TAMIL NADU ELECTRICITY

BOARD
TAMIL NADU ELECTRICITY BOARD
INTRODUCTION
The Tamil Nadu Electricity Board is constituted under the Electricity (Supply) At,
1948 (Central Act 4 o! 1948) and authorised to !unction as the State Transmission
"tility and a #icensee as noti!ied $y the %o&ernment o! Tamil Nadu under pro&ision
o! clause (a) o! Section 1'( o! the Electricity Act, ())* !or the period up to 1+)9+
()1),
MISSION OF THE GOVERNMENT
The %o&ernment o! -ndia has planned to .i&e /0o1er !or all $y ()1(2, To achie&e
this, Tamil Nadu Electricity Board is ma3in. pro.ress in %eneration, Transmission
and 4istri$ution sector, TNEB has completed the electri!ication o! all &illa.es and
to1ns in the state and is also pro.ressin. to1ards electri!ication o! all households,
GENERATION
To satis!y the ener.y needs o! the state, Tamil Nadu Electricity Board has a total
installed capacity o! 1),(14 56 1hich includes State, Central share and -ndependent
po1er producers, 7ther than this, the state has installations in rene1a$le ener.y
sources li3e 1indmill up to 4*)) 56, 4ue to the astronomical increase in ener.y
demand in the last !e1 years, the state has a de!icit o! po1er 1hich is estimated to $e
around 11,98 as on 9e$ ())9,To meet the e&er+increasin. ener.y demand in the
comin. years, TNEB has proposed ne1 .eneration pro:ects !or the ne;t years,
TRANSMISSION
TNEB has a total o! 1()( su$stations 1ith <T and E<T lines to a len.th o! 1, =*,88*
>ms, The &olta.e le&els in use in TNEB are 4))>?, (*) >?, 11) >?, == >?, **
>?, (( >? and 11 >?, -n order to e&acuate $ul3 po1er !rom one re.ion to another
re.ion, there is a more scope !or enhancin. transmission capa$ility to '= >? le&el
and settin. up o! 8)) >? <i.h ?olta.e 4C system, The %o&ernment o! -ndia has
appro&ed non+discriminatory open access !or the transmission system ,The
%o&ernment o! Tamil Nadu has also permitted third party sale o! po1er produced $y
-00s, C00s @ other pri&ate po1er producers throu.h short term -ntra+State open
access to <T consumers 1ithin Tamil Nadu,
OPERATIONS OF THE COMPANY
The installed capacity o! TNEB stood at 98 56 $y the end o! 9AB)8, The installed
capacity has hardly re.istered any si.ni!icant .ro1th durin. the last !e1 years, The
entire .eneration capacity o! TNEB is contri$uted $y *9 hydro po1er stations, 4
thermal po1er plants and * .as $ased po1er plants, The capacity mi; o! thermalC
hydel plants stood at =1C*9 $y the end o! 5arB)8, Apart !rom the $oardBs o1n
.eneratin. stations, TNEB also dra1s po1er !rom ' -00s 1ho ha&e a com$ined
.eneration capacity o! more than 1*)) 56,
4ue to sta.nancy in capacity additions in the recent past, the net po1er .enerated $y
TNEB has .ro1n at a lo1 CA%D o! 8 durin. the 9AB)4+)8 period, At the same
time, the po1er purchased has .ro1n at a much hi.her CA%D o! 1)8 especially 1ith
hi.her .ro1th in the last !e1 years, The share o! same has seen secular increase in the
last !e1 years, 6ith lac3 o! capacity, TNEB has to necessarily increase the po1er
purchased to cater to the risin. demand,
A!ter declinin. in 9AB) and 9AB)=, the plant load !actor (0#9) has sho1n si.ni!icant
impro&ement in the ne;t ( years to 8(8, Au;iliary consumption has $een maintained
at around 88 le&el !or the last !e1 years, The e;tent o! T@4 loss has remained
constant durin. the 9AB)4+)8 periods at a$out 188, The 188 T@4 loss reported is
ar$itrary in nature as the $oard does not ha&e any proper system o! assessin. the
actual T@ 4 loss,
DISTIBUTION
TNEB has a consumer $ase o! a$out ()) la3h consumers, 1))8 rural electri!ication
has $een achie&ed, 0er Capita consumption o! Tamil Nadu is 1))) units, To achie&e
the .oal o! electri!ication o! all households, the %o&ernment has launched the Da:i&
%andhi %rameen ?idyuti3aran Ao:ana (D%%?A) scheme, 6here .rid connecti&ity
is not !easi$le or not cost e!!ecti&e, 4ecentralised 4istri$uted %eneration is permitted,
To achie&e relia$le and Euality po1er supply and minimise the loss o!
ener.y, 570F%7- has launched the Destructured A04D0 scheme under 11
th
!i&e year
plan,

