My SIP ppt.

8/3/2019 My SIP ppt.

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PRESENTED BY-:DEVENDRA PRASAD MUDULIRegd.No. - 0941333118CORPORATE GUIDE: FACULTY GUIDE:

Mr. NILAMANI MOHAPATRA Mr. SANJIB PATTNAIKSr. Manager (Finance) Asst. Prof. (Fianance)


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INTRODUCTION TO ORISSA POWERGENERATION CORPORATION LTD.

Orissa Power Generation Corporation Limited (OPGC) was

incorporated as a wholly owned Government Company on November

14, 1984 under the Companies Act 1956. In the pursuit of its

objective, OPGC established IB Thermal Power Station having two

units of 210 MW each in the Ib valley area of Jharsuguda District in

the State of Orissa. These Units have become operational since

1994 (1st Unit) and 1996 (2nd Unit) respectively.


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RATIONAL OF THE PROJECT..

In order to access the performance of OPGC ltd I have done mystudy in the way as Du Pont analysis. The study focuses on the

calculation of Return on Equity of OPGC ltd. The amount of net

income returned as a percentage of shareholders equity.Return on equity measures a corporations profitability by

revealing how much profit a company generate with the money

shareholders have invested. ROE is expressed as a percentage

and calculated as:

Net Profit

ROE -: _______________

Shareholders Equity


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OBJECTIVE OF THE STUDY..

To compute the profit margin of OPGC ltd. in order to haveinsight view of financial strength and weakness.

To find out the current financial position of OPGC.

To find out the assets turnover of the firm over a period.To find out the equity multiplier of the firm.

To find out whether OPGC has control over its business or not.

To know the strength of the company which is fulfilling itsobligations or not.

To make recommendations that may be useful for thecompany.


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Research Design..

SAMPLING -:

Unitary sampling method was adopted as per the convenience of theresearcher.

DATA SOURCES -:

Both primary and secondary data was collected for carrying out the study.Primary data included discussions with various managers of OPGC ltd. Thesecondary data was comprised of Annual reports of OPGC ltd and articlesfrom websites as well as journals.

TIME FRAME OF THE STUDY-:

The research work has been based upon the data with a time frame from 2004-05to 2008-09.

TOOLS AND TECHNIQUES ADOPTED -:Du Pont analysis

Ratio analysis

Trend analysis

Various pictorial representations like: Bar diagram, pie chart etc.


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DATA ANALYSIS

Return on Equity is based in multiple of three aspects as profit margin, assets

turnover and Equity multiplier. So first of all we have to calculate each part. Thesecalculations are as below:

1)Profit Margin considers the profit after tax in relation to the sale of power ofO.P.G.C. This shows the total profit left after payment of tax in relation to the saleof power.


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INTERPRETATION:

In the year 2004-05, the profit margin is 34.8%.In the year 2005-06, the profit margin has come down to a small that is

34.4%. This year the profit margin has come down because the sales of thecompany has increased as well as the company has paid a small no. Ofincrease in TAX.

In the year 2006-07, the profit margin has increased to 37.9%. This year theprofit margin has increased because the sales as well as the profit haveincreased. But in this year the payment of tax has decreased and the saleshave decreased.

In the year 2007-08, the profit margin has also increased to 38.9%. But inthis year the profit has decreased as well as the sales also decreased.

Because this year the tax proportion has more.In the year 2008-09, the profit margin has decreased to 27.9%. In this yearthe profit has decreased and in the same as the sales also decreased.Because this year the tax proportion has more as the sales has less.


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2)The asset turn over considers the sale of power in relation tothe total assets. This shows the total sales of the company inrelation to the assets in the hands of the company.

49.2%

51.9%48.4%

40%36.9%


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INTERPRETATION:

In the year 2004-05, the Asset turnover is 49.2%. In this year theutilization of assets has approximately well.

In the year 2005-06, the Asset turnover is 51.9%. This year the assetturnover is more as compare to 2004-05 because the sales of thecompany in this year have increased and the holding of assets isdecreased.

