CONTRACT AND PROCUREMENT SYSTEM AND FINANCIAL ANALYSIS OF

SUMMER TRAINING PROJECT REPORT

CONTRACT AND PROCUREMENT MANAGEMENT

SYSTEM AND RATIO ANALYSIS OF NTPC

AT NTPC, NOIDA

SUBMITTED TOWARD PARTIAL FULFILLMENT OF

MASTER OF BUSINESS ADMINISTRATION 2009-2011

Under Guidance of:- Submitted by: Mr. P.K GOEL SAKSHI BHATNAGAR DGM (Finance) ROLL NO:0906370091

GLA INSTITUTE OF TECHNOLOGY AND MANAGEMENT MATHURA

PREFACE

This project report deals with the procedures, practices and guidelines adopted by the NTPC

Limited with respect to the procurement of various goods and services which are essential for

carrying of the smooth functioning of the activities performed at the office. These practices

are followed during all procurement by NTPC. The purchase procedure starts at Indenting by

the department that requires the material and goes to the cost department and finance

department for required approval and vetting. A brief introduction about the procedure along

with the procurement policy is given along with the recommendation and the limitations of

the procurement system. Furthermore this project aims to analyze the financial strength of the

company and aims to interpret them thereof with the help of ratio analysis.

i

ACKNOWLEDEMENT

The six weeks Summer Training at NTPC have been a great learning experience. It has been

one of the most enriching experiences for me to work along with the employees of one of the

best managed organizations, a company rightly considered as the Navratna among the public

sector undertakings of the India.

I am very thankful to Sh.P.K GOEL DGM (Finance) who has given an opportunity to learn

about the procurement procedures followed here by allowing me to undergo training at their

Finance (Concurrence) Department. He gave me full support to learn the crucial things of this

whole exercise. I am thankful to sir for the his kind support in completion of this project

report by guiding me throughout my training, for his support, guidance and providing the

valuable information from his vast experiences which has enabled me in successfully

completing the Summer training which is an essential part of my MBA course curriculum.

SAKSHI BHATNAGAR

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TABLE OF CONTENTS

S.N TOPIC PAGE

NUMBER

1 INTRODUCTION OF TOPIC 1

2 NEED AND RELEVANCES OF STUDY 3

3 OBJECTIVE OF STUDY 4

4 INTRODUCTION OF NTPC 5

6 POWER STATION IN INDIA OF NTPC 9

7 RESEARCH METHODOLOGY 12

8 PROCUREMENT STEPS 13

9 TENDERING PROCEDURE 14

10 RATIO ANALYSIS OF NTPC 40

11 FINDINGS 63

12 RECOMMENDATION 64

13 LIMITATION OF STUDY 65

14 CONCLUSION 66

15 APPENDIX 69

INTRODUCTION OF TOPIC

The report entitled “CONTRACT AND PROCUREMENT MANAGEMENT SYSTEM

AND RATIO ANALYSIS AT NTPC” is about the purchase practices followed at NTPC for

every equipment.

Procurement Management at NTPC starts with Indenting by the department that requires the

material and goes to the cost department and finance department for required approval. In

between various activities like Liquidated Damages calculation, Spare Parts procurement

terms, Guarantee in Liability Defect period etc are undertaken. Once all the terms and

conditions are formulated and approved, the tender document preparation starts. The tender

documents are issued to the prospective bidder for a cost that starts from Rs 200 to Rs 3000.

The content of the tender document is prepared in such a manner that the prospective bidder

comes to know about all the important details about the contract. The issuance of tender

document is followed by the receipt of Bids from various vendors in the specified format.

Once all the bids are received, they are opened in presence of some nominated officials from

Finance, Contracts and Materials department. The representatives from the bidders may also

be present. Then a comparative statement of the quoted bids is prepared and the contract is

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awarded to the lowest quoting bidder.

During the document preparation phase, payments terms are also decided and documented in

the General Condition of Contract, which is issued to the bidder with the tender documents.

Apart from payments, there are various other issues like Arbitration, which are dealt in the

tender documents. Liquidated Damages is one of the very important clauses. Liquidated

damage is a payment to be made by the contractor in case he fails to complete the project in

the stipulated time. The purchase is followed by the evaluation, which is done for two things,

the vendor’s performance and the purchase performance. The Vendor evaluation comes in

handy for placing future orders where as the Purchase Performance evaluation provides

detailed insight into the procedures being followed to procure the required material.

Financial statement analysis is yet another one of the important part of the project where in

various crucial ratios which help to analyze the financial position of the company are being

calculated which provide inside into the growth prospects of the company. The tool used for

financial statement analysis is Ratio Analysis. Ratio Analysis is the process of determining

and presenting the relationship of items or group of items in the financial statement. It has

emerged as a principle technique for the analysis of the financial statements of the

companies.

These ratios are being calculated with the help of the 2 most important financial statements

of the company i.e. profit and loss account and balance sheet. These are important not only

for the working of the company but they are even important for the outsiders of the company

like creditors, investors etc. and further its comparison with other power sector players

Reliance Energy and Tata power will help to analyze the better position of the company in

comparison to others or in case of any loop holes the company can perform better in future.

The project also includes over all study of the power sector which will help in knowing the

company in much better sense and its position in power sector.

2

NEED AND RELEVANCES THE STUDY

This project is an effort to understand the procurement practices followed at NTPC and to

understand what they keep in mind before awarding a particular bid contract to the specific

bidder. Thus, the scope covers the following areas:

The rules, regulations and the appropriate policy that is taken as base, which serves as a

guideline to guide all through the procurement process.

Various steps involved in the procurement process.

The conditions of contracts, requirements to be submitted by the bidder during the

contract.

It will also highlight the condition taken into consideration in the award of contracts at the

NTPC.

Additionally the Ratio Analysis tool of Financial Statement Analysis has been used to

analyze the profitability, solvency, liquidity and performance of the company from year

2008-2010

All the above points covered helps an individual in understanding the What, Why, How

of the procurement procedures at the NTPC

3

OBJECTIVE OF THE STUDY

This project tries to achieve the following objectives:

To study the procurement procedure in NTPC.

To study how important is the role of finance concurrence department at various stages

of the procurement process.

To understand the criteria and procedure on which the bidders are selected for placing

an order

Using Ratio Analysis the aspects of the profitability, solvency, liquidity and performance

are adjudged.

4

INTRODUCTION TO THE NTPC LIMITED

NATIONAL THERMAL POWER CORPORATION

NTPC is the largest power generating company of INDIA and contributes one-fourth of the

thermal energy generated in the country. A public sector company, it was incorporated in the year 1975 to accelerate power development in the country as wholly owned company of the Government of INDIA. It has 463 rank in the World Top Class 2000 Companies which is

improve from the last year rank i.e. 486. At present, Government of INDIA holds 84.5% of the company and the balance is held by FIIS, Domestic Banks, Public and others. Within a

span of 35 years, NTPC has emerged as a truly national power company, with Power Company, with power generating in all major regions of the country

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Vision And Mission

Vision"A world class integrated power major, powering India’s growth, with increasing global presence."

Mission“Develop and provide reliable power, related products and services at competitive prices, integrating multiple energy sources with innovative and eco-friendly technologies and contribute to society.”

Core Values – BCOMIT Business Ethics

Customer Focus

Organisational & Professional Pride

Mutual Respect & Trust

Innovation & Speed

Total Quality for Excellence

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Recognitions & Awards

NTPC has a glorious record of excellence in every field of

its activities ever since its inception in 1975. Leading the

country’s power sector with a vision to become a 75,000

MW company by 2017, we take pride in our people and

their performance which has been acknowledged time and

again at various national and international level

Achievements: Sixth largest thermal power generator in the World and the Second most efficient

utility in terms of capacity utilization.

Contribution of NTPC in power generation: NTPC has contribution of 28% of total power generation capacity of India.

NTPC’S CULTURE Core values are both intensely and widely shared

Climate of high behavioral control

Low employee turnover

High agreement among the employees, for what NTPC stands for.

All these point to the fact that strong cohesiveness, loyalty and organization commitment exist in NTPC lowering he attrition Rate

7

Organization Structure of NTPC

Organization structure includes three levels of management i.e. corporate level including top management, then region level comprising management of SBU regional level management & last as planning level management as GMs of various plants.

Chairman & Managing Director

Director (HR)

Director (Finance)

Director (Projects)

Director (Operations)

Director (Commercial)

Director (Technical)

Executive Director (NR)

Executive Director (NCR)

Executive Director (NR)

Executive Director (WR)

Executive Director (SR)

General Manager General Manager General Manager

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POWER STATION OF NTPC IN INDIA

Power Generation

Presently, NTPC generates power from Coal and Gas. With an installed capacity of 28840 MW, NTPC is the largest power generating major in the country. It has also diversified into hydro power, coal mining, power equipment manufacturing, oil & gas exploration, power trading & distribution. With an increasing presence in the power value chain, NTPC is well on its way to becoming an “Integrated Power Major.”

9 [ Singrauli | Korba |  Ramagundam | Farakka | Vindhyachal | Rihand ]

[ Kahalgaon | NCTPP | Talcher Kaniha | Unchahar | Talcher Thermal | Simhadri |

Tanda]

[ Anta | Auraiya | Kawas | Dadri Gas | Jhanor-Gandhar | Kayamkulam | Faridabad]

PERFORMANCE OF NTPC’s COAL/GAS BASED POWER STATION

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REGION WISE AND STATION WISE PERFORMANCE 2002-2003

STATION CAPACITY

GENERATION

1. North region 4280 31810

2. Singroli 2000 15474

3. Rihand 1000 7674

4. Unchahar 840 6561

5. Tanda 440 2101

6. National Capital Region 3152 23008

7. Dadri coal 840 6673

8. Anta 413 3060

9. Auraiya 652 4684

10. Dadri gas 817 5730

11. Faridabad 430 2861

12. Western Region 5653 39562

13. Korba 2100 16605

14. Vindhyachal 2260 15590

15. Kawas 645 3745

16. Jhanor-gandhar 648 3615

17. Eastern Region 3900 21634

18. Farakka 1600 8418

19. Kahalgaon 840 4514

20. Talcher kaniba 1000 6236

21. Talcher thermal 460 2466

22. Southern Region 2950 17178

23. Ramagundam 2100 15846

24. Kayamkulam 350 1316

25. Simhadri 500 1500

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RESEARCH METHODOLOGY

The methodology adopted for the present study was discussion with company guide, experts

and doing daily practical work of the organization. The main focus was to gain knowledge

and experience during the training period that will help understand the whole process of

tendering in procurement management.

