Chapter I INTRODUCTION

Introduction
Financial Management is the specific area of finance dealing with the financial decision corporations make, and the tools and analysis used to make the decisions. The discipline as a whole may be divided between long-term and short-term decisions and techniques. Both share the same goal of enhancing firm value by ensuring that return on capital exceeds cost of capital, without taking excessive financial risks. Capital investment decisions comprise the long-term choices about which projects receive investment, whether to finance that investment with equity or debt, and when or whether to pay dividends to shareholders. hort-term corporate finance decisions are called working capital management and deal with balance of current assets and current liabilities by managing cash, inventories, and short-term borrowings and lending !e.g., the credit terms extended to customers". #orporate finance is closely related to managerial finance, which is slightly broader in scope, describing the financial techniques available to all forms of business enterprise, corporate or not.

Role of Financial Managers$

The role of a financial manager can be discussed under the following heads$ %. &ature of work '. (orking conditions ). *mployment +. Training, ,ther qualifications and -dvancement .. /ob outlook 0. *arnings 1. 2elated occupations

3et us discuss each of these in a detailed manner.

%. Nature of work
-lmost every firm, government agency and organi4ation has one or more financial managers who oversee the preparation of financial reports, direct investment activities, and implement cash management strategies. -s computers are increasingly used to record and organi4e data, many financial managers are spending more time developing strategies and implementing the long-term goals of their organi4ation.

The duties of financial managers vary with their specific titles, which include controller, treasurer or finance officer, credit manager, cash manager, and risk and insurance manager. Controllers direct the preparation of financial reports that summari4e and forecast the organi4ation5s financial position, such as income statements, balance sheets, and analyses of future earnings or expenses. 2egulatory authorities also in charge of preparing special reports require controllers. ,ften, controllers oversee the accounting, audit, and budget departments. Treasurers and finance officers direct the organi4ation5s financial goals, objectives, and budgets. They oversee the investment of funds and manage associated risks, supervise cash management activities, execute capital-raising strategies to support a firm5s expansion, and deal with mergers and acquisitions. Credit managers oversee the firm5s issuance of credit. They establish credit-rating criteria, determine credit ceilings, and monitor the collections of past-due accounts. 6anagers speciali4ing in international finance develop financial and accounting systems for the banking transactions of multinational organi4ations. Cash managers monitor and control the flow of cash receipts and disbursements to meet the business and investment needs of the firm. 7or example, cash flow projections are needed to determine whether loans must be obtained to meet cash requirements or whether surplus cash should be invested in interest-bearing instruments. Risk and insurance managers oversee programs to minimi4e risks and losses that might arise from financial transactions and business operations undertaken by the institution. They also manage the organi4ation5s insurance budget.

7inancial institutions, such as commercial banks, savings and loan associations, credit unions, and mortgage and finance companies, as lending, trusts, mortgages, and investments, or programs, including sales, operations, or electronic financial services. These managers may be required to solicit business, authori4e loans, and direct the investment of funds, always adhering to tate laws and regulations. Branch managers of financial institutions administer and manage all of the functions of a branch office, which may include hiring personnel, approving loans and lines of credit, establishing a rapport with the community to attract business, and assisting customers with account problems. 7inancial managers who work for financial institutions must keep abreast of the rapidly growing array of financial services and products. 8n addition to the general duties described above, all financial managers perform tasks unique to their organi4ation or industry. 7or example, government financial managers must be experts on the government appropriations and budgeting processes, whereas healthcare financial managers must be knowledgeable about issues surrounding healthcare financing. 6oreover, financial managers must be aware of special tax laws and regulations that affect their industry. 7inancial managers play an increasingly important role in mergers and consolidations and in global expansion and related financing. These areas require extensive, speciali4ed knowledge on the part of the financial manager to reduce risks and maximi4e profit. 7inancial managers increasingly are hired on a temporary basis to advise senior managers on these and other matters. 8n fact, some small firms contract out all accounting and financial functions to The role of the financial manager, particularly in business, is changing in response to technological advances that have significantly reduced the amount of time it takes to produce financial reports. 7inancial managers now perform more data analysis and use it to offer senior managers ideas on how to maximi4e profits. They often work on teams, acting as business advisors to top management. 7inancial managers need to keep abreast of the latest computer technology in order to increase the efficiency of their firm5s financial operations.

2. Working conditions
7inancial managers work in comfortable offices, often close to top managers and to departments that develop the financial data these managers need. They typically have direct access to state-of-the-art computer systems and information services. 7inancial managers commonly work long hours, often up to .9 or 09 per week. They generally are required to attend meetings of financial and economic associations and may travel to visit subsidiary firms or to meet customers.

3. Emplo ment
(hile the vast majority is employed in private industry, nearly % in %9 works for the different branches of government. 8n addition, although they can be found in every industry, approximately % out of + are employed by insurance and finance establishments, such as banks, savings institutions, finance companies, credit unions, and

+. !raining" #t$er %ualifications and &dvancement

- bachelor5s degree in finance, accounting, economics, or business administration is the minimum academic preparation for financial managers. :owever, many employers now seek graduates with a master5s degree, preferably in business administration, economics, finance, or risk management. These academic programs develop analytical skills and provide knowledge of the latest financial analysis methods and technology. *xperience may be more important than formal education for some financial manager positions;notably, branch managers in banks. Banks typically fill branch manager positions by promoting experienced loan officers and other professionals who excel at their jobs. ,ther financial managers may enter the profession through formal management training programs offered by the company. #ontinuing education is vital for financial managers, who must cope with the growing complexity of global trade, changes in tate laws and regulations, and the proliferation of

new and complex financial instruments. 7irms often provide opportunities for workers to broaden their knowledge and skills by encouraging employees to take graduate courses at colleges and universities or attend conferences related to their specialty. 7inancial management, banking, and credit union associations, often in cooperation with colleges and universities, sponsor numerous national and local training programs. <ersons enrolled prepare extensively at home and then attend sessions on subjects such as accounting management, budget management, corporate cash management, financial analysis, international banking, and information systems. 6any firms pay all or part of the costs for employees who successfully complete courses. -lthough experience, ability, and leadership are emphasi4ed for promotion, this type of special study may accelerate advancement. 8n some cases, financial managers also may broaden their skills and exhibit their competency by attaining professional certification. There are many different associations that offer professional certification programs. 7or example, the -ssociation for 8nvestment 6anagement and 2esearch confers the #hartered 7inancial -nalyst designation on investment professionals who have a bachelor5s degree, pass three sequential examinations, and meet work experience requirements. The -ssociation for 7inancial <rofessionals !-7<" confers the #ertified #ash 6anager credential to those who pass a computer-based exam and have a minimum of ' years of relevant experience. The 8nstitute of 6anagement -ccountants offers a #ertified in 7inancial 6anagement designation to members with a B- and at least ' years of work experience who pass the institute5s four-part examination and fulfill continuing education requirements. -lso, financial managers who speciali4e in accounting may earn the #ertified <ublic -ccountant !#<-" or #ertified 6anagement -ccountant !#6-" designations. #andidates for financial management positions need a broad range of skills. 8nterpersonal skills are important because these jobs involve managing people and working as part of a team to solve problems. 7inancial managers must have excellent communication skills to explain complex financial data. Because financial managers work extensively with various departments in their firm, a broad overview of the business solvers, applying their analytical skills to business. They must be comfortable with the latest computer technology.

-s financial operations increasingly are affected by the global economy, financial managers must have knowledge of international finance. <roficiency in a foreign language also may be important. Because financial management is critical for efficient business operations, well-trained, experienced financial managers who display a strong grasp of the operations of various departments within their organi4ation are prime candidates for promotion to top management positions. ome financial managers transfer to closely related positions in other industries. Those with extensive experience and access to sufficient capital may start their own consulting firms.

'. (o) outlook

ome companies may hire financial managers on a temporary basis, to see the organi4ation through a short-term crisis or to offer suggestions for boosting profits. ,ther companies may contract out all accounting and financial operations. *ven in these cases, however, financial managers may be needed to oversee the contracts. #omputer technology has reduced the time and staff required to produce financial reports. -s a result, forecasting earnings, profits, and costs, and generating ideas and creative ways to increase profitability will become a major role of corporate financial. 7inancial managers who are familiar with computer software that can assist them in this role will be needed.

*. Earnings
The -ssociation for 7inancial <rofessionals5 %0th annual compensation survey showed that financial officers5 average total compensation in '990, including bonuses and deferred compensation, was ='0%,>99. elected financial manager positions had average total compensation as follows$

? = @ice president of finance Treasurer -ssistant vice president-finance #ontrollerAcomptroller Birector -ssistant treasurer -ssistant controllerAcomptroller 6anager #ash manager )01,999 )9%,'99 '>',099 '0>,099 ''1,'99 ''),>99 ')%,999 %01,999 %'C,+99

3arge organi4ations often pay more than small ones, and salary levels also can depend on the type of industry and location. 6anagers in both public and private industry receive additional compensation in the form of bonuses, which also vary substantially by si4e of firm. Beferred compensation in the form of stock options is becoming more common, especially for senior level executives.

+. Related occupations
7inancial managers combine formal education with experience in one or more areas of finance, such as asset management, lending, credit operations, securities investment, or insurance risk and loss control. (orkers in other occupations requiring similar training and skills include accountants and auditorsD budget analystsD financial analysts and personal financial advisorsD insurance underwritersD loan counselors and officersD securities, commodities, and financial services sales agentsD and real estate brokers and sales agents.

Need For Study

 The study has great significance and provides benefits to various parties whom directly or indirectly interact with the company. 8t is beneficial to management of the company by providing crystal clear picture regarding important aspects like liquidity, leverage, activity and profitability The study is also beneficial to employees and offers motivation by showing how actively they are contributing for company5s growth. The investors who are interested in investing in the company5s shares will also get benefited by going through the study and easily take a decision whether to invest or not invest in the company5s shares.

Objectives of the Study

To study the financial soundness of Eenting 3anco !8ndia" <rivate 3imited. To study and analyses the funds management in the organi4ation. To evaluate the various sources and applications in the organi4ation. To give suggestions if any the measure for a better funds management in the organi4ation.

Methodology
The research methodology is collecting the data in two ways.

 <rimary Bata ,rimar -ata. The <rimary data are those which are collected a fresh and for the first time. /econdar -ata$ The secondary data are those which have already been collected by someone else and which have already been passed through the statistical process. They are #ompany reports, *xisting reports, /ournals, (ebsites and Balance sheets are the secondary data. econdary Bata

0imitations of t$e stud .

%. out. '. ,ne of the factors of the study was lack of availability of ample information. 6ost of the information has been kept confidential and as such as not assed as art of policy of company. Time is an important limitation. The whole study was conducted in a period of 09 days, which is not sufficient to carry out proper interpretation and analysis. The below mentioned are the constraints under which the study is carried

Chapter II
THE ELECTRICITY REGULATORY COMMISSION ANALYSIS
(SUBSTANTIVE ISSUES RAISED PUBLIC)
BY THE

-ndhra <radesh *lectricity 2egulatory #ommission was constituted on )%.9).%CCC under the -.<. *lectricity 2eform -ct, %CC>. ince its inception, the -<*2# has taken several initiatives to improve the functionality of the <ower ector in the state of -< to make it viable and more importantly to protect the interests of the consumers. The commission issued 3icenses to the -<T2-& #,, the four Bistribution #ompanies and the nine 2ural *lectric #ooperatives in the state. issued. ix Tariff ,rders have been everal path breaking documents have been formulated and released relating to

the performance of the 3icensees and protection of the interests of the consumer5s vi4., #ustomer5s right to information, 3icenseeFs complaint handling procedure, the grid code, Euidelines for 8nvestment proposals, 3oad 7orecasting and <ower <rocurement procedure, 6erit ,rder Bispatch and 3ong Term tariff <rinciples !3TT<" etc. #onsequent to the enactment of the *lectricity -ct '99), the #ommission formulated and notified a number of 2egulations on important aspects of *lectricity to the consumers. #ommission has facilitated competition in <ower sector by notifying regulations on Terms and #onditions of ,pen -ccess !uAs +'" and is in the process of notifying regulations for Trading in *lectricity !uAs .'". #ommission is also contemplating to introduce -vailability Based Tariff !-BT" at the state level from '990-91 onwards as required in the &ational *lectricity <olicy notified by The #ommission is also set to introduce 6ultiyear tariff regime from '990-91 onwards so as to ensure 2egulatory #ertainty and to improve the financial and operational efficiency of the Bistribution 3icensees. The (ebsite is part of the endeavors of the #ommission to usher in and function in an environment of transparency in its operations. improvement of the website are welcome. uggestions for upply of

Regulation No. 1 of 2007 !R&N/MI//I#N 0ICEN/EE /!&N-&R-/ #F ,ERF#RM&NCE

8n exercise of the powers conferred by sections %>% read with section .1 !%", .1 !'" and >0 !%" !i" of the *lectricity -ct, '99) !)0 of '99)", the -ndhra <radesh *lectricity 2egulatory #ommission makes the following 2egulation, namely$

1. SHORT TITLE AND COMMENCEMENT

%.% This 2egulation may be called the G-ndhra <radesh *lectricity 2egulatory #ommission !Transmission tandards of <erformance" 2egulation, '991H. %.' This 2egulation shall be applicable to the tate Transmission ?tilityA Transmission 3icensee in the tate of -ndhra <radesh. %.) This 2egulation extends to the whole of the tate of -ndhra <radesh. %.+ This 2egulation shall come into force on the date of its publication in the official Ea4ette of -ndhra <radesh.

