This action might not be possible to undo. Are you sure you want to continue?
CHAPTER A B C PARTICULARS LIST OF TABLES LIST OF FIGURES LIST OF ABBREVIATIONS EXECUTIVE SUMMARY, INTRODUCTION AND DESIGN OF THE STUDY 1.1 Executive Summary 1.2 Introduction of the Study 1.3 Objective of the Study CHAPTER I 1.4 Research Methodology 1.4.1 Research Design 1.4.2 Nature of Data 1.4.3 Methods Data Collection 1.4.4 Research Tools 1.5 Limitations of the Study CHAPTER II CHAPTER III REVIEW OF LITERATURE PROFILE 3.1 Industry Profile 3.2 Company Profile CHAPTER IV CHAPTER V DATA ANALYSIS AND INTERPRETATION FINDINGS AND SUGGESTIONS 5.1 Findings 5.2 Suggestions CONCLUSION AND BIBLIOGRAPHY CHAPTER VI 6.1 Conclusion 6.2 Bibliography APPENDICES PAGE NO. 2 3 4 5-29 6 8 27 28 28 28 28 28 29 30-38 39-76 40 63 77-113 114-118 115 117 119-123 120 121 124-136
LIST OF TABLES
SR. NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Current Ratio Liquid Ratio Absolute Liquidity Ratio Debt Equity Ratio Proprietary Ratio Fixed Assets Turnover Ratio Working Capital Turnover Ratio Total Assets Turnover Ratio Capital Turnover Ratio Return on Total Assets Gross Profit Ratio Net Profit Ratio Return on proprietor’s fund Administration and Selling Expense Ratio Cost of Energy Ratio Cost of Fuel Ratio Cost of Tax ratio Expenditure on EPC PARTICULARS PAGE NO. 78 80 83 86 88 90 92 94 96 98 100 102 104 106 108 110 112 114
LIST OF FIGURES
SR. NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Current Ratio Liquid Ratio Absolute Liquidity Ratio Debt Equity Ratio Proprietary Ratio Fixed Assets Turnover Ratio Working Capital Turnover Ratio Total Assets Turnover Ratio Capital Turnover Ratio Return on Total Assets Gross Profit Ratio Net Profit Ratio Return on proprietor’s fund Administration and Selling Expense Ratio Cost of Energy Ratio Cost of Fuel Ratio Cost of Tax ratio Expenditure on EPC PARTICULARS PAGE NO. 79 81 83 85 87 89 91 93 95 97 99 101 103 105 107 109 111 113
LIST OF ABBREVIATIONS GDP EPS ROI OBC ETFs DEA FDI Gross domestic product Earnings Per Share Return on Investment Off Balance Sheet Exchange Trade Funds Data Envelopment Analysis Foreign Direct Investment 4|Page .
I EXECUTIVE SUMMARY.CHAPTER . INTRODUCTION AND DESIGN OF THE STUDY 5|Page .
Incorporated in 1929.1 EXECUTIVE SUMMARY Infrastructure is the basic physical and organizational structures needed for the operation of a society or enterprise. construction relating to agro-processing projects and reservation and storage of perishable goods. including industrial parks. Karnataka and Goa. power grids. and telecommunications. sales. Procurement and Construction (EPC) segment of the power sector. The agriculture sector comprises infrastructure-related storage facilities. Andhra Pradesh. It ranks among India‟s top listed private companies on all major financial parameters.24. Currently. including assets. The term typically refers to the technical structures that support a society. Reliance Infrastructure group is engaged in the implementation of projects not only in the fields of generation. rail system and logistics. educational institutions and hospitals and solid waste management systems. Reliance Infrastructure is one of India‟s fastest growing companies in the infrastructure sector. or the services and facilities necessary for an economy to function. Kerala. ports. Reliance Infrastructure has emerged as the leading player in India in the Engineering. the transportation sector is the most important. In the last few years. sewers. Within the Infrastructure of India. one of the leading business houses in India. distribution and trading of power but also in other key infrastructural areas such 6|Page . The Company generates over 940 MW of electricity through its power stations located in Maharashtra. water supply.1. Mumbai and Delhi. also play significant role in Indian economy. profits and market capitalization. Reliance Infrastructure Limited is a part of the Reliance Group. tourism and entertainment centers. Reliance Infrastructure has expanded its foot-print much beyond the power sector. including the aviation. special economic zones. such as roads.300 sq kms and includes India‟s two premier cities. real-estate development. roads. Among others essential sectors. transmission. Reliance Infrastructure companies distribute more than 36 billion units of electricity to over 30 million consumers across an area that spans over 1.
metro rail and other mass rapid transit systems. cement. profitability and solvency position. airports. Thus this thesis is about financial statements analysis of Reliance Infrastructure Limited. In order to analyze the financial statements the Ratio analysis method was used. roads. The expected results would reveal the liquidity. The main motto behind choosing this company is it is one of the leading private sector undertaking and in the present context of disinvestment policy of government of India. bridges. 7|Page . etc. The objectives of the research include analyzing the profitability and solvency position of the company. real estate.as highways. special economic zones. many of the investors are interested in knowing the performance of this company and so the study has been undertaken.
They play a dominant role in setting the frame work of managerial decisions. At the right time to preserve solvency from the right sources and at the right cost of capital. The purpose of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. Whether owned or borrowed funds.1. This right quantity of money for liquidity consideration of right quality.2 INTRODUCTION OF THE STUDY Finance is one of the most primary requisites of a business and the modern management obviously depends largely on the efficient management of the finance. 8|Page . The term financial analysis is also known as „analysis and interpretation of financial statements‟ refers to the process of determining financial strength and weakness of the firm by establishing strategic relationship between the items of the Balance Sheet. Profit and Loss account and other operative data. Financial statements are prepared primarily for decision making. The finance manager has to adhere to the five R‟s with regard to money.
equipment. Current Assets include anything that company can quickly monetise. patents and trademarks. office salaries). and real estates. It provides operating income/earnings before interest and taxes (EBIT) ii) The balance sheet Balance sheets provide the observant with a clear picture of the financial condition of the company as a whole. usually one month. Examples of the assets of a company are its cash. as in the case of an income statement. buildings. or may reveal a series of activities over a given period of time. or notes receivables. notes receivable (other than from officers or employees). These good can be broken further down into three main categories. It may show a position at a moment of time as in the case of a balance sheet. It summarizes the results of the firm‟s operating and financing decisions during that time. cost of goods sold administrative and general expenses (advertising. lands. Thus. Assets that are owed to the company are referred to as accounts-. Such current assets include cash. government securities. accounts receivable. prepaid expenses. and any other item that could be converted into cash within one year in the normal course of business. 9|Page . Assets Assets include anything that the company actually owns and has disposal over. It lists in detail the tangible and the intangible goods that the company owns or owes. the liabilities and the shareholder‟s equity. and money owed by certain individuals or/and other businesses to the particular company.Financial statement: A financial statement is an organized collection of data according to logical and consistent accounting procedures. machinery. Its purpose is to convey an understanding of some financial aspects of a business firm. the assets. three months. i) The income statement An income statement is a summary of the revenues and expenses of business over a period of time. marketable securities. the term financial statement generally refers to the basis statements. furniture. or one year. inventories. Due to income statement Operating decisions of the company apply to production and marketing such as sales/revenues.
accrued expenses (eg. and notes-. or owners. current payment (due within one year) of long-term debts. other intellectual property. taxes payable to financial institutions. such as patents. Shareholder's equity The shareholder‟s equity (also called as net worth or capital) is money or other forms of assets invested into the business by the owner. and other obligations to creditors due within one year. royalties. and any other items with an expected useful business life usually measured in a number of years or decades (as opposed to assets that wear out or are used up in less than one year. equipment loans. salaries). machinery. Creditors (those that loan to the company) do not receive ownership in the business. Fixed assets are usually accounted as expenses upon their purchase. are also added to the 10 | P a g e . such as land. exclusive contracts. equipment. and/or other corporate entities. fixtures. or services to the company on credit. sale of property. Fixed Assets are long-term investments of the company. plant. Any net profits that are not paid out in form of dividends to the owner. to acquire assets and to start the business. Some examples of liabilities would be loans. and notes receivable from officers and employees. They are normally not for resale and are recorded in the Balance Sheet at their net cost less (less is accounting term for minus) accumulated depreciation. leasehold improvements. Long-term liabilities are due to be paid in more than one year. Current Liabilities are accounts-. Liabilities Liabilities are money or goods acquired from individuals. furniture. copyrights. or owners. Long-Term Liabilities are mortgages. and other payment obligation due to a creditor of the company. intermediate and long-term loans. wages. only a (usually written) promise that their loans will be paid back according to the term agreed upon. Other Assets include any intangible assets.
iii) A statement of retained earnings iv) A statement of charge in financial position in addition to the above two statement. Significance of Financial Statement Financial statement analysis is a significant business activity because a corporation's financial statements provide useful information on its economic standing and profit levels. 11 | P a g e . The analysis is done by properly establishing the relationship between the items of balance sheet and profit and loss account the first task of financial analyst is to determine the information relevant to the decision under consideration from the total information contained in the financial statement. Company A may analyze levels of cash. evaluate cash receipts and payments during a period and appraise owners' investments in the company. Thus financial analysis is the process of selection relating and evaluation of the accounting data/information. a regulator or a company's top management understands operating data. such as the Securities and Exchange Commission (SEC). inventories and accounts receivable to appraise short-term assets. Alternatively. These statements also help an investor. A corporation also may analyze financial statements to gauge levels of cash flows and owner investments. Losses during the operation of the business are subtracted from the shareholder‟s equity. may review a company's retained earnings statement to appraise corporate shareholders' accounts. The final step is interpretation and drawing of inferences and conclusion. a regulator. The second step is to arrange information in a way to highlight significant relationship.shareholder‟s equity. Function 1. For instance. Financial statement analysis allows a corporation to review operating data and evaluate periodic business performance. Financial statement analysis: It is the process of identifying the financial strength and weakness of a firm from the available accounting data and financial statement.
12 | P a g e . may review the company's financial position at the end of the year to gauge cash available and inventory quantities on hand. such as salaries.. may review levels of sales and expenses each month to understand whether the company's expenses are appropriate based on sales. require a company to prepare a full set of financial statements on a quarterly or annual basis. Mr. Financial statement analysis is a significant business practice because it helps top management review a corporation's balance sheet and income statement to gauge levels of economic standing and profitability. and short-term liabilities. the chief financial officer (CFO) of a large distribution company. may review cash payments for operating activities to gauge trends in interest payments. reviews the company's balance sheet and compares short-term assets. Let's say Mr. Benefits 5. Generally accepted accounting principles (GAAP) and regulatory guidelines. A. A. Types 3. As an example. an accountant at a large retail store. A statement of owners' equity may help an investor identify a company's shareholders. a statement of cash flows and a statement of retained earnings (also called statement of owners' equity).. For example. Alternatively. A full set of financial statements includes a balance sheet (or statement of financial position). a statement of income (also known as statement of profit and loss). Financial statement analysis may be pivotal for management to understand levels of cash receipts and disbursements in corporate operations. Mr. such as SEC rules. Mr. interest and taxes payable.. A statement of cash flows lists cash flows related to operating activities. B. Features 4. B. such as cash and inventories. the CFO of the sample company. A. investments and financing transactions. A company's accounting department may perform financial statement analysis throughout the year or at a specific point in time. Mr.Time Frame 2. may note that the $100 million difference between short-term assets and liabilities (also called working capital) is a sign of economic health.
In these statements. (ii) Comparative balance sheet: Comparative balance sheet as on two or more different dates can be used for comparing assets and liabilities and finding out any increase or decrease in those items. while in a single balance sheet the emphasis is on present position. 1) Comparative financial statement: Comparative financial statement is those statements which have been designed in a way so as to provide time perspective to the consideration of various elements of financial position embodied in such statements. figures for two or more periods are placed side by side to facilitate comparison. the reader can quickly ascertain whether sales have increased or decreased. Such a balance sheet is very useful in studying the trends in an enterprise. A comparative income statement will show the absolute figures for two or more periods. 13 | P a g e .Types of Analysis 1) Comparative analysis statement 2) Common-size analysis statement 3) Trend analysis 4) Ratio analysis. the change in terms of percentages. it is on change in the comparative balance sheet. the figures for two or more periods are shown side by side. Thus. whether cost of sales has increased or decreased etc. Since. the absolute change from one period to another and if desired. (i) Comparative income statement: The income statement discloses net profit or net loss on account of operations. But the income statement and balance sheet can be prepared in the form of comparative financial statement.