Research Design:

To achieve the objectives stated above, I have done “Descriptive Research” and for that data

is collected from secondary sources. 

Research Method:  

Secondary data collection technique to achieve the objectives stated above, “Descriptive

Research” is taken into account.

Collection of Data

The data and information for the project is collected by studying various handbooks, assist-

books, bidding documents and internal circulars.

The research methodology comprised of secondary data collected from various NTPC

records and through NTPC website.

Secondary Data:

1. NTPC website

2. Manuals of NTPC

3. NTPC Records

4. Other websites

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PROCUREMENT STEPS

Procurement life cycle in modern businesses usually consists of seven steps:

Information Gathering : If the potential customer does not already have an established

relationship with sales/ marketing functions of suppliers of needed products and services

(P/S), it is necessary to search for suppliers who can satisfy the requirements.

Supplier Contact : When one or more suitable suppliers have been identified, Requests

for Quotation (RFQ), Requests for Proposals (RFP), Requests for Information (RFI) or

Requests for Tender (RFT) may be advertised, or direct contact may be made with the

suppliers.

Background Review : References for product/service quality are consulted, and any

requirements for follow-up services including installation, maintenance, and warranty are

investigated. Samples of the P/S being considered may be examined, or trials undertaken.

Negotiation : Negotiations are undertaken, and price, availability, and customization

possibilities are established. Delivery schedules are negotiated, and a contract to acquire

the P/S is completed.

Fulfillment : Supplier preparation, shipment, delivery, and payment for the P/S are

completed, based on contract terms. Installation and training may also be included.

Consumption, Maintenance and Disposal : During this phase the company evaluates the

performance of the P/S and any accompanying service support, as they are consumed.

Renewal : When the P/S has been consumed and/or disposed of, the contract expires, or

the product or service is to be re-ordered, company experience with the P/S is reviewed.

If the P/S is to be re-ordered, the company determines whether to consider other suppliers

or to continue with the same supplier

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TENDERING PROCEDURE FOLLOWED AT NATIONAL

THERMAL POWER CORPORATION LTD(NTPC)

Procedure:

DOP (DELEGATION OF POWER) All the activities undertaken at NTPC are regulated by a guideline called “DELEGATION

OF POWERS” or “DOP” in short. The guideline lays down the responsibility and authority

of various level executives in the PSE (Public Sector Enterprises). Based on this guideline the

following major procedures have been identified.

However, procurement of any material for any plant or the office of NTPC is done by two

processes. These processes are:-

Procurement through tenders.

Emergent Procurement

Though in case of urgency the respective department is allowed to make procurement

through cash up to the limit of Rs. 10,000 only. But in case of the normal procurement that is

done by tendering, a standard procedure is followed where the intender sends the

procurement list to the finance department for the goods valued over Rs. 10,000 for vetting.

Once the finance department clears the cost aspect of the tender it is send for the

required approval from the competent authority as described in the DOP. After getting the

required authorization the indent is forwarded to materials, contracts or HR services as is

suitable. From there a tender notice is issued and the procurement process starts.

The following are the steps involved:

Promotion of competition, efficiency and economy in electricity industry can be conveniently

achieved through the process of competitive bidding. The Central Government issued

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detailed guidelines for competitive bidding of power projects in January 1995 whereby the

competitive procurement of power sector projects was made mandatory. These guidelines

laid emphasis on project identification, justification and development before taking up

competitive bidding.

1. Indent by the engineering department who coordinates the equipment requirement.

2. Preparation of cost estimate in association with cost engineering department and

seeking approval thereof.

3. Preparation of the bid documents for issue of NIT. The documents include INB,

General Condition of Contract, and special conditions of contract. Once all the terms

and conditions are formulated and approved, the tender document preparation. The

content of the tender document is prepared in such a manner that the prospective

bidder comes to know about all the important details about the contract

4. Issue of NIT-usually the publication in the newspaper or trade journal. The tender

documents are issued to the prospective bidder for a cost that starts from Rs 200 to Rs

3000.

5. Receipt of bids and bid opening. The issuance of tender document is followed by the

receipt of Bids from various vendors in the specified format. Once all the bids are

received, they are opened in presence of some nominated officials from Finance,

Contracts and Materials department. The representatives from the bidders may also be

present.

6. Bid evaluation- a comparative statement of the quoted bids is prepared and the

contract is awarded to the lowest quoting bidder. The process involves Vendor

evaluation and assessment that includes the physical verification of assets and

manufacturing facilities as well as the financial capacity of the bidder.

7. Contract of award is given to the lowest bidder.

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INTRODUCTION TO PROCUREMENT

Procurement activities to be taken by NATIONAL THERMAL POWER CORPORATION

(NTPC) are to satisfy varying project requirement of equipment, materials and services. Any

procurement-requiring adherence to the IDA procurement procedure, long equipment

delivery periods, intense engineering co-ordination or specialized engineering knowledge

during procurement etc. would be classified as category “A” contracts. All other procurement

contracts pertaining to a project will be classified as category “B” contracts.

Procurement at NTPC is initiated on the basis of approved indents/requisitions and

indicating budget and project estimate provisions. The contract services/materials

management services receive the requisition/indent for the procurement of

materials/equipment/services duly approved by the competent authority and then plan and

organize the procurement action.

Objective

The basic objective of procurement management at NTPC is to make available, the needed

equipment, material, works and services in the right quality and quantity, at the right time and

at the right price after giving fair and equal chance to renderers’, so as to obtain the optimum

value for each unit of expenditure

What is a contract?

A contract in its simplest form defined as a promise, or group of promises, that the law will

enforce. The promise is to do, or refrain from doing, a particular activity.

But in commercial context, a contract is a document in which the terms of the promise are

recorded. It can also be explained, as “a contract is an agreement enforceable at law between

two or more parties to undertake or perform a particular thing. In undertaking or performing

that activity both the parties accept certain responsibilities and in return receive certain

benefit for performing the same.

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Procedure of procurement

Intent of the contracting parties :

An agreement between the two parties does not itself constitute a contract. There must be a

definite promisor, each of whom is legally capable of performing the intended part of the

agreement. It is necessary for the two parties to have their agreement legally binding, that is,

that the agreement be written and enforceable by law.

At NTPC the department, which requires the materials is known as intending department and

the department that procures the material is known as the material department. Hence

intending department is the customer for material department.

All these steps are discussed here in detail:

1. Intending for Procurement: Procedure for intending is as follow:

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INDENT

COST ESTIMATION

FINANCE

CONTRACT MATERIAL HR

For the purpose of indenting, material planning is required. It is nothing but classifying

the materials into various categories to facilitate a speedy and efficient procurement. In this

process all the materials which may be required at any of the NTPC projects or offices are

classified in to five major categories and their procurement is to be done on the basis

predefined for them.

1. Stock item (Automatic Recoupement items/AR)

2. Insurance Items (I)

3. Unit Replacement item (UR)

4. Capital Item (P)

5. Other non-stock items (Not falling under any of the above category)

Identification of Responsibilities.NTPC being a utility organization with projects located away from the corporate office, has

divided the responsibilities of contracts management, both pre award and post award between

the corporate office and project site. A contract management functions as an independent

specialized techno commercial function unit to meet the overall corporate objective in the

area of project procurement. It has been in place since inception of NTPC as corporate

contract department or concurrence department.

The corporate contracts procures plants/ equipment and services for its projects, which are

characterized by the adherence to the procurement of external funding agencies, factoring of

the long process owner for award of all such contracts including high value civil works, its

monitoring and post award follow up till the delivery of equipment from the suppliers works

till the closure of the contracts.

The corporate contracts division/department is responsible for installation of the plant &

equipment and its execution is the responsibility of the project site.

There are number of the other small value contracts with lesser of engineering coordination,

whose pre award and post award contracts are handled by the project sites. The principles and

guidelines followed for these site contracts are similar to those applicable to corporate

contracts.

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In view of the complexity involved in the construction of thermal generation projects. The

contracts management systems calls for the further sharing of responsibilities for specialized

functions such as engineering, finance, cost engineering, quality assurance and inception at

corporate center & erection, site finance, field quality assurance etc. as the project site. The

co-ordination and division of responsibility between the departments at two responsibility

centers are also clearly defined.

Stages of international competitive bidding (ICB)

Step 1

(a) Contract packaging

Contract packaging is the first step of procurement for a project. The total project work is

broken into smaller well-defined packages. This is done with the view to optimize the

number of contracts to be handled for the better planning, co-ordination and

implementation of the whole project and at the same time to execute the project at an

optimum cost to the owner.

(b) Development of packages

First of all feasibility report for any project is prepared which contains the details of the

various equipment systems and services required for a particular project.

Subsequently, as the conceptual design progresses, a detailed project description

emerges as design intent memorandum (DIM) incorporating station schematics like

thermal schematics, electrical signal line diagrams, and station water flow systems, coal

and ash handling systems etc. these schematics provide the inter linkage between the

various equipments and services. The engineering function is responsible for

development of such schematics. Taking into consideration the requirement of the

project master network (PMNW) schedule, grouping of equipment and services is done

to arrive at contract packages. Each package as developed above normally forms an

independent contract.

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The development of contract package list for a project is done jointly by engineering,

contracts, and corporate planning and finance functions. The contract package being

extremely vital to a successful project implementation is approved for implementation

by the highest corporate level authority.

2. Cost Estimation: Cost estimation process is the most important financial activity in the process of budgeting

and procurement. Whenever NTPC procures some material, it is either financed from the

budget allocated to the particular department requesting for the material or it will be financed

from the central fund. The procurement of the second kind requires financial clearance from

the Finance Concurrence department. For the purpose, cost estimate is made before

forwarding the indent document to the Finance department. There are various methods of cost

estimation, which are used at NTPC. Some of the methods use very technical details and

procedures whereas others are simple to implement and uses market rate to prepare a cost

estimate.

