1990
Total installed capacity crossed 10000MW
1992
AAcquisition by the company of Feroz Gandhi Unchahar Thermal Power Station (2x210
MW) from Uttar Pradesh Rajya Vidyut Utpadan Nigam Of Uttar Pradesh
1994
CCrossed 15000 MW of installed capacity
1995
NNTPC celebrated 20 yrs of its existence
A new logo was adopted
NNTPC took over the 460 MW Talcher Thermal power Station from Orrisa State
Electricity Board
1997
AAchieved 100 million units generation in one year
1998
CCommissioned the first Naphtha based plant at kayamkulam with a capacity of 350
MW
2000
CCommenced construction of a first hydro- electricity power project of 800 MW
capacity in Himachal Pradesh
2002
TThree wholly owned subsidiaries viz. NTPC Electric Supply Company Limited, NTPC
Hydro Limited, NTPC Vidyut Vyapar Nigam Limited incorporated.
2004
NNTPC became a listed company
NNTPC made its debut issue of euro bonds amounting to USD 200 million in
international market.
2005
-
7/31/2019 Ravi Shekhar
26/64
NTPC Power plantSingrauli
TThe company rechristened as NTPC Limited in line with its changing business
portfolio and transforms itself from a thermal power utility to an integrated power
utility.
2008
NNational Thermal Power Corporation is the largest power generation company in
India. Forbes Global 2000 for 2008 ranked it 411th in the world.
VISION AND MISSION OF NTPC :
VISION: To be one of the worlds largest and best power utilities,powering Indias growth.
To realize this vision, NTPC has drawn up a detailed Corporate Plan for the period
1997-2012 which represents the company's collective optimism and enthusiasm,
inspired by a glorious past, a vibrant present and a brilliant future. The Plan has been
prepared in-house in consultation the committed, competent and confident members of
the NTPC family. The road map that has been charted out was after a thorough scan of
the strengths and weaknesses within the organization as well as opportunities and threats
in the environment. Considering multidimensional opportunities in the energy sector,
NTPC will adopt a multi-pronged growth strategy for capacity addition through
Greenfield sites, expansion of existing stations, takeovers and joint ventures. The
capacity addition plans that we have drawn up for the fifteen-year period using all the
above strategies to enable the corporation to become a 40,000 MW company by 2012
A.D.
MISSION: Develop and provide reliable power, related products andservices at competitive prices, integrating multiple energy sources with
innovative and ecofriendly technologies and contribute to society"
Make available reliable and quality power in increasingly large quantities at
competitive prices and ensure timely realization of revenues.
-
7/31/2019 Ravi Shekhar
27/64
NTPC Power plantSingrauli
Adopt a broad based capacity portfolio including Hydro Power, LNG, Nuclear Power,
and non conventional and eco-friendly fuels
Plan and speedily implement power projects using state-of- the art technologies.
Be an integrated utility by implementing strategic diversifications in areas such aspower trading distribution, transmission, coal mining, coal beneficiation etc.
Develop a strong portfolio of profitable businesses in overseas markets including
technical services, generation assets etc.
Continuously attract and develop committed human resources to match world
standards.
Lead fundamental and applied research for adoption of the state-of-the-art
technologies, breakthrough efficiency improvements and new fuels.
Lead developmental efforts in the Indian power sector including assisting state utility
reform, policy recover etc.
Be a socially responsible corporate entity with thrust on environment protection, ash
utilization, community development, and energy conservation.
ORGANIZATION STRUCTURE AND CULTURE OF NTPC:
Organization Structure
-
7/31/2019 Ravi Shekhar
28/64
NTPC Power plantSingrauli
NTPC : Core Values &Objectives
CORE VALUESThis corporate plan provides details of the overall agenda for NTPC. The successful
delivery of this agenda would require a committed work force that identifies with and
supports the vision. To ensure realization of this corporate agenda, a set of core values
should be central to, and govern each activity of the organization. Known as one of the
NAVRATANS of the PSUS NTPC has its following core values. They are known as
(BCOMIT) as follows:-
B-Business Ethics
C-Customer Focus
O-Organizational & Professional pride
M-Mutual Respect and Trust
I- Innovation & Speed
T-Total quality for Excellence
-
7/31/2019 Ravi Shekhar
29/64
NTPC Power plantSingrauli
CORPORATE OBJECTIVE
BUSINESS PORTFOLIO GROWTH
To further consolidate NTPCS position as the leading thermal power generationcompany in India and establish a presence in hydro power segment.
To broad base the generation mix by evaluating conventional sources of energy toensure long run competitiveness and mitigate fuel-risks.
To diversify across the power value chain in India by considering backward andforward integration into areas such as power trading, transmission, distribution, coalmining, coal beneficiation, etc.
