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  • 1. The Energy Sector-Afinancial studyTeam members(BFIA1b)Priyank Misra(75140)Shantanu Vashishth(75150)Puneet Arora(75141)
  • 2. Companies
  • 3. ContentsBalance Sheet.Income Statement.Ratio analysis.Beta estimation.Indian Power-sector Scenario.Relevant Budget Highlights and Noteworthy recent developments
  • 4. Royal Dutch ShellBASIC PROFILE Royal Dutch Shell plc. operates as an oil and gas company worldwide. The company explores for and extracts crude oil and natural gas. It also converts natural gas to liquids to provide cleaner-burning fuels; markets and trades natural gas; extracts bitumen from mined oil sands and convert it to synthetic crude oil;and generates electricity from wind energy. it converts crude oil into a range of refined products, including gasoline,diesel, heating oil, aviation fuel, marine fuel, lubricants, bitumen, sulphur,and liquefied petroleum gas (LPG); and produces and sells petrochemicals for industrial use. the company produces a range of base chemicals, including ethylene,propylene, and aromatics; and intermediate chemicals, such as styrene monomer, propylene oxide,solvents, detergent alcohols, ethylene oxide, and ethylene glycol.
  • 5. Income Statement
  • 6. Ratio analysis1) Liquidity Ratios Current Ratio:-CR=Current Assets ÷ Current Liabilities Quick Ratio:-QR=Quick Assets*÷Current Liabilities*Quick Assets=Current Assets net of inventory
  • 7.  Absolute cash ratio=(Cash + marketable securities) ÷ Current Liabilities Internal Interval Measure Ratio:-IIMR=Quick Asset ÷ Average Daily Operating Expenses*Average Daily Operating Expenses=(COGS + Other operating expenses – Non-cash Operating cost)÷No. of days in a year
  • 8.  Debt-Equity Ratio=Debt ÷ Equity0.000.050.100.150.200.25Dec 11 Dec 10 Dec 09 Dec 08 Dec 07Debt-Equity RatioDebt-Equity Ratio
  • 9. 3)Activity Ratios Debtors’ Turnover ratio=Net credit sales ÷ Average receivables Working Capital Turnover=Net Sales ÷ working capital
  • 10. 4)Profitability Ratios Operating Ratio=(Operating Profits ÷ Net Sales)*100Net Profit Ratio=(Net Profit/Net Sales)*100
  • 11. Beta Estimationfile://localhost/Users/puneet/Downloads/RDS Beta.xlsx00.20.40.60.811.21.41.62005 2006 2007 2008 2009 2010 2011 2012Annual BetasAnnual Betas
  • 12. Indian power sectorscenarioIndia has the world’s 5th largest electricity generationcapacity and it is the 6th largest energy consumeraccounting for 3.4% of global energy consumption.The country’s energy demand has grown at an average of3.6% p.a. over the past 30 years.In India, power is generated by State utilities, Centralutilities and Private players.
  • 13. Installed Capacityfile://localhost/Users/puneet/Desktop/Power Sector at a GlanceALL INDIA.html
  • 14. Challenges1. Availability of Coal: -India has limited coal reserves, plus, availability of domestic coal is achallenge on account of various bottlenecks such as capacity expansion ofCoal India Limited , coal block allocation, tribal landacquisition, environmental and forest clearances, etc.Transportation of coal is a big concern in itself. Within the country, coal istransported by Indian Railways and in case of imports; coal is to beunloaded at ports. In both cases, India currently faces capacity shortage.Hence, a project developer has to account for and manage its logisticschain in a manner that ensures regular fuel supply which is a bigchallenge.
  • 15. 2. Dependence on Equipment Suppliers: -• Equipment shortages have been a significant reason for Indiamissing its capacity addition targets for the 10th five year plan.While the shortage has been primarily in the core components ofboilers, turbines and generators, there has been lack of adequatesupply of Balance of Plant (BOP) equipment as well. These includecoal handling, ash-handling plants, etc. Apart from these, there isshortage of construction equipment as well. Hence, inadequatesupply of equipments is a cause of concern for the powercompanies.3. Aggregate Commercial and Technical Losses: -• India’s AT&C losses are as high as 30% compared with 5-10% inthe developed markets which means out of every 100 unitsproduced, 30 are lost during transmission and distribution.Technical losses are due to inadequate investments over the yearsfor system improvement works. Commercial losses are mainly dueto low metering efficiency, pilferage and theft of power. This is a
  • 16. SUZLONBASIC PROFILE Suzlon Energy Limited engages in thedesign, development, manufacture, and supply of wind turbinegenerators in the Americas, Asia, Australia, and Europe. The company’ s product portfolio includes drive systems, annulargenerators, and grid connection systems, as well as towers andfoundations comprising tower constructions, tubular steeltowers, precast concrete towers, and foundation constructions. It also involves in the sale/sub-lease of land; infrastructuredevelopment; sale of gear boxes, and foundry and forgingcomponents; and power generation operations. In addition, the company offers land sourcing and permitting, windresource assessment, and erection and commissioning services, aswell as operations and maintenance services for projects. SuzlonEnergy Limited was founded in 1995 and is based in Pune, India.
