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KARNATAKA POWER CORPORATION

ORATION LIMITED CASH FLOW ANALYSIS

CHAPTER: 1

INTRODUCTION

ABOUT INDUSTRY
STRY

Electricity is an energy form that results from the existence of charged particles such as
electrons or protons, either statically as an accumulation of charge or dynamically as a
current. Electricity has several uses such as cooking, transport and communication and also in
several industries to produce goods and services. It has a unique feature of instant generation
and consumption. Unlike other commodities, electricity cannot be stored for future use. In
other words, its generation and consumption have to be simultaneous and instantaneous. The
unique features of power as a commodity or service make the dynamic of its supply and
demand difficult to manage.

Electricity plays a major role in every aspect of technology. It makes telephone computers,
TV and countless other necessities and luxuries possible. Totally we can say tthat human life
has become depended on electricity. Electric power systems are the components that
transform other types of energy into electrical energy and transmit this energy to customer.
The production and transmission of electricity is relatively efficient
efficient and inexpensive although
like other forms of energy, electricity is not easily stored and thus generally be used as it is
being produced.

With his scientific thinking man has made it possible to create wonders by generating the
power with easily available
lable natural resources. So, nowadays generation has become total
dependent on those resources like coal, water, wind. The emphasis on hydro and thermal
generation has different from country, mainly as a result in different in topography, rainfall
and fuel availability.

A MODERN ELECTRIC POWER SYSTEM CONSISTS OF


FOUR MAIN COMPONENTS:

The power station


A set of transformers
The transmission line

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Distribution line

A POWER STATION

A power station (also referred to as a generating station


station, power
plant, powerhouse or generating plant)
plant is an industrial facility for the generation of electric
power. At the centre of nearly all power stations is a generator, a rotating machine that
converts mechanical power into electrical power by creating
ting relative motion between
a magnetic field and a conductor.
conductor The energy source harnessed
ed to turn the generator varies
widely. It depends chiefly on which fuels are easily available, cheap enough and on the types
of technology that the power company has access to. Most power stations in the world
burn fossil fuels such as coal,
coal oil, and natural gas to generate electricity, and some
use nuclear power,, but there is an increasing use of renewable sources such
as solar, wind, wave and hydroelectric.
hydroelectric

TRANSFORMERS

A transformer is an electrical device that transfers energy between two circuits


through electromagnetic induction.
induction. A transformer may be used as a safe and
efficient voltage converter to change the AC voltage at its input to a higher or
lower voltage at its output. Other uses include current conversion, isolation with or
without changing voltage and impedance conversion. In a typical system, the generation at
the power stations deliver a high voltage from 1000 to 2600 volt (V). Transformers step up
this voltage up to range values ranging from 138000 to 765000 (V) for further transfer on the
distribution high voltage may be transformed step the voltage down again to distribution level
such as 2400 or 4160 or 1517 or 33 Kilovolt (KV). Finally the voltage is transformed once
again at the distribution transformer near the point of use to 240 or 120V.

TRANSMISSION LINE

The lines the high-voltage


voltage transmission systems are usually composed of wires of
copper, aluminium, or copper-clad
copper or aluminium-cold
cold steel which are suspended from tall
lattice work tower of steel by strings
strings of porcelain insulators. By the use of clad steel wired
and high towers, the distance between towers can be increased, and the cost of the
transmission line thus reduced. In modern installation with essentially straight paths, high

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voltage line may be built


uilt with a few as six towers to the kilometre. In some areas high
high-
voltage lines are suspended from all wooden poles spaced more closely together. For tower
voltage distribution lines,
s, wooden poles are generally used rather than steel towers. In cities
and other areas where open lines create a safety hazard cables are used for distribution. Some
of these cables have hollow core through oil circulates under low pressure the oil provide
temporary from water damage to the enclose wires should a cable develop a leak. Pipe type
with oil under high pressure 14kg per square sq.cm/200
sq.cm/200 is frequently used. These cables are
used for transmission of current at voltage as high as 345000V (or 345KV).

DISTRUBUTION LINES

Any electric-distribution
distribution system involves a large amount of supplementary equipment to
protect the generators, transmission lines. The system often includes devices to customers. To
protect all elements to the power system from short circuit and overload
overloads, and for normal
switching operation, circuits breakers are employed. This breakers are large switches that are
activated automatically in the event of short-circuits
short circuits or other condition that produ
produce a sudden
raise in current. Because a current forms across
across the terminals of the circuit breaker at the
moment the current is interrupted, some large breakers (such as those uses are as oil, to
quench the current) in large air-type
air type circuit breakers as well as in oil breakers, magnetic field
is use to break up the current. Small air circuit breakers are used for protection in shop
factory, and in modern home installation. In residential electric wiring, fuses where
commonly employed for the same purpose. A fuse consists of a piece of alloy with a law
melting point,
nt, inserted in the circuit, which melts, breaking the circuits if the current rises
above a certain value.

INDSUTRY PROFILE

The power sector is registered significant progress since process is planned


development of economy began in 1950. Hydro-power
Hydr power and coal based thermal power has
been the sources of generating electricity. Nuclear power development is at slower pace,
which was introduced, in late sixties.

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HISTORY

Although electricity had known to be produced as a result of the chemical reactions


that place in an electrolytic cell since Alessandro Volta developed the voltaic pile in 1800,
its production by this mean was, and still is expensive. In 1831, Michael fara
faraday devised a
machine that generate electricity from rotary motion, but it took almost 50 years for the
technology to reach a commercially viable replacement for gas, lighting and heating using
locally generated and distributed direct current electricity.

The world first electricity supply was provided in late 1881, when the street of the
Surrey town of Godalming in the UK was link with electric light. This system was powered
from the water wheel on the river way, which drove a Siemens alternate, which supply a
number of arcs lamps within the town.

Coinciding with this, in early 1882, Edition opened the worlds first steam powered
electricity power generation station at Holborn Viaduct in London, where he had entered into
an agreement with the city corporation for a period of three months to provide street lighting.
In the he had supplied a number of local consumer with electricity light. The method of
supply was direct current (DC).

It was later on in the year September 1882 that Edison opened the pearl street power station
in New York City again it was DC supply. It was for this reason that the generation was close
to or on the consumers premises as the Edison had no means of voltage conversion
conversion. The
voltage chosen for any electrical system is compromise. Increase the voltage reduces the
current and therefore reduces resistive losses on the cable. Unfortunately it increases the
danger from direct contact and also increases the required installation thickness.

Additionally, Robertt Hammond, in December 1881, demonstrated the new electric light
in the Sussex town of Brighton in the UK for a trail period. The insuring success in this
installation enabled.

Hammond to put this venture on the both a commercial and legal footing, as a number of
shop owner wanted to use the new electric light. Thus the Hammond electricity supply co
co.
was launched. Whilst the Godalming and Holborn viaduct scheme closed after a few years
the Brighton scheme and continued on and supply was in 1887 made available for 24/7.

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Nikola Tesla, who had worked for Edison for a short time and appreciated the electricity
theory in the way that Edison did not, devised an alternative system using alternating current,
Tesla realised that while doubling the voltage would
would halve the current and reduce losses by
three-quarters,
quarters, only an alternating current system allowed the transmission between the
voltages for distribution where their risk could easily be mitigated by good design while still
allowing fairly safe voltages to be supply to the loads. He went to develop the overall theory
of his system, devising theoretical and practical alternatives for all the current appliances then
in use, and patented his novel ideas in 1887, in thirty separate patents.

In 1888, Teslas
as work came to the attention of George Westinghouse, who owned a patent
for a type of transformer that could deal with high power and was easy to make.
Westinghouse had been operated an alternating current light plant in Greg Barrington,
Massachusetts since
nce 1886. While Westinghouses system could use Edisons light and
heaters, it did not have a motor. With Tesla and his patents, Westinghouse built a power
system for a gold mine in telluride, Colorado in 1891, with a driven 100 horsepower (75KW)
generator powering a 100 horsepower (75KW) motor over a 2.5-mile
2.5 mile (4Km) power line. AL
Marian Decker finally invented the whole system in three-phase
three phase power generating in
Redlands, California in 1893. Then, in a deal with general electric, which Edison had been
forcedd to sell, Westinghouses company went on a construction a power station at the Niagara
Falls, with three horsepower (3.7MW) Tesla generating supplying electricity to an aluminium
smelter at Niagara and the town of Buffalo 22 miles (35Km) away. The Niagara power
station commenced operation on April 20, 1885.

Teslas alternating current system remains the primary means of delivering electrical
energy to consumers throughout the world. While high-voltage
high voltage direct current (HVDC) is
increasingly being usedd to transmit large quantities of electricity over long distances or to
connect adjacent asynchronous power system, the bulk of electricity generation, transmission
and retailing take place using alternating current,

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MAIN PLAYERS

Major players in the power sector can be broadly divided into public, private and
international,

Major players Capacity G T D


Public sector
National thermal power station 29144 - -
National hydro electrical power 2755 - -
station
Nuclear power station 4120 - -
Domestic power sector
Tata power 2323
RPG Group 975 -
Reliance energy 941
International private sector
China light and power (CPL) 665 - -
Murubeni corporation 347 - -

G Generation
T Transmission
D Distribution

Source: ministry of power, Capitoline

GROWTH OF INDIAN POWER SECTOR:


SECTO

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

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registering a 63 fold increase in 54 years. Similarly, the per capita consumption of electricity
in the country also increased.