Historical Cost Method:In this method of cost estimation. The cost engineering department at NTPC uses the latest

cost incurred for a similar kind of project. For example, if a cost estimate has to be prepared

for· a new Thermal Power Plant, the latest executed Thermal Power Plant rates will be used

not any other. Hence the rates thus obtained are very near to the actual that might be

prevalent in the market at present. But to

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HISTORICAL COST METHOD

MARKET RATE METHOD

smoothen the effect of inflation and various other financial components in the price at the

time of the execution of that project, an escalation factor is used. All the prices of previous

projects are multiplied by this factor and a very close estimation of market rate is thus

obtained. The escalation factor calculation is discussed separately in the report.

Market Rate Method:

Market rate method is used for the procurements that are not in very large numbers and value.

In this method once an indent is prepared, some of the vendors registered at NTPC or listed in

trade journals are sent a request for quoting the prices of a particular good. This enquiry is not

a tender and the rates provided by the vendors are not part of the bid. After the information is

received, the rates quoted by various vendors are compared and the lowest quoted price is

taken as base rate for calculation. However if the difference in the price quoted by two

vendors are reasonably high an average of the two may be taken as the base. However for

civil works component of the contract, the wages rates are taken from the government

gazettes and similarly for some homogeneous products like cement, steel etc a standard

market prevailing rate is used

3. Tendering and Bidding Documents: Normally an open tendering system for procurement is adopted during construction stage of

a project. However depending on the circumstances and the requirements, limited tendering

or single tendering system is also adopted in specific cases. Following are three types of

tenders:

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TYPE OF TENDERS :

1. Open Tender:

Procurements or value Rs 1 lakh and above must be done through open tendering. All the plant

packages are procured through Open Tender. Open tender is accessible to all known, reliable

and proven sources of particular equipment/material. For the purpose, a notice inviting

tenders must appear in two or more newspapers of all India repute in addition to one or more

local newspaper where the material/equipment is to be delivered. However to avoid frivolous

tenders, a pre-qualification procedure may be adopted. This process will take place once in

every three years by advertising in two or more newspapers of all India repute in addition to

one or more local newspaper where the material/equipment is to be delivered. The criteria for

pre-qualification will inter-alia consist of past performance, financial soundness, technical

competence, organizational capability etc. But for the items valued less than Rs 1 lakh the

pre-qualification can be done on the basis of data available in Trade Journals, Manufacturer's

Directory, or approved vendors list of State Government/Central Government/DGS&D

vendors to whom enquiries were floated in past.

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Single tender

Limited tender

Open tender

2. Limited Tender :

Limited tender is a type of tender where instead of sending bid enquiry to all the possible

vendors through newspapers, a limited number of vendors arc intimated through post or fax.

But a Limited Tender may be invited only for the procurements worth less than Rs. 50000/-.

In limited tender, a minimum of four bidders are invited to quote the prices for the required

equipment/material /services and these four bidders must be from the approved list of

vendors mentioned in the open tender. However a Limited Tender is a special case and

cannot be issued without proper explanation and requirement. In case of urgency, items worth

more than Rs. 50000/- may also be procured with authorization of competent authority and

the reason must be recorded in the indent documents. However the next higher authority of

the procurement department will decide the number and names of supplier.

3. Single Tender: This type of tendering is the easiest and fastest to acquire a good but requires lot of paper

work and authorization before the acquisition can be initiated. These acquisitions take place

on the ground of proprietary items or standardization. To initiate a single tender, a Proprietary

Article Certificate must be issued by a competent authority and the purchase will not be made

without authorization of a Genial Manager or to whom the power is delegated. This type of

tendering is monopolistic in nature and is avoided to the extent possible. However Single

Tendering is done in many other cases which are not mentioned anywhere in the DOP.

The Invitation for Bids (IFB)/ Notice Inviting Tender (NIT) are published in leading national

newspaper as per guidelines and procedures. Copies of IFB/NIT are also sent to the bidders

who have evinced interest in supplying similar equipment/services in the past. An the case of

procurements funded by external funding agencies following International Competitive

Bidding procedures, the IFB us also published in the Indian Trade Journal and a copy of IFB

sent to each of the embassies/ High commissions of member countries of the funding agency.

In case of procurements under the World Bank funding, the IFB is also published in the

‘Development Business’ of United Nations when required.

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CONTENTS OF BIDDING DOCUMENTS:

Every time when an open tender is invited, the bidders are provided with a set of

documents, which provides various required information and terms and condition of the

contract The documents also contains the various contract forms which the bidder is

expected to sign and return to NTPC to acknowledge the acceptance of the terms and

condition of the contract. The document also contains the guidelines for bidders for

bank guarantee. Earnest money and the like, this document is issued for a cost

that is decided on the basis of the total estimated value of the indent.

Every time a new tender is notified, a set of tender documents is issued against a payment of

stipulated fee according to the price list given above. This set of tender document consists of

many different documents meant for different purposes. The documents may vary from

project to project. Here we will see what the documents that are generally issued to bidders

are.

(A) Instruction to Bidder (1TB): This document is meant to provide the

bidders the vital information required to understand and evaluate the tender offer. The

document contains the general instructions like the Terms of Payment, Bid Security,

Contract Performance Security, Liquidated Damages, Currencies conversion, Defects

Liability and Work Schedule. The document also specifics the Qualifying/Eligibility

requirements of the bidder and the goods/services supplied. The ITB also contains

information for the foreign bidders. Additionally the ITB contains various references

to clauses of GCC (General Condition of Contract) and SCC (Special Condition of

Contract). Finally the document specify about the language and interpretation and

implied terms and condition of all the documents provided with the bid. ITB also

contains information about how to modify and withdraw the bids already submitted to

NTPC. Hence in short we can identify this document as the guidelines and

information brochure to bidders before they submit their quotation for the notified

work.

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(B) Bid Proposal Sheet or Bid Data Sheet : Bid proposal sheet is a set of

documents which contains the formats for bidding, Summary price proposal, Break up

of Bid price, Equipment wise price break-up, civil works price break-up, commercial

deviation, Technical deviations, Guarantee declaration, Price Adjustment data, Price

break up of recommended spares, Construction Equipments, Special Maintenance

Tools, QR Data and capacity data, Work completion Schedule, Declaration of Import

content, Check list, Information regarding value addition and Type test charges. This

document is nothing but a standard format providing the bidder to -Furnish the details

required by the NTPC in a standard format used at NTPC.

(C) General condition of Contract: The document titled General

Condition of Contract of GCC is a document that takes care of the legal aspect of the

contract between the bidder and NTPC. This document also is an integral part

of all the bid documents with some minor changes or no changes at all. The

document starts with the definition for The terms used in various tender documents.

This is worth noting that all the terms used in the bid document are predefined and have

one and only meaning which is defined in the GCC. The document also contains different

formulae that are to be used on some future dates to calculate the LD or the Price

Escalation. Finally the document also refers to the unforeseen events like Out Break of a

War, Bankruptcy of the contractor or any other Force Majeure. The GCC also has a clause

called RESOLUTION OF DISPUTES that specifies the procedures to be followed if any

dispute occurs, arising out of or in connection with the Contract.

(D) Special Conditions of Contract: Special Condition of Contract or SCC is

not a standard document that is issued with all the tender documents. The document

takes care of the special issues that have come up or may come up in the course of the

execution of that particular contract and has not been covered in the General

Condition of Contract. The very first clause of the document is TIME-THE

ESSENCE OF CONTRACT. The document also talks about the detailed

25

(E) Manufacturing plan and Master Schedule of the execution of the contract. It is the

SCC where we mention the issues related to Liquidated Damage Clause. This is

mentioned in the document itself that "The following Special Condition (if Contract

shall supplement the General Condition of Contract. Wherever there is a conflict. The

provisions herein shall prevail over those in the General Conditions of contract.

Hence the document may also be considered as the amendments to the GCC.

(F) Erection Condition of Contract: This document again is specific

document which may not be issued with all the tenders. As the name itself suggests.

The document deals with the erection component of the contract (if any). In the

document some particular issues pertaining to the erection component of the contract

is dealt with. Typically, an Erection Condition of Contract deals with the civil

construction works undertaken at the site where the equipment is to be installed and

commissioned. This also takes into consideration the statutory and local authority who

may be in charge of monitoring the work in progress and whose permission may be

required. Hence this document is a must for all the work where there is an erection

component.

(G) Technical Specification: The document is the thickest document or any

bid document. This document contains all the specification required for that particular

project. The document is prepared by the Project Engineering department and

contains the technical specifications of the equipments and spares to be procured. It

may also contain the drawings of the equipment or layout of the project. Similarly the

document will also enlist all other possible alternatives to the already mentioned

specifications (if any). Since there are no financial aspects associated with this

document, a detailed study of this document is out of the scope of this report.

26

TENDER COMMITTEE:

As we have mentioned earlier, Delegation of Power has a very important role to play in

purchasing process At NTPC. For every purchase value of exceeding Rs 50000/-.

The committee consists of three members, one representative each from the

Indenting department, Materials Department and Finance (Concurrence). The representatives

are nominated by competent authority varying from Senior Manager to DGM depending

upon the value of the contract. This committee will take into consideration every possible

aspect of the terms and conditions, prices, inspection procedures, phasing delivery if required

etc. This committee also formulates the QR (Qualifying Requirements) for the bidders of that

particular tender.

TENDER OPENING:

Tender opening is the penultimate step in the purchasing process. Tenders are opened on the

due date and time mentioned in the tender notification without fail. If the data mentioned is

declared holiday, the next working day will be considered as the opening date but the time

will remain the same. The sealed envelopes containing the bid will be opened by the purchase

and finance executives nominated by their Head of the Department. The representatives of

the bidders may also present themselves if they wish so however their absence will not hinder

the process. The name and rates quoted by all the present bidders will be read out and any

omission or irregularity will be pointed out on the spot.

