Optcl Project
Optcl Project
Monalisha Behera
Roll no.41113C032
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F.M. AUTO CLG OPTCL
This is to certify that the project work entitled financial statement analysis
is an authentic record of the project work done by MONALISHA
BEHERA of F.M(AUTO)CLG during the period of 2013-2015 in this
organization under my guidance and supervision for the partial fulfillment
of the Master degree of P.G IN COMMERCE
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Student Declaration
ROLL NO:41114C032
REGD NO:01745/13
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ACKNOWLEDGEMENT
ROLL NO:41114C032
REGD NO:01745/13
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SL .No. Contents
1. INTRODUCTION
2. 0bjective of the study
3. Research Methodology
Research framework
Type of data
How data was collected
4. Limitation of the Study
5. Introduction And Review Literature
About the Topic
Studies on Financial statement
analysis
6. Company Profile
Mission & Vision
Objective of OPTCL
Function of OPTCL
Organization History
7. Analysis and Result
8. Interpretation
9. Suggestion
10. Conclusion
11. Bibliography
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EXECUTIVE SUMMARY
For this study three years ‘comparative Income Statement & Balance
Sheet have been taken for calculating ratio analysis. Main objective in
undertaking this project is to supplement academic knowledge with absolute
practical exposure to day to day functions of the sector.
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There have been various objectives for this study, the first of which is a
detailed analysis of the financial statements that is the balance sheet and the
income statement of OPTCL.
The second objective, however the most important one or in other word
the principle aim of this project is the understanding and assessment of financial
ratios based on the statements of the company.
The next aim of the project is to recognize the position of the company
through those ratios and data available. This recognition is a leading factor in
changes of each and every company and the base and root of lots of
management decisions.
RESEARCH METHODOLOGY
Research famework: This study is based on the data about OPTCL for a
detailed study of its financial statements, documents and system ratios and
finally to recognize and determine the position of the company.
1. The secondary data which was already prepared so these data was only
used to reach the aims and objectives of this project. These data has been
collected from the financial reports of the company.
How the data was collected: The secondary one was collected from the
financial statements already available to the employees of the company and
some of which was published.
In some cases, I had the chance to ask my questions personally from the Head
of Accounts department and Head of HR Department regarding the information
I needed.
Different questions and information I could collect during these two methods
are
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4. Areas of operations
The secondary data I collected was through the study of the financial
statements already existed in the company in form of printed files or digital files
reserved in the company for further references. I had chosen these files because
of the reliability and suitability of these information which I was also sure about
the accuracy of them.
3. Income statements
4. Financial reports
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The appropriate unit of measurement is the dollar. While this seems logical,
the effects of inflation, combined with the practice of recording values at
historical cost, may cause problems in using and interpreting these values.
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Balance sheet
Income statement
Assets are the resources of the business enterprise, such as plant and equipment
that are used to generate future benefits. If a company owns plant and
equipment that will be used to produce goods for sale in the future, the company
can expect these assets (the plant and equipment) to generate cash inflows in the
future.
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most basic accounting terms, equity is the difference between what the firm
owns—its assets—and what it owes its creditors—its liabilities.
ASSETS
There are two major categories of assets: current assets and noncurrent assets,
where noncurrent assets include plant assets, intangibles, and investments.
Assets that do not fit neatly into these categories may be recorded as either other
assets, deferred charges, or other noncurrent assets.
Current assets (also referred to as circulating capital and working assets) are
assets that could reasonably be converted into cash within one operating cycle
or one year, whichever takes longer. An operating cycle begins when the firm
invests cash in the raw materials used to produce its goods or services and ends
with.the collection of cash for the sale of those same goods or services. For
example, if Fictitious manufactures and sells candy products, its operating cycle
begins when it purchases the raw materials for the products (e.g., sugar) and
ends when it receives cash for selling the candy to retailers. Because the
operating cycle of most businesses is less than one year, we tend to think of
current assets as those assets that can be converted into cash in one year.
Current assets consist of cash, marketable securities, accounts receivable, and
inventories. Cash comprises both currency—bills and coins—and assets that are
immediately transformable into cash, such as deposits in bank accounts.
