A PROJECT REPORT ON

RATIO ANALYSIS OF Tata Power Company Limited

SUBMITTED BY
MR/MISS ZINE SAGAR VIJAY SANGITA,
ROLL NO: 6279
M.Com. SEM- I
(ADVANCE ACCOUNTANCY)
ACADEMIC YEAR: 2014-15

Under the guidance of PROJECT GUIDE

PROF. S.V.RANE
PROF.ANURADHA GANESH

SUBMITTED TO UNIVERSITY OF MUMBAI

MULUND COLLEGE OF COMMERCE
S N ROAD, MULUND (WEST)
MUMBAI - 400080
1

DECLARATION FROM THE STUDENT

I, ZINE SAGAR VIJAY SANGITA ROLL No. 6279 Student of
Mulund College Of Commerce, S. N. Road, Mulund (West)
400080, studying in M.Com Part- I hereby declare that I have
completed the project on RATIO ANALYSIS OF INDIAN OIL
CORPORATION LTD under the guidance of project guide Prof.
during the academic year 2014-15. The information submitted is
true to the best of my knowledge.

Date: 23RD SEPTEMBER 2014

Signature

Place : Mulund

CERTIFICATE
I, Prof., hereby certify that Mr/Miss ZINE SAGAR VIJAY SANGITA Roll
No. 6279 of Mulund College of Commerce, S. N. Road, Mulund (West),
Mumbai -400080 of M.com Part I (Advanced Accountancy) has completed her
project on RATIO ANALYSIS OF INDIAN OIL CORPORATION LTD
during the academic year 2014-15. The information submitted is true and
original to the best of my knowledge.

Project Guide

External guide

Co-coordinator

Principal

Date: 23RD SEPTEMBER 2014

ACKNOWLEDGEMENT

I would like to express my sincere gratitude to Principal of

Mulund College of Commerce DR. (Mrs.) ParvathiVenkatesh,
Course - Coordinator

Prof. Rane and our project guide Prof.,

for providing me an opportunity to do my project work on

RATIO ANALYSIS OF INDIAN OIL CORPORATION LTD. I
also wish to express my sincere gratitude to the non teaching staff of our college. I sincerely thank to all of them
in helping me to carrying out this project work. Last but not
the least, I wish to avail myself of this opportunity, to
express a sense of gratitude and love to my friends and my
beloved parents for their mutual support, strength, help and
for everything.

DATE: 23RD SEPTEMBER 2014

SIGNATURE

PLACE:MULUND
4

Contents
INTRODUCTION

VISION,MISSION AND VALUES

History :-

Achievements/ recognition:

11

BALANCE SHEET

14

STATEMENT OF PROFIT AND LOSS A/c:

16

RATIO ANALYSIS

18

CALCULATION RATIO ANALYSIS

20

Conclusion

43

Bibliography/webliography

45

INTRODUCTION
Tata Power is Indias largest integrated power company with a growing
internationalpresence. The Company together with its subsidiaries and jointly
controlled entities has aninstalled gross generation capacity of 8584 MW in
India and a presence in all the segments of the power sector viz. Fuel Security
and Logistics, Generation (thermal, hydro, solar and wind), Transmission,
Distribution and Trading.
It has drawn up an ambitious roadmap to expand its presence across
the power valuechain to empower and positively impact the lives of each and
every stakeholder. Witha customer base of 1.9 million, the Company plans to
have 18,000 MW generation
capacity, 4000 MW of distribution, 25 million tonnes per annum of energy
resources and
10-X growth in value added businesses by 2022. The Company is also
constantly innovating to ensure that stakeholder expectations are exceeded.
Some of these are :
Successful public-private partnerships in Generation, Transmission and
Distribution in India

Developed countrys first 4000 MW Ultra Mega Power Project at Mundra

(Gujarat) based on supercritical technology

Focus on clean energy and one of the largest renewable energy players in
India
Strategic presence in Transmission through Powerlinks Transmission Limited
in the Eastern and North Eastern region of India and Transmission operations
in the Mumbai License Area
International presence through strategic investments in Indonesian coal
mines; in Singapore through Trust Energy Resources to securitise coal supply
and the shipping of coal for its thermal power generation operations; in
South Africa through a joint venture called Cennergi to develop projects in
South Africa, Botswana and Namibia; in Australia through investments in
6

enhanced geothermal and clean coal technologies and in Bhutan through a

hydro project in partnership with The Royal Government of Bhutan.

Strategic Elements tatapowerfor the year 2014-15

Vision :
To be the most admired and responsible integrated power
company with international footprint, delivering sustainable
value to all stokeholder.

