Yash full

“A STUDY ON FINANCIAL PERFORMANCE OF BESCOM”

CHAPTER I

INTRODUCTION

A firm communicates financial information to the customer through

financial statements and reports. The financial statement contains summarized

information of firm’s financial affairs organized systematically. They are meant to

present the firm financial situation to customer preparation of the financial

statement is the responsibility of the top management. As these statements are

used by investor and financial analysis to examine the firm performance in order

to make internal decision they should be prepared very carefully and contain

complete information.

The success of business enterprise at the least its survival depends upon how

the funds are generated and when needed.

The key to all other business activities lies in financial, the simple words,

“Finance” is the management of the monetary affairs of a company/business firm,

it is the process of organizing the flow of funds so that a business can carry out its

objective in the most efficient manner and meet its obligations are they fall down.

Meaning of finance: -

In general terms finance means management of money for your expenses.

In broad terms finance is a science of fund management. Finance includes saving

money and often includes lending money.

DEPT. OF COMMERCE, VIDYAVAHINI PG COLLEGE TUMKUR - 572103 1


Finance has been classified as;

Business finance

Personal finance

Public finance

Finance is also a money budget management. The field of finance deals with

how money is spent and budgeted. It also deals the concept of time, money and

risk, and how they are interested. Individuals use finance as personal finance, by

government as public finance, by business as corporate finance, as well as by a

wide verity of organizations including schools and non-profit organization.

Finance is the need of today’s world economy.

TYPES OF FINANCE

There are mainly two types of finance found in the current economy,

1. PERSONAL FINANCE

In this finance decisions may involve paying for education, financial

durable goods such as real estate and cars, buying insurance.

Ex: health and property insurance, investing and savings for retirement. Personal

financial decision may also involve paying for a loan, or debt obligation.

2. CORPORATE FINANCE

It is the task of providing fund for a corporation’s activities. Corporate

finance can easily categorized in to category.



First one is short-term finance, which generally involves balancing risk

profitability, while attempting to maximize an entities wealth and the value of

its stock.

Long-term funds are provided by ownership activity and long-term credit,

often in the form of Bonds. The balances between these forms the company’s

capital structure short-tem funding or banks extending a line of credit mostly

provide working capital.

Goals of Finance:

a. Profit maximization

b. Wealth maximization

c. Other goals

i. Balance asset structure

ii. Liquidity

iii. Judicious planning of funds

iv. Efficiency

v. Financial discipline

Meaning of Financial performance:

Financial performance means, “Measuring the result of firms policies and

operations in monitory terms. These results are reflected in the firms returns on

investment, return on assets, value added etc.”



Financial Statements:

A financial statement is an organized collection of data according to logical

and consistent accounting procedures. Its purpose is to convey an understanding of

some financial aspects of a business firm. It may show position at a movement of

time has in the case Balance Sheet or may revel a series of activity over a given

period of time, as in the case of an income statement.

Income statement.

Statement of retained earnings.

Statement of changes in working capital.

Balance Sheet.

Analysis and Interpretation of Financial Statements:

Types:

I. Material used:

a) External analysis.

b) Internal analysis

II. Modes of operations:

a) Horizontal analysis

b) Vertical analysis



Technology of financial analysis:

1. Comparative financial statement.

2. Common size financial statement.

3. Trend Analysis.

4. Fund flow analysis.

5. Cash flow analysis.

6. Cost-Volume profit (CVP) Analysis.

7. Ratio Analysis.



Introduction about company:

The Erstwhile Mysore state had the enviable and glorious position of

establishing the first major hydroelectric generating stations at Shivansamudram

has early as 1902 for commercial operations. The art at that time was still in its

infancy. Even in the advanced countries, the longest transmission line at the higher

voltage in the worked was constructed to meet power needs of mining operation at

Kolar gold fields.

The generating capacity of shivansamudram powerhouse gradually

increased to 42 MW to meet the increased demand for a power. The shimsha

generating station with a installed capacity of 17.2 mega watt was commenced in

the year 1938. The power demand was even in the increase of industrial and rural

Electrification and addiction to generating become imperative first stage of 48

MW and 21 stage of 72 MW of the Mahatma Gandhi hydro electrical station were

commenced during 1948 and 1952. Subsequently the Rudra project with an

installed capacity of 33.2MW and THUNGA BADRA left bank power house with

an installed capacity of 27 MW at minarabad was commissioned during 1964 and

1965 respectively.

The state Government of Karnataka with availability of cheap electricity

power and other infrastructure facility was conducting for increased tempo of

industrial activity. It became necessary therefore augment power generating

capacity by harnessing the entire potential of the Sharagvathi valley. The first unit

of 89.1 MW was commissioned in 1964 and completed in 1977.

The demand power saw a phenomenal increase in the mid sixties and

onwards with the setting up of many public sector and private industries in the

state. As power generation in the state was entirely dependent on monsoon and

subject to its vagaries the state government set up a coal based power plant at

Raichur, the present installed capacity of this plant is 1260MW.



The augment power resource of the state, The KALINADI project with an

installed capacity of the power plant are 810 MW at Nagihari power house and

100 MW supa dam power house with an energy potential of 4.112 MW were set

up.

The transmission and distribution system in the state was under the control

of government of Karnataka (Mysore) till the year 1957. In the year of 1957

Karnataka Electricity Board (KEB) was formed the private distribution companies

were amalgamated with Karnataka Electricity Board.

Till the year 1986, KEB was a profit making organization. However, in the

subsequent years like other state Electricity Board in the country, KEF also started

incurring losses mainly due to the increase in the Agricultural Consumption and

due to the implementation of the socio economic policies of the government.

The performance of power sector affected to improve the performance of the

power sections in the tune with the reform initiated by the government of India.

The government of Karnataka came out with a general policy proposing

fundamental and nodical reforms in the power sector. Accordingly a bill namely

Karnataka electricity reforms Act was passed by the Karnataka Legislature. The

reform bill has mandated major restricting of the KEB and its Corporatization. As

pert of Corporation the Karnataka Electricity Board (KEB) seized to exist and the

Karnataka power Transmission Corporation limited. (KPTCL) to look after

transmission and distribution in the state and VVNS (Vishweshwariah Vidyuth

Nighama Limited) to look after the generating stations under the control of

Erstwhile Karnataka Electricity Board were constituted from 1-8-1999..

As part of reforms the distribution sector was further divided into four

companies viz..



BESCOM – Bangalore Electricity Supply Company Limited

HESCOM- Hubli Electricity Supply Company limited

MESCOM- Mangalore Electricity supply Company limited

GESCOM- Gulburga Electricity Supply Company Limited

CESC- Chamundeshwari Electricity Supply Company limited

These companies came into existence from 1st June 2002



CHAPTER II

RESEARCH DESIGN AND METHODOLOGY

Introduction:

The Encyclopedia of social sciences defines Research as “The manipulation

of generalization to extend corrector verifies knowledge.” This definition

highlights the primary purpose of a Research that is arriving at generalization and

the method of manipulation, which is an aspect of experimentation adopted for the

purpose.

Meaning:

A Research design is the program that guides the investigator in the process

of collecting analyzing and interpreting observations.” It provides a systematic

plan of procedure for the researcher to follow.

Definition:

KERLINGER defines “Research Design as a investigation of hypothesis

propositions about the presumed relations among natural phoneme.”

Title of the Study:

“A study on financial performance of BESCOM in Tumkur Division”

Statement of the Study:

Financial Analysis is an important aspect of Financial Management for

any company. Financial analysis gives the first hand information about the

financial aspects, financial performance, and growth of the company as well as

the liquidity position and profitability of the manufacturing industry.



But, whether the financial analysis is viable or feasible to calculate for

a service sector is to be known. For this reason, the following assertion has

been done.

Scope of the Study:

The study of ratios is a key indicator to the financial position of

BESCOM – Tumkur division, the soundness and the overall financial

performance of the company over 5 years.

The scope of the study also extends to understand whether ratio

analysis is an efficient in power sector, as it is an analytical tool measuring

growth trend.

Objectives Of The Study:

To know the growth and development of BESCOM during the period 2005

to 2010

To know the different services rendered by the BESCOM to the customer

and employees.

To analyze the operating position of BESCOM.

