Questionnaire On Employee Welfare Measures

A STUDY ON PERFORMANCE OF RATIO ANALYSIS IN
EASTERN POWER DISTRIBUTION COMPANY OF
ANDHRA PRADESH LIMITED [APEPDCL]
A Project Report Submitted to
Jawaharlal Nehru Technological University, Kakinada in partial fulfillment of

the requirements for the award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
Submitted by
T. AKHIL
(PIN. No: 17551E00A7)
Under the guidance of
Sri. Sunitha
Associate Professor
DEPARTMENT OF MANAGEMENT STUDIES

GODAVARI INSTITUTE OF ENGINEERING & TECHNOLOGY
(Approved by AICTE, New Delhi and permanent Affiliated to JNTU, Kakinada)
Accredited by NBA and NAAC with “A” Grade
RAJAMAHENDRAVARAM– 533296 , E.G Dist.
2017-19
DECLARATION
T AKHIL from programmers declare that the project work entitled” A STUDY ON
PERFORMANCE OF RATIO ANALYSIS” in APEPDCL, Visakhapatnam is
original and bonafide work done by me for the fulfillment of the award of” MASTER OF
BUSINESS ADMINISTRATION” from Godavari institute of Technology Autonomous,

Rajahumundry
Place: Rajahumundry
Date:
Signature of the Student
T AKHIL
(Regd. No:17551E00A7)
CERTIFICATE
This is to certify that project report entitled A study on
"PERFORMANCE OF RATIOANALYSIS” submitted by T.AKHIL to

GODAVARI INSTITUTE OF ENGINEERING & TECHNOLOGY in
partial fulfillment for the award of the degree of MASTER OF BUSINESS
ADMINISTRATION is a record of bonafide work carried out by her under my guidance

and supervision.
Place: Rajahmundry
Date:
Signature of the guide,

Sri KRISHNA MOHANY
ACKNOWLEDGEMENT
I wish to express my sincere thanks to Mr. Dr. P R K RAJU , Principal of GODAVARI
INSTITUTE OF ENGINEERING & TECHNOLOGY, AUTONOUMUS for giving me
permission to do project work at APEPDCL, VISAKAHAPATNAM.
I express my heart-felt gratitude to Sri. G. SRINIVASA REDDY, Chief General

Manager/ Expenditure, Sri P. NAGESWARA RAO, Chief General Manager/HRD Corporate
Office, APEPDCL, Visakhapatnam, for permitting me to do the project in their esteemed
Organization.
I record my deep sense of gratitude to MRS.VIJAYA JYOTHI, Assistant Professor, who

inspired me during my extensive research in this area and extended her constructive guidance
and constant supervision, which is of immense help to me in the successful completion of this
study.
A special word of thanks to Sri A. VENKATESWARA RAO/General Manager

(Accounts) and my Hartley thank Smt. M. VIJAYAKUMARI, DGM/IR for their
cooperation while doing this project.
Last but not the least; I am indebted to my mother and friends and employees
of APEPDCL for their full support and encouragement in carrying out this
project.
T AKHIL
(Regd. No: 17551E00A7)
CONTENTS
CHAPTER-1
INTRODUCTION
 NEED FOR THE STUDY

 OBJECTIVES
 METHODOLOGY
 LIMITATIONS
CHAPTER-II
A BRIEF PROFILE OF EASTERN POWER DISTRIBUTION COMPANY
 INDUSTRY PROFILE
 COMPANY PROFILE
CHAPTER-III
THEORETICAL FRAME WORK ON RATIO ANALYSIS
CHAPTER-IV
RATIO ANALYSIS OF EASTERN POWER DISTRIBUTION COMPANY PVT.LTD
CHAPTER-V
 SUMMARY
 FINDINGS
 SUGGESTIONS
ANNEXURE
BIBLIOGRAPHY
INTRODUCTION
The area of financial management has undergone far-reaching changes over time. The
finance function assumes a lot of significance in the modern days in the view of increased size of
business operations and growing complexities associate thereto. A firm performs finance
function simultaneously and continuously in the normal course in the business. They do not
necessarily occur in a sequence. Finance function call for skillful planning, control and execution
of business activities.
The financial statements provide a summarized view of the financial position and
operations of the firm. Therefore, much can be learned about the organization by a careful
examination of its financial statements, as they are invaluable documents regarding the financial
performance of an organization. Thus analysis of financial statements is an important aid to
financial analysis. The financial analysis statements is appraises of evaluating relationship
between components parts of financial statements to obtained better understanding of the firms
position and performance.
Financial statement analysis can be undertaken either by the management of the firm or
by the outside parties like Creditors, Investors and Public. The nature of analysis differs
depending upon the purpose of analysis. The analysis and interpretation of financial statements is
an important accounting activity. The end users of financial statements will get further insight
about financial strengths and weakness of the firm. Management will be particularly interested in
knowing financial strengths of the firm to make their best use to be future plans of the firm
should be laid down in view of firm’s financial strengths and weaknesses.
A proper financial analysis must be used to analyze a firms past performance and assess
its present financial strength for making the better future plans. The financial resources of every
organization are always scarce and therefore require proper planning and control in order to
achieve the best out of funds available. The ratio analysis reveals the relationship in more
meaning full way so as to enable one to draw conclusions firm them. The parties interested in
financial analysis are short and long term creditor’s owners and management. These people use
ratios to determine those financial characteristics of the firm in which they are interested
The financial condition and the ability of the firm to meet its current obligation. The
extent to which the firm has used its long-term solvency by borrowing funds. The efficiency with
which the firm is utilizing its assets in generating sale revenue. The overall operating efficiency
and performance. Thus one can understand that the financial management is the key to the
successful business operations. And without proper administration of finance no business
enterprise can utilize its full potential for growth and success. Financial statement provide
summary of the accounts of a business enterprise. But the accounts stated in balance sheet and
income statement require treatment in order to assess the financial soundness of the enterprise.
Management of the organization is confront with taking decision about sources of finance
of its capital structure and credit policy its applications of funds in order to take care strategic
decision, the management needs to assess the progress and performance of the organization.
Financial statement analysis can be undertaken either by the management of the firm or by the
outside parties like Creditors, Investors and Public. The nature of analysis differs depending
upon the purpose of analysis. The analysis and interpretation of financial statements is an
important accounting activity. The end users of financial statements will get further insight about
financial strengths and weakness of the firm. A proper financial analysis must be used to analyze
a firms past performance and assess its present financial strength for making the better future
plans. The financial resources of every organization are always scarce and therefore require
proper planning and control in order to achieve the best out of funds available.
The relationship between two accounting figures expressed mathematically is knows as
financial ratio. The relationship can be expressed as percentages, fractions and proportions of
numbers. Ratio helps to summarize the large quantities of financial data and to make
qualitative judgment about the firm’s financial performance. Rations may be compared with its
own past records and similar firms for efficient financial management. So The ratio analysis
reveals the relationship in more meaning full way so as to enable one to draw conclusions firm
them.
The parties interested in financial analysis are short and long term creditor’s owners and
management. These people use ratios to determine those financial characteristics of the firm. The
financial condition and the ability of the firm to meet its current obligation The extent to which
the firm has used its long-term solvency by borrowing funds. The efficiency with which the firm
is utilizing its assets in generating sales revenue. The overall operating efficiency and
performance. Thus one can understand that the financial management is the key to the successful
business operations. And without proper administration of finance no business enterprise can
utilize its full potential for growth and success.
About three decades ago, the scope of financial management was confined to rising of
funds, whenever needed and little significance used to be attached to financial decision-making
and problem solving. As a consequence, the traditional finance texts were structured around this
theme and contained description of the instruments and institutions of raising funds and of the
major events, such as promotion, reorganization, readjustment, merger, consolidation etc., when
funds were raised. The modern thinking in financial management accords far managers do not
perform the passive role of scorekeepers of financial data and top management areas and play a
dynamic role in solving complex management problems. They are now responsible for shaping
the fortunes of the enterprise and are involved in the most vital management decision of
allocation of capital. It is their duty to ensure that the funds are raised most economically and
used in the most efficient and effective manner. Because of this change in emphasis, the
descriptive treatment of the subject of financial management is being replaced by growing
treatment of the subject of financial management is being replaced by growing analytical content
and sound theoretical underpinnings.
NEED FOR THE STUDY
APEPDCL, Visakhapatnam is the leading Indian power utility serving a
consumer base of over 57.81 lakhs of consumers spread across five districts in the
southern state of Andhra Pradesh, it has always been a pioneer in delivering
technology centric customer care services to its customers. EPDCL has the lowest
AT&C losses and one of the best in terms of operational efficiency.
Financial analysis of identifying the financial strengths and weaknesses of the firm by
properly establishing relationships between the items of the balance sheet and the profit & loss
account. Management of the firm can undertake financial analysis or by parties outside the firm
that is owners, creditors, investors and others. The nature of analysis will differ depending on the
purpose of the analyst.
In the era of globalization, companies can no longer pay attention only to their domestic
market, no matter how large it is. Many industries are global industries and their leading firms
achieve lower costs and higher brand awareness. Protectionist measures can only slow down the
invasion of superior goods, the best company that is fence is a sound global offence.
Trade creditors are interested in firm’s ability to meet their claims over a very short
period of time. Their analysis will therefore confine to the evaluation of the firm’s liquidity
position. Suppliers of the long-term debt on the other hand are concerned with the firm’s long
term solvency and survival. They analyze the firm’s profitability over time, its ability to generate
cash to pay interest and repay principal and the relationship between various sources of funds.
Investors, who have invested their money is the firm’s shares are most concerned about the
firm’s earnings. As such, they concentrate on the analysis of the firm’s present and future
profitability. They are alsointerested in the firm’s financial structure to the extent. It influences
the firm’s earnings ability and risk.
The project work is done for analyzing the financial position of the Eastern power
distribution company of A.P limited. Since the organization felt that there is a need to know the
strength and weakness of its financial position in the light of its future plans regarding the growth
position gives a better picture of the financial position of the organization in order to take better
decisions.
The organization has to submit its financial position to the potential lender of money
and to the upcoming partners of that it wanted to have the first utilized of the analysis to rectify
the problem if any. This situation has created an interest to study and analyze some the financial
aspects of this corporation through ration analysis comparative income statements. Balance sheet
and funds flow statements
OBJECTIVES OF THE STUDY

The main objective of the study is to apply theoretical concepts to the practical situations
Eastern power distribution company of A.P limited so as to compare and correlate the actual
achievements with a theoretical conclusion. The main objectives of this study are –
 To study the efficiency of overall operations using financial ratio analysis.
 To evaluate the changes and trends in the firm’s short – term financial condition by using this
financial analysis.
 To analyze the financial position of the organization through the ratio analysis.
 Setting up of an Autonomous Electricity Regulatory commission.

 Limiting the role of the State Government from that of owner, operator and regulator to
broad policy formulation
METHODOLOGY
The objective of this work is to examine the financial position of the company to analyze
the ratios.
The study has been carried on with the help of
 Primary data
 Secondary data
PRIMARY DATA
The information regarding primary data is collected by interviews with the help of people
through consolation personal observation, printed materials and so on.
SECONDARY DATA
This study is based on the secondary data. The required data have been collected from
various financial statements of the organization such as profit & loss account, balance sheet, cash
flow, funds flow statements and other statements which would contain the data related to various
current assets and current liabilities. The data from these statements has been evaluated.
THE SOURCES OF DATA
 Annual reports of Eastern power distribution company of A.P limited Published,
printed statements of the Eastern power distribution company of A.P limited
 Executive and staff of the account department.
 From account’s officers of the Eastern power distribution company of A.P limited
LIMITATIONS OF THE STUDY
 Interpretations are based on the validity of the data collected.
 Some aspects of financial information were not available because of the confidentiality of
the Eastern power distribution company of A.P limited.
INDUSTRY PROFILE AND POWER SECTOR REFORMS IN

