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PROJECT REPORT ON

A Study on Cash flow Performance on


Karnataka Power Corporation Ltd.,
Bangalore.
by

PRAVEEN H V
2491400027
For partial fulfillment of the requirements of final year
MBA curriculum of Two years Full time MBA (Industry
Integrated) Programme.

Submitted to:

Through

STUDENTS DECLARATION

I hereby solemnly affirm, declare and state that report titled A


Study on Cash flow Performance on Karnataka Power
Corporation Ltd., Bangalore. was done by me with due diligence
and sincerity and this report based on that study is a bonafied
work by me and submitted to ANNAMALAI UNIVERSITY through
RAMAIAH INSTITUTE OF MANAGEMENT SCIENCES under the
guidance and supervision of PROF.Dr. Radha R, Faculty RIMS is
my original work and not submitted for the award of any other
degree, diploma, fellowship or other similar title or prizes.

PLACE:

BANGALORE

DATE:
NO.2491400027

Signature:
ENROLLMENT

CERTIFICATE FROM THE GUIDE


This is to certify that the project report titled A Study on Cash flow
Performance on Karnataka Power Corporation Ltd., Bangalore.
by Praveen H V, 2491400027: carried out in partial fulfillment for
the award of degree of MBA (Industry Integrated) programmer of
Annamalai University at RIMS, Bangalore under my guidance and
direction. This study report is an original work and not submitted
earlier to any University/Institute as per my true knowledge and
belief.

PLACE: BANGALORE
DATE:
Name

Signature:

Guides
Prof. Dr. Radha
R

LETTER FROM AU

ACKNOWLEDGEMENTS

I thank the almighty god for giving me the opportunity of doing this
dissertation work successfully.
I wish to express our sincere gratitude to Dr. M.R.
PATTABHIRAM, chief Academic Advisor, AU program, Dr. Y.
RAJARAM Dean and Mrs. T.N SHOBHA AU program coordinator,
Ramaiah Institute of Management Sciences for providing the
academic environment for undertaking this project.
I deem it a great privilege to prepare the training report under the
supervision of guide PROF. Dr. RADHA R, Ramaiah Institute of
Management Sciences for her timely help and constant
encouragement for bringing out the present report in time and for
her support and valuable guidance throughout the preparation of
this report.
I am grateful to Human Resource Department and other staff of
Karnataka Power Corporation Ltd., Bangalore. For providing us all
the information throughout the Project period for the success in
completion of our organizational research.

TABLE OF CONTENTS
Chapter

Content

Page no.

Executive Summary
1

1. INTRODUCTION
1.1 Pricing Policy
1.2 Industry Profile
1.3 Company Profile

2. REVIEW OF LITERATURE

3. RESEARCH METHODOLOGY
3.1
3.2
3.3
3.4

Statement of Problem
Objectives
Data Collections
Sampling

4. DATA ANALYSIS AND INTERPRETATION


4.1 Assumptions
4.2 Formulation of Hypothesis
4.3 Data Presentation

5.FINDINGS, RECOMMENDATIONS,
SUGGESTIONS, LEARNING EXPERIENCE AND
CONCLUSION
5.1
5.2
5.3
5.4
5.5

Findings
Recommendations
Suggestions
Learning Experience
Conclusion

BIBLIOGRAPHY
APPENDIX I (QUIESTIONNAIRE)
List of Graphs and Interpretations
SL NO
6.1
6.2
6.3
6.4
6.5

Name

Page No

6.6
6.7
6.8
6.9
6.10
6.11
6.12
6.13
6.14
6.15
6.16

EXECUTIVE SUMMARY
The power sector has registered significant progress since process of planned
development of the economy began in 1950. Hydro-power and coal based thermal power has
been the main sources of generating electricity. Nuclear power development is at slower pace,
which was introduced, in late sixties. The concept of operating power systems on a regional basis
crossing the political boundaries of state was introduced in the early sixties. In spite of the
overall development that has taken place, the power supply industry has been under constant
pressure to bridge the gap between supply and demand.

HISTORY
Although electricity had been known to be produced as a result of the chemical reactions
that take place in an electrolytic cell since Alessandro Volta developed the voltaic pile in 1800,
its production by this means was, and still is, expensive. In 1831, Michael Faraday devised a
machine that generated electricity from rotary motion, but it took almost 50 years for the

technology to reach a commercially viable stage. In 1878, in the US, Thomas Edison developed
and sold a commercially viable replacement for gas lighting and heating using locally generated
and distributed direct current electricity.
The world's first public electricity supply was provided in late 1881, when the streets of
the Surrey town of Godalming in the UK were lit with electric light. This system was powered
from a water wheel on the River Way, which drove a Siemens alternate that supplied a number of
arc lamps within the town. This supply scheme also provided electricity to a number of shops
and premises.
Coinciding with this, in early 1882, Edison opened the worlds first steam-powered
electricity generating station at Holborn Viaduct in London, where he had entered into an
agreement with the City Corporation for a period of three months to provide street lighting. In
time he had supplied a number of local consumers with electric light. The method of supply was
direct current (DC).
It was later on in the year in September 1882 that Edison opened the Pearl Street Power
Station in New York City and again it was a DC supply. It was for this reason that the generation
was close to or on the consumer's premises as Edison had no means of voltage conversion. The
voltage chosen for any electrical system is a compromise. Increasing the voltage reduces the
current and therefore reduces resistive losses in the cable. Unfortunately it increases the danger
from direct contact and also increases the required insulation thickness. Furthermore some load
types were difficult or impossible to make for higher voltages.
Additionally, Robert Hammond, in December 1881, demonstrated the new electric light
in the Sussex town of Brighton in the UK for a trial period. The ensuing success of this
installation enabled Hammond to put this venture on both a commercial and legal footing, as a
number of shop owners wanted to use the new electric light. Thus the Hammond Electricity
Supply Co. was launched. Whilst the Godalming and Holborn Viaduct Schemes closed after a
few years the Brighton Scheme continued on, and supply was in 1887 made available for 24
hours per day.

Nikola Tesla, who had worked for Edison for a short time and appreciated the electrical
theory in a way that Edison did not, devised an alternative system using alternating current. Tesla
realized that while doubling the voltage would halve the current and reduce losses by threequarters, only an alternating current system allowed the transformation between voltage levels in
different parts of the system. This allowed efficient high voltages for distribution where their
risks could easily be mitigated by good design while still allowing fairly safe voltages to be
supplied to the loads. He went on to develop the overall theory of his system, devising theoretical
and practical alternatives for all of the direct current appliances then in use, and patented his
novel ideas in 1887, in thirty separate patents.
In 1888, Tesla's work came to the attention of George Westinghouse, who owned a patent
for a type of transformer that could deal with high power and was easy to make. Westinghouse
had been operating an alternating current lighting plant in Grea Barrington, Massachusetts since
1886. While Westinghouse's system could use Edison's lights and had heaters, it did not have a
motor. With Tesla and his patents, Westinghouse built a power system for a gold mine in
Telluride, Colorado in 1891, with a water driven 100 horsepower (75 kW) generator powering a
100 horsepower (75 kW) motor over a 2.5-mile (4 km) power line. Almarian Decker finally
invented the whole system of three-phase power generating in Redlands, California in 1893.
Then, in a deal with General Electric, which Edison had been forced to sell, Westinghouse's
company went on to construct a power station at the Niagara Falls, with three 5,000 horsepower
(3.7 MW) Tesla generators supplying electricity to an aluminum smelter at Niagara and the town
of Buffalo 22 miles (35 km) away. The Niagara power station commenced operation on April 20,
1895.
Tesla's alternating current system remains the primary means of delivering electrical energy to
consumers throughout the world. While high-voltage direct current (HVDC) is increasingly
being used to transmit large quantities of electricity over long distances or to connect adjacent
asynchronous power systems, the bulk of electricity generation, transmission, distribution and
retailing take place using alternating current

INDUSTRY PLAYERS AND PROFILE:

The power sector reveals that it can be largely segregated into four different categories on the basis of
type of players in the industry. These include:

CENTRAL

GOVERNMENT

CORPORATIONS:Which

consists

of

corporations like National Thermal Power Corporation (NTPC), Nuclear Power Corporation,
National Hydro Electric Power (NHPC), and some other smaller players?

STATE GOVERNMENT CORPORATIONS:Which

consist of the various state

electricity boards and other corporation that have been promoted by the respective governments.

PRIVATE SECTOR LICENCEES:In

the private sector, some companies had been

given licenses to carry o generation and distribution activities. While some of these companies
are generation and distribution companies, others like Seurat Electricity are just distribution
companies.

INDEPENDENT POWER PRODUCERS:The

independent power producers

(IPPs) are the companies that have been given a nod to set up generation capacities.

INTRODUCTION:
About subject:
Cash flow analysis is another important technique of financial analysis. It involves
preparation of cash flow statement for identifying sources and application of cash. Cash flow
statement may be prepared on the basis of actual or estimated data. In the later case, it is termed
as projected Cash Flow Statement, which is a synonym with the term Cash Budget.
From a Financial point of view, a firm basically generates cash and spends cash. It
generates cash when it issues securities, raises a bank loan, sells a product, disposes an asset, so
on and so forth. It spends cash when it redeems securities, pays interest and dividends, purchase
materials, acquire an asset, etc. The activities that generate cash are called sources of cash and
the activities that absorb cash are called uses of cash.

To understand how a firm has obtained cash and how it has spent cash during a given
period, we need to look at the changes in each of the items in the balance sheet over that period.
The changes in various items of the balance sheet are noted in the last two columns.

Cash flow:
Cash flow is earnings before depreciation and amortization. Cash flow is calculated as the
difference between cash inflows and outflows. Cash flow can be derived from operating profit by
adjusting for items which do not affect payments and items. Which affects payments and items
are not recorded in Operating Profit.
Cash flows are the actual flow or movement of cash in and out of an enterprise. The term
cash includes cash and bank balances. There is said to be

cash flow or flow of cash, if a

business transactions bring about a change in the cash balance or bank balance of the concern.
On the other hand, if a business transaction does not result in any change in the cash or bank
balance of the concern, there is no flow of cash.

Types of cash flow:


There are two types of cash flow, viz,
Actual Cash Flow.
Notional Cash Flow.

Actual Cash Flow:


Actual cash flow refers to actual flow or movement of cash into the business that have
occurred over a previous trading period.

Notional Cash Flow:


Notional cash flow refers to the indirect (and not the direct) flow of cash into or out of the
business. Notional cash flow arises when there is an increase or decrease in current assets like
bills receivable, sundry debtors, stock in trade, prepaid expenses, and outstanding incomes and
current liabilities like bills payable, sundry creditors, outstanding expenses and income received
in advance.

Meaning of Cash Flow Analysis:


Cash flow analysis is an important technique of financial analysis which involves the
preparations of cash flow statement for identifying the various sources and uses of cash.

Meaning of Cash Flow Statement:


A cash flow statement is a statement which shows the change in the cash position of a
concern between any balance sheet date and another.

Types of Cash Flow Statement:


There are two types of cash flow statement

Historical cash Flow Statement.

Projected Cash Flow Statement.

Historical Cash Flow Statements:


These shows an historic view, showing the actual flows of cash into and out of a business
that have occurred over a previous trading period, e.g. 6 months, or 1 year.

