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My Final Project On Cash Management
My Final Project On Cash Management
My Final Project On Cash Management
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1.1 INTRODUCTION
Cash is the important current asset for the operations of the business. Cash is
the basic input needed to keep the business running on a continuous basis; it is also
the ultimate output expected to be realized by selling the service or product
manufactured by the firm. The firm should keep sufficient cash, neither more nor
less. Cash shortage will disrupt the firm’s manufacturing operations while excessive
cash will simply remain idle, without contributing anything towards the firm’s
profitability. Thus, a major function of the financial manager is to maintain a sound
cash position.
Cash is the money which a firm can disburse immediately without any
restriction. The term cash includes coins, currency and cheques held by the firm, and
balances in its bank accounts. Sometimes near-cash items, such as marketable
securities or bank times deposits, are also included in cash. The basic characteristic of
near-cash assets is that they can readily be converted into cash. Generally, when a
firm has excess cash, it invests it in marketable securities. This kind of investment
contributes some profit to the firm.
primarily to larger business customers. It may be used to describe all bank accounts
often used to describe specific services such as cash concentration, zero balance
The following is a list of services generally offered by banks and utilized by larger
businesses and corporations:
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therefore what the company's true balance is. To address this, banks have
developed a system which allows companies to upload a list of all the checks
that they issue on a daily basis, so that at the end of the month the bank
statement will show not only which checks have cleared, but also which have
not. More recently, banks have used this system to prevent checks from being
fraudulently cashed if they are not on the list, a process known as positive pay.
more advanced than the one available to consumers. This enables managers to
send wires and access other cash management features normally not found on
Armored Car Services: Large retailers who collect a great deal of cash may
have the bank pick this cash up via an armored car company, instead of asking
electronic system used to transfer funds between banks. Companies use this to
pay others, especially employees (this is how direct deposit works). Certain
companies also use it to collect funds from customers (this is generally how
advocacy groups, because under this system banks assume that the company
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compilations of banking activity may include balances in foreign currencies,
well as 'float' (e.g., checks in the process of collection). Finally, they offer
deposits, checks, and wire transfers in and out, ACH (automated clearinghouse
areas where their primary bank does not have branches. Therefore, they open
bank accounts at various local banks in the area. To prevent funds in these
accounts from being idle and not earning sufficient interest, many of these
companies have an agreement set with their primary bank, whereby their
primary bank uses the Automated Clearing House to electronically "pull" the
number of payments via checks in the mail have the bank set up a post office
box for them, open their mail, and deposit any checks found. This is referred
to as a "lockbox" service.
shares its check register of all written checks with the bank. The bank
therefore will only pay checks listed in that register, with exactly the same
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Sweep Accounts: are typically offered by the cash management division of a
bank. Under this system, excess funds from a company's bank accounts are
automatically moved into a money market mutual fund overnight, and then
moved back the next morning. This allows them to earn interest overnight.
confused if all those stores are depositing into a single bank account.
stores without seeking to view images of those deposits. To help correct this
problem, banks developed a system where each store is given their own bank
account, but all the money deposited into the individual store accounts are
automatically moved or swept into the company's main bank account. This
allows the company to look at individual statements for each store. U.S. banks
are almost all converting their systems so that companies can tell which store
made a particular deposit, even if these deposits are all deposited into a single
cash at a cash office. Bank wire transfers are often the most expedient method
accordance with the instructions given. The message also includes settlement
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instructions. The actual wire transfer itself is virtually instantaneous, requiring
Cash Management Services. The bank provides a daily report, typically early
in the day, that provides the amount of disbursements that will be charged to
and customer is able to delay the payment due to increased float time.
In the past, other services have been offered the usefulness of which has diminished
with the rise of the Internet. For example, companies could have daily faxes of their
Cash management aims at evolving strategies for dealing with various facets of cash
generation, efficient utilization and effective conversation of its cash resources. Cash
flow is a circle. The quantum and speed of the flow can be regulated through prudent
financial planning facilitating the running of business with the minimum cash balance.
This can be achieved by making a proper analysis of operative cash flow cycle along
Cash Forecasting
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Cash forecasting is backbone of cash planning. It forewarns a business
regulate further cash flow movements. Due to lack of cash planning results in
decelerating cash payments so as to exploit its scarce cash resources to the maximum.
There are techniques in the cash management which a business to achieve this
objective.
