PROJECT SYNOPSIS

ON
RATIO ANALYSIS
FOR
TATA POWER COMPANY
LIMITED.

COMPANY PROFILE:
TATA POWER: Lighting up Lives!
Tata Power is India's largest integrated power company with a significant international presence.
The Company has an installed generation capacity of 8613 MW in India and a presence in all the
segments of the power sector viz Generation (thermal, hydro, solar and wind), Transmission,
Distribution and Trading. It has successful public-private partner ships in Generation,
Transmission and Distribution in India namely "Tata Power Delhi Distribution Limited" with
Delhi Vidyut Board for distribution in North Delhi, 'Powerlinks Transmission Ltd.' with Power
Grid Corporation of India Ltd. for evacuation of Power from Tala hydro plant in Bhutan to Delhi
and 'Maithon Power Ltd.' with Damodar Valley Corporation for a 1050 MW Mega Power Project
at Jharkhand. It is one of the largest renewable energy players in India and is developing
country's first 4000 MW Ultra Mega Power Project at Mundra (Gujarat) based on super-critical
technology. Recently, Tata Power has been selected to work as a Distribution Franchisee (DF) in
Jamshedpur Circle of Jharkhand State Electricity Board (JSEB).
Its international presence includes strategic investments in Indonesia through 30% stake in coal
mines and a geothermal project; in Singapore through Trust Energy Resources to securitise coal
supply and the shipping of coal for its thermal power generation operations; in South Africa
through a joint venture called Cennergi' to develop projects in 16 different countries in Africa; in
Australia through investments in enhanced geothermal and clean coal technologies and in Bhutan
through a hydro project in partnership with The Royal Government of Bhutan. With its track
record of technology leadership, project execution excellence, world class safety processes,
customer care and driving green initiatives, Tata Power is poised for a multi-fold growth and
committed to 'lighting up lives' for generations to come.
Apart from being pioneers in Power production in the private sector, Tata Power has many
firsts to its credit:

First to bring UMPP in India (at Mundra, Gujarat) based on super- critical technology and
unit size of 800 MW each.

First 150 MW thermal unit in the country First 500 MW thermal unit in the country.

First to Commission Gas Insulated Switchgear 220 KV and 110 KV.

Touch screen-based Distributed Digital Control and Energy Management Systems.

Computerised Grid Control and Energy Management Systems.

220 kV Transmission Lines in Four-Circuit Towers.

220 kV Cable Transmission Network. Flue Gas De-sulphurisation Plant using sea water.

First 275 meter tall chimney for Unit No. 6. 500 MW power plant.

First Operational Pumped Storage Unit in the country of 150 MW capacity.

First to install Fly Ash Aggregate Plant to convert waste product (fly ash) into a useful
building material.

Training Simulators for 150 MW, 500 MW Thermal Power Plants and High Voltage
Switchyard Operations.

First to introduce SCADA and Fibre Optic Ground Wire Communication.

Tata Power's Load Despatch Center is the First ever Load Despatch Center in India to
have
gotten ISO Certification (11 August 2004).

Leading Renewable player

Harnessing Hydro Power: The Company has an installed hydro capacity of 447 MW in
Maharashtra. Tata Power and Norway-based SN Power entered into an exclusive partnership to
develop hydro power projects in India and Nepal. The consortium is developing the "236 MW
Dugar Hydro Electric Project" in Chenab Valley in Himachal Pradesh, India. Tata Power
through a JV with the Royal Government of Bhutan is implementing the 126 MW Dagachhu