Projected Cash Flow Statement:


These shows the expected flows of cash into and out of a business over a trading period
in the immediate future, e.g. next 6 months or year.

Difference between fund flow statement and cash flow statement:

Fund flow statement

Cash flow statement

1.The fund flow statement is based on the


working capital concept of funds

1. Cash flow statement is based on cash


concept of fund.

2. Fund flow statement is based on the


actual system of accounting.

2. Cash flow statement is based on the cash


system of accounting.

3. A fund flow statement is useful in


planning intermediate and long term
financing.

3. A cash flow statement is more useful for


short term analysis and cash planning of
the business.

4. A fund flow concept is a broader


concept, which explains the changes in
working capital of an organization.

4. A cash flow statement explains the


changes in cash balances. Which only of
the components of working capital. hence,
cash flow statement supplementary in
nature.

5. A fund flow statement does not


adequately analyse the very short term
solvency position of the company.

5.Cash flow statement adequately analyse


the short term solvency position of the
company

6. The statement of changes in working


capital is prepared along with the funds
flow statement to explain the net changes
in funds.

6. No such statement is prepared along


with the cash flow statement.

Objectives of cash flow statement:


The objectives of cash flow statement are:

Making long term planning for cash.


Projecting future cash position of a concern.
Evaluating the cash position of a firm.
To know about liquidity position.

Advantages of Cash Flow Statement:


It reveals the causes of changes in the cash position of an enterprise between two balance sheet
periods.
1

It is very helpful to a concern in understanding its current Cash position.

It helps the management in determining its policies regarding financial management like
dividend payment, repayment of long term loan, replacement of plant and machinery.

It facilitates effective cash planning.

It helps the management to understand the past behaviour of cash cycle and to control
uses of cash in future.

It helps the management in determining the successful cash planning.

Limitations of Cash Flow Statement:


1

A Cash Flow Statement only reveals the inflow and outflow of cash. There are
controversies over a number of items like cheques, stamps, postal orders to be included in
cash.

A Cash Flows Statement Cannot be equated with the income statement. Income statement
takes into account both cash and non-cash items.

Working capital being a wider concept of funds, Fund Flow Statement presents a more
complete picture than cash flow statement.

It may not represent the real liquidity position of a business, for a firm can manipulates
liquidity position at the end of a period by postponing and other payments and this
manipulation is not revealed by a cash flow statement.

Various Sources and uses of cash:


A cash flow statement is prepared by taking into account the various sources of cash and
uses of cash. As such, it is necessary to have a thorough knowledge of the various sources and
uses of cash.
The various sources of cash can be classified into two broad categories,
1

Internal sources.

External sources.

Internal sources:
Depreciation
Amortization of Intangible Asset
Gain from sale of Fixed Asset
Creation of reserves

External sources:
Dividend received, interest received, rent received.
Cash rose through the issue of shares.

Cash received through long term deposits.


Cash received through the issue of debentures.
Cash received through medium term and short term deposit.
Cash rose through the sale of fixed assets.

Cash rose through the sale of investment whether long term or short term.

Proforma of cash flow statement(As per AS3)


Particulars

Rs

Rs

Cash flow from operating activities:


Net profit before tax and extra ordinary items

xxxxxx

Add: Adjustment for:


Depreciation

xxx

Interest income

xxx

Dividend income

xxx

Interest expenses

xxx

Foreign exchange losses

xxx

Operating profit before working changes

____

xxxxxxx

Adjustments for changes in current assets and current xxx


liabilities
xxx
Cash generated from or used operations before tax
xxx
Income tax paid
xxx
Cash flow before extraordinary items
xxx
Cash flow from investing activities :Net cash from
xxxx
operating activities

xxxxxxx

Purchase of fixed assets

xxx

Proceeds from sale of fixed assets

xxx

Interest and dividend received

xxx

xxxxxx

Net cash flow from investing activities

xxx

xxxxx

Cash flow from financing activities:


Proceeds from issue of shares/debentures

xxx

Proceeds from long term borrowings

xxx

Repayment of long term borrowings

xxx

Interest paid

xxx

Dividend paid

xxx

Net cash from financing activities:

xxxxx

Net increase or decrease in cash and cash equivalents:


Cash and cash equivalents at the beginning of the
period
Cash and cash equivalents at the end of the period.

___________
Xxxxxx

Cash Flow Activities:


The statement presented above lumped together all sources of cash and uses of cash. To
understand better how cash flows have been influenced by various decisions, it is helpful to
classify cash flows into three classes viz.,

Operating activities,

Investing activities, and

Financing activities.

Operating activities:
It involves producing and selling goods and services. Cash inflows from operating
activities include monies received from customers for sales of goods and services. Cash outflows
from operating activities include payments to suppliers for materials, to employees for services,
and to the government for taxes.

Operating cash flows include:


Receipts from the sale of goods or services.
Receipts for the sale of loans, debt or equity instruments in a trading portfolio.
Interest received on loans.
Dividends received on equity securities.
Payments to suppliers for goods and services
Payments to employees or on behalf of employees.
Tax payments.
Interest payments.
Payments for the sale of loans, debt or equity instruments in a trading portfolio.
Items which are added back to (or subtracted from, as appropriate) the net income figure
(which is found on the Income Statement) to arrive at cash flows operations generally
include:
Depreciation (loss of tangible asset value over time)
Deferred tax.
Amortization (loss of intangible asset value over time)

Any gains or losses associated with the sale of a non-current asset, because associated
cash flows do not belong in the operating section. (unrealized gains/ losses are also added
back from the income statement)

Investing activities:
It involves acquiring and disposing fixed assets, buying and selling financial securities,
and disbursing and collecting loans. Cash inflows from investing activities include receipts from
the sale of assets (real as well financial), recovery of loans, and collection of dividend and
interest. Cash outflows from investing activities include payments for the purchase of assets (real
and financial) and disbursement of loans.
Investing cash flow includes:

Purchase of an asset

Assets can be land, building, equipment marketable securities, etc.

Loans made to suppliers or customers.

Financial activities:
It involves raising money from lenders and shareholders, paying interest and dividend,
and redeeming loans and share capital. Cash inflows from financing activities include receipts
from issue of securities and from loans and deposits. Cash outflows from financing activities
include payment of interest on various forms of borrowings, payment of dividend, retirement of
borrowings, and redemption of capital.
Financing cash flows include:

Proceeds from issuing shares.

Proceeds from issuing short-term or long term debt.

Payments of dividends.

Payments for repurchase of company shares.

Repayment of debt principal, including capital leases.

For non-profit organizations, receipts of donor-restricted cash that is limited to long-term


purposes.

Items under the financing activities section include:

Dividends paid.

Sale or repurchase of the companys stock.

Net borrowings

COMPANY PROFILE
History of the Karnataka power sector
The gears of enterprise in Karnataka powered nascent industrial activity as early as the
year 1800, when the first sugar unit was set up. In 1902, Karnataka recorded another mega watt
sized project first - Asias first Hydro Electric Power Station in Shivanasamudram, on the banks
of river Cauvery.
In fact, Karnatakas pioneering spirit in the field of power has been translated into several
major milestones. Karnataka was the first to embark on Alternating current, when Bangalore
Citys

lighting

scheme

was

completed.

Karnataka had the longest transmission line in the world in 1902, from Shivanasamudram to
KGF, covering a distance of 147 km. and Karnataka was the first state in the country to conceive
and set up a professionally managed Corporation to plan, construct, operate and maintain power
generation projects in the state. Thats the legacy that KPCL started with and built on.

KPCL an overview
For over three decades, the Karnataka Power Corporation has been a prime mover and
catalyst behind key power sector reforms in the state - measures that have spiraled steady growth
witnessed in both industrial and economic areas.
Right from the year of inception, in 1970, KPCL set its sights on growth from within
meeting growing industry needs and reaching out to touch the lives of the common man, in more
ways than one.
KPCL today has an installed capacity of 5509.82 MW of hydel, thermal and wind energy,

with 4000 MW in the pipeline. The 1470 MW Raichur Thermal Power Station located in
Raichurdist is accredited with ISO 14001-2004 certification for its environment protection
measures. From an industry vantage point, KPCL has raised the bar on the quality of deliverables
and is constantly working at lowering the cost per megawatt - a commendable cost-value
equation that has become a benchmark on the national grid. KPCLs stock in trade is industry
proven - well-established infrastructure & modern, progressive management concepts and a
commitment to excel, helping it meet the challenges of the rising energy demands of Karnataka.
The leverage point of KPCL initiatives are its resource management strengths right
across planning, financing and project engineering. KPCL also has a high rating in terms of
project completion and commissioning within the implementation calendar.

KPCL VISION
Ensuring energy security for Karnataka through diversified energy portfolio.

KPCL MISSION
The Mission of KPC is to maximise the Power Generation by:
Identifying and developing opportunities in power generation.
Establishing and operating power plants.
Constant up gradation of technical competence and systems, developing human resource
capabilities and empowering are the ways to achieve these objectives.
KPC seeks to be a world class organisation emphasizing efficiency, cost effectiveness and
harmony with environment.

ACHIEVEMENTS
KPCL's record achievements:

Highest generation of 26635 million units (2006-2007).

Highest thermal generation of 11484 Million Units 2006-07.

Highest Plant Load Factor (PLF) of 90.39 % at Raichur Thermal Power Station (20022003).

Highest capacity addition of 600 MW, in 1999.

Highest Annual Turnover of Rs.3387 Crores (2006-2007). Commissioning of Unit - 7 at


RTPS in 25 Months - A National record

KPCL currently has 34 dams & 25 power stations across the State with profiles that range from
0.35 MW to 1035 MW.
The total installed capacity logged by KPCL is 5509 MW across a project canvas that covers
expansions, renovations and upgrading of existing plants. .
Power Station

Thermal

No of Units

MW

Total

Raichur
Bellary
Diesel - Yelahanka

7
1
6

210
500
21.32

1470
500
127.92

2
10
4

27.5
103.5
60

55
1035
240

MGHE Jog

4
4

21.60
13.20

139.20

Bhadra Right Bank

1
1

7.2
6

13.20

Bhadra Left Bank

2
1

12
2

26

Supa

50

100

Nagjhari

2
4

135
150

870

Kadra
Kodasalli
Varahi
Varahi
Mani
Other

3
3

50
40

150
120

2
2

115
4.5

230
9

Ghataprabha

16

32

Almatti

1
5

15
55

290

Munirabad

28

Hydel
Sharavathi
Linganamakki
Sharavathi
Gerusoppa

Kalinadi

Shivanasamudram

4
6

6
3

42

Shishma

8.6

17.20

Mallapur

4.5

Sirwar

Kalmala
Ganekal

0.40

0.40

10

10

9
11

0.225
0.230

Wind

Kappadagudda

2.025
2.53

Hydel Stations
a

Sharavathi Generating Stationhas achieved a record generation of 23.264


MUs on 07-04-2007 which is highest generation so far in single day.

b Sharavathi Generating Station has achieved highest annual generation of 5825.434


MUs during 2007-08 against the previous highest generation of 5732.080 MUs during
1999-00.
c

Varahi Underground Power housemade a record annual generation of


1401.021 MU surpassing the previous highest annual generation of 1340.343 MUs
during 1994-95.

d Mani Dam Power Housemade record annual generation of 41.873 MU


surpassing the previous highest annual generation of 37.697 MUs during 1994-95.

