DECLARATION

I, Ms Ipsita Panigrahi Bearing university registra on no 2206258146 (2022-24 batch), hereby declare
that the project report tled A STUDY ON WORKING CAPITAL MANAGEMENT OF OPTCL is based on
my internship at ODISHA POWER TRANSMISSION CORPORATION LIMITED during the period 01.09.23
to 30.09.23 and This is an original work done by me under the supervision of Mr. Avinash Kotni
(Corporate guide) and Mr.Chinmaya Ku Rout(Internal Guide). This report is being submi ed to Biju
Patnaik Ins tute of Informa on Technology and Management Studies, Bhubaneswar, affiliated to Biju
Patnaik University of Technology, Odisha, in par al fulfillment of the requirements for the award of
the degree of Master of Business Administra on. This project report has not been submi ed to any
other ins tute/university for the award of any degree or diploma.

Date:

Place: Signature

1
 CERTIFICATE OF INTERNAL GUIDE

This is to cer fy Mr/Ms Ipsita panigrahi, bearing university registra on no 2206258146 of

2022-24 batch, has completed his/her summer internship at OPTCL from 1-09-2023 to 30-09-
2023 under the supervision of Mr.Chinmaya ku Rout and his submi ed this project report
under my guidance in par al fulfilment of the requirements for award of the degree of Master
of Business Administra on at Biju Patnaik Ins tute of Informa on Technology &
Management Studies,Bhubaneswar. To the best of my knowledge and belief, this project
report has been prepared by the student and has not been submi ed to any other ins tute
or university for the award of any degree or diploma.

Date: CHINMAYA KU ROUT

Place: ASSISTANT PROF. OF FINANCE

BIITM
BHUBANESWAR

2
 COMPANY CERTIFICATE

This is to cer fy that Ipsita panigrahi, a student of MBA from Biju Patnaik
Ins tute of Informa on Technology & Management Studies, has undergone
project study in Finance Department, OPTCL, Bhubaneswar from 1st september
2023 to 30th september 2023 under the guidance of Mr. Avinash kotni, Deputy
Manager(Finance). Miss ipsita panigrahi was assigned to the project" Working
Capital Management of OPTCL". She has completed the project sa sfactorily.

The cer ficate is being issued for academic purpose only.

Mr. Avinash kotni

Deputy Manager (Finance)
(OPTCL)

3
 ACKNOWLEDGEMENT

This project report bears the imprint of many people on it. I am very much thankful to Biju
Patnaik Ins tute of Informa on Technology & Management Studies, Bhubaneswar for the
successful comple on of my SIP report.
I would like to thank my project supervisor and guide Dr. Chinmaya ku. Rout professor, BIITM
for his invaluable guidance and assistance in preparing the project report and also contribu ng
a lot for accomplishment of this Project.
I am highly indebted Mr. Avinash Kotni, Deputy Manager(finance) at Odisha Power
Transmission Corpora on Limited, Bhubaneswar my corporate guide, who guided me during
the internship period and suggested many issues which has been taken care in my project
work.
I am also expressing my indebtedness to my parents and my friends who gave their full-fledged
co-opera on for the successful comple on of my project.

IPSITA PANIGRHI
2206258146

4
 PREFACE

It is a great opportunity for me to pursue my MBA in BIJU PATTNAIK INSTITUTE

OF INFORMATION TECHNLOGY & MANAGEMENT STUDIES. In the
accomplishment of Summer Internship Programme, I am submitting a report on "Working
Capital Management of OPTCL". Subject to the limitation of time, efforts and resources
every possible attempt has been made to study the matter deeply. The whole project has been
analysed and interpreted and the result was obtained. The purpose of this report is to give a
brief idea about what has been done in the summer training. This report comprises of various
things and knowledge I have got during my summer internship at Odisha Power Transmission
Corporation Limited.

5
 TABLE OF CONTENTS
Chapter 1
 Introduc on
 Importance of study
 Scope of the study
 Objec ves of the study
 Research Methodology
 Methods of the study
 Collec on of the data
 Selec on of topic
 Limita on of study

Chapter 2
 Company profile
 Vision
 Mission
 Objec ves of OPTCL
 SWOT Analysis
 Func onal areas of OPTCL
 Structure of OPTCL

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Chapter3

 Compe tor Analysis

 Customer Analysis

Chapter 4

 Working capital management (concept)

 Importance
 How it is calculated
 Approaches and principles of working capital
management

Chapter 5

 Data represen ng and interpreta on

 Data analysis & Actual work done

Chapter 6

 Findings
 Sugges on
 Conclusion

BIBLIOGRAPHY

7
 CHAPTER – 1
INTRODUCTION

8
1.INRODUCTION
Financial performance is a subjec ve measure of how well a firm can use assets from its
primary mode of business and generate revenues. The term is also used as a general measure
of a firm's overall financial health over a given period.
Analysts and investors use financial performance to compare similar firms across the same
industry or to compare industries or sectors in aggregate:
There are many ways to measure financial performance, but all measures should be taken in
aggregate. Line items such as revenue from opera ons, opera ng income, or cash flow from
opera on can be used, as well as total unit sales. Furthermore, the analyst or investors may
wish to look deep into financial statements and seek out margin growth rates or any declining
debt.
There are many stakeholders in a company, including trade creditors, bondholders, investors,
employees and management. Each group has its own interest in tracking the financial
performance of the company. Analysts learn about financial performance from data published
by company in form 10k, also known as the annual report. The purpose of the report is to
provide stakeholders with accurate and reliable financial statements that provide an overview
of the company's financial performance.
In addi on, company leaders audit and sign these statements and other disclosure
documents. In this way the 10k represents the most comprehensive source of informa on
made available to investors to annually. Included in the 10k are three financial statements:
the balance sheet, the income statement and the cash flow statements.

BALANCE SHEET
The balance sheet is a summary of the financial balance of an organisa on. This is a financial
statement of a company which includes assets, liabili es, equity capital, total debt, etc. at a
point of me. It provides an overview of how well the company manages its assets and
liabili es. Analysts can find informa on about long-term vs. short term debt on the balance
sheet. They can also find informa on about what kind of assets of the company owns and
what percentage of assets are financed with liabi es vs.stock holder’s equity.

INCOME STATEMENT
The income statement provides summery of opera on for the en re year . It starts with sales
and revenues and ends with net income .It shows the company’s profits or loss is determined
by taking all revenues and subtrac ng all expenses from both opera ng and non-opertaing
ac vites . Also reffered to as the profit and loss statement, the income statement provides the
gross profit margin, the cost of goods sold,opera ng profit margin,and net profit margin.It

9
also provides an overview of the number of shares outstanding ,as well as comparison against
performance of the present year.

CASH FLOW STATEMENT

The cash flow statement is a combina on of both the income statement and balancesheet
.For some analysts ,the cash flow statement is the most important financial statement because
it provides a reconcilia on between net income and cashflow .This is where analysts see how
much the company spent on stock repurchase, dividend and capital expenditure.It also
provides the soureces and use of cashflow from opera ons,inves ng and financing.