ANDHRA PRADESH
The erstwhile Andhra Pradesh State Electricity Board (APSEB) has been incorporated in
April 1959 under Indian Electricity Supply act,1948 by the Government of Andhra Pradesh, with
the main objectives of establishing an integrated state grid covering the entire state ,and for rapid
electrification of all the regions in Andhra Pradesh with particular emphasis on rural areas in the
state, and to Generate, Transmit and Distribute the power so generated commensurate with the
growth in the power sector. The APSEB had been responsible for Power Generation,
Transmission and distribution activities and for development of overall power sector comprising
Domestic, Industrial, Agricultural and commercial and other categories of consumers in the state
of Andhra Pradesh.
The reforms process in the power sector had been contemplated as a sequel to the
liberalization of Power Sector by the Central Government of India since 1991, the
recommendations of a high level committee headed by Mr. Hiten Bhayya, in January 1995, the
consensus of Chief Minister’s conference in 1996 and the Common Minimum National Action
Plan for Power. Government of Andhra Pradesh has announced a general policy statement in
February 1997, followed by a detailed Policy Statement in October 1998, which indicated clearly
the objective of bringing viability to the sector and Government’s decision to distance itself from
the sector as the OWNER, OPERATOR, and REGULATOR, and to limit its role to that of a
POLICY MAKER. The reform process had further been taken up in AP out of a sincere concern
for the viability and growth of the power sector to meet the needs of the consumers and to
promote the state’s economy as a whole.
Consequently the AP legislative Assembly has passed the AP Electricity Reforms Bill
1998 on 28th April 1998,in the AP Legislative Assembly, and the combined APSEB had been
unbundled into two separate companies , namely 1) Transmission Corporation of AP Ltd. (
APTRANSCO ) responsible for Transmission, Bulk Supply , Distribution and Retail supply
business and 2) Andhra Pradesh Power Generation Corporation Limited (APGENCO)
responsible for Power Generation, and have become operational from 1st February 1999.
The salient features of the AP Electricity Reforms Bill 1998 bill are as follows:
 OBJECTIVES
 Setting up of an Autonomous Electricity Regulatory commission.
 Restructuring of APSEB into functionally distinct companies in the areas of Generation,
Transmission and Distribution
 Limiting the role of the State Government from that of owner, operator and regulator to
broad policy formulation
 REGULATORY FUNCTIONS OF THE AP ELECTRICITY COMMISSION(APERC)
 Issue of regular licenses to APTRANSCO,APGENCO and APDISCOMS and regulating
the Generation, Transmission and Distribution business
 Regulating the tariffs for Generation, Transmission and Distribution of electricity
 Issue of practice directions in regard to Captive power policy
 Issue of policy directions for purchase of power by APTRANSCO in an efficient and
economic manner
 Issue of performance standards and quality of supply and consumer service to the
licensees
 Issue of orders on Long Term Tariff principles
 Issue of regulations connected to Electricity business.
 Balancing the need to maintain the viability of the Power sector with the need to protect
the interests of the consumers
SCENARIO OF POWER SECTOR IN ANDHRA PRADESH BEFORE REFORMS
GOVERNMENT
APSEB
GENERATION TRANSMISSION DISTRIBUTION
INDEPENDENT POWER
PRODUCERS (IPP’S)
During the 40 years of its existence from 1959 to 1999 there had been an impressive
growth and performance with the Andhra Pradesh State Electricity Board in the fields of
Generation, Transmission and Distribution and some of the prestigious and major generation
projects like Nagarjuna Sagar Power House, Srisailam Power House, Sileru PH , Kothagudem
Thermal Power Station and Vijayawada Thermal Power Station ( Now Dr.Narla Tata Rao
Thermal Power Station )and Muddanuru Thermal Power Station ,to name a few which were
constructed during the regime of APSEB. But inspite of the impressive growth in the power
sector under governmental regime, the growth in installed capacity of generation has not been
commensurate with the growth in load demand and serious shortages in Electricity Generation
prevailed. The Transmission and Distribution System is beset with problems of high line losses,
poor voltages, and inadequate substations and inadequate transmission and distribution networks
and low reliability and with less consumer orientation and is unable to meet growing
expectations of the consumers in different categories. Consumer services also need much to be
desired. As the power sector is a capital intensive sector, the poor financial health of the power
sector in Andhra Pradesh at that time has been standing in the way of revamping of the power
system and adding new capacities to meet the developmental needs of the power sector. Based on
studies of the power utilities (at that time each state having its own State Electricity Board and
90 % of the Electricity Boards were in huge deficits), it was felt that all these deficiencies of the
power sector arise from serious structural flaws. A crying need has therefore been felt to
restructure the Electricity Board to impart Autonomy and commercial outlook.
Need for Restructuring

Given the financial condition of the State Electricity Board at that time and also that of
the State Government, the funds required for the capital investment for revamping the APSEB
could not be raised by APSEB or such huge investment could not be pumped in by Private Sector
either from within the country or from outside. The lending agencies like World Bank etc. had
been stressing the need for reforms and restructuring of the Electricity sector by creation of
commercially viable independent corporate entities for Generation, Transmission, and
Distribution, and also to allow private players into the field of Generation, Transmission and
Distribution, as a necessary condition for extending loan facilities to the power sector. The
“Hiten Bhayya High Level Committee” comprising of top experts in the field of Power also
made a recommendation reiterating the above view in 1995.This recommendation was based on
the experience of several countries already in the path of reforms. Experience in these countries
such as UK, USA, Norway, Argentina and Canada has shown that after reforms the consumers
have been benefited both by way of improvement in quality of service as well as lowering of
energy tariffs consequent to the introduction of competition by way of private players.
The world over, the power sector is undergoing metamorphical changes with countries
like U.K,USA, Norway, Argentina, and even Gulf countries implementing revolutionary
structural changes. In India too, several states have embarked on the reform process with Orissa
taking the lead. The structural reforms are in various stages in the states of Haryana, Madhya
Pradesh, Karnataka, Kerala and Uttara Pradesh. The imperative need for reforms was recognized
by a national consensus and was made part of ‘Common Minimum National Action Plan for
Power’ of the Central Government. The Government of India has also progulmated an Ordinance
of creating Central Electricity Regulatory Commission (CERC) as well as ‘State Electricity
Regulatory Commissions’ (SERC).

REFORMS PROCESS - FIRST TRANSFER SCHEME
As envisaged in the Andhra Pradesh Electricity Reforms Act 1998, the monolithic,
vertically integrated APSEB was unbundled and two separate companies viz. AP Power
Generation Corporation Ltd and Transmission Corporation of AP Ltd. Were formed and
incorporated in 12/98.These companies have commenced their business operations as
commercial entities w.e.f. 1-2-99.To start with Distribution business was also entrusted with
APTRANSCO. In the FIRST TRANSFER SCHEME, the Govt.of AP has issued provisional
bulk supply and Transmission license as also Distribution and retail supply license to
APTRANSCO w.e.f 1-2-99.
SECOND TRANSFER SCHEME
In the second transfer scheme, 2000 published in the official Gazette as Notification No;
G.O.M.S. No:35 (Energy Power-III) dt: 31 st March 2000, APTRANSCO was further unbundled
into APTRANSCO and four distribution companies collectively called as APDISCOMS namely:
 Eastern Power Distribution Company of Andhra Pradesh Ltd (A P E P D C L)
 Central Power Distribution Company of Andhra Pradesh Ltd (A P C P D C L)
 Southern Power Distribution Company of Andhra Pradesh Ltd (A P S P D C L)
 Northern Power Distribution Company of Andhra Pradesh Ltd (A P N P D C L)
Financial and Administrative autonomy was given to the Discoms and the distribution
business was transferred from APTRANSCO to the DISCOMS on territorial basis. Employees
have been allocated the Six companies APGENCO, APTRANSCO, APEPDCL, APCPDCL,
APSPDCL, and APNPDCL through an options process.

THIRD TRANSFER SCHEME
The third transfer scheme,2005 entails the disintegration of the Electricity
bulk supply undertaking from APTRANSCO to the APDISCOMS and is published in the
official Gazette as Notification No; G.O.M.S. No:58 (Energy Power-III) dt: 7th June 2005.
Thus, EASTERN POWER DISTRIBUTION COMPANY OF ANDHRA PRADESH
LTD, and in short APEPDCL came into existencedue to the power reforms, as explained
above, that have taken place in the state of Andhra Pradesh from 1st April 2000
POWER SECTOR STRUCTURE IN ANDHRA PRADESH AFTER REFORMS

Generating companies
A
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APGENCO Independent Power CGS Elect. From Other Joint Venture
E Producers States / Regions Companies
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APTRANSCO
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APCPDCL APSPDCL APNPDCL
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ELECTRICITY CONSUMERS
CGS - Central Generating Stations
VISION OF APEPDCL
 To ensure reliable, efficient and self-sufficient power supply to consumers.
 To ensure operational efficiency through Managerial, functional autonomy and
Technological up gradation
 To ensure a balanced all-round development of power infrastructure in all Circles of
Operation.
 To focus on customer care and customer service in all spheres of activity, by maintaining
good quality in cost-effectiveness in power distribution.
 To emphasize fulfillment of Employee expectations –By promoting positive
work culture, thereby motivating Employees to perform better.
QUALITY POLICY OF APEPDCL
We are committed to be the best “POWER UTILITY”
by providing sufficient reliable and cost effective
power to the delight of our customer.
We shall achieve this through continual improvement of our
processes, technological advancements and conductive work

environment
OBJECTIVES OF APEPDCL
 To engage in the business of supply and distribution of electricity, purchasing, selling,
importing, exporting, wheeling, trading of electrical energy, operation of distribution
system including submission of tariff proposals to APERC, billing and collection of
revenues thereof besides entering into any agreements for the carrying on of such
business.
 To takeover, vest and acquire the supply and distribution of electricity with respect to a
specified area from the Transmission Corporation of Andhra Pradesh.
 To acquire, establish, construct, takeover, erect, lay, operate ,run, manage, hire, lease, buy,
sell, maintain, enlarge, alter work, use, renovate, and modernize electrical lines for the
purpose of distribution and / or supply of electrical energy and associated sub-stations,
including distribution centers, cables wires, accumulators, plants, motors, meters,
apparatus, computers and material connected with distribution and / or supply of electrical
energy, ancillary services, communication and tele-metering equipment.
 To study, investigate, collect information and data, review operations, plans, research,
design and prepare project reports, diagnose operational difficulties and weaknesses, and
advise on the remedial measures to improve and modernize the existing electrical lines
and sub-stations, to prepare load forecasts of customer demand and sources of purchase of
power, to prepare business plans and strategy documentation.
COMPANY PROFILE –APEPDCL

APEPDCL is a subsidiary company of APTRANSCO. The board of Directors of
APEPDCL comprises of eight (8) directors including two (2) part time official directors and two
non-whole official directors, who are nominated by APTRANSCO.The details are as follows.
 Sri. H.Y. Dora :Chairman & Managing Director
 Sri. B. SeshuKumar : Director (Operations & Projects)
 Sri. T.V.S. Chandra sekhar : Director (Finance, HRD & Plng.)
 Sri. Rahul Pandey, I.F.S : Nominee Director
 Sri. K.N. Malleswara rao : Nominee Director
APEPDCL, Visakhapatnam is the leading Indian power utility serving a consumer base of
nearly 5.78million spread across five districts in the southern state of Andhra Pradesh. It has
always been a pioneer in delivering technology centric customer care services to its customers.
EPDCL has the lowest AT&C losses and one of the best in terms of operational efficiency.
APEPDCL is responsible for undertaking distribution and bulk supply of power in the
operation circles of Srikakulam, Visakhapatnam, Vizianagaram, East and West Godavari districts
and 20 Divisions of Coastal Andhra Pradesh. APEPDCL supplies power to over 57.8lakhs
consumers belonging to different categories through a network consisting of 816 Sub-stations of
33 KV level, 1807 feeders of 11 KV level and more than 188287 distribution transformers of
different levels. The Corporate Office and Headquarters of APEPDCL are situated at
Visakhapatnam.
Socio-Economic Profile of each Circle
The Eastern Power Distribution Company of Andhra Pradesh Limited is
made up of five Operation circles namely Srikakulam, Vizianagaram,
Visakhapatnam, Rajahmundry and Eluru. There is wide diversity in these districts
in pattern of land irrigated, crop patterns, rainfall, cultural attitudes, consumer
attitudes, etc.
Each circle is divided in to Operation Divisions depending up on the
requirement for effective functioning of the Circle. Apart from these Operation
Divisions, each Circle consists of M&P (Meters & Protection) Division,
Transformers Division, Construction Division and DPE (Detection of Pilferage of
Energy) Division.
The following provide a brief overview of the different factors at play in
each of the EPDCL circles. These factors have a bearing on different operational
and commercial parameters of the company.
SRIKAKULAM CIRCLE
Geographical Information
The Srikakulam circle is the uppermost district of the state of Andhra
Pradesh. The climate is characterised by humidity throughout the year and the
annual rainfall is around 940 mm. Main crops are Paddy, Ragi, Bajra, groundnut
Chillies and sugarcane. Major irrigation project in the district is Vamsadhara. The
other river passing through this district is Nagavali
Industry & Tourism
GMR Vasavi Industries and Vamsadhara Paper mill are the major industries. There
is considerable presence of dairy development as well. Srikurmam and Arasavalli
are two important places of pilgrimage, which are also attraction for the tourists.
Kalingapatanam is the port in this district.
There are two operation divisions in the circle namely Srikakulam and
Tekkali.
VIZIANAGARAM CIRCLE
The Vizianagaram circle constituting the Vizianagaram district, with
headquarters at Vizianagaram is bounded on the East by Srikakulam District on
the West and South by Visakhapatnam district, on the South East by the Bay of
Bengal and North West by Orissa State.
High humidity, oppressive summers and good seasonal rainfall primarily
through the South West monsoons characterize the circle. Up to eight rivers flow
through this area, the main among which are the Nagavali, Vegavathi and Gomukhi
and cater to the irrigation needs of a part of the cultivable land in the circle.
Industry & Tourism
Overall 52.3 % of the total area in the circle constitutes agricultural land
and up to 83 % of the population is dependent on agriculture for their livelihood.
The other occupations are related to forests, fisheries and through agro-based
industries like jute and sugar mills. Manganese and limestone are the most
important minerals found in the circle, which also has a Ferro-alloys and a cement
unit respectively. M/s Andhra Ferro Alloys and M/s Jindal are the major
industries in the District.
Vizianagaram town is an important railway junction in the Howrah –
Chennai trunk route and has an important place in the history of the AP state due
to the contributions made by the Rajahs of the area towards cultural and social
development. There are two operation divisions in the circle namely Vizianagaram
and Bobbili.
VISAKHAPATNAM CIRCLE
This circle covers the Visakhapatnam district, which is one of the North
Eastern coastal districts of Andhra Pradesh. It is bounded on the West and partly on
the North by Orissa State. Vizianagaram district constitutes a part of its northern
boundary. Bay of Bengal is on the East and the Southern boundary of the district is
formed by East Godavari District. The district can be divided into two distinct
divisions, the hilly region of the Eastern Ghats called the agency division and the
plain area (coastal and interior) called the plain division.

Industry & Tourism
Visakhapatnam city has a number of big industrial and Government
establishments including the Vizag Steel plant, HPCL, BHPV and Visakhapatnam
Port Trust, which is one of the busiest major ports in the country.
A number of areas of tourist interest in the district are popular. Among them
are Araku valley, Borra caves, Visakhapatnam city, Rishikonda beach etc.
There are Six operation divisions in the circle namely Zone-I, Zone-II,
Zone-III, Anakapalli, Narsipatnam and Paderu.
RAJAHMUNDRY CIRCLE
Rajahmundry is one of the two Godavari districts of Andhra Pradesh. The
climate is relatively stable, however between April and June it becomes very
warm. The normal rainfall of the district is 1159 mm.
Industry & Tourism
Due to presence of Godavari and the related irrigation schemes, there is lot
of emphasis on agriculture. The main crops in the region are paddy (which covers
over 65 % of the total area), coconut and bananas.
Rice, sugar, fertilisers, paper and textiles are the main industries in the
circle. Bauxite, clay for ceramic products, graphite, tungsten, natural gas and oil
are the important minerals in the circle. One of the important features of this
circle is the network of navigation canals. Commodities like coconuts and other
goods are carried through water transport system.