Almatti Dam Power Househas achieved a record generation of 664.21 MUs


during 2007-08 surpassing the previous highest annual generation of 630.23 MUs
during 2006-07.

Central Efficiency Authority has selected the Kodasalli Hydro Power Station for
Bronze shield as 3rd best performance station during the year 2006-07.

NPH Unit-4 successfully synchronized with grid after RM & up-rating from 135 MW
to 150 MW on 28-02-2008.

Raichur Thermal Power Station


a

Unit-6 has been awarded 1st prize in Best Safe Power Boileron the 37th National
Safety Day Celebration conducted jointly by the Director of Factories and Boilers, Govt
of Karnataka at Bangalore on 04-03-2008.

b At RTPS a record total of 677 wagons were tippled on 18-03-08 as against 650 wagons of
previous record on 22-01-07.
c

RTPS has achieved cumulative PLF of 84.22% during 2007-08

Bellary Thermal Power Station


Unit-6 (500 MW) has been successfully synchronized to grid with coal firing on 25-03-2008.

AWARDS
2008-2009 - KARNATAKA RATNA AWARD BY GOVERNMENT OF KARNATAKA FOR BEST OVERALL
PERFORMANCE AMONG PSUs
2008 - FIRST PRIZE FOR UNIT-6 OF RTPS - BEST SAFE POWER BOILER FROM DIRECTOR OF
FACTORIES AND BOILERS( 37TH NSC)
2008-2009 - BRONZE MEDAL FOR VARAHI HYDRO ELECTRIC PROJECT FOR BEST PERFORMANCE
2008-2009 - GOLD MEDAL FOR VARAHI HYDRO ELECTRIC PROJECT FOR EARLY COMPLETION OF THE
PROJECT

2008 - FIRST PRIZE FROM IEEMA FOR EXCELLENCE FOR SHARAVATHI GENERATION STATION
2007-2008 - BRONZE MEDAL FOR GERUSOPPA DAM POWER HOUSE THIRD BEST PERFORMING
HYDEL STATION
2006-2007 - BRONZE MEDAL FOR KODASALLI DAM POWER HOUSE(KALI) THIRD BEST PERFORMING
HYDEL STATION
2005-2006 - CERTIFICATE FOR VARAHI HYDRO ELECTRIC PROJECT - BEST PERFORMANCE IN HYDEL
STATION
2005-2006 - CERTIFICATE FOR ALMATTI DAM POWER HOUSE UNIT 6 BEST EXECUTED PROJECT
2004-2005 - CERTIFICATE FOR ALMATTI DAM POWER HOUSE UNIT 3 BEST EXECUTED PROJECT
2003-04 - GOLD SHIELD & CERTIFICATE FOR OUTSTANDING PERFORMANCE - 88.23% PLF
2002-03 - GOLD SHIELD & CERTIFICATE FOR OUTSTANDING PERFORMANCE -90.39% PLF
2000-01 and 2001-02 - CERTIFICATE & SILVER SHIELD FOR GOOD PERFORMANCE.
2000,2002 - CERTIFICATE FOR REDUCTION IN AUXILIARY COMSUMPTION.
2001,2002,2003 CERTIFICATE FOR REDUCTION IN SECONDARY FUEL OIL.
1999-2000 Rs 22.82 LAKHS FOR REDUCTION IN SECONDARY FUEL,OIL,AUXILLARY CONSUMPTION &
HIGH PLF OF 81.52%
1998-99 Rs 6.65 LAKHS FOR CASH AWARD & BRONZE MEDAL FOR ACHIEVING HIGH PLF OF 81.65%
1998 - Rs 9.94 LAKHS FOR REDUCTION IN SECONDARY FUEL OIL & AUXILLARY CONSUMPTION.
1997-98 Rs 9.22 LAKHS FOR REDUCTION IN SECONDARY FUEL OIL & AUXILLARY CONSUMPTION.
1996-97 Rs 16.75 LAKHS CASH AWARD AND SHIELD FOR ACHIEVING HIGH PLF OF 70 % &REDUCTION
IN SECONDARY FUEL OIL CONSUMPTION.
1995 - Rs 6.10 LAKHS FOR REDUCTION IN SECONDARY FUEL OIL & AUXILLARY CONSUMPTION
1994 - Rs 6.10 LAKHS FOR REDUCTION IN SECONDARY FUEL OIL CONSUMPTION.
1993 - Rs 12.5 LAKHS FOR REDUCTION IN SECONDARY FUEL OIL & AUXILLARY CONSUMPTION.
1992 - Rs 16.88 LAKHS FOR REDUCTION IN SECONDARY FUEL OIL & AUXILLARY CONSUMPTION.
1991 - Rs 9.26 LAKHS FOR REDUCTION IN SECONDARY FUEL OIL CONSUMPTION.
1990 - Rs 14.48 LAKHS CASH AWARD & A GOLD MEDAL FOR ACHIEVING HIGH PLF OF 78.59%
1989 Rs 10.00 LAKHS FOR ACHIEVING HIGH PLF OF 72.99%.
1988 Rs 8.00 LAKHS FOR ACHIEVING HIGH PLF OF 66.3%.
For Renewable Energy
1993 A ROLLING SHIELD FOR BEST PERFORMANCE IN RENEWABLE ENERGY.

Social Responsibility

The corporation made a total contribution of Rs. 1.5 Crores to chief Ministers Relief
fund during the year 2004-2005.

Enhancement of knowledge and skill of employees through training.

Voluntary implementation of best practices having regard to the regulatory tariff regime.

High priority in compliance to environment laws, regulation and norms.

Passing on the benefit of cost cutting in construction, finance and operations to the
customers.

ORGANISATION STRUCTURE

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BOARD CONSISTS OF

Chairman is chief minister of the state

Managing Director

Technical Director

Financial Director

Human Resource Director

Principal secretary

Principal secretary to chief minister

BOARD OF DIRECTORS
The corporation has at its apex board of directors duly constituted under the 11th
provision of Articles of association of the corporation and the Companies Act of 1956. Board of
Directors will be appointed by the government on such remuneration, as it may fit and shall be
entitled to remove the directors from office at any time. But subject to provision of section 252
of the Act. The number of directors of the company shall not be less than 3 and not more than 17.
The govt may free from time to time appoint one or more of the directors as Chairmen,
Vice Chairmen or Managing Director of the corporation. Usually Chairmen will be Chief
Minister or the Minister of Power & Energy or Member of Parliament or state Legislature.

KARNATAKA POWER CORPORATION LIMITED


Board Of Directors

Address
ShriSiddaramaiah,
Honble Chief Minister,
Govt. of Karnataka,
and Chairman - KPCL

M.R.Kamble, IAS,
Managing Director.

R.Nagaraj
Finance Director

P. Bhaskar
Technical Director

ISN Prasad, IAS


Principal Secretary,
Finance Department,
Govt. of Karnataka.

Dr.Amita Prasad, IAS


Principal Secretary,
Energy Department,
Govt. of Karnataka.

D.N.NarasimhaRaju,IAS
Principal Secretary to the Honble Chief
Minister,
Govt. of Karnataka.

Dr.H.Basker, IAS
Principal Secretary to Govt. Department of
Public Enterprises,
Govt. of Karnataka.

D.Satyamurty, IAS
Principal Secretary,
Water Resources Dept.
Govt. of Karnataka.

<>
G. Kumar Naik, IAS
Managing Director,
K.P.T.C.L.

POWERS OF THE BOARD

To authorize the corporation for undertaking of work of a capital nature.

To pay and change to the capital amount of the company and any interest law full
payable.

To act on behalf of the company in all matters relating to bankrupts and insolvents.

To open any account or accounts with such banks as the board of directors may select or
appoint.

To appoint or remove or suspend such managers, secretaries, supervisors, clerks, agents


and servants or permanent or temporary as they fit.

To establish any board or agency for managing any of the affairs of the company in any
locality in India or elsewhere.

To appoint any person to be the attorneys of the company.

No member shall be entitled to visit or inspect works of the company without permission
of directors in the nature of trade secrets, trade mystery and secret process.

INDIAN SCENARIO

POWER INFRASTRUCTURE IN INDIA:


The power industry in India derives its funds and financing from the government,
some private players that have entered the market recently, World Bank, public issues and
other global funds. The Power Ministry India has set up Power Finance Corporation of India
that looks after the financing of the power sector in India. The Power Finance Corporation
Limited provides finance to major power projects in India for power generation and
conversion, distribution and supply of power in India.
Power Finance Corporation (PFC) Ltd India also looks after the installation of any new
power projects as well as renovation of an existing power project India. The PFC in
association with central electricity authority and the ministry of power facilitates the
development in infrastructure of the power sector India. They have taken up construction of
mega power projects that will answer to the power shortage in various states through power
transmission through regional and national power grids

Power sources in India:


Power is derived from various sources in India. These include thermal power, hydropower or
hydroelectricity, solar power, biogas energy, wind power etc. the distribution of the power
generated is undertaken by Rural Electrification Corporation for electricity power supply to
the rural areas, North Eastern Electric Power Corporation for electricity supply to the North
East India regions and the Power Grid Corporation of India Limited for an all India supply of
electrical power in India.

Thermal Power in Indiais mainly generated through coal, gas and oil. India coal
power forms a majority share of the source of power supply in India. The electric
power in India is generated at various thermal power stations in India. The power
generated at these thermal power plants is then distributed all over India through a
network of power grid at regional and national levels. The power ministry
organization responsible for the thermal power management in India is the NTPC.

Hydropower in Indiais one of the mega power generators in India. Various


hydropower projects and hydro power plants have been set up by the ministry of
power for generation of hydro power in India. Various dams and reservoirs are

constructed on major rivers and the kinetic energy of the flowing water is utilized to
generate hydroelectricity. The power generator here is the running water. The
hydroelectric power plants and the hydro power generation companies are managed
by the National Hydro Electric Power Corporation (NHPC).

Wind Power hashuge potential in India as the country experiences high intensity
winds in various regions due to the topographical diversity in India. Efforts have been
made to utilize this natural source of energy available free of cost for wind power
generation. Huge wind energy farms have been set up by the government for tapping
the wind energy by using gigantic windmills and them converting the kinetic energy
of the wind into electricity by the use of power converters. The wind power
advantages start with the very fact that a wind energy power plant does not require
much infrastructure input and the raw material i.e. wind itself is available free of cost.

Solar Power in Indiais being utilized to generate electricity on smaller scale by


setting up massive solar panels and capturing the solar power. Solar power India is
also being utilized by the power companies in India to generate solar energy for
domestic and small industrial uses.

Nuclear Power in Indiais generated at huge nuclear power plants and nuclear
power stations in India. A nuclear power plant generates the electricity using nuclear
energy. All the nuclear power plants in India are managed by the Nuclear Power Corp
of India Ltd (NPCL). The electricity from all India nuclear plants is distributed by the
NPCL as per the nuclear power project scheme.

Biogas Production in Indiais still in its infancy stage. Also the number of
biogas plants in India is still very low. India being the largest domestic cattle
producer has plenty of biogas fuel and thus utilization of the fuel for mass biogas
production by setting up more biogas plants in India would solve the power shortage
problem to some extent.