To identify the operating efficiency of the BESCOM.

To identify the financial strength of the company in both short term and

long term.

To assess the status of working capital and financial performance of

BESCOM.

Methodology of the Study:

This study under taken to analyze the performance of BESCOM –

Tumkur division, with the help of both primary and secondary data.



Primary data

Informal discussion with the officials of the company.

Constitutes on the data collected study was started with the

discussion with the guide assigned from our college.

Secondary data was collected through:

Annual report of BESCOM – Tumkur division..

Collection of industrial and company profile through internet.

Tools Of Data Collection:

There is various ways in which one planes to collect data. Tolls for data

collection are those means by which data is collected.

The tolls for data collection for this study are:

Interview schedule.

Trial balance.

Account related textbook.

BESCOM web – site.

BESCOM magazine.

Research Instrument:

Ratio analysis has various methods and tools and techniques to analyze

the data, comparative analysis and interpretation of financial statements,

common measurements statements, techniques in that common size statement

or used in this study.



The analysis and interpretation has been planned carefully in an organized

manner

Limitation Of The Study:

The study is limited to BESCOM, Tumkur only.

This study concentrates only on analyzing the financial position of

BESCOM since past five years and does give importance to its working

capital management.

The study does not carry any inventory ratio as it concentrates only on

credit worthiness of the company and not on inventory analysis.

Plan Of Analysis:

This study is divided into several parts:

First part deals with the general introduction of BESCOM. Which consists

of introduction to financial analysis and interpretation of financial

statement in BESCOM

Second part deals with research designing, which consists of statements of

the problem, objectives, scope, limitation of the study and research

methodology.

Third part deals with the company profile, which includes origin growth

and future prospective of the BESCOM, organization chart.

Fourth part deals with types of financial analysis and interpretation of

financial statement in BESCOM.

Fifth part deals with the summary of findings suggestions and

conclusions.



CHAPTER III

COMPANY PROFILE

Origin, Growth and Development of the Company

KARNATAKA ELECTRICITY BOARD (K.E.B) was formed with effect

from 1/10/1957 under the Indian Electricity (Supply) Act of 1948 K.E.B was

corporatized into a company under the Indian Companies Act with effect from

1/9/1999.

It owns some generation stations at shivanasamudrum; jog falls etc., where it

produces electricity through hydroelectric station it also owned on generating

stating at yelhanka where the main fuel is diesel. Its main demand of electricity is

met from Karnataka Power Corporation. Limited. Which is a 100% Karnataka

State Government undertaking? The new hydroelectric station and thermal stations

coming up in the state are under the control of KARNATAKA POWER

CORPORATION LIMITED [KPTCL]. KPTCL also gets its share of electricity

from the central generating stations such as national thermal power corporation,

Nyveli lignite corporation etc. During the last couple of years some independent

power producers like Tata’s and Jindal tractable have put up their plants and

started producing electricity, which is fed into the state grid.

Karnataka is pioneer in the reforms of power sector as Karnataka Power

Corporation was reformed in 1975 to take up the work of power generation

leaving Karnataka Electricity. Board to transmit and distribute the electricity. The

Karnataka Power reforms bill was passed in 1999 and K.E.B was corporatized as a

company under the Indian companies act, 1952.



With effect from 1/9/1999 the name of the organization was changed to

KARNATAKA POWER TRANSMISSION CORPORATION LIMITED

(KPTCL) and the reform activities are in progress. In the reform scenario, KPTCL

is mainly accountable through Karnataka electricity regulatory commission

(KERC).the tariff structure of different categories of consumers, its investment

decision and tariff proposals have to be approved by KERC.

KPTCL to ESCOMS

Government vide order no. 69 BS 12 2001 Bangalore, dated 15/02/2002 has

unbundled KPTCL and formed four distribution companies consequent to this the

function of distribution of power has been totally separated from KPTCL. KPTCL

is now vested with the responsibility of transmitting power all over the state and

construction and maintenance of stations and lines of 66 kV and above. KPTCL

will purchase power from various power producers and sell it to the distribution

companies.

The four newly formed independent distribution companies, which were

registered on 30/04/2002, are Bangalore Electricity Supply Company,

management electricity supply company Hubli Electricity Supply Company and

Gulbarga Electricity Supply Company. They have stated functioning from

01/06/2002. These companies are in charge of distribution of power within their

jurisdiction.



BESCOM Structure


HESCOM GESCOMBESCOM MESCOM

ESCOMS

Gulbarga Zone

Hubli Zone

Mangalore Zone

Bangalore Rural Zone

Bangalore Metropolitan Area Zone


Present States of ESCOMS

At present, KPTCL is into transmission and maintenance and ESCOMS for

distribution of electricity in the entire state. It caters to the needs of more than 10

millions consumers. It supplies electricity to houses residential complexes, shops,

industries, low-tension power consumers having irrigation pump sets. It also

supplies electricity to Bhagyajyothi consumers where the state government

introduces 1 bulb for one house scheme respectively. KPTCL levy different rates

of electricity changes to different categories of consumers some of the categories

of consumer are charged at subsidized rates of electricity because of socio-

economic commitments.

Organization Structure

Under each ESCOM, there are about 3 O and M (operation and maintenance)

circles totally to 15 circles in the entire state. Under the circles, there are O and M

divisions and under divisions and under divisions there are O and M sub-divisions

and accounting and non-accounting sections. The sub-divisions and sections

collect the electricity charges from the consumers and ledger account of all the

consumers are maintained in these sub-divisions and accounting sections. Besides

these, there are major work zones circles and divisions which take up work of

major nature like laying of transmission lines and stations etc. there are other

divisions like MRT [Meter Relay Testing] divisions MPD [master plan division],

system improvement cell etc..



Operations and Maintenance (O and M)

There are about 15 O and M circles headed by superintending engineer’s

electrical and 56 O and M division (revenue) under the above circles headed by

executive engineers. There are 256 O and M sub-divisions under the above

divisions headed by assistant executive engineers and 977 O and M sections under

the sub-division which are headed by assistant engineer electrical / junior engineer

electrical. They look after O and M of distribution systems and arrange new

service connection of the corporation. Apart from the above 17 sub-stations

maintain divisions headed by executive engineer electrical under the control of

superintending engineer TS and SS for all the zones.

Personnel Management

The ESCOMS is having 49,447 employees, which are inclusive of 40,233

regular employees, 598 part time and 8616 temporary workers on contract basis.

The employees of the corporation under regular establishment fall under 2

categories, namely technical and non-technical. The technical cadre comprises of

engineering personnel and skilled employees like meter readers/ operators

/overseers. The non-technical cadre comprises of ministerial staff to look after

audit and account.

Vigilance Cell

The vigilance cell is headed by the Deputy Inspector General of police

under him two superintendents of police are working at Bangalore and Hubli.

There is also vigilance squared located at circle headquarters consisting of

technical and police staff. The vigilance cell investigates allegations of corruption,

misuse of power and mis -appropriation etc. against the employees of the



corporation and also conducts surprise check of installations to detect theft of

energy. The vigilance cell is also responsible for security measures for officers,

projects and important installations of the corporation.

System Improvement Cell

It consists of two circles located at Bangalore and Hubli working under the

administrative control of Chief Engineer Electricity (general). Only Mangalore

and Gulbarga zones are having executive engineer at the zone head quarters. Each

of the O and M circles is having assistant executive engineers to look after

exclusively works, aimed at improving the existing system.

Research Wing

The corporation has a research wing headed by the Chief engineer

electricity, research and development to undertake the study of various research

projects allotted by the Central Board of Investigation Power, New Delhi, as well

as by the KPTCL to formulate new project proposals under research scheme on

power. Besides these, the research wing also undertakes the routine works namely

the designing of earth mats for the new as well as existing stations, investigations

of station earthling, testing of oil samples of power transformers, assessments of

average IP consumption and arranging for awareness programmer on energy

conservation with consumer public industrializes etc.

Mission Statement of BESCOM

Is to ensure complete customer satisfaction by providing its custom we quality,

reliable power at competitive rates.

BESCOM is set it achieve this through



Best practices in the construction and maintenance of its distribution

network.

High standards in customer service.

Optimum usage of technical and human resources.

