INDUSTRIAL TRAINING REPORT

FINANCIAL ANALYSIS
OF
SJVN

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

DEGREE OF

Master of Business Administration (Finance and Marketing)

2017-2019

SUBMITTED TO: SUBMITTED BY:

Dr. DINESH SHARMA DEVESH SHARMA

CO-ORDINATOR T&P CELL ROLL NO.: 3673/3469
HPUBS

Himachal Pradesh University Business School

Summerhill, Shimla (H.P.) 171005

PREFACE
1
This study is conducted as a part of the curriculum of Master of Business Administration
(Finance and Marketing) offered by HIMACHAL PRADESH UNIVERSITY BUSINESS
SCHOOL.

Training is an essential requisite of any learning process. The classroom imparts the
theoretical knowledge which helps us to form an impression, but unless it is applied in the
practical field to assess its usefulness or utility it does not find a permanent place in our
memory. Training provides the facility to apply the classroom knowledge into the field. To
provide a rich insight into work situation, the management institutes all over the country
arrange research projects for their students during their MBA.

This report aims to have an understanding the concept equity and debt. This report is just a
part of feedback to the Top-level Management for the various plans they made regarding
allocation of financial resources etc, which were implemented, in the current financial year.

This report gives a deep insight into various matters if any implementation of the plans for
achieving the objective of the firms.

Various other factors are there which limit the accuracy and correctness of the report. Even
then a great effort has been kind of analysis and interpretation on personal level.

However, I must say that this report is not the work for excellence work of scholar, it is result
of assignment to improve myself and gain confidence. So , there is a chance of some
mistakes and also a critical appraisal by anyone will be heartily welcomed.

ACKNOWLEDGEMENT

2
On every step there is a need of proper guidance, support and motivation. The
encouragement enable the person to give his best performance and thus to achieve the
goal.As a small token of my appreciation I have named here of all those wonderful people,
without whom the training would not have been possible. I sincerely acknowledge, with
thanks, the encouraging guidance and critical supervision of my supervisor Mr Vikas Gupta
for assigning the project, useful comments and remarks through the learning process in this
training period. Furthermore, I would like to thank Mr. Jitendra Sumbria , Mr. Pritam
Chand , Mr. Sitendra Singh and Mr. Rakesh Chauhan for helping me in my project and
guidance. I would also like to thank my friends and family who continuously helped and
guided me. Their guidance and support was necessary during the training period.

DECLARATION
3
I,Devesh Sharma hereby declare that the report titled “FINANCIAL ANALYSIS OF SJVN ”
submitted by me as a part of partial fulfilment of the requirements fot the degree of Masters
of Business Administration at Himachal Pradesh University is a record ofbonafied work
done by me. I also declare that this report has to my knowledge is my own and is neither
submitted to any other university or institute.. To the best of knowledge I didn’t breach any
copyright act intentionally. I would be very happy to provide you with any clarification
regarding the report.

ON THE JOB TRAINING COMPLETION CERTIFICATE

4
Title Page No.

INTRODUCTION 7-11

SJVN: A PROFILE 12-22

BOARD OF DIRECTORS 23-25

26-34
BUSINESS CARRIED OUT BY SJVN

ORGANISATIONAL STRUCTURE 35

AWARDS AND ACHIVEMENTS 36

COMPANY PROFILE 37

FUNCTIONAL AREA 38-39

FINANCIAL ANALYSIS 40

ANNAUAL REPORT 41-50

RATIOS 51-61

CONCLUSIONS 61

PERFORMANCE 62

REFERENCES 63

5
CONTENTS

6
 CHAPTER 1
INRODUCTION

7
 INTRODUCTION

The government-owned corporations are termed as Public Sector Undertakings (PSUs) in

India. In a PSU majority (51% or more) of the paid up share capital is held by central
government or by any state government or partly by the central governments and partly by
one or more state governments.

The Comptroller and Auditor General of India (CAG) audits government companies. In
respect of government companies, CAG has the power to appoint the Auditor and to direct
the manner in which the Auditor shall audit the company's accounts.

EVOLUTION OF PUBLIC SECTOR UNDERTAKINGS

Post Independence, India was grappling with grave socio-economic problems, such as
inequalities in income and low levels of employment, regional imbalances in economic
development and lack of trained manpower, weak industrial base, inadequate investments
and infrastructure facilities, etc.

Hence, the roadmap for Public Sector was developed as an instrument for self-reliant
economic growth. The country adopted the planned economic development polices, which
envisaged the development of PSUs.

Initially, the public sector was confined to core and strategic industries. The second phase
witnessed nationalization of industries, takeover of sick units from the private sector, and
entry of the public sector into new fields like manufacturing consumer goods, consultancy,
contracting and transportation etc.

The Industrial Policy Resolution 1948 outlined the importance of the economy and its
continuous growth in production and equitable distribution. In this process, the policy
envisaged active engagement of the State in development of industries.

The Industrial Policy Resolution 1956 classified industries into three categories with respect
to the role played by the State -

 The first category (Schedule A) included industries whose future development would
be the exclusive responsibility of the State

 The second (Schedule B) category included Enterprises whose initiatives of

development would principally be driven by the State but private participation would
also be allowed to supplement the efforts of the State
8
  And, the third category included the remaining industries, which were left to the
private sector.

In 1969, the government nationalized 14 major banks.

The Industrial Licensing Policy 1970 placed certain restrictions on undertakings belonging to
large industrial houses, defined on the basis of assets exceeding Rs 350 mn.

In 1973, the definition of large industrial houses was adopted in conformity with that of the
Monopolies and Restrictive Trade Practices Act (MRTP) 1969- External website that opens
in a new window and included companies whose assets exceeded Rs 200 mn.

The Statement on Industrial Policy in July 1991 was also significant. It brought in
fundamental changes in the MRTP Act as well. The statement revised the priority of the
public sector.

CLASSIFICATION OF PUBLIC SECTOR UNDERTAKINGS

Public Sector Undertakings (PSUs) can be classified as Public Sector Enterprises (PSEs),
Central Public Sector Enterprises (CPSEs) and Public Sector Banks (PSBs).

The Central Public Sector Enterprises (CPSEs) are also classified into 'strategic' and 'non-
strategic'. Areas of strategic CPSEs are:

 Arms & Ammunition and the allied items of defence equipments, defence air-crafts
and warships

 Atomic Energy (except in the areas related to the operation of nuclear power and
applications of radiation and radio-isotopes to agriculture, medicine and non-strategic
industries)

 Railways transport.

All other CPSEs are considered as non-strategic.

SECTION 25 COMPANIES

Public Sector Enterprises having objects to promote commerce, art, science, religion, charity
9
or any other useful purpose and not having any profit motive can be registered as non-profit
company under section 25 of the Companies Act, 1956.

This section empowers the Central Government to grant a license directing that such an
association may be registered as a company with limited liability, without the addition of the
words `Limited' or `Private Limited' to its name.

Such companies are also called as the Non-profit or 'No Profit - No Loss' companies.

MAHARATNA/NAVRATNA/MINIRATNA STATUS FOR PUBLIC SECTOR

UNDERTAKINGS

The status of Maharatna, Navratna, Miniratna to CPSEs is conferred by the Department of

Public Enterprises- External website that opens in a new window to various Public Sector
Undertakings. These prestigious titles provide them greater autonomy to compete in the
global market.

Maharatna

A company qualifying for the Maharatna- External website that opens in a new
window status should have an average annual turnover of Rs 20,000 crore during the last
three years against Rs 25,000 crore prescribed earlier. The average annual net worth of the
company should be Rs 10,000 crore.

The Maharatna status empowers mega CPSEs to expand their operations and emerge as
global giants. The coveted status empowers the boards of firms to take investment decisions
up to Rs 5,000 crore as against the present Rs 1,000 crore limit without seeking government
approval. The Maharatna firms would now be free to decide on investments up to 15% of
their net worth in a project, limited to an absolute ceiling of Rs 5,000 crore.

Navratna

The Central Public Sector Enterprises (CPSEs) fulfilling the following criteria are eligible to
be considered for grant of Navaratna- External website that opens in a new window status:

 Having Schedule 'A' and Miniratna Category-1 status.

 Having at least three 'Excellent' or 'Very Good' Memorandum of Understanding

(MoU) ratings during the last five years.

The Navratna status empowers PSEs to invest up to Rs. 1000 crore or 15% of their net worth
on a single project without seeking government approval. In a year, these companies can

10
spend up to 30% of their net worth not exceeding Rs. 1000 cr. They also enjoy the freedom
to enter joint ventures, form alliances and float subsidiaries abroad.

Miniratna Category

For Miniratna category I status, the CPSE should have made profit in the last three years
continuously, the pre-tax profit should have been Rs. 30 crores or more in at least one of the
three years and should have a positive net worth. For category II, the CPSE should have
made profit for the last three years continuously and should have a positive net worth.