Mission
We will become the most admired and responsible power
company delivering sustainable value by :
Operating our assets at benchmark levels Execting projects
safely, with predictable benchmark quality, cost and time
growing the tata power businesses be it across the value
chain or across geographies, and also in allied or new
businesses
Driving organizational transformation and creating a culture
that will help us to deliver on our strategic intent.
Achieving our sustainability intent of Leadership with care,
by having leading and best practices obn care for the
Environment, care for the community, care for the customers
and shareholders and carec for the people.
Being the lead adopter of technology, wherever appropriate,
with a bold spirit of pioneering and calculated risk taking,
and building capabilities that would help us internalise the
use of these technologies
.
Values :
Our Values are SACRED to us
Safety Safety is a core value over which no business
objective can have a higher priority.
7

Agility :-Speed, Responsiveness and being Proacting

through collaboration and Empowering Employees
Care : care for stakeholders our Environments, customers
and potential, our community and our people (our employee
and partners)
Ethics : Achieve the most admired standards ethics, through
integrity and mutual trust.
Diligence : Do everything (set direction, deploy actions,
analyse, review, plan and mitigate risks etc.) with a
thoroughness that delivers quality and
Excellence : in all areas, and especially in operation,
Exaction and growth.

History :Tata Power, erstwhile known as Tata Electric, pioneered the generation
of electricity in India nine decades ago. The company started as Tata
Hydroelectric Power Supply Company in 1911, it got its new status with the
amalgamation of two entities viz, Tata Hydroelectric Power Supply Company
and Andhra Valley Power Supply Company in 1916. Today, it is the country's
largest private power utility, established as a licensee in Mumbai and with
ambitious expansion plans from being essentially Mumbaicentric to a major
national player, not only in the fields of Power but also in Energy and
Broadband Communication.
Tata Power commissioned Indias first power plant the hydroelectric
station in Khopoli (72 MW) in 1915, the second hydro station one in
Bhivpuri (75 MW) in 1919 and the 3rd one in Bhira (300 MW) in 1922. With
these three hydro stations and the 1,350 MW thermal power station in
Trombay, Mumbai; a 475 MW power station near Jamshedpur in Jharkhand
and an 87 MW thermal power plant in Belgaum, Tata Power is the largest
integrated private power company in India and is the most trustworthy power
supplier to Mumbai.
The Tata Power Company Limited is India's largest private sector power utility
with an installed generation capacity of over 2785 MW. The company has
emerged as a pioneer in the Indian power sector, with a track record of
performance, customer care and sustained growth. Tata Power has a presence
in all the segments of the power sector viz generation (thermal, hydro, solar,
wind and liquid fuel), transmission and distribution Recognized as Indias
largest private sector power utility, with a reputation for trustworthiness, built
up over nearly nine decades, Tata Power surges ahead into yet another year
with plans of sustained growth, greater value to consumer and reliable power
supply.
Led by a powerful vision, Tata Power pioneered the generation of
electricity in India. It has now successfully served the Mumbai consumers for
over ninety years and has spread its footprints across the nation. Today, it is
the countrys largest private player in the sector. Apart from Mumbai and
Delhi, the company has generation capacities in Jojobas, Jharkhand and
Karnataka.
Tata Power has an installed power generation capacity of above 2300
Mega Watts, with the Mumbai power business, which has a unique mix of
Thermal and Hydro Power, generated at the Thermal Power Station, Trombay,
and the Hydro Electric Power Stations at Bhira, Bhivpuri and Khopoli,
accounting for 1797 MW. Its diverse generation capability facilitates the
company in producing low cost energy, thereby giving its consumers a greater
value for money.
9

Among its many achievements that Tata Power can proudly boast of are the
installation and commissioning of Indias first 500 MW unit (at its Thermal
Power Generating Station, Trombay) the 150 MW Pumped Storage Unit at its
Hydro Generating Station, Bhira, and environmental control systems like the
Flue Gas Desulphurisation plant.
Tata Power has a first of its kind joint venture with Power Grid Corporation of
India for the 1200 km Tala Transmission Project.

Services offered by the company:

Design & Development Strategic Electronics Division (SED) SED
(Mumbai) was established in 1967 and is today a leading development
organization, having pioneered indigenous design and development of many
hitech systems for Defence and Industry. The manufacturing facility was
established in 1982 and is situated in Bangalore.
Direct Marketing Power Supply to Mumbai Consumers The Company
also supplies power directly to such bulk consumers as Central and Western
Railways, Mumbai Port, refineries, textile mills, fertilizer factories, BARC,
Municipal Corporation water pumping plants and other major continuous
processes industries requiring uninterrupted power supply.
Power Projects & Related Services Tata Power also extends its expertise
for:Setting up Independent Power Plants (IPP) Setting up Captive Power
Plants (CPP)Power Transmission and Distribution Projects Operation and
Maintenance Services (O&M Services)
Transmission & Distribution
Transmission Business Tata Power owns and operates 1200 circuit Kms of
high voltage (220 kV and 110 kV) Transmission Network.

