TABLE OF CONTENT

CHAPTER A B C PARTICULARS LIST OF TABLES LIST OF FIGURES LIST OF ABBREVIATIONS EXECUTIVE SUMMARY, INTRODUCTION AND DESIGN OF THE STUDY 1.1 Executive Summary 1.2 Introduction of the Study 1.3 Objective of the Study CHAPTER I 1.4 Research Methodology 1.4.1 Research Design 1.4.2 Nature of Data 1.4.3 Methods Data Collection 1.4.4 Research Tools 1.5 Limitations of the Study CHAPTER II CHAPTER III REVIEW OF LITERATURE PROFILE 3.1 Industry Profile 3.2 Company Profile CHAPTER IV CHAPTER V DATA ANALYSIS AND INTERPRETATION FINDINGS AND SUGGESTIONS 5.1 Findings 5.2 Suggestions CONCLUSION AND BIBLIOGRAPHY CHAPTER VI 6.1 Conclusion 6.2 Bibliography APPENDICES PAGE NO. 2 3 4 5-29 6 8 27 28 28 28 28 28 29 30-38 39-76 40 63 77-113 114-118 115 117 119-123 120 121 124-136

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LIST OF TABLES
SR. NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Current Ratio Liquid Ratio Absolute Liquidity Ratio Debt Equity Ratio Proprietary Ratio Fixed Assets Turnover Ratio Working Capital Turnover Ratio Total Assets Turnover Ratio Capital Turnover Ratio Return on Total Assets Gross Profit Ratio Net Profit Ratio Return on proprietors fund Administration and Selling Expense Ratio Cost of Energy Ratio Cost of Fuel Ratio Cost of Tax ratio Expenditure on EPC PARTICULARS PAGE NO. 78 80 83 86 88 90 92 94 96 98 100 102 104 106 108 110 112 114

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LIST OF FIGURES
SR. NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Current Ratio Liquid Ratio Absolute Liquidity Ratio Debt Equity Ratio Proprietary Ratio Fixed Assets Turnover Ratio Working Capital Turnover Ratio Total Assets Turnover Ratio Capital Turnover Ratio Return on Total Assets Gross Profit Ratio Net Profit Ratio Return on proprietors fund Administration and Selling Expense Ratio Cost of Energy Ratio Cost of Fuel Ratio Cost of Tax ratio Expenditure on EPC PARTICULARS PAGE NO. 79 81 83 85 87 89 91 93 95 97 99 101 103 105 107 109 111 113

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LIST OF ABBREVIATIONS
GDP EPS ROI OBC ETFs DEA FDI Gross domestic product Earnings Per Share Return on Investment Off Balance Sheet Exchange Trade Funds Data Envelopment Analysis Foreign Direct Investment

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CHAPTER - I EXECUTIVE SUMMARY, INTRODUCTION AND DESIGN OF THE STUDY

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1.1

EXECUTIVE SUMMARY

Infrastructure is the basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function. The term typically refers to the technical structures that support a society, such as roads, water supply, sewers, power grids, and telecommunications. Within the Infrastructure of India, the transportation sector is the most important, including the aviation, ports, roads, rail system and logistics. The agriculture sector comprises infrastructure-related storage facilities, construction relating to agro-processing projects and reservation and storage of perishable goods. Among others essential sectors, real-estate development, including industrial parks, special economic zones, tourism and entertainment centers, educational institutions and hospitals and solid waste management systems, also play significant role in Indian economy. Reliance Infrastructure Limited is a part of the Reliance Group, one of the leading business houses in India. Incorporated in 1929, Reliance Infrastructure is one of Indias fastest growing companies in the infrastructure sector. It ranks among Indias top listed private companies on all major financial parameters, including assets, sales, profits and market capitalization. Reliance Infrastructure companies distribute more than 36 billion units of electricity to over 30 million consumers across an area that spans over 1,24,300 sq kms and includes Indias two premier cities, Mumbai and Delhi. The Company generates over 940 MW of electricity through its power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa. Reliance Infrastructure has emerged as the leading player in India in the Engineering, Procurement and Construction (EPC) segment of the power sector. In the last few years, Reliance Infrastructure has expanded its foot-print much beyond the power sector. Currently, Reliance Infrastructure group is engaged in the implementation of projects not only in the fields of generation, transmission, distribution and trading of power but also in other key infrastructural areas such
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as highways, roads, bridges, metro rail and other mass rapid transit systems, special economic zones, real estate, airports, cement, etc. Thus this thesis is about financial statements analysis of Reliance Infrastructure Limited. The main motto behind choosing this company is it is one of the leading private sector undertaking and in the present context of disinvestment policy of government of India, many of the investors are interested in knowing the performance of this company and so the study has been undertaken. The objectives of the research include analyzing the profitability and solvency position of the company. In order to analyze the financial statements the Ratio analysis method was used. The expected results would reveal the liquidity, profitability and solvency position.

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1.2 INTRODUCTION OF THE STUDY

Finance is one of the most primary requisites of a business and the modern management obviously depends largely on the efficient management of the finance. Financial statements are prepared primarily for decision making. They play a dominant role in setting the frame work of managerial decisions. The finance manager has to adhere to the five Rs with regard to money. This right quantity of money for liquidity consideration of right quality. Whether owned or borrowed funds. At the right time to preserve solvency from the right sources and at the right cost of capital. The term financial analysis is also known as analysis and interpretation of financial statements refers to the process of determining financial strength and weakness of the firm by establishing strategic relationship between the items of the Balance Sheet, Profit and Loss account and other operative data. The purpose of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm.

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Financial statement: A financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show a position at a moment of time as in the case of a balance sheet, or may reveal a series of activities over a given period of time, as in the case of an income statement. Thus, the term financial statement generally refers to the basis statements; i) The income statement An income statement is a summary of the revenues and expenses of business over a period of time, usually one month, three months, or one year. It summarizes the results of the firms operating and financing decisions during that time. Due to income statement Operating decisions of the company apply to production and marketing such as sales/revenues, cost of goods sold administrative and general expenses (advertising, office salaries). It provides operating income/earnings before interest and taxes (EBIT) ii) The balance sheet Balance sheets provide the observant with a clear picture of the financial condition of the company as a whole. It lists in detail the tangible and the intangible goods that the company owns or owes. These good can be broken further down into three main categories; the assets, the liabilities and the shareholders equity. Assets Assets include anything that the company actually owns and has disposal over. Examples of the assets of a company are its cash, lands, buildings, and real estates, equipment, machinery, furniture, patents and trademarks, and money owed by certain individuals or/and other businesses to the particular company. Assets that are owed to the company are referred to as accounts-, or notes receivables.

Current Assets include anything that company can quickly monetise. Such current assets include cash, government securities, marketable securities, accounts receivable, notes receivable (other than from officers or employees), inventories, prepaid expenses, and any other item that could be converted into cash within one year in the normal course of business.
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Fixed Assets are long-term investments of the company, such as land, plant, equipment, machinery, leasehold improvements, furniture, fixtures, and any other items with an expected useful business life usually measured in a number of years or decades (as opposed to assets that wear out or are used up in less than one year. Fixed assets are usually accounted as expenses upon their purchase. They are normally not for resale and are recorded in the Balance Sheet at their net cost less (less is accounting term for minus) accumulated depreciation. Other Assets include any intangible assets, such as patents, copyrights, other intellectual property, royalties, exclusive contracts, and notes receivable from officers and employees. Liabilities Liabilities are money or goods acquired from individuals, and/or other corporate entities. Some examples of liabilities would be loans, sale of property, or services to the company on credit. Creditors (those that loan to the company) do not receive ownership in the business, only a (usually written) promise that their loans will be paid back according to the term agreed upon.

Current Liabilities are accounts-, and notes-, taxes payable to financial institutions, accrued expenses (eg. wages, salaries), current payment (due within one year) of long-term debts, and other obligations to creditors due within one year. Long-Term Liabilities are mortgages, intermediate and long-term loans, equipment loans, and other payment obligation due to a creditor of the company. Long-term liabilities are due to be paid in more than one year.

Shareholder's equity The shareholders equity (also called as net worth or capital) is money or other forms of assets invested into the business by the owner, or owners, to acquire assets and to start the business. Any net profits that are not paid out in form of dividends to the owner, or owners, are also added to the
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shareholders equity. Losses during the operation of the business are subtracted from the shareholders equity. iii) A statement of retained earnings iv) A statement of charge in financial position in addition to the above two statement. Financial statement analysis: It is the process of identifying the financial strength and weakness of a firm from the available accounting data and financial statement. The analysis is done by properly establishing the relationship between the items of balance sheet and profit and loss account the first task of financial analyst is to determine the information relevant to the decision under consideration from the total information contained in the financial statement. The second step is to arrange information in a way to highlight significant relationship. The final step is interpretation and drawing of inferences and conclusion. Thus financial analysis is the process of selection relating and evaluation of the accounting data/information. Significance of Financial Statement Financial statement analysis is a significant business activity because a corporation's financial statements provide useful information on its economic standing and profit levels. These statements also help an investor, a regulator or a company's top management understands operating data, evaluate cash receipts and payments during a period and appraise owners' investments in the company. Function 1. Financial statement analysis allows a corporation to review operating data and evaluate periodic business performance. For instance, Company A may analyze levels of cash, inventories and accounts receivable to appraise short-term assets. A corporation also may analyze financial statements to gauge levels of cash flows and owner investments. Alternatively, a regulator, such as the Securities and Exchange Commission (SEC), may review a company's retained earnings statement to appraise corporate shareholders' accounts.

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Time Frame 2. A company's accounting department may perform financial statement analysis throughout the year or at a specific point in time. As an example, Mr. B., an accountant at a large retail store, may review the company's financial position at the end of the year to gauge cash available and inventory quantities on hand. Alternatively, Mr. B. may review levels of sales and expenses each month to understand whether the company's expenses are appropriate based on sales. Types 3. Generally accepted accounting principles (GAAP) and regulatory guidelines, such as SEC rules, require a company to prepare a full set of financial statements on a quarterly or annual basis. A full set of financial statements includes a balance sheet (or statement of financial position), a statement of income (also known as statement of profit and loss), a statement of cash flows and a statement of retained earnings (also called statement of owners' equity). Features 4. Financial statement analysis is a significant business practice because it helps top management review a corporation's balance sheet and income statement to gauge levels of economic standing and profitability. Let's say Mr. A., the chief financial officer (CFO) of a large distribution company, reviews the company's balance sheet and compares short-term assets, such as cash and inventories, and short-term liabilities, such as salaries, interest and taxes payable. Mr. A. may note that the $100 million difference between short-term assets and liabilities (also called working capital) is a sign of economic health.
Benefits

5. Financial statement analysis may be pivotal for management to understand levels of cash receipts and disbursements in corporate operations. A statement of cash flows lists cash flows related to operating activities, investments and financing transactions. A statement of owners' equity may help an investor identify a company's shareholders. For example, Mr. A., the CFO of the sample company, may review cash payments for operating activities to gauge trends in interest payments.

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Types of Analysis 1) Comparative analysis statement 2) Common-size analysis statement 3) Trend analysis 4) Ratio analysis. 1) Comparative financial statement: Comparative financial statement is those statements which have been designed in a way so as to provide time perspective to the consideration of various elements of financial position embodied in such statements. In these statements, figures for two or more periods are placed side by side to facilitate comparison. But the income statement and balance sheet can be prepared in the form of comparative financial statement. (i) Comparative income statement: The income statement discloses net profit or net loss on account of operations. A comparative income statement will show the absolute figures for two or more periods; the absolute change from one period to another and if desired; the change in terms of percentages. Since, the figures for two or more periods are shown side by side; the reader can quickly ascertain whether sales have increased or decreased, whether cost of sales has increased or decreased etc.

(ii) Comparative balance sheet: Comparative balance sheet as on two or more different dates can be used for comparing assets and liabilities and finding out any increase or decrease in those items. Thus, while in a single balance sheet the emphasis is on present position, it is on change in the comparative balance sheet. Such a balance sheet is very useful in studying the trends in an enterprise.

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2) Common-size financial statement: Common-size financial statement are those in which figures reported are converted into percentages to some common base in the income statement the sales figure is assumed to be 100 and all figures are expressed as a percentage of sales. Similarly, in the balance sheet, the total of assets or liabilities is taken as 100 and all the figures are expressed as a percentage of this total.