From 15WH in 1950 to about 395 KHW in 2004-05,


2004 which is about 26times? In the
field of rural electrification and pump set energization,
gization, country has made a tremendous
progress, 88% of the village has been electrified expect far flung areas in North Easter states,
where it is difficult to extend the grid supply.

GENERATION MIX:

The share is hydel generation in the total generating capacity of the country has been
declined from 34% at the sixth plan to 29% at the end of the seventh plan and further 25.5%
at the end of the eighth plan. The share is likely to decline ever further unless suitability
corrective measures
easures are initiated immediately. Hydel power projects, with storage facilities,
provide peak time support to the power system.
system

EMERGENCE REGIONAL POWER SYSTEM:

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

PRIVATE SECTORS:

The initial response of the domestic and foreign investors to the policy of private
participation in power sector has been extremely encouraging. However, many projects have
been encountered unforeseen delays.
delays. There have been delays relating to finalisation of power
purchase agreements, guarantees, environmental clearance, matching transmission network
and legally enforceable contract for fuel supplies. The short fall in the privat4e sector was due
to emergence
rgence the number of constraints, which
whi were not anticipated at the time the policy was
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formulated. The most important is that leaders are not willing to finance large independent
power projects, selling power to a monopoly buyers such as SEBs do not pay for electricity.
Uncertainties about fuel supply agreements and the difficulties in negotiation arrangement
with public sectors fuel suppliers,
supp which concern penalties for non-performance,
performance, is another
area of potential difficulty. This is important to resolve
resolve these difficulties and revolve a
framework of policy which makes power project financially attractive. The capacity addition
programmed for 9th plan envisaged around 17588MW to be added by private generating by
the plan, the following additional facilitating
facilitating measures recently been suggested by promoters.
Most of these have been accepted while some of them are under the consideration of the
government.

OBJECTIVES OF THE POWER SECTORS:

To provide reliable and quality power at an economic price.


To make the sector commercially sound and self-sustaining.
self
To achieve environmentally sustainable power development.
High performance level to reduce cost and ensure reliable power supply.

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PART: B

ABOUT THE SUBJECT

CASH FLOW: Cash follow mean inflow and outflow of cash. Cash flow is the
movement of money into or out of a business, project, or financial product. It is usually
measured during a specified, limited period of time. Measurement of cash flow can be used
for calculating other parameters that give information on a company's value and situation.
Cash flow
ow can be used, for example, for calculating parameters: it discloses cash movements
over the period. A cash flow statement is a financial report that describes the sources
of a company's cash and how that cash was spent over a specified time period. It do
does
not include non-cash
cash items such as depreciation. This makes it useful for determining
the short-term
term viability of a company, particularly its ability to pay bills. Because the
management of cash flow is so crucial for businesses and small businesses in
particular, most analysts recommend that an entrepreneur study a cash flow statement
at least every quarter.

It should be noted that cash flow statement deals with the flow of cash fund but
not consider movement of cash bank balance and cash equivalent.

Cash fund: As per (AS-3)


3) issued by the ICWA of India, the term cash includes:

(i) Cash in hand


(ii) Demand deposited with bank

Accounting standard 3 (AS-3)


(AS cash flow statement

The 'applicability' paragraphs of AS 3 stand modified as under:

"The following is the text of the revised Accounting Standard (AS) 3, 'Cash Flow
Statements', issued by the Council of the Institute of Chartered Accountants of India.
This Standard supersedes Accounting Standard (AS) 3, 'Changes in Financial Posi
Position',
issued in June, 1981. In the initial years, this accounting standard will be
recommendatory in character. During this period, this standard is recommended for use

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by companies listed on a recognised stock exchange and other commercial, industrial and
business enterprises in the public and private sectors.

Accounting Standard (AS) 3, 'Cash Flow Statements' (revised 1997), issued by the
Council of the Institute of Chartered Accountants of India, comes into effect in respect of
accounting periods commencing
mmencing on or after 1-4-1997.
1 1997. This Standard supersedes
Accounting Standard (AS) 3, 'Changes in Financial Position', issued in June 1981. This
Standard is mandatory in nature in respect of accounting periods commencing on or after
1-4-20041 for the enterprises
ises which fall in any one or more of the following categories,
at any time during the accounting period:

i. Enterprises whose equity or debt securities are listed whether in India or outside
India.
ii. Enterprises which are in the process of listing their equity or debt securities as
evidenced by the board of directors' resolution in this regard.
iii. Banks including co--operative banks.
iv. Financial institutions.
v. Enterprises carrying on insurance business.
vi. All commercial, industrial and business reporting enterprises, wh
whose turnover for
the immediately preceding accounting period on the basis of audited financial
statements exceeds Rs. 50 crores,, Turnover does not include 'other income'.
vii. All commercial, industrial and business reporting enterprises having borrowings,
including
uding public deposits, in excess of Rs. 10 crores at any time during the
accounting period.
viii. Holding and subsidiary enterprises of any one of the above at any time during the
accounting period.

The enterprises which do not fall in any of the above categories are encouraged, but are
not required, to apply this Standard.

Where an enterprise has been covered in any one or more of the above categories and
subsequently, ceases to be so covered, the enterprise will not qualify for exemption from
application
ion of this Standard, until the enterprise ceases to be covered in any of the above
categories for two consecutive years.

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Where an enterprise has previously qualified for exemption from application of this
Standard (being not covered by any of the above categories) but no longer qualifies for
exemption in the current accounting period, this Standard becomes applicable from the
current period. However, the corresponding previous period figures need not be
disclosed.

An enterprise, which, pursuant to the above provisions, does not present a cash flow
statement, should disclose the fact.
The following is the text of the Accounting Standard."

The above modifications come into effect in respect of accounting periods commencing
on or after 1-4-2004.
2004. Accordingly,
Accordingly, the announcement issued by the Council titled as
'Accounting Standard (AS) 3, Cash Flow Statements Made Mandatory', published in the
December 2000 issue of the Institute's Journal (page 65) stands withdrawn in respect of
accounting periods commencing on or after 1-4-2004.

Classification of cash flow

Accountant standard (AS-3)


3) requires that cash flow statement should cash flow during the
period classification by operating, investing and financing activities.

Operating activities

Operating activities are the principle activities of the enterprise. An accounting item
indicating the money a company brings in from ongoing, regular business activities, such as
manufacturing and selling goods or providing a service. Cash flow from operating activities
does not include long-term
term capital or investment costs. It does include earnings before
interest and taxes plus depreciation minus taxes.

Also called operating cash flow or net cash from operating activities, it can be calculated as
follows.

Cash Flow from Operating Activities = EBIT + Depreciation Taxes

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Some examples of cash flow from operating activities are:

1. Cash receipts from the sale of the goods and the rendering of services usually
from a major share of cash inflows.
2. Cash receipts from royalties fees, commission and other revenues.
3. Cash payment of supplier for goods and services, such as payment of expenses
like lighting and power, rent, insurance etc.
4. Cash payment of the wages and salary to the employees.

Operating activity

The owners or managers of the business use the initial funds to buy equipment or
other assets they need to run the business. In other words, they invest it. The purchase
of property, plant, equipment, and other productive assets is classified as an investing
activity. Sometimes a company has enough cash of its own that it can lend money to
another enterprise. This, too, would be classified as an investing activity. Generally,
any item that would be classified on the balance sheet as a long-term
long term asset would be a
ssification as an investing activity.
candidate for classification

Financing activities

Now the company can start doing business. It has procured the funds and purchased
the equipment and other assets it needs to operate. It starts to sell merchandise or
services and make payments for
for rent, supplies, taxes, and all of the other costs of
doing business. All of the cash inflows and outflows associated with doing the work
for which the company was established would be classified as an operating activity.
In general, if an activity appears
appears on the company's income statement, it is a candidate
for the operating section of the cash flow statement.

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METHODS OF PREPARING THE CASH FLOW STATEMENT

In November 1987, the Financial Accounting Standards Board (FASB) issued a "Statement of
Financial Accounting Standards" which required businesses to issue a statement of cash flow
rather than a statement of changes in financial position. There are two methods for preparing
and presenting this statement, the direct method and the indirect method. The F
FASB
encourages, but does not require, the use of the direct method for reporting. The two methods
of reporting affect the presentation of the operating section only. The investing and financing
sections are presented in the same way regardless of presentation
presentat methods.

1. Direct Method

The direct method, also called the income statement method, reports major classes of operating
cash receipts and payments. Using this method of preparing cash statement starts with money
received and then subtracts money spent, to
to calculate net cash flow. Depreciation is excluded
altogether because, although it is an expense that affects net profits, it is not money spent or
received.

2. Indirect Method

This method, also called the reconciliation method, focuses on net income and the net cash
flow from operations. Using this method one starts with net income, adds back depreciation,
then calculates changes in balance sheet items. The end result is the same net cash flow
produced by the direct method. The indirect method adds depreciation
depreciation into the equation
because it started with net profits, from which depreciation was subtracted as an expense.

Regardless of whether the direct or the indirect method is used, the operating section of the
cash flow statement ends with net cash provided (used)
(used) by operating activities. This is the most
important line item on the cash flow statement. A company has to generate enough cash from
operations to sustain its business activity. If a company continually needs to borrow or obtain
additional investor capitalization
apitalization to survive, the company's long-term
long term existence is in jeopardy.

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FINANCING AND INVESTING SECTIONS


The cash flows, in and out, resulting from financing and investing activities are listed in the
same way whether the direct or indirect method of presentation is employed.