Distribution Business Tata Power has a 935 km HT and LT cable

distribution network connecting 17 major receiving stations and over 85
substations in its Mumbai License area.Subsidiary Companies associated
with Tata Power:

AfTaab Investment Co. Ltd.

Chemical Terminal Trombay Ltd.

Powerlinks Transmission Ltd.

Tata Power Trading Co. Ltd.

Maithon Power Ltd.

10

NELCO Ltd.

Tatanet Services Ltd.

Industrial Energy Ltd.

Industrial Power Utility Ltd.

Industrial Power Infrastructure Ltd.

Coastal Gujarat Power Limited

Veltina Holdings Ltd.

Tata Power (Mauritius) Ltd.

Tata Power (Cyprus) Ltd.

Tata Power International Holdings Ltd.

North Delhi Power Ltd.

Energy Eastern Pte. Ltd.

Trust Energy Resources Pte. Ltd.

Achievements/ recognition:
2013
Tata Agrico Best Garden Awards 2013
MACCIA Awards 2013
Partner Recognition for Illustrious Delivery & Excellence
2012
Infrastructure Excellence Awards 2012
Powerline Award in the category 'Best Performing Renewable IPP'
Certificate of Merit awarded to Transmission Lines
olden Peacock Environment Management Award 2012
Greentech Safety Award 2012 Silver in the Power Sector category
Innovative Energy Service Award
'The Most Innovative Energy Service Award'
11

Maithon Power Limited (a JointVenture of Tata Power and Damodar

Valley Corporation), in continuation with the Green Maithon, Great
Maithon campaign launched on World Environment Day, has undertaken
Green Belt Development on over 400 acres of project area and social
forestry in 10 Kms radius. Sept 2011.

Tata Power, won several accolades at the prestigious CMO Asia

Awards 2011 for excellence in Brand and Marketing organized at Singapore.

Greentech Safety Gold Award 2008 in Thermal Power sector for

Outstanding achievement in Safety Management awarded to Trombay
Thermal Power Station for the 5th consecutive year. April 2008.

SurakshaPuraskar by the National Safety Council of India for

Jojobera, in January 2008 for developing and implementing very effective
Safety Management Systems and Procedures during the assessment period
of three years 200305. January 2008.

Silver Shield awarded for Bhira and Bhira Pump Storage Scheme
(6X25 + 1 X 150 MW), adjudged the second best performing station in the
country by the Central Electricity Authority, India. March 2008.

Awarded the Quality Circles AWARD 2007 at the National

Convention on Quality Circles under the aegis of Quality Circle Forum of
India.

Dahanukar Award by the Indian Association of Occupational Health

for HIV/AIDS intervention at the workplace.

NASSCOM Best IT User Award 2006 in the Energy and Utility sector
for providing value added services to consumers through Customer Portal
System via Internet website.

Amity HR Excellence Award for the year 2007 for effective people
management practices and HR systems.

Tata Power has won the prestigious Dahanukar Award for HIV / AIDS
intervention at the work place in 2007.

Association of Business Communicators India Award 2007 Bronze

medal for Social Responsibility Communication.

Tata Power Bhira Hydro Plant has received the Silver Shield Award
from the Central Electricity Authority Mumbai.
12

Tata Power, Jamshedpur' has been declared as the winner of 'Golden

Peacock Environment Management Award' for the year 2006.

Greentech Safety Award 2006 under Platinum Category has been

awarded to The Tata Power Co. Ltd., Jojobera, Jamshedpur.

Rajiv Gandhi National Quality Award 2005 for Jojobera.

Tata Power is awarded Certificate for Strong Commitment to Excel for

the year 2005 by the jury of CIIEXIM Bank Award for Business
Excellence2005 12 November 2005.

Tata Power among the top 13 Best Managed Companies in India by

Business TodayAT Kearney.

Tata Power receives CII National Award for Excellence in Energy

Management (Nov 04, 2004).

The 2nd WartsilaMantoshSondhi Award 2004 for its outstanding

contribution to the Indian Power sector.

Greentech Environment Excellence Platinum Award' in Thermal Power

sector for the year 20032004 for Jojobera Division.

'Greentech Safety Gold Award' for the Year 20032004 for the
Trombay power plant.

Tata Power receives the Greentech Gold Award for safety (August 18,
2003).

Tata Power bags BCCI 'good corporate citizen award 20012002'

(September 21, 2002).

Premier credit rating agencies like CRISIL & ICRA have given Tata
Power the Coveted 'AAA ' and 'LAAA' ratings respectively.

Tata Power has won the N M GIDWANI Rolling Trophy consistently

from 1991 to 1999, for the maintenance of the Suman Nagar Gardens, a
competition conducted by the Friends of Trees.