3) Trend Analysis: Trend analysis is a study of a company's financial performance over an extended period of time. Trend analysis helps to understand overall financial performance over a period of time. In other words it is a detailed examination of a company's financial ratios and cash flow for several accounting periods to determine changes in a borrower's financial position. Trend analysis is a key part of credit underwriting, and is a useful and necessary tool in determining whether the borrower's financial strength is improving or deteriorating. Key ratios examined include debt coverage ratio, turnover ratio (conversion of inventory and receivables to cash), and the quick assets ratio or quick ratio (current assets divided by current liabilities). 4) Ratio analysis: Ratio analysis is a widely used tool of financial analysis. The term ratio in it refers to the relationship expressed in mathematical terms between two individual figures or group of figures connected with each other in some logical manner and are selected from financial statements of the concern. The ratio analysis is based on the fact that a single accounting figure by itself may not communicate any meaningful information but when expressed as a relative to some other figure, it may definitely provide some significant information the relationship between two or more accounting figure/groups is called a financial ratio helps to express the relationship between two accounting figures in such a way that users can draw conclusions about the performance, strengths and weakness of a firm.

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Classification of ratios: A) Liquidity ratios B) Leverage ratios C) Activity ratios D) Profitability ratios A) LIQUIDITY RATIOS: These ratios portray the capacity of the business unit to meet its short term obligation from its short-term resources (e.g.) current ratio, quick ratio. i) Current ratio: Current ratio may be defined as the relationship between current assets and current liabilities it is the most common ratio for measuring liquidity. It is calculated by dividing current assets and current liabilities. Current assets are those, the amount of which can be realized with in a period of one year. Current liabilities are those amounts which are payable with in a period of one year. Current assets -----------------------Current liabilities

Current assets =

ii) Liquid Ratio: The term liquidity refers to the ability of a firm to pay its short-term obligation as and when they become due. The term quick assets or liquid assets refers current assets which can be converted into cash immediately it comprises all current assets except stock and prepaid expenses it is determined by dividing quick assets by quick liabilities. Liquid assets ------------------------Liquid liabilities

Liquid ratio =

iii). ABSOLUTE LIQUIDITY RATIO: Absolute liquid assets include cash, bank, and marketable securities. This ratio is obtained by dividing cash and bank and marketable securities by current liabilities.

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Cash + bank +marketable securities Absolute liquidity ratio = ----------------------------------------------------Current liabilities

B) LEVERAGE RATIOS: Many financial analyses are interested in the relative use of debt and equity in the firm. The term solvency refers to the ability of a concern to meet its longterm obligation. Accordingly, long-term solvency ratios indicate a firms ability to meet the fixed interest and costs and repayment schedules associated with its long-term borrowings. (E.g.) debt equity ratio, proprietary ratio, etc. i) Debt equity ratio: It expresses the relationship between the external equities and internal equities or the relationship between borrowed funds and owners capital. It is a popular measure of the long-term financial solvency of a firm. This relationship is shown by the debt equity ratio. This ratio indicates the relative proportion of debt and equity in financing the assets of a firm. This ratio is computed by dividing the total debt of the firm by its equity (i.e.) net worth. Outsiders funds ---------------------------Proprietors funds

Debt equity ratio =

ii) Proprietary ratio: Proprietary ratio relates to the proprietors funds to total assets. It reveals the owners contribution to the total value of assets. This ratio shows the long-time solvency of the business it is calculated by dividing proprietors funds by the total tangible assets. Proprietors funds Proprietary ratio = -----------------------------------Total tangible assets C) ACTIVITY RATIOS:

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These ratios evaluate the use of the total resources of the business concern along with the use of the components of total assets. They are intended to measure the effectiveness of the assets management the efficiency with which the assts are used would be reflected in the speed and rapidity with which the assets are converted into sales. The greater the rate of turnover, the more efficient the management would be (E.g.) stock turnover ratio, fixed assets turnover ratios etc. i) Fixed assets turnover ratio: The ratio indicates the extent to which the investments in fixed assets contribute towards sales. If compared with a previous year. It indicates whether the investment in fixed assets has been judious or not the ratio is calculated as follows. Net sales Fixed assets turnover ratio = ------------------Fixed assets

ii) Working capital turnover ratio: Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of a year. It is a good measure over trading and under-trading. Net sales ---------------------------Net working capital

Working capital turnover ratio =

iii) Return on total assets: Profitability can be measured in terms of relationship between net profit and total assets. It measures the profitability of investment. The overall profitability can be known by applying this ratio. Net profit Return on total assets = ----------------------------- x100 Total assets

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iv) TOTAL ASSETS TURNOVER RATIO: This ratio is an indicator of how the resources of the organization utilized for increasing the turnover. It shows the ratio between the total assets and the net sales of the company. From this ratio one can understand how the assets are performing and being utilized in achieving the objectives of the company. Total assets ----------------Net assets

Total assets turnover ratio =

v) CAPITAL TURNOVER RATIO: This is a ratio which shows how much sales are entertained from the capital. It shows how the sales are attracted from the Proprietor's Fund. Sales ----------------------Proprietors fund

Capital turnover ratio =

D) PROFITABILITY RATIOS: The profitability ratios of a business concern can be measured by the profitability ratios. These ratios highlight the end result of business activities by which alone the overall efficiency of a business unit can be judged, (E.g.) gross ratios, Net profit ratio. i) Gross profit ratio: This ratio expresses the relationship between Gross profit and sales. It indicated the efficiency of production or trading operation. A high gross profit ratio is a good management as it implies that cost of production is relatively low. Gross profit ----------------------------------- x 100 Net sales

Gross profit ratio = ii) Net profit ratio:

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Net profit ratio establishes a relationship between net profit (after taxes) and sales. It is determined by dividing the net income after tax to the net sales for the period and measures the profit per rupee of sales. Net profit ----------------- x 100 Net sales

Net profit sales =

iii) Return on Shareholders Fund In case it is desired to work out the productivity of the company from the shareholders point of view, it should be computed as follows:

Net profit after Interest and Tax Return on shareholders fund = ------------------------------------------ X 100 Shareholders fund The term profit here means Net Income after the deduction of interest and tax. It is different from the Net operating profit which is used for computing the Return on total capital employed in the business. This is because the shareholders are interested in Total Income after tax including Net nonoperating Income (i.e. Non- Operating Income - Non-Operating expenses). iii) EXPENSES RATIO: There are two main ratios 1) Indirect Expense ratio 2) Direct Expense Ratio 1) Indirect Expense Ratios This ratio establishes the relationship between various indirect expenses to net sales. a) Administration Expense Ratio: Administrative expenses
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Administrative expenses ratio = ------------------------------- x 100 Sales

b) Selling and Distribution Expense Ratio Selling & distribution expenses ratio = Selling &distribution expenses -------------------------------------------------------------------- x 100 Sales 2) Direct Expense ratio This ratio establishes the relationship between various direct expenses to net sales a) Cost of energy ratio Cost of energy -----------------------------------------Sales

Expenses ratio =

x 100

b) Cost of Fuel Ratio Cost of Fuel ------------------------------------ x 100 Sales

Expenses ratio =

c) Cost of tax Ratio Cost of Tax ------------------------------------ x 100 Sales

Expenses ratio =

d) Expenditure on EPC ratio

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Expenses ratio =

Expenditure on EPC ------------------------------------ x 100 Sales

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IMPORTANCE OF RATIO ANALYSIS

It helps in evaluating the firms performance: With the help of ratio analysis conclusion can be drawn regarding several aspects such as financial health, profitability and operational efficiency of the undertaking. Ratio points out the operating efficiency of the firm i.e. whether the management has utilized the firms assets correctly, to increase the investors wealth. It ensures a fair return to its owners and secures optimum utilization of firms assets It helps in inter-firm comparison: Ratio analysis helps in inter-firm comparison by providing necessary data. An inter firm comparison indicates relative position. It provides the relevant data for the comparison of the performance of different departments. If comparison shows a variance, the possible reasons of variations may be identified and if results are negative, the action may be initiated immediately to bring them in line. It simplifies financial statement: The information given in the basic financial statements serves no useful Purpose unless it s interrupted and analyzed in some comparable terms. The ratio analysis is one of the tools in the hands of those who want to know something more from the financial statements in the simplified manner. It helps in determining the financial position of the concern: Ratio analysis facilitates the management to know whether the firms financial position is improving or deteriorating or is constant over the years by setting a trend with the help of ratios The analysis with the help of ratio analysis can know the direction of the trend of strategic ratio may help the management in the task of planning, forecasting and controlling. It is helpful in budgeting and forecasting:

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Accounting ratios provide a reliable data, which can be compared, studied And analyzed. These ratios provide sound footing for future prospectus. The ratios can also serve as a basis for preparing budgeting future line of action. Liquidity position: With help of ratio analysis conclusions can be drawn regarding the Liquidity position of a firm. The liquidity position of a firm would be satisfactory if it is able to meet its current obligation when they become due. The ability to met short term liabilities is reflected in the liquidity ratio of a firm. Long term solvency: Ratio analysis is equally for assessing the long term financial ability of the Firm. The long term solvency s measured by the leverage or capital structure and profitability ratio which shows the earning power and operating efficiency, Solvency ratio shows relationship between total liability and total assets. Operating efficiency: Yet another dimension of usefulness or ratio analysis, relevant from the View point of management is that it throws light on the degree efficiency in the various activity ratios measures this kind of operational efficiency. Help in investment decisions It helps in investment decisions in the case of investors and lending decisions in the case of bankers etc.

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1.3 OBJECTIVE
1. The purpose of objective of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. To determine the significance and meaning of the financial statement data so that forecast may be made of the future earnings, ability to pay interest and debt maturities (both current and the long term) and profitability of a sound dividend policy. Compare performance with past performance. To study the efficiency of the operations. To study the risk of operations.

2.

3. 4. 5.

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1.4 RESEARCH METHODOLOGY:

RESEARCH DESIGN The descriptive form of research method is adopted for study. The major purpose of descriptive research is description of state of affairs of the institution as it exists at present. The nature and characteristics of the financial statements of Reliance Infrastructure Limited have been described in this study. NATURE OF DATA The data required for the study has been collected from Primary and secondary source. 1. The primary data is collected from the questionnaire asked to the employee. 2. The relevant information taken from annual reports, journals and internet is secondary data. METHODS OF DATA COLLECTION This study is based on the annual report of Reliance Infrastructure Limited, magazines, journals. Hence the information related to, profitability, short term and long term solvency and turnover were very much required for attaining the objectives of the present study. TECHNIQUE USED Although the ratio analysis has so many limitations but this is best techniques, which is used internationally, used for measuring the strength and weaknesses of the company. This is modern method, which shows the overall profitability of the company, to know the better results the ratios are compared with the ratios of the other companies.

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1.5 LIMITATIONS OF THE STUDY The period of study is 5 years from 2005-06 to 2009-10 The company could not provide me the recent data due to financial year ending. All the limitations of ratio analysis, common-size statement, comparative statements, and trend analysis and interpret are applicable to this study.

LIMITATION OF THE RATIO ANALYSIS The ratio analysis is one of the most powerful tools of the financial analysis. Though ratios are simple to calculate and easy to understand, they differ from some serious limitations. a) Limited use of a single ratio A single ratio usually does not convey much of the sense. To make a better interpretation a large number of ratios have to be calculated, which is likely to confuse the analyst than help him in making any meaningful conclusions. b) Lack of Adequate standards There are no well-accepted standards or rules of thumb for all ratios, which can be accepted as norms. It renders interpretations of ratios difficult. c) Window dressing Financial statements can easily be window dressed to present a better picture of profitability to the outsiders. Hence one has to be very careful while making decisions from ratios calculated from such financial statements. d) Price level changes While making ratio analysis no consideration is given to the price level and this makes the interpretations of the ratios invalid.

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CHAPTER- II LITERATURE REVIEW

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LITERATURE REVIEW:
For the purpose of literature review the basic concepts of Fundamental analysis were studied, and similar studies relating to financial statements analysis are examined, following are some the articles collected from various blogs and reports Article1 : FINANCIAL STATEMENT ANALYSIS Financial statement analysis is defined as the process of identifying financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. There are various methods or techniques that are used in analyzing financial statements, such as comparative statements, schedule of changes in working capital, common size percentages, funds analysis, trend analysis, and ratios analysis. Financial statements are prepared to meet external reporting obligations and also for decision making purposes. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements. Tools and Techniques of Financial Statement Analysis: Following are the most important tools and techniques of financial statement analysis: 1. Horizontal and Vertical Analysis 2. Ratios Analysis Article2: ANALYSIS OF FINANCIAL STATEMENTS-SELECTIVE TOOLS Any successful business owner is constantly evaluating the performance of his or her company, comparing it with the company's historical figures, with its industry competitors, and even with successful businesses from other industries.
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To complete a thorough examination of your company's effectiveness, however, you need to look at more than just easily attainable numbers like sales, profits, and total assets. You must be able to read between the lines of your financial statements and make the seemingly inconsequential numbers accessible and comprehensible. This massive data overload could seem staggering. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Comparative ratio analysis helps you identify and quantify your company's strengths and weaknesses, evaluate its financial position, and understand the risks you may be taking. Article3: WHY SHOULD I CARE ABOUT FINANCIAL STATEMENT ANALYSIS? The detailed information available on financial statements is only of interest to someone who is doing some extensive research on individual stocks. If you invest in mutual funds, index funds or ETFs then you dont need to know the details but it is useful to know the terminology since fund managers and other investing types will often talk about details from the financial statements in the business section of the news.