  • 17. Balance Sheet (figures in crores)
  • 18. Income Statement
  • 19. Ratio analysis1) Liquidity Ratios Current Ratio:-CR=Current Assets ÷ Current Liabilities Quick Ratio:-QR=Quick Assets*÷Current Liabilities*Quick Assets=Current Assets net of inventory
  • 20.  Absolute cash ratio=(Cash + marketable securities) ÷ Current Liabilities Internal Interval Measure Ratio:-IIMR=Quick Asset ÷ Average Daily Operating Expenses*Average Daily Operating Expenses=(COGS + Other operating expenses – Non-cash Operating cost)÷No. of days in a year
  • 21. 2)Leverage Ratios Debt-Equity Ratio=Debt ÷ Equity00.20.40.60.811.21.41.6Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Debt-Equity RatioDebt-Equity Ratio
  • 22. 3)Activity Ratios Debtors’ Turnover ratio=Net credit sales ÷ Average receivables Working Capital Turnover=Net Sales ÷ working capital
  • 23. 4)Profitability Ratios Operating Ratio=(Operating Profits ÷ Net Sales)*100 Dividend per share & Earning per share0102030405060Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Equity Dividend %Earnings Per Share
  • 24. Net Profit Ratio=(Net Profit/Net Sales)*1004)Profitability RatiosPeriod Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Net Profit -260.49 -1,238.69 -539.96 1,319.79 1,119.58Net Sales 4,921.75 3,725.61 7,481.25 7,254.52 5,537.07Net Profit Ratio -5.2926 -33.248 -7.2175 18.1927 20.2197
  • 25. Beta Estimationfile://localhost/Users/puneet/Desktop/Beta folder/SuzlonBeta.xlsxβ = Covariance/VariancE2.60365324700.511.522.533.542008 2009 2010 2011 2012Annual BetasAnnual Betas
  • 26. National Thermal Power CorporationBasic Profile•NTPC Limited is the largest Indian state-owned electric utilitiescompany based in New Delhi, India. It is an Indian public sectorcompany listed on the Bombay Stock Exchange in which at presentthe Government of India holds 84.5% of equity.•NTPC Limited engages in the generation and sale of bulkpower to state power utilities in India. The companygenerates power from coal, gas, liquid fuel, and hydelsources.•It also undertakes consultancy and turnkey project contractsthat comprise engineering, project management, constructionmanagement, and operation and maintenance of powerplants.•As of December 21, 2011, it had approximately 34,000
  • 27. Balance Sheet
  • 28. Income Statement
  • 29. Ratio analysis1) Liquidity Ratios Current Ratio:-CR=Current Assets ÷ Current Liabilities Quick Ratio:-QR=Quick Assets*÷Current Liabilities*Quick Assets=Current Assets net of inventory
  • 30.  Absolute cash ratio=(Cash + marketable securities) ÷ Current Liabilities Internal Interval Measure Ratio:-IIMR=Quick Asset ÷ Average Daily Operating Expenses*Average Daily Operating Expenses=(COGS + Other operating expenses – Non-cash Operating cost)÷No. of days in a year
  • 31. 2)Leverage Ratio Debt-Equity Ratio=Debt ÷ Equity00.10.20.30.40.50.60.72011 2010 2009 2008 2007Debt-Equity RatioDebt-Equity Ratio
  • 32. 3)Activity Ratios Debtors’ Turnover ratio=Net credit sales ÷ Average receivables Working Capital Turnover=Net Sales ÷ Working Capital
  • 33. 4)Profitability Ratios Operating Ratio=(Operating Profits ÷ Net Sales)*100 Dividend per share & Earning per sharePeriod Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Net Sales 57,464.16 49,250.50 44,988.00 40,210.70 35,507.30Net Profit 10,713.99 10,822.60 9,491.30 10,536.80 8,904.70Net Profit Ratio 18.6446 21.9746 21.0974 26.204 25.0785Net Profit Ratio=(Net Profit/Net Sales)*1000510152025303540Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Earning Per Share (Rs)Equity Dividend (%)
  • 34. Beta Estimationfile://localhost/Users/puneet/Desktop/Beta folder/NTPC Beta (1).xlsx00.20.40.60.811.22004 2005 2006 2007 2008 2009 2010 2011 2012Annual BetasAnnual Betas
  • 35. TATA POWERFounded in 1915 and based in Mumbai.The company supplies power to central and westernrailways, Mumbai port, refineries, textile mills, fertilizerfactories, BARC.Installed capacity of 3,127 MW.Fuel source- thermal, hydroelectric power, wind, solar, and waste gassources.The company also engages in the design and development ofdefense systems, such as such as display consoles for C4IapplicationsIts Electronic defense system products also include warfare controlcentre for the army; combat systems for the navy; automatic datahandling air defence system for the air force; and automotiveelectrical system for the armys battle tank
  • 36. Balance sheet
  • 37. Income Statement
  • 38. Ratio analysis1) Liquidity Ratios Current Ratio:-CR=Current Assets ÷ Current Liabilities Quick Ratio:-QR=Quick Assets*÷Current Liabilities*Quick Assets=Current Assets net of inventory