In other words it is a detailed examination of a company's financial ratios and cash flow for several accounting periods to determine changes in a borrower's financial position.2) Common-size financial statement: Common-size financial statement are those in which figures reported are converted into percentages to some common base in the income statement the sales figure is assumed to be 100 and all figures are expressed as a percentage of sales. turnover ratio (conversion of inventory and receivables to cash). Similarly. and the quick assets ratio or quick ratio (current assets divided by current liabilities). The ratio analysis is based on the fact that a single accounting figure by itself may not communicate any meaningful information but when expressed as a relative to some other figure. 14 | P a g e . and is a useful and necessary tool in determining whether the borrower's financial strength is improving or deteriorating. strengths and weakness of a firm. The term ratio in it refers to the relationship expressed in mathematical terms between two individual figures or group of figures connected with each other in some logical manner and are selected from financial statements of the concern. in the balance sheet. it may definitely provide some significant information the relationship between two or more accounting figure/groups is called a financial ratio helps to express the relationship between two accounting figures in such a way that users can draw conclusions about the performance. Trend analysis helps to understand overall financial performance over a period of time. 3) Trend Analysis: Trend analysis is a study of a company's financial performance over an extended period of time. the total of assets or liabilities is taken as 100 and all the figures are expressed as a percentage of this total. Key ratios examined include debt coverage ratio. Trend analysis is a key part of credit underwriting. 4) Ratio analysis: Ratio analysis is a widely used tool of financial analysis.
i) Current ratio: Current ratio may be defined as the relationship between current assets and current liabilities it is the most common ratio for measuring liquidity. Current assets are those. It is calculated by dividing current assets and current liabilities. 15 | P a g e . quick ratio. and marketable securities.) current ratio. ABSOLUTE LIQUIDITY RATIO: Absolute liquid assets include cash. The term quick assets or liquid assets refers current assets which can be converted into cash immediately it comprises all current assets except stock and prepaid expenses it is determined by dividing quick assets by quick liabilities. Current assets -----------------------Current liabilities Current assets = ii) Liquid Ratio: The term „liquidity‟ refers to the ability of a firm to pay its short-term obligation as and when they become due. Current liabilities are those amounts which are payable with in a period of one year.g. This ratio is obtained by dividing cash and bank and marketable securities by current liabilities.Classification of ratios: A) Liquidity ratios B) Leverage ratios C) Activity ratios D) Profitability ratios A) LIQUIDITY RATIOS: These ratios portray the capacity of the business unit to meet its short term obligation from its short-term resources (e. the amount of which can be realized with in a period of one year. Liquid assets ------------------------Liquid liabilities Liquid ratio = iii). bank.
) debt equity ratio. (E. This ratio shows the long-time solvency of the business it is calculated by dividing proprietor‟s funds by the total tangible assets.g. etc. This ratio is computed by dividing the total debt of the firm by its equity (i. The term „solvency‟ refers to the ability of a concern to meet its longterm obligation. Accordingly. This relationship is shown by the debt equity ratio. long-term solvency ratios indicate a firm‟s ability to meet the fixed interest and costs and repayment schedules associated with its long-term borrowings. This ratio indicates the relative proportion of debt and equity in financing the assets of a firm.e. It is a popular measure of the long-term financial solvency of a firm. Outsider’s funds ---------------------------Proprietor’s funds Debt equity ratio = ii) Proprietary ratio: Proprietary ratio relates to the proprietors funds to total assets. i) Debt equity ratio: It expresses the relationship between the external equities and internal equities or the relationship between borrowed funds and „owners‟ capital.Cash + bank +marketable securities Absolute liquidity ratio = ----------------------------------------------------Current liabilities B) LEVERAGE RATIOS: Many financial analyses are interested in the relative use of debt and equity in the firm. It reveals the owners contribution to the total value of assets. proprietary ratio.) net worth. Proprietor’s funds Proprietary ratio = -----------------------------------Total tangible assets C) ACTIVITY RATIOS: 16 | P a g e .
) stock turnover ratio. Net profit Return on total assets = ----------------------------. i) Fixed assets turnover ratio: The ratio indicates the extent to which the investments in fixed assets contribute towards sales. It is a good measure over –trading and under-trading. fixed assets turnover ratios etc. It measures the profitability of investment. The overall profitability can be known by applying this ratio. The greater the rate of turnover. They are intended to measure the effectiveness of the assets management the efficiency with which the assts are used would be reflected in the speed and rapidity with which the assets are converted into sales. It indicates whether the investment in fixed assets has been judious or not the ratio is calculated as follows.g. the more efficient the management would be (E. This ratio indicates the number of times the working capital is turned over in the course of a year. Net sales ---------------------------Net working capital Working capital turnover ratio = iii) Return on total assets: Profitability can be measured in terms of relationship between net profit and total assets.x100 Total assets 17 | P a g e . If compared with a previous year. Net sales Fixed assets turnover ratio = ------------------Fixed assets ii) Working capital turnover ratio: Working capital turnover ratio indicates the velocity of the utilization of net working capital.These ratios evaluate the use of the total resources of the business concern along with the use of the components of total assets.
From this ratio one can understand how the assets are performing and being utilized in achieving the objectives of the company. Gross profit ----------------------------------. Total assets ----------------Net assets Total assets turnover ratio = v) CAPITAL TURNOVER RATIO: This is a ratio which shows how much sales are entertained from the capital. These ratios highlight the end result of business activities by which alone the overall efficiency of a business unit can be judged. It shows how the sales are attracted from the Proprietor's Fund. Net profit ratio.) gross ratios. (E.iv) TOTAL ASSETS TURNOVER RATIO: This ratio is an indicator of how the resources of the organization utilized for increasing the turnover.g.x 100 Net sales Gross profit ratio = ii) Net profit ratio: 18 | P a g e . i) Gross profit ratio: This ratio expresses the relationship between Gross profit and sales. It shows the ratio between the total assets and the net sales of the company. Sales ----------------------Proprietor’s fund Capital turnover ratio = D) PROFITABILITY RATIOS: The profitability ratios of a business concern can be measured by the profitability ratios. A high gross profit ratio is a good management as it implies that cost of production is relatively low. It indicated the efficiency of production or trading operation.
It is different from the “Net operating profit” which is used for computing the „Return on total capital employed‟ in the business.x 100 Net sales Net profit sales = iii) Return on Shareholder’s Fund In case it is desired to work out the productivity of the company from the shareholder‟s point of view.e. iii) EXPENSES RATIO: There are two main ratios 1) Indirect Expense ratio 2) Direct Expense Ratio 1) Indirect Expense Ratios This ratio establishes the relationship between various indirect expenses to net sales. Non. It is determined by dividing the net income after tax to the net sales for the period and measures the profit per rupee of sales.Net profit ratio establishes a relationship between net profit (after taxes) and sales. Net profit ----------------.X 100 Shareholders’ fund The term profit here means „Net Income after the deduction of interest and tax.Non-Operating expenses). it should be computed as follows: Net profit after Interest and Tax Return on shareholder’s fund = -----------------------------------------. a) Administration Expense Ratio: Administrative expenses 19 | P a g e . This is because the shareholders are interested in Total Income after tax including Net nonoperating Income (i.Operating Income .
x 100 Sales 2) Direct Expense ratio This ratio establishes the relationship between various direct expenses to net sales a) Cost of energy ratio Cost of energy -----------------------------------------Sales Expenses ratio = x 100 b) Cost of Fuel Ratio Cost of Fuel -----------------------------------.x 100 Sales Expenses ratio = d) Expenditure on EPC ratio 20 | P a g e .x 100 Sales b) Selling and Distribution Expense Ratio Selling & distribution expenses ratio = Selling &distribution expenses -------------------------------------------------------------------.x 100 Sales Expenses ratio = c) Cost of tax Ratio Cost of Tax -----------------------------------.Administrative expenses ratio = ------------------------------.
x 100 Sales 21 | P a g e .Expenses ratio = Expenditure on EPC -----------------------------------.
It is helpful in budgeting and forecasting: 22 | P a g e . the possible reasons of variations may be identified and if results are negative. The ratio analysis is one of the tools in the hands of those who want to know something more from the financial statements in the simplified manner. It ensures a fair return to its owners and secures optimum utilization of firms assets It helps in inter-firm comparison: Ratio analysis helps in inter-firm comparison by providing necessary data. It simplifies financial statement: The information given in the basic financial statements serves no useful Purpose unless it s interrupted and analyzed in some comparable terms. If comparison shows a variance.IMPORTANCE OF RATIO ANALYSIS It helps in evaluating the firm’s performance: With the help of ratio analysis conclusion can be drawn regarding several aspects such as financial health. the action may be initiated immediately to bring them in line. forecasting and controlling. Ratio points out the operating efficiency of the firm i. An inter firm comparison indicates relative position. to increase the investor‟s wealth. It provides the relevant data for the comparison of the performance of different departments. profitability and operational efficiency of the undertaking. whether the management has utilized the firm‟s assets correctly. It helps in determining the financial position of the concern: Ratio analysis facilitates the management to know whether the firms financial position is improving or deteriorating or is constant over the years by setting a trend with the help of ratios The analysis with the help of ratio analysis can know the direction of the trend of strategic ratio may help the management in the task of planning.e.
Accounting ratios provide a reliable data, which can be compared, studied And analyzed. These ratios provide sound footing for future prospectus. The ratios can also serve as a basis for preparing budgeting future line of action. Liquidity position: With help of ratio analysis conclusions can be drawn regarding the Liquidity position of a firm. The liquidity position of a firm would be satisfactory if it is able to meet its current obligation when they become due. The ability to met short term liabilities is reflected in the liquidity ratio of a firm. Long term solvency: Ratio analysis is equally for assessing the long term financial ability of the Firm. The long term solvency s measured by the leverage or capital structure and profitability ratio which shows the earning power and operating efficiency, Solvency ratio shows relationship between total liability and total assets. Operating efficiency: Yet another dimension of usefulness or ratio analysis, relevant from the View point of management is that it throws light on the degree efficiency in the various activity ratios measures this kind of operational efficiency. Help in investment decisions It helps in investment decisions in the case of investors and lending decisions in the case of bankers etc.
23 | P a g e
1. The purpose of objective of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. To determine the significance and meaning of the financial statement data so that forecast may be made of the future earnings, ability to pay interest and debt maturities (both current and the long term) and profitability of a sound dividend policy. Compare performance with past performance. To study the efficiency of the operations. To study the risk of operations.
3. 4. 5.
24 | P a g e
1.4 RESEARCH METHODOLOGY:
RESEARCH DESIGN The descriptive form of research method is adopted for study. The major purpose of descriptive research is description of state of affairs of the institution as it exists at present. The nature and characteristics of the financial statements of Reliance Infrastructure Limited have been described in this study. NATURE OF DATA The data required for the study has been collected from Primary and secondary source. 1. The primary data is collected from the questionnaire asked to the employee. 2. The relevant information taken from annual reports, journals and internet is secondary data. METHODS OF DATA COLLECTION This study is based on the annual report of Reliance Infrastructure Limited, magazines, journals. Hence the information related to, profitability, short term and long term solvency and turnover were very much required for attaining the objectives of the present study. TECHNIQUE USED Although the ratio analysis has so many limitations but this is best techniques, which is used internationally, used for measuring the strength and weaknesses of the company. This is modern method, which shows the overall profitability of the company, to know the better results the ratios are compared with the ratios of the other companies.
25 | P a g e
All the limitations of ratio analysis. 26 | P a g e . LIMITATION OF THE RATIO ANALYSIS The ratio analysis is one of the most powerful tools of the financial analysis. which can be accepted as norms. common-size statement. It renders interpretations of ratios difficult. they differ from some serious limitations. Though ratios are simple to calculate and easy to understand. Hence one has to be very careful while making decisions from ratios calculated from such financial statements.1.5 LIMITATIONS OF THE STUDY The period of study is 5 years from 2005-06 to 2009-10 The company could not provide me the recent data due to financial year ending. a) Limited use of a single ratio A single ratio usually does not convey much of the sense. c) Window dressing Financial statements can easily be window dressed to present a better picture of profitability to the outsiders. which is likely to confuse the analyst than help him in making any meaningful conclusions. b) Lack of Adequate standards There are no well-accepted standards or rules of thumb for all ratios. comparative statements. and trend analysis and interpret are applicable to this study. d) Price level changes While making ratio analysis no consideration is given to the price level and this makes the interpretations of the ratios invalid. To make a better interpretation a large number of ratios have to be calculated.
II LITERATURE REVIEW 27 | P a g e .CHAPTER.
the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements. However. Financial statements are prepared to meet external reporting obligations and also for decision making purposes. common size percentages. Tools and Techniques of Financial Statement Analysis: Following are the most important tools and techniques of financial statement analysis: 1. comparing it with the company's historical figures. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. trend analysis. Horizontal and Vertical Analysis 2. and ratios analysis. with its industry competitors. Ratios Analysis Article2: ANALYSIS OF FINANCIAL STATEMENTS-SELECTIVE TOOLS Any successful business owner is constantly evaluating the performance of his or her company. schedule of changes in working capital. They play a dominant role in setting the framework of managerial decisions. such as comparative statements. There are various methods or techniques that are used in analyzing financial statements.LITERATURE REVIEW: For the purpose of literature review the basic concepts of Fundamental analysis were studied. following are some the articles collected from various blogs and reports Article1 : FINANCIAL STATEMENT ANALYSIS Financial statement analysis is defined as the process of identifying financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. and similar studies relating to financial statements analysis are examined. and even with successful businesses from other industries. 28 | P a g e . funds analysis.