Article4: FINANCIAL RATIO ANALYSIS FOR PERFORMANCE CHECK AUTHOR: GOPINATHAN THCCHAPPILLY APR 12, 2009 Used externally, financial ratio analysis can spot better investment options for investors, and internally, business managers can spot business areas requiring attention. Financial analysis using ratios between key values help investors cope with the massive amount of numbers in company financial statements. For example, they can compute the percentage of net profit a company is generating on the funds it has deployed. All other things remaining the same, a company that earns a higher percentage of profit compared to other companies is a better investment option.

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Financial Ratios Can Measure Different Things The Net Profit to Capital Employed ratio mentioned above measures the success of a company in using funds available to it. There are ratios to measure the company's:

Financial health Operating performance Cash flows and liquidity

Under each category, there are multiple ratios that measure different aspects, or fine tune the measurements. For example, different profitability ratios measure profit margins at different stages return on owners' funds and effective tax burden. We will be looking at the different ratio categories in separate articles on:

Profitability Ratios Liquidity Ratios Debt Ratios Performance Ratios

Article5: UNDERSTANING FINANCIAL STATEMENT BY ANA GONZALEZ RIBIERO ON 6/30/2009 When looking over your investments, do you ever wonder how the value of the companies youve put your money in is determined? What factors decide how well a company is really doing? Whats the source of the companys financing? Will it meet or exceed this quarters projections? While some consider the stock market to be little more than a house of cards, subject to the whims of individual investors, there are, in fact, some very real and measurable things that can help you to diagnose the financial health of a company. Take a statement Its not an interrogation but youll want to ask the hard questions before you invest. Only by examining and drawing conclusions from a financial statement, will you truly know how well a company is doing.

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Know the facts Investing should never be based on emotion. While you might be tempted to invest in a company because you like its products or because youve just read a favorable article about it in a magazine or newspaper, you should make sure youve done your research before ponging up your hard earned cash.

Article6: KEY BUSINESS RATIO Industry Norms and Key Business Ratios: The following key business ratios were obtained from the public domain and may not be accurate. However, they will give you a rough idea. Key Business Ratios can be obtained from companies like D&B (Dun & Bradstreet) or RMA. Their ratios are developed and derived from the financial statements in their extensive database. They are based on activities of numerous industries, includes a combination of financial statements and business ratios to help the credit community to compare a company's financial performance to its peer group by industry size and region. For more information and an extensive list of the key business ratios please contact your local Dun & Bradstreet or RMA office. Article7: SEVEN HABITS FOR FINANCIAL STATEMENT ANALYSIS AND BUSINESS NEWS REPORTING BY CFA INSTITUTE Journalists and analysts know that earnings may not really be earnings and that press releases can be a way for a company to spotlight good news only. Add to that the myriad of technical terms, semantic issues, and acronyms and one can easily get lost trying to discern the real headline. To help navigate through the maze of financial data, CFA Institute created this checklist to use when analyzing a company and its financial statements and to better understand the due diligence that Professionals undertake in developing successful investment strategies for 2006.

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8. ENVIRONMENTAL AND FINANCIAL PERFORMANCE LITERATURE, BY DONALD P. CRAM, ON MARCH 27, 2000 "We review the growing literature relating corporate environmental performance to financial performance. We seek to identify achievements and limitations of this literature and to highlight areas for further research. Our primary interest is to assess the adequacy of the literature in informing corporate managers how, when, and where to make pro-environment investments that will pay off with financial returns for long-term shareholders. To do so, we create a conceptual framework that maps the influence of regulators, public health scientists, environmental advocates, consumers, employees, and other interested parties upon corporate financial returns. Our discussion has relevance to all parties interested in influencing corporate actions that affect the environment." 9. JOURNAL OF INDUSTRIAL TECHNOLOGY VOLUME 19, NUMBER FEBRUARY 2003 To APRIL 2003 PAGE, BY Dr. DEVANG P. MEHTA "This paper is primarily based on Rogers diffusion of innovations theory and Augers empirical study. An empirical research study was conducted to investigate the perceived financial performance of commercial printing firms for conducting business-to-customer (B2C) activities using Web technology. Financial performance was measured using four financial indicators: sales, profits, costs, and return-on-investment (ROI). The diffusion of innovations theory states that an innovation brings changes to a company. Web technology is an innovation that affects companys performance. This paper investigates the effect of Web technology on commercial printing firms financial performance."

10. JOURNAL OF INTERNATIONAL BUSINESS STUDIES (1995), VOL 26, PAGE 181202 BY JANET Y. MURRAY, MASAAKI KOTABLE & ALBERT R. WILDT "Using a contingency model of global sourcing strategy, this study investigated the moderating effects of sourcing-related factors on the relationship between
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sourcing strategy and a product's strategic and financial performance. The results lent some support to the contingency model of global sourcing strategy in that product innovation, process innovation and asset specificity were significant moderator variables for financial, but not strategic, performance. However, the results provided no support for bargaining power of suppliers and transaction frequency as moderator variables. In other words, in achieving high financial performance for a product, whether a particular sourcing strategy should be used for a particular product depended on the levels of product innovation, process innovation and asset specificity." 11. IMPLICATION FOR FINANCIAL PERFORMANCE AND CORPORATE SOCIAL RESPONSIBILITIES, BY PHILIPPE JACQUART, CATHERINE RAMUS & JOHN ANTONAKIS, ON MAY 23, 2004. "We investigate whether CEO implicit motives predict corporate social performance and financial performance. Using longitudinal data on 258 CEOs from 118 firms, and controlling for country and industry effects, we found that motives significant predicted both financial performance (Tobin's Q and the CAPM) and social responsibility. In general, need for power and responsibility disposition were positively predictive whereas need for achievement and affiliation were negatively predictive of outcomes. Contrary to previous theorizing, corporate social responsibility had no link to financial performance. Our findings suggest that executive characteristics have important consequences for corporate level outcomes." 12. JOURNAL OF OPERATIONAL RESEARCH SOCIETY (2003) VOL54, PAGES 4858, BY E. H. FEROZ ."Ratio analysis is a commonly used analytical tool for verifying the performance of a firm. While ratios are easy to compute, which in part explains their wide appeal, their interpretation is problematic, especially when two or more ratios provide conflicting signals. Indeed, ratio analysis is often criticized on the grounds of subjectivity that is the analyst must pick and choose ratios in order to assess the overall performance of a firm. In this paper we demonstrate that Data Envelopment Analysis (DEA) can augment the traditional ratio analysis. DEA can provide a consistent and reliable measure of managerial or
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operational efficiency of a firm. We test the null hypothesis that there is no relationship between DEA and traditional accounting ratios as measures of performance of a firm. Our results reject the null hypothesis indicating that DEA can provide information to analysts that is additional to that provided by traditional ratio analysis. We also apply DEA to the oil and gas industry to demonstrate how financial analysts can employ DEA as a complement to ratio analysis."

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CHAPTER III PROFILE

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3.1 INDUSTRY PROFLE

INTRODUCTION Infrastructure is the basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function. The term typically refers to the technical structures that support a society, such as roads, water supply, sewers, power grids, and telecommunications. Infrastructure facilitates the production of goods and services; for example, roads enable the transport of raw materials to a factory, and also for the distribution of finished products to markets. In some contexts, the term may also include basic social services such as schools and hospitals. In military parlance, the term refers to the buildings and permanent installations necessary for the support, redeployment, and operation of military forces Encompassing all things to all people is hardly a useful way to define infrastructure clouding investors, governments, and their citizens ability to understand, advocate, and direct capital toward durable, networked assets with widespread societal benefits. Primary infrastructure components are generally monopolistic in nature and require large financial commitments for their development, repair and replacement. They can be built, touched, enabled, disabled, and function together to form interrelated, dependent systems that deliver needed commodities and services to society. In doing so, they facilitate economic productivity and promote a standard of living. Infrastructure can then be more concisely defined as The physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions.

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INFRASTRUCTURE IN INDIA The time tested Indian organizations provide international investors a lucid ambiance that ensures the protection of their long-standing endowments. These entail an independent and vivacious media, a judicial system that can claim superiority above the government, a refined legal and accounting structure and a user-friendly infrastructure. India's self-motivated and extremely viable private sector has been the strength of character of its financial activities and accounts for more than 76% of its Gross Domestic Product besides providing significant possibilities for joint ventures and tie-ups. At present, India is one of the rapidly emerging markets across the world. Equipped with highly skilled professionals and technical workforce, that suits the international standards provide the nation with a discrete cutting edge in worldwide rivalry. The road transport of India has been announced as a priority sector with loans available from the governments at positive provisions. The Monopoly and Restrictive Trade Practices Act (MRTP Act) was sanctioned in an attempt to endorse bigger sector to make a foray into the road industry. To develop the national highways, the National Highways Act has been altered to assist the diminution of taxes on national motorways, suspension bridges and passageways. Across the globe, Howrah Bridge at Kolkata is the busiest with regular stream of 58,000 automobiles and countless pedestrians. Private contribution in the energy industry has been motivated with the decline of import tariffs that is a 5 year tariff relief for new energy schemes and a 16% equity return. The administration is also considering the latest telecommunications strategy that targets at the enhancement of quality to an international level and indirectly triggers the growth of India as a chief manufacturer and exporter of telecommunication set-ups. Infrastructure in India include transportation, agriculture, water management, telecommunications, industrial and commercial development, power, petroleum
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and natural gas, housing and other segments such as mining, disaster management services, technology-related infrastructure. Important sectors in Infrastructure in India: Within the Infrastructure of India, the transportation sector is the most important, including the aviation, ports, roads, rail system and logistics. The agriculture sector comprises infrastructure-related storage facilities, construction relating to agro-processing projects and reservation and storage of perishable goods. Among others essential sectors, real-estate development, including industrial parks, special economic zones, tourism and entertainment centres, educational institutions and hospitals and solid waste management systems, also play significant role in Indian economy. Finance for Infrastructure in India: The rules for government-owned infrastructure companies for raising funds through initial share offerings are made flexible by the Securities and Exchange Board of India, which naturally will increase the flow of investment in the Infrastructure of India. To bridge the wide gap between the potential demand for infrastructure for high growth and the available supply, there is urgent need for a close partnership between the public and private sectors, with a vital role reserved for foreign capital. In India infrastructure sector itself is becoming an attractive investment area for FDIs. To encourage foreign funds flow into the Infrastructure in India, the Indian Finance Ministry has allowed Foreign Institutional Investors (FIIs) also to invest in unlisted companies. FIIs now can invest 100 per cent of their funds in the Infrastructure in India. In order to make the core sector more attractive for FDI, the Cabinet Committee on Foreign Investment (CCFI) has modified the 49 percent cap on foreign equity in the infrastructure sector to make fund mobilization easier. This major policy decision which will indirectly raise the foreign equity investment in infrastructure sector to well over 51 per cent. Besides, even if allocation in the Infrastructure in India is raised with a greater inflow of FDI and a large participation of private sector, the immediate problem will still remain, since, infrastructure is subjected to long gestation period. Consequently, the inadequacy of Infrastructure in India will continue for quite some time, unless technology up gradation can be done in the infrastructure production, including construction activities, for reducing the gestation lags and
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simultaneously improving the quality of products. With this infrastructure limitation any indiscriminate growth may lead the economy of the country to a situation of over-heating and a further rise in inflation. Under the Infrastructure in India the most essential field in which there should be development is in the urban infrastructure. Except for a few large projects in a handful of cities, paucity of urban infrastructure projects is a standing problem. Although city mass transport systems and airports have found place in developmental plans, essential services such as roads, drinking water, sewerage management, drainage, and primary health are still greatly under developed. However, with the economy growing at more than at the rate of 8 per cent, the government is aiming at an economic growth rate of 8 per cent during the Eleventh Plan (2008-12), for which the government is taking necessary steps to develop the Infrastructure in India. INDIA INFRASTRUCTURE India to become the second Largest Economy by 2050 Indian Economy The best barometer of countrys economic standing is measured by its GDP. India, the second most populated country of more than 1100 million has emerged as one of the fastest growing economies. It is a republic with a federal structure and well-developed independent judiciary with political consensus in reforms and stable democratic environment .In 2008-09 Indias economy-GDP grew by 6.5% due to global recession. In the previous four years,economy grew at 9%.The Indian economy is expected sustain a growth rate of 8% for the next three years upto 2012. With the expected average annual compounded growth rate of 8.5%, India's GDP is expected to be USD 1.4 trillion by 2017 and USD 2.8 trillion by 2027. Service sector contribute to 50% of Indias GDP and the Industry and agriculture sector 25% each. Investment Opportunities In Indian Infrastructure