BESCOM (Profile as per 31-03-2010)

1. AREA -41092 sq kms

2. District - 8 [Bangalore Rural, Urban, Tumkur,

Davanagere, Chitradurga,

Chikkaballapura, Kolar, and

Ramanagar]

3. Population - 6.8 Million

4. Consumers - 7.32 Million

5. No. Distributions of Transformers - 138618

6. HT Line length -68692 ckt. Kms

7. LT Line length -143544 ckt.kms

8. Employees strength : Sanctioned -16841

Working - 10529

9. Total Assets -Rs. 4211.98 Crores

BESCOM Overview

In the year 1999, Karnataka embarked on a major reform of the power sectors.

As a first step, Karnataka Electricity Board [KEB] was dissolved and in its place,

the Karnataka Power Transmission Corporation Limited [KPTCL] was

incorporated. This was followed by the constitution of Karnataka Electricity

Regulatory Commission [KERC] in November 1999.



In the next phase of the reform process, the transmission and distribution

business managed by KPTCL were unbounded in June 2002 four new distribution

companies were formed to distribute power in Karnataka.

As a part of the reforms the distribution sector was further divided into four

companies.

Bangalore Electricity Supply Company Limited [BESCOM] has taken over the

responsibility from KPTCL for the distribution of electricity in 6 districts and

commenced its operations from 1st June 2002.



Corporate Structure of BESCOM


CHAIRMAN

B.O.DManaging Director

TA & QCVigilanceCompany Secretary

Financial Advisor

Director(Technical)

Internal AuditCommunication & Reforms Co-ordination Officers

General Manager (Technical)

SuperintendingEngineer Electrical (Procurement)

Controller (Finance)

Controller (Accounts)


The following are the directors of BESCOM as on the date of AGM:

1. Shamim bhanu, I.A.S., Chairman

2. Tushar Girinath, I.A.S. Managing Director

3. G.Latha Krishna Rao, I.A.S. Director

4. Dr. Rajkumar katral I.A.S. Director

5. Alok Mohan, I.P.S.,. Director

6. M. Shivamallu. Director

7. Pradi rajnal. Director

8. M. Govindappa. Director

9. Nagesh. H. Director (Technical)

10. Parvathy Keshavachar. Director

11. L. Ravi. Director

12. M. Nagaraju. Director

Organization structure of BESCOM

BESCOM Board: BESCOM Board is consisting of the following members.

Sriyuths

Principal secretary Energy, Department, GOK: Smt. Shamim Banu, I.A.S

Managing Director: Sri Tushar girinath, IAS

Director (Technical): Sri. A.N> Ramesh

Managing Director, GESCOM: Sri. C.S. Ganesh

Dep. Sec. Energy Dept.: Smt. Parvathi Keshavachar



The Board members will be meeting regularly every month or on the dates as

situation warrants, for deciding on issues concerned with administrative and

technical matters.

Committees

The following committees are formed in BESCOM for the purposes advise

regarding purchase, technical, accounts and administrative matters.

Central Purchase Committee

This committee comprises of the following members

o Managing Direct, BESCOM: Chairman

o Director (Technical), BESCOM: Member

o Deputy Secretary, GOK: Member

o Energy Dept. Secretary, KPTCL: Convener

Invitees Chief General Manager (F & C), GM (Tech.), GM (procurement),

GM (RTA).

This committee will meet depending on the procurement action to be initiated as

and when required. In general procurement involving an amount up to 5 crores

will be decided by the committee on the basis of purchase proposals put up by the

procurement wing. Procurement involving an amount above 5 crores will be

referred to the board of decision/approval.



Technical committee

This committee comprises of the following members:

o Director (Technical), BESCOM: Chairman

o Chief General Manager (Eel), BMAZ: Member

o Chief General Manager (Eel) BRAZ: Member

o General Manager (Tech): Member, Convener

o General Manager (Planning): Member

o General Manager (Procurement): Member

Accounts and Audit coordinating committee

This comprises of the following members

o Financial advisor, Chairman

o Controller (RTA), Member

o Controller (Accounts), Member

o Controller, BMAZ, Member

o Controller, BMAZ, Member

o Representatives of auditing company (Auditors)

Apart from the above three major committees, several other sub

committees like, borrowing tender qualifying recruitment committee, tender

scrutiny committees, evaluation committee, audit committees, SR preparation

committee etc. are formed on ad-hoc basis depending on the requirements under

specific circumstances. The deliberation on the meetings of these committees will

be purely from the point of view of implementation of company’s policies and



program connected to administrative and technical action, execution of works. The

minutes/deliberation of the board meeting and the committee meetings are not

open/accessible to general public.

Recent Development in BESCOM

IT initiatives in BESCOM

B.R. Vasanth Kumar, Director (Technical) and B.T. Prakash Kumar, AEE,

BESCOM. BESCOM has been following the IT initiatives road map prescribed by

Ministry of Power, GOI under Reforms process to achieve customer satisfaction,

improved performance, low interruptions, improved quality of power supply.

BESCOM intends to be the Best Distribution Company in the country.

About BESCOM

BESCOM is responsible for power distribution in six districts of Karnataka.

BESCOM covers an area of 41092 sq. kms. Serving a population of over

168 lacks.

The districts which are serviced BESCOM

Bangalore Urban

Bangalore Rural

Kolar

Tumkur

Chitradurga



Davanagere

Chikkaballapura

Ramnagara

BESCOM in IT

Knowledge based systems to improve consumer relationship.

The power sector in the country is undergoing a lot of changes to make it

financially viable. Reforms and restructuring are underway making

BESCOM transparent and more responsive to the needs of its consumers.

BESCOM is using IT to develop effective and efficient solutions to reach

and serve the consumers in a better way.

IT is also helping BESCOM has risen towards the achievement of total IT

solutions.

ACHIVEMENTS AND AWARDS

The following are the milestones achieved:

Electronic Mail Service

BESCOM.ORG also integrates a very high quality inter office electronic

mail system.

Inter office email can be an effective and efficient system for

communication and documentation.

The web based email service allows employees of BESCOM to check their

e-mail from any computer with Internet access.

The system also helps in tracking and monitoring all email

communications.

Integrated with IVRS and MMS for full customer support.


http://BESCOM.ORG/


Centralized consumer billing information

Centralized data storage of consumers account information.

Purging consumers information and billing data for all sub divisions.

Quick access and retrieval of customer information.

Fine tuning consumer billing system for accuracy.

Consumers can pay their bills anywhere.

Interactive Voice Response system

Consumer care and retention is important for most companies in today’s

competitive market place where customers demand immediate access to

information and efficiency of response.

Interactive Voice Response System (IVRS) technology provides an

effective and affordable, consumers-friendly information system.

Accessible from any phone.

Consumer can get billing information and can lodge their complaints.

Scheduled of planned outages and important announcements can be

informed by the IVRS>

SAFETY IN USE

DO’S

1. Always used ISI approved equality material

2. Install ELCB to avoid electrical shock.

3. Always call electricity for repair and checking

4. Get the wiring done by an approved govt. licensed electricity contractor

5. Always ensure that the plug socket is not in reach of children



6. Always ensure that the plug socket to avoid loose contact and

consequently heating and melting

7. Use only three-pin socket.

8. Get the installation checked for earthling of insulation

9. Cover bare portion of electrical connection with insulation tape

10. Use rubber gloves of rubber mat while working on electrical equipments.

11. Use insulated cutting pliers and line tester for handling electricity wire

of equipments.

12. Report the leakages of current of relevant jurisdictional BESCOM

service station.

13. Report slating of poles sagging and snapping of conductor to BESCOM

service station.

14. Eliminate dampness \ water leakages near electrical wiring\ equipment.

15. Educate other about safe usage of electricity.

16. Use correctly size fuse wire.

17. Turn you face away whenever spare over occurs.

18. Switch off supply whenever you see fire near electrical equipments.

19. Before working on replacing any lamp – equipment ensure that supply is

switched off.

ACCIDENTS

In case of a person coming in contact with electrify.

1. Do not touch him.

2. Switch off the main supply.

3. Insulate your self with the surrounding and move the person away form

the electrical count act.