You must be able to read between the lines of your financial statements and make the seemingly inconsequential numbers accessible and comprehensible. a company that earns a higher percentage of profit compared to other companies is a better investment option. For example. and understand the risks you may be taking. Comparative ratio analysis helps you identify and quantify your company's strengths and weaknesses. 29 | P a g e . there are many well-tested ratios out there that make the task a bit less daunting. Article4: FINANCIAL RATIO ANALYSIS FOR PERFORMANCE CHECK AUTHOR: GOPINATHAN THCCHAPPILLY APR 12. All other things remaining the same. you need to look at more than just easily attainable numbers like sales. This massive data overload could seem staggering. Financial analysis using ratios between key values help investors cope with the massive amount of numbers in company financial statements. evaluate its financial position. financial ratio analysis can spot better investment options for investors. profits. they can compute the percentage of net profit a company is generating on the funds it has deployed. 2009 Used externally. Luckily. and total assets.To complete a thorough examination of your company's effectiveness. however. index funds or ETFs then you don‟t need to know the details but it is useful to know the terminology since fund managers and other investing types will often talk about details from the financial statements in the business section of the news. If you invest in mutual funds. business managers can spot business areas requiring attention. and internally. Article3: WHY SHOULD I CARE ABOUT FINANCIAL STATEMENT ANALYSIS? The detailed information available on financial statements is only of interest to someone who is doing some extensive research on individual stocks.
Only by examining and drawing conclusions from a financial statement. do you ever wonder how the value of the companies you‟ve put your money in is determined? What factors decide how well a company is really doing? What‟s the source of the company‟s financing? Will it meet or exceed this quarter‟s projections? While some consider the stock market to be little more than a house of cards. For example. We will be looking at the different ratio categories in separate articles on: Profitability Ratios Liquidity Ratios Debt Ratios Performance Ratios Article5: UNDERSTANING FINANCIAL STATEMENT BY ANA GONZALEZ RIBIERO ON 6/30/2009 When looking over your investments. subject to the whims of individual investors. or fine tune the measurements. There are ratios to measure the company's: Financial health Operating performance Cash flows and liquidity Under each category. there are. Take a statement It‟s not an interrogation but you‟ll want to ask the hard questions before you invest. different profitability ratios measure profit margins at different stages return on owners' funds and effective tax burden. will you truly know how well a company is doing. there are multiple ratios that measure different aspects. some very real and measurable things that can help you to diagnose the financial health of a company. in fact.Financial Ratios Can Measure Different Things The Net Profit to Capital Employed ratio mentioned above measures the success of a company in using funds available to it. 30 | P a g e .
While you might be tempted to invest in a company because you like its products or because you‟ve just read a favorable article about it in a magazine or newspaper. you should make sure you‟ve done your research before ponging up your hard earned cash. they will give you a rough idea. Article7: SEVEN HABITS FOR FINANCIAL STATEMENT ANALYSIS AND BUSINESS NEWS REPORTING BY CFA INSTITUTE Journalists and analysts know that “earnings” may not really be earnings and that press releases can be a way for a company to spotlight good news only.Know the facts Investing should never be based on emotion. They are based on activities of numerous industries. and acronyms and one can easily get lost trying to discern the real headline. CFA Institute created this checklist to use when analyzing a company and its financial statements and to better understand the due diligence that Professionals undertake in developing successful investment strategies for 2006. However. semantic issues. includes a combination of financial statements and business ratios to help the credit community to compare a company's financial performance to its peer group by industry size and region. Add to that the myriad of technical terms. Key Business Ratios can be obtained from companies like D&B (Dun & Bradstreet) or RMA. Article6: KEY BUSINESS RATIO Industry Norms and Key Business Ratios: The following key business ratios were obtained from the public domain and may not be accurate. 31 | P a g e . Their ratios are developed and derived from the financial statements in their extensive database. For more information and an extensive list of the key business ratios please contact your local Dun & Bradstreet or RMA office. To help navigate through the maze of financial data.
consumers. MEHTA "This paper is primarily based on Rogers‟ diffusion of innovations theory and Auger‟s empirical study. Our primary interest is to assess the adequacy of the literature in informing corporate managers how." 10. We seek to identify achievements and limitations of this literature and to highlight areas for further research. WILDT "Using a contingency model of global sourcing strategy. To do so. BY Dr. JOURNAL OF INDUSTRIAL TECHNOLOGY • VOLUME 19. Web technology is an innovation that affects company‟s performance. 2000 "We review the growing literature relating corporate environmental performance to financial performance. BY DONALD P. and where to make pro-environment investments that will pay off with financial returns for long-term shareholders. VOL 26. The diffusion of innovations theory states that an innovation brings changes to a company. and return-on-investment (ROI). MURRAY. employees. ON MARCH 27. costs. public health scientists.8." 9. environmental advocates. MASAAKI KOTABLE & ALBERT R. and other interested parties upon corporate financial returns. JOURNAL OF INTERNATIONAL BUSINESS STUDIES (1995). Financial performance was measured using four financial indicators: sales. DEVANG P. when. NUMBER • FEBRUARY 2003 To APRIL 2003 PAGE. An empirical research study was conducted to investigate the perceived financial performance of commercial printing firms for conducting business-to-customer (B2C) activities using Web technology. we create a conceptual framework that maps the influence of regulators. profits. ENVIRONMENTAL AND FINANCIAL PERFORMANCE LITERATURE. CRAM. PAGE 181–202 BY JANET Y. Our discussion has relevance to all parties interested in influencing corporate actions that affect the environment. this study investigated the moderating effects of sourcing-related factors on the relationship between 32 | P a g e . This paper investigates the effect of Web technology on commercial printing firms‟ financial performance.
However. PAGES 48–58. In this paper we demonstrate that Data Envelopment Analysis (DEA) can augment the traditional ratio analysis." 11. ON MAY 23. process innovation and asset specificity were significant moderator variables for financial. In other words. BY PHILIPPE JACQUART. DEA can provide a consistent and reliable measure of managerial or 33 | P a g e . whether a particular sourcing strategy should be used for a particular product depended on the levels of product innovation. the results provided no support for bargaining power of suppliers and transaction frequency as moderator variables. The results lent some support to the contingency model of global sourcing strategy in that product innovation. and controlling for country and industry effects. FEROZ . which in part explains their wide appeal. their interpretation is problematic. CATHERINE RAMUS & JOHN ANTONAKIS. In general. Indeed. need for power and responsibility disposition were positively predictive whereas need for achievement and affiliation were negatively predictive of outcomes. "We investigate whether CEO implicit motives predict corporate social performance and financial performance. While ratios are easy to compute. especially when two or more ratios provide conflicting signals." 12. performance. JOURNAL OF OPERATIONAL RESEARCH SOCIETY (2003) VOL54. H. but not strategic. Using longitudinal data on 258 CEOs from 118 firms. 2004. in achieving high financial performance for a product. IMPLICATION FOR FINANCIAL PERFORMANCE AND CORPORATE SOCIAL RESPONSIBILITIES. corporate social responsibility had no link to financial performance. we found that motives significant predicted both financial performance (Tobin's Q and the CAPM) and social responsibility. process innovation and asset specificity. Contrary to previous theorizing.sourcing strategy and a product's strategic and financial performance. BY E. ratio analysis is often criticized on the grounds of subjectivity that is the analyst must pick and choose ratios in order to assess the overall performance of a firm. Our findings suggest that executive characteristics have important consequences for corporate level outcomes."Ratio analysis is a commonly used analytical tool for verifying the performance of a firm.
Our results reject the null hypothesis indicating that DEA can provide information to analysts that is additional to that provided by traditional ratio analysis. We test the null hypothesis that there is no relationship between DEA and traditional accounting ratios as measures of performance of a firm.operational efficiency of a firm. We also apply DEA to the oil and gas industry to demonstrate how financial analysts can employ DEA as a complement to ratio analysis." 34 | P a g e .
CHAPTER III PROFILE 35 | P a g e .
1 INDUSTRY PROFLE INTRODUCTION Infrastructure is the basic physical and organizational structures needed for the operation of a society or enterprise.3. and direct capital toward durable. In some contexts. disabled. for example. They can be built. sustain. In military parlance. redeployment. power grids. In doing so. the term refers to the buildings and permanent installations necessary for the support. sewers. they facilitate economic productivity and promote a standard of living. repair and replacement. The term typically refers to the technical structures that support a society. and their citizens‟ ability to understand. water supply. networked assets with widespread societal benefits. and telecommunications. and also for the distribution of finished products to markets. and function together to form interrelated. or the services and facilities necessary for an economy to function. the term may also include basic social services such as schools and hospitals. such as roads. 36 | P a g e . dependent systems that deliver needed commodities and services to society. and operation of military forces Encompassing all things to all people is hardly a useful way to define infrastructure – clouding investors. enabled. touched. roads enable the transport of raw materials to a factory. Infrastructure can then be more concisely defined as “The physical components of interrelated systems providing commodities and services essential to enable. or enhance societal living conditions. Primary infrastructure components are generally monopolistic in nature and require large financial commitments for their development. Infrastructure facilitates the production of goods and services. governments. advocate.
that suits the international standards provide the nation with a discrete cutting edge in worldwide rivalry. India is one of the rapidly emerging markets across the world.INFRASTRUCTURE IN INDIA The time tested Indian organizations provide international investors a lucid ambiance that ensures the protection of their long-standing endowments. suspension bridges and passageways. telecommunications. petroleum 37 | P a g e . To develop the national highways. a refined legal and accounting structure and a user-friendly infrastructure. a judicial system that can claim superiority above the government. At present. The Monopoly and Restrictive Trade Practices Act (MRTP Act) was sanctioned in an attempt to endorse bigger sector to make a foray into the road industry. water management. The administration is also considering the latest telecommunications strategy that targets at the enhancement of quality to an international level and indirectly triggers the growth of India as a chief manufacturer and exporter of telecommunication set-ups.000 automobiles and countless pedestrians. Across the globe. Infrastructure in India include transportation. The road transport of India has been announced as a priority sector with loans available from the governments at positive provisions. Howrah Bridge at Kolkata is the busiest with regular stream of 58. the National Highways Act has been altered to assist the diminution of taxes on national motorways. Equipped with highly skilled professionals and technical workforce. Private contribution in the energy industry has been motivated with the decline of import tariffs that is a 5 year tariff relief for new energy schemes and a 16% equity return. agriculture. India's self-motivated and extremely viable private sector has been the strength of character of its financial activities and accounts for more than 76% of its Gross Domestic Product besides providing significant possibilities for joint ventures and tie-ups. industrial and commercial development. power. These entail an independent and vivacious media.
Important sectors in Infrastructure in India: Within the Infrastructure of India. the immediate problem will still remain. This major policy decision which will indirectly raise the foreign equity investment in infrastructure sector to well over 51 per cent. technology-related infrastructure. disaster management services. the inadequacy of Infrastructure in India will continue for quite some time. To encourage foreign funds flow into the Infrastructure in India. the Cabinet Committee on Foreign Investment (CCFI) has modified the 49 percent cap on foreign equity in the infrastructure sector to make fund mobilization easier. since. ports. In India infrastructure sector itself is becoming an attractive investment area for FDIs. Finance for Infrastructure in India: The rules for government-owned infrastructure companies for raising funds through initial share offerings are made flexible by the Securities and Exchange Board of India. real-estate development. In order to make the core sector more attractive for FDI. To bridge the wide gap between the potential demand for infrastructure for high growth and the available supply. which naturally will increase the flow of investment in the Infrastructure of India. with a vital role reserved for foreign capital. Consequently. unless technology up gradation can be done in the infrastructure production. for reducing the gestation lags and 38 | P a g e . the transportation sector is the most important. there is urgent need for a close partnership between the public and private sectors. housing and other segments such as mining. even if allocation in the Infrastructure in India is raised with a greater inflow of FDI and a large participation of private sector. Besides. roads.and natural gas. rail system and logistics. Among others essential sectors. construction relating to agro-processing projects and reservation and storage of perishable goods. also play significant role in Indian economy. the Indian Finance Ministry has allowed Foreign Institutional Investors (FIIs) also to invest in unlisted companies. educational institutions and hospitals and solid waste management systems. including the aviation. tourism and entertainment centres. special economic zones. FIIs now can invest 100 per cent of their funds in the Infrastructure in India. including industrial parks. including construction activities. The agriculture sector comprises infrastructure-related storage facilities. infrastructure is subjected to long gestation period.
simultaneously improving the quality of products. INDIA INFRASTRUCTURE India to become the second Largest Economy by 2050 Indian Economy The best barometer of country‟s economic standing is measured by its GDP. Except for a few large projects in a handful of cities. It is a republic with a federal structure and well-developed independent judiciary with political consensus in reforms and stable democratic environment .5% due to global recession. essential services such as roads. paucity of urban infrastructure projects is a standing problem. With the expected average annual compounded growth rate of 8. drainage. With this infrastructure limitation any indiscriminate growth may lead the economy of the country to a situation of over-heating and a further rise in inflation. and primary health are still greatly under developed.economy grew at 9%. the government is aiming at an economic growth rate of 8 per cent during the Eleventh Plan (2008-12). the second most populated country of more than 1100 million has emerged as one of the fastest growing economies. with the economy growing at more than at the rate of 8 per cent.5%. However. India. Although city mass transport systems and airports have found place in developmental plans. India's GDP is expected to be USD 1. for which the government is taking necessary steps to develop the Infrastructure in India. Under the Infrastructure in India the most essential field in which there should be development is in the urban infrastructure.4 trillion by 2017 and USD 2.In 2008-09 India‟s economy-GDP grew by 6. In the previous four years. sewerage management.8 trillion by 2027.The Indian economy is expected sustain a growth rate of 8% for the next three years upto 2012. drinking water. Investment Opportunities In Indian Infrastructure 39 | P a g e . Service sector contribute to 50% of India„s GDP and the Industry and agriculture sector 25% each.