To develop a portfolio of generation assets in international markets. To establish a strong brand in the domestic & international market.
CUSTOMER FOCUS To foster a collaborative style of working with customer growing to be a preferred
brand for supply of quality power.
To expand the relationship with existing customers by offering a bouquet of services in
addition to supply of power e.g. trading, energy consulting, distribution consulting,
management consulting, management practices.
To expand the future customer portfolio through profitable diversification into
downstream business, inter alia retail distribution and direct supply.
To ensure rapid commercial decision making, using customer specific information with
adequate concern for the interests of the customer.
AGILE CORPORATION
To ensure effectiveness in business decisions and responsiveness to change in the
business environment by
Adopting a portfolio approach to new business development.
Continuous and coordinated assessment of the business environment to identify and
respond to opportunities and threats. 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
-
7/31/2019 Ravi Shekhar
30/64
NTPC Power plantSingrauli
To continuously improve on project execution time and cost in order to sustain long
run competitiveness in generation.
To operate & maintain NTPC stations at par with the best-run utilities in the world with
respect to availability, reliability, efficiencies. To aim for performance excellence in the diversification businesses.
To embed quality in all systems and processes.
HUMAN RESORUCE DEVELOPMENT
To enhance organizational performance by institutionalizing an objective and open
performance management system.
To align individual and organizational needs and develop business leaders by
implementing a career development system.
To enhance commitment of employees by recognizing and rewarding high
performance.
To build and sustain a learning organization of competent world-class professionals.
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 ofdeployed funds, leveraging opportunities in domestic and international financial
markets.
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.
SUSTINABLE and DEVELOPMENT
To contribute to sustainable power development by discharging corporate social
responsibilities.
To lead the sector in the areas of resettlement and rehabilitation and environment
protection including effective ash-utilization, peripheral development and energy
conservation practices.
To lead developmental efforts in the Indian power sector through efforts at policy
advocacy, assisting customers in the operations and management of power plants etc.
-
7/31/2019 Ravi Shekhar
31/64
NTPC Power plantSingrauli
RESEARCH and DEVELOPMENTS
To pioneer the adoption of reliable, efficient and cost-effective technologies by carrying out
fundamental and applied research in alternate funds and technologies.
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.
To disseminate the technologies to other players in the sector and in the long-run generating
revenue through proprietary technologies.
SWOT Analysis:
Strengths Largest market share in domestic power generation and a broad customer portfolio across
the country.
Excellent track record of performance in project implementation and plant operation.
Diversified thermal generation portfoliomultiple sizes and fuel types.
Highly skilled and experienced human resources, exposed to state-of-the art technologiesin project execution and power generation.
Navaratna status
Strong balance sheetability to raise low cost debt.
Engineering skills in project configuration and package design.
Turnaround ability for old plantsdemonstrated in the takeover plants of Talcher, Tanda& Unchahar.
High credit rating that is indicative of the confidence of lenders.
Thrust on reducing social costs of capacity growthstrong execution of Resettlement andrehabilitation plans.
Weakness Poor financial health of customers.
Functional orientation hampering cross functional perspective in decision making.
Long and multi layered procurement process leading to long lead times and process delay.
Gaps in HR systems such as performance management, rewards and incentives and careerdevelopment.
-
7/31/2019 Ravi Shekhar
32/64
NTPC Power plantSingrauli
Inadequate deployment of a strong knowledge management system that could assist in
improving efficiency and effectiveness in all aspects of the business.
Hierarchy for decision making that affects responsiveness.
Role ambiguity and dilution within different lends of the organization.
Opportunities Expand generation capacities by putting up thermal and hydro capacities, maintain the
position of a dominant generating utility in the Indian Power sector.
Broad base fuel mix by considering imported coal, gas, domestic coal, nuclear power etcwith a view to mitigate fuel risks and maintain long run competitiveness.
Expand services for EPC, R&M and O&M activities in the domestic as well asinternational markets.
Backward integrate into fuel management to exercise greater control and understandingof supply economics.
Improve collections by trading, direct sale to bulk customers and the active role inallocation in new plants.
Execute increased number of power plants that classify for Mega Power Projects status,thereby reducing the cost of the projects and power and power generated.
Forward integrate into the distribution business in India.
Threats Limited experience of operating in a truly liberalized environment with competition.
Limited experience of operating in an independently regulated system.
Redirecting power may be constrained by inter-regional connectivity.
Absence of an independent regular for coal industry and the delay in private investmentslending to the risk of low availability of coal in the future.