As per leading market research firm RNCOS (2008) report on Indian Power Sector
Analysis more than 64% of Indias total installed capacity is contributed by thermal power.
Significant jump in unit size and steam parameters will result in higher efficiencies and better
economics for the Indian power sector.
Western region accounts for largest share (30.09%) of the installed power in India followed by
Southern region with 27.76%.
Unbalanced growth remains the cause of concern for the Indian power sector. Only about 56% of
households have access to electricity, with the rural access being 44% and urban access about
82%.
Southern region remains the dominant region in renewable energy source accounting for more
than 57% of the total renewable energy installed capacity.
Key players currently operating in the Indian power sector are National Thermal
Power Corporation Limited, Nuclear Power Corporation of India Limited, North Eastern
Electric Power Corporation Limited, Power Grid Corporation of India, Tata Power, etc.
SIZE
The total installed capacity in India is calculated to be 145,554.97 mega watt, out of which
75,837.93 mega watt (52.5%) is from State, 48,470.99 mega watt (34%) from Centre, and
21,246.05 mega watt (13.5%) is from Private sector initiative.

Generation capacity of 141 GW; 663 billion units produced (1 unit = 1kwh)-January
2008. CAGR of 5% over the last 5 years.

India has the fifth largest electricity generation capacity in the world. Low per capita
consumption at 631 units; less than half of China.

Transmission & Distribution network of 6.6 million circuit km - the third largest in the
world .

Coal fired plants constitute 54% of the installed generation capacity, followed by 25% from
hydel power, 10% gas based, 3% from nuclear energy and 8% from renewable sources.

STRUCTURE

M ority of Generation, Transmission and Distribution capacities are with either public
sector companies or with State Electricity Boards (SEBs)

Private sector participation is increasing especially in Generation and Distribution

Distribution licenses for several cities are already with the private sector

Three large ultra-mega power projects of 4000MW each have been recently awarded to
the private sector on the basis of global tenders.

MAIN PLAYERS
Major players in the Power sector can be broadly divided into public, private and international
private sectors.
Major players and presence in value chain
Public sector
National Thermal Power Station

Capacity(MW)

29144

National Hydro Electric Power Station

2755

Nuclear Power Station

4120

Domestic Power Sector


Tata Power

2323

RPG Group

975

Reliance Energy

941

International Private Sector


China Light and Power (CLP)

655

Murubeni Corporation

347

G - Generation T - Transmission D - Distribution


Source: Ministry of Power, Capitalize (as on 2008)

POLICY
100% FDI permitted in Generation, Transmission & Distribution - the Government is
keen to draw private investment into the sector
Policy framework: Electricity Act 2003 and National Electricity Policy 2005
Incentives: Income tax holiday for a block of 10 years in the first 15 years of operation;
waiver of capital goods' import duties on mega power projects (above 1,000 MW
generation capacity)

Independent Regulators: Central Electricity Regulatory Commission for central PSUs and
inter-state issues. Each state has its own Electricity Regulatory Commission

CHALLENGE & OUTLOOK


With the countrys power requirement expected to touch 8,00,000 MW by 2031-32, India
would need an investment of Rs 6,00,000 crore. This investment is possible only by attracting
foreign direct investment and public-private participation in the power sector,
At present, the energy shortage in the country was estimated at 10% and it touches 13% during
peak seasons. There are states, where the energy shortage is 25%.
This is a serious impediment in the way of industrial development and economic process. We
need a crash project for capacity building and need to eliminate power shortage by 2012

.OPPORTUNITY
India possesses a vast opportunity to grow in the field of power generation, transmission, and
distribution. The target of over 150,000 MW of hydel power germination is yet to be achieved.
By the year 2012, India requires an additional 100,000 MW of generation capacity. A huge
capital investment is required to meet this target. This has welcomed numerous power
generation, transmission, and distribution companies across the globe to establish their
operations in the country under the famous PPP (public-private partnership) programmes. The
power sector is still experiencing a large demand-supply gap. This has called for an effective
consideration of some of strategic initiatives. There are strong opportunities in transmission
network ventures - additional 60,000 circuit kilometres of transmission network is expected by
2012 with a total investment opportunity of about US$ 200 billion.
The implementation of key reforms is likely to foster growth in all segments:

Unbundling of vertically integrated SEBs

Open Access to transmission and distribution network

Distribution circles to be privatized

Tariff reforms by regulatory authorities

Opportunities in generation for:

Coal based plants at pithead or coastal locations (imported coal)

Natural Gas/CNG based turbines at load centres or near gas terminals

Hydel power potential of 150,000 MW is untapped as assessed by the Government of


India

Renovation, modernization, up-rating and life extension of old thermal and hydro power
plants

INITIATIVES

Allowing foreign equity participation up to 100 per cent in the power sector under the
automatic route.

Encouraging the private sector to set up coal, gas or liquid-based thermal projects, hydel
projects and wind or solar projects of any size.

Constitution of Independent State Electricity Regulatory Commissions in the states.

Deregulation of the ancillary sectors such as coal.

Introduction of the Electricity Act 2003 and the notification of the National Electricity
and Tariff policies.

Provision of income tax holiday for a block of 10 years in the first 15 years of operation
and waiver of capital goods' import duties on mega power projects (above 1,000 MW
generation capacities).

Un-bundling of the State Electricity Boards (SEBs) into generation, transmission, and
distribution companies for better transparency and accountability.

OUTLOOK
Over 78,000 MW of new generation capacity is planned in the next five years. A corresponding
investment is required in Transmission and Distribution networks.

POTENTIAL

Large demand-supply gap: All India average energy shortfall of 10% and peak demand
shortfall of 13%.

Unbundling of vertically integrated SEBs

Open Access to Transmission and Distribution networks

Select distribution circles to be franchised/privatised

Tariff reforms by regulatory authorities

Opportunities in Generation for:

Coal based plants at pithead or coastal locations (imported coal)

Natural Gas/CNG based turbines at load centres or near gas terminals

Hydel power potential of 150,000 MW is untapped as assessed by Government of India

Renovation, modernisation, up-rating and life extension of old thermal and hydro power
plants

Opportunities in Transmission network ventures - additional 60,000 circuit km of


transmission network expected by 2012.

Opportunities in Distribution through bidding for the privatisation of distribution in


thirteen states that have unbundled/corporatised their State Electricity Boards expected
to take place over the next 2-3 years.

Total investment opportunity of about US$ 200 billion over a seven year horizon.

Growth of Indian power sector


Power developmentis the key to the economic development. The power sector has
been receiving adequate priority ever since the process of planned development began in 1959.
The power sector has been getting 18-20% of the total public sector outlay in initial plan periods.
Remarkable growth and progress have led to extensive use of electricity in all the sectors of
economy in the successive five years plans. Over the years (since 1950) the installed capacity of
power plants (utilities) has increased to 109092 MW (2004-05) from 1713 MW in 1959,

registering a 63 fold increase in 54 years. Similarly, the electricity generation increased from
about 5.1 billion to 440 billion units 86 fold increases. The per capita consumption of electricity
in the county also increased from 15 KWH in 1950 to about 395 KWH in 2004-05, which is
about 26 times. In the field of rural electrification and pump set energization, country has made a
tremendous progress, 88% of the village have been electrified except far flung areas in North
Easter states, where it is difficult to extend the grid supply.

Generation mix
The share if hydel generation in the total generating capacity of the country has declined from
34% at the end of the sixth plan to 29% at the end of the seventh plan and further to 25.5 percent
at the end of eighth plan. The share is likely to decline ever further unless suitable corrective
measures are initiated immediately. Hydel power projects, with storage facilities, provide peak
time support to the power system. Inadequate hydel support in some of the regions is adversely
affecting the performance of the thermal power plants. In western and Eastern regions, peaking
power provided by thermal plants, some of which have to back down during off peak hours.

Emergence regional power systems


In order to optimally utilize the dispersed sources for power generation it was
decided right at the beginning of the 1960s that the country would be divided into 5 regions and
the planning process would aim at achieving regional self sufficiency. The planning was so far
based on a region as a unit for planning and accordingly the power systems have been developed
and operated on regional basis, strong integrated grids exist in all the five regions of the country
and the energy resources developed are widely utilized within the regional grids. Presently, the
Eastern and North-Eastern regions are operating in parallel. With the proposed inter-regional
links being developed it is estimated that it would be possible for power to flow anywhere in the
country with the concept of National Grid becoming a reality during 12th plan period.

Private Sectors
The initial response of the domestic and foreign investors to the policy of private
participation in power sector has been extremely encouraging. However, many projects have
encountered unforeseen delays. There have been delays relating to finalization of power purchase

agreements, guarantees and counter guarantees, Environmental clearances, matching


transmission networks and legally enforceable contracts for fuel supplies. The shortfall in the
private sector was due to the emergence of a number of constraints, which were not anticipated at
the time the policy was formulated. The most important is that leaders are not willing to finance
large independent power projects, selling power to a monopoly buyer such as SEBs do not pay
for electricity. Uncertainties about fuel supply arrangements and the difficulty in negotiating
arrangements with public sector fuel suppliers, which concern penalties for non-performance, is
another area of potential difficulty. This important to resolve these difficulties and revolve a
framework of policy which can ensure a reasonable distribution of risks which make power
sector projects financially attractive. The capacity addition programmed for the 9 th plan
envisaged around 17588 MW to be added by private generating companies. In order to achieve
the targeted private sector capacity addition during the 9 th plan, the following additional
facilitating measures have recently been suggested by the promoters. Most of these have been
accepted while some of them are under the consideration of the government.

Objectives of the power sector


To provide reliable and quality power at a economic price.
To make the sector commercially sound and self-sustaining.
To achieve environmentally sustainable power development.
High performance levels to reduce cost and ensure reliable power supply.

COMPUTERISATION:

In todays world computers play a very prominent role in almost all the spheres of human life.
Computers can perform several million operations per second, vast amount of data can be
quickly processed without difficulty. it replaces human labour and provides the management with
accurate information as and when it is required in the form needed by the management. like any
other business organisation of today, computerisation has become inevitable in KPCL also.KPCL
aims for 100% computerization but computers are in vogue in almost all the functional areas of
KPCL.computer application in three major functional areas of KPCL.

KPCL seeks to touch higher vantage points in the world of power engineering. Our formula for
achieving this - start with a world class organization, build-in efficiency and cost control and
ensure that progress is in harmony with the environment.

Exploring, identifying and developing opportunities in power generation.

Devising innovative ways of setting up and operating power plants.

Investing in a resource base of technical competence, systems, processes and capability.

Empowering people, work teams and the support network to achieve these objectives.

