Reliance finance

A SUMMER TRAINING REPORT ON
THE STUDY OF
WORKING CAPITAL SCENARIO
AT
RELIANCE ENERGY LIMITED
(BSES POWER LIMITED)
NEW DELHI
Submitted By:
SWATI VIJAY
PGDM
2004-2006
in partial fulfillment of the requirement of the award of
Post Graduate Diploma in Management
INSTITUTE OF TECHNOLOGY &
SCIENCE

MOHAN NAGAR, GHAZIABAD.
This is to certify that Miss Swati Vijay, student of First Year, POST
GRADUATE DIPLOMA IN MANAGEMENT has successfully completed
his summer training project titled
“WORKING CAPITAL MANAGEMENT”
AT
Reliance Energy Limited
(BSES Power Limited)
New Delhi
And all the above statements made by the candidate are correct to the best of
our knowledge and belief.
We wish him all the best for his future endeavors.
Signature
Mr. Inderneel Deb
(Dy. Manager, Banking & Treasury Operations)

Table of Contents
Sr. No CONTENTS
1). Acknowledgement
2). Company Profile
3). Objectives of the study
4). Research Methodology & Scope of the study
5). Need of the study
6). Actual study:
 Working Capital Management
 Cash Management & Collection
Process
 Inventory Management
 Receivables Management & Billing
Procedure
 Payables Management
 Working Capital Financing Procedure
7). Comparative Ratio Analysis – BYPL & NDPL
8). Major Findings & Recommendations
9). Conclusion
10). Limitations of the study
11). Annexure

12). Bibliography
ACKNOWLEDGEMENT

A project of this nature calls for intellectual nourishment, professional help and
encouragement from many quarters.
I take this opportunity to express my profound sense of gratitude to all those,
without whose encouragement, assistance and co-operation, successful
completion of this summer project would not have been possible.
I am deeply indebted to my guide, Mr. Inderneel Deb, Dy. Manager, Banking
& Treasury operations, Mr. Hemant Goyal, Manager, Finance Central
accounts for giving me the opportunity to engage in an on the job training
project on “Working Capital Management” to get a detailed insight of the topic
and various issues related to it.
I am also grateful to all the staff in Finance Department for their cooperation
and valuable support throughout my training. Their constant encouragement
was a source of strength for me in pursuing this work. A refreshing,
enlightened knowledge based experience was possible because of the overall
support of various officers of the various departments, who took keen interest
in sparing their valuable time. I convey my sincere acknowledgement to all of
them.
It provides me immense pleasure to extend my grateful thanks to my internal
mentors Prof. Vidushi Sharma, Prof. Raju Majumdar for their perpetual
guidance and encouragement.
I express my deep sense of gratitude and reverence for my parents and my dear
friends for their endless love, guidance, moral support, encouragement and
untiring co-operation throughout my study and work, without which this work
would never have been completed.
It was learning and an enlightening experience for me and I therefore will
remain indebted to all the people mentioned above as no words can thank
them for their teaching and love shown towards me.
Finally I would like to take this opportunity to thank the organization, BSES
who helped me to acquire proper knowledge and success in my training.
(SWATI VIJAY)

RELIANCE ENERGY LIMITED
“Powering Progress, Energizing the Economy”
Reliance Energy Ltd, part of the Anil Dhirubai Ambani Enterprise group, is
India's leading integrated power utility company in the private sector. It has
a significant presence in generation, transmission and distribution of
power in Maharashtra, Goa and Andhra Pradesh and in the capital.
The Company has a pioneering history of leadership and innovation spanning
75 years in Mumbai providing reliable and dependable electricity at competitive
prices to its consumers .The company has 941 MW of power generation
capacity at plants located in Maharashtra, Andhra Pradesh, Kerala and
Karnataka. Reliance Energy and its affiliate companies distribute over 15 billion
units of power a year to over 5 million customers in Mumbai, Delhi and Orissa.
The combined sales of Reliance Energy and its affiliate companies are over Rs
9,500 crore and asset base of about Rs. 10,700 crore. It aims to become one of
the largest power players in the country with expansion plans of over Rs.
60,000 crore in generation, transmission and distribution. The company ranks
among the top 20 private sectors listed companies in the country, in terms of
all major financial parameters, such as assets, sales, profits and market
capitalisation.
Reliance Energy is committed to expanding customer base in its distribution
through new licenses, through open access on existing networks, and / or
through participation in the privatization process of state owned distribution
assets. The company plans to set up gas, wind, hydro and coal based power
generation projects, to match its distribution capability. The Company is also
exploring growth opportunities in the power transmission sector.

.
Reliance Energy, through a special purpose vehicle viz. Reliance Energy
Generation Limited is setting up a 3740 MW gas based mega power project at
Dhirubai Ambani energy City, near Dadri in the state of Uttar Pradesh.With an
initial investment outlay of Rs. 11,000 crore, the power project, to be developed
in phases, will also be the world’s largest power generating power plant at a
single location.
Reliance Energy & BSES:
After being the single largest private sector shareholder in BSES for over a
decade, Reliance had made two open offers of BSES, in accordance with the
provisions of the SEBI Takeover Code. As a result, Reliance’s stake in BSES
increased to 58 percent, and it acquired management control over the company
during the year 2003. Thus BSES became a part of the Reliance Group on
January 18, 2003.

PROFILE OF THE COMPANY
BSES, is the first private power distribution company formed in 1929
earlier known as Bombay Suburban Electric Supply Company. The company is
engaged in the generation, transmission and distribution of electricity in and
around Mumbai. It provides a portfolio of value added services in electrical
contracting, engineering, procurement and construction (EPC) contracts and
computer services.
BSES and its subsidiaries provide electricity service to more than 2.70 million
consumers in areas covering about 1, 23,000 sq. kms. With an estimated
population of about 34 million. BSES operates a state-of-the-art 500 MW
Thermal Power Station at Dahanu near Mumbai and supplies the power to the
companies own distribution grid. The Generation Division undertakes
engineering and construction of power plants. The Transmission Division
designs and installs transmission lines and sub-stations. Contracts Division
including the EPC Business Group renders compressive value added services
in construction, erection and commissioning through a nationwide network of
regional-offices. The Computer Division offers a wide range of utility related
computer services.
BSES is considered to be India's no.1 integrated utility in the private
sector and is the first Indian power utility company to get ISO 9002
accreditation. With over seven decades in the field of power distribution, the
Electricity Supply Division has achieved the distinction of operating its
Mumbai distribution network with 99.9 % on line reliability coupled with a
miniscule distribution loss of 11.5%, which is the lowest in the country.
Over the years BSES has received many coveted awards and recognitions
across various categories. BSES was honored with the first Millennium
Business award for environment management. The United Nations
Environment Programmes and several international awards.
In Mumbai, the state-of-art technology interface which caters to 22 lakh
consumers includes online inquiry, consumer centers, touch screen kiosks and
mobile collection vans all of which lead to a high level of consumer
satisfaction. The strong IT driven system with in-house billing expertise adds to
the reliable and efficient services we offer our consumers. Besides, privatization

of the distribution system in Orissa makes BSES the only utility company with
more than 3 years experience in managing privatized distribution.
BSES Limited is India's premier utility engaged in the generation, transmission
and distribution of electricity. Formerly, known as Bombay Suburban Electric
Supply Limited, it was incorporated on 1st October 1929, for the distribution
of electricity in the suburbs of Mumbai, with a pioneering mission to make
available uninterrupted, reliable, and quality power to customers and
provide value added services for the development of the power and
infrastructure sectors.
BSES caters to the needs of 2.07 million consumers over an area of 384 sq. km.
with a maximum system demand of approximately 1198 MVA. With 7 decades
in the field of power distribution, the Electricity Supply Division of BSES has
achieved the distinction of operating its distribution network with 99.98% on-
line reliability and has a distribution loss of only 11.6%.
BSES was amongst the first utilities in India to adopt computerization in 1967
to meet the increasing workload and to improve services to its customers.
With a view to optimally utilize trained manpower and expertise in the field of
power, the company commenced contracting activities in 1966 by undertaking
turnkey electrical contracts, thermal, hydro and gas turbine installations and
commissioning contracts, transmission line projects etc.
BSES set up its own 500 MW Thermal Power Plant and the first 2 x 250 MW
units of Dahanu Power Station were synchronized and began commercial
operation during 1995-1996. A dedicated 220 kV double circuit transmission
line network with three 220 / 33 kV receiving stations have been installed to
evacuate the power to the distribution area of the Company. This demonstrates
BSES’ in-house capabilities ranging from engineering, operation &
maintenance of power plants and transmission and distribution systems.
BSES through international competitive bidding acquired an equity stake of
51% in three of the four Distribution Companies of Orissa. At present, BSES
along with its subsidiaries provide electricity to more than 2.7 million
consumers in an area covering about 1,23,000 sq. km with an estimated
population of 34 million.
BSES, which has been the oldest professionally managed private sector
company in power generation, transmission and distribution, has now become
a part of the Reliance group.