WORKING CAPITAL MANAGEMENT-AN OVERVIEW
INTRODUCTION:
Working capital means the funds which are required to meet the daily transactions of the
business .In other words it refers to that part of the firms capital which is required for
financing current assets such as cash, marketable securities, debtors and inventories. Thus
working capital is very significant facet of financial management. Every business concern
-
7/31/2019 Ravi Shekhar
33/64
NTPC Power plantSingrauli
should have adequate working capital to run its operations smoothly. It should have neither
excess working capital nor inadequate working capital because both of these have adverse
effects on firms profitability and liquidity positions. Therefore, business concerns should
maintain adequate working capital. The basic objective of working capital is to manage thefirms current assets and current liabilities in such a way that that a satisfactory leve l of
working capital is maintained.
Working capital policies have a great effect on a firms liquidity and profitability. Therefore,
the working capital should be managed in such a way which will ensure higher profitability
and proper liquidity to the business concern.
The significance of working capital management is to ensure that the organization maintains
a good fit with the changing environment and strives to build the capability to cope with
challenges.
CONCEPTS OF WORKING CAPITAL
There are two concepts of working capital:
Balance sheet concept or traditional concept.
Operating cycle concept.
BALANCE SHEET CONCEPT OR TRADITIONAL CONCEPT
-
7/31/2019 Ravi Shekhar
34/64
NTPC Power plantSingrauli
It shows the position of the firm at a certain point of time. It is calculated on the basis of
balance sheet prepared at a specific date. In this method there are two types of working
capital.
Gross working capitalNet working capital
GROSS WORKING CAPITAL
It refers to a firms investment in current assets. The sum of the current assets is the wo rking
capital of the business. The sum of the current is quantitative aspect of working capital which
emphasizes more on quantity than on its quality, but it fails to reveal the true picture of the
financial position of the business because every increase in current liabilities will decreasethe gross working capital.
NET WORKING CAPITAL
It is difference between the current assets and current liabilities or the excess of total current
assets over total current liabilities. It can also be defined as that part of a firms current asset
which is financed with long term funds. It may be either negative or positive. When the
current assets exceed the current liabilities, the working capital is positive and vice-versa.
OPERATING CYCYE CONCEPT
The duration or time required to complete the sequence of events right from the purchase ofraw materials for cash to the realization of sales in cash is called operating cycle or working
capital cycle. The operating cycle consists of three phases:
In phase 1, cash gets converted into inventory. This would include purchase of raw materials,
conversion of raw materials into work-in-progress, finished goods and terminate in the
transfer of goods to stock at the end of the manufacturing process. In the case of trading
organization, this phase would be shorter as there would be no manufacturing activity and
-
7/31/2019 Ravi Shekhar
35/64
NTPC Power plantSingrauli
cash will be converted into inventory directly. The phase will, of course, be totally absent in
case of service organizations.
In phase 2 of the cycle, the inventory is converted into receivables as credit sales are made to
customers. Firms which do not sell on credit will obviously not have phase 2 of the operatingcycle.
The last phase, phase 3, represents the stage when receivables are collected. This phase
completes the operating cycle. Thus, the firm has moved from cash to inventory, to
receivables and to cash again.
FIXED/PERMANENT WORKING CAPITAL
To carry on business, a certain level of working capital is necessary on a continuous and
uninterrupted basis, for all practical purpose, the requirement has to be met as with other
fixed assets. Permanent working capital represents the minimum level of raw materials,
work-in-progress, finished goods, stores, accounts receivables and cash which are in
circulation to ensure continuity of production.
Permanent working capital is again divided into two parts: regular working capital and
reserve working capital. The portion of fixed working capital which is utilized to carry out
the cyclical operation of current assets in the form of conversion of liquid cash into raw
-
7/31/2019 Ravi Shekhar
36/64
NTPC Power plantSingrauli
materials, raw materials into finished goods, finished goods into debtors and debtors into
liquid cash in a continuous manner is known as regular working capital. On the other hand,
the portion of fixed working capital, which is preserved for meeting uncertain and emergent
working needs (like sudden price hike, abnormal scarcity in times of war, natural calamity,etc) is known as reserve working capital.
VARIABLE/TEMPORARY WORKING CAPITAL
Besides fixed working capital, a business may need additional working capital to meet the
growing demands of busy seasons at stated intervals. If the demand for the products of the
business goes up at any time it needs additional funds to pay for more materials, labour and
other expenses and to meet the requirement of cash balance to be maintained in the changed
situation. This additional working capital needed to feed the operating cycle in busy business
periods is known as variable or temporary working capital. It is called variable or temporary
because the business does not need it always but it is required according to the need of the
situation.
Generally the importance of variable working capital is more acute in business concern
having seasonal market demands. Variable or temporary workingcapitalmay be further sub-
divided into (a) seasonal working capital and (b) special working capital.