IMPORTANCE OFTHE STUDY

OPTCL is one of the largest power transmission organiza ons in the country, which plays the
role of transmission in the en re state of Odisha seeing the good opportunity to study
financial performance of OPTCL; it is rela vely important to take up internship assignment on
"EVALUATION OF FINANCIAL PERFORMANCE OF OPTCL". During the project work, it is being
analysed the financial posi on of the organisa on.
Financial performance in broader sense refers to the degree to which n financial objec ves
being or has accomplished and is an important aspect of finance risk management .It is the
process of measuring the results of a firm's policies and opera ons in monetary terms. It is
used to measure firm's overall financial health over a given period of me and can also be
used to compare similar industries or sectors in aggrega on.
Firms and interested groups such as managers, shareholders, creditors and tax authori es
look answer important ques ons like:

1. What is the financial posi on of the firm at a given point of me?

2. How is the financial performance of the firm over a given period of me?
These ques ons can be answered with the help of a financial analysis of a firm. Financial
analysis involves the use of financial statements. A financial statement is a collec on of data
that is organised according to logical and consistent accoun ng procedures. Its purpose is to
convey an understanding of some financial aspects of a business firm.
It may show a position of a period of time as in the case of a balance sheet, or may reveal a
series of activities over a given period of time, as in the form of an income statement. Thus, the
term financial statements' generally refers to two basic statements: the balance sheet and the
Income Statement.
The Balance sheet shows the financial position [condition] of the firm at a given point of time.
It provides a snapshot that may be regarded as static picture. "Balance sheet is a summary of

10
firm's financial position on a given date that shows Total assets = Total liabilities + Owner's
equity"
The Income Statement reflects the performance of the firm over a period of time. income
statement is a summary of the firm's business revenues and expenses over a specific period,
ending with net income or loss for the period. However, a financial statement does not reveal
all the information related to the financial operations of a firm, but they furnish some extremely
useful information, which highlights two factors profitability and financial soundness.

SCOPE OF THE STUDY

The study entitled " WORKING CAPITAL OF OPTCL" is to analyze the financial
performance of OPTCL for 5 years. The study is based on the financial position of the firm by
using Comparative statements. Financial statements help the management to analyze profit,
solvency, liquidity and efficiency etc. This analysis will give the exact picture of the company.
These studies will also help the management to take managerial decisions. These studies help
the management to understand the new possibilities. The Study helps us to conduct researches
in financial Decisions in Personal Life.

OBJECTIVES OF THE STUDY

Everything in life holds some kinds of objectives to be fulfilled. This study is not an exception
to it. The following are a few straight forward goals which I have tried to achieve in my project.
1. To evaluate the financial performance of the company by using ratios as a yardstick to
measure the efficiency of the company.
2. To understand the liquyidity, profitability and efficiency positions of the company during the
study.

RESEACH METHODOLOGY
This chapter contains the methodology adopted in collection and analysis of the data for the
study of financial performance of WORKING CAPITAL IN OPTCL". The scope of the study,
sources of data and limitations of the study. The chapter also discusses the techniques used for
analysis and interpretation of financial performance practices of WORKING CAPITAL IN
OPTCL, BBSR".
Research methodology is a systematic approach in management research to achieve pre-
defined objectives. It helps a researcher to guide during the course of research work. Rules and
techniques stated in research methodology save time and labour of the researcher as researcher
know how to proceed to conduct the study as per the objective.

11
METHOD OF THE STUDY
Information collected during my four weeks of study program at OPTCL from official
document, various sections of the organization and disquisition with the officers of various
departments. Some information's are collected directed through meet some information
available in official document such as: Newspaper, Annual report, Newsletter and any other
references.

COLLECTION OF DATA
The data for purpose of the study are collected only from the secondary sources of information.
The information, which is available on various publications like books, journal's annual general
reports, financial statement, records etc, is taken for the purpose of the study.

SELECTION OF THE TOPIC

The selection of the topic is a crucial factor in any research study. There should be newness
and it should give maximum scope to explore the ideas from different angles.
Financial performance is a subjective measure of how well a firm can use assets from its
primary mode of business and generate revenues. The term is also used as a general measure
of a firm's overall financial health over a given period.
Financial Performance in broader sense refers to the degree to which financial objectives being
or has been accomplished and is an important aspect of finance risk management. It is the
process of measuring the results of a firm's policies and operations in monetary terms. It is used
to measure firm's overall financial health over a given period of time and can also be used to
compare similar firms across the same industry or to compare similar firms across the same
industry or to compare industries or sectors in aggregation.
After due to consultation with the external guide/ internal guide, the topic was finalized and
titled as
"A STUDY ON WORKING CAPITAL IN OPTCL, BBSR

SELECTION OF LOCATION FOR THE STUDY:

The location for the study was selection as the CORPORATE OFFICE OF OPTCL,
Bhubaneswar.
RESEARCH DESIGN:"A Research design is the arrangement of conditions for collection and
analysis for data in a manner that aims to combine relevance to the research purpose with
economy in procedure". The research design followed to study the financial performance in

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ORISSA POWER TRANSMISSION CORPORATION LIMITED [OPTCL] is Descriptive and
Analytical Research Design.

LIMITATION OF STUDY
 Dependence on historical costs

 Intangible assets not recorded

 Based on specific time period

 Not always comparable across companies

 Subject to fraudulent

13
 CHAPTER -2
COMPANY PROFILE

14
COMPANY PROFILE
ODISHA POWER TRANSMISSION CORPORATION LIMITED. (OPTCL)Registered
Office: Janpath, Bhubaneswar – 751022
Phone: (0674)-2540051/2540243
ODISHA POWER TRANSMISSION CORPORATION LIMITED (OPTCL), One of the
largest Transmission Utility in the country was incorporated in March 2004 under the
Companies Act, 1956 as a company wholly owned by the Government of Orissa to undertake
the business of transmission and wheeling of electricity in the State.
Started commercial operation from 01.04.2005 only as a Transmission Licensee. (a deemed
Transmission Licensee under Section 14 of Electricity Act, 2003)
Notified as the State Transmission Utility (STU) by the State Govt. and discharges the State
Load Dispatch functions.

The registered office of the Company is situated at Bhubaneswar, the capital of the State of
Orissa. Its projects and field units are spread all over the State. OPTCL became fully
operational with effect from 9th June 2005 consequent upon issue of Orissa Electricity with
OPTCL. The Company has been designated as the State Transmission Utility in terms of
Section 39 of the Electricity Act, 2003. Presently the Company is carrying on intra state
transmission and Reform (Transfer of Transmission and Related Activities) Scheme, 2005
under the provisions of Electricity Act, 2003 and the Orissa Reforms Act, 1995 by the State
Government for transfer and vesting of transmission
related activities of GRIDCO wheeling of electricity under a license issued by the Orissa
Electricity Regulatory Commission.
The Company is also discharging the functions of State Load Dispatch Centre. The Company
owns Extra High Voltage Transmission system and operates about 9550.93ckt kemps of
transmission lines at 400 kV, 220 kV, 132 kV levels and 81 nos. of substations with
transformation capacity of MVA. The day-to- day affairs of the Company are managed by the
Managing Director assisted by whole-time Functional Directors as per the advice of the Board
of Directors constituted. They are inturn assisted by a team of dedicated and experienced
professionals in the various fields.
FORMATION OF GRIDCO-The GRIDCO limited was incorporated on 20th April 1995 under
the companies Act 1956 as a wholly owned Government of Odisha undertaking the company
obtained the certificate of commencement of business on 6th July 1995. GRIDCO carried on
the business of Transmission and bulk supply of electricity and other related activities under
an exclusive license issued by Odisha Electricity Regulatory Commission.
RESTRUCTURING OF GRIDCO AND FORMATION OF OPTCL GRIDCO has three
functioning:

15
• The transmission and bulk supply activities in the State of Odisha..
• Sale of energy outside the State of Odisha.
 The State load dispatch functions.
Keeping in view, the statutory requirement of the Electricity Act 2003 for separation of trading
and transmission functions into two separate entities. The State government on 27.03.2004
incorporated Odisha power transmission corporation (OPTCL) as a wholly owned undertaking
of the State Government to take over the transmission, STU and SLDC function of GRIDCO.