RESTRUCTURING OF TNEB
%o&ernment o! Tamil Nadu has accorded an in principle appro&al !or the re+
or.anisation o! TNEB $y the esta$lishment o! a holdin. company, $y the name TNEB
#td and t1o su$sidiary companies, namely Tamil Nadu Transmission Corporation #td
(TANTDANSC7) and Tamil Nadu %eneration and 4istri$ution Corporation #td
(TAN%E4C7) 1ith the stipulation that the a$o&e mentioned companies shall $e !ully
o1ned $y %o&ernment, The %o&t, has also constituted a Steerin. Committee to
!inalise the trans!er scheme !or the re+or.anisation o! Board under section 1*1 o! the
Electricity Act, ())*,
INSTALLED CAPACITY
To satis!y the ener.y needs o! the state, Tamil Nadu Electricity Board has a total
installed capacity o! 1)(14 56 1hich includes Central share and -ndependent 0o1er
0roducers, 7ther than this, the state has installations in rene1a$le ener.y sources li3e
1indmill, Bios mass and Co.eneration up to 8= 56, As o! no1, the total installed
capacity in Tamil Nadu is 18)) 56,
RATIONALE
CADE has assi.ned a conditional ratin. o! BCADE AG (S7) H(Sin.le A 0lus
(Structured 7$li.ation)IB to the proposed Ds, =)) cr issue o! Tamil Nadu Electricity
Board (TNEB), The ratin. is mainly $ased on the unconditional and irre&oca$le
.uarantee !or the repayment o! principal and payment o! interest !rom %o&ernment o!
Tamil Nadu (%oTN) issued $y 9inance (#oans @ Ad&ances Cell) 4epartment &ide
%,7 5s,No,(' dated (8F)1F())9 and su$:ect to implementation o! credit enhancement
in the !orm o! a structured payment mechanism, -nstruments 1ith this ratin. are
considered to o!!er adeEuate sa!ety !or timely ser&icin. o! de$t o$li.ations, Such
instruments carry lo1 credit ris3,
The ratin. !actors the stron. !undamentals !or %o&ernment o! Tamil Nadu (%oTN)
!inancials includin. a re&enue surplus position, com!orta$le de$t and de$t ser&icin.
$urden, $etter liEuidity mana.ement, e;istence o! structures !or redemption o! 3ey
lia$ilities and pro&ision o! a stron. statutory !rame1or3 !or !iscal re!orms, The ratin.
is constrained $y e&idences o! strains in the re&enue $alance, moderatin. re&enue
.ro1th, continuin. hi.h le&els o! committed e;penditure alon. 1ith the li3ely impact
o! the 0ay Commission recommendations and arrear clearance, The ratin. also !actors
in TNEBBs position as a monopoly %oTN+o1ned electric utility o! Tamil Nadu, lo1
capacity additions in the last !e1 years leadin. to increasin. dependence on hi.h cost
po1er purchases, s3e1ed re&enue &ersus
consumption pattern and non+rationaliJation o! tari!! structure durin. the last !e1
years 1hich has resulted in sharp deterioration in the !inancial per!ormance o! TNEB
characterised $y increasin. de!icits and sharp increase in de$t le&els,
FINANCIAL STATEMENT OF TAMIL NADU ELECTRICITY BOARD
BALANCE SHEET AS ON 31
st
MARCH
RS IN
LAKHS
PARTCULARS AS AT 31
ST
MAR08
AS AT
31
ST
MAR07
Sou!"s o# Fu$%s
S&'"&o(%"s Fu$%
Share Capital 1*'4(1,)) 1)=1)*,))
Deser&es @ Surplus ((4=14,)) 1899*,))
Contri$ution %rants @
Su$sidies
4*4=8(,)) *89(89,))
9unds 9rom State
%o&ernment
1()))),)) '1))),))
Borro1in.s 9or 6or3in.
Capital
8=88,)) 1)*9(=,))
Tot'( ))*0*0+,00 180-311,00
A..(/!'t/o$ o# Fu$%s
F/0"% Ass"ts
%ross Bloc3 (*)9)8),)) (1=9(,)
)
#ess C Accumulated
4epreciation
9*919(,)) 8'**94,))
N"t B(o!1 1*=9888,)) 1(8*198,))
Assets not in use *1),)) 41*,))
Capital e;penditure in
pro.ress
*4)*9=,)) (=1(11,))
4e!erred Costs 1=9,)) 1*1,))
-ntan.i$le Assets + +
-n&estments (=9=,)) ''81,))
CURRENT ASSETS
Total Current Assets =)(1'9,)) 9188,))
L"ss2 Cu"$t L/'3/(/t/"s
4 Po5/s/o$s
Security 4eposits 9rom
Consumers
4)8=)1,)) *=(8=1,))
7ther Current #ia$ilities ==*),)) 9(98,))
N"t !u"$t Ass"ts 6*-)7+),00 63-0)71,00
Su$sidy recei&a$le !rom
.o&ernment
*19(,)) 8)=,))
4e!icit 9=(8)',)) =1*)4,))
TOTAL -3-877,3* 180-31*,00
PROFIT AND LOSS ACCOUNT AS ON 31
st
MARCH
PARTICULARS AS ON 31,03,08 8 I$
L'1&s9
AS ON 31,03,07
8 I$ L'1&s9
UNITS SOLD 8IN MU9 +)83) +01+7
A, INCOME
De&enue !rom sale o!
po1er 1,8,=9(,)) 14,4,(*,))
De&enue !rom su$sidies
and .rains 1,4,')(,)) 1,**,)1),))
7ther income *',((',)) *1,9=,))
TOTAL8A9
17:*1:-)1,00
1-:10:*
87,00