Miniratnas can enter into joint ventures, set subsidiary companies and overseas offices but
with certain conditions. This designation applies to PSEs that have made profits continuously
for the last three years or earned a net profit of Rs. 30 crore or more in one of the three years.

Miniratna Category-II CPSEs

Category II miniratnas have autonomy to incurring the capital expenditure without
government approval up to Rs. 300 crore or up to 50% of their net worth whichever is lower.

11
 CHAPTER 2
COMPANY PROFILE

12
 SJVN : A PROFILE

SJVN Limited, a Mini Ratna, Category-I and Schedule –‘A’ CPSE under administrative
control of Ministry of Power, Govt. of India, was incorporated on May 24, 1988 as a joint
venture of the Government of India (GOI) and the Government of Himachal Pradesh
(GOHP). SJVN is now a listed Company having shareholders pattern of 61.93 % with Govt.
of India, 26.85% with Govt. of Himachal Pradesh and rest of 11.22 % with Public. The
present paid up capital and authorized capital of SJVN is Rs. 3,929.80 Crore and Rs. 7,000
Crore respectively. The present Net Worth as on 31.03.2018 is Rs.10,694.71 Crore.

Beginning with a single Project and single State operation (i.e. India’s largest 1500 MW
Nathpa Jhakri Hydro Power Station in Himachal Pradesh) the Company has commissioned
five projects totaling 2015.2 MW of installed capacity including wind and solar power.
SJVN is presently implementing power projects in Himachal Pradesh, Uttarakhand, Bihar,
Maharashtra and Gujarat in India besides neighbouring countries viz. Nepal and Bhutan.

13
 SJVN LTD. (SJVN) - COMPANY HISTORY

SJVN Ltd is a hydroelectric power generation company. The company is the largest
operational hydroelectric power generation facility in India based on installed capacity with
an aggregate generation capacity of 1912 MW. SJVN has expanded its horizons and
envisions developing itself into a fully diversified transnational Power Sector company in all
types of conventional and non-conventional forms of energy along with Power Transmission.
The company is also engaged in the business of providing consultancy.SJVN Ltd was
incorporated on May 24 1988 as Nathpa Jhakri Power Corporation Pvt Ltd. The company
was established as a joint venture between the Government of India and the State
Government of Himachal Pradesh to plan investigate organize execute operate and maintain
Hydro-electric power projects. In November 3 1988 the word private was deleted and the
name was changed to Nathpa Jhakri Power Corporation Ltd. In August 1991 the company
took over the construction and operation of the NJHPS from the HPSEB. In September 17
2002 they changed their name from Nathpa Jhakri Power Corporation Ltd to Satluj Jal
Vidyut Nigam Ltd as the operations of the company were based in and around the river
Sutlej. In October 2003 the first 250 MW hydroelectric power generation unit was
commissioned at the NJHPS.In the year 2004 the Government of Himachal Pradesh
allocated Luhri Hydro Electric Project to the company for preparation of detailed project
report. Also they signed an implementation agreement with Government of Himachal
Pradesh for RHEP. In the year 2005 the company signed an agreement with Government of
Uttarakhand for execution of Devsari Hydro Electric Project (300 MW) Naitwar Mori Hydro
Electric Project (33 MW) and Jakhol Sankri Hydro Electric Project (33 MW) on BOO
basis.In the 2008 the company was granted the Mini Ratna Category I status of the company.
They signed an MoU for Arun - III Hydro Electric Project with Government of Nepal. Also
they signed an MoU with Government of Himachal Pradesh for the implementation of Luhri
Hydro Electric Project and the execution of Dhaulasidh Hydro Electric Project.In September
10 2009 the company changed their name Satluj Jal Vidyut Nigam Ltd to SJVN Ltd as the
operations of the company expanded and were no longer confined to the area in and around
the river Sutlej. Also the company was converted into a public limited company. The
company entered into a Joint Venture for the implementation of 1500 MW Tipaimukh Hydro
Electric Project in Manipur with equity participation to the extent of 26%. Also the company
was assigned the task of updating/preparing DPRs of two Hydro Electric Projects 900 MW
Wangchu Hydro Electric Project and 486 MW Kholongchu Hydro Electric Project in Bhutan
by Government of India. Shares of SJVN were listed on the bourses on 20 May 2010 after an
initial public offer (IPO). The stock debuted at Rs 28 on BSE compared with IPO price of Rs
26.On 5 July 2013 SJVN announced that it has acquired Buxar Bijlee Company Private
Limited by acquisition of 100% of equity of the company on 4 July 2013 in terms of MOU
14
signed with Bihar Government on 17 January 2013 for setting up Green Field 1320 MW (2 x
660 MW) Supercritical Technology Thermal Power Project at Chausa village in Buxar
district of Bihar. The Ministry of Coal has informed SJVN that the company has been
allocated 486 MT of coal reserves in the 2102 MT Deocha-Pachami Coal Block located in
West Bengal for the purpose of Buxar Thermal Project.On 29 January 2014 SJVN Limited
signed a MoU to form a Joint Venture Company to plan develop and operate the world's
largest 4000 MW Ultra Mega Solar Project in Sambhar area of Rajasthan with five other
PSUs namely Bharat Heavy Industries Limited (BHEL) Power Grid Corporation of India
(PGCIL); Sambhar Salt Limited (SSL); Rajasthan Electronics & Instrumentation Ltd. (REIL)
Solar Energy Corporation of India (SECI). The project having total installed capacity of
4000 MW will be implemented in phases beginning 1000 MW in the first Phase through the
aforesaid JV Company and SJVN will have 16% equity participation in the proposed mega
project.On 21 March 2014 SJVN Ltd informed the stock exchanges that the 412 MW
Rampur Hydro Electric Project of SJVN Limited located on river Satluj in Himachal Pradesh
commenced power generation on 20 March 2014 with the synchronization of its first 68.67
MW unit with the northern grid. The mechanical wet spinning of Unit-I and Unit-II of the
Project had been successfully achieved on 4 and 5 March 2014 respectively. On completion
the project will generate 1770 million units of electricity per annum 30% of which will be
supplied to home state Himachal Pradesh which is the company's equity partner in addition
to 12% free power. The balance power will be supplied to the northern grid states namely
Haryana Himachal Pradesh J&K Punjab Rajasthan Uttar Pradesh Uttarakhand Chandigarh &
Delhi.On 23 April 2014 SJVN Limited signed a Memorandum of Understanding (MOU)
with Druk Green Power Corporation Limited (DGPC) Bhutan for carrying out
preconstruction activities for development of Kholongchhu Hydroelectric Power Project
(600MW) till formation of Joint Venture Company in Bhutan. The Project is situated on the
Kholongchhu river in Trashiyangtse Dozongkhag having total installed capacity of 600 MW
and shall be implemented by setting up a JV Company (of SJVN & DGPC) in Bhutan which
shall develop and operate the project on BOOT basis.On 21 May 2014 SJVN Ltd informed
the stock exchanges that with the commissioning of the last i.e. 56th Wind Energy Generator
(WEG) on 20 May 2014 SJVN's 47.6 MW Khirvere Wind Power Project comprising of total
56 Wind Energy Generators (WEG) each having capacity of 850kW stands fully
commissioned on 20 May 2014.On 13 August 2014 SJVN announced that the company has
signed a Memorandum of Agreement (MoA) for the implementation of 80 MW Doimukh
Hydro Electric Project as a run of the river scheme on river Pare in the state of Arunachal
Pradesh.On 5 December 2014 SJVN announced that the 412 MW Rampur Power Project of
the company located on river Satluj in Himachal Pradesh stands fully commissioned on 4
December 2014 with the commissioning of the last i.e. 6th vertical axis Francis turbine Unit
of 412 MW Rampur Power Project. The SJVN's 412 MW Rampur Power Project will
generate 1770 million units of electricity every year. Out of which 30% of Power will be
15
supplied to the home state Himachal Pradesh which is SJVN's equity partner in addition to
12% free power. The balance power will be supplied to the Northern Grid states namely
Haryana Himachal Pradesh J&K Punjab Rajasthan Uttar Pradesh UttarakhandChandigarh &
Delhi.On 1 January 2015 SJVN announced that it has signed a MoU with Hindustan Salts
Limited to conceptualise structure implement operate and maintain the ultra mega hybrid
renewable energy (solar and wind) park at salt pan land in Kharaghoda Gujarat. SJVN also
signed a MoU with Rajasthan Electronics and Instruments Limited to develop solar power
plant of about 2 MW capacity at Kotla Himachal Pradesh and other places in the project area
of SJVN.On 8 January 2015 SJVN Ltd informed the stock exchanges that the company has
signed a Joint Venture Agreement with six state power generating companies belonging to
West Bengal Bihar Uttar Pradesh Punjab Karnataka and Tamilnadu for formation of a JV
Company for mining coal from Deocha Pachami-Dewanganj Horisingha Coal Block located
in Birbhum district of West Bengal State. The coal mined from the block would feed to the
1320MW (2*660MW) supercritical thermal power project of SJVN Thermal Private Limited
at Buxar Bihar.On 15 June 2015 SJVN Ltd informed the stock exchanges that a Joint Venture
of the company has been incorporated on12 June 2015 under the name and style of
Kholongchhu Hydro Energy Limited to implement the 600 MW Kholongchhu Hydro
Electric Project in Bhutan.On 4 December 2015 SJVN Ltd informed the stock exchanges
that the company has signed a Memorandum of Understanding (MoU) with the Saurya Urja
Company of Rajasthan Limited for allocation of land in the solar parks being developed by
them at Jodhpur and Jaisalmer in the state of Rajasthan. SJVN has plans to set up cumulative
300 MW Solar capacity in these solar parks.On 20 March 2018 the company announced
closure of share buyback with completion of extinguishment 20.68 crore shares. Earlier the
company's Board of Directors at its meeting held on 8 January 2018 approved the proposal to
buyback up to 20.68 crore equity shares of the company at a price of Rs 38.75 per share for
an aggregate consideration upto Rs 801.47 crore through the Tender Offer route. The
Buyback offer opened on 14 February 2018 and closed on 28 February 2018.On 30 March
2018 the foundation stone was laid for SJVN's 60 MW Naitwar Mori Hydro Electric Project
at Mori. The project is located on River Tons a major tributary of River Yamuna on the
Ganga basin in Uttarkashi district of Uttarakhand. On 12 May 2018 the foundation stone was
laid for SJVN's 900 MW Arun-3 Hydro Electric Project at Kathmandu. The project is located
on River Arun in Sunkhuwashabha District of Nepal. The project is being executed by SJVN
through its wholly owned subsidiary namely SJVN Arun-3 Power Development Company
(SAPDC). This project has been allocated to SJVN based on International Competitive
Bidding (ICB) by Government of Nepal (GoN) in March 2008. Memorandum of
Understanding for execution of Arun-3 project was signed between Government of Nepal
and SJVN on 2 March 2008.