Rajahmundry has the gas based power generation station owned by the
GVK group of industries.
This circle has some important religious places like Annavaram,
Draksharamam, Korukonda, Ryali, Antarvedi, Mandapalli, and Moramalla and
there is also an old mosque erected during the regime of Mohd-bin-Tughlaque in
14th century. There is also a 2nd century Buddhist monastery at
Rampayerrampalam.
There are five operations divisions namely Rajahmundry, Kakinada,
Amalapuram, Ramachandrapuram and Jaggampeta.
ELURU CIRCLE
This circle comprises of the extreme fertile district of Eluru, which is
situated between the lifelines of Andhra Pradesh, Godavari and Krishna. Apart
from Godavari, the other rivulets in this region that also feeds the upland tanks are
Tammileru, Yerrakalava, Byneru, Kovvada Kalva, Jalleru, Ralla, Madugu and
Gunderu. The climate conditions of this district are of more or less the extreme.
The average rainfall in this district is 1076 mm.
Industry & Tourism
Paddy is the most important crop in this area, which is grown in Khariff as
well as Rabi seasons. Apart from paddy, the other crops are sugarcane, mango,
cashew nut, lime and coconut.

Eluru circle has the gas-based power station owned by APGPCL and
APGENCO.
Dwarkatirumala, Pattisam, and Ryali are the important places of pilgrimage
in the district.
There are 4,981 small-scale industries with employment of 82,604 persons.
The important items that are being manufactured are corrugated boxes, egg trays,
modern roofings, general engineering works, ice plants etc.
There are four operation divisions in the circle namely Eluru,
Tadepalligudem, Nidadavole, Jangareddygudem and Bhimavaram
The salient features of the company as on 31-03-2018 are as follows:
Visakhapatna
S.No. Particulars Srikakulam Vizianagaram Rajahmundry Eluru Total
m
1 Area in Sq.km. 5837.00 6539.00 11200.00 10807.74 8506.00 42890
Population (No’s)
2 (As per census 2703100 2344000 4200000 5154296 3803517 18204913
2011)
3 No. of Mandals 38 34 43 64 48 227
No. of
4 Parliamentary 3 1 3 4 2 13
Constituencies
No. of Assembly
5 10 9 15 19 15 68
Constituencies
6 No. of Divisions 7 7 12 11 11 48
a) Operation 2 2 6 5 5 20
b) Transformers 1 1 1 1 1 5
c) M&P 1 1 1 1 1 5
d) Construction 1 1 1 2 1 6
e) DPE 1 1 1 1 1 5
f) Assessments - - 1 0 1 2
g) DE Tech to SE 1 1 1 1 1 5
h) Corporate
13
Office Des
No. of Operation
7 10 10 21 22 21 84
Sub divisions
5+3 (Sub- 8+3 (Sub 8+3 (Sub 31+9 (Sub-
8 No. of E.R.Os 4 6
EROS) ERO's) ERO's) EROs)
No. of Operation
9 42 36 70 86 77 311
Sections
No. of R.E.C. 1 1
10 - - - 2
Societies (Cheepurupalii) (Kasimkota)
a) No .of
- 3 5 - - 8
Mandals
b) No. of
Parliamentary - - 1 - - 1
Constituencies
c) No. of
Assembly - 1 2 - - 3
Constituencies
FUNCTIONS OF THE BOARD
APEPDCL is led by a Chairman and Managing Director, appointed by the
Government of Andhra Pradesh, assisted by a Board of Directors. The Board has
the power to take decisions at their board meetings by passing a resolution. The
Board has to prepare a report every year giving an account of its activities during
financial year and also of the activities, which are likely to be undertaken in the
next financial year. This report is sent to the Government, which will be placed
before the State Legislature.
The Chairman and Managing Director looks after the overall administration
of the Company; the other Directors look after individual wings like Finance and
Accounts, Operations, HRD, Projects, Commercial & RAC and Planning etc. The
officers of various cadres work under Directors in discharging their duties and
functions effectively.
KEY ACHIEVEMENTS:
PERFORMANCE AND OPERATIONAL HIGHLIGHTS
During the year, the Sale of Energy was 16443.36 Million Units, an
increase of 10.82% as compared to 15185.99 Million Units for the previous
year. The aggregate technical and commercial losses were brought down to
4.99% from 5.48% in the previous year. As per the revised methodology
communicated by CEA losses works out to 7.70% (2016-17).
During the year, the DPE wing inspected 66,321 services and assessed
an amount of Rs.4973.84 Lakhs in respect of 14,409 cases booked, relating to
pilferage, malpractice, back billing, etc.; out of which an amount of
Rs.2724.43 Lakhs had been realized.
During the year, the Assessment wing has disposed off 4200 Nos. of
cases.
APEPDCL FACILITATES ANDHRA PRADESH FIBER GRID
PROJECT IN 5 COASTAL DISTRICTS:

APEPDCL has involved in the Andhra Pradesh prestigious project, Overhead
Optical cable grid with the aim of providing high-speed internet facility to
people of the State at an economical price
The project being funded by the Infrastructure Corporation of Andhra
Pradesh and is part of Government’s vision of Internet for all, began in
APEPDCL limits by laying 24-Crore fiber optic cables using the existing
electrical network system of 33 KV and 33/11 KV lines and Sub-Stations of
the APEPDCL for 5 Coastal Districts of Srikakulam, Vizianagaram,
Visakhapatnam, East Godavari and West Godavari. In the first phase, work in
progress in the Five Coastal Districts.Cable will be laid across a length of
about 4,887Kms, linking 69,140 poles in the Five District. Apart from the
general public, the facility can be utilized by Government offices as well
Municipal and ZP Schools across the 664Mandals in the State can avail of the
facility at a very economic price.
SYSTEM IMPROVEMENT
The Company is continuously upgrading and augmenting its network to
achieve different objectives viz., to reduce technical losses, to improve
reliability of the system, to serve the consumers for better services and to give
interrupted quality power.
PROGRESS OF PROJECT WORKS

Your Company continues to explore various modes to utilize project works for
improving operational efficiency. Some of the highlights are:
 Erection of new 33/11 KV Substations: 8 Nos. new 33/11KV
Substations with estimated cost of Rs.3.03 Crores are changed
during the F.Y. 2016-17 under T&D(2Nos) and IPDS (6Nos).
DEEN DAYAL UPADYAYAGRAM JYOTHI YOJANA
(DDUGJY SCHEME):
(a) Rural Electrification (RE) Component:
67436 Nos. Services released to Rural Households during 2016-2017.
Expenditure incurred is Rs.31.22 Crores. And Rs.42.47 Crores released from
M/s. REC Ltd during FY 2016-17. And cumulative expenditure incurred is
Rs.71.067 Crores against received amount of Rs.49.684 Crores.
(b) Balance component of DDUGJY viz., System strengthening,
SAGY and Metering:
Tenders floated and awarded in 10 packages for Erection of 80 Nos.
new 33/11 KV Sub-stations with connected lines, SAGY and metering works
during October 2016. The works are under progress.
Expenditure incurred is Rs.36.33 Crores. And Rs.30.659 Crores.
Released from M/s. REC Ltd.
DDG PROJECTS:
194 Nos habitations are identified in Visakhapatnam, circle and in which 39
Nos were electrified and 722 Nos services are released during the FY 2016-17.
For 22 Nos are already electrified through grid and for 135 Nos. works are in
progress.
INTEGRATED POWER DEVELOPMENT SCHEMES (IPDS):
6 Nos. 33/11 KV Sub-stations charged.17 Locations of 363KWp Solar
rooftop works are completed in Vizianagaram and Eluru circles including
collector offices.
Expenditure incurred is Rs.45.61 Crores and Rs.27.56 Crores released
from M/s. PFC Ltd. During FY 2016-17. And cumulative expenditure incurred
is Rs.46.76 Crores against received amount of Rs.41.02 Crores.
HVDS WORKS UNDER NEF FUNDS
2,900 Nos. pump sets were converted into HVDS with an expenditure of
Rs.33.56 Crores in Rajamahendravaram and Eluru circles.
R-APDRP PART-B SCHEME:
The scheme was sanctioned by PFC for implementation of SCADA for
amount of Rs.13.16 Crores and installation of SCADA Enabling Electrical
Components for Rs.21.42 Crores under 28 Nos. 33/11 KV Substations in
Visakhapatnam Town. Supply and Installation works have been awarded on
100% Turnkey Basis.
All Installation & Commissioning works were completed and minor
integration issues are pending which are being attended by SIA (SCADA
implementing Agency).
CONSUMER SERVICES:
Your company dedicates itself to efficient and customer service and the
following initiatives were further were launched during the year:
 The company is resolving immediately the complaints registered
in Centralized Electricity Call Center on a priority basis from time
to time.
 Online ‘Spandana’ for receiving the consumer complaints to
improve the customer services and achieve the objective of
customer delight in addition Spandana programme which is being
conducted on every Monday at Corporate Office to resolve the
grievances of customers.
 Centralized call center number 1912 established for better
customer support for rectification electricity supply and other
electrical problems.
 Vidyut Adalats are conducted every Monday at all section offices
to resolve complaints.
 HT Consumers meets are being organized at Circle and Corporate
Offices to resolve pending issues.

 Wide publicity activities were taken up such as exhibition of
display boards, norms for new service connections and citizen
charters etc.
 Regular visits are conducted for effective monitoring as part of
continuous improvement.
 During the year new payment gateway i.e. payment of bills
through Andhra Bank ATMs was introduced to facilitate
consumers to have multiple choices for bill payment.

 Implemented online e-payment system for collection of bills and
also introduced UPI payment service for receiving electricity
payments using BHIM app for better consumer service.
CONSUMER GRIEVANCES REDRESSAL FORUM:
Forum has conducted 50 Consumer Awareness Programmes besides 15
Nos. public hearings in various places and disposed off 493 Nos. complaints
during the year.
SAFETY MEASURES:
Safety comes first and remains at the top of the agenda of Company round the
year. Company has initiated various safety measures like procurement of
safety equipments for the field staff and initiating safety awareness
programmes etc.
 Safety Boards are displayed in all fault centers of APEPDCL
Jurisdiction for enforcement of Safety rules.

 Safety training provided to line staff.
 Safety Committeesformed up to Sub-Division level for strict
implementation of safety measures.
INFORMATION TECHNOLOGY:
Your Company continues to explore various modes to utilize
technological developments for improving operational efficiency and customer
care. Some of the highlights of the areas in which the basic work is completed
are as follows:
 Implemented E-office and E-stores successfully

 APEPDCL is providing 46 Nos. services to its customers
through Meeseva (around 2600centres)

 CM Dash Board developed for monitoring the progress of
the AP DISCOMS
 AP Vidyut Pravah application developed for monitoring
Demand-supply Position, SAIDI & SAIFI Town-
wise/Mandal-wise/Village wise/Service Connection
Number-wise Power Supply Position, Power supply
information using registered mobile number and Prior
information on Scheduled Power Outages

 “Real Time Feeder Monitoring System” has been introduced
during September,16 for monitoring Power Outage
Information on real time, 11 KV feeder interruptions with
cause-wise analysis, Loads and Power factor of all 11 KV
feeders, Ensure 24*7 supply to all industrial feeders and HT
services and SAIDI-SAIFI on daily basis.

 Online Billing system is implemented in all the 5 circles of
APEPDCL since June’2016 and it saves a lot of time and
work for both the section officers as well as spot biller and
same billed data is transferred from the SBM to EPCCB
through encryption.
 Implemented online e-payment system for collection of bills
and also introduced UPI payment service for receiving
Payments using BHIM Application and improving online
Payments for provided swiping machines to EROs and
Revenue Cashiers for collection of bills and also, the agent

mobile app is now being modified for enabling Aadhaar
based payments.
 Kaizala application developed for to address the grievances
of all valuable HT consumers, district-wise Kaizala groups
were formed and the complaints received are addressed on
top priority.
 R-APDRP Part-A (IT initiatives) was sanctioned for amount
of Rs.388.04 Crores in all 4 DISCOMs of Andhra Pradesh
out of which APEPDCL sanction is Rs.61.01 Crores
covering 29 Towns.
As part of this, the following major modules are getting implemented:
 Centralized Call Centre (CCC)

 GIS Based consumer indexing
 GIS Based Network Analysis
 Web Self Service (Website)
 Meter Data Acquisition System (MDAS)
 Meter Data Management (MDM)
 Energy Audit (EA)
 GPS based vehicle tracking system is implemented for
monitoring replacement of DTRs.

 To ensure the replacement of failed DTRs within the
timelines specified by the Hon’ble APERC i.e. within
12hours in Urban areas and 24 hours in Rural areas.

 To ensure that only department vehicles are used for
replacement
 Real time integration with EPCCB and CCC applications
in respect of replacement of DTRS

 APEPDCL has started sending SMS alerts to the
consumers immediately after:

 Issuing the CC bill
 Bill payments
 Release of new services
 Registration and resolution of CCC complaints.
CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND
OUTGO:
Theparticulars relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo in accordance with the
provisions of Section 134 (3) (m) of the Companies Act,2013, read with the
Companies (Accounts) Rules, 2014,are given below.
(A) Conservation of energy:
DELP (DSM based Efficient Lighting Programme)
 APEPDCL has implemented the Demand Side Management based
Efficient Lighting Programme (DELP) with the financial support of
M/s. Energy Efficiency Services Limited (EESL), New Delhi as
approved by the Hon’ble APERC vide OP Nos.6 of 2015 and 7 of
2015 Orders dt.06.06.2015.

 As a part of energy conservation measures the DELP (DSM based
Efficient Lighting Programme) scheme for distribution of LED
bulbs was successfully taken up in two phases in 5 districts i.e.
Srikakulam, West Godavari, Vizianagaram, Visakhapatnam and East
Godavari Districts.
SOLAR AGRICULTURE PUMPSETS AND ROOFTOP

 As per the GoAP Policy, Agricultural farmers receive 7hrs of free
supply by providing Subsidy amount to APDISCOMS. The total
agriculture consumption is more than 27% of energy supplied.
Keeping in view of the huge demand, power supply is usually
being supplied to agricultural consumers in 2 spells of one each
during the day and night.