B, E;PENSES
0urchase o! po1er 1(,(=,94),)) 9,9=,49=,))
%eneration o! po1er *,=','(1,)) *,*9,=9,))
Depairs and
5aintenance *,9)(,)) (4,()*,))
Employee Costs (,*=,8'4,)) (,1=,)',))
9rin.e Bene!it Ta; *1,)
) *)',))
Administration @
.eneral e;penses (4,'88,)) (),(84,))
4epreciation =',84,)) =*,(*1,))
-nterest @ 9inance
char.es 1,48,*4(,)) 1,(),4(*,))
TOTAL8B9
)1:08:77),00
17:80:-
7-,00
#essC E;penses
capitalised
-nterest @ 9inance
char.es capitalised
(),(4(,)) 1,=',))
7ther e;penses
capitalised
*),=(4,)) (,(=,))
TOTAL E;PENSES
CAPITALISED 8C9 ),8==,))
41,(
)1,))
Su3 Tot'( 8B6C9
)0:+7:70-,00
17:37:*
7+,00
7ther de$ts ),'*4,)) *,8*,))
E;traordinary -tems (,)) 8,))
TOTAL 8D9
)1:08:-*),00
17:73:0
8-,00
Po#/t 3"#o" T'0't/o$
8A6D9 83:-7:0)1,009
81:8):+
77,009
Ta;ation
+

+
Po#/t '#t" T'0
83:-7:0)1,009
81:8):+
77,009
Net prior period char.es
(1',(=),)))
(=),'
)*,)))
Su.(us<D"#/!/t
83:*7:7-1,009
81:)1:8
7*,009
RATIOS
TIME SERIES ANALYSIS
Y"'s Fo=u(' )008 )007
L/>u/%/t? R't/os
Current ratio current assetsFcurrent lia$ilities
),
'

),=(
L"5"'@"
4e$t+ eEuity Datio 4e$tFeEuity
),1
*

),14
4e$t+Datio 4e$t F Assets
),)
9

),1)
-nterest co&era.e
Datio
0ro!it $e!ore interest and
ta;esFinterest
(1,)
()