The additional working capital required by a concern to carry out its operating activities in
busy seasons of high market demands is known as seasonal working capital. Businesses
which mostly have seasonal demands of their products like ice- cream, cold drinks, wool and
likely products manufacturing concern may need huge amount of seasonal working capital. Inother business concerns too the market may rise to the peak in some particular time period.
So in all types of business a portion of working capital may be preserved for meeting
seasonal needs. On the other hand, the portion of working capital that is needed by a concern
to meet the extraordinary requirements of special situations is known as special working
capital. This is called special working capital because it is needed in special situations and not
in normal circumstances.
-
7/31/2019 Ravi Shekhar
37/64
NTPC Power plantSingrauli
Diagrammatic representation of the concept of working capital
IMPORTANCE OF WORKING CAPITAL
The adequate reserve of working capital ensures a steady flow of raw materials to the
production process.
The adequate reserve of working capital indicates the good solvency position of the
concern and helps it to get loan from the market at favorable terms.
The adequate stock of working capital makes it possible for a concern to purchase the
trading goods in cash and cash purchase always carries the benefit of getting cash
discount.
A strong working capital base is probably the only remedy to overcome the oddsituations like dull market conditions, scarcity of raw materials and other components
in case of any emergency, sudden market fluctuations, etc.
A business concern can exploit the market opportunities with the help of adequate
working capital.
The regular flow of adequate working capital makes possible efficient use of fixed
assets, reduces wastage, ensures quick replying of current assets, and establish a well-
tuned working environment.
-
7/31/2019 Ravi Shekhar
38/64
NTPC Power plantSingrauli
A quick rotation of working capital cycle and an efficient management of working
capital reduce cost and increases production and sales. The combined effect of all
these favorably add to the profitability of the concern.
The adequate amount of working capital and its quick rotation increases profit. Therate of dividend of the shareholders also increases as a result of such increase in
profit.
Sufficient working capital helps in research and development to face the present era
of cut throat competition and quick technological advancement.
DETERMINANTS OF WORKING CAPITAL
The total working capital requirement is determined by a wide variety of factors. It should be,
however, noted that these factors affect different enterprises differently. They also vary from
time to time. In general, the following factors are involved in a proper assessment of the
quantum of working capital required:-
GENERAL NATURE OF BUSINESS:The working capital requirements of an enterprise are basically related to the conduct of the
business. According to the nature of business they have to maintain a sufficient amount of
cash, inventories and book debts. The industrial concerns require fairly large amounts of
working capital though it varies from industry to industry depending on their assets structure.
PRODUCTION CYCLE:Another factor which has a bearing on the quantum of working capital is the production
cycle. The term production or manufacturing cycle refers to the time involved in the
manufacture of goods. It covers the time-span between the procurement of raw materials and
the completion of the manufacturing process leading to the production of finished goods. To
sustain such activities the need of working capital is obvious.
BUSINESS CYCLE:
The working capital requirements are also determined by the nature of the business cycle.
The variations in business conditions may be in two directions: (i) upward phase when boom
conditions prevail, and (ii) downward phase when economic activity is marked by a decline.
During the upswing of the business activity the need of working capital is more as opposed to
the downward phase of the business.
PRODUCTION POLICY:The requirement of working capital also depends on the production policy of the firm. In
manufacturing concerns having mostly seasonal demand for the product the production
policy is a significant determinant of working capital.
-
7/31/2019 Ravi Shekhar
39/64
NTPC Power plantSingrauli
CHANGES IN PRICE LEVEL:General increase in price level increases working capital need of a firm because the firm has
to pay more for maintaining the previous level on working capital
GROWTH AND EXPANTION:As a company grows, it is logical to expect that a larger amount of working capital will be
required. The critical fact is however, is that the need for increased working capital funds
does not follow the growth in business activities but precedes it.
AVAILABILITY OF RAW MATERIALS:In case raw materials are easily available on soft terms the firm does not require maintaining
a huge inventory of raw materials. Such a firm does not require blocking up huge amount of
working capital for this purpose. On the contrary if raw materials are scarce and its supply is
irregular and seasonal in nature the firm needs to store a reasonable quantity of raw materials
in hand. The working capital need of such a firm is significantly high.DIVIDEND POLICY:The payment of dividend consumes cash resources and, thereby, affects working capital to
that extent. Conversely, if the firm does not pay dividend but retains the profits, working
capital will increase.
-
7/31/2019 Ravi Shekhar
40/64
NTPC Power plantSingrauli
STRUCTURE OF WORKING CAPITAL
The structure of working capital includes a study of the components of current assets and
current liabilities.
CURRENT ASSETS:The list of current assets comprises inventories (including raw materials, work-in-progress
and finished goods and spares), sundry debtors including receivables, readily realizable
securities and tax reserve certificates, short-term investments, accrued incomes, prepaid
expenses (not in the nature of deferred charge), cash at bank, and cash in hand.