16
 PORTFOLIO

The present installed capacity of SJVN is 2015.2 MW comprising of five projects and one
transmission line of 86 km length as tabulated below:

Sr.No Project Installed capacity

1. Nathpa Jhakri Hydro Power Station 1500 MW

2. Rampur Hydro Power Station 412 MW

3. Khirvire Wind Power Project 47.6 MW

4. Charanka Solar PV Power Plant 5.6 MW

5. Sadla wind Power Project 50 MW

6. 400 kV, D/C cross border transmission line 86 Km

SJVN has expanded its horizons and envisions developing itself into a fully diversified
transnational power sector company in all types of conventional and non-conventional forms
of energy along with power transmission. SJVN aims to be a 5000 MW company by 2023,
12000 MW company by 2030 and 25000 MW company by 2040. Total portfolio of SJVN is
6801.2 MW, out of which 2015.2 MW is under operation, 2880 MW is under construction,
528 MW is under pre-construction & investment approval and 1378 MW is under survey &
investigation stage. Besides, 217 Km 400 kV D/c transmission line from Arun-3 HEP in
Nepal to Bathnaha on Nepal-India border is also under construction. Project wise detail is as
per under:

17
Sr.No Project Capacity
Projects under construction
1. Arun- 3 HEP 900 MW
2. Naitwar Mori HEP 60 MW
3. Kholongchhu HEP 600 MW
4. Buxar Thermal Power Project 1320 MW
5. 400 KV, D/C Transmission Line from Arun-3 217 Km
HEP in Nepal to Bathnaha (Nepal- India
Border

Projects under Pre- construction and Investment approval

1. Luhri Stage-I HEP 210 MW
2. Dhaulasidh HEP 66 MW
3. Devsari HEP 252 MW
Projects under Survey and Investigation stage
1. Jakhol Sankri HEP 44 MW
2. Sunni Dam HEP 382 MW
3. Luhri Stage-II HEP 172 MW
4. Jangi Thopan Powari HEP 780 MW
SJVN commissioned 86 ckm 400 kV double circuits Indo-Nepal Cross Border Power
Transmission corridor between Sursand and Muzzafarpur on 19.02.2016 in JV with Power
Grid, IL&FS, and Nepal Electricity Authority. The same was dedicated to nation by Hon’ble
Prime Minister of India on 20.02.2016. In addition to above, Company is engaged in
implementation of 400 kV double circuit associatedtransmission line of 217 km (upto Indo-
Nepal Border) for its 900 MW Arun-3 Project in Nepal.

SUBSIDIARIES
18
 SJVN Arun -3 Power Development Company Pvt. Ltd. (SAPDC)–Fully owned
subsidiary incorporated in Nepal for implementation of 900 MW Arun-3 Project in
Nepal

 SJVN Thermal Private Limited –Fully owned subsidiary incorporated for execution
of 1320 MW Buxar Thermal Power Project in Bihar.

JOINT VENTURES
19
 Cross Border Power Transmission Company Limited (CPTC)-To construct and
maintain 86 km long, 400 kV D/C transmission line from Muzaffarpur-Sursand and a
bay extension at Muzaffarpur substation. Equity contributions by SJVN, PGCIL, and
IEDCL & NEA are 26%, 26%, 38% & 10% respectively in the Joint Venture
Company.

 Kholongchhu Hydro Energy Limited-To execute of 600 MW Kholongchhu Hydro

Electric Project in Bhutan, a joint venture Company of SJVN and Druk Green Power
Corporation Ltd, Bhutan (DGPC) having 50% share holding each was incorporated in
Bhutan on 12.06.2015.

20
 VISION

To be best-in-class Indian Power Company globally admired for developing affordable clean
power and sustainable value to all stake holders.

MISSION
To drive socio-economic growth and optimize shareholders and stakeholders interest
by:

 Developing and operating projects in cost effective and socio-environment friendly

manner.

 Nurturing human resources talent with care.

 Adopting innovative practices for technological excellence.

 Focusing on continuous growth and diversification.

OBJECTIVES
In the pursuit of above mission, the company had set for itself the following
corporate objectives:

 Operating and maintaining power stations with maximum performance efficiency.

 Establishing and following sound business, financial and regulatory policies.

 Taking up of other hydro power projects.

 Completion of the new projects allocated to SJVN in an efficient and cost effective
manner.

 Use of the best project management practices for the project implementation by
applying latest universally accepted Project Management Techniques, and by enabling
its Engineers, to become certified Project Managers through further trainings.

21
 Dissemination of available in-house technical and managerial expertise to other
utilities / projects.

 Creating work culture and work environment conducive to the growth and
development of both the organization and the individuals through introduction of
participative management philosophy.

 Fulfilling social commitments to the society. Achieving constructive cooperation and

building personal relations with stakeholders, peers, and other related organization.

 Striving clean and green project environment with minimal ecological and social
disturbances.

 To strive for acquiring Nav Ratna Status.

BOARD OF DIRECTORS
22
The business of the company shall be managed by Board of Directors consisting
of Functional Directors and Part Time Directors. SJVN is headed by a full time
Chairman & Managing Director and four functional Directors viz Director
(Finance), director (Personnel), Director (Electrical) and Director (Civil). In
addition, there are two part time Directors representing Govt. of India and Govt.
of Himachal Pradesh. Also, there are four independent Non-Official Part Time
Director

Sh. Nand Lal Sharma

Chairman cum Managing Director

23
 FUNCTIONAL DIRECTORS

Mr. Amarjit Singh Bindra Mr. Rakesh Kumar Bansal

Director(Finance) Director (Electrical)

Mrs. Geeta Kapur Mr. Surinder Pal

Bansal
Director (Personnel) Director (Civil)

GOVERNMENT NOMINEE DIRECTORS

Mr. Aniruddha Kumar Mr. Prabodh Saxena

Nominee Director(GoI) Nominee Director (GoHP)

24
 INDEPENDENT DIRECTORS

Dr Rajni Sarin Mr. Pravinbhai Patel Mr. Subhash Chander

Mr. Rajinish Pande Mr. Shamsher Singh Uppal

25
 BUSINESS CARRIED OUT BY SJVN

HYDRO POWER
Beginning from a single hydropower project company, SJVN today has a footprint in a
Hydroelectric Projects in Himachal Pradesh, Uttrakhand and in the neighboring countries of
Nepal and Bhutan.

SJVN is successfully operating the country’s largest 1500 MW Nathpa Jhakri Hydropower
Station and is setting new benchmarks in generation and maintenance year after year, after
having tackled the silt erosion problems in under-water turbine parts.