Alterations or erasures (if any) will be initiated by the officers present at the

time or the opening of the tenders. All the quoted figures should also be encircled and will be

written in words if the bidder have not done so already and will be attested. Total number of

erasures and correction will also be written and attested. These all activities are done to

ensure proper and transparent procurement process.

SECURITY DEPOSITS:

A refundable security deposit may be asked at the time of submission of the bid. This deposit

is taken to ensure that the vendor who is awarded the contract will not refuse to undertake the

contract. If the bidder after successful bid refuses to undertake the contract, the earnest

27

money deposited by him will be forfeited. However there arc various instances where this

deposit may be waived off. For example for all the purchases valued less than Rs. 50000/- the

EMD may be waived off. Similarly for the PSUs, NSICs and SSI parties, the EMD can be

waived also. On successful completion of bidding the earnest money may either be returned

to the bidder or may be adjusted towards the security deposit to be provided by the

bidder. Another major deposit is in form of performance guarantee or Liquidity

damage (LD) the equipments provided by the vendor fail to perform as per

the specification, the cost for this shortfall may be recovered from the vendor. This

guarantee is generally 10% of the awarded value and is generally in form of bank guarantee.

However in cases of procurement from OEM/OES or proprietary· vendor the same may be

waived depending upon the merit of case.

However in case of procurement of equipment/material/services there is a contract for

providing spares for the next three years. In case the prices of these spare parts goes up in the

future and the vendor refuses to supply the spares at the same rate this guarantee deposit will

be forfeited. As a matter of fact, this guarantee is taken just to make sure that the contractor

does not refuse to honor the contract in future after he realizes that the prices have gone up or

for some similar reasons.

4. Cost of Bidding Documents:

S.N. ESTIMATED VALUE OF INDENT COST OF TENDER DOCUMENT

1 Up to Rs. 10 lakhs 200

2 Above Rs 10 lakhs and up to 25 lakhs 300

3 Above Rs 25 lakhs and up to Rs 50 lakhs 500

4 Above Rs 50 lakhs and up to Rs 100 lakhs 750

5 Above Rs 100 lakhs and up to Rs 500 lakhs 1500

6 Above Rs 500 lakhs 3000

28

5: Receipt and Opening Submission, of Bids:

The time allowed for preparation and submission of bids by the bidders is decided taking

Into consideration the particular circumstances and complexity of work involved.

Generally, a period of not less than 6 weeks from the date of Invitation of Bids is

considered for preparation and submission of bids. For large and complex packages this

Period is extended to 10 –12 weeks.

Document comprising the bid

The bid submitted by the bidder shall comprise of the following documents:

1. Bid form duly completed and signed by the bidder.

2. All price schedule duly completed in all respect by the bidder.

3. The bid shall contain necessary detail of the equipment and mandatory spares to be

imported from associated /collaborator by manufacture or bidder.

Each bidder shall submit with its bid the following attachments:-

1. Attachment 1: Bid Security

2. Attachment 2: Power of Attorney

3. Attachment3: Bidder Qualification

4. Attachment4: Eligibility and Conformity of the Facilities

5. Attachment5: Subcontractors Proposed by Bidder

6. Attachment6: Deviations

7. Attachment7: Alternative Bids

8. Attachment8: Local Representation

9. Attachment9: Deemed Export Benefits

10. Attachment10: Functional Guarantees

11. Attachment11: Erection Tools and Tackles

12. Attachment12: Technical Data Sheet

13. Attachment13: Bought Out Items

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14. Attachment14: Quality Assurance Program

15. Attachment15: Additional Information

16. Attachment16: Milestone Schedule

17. Attachment17: Price Adjustment Data

18. Attachment18: Equipment and Mandatory Spares to be imported from

Associated Collaborator.

Bid Form and Price Schedules

The bidder shall complete the form and appropriate price schedules furnished in the bidding

documents as indicated therein.

Bid Prices

Bidders shall quote for the entire facilities on a single responsibility basis such that the total

bid price covers all the contractors obligations mentioned in or to be responsibly inferred

from the bidding documents in respect of the design manufacture, including procurement and

sub contracting, delivery, constructions installation commissioning, completion of the

facilities and conduct of guarantee test for the facilities including supply of mandatory spares.

This includes all requirement under the contractors responsibilities for testing, pre-

commissioning and commissioning of the facilities conducting guarantee test and where so

required by the bidding documents the acquisition of all permits approvals and licenses etc.

the operation maintenance and training services and such other items and services as may be

specified in the bidding documents all in agree accordance with the requirement of the

general conditions of contract and technical specifications. Bidders shall give a breakdown

prices in the manner and detail called for in the price schedule. The bidder shall their prices in

the following manner:-

Schedule No.1 Plant and Equipment including Type test charges and Mandatory Spares to be

supplied from Abroad.

Schedule No.2 Plant and Equipment including Type test charges and Mandatory Spares to be

manufacture within the employers country.

30

Schedule No.3 Local transportation including port handling, port clearance, port charges

inland transit insurance and other local costs incidental to delivery of plant & equipment and

Mandatory Spares.

Schedule No. 4 installation services including erection works civil structural steel and allied

works insurance covers other then inland transit insurance and other services as specified in

the bidding documents.

Schedule No 5 Grand Summary (Schedule No 1 to 4)

Schedule No 6 Recommended Spares Parts

Schedule No 7 Taxes and duties not included in bid price

Schedule No 8a Break up of type test charges quoted in schedule-1

Schedule No 8b Break up of type test charges quoted in schedule-2

Schedule No 9 Unit rate Schedule

Benefits/Exemption to supply for Mega Power Projects

Inviting Bids for the package name in the bid data sheet on International Competitive Bidding

(ICB) basis has been approved by Ministry of Power, Govt. of India. Govt. of India is advised

to Indian State Govt. to exempt supplies made to Mega Power Project from sales tax and

local levies. In case the state govt. do not provide the exemption than the employer shall bear

and pay applicable sales tax and local levies as per provision of GCC.

Price Basis

Price quoted by bidders shall be subject to adjustment during performance of the contract to

reflect charges in the cost of labor, material etc. a bid submitted with a fixed price quotation

will not be rejected but the price adjustment will be treated as zero. The price adjustment

provision will not be taken into consideration in bid evaluation. Bidder must include the

name, source, and origin of labor and material indices along with there base values and

corresponding coefficients.

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Bid security

The bidder shall furnish, as part of its bid security in a separate sealed envelope in the amount

and currency as stipulated in the Bid Data Sheet.

The bid security shall, at the bidders option be in a form of a banker’s cheque irrevocable

letter of credit or a bank guarantee. But the banks should be specified in the company’s list

that is given the instruction to fill up the contract.

In the case of foreign bidders, the foreign bidder shall be fill up the contract and security for

the contract he must look the bank name that is specified in the company’s procedure. That is

helped to the contractor and trust to the company. That is also helped in increase the goodwill

in the market. The bid security shall remain valid for 45 days. The format of guarantee letter

shall be accordance with the form of bid security include in the bidding document.

The bid security may be forfeited

a) If the bidder withdraws its bid during the period of validity specified by the bidder in the

bid form

b) The bidder does not accept the correction of its bid price.

c) If the bidder does not withdraw any deviation listed the cost of withdrawal idicated by him.

d) If the bidder refuses to withdraw, without any cost to the employer, any deviation not

listed but found else where in the bid.

e) In the case of a successful bidder, if the bidder fails with in the specified time limit there as

follows:-

(I) To sign the contract agreement, in accordance with ITB.

(II) To furnish the required performance securities.

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Period of Validity of Bid

Bids shall be remain valid for a period of 180 days from the closing date prescribed by the

Employer for the receipt of the bid. A bid is valid for a shorter period shall be rejected by the

Employer as being non-responsive.

The bidder is required to keep the prices of recommended spares covered the validity of the

bid security shall be 6th month after notification of award for main equipment and mandatory

spares.

In exceptional circumstances the employer may solicit the bidder’s consent to an extension of

the bid validity period. The request and responses there to shall be made in writing by post or

by telefax followed by confirmation. If a bidder accept to extend the period of validity, the

validity of bid security shall also be suitable extended. A bidder may refuse the request will

not be required nor permitted to modify its bid.

Format and Signing of Bid

The bidder shall prepare an original and five(5) copies/sets of the bid clearly making each

one as “Original Bid” ,”Copy No.1”,”Copy No.2”…… etc, as appropriate. In the event of

any discrepancy between them, the original shall govern.

The original and all copies of the bid, each consisting of the documents shall be all typed or

written in indelible ink and shall be signed by the bidder or a person or person dully

authorized to bind the bidder to the contract.

Submission of Bids , Sealing and Making of Bids

The bidder shall seal the original and each copy of the bid in separate envelopes, duly

marking the envelops as “ORIGINAL BID “and “COPY NUMBER”. The bid security

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furnished be sealed in a separate envelope, duly marking the envelope as “ATTACHMENT-

1”,”BID SECURITY”. The certificate regarding acceptance of importance conditions. The

bidder also is sealed in a separate enveloped entitled “CERTIFICATE REGARDING

ACCEPTANCE OF IMPORTANT CONDITIONS”. The envelops shall then be sealed in an

outer envelope.

The inner and outer envelopes shall:-

A] Be addressed to the employer at the address given in the bid data sheet.

B] Bear the package name indicated in the Bid Data Sheet, the invitation for bid number

indicated in the bid data sheet and statement “DO NOT OPEN BEFORE [DATE]”. TO BE

COMPELETE IN THE TIME AND SPECIFIED IN THE BID DATA SHEET

The inner envelops shall also indicated the name and address of the bidder so that the bid can

be return unopened in case it is declared “Late” or is received without any requisite.

The outer envelop is not sealed and marked that is employers responsibility for the bid

misplacement.

Deadline for submission of Bids

Bid must be received by the purchaser at the address specified under ITB later than the time

and date specified in the Bids date sheet. The all rights and obligation of the Purchaser and

Bidders previously subject to the deadline will thereafter be subject to the deadline as

extended.

Late Bids

If any bid received by the purchaser after the deadline of submission of bids prescribed by the

purchaser pursuant to ITB, will be rejected and returned unopened to the bidder.