Safety Awards for Lowest Frequency Rate of Accident and Maximum

Accident Free days have been won by Trombay Thermal Power Station in
1992. Bombay Chamber Good Corporate Citizen Award 1994 95.
13

Awards from FCCI, ASSOCHAM and the Department of Science and

Technology, Government of India for the achievements in the field of R &
D.

Confederation of Indian Industries (CII) award for the development of

500 MW Thermal Power Plant training simulator.

The Review 200 Plaque ranked Tata Power among the top ten
organisations in Asia for overall corporate excellence by the Far Eastern
Economic Review in 1995.

The 1995 Power Plant Award presented by Electric Power International

for the Trombay Thermal Power Station.

Bronze Award from the American Concrete Institute for the

'Outstanding Structures of the Year' for the 900 feet tall reinforced concrete
chimney for the 500 MW power plant at Trombay Thermal Power Station
198889.

14

BALANCE SHEET FOR

FINANCIAL YEARS 2014 AND 2013
Note

Particulars

March-14

March-13

EQUITY AND LIABILITIES

(1) Shareholders' Funds
2 (a) Share Capital
3

237.33

237.33

(b) Reserves and Surplus11648.74 10,803.46

11,886.0711,040.79
UNSECURED PERPETUAL SECURITIES1,500.00

1,500.00

613.23

STATUTORY CONSUMER RESRVIES

SPRVICE APPROPRIATION TOWARDS PROJECT COST533.61

(2) Non-current liabilities

4 (a) Long-term borrowings7,175.998,452.57
5 (b) Deferred tax liabilities (Net) 881.14805.49
6 (c) Other Long-term liabilities86.1099.81
7 (d) Long-term provisions 164.23413.19
8,307.469,771.06

(3) Current liabilities

8 (a) Short-term borrowings 1,579.531,172.15
9(b) Trade payables 1,057.68923.55
6 (c) Other current liabilities4,305.992,027.64
15

604.23
533.61

7 (d) Short-term provisions661.01437.61

7,604.21

4,560.95

TOTAL30,539.03

28,092.86

ASSETS
(4) Non-current assets
(a) Fixed Assets
10

(i) Tangible assets8,532.81

7,744.41

11 (ii) Intangible assets65.8230.11

12(iii) Capital work-in-progress 684.49641.46
9,373.72

8,489.32

14 (b) Non-current investments 12,361.09 10,859.68

15(c) Long-term loans and advances 2,898.79 2,140.56
16(d) Other non-current assets 2,369.49 2,808.17
27,003.54 24,297.73

(5) Current assets

14 (a) Current investments

1.36 256.56

17 (b) Inventories 710.67761.09

18 (c) Trade receivables1,320.101,300.06
19 (d) Cash and Bank Balances67.86413,17
15 (e) Short-term loans and advances 873.08920.90
16 (f) Other current assets 562.42141.35
3,535.49

3,795.13

TOTAL30,539.03

28,092.86
16

STATEMENT OF PROFIT AND LOSS

FOR THE YEAR ENDED 31ST
MARCH 2014
Note Particulars March-14 March-13
(1) Revenue:
20 (a) Revenue from operations

8,645.259,583.64

Less: Excise Duty18.2116.36

Revenue from operations (Net) 8,627.049,567.28
21 (b) Other Income655.76721.67
Total Revenue9,282.8010,288.95
(2) Expenses:

789.97

Cost of Power Purchases

793.33 624.26

Less : Cash Discount

3.360.84

627.39
Cost Of Fuel

3,350.915,244.00

Transmission Charges 467.96 233.43

22 Cost of Components consumed 178.99
23

Employee Benefits Expense

24Finance cost

868.21

150.75
544.95

547.60

684.41

Depreciation and Amortisation

587.14

364.10

1,491.16

1,703.38

26 Other Expenses 1,003.51737.49

Total Expenses 7,791.648,585.57
PROFIT BEFORE TAX
17

TAX EXPENSE
(8) Tax Expense:
Current Tax Expanses

354.50

MAT Credit reversed in respect of prior year 105.00

337.43

Nil

Excess Provision For Tax Relating to Prior Years (25.65) Nil

Net Current Tax Expenses

433.85

337.43

Deferred Tax 103.23341.26

Net Tax Expenses
(9) Profit for the year 954.08
33

537.08678.69
1,024.69

Earning per Equity Share

(a) Basic (Rs.)

3.50

3.44

(b) Diluted (Rs.)