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The robust current growth in GDP has exposed the grave inadequacies in the countrys infrastructure sectors. The strong population growth in India and its booming economy are generating enormous pressures to modernize and expand Indias infrastructure. The creation of world class infrastructure would require large investments in addressing the deficit in quality and quantity. More than USD 475 billion worth of investment is to flow into Indias infrastructure by 2012. No country in the world other than India needs and can absorb so many funds for the infrastructure sector. With the above investments Indias infrastructure would be equal to the best in the world by 2017. In the next five years planned infrastructure investment in India in some key sectors are (at current prices): Modernization of highways -US$ 75 billion, Development of civil aviation US$ 12 billion, Development of Irrigation system- US$ 18 billion, Development of Ports-US$ 26 billion, Development of Railways- US$ 71 billion, Development of Telecom- US$ 32 billion, Development of Power -US$ 232 billion. Thus in the eleventh five year plan ,investment in the above sectors (Aviation infrastructure ,Construction infrastructure, Highway infrastructure ,Power infrastructure, Port infrastructure ,Telecom infrastructure ) will be US$ 384 billions(Rs 17,20,000 Crores) considering the huge infrastructure market potential in India. In addition to the above, investments to the tune of US$ 91 billions have been planned in other infrastructure sectors like Tourism infrastructure ,Urban infrastructure ,Rural infrastructure, SEZs ,and water infrastructure and sanitation infrastructure thus making the total infrastructure investments in the eleventh plan period 2007-08

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to 2011-12 as US$475 billions. Domestic and global infrastructure funds have exposure to Indian infrastructure sectors. Infrastructure sector targets for Eleventh five year plan ending 2012 Electricity: Additional power generation capacity of about 90,000 MW , reaching electricity to all un-electrified hamlets and providing access to all rural households through Rajiv Gandhi Grameen VidyutikaranYojna (RGGVY) National Highways: Six-laning 6,500 km of Golden Quadrilateral and selected National Highways, Four-laning 6,736 km on North-South and East-West Corridors, Four-laning 12,109 km of National Highways, Widening 20,000 km of National Highways to two lanes, Developing 1000 km of Expressways, Constructing 8,737 km of roads, including 3,846 km of National Highways, in the North East. Rural Roads: Constructing 1, 65,244 km of new rural roads, and renewing and upgrading existing 1, 92,464 km covering 78,304 rural habitations. Railways: Constructing Dedicated Freight Corridors between MumbaiDelhi and Ludhiana-Kolkatta, 10,300 km of new railway lines; gauge conversion of over 10,000 km and doubling, Modernization and redevelopment of 21 railway stations, Introduction of private entities in container trains for rapid addition of rolling stock and capacity, Metro rails and world class stations Ports: Capacity addition of 485 million MT in Major Ports, 345 million MT in Minor Ports, construction of jetties and berths, Port connectivity ,channels deepening and port equipments. Airports : Modernization and redevelopment of 4 metro and 35 nonmetro airports, Constructing 7 Greenfield airports, Constructing 3 airports in North East, Upgrading CNS/ATM facilities ,Establishing training facilities and MRO. Telecom and IT : Achieving a telecom subscriber base of 600 million, with 200 million rural telephone connections, Achieving a broadband coverage of 20million and 40 million internet connections Irrigation: Developing 16 million hectares through major, medium and minor irrigation works. Urban Infrastructure: Urban renewal projects for selected cities; one million plus cities, state capitals and places of historical, religious or tourist importance under Jawaharlal Nehru National Urban Renewal Mission (JNNURM). Rural infrastructure :As per Bharat Nirman action proposed in rural
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infrastructure for irrigation, roads, housing, water supply, electrification and telecommunication connectivity Construction and Real Estate infrastructure :Development of residential and retail real estate ,Green buildings ,construction of SEZs, Infrastructure projects, Infrastructure facilities for Common wealth games 2010. Mining Infrastructure :Mineral exploration, Mineral extraction, processing technology and equipments. Investments in infrastructure sectors to create demand: The estimated infrastructure investments in India over USD475 will create demand for Power equipment , Construction equipment ,Material Handling equipment ,Electronic and IT systems ,Environment technologies ,Transport equipment , EPC contracts, Infrastructure companies in India ,Financial services ,Real estate ,Education and training ,Design and Planning services , Infrastructure consultants , Advisory and professional services and provide opportunities for investors, contractors, o&m contractors, developers of infrastructure projects ,foreign players. Infrastructure policy in India: Major policy initiatives such as deregulation, viability gap funding ,India infrastructure finance company, Committee on infrastructure ,rural infrastructure programme , National urban renewal mission, public private partnerships, Launch of private sector infrastructure funds have been implemented in infrastructure sector. Road Policy in India: Indian infrastructure policy on roads permit duty free import of high capacity and modern road construction equipments, complete tax holiday for any 10 consecutive years out of 20 years. Longer concession periods of up to 30 years are permitted as per the roads policy of India. Airports Policy in India: Indian airport infrastructure policy permits 100% tax exemption for airport projects for 10 years, 100% equity ownership by Non Resident Indians (NRIs), 100% foreign direct investments (FDI) in India in existing and Greenfield airport projects, Airport policy of India also allows 49%FDI and 100% NRI investment in airport transport services. Ports Policy in India: As per Indian port policy all areas of port operation open for Private Sector Participation .Private sector participation and JVs now permitted. Ports policy of India also allows 100% income tax exemption for a period of 10 years.

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Power Policy in India: Indian power policy permit 100 percent FDI (except atomic energy) in electricity generation, transmission, and distribution and trading, Establishing power plants without any license, transmission services for Independent power transmission companies. Oil, Gas and mining Policy: 100% FDI permitted for mining (except coal). CASs, levied earlier on crude production, has been abolished for the blocks offered under NELP. In deepwater exploration royalty for areas beyond 400m bathymetry will be charged at half the prevailing rate. In petroleum and natural gas sector 100 FDI is permitted except refining ,subject to sectoral regulations; and in the case of actual Trading and marketing of petroleum products, divestment of 26% equity in favour of Indian partner/public within 5 years .In refining 100% FDI is allowed in private companies and 26% FDI allowed in Public sector companies. Real Estate Policy in India: Corporate tax exemption of up to 100% for industrial parks, SEZs and housing projects are permitted as per Indian Real Estate Policy. Telecommunication Policy in India: 74% FDI is allowed in Basic and cellular, Unified Access Services, National/International Long Distance, V-Sat, Public Mobile Radio Trucked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS) and Other value added telecom services, ISP with gateways, radio paging, end-toend bandwidth. 100% FDI is permitted in ISP without gateway, infrastructure provider providing dark fiber, electronic mail and voice mail, subject to the condition that such companies shall divest 26% of their equity in favor of Indian public in 5 years, if these companies are listed in other parts of the world as per the Indian telecommunication policy. Why India -India at a glance- Attractive Destination India has a population of 1.1 billion. More than 30% of the worlds youth live in India. More than 55% (550 million) of the Indias population is less than 25 years of age. This is nearly twice the total population of the United States. Indias urban population constitutes around 30%. India is a nation growing younger (population in working age group projected to increase) as the developed world faces the problem of aging. India has a huge reservoir of English speaking, skilled and relatively inexpensive manpower with over 2.6 million engineers (degree and diploma holders), 814,000 software professionals, growing every year. It also got a well developed banking system, with over 67,000 branches and banking practices conforming to international best standards with net non performing assets ratio for all commercial banks 1.2%. It
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has a sophisticated, well regulated capital market with 23 stock exchanges of which the two largest, the National Stock Exchange and Bombay Stock Exchange ranked as no 3 and 5 in the globe by number of transactions. India has more billionaires than China. This year there were 15 billionaires in China but last year in India, there were 20 billionaires, according to the Forbes magazine. Forty-four per cent of Top 100 Fortune 500 companies are present in India. Some of the fortune companies present in India are ABB, Accenture, Alctel, AMD,ANZ, APC, Bosch, CSC, Citibank, Caterpillar, CA, Delphi, Dell, Dupont, Digital , Delloitte ,Ford,HSBC,Hyundai, Google,Intel,GE, Oracle ,Microsoft , Nokia, Siemens. India is the fourth largest economy in terms of purchasing power parity, the tenth most industrialized country in the world, the tenth largest economy in the world in terms of GDP and is one of the fastest growing developing economies today in the world. The most remarkable feature of its impressive growth story, especially over the last decade and a half, is that it has happened in a solid, democratic environment, making the process sustainable. The present infrastructure in India is grossly inadequate for the 1.1 billion populations. To improve the infrastructure of India, large investments have been planned by Indian government. Infrastructure Potential in India: Ports infrastructure in India: India has a long coastline of 7,517 km. The existing 12 major ports control around 76 % of the traffic. Due to globalization, Indias ports need to gear up to handle growing volumes. A number of the existing ports have plans for expansion of capacities, including addition of container terminals. The government has launched the National Maritime Development Programme, to cover 276 port projects (including related infrastructure) at an investment of about INR 600 billion by the year 2012. Also, States are increasingly seeking private participation for the development of minor ports, especially on the west ports. Indian ports are projected to handle 875 million tones(MT) of cargo traffic by 2011-12 as compared to 520MT in 2004-05.There will be an increase in container capacity at 17% CAGR. Cargo handling at all the ports is projected to grow at 19 per cent per annum till 2012. Planned capacity addition of 545 mt at major ports and 345 mt at minor ports. Port traffic is estimated to reach 1350 million tones by 2012 .Containerized cargo is expected to grow at 18 per cent per annum till 2012. Projected Investment in major ports $16 billions and minor ports $9billion during 2007-12.
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Airports infrastructure in India: Passenger and cargo traffic slated to grow at over 20% annually and set to cross 100 million passengers per annum by 2010 and set to cross cargo traffic of 3.3 million tonnes by 2010.Mumbai and Delhi airports have already been handed over to private players. Kolkata and Chennai airports will also be developed through JV route. Railways Infrastructure in India: Indian Railways is the largest rail network in Asia and worlds second largest under one management. Indian Railways comprise over one hundred thousand track kilometres and run about 11000 trains every day carrying about 13 million passengers and 1.25 million tones of freight every day. The scope for public private partnership is enormous in railways, ranging from commercial exploitation of rail space to private investments in railway infrastructure and rolling stocks. The Golden quadrilateral is proposed to be strengthened to enable running of more long distance passenger trains and freight trains at a higher speed. Programmed also envisages strengthening of rail connectivity to ports and development of multimodal corridors to hinterland. Construction of 4 mega bridges costing about US$ 750 million is also included in the programme. Construction of a new Railway Line to Kashmir valley in most difficult terrain at a cost of US$ 1.5 Billion and expansion of rail network in Mumbai area at a cost of US$900 million has also been taken up. Freight traffic is growing at close to 10% and passenger traffic at close to 8% annually. Railways have planned a dedicated rail freight corridor running along the railways Golden Quadrilateral (GQ). The double-line freight corridor is expected to evolve systematic and efficient freight movement mechanisms and ease congestion along the existing GQ. It would leave the existing GQ free for passenger trains. The 9260 km dedicated freight corridor to be built at a cost of Rs 60,000 crore (US$ 15 billion) is being funded partially with a US$ 5 billion loan from Japan. The work is expected to be completed within the next 57 years. The first phase of the project would include the DelhiHowrah and the DelhiMumbai routes Power Infrastructure in India: Presently the installed capacity of electric power generation stations under utilities stood at 130000MW and in the five year plan the generation capacity is planned to be increased to 2,20,000 MW by 2012.There is a 13% peaking and 8% average shortage of power annually. Central government has already taken steps to increase capacity by building Ultra mega power projects

