ON
SUBMITTED TO
MANAGEMENT PROGRAMME
Anurag Kumar
PREFACE
The Approach
To give a comprehensive coverage to the subject of this project, the project work is
done with the influence of proper thesis of the cash flow analysis and
implementation of various types of techniques and tools. Each part of this project
deals with different type of work related to the main project.
EXECUTIVE SUMMARY
The main objective of this project is to check the
BRIEF CONTENTS
Preface
3.2)
3.3)
4.2)
4.3)
BRIEF HISTORY OF ERSTWHILE BIHAR STATE ELECTRICITY BOARD
NOW BSPHCL
2.1 ORIGIN OF ERSTWHILE BSEB
The pre-independence period was faced by shortage of industrial,
agricultural and economic development in the country. Electricity was one of
the most important factors of all-round development in agricultural,
industrial and commercial sectors. As pre-independence era did not rove
adequate contribution for generation and distribution of electrical energy,
the Government of India took a policy decision to empower it functional
autonomy and commercial viability.
1. North Bihar Power Distribution Company Ltd., Patna Distribution Company for
North Bihar
2. Bihar State Power (Holding) Company Ltd., Patna A controlling company which
will hold equity capital of the other four subsidiary companies and will act as a
controlling company for the subsidiary companies.
5. South Bihar Power Distribution Company Ltd., Patna Distribution Company for
South Bihar.
2.2 DUTIES OF BSPHCL
The duties of the Company have been defined in Section 18 of the Electricity Supply Act,
1948. It has been charged with the responsibility of promoting a coordinated
development of generation, supply and distribution of electricity in the State of Bihar on
an efficient and economic basis of management.
Though BSPHCL deals in only one product, i.e., electrical power, its significance and
utility value is enormous for the State. Almost all aspects of modern life-style are
dependent on it in one way or another.
Bihar State Power Generation Company Limited means the generating company which
possesses the Generating Undertaking of the Board.
South Bihar Power Distribution Company Ltd (SBPDCL) has been given the status of a
Distribution Licensee as per Section 14 of the Electricity Supply Act 2003 and engaged
primarily in the business of distribution of Electricity.
The Company has been given the status of a Distribution licensee as per Section14 of the
Electricity Act 2003. The Company is engaged primarily in the business of distribution of
electricity. It has been vested with the distribution assets, interest in property, rights and
liabilities of the erstwhile BSEB necessary for the business of distribution in its area of
distribution comprising of all 21 districts of North Bihar.
In order to ensure that its responsibilities are discharged effectively and efficiently, the
Company has engaged nearly 1,700 officer and 14,850 staffs on various posts to generate its
own power and to maintain proper distribution system. It arranges to supply the electricity
properly to the consumers and maintain their equipment.
As on today, the installed generating capacity of BSPHCL in terms of its Thermal and Hydro-
Electrical plants exceeds 559.2 MW.
The Company has its full-fledged Accounts and Audit Department for proper keep-up of its
financial transaction as also to ensure efficient financial management on the commercial line.
The Company has also its personnel wing to safeguard the interest of all its employees. The bio-
data and service records of the employee have been computerized at its Headquarters.
ADMINISTRATIVE SET-UP
BSPTCL:
BSPTCL operates a transmission network of 6182 Kms. of 132 K.V. Lines & 1663 Kms. of 220
K.V. lines & 75 Kms. of 400 K.V. Line as well as 97 Nos. of operational EHV sub- stations
with 7360 MVA Transformation Capacity.
Besides continual technical up-gradation, the company lays emphasis on imbibing required
skills in its people and therefore it has invested in creating training infrastructure. It has recently
established a "Power Training Centre" at Gaurichak, Patna where Employees/Students are
trained on various power system protection and equipment testing.
The day-to-day affairs of the company are managed by the Managing Director assisted by
Director (Project) and by whole time Chief-Engineers both at HQ and field levels. They are in
turn assisted by a team of dedicated and experienced professionals/Engineers in various fields.
BIHAR STATE POWER TRANSMISSION COMPANY LIMITED
Managing
Director
Board of
Directors
BSPGCL:
Power Generation in Bihar is primarily fossil fuel based. The state has several plans for power
generation through Bihar State Power Generating Company.
Bihar grid, as on date, is totally dependent on central supply. Earlier Katihar, Pirpainti and
Nabinagar were identified for installation of coal based Power Projects in the State of Bihar.
Subsequently, a Special Purpose Vehicle (SPV) in the name of Bihar Power Infrastructure
Company Pvt. Ltd. has been incorporated to carry out the development activities and further
carry out bid process management. Bihar state is also trying for a nuclear power station.
Power system in Bihar is predominant by thermal power generation and the contribution of
hydro power is only 10%. Bihar has only 491.1 MW of installed capacity, of which 440 MW is
thermal and remaining 51.1 MW is hydel.
Separation of Jharkhand from Bihar left the erstwhile Board with only three Power Generation
Plants. Details of which are as follows:
Managing
Director
Board of
Directors
SBPDCL:
South Bihar Power Distribution Company Ltd (SBPDCL) has been given the status of a
Distribution Licensee as per Section 14 of the Electricity Act 2003 and engaged primarily in the
business of distribution of Electricity and is serving more than 18 lacs consumers in 17 districts
of South Bihar.
Presently, we are providing uninterrupted power supply in PESU, Area, Patna i.e. Capital of
Bihar and also providing 18-20 Hrs assured power supply in the entire17 district HQ of South
Bihar. It also gives their consumers the assurance for replacement of defective transformer in
the urban areas in 24 hrs & in rural areas in 72 hrs.