STRUCTURE OF ELECTRICITY SECTOR OF ODISHA

VISION OF OPTCL
OPTCL ranks as one among the leading transmission utilities in India, transmitting quality
,reliable and SECURED power with minimum transmission loss at a competitive price .

MISSION OF OPTCL
 Transmission of power in large quantity with affordable price as per the expectation of
customers, Government of Odisha and OERC.
 Increase transmission network need based, to meet the demand of the state in2025.
 Develop a portfolio of Intra-State and some Inter-State transmission assets in national
market including business expansion for evacuation of power outside the state in
collaboration with PGCIL and others.

16
  Adoption of best Construction and OJM practices supported by system driven processes
enabled by cutting age IT solutions.
 Diversification of business by providing consultancy in the areas of construction and
maintenance services and also in Telecommunication and other emerging areas so as to
achieve optimum utilization of assets for generation of additional revenue.
 Develop skilled and satisfied human resources, fostering a service-oriented attitude to
its customers/stake holders and becoming empowered to meet customer need in the
changing scenarios.
 Building Research and Development wing for adoption of new technology.
 Discharging the social responsibility with commitment on Environment Protection,
Health, Safety, Energy Conservation and Community development Achieve excellence
in project implementation.
 Practice higher standard of corporate governance and be a financially sound company.

OBJECTIVES OF OPTCL
To effectively operate Transmission lines and Sub Stations in the State for evacuation of power
from the state generating stations feed power to state distribution companies, wheeling of
Power to other states, maintenance of the existing lines and substations for power transmission
and to undertake power system improvement by renovation, up gradation and modernization
of the transmission network.
OPTCL being a State Transmission Utility Public Authority has set the following objectives:
Undertake transmission and wheeling of electricity through intra- State Transmission system.
Discharge all functions of planning and coordination relating to intrastate, inter State
transmission system with Central Transmission Utility, State Govt. Generating Companies,
Regional Power Board, Authority, Licensees or other person notified by State Govt. in this
behalf.
Ensure development of an efficient and economical system of intra state and inter State
transmission lines for smooth flow of electricity from generating stations to the load centers.
Provide non-discriminatory open access to its transmission system for use by any licensee or
generating company or any consumer as and when such open access is provided by the State
Commission on payment of transmission charges/surcharge as may be specified by the State
Commission.
Restore power at the earliest possible time through deployment of emergency Restoration
system in the event of any Natural Disasters like super cyclone, flood etc.
Exercise supervision and control over the intrastate transmission system, efficient
operation and maintenance of transmission lines and substations and operate State Load
Dispatch Centres to ensure optimum scheduling and dispatch of electricity and to ensure
integrated operation of power systems in the state. POWER SECTOR REFORM IN ODISHA

17
-OPTCL
The Power Sector Reforms in the State of Odisha was started during November 1993 in an
organized manner. The main objective of the reform was to unbundle generation, transmission
and distribution and to establish an independent and transparent Regulatory Commission in
order to promote efficient and accountability in the PowerSector.
In order to implement the reform, in the first phase, two corporate entities namely Grid
Corporation of Odisha Limited (GRIDCO) and Odisha Hydro Power Corporation Limited
(OHPC) were established in April 1995. GRIDCO was incorporated under the Companies Act,
1956 in April 1995 to own and operate the transmission and distribution systems in the State.
Similarly OHPC was incorporated to own and operate all the hydro generating stations in the
State.
In Excise of power under Section 23 and 24 of the Odisha Electricity reform Act 1995, the
State Govt. Notified the Odisha Electricity Reform (Transfer of Undertaking, Assets,
Liabilities, proceedings and personnel) Scheme rules 1996. As per the scheme, the
transmission, distribution activities of erstwhile OSEB along with the related assets, liabilities,
personnel and proceedings were vested on GRIDCO. Simultaneously the hydro generation
activities of OSEB along with related assets, liabilities, personnel and proceedings were vested
on OHPC. In order to privatize the distribution functions of electricity in the State, four
Distribution Companies namely CESU utility, NESCO utility, WESCO utility and SOUTHCO
utility managed by GRIDCO ltd as a separate utility. During November 1998 the State Govt.
issued the "Odisha Electricity Reform: (Transfer of Assets, Liabilities, Proceedings and
Personnel of GRIDCO to distribution Companies) Rules 1998" wherein the electricity
distribution and retail supply activities along with the related assets, liabilities, personnel and
proceedings were transferred from GRIDCO to the four Distribution Companies. Through a
process of international Competitive Bidding (ICB), the four Distribution Companies were
privatized during 1999. The Government of India enacted the Electricity Act, 2003 which came
into effect from 10th June 2003. Under the provisions of the said Act, trading in electricity has
been recognized as a distinct licensed activity, which can only be undertaken by a licensee to
be granted by the appropriate commission. The Act specifically prohibits the STU and
Transmission Company in the State from engaging in the business of trading. GRIDCO being
a State Transmission Utility was not permitted to engage itself in the trading in electricity and
was required to segregate its activities in a manner within the transonic period allowed under
the Act that, the entity which will undertake transmission STU and SLDC function will not
undertake the activities of Trading and Bulk Supply of Electricity.

SWOT ANALYSIS
A.STRENGTH
OPTCL is the only transmission utility in the state of Odisha, there is no competition from any
other transmission corporation limited The strong transmission network is having 81 grid
substations spread throughout the state, is a great asset of OPTCL.

18
B. WEAKNESS
In the absence of any competition there is a likelihood that the performance of the employee
may god own.
As there is no recruitment has taken place since last 2-3 years, the performance of the remote
grid substation has gone down due to lack of proper manpower.

C.OPPORTUNITY
There is enough scope for creating network for both inter as well as intra state in the absence
of any competitors. Availability of technical persons [electrical engineers] within the state in a
large number is an opportunity in the organization for fresh recruitment.
D. THREATS
Continuous operation and maintenance of grid substation and extra high voltage [EHV]
transmission lines has become a challenge to the organization: unless properly maintained it
will break down of the entire system.
As per electricity act 2003 a new transmission company may come up in the future which may
pose a threat for the existing company.

FUNCTIONAL AREAS OF OPTCL

A. Finance

B. Human resource development

C. Telecom

D. Regulation and tariff wing

E. Corporate planning

A. FINANCE
1. Corporate Account Section: It deals with Profit and Loss Account, Trading Account
and Balance Sheet i.e. preparation of final statement of the organization.

2. Corporate Finance Section: It deals with funds management, cash management, etc.
3. Funds Section: It deals with the retirement benefits such as Pension, Gratuity, PPF, etc.
4. Budget Section: It deals with the preparation of budget to the implementation of it.
Budget is the estimation of expenditure of the organization for the next financial year.

19
5. Audit Section: It deals with internal audit that takes place within the same department by
higher officials of that department of the organization, higher audit that takes place externally
by the State Government through its appointed audit officer; special audit is done for a special
cause, resident audit that takes by different department within the organization.

6. Loan Section: It deals with the amount of funds deficit of the organization and
procurement of funds from external source such as banks and other financial institutions. The
loans have been termed as short term and long term. Long term loan is generally for a period
of 1 to 7 years with a rate of interest varying between 7.75% and 8.25% whereas short term
loan is for a period of 5 months up to 1 year with a rate of interest between 7.75% and 8.25%.