Marketable securities are securities that can be readily sold when cash is
needed. Every company needs to have a certain amount of cash to fulfil
immediate needs, and any cash in excess of immediate needs is usually invested
temporarily in marketable securities. Investments in marketable securities are
simply viewed as a short term place to store funds; marketable securities do not
include those investments in other companies‘ stock that are intended to be long
term. Some financial reports combine cash and marketable securities into one
account referred to as cash and cash equivalents or cash and marketable
securities. Accounts receivable are amounts due from customers who have
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purchased the firm‘s goods or services but haven‘t yet paid for them. To
encourage sales, many firms allow their customers to ―buy now and pay later,‖
perhaps at the end of the month or within 30 days of the sale. Accounts
receivable therefore represents money that the firm expects to collect soon.
Because not all accounts are ultimately collected, the gross amount of accounts
receivable is adjusted by an estimate of the uncollectible accounts, the
allowance for doubtful accounts, resulting in a net accounts receivable figure.
Inventories represent the total value of the firm‘s raw materials, work-in-
process, and finished (but as yet unsold) goods. A manufacturer of toy trucks
would likely have plastic and steel on hand as raw materials, work-in-process
consisting of truck parts and partly completed trucks, and finished goods
consisting of trucks packaged and ready for shipping. There are three basic
methods of accounting for inventory, including:
■ FIFO (first in, first out), which assumes that the first items purchased are the
first items sold,
■ LIFO (last in, first out), which assumes that the last items purchased are the
first items sold, and
■ Average cost, which assumes that the cost of items sold, is the average of the
cost of all items purchased.
The choice of inventory accounting method is significant because it affects
values recorded on the balance sheet and the income statement, as well as tax
payments and cash flows.
Another current asset account that a company may have is prepaid expenses.
Prepaid expenses are amounts that have been paid but not as yet consumed. A
common example is the case of a company paying insurance premiums for an
extended period of time (say, a year), but for which only a portion (say, three
months) is applicable to the insurance coverage for the current fiscal year; the
remaining insurance that is prepaid as of the end of the year is considered an
asset. Prepaid expenses may be reported as part of other current liabilities.
Noncurrent Assets
Noncurrent assets are assets that are not current assets; that is, it is not expected
that noncurrent assets can be converted into cash within an operating cycle.
Noncurrent assets include physical assets, such as plant and equipment, and
nonphysical assets, such as intangibles.
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Plant assets are the physical assets, such as the equipment, machinery, and
buildings, which are used in the operation of the business. We describe a firm‘s
current investment in plant assets by using three values: gross plant assets,
accumulated depreciation, and net plant assets. Gross plant and equipment, or
gross plant assets, is the sum of the original costs of all equipment, buildings,
and machinery the firm uses to produce its goods and services. Depreciation, as
you will see in the next chapter, is a charge that accounts for the using up of an
asset over the length of an accounting period; it is a means for allocating the
asset‘s cost over its useful life. Accumulated depreciation is the sum of all the
depreciation charges taken so far for all the company‘s assets. Net plant and
equipment, or net plant assets, is the difference between gross plant assets and
accumulated depreciation. The net plant and equipment amount is hence the
value of the assets—historical cost less any depreciation- according to the
accounting books and is therefore often referred to as the book value of the
assets.
Intangible assets are the current value of nonphysical assets that represent
long-term investments of the company. Such intangible assets include patents,
copyrights, and goodwill. The cost of some intangible assets is amortized
(―spread out‖) over the life of the asset. Amortization is akin to depreciation:
The asset‘s cost is allocated over the life of the asset; the reported value is the
original cost of the asset, less whatever has been amortized. The number of
years over which an intangible asset is amortized depends on the particular asset
and its perceived useful life. For example, a patent is the exclusive right to
produce and sell a particular, uniquely defined good and has a legal life of 17
years, though the useful life of a patent—the period in which it adds value to the
company-may be much less than 17 years. Therefore the company may choose
to amortize a patent‘s cost over a period less than 17 years. As another example,
a copyright is the exclusive right to publish and sell a literary, artistic, or
musical composition, and is granted for 50 years beyond the author‘s life,
though its useful life in terms of generating income for the company may be
much less than 50 years. More challenging is determining the appropriate
amortization period for goodwill. Goodwill was created when one company
buys another company at a price that exceeds the acquired company‘s fair
market value of its assets.