OPERATIONAL PROJECTS

NATHPA JHAKRI HYDRO POWER STATION

The Nathpa Jhakri Hydroelectric Station of 1500 MW capacity is the country’s largest
hydropower plant.

The run of the river project is located on River Sutlej, a major tributary on the Indus basin, in
Shimla district of Himachal Pradesh in North India.

The Nathpa Jhakri plant is designed to generate 6950.88 (6612) million units of electricity
each year but quality management at the plant has enabled generation to exceed yearly
targets.

A Memorandum of Understanding for execution of the Nathpa-Jhakri project was signed

between Government of India and Government of Himachal Pradesh in July, 1991.

26
The Nathpa Jhakri Hydroelectric project has been financed on a 50:50 debt equity ratio basis.

The project had the backing of World Bank. The project was completed at a cost of Rs 8187
Crore.

The Nathpa Jhakri project was commissioned in May, 2004 and officially dedicated to the
nation by Prime Minister Manmohan Singh on May 28, 2005.

Power allocation from Natpha Jhakri hydroelectric plant to the North Indian states of
Haryana, Himachal Pradesh, Punjab, Jammu & Kashmir, Rajasthan, Uttar Pradesh,
Uttarakhand and the cities of Delhi and Chandigarh has enabled the grid to overcome power
shortages in the region.

RAMPUR HPS
Rampur Hydro Power Station of 412 MW installed capacity is located on River Satluj, a
major tributary of Indus basin, in Shimla and Kullu district of Himachal Pradesh in North
India.

The plant is designed in tandem with run of the river plant Nathpa Jhakri (1500 MW) .

A Memorandum of Understanding for execution of Rampur Project was signed between

Government of India and Government of Himachal Pradesh on October, 2004.

Major works project began in February 2007, after completition of HRT, Surge Shaft, Valve
House. Power House, TRT and other associated works, water filling of water Conductor
System completed in March, 2014 successfully without any leakage.

The Project has been financed on a 70:30 debt equity ratio basis.

The Project had the backing of World Bank. Estimated cost of the project at March, 2006
price level was Rs. 2047.06 crores. PIB recommended its approval of Revised Cost Estimate
(RCE-I) for Rs. 4,233.21 Crore.

Rampur HPS is designed to generate 1878 million units of electricity each year.

Power generated from Rampur HPS is distributed to Northern Regional states i.e. Himachal
Pradesh, Haryana, J&K, Punjab, Rajesthan, UP, Uttrakhand as per their percentage allocation
by ministry of Power.

PROJECT UNDER SURVEY & INVESTIGATION

27
 LUHRI STAGE-II HEP
Luhri HEP Stage-II (172 MW) is a run of river project on Satluj river near Nanj village,
spread over Shimla, Kullu & Mandi districts of Himachal Pradesh. The project is estimated
to generate 632 MU of electricity in a 90% dependable year. Investment approval for pre-
construction activities of Rs 72.478 Crore received from GOI on 16.03.18.

1st consultation meeting for preparation of DPR held on 11.06.2018. DPR is under
preparation.

Statutory clearances i.e. Environment Clearance, Forest Clearance and acquisition of private
land is under process.

JAKHOL SANKRI HEP

The Jakhol Sankri HEP with proposed capacity of 44 MW is located on river Supin, a
tributary of river Tons and part of river Yamuna on the Ganga basin, in Uttarkashi district of
Uttarakhand. The project is designed as run of the river project and has the potential to
generate 166 MU of energy in a year. A Memorandum of Understanding for execution of
project was signed with the Government of Uttarakhand in November 21, 2005.

GoI accorded investment approval for pre-construction activities of project at an estimated

cost of Rs 84.50 Crore on 15.09.17. DPR of project is under approval with Govt of
Uttarakhand.

Statutory clearances i.e. Environment & Forest clearance and acquisition of private land is
under process.

SUNNI DAM HEP

Sunni Dam HEP is a run of the river type scheme. The project is situated on Satluj river near
Khaira village spread over Shimla and Mandi districts of Himachal Pradesh. The project is
estimated to generate 1369 MU of electric energy in a 90% dependable year.
28
Investment approval for pre-construction activities accorded by GoI on 18.04.18.

Preparation of DPR in progress. Statutory clearances i.e. Environment Clearance & Forest
Clearance and acquisition of private land are under process.

JANGI Thopan Powari HEP

J

angi Thopan Powari HEP with proposed capacity of 780 MW located on river Satluj in Distt.
Kinnaur of Himachal Pradesh was allotted to SJVN on 24.11.2018 by GoHP on BOOT basis.

Signing of MoU is under process.

PROJECTS UNDER PRE-CONSTRUCTION & INVESTMENT

APPROVAL

DEVSARI HEP

Devsari HEP with installed capacity of 252 MW is located on river Pindar, a tributary of
river Alaknanda on Ganga basin, in Chamoli district of Uttarakhand. The project is designed
as Run of the River project and has the potential to generate 936 MU of electricity in a 90%
dependable year.

A Memorandum of Understanding for execution of project was signed with the Government
of Uttarakhand on November 21, 2005. The scheme was cleared by Govt. of Uttarakhand in
October, 2007 and by Standing Technical Committee in April, 2012.

TEC of the project was concurred by CEA in August, 2012. CEA has vetted project cost
amount to Rs 2138.67 Cr at February, 2017 PL on 09.03.2018. Acquisition of private land
and forest clearance is under process.

29
 DHAULASIDH HEP
The Dhaulasidh Hydro Electric Project with a generation potential of 66 MW is located on
river Beas, part of the Indus basin, in Hamirpur & Kangra districts of Himachal Pradesh.

The project is designed as a Run of the River project with a small live storage that would be
utilized for peaking power during the lean season.

The project holds potential of generating 247 million units of electric energy in a 90%
dependable year.

A Memorandum of Understanding for execution of project was signed with the Government
of Himachal Pradesh on 27th October, 2008. Govt. of Himachal Pradesh accorded TEC of
the project on 25.06.2011. Environment Clearance and Forest Clearance Stage-1 has been
obtained.

Acquisition of private land is in process. Investment approval for major works is under
process.

LUHRI Stage- I HEP

Luhri Hydro Electric Project is located on river Satluj spread over Shimla, Kullu and Mandi
districts of Himachal Pradesh. Initially LHEP was contemplated as single stage project and
Implementation Agreement with Govt. of Himachal Pradesh was signed on 27.10.08. Govt.
of H.P. in March, 2015 advised SJVN to explore the possibility of executing the LHEP as
multi-stage project instead of single stage on account of social and environmental concerns.
Accordingly three stages (i.e. Luhri HEP Stage- I - 210 MW, Luhri HEP Stage-II – 172
MW and Sunni Dam HEP - 382 MW) were envisaged to harness the hydel potential of
Satluj river between Rampur and Kol Dam Hydro Electric Projects. Govt. of H.P. reallocated
all three projects on "Stand Alone Basis" to SJVN on 29.08.17.

Luhri HEP Stage-1 is a Run of the River (RoR) scheme with installed capacity of 210 MW,
located on river Satluj, near Nirath village spread over Shimla and Kullu Districts of
Himachal Pradesh. The project holds potential of generating 758 MU of electric energy in a
90% dependable year. Investment approval for pre-construction activities accorded by GoI
for Rs 86.53 Crore on 08.02.18.

30
Techno-Economic Clearance (TEC) of DPR accorded by CEA on 01.05.2018. Forest
Clearance, Environment clearance and acquisition of private land are under process

PROJECTS UNDER CONSTRUCTION

NAITWAR Mori HEP

Naitwar Mori Hydro Electric Project with a generation potential of 60 MW is located on
River Tons, a major tributary of River Yamuna on the Ganga basin, in Uttarkashi district of
State Uttarakhand in North India. The project is designed as a standalone run of the river
project. The entire project is on the right bank of river Tons stretching from Barrage site near
village Naitwar and Power house complex near Bainol village.

Naitwar Mori Hydro Electric Project has the potential to generate 265.5 million units of
electricity each year. A Memorandum of Understanding for execution of Naitwar Mori
project was signed with the Government of Uttarakhand in November 21, 2005.

Hon’ble Union Minister of Power (Independent Charge) Sh. R K Singh and Hon’ble Chief
Minister of Uttarakhand Sh. Trivender Singh Rawat laid the foundation stone of Project at
Mori on 30.03.2018.

LoA for Civil Package issued on 05.12.2017 and work of Desilting tank, Barrage, Diversion
Channel and HRT etc. in progress.

LoA for Hydro Mechanical Package on 18.04.2018.