3.50

3.44

18

RATIO ANALYSIS
Ratio Analysis is the method or process by which the relationship of items
or group of items in the financial statements are computed, determined and
presented.
Ratio analysis is an attempt to derive quantitative measures or guides
concerning the financial health and profitability of a business enterprise.
Ratio analysis can be used both in trend and static analysis. There are
several ratios at the disposal of an analyst but the group of ratios he would
prefer depends on the purpose and the objective of the analysis.
Ratio :
Means ratio is one figure expressed in term of another figure. It is a
mathematical yardstick that measures the relationship between two figures.,
which are related to each other and mutually interdependent. Ratio is
expressed by dividing one figure by the other related figure. Thus the a ratio
is an expression relating one number to another.
An accounting ratio is an expression relating two figures or two accounts or
two sets of account heads or groups contained in the financial statements.

OBJECTIVE OF RATIOS
a)
b)
c)
d)
e)
f)
g)
h)

Solvency : 1)Long Term 2) Short Term 3) Immediate

Stability
Profitability
Operational efficiency
Credit standing
Structural analysis
Effective utilization of resources
Leverage or external financing.

19

1)Liquidity Ratios :
1)Current Ratio :
The Current Ratio is one of the best known measures of financial strength. It
is the most common measure of short-term liquidity. It is also referred as the
working capital ratio because net working capital is the difference between
current assets and current liabilities.
Current Assets = Inventories + Sundry Debtors + Cash and Bank Balances +
Receivables/ Accruals + Loans and Advances + Disposable Investments
Current Liabilities = Creditors for goods and services + Short-term Loans +
Bank Overdraft + Cash Credit + outstanding Expenses + Provision for
Taxation + Proposed Dividend + Unclaimed Dividend
The main question this ratio addresses is: "Does your business have enough
current assets to meet the payment schedule of its current debts with a margin
of safety for possible losses in current assets?"
A generally acceptable current ratio is 2 to 1.

a) Current Ratio = Total Current Assets

Total Current Liabilities

20

CALCULATION OF CURRENT RATIO

FOR THE YEAR 2013-14
a) Current Ratio =

Total Current Assets

Total Current Liabilities

current ratio=3535.49
7604.21
=

0.46

FOR

THE YEAR 2012-13

Current Rations =

Total Current Assets

Total Current Liabilities

= 3795.13
4560.95

= 0.83

Comments :The ratio is not somewhere near to standard ratio of 2:1.

The ratio is 0.46 and 0.83 respectively the year 2013-14

21

and 2013.

b) Quick Ratios/ Quick Asset Ratio/ Acid test Ratio

The Quick Ratio is sometimes called the "acid-test" ratio and is one of
the best measures of liquidity.

Quick Assets
= Current Assets (Inventories + prepaid expenses)
Current Liabilities
= As mentioned under Current Ratio.
The Quick Ratio is a much more conservative measure of
short-term liquidity than the Current Ratio. It helps answer the
question: "If all sales revenues should disappear, could my business
meet its current obligations with the readily convertible quick funds on
hand?"
Quick ration of 1:1 is considered satisfactory.

b)Quick Ratio = Total Quick Assets

Total Current Liabilities
FOR THE YEAR 2013-14
a) Quick Ratio =
Total Quick Assets
Total Current Liabilities
=

2824.82
7604.21

0.371
22

FOR THE YEAR 2012-13

a) Quick Ratio =
Total Quick Assets
Total Current Liabilities
=
3034.04
4560.95
=
0.665
Comments :-The immediate solvency position as reveled by liquidity ratio is
seems to be satisfactory. This proves that company is in a better condition to
pay back all its quick liabilities.
However the position in 2014 is better than that of 2013.
b)

Absolute Liquidity Ration :

Absolute Liquid Assets
Marketable Securities

Cash + Bank Balance +

Current Liabilities = Trade Creditors+ Bills payable+ Banks credit+ Provision

for Taxation+ Dividend Payable+ Outstanding Expenses

Rationale:
1) The ideal Absolute Liquid ratio is 1:2 or 0.5.
2) This ratio indicates most rigorous liquidity test.
c) Absolute Liquidity Ration = cash + Marketable securities

Total Current Liabilities

FOR THE YEAR 2013-14

a) Absolute Liquidity Ration = cash + Marketable securities
Total Current Liabilities
=

69.22
7604.21

0.009

FOR THE YEAR 2012-13

Absolute Liquidity Ration =Total Current Assets

23

Total Current Liabilities

=

671.73
4560.95

0.147

Comments :
The ideal Absolute Liquid ratio is 1:2 or 0.5 .how ever the Absolute
liquidity ration is 0.009 and 0.147 receptively the year 2014 and 13.
There for the in 2013 is better than the year 2014.

