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ACKNOWLEDGEMENT I am extremely grateful to all the employees SSTPS/NTPC who have helped me in completing my training here. Their Guidance has helped me in completing my training here and enabled me to gain knowledge about the financial position of organization.

I shall forever remain indebted to my project guide, who given me his valuable guidance & precious time. He had been a constant source of inspiration all throughout my project work been able to complete my project successfully.

I am also very thankful the officers of finance department who have helped me in completing my project.

                 

                           

PREFACE

I choose SSTPS as my Organization for study as it has number one position in generation and a flagship stations of NTPC, a ‘Navaratna

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Company’

During the introductory phase when I was being introduce my guide the whole personals and administrations department of NTPC/SSTPS, I came to know much about financial positions only through ‘annual reports of different year’s of NTPC, & with help of journals.

I know much more under guidance of ‘finance manager’. I decided working capital management of organization as my subject. My work is totally concerned with collecting the facts, figures and then compiling them so as to know what is the working capital position of organization (NTPC, SSTPS).

CONTENTS

S. No Subject

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1 INTRODUCTION TO POWER SECTOR 2 BUSINESS OVERVIEW

3 MANAGEMENT OF NTPC 4 CORPORATE OBJECTIVE

5 FINANCIAL DEPARTMENT IN NTPC 6 OBJECTIVE'S OF RESEARCH 7 RESEARCH METHODOLOGY 8 WORKING CAPITAL MANAGEMENT IN NTPC A PROSPECTIVE. 9 CASH MANAGEMENT IN NTPC10 INVENTORY MANAGEMENT IN NTPC11 MANAGEMENT OF ACCOUNT IN NTPC12 LOAN & ADVANCES IN NTPC13 CURRENT LIABILITES IN NTPC14 LIMITATION15 CONCLUSION16 SUGGESTION

17 BIBLIOGRAPHY

INTRODUCTION TO POWER SECTORAt the time of independence in 1947, India had a meagre power generating capacity of 1,352 MW which has since increased to 155,859 MW as of November 30, 2009. After independence, electricity was made subject to the concurrent jurisdiction of the

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state and central governments; although Parliament was given the ability to exercise pre-emptive power. The Electricity (Supply) Act, 1948 (the “Supply Act”) led to the creation of the SEBs. The SEBs is state government agencies with the sole responsibility for generation, transmission and distribution of electricity within each state. Many of the SEBs have since been unbundled into state utilities for generation, transmission and Distribution. As of November 30, 2009, the SEBs and the state utilities own or control approximately 50.3% of India's total generating capacity and have substantial control of most of the distribution assets. The MoP is primarily responsible for the development of the power industry in the country.

The GoI has made a series of investments to develop the power sector in India, to supplement the efforts of the states. In 1975, the GoI created NTPC (known then as National Thermal Power Corporation Ltd.) and NHPC Limited (“NHPC”) to establish thermal and hydro generating plants andto install associated interregional transmission systems. In the same year, the GoI established the CEA in its present form to develop a uniform national power policy. Later, NEEPCO, Satluj Jal Vidyut Nigam Limited – SJVN (formerly Nathpa Jhakri Power Corporation Limited - NJPC) and THDCLimited (formerly known as Tehri Hydro Development Corporation Limited) (“THDC”) were incorporated as hydro power generating companies in the Central Sector. In 1992, the GoI established the central entity known

Today as the Power Grid Corporation of India Limited ("PGCIL") to construct, operate and maintain inter-state and interregional transmission systems. These entities are collectively referred to as the Central Power Sector Utilities ("CPSUs") and are directly accountable to the MoP. The MoP also controls the Power Finance Corporation Limited (“PFC”) and Rural Electrification Corporation Limited (“REC”), both of which are intended to help channel

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investment into the power sector. PGCIL, NTPC and PFC promoted India’s first power trading company .PTC India Limited (“PTC”) in 1999, to allow surplus power supplies to be efficiently traded to utilities with deficit power supplies.

To supplement public sector investment, the GoI took steps in 1991 to attract private investment to the power industry. The GoI permitted 100% foreign ownership of power generating assets and provided assured returns, a five-year tax holiday and low equity requirements. Some private generators were also furnished with counter-guarantees against non-payment of dues by SEBs.Through successive Five Year Plans; the GoI implemented a major expansion of generating assets. From 1982, when NTPC's first project was commissioned, to November 2009, India's total installed capacity increased from 35,781 MW to 155,859 MW, representing a compound annual growth rate of 5.46%. In addition, captive generation capacity at the end of Fiscal 2009 was approximately 19,509 MW. The transmission and distribution network has been expanded so as to keep pace with the capacity expansion plans.

India has total power generation capacity of 155,859 MW as of November 30, 2009. The power industry in India has been characterized by energy shortages. In Fiscal 2009, there was a shortage of 11.1% in terms of total energy requirements and 11.9% in terms of peak demand requirements.

During the period of April 1, 2009 to November 30, 2009, the peak demand deficit rose to 12.6% and energy shortages came down to 9.6%. The total energy shortage during this period was 86,001 million units and India’s peak demand deficit during the same period was 13,024 MW. The low per capita consumption of electric power in India compared to the world average presents a significant potential for sustainable growth in the demand for electric power in India.

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Although power generation capacity has increased substantially in recent years, it has not kept pace with the continued growth of the Indian economy, despite very low per capita electricity consumption. India has one of the lowest electricity consumption levels in the world, at 704.2 units per capita in 2007-08, due in part to unreliable supply and inadequate distribution networks.

To address the persistent shortages, the GoI has taken significant action to restructure the industry, attract investment and plan for fast track capacity addition through incentivised policy initiatives. These included measures such as restructuring the SEBs to improve their financial condition, and regulatory and policy intervention such as the Electricity Act, the National Electricity Policy 2005, the Tariff Policy 2006, Tariff Based Bidding Guidelines 2005 and the National Hydro Policy 2008, among others. The GoI has also liberalised policies relating to the transmission and distribution sectors.

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INTRODUCTION TO NTPC

NATIONAL THERMAL POWER CORPORAION LTD .

The year 1975 witnessed the birth of an

organization that went on to achieve great feats

in performance in a sector that was, until then,

characterized largely by lack of investment,

severe supply shortage and operational

practices that made the commercial viability of the sector

unsustainable. On November 7 1975, NTPC came into being and

with it came a bold way of looking at the power infrastructure that

could support the economy, then reeling under the oil crisis. Since

then, NTPC has led the power sector with the creation of an

immensely efficient and reliable power generation infrastructure

which was till then largely in the hands of state electricity boards.

NTPC was set up in the central sector to build, own and operate large

thermal power stations which unit size of 200 MW and 500MW.

Capacity addition by NTPC was meant to supplement the efforts of

state electricity boards (SEBs). The first four projects, namely,

singrauli, Korba, Ramagundam, Farakka, in four different regions of

the country, were already on the drawing board and were to be set

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up as pit-head stations. There were challenges aplenty. The

expectations were high and so were the risks. NTPC symbolized

hope of the country suffering from crippling power black-outs, the

government of India, which was trying to put an ailing, economy

back on track and the World Bank, which was supporting the country

in many development initiatives. Thus, NTPC was created not only to

redraw the power map of India but also to excel in its performance

and set benchmarks for others to follow. It succeeded on both

counts. In 1978 it was a clean state. Until the first sketches of an idea

were scribbled on it. And them, in no time, it seems, what was a

dream became a reality –power. Today, Singrauli stands tall among

India’s foremost power plants. Cleared by the Government of India

on 8th Dec.76, the project began to take shape in early’78. An

intrepid group of site engineers, supervisors and workmen braved

the elements to lay the foundations of what at the time was thought

to be a dream.

By mid 1978, the first T.G raft connecting, a very precise and

massive task was completed. By Nov. 78, the erection of the first

steam generator had commissioned. In Nov.’79, the first major mile-

stone in the erection of the main plant was reached with the boiler

drum of unit – I being lifted successfully, signaling the

commencement of pressure parts erections. By June’80 the turbine

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installation work had already begun, and in Sept.’81, the boiler was

lit up and the cleaning process completed by Oct.’81.

Finally on 13th Feb.’1982 the turbine was steam rolled and the first

unit of NTPC was successfully synchronized with the Northern Grid at

Shaktinagar. The peak load of 200MW was touched in April’82. The

fifth and last one on 20th Feb.’84, bringing the curtain down on stage

–I of the project. National Thermal Power Corporation is the largest

power generation company in India. The Forbes Global 2000 ranking

for 2005 ranks it as the 5th leading company in India and the 486th

leading company in the world. It is a public listed (Bombay Stock

Exchange) Indian public sector company, with majority shares owned

by the Government of India. India. At present, Government of India

holds 89.5% of the total equity shares of the company and the

balance 10.5% is held by FIIs, Domestic Banks, Public and others.

NTPC ranks amongst the top five companies, in terms of market

capitalizations.NTPC's core business is engineering, construction and

operation of power generating plants and also providing consultancy

to power utilities in India and abroad. As on date the installed

capacity of NTPC is 26, 404 MW through its 14 coal based (21,395

MW), 7 gas based (3,955 MW) and 4 Joint Venture Projects (1,054

MW).

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NTPC’s share on 31 Mar 2007 in the total installed capacity of the country was 19.51% and it contributed 27.68% of the total power generation of the country during 2007-08. Thus, every fourth home in India is enlightened by NTPC. A total of 170.88 BUs of electricity was produced across all the stations of the company in the financial year 2005-2006.

The Net Profit after Tax on March 31, 2008 was INR 58, 202 million. Net Profit after Tax for the quarter ended June 30, 2006 was INR 15528 million, which is 18.65% more than the same quarter in the previous financial year (2006-2007) where the profit was INR 13087 million. Pursuant to special resolution passed by the Shareholders at the Company’s Annual General Meeting held on September 23, 2005 and the approval of the Central Government under section 21 of the Companies Act, 1956, the name of the Company "National Thermal Power Corporation Limited" has been changed to "NTPC Limited" with effect from October 28, 2005.