ARUN III HEP

Memorandum of Understanding (MOU) was signed with the Govt. of Nepal for the
execution of 900 MW Arun – III HE Project on BOOT basis with a construction period of 5
years from date of financial closure of the project and operation period of 25 years. Project is
located on river Arun in the Sankhuwasabha Distt. of Nepal, 657 Km from Kathmandu via
Birat Nagar. SJVN Arun-3 Power Development Company Pvt. Ltd (SAPDC) was
incorporated & registered on 25.04.13 as a private limited company under the Nepalese

31
Companies Act 2063 duly floated by single shareholder company SJVN Ltd with an aim to
plan, promote, organize & execute the Arun-3 Hydro-electric Project. Project Development
Agreement (PDA) signed with IBN, GoN on 25.11.14.

The Survey license for generation was issued by Govt. of Nepal during July 2008. Survey &
Investigation works completed in January, 2011. TOR clearance for IEE of roads issued by
GoN on 20.04.10.

DPR of the Project vetted by CEA on 09.06.14. PIB recommended for investment for
generation component of Arun-3 HEP for estimated cost of Rs. 5723.72 Crore. CCEA
accorded approval on 22.02.17.

The EIA report of the project was approved by Ministry of Science, Technology &
Environment, GoN on 12.08.15. MoU for roads & bridges for the project signed between
Department of Roads, Govt of Nepal & SAPDC on 05.01.16 and agreement signed on
29.05.16.

Generation license issued by GoN on 03.05.18.

LoA of Package-1 for main works (Dam & 3 km HRT) issued on 22.09.17. Works of
Diversion tunnel, dam stripping and HRT from Adit-1 in progress.

LoA for Package-2 for main works (Power House & 8.6 km HRT) issued on 19.03.18. after
award of major civil works, project roads, partially constructed by DoR were handed over to
the main civil works contractors for execution of balance reaches.

LoA for HM Package issued to M/s Om Metals on 11.04.18.

LoA for EM Package issued to M/s BHEL, Delhi on 30.04.18.

Construction license for 46 km 33 kv construction power line issued by GoN on 28.11.18.

Construction work has been awarded to M/s Sigma Con Pvt Ltd on 09.08.18 and is under
progres

KHOLONGCHU HEP

32
Kholongchhu HEP was allocated to SJVN for the preparation of DPR on 22.07.2008. The
DPR for 600MW was approved by CEA and Royal Government of Bhutan (RGoB) on
05.11.2012 and 23.05.2013 respectively. Kholongchhu HEP with the proposed capacity of
600MW on the river Kholongchu in Bhutan will generate 2569 MU annually.

CCEA approval from GoI received on 28.02.2014. Inter Governmental Agreement between
RGoB and GoI for implementation of Kholongchhu HEP was signed on 22.04.2014. Hon’ble
Prime Minister of India laid the foundation stone for the Project on 16.06.2014. National
Environment Commission of RGoB accorded Environment Clearance on 21.07.2014.

The project is being implemented jointly by SJVN and Druk Green Power Corporation
(DGPC) Bhutan. The shareholders agreement between DGPC and SJVN was signed on
30.09.2014. Joint Venture company registered as "Kholongchhu Hydro Energy Ltd" (50:50
JV of SJVN & DGPC) in Bhutan on 12.06.2015. Ground Breaking Ceremony of project was
held on 18.09.2015 which was graced by His Royal Highness, the Gyaltshab.

Tendering for main works under process.

THERMAL POWER
After experience gained in harnessing the country’s hydropower potential, SJVN forayed
into generation of thermal power. The first project taken up for execution is the 1320 MW
capacity Buxar Thermal Power Plant in Distt. Buxar, Bihar. SJVN took over Buxar Bijlee
Company Pvt. Ltd. on 04.07.2013 and name was changed to SJVN Thermal Pvt. Ltd.
(wholly owned subsidiary of SJVN Ltd.) on 17.10.2013.

PROJECT UNDER PRE-CONSTRUCTION & INVESTMENT APPROVAL

BUXAR THERMAL POWER PROJECT

SJVN signed MoU with Bihar State Power Holding Company Limited (BSPHCL) and Bihar
Infrastructure Company (BPIC) on 17.01.13 for setting up Buxar Thermal Power Plant (2X
660 MW) at village Chausa, Distt. Buxar. SJVN took over Buxar Bijli Company Private
33
Limited on 04.07.13 and name changed to SJVN Thermal Private Limited (a wholly owned
subsidiary of SJVN Ltd) on 17.10.13. Power Purchase Agreement (PPA) has been signed
with Bihar State Power Holding Company Limited (BSPHCL) for 85% share of power
generation on bus bar rate.

DPR of the project has been updated on 29.08.16. Environment Clearance has been received
from MoEF & CC on 28.02.17. Private land for main plant has been acquired. Clearance
from airport authority for chimney has also been received. CCEA accorded investment
approval for the project on 08.03.19. Foundation stone laid by Hon'ble Prime Minister of
India on 09.03.19. Main plant works are under tendering process.

Wind Power

SJVN has diversified into Wind Power generation with commissioning of its first project in
Maharashtra. The 47.6 MW Khirvire Wind Power Project has been installed at Khirvire and
Kombhalne villages in Ahmednagar district of Maharashtra. SJVN is also executing its
second wind project i.e. Sadla Wind Power Project of 50 MW Capacity situated in village
Sadla, District Surendranagar in the state of Gujarat.

Power Transmission
From a power generation company, SJVN has also entered into Power Transmission Sector
by partnering with others companies to lay out the Cross Border Indo-Nepal Power
Transmission Line. The above mentioned Power Transmission Line has been declared
commercial on 19th February, 2016 and dedicated to the nations jointly by Hon'ble Prime
Minister of India & Nepal on 20th Feb, 2016.

Solar Power
SJVN has diversified into Solar Power generation with commissioning of its first project in
Charanka Solar Park, Gujarat. The 5 MW Charanka Solar Power Project has been
commissioned on 31.03.2

34
ORGANISATIONAL STRUCTURE OF SJVN

35
AWARD AND ACHIVEMENTS
36
During the Financial year 2017-18, your Company & Directors received commendation for
work in form of various Awards and Accolades as under:-

I. SJVN was awarded with ‘Achievement Award 2018’ and ‘Partners in Progress
Trophy’ for Social Development & Impact during 10th CIDC Vishwakarma Award
2018. The award was presented by Construction Industry Development Council.

II. SJVN was conferred with Global CSR Excellence & Leadership Award in the
category of Concern for Health by World CSR Congress, Mumbai.

III. SJVN was felicitated with ‘Eminent Award’ for Best Corporate Social Responsibility
practices in health sector by the EK Nam Desh Ke Nam, New Delhi.

IV. SJVN was honoured with ‘Silver Plate Award’ by Help Age India, New Delhi for its
outstanding contribution in the field of healthcare as one of its many CSR initiatives.

V. SJVN was awarded with Winner Trophy for ‘Best Hydro Power Generator’ by
Independent Power Producers Association of India (IPPAI). The prestigious award
was conferred to SJVN for its outstanding performance in the area of Operation &
Maintenance of Hydro Power Stations.

COMPANY PERFORMANCE
KEY FINANCIAL HIGHLIGHTS.

37
Net sales revenue 0.8%▼
Total operating revenue 0.8%▼
Operating profit (EBIT) 5.28%▼

EBITDA 3.63%▼
Net Profit (Loss) for the Period 17.09%▼

Total equity 5%▼

Operating Profit Margin (ROS) 2.86%▼

Net Profit Margin 9.61%▼

Return on Equity (ROE) 3.36%▼

38
 CHAPTER 3
FUNCTIONAL AREA

FUCTIONAL AREA: FINANCE

39
DETAILS:
 Introduction about the various projects of SJVN located in H.P.

 Understanding of the daily functions and operations which take place in the
organization .

 Gain knowledge about the various functions performed in corporate finance

department of SJVN.

 Proper understanding of how daily transactions are recorded in the organization .

 Gain knowledge about the ITR filling of a Company.

 Gain practical knowledge about GST and TDS .

 Elementary knowledge about Accounting Standards .

 Knowledge about third party billing and preparing vouchers.

 Knowledge about cross border transactions to other branches in other countries.

 Uploading and verifying documents of various employees regarding their

remuneration and incentives.

 Handling of entries related to buying and selling of goods and services and updating
various books holding information about these transactions.

 Grasping knowledge of the process involved in Bank Reconciliation Statement.

 Grasping knowledge about Company’s Policies regarding allowances given to the

Employees of SJVN.

40
 CHAPTER 4
FINANCIAL ANALYSIS OF
SJVN

41
ANNUAL REPORT OF SJVN

BALANCE SHEET 2017-18

42
STATEMENT PF PROFIT AND LOSS

43
STATEMENT OF CASH FLOW

44
45
 INRODUCTION OF FINANCIAL ANALYSIS

The ever changing, external & internal environment in which the organization operates to
achieve its goal has often leaded to change in the financial structure of the firm. This change
may be in the assets structure, capital structure or any other such type of the change have
often been found out of bring changes in the liquidity position, level of activity &
profitability of organization.