7. Banking Section: The finance department of OPTCL is dealing with 2 to 3 nationalized

banks. Also deals with some of the private bank such as ICICI, UTI, etc. And Union bank is
the main banker of OPTCL. OPTCL has 5 types of account in these banks such as current a/c,
flexi a/etc.

B. HUMAN RESOURCE DEVELOPMENT

The function of HR Department starts from recruitment and end at retirement, besides this, the
main objective is to utilize the existing manpower in the best possible manner by motivating
them more effective and efficient through several training and development program me to
achieve organizational goal and objective.

THE OBJECTIVE OF HR DEPARTMENT:

Introduction of new schemes, incentives, etc.
Decentralization of power
Formulation of rules, regulation, guidelines and service conditions
• Formulation of recruitment, promotion, and transfer policies for its employees Service benefit
to employee.

C. Telecom
UTILITY OF COMMUNICATION IN OPTCL THE CHALLENGES AHEAD

For ensuring effective and secured communication, all power utilities in India and abroad have
opted for their own telecom network due to the reasons that public telephone network remains
busy very often and goes out of service during natural calamities.
For this purpose, power utilities do recruit their own telecom engineers who are entrusted for
planning, design, deployment and management of dedicated telecom network. OPTCL like
other Power Utilities in the country also have its own telecom network which is operated and

20
managed by a Telecom Wing since 1973. Power Line Carrier Communication (PLCC) is
considered as the most economic, reliable and dependable for voice and low speed data
communication in electrical utilities. In the year 1994, the SCADA, based on CMC design was
implemented in Odisha Grid as a pilot project, considering only 15 RTU stations located at:
(1)Balimela (2) Bhanjanagar (3) Burla PH (4) Chip Lima PH (5) IB TPS (6) Talcher TPS (7)
Rengali PH (8) Rengali Switch Yard (9) Upper- Kolab PH (10) Tarkera (11) Jeypore PG (12)
Jayanagar (13) Budhipadar (14) Joda the advice of the Board of Directors constituted. They are
inturn REGULATION AND TARIFFWING OPTCL raises customer-bills on a monthly basis
as follows: Network Intra-state transmission charge bills are raised upon GRIDCO towards
transmission of energy for four DISCOMS (CESU, NESCO, SOUTHCO and WESCO) who
are long-term open access customers. Bills on other long-term open access customers like
NALCO and ICCL are raised for wheeling of energy from their CGPS to their industries located
at Damanjodi and the Rubali respectively. Inter-state wheeling charge bills are raised upon
CSEB, MPSEB, MSEB, DD and DNH for wheeling of central sector power to their territories
through OPTCL. D. CORPORATEPLANNING ACTIVITIES OF THE CORPORATE
PLANNING: The Directorate of Corporate Planning was created in GRIDCO during the year
1995. The Corporate Planning was assigned with the following main activities: Long term
financial projection and overall prospective.

ORGANISATIONAL STRUCTURE OF OPTCL

21
 CHAPTER-3
COMPETITOR & CUSTOMER ANALYSIS

22
Customer Analysis
Odisha Power Transmission Corporation Limited basically engaged with the business of
transmission of electricity across every rural, semi-urban and urban areas of Odisha with a
vision to provide quality product with an affordable price as per the expectations and demand
of its customers.
As one of the largest transmission utility in India, OPTCL aims at developing its portfolio and
providing the best quality output for the customers. The main function OPTCL performs as an
agent between the generator and distributor of electricity with a minimal loss in the country.
The customers of Odisha Power Transmission Corporation Limited typically include various
large manufacturing companies, commercial, industrial and institutional users and many
distribution channels who rely on the electriciity transmission and distribution services
provides by the company. The above mentions customers receive electricity through the
transmission and distribution networks managed by OPTCL.
Its customer base can be categorised into various groups:
 Distribution Companies (DISCOMS): OPTCL primarily serves as the transmission.
company, supplying electricity to DISCOMS in Odisha such as CESU, NESCO,
WESCO and SOUTHCO.
 Bulk Customers: Industrial and commercial entities that consume electricity in large
quantities are also customers of OPTCL. They receive power through transmission
network for their operation.
 Renewable Energy Developers: OPTCL facilitates the renewable energy sources like
wind and solar power into the grid, making developers of such project customers.
 Open Access Customers: Some consumers such as large industries can buy power
directly from generators or through power exchanges, and OPTCL's transmission
network plays a crucial role in facilitating this open access system.
 Rural Electrification: Rural electrification schemes and projects are also part of
OPTCL's responsibilities, serving rural consumers and development projects.

The exact customer base and categories may vary, but in general, anyone who uses electricity
in the state of Odisha is connected to the power grid managed by OPTCL.

23
Competitor Analysis
The Odisha Power Transmission Corporation Limited is one of the largest transmission
companies which aims at providing electricity all across the state with a vision to transmit
secured and good quality power supply with an affordable price. It is a wholly owned
government company which serves a monopoly business in the field of transmission of
electricity in the state of Odisha.
As of now, OPTCL is the only transmission utility company in Odisha, there is no any
competitors till date but most likely the competitors of OPTCL will appear in near future as
some of the large business entities are trying to enter into the field of transmission of electricity,
in order to operate in the same region or within the Indian Power Sector.
The companies may include:
 Tata Power Transmission Company Limited: Tata Power is considered as a major player
in the Indian Power Sector and is involved in both generation and distribution of
electricity.
 Adani Transmission Limited: Adani Transmission is a subsidiary of Adani Group and
operates in the transmission and distribution of electricity. Sterlite Power Transmission
Limited: Sterlite Power is another player in the power transmission sector in India and
is known for its innovative transmission projects.
 Power Grid Corporation of India Limited: Power grid is one of the largest power
transmission companies in India and operates on a national level. It is involved in the
transmission of electricity across various states in India.

24
 CHAPTER -4
CONCEPT OF WORKING CAPITAL MANAGEMENT

25
 WORKING CAPITAL MANAGEMENT

CONCEPT OF WORKING CAPITAL

Finance is the life blood of any business. It is the starting for making plans, before using any
sophisticated forecasting and planning procedures. Understanding the past is a prerequisite for
anticipating the future. So finance needs to be managed very effectively. Various tools are used
in analysing the financial information contained in the financial, statement and the "working
capital" is one of them. Working capital is a technical tool to measure the financial strength,
weakness and progress.

DEFINITION
Working capital= Current Assets - Current Liabilities.
Working capital refers to that part of the firm's capital which is required for financing short
term or current assets such as cash, marketable securities, debtors & inventories. Funds, thus,
invested in current assets keep revolving fast & are being constantly converted into cash and
these cash flows out again exchange for other current assets. Hence it is also known as
revolving or circulating capital or short-term capital. Working capital, in general practice refers
to the excess of current assets over current liabilities. Working capital management therefore,
is concerned with the problems that arise in attempting to manage the current assets, the current
liabilities and the inter-relationship that exists between them

MANAGEMENT OF WORKING CAPITAL

26
CASH MANAGEMENT:
Cash is the important current asset for the operation of the business. Cash is the basic input
needed to keep the business running in the continuous basis, it is also the ultimate output
expected to be realized by selling 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 ideal without contributing anything
towards the firm's profitability. Thus a major function of the financial manager is to maintain
a sound cash position. The term cash includes coins, currency and cheques held by the firm and
balances in its bank account. Sometimes near cash items such as marketing securities or
Working capital-current assets-current liabilities Management of Working Capital Cash
Management Receivable Management Inventory Management 12 bank term deposits are also
included in cash. Generally when a firm has excess cash, it invests it is marketable securities.
This kind of investment contributes some profit to firm. Sources of Cash: Sources of additional
working capital include the following:
> Existing cash reserves
> Profits (when you secure it as cash!)
> Payables (credit from suppliers)
> New equity or loans from shareholders
> Bank overdrafts or lines of credit.
> Long-term loans if you have insufficient working capital and try to increase sales, you can
easily over-stretch the financial resources of the business.