),11
Tu$o5"
9i;ed assets turno&er Net salesFA&era.e net !i;ed assets
1,1
8 +
Total assets turno&er Net salesFa&era.e total assets
),'
' +
Po#/t'3/(/t?
Net 0ro!it mar.in Net pro!it FNet sales
(),(
() +),)8
Deturn on assets Net pro!it FA&era.e total assets
(),1
') +
Deturn on eEuity
EEuity earnin.sFA&era.e net
1orth
(),(
)
E;PLANATION
Current Assets+ Current Assets are $ein. used !or short term !inancial position, -n
())8 and ())' the current ratio is less than 1, -t is one o! the $est 3no1n measures o!
!inancial stren.th. There is no pro$lematic situation i! it is less than 1,
4e$t EEuity Datio+ -t means ho1 e!!icient an or.anisation to .enerate ne1 !unds in
the mar3et, <i.her the ratio, hi.her is the ris3, <ence it does not ha&e lar.e de$t ratio,
4e$t Datio+ A lo1 de$t ratio indicates conser&ati&e !inancin. 1ith an opportunity to
$orro1 in the !uture at no si.ni!icant ris3, A ratio less than one means that a company
has more assets than de$t, 1hile a ratio o! more than one means the opposite, Thus a
de$t ratio is a measure o! ho1 ris3y it 1ould $e !or a $an3 to e;tend a loan to a
company, 1ith a hi.her ratio indicatin. .reat ris3
-nterest Co&era.e Datio+ -nterest co&era.e ratio means that the company is a$le to pay
the interest or not, -! the ratio is a$o&e 1 the company is a$le to pay the interest, -n
())8 there 1as ne.ati&e interestK hence it means they 1ere not a$le to pay their
interest,
Deturn on Assets+ -t sho1s ho1 pro!ita$le a company is relati&e to its total assets,
D7A pro&ides an idea o! ho1 e!!icient mana.ement is at usin. its assets to .enerate
earnin.s, D7A .i&es in&estors some idea o! ho1 e!!ecti&ely the company is
con&ertin. the money it has into net income, -n ())8 there 1ere ne.ati&e returns,
Deturn on EEuity+ Deturn on eEuity, Deturn on eEuity (D7E) measures ho1 much a
company earns 1ithin a speci!ic period in relation to the amount thatBs in&ested in its
common stoc3, A hi.h return on eEuity indicates that the company is spendin. 1isely
and is li3ely pro!ita$leK a lo1 return on eEuity indicates the opposite, As a result, hi.h
returns on eEuity lead to hi.her stoc3 prices, <ence in ())8 there 1ere ne.ati&e
returns,
Net 0ro!it 5ar.in+ Net 0ro!it sho1s ho1 1ell a company control its cost a!ter
deductin. interest and ta;, There are losses in ())8 and ())',
Pos."!ts
The !inancial position o! TNEB has under.one sharp deterioration in the last !e1
years due to a$sence o! tari!! rationaliJation, 6ith limited capacity additions in the
last !e1 years, TNEB could not meet the risin. demand and has imposed restriction
and control o! po1er supply, 6ith the $orro1in. le&els already hi.h, a$ility o! TNEB
to !urther $orro1 to underta3e lar.e scale cape; pro.ramme to $rid.e the po1er
shorta.e remains to $e seen, This alon. 1ith the continued !inancial support !rom
%o&ernment o! Tamil Nadu (%oTN) and rationaliJation o! tari!! structure 1ill $e
critical to the !inancial prospects o! TNEB, Since the ratin. is $ased on credit support
e;tended $y %oTN to the $ond issue in the !orm o! a .uarantee, a re&ie1 o! its
!inances is discussed in the !ollo1in. section,
St't" P('$
The siJe o! the Ele&enth 9i&e year plan has more than dou$led as compared to the
tenth !i&e year plan !rom Ds 4),))) crore in the pre&ious plan to Ds, 8,*44 crore in
the Ele&enth plan, 0lan outlay !or ())'+)8 1as !i;ed at Ds 14))) crore, As a.ainst
this, the re&ised estimates an e;penditure o! Ds 1*=* crore in 9A)8 (DE)
representin. an annual achie&ement o! 9=,88, The plan has !ocused ma:orly on
re:u&enatin. a.riculture alon. 1ith !ocus on the ener.y and transport se.ments,
D"3t M'$'@"="$t
7&erall de$t le&els remain com!orta$le, 4e$t to re&enue receipts ratio remains at
1848 in 9A)8 (DE) as compared to the con&entional $enchmar3 (reser&e Ban3 o!
-ndia) o! ())8, This 1as in contrast to19=8 in 9A)', 9A)9 could 1itness rene1ed
pressure due to a strained re&enue $alance position and an increase in de$t $ac3ed
cape; could $e the result, Structurally ho1e&er the pro&ision o! a sin3in. !und and a
.uarantee redemption !und does .i&e the state some cushion to meet its lia$ilities and
thus insulates the ser&icin. reEuirements !rom periodic strains in the re&enue $alance,
L/>u/%/t? Pos/t/o$
Althou.h the state had resorted to 65A and 7&erdra!ts re.ularly in the past, recent
years ha&e seen an impro&ement in the liEuidity mana.ement, %oT did not a&ail
65A !or 9A)' as 1ell as !or 9A)8,
R"#o=s
The Tamil Nadu 9iscal Desponsi$ility Act, ())* 1as passed in 5ay ())* to ensure
prudence in !iscal mana.ement and !iscal sta$ility, Accordin.ly, the Tamil Nadu
le.islati&e assem$ly had passed the Tamil Nadu 9iscal Desponsi$ility (Amendment)
act, ()) on 1) 5ay
()), Accordin. to the act, the %o&ernment is committed to eliminate re&enue de!icit
$y ())8+)9K reduce %94F%S40 to *8 $y 5arch ())8, cap the total outstandin.
.uarantees
to hundred per cent o! total re&enue receipts in the precedin. year or at 1)8 o! the
pre&ious year %S40, 1hiche&er is lo1er and cap the ris3+1ei.hted .uarantees to '8
o! the total re&enue receipts in the pre&ious year or at '8 o! the %S40 1hiche&er is
lo1er, 6hile the state has had a re&enue surplus position since 9A)=K it has
maintained the %94 to %S40 le&el at or $elo1 *8 since 9A),