A SYNOPSIS OF PROJECT REPORT ON

PRINCIPLES OF BUSINESS FINANCE: FINANCIAL ANALYSIS OF WORKING CAPITAL OF NATHPA JAKHRI POWER CORPORATION LIMITED

Submitted to the Himachal Pradesh University for the degree of

Master of Arts in Business Economics (MA.BE)

Supervised By: Dr. Sikander Kumar Professor

Submitted By: Mr. Yoginder Singh Roll Number - 916 9418981881

DEPARTMENT OF ECONOMICS, HIMACHAL PRADESH UNIVERSITY, SHIMLA

INTRODUCTION 1.1 FINANCIAL MANAGEMENT

Finance is defined as the provision of money at the time when it is required. Every enterprise, whether big, medium or small, needs finance to carry on its operations and to achieve its targets. In fact, finance is so indispensable today that it is rightly said to be the lifeblood of an enterprise. Without adequate finance, no enterprise can possibly accomplish its objectives. According to Guttmamm and Dougall,Business finance can be broadly defined as the activity concern with the planning, raising, controlling and administering the funds used in the business. According to J.L. Massie,Financial management is the operational activity a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operation.

Elements of Finance Management

Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in current assets are also a part of investment decisions called as working capital decisions. Financial decisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby. Dividend decision - The finance manager has to take decision with regards to the net profit distribution. Net profits are generally divided into two:

o Dividend for shareholders- Dividend and the rate of it has to be decided. o Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise.

Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be To ensure regular and adequate supply of funds to the concern.

 To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders. To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost. To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved. To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.

1.2 Capital Structure

its refer to the way a corporation finance its assets through some combination of equity debt or hybrid security In simple words, capital structure refer to the proportion of different sources of long term funds in the capital ratio. The term capital structure refers to the percentage of capital (money) at work in a business by type. Broadly speaking, there are two forms of capital: equity capital and debt capital. Each has its own benefits and drawbacks and a substantial part of wise corporate stewardship and management is attempting to find the perfect capital structure in terms of risk / reward payoff for shareholders. Equity CapitalThis refers to money put up and owned by the shareholders (owners). Debt Capital The debt capital in a company's capital structure refers to borrowed money that is at work in the business.

1.3 Working Capital

Working capital means meeting day to day requirements. The requirements of working capital changes from time to time and firm to firm depending upon nature of business market condition. According to Shubin, Working capital is amount of funds necessary to cover the cost of operating the enterprise.

1.3 Ratio Analysis

A ratio is simple airthmathematical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions. Ratio analysis is a process whereby the financial statement are analysed and interpreted ratio. To calculate ratio one item divided with the other. Because these ratios are based on financial accounts, therefore , they are also called accounting ratios.

According to Accountants Handbook by Wixon, Kell and Bedfor. A

ratio is an expression of the quantative relationship between two numbers

EXPRESSING RATIOS
Proportion Percentage Quotient

2. PROFILE OF COMPANY
The 1500 MW hydro electric power project is situated in Kinnaur district, Himachal Pradesh. Stretched over 45 kms length on river Satluj, this project has been a civil engineering marvel. The Head Race Tunnel with 8.5 Mtr finished diameter and 27 kms long is longest in any Hydro Project in the country and probably in the whole of Asia. The run off the river project has 65 meter high concrete dam to divert water to HRT through four desilting chambers, each having 21 meter diameter. First time in the country, Steel fibre shotcrete is applied as the final lining in this structure. Six turbines, housed in underground power hose will start producing the electricity in 2004.

 Salient Features Client : Nathpa Jhakri Power Corporation Contractors : Continental Foundation Joint Venture for Dam, Desilting chambers and part of the HRT Nathpa Jhakri Joint Venture for Surge shaft and part of the HRT Jaiprakash Hyundai JV for power house, TRT and the valve chambers/pressure shafts. Approximately 60,000 cum of SFRS is applied in desilting chambers using 'Total Consistency Control' system. Products

Polyheed SG 30 (Water reducer cum thixotropic agent) - 500 MT Meyco TCC 766 (Activator) - 2000 MT Meyco MS 610 (Microsilica) - 1500 MT

The concrete lining has been placed in variety of conditions, with temparature ranging from -5.C to 35.c. Some parts had very high temp of around 60.c due to the hot water springs.

Nathpa Jhakri Power Corporation Limited (NJPC) was set-up in 1988 to plan, investigate, organize execute, operate and maintain hydro electric power project in the Satluj river basin in the State of Himachal Pradesh. Emerging rapidly on the National Power scene, NJPCs first gigantic 1500 MW Nathpa Jhakri Hydro Power Project(NJHPP) at an estimated cost of over Rs. 8,000 crores is fast nearing completion

3 Need and importance of the study

The life blood of business, as is evident , signified funds required for day-to-day operation of the firm. The management of working capital assumes great importance because shortage of working capital funds is perhaps the biggest possible cause of failure

of many business units in recent times, in this study an attempt has been made analyze the various dimensions of the working capital of ( NJPC) Nathpa Jakhri Power Corporation ltd. with a view to achieve the following objectives.

4 Objectives of the study

The following are the main objectivesof the study

to examine the capital requirement of Nathpa Jhakri Power Corporation Ltd.

to evaluate the financial performance of Nathpa Jhakri Power

Corporation Ltd.
to suggest measures to increase the efficiency in management of working capital.

5. RESEARCH METHODOLOGY
In order to achieve the objectives of this study both the primary and secondary data will be collected with the help of well structured schedules/questionnaire and the secondary data will be collected from the already published source. Besides the various web sites and internet will also be consulted. After collecting the required information it will be classified, tabulated and average and percentage will be worked out in order to draw the inferences. The various ratios will be calculated with the help of ratios analysis.

References
Pandey I.M., Financial Management, 10th edition, Vikas Publishing House Private Ltd.

Gupta K Shashi, Financial Management, P 29 Kalyani Publishers, 2009 New Delhi Dr. R.K. Mittal, Management Accounting and Financial Management, P 49 ,V.K (India) Publication New Delhi N.K Sahni and Rajneesh Jain, Financial Management, P 20, Kalyani Publishers,Third Edition 2004, New Delhi Annual report of Nathpa Jhakri Power Corporation Ltd for various years.

Websites www.google.com