2. DE INITIONS
'.% 8n this 2egulation, unless the context otherwise requires$ !a" G-ctH means the *lectricity -ct, '99) !#entral -ct &o. )0 of '99)"D !b" G-<T2-& #,H means Transmission #orporation of -ndhra <radesh 3imited registered under the #ompanies -ct, %C.0D !c" G#*-H means the #entral *lectricity -uthorityD !d" G#ommissionH means -ndhra <radesh *lectricity 2egulatory #ommissionD !e" G#onsumerH in the context of this 2egulation means any person who is provided with the transmission services by the transmission licensee and includes any person whose premises are for the time being connected for the purpose of providing

transmission services from the licensee, and persons who have applied for availing transmission services from a transmission licensee. !f" G*:@A*:TH means *xtra :igh @oltageA*xtra :igh Tension !voltage level above )),999 volts"D !g" GErid #odeH means the set of principles and guidelines prepared in accordance with the terms of ection >0 !%" !h" of the *lectricity -ct '99)D !h" G8*E#H means the 8ndian *lectricity Erid #ode approved by #entral *lectricity 2egulatory #ommission !#*2#" and Erid #ode specified by #entral #ommission under clause !h" of sub-section !%" of section 1C of the -ctD !i" G<E#83H means <ower Erid #orporation of 8ndia 3imited, a #entral Transmission ?tility notified under sub-section !%" of section )> of the -ctD !j" G2ulesH means the 8ndian *lectricity 2ules, %C.0 andAor any other rules made under -ctD !k" G tateH means the tate of -ndhra <radesh !l" G tate Transmission ystemH means the system of *:@ electric lines and

electrical equipment operated andAor maintained by tate Transmission ?tility andAor any Transmission 3icensee for the purpose of the transmission of electricity among generating stations, external interconnections, distribution systems and any other user connected to it with in the state of -ndhra <radeshD !m" G?serH means a person, including Eenerating customer who use the tate Transmission tations within the tate,

Transmission 3icensees or Bistribution 3icensees within the provisions of the Erid #odeD

tate and open access

ystem and who must comply with the

2.2 Words and expressions used but not defined herein shall have the meaning assigned to them in *lectricity -ct '99), 8ndian *lectricity Erid #ode, -ndhra <radesh *lectricity Erid #ode and 8ndian *lectricity 2ules, %C.0.

3. O!"ECTI#E
This 2egulation lays down the performance standards to maintain certain critical grid parameters within the permissible limits. These standards shall serve as guidelines for tate Transmission ?tility ! T?"ATransmission 3icensee to operate the 8ntra- tate Transmission performance standards are$ !a". To ensure that the grid performance meets minimum standards essential for the ?sers5 system demand and proper functioning of equipmentD !b". To enable the ?sers to design their systems and equipment to suit the electrical environment that they operate inD and !c". To enhance the quality standards of the tate Transmission ystem in order to move towards standards stipulated in or established under the authority of &ational and tate -cts and 2ules in the short term and gradually towards the international standards in the long term. ystem for providing an efficient, reliable, coordinated and economical system of electricity supply and transmission. The main objectives of these

2. STANDARDS O $ER ORMANCE

2.1 The Transmission performance standards are classified under the following two categories$ !a" 6andatory tandards - Those performance standards, the failure to maintain which attracts the provisions of sub-section !'" of the section .1. !b" Besirable tandards - Those performance standards, which are desirable for providing quality, continuity and reliability of services by the 3icensees, and though also specified by the #ommission do not, unless provided otherwise by the #ommission from time to time, attract the provisions of sub-section !'" of the section .1. 2.2 !$e following standards are the mandatory standards$ !a" @oltage @ariation !b" afety tandards

These are statutory standards to be complied with by the 3icensee as per *lectricity 2ules %C.0 wherever not inconsistent with the -ct. The new 2ules under section .) of -ct are yet to be issued by the #*- in consultation with the new 2ules under the -ct come into effect. 2.3 Besirable standards too have been specified herein under section >0 !%" !i" of the -ct, with the main objective of providing quality, continuity and reliability of services to the consumers. The #ommission shall fix the time-bound schedule for implementationAcompliance ofAwith each parameter of these standards. The following standards are specified herein as desirable of achievement$ !a" 7eeder -vailability !b" ub-station -vailability tate Eovernment. The standards specified in this 2egulation shall therefore be revised after

!c" @oltage ?nbalance !d" &eutral @oltage Bisplacement !&@B" !e" @oltage @ariation 8ndex !@@8" !f" !g" ystem -dequacy ystem ecurity

'. $HASIN% O IM$LEMENTATION

'.1 The performance standards excepting the 6andatory tandards, specified herein shall be implemented in a phased manner in three stages as follows$ !a" <reliminary tage !3evel-%"$ The time period of two !'" years immediately after these standards come into force shall be considered as <reliminary tage. Buring this preliminary stage, tandards marked as 3evel % shall be achieved, unless specified otherwise. !b" Transition tage !3evel-'"$ Time period spreading up to three !)" years after the <reliminary tage shall be considered as Transition tage. Buring this period, the

licensee is expected to upgrade its systems.

tandards marked as 3evel ' shall be

achieved during Transition tage, unless specified otherwise. !c" 7inal tage !3evel-)"$ Two years after expiry of the Transition tage when substantial improvements should have been carried out and the system considered to be in satisfactory condition with necessary capability improvement. tandards marked as 3evel ) shall be achieved during this 7inal tage.

'.2 8n all cases, where standards are specified by appropriate authorities, for example *lectricity 2ules %C.0, such standards shall be required to be complied with as specified by that authority, may be from the preliminary stage itself.

/tandards to )e complied wit$.

'.3 The #ommission specifies the following standards for T?ATransmission 3icensees$ 3a4 5oltage 5ariation. !i" @oltage @ariation is defined as the deviation of the root-mean-square !26 " value of the voltage from its nominal 26 duration for a time greater than one minute. !ii" 7or the purpose of these standards, the sustained variation in steady state voltage exceeding one minute duration shall be considered. The specified permissible limits of sustained voltage variation shall not apply in the cases where the circumstances are reasonably beyond the control of tate Transmission ?tility ATransmission 3icensee e.g. major break-downs, grid failures, accidents, system distress conditions, etc. !iii" tate Transmission ?tility ATransmission 3icensee shall make all possible value, expressed in terms of percentage. @oltage @ariation may be either of short duration not exceeding one minute or of long

efforts to ensure that the grid voltages remain within the following voltage levels at all points of its Transmission ystem$

Nominal 5oltage 3k54 +99 ''9 %)' )) %%I

Ma6imum 5alue 3k54 +'9 '+. %+. ). %%.01

Minimum 5alue 3k54 )09 '99 %'9 )9 %9

& ''k# (oltages to )e maintained )* the transmission licensee onl* in those cases +here ''k# su,,l* is e-tended from the EHT su)station.

3)4 /afet /tandards.

!i" tate Transmission ?tility ATransmission 3icensee shall observe the general safety requirements as laid down in 8* 2ules, %C.0, for construction, installation, protection, operation and maintenance of electric supply lines and apparatus. !ii" 2elevant rules under 8* 2ules, %C.0 pertaining to safety standards and practices shall be followed. !iii" tate Transmission ?tility A Transmission 3icensee shall develop its own ,peration and 6aintenance 6anual !including afety 2egulations !iv" tate Transmission ?tility A Transmission 3icensee shall develop its own ,peration and 6aintenance 6anual !including afety 2egulations" #lause !c" of section 1) read with ection .) of the -ct. 3c4 Feeder &vaila)ilit . !i" The feeder availability gives the percentage of time during which the feeder remained available for transmission. 7eeder -vailability shall be calculated based on following formula

7 &vaila)ilit of 8 3No of feeders 9 :+*; < &nnual outages in feeder<$ours4 9 1;; Feeder !otal availa)ilit in feeder<$ours :ere, total availability in hours is equal to the number. of hours in a year i.e. >109 !non-leap year" !ii" The Transmission 3icensee shall achieve CCJ feeder availability from the preliminary stage itself. 3d4 /u)<station &vaila)ilit . !i" The sub-station availability expressed in percentage is the measure of the extent the power transmission capacity remained available from a sub-station. ub-station availability shall be calculated based on following formula$
7 &vaila)ilit of // 8 3Installed capacit in M5& 9 :+*; < #utage in M5& 9 =ours4 Installed capacit in M5& 9 :+*;

!ii" The Transmission 3icensee shall achieve C1J ubstation availability from the preliminary stage itself.

3e4 5oltage >n)alance. !i" The phase voltages of a )-phase supply should be equal in magnitude and
phase angle. The loads on each phase should be balanced. Beviations will result in decreased efficiency, negative torque, vibrations and overheating. could lead to malfunctioning of some equipment. follows$ J @oltage ?nbalance K 6ax Beviation from 6ean of L@2M, @MB, @B2N O %99 6ean of L@2M, @MB, @B2N evere unbalance The unbalance is computed as

(here, @2M is @oltage between 2 P M phases, @ MB is @oltage between M P B phases and @B2 is voltage between B P 2 phases.

!ii" ubject to Bistribution 3icensee!s" observing the Erid #ode #onnection #onditions in this regard, the voltage unbalance shall not exceed the values given below$

Implementation /tage

5oltage 0evel

0imit of voltage un)alance ' J ) J )

<reliminary tage - 3evel % Transition tage - 3evel ' Transition tage - 3evel '

''9k@ and -bove %)'k@ ))k@ and %%k@ buses in *:@ ubstation J

<rovided that the above limit for @oltage unbalance at the interconnection point with Bistribution ystem are subject to

3icensee maintaining current unbalance between phases within limit of )J applied for all feeders of one voltage class emanating from a sub-station including railway traction etc. measured at ) sub-stations in a row. The @oltage unbalance shall be measured at sub-stations provided with measuring instruments having accuracy class within %J limit.

3f4 Neutral 5oltage -isplacement 3N5-4.

!i" ?nbalance in loads on three phases cause shifting of neutral from earth potential. &eutral displacement is applicable for transformers with Q tar <oint5 solidly grounded. ?nder GsolidlyH grounded conditions, the potential of neutral should be equal to earth i.e. 4ero. But in actual conditions, the earthing of the star point is imperfect and so the star to ground offers small resistance. This results in flow of negative sequence currents !because 82 R 8M R 8B is not equal to 4ero, where, 8 2 is the current in the 2<hase, 8M is the current in the M-<hase and 8B is the current in the B-<hase" through

neutral to ground. The neutral therefore shifts from earth potential. This performance standard shall be achieved for star point of all *:T transformers having ))k@ or %%k@ on the low voltage side. !ii" ?nbalance voltages and displacement of neutral result in decreased efficiency, negative torque, leakage currents, vibrations and overheating. evere unbalance and neutral displacement could lead to malfunctioning of some equipment. !iii" The tate Transmission ?tility ATransmission 3icensee shall ensure that the neutral point voltage of the transformers with respect to earth will not have potential greater than 'J of the no load phase to phase voltage of the transformer. !iv" This standard shall be implemented in the <reliminary tage !3evel %" itself.

3g4 5oltage 5ariation Inde6 355I4.

@oltage @ariation 8ndex representing the degree of voltage variation from nominal value !in J" over a specified period of time shall be computed separately by the tate Transmission ?tility ATransmission 3icensee for higher than nominal system voltage and lower than nominal system voltage as per the following formula$

N 55I 8 /%uare Root of ? 35i @ 5s4 2 A NB 9 31;; A 5s4 7 I81

W$ere" @i K 26 value of measured voltage !in k@" at i th hour in the period for which @@8 is computed @s K 26 value of the nominal system voltage i.e. +99k@, ''9k@ and %)'k@ etc. as may be applicable at the interconnection point & K &umber of hourly measurements over the specified period of time The data from defective metering or any abnormal data shall be discarded from calculations. The @@8 shall be computed on monthly basis$ <reliminary tage S 3evel % TK %9 to be achieved for more than C9J of buses

Transition tage S 3evel ' 7inal tage S 3evel )

TK 0 TK +

to be achieved for more than C9J of buses to be achieved for more than C9J of buses

3$4 / stem &de%uac .

ystem adequacy is the ability of the electric system to receive the generated power or supply the aggregate electrical demand and energy requirements of its consumers at all times, taking into account scheduled and reasonably expected unscheduled outage of system elements. -dequacy of the power system is usually measured in terms of 3oss of 3oad <robability !3,3<". 3,3< is the probability of transmission system capacity not being able to meet system load. 3,3< can also be expressed as 3oss of 3oad *xpectation !3,3*" in hours per year. This measure does not consider the amount or duration of the generation capacity shortfall. tate Transmission ?tility ATransmission 3icensee are expected to achieve 3,3* hours in percentage as under$

Implementation /tage

Nos. of $ours in ear w$en s stem demand

0oss #f 0oad E6pectation 30#0E4 in 7 of $ours 3C8C 91;;A:+*;4

can )e full met su)Dect to generation availa)ilit 3&4

can not full met even wit$ generation availa)ilit 3C 8 :+*; < &4

<reliminary tage S 3evel % Transition ' tage S 3evel

1++0 1>>+ >01'.+

%)%+ >10 >1.09

%.J %9J %J

7inal tage S 3evel )

3i4 / stem /ecurit .

ecurity is the ability of the electric system to withstand sudden disturbance such as electric short circuit or unanticipated loss of system element, detailed in #lause 0 of G6anual on Transmission <lanning #riteriaH issued by #*-. The tate Transmission ystem shall be designed for a security level of Gn-%H i.e. to withstand a single contingency with little negative effect. This means the most severe fault or tripping of a critical generator, transformer or line should not result in instability of the system, overloading lines andAor transformers for more than %. minutes, voltage drop of more than %9J when the system import is increased by '9J. tate Transmission ?tility ATransmission 3icensee shall maintain the system security level of Un-%U !single contingency" plus spinning reserve margin for teady tate ,peration.