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(UMPPs).There is a plan to increase Nuclear power capacity from 3900MW currently to 10000 MW by end of 11th plan. Telecom Infrastructure in India: Even with the rapid growth of telecom sector in India, the rural penetration is still less than 5%. At 500 minutes a month, India has the highest monthly 'minutes of usage' (MOU) per subscriber in the Asia-Pacific region, the fastest growth in the number of subscribers at CAGR of more than 50%, the fastest sale of a million mobile phones (in one week), the world's cheapest mobile handset and the world's most affordable colour phone. Highways and Roads infrastructure: The Indian road network has emerged as the second largest road network in the world with a total network of 3.3 million km comprising national highways (65,569 km.), State highways (128,000 km.) and a wide network of district and rural roads. The US tops the list with a road network of 6.4 million km. Currently, China has a road network of over 1.8 million km only. Out of the 3.38 million Kms of Indian road network, only 47% of the roads are paved. Roads occupy a crucial position in the transportation matrix of India as they carry nearly 65 per cent of freight and 85 per cent of passenger traffic. Over the past decade several major projects for development of highways linking the major cities have been planned and work started on most of them. What is of significance is that private sector involvement (BOT projects) has finally been found to be feasible in the Indian context. This has led to an accelerated growth in this sector which had long been faced with financial constraints. This has also facilitated improvement in the quality of the new highways and introduction of the latest concepts for toll collection, signages etc. The process of development of the new highways is expected to continue for many years to come. Construction Infrastructure in India: Construction accounts for nearly 7 per cent of Indian GDP and is the second biggest contributor (to GDP) after agriculture. Construction is a capitalintensive activity. Broadly the services of the sector can be classified into infrastructure development (54%), industrial activities (36%), residential activities (5%) and commercial activities (5%). The main entities in the construction sector are construction contractors, equipment suppliers, material suppliers and solution providers. Indias construction equipment sector is growing at a scorching pace of over 30 per cent annually--driven by huge
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investments by both the Government and the private sector in infrastructure development. It is estimated that there is USD860 billion worth of construction opportunities in India Oil, Gas Hydrocarbon Infrastructure in India With the exponential increase in the population of vehicles and industrial requirement, the consumption of petrol products is likely to increase to 300 MMT by the year 2010. India has established geological reserves of more than 6 billion and exploration acreages are available on offer on continuous basis. It is estimated that investment over the next 10-15 years shall be in the range of US$ 100-150 billion. Additional refining capacity of 110 million tonnes shall be required by 2010. Opportunities have emerged in business areas linked to Natural Gas. Private opportunities also exist in infrastructure like jetties, storage tanks, movement of oil and petro-products. Oil import constitute largest share of total import and therefore Government has taken many initiatives to mitigate the situation and attract the foreign investors.100% foreign investment has been allowed in this sector. Deregulation and de-licensing has been done for the petroleum products. Rationalization of pricing has taken place by decontrol and import parity. Private sector can import most products, pipelines, terminals and tank ages cleared for private investment. JV can be formed for the development of infrastructure, marketing and, refining activities. NEW INSTITUTIONAL MECHANISM FOR PPP The creation of world class infrastructure would require large investments in addressing the deficit in quality and quantity. , it is necessary to explore the scope for plugging this deficit through Public Private Partnerships (PPPs) in all areas of infrastructure like roads, ports, energy, etc. Given the risks involved in large projects the government has realized that only public sector involvement with central government development assistance for infrastructure projects is not adequate to meet the challenge. Recognizing the imponderable risks, which infrastructure projects entail, with long gestation periods, high costs and budget constraints, the government has proposed a flexible funding scheme, which will find support from budgetary allocation to fund public-private-partnerships (PPPs) for infrastructure projects. The government has proposed India Infrastructure Finance Company (IIFC) and formulated a scheme to support PPPs in infrastructure. As part of this scheme, PPP opportunities are to be awarded through competitive bidding in a transparent manner and for each project, performance is to be assessed against easily measurable standards,

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based on unambiguously defined criteria, in order to inspire confidence among investors. Recently, legal and regulatory changes have been made to enable PPPs in the infrastructure sector, across power, transport, and urban infrastructure. For example, the Electricity Act allowed for private sector participation in the Distribution of electricity in specified area(s) of the distribution licensees under the role of a franchisee. The recognition of the franchisee role is a significant step towards fostering PPP in the distribution of electricity. In some cases, the impact of private sector involvement in terms of end-user benefits has been felt almost immediately. A case in point is the initial Build-Operate-Transfer (BOT) experience at Jawaharlal Nehru Port, where the Minimum Guaranteed Traffic requirement at the end of 15 years, identified as part of the concession agreement, was met in just 2 years. The experiment is being replicated across other major ports as well. Special Economic Zone (SEZ) A New Policy The Government of India has announced a pragmatic SEZ policy, which offers several innovative fiscal and regulatory incentives to developers of the SEZs, as well as the units within these zones. Each SEZ is treated as a foreign territory and units located in it are not subject to either customs tariffs or domestic duties. Sales to Domestic Tariff Areas are permitted, subject to payment of applicable customs duties and import policies in force. Inputs, whether imported or sourced domestically, are free of any taxes. So are exports made from a SEZ. The only requirement is that the SEZ and the units located within it are positive foreign exchange earners. This offers foreign companies tremendous opportunities for taking full advantage of Indian strengths in doing business in India. This could be either as the developer of the SEZ or as a unit in a SEZ or both. Presently, the board of approvals for the SEZs granted formal approvals for 340 SEZs. These 339 SEZs today have lands for development. It is widely expected that the Special Economic Zones approved for various parts of the country, once implemented, would contribute substantially to India's exports and would help connecting the missing links in manufacturing. These zones aim at providing an internationally competitive and hassle free business environment for promotion of exports. India Infrastructure Needs India's economic development is projected on the basis of the development of its basic infrastructure in its 600,000 villages inhabited by the 700 million rural population. Rural India infrastructure needs a completely new visionary outlook
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and new initiatives. Agriculture is the main occupation in rural India and most of the rural population still depends either directly or indirectly on agricultural activities for their living. But the lack of basic infrastructure for pursuing agricultural activities has forced a large section of Indias agricultural labour force to move to non-agricultural sectors for livelihood. The rural India Infrastructure needs are:

Rural housing Roads Healthcare Education Irrigation Drinking Water Power Telecommunication Further, the tremendous growth of Indian IT, telecommunication, manufacturing, and pharmaceutical industry has created an enormous pressure on the limited world class urban infrastructure available in India. The Ministry of Finance has realized that economic development of India is directly connected to the availability of basic and modern urban infrastructure in Indian cities. The government of India has now formulated policies to forge public and private partnerships for tackling the problems related to infrastructure. The urban India Infrastructure needs are:

Urban housing Business premises Power Urban transport Water supply, Sewerage Airports Railways Seaports Roads Bridges
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Tourism infrastructure Solid waste management Projects in SEZ Health care Entertainment Communications Financial limitations of the central government for providing world class infrastructure made it impossible to meet India Infrastructure needs at every village and cities in India. So the government of India's Infrastructure development policy aims at engaging major financial contributions from private partners for meeting India Infrastructure needs in urban as well as rural India. This site provides detailed information on infrastructure problems in India. The site also focuses on the growing problem of infrastructure limitations in India. Infrastructure Problems in India can be classified into two parts:

Urban infrastructure problems in India Rural infrastructure problems in India Urban infrastructure problems in India is a age old problem. The Infrastructure problems in India mostly took a back-seat in the economic development policy drafts. The meagre budgetary allocation to arrest infrastructure problems in India has so far proved to be too little to keep pace with other areas of business development in India. Moreover, the tremendous growth of Indian IT, telecommunication, manufacturing, and pharmaceutical industries have consumed the limited world class urban infrastructure available in India. The Urban infrastructure problems in India are:

Urban residence Business premises Power Urban transport Water Sewerage Airports Railways
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Seaports Roads Bridges Tourism infrastructure Solid waste management Projects in SEZ Health care Entertainment Communications Rural infrastructure problems in India Rural infrastructure problems in India has gone from bad to worse in recent years. However, the government of India has taken some important steps to arrest the age old problems of rural India, such as:

Connecting 66,800 habitations with all weather roads Construction of 1,46,000 km of new rural roads Upgrading 1,94,000 km of existing rural roads Allocation of investment to the tune of Rs. 1,74,000 crores envisaged under Bharat Nirman. Providing a corpus of Rs. 8000 crores for Rural Infrastructure Development Fund (RIDF). With around 600,000 villages and 70% of its population in rural India, the need of the hour for the government is to develop proper rural infrastructure for the masses in India. The immediate focus area should cover but not be confined to the following areas:

Power Irrigation Drinking Water Rural housing Roads Health care Education Telecommunication

Infrastructure Sector Growth Rate

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Infrastructure Sector Growth Rate in India GDP has been on the rise in the last few years. The Growth Rate of the Infrastructure Sector in India GDP has grown due to several reasons and this in its turn has given a major boost to the country's economy. Economy of India India gross domestic product (GDP) means the total value of all the services and goods that are manufactured within the borders of the country within the specified period of time. The Indian economy is the twelfth biggest in the whole world for it has the GDP of US$ 1.09 trillion in 2007. The economy of India is the second major growing economy in the whole world for it has the GDP growing at the rate of 9.4% in 2006- 2007.

The Infrastructure Sector in India The Infrastructure Sector in India was after independence completely in the hands of the public sector and this hampered the growth of this sector. India's less spending on real estate, power, telecommunications, construction, and transportation prevented the country from sustaining very high rates of growth. The amount that India was spending on the Infrastructure Sector was 6% of GDP or US$ 31 billion in 2002. The contribution of the Infrastructure Sector in the India GDP Infrastructure Sector Growth Rate in India GDP came to 3.5% in 19961997 and the next year, this figure was 4.6%. The Growth Rate of the Infrastructure Sector in India GDP increased after the Indian government opened the sector to 100% foreign direct investment (FDI). This was done in order to boost the Infrastructure Sector in the country. The result of opening the sector to the private sector has been that Infrastructure Sector Growth Rate in India GDP has increased at the rate of 9%. It is estimated that the Growth Rate of the Infrastructure Sector in India GDP will grow at the rate of 8.5% between 2006 and 2010. The biggest ongoing project in the Infrastructure Sector in India is the Golden Quadrilateral, which is improving the main roads that connect the four cities of Chennai, Mumbai, Delhi, and Kolkata.

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The Government of India must boost the Infrastructure Sector Infrastructure Sector Growth Rate in India GDP thus has increased over the last few years due to the efforts that have been made by the Indian government. The government of India must continue to take steps to improve the Infrastructure Sector in the country. For this in its turn will help to boost the Indian economy in future.

Challenges in front of Indian Infrastructure Sector India infrastructure: big ambitions, big potential, big money, little happening. This is what we feel, sums up, what's happening in the Indian infrastructure sector. Government's extended enthusiasm about the sector hasn't been able to get the big infrastructure projects moving. There are lot of PPP projects coming up but what's going wrong? Many Infrastructure and Power shares are seeing constant ups and downs in the market. What is keeping the big money away? Surely the private investor is upbeat on the sector and so is Indian mutual fund. But the big money from western FIIs and Pension funds doesn't seem to have embraced the sector gladly. We believe that there are few sore issues which needs to be taken care of so that the Indian infrastructure sector can be put on fast track as soon as possible. 1. Dilly Dally attitude of government which ensures unending delays along with the corrupt governance model especially at the grass root level. 2. Absence of strong long term debt market in India. Corporate bond market is almost non-existent (specially compared to domestic stock market or int'l bond market). Indian banks are the only funding source which anyways charge very high interest rates and come with many more strings attached. Any ways Indian Banking sector is not the most revered one in the world. 3. Infrastructure projects need long term loans, for which insurance and pension funds are extremely suitable. If we can't tap the western insurance and pension funds then we can use our own domestic insurance and pension funds. However, they are not developed enough. Also, they need to be opened up further to attract foreign funds. LIC might need to play a decisive role in the infrastructure projects in India which in turn needs a hell lot of money today. 4. India is competing with the likes of China, Korea and Brazil for infrastructure related funds. While India plans to spend $500 billion on infra. projects from 2007-2012, China has already come up with a plan of over $550 billion
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investment in infrastructure projects just to fight the recession. According to some estimates China might be investing over $5000 billion in next 2 decades. So the competition to get the funds is likely to remain high in years to come. 5. If funds are such a big problem then why can't Indian government just print money and pay for it. The problem is not only the high budget deficit and high public debt that we are already running in order to fight the recession. More importantly the very nature of infrastructure projects which takes years to start paying the benefits would mean inflation. No matter how the money comes, the gestation period of infra projects would mean calls to inflation in short term. Infra projects anyways take a long time to complete and still longer in India. The time required has to be tightened. This would require minimum governance. intervention, minimum red tapism, increased transparency, consistent flow of fund and last but not the least, latest technology. Latest technology would again require FDI flowing in. So quite a bit of challenges to face.