Liquidity Analysis:
does the autopsies of the businesses that failed, he would find that the major reason
for the failure was their inability to remain liquid. Liquidity has an intimate
level of liquidity.
Due to non-synchronization of ash inflows and cash outflows the surplus cash
may arise at certain points of time. If this cash surplus is deployed judiciously cash
management will itself become a profit centre. However, much depends on the
quantum of cash surplus and acceptability of market for its short-term investments.
Economical Borrowings
emergence of deficits at various points of time. A business has to raise funds to the
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extent and for the period of deficits. The raising of funds at minimum cost is one of
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Purpose of Cash Management
1. To eliminate idle cash balances. Every dollar held as cash rather than used to
augment revenues or decrease expenditures represents a lost opportunity. Funds that
are not needed to cover expected transactions can be used to buy back outstanding
debt (and cease a flow of funds out of the Treasury for interest payments) or can be
invested to generate a flow of funds into the Treasury’s account. Minimizing idle cash
balances requires accurate information about expected receipts and likely
disbursements.
2. To deposit collections timely. Having funds in-hand is better than having accounts
receivable. The cash is easier to convert immediately into value or goods. A
receivable, an item to be converted in the future, often is subject to a transaction delay
or a depreciation of value. Once funds are due to the Government, they should be
converted to cash-in-hand immediately and deposited in the Treasury's account as
soon as possible.
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1.2 INDUSTRY PROFILE
The electricity sector in India had an installed capacity of 223.625 GW as of
April 2013 the world's fifth largest. Captive power plants generate an additional
34.444 GW. Non Renewable Power Plants constitute 87.55% of the installed capacity
and 12.45% of Renewable Capacity.
In terms of fuel, coal-fired plants account for 57% of India's installed
electricity capacity, compared to South Africa's 92%; China's 77%; and Australia's
76%. After coal, renewal hydropower accounts for 19%, renewable energy for 12%
and natural gas for about 9%. As of January 2012, one report found the per capita
total consumption in India to be 778 kWh.
The electricity sector in India is predominantly controlled by the Government
of India's public sector undertakings (PSUs). Major PSUs involved in the generation
of electricity, several state-level corporations, such as Maharashtra State Electricity
Board (MSEB) are also involved in the generation of electricity. The interstate
distribution is managed by the state electricity board (SEB) and private companies .In
2010, the five largest power companies in India, by installed capacity, in decreasing
order, were the state-owned NTPC, state-owned NHPC, followed by three privately
owned companies: Tata Power, Reliance Power and Adani Power. The PowerGrid
Corporation of India is responsible for the inter-state transmission of electricity and
the development of national grid.
Generation
In India's effort to add electricity generation capacity over 2009–2011, both
central government and state government owned power companies have repeatedly
failed to add the capacity targets because of issues with procurement of equipment
and poor project management. Private companies have delivered better results.
Thermal Power
Installed thermal power capacity
The installed capacity of Thermal Power in India, as of 31 October 2012, was
140206.18 MW which is 66.99% of total installed capacity.
Current installed base of Coal Based Thermal Power is 120,103.38 MW which
comes to 57.38% of total installed base.
Current installed base of Gas Based Thermal Power is 18,903.05 MW which is
9.03% of total installed capacity.
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Current installed base of Oil Based Thermal Power is 1,199.75 MW which is
0.57% of total installed capacity.
The state of Maharashtra is the largest producer of thermal power in the country.
Hydro power
India is one of the pioneering countries in establishing hydro-electric
power plants. The power plants at Darjeeling and Shimsha (Shivanasamudra) were
established in 1898 and 1902 respectively and are among the first in Asia.
The present installed capacity as of 31 October 2012 is approximately 39,291.40 MW
which is 18.77% of total electricity generation in India. The public sector has a
predominant share of 97% in this sector. .
Nuclear power
As of 2011, India had 4.8 GW of installed electricity generation capacity using
nuclear fuels. India's Nuclear plants generated 32455 million units or 3.75% of total
electricity produced in India. India's share of nuclear power plant generation capacity
is just 1.2% of worldwide nuclear power production capacity, making it the 15th
largest nuclear power producer.
Renewable energy
Renewable energy in India is a sector that is still in its infancy.