RECEIVABLE MANAGEMENT:
Receivable represent amount owed to the firms a result of sale of goods & services in the
ordinary course of business. These claims of the firm against customers and firms part of its
current receivables, trade receivables or book debts. On the other hand receivable management
is the process of making decisions relation to investment in trade debtors. Cost of Maintaining
Receivables:

1. Cost of financing receivables: When products are provided on credit then concerns
capital allowed to be use by the customers. The receivables are financer from the funds supplied
by shareholders for long term financing and through retained earnings.

2. Cost of collection: A proper collection of receivables is essential for receivables

management. The customers who delays in payment are sent reminders, some persons may
have to be sent for collecting these amounts.Sometimes legal action also taken includes cost of
the concern.

3. Bad-debts: The amount, which the customers fail to pay, is known as debts. Though a
concern may be able to reduce bad debts through efficient collection machinery but one cannot

27
altogether rule out this cost. Factors influencing the size of receivables:- The various factors as
follows-
> Size of credit sale
>Credit policy
>Terms of trade
>Expansion plans

INVENTORY MANAGEMENT:
Inventories: Inventories constitute the most important part of the current assets of large
majority of companies. On an average the inventories are approximately 60% of the current
assets in public limited companies in India. Because of the large size of inventories maintained
by the firms, a considerable amount of funds is committed to them. It is therefore, imperative
to manage the inventories efficiently and effectively in 13 orders to avoid unnecessary
investment. Nature of Inventories: Inventories are stock of the product of the company is
manufacturing for sale and components makeup of the product. The various forms of the
inventories in the manufacturing companies are:
Raw Material: It is the basic input that is converted into the finished product through the
manufacturing process. Raw materials are those units which have been purchased and stored
for future production.
Work-in-progress: Inventories are semi-manufactured products. They represent product that
need more work they become finished products for sale.
Finished Goods: Inventories are those completely manufactured products which are ready for
sale. Stocks of raw materials and work-in-progress facilitate production, while stock of finished
goods is required for smooth marketing operations. Thus, inventories serve as a link between
the production and consumption of goods.
OPERATING CYCLE It is the time duration required to convert sales, after the conversion of
resources into inventories into cash. The operating cycle refers to different stages involved
from the investment in raw material to realization of cash from the sale of finished products.
The stages in the operating cycle of a manufacturing company as given below.
1. Conversion of cash into raw material
2. Conversion of raw material into work-in-progress (Raw Material Conversion Period)
3. Conversion of work-in-progress into finished goods
4. (Work-In-Progress Conversion Period)
5. Conversion of finished goods into debtors through sales (Finished Goods Conversion
Period)
6. Conversion of debtor into cash (Debtor Conversion Period)

28
WORKING CAPITAL CYCLE
Working capital cycle is the amount of time it takes to turn the net current liabilities into cash.
The longer cycle liabilities are, the longer a business is typing up capital without earning a
return on it. Therefore, companies strive to reduce their working capital cycle by collecting
receivables quicker or sometimes stretching accounts payable. The capital measures the time
between paying for goods supplied to you and the final receipt of cash to you from the sale. It
increases the effectiveness of working capital. The working capital cycle is made up of four
core components:
Cash (funds available)
Creditors (accounts payable)
Inventory (stock in hand)
Debtors (accounts receivable)

29
Classification or kinds of working capital: Working capital may be classified in two ways:

 MANUFACTURER PROVIDER

 SERVICE PROVIDER

30
1.On the basic of concept:
On the basis of concept working capital is classified as a gross capital and net working
capital. This classification is important from the point of view of the financing manager.
i) Gross working capital: The term working capital refers to the gross working capital and
represents the amount of funds invested in current assets
ii) Net working capital: The term working capital refers to the net working capital. Net
working capital is the excess of the current assets over current liabilities.
2) On The basis of time: On the basis of the time, working capital may be classified as
permanent or fixed working capital, temporary or variable working capital.
i) Permanent or Fixed working capital: Permanent or fixed working capital is the minimum
amount which is required to ensure effective utilization of fixed facilities and for maintaining
the circulation of current assets. The permanent working capital can further be classified as
regular working capital and reserve working capital required insuring circulation of current
assets from cash inventory, from inventories to receivables and from receivable to cash and
soon.
a) Regular working capital:
This is the amount of working capital required for the continuous operation of an enterprise. It
refers to the excess of current assets over current liabilities Any organization has to maintain a
minimum stock of materials, finished goods and cash insure its smooth working and to meet
immediate obligations.
b) Reserve working capital:
Reserve working capital is the excess amount over the requirement for regular working capital
which may be provided for contingencies that may arise at unstated period such as strikes, rise
in price, depression, etc.
ii) Temporary or variable working capital: Temporary or variable working capital is the amount
of working capital which is required to meet the seasonal demands and some special exigencies.
Variable working capital can further be classified as seasonal working capital and special
working capital
(a)Seasonal working capital:- The capital required to meet the seasonal need of the enterprise
such as, a textile dealer would require large amount of fund a few month before Diwali.
(b)Special working capital: Special working capital is that part of working capital which is
required to meet special exigencies such as launching of extensive marketing for conducting
research, etc. Most of the enterprises have to provide additional working capital to meet the
seasonal and 15 special needs. Temporary working capital differs from permanent working
capital in the following diagrams would show the different between permanent and temporary
working capital. Figure a) presents constant permanent capital and Figure b) present an
increasing permanent capital .The first is the case of a static company and that of a growing

31
one. Reserve working capital is the excess amount over the requirement for regular working
capital which may be provided for contingencies that may arise at unstated period such as
strikes, rise in price, depression, etc.

NEED FOR WORKING CAPITAL

Working capital is required starting from purchase of raw materials to the sale of finished
goods. Hence working capital is required also for the following purposes working capital is
needed.
 For purchasing of raw material.
 For payment of production expenses, such as wages and salary.
 For payment of other operating expenses.
 For payment of selling and distribution expenses.
 For making credit sales of finished products.
 For maintaining closing stock of raw material, work in progress and finished goods.

IMPORTANCE OF WORKING CAPITAL

Working capital is the life blood and nerve centre of a business. Just as a circulation of blood
is essential in human body for maintaining life, working capital is very essential to maintain
the smooth running of a business .No business can run successfully without an adequate amount
of working capital. The main advantage of maintaining adequate amount of working capital
are as follows :
Solvency of a business - Adequate working capital helps in maintaining solvency of a business
by providing uninterrupted flow of production.
Goodwill- Sufficient working capital enables a business concerns to make prompt payments
and hence helps in creating and maintaining goodwill.
Easy loans- A concern having adequate working capital, high solvency good carrying standing
can arrange loans from banks and others on easy and favourable items.
Cash discounts- Adequate working capitals also enables a concerns to avail cash discounts on
purchase & hence it reduces cash discounts.
Regular supply of raw materials-Sufficient working capital ensures regular supply of raw
materials and continuous production.
Regular payments of salaries, wages and others day-to-day commitments-A company which
has ample working capital can make regular payment of salaries wages and other day -to-day
commitments which raises moral of its employees, increases their efficiency, reduce wastages
& costs &enhances production &costs.