FINANCIAL PERFORMANCE

Profit and Loss Account (Rs. Crores)


INCOME

2012-2013

Sale of energy

5426

Other Income

967

TOTAL

6393

EXPENDITURE
Fuel Consumption

3831

Administrative and others

982
Finance charges
Royalty on Power sold
Depreciation
TOTAL
Profit for the year

Provision for taxes

890
42
566
6311
82

Prior period adjustments

(89)

Profit before taxes

171

Current tax

35

Deferred tax

134

Fringe benefit tax


Tax adjustment of previous year

REVIEW OF LITRATURE:
Ball and Brown (1968) were the first to highlight the relationship between stock prices and
information disclosed in the financial statements. Empirical research on the value relevance has
its roots in the theoretical framework on equity valuation models.
Ohlson (1995) depicted in his work that the value of a firm can be expressed as a linear function
of book value, earnings and other value relevant information.
Amir et al. (1993) were the first to use the term value relevance in the context of
information content of accounting figures. An accounting figure/ratio is value relevant is it has
the significantly strong predicted association with the stock prices and stock market indicators
such, price-earnings (P/E) or price to book (P/B) ratios.
Misund et al. in their study on the value relevance of accounting figures in the international oil
and gas industry concluded that all accounting figures are value relevant, be it cash or accrual
based.
Mingyi Hung (2000) in his paper on Accounting Standards and Value Relevance of Financial
Statements: An International Analysis concluded that the use of accrual accounting (versus cash
accounting) negatively affects the value relevance of financial statements in Countries with weak
shareholder protection. This negative effect, however, does not exist in countries with strong
shareholder protection.
Many studies indicate better value relevance of earnings vis--vis cash flows (for instance,Sloan,
1996; Charitou, 1997; How et al. 2001). Some others, however, indicate better value relevance of
cash flow Vis-a- Vis earnings (for instance, Cheng et al. 1997; Clinchetal.2002). At a conceptual
level, earnings should be the more representative value driver because earnings reflect value
changes regardless of when the cash flows occur. Still, many practitioners, are of the view that
accruals involve discretion and are often used to manipulate earnings, and hence they prefer to
use cash flow multiples.
The concept of cash flow reporting is a recent one; conventionally companies use to prepare
Only Balance sheet and Profit & Loss Account. In India, cash flow reporting was made
mandatory for listed companies just six years back (in 2001-02). Cash flow statement is yet not

universally International Research Journal of Finance and Economics - Issue 17 (2008) 86


understood by the investors. IAS 7 Cash Flow Statement came into effect on 1/1/1994.
In Germany, cash flow reporting came in to practice in 1998.Also much research is done on the
relevance of value relevance research in financial accounting standard setting. Barth, Beaver and
Landsman (2000) concluded in their study that the value relevance literature provides fruitful
insights for standard setting process. However, Holthousen and Watts (2001)
In their study pointed out that value relevance research offers little or no insight for standard
setting.
As mentioned before, much of the studies are done on investigating the relative value relevance
of various accounting figures reported in the financial statements. Brief and Zarowin, in their
study on value relevance of dividends, book value and earnings, pointed out that the variables,
book value and dividends, have almost the same explanatory power as book value and reported
earnings.
In Liu, Nissim, and Thomas (2002), we found that multiples based on reported earnings
outperform multiples based on a variety of reported operating cash flow measures. EPS forecasts
represented substantially better summary measures of value than did operating cash flows
forecasts in all five countries examined, and this relative superiority was observed in most
industries.
Hardly any studies have been done in the area of investigating value relevance of financial
Statements based on Indian Accounting Standards. This may be probably because its just ten
years that due to a number of reforms, Indian economy has divulged into a market-oriented
economy. Further, most of the accounting standards have been developed during last six years by
the ICAI. Prior to this, due concerns were not involved in improving the quality and integrity of
financial reporting the cash flow statement. It then describes how the company spent its cash.

TITLE OF THE STUDY


A study on Cash flow performance on Karnataka Power Corporation Ltd.,Bangalore.

STATEMENT OF PROBLEM
Cash flow statement analysis is another important technique of financial statement
analysis. This cash flow statement explains the reasons for such inflows or outflows of the cash.
A proper planning of the cash resource will enable the management to have cash
available whenever needed and put it to some profitable or productive use.
In this project an attempt is made to evaluate the cash position of KPCL by analysing its
cash flow statement.

NEED FOR THE STUDY


The power sector is going through a crisis situation. This study is intended to find out
more about the power sector and its performance.

2.4 OBJECTIVE OF THE STUDY


1
2
3

To analyse the overall cash performance of the KPCL.


To measure the short-term financial position.
To analyse and interpret the liquidity position of KPCL Using appropriate analysis
and offer suitable suggestions.

2.5 HYPOTHESIS

NULL HYPOTHESIS(HO)
There is no significant difference in the performance of KPCL in comparison with other
corporations.
ALTERNATIVE HYPOTHESIS(H1)
There is significant difference in the performance of KPCL in comparison with other
corporation.

METHODOLOGY

Primary Data:
Primary data collection sources included a detailed personal interview with finance
managers and account executives and with the help of other department of the company.

Secondary Data:
It was collected through two sources:

Internal sources:Documents, reports, profiles, books of accounts, balance sheet.

External sources:Magazines, newspapers and websites.

TOOLS FOR STUDY:


Tables, graphs, percentage, financial statement analysis and ratio analysis

2.8 SCOPE OF THE STUDY


The study is exclusively conducted for the company mentioned for a period of five financial
years. The trends indicated might differ year to year in the pattern of instrument, sales etc. this
study is conducted in order to evaluate the cash flow statement of the company. This gives a
wider scope of understanding and functioning of the KPCL units.
2.9LIMITATIONS OF THE STUDY
1

This study is limited to information provided by the KPCL.

The analysis of cash flow statement of the KPCL is done only in the cash flow of 5 years.

Time constraints limited the wide coverage of the study.

Concentrated only me financial aspects.

Accuracy of information depends on degree of correctness accountings of the company.

CHAPTER - Research design


This chapter gives an overview of research design. It covers various areas such as:

Title of the study


Statement of problem.
Objectives of the study.
Scope of the study
Limitations of the study.
Chapter scheme.

ANALYSIS AND INTERPRETATION


TABLE 1.
SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN
(000S)
Year
2008-09
2009-10

Amount(000s)
3710576
7323530

Percentage (%)
100
197.36

Increase/ Decrease (%)


97.36(I)

Analysis & Inference:


As seen in the above table the Net Profit before tax and prior period items of the KPCL
Company is increased in 2009-10 when compared to 2008-09. There is a increase of 32.36 % i.e.
Rs.3612954. So, the company made a satisfactory progress compare to previous year.

GRAPH 1
SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN
(000S)
8000000

7323530

7000000
6000000
5000000

3710576

2008-09

4000000

2009-10

3000000
2000000
100

1000000
0
Amount(000s)

197.36 97.36

100 197.36

Percentage (%)

Increase/ 0Decrease (%)

The above graph shows the Net Profit before tax and prior period items of the KPCL
Company from the year 2008-09 to 2009-10

TABLE 2

2008-09

2009-10

SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN


(000S)
Year
2009-10
2010-11

Amount(000s)
7323530
4346656

Percentage (%)
100
59.35

Increase/ Decrease (%)


40.65(D)

Analysis & Inference:


As seen in the above table the Net Profit before tax and prior period items of the KPCL
Company is decreased in 2010-11 when compared to 2009-10. There is an decrease of 40.65%
i.e. Rs.2976874. So, the company made a dissatisfactory progress compare to previous year.

GRAPH 2
SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN
(000S)
8000000

7323530

7000000
6000000
5000000

4346656

4000000
3000000
2000000
1000000
0

100
Amount(000s)

59.35

Percentage (%)
2009-10

40.65
0 Decrease (%)
Increase/

2010-11

The above graph shows the Net Profit before tax and prior period items of the KPCL
Company from the year 2009-10 to 2010-11

TABLE 3

SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN


(000S)
Year
Amount(000s)
2010-11
4346656
2011-12
1622736
Analysis & Inference:

Percentage (%)
100
37.33

Increase/ Decrease (%)


62.67(D)

As seen in the above table the Net Profit before tax and prior period items of the KPCL
Company in 2011-12 when compared to 2010-11. There is a Decrease of 62.67% i.e. Rs.
2723920. So, the company made a unsatisfactory progress compare to previous year.

GRAPH 3.
SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN
(000S)
4346656
4500000
4000000
3500000
3000000
2500000
2000000

1622736

1500000
1000000
100

500000

37.33

0
Amount(000s)

Percentage (%)
2010-11

62.67
0
Increase/Decrease (%)

2011-12

The above graph shows the Net Profit before tax and prior period items of the KPCL Company
from the year 2010-11 to 2011-12.

TABLE 4

SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN


(000S)
Year
2011-12
2012-13

Amount(000s)
1622736
1712005

Percentage (%)
100
106

Increase/ Decrease (%)


6(I)

Analysis & Inference:


As seen in the above table the Net Profit before tax and prior period items of the KPCL
Company is increased in 2012-13 when compared to 2011-12. There is an increase of 6% i.e.
Rs.89869. So, the company made a satisfactory progress compare to previous year.

GRAPH 4
SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN
(000S)
1800000

1712005
1622736

1600000
1400000
1200000
1000000

2011-12

800000

2012-13

600000
400000

100

200000

106

0
Amount(000s)

Percentage (%)

6
0
Increase/Decrease
(%)

The above graph shows the Net Profit before tax and prior period items of the KPCL
Company from the year 2011-12 to 2012-13

TABLE 5

SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN


(000S)
Year
2008-09
2009-10
2010-11
2011-12
2012-13

Amount(000s)
3710576
7323530
4346656
1622736
1712005

Percentage (%)
100
197.36
117.14
43.73
46.13

Increase/ Decrease (%)


97.36(I)
17.14(I)
56.27(D)
53.87(D)

Analysis & Inference:


As seen in the above table the Net Profit before tax and prior period items of the KPCL
Company in 2009-10 when compared to 2008-09. There is an increase of 97.36% i.e.
Rs.3612954. Again in the year 2010-11 there is an increase of 17.14% i.e. 636080. but in the year
2011-12 there is a decrease of 56.27% i.e. 2087840 .again in the year2012-13 there is a decrease
of 53.87% i.e, Rs.1998571. So, the company made a unsatisfactory progress compare to previous
years.

GRAPH 5
SHOWING NET PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS IN
(000S)

8000000
7323530
7000000

6000000

5000000
4346656
4000000
Amount(000s) 3710576

Percentage (%) 100

Increase/ Decrease (%) -

3000000

2000000

1712005

1622736

1000000

197.3697.36
2009-10

117.1417.14
2010-11

43.73 56.27
2011-12

46.13 53.87
2012-13

The above graph shows the Net Profit before tax and prior period items of the KPCL
Company from the year 2008-09 to 2012-13.

TABLE 6
SHOWING OPERATING PROFIT BEFORE WORKING CAPITAL
CHANGES (000S)
Year

Amount(000s)

Percentage (%)

Increase/Decrease(%)

2008-09

10035497

100

2009-10

15923141

158.66

58.66 (I)

Analysis & Inference:


As seen in the above table the Operating Profit before working capital changes of the
KPCL Company is increased in 2009-10 when compared to 2008-09. There is an increase of
58.66% i.e. Rs. 5887644. Due to increase in Profit on sale of assets, Interest receipts in the
organization. So, the company made a satisfactory progress when compared to previous year.

GRAPH 6
SHOWING OPERATING PROFIT BEFORE WORKING CAPITAL
CHANGES (000S)
15923141
16000000
14000000
12000000

10035497

10000000

2008-09

8000000

2009-10

6000000
4000000

100 158.66

2000000
0
Amount(000s)

Percentage (%)

58.66
Increase/ 0Decrease (%)

The above graph shows the Operating Profit before working capital changes of the KPCL
Company for the year 2008-09 to 2009-10.