3.2 COMPANY PROFILE

Reliance Infrastructure, (BSE: 500390) formerly known as Reliance Energy and prior to that as Bombay Suburban Electric Supply (BSES), Its India's largest private sector enterprise in power utility. The company is headed by Anil Ambani. The company's corporate headquarters is situated in Mumbai. The company is the sole distributor of electricity to consumers in the suburbs of Mumbai. It also runs power generation, transmission and distribution businesses in other parts of Maharashtra, Goa and Andhra Pradesh. Reliance Energy plans to increase its power generation capacity by adding 16,000 MW with investments of $13 billion.
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The Company is in the process of restructuring its various divisions to its wholly owned subsidiaries with a view to adopting the best management practices, establish highest operational standards and also to identify separately the economic value of each of the divisions. Reliance Infrastructure, a part of Reliance - Anil Dhirubhai Ambani Group, is India's largest infrastructure company with turnover of over Rs.15,690 crore and market capitalization of over Rs. 24,450 crore as on March 31, 2010. Reliance Infrastructure Limited is Indias leading utility company having presence in across the value chain of power business i.e. Generation, Transmission, Distribution, EPC and Trading and the largest infrastructure company by developing projects in all high growth areas in infrastructure sector i.e. Roads, Highways, Metro Rails, Airports and Speciality Real Estate. Our presence spans across three verticals: Engineering, Procurement and Construction Energy Infrastructure Engineering, Procurement and Construction EPC offers a single point solution to the execution of power plants including project engineering, procurement, construction & commissioning for its clients. The world of tomorrow will feature abundant energy that will spark a million smiles and dreams. Our EPC division is ushering this energy revolution with power plant projects. Along with full service project advisory capabilities, we manage power plants on a turnkey basis and provide industry specialist services such as fuel management advice and fiscal advice. Our the turnover of the division was Rs 557 crore (US$ 120 million) and order book position of over Rs 18,530 crore (US$ 4 billion) as on June 30, 2010. Energy Our core competency in energy extends to generation, transmission, distribution and trading. This comprehensive sphere of influence extends our vision of a highly developed India within our realms. We distributed more than 36 billion units of electricity to 30 million consumers and generate 941 MW of electricity from our power stations. Our transmission division is developing 5 transmission projects, with total project outlay of Rs 6,640 crore (US$ 1.4 billion). Infrastructure Reliance Infra has a significant presence in the construction of roads, metros, airports and real estate. Infrastructure is decidedly the most visible and
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important form of development in a nation. We signify this with our 11 road projects of 970 kms worth about Rs 12,000 crores (US$ 2.6 billion). We are currently implementing 3 metro rail projects in Mumbai and Delhi worth around Rs 16,000 crores (US$ 3.4 billion).In the real estate space, we are in various stages of bidding/negotiation/planning with over 400 million sq. feet of mixed use built up potential. Enhancing Our Legacy/ Carrying the Legacy Our passion to excel in every endeavor emanates from the legacy of our founder Late Shri Dhirubhai Ambani. His values and ideals stand with us as we collectively seek to further develop the society, landscape and the nation we are a proud part of. In the years ahead of us, we will keep exploring the unknown in our quest for excellence. Highlights for Company Profile

One of the largest Indian business conglomerate. Leading Private Utility Firm in Transmission. Significant presence in EPC, Energy and Infrastructure.

Mission: Excellence in Infrastructure To attain global best practices and become a world-class utility. To create world-class assets and infrastructure to provide the platform for faster, consistent growth for India to become a major world economic power. To achieve excellence in service, quality, reliability, safety and customer care. To earn the trust and confidence of all customers and stakeholders, exceeding their expectations and make the Company a respected household name. To work with vigour, dedication and innovation with total customer satisfaction as the ultimate goal. To consistently achieve high growth with the highest levels of productivity. To be a technology driven, efficient and financially sound organisation. To be a responsible corporate citizen nurturing human values and concern for society, the environment and above all people.

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 To contribute towards community development and nation building. To promote a work culture that fosters individual growth, team spirit and creativity to overcome challenges and attain goals. To encourage ideas, talent and value systems. To uphold the guiding principles of trust, integrity and transparency in all aspects of interactions and dealings. HISTORY 2000 - BSES Telecom announced the launch of its Internet Services, Powersurfer.net. - The BSES Telecom has also formed a joint venture company with the Hyderabad-based Sriven Multitech Ltd. - The Business Millennium Award for Environmental Management was Given to Mumbai-based BSES. - BSES Telecom, the wholly-owned subsidiary of the power major BSES, has shortlisted four international companies Cable and Wireless of the UK, MCI Worldcom, British Telecom and News Skies of the US for setting up Internet gateways across the country. - Gujarat Positra Port Infrastrucutre Ltd. has signed an memorandum of understanding with BSES Ltd. to execute a 261 mw power project. - BSES Ltd. has signed a memorandum of understanding with Oil and Natural Gas Commission Ltd. for supply of 1.85 MCMD of gas from Bombay High, for its 500 MW combined cycle power plant in Saphale, Palghar. - Reliance Industries has picked up a 26.6% stake in BSES. RIL is entering the broadband business and expanding its power business in a big way by way of exploiting its synergies with BSES. - BSES Ltd has launched a customer-friendly website bsessupply.com. - BSES Ltd has informed that Shri V M Lal has ceased to act as the Director of the Company with effect from January 29, 2002. In the casual vacancy so arisen, Shri R Buddhiraja, IAS, Principal Secretary (Energy) to the Government of Maharashtra has been appointed on the Board of the Company with effect from January 29, 2002. - BSES and its subsidiaries provide electricity service to more than 2.70 million consumers in area covering about 1,23,000 sq. km. And with an
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estimated population of about 34 million. BSES operates a state-of-the-art 500 MW Thermal Power Station at Dahanu near Mumbai and supplies the 2001. - Strategies upto 2000 A.D. - Power generation, transmission and distribution are areas of core competencies. - 90% of investment to be made in core activities and the balance in other related activities. - Other related activities cover those synergetic to the core activities. - The resources for these projects would be met by BSES and raised through joint ventures. - Corporate Plan - First Five Years:Core Areas: Power Generation capacity around 2000 MW Dahanu expansion / Palghar Project: Capacity - 500 MW Projects at different locations - Capacity - 1500 MW Three to four distribution networks of similar size as BSES Mumbai. - Other Areas: Expand EPC & Other contracting activities Turnover Rs. 750 crores. Coal Beneficiation / Mining. Manufacturing of Energy Meters. Telecom / IT - Turnover Rs. 100 crores. - Corporate Plan - 15 years Perspective Plan:Power Distribution - Capacity 8000 MW. Power Distribution Networks - 20 - 25 locations. Contracting Activities - Turnover Rs. 1500 crores. Coal Beneficiation / Mining. Composite Financial Services. Fuel Management. Energy Efficiency / Gas Distribution. - Upcoming Projects:-Generation: On its balance sheet:Palghar Project Wind Farm Project - Through Joint venturesBSES Kerala Power Limited TICAPCO-Srimushnam Project BSES Andhra Power Limited Maithon Power Limited. - Distribution: Orissa Distribution Companies Part of Rajasthan Distribution System. Consultancy of Goa, Andhra Pardesh. It has given consultancy to Andhra Pradesh State Electricity Board (APSEB) for privatisation of Distribution System. Also the Goa Power Department has shown interest for consultancy for restructuring and privatisation of power department. The assignment is awarded to BSES and it is being executed. - Related Areas: ST BSES Coal Washeries Limited Utility Powertech Limited BSES Telecom Limited BSES Infrastructure Finance Limited - Electric Supply and Transmission Division: BSES has a consumer base of 2 million. Importantly, there is no agriculture load as the company caters to the urban areas only. It has a good recovery of 99.4%, which helps it to provide efficient and effective consumer services. It has capital expenditure plans of Rs 120 crore on SCADA and fibre optic.
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- The company has managed to maintain the distribution losses at around the same level during the past five years. Distribution losses were 11.6% during the year ended March 2001 as compared to 11.5% during the year ended March 2000. It has come down from 14.95% during FY 1993-94. BSES is taking measures to reduce its distribution losses further along with improvement in collection mechanism. It is also implementing cost control measures with financial engineering and tax planning. It also has plans to focus on commercial customers in future. - Dahanu Power Station: Dahanu Power Station achieved a plant load factor (PLF) of 82.68% during the year 2000-01. The plant availability was to the tune of 92.33%.The plant of the company meets 55% of its needs. The demand has been increasing at around 5% per annum. However, BSES depends on Tata Power for additional power requirements. It has to purchase this extra power at much higher costs. The company is taking measures to reduce overhaul period per unit. It also plans to improve plant availability besides increasing the dispatches during off peak hours besides reducing coal transit losses. - Wind Energy: BSES has invested Rs 41 crore in 7.59 mw wind farm at Chitradurga, Karnataka. This farm has 33 windmills. It has already started commercial operations and has one of the highest PLF in the country in the wind farm segment. For the year 2000-01, its average PLF was 30.11% when others can manage only 20% to 25% PLF. This farm has an attractive return of investment (RoI) as the company is allowed 100% depreciation. - Contracts and EPC Division: This division achieved a turnover of Rs 529 crore during the year ended March 2001 as against Rs 399 crore during the year ended March 2000 and it. Its turnover was Rs 391 crore during the year ended March 1999. This division has showed an improved performance and has been growing at a good rate for the last three years. This division was instrumental in construction and erection works of 5,000 mw in Indian and other industrial and infrastructure projects. The cumulative value of works executed by this division since inception is to the tune of Rs 3,500 crore. It has a good order booking of Rs 1,400 crore as of June 2001.To keep up the growth in this business, the company plans to target turnkey jobs with higher margins. It also needs to diversify into larger civil jobs and other infrastructure sectors. The company also plans to provide modern tools for faster project implementation and to provide training inputs for better project management.

