NTPC

Financial Analysis
Powerpoint Templates

Presented By:

Jatin Garg(101132) Himanshu Gupta(101133) Anurag Chutani(101134) Harjot Singh(101135)

Acknowledgement
We would like to extend our heartfelt gratitude to Mr. Puneet Bhushan Sood for taking out the time to critically analyze our presentation and for continuously suggesting improvements which led us to this final product.

History and Profile

NTPC Limited' (formerly National Thermal Power Corporation) is the largest Indian stateowned energy service provider based in New Delhi, India. With a current generating capacity of 36,014 MW, NTPC has embarked on plans to become a 75,000 MW company by 2017. It was founded on November 7, 1975. NTPC's core business is engineering, construction and operation of power generating plants and providing consultancy to power utilities in India and abroad.

History and Profile(contd.)

Special resolution passed by the Shareholders at the Companys Annual General Meeting 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.

Power Generation

Performance Statistics

 In terms of operations, NTPC has always been considerably above the national average. The availability factor for coal based power stations has increased from 89.32% in 1998-99 to 91.62% in 2010-11, which compares favourably with international standards. The PLF has increased from 76.6% in 1998-99 to 88.29% during the year 2010-11.

The table below shows that while the installed capacity has increased by 73.33% in the last twelve years the generation has increased by 101.39%.

DESCRIPTION

UNIT

1998-99

2010-11

% OF INCREASE

Installed Capacity

MW

17,786

30,830

73.33

Generation

MUs

1,09,505

2,20,540

101.39

Turnaround Capability

Badarpur (705 MW) Unchahar (420 MW) Talcher (460 MW) Tanda (440 MW)

Renewable Energy and Distributed Generation

Renewable Energy Renewable energy (RE) is being perceived as an alternative source of energy for Energy Security and subsequently Energy Independence by 2020. Renewable energy technologies provide not only electricity but offer an environmentally clean and low noise source of power. Vision To provide green power through locally available resources at affordable price, promoting clean energy

Objective
Implementation of distributed generation projects using locally available renewable resources such as biomass, wind, solar, micro hydel, bio-fuel etc. Training & capacity building of local community to enable them to independently manage, operate & maintain the plant. To ensure viability and long term sustainability of DG projects Integrated growth & development of rural areas by enhancing employment education, income generation & livelihood opportunities To ensure implementation of various technologies as demo/pilot project

Installed Capacity
NO. OF PLANTS NTPC Owned Coal 15 28,195 3,955 CAPACITY (MW)

Gas/Liquid Fuel

Total

22

32,150

Owned By JVs
Coal & Gas Total 6 28 3,864 36,014

Awards
NTPC has been bestowed the honour of being most respected company in Power Sector for the year 2011 by Businessworld. Good Corporate Citizen Award has been given to NTPC for its outstanding achievement. Environment Awards: Golden Peacock Environment Management Award -2008 Top Rankers Excellence Award 2011 in the Best Finance Professional category. Aon Hewitt Best Employers in India 2011 Study of Best Employers ranked the NTPC at 6th. The prestigious Golden Peacock Award-2011 for Corporate Social Responsibility at 6th.

Environment Friendly
While leading the nations power generation league, NTPC has remained committed to the environment. It continues to take various pro-active measures for protection of the environment and ecology around its projects. NTPC was the first among power utilities in India to start Environment Impact Assessment (EIA) studies and reinforced it with Periodic Environmental Audits and Reviews.

Financial Statement Analysis

Ratio Analysis Comparative Analysis Common Size Analysis Index Analysis

We have used Ratio and Common Size Statement Analysis method for our Financial Statement Analysis of NTPC Limited.

RATIO ANALYSIS

Liquidity Ratio Leverage Ratio Turnover Ratio Profitability Ratio Expense Ratio

Liquidity Ratio
2006
Current ratio Quick ratio Cash ratio
1.4868 1.2146 0.9759

2007
1.7153 1.4792 1.2363

2008
1.6577 1.4525 1.1329

2009
1.8549 1.6239 1.1415

2010
1.4096 1.2355 0.7411

2011
1.4989 1.3251 0.7619

A firm should ensure that it does not suffer from lack of Liquidity and also that it does not have excess liquidity.