As of December 2011, India had an installed capacity of about 22.4 GW of renewal
technologies-based electricity, about 12% of its total. Renewable energy projects in
India are regulated and championed by the central government's Ministry of New and
Renewable Energy
Transmission
Transmission of electricity is defined as bulk transfer of power over a long
distance at high voltage, generally of 132kV and above. In India bulk transmission
has increased from 3,708ckm in 1950 to more than 165,000ckm today (as stated by
Power Grid Corporation of India). The entire country has been divided into five
regions for transmission systems, namely, Northern Region, North Eastern Region,
Eastern Region, Southern Region and Western Region. The Interconnected
transmission system within each region is also called the regional grid.
While the predominant technology for electricity transmission and distribution has
been Alternating Current (AC) technology, High Voltage Direct Current (HVDC)
technology has also been used for interconnection of all regional grids across the
country and for bulk transmission of power over long distances.
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Distribution
Apart from an extensive transmission system network has developed to
transmit the power from generating station to the grid substations, a vast network of
sub transmission in distribution system has also come up for utilization of the power
by the ultimate consumers. As the T&D loss was not able to capture all the losses in
the net work, concept of Aggregate Technical and Commercial (AT&C) loss was
introduced. AT&C loss captures technical as well as commercial losses in the network
and is a true indicator of total losses in the system. High technical losses in the system
are primarily due to inadequate investments over the years for system improvement
works, which has resulted in unplanned extensions of the distribution lines,
overloading of the system elements like transformers and conductors, and lack of
adequate reactive power support.
The commercial losses are mainly due to low metering efficiency, theft &
pilferages. This may be eliminated by improving metering efficiency, proper energy
accounting & auditing and improved billing & collection efficiency. Fixing of
accountability of the personnel / feeder managers may help considerably in reduction
of AT&C loss. India's network losses exceeded 32% in 2010 including non-technical
losses, compared to world average of less than 15%. Both technical and non-technical
factors contribute to these losses, but quantifying their proportions is difficult. But the
Government pegs the national T&D losses at around 24% for the year 2011 & has set
a target of reducing it to 17.1% by 2017 & to 14.1% by 2022.
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India's central government and state governments jointly regulate electricity
sector in India. The Maharashtra Electricity Regulatory Commission (MERC) is the
State power sector regulator in Maharashtra. The Commission is recognized under
Section 82 of the Electricity Act, 2003, which assigns the following broad
responsibilities on the Commission:
Safeguarding interests of the consumers and protect the financial viability of
the electricity utilities
Tariff determination
Promotion of competition, economy and efficiency in activities of the
electricity industry
Ensuring optimum investments for efficient development of electricity sector
In addition to the responsibilities outlined above, there are certain points on which
special emphasis is laid. Those points are as follows:
1. Power procurement regulation and Intra-State Transmission System Development
To regulate electricity purchase and procurement process of distribution
licensees, including the price at which electricity shall be procured from the
generating companies or licensees, or from other sources.
Fixation of trading margin for intra-state electricity traders.
Facilitate intra-State transmission and wheeling of electricity.
2. Licensing
Issue licenses to persons seeking to act as transmission licensees, distribution
licensees, and electricity traders.
Monitor enforcement of license conditions
3. Promotion of non-conventional energy generation
Promote co-generation and generation of electricity from renewable sources of
energy
4. Setting ‘Performance of Standards’
Specify and enforce standards with respect to quality, continuity and reliability
of service by Licensees, including setting time limits for service connection requests,
handling and disposal of various complaints filed by the consumers with the utilities,
etc.
The Commission provides a forum where all stakeholders — utilities, citizens, or
consumers — can take their grievances to be resolved consultatively and amicably,
through a transparent process.
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The Commission conducts public hearings on Utilities’ ARR/APR submissions/Tariff
proposals and other issues of stakeholders’ concern. These hearings provide
consumers with an opportunity to voice their concerns as much as they provide a
forum for the utilities to present their case. Utilities are also directed by the
Commission to provide satisfactory responses to concerns expressed by the public
during these hearings.
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India is a booming trillion dollar economy; an overwhelmingly young country,
with more than 55 per cent of its population below the age of 30. One of the fastest
growing GDPs in the world, complemented by the energy, dynamism ambition of its
youth, India is truly set to stake its rightful position on the global arena.