To be aware of various positions parties concerned with the organization often go for the
various type of analysis one of them being financial analysis, that is done to know about the
present performance of the firm in which they are either going to invest or do business, with.
The responsibility of management to look after the effective & efficient utilization of
resources of the overall sound financial situation of the organization, increase their
requirement to have a detailed report on probably each & every aspect of financial position
which may be liquidity, activity, profitability.

The presentation of an elaborate system of ratio analysis was made in 1909 by Alexander
wall, who criticized the bankers for its lopsided development owing to their decisions
regarding the grant of credit on current ratios alone.

Wall, one of the foremost proponents of ratio analysis, pointed out that, in order to get a
complete picture, it is necessary to consider relationship in financial statement other than that
of current assets to current liabilities – relationship that might be measured quantitatively and
used as checks on current ratio. Since then, comprehensive analysis by means of calculation
of a series rapidly became „all the range‟.

Based upon their wide range of requirement the general trend is of going for the financial
ratio analysis, which is also considered to be the most effective one capable of giving
detailed & accurate information, more detailed & accurate than any other type of financial
analysis.

Financial ratio analysis is an arithmetic relationship between two figures.

Financial ratio analysis is a study of ratio between various items of groups of items in
financial statement. It also based upon various financial ratios, which are calculated from the
data provided in company‟s balance sheet & profit and loss account.

As per I.M. Pandey “Financial ratio in the relationship between two accounting figures,
expressed mathematically “.

46
In addition to the analysis based on current year financial ratio comparison with previous
year help us in establishing various methods. Which are further helpful in predicting the
future of the concern as well as present financial situation?

This report is submitted as a part of brief study of financial condition of “SJVN”. This report
has been prepared for the management purpose to make them aware of the unit in the various
fields of finance.

Detailed analysis is also a part of this report, which is based upon various ratios calculated &
various trends seen. Each & every ratio has been analyzed briefly & adequately followed by
various inferences & suffusions based on this analysis, which is beneficial for the Top-level
Management in the better financial control & planning for future.

This report is just a part of feedback to the Top-level Management for the various plans they
made regarding allocation of financial resources etc, which were implemented, in the current
financial year.

This report can give a deep insight into various matters if any implementation of the plans
for achieving the objective of the firms.

Various other factors are there which limit the accuracy & correctness of the report. Even
then a great effort has been kind of analysis & interpretation on personal level.

47
 NATURE
Ratio analysis is a powerful tools a financial analysis. In financial analysis, a ratio is used as
a benchmark.

For evaluating the financial position & performance of the firm. The relationship between
two accounting figures, expressed mathematically, is known as a financial ratio. Ratio helps
to summarized large quantity of financial data & to make qualitative judgment about the
firm‟s financial performance.

This relationship is an index or yardstick, which permits qualitative judgments to be, formed
about the firm‟s ability to, meets its current obligations.

It measured the firm‟s liquidity. The greater the ratio, the greater the firm‟s liquidity & vice-
versa. The point to be note is that a ratio reflecting a quantitative relationship helps to form
qualitative judgments. Such is the nature of all financial ratios.

ADVANTAGES OF RATIO

The ratio analysis is one of the most powerful tools of financial analysis. It is use as a device
to analysis and interprets the financial health of enterprise. Just like a doctor examines his
conclusion regarding the illness and before giving his treatment, a financial analyst analyses
the financial statement with various tools of analysis before commenting upon the financial
bearlth or weakness of an enterprise. „A ratio is known as a symptom like blood pressure, the
pulse rate or the temperature of the individual‟. It is with help of ratios that the financial
statements can be analyzed and decision made from such analysis.

HELPS IN DIVISION MAKING: Financial statements are prepared primarily for decision
making, but the information provided in financial statements is not an end in itself and no
meaningful conclusions can be drawn from these statements alone. Ratio analysis helps in
making decisions from the information provided in these financial statements.

HELPS IN FINANCIAL FORCASTING AND PLANNING: Ratios analysis is of much

help in financial forecasting and planning. Planning is looking ahead and the ratios
calculated for a number of year‟s work as a guide for the future. Meaningful conclusions can
be drawn for future from these ratios. Thus, ratio analysis helps in forecasting and planning.

48
HELPS IN COMMUNICATING: The financial strength and weakness of a firm are
communicated in a more easy and understandable manner by the use of ratios the
information contained in a financial statements conveyed in a meaningful manner to the one
for the whom it is meant. Thus, ratios help in communicating and enhance the value of
financial statements.

HELPS IN COORDINATION: Ratios even helps in coordinating, which is utmost

important in effective business management. Better communication of efficiency and
weakness of an enterprise results in better coordination in the enterprise.

HELPS IN CONTROL: Ratio analysis even helps in making effective control of the
business. Standard ratios can be based upon Performa Financial Statements and variance or
deviations, if any, can be founded by comparing the actual with the standards so as to take
corrective action at the right time. The weakness or otherwise, if any, come to the knowledge
of the management which helps in effective control of the business.

ROLE OF FINANCIAL RATIO

Aid in financial forecasting: Ratio analysis is very helpful in financial forecasting. Ratio
relating to the past sales, profits & financial position from the basis for setting future trends.

Aid in comparison: With the help of ratio analysis ideal ratio can be composed & they can
be used for comparing a firm progress & performance. Inter firm comparison with the
industry averages is made possible by ratio analysis.

Financial solvency of the firm: Ratio analysis indicates the trend in financial solvency of
the firm. Solvency has to dimensions:

Long-term Solvency

Short-term Solvency

Long term solvency refers to the financial viability of the firm while Short-term solvency is
the liquidity position of the firm.

Communication values: Different financial ratios communicate the strength & financial
standing of the firm to the internal & the external parties. They indicate overall profitability
of the firm

Other uses: Financial ratios are very helpful in the diagnosis & financial health of a firm.
They highlight the liquidity, solvency, profitability & capital gearing etc. of the firm. They
are useful tools of analysis of financial performances.

49
 OBJECTIVE OF THE STUDY
An analysis of financial statements with the help of „ratio‟ may be termed as “Ratio
Analysis”. It implies the process of computing determining & presenting the relationship of
the terms or group of items of the financial statements. It also involves the comparison &
interpretation of these ratios & use of them for future projections.

And the fund flow arises when the net effect of the transaction is to increase or decrease the
amount of working capital. Normally, a firm will have some transactions that will change net
working capital & some that will cause no change in net working capital include most of
items of profit & loss account and those business events, which simultaneously effect both
current & non-current balance sheet items.

CLASSIFICATION OF RATIOS

Ratio may be classified in a number of ways to suit any particular purpose. Different kinds of
ratio statement are selected for different types of situations. Mostly, the purpose for which
the ratios are used and the kind of the data available determine the nature of analysis. In
general, the following basis of classification is in vogue.

(a) Traditional classification or classification according to the statements from which

ratios are derived:

A basis of classification of ratios which readily suggests itself is according to the statement
to which the determinants of a ratio belong. From this angle, ratios are classified as thus:

(1) Balance Sheet Ratios: these ratios are also called financial ratios. They deal with the
relationship between two items, or group of item, which are together in the balance sheet,
example current ratio, liquid ratio, proprietary ratio, fixed assets ratio, capital gearing ratio,
and debt equity ratio.

(2) Profit & Loss Account Ratios: these ratios are also called operating ratios. The items
used for the calculation of these ratios are usually taken out from the profit and loss
statement. Example: operating ratio, expensive ratio, net profit ratio, gross profit ratio, stock
turnover ratio.

(3) Inter-statement ratios or combined ratios: the information required for the compilation
of these ratios is normally drawn from both the balance sheet, and profit & loss account.
Example : Return on capital employed, return on proprietors‟ funds or share holders‟

50
investment, and return on total investment, debtors Turnover ratio, creditor‟s turnover ratio,
fixed assets turnover ratio, working capital turnover ratio.

(b) Classification according to tests satisfied or functional classification:-

Robert N. Anthony suggested that ratios may be grouped the basis of certain tests which
satisfy needs of the parties having financial interest inventory the business concern. These
tests are:

Test of liquidity

Test of profitability

Market tests

(c) Classification from the point of view of financial management or classification

according to nature:

This standard of classification envisages the organization of accounting ratios into four
fundamental types which are as follows;

(1) LIQUIDITY RATIOS

Liquidity refers to the ability of the firm to meet its obligations inventory the short-run,
usually one year. Liquidity ratios are generally based on the relationship between current
assets and current liabilities (the sources for meeting short-term obligations). Example:
Current ratio, Acid test ratio.

(2) LEVERAGE RATIOS

Capital structure ratio

Earnings ratio

Dividend ratio

Financial leverage refers to the use of debt finance. While debt capital is analysis cheaper
source of finance, it is analysis riskier source of finance. Leverage ratios helps inventory
assessing the risk arising from the use of debt capital. They are also known as capital
structure ratios. Example: Debt-to-equity ratio, fixed assets to net work, interest coverage
ratio.

(3) ACTIVITY RATIOS

They are also called turnover ratios or asset management ratios. They measures how
efficiently the assets are employed by the firm. These ratios are based on the relationship

51
between the level of activity and the level of various assets. Example: Fixed assets turnover,
Stock turnover, Debtors turnover, Creditors turnover, Total assets turnover ratio.

These ratios would also indicate the profitability position of the business.

(4) PROFITABILITY RATIOS

Profitability reflects the final result of business operations. There are two types of
profitability ratio.

Profit margin ratios

Rate of return ratios

A profit margin ratio shows the relationships between profit and sales. Rates of return reflect
the relationship between profit and investment.

(d) Classification According To Importance:

Some ratios when related to the main objective of the business purpose of analysis may be
more important than others. This basis classification has been recommended by the British
Institute of Management for inter-firm computations and the following types have been
suggested by the institute:

(i) Primary Ratios:

The primary motive of any commercial under taking is profit and therefore, ratios like profit-
to-sales, return on capital employed may be termed as primary ratios to such an undertaking.

(2) Secondary Ratios:

These ratios are mainly used to explain the primary ratios. They are also known as subsidiary
or supporting ratios. Taking the ratio of return on capital employed as the primary ratio, the
following ratios may be grouped as secondary ratios:

(a) Profit and Earning ratios

(b) Cost or expenses ratios

(c) Turnover ratios

(d) Capital and related ratios

52
 SHORT-TERM SOLVENCY OR LIQUIDITY RATIOS

Liquidity ratios play analysis key role in the analysis of the short-term financial position of
analysis business. Commercial banks and other short-term creditors are generally interested
in such an analysis. However, managements can employ these ratios to ascertain how
efficiently they utilize the working capital in the business. Shareholders and debenture-
holder and long-term creditors can use these ratios to assets the prospects of dividend and
interest payments. This type of ratios normally indicates the ability of the business to meet
the maturing or current debts, the efficiency of the management inventory utilizing the
working capital and the progress attained inventory the current financial position.

Description of Principal Ratios:-

1. Current Ratio

Current ratio may be defined as the ratio of current assets to current liabilities. It is also
known as working capital ratio or 2 to 1 ratio. Current ratio shows the relationship between
total current assets and total current liabilities. 76

Components

Current assets normally include cash in hand or at bank, marketable securities other short-
term high quality investment bills receivable, prepaid expenses, work-in-progress, sundry
debtors and inventories. While current liabilities are composed of sundry creditors, bills
payable, outstanding and accrued expenses, income tax payable.

Expressed as a formula, the current ratio is as follows:

Current Assets

Current Ratio = -----------------------

Current Liabilities
2017-18: Current Ratio = 3.34 : 1

2016-17: Current Ratio = 3.83 : 1

53
Explanation:

Coming toSJVN the current ratio is 20017-18 has decreasing in comparison year 2016-17.
The ratio of 2017-18 shows that the assets are 3.34times of current liabilities. Current Assets
should be one and half of current liabilities. According to SJVN report is improving. A low
current ratio indicates that the enterprise is short of funds for honoring its commitment and
this was lead to insolvency. On the other hand a very high current ratio indicates that the firm
has a very large amount of current assets Many times higher than that of current liabilities.

This is a situation of high liquidity and is indicative the existence of excessive current assets.

2. Acid Test Ratio or Liquid Ratio

Acid test Ratio or Liquid ratio, as it is sometimes called is concerned with the relationship
between liquid assets and liquid liabilities to supplement the information given by the current
ratio. In many lines of business a concern whose current assets consist largely of inventory
can very early become technically, if not actually; insolvent within analysis very short period
of time and this is the rationale of the term „Acid-Test Ratio‟ 78

Components:

Liquid Assets = Current Assets – Inventory.

Generally, this ratio is considered to be good if it is 1:1. It shows the relationship of quick
cash-yielding assets to current liabilities.

Expressed as a formula, the liquid ratio is as follows:

Quick Assets
Liquid Ratio = -----------------------
Current Liabilities

2017-18 Liquid Ratio : 3.10 : 1

2016-17 Liquid Ratio: 3.55 : 1

The quick ratio is decreasing over the period 2016-17 to 2017-18 . With the help of quick
ratio we analysis the inventory level. The quick ratio analysis gives better picture than the
current ratio towards the payment of current liabilities. It is used to test the short-term
liquidity of the firm in its correct form and represent good position.
54
 LONG-TERM SOLVENCY ANALYSIS
Bankers and other short-term creditors are most interested in the current debt-paying ability
of business, so the share holders and debenture holders are mainly concerned with the long-
term financial prospects. However, neither group may logically ignore the financial aspects
of primary interest to the other so that both these groups concern themselves with current and
prospective earnings. Some selected solvency ratios are discussed below:

Debt-Equity-Ratio

Debt-to-equity ratio relates all external liabilities to owners recorded claims. It is also known
as External-Internal Equity Ratio. It is determined to measure the firm’s obligations to
creditors in relation to the funds invested by the owners.

Components: The term external equities refers to total outside liabilities and internal
equities includes all claims of preference share holders and equity share holders such as
share capital and reserves and surplus. Outside liabilities include all debts, whether long-
term or short-term or in the form of mortgages, bills or debentures. But when used as
analysis long-term financial ratio, only term debts like debentures etc are to be considered.

In generally, Debt-to-equity ratio 2:1 is acceptable.

Debt 203534
Debt-Equity-Ratio = --------- = --------------- = 0.19:1
Equity 1069471

The ratio indicates the degree of protection provided to the lenders. The lower the ratio the
higher will be the degree of protection. As a general rule, this should not exceed 2:1. If the
debt equity ratio is more than that is shows a rather risky financial position from the long-
term point of view. This ratio shows favorable condition of SJVN.

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Proprietary Ratio

This is a variant of the debt-equity ratio. This ratio relates the share holders‟ funds to total
assets. It is calculated by dividing the share holder‟s funds by the total tangible assets. This
ratio indicates the long-term or future solvency position of the business. It is also known as
Equity to total assets ratio or Net Worth to total Assets ratio.

This ratio throws light on the general financial strength of the company. Higher the ratio, the
better it is for all concerned.

2017-18

Proprietary or Shareholder Funds

Proprietary Ratio = ------------------------------------------------

Total Assets or Total Equities

1069471

Proprietary ratio = --------- ---------------- = 0.74 or 74%

1436559

This ratio indicates the long term or future solvency position of the business. Analysis high
ratio shows that there is safety for creditors of all types. A ratio below 50% may be alarming
for the creditors since they may have to lose heavily in the event of company‟s liquidation
on account of heavy losses.

Ratio of Fixed Assets to Proprietors‟ funds:

This ratio establishes the relationship between fixed assets and shareholders funds. The
purpose of this ratio is to indicate the percentage of the ownersfunds invested in fixed assets.
Fixed Assets (after depreciation)
Fixed Assets to Proprietors‟ Fund = ------------------------------------------
Proprietor funds

56
 76389
Fixed Assets to Proprietors‟ Fund = ----------------= 0.07 or 7%
1069471

B. TEST OF PROFITABILITY

The main object of analysis business concern is to earn profit. In general terms, efficiency in
business is measured by profitability. Profit as compared to the capital employed indicates
profitability of the concern. If analysis concern goes on losing, its financial condition will
definitely be bad sooner or later. Profits enable analysis firm to improve its financial
strength; there, ratios based on profitability are termed “casual” ratios, indicating the causes
of the present or expected financial position. These ratios are designed to highlight overall
efficiency of analysis business concern. Thus, analysis measures of profitability are the
overall measure of efficiency.

(1) Gross Profit Ratio

This ratio shows the relationship of sales with the direct costs such as purchases,
manufacturing cost etc and thus is important.

Gross Profit
Gross Profit Ratio = ------------------- * 100
Net Sales

164837
Gross Profit Ratio = ------------------- * 100 = 73.91%
222997

Any fluctuation in this gross profit is the result of a change either in „sales‟ or the „cost of
goods sold‟ or both. Thus, this ratio shows the average margin on goods sold.

The gross profit is what is revealed by the trading account. It results from the difference
between not sales and cost of goods sold without taking into account expenses generally
charged to the profit and loss account.

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Operating Ratio: -

This ratio establishes the relationship between operating profit and sales and is calculated as
follows:

Operating Profit
Operating Profit Ratio = ----------------------- * 100
Net Sales

122488
Operating Profit Ratio = ----------------------- * 100 = 54.92%
222997

Where

Operating Profit = Net Profit + Non-Operating Expenses – Non Operating Income

OR

Gross Profit – Operating expenses

Operating ratio as follows:

Operating profit Ratio = 100 – Operating Ratio

Operating Profit margin is greater than 2017-18 and 20016-17. This ratio indicates the
portion remaining out of every rupee worth of sales after all operating costs and expenses,
have been met. Higher the ratio better it is.