2.0000 1.8000 1.6000 1.4000 1.2000 1.0000 0.8000 current ratio quick ratio cash ratio

0.6000
0.4000 0.2000 0.0000 2006 2007 2008 2009 2010 2011

As we know that current ratio of 2:1 or more is considered satisfactory. There is NO year in which ratio is 2:1. So it may be interpreted to be insufficiently liquid. Comparatively 2009 has ratio of 1.85, which shows better short-term solvency than other years.

 All years having ratio of more than 1:1, which represent a satisfactory current financial condition. Year 2009 had a ratio of 1.62:1, So, in this year company could suffer from a shortage of funds if it had slow paying and long-duration outstanding debtors

 Years 2010 and 2011 show the lack of cash in the company, but due to companys reserve borrowing power, there is nothing to worry.

Leverage Ratio
2006 2007
0.7342 9.3731

2008
0.7825 9.9689

2209
0.7664 11.7603

2010
0.8845 11.6526

2011
0.8667 10.5616

Debt Ratio Coverage Ratio (ICR)

0.7399 11.3584

It is the proportion of Debt and Equity

14.0000

12.0000

10.0000

8.0000 Debt Ratio Coverage Ratio (ICR) 6.0000

4.0000

2.0000

0.0000
2006 2007 2008 2209 2010 2011

2006 Debt Ratio

0.7399

2007
0.7342

2008
0.7825

2209
0.7664

2010
0.8845

2011
0.8667

2006 Coverage Ratio (ICR)

11.3584

2007
9.3731

2008
9.9689

2209
11.7603

2010
11.6526

2011
10.5616

Turnover Ratio
2006 ITR DTR Av. Collection Ratio (Days) Asset turnover ratio Fixed Assets Ratio Current Assets Ratio
11.3764 12.9792

2007
13.3739 12.5498

2008
14.1925 8.8444

2009
13.9958 6.1060

2010
13.9334 4.8336

2011
15.5640 4.6117

28 0.3573
1.1643 2.0827

29 0.3834
1.2793 1.7759

41 0.3884
1.4276 1.7045

59 0.3794
1.2744 1.5875

74 0.3763
1.3410 1.6947

78 0.3986
1.4064 1.7327

It measures how efficiently the assets are employed by the firm. These ratios are also called as efficiency ratios. The efficiency of assets would be reflected in the speed with which it is converted into sales. The greater is the rate of turnover, the efficient is the utilisation / management.

18.0000

16.0000
14.0000 12.0000 10.0000 8.0000 6.0000 4.0000 2.0000 0.0000 2006 2007 2008 2009 2010 2011 ITR DTR

ITR indicates the efficiency of the firm in producing and selling its product. In year 2008 and 2011 it is calculated that inventory is turning into receivables through sales in better speed then other years. Year 2006 shows slow-moving inventory.

In year 2006 and 2007 the management of credit is more efficient.

2006 DTR
12.9792

2007
12.5498

2008
8.8444

2009
6.1060

2010
4.8336

2011
4.6117

3.0000

2.5000 Av. Collection Ratio (months) Asset turnover ratio Fixed Assets Ratio

2.0000

1.5000

1.0000

Current Assets Ratio

0.5000

0.0000 2006 2007 2008 2009 2010 2011

Smaller the average collection period, Better the quality of debtors.

Profitability Ratio
2006 2007 2008 2009
0.2801

2010
0.2677

2011
0.2349

Profit Margin ratio

GPM Net Profit Margin

0.2933

0.2918

0.2954

0.2165

0.2092

0.1991

0.1954

0.1873

0.1650

Rate of return

ROTA RONA ROE EPS

0.0774 0.2131 0.1282 0.5820

0.0802 0.2058 0.1394 0.6865

0.0773 0.2133 0.1373 0.7415

0.0741 0.1818 0.1369 0.8201

0.0705 0.2042 0.1398 0.8728

0.0658 0.1827 0.1341 0.9103

Profitability reflects the final result of business operations.