Implementation /tage

/ stem /ecurit 0evel of En<1F 3/ingle Contingenc 4 plus spinning reserve margin of. &o requirement mandatory

<reliminary tage S 3evel % Transition tage S 3evel ' 7inal tage S 3evel )

9..J of system peak load %J of system peak load

*. RE$ORTIN% RE./IREMENT AND COM$LIANCE

*.1 tate Transmission ?tility ATransmission 3icensee shall furnish to the #ommission an half yearly report in the format prescribed at -&&*O?2*--, by ,ctober )% st and -pril )9th of each year on actual performance vis-V-vis the performance standards laid down in these standards as modified from time to time. The report shall contain all parameters irrespective of whether such parameters are applicable during the current reporting

period. The tate Transmission ?tility ATransmission 3icensee shall maintain the base data like 3og heet, #omplaint 2egisters and 8nterruption 2egister and relevant load flow studies in respect of system security etc. at sub-station level for compilation of monthly report at circle level. The consolidated report shall be based on circle-wise compilation for whole tate Transmission ?tility ATransmission 3icensee. The circle-wise compilation and base data at sub-station level shall be subject to its scrutiny as considered necessary by the #ommission. *.2 The tate Transmission ?tility ATransmission 3icensee shall display on their website the actual performance against the required standards on a monthly basis. *.3 7or the purpose of this 2egulation, the half-year periods would be as follows$ !a" %st :alf year$ %st -pril to )9th eptember !b" 'nd :alf year$ %st ,ctober to 6arch )%st. *.2 The #ommission may, from time to time, modify the contents of the regulationAformats or add new regulationAformats for additional information. *.' 8n addition to the hard copies, the information shall necessarily be submitted in such electronic form or through compact disks or e-mail as the #ommission may direct. *.* Effect of default in compliance with the tandards !a" #onsequent to failure of tate Transmission ?tility ATransmission 3icensee to meet performance standards specified herein, the affected ?tilityA#onsumers shall be entitled to seek reliefAcompensation from tate Transmission ?tility ATransmission 3icensee, as may be determined by the #ommission$ <rovided that the T?ATransmission 3icensee shall be given an

opportunity of being heard before such compensation is determined by the #ommission$ <rovided further that the compensation so determined shall be payable within C9 days of its determination by the #ommission$ <rovided also that the payment of compensation by the tate Transmission ?tility ATransmission 3icensee shall be without prejudice to any penalty, which may be imposed or prosecution initiated by the #ommission as provided in the -ct.

!b" The #ommission at its own discretion may require the tate Transmission ?tility ATransmission 3icensee to furnish a report on actual performance levels maintained against the standards specified by the #ommission with its <etitions for -nnual 2evenue 2equirement !-22" and Tariff Betermination, which shall be subject to public hearing for tariff setting by the #ommission.

+. MISCELLANEO/S &nnual Review of ,erformance /tandards

+.1 The #ommission in consultation with tate Transmission ?tility ATransmission

3icensee shall review the performance standards for Transmission ystem as specified above once in every . years or more frequently as may be required.

Use of the Information

+.2 The #ommission shall have the right to use the information submitted by tate

Transmission ?tility ATransmission 3icensee as it deems fit including publishing it or placing it on the #ommissionFs website andA or directing the tate Transmission ?tility ATransmission 3icensee to display the information in the licensee5s website.

,ower to &mend
+.3 The #ommission may, at any time add, vary, alter, modify or amend any provisions of this 2egulations.

/avings
+.2 &othing in this 2egulation shall be deemed to limit or otherwise affect the inherent power of the #ommission to make such orders as may be necessary to meet the ends of justice or to prevent abuses of the process of the #ommission. +.' &othing in this 2egulation shall bar the #ommission from adopting in conformity with the provisions of the -ct, a procedure, which is at variance with any of the

provisions of this 2egulation, if the #ommission, in view of the special circumstances of a matter or class of matters and for reasons to be recorded in writing, deems it necessary or expedient for dealing with such a matter or class of matters. +.* &othing stated in this 2egulation shall, expressly or implicitly, bar the #ommission from dealing with any matter or exercising any power under the -ct for which no 2egulation has been framed, and the #ommission may deal with such matters, powers and functions in a manner it thinks fit.

E6emption
+.+ The #ommission may relax adherence to specific performance standard during 7orce 6ajeure conditions such as war, mutiny, civil commotion, riot, flood, cyclone, storm, lightening, earthquake, grid failure, and strikeAcurfew, lockout, fire affecting the tate Transmission ?tility5sA Transmission 3icenseeFs installations and operation activities. +.: The #ommission under specific circumstances may also relax any provisions of 2egulation in general or in specific cases for the period!s" specified in its order!s".

Cha,ter 0 III ,#WER IN->/!RG

IN->/!RG ,R#FI0E
*3*#T28#8TM is one of the vital requirements in the over all development of the economy and is therefore, appropriately called the HW$eel of -evelopmentI. 8n fact, the power sector has played a dominant role in the socioeconomic development of the county. -s a convenient versatile and relatively cheap form of energy it plays a crucial role in agriculture, transport, industry and domestic sector. :ence power has all along remained in the priority list of 8ndian planners and plan outlays have reflected this aspect. The outlays for power sector have been around %CJ of the total outlays for the public sector in various plan periods. There has been a spectacular increase in the installed generating capacity of electricity in the country. tarting with a capacity of about %)096( at the time of independence, Bespite tremendous increase in the availability of power since independence there is acute power shortage gap between demand and supply. The per capita consumption of power in the country is very low as compared to the position in the developed countries. <ower is a key input for economic growth has as direct relationship with the national productivity as also the overall economy of the country. There has been diversification of the sources of generation in terms of hydel, thermal and nuclear sources. The share of hydel in the total generating capacity had drastically come down and that of thermal had shown noticeable increase. -nother significant change is the increasing share of #entral sectors in recent years. The share of the thermal element in the installed generating capacity, which is also predominantly coal-based, shows a steady increase. Thus, the relatively cheaper and a more desirable change in terms of a higher share of hydel source, which is renewable, have not materiali4ed.

$O1ER SCENARIO
The power sector is at cross roads today. There is a chronic power shortage in the country mainly attributable to demand of power continuously outstripping the supply.

H2DEL $O1ER
8n the present global energy context, there are certain aspects, which have acquired a new significance. The development of hydropower has to be given a major thrust in the current decade. (e still have large untapped hydro power potential, but its development has slowed down on account of lack of financial resources, interstate rivalry, inefficiency of certain state electricity boards, variations in the course of the monsoons etc. a concerted effort is imperative to overcome the hurdles and enlarge the share of the hydro power generation in the country. This will help not only in tapping a renewable resource of energy, but will provide essentially needed peaking support to thermal power generation with the pattern of demand for electricity. ince the planners5 initial enthusiasm about the large hydel projects has waned somewhat, 8ndia will do well to take resource to the #hinese pattern of micro and mini hydel projects wherever the terrain is suitable. The &ational :ydroelectric <ower #orporation has been assigned a dominant role in accelerating the development of the large hydel potential in 8ndia, particularly in the :imalayan region. - top level official committee has recommended a 2s. )99 #rore renovation and moderni4ation !2 P6" programmed that will seek to cover C) hydel power plants in 8ndia and result in additional capacity of .'1.>% 6(. The growth of the power sector was marked by adequate share of hydro capacity up to the end of Third five-year <lan !%C0%-00". :owever, thereafter there has been a continued decline and the proportion of hydropower has dropped from +..>0J in %C00 to about '>J by 6arch %CC'. 6any of the problems in the power supply and power

system in the country can be attributed inter alia to the declining hydro share in the power system and consequent growth of thermal development in the sub-optimal manner. Eovernment of 8ndia has recently constituted a group to identify new hydel projects on which advance action can be taken. 8n order to give a boost to the development of hydro power more and more hydro electric projects are being planned or being implemented in the central sector. 8n order to achieve this four #orporations have already been set up under #entral or in joint sectors.

They are %. &ational :ydroelectric <ower #orporation !&:<#". '. &ortheastern *lectric <ower #orporation !&**<#,". ). Tathpa /hohri <ower #orporation !&/<#".

MINI =G-E0 ,0&N!/.

There are a number of states in the #ountry where mini hydel projects can be set up at comparatively lower investments to supplement other sources of energy. -ccording to reliable estimates the total potential of mini-hydel plants all over the country is around .9996(. This includes ',9996( in hilly areas at Ghigh heads and low dischargeH points and )996( at Glow heads and low BischargeH points. <articular drops and irrigation systems. 6any of the tates have surveyed potential mini-hydel schemes and

identified several sites for instance, <unjab has identified %)9 falls. (ith a combined capacity of %99 6(. -ndhra <radesh has identified projects that could yield a total of .96( while Warnataka has estimated that some %1. mini- hydel projects in the state could yield '99 6(. /ammuPWashmir have identified .+ mini-hydel project sites while Tamil&adu has carried out feasibility studies on 1' sites with a total potential of %.96(. The (orld Bank has estimates, the cost of generation from mini-hydel turbines to be only 09 paise per k(h at 09 per cent plant load factor.

MINI<=G-E0 /C=EME/ =&5E /E5ER&0 &-5&N!&JE/.

%. They do not require larger capital investment and their gestation period is only %' to %> months. '. They are ideal for decentrali4ed energy generating sources. ). These projectors cause very little environmental disturbances, and also do not have to depend on any of the already depleting sources of energy.
+.

- large number of sites for mini-hydel projects are easily accessible, as they are located on existing canals and irrigation systems.

!=ERM&0 ,#WER.
Thermal units have emerged as the largest source of power in 8ndia. But unfortunately, the progress of power generation in this sector has not been marked by any new breakthrough. -t present stress continues to be laid on thermal power station because of shorter construction time. ?sing better project management techniques is shortening the construction period for these plants. 8t has been possible to improve overall efficiency of thermal plant by using gas turbines in conjunction with conventional steam turbines. The union government has, in order to step up central generation in the country, established super thermal power tation in different regions. The &ational Thermal power #orporation !&T<#" was established in %C1. with the object of planning, promoting and organi4ing integrated development of thermal power in the country.

=IJ=0IJ=!/.
%. Two part system for thermal tariffs and single tariff for hydel projects. '. *xchange fluctuations to be compensated ). ,perating and 6aintenance expenses at '.. per cent respectively for thermal and hydel units in the base year.

+. ,ptimal capacity utili4ation norm for thermal units$ 0999kwhAkwAyear$ C9 per cent dependable hydrology for stations exceeding %.6* capacity. .. Tariff to be computed for a period of five years. 0. 2ate of return on equity will be %0 per cent.

!=E /!&!E E0EC!RICI!G C#&R-/.

The tate electricity boards ! *Bs" are autonomous bodies created under the *lectricity !supply" act, %C+> and have the statutory responsibility of generating and supplying power in the most economical manner to the consumers. The underlying idea behind the central enactment was to confer autonomy on the *Bs so as to enable them to function strictly on #ommercial principles.

R#0E #F N&!I#N&0 !=ERM&0 ,#WER C#R,#R&!I#N 3N!,C4

8n just %1 years &ational Thermal <ower #orporation !&T<#" has grown to be the largest producer of electric power in the #ountry. (ith over %),9996( commissioned capacity and approved capacity of %0,>).6( at an estimate of 2s. '),'%> #rore. This installed capacity of the company accounts for about '0J of the thermal capacity and %>J of the total capacity of the country. The company has also played the lead role in the augmentation of transmission network by setting up of around %1,999 circuit kilometers of high voltage transmission network across the country. These transmission systems now stand transferred to the newly formed <ower grid #orporation of 8ndia. &T<# has been playing a significant role in meeting the #ountry5s power demand.

JE# ,#WER /G/!EM

Eeo <ower ystem is a natural air-conditioning system for residential and commercial premises, using geothermal energy available beneath the ground surface at a depth of . meters. 8t is intelligently designed to ventilate the interiors to all corners and to effectively enhance the internal conditions by removal of formaldehyde which is harmful to one5s health. This system provides natural environment-like conditions to oneself, increases house life and protects the environment.

Jeo !$ermal Energ

Eeo Thermal energy can be explained in simple terms as the thermal energy available at a depth of . meters below the ground where the temperature remains stable all round the year between %.-%> degrees #entigrade i.e. .C-0. degrees 7ahrenheit. This thermal energy does not change with respect to the outside temperature considerably. The only change visible is very small which also has a time lag with respect to outside temperature. The temperatures beneath the ground are rather cool !%. degrees #" when in summer and warm enough !%> degrees #" during winter. This provides the feed for the natural air conditioning system.

Jeo ,ower / stem #peration

E*, <ower ystem is a three in one system combining the effectiveness of three factors namely, Eeothermal *nergy R -ir #irculation R @entilation. This system is one of a kind system which ensures high quality of life with high performance at a relatively low cost

-uring /ummer
Cool &ir InsideA=ot &ir #utside

5entilation
Eround -ir is pumped into the house after being cooled by the E*, <8<*. The hot air is being ventilated out of the house throughthe attic ventilation

Circulation

Eround -ir is pumped into the house after being cooled by the E*, <8<*

-uring Winter
Ma6imum >se of Warm and Jenerated =eat Keep awa from Cold &ir.

5entilation
Eround air is pumped into the house after being heated up by the E*, <ipe. #urrent -ir 6ass is discharged from the attic ventilation.

Circulation
By ?sing the Eeo Thermal :eat, the heat generated in the house and the available hot mass, the house is kept away from the cold. The special system namely olar Bless introduces the heat from the sun to the cobble stone layer for recycling it to the interiors

!$e effect of Jeo ,ower / stem /alient Features of Jeo ,ower / stem L or Human RaceM

1. Recovering /elf Resistance

:uman body is empowered by nature to regulate self temperature. -lthough this power has been declining due to the increasing usage of air conditioning systems in all seasons, the usage of this natural air conditioning system helps in the revival of this power.

2. =ealt$ and Comforta)le 0iving /pace

The systems usage of natural resources to effectively control the temperature and ventilate at all hours, successfully creating a better, healthier and comfortable living space.

3. ,rotects t$e Goung and t$e #ld

8n this age where child care and better health services for all especially of the old have taken primary significance, the power of this system which minimi4es temperature differences between interior rooms helps better health keeping for the young and the old.

2. Natural ,urification
The system includes natural purification of minute impurities in the air which are cleaned before being pumped into the house. This is done with the help of condensed moisture which accumulates at the surface of the cobblestones and the pipes.

'. =umidit control and Jerm ,revention

?sing &atural Behumidifiers and health care material like tourmaline, charcoal and copper the humidity is controlled and also help in germ prevention.

LEcos stem and EnvironmentM 1. Energ /aving

The most scarce resource in the world is the forms of energy available to mankind. (ith ever increasing dependence on electricity as a medium of energy, the invention of alternative energy resources is a tough ask. The usage of alternative energy form by this system greatly helps in reducing the usage of conventional electricity for air conditioning and also helps in reducing the emission of harmful #,' into the environment.