CASH FLOWS FROM INVESTING

The major line items in this section of the cash flow statement are as follows:

Capital Expenditures. This figure represents money spent on items that last a long time such
as property, plant, and equipment. When capital spending increases, it often means the
company is expanding.

Investment Proceeds. Companies will often take some of their excess cash and invest it in an
effort to get a better return than they could in a savings account or money ma
market fund. This
figure shows how much the company has made or lost on these investments.

Purchases or Sales of Businesses. This figure includes any money the company made from
buying or selling subsidiary businesses and will sometimes appear in the cash fl
flows from
operating activities section, rather than here.

CASH FLOWS FROM FINANCING

The major line items in this section of the cash flow statement include such things as:

Dividends Paid. This figure is the total dollar amount the company paid out in divid
dividends over
the specified time period.

Issuance/Purchase of Common Stock. This is an important number because it indicates how a


company is financing its activities. New, rapidly growing companies will often issue new
stock and dilutes the value of existing shares in so doing. This practice does, however, give
company cash for expansion. Later, when the company is more established it will be in a
position to buy back its own stock and in this way increase the value of existing shares.

Issuance/Repayments of Debt.
ebt. This number tells you whether the company has borrowed
money during the period or repaid money it previously borrowed. Borrowing is the main
alternative to issuing stock as a way for companies to raise capital.

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The cash flow statement is the newest of the three fundamental financial statements prepared
by most companies and required to be filed with the Securities and Exchange Commission by
all publicly traded companies. Most of the components it presents are also reported, although
often in a differentt format, in one of the other statements, either the Income Statement or the
Balance Sheet. Nonetheless, it offers the manager, investor, lender, and supplier of a company a
view into how it is doing in meeting its short-term
short term obligations, regardless of whe
whether or not the
company is generating income

TREATMENT OF OTHER ITEMS

i. Interest and dividend


a) In case of financing enterprise, cash flow from interest paid and interest
dividend received should be treated as cash flow from operating activities.
Dividend paid should be classified as cash flow from financing activity.
b) In the case of other enterprises, cash flows arising from interest and dividend
paid should be classified as cash flows from financing activities while interest
and dividend should be classified
classified as cash inflow from financing activity.

Net profit is adjusted for non operating expenses and income for
calculating operating profit as shown below:

Net profit xxx


Add: non operating expenses xxx
Less: non-operating income xxx
Net operating profit xxx

IMPORTANT TERMS

1. Income tax: cash flow arising from income tax should be classified as flows from
operating activities unless they can be specialised identified financing and investing
activity. For example: capital gain tax on sale of land can be identified with investing

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activities and therefore in the cash flow statement, it should be shown as outflow from
investing activity.
2. Extra ordinary items: the cash flow associated with extra ordinary items should be
classified as arising from operating, investing and financing as appropriat
appropriate and
separately disclosed. For example: legal claim cost of winning a law suit or lottery,
receipt of claim from an insurance company etc.
cash transactions: there are certain transactions which do not include any cash
3. Non-cash
out flow although they affect the capital and the assets of the enterprise; they are
excluded from cash flow for obvious reason. Examples of non cash transaction are:
a) Acquisition of asset by issuing shares or debentures.
b) Conversion of non-convertible
non debentures into shares.
c) Acquisitionn of fixed asset like machinery on credit

PREPARATION OF CASH FLOW STATEMENT

Preparation of cash flow statement is similar to fund flow statement. In fact the basic
difference arises from the definition of fund. In fund flow statement, Fund mean net work
working
capital while in cash flow statement it means cash AS-3
AS 3 has not prescribed any specific
format for cash flow statement but SEBI has approved cash flow statement to be prepared in
the following form

Performa of cash flow statements

1.Cash flow from operating activities


Before tax and extra ordinary items
Adjustment for:

Depreciation
Interest income
Dividend income
Interest expense
Foreign exchange loss
Operating profit before changing in working capital
Adjusted capital before working capital
Cost generation from or used in operation before tax

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Income tax paid


Cash flow before extra ordinary items
Net cash from (or used in ) operating activities
2. cash from investment activity
Purchase of fixed assets
Proceeds of sale of fixed assets
Interest and dividend received activity
Net cash from (or used) in investment activities

3.Cash flow from financing activities


Proceeds from issue of shares/debenture
Proceeds from long term borrowing
Repayment of long term borrowing
Interest paid
Dividend paid
Net cash from (or used in) financing activities
Net increase or decrease in cash and cash equivalent
Cash and cash equivalent at the beginning of the year
Cash and cash equivalent at the end of the period

OBJECTIVE AND USES OF CASH FLOW STATEMENT

Useful in cash planning: a cash flow statement is very useful to the


management in by providing a basic to evaluate the ability of a company to generate
cash. A cash flow statement is prepared on an estimated basis for the next accounting
periods enable the management to know how much cash can be generated internally
and how much it should arrange from outside. Such estimated amounts are used for
preparing a cash
sh budget.

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Assesses cash from operating activity: cash flow statement provides


information about cash generated from operation. It provides explanation for the
difference net profit and cash from operation. Cash provided by operating activity is
very important to assess the cash generated by internal sources.

Payment of dividend: Decision to pay the dividend cannot be based on the net
profitt only availability of profit in the form of the cash is also important for
distribution disbursement. Thus, cash provided by operating activities assume
importance for declaration of dividend.

Cash from investing and financing activities: a cash flow sta


statement not
provide information only about cash by operating activity but also by non
non-operating
activities under two heads, namely investing activities and financing activities. This
helps to explain the overall liquidity position of the enterprise and its ability to meet
its cash commitment.

Explain reason for surplus or shortage of cash: a business may have made profit
and yet running short of cash. Similarly a business may have suffered a loss and still
has sufficient cash in bank. A cash flow statement discloses reason for such increases
or decreases of cash balance.

Parties interested in financial statement analysis

The analysis of financial figures contained in the company's profit and loss account and balance
sheet by employing appropriate technique is known a financial statement analysis. Financial
statement analysis is useful to different parties to obtain the required information about the
organization. Following are the parties interested in financial statement analysis.

1. Shareholders
Shareholders are interested in financial statement analysis to know the profitability of the
organization. Profitability shows the growth potentiality of an organization and safety of
investment of shareholders.

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2. Investors and Lenders


Investors and lenders
ers are interested to know the solvency position of an organization. They
analyze the financial statement position to know about the safety of their investment and
ability to pay interest and repayment of principle amount on due date.
3. Creditors
Creditorss are interested in analyzing the financial statements in order to know the short term
liquidity position of an organization. Creditors analyse the financial statement to know either
the organization is unable to pay the amount of short term liabilities on due date.
4. Management
Management is interested to analyze the financial statement for measuring the effectiveness
of its policies and decisions. It analyze the financial statements to know short term and long
term solvency position, profitability, liquidity
liquidity position and return on investment from the
business.

5. Government
Government is interested to analyze the financial position in determining the amount of tax
liability. It also helps for formulating effective plans and policies for economic growth.

6.. Purchaser of the business

Any person who is interested to buy a going concern analyse the financial statement to
determine its real value. It makes an assessment of the financial and operating strength and
weakness of the business.

7. Other interested group

Financial statement analysis is also important for many others. For example workers and
trader union, etc.

TREND PERCENTAGE ANALYSIS


The next important tools of analysis are trend percentage which plays significant role in
analyzing the financial stature of the enterprise through base years performance ratio
computation. This not only reveals the trend movement of the financial performance of the
enterprise but also highlights the strengths and weaknesses of the enterprise
The following ratio is being used to compute the trend percentage

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Current year
= -------------- X 100
Base year

This trend ratio is being computed for every component for many numbers of years which not
only facilitates comparison but also guides the firm to understand the trend path of the firm.

******

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CHAPTER: 2

RESEARCH DESIGN

2.1 TITLE OF THE STUDY:


STUDY cash flow analysis.

A study conducted in Karnataka power corporation Ltd.

2.2 STATEMENT OF PROBLEM

Cash flow analysis is another important technique of financial statement. The cash flow
statement explains the reasons for the inflows and out flow. A proper planning of the cash
resources will be enable the management to have cash available whenever needed and put it
to some profitable or productive use in cash there is surplus cash available. In this project as
an attempt is made to evaluate the cash
cash position of KPCL by analysing its cash flow
statement.

2.3 NEED FOR THE STUDY:

Cash flow analysis is a difficult task in, which is relied in the hands of financial manager,
should make a comprehensive study during the year to exercise
exercise control over cash fflows and
its component. It is a crucial part of the decision.
decision. The cash flow analysis is important for the
company to reduce the cash outflow and take the measures how to increase in cash inflow.

2.4 SCOPE OF THE STUDY:

To evaluate the impact of cash flow analysis at KPCL.

The study is exclusively conducted for the company mention for the period of 5 financial
years. This study is conducted to
to identify the area where cash flow measures are relatively
weak and inadequate and in that direction to make recommendation
recommendation to improve cash flows.

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2.5 OBJECTIVE OF THE STUDY:

To understand the impact of the operating, financing and investing activities of cash
resources.
To understand the causes for changes in cash balance.
To understand the ways of cash inflow and cash outflow.
To know how much cash are available in the firm.
To know is there any inflow or outflow of the cash during the year.