In the year 2006-07, the Asset turnover is decreased to 48.4%. Why thisyear the asset turnover is less because the sales of the company haveincreased as well as the holding of the assets is also increased.

In the year 2007-08, the Asset turnover has also decreased to 40%.Because the sales of the company has decreased and the holding ofassets has decreased.

In the year 2008-09, the Asset turnover has also decreased to 36.9%.Because the sales of the company in this year has also decreased andthe holding of assets has increased.


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3) Equity multiplier considers the total assets in relation to the share holders fund.This shows the amount of assets in the hands of the company, whether it hasincreased or decreased in relation to the funds belonging to the share holders. Thisratio shows a company's total assets per amount of shareholders' equity. A higherequity multiplier indicates higher financial leverage, which means the company isrelying more on debt to finance its assets.

130.3% 130.8% 116.2% 112.7% 113.5%


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INTERPRETATION:

In the year 2004-05, the Equity multiplier has 130.3%.

That means the company uses its debt to finance its assets in this year.

In the year 2005-06, the Equity multiplier has increased to 130.8%. Thatmeans the company is relying more on debt to finance its assets verywell.

In the year 2006-07, the Equity multiplier has decreased to 116.2%. Thatmeans in this year the holding of assets has increased as well as the

share holders fund has also increased. So in this year the company is notrelying more on debt to finance its assets very well.

In the year 2007-08, the Equity multiplier has also decreased to 116.2%.That means in this year the holding of assets has also increased as andthe shareholders fund has decreased.

In the year 2008-09, the Equity multiplier has a shot increased to113.5%. That means in this year also the holding of assets hasdecreased as well as the shareholders fund has also decreased.


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Return on Equity= Profit margin

Asset Turn over Equity Multiplier


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INTERPRETATION:

In the year 2004-05, the ROE of the company has 22.3%.

In the year 2005-06, the ROE of the company has increasedto 23.3%.

In the year 2006-07, the ROE of the company has decreased21.3%.

In the year 2007-08, the ROE of the company has alsodecreased to 17.5%.

In the year 2008-09, the ROE of the company has also

decreased to 11.7%.


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FindingsBy studying the OPGCs Return on Equity, it was found that:-

The profit margin of OPGC ltd. was rapidly increasing but in the year2008-09, it has decreased due to the keeping of provision for

depreciation.

The asset turnover of OPGC ltd. has not been constant every year due

to less use of the existing assets.

The equity multiplier of OPGC ltd. May have decreased due to the

purchasing of new assets or due to the less use of existing assets as

well as the increase in share holders fund.

The return on equity of OPGC ltd. has also come down year by year

due to less use of funds of share holders.


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Suggestions.......

The profit margin will increase if OPGC ltd. will keep less provision of

depreciation and use its assets in a frequent manner.The asset turnover of OPGC ltd. can be increased by using itsassets very well.

The return on equity can be increased if OPGC ltd. will use the fundsof share holders in the best possible way.

The existing accounting system that OPGC uses in the preparationand compilation of Du Pont analysis is fair to some extent but as pertoday's scenario, with the evolution of the International FinancialReporting Standards (IFRS) accounting system, the former isoutdated. So OPGC should change the accounting system for the

preparation and compilation of final Accounts as soon as possible.


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Conclusion.......

After examining and studying the trend in Du Pont analysis ofOrissa Power Generation Corporation Ltd., we find that the

organization follows all the necessary amendments needed for thepreparation of Du Pont analysis of the company registered underthe Companies Act, 1956. The return on equity over the period ofanalysis showed a satisfactory trend. This can be thought of asproper management of the share holders fund by OPGC ltd. Theanalysis of asset turn over leads us to believe that the organisation

is constantly having a watch over the use and replacement of itsproductive assets.

OPGC ltd. , even though is a public sectororganisation , is well versed with the latest developments inproduction technique as well as accounting practices. This can be

looked upon as a contrary to the public sector undertakings in India.Through the analysis and findings of this project, it

can be concluded that OPGC is nurtured in the right direction by itsmanagement as well as employees and will continue to be a rolemodel for other public sector undertakings in the future.


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My SIP ppt.

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