2. =eat Island ,$enomenon Reduced

2eduction in the usage of electric air conditioning systems helps in the reduction of the heat island phenomenon.

L!uilding StructureM

1. Increased -ura)ilit
The durability of the building both exteriors and interiors is increased by the prevention of mould and dewfall. The corrosion of the building mostly due to water reasons and humidity is avoided by using dehumidifier5s namely ceramic charcoal and others. This helps to maintain the good condition of the building.

2. 0ow Cost and Maintenance Friendl

ince the system is made up of several small independent units, the maintenance is simple and the costs for the same are low.

N>C0E&R ENERJG.
The planners, right from the beginning understood the importance of nuclear energy in meeting the country5s long-term energy needs. 2ecogni4ing that nuclear technology would be subject to a progressively restrictive technology central regime and also that the long term strategies for exploitation of the country5s vast thorium resources are bound to be some what different from those of most other countries engaged in nuclear power development, tremendous emphasis was placed on achieving self reliance in technology development. This policy has yielded rich dividends and today one can proudly use the reali4ation of indigenous capability in all aspects of the nuclear fuel cycle. %. Tarapur -tomic <ower Eujarat. '. 2ajasthan -tomic <ower tation !2-T "-8t provides electricity to 2ajasthan. ). 6adras -tomic <ower tation !6-< "-8t provides electricity to 6adras. +. &arora -tomic <ower tation !&-< "-8t provides electricity to up and Belhi. tation !T-< "-8t provides electricity to 6aharashtra and

&-5&N!&JE/.

%. &uclear source is clean, compact and concentrated. '. &uclear is economical. ). - unit of electricity from the nuclear power stations at Tarapur and Walpakkam cost +9 to .> paise per k(h compared with 09 to C9 paise per k(h from thermal tation in the respective regions.
+.

The greatest advantage of nuclear power is that it can be installed in location even remote from hydel and coal resources.

#CE&N ENERJG.
The long standing proposal to tap non-conventional source of ocean energy for power generation is expected to get a fillip with a joint team of the Tamilnadu electricity Board and the ,cean *nergy #ell 8ndian 8nstitute of Technology, 6adras commending the offer of the ?. . based firm sea solar power ! <" to set up 0 ,cean Thermal *nergy #onversion !,T*#" plants of %99 6( capacities each along the Tamilnadu #oast for serious consideration and recommending the setting up of one plant to begin with at Wulasekarpatnam area. The #apital cost per W.(. of power production is estimated at ? =%999 for ,T*# plant compared to ? =%%99 for oil based ? =''99 for coal based, ? =')+9 for hydro, and ? ='+.9 for nuclear power. The fuel cost in the case of ,T*# is practically nil. 6oreover valuable Bi products are obtained from ,T*# plants. These include fresh water for irrigation and drinking, hydrogen and oxygen which can be used as feedstock in manufacture of other products, ammonia that can be used as fertili4ers and methanol that can be mixed with gasoline. 8f the value of the power and by-products are added together, the annual income of the typical %996( plant can amount to more than ? =%99 million.

WIN- ENERJG.

(ind energy is fast emerging as the most cost-effective source of power as it combines the abundance of a natural element with modern technology. The growing interest in wind power technology can be attributed not only to its cost effectiveness but also to other attractive features like modularity, short project gestation and the nonpolluting nature of the technology. 8n 8ndia, the exercise to harness wing energy includes wind pumps, wind battery chargers, stand alone wind electric generators and grid connected wind farms. The department of non-conventional energy sources !B&* " in association with state agencies has been responsible for creating and sustaining interest in the field.

/#0&R ENERJG.
8t is believed that with just 9.% per cent of the 1.,999 trillion k:4 of solar energy that reaches the earth, planet5s energy requirement can be satisfied. *lectricity can be generated with the help of solar energy through the solar thermal route, as well as directly from sunlight with the help of olar <hoto@oltaic ! <@" technology. <@ ystems are being used for lighting, water pumping, and telecommunications and also for village si4e power plants in rural areas. <@ systems are being used to provide lighting under the &ational 3iteracy mission, refrigeration for vaccine storage and transport under the &ational immuni4ation programme, drinking water and power for telecommunications. 8ndian railways have been using this technology for signaling.

,RICINJ.
*lectricity by no means is a cheap form of energy. 8f its efficient use is to be encouraged, the price of electricity should reflect its true economic value. There could be cross subsidi4ation within the tariff structure to a limited extent, but this cannot be extended to a level where the viability of the industry is jeopardi4ed.

,R#C0EM/.

The power sector in 8ndia is beset with a number of problems. They relate to delays in the formulation and implementation of various projects, poor utili4ation of capacity, bottlenecks in the supply of coal to thermal station, and its poor quality, faulty distribution and transmission arrangements and bad planning leading to an injudicious hydel thermal mix. *cological problems are also vexing this sector. :urdles in environmental clearances tend to slow down completion of power projects. #ompensatory afforestation and land acquisition have proved to be major bottlenecks in the clearance of power projects. The main problem faced in the case of environmental clearances is the shortage of land for compensatory afforestation. (hile project authorities are prepared to invest funds in afforestation land, the state governments are not able to provide the required land. The Eovernment has proposed to set up a task force to look into clearances for power projects and speed up the clearances.

SHORT AND LON% TERM MEAS/RES TO CO$E 1ITH THE ENER%2 SHORTA%ES3 /$ort term /trateg .
%. The increased number of short gestation gas based projects to add capacity and stabili4e power supply. '. <ermitting the use of gas and oil fuels at selected power plants either to supplement or to substitute coal with a view to increase power production. ). ?ndertaking renovation and moderni4ation programs at the various thermal and hydro power plants to improve availability and performance and maximi4e power generation. 8t is hoped that <ower 7inance #orporation would play a significant role in this regard. +. 8mproving the quality and ensuring consistency of coal supplies to power plants. .. 2eduction in Transmission P Bistribution losses.

0. *ffective interconnected operation of power systems in the various regions to enable transfer of power from surplus to deficit systems and also ensuring delivery of power from #entral sector power plants to beneficiary states.

0ong term strateg .

%. -cceleration of hydro development by focusing on removing the various inadequacies in organi4ation. 6anagement funding etc. it would be desirable and necessary to make provision of adequate funds especially earmarks for hydro development. '. Tlomg 8 a larger T P B <rogrammed to remove the present inadequacies, strengthening of the regional grids and bringing about an overall improvement in the T P B losses. ). #oal benefaction by adopting more sophisticated techniques to ensure better and consistent quality of coal to the power plants. +. Biversification of fuels and modes of transportation of coal to thermal power plants to ensure adequate supply of fuel of appropriate quality. .. trengthening the organi4ation responsible for erection and commissioning of power plants.

,RI5&!E /EC!#R ,&R!ICI,&!I#N IN ,#WER JENER&!I#N

The central Eovernment has formulated a scheme to encourage greater participation by private enterprises in electricity generation, supply and distribution. <rivate enterprises can set up units either as licensees, distributing power in a licensed area from own generation or purchased power or as generating companies, generating power for supply to the grid. The break up of the capital investment is$

%. '9J equity out of which at least %%J to be raised as promoter5s contribution '. >9J of the capital investment to be raised through loans and only .9J of this amount could be raised from public 7alls. ). Bebt equity ratio has been raised up to +$% +. 8ncrease in the prescribed rate of return for the license has been approved from the existing %'J to %.J. .. #apitali4ation of interest during construction has been permitted at the actual cost !instead of the present %J above the 2eserve Bank rate" for the initial project as well as for the subsequent expansions. 0. <eriod of initial validity of the license has been increased to )9 years from the existing '9 years and subsequent extension for '9 years on each occasion. 1. <rivate licenses have been exempted from obtaining clearance under the 62<T act. >. To ensure additional resources mobili4ation it has been proposed that at least 09J of the outlays come from sources other than public financial institutions and at least %%J through promoter5s contribution. C. - special cell to be created in department of power to deal with proposals expeditiously for private sector participation.

!=E F>!>RE.
Eovernment5s decision to invite the private sector to participate in the power generation sector is most opportune and constructive approach <ar excellence. The positive and encouraging initiatives from the government are bound to find favourable responses from the private sector. The solution to our perennial power crunch seems to lie in private participation.

Cha,ter 0 I#
O#ER#IE1 O

0&NC# JR#>,

,R#FI0E #F JEN!INJ 0&NC# ,#WER 3IN-I&4 ,RI5&!E 0IMI!E3O$ERATIONS 4 MAINTENANCE COM$AN2 OR LANCO 5ONDA$ALLI $O1ER $RI#ATE LIMITED4
Eenting 3anco <ower !8ndia" <rivate 3imited is a subsidiary of Eenting group of companies based at Wuala 3umpur, 6alaysia. Eenting group has its presence in diversified fields like <ower, <lantations, <aper P <ackaging, *ntertainment, 2esorts P :otels, <roperty development, #ruise liners, e #ommerce, ,il and Eas. Eenting group is 6alaysia5s leading multinational corporation and one of -sia5s best-managed companies with over )0,999 employees globally. The group is renowned for its strong management leadership, financial prudence and sound investment discipline. The combined market capitali4ation of the group is about ? =C billion. The operating revenue for the group for the year '991 is ? =%..) billion. Eenting 3anco <ower !8ndia" <rivate 3imited has entered in to a %. years ,perations and 6aintenance -greement with 3anco Wondapalli <ower <rivate 3imited, who are the owners of the )0> 6( gas fired combined cycle power plant at kondapalli. Eenting 3anco <ower !8ndia" <rivate 3imited has its registered office at 3anco Wondapalli <ower <lant, Wondapalli 8B-, and Wrishna Bistrict.

0&NC# JR#>, ,R#FI0E

3-&#, Eroup, headquartered in :yderabad, 8ndia is one of the leading business houses in outh 8ndia. 8t has an asset base of ? = +.9 million and a turnover of more than ? = )99 million. (ith operational experience in power plants based on Eas, Biomass and (ind and an operating capacity of .9C 6(, 3-&#, is heading for a capacity of '.99 6( and an asset base of ? = '.. billion by the year '9%9. 3anco is a well-diversified group with activities like power generation, engineering and construction, manufacturing, 8nformation technology !8T", and property development. 3anco group is striving to *mpower, *nable and *nrich partner, business associates and to be the chosen vehicle for growth for stakeholders and source of inspiration to the society. The group is recogni4ed as a leading player in the 8ndian economic scenario with operation in ? - and ?W. 3-&#, also has presence in #ivil #onstruction, <roperty Bevelopment, 6anufacturing of <ig 8ron P Buctile 8ron pun <ipes and 8nformation Technology. 3-&#,5s overall growth is attributed to its technical, #ommercial and managerial skills, which is appreciated by its 8nternational partners S #ommonwealth Bevelopment #orporation !-#T8 AElobules" of the ?nited Wingdom, Eenting Eroup of 6alaysia and Boosan of Worea.

=I/!#RG &N- E5#0>!I#N

The 3anco group of companies was established nurtured and developed by a team of dedicated young technocrats. The burning desire to achieve versatility in engineering spawned the magnificent decade Sold growth of the present day multifaceted conglomerate that touches the nerve center of the country. 3. 2ajagopal, a technocrat-turned industrialist, is the 7ounder #hairman of 3-&#, Eroup. *stablished in %C>C, the Eroup5s activities range from <ower Eeneration, *ngineering and #onstruction, 6anufacturing to 8nformation Technology. ?nder his dynamic leadership, the Eroup5s capital outlay has touched a whopping ? = +.9 million and is recogni4ed as one of the leading players in the infrastructure sector in 8ndia.

MEMCER #F ,&R0I&MEN!
-fter one-and-a-half decades of outstanding contribution to the industry, 2ajagopal chose to enter public life in '99). :e contested the recent elections to the 3ower :ouse of <arliament for @ijayawada constituency and won a landslide victory. -s a 6ember of <arliament, his avowed mission is to make a difference in public life.

OBJ !"I# S
%. To provide basic amenities for the rural poor. '. To save arts of historical relevance which are on the verge of extinction. ). To develop integrated programmes for the differently abled. +. To encourage fresh talent in the area of sports. .. To take up other humanitarian activities.

0&NC# IN->/!RIE/ 0IMI!E-. &N I/# N;;1 CER!IFIE- C#.

3anco industries 3td. is established in the year %CC) had setup a state-ofthe-art integrated <ig 8ron and #ement <lants, which had in fact set the countries modern day technological innovations. The complex has a captive power plant generating '.. 6( of electricity from waste that meets the substantial part of the power requirement.

0&NC# C#N/!R>C!I#N 0!-.

This was established in the year %CC) and has executed most demanding and difficult projects in the field of civil and construction engineering. 3anco constructions ltd. today stand tall and proud as one the leading civil engineering companies by building competencies, developing modern construction management methods and by adopting the highest standards of guilty.

$t %an&o di'erse dimension of gro(th is a&hie'ed through &on'erging rays of 'ision &reating dimensions 6 W-3-:- T8 #- T8&E limited an example of the forward integration of the company established in %CC1 located strategically beside the <ig 8ron <lant avoiding re-melting and transportation it employs delved process that ensures the highest quality and durability.

0&NC# ,R#(EC! 0!7ocuses on the immense opportunities in the area of 2eal *states, #onstruction and <roperty Bevelopment, 8nternational shopping malls, 7ood counters etc are a few projects on the anvil. 3-&#,5s venture into power is a natural extension of its core mission. 3anco Wondapalli <ower <vt. 3td. is a short gestation <oly fuel based combined cycle power plant. The )0>.%++ mw !8 ," power plant has a build- operate -own agreement with the state government. 8t is 3anco5s timely answer to the nations increasing power needs. 3anco Wondapalli <ower 3td. is a joint venture involving 3anco group, Eenting Eroup of 6alaysia, :anjung !the Worean heavy industries and #onstruction #ompany" and the #ommon (ealth Bevelopment #orporation 3td. The project reflects 3anco5s ability to partner with the global players and achieve inter organi4ation synergies that give its vision great scope and reach

0&NC# K#N-&,&00I ,#WER ,RI5&!E 0!#ision3

%. To empower, enable and enrich partners, business and associates. '. To be the chosen vehicle of growth for the inspiration for the society. takeholders and a source of

Mission
%. To be a leader in all areas key to the development of a nation and progress of the world. '. To be a leader in the field of 8nfrastructure, 6anufacturing and 8nformation Technology. ). To become learning organi4ation and enable people to think like geniuses.
o o

(here every associate achieves outstanding results. (here capabilities are nurtured and stretched beyond boundaries for new understandings, high performance, quality relations and attainment of peace and happiness.