TABLE 7
SHOWING OPERATING PROFIT BEFORE WORKING CAPITAL
CHANGES (000S)

Year
2009-10
2010-11

Amount(000s)
15923141
15742050

Percentage (%)
100
98.86

Increase/Decrease (%)
1.14 (D)

Analysis & Inference:


As seen in the above table the Operating Profit before working capital changes of the
KPCL Company is decreased in 2010-11 when compared to 2009-10. There is an decrease of
1.14% i.e. Rs. 181091. Due to decrease in prior period items, loss on sale of stock So, the
company made a dissatisfactory progress when compared to previous year.

GRAPH 7
SHOWING OPERATING

PROFIT BEFORE WORKING

CAPITAL

CHANGES (000S)
15923141
15742050
16000000
14000000
12000000
10000000

2009-10

8000000

2010-11

6000000
4000000
100 98.86

2000000
0
Amount(000s)

Percentage (%)

1.14
Increase/ 0Decrease (%)

The above graph shows the Operating Profit before working capital changes of the KPCL
Company for the year 2009-10 to 2010-11.

TABLE 8
SHOWING OPERATING PROFIT BEFORE WORKING CAPITAL
CHANGES (000S)

Year

Amount(000s)

Percentage (%)

Increase/Decrease (%)

2010-11
2011-12

15742050
13335324

100
84.71

15.29 (D)

Analysis & Inference:


As seen in the above table the Operating Profit before working capital changes of the
KPCL Company is decreased in 2011-12 when compared to 2010-11. There is an increase of
18.29% i.e. Rs.2406726. Due to increase in financial changes in the organization there is a
decrease in depreciation.

GRAPH 8
SHOWING OPERATING

PROFIT BEFORE WORKING

CAPITAL

CHANGES (000S)
15742050
13335324

16000000
14000000
12000000
10000000
8000000
6000000
4000000

100

2000000
0

Amount(000s)

84.71

Percentage (%)
2010-11

15.29
0
Increase/Decrease
(%)

2011-12

The above graph shows the Operating Profit before working capital changes of the KPCL
Company for the year 2010-11 to 2011-12.

TABLE 9
SHOWING OPERATING PROFIT BEFORE WORKING CAPITAL
CHANGES (000S)
Year

Amount(000s)

Percentage (%)

Increase/Decrease (%)

2011-12
2012-13

13335324
16241846

100
121.79

21.79 (I)

Analysis & Inference:


As seen in the above table the Operating Profit before working capital changes of the
KPCL Company is increased in 2012-13 when compared to 2011-12. There is an increase of
21.79% i.e. Rs. 2906522. Due to increase in scrapping of assets, Donation of assets, impairment
loss and financial changes in the organization. So, the company made a satisfactory progress
when compared to previous year.

GRAPH 9
SHOWING OPERATING PROFIT BEFORE WORKING CAPITAL
CHANGES (000S)
16241846

18000000
16000000

13335324

14000000
12000000
10000000

2011-12

8000000

2012-13

6000000
4000000
100 121.79

2000000
0
Amount(000s)

Percentage (%)

21.79
0
Increase/Decrease
(%)

The above graph shows the Operating Profit before working capital changes of the KPCL
Company for the year 2011-12 to 2012-13.

TABLE 10
SHOWING OPERATING PROFIT BEFORE WORKING CAPITAL
CHANGES (000S)
Year

Amount(000s)

Percentage (%)

Increase/Decrease(%

)
2008-09
2009-10
2010-11
2011-12
2012-13

10035497
15923141
15742050
13335324
16241846

100
158.66
156.86
132.88
161.84

58.66(I)
56.86(I)
32.88(I)
61.84(I)

Analysis & Inference:


The above table shows the Operating Profit before working capital changes of the KPCL
Company. In the year 2009-10 there is an increase of 58.66% i.e. Rs.5887644. Again in the year
2010-11 there is an increase of 56.86% i.e. Rs.5706553. So, there is a scope for the growth of the
company. Again in the year 2011-12 there is an increase of 32.88% i.e.3299827. Again in the
year 2012-13 there is an increase of 61.84% i.e.6206349. which shows the good progress of the
company.

GRAPH 10
SHOWING OPERATING

PROFIT BEFORE WORKING

CAPITAL

CHANGES (000S)
Amount(000s) 10035497
Increase/ Decrease (%)

Percentage (%) 100


-

18000000
16000000

15923141

16241846

15742050
13335324

14000000
12000000
10000000
8000000
6000000
4000000
2000000
0

58.66
158.66
2009-10

56.86
156.86
2010-11

32.88
132.88
2011-12

61.84
161.84
2012-13

The above graph shows the Operating Profit before working capital changes of the KPCL
Company from the year 2008-2009 to 2012-2013.

TABLE 11
SHOWING

OPERATING

PROFIT

AFTER

WORKING

CAPITAL

CHANGES (000S)
Year
2008-09
2009-10

Amount(000s)
14432008
4934877

Percentage (%) Increase/Decrease (%)


100
34.19
65.81 (D)

Analysis & Inference:


From the above table it can predict that the Operating Profit after working capital changes
of the KPCL Company is decreased in 2009-10 when compared to 2008-09. There is a decrease
of 65.81% i.e. 9497131. Due to changes taken place in inventory, sundry debtors, current
liabilities and increase in Provisions. This shows the bad working capital of the company.

GRAPH 11
SHOWING

OPERATING

PROFIT

AFTER

WORKING

CAPITAL

CHANGES (000S)
16000000

14432008

14000000
12000000
10000000
2008-09

8000000
6000000

2009-10

4934877

4000000
2000000

100 34.19

0
Amount(000s)

65.81

Percentage (%) Increase/ 0Decrease (%)

The graph predicts that Operating Profit after working capital changes of the KPCL Company
from the year 2008-09 to 2009-10.

TABLE 12
SHOWING

OPERATING

PROFIT

AFTER

WORKING

CAPITAL

CHANGES (000S)
Year
2009-10
2010-11

Amount(000s)
4934877
2567573

Percentage (%)
100
52.09

Increase/Decrease (%)
49.91 (D)

Analysis & Inference:


As seen in the above table the Operating Profit after working capital changes of the
KPCL Company is decreased in 20010-11 when compared to 2009-10. There is a decrease of
49.91% i.e.Rs.2367304. Due to decrease inventories, Sundry debtors and loans and advances.

GRAPH 12
SHOWING

OPERATING

PROFIT

AFTER

WORKING

CAPITAL

CHANGES (000S)
4934877
5000000
4500000
4000000
3500000

2567573

3000000
2500000
2000000
1500000
1000000

100

52.09

49.91

500000
0

Amount(000s)

Percentage (%)
2009-10

Increase/0Decrease (%)

2010-11

From the above information it depicts that the Operating Profit after working capital
changes of the KPCL Company from the year 2009-10 to 2010-11

TABLE 13

SHOWING OPERATING PROFIT AFTER WORKING CAPITAL


CHANGES (000S)
Year

Amount(000s)

Percentage (%) Increase/Decrease (%)

2010-11
2011-12

2567573
15828035

100
616.45

516.48 (I)

Analysis & Inference:


As seen in the above table the operating Profit after working capital changes of the KPCL
Company is increased in 2011-12 when compared to 2010-11. There is an increase of 516.48%
i.e. Rs.13260462. Because of changes taken place in debtors and loans and advances. This shows
the good working capital management of the company.

GRAPH 13
SHOWING OPERATING PROFIT AFTER WORKING CAPITAL
CHANGES (000S)
15828035
16000000
14000000
12000000
10000000
8000000
6000000
4000000

2567573
100

2000000
0

Amount(000s)

616.45

Percentage (%)
2010-11

516.48
0
Increase/Decrease
(%)

2011-12

The above graph shows the Operating Profit after working capital changes of the KPCL
Company from the year 2010-11 to 2011-12.

TABLE 14
SHOWING OPERATING AFTER WORKING CAPITAL CHANGES (000S)

Year
2011-12
2012-13

Amount(000s)
15828035
2129461

Percentage (%) Increase/Decrease (%)


100
13.45
86.55 (D)

Analysis & Inference:


From the above table it can predict that the Operating Profit after working capital changes
of the KPCL Company is decreased in 2012-13 when compared to 2011-12. There is a huge
decrease of 86.55% i.e. Rs.13698574. Due to decrease in inventory, sundry debtors and loans.

GRAPH 14
SHOWING OPERATING AFTER WORKING CAPITAL CHANGES (000S)
15828035
16000000
14000000
12000000
10000000
8000000
6000000

2129461

4000000

100

2000000
0

Amount(000s)

13.45

Percentage (%)
2011-12

86.55
0
Increase/Decrease
(%)

2012-13

The above graph shows the Operating Profit after working capital changes of the KPCL
Company from the year 2011-12 to 2012-13.

TABLE 15
SHOWING OPERATING PROFIT AFTER WORKING CAPITAL
CHANGES (000S)

Year
2008-09
2009-10
2010-11
2011-12
2012-13

Amount(000s)
14432008
4934877
2567573
15828035
2129461

Percentage (%)
100
34.19
17.79
109.67
14.75

Increase/Decrease (%)
65.81(D)
82.21(D)
9.67(I)
85.25(D)

Analysis & Inference:


From the above observation it is evident that the Operating Profit after working capital
changes of the KPCL Company is decreased continuously up to 2010-11 . In the year 2009-10
there is an decrease of 65.81% i.e. Rs.9497131 because of change taken place in sundry debtors
and loans and advances. In the year 2010-11 there is an huge decrease of 82.21% i.e.11864435
due to decrease in current liabilities and changes taken place in inventory. but In the year 201112 there is slight an increase of 9.67% i.e.1396027 due to changes taken place in sundry debtors
and current liabilities. Again In the year 2012-13 there is an decrease of 85.25% i.e.12302547.
which shows the unsatisfactory progress of the company.

GRAPH 15
SHOWING OPERATING PROFIT AFTER WORKING CAPITAL
CHANGES (000S)

18000000
15828035

16000000
14000000
12000000
10000000
8000000
6000000 4934877
4000000

2567573

2129461

2000000
0

34.19 65.81
2009-10

17.79 82.21

109.67 9.67

2010-11

2011-12

Amount(000s) 14432008
Increase/ Decrease (%)

14.75 85.25
2012-13

Percentage (%) 100


-

From the above information it depicts that the Operating Profit after working capital
changes of the KPCL Company from the year 2008-09 to 2012-13

TABLE 16
SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)
Year
2008-09
2009-10

Amount(000s)
655123
3745039

Percentage (%) Increase/Decrease (%)


100
571.65
471.65 (I)

Analysis & Inference:


From the above information it depicts that the Net cash from Operating Activities of the KPCL
Company is increased in the year 2009-10 when compared to 2008-09. There is a increase of
471.65%..which shows the good progress of the company.

GRAPH 16
SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)
4000000

3745039

3500000
3000000
2500000
2008-09

2000000

2009-10

1500000
1000000

655123

500000

100 571.65

0
Amount(000s)

Percentage (%)

471.65
Increase/ 0Decrease (%)

The above chart depicts that the Net cash from operating activities of the KPCL Company from
the year 2008-09 to 2009-10

TABLE 17
SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)
Year
2009-10
2010-11

Amount(000s)
3745039
1069718

Percentage (%) Increase/Decrease (%)


100
28.56
71.44 (D)

Analysis & Inference:


From the above table it predicts that the Cash from Operating Activities of the KPCL
Company is decreased in 2010-11 when compared to 2009-10. There is a decrease of 71.44% i.e.
2675321. Due to direct tax paid during the year including previous year dues.

