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Managerial Accounting: Power Sector Company: Operating Efficiencies

Operational inefficiencies of power sector companies NTPC, NHPC and Tata power ratios are given in the PPT.

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Rohit Jain
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27 views21 pages

Managerial Accounting: Power Sector Company: Operating Efficiencies

Operational inefficiencies of power sector companies NTPC, NHPC and Tata power ratios are given in the PPT.

Uploaded by

Rohit Jain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Managerial Accounting

Power Sector Company : Operating


Efficiencies

History of the Power


Sector in India
The industry has mainly developed through
State controlled instruments.
Until
1975

dev.
mainly
through
SEBs/electricity departments controlled by the
respective state government
1975 The Electricity (supply) Act was
amended.
Intervention
of
the
central
government in development of generation
facilities led to the formation of NTPC, NHPC
Effect of this intervention started being felt in
early 80s.

Power Generation in India

Sources of Electricity in
India

Three Companies Chosen


Three top Power companies in terms of Market
capitalization

Company
NTPC
Tata Power
NHPC

Market Capitalisation
(Rs Cr)[1]
98,244.71
16,376.53
17,823.78

NTPC
NTPC Limited(National Thermal Power Corporation
Limited)
is
anIndianCentral
Public
Sector
Undertaking (CPSU) under the Ministry of Power,
Government of India, engaged in the business of
generation of electricity
NTPC's core business is generation and sale of
electricity to state-owned power distribution
companies and State Electricity Boards in India
The total installed capacity of the company is
45,548 MW with 18 coal based and 7 gas based
stations
NTPC accounts for 17.7 percent of the countrys

NHPC
NHPC was incorporated in 1975 following the
government's amalgamation of three hydroelectric
power projects that were being executed by the
Central Hydroelectric Projects Control Board
NHPC has become the largest hydroelectric power
developer in the country with 86 per cent of equity
held by government
NHPC is a Mini Ratna Category-I Enterprise of the
Govt. of India with an authorised share capital of Rs.
1,50,000 Million
During the financial year 2013-2014 , NHPC Power
Stations achieved the generation of 18386 MU.

Tata Power
Tata Poweris an Indianelectric utilitycompany
based inMumbai, Maharashtra, India and is part of
theTata Group
The Company has an installed generation capacity
of 8669 MW in India and a presence in all the
segments of the power sector viz Generation
(thermal, hydro, solar and wind), Transmission,
Distribution and Trading
Its international presence includes a 30 percent
stake in coal mines and a geothermal project in
Indonesia, and a hydroproject in Bhutan in
partnership with The Royal Government of Bhutan

Efficiency
Efficiency
RatiosRatios
Asset Turnover Ratio
Fixed Asset Turnover Ratio
Inventory Turnover Ratio
Receivables Turnover Ratio
Average Collection period
Average Payment period
Average Holding Period

Plant Load Factor


PLF ( %) = Total generation
Installed capacity
It is a performance indicator which
indicates the exact loadability of the
power plant.

Asset Turnover Ratio


Asset turnover ratio = Gross Sales / Total
assets
It represents how efficiently a company
uses its assets to generate sales
Higher the ratio, better is the asset
utilization by the company

Asset Turnover Ratio


0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00

FY 2014-15

FY 2013-14
NTPC

NHPC

Tata Power

Industry Average:

FY 2012-13

Fixed Asset Turnover Ratio


Fixed asset turnover ratio = Gross sales /
Fixed assets
It is a better performance indicator than
the asset turnover ratio for comparing a
capital intensive sector

Fixed Asset Turnover Ratio


0.60
0.50
0.40
0.30
0.20
0.10
0.00

FY 2014-15

FY 2013-14
NTPC

NHPC

Tata Power

Industry average: 0.65

FY 2012-13

Inventory Turnover Ratio


Inventory turnover ratio = Cost of goods
sold
inventories
The lesser the inventory level, the greater
the cash available for meeting day-to-day
operating needs and investment in
productive assets
Higher the inventory turnover ratio, better
is the inventory management by the

Average Holding Period


Average Holding Period =
year

Days / months in an

Inventory
Average Holding Period

turnover
ratio
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00

FY 2014-15

FY 2013-14
NTPC

NHPC

FY 2012-13

Tata Power

Industry average : 18.25

Debtors Turnover Ratio


Receivables turnover ratio =
sales

Gross

Receivables
Measures the efficacy of a firms
credit policy and collection
mechanism
High RTO shows how effectively the
receivable are converted into cash

Average Collection period


Average Collection
Period
=

Days/Months in an Year

Debtors
Average Collection
Period Turnover
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00

FY 2014-15

FY 2013-14
NTPC

NHPC

FY 2012-13

Tata Power

Industry average: 68.86

Ratio

Average Payment period


Average payment
period
= Days/
Months in a year
Creditors
turnover
ratio
Average Payment
Period
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00

FY 2014-15

FY 2013-14
NTPC

NHPC

Tata Power

FY 2012-13

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