The Reliance Group strongly believes that it has a pivotal role to play in shaping the
destiny of our great nation. Through its various consumer-facing businesses, the
group provides a robust platform to every Indian to realize his potential and shape
his/her destiny through its state-of-the art products and services. A seven year old
group that ranks among India’s leading business houses, it has a dominant presence
across a wide array of high-growth consumer-facing businesses ranging from telecom
and financial services to infrastructure, power, entertainment and healthcare, touching
the life of almost every Indian.
Through different companies, the group positively influences the lives of over 241
million customers i.e. one in every 10 young and aspiring Indians – every single day
across 600000 villages and 24,000 towns, It enjoys the unparalleled trust, faith and
confidence of nearly 10 million shareholders, the largest such family in India, perhaps
even in the world! It is one of the largest employers in the country with a young,
highly-trained and motivated 110000 –strong workforce. At the Reliance Group, all
our efforts are focused towards two goals: building a great enterprise for its
stakeholders and a great future for our country.
Reliance Group Companies
Reliance Communication
Reliance Telecom
Reliance Communications Infrastructure
Reliance Globalcom
Reliance BPO
Reliance Infratel
Reliance Digital TV
Reliance Tech Service
Reliance Capital
Reliance Capital Asset Management
Reliance Life Insurance
Reliance Commercial Finance and Reliance Home Finance
Reliance Securities
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Reliance Money
Reliance General Insurance
Reliance Exchange Next
Indian Commodity Exchange
Reliance Spot Exchange
Reliance Equity Advisors
Reliance Assets Reconstruction
Reliance Venture Asset Management
Quant Capital
Reliance Infrastructure Ltd
Power
Engineering, Procurement and Construction (EPC)
Infrastructure
Reliance Power
Reliance Entertainment
Basic Information
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A key constituent of the Reliance Anil Dhirubhai Ambani Group, India’s third
largest business houses. Reliance Infrastructure Ltd is India’s foremost private sector
utility engaged in the generation, transmission and distribution of electricity. Reliance
Infrastructure Limited, a part of Reliance Group, is India's largest infrastructure
company with total revenues of about Rs. 28,270 core as on March 31, 2011.It ranks
among India’s top listed private companies on all major financial parameters
including assets, sates, and profit and market capitalization.
Reliance Infrastructure Limited is India’s leading utility company having presence
across the value chain of electricity business i.e. Generation, Transmission,
Distribution, EPC and Trading and also the largest infrastructure company by
developing projects in all high growth areas in infrastructure sector i.e. Roads,
Highways, Metro Rails, Airports and Specialty Real Estate.
Product
Reliance Infrastructure Ltd presence spans across three verticals:
• Engineering, Procurement and Construction
EPC offers a single point solution to the execution of power plants including project
engineering, procurement, construction & commissioning for its clients. The world of
tomorrow will feature abundant energy that will spark a million smiles and dreams.
Reliance Infrastructure Ltd EPC division is ushering this energy revolution with
power plant projects. Along with full service project advisory capabilities, Reliance
Infrastructure Ltd manages power plants on a turnkey basis and provides industry
specialist services such as fuel management advice and fiscal advice. The income of
the division was Rs 3609 crore (US$ 809 million) and order book position of over Rs
29,635 crore (US$ 6.6 billion) as on March 31, 2011.
• Energy
Reliance Infrastructure Ltd’s core competency in energy extends to generation,
transmission, distribution and trading. This comprehensive sphere of influence
extends Reliance Infrastructure Ltd’s vision of a highly developed India within
Reliance Infrastructure Ltd’s realms. Reliance Infrastructure Ltd distributes more than
36 billion units of electricity to 30 million consumers in Mumbai, Delhi, Orissa and
Goa across an area that spans 124300 sq. kms and generates 941 MW of electricity
from Reliance Infrastructure Ltd’s power stations. Reliance Infrastructure Ltd’s
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transmission division is developing 5 transmission projects, with total project outlay
of Rs 7,000 crore.
• Infrastructure
Reliance Infrastructure Ltd has a significant presence in the construction of roads,
metros, airports and real estate. Infrastructure is decidedly the most visible and
important form of development in a nation. Reliance Infrastructure Ltd signifies this
with its 11 road projects of 970 kms worth about Rs 12,000 crore. Reliance
Infrastructure Ltd is currently implementing 3 metro rail projects in Mumbai and
Delhi worth around Rs 16,000 crore (US$ 3.4 billion)
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To promote a work culture that fosters individual growth, team spirit and
creativity to overcome challenges and attain goals.
