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 (HOD-
MBA) 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. Corporate mission 9
c. Corporate objectives 10
d. Organization chart 14
e. Corporate Structure of NTPC 17
f. Different station of NTPC 18

2. Performance highlights(2008-09) 19
Joint Ventures 30
3. SSTPS (Introduction) 36
a. Financial sections of Singrauli Super Tharmal Power Station 42
b. New Business Development 46
c. Chairman Statement 51
d. Environment Management 58
e. Global Compact 64
4. Project design and Research methodology 69
a. Theoretical basis of Working Capital Management (Title) 70
b. Factors Determining the Size of W.C. 71
c. Type of W.C. 74
d. Need of W.C. 76
e. Objectives 77
f. Working capital management in N.T.P.C (Sample) 78
g. Scope of Study 82
h. Limitation of Study 83
5. Facts and Findings 84
6. Analysis and Interpretation:
a. Current assets 85
b. Cash 86
c. Inventory 88
d. Receivables 91
e. Loan and advances 94
f. Current liability 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

8
 Corporate Mission

• Make available reliable and quality power in increasingly large quantities at

competitive prices and ensure timely realization of revenues.

• Adopt a broad based capacity portfolio including hydro power, LNG, nuclear power
and non-conventional and eco-friendly.

• Plan and speedily implement power projects using state-of-the-art technologies.

• Be an integrated utility by implementing strategic diversifications in area such as

power trading, distribution, transmission, coal mining, coal beneficiation etc.

• Develop a strong portfolio of profitable business in overseas markets including

technical services, generation assets etc.

• Lead fundamental and applied research for adoption of 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 advocacy etc.

• Be a socially responsible corporate entity with thrust on environmental protection, as

utilization community development and energy conservation.

• 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.

• The broad base the generation mix by evaluating conventional and non-conventional
sources of energy to ensure long run competitiveness and mitigate fuel risks.

• 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.

• To develop a portfolio of generation assets in international markets.

• 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.

• To expand the relationship with exiting customers by offering a bouquet of services

in addition to supply of power. E.g. Trading ,energy-consulting, distribution-
consulting, management practices.

• To expand future customer portfolio through profitable diversification into

downstream businesses, Intel alia retail distribution and direct supply.

• 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.

• 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.
• To operate& maintain NTPC stations at par with the best- run utilities in the world
with respect to availability, reliability, efficiency, productivity and costs.
• To effectively leverage information Technology to drive process efficiencies.
• To aim for performance excellence in the diversification businesses.
• To embed quality in all systems and processes

Human Resource Development:

• To enhance organizational performance by institutionalizing any 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 employee by recognizing and rewarding high performance.
• To build and sustain 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 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.
• To lead the sector in the areas of resettlement and rehabilitation and environment
protection including effective ash-utilization, peripheral development and energy
conservation practice.
• 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.
• 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 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 2003-
04:

• 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.

16
Corporate Structure of NTPC

17
 GM(S)
MPWS
ESBLR.
SR.
SAL
P DY.MGR
TRG&
DGM
TG
P&S , SUPDT.
WORKS
O&M
CIVIL
OPRN.
SB/PSL/S
DGM
MGR
ECDGM
CHEMI.
OPRN.
DGM
FE.
DGM
DGM
&
DGM
AGMDGM
CMO
CHP
LAW DGM
A (M.)
MGR
CONCUR
(M.)
& &
&
Plant
TOWNSHIP
CIVIL ST
(FIN.)
(EDP)
(FQA)
(C&M)A/B
(MTP)
(TS)
IR
(HR)
(FM)
(T/A)
ST.- .I(INDRL.
(Elect.)
(EMG)
D.F(C&I)
II(M)
(O) &II(O&E)
CONSTRUCTION
CONSTRUCTION
SR.VIG.OFFICER
To (O&M)
GM(S) SAFETY
ADMIN.
V

DIFFERENT STATIONS OF NTPC

STATIONS CAPACITY (MW)

(A) Northern Region 4780
Singrauli 2000
Rihand 1500
Unchahar 840
Tanda 440
(B) National Capital Region 3152
Dadari (Coal) 840
Anta (Gas) 413
Auraiya (Gas) 652
Dadari (Gas) 817
Faridabad (Gas) 430
(C) Western Region 6653
Korba 2100
Vindyachal 3260
Kawas (Gas) 645
Jhanor Gandhar (Gas) 648
(D) Eastern Region 5900
Farakka 1600
18
 Kahalgaon 840
Talcher – Kaniha 3000
Talcher – Thermal 460
(E) Southern Region 3950
Ramagundam 2600
Simhadri 1000
Rajiv Gandhi CCP (Gas) 350
Total (A+B+C+D+E) = 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.

20
 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 2008-
09, 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-’.