(here an employee makes transaction from an old world to a new world, from an old understanding to a desired understanding and from a subordinate to an associate.

+. To constantly evolve and seek synergies between the interests of employers and those of employees and to work intelligently towards empowerment of associates. .. 8n view of global competition and knowledge explosion infusion in the market place with complex, cognitive work, we seek to build efficiencies in such an uncertain environment through empowerment of employees.
o o

(here decision-making is at frontline levels (here decision-making responsibility vests with self-directing teams close to internal and external customers and associates take charge of their own jobs.

(here the organi4ation is built, sleek, for speed, flexibility, quality and service that are essential for global competition.

0. To make association with us an enriching experience to our partners, businesses and associates.

1. To work with honest purpose, strategic planning and enduring perseverance to achieve customer satisfaction, stakeholder benefits and measurable economic growth for the organi4ation.

$hiloso,h*
%. -ssemble best people, delegate authority and don5t interfere Gpeople make the difference '. Business heads are entrepreneurs ). 6istakes are facts of life. 8t is response to the error that counts.

Success
%. #reate your luck by hard work

'. Trust R delegation K growth.

1ork culture %. #ommitment, creativity, efficiency, team spirit.

,R#M#!ER/ &N- EO>I!G ,&R!NER/

The power project is promoted by 3anco group of 8ndia and is co-promoted by %. Eenting Eroup of 6alaysia '. !#B#" common wealth development corporation ?W ). !Boosan" Boosan heavy industries and construction co.ltd in Worea.

0#C&!I#N
The plant is located at Wondapalli industrial development area in Wrishna !Bist." of -ndhra <radesh. The plant is connected by road !national high way no. C", broad gauge railway line and is approximately '. km from @ijayawada .The registered office is at 3anco house, &o .0., phase - 888, /ubilee :ills, 2oad no S C', :yderabad, -ndhra <radesh .999)), 8ndia.

&earest railway station Nearest airport -ccess road ource of water #limatic condition

Wondapalli railway station Gannavaram &ational highway &o SC Wrishna river C-km from the site Tropical hot, :umid.

0&NC# ,#WER ,0&N! A#,ER&!I#N &N- M&IN!EN&NCE

The project comprise of a combined cycle power plant consisting of two !'" gas turbine generating units, two heat recovery steam generator and one steam turbine generation unit along with all electrical system, #ontrols and instrumentation, #ivil, tructural and architectural works. 3anco Wondapalli <ower <rivate 3imited !3W<<3" is an 8ndependent <ower <roject !8<<" located at Wondapalli 8ndustrial Bevelopmental -rea near @ijayawada in 8ndia, set up at a cost of around 2s.%%,999 million !? ='1. million", the <lant is a )0>.%++ 6( #ombined #ycle <ower <roject operating on &atural Eas as <rimary fuel. The plant operates on natural gas as the main fuel and &aphthaD : B as the alternative fuels &atural gas fuel is being received at site from Tatipaka near 2ajahmundry through a pipeline laid down by E-83

Fuel
&aphtha fuel -

Received
Through dedicated pipeline from :<#3 Wondapalli depot.

: B

2oad tankers

The ,perations P 6aintenance of the plant is done by E3<8<3 !Eenting 3anco <ower !8ndia" <rivate 3imited" which is a joint venture of 3anco group :yderabad and Eenting Eroup of 6alaysia.

&W&R-/ &N- CER!IFIC&!E/

%. 3eadership and *xcellence -ward in afety, :ealth P *nvironment '99' by #ofederation of 8ndian 8ndustries. '. Best *nvironmental 8mprovement award '99) 7-<##8. ). #ertificate of *nvironmental management system with 8 , %+99% !%CC0" from 32X- -pril '99). +. *nvironmental *xcellence -ward '99+ by Ereen-tech 7oundation, &ew Belhi. .. #ertificate of Xuality 6anagement ystem with 8 , C99% 32X6D -pril '99+. 0. '.J #ess 2ebate on (ater uses by -<<#B. 1. , :- %>99% #ertified S /une '99..

EN5IR#NMEN! ,#0ICG
(e are committed to achieve satisfaction of interested parties and protect environment by %. Eeneration of power by implementation of prudent *co friendly methods. '. #onservation of natural resources like natural gas and water. ). #omplying to all the legal requirements.

+. #ontinual improvement in the environmental performance by minimi4ing the emission and discharges P prevention of pollution. .. *nhancing environmental awareness among employee5s contractors and surrounding society.

O>&0I!G ,#0ICG
(e are committed to continually improve the quality of our performance through the application of our Xuality policy. %. ?tili4ing #ommercial, *ngineering and :uman 2esources, to 6inimi4e 2isks to <ersonnel, <lant P *quipment and 6aximi4e plant -vailability for Eeneration of <ower. '. <roviding the best policies level of commercial performance for the benefit of all take :olders. ). 8mplementing prudent utility practices and providing :ealthy and *xcellent (orking *nvironment in all Bisciplines of *ngineering and Business as documented in the Xuality ystem. +. Treating all staff P families fairly and with respect while encouraging personnel growth.

#CC>,&!I#N&0 =E&0!= P /&FE!G 3#=P/4 ,#0ICG

The 6anagement is committed to maintain high standards of health and safety in the workplace and shall consider ,:P in all its business activities. %. <rovide a safe working place to all of our direct and indirect employees by minimi4ing ,ccupational :ealth P practicing &ational tandards. '. ). 6onitor and maintain health, safety and welfare of all employees and comply with all applicable statutes. <rovide appropriate and ongoing 8nformation, 8nstruction and Training of our direct and indirect employees. afety 2isks and

0K,,0I/ C#MMI!MEN! !# C0E&N P /&FE EN5IR#NMEN!

7%reen )elt Management8

3anco #ommitment to re vegetation is %. *ncourage native fauna to develop. '. #ontribute to a reduction in green house gases ). 2educe noise level +. 6inimi4e the effect of soil erosion. .. :elp to restore the site to a sustainable system. 0. 8mprove as the aspects of the power plant. ,n going trees planting and maintaining theme are the important aspects of environmental management program at 3-&#,.

N#I/E M&N&JEMEN!
*fforts to minimi4e noise emission from equipment and activities. %. -coustic linings around gas and steam turbines and boilers. '. ilencers have been provided.

). &oise minimi4ation policy for equipment.

EFF0>EN! -I/C=&RJE- FR#M ,#WER ,0&N!

(ell-developed chemical laboratory to cater the need for monitoring effluent quality as per -<<#B &orms. %. Easeous emission mgt. S as issues of green house gases has become prominent in the public. '. (ater mgt. - -cknowledges importance of maintaining water quality.

). #ommunity participation.
+.

*nvironmental awareness training.

C#M,&NG =IJ= 0IJ=!/

%. )0>.%++ 6( combined cycle power plant under build S operate S own arrangement with the state government. '. The single largest investment in -ndhra <radesh, by any -ndhra <radesh based group. ). <ower purchase agreement firmed with -< T2-& #, for %. years. +. *co S friendly, adhering to highest standards of safety and conversion of natural resources. .. The first project cleared by #entral *lectricity -uthority !#*-" under the international competitive Bidding !8#B" route for power projects in 8ndia. 0. The first of the 8#B power projects in 8ndia to achieve financial closure and complete construction in shortest possible time. 1. ,ne of the lowest evacuations costs to -< T2-& #,. >. The first private sector power project to receive disbursement of finance from <ower 7inance #orporation limited, 8ndia. C. The shortest construction time in the private sector %9. 3ocation advantages include$ a" <roximity to &ational and state :ighway b" /ust %.. km from fuel storage facility of :industan <etroleum #orporation limited. c" #lose to the river Wrishna and up stream of the <rakasam Barrage ensuring perennial water supply.
d"

-djacent to ''9 k(h ubstation of -< T2-& #,.

Chapter-V
FUNDS FLOW STATEMENT

Funds Flow /tatement

Introduction
The basic financial statements i.e., the balance sheet and profit and loss account or income statement of business, reveal the net effect of various transactions on the operational and financial position of the company. The balance sheet gives a summary of the assets and liabilities of an undertaking at a particular point of time. 8t reveals the financial states of the company. The assets side of a balance sheet shows the deployment of resources of an undertaking while the liabilities side indicates its obligations i.e., the manner in which these resources were obtained. The profit and loss account reflects the results of the business operations for a period of time. 8t contains a summary of expenses incurred and the revenue reali4ed in an accounting period and the revenue reali4ed in an accounting period. Both the statement provides the essential basic information on the financial activities of a business but their usefulness is limited for analysis and planning purposes. The balance sheet gives a static view of the resources !liabilities" of a business and the uses !assets" to which these resources have been put at a certain point of time. 8t does not disclose the causes for changes in the assets and liabilities between two different points of time. The profit and loss account, in a general way indicates the resources provided by operations. But there are many transactions that take place in an undertaking and which do not operate through profit and loss account. Thus another statement has to be prepared to show the change in the assets and liabilities from the end of one period of time to the end of another period of time. The statement is called a statement of changes in financial position or a funds flow statement. The 7unds 7low tatement is a statement, which shows the movement of funds and is a report of the financial operations of the business undertaking. 8t indicates various means by which funds were obtained during a particular period and the ways in which these funds were employed. 8n simple words it is a statement of sources P applications of funds.

)eaning and &on&e*t of Funds

The term fund has been defined in a number of ways.

In a narrow sense
8t means cash only and a funds flow statement. receipts and disbursements of cash. uch a statement enumerates net effects of the various business transactions on cash and takes into account

In a broader sense
The term Qfunds5, refers to money values in whatever from it may exit. :ere Qfunds5 means all financial resources, used in business whether in the form of men, material money, machinery and others.

In a Popular sense
The term Qfunds5, means working capital, i.e., the working capital concept of funds has emerged due to the fact that total resources of a business are invested partly in fixed assets in the form of fixed capital and partly kept in form of liquid or near liquid form as working capital.

)eaning and &on&e*t of Flo( of funds

The term flow means movement and includes both inflow and out flow. The term flow of funds means transfer of economic values from one asset of equity to another flow of funds is said to have taken place when any transaction makes changes in the amount of funds available before happening of the transaction. 8f the effect of transaction results in the increase of funds it is called a source of funds and if it results in the decrease of funds, it is known as an application of funds. 7urther, in case the transaction does not change funds, it is said to have not resulted in the flow of funds. -ccording to the working capital concept of funds, the term flow of funds refers to the movement of funds in the working capital. 8f any transaction results in the

increase in working capital, it is said to be a source or flow of funds and if it results in the decrease of working capital, it is said to be an application or out S flow of funds.

Rule
The flow of funds occurs when a transaction changes on the one hand a non current account and on the other a current account and vice versa only. 8n simple language funds move when a transactions effects % ' ) + a current asset and a fixed asset, or a fixed and a current liability or a current asset and a fixed liability or a fixed liability and current liability -nd funds do not move when the transaction affects fixed assets and fixed liability or current assets and current liabilities.

!urrent and Non+!urrent $&&ount

To understand flow of funds it is essential to classify various accounts and balance sheet items into current and non-current categories

#urrent accounts can either be current assets or current liabilities. #urrent

assets are those assets which in ordinary course of business can be or will be converted into cash within a short period of normally one accounting year. #urrent liabilities are those liabilities which are intended to be paid in the

ordinary course of business with in a short period of normally one accounting year out of the current assets or the income of the business.

0ist of current or working capital accounts

Current 0ia)ilities %. Bills payable Current &ssets %. #ash in hand.

'. undry creditors or accounts '. #ash at bank. payable accrued or outstanding expenses ). Bividend payable Bank over ). Bills receivable. draft. +. hort-term Pdeposits. loans advances +. undry debtors or accounts receivable. .. hort term loans P advances or 6arketable

.. <rovision against current assets.

0. <rovision for taxation, if it does 0. Temporary not amount to appropriation of investments. profits.

1. <roposed dividend !may be a 1. 8nventories or stocks uch as current or non-current liability". %. '. ). +. raw material work in process stores P spares finished goods

>. <repaid expenses C. -ccrued incomes

0ist of non<current or permanent capital accounts

Non<current or permanent lia)ilities %. *quity share capital '. <reference share capital ). 2edeemable preference capital Non current or permanent assets

%. Eoodwill '. 3and share ). Building

+. Bebentures +. <lant P machinery .. 3ong term loans .. 7urniture P fitting 0. hare premium -ccount 0. Trade marks 1. hare premium account 1. <atent rights >. hare forfeited account >. 3ong-term investment C. <rofit P loss account !balance of C. Bebit balance of profit and loss profit, i.e., credit balance" account %9. #apital reserve %%. #apital redemption reserve %'. <rovision for against fixed assets %9. Biscount on issue of shares %%. Biscount on issue of debentures

depreciation %'. <reliminary *xpenses %). ,ther deferred expenses

%. general reserve '. dividend equali4ation fund %). 8nsurance fund %+. #ompensation fund %.. inking fund %0. 8nvestment 7luctuation fund %1. <rovision for Taxation %>. <roposed dividend

Procedure for knowing whether a transaction results in the flow of funds or not:

1. &nal ses t$e transaction and find out t$e two accounts involved. 2. Make Dournal entr of t$e transaction. 3. -etermine w$et$er t$e accounts involved in t$e transaction are current or non<current. 2. If )ot$ t$e accounts involved are current i.e." eit$er current assets or current lia)ilities" it does not result in t$e flow of funds. '. If )ot$ t$e account involved is" non<current" i.e." eit$er permanent assets or permanent lia)ilities" it still does not result in t$e flow of funds. *. If t$e accounts involved are suc$ t$at one is a current account w$ile t$e ot$er is a non<current account" i.e." current asset and fi6ed asset" or current lia)ilit and permanent lia)ilit t$en it results in t$e flow of funds. Meaning and definition of funds flow statement Funds flow statements is a met$od ) w$ic$ we stud c$anges in t$e financial position of a )usiness enterprise )etween )eginning and ending financial statements dates. It is a statement s$owing sources and uses of funds for a period of time. E& statement of sources and application of funds is a tec$nical device designed to anal Qe t$e c$anges in t$e financial condition of a )usiness enterprise )etween two datesF. ------ 7,?3W*

E!$e funds flow statement descri)es t$e source from w$ic$ additional funds were derived and t$e use to w$ic$ t$ese coerces were putF. --------&T:,&M. Funds flow statement as Eas a statement eit$er prospective or retrospective setting out t$e sources and applications of t$e funds of an enterprise. !$e purpose of t$e statement is to indicate clearl t$e re%uirement of funds and $ow t$e are proposed to )e raised and t$e efficient utiliQation and application of t$e sameF ------- 8#(-.8& E3, -2M ,7 6-&-E*6*&T -##,?&T

Funds flow statement, income statement and balance sheet$ Funds flow statement is not a su)stitute of an income statement" i.e." a profit P loss account and )alance s$eet. & )alance s$eet is a statement of financial position or status of a )usiness on a given date. It is prepared at t$e end of accounting period. !$e )alance s$eet depicts various resources of an undertaking and $e deplo ment of t$ese resources in various assets on a particular date. =ence" funds flow statement is not competitive )ut complementar to financial statements. !$e funds statement provides additional information as regards c$anges in working capital. It is a tool of management for financial anal sis and $elps in making decisions.