GRAPH 17
SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)
71.44
Increase/ Decrease (%)
0

28.56
Percentage (%)
100

1069718
Amount(000s)
3745039
0

1000000
2009-10

2000000

3000000

2010-11

The above chart depicts that the Net cash from operating activities of the KPCL
Company from the year 2009-10 to 2011.

4000000

TABLE 18
SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)
Year
2010-11
2011-12

Amount(000s)
1069718
1023231

Percentage (%) Increase/Decrease (%)


100
95.65
4.35 (D)

Analysis & Inference:


From the above information it depicts that the Net cash from Operating Activities of the
KPCL Company is decreased in the year 2011-12 when compared to 2010-11. There is a
decrease of 4.35%. Due to payment of taxes.

GRAPH 18
SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)
1200000
1069718
1023231
1000000
800000
2010-11

600000

2011-12
400000
200000
100

0
Amount(000s)

95.65

Percentage (%)

4.35
0 Decrease (%)
Increase/

The above chart depicts that the Net cash from operating activities of the KPCL
Company from the year 2010-11 to 2011-12

TABLE 19

SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)


Year
2011-12
2012-13

Amount(000s)
1023231
15395830

Percentage (%) Increase/Decrease (%)


100
1504.62
1404.62 (I)

Analysis & Inference:


From the above table it predicts that the Cash from Operating Activities of the KPCL
Company is huge increased in 2012-13 when compared to 2011-12. There is a increase of
1404.62% i.e. 14372599. Due to more power supply .

GRAPH 19
SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)

15395830
16000000
14000000
12000000
10000000
8000000
6000000
4000000

1023231

100 1504.62

2000000
0

Amount(000s)

Percentage (%)
2011-12

1404.62
0
Increase/Decrease
(%)

2012-13

The above chart depicts that the Net cash from operating activities of the KPCL
Company from the year 2011-12 to 2012-13.

TABLE 20
SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)

Year
2008-09
2009-10
2010-11
2011-12
2012-13

Amount(000s)
655123
3745039
1069718
1023231
15395830

Percentage (%)
100
571.65
163.28
156.18
2350.06

Increase/Decrease (%)
471.65(I)
63.28(I)
56.18(I)
2250.06(I)

Analysis & Inference:


From the above observation, it is clear that the Net Cash from Operating activities
increase comparing the previous year 2008-09 of Rs. 3089916 i.e.471.65% but again increase
due to less tax paid during the year and there is no payment made to VES scheme. Again in the
year 2010-11 further increase of Rs.414595 i.e.63.28% due to increase in current assets and
decrease in current liabilities. In the year 2011-12 there is a increase of 56.18% i.e. 368108 due
high volume of power supply. Again in the year 2012-13 there is a huge increase of 2250.06%
i.e. 14740707 it shows satisfactory and progressive performance of the company .

GRAPH 20
SHOWING NET CASH FROM OPERATING ACTIVITIES (000S)

15395830

16000000
14000000
12000000
10000000

Amount(000s) 655123
Percentage (%) 100

8000000

Increase/ Decrease (%)


-

6000000
3745039
4000000
1069718

2000000

471.65
571.65
0

2009-10

1023231

63.28
163.28
2010-11

56.18
156.18
2011-12

2250.06
2350.06
2012-13

The above chart depicts that the Net cash from operating activities of the KPCL Company
from the year 2008-09 to 2012-13.

TABLE 21

SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)


Year
2008-09
2009-10

Amount(000s)
11420866
9553633

Percentage (%) Increase/Decrease (%)


100
83.65
16.35 (D)

Analysis & Inference:


From the above table it clearly shows that the Net Cash used in Investing Activities of the
KPCL Company is decreased in 2009-10 when compared to 2008-09. There is a decreased of
16.35% i.e. Rs. 1867233. Due to decrease in additions to Fixed Assets & Capital WIP and
changes occurred in Interest receipts.

GRAPH 21
SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)
11420866
12000000

9553633
10000000
8000000
6000000
4000000
2000000
0

100
Amount(000s)

83.65

Percentage (%)
2008-09

16.35
0
Increase/Decrease
(%)

2009-10

The above graph shows that the Net cash from investing activities of the KPCL
Company from the year 2008-09 to 2009-10

TABLE 22

SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)


Year
2009-10
2010-11

Amount(000s)
9553633
11108951

Percentage (%) Increase/Decrease (%)


100
116.27
16.27 (I)

Analysis & Inference:


The above table it clearly shows that the Net Cash used in Investing Activities of the
KPCL Company is increased in 2010-11 when compared to 2009-10. There is an increase of
16.27% i.e. Rs. 1555318. Due to changes occurred in Fixed Assets & Capital WIP of 11564583
from the previous year 4272142.

GRAPH 22
SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)
12000000

11108951
9553633

10000000
8000000
2009-10

6000000

2010-11

4000000
2000000

100 116.27

0
Amount(000s)

Percentage (%)

16.27
0
Increase/Decrease
(%)

The above graph shows that the Net cash from investing activities of the KPCL Company for the
year 2007-08 to 2008-09.

TABLE 23
SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)

Year
2010-11
2011-12

Amount(000s)
11108951
8194782

Percentage (%) Increase/Decrease (%)


100
73.76
26.24 (D)

Analysis & Inference:


From the above table it clearly shows that the Net Cash used in Investing Activities of the KPCL
Company is decreased in 2011-12 when compared to 2010-11. There is a decreased of 26.24%
i.e. Rs. 2914169. Due to decrease in additions to Fixed Assets & Capital WIP and changes
occurred in Interest receipts.

GRAPH 23
SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)
12000000

11108951

10000000
8194782
8000000
6000000
4000000
2000000
0

100
Amount(000s)

73.76

Percentage (%)
2010-11

26.24
Increase/Decrease
0
(%)

2011-12

The above graph shows that the Net cash from investing activities of the KPCL Company
from the year 2010-11 to 2011-12.

TABLE 24
SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)
Year

Amount(000s)

Percentage (%) Increase/Decrease (%)

2011-12
2012-13

8194782
12269290

100
149.72

49.72 (I)

Analysis & Inference:


The above table it clearly shows that the Net Cash used in Investing Activities of the
KPCL Company is increased in 2012-13 when compared to 2011-12. There is an increase of
49.72% i.e. Rs. 4074508. Due to changes occurred in Fixed Assets & Capital WIP of the
previous year.

GRAPH 24
SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)
14000000

12269290

12000000
10000000

8194782

8000000

2011-12

6000000

2012-13

4000000
100 149.72

2000000
0
Amount(000s)

49.72

0
Percentage (%) Increase/Decrease
(%)

Data analysis:
The above graph shows that the Net cash from investing activities of the KPCL Company
for the year 2011-12 to 2012-13.

TABLE 25
SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)
Year

Amount(000s)

Percentage (%) Increase/Decrease (%)

2008-09
2009-10
2010-11
2011-12
2012-13

11420866
9553633
11108951
8194782
12269290

100
83.65
97.26
71.75
107.42

16.35(D)
2.74(D)
28.25(D)
7.42 (I)

Analysis & Inference:


From the above data it depict that there is a decrease in the Net cash used in investing
activities of the KPCL Company. In the year 2009-10 there is decrease of 16.35% i.e. Rs.
4867233. again in the year 2010-11 there is as slight decrease of 2.74% i.e. Rs. 99668085. In the
year 2011-12 there is a further decrease of 28.25% i.e. 3226084. but In the year 2012-13 there is
an increase of 7.42% i.e. Rs.848424. due to the increase in fixed assets of the company.

GRAPH 25
SHOWING NET CASH USED IN INVESTING ACTIVITIES (000S)

7.42
2012-13
107.42
12269290
28.25
2011-12
71.75
8194782
2.74
2010-11
97.26
11108951
16.35
2009-10
83.65
9553633
0
2008-09
100
11420866
0

2000000

4000000

Amount(000s)

6000000

8000000 10000000 12000000 14000000

Percentage (%)

Increase/Decrease (%)

The above graph shows that the Net cash from investing activities of the KPCL Company
from the year 2008-09 to 2012-13.

TABLE 26
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)
Year
2008-09
2009-10

Amount(000s)
15594760
7271025

Percentage (%) Increase/Decrease (%)


100
46.62
53.38 (D)

Analysis & Inference:


As seen in the above table the Net Cash from Financing Activities of the KPCL Company
is increased in 2009-10 when compared to 2008-09. There is an decrease of 53.38% i.e. Rs.
8323735. Due to changes in unsecured loans, financial charges and changes in secured loans.

GRAPH 26
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)
15594760
16000000
14000000
12000000
10000000

7271025

2008-09

8000000

2009-10

6000000
4000000

100 46.62

2000000
0
Amount(000s)

Percentage (%)

53.38
0
Increase/Decrease
(%)

The above graph shows that the Net cash from financing activities of the KPCL Company from
the year 2008-09 to 2009-10

TABLE 27
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)
Year
2009-10
2010-11

Amount(000s)
7271025
9150403

Percentage (%) Increase/Decrease (%)


100
125.84
25.84 (I)

Analysis & Inference:


From the above observation, it is found that the Net Cash from Financing Activities of the
KPCL Company is increase of 25.84% i.e. Rs 1879378 in the year 2010-11. Because the Net
additions during the year to the fixed assets and capital WIP.

GRAPH 27
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)

9150403
10000000
9000000
8000000
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0

7271025

2009-10
2010-11
100 125.84

Amount(000s)

Percentage (%)

25.84
0
Increase/Decrease
(%)

The above graph shows that the Net cash from financing activities of the KPCL Company
from the year 2009-10 to 2010-11

TABLE 28
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)
Year
2010-11
2011-12

Amount(000s)
9150403
3505417

Percentage (%) Increase/Decrease (%)


100
38.30
61.7 (D)

Analysis & Inference:


As seen in the above table the Net Cash from Financing Activities of the KPCL Company
is decreased in 2011-12 when compared to 2010-11. There is an decrease of 61.7% i.e. Rs.
5644986. Due to increase in unsecured loans, financial charges and changes in secured loans.

GRAPH 28
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)
10000000
9000000
8000000
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0

9150403

3505417

100
Amount(000s)

38.3

Percentage (%)
2010-11

61.7
0
Increase/Decrease
(%)

2011-12

The above graph shows that the Net cash from financing activities of the KPCL Company
from the year 2010-11 to 2011-12.

TABLE 29
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)
Year
2011-12
2012-13

Amount(000s)
3505417
4596176

Percentage (%) Increase/Decrease (%)


100
131.11
31.11 (I)

Analysis & Inference:


From the above observation, it is found that the Net Cash from Financing Activities of the
KPCL Company is increased in 2012-13 when compare to 2011-12 there is increase of 31.11%
i.e. Rs 1090759. Because the Net additions during the year to the fixed assets and capital WIP.

GRAPH 29
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)
5000000
4500000
4000000

4596176
3505417

3500000
3000000
2500000
2000000
1500000
1000000

100

500000
0

amount(000)'s

131.11

Percentage%
2011-12

31.11
0
Increase/Decrease%

2012-13

The above graph shows that the Net cash from financing activities of the KPCL
Company from the year 2011-12 to 2012-13.