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- BSES has several group companies - ST-BSES Coal Washery, BSES Infrastructure Finance, Utility Powertech, Ticapco, BSES Telecom, BSES Kerala Power, BSES Andhra Power and three new companies of Orissa. The company has a strategy of adding value by strategic alliances within the group. - Coal Washery - JV Company: This JV is a backward integration project for the Dahanu Power plant. It supplies washed coal to the plant as well as to others. The total cost of this project is around Rs 60 crore out of which Rs 9 crore is by a US aid. The washery, which is already operational, has a 2.5 mmt per annum capacity and is located at Madhya Pradesh. The return on equity in this JV exceeds 25%. The company posted revenues of Rs 25 crore with net profit of Rs 3.7 crore for the year 2000-01. - BSES Infrastructure Finance (BIFL): This company is in the business of providing advisory services on new businesses and financial engineering. It also provides bridge finance and leasing services to group companies. It has tied up funds for various projects to the tune of over Rs 1,500 crore. It has been a dividend paying company since inception. It posted revenues of Rs 12.70 crore and net profit of Rs 3 crore for the year 2000-01. - Utility Powertech: This is a JV with National Thermal Power Corporation (NTPC). Utility Powertech has taken up maintenance contracts for NTPC power stations. It has 250 operational sites with Rs 25 crore orders on hand. The company is focussing on non-conventional project development including mini and micro hydel projects. It posted revenues of Rs 39 crore and profit of Rs 1.5 crore for the year 2000-01. - BSES Telecom: This company has been operational since March 2000. It is an Internet service provider (ISP) in Mumbai and has a fibre optic network to support its last mile services. Its utility software division has a customer care product, which caters to over 6 million consumers of BSES. It is also exploring alliances for providing utility solutions. - BSES Kerala Power: This is a 165 mw naptha-based combined cycle Power plant at Kochi in Kerala. It employs 3 gas turbines of 43.5 mw each. It proposes to use liquified natural gas (LNG) from the Kochi terminal in future. - BSES Andhra Power: This is a 220 mw duel fuel combined cycle power plant at Samalkot. The construction work on civil works is presently in progress and the expected date of completion is October 2001 for open cycle and February 2002 for combined cycle. BSES EPC group is doing the EPC work.
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- Orissa Power distribution companies: BSES had bid for distribution companies in Orissa in 1999 when the distribution part was opened up for privatization. On 1 April 1999, the company with a 51% stake along with the JV partner, GRIDCO acquired the three companies. The total investment in this distribution foray was to the tune of Rs 117 crore. World Bank and others are providing long-term soft loans amounting to Rs 150 crore in three years. The consumer base is around 8,14,000 with the consumption at around 6,000 million units. The tariff is one of the lowest for bulk supply. Importantly, agricultural load is less than 6% of the total load. BSES is targeting a turnaround for these distribution companies in the next 2-3 years. 2002 - BSES Ltd has informed that Shri R V Shahi Chairman & Managing Director of the Company has relinquished the Office of Chairman & Managing Director.The Board of Directors has appointed Shri S S Dua as acting Chairman & Managing Director. -BSES appointed J P Chalsani as chief executive officer of the southwest Delhi electricity distribution company and the central-east Delhi electricity distribution company, in which BSES has a controlling stake. -Reliance Industries Ltd. increases the stake in the company to 31.54% -Signs confidentiality agreement for buying out Enron's stake in Dabhol Power Company -Issues Non Covertible Debentures (NCD) for Rs 100 crore -Company's 500-mw Dahanu thermal power station achieves an availability of 100 per cent and a plant load factor (PLF) of 98.92 per cent during March -Power Ventures increases the holding in the company to 23.88% -Acquires 51% stake in two Delhi Vidyut Board's power distribution companies (Central East Delhi Electricity Distribution Company Ltd and South West Delhi Electricity Distribution Company Ltd.) -Delhi government signs a share-holding agreement with Bombay Suburban Electric Supplies (BSES) and Tata Power for power distribution in Delhi -Changed names of its two power distribution companies in Delhi. While the South West Delhi electricity Distribution Company was renamed as BSES Rajdhani Power Ltd, the Central East Delhi Electricity Distribution Company was christened BSES Yamuna Power Ltd.
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-Pulls out of 250 MW power project in Tamil Nadu -Reliance group increases stake in the company from 38% to 40.29% through creeping acquisition route -Reliance Power Ventures acquires 28,28,545 shares of BSES Ltd, increases the stake to 28.30% -Completes US$ 120 million Foreign Currency Convertible Bond issue 2003 - Company becomes part of the Reliance Group, with Mr Anil D Ambani, Vice Chairman and Managing Director of Reliance Industries Ltd. unanimously being appointed by the Board as Chairman of BSES. -The name of BSES Ltd changed to Reliance Energy Ltd. -BSES Andhra Power Ltd, BSES Kerala Power Ltd, BSES Rajdhani Power Ltd, BSES Yamuna Power Ltd, North Eastern Electricity Supply Company of Orissa Ltd, Southern Electricity Supply Company of Orissa Ltd, Tamil Nadu Industries Captive Power Company Ltd and Western Electricity Supply Company of Orissa Ltd cease to be subsidiaries of the Company with effect from March 29, 2003 -Members approve delisting of company's shares from the following stock exchanges: 1. Ahmedabad Share & Stock Brokers Association 2. Bangalore Stock Exchange Ltd 3. Calcutta Stock Exchange Association Ltd 4. Delhi Stock Exchange Association Ltd 5. Inter Connected Stock Exchange of India Ltd. -BSES Andhra Power Ltd. becomes 100-pc subsidiary of Reliance Energy -Allots equity shares to Bank of New York on options exercised by it -Anil Ambani, vice-chairman and managing director, Reliance Industries Ltd, and chairman, BSES Ltd, voted as the MTV Youth Icon of the Year by young Indians across the country -Maharashtra Govt. took back its nominee from the company board -Reliance Salgaocar Power becomes Wholly Owned Subsidiary of the company -BSES signs an agreement with US bank for GDR conversion 2004
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-Reliance decides to revamp Hirma mega thermal power project -Easy Bill, a Hero group company, inks pact with BSES for bill collection -Promoters' holding in BSES has dropped by 5.67 per cent to 52.55 percent -BSES Andhra Power Ltd. & Reliance Salgaocar Power Company Ltd (RSPCL) merged with the Company -Janus acquires 4-pc stake in Reliace Energy -The name of BSES Limited shall be changed to Reliance Energy Limited and the trading symbol of BSES Limited be changed from BSES to REL w.e.f. March 12, 2004. -Mops up 8 million (Rs 805 cr) through a five-year zero-coupon foreign currency convertible bond (FCCB) issue -Enters into two foreign currency facility agreements pursuant to which the Company was required to create security over certain of its assets by certain specified times after the respective dates of the Facilities -Life Insurance Corporation of India has informed that they have acquired 55,00,000 equity shares of Reliance Energy Limited. -Reliance Power Ventures Limited acquires 91,95,622 shares representing 4.99% of voting rights of Reliance Energy Limited via preferential allotment and the date of acquisition is April 03, 2004. -Reliance Energy, Govt of UP and Reliance sign the State Support Agreement -Reliance wins Koldam project over Essar -Reliance join hands with Temasek to establish first power VF - launches multilingual power bills on September 16, 2004 2005 -Dahanu of REL's bags CII`s National Award of Excellence 2005 2006 -Reliance Energy join hands with Bajaj for CFL bulbs -The Company along with its consortium on November 07, 2006 signed Contract with Ministry of Petroleum and Natural Gas (MoPNG) for exploration and production of four Coal Bed Methane (CBM) blocks.

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2007 -Reliance Energy Ltd has appointed Shri. Lalit Jalan as Whole-time Director on the Board. -CRISIL has reaffirmed its outstanding ratings of 'AAA/Stable/P1+' on Reliance Energy Ltd's (Reliance Energy's) debt programmes. -Reliance Energy Ltd bagged an Engineering, Procurement and Construction (EPC) contract from Damodar Valley Corporation (DVC) to set up the 2 x 600 MW coal based power station at Raghunathpur in West Bengal. 2008 - Reliance Infrastructure has bagged the contract for four-laning of the Gurgoan-Faridabad road and along with this the upgradation of the BallabgarhSohana road on a build-operate and transfer (BOT) basis. This project involves the construction of 66 km of road on high density traffic zone and the project is expected to be completed in two years from the date of commencement with a concession period of 17 years. -Company name has been changed from Reliance Energy Ltd to Reliance Infrastructure Ltd. -Reliance Infra's Dahanu Thermal Power Station bags award 2009 -Reliance Infra to enter into cement sector -Reliance Infra agrees to pay marketing margin to RIL -RInfra gets Kandla-Mundra road project in Gujarat -Reliance Infrastructure Wins Rs 11,000 cr Mumbai Metro-II Project -RInfra wins Jaipur-Reengus Road Project from NHAI 2010

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- The Anil Dhirubhai Ambani Group (ADAG) firm Reliance Infrastructure (RInfra) has inked an agreement with NHAI for developing the Rs 3,000 crore Delhi-Agra highway project

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CHAPTER IV DATA ANALYSIS AND INTERPRETATION

1) CURRENT RATIO: Current ratio = Current assets ------------------------Current liabilities

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Year 2005-06 2006-07 2007-08 2008-09 2009-10

Current Assets 7353.64 3871.45 2384.93 3227.07 3735.52

Current liabilities 1570.82 2246.55 2599.38 4655.5 5646.72

Ratio 4.68140207 1.723286818 0.917499558 0.69317367 0.661538

Figure 1 : CURRENT RATIO

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and diagram shows that the current ratio on FY year 2005-06 was 4.68 and then it dip to 1.33 in the FY 2006-07, further move downward to 0.92 and in the FY 2008-09 it dip down to 0.69 and finally in the FY 2009-10 it again moved down to 0.66. The bench mark current ratio for Infrastructure
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Industries is 2:1. The above table shows current ratio is less than 2. Over the year under study it has been observed that the company has not maintained favourable liquidity position and this can be treated as a unhealthy sign.

2) LIQUID RATIO: Liquid ratio = Liquid assets ----------------------Liquid liabilities Quick Assets = Total Current Assets (minus) Inventory

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Quick Asset 7058.59 3578.76 2084.64 2786.39 3466.01

Quick Liabilities 1570.82 2246.55 2599.38 4655.5 5646.72

Quick ratio 4.493570237 1.593002604 0.801975856 0.59851573 0.613809

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Figure 2 : LIQUID RATIO

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and diagram shows the liquid ratio during the study period except in the FY 2007-08 to 2009-10 is more than the bench mark Liquid ratio (i.e.) 1:1.It reached the highest 4.49 in the FY 2005-06 and then in FY 2006-07 it came down to 1.59 and eventually went on decreasing to 0.61 in FY 2009-10. This shows that the company is not enjoying credit worthiness. It is clear that the liquid ratio of the company is at an decreasing rate and it is not close to standard ratio and this can be treated as a unhealthy sign. So we can understand that the company is not in a position to meet the short term obligations.

3) ABSOLUTE LIQUIDITY RATIO: Cash + bank +marketable securities

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Absolute liquidity ratio = ----------------------------------------------------Current liabilities Year Cash and securities 5652.9 2175.92 87.65 251.01 301.82 Current Liabilities 1570.82 2246.55 2599.38 4655.5 5646.72 Ratio

2005-06 2006-07 2007-08 2008-09 2009-10

3.598693676 0.968560682 0.033719579 0.05391687 0.05345

Figure 3 : ABSOLUTE LIQUID RATIO

4 3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS

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The above table and diagram shows the absolute ratio for the study period FY 2005-06 to 2009-10. There is decrease in the absolute ratio. It was 3.60 in the FY 2005-06. In FY 2006-07 it decreased to 0.97.Further it decreased to 0.34 in FY 2007-08. Then in FY 2008-09 and FY 2009-10 it was 0.05

4) DEBT EQUITY RATIO: Debt equity ratio = Outsiders funds -----------------------------Proprietors funds

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Outsiders fund 4494.54 6114.25 5257.55 7526.13 4272.61

Proprietors fund Ratio 7873.28 9339.24 11686.96 11907.44 15152.19 0.570859921 0.654683893 0.449864635 0.63205273 0.28198

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Figure 4: DEBT-EQUITY RATIO

0.7 0.6 2005-06 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and diagram shows the debt equity relationship of the Reliance Infrastructure company during the study period. The Bench Mark Debt-Equity ratio is 2:1. During the FY 2005-06 it was 0.57 and then reached its highest in the next year and from there it began to slope downwards and ultimately came to 0.28 in the year 2009-10. In all the years the equity is more when compared with borrowings. Hence the company is maintaining its debt position.

5) PROPRIETARY RATIO: Proprietors funds --------------------------Total tangible assets

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Proprietary ratio =

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Proprietor s fund 7873.28 9339.24 11686.96 11907.44 15152.19

Tangible assets 2647.71 2806.35 3056.49 3331.37 3468.61

Ratio 297.3618712 332.7895665 382.365393 357.433728 436.8375

Figure 5: PROPRIETARY RATIO

450 400 350 300 250 200 150 100 50 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and diagram shows that the Proprietors fund ratio as on FY 2005-06 was 297.36 which gradually increased till FY 2009-10. This shows that the firm has good investment in fixed asset and favourable long term solvency position over the year under study.

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6) FIXED ASSETS TURNOVER RATIO: Net sales ------------------Fixed assets Ratio 1.603463815 2.118069425 2.062752647 2.80664295 2.673931

Fixed assets turnover ratio =

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Net sales 4607.89 6575.25 7501.2 10958.79 10908.06

Fixed assets 2873.71 3104.36 3636.5 3904.59 4079.41

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Figure 6: FIXED ASSET TURNOVER RATIO

3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and diagram shows the relationship between the fixed assets and sales. The sale is 1to 2 times more than the fixed assets from FY 2005-06 to 2009 -10. This indicates that fixed assets turnover ratio of the company is gradually increasing which is a healthy indication that less amount of money is tied up with fixed assets and thus fixed assets are effectively used to generate the sales.

7) WORKING CAPITAL TURNOVER RATIO: Net sales ---------------------------75 | P a g e

Working capital turnover ratio =

Net working capital Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net sales 4607.89 6575.25 7501.2 10958.79 10908.06 Net working Ratio capital 5782.82 1624.9 (214.45) (1428.43) (1911.2)

0.796824041 4.046556711 (34.9787829) (7.67191252) (5.70744)

Figure 7: WORKING CAPITAL TURNOVER RATIO

5 0 -5 -10 -15 -20 -25 -30 -35 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS

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The above table and diagram indicates that working capital turnover ratio is negative. Generally a negative working capital is a sign of managerial efficiency in a business with low inventory and accounts receivable, which means they operate on an almost strictly cash basis.

8) TOTAL ASSETS TURNOVER RATIO: Total assets ---------------------Net assets Ratio 2.684052788 2.350251321 2.258906575 1.77333173 1.780775

Total assets turnover ratio =

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Total assets 12367.82 15453.49 16944.51 19433.57 19424.8

Net sales 4607.89 6575.25 7501.2 10958.79 10908.06

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Figure 8: TOTAL ASSET TURNOVER RATIO

3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and diagram shows the relationship between the total assets to net sales. During all the study period years the relationship between sales to total assets is Low. The ratio increased from 2.68 (2005-06) to 1.78 (2009-10) due to the heavy rise in the sales.

9) CAPITAL TURNOVER RATIO:

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Capital turnover ratio =

Sales ---------------------Proprietors fund Proprietor s fund 7873.28 9339.24 11686.96 11907.44 15152.19 Ratio 0.585256716 0.704045511 0.641843559 0.92033132 0.7199

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Net sales 4607.89 6575.25 7501.2 10958.79 10908.06

Figure 9: CAPITAL TURNOVER RATIO

10 9 8 7 6 5 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS

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The above table and diagram shows the relationship between the sales and proprietors funds. It indicates that the sales are in between 0.58 and 0.90 times less than the proprietor's funds. It shows the firms is not maintaining the better utilization of own funds.