-ifference )etween funds flow statement and income statement

Funds flow statement %. 8t highlights the changes in the financial position of a business and indicates the various means by which funds were obtained during a particular period and the ways to which these funds were employed. '. 8t is complementary to income statement. 8ncome statement helps the preparation of funds flow statement. ). (hile preparing funds flow statement both capital and revenue item are considered. +. There is no prescribed format for preparing a fund flow statement. +. 8t is prepared prescribed format. ). ,nly revenue item are considered. '. 8ncome prepared statement. statement from is not flow fund Income statement %. 8t does not reveal the inflow and outflows of funds but deposits the items of expenses and income arrive at the figure of profit or loss.

-ifference )etween funds flow statement P )alance s$eet

Funds flow statement %. 8t is a statement of changes in financial position and hence is dynamic in nature. '. 8t shows the sources and uses of funds in a particular period of time. ). 8t is a tool of management for financial analysis and helps in making decisions. +. ?sually, schedule of changes in working has to be prepared before preparing funds flow statement. +. ). '. time. 8t is not of much help to management decisions. &o such schedule of changes in working capital is required. 2ather profit P loss account is prepared. in making Calance s$eet 8t is a statement of financial position on a particular date and hence is static in nature. 8t depicts the assets and liabilities at a particular point of

%.

/ses9 significance and im,ortance of funds flo+ statement.

- fund flow statement is an essential tool for the financial analysis and is of primary importance to the financial management. The basic purpose of a funds flow statement is to reveal the changes in the working capital on the two balance sheet dates. 8f also describes the sources from which additional working capital has been financial and the uses to which working capital has been applied. uch a statement is particularly useful in assessing the growth of the firm. The significance or importance of funds flow statement can be well followed from its various uses given below.

1. It $elps in t$e anal sis of financial operations

The financial statements reveal the net effect of various transactions on the operational and financial position of a concern. The balance sheet gives a static view of the resources of a business and the uses to which these resources of a business and the uses to which have been put at a certain point of time. The funds flow statement explains causes for such changes and also the effect of this change on the liquidity position of the company sometime a concern may operate profitably and yet its cash position may become more and worse. The funds flow statement gives a clear answer to such a situation explaining what has happened.

2. It t$rows lig$t on man perple6ing %uestions of general interest

(hich otherwise may be difficult to be answered, such as %. (hy were the net current assets lesser spite of higher profits and vice versaY '. (hy more dividends could not be declared in spite of available profitsY ). :ow was it possible to distribute more dividends than the present earningsY +. (hat happened to the proceeds of sale of fixed assets or issue of shares, debentures, actY .. (hat happened to the net profitY (here did they goY 0. :ow was the increase in working capital financed and how will it be financed in futureY

3. It $elps in t$e formation of a realistic dividend polic

ometimes a firm has sufficient profits available for distribution as dividend but yet it may not be advisable to distribute dividend for lack of liquid or cash resources. 8n such cases, a funds flow statement helps in the formation of a realistic dividend policy.

2. It $elps in t$e proper allocation of resources

The resources of a concern are always limited and it wants to make the best use of these resources. - projected funds flow statement constructed for the future helps in making managerial decisions. The firm can plan the deployment of its resources and allocate them among various applications.

'. It acts as a future guide

- projected funds flow statement also acts a guide for future to the management. The management can come to know the various problems it is going to face in near future for want of funds. The firm5s future needs want of funds. The firm5s future needs of funds can be projected work in advance and also the timing of these needs.

*. It $elps in appraising t$e use of working capital

- funds flow statement helps in explaining haw effectively the management has used its working capital and also suggests ways to improve working capital position of the firm.

+. It $elps knowing t$e overall credit wort$iness of a firm

The financial institutions and banks such as state financial institutions. 8ndustrial Bevelopment #orporation, industrial finance corporation of 8ndia, industrial development bank of 8ndia, etc., all ask for funds flow statement constructed for a member of years before granting loans to know the credit worthiness and paying capacity of the firm. :ence, a firm seeking financial assistance from these institutions has no alternative but to prepare funds flow statement.

0IMI!&!I#N/ #F F>N-/ F0#W /!&!EMEN!

%. 8t should be remembered that a funds flow statement is not a substitute of an income statement or a balance sheet. 8t provides only some additional information as regards changes in working capital.

'. 8t cannot reveal continuous changes. ). 8t is not original statement but simply is arrangement of data given in the financial statements. +. 8t is essentially historic in nature and projected funds flow statement cannot be prepared with much accuracy. .. #hanges in cash are more important and relevant for financial management than the working capital.

,R#CE->RE F#R ,RE,&RINJ & F>N-/ F0#W /!&!EMEN!

The funds flow statement is prepared by comparing two balance sheets and with the help of such other information derived from the accounts as may be needed. The preparation of a funds flow statement consists of two parts$ %.
'.

tatement or schedule of changes in working capital. tatement of sources and application of funds.

1. /tatement or /c$edule of c$anges in Working Capital

(orking #apital means the excess of current assets over current liabilities. tatement of changes in working capital is prepared to show the changes in the working capital between the two balance sheet dates. This statement is prepare with the help of current assets and current liabilities derived from the two balance sheets -s, (orking #apital K #urrent -ssets S #urrent 3iabilities i" ii" iii" iv" follows -n increase in current assets increases the working capital. - decrease in current assets decreases the working capital. -n increase in current liabilities decreases the working capital. - decrease in current liabilities increases the working capital. - typical for statement or schedule of changes in working capital is as

1. /tatement of c$anges in Working Capital Effect in working capital ,articulars Current &ssets #ash in hand #ash at bank Bills 2eceivable undry Bebtors Temporary 8nvestments tock or 8nventories <repaid *xpenses -ccrued 8ncomes !otal Current &ssets Current 0ia)ilities Bills <ayable undry #reditors ,utstanding *xpenses Bank ,verdraft hort term advances Bividend <ayable <roposed Bividend R <rovision for Taxation R !otal Current 0ia)ilities Working Capital 3C& < C04 &et 8ncrease A Becrease in (orking #apital ,revious Current ear Gear Increase -ecrease xxx xxx xxx xxx xxx xxx xxx xxx 666 xxx xxx xxx xxx xxx xxx xxx xxx 666 666 666 xxx xxx xxx xxx xxx xxx xxx xxx 666 xxx xxx xxx xxx xxx xxx xxx xxx 666 666

666 666

666 666 666

R 6ay or may not be a current liability.

2. /tatement of /ources and &pplication of Funds

7unds flow statement is a statement which indicates various sources from which funds !working capital" have been obtained during a certain period and the uses a applications to which these funds have been put during that period. Eenerally, the statement is prepared in tow formats. i. 2eport 7orm ii. T 7orm or an -ccount form or elf Balancing Type.

/pecimen of Report Form of Funds Flow /tatement ,articulars

/ources of Funds 7unds from ,perations 8ssue of hare #apital 2aising of 3ong term 3oans 2eceipts from <artly <aid hare #alled-up ales of &on #urrent !7ixed" -ssets &on Trading 2eceipts !Bividend 2eceivedZ." ale of 8nvestment !long term" Becrease in (orking #apital !as per schedule of changes in working capital" !otal &pplications of Funds 7unds 3ost in ,perations 2edemption of <reference hare #apital 2edemption of Bebentures 2epayment of 3ong term 3oans <urchase of &on #urrent !7ixed" -ssets <urchase of 3ong term 8nvestment &on Trading <ayments <ayment of Bividend R <ayment of Tax I 8ncrease in (orking #apital !as per schedule of changes in working capital" !otal &mount 3Rs.4 xxx xxx xxx xxx xxx xxx xxx xxx xxx 666 xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx 666

! Form or an &ccount Form or /elf Calancing ! pe Funds Flow /tatement /ources

7unds from ,perations 8ssue of hare #apital 8ssue of Bebentures 2aising of 3ong term 3oans 2eceipts from <artly paid shares, called up &on trading 2eceipts !Bividend" ale of 3ong term 8nvestment &et Becrease in (orking #apital
&mount 3Rs.4

&pplications
7unds 3ost in ,perations 2edemption of <reference hare #apital 2edemption of Bebentures 2epayment of 3ong term 3oans <urchase of &on #urrent !7ixed" -ssets <urchase of 3ong term 8nvestments &on trading <ayments <ayment of Bividends I <ayment of TaxesI &et 8ncrease in (orking #apital

&mount 3Rs.4

xxx xxx xxx xxx xxx xxx xxx xxx

xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx 666

666

RNote
<ayment of dividend and tax will appear as an application of funds only when these items are appropriations of profits and not current liabilities.

Casicall t$ere are two met$ods of calculating Funds from #perations

a" The first method is to prepare the profit and loss account a fresh by taking into consideration only fund and operational terms which involve funds and are related to the normal operations of the business.

b"

The second method !which is generally used" is to proceed from the figure of net profit and net loss as arrived at from the profit and loss account already prepared. 7unds from ,perations by this method can be calculated as under.

Calculation of Funds from #peration ,articulars #losing balance of <P3 aAc or 2etained *arnings ! as given in the balance sheet &dd . &on 7und and &on ,perating items which have been already debited to < P 3 aAc i" Bepreciation and Bepletion ii" -morti4ation of fictitious and 8ntangible %. Eood will '. <atents ). Trade 6arks +. <reliminary *xpenses .. Biscount on issue of hares, etc., iii" -ppropriation of 2etained *arnings, such as %. Transfer to Eeneral 2eserve '. Bividend *quali4ation 7und ). Transfer to inking 7und +. #ontingency 2eserve, etc., iv" 3oss on ale of any &on #urrent !7ixed" -ssets, such as %. 3oss on ale of 3and P Buildings '. 3oss on ale of 6achinery ). 3oss on ale of 7urniture +. 3oss on ale of long - term 8nvestments, etc v" Bividend including %. 8nterim Bividend '. <roposed Bividend !if it is an appropriation of profits and not taken as current liability
&mount 3Rs.4

666 xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

xxx

vi" <rovision for Taxation !if it is not taken in #urrent 3iability" vii" -ny other non-fundA non operating items which have been debited to p P l aAc" !otal 3a4 0ess . &on 7und or &on ,perating items which have already been #redited to < P 3 aAc i" <rofit on ale of &on #urrent !7ixed" -ssets, such as %. <rofit on sale of 3and P Buildings '. <rofit on sale of <lant P 6achinery ). <rofit on sale of 3ong - term 8nvestments, etc., ii" -ppreciation in the value of 7ixed -ssets, such as 8ncrease in the value of 3and if it has been credited to < P 3 aAc iii" Bividend 2eceived iv" *xcess <rovision retransferred to < P 3 aAc or written off v" -ny other non - operating items which has been credited to < P 3 aAc vi" ,pening Balance of < P 3 aAc or 2etained *arnings !as given in the balance sheet" !otal 3)4 Funds Jenerated ) #perations 3!otal 3a4 < !otal 3C44

xxx

xxx 666

xxx xxx xxx xxx xxx

xxx xxx xxx xxx xxx 666 666

b" 7unds from ,perations can also be calculated by preparing adjusted <rofit P 3oss -ccount as follows.

&dDusted ,rofit P 0oss &ccount

,articulars
To Bepreciation P Bepletion or -morti4ation of 7ictions and 8ntangible -ssets Eood will, <atents, Trade marks, <reliminary *xpenses, etc., To -ppropriation of 2etained *arnings Transfer to Eeneral 2eserves, Bividend *quali4ation 7und, inking 7und, etc., To 3oss on ales of any &on #urrent or 7ixed -ssets To Bividends !8ncluding interim Bividend" To <roposed Bividend !if not taken as a current liability" To <rovision for Taxation !if not taken as a current liability To #losing balance !of <P 3 aAc" To 7unds lost in ,perations !balancing figure incase side exceeds the debit side" Oxx Oxx

&mount 3Rs4

,articulars
By ,pening Balance !of < P 3aAc" By Transfer from excess provisions By -ppreciation in the value of fixed assets

&mount 3Rs4

Oxx

xxx

xxx xxx

By Bividends 2eceived By <rofit on sale of fixed or non current assets By 7unds from operations !balancing figures incase debit side exceeds credit side"

xxx xxx

Oxx Oxx Oxx Oxx

xxx

Oxx 966

666

C&/= F0#W /!&!EMEN!