Defensive Interval Ratio :

D) Defensive Interval Ratio =
Quick Assets
Projected Daily Cash Requirement
FOR THE YEAR 2013-14
Defensive Interval Ratio =

Quick Assets
Projected Daily Cash Requirement

2824.82
41.095

68.728

FOR THE YEAR 2012-13

Defensive Interval Ratio =

Quick Assets
Projected Daily Cash Requirement

3034.04
46.06

67.33

Projected Daily Cash Requirement = Cost Of goods sold + Cash Expenses

365
FOR THE YEAR 2013-14
24

7207.88 + 7791.64
365

41.094

FOR THE YEAR 2012-13

=

7863.9 + 8585.57
365

=
45.06
Comments :-The Defensive Interval Ratio is 68.72 and 67.33 receptively
the year 2014 and 13

2) Activity Ratios :
a) Inventory Turnover Ratio = Cost of goods sold
Average Inventory
FOR THE YEAR 2013-14

7207.88
355.335

20.284

FOR THE YEAR 2012-13

=

7863.9
380.545

20.66

Comments :The purpose of this ratio is to measure the operating efficiency of the
company and of inventory management.
Higher the ratio, greater is the efficiency.
25

The stock turnover is almost same in the year 2014 and 13.

Debtors Turnover
Debtors Turnover =
Credit Sales
Average Debtors
FOR THE YEAR 2013-14

8627.04
660.05

13.070

FOR THE YEAR 2012-13

=

9567.28
650.03

=
14.71
Comments :-The Debtors Turnover was 13.70 and 14.71receptively the
year 2014 and 13

26

Working Capital Turnover :

a) Working Capital Turnover =
Net Sales
Average Working Capital

FOR THE YEAR 2013-14

8627.04
(2034.06)

- 4.240

FOR THE YEAR 2012-13

=

9567.28
(382.91)

- 24.98
27

Comments :The purpose of this ratio is to measure the operating efficiency of the
company and of inventory management.Higher the ratio, greater is the
efficiency.

Fixed Assets Turnover :

It measures the efficiency with which the firm uses its fixed
assets.
A high fixed assets turnover ratio indicates efficient utilisation of fixed
assets in generating sales.
A firm whose plant and machinery are old may show a higher fixed
assets turnover ratio than the firm which has purchased them recently.

a) Fixed Assets Turnover =

Sales
Fixed Assets
FOR THE YEAR 2013-14

8627.04
9373.72

0.920

28

FOR THE YEAR 2012-13

=

9567.28
8489.32

1.126

Comments :The ratio of fixed turnover has declined in the year 2014 from 1.126 in the
year 2013 to 0.126 in the year 2014.This is due to decrease in fixed assets
due to new machinery purchase

Total Assets Turnover :

This ratio measures the efficiency with which the firm uses
its total assets.
This ratio is computed as: __Sales_
Total Assets

b) Total Assets Turnover = Sales

Total Assets
FOR THE YEAR 2013-14
=

8627.04
30539.03

0.2824

FOR THE YEAR 2012-13

=

9567.28
28092.86

0.34

29

Comments :There is decrease in the total asset ratio in the year 2014, the reason
is purchase of new assets.

Capital Employed Turnover :

It is a relationship between sales and capital employed
This ratio indicates the firms ability of generating sales per rupee of
long term investment.

The higher the ratio, the more efficient is the utilization of owners and
long-term creditors funds.
c) Capital Employed Turnover =
Sales
Average Capital Employed
FOR THE YEAR 2013-14
=

8627.04
2652.5

3.252

FOR THE YEAR 2012-13

=

9567.28
4053.20

2.36
30

Comments :There is a increase in the capital employed ratio from the year 2013 to
2014 from 2.36 to 3.25. The sales have increased but capital employed
has increased more than increase in sales

3) Leverage Ratios :
1) Debt Equity Ratio
This ratio indicates the proportion of debt fund in relation to
equity. This ratio is very often referred in capital structure decision as
well as in the legislation dealing with the capital structure decisions
(i.e. issue of shares and debentures). Lenders are also very keen to
know this ratio since it shows relative weights of debt and equity.
Debt equity ratio is the indicator of firms financial leverage.
According to the traditional school, cost of capital firstly decreases due
to the higher dose of leverage, reaches minimum and thereafter
increases, so infinite increase in leverage (i.e. debt-equity ratio) is not
possible.

a) Debt Equity Ratios =

Long Term Debts
Shareholders Funds
FOR THE YEAR 2013-14
=

7175.99
11886.07

0.603
31

FOR THE YEAR 2012-13

=

8452.57
11040.79

0.76

Comments :A high ratio here means less protection for creditors. A low ratio, on the other
hand, indicates a wider safety cushion.

Here large sum is contributed by

shareholders so debt is minimal. Still a decline in debt equity can be observed

due to increase in shareholders funds

b) Total Debt Ratio = Total Debt

Total Assets
FOR THE YEAR 2013-14
=

8755.52
30539.09

0.286

FOR THE YEAR 2012-13

=

9630.72
28092.86

0.34

Comments :As there is an increase in the assets of the company due to purchase of fixed
assets, the total debt equity ratio is showing the decline from 0.34 in the year
2013 to 0.28 in the year 2014
32

c) Interest Coverage Ratios =

EBIT
Interest
FOR THE YEAR 2013-14
=

2823.63
795.39

3.54

FOR THE YEAR 2012-13

=

3048.33
666.26

4.57

Comments :The company has negligible interest burden. The interest coverage ratios are
totally in favourable condition.

d) Financial Leverage Ratio =

EBIT
EBT
FOR THE YEAR 2013-14
=

2823.63
1491.16

1.89

FOR THE YEAR 2012-13

33

3048.33
1703.38

1.78

Comments :The Financial Leverage Ratio in the 2013 was 1.78 and in the
year 2014 was 1.89.so the financial leverage ratio is same.

4) Profitability Ratios :
Gross Profit Ratio:
It brings out relationship between Gross Profit and Net Sales. It
is also known as
Turnover Ratio. It is expressed as a percentage of net sales.
Gross profit= Net sales - Cost of goods sold
Net sales = Gross Profit sales - returns
This ratio is important in the analysis of the profitability of a business
concern.

a) Gross Profit Ratios = Gross Profit * 100

Net Sales
FOR THE YEAR 2013-14
=

1491.16*100
8627.04
34

17.28

FOR THE YEAR 2012-13

=

1703.38*100
9567.28

17.80

Comments :
The rate of gross profit is 17.28 % in 2014 and 17.80 % in 2013.
This shows that there is a reduction in the gross profit ratio.
The reason for reduction in gross profit ratio is increase in cost of
goods sold without corresponding increase in sales.
But the on the whole the rate near to 65 % is satisfactory

Operating Profit Ratio:Operating ratio is the relationship between cost of activities and
net sales. This ratio brings out the relationship between total cost of
goods sold and net sales

The operating ratio shows at what percentage the operating expenses

are comprised in net sales. It is expressed as a percentage
Operating cost = cogs + operating expenses

b) Operating Profit Ratios =

EBIT * 100
Net Sales
FOR THE YEAR 2013-14
=

2823.63*100
8627.04
35

32.729

FOR THE YEAR 2012-13

=

3048.33*100
9567.28

31.86

Comments :There is aincrease in the operating profit ratio.

The operating cost has increased may be due to inflation but
considerable the net sales have not increased.

Net Profit Ratio:

Net profit ratio indicates the relationship between net profit and
net sales. Net profit can be either operating net profit or net profit after
tax or net profit before tax. This ratio is also known as Margin on
Sales Ratio

This ration in important as it is measure of over-all profitability and is

very useful to the proprietors and investors in judging the prospects of
return on their investments.

Net Profit Ratios = Profit After Tax * 100

Net Sales
FOR THE YEAR 2013-14
36

954.08*100
8627.04

11.059

FOR THE YEAR 2012-13

=
=

1024.69*100
9567.28
10.71

Comments :The net profit is 11.05% and 10.71 % for 2014 and 2013
respectivelyincrease .The net profit ratio is satisfactory for both the
years.

c) Cost of Goods Sold Ratio =

FOR THE YEAR 2013-14
=
=

835.4*100
8627.04
9.68

FOR THE YEAR 2012-13

=

981.71
9567.28

10.26
37

Cost of Goods Sold * 100

Net Sales

Comments :There is a fall in the cost of goods sold ratio due to in increment in the
cost maybe due to inflation. And the net sales did not increase in
correspondence to increase in cost

d) Administrative Exp. Ratio = Administrative Exp * 100

Net Sales
FOR THE YEAR 2013-14
=

129.16*100
8627.04

1.49

FOR THE YEAR 2012-13

=

135.38*100
9567.28

1.41

Comments
There a fall in the admin expenses ratio in the year 2014.
e) Selling Expenses Ratio =
FOR THE YEAR 2013-14
=

6.68*100
8627.04

0.07

FOR THE YEAR 2012-13

38

Selling Exp *100

Net Sales

7.74*100
9567.28

0.081

Comments :There is a fall in the Selling Expenses Ratio in the 2014. Which proves
improvement in the efficiency of the firm

a) Operating Expenses Ratio = Adm.Exp + Selling Exp+

Deprecition*100
Net Sales
FOR THE YEAR 2013-14
=

724.85*100
8627.04

8.40

FOR THE YEAR 2012-13

=

634.81*100
9567.28

6.63

Comments :The Operating Expenses Ratio is in the year 2013 was

6.30 and in the year 2014 was 8.40.

b) Financing Expenses Ratio = Financing Expenses * 100

Net Sales
39

FOR THE YEAR 2013-14

=

868.21*100
8627.04

10.06

FOR THE YEAR 2012-13

=

684.41*100
9567.28

7.15

Comments :The Financing Expenses Ratio was in the year 2014 was
increase from 7.15 to 10.06.

c) Operating Ratio =

COGS + AD. Ex. + Selling Ex.+

Deprecation*100
Net sales

FOR THE YEAR 2013-14

=

-258.73*100
8627.04

- 2.99

FOR THE YEAR 2012-13

=

3034.04
4560.95

0.665
40

Comments :There is improvement in efficiency in the year 2014 as compared to

2013.There is decline in various expenses, leading to better
profitability of the company.