To encourage ideas, talent and value systems.
To uphold the guiding principles of trust, integrity and transparency in all
aspects of interactions and dealings.
Values
We believe that any business conduct can be ethical only when it rests on the nine
core values of Honesty, Integrity, Respect, Fairness, Purposefulness, Trust,
Responsibility, Citizenship and Caring. These values are not to be lost sight of by
anyone at RELIANCE INFRASTRUCTURE LIMITED under any circumstances
irrespective of the goals that are intended to be achieved. To us, means are as
important as the ends.
QUALITY POLICY
Reliance Energy Limited is committed to be amongst the most admired &
trusted integrated Electric Supply Utility Companies in the world.
Reliance Energy Limited shall deliver reliable and quality products and
services to all customers at competitive costs, with international standards of
customer care – thereby creating superior value for all stakeholders.
Reliance Energy Limited is committed to comply with requirements and
continually improve the effectiveness of the Quality Management System as
per ISO 9001:2000.
Reliance Energy Limited shall set new benchmarks in standards of corporate
performance and governance through the pursuit of operational /
environmental and financial excellence, responsible citizenship, and profitable
growth.
QUALITY OBJECTIVES
The quality objectives of Reliance Energy Limited are to:
To attain global best practices and become a world-class utility.
To provide uninterrupted, affordable, quality, reliable and clean power, to
millions of customers.
To achieve excellence in service, quality, reliability, safety and customer care.
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To earn the trust and confidence of all customers and stakeholders, exceeding
their expectations, and make the company a respected household name.
To work with vigour, dedication and innovation, with total customer
satisfaction as the ultimate goal.
To consistently achieve high growth with the highest levels of productivity.
To be a technology driven, efficient and financially sound organization.
To be a responsible corporate citizen nurturing human values and concern for
society, the environment and nation building.
To promote a work culture that fosters individual growth, team spirit and
creativity to overcome challenges and attain goals.
To encourage ideas, talent and value systems.
To uphold the guiding principles of trust, integrity and transparency in all
aspects of interactions and dealings.
Competitive Analysis
The Supreme Court’s judgment dated July 8, 2008 allows The Tata Power Company
to supply power to any and all consumers in retail in the entire city of Mumbai
(leaving only some central suburbs, being served presently by MSEDCL). This
development has caused competition to emerge in retail supply in the license areas of
BEST and Reliance Infrastructure Ltd. The issue of competition materially impacts
the Business forecasts of Reliance Infrastructure Ltd over the forthcoming MYT
Period.
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4 OBJECTIVES OF THE STUDY
Primary Objective:
To analyze the cash management of Reliance Infrastructure Ltd.
Secondary Objective:
• To find out the liquidity position of the concern through ratio analysis.
• To study the growth of Reliance Infrastructure Ltd in terms of cash flow
statement.
• To analyze the cash collection of Reliance Infrastructure Ltd.
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4 RESEARCH METHODOLOGY
4.1 RESEARCH
Research is a process in which the researchers wish to find out the end result for a
given problem and thus the solution helps in future course of action. The research has
been defined as “A careful investigation or enquiry especially through search for new
facts in branch of knowledge”
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5 Data Analysis and Interpretation
5.1 Cash Flow Analysis
In 2009 the cash flow from operating activities reached Rs.892.64 crores
In 2010 cash flow from operating activities was decrease by Rs.6.10.44 crore as there
was increase in inventories, debtors and advance to creditors.
In 2012 again there were huge stockings of inventories, and advance increase in trade
and others payable, made operating cash flow negative to Rs.446.12 crores.
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Cash Flow
2000
1500
1000
cash flow
500
Cash Flow
-500
-1000
2009 2010 2011 2012
Year
Note: All figures in the above paragraph are rounded off to nearest five thousand
crore.
The investing out flow of the company is to be increased for year after year.
In 2010 it restricted its investment, the net cash flow from investing activity was
positive of Rs. 512.35 crores.
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In 2011 it further purchased Fixed Assets, which increased its investment to
Rs.2449.58 crores, by issue of shares, and taking Term Loans.
In 2012 it further purchased Fixes Assets, by taking Term Loans which raised its
investment to Rs.3097.45 crores.