32
Exploitation of favourable market conditions- Only concerns with adequate working capital
can exploit favourable market conditions such as purchasing its requirements in bulk when the
prices are lower & by holding its inventories for higher prices..
Ability to face crisis- Adequate working capital enables a concern to face business crisis in
emergencies such as depression, because during such periods, generally, there is much pressure
on working capital
Quick and regular return on investments- Every investor wants a quick and regular return on
his investments sufficiency of working capital enables a concern to pay a quick and regular
dividends to its investors as there may not be much pressure to plough back profits. This gains
the confidence of its investors and creates a favourable market to raise additional funds in the
future
High morals- Adequacy of working capital creates an environment of security, confidence and
high moral and creates overall efficiency in a business.

HOW IT IS CALCULATED?
An analysis of working capital position of a firm means such a treatment of the information
contained in its financial statements so as to afford a full diagnosis of its working capital
management Practices, the data provided in the financial statements should be methodically
classified in tune with the objective of the analysis .Then only by using the techniques of
analysis, one can get answers to the following questions relating to efficiency of working
capital.
Will the firm be able to pay its obligations as and when they fall due?
Is the working capital position improving or deteriorating day by day?
Is the working capital being effectively utilized?It is the amount of working capital sufficient,
excessive or inadequate?
There are at hand several techniques for analysis of working capital of a firm. The following
are some of them:
 Comparative statements
 Trend percentage analysis
 Common size percentage analysis
 Cash flow analysis
 Ratio analysis

COMPARATIVE STATEMENT-
Comparative financial statements are important tools of horizontal financial analysis. A
statement prepared in a form that reflects financial data for two or more periods is known as
comparative statement.The figures for two or more periods are placed side by side comparative
statement of current assets,current liabilities and their components over a period of two years

33
enables one to study the increase and decrease in them and their effects on the working capital
position.

TREND PERCENTAGE ANALYSIS-

Trend percentages are index figures indicating the percentage relationship that each statement
item bears to the same item in the base year. The information for a number of years is taken up
and one year, usually the first year is taken up as the base year. Each item of base year is taken
as 100 and trend ratios for other years are calculated on the basis of the year. By showing the
relative changes, it discloses unequal changes that significance has to be analysed and
interpreted.It will be possible to observe trend of figures, whether upward or downward.

COMMON-SIZE STATEMENTS-
Common-size financial statements are devices for studying financial statements and the
changes there in. These are prepared by expressing the items of the balance sheet as a
percentage of total assets and the items of the income statements as a percentage of total
revenue. These statements are also known as "100 percent" statement because each individual
item is stated as a percentage of total of 100. In order to study the pattern of grass working
capital, total current assets are taken as 100 and different components are expressed as a
percentage of total. Similarly, the pattern of current liabilities can also be studied. These
statements are more valuable in making comparisons between the companies in the same
industry.

CASH FLOW ANALYSIS-

Cash flow Analysis is the evaluation of a company's cash inflows and outflows from operations,
financing activities,and investing activities. In other words, this is an examination of how the
company is generating its money, where it is coming from and what it means about the value
of the overall company. Cash flow analysis is a technique used by investors and business to
determine the value of overall companies as well as the individual branches of large companies
by looking at how much excess cash they produce.

RATIO ANALYSIS-
Among all the techniques used in financial statement analysis, ratio analysis is the most
powerful tool of financial analysis. A ratio is simply one number expressed in terms of another.
Liquidity and turnover ratios are used by management in checking upon the efficiency with
which working capital is interpreted and compared. Behaviour of ratios over a period of times
is to be studied to determine their trend. A ratio may be interpreted in relation to certain being
used in the firm. To make ratios more powerful, they have to be further rule of thumb or it may
be compared with the past ratios.

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APPROACHES OF WORKING CAPITAL FINANCE
 Hedging/Matching Approach
 Conservative Approach
 Aggressive Approach

1.Hedging/Matching Approach:
The hedging refers to selling transactions of simultaneous but opposite nature which counter
balance the effect of each other. The term hedging refers to the process of matching maturities
of debt with maturities of financial needs. According to this approach the maturity of sources
of funds should match nature of assets to be financed.

2.Conservative Approach:
The approach suggests that entire estimated investments in current assets should be financed
from long term sources and short-term sources should be used only for emergency
requirements.

3. Aggressive approach: This approach suggests that the entire estimated requirement of
current asset should be financed from short term sources. This approach makes finance mix
more risky, less costly and more profitable.

35
 CHAPTER-4
DATA ANALYSIS & ACTUAL WORK DONE

36
 DATA ANALYSIS & ACTUAL WORK DONE
SOURCES OF DATA COLLECTION
The secondary data are those which have already collected and stored. Secondary data easily
get those secondary data from records, journals, annual reports of the company etc. It will save
the time, money and efforts to collect the data. Secondary data also made available through
trade magazines, annual reports, books etc. This project is based on secondary data collected
through the annual reports of the organisation. The data collection was aimed at study of
working capital management of the company.

BALANCE SHEET OF OPTCL (RS IN CR)

Particulars As at As at As at As at As at
31.3.17 31.3.18 31.3.19 31.3.20 31.3.21
EQUITY AND
LIABLITIES

1.Shareholder’s fund

(a) Share capital 460.07 510.07 790.07 859.77 1571.06

(b) Reserve & surplus 659.90 894.54 658.83 507.93 663.55

1119.97 1404.61 1448.90 1367.70 2234.61

2.Non-current liabilities

37
(a)Long term 2005.7 2075.92 2822.30 1909.66 2015.94
borrowing

(b)Other long term 168.71 176.71 277.40 278.31 284.89

liabilities
(c) Long term provision 429.18 451.96 522.51 602.76 551.93

2603.59 2704.59 2822.30 2790.73 2852.76

3.Current Liabilities

(a)Trade payables 206.93 333.40 218.47 277.78 132.51

(b)Other current liabilities 2290.93 2540.82 2894.41 2813.22 2826.00

(c)short term provision 139.61 138.11 220.61 164.27 192.30

2637.37 3012.33 3333.49 3255.27 3150.81

TOTAL 6360.95 7121.90 7604.69 7416.07 8238.88

ASSETS Non-current
liabilites

(a)Fixed Assets 3805.67

(i)Tangible assets 2725.12 2978.40 3400.79 3685.21 4079.93

(ii)Capital W.I. P 1074.13 1481.73 1734.06 2092.41 2260.36

(iii)Intangible assets 0.13 0.18 14.84 12.28 9.75

38
(iv)intangibles assets 6.29 6.29 0.04
under development
(b) non-current 144.5 147.55 143.59 124.73 119.73
Liabilities
(c) Long term loans & 11.39 11.39 11.08 17.99 15.60
Advance
(d) Other Non current 27.06 51.67 7.41 177.58 174.39
liabilities

3988.69 4677.21 5311.81 6110.20 6659.76

2.Current Assets

(a)Current investment 102.58 138.67 154.65 100.00 155.00

(b) Inventories 178.56 157.86 166.12 195.93 199.73

(c) Trade receivables 202.00 150.07 142.59 135.89 146.82

(d)Cash & cash 1545.35 1750.02 1566.98 866.42 1066.61

equivalent
(e)Short term loans & 5.62 6.16 6.68 8.26 7.52
Advance
(f)Other current assets 338.15 241.91 210.95 4.72 3.44