The strong population growth in India and its booming economy are generating enormous pressures to modernize and expand India‟s infrastructure.Urban infrastructure . More than USD 475 billion worth of investment is to flow into India‟s infrastructure by 2012.Power infrastructure. Highway infrastructure .US$ 18 billion.US$ 32 billion. Port infrastructure . Development of Power -US$ 232 billion. Thus in the eleventh five year plan .US$ 71 billion.investment in the above sectors (Aviation infrastructure . With the above investments India‟s infrastructure would be equal to the best in the world by 2017. The creation of world class infrastructure would require large investments in addressing the deficit in quality and quantity. Development of Irrigation system. SEZs . Development of Ports-US$ 26 billion.20. In addition to the above.000 Crores) considering the huge infrastructure market potential in India. In the next five years planned infrastructure investment in India in some key sectors are (at current prices): Modernization of highways -US$ 75 billion.Rural infrastructure.Telecom infrastructure ) will be US$ 384 billions(Rs 17. investments to the tune of US$ 91 billions have been planned in other infrastructure sectors like Tourism infrastructure . Development of Telecom. Development of civil aviation US$ 12 billion. Development of Railways.The robust current growth in GDP has exposed the grave inadequacies in the country‟s infrastructure sectors.and water infrastructure and sanitation infrastructure thus making the total infrastructure investments in the eleventh plan period 2007-08 40 | P a g e .Construction infrastructure. No country in the world other than India needs and can absorb so many funds for the infrastructure sector.
Railways: Constructing Dedicated Freight Corridors between MumbaiDelhi and Ludhiana-Kolkatta.000 km and doubling. 10.737 km of roads.Establishing training facilities and MRO. gauge conversion of over 10.000 MW . with 200 million rural telephone connections. Widening 20.500 km of Golden Quadrilateral and selected National Highways. Telecom and IT : Achieving a telecom subscriber base of 600 million. one million plus cities. Domestic and global infrastructure funds have exposure to Indian infrastructure sectors.300 km of new railway lines. Rural Roads: Constructing 1. Achieving a broadband coverage of 20million and 40 million internet connections Irrigation: Developing 16 million hectares through major. Urban Infrastructure: Urban renewal projects for selected cities. state capitals and places of historical. Upgrading CNS/ATM facilities . Constructing 7 Greenfield airports.244 km of new rural roads. 65. reaching electricity to all un-electrified hamlets and providing access to all rural households through Rajiv Gandhi Grameen VidyutikaranYojna (RGGVY) National Highways: Six-laning 6.channels deepening and port equipments. Modernization and redevelopment of 21 railway stations. including 3. Infrastructure sector targets for Eleventh five year plan ending 2012 Electricity: Additional power generation capacity of about 90.736 km on North-South and East-West Corridors. Port connectivity .to 2011-12 as US$475 billions.846 km of National Highways. medium and minor irrigation works.109 km of National Highways. Constructing 3 airports in North East. construction of jetties and berths. religious or tourist importance under Jawaharlal Nehru National Urban Renewal Mission (JNNURM). 92. Constructing 8. Introduction of private entities in container trains for rapid addition of rolling stock and capacity. Developing 1000 km of Expressways. Rural infrastructure :As per Bharat Nirman action proposed in rural 41 | P a g e . 345 million MT in Minor Ports.000 km of National Highways to two lanes. in the North East.304 rural habitations. Metro rails and world class stations Ports: Capacity addition of 485 million MT in Major Ports.464 km covering 78. and renewing and upgrading existing 1. Airports : Modernization and redevelopment of 4 metro and 35 nonmetro airports. Four-laning 12. Four-laning 6.
Longer concession periods of up to 30 years are permitted as per the roads policy of India.Real estate . complete tax holiday for any 10 consecutive years out of 20 years. Committee on infrastructure . Infrastructure facilities for Common wealth games 2010.Transport equipment . Advisory and professional services and provide opportunities for investors. EPC contracts. Ports policy of India also allows 100% income tax exemption for a period of 10 years.Environment technologies . water supply.foreign players. 100% foreign direct investments (FDI) in India in existing and Greenfield airport projects.India infrastructure finance company.rural infrastructure programme . Airports Policy in India: Indian airport infrastructure policy permits 100% tax exemption for airport projects for 10 years.Material Handling equipment .Design and Planning services . public private partnerships. 42 | P a g e . Mining Infrastructure :Mineral exploration. Infrastructure companies in India . Launch of private sector infrastructure funds have been implemented in infrastructure sector. Road Policy in India: Indian infrastructure policy on roads permit duty free import of high capacity and modern road construction equipments. Investments in infrastructure sectors to create demand: The estimated infrastructure investments in India over USD475 will create demand for Power equipment . viability gap funding . Infrastructure policy in India: Major policy initiatives such as deregulation. contractors.infrastructure for irrigation.Green buildings . developers of infrastructure projects . 100% equity ownership by Non Resident Indians (NRIs).Financial services . Airport policy of India also allows 49%FDI and 100% NRI investment in airport transport services.Private sector participation and JVs now permitted. processing technology and equipments. Construction equipment .construction of SEZs.Education and training .Electronic and IT systems . o&m contractors. Infrastructure projects. Mineral extraction. roads. Ports Policy in India: As per Indian port policy all areas of port operation open for Private Sector Participation . National urban renewal mission. housing. Infrastructure consultants . electrification and telecommunication connectivity Construction and Real Estate infrastructure :Development of residential and retail real estate .
Power Policy in India: Indian power policy permit 100 percent FDI (except atomic energy) in electricity generation. Unified Access Services. India‟s urban population constitutes around 30%. has been abolished for the blocks offered under NELP. SEZs and housing projects are permitted as per Indian Real Estate Policy. It also got a well developed banking system. if these companies are listed in other parts of the world as per the Indian telecommunication policy. Telecommunication Policy in India: 74% FDI is allowed in Basic and cellular.2%. radio paging.Attractive Destination India has a population of 1. Why India -India at a glance. Public Mobile Radio Trucked Services (PMRTS). and in the case of actual Trading and marketing of petroleum products. divestment of 26% equity in favour of Indian partner/public within 5 years . and distribution and trading. More than 55% (550 million) of the India‟s population is less than 25 years of age. V-Sat. skilled and relatively inexpensive manpower with over 2. ISP with gateways. This is nearly twice the total population of the United States. 814. infrastructure provider providing dark fiber. More than 30% of the world‟s youth live in India.000 software professionals.In refining 100% FDI is allowed in private companies and 26% FDI allowed in Public sector companies. electronic mail and voice mail. Establishing power plants without any license.1 billion. transmission.subject to sectoral regulations. Real Estate Policy in India: Corporate tax exemption of up to 100% for industrial parks. subject to the condition that such companies shall divest 26% of their equity in favor of Indian public in 5 years. Oil. National/International Long Distance. 100% FDI is permitted in ISP without gateway. CASs. transmission services for Independent power transmission companies. India has a huge reservoir of English speaking. end-toend bandwidth.6 million engineers (degree and diploma holders). levied earlier on crude production. Gas and mining Policy: 100% FDI permitted for mining (except coal). In deepwater exploration royalty for areas beyond 400m bathymetry will be charged at half the prevailing rate. India is a nation growing younger (population in working age group projected to increase) as the developed world faces the problem of aging. In petroleum and natural gas sector 100 FDI is permitted except refining . with over 67. It 43 | P a g e .000 branches and banking practices conforming to international best standards with net non performing assets ratio for all commercial banks 1. Global Mobile Personal Communications Services (GMPCS) and Other value added telecom services. growing every year.
making the process sustainable. the tenth largest economy in the world in terms of GDP and is one of the fastest growing developing economies today in the world. Alctel. Some of the fortune companies present in India are ABB. there were 20 billionaires. Google.Intel. India‟s ports need to gear up to handle growing volumes. The government has launched the National Maritime Development Programme. Caterpillar. Due to globalization.Containerized cargo is expected to grow at 18 per cent per annum till 2012. Delphi. 44 | P a g e . Port traffic is estimated to reach 1350 million tones by 2012 .GE. large investments have been planned by Indian government. Accenture. Projected Investment in major ports $16 billions and minor ports $9billion during 2007-12. Dell.ANZ. especially over the last decade and a half. Bosch. the tenth most industrialized country in the world. CSC.Microsoft . Also. The present infrastructure in India is grossly inadequate for the 1. Dupont. Siemens.Ford.has a sophisticated. Infrastructure Potential in India: Ports infrastructure in India: India has a long coastline of 7.Hyundai. Citibank. well regulated capital market with 23 stock exchanges of which the two largest. to cover 276 port projects (including related infrastructure) at an investment of about INR 600 billion by the year 2012. especially on the west ports.1 billion populations.517 km. To improve the infrastructure of India. according to the Forbes magazine.HSBC. Forty-four per cent of Top 100 Fortune 500 companies are present in India. Oracle . Digital . AMD. The existing 12 major ports control around 76 % of the traffic. is that it has happened in a solid. This year there were 15 billionaires in China but last year in India. Delloitte . APC. Cargo handling at all the ports is projected to grow at 19 per cent per annum till 2012.There will be an increase in container capacity at 17% CAGR. the National Stock Exchange and Bombay Stock Exchange ranked as no 3 and 5 in the globe by number of transactions. Planned capacity addition of 545 mt at major ports and 345 mt at minor ports. The most remarkable feature of its impressive growth story. A number of the existing ports have plans for expansion of capacities. Indian ports are projected to handle 875 million tones(MT) of cargo traffic by 2011-12 as compared to 520MT in 2004-05. States are increasingly seeking private participation for the development of minor ports. CA. including addition of container terminals. India has more billionaires than China. Nokia. democratic environment. India is the fourth largest economy in terms of purchasing power parity.
Kolkata and Chennai airports will also be developed through JV route. Programmed also envisages strengthening of rail connectivity to ports and development of multimodal corridors to hinterland.000 crore (US$ 15 billion) is being funded partially with a US$ 5 billion loan from Japan. The scope for public private partnership is enormous in railways.000 MW by 2012. The double-line freight corridor is expected to evolve systematic and efficient freight movement mechanisms and ease congestion along the existing GQ. It would leave the existing GQ free for passenger trains. The 9260 km dedicated freight corridor to be built at a cost of Rs 60. The Golden quadrilateral is proposed to be strengthened to enable running of more long distance passenger trains and freight trains at a higher speed. The first phase of the project would include the Delhi–Howrah and the Delhi–Mumbai routes Power Infrastructure in India: Presently the installed capacity of electric power generation stations under utilities stood at 130000MW and in the five year plan the generation capacity is planned to be increased to 2. Construction of a new Railway Line to Kashmir valley in most difficult terrain at a cost of US$ 1.5 Billion and expansion of rail network in Mumbai area at a cost of US$900 million has also been taken up. The work is expected to be completed within the next 5–7 years. Railways have planned a dedicated rail freight corridor running along the railways Golden Quadrilateral (GQ). Indian Railways comprise over one hundred thousand track kilometres and run about 11000 trains every day carrying about 13 million passengers and 1. Railways Infrastructure in India: Indian Railways is the largest rail network in Asia and worlds second largest under one management.Mumbai and Delhi airports have already been handed over to private players.20.There is a 13% peaking and 8% average shortage of power annually. ranging from commercial exploitation of rail space to private investments in railway infrastructure and rolling stocks.Airports infrastructure in India: Passenger and cargo traffic slated to grow at over 20% annually and set to cross 100 million passengers per annum by 2010 and set to cross cargo traffic of 3. Freight traffic is growing at close to 10% and passenger traffic at close to 8% annually.3 million tonnes by 2010. Central government has already taken steps to increase capacity by building Ultra mega power projects 45 | P a g e .25 million tones of freight every day. Construction of 4 mega bridges costing about US$ 750 million is also included in the programme.