TABLE 30
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)
Year
2008-09
2009-10
2010-11
2011-12
2012-13

Amount(000s)
15594760
7271025
9150403
3505417
4596176

Percentage (%)
100
46.62
58.67
22.47
29.47

Increase/Decrease (%)
53.38 (D)
41.33(D)
77.53(D)
70.53 (D)

Analysis & Inference:


When the analysis is made based on the data taking 2008-2009 as base year the following
analysis is done. From the above table it can observe that the Net cash from Financing activities
of the KPCL Company. In the year 2009-10 there is a decrease of 53.38% i.e. Rs.8323735 due to
change in secured loans and change in unsecured loans. In the year 2010-11 there is a further
huge decrease of 41.33% i.e. Rs.6444357 due to increase in finance charges and change in
unsecured loans. Again in the year 2011-12 there is a decrease of 77.53% i.e. 12089343. Due to
increase in unsecured loans, financial charges and changes in secured loans. in the last year
2012-13 there is a decrease of 70.53% i.e. 10998584 due to the increase in fixed assets of the
company.

GRAPH 30
SHOWING NET CASH FROM FINANCING ACTIVITIES (000S)

4596176
3505417

15594760
2008-09
2009-10

9150403

2010-11

7271025

2011-12
2012-13

The above graph shows that the Net cash from financing activities of the KPCL Company
from the year 2008-09 to 2012-13.

TABLE 31
SHOWING

NET

INCREASE/DECREASE

IN

CASH

&

CASH

EQUIVALENTS ACTIVITIES (000S)


Year
2008-09
2009-10
2010-11
2011-12
2012-13

Amount Increase
4829016
1462431
----------------------------------

Amount Decrease
--------------------888831
1469637
3666134

Analysis & Inference:


The above graph shows that the Net increase/decrease in cash & cash equivalents activities of the
KPCL Company from the year 2008-09 to 2012-13.

FINDINGS, CONCLUSION AND SUGGESTIONS

FINDINGS

Cash flow statement the various sources form which cash was received and the cash was
utilized during an accounting period. It is helpful to the most in reviewing its decisionregarding the raising and utilization of cash.
From the study we can observe that the percentage of net profit before tax &prior period
items adjustments is increasing continuously from the year to 2008-09 to 2010-11.there is
an increase of 97.36% and 17.14% respectively. but in the year 2011-12 to 2012-13 there
is slight decrease of 56.27% & 53.87%.so the company made a satisfactory progress
compare to previous year.
The operating profit before working capital changes is increasing continuously in the year
2008-09 to 2012-13.

The operating profit after working capital changes of the company has decreased up to
2010-11 at 82.21%.but in the year 2011-12 there is a slight increase of 9.67% but again in
the year 2012-13 huge decrease of 85.25% due to changes made in current liabilities
&and the inventory.

The percentage of net cash used in operating activities has continuously increased to from
the period of 2008-09 to 2012-13.due to high power generation and power supply to
BESCOM.
From the cash flow statement it is clear that more non cash expenses &non operating
expenses in the year 2012-13 due to this the cash flow statement is showing surplus,
compared to the last years.

The net cash used in investing activities is decreased to 16.35% in the year 2009-10.again
in the year 2010-11 decrease of 2.74.again further in the year 2011-12 it is decreased to
28.25% due to decrease in the investment of fixed assets, but in the year 2012-13 there is
an increase of 7.42% .due to changes made in fixed assets.
The net cash used in financing activities is continuously decreased from the year 2009-10
to 2012-13.in the year 2011-12 there is huge decreased to 77.53% i.e.12089343 compare
to 4 preceding years.
From the cash flow statement it is clear that due to the less issue of share capital &
borrowings there cash balance from financing activities is showing surplus when
compared to the last years.
In the year 2012-13 the net cash and cash equivalents is increased to Rs 3666134

SUGGESTIONS
The company has to take measures to reduce rate of deducting depreciation and also
finance changes in order to reduce the operating cost.
KPCL should develop a strong credit management policy.
The company has to take the tax advantage by maintaining proper debt equity ratio.
The company has to increase its sales (sales of energy).this leads to increase in the
operating profit. It further leads to a net increase in cash and cash equivalents.
The company has to fluctuate its rate of paying dividend in order to reduce the rate of tax
on dividend.
KPCL depends on one customer KPTCL; in future it is advisable to look for other
customers.
KPCL depends on borrowings to finance fixed assets. In future the company should use
its own earnings to reduce the burden of interest payments.
The cash balance of the company is required to be improved in order to have immediate
liquidity position .but at the time precaution should be taken to see that too much fund is
not locked up in cash balances, which ultimately may lead to improper utilization of
funds.
The KPCL should further utilize assets to generate sales.
The company should try to increase net profit .company should increase the operating
efficiency in controlling the operating expenses, to achieve net profit margin.

The improvement in credit collection and selling will boost their sales and will record
them in cash flow management. the effective and efficient cash flow provides an

opportunity to co-ordinate with cash outflow. proper coordinated cash inflow and outflow
management will maintain sound better working capital
management.CONCLUSION
It is to conclude that cash flow statement analysis of is most important aspect to evaluate
the inflow and outflow of cash in the company. And also this study shows that KPCL and
KPTCL should be committed to each other. After analysing each and every head we are required
mainly to concentrate on debtors . debtors is forming major portion in total current assets, as the
debtors collection period is decreasing slowly , it shows the sign of recovery of debtors at the
faster rate. Major portion of the power generation by KPCL is from Hydel projects since hydel
projects depend on monsoon condition any variation in monsoon condition would affect the
power generation and consequently the profitability of KPCL.
The company should take steps to collect dues from KPTCL.KPTCL should also make
efforts to pay the dues within time. rather than saying that there is poor credit policy management
in the company, the major fault is on the part of KPTCL, which has defaulted in making
payments within due time. Since both organizations are a government of Karnataka undertaking,
the company cannot pressurize KPTCL to pay the debts within time period. There fore the only
way left out with the company is to pressurize government of Karnataka to give proper directives
to its customers. It is the responsibility of the customer to make the payment within time to the
company.

BIBLIOGRAPHY
BOOKS REFERRED

BOOK

AUTHOR

PUBLICATIONS

EDITION

Management

K.Ashwatappa

Himalaya publication

2010

Financial Accounting

Prasannachandra

Sapna book house.

2009

Performance

SoumendranarainBag

Cengage learning

2010

management

achi

accounting

Web site :

www.powermin.nic.in-official website of Indian Ministry of india


www.karnatakapower.com KPCL Company website

Reports:

KPCLs 40th Annual Report 2012-2013


Magazines in KPCL

ANNAMALAI

UNIVERSITY

PROFORMA FOR APPROVAL OF


Name and Address of the

Enrolment Number : 2491400027


PRAVEEN H V
RAMAIAH INSTITUTE OF MANAGEMENT
SCIENCES
No. 15, New BEL Road, MSRIT Post, MS
Ramaiah Nagar, Bangalore-560054.

Student

Subject Area of the Project

CASH FLOW PERFORMANCE ANALYSIS OF


POWER
GENERATING
SECTOR
IN
BANGALORE

Title of the Project

A
STUDY
ON
CASH
PERFORMANCE OF KPCL

Name and Official Address of

Prof. DR.Radha.R

FLOW

the Research Supervisor.


RAMAIAH INSTITUTE OF MANAGEMENT
SCIENCES
No. 15, New BEL Road, MSRIT Post, MS
Ramaiah Nagar, Bangalore-560054.

(Bio-Data should be enclosed)

Signature of the Student


Date :

:
Signature of the Research Supervisor:
Name:
Academic Year :
Number of Candidates:
(Number of candidates should not exceed Five for a

Research supervisor in an academic year)

Encl : 1. Synopsis
2. Bio- Data of the Research Supervisor
(for office use only)

Scrutinized by
Approved / To Resubmitted

PROJECT SYNOPSIS ON
A STUDY ON CASH FLOW PERFORMANCE OF KPCL

By
PRAVEEN H V
ENROLLMENT NO-2491400027
For partial fulfillment of the requirements of final year
MBA curriculum of Two years Full time MBA (Industry
Integrated) Programme.

Submitted to:

Through

TITLE
A study on Cash flow

of power generating
reference to Karnataka
Limited, Bangalore.

performance analysis
sector with special
Power Corporation

INTRODUCTION
The power sector has registered significant progress since process of planned
development of the economy began in 1950. Hydro-power and coal based thermal power has
been the main sources of generating electricity. Nuclear power development is at slower pace,
which was introduced, in late sixties. The concept of operating power systems on a regional basis
crossing the political boundaries of state was introduced in the early sixties. In spite of the
overall development that has taken place, the power supply industry has been under constant
pressure to bridge the gap between supply and demand.

STATEMENT OF THE PROBLEM


Cash flow statement analysis is another important technique of financial statement analysis. This
cash flow statement explains the reasons for such inflows or outflows of the cash.
A proper planning of the cash resource will enable the management to have cash
available whenever needed and put it to some profitable or productive use.
In this project an attempt is made to evaluate the cash position of KPCL by analyzing its
cash flow statement

NEED FOR THE STUDY


The power sector is going through a crisis situation. This is study intended to find out more about
the power sector.

OBJECTIVES OF THE STUDY


4

To analyse the overall cash performance of the KPCL.

2.. To measuring the short-term financial position.


3.

to analyze and interpret the liquidity position of KPCL using appropriate analysis

techniques and offer suitable suggestions.

HYPOTHESIS
NULL HYPOTHESIS(HO)
There is no significant difference in an performance of KPCL in comparison with other
corporations.
ALTERNATIVE HYPOTHESIS(H1)
There is significant difference in an performance of KPCL in comparison with other
corporations.

METHODOLOGY
PRIMARY DATA & SECONDARY DATA

Primary Data:
Primary data collection sources included a detailed personal interview with finance
managers and account executives and with the help of other department of the company.

Secondary Data:
It will be collected through two sources:

Internal sources:Documents, reports, profiles, books of accounts, balance sheet.

External sources:Magazines, newspapers and websites

TOOLS FOR STUDY:

Tables, graphs, percentage, financial statement analysis and ratio analysis.

SCOPE OF THE STUDY


The study is exclusively conducted for the company mentioned for a period of five
financial years. The trends indicated might differ year to year in the pattern of instrument, sales
etc. this study is conducted in order to evaluate the cash flow statement of the company. This
gives a wider scope of understanding and functioning of the KPCL units.

LIMITATIONS OF THE STUDY


6

This study is limited to information provided by the KPCL.

The analysis of cash flow statement of the KPCL is done only in the cash flow of 5 years.

Time constraints limited the wide coverage of the study.

Concentrated only me financial aspects.

10 Accuracy of information depends on degree of correctness accountings of the company.

BIBLIOGRAPHY
BOOKS REFERRED
BOOK

AUTHOR

PUBLICATIONS

EDITION

Management

K.Ashwatappa

Himalaya publication

2010

Prasannachandra

Sapna book house.

2009

accounting
Financial Accounting

Performance

SoumendranarainBag

management

achi

Cengage learning

Web site: www.powermin.nic.in-official website of Indian Ministry of india


www.karnatakapower.com KPCL Company website
Reports: KPCLs 40th Annual Report 2013-2014
Magazines in KPCL

2010