The company, which has completed its thirty years of existence on November 7, 2008, has made its foray into hydro-power and is planning to go into nuclear too). Within a span of 31 years, NTPC has emerged as a truly national power company, with power generating facilities in all the major regions of the country. Based on 1998 data, carried out by Data monitor UK, NTPC is the 6th largest in terms of thermal power generation and the second most efficient in terms of capacity utilization amongst the thermal utilities in the world

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Coal Based Power Stations

Coal based State Commissioned

Capacity(MW)

1. Singrauli Uttar Pradesh 2,000

2. Korba Chattisgarh 2,100

3. Ramagundam Andhra Pradesh 2,600

4. Farakka West Bengal    1,600

5. Vindhyachal Madhya Pradesh 3,260

6. Rihand Uttar Pradesh    2,000

7. Kahalgaon Bihar 1,340

8. NTCPP Uttar Pradesh 840

9. Talcher Kaniha Orissa  3,000

10. Unchahar Uttar Pradesh 1,050

11. Talcher Thermal Orissa 460

12. Simhadri Andhra Pradesh 1,000

13. Tanda Uttar Pradesh 440

14. Badarpur Delhi 705

15 Sipat Chattisgarh 500

Total (Coal) 23395

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Gas/Liq. Fuel Based Power Stations

Gas based State Commissioned

Capacity(MW)

16. Anta Rajasthan 413

17. Auraiya Uttar Pradesh 652

18. Kawas Gujarat 645

19. Dadri Uttar Pradesh 817

20. Jhanor-Gandhar Gujarat 648

21. Rajiv Gandhi CCPP

Kayamkulam Kerala 350

22. Faridabad Haryana 430

Total (Gas) 3,955

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Projects under Implementation

  Coal / Hydro State Fuel

Additional Capacity Under Implementation

(MW)

1. Kahalgaon Stage II (Phase I) (Phase II)

Bihar Coal500500

2. Sipat (Stage I) (Stage II) Chhattisgarh Coal19801000

3. Barh Bihar Coal 1980

4. Bhilai (Exp. Power

Project-JV with SAIL)Chhattisgarh Coal 500

5. Korba (Stage III) Chhattisgarh Coal 500

6. Farakka (Stage III) West Bengal Coal 500

7. NCTPP (Stage II)Uttar

PradeshCoal 980

8. Simhadri (Stage II)Andhra Pradesh

Coal 1000

9. Koldam (HEPP)Himachal Pradesh

Hydro 800

10. Loharinag Pala (HEPP) Uttarakhand Hydro 600

11. Tapovan Vishnugad

(HEPP)Uttarakhand Hydro 520

Total (Coal + Hydro) 11,360

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Subsidiary Companies

1. NTPC Vidyut Vyapar Nigam Limited has been incorporated as a

wholly owned subsidiary of NTPC to tap the vast potential of

Power Trading for optimization of capacity utilization.

2. NTPC Hydro Limited has been incorporated as a wholly owned

subsidiary of NTPC for development of small and medium scale

hydro power projects.

3. NTPC Electric Supply Company Limited has been incorporated

as a wholly owned subsidiary of NTPC for taking up power

distribution activities.

4. Pipavav Power Development Co. Ltd. has been incorporated

under Presidential Directive to acquire land and other site-

related development activities to set up 2000 MW Pipavav

Mega Power Project in the state of Gujarat.

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Joint Venture Companies

1. Utility Powertech Limited a 50:50 Joint Venture Company of

NTPC and Reliance Energy Limited has been incorporated to

take up assignments of construction, erection and supervision

in power sector and other sectors in India and abroad.

2. NTPC-Alstom Power Services Private Limited a 50:50 Joint

Venture Company of NTPC and Alstom Power Generation AG,

Germany has been incorporated for taking up renovation and

modernization assignments of power paints both in India and

abroad.

3. NPTC India Ltd., in which NTPC holds 8% equity, is engaged in

the business of purchasing power from power projects and

selling the same to SEBS requiring power.

4. NTPC-SAIL Power Company Private Limited – a 50:50 Joint

Venture of NTPC and SAIL is operating and maintaining the

Captive Power Plants (CPP-II) of Durgapur and Rourkela Steel

Plants (120 MW each).

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5. Bhilai Electricity Supply Company Private Limited – another

50:50 Joint Venture company of NTPC and SAIL is operating and

maintaining the CPP-II (74 MW) of Bhilai Steel Plant. The

company is also setting up 2 x 500 MW units as expansion of

the CPP.

6. NTPC Tamil Nadu Energy Company Limited – a 50:50 Joint

Venture company of NTPC and Tamil Nadu Electricity Board has

been incorporated to establish and operate a 1000 MW

thermal power project in Tamil Nadu.

7. vii) Ratnagiri Gas and Power Private Limited a Joint Venture

Company which has taken over the assets of Dabhol Power

Project from India Lenders. Currently, each of NTPC, GaAIL and

Financial Institutions are holding 28.33% equity share capital of

the Company and MSEB is holding balance 15%.

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Power plant managed by NTPC

Badarpur Thermal Power Station (with a total installed capacity of 705 MW) is being managed by NTPC on behalf of the GoI since April 1978. BTPS supplies its entire generation to Delhi. The station generated 5463 MUs during 2004-05.

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BUSINESS - Overview

We are the largest power generating company in India. As of September 30, 2009, our owned installed power generating capacity is approximately 18.6% of India's total installed capacity. InFiscal 2009, we contributed 28.6% of the total power generation of India. (Source: CEA). In 2009, we were the top IPP in Asia, and ranked second in the world, on the basis of asset worth, revenues,Profits and return on invested capital, according to a study conducted by Platts, a division of the McGraw-Hill Companies. Prior to this Offer, the GoI owns approximately 89.5% of our Equity ShareCapital. As of September 30, 2009, our total installed power generation capacity was 30,644 MW, including 28,350 MW of generation capacity through 112 units owned by us and 2,294 MW of capacity through two joint venture companies. Of our owned capacity, 86.0% is coal-based, operated through 15 coal based power stations, and 14.0% is gas-based, and operated through seven gas-based power stations (including one naphtha-fired station). In Fiscal 2009, we generated 206.9 billion units of electricity through our owned stations.

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We operate our stations at a level of efficiency that exceeds the average in India, based upon availability factor (which is a measure of how often a station is available to generate power) and average plant load factor (“PLF”) (which is a measure of how much of its capacity a plant actually uses to generate electricity). In Fiscal 2009, our coal-based stations operated at an average availability factor of 92.5%, and they achieved an average PLF of 91.1%, compared to the all-India average PLF for coal-based stations of 77.2%. In Fiscal 2009, of our 15 coal-based power stations, four operated at a PLF of greater than 95.0% and one operated at a PLF of 99.4%. In Fiscal 2009, our gas-based stations operated at an average availability of 86.7% and an average PLF of 67.0%, compared to the all-India average PLF for gas-based stations of 57.6%. PLF of our gas-based stations has improved to 78.4% in the first half of Fiscal 2010 due to increased gas availability. Our average selling price of electricity was Rs. 2.12 per unit in Fiscal 2009. We have developed a long term technology roadmap for the induction of high efficiency equipment,Including supercritical and ultra-supercritical machines at our new plants. We also intend to use other advanced technologies in the renovation and modernisation of our aging power stations. We believethat these technologies will help us to achieve higher efficiency and availability. As of September 30, 2009, we have added 3,240 MW during the Eleventh Plan, and we are presently engaged in construction activities for projects representing 17,930 MW (including 4,000 MW undertaken by our joint venture companies). We are also pursuing a basket of projects for approximately 33,000 MW of capacity which are in various stages, including projects for which tender has been invited, a FR prepared, or a FR is under preparation and approval, in order to achieve our stated goal of 75,000 MW capacity by Fiscal 2017. We take up new projects upon establishing the availability of inputs such as land, water, fuel, off-take arrangements and environmental clearances. We have begun to progressively diversify our fuel mix. We are currently constructing hydroelectric power projects. As of September 30, 2009, 1,920 MW of capacity is under construction and 552 MW is under bidding. We

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are also preparing FRs and detailed project reports for hydroelectric power projects to achieve hydroelectric capacity of approximately 9,000 MW by Fiscal 2017. We are also seeking other renewable energy projects, such as wind and solar, to have 1,000 MW of our generating capacity from other renewable sources by Fiscal 2017.Currently, all of our total sales of electricity are made pursuant to long term PPAs. More than 90% of our sales of electricity are to SEBs and state owned distribution companies for which payments areSecured through LCs and the Tripartite Agreements (“Tripartite Agreements”). For private distribution company customers, payments are secured through letters of credit backed by a firstCharge created on their receivables in our favour. In order to capitalize on the opportunity from the sale of merchant power, we are implementing 2,120 MW of power projects, as merchant power plants for selling power outside long-term PPAs at a market-based price. As provided by the National Electricity Policy, 2005, up to 15% of new generating capacity may be sold outside long-term PPAs.However, some of the power generation from our merchant capacity may also be sold under PPAs. As of September 30, 2009, we have signed long term CSAs covering 12 of our 15 coal-based stations.We have also executed gas supply agreements with GAIL for the supply of gas for our gas-based power stations, which are valid up to 2021. We are also continuing to diversify our business to become an integrated power company. In order to secure our fuel supply, we have diversified into coal mining. We have been awarded eight coalsMining blocks by the GoI, including two blocks awarded for development under a joint venture with Coal India Limited. In 2002 we incorporated our power trading subsidiary, NVVN, which has grown to become the second largest power trader in India. In order to incentivize the development of solar power in India, the GoI has designated NVVN as the nodal agency for the purchase of up to 1,000 MW of solar power commissioned by Fiscal 2013 under the National Solar Mission and sale after bundling an equivalent MW capacity from our stations. We have developed a consulting business to leverage our technical and operational skills and knowledge base,

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domestically and internationally. Total revenues from our consulting business has increased to Rs. 1,325 million in Fiscal 2009 from Rs. 341 million in Fiscal 2004. Through our consulting business we are currently supporting capacity addition, operation and maintenance,Renovation and modernisation and performance improvement of approximately 26,000 MW of generating capacity in India. The other businesses we are developing include equipment manufacturing, to ensure supply of critical equipment and spare parts, and an electricity distribution business. In line with the increase in our supply and generation capabilities over the last two years, we have achieved significant growth in our gross income and profit after tax. Our gross revenue increased to Rs. 452,728 million in Fiscal 2009 from Rs. 400,177 million in Fiscal 2008. Our profit after tax was Rs. 82,013 million in Fiscal 2009 and Rs. 74,148 million in Fiscal 2008.