 Applicability of Scheme is only for Agricultural motors of 5HP &
3HP systems.
 During the Year 2729 Nos. Solar Agricultural Pump Sets energized
by the Company and also 341 Nos. Solar Rooftop services
synchronized by the Company and capacity synchronized 6.26
MW.
INITIATIVES OF APEPDCL FOR PROMOTION OF SOLAR
ROOFTOP:
1)APEPDCL is emerging the development of Non-Renewable energy and
accepting the Gross/Net Metering options from the eligible developers as per
the Policy, 2015.
2)APEPDCL installed to 10 KW Solar Rooftop on ATC building as initiative
and for demonstration purpose.
(B) Technology absorption:
Major efforts made towards technology absorption.
 Company has upgraded its android application on Google play
store so that any consumer can make the payment of energy bill
through its android mobile.

 Transformer load loss measurement facility at stores.
 Company is in the process of adopting new technologies to
reduce the consumption of Electricity.
(C) Foreign exchange earnings and outgo
There were no foreign exchange earnings and outgo during the year.
ANTI THEFT MEASURES:
Your Company is having a full-fledged Vigilance Department (DPE
Wing).
 Night raids have been conducted where department transformers
are inside the consumer premises like fish tanks, poultry farms,
marriage function halls & Industries.

 Awareness was created among staff members and public not to
allow any sort of evil practices

 High loss sections or low specific or unmanned Distributions,
Low consumption, Nil consumption, stuck up meters, burnt
meters, no billing & UDC services were inspected.

 Review of MRB registers, abnormal consumption services in
EPIMRS were checked.

 Conducted intensive inspections in theft prone areas based on
information received from Public, Material published in
Newspapers, Vigilance reports etc.

 Intensive inspections over a specified area were being conducted
by pooling up DPE Units of various OPE Divisions on getting
the information from the concerned Superintending
Engineer/Operations, and also as per the instructions from Joint

Managing Director(V&S), Directors & Chairman & Managing
Director.
VIGIL MECHANISM:
The Company has a Vigil Mechanism System as per the existing APSEB
Employees Conduct Regulations which meets the objective of having Vigil
Mechanism Policy in the Company as per Section 177 (9) of the Companies
Act, 2013.
TARIFF
AndhraPradesh Electricity Regulatory Commission [APERC] is the authority
who has been entrusted with the various functions inter alia determination of
tariff for electricity for various categories of consumers.
RISK MANAGEMENT POLICY :
The elements of risk threatening the Company’s existence is very minimal.
However, the Business risk evaluation and management is an ongoing process
within the organization. The management reviews the reports of compliance to
all applicable laws and regulations at frequent intervals.
CORPORATE SOCIAL RESPONSIBILITY:

As per the provisions of Section 135 of the Companies Act, 2013,
the Board has constituted the Corporate Social Responsibility Committee with
the following Directors:
 Chairman & Managing Director
 Director (Finance & HRD)
 Director (Operations & Projects)
The Board also adopted CSR Policy of the Company, which has been posted on
the website of the Company. CSR Budget to spent during the financial year 2016-
17 is NIL as the company is not having the average net profits for the last three
financial years i.e. 2013-14, 2014-15 and 2015-16. Hence, the Company has not
undertaken any projects as per CSR Policy. However, being a Power Distribution
Company, we are continuously taking up energy efficiency measures as a part of
CSR initiatives from time to time as per the State Government directives and with
the association of Andhra Pradesh State Energy Conservation Mission (APSECM)
which has been constituted by Government of Andhra Pradesh as a part of energy
conservation measures. The Annual report on CSR activities as specified is
annexed in the prescribed format, which forms part of this report.

ORGANIZATION CHART
SALES REVENUE OF 2016-17
PARTICULARS Sales Revenue

MU % Rs. Crores %
Domestic 4607.53 28.02 1426.80 18.68
Non-Domestic 917.58 5.58 871.90 11.41
Industrial (LT) 983.29 5.98 535.94 7.02
Agricultural 2399.41 14.59 0.88 0.01
Other LT 271.23 1.65 166.21 2.18
HT Industrial 5387.17 32.76 3437.23 44.99
HT Cat-II Others 587.05 3.57 541.40 7.09
HT Cat-IV Lift irrigation 271.97 1.65 151.12 1.98
Railway Traction-Cat. V 645.76 3.93 431.24 5.64
HT RESCOS 290.29 1.77 20.79 0.27
HT Others Categories 82.08 0.50 56.16 0.74
TOTAL 16443.36 100.00 7639.67 100.00
EASTERN POWER DISTRIBUTION COMPANY OF AP LTD

REVENUE ACCOUNT 2016-17
Current Year Previous Year

PARTICULARS 2016-17 2015-2016
Revenue
Sale of power (incl.Electricity Duty) 8101.17 7451.47
Inter-state sales and Inter Discom sales 33.95 184.65
Other income 449.24 363.20
Subsidy 135.94 867.55
Total revenue 8720.30 8866.87
Expenditure
Power Purchase 7371.19 7548.31
Electricity Duty 77.88 70.47
Employee Cost 822.66 841.73
Administration & General Charges 90.96 95.17
Repairs & maintenance 107.24 99.32
Interest & finance Charges
Interest to consumers on security deposit 81.28 79.18
Interest on working capital and other loans 354.11 373.85
Depreciation 305.78 273.12
Other Expenses 96.9 18.39
Prior Period Credits/(charges) (86.83) -
Special Appropriation-Contingency Reserve, True up cost
& Supply margin & ROCE & Taxes on income - -
Less:1. Expenses Capitalized 59.56 60.79
2.Interest During Construction (IDC) - -
Total Expenditure 9161.61 9338.73
Profit/(Loss) before Tax but After Prior Period items &
Spl.Appropriation (441.31) (471.86)
Provision for Income Tax - -
Profit after Tax/(Loss) (441.31) (471.86)
EASTERN POWER DISTRIBUTION COMPANY OF APLTD

BALANCE SHEET AS ON 31.03.2013
Current year Previous year

PARTICULARS 31-03-2013 31-03-2012
NET ASSETS
Net Fixed assets
Gross Block 28545307318 31267172487
Less: Accumulated Depreciation 13176069882 15076801010
Net Fixed assets 15369237436 16190371477
Capital Expenditure in progress 1815987909 207474522
Assets not in use 18282521 18282521
Intangible assets 0 0
Investments 708398800 978998800
Net Current Assets
Total Current Assets 41191116741 46703297345
Less: total Current Liabilities
Security Deposits from Consumers 6539094830 7429505365
Other Current Liabilities 9857950486 14353837021
Total Current Liabilities 16397045316 21783342386
Net Current Assets 24794071425 24919954959
NET ASSETS 42705978091 44182352969
FINANCED BY
Borrowings for working capital 27636059295 28796907590
Payments due on capital liabilities 517017373 463710373
Capital & other liabilities 3725691451 3388053680
Funds from State Government 1212253290 1212253290
Contributions, Grants on Subsidies
towards cost of capital assets 6555149803 7400678377
Reserves & Reserve funds 2092750482 1701253598
Deficit/Surplus from Revenue 967056397 1219496061
TOTAL FUNDS 42705978091 44182352969
As at 31st As at 31st March,

PARTICULARS Note No. March,2014 2013
EQUITY AND LIABILITIES
Shareholders' funds
(a) Share capital 2 1212253290 1212253290
(b) Reserves and surplus 3 -455108770 -5988666572
Non-current liabilities
(a) Long-term borrowings 4 33799492499 2702764255
(b)Other long-term liabilities 5 9246220470 8566632560
(c) Long-term provisions 6 1611262742 1586294978
Current liabilities
(a) Short-term borrowings 7 1275874020 29086371107
(b) Trade payables 8 12311540723 17659127099
(c)Other current liabilities 9 6516142805 7462288248
(d)Short-term provisions 10 1052752419 1117493873
TOTAL EQUITY & LIABILITIES 62474451259 63404558838
ASSETS
Non-current assets
(a) Fixed assets
(i) Tangible assets 11 20943368266 17847942488
(ii) Capital Work-in-progress 12 2568851724 2419231691
(b) Non-current investments 13 1684022800 1346498800
(c) Long-term loans and advances 14 418071836 555431842
(d)other non-current assets 15 74921436 133053882
Current assets
(a) Inventories 16 1086005875 1011728616
(b) Trade receivables 17 7938366883 6591229304
(c) Cash and cash equivalents 18 2832122878 2743232599
(d)Other non-current assets 19 11448782874 10362203213
(e)Other current assets 20 13479936687 20394006403
TOTAL Assets 62474451259 63404558838
Significance Accounting Policies 1
The accompanying notes are an integral 2 to 27

NOTE AS AT 31 AS AT 31st
PARTICULARS NO. MARCH,2015 MARCH,2014
A EQUITY AND LIABILITIES
1 Shareholders' funds
(a)Share capital 2 1212253290 1212253290
(b)Reserves and surplus 3 -11157696359 -455108770
2 Non-current liabilities
(a)Long term borrowings 4 37458468089 33799492499
(b)Other long term liabilities 5 9331695014 9246220470
(c)Long term provisions 6 2565125789 1611262742
3 Current liabilities
(a)Short term borrowings 7 1038655466 1275874020
(b)Trade payables 8 17094922442 12311540723
(d)Short term provisions 10 3116508904 1052752419
B ASSETS
1 Non-current assets
(a)Fixed assets
(i)Tangible assets 11 21783839624 20943368266
(ii)Capital work in progress 12 3351867758 2568851724
(b)Non-current investments 13 1684022800 1684022800
(c)Long term loans and advances 14 4475009598 418071836
2 Current assets
(a)Inventories 16 1567327642 1086005875
(b)Trade receivables 17 9874113696 7938366883
(c)Cash and cash equivalents 18 1633562677 2832122878
(d)Short term loans and advances 19 13849451165 11448782874
TOTAL ASSETS 67899287105 62474451259

NOTE AS AT 31 MARCH, AS AT 31
PARTICULARS NO. 2016 MARCH,2015
A EQUITY AND LIABILITIES
1 Shareholders' funds
(a)Share capital 2 1212253290 1212253290
(b)Reserves and surplus 3 -14569794190 -11157696359
2 Non-current liabilities
(c)Long term provisions 6 3453922511 2565125789
3 Current liabilities
(b)Trade payables 8 31292505729 17094922442
B ASSETS
1 Non-current assets
(a)Fixed assets
(ii)Capital work in progress 12 4971213565 3351867758
2 Current assets
(a)Inventories 16 1842779400 1567327642
TOTAL ASSETS 91192698355 67899287105

AS AT 31
NOTE MARCH, AS AT 31 MARCH,
A PARTICULARS NO. 2017 2016
1 EQUITY AND LIABILITIES
Shareholders' funds
(a)Share capital 2 1212253290 1212253290
2 (b)Reserves and surplus 3 13187954498 -14569794190
Non-current liabilities
3 (c)Long term provisions 6 3715629712 3453922511
Current liabilities
(b)Trade payables 8 21269158748 31292505729
B TOTAL EQUITY & LIABILITIES 93665923795 91192698355
1 ASSETS
Non-current assets
(a)Fixed assets
662882
(ii)Intangible assets 11 0
(iii)Capital work in progress 12 4185194451 4971213565
2 (d)Other non-current assets 15 315005300 275889955
Current assets
(a)Inventories 16 1681853712 1842779400
TOTAL ASSETS 93665923795 91192698355
Profit and loss of the year ended 31st March,2014
For the year For the year

ended 31st ended 31st
PARTICULARS Note No. March,2014 March,2013
Revenue from operations 21 60338132896 48711329033
Other income 22 3168549294 2202814239
Total Revenue (I+II) 63506682190 50914143272
Expenses
(a) Cost of Power Purchase 23 54937728866 54067199544
(b) Employee benefit expenses 24 4825975708 5025759956
(c) Finance costs 25 1593441080 2907503777
(d) Depreciation and amortisation expense 11 2239750248 2097582582
(e)Other expenses 26 1268280446 3621566459
Total Expenses 64865176348 67719612317
Profit /(Loss) before exceptional and extraordinary
items and tax (III-IV) -1358494158 -16805469046
Exceptional items - -
Profit /(Loss) before extraordinary items and tax
(V+_VI) -1358494158 -16805469046
Extraordinary items
Profit/ (Loss) before tax 9VII+_VIII) -1358494158 -16805469046
Tax Expenses:
(a) Current tax expense for current year -
(b)(Less): MAT credit (where applicable) - -
(c)Current tax expense relating to prior years - -
(d)Net current tax expense - -
(e)Deferred tax - -
Profit/ (Loss) from continuing operations (IX+_X) -1358494158 -16805469046
Earnings per Equity share:
(1) Basic -11.21 -138.64
(2)Diluted -11.21 -138.64
The accompanying notes are an integral part of the
financial statements 2 to 27
Profit and loss of the year ended 31st March 2015
For the year ended 31st For the year ended 31st
PARTICULARS March,2015 March,2014
Revenue from operations 76178769716 60338132896
Other income 3428374493 3168549294
Expenses
(a) Cost of Power Purchase 68352297945 54937728866
(b) Employee benefit expenses 9716159028 4825975708
(c) Finance costs 3264384712 1593441080
(d) Depreciation and amortisation expense 2524194854 2239750248
(e)Other expenses 2972477347 1268280446
Total Expenses 86829513887 64865176348
Profit /(Loss) before exceptional and
extraordinary items and tax (III-IV) -7222369677 -1358494158
Exceptional items 0 0
(V+_VI) -7222369677 -1358494158
Extraordinary items
Tax Expenses:
(a) Current tax expense for current year 0
(b)(Less): MAT credit (where applicable) 0 0
(c)Current tax expense relating to prior years 0 0
(d)Net current tax expense 0 0
(e)Deferred tax 0 0
(1) Basic -59.58 -11.21
(2)Diluted -59.58 -11.21
Significance Accounting Policies
The accompanying notes are an integral part of
the financial statements
Profit and loss of the year ended 31st march 2016
Note For the year ended For the year ended