Roads occupy a crucial position in the transportation matrix of India as they carry nearly 65 per cent of freight and 85 per cent of passenger traffic. the world's cheapest mobile handset and the world's most affordable colour phone. only 47% of the roads are paved. industrial activities (36%). India‟s construction equipment sector is growing at a scorching pace of over 30 per cent annually--driven by huge 46 | P a g e .000 km. equipment suppliers.There is a plan to increase Nuclear power capacity from 3900MW currently to 10000 MW by end of 11th plan. Telecom Infrastructure in India: Even with the rapid growth of telecom sector in India. signages etc. Currently. China has a road network of over 1. This has also facilitated improvement in the quality of the new highways and introduction of the latest concepts for toll collection. What is of significance is that private sector involvement (BOT projects) has finally been found to be feasible in the Indian context.3 million km comprising national highways (65. Construction Infrastructure in India: Construction accounts for nearly 7 per cent of Indian GDP and is the second biggest contributor (to GDP) after agriculture. material suppliers and solution providers. The US tops the list with a road network of 6. Over the past decade several major projects for development of highways linking the major cities have been planned – and work started on most of them.) and a wide network of district and rural roads.38 million Kms of Indian road network. At 500 minutes a month.(UMPPs). State highways (128. the fastest sale of a million mobile phones (in one week). India has the highest monthly 'minutes of usage' (MOU) per subscriber in the Asia-Pacific region.4 million km. This has led to an accelerated growth in this sector – which had long been faced with financial constraints.). Construction is a capitalintensive activity. Broadly the services of the sector can be classified into infrastructure development (54%).569 km.8 million km only. The main entities in the construction sector are construction contractors. Out of the 3. The process of development of the new highways is expected to continue for many years to come. the fastest growth in the number of subscribers at CAGR of more than 50%. Highways and Roads infrastructure: The Indian road network has emerged as the second largest road network in the world with a total network of 3. residential activities (5%) and commercial activities (5%). the rural penetration is still less than 5%.
the government has proposed a flexible funding scheme. It is estimated that there is USD860 billion worth of construction opportunities in India Oil. high costs and budget constraints. movement of oil and petro-products. energy. Gas –Hydrocarbon Infrastructure in India With the exponential increase in the population of vehicles and industrial requirement. JV can be formed for the development of infrastructure.100% foreign investment has been allowed in this sector. with long gestation periods. Deregulation and de-licensing has been done for the petroleum products. Private sector can import most products. etc. it is necessary to explore the scope for plugging this deficit through Public Private Partnerships (PPPs) in all areas of infrastructure like roads. performance is to be assessed against easily measurable standards. Additional refining capacity of 110 million tonnes shall be required by 2010. Oil import constitute largest share of total import and therefore Government has taken many initiatives to mitigate the situation and attract the foreign investors. ports. the consumption of petrol products is likely to increase to 300 MMT by the year 2010. Given the risks involved in large projects the government has realized that only public sector involvement with central government development assistance for infrastructure projects is not adequate to meet the challenge. Rationalization of pricing has taken place by decontrol and import parity. As part of this scheme. . It is estimated that investment over the next 10-15 years shall be in the range of US$ 100-150 billion. PPP opportunities are to be awarded through competitive bidding in a transparent manner and for each project. marketing and. pipelines. which will find support from budgetary allocation to fund public-private-partnerships (PPPs) for infrastructure projects. Opportunities have emerged in business areas linked to Natural Gas. Recognizing the imponderable risks. terminals and tank ages cleared for private investment. refining activities. 47 | P a g e .investments by both the Government and the private sector in infrastructure development. which infrastructure projects entail. NEW INSTITUTIONAL MECHANISM FOR PPP The creation of world class infrastructure would require large investments in addressing the deficit in quality and quantity. India has established geological reserves of more than 6 billion and exploration acreages are available on offer on continuous basis. The government has proposed India Infrastructure Finance Company (IIFC) and formulated a scheme to support PPPs in infrastructure. storage tanks. Private opportunities also exist in infrastructure like jetties.
whether imported or sourced domestically. Each SEZ is treated as a foreign territory and units located in it are not subject to either customs tariffs or domestic duties. These zones aim at providing an internationally competitive and hassle free business environment for promotion of exports. This offers foreign companies tremendous opportunities for taking full advantage of Indian strengths in doing business in India. the impact of private sector involvement in terms of end-user benefits has been felt almost immediately. Inputs. was met in just 2 years. Recently. which offers several innovative fiscal and regulatory incentives to developers of the SEZs. across power. So are exports made from a SEZ. as well as the units within these zones.based on unambiguously defined criteria. would contribute substantially to India's exports and would help connecting the missing links in manufacturing. In some cases. and urban infrastructure. legal and regulatory changes have been made to enable PPPs in the infrastructure sector. identified as part of the concession agreement. are free of any taxes. These 339 SEZs today have lands for development. Presently. Sales to Domestic Tariff Areas are permitted.000 villages inhabited by the 700 million rural population. This could be either as the developer of the SEZ or as a unit in a SEZ or both. Rural India infrastructure needs a completely new visionary outlook 48 | P a g e . in order to inspire confidence among investors. once implemented. the Electricity Act allowed for private sector participation in the Distribution of electricity in specified area(s) of the distribution licensees under the role of a “franchisee”. transport. the board of approvals for the SEZs granted formal approvals for 340 SEZs. subject to payment of applicable customs duties and import policies in force. The only requirement is that the SEZ and the units located within it are positive foreign exchange earners. The experiment is being replicated across other major ports as well. For example. It is widely expected that the Special Economic Zones approved for various parts of the country. where the Minimum Guaranteed Traffic requirement at the end of 15 years. The recognition of the franchisee role is a significant step towards fostering PPP in the distribution of electricity. Special Economic Zone (SEZ) – A New Policy The Government of India has announced a pragmatic “SEZ” policy. A case in point is the initial Build-Operate-Transfer (BOT) experience at Jawaharlal Nehru Port. India Infrastructure Needs India's economic development is projected on the basis of the development of its basic infrastructure in its 600.
Sewerage Airports Railways Seaports Roads Bridges 49 | P a g e . The government of India has now formulated policies to forge public and private partnerships for tackling the problems related to infrastructure. telecommunication. the tremendous growth of Indian IT. The urban India Infrastructure needs are: Urban housing Business premises Power Urban transport Water supply. The rural India Infrastructure needs are: Rural housing Roads Healthcare Education Irrigation Drinking Water Power Telecommunication Further. manufacturing. Agriculture is the main occupation in rural India and most of the rural population still depends either directly or indirectly on agricultural activities for their living. and pharmaceutical industry has created an enormous pressure on the limited world class urban infrastructure available in India. But the lack of basic infrastructure for pursuing agricultural activities has forced a large section of India‟s agricultural labour force to move to non-agricultural sectors for livelihood.and new initiatives. The Ministry of Finance has realized that economic development of India is directly connected to the availability of basic and modern urban infrastructure in Indian cities.
The Urban infrastructure problems in India are: Urban residence Business premises Power Urban transport Water Sewerage Airports Railways 50 | P a g e . and pharmaceutical industries have consumed the limited world class urban infrastructure available in India. The Infrastructure problems in India mostly took a back-seat in the economic development policy drafts. telecommunication. So the government of India's Infrastructure development policy aims at engaging major financial contributions from private partners for meeting India Infrastructure needs in urban as well as rural India. This site provides detailed information on infrastructure problems in India. manufacturing. Moreover. The meagre budgetary allocation to arrest infrastructure problems in India has so far proved to be too little to keep pace with other areas of business development in India. Infrastructure Problems in India can be classified into two parts: Urban infrastructure problems in India Rural infrastructure problems in India Urban infrastructure problems in India is a age old problem. Tourism infrastructure Solid waste management Projects in SEZ Health care Entertainment Communications Financial limitations of the central government for providing world class infrastructure made it impossible to meet India Infrastructure needs at every village and cities in India. The site also focuses on the growing problem of infrastructure limitations in India. the tremendous growth of Indian IT.
Providing a corpus of Rs.46.000 villages and 70% of its population in rural India. the need of the hour for the government is to develop proper rural infrastructure for the masses in India.74. such as: Connecting 66. 8000 crores for Rural Infrastructure Development Fund (RIDF).94. With around 600.800 habitations with all weather roads Construction of 1.000 km of new rural roads Upgrading 1. The immediate focus area should cover but not be confined to the following areas: Power Irrigation Drinking Water Rural housing Roads Health care Education Telecommunication Infrastructure Sector Growth Rate 51 | P a g e . However.000 km of existing rural roads Allocation of investment to the tune of Rs.000 crores envisaged under Bharat Nirman. 1. the government of India has taken some important steps to arrest the age old problems of rural India. Seaports Roads Bridges Tourism infrastructure Solid waste management Projects in SEZ Health care Entertainment Communications Rural infrastructure problems in India Rural infrastructure problems in India has gone from bad to worse in recent years.
6%. The biggest ongoing project in the Infrastructure Sector in India is the Golden Quadrilateral. Economy of India India gross domestic product (GDP) means the total value of all the services and goods that are manufactured within the borders of the country within the specified period of time.09 trillion in 2007. The Growth Rate of the Infrastructure Sector in India GDP has grown due to several reasons and this in its turn has given a major boost to the country's economy. This was done in order to boost the Infrastructure Sector in the country. which is improving the main roads that connect the four cities of Chennai. India's less spending on real estate. The amount that India was spending on the Infrastructure Sector was 6% of GDP or US$ 31 billion in 2002. Delhi. The Infrastructure Sector in India The Infrastructure Sector in India was after independence completely in the hands of the public sector and this hampered the growth of this sector. construction. Infrastructure Sector Growth Rate in India GDP has been on the rise in the last few years. 52 | P a g e . and Kolkata. It is estimated that the Growth Rate of the Infrastructure Sector in India GDP will grow at the rate of 8. The contribution of the Infrastructure Sector in the India GDP Infrastructure Sector Growth Rate in India GDP came to 3. telecommunications. this figure was 4. The Indian economy is the twelfth biggest in the whole world for it has the GDP of US$ 1.5% in 19961997 and the next year. Mumbai. The economy of India is the second major growing economy in the whole world for it has the GDP growing at the rate of 9. and transportation prevented the country from sustaining very high rates of growth.4% in 2006.5% between 2006 and 2010.2007. The Growth Rate of the Infrastructure Sector in India GDP increased after the Indian government opened the sector to 100% foreign direct investment (FDI). power. The result of opening the sector to the private sector has been that Infrastructure Sector Growth Rate in India GDP has increased at the rate of 9%.
The government of India must continue to take steps to improve the Infrastructure Sector in the country. This is what we feel. Corporate bond market is almost non-existent (specially compared to domestic stock market or int'l bond market). Korea and Brazil for infrastructure related funds. LIC might need to play a decisive role in the infrastructure projects in India which in turn needs a hell lot of money today. India is competing with the likes of China. China has already come up with a plan of over $550 billion 53 | P a g e . Infrastructure projects need long term loans. they are not developed enough. The Government of India must boost the Infrastructure Sector Infrastructure Sector Growth Rate in India GDP thus has increased over the last few years due to the efforts that have been made by the Indian government. for which insurance and pension funds are extremely suitable. While India plans to spend $500 billion on infra. 4. But the big money from western FIIs and Pension funds doesn't seem to have embraced the sector gladly. What is keeping the big money away? Surely the private investor is upbeat on the sector and so is Indian mutual fund. If we can't tap the western insurance and pension funds then we can use our own domestic insurance and pension funds. However. 2. little happening. We believe that there are few sore issues which needs to be taken care of so that the Indian infrastructure sector can be put on fast track as soon as possible. Government's extended enthusiasm about the sector hasn't been able to get the big infrastructure projects moving. big potential. Absence of strong long term debt market in India. Indian banks are the only funding source which anyways charge very high interest rates and come with many more strings attached. Also. For this in its turn will help to boost the Indian economy in future. big money. There are lot of PPP projects coming up but what's going wrong? Many Infrastructure and Power shares are seeing constant ups and downs in the market. 1. Any ways Indian Banking sector is not the most revered one in the world. 3. what's happening in the Indian infrastructure sector. Challenges in front of Indian Infrastructure Sector India infrastructure: big ambitions. sums up. projects from 2007-2012. Dilly Dally attitude of government which ensures unending delays along with the corrupt governance model especially at the grass root level. they need to be opened up further to attract foreign funds.
000 MW with investments of $13 billion. transmission and distribution businesses in other parts of Maharashtra. More importantly the very nature of infrastructure projects which takes years to start paying the benefits would mean inflation. intervention. the gestation period of infra projects would mean calls to inflation in short term. So the competition to get the funds is likely to remain high in years to come. 5. Reliance Energy plans to increase its power generation capacity by adding 16.2 COMPANY PROFILE Reliance Infrastructure. Latest technology would again require FDI flowing in. No matter how the money comes. According to some estimates China might be investing over $5000 billion in next 2 decades. Goa and Andhra Pradesh. The problem is not only the high budget deficit and high public debt that we are already running in order to fight the recession. The company's corporate headquarters is situated in Mumbai. The company is the sole distributor of electricity to consumers in the suburbs of Mumbai. This would require minimum governance. latest technology. It also runs power generation. (BSE: 500390) formerly known as Reliance Energy and prior to that as Bombay Suburban Electric Supply (BSES). Its India's largest private sector enterprise in power utility. So quite a bit of challenges to face. The time required has to be tightened. If funds are such a big problem then why can't Indian government just print money and pay for it. Infra projects anyways take a long time to complete and still longer in India. minimum red tapism.investment in infrastructure projects just to fight the recession. increased transparency. 3. The company is headed by Anil Ambani. consistent flow of fund and last but not the least. 54 | P a g e .