Demand OF POWERDemand for energy grows in tandem with the growth of the economy. This can be seen from the following table, which shows the growth in real GDP from Fiscal 2003 through Fiscal 2009 and the growth in demand for energy in the same period.Real GDP Growth and Growth in Demand for EnergyFiscal Year Real GDP growth Growth in Demand for Energy 2003 3.8% 4.5% 2004 8.5% 2.4% 2005 7.5% 5.7% 2006 9.5% 6.8% 2007 9.7% 9.3% 2008 9.0% 7.1% 2009 6.7% 4.7%

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Future Electric Energy Requirements Fiscal Year Electrical Energy Requirement at Annual Peak Power Station Bus Bars (GHz) Electric Load at Power Station ) Bus Bars

2012 968,659 152,746 2017 1,392,066 218,209 2022 1,914,508 298,253

CAPACITY ADDITION PROGRAMME

At India’s current projected GDP growth rate of between seven and eight percent, power demand is expected to grow significantly. We expect that a large energy deficit will exist as has occurred in the past. We have embarked on an aggressive capacity addition program, in line with the GoI’s policy of adding capacity to meet the demands for energy in India. We have a stated goal to be a 75,000 MW company by Fiscal 2017. We have also begun to progressively diversify our fuel mix. We are planning a capacity addition of approximately 9,000 MW through hydroelectric power, 2,000 MW Through nuclear power and1, 000 MW through renewable energy resources by 2017. We have adopted a multi-pronged strategy that includes capacity addition through green field projects, brown field expansions, joint ventures and acquisitions. We first identify new potential sites or existing sites that could potentially be expanded. We then seek to establish project viability through FRS.

We currently have 17,930 MW of additional capacity under construction. We have also identified a basket of projects for

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approximately 33,000 MW of capacity in various stages, through which webelieve we can achieve our stated goal of 75,000 MW capacity by Fiscal 2017. We classify our basket of projects for capacity in the following categories:• Projects under construction• Projects for which we have invited bids from vendors• Projects for which the FR s are approved• Projects for which FRs are under preparation.

Projects under constructionWe are presently engaged in construction activities for projects representing 17,930 MW, including 4,000 MW undertaken by joint venture companies, which are in different stages of completion:

Projects under construction - owned capacity Name State Cap (MW) Approved Cost (Rs. In Mill) Fuel TypSipat -I* Chhattisgarh 1,980 83,234 CoalBarh –I* Bihar 1,980 86,930 CoalKorba- III Chhattisgarh 500 24,485 CoalNCTPP- II Dadri UP 980 51,353 CoalFarakka-III W.B. 500 25,704 CoalSimhadri-II A.P. 1,000 50,385 CoalBongaigaon Assam 750 43,754 CoalBarh-II* Bihar 1,320 73,410 CoalMauda-I Maharashtra 1,000 54,593 CoalRihand-III U.P. 1,000 62,308 CoalVindhyachal-IV M.P. 1,000 59,150 CoalKol Dam H.P. 800 45,272 HydroLoharinag Pala Uttarakhand 600 28,951 HydroTapovan Vishnugad Uttarakhand 520 29,785 HydroSubtotal-owned (A) 13,930 719,314

*Indicates projects using super-critical technology

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#Unit I (490 MW) of this project commenced commercial operation w.e.f. January 31, 2010

Projects under construction - joint venturesName of Project State Capacity Fuel TypeVallur – I, Phase – I, JV with TNEB Tamil Nadu 1,000 CoalVallur – I, Phase – II, JV with TNEB Tamil Nadu 500 CoalIndira Gandhi STPP Haryana 1,500 CoalNabinagar, JV with Railways Bihar 1,000 CoalSubtotal-joint ventures (B) 4,000Total-owned and joint ventures (A+B) 17,930

Projects for which we have invited bids from vendors

Projects for which we have invited bids from vendors owned capacityName of Project State Capacity (MW) Fuel TypeSolapur Maharashtra 1,320 CoalMauda II Maharashtra 1,320 CoalNorth Karanpura Jharkhand 1,980 CoalSingrauli III Uttar Pradesh 500 CoalRupsiyabagar Khasiabara Uttarakhand 261 HydroRenewable Energy Various Locations 100 WindSubtotal-owned capacity (A) 5,481

Projects for which we have invited bids from vendors- joint ventures and subsidiariesName of Project state capacity (MW) fuel typeMeja Urja Nigam Pvt. Ltd. Uttar Pradesh 1,320 CoalNabinagar Power Generating Co Pvt. Ltd. Bihar 1,980 CoalKanti Bijlee Utpadan Nigam Limited Bihar 390 CoalLata Tapovan Uttarakhand 171 HydroRammam-III West Bengal 120 Hydro

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Subtotal-joint ventures and subsidiaries (B) 3,981Total-owned and joint ventures andsubsidiaries (A+B)

Growth Strategy Total Installed capacity envisaged• Multi pronged approach to 1982- 200mwCapacity addition• Greenfield projects 1987- 3100mw• Brownfield expansion• Joint ventures / 1992- 11333mwAcquisitions• Diversification in related 1997- 16795mwbusiness areas• Hydro projects 2002- 20249mw• Coal Mining• Power trading 2006- 2500mw• Oil / gas exploration • LNG value chain 2007- 28890mw• Consultancy services 2012- 40000mw

2017- 75000mw

ENERGY TECHNOLOGIESNTPC has set up Energy Technologies Centre with a well-defined mandate to develop and innovate cutting edge technologies to meet the ever-changing scenario in power sector. The centre is working in both fundamental and applied fields with the ultimate objective of commercializing the technologies both within and outside. Setting up of this centre by NTPC meets a long-term need of such a centre in the power sector in India. Energy Technologies has already started its research activities in-house and through networking with established research institutes in India.

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ENVIRONMENT MANAGEMENT• All NTPC stations have been certified with ISO-14001 by reputed International certifying agencies.• NTPC has planted a total of more than 18.2 Million trees tillMarch-07 including more than 0.28 million trees planted during the current year 2006-07

ASH UTILIZATIONwe are required to ensure that by 2014, 100% of fly ash produced through our generation activities is gainfully utilised. New stations and units must utilize the entire quantity of ash they produced in four years from the date of commissioning. The GoI also has interim ash utilisation requirements. Our actual ash utilisation has increased from 0.3 million tonnes in Fiscal 1992 to 24.4 million tonnes in Fiscal 2009 (or 56.7% of our total ash production) which is more than the present ash utilization targets. We utilize ash for ash dyke rising, mine filling, bricks/blocks/tiles manufacturing and landfills.At present, we supply ash free of cost to consumers of ash, who use it in cement and asbestos industry, building products, land development and road construction. In order to provide fly ash in dry form to various users, dry ash extraction facilities have been provided at all our stations. Recently, the GoI has allowed sale of fly ash to certain users such as cement and asbestos industries, etc. However, the proceeds from the sale of fly ash are to be utilized only for development of infrastructure and promotional activities for ash utilisation. The GoI has given directions to mining companies and theConstruction industry for mandatory use of ash. We believe that these directions may further increase ash utilisation

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CORPORATE SOCIAL RESPONSIBILITY (CSR)We follow the global practice of addressing Corporate Social Responsibility (CSR) issues in an integrated multi stake-holder Approach covering the environment and social aspects. We have joined Global Compact, a United Nations initiative for corporate social responsibility committed to basic principles in the areas of human rights, labour standards, the environment and anti-corruption, and we submit Communication on Progress (“COP”) to UN Global Compact on an annual basis. In line with our CSR – Community Development (CSR – CD) Policy, we have taken up various activities addressing the socio-economic issues at the national level as well as in the neighbourhood area of operating stations. We currently work in the areas of Primary Education, Community Health, Basic Infrastructure Development and Vocational Training. We also facilitate distributed generation, which involves the use of non-conventional energy sources to provide electricity to remote and rural areas. We have also set up NTPC Foundation to help the physically challenged and other marginalized communities. This foundation has set up information and communication technology centres for the visually challenged, provided management services to a rehabilitation centre, and is running observable treatment centres for tuberculosis patients.

SAFETYLooking into the necessity and to ensure the best health and safety performance and the accident free environment, all NTPC Projects/ Stations have obtained the OHSAS – 18001 (Occupational Health & Safety Management Systems) certification. NTPC Ramagundam, Dadri, Kahalgaon and Korba station have won the first “Safety Innovation Award 2006” for implementing innovative, Safety and Quality Procedures and Practices. The award is instituted by the Safety and quality forum of Institution of Engineers (India). The award has been conferred to Ramagundam for second year in

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succession.

HUMAN RESOURCE MANAGEMENTOur success depends to a great extent on our ability to recruit, train and retain high quality professionals. We believe that our strong brand name, industry leadership position, wide range of growth opportunities and focus on long-term professional development give us significant advantages in attracting and retaining highly skilled employees. We follow a “people first” approach to leveragethe potential of our employees. In 2009, we were ranked as one of the top 10 Best Companies to work for by the Great Place to Work and Economic Times survey. We have 24,979 employees as ofSeptember 30, 2009, including employees in our subsidiaries and joint ventures. We encourage our employees to develop management and technology skills through internal training programmes, industry affiliations and external programmes. For continuous honing of these skills we maintain development and assessment centres, comprehensive feedback mechanisms and a number of other learning initiatives including e-learning. As a part of our commitment to training, we have set up the Power Management Institute (PMI), which is a training centre for our middle and senior level management personnel.