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Modification and Withdrawal of Bids

The may modify or withdraw its bid after the bid’s submission, provided that written notice

of the modification, including substitution or withdrawal of the bids, is received by the

Purchaser prior to the deadline prescribed for submission of bids. The bidder’s modification

or withdrawal notice shall be prepared, selected, marked and dispatched in accordance with

the provision of ITB .No bid may modified after the deadline for submiss

Receipt of Bids

Bids are received in a sealed condition at the place, date and time identified in the Invitation

for Bids/ Bidding Documents. A receipt is issued to the bidders for the bids delivered by hand

indicating the date and time of delivery.

Opening of Bids

The bids received are opened by a team comprising representatives from Engineering,

Contracts and Finance functions in the presence of bidders’ representatives who chose to

attend the bid opening. The details such as name of the bidder, bid price, availability of bid

security, guaranteed parameter, discounts if any, are read aloud during the opening. All the

participants in the bid opening are required to sign a register as a proof of attendance

maintained for the purpose.

6. Evaluation of Bids:

The bids are received, opened and evaluated by a duly constituted Tender Committee

comprising members from Contracts, Engineering and Finance functions in accordance with

the ‘Delegation of Powers’. The committee determines the lowest evaluated bid for award of

contract in terms of criteria for evaluation of bids stipulated in the bidding documents and

35

puts up its recommendation for the approval of competent authority in accordance with the

‘Delegation of Powers’.

The process of evaluation of bids begins with an examination of the bids to determine:

i. Bidders eligibility.

ii. Acceptability of bid security furnished by the bidder.

iii. Completeness of bid and correctness of signatures.

iv. Acceptability of Joint Deed of Undertakings (if envisaged in the bidding

documents).

v. Computational errors in the bid price.

vi. Stated deviations from the bidding conditions, which might reflect on the

“substantial responsiveness” of the bid and justify its rejection.

Though generally and to the extent possible avoided, clarifications may be

sought from the bidders, if considered necessary by the tender committee, with the approval

of competent authority. Due care is taken of the fact that such clarifications would not call for

any material alterations in the bidder’s bid.

The detailed evaluation is carried out only for bids, which are substantially responsive. Bid

evaluation considers price and other factors in a transparent manner and in accordance with

the stipulated evaluation criteria stated in the Bidding Documents such as cost compensations

for the deviations from the bidding conditions taken by the bidders, differential price factors

for guaranteed parameters etc.

In case of procurements under International Competitive Bidding procedures, the bid prices

are converted into a single currency i.e. in the Indian rupees based on the exchange rate

prevailing as on the date of bid and comparison of bids. Other factors such as a domestic

price preference (applicable in case of WB/ADB funded procurements) and purchase

preference to Public Sector Undertakings applicable as per the extant guidelines are also

considered for the purpose of evaluation of bids.

36

Once the lowest evaluated bidder is selected as above, the next step is to determine whether

the Qualification Requirements (QR) as stipulated in the bidding documents is met and

whether the bidder in question is capable to successfully executing the contract. An

affirmative determination of the above is a prerequisite for award of contract to the bidder. In

case the lowest evaluated bidder does not meet the above requirement, the similar

determination is done for the next lowest bidder. If the bidderalso fails, the process is

continued until the lowest evaluated and qualified bidder is chosen.

QUALIFYING REQUIREMENT FOR BIDDERS:

The following are the specific requirements.

1 The bidder should have engineered, fabricated/supplied, erected and tested at least

one (1) piping system, of minimum … MT, consisting of steel pipes of size … NB or above,

complete with valves and fittings, etc.

1.2 The average annual turnover of the Bidder, in the preceding three (3) financial years as on

the date of bid opening, shall not be less than Rs… million or in equivalent foreign currency.

1.3 The Net Worth of the Bidder as on the last day of the preceding financial year shall

not be less than 25% of the paid-up share capital.

1.4 The unutilized Bank Guarantee limits of the Bidder as on seven (7) days prior to the date

of bid opening, duly certified by the Bankers shall not be less than Rs… Million or in

equivalent foreign currency.

1.5 The Bidder shall have unutilized cash credit limits together with cash and bank

balances including fixed deposits, as on seven (7) days prior to the date of bid opening of not

less than Rs… million or in equivalent foreign currency.

37

Notes:

a) Net Worth means the sum total of the paid up share capital and free reserves. Free

reserves means all reserves credited out of the profits and share premium account but does

not include reserves credited out of the re-valuation of assets, write back of depreciation

provisions and amalgamation. Further any debit balance of Profit & Loss account and

miscellaneous expenses to the extent not adjusted or written off, if any, shall be reduced from

Reserves & Surplus.

b) Other income shall not be considered for arriving at annual turnover.

c) For unutilized BG limits, Cash Credit Limits and Turnover in foreign currency, the

exchange rate as on 7 days prior to the date of Bid opening shall be used.”

NEGOTIATION:

When adequate competition exists, the negotiation should and must be avoided. This

competition may be in form of many manufacturers making the same good or a single

manufacturer providing the goods through many retailers/suppliers and all the

retailers/suppliers are free to quote individually. However if it's found that the price quoted

by all individual bidders are unreasonably high in comparison to the last purchase

price/estimate or in case of some ambiguous technical/commercial terms and conditions,

negotiations can be done with the approval of competent authority as per DOP. In normal

circumstances, the negotiation should take place with the technically and commercially

evaluated lowest (Lt) vendor only. However, depending upon the situation the negotiation

may be carried out with more than one party at a time. Normally the negotiation is carried out

by the TC (Tender Committee). But in case a tender committee is absent i.e. no committee

was formed to monitor the procurement, representatives from finance and purchase may

complete the task of negotiation. However, negotiation process is not always for negotiating

the prices of equipment/material/services supplied but it may also involve terms and

conditions of supply, future commitments for supply of spare parts and consumables and

38

many other aspect of the contract. For example a lowest price bidder may not get the contract

if it’s found that another bidder who is quoting higher than him but is offering lower priced

spares. Hence in this case a negotiation may be conducted with the L 1 to make him offer the

spares at the same rate as being offered by his competitor. Once the negotiation process is

finished and the two parties involved in the negotiation reach a consensus, the committee's

purchase proposal/recommendation will be put up to the competent authority for approval

and subsequently the letter of intent may be faxed to the party.

7. Award of Contract:

All the activities related to evaluation of bids and approval of evaluation report/ award

recommendations by the competent authority, concurrence of the funding agency (wherever

applicable) and post-bid discussions with the successful bidder to resolve ambiguities/

nonconformity to the bidding provisions observed during the bid evaluation, are required

within the bid validity period.The contract is thus awarded to the bidder whose bid has been

found as the lowest evaluated techno-commercially-responsive bid and meets the specified

Qualifying Requirements.

Financial statement analysis

At National Thermal Power Corporation

Financial Analysis

Introduction

Financial analysis is the process of identifying the financial strength and weaknesses of the

firm by properly establishing relationship between the items of the balance sheet and the

profit and loss account. It is the critical examination of the financial information contained in

AWARD OF CONTRACT

LOWEST

BIDDER

the financial statements to understand and make decisions regarding the operations of the

firm.

40

Definitions

In the words of Myer,” Financial statement analysis is largely a study of relationships among

the various financial factors in a business, as disclosed by a single set of statements, and a

study of trends of these factors, as shown in a series of statements.

In the words of Kennedy and Muller,” The analysis and interpretation of Financial

statements are an attempt to determine the significance and meaning of financial statement

data so that the forecast may be made of the prospects for future earnings, ability to pay

interest and debt maturities (both current and long-term) and profitability and sound dividend

policy.

Purpose And Significance of Financial Analysis

1. Judging the earning capacity or profitability. On the basis of financial statements the

earnings capacity of the business concern maybe computed. In addition to this, the

future earning capacity of the concern may be forecasted. All external users of accounts,

specially the investors and potential investors, are interested in this.

2. Judging the managerial efficiency. The financial statements analysis helps to pinpoint

the areas wherein the managers have shown better efficiency and the areas of

inefficiencies. For example, using financial ratios, it is possible to analyse relative

proportion of production, administrative and marketing expenses. Any favorable and

unfavorable variations can be identified and reasons thereof can be ascertained to pin

3. Judging the short and long-term solvency of the concern. On the basis of financial

statements, the solvency of the concern may be judged. Debenture holders and lenders

judge the ability of the company to pay the principal and interest as most of the

companies raise a portion of their capital requirements by issuing debentures and raising

long-term loans. Trade creditors are mainly interested in assessing the short-term .

solvency of the business as they want to know that the business is in a position to pay

41

4. Inter-firm comparison. Financial statements of different enterprises may be analyzed

and comparison be made thereof. The inter-firm comparison helps in assessing own

performances as well as that of others, if mergers and acquisitions are considered. Inter-

firm comparison is better carried out if it is based on Ratios.

5. Making forecast and preparing budgets. Past financial statements analysis helps a

great deal in asseseing developments in the future, specially the next year. For example,

given a certain investment, it may be possible to forecast the next year’s profit on the

basis of earning capacity shown in the past. Analysis thus helps in preparing budgets.

Ratio Analysis Introduction

Ratio analysis is a powerful tool of financial analysis. A ‘ratio’ is defined as

“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.Ratio analysis is a technique of analyzing the financial statements by

computation of ratios. In other words, Ratio analysis is a process of determining and

interpreting relationship between the items of financial statements to provide a meaningful

understanding of the performance and financial position of an enterprise.

According to Myers, “Ratio analysis is a study of relationship among various financial

factors in a business.”

Advantages and Uses of Ratio Analysis

Ratio analysis is an important technique of financial analysis. The advantages derived by an

enterprise by the use of accounting ratios are:

1. Useful In Analysis of Financial Statements. Ratios are useful for understanding the

financial position of the concern. They are an extremely useful device for analyzing

the financial statement. Bankers, investors, creditors etc, all analyse balance sheet

and profit and loss accounts by means of ratios.

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2. Useful In Simplifying Accounting Figures. Ratios simplify, summarize and

systematize a long array of accounting figures to make them understandable. Its main

contribution lies in communicating precisely the interrelationship, which exists

between various financial statement elements. The importance of accounting ratios,

that is, relationships worked out among various accounting data which are mutually

dependent and which influence each other in a significant manner. Arises from the

fact that often absolute figures standing alone do not convey any meaning.