2372.26 2444.69 2247.97 1306.5 1579.12

TOTAL 6360.95 7121.9 7604.69 7416.7 8238.88

39
 STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 st MARCH

PARTICULARS For the year For the year For the year For the For the year
ended 31.3 ended ended year ended ended
17 31.3.18 31.3.19 31.3 20 31.3.21

1.Revenue from 665.31 692.30 713.84 684.94 711.40

operation

2.Other income 189.13 178.61 164.27 130.11 193.09

3.Total revenue(1+2) 854.44 870.91 878.11 815.05 904.09

4.Expenses

Employee.Exp 380.39 385.44 382.65 394.37 380.36

Finance cost 66.94 78.11 74.27 71.60 71.94

Depreciation Exp 176.39 201.21 229.14 257.96 284.14

Other Exp 211.21 183.34 154.24 171.54 155.71

Net period income

Total Expenses 834.93 848.10 840.27 895.47 892.15

5.Profit/loss before 19.51 22.81 37.84 80.42 12.34

tax& extraordinary
exp(3-4)

6.Exceptional items 3.01 0.13

7.profit before tax(iii- 19.51 19.80 37.71 80.42 12.34

iv)

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 8.Tax Expenses 1.54 22.60 (106.72) 63.95 (49.33)

9.Profit /loss for the 17.97 42.40 (69.01) 16.47 36.99

period(v-vi)

10.earning per eqity

share
(i)Basic 39.07 38.82 47.73 38.80 36.78

(ii)Diluted 27.23 27.89 38.09 27.80 26.65

The data analysis is made by taking ratios into consideration. Among the all techniques used
in financial statement analysis, ratio analysis is the most powerful tool of financial analysis. A
ratio is simply one number expressed in terms of another. To make ratios more powerful, they
have to be further interpreted and compared. Behaviour of ratios over a period of time is to be
studied to determine their trend. A ratio may be interpreted in relation to certain rule of thumb
or it may be compared with past ratios.
CLASSIFICATION OF RATIOS:
1. Liquidity Ratio
2. Profitability Ratio
3. Turnover Ratio
4. Solvency Ratio
5. Overall Profitability Ratio

LIQUIDITY RATIO:-
Liquidity ratios are termed as short term solvency ratios. The term liquidity means the extent
of quick convertibility of assets into money for paying obligations of short term nature.
Accordingly, the liquidity ratios are useful in obtaining an indication of a firm's ability to meet
its current liability, but it doesnot reveal how effectively the cash resources can be managed.
To measure the liquidity of a firm, the following ratios are commonly used.
 Current Ratio
 Quick Ratio(or)Acid Test or Liquid Ratio
 Absolute Liquid Ratio(or)Cash Position Ratio

41
a) Current Ratio:-
Current Ratio establishes the relationship between current assets and current liabilities. It
attempts to measure the ability of the firm to meet its current obligations. In order to compute
this ratio, the following formula is used:
Current Ratio = Current Assets/Current Liability
CURRENT ASSETS (in Rs.crore)
2017 2018 2019 2020 2021
Current investment 102.58 138.67 154.65 100.00 155.00
Inventories 178.56 157.86 166.12 195.93 199.73
Trade Receivables 202.00 150.07 142.59 135.89 146.82
Cash& cash 1545.35 1750.02 1566.98 866.42 1066.61
equivalent
Short term loans& 5.62 6.16 6.68 8.26 7.52
advance
Other current assets 338.15 241.91 210.95 4.72 3.44
TOTAL 2372.26 2444.69 2247.97 1311.22 1579.12

CURRENT LIABILITY(in Rs.crore)

2017 2018 2019 2020 2021
Trade payable 206.93 333.40 218.47 277.78 132.51
Other current liabities 2290.83 2540.82 2894.41 2813.22 2826.00
Short term provision 139.61 138.11 220.61 164.27 192.30
TOTAL 2637.37 3012.33 3333.49 3255.27 3150.88

Total CA 2372.26 2444.69 2247.97 1311.22 1579.12

Total CL 2637.37 3012.33 3333.49 3255.27 3150.88

CURRENT 1.89 1.81 0.68 0.40 0.50

RATIO

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 CURRENT RATIO
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1 2 3 4 5

b)Acid test ratio or quick ratio:

It is the ratio of quick assets to current liability. It is an indicator of a company's short-term
liquidity. The quick assets are defined as those assets which are quickly convertible into cash.
While calculating quick assets closing stock and prepaid company's ability to meet its short
term obligation with its most liquid assets. Higher is the quick ratio, better is the position of
the company. Quick ratio is viewed as a sign of company's financial strength or weakness
(higher number means stronger, lower number means weaker). It is also known as acid test
ratio. It is expressed as:
QUICK RATIO=QUICK ASSETS/CURRENT LIABILITIES
YEAR 2017 2018 2019 2020 2021
Total CA 2372.26 2444.69 2247.97 1311.22 1579.12
Inventories 178.56 157.86 166.12 195.93 199.73
Quick assets(Total 2193.37 2286.83 2081.85 1115.29 1379.39
CA-Inventories
Total CL 2637.37 3012.33 3333.49 3255.27 3150.88
QUICK RATIO 0.831 0.759 0.62 0.342 0.437

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 QUICK RATIO
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
1 2 3 4 5

c) Absolute liquid ratio or cash position ratio:

Absolute liquid ratio extends the logic further and eliminated accounts receivable (sundry
debtors and bills receivable) also. Though receivables are more liquid as compared to inventory
but still there may be doubts considering their time and amount of realization. Therefore,
absolute liquidity ratio related cash, bank and marketable securities to the current liabilities.
Since absolute liquid ratio lays down very strict and exacting standard of liquidity, therefore,
acceptable norm of this ratio is 50 percent. It means absolute liquid assets worth one half of the
value of current liabilities are sufficient for satisfactory liquid position of a business. It can be
expressed as:
ABSOLUTE LIQUID RATIO=ABSOLUTE CURRENT ASSETS/CURRENT
LIABILITIES WHERE ABSOLUTE CURRENT
ASSETS=CASH+BANK+MARKETABLE SECURITIES
YEAR 2017 2018 2019 2020 2021
Cash& cash Equivalent 990.38 583.86 1038.08 966.42 1216.61
Bank Balance 554.97 1166.16 528.90 261.17 309.76
Marketable Securities 2.0
Absoulte Current Asset 1547.35 1750.02 1566.98 1227.59 1526.37
Total CL 2637.37 3012.33 3333.49 3255.27 3150.88
ABSOULTE Liquid ratio 0.59 0.58 0.47 0.37 0.48

44
 ABSOLUTE LIQUID RATIO
0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
1 2 3 4 5

2.SOLVENCY RATIO: Solvency ratio is calculated to determine the ability of the business
to service its debt in long run. The following ratios are normally computed for evaluating
solvency of the business:
Debt Equity Ratio: Debt equity ratio measures the relationship between long term debt and
equity. If debt component of the total long term funds employed is small. Outsiders feel more
secure. From security point of view, capital structure with less debt and more equity is
considered favourable as it reduces the chances of bankruptcy. Normally 2:1 debt equity ratio
is considered as safe. It is computed as follows:
DEBT EQUITY RATIO = LONG TERM DEBT / SHARE HOLDER FUNDS
YEAR 2017 2018 2019 2020 2021

Long term debt 638.22 634.30 599.08 602.76 551.93

Share holder funds 1119.97 1404.61 1448.90 1367.70 2234.61
Debt Equity Ratio 0.57 0.45 0.41 0.44 0.24