TRAINING AND DEVELOPMENTThe Power Management Institute (PMI), NTPC’s apex Training and Development Centre conducted 325 training programmes, the number of participants trained both internal and external was 8689. In its effort to go global PMI has organised an international seminar on “Developing Global Business Competencies” at Manchester Business School, UK. In its effort to provide training support to NTPC’s customers, PMI has hosted 15 nos. Distribution Reforms and Upgrades Management Programmes which were attended by 263 SEB participants.

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EMPLOYEE RELATIONSIndustrial Relations in NTPC continued to be cordial and harmonious during the year. Workshops for employee representatives from projects were held, at the apex as well as regional level, to sensitize them of the opportunities, threats and challenges facing the company in the dynamics of an uncertain business environment and to reiterate their significant role in synergizing the potential of the human resource – the sole differentiating factor of competitive advantage in today’s knowledge economy.

OPERATIONAL PERFORMANCEIn Fiscal 2009, we generated 206.9 billion units of electricity, 183.3 billion units or 88.6%, through our coal-based stations and 23.6 billion units or 11.4% through our gas-based stations. The operating efficiency of our power stations has improved over the years. The availability factor of our coal-based stations has increased from 86.5% in Fiscal 1994 to 92.5% in Fiscal 2009. The availability factor of our gas-based stations has increased from 60.2% in Fiscal 1994 to 86.7% in Fiscal 2009. The average PLF of our coal-based stations, has increased from 78.1% in Fiscal 1994 to 91.1% in Fiscal 2009. In Fiscal 2009, the average PLF for coal-based power stations in India was 77.2%. The average PLF of our gas-based stations has increased from 50.3% in Fiscal 1994 to 67.0% in Fiscal 2009. In Fiscal 2009, the average PLF for gas-based power stations in India was 57.6%.The following table presents certain company-wide operating data for the last five Fiscal years:Fiscal Year 2009 2008 2007 2006 2005Installed Capacity (MW) 27,850 27,350 26,350 23,935 23,435Generation (Billion Units) 206.9 200.9 188.7 170.9 159.1Sales (Billion Units) 193.7 188.0 176.5 159.0 147.8Average availability (%)Coal-fired: 92.5 92.1 90.1 89.9 91.2Gas-fired: 86.7 85.9 85.1 82.2 82.4

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Average PLF (%)Coal-fired: 91.1 92.2 89.4 87.5 87.5 Gas-fired: 67.0 68.1 71.9 65.8 65.4

∗ Includes generation during pre-commissioning phase.

ROBUST FINANCIALS

Provisional and unaudited Profit after tax for the year 2006-07 is Rs. 67,264 million as compared to Rs.58, 202 million during the year 2005-06, an increase of 15.57%.

Provisional and unaudited Net Sales of Rs 306,387 million during 2006-07 as against Rs. 261,429 million registering an increase of 17.20%. The provisional unaudited gross revenue is Rs. 332,997 million, during 2006-07 as against Rs 287,530 million for the year 2005-06, an increase of 15.81%.

Highest interim dividend @ 24% amounting to Rs. 19789 million during the year.

Highest ever capital expenditure of Rs. 78206 Million during 2006-07.

High Investor Confidence: Standard and Poor’s Ratings Services raised the Corporate Credit Rating of NTPC to ‘Investment Grade’ on the basis of its stand alone credit profile and dominant market share.

Latest Market Capitalization of the company is Rs 1327 billion (US $ 30.75 billion) making it the fourth largest company.

100 % realization of the billing for the fourth year in succession

Loan agreement of US $ 300 million (approximately Rs 13.15 billion) with ADB - first loan syndication deal for an Indian Corporate

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under the Asian Development Bank’s Complementary Finance Scheme for Sipat and Kahalgaon Stage II.

Loan agreement of US $ 100 million (approximately Rs 4.4 billion) signed with KfW to part finance the expenditure on Renovation and Modernisation of NTPC Power plants.

Term-loan of Rs. 20 billion disbursed by LIC in addition to Bonds of Rs. 15 billion placed with them to finance the capital expenditure of on-going projects.

Term loan of Rs. 15 billion signed with SBI in addition to term loan of Rs. 13 billion signed with various other banks to part finance on-going capacity addition programmes.

In the process of concluding financial tie-ups for about US $ 1.5 billion with international banks and multilateral institutions.

The approved outlay for 2007-08 for capital schemes of NTPC is Rs. 127920 million.

REALIZATION OF DEBT• The realization of monthly bills from April, 2006 to March, 2007 was 100%. All the customers have opened and are maintaining LC equal to 105% of average monthly billing as per One – Time Settlement Scheme and are making full payment of current bill.

The One Time Settlement (“OTSS”) addressed these problems. Tripartite agreements (“Tripartite Agreements”) were signed under which the past dues from the SEBs were securitised by the issue of 8.5% Tax Free State Government special bonds issued under the OTSS (the “Tax Free Bonds”) (maturing in various stages, from October 1, 2006 until April 1, 2016). In addition, the Tripartite Agreements have improved the situation by requiring the SEBs to

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establish letters of credit (LCs) to cover 105% of current payments. In addition to the Tripartite Agreements, beyond 2016, our sales are secured through supplementary agreements with our customers under which the customers have agreed to create a charge overtheir own receivables in our favour and in the event of a payment default, assign their receivables into an escrow account. If receivables of these customers are not received into such escrow accounts for any reason whatsoever or if the security over such receivables is flawed, our payment would not be secured. Any change that adversely affects our ability to recover our dues will adversely affect our financial position as we do not have a diverse customer base. In Fiscal 2008, the SEBs had incurred losses of approximately Rs. 340,950 million. In addition, there have also been instances of state governments promising free power to certain sections of society, such as farmers. The adoption of such policies by state governments would adversely affect the financial health of the SEBs, which would in turn adversely affect their ability to make payments to us.

CORPORATE OBJECTIVESIn pursuance of the Vision and Mission, the following are the corporate Objectives of NTPC:

To realize the vision and mission, eight key corporate objectives have been identified. These objectives would provide the link between the defined mission and the functional strategies.

Business portfolio growth:

• To further consolidate NTPC’s position as the leading thermal power generation company in India and establish a presence in hydro power segment.• To broad base the generation mix by evaluating conventional and non-conventional source of energy to endure long run

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competitiveness and mitigate fuel risks.• To diversify across the power value chain India by considering backward and forward integration into areas such as power trading, transmission, distribution, coal mining, coal beneficiation, etc.• To develop a portfolio of generation assets in international markets.• To establish a strong services brand in the domestic andinternational markets.

Customer Focus:• To foster a collaborative style of working with costumers, growing to be a preferred brand for supply of quality power.

• To expand the relationship with existing customers by offering a bouquet of services in addition to supply of powere.g. trading, energy consulting, distribution consulting, management practices.• To expend the future customer portfolio through profitable diversification into downstream business, inter alia retail distribution and direct supply.• To ensure rapid commercial decision making, using customer specific information, with adequate concern for the interests of the customer.

Agile Corporation:

• To ensure effectiveness in business decisions and responsiveness tochanges in the business environment by: Adopting a portfolio approach to new business development. Continuous and co-ordinate assessment of the business environment to identify and respond to opportunities and threats.

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• To develop a learning organization having knowledge based competitive edge in current and future businesses.• To effectively leverage Information Technology to ensure speedy decision making across the organization.

Performance Leadership:• To continuously improve on project execution time and cost in order to sustain long run competitiveness in generation.• To operate& maintain NTPC stations at par with the best- run utilities in the world with respect to availability, reliability, efficiency, productivity and costs.• To effectively leverage information Technology to drive process efficiencies.• To aim for performance excellence in the diversification businesses.• To embed quality in all systems and processes.

Human Resource Development:• To enhance organizational performance by institutionalizing an objective and open performance management system.• To align individual and organizational needs and develop business leaders by implementing a career development system.• To enhance commitment of employee by recognizing and rewarding high performance.• To build and sustain learning organization of competent world class professionals.• To institutionalize core values and create a culture of team-building, empowerment, equity, innovation and openness which would motivate employees and enable achievement of strategic

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objectives.

Financial Soundness:

• To maintain and improve the financial soundness of NTPC by prudent management of the financial resources.• To continuously strive to reduce the cost of capital through prudent management of deployed funds, leveraging opportunities in domestic and international financial markets.• To develop appropriate commercial policies and processes this would ensure remunerative tariffs and minimize receivables.• To continuously strive for reduction in cost of power generation by improving operating practices.

Sustainable Power Development:

• To contribute to sustainable power development by discharging corporate social responsibilities.• To lead the sector in the areas of resettlement and rehabilitation and environment protection including effective ash-utilization, peripheral development and energy conservation practice.• To lead developmental efforts in the Indian power sector through efforts at policy advocacy, assisting customers in reform, disseminating best practices in the operations and management of power plants etc.

Research and Development:

• To pioneer the adoption of reliable, efficient and cost- effective technologies by carrying out fundamental and applied research in alternate fuels and technologies.• To carry out research and development of breakthrough techniques in power plant construction and operation that can lead

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to more efficient, reliable and environment friendly operation of power plants in the country

FINANCIAL DEPARTMENT IN NTPCNTPC is also having their own separate financial department and FAS (Online Integrated Material and Financial Accounting System). This department does all the function which is related to the finance or fund of the company. It use a specific language in the computer for manage zing all the work or communicating with other department and this language is ingress.There are various section are working in the NTPC for managing all the work in better way this section are divided according to the nature of work . It is organized into following ways:-

1 Books and Budget section2 Works and Bills section3 Store, Bills and PSL (Price Store Ledger) Section 4 Commercial Section 5 Weighting and Concurrences6 Cash And Bank 7 Establishments8 Miscellaneous

For doing all this accounting method this section are use FAS method (Online integrated material & financial Accounting System) and ingress language in the computers.Second (Budget) this section prepare budget for all department and before making the budget first it collect all the expected orestimated expenditure from each department and then prepare a perfect budget and it send to their head office or corporate section for final approval.