  • 39.  Absolute cash ratio=(Cash + marketable securities) ÷ Current Liabilities Internal Interval Measure Ratio:-IIMR=Quick Asset ÷ Average Daily Operating Expenses*Average Daily Operating Expenses=(COGS + Other operating expenses – Non-cash Operating cost)÷No. of days in a year
  • 40. 2)Leverage Ratios Debt-Equity Ratio=Debt ÷ Equity00.10.20.30.40.50.60.7Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Debt-Equity RatioDebt-Equity Ratio
  • 41. 3)Activity Ratios Debtors’ Turnover ratio=Net credit sales ÷ Average receivables Working Capital Turnover=Net Sales ÷ Working Capital
  • 42. 4)Profitability Ratios Operating Ratio=(Operating Profits ÷ Net Sales)*100 Dividend per share & Earning per shareNet Profit Ratio=(Net Profit/Net Sales)*100020406080100120140Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Earning Per Share (Rs)Equity Dividend (%)
  • 43. Beta Estimationfile://localhost/Users/puneet/Desktop/Beta folder/TataBeta.xlsx-0.7-0.6-0.5-0.4-0.3-0.2-0.100.10.22003 2004 2005 2006 2007 2008 2009 2010 2011 2012Annual BetasAnnual Betas
  • 44. RELIANCE POWERIts power projects include seven coal-fired projects, two gas-fired projects, and seven hydroelectric projects.13 medium and large-sized power projects with a combinedplanned installed capacity of 33,480The company is also developing coal bed methane blocks to fuelgas based power generation, as well as developing powerprojects based on renewable energy resources, such as solarand wind.On February 2, 2011 United Nations registered ReliancePowers Sasan Power Plant to be eligible for earning carboncredits followed by Krishnapatanm Ultra Mega Power Projectand Tilaiya Ultra Mega Power Projects.
  • 45. Balance Sheet
  • 46. Income Statement
  • 47. Ratio analysis1) Liquidity Ratios Current Ratio:-CR=Current Assets ÷ Current Liabilities Quick Ratio:-QR=Quick Assets*÷Current Liabilities*Quick Assets=Current Assets net of inventory
  • 48.  Absolute cash ratio=(Cash + marketable securities) ÷ Current Liabilities Internal Interval Measure Ratio:-IIMR=Quick Asset ÷ Average Daily Operating Expenses*Average Daily Operating Expenses=(COGS + Other operating expenses – Non-cash Operating cost)÷No. of days in a year
  • 49. 2)Leverage Ratios Debt-Equity Ratio=Debt ÷ Equity00.020.040.060.080.10.12Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Debt-Equity RatioDebt-Equity Ratio
  • 50. 3)Activity Ratios Debtors’ Turnover ratio=Net credit sales ÷ Average receivables Working Capital Turnover=Net Sales ÷ Working Capital
  • 51. 4)Profitability Ratios Operating Ratio=(Operating Profits ÷ Net Sales)*100 Dividend per share & Earning per shareNet Profit Ratio=(Net Profit/Net Sales)*100020406080100120140Mar 11 Mar 10 Mar 09 Mar 08 Mar 07Earning Per Share (Rs)Equity Dividend (%)
  • 52. Beta Estimationfile://localhost/Users/puneet/Desktop/Beta folder/RelianceBeta.xlsx-2-1.5-1-0.500.52008 2009 2010 2011 2012Annual BetasAnnual Betas
  • 53. Relevant Budget Highlights and Noteworthy recentdevelopments“In power generation, fuel supply constraints are affectingproduction.To address this concern,Coal India Limited(CIL) hasbeen advised to sign fuel supply agreements.with power plants thathave entered into long-term Power Purchase Agreements withDISCOMs ad would get commissioned on or before March31,2015.An inter-ministerial group group is being constituted toundertake periodic review of the allocated coal mines and makerecommendations on de-allocations,if so required.”“I propose to allow External Commercial Borrowings to part financeRupee debt of existing power projects.”
  • 54. Noteworthy developments• The union disinvesment secretary recently stated that the govt.plans to sell equity in its wholly owned nuclear power generationcompany,the Nuclear Power Corp. of India Ltd(NPCIL)• CIL is expected to enter the FSAs with as many as 50 powerproducing firms including National Thermal Power Corporation(NTPC) and Reliance Power for a total capacity of 28,000 MW.• Larsen & Toubro Ltd. had commissioned Indias largest solar photovoltaic based power plant - 40 MWp - owned by Reliance PowerLtd. at Dhursar Village, Jaisalmer district of Rajasthan.• CAG draft reports estimate a loss of over Rs.10 lakh crore to theexchequer due to free allocations of coal blocks.In light of thisreport govt. has decided to auction coal blocks for the next round ofallocations in a bid to refute the CAG argument of such a high loss.
  • 55. SourcesYahoo FinanceNational Stock ExchangeBombay Stock ExchangeMarketwatch.comwww.powermin.nic.inwww.infraline.com