Net Profit Ratio:

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We all know that gross profit is not the final profit- it is the net profit which is really
significant. Therefore, a ratio of net profit to sales (also called net margin) is worked out; but
in this case the profit considered is profit before interest. This is the ratio of net income or
profit after takes to net sales. Net Profit, as used here, is the balance of profit and loss
account which is arrived at after considered all non-operating income such as interest an
investment, dividend received etc… and non-operating expenses like loss on sale of
investments, provision for contingent liabilities, etc
Net Profit after tax
Net Profit Ratio = ------------------------- * 100
Net Sales
159727
Net Profit Ratio = ------------------------- * 100 = 71.26%
2222997

Net profit ratio is the profit after all expenses and income tax and is available to the owners.
So this ratio indicates that forever hundred rupees of sales. This ratio is profitable for the
company because it is increasing time to time.

OVERALL PROFITABILITY RATIO:

(i) Return On Capital Employed:

The prime objective of making investment in any business is to obtain satisfactory return on
capital invested. Hence, the return on capital employed is used as a measure of success of a
business in realizing this objective, otherwise known as return on investment this is the
overall profitability ratio. It indicates the percentage of return on the capital employed in the
business and it can be used to show the efficiency of the business as a whole.
Operating Profit
Return on Capital Employed = ----------------------- x 100
Capital Employed

122488
Return on Capital Employed = ----------------------- x 100 = 9.62%
1273029

This ratio is decreasing in comparison of last year which is not favorable position of the
Company and this ratio is helpful for making capital budgeting decisions. .

Return on Shareholders’ Fund

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It is the ratio of net profit to shareholders‟ investment. It is also called „Return on
Proprietors‟ Funds‟, or Capital Employed. This ratio establishes the profitability from the
shareholders‟ point of view

122488
Return on Shares holder‟s Fund = ---------------------------------- * 100 = 31..16
392980

This ratio is almost half in comparison of last year. The ratio of net profit to share holders
fund shows the decrease to which profitability objective is being loose. Higher the ratio, the
better it is.

ACTIVITY (TURNOVER OR PERFORMANCE) RATIOS

Profit depends on the rate of turnover and the net margin. The importance of good turnover
cannot be over-emphasized. Turnover ratios judge how well the facilities at the disposal of
the concern are being used. In other words, these ratios measure the effectiveness with which
analysis concern uses resources at its disposal. The result is expressed in integers rather than
as a percentage. These ratios are usually calculated on the basis of sales or cost of sales.
Turnover ratios for each type of assets should be calculated separately. Higher the turnover
ratio, better the use of capital or resources; of course, higher the turnover, the better the
profitability ratio. The following are the import activity (turnover or performance) ratios.

Stock Turnover Ratio or Inventory Turnover Ratio:

This ratio establishes relationship between the cost of goods sold during a given period and
the average amount of inventory carried during that period. It indicates whether stock has
been efficiently used or not, the purpose being to checkup whether only the required
minimum has been lock up in stocks. It is usually considered better to work out the turnover
against cost of sales since sales include an element of profit, where as stock is usually at cost.
Cost of Goods Sold
Stock Turnover Ratio = ---------------------------- * 100
Average inventory at Cost
Where,

Cost of Goods Sold = Opening Stock + Purchases + Manufacturing Exp. - Closing

Stock

OR

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Cost of Goods Sold = Sales – Gross Profit

Average Stock = (Opening Stock + Closing Stock) / 2

Higher the ratio, the better it is since it indicates that more sales are being produced by a unit
of investment in stocks. Industries, in which stock turnover ratio is high usually work on a
comparatively low margin of profit. The ratio shows better performance if it increases, since
it means that the investment in stocks is leading

to higher sales. The reverse is also true. It should be noted that some people calculate this
ratio on the basis of sales.

Notes:

Coming to SJVn the data on purchase, sale and stock etc. and are not available from the
Balance Sheet and the other material provided to the investigators by company. Hence, it is
not possible to calculate the turnover ratio of the Company.

Debtors (Receivable) Turnover Ratio:

It indicates the number of times on the average the receivable is turnover in each year. The
higher the value of the ratio, the more is the efficient management of debtors. It measures the
accounts receivable (trade debtors and bills receivables) in terms of number of days of credit
sales during a particular period. Average debtors are calculated by dividing the sum of
debtors in the beginning and at the end by 2.

The ratio is measure of the collectability of accounts receivables and tells about low the
credit policy of the company is being enforce
Net Credit Sales
Debtors Turnover Ratio = -----------------------
Average account receivable (Drs + B/R)

Notes:
The data is not available for the calculation of debtor‟s turnover ratio. It shows more the
chances of bad debts efforts should be made to make the collection machinery efficient so
that the amount due from debtors may be realized in time

Creditors (or Account Payable) Turnover Ratio:

This ratio is calculated roughly as the debtor‟s turnover ratio. It indicates the velocity with
which the payments for credit purchase are made to creditors. The term account payable
includes Creditors and Bills payable. This ratio may be calculated as follows:

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 Credit Purchases
Creditors Turnover Ratio = -----------------------
Average Accounts Payable
(Cr + B/P)

high ratio indicates that creditors are not paid in time while a low ratio gives an idea that the
business is not taking full advantages of credit period allowed by the creditors. 9

Sometimes it is also required to calculate the average payment period (or average age of
payable or debt period enjoyed) to indicate the speed with payments for credit purchase are
made to creditors.

Notes:

Coming to KCL the data on purchase sale and stock etc… and are not available from the
Balance Sheet and the other material provided to the investigators by Company. Hence, it is
not possible to calculate the turnover ratio of the Company.

Ratio for Prospective Investors

Book Value per Share:

Book Value per Share means the value which is payable of liquidation of a company
Shareholder’ Funds
Book Value Per Share = -------------------------------
Number of Shares

392980
For A.Y. 2017-18 = 27.21
For A.Y. 2016-17=27.76

Earning Ratio ;

Earnings Per Share

Earnings per Share

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This helps in determining the market price of equity shares of the company and in estimating
the company‟s capacity to pay dividend to its equity Shareholder.

The Performance and prospects of the company are affected by earning Per Share. If earning
per share increases, there is possibility that the company may pay more dividend or issue
bonus shares. In short the market price of the share of a company will be affected by all these
factors. A comparison of earning per share of the company with another company will also
help in deciding whether the equity capital is being effectively used or not.
Net Profit after Tax & Preference Dividend
Earnings Per Share = ------------------------------------------------------------
Number of Equity Shares

For 2017-18 = 3.12

For 2016-17= 3.73

CONCLUSIONS

The study in the preceding pages reveals some important and interesting conclusions. The
theoretical portion reveals the conclusion of academic importance and when the Financial
Data of SJVN has been analyzed, the financial position of the company is brought to surface.
The overall financial position of the company is quite healthy and over the last years which
covered the period of study, the financial position has improved. The current Ratio, Acid Test
Ratio, Debt equity Ratio and Proprietary Ratio all have partially improved over the period
2016-17 to 2017-18 . The credit for this improvement goes to efficient management, Long
term vision of the management, team spirit among the employs of the company higher level
of orders in the hands of the company, better realization and better overall economic
condition of the economy with increased emphasis of government on expansion and
strengthening of economic infrastructure, it is expected that SJVN will grow lot, its financial
Ratio will improve further and so the financial strength of the company.

WORK DONE UNDER CORPORATE FINANCE DEPT. OF SJVN

63
The roles that I performed at SJVN relating to corporate finance were:

 To prepare Bank Reconciliation Statement of SJVN for the month Oct.2018 to

Dec.2018. During this process the accounts of SJVN were cross Checked with
Axis bank Account of SJVN at Kasumpati branch.

 Then I helped Mr. Sitendar Singh (A.G.M) in preparing his case file for SJVN’s case
in Appellate Tribunal Chandigarh.. During this time we have to compile various
documents which were needed as evidence in Appellate Tribunal during the court
hearing.

 To Update the Information of various employee about their Salary and Incentives for
the month Feb. 2019.

 To prepare voucher for the sales and purchase of goods for daily use by the
organization using Accounting software IFS by ERP.

 To clear medial and employee related bill for the organization.

 To perform accounting of various taxes like GST and TDS on IFS.

 And Lastly helping Employees filling their Income Tax Returns.

REFERENCES

www.policybazaar.com

www.financialexpress.com

www.investopedia.com

www.quora.com

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archive.india.gov.in

www.business-standard.com.

www.emis.com

www.sjvn.nic.in

www.cptcindia.com

Book Consulted: Financial Management By I.M. Pandey

And Annual report of SJVN

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