In NTPC straight line method are using for calculating thedeprecation on the machinery and finding out net value of themachinery or for other assets. Deprecation means decrease in the

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value of the assets due to wear and tear of assets year to year. And straight line method are refers to the method in which we use same amount or a fixed amount for the deprecation for each year. It calculates with the help of this formula:- total Value of the assets• Amount of Deprecation = --------------------------------- Estimated life of the assets (in years)

It also done fixed assets registration

I. Works Bill Section Works Bills section is another section of the NTPC and this work are manage by or done by O&M Department (Operation & maintenances). There are many Contractors doing the works under the contract with NTPC like Building contraction, Road construction, etc.( This is necessary that all the contract are under the contract act other vice it become void contract in the eye of law).This section are responsible to making the payment to all contractors for this they pass bills before making detail study on it and then make the payments according to the work of the contractors.The works which are under the contraction are coming under the Capital Work-in-progress and when it finished it come under the goods. This is a way to calculating Capitalization in the company. It is also liable to pay the interest and Incidentals cost to works.

II. Store Bills and PSL (Price Store Ledger) Section:- The function of this sector is making all the payment of purchase; it means payment for raw material, for plants & machinery, Etc. It also makes the payment for Insurance, Premium, Govt. theme and the charges of transportation. In Price Store Ledger (PSL) this sector doing valuation of inventory and it maintain every months. It using following method for calculating valuation of inventory:-

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• Opening balance of inventory+ Store Receive Voucher (SRV)+ Material Return Notes (MRN)- Store Issue voucher (SIV)- Material Transfer Notes (MTN) = Closing balanceIn Store Receive Voucher (SRV) this section using invoice pricing method for determining the actual price of inventory and using Weight average method for find out actual value of the material, after that it compare given value of inventory for other department books where they issue inventory.And Price Store ledger (PSL) is using other method and this method is as follow:-• FIFO (first in first out method)• LIFI (last in first out method)

After doing all the method and finding out the actual value of the inventory then at last they doing stock verification.

III. Commercial Section All the works of this section are related with account section and the work which are done by this section are as follow:-• To maintain the account for coal and fuel and making its payment to supplier of this material.• To maintain the adequate level of the material in stock forcontinuous manufacturing process without any hurdle due to shortage of material in the stock.• To apply FPVAM fuel price variance adjustment method for determining the adequate level of required fuel and coal for power generation making payment for it. In simple way it a method to clarify the value of coal and fuel in plant.

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IV. Weighting and Concurrences It refers to the group of managers or a department who are responsible for giving their clean chit to the Bills and Cheques, which are payable to the supplier. First the bills and cheques are issued by the Works & bills and Store Bills and PSL (Price Store Ledger) Section and after that it send to Weighting and Concurrences section for final approval after detail study and investigation on the all bills and cheques, After it final payment are made to supplier and the dealer of coal and fuel.

V. Cash & bank There are two main deals which are made between Bank and company and this are as follow:-1. BRS (Bills Reconciliation System):-2. Way to relies the bills or cheques:-3. Receive the short term fund form bank:-

In brief the company means this branch of NTPC needed cash for fulfil their daily, weekly & monthly cash requirement for smooth function of the company and removing all the hurdles in the way of the production. First the branch makes a budget for the actual requirement of the cash in the company, for making the actual requirement of cash in the company each department are made their own budget and after it the merge all department and find out the whole figure of required amount of cash (it should be on day, week or monthly bases).And after making the final budget for cash requirement in company they send it to the Corporate Office and corporate office arranged this required cash for the branch from banks on the bases of budget which are sending by the branch to corporate office. Another works of the bank for the company are it gives the guarantee for custody of material.

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VII. Establishment Section This section is responsible for the all payments which are necessary for the company which are as follow:-1. Payment of salary to the employees,2. Loans and advances to the employees,3. Income tax to the Government,4. PF (provided fund) and pension to the employee,

On the bases of above points we can said that this establishment section are dealing with all the payment which are made to the employees in the company.

VIII. Miscellaneous This section are dealing with all thenon-operational activity but having important place among the work in company which are as follow:-1. Horticulture2. Hospital payments3. CISF (Central Industrial Security Force)4. School employee’s payment5. And all patty expenses which are necessary for the organization.

OBJECTIVE OF STUDYMy objective of doing research on working capital management in NTPC are as follows.

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1. Management of working capital by organisation.

2. Determine the profitability of various component of working capital and their relation to profitability and sales.

3. Find out the effect of working capital on capital expenditure.

4. To find out the cost and expenditure which are occurring during maintaining working capital

RESEARCH METHODOLOGY

SECONDARY DATA COLLECTION

When I do the research on working capital management, first I will collect the data of last five years and various internal sources from company.Tabulations of data and its graphical representation & its conclusions.Using various method of accounting which determine actual point of working capital then I use some documents that are given below:-

1- NTPC Financial Reports.2- News Magazine of NTPC.3- Journals of NTPC (SSTPS).4- Shakti Sandesh Magazine.

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5- Reports of NTPC.6- NTPC annual Reports

WORKING CAPITAL MANAGEMENT IN NTPC (SSTPS)National Thermal Power Corporation is the largest power generation company in India. The Forbes Global 2000 ranking for 2005 ranks it as the 5th leading company in India and the 486th leading company in the world. It is a public listed (Bombay Stock Exchange) Indian public sector company, with majority shares owned by the Government of India. Its main business of this company is to generate electricity. So, according to its nature it is clear that this company required hues Working capital for the fulfilments of basic need of the company. The company engage to producing electricity which not having physical existence, so there are not any types of raw material in term of finished goods for the company are present, which are use by other company as a raw material. And the company doesn’t having any types of semi-finished goods in their production cycle.A big question is always arising among all the companies and the question is:

What is Working Capital and why the company needed this WORKING CAPITAL in the organization?

Answers of the above question are as follow:-Working capital management is concerned with the problems that arise in attempting to manage the current assets, the currentliabilities and the interrelationship that exist between them. Because they are highly liquid and need to manage it in a better way for its

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best utilization and meet all short term finance and repayment of short term debt. It manages the required funds to carry the required levels of current assets to enable the company to carry on its operations at the expected level without any disruption. The aim of working capital management is to manage the firm’s current assets and current liability in such a way that maintained a satisfactory level of working capital. This is so because if the firm cannot maintain a satisfactory level of working capital, it is likely to become insolvent and may even be forced into bankruptcy. The current assets should be large enough to cover its current liabilities in order to ensure a reasonable level of safety.The interaction between current assets and currentliabilities and its use in best and possible way is the main theme of the theory of working capital management.There are two concepts of working capital: Gross and Net.Gross W.Capital The term Gross working capital is refers to thetotal current assets of the company. And the capital which includes all the detectable items likes expenses and others.Net W.Capital The term Net working capital can be defined in two ways:-(i) The most common definition of net working capital (NWC) is the difference between current assets and current liabilities.(ii) Alternative definition of net working capital is that portion ofcurrent assets which is financed with long-term funds. Since current liabilities represent sources of short term funds, as longs as current assets exceed the current liabilities, the excess must be finance with long-term funds.

The operating cycle consists five phases:-

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I phase: - Cash get converted into raw material.

II phase: - Raw material gets converted into work-in-progress.

III phase: - Work-in-Progress gets converted into finished goods.

IV phase: - Finished goods get converted into sales.

V phase: - Sales gets converted into debtors.

OPERATING CYCLEIf it were possible to complete the sequences instantaneous therewould be no need for current assets (working capital). But since it is not possible, the firm is forced to have current assets. If cash inflows and outflows do not match, firm have to necessarily keep cash or invest in short term liquid securities so that they will be in opposition to meet obligations when they become due. So, due to above statement it is clear that why the companies are needed working capital.

Parts of Working CapitalThere are mainly three part of Working Capital in the company which is as follow:-

A) Cash

B) Inventory

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C) Bills Receivable

(A) CASH

Cash is the most important component of current assets. All othercomponents such as debtors and inventories ultimately get converted into cash and this fact further emphasizes the importance of management of cash. The goal of cash management is to maintain the minimum cash balance that provides the firm with sufficient liquidity needed to meet financial objectives. The term cash includes not only currency but also near cash assets such as marketable securities and demand deposits in bank. Cash section is an important section of finance and accounts department. It deals with the employees, contractors and suppliers frothier payments Corporate office plays a dominant role in cash management. The corporate office allocates different amount of each to different coalmines as per its requirements. Corporate office acts as a linkage between the NTPC and main book. The state bank of India, Corporate office has determined the credit facility for every units of NTPC. No one unit of NTPC can get the credit facility more than ones limit. The credit facility is known as rolling cash limit. This keeps on changing from year to year depending upon company’s position transactions, profitability and inventory position.Although corporate office provides credit limits facilities, yet NTPC is not fully dependent on the corporate office. The sale of scrap materials of defective at plant level generates the cash. Thus at a time plant can also pay liabilities and then the balance amount is not only intimated to the corporate office. NTPC gives priority in cash payment, which is urgent, and sends the report to corporate office.

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In brief the main uses of the cash in organization are as follow:-• It required paying for the fuel and coal charges to the supplier.

• It also use to making payment for other construction in organization like building, road, etc. on every day or week or monthly bases.• It use to buying loose tools, spare parts, etc.

• And making payment to the employees in the organization.