Airports and Speciality Real Estate. Procurement and Construction EPC offers a single point solution to the execution of power plants including project engineering. a part of Reliance . Energy Our core competency in energy extends to generation. establish highest operational standards and also to identify separately the economic value of each of the divisions. metros. The world of tomorrow will feature abundant energy that will spark a million smiles and dreams. Infrastructure Reliance Infra has a significant presence in the construction of roads. distribution and trading. EPC and Trading and the largest infrastructure company by developing projects in all high growth areas in infrastructure sector i.450 crore as on March 31. Our EPC division is ushering this energy revolution with power plant projects. Reliance Infrastructure.4 billion). we manage power plants on a turnkey basis and provide industry specialist services such as fuel management advice and fiscal advice. Procurement and Construction Energy Infrastructure Engineering.15.The Company is in the process of restructuring its various divisions to its wholly owned subsidiaries with a view to adopting the best management practices.690 crore and market capitalization of over Rs. Metro Rails. Infrastructure is decidedly the most visible and 55 | P a g e . Along with full service project advisory capabilities.e. Distribution.640 crore (US$ 1. is India's largest infrastructure company with turnover of over Rs. construction & commissioning for its clients. We distributed more than 36 billion units of electricity to 30 million consumers and generate 941 MW of electricity from our power stations. Our the turnover of the division was Rs 557 crore (US$ 120 million) and order book position of over Rs 18. transmission. Roads. This comprehensive sphere of influence extends our vision of a highly developed India within our realms. Generation.Anil Dhirubhai Ambani Group. airports and real estate. with total project outlay of Rs 6. Our presence spans across three verticals: Engineering. Transmission. procurement. Highways.e. Our transmission division is developing 5 transmission projects.530 crore (US$ 4 billion) as on June 30. 24. 2010. Reliance Infrastructure Limited is India‟s leading utility company having presence in across the value chain of power business i. 2010.
To be a technology driven. exceeding their expectations and make the Company a respected household name.6 billion). the environment and above all people. To create world-class assets and infrastructure to provide the platform for faster. To achieve excellence in service. In the years ahead of us. consistent growth for India to become a major world economic power. We are currently implementing 3 metro rail projects in Mumbai and Delhi worth around Rs 16. dedication and innovation with total customer satisfaction as the ultimate goal. Mission: Excellence in Infrastructure To attain global best practices and become a world-class utility. To be a responsible corporate citizen nurturing human values and concern for society.4 billion).In the real estate space. reliability. safety and customer care. feet of mixed use built up potential. landscape and the nation we are a proud part of.000 crores (US$ 2. To consistently achieve high growth with the highest levels of productivity.000 crores (US$ 3. We signify this with our 11 road projects of 970 kms worth about Rs 12. Enhancing Our Legacy/ Carrying the Legacy Our passion to excel in every endeavor emanates from the legacy of our founder Late Shri Dhirubhai Ambani. 56 | P a g e . we will keep exploring the unknown in our quest for excellence.important form of development in a nation. Highlights for Company Profile One of the largest Indian business conglomerate. To earn the trust and confidence of all customers and stakeholders. His values and ideals stand with us as we collectively seek to further develop the society. To work with vigour. efficient and financially sound organisation. quality. we are in various stages of bidding/negotiation/planning with over 400 million sq. Energy and Infrastructure. Significant presence in EPC. Leading Private Utility Firm in Transmission.
In the casual vacancy so arisen. To promote a work culture that fosters individual growth. MCI Worldcom. IAS. HISTORY 2000 .BSES Ltd. .BSES Ltd has launched a customer-friendly website bsessupply.BSES Telecom announced the launch of its Internet Services. Principal Secretary (Energy) to the Government of Maharashtra has been appointed on the Board of the Company with effect from January 29.6% stake in BSES. km.net. 2002. . To encourage ideas. for supply of 1. talent and value systems. .Reliance Industries has picked up a 26. 2002. . Shri R Buddhiraja.70 million consumers in area covering about 1. .000 sq. Palghar.23. has signed an memorandum of understanding with BSES Ltd. British Telecom and News Skies of the US for setting up Internet gateways across the country. . To uphold the guiding principles of trust. integrity and transparency in all aspects of interactions and dealings. team spirit and creativity to overcome challenges and attain goals. To contribute towards community development and nation building. has signed a memorandum of understanding with Oil and Natural Gas Commission Ltd.85 MCMD of gas from Bombay High.The Business Millennium Award for Environmental Management was Given to Mumbai-based BSES. RIL is entering the broadband business and expanding its power business in a big way by way of exploiting its synergies with BSES. Powersurfer. .The BSES Telecom has also formed a joint venture company with the Hyderabad-based Sriven Multitech Ltd.com. has shortlisted four international companies Cable and Wireless of the UK.Gujarat Positra Port Infrastrucutre Ltd. to execute a 261 mw power project.BSES Ltd has informed that Shri V M Lal has ceased to act as the Director of the Company with effect from January 29. .BSES and its subsidiaries provide electricity service to more than 2. . And with an 57 | P a g e . the wholly-owned subsidiary of the power major BSES. for its 500 MW combined cycle power plant in Saphale.BSES Telecom.
transmission and distribution are areas of core competencies. Energy Efficiency / Gas Distribution. Also the Goa Power Department has shown interest for consultancy for restructuring and privatisation of power department. Consultancy of Goa. . .25 locations. BSES operates a state-of-the-art 500 MW Thermal Power Station at Dahanu near Mumbai and supplies the 2001. Manufacturing of Energy Meters. Power Distribution Networks .The resources for these projects would be met by BSES and raised through joint ventures.90% of investment to be made in core activities and the balance in other related activities. It has given consultancy to Andhra Pradesh State Electricity Board (APSEB) for privatisation of Distribution System. Fuel Management.Capacity . Andhra Pardesh. Coal Beneficiation / Mining.First Five Years:Core Areas: Power Generation capacity around 2000 MW Dahanu expansion / Palghar Project: Capacity . 1500 crores. Contracting Activities . .Distribution: Orissa Distribution Companies Part of Rajasthan Distribution System.Turnover Rs. It has a good recovery of 99.Power generation. .Related Areas: ST BSES Coal Washeries Limited Utility Powertech Limited BSES Telecom Limited BSES Infrastructure Finance Limited .Turnover Rs. Telecom / IT . there is no agriculture load as the company caters to the urban areas only. Coal Beneficiation / Mining.Through Joint venturesBSES Kerala Power Limited TICAPCO-Srimushnam Project BSES Andhra Power Limited Maithon Power Limited.4%. It has capital expenditure plans of Rs 120 crore on SCADA and fibre optic.Corporate Plan .15 years Perspective Plan:Power Distribution .500 MW Projects at different locations . Composite Financial Services. The assignment is awarded to BSES and it is being executed.estimated population of about 34 million. Importantly.Corporate Plan . 100 crores. which helps it to provide efficient and effective consumer services.D.Capacity 8000 MW. . . 58 | P a g e . .Strategies upto 2000 A. 750 crores.Upcoming Projects:-Generation: On its balance sheet:Palghar Project Wind Farm Project .Electric Supply and Transmission Division: BSES has a consumer base of 2 million.Other Areas: Expand EPC & Other contracting activities – Turnover Rs. .Other related activities cover those synergetic to the core activities. . .20 .1500 MW Three to four distribution networks of similar size as BSES Mumbai. .
It also plans to improve plant availability besides increasing the dispatches during off peak hours besides reducing coal transit losses. the company plans to target turnkey jobs with higher margins. This farm has 33 windmills. BSES is taking measures to reduce its distribution losses further along with improvement in collection mechanism. It also has plans to focus on commercial customers in future. It is also implementing cost control measures with financial engineering and tax planning.5% during the year ended March 2000. However. Karnataka. its average PLF was 30. It has already started commercial operations and has one of the highest PLF in the country in the wind farm segment. It has a good order booking of Rs 1.000 mw in Indian and other industrial and infrastructure projects.68% during the year 2000-01. The cumulative value of works executed by this division since inception is to the tune of Rs 3.400 crore as of June 2001. This division was instrumental in construction and erection works of 5.95% during FY 1993-94. The company is taking measures to reduce overhaul period per unit.500 crore. The company also plans to provide modern tools for faster project implementation and to provide training inputs for better project management. It has come down from 14. BSES depends on Tata Power for additional power requirements.To keep up the growth in this business.6% during the year ended March 2001 as compared to 11. Distribution losses were 11. . . This farm has an attractive return of investment (RoI) as the company is allowed 100% depreciation. It also needs to diversify into larger civil jobs and other infrastructure sectors. This division has showed an improved performance and has been growing at a good rate for the last three years.Wind Energy: BSES has invested Rs 41 crore in 7.. For the year 2000-01. It has to purchase this extra power at much higher costs.Contracts and EPC Division: This division achieved a turnover of Rs 529 crore during the year ended March 2001 as against Rs 399 crore during the year ended March 2000 and it. . 59 | P a g e . The demand has been increasing at around 5% per annum.The company has managed to maintain the distribution losses at around the same level during the past five years. Its turnover was Rs 391 crore during the year ended March 1999.11% when others can manage only 20% to 25% PLF.33%.59 mw wind farm at Chitradurga. The plant availability was to the tune of 92.The plant of the company meets 55% of its needs.Dahanu Power Station: Dahanu Power Station achieved a plant load factor (PLF) of 82.
It also provides bridge finance and leasing services to group companies.70 crore and net profit of Rs 3 crore for the year 2000-01. It has been a dividend paying company since inception. The company has a strategy of adding value by strategic alliances within the group..5 mmt per annum capacity and is located at Madhya Pradesh.5 crore for the year 2000-01. which caters to over 6 million consumers of BSES.5 mw each. It has 250 operational sites with Rs 25 crore orders on hand. which is already operational. BSES Kerala Power.BSES Andhra Power: This is a 220 mw duel fuel combined cycle power plant at Samalkot. It is an Internet service provider (ISP) in Mumbai and has a fibre optic network to support its last mile services. has a 2. The return on equity in this JV exceeds 25%. It posted revenues of Rs 12. It is also exploring alliances for providing utility solutions. BSES Andhra Power and three new companies of Orissa.7 crore for the year 2000-01. The total cost of this project is around Rs 60 crore out of which Rs 9 crore is by a US aid. Its utility software division has a customer care product. It supplies washed coal to the plant as well as to others.BSES Kerala Power: This is a 165 mw naptha-based combined cycle Power plant at Kochi in Kerala. BSES EPC group is doing the EPC work.BSES has several group companies . Utility Powertech. Ticapco. The washery. It has tied up funds for various projects to the tune of over Rs 1. . Utility Powertech has taken up maintenance contracts for NTPC power stations.BSES Infrastructure Finance (BIFL): This company is in the business of providing advisory services on new businesses and financial engineering. . 60 | P a g e . BSES Telecom. . . . It proposes to use liquified natural gas (LNG) from the Kochi terminal in future.Utility Powertech: This is a JV with National Thermal Power Corporation (NTPC). The construction work on civil works is presently in progress and the expected date of completion is October 2001 for open cycle and February 2002 for combined cycle. .Coal Washery . It posted revenues of Rs 39 crore and profit of Rs 1.JV Company: This JV is a backward integration project for the Dahanu Power plant.500 crore. The company is focussing on non-conventional project development including mini and micro hydel projects.ST-BSES Coal Washery. The company posted revenues of Rs 25 crore with net profit of Rs 3. BSES Infrastructure Finance.BSES Telecom: This company has been operational since March 2000. It employs 3 gas turbines of 43.
-Reliance Industries Ltd. The consumer base is around 8.14. While the South West Delhi electricity Distribution Company was renamed as BSES Rajdhani Power Ltd. The total investment in this distribution foray was to the tune of Rs 117 crore. Importantly.) -Delhi government signs a share-holding agreement with Bombay Suburban Electric Supplies (BSES) and Tata Power for power distribution in Delhi -Changed names of its two power distribution companies in Delhi..000 with the consumption at around 6.Orissa Power distribution companies: BSES had bid for distribution companies in Orissa in 1999 when the distribution part was opened up for privatization. 2002 . On 1 April 1999. World Bank and others are providing long-term soft loans amounting to Rs 150 crore in three years.54% -Signs confidentiality agreement for buying out Enron's stake in Dabhol Power Company -Issues Non Covertible Debentures (NCD) for Rs 100 crore -Company's 500-mw Dahanu thermal power station achieves an availability of 100 per cent and a plant load factor (PLF) of 98.BSES Ltd has informed that Shri R V Shahi Chairman & Managing Director of the Company has relinquished the Office of Chairman & Managing Director. agricultural load is less than 6% of the total load.The Board of Directors has appointed Shri S S Dua as acting Chairman & Managing Director.92 per cent during March -Power Ventures increases the holding in the company to 23. -BSES appointed J P Chalsani as chief executive officer of the southwest Delhi electricity distribution company and the central-east Delhi electricity distribution company. GRIDCO acquired the three companies. BSES is targeting a turnaround for these distribution companies in the next 2-3 years. The tariff is one of the lowest for bulk supply. the Central East Delhi Electricity Distribution Company was christened BSES Yamuna Power Ltd. the company with a 51% stake along with the JV partner.88% -Acquires 51% stake in two Delhi Vidyut Board's power distribution companies (Central East Delhi Electricity Distribution Company Ltd and South West Delhi Electricity Distribution Company Ltd. 61 | P a g e . increases the stake in the company to 31.000 million units. in which BSES has a controlling stake.