Cash Flow
1000
-1000
cash flow
Cash Flow
-2000
-3000
-4000
2009 2010 2011 2012
Year
Note: All Figure in this chart represent out flow of cash. All figures in the above
paragraph are rounded off to nearest thousand crore.
In 2010 as unsecured loans were repaid it reduced the inflow of financing activity to
Rs.1078.98 crores.
In 2012 company raised additional capital, which raised its inflow to Rs.3858.58
crores.
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Cash Flow
5000
4000
3000
cash flow
2000
1000 Cash Flow
0
-1000
-2000
2009 2010 2011 2012
Year
Note: All Figure in this chart represent in-flow of cash. All figures in the above
paragraph are rounded off to nearest thousand.
The cash inflow of the company is to be increased for year after year.
26
Cash Flow
800
600
cash flow
400
Cash Flow
200
0
2009 2010 2011 2012
Year
Note: All figures in this chart represent net in-flow of cash. All figures in the above
paragraph are rounded off to nearest two hundred crore.
As there is constant increase in scale of production, the cash flow from operating
activity is changing from one year to another. As more stock is accumulated for
increasing production, more advance in made to suppliers; the more negative is the
cash flow from operating activities in that year.
The company is able to finance it operations by getting finance from various financial
institutions, by way of subsidy from government, and by issuing shares of the
company. The company is able to arrange finance from different sources as and when
required at good terms.
There in constantly an upward trend in the net cash flow over the years, in spite of
huge negative flow in operating activities in some of the years. It indicates than the
company is able to cope up with different situations in a good manner in the proper
span of time.
This shows its ability to grow fruitfully in the coming future with proper decisions at
the required time.
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5.2 RATIO ANALYSIS
Fixed Assets
Increase/
Decrease
YEAR RATIO
2009 – 10 2.98:1
. Inference:
The level of Current Assets can be measured by using this Current Asset to
Fixed Assets Ratio. The level has been fluctuating every year. The level of the
current assets can be measured by relating current assets to fixed assets.
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CA/FA is higher. It implies greater liquidity and lower risk.
2.8
2.6
2.4
09-'10 10-'11 11-'12
Total Assets
Increase/
Decrease
YEAR RATIO
2009 - 10 0.62:1
Inference:
The Table shows the Current Assets to Total Assets ratio of the company,
which registered a fluctuating trend throughout the study period. This ratio
varied from 0.62 to 0.81 times during the study. The Current Assets to Total
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Assets Ratio implies that RELIANCE INFRASTRUCTURE LTD is
maintaining a considerable level of Current Assets in proportion to Total
Assets. The relative liquidity of the firm’s assets structure is measured by
current to fixed assets or current asset to total asset ratio. The greater this ratio,
the less risky as well as the less profitable will be the firm and vice versa.
0.8
0.6
C urrent Assets to Total
A ssets Ratio
0.4
0.2
0
09-'10 10-'11 11-'12
Current Assets
Increase/
Decrease
YEAR RATIO
2009 – 10 0.02:1
2010 – 11 0.02:1
Inference:
30
From the table it is known that the Inventories to Current Assets Ratio also
register a fluctuating trend during the entire study period.
The average ratio is 0.02 times and thus it is found that the investment in
inventories (being one of the important Current Assets) is kept at the considerable
level.
0.02
0.02
0.02
0.01
0.01
Inventories to Current
0.01
Assets Ratio
0.01
0.01
0
0
0
09-'10 10-'11 11-'12
Current Assets
Increase/
Decrease
YEAR RATIO
2009 – 10 0.28:1
Inference:
31
From the table the Sundry Debtors to Current Assets Ratio shows a fluctuating
trend throughout the study period from 2009-10 to 2011-12. Hence it implies the
credit policy followed by RELIANCE INFRASTRUCTURE LTD is aggressive.
0.3
0.25
0.2
0.1
0.05
0
09-'10 10-'11 11-'12
Current Assets
Increase/
Decrease
YEAR RATIO
2009 – 10 0.56:1
Inference:
From the table it is noted that the Loans and Advances to Current Assets Ratio
have registered a fluctuating trend.
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It implies that half positions of the Current Assets are kept in for Loans and
Advances; thereby it is found that RELIANCE INFRASTRUCTURE LTD value of
Loans and Advances is considerable.