(B) INVENTORYInventory is stock of a company, which is manufacturing for sale and component that make up the product. Inventory means “a schedule of items held at a particular point of time.”In managing inventories the objective of NATIONAL THERMAL POWER CORPORATION LTD. is to determine and maintain optimum level of inventory investment. The optimum level of inventory lies between two danger point of excess and inadequate inventories. In NTPC inventory consist of following terms which are as follow:-• Components and Spares• Chemical & Consumers• Loose Tools• Fuel Such as Coal, oil, Lethal (too highly inflammable), etc.There are 73 thousand material item are involve in the NTPC and 53 thousand materials are in use. Some materials are come under the category of Capital Spares and Mandatory spares. There are some methods which are use in the organization for dividingthe material according to their value, quantity, importance and these methods are as follow:-

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(1) ABC analysis(2) XYZ analysis(3) ICU (Insurance component and unit spares)(4) Non moving inventory(5) Surplus inventory

(1) ABC AnalysisItem, which constitutes to 70% of total consumption value whenarranged in descending order of consumption value, will be termed as A class items. Next 20% of total consumption value will be termed as B class items and the rest 10% as the C class items.

(2) XYZ AnalysisItems which constitute top 70% of total stock of stores and sparesholding value when arranged in descending order of stock holding will be termed as X class items next 20% of the total stock holding value is Y class items and the rest 10% is Z class items.

(3) ICU (Insurance component and unit sparesIn this method Inventory is divided according to its insurance value and period of insurance, this method is applied by NTPC for dividing the material according to its group.

(4) Non-Moving InventoriesItems, which have not been issued for the last 3 or 5 years, shall be non moving items.

(5) Surplus InventoryOut of the above non moving inventory when there is issue made to various shops asking the requirement of the inventory and if there

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are also it is not needed then transferred to another coalmines and it again not needed there also then sent for disposal through auction sale.Valuation of inventoryMonthly Weighted average method is applied in NTPC for determining the value of the inventoryFormula Total value of inventory / Total no. of unit

(A) Bills Receivable

The term receivable is defined as "Debt own tothe firm by customer arising from sale of goods or services inordinary course of business".Account receivable management is also an important aspect of working capital management. When a firm sells its products and Services and doesn’t receive cash for its immediately, the firm is said to have granted trade credit to the customer and the customer from whom receivables or took debt have to be collected in future are called trade debtor. Account receivable represents the extension of credit on an open account by the firm to its customers. In order to keep current customer and attract new ones, most manufacturing firms find it necessary to offer credit. The practices give birth to accounts receivables. Receivable constitute a substantial portion of current assets of several firmsAlthough managing the receivables is done by corporate office yet central marketing organization directly deals with it. Few years ago when market was having not too much demand for electricity, they used to receivable accounting to maintain the market share, at that time credit policy of corporate office helped to retain old customer and create new customers. Now the situation is opposite

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of that there is growing demand of Electricity production not only in our own country but abroad also, the credit policy is helping to increase the firm market share. Obviously the minor parts of receivables management dealt at NTPC, Which consists of recovery of the direct sale of scrap and defectives and employees related matters. Thus we can say that the management of receivables is dealt major part by corporate office and minor part by the finance department of NTPC itself. The term receivable is defined as "Debt own to the firm by customer arising from sale of goods or services in ordinary course of business". Account receivable management is also an important aspect of working capital management. When a firm sells its products and services and doesn’t receive cash for its immediately, the firm is said to have granted trade credit to the customer and the customer from whom receivables or took debt have to be collected in future are called trade debtor. Account receivable represents the extension of credit on an open account by the firm to its customers. In order to keep current customer and attract new ones, most manufacturing firms find it necessary to offer credit. The practices give birth to accounts receivables. Receivable constitute a substantial portion of current assets of several firms. In NTPC all the sales are done on the credit bases because NTPC produce Electricity which are not having physical existence like other material and it sale their product to the state govt. not to other one and the price of the product are to hues , So the customers are made their payment after some time not suddenly. NTPC provide two month additional time to their customer for making payment after sending bills to the purchaser and Debtor are use letter of credit for making payments to the NTPC. Billing are use in tariff which having three types and the types are as follow:-

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• Capacity charges (fixed charges)• Energy charges (Variable charges)• U I (unscheduled inter change charges)

(B) Loans & Advances

In NTPC Loans & Advances are also donated as thepart of Working Capital and it having too important part in theorganization together with other things. This thing are use in organization for motivate tothe employees in the organization by providing some types of loans under this head. There are basically two types of loans are provided by the company to their employees, which are as follow:-• Interest free loans In this the company provide such types of loans which having no any interest charges. And this contain following loans Multipurpose loans (yearly bases), Furniture advance loans.• Interest payable loans In this company provided such types of loans which having interest charges on the amount of loan. And this contain following types of loans:- Computer loan Car loan Scooter loan House loan, etc.

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Advances are also provide to the supplier like BHEL, mobilizations

advances are given to the contractor but mainly this loans and

advances are use for the employees of the company, it is part of the current assets

CASH MANAGEMENT IN NTPCCash section is an important section of finance and accountsdepartment. It deals with the employees, contractors and suppliers for their payments. Corporate office plays a dominant role in cash management. The corporate office allocates different amount of each to different coalmines as per its requirements. Corporate office acts as a linkage between the NTPC and main book. The state bank of India, Corporate office has determined the credit facility for every units of NTPC. No one unit of NTPC can get the credit facility more than ones limit. The credit facility is known as rolling cash limit. This keeps on changing from year to year depending upon company’s position transactions, profitability and inventory position. Although corporate office provides credit limits facilities, yet NTPC is fully dependent on the corporate office. The sale of scrap materials of defective at plant level generates the cash. Thus at a time plant can also pay liabilities and then the balance amount is only intimated to the corporate office. NTPC gives priority in cash payment, which is urgent, and sends the report to corporate office.

FUND ALLOCATIONHere the initial allocation for funds and NTPC unit is done bycorporate office and all supplementary requirements are to look by NTPC itself. The corporate office allocates the funds for all

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coalmines and particularly about NTPC.

FUND UTILISATIONNTPC operates an annual cash budget and a rolling cash plan drawn up every month. Although specific forecasting technique is used, funds are deployed to different departments as per their requirements. A daily report on cash transaction is prepared by cash section to keep a track of all payment in the days work. Every month cash transaction report is sent to corporate office showing the all transaction of cash, actual utilization of cash and allocation of fund is compared. If the utilization of cash is more than the allocation of funds, then the plant has to justify its more utilization and if the justification is not found satisfactory then the corporate office gives the letter of improvement.

CASH FORECASTING AND BUDGETINGCash budget is the more significant device to plan for and control the cash receipts. Cash budget is a summary of NTPC expected cash inflows and outflows. Again this cash budget is broken into month wise budget where allocation of cash on month basis is done with the help of projection of cash on month wise it becomes easier to allocate the amount. The information of expected cash flows and cash balance helps to financial managers of NTPC to determine the future cash need of the firm, plan for the financing of these needs and exercise control over the cash and liquidity of NTPC. NTPC needs cash to carry out the day-to-day functions of business just as the level of operations affects working capital requirements; it affects the need for cash. These days the direct sale of billets and merchant

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products are increasing cash. Cash has been receiving from customers and has been providing for adequate cash for their liabilities.

EVALUATION OF CASH MANAGEMENT

Composition and growth of cash Cash balance represents the aggregate of cash in hand, cheques on hand, remittances in transit, and balances with banks in current accounts and in fixed deposits with others. To bring uniformity on the components of cash, cash balances of the selected undertakings have been divided into two segments. Cash in hand and cheques on hand. Cash management at NTPC includes the discussion on size of each, cash flow statement and liquidity position of the firm.

GRAPHIC REPRESENTATIONOn the bases of above points it is clear that cash is to importantterm for the organization, and I clear the importance of cashmanagement with the help of following graph representation which are based on the formula of ration analysis.

Current asset

Current ratio = current liability

Year 2004-05 2005-06 2006-07 2007-08 2008-09Current Assets 160751.7 177772 194132 135468 129073Current Liability27620.23 31881 34202 65244 52306

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Ratio 5.82 5.58 5.68 2.08 2.47

Comments Whereas the current ratio is indicated to be most ideal at 2 NTPC's current ratio was 2.83 in 2004-05 it increase to 3.48 in the next year increase again to 4.23 in 2005-06 which is the highest for the period the ratio again show the falling trend with the level at1.68 at a slide increase to 1.91 in 2008-09. It is seen that the current liability is the main reason for the highest level of current ratio to 2006-07 during the first three year the current liability went down from Rs. 67324 Million to Rs.45850 Million the ratio improves during the last three years of our period only the Strength of an increase in current liability. During the last two year the current assets also register a decrease from the trend of the current ratio it is clear that the organization should give greater importance to its current liability by obtaining more credit from its supplier. Mainly supplier of fuel and inventory. It may be noted that the figures for current liability also include provision. Liquid Current Assets 2 Acid Test ratio = ------------------------- Current liabilities

Year 2004-05 2005-06 2006-07 2007-08 2008-09Liq. Current Assets 142395.85 157630 176420 118088 111296Current Liability 27620.23 31881 34202 65244 52306Ratio 5.15 4.94 5.16 1.81 2.13

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Comments This ratio indicates the liquidity position of the company morecompletely by excluding least liquid current assets that is inventory. The current visible is of an increase up-to 4.5 in the year 2004-05 while this compare unfair comparison with desire 1, the ratio show an improvement in the year 2004-05 at the level of 1.39 the moment is slightly adverse for the last year of our period at the level of 1.61 the improvement in the trend is due to a decrease in the level of receivables from2004 to2006 but is also due to a generally rising trend of current liability. The ratio would have a better performance but for the considerable increase in the level of cash during the last year.

3- Cash Turnover Ration Cash Turnover Ratio are the known about the relationshipbetween how much company hold the ideal balance of the cash in the organization. Interest & Finance Charges

Cash Turnover Ratio= --------------------------------- Average Cash Balance

(In Million Year) 2004-05 2005-06 2006-07 2007-08 2008-09Interest & Finance Charges 10910 7628.67 79916 33697 16955

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Average Cash Balance 4715.67 7939.025 8747.79 5769 33437Ratio 2.32 1.09 1.13 5.84 0.51

CommentsThe cash turnover ratio indicates the efficiency of cash and its usethrew the working capital cycle. This ratio relates interest andfinance charges which indicate volume of cash transacted to average cash balance. Which indicates the ideal cash remaining at the end of the period? Therefore the ratio should be having a normal rising trend. The trend for ratio during our period however the reverse up to 2005-06 mainly due to rising average cash balances for the first three year. This was due to the need to offset short falls of collection of receivables for 2006-07 the trend was reversed on the strength of both considerably increased cash transacted as well hedge control average cash balance this was due to the policy of turning receivables into investment with defaulting customer. This trend however is again reversed in 2007-08 due to sharp increase in average cash balance because of share premium money received from the IPO, fore closed investment in government securities and they result in fall in transacted cash.