Company becomes part of the Reliance Group.30% -Completes US$ 120 million Foreign Currency Convertible Bond issue 2003 . -The name of BSES Ltd changed to Reliance Energy Ltd. BSES Ltd. -BSES Andhra Power Ltd. voted as the MTV Youth Icon of the Year by young Indians across the country -Maharashtra Govt. BSES Rajdhani Power Ltd. increases the stake to 28. took back its nominee from the company board -Reliance Salgaocar Power becomes Wholly Owned Subsidiary of the company -BSES signs an agreement with US bank for GDR conversion 2004 62 | P a g e . 2003 -Members approve delisting of company's shares from the following stock exchanges: 1. Tamil Nadu Industries Captive Power Company Ltd and Western Electricity Supply Company of Orissa Ltd cease to be subsidiaries of the Company with effect from March 29. Inter Connected Stock Exchange of India Ltd.545 shares of BSES Ltd. -BSES Andhra Power Ltd. Calcutta Stock Exchange Association Ltd 4.-Pulls out of 250 MW power project in Tamil Nadu -Reliance group increases stake in the company from 38% to 40. vice-chairman and managing director.28. Vice Chairman and Managing Director of Reliance Industries Ltd. and chairman. BSES Yamuna Power Ltd. becomes 100-pc subsidiary of Reliance Energy -Allots equity shares to Bank of New York on options exercised by it -Anil Ambani. Bangalore Stock Exchange Ltd 3. unanimously being appointed by the Board as Chairman of BSES.29% through creeping acquisition route -Reliance Power Ventures acquires 28. North Eastern Electricity Supply Company of Orissa Ltd. BSES Kerala Power Ltd. with Mr Anil D Ambani. Reliance Industries Ltd. Ahmedabad Share & Stock Brokers Association 2. Delhi Stock Exchange Association Ltd 5. Southern Electricity Supply Company of Orissa Ltd.
2004 2005 -Dahanu of REL's bags CII`s National Award of Excellence 2005 2006 -Reliance Energy join hands with Bajaj for CFL bulbs -The Company along with its consortium on November 07. & Reliance Salgaocar Power Company Ltd (RSPCL) merged with the Company -Janus acquires 4-pc stake in Reliace Energy -The name of BSES Limited shall be changed to Reliance Energy Limited and the trading symbol of BSES Limited be changed from BSES to REL w. a Hero group company. Govt of UP and Reliance sign the State Support Agreement -Reliance wins Koldam project over Essar -Reliance join hands with Temasek to establish first power VF . March 12.f. inks pact with BSES for bill collection -Promoters' holding in BSES has dropped by 5.000 equity shares of Reliance Energy Limited.67 per cent to 52. 63 | P a g e . -Reliance Energy.launches multilingual power bills on September 16.622 shares representing 4.95.99% of voting rights of Reliance Energy Limited via preferential allotment and the date of acquisition is April 03.55 percent -BSES Andhra Power Ltd. -Mops up 8 million (Rs 805 cr) through a five-year zero-coupon foreign currency convertible bond (FCCB) issue -Enters into two foreign currency facility agreements pursuant to which the Company was required to create security over certain of its assets by certain specified times after the respective dates of the Facilities -Life Insurance Corporation of India has informed that they have acquired 55. 2004. 2004.e.-Reliance decides to revamp Hirma mega thermal power project -Easy Bill.00. -Reliance Power Ventures Limited acquires 91. 2006 signed Contract with Ministry of Petroleum and Natural Gas (MoPNG) for exploration and production of four Coal Bed Methane (CBM) blocks.
-Company name has been changed from Reliance Energy Ltd to Reliance Infrastructure Ltd. -Reliance Energy Ltd bagged an Engineering. Lalit Jalan as Whole-time Director on the Board. -CRISIL has reaffirmed its outstanding ratings of 'AAA/Stable/P1+' on Reliance Energy Ltd's (Reliance Energy's) debt programmes.000 cr Mumbai Metro-II Project -RInfra wins Jaipur-Reengus Road Project from NHAI 2010 64 | P a g e . -Reliance Infra's Dahanu Thermal Power Station bags award 2009 -Reliance Infra to enter into cement sector -Reliance Infra agrees to pay marketing margin to RIL -RInfra gets Kandla-Mundra road project in Gujarat -Reliance Infrastructure Wins Rs 11. This project involves the construction of 66 km of road on high density traffic zone and the project is expected to be completed in two years from the date of commencement with a concession period of 17 years. 2008 .2007 -Reliance Energy Ltd has appointed Shri. Procurement and Construction (EPC) contract from Damodar Valley Corporation (DVC) to set up the 2 x 600 MW coal based power station at Raghunathpur in West Bengal.Reliance Infrastructure has bagged the contract for four-laning of the Gurgoan-Faridabad road and along with this the upgradation of the BallabgarhSohana road on a build-operate and transfer (BOT) basis.
The Anil Dhirubhai Ambani Group (ADAG) firm Reliance Infrastructure (RInfra) has inked an agreement with NHAI for developing the Rs 3..000 crore Delhi-Agra highway project 65 | P a g e .
CHAPTER IV DATA ANALYSIS AND INTERPRETATION 1) CURRENT RATIO: Current ratio = Current assets ------------------------Current liabilities 66 | P a g e .
38 4655.5 1 0.Year 2005-06 2006-07 2007-08 2008-09 2009-10 Current Assets 7353.5 4 3.5 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and diagram shows that the current ratio on FY year 2005-06 was 4.93 3227.69 and finally in the FY 2009-10 it again moved down to 0.68140207 1.66. The bench mark current ratio for Infrastructure 67 | P a g e .917499558 0.33 in the FY 2006-07.07 3735.68 and then it dip to 1.92 and in the FY 2008-09 it dip down to 0.55 2599.82 2246.52 Current liabilities 1570.72 Ratio 4.723286818 0. further move downward to 0.64 3871.5 5646.661538 Figure 1 : CURRENT RATIO 5 4.45 2384.5 3 2.5 2 1.69317367 0.
5 5646.01 Quick Liabilities 1570.64 2786.59851573 0.38 4655.55 2599.Industries is 2:1.72 Quick ratio 4.593002604 0. The above table shows current ratio is less than 2. 2) LIQUID RATIO: Liquid ratio = Liquid assets ----------------------Liquid liabilities Quick Assets = Total Current Assets (minus) Inventory Year 2005-06 2006-07 2007-08 2008-09 2009-10 Quick Asset 7058. Over the year under study it has been observed that the company has not maintained favourable liquidity position and this can be treated as a unhealthy sign.493570237 1.613809 68 | P a g e .801975856 0.39 3466.59 3578.76 2084.82 2246.
5 2 1.It reached the highest 4.e.5 1 0.Figure 2 : LIQUID RATIO 4.5 4 3.5 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and diagram shows the liquid ratio during the study period except in the FY 2007-08 to 2009-10 is more than the bench mark Liquid ratio (i. It is clear that the liquid ratio of the company is at an decreasing rate and it is not close to standard ratio and this can be treated as a unhealthy sign.5 3 2.) 1:1.49 in the FY 2005-06 and then in FY 2006-07 it came down to 1.61 in FY 2009-10. 3) ABSOLUTE LIQUIDITY RATIO: Cash + bank +marketable securities 69 | P a g e .59 and eventually went on decreasing to 0. So we can understand that the company is not in a position to meet the short term obligations. This shows that the company is not enjoying credit worthiness.
38 4655.05345 Figure 3 : ABSOLUTE LIQUID RATIO 4 3.82 2246.5 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS 70 | P a g e .033719579 0.5 1 0.92 87.01 301.82 Current Liabilities 1570.Absolute liquidity ratio = ----------------------------------------------------Current liabilities Year Cash and securities 5652.5 2 1.72 Ratio 2005-06 2006-07 2007-08 2008-09 2009-10 3.65 251.05391687 0.9 2175.5 3 2.5 5646.598693676 0.55 2599.968560682 0.
25 5257.61 Proprietors fund Ratio 7873. Then in FY 2008-09 and FY 2009-10 it was 0.05 4) DEBT EQUITY RATIO: Debt equity ratio = Outsider’s funds -----------------------------Proprietor’s funds Year 2005-06 2006-07 2007-08 2008-09 2009-10 Outsiders fund 4494.97.34 in FY 2007-08. It was 3.13 4272.24 11686.55 7526. In FY 2006-07 it decreased to 0.Further it decreased to 0.54 6114.28 9339. There is decrease in the absolute ratio.60 in the FY 2005-06.449864635 0.28198 71 | P a g e .The above table and diagram shows the absolute ratio for the study period FY 2005-06 to 2009-10.19 0.44 15152.570859921 0.96 11907.63205273 0.654683893 0.
3 0.28 in the year 2009-10. The Bench Mark Debt-Equity ratio is 2:1.57 and then reached its highest in the next year and from there it began to slope downwards and ultimately came to 0.1 0 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and diagram shows the debt equity relationship of the Reliance Infrastructure company during the study period. During the FY 2005-06 it was 0.Figure 4: DEBT-EQUITY RATIO 0.2 0.4 0. In all the years the equity is more when compared with borrowings.7 0. Hence the company is maintaining its debt position.6 2005-06 0. 5) PROPRIETARY RATIO: Proprietor’s funds --------------------------Total tangible assets 72 | P a g e Proprietary ratio = .5 0.
Year 2005-06 2006-07 2007-08 2008-09 2009-10 Proprietor s fund 7873. This shows that the firm has good investment in fixed asset and favourable long term solvency position over the year under study.36 which gradually increased till FY 2009-10.433728 436.8375 Figure 5: PROPRIETARY RATIO 450 400 350 300 250 200 150 100 50 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and diagram shows that the Proprietor‟s fund ratio as on FY 2005-06 was 297.19 Tangible assets 2647.37 3468.24 11686. 73 | P a g e .365393 357.71 2806.49 3331.96 11907.3618712 332.28 9339.44 15152.35 3056.7895665 382.61 Ratio 297.
06 Fixed assets 2873.36 3636.603463815 2.25 7501.118069425 2.2 10958.79 10908.062752647 2.5 3904.6) FIXED ASSETS TURNOVER RATIO: Net sales ------------------Fixed assets Ratio 1.673931 Fixed assets turnover ratio = Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net sales 4607.41 74 | P a g e .89 6575.80664295 2.71 3104.59 4079.
Figure 6: FIXED ASSET TURNOVER RATIO 3 2. This indicates that fixed assets turnover ratio of the company is gradually increasing which is a healthy indication that less amount of money is tied up with fixed assets and thus fixed assets are effectively used to generate the sales. The sale is 1to 2 times more than the fixed assets from FY 2005-06 to 2009 -10.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and diagram shows the relationship between the fixed assets and sales. 7) WORKING CAPITAL TURNOVER RATIO: Net sales ---------------------------75 | P a g e Working capital turnover ratio = .
9787829) (7.67191252) (5.45) (1428.796824041 4.89 6575.70744) Figure 7: WORKING CAPITAL TURNOVER RATIO 5 0 -5 -10 -15 -20 -25 -30 -35 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS 76 | P a g e .2 10958.9 (214.Net working capital Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net sales 4607.43) (1911.25 7501.82 1624.79 10908.2) 0.046556711 (34.06 Net working Ratio capital 5782.
8) TOTAL ASSETS TURNOVER RATIO: Total assets ---------------------Net assets Ratio 2.2 10958.49 16944.The above table and diagram indicates that working capital turnover ratio is negative.79 10908.350251321 2.25 7501.258906575 1.06 77 | P a g e .77333173 1.57 19424.51 19433.8 Net sales 4607. which means they operate on an almost strictly cash basis.780775 Total assets turnover ratio = Year 2005-06 2006-07 2007-08 2008-09 2009-10 Total assets 12367.82 15453. Generally a negative working capital is a sign of managerial efficiency in a business with low inventory and accounts receivable.89 6575.684052788 2.
Figure 8: TOTAL ASSET TURNOVER RATIO
3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10
INTERPRETATION AND ANALYSIS The above table and diagram shows the relationship between the total assets to net sales. During all the study period years the relationship between sales to total assets is Low. The ratio increased from 2.68 (2005-06) to 1.78 (2009-10) due to the heavy rise in the sales.
9) CAPITAL TURNOVER RATIO:
78 | P a g e
Capital turnover ratio =
Sales ---------------------Proprietor’s fund Proprietor s fund 7873.28 9339.24 11686.96 11907.44 15152.19 Ratio 0.585256716 0.704045511 0.641843559 0.92033132 0.7199
Year 2005-06 2006-07 2007-08 2008-09 2009-10
Net sales 4607.89 6575.25 7501.2 10958.79 10908.06
Figure 9: CAPITAL TURNOVER RATIO
10 9 8 7 6 5 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10
INTERPRETATION AND ANALYSIS
79 | P a g e
The above table and diagram shows the relationship between the sales and proprietors funds. It indicates that the sales are in between 0.58 and 0.90 times less than the proprietor's funds. It shows the firms is not maintaining the better utilization of own funds.
10) Return on total assets: Net profit ------------------- x100 Total assets Ratio 0.052583236 0.051862071 0.064010703 0.05860375 0.05929
Return on total assets =
Year 2005-06 2006-07 2007-08 2008-09 2009-10
Net profit Total assets After Tax 650.34 12367.82 801.45 1084.63 1138.88 1151.69 15453.49 16944.51 19433.57 19424.8
80 | P a g e
x 100 81 | P a g e Gross profit ratio = .04 0.07 0. 11) GROSS PROFIT RATIO: Gross profit ----------------------------------.03 0.Figure 10: RETURN ON TOTAL ASSET 0.02 0.05 0.01 0 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and figure as on FY 2010 remain modest at 6% indicating that the long term fixed asset investments are not yet effectively managed to generate net income.06 2005-06 0.