PARTICULARS No. 31st March,2016 31st March,2015
Other income 22 3632034871 3428374493
Expenses
(c) Finance costs 25 1593441080 3264384712
(e)Other expenses 26 2037650497 2972477347
Total Expenses 92682671657 86829513887
items and tax (III-IV) -4718567577 -7222369677
Exceptional items 0 0
(V+_VI) -4718567577 -7222369677
Extraordinary items
Tax Expenses:
(a) Current tax expense for current year 0 0
(e)Deferred tax 0 0
(1) Basic -38.92 -59.58
(2)Diluted -38.92 -59.58
The accompanying notes are an integral part of the 2 to
financial statements 27
Profit and loss of the year ended 31st march 2017
Note For the year ended For the year ended

PARTICULARS No. 31st March,2017 31st March,2016
Other income 22 4492419532 3632034871
Expenses
(c) Finance costs 25 4353935897 1593441080
(e)Other expenses 26 2861656988 2037650497
Total Expenses 91705522213 92682671657
items and tax (III-IV) (5281316490) (4718567577)
Exceptional items 26.A 0 0
(V+_VI) (5281316490) (4718567577)
Extraordinary items 26.B 868251500 0
Profit/ (Loss) before tax 9VII+_VIII) (4413064990) (4718567577)
Tax Expenses:
(a) Current tax expense for current year 0 0
(e)Deferred tax 0 0
Profit/ (Loss) from continuing operations (IX+_X) (4413064990) (4718567577)
(1) Basic (36.40) (38.92)
(2)Diluted (36.40) (38.92)
The accompanying notes are an integral part of the
financial statements 2 -27
INTRODUCTION TO FINANCIAL MANAGEMENT
funds were raised. In the mid-fifties, the emphasis shifted to the judicious utilization of funds.
The modern thinking in financial management accords far managers do not perform the
passive role of scorekeepers of financial data and top management areas and play a dynamic rote
in solving complex management problems. They are now responsible for shaping the fortunes of
the enterprise and are involved in the most vital management decision of allocation of capital. It
is their duty to ensure that the funds are raised most economically and used in the most efficient
and effective manner. Because of this change in emphasis, the descriptive treatment of the
subject of financial management is being replaced by growing treatment of the subject of
financial management is being replaced by growing analytical content and sound theoretical
underpinning.
Financial management is that managerial activity which is concerned with the planning
and controlling of the firm’s financial resources. Though it was a branch of economics till 1890,
as a separate activity or discipline it is of recent origin. Still, it has no unique body of knowledge
of its own, and draws heavily on economics for its theoretical concepts even today.
SCOPE OF FINANCE
What is Finance? What are a firm’s activities? How are they related to the firm’s other
activities? Firms create manufacturing capacities for production of goods; some provide services
to customers. They sell their goods or services to earn profits. They raise funds to acquire
manufacturing and other facilities. Financing decision is an important function to be performed
by the financial manager. Broadly, he or she must decide when, where and how to acquire funds
to meet the firm’s investment needs. The central issue before him or her is to determine the
proportion of equity and debt. The mix of debt and equity is known as the firm’s capital
structure. The financial manager must strive to obtain the best financing mix of the optimum
capital structure for his of her firm. Once the financial manager is able to determine the best
combination of debt and equity, he or she must raise the appropriate amount through the best
available sources. In practice, a firm considers many other factors such as control, flexibility,
loan convenience, legal aspects etc., in deciding its capital structure.
FINANCIAL RATIO ANALYSIS
INTRODUCTION
As observed, a basic limitation of the traditional financial statement comprising the
balance sheet and the profit and loss account is that they do not give all the information related to
the financial operation of the firm. Nevertheless, they provide some extremely useful
information to the extent that the Balance Sheet mirrors the financial position on a particular date
in terms of the structure of assets, liabilities and owner’s equity and so on. The profit and loss
account shows the results of operations during a certain period of time in terms of the revenues
obtained and the cost incurred during the year. Therefore, much can be learnt about a firm from
a careful examination of its financial statements as invaluable documents/performance analysis.
Users of financial statements can get further insight about financial strengths and weaknesses of
the firm if they properly analyze information reported in these statements. Management should
be particularly interested in knowing financial weakness of the firm to take suitable corrective
actions. The future plans of the firm should be laid down in view of the firm’s financial strengths
and weaknesses. Thus, financial analysis is the starting point for making plans, before using any
sophisticated forecasting and planning procedures. Understanding the past is a pre-requisite for
anticipating the future.
MEANING AND RATIO ANALYSIS
Ratio analysis is a widely – used tool of financial analysis. It is defined as the systematic
use of ration to interpret the financial statements so that the strengths and weaknesses of the firm
as well as its historical performance and current financial condition can be determined. Ratio
analysis is a powerful tool of financial analysis. A ratio is defined as “the indicated quotient of
two mathematical expressions” and as the “the relationship between two or more things”.
In financial analysis, a ratio is used as a benchmark for evaluating the financial position
and performance of a firm. The term ratio refers to the numerical or quantitative relationship
between two items/variables. This relationship can be expressed as
1. Percentages, say, Net Profits are 25% of Sales (assuming Net Profit of Rs.25,000 and
Sales of Rs.1,00,000)
2. Fraction (Net profit is 1/4th of Sales) and
3. Proportion of numbers (the relationship between Net profits and Sales is 1:4).
These alternative methods of expressing items, which are related to each other, are, for
purpose of financial analysis, referred to as ratio analysis. It should be noted that
computing the ratios does not add any information already inherent in the above figures
of profits and sales
What the ratios do is that they reveal the relationship in a more meaningful way so as to
enable us to draw conclusions from them. The rationale of ratio analysis lies in the fact that it
makes related information comparable. A single figure by itself has no meaning but when
expressed in terms of a related figure, it yields significant inferences. For instance, the fact that
the Net profits of a firm amount to, say Rs. Ten Lakhs throws no light on its adequacy or
otherwise. The figure of Net profit has to be considered in relation to other variables. How does
it stand in relation to sales? If, therefore, Net profits are shown in terms of their relationship with
items such as Sales, Assets, Capital employed, Equity capital and so on, meaningful conclusions
can be drawn regarding their adequacy.

To carry the above example further, assuming the capital employed to be Rs.50lakh and
Rs.100lakh, the Net profit are 20% and 10% each respectively. Ratio analysis, thus, as a
quantitative tool, enables analysts to draw quantitative answers to questions such as; are the Net
profits adequate? Are the assets being used efficiently? Is the firm solvent? Can the firm meet
its current obligations and so on.
IMPORTANCE AND LIMITATIONS OF RATIO ANALYSIS
Importance
As a tool of financial management, ratios are of crucial significance. The importance of
ratio analysis lies in the fact that is presents facts on a comparative basis and enables the drawing
inference regarding the performance of a firm. Ratio analysis is relevant in assessing the
performance of a firm in respect to the following aspects.
i. Liquidity position
ii. Long-term solvency
iii. Operational efficiency
iv. Overall profitability
v. Inter-firm comparison, and
vi. Trend analysis
Liquidity position
With the help of ratio analysis conclusions can be regarding the liquidity position of a
firm. The liquidity position of a firm would be satisfactory if it is able to meet its current
obligations when they become due. A firm can be said to have the ability to meet its short-term
liabilities if it has sufficient liquid funds to pay the interest on its short-maturing debt usually
within a year as well as to repay the principal. This ability is reflected in the liquidity ratio of a
firm. The liquidity ratios are particularly useful in credit analysis by banks and other suppliers of
short-term loans.
Long-term solvency
Ratio analysis is equally useful for assessing the long-term financial viability of a firm.
This aspect of the financial position of a borrower is of concern to the long-term creditors,
security analysts and the present and potential owners of a business. The long-term solvency is
measured by the leverage/capital structure and profitability ratios, which focus on earning power
and operating efficiency. Ratio analysis reveals the strength and weaknesses of a firm in this
respect. The leverage ratios, for instance, will indicate whether a firm has a reasonable
proportion of various sources of finance or if it is heavily loaded proportion of various sources of
finance or if it is heavily loaded with debt in which case its solvency is exposed to serious strain.
Similarly, the various profitability ratios would reveal whether or not the firm is able to offer
adequate return to its consistent with the risk involved.
Operating Efficiency
Another dimension of the usefulness of the ratio analysis, relevant from the view point of
management, is that it throws light on the degree of efficiency in the management and utilization
of its assets. The various activity ratios measure this kind of operational efficiency.
Overall Profitability
Unlike the outside parties, which are interested in one aspect of financial position of a
firm, the management is constantly concerned about the over-all profitability of the enterprise.
That is, they are concerned about the ability of the firm to meet its short-term as well as long-
term obligations to its creditors, to ensure a reasonable return to its owners and secure optimum
utilization of the assets of the firm. This is possible if an integrated view is taken and all the
ratios are considered together.
Inter-firm Comparison
Ratio analysis not only throws light on the financial position of a firm but also serves as
a stepping stone to remedial measures. This is made possible due to inter-firm comparison and
comparison with industry averages. A single figure of a particular ratio is meaningless unless it
is related to some standard or norm. One of the popular techniques is to compare the ratios of a
firm with the industry average. An inter-firm comparison would demonstrate the firm’s position
vis-à-vis its competitors.
Trend Analysis
Finally, ratio analysis enables a firm to take the time dimension into account. In other
words, whether the financial position of a firm is improving or deteriorating over the years. This
is made possible by the use of trend analysis. The significance of a trend analysis of ratios lies in
the fact that the analysis can know the direction of movement, the is, whether the movement is
favorable or unfavorable. For example, the ratio may be low as compared to the norm but the
trend may be upward. On the other hand, though the present level may be satisfactory but the
trend may be a declining one.
LIMITATIONS
Ratio Analysis is a widely used tool of financial analysis. Yet, it suffers from various
limitations. The operational implication of this is that while using ratios, the conclusions should
not be taken on their face value. Some of the limitations, which characterize ratio analysis, are
i. Difficulty in comparison.
ii. Impact of Inflation, and
iii. Conceptual Diversity.

Difficulty in comparison
One serious limitation of ratio analysis arises out of the difficulty associated with there
comparability. One technique that is employed is inter-firm comparison. But such comparison is
vitiated by different procedures adopted by various firms.
 Differences in basis of inventory valuation (e.g.: - last in first out, average cost and cost);
 Different depreciation methods (i.e. straight line Vs. written down basis);
 Estimated working life of assets, particularly of plant and equipment;
 Amortization of deferred revenue expenditure such as preliminary expenditure and
discount on issue of shares;
 Capitalization of lease;
 Treatment of extraordinary items of income and expenditure; and so on.
Secondly, apart from different accounting procedures, companies may have different
accounting procedures, implying differences in the composition of assets, particularly current
assets. For these reasons, the ratios of two firms may not be strictly comparable.
Impact of Inflation
The second major limitation of the ratio analysis is a tool of financial analysis is
associated with price level changes. This infact is a weakness of the traditional financial
statements, which are based on historical cost. An implication of this feature of the financial
statements as regards ratio analysis is that assets acquired at different periods are, in effect,
shown at different prices in the balance sheet, as they are not adjusted for changes in the price
level. As a result, ratio analysis will not yield strictly comparable and therefore, dependable
results.
Conceptual Diversity
The factor that influences the usefulness of ratios is that there is difference of opinion
regarding the various concepts used to compute the ratios. There is always room for diversity of
opinion as to what constitutes shareholder’s equity, debt, assets, profit and so on.
Finally, ratios are only a post-mortem analysis of what has happened between two
balance sheet dates. For one thing the position in the interim period is not revealed by ratio
analysis. Moreover, they give no clue about the future.
In brief, ratio analysis suffers from serious limitations. The analyst should not be carried
away by it’s over simplified nature, easy computation with high degree of precision. The
reliability and significance attached to ratios will largely depend upon the quality of data on
which they are based. They are as good as the data itself. Nevertheless, they are an important
tool of financial analysis.
Precautions for use of ratios
The calculation of ratios may not be a difficult task but their use is not easy. The
information on which these are based, the constraints of financial statements, objectives for using
them, the caliber of the analyst, etc., are important factors, which influence the use of ratios.
Following guidelines/factors may be kept in mind interpreting various ratios.
 The reliability of ratio is linked to the accuracy of information in financial statements.
Before calculating ratios one should see whether proper concepts and conventions are
used for preparing financial statements of not. Competent auditors should properly audit
the statements.
 The purpose of the user is also important for the analysis of ratios. A creditor, a banker,
an investor, a shareholder, all has different objects for studying ratios. The purpose (or)
object for which ratios are required to be studied should always be kept in mind for
studying various ratios. Different objects may require the study of different ratios.
 Another precaution in ratio analysis is the proper selection of appropriate ratios. The
ratios should match the purpose for which these are required.
Calculating a large number of ratios without determining their need in the present
context may confuse the things instead of solving them. Only those ratios should be selected
which can throw proper light on the matter to be discussed.
Unless otherwise the ratios calculated are compared with certain standards one will not
be reach at conclusions. These standards may be a rule of thumb as in current ratio (2:1), may be
industry standards, may be projected ratios etc. The comparison of calculated ratios with the
standards will help the analyst in forming his opinion about financial situation of the concern.
 The ratios are only the tools of analysis but their interpretation will depend upon the
caliber and competence of the analyst. He should be familiar with various financial
statements and the significance of changes etc.
 A wrong interpretation may create havoc for the concern since wrong conclusions may
bad to wrong decisions. The utility of ratios is linked with expertise of the analyst.
 The ratios are only guidelines for the analyst; he should not base his decisions entirely on
them. He should study any other relevant information, situation in the concern, general
economic environment etc., before reaching final conclusions.
The study of ratios in isolation may not always prove useful. The interpretation should
use the ratios as guide and may try to solicit any other relevant information which helps is
reaching a correct decision.
Users of financial analysis