2.6 OPERATIONAL DEFINITION OF THE CONCEPT:

The
he total amount of money being transferred
transferred into and out of the business, especially as
affecting liquidity.. A revenue or expense stream that changes a cash account over a given
period. Cash flow is usually arises from one of three activities financing, operation or
investing-although
although this also occurs as a result of donation or gifts
gifts in the cash of the personal
finance. Cash outflow is result from expenses or investment.

2.7 RESEARCH DESIGN:


DESIGN

The research design is the conceptual


conceptua structure which research is conducted. It
constitutes the blue print for the collection, measurement and analysis of data. A research
design in the basic plan, which guide collection and analysis of the data. A research design
framework, which specifies the type of information to collect the sources of data collection
procedure. Data was collected form primary and secondary sources.

Research design adopted for study

Explorative research is used in the study:-


study:
Study of secondary information i.e.,
i.e annual report of the company

2.8 RESEARCH DESIGN METHODOLOGY

Primary and Secondary date are collected to achieve the objective of the project, towards this
direction personal interview with the representative will be undertaken. Data will also be

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gathered from Questionnaire distributed amongst executive in various departments for


survey.

Sampling Method

Primary Data

These are obtained from interaction with the department executives, from department
manual and other publication of company

Secondary Data

These are obtained from annual reports, magazines, website and reports of the company
.Also data and information will be collected from academic journals and other papers
presented at conventions
onventions related to the topic.

Sampling Size : 5 years financial statements

PLAN OF ANALYSIS

Data collected from all the available sources will be tabulate, collated, and interpreted du
duly
supported with charts, tables, graphs etc. Whenever necessary data collected will be subjected
to such authenticity test as deemed necessary.

No effect will be spread in ensuring a complete


complete of detail study, given the limitation to the
study. Based on the findings on the study and the resultant conclusion, recommendations will
be offered.

METHOD OF ANALYSIS:

Analyse the effectiveness with the help of annual report of the company.
Own observation of various practices followed by the company.

2.9 TOOLS USED:

The tools and technique is used for the analysing the data, which include table, bar-chart
and simple percentage method have been used for the purpose of analysis and presentati
presentation.
For the data analysis the subsequent interpretation has been interpreted.

2.10 LIMITATION OF THE STUDY:


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As far as possible I have put my best efforts to collect the data in the course of the entire
study. Throughout the study, I found some of limitations, which are:

Due to the short period of time of project work, the study was confined only too few
component of the cost control.
The finding is the substantially based on information given by the guide report of the
company.
Due to strict policyy of the company they did not provide all the information.

2.13 CHAPTER SCHEME

CHAPTER:-1:
1: INTRODUCTION

This chapter includes the theoretical background of the study.

Part A: About Industry Brief history, growth and prospects.

Part B: About subject Definition of the terms used importance and other relevant aspects of
the subject to the title of the study.

CHAPTER: - 2: RESEARCH DESIGN

Title of the study


Statement of the problem
Objectives of the study
Scope of the study
Operational definition of concepts
co
Methodology
Limitation of the study
Chapter scheme

CHAPTER:-3:
3: COMPANY PROFILE

Inception, type, nature, board of directors, organizational structure, business operations,


product/service profile, marker share, competitors, suppliers, customers, fun
functional chart,
future prospects/growth of the company.

CHAPTER: - 4: DATA ANALYSIS AND INTERPRETATION:

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Title of the table


Data table ( In figures )
Graphical representation ( visual presentation of the data )
Analysis of the table
Inference of the table.

CHAPTER:-5:
5: SUMMARY OF FINDINGS, SUGGESTIONS AND
CONCLUSIONS:

The chapter begins with objectives and scope of the study to ease the undertaking of the
reader. The findings should be summarized and presented in a paragraph form, numbering
each of the finding.

Draw with direct references to objectives of the study.

Find specific recommendations/suggestions to each of the objectives of the study. These


recommendations should be specific, acceptable/practical and clear.

The conclusions of the project should be given so as justify the objectives of the study.

APPENDICES AND ANNEXURES:

The copy of the questionnaire and all other usual material collected from the organization
may be annexed.

In case of finance of topics, the copies of the financial statements of three


three to five years are to
be annexed.

BIBLIOGRAPHY:

The references made from text books, journals, newspapers, and magazines are to be listed in
this chapter. The order followed is name of the author, edition of the book, name of the
publisher, place of publication,
lication, and year of publication.

The sources of internet and websites may also mention with correct address of the site
site.

*******

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CHAPTER: 3

COMPANY PROFILE

KPCL an overview the bar on the quality of deliverables and is constantly working
at lowering the cost per megawatt - a commendable cost-value
value equation that has become a
benchmark on the national grid. KPCLs stock in trade is industry proven - well-established
infrastructure & modern, progressive management concepts and a commitment to excel,
helping
ing it meet the challenges of the rising energy demands of Karnataka.

The leverage point of KPCL initiatives are its resource management strengths right across
planning, financing and project engineering. KPCL also has a high rating in terms of project
completion and commissioning within the implementation calendar.

The leverage point of KPCL initiatives are its resource management strengths right across
planning, financing and project engineering. KPCL also has a high rating in terms of project
completion
tion and commissioning within the implementation calendar.

HISTORY OF THE ORGSNISASTION

Karnataka Power Corporation limited (or KPCL) is a company owned by the government by
the Karnataka, and is engaged in generation of electrical power. The modes of gener
generating
power are hydroelectric, thermal and diesel, the company was started on 20.07
20.07.1970 due to a
vision of Karnataka for separate entities for generation and distribution of electrical power.
This was done before World Bank dictated power sector reforms were initiated in early 21st
century in India.

Right from the year of inspection,


inspection, in 1970, KPCL sets its sight on growth from within
meeting growth industry needs and research out to touch the lives of common man
man, in more
than then one.

KPCL has today installed capacity of 5975.91 MV of Hydro, thermal, solar and wind energy,
with 9500 MV in the pipeline. The 1720 MV of Raichur thermal power station in Raichur
dist is accredited with ISO 14001-2004
14001 2004 certification for its environmental protection
measures. From an industries vantage point, KPCL has raised bar on the quality of
deliverables and is the constantly working at lowering the cost per megawatt a

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commendable cost value that has become a benchmark on the national grid, KPCLs stock in
trade is industry proven well established infrastructure & modern, progressive
management concept and a commitment to excel, helping it meet the challenges of raising
energy demands of Karnataka.

The leverages point of KPCL initiative are its resource management strength right across
planning , financing and project engineering, KPCL also has a high rating in term of project
completion and commissioning within the implementation
implementa calendar.

ORIGIN OF THE COMPANY

Karnataka Power Corporation limited (KPCL) was incorporated in 1970 as a wholly owned
undertaking of government of Karnataka. It comprises of 6 coal thermal power units, 15
hydel & wind farm project.

Karnataka has the distinction of being the first in the country to setup a professionally
managed corporation. The KPCL which is empowered to plan, construct, operate and
maintain power generation, projects in the state.

KPCL is the sole administrator for the power generation


generation in the state. A strong infrastructure
coupled with the modern technical & management concept has helped the company to meet
the challenges to control energy demands of Karnataka.

IMPORTANT TERMS

Date of incorporation-20th July 1970

Dams -32

Power houses-18

Capacity-4994.85 MW

Assets-Rs.7200 crores

Annual turnover-Rs.2521
Rs.2521 crores

BOARDS OF DIRECTORS

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Usually, chairman will be the chief minister of Karnataka. The minister of power & energy
shall be the vice chairman

At present Shri Siddaramaihah are the Chief Minister & chairman of Karnataka Power
Corporation limited.

Board of Directors of KPCL

Board Of Directors Address


Shri Siddaramaihah Shri Siddaramaihah,

Honble Chief Minister,


Govt. of Karnataka,
and Chairman - KPCL

Shri DK Shivkumar Shri DK Shivakumar,


Honble Energy Minister,
Govt. of Karnataka,
and Vice Chairman - KPCL

M.R. Kumble, IAS M.R.Kamble, IAS,


Managing Director.

R.Nagaraj
R.Nagaraj
Finance Director

P. Bhaskar
P. Bhaskar
Technical Director

ISN Prasad, IAS ISN Prasad, IAS


Principal Secretary, Finance
Department,
Govt. of Karnataka.

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P Ravikumar, IAS
P Ravikumar,
Ravikumar IAS
Additional Chief Secretary, Energy
Department,
Govt. of Karnataka.

D.N.Narasimha Raju, D.N.Narasimha Raju, IAS


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

Dr.H.Basker, IAS Dr.H.Basker, IAS


Principal Secretary to Govt. Department of
Public Enterprises,
Govt. of Karnataka.

D.Satyamurty, IAS D.Satyamurty, IAS


Principal Secretary,
Water Resources Dept.
Govt. of Karnataka.

G. Kumar Naik, IAS G. Kumar Naik, IAS


Managing Director,
K.P.T.C.L.

MISSION AND OBJECTIVE

OBJECTIVE

To carry on the operation of electric power corporation.


To establish power plants.
To construct and maintain dams, reservoirs etc., which contributes directly &
indirectly to generate power.

MISSION

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

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Exploring, identifying and developing opportunities in power generation.


Devising innovative ways of setting up and operating power plants.
Investing in a resource base of technical competence, systems, processes and
capability.