0.56
0.55
0.54
0.52
0.51
0.5
09-'10 10-'11 11-'12
Current Assets
Increase/
Decrease
YEAR RATIO
2009 – 10 0.03:1
Inference:
The table shows the details of Cash to Current Assets Ratio and registered a
fluctuating trend throughout the study period from 2009-10 to 2011-12.
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0.03
0.02
0.01
0
09-'10 10-'11 11-'12
Working Capital
Increase/
Decrease
YEAR RATIO
2009 – 10 0.06:1
Inference:
The Cash to Working Capital Ratio registered a fluctuating trend during the
study period this is noted from the table. It was 0.06 times in 2009-10, which sharply
increased to 0.16 times in the next year and later for the following years it is
fluctuating.
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Working Capital in RELIANCE INFRASTRUCTURE LTD can be said as aggressive
policy.
0.2
0.15
0.05
0
09-'10 10-'11 11-'12
Sales
Increase /
Decrease
YEAR RATIO
2009 – 10 0.03:1
2011 – 12 0.04:1
Inference:
This is one of the important ratios of controlling cash. A study of cash to sales
ratio will provide a deep insight into the cash balances held in the concerns.
Evident from the table shows Cash to Sales registered a maintaining trend
throughout the study period. The average cash to sales ratio is 0.04 times and which
indicates that only 0.4% of sales has been maintained as cash with the business.
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0.04
0.03
0.01
0
09-'10 10-'11 11-'12
Current liabilities
Cash Ratio
Increase /
Decrease
YEAR RATIO
2009 – 10 0.05:1
Inference:
From the table it is noted that the cash position of the RELIANCE
INFRASTRUCTURE LTD is satisfactory.
It is found that the cash required to meet out the current liabilities is
maintained at a normal level. Hence, it shows that RELIANCE INFRASTRUCURE
LTD follows an average policy.
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0.05
0.05
0.04
0.04
0.03
0.03 Cash Ratio
0.02
0.02
0.01
0.01
0
09-'10 10-'11 11-'12
Current liabilities
Current Ratio
Increase /
Decrease
YEAR RATIO
2009 – 10 1.81: 1
Inference:
This ratio is an indicator of the firm’s commitment to meet its short – term
liabilities.
From the table it is clear that the Current Ratio of RELIANCE
INFRASTRUCTURE LTD has been fluctuating from the starting of the study period,
later for last year it has been decreasing; hence the Current Ratio is quite satisfactory.
Thus the Current Ratio shows that the company has sufficient funds to meet its
short-term obligations.
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2
1.5
1 Current Ratio
0.5
0
09-'10 10-'11 11-'12
Current liabilities
Liquidity Ratio
Increase /
Inference: Decrease
YEAR RATIO
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2
1.5
1 Liquidity Ratio
0.5
0
09-'10 10-'11 11-'12
Working Capital
Increase /
Decrease
YEAR RATIO
2009 – 10 1.81: 1
Inference:
This ratio indicates whether Working Capital has been effectively utilized in
making sales or not.
From the table it is noted that Working Capital had some fluctuation in the
middle of the study period, yet the company was able to increase it in the later years.
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4.5
3.5
2.5
Working Capital turnover
2 Ratio
1.5
0.5
0
09-'10 10-'11 11-'12
Average Stock
Inventories Turnover
2009 – 10 59.45
Inference:
From the table it is found that the Inventory turnover Ratio of RELIANCE
INFRASTRUCTURE LTD had some fluctuations in the starting of the study period
then it had a growth in it.
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59.5
59
58.5
57.5
57
09-'10 10-'11 11-'12
Sundry Debtors
Debtors Turnover
Increase /
Decrease
YEAR RATIO
2009 – 10 2.93: 1
Inference:
This is one of the techniques employed by the company with regard to the
collection of the receivables through effective management of collection policy with
the help of factoring services. Higher ratio is favorable.
From the table it shows that the Debtors’ turnover Ratio had satisfactory
increase in the starting of the study period. However, in middle of the study period it
had slight fluctuations, the company was able to raise it in the next year. This ratio is
important for calculation of debtor’s collection period.
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4
0
09-'10 10-'11 11-'12
Increase /
Decrease
YEAR RATIO
2009 – 10 124.52
Inference:
This ratio indicates the extent to which the debts have been collected in time.
It gives the average debt collection period.