Financial analysis is the process of identifying the financial strengths and weaknesses of
the firm by properly establishing relationships between the items of balance sheet and profit and
loss account. Financial analysis can be undertaken by management of the firm, or by parties
outside the firm, viz., owners, investors and others.
The nature of analysis will differ depending on the purpose of the analyst.
 Trade creditors are interested in firm’s ability to meet their claims over a very short period
of time. Their analysis will, therefore, confine to the evaluation of the firm’s liquidity
position.
 Suppliers of long-term debt on the other hand are concerned with the firm’s long-term
solvency and survival. They analyze the firm’s profitability over time, its ability to
generate cash to be able to pay interest and repay principle and the relationship between
various sources of funds. (Capital structure relationship).
 Investors, who have invested their money in the firm’s share, are most concerned about the
firm’s earnings. They restore more confidence in those firms that show steady growth in
earnings. As such, they concentrate on the analysis of the firm’s
Present and future profitability. They are also interested in the firm’s financial
Structure to the extent it influences the firm’s earnings ability and risk.
 Management of the firm would be interested in every aspect of the financial analysis. It is
their overall responsibility to see that the resources of the firm are used most effectively
and efficiently, and that the firm’s financial condition is sound.
Types of Ratios
Several ratios, calculated from the accounting data, can be grouped into various classes
according to financial activity or function to be evaluated. As stated earlier, the parties interested
in financial analysis are short-term and long-term creditors, owners and management. Short-
term creditors` main interest is in the liquidity position or the short-term solvency of the firm.
Long-term creditors`, on the other hand, are more interested in the long-term solvency and
profitability of the firm. Similarly, owners concentrate on the firm’s profitability and financial
condition. Management is interested in evaluating every aspect of the firm’s performance. They
have to protect the interests of all parties and see that the firm grows profitably. In view of the
requirements of the various users of ratios, we may classify them into the following four
important categories:
 LIQUIDITY RATIOS
 LEVERAGE RATIOS
 ACTIVITY RATIOS
 PROFITABILITY RATIOS
LIQUIDITY RATIOS
It is extremely essential for a firm to be able to meet its obligations as they become due.
Liquidity ratios measure the firm’s ability to meet current obligations. In fact, analysis of
liquidity needs the preparation of cash budgets and cash and Fund Flow statements; but liquidity
ratios, by establishing a relationship Between cash and other current assets to current obligations
provided a quick measure of liquidity. A firm should ensure that it does not suffer from lack of
liquidity, and also that it does not have excess liquidity. The failure of a company to meet its
obligations due to lack of sufficient liquidity, will result in a poor creditworthiness, loss of
creditors` confidence, or even in legal tangles resulting in the closure of the company. A very
high degree of liquidity is also bad; idle assets earn nothing. The firm’s funds will be
unnecessarily tied up in current assets. Therefore, it is necessary to strike a proper balance

between high liquidity and lack of liquidity. The most common ratios, which indicate the extent
of liquidity or lack of it, are:
 CURRENT RATIO
 QUICK RATIO
 CASH RATIO
CURRENT RATIO
The current ratio is calculated by dividing current assets by current liabilities
Current assets
CURRENT RATIO =
Current liabilities
Current assets include cash and those assets, which can be converted into cash within a
year, such as Marketable Securities, Debtors and Inventories. Prepaid expenses are also
including in current assets as they represent the payments that will not be made by the firm in
future. Current Liabilities include Creditors, Bill payable, Accrued expenses, Short-term bank
loan, and Income Tax Liability and Long-term debt maturing in the current year.
The current ratio is a measure of the firms` short-term solvency. The higher the current
ratio, the larger is the amount of rupees available per Rupee of current liability, the more is the
firms` ability to meet current obligations and the greater is the safety of funds of short-term
creditors.
QUICK RATIO
The Quick ratio is calculated by dividing quick assets by quick liabilities.
Quick assets
QUICK RATIO = Quick liabilities
Quick assets or a Liquid asset means those assets which are immediately convertible into
cash without much loss. All current assets except prepaid expenses and inventories are
categorized in liquid assets. Quick liabilities means those liabilities, which are payable within a
short period. Normally, Bank overdraft and Cash credit facility, if they become permanent mode
of financing are in quick liabilities.
As this ratio concentrates on cash, marketable securities and receivables in relation to
current obligation, it provides a more penetrating measure of liquidity than current ratio.
CASH RATIO
The cash ratio is calculated by dividing cash + marketable securities by
current liabilities.
Cash + Marketable Securities
CASH RATIO =
Current liabilities
Since cash is most liquid asset, a financial analyst may examine cash ratio and its
equivalent to current liabilities. Trade investment or marketable securities are equivalent of cash;
therefore, they may be included in the computation of cash ratio.
LEVERAGE RATIOS
The short-term creditors like bankers and suppliers of raw material are more concerned
with the firms` current debt-paying ability. On the other hand, long-term creditors like debenture
holders, financial institutions etc., are more concerned with the firms` long-term financial
strength. In fact, a firm should have strong short-as well as long-term financial position. To
judge the long-term financial position of the firm, financial leverage, or Capital structure, ratios
are calculated. These ratios indicate mix of funds provided by owners and lenders. As a general
rule, there should be an approximate mix of debt and owner’s equity in financing the firms`
assets.
The manner in which assets are financed has a number of implications. First, between
debt and equity, debt is more risky from the firms` point of view. The firm has a legal obligation
to pay interest on debt holders, irrespective of the profits made or losses incurred by the firm. If
the firm fails to debt holders in time, they can take legal action against it to get payment and in
extreme cases, can force the firm into liquidation.
Secondly, use of debt is advantageous for shareholders in two ways:
a. They can retain control of the firm with a limited stake and
b. Their earnings will be magnified, when the firm earns a rate of return on the total capital
employed higher than the interest rate on the borrowing funds.
Leverage ratios may be calculated from the balance sheet to determine the proportion of
debt in total financing. Many variations of these ratios exist; but all these ratios indicate the
same thing-the extent to which the firm has relied on debt in financing assets. Leverage ratios
are also computed from the profit and loss items by determining the extent to which operating
profits are sufficient to cover the fixed charges.
DEBT – EQUITY RATIO
The relationship describing the lender contribution for each rupee of the owner’s
contribution is called DEBT-EQUITY RATIO. DEBT – EQUITY RATIO is directly computed
by the following formula.
DEBT
DEBT-EQUITY RATIO =
EQUITY
PROPRIETORY RATIO
This ratio states relationship between share capital and total assets. Proprietor’s equity
represents equity share capital, preference share capital and reserves and surplus. The latter ratio
is also called capital employed to total assets.
EQUITY SHARE CAPITAL
PROPRIETORY RATIO =
TOTAL TANGIBLE ASSETS
PROPRIETORS EQUITY
(OR)
TOTAL TANGIBLE ASSETS
INTEREST COVERAGE RATIO
This ratio indicates the extent to which earnings can decline without resultant financial
hardship to the firm because of its inability to meet annual interest cost. For example, coverage
of 5 times means that a fall in earnings unto (1/5 th) level would be tolerable, as earnings to
service interest on debt capital would be sufficiently available. This ratio is measured as follows:
EARNINGS BEFORE INTEREST &
TAXES (EBIT)
INTEREST COVERAGE RATIO =
INTEREST CHARGES
FIXED ASSETS TO NET WORTH
This ratio indicates the extent to which Equity capital is invested in the net fixed assets. It
is expressed as follows:
FIXED ASSETS
FIXED ASSETS TO NET WORTH =
NET WORTH
NET WORTH is represented by Equity Share Capital plus Reserves and
Surpluses. If the fixed assets are more than the Net Worth, difficulties may arise, as the
depreciation will reduce profit. This also means that creditors have contributed to fixed assets.
The higher this ratio, the less will be the protection to creditors. If this ratio is too high, the firm
may find itself handicapped, as too much capital is tied up in fixed assets but not circulating.
ACITIVITY RATIOS
Funds creditors and owners are invested in various assets to generate sales and profits. The
better the management of assets, the larger the amount of sales. Activity ratios are employed to
evaluate the efficiency with which the firm managers and utilizes its assets. These ratios are also
called Turnover Ratios because they indicate the speed with which assets are being converted or
turned over into sales. Activity ratios, thus, involve a relationship between sales and assets. A
proper balance between sales and assets generally reflects that assets are managed well. Several
activity ratios can be calculated to judge the effectiveness of asset utilization.

INVENTORY TURNOVER RATIO
Inventory turnover ratio indicates the efficiency of the firm in producing and selling its
products. It is calculated by dividing the cost of goods sold by the average inventory.
The average inventory is the average of opening and closing balance of
inventory. In a manufacturing company inventory of finished goods is used to calculate inventory
turnover.
Cost of goods sold
INVENTORY TURNOVER RATIO = ________________________
Average inventory
DEBTORS TURNOVER RATIO
A firm sells goods for cash and credit. Credit is used marketing tool by a number of
companies. When the firm extends credits to its customers, debtors (accounts receivables) are
created in the firms` accounts. The debtors are expected to be converted into cash over a short
period and, therefore, are included in current assets. The liquidity position of the firm depends
on the quality of debtors to a greater extent. Financial analysts apply three ratios to judge the
quality or liquidity of debtors:
a. Debtors turnover,
b. Collection period and
c. Aging schedule of debtors
Credit Sales
DEBTORS COLLECTION PERIOD RATIO =

Avg. Accounts Receivable
DEBTORS COLLECTION PERIOD RATIO
This ratio indicates the extent to which the debts have been collected in time. The debt
collection period indicates the average debt collection period. This ratio is a good indicator to
the lenders of the firm, because it explains to them whether their borrower is collecting from its
debt in time. An increase in this period indicates blockage of funds in debtors.
Months/Days (in a year)
DEBTORS COLLECTION PERIOD RATIO = Debtors turn over
(Or)
Debtors X Months/Days (in a year)
Sales
FIXED ASSETS TURNOVER RATIO
The fixed assets turnover ratio measures the efficiency with which the firm is utilizing its
investments in fixed assets, such as land, building, plant and machinery, furniture, etc. It also
indicates the adequacy of sales in relation to the investment in fixed assets. The fixed assets
turnover ratio is sales divided by net fixed assets. The firm assets turnover ratio should be
compared with past and future ratios and also with ratio of similar firms and the industry
average. The high fixed assets turnover ratio indicates efficient utilization of fixed assets in
generating sales, while low ratio indicates inefficient management and utilization of fixed assets
Sales
FIXED ASSETS TURNOVER RATIO =
Net fixed assets

WORKING CAPITAL TURNOVER RATIO
Working capital turnover ratio indicates the velocity of the utilization of net working
capital. This ratio indicates the number of times the working capital is turned over in the course
of a year. This ratio measures the efficiency with which the working capital is being used by a
firm.
A higher ratio indicates efficient utilization of working capital and low ratio indicates
otherwise. But a very high working capital turnover ratio is not a good situation for any firm and
hence care must be taken while interpreting the ratio. Making of comparative and Trend
Analysis can at best use this ratio for different firms in the same industry and for various periods.
This can be calculated as follows:
Sales
WORKING CAPITAL TURNOVER RATIO =
Net Working Capital
NET WORKING CAPITAL = Current Assets - Current Liabilities
(Excluding short-term bank borrowings)
PROFITABILITY RATIOS
A company should earn profits to Survive and Grow over a long period of time. Profits
are essential, but it would be wrong to assume that every action initiated by management of a
company should be aimed at maximizing profits, irrespective of social consequences.
Profit is the difference between revenues and expenses over a period of time (usually a
year). Profit is the ultimate “Output” of a company, and it will have no future if it fails to make
sufficient profits. Therefore, the financial manager should continuously evaluate to the
efficiency of the company in term of profits. The profitability ratios are calculated to measure
the operating efficiency of the company. Besides management of the company, creditors and
owners are also interested in the profitability of the firm. Creditors want to get interest and
repayment of principle regularly. Owners want to get a required rate of return on their
investment. This is possible only when the company earns enough profits.
Generally, two major types of profitability ratios are calculated.
 PROFITABILITY IN RELATION TO SALES
 PROFITABILITY IN RELATION TO INVESTMENT
PROFITABILITY RATIOS IN RELATION TO SALES
1. GROSS PROFIT MARGIN
2. CASH MARGIN
3. OPERATING MARGIN
4. NET PROFIT RATIO
GROSS PROFIT MARGIN
Gross profit margin reflects the efficiency with which the management produces each
unit of product. This ratio indicates the average spread between the cost of goods sold and the
sales revenue. When we subtract the gross profit margin from 100%, we obtain the ratio of Cost
of goods to Sales.
Both this shows profits relative to sales after the deduction of production costs, and
indicates the relation between Production costs and Selling price. A high gross profit margin
relative to the industry average implies that the firm is able to produce at relatively lower cost.
A high gross profit margin ratio is a sign of good management. A gross margin ratio may
increase due to any of the following factors.
i. Higher sales prices, cost of goods sold remaining constant,
ii. Lower cost of goods sold, sales prices remaining constant,
iii. A combination of variations in sales prices and costs, the margin widening, and
iv. Increases in the proportionate volume of higher margin items.
The analysis of these factors will reveal to the management that how a depressed gross profit
margin can be improved.
A low gross profit margin may reflect higher cost of goods sold due to the firms` inability to
purchase raw materials at favorable terms, inefficient utilization of plant and machinery,
resulting in higher cost of production. The selling price by the firm in an attempt to obtain large
sales volume, the cost of goods remaining unchanged. The financial manager must be able to
detect the causes of a falling gross margin and initiate action to improve the situation.
Sales – Cost of goods sold (or) gross profit
GROSS PROFIT MARGIN RATIO = Sales
NET PROFIT MARGIN RATIO
Net profit is obtained when operation expenses, interest and taxes are subtracted from
the gross profit.