Hydro Project. The Company is prospecting further opportunities to bid and acquire hydro
projects.
Harnessing Solar Energy: Tata Power has a strong portfolio of 50+ MW of solar generation
capacity. It commissioned its solar power project of 25 MW in Mithapur, Gujarat in January
2012 and a 29 MW solar powered project in Pallaswadi, Maharashtra in May 2014. It has also
executed a 3 MW solar photo-voltaic plant at Mulshi, one of the largest grid-connected solar
projects in the State of Maharashtra. The Company had set up its first solar power plant of 110
kW, way back in 1996 at Walwhan in Lonavla. A 60.48 kWp solar power plant has been installed
on the rooftop of one of the Company's offices in Mumbai and the power generated by these
solar panels is expected to take the lighting load of the entire building.
Innovations: Floating Solar Plant: The Company has partnered with the Australian company,
Sunengy Pty. Ltd. to build the first floating solar plant in India.
Harnessing Wind Energy: Tata Power has an installed capacity of 461 MW and plants spread
across five states of Maharashtra, Gujarat, Tamil Nadu, Karnataka and Rajasthan, the leading
states in promoting wind power generation in India. Another 180 MW of wind projects are under
construction in the states of Rajasthan (Dalot 100.5) and Maharashtra (Pethshivpur 49.5, Visapur
32 MW).
Exploring Geothermal Power : 240 MW Sorik Marapi Geothermal Project: A consortium
led by Tata Power (47.5%) along with Origin Energy Ltd., Australia (47.5%) and PT Supraco,
Indonesia (5%) won the Sorik Marapi geothermal project in Northern Sumatra, Indonesia. The
Sorik Marapi project is estimated to support the development of approximately 240 MW of
geothermal generation capacity The project currently is in exploration development phase.
Waste Gas Generation: Tata Power has set up various plants at Haldia and in Jamshedpur
(Power 6) based on the blast furnace and coke oven gases which are waste gases from steel
making process which help in reducing greenhouse gas emission significantly. It's looking at
other similar projects with Tata Steel.
OTHER BUSINESSES:

Tata Power Trading Company Limited (TPTCL), a wholly owned subsidiary, is the first
company to have been awarded a power trading licence by the Central Electricity Regulatory
Commission enabling it to carry out transactions all over India.
The Strategic Engineering Division (SED), It has been in operation for over 30 years and has
been pursuing development and production activities for the Indian defence sector. Over 90% of
the company's strategic electronic efforts are executed for the defence sector. The division has
long-standing relationships with the Armed Forces and DRDO. The Division has developed
specialised equipment for Air Defence and Naval Combat Systems.
It is also developing a program to modernize the Airfield Infrastructure for the Indian Air Force.
Tata Power Solar, It is a 100% subsidiary of Tata Power, and is a market leader in Solar
Photovoltaic technology in India. Nearly 75% of sales is achieved from exports to Europe and
USA.

INTRODUCTION TO TOPIC

RATIO ANALYSIS
Ratio Analysis is the most popular technique of financial analysis indicating the relationship that
exists between two variables & is expressed as a percentage or number. Another defines a ratio
as a quotient obtained by dividing one variable by another. A financial analyst can use a ratio as a
ratio as a bench mark to evaluate the financial position & performance of a firm. Comparison &
interpretation of various ratios obtained from financial statements can help in having a better
understanding of the financial position & performance of an enterprise. Therefore it is a more
meaningful & effective tool of analysis.

Ratio analysis offers many benefits. It helps in establishing relationship between various
financial items of financial statements. These ratios provide important information, which serves
as a basis for decision-making.
An inventors in interested regarding the exact financial position of the business , its earning
capacity and the present position with regards to profitability and future possibility of the
company. He has only the published accounted of the company before him. This would enable
him to take any decision with respect to investing his money. Them published accounts are,
Profit &loss accounts, balance sheet, Directors reports and auditor reports and chairman speech.
The directors report and chair man speech would assist him in foreseeing the future prospect of
the company. Let us see at this classifying in our study of analysis of accounts.
Financial statement gives the current position of the business
Company which is being its facts data are comparable with other company in the field and also
comparable with whole industry facts.

Importance of Ratio Analysis:

The Important of the Ratio Analysis can be stated as follows:
1.

Liquid Position:

A firm can be said to have the ability to meet its short term liabilities if it has sufficient liquid
funds to pay the interest on its short maturing debt usually within a year as well the principal.
This ability is reflected in the liquidity ratios of a firm.
2.

Long term Solvency:

The long-term solvency is measured by the leverage/capital structure & profitability ratios,

which focus on earning power & operating.

3. Operating activity:
Ratio Analysis throws light on the degree of efficiency in the management & utilization of its
assets. It would be recalled that the various activity ratios measure this kind of operational
efficiency.