• During the year, NTPC has received Issuer rating of ‘LAAA’ from ICRA and ‘AAA’
from CRISIL which indicates highest credit quality.

• 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 Non-
Cumulative 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 mid-
course 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.

• 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.

29
 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

30
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.

31
• 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.

• In Orissa State, NTPC has taken up Developmental works for car parking, water
tanks and lighting of approach road for Shree Jagannath Temple, Puri.

32
 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, Korba-
II-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.

34
 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.

35
 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.

36
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.

37
 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

38
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: Stage-I Stage-II

(World Bank) :- 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 ESU :150MW Gen.Cost 29.0p/Kwh

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.

40
41
 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 SECTION-

This 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 SECTION-

This 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 CONCURRENCE-

The 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) SECTION-

This 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.

45
 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%

46
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 non-
traction 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 YEAR ORIGINAL OWNER

2x210 MW FEROZE GANDHI
UP RajyaVidyut Utpadan
UNCHAHAR THERMAL POWER 1991
Nigam of Uttar Pradesh
STATION
4x60 MW + 2x110 MW TALCHER Orissa State Electricity
1995
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.

• 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
 • Strong cash flow with 100% realization of billing for the 4th consecutive year.

• Highest ever generation of 188.674 billion units, an increase of 10.41% over the
previous year's generation of 170.880 billion units.

• 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%.

• A new national record of 559 days of uninterrupted running set by Unit # 3 of

Vindhyachal Super Thermal Power Station.

• 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.

• 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.

52
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 Middle-
East.

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

55
 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.

• We pledge to serve the community and the environment with utmost sensitivity and
care.

• 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.

58
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 Bio-
Medical 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:

59
 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

60
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.

61
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;

• United Nations Environment Programme;

• International Labour Organization;

• United Nations Development Programme;

• United Nations Industrial Development Organization; and

• 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

• The International Labour Organization's Declaration on Fundamental Principles and

Rights at Work

• The Rio Declaration on Environment and Development

• 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

• 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;

• Principle 4 : The elimination of all forms of forced and compulsory labour;

• Principle 5 : The effective abolition of child labour; and

• 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
 • Principle 8 : Undertake initiatives to promote greater environmental responsibility;
and

• 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 socio-
economically 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 pre-
collected.

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.

69
 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 requirements of
the W.C.

→ 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.

71
 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. S.T. financing

Non-Variable C.A. 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. S.T. financing

Non-Variable C.A. L.T. financing

72
 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.

74
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:

2009 2008 % change

Secured loans
Bonds 47,044 32,077 47%
Foreign Currency
Terms loans 10,274 12,319 -17%
Other 9 11 -18%
Sub-total 57,327 44,407 29%
Unsecured loans
Fixed deposits 778 4,159 -81%
Bonds 5000 -100%
Foreign Currency
Bonds/Notes 22,475 8,814 155%
Foreign Currency
Terms loans 33,336 32,608 2%
Rupee term loans 87,821 75,339 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.

2009 2008 %change

Gross 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 32,341 32,189 0%
advances
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 one
time settlement scheme 171,762 164,107
Investments in joint
ventures 6,818 1,318
Investment in
subsidiaries 304 252
Investment of surplus
cash in various
instruments 8,508 32,504
Others
Bonds against dues 5,306 7,428
Investments of
development surcharge
76
 on behalf of customers 193 2,368
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 %of current Amount %of current Amount %
assets 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.

2009 2008 Change

Current assets Amount %of current Amount %of current Amount %
assets assets
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 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.

For the year ended march 31st

2009 2008 2007 2006 2005
Opening cash and
Cash equivalents 60,783 66,351 23,894 13,659 12,015
Net cash from
operating activities 62,064 50,998 58,118 47,402 29,372
Net cash used in
investing activities 27,136 64,136 24,597 31,881 28,377
Net cash flow from
financing 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 1,644
Closing cash and
cash equivalents 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 non-
monetary 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:-

80
 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
Ratio 0.52 0.94 2.0 2.4 3.2

2. QUICK RATIO

Quick Ratio = Current Assets – Inventory

Current Liabilities

81
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

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
Current Liabilities 31881 34202 65244 52306 49102
Ratio 0.37 0.15 0.09 1.16 1.72

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

5. Components and Spares in NTPC

Inventory to Spares = Inventory

Spares

(In Million)
Year 2004-05 2005-06 2006-07 2007-08 2008- 09

85
 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.

92
•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.
• Through reading annual reports of NTPC:-
i. 26th Edition
ii.27th Edition
iii.28th Edition
iv.29th Edition
v.30th Edition
• From NTPC Financial Reports.
• News Magazine of NTPC.
• Journals of NTPC (SSTPS).
• Shakti Sandesh Magazine.
• Reports of NTPC.

94
THANK
YOU

95