45
 DEBT EQITY RATIO
0.6

0.5

0.4

0.3

0.2

0.1

0
1 2 3 4 5

b)Debt Ratio: Debt ratio refers to proportion of long term debt a company has relative to its
assets or the capital employed. The measure gives an idea to the leverage of the company along
the potential risks the company faces in terms of its debt-loan. Capital employed is equal to
long term debt shareholders fund. It is computed as follows:
DEBT RATIO=TOTAL DEBT/TOTAL ASSETS
YEAR 2017 2018 2019 2020 2021

Total Debt 5240.96 5716.92 6155.79 3277.36 4250.55

Total Assets 6360.93 7121.53 7604.69 7416.7 8238.88

Debt Ratio 0.82 0.80 0.81 0.44 0.51

46
 DEBT RATIO
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
1 2 3 4 5

(C)Proprietary Ratio: proprietary ratio expresses relationship of proprietor’s (Share holder

fund) to net assets.It is calculated as follows:-
PROPRIETARY RATIO = SHARE HOLDER FUND /CAPITAL EMPLOYED (TOTAL
ASSETS – CURRENT LIABILITIES)

YEAR 2017 2018 2019 2020 2021

Share holder’s fund 1111.60 1404.61 1448.90 1367.70 2234.61
Capital Employed 3723.56 4109.56 4271.2 4161.42 5088.00
Proprietary Ratio 0.30 0.34 0.34 0.32 0.43

PROPRIETARY RATIO
0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
1 2 3 4 5

3.PROFITABLITY RATIO: The profitability or financial performance is summarized in

income statement. Profitability ratio is calculated to analyse the earning capacity of the

47
business which is outcome of utilization of resources employed in the business. The various
ratios which are commonly used are:
Net profit ratio:Net profit ratio expresses the relationship between net profit after taxes and
sales. This ratio is a measure of overall profitability net profit is arrived after taking into
accounts both the operating and non-operating items of incomes and expenses. The ratio
indicates what portion of the net sales is left for the owners after all expenses have been met.
NET PROFIT RATIO= NET PROFITS/SALES* 100
YEAR 2017 2018 2019 2020 2021

Net profit 17.97 19.80 37.71 50.42 12.34

sales 665.31 692.30 713.84 684.94 711.40

Net Profit Ratio 2.70% 2.86% 5.28% 7.36% 0.017%

NET PROFIT RATIO

8

0
1 2 3 4 5

Earning per share : The portion of a company’s profit allocated to each outstanding share of
a common stock .Earning per share serve as an indicator of a company’s profitability.
EARNING PER SHARE = PROFIT AVAILABLE FOR EQUITY SHARE HOLDER/NO
OF EQUITY SHARE
YEAR 2017 2018 2019 2020 2021
PAFESH 17.97 19.80 37.71 50.42 12.34
No.of eq shareholder 46,00,700 46,00,700 79,000,791 55,78,180 47,51,170
EPS 39.07 38.82 47.73 90.38 25.97

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 CHAPTER-5
FINDING, SUGGESTIONS & CONCLUSION

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FINDINGS OF THE STUDY
So, from the above analysis of data it is found that the representation of data is done or
evaluation of financial performance of OPTCL is done taking ratio as a tool. Here in this
liquidity ratio, solvency ratio and profitability ratio is taken into consideration. In the liquid
ratio we have current ratio, quick ratio and cash position. The ideal current ratio is 2:1 or we
can say it can vary from 1.2 to 2 but below 1 it is not said as ideal. In 2017 and 2018 the current
ratio was above 1.2 which is considered as ok but in 2019, 2020 and 2021 it is below I which
is not at all good for the company. It means that the company doesn't have liquid assets to cover
its short-term liabilities. In the quick ratio it is good to have ratio 1 or higher. The greater this
number, the more liquid assets a company has to cover its short obligations and debts. A number
less than 1 might indicate that a company doesn't have enough liquid assets to cover its current
liabilities. In 2017 and 2018 the quick ratio is 1.332 and 1.436 which is good sign but from
2019-2021 it is below I which means the company doesn't have enough liquid assets to cover
its current liability. In the cash position ratio it indicates that except 2017, remaining 4 years
have cash position ratio below I which means the company is at risk of having financial
difficulty. In solvency ratio we have Debt equity ratio, Debt ratio, Proprietary ratio, Interest
coverage ratio. The debt equity ratio should be 1 to 1.5 or higher. Here in this the debt equity
ratio is below 1. Lenders and investors usually prefer low debt to equity ratios because their
interests are better protected in the event of a business decline. Debt ratio should be 0.4 or
below but in most of years like in 2017, 2018 and 2019 the debt ratio is 0.6 or higher which
makes it more difficult to borrow money. The proprietary ratio should be 0.5:1 but here the
proprietary ratio is below 0.5 in these 5 years. Higher the ratio better the long term solvency
(financial) position of the company. Here in the interest coverage ratio we have ratios which is
more than 1 in 5 years. It is a good sign for the investors. A bad interest coverage ratio which
is less than 1 means it is a definite red flag for investors. In the profitability ratio here we see
the margin of profit. If the margin of profit is 5% or below 5% then the profit is less. Here in
this analysis we have profit less than 5% which means the profit is less.

SUGGESTION
OPTCL is the soul of Odisha's power transmission network and is playing a pivotal role in
making surplus power after meeting the demand of the state through efficiently administering
the system of transmission. For improvement of organization's profitability, much emphasis is
to be given to improve performance by decreasing the current liabilities through reducing the
unplanned expenses. The company should give more emphasize on increasing the current
assents over current liabilities in order to meet the debt. The management should generate a
systematic financial plan for better financial performance of the company. There should be
proper guidelines for evaluating the financial performance. It should get detailed view of the
operations, find out the financial requirement on accounts of operation after taking
consideration the different financial statements. The corporation should invest more in current
assets. If the corporation will give emphasis on investment in current assets then it will increase
the liquidity position of corporation. There should be a systematic plan to collect the

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outstanding payments still due from the distribution companies. The management should more
concentrate on management of current assets and minimize current liabilities. The proportion
of the current assets to total assets is very low, so the corporation should have to take some
adequate measures to increase it.In order to increase the profitability of this concern, if
government increases the tariff rate, then this corporation as well as other power sector
corporation will get more profit in the future. So that they can meet with the demand side.
CONCLUSIONS
On the basis of data analysis on financial performance of OPTCL, the following conclusion
arrived. Orissa Power Transmission Corporation Limited (OPTCL) started operations in the
year 1st April 2005. OPTCL is one of the largest transmission corporation limited undertake
the business of transmission and wheeling of electricity in the state. OPTCL has its registered
office at Bhubaneswar. The organizations have a very good financial performance and they
also have the capacity and ability to increase their effectiveness and efficiency to a much greater
extent. And all these factors and key areas have been analysed critically to evaluate the actual
performance and also to evolve their further scope for improvement. The changes in the
economy sector and the changes in the company policies made it difficult for the firm to make
a continues growth in the absolute liquidity position, however the firm is having a qualified
manpower and they would make the efficient use of the resources to maintain a satisfactory
balance between absolute liquid assets and current liabilities of the at present and they will
definitely get the growth pace very soon in near future. As the analysis of the OPTCL and their
financial performance by using the financial analysis tools like Cash Flow Analysis and Ratio
Analysis the results have shown a great performance of the business and they do have some
lacuna but they have the resources available with them to ensure the variations from the desired
could be minimised or completely erased.

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BIBLIOGRAPHY:
WEBSITES:
 www.optcl.co.in
 www.wikipedia.com
 www.slideshare.com
 www.google.com

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