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SYNOPSIS

Working Capital Management in APCPDCL


Introduction Finance is regarded as the life blood of a business enterprise. It is guide for regularizing investment decision and expenditure, and endeavors to squeeze the most out of every available rupee. No business activity can ever be pursued without financial support. Production and distribution of goods and services in fact, will be a mere dream without flow of funds. Efficient management of every business enterprise is closely linked with efficient management of its finances. Financial management involves the management of finance function. It is concerned with planning, organizing, directing, and controlling the financial activities of an enterprise. It deals mainly with raising funds in the most economic and suitable manner: using these funds as profitably as possible: planning future operations: and controlling current performance and future development through financial accounting, budgeting, statistics and other means. Financial management means the entire gamut of managerial efforts devoted to the management of finance both its sources and uses of the enterprise. In every organization, where funds are involved, sound financial management is necessary. It helps in monitoring the effective deployment of funds in fixed assets and in working capital. Working capital Management IT is an integral part of overall corporate management. It is concerned with the management of the current assets. Working capital is the amount of funds which a company must have to finance its day-to-day operations. It can take the form of cash, near cash and other assets in the process of moving towards the cash form in a short period. These other assets are stocks of raw materials and supplies needed for manufacture stocks of finished goods awaiting sale, semi-processed items or components that will soon emerge as final products, sundry debtors pending cello\options against credit sales and short term investments. There are 4 types of working capital 1) Gross Working Capital

Gross Working capital is represented by the sum total of all current assets of the enterprise The funds needed would total up to the constituent components, namely stocks of raw materials and supplies, work- inprogress, finished goods, accounts receivables and minimal cash and bank balances, constituting working capital. 2) Net Working Capital Net working capital is the difference between the current assets and current liablilities. The concept of net working capital, as the excess of current assets over current liabilities, highlights the character of the sources form which the funds have been obtained to support that portion of current assets in excess of current liabilities. 3) Permanent Working Capital In actual operations of a typical going concern, the current assets and each component of it are subject to continuous and rapid pace of replacement. 4) Variable Working Capital The amount of funds needs over and above the fixed working capital to take care of such seasonal shifts constitutes the variable working capital. Working Capital Management in APCPDCL The theoretical frame of working capital management and its application is the subject matter of this chapter. The erstwhile APSE Board was constituted on 01-04-59 shortly formation of Andhra Pradesh State with the object of generating, transmitting, distribution of power to the Electricity Consumers with in the state as envisaged by the Electricity (supply) Act 1948 and with a view of Promotion coordinated development of production and supply of Electricity within the State. Under section 5 of the Electricity (Supply) Act, the Andhra Pradesh State Electricity Board has been constituted (with a minimum and maximum numbers as 3 and 7 respectively). Section 15 authorizes the Board to appoint officers and employees as may be required, to enable the Board to carry out its functions under the act. Area of operations of the Board extend to 2.77 lakh square KM and the Board has to be ready to meet the needs of over 73 million people of Andhra Pradesh. Due to severe cash crunch, the finance problems faced by APSEB have made it difficult for it to mobilize the resources needed to bring in capacity additions in Generating, Transmission and Distribution commensurate with the growth in demand.

Reformation of TRANSCO to CPDCL of A.P. Limited As a part of Reform process the Government of Andhra Pradesh has formulated AP Electricity Reform Bill (Act No 30 of 1998) and notified the same to be effective from 01-02-99 onwards. The Government of AP have also notified the transfer schemes rules 1999 to enable smooth transfer of APSEB assets, properties, liabilities, obligations, proceedings and personnel of APSEBoard to APGENCO and APTRANSCO. Accordingly the new entities APGENCO (AP Power Generations Corporation Limited) and APTRANSCO (Transmission Corporation of AP Limited) have been incorporated under Companys Act 1956 as State owned Companies and started functioning with effect from 01-02-1999. Reformation of TRANSCO to CPDCL of A.P. Limited As a part of Reform process the Government of Andhra Pradesh has formulated AP Electricity Reform Bill (Act No 30 of 1998) and notified the same to be effective from 01-02-99 onwards. The Government of AP have also notified the transfer schemes rules 1999 to enable smooth transfer of APSEB assets, properties, liabilities, obligations, proceedings and personnel of APSEBoard to APGENCO and APTRANSCO. Accordingly the new entities APGENCO (AP Power Generations Corporation Limited) and APTRANSCO (Transmission Corporation of AP Limited) have been incorporated under Companys Act 1956 as State owned Companies and started functioning with effect from 01-02-1999. APGENCO Generation of Electricity by the Generating Stations of erst while APSEB. TRANSCO Transmission and distribution of Electricity. The Government of Andhra Pradesh have also constituted Electricity Regulatory Commission for dealing matters concerning Regulatory Body for Electricity Generation, Transmission and distribution of power supply in the State. The Government of Andhra Pradesh also notified second Transfer scheme for giving effect to the transfer of Assets, properties, liabilities, obligations, proceedings and personnel of APTRANSCO to 4 distribution companies incorporated under Companys act 1956.