A company may have additional noncurrent assets, depending on their
particular circumstances. A company may have a noncurrent asset referred to as
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investments, which are assets that are purchased with the intention of holding
them for a long term, but which do not generate revenue or are not used to
manufacture a product. Examples of investments include equity securities of
another company and real estate that is held for speculative purposes. Other
noncurrent assets include long term prepaid expenses, arising from
prepayment for which a benefit is received over an extended period of time, and
deferred tax assets, arising from timing differences between reported income
and tax income, whereby reported income exceeds taxable income.
Long-term investment in securities of other companies may be recorded at cost
or market value, depending on the type of investment; investments held to
maturity are recorded at cost, whereas investments held as trading securities or
available for sale are recorded at market value. Whether the unrealized gains or
losses affect earnings on the income statement depend on whether the securities
are deemed trading securities or available for sale.
LIABILITIES
Liabilities, a firm‘s obligations to its creditors, are made up of current
liabilities, long-term liabilities, and deferred taxes.
Current Liabilities
Current liabilities are obligations that must be paid within one operating cycle
or one year, whichever is longer. Current liabilities include:
Accounts payable, which are obligations to pay suppliers. They arise from
goods and services that have been purchased but not yet paid.
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The reliance on short-term liabilities and the type of current liabilities depends,
in part, on the industry in which the firm operates.
Long-term liabilities are obligations that must be paid over a period beyond
one year. They include notes, bonds, capital lease obligations, and pension
obligations. Notes and bonds both represent loans on which the borrower
promises to pay interest periodically and to repay the principal amount of the
loan.
A lease obligates the lessee—the one leasing and using the leased asset—to pay
specified rental payments for a period of time. Whether the lease obligation is
recorded as a liability or is expensed as lease payments made depends on
whether the lease is a capital lease or an operating lease.
A company‘s pension and post-retirement benefit obligations may give rise to
long-term liabilities. The pension benefits are commitments by the company to
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EQUITY
Equity is the owner‘s interest in the company. For a corporation, ownership is
represented by common stock and preferred stock. Shareholders‘ equity is also
referred to as the book value of equity, since this is the value of equity
according to the records in the accounting books. The value of the ownership
interest of preferred stock is represented in financial statements as its par value,
which is also the dollar value on which dividends are figured. For example, if
you own a share of preferred stock that has a $100 par value and a 9% dividend
rate, you receive $9 in dividends each year. Further, your ownership share of the
company is $100. Preferred shareholders equity is the product of the number of
preferred shares outstanding and the par value of the stock; it is shown that way
on the balance sheet. The remainder of the equity belongs to the common
shareholders. It consists of three parts: common stock outstanding (listed at
par or at stated value), additional paid-in capital, and retained earnings. The par
value of common stock is an arbitrary figure; it has no relation to market value
or to dividends paid on common stock. Some stock has no par value, but may
have an arbitrary value, or stated value, per share. Nonetheless, the total par
value or stated value of all outstanding common shares is usually entitled
―capital stock‖ or ―common stock.‖ Then, to inject reality into the equity part
of the balance sheet, an entry called additional paid-in capital is added; this is
the amount received by the corporation for its common stock in excess of the
par or stated value. If a firm sold 10,000 shares of $1 par value common stock at
$40 a share, its equity accounts would show:
Common stock, $1 par value $10,000
Additional paid-in capital $390,000
There are actually four different labels that can be applied to the number of
shares of a corporation on a balance sheet:
The number of shares issued and sold by the corporation, which can be less
than the number of shares authorized.
The number of shares currently outstanding, which can be less than the
number of shares issued if the corporation has bought back (repurchased) some
of its issued stock.
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The number of shares of treasury stock, which is stock that the company
has repurchased.
The outstanding stock is reported in the stock accounts, and adjustments must
be made for any treasury stock. The bulk of the equity interest in a company is
in its retained earnings. A retained- earnings is the accumulated net income of
the company, less any dividends that have not been paid, over the life of the
corporation. Retained earnings are not strictly cash and any correspondence to
cash is coincidental. Any cash generated by the firm that has not been paid out
in dividends has been reinvested in the firm‘s assets—to finance accounts
receivable, inventories, equipment, and so forth.
THE INCOME STATEMENT
An income statement is a summary of the revenues and expenses of a business
over a period of time, usually one month, three months, or one year. This
statement is also referred to as the profit and loss statement. It shows the
results of the firm‘s operating and financing decisions during that time.
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shareholders. The board of directors may then distribute all or part of this as
common stock dividends, retaining the remainder to help finance the firm.
Companies must report comprehensive income prominently within their
financial statements. Comprehensive income is a net income amount that
includes all revenues, expenses, gains, and losses items and is based on the idea
that all results of the firm—whether operating or no operating should be
reflected in the earnings of the company. This is referred to as the all-inclusive
income concept. The all-inclusive income concept requires that these items be
recognized in the financial statements as part of comprehensive income.
It is important to note that net income does not represent the actual cash flow
from operations and financing. Rather, it is a summary of operating
performance measured over a given time period, using specific accounting
procedures. Depending on these accounting procedures, net income may or may
not correspond to cash flow.
CASH FLOW STATEMENT:
It is a statement, which measures inflows and outflows of cash on account of
any type of business activity. The cash flow statement also explains reasons for
such inflows and outflows of cash so it is a report on a company's cash flow
activities, particularly its operating, investing and financing activities.
FINANCIAL ANALYSIS
Financial analysis is a tool of financial management. It consists of the
evaluation of the financial condition and operating performance of a business
firm, an industry, or even the economy, and the forecasting of its future
condition and performance. It is, in other words, a means for examining risk and
expected return. Data for financial analysis may come from other areas within
the firm, such as marketing and production departments, from the firm‘s own
accounting data, or from financial information vendors such as Bloomberg
Financial Markets, Moody‘s Investors Service, Standard & Poor‘s Corporation,
Fitch Ratings, and Value Line, as well as from government publications, such as
the Federal Reserve Bulletin. Financial publications such as Business Week,
Forbes, Fortune, and the Wall Street Journal also publish financial data
(concerning individual firms) and economic data (concerning industries,
markets, and economies), much of which is now also available on the Internet.
Within the firm, financial analysis may be used not only to evaluate the
performance of the firm, but also its divisions or departments and its product
lines. Analyses may be performed both periodically and as needed, not only to
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2. between industries
3. between different time periods for one company
4. between a single company and its industry average
To evaluate the performance of one firm, its current ratios will be
compared with its past ratios. When financial ratios over a period of time are
compared, it is called time series or trend analysis. It gives an indication of
changes and reflects whether the firm‘s financial performance has improved or
deteriorated or remained the same over that period of time. It is not the simply
changes that has to be determined, but more importantly it must be recognized
that why those ratios have changed. Because those changes might be result of
changes in the accounting polices without material change in the firm‘s
performances.
Another method is to compare ratios of one firm with another firm in the same
industry at the same point in time. This comparison is known as the cross
sectional analysis. It might be more useful to select some competitors which
have similar operations and compare their ratios with the firm‘s. This
comparison shows the relative financial position and performance of the firm.
Since it is so easy to find the financial statements of similar firms through
publications or Medias this type of analysis can be performed so easily.
To determine the financial condition and performance of a firm, its ratios may
be compared with average ratios of the industry to which the firm belongs. This
method is known as the industry analysis that helps to ascertain the financial
standing and capability of the firm in the industry to which it belongs.
Industry ratios are important standards in view of the fact that each industry has
its own characteristics, which influence the financial and operating
relationships. But there are certain practical difficulties for this method. First
finding average ratios for the industries is such a headache and difficult.
Second, industries include companies of weak and strong so the averages
include them also. Sometimes spread may be so wide that the average may be
little utility. Third, the average may be meaningless and the comparison not
possible if the firms with in the same industry widely differ in their accounting
policies and practices. However if it can be standardized and extremely strong
and extremely weak firms be eliminated then the industry ratios will be very
useful.
What does ratio analysis tell us?
After such a discussion and mentioning that these ratios are one of the most
important tools that is used in finance and that almost every business does and
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calculate these ratios, it is logical to express that how come these calculations
are of so importance.
What are the points that those ratios put light on them? And how can these
numbers help us in performing the task of management?
The answer to these questions is: We can use ratio analysis to tell us whether
the business
1. is profitable
2. has enough money to pay its bills and debts
3. could be paying its employees higher wages, remuneration or so on
4. is able to pay its taxes
5. is using its assets efficiently or not
6. has a gearing problem or everything is fine
7. is a candidate for being bought by another company or investor
But as it is obvious there are many different aspects that these ratios can
demonstrate. So for using them first we have to decide what we want to know,
then we can decide which ratios we need and then we must begin to calculate
them.
CLASSIFICATION OF RATIOS
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LIQUIDITY RATIOS:
The two liquidity ratios, the current ratio and the acid test ratio, are the most
important ratios in almost the whole of ratio analysis and they are also the
simplest to use. Liquidity ratios provide information about a firm‘s ability to
meet its short- term financial obligations. They are of particular interest to those
extending short term credit to the firm. Two frequently-used liquidity ratios are
current and quick ratio.
While liquidity ratios are most helpful for short-term creditors/suppliers and
bankers, they are also important to financial managers who must meet
obligations to suppliers of credit and various government agencies. A
company's ability to turn short-term assets into cash to cover debts is of the
utmost importance when creditors are seeking payment. Bankruptcy analysts
and mortgage originators frequently use the liquidity ratios to determine
whether a company will be able to continue as a going concern. A complete
liquidity ratio analysis can help uncover weaknesses in the financial position of
the business. Generally, the higher the value of the ratio, the larger the margin
of safety that the company possesses to cover short-term debts.
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liabilities except bank overdraft and cash credit since they are not required to be
paid off immediately.
It shows how the company uses its fixed assets to achieve sales. The formula is
as follows:
FIXED ASSETS TURN OVER RATIO = FIXED ASSET
NET SALES
This ratio reflects the relative claims of creditors and share holders against the
assets of the firm, debt equity ratios establishment relationship between
borrowed funds and owner capital to measure the long term financial solvency
of the firm. The ratio indicates the relative proportions of debt and equity in
financing the assets of the firm.
It is calculated as debt ratio = debt
Share holders fund
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COMPANY PROFILE
ORISSA POWER TRANSMISSION CORPORATION LIMITED
(OPTCL), one of the largest Transmission Utility in the country was
incorporated in March 2004 under the Companies Act, 1956 as a company
wholly owned by the Government of Orissa to undertake the business of
transmission and wheeling of electricity in the State. The registered office of the
Company is situated at Bhubaneswar, the capital of the State of Orissa. Its
projects and field units are spread all over the State.
OPTCL became fully operational with effect from 9th June 2005
consequent upon issue of Orissa Electricity Reform (Transfer of Transmission
and Related Activities) Scheme, 2005 under the provisions of Electricity Act,
2003 and the Orissa Reforms Act, 1995 by the State Government for transfer
and vesting of transmission related activities of GRIDCO with OPTCL. The
Company has been designated as the State Transmission Utility in terms of
Section 39 of the Electricity Act, 2003.
Notified as the State Transmission Utility (STU) by the State Govt. and
discharges the State Load Dispatch functions.
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OPTCL became fully operational with effect from 9th June 2005 consequent
upon issue of Orissa Electricity Reform (Transfer of Transmission and Related
Activities)Scheme, 2005 under the provisions of Electricity Act, 2003 and the
Orissa Reforms Act, 1995 by the State Government for transfer and vesting of
transmission related activities of GRIDCO with OPTCL. The Company has
been designated as the State Transmission Utility in terms of Section 39 of the
Electricity Act, 2003.
The day-to-day affairs of the Company are managed by the Managing Director
assisted by whole-time Functional Directors as per the advice of the Board of
Directors constituted. They are in turn assisted by a team of dedicated and
experienced professionals in the various fields.