89 2028.89 6575.4825202 30.0412 Figure 11: GROSS PROFIT RATIO 45 40 35 30 25 20 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS 82 | P a g e .79 10908.Net sales Year 2005-06 2006-07 2007-08 2008-09 2009-10 Gross Profit 4607.7372687 27.83 2949.06 Ratio 40.84445458 33.25 7501.2 10958.7 3045.7934881 27.1 2530.67 Net sales 4607.
This show there is low efficiency in managing purchases.55816 Net profit sales = Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net Profit 650. However it can be noticed that sales are increasing but gross profit is not increasing proportionately every year.45 1084. sales and moderate amount is available to meet the other expenses.2 10958.3923882 10.73% and finally reached to 27.89 6575.79 10908. labour.04% in the year 2009-10.88 1151.63 1138.11361816 12.34 801. 12) NET PROFIT RATIO: Net profit ----------------.45941983 10.25 7501.The above table and diagram shows the relationship between the gross profit and net sales in percentage.69 83 | P a g e . During 2005-06 the gross profit position was 40.18889016 14.48% and in the very next year it slashed down to 30.84% and again raised to 33.06 Ratio 14. production.x 100 Net sales Net sales 4607.
55 in 2009-10 The sales of the organization are also increasing and the profit of the organization is also increasingly proportionately . During 2005-06 it was 14. There is an further in percentage of 10.11% on sales and in2006-07 it decreased to12.This shows Reliance infrastructure limited have good control over direct and indirect cost and they have large amount available to meet non-operating expenses/losses. 13) RETURN ON SHAREHOLDER’S FUND 84 | P a g e .18%.Figure 12: NET PROFIT RATIO 16 14 12 10 8 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and diagram shows the relationship between net profit and net sales.
Net profit after Interest and Tax Return on shareholder’s fund = -------------------------------------.260089823 801.45 1084.56444038 7.63 1138.88 1151.24 11686.600815 Figure 8: RETURN ON SHAREHOLDER'S FUND 10 9 8 7 6 5 4 3 2 1 0 2005-2006 2006-2007 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS 85 | P a g e .280685482 9.34 7873.X 100 Shareholders’ fund Year 2005-06 2006-07 2007-08 2008-09 2009-10 Profit After Proprietor Ratio Tax s fund 650.581533401 9.69 9339.96 11907.19 8.44 15152.28 8.
1135318 11.99 847.3 1277.x 100 Sales Year 2005-06 2006-07 2007-08 2008-09 2009-10 Administration& Selling expenses 543. a) 14) ADMINISTRATIVE AND SELLING EXPENSES RATIO: Administrative and Selling expenses Administrative expenses ratio = ----------------------------------.89 6575.79303325 10.68 Net sales 4607. It is evident from this that the percentage return on Owner‟s fund is between 7-9 %.The above Table and Diagram shows that there is a fluctuation in this ratio and this is due to fluctuating debt capital and interest burden on the company.29552605 11.06 Ratio 11.25 7501.79 10908.02 1040.540468 86 | P a g e .41 664.6529288 9.2 10958.
87 | P a g e .
15) COST OF ENERGY EXPENSE RATIO Cost of energy Expenses ratio = ------------------------------------------ x 100 88 | P a g e .This shows there is a good control on expenditure and may be one of the reasons to net profit during the study years. The administration and selling expenses during 2005-06 is very high and gradually decreased to 9.Figure 14: ADMINSTRATION AND SELLING EXPENSE RATIO 12 10 8 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and diagram shows the relationship between the administration and selling expenses and sales in percentage.54 in year 2009-10.
2 33.25 23.99 10958.06 30.43 6575.69 7501.56 Net sales 4607.16389378 2008-09 4253.45399 89 | P a g e .8180629 2009-10 3321.Sales Year 2005-06 Cost of Energy 1087.79 38.89 Ratio 23.60212592 2006-07 1532.94 10908.30603399 2007-08 2487.
x 100 90 | P a g e Expenses ratio = . 16) COST OF FUEL RATIO Cost of Fuel -----------------------------------.Figure 15: COST OF ENERGY EXPENSE RATIO 40 35 30 25 20 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and figure show that the cost of energy and net sales are increasing gradually indicating that there is good control on the expenditure and ultimately resulting in higher productivity.
01117828 2007-08 1015.18283 Figure 16: COST OF FUEL EXPENSE RATIO 18 16 14 12 10 8 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10 91 | P a g e .89 Ratio 17.83 10908.6469784 2009-10 1219.52 7501.79 10.06 11.2 13.1 Net sales 4607.62411863 2006-07 921.53810057 2008-09 1166.27 6575.25 14.Sales Year 2005-06 Cost of fuel 812.78 10958.
17.26 6575.58 7501.25 1.x 100 Sales Expenses ratio = Year 2005-06 Cost of Tax 114 Net sales 4607. ratio is 11.18 as compared to FY 2005-06 i.754119341 92 | P a g e .62 indicating that increasing in the net sales is not proportionate with increasing cost of fuel as the ratio is dipping. This shows that the company has good control over the cost of fuel over the study period.474017392 2006-07 124.89 Ratio 2. 17) COST OF TAX RATIO Cost of Tax -----------------------------------.e.889814076 2007-08 131.2 1.INTERPRETATION AND ANALYSIS The above table and figure shows that As on FY 2010 the Cost of fuel to sale .
13 10908. From FY 2005 to FY 2010 the ratio are marginally varied and remained more or less close to 1.39577453 2009-10 154.2008-09 152. 93 | P a g e .5 1 0.96 10958.5 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and figure show that the cost of tax and net sales are increasing proportionately indicating that there is good control on the expenditure and ultimately resulting in higher productivity.412992 Figure 17: COST OF TAX EXPENSE RATIO 2.79 1.06 1.50.5 2 1.
2 17.49 10908.89 Ratio 15.25 29.345696 2009-10 3262.94851907 2007-08 1335.19 6575.84 4607.81721786 Year 2005-06 2006-07 1969.79 21.18) EXPENDITURE ON EPC RATIO Expenses ratio = Expenditure on EPC -----------------------------------.90898 94 | P a g e .80661761 2008-09 2339.23 10958.06 29.x 100 Sales Expenditure on Net sales EPC 728.71 7501.
95 | P a g e . had increased as against FY 2009 on account of substantial increase in the Sales.Figure 18: EXPENDITURE ON EPC EXPENSE RATIO 30 25 20 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10 INTERPRETATION AND ANALYSIS The above table and figure shows that as on FY 2010 the Expenditure on EPC ratio.
1 FINDINGS This study is carried out with the objective of analyzing the financial performance of Reliance Infrastructure to examine and understand the role of finance in the growth of the company. 1. 96 | P a g e . This chapter attempts to highlight the findings of the study.CHAPTER V FINDINGS AND SUGGESTIONS 5. The profit before interest and tax is in positive during the period of study.
PBIT. when compared with borrowings. It depicts that the company‟s fixed assets are utilized properly in relation to the sales. 8. Proprietary ratio of the company fluctuates during the period of study shows that the firm has good investment in fixed asset and favourable long term solvency position over the year under study. Hence the company is maintaining its debt position.2. 3. This shows Reliance infrastructure limited have good control over direct and indirect cost and they have large amount available to meet non-operating expenses/losses. The ideal liquid ratio is 1 which is also not obtained by the firm and So the company is not in a position to meet the short term obligations. 4. 10 In all the years the debt equity is more. 5. Working capital turnover ratio is negative. which means they operate on an almost strictly cash basis. Net Profit ratio shows that the sales of the organization are increasing and the profit of the organization is also increasingly proportionately. It indicates that less amount of money is tied up with fixed assets and thus fixed asset are effectively used to generate the sales. 7. 97 | P a g e . PAT all shows the increasing trend during the period under review. PBT. Fixed Assets turnover ratio shows the increasing trend. It depicts that the company is working with more efficiency. 6. The ideal current ratio is 2 which the firm does not obtained and this shows the company has not maintained favourable liquidity position and this can be treated as an unhealthy sign. Generally a negative working capital is a sign of managerial efficiency in a business with low inventory and accounts receivable. The sales. 9. There is decreasing trend in the absolute ratio for all the study years.
11 . Optimum utilization of Working Capital can be planned so as to result in sound financial position. sales and moderate amount is available to meet the other expenses.Capital turnover ratio indicates that the sales are in between 0.2 RECOMMENDATIONS 1. 2. 3. 4.54 in year 2009-10.This shows there is a good control on expenditure and may be one of the reasons to net profit during the study years.Gross profit ratio indicates that sales are increasing but gross profit is not increasing proportionately every year. 5. 6. 12 . 13 The administration and selling expenses during 2005-06 is very high and gradually decreased to 9. 98 | P a g e . The company may reduce the operating inefficiencies through effective utilization of all the resources. production. labour. so that the interest an finance charges will be less.90 times less than the proprietor's funds which shows the firms is not maintaining the better utilization of own funds. This show there is low efficiency in managing purchases. The company may strike a balance between the current assets and current liabilities to maintain the solvency position. The Management must also study the market position and it also find the demand prevailing in the market for the products and thus this will guide them to enhance their sales volume. 5.58 and 0. The company may increase the sales if it attempts to move into export market. The company may increase the performance by reducing the borrowed capital.
The Gross Profit ratio can be improved by increasing the gross profit and the factors decreasing the gross profit ratio should be thoroughly checked timely whither they are operating factors or any misleading factors. etc. 9.) and that in turn will increase the overall profits of the organization. assets.e. The sales of the organization can be further increased by improving the quality through optimum utilization of company's resources (i. And this must be improved further for the purpose of proper utilization of the liquid assets of the company. credit system. raw materials. The liquidity position of the company is quite satisfactory. 8.7. 99 | P a g e .
100 | P a g e . the study reveals the favourable financial performance with steady margins.1 CONCLUSION On studying the Ratio Analysis of Reliance Infrastructure Limited for a period of five years from 2005-06 to 2009-10.CHAPTER VI CONCLUSION AND BIBLIOGRAPHY 6.
It shows that there is a constant increase in the net sales and net profit which indicates a healthy sign for the company to sustain in market. PANDEY. 6.com 101 | P a g e . Vikas Publishing house private limited.2 BIBLIOGRAPHY Books Referred R. It can be also noticed from the ratios that company is able to satisfy its shareholders with maximum returns.K. “Financial Management”. 2006 Advanced Accountancy. University of Mumbai. COM Part – II. GUPTA. SHARMA and SHASHI K. Websites: www. contributing to the strong financial position of the company. New Delhi. Kalyani Publishers. “Management Accounting and Business Finance”. Institute of distance and open Learning. Therefore the company has been able to maintain and grow its market share to make strong margins in market.M.rinfra. M. I.
or g/jit/Articles/mehta011603. Catherine Ramus & John Antonakis.nait.icp2008. Environmental and Financial Performance Literature.132/search?q=cache:EIGjtsUJQeEJ:www. Source: http://www.palgravejournals. Cram. on May 23.com/jors/journal/v54/n1/abs/2601475a. 2004.com Literature Review Bibliography 1. Source: http://www1.com www.org/guest/AbstractView?ABSID=10821 5. Number • February 2003 to April 2003 Page2.com/jibs/journal/v26/n1/abs/8490171a. Page 181–202 By Janet Y. Masaaki Kotabe & Albert R. Mehta Source: http://72.edu/doncram/www/environmental/envir-finliterature. Implications for financial performance and corporate social responsibility. 2000 Source: http://web. Journal of the Operational Research Society (2003) Vol.investopedia.html 4. by E H Feroz.palgravejournals. Devang P. Journal of International Business Studies (1995).Pages 48–58.54. Journal of Industrial Technology • Volume 19.www.html 102 | P a g e . on March 27.html 2.google. Murray.mit. by Philippe Jacquart.com www.14. Wildt Source: http://www. by Dr.wikipedia.235.pdf+review+of+literature+on+financial+performance &hl=en&ct=clnk&cd=2 3. Vol 26. by Donald P.
htm Article7:http://www.com/accounting-articles/analysis-of-financialstatementsselective-tools-1284945.net/financial-statements-analysis/ Article4:http://businessfinancialplanning.creditguru.accountingformanagement.com/article.html Article3: http://www.htm Article 2:http://www.com/blog/finance-core/understanding-financialstatements/ Article6: http://www.com/accounting_ratios.Article1: http://www.pdf 103 | P a g e .articlesbase.cfm/financial_rat io_analysis_for_performance_check Article5: http://www.suite101.abcsofinvesting.org/aboutus/press/pdf/TipSheetSevenHabitsUS .cfainstitute.com/ratios/inr.mint.
APPENDICES 104 | P a g e .
105 | P a g e .
106 | P a g e .
107 | P a g e .
108 | P a g e .
109 | P a g e .
110 | P a g e .
111 | P a g e .
112 | P a g e .
113 | P a g e .
114 | P a g e .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.