In NTPC Power Plant current assets are:
Sundry debtors
Cash & bank balances
Interest receivable/accrued Loans & advances etc.
CURRENT LIABILITIES:The list of liabilities includes trade creditors, accounts payable, outstanding or accrued
expenses, bank overdraft, outstanding liabilities, short-term loans and borrowings and certain
obligations including different provisions, i.e., provision for taxation, proposed dividend etc.
In Singarwali power Plant current liabilities are:
Sundry creditors
Advances from customers
Security deposit
Other liabilities etc.
FACTORS TO BE CONSIDERED WHILE ESTIMATING WORKING
CAPITAL REQUIREMENT
Total costs incurred on materials, wages and overheads.
The length of time for which raw materials remain in stores before they are issued to
production.
The length of the production cycle or work-in-progress, i.e., the time taken for
conversion of raw materials into finished goods.
The length of the Sales Cycle during which finished goods are to be kept waiting for
sales.
The average period of credit allowed to customers.
The amount of cash required to pay day-to-day expenses of the business.
The amount of cash required for advance payments if any.
The average period of credit to be allowed by suppliers.
-
7/31/2019 Ravi Shekhar
41/64
NTPC Power plantSingrauli
SOURCE OF WORKING CAPITAL FOR SINGRALI POWER PLANT
The allocated amount by the registered office of NTPC in New Delhi gets transferred into the
cash credit account of Singarwli power Plant in State Bank of India, Saktinagar. This cash
credit account is the source of working capital for NTPC. The plant uses this amount to meet
its daily expenditure. At the end of the day the balance of this account is transferred back into
account of NTPC, New Delhi. This practice is done on a daily basis.
WORKING CAPITAL MANAGEMENT IN NTPC
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:
2009 2008 % change
Secured loans
Bonds 47,044 32,077 47%
Foreign CurrencyTerms loans 10,274 12,319 -17%
Other 9 11 -18%
Sub-total 57,327 44,407 29%
Unsecured loansFixed deposits 778 4,159 -81%
Bonds 5000 -100%
Foreign CurrencyBonds/Notes 22,475 8,814 155%
Foreign CurrencyTerms loans 33,336 32,608 2%
Rupee term loans 87,821 75,339 17%Loans from government ofIndia 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
-
7/31/2019 Ravi Shekhar
42/64
NTPC Power plantSingrauli
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 2009 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.
2009 2008 %changeGross block 460,396 431,062 7%
Net block 230,895 223,148 3%
Capital work-in-progress 103,999 67,063 55%
Construction stores and advances 32,341 32,189 0%
Total fixed assets 367,235 322,400 14%
4) INVESTMENTS
Investments comprise bonds issued by various state governments under the one-time
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:
2009 2008
Bonds issued under onetime settlement scheme 171,762 164,107
Investments in jointventures 6,818 1,318
Investment in subsidiaries
304 252Investment of surplus cashin various instruments
8,508 32,504
Others
Bonds against dues 5,306 7,428
Investments of developmentsurcharge on behalf ofcustomers 193 2,368
-
7/31/2019 Ravi Shekhar
43/64
NTPC Power plantSingrauli
Total investments 192,891 207,977
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 2008 Change
Current assets Amount % ofcurrent
assets
Amount % ofcurrent
assets
Amount %
Inventories 23,405 15% 17,819 14% 5,586 31%
Sundry debtors 8,678 6% 13,747 11% -5,069 -37%
Cash and Bankbalances 84,714 54% 60,783 47% 23,931 39%
Other Current assets10,161 6% 9,764 7% 397 4%
Loans and advances30,287 19% 26,993 21% 3,294 12%
Total current assets157,245 100% 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
-
7/31/2019 Ravi Shekhar
44/64
NTPC Power plantSingrauli
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
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 tariffs for various stations are determined by the regulator.
2009 2008 Change
Current assets Amount % ofcurrentassets
Amount % ofcurrentassets
Amount %
Liabilities 49,102 80% 52,306 78% -3,204 -6%
Provisions 12,300 20% 15,161 22% -2,861 -19%
Total Current
liabilities 61,402 100% 67,467 100% -6,065 -9%
7) PROVISIONS
As at March 31, 2009 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:
-
7/31/2019 Ravi Shekhar
45/64
NTPC Power plantSingrauli
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 2006 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
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.
For the year ended march 31st
2009 2008 2007 2006 2005
Opening cash andCash equivalents 60,783 66,351 23,894 13,659 12,015
Net cash fromoperating activities 62,064 50,998 58,118 47,402 29,372
Net cash used ininvesting activities 27,136 64,136 24,597 31,881 28,377
Net cash flow fromfinancing activities 10,997 7,570 8,873 5,271 630
Intangibles 63 15 19
Change in cash and
cash equivalents 23,931 5,568 42,457 10,235 1,644Closing cash and cashequivalents 84,714 60,783 66,351 66,351 13,659
WORKING CAPITAL OVERALL TURNOVER RATIO
1. CURRENT RATIO
-
7/31/2019 Ravi Shekhar
46/64
NTPC Power plantSingrauli
Current Ratio = Current Assets
Current Liabilities
Year 2004-05 2005-06 2006-07 2007-08 2008-09
Current
Assets 167990 194132 135468 129073 157245
Current
Liabilities 31881 34202 65244 52306 49102
Ratio 0.52 0.94 2.0 2.4 3.2
In year 2004-05 management is not good so CR is not good. Therefore liquidity
condition is not good and 2005- 06 also the liquidity condition is not good. But after
government reforms some policies and management styles be change therefore CR
CURRENT RATIO
0
0.5
1
1.5
2
2.5
3
3.5
YEAR
RATIO
Ratio
Ratio 0.52 0.94 2 2.4 3.22004-05 2005-06 2006-07 2007-08 2008-09
-
7/31/2019 Ravi Shekhar
47/64
NTPC Power plantSingrauli
ratio gradually increase and 2006-07. CR is optimal but after that year liquidity
increase so company has to bear additional cost of working capital.
2. QUICK RATIO
Quick Ratio = Current AssetsInventory
Current Liabilities
Year 2004-05 2005-06 2006-07 2007-08 2008-09
Inventory 157596 176420 118088 111296 133840
Current Liabilities 31881 34202 65244 52306 49102
Ratio 4.9 5.1 1.8 2.1 2.7
QUICK RATIO
0
1
2
3
4
5
6
YEAR
RATIO
Ratio
Ratio 4.9 5.1 1.8 2.1 2.72004-05 2005-06 2006-07 2007-08 2008-09
-
7/31/2019 Ravi Shekhar
48/64
NTPC Power plantSingrauli
In quick ratio every year 2004- 2009 additional cost is increase so company has more
liquidity.
1. 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
-
7/31/2019 Ravi Shekhar
49/64
-
7/31/2019 Ravi Shekhar
50/64
NTPC Power plantSingrauli
In cash holding period shows how much company hold cash against immediateliquidity. From this figure we can observed that company has very poor cash
management. In this ratio, we see that how many days company hold the cash.
CASH HOLDING PERIOD
0
200
400
600
800
1000
1200
1400
1600
YEAR
DAYS
Days
Days 334 322 62 720 1506
2004-05 2005-06 2006-07 2007-08 2008-09
-
7/31/2019 Ravi Shekhar
51/64
NTPC Power plantSingrauli
2. 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
Current Liabilities 31881 34202 65244 52306 49102
Ratio 0.37 0.15 0.09 1.16 1.72
CASH TO CURRENT LIABILITIES
0
0.5
1
1.5
2
YEAR
RAtio
Ratio
Ratio 0.37 0.15 0.09 1.16 1.72
2004-05 2005-06 2006-07 2007-08 2008-09
-
7/31/2019 Ravi Shekhar
52/64
NTPC Power plantSingrauli
INVENTORY MANAGEMENT IN NTPC
1. INVENTORY TURNOVER RATIO
Rs. Million
YEAR COST OF
GOOD
SOLD
INVENTORY
OP. BAL.
INVENTORY
CLO. BAL.
AVERAGE
INVENTORY
RATIO
2004-05 1,60,156 20,176 17,712 37,888/2 8.454
2005-06 2,00,562 17,712 17,380 35,092/2 11.43
2006-07 1,94,734 17,380 17,819 35,199/2 11.06
2007-08 2,24,818 17,819 23,405 41,224/2 10.90
2008-09 2,64,842 23,405 25,102 48,507/2 10.91
INVENTORY TURNOVER RATIO = COST OF GOOD SOLD
AVERAGE INVENTORY
AVERAGE INVENTORY = OPENING BALANCE + CLOSING BALANCE
2
-
7/31/2019 Ravi Shekhar
53/64
NTPC Power plantSingrauli
This ratio is designed to major the efficiency to use of inventory in other words. It major the
efficiency of inventory management as all inventory is used to ultimately facilities sales at
carries a cost, it is to be related to cost of goods sold to major its efficiency. Cost of goods
sold although a cost also indicates it turnover achieves. Its increase over the year would
therefore be natural. The cost of goods sold over the period of 5 years accept follow arising
trends accept for a slide decrease in the year 2004-05. The average inventory shows
controlled level up to the year 2004-05 and increase there after you to the exercise
Renovation & Modernization being a ambartha upon in the older unit such as Singrauli. The
ratio likewise registers generally stable trends showing stability with a receding trends
signifying quite and efficient inventory management.
INVENTORY TURNOVER RAIO
8.454
11.43 11.06 10.9 10.91
0
2
4
6
8
10
12
14
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
RATIO
RATIO
-
7/31/2019 Ravi Shekhar
54/64
NTPC Power plantSingrauli
2. INVENTORY HOLDING PERIOD
Rs. Million
YEAR INVENTORY
OP. BAL.
INVENTORY
CLO. BAL.
AVERAGE
INVENTORY
COST OF
GOOD
SOLD
RATIO
2004-05 20,176 17,712 37,888/2 1,60,156 43.17
2005-06 17,712 17,380 35,092/2 2,00,562 31.93
2006-07 17,380 17,819 35,199/2 1,94,734 32.98
2007-08 17,819 23,405 41,224/2 2,24,818 32.73
2008-09 23,405 25,102 48,507/2 2,64,842 33.42
INVENTORY HOLDING PERIOD RATIO = AVERAGE INVENTORY * 365
COST OF GOOD SOLD
-
7/31/2019 Ravi Shekhar
55/64
NTPC Power plantSingrauli
The average holding period is reciprocal of inventory turnover ratio and indicated stability &
controlled with the duration ranging from 44 days in 2004-05 and 34 days 2008-09, alter first
year. Period the holding period received to 32 days in 2005-06 year and raise marginally to
33 days in 2006-07. The controlled inventory holding period indicates sound inventory
management with the majors mentioned about despite the fact that due to many spares being
scares the inventory for them is currently being procured for up to 2 years in advances for
uninterrupted operation.
INVENTORY HOLDING PERIOD
43.17
31.93 32.98 32.73 33.42
0
10
20
30
40
50
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
RATIO
RATIO
-
7/31/2019 Ravi Shekhar
56/64
NTPC Power plantSingrauli
3. INVENTORY TO BILL RECEIVABLE
Rs. Million
YEAR INVENTORY INVENTORY
BILL
RECEIVABLE
RATIO
2004-05 17,712 1,24,399 0.142
2005-06 17,380 4699 3.69
2006-07 17,819 13,747 1.29
2007-08 23,405 8,678 2.69
2008-09 25,102 12,523 2
INVENTORY TO BILL RECEIVABLE RATIO = INVENTORY
BILL RECEIVABLE
-
7/31/2019 Ravi Shekhar
57/64
NTPC Power plantSingrauli
Inventory and receivable are both current assets and in the sequence in the cycles. Inventory
leads to receivable. Receivable are a reflection of sales maximizing Receivable with
controlled inventories would translate as a profitable enterprises the ratio therefore must
follow a receding trends normally and a reversal only in a situation of receivable promptly
services. The ratio follows the mix trends rising from 0.14 2004-05 to 3.69 in 2005-06. The
ratio received to 1.29 in 2006-07 to 2.69 in 2007-08, it finally reduced to 2008-09. It there
after registers increases mainly due to expansion and accelerated Renovation &
Modernization.
INVENTORY TO BILL RECEIVABLE
0.142
3.69
1.29
2.69
2
0
0.5
1
1.5
2
2.5
3
3.54
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
RATIO
RATIO
-
7/31/2019 Ravi Shekhar
58/64
NTPC Power plantSingrauli
4. FUEL TO TOTAL INVENTORY
INVENTORY TO TOTAL FUEL = 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
INVENTORY TO FUEL
0
1
2
3
4
5
YEAR
RATIO
Ratio
Ratio 2.99 3.53 3.94 3.88 2.58
2004-05 2005-06 2006-07 2007-08 2008-09
-
7/31/2019 Ravi Shekhar
59/64
NTPC Power plantSingrauli
Fuel (Coal, Oil, Naphtha) are a large part of inventory of NTPC. This ratio seeks to determine
a trend of this proportion over the year. It is seem proportion of fuel in the total inventory
ranges between 0.528 to 0.26 up to 2004-05 it then increases 3.94 in 2006-07. While small
fluctuation may be due to incidental events it is seen that with expansion in capacity fewer
assumes a proportions nearing 40% of the total inventory.
FINDINGS
-
7/31/2019 Ravi Shekhar
60/64
NTPC Power plantSingrauli
In current ratio is increases year by year means liquidity increases after 2006 -07.
Liquidity increases mean company has more cash for new project.
Quick ratio is again high means company has high liquidity power to liquidate. Butcompany should invest in the new project.
The company has an excellent short-term liquidity position and it should look
forward to improve it in the future.
Inventory turnover ratio was increased in 2004-05 to 2006-07 but further its constant.
It means Company was able to overcome the short coming to a limit. So many is on
the positive pace which is expected to maintain in future also.
Install capacity ratio was declined in 2004-05 to 2006-07 and then increased in 2007-
08 and 2008-09, which means they are increased install capacity ratio with the control
the inventory and increased production.
Inventory holding period within 5 years slightly up and down but they control holding
period (i.e. 30 days) which means sound inventory management.
SUGGESTIONS
-
7/31/2019 Ravi Shekhar
61/64
NTPC Power plantSingrauli
Singrawli power Plant should concentrate on JIT (Just-in-time) technique of
manufacturing. This will help in minimizing the blockage of funds.
The company should search for more source of raw materials as it will reduce the cost
of production and improve the profitability of the plant.
The management of the plant should incorporate TQM (Total quality management),
particularly in all departments of production to ensure better sales and reduce the
inventory of finished products.
Singrawli power plant should try to fix a standard in respect of holding period of raw
materials. This will help NTPC to reduce the blockage of funds in raw materials and
improve the liquidity of the company. The company should take into account the
irregularities in the supply of raw materials while making such standards because
fluctuations in supply of raw materials affect the production process.
The company should review its credit policy at frequent intervals which will help it to
reduce debtors so that the money can be used for other investment plans.
NTPC should try to invest the excess cash balance after keeping the required amount
because holding of cash as idle is unproductive for the plant.
The plant must make efforts to follow a decreasing trend in current liabilities keeping
the turnover in mind. Since it is a liability, lower the better.
CONCLUSION
-
7/31/2019 Ravi Shekhar
62/64
NTPC Power plantSingrauli
The profitability of the plant is getting affected due to the holding of cash as idle
which is increasing year after year.
Singrauli Power Plant follows a good credit policy of debtors but a risk of bad debts
is always present in high debtors.
The company has an excellent short-term liquidity position and it should look
forward to improve it in the future.
Uneven trend in holding period of raw materials is a problem in Singrawli Power
Plant and this is affecting the liquidity of the company.
Singrauli Power Plant has increased its loans and advances over the four years which
shows that the plant is engaged in modernization of machinery. It is very essential
because it helps the company to compete with other competitors in the market. ThePlant should carry on such modernization plans in future as well.
The working capital ratio in NTPC is low and measures should be adopted to increase
it in future.
The management of the plant had been successful in timely recovery of accrued
interest from the concerned parties.
The holding period of finished and semi-finished product in Singrauli power plant has
increased over the four years though the turnover has gone up. Having such kind of
situation of situation further can cause a major impact on the liquidity of the
company.
On the whole after this detailed study of the working capital management practices in
Singrauli Power Plant, it can be said that it is managing its working capital quite
efficiently and its techniques are in sync with the latest practices of the Indian Power
industry.
BIBLIOGRAPHY
1. Annual report (NTPC) - 2004
-
7/31/2019 Ravi Shekhar
63/64
NTPC Power plantSingrauli
2. Annual report (NTPC) -2005
3. Annual report (NTPC) -2006
4. Annual report (NTPC) -2007
5. Annual report (NTPC) -2008
6. Annual report (NTPC) -2009
7. www.ntpc.com
8. www.ntpc.co.in/companyperformance
9. www.ntpc.co.in/introductionof ntpc
10. http://economictimes.indiatimes.com/news/news-by-
11. singrauli at a glance, ntpc, a promise fulfilled (magzine), singrauli
12. financial assistance, ntpc, a promise fulfilled(magzine), singrauli
13. srikanthan s.(oct. 1989), store management systems (manual) n.t.p.c. vol:xii,part ii
14. industry/energy/power/NTPC-to-float-global-offer-to-acquire-equity-stakes-in-
coal-assets/articleshow/6423788.cms
15. Blume, Lawrence, David Easley, and Maureen Ohara, 1994. Market Statistics
and Technical Analysis: The Role of Volume. The Journal of Finance, 153181.
16. Brown, D. P., And R. H. Jennings, 1989. On Technical Analysis. The Review of
Financial Studies, 527551.
17. Drew, W.H., and Lazarus, J., 1996. Thirukkural, Asian Educational Services,
Madras.
18. Douglas, H., (2009). The Failure of Risk Management: Why It's Broken and How
to Fix It. John Wiley & Sons. p. 46.
http://www.ntpc.com/http://www.ntpc.com/http://www.ntpc.co.in/COMPANYhttp://www.ntpc.co.in/COMPANYhttp://www.ntpc.co.in/INTRODUCTIONhttp://www.ntpc.co.in/INTRODUCTIONhttp://www.ntpc.co.in/INTRODUCTIONhttp://www.ntpc.co.in/COMPANYhttp://www.ntpc.com/ -
7/31/2019 Ravi Shekhar
64/64
NTPC Power plantSingrauli