4. Overall Profitability:
The management is constantly concerned about the overall profitability of the enterprise. I.e.
they are concerned about the ability of the firm to meet its short term as well as long-term
obligations to its creditors, to ensure a reasonable return to its owners & square optimum
utilization of the assets of the firm. This is possible if an integrated view is taken & all the ratios
are considered together.
5. Trend Analysis:
Ratio Analysis enables a firm to consider the time dimension.
In other words, whether the financial position of. The firm is improving or deteriorating over the
year. Trend analysis shows the direction of movement i.e. whether the movement is favorable or
unfavorable.

TYPES OF RATIO
To evaluate the financial condition & performance of a firm meaningfully, financial analysis
need to compute a number of financial ratios from the accounting date presented in the financial
statement of the firm. There are different ratios are as follows.
A. Liquidity Ratios
B. Leverage Ratio
C. Turnover Ratio
D. Profitability Ratio
A. Liquidity Ratios:As the name suggests liquidity ratios are used to evaluate the firm's ability to honor its shortterm or current obligations & judge, the present cash solvency of the firm. This indicates the
relationships between current assets i.e. the resources available with the firm to meet current
obligations & current liabilities.
Some important liquidity ratios are:
a) Current Ratio
b) Acid-test ratio
c) Cash Ratio

B. Leverage Ratios:The short-term creditors who are interested in the current financial position would use the
liquidity ratios. The leverage or capital structure ratio may be defined as the financial ratio which
throws light on the long- term solvency of a firm reflected in its ability to1) Periodic payment of interest during the periods of the loan & advances.
2) Repayment of principal on maturity or in pre-determined Installments at due-date.
There are thus, two aspects of the long-term solvency of the firm. First ratio, which is based on
the relationship between borrowed funds & owner's capital. These ratios are computed from the
balance sheet & have many variations such as;
1. Debt-equity ratio
2. Debt- assets ratio
3. Owner's ratio
The second type of Capital structure ratio popularly called coverage ratios, are calculated
from the Profit & loss account include the following.
Interest coverage ratio, Dividend Coverage ratio, Total fixed changes coverage ratio, Cash
flow Coverage ratio, Debt service coverage ratio.
C.

Turnover Ratios:-

Turnover ratios, also known as activity ratios, are based on relationships between turnover or
level of activity & various assets, namely net assets, fixed assets, net working capital, inventories
etc. Turnover means sales revenue or total sales receipts during a period, i.e. a firm's gross
trading income for a period. Thus, turnover ratios are obtained by dividing sales by various
assets. They indicates how efficiently various assets have been employed. So these ratios are also
called "asset management ratios." Some important turnover ratios are:
1)

Inventory turnover Ratio

2)

Debtors turnover Ratio

3)

Average collection period

4)

Creditors turnover Ratio

5)

Fixed Assets Ratio

6)

Total Assets Ratio

D. Profitability Ratios: - In order to evaluate the results of business operations we need to

know the profitability of the firm. Profitability is essential not only for a firm's survival but for
its growth also. Profitability relationship or ratios are generally of two types profitability. As
related to sales (profit margin ratio) & profitability as related to investment (rate of return ratios).
These ratios reflect the firm's operational efficient

INTRODUCTION ABOUT THE RESEARCH METHODOLOGY

As traditionally defined, modern research work has been concerned with gathering data that can
help us answer question about various aspects industrial economy, trade and commerce and this
can enable as to understand present problem. Research in common parlance reference to a search
for knowledge. One can also define research as a scientific and systematic search for pertinent
information on a specific topic.

OBJECTIVES OF THE STUDY :

To know about the ratios analysis for years 2009-2013 of the Tata power company limited.
To study the financial performance and other facts related to Financial Management so as to find
out the strengths and weaknesses of Tata power company limited.
To study the past and present status of Tata power company limited.
To know about the trend in the financial performance of the Tata power company limited. over
last few years.
To study and analyze the financial performance of the company by using ratios as a tool to know
the position of the company through the study

RESEARCH METHODOLOGY
RESEARCH: Research study has its own specific purpose but the research design of the

project on

Tata power company limited is exploratory in nature as the objective is the

development of the hypothesis rather than their testing.

METHODOLOGY: Research Methodology comprises of defining & redefining problem,

collecting, organizing & evaluating data, making deductions & researching to conclusion.

Research Design
Problem Identification
@ Find out Ratios of Tata power company limited and compare with other industry in same line

of Business.
@ Find deviation of calculated ratios from standard or Norms
@ Calculating the working capital requirement of Tata power company limited.