If the non-operating income figure is substantial, it may be excluded from PAT to see
profitability arising directly from sales. Net profit margin ratio establishes a relationship
between net profit and sales and indicated management’s efficiency in manufacturing,
administering and selling the products. This ratio is the overall measure of the firms` ability to
turn each rupee sales into net profit. If the net margin is inadequate, the firm will fail to achieve
satisfactory return on shareholder’s funds.
This ratio also indicates the firms` capacity to withstand adverse economic conditions. A
firm with a high net margin ratio would be in an advantageous position to survive in the face of
falling selling prices, rising costs of production or declining demand for the product. It would
really be difficult for a low net Margin firm to withstand these adversities. Similarly, a firm
higher net profit margin can make better use of favorable condition, such as rising selling prices;
fall in costs of production or increasing demand for the product. Such a firm will be able to
accelerate its profits at a faster rate than a firm with a low net profit margin will.
An analyst will be able to interpret the firm’s profitability more meaningfully if he/she
evaluates both the ratios-gross margin and net margin-jointly. To illustrate, if the gross profit
margin has increased over years, but the net profit margin has either remained constant or
declined, or has not increased as fast as the gross margin, this implies that the operating expenses
relative to sales have been increasing. The increasing expenses should be identified and
controlled. Gross profit margin may decline due to fall in sales price or increase in the cost of
production.
Profit after tax
NET PROFIT MARGIN RATIO =
Sales
CASH MARGIN RATIO
Cash profit excludes depreciation. It means Net profit after interests and taxes but before
depreciation. This ratio indicates the relationship between the profit, which accrues in cash and
sales. Greater percentage indicates better position and Vice-Versa as it shows the correct profit
earned by the firm.
This ratio is expressed as cash profit to sales.
Cash profit
CASH MARGIN RATIO = X 100
Sales
OPERATING MARGIN RATIO
Operating margin ratio is also known as Operating Net profit ratio. It is the ratio of
operating profit to sales. This ratio establishes the relationship between the total cost incurred
and sales. Operating profit is the Net profit after depreciation but Before Interests and Taxes.
The purpose of computing this ratio is to find out the overall operational efficiency of the
business concern. It measures the cost of operations per rupee of sale
This ratio is expressed as operating profit to sales.
Operating profit x 100
OPERATING MARGINRATIO =Sales
PROFITABILITY RATIOS IN RELATION TO INVESTMENT

1. RETURN ON INVESTMENT
2. RETURN ON NET WORTH
3. RETURN ON CAPITAL
4. RETURN ON GROSS BLO
5. RETURN ON INVESTMENT
The term investment refers to Total Assets. The funds employed in Net assets are
known as Capital Employed. Net assets equal net fixed assets plus current assets minus Current
liabilities excluding Bank loans. Alternatively, Capital employed in equal to Net worth plus total
debt.
The conventional approach of calculating return on investment (ROI) is to divide PAT by
Investment. Investment represents pool of funds supplied by shareholders and lenders, while
PAT represents residual income of shareholders; therefore, it is conceptually unsound to use PAT
in the calculation of ROI. Also, as discussed earlier, PAT is affected by capital structure. It is,
therefore more appropriate to use one of the following measures of ROI for comparing the
operating efficiency of firms.
EBIT (1-T)
ROI = ROTA =
Total Assets
EBIT (1-T)
ROI = RONA =
NET Assets
Where ROTA and RONA respectively Return on Total assets and Return on Net assets.
RONA is equivalent of Return on Capital Employed
RETURN ON NET WORTH

NET Worth is also known proprietors Net Capital Employed. The Return should be
calculated with reference to profits belonging to shareholders, and therefore, profit shall be Net
profit after interest and tax. The profit for this purpose will include even non-trading profit. This
is given as follows:
Net profit after interest & tax
RETURN ON NET WORTH = X 100
Shareholders’ funds
RETURN ON CAPITAL
The ROCE is the second type of ROI. The term capital employed refers to long-term
funds supplied by the creditors and owners of the fund. It can be computed in two ways. First, it
is equal to non-current liabilities (long-term liabilities) plus owner’s equity. Alternatively, it is
equivalent to Net Working Capital plus Fixed Assets. Thus, the Capital Employed provides a
basis to test the profitability related to the sources of long-term funds. A comparison of this ratio
with similar firms, with the industry average and overtime would provide sufficient insight into
how efficiency the long-term funds of owners and creditors are being used. The higher the ratio,
the more efficient is the use of Capital Employed.
NET PROFIT AFTER TAX/EBIT
ROCE = X100
Average Total Capital Employed
RETURN ON GROSS BLOCK
This ratio establishes a relationship between net profit and gross fixed assets. This ratio
emphasizes the profit on investment in Fixed Assets. This ratio is expressed as follows:
Net profit
RETURN ON GROSS BLOCK = X 100
Gross Block
NET PROFIT is profit before Tax. Gross Block means Gross fixed assets i.e., Fixed
assets before deducting depreciation.
Ratio ‘s Analysis of last 5 years
SALES TO FIXED ASSETS (Value in Lakhs)
Year Fixed Assets Sales Ratio
2012-2013 202671.73 535010.13 2.639
2013-2014 235122.19 487113.29 2.071
2014-2015 251357.06 761787.69 3.03
2015-2016 291453.89 843320.69 2.893
2016-2017 318022.71 819317.86 2.576

Ratio
3.5
2.5
1.5
0.5
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
Here we can see that the ratio is goes on decreasing from 2012-2013 to 2013-2014 and a great
increasing on 2014-2015 and a little decreasing on 2015-2016 to 2016-2017. It moves according
to the sales of the organization.
NET PROFIT RATIO (Value in Lakhs)
Year Net Profit Sales Ratio
2012-2013 -168054.69 535010.13 -0.314
2013-2014 -13584.94 487113.29 -0.027
2014-2015 -72223.67 761787.69 -0.094
2015-2016 -47185.67 843320.69 -0.055
2016-2017 -44130.64 819317.86 -0.053

Ratio
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
-0.05
-0.1
-0.15
-0.2
-0.25
-0.3
-0.35
Interpretation:
Here we can see that the ratio is goes on great increasing from 2012-2013 to 2013-2014 and a
decreasing on 2014-2015 and a little increasing on 2015-2016 to a slight increasing on 2016-
2017. It moves according to the sales of the organization.
RETURN ON TOTAL ASSETS (Value in Lakhs)
Year Net Profit Total Assets Ratio
2012-2013 -168054.69 634045.58 -0.267
2013-2014 -13584.94 624744.51 -0.021
2014-2015 -72223.69 678992.87 -0.106
2015-2016 -47185.67 911926.98 -0.051
2016-2017 -44130.64 936689.23 -0.047

Ratio
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
-0.02
-0.05
-0.05 -0.05
-0.1
-0.11
-0.15
-0.2
-0.25
-0.27
-0.3
Interpretation:
Here we can see that the ratio comes according to the net profit of that the organization
achieved. The ratio is goes on great increasing from 2012-2013 to 2013-2014 and a decreasing
on 2014-2015 and a increasing on 2015-2016 and slight increasing on 2016-2017.
CURRENT RATIO (Value in Lakhs)
Year Current assets Current liability Ratio
2012-2013 410724.00 553252.8 0.74
2013-2014 367852.15 211563.09 1.73
2014-2015 365119.52 284894.41 1.28
2015-2016 517428.41 426230.18 1.21
2016-2017 588473.34 347580.73 1.69

Ratio
2
1.8
1.6
1.4
1.2
0.8
0.6
0.4
0.2
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
Here we can see that the ratio is goes on great increasing from 2012-2013 to 2013-2014
and decreasing on 2014-2015 and a slight decreasing on 2015-2016 and a great increasing on
2016-2017.It moves according to the current assets of the organization.
LIQUID RATIO: (Value in Lakhs)
Year Liquid assets Current liability Ratio
2012-2013 400906.7 553252.8 0.78
2013-2014 356992.06 211563.09 1.68
2014-2015 349446.22 284894.41 1.22
2015-2016 499000.61 426230.18 1.17
2016-2017 571654.80 347580.73 1.64

Ratio
1.8
1.6
1.4
1.2
0.8
0.6
0.4
0.2
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
and decreasing on 2014-2015 and a slight decreasing on 2015-2016 and increasing on 2016-
2017.It moves according to the liquid assets of the organization.
DEBT-EQUITY RATIO:(Value in Lakhs)
Year Debt Equity Ratio
2012-2013 -47764.13 27027.64 -1.767
2013-2014 -33388.34 337994.92 -0.098
2014-2015 -99454.43 374584.68 -0.265
2015-2016 -133845.40 433214.13 -0.308
2016-2017 144002.07 276116.19 0.521

Ratio
1
0.5
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
-0.5
-1
-1.5
-2
Interpretation:
and increasing on 2014-2015 and a slight decreasing on 2015-2016 and great increasing on 2016-
2017.
PROPRIETORY RATIO:(Value in Lakhs)
Year Equity Fixed Assets Ratio
2012-2013 12122.53 202671.74 0.059
2013-2014 12122.53 235122.19 0.051
2014-2015 12122.53 251357.07 0.048
2015-2016 12122.53 291453.90 0.041

2016-2017 12122.53 318022.71 0.038
Ratio
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
Here we can see that the ratio is goes on great decreasing from 2012-2013 to 2013-2014 and
slight decreasing on 2014-2015 and a slight decreasing on 2015-2016 and decreasing on 2016-
2017.It moves according to the fixed assets of the organization.

SUMMARY
The area of financial management has undergone far-reaching changes over time. The
finance function assumes a lot of significance in the modern days in the view of increased size of
business operations and growing complexities associate thereto. A firm performs finance
function simultaneously and continuously in the normal course in the business. They do not
necessarily occur in a sequence. Finance function call for skillful planning, control and execution
of business activities.
The financial statements provide a summarized view of the financial position and
operations of the firm. Therefore, much can be learned about the organization by a careful
examination of its financial statements, as they are invaluable documents regarding the financial
performance of an organization. Thus analysis of financial statements is an important aid to
financial analysis. The financial analysis statements is apprises of evaluating relationship
between components parts of financial statements to obtained better understanding of the firms
position and performance.
APEPDCL is being a profitable organization is still facing a huge problem from the
foreign competitors. The liberalization, privatization, globalization policy has opened the
floodgates and has allowed the foreign competitors to take its market is a nation. Financial
statement provides summary of the accounts of a business enterprise. But the accounts stated in
balance sheet and income statement require treatment in order to assess the financial soundness
of the enterprise.
funds were raised. In the mid-fifties, the emphasis shifted to the judicious utilization of funds.
The modern thinking in financial management accords far managers do not perform the passive
role of scorekeepers of financial data and top management areas and play a dynamic rote in
solving complex management problems. They are now responsible for shaping the fortunes of
the enterprise and are involved in the most vital management decision of allocation of capital. It
is their duty to ensure that the funds are raised most economically and used in the most efficient
and effective manner. Because of this change in emphasis, the descriptive treatment of the
subject of financial management is being replaced by growing treatment of the subject of
financial management is being replaced by growing analytical content and sound theoretical
underpinnings.
Financial management is that managerial activity, which is concerned with the planning
and controlling of the firm’s financial resources, its activities, and the mix of debt and equity
which is nothing but its Capital Structure. The financial manager must strive to obtain the best
financing mix or the optimum capital structure for his or her firm.
The analysis of financial statements is, thus, an important aid to financial analysis. Users
of financial statements can get further insight about financial strengths and weaknesses of the
firm if they properly analyze information reported in these statements. The future plans of the
firm should be laid down in view of the firm’s financial strengths and weaknesses.
Ratio analysis is a widely – used tool of financial analysis. Ratio is used as a benchmark
for evaluating the financial position and performance of a firm. As a tool of financial
management, ratios are of crucial significance. Ratio analysis is relevant in assessing the
performance of a firm in respect to the following aspects:
 Liquidity position
 Long – term solvency
 Operational efficiency
 Overall profitability
 Inter – firm comparison, and
 Trend analysis
Ratio analysis is the technique to know the financial position of the company. Ratio
analysis in Eastern power distribution company is very important as it indicates the liquidity,
solvency and profitability position of the Eastern power distribution company.
 Liquidity ratios i.e., Quick ratio and Cash ratio are up to the conventional ratios. So, it
could be further improved by decreasing its Current liabilities and increasing its Current
assets in par with its requirements.
 Although Debt – Equity ratio is low, it is in a satisfactory position. Under unfavorable
conditions lower Debt/Equity is desirable. The increase in the interest coverage ratio
shows that the firm has improved its ability to a greater extent in handling fixed charge
liabilities.
 Also the Proprietary ratio is in satisfactory state. Inventory turnover ratio has improved
in the current year, shows the operational efficiency of the firm in managing the
inventories. The increase in the Debtors turnover ratio and decrease in the Debtors
collection period shows the effective management of debtor’s /credit sales.
 There is a Net Profit in the current year. All the profitability ratios basing on
investment like return on investment, net worth, capital and gross block which were
negative in the previous years. But turned positive and has yielded reasonable results in
the current year.
The analysis for the purpose of the investing in shares generally concentrates on the
return on equity of Eastern Power Distribution Company which is increasing; therefore, the
shares may be purchased.
The erstwhile Andhra Pradesh State Electricity Board (APSEB) has been incorporated in
April 1959 under Indian Electricity Supply act,1948 by the Government of Andhra Pradesh, with
the main objectives of establishing an integrated state grid covering the entire state ,and for rapid
electrification of all the regions in Andhra Pradesh with particular emphasis on rural areas in the
state, and to Generate, Transmit and Distribute the power so generated commensurate with the
growth in the power sector. The APSEB had been responsible for Power Generation,
Transmission and distribution activities and for development of overall power sector comprising
Domestic, Industrial, Agricultural and commercial and other categories of consumers in the state
of Andhra Pradesh.
APEPDCL is responsible for undertaking distribution and bulk supply of
power in the operation circles of Srikakulam, Visakhapatnam, Vizianagaram, East
and West Godavari districts and 20 Divisions of Coastal Andhra Pradesh.
APEPDCL supplies power to over 48.89lakh consumers belonging to different
categories through a network consisting of 626 Sub-stations of 33 KV level,