4-Cash Holding Period:-

This ratio show the actually no. of days on which companyhold the cash in the organization:

Average Balance of CashCash Holding Period: ---------------------------------- Interest & Finance Charges

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(In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09Average Cash Balance 4715.67 7939.025 8747.79 5769 33437Interest & Finance Charges10917.62 8677 9916 33697 16955Ratio 158 334 322 62 720

Comments The holding for any current assets should be the optimum keeping in the major of the business. The cycle of current assets for NTPC cannot be very short due to the fact that the company generates an intangible product that cannot be store, the fact leading to receivables of a minimum 60 days long ability as also large inventory of spares having necessarily long holding periods as also of fuel for safety of continue generation the company follow a policy of holding the minimal cash balance at any given point of time for the reason that it has to mobilize liquidity to meets its day to day requirements not only from its collection against sales (which are my always credit sales often defaulted) but threw a consideration of banks led by the SBI in the form of cash credit i.e. Costly as against this the trend of cash holding period for the first three years is that of a sharp increase with a sharp fall in 2008-09 the reason discussed about. The holding period for the last year rises up to an abnormal 720 days due to sharply increase average cash balance for the extra ordinary factor prevailing.

5- Cash To Current Assets:-

This cash to current assets ration show the relationshipbetween cash and current assets in the organization and also show

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that how much cash affect to the current assets:

Cash

Cash to Current Assets= ---------------- Current Assets

(In Million)Year 2004-05 200-06 2006-07 2007-08 2008-09Cash 3829.48 12048.57 5447 6544 60783Current Assets 160751.7 177772 194132 135468 129073Ratio 0.02 0.07 0.03 0.04 0.47

CommentsThis ratio intended to have an estimation of the proportion of cash in the current assets NTPC has been in keeping minimum ideal cash added any given point of time and this evident during all period of our period except 2004-05 and 2007-08 where as 2004-05 the company have to keep cash because of the exceptionally adverse receivables situation that year, the highest level of cash for the year 2007-08 was due to change into policy lines for investment of cash there for where as the ratio should have had generally falling trend and shows abnormally high level for the last year.

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6- Cash to Receivables Ratio = Cash ---------------- Receivables

(In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09Cash 3829.48 12048.57 5447 6091 60783Receivables 95851.39 115328 124349 4699 13747Ratio 0.04 0.10 0.04 1.30 4.42

CommentsThis ratio serves to estimate the need for cash stemming from asituation of uncontrollable receivable. It is seem that the need forcash raises indirectly proportion to the receivables and there for our working capital a structure to be sound the ratio should have an increasing trend with increase in stable proportion. The trend should be increasing because of an increase in generation, installed capacity and sales. It should be in stable proportion. If the receivables and the cash balances stick to normal levels is keeping with the increasing operation and turnover where as the trend of this ratio should be one of graduated increase, it show a stability for first three years but increase this proportionately last two the level for 2006-07 i.e. 1.30 has been due to considerably reduce receivable for the policy of debt management threw investment the trend for the last year both because of an increasing receivable as well as cash.

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INVENTORY MANAGEMENT AT NTPC

Inventory is stock of a company, which is manufacturing for sale and component that make up the product. Inventory means “a schedule of items held at a particular point of time.”In managing inventories the objective of NATIONAL THERMAL POWER CORPORATION LTD. is to determine and maintain optimum level of inventory investment. The optimum level of inventory lies between two danger point of excess and inadequate inventories.The inventory of NTPC is unique for not having semi finished goods, finished goods or raw materials. Fuel is some way could be considering raw material but by most definitions it would not qualify to be raw material because the product is intangible. The inventory of NTPC consist of fuel, spare parts, loose tools and components, chemicals consumables and some other material. The inventory of NTPC is very large comprising 73000 material codes. The inventory at Singrauli alone consists of 53000 material codes. Being a large inventory some of which is to be maintained permanently for to continuity and security of generation, the inventory is valued by the monthly weighted moving average method. The valued inventory is called priced stores ledger (PSL) this is regulated by the four instruments.

(1)MRN (2) MTN (3) SRV (4) SIV. PSL is run on monthly basis.

The inventory of NTPC is subject to several analysis including ABC, XYZ, VED, FSN, ICU. The consumption is valued at PSL rate. Whereas at the point of induction at the store it is valued at the invoice price.

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The inventory is regularly verified for a match between the Bin Card balances and the physical stock as also with the PSL run. This inventory in NTPC is also subject to regular checks and control exercises.

RAW MATERIAL

Raw materials are the inputs used by the concern forproducts of finished goods through manufacturing process. Raw material inventory are those, which have been purchased and are stored for future production. In NATIONAL THERMAL POWER CORPORATION LTD. raw material is purchased by central procurement and regional procurement unit of centralmarketing organization as per the requirement of the individual coal plant. The bulk purchase are procured and sent to the place of the need. Basic objectives in holding raw materials inventory is turn separate purchase and production activities. If raw material inventories were not held, purchase would have to be made continuously at the usage rate in production.

(In Million) Year 2004-05 2005-06 2006-07 2007-08 2008-09Cost Of Goods Sold 117804.9 123667 29394 140798 158166Average Inventory 19291.36 19265.9318944 17546 17578.5Ratio 6.11 6.42 9.83 8.02 9.00

CommentsThis ratio estimates the efficiency of inventory in facilitatinggeneration and sales. It relates cost of goods sold to average

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inventory. Cost of goods sold has been taken to include expenses on fuel, employee remuneration and generation and administration & other expenses. In other words only the operating expenses have been taken the average inventory can shows the inventory specifically availing during the year. Cost of goods sold indicates sales less profit i.e. sales valued at operating expenses. Where as this ratio should have increasing trend it does have the same our period under consideration. Where as the cost of goods sold, indicative of sales, register a consistent increase the inventory show a falling trend mainly due to effective inventory control methods and controlled inventory.

Average Holding Period Average Inventory = ------------------------- Cost of Goods Sold

(In Million) Year 2004-05 2005-06 2006-07 2007-08 2008-09Average Inventory 19291.36 19265.93 18944 17546 17578.5Cost Of Goods Sold 117804.9 123667 129394 140798 158166Day 60 57 53 45 41

CommentsThe holding period in lined with the evidence with the controlledinventory shows a falling trend over a period under consideration from 60 days in first year to 41 days in the last year. How ever as large inventory like NTPC's at the time when the older plants of the company are nearing there end of useful life many of the inventory of spares must necessarily have inventory i.e. now obsolete, non-moving or surplus due to technological changes, up gradation, renovation and modernization or replacement. The control of such

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inventory would improve the holding period further.

Inventory to Current Assets Ratio: current assets

Inventory

This ratio shows the proportion of Inventory in the total layout oncurrent assets. The ratio show a generally constraint trend not only evidence of inventory control But also the necessity of it’s in the basically engineering orientation of the facilities in the country.

(In Million) Year 2004-05 2005-06 2006-07 2007-08 2008-09Inventory 18355.85 20176 17712 17380 17777Current Assets 160751.7 177772 194132 135468 129073 Ratio 0.11 0.11 0.09 0.13 0.14

CommentsThis ratio shows the proportion of Inventory in the total layout oncurrent assets. The ratio show a generally constraint trend showing not only evidence of inventory control but also the necessity of it in the basically engineering orientation of the facilities in the country.

Cash Cash to inventory Ratio = ------------- Inventory

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(In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09Cash 3829.48 12048.57 5447 6091 60783Inventory 18355.85 20176 17712 17380 17777Ratio 0.21 0.60 0.31 0.35 3.42

Comments This ratio relates cash to inventory to procure which cash is mainly used; this ratio should ideally have a falling trend. This is show because while larger cash balance would indicates idealness and interest expenses, a rise in inventory could be normal given added installed capacity increasing generation and less costly tangible of current assets. In the right of this the ratio show a generally adverse trend, because of a generally rising trend of cash set against controlled inventory.

RECEIVABLES MANAGEMENT IN NTPCThe term receivable is defined as "Debt own to the firm by customer arising from sale of goods or services in ordinary courseof business". Account receivable management is also an important aspect of working capital management. When a firm sells its products and services and doesn’t receive cash for its immediately, the firm is said to have granted trade credit to the customer and the customer from whom receivables or took debt have to be collected in future are called trade debtor. Account receivable represents the

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extension of credit on an open account by the firm to its customers. In order to keep current customer and attract new ones, most manufacturing firms find it necessary to offer credit. The practices give birth to accounts receivables. Receivable constitute a substantial portion of current assets of several firms.Receivables of NTPC are very important because of the nature of aproduct and the credit policy followed by NTPC. NTPC produceelectricity which have no any physical existence like other finishedgoods and it sale their goods to the customers on the only creditbases. NTPC gives 60 days (two months) time to their customer for making payment, its means all the sales of the NTPC are on the credit bases. There is a rebate on early or prompt payment. The present system of Tariff is Availability Based Tariff (ABC) where as the previous tariff system called the KP Rao Tariff was a two part Tariff essentially rewarding efficiency or PLF, the present system is a three part Tariff. (1) Fixed charge (2) Variable charge (now called energy charge) (3) Unscheduled interchange charge rewarding availability between the power producers i.e. NTPC and the customer i.e. SEBE there is a monitor in the institution of the regional electricity board which coordinates the Availability schedule awarded to each of power producer in the region as well as the joint meter reading and both the ends. And implement the new resume. The billing is completed during the first five days of the month following and therefore the billing cycle of NTPC comes to be 35 days. There are default on part of the customer in viewof these NTPC adopted a new receivables management policy in the form of turning long time receivables into investment with the defaulting customers these are in the shape of medium term bond or debenture bearing interest up-to 12.5%, 8.5% or even less. By this method the company has managed control his receivables to a large extent.