ADMINISTRATIVE SET-UP
NBPDCL:
NBPDCL is a company registered under the provisions of Companies Act 1956 and is a fully
owned subsidiary Company of BSPHCL.
NBPDCL provides power in 21 districts of North Bihar namely, 1. West Champaran, 2. East
Champaran, 3. Sitamadhi, 4. Sheohar, 5. Muzaffarpur, 6. Vaishali, 7. Saran, 8. Siwan, 9.
Gopalgunj, 10. Mahubani, 11. Darbhanaga, 12. Samastipur, 13. Begusarai, 14. Khagaria, 15.
Saharsa, 16. Supaul, 17. Medhepura, 18. Araria, 19. Katihar, 20. Purnea and 21. Kishangunj.
ADMINISTRATIVE SET-UP
Meaning
Cash flow statement is a statement of changes in the short term financial position of the
business due to inflow and outflow of cash. Statement of cash flow is required for short range
financial planning. In other words, cash flow statements are the summarized form of inflow of
cash funds from different sources and the uses to which the cash funds have been applied.
Cash flow statements are useful for the management in accessing the capability of business to
meet its short term commitments towards creditors for goods and expenses.
Cash flow statement prepared month wise presents information regarding cash available
every month. From this statement we can identify in which cash is generally surplus or short.
Cash flow statement, in this way will enable the management to revise its short term financial
plans.
The revised AS-3 excludes movement between items that constitute cash and cash equivalents
as they are apart from the cash management of the enterprise and do not relate to operating,
investing and financing activities. Example of these transaction are as follows:
Cash Funds - As per Accounting Revised Standard-3 (AS-3) issued by the council of ICAI Cash
funds include:
From the above, it may be noted that cash funds is a broad term which include cash
equivalents apart from the actual cash in hand.
Cash equivalent means short term highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of changes in
value. Investments with shirt term maturity period of, say three months or less from the
date of acquisition qualify as a cash equivalent.
a) Bank overdraft
b) Cash credit
c) Short term deposits
d) Marketable securities
Thus, cash flow statement deals with flow of cash funds which include cash equivalent as
well as actual cash.
### Cash Flow Statement is additional information to users of financial statement. The
statement exhibits the incoming and outgoing of cash. The statement assesses the
capability of the enterprise to generate cash and utilize it. Cash flow statement is
undoubtedly a tool for assessing the liquidity and solvency of the enterprise.
Uses/Need/Benefits/Advantages of cash flow statement
Cash flow statement has got the following uses:
1. Tool of Planning: Cash Flow statement is used as the basis for the projection of future
investing and financing plans of the enterprise by the management. Payment of long term
loans, expansion and modernization of the plant and payment of interest and dividend can
be planned on the basis of the information supplied by Cash flow statement.
2. Efficient cash management: The management knows the cash status, its shortage,
adequacy and sufficiency and makes use of the cash effectively. In case of shortage of cash,
requisite cash is arranged. If there is surplus cash, it is properly invested.
3. Knowledge of magnitude and direction of cash flow: The cash Flow Statement provides
us information regarding cash generated and used in operating, investment and financial
activities. On the basis of information supplied financial structure of the enterprise can be
evaluated.
4. Tools of historical analysis: The financial decisions taken in the past can be evaluated on
the basis of information supplied b Cash flow Statement. Certain interesting information,
such as shortage of cash even though there was sufficient profit or surplus cash. When
there was substantial loss, what happened to the huge cash received from the sale of land
etc. are available from Cash Flow Statement.
5. Presenting separate financial activities: Cash flow Statement based on AS-3 presents
separately cash generation and used in operating, investing and financial activities.
Limitations of Cash Flow Statement
In spite of its various advantages Cash flow statement has got the following limitations:
This technique helps in insuring the liquidity position of any firm. With the help of this
technique every business firm is in a position to maintain the liquidity position or to improve
adjusting the liquidity position at the desired level.
As per the latest changes in the accounting principles, preparation of cash flow statement has
become mandatory whose turnover is more than 50 Crore and such business firm is bound to
prepare cash flow statement as per accounting standard III. However other business firms
have the option to prepare the cash flow statement either under the traditional method or as
for accounting standard III which is known as modern method. Most of the business firms have
started preparing cash flow statement as per accounting standard III hence we shall discuss
the preparation of cash flow according to modern method which is done by preparing four
statements.
1. Direct Method
2. Indirect method
1. Direct Method: In this method gross receipts and gross payments of cash are disclosed. Only
cash transactions are taken into consideration which are related to the concerned business.
When we follow direct method for calculating cash from operating activities it is the difference
between the cash operating income and Cash operating expenses.
**Cash Operating income includes Cash sales, Cash received from debtors or
customers in case of credit sales, other operating cash such as Commission,
Brokerage, Refund of tax etc.
**Cash Operating expenses includes Cash Purchase, Cash paid to suppliers and
employees and other operating expenses in cash such as wages, expenses, rent,
repairs, maintenance etc.
So we do not consider non operating income and expenses and those operating income and
expenses which are not been made through cash.
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Note: 1. It is important to keep into consideration that provision for taxation made during
the year is added and tax paid during the year is deducted while calculating cash from
operating activities.
2. It is also important to mention here that if the statement shows positive balance is
the generation of cash profit but if it shows negative balance this shows cash loss in operating
activities.
3. So far the proposed dividend is concerned the proposed dividend of current year is
added in calculating cash from operating activities and proposed dividend of the previous year
is treated as the payment of dividend which is recorded in calculating cash from financial
activities.
Thus on the basis of the comparison between inflow and outflow of the cash we calculate the
amount of cash as generated or lost during the period from investment activities.
STATEMENT
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