Profit Margin Ratios It measures the relationship between profit and sales.

Rate of Return Ratios It reflects the relationship between profit and investment.

Profit Margin Ratios

0.3500 0.3000 0.2500 0.2000 0.1500 0.1000 0.0500 GPM Net Profit Margin

0.0000
2006 2007 2008 2009 2010 2011

Expense Ratio

2006 Selling Expenses Ratio COGS Expense Ratio Operating Exp. Ratio
0.0161 0.9121 1.6348

2007
0.0259 0.9252 1.6494

2008
0.0196 0.9295 1.6404

2009
0.0163 0.9286 1.6976

2010
0.0153 0.9282 1.6780

2011
0.0132 0.9357 1.6951

Expense ratios are important to consider when choosing a fund, as they can significantly affect returns. Factors influencing the expense ratio include the size of the fund (small funds often have higher ratios as they spread expenses among a smaller number of investors), sales charges, and the management style of the fund.

0.0300

0.0250

0.0200 Selling Expenses Ratio

0.0150

0.0100

0.0050

0.0000

1.8000 1.6000 1.4000 1.2000 1.0000 0.8000 COGS Expense Ratio Operating Exp. Ratio

0.6000
0.4000

0.2000
0.0000

Rate of Return
0.2500

0.2000

0.1500

0.1000

ROTA RONA ROE

0.0500

0.0000

Earning per Share

EPS
1.0000 0.9000 0.8000 0.7000 0.6000 0.5000 EPS

0.4000
0.3000 0.2000 0.1000 0.0000

DUPONT ANALYSIS
RONA (or ROCE) is the measure of the firms operating performance. It indicates the firms earning power. It is a product of the asset turnover, gross profit margin and operating leverage. RONA can be computed as follows:

For the year 2007 the GPM=0.2918 ATR=0.3834 & operating leverage=1.839 & their product equals to 0.2058 which is RONA for that year. All the firms would like to improve their RONA. In practice , however, competition puts a limit on RONA. Also, firms may have to trade off between asset turnover and gross profit margin. A firm can convert its RONA into an impressive ROE through financial efficiency. Net Profit = Net Profit Sales Total assets Equity Sales Total assets Equity ROE NPM TATR 1 / (1- DR)
.

COMMON SIZE ANALYSIS

COMMON SIZE ANALYSIS, as used in vertical analysis of financial statements, an item is used as a base value and all other accounts in the financial statement are compared to this base value. On the balance sheet, total assets equal 100% and each asset is stated as a percentage of total assets. Similarly, total liabilities and stockholders equity are assigned 100%, with a given liability or equity account stated as a percentage of total liabilities and stockholders equity. On the income statement, 100% is assigned to net sales, with all revenue and expense accounts then related to it in percentages.

 Income statement items-expressed as percentage of total sales Balance sheet items-expressed as percentage of total assests

2006 Sales Income from financial services Income from treasury operations Income from nonfinancial services Other income Provision for direct tax Rent & lease rent Raw materials, stores & spares Miscellaneous expenditure

2007

2008

2009

2010

2011

268,813.00 328,089.00 372,481.00 419,728.00 466,109.00 551,766.00 28,181.00 26,259.00 29,708.00 3,868.00 1,737.00 1,773.00 31,597.00 1,918.00 26,378.60 660.5 23,467.70 313.4

484
1,536.00

674
1,162.00

1,132.00
1,539.00

1,417.00
1,308.00 25,547.00 596

1,641.40
2,427.80 26,799.70 747.4

1,810.30
1,738.20 26,305.40 810

13,706.00 16,884.00 24,851.00 176 204 548

164,151.00 198,418.00 216,859.00 267,182.00 289,840.70 348,333.10

1,057.00

1,189.00

1,100.00

1,678.00

1,474.50

2,328.30

2006 Income from financial services Income from treasury operations Income from nonfinancial services Other income Provision for direct tax Rent & lease rent Raw materials, stores & spares Miscellaneous expenditure