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

MANI DAM POWER HOUSE

A power house at the foot of the main dam on the right bank utilise the reservoir head and
generate about 40 MU of energy annually. Two penstocks of 2.5 metres in diameter
embedded in the dam feed the two vertical axes Kaplan turbine coupled to the 4.5 MW
generators. The design head of the units is 22.5 metres and unit operate for the head variation
of 11.25 metres to 33.75 metres.
metres

KPCL currently has


as 34 dams & 25 power stations across with profile that range from 0.35
MV to 1720 MV.

KPCL POWERING KARNATAKA SINCE 1970:

The power to lead.


The power to profile.
The power to grow and prosper.
The power to beat the clock.
The power to take on new challenges.
challen
The power to reform, the power to excel.
The power to move into new direction.
The power technology.
The power to build lasting relationship.
The power to give to the world what they have taken from it.
The power for future.

KPCL - A POINEER

Karnataka has the distinctive being the first state in the country to setup a professional
managed corporation. The Karnataka power corporation ltd which has the empowered to plan

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Formed on 20th July 1970 as


construct, operate and maintain power generation in the state. Formed
sister concern of Karnataka electricity board (KEB), from the Mysore power corporation ltd
(a successor to the hydro electric construction department of Mysore state) to Karnataka
power corporation ltd of 21st century it has been a long rewarding journey of the decades.

Today KPCL takes great pride in the experience it has gathered, the expertise it has
developed and skills it has owned especially in planning, investigation, design, execution and
effective operation on large project. A strong infrastructure coupled with modern technical
and management concept has been helped KPCL meet the challenges of the rising demand of
the Karnataka. A dedicated workforce of almost 8000 professional shares the vision of
KPCL. At help of affairs
fairs it has an effective, professional, corporate team of senior
administrators, and technocrats, the managing directors, under the overall supervision of
board of directors, manages the general affairs of the company.

The board headed


head by the chairmen, who is the chief minister of the state,
comprises senior officer of the state government like the financial secretary and eminent
technical experts. With its reach experience and expertise KPCL is well equipped to
undertake in large scale
le power project from concept of commission and operation on EPC
basis, with a host of separate auxiliaries services.

KPCLs power generation blueprint has a clear cut policy on environment


management building in green mapping concept such as sustainable development which
creates the framework for improving the quality of life. Sustainable development goes in
hand in hand with environmental protection.

All KPCL project has assurance of comprehensive environmental impact study to eval
evaluate
the impact of the project on the environment. It also prepares an environmental management
plan complying with all the condition
con stipulated by KSPCB/MOEF.

KPCLs raichur thermal power station has been accredited with ISO 14001 2004 for its
efforts towards environment protection management.

The following innovative and the new measures to aid the process of envi
environment
control have been put in place:

A unique Ayurvedic greenhouse has been developed at karma project.


Fish fingerling in power generation reservoirs to maintain aqua balance.

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Eco friendly control measures adopted such as controlled balanced


Construction of colonies with least destruction to ecology.
Installation of electro static precipitators in thermal plant.
Measures across
ss the board to minimise pollution.
Fuel supply agreement with collieries to ensure high grade coal supply.
Monitoring measures for ash minimisation, ash emission control, ash utilisation and
ash disposal.
Recycling of water from ash ponds for alternative use.
Modernisation of sewerages treatment plant.
Continuous monitoring of air quality of quality in work environment & environmental
management measures.

PRODUCT PROFILE

The study is conducted in Karnataka Power Corporation limited, which has generating
the power as its product. The firm is providing the service of power without which
lightening is not possible. Now a days power is very essential in all activity of life
human beings.
KPCL is a monopoly producer of power in Karnataka state.
The corporation
on is generating the power by hydro, wind & coal.
It is really very expensive to generate power. Because it needs constructed dam for
hydel power generation, generators, plants which incur huge investment, it also costly
in the case of wind and coal. At present
present KPCL producing at 70% through hydro, 20%
& 10% through coal & wind respectively.
The power generated by KPCL is sold KPTCL (Karnataka power Transmission
Corporation limited). As per data collected, the corporations is generating power
capacity is 19713
13 million units. The generated power cannot be saved and sold some
days later, it should be sold out while generating. Power is sold with the help of the
gridlines, transformers and other power supply tools.
These are the 4 types of power generation by KPCL.
KP
Thermal:-in
in this type of power generation KPCL produces the power by using coal &
raw material. At present RTPSs (Raichur thermal power station) 8th unit, BTPSs
(Bellary Thermal Power Station) thermal plants are under construction. KPCL has

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many track records in thermal power production. In this case KPCL is well known in
Asia and world this from power generation contributes 31% of total power generation.
Hydel: - In this case KPCL produce the power by using the water as a raw material it
has constructed 34 dams for Hydel power generation. The form of power
generation contributes 68% of power generation.
Example:-Sharavathi
Sharavathi valley Project, Kalinadi hydroelectric project
Wind:-it
it is also one type of generation where KPCL produce power by using tthe
wind. This form of power generation contributes only 1% of total power generation.
Diesel power station:-A
A diesel generator is the combination of a diesel engine with an
electrical generator (often called an alternator) to generate electric energy. Dies
Diesel
generating sets are used in places without connection to the power grid or as
emergency power supply if the grid falls. KPCL has 6 units & 21.32 MW capacity,
total installed capacity is 127.92(6*21.32 MW). This type of power generation is very
costly, itt costs nearly Rs.10 per unit & used only for emergency purpose. KPCLs
Diesel power station is situated in Yelhanka.
Example: Yelhanka diesel generating
At present KPCL is using modern techniques of power generation. In addition to this
the corporation is training their employees regarding the power generation techniques.
The KPCL has more than 20 projects.

FLY ASH INITIATIVE

MOEF/GOI has stipulated utilisation of 100% Fly Ash generated at Thermal power
stations for manufacturing ash based products like Bricks,
Bricks, Asbestos sheets,
Embankments, Dams and Dykes. Fly Ash is issued free of cost
The approximate quantity of Fly Ash generated at Raichur Thermal Power Station
from 7 units for the year 2004-05
2004 is 16.0 lakhs MT
RTPS has the distinction of utilizing approx. 60 to 65% of Fly Ash in a year
Total coal consumed during 2004 2005 69.10 lakhs tonnes
Ash content - 22.02 lakhs tonnes
(Weighted ash content 31.73 %)
Fly ash (80%) 16.0 lakhs tonnes
Bottom ash (20%) 4.40 lakhs tonnes
Fly ash utilization(65%) 10.37 lakhs tonnes

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INITIATIVES TO UTILIZE MAXIMUM FLY ASH FROM


RTPS:

* Agreement signed with major cement manufacturers like ACC and A


ARV society for
production of puzzling a cement using Fly ash.
ash

* The Fly ash is being transported through specially


ally designed closed tankers by road

* Fly ash has been issued to many SSI units for manufacture of Fly ash bricks,
asbestos sheets etc.

* Established an R&D centre in 2002 with Norwegian aid for the utilization of Fly ash
in the manufacture of ash based products.

* Associated with the University of Agricultural Sciences, Raichur by extending


financial aid for carrying out R&D on utilization of Fly ash in the agricultural sector.

GROWTH DEVELOPMENT A PRESENT STATUS OF THE


ORGANISATION

POWER TECHNOLOGY

KPCL has always believed in keeping pace with latest technology. To keep them
operating efficiently even while the increasing the capacity, KPCL has undertaken to
renovation, modernisation and upgrade of its power sanitation in a phased manner. The most
advance technology was utilising to upgrade all the 10 units of the Sharavadhi generation
station from 89.1 MW, thereby adding 144 MW capacities. Outdated rotary governs have
been replaced by the state of art digital system and governing system.

Additionally, a comprehensive time bound plan has been finalised to


modernisation all old hydro station. This plan envisions the setting up of sophisticated
equipment and controls hydro station by the year 2005. KPCL has also been distinction of
being thee first state owned utility in the power sector to have computerised satellite
communication network through VAST among all its power stations and Bangalore. The high
tech VAST network is called shakthinet, was continued during 1997.

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KLPCL is a highly it savvy company among the public sector unit in the state at
large and power sector in particular and has the distinction in being the first state owned
company in the power sector to have establishment shakthinet _ a sat
satellite based
communication network through VASTs among all its power station in Bangalore. Local area
network has been established at all project locations and about 800 officials have been wired
to corporate office with reliable VASTs back bone. All the activities
activities of corporation are
computerised and KPCL has a unit distinction among power utility has been established
voice and data communication between its project and Bangalore through the new generation
DAMA V-SATA
SATA on KPTCLs VIDYUTNET.

Some of software developed in house is:

fuel management system


human resource information system
establishment
integrity inventory system
public deposit system
generation management system
billing software for Bellary thermal power station
medicine procurement
ement system

CONCERNING FOR ENVIRONMENT

KPCL is constantly and concisely starving to return to the environment while carrying out its
primary task of power generation, KPCL has adopt a define policy that blend and harmonise
ecology balance even it upholds human rights. Every times KPCL implements a power
project; it undertakes a comprehensive environmental impact study, to examine the impact of
proposed project on the environment management plan complying with all the condition
stipulated by Karnataka
nataka State Control board (KSPCB)

KPCLs compensatory a forestation work is carried out in consultant with


environmentalists and forest department officials. Compensatory a forestation to the extent of
6300 hectares wass carried out in Kalanandi and Gerusoppa
erusoppa 175000 sapling have been planted
in areas 215 hectares around raichur super thermal power station. It also proposes to a plant
25000 sapling every year. In order to maintain aqua balance in reservoirs constructed for

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power generation fishing fingerlings have been let in apart for developing fisheries in
reservoirs, KPCL also undertakes eco friendly techniques like controlling blasting,
constructing colonies without in felling down the trees, provision of fish ladders, installation
of electro state precipitators in thermal
ther plants etc.