3. Useful In Judging The Operational Efficiency Of Business. Ratios are essential

for understanding the affairs of a firm. Specially its operating efficiency. They are

useful for diagnosis of the financial health of a business concern. This id done by

evaluating liquidity, solvency, profitability, etc. Such an evaluation enables

management to assess financial requirements and capabilities of various business

units.

4. Useful For Forecasting Purpose. Ratios are of much help in business planning and

forecasting. The trend ratios are analyzed and used as guide to future planning. What

should be the course of action in the immediate future is decided, many a time, on the

basis of trend ratios, i.e., ratios calculated for a number of years.

5. Useful In Locating The Weak Areas Of The Business. Ratios are of great

assistance in locating the weak areas of the business even though the overall

performance may be quite good. Management can then pay attention to the weakness

and take remedial action.

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NTPC RATIO

YEAR 2010 2009 2008

1. Liquidity Ratio1.1 Current RatioCurrent Assets 2530269 2407840 2151340Current liabilities 1075816 1068860 792990

current ratio 2.35 2.25 2.711.2 Quick RatioQuick Assets 2195498 2083500 1883770Current Liabilities 1075816 1068860 792990Quick Ratio 2.04 1.95 2.37

1.3 Cash RatioCash & Bank Balance 1445948 1627160 1493320Current Liabilities 1075816 1068860 792990Cash Ratio 1.34 1.52 1.88

2010

2009

2008

0 0.5 1 1.5 2 2.5 3

cash ratioquick ratiocurrent ratio

44

1. LIQUIDITY RATIO

Liquidity ratio measures the ability of a firm to meet its short term obligation and reflect the short

term financial strength or solvency of a firm. Liquidity ratio includes current ratio, quick ratio and

inventory turnover ratio.

Current ratio

Current ratio is the ratio of total current assets by total current liabilities. Current ratio of the firm

measures its short-term solvency i.e. its ability to meets short term obligation. The higher the

current ratio the larger the amount of rupees available per rupee of current liability

CR= Current asset

Current liability

Ideally a company should have 2:1 current ratio its shows that company has enough funds to meet

its short term obligations. Higher the current ratio better it is for company as it enhances the

liquidity position of the company and builds creditors and investor’s trust.

FOR NTPC:

Current Ratio has been very good over the years.The current ratio of company shows fluctuating

trend but has always been good as current assets have always been more than current liabilities

which shows that firm has always enough funds to meet its day to day obligations.

Quick Ratio :

It measures the instant debt paying capability or company’s ability to pay unexpected demand for

working capital. This ratio establishes the relationship between quick or liquid current assets and

current liabilities

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QR = Current assets – (Inventories + prepaid expenses)

Current Liabilities

Ideally it should be 1:1 but if the liquid ratio or quick ratio is more than 1:1 than company seems

to be sound and good. On the other hand if it is less than 1:1 the company is said to be unsound.

For NTPC

Quick Ratio came to 2.04 in the year 2010, this was better than the previous year ratio ,indicating

that the company is having quick assets to pay its current liabilities. This shows that company

keeps enough liquid funds to meet its unexpected cash requirements or obligations. For NTPC it

shows that it can meet unexpected need for funds easily.

Cash Ratio:

It measures the absolute liquidity of the company. It is a relationship between absolute quick assets

and quick liabilities.

Quick Assets include cash, bank and marketable securities and Quick Liabilities includes all

current liabilities except bank over draft.

C cash ratio = Absolute Liquid Assets

Q quick Liabilities

Ideally it should be 0.5:1

F For NTPC

Cash Ratio is 1.34 in year 2010 to showing the firm’s ability to quickly pay its

debt

2.ACTIVITY OR EFFICIECY

RATIO 46

2.1Receivables Turnover Ratio

Net Sales 4632259 4192380 3705010Receivables at the end 665146 358420 298270Receivables Turnover

Ratio 6.96 11.69 12.42

2.2 Total Assets Turnover Ratio

net sales 4632259 4192380 3705010Total assets 11287374 10522480 8938800

Total assets turnover ratio 0.41 0.39 0.41

2.3 Fixed Asset TuURNOVER Ratio

Net Sales 4632259 4192380 3705010Fixed Assets 6686560 3293770 2609370

Fixed Assets Turnover 0.69 1.27 1.41

Ratio

2.4 C/ATurnover RatioNet Sales 4632259 4192380 3705010

Current Assets 2530269 2407840 2151340Current Assets Turnover

Ratio 1.83 1.74 1.72

2.5 Working Capital Turnover RatioNet Sales 4632259 4192380 3705010

Net Current Assets 1454453 2023670 1761890W C Turnover Ratio 3.18 2.07 2.10

47

2010

2009

2008

0 2 4 6 8 10 12 14

wc turnover ratiocurrent asset turnover ratiofixed asset turnover ratiototal asset turnover ratioreceivable turnover ratioinventory turnover ratio

FIG ..2…ACTIVTIY RATIO

2. ACTIVITY RATIO

An activity ratio is the relationship between sales or cost of goods sold and investment in

various assets of the company. It is always expressed as turnover. They are intended to

describe how efficiently or intensively a firm uses its assets to generate sales.

Some of the important activity or efficiency ratios are as follow:

Receivable Turnover Ratio:

How far the company is efficient or successful enough in realizing its credit debtor’s turnover

ratio is being calculated. It establishes relationship between net credit sales and average

receivables of the year.

48

RT = Net Credit Sales

Average Receivables

Credit sales means all credit sales minus the sales returns. Or else a total sale is considered as

credit sales.

Average Receivables are computed as:

AR = Opening Debtors and B/R + closing Debtors and B/R

2

For NTPC

Receivables Turnover is 6.96 in 2010. NTPC collected its outstanding

credit account & its collection of the fund has reduced as compare to last

year .

Total Asset Turnover Ratio :

This ratio expresses relationship between costs of goods sold or net sales and total assets or

investments of a firm.

TAT = Net Sales or Cost of Goods Sold

Total Assets

Total Assets means all fixed and current assets but the provision for depreciation is adjusted

in it.

This ratio indicates the number of times the assets are turned over in a year in relation to

sales. A higher total assets turnover ratio is the indicator of effective utilization of investment

in assets where as lower assets turnover ratio indicates that assets are not properly utilized in

comparison to sales. Thus, there is an over investment in assets. Extremely high ratio means

over trading in the business.

49

For NTPC

Total Assets Turnover Ratio indicates that NTPC in the year 2010, for

every 1 rupees in total assets generate 41 paisa in sales.

This shows that company still need to concentrate more on this ratio for

its effective utilization of the funds as it can even go much higher .

Fixed Assets Turnover Ratio:

This ratio expresses the relationship between fixed assets (less depreciation) and net sales or

cost of goods sold. This ratio measures the efficiency and profit earning capacity of the firm.

FAT = Sales or Cost of Goods sold

Fixed Assets less depreciation

The higher the ratio the greater is the intensive utilization of fixed assets. Lower ratio means

under utilization of fixed assets and excessive investment in these assets.

For NTPC

Fixed Assets Turnover indicates that NTPC in the year 2007, for every 1

rupees in fixed assets generate 0.69 in sales. It shows intensive utilization

of fixed assets. Indicates the profit earning capacity of the company is

high.

Current Assets Turnover Ratio :

This ratio expresses the relationship between current assets and net sales or cost of goods

sold. This ratio reflects the efficiency and capacity of working capital. On the basis of this

ratio efficiency of current assets and over and under investment in the company can be

examined.

50

CAT = Sales or Cost of Goods Sold

Current Assets

For NTPC

Current Assets Turnover Ratio: indicates that NTPC in year 2010 is

1.83. This shows that company’s current assets are effectively utilized.

Working Capital Turnover Ratio :

This ratio establishes relationship between net working capital and net sales or cost of good

sold. This ratio is used to assess the efficiency with which the working capital is being used

in the business.

WCT = Sales or Cost of Goods Sold

Net Working Capital

A high working capital ratio indicates efficient management of working capital or over

trading i.e. low investment in working capital and more profits. Low working capital turnover

ratio implies under trading i.e. funds are not being utilized efficiently.

For NTPC

Working Capital Turnover Ratio: indicates the proper management of

the working capital in the firm which is required for the day to day

operations of the firm. It shows that in year 2010 it is 3.18 which has

comparatively increased over the years.

51

3. Profitability Ratio

(based on sales)

3.1 Gross Profit Margin

Gross Profit (PBIT)Net Sales 4632259 4192380 3705010

Gross Profit Margin

3.2 Net Profit RatioNet Profit 872820 820130 741480Net Sales 4632259 4192380 3705010

net profit Ratio 18.84% 19.56% 20.01%

FIG …..3….PROFITABILITY RATIO

52

3. PROFITABILITY RATIO

The management of the firm is naturally eager to measure its operating efficiency. Similarly

the owners invest their funds in the expectation of reasonable return. The operating efficiency

of a firm and its ability to ensure adequate returns to its shareholders depends ultimately on

the profit earned by it. Therefore profitability is measure of efficiency .it also indicate public

acceptance of the product and show that firm ca produce competitively.

When profitability ratio is computed by relating profit of a firm to its investments that ratio

are termed as return on investments

(i) Profitability based on sales

Gross profit Ratio:

This ratio expresses the relationship of gross profit on sales to net

sales in terms of percentage.

2010

2009

2008

0 5 10 15 20 25 30

NET PROFIT RATIOGROSS PROFIT RATIO

Gross Profit X 100

Net Sales

Gross profit can be computed as Net Sales – Cost of Goods Sold.

The ratio measures the trading effectiveness and basic profit earning

potentiality of a company. The higher the ratio the greater will be the

margin.

FOR NTPC:

Gross Profit Margin: has reduced from 49.12% in the year 2004 to

33.03% in the year 2007. This tells that NTPC generate 33 paisa from

every 1 rupee sales. Although it was good in year 2004 which could due to

the large sales in that particular year or may be due to market favoring

the environment of the sales. Still it is good for year 2007 i.e. for every

one rupee sale company can generate 33 paisa as profit after meetings it

expenses of generation.