280Nos of 33KV feeders, 1830 feeders of 11 KV level and 136860 Nos. of
distribution transformers of different levels. The Corporate Office and
Headquarters of APEPDCL are situated at Visakhapatnam.
The Eastern Power Distribution Company of Andhra Pradesh Limited is
made up of five Operation circles namely Srikakulam, Vizianagaram,
Visakhapatnam, Rajahmundry and Eluru. There is wide diversity in these districts
in pattern of land irrigated, crop patterns, rainfall, cultural attitudes, consumer
attitudes, etc.
Each circle is divided in to Operation Divisions depending up on the
requirement for effective functioning of the Circle. Apart from these Operation
Divisions, each Circle consists of M&P (Meters & Protection) Division,
Transformers Division, Construction Division and DPE (Detection of Pilferage of
Energy) Division.
The following provide a brief overview of the different factors at play in
each of the EPDCL circles. These factors have a bearing on different operational
and commercial parameters of the company.
The reforms process in the power sector had been contemplated as a sequel to the
liberalization of Power Sector by the Central Government of India since 1991, the
recommendations of a high level committee headed by Mr. Hiten Bhayya, in January 1995, the
consensus of Chief Minister’s conference in 1996 and the Common Minimum National Action
Plan for Power. Government of Andhra Pradesh has announced a general policy statement in
February 1997, followed by a detailed Policy Statement in October 1998, which indicated clearly
the objective of bringing viability to the sector and Government’s decision to distance itself from
the sector as the OWNER, OPERATOR, and REGULATOR, and to limit its role to that of a
POLICY MAKER. The reform process had further been taken up in AP out of a sincere concern
for the viability and growth of the power sector to meet the needs of the consumers and to
promote the state’s economy as a whole.
Power comprises one of the most important inputs in all sectors of economy. Economy
of any country depends on the strong base of the power distribution company, making it
indispensable for furthering and achieving continual growth of the economy. The level of power
consumptions has long been regarded as an index of industrialization and economic maturity
attained by country. Keeping in view the importance of power, the integrated power plants with
foreign collaborations were set up in the public sector in the post-independence era.
What is Finance? What are a firm’s activities? How are they related to the firm’s other
activities? Firms create manufacturing capacities for production of goods; some provide services
to customers. They sell their goods or services to earn profits. They raise funds to acquire
manufacturing and other facilities.
Financing decision is an important function to be performed by the financial manager.
Broadly, he or she must decide when, where and how to acquire funds to meet the firm’s
investment needs. The central issue before him or her is to determine the proportion of equity
and debt. The mix of debt and equity is known as the firm’s capital structure. The financial
manager must strive to obtain the best financing mix of the optimum capital structure for his of
her firm. Once the financial manager is able to determine the best combination of debt and
equity, he or she must raise the appropriate amount through the best available sources. In
practice, a firm considers many other factors such as control, flexibility, loan convenience, legal
aspects etc., in deciding its capital structure.

Ratio analysis is equally useful for assessing the long-term financial viability of a firm.
This aspect of the financial position of a borrower is of concern to the long-term creditors,
security analysts and the present and potential owners of a business. The long-term solvency is
measured by the leverage/capital structure and profitability ratios, which focus on earning power
and operating efficiency. Ratio analysis reveals the strength and weaknesses of a firm in this
respect. The leverage ratios, for instance, will indicate whether a firm has a reasonable
proportion of various sources of finance or if it is heavily loaded proportion of various sources of
finance or if it is heavily loaded with debt in which case its solvency is exposed to serious strain.
Similarly, the various profitability ratios would reveal whether or not the firm is able to offer
adequate return to its consistent with the risk involved.
Unlike the outside parties, which are interested in one aspect of financial position of a
firm, the management is constantly concerned about the over-all profitability of the enterprise.
That is, they are concerned about the ability of the firm to meet its short-term as well as long-
term obligations to its creditors, to ensure a reasonable return to its owners and secure optimum
utilization of the assets of the firm. This is possible if an integrated view is taken and all the
ratios are considered together.
Ratio analysis not only throws light on the financial position of a firm but also serves as a
stepping stone to remedial measures. This is made possible due to inter-firm comparison and
comparison with industry averages. A single figure of a particular ratio is meaningless unless it
is related to some standard or norm. One of the popular techniques is to compare the ratios of a
firm with the industry average. An inter-firm comparison would demonstrate the firm’s position
vis-à-vis its competitors.

Finally, ratio analysis enables a firm to take the time dimension into account. In other
words, whether the financial position of a firm is improving or deteriorating over the years. This
is made possible by the use of trend analysis. The significance of a trend analysis of ratios lies in
the fact that the analysis can know the direction of movement, this is, whether the movement is
favorable or unfavorable. For example, the ratio may be low as compared to the norm but the
trend may be upward. On the other hand, though the present level may be satisfactory but the
trend may be a declining one.
The major limitation of the ratio analysis is a tool of financial analysis is associated with
price level changes. This in fact is a weakness of the traditional financial statements, which are
based on historical cost. An implication of this feature of the financial statements as regards
ratio analysis is that assets acquired at different periods are, in effect, shown at different prices in
the balance sheet, as they are not adjusted for changes in the price level. As a result, ratio
analysis will not yield strictly comparable and therefore, dependable results.
Calculating a large number of ratios without determining their need in the present context
may confuse the things instead of solving them. Only those ratios should be selected which can
throw proper light on the matter to be discussed.
Unless otherwise the ratios calculated are compared with certain standards one will not
be reach at conclusions. These standards may be a rule of thumb as in current ratio (2:1), may be
industry standards, may be projected ratios etc. The comparison of calculated ratios with the
standards will help the analyst in forming his opinion about financial situation of the concern.
Between cash and other current assets to current obligations provided a quick measure of
liquidity. A firm should ensure that it does not suffer from lack of liquidity, and also that it does
not have excess liquidity. The failure of a company to meet its obligations due to lack of
sufficient liquidity, will result in a poor creditworthiness, loss of creditors` confidence, or even in
legal tangles resulting in the closure of the company. A very high degree of liquidity is also bad;
idle assets earn nothing. The firm’s funds will be unnecessarily tied up in current assets.
Therefore, it is necessary to strike a proper balance between high liquidity and lack of liquidity.
As observed, a basic limitation of the traditional financial statement comprising the
balance sheet and the profit and loss account is that they do not give all the information related to
the financial operation of the firm. Nevertheless, they provide some extremely useful
information to the extent that the Balance Sheet mirrors the financial position on a particular date
in terms of the structure of assets, liabilities and owner’s equity and so on. The profit and loss
account shows the results of operations during a certain period of time in terms of the revenues
obtained and the cost incurred during the year. Therefore, much can be learnt about a firm from
a careful examination of its financial statements as invaluable documents/performance analysis.
Users of financial statements can get further insight about financial strengths and weaknesses of
the firm if they properly analyze information reported in these statements. Management should
be particularly interested in knowing financial weakness of the firm to take suitable corrective
actions. The future plans of the firm should be laid down in view of the firm’s financial strengths
and weaknesses. Thus, financial analysis is the starting point for making plans, before using any
sophisticated forecasting and planning procedures. Understanding the past is a pre-requisite for
anticipating the future.
The ratio is also indicates the firms` capacity to withstand adverse economic conditions.
A firm with a high net margin ratio would be in an advantageous position to survive in the face
of falling selling prices, rising costs of production or declining demand for the product. It would
really be difficult for a low net.

Margin firm to withstand these adversities. Similarly, a firm higher net profit margin can
make better use of favorable condition, such as rising selling prices; fall in costs of production or
increasing demand for the product. Such a firm will be able to accelerate its profits at a faster
rate than a firm with a low net profit margin will.
An analyst will be able to interpret the firm’s profitability more meaningfully if he/she
evaluates both the ratios-gross margin and net margin-jointly. To illustrate, if the gross profit
margin has increased over years, but the net profit margin has either remained constant or
declined, or has not increased as fast as the gross margin, this implies that the operating expenses
relative to sales have been increasing. The increasing expenses should be identified and
controlled. Gross profit margin may decline due to fall in sales price or increase in the cost of
production.
REGULATORY FUNCTIONS OF THE AP ELECTRICITY COMMISSION
(APERC)
 Issue of regular licenses to APTRANSCO, APGENCO and APDISCOMS and regulating
the Generation, Transmission and Distribution business
 Regulating the tariffs for Generation, Transmission and Distribution of electricity
 Issue of practice directions in regard to Captive power policy
 Issue of policy directions for purchase of power by APTRANSCO in an efficient and
economic manner
 Issue of performance standards and quality of supply and consumer service to the
licensees
 Issue of orders on Long Term Tariff principles

 Issue of regulations connected to Electricity business.
 Balancing the need to maintain the viability of the Power sector with the need to protect
the interests of the consumers
Operating margin ratio is also known as Operating Net profit ratio. It is the ratio of
operating profit to sales. This ratio establishes the relationship between the total cost incurred
and sales. Operating profit is the Net profit after depreciation but Before Interests and Taxes.
The purpose of computing this ratio is to find out the overall operational efficiency of the
business concern. It measures the cost of operations per rupee of sales.
Current ratios judge the firm’s ability to meet short-term obligations. These ratios give a
good insight into a firm’s ability to remain solvent in the events of adversities. For this purpose,
short-term resources are compared with short-term obligations.
Management of the organization is confront with taking decision about sources of finance
of its capital structure and credit policy its applications of funds in order to take care strategic
decision, the management needs to assess the progress and performance of the organization.
Financial statement analysis can be undertaken either by the management of the firm or
by the outside parties like Creditors, Investors and Public. The nature of analysis differs
depending upon the purpose of analysis.
SUGGESTIONS
Some of the Suggestions drawn from the findings of the ratio analysis for the better
performance of Eastern Power Distribution Company are as follows.

 Though the company has recorded very good improvement in managing the
inventories and Debtors. The firm was not able to generate the reasonable
Turn over the fixed assets. So, this calls for further improvement in the ratio, by
generating more sales.
 The company has recorded profits in the current year for the last 5 years. It is due to
the fact that vast improvement in Gross profit ratio. The company may put some
more special efforts to further consolidate its position by concentrating on more
market share.
 Another reason for the company to have the less Net Profit is, due to the increase in
its expenditure and operating expenses. The company may consider by that efficiency
can be improved further by reducing the operating expenses.
BIBLOGRAPHY
Books Referred
1. Financial Management: I.M. Pandey
Financial Management: Prasanna Chandra
Financial Management: Khan Jain
Financial Management: Sharma Gupta
2. Elements of Management Accounting
3. Principles of Corporate Finance
4. Accounting & Finance for Managers
INTEREST SITES
 www.apeasternpower.com
JOURNALS
 Tappi magazine of Industry

 Annual reports of the company
 Prospects of the company
 Industrial Directory of India

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A STUDY ON PERFORMANCE OF RATIO ANALYSIS IN

EASTERN POWER DISTRIBUTION COMPANY OF

ANDHRA PRADESH LIMITED [APEPDCL]

A Project Report Submitted to

Jawaharlal Nehru Technological University, Kakinada in partial fulfillment of

DEPARTMENT OF MANAGEMENT STUDIES

PERFORMANCE OF RATIO ANALYSIS” in APEPDCL, Visakhapatnam is

BUSINESS ADMINISTRATION” from Godavari institute of Technology Autonomous,

Signature of the Student

This is to certify that project report entitled A study on

"PERFORMANCE OF RATIOANALYSIS” submitted by T.AKHIL to

ADMINISTRATION is a record of bonafide work carried out by her under my guidance

Signature of the guide,

I express my heart-felt gratitude to Sri. G. SRINIVASA REDDY, Chief General

I record my deep sense of gratitude to MRS.VIJAYA JYOTHI, Assistant Professor, who

A special word of thanks to Sri A. VENKATESWARA RAO/General Manager

(Regd. No: 17551E00A7)

 NEED FOR THE STUDY

A BRIEF PROFILE OF EASTERN POWER DISTRIBUTION COMPANY

THEORETICAL FRAME WORK ON RATIO ANALYSIS

RATIO ANALYSIS OF EASTERN POWER DISTRIBUTION COMPANY PVT.LTD

performance of an organization. Thus analysis of financial statements is an important aid to

financial analysis. The financial analysis statements is appraises of evaluating relationship

position and performance.

should be laid down in view of firm’s financial strengths and weaknesses.

successful business operations. And without proper administration of finance no business

The relationship between two accounting figures expressed mathematically is knows as

utilize its full potential for growth and success.

descriptive treatment of the subject of financial management is being replaced by growing

and sound theoretical underpinnings.

NEED FOR THE STUDY

APEPDCL, Visakhapatnam is the leading Indian power utility serving a

southern state of Andhra Pradesh, it has always been a pioneer in delivering

AT&C losses and one of the best in terms of operational efficiency.

purpose of the analyst.

the firm’s earnings ability and risk.

and funds flow statements

OBJECTIVES OF THE STUDY

 To study the efficiency of overall operations using financial ratio analysis.

 Setting up of an Autonomous Electricity Regulatory commission.

The study has been carried on with the help of

through consolation personal observation, printed materials and so on.

THE SOURCES OF DATA

 Annual reports of Eastern power distribution company of A.P limited Published,

printed statements of the Eastern power distribution company of A.P limited

 Executive and staff of the account department.

LIMITATIONS OF THE STUDY

 Interpretations are based on the validity of the data collected.

the Eastern power distribution company of A.P limited.

INDUSTRY PROFILE AND POWER SECTOR REFORMS IN

promote the state’s economy as a whole.

SCENARIO OF POWER SECTOR IN ANDHRA PRADESH BEFORE REFORMS

GENERATION TRANSMISSION DISTRIBUTION

restructure the Electricity Board to impart Autonomy and commercial outlook.

Need for Restructuring

commercially viable independent corporate entities for Generation, Transmission, and

energy tariffs consequent to the introduction of competition by way of private players.

of creating Central Electricity Regulatory Commission (CERC) as well as ‘State Electricity

Regulatory Commissions’ (SERC).

incorporated in 12/98.These companies have commenced their business operations as

APTRANSCO w.e.f 1-2-99.

SECOND TRANSFER SCHEME