OBJECTIVES OF OPTCL:-
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ELECTRICITY SECTORS
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MISSION:-
The Power Sector Reforms in the State of Orissa was started during November
1993 in an organized manner. The main objective of the reform was to
unbundle generation, transmission and distribution and to establish an
independent and transparent Regulatory Commission in order to promote
efficient and accountability in the Power Sector. In order to implement the
reform, in the first phase, two corporate entities namely Grid Corporation of
Orissa Limited (GRIDCO) and Orissa Hydro Power Corporation Limited
(OHPC) were established in April 1995. GRIDCO was incorporated under the
Companies Act, 1956 in April 1995 to own and operate the transmission and
distribution systems in the State. Similarly OHPC was incorporated to own and
operate all the hydro generating stations in the State.The State Government
enacted the Orissa Electricity Reform Act, 1995 which came into force with
effect from 1.4.1996. In exercise of power under Section 23 and 24 of the
Orissa Electricity Reform Act, 1995,the State Govt. notified the Orissa
Electricity Reform (Transfer of Undertakings, Assets, Liabilities, proceedings
and Personnel ) Scheme Rules 1996. As per the scheme, the transmission,
distribution activities of the erstwhile OSEB along with the related assets,
liabilities, personnel and proceedings were vested on GRIDCO. Simultaneously
the hydro generation activities of OSEB along with related assets, liabilities,
personnel and proceedings were vested on OHPC. In order to privatize the
distribution functions of electricity in the State, four Distribution Companies
namely Central Electricity Supply Company of Orissa Limited (CESCO), North
Eastern Electricity Supply Company of Orissa Limited (NESCO), southern
Electricity Supply Company of Orissa limited (SOUTHCO) & Western
Electricity Supply Company of Orissa Limited (WESCO) were incorporated
under the Companies Act, 1956 as separate corporate entities. During
November 1998 the State Govt. issued the “Orissa Electricity Reform (Transfer
of Assets, Liabilities, Proceedings and Personnel of GRIDCO to distribution
Companies) Rules 1998” wherein the electricity distribution and retail supply
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activities along with the related assets, liabilities, personnel and proceedings
were transferred from GRIDCO to the four Distribution Companies. Through a
process of international Competitive Bidding (ICB), the four Distribution
Companies were privatized during 1999.After separation of Distribution
business, GRIDCO left with electricity Transmission and Bulk Supply/Trading
activities. GRIDCO was also declared as the State Transmission Utility and was
discharging the functions of State Load dispatch Center (SLDC). The
Government of India enacted the Electricity Act, 2003 which came into effect
from 10th June 2003. Under the provisions of the said Act, trading in electricity
has been recognized as a distinct licensed activity, which can only be
undertaken by a licensee to be granted by the appropriate commission. The Act
specifically prohibits the STU and Transmission Company in the State from
engaging in the business of trading. GRIDCO being a State Transmission
Utility was not permitted to engage itself in the trading in electricity and was
required to segregate its activities in a manner within the transional period
allowed under the Act that, the entity which will undertake transmission STU
and SLDC function will not undertake the activities of Trading and Bulk
Supply of Electricity. Keeping in view the statutory requirement of the
Electricity Act for separation of trading and transmission functions into two
separate entities, the State Govt incorporated Orissa Power Transmission
Corporation Limited (OPTCL) to take over the transmission, STU/SLDC
functions of GRIDCO. In exercise of the power conferred under Section
39,131, 133 & 134 of the Electricity Act, 2003, read with Section 23 & 24 of
the Orissa Electricity Reform Act, 1995, the State Govt. issued the notification
“Orissa Electricity Reform (Transfer of Transmission and Related Activities)
Scheme 2005” on 9.6.2005. The Scheme was made effective from 1.4.2005. By
virtue of the Transfer Scheme, 2005, OPTCL now undertaking the functions of
transmission of electricity in the State of Orissa and has been declared as the
State Transmission Utility. GRIDCO is also discharging the functions of
SLDC.
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Proceedings and Personnel) Scheme Rules, 1996 came into force with effect
from 01.04.1996. GRIDCO vested with transmission and distribution
activities and OHPC vested with hydro generation activities.
Under the Orissa Electricity Reform Act, 1995 Orissa Electricity Regulatory
Commission, a regulatory body was created which became functional from
01.08.1996.
5.Unbundling of transmission and distribution functions of GRIDCO by
creation of four distribution companies namely CESCO, NESCO, WESCO
and SOUTHCO.
Orissa Electricity Reform (Transfer of Assets, Liabilities, Proceedings and
Personnel of GRIDCO to Distribution companies). Rules 1998 came into
force with effect from 26.11.1998 and the distribution related assets,
liabilities and personnel were vested with four distribution companies.
BSES took over the management control of three distribution companies
namely NESCO, WESCO & SOUTHCO from 01.04.1999.
AES took over the management control of CESCO from 01.09.1999. By this
, the privatization of distribution companies were completed.
Eight Tariff Orders were issued by Orissa Electricity
9.Eight Tariff Orders wear issued by Orissa Electricity Regulatory
Commission after public hearing.
10. Orissa Power Transmission Corporation Limited(OPTCL) was
incorporated ON 29.03.2004 to carry on business of transmission,STU and
SLDC function of GRIDCO.
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The Govt. of India enacted the Electricity Act, 2003, which came into force with
effect from 10th June 2003. The Act has repealed the earlier Central Acts namely
the Indian Electricity Act, 1910, Electricity (Supply) Act, 1948 and the Electricity
Regulatory Commission Act, 1998. The main objectives of the Act as envisaged in
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the preamble are “an Act to consolidate the laws relating to generation,
transmission , distribution, trading and use of electricity and generally for taking
measures conducive to development of electricity industry, rationalization of
electricity tariff, ensuring transparent policies regarding subsidies, promotion of
efficient and environmentally benign policies, constitution of Central Electricity
Authority, Regulatory Commissions and establishment of Appellate Tribunal and
for matters connected therewith or incidental there to.”The Electricity Act, 2003 is
a comprehensive law intended for growth and development of Electricity sector as
a whole. This Act gives clarity to the investors, the regulators, the consumers and
other stakeholders at large and connected to the Electricity Sector in particular. It
also brings modern concept like power trading, open access and parallel networks.
The main features of the Act are as follows:
From the above, it is evident that the new Electricity Act provides a comprehensive
enabling framework which can be considered as a milestone in further liberalizing
the electricity sector in the country as it paves the way for evaluation of a
genuinely competition in power sector. It is for the entire stakeholder as to utilize
the framework and take the electricity sector rapidly in the direction of realizing
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the objectives stated in the Act which are in line with the National Electricity
policy.
The Power Sector Reforms in the State of Orissa was started during November
1993 in an organized manner. The main objective of the reform was to
unbundle generation, transmission and distribution and to establish an
independent and transparent Regulatory Commission in order to promote
efficient and accountability in the Power Sector. In order to implement the
reform, in the first phase, two corporate entities namely Grid Corporation of
Orissa Limited (GRIDCO) and Orissa Hydro Power Corporation Limited
(OHPC) were established in April 1995. GRIDCO was incorporated under the
Companies Act, 1956 in April 1995 to own and operate the transmission and
distribution systems in the State. Similarly OHPC was incorporated to own and
operate all the hydro generating stations in the State. The State Government
enacted the Orissa Electricity Reform Act, 1995 which came into force with
effect from 1.4.1996. In exercise of power under Section 23 and 24 of the
Orissa Electricity Reform Act, 1995, the State Govt. notified the Orissa
Electricity Reform (Transfer of Undertakings, Assets, Liabilities, proceedings
and Personnel) Scheme Rules 1996. As per the scheme, the transmission,
distribution activities of the erstwhile OSEB along with the related assets,
liabilities, personnel and proceedings were vested on GRIDCO. Simultaneously
the hydro generation activities of OSEB along with related assets, liabilities,
personnel and proceedings were vested on OHPC. In order to privatize the
distribution functions of electricity in the State, four Distribution Companies
namely Central Electricity Supply Company of Orissa Limited (CESCO), North
Eastern Electricity Supply Company of Orissa Limited (NESCO), southern
Electricity Supply Company of Orissa limited (SOUTHCO) & Western
Electricity Supply Company of Orissa Limited (WESCO) were incorporated
under the Companies Act, 1956 as separate corporate entities. During
November 1998 the State Govt. issued the “Orissa Electricity Reform (Transfer
of Assets, Liabilities, Proceedings and Personnel of GRIDCO to distribution
Companies) Rules 1998” wherein the electricity distribution and retail supply
activities along with the related assets, liabilities, personnel and proceedings
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4. Under the Orissa Electricity Reform Act, 1995 Orissa Electricity Regulatory
Commission, a regulatory body was created which became functional from
01.08.1996.
7. BSES took over the management control of three distribution companies namely
NESCO, WESCO & SOUTHCO from 01.04.1999.
8. AES took over the management control of CESCO from 01.09.1999. By this
, the privatization of distribution companies were completed.
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Plan & operate the Transmission system so as to ensure that transmission system
built, operated and maintained to provide efficient, economical and coordinated
system of Transmission and meet the overall performance Standards.
(i) To upgrade the transmission system network so as to handle power to the tune
of 3000 MW by the year 2012 for 100% availability of power to each family.
(ii) To maintain the system losses at par with that of National level.
(iii) To impart advanced techno managerial training to the practicing engineer
and work force so as to professionalism them with progressive technology and
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VISION:
1.To build up OPTCL as one of the best Transmission utility in the Country
in terms of uninterrupted power supply, minimizing the loss, contributing to
state's Industrial growth. 2.Development of a well-coordinated transmission
system in the backdrop of formation of strong National Power Grid as a
flagship, endeavor to steer the development of Power System on Planned path
leading to cost effective fulfillment of the objective of 'Electricity to All' at
affordable price.
BOARD OF DIRECTORS
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ANALYSIS, FINDING
&
INTERPRETATION
Ratio Analysis
Current Ratio:-
Current Ratio=Current Assets/Current Liabilities
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Debt-Equity Ratio:-
Debt-Equity Ratio=Outsider Fund / shareholder Fund
INTERPRETATION:
Inventory turnover ratio measures the velocity of conversion of stock into sale.
A Inventory turnover ratio indicate efficient management of inventory because
more the stock are sold the lesser amount of money required to finance the
inventory. In the year 2012 the ratio is 3.54:1 and the inventory conversion
period is 103 days which has decreased from the year 2011.
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INTERPRETATION:
It establishes a relationship between net profit/sales. Net profit ratio incurring a
lot of losses that shows negative percentage. The net profit of OPTCL is not
satisfactory, because it shows negative balance.
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Total
82141.18 84313.49 2172.31 2.64%
Long –Term Loans
Secured Loans 29708.43 18828.08 (10880.35) (36.62%)
Unsecured Loans 73382.14 73057.69 (324.45) (0.44%)
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(A)Sources of funds
1. Share holder Fund
(a) Share Capital 600,700,000 831,255,000 881,255,000
(b)Reserve & surplus
2. Loan Funds 53,683,62,657 5,531,676,826 6,824,666,950
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INTERPRETATION:
FIXED ASSETS: - From the above data show that total fixed assets of 2013
have been increased as compare to other financial year like in2012 and 2011.
LONG TERM LOANS:- In the year 2011 the long-term loan was Rs.1433.39
cr. and in 2012 it was 228687.25 cr. as it was increased which is not good for
company and in 2013 it was Rs.15826.86 Cr. as it was decreased and in 2013 it
was Rs.4047.66 Cr. as it was decreased .which shows a positive sign that the
company is recovery from its past deficits.
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INTERPRETATION:
Comparative income statement shows that there has been decrease in net sales
in the current final year 2013 as compare to previous final year i.e Rs.10002.87
with a percentage of 32.77%
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CONCLUSION
After critically examining the various financial aspects relating to
FINANCIAL STATEMENT ANALYSIS OF ORISSA POWER
TRANSMISSION CORPORATIONLIMITED (OPTCL), I have reached into
the conclusion that, this company is a pioneer in transmission of power not only
in the state Orissa but also to its neighbor states.There is a satisfactory
management of liquidity position of the company .During the 2012-13 it is
satisfactory. But 2010-11 there is an increase in total current liabilities&
decrease in total current assets which leads to decrease in the working capital of
company. However, the current status of the company in managing working
capital is satisfactory, which is evident from managing the services rendered
within Orissa in treating electricity.
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BIBLIOGRAPHY
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