10) Return on total assets: Net profit ------------------- x100 Total assets Ratio 0.052583236 0.051862071 0.064010703 0.05860375 0.05929

Return on total assets =

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Net profit Total assets After Tax 650.34 12367.82 801.45 1084.63 1138.88 1151.69 15453.49 16944.51 19433.57 19424.8

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Figure 10: RETURN ON TOTAL ASSET

0.07 0.06 2005-06 0.05 0.04 0.03 0.02 0.01 0 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and figure as on FY 2010 remain modest at 6% indicating that the long term fixed asset investments are not yet effectively managed to generate net income.

11) GROSS PROFIT RATIO: Gross profit ----------------------------------- x 100

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Gross profit ratio =

Net sales Year 2005-06 2006-07 2007-08 2008-09 2009-10 Gross Profit 4607.89 2028.1 2530.7 3045.83 2949.67 Net sales 4607.89 6575.25 7501.2 10958.79 10908.06 Ratio 40.4825202 30.84445458 33.7372687 27.7934881 27.0412

Figure 11: GROSS PROFIT RATIO

45 40 35 30 25 20 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS

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The above table and diagram shows the relationship between the gross profit and net sales in percentage. During 2005-06 the gross profit position was 40.48% and in the very next year it slashed down to 30.84% and again raised to 33.73% and finally reached to 27.04% in the year 2009-10. However it can be noticed that sales are increasing but gross profit is not increasing proportionately every year. This show there is low efficiency in managing purchases, production, labour, sales and moderate amount is available to meet the other expenses.

12) NET PROFIT RATIO: Net profit ----------------- x 100 Net sales Net sales 4607.89 6575.25 7501.2 10958.79 10908.06 Ratio 14.11361816 12.18889016 14.45941983 10.3923882 10.55816

Net profit sales =

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Net Profit 650.34 801.45 1084.63 1138.88 1151.69

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Figure 12: NET PROFIT RATIO

16 14 12 10 8 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and diagram shows the relationship between net profit and net sales. During 2005-06 it was 14.11% on sales and in2006-07 it decreased to12.18%. There is an further in percentage of 10.55 in 2009-10 The sales of the organization are also increasing and the profit of the organization is also increasingly proportionately .This shows Reliance infrastructure limited have good control over direct and indirect cost and they have large amount available to meet non-operating expenses/losses.

13) RETURN ON SHAREHOLDERS FUND

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Net profit after Interest and Tax Return on shareholders fund = -------------------------------------- X 100 Shareholders fund Year 2005-06 2006-07 2007-08 2008-09 2009-10 Profit After Proprietor Ratio Tax s fund 650.34 7873.28 8.260089823 801.45 1084.63 1138.88 1151.69 9339.24 11686.96 11907.44 15152.19 8.581533401 9.280685482 9.56444038 7.600815

Figure 8: RETURN ON SHAREHOLDER'S FUND

10 9 8 7 6 5 4 3 2 1 0 2005-2006 2006-2007 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS

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The above Table and Diagram shows that there is a fluctuation in this ratio and this is due to fluctuating debt capital and interest burden on the company. It is evident from this that the percentage return on Owners fund is between 7-9 %.

a) 14) ADMINISTRATIVE AND SELLING EXPENSES RATIO: Administrative and Selling expenses Administrative expenses ratio = ----------------------------------- x 100 Sales Year 2005-06 2006-07 2007-08 2008-09 2009-10 Administration& Selling expenses 543.41 664.99 847.3 1277.02 1040.68 Net sales 4607.89 6575.25 7501.2 10958.79 10908.06 Ratio 11.79303325 10.1135318 11.29552605 11.6529288 9.540468

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Figure 14: ADMINSTRATION AND SELLING EXPENSE RATIO

12 10 8 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and diagram shows the relationship between the administration and selling expenses and sales in percentage. The administration and selling expenses during 2005-06 is very high and gradually decreased to 9.54 in year 2009-10.This shows there is a good control on expenditure and may be one of the reasons to net profit during the study years.

15) COST OF ENERGY EXPENSE RATIO Cost of energy Expenses ratio = ------------------------------------------

x 100
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Sales Year 2005-06 Cost of Energy 1087.56 Net sales 4607.89 Ratio 23.60212592

2006-07

1532.43

6575.25

23.30603399

2007-08

2487.69

7501.2

33.16389378

2008-09

4253.99

10958.79

38.8180629

2009-10

3321.94

10908.06

30.45399

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Figure 15: COST OF ENERGY EXPENSE RATIO

40 35 30 25 20 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and figure show that the cost of energy and net sales are increasing gradually indicating that there is good control on the expenditure and ultimately resulting in higher productivity.

16) COST OF FUEL RATIO Cost of Fuel ------------------------------------ x 100

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Expenses ratio =

Sales Year 2005-06 Cost of fuel 812.1 Net sales 4607.89 Ratio 17.62411863

2006-07

921.27

6575.25

14.01117828

2007-08

1015.52

7501.2

13.53810057

2008-09

1166.78

10958.79

10.6469784

2009-10

1219.83

10908.06

11.18283

Figure 16: COST OF FUEL EXPENSE RATIO

18 16 14 12 10 8 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10

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INTERPRETATION AND ANALYSIS The above table and figure shows that As on FY 2010 the Cost of fuel to sale , ratio is 11.18 as compared to FY 2005-06 i.e. 17.62 indicating that increasing in the net sales is not proportionate with increasing cost of fuel as the ratio is dipping. This shows that the company has good control over the cost of fuel over the study period.

17) COST OF TAX RATIO Cost of Tax ------------------------------------ x 100 Sales

Expenses ratio =

Year 2005-06

Cost of Tax 114

Net sales 4607.89

Ratio 2.474017392

2006-07

124.26

6575.25

1.889814076

2007-08

131.58

7501.2

1.754119341

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2008-09

152.96

10958.79

1.39577453

2009-10

154.13

10908.06

1.412992

Figure 17: COST OF TAX EXPENSE RATIO

2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and figure show that the cost of tax and net sales are increasing proportionately indicating that there is good control on the expenditure and ultimately resulting in higher productivity. From FY 2005 to FY 2010 the ratio are marginally varied and remained more or less close to 1.50.

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18) EXPENDITURE ON EPC RATIO

Expenses ratio =

Expenditure on EPC ------------------------------------ x 100 Sales Expenditure on Net sales EPC 728.84 4607.89 Ratio 15.81721786

Year 2005-06

2006-07

1969.19

6575.25

29.94851907

2007-08

1335.71

7501.2

17.80661761

2008-09

2339.23

10958.79

21.345696

2009-10

3262.49

10908.06

29.90898

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Figure 18: EXPENDITURE ON EPC EXPENSE RATIO

30 25 20 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10

INTERPRETATION AND ANALYSIS The above table and figure shows that as on FY 2010 the Expenditure on EPC ratio, had increased as against FY 2009 on account of substantial increase in the Sales.

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CHAPTER V FINDINGS AND SUGGESTIONS

5.1 FINDINGS
This study is carried out with the objective of analyzing the financial performance of Reliance Infrastructure to examine and understand the role of finance in the growth of the company. This chapter attempts to highlight the findings of the study. 1. The profit before interest and tax is in positive during the period of study.

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2. The sales, PBIT, PBT, PAT all shows the increasing trend during the period under review. It depicts that the company is working with more efficiency. 3. Net Profit ratio shows that the sales of the organization are increasing and the profit of the organization is also increasingly proportionately. This shows Reliance infrastructure limited have good control over direct and indirect cost and they have large amount available to meet non-operating expenses/losses. 4. Fixed Assets turnover ratio shows the increasing trend. It depicts that the companys fixed assets are utilized properly in relation to the sales. It indicates that less amount of money is tied up with fixed assets and thus fixed asset are effectively used to generate the sales. 5. Working capital turnover ratio is negative. Generally a negative working capital is a sign of managerial efficiency in a business with low inventory and accounts receivable, which means they operate on an almost strictly cash basis. 6. The ideal current ratio is 2 which the firm does not obtained and this shows the company has not maintained favourable liquidity position and this can be treated as an unhealthy sign. 7. The ideal liquid ratio is 1 which is also not obtained by the firm and So the company is not in a position to meet the short term obligations. 8. Proprietary ratio of the company fluctuates during the period of study shows that the firm has good investment in fixed asset and favourable long term solvency position over the year under study. 9. There is decreasing trend in the absolute ratio for all the study years. 10 In all the years the debt equity is more, when compared with borrowings. Hence the company is maintaining its debt position.

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11 .Capital turnover ratio indicates that the sales are in between 0.58 and 0.90 times less than the proprietor's funds which shows the firms is not maintaining the better utilization of own funds. 12 .Gross profit ratio indicates that sales are increasing but gross profit is not increasing proportionately every year. This show there is low efficiency in managing purchases, production, labour, sales and moderate amount is available to meet the other expenses. 13 The administration and selling expenses during 2005-06 is very high and gradually decreased to 9.54 in year 2009-10.This shows there is a good control on expenditure and may be one of the reasons to net profit during the study years.

5.2 RECOMMENDATIONS
1. The company may increase the performance by reducing the borrowed capital, so that the interest an finance charges will be less. 2. The company may increase the sales if it attempts to move into export market. 3. The company may reduce the operating inefficiencies through effective utilization of all the resources. 4. The company may strike a balance between the current assets and current liabilities to maintain the solvency position. 5. Optimum utilization of Working Capital can be planned so as to result in sound financial position. 6. The Management must also study the market position and it also find the demand prevailing in the market for the products and thus this will guide them to enhance their sales volume.

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7. The liquidity position of the company is quite satisfactory. And this must be improved further for the purpose of proper utilization of the liquid assets of the company. 8. The sales of the organization can be further increased by improving the quality through optimum utilization of company's resources (i.e. assets, raw materials, credit system, etc.) and that in turn will increase the overall profits of the organization.
9. The Gross Profit ratio can be improved by increasing the gross profit and

the factors decreasing the gross profit ratio should be thoroughly checked timely whither they are operating factors or any misleading factors.

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CHAPTER VI CONCLUSION AND BIBLIOGRAPHY

6.1 CONCLUSION

On studying the Ratio Analysis of Reliance Infrastructure Limited for a period of five years from 2005-06 to 2009-10, the study reveals the favourable financial performance with steady margins.

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 It shows that there is a constant increase in the net sales and net profit which indicates a healthy sign for the company to sustain in market.

Therefore the company has been able to maintain and grow its market share to make strong margins in market, contributing to the strong financial position of the company. It can be also noticed from the ratios that company is able to satisfy its shareholders with maximum returns.

6.2 BIBLIOGRAPHY
Books Referred R.K. SHARMA and SHASHI K. GUPTA, Management Accounting and Business Finance, Kalyani Publishers. I.M. PANDEY, Financial Management, Vikas Publishing house private limited, New Delhi, 2006 Advanced Accountancy, M. COM Part II, Institute of distance and open Learning, University of Mumbai. Websites: www.rinfra.com
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www.google.com www.wikipedia.com www.investopedia.com

Literature Review Bibliography 1. Environmental and Financial Performance Literature, by Donald P. Cram, on March 27, 2000 Source: http://web.mit.edu/doncram/www/environmental/envir-finliterature.html

2. Journal of Industrial Technology Volume 19, Number February 2003 to April 2003 Page2, by Dr. Devang P. Mehta Source: http://72.14.235.132/search?q=cache:EIGjtsUJQeEJ:www.nait.or g/jit/Articles/mehta011603.pdf+review+of+literature+on+financial+performance &hl=en&ct=clnk&cd=2 3. Journal of International Business Studies (1995), Vol 26, Page 181202 By Janet Y. Murray, Masaaki Kotabe & Albert R. Wildt Source: http://www.palgravejournals.com/jibs/journal/v26/n1/abs/8490171a.html 4. Implications for financial performance and corporate social responsibility, by Philippe Jacquart, Catherine Ramus & John Antonakis, on May 23, 2004. Source: http://www1.icp2008.org/guest/AbstractView?ABSID=10821 5. Journal of the Operational Research Society (2003) Vol- 54,Pages 4858, by E H Feroz. Source: http://www.palgravejournals.com/jors/journal/v54/n1/abs/2601475a.html
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Article1: http://www.accountingformanagement.com/accounting_ratios.htm

Article 2:http://www.articlesbase.com/accounting-articles/analysis-of-financialstatementsselective-tools-1284945.html

Article3: http://www.abcsofinvesting.net/financial-statements-analysis/

Article4:http://businessfinancialplanning.suite101.com/article.cfm/financial_rat io_analysis_for_performance_check

Article5: http://www.mint.com/blog/finance-core/understanding-financialstatements/

Article6: http://www.creditguru.com/ratios/inr.htm

Article7:http://www.cfainstitute.org/aboutus/press/pdf/TipSheetSevenHabitsUS .pdf

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APPENDICES

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