SYNOPSIS OF PROJECT REPORT Title of the project Submitted by : Analysing the Financial performance of power sector in India.

: Ronnie Bhaumik MMS II SEM IV Project guide : : Prof. Charu Upadhyaya

Year of submission : 2012-13

Introduction The electricity sector in India was predominantly controlled by the Government of Indias public sector undertakings (PSUs). It was running under the risk of bankruptcy. This created a serious impediment to investments in the sector at the time when India desperately needed them. This led to the emergence of Private players in the power sector. The NTPC, Reliance Infra, Tata Power, Power Grid, & Torrent Power are the market leaders in the power sector and have high Cumulative Annual Growth Rate (CAGR). This report is based on the extensive study of the power sector in India focusing mainly on the public and private sector power companies in India. This study will examine the financial statement and analyze its financial prospects in terms of Liquidity, Debt, company performance, efficiency and financial position. The study also takes into account the companys short term and long term solvency with ratio analysis. Objectives

To study the growth and development pattern of power Sector in India To find out the key performance indicators for the sector. To measure the overall financial performance of the sector. To study the future scope for the sector.

Scope of study: The study analyzes the financial and the liquidity position of the power sector firms in India. Also, the study will highlight the gray areas for improvement in the companys performance.

Literature review:

1. N. Sreekumar (Nov 2008), States that the market-oriented power sector reforms initiated in India in the early 1990s. It brings out a public interest oriented critique of the three phases of the reformsfirstly, privatisation of generation, secondly, state sector restructuring and finally, the ongoing reforms since the passage of the Electricity Act 2003. Reforms were taken up as a response to the crisis in the sector. The article questions the success of the process in solving the crisis. While acknowledging positive elements like increase in transparency and participation, it criticizes the process for neglect of development issues like rural electrification and energy efficiency. The article concludes with some thoughts on developing an alternate reform approach.
2. Yin-Fang Zhang, David Parker and Colin Kirkpatrick (Nov 2002), This paper provides

an econometric assessment of the effects of privatization, competition and regulation on the performance of the electricity generation industry using panel data for 51 developing countries, over the period 1985 to 2000. The study identifies the impact of these reforms on generating capacity, electricity generated, labour productivity in the generating sector, capacity utilization and industrial a0nd residential user prices. The paper concludes that competition appears to bring about favourable results for service penetration, capacity expansion, labour efficiency and prices to industrial users.

3. Anoop Singh (Sep 2006), address the Power sector reforms in India. Reforms were initiated

at a time when the sector was plagued with commercial losses and increasing subsidy burden. Investment in the sector was not able to keep pace with growing demand for electricity. This paper takes stock of pre-reform situation in Indian power sector and identifies key concerns that led to initiation of the process of reform. The paper discusses major policy and regulatory changes undertaken since the early 1990s. The paper also illustrates changes in the market structure as we move along the reform process. It also discuss some of the major provisions of the recently enacted Electricity Act 2003 that aims to replace the prevailing acts which govern the functioning of the power sector in the country.
4. Swain, Singh and Kumar (2004),

describes there were many inhibitors to growth in power sector but the main problem in the growth was Government Policy, which made it difficult for a private player to enter. A whole new system was evolved where private players were invited to be an active participant. This resulted in demand for financial, political and other major requirement in roads and communication .Some of the bold steps taken in the Act were moving generation and distribution out of License Raj, opening access to national grid and demolishing the Single Buyer model. The failure of the large structure and the changing global scenario has forced Government to think of ways to revive this fundamental infrastructure sector.

5. Rahul Tongia (April 2003), describes that Indias power sector is undergoing significant

reforms, beginning in 1991, which are changing and diminishing the role of the government,

which functioned earlier as the near monopoly integrated utility. Because of significant financial difficulties faced by the State Electricity Boards. As a result, 1991 saw the enactment of legislation, the 1991 Electricity (Supply) Act, which opened up the sector to private participation, primarily in generation. The current thrust of reforms is on the distribution sector, reducing losses and increasing efficiency. This might just be a precursor to privatization, but there is a goal to full electrification by 2012. In the last few years, the T&D losses have stabilized somewhat, but there is only limited interest of private players into the sector, especially new players. Those who state that overall financial losses have increased after the reforms do not factor in the increase in costs due to generator price increases regardless of reforms, even from government generators and PSUs. Electricity Bill 2001 opens up the sector to private participation with limited approval obligations. This sector is vital to Indias growth and development. Research methodology Formation of problem: The Indian power sector companies during the current five year plan have been going through a demand-supply mismatch in terms of planned capacity and actual capacity. The power companies also have poor financial health and therefore undergoing a restructure. This study analyses the power companies to find out the appropriate solution to increase efficiency. Methods of collection of data: For the purpose of study, Secondary data will be collected via journals and annual reports. Research limitation

This research is limited to the domestic sector. Ratio analysis explains relationships between past information while users are more concerned about current and future information.

Data analysis and interpretation: Financial statement analysis will be carried out on the data collected. Also, financial ratio analysis will be applied on the date to measure the performance of the power sector companies and to compare the same. References: N Sreekumar (2008), Market Oriented Power Sector Reforms, The IUP Journal of Governance and Public Policy, 2008, vol. III, issue 2 & 3, pages 25-48.

Yin-Fang Zhang, David Parker and Colin Kirkpatrick (Nov 2002), Electricity Sector Reform in Developing Countries, An Econometric Assessment of the Effects of Privatisation, Competition and Regulation, Aston Business School Research Paper, pages 4-26. Anoop Singh ( Sep 2006), Power Sector Reform India- Current Issues and Prospects, IIT Kanpur, pages 1-8. Swain, Singh and Kumar (2004), Analysis of Power Sector In India- A structural Perspective, law and Economics, Pages 2-17. Rahul Tongia( April 2003), Power Sector Reform India- The long Road Ahead, Economic and Political Weekly, 2003, pages 3-45.