4. Given him first aid.



5. Call for the doctor.

6. Inform the relevant jurisdictional BESCOM service station.

DON’TS

1. Touch a snapped conductor.

2. Tie animals to electricity pole and guy wires.

3. Use guy wires fir drying for cloths.

4. Energies the fences.

5. Climb electrical poles.

6. Building house / grow trees and plants underneath the electric lines.

7. Build balconies / windows towards the open lines.

8. Cut tree branches near the overhead lines.

9. Over load the system by additional\ unauthorized load.

10. Use unearthed electrical equipment.

11. Use open wires/joined wires for appliance.

12. Use broken switches socket or plug.

13. Extend open heating coil for heating water.

14. Extend open/ loose wires form junction.

15. Operate electrical equipment/ switches with wet hands.

16. Allow layman to handle the electric system.

17. Touch a person with bare hands who is in contact with electric supply.

18. Carry long metallic pipes underneath the overhead lines

19. Throw water on live electrical equipment incase of fire.

20. Disconnects a plug by pulling the flexible cable when the switch is on.

21. Plug is any portable lamp/appliance before making sure the switch is

off and the plug is properly inserted in the socket.

22. Connect the customer’s earthling to water/pipes.



23. Use copper wires as substitute for fuse wires.

24. Use Temporary wires for extension of supply.

25. Touch metallic Supports of lines during rainy season.

SAVE POWER:

Power is precious – one unit saved is equal to two units generated. It takes

more than Rs-4 crores of Investment to produce just one mega watt of electric

power. In order to conserve power, customer should follow the philosophy of

“Waste Not,” so that power is available to more important areas like Hospitals,

Railways, Transport, and the like.

TIPS TO SAVE POWER

DOMESTIC CUSTOMERS

1. Power is precious – use it judiciously.

2. One unit saved is equal to units generated.

3. Switch off lights fans and other electrical gadgets when not required.

4. Sunlight is available free of cost make maximum use of daylight and

reduce use of artificial light.

5. Keep the bulbs and tubes clean to get better light.

6. Use low wattage bulbs for corridors and other less important areas.

7. Use light-colored paints and distempers for interiors.

8. Use tube light in place of filament lights. They last longer, consume less

power and give you more lightly.

9. Do not keep the door of your refrigerator open unnecessarily.

10. Reduce the height of partition walls wherever possible.



11. Eschew the use of ornamental and festoon lights.

12. Use cords of suitable capacity to avoid loss of energy and to reduce fore

accidents due to shorts circuits.

13. Use air-conditioners and climate control equipment very sparingly.

14. Keep the motors clean and cool

15. Use capacitors near motor terminals to avoid damage to motor and to

reduce demand charges.

RURAL CUSTOMERS

1. Use foot values of low resistance to save up to 10% power.

2. Use RPVc section pipers to save up to 10% power.

3. Motor and pump should be at same level. Pump should be within 3 meters

room the level.

4. Use pump sets of suitable power depending upon water lifting

requirements. It could save up to 25% power.

5. The capacity of motor should match the requirements using motors of

higher capacity where a lower one is good enough, results in loss of power

use only motors of good efficiency.

6. The pipe in which water comes out should be as close to earth level as

possible.

7. Use capacitors near motor terminal to avoid damage to motors and to

reduce demand charges.

INDUSTRIAL CUSTOMERS

1. Keep the motors clean and cool.

2. Use capacitors near motor terminals to avoid damage to motors and

to reduce demand charges.



3. Tighten belts and pulleys at regular intervals to avoided energy

loosed due to drag.

4. The capacity of motor should match the requirements. Using

motors of higher capacity. Where lower one is good enough results

in loss of power. Use only motors good efficiency.

5. Use grease frequently at all required points in all motor and motor

drives to reduce friction.

6. The machine driven should be very close to the motor.

7. Sunlight is available free of cost make maximum use of daylight and

reduce use of artificial light.

8. Change worn out bearing and repairs them in time.



CHAPTER IV

Theoretical background

Meaning of financial statement

Financial statement is a collection of data organized according to logical

and consistent accounting procedures. Its purpose is to convey an understanding of

some financial aspects of a business firm. It may show a position at a moment in

time, as in the case of balance sheet or may reveal a series of activities over a

given period of time as in the case of balance sheet.

Nature of Financial statement

Recorded facts:

It refers to the data taken out from the accounting records.

The records are maintained on the basis of actual cost data.

Accounting conventions:

Certain accounting conventions are followed while preparing

financial statements. The convention of valuing inventory at cost or

market price, which even is lower, is followed.

Postulates:

The accountant makes certain assumptions while making

Accounting records. One of these assumptions is that the enterprise



is treated as a going concern.

Personal judgments:

Even through certain standard accounting conventions are

followed in preparing financial statements but still personal judgments

of the accountant plays an important part.

Importance of Financial statement

Management:

Financial statement is useful for assessing the efficiency for

Different cost centers. The management is able to exercise through

these statement.

Creditors:

The trade creditors are to be paid in a short period. This

liability is met out of current assets.

Banker:

The banker is interested to see that the loan amount is secure

and the customer is also to pay the interest regularly.

Investors:

The investor includes both short-term and long-term

investors. They are interested in the security of the principle

amount of loan and regular interest payment by the concern.



Government

Financial statement are used to assess tax liability of business

Enterprises the government studies economic situation of the

Country from these statement.

Trade associate

These associations provide service and protection to the

member. They may analysis the financial statement for the purpose

of providing facilities to these members.

Meaning of Financial statement

A financial statement is an organized collection of data according to

logical and consistent accounting procedures. Its purpose is to convey an

understanding of some financial aspects of a business firm, it may show a position

at a moment of times as in the case of balance sheet, or may reveal a series of

activities over a given period of time, as in the case of an income statement.

Thus the term financial statement generally refers to two basic statements

Income statement

Balance sheet

Besides these two statements an origination particularly a company,

May also prepare a statement of retained earnings and statement of changes

In financial position.



Financial statements

The meaning and significance of each of these statements below.

Income statement:

It is a financial statement, which presents the revenues and expenses

of an enterprise for an accounting period and shows the access of revenues over

expenses. It is also known as profit and loss account. It is generally considered to

be the most useful of all financial statements. It explains what has happened to a

business as result of operation between two balance sheet dates. For this purpose it

matches the revenues and costs incurred in the process of revenues and shows the

net profit earned or loss suffered during a particular period

The nature of the ‘Income’, which is the focus of the income

statement, can be well understood if a business is taken as an organization that

uses ‘inputs’ to ‘produce’ output. The outputs are the goods and services that

the business provides to its customers. The values of these outputs are the

amount paid by the customers for them. These amounts are called ‘revenues’

in accounting. The inputs are the economic resources used by the business in

providing these goods and services these are termed as ‘expenses’ in

accounting.



Balance Sheet

It is a statement of financial position of a specific moment of time.

According to the institute of chartered accountants of India, balance and other

account balanced at their respective book values. Thus, balance sheet

Represents all assets owned by the business at a particular moment of time

and the claims of the owners and outsiders against those assets at the time.

The important distinction between an income statement and balance sheet

is that the income statement is for a period while balance sheet is on a

particular data income statement is therefore a flow report as contrasted with

the balance sheet which is a static report tow ever both are complementary to

each other

Statement of Retained Earnings

It is also termed as profit and loss appropriation account. The statement

gives detail of the distribution of earnings during a particular accounting

period. The balance shown by the income statement is transferred to the

balance sheet through this statement after making necessary appropriations.

The balance of this account represents the retained earnings i.e., accumulated

excess of earning over losses and dividends. They statement is a connecting

link between the balance sheet and income statement. It is fundamentally a

display of things that have caused the beginning of the period retained

earnings, balance to be change into the one shown in the end of the period

balance sheet.



Statement of Changes in Financial Position (SCFP)

The balance sheet shows the financial condition of the business at a

particular moment of time while the income statement discloses the results of

operations of business over a period of time. However, for a better

understanding of the affairs of the business, it is essential to identify the

movement of working capital or cash in and out of the business. This

information is available in the statements of change in financial position of

the business. It may be defined as “a statement which summarizes for the

period the resources made available to finance the activities of an enterprise

and the uses to which such resources have been put”. The statement may

emphasize any of the following aspects relating to changes in financial

position of the business.