Information needed
@ Information about firms assets, liabilities, revenue, expenditure, bankers, investment etc.
@ Information about firms loan, security, stock level & other financial information.

SOURCES OF Data Collection

1. Primary data
2. Secondary data
Primary Data:
Data that has been collected from first-hand-experience is known as primary data. Primary data
has not been published yet and is more reliable, authentic and objective. Primary data has not
been changed or altered by human beings, therefore its validity is greater than secondary data.

Sources of Primary Data:

BOOKS:

Donald R. Cooper Pamela S Schindler business research methods .

Phillip Kotler Marketing Management .

K.Ashwathppa for production and operation management.

I M Pandey for financial management

BROCHURES:
Last 5 years of data of the Tata power company limited.

Balance Sheet of Tata Power Company

------------------- in Rs. Cr. -------------------

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Total Share Capital

237.33

237.33

237.33

237.33

237.33

221.44

Equity Share Capital

237.33

237.33

237.33

237.33

237.33

221.44

0.00

0.00

0.00

0.00

0.00

0.00

Sources Of Funds

Share Application Money

Preference Share Capital

0.00

0.00

0.00

0.00

0.00

0.00

Reserves

12,890.03

12,023.52

11,519.66

10,938.25

10,295.03

8,422.06

Networth

13,127.36

12,260.85

11,756.99

11,175.58

10,532.36

8,643.50

6,689.61

7,043.02

4,951.27

4,753.91

4,105.38

3,931.71

Secured Loans
Unsecured Loans

3,565.91

4,081.70

4,245.86

2,299.78

1,858.04

1,315.35

Total Debt

10,255.52

11,124.72

9,197.13

7,053.69

5,963.42

5,247.06

Total Liabilities

23,382.88

23,385.57

20,954.12

18,229.27

16,495.78

13,890.56

14,813.64

13,414.70

12,497.45

10,518.92

10,010.80

8,985.86

0.00

0.00

0.00

0.00

0.00

0.00

Less: Accum. Depreciation

6,215.01

5,640.18

5,299.75

4,735.98

4,258.06

3,795.32

Net Block

8,598.63

7,774.52

7,197.70

5,782.94

5,752.74

5,190.54

Application Of Funds
Gross Block
Less: Revaluation Reserves

Capital Work in Progress

Investments

775.09

714.80

833.13

1,469.50

476.21

761.16

12,362.45

11,118.24

9,792.68

7,939.91

6,688.62

5,443.47

Inventories

710.67

761.09

854.47

629.57

589.36

644.14

1,320.10

0.00

1,003.37

1,974.32

1,976.31

1,587.97

67.86

413.17

59.26

235.11

66.97

45.50

Total Current Assets

2,098.63

1,174.26

1,917.10

2,839.00

2,632.64

2,277.61

Loans and Advances

6,704.23

6,010.98

4,313.88

2,690.14

2,205.44

2,493.82

0.00

0.00

1,028.09

602.18

1,210.67

0.00

8,802.86

7,185.24

7,259.07

6,131.32

6,048.75

4,771.43

Sundry Debtors
Cash and Bank Balance

Fixed Deposits
Total CA, Loans & Advances
Deferred Credit

0.00

0.00

0.00

0.00

0.00

0.00

6,330.91

2,127.45

3,261.80

2,391.91

1,767.97

1,624.05

825.24

850.80

866.66

702.49

702.57

651.99

Total CL & Provisions

7,156.15

2,978.25

4,128.46

3,094.40

2,470.54

2,276.04

Net Current Assets

1,646.71

4,206.99

3,130.61

3,036.92

3,578.21

2,495.39

0.00

0.00

0.00

0.00

0.00

0.00

Total Assets

23,382.88

23,814.55

20,954.12

18,229.27

16,495.78

13,890.56

Contingent Liabilities

21,759.26

929.30

825.97

1,229.25

849.43

978.44

55.32

51.67

49.54

470.93

443.83

390.36

Current Liabilities
Provisions

Miscellaneous Expenses

Book Value (Rs)

Key Financial Ratios of Tata Power Company

Mar
'14

Mar '13

Mar '12

Mar '11

Mar '10

1.00

1.00

10.00

10.00

Investment Valuation Ratios

Face Value

1.00

10.00

Dividend Per Share

1.25

1.15

1.25

12.50

12.00

11.50

Operating Profit Per Share (Rs)