Profit before Tax :

A high NP Margin would ensure adequate return to the owners as
well as enable the Company to withstand adverse economic
conditions when selling prices are declining, demand for the product is
falling and cost of production is increasing

d) Profit Before Tax Ratio =

Profit Before Tax * 100

Net Sales

FOR THE YEAR 2013-14

=

1419.16*100
8627.04

17.28

FOR THE YEAR 2012-13

=

1703.38*100
9567.28

17.80

Comments :-A high NP Margin would ensure adequate return to the

owners as well as enable the Company to withstand adverse
economic conditions when selling prices are declining, demand for the
product is falling and cost of production is increasing.
Decline in Net Profit implies increase in operating Expenses

41

Net Profit Margin indicates Management s ability to operate the

business with sufficient success not only to cover the costs but also to
leave a margin of reasonable compensation to the Owners for
providing their capital at a risk.

Return On Assets Ratio:

The profitability of the firm is measured by establishing
relation of net profit with the total assets. The ratio indicates
the efficiency of utilization ofassets in generating revenue

e) Return on Assets Ratios =

Profit After Tax * 100

Total Assets

FOR THE YEAR 2013-14

=

954.08*100
30539.03

3.124

FOR THE YEAR 2012-13

=

1024.69*100
28092.86

3.64

Comments :
The Return on Assets Ratios was 3.12 and 3.64 was respectively in the year
2014 and 2013.the ratios was almost same.

Return on Proprietors Fund :

42

Alternatively known as Return on Proprietors equity or Return on

ShareHolders Investments or Investors Ratio these ratio indicates
the relation between profit earned ant total proprietors funds
This ratio is of practical importance to prospective investors and
share-holders. If the ratio is higher, they feel confident and
encouraged to invest in the company.
f) Return on Shareholders Funds = Profit After Tax * 100
Shareholders Funds
FOR THE YEAR 2013-14
=

954.08
11886.07

8.026

FOR THE YEAR 2012-13

=

1024.69*100
11040.79

9.28

Comments :There is decreases in the Return on asset ratio in the year 2014 as
compared to 2013.
This means for each rupee of asset the company is earning more of
profit

Earning per Share :

43

Earning per share is calculated to find out over-all profitability of the

organisation. Earning per share represents earnings of the company
whether or not dividends are declared. If there is only one case of
shares, the earning per share are determined by dividing net profit by
the number of shares. If there are both equity and preference shares
then the net profit should be reduced by the amount paid to the
preference share holders.

This ratio is used by the investors for evaluating the investment

opportunities.

g) Earnings Per Share = PAT Pref. Dividend

Number of Equity Shares
FOR THE YEAR 2013-14
=

954.08-0
22900000

4.16

FOR THE YEAR 2012-13

=

1024.69-0
22900000

4.47

Comments :TheEarnings Per Share ratios in the year 2014 and in the year 2013 was
receptively 4.17 and 4.37.

Conclusion
44

STANDALONE
ON a standalone basis the operating revenue was lower at
Rs.8,627.04crore, as against 9,567.28 crore in FY 13, decreased of
10 % however your company earned a higher operating profit
compared to previous years but owing to forex losses and reversal
of mat credit accrued in earlier years, your company reported a
profit after tax (PAT) of Rs.954.08 crore as against Rs.1,024.69
crore for the previous year.

Last year pat was higher due to

onetime adjustment owing to change in depreciation rate.

Power Business
Operating revenue for power business was Rs. 8,167.70 crore in
FY 14 as against Rs. 9,157.96 crore in Fy 13 lower fuel cost builit
in the revenue recovery resulted in lower operating revenue on
standalone basis part ly offset by higher transmission charges paid
in the Mumbai regulated business based on the intra state
trqansmission order. However operating profit was higher due to
favourable appellate tribunal order Mumbai license area.
All the ratios compeer the each other I say the tata power ltd was
profitably is the year 2012-14 was in the year 2012-13 more
profitability for the year 2012-13.
The company was more profitability compeer the year 2013 and
the year was 2014 was more than higher profit in the year 201213.

45

Bibliography
T.Y.B.COM book of University of Mumbai-Managements accounting
Books of T.Y.B.COM of Financial Accounting Dr.VarshaAinapur
M.com Part II books Advanced Financial AccountingIII

Webligraphy
http//: www.tatapoer.com

http//:www.tatapoweltd.com
http//:www.tatapowerndtv.com

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