2007

2008

2009

2010

2011

10.4835 8.003621 7.975709 7.5279705

1.438919

5.65932 4.2531979

0.52943 0.475997 0.4569626 0.1417051 0.0567994 0.328092

0.180051 0.205432 0.303908 0.3375996 0.3521494

0.571401 0.354172 0.413175 0.3116304 0.5208653 0.3150248

5.098712 5.146165 6.67175 6.0865608 5.7496637 4.767492

0.065473 0.062178 0.147122 0.1419967 0.1603488 0.1468014 61.06513 60.47688 58.22015 63.655987 62.18303 63.130584

0.39321 0.362402 0.295317 0.3997827 0.3163423 0.4219724

2006 Total assets Plant & machinery, computers and electrical assets Inventories Cash & bank balance Land

2007

2008

2009

2010

2011

752,339.00 855,662.00 958,990.00 1,106,167.00 1,238,653.10 1,384,119.70

184,945.00 207,231.00 208,602.00 23,629.00 25,435.00 27,055.00

264,509.00 32,924.00 162,716.00 20,389.00

278,476.20 33,981.20 144,594.80 21,678.60

318,837.10 36,921.60 161,852.60 22,544.50

84,714.00 133,146.00 149,332.00 12,680.00 13,590.00 15,726.00

2006 Plant & machinery, computers and electrical assets Inventories Cash & bank balance Land

2007

2008

2009

2010

2011

24.58267

24.21879

21.75226

23.912212

22.482178

23.03537

3.140738

2.972552

2.821197

2.9764041

2.7433993

2.667515

11.26008

15.56058

15.5718

14.709895

11.673551

11.693541

1.68541

1.588244

1.63985

1.8432117

1.7501753

1.628797

SWOT ANALYSIS
S:STRENGTH W:WEAKNESS O:OPPURTUNITY T:THREAT

SWOT analysis (alternately SLOT analysis) is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieve that objective.

 Strengths: characteristics of the business, or project team that give it an advantage over others Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative to others Opportunities: external chances to improve performance (e.g. make greater profits) in the environment Threats: external elements in the environment that could cause trouble for the business or project

STRENGTH
Spread across the country Dominant Market Share Consistent Growth Operational efficiency Human Resources

Spread Across the Country

A national generator-supplier to major States-Diversified customer base

Dominant Market Share More than one-fourth of Indias generation with one-fifth capacity The next largest power utility owns 7.5% of market share in terms of capacity and 7.6% of share in terms of units generated

Human Resources

24,375 highly trained employees. Planned interventions at various stages of career Knowledge sharing & development through various HR initiative

WEAKNESS
Disposal of Rejects For every 1% reduction in Ash, Yield drops by about 4% Availability of Basic Infrastructure No Control on Input Coal Quality. Decision Process is very slow.

OPPORTUNITY
The company has taken many steps like step-up its recruitment, reviewing feasibilities of various sites for project implementations etc. and has been quite successful till date. NTPC will invest about Rs 20,000 crore to set up a 3,900-megawatt (Mw) coal-based power project in Madhya Pradesh. Company will also start coal production from its captive mine in Jharkhand in 201112, for which the company will be investing about Rs 1,800 crore.

THREAT
India, as a developing country is characterised by increase in demand for electricity and as of moment the power plants are able to meet only about 6075% of this demand on an yearly average. The only way to meet the requirement completely is to achieve a rate of power capacity addition (implementing power projects) higher than the rate of demand addition. NTPC strives to achieve this and undoubtedly leads in sharing this burden on the country.

Conclusion
Company should come up with better management of its credit. Companys sales generating rate is constantly increasing. Being the dominant leader in the market, company should keep its growth consistent as in future there will be a lot of demand for power in our country and it should invest in such a way that it gets the maximum output of its policies. Company should overtake the demanded power output so as to increase its profits.