Change in working capital position: in such a case the statement is termed

as SCFP (or) popularly funds flow statements

Change in cash position: in such a case the statement is termed as SCFP

(or) popularly cash flow statements

Change in overall financial position: in such a case the statement is termed

simply as statement of changes in financial position (SCFP).



Analysis And Interpretation Of Financial Statement

Financial statements are indicators of two significant factors:

Profitability

Financial soundness

A distinction here can be made between the two terms. “Analysis” and

“interpretation”. The term “analysis” means methodical classification of the

data given in the financial statements the figures given in the financial

statement will not help one unless they are put in a simplified form. For ex, all

item relating to “current assets” are put at one place while all items relating to

“Current liabilities” are put a another place. The term interpretation means

explaining the meaning and significance of the data so simplified.

However both “Analysis” and “Interpretation” are complimentary to each

other. Interpretation requires analysis, while analysis is useless without

interpretation. Most of the authors have used the term “Analysis” only to

cover the meanings of both analysis and interpretation, since analysis involves

interpretation. According Myers, “financial statement analysis is largely a

study of the relationship among the various financial factors in a business as

disclosed by a single set of statements and a study of the trend of these factors

ha shown in a serious of statements”. For the sake of convenience, we have

also use3d the term “financial statement analysis” throughout the chapter to

cover analysis and interpretation.

Types of financial analysis:-



Financial analysis can be classified into different categories depending

upon

The material used

The modus operandi of analysis

On the basis of material used:-

According to this basis, financial analysis can be of two types

External analysis

Internal analysis

External analysis: -

Those who are outsiders for the business do this analysis. The term

outsiders include investors, credit agenesis and government agenesis and other

creditor who have no access to the internal records of the company. These

persons mainly depend upon published financial statements. Their analysis

serves only a limited purpose. The position of these analysts has improved in

resent times on account of increased government control over companies and

governmental regulations requiring more detailed disclosure of information by

the companies in their financial statements.



Internal Analysis: -

Persons who have access to the books of accounts and other

information’s related to the business do this analysis. Such an analysis can

therefore, be done by executives and employees of the organization or by

officers appointed for this purpose by the government or the court under

powers verged in them. The analysis is depending upon the objective to be

achieved through this analysis.

On The Basis of Modus Operation

According to this basis financial analysis can also be of two types.

Horizontal Analysis

Vertical Analysis

Horizontal Analysis: -

In case of this type of analysis financial statements for a number of

years are reviewed and analyzed. The current year’s figures are compared with

the standard or base year. The analysis statement usually contains

figures for two or more year and changes are shown regarding each item from

the base year usually in the form of percentage. Such an analysis gives the

management considerable insight into levels and areas of strength and

weakness since this type of analysis is based on the data from year rather than

one date, it is also termed as “Dynamic Analysis”.



Vertical Analysis: -

In case of these types of analysis a study is made of the quantitative

relationship of the various items in the financial statement on a particular date.

For example, the ratio of different items of costs for a particular period may be

calculated with the sales for that period, such an analysis is useful in

comparing the performance of several companies in the same group, or the

date for one period. This is not very conductive to a proper analysis of the

company’s financial position. It is also called ‘Static Analysis’ as is frequently

used for referring to ratios developed on one date or for one accounting

period.

TECHNOLOGY OF FINANCIAL ANALYSIS

1. Comparative Financial Statements:

Comparative financial statements are those statements, which have

been so designed in a way so as to provide time perspective to the

consideration of various elements of financial position embodied in such

statements. In these statements, figures for two or more periods are placed side

by side to facilitate comparison.

2. Common – Size Financial Statements: -

Common – size financial statements are those in which figures reported

are converted into percentages to some common base. In the income statement

he sales figures is assumed to be 100 and all figures are expressed as

percentage of sales. Similarly, in balance sheet. The total of as sects or

liabilities is taken as 100 and all the figures are expressed as a percentage of

this total.



3. Trend Percentages: -

Trend percentages are immensely helpful in making a comparative

study of the financial statements for several years. The method of calculating

trend percentages involves the calculating of percentage relationship that each

item bears to the same item in the base year. Any year may be taken as the

base year. It is usually the earliest year. Any intervening year may also be

taken as the base year. Each item of the base year is taken as hundred and on

that basis percentages for each of the items of each of the years are calculated.

These percentages can be taken as index number showing the relative changes

in the financial data resulting with passing of time.

4. Funds Flow Analysis:-

Funds Flow analysis as become an important tool in the analytical kit

of financial analysis, credit granting institution and financial managers. This is

because the balance sheet of a business reveals its financial status at a

particular point of time.

Fund flow analysis reveals the changes in working caption. It tells

about the sources from which the working capital was obtained and the

Purpose for which is used. It brings out in open the changes, which have taken

place. Behind the balance sheet, working capital being the lifeblood of the

business.



5. Cost –Volume- Profit Analysis:-

Cost volume profit analysis is an important tool of profit planning. It

studies the relationship between the cost volume of production sales and

profit. However, it is an impotent tool for management decision making from

the data provided by both cost and financial records. It tells the volume of

sales at which the firm will break even, the effect of profit an account of

variation in output in selling price and cost and finally, the quantity to be

produced and sold to reach the target profit level

6. Ratio Analysis:-

This most important tool available to financial analysis for their work.

An accounting ratio shows the relationship in mathematically terms between

two inter related accounting figures. The figures have to be interred related

because no useful purpose will be served if ration are calculated between two

figures that are not at all related to each other, example, Sales and discount on

issue of debentures.

Meaning of Ratio

A ratio a simple arithmetically expression of the relationship of one

number to another. It may be defined as the indicated quotient of two

mathematical expressions.

According to accountant’s handbook by Wixom Kill and Bedford, a

ratio “is an expression of the quantitative relationship between two numbers “.



According to Kohler, a ratio “is the relation, of the amount, a, to

another, b. expressed as the ratio of a to b; a: b (a is to b) or as a simple

fraction, integer, decimal, faction or percentage”.

In simple language a ratio is one number expressed in terms of another

and can be worked out by dividing one number into the other.

Classification of Ratio

Functional Classification or Classification according to tests,

1. Liquidity Ratio: -

This is the ratio, which measure the short –terms solvency or financial

position of a firm. These ratios are calculated to comment upon the short term

paying capacity of a concern or a firm’s ability to its obligations.

Current Ratio: -

Current ratio may be defined as the relationship between current

assets and current liabilities. This ratio also known as working capital ratio is

a measure of general liquidity and is most widely used to make the analysis of

a short-term financial position or liquidity of a firm.

It is calculated by dividing the total current assets by total of the current

liabilities.

Current ratio =current assets

Current liability



Liquid Ratio (or) Quick Ratio (or) Acid test ratio:-

Quick ratio may be defined as the relationship between quick / liquid/

acid test assets and current or liquid liabilities. An asset is said to be liquid if it

can be converted into cash within a short period without loss of value. The

quick ratio can be calculated by dividing the total of quick assets b total

current liabilities. Thus

Quick/Liquid/Acid Test ratio = Quick/Liquid assets

Current liabilities

2. Long –term Solvency and Leverage Ratio:-

Long term Solvency Ratio convey a firm’s ability to meet the interest

cast and repayments schedules of its long terms obligations.

Debt Equity Ratio:-

Debit Equity Ratio, also known as external – internal equity ratio is

calculated to measure the elative claims of outsides and the owners (that is

share holders) against the firm’s assets.

Debt equity ratio= Outside funds

Share holders funds



Debt to total Capitalization Ratio:-

The ratio establishes a link between the long term funds raised from

outsiders and total long-term funds available in the business.

The two words used in this ratio are:-

Funded Debt

Total Capitalization

Funded Debt = Debentures + Mortgage loans + Bond + other long

Total Capitalization = Equity share capital +

Preferences share capital +Reserves and surplus + other undistributed reserves

+ Debentures + Mortgage loans + Bonds+ Other long-term loans.

Funded debt is that part of total capitalization which is financed by outsiders.

3. Activity Ratio:-

Activity ratios are calculated to measure the efficiency with which the

resources of a firm have been employed. These ratios are also called as

turnover ratio.


Funded debt to funded debt X 100

total capitalization ratio = total capitalization


Inventory Turnover Ratio (or) Stock Turnover Ratio:-

Every firm has to maintain a certain level of inventory of finished goods so as

to be able to meet the requirement of the business. Inventory turnover ratio

also known as stock velocity is normally calculated as sales / average

inventory or cost of goods sold / average inventory. Inventory turnover ratio

(ITR) indicates turned the number of time the stock has been turned over

during the period and evaluates the efficiency Term

loan

with which a firm is able to divide the cost of goods sold by the amount

of the average inventory at cost.

Inventory Turnover Ratio =Cost of goods sold

Average inventory cost

Debtors/Receivables Turnover or Debtors Velocity:-

Debtor’s turnover ratio indicates the velocity of debt collection of firm.

In simple words, it indicates the number time average debtors turnover during

a year, thus

Debtors turnover ratio= net credit annual sales

Average trade debtors

Trade Debtors = Sundry Debtors + Bills Receivables and Account

receivables



Average Trade Debtors = Opening trade Debtors + Closing trade Dr.s

2

Creditors/ Payable turnover Ratio:-

A supplier of goods that is creditors are naturally interested in finding out

how much time the firm is likely to take in repaying it trade creditors. Creditor’s

turnover ratio can be calculated in two forms

A supplier of goods, that is creditors are naturally interested in finding

out how much time the firm is likely to take in repaying it trade creditors.

Creditor’s turnover ratio can be calculated in two forms

If information about credit purchases is `not available, the figure o

total purchase may be taken as the numerator and the trade creditors includes

sundry credit and bills payables. If opening a closing balance of creditors are

not known, the balance of creditors given may be taken to find out the ratio.

The ratio indicates the velocities with the creditors are turned over in relation

to purchases.

Avg. payment = Avg. trade Creditors (creditor’s + bills payment)

Period ratio Avg. daily purchase


Creditors turnover ratio = Net credit annual sales

Average trade creditors


4. Profitability Ratios:-

Their ratios measure the results of business operations or overall

performance and effectiveness of the firm.

There are two types of profitability ratios are calculated:-

In relation to sales

In relation to investments

Gross Profit Ratio:-

Gross Profit ratio measures the relationship of gross profit to net sales and

is usually represented as a percentage. Thus it is calculated by dividing the gross

profit by sales.


Gross profit ratio= Gross profit x 100

Net sales

Gross profit ration= Sales – cost of goods sold x 100

Sales


Operating Ratio:-

Operating Ratio establishes the relationship between cost of goods sold

and other operating expenses on the one hand the sales on the other.

The two basic elements of these ratios are operating cost and not sales. Operating

cost can be found by adding operating expenses to the cost of goods.

Operating Profit Ratio;-

This ratio is calculated by dividing operating profit by sales, operating

profit is calculated as,

Operating profit = Net sales– Operating cost

Operating profit = Net sales – (cost of goods sold+ Administrative and office

expenses + selling and distributive expenses)


Operating ratio = operating cost x 100

Net sales

Operating ratio= cost of goods sold + operating exp. X 100

Net sales

Operating profit ratio = operating profit x 100

Sales


Operating Profit can also be calculated as;

So, Operating ratio = Net Profile + Non- operating expenses

- Non – operating income

This ratio can also be calculated as;

Operating profit ratio = 100 – operating ratio.

Expenses Ratios: -

Expenses Ratios indicate the relationship of various expenses to net

sales. The operating ratio reveals the average total variations in expenses.

Expense ratio = Expanses x 100

Net sales

Net Profit Ratio: -

Net profit ratio establishes a relationship between net profit (after taxes)

and sales, and indicates the efficiency of the management in manufacturing,

selling, administration and other activities of the firm. This ratio is the overall

measure of firms profitability and is calculated as



Net Profit Ratio= net profit after tax x 100

Net sales

Return on Capital Employed:-

The turn’ Capital Employed’ refers to the total of investments made in

a business and can be defined in a number of ways.

The three most widely used definitions of these terms are:-

Gross Capital Employed = Fixed assets + Current assets

Net Capital Employed = Total assets – Current Liabilities

Proprietors Net Capital Employed = Fixed assets + Current

Assets – Outside liabilities

Return on Equity Capital: -

Ordinary Share holders are more interested in the profitability of a

company and the performance of a company should be judged on the basis of

return on equity capital of the company . Return on the equity capital, which is

the relationship between profit of a company and its equity capital, can be

calculated as;

Return on = Net profit after tax – Preference Dividend

Equity share capital



Earnings Per Share [EPS]

Earnings per share are a small variation of return on equity capital and

are calculated by dividing the net profit after taxes and preference dividend by

the total number of equity shares.

EPS = net profit after tax-preference dividend

No. of equity shares



CHAPTER V

DATA ANALYSIS & INTERPRETATION

Financial analysis is the process of identifying the financial strength and

weakness of the firm by properly establishing relationships between the items of

the balance sheet and the profit and loss account.

They analysis the forms profitability over time its ability to generate cash to

be able to pay interest and repay principle and relationship between various

sources of funds. As such they concentrate on the analysis of the firm’s present

and future profitability.

So here I had analyzed the collected data in a systematic manner and

interpreted with simple method, then only it will be useful for the study. The

analysis of the collected data are interpreted it with pictorial representation by

using column chart and bar charts etc.



Analysis of financial position of BESCOM in the year 2005-06 based on

the common size statement (Rupees in Crore)

SL.No. Particulars Amount Total %

1 Sources of Funds

Share holder’s funds

Share capital

Share deposit

Reserves and Surplus

205.95

4.76

511.67 722.38

8.48

0.19

21.07

2 Loans/Funds

Secured loans

Unsecured loans

Other Funds: Service line &

security deposits

432.86

76.12 508.99

1196.41

17.82

3.13

49.31

Total I 2427.79 100

II

1

Application of Funds

Fixed Assets

Gross block

Less: Depn.

Net block

Capital work in progress

2015.56

788.99

1226.56

53.42

(32.49)

50.52

2.20

1279.99 52.72

2 Current Assets, loans & advances

Inventories, stores & spares

Sundry Debtors

Cash & Bank balances

Loans, advances & Deposits

75.40

1858.64

200.86

3.10

72.51

8.27



Other current assets 143.99

162.09

5.93

6.63

Total II 2441.02 100.50

Less current liabilities 1293.20 53.26

Net current assets 1147.80 47.28

Total II 2427.79 100






1 Sources of Funds


Share capital

Share deposit

Share deposit adjustment a/c


205.95

1.51

--

684.37 890.34

6.92

0.05

--

23.82

2 Loans/Funds

Secured loans

Unsecured loans

Other Funds: service line/Security

dep.

613.62

97.45 711.07

1373.48

2062

3.20

45.31

Total I 2974.90 100

II

1


Fixed Assets

Gross block

Less: Depn.

Net block


2323.52

781.68 (26.27)

1541.83

77.09

51.82

2.59

1618.93 54.41



Sundry Debtors


117.19

1884.40

273.08

3.93

63.34

9.17




Other current assets

276.07

180.97

9.27

6.08

Total 2 2731.73 91.82



Total II 2974.90 100






1 Sources of Funds


Share capital

Share deposit


205.95

1.51

931.96 1137.92

6.38

0.04

28.89

2 Loans/Funds

Secured loans

Unsecured loans


dep.

424.65

92.06 516.72

1570.13

13.16

2.85

48.68

Total I 3224.78 100

II

1


Fixed Assets

Gross block

Less: Depn.

Net block


2792.46

858.97 (26.63)

1933.48

175.52

59.95

5.08

2109.01 65.03



Sundry Debtors



112.72

1484.99

406.75

279.10

3.49

46.04

12.61

8.61



Other current assets 348.96 10.82

Total II 2632.53 81.57



Total II 3224.78 100






1 Sources of Funds


Share capital

Share deposit


205.95

1.51

906.38 1112.35

5.23

0.04

24.37

2 Loans/Funds

Secured loans

Unsecured loans


dep.

509.32

295.97 805.30

1740.13

13.92

8.09

48.35

Total I 3657.79 100

II Application of Funds

Fixed Assets

Gross block

Less: Depn.

Net block


Investments

3505.34

945.48

2559.85

137.89

1.00

69.98

3.76

0.02

2698.75 73.76

Current Assets, loans & advances


Sundry Debtors


147.98

1405.80

4.04

38.43





59.54

171.88

562.35

1.62

4.29

15.37

Total II 2347.57 60.18



Profit and Loss a/c 362.47 9.92

Total II 3657.79 100






1 Sources of Funds


Share capital

Share deposit


205.95

210.01

985.88 1401.85

4.89

4.99

23.41

2 Loans/Funds

Secured loans

Unsecured loans


dep.

330.47

647.15 977.62

1832.50

7.84

15.36

43.51

Total I 4211.97 100

II Application of Funds

Fixed Assets

Gross block

Less: Depn.

Net block


Investments

3908.23

1087.43

2820.80

161.47

1.00

66.97

3.88

0.02

2983.27 70.83

Current Assets, loans & advances


Sundry Debtors


105.01

1791.97

2.41

42.55





110.81

171.60

398.27

2.63

4.07

9.46

Total II 2577.67 61.20



Profit and Loss a/c (350.20) (8.36)

Total II 4211.97 100



Table: 1

Table showing the Share capital (Rs in Crore)

Year Amount % to total sources

2005-06 205.95 8.48

2006-07 205.95 6.92

2007-08 205.95 6.38

2008-09 205.95 5.23

2009-10 205.95 4.89

Analysis:

It shows that percentage to the total sources of fund decreasing in every

year though the amount of share capital remains same.



Graph: 1

Graph showing the Share capital (Rs in Crore)

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

8.48

6.926.38

5.234.89

% to total sourcess

Shar

e ca

pita

l

Interpretation:

Because of increasing in borrowings of funds the percentage of share capital fund is decreasing.



Table: 2

Table showing share deposit (Rs in Crore)


2005-06 4.76 0.19

2006-07 1.51 0.05

2007-08 1.51 0.04

2008-09 1.51 0.04

2009-10 210.01 4.99

Analysis:

The above table reveals that the share deposit to the BESCOM was 4.76

crores in the year 05-06 at the percentage of 0.19, Then in 06-07,07-08 & 08-09 it

decreased to 0.05%, 0.4%,0.4%. But in 09-10 it increased to 4.99%.



Graph: 2

Graph showing share deposit (Rs in Crore)

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

Percentage 0.19 0.05 0.04 0.04 4.99

0.5

1.5

2.5

3.5

4.5

5.5

Shar

e De

posit

s

Interpretation:

Share deposit was decreased up to 0.4% but, in the year 2009-10 it

increased to 4.99% because of GOK has distributed Rs 210 crores towards Equity

investment.



Table: 3

Table showing in Reserves and Surplus ((Rs in Crore)


2005-06 511.67 21.07

2006-07 684.37 23.82

2007-08 931.96 28.89

2008-09 906.38 24.37

2009-10 985.88 23.41

Analysis:

The above table shows that in the year 05-06 reserve and surplus was Rs

311.67 Crores i.e.,21.07% of total assets, It increased in 06-07 and 07-08 at the

rate of 23.82%, 28.89% But in 08-09 and 09-10 it decreased to 24.37% &

23.41%.



Graph: 3

Graph showing Reserves and Surplus ((Rs in Crore)

2005-06; 21.07

2006-07; 23.82

2007-08; 28.89

2008-09; 24.37

2009-10; 23.41

Interpretation:

Reserves and surplus is increased year to year up to 2008 i.e., 28.89%

increased but from 07-08 to 09-10 its keep on decreasing. It shows that the level of

operating efficiency of BESCOM is decreasing and showing satisfactory.



Table: 4

Table showing secured loans ((Rs in Crore)

Year Amount % to total

sources

2005-06 432.86 17.82

2006-07 613.62 20.62

2007-08 424.65 13.16

2008-09 509.32 13.92

2009-10 330.47 7.84

Analysis:

The above table shows that in the year 05-06 secured loan was 17.82%, In

2006-07 it increased to 20.62%, Then in 07-08 decreased to 13.16%, in 08-09

again increased to 13.92%, But in 09-10 decreased to 07.84%.



Graph: 4

Graph showing secured loans ((Rs in Crore)

2005-06; 17.82

2006-07; 20.622007-08; 13.16

2008-09; 13.92

2009-10; 7.84

Interpretation:

Secured loans is goes on decreasing except in the year 2007 and 2009 i.e.,

20.62% & 13.92 but it is decreased to 7.84% in the year 2010 . because of increase

in total Liability of the company.



Table: 5

Table showing unsecured loans (Rs in Crore)


2005-06 76.12 3.13%

2006-07 97.45 3.28%

2007-08 92.06 2.85%

2008-09 295.97 8.09%

2009-10 647.15 15.36%

Analysis:

The above table shows that in the year 05-06 unsecured loans rate was

3.13%, in 06-07 its increased to 3.28%, in 07-08 it decreased to 2.85%, From 08-

09 to 09-10 it increased to 8.09% and 15.36%.



Graph: 5

Graph showing unsecured loans (Rs in Crore)

2005-06 2006-07 2007-08 2008-09 2009-100.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

3.13% 3.28% 2.85%

8.09%

15.36%

year

Unse

cure

d lo

an

Interpretation:

Unsecured loans are increased in the year 2010 i.e., 15.36%. When

compared previous year its double increased.



Table: 6

Table showing other funds ((Rs in Crore)


2005-06 1196.41 49.31

2006-07 1373.48 45.31

.2007-08 1570.13 48.68

2008-09 1740.13 48.35

2009-10 1832.50 43.51

Analysis:

In the above table it shows that, In 05-06 other funds rate of % was 49.31,

in 06-07 decreased to 45.31% , In 07-08 again increased to 43.68%, In 08-09 and

09-10 decreased to 48.35% and 43.51% respectively



.

Graph: 6

Graph showing other funds ((Rs in Crore)

2005-06 2006-07 2007-08 2008-09 2009-1040

41

42

43

44

45

46

47

48

49

50 49.31

45.31

48.6848.35

43.51

Year

Oth

er fu

nd

Interpretation:

Other funds are decreased compared to last 2 year. That means borrowing

from outside is reduced in 2009 & 10 i.e., it is reduced up to 48.35%. & 43.51

respectively.



Table: 7

Table showing fixed assets (Rs in Crore)

Analysis:

Above table

shows the fixed assets

of company is increased

starts from 05-06 and

continued to 06-07, 07-

08, 08-09 with

52.72%,

54.41%,65.03%, 73.74% But in 09-10 it decreased to 70.88%.

Graph: 7



application of

fund

2005-06 1279.99 52.72

2006-07 1618.93 54.41

2007-08 2109.01 65.03

2008-09 2697.75 73.74

2009-10 2985.27 70.88


Graph showing fixed assets (Rs in Crore)

2005-062006-07

2007-082008-09

2009-10

0

10

20

30

40

50

60

70

80

52.72 54.41

65.03

73.7470.88

Year

Fixe

d as

sets

Interpretation:

Fixed assets are increased year to year until to 2009 but, reduce the fixed

assets from 73.74% to 70.88%. It shows that the long-term strength is satisfactory

and equities are effectively utilized in capital assets.

Table: 8



Table showing net current assets ((Rs in Crore)


application of fund

2005-06 1147.80 47.28

2006-07 1355.97 45.59

2007-08 1115.77 34.97

2008-09 596.57 16.32

2009-10 350.88 8.33

Analysis:

Above table shows the net current assets of the BESCOM was 47.28% of total

asset, But in 06-07, 07-08, 08-09 and in 09-10 it decreased to 45.59%, 34.97%, 16.32%

and 8.33% respectively.



Graph: 8

Graph showing net current assets ((Rs in Crore)

2005-06 2006-07 2007-08 2008-09 2009-100

5

10

15

20

25

30

35

40

45

50

YEAR

Net

Cur

rent

Ass

ets

Interpretation:

Current assets are slightly decreased year to year i.e., in 2006 it was

47.28%, and then it decreased to 8.33%. It shows that the weakening of working

capital position of the company.