53

Net Profit Margin:

This ratio measures the relationship between net profit and sales of a firm. Net Profit is the

excess of revenue over expenses during a particular accounting period. The net profit ratio is

determined by dividing the net profit by sales and expressed as percentage.

NP = Net Profit (after tax) X100

Net Sales

This ratio is the indication of over all profitability and efficiency of the business. A high net

profit ratio would only mean adequate returns to the owners. It also enables a firm to

withstand in cut throat competition when the selling price is declining or cost of production is

rising. A low net profit ratio on the other hand, would only indicate inadequate return to the

owners

For NTPC

Net Profit Margin: has reduced to 18.84% in year 2010 from 20.01% in

year 2008 . This shows that company is running efficiently and it can pay

more to its investors as it generates 18 paisa in the profit for every single

rupee of sale. Though it is less than year 2008 but yet it is not bad it still

displays the profit earning efficiency of the company as good.

54

2010

2009

2008

0.00% 500.00% 1000.00% 1500.00%

return on total assetreturn on equityreturn on capital employed

FIG …4…..PROFITABILITY RATIO

4.Profitability Ratio (based on capital)

4.1 Return of Capital Employed

Net Profit (PBIT) 1269439 935950 1025490

Capital Employed1002344

4 9193781 10615838Return of Capital Employed 12.66% 10.18% 9.66%

4.2 Return On Equity (ROE)Net Profit (PAIT) 872820 820130 741480

Shareholder's Fund 6243742 5737010 5263860return on equity 13.97% 14.29% 14.08%

4.3 return on total assetsnet profit after tax 872820 820130 741480

total assets1128737

4 10522480 8938800return on total assets 7.73% 7.79% 8.29%

55

4.PROFITABILITY RATIO CAPITAL BASED

Return on Capital Employed:

This ratio expresses the relationship between profit and capital employed and is calculated in

percentage by dividing the net profit by capital employed.

ROCE = Net Profit (PBIT) X100

Capital Employed

The return on capital employed provides a test of profitability related to long term funds. The

higher the ratio, the more effective and efficient would be utilization of capital or vice- versa.

For NTPC

Return on Capital employed: it has increased from 10.66% in year 2009 to 12.66% in year

2010 .This shows that company was making most effective utilization of its capital and it is

operating efficiently.

Return on proprietor’s funds or equity:

This ratio expresses the percentage relationship between the net profit (after interest and tax)

and proprietor’s funds or shareholder’s investment.

Net Profit (after interest and tax) X100

Shareholder’s funds

Shareholder’s funds include preference share capital as well as equity shareholders funds

which in turn comprises of equity share capital, share premium and reserves & surplus.

For NTPC

56

Return on Equity (ROE): It is also consistent over the years reflecting not much variation

till 2006. It is 13.97% for the year 2010 indicating that NTPC generate 13 paisa in profit per

1Rs invested in Equity.

Return on Total Assets:

Profitability of the company can also be measured by establishing relationship between net

profit and total assets. Total assets mean all net fixed assets, current assets and non trading

investments.

ROTA = Net Profit after Tax X 100

Total assets

This ratio measures the profitability of investments which reflects managerial efficiency. The

higher the ratio the better is the profit earning capacity of the firm or vice versa.

For NTPC

Return on Assets (ROA): It has been consistent over the years; it is 7.73% for the year

2010 indicating that NTPC generates 7.73 paisa of profit per one rupee invested in assets.

57

2010

2009

2008

0 1 2 3 4 5 6 7 8

interest coverage ratioDividend coverage ratiodebt to total asset ratiodebt equity ratio

FIG......5….LEVERAGE RATIO

5. leverage or Capital Structure Ratio

5.1 Debt - Equity RatioTotal Debt 3779702 3456780 2719060Net Worth 6243742 5737010 5263860

Debt - Equity Ratio 0.61 0.60 0.525.2 Debt to Total Assets ratio

Total Liabilities 4855518 4525640 3512050Total Assets 11287374 10522480 8938800

Debt to Total Assets Ratio 0.43 0.43 0.40

5.3 interest Coverage Rationet profit before interest and tax 1269439 935950 1025490

fixed interest chargesInterest coverage ratio

5.4 Dividend Coverage Rationet profit after interest and tax 872820 820130 741480

Dividend 313328 296830 288590Dividend Coverage Ratio 2.78 2.76 2.56

58

6.LEVERAGE RATIO

Debt – Equity Ratio:

This ratio indicates the relative proportion of debt and equity in financing the assets of a firm.

It reveals the relationship between internal and external sources of funds of a company.

D-E = Total Debts

Net Worth

Total debts refer to the total outside liabilities i.e. short term and long term loans. Net worth

mean total paid up amount of equity and preference share capital plus the total or

accumulated amount of reserves and surplus.

This ratio plays important role in analyzing the long term solvency of a company. It indicates

the firm’s capacity to pay long term debts and procure additional loans and informs whether

the firm is following the policy of trading on equity.

For NTPC

Debt Equity Ratio: are also consistent and there has been not much variation in this ratio

over it is 0.61 in year 2010 and 0.52 times in year 2008. This ratio shows that the long term

solvency of the firm is sound enough it has good capacity to pay its long term debts which

make it easy for it to procure funds from the market easily due to its long term solvency ratio.

Debt to Total Assets Ratio:

This ratio measures the long term solvency of the business. It reveals relationship between

total assets and total external liabilities. External liabilities mean all long term and short term

liabilities.

DTA = Total Liabilities

Total Assets

59

This ratio measures the proportion of total assets provided by creditors (long term as well as

short term) of the company i.e. what part of assets is being financed from loans. If total assets

are more than external liabilities the firm is treated as solvent. So, higher the ratio the greater

is the amount of creditors that is being used to generate profits for the owners of the firm.

FOR NTPC:

Total debt ratio is consistent over the year; it was 0.40 times in 2008, 0.43 times in 2009 and

0.43 times in 2010.

And 0.43 times in 2010 indicating that NTPC use 39% Debt and 61% Equity Capital

structure in the year 2007. This shows that company is solvent enough as its total assets are

more than its total debt. It uses less funds from outside to finance its working or for

generating profits.

Dividend Coverage Ratio:

It has increased from 2.56 times in year 2008 to 2.78 times in year 2010, this is good

indicator which shows that company is able to meet its dividend obligations of the

shareholder .

60

Dividend per share 3.8 3.6 3.5

2010

2009

2008

0 2 4 6 8 10 12

DPS EPS

FIG…6………INVESTMENT ANALYSIS RATIO

6.Investment

Analysis Ratio6.1 earning per share

profit after tax 878280 820130 741480

no of equity share 8245464400 8245464400 8245464400

earning per share 10.65 9.94 8.99

61

6.INVESTMENT ANALYSIS RATIO

Earning Per Share – EPSThe rate of dividend on shares depends upon the amount of profits earned by the firm. Whatever profits remains, after meetin EPS = Profit after tax – Preference Dividend

No. of equity sharesall expenses and paying preference share dividend, belongs to equity shareholders.

This is a popular ratio as it measures the profitability of a firm from owners’ standpoint. The higher the ratio the greater would be the market price of a company’s shares or vice versa.

EPS has been consistent over year it was 8.99 in the year 2008 and now it is 10.65 in 2010

FOR NTPC

62

FINDINGS

The tendering process requires too much of paperwork.

Certain steps like preparation of similar documents again & again, cross checking of

reports by different departments starting from scratch, eats too much of time.

Lack in use of Intranet facility over the departments.

NTPC have good short term financial strength

Company EPS is constantly increasing from the past year’s

Return on capital employed is constantly increasing.

The award of contract take place on a fair and transparent bases and everybody is

given equal opportunity to take part in bidding.

63

RECOMMMENDATIONS

Enough care should be taken while preparing the bid documents to avoid confusions,

delays, favors etc.

The tender committee officials should encircle and initial on each page of the tender

documents received from the parties on the tender opening date. They should mention

number of any corrections (if so made) on each page. Otherwise they should mention ‘no

cutting/no overwriting’. This will eliminate scope for tampering at the alter date.

While recommending award of a contact to a particular bidder, a justification analysis

should also be prepared.

All payment terms, including advance payments should be mentioned in the bid

documents itself so as to obviate release of any payment out of the purview of contract

later on

Equity & transparency in the bidding and evaluation process are being strictly followed

in NTPC; however certain leakage of data is possible because of involvement of multiple

groups. This aspect needs more attention\

64

Limitations of the study The study suffers from certain limitations like any other research. However, these limitations

cannot have a drastic impact on the analysis and the recommendations of the study as these

limitations are within manageable limits. These limitations are as follows:

The coverage of more information about the requirements of a Procurement Contract was

not highly successful because of the time limit involved in carrying out the project.

High degree of accuracy is doubtful as the fact-finding investigations in this project are

based on given factual information. Hence, an allowance should be made for deviations

and errors because no attempt has been made to check the accuracy and reliability of the

information provided.

It has been assumed that the information provided by the concerned authorities is correct.

Being a purely academic–based project, it has been limited to certain particular areas of

the Finance Concurrence Department which actively participates in the procurement

function

65

CONCLUSION

Contract/Purchase management activities at NTPC are one of the most vital activities

undertaken by the 25000MW Power Giant of India. The process followed by NTPC is found

to be very objective in nature and very professional methods are in vogue.

We have learned the following while studying the system in NTPC:

(a) Advantage of the competition: NTPC tries to take advantage of the

Competition in the field of heavy engineering where foreign manufacturers like MHI, GE etc.

are competing with Indian manufacturers like BHEL and L&T.

(b) Transparency: NTPC being a public sector company & to be free from nepotism and

favoritism has adopted a system where transparency and automation is at their highest levels.

Transparency is achieved by the formation of a multi member bid-opening team and the

bidders submitting their bids in sealed packets where no one knows in advance the quotation

offered by a particular bidder. Automation here signifies that almost all the contracts are

awarded following the same procedures, by awarding the contract to the lowest bidder that is

L1 provided that the lowest bidder qualifies himself technically too. Moreover the bid

documents are available on the website.

(c)Cost reduction: Cost must be reduced by means of optimum utilization of resources and

the resources thus saved can be channelized to more profitable segments. Cost estimation for

the purpose of cost and budgetary control is a very important aspect of learning during our

training in NTPC.

(d)Selection of proper contractor:  While an order is placed for execution of any work, it

must be awarded to a proper contractor. If incapable contractor is chosen, he may not be able

to execute the work on time or he may abandon the work in between which will result in loss

of time, increase of cost and it disrupts the schedule for this package as well as the project

schedule. Hence assessment of capacity and capability of the bidder which includes detailed

financial analysis of his capacity is considered as a very important aspect in the whole

process.

66

Financial statement analysis of the national power thermal corporation shows that firm is

efficient enough to run its day to day business. The liquid ratios of the company i.e. current

ratio, quick ratio, and acid test ratio indicate that NTPC is able to pay its short term bills

without undue stress. This shows that company is liquid enough to meet its day to day

obligations.

The long term ratios i.e. debt equity ratio and interest coverage ratio indicates that NTPC is

easily able to meet its financial leverages. Turnover ratios i.e. inventory turnover, receivables

turnover, asset turnover indicates NTPC id efficiently using its assets to generate sales. Also

the profitability ratios i.e. profit margin, return on equity etc. indicates there is slight fall in

net income of the company. But the earning per share has remained same all the year this

shows the investors side is safe enough.

Over all it can be summarised that NTPC is financially sound i.e. financial position and

profitability of the company is quite acceptable.

67

BIBLOGRAPHY

Books

o “Khan & Jain”- Financial Management

o “I.M PANDEY” - Financial Management

Manuals

o Delegation of Powers Manual of NTPC

o Bidding Documents Sec.-I,II,III,IV,V

o Annual Report of NTPC

o Purchase Management Manual of NTPC

Websites Referred

o www.ntpc.co.in

o www.powermin.nic.in

o www.ntpctender.com

o www.pfc.com

o www.teriin.org

o www.ntpceoc.com

68

APPENDIX:

Financial Results

Audited Financial Results for the Year ended 31st March 2010

(Rs./Lakh)

Sl. Particulars

Stand Alone Consolidated

Quarter ended 31.03.2010 (Unaudited)

Quarter ended 31.03.2009 (Unaudited)

Year ended 31.3.2010 (Audited)

Year ended 31.3.2009 (Audited)

Year ended 31.3.2010 (Audited)

Year ended 31.3.2009 (Audited)

1 2 3 4 5 6 7 8

1 (a) Net Sales (Net of Electricity Duty)

1235339 1144578 4632259 4192373 4825641 4266132

(b) Other Operating Income

37815 74196 189873 217567 193211 226294

2 Expenditure

(a) Fuel Cost 834598 801583 2946274 2711069 3018766 2734645

(b) Employees Cost

74561 62025 241236 246313 252300 253251

(c) Depreciation 73216 72639 265006 236448 289438 249489

(d) Other Expenditure

59606 58984 202710 195209 247117 223864

Total (a+b+c+d)

1041981 995231 3655226 3389039 3807621 3461249

3 Profit from Operations before Other Income, Interest & Exceptional Items (1-2)

231173 223543 1166906 1020901 1211231 1031177

4 Other Income 24950 26709 102533 114668 101483 113893

5 Profit before 256123 250252 1269439 1135569 1312714 11450

Interest & Exceptional Items (3+4)

70

6 Interest & Finance charges

48179 54039 180893 199622 207803 214346

7 Profit after Interest but before Exceptional Items (5-6)

207944 196213 1088546 935947 1104911 930724

8 Exceptional items

- - - - - -

9 Profit(+)/Loss(-) from Ordinary Activities before Tax (7+8)

207944 196213 1088546 935947 1104911 930724

10 Tax Expenses:

(a) Current Tax (9762) (15623) 194544 113834 197908 119430

(b) Deferred Tax

15941 1043 20913 (44880) 22963 (45203)

(c) Fringe Benefit Tax (FBT)

0 585 269 2098 270 2186

Total (a+b+c) 6179 (13955) 215726 71052 221141 76413

Less: Deferred Tax Recoverable / Payable

- 1043 - (44880) - (45215)

FBT transferred to Expenditure during Construction / Development of coal mines

- 84 - 115 (5) 150

Tax Expenses (Net)

6179 (15122) 215726 115817 221146 121478

11 Net Profit(+)/ Loss(-) from ordinary activity after tax (9-10)

201765 211335 872820 820130 883765 809246

12 Extraordinary Items (Net of tax expenses)

- - - - - -

13 Net Profit(+)/ Loss(-) for the year before Minority Interest (11-12)

201765 211335 872820 820130 883765 809246

14 Minority Interest in Consolidated Profit

- - - - - (10)

15 Net Profit (+)/ Loss (-) for the year after Minority Interest (13-14)

201765 211335 872820 820130 883765 809256

16 Paid-up Equity Share Capital(Face value of share Rs. 10/- each)

824546 824546 824546 824546 824546 824546

17 Paid up Debt Capital

3779702 3456775

18 Reserves excluding revaluation reserve as per Balance Sheet

- - 5419196 4912460 5438227 4916208

19 Debenture Redemption Reserve

198672 168894

20 Earning per share - (EPS in Rs.)

(a) Basic and diluted EPS before Extra-ordinary items (not annualised)

2.45 2.57 10.59 9.95 10.72 9.81

(b) Basic and diluted EPS after Extra-ordinary

2.45 2.57 10.59 9.95 10.72 9.81

items (not annualised)

21 Debt Equity Ratio

0.61 0.60

22 Debt Service Coverage Ratio (DSCR)

3.92 3.67

23 Interest Service Coverage Ratio (ISCR)

13.64 10.19

24 Public Shareholding

(a) Number of shares

1278103220 865830000 1278103220 865830000 1278103220 865830000

(b) %age of share holding

15.50 10.50 15.50 10.50 15.50 10.50

25 Promoters and Promoter Group Shareholding

(a) Pledged/ Encumbered

- Number of Shares

- - - - - -

- Percentage of share (as % of the total shareholding of promoter and promoter group)

- - - - - -

- Percentage of share (as % of the total share capital of the company)

- - - - - -

(b) Non-encumbered

- Number of Shares

6967361180 7379634400 6967361180 7379634400 6967361180 7379634400

- Percentage of share (as % of the total shareholding of promoter and promoter group)

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

- Percentage of share (as % of the total share capital of the company)

84.50% 89.50% 84.50% 89.50% 84.50% 89.50%

SUMMARY OF ASSETS AND LIABILITIES AS AT 31st MARCH 2010

(Rs./Lakh)

Particulars

Stand Alone Consolidated

Year ended 31.03.2010 (Audited)

Year ended 31.03.2009 (Audited)

Year ended 31.03.2010 (Audited)

Year ended 31.03.2009 (Audited)

SOURCES OF FUNDS

Shareholders’ Funds:

(a) Capital 824546 824546 824546 824546

(b) Reserves and Surplus 5419196 4912460 5438227 4916208

Deferred Revenue from Advance Against Depreciation

161084 193601 161084 193601

Deferred Income from Foreign Currency Fluctuation

- 60771 - 60765

Loan Funds

(a) Secured Loans 907992 896956 1537654 1321170

(b) Unsecured Loans 2871710 2559819 2877210 2561094

Deferred Foreign Exchange Fluctuation Liability

6105 5452 6105 5445

Deferred Tax Liability (net) after Recoverable

20925 13 22971 13

Minority Interest - 27893 16619

TOTAL 10211558 9453618 10895690 9899461

APPLICATION OF

FUNDS

Goodwill on Consolidation

- - 62 62

Fixed Assets incl. CWIP and Construction Stores & Advances

6686560 5934263 7648609 6589484

Investments 1480709 1398349 1177761 1169596

Deferred Foreign Currency Fluctuation Assets

36517 97344 36525 97349

Current Assets, Loans And Advances

(a) Inventories 334771 324342 353299 336157

(b) Sundry Debtors 665146 358418 708080 381892

(c) Cash and Bank balances

1445948 1627163 1605304 1725045

(d) Other current assets 84404 97946 86804 99336

(e) Loans and Advances 551311 684653 568062 703888

Less: Current Liabilities and Provisions

(a) Liabilities 768758 743907 975798 871909

(b) Provisions 307058 324953 315027 331439

Net Current Assets 2005764 2023662 2030724 2042970

Deferred Expenses from Foreign Currency Fluctuation

2008 - 2009

TOTAL 10211558 9453618 10895690 9899461AUDITED SEGMENT-WISE REVENUE, RESULTS AND

CAPITAL EMPLOYED FOR THE YEAR ENDED 31stMarch 2010(Rs./Lakh)

Sl. Particulars

Stand Alone Consolidated

Quarter ended 31.03.2010 (Unaudited)

Quarter ended 31.03.2009 (Unaudited)

Year ended 31.03.2010 (Audited)

Year ended 31.03.2009 (Audited)

Year ended 31.03.2010 (Audited)

Year ended 31.03.2009 (Audited)

1 2 3 4 5 6 7 8

1 Segment Revenue (Net Sales)

- Generation 1230529 1140489 4616867 4179119 4774989 4227388

- Others 4810 4089 15392 13254 50652 38744

- Total 1235339 1144578 4632259 4192373 4825641 4266132

2 Segment Results (Profit

before Tax and Interest)

- Generation 197550 159674 1015253 905305 1049376 902317

- Others 1664 1522 5816 4184 16085 12811

- Total 199214 161196 1021069 909489 1065461 915128

Less

(i) Unallocated Interest and Finance Charges

28584 31979 111682 208630 138312 220701

(ii) Other Unallocable expenditure net of unallocable income

(37314) (66996) (179159) (235088) (177762) (236297)

Total Profit before Tax

207944 196213 1088546 935947 1104911 930724

3 Capital Employed (Segment Assets - Segment Liabilities)

- Generation 3945020 3383665 3945020 3383665 4373991 3596247

- Others 5445 3226 5445 3226 33623 18185

- Un-allocated

2293277 2350115 2293277 2350115 1883052 2142941

- Total 6243742 5737006 6243742 5737006 6290666 5757373