KPCL concern also extended to rehabilitation of displaced people in the project area
compensation is paid, employment provided whenever possible civic amenities provided in
the new settlement and development works then up on the priority. Its excellent track record,
its many strengths, its vision and dynamic, its pioneer sprite, its technology innovation and
sound financial management, its people oriented policies, its ability to adopt itself to
changing markets and needs. These have helped shape KPCL into an organisation that
benchmark itself against the best in the industry. Today LPCL looked ahead with confidence
with bright, powerful promising future.

SOCIAL RESPONSIBILITY:

A garden with the name SHARAVATHI GARDEN was developed in the kidwai
cancer hospital at the cost of 5 lakhs.

The corporation made a total contribution of 25 lakhs to the CMs relief CMs relief
fund during the year 98-99.
98

Passing on the benefit of cost cutting in contribution,


contribution, finance and operation to the
consumers.

Maintaining interior road near project location.

Making available corporation run school, hospital and community centres for the
general public in the project areas.

Reduction cost and endures reliable power supply, strict compliance environmental
laws, regulation and norms.

ENVIRONMENT MANAGEMENT

KPCLs power generation blueprint has a clear-cut


clear policy
licy on environment management.
Building in green-mapping
mapping concepts such as sustainable development, which cre
creates the

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framework for improve the quality of life. Sustainable development goes hand
hand-in-hand with
'environment protection'

All KPCL projects have the assurance of a comprehensive Environmental Impact Study to
evaluate the impact of the project on the environment. It also prepares an Environmental
Management Plan complying with all the conditions stipulated by KSPCB/MOEF.

KPCL's
's Raichur Thermal Power Station has been accredited with ISO 14001 -2004 for its
efforts towards environment protection management.

The following innovative and new measures to aid the process of environment control have
been put in place:

A unique Ayurvedic
dic greenhouse has been developed at Kadra
adra Project.
Fish fingerlings in power generation reservoirs to maintain aqua-balance.
aqua balance.
Eco-friendly
friendly control measures adopted such as controlled blasting.
Construction of colonies with least destruction to ecology.
Installation
tallation of Electro Static Precipitators in Thermal Plants.
Measures across the board to minimize pollution.
Fuel supply agreement with collieries to ensure high grade coal supplies.
Monitoring measures for ash minimisation, ash emission control, ash util
utilisation and
ash disposal.
Recycling of water from ash ponds for alternative use.
Modernisation of sewerage treatment plant.
Continuous monitoring of air quality in work environments & environment
management measures.

AWARDS AND ACHIEVEMENT

1. 2008-2009 - KARNATAKA RATNA AWARD BY GOVERNMENT OF


KARNATAKA FOR BEST OVERALL PERFORMANCE AMONG PSUs.
2. 2008 - FIRST PRIZE FOR UNIT-6
UNIT OF RTPS - BEST SAFE POWER BOILER
FROM DIRECTOR OF FACTORIES AND BOILERS (37TH NSC).
3. 2008-2009 - BRONZE MEDAL FOR VARAHI HYDRO ELECTRIC PROJECT
FOR BEST PERFORMANCE

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

4. 2008-2009 - GOLD MEDAL FOR VARAHI HYDRO ELECTRIC PROJECT FOR


EARLY COMPLETION OF THE PROJECT.
5. 2008 - FIRST PRIZE FROM IEEMA FOR EXCELLENCE FOR SHARAVATHI
GENERATION STATION
6. 2007-2008 - BRONZE MEDAL FOR GERUSOPPA DAM POWER HOUSE THIRD
BEST PERFORMING HYDEL STATION
7. 2006-2007 - BRONZE MEDAL FOR KODASALLI DAM POWER HOUSE(KALI)
THIRD BEST PERFORMING HYDEL STATION
8. 2005-2006 - CERTIFICATE FOR VARAHI HYDRO ELECTRIC PROJECT - BEST
PERFORMANCE IN HYDEL STATION
9. 2005-2006 - CERTIFICATE FOR ALMATTI DAM POWER HOUSE UNIT 6 BEST
EXECUTED PROJECT
10. 2004-2005 - CERTIFICATE FOR ALMATTI DAM POWER HOUSE UNIT 3 BEST
EXECUTED PROJECT
11. 2003-04 - GOLD SHIELD & CERTIFICATE FOR OUTSTANDING
PERFORMANCE - 88.23% PLF
12. 2002-03 - GOLD SHIELD & CERTIFICATE FOR OUTST
OUTSTANDING
PERFORMANCE -90.39%
90.39% PLF
13. 2000-01 and 2001-02
02 - CERTIFICATE & SILVER SHIELD FOR GOOD
PERFORMANCE.
14. 2000, 2002 - CERTIFICATE FOR REDUCTION IN AUXILIARY
COMSUMPTION.
15.2001, 2002, 2003 - CERTIFICATE FOR REDUCTION IN SECONDARY FUEL
OIL.

KPCL's RECORD ACHIEVEMENTS:

Highest thermal generation of 13982 Million Units (2012-13).


(2012
Highest Plant Load Factor (PLF) of 90.39 % at Raichur Thermal Power Station
(2002- Highest generation of 28239.48 million units (2011-2012).
(2011
2003).
Highest capacity addition of 730 MW, in 2008-2009.
2008
Commissioning of Unit - 7 at RTPS in 25 Months - A National record

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

HIGHLIGHT DURING THE YEARS:

KPCL has achieved highest generation of 28239 MW (since inception) during the
year 2011 2012.

Bellary TPS has achieved highest generation in a year 3089.8 MW during 2011
2012.

Raichur TPS achieved highest generation in day of 40.552 MU (98.24% PLF) on


27.03.2012.

Sharavathi generation station achieved highest generation in a day of 23.461 MU


on 13.03.2012 andd highest generation in a month of 665.824 MU during March 2012.

Shivasamudram power house has achieved highest generation in a year of 332.12


MU during 2011 12.

Sharavathy valley project repair to power channel


Water supply generation station is fed from
from linganamakki reservoir for power
generation through power channel which has constructed during 1964. This power
channel has progressively deteriorated leading to heavy leakage and repair work of
the power channel was taken up during the financial year by taking shut down of
power channel from 17.11,2011 with the approval of GOK. This repair work was
entrusted to M/s. ITD cementation India Ltd, Mumbai at a contract amount 22.24
crores. The work was commenced from 17.11.2011 and completed in all the respe
respect
by 01.03.2012 in a record time of 3 month in one season only in against proposed 5
month working period (separated
( over the two season).

COMPETITORS OF KPCL

KPCL produces 59% of electricity in Karnataka. As it is owned by state government so,


always an upper hand than rivalries. Karnataka is facing a shortage of power supply. State
government itself encouraging the private player invest in the power sector.

MAJOR COMPETITORS KPCL:

National thermal power corporation

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

Naively lignite corporation


Reliance energy
Tata power
Suzion energy
Torrent power
Jindal thermal
Essar power

POWER PROJECTS

KPCL currently has 34 dams & 25 power stations across the State with profiles that range
from 0.35 MW to 1720 MW.

The total installed capacity logged by KPCL is 6498.91 MW across a project canvas that
covers expansions, renovations and upgrading of existing plants. .

No of
Power Station MW Total
Units
Thermal + Diesel
Raichur 7+1 210+250 1720
Bellary 2 500 1000

DG Plant 6 18 108
Hydel

Sharavathy project

Linganamakki 2 27.5 55
Sharavathy 10 103.5 1035
Gerusoppa 4 60 240
4 21.6
Mahatma Gandhi Jog 139.20
4 13.20

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

Sir. Sheshadri Iyer Hydro Electric Station

Shimsha 2 8.6 17.20

4 6
Shivanasamudram 42
6 3

Kali Nadi project

Supa 2 50 100

5 150
Nagjhari 885
1 135
Kadra 3 50 150
Kodasalli 3 40 120
Varahi
Mani 2 4.5 9
Varahi 4 115 460

OTHER PROJECTS
1 15
Almatti 290
5 55
2 9
Munirabad 28
1 10
Ghataprabha 2 16 32

Mallapur 2 4.5 9

Sirwar 1 1 1
Kalmala 1 0.40 0.40
Ganekal 1 0.35 0.35

Wind Project
9 0.225
Kappadagudda 4.56
11 0.230

SOLAR PROJECTS

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

Yalesandra Solar PV Plant, Kolar Dist. 1 3 3

Itnal Solar PV Plant, Belgaum Dist 1 3 3

Yapaldinni Solar PV Plant, Raichur Dist 1 3 3

Shimsha Solar PV Plant, Shimshapura 1 5 5

Total 6498.91

MILESTONS:

KPCL is trend setter in power generation with the track records of commissioning 31 dams
and 16 power houses of varying size from 35 MW to 1050 MW it has been a long journey:

The longest transmission line in the world in 1902, from Shivanasamudram to K G


F, covering of 147 KMs.
Sharavathi hydro electric project, on the bank of river Sharavathi in
in S
Shimogga district,
the back bone of the states power generation with its 10 unit has an installed capacity
of 1035 MV. Also part of Sharavathi hydro electric project.
Shimshapura generating station, setup in 1937 with 630 ft head and generating
capacity of 17200 KW.
Kalinanda hydro electric project , setup near Diggi village in the wes
western ghats of
Karnataka, its covering the distance of 160 KM. Generating capacity of 17000 MV.
Almatti dam power house has generating capacity of 290 MV.
Gataprabha hydro electric project, with installed capacity of 32 MV.
Linganamakki dam power house with 2 units has an installed capacity of 55 MV.
Gerusoppa dam project with 4 unit of 6 MV, having an installed capacity of 240 MV.
Kalinadi hydro electric project, the Supa dam power house has an installed capacity of
250 MV with an annual energy of 450 MV.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

ORGANISATIONAL STRUCTURE

Board of directors

Managing director

Technical Finance director HR General Manager


director directors

Chief engineer DY. DY. AM (crop


manager manager (HR) com)

Superintending Asst. manager Asst. manager JR public


engineer (finance) (HR) relation officer

Asst. JR public
Executive engg. Accountant Personal officer
Relation officer
officer

Asst executive Asst. Accountant Asst. personal


engg. officer officer

Asst. engineer Assistants Assistants

Junior engineer

******

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

CHAPTER: 4
ANALYSIS AND INTERPRETATION
TABLE: 4.1
Table showing net profit before tax and prior period item
(000)

Years Net profit before tax & prior period Trends %


items
2008-09 3915833 100%

2009-10 7323530 187%

2010-11 4346656 111%

2011-12 1622700 41%

2012-13 1712000 44%

Analysis:
From the following table it can be seen that the companys net profit in trend is the year
2008-09
09 was 100% and it had increased in 2009-102009 10 by 187% and after that there was
decreased in profit gradually in 2010-11
2010 it became 111%, in 2011-12
12 it was 41%, and it has
decreases and became 44% in year 2012-13.
2012

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.1
Graph shows net profit before tax and prior items

Net profit before tax and prior items

200% 187%
180%

160%

140%

120% 111%
100%
100%

80%

60% 41% 44%


40%

20%
0%
2009 2010 2011 2012 2013

Interpretation
The above graph indicates that the performance of the net profit before tax and prior items.
In the years 2010 and 2011 there is increase because the company made a good profit by
selling their product and a gradual decrease from 2012 2013 because the company could
not perform well in selling.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.2
Table showing adjustment for non operating items
(000)

Years Adjustment
djustment for non operating items Trends %

2009 9491008 100%

2010 8599611 91%

2011 11395395 120%

2012 11712600 123%

2013 14529800 153%

Analysis
Form the above table we can see that the adjustments for non-operating
non operating items from 2009
2013. 2009 is the base year and it is 100% and then there is a decrease from 100% to 90% in
the year 2010 and after that there be gradually increased in every year 120% in 2011
2011, 123 %
in 2012 and 153% in 2013.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.2
Graph showing adjustment for non-operating
non items

Adjustment for non-operating


non items

153%
160%
140% 120% 123%
120% 100%
91%
100%
80%
60%
40%
20%
0%
2009 2010 2011 2012 2013

Interpretation
The above graph of adjustment for non-operating
non items is showing decrease in the year 2010
because there is loss on sale of the stock, obsolesce of the stock,, and prior period items which
are comparatively more than the any years. And there is increase after the year 2010 because
there is no more loss on sales of stock, obsolesce of stock and there is not much prior period
items in any year compare to the 2010.
2010

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.3
Table showing operating profit before changes in working capital
(000)

Years Operating profit before working capital changes Trends %

2009 13406841 100%

2010 15923141 119%

2011 15742050 117%

2012 13335300 99%

2013 16241846 121%

Analysis
The above table gives the information about operating profit before change in working
capital. 2009 is the base year so, its 100% and in year 2010 it has been increases to 119%
and in the year it is also showing an increase 0f 17% in the operating profit compare to the
base year. It has been decreased in the year 2012 to 99% and in the year 2013 is more
compare to the previous years.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH 4.3
The graph showing operating profit before change in W.C

Operating profit before change in working capital

153%
160%
140% 123% 120%
120% 100% 99%
100%
80%
60%
40%
20%
0%
2009 2010 2011 2012 2013

Interpretation
The above graph is showing of the operating profit before
efore change in working capital. In the
year 2010-11 and in 2013 there is increase in operating profit before change in working
capital because company was able to earn more operating profit in the year through selling
and there was no more adjustment in prior items. And in the year 2012 there is decrease
because company earn less profit in that year in compare to the any year.

VIVEKANANDA DEGREE COLLEGE Page 49


KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.4
Table showing Cash generated from operations
(000)

Years Cash generated from operations Trends %

2009 1157411 100%

2010 4934877 426%

2011 2567573 222%

2012 2129500 184%

2013 15828000 1367%

Analysis
Cash generated from operation is comparatively higher in the year 2013 and has and it is
showing that company operating profit is in good condition.

In year 2009 base year cash generated from operation is 100% and it has increased to 426%
and then
en there is a decreased in compare of previous year but its good according to the base
year and every year is good compare to base year.
year

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.4
Graph showing cash generated from operations:

Cash generated from operations


1367%
1400%

1200%

1000%

800%

600%
426%

400%
222%
184%
200% 100%

0%
2009 2010 2011 2012 2013

Interpretation
The table shows the info of cash generated from operation there is increase in every year
because the company is good at operating activities. And it shows the performance of the
company is in good condition in operating activities.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.5

Table showing tax paid:


(000)

Years Tax paid Trends %

2009 502288 100%

2010 1189838 237%

2011 1497855 298%

2012 1106200 200%

2013 483200 87%

Analysis:
The above table indicate tax paid during the year2009-2013
year2009 2013 by the company and it is
continuouslyy increasing in the year 2010, 2011, and 2012 after there is n decrease in the year
of 2013. The company paid lowest rate of tax in the year
ye 2013 compare to the base yearyear.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.5
Graphs showing taxes paid by the company

TAX PAID
298%
300%

250% 237%
220%

200%

150%

100%
100% 87%

50%

0%
2009 2010 2011 2012 2013

Interpretation
The above graph is showing the tax paid during the year 2009-2013.
2009 2013. In 2010 and 2011 there
is increase of tax payment because company had made more profit in these where as reduced
in the year 2013 because the company did not earn more profit.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.6
Table cash flow from operating activates after exceptional items
(000)

Years Net cash flow from operating activities after Trends %


exceptional items

2009
655123 100%

2010
3745040 572%

2011
1069718 163%

2012
1023300 156%

2013
15395800 2350%

ANALYSIS

It shows that the net cash from operating activity has increased to 572% in the year 2010 and
then there is decrease in the continues 2 years 163% & 156% in 2011 n 2012 respectively and
the highest net cash flow from the operating activity is in 2013 is 2370%.

VIVEKANANDA DEGREE COLLEGE Page 54


KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.6
Graph showing net cash from operating activity after exceptional items:

Net cash flow from operating activities after exceptional


items
2500% 2350%

2000%

1500%

1000%

572%
500%
100% 163% 156%

0%
2009 2010 2011 2012 2013

Interpretation
The above table shows info about the cash inflow from operating activities after exceptional
items. There is increase in every year because the company is earning good from operations.
This indicates cash inflow by operating activities.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.7

Table showing addition of fixed assets and WIP

(000)

Years Addition of fixed assets and WIP Trends %

2009 100%
11549886

2010 84%
9960934

2011 69%
7930746

2012 71%
8157900

2013 105%
12164400

ANALYSIS

The above table provide info about the fixed asset purchased by a company during 5 years.
Fixed asset purchase is 84% in 2010, 69% in 2011, 71% in 2012 and 105% in 2013. It is
comparatively more in 2013 than the all years.

VIVEKANANDA DEGREE COLLEGE Page 56


KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.7
Graph showing the net addition to the fixed asset and WIP

Net addition of fixed assets & WIP

120% 105%
100%
100% 84%
80% 69% 71%

60%

40%

20%

0%
2009 2010 2011 2012 2013

Interpretation
The above graph provides information of the net addition of the fixed assets and WIP. So the
company purchases more fixed asset in the year 2013 in compare to the base year this is the
highest purchase
urchase year for the company. I.e. 105% in the year 2013 and company purchase
very less in the year 2011 i.e. 69% only compare of the base year. This indicates cash outflow
by the purchase.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.8
Table showing interest received
(000)

Years Interest received Trends

2009 129019 100%

2010 157301 122%

2011 87283 68%

2012 36100 28%

2013 35600 27%

Analysis
The above table is showing the interest received by the company during 5 years from 2009
2009-
2013. We can observe that in the 2010 it has increased to 122% and the next year 2011 it has
decreased to 68% and consequently decreasing in the year 2013 28% and in 2013 it is only
27%.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.8
Graph showing interest received

Interest received

140% 122%
120%
100%
100%

80% 68%

60%

40% 28% 27%

20%

0%
2009 2010 2011 2012 2013

Interpretation
Graph on interest received on investment shown increases in only in the year 2010 i.e. 122%
because company had purchased investment more so they get an interest and after that
decreasing trends because company had sold out their investment.
investment

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.9
Table showing net cash used in investment activities
(000)

Years Net cash used in investment activities Trends %

2009 11420961 100%

2010 9553633 84%

2011 11108951 97%

2012 8194800 72%

2013 12269200 107%

Analysis
The above table is showing net used in investment activities which is constantly decreasing
every year. 2009 is the base year where investment is 100% from there it is decreasing. In
2010 it became 84%, in 2011 it is 97%, and in 2012 it is 72% and in 2013 it is 107% there is
more used of cash in this year.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.9
Graph showing net decrease from in investment