IN!R#->C!I#N
#ash plays a very important role in the entire economic life of a business. - firm needs cash to make payments to its suppliers, to incur day-to-day expenses and to pay salaries, wages, interest and dividend, etc. 8n fact, what blood is to a human body, cash is to a business enterpriseY 8t is very essential for a business to maintain an adequate balance of cash. But many times, a concern operates profitably and yet it becomes very difficult to pay taxes and dividend. This may be because -lthough huge profits have been earned yet cash may not have been received. *ven if cash has been received, it may have drained out !used" for some other purposes. This movement of cash is of vital importance to the management. (e have studied in the previous chapter that the two basic financial statements, i.e., the balance sheet and profit and loss account, provide the essential basic information on the financial activities of a business, but their usefulness is limited for analysis and planning purposes. The balance sheet does not disclose the causes for changes in the assets and liabilities between two different points of time. The profit and loss account also fails to disclose the reasons for shortage of cash in spite of positive net income. Thus, another statement, called funds flow statement, was prepared to show the changes in the assets and liabilities from the end of one period of time to the end of another period of time. To underline the importance of funds statement, the institute of #hartered -ccountants of 8ndia !8#-8" issued in /une,%C>% -ccounting tandard-) dealing with the preparation of statement of changes in 7inancial <osition. The statement of changes in financial position summari4ed, for the period covered by it, the changes in the financial position including the sources from which funds where obtained by the enterprise and the specific uses to which such funds where applied. 7or this purpose, the term Qfunds5 was defined as cash and cash equivalents or working capital. The statement in financial position, also called 7unds 7low tatement, was intended to provide a

meaningful link between the balance sheet at the beginning and at the end of a period and the profit and loss account for that period.

ME&NINJ
#ash flow statement is a statement which describes the inflows !sources" and outflows !uses" of cash and cash equivalents in an enterprise during a period of time. uch a statement enumerates net effects of the various business transactions on cash and its equivalents and takes into account receipts and disbursements of cash. - cash flow statement summari4es the causes of changes in cash position of a business enterprise between dates of two balance sheets. -ccording to -s-) !2evised", an enterprise should prepare a cash flow statement and should present it for each period for which financial statements are prepared. The terms cash, cash equivalents and cash flows are used in this statement with the following meanings$ %. #ash comprises cash on the hand and demand deposits with banks. '. #ash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. #ash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. ). #ash flows are inflows and outflows of cash and cash equivalents. 7low of cash is said to have taken place when any transaction makes changes in the amount of cash and cash equivalents available before happening of the transaction. 8f the effect of transaction results in the increase of cash and its equivalents, it is called an inflow !source" and if it is results in the decrease of total cash, it is known as outflow !use" of cash.

C0&//IFIC&!I#N #F C&/= F0#W/

#ash flows are classified into three main categories$ %. #ash flows from operating activities. '. #ash flows from investing activities. ). #ash flows from financing activities.

%. Cas$ Flows from #perating &ctivities$ ,perating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities. The amount of cash flows arising from operating activities is a key indicator of the extent to which the operations of the enterprise have generated sufficient cash flows to maintain the operating capability of the enterprise, pay dividends, repay loans, and make new investments without recourse to external sources of financing. 8nformation about the specific components of historical operating cash flows is useful, in conjunction with other information, in forecasting future operating cash flows. *xamples of cash flows from operating activities are$ !a" cash receipts from the sale of goods and the rendering of servicesD !b" cash receipts from the royalties, fees, commissions, and other revenueD !c" cash payments to suppliers of goods and servicesD !d" cash payments to and on behalf of employees. %. Cas$ Flows from #perating &ctivities. 8nvesting activities are the acquisition and disposed of long-term assets and other investments not included in cash equivalents. The separate disclosure cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources intended to generate future income and cash flows. *xamples of cash flows arising from investing activities are. !a" #ash payments to acquire fixed assets !including intangibles". These payments include those relating to capitali4ed research P Bevelopment costs and self constructed fixed assetsD !b" #ash payments to acquire shares, warrants, or debt instruments of ,ther enterprises and interests in joint ventures !other than <ayments for those instruments considered to be cash equivalents and those held for dealing or trading purposes"D !c" #ash receipts from disposal of fixed assets !including intangibles".

). Cas$ Flows from Financial &ctivities$ 7inancing activities are activities that results in changes in the si4e and composition of the owner5s capital !including preference share capital in the case of a company" and borrowings of the enterprise The separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of funds !both capital and borrowings" to the enterprise. *xamples of cash flows arising from financing activities are$ !a" cash proceeds from issuing shares or other similar instrumentsD !b" cash proceeds from issuing debentures, loans, notes, bonds, and other short-term borrowingsD !c" cash repayments of amounts borrowed such as redemption of debentures, bonds, preference shares #C(EC!I5E/ %. 8nformation about the cash flows of an enterprise is useful in providing users of financial statements with a basis to assess the ability of the enterprise to generate cash and cash equivalents and the needs of the enterprise to utili4e those cash flows. '. The economic decisions that are taken by user require an evaluation of the ability of an enterprise to generate cash and cash equivalents and the timing and certainly of their generation. ). The statement deals with the provision of information about the historical #hanges in cash and cash equivalents of an enterprise by means of a cash flow statement which classifies cash flows during the period from operating investing and financing activities. /C#,E %. -n enterprise should prepare a cash flow statement and present it for each period for which financial statements are presented. '. ?sers of an enterprise5s financial statements are interested in how the enterprise generates and uses cash and cash equivalents. This is case regardless of the nature

of the enterprise5s activities and irrespective of whether cash can be viewed as the product of the enterprise, as may be the case with a financial enterprise, as may be the case with a financial enterprise. ). *nterprises need cash for essentially the same reasons, however different their <rincipal revenue-producing activities might be. +. They need cash to conduct their operations, to pay their obligations, and to provide returns to their investors

>/E/ &N- /IJNIFIC&NCE #F C&/= F0#W /!&!EMEN!

#ash flow statement is of vital importance to the financial management. 8t is an essential tool of financial analysis for short-term planning. The chief advantages of cash flow statement are as follows$ !%" ince a cash flow statement is based on the cash basis of accounting, it is very useful in the evaluation of cash position of a firm. !'" - projected cash flow statement can be prepared in order to know the future cash position of a concern so as enable a firm to plan and coordinate its financial operations properly. By preparing this statement, a firm can come to know as to how much cash will be generated into the firm and how much cash will be needed to make various payments and hence the firm can well plan to arrange for the future requirements of cash. !)" - comparison of the historical and projected cash flow statements can be made so as to find the variations and deficiency or otherwise in the performance so as to enable the firm to take immediate and effective action. !+" - series of intra-firm and inter-firm cash flow statements reveals whether the firm5s liquidity !short-term paying capacity"is improving or deteriorating over a period of time and in comparison to other firms over a given period of time. !." #ash flow statement helps in planning the repayment of loans, replacement of fixed assets and other similar log-term planning of cash. 8t is also significant for capital budgeting decisions.

!0" #ash flow analysis is more useful and appropriate than funds flow analysis for short-term financial analysis as in a very short period it is cash which is more relevant then the working capital for forecasting the ability of the firm to meet its immediate obligations. !1" #ash flow statement provides information of all activities classified under operating, investing and financing activities, the funds statement even when prepared on cash basis, did not disclose cash flows from such activities separately, Thus, cash flow statement is more useful than the funds statement.

0IMI!&!I#N/ #F C&/= F0#W /!&!EMEN!/

Bespite a number of uses, cash flow statements suffer from the following limitations$ !%" -s cash flow statement is based on cash basis of accounting, it ignores the basic accounting concept of accrual basis. !'" ome people feel that as working capital is a wider concept of funds, a funds flow statement provides a more complete picture than cash flow statement. !)" #ash flow statement is not suitable for judging the profitability of a firm as noncash charges are ignored while calculating cash flows from operating activities.

,RE,&R&!I#N #F C&/= F0#W /!&!EMEN!

The #ash 7low tatement is to be presented as per the - -) of the 8nstitute of #hartered -ccountants of 8ndia !8#-8". The 8#-8 issued - -)in /une, %C>% for the first time. 3ater in 6arch, %CC1 it revised the standard. The model stipulated in - -) is the widely accepted model for presentation of #ash 7low tatements. -ll the listed companiesAentities whose financial year ends on 6arch, %CC0 and thereafter will be required to give #ash 7low tatement along with Balance heet and <rofit and 3oss -ccount. The above amendment comes into effect immediately 8.e., w.e.f.%.-'-%CC0

-I/!INC!I#N CE!WEEN F>N-/ F0#W /!&!EMEN! &NC&/= F0#W /!&!EMEN!

Funds Flow /tatement 8t is based on accrued basis of -ccounting. !'" 7unds flow statement is concerned with changes in (orking #apital position Between two Balance heet. !)" 7unds flow statement is based on a wider concept of funds i.e., working #apital. !+" - schedule of (orking capital changes is prepared in the case of 7unds 7low tatement. !." 8t shows the changes of not only cash but also of other current assets like debtors, stock etc !0" The statement does not start with any opening of balance of any account and does not even and with any such closing balance of any account. !1" 8t shows the changes in the current liabilities like sundry creditors, bills <ayable etc. !>" 8n this case, the profit from operation or the net profit is considered as a <rincipal sources of fund. !C" 7unds 7low statement is useful for long-term financial analysis and olvency of the firm.
!%" !%" 8t

Cas$ Flow /tatement is based on cash basis of -ccounting. !'" #ash 7low statement is concerned only with the changes in cash <osition. !)" #ash flow statement is based on the narrow concept of funds i.e., cash only which is only one component of (orking capital. !+" &o such schedule is prepared in the case of #ash 7low tatement. !." 8t shows the change of the opening cash balance into the closing cash balance. !0" The statement starts with the opening cash and bank balances and ends with the closing cash and bank balances in most of the cases. !1" 8t does not show the changes in the current liabilities of the enterprise. !>" 8n this case, the main source of cash inflow is considered to be the sales and not the net profit of the business. !C" #ash 7low tatement as a tool of financial analysis is more useful to the management in cash planning and short-term analysis.

,RE/EN!&!I#N #F C&/= F0#W /!&!EMEN!

(hile preparing the cash flow statement, cash flows from operating activities are presented first, followed by investing activities and then financing activities. The individual inflows and outflows relating to investing and financing activities are presented separately in their respective categories. The operating activities section can be presented using the direct method or indirect method. 8n the direct method cash flow

statement is presented primarily on a cash receipts and cash payments basis, instead of on accrual basis. 8n the indirect method, net income is adjusted for items that affected net income but did not affect cash. -irect Met$od$

Format of Cas$ Flow /tatement

,articulars
-.

&mount &mount Rs Rs
xxx xxx xxx xxx xxx xxx xxx

#ash 7lows from ,perating -ctivities #ash 2eceipts$ ales 8nterest 2eceived #ash payments for <urchases ,perating *xpenses 8nterest payments 8ncome taxes &et #ash 7lows from ,perating -ctivities #ash 7lows from 8nvesting -ctivities ale of <lant -ssets ale pf 8nvestments <urchase of <lant -ssets <urchase of 8nvestments &et #ash 7low used by 8nvesting -ctivities #ash 7lows from 7inancing -ctivities 2epayment of Bonds and Bebentures 8ssue of #ommon hares Bividend paid &et cash flows 7inancing -ctivities &et 8ncreaseABecrease in cash

Oxx

xxx xxx xxx xxx xxx

B.

#.

xxx xxx xxx xxx xxx xxx

xxx

Indirect Met$od$

Format of Cas$ Flow /tatement

,articulars &mount Rs &mount Rs

-.

#ash 7low from ,perating -ctivities$ &et 8ncome -djustments to 2econcile &et income to &et cash <rovided by ,perating -ctivities$ Bepreciation Eain on sale of 8nvestments 3oss on sale of <lant -sset 8ncrease in #urrent -ssets Becrease in #urrent 3iabilities

xxx xxx xxx xxx xxx xxx xxx

&et #ash 7lows from ,perating -ctivities B. #ash 7low from 8nvesting -ctivities$ ale of <lant -ssets ale of 8nvestments <urchase of <lant -ssets <urchase of 8nvestments Becrease in #urrent -ssets 8ncrease in #urrent 3iabilities &et #ash 7lows used by 8nvesting -ctivities #. #ash 7lows from 7inancing -ctivities$ 2epayment of Bonds and Bebentures 8ssue of common shares Bividends paid &et #ash 7lows from 7inancing -ctivities &et 8ncreaseABecrease in cash

xxx xxx xxx xxx xxx xxx

xxx

xxx xxx xxx xxx

xxx

Chapter-VI DATA ANALYSIS

,articulars Current &ssets undry debtors

2;11 >91%'>9+

2;12 )1>.0+'9

Increase +'>.0)>+

-ecrease

#ash and bank ,ther current assets 3oans and advances !otal Current &ssets Current 0ia)ilities #urrent liabilities <rovisions !otal Current 0ia)ilities Working Capital 3C& < C04 Net Increase A -ecrease in Working Capital

)+9+).'9 %.'''> 1)).%0 11'*22;*: '%.C0C%0 >00C1+. 3;2****1 :'3+'2;+

.%0C9)'0 >.11.) C')19C N132:2;: )>.C%'0. >.'.C)+ 2+11+1NN 22211;;N %0CC+)+C

%10+0>90 19..'. %C9%C)

%+)>%%

'N:';+33

1:*:*33' +%%0+)C> 'N:';+33

:'3+'2;+

+%%0+)C> :'3+'2;+ 'N:';+33

/ources 7unds from operations #harge of depreciation on fixed assets

&mount 3Rs4 &pplications +9.>0)0% 8ncrease in (orking #apital >C)C.C Becrease in Tax liability 212:;32;

&mount 3Rs4 +%%0+)C> )%.C'' 212:;32;

C$anges in Work<in Capital /tatement for t$e ear 2;1; <2;11 3&mout Rs.4 ,articulars 2;1; 2;11 Increase -ecrease Current &ssets #ash and Bank .%,0C9,)' 0 )>,9'),0) + %),000,0C '

undry Bebtors ,ther #urrent -ssets 3oans and -dvances !otal Current &ssets Current 0ia)ilities #urrent 3iabilities <rovision !otal Current 0ia)ilities

)1,>.0,+' 9 >.1,1.) C'),19C N1"32:"2; : )>,.C%,'0 . >,.'.,C)+ 2+"11+"1N N ++,'%%,99 C %%,1++,+. % ''"N''"2* ;