RELIANCE INFRASTRUCTURE LTD use this ratio to find out whether their
borrowers are paying on time. From the table it is found that throughout the study
period the collection period is fluctuating and is within the average. A low ratio may
be an indication of long credit period, or slow realization from debtors.
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200
150
50
0
09-'10 10-'11 11-'12
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Avenues
Drop Boxes 5.17 5.09 4.84 4.15 3.65
Internet 11.98 10.83 11.04 10.33 11.78
REL Counter 66.03 66.88 66.25 67.09 67.16
Bank Branches 14.48 14.36 14.17 13.64 12.56
Cheque By Mail - - - - -
ECS 1.57 1.72 1.68 1.54 1.53
VDS 0.01 0.01 0.01 0.01 0.01
Other Outlets 0.76 1.10 2.01 3.25 3.31
Total 100.00 100.00 100.00 100.00 100.00
Note: Above fig. in percentage.
Inference:
Reliance’s own collection counter where they collect cheques and cash
generates around 65% to 70% combined all collection over a period of time.
So we can see that Reliance own collection centre is the most important avenues to
collection. It also reveals efficiency of reliance collection department.
Internet usage has remain the same for every year, there has no effect of
change in total receipt of collection and also consumer have started using different
mode which are more convenient to them like drop boxes facilities and easy bills
outlets . The usage of Drop boxes and cheque by mail for making bill payment has
decreases significantly over a period of time with decreases in total receipt of
collection, Drop boxes cheque collections has decreased from 5.17% in 2009-10 to
3.65% in 2008-2009.
We can see that usage of easy bill outlets, pay point and suvidha outlets has
increased from 0.76% in 2009 -2010 to 3.31% in 2012-13.
The total bills collected during 2011-2012 and 2012-13 were 22,948,502 and
22,515,029 respectively.
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Bank Branches 49450 9.90 47768 9.11
Cheques by Mail 20 0.00 16 0.00
ECS 8523 1.71 9083 1.73
VDS 141 0.03 168 0.03
Easy Bill outlets 3047 0.61 1751 0.33
Pay Point 1855 0.37 3084 0.59
Suvidhaa Outlets 1816 0.36 2247 0.43
Total 499254 100.00 524130 100.00
Inference:
Reliance infrastructure Ltd collects an amount of Rs. 499254 and Rs. 524130
for the year 2011-2012 and 2012-2013 respectively. There has about 73% to 76% of
collection through reliance own counter out of total collection.
Internet and other avenues usage has increased year by year. These represent
consumer have started using different mode which are more convenient to them.
Collection
9.90 Mode Wise
7.92 2012
25.70
48.43
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Collection mode wise 2013
9.28
9.11
0.59 0.43
1.73 0.03 0.33 4.46
0.00
27.01
47.02
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6. FINDINGS
We have seen in spite of deficit in operating cash flow, the company is able
keep a growing trend to its net in-flow of cash which in of good sign. The
financial managers have made good decisions as and when required to
maintain a proper balance in different financial matters.
The cash inflow and outflow of cash flow statement have a cash balance will
be increased 2 times when compared to last year balance.
If this increasing profit and cash in-flow trends continue over time then the
company can fulfill its vision well ahead of time.
There are various projects still under process which result in low debt
collection ratio of the company
There has been decreased in total receipt in collection since the year 2009 due
to open access policy which was allowed by MERC from the year 2009. The
difference between every year show customer change over to other
There has been increased in total amount of collection since the last year due
to cross subsidy charges levied on the change over consumer.
There has more focus on bill collection therefore there are various kinds of
avenues provided by Reliance Infrastructure Ltd. For the consumer for
consumption bill collection.
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7. CONCLUSION
This project was very useful for the judgment of the financial status of
the company from the management point of view. This evaluation proved a great deal
to the management to make a decision on the regulation of the funds to increase the
sales and bring profit to the company.
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8. LIMITATIONS OF THE STUDY
One of the major limitations of this project is that I couldn’t get the separate
financial data of energy division of Reliance Infrastructure Ltd.
The study is limited to eight weeks therefore I couldn’t learn much detail
about the project.
I couldn’t get the data regarding expenditure as real values are confidential.
The study does not take into account the inflation.
The study takes into account only the quantitative data and the
qualitative aspects were not taken into account
Due to the various department of Finance Department, it is difficult
to gather information.
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BIBILIOGRAPHY
BOOKS:
WEBSITE:
www.rinfra.com
www.google.com
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