Net cash used in investment activities

120% 107%
100% 97%
100%
84%
80% 72%

60%

40%

20%

0%
2009 2010 2011 2012 2013

Interpretation
The above graph
aph is showing that the companys net cash used in investment activities and its
showing decrease in the year from 2010 to 2012 because the receipt is more and the payment
is less in the year and in 2013 the company used more in investing activities because
company invested more in acquiring fixed assets.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.10
Table showing receipt from issue of equity share capital
(000)

Years Receipts from issue of share capital Trends

2009 5000000 100%

2010 5000000 100%

2011 5000000 100%

2012 6250000 125%

2013 4000000 80%

Analysis
The above table provide info about the share capital raised during the period of 2009
2009-2013.
Equity share raised during the year 2009, 2010 and 2011 is 100% there is no
not any fund raised
by the company during the year. In 2012 25% equity share has been raised by the yyear 2012
and it has been decrease in the year 2013 to 80%.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.10
Graph showing fund raised by equity share capital

Equity share capital

140% 125%

120%
100% 100% 100%
100%
80%
80%

60%

40%

20%

0%
2009 2010 2011 2012 2013

Interpretation
It provides the info about equity share capital and remains constant in the previous 3 years
because company did not raised any fund by the equity share. In the 2012 there is an increase
because the company raised fund by the equity shares capital.
capital

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.11
Table showing redemption on debentures
(000)

Years Redemption on debenture Trends %

2009 143000 100%

2010 165000 115%

2011 _ 0%

2012 _ 0%

2013 _ 0%

Analysis
The above table gives info about
out the redemption on debentures during
during the year 2009
2009-2013.

The redemption is 115% in 2010 when compare with the base year and there after no
redemption.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.11
Graph showing the redemption on debenture

Redemption of debenture

115%
120%
100%
100%

80%

60%

40%

20%
0% 0% 0%
0%
2009 2010 2011 2012 2013

Interpretation
The graph shows there is increase in redemption of debenture in 2010 because the company
had redeemed the debenture in the year 2010 and after that the company redeemed the
debenture in the same year so; there is no any change in the next years.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.12
Table showing payment of dividend
(000)

Years Payment of dividend Trends %

2009 148652 100%

2010 148652 100%

2011 248652 167%

2012 348600 235%

2013 228100 153%

ANALYSIS
The above table provide the information of payment of the dividend in which we can see that
there equal payment in the year 2010 the dividend is paid 100% equal to the previous year,
and the next year they are paying more in every year. 1675 in the year 2011, 235% in the year
2012 and 153% is in the year 2013.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.12
Graph showing the payment of dividend

Payment of dividend

250% 235%

200%
167%
153%
150%

100% 100%
100%

50%

0%
2009 2010 2011 2012 2013

Interpretation
The above table is showing that the dividend payment by the company there is the equal
payment in the year of 2009 and 2010 because there is not any fund raised by the company
through capital share and there is no any changes in the decision of payment of dividend. And
after that there is increase in payment because the company earn good profit and so, they
change the decision of payment of the dividend.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.13
Table showing net cash used in financing activities
(000)

Years Cash used in financing Trends %


activities

2009 15594760 100%

2010 7271024 47%

2011 9150404 59%

2012 3505400 22%

2013 -4596100 -29%

Analysis
The above table is showing the net cash from (and used in) financing activities inflow of cash
from financing activities in the year 2010 is 47%, in the year 2011 is 59% and in the year
2012 is 22% and there is a outflow of cash from the financing activities in the year 2013 is
29%.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.13
Graph shows the net cash from (or used in) financing activities

Net cash used in financing activities


100%
100%

80%
59%
60%
47%

40%
22%
20%

0%
2009 2010 2011 2012 2013
-20%
-29%
-40%

Interpretation
The cash inflow from financing activities is showing decrease in every year because the
payment is more than the receipt every year.

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KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

TABLE: 4.14

Table showing net increase or decrease in cash or cash equivalent:

(000)

Years Net increase or decrease in cash or cash Trends


equivalent

2009 4829016 100%

2010 1462431 30%

2011 -888829 -18%

2012 -3666100 -76%

2013 -1496000 -30%

Analysis
From the above table we can see the company cash is decreasing consistently decreasing
consistently From 100 to 30 in 2010, -18% in 2011, -76%
76% in 2012 and -30% in 2013. It
shows the net decreases in cash every year.

VIVEKANANDA DEGREE COLLEGE Page 70


KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

GRAPH: 4.14
Graph showing net increase or decrease in cash or cash equivalent

Net increase or decrese in cash


100%
100%

80%

60%

40% 30%

20%

0%
2009 2010 2011 2012 2103
-20% -18%
--30%
-40%

-60%

-80% -76%

Interpretation
The graph is showing decrease in cash every year because company receipts are more than
the payment. The company is using more cash in financing and investing activates. These
show the outflow of cash.

VIVEKANANDA DEGREE COLLEGE Page 71


KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

CHAPTER: 5

Findings, suggestion, and conclusion

FINDINGS:

The performance of the net profit before tax and the condition in the year 2010 and a
gradual decrease from 2011 and there on.
Adjustment for non-operating
operating items. Indicates that deductions made on net profit
before tax shows continues increase from
fr 2010-2013.
The operating capital changes indicate good performance of company in year 2010,
2011 & 2013. But a slightly poor performance in the year 2009 and 2012.
Cash generated from operation is comparatively higher in the year 2010, and has
increase in priorities thereafter.
The tax paid during the year 2009 till 2012 shows increasing trend where as reduced
in the year 2013.
Net cash inflow from the operating activities shows a good performance in the year
2010, 2012 & 2013 compared to base year 2009.
2009
Interest received on investment shows increase in the year 2010 and after decreasing
trend.
Purchase fixed assets shows that cash outflow for purchasing fixed asset has declined
till and shows an increase in 2013.
The investment sold during the above specified period shows fluctuations of increased
and decreased.
It highlight that there is no cash flow from shares till 2011 from the year 2009 & in
2012 there is inflow of cash & in 2013 there is out flow of fund.
The priorities of raising long term loans secure to high in 2010, 2011 & 2012
compared to 2009 & 2013.
There is cash outflow in the form of redemption of debentures in the year 2009 and
2010 and no effect in the year from 2011-13.
2011
Payment of dividend shows gradual
gradual decline in the outflow of cash from 2009 to 2011,
and there is decrease in outflow in 2013.

VIVEKANANDA DEGREE COLLEGE Page 72


KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

Cash inflow from financing activities shows fluctuations. It is very compare to its
2009.
There is no any inflow of cash in the statement.

SUGGESTION AND RECOMMENDATION


RECO

1. The company is recommended to concentrate on increase in debtors. It has to modify


and improvise its terms and conditions
conditions of credit sales. As it may block the inflow of
cash in the irrecoverable bad debts. This turn can improve the companys ooperating
profit.
2. Interest received on investment shows continuous decline which in turn may result in
cash inflow from investing activities. Therefore, it is suggested to the company to
invest amount on purchase of such long-terms
long terms investment. These in turn guaranty
highest rate of return.
3. It is also recommended to the company to maintain the proportion of current assets
and current liabilities as a result of which there will be increase of working capital.
4. The company has suggested having a proper systematic utilisation of cash for its
respective proper utilisation of cash inflow from long term sources such as issue of
share capital in rising in long term capital should be used for purchase of long term
assets such as fixed assets and investment.
inve
5. Sale of investment within maturity period has to be avoided as long term investments
would get better benefit rather than sales proceed within short span which also affect
the regular income of interest.
6. The company should proper utilise the cash in the investing and financing activities.

7. Track accounts receivable to identify and avoid slow-paying


slow paying costumer. Refusing to do
business with slow paying costumer.

VIVEKANANDA DEGREE COLLEGE Page 73


KARNATAKA POWER CORPORATION
ORATION LIMITED CASH FLOW ANALYSIS

CONCLUSION:

The study on cash flow analysis of KPCL was mainly undertaken to study the inflow &
outflow of cash from various financial element in practical condition. This is an opportunity,
which helped me in understanding cash flows and practical knowledge with respect to a
companys performance.

Cash inflow from operating activities in the


the form of operating profit before working capital
changes, cash generation from operations and net cash inflow from operation shows great
improvement in 2010 & 2011 compare to the base year. Where it shows reduction value of
cash outflow in the form of bad
bad debts, depreciation, and loss on the sale of assets and tax paid
during the years.

When cash flow from investing activities were analysed it shows cash outflow is due to
heavy purchase of fixed assets and investments from 2009-2012.
2009 2012. Interest received is only
inflow of the cash from investment.

Cash flow from financial activities shows inflow of cash in all the year from 2009
2009-2012.
Whereas, inflow gradually decreasing in value from 2009-12.
2009 12. Equity share capital issued,
long term borrowings raised and receipts
receipts of unsecured loans are the reason for cash inflow in
financial activities. However payment of financial charges, dividend and CDT are the
outflows noticed in the financial activities.

However, overall cash flow from all the activities shows good inflow
inflow of cash in the year
2009, which has decline in 2010. And thereafter it indicates outflow of cash in the year 2011
2011-
and 2012.

To conclude the companys cash performance in all years seems to be satisfactory except in
the year 2012, as there is decline in the cash equivalent condition of the company in the year
2012 compare to its base year 2009.

VIVEKANANDA DEGREE COLLEGE Page 74