Table: 9

Table showing current liabilities and provisions (Rs in Crore)


application of fund

2005-06 1293.20 53.26

2006-07 1375.76 46.24

2007-08 1516.76 43.03

2008-09 1750.02 47.84

2009-10 1700.87 40.38

Analysis:

Above table shows the net current liability and provision was 53.26% in 05-

06, and in 06-07, 07-08 decreased to 46.24% and 43.03%, But in 08-09 increased

to 47.84%, in 09-10 decreased to 40.38%.



Graph: 9

Graph showing current liabilities and provisions (Rs in Crore)

2005-06 2006-07 2007-08 2008-09 2009-100

10

20

30

40

50

60 53.26

46.2443.03

47.84

40.38

YEAR

Cure

nt li

abili

ty a

nd p

rovi

sons

Interpretation:

Current liabilities decreased in every year except the year 2009(47.84).

Even it’s decreased in 2010, its having 40.38% of total liability. It shows the

weakening of working capital position in BESCOM.



Table: 10

Table showing Sundry Debtors (Rs in Crore)


application of fund

2005-06 1858.64 72.51

2006-07 1884.40 63.34

2007-08 1484.99 46.04

2008-09 1405.80 38.43

2009-10 1791.97 42.55

Analysis:

The above table shows that, there were 72.51% of sundry debtors to the

total application of fund in 05-06 & it decreased year by year till 08-09 to 38.43%

& increased in 09-10 to 42.55%.



Graph: 10

Graph showing Sundry Debtors (Rs in Crore)

2005-062006-07

2007-082008-09

2009-10

0

10

20

30

40

50

60

70

80 72.51

63.34

46.04

38.43 42.55

Year

Sund

ry D

ebto

rs

Interpretation:

Sundry debtors are decreasing year to year i.e., 72.51% in 2006 but its

increased its sundry debtors rate in 2010 i.e., 42.55%.



Table: 11

Table showing loans, advances and deposits (Rs in Crore)


application of fund

2008-06 143.99 5.93

2006-07 276.07 9.27

2007-08 279.10 8.61

2008-09 171.88 4.29

2009-10 171.60 4.07

Analysis:

The above table shows that loans, advances & deposits were 5.93% to the

total application of fund then it increased to 9.27%, in 07-08 it starts to decrease

and continue to 08-09 & 09-10 that is 8.61%, 4.29% & 4.07% respectively.



Graph: 11

Graph showing loans, advances and deposits (Rs in Crore)

2008-06 2006-07 2007-08 2008-09 2009-100

1

2

3

4

5

6

7

8

9

10

5.93

9.278.61

4.29 4.07

Year

Loan

s,Adv

ance

s & D

epos

its

Interpretation:

Loans, advances and deposits are decreased by 4.07%. this shows that the

company has reduced the external capital in its capital structure. This is also a

good sign of improvement.



Table: 12

Table showing provision for Depreciation on fixed assets (Rs in Crore)


application of fund

2005-06 788.99 32.49

2006-07 781.68 26.27

2007-08 858.97 26.63

2008-09 945.48 25.84

2009-10 1087.43 25.81

Analysis:

The above shows that in 05-06 provision for depreciation on fixed assets

was 32.49%, In 06-07 it decreased to 26.27%, and increased to 26.63% in 07-08,

and decreased to 25.84%. 25.81% in 08-09 % 09-10 respectively.



Graph: 12

Graph showing provision for Depreciation on fixed assets (Rs in Crore)

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

32.49

26.27 26.6325.84 25.81

Year

Depr

iciati

on o

n Fi

xed

asse

t

Interpretation:

This table shows that there is a continuous decrease in provision for

depreciation on fixed assets. This shows that the company is not effectively

utilizing the current earnings of the company.



Table: 13

Table showing cash and bank balances (Rs in Crore)


application of fund

2005-06 200.86 8.27

2006-07 273.08 9.17

2007-08 406.05 12.61

2008-09 59.54 1.62

2009-10 110.81 2.63

Analysis:

The above shows that in 05-06 cash and bank balance was 08.27% of total

assets. In 06-07 increased to 09.17%, in 07-08 increased to 12.61% but it

decreased to 1.62% in 08-09, and in 09-10 increased to 2.63%.



Graph: 13

Graph showing cash and bank balances (Rs in Crore)

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

8.27

9.17

12.61

1.62

2.63

Percentage

Interpretation:

When compared to last year Cash and bank balances of the company is

increased,. But its very lesser compared to preceding previous year.



Table: 14

Table showing profit and loss (Rs in Crore)

Year Amount

2005-06 162.88

2006-07 213.19

2007-08 225.76

2008-09 -362.47

2009-10 -350.88

Analysis:

The above table shows that BESCOM earns 162.88 crores in 05-06 and

increased to 213.19 & 225.76 Crore but in 08-09 and 09-10 it’s incurring a loss of

Rs 362.47&350.88 crores.



Graph: 14

Graph showing profit and loss (Rs in Crore)

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

-400

-300

-200

-100

0

100

200

300

162.880000000001213.19 225.76

-362.47 -350.88

Year

Profi

t or L

oss

Interpretation:

BESCOM was good profit earning company till the year 2008 but from

2009 its incurring a loss. In previous year loss was 350.88 Lakhs



CHAPTER VI

SUMMARY OF FINDINGS, SUGGESTIONS AND

CONCLUSIONS

Findings

Share capital percentage is continuously decreased compare to previous

years. It is decreased to 4.89% in the year 2010. It shows that negligence of

share holders in improving or in investing the shares to the company.

Reserves and surplus is increased from 906.38 lakhs to 985.88 lakhs but it

is reduced in the overall % of total assets and it decreases from 24.37% to

23.41%.

Borrowings are decreased to 4.07% this shows that the company has

reduced its barrowings and capital structure.

Working capital position of the company is not good because its current

assets (i.e.876.8 lakh) are more than its current liabilities (i.e.1700.81 lakh).

Financial performance of the company is satisfactory, because its

investment in fixed assets and on long-term investments are more than 50%

of total balance sheet values.

There is loss in BESCOM in the year 2009 (362.47 lakhs) and in the year

2010 it occurs a loss of Rs.350.88 lakhs.

The major thing is , the GOK has distributed the 210 crorers as equity

investment of RS.32 crore and interest free loan of Rs.118 crore.



There is increase in cash and bank balance i.e. 595.43 lakhs to 1108.14

lakhs which doubled when compared to last year. It shows the BESCOM

has deposits with the bank and having good cash position.



Suggestions

The company has to take reasonable steps to reduce or control the rate of

increase in operation expense of the company.

The company has to use its existing resources on fixed assets effectively for

further improvement on earnings in operating income.

Fixed assets occupied more than 50% of total assets of the company. Proper

steps should be taken to maintain them properly and it is observed that the

fixed assets are not being utilized properly. It is advisable for the company

to go for maximum utilization of the available resources.

No doubt, the working capital position of the company is not good because

of decrease in current assets and increase in current liabilities so, proper

steps should be taken by the company to improve the working capital

position of the company.

We know very well that returns generated from investment on current

assets and are very less and further it is just for short-term period. So, it is

advisable to the company to concentrate on this particular issue to further

strengthen its operating efficiency.

From last year i.e. from 2009 company is incurring loss so, it is advisable to

the company in increasing its profit through investment in long-term assets

utilizing resources of the company properly and effectively.



Long-term in the capital structure of the company is negligible. This shows

that the company has not capitalized the available debt facility. This is

because debt is the cheapest source of finance than any other sources.

Company has sufficient precision for depreciation fixed assets. It is

advisable for maximum utilization of this particular sources.

It is also advisable to the company to improve its cash and bank balances of

the company.

Instead of keeping resources and surplus as idle, it is advisable for further

utilization of this source of finance.



Conclusion

The company has not favorable in working capital position in all the past 5 years.

Because continuous decrease in current assets of the company. Long-term

financial strength of the company is excellent because investment on fixed assets

and long-term investments are more than 50% of total assets of the company. But

this resource is not properly utilized in making/earning profit in the company.

The operating performance of the company is satisfactory in all the year except in

2009 2010. The company is running under the loss.

In the overall financial performance of the company except in 2009 & 2010 was good in

all last 3 years The step should be taken by the company to improve the operating

efficiency and financial position of the BESCOM company.


Yash full

Education

Transcript of Yash full