9.65

8.53

7.55

63.98

78.37

50.79

36.35

40.32

36.11

290.82

299.37

327.74

--

--

41.74

399.41

372.15

308.95

0.47

0.47

0.47

0.47

0.47

0.51

26.55

21.15

20.90

22.00

26.17

15.49

18.35

16.13

12.99

13.68

18.78

10.63

Gross Profit Margin(%)

19.74

17.35

14.25

14.60

19.44

10.96

Cash Profit Margin(%)

16.60

13.49

16.98

18.10

18.63

10.88

Adjusted Cash Margin(%)

16.60

13.49

16.98

18.10

18.63

10.88

Net Profit Margin(%)

10.27

9.95

12.44

12.78

12.88

12.32

Adjusted Net Profit Margin(%)

10.27

9.95

12.44

12.78

12.88

12.32

Return On Capital Employed(%)

10.09

10.18

9.79

8.07

9.90

7.32

Return On Net Worth(%)

7.26

8.35

9.94

8.42

8.99

10.66

Adjusted Return on Net Worth(%)

7.26

8.35

8.72

7.36

8.47

5.56

55.32

51.67

49.54

470.93

443.83

390.36

55.32

51.67

49.54

470.93

443.83

390.36

10.82

10.72

10.16

8.39

9.94

7.67

Current Ratio

0.97

1.30

1.48

1.55

2.39

1.64

Quick Ratio

1.13

1.64

1.53

1.74

2.17

1.77

Debt Equity Ratio

0.78

0.91

0.78

0.63

0.57

0.61

Long Term Debt Equity Ratio

0.66

0.81

0.71

0.56

0.55

0.53

Interest Cover

2.72

3.51

4.16

3.53

4.02

3.33

Total Debt to Owners Fund

0.78

0.91

0.78

0.63

0.57

0.61

Financial Charges Coverage Ratio

3.39

4.05

5.10

4.31

5.02

4.15

2.78

3.05

4.38

4.16

4.39

4.86

12.14

12.57

14.50

17.79

18.98

15.49

6.59

19.07

5.76

3.49

3.99

4.83

Investments Turnover Ratio

12.14

12.57

14.50

17.79

18.98

15.49

Fixed Assets Turnover Ratio

0.58

0.71

0.69

0.66

0.71

0.81

Total Assets Turnover Ratio

0.37

0.40

0.41

0.38

0.43

0.52

Asset Turnover Ratio

0.37

0.43

0.44

0.40

0.47

0.58

Average Raw Material Holding

--

--

--

--

--

--

Average Finished Goods Held

--

--

--

--

--

--

Net Operating Profit Per Share

(Rs)
Free Reserves Per Share (Rs)
Bonus in Equity Capital
Profitability Ratios
Operating Profit Margin(%)
Profit Before Interest And Tax
Margin(%)

Return on Assets Excluding

Revaluations
Return on Assets Including
Revaluations
Return on Long Term Funds(%)
Liquidity And Solvency Ratios

Debt Coverage Ratios

Financial Charges Coverage Ratio

Post Tax
Management Efficiency Ratios
Inventory Turnover Ratio
Debtors Turnover Ratio

Number of Days In Working

65.52

151.18

171.99

181.32

123.79

0.14

1.74

63.72

63.18

61.28

73.86

--

--

--

--

--

--

--

--

0.78

0.88

0.74

0.67

3.89

3.76

7.37

1.70

0.78

4.47

35.47

26.65

25.38

31.53

30.07

27.75

Dividend Payout Ratio Cash Profit 21.95

19.66

17.06

20.45

19.99

20.38

Earning Retention Ratio

64.53

73.35

71.07

63.95

68.08

46.76

Cash Earning Retention Ratio

78.05

80.34

81.41

77.74

79.21

68.58

6.65

8.01

5.76

5.29

4.35

6.44

Capital

17.08

Profit & Loss Account Ratios

Material Cost Composition
Imported Composition of Raw
Materials Consumed
Selling Distribution Cost
Composition
Expenses as Composition of Total
Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit

AdjustedCash Flow Times

Earnings Per Share
Book Value

4.02

4.32

4.93

39.67

39.93

41.65

55.32

51.67

49.54

470.93

443.83

390.36