)','00,.0 . >)+,C0) >C.,C%C +2";21";: 1

.,.>C,>.. '',1C9 '1,1C9

>,9.+,>'1 >,9%9,1C+ 1*";*'"*2 1 ..,C..,+0 9 ''"N''"2* ;

1N"3;+"12 +

)9,.)0,+) > .%.,%+9 31";'1"'+ :

Net Working 3C& < C04 Becrease in (orking #apital

%%,1++,+. % 31";'1"'+ :

31";'1"'+ :

/ources Becrease in (orking #apital #hange of Bepreciation on 7ixed -ssets

&mount 3Rs4

&pplications

&mount 3Rs4 %),1.1,+9C 01,).C 13":22"+*:

%%,1++,+.% 7unds 3ost in ,peration Becrease in Beferred Tax ',9>9,)%1 3iability 13":22"+*:

C$anges in Work<in Capital /tatement for t$e ear 2;1; <2;;N 3&mout Rs.4

,articulars Current &ssets #ash and Bank undry Bebtors ,ther #urrent -ssets 3oans and -dvances !otal Current &ssets Current 0ia)ilities #urrent 3iabilities <rovision !otal Current 0ia)ilities Net Working 3C& < C04 Becrease in (orking #apital

2;;N

2;1;

-ecrease

)>,9'),0)+ )','00,.0. >)+,C0) >C.,C%C +2";21";:1 >,9.+,>'1 >,9%9,1C+ 1*";*'"*21 ..,C..,+09 ''"N''"2*;

C,>'C,)'1 .>,C9',C'0 1C,))0 C.),1.1 *N"+*'"32* )9,>1.,C%) %,99>,19) 31"::2"*1* )1,>>9,1)9 %>,91+,1)9 ''"N''"2*;

'>,%C+,)91 '0,0)0,)0% 1..,0'1 .1,>)>

'',>'%,9>0 '1"++1";2; 1,99',9C% 33"*N*"2N;

'1"++1";2;

%>,91+,1)9 '1"++1";2;

Funds Flow /tatement &mount 3Rs4 &mount 3Rs4

/ources

&pplications

Funds From Operation

#hange of Bepreciation on 7ixed -ssets

8ncrease in (orking %0,C'C,''1 #apital Becrease in Biffered Tax %,.).,+.% 3iability 1:"2*2"*+:

%>,91+,1)9 )>C,C+> 1:"2*2"*+:

C$anges in Work<in Capital /tatement for t$e ear 2;;: <2;;N 3&mount Rs.4

,articulars Current &ssets #ash and Bank undry Bebtors ,ther #urrent -ssets 3oans and -dvances !otal Current &ssets Current 0ia)ilities #urrent 3iabilities <rovision !otal Current 0ia)ilities Net Working 3C& < C04 Becrease in (orking #apital

2;;:

2;;N

Increase

-ecrease

C,>'C,)'1 .>,C9',C'0 1C,))0 C.),1.1 *N"+*'"32* )9,>1.,C%) %,99>,19) 31"::2"*1* )1,>>9,1)9 %',1>C,+0C ';"*+;"1NN

'C,'.1,C+. '>,)++,%)) 1).,'91 ')0,>00 ':"'+2"1'1 ',).),1.0 .,..9,%C0 +"N;3"N'2 .9,019,%CC ';"*+;"1NN

%C,+'>,0%> )9,..>,1C) 0..,>1% 1%0,>C%

'>,.'',%.1 +,.+%,+C) 3'":1+"1++ 2:"*;*"*2*

%',1>C,+0C 2:"*;*"*2*

2:"*;*"*2*

Funds Flow /tatement &mount 3Rs4 &mount 3Rs4

/ources

&pplications 7unds 3ost in ,peration

Becrease in (orking #apital #hange of Bepreciation on 7ixed -ssets 8ssue of hare #apital 8ncrease in Biffered Tax 3iability

%',1>C,+0C %,)'.,'.C %0,0)C,)09 '0',0.1 31";1*"+2'

)%,9%0,1+.

31";1*"+2'

C$anges in Work<in Capital /tatement for t$e ear 2;;+ <2;;: 3&mout Rs.4

,articulars 2;;+ Current &ssets #ash and Bank 'C,'.1,C+. undry Bebtors '>,)++,%)) ,ther #urrent -ssets 1).,'91 3oans and -dvances ')0,>00 !otal Current &ssets ':"'+2"1'1 Current 0ia)ilities #urrent 3iabilities ',).),1.0 <rovision .,..9,%C0 !otal Current 0ia)ilities +"N;3"N'2 Net Working 3C& < C04 Becrease in (orking #apital .9,019,%CC ';"*+;"1NN

2;;: '),9+0,9+> %9,'9>,1++ .0>,C01 33":23"+'N ),19+,)C> %,>'',1%% '"'2+"1;N '>,'C0,0.9 2:"2N*"*';

Increase 0,'%%,>C1 %>,%).,)>C 1).,'91

-ecrease

))',%9%

%,).9,0+' 2*"233"13' ),1'1,+>. 2";'N"':*

2*"233"13'

'',)1),.+C 2*"233"13'

Funds Flow /tatement &mount 3Rs4 &mount 3Rs4

/ources

&pplications 8ncrease in (orking #apital

7unds 7rom ,perations #hange of Bepreciation on 7ixed -ssets 8ncrease in Biffered Tax 3iability 6iscellaneous expenses

.C9,0>. %>,1>>,+1+ ',C>C,999 .,)C9 22"3+3"'2N

'',)1),.+C

22"3+3"'2N

e!so"s#

The sundry debtors increased in the year '9%% when compared with '9%9 because there is an increased in ,P6 fee. The cash and bank balance of '9%% is decreased due to the payment of dividends declared in '9%9 The loans and advances include employee claims and deposits with governmentD in the year '9%%, the loans and advances are decreased because, the employees set off their claims.

The other current assets majorly include interest on deposits. The interest is decreased because the deposits are used for the payment of dividend. 8n the case of current liabilities there is a decreased in the year '9%%. The provisions are also increased, the additional provision is created for, raised sundry debtors. 7or the purpose of preparation of 7unds 7low tatement we have to

calculate the changes in (orking #apital. The excess of #urrent -ssets over #urrent 3iabilities is called &et (orking #apital.

I"te$%$et!tio"
The (orking #apital tatement treated as$ The undry debtors are increased in +',>.0,)>+A- the year '9%% as compared to the year '9%9. The #ash and Bank balances are decreased in %1,0+0,>90A- the year '9%% as compared to the year '9%9. Because the Eenting 3anco company has paid the dividends in '9%9. The ,ther #urrent -ssets are also decreased in 1,9.,.'.Athe year '9%% as compared to the year '9%9. Because the company canceled the dividends in '9%9. The interest is decreased that is the reason #urrent -ssets are decreased in '9%%.

The 3oans and -dvances are also decreased in %,C9,%C)A- the year '9%% as compared to the year '9%9. Because here the company set-off the *mployee5s claims.

The #urrent 3iabilities are decreased in %0,CC+,)+CA- the year '9%% as compared to the year '9%9. Because additional consultancy provided by the company. The <rovisions are increased in %,+),>%%A- the year '9%% as compared to the year '9%9. Because the sundry debtors are increased. The ,verall (orking #apital is increased in +%,%0+,)C>A- the year '9%%. 8n 7unds 7low tatement the 7ixed -ssets are treated as source because

depreciation of fixed assets are decreased in >, C),C.CA- the year '9%%, the reason is 7ixed -ssets does not purchase by the company. Beferred tax liability is decreased in ), %.,C''A- the year '991.

I"te$%$et!tio"
The (orking #apital treated as$ The undry debtors are increased in .,.>C,>..A- the year '9%9 as compared to the year '99C. The #ash and Bank balances are increased in %),000,0C'A- the year '9%9 as compared to the year '99C. The ,ther #urrent -ssets are increased in '',1C9A- the year '9%9 as compared to the year '99C. The 3oans and -dvances are also increased in '1,1C9A- the year '9%9 as compared to the year '99C. The #urrent 3iabilities are also increased in )9,.)0,+)>A- the year '9%9 as compared to the year '99C. The <rovisions are increased in .,%.,%+9A- the year '9%9 as compared to the year '99C. The ,verall (orking #apital is decreased in %%,1++,+.%A- the year '9%9.

I"te$%$et!tio"
The (orking #apital treated as$ The undry debtors are decreased in '0,0)0,)0%A- the year '99C as compared to the year '99>. The #ash and Bank balances are increased in '>,%C+,)91A- the year '99C as compared to the year '99>. The ,ther #urrent -ssets are increased in 1,..,0'1A- the year '99C as compared to the year '99>. The 3oans and -dvances are decreased in .1,>)>A- the year '99C as compared to the year '99>. The #urrent 3iabilities are decreased in '',>'%,9>0A- the year '99C as compared to the year '99>. The <rovisions are increased in1,99',9C%A- the year '99C as compared to the year '99>. The ,verall (orking #apital is increased in %>,91+,1)9A- the year '99C.

I"te$%$et!tio"
The (orking #apital treated as$

The undry debtors are increased in )9,..>,1C)A- the year '99> as compared to the year'991. The #ash and Bank balances are decreased in %C,+'>,0%>A- the year '99> as compared to the year '991. The ,ther #urrent -ssets are decreased in 0,..,>1%A- the year '99> as compared to the year '991.

The 3oans and -dvances are increased in 1,%0,>C%A- the year '99> as compared to the year '991. The #urrent 3iabilities are increased in '>,.'',%.1A- the year '99> as compared to the year '991. The <rovisions are decreased in +,.+%,+C)Ayear '991. The ,verall (orking #apital is decreased in %>,))C,00.A- the year '99> because here, the company declared the dividends... the year '99> as compared to the

I"te$%$et!tio"
The (orking #apital tatement treated as$

The undry debtors increased in %>,%).,)>CA- the year '991 as compared to the year'990. The #ash and Bank balance is increased in 0,'%%,>C1A- the year'991 as compared to the year '990. The ,ther #urrent -ssets are also increased in 1,).,'91A- the year '991 as compared to the year '990. The 3oans and -dvances are decreased in )),'%9A- the year '991 as compared to the year '990. The #urrent 3iabilities are decreased in %,).9,0+'A- the year '991 as compared to the year '990. The <rovisions are increased in ),1'1,+>.A- the year '991 as compared to the year '990. The ,verall (orking #apital is increased in'',)1),.+CA- the year '991.

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IN!ERNE! /I!E
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$,, N-I.
Calance s$eet as on 31st Marc$ 2;11
3&mount in Rs.4
,articulars /#>RCE/ #F F>N-/ . 14 /=&RE=#0-ER/S F>N-/ !a" #apital !b" 2eserves and urplus 24 -EFFERE- !&9 0I&CI0I!G !#!&0 &,,0IC&!I#N #F F>N-/ . 14 FI9E- &//E!/ !a" Eross Block !b" 3ess$ Bepreciation !c" &et Block 24 C>RREN! &//E!/" 0#&N/ &N- &-5&NCE/ !a" undry Bebtors !b" #ash and Bank Balances !c" ,ther #urrent -ssets !d" 3oans and -dvances 0E// . C>RREN! 0I&CI0I!IE/ &N- ,R#5I/I#N/ !a" 3iabilities !b" <rovisions NE! C>RREN! &//E!/ !#!&0 2;1; < 11 2;;N < 1;

%>,1%C,'>9 1>,)+9,1)) C1,909,9%) ',+1>,+'> CC,.)>,++%

%>,1%C,'>9 )1,1.+,)1' .0,+1),0.' ',1C+,).9 .C,'0>,99'

)%,9.1,.C0 %0,>C+,.0' %+,%0),9)+ >9,1%',>9+ )+,9+),.'9 %.',''> 1)),.%0 %%.,0+',90> '%,.C0,C%0 >,00C,1+. )9,'00,00% >.,)1.,+91 CC,.)>,++%

'C,101,C1C %+,1%9,C>0 %.,9.0,CC) )1,>.0,+'9 .%,0C9,)'0 >.1,1.) C'),19C C%,)'>,'9> )>,.C%,'0. >,.'.,C)+ +1,%%1,%CC ++,'%%,99C .C,'0>,99'

,rofit and 0oss &ccount for t$e period ended on 31st Marc$ 2;11 3&mount in Rs.4

,articulars I.INC#ME 8ncome from ervices ,ther 8ncome !#!&0 II.E9,EN-I!>RE -dministrative and ,ther *xpenses 3ess$ *xpenditure 2eimbursable under ,perations and 6aintenance -greement !#!&0 III. ,R#FI! CEF#RE -E,RECI&!I#N &N- !&9&!I#N <rovision for Bepreciation I5. ,R#FI! CEF#RE !&9&!I#N <rovision for Taxation - #urrent - Beferred - 7ringe Benefits 5. ,R#FI! &F!ER !&9&!I#N urplus brought forward from <revious Mear 5I. ,R#FI! &5&I&0&C0E F#R &,,R#,RI&!I#N/ Transfer to Eeneral 2eserve 8nterim Bividend 2s.%. per equity hare !'99.- &83" <rovision for Bividend Bistribution Tax 5II. C&0&NCE C&RRIE- !# C&0&NCE /=EE!

2;1;< 11 C0,0.+,C9' ',)C>,''9 CC,9.),%'' >%,))+,1.9 >%,))+,1.9 +C,+1+,)9. )%,>09,++. 01,%C',011 ',%>),.10 0.,99C,%9% '+,'C',999 !)%.,C''" ++0,00) +9,.>0,).C '0,0CC,'.1 01,'>.,0%1 01,'>.,0%1

2;;N @ 1; ..,..9,0+C ','>.,>C0 .1,>)0,.+. 1.,.CC,1%C 1.,.CC,1%C +C,)+C,>C' '0,'+C,>'1 )%,.>0,1%> ','1C,C%1 'C,)90,>9% %9,0>9,++9 !01,).C" +)+,%+9 %>,'.C,.>9 ++,C.%,>.% 0),'%%,+)% +,+C.,%>. '>,91>,C'9 ),C)>,90C '0,0CC,'.1

Earnings ,er /$are < Casic P -iluted

22

1;