The distribution companies incorporated under Companies act as wholly owned subsidiaries of APTRANSCO started functioning with effect from 0104-2000. APTRANSCO APEPDC Ltd. APSPDC Ltd. APCPDC Ltd. APNPDC Ltd.

APTRANSCO

NEED FOR THE STUDY Central Power Distribution Company of Andhra Pradesh Limited is a leading power distribution company in AP State. The functioning and achievement of objectives in the power sector largely depends upon the human force working in the power sector. Presently the power sector is undergoing reforms process. Restructuring of power industry is rapid and sea changes are taking place in power sector. At this juncture it is very essential to study the morale and job satisfaction of the employees working in power sector especially in Central Power Distribution Company of Andhra Pradesh Limited. As the success of an organization depends upon the commitment of its human resources in achieving organizational objectives. Positive morale and job satisfaction of an employee contributes in achievement of organizational goals. Thus it is necessary to study the morale and job satisfaction of employees working in power sector especially in Central Power Distribution Company Of Andhra Pradesh Limited. Central Power Distribution Company of Andhra Pradesh Limited is a leading power distribution company in AP State. The functioning and achievement of objectives in the power sector largely depends upon the human force working in the power sector. Presently the power sector is undergoing reforms process. Restructuring of power industry is rapid and sea changes are taking place in power sector. The functions of raising funds, investing them in assets and distributing returns earned form assets to share holders are respectively known as financing, investing and dividend decisions. By doing so, as firm attempts to balance cash inflow and outflows.

3. Statement of the Problem and Hypothesis The statement of the problem is the studying of the morale and the job satisfactions of the employees working in Central Power Distribution Company of Andhra Pradesh Limited through questionnaire, observations and oral interviews. 4. Objectives of the study The objectives if the study is: 1) To study the existing system of the working capital management in Central Power Distribution of Company of AP limited; 2) The analyze the financial performance of the company using working capital; carryout to ensure is effectiveness of the company; 3) To suggest the company to ensure that a firm is able to continue its operations further. 5. Scope of the study 1) APCPDCL 2) For 5years i.e., from the year 2006-07 to 2011-2012 3) Working capital management in cash, receivables, inventory and other items which constituents of working capital management. 6. Methodology and database 1 Preparation of numeric date table with data of accounting year wise factors of ratios with calculated ratios 2 Graphical presentation of the ratios indicating changes. 3 Interpretation with the help of numeric and graphical presentation. 7. Period of the study It is planned to study the WORKING CAPITAL Management in APCPDCL over a period of 5 years. The study may take 30 - 40 days duration commencing from July to August, 2012. CHAPTER PLAN 1 Chapter-I 2 Chapter-II 3 Chapter-III

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Introduction Working Capital Management: A Theoretical Framework Company profile

4 Chapter-IV 5 Chapter-V

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Data analysis Conclusions and Suggestions

BIBLIGRAPHY K.ASWATHAPP & K. SRIDHARA BHAT. Production and operation management Himalaya Public House, Mumbai. I.M.PANDEY, Financial Management Vikas Publishing House Pvt. Ltd. New Delhi. M.Y.KHAN & P.K.JAIN, Management Accounting Tata MC Graw Hills Publishing Company Limited, New Delhi. K.ASHOK, Sources of Management Random house publications, New Delhi. Websites www.aptranscorp.com www.transcorp.com www.apcentralpower.com www.apcpdcl.com

CENTRAL POWER DISTRIBUTION COMPANY OF A.P. LIMITED. APPROVAL LETTER To The Dean, Faculty of Commerce Dr.B.R.Ambedkar Open University Jublee Hills, Hyderabad.

This is to certify that Mrs. K. Madhavi (ADMN NO. rd ) D/O.K.Subhash a MBA 3 year student of Dr.B.R.Ambedkar Open University, Hyderabad wish to carry out her project work on Working Capital Management in APCPDCL as a part of her MBA degree. Hence, permission is accorded to do her project work in this organization for a period of two months (July to August 2012).

Date: Divisional Engineer (Electrical) Operation Jogipet, APCPDCL, Medak.

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