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ACCOUNT PAYABLES IN NTPCThe creditors are managed at plant level only. Mostly the creditorcomprises of contractors to whom payment are to be given and the capital works. This is basically done as per terms and condition with respective parties. In case of small-scale industries it is done within 30 days. There is also a scheme of earnests money deposits for the registered small scale industries. The schemes allow having a security deposits which is refundable at the end of contract. In case of statutory payment that is the income tax, excise tax one month due is there. When the final payment is to be made to ex-employee, it is only done after the file reaches the department as per the individual case. Major chunk is from statutory liabilities, which are rapid as per act that is one month due is given.

Sales

Receivables Turnover Ratio= .................. Average Receivable (In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09Sales 189449.84 178153 190475 188591 225402Average Receivables 88971.065 105589.7 119838.5 64524 9223Ratio 2.13 1.69 1.59 2.92 24.44

CommentsThis ratio gives the efficiency of receivables as current assets. Itis relates sales to average receivables in this way specifically

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address the receivables actually contributing to a given volume ofsales during the year. Where are the trend of this ratio ideally beraising the ratio for the first three year of our period actuallyregistered a fall. During these three year even though the salesregistered overall increase the receivables have the consistent in arise with the control of receivables from 2006-07 to 2007-08 with the result that the ratio shows a gratis increase from 2.92 in 2006-07 ton 24.44 in last year of our period.

Average Receivable

Average Collection Period =.................................... Sale(In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09Average Receivables 88971.065 105589.7 119838.5 64524 9223Sales 189449.84 178153 190475 188591 225402Day 171 216 230 125 15

CommentsThe average collection period is the reciprocal of the receivablesturnover ratio. The collection period of receivables for NTPC in any given year except the last year of our period is rather long when we consider the company policy of given 60 days credit to its customers and having a billing period of 35 days. Which wouldmake the total collection period with any default from the customer to be naturally 95 days as against this we have collection period rising from 171 in 2004-05, 230 in 2005-06 and then with a reduction to 125 in 2006-07 to 15 in 2007-08 the collection period of the last year would indicate very prompt payment or settlement of due by customer.

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ReceivableReceivables to Current Assets Ratio= .........................

Current Assets

(In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09Receivable 95851.39 115328 124349 4699 13747Current Assets 160751.7 177772 194132 135468 129073Ratio 0.60 0.65 0.64 0.03 0.11

CommentsThis ratio relates receivables to the total of current assets i.e.shows the proportion of receivables in the quantum of current assets where as this ratio so have an ideally falling trend the trend Should be one of consistent proportion. Against this the ratio rises marginally for first two year, remains nearly constant during third year and falls drastically in 2006-07 again registering arising in 2007-08 with a mix trend of receivables over the last two year and a generally falling trend of current assets towards the end.

ReceivableReceivables to Current Liability Ratio=...................... Current Liability

(In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09

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Receivable 95851.39 115328 124349 4699 13747Current Liability 27620.23 31881 34202 35673 52306Ratio 3.47 3.62 3.64 0.07 0.26

Comments

This ratio relates receivables to its financial antithesis thereforein the two should be inversely proportional to one another in normal course and the ratio of two should have a consistently falling trend the ratio however saw a increasing trend up to 2005-06 and there after a sharp fall to 0.07 in 2007-08and then slide increase to 0.26 in 2008-09. This is because of an increase both in current liabilities as well as receivables, a sharp increase in current liabilities in 2005-06 along with a drastic fall in receivables there after an increase in receivables and a fall in current liability.

Investment to Receivable Ratio = ..Investment.................. Receivables

(In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09Investment 39914.59 40281 36674 173380 207977Receivables 95851.39 115328 124349 4699 13747Ratio 0.42 0.35 0.30 36.90 15.13

Comments

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Investment i.e. trade investments have been a debt managementtechnique adopted by NTPC to control rising receivables speciallysince 2004-05 by this method long standing receivables due frominsolvent customer were converted to medium terms bonds of the nature of debentures bearing interest and having maturity period upwards of Seven years. As such investments also are inversely proportional to one another and this is broadly in evidence over the period under consideration. Where as the trend of this ratio should be one of rising level, it should not be show disproportionately, the trend in evidence is one of a fall up to 2004-05 and a sharp increase in the next year. The ratio falls to 15.13 in the last year. It is to be noted that investments increase substantially only from 2005-06 where as receivables, after the sharp fall of 2005-06 due to effective of recourse to investment resume their original increasing trend in the last year.

LOAN AND ADVANCEMENT MANAGEMENT IN NTPCAlthough current assets traditionally comprise inventory, receivables and Cash, in an organization like NTPC which provides loans to its employees and also advances both to the employees and supplier as well as contractors, the loan and advances are also an important part of the company. The advances given to contractor are mainly the nature of mobilization advances and to the employees with the purpose of providing assistant to them by way facilities to help in the discharge of their duties. Their loans are included in the category of current assets for their regular recovery from the employees adjust and recovery from supplier within a very short period of time. The loan and advances given by the company to its suppliers, contractor and its employees are the major part of its current assets. These other mainly on interest or free of charge advances given to

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suppliers and contactor are mostly free two of the advances given to employees are interest free, multipurpose advances and furniture advance recoverable in 12 and 60 instalment respectively. Beside these all other loan and advances are on interest. The recovery of these interests bearing loan done as such a way that the principal is recovered first and the interest there after. The interest is levied on the diminishing balance of principal and there is no interest oninterest. These loan and advances are categorized as current assets because their recovery is continuous immediately from the after the drawn month and the principal is first recovered.

Loan and Advances To Current Assets Ratio

Loan & Advances = ---------------

Current Assets(In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09Loan & Advances 33011.35 24742 21482 27279 27052Current Assets 160751.7 177772 194132 135468 129073Ratio 0.21 0.14 0.11 0.20 0.21

CURRENT LIABILITIES IN NTPC

Current Liability shows the different combination of liabilities which includes various liabilities. It generally shows on the liability side in the balance sheet under the head of liabilities. Others liabilities represent amount of income tax deducted at source, redemption

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amount payable on maturity of bonds, sales tax payable, development surcharge amount to be transferred to customers etc. Besides current assets, current liabilities also count in framing the structure of working capital. Bank over-draft, creditors for goods supplied, unpaid dividend and taxes are the main constituents of current liabilities. The share of each constituent to total current liabilities determines to some extent the availability of current liabilities, the management remains more concerned with the administration of current assets. Other liabilities have increased due to transfer of as amount of Rs. 2,426 million from Development Surcharge Fund. In the previous years as per the regulations of central electricity regulatory commission (CERC) development surcharge was being charged from customer and kept invested in instruments as required by the regulations. CERC vide its order dated 09//11/2005 discontinued the billing and realization of development surcharge. It further directed that the amount collected earlier from the state utilities and invested in instruments corresponding to the amount contributed by each of the state utilities shall be transferred in the name of the concerned utility.

Current Liabilities to Inventory

This is a way to show the relationship between Inventory and totalCurrent Liability Current LiabilitiesCurrent Liabilities to inventory = ------------------------ Inventory

(In Million)

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Year 2004-05 2005-06 2006-07 2007-08 2008-09Inventory 8355.85 20176 17712 17380 17777Current Liabilities160751.7 177772 194132 135468 129073Ratio 0.11 0.11 0.09 0.13 0.14

Current Liabilities to InventoryThis ratio shows the proportion of Inventory in the total layout oncurrent liability. The ratio showing a generally constraint trend notonly evidence of inventory control, But also the necessity of it’s inthe basically engineering orientation of the facilities in the country.

Current Liability to Receivable:-

This Receivable to Current liability ratio show therelationship between receivable and current liability:

Receivable

Receivable to Current liability = ------------------ Current Liability

(In Million)Year 2004-05 2005-06 2006-07 2007-08 2008-09Receivable 95851.39 115328 124349 4699 13747Current Liability 27620.23 31881 34202 65244 52306Ratio 3.47 3.62 3.64 0.07 0.26

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WORKING CAPITAL CYCLE WORKING CAPITAL CYCLE

16 DAYS16 DAYS 15 DAYS DAYS

CASH

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FINAL YEAR (2005-06)

RECEIVABLE

INVENTORY

207 DAYS207 DAYS

LIMITATION 1 NTPC in a working capital is a book profit it is not true.

2. It is based on the re-payment of owner due to the political power.

3. It is create to the receivable problem to it.

4. It is reduces in a working capital turn over.

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CONCLUSION

1 Inventory is area a unique, in the sense of finished goods is not there.

2 Receivable is presently in large.

3 Permanent working capital preparation is a very large for us.

4 It is control to the inventory analysis going arising 5 Obsolete surplus and non moving inventories.

6 Receivables management reduces billing time, reduces billing cycle and give more discount and rebates against from them.

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7 cash convertible credit instrument should be taken other policy.

SUGGESTION

1. It is to be managed to effective working capital turnover.2. Surplus and obsolete of items due to according to managed.3. NTPC is a consulted conclusion receivables by the investment of

a share period.4. It is a not repayment of owner due to the political power to it.5. Cash to be used to effective ways.6. It should be solved in effective manner the receivables roblem.

If the NTPC/SSTPS, Shaktinagar adapt above to six suggestion point then employees and management will be happy and profit managementalso.

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BIBLIOGRAPHY I choose SSTPS/NTPC Corporation for my study of working capital position, when I do the research; in this connection following things are very useful to write this report and other things.

1. Book of research methodology.2. Financial policy report of different years issued by NTPC.3. Performance highlights book.4. Shakti Sandesh- a Journal of NTPC/SSTPS.5. NTPC news Magazine of different years.6. Singrauli (Promise fulfilled) a journal of SSTPS.7. Employee’s hand book.