BSES will play an important role in the fulfillment of Shri Dhirubhai Ambani’s
vision of contributing to the economic growth of the country by accelerating
the pace of development of world-class power infrastructure and serving
millions of customers. This integration of BSES into the Reliance family is
another step forward to establish Reliance as India’s only integrated Energy
Company with interests in oil and gas exploration and production, refining and
marketing of petroleum products, petrochemicals and power.
BSES DELHI
In July 2002, Delhi Vidyut Board unbundled into five successor entities – the
three distribution companies, a transmission and a holding company. Two of
the three distribution companies have been handed over to BSES, and one to
TATA POWER.
As a part of its active support to the privatization process, BSES has recently
acquired an equity stake of 51% in two of the three Distribution Companies of
Delhi after unbundling and privatization of the erstwhile Delhi Vidyut Board.
The two distribution companies, BSES Rajdhani Power Limited covering
South and West areas and BSES Yamuna Power Limited covering
Central and East regions provide electricity to around 23 lakhs consumers
spread across an area of 1000 sq kms (approx).
Distributing Power in the Capital
The Delhi Distribution Companies, BSES Yamuna Power Limited (BYPL) and
BSES Rajdhani Power Limited (BRPL) are two of the successor entities created
as a result of the functional unbundling of Delhi Vidyut Board. The Companies
commenced the business distribution and supply of electricity in Delhi from 1st
July. 2002. The Company acquired assets, liabilities, proceedings and personnel
of the Delhi Vidyut Board as per the terms and conditions contained in the
Transfer Scheme.
BSES Yamuna Power Limited
BYPL has a consumer base of 10.49 lakhs covering Central and East areas
regions and consists of 14 divisions, Chandni Chowk, Daryaganj, Paharganj,
Shankar road, Patel Nagar, Karkardooma, GT Road, Yamuna Vihar, Karawal
Nagar, Nand Nagri, Krishna Nagar, Laxmi Nagar, Mayur Vihar I & II, Mayur
Vihar III.

Consumer Profile
Category Central-East
LIP (Large
Industrial Power)
310
SIP (Small Industrial
Power)
26416
Non-Domestic 173248
Domestic 660866
Agriculture 341
Railways 0
Water 43
Public Lighting 1
BSES Rajdhani Power Limited
BRPL has a consumer base of 11.69 lakhs covering South and West regions
and consists of 19 divisions, Saket, Vasant Kunj, Hauzkhas, Khanpur, Sarita
Vihar, Tagore Garden, Nehru Place, RK Puram, Jaffarpur, Mundka, Dwaraka,
Vikaspuri, Najafgarh, Alaknanda, Mehrauli, Palam, Nangloi, Nizamuddin,
Janakpuri and Punjabi Bagh areas.

CONSUMER PROFILE
Category South-West
LIP (Large
Industrial Power)
SIP (Small Industrial
Power)
19802
Non-Domestic 100062
Domestic 717273
Agriculture 11173
Railways
Water
Public Lighting
These two Companies together provide service to an estimated population of 7
million. BSES Delhi with its Two Distribution Companies at Delhi comprises
of functions & roles that are multi-faced and dynamic. The functions include
system & Operations. Commercial, Billing, Finance and Customer
Services.
These Companies have introduced a number of measures including
infusion of information technology in order to improve and monitor the
distribution system effectively and to ensure transparency and
accountability in the billing and payment system. Some of the steps
taken in this direction are:
 Focusing attention on strengthening and streamlining of the
organization structure
 Capacity of Call Centers enhanced
 Measures to reduce faults and improve supply - including installation
of 50 additional cheque collection boxes, etc.
 Regular meetings with local statutory authorities for smooth
coordination.

 Undertaking of prompt efforts to meet the short term exigencies and
at the same time drawing up of detailed action plans on each area of
business
 Replacement of defective and stalled meters.
With the above measures, both the Companies have been able to reduce the
system loss at a steady pace and continual efforts are being made to achieve
further loss reduction and system improvement with the implementation of
above measures.
NETWORK OF THE COMPANY

OBJECTIVES OF THE
STUDY
Everything that comes into existence must have an objective for its existence.
It holds true for my Project also.
The primary objective of this study is to have an insight into the practices of
the company with regards to management of various elements of working
capital.
An attempt has also been made to find out whether or not, to what extent, the
working capital management is efficient and effective in BSES. Ways and
means to improve working capital management have also been suggested which
lead to better productivity.
Apart from the above, more specifically the present study is conducted to find
out as follows:

 To study the Collection process of BSES and determining how far has
the company been successful in managing collection of receivables in
time.
 To study the Inventory management process in BSES i.e. material
planning, material procurement & vendor selection procedure.
 How well has the company been successful in managing its Creditors /
payables i.e. suppliers of electricity, suppliers of inventory.
 To Understand the Cash Management procedure in BSES and
suggesting ways with which company is able to maintain adequate
liquidity throughout the year.
 To understand the entire Billing procedure of BSES and
recommending ways to fasten the revenue cycle time of Billing to cash
receipt.
 To understand the need for Working Capital Financing in BSES.

Research Methodology
&
Scope of the Study
The Research study is descriptive in nature. Descriptive research includes
surveys and fact-finding enquiries of different kinds. The major purpose of
descriptive research is description of the state of affairs, as it exists at present.
The Study on various aspects of Working Capital such as Cash Management,
Inventory management, Receivables Management, Payables Management
involves understanding the various processes in the company.
The scope of the study was restricted to the Finance Department,
Commercial Department & Operations Department of BSES, a nearby
Inventory Store at Okhla and CPC (Collection Processing Centre) situated at
Shankar Road, New Delhi.
The identification of the issues in the report is mainly based on the review of
records, sample verification of Documents & Financial Statements. Sample
selection is purely judgemental in view of the limited time available and
confidentiality of the documents.

SOURCES OF DATA COLLECTION:
The research plan called for gathering primary data as well as secondary
data. Though the research is based more on secondary data.
Primary Data: - It is the data collected firsthand relating to specific queries
and problems from the process owners in the organization. Its main advantage
is that the information is up-to-date but it is time consuming.
Sources of collecting Primary Data
The primary data is collected using two main research instruments:
questionnaires and mechanical devices. The required information from the staff
members of the Finance, Inventory Department and Collection Department of
the BSES was gathered through personal interview.
Secondary Data: - It is the information, which has been already collected for
other purposes and is readily available in some form.
Sources of Collecting Secondary Data
 Internal Sources the Company's Financial Statements i.e. Balance Sheet
& Profit & Loss Accounts, Cash Flow Statement, Collection figures,
credit policies, CMA Data and various invoices.
 Financial Books from libraries providing information on working
capital management.
 Company’s Website etc.
Analysis Technique
The obtained raw data was categorically and methodically subjected to
tabulation in Excel and statistical techniques like mean and percentages were
applied to analyze the same. Flowchart has also been used to come out with the
findings. Ratio analysis was used to analyse the working capital / short-term
position of the company.

Along with the Fixed Assets, which yield returns over a period of time, BSES
like all other firms has also to employ short-term assets and short-run sources
of financing. The management of such assets, described as working capital
management or current assets management, is one of the most important
aspects of financial policy of BSES.
Working Capital Management (WCM) is a crucial area of study. All
organizations, whether big or small, manufacturing or trading have Working
Capital. WCM is concerned with the problems that arise in attempting to
manage the current assets, the current liabilities and the interrelationship that
exists between them.
The problems involved in the management of working capital in BSES differ
from those in the management of Fixed assets. In the first place, BSES acquires
fixed assets to retain them in the business over a period of time and yield
returns over the life of the assets.

Probably, the most notable feature of such assets, from the point of view of
financial analysis, is the time dimension. In contrast, the stock-in-trade of
working capital management is short-term asset, which loses its identity fairly
quickly, usually within an operating cycle not exceeding a year. In the
management of working capital, therefore, the time factor is not at all crucial as
a decision variable.
Yet another notable feature of short-term assets is the question of profitability
versus liquidity and the related aspect of risk. If the size of such assets is large,
the liquidity position would improve, but profitability would be adversely
affected, as fund will remain idle. Conversely, if the holdings of such assets are
relatively small, the overall profitability will no doubt increase, but it will have
an adverse effect on the liquidity position and make the company more risk-
prone.
Working Capital management should, therefore, aim at striking a balance such
that there is an optimum amount of short-term assets. No business can run
successfully without an adequate amount of working capital.
Justification for the Selection of this Topic:
BSES enjoys the following advantages of maintaining adequate working capital:
 It has helped the company in fostering good relations with trade
creditors (both small-scale industries and others) and suppliers of
electricity, assets like transformers, cables, and other inventory items.
 The adequate level of cash with the BSES has helped the company to
prevent insolvency or bankruptcy arising out of its inability to meet its
obligations.
 It has led to a strong credit rating, which enables BSES to purchase
goods on favourable terms and to maintain its line of credit with banks
and other sources of credit.
 BSES is able to meet its high cash expenditure with a minimum of strain
during the peak season like may-june in summers when the expenditure
on transformers, cables and other operational & maintenance expenses
are high.

 BSES is able to make regular payment of salaries, wages and other day-
to-day commitments, which raises the morale of its employees, increases
their efficiency, reduce wastage and costs, enhances business and profits.
 Sufficiency of working capital enables BSES to pay quick and regular
dividends to the investors.
By keeping the above points in mind, it was felt that the working capital is the
most critical financial activity, which has to be properly tackled by the finance
manager.
Therefore, I decided to study “Working Capital Management” as my project
topic for study during summer training.
ACTUAL STUDY

Working capital management is management for the short-term. It is
concerned with the problems that arise in attempting to manage the current
assets, the current liabilities and the interrelationship that exists between them.
This is of critical importance to BSES.
A firm’s working capital consists of its investment in Current assets i.e. those
assets, which in the ordinary course of the business can be, or will be,
converted into cash within one year without a diminution in value and without
disrupting the operations of the firm. A firm’s working capital consists of its
investment in current assets, which include short assets such as cash and bank
balance, inventories, receivables (including debtors and bills), and marketable
securities. Current Liabilities are those liabilities, which are intended, at their
inception, to be paid in the ordinary course of business, within a year, out of
the current assets or earnings of the concern.
The goal of working capital management is to manage the firm’s current
assets and liabilities in such a way that a satisfactory level of working
capital is maintained.
The need for Working Capital arises from the following considerations:

First, existence of working capital is imperative in any firm. The fixed assets,
which usually require a large chunk of total funds, can be used at an optimal
level only if supported by sufficient working capital.
Second, the working capital investments of funds of the firm if the working
capital level is not properly maintained and managed, then it may result in
unnecessary blocking of scarce resources of the firm. The insufficient working
capital, on the other hand, put different hindrances in smooth working of the
firm.
To earn a steady amount of profit requires successful sales activity. The firm
has to invest enough funds in current assets for generating sales. Current assets
are required, as sales do not convert into cash instantaneously. There is always
an operating cycle involved in the conversion of sales into cash. The
continuing flow from cash to suppliers, to inventory, to accounts receivable
and back into cash is what is called the operating cycle. Thus, the term
operating cycle refers to the length of the time necessary to complete the
following cycle of events:
 Conversion of cash into inventory.
 Conversion of inventory into receivables.
 Conversion of receivables into cash.
Cash flows in a cycle into, around and out of a business. It is the business's
lifeblood and every manager's primary task is to help keep it flowing and to use
the cash flow to generate profits. If a business is operating profitably, then it
should, in theory, generate cash surpluses. If it doesn't generate surpluses, the
business will eventually run out of cash and expire.
The faster a business expands, the more cash it will need for working capital
and investment. The cheapest and best sources of cash exist as working capital
right within business. Good management of working capital will generate cash
will help improve profits and reduce risks. Bear in mind that the cost of
providing credit to customers and holding stocks can represent a substantial
proportion of a firm's total profits.
There are two elements in the business cycle that absorb cash - Inventory
(stocks and work-in-progress) and Receivables (debtors owing you money).

The main sources of cash are Payables (your creditors) and Equity and
Loans.
Each component of working capital (namely inventory, receivables and
payables) has two dimensions ...TIME ......... and MONEY. When it comes to
managing working capital - TIME IS MONEY. If you can get money to
move faster around the cycle (e.g. collect monies due from debtors more
quickly) or reduce the amount of money tied up (e.g. reduce inventory levels
relative to sales), the business will generate more cash or it will need to borrow
less money to fund working capital. As a consequence, you could reduce the
cost of bank interest or you'll have additional free money available to support
additional sales growth or investment. Similarly, if you can negotiate improved
terms with suppliers e.g. get longer credit or an increased credit limit, you
effectively create free finance to help fund future sales.
If you ...FHGYT Then ...
• Collect receivables (debtors) faster
You release cash from the
cycle
• Collect receivables (debtors) slower
Your receivables soak up

cash
• Get better credit (in terms of duration or
amount) from suppliers You increase your cash
resources
• Shift inventory (stocks) faster
You free up cash
• Move inventory (stocks) slower
You consume more cash
It can be tempting to pay cash, if available, for fixed assets e.g. computers,
plant, vehicles etc. If you do pay cash, remember that this is now longer
available for working capital. Therefore, if cash is tight, consider other ways of
financing capital investment - loans, equity, leasing etc. Similarly, if you pay
dividends or increase drawings, these are cash outflows and, like water flowing
down a plughole, they remove liquidity from the business.
Compution of Working Capital Requirement Period
Thus the operating cycle in BSES can be computed as follows:
BSES Yamuna on an average take 57 days to collect its receivables and
took 59 days to pay its payables. On an average, average age of inventory
is 24 days.
Operating cycle period
The length or time duration of the operating cycle of BSES can be defined as
the sum of its inventory conversion period and the receivables conversion
period.
The total of Inventory Conversion Period and Receivable Conversion Period is
also as Total Operating Cycle Period.

So, Gross Operating Cycle = (24 + 57) = 81 days.
BSES gets some credit facility from the supplier of inventory; wage earners etc.
This period for which the payments to these parties are deferred or delayed is
known as Deferral Period. Deducting the Deferral Period from the Total
Operating Cycle arrives at the Net Operating Cycle of the firm. Thus
Net Operating Cycle = (81 – 59) = 22 days.
Working Capital: Policy and Management
The Working Capital management includes and refers to the procedure and
policies required to manage the working capital. It may be noted that the long-
term profitability of a firm, undoubtedly, depends upon the investment
decisions of a firm. The investment decisions determine the pattern of sales
growth and sales in turn, determine the profitability. However, the investment
decisions and other decisions have two important implications for working
capital management. First, the sales forecast of goods and services being
produced by the firm allow the financial manager to estimate the working
capital needs and levels of different current assets. Second, the working capital
management helps maximizing the shareholder’s wealth by providing and
maintaining firm’s liquidity. The working capital management need not
necessarily have a target of increasing the wealth of the shareholders;
nevertheless it helps attaining the objective by providing sufficient liquidity to
the firm.
The importance of the working capital management, thus, can be expressed in
terms of the following points:
 The level of current assets changes constantly and regularly depending
upon the level of actual and forecasted sales. This requires that the
decisions to bring levels of current assets to the desired level of current
assets should be made at the earliest opportunity and as frequently as
required.
 The changing levels of current assets may also require review of the
financing pattern. How much working capital needs to be financed by
different sources of financing must be periodically reviewed.

 Inefficient working capital management may result in loss of sales and
consequently decline in profits of the firm.
 Inefficient working capital management may also lead to insolvency of
the firm if it is not in a position to meet its liabilities and commitments.
 Current assets usually represent a substantial portion of the total assets
of the firm, resulting in investment of a larger chunk of funds in the
current assets.
There is an obvious and inevitable relationship between the sales growth and
the level of current assets. The target sales level can be achieved only if
supported by adequate working capital. The increase in sales level requires
increase in working capital and thus the financial manager must be able to
respond quickly in providing and arranging additional working capital.
Types of Working Capital Policy
There are three types of working capital, which a firm may adopt
1.Moderate Working capital Policy
2.Conservative Working Capital Policy
3.Aggressive working Capital
Conservative
Current assets Moderate
Aggressive

Sales Level
(Different Types of Working Capital Policies)
In case of Moderate Working Capital Policy, the increase in sales level will
be coupled with proportionate increase in level of current assests also. For
example if sales increase or are expected to increase by 10% , then the levl of
current assets will also increased by 10%.
In case of Conservative Working Capital Policy the firm does not like to
take risk. For every increase in sales, the level of current assets will be increased
more than proportionately. Such a policy tends to reduce the risk of shortage
of working capital by increasing the safety component of current assets. The
conservative working capital policy also reduces the risk of non payment to
liabilities.
On the other hand the firm is said to have an Aggressive Working Capital
Policy if the increase in current assets does not result in proportionate increase
by 7% only. This type of aggressive policy has many implications. First, the risk
of insolvency of the firm increases as the firm maintains lower liquidity.
Second, the firm is exposed to greater risk as it may not be able to face
unexpected change in market and, third, reduced investment in current assets
will result in increase in profitability of the firm.
Thus efficient working capital management is important from the point of view
of both the liquidity and the profitability. Poor and inefficient working capital
management means that funds are unnecessarily tied up in idle assets. This
reduces the liquidity as well as the ability to invest funds in productive assets,
so affecting the profitability. So it is imperative to formulate a suitable working
capital policy for the firm.
Sales in 2004
(Rs.)
Sales in 2005
(Rs.)
Increase in
sales
% Increase
10915464736.31 8939861170.72 1975603566 22.09
Current assets
in 2004 (Rs.)
Current
assets in 2005
(Rs.)
Increase in
current
assets
% Increase

3454801038 1973987700 1480813338 75.09
Evaluation of BSES’s Working Capital Policy
According to the above done analysis of the difference between the two year
current assets and sales it becomes apparent that the Reliance BSES has
adopted very conservative working capital policy. There is increase in sales of
about 22% and increase in current assets is more than 75%. Thus it indicates
very conservative policy.
Working Capital requirements are determined by a variety of factors. In
general, the following factors are relevant for the proper assessment of the
quantum of working capital required:
 BSES’s nature of business: The working capital requirements of the
company are entirely dependent on the conduct of the business. BSES,
which is a power utility company, have to maintain sufficient amount of
inventories and bookdebts. The proportion of current assets to total
assets measures the requirements of working capital in the company.
This ratio has been increasing in case of BSES because of the increasing
consumer base and thus the investment in current assets.
 BSES’s Inventory policy: If the business requires keeping large stock
of inventory then it requires more working capital. It depends upon how
efficiently the company manages its inventories and the inventory policy,
which it frames.
 BSES’s Credit Policy: Electricity is alwyas sold on credit. The period of
credit in case of BSES depends upon the time it takes for company to
complete meter reading and then dispatch the bills to the consumers.
This period usually takes 15 days and then 15 more days are given to
consumers for making their payments. But the substantial period lies in
the fact that the bill charged is for two months. Thus very lienient olicy
is adopted in case of the company but then it is therequirement of the
electricity business and it results in saving also due to the fact that ia

saves the expenses on meter reading and billind procedure.credit policy
of the BSES requires reasonable investment in working capital.
 BSES’s Business Cycle: The working capital requirements in case of
BSES are also determined by the nature of the business cycle. Business
fluctuations lead to cyclical and seasonal changes, which, in turn, cause a
shift in the working capital position, particularly for temporary working
capital requirements. BSES has different working capital requirements
during its peak and non- peak season. The peak season is in may-June
during summers when electricity consumption is more and more cases
of burnt wires etc. Thus during those periods, the size of the working
capital mainly through inventories is affected.
COMPOSITION OF CURRENT ASSETS OF BRPL
IN THE YEARS 2004 & 2005:
COMPOSITION OF CURRENT ASSETS (2005)
32%
61%
1% 6%
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances

2004
16%
62%
17%
5%
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
 The majority of the Current assets (i.e. 61% in 2005 & 62% in 2004) are
sundry debtors, which includes debt for the period exceeding six months
(considered good because they are secured by way of consumer deposits)
and other debt.
 Inventory is the next highest contributor to working capital (i.e. 32% in
the year 2005), which has doubled its share since last year. This is
because of the huge amount of inventory that was required for the
consumption in repairs & maintenance of buildings and machinery. Also
the increase in demand of electricity with increasing consumer base in
Delhi has made the company keep higher levels of inventory (stores &
spares).
 The percentage of the loans and advances has remained same over the
two years.
COMPOSITION OF CURRENT LIABILITIES OF
BRPL IN THE YEARS 2004 & 2005:

2005
54%
0%
20%
15%
0%
11%
Sundry Creditors
Works & Earnest money deposits
Consumer Deposits
Expenses payable
DPCL
Other liabilities payable
2004
22%
1%
31%19%
5%
22%
Sundry Creditors
Works & Earnest money deposits
Consumer Deposits
Expenses payable
DPCL
Other liabilities payable
 The two major components of Current liabilities of BSES are Sundry
creditors and Consumer deposits.
 The sundry creditors (both small-scale and the large scale suppliers)
of the electricity have increased in absolute as well as relative terms.
The company, due to its reputation in the industry and backing of the
Reliance group is able to enjoy high credit from the suppliers. The
share of the creditors in the total current liabilities have increased
from 22% in 2004 to 54% in the year 2005.
 Although, the percentage share of the consumer deposits in the total
current liabilities have come down from 31% in 2004 to 20% in the
year 2005, but in absolute terms there has been an increase of Rs.

16.5 crores. This is due to the new connections being taken by the
residents of Delhi and the deposits being kept with BSES.

CASH MANAGEMENT
Cash Management is one of the key areas of working capital management.
Apart from the fact that it is the most liquid asset, cash is the common
denominator to which all current assets can be reduced because the other
major liquid assets, that is, receivables and inventory get eventually converted
into cash. This underlines the significance of cash management.
The term Cash in BSES Ltd. includes cash (currency) and generally accepted
equivalents of cash, such as cheques, drafts and demand deposits in the banks.
BSES keeps substantial part of the cash with the scheduled banks in the form
of fixed deposits (as a deposit with Registrar of State).
The basic objectives of Cash management in BSES Ltd. are two-fold:
 To meet the cash disbursement needs (payment schedule)
 To minimise funds committed to cash balances.
Meeting Payments Schedule:

In the normal course of business, BSES has to make payments of cash on a
continuous and regular basis to suppliers of Power, Fixed Assets, Inventory,
Employees and so on. At the same time there, there is a constant inflow of
cash through collections from debtors (which are basically the Electricity
consumers) in case of BSES.Thus the basic objective of cash management is to
meet the payment schedule, that is, to have sufficient cash to meet the cash
disbursement needs of the company.
BSES enjoys the following advantages of maintaining adequate cash:
 It has helped the company in fostering good relations with trade
creditors (both small-scale industries and others) and suppliers of
electricity, assets like transformers, cables, and other inventory items.
 The adequate level of cash with the BSES has helped the company to
prevent insolvency or bankruptcy arising out of its inability to meet its
obligations.
 It has led to a strong credit rating, which enables BSES to purchase
goods on favourable terms and to maintain its line of credit with banks
and other sources of credit.
 BSES is able to meet its high cash expenditure with a minimum of strain
during the peak seasons like may-june in summers when the expenditure
on transformers, cables and other operational & maintenance expenses
are high.
Minimising Funds Committed to Cash Balances:
BSES enjoys the advantages of prompt payment of cash by maintaining
sufficient and not excessive cash. A low level of cash balances, on the other
hand, may mean the failure to meet the payment schedule. Therefore, the aim
of cash management in BSES is to have an optimal amount of cash balances.
BSES’S CASH MANAGEMENT
: BASIC STRATEGY

The broad cash management strategies of the BSES are essentially related to
the cash turnover process, that is, the cash cycle together with the cash
turnover.
The Cash cycle refers to the process by which cash is used to purchase power
and then it is sold to the final consumers, who later pay the electricity bills.
BSES receives cash from its customers on both monthly & bi-monthly basis
and the cycle repeats itself.
Details of Cash Cycle in BSES:
A B C D E F G H
A = Inventory Ordered Power Purchased
B = Inventory Received Power Received
C = Payments
D = Cheque Clearance
E = Goods Sold
F = Customers make payments
G = Payment Received
H = Cheques Deposited
I = Funds collected
BSES, which purchases power on credit, is required by the credit terms to
make payments within 30 days. On its side, the company allows its customers
to pay within 15 days. Its experience has been that it takes, on an average, 59
days to pay its creditors (suppliers) and 57 days to collect its receivables.
Moreover, 24 days elapse between the purchase of power and the sale of
Electricity; that is to say, the average age of inventory (power in this case) is 24
days.
The Cash Flow of BSES can be calculated by finding the average number of
days that elapse between the cash outflows associated with paying suppliers and
the cash inflows associated with collecting accounts receivables:

Cash Cycle = 24 days + 57 days – 59 days = 22 days.
Cash turnover = the assumed number of days in a year (normally 360)
divided by the cash cycle = 360/ 22 = 16.36.
MINIMUM OPERATING CASH
The higher the turnover, the lesser is the cash a firm requires. Thus BSES tries
to maximize the cash turnover. But it has to maintain a minimum amount of
operating cash balance so that it does not run out of cash.
The minimum level of operating cash in case of BSES is equal to:
(TOTAL OPERATING OUTLAYS) / CASH TURNOVER
RATE)
= (364 + 167) / 16.36 = Rs. 32.46 crores
The Operational outlay for the year 2004-05 in case of BYPL & BRPL was Rs.
364 & Rs. 167 crores(approximately).
The Cash turnover rate as calculated above is 16.36
The Cash Management strategies of the BSES are intended to minimize the
operating cash balance requirement. Thus basic strategies that are employed to
do the needful are as follows:
 Stretching Accounts Payable
 Speedy Collection of Accounts Receivable
SPEEDING ACCOUNTS PAYABLE
One basic strategy of efficient cash management is to stretch the accounts
payable. In other words, BSES should pay its suppliers as late as possible
without damaging its credit standing.
If BSES can stretch its accounts payable from the current level of 59 days to 69
days, its cash cycle will be 12 days (i.e. reduced by 10 days from the original 59
days). The reduction in Cash cycle by 10 days as a result of the stretching of the
accounts payable by 10 days will increase the cash turnover from the present
level of 16.36 to 30 (360 / 12). This will lead to a decrease in the minimum
cash requirement from Rs.32.46 crore to Rs.17.70 crore (Rs. 364 + 167 / 30).

That is, the requirement has been reduced by Rs. 14.76 Crore. Assuming a 5
percent rate of interest, there will be a saving in cost to BSES to the extent of
Rs. 74 lacs per annum. .
SPEEDY COLLECTION OF RECEIVABLES
Yet another strategy for efficient cash management is to collect accounts
receivable as quickly as possible. I believe BSES has improved its collections
tremendously by taking many steps, which has made making payments really
easy for the consumers.
Present system of Cash Management in BSES
Regular Funds Inflow is received from collection proceeds of sale of energy on
daily basis through cash receipt and cheque collections. Collections are heavily
dependent on drawl of power, which in turn varies significantly on monthly
basis.
In the normal course of business, BSES has to make payments of cash on a
continuous and regular basis to suppliers of Power, Fixed Assets, Inventory,
Employees and so on. At the same time there, there is a constant inflow of
cash through collections from debtors (which are basically the Electricity
consumers) in case of BSES.Thus the basic objective of cash management is to
meet the payment schedule, that is, to have sufficient cash to meet the cash
disbursement needs of the company.
Since major portion of monthly recurring cash inflows are used for bulk power
purchase payments, strict monitoring of inflows and outflows is to ensure as far
as possible payment from own sources on due dates of payments.
BYPL is having fund based facilities of Rs. 63 crores from a Consortium of
seven bankers which usually remains unutilized / underutilized. Cost of
borrowed funds from these Banks is 8% per annum.

Prepayment to Delhi Transco before due date earns an rebate of 30% p.a.
(i.e.2.5% per month) for period for which amount is prepaid subject to
maximum of one month prepayment only.
The amount payable for bulk power drawl for each month can be ascertained
on 1st
/ 2nd
day of every month even before raising of invoice by Delhi Transco
Ltd. The said amount payable can be paid on either1st / 2nd
day of month by
utilizing fund bases facilities after keeping some margin for contingencies.
This will help the company in earning rebate, which will help in increasing
profitability. Further since interest income will be given to various bankers,
better terms for other facilities like Letter of Credit, Bank Guarantees, Cash
Sorting Charges and other Bank Charges etc can be negotiated with them.
INVESTMENT ACTIVITIES IN RELIANCE BSES
If investment activities of Reliance BSES are talked about then there is no substantial
investment in Reliance BSES. The company does not come out with surplus amount
that it can invest. With whatever amount the company is left it invests it in Reliance
Mutual funds that too for short term.
Reliance Rajdhani Power Limited is sometimes able to generate profits but Reliance
Yamuna Power Limited is never in a position to show any profit. The AT&C
(Agriculture Technical and Commercial) losses are on a high level in Reliance Yamuna
Power Limited. So it is never in a position to show any profit.
For example in Reliance Yamuna Power Limited if the cost of providing electricity is
about Rs.100 then it comes out to be almost Rs.85. So there is always loss of about
15%. There are many reasons for this such as Reliance Yamuna Power Limited covers
East and Central Delhi where the population density is very low, no. of payments are
less, theft is more in comparison to South and West Delhi where population is more
and the conditions are better. Like in Southern part people are educated and efficient so
there are no such problems.
The company is only maintaining Reserves & Surplus that too is mandatory
according to The Electricity (Supply) Act, 1948. According to the act there shall

be created from the existing reserves or from the revenues of the undertaking
that is called the “Contingencies Reserves”.
*The Act clearly defines
(a) The licensee shall appropriate to the “Contingencies Reserves from the
revenues of each year of account a sum not less than one-quarter of one per
centum (.2) and not more than one half of one per centum to the original cost
of fixed assets, provided that if the said reserves exceeds, or would by such
appropriation, be caused to exceed, five per centum of the total cost of fixed
assets, no appropriation shall be made which would have the effect of
increasing the reserve beyond the said maximum.
(b) The sums appropriated to the Contingencies Reserves shall be invested in
securities authorized under the Indian Trust Act, 1882 (2 0f 1882) and such
investment shall be made within a period of six months of the close of the year
of account in which such appropriation is made.
A Flow chart of present system being followed for cash management is given
hereunder

Collection from
Sale of Energy
Cash Cheques
Deposited in Bank of
Punjab on Next day
Deposited in Bank of
Punjab on Next day
Available for utilization on
same day.
Available for utilization after two
days.
Utilized for making
Payments.
Transfer to Other Bank Accounts for
Payments and Establishment expenses.
Used for making payments
for various expenses.
Transfer to SBI Chandani Chowk For Bulk Power
Purchse Payments on respective due dates.

It is seen that at present, cash is deposited only in Bank Of Punjab for which
company is paying cash sorting due to heavy cash deposit. Possibilities of
depositing Cash collection on Consortium Bankers may be explored.
This can help in reducing expense on account of cash sorting charges as well as
simultaneous liquidation of Debit Balance in Cash Credit Accounts as cash will
be distributed among seven bankers thus vacating load on one banker.

Inventory forms an important part of the total current assets or working
capital enterprises whether it is an industrial undertaking or a trading enterprise.
Inventories are assets of the firm, and as a result it represents an investment.
Because such investment requires a commitment if funds, it is necessary to
maintain inventories at the correct level. If they become too large, the firm
loses the opportunity to employ those funds more effectively. Similarly, if they
are too small, the firm may lose sales. Thus, there is an optimal level of
inventories and there is an economic order quantity model for
determining the correct level of inventory.
The inventories need not to be viewed as idle assets rather these are an integral
part of firm’s resources. The basic financial problem is to determine the proper
level of investment in the inventories and to decide how much inventory must
be acquired during each period to maintain that level.
Types of Inventory means and includes the goods and services being sold by
the firm and the raw material or other components being used in the
manufacturing firm of such goods and services. The different business may
have different types of inventory as per requirement of the business. The
common types of inventories for most of the businesses may be classified as:
 Raw Material
 Work-in-progress or semi-finished goods
 Other items of stores etc. held for being consumed in the manufacturing
process
 Finished Goods awaiting sale
Inventory in BSES comprises of Stores, Spares & Loose Tools. Since they are
in the business of buying Power and then selling Electricity to the consumers,
there is no work-in-progress.
The basic purpose of carrying inventory in BSES is to uncouple the
operation of the firm i.e. to make each function of the firm independent of
other functions so that delays in one area do not affect the regular supply of
electricity to its consumers.
Any firm will like to hold higher levels of inventory. This will enable the firm to
be more flexible in supplying to the customers and will find ease in its
production. Most of the customers may require immediate delivery and higher
inventories may help meeting their demands and hence there would be less and
fewer chances of transmission of power being disrupted. But there is always a
cost involved in the inventories. This cost includes the capital cost of the stock

and the costs of storing and the carrying etc. on the other hand, holding lower
level of stock than required may result in stock outs. The cost of stock out may
be sales loss or customer’s dissatisfaction. The stock outs may also result in
delays or hold-ups in the transmission process.
So every firm must manage the inventories in such a way as to get the best
return thereof. It must weigh the benefits of holding inventory against its
opportunity costs. While achieving the objective of optimal level of inventory, a
financial manager has to reconcile the differing view points of production
department, marketing department and the purchase department in
consultation with the production department, still the financial manager should
ensure that the inventories are properly controlled and should stress the need
for the consideration of financial implication of inventory management.
Thus, the objective of inventory management is to determine the optimum
level of inventory i.e. the level at whish the interest of all the departments
are taken care of. The inventory management seeks to maximize the wealth of
the shareholders by designing and implementing such policies, which attempt
to maximize the cost of procuring and maintaining the inventory.
There are lots of benefits and different types of costs associated with carrying
the stock of inventory. For uninterrupted production schedule independent
sales activity there is always need to maintain a sufficient stock of inventory.
But the cost like cost of storage, cost of financing, cost of ordering, and cost of
stock outs (if inventory is not kept properly) is always there for concern. So it is
necessary to find a trade off between the risk and return so the firm gets
optimum results.
Out of different current assets inventory is the asset, which requires to be
monitored and managed not only in terms of money value but also in terms of
number of physical units. Moreover inventory is the asset the investment in
which is the least liquid of all the current assets, any error in its management
cannot be readily rectified and hence may be costly to the firm. The goal of
inventory management should therefore, be to establish an optimum level of
each item of the inventory.
BSES employs A B C classification system to determine the type
and degree of control required for each item. This technique is based on the
assumption that a firm should not exercise the same degree of control on items
of inventory. It should rather keep a more rigorous control on items that are
(i) The most costly, and/or

(ii) The slowest turning, while items that are less expensive should be
given less control effort.
On the basis of the cost involved, BSES has classified the various inventory
items into three classes:
 A: The items included in group A involve the largest investment
i.e. 70% of the total value of inventory. This group comprises of
electric cables, Transformers, Energy meters, conductors,
lightning arrestors, Fitting-Street Lights and oil used in the
transformers. Therefore, Inventory control is most rigorous
and intensive and most sophisticated Inventory control
techniques are applied to these few items. Out of around 1200
different items of inventory in BSES, only 40 items (i.e.
3.33%) account for the 70% of the total value of inventory.
 B: The items comprising group B account for 20% of the
investments in inventory. This group comprises of Fitting-
Industrial Street Lights, Meter boxes, Panels, Thermovision
Camera, Switch boards, non-adhesive tapes, Pin-steel insulators
and ignitors etc. They get slightly less attention than group A
items. In group B also, only 120 items ( i.e. 10%) account for
20% of the investments in inventory.
 C: The items comprising group C account for only 10% of the
total value although number-wise its share is as high as 86%.
These items comprise of fuse wires, sockets, drilling machines,
ladder, paint, grease, screwdrivers etc. These items get minimum
attention.
BSES also keep stocks of fixed assets like wires, transformers, termination kits,
steel, Street lighting & poles, meters, L T boards, Insulators & accessories,
connection cables, conductors and circuit breakers.
ECONOMIC ORDER QUANTITY (EOQ) MODEL:
On the basis of a trade-off between benefits derived from the availability of
inventory and the cost of carrying that level of inventory, the appropriate or
optimum level of the order to be placed is determined in BSES. This optimum
level of inventory is popularly referred to as the economic order quantity
(EOQ).
The EOQ may be defined as that level of inventory order that minimizes the
total cost associated with inventory management.

BSES determines or forecasts the total annual usage or inventory reqirement in
the beginning of the year.The acquisition costs and the carrying costs are
determined for each item of inventory.
The firm then tries to find the Total costs (carrying and ordering costs taken
together) at various order sizes. Wherever, the total costs are the minimum, we
get the EOQ.
REORDER POINT:
BSES determines the reorder point for each level of inventory, using SAP. It is
that level of inventory when fresh order is placed with the suppliers for
procuring additional inventory equal to the economic order quantity.
Total re-order point = Lead time in days * average daily usage of inventory
Where, Lead-time refers to the total time normally taken in receiving the
delivery after placing orders with the suppliers.
Average usage means the quantity of inventory-consumed daily.
The SAP software employed in BSES is real-time and lets the users know
about the stock levels of different inventory items at all times. As soon as it
reaches the minimum order level, BSES orders its suppliers to send the
inventory.
BSES has maintained safety stock for all inventory items in its stores. It is the
minimum additional inventory that serves as a safety margin to meet an
unanticipated increase in resulting from an unusually high demand and/or an
uncontrollable late receipt of incoming inventory by its suppliers.
INVENTORY MANAGEMENT PROCESS IN BSES

There are four Main stores:
(i) Sriniwaspuri
(ii) Shadara
(iii) Rajghat
(iv) Ghazipur
The 3 main stores at Sriniwaspuri, Shadara and Rajghat are Operations and
Maintenance Stores and the one at Ghazipur stores Capital Equipments.
In addition to this, there are 14 maintenance stores. There are 4 Scrap stores
(East, Central, West, South).
Main Stores are the feeder stores to 14 maintenance stores.
MATERIAL PLANNING:
The Material Planning comprises of:
 Material Requirement Planning
 Material Inspection.
 Material Deliveries Follow-Ups.
A Material Requirement Planning
 It starts with the Fixation of minimum /maximum /reorder levels
based on the past consumption with periodical review/revision.
 Review & maintenance of inventory levels on regular basis.
 Collection of material requirements from field/users department
relating to schemes.
 Preparation of annual material requirements and generation of
purchase requisition based on re-order levels/indenter’s
request/material requirement for scheme.

B. Material Inspection
 Receiving of quality plan from supplier for approval.
 Approval of quality plan by CTS department after evaluation with
BSES requirements and standard quality plans.
 Receiving of inspection call from the supplier.
 Coordination with inspection agency for conducting inspection of
material based on approved quality plan.
 Inspection at suppliers premises by inspecting agency as per
inspection plan and Indian standards.
Methodology for Inspection
1) 100% inspection in case of customer’s specific items’ including major
capital items.
2) Waiver is considered in following cases and conditions:
• Frequent supplied items based on request routine test (in this case also
inspection of at least one unit is necessary.)
• Consumable items.
• Low value items based on sample approval from CTS department or
laboratory testing results in impendent laboratory.
 Receiving of inspection report from inspection agency.
 Verification of inspection reports and issuance of MDCC.
C. Delivery Follow Ups
 Preparation of delivery schedule
 Coordination with suppliers
 Updating the stores of the delivery schedule

 Rescheduling the deliveries as and when required
CONTRACT PROCESS:
Step 1: Contract Formulation and Awarding.
This process consists of the following steps:
 The user group identifies the requirements and conducts a survey of the
proposal to evaluate the technical and financial feasibility.
 The scheme is then drafted and sent to the CEO for approval.
 The CEO cell anlayzes the draft scheme and if any clarification is
required, it is sent back to the user group for further clarification.
 The scheme is then sent to the CEO for approval. Post approval, the
scheme is sent to the Contract and Maintenance department for
formulation of contract.
 The Contract and Maintenance department classifies the contract under
the following heads:
• Power Distribution Contracts
• Civil Contract
• Non-distribution Contracts
 The scheduled unit rates are derived on the basis of past trends record.
However the period for which the rates are fixed is not defined.
 After the classification, the drafting of the contract is sent to the CFO
for financial approval. In case the value of the contract exceeds Rs. 20.00
lacs, the contract is to be approved by the Mumbai office.
 Post approval, the contract is awarded to the contractor.
AFTER THE CONTRACT EXECUTION COMES THE BILLING
AND PAYMENTS OF CONTRACTS.

The Contracts which were awarded after 1st
April, 04 are settled through
automated processing in SAP.
MATERIAL PROCUREMENT:
It comprises of the following procedure:
 Purchase Requisition
 Procurement Process.
A Purchase Requisition
 Receiving purchase requisition in SAP generated by an authorized
source, along with approval of HOD/CEO on hard copy.
 Verify that the account code is correct.
 The respective buyer group processes purchase requisition.
Buyer groups
• All electrical items
• Automobiles & Poles.
• All information technology items.
• All Administrative/Automobiles/HR Items.
 The respective buyer group to process the purchase requisition as
follows:
• Purchase Requisition of high value items like transformers, switch
gears, control relay, HT cable, Isolators, Meters and related items
and other project / scheme material will be directly transferred by
the respective buyer to CPG for processing and placing the order.
• Balance items will be processed as per procurement procedure.
B Procurement Process
Vendor Evaluation and selection:
The following steps are involved in the process:
 The mode of Vendor identification is as follows:

• Vendors transferred from DVB are duly screened and
validated.
• Company approaches the vendor based on their own database
like manufactures directory, Internet, Trade magazines,
personal information network.
• Vendor approaching the company.
 The Vendor(s) is requested to submit an application in a pre-defined
format. The details in the format are indicative and not exhaustive.
 The Procurement department follows up with the vendor for the
following information:
• Capital Structure of the Vendor’s organization
• Financial Position of the vendor
• Organization structure
• Present Customer profile
• Volume of business with each customer
• Supplies made to each customer during last year to
each customer by the vendor
• Manufacturing Equipments and quality Control
standards
 It is followed by the Commercial evaluation being sent to the Central
Technical Services group, which visits the vendor’s premises and submits a
Technical evaluation report to the Procurement department based on which
the vendor is registered.
 After vendor’s approval, the vendor is asked to supply a sample, which is
put on trial. If the trial is successful, then vendor is considered in due course
for placing firm orders.
 Normally after 6 months from the date of registration of vendor “Vendors
Performance evaluation” is done. Vendor is rated considering 3 attributes:
Quality Rating (QR), Delivery Rating (DR), and Service Rating (SR).
 After calculating QR, DR and SR, Vendor Rating (VR) is calculated as
follows:
VR = 0.45*QR + 0.35*DR +0.20*SR
 After assigning the vendor rating, the category of the vendor is defined as
given below:

• Category ‘A’ if VR >= 80%
• Category ‘B’ if 60 <= VR <80%
• Category ‘C’ if VR <60%
 Blacklisting of the vendors is done only in case of gross breach of quality
and delivery parameters.
Procurement and Expediting:
The following steps are involved in the process:
 The respective departmental heads generates the Purchase Requisition
(PR) in SAP by using their Id and forward to the purchase department.
 In case of any clarification by purchase department, information is
sought from the respective user department for the PR generated.
 The Purchase department then identifies the priority for procurement.
 After identification of requirements and the related priorities, some
vendors are selected out of the registered vendors.
 Normally 3 to 4 quotations are invited from short listed vendors.
However in the following circumstances, the normal procedures of
inviting the quotations from the vendors is not followed:
• In case of emergency situation
• In case of limited vendors for the product or in case of propriety
items, which are few and far between.
 The vendor is selected and the order is placed based on the most
appropriate terms and conditions after taking approval from CEO.
 After obtaining the approval, the purchase order is prepared and sent to
the vendor concerned.
 In case the procurement is to be made for value exceeding Rs. 5 lacs,
the Mumbai office approves the purchase order and after this the Delhi
office prepares it.
 Once the order is awarded to the vendor, the vendor submits the
technical details. If the order involves fabrication, the quality parameters
are also forwarded to the vendors subsequently.

Expediting Cell:
The main objective of the expediting cell is to ensure that the fabrication is
done as per specifications, the quality parameters are met and the delivery is
made within the time specified in the PO. Follow-up is also done in those cases
where fabrication is not involved.
 Before commencing fabrication the vendor submits the fabrication plan,
and engineering drawings to the expediting cell. The vendor also submits a
quality plan based on the quality parameters provided by BSES.
 Subsequently the expediting group periodically visits the premises of the
vendor to ensure that the fabrication is done as per the fabrication plan and
the engineering and the quality parameters are compiled with.
 After the awarding of the PO, the vendor submits the delivery plan.
 A third party does the final quality inspection. The selection of the third
party is mainly based on market reputation.
 Third party quality report is submitted to the Central Technical Services
group for verification and validation.
 The acceptance of the material is not totally subject to the third party quality
tests but is also dependent on the management’s discretion.
 After the verification and validation of the quality report by CTS group, the
Expediting cell issues a material dispatch clearance certificate (MDCC), after
which the product can be dispatched.
 If the delivery is not done as per the delivery scheduled submitted by the
vendor, LD (Late Delivery) charges are levied on the vendor @0.5% per
week up to a maximum of 5%.
Process Description:
Following are the steps involved in the process:
NORMAL RECEIPTS:

 Vendor sends the material along with the invoice and copy of the
Purchase Order.
 The Dispatch advice, which represents pre-delivery quality check at the
premises of the vendor by the Expediting group, is also sent along with
the consignment.
 At the time of receipt of material, quality check is done and they are
physically verified for any damage during the transit.
 After the quality check, Goods Received Note (GRN) is prepared in
SAP.
 In case of shortage/rejection, the fact is informed to the vendor.
 The GRN is prepared only in cases where the payment is involved. In
the following cases GRN is not prepared, instead a Receipt Note is
prepared:
• Transformers sent for replacement.
• Inter unit stock transfer
• Material return from site
NORMAL ISSUE:
SAP Processing In case of Summer scheme and other operational and
maintenance contract)
 The Material reservation slip (MRS generated in SAP) is sent to the
stores by the users (site engineers) for availing the material required for
the execution of the contract.
 The user prepares the MRS by using his/her user id, however a manual
copy is also sent to the stores department.
 The MRS is authorized by the immediate superior of the person who
generated the MRS. Further the authorisation procedure is manual.
 In case the contractor comes along with the authorized MRS, the issue is
made directly to him only in case his signatures are duly attested by the
person who has authorized the MRS.

 Finally the material is issued and a material issue note is prepared in the
SAP.
MATERIAL DIRECTLY SENT TO THE SITE:
 In case the materials are sent directly to the site from the vendor
premises, it accompanies the invoice along with the challan. The
challan is duly signed by the receiving authority at the site and is
delivered to the store department.
 After the receipt of the challan, the store prepares the GRN and
simultaneously the Material Issue note.
MANUAL PROCESSING (IN CASE OF EXTRA
HIGH VOLTAGE CABLE):
 In case of Manual processing, the requirement is sent manually to the
stores by the user with five sets of copies, out of which the stores retain
two copies. Out of remaining three copies: One copy goes to the
security at the stores gate and the other two copies goes back to the user
along with the material.
 The issue quantity is entered in the SAP and issue slip is generated.
 Finally the material is issued to the requirement group.
INTER UNIT TRANSFER:
In case of inter unit stock transfer, the following procedure is followed:
 The store having the requirement generates the material reservation slip
(MRS) .
 The MRS is sent to the respective stores having the requisite material
and on the basis of MRS, the issuing store generates material issue note
(MIN) against which the material is issued.
 The receiving store on the receipt of the material generates the
Received Note.

MATERIAL RETURN FROM SITE:
This event has two scenarios:
 Material returned to the stores from where it is received
 Material returned to the store other than the stores from which it is
issued.
JOB COSTING:
 The capitalization process begins at the time of receipt of the
completion report from the site manager.
 The material part is capitalized on the basis of issue details mentioned in
the completion report.
 The labour part is capitalized after the final payment is released to the
contractor.
 The rate used for capitalization is the standard rate for the whole year.
The standard rate is calculated by weighted average method on the
basis of rates mentioned in Purchase Order (P.O.)(Total amount paid for
the material during the whole year / Total quantity purchased during the
year).
 Overheads are capitalized on the basis of absorption costing. The
absorption rate is 5% of material and labour cost. The absorption rate is
fixed at Mumbai office.
PROCUREMENT & VENDOR SELECTION:
-PAYMENT TO VENDORS
 The Vendor supplies the material as per the terms and conditions
mentioned in the P.O.
 The stores department prepares GRN for the material directly to stores.

 In case the materials are sent directly to site, the GRN is prepared on the
information of the site authority which is the business manager, who
signs on the delivery challan.
 The GRN along with the following documents are sent to the “Vendor
Support Cell” (a part of procurement):
• Supplier’s Invoice
• L.R. copy
• Excise Invoice
• Delivery Instructions
• Testing report
• Performance guarantee
 The “Vendor Support Cell” examines the details received and generates
an acknowledgement, which is sent to the vendor.
 The “Vendor Support Cell” hands over the details to the accounts
department.
 The Accounts department conducts the invoice verification (IV) as per
the purchase order within 2 or 3 days from the date of receiving.
 The payment is finally released as per the payment period mentioned in
purchase order.
 In case of delay in supply of materials, late delivery charges are levied at
the rate of 0.5% per week subject to the maximum of 5% at the time of
making the payment.
 The retention money of 10% is deducted while making the payment in
cases where bank guarantee is not taken from the vendor. Where bank
guarantee is taken, in that case the balance 10% payment is released only
when the installation certificate / successful running certificate is
received from site

RECEIVABLES
MANAGEMENT
&
BILLING PROCEDURE
The Receivables represent an important component of the current assets of
the firm. The term receivable is defined as ‘debt owed to the firm by customers
arising from sale of goods or services in the ordinary course of business’. When
a firm makes an ordinary sale of goods and services and does not receive
payment, the firm grants trade credit and creates accounts receivable which
could be collected in future. Receivables credit is also called trade credit
management.
As a marketing tool, they are intended to promote sales and thereby profits.
However, extension of credit involves risk and cost. Management should weigh
the benefits as well as cost to determine the goal of receivables management.
Since BSES is in the unique business of buying power from the Transmission

companies and then distributing power to its customers, the receivables of the
company includes the consumers of electricity only.
DERC (Delhi Electricity Regulatory Commission) has defined the following
five categories of consumers:
 Domestic: Consumers who use their premises for bonafide residential
purpose.
 Industrial: Consumers who use their premises for industrial activity.
 Non-Domestic: Consumers who use their premises for a purpose other
than Industrial , agriculture or residential (eg: A residential premises with
a beauty parlour).
 Agricultural: Consumers who use power for agriculture.
 Mushroom cultivation: Consumers who use their premises for
mushroom cultivation (eg: greenhouses used to cultivate mushrooms).
BSES has divided its consumers among LIP (Large Industry Power), SIP
(Small Industry Power), Non-Domestic, Domestic, Agriculture, Railways,
Water, Power Lighting. BSES supplies electricity to over 22 lakh
consumers spread over approx. 1,000 sq km – or 2/3rds of Delhi. The two
distribution companies BYPL and BRPL have achieved aggregate sales of
electrical energy of a record 8503 million units during the year ended
31st
March, 2005, against 7085 million units in the previous year, an
increase of 20%. During the last year, the aggregate consumer base
increased by 2 lakh to reach 22.0 lakh
833 locations to make Bill Payments easy:
BSES now provides its customers a choice of 833 locations for the easy
payments of bills. These facilities can be availed at:
 400 EAZY BILL OUTLETS: Effective April, 05 BSES has also
decided to avail the processing fee of Rs. 5-/- which was earlier
charged to customers at these outlets.
 33 Divisional Office Cash Counters: open from 8 am to 4 pm.
 200 BSES Cash Counters: open from 8 am to 4 pm.
 200 24x7 Skypack Drop Boxes.
Over the last two years, BSES has undertaken a comprehensive
computerization of all billing activities. This has not only eliminated human
errors but also ensured high levels of accuracy and reliability. The fully
Computerised BSES billing system has in place elaborate checks and

balances, including a comprehensive pre-issue audit which brings up all
“suspect” cases for a rigorous recheck.
BSES has taken every care to ensure that the electronic meter runs accurately
and shows correct reading .
BILLING SYSTEM:
For Billing process, BSES has divided its consumers into 33 divisions. These
divisions are responsible for collections from the consumers in their own
locality. These 33 divisions are further divide into 4 cash circles:
 BSES Yamuna Power Limited :
• East Cash Circle has 9 divisions
• Central Cash Circle has 5 divisions
 BSES Rajdhani Power Limited :
• South Cash Circle has 9 divisions
• West Cash Circle has 10 divisions
The Domestic Billing System has following steps:
 Meter reading : The meter-reading is taken by 3 outside agencies
SANDS, KLG Systel and DATAGEN.
 The Reading is then sent to the District Data centers.
 Daily NR (Not Read) & PL (Premises locked) Edit is generated and
verified.
 Edit is uploaded and then sent to Billing Processing unit.
 Edit is generated by BPU.
 Edit is then sent to VSNL for pre-audit purposes.
 VSNL uploads the data in EBS after putting due date.
 VSNL then runs the billing process in EBS, conducts post audit and
abnormal bills if any are held back
 BPU raises the bill and sends it to outside agencies for printing of the
same.
 Printed Bills are sent for distribution and delivery to the consumer.
 Consumer is given fifteen days for making the payment.

The process of meter reading to dispatch of the bill on an average takes around
15 days, while consumers are given 15 more days to make the payment.
The process of billing commences when the complete consumption of a
particular month is over and the meter reading takes place. As a consequence,
by the time the cash against a particular bill is realized there is a gap of around
a month between sale of energy and realization of cash.
The Bulk supply Billing System has following steps:
Key Consumer Cell (KCC) handles consumers under the following categories:
• Large Industrial Power having load of more than 100 KW.
• Small Industrial Power having load of100 KW or less.
• Non-Domestic Commercial
• Railways
• Public lighting
STEPS:
 Meter reading: BSES has allocated the task of meter reading to an
outside agency – KLG Systels. The agency does it from the 1st
of every
month to the 10th
.
 Meter reading is recorded in CMRI (Consumer Meter Reading
Instrument) at consumer site
 Electronic Data Processing (EDP): Recording on CMRI machines is
downloaded on computers by KLG Systel (during night shift), using
specified software.
 Specified data is transferred to EDP in text format by KLG through
CDs.
 Pre-Billing Scan: It is carried out to ensure meter reading validity for
detection of errors, if any.
 Electronic Data Processing at EDP BSES and Billing: The EDP
team at KCC incorporates the meter reading text files, (handed over by
KLG) into the database in COBOL. The front end VB Screen is backed
by ORACLE which generates and records the bills.
 Edit is generated by IT and checked by KCC team.
 Corrected Edit is then uploaded by IT.

 Consumer bills generated for current demand and arrears, if any,
taking into account LPSC, Current Tariff rates, Demand Charges,
Electricity Duty etc.
 Checked and verified bills are dispatched by KCC team to consumers
through speed post after review by deputy manager (Circle).
 Consumers are given fifteen days for making the payment.
CLINICAL TESTING POST BILLING: After Dispatch of Bills, analysis
of Data commences – data contains a thirty five day record of Load survey i.e.
KWH, KVAH, KVA, KW. Abnormalities in data generated is reworked on,
and supplementary bill is issued/additional units charged to the consumer for
billing with current’s billing cycle, if necessary. If abnormality detected is in
relation to the meters, a report is sent to the Meter Management Group
through e-mail for checking the meter / installing a new meter.
CONSUMER GRIEVANCES: In case any consumer grievance / dispute,
additional processes are carried out to settle the same as deemed necessary.
COORDINATION OF KCC ISSUES in relation to the new meters,
enhancement of load or new connections, transfers from enforcement etc. are
carried out as deemed necessary.
REVENUE ACCOUNTING: Monthly Circle-wise, category-wise
Assessment Summary is prepared by EDP Executive at KCC. This statement is
forwarded to the Finance & Accounts, which evaluates to establish that the
average rate of the total population for the period is around the acceptable rate
(Rs. 5 per unit). Thereafter the EDP executive at KCC uploads the income (for
LIP and SIP consumers) in SAP.
The study of Receivables brings out one fact that the realizations from Key
Consumers are not aligned to major cash outflows.
The process of billing commences when the complete consumption of a
particular month is over and the meter reading takes place. As a consequence,
by the time the cash against a particular bill is realized there is a gap of around
a month between sale of energy and realization of cash.
However, BSES is currently being billed six times subsequent to the month of
consumption by Delhi Transco Ltd. for purchase of energy and on pre-
payment of the bill amount, it is entitled to a rebate of 2.5% per month on the
number of days the amount due is pre-paid.
 Delays in billing new consumers (due to the delay in receipt of
information from the commercial section) and Untimely recognition of
revenue results in loss of interest revenue or opportunity gain.

 Time bound Program be carried out to change the Mechanical / L&T
meters of all consumers to electronic meter.
COLLECTION PROCESS
1). Process (Collection Point wise)
The consumer can make payments for energy/ non-energy bill at any of the
following collection points -
1. Payment at the “Collection Counters”.
2. Deposit at the “Drop Boxes” present at the Collection
Centers/ Circle Office for cheques only.
3. Deposit at the “SFS Drop Boxes” for cheques only.
4. Payment through “Easy Billing System”.
5. Payment through “internet”(i.e. bill junction, bill desk)
Collection Point -1(Collection Counters)
1.1 Collection Counters (POS)
The collection counters can be categorized as follows -
1. K & SIP Counters
2. Key Consumers (KCC) Counters
3. Theft collection Counters
4. Non-energy (Commercial) Counters
1. K & SIP Counters -

 Cashiers at the collection counters use POS machines which
has a specific User ID and password.
 Consumer presents the bill along with cash/cheque.
 The cashier at the collection counter scans the barcode
through POS machines(If the barcode is not readable or for
any reason it is not scanned fully then Forced / Manual
entry is passed )
 The cashier then accepts the payment after counting the
currency or after examining the cheques for accuracy.
 The bill is then entered into the print machine on which
acknowledgement of receipt of cash/cheque (as the case
maybe) is printed.
 While the stub is retained by the cashier, the bill is returned to
the consumer.
 The cashier affixes the Revenue Stamps where the amount
collected is more than Rs. 500/-.
 Cheque details like cheque no., name of the bank are keyed
into the POS machines.
 Where the customer makes part payment against a bill or
where there is an extension of due date, cashier checks the
authorization before accepting the payment.
 On close of transaction hours the counter is closed and
Counter Summary* & Collection Summary Report* etc. is
generated from POS machines.
 The cashier tallies the cash in hand with the collection
summary report and prepares Annexure I* and Annexure II
(Incase of Non-energy collection counters).
 The cashier gets the acknowledgement from the Head Cashier
on Annexure-1 on handing over the cash(without counting
it), cheque, floppy (having data downloaded from the POS

machine) and documents prepared (i.e. stubs, counter
summary, collection summary, cheque list, Annexure-II) .
2. Key Consumers (KCC) Counters -
 The normal POS machines are not used at KCC counters
rather a desktop with barcode reading facility is in operation.
 Details generated at these counters-
1. Daily Summary
2. Daily Summary circle wise
3. Daily Cheque/ DD statement
4. Circle wise summary
 Data is not sent through Floppy/ e-mail to circle office or
CPC.
 The collection for all the circles are received at this counter
and thereafter circle wise summary is generated at the counter
itself.
 Circle wise details are shown in south circle summary for KCC
counter at the bottom but the total amount is shown in front
of KCC counter column.
 Stubs and counter summary is forwarded to CPC through
circle office.
 Other process followed is same as in case of K & SIP counter.
1.2 Collection Counter (Manual)
 When the POS machine is not working, Cash / Cheques are
accepted and acknowledged by stamping the customers’ bill
and stub of bill is retained. The stamp reflects the counter
number, date of receipt, nature of payment- cash/cheque, and
serial no. per scroll sheet.
 Revenue stamp is affixed if the amount of the payment
received is more than Rs.500/- and stub of the bill is retained.

 Stub is required to be posted on an on-going basis in Cashier
Scroll (manual cashier summary), number wise indicating K
account Cash, K Account cheques, SIP Cash, SIP cheques etc.
 Collections through Cash and cheque are recorded on 2
separate Daily Collection Summary-Cash/Cheque.
 After transaction hours, the counter cashier -
(a) Tallies the cash with the total per Cashier Scroll- cash.
(b) Reexamines the accuracy of the Cashier Scroll-cheques
with cheques and stubs on hand.
(c) Prepares Annexure 1.
1.3 Circle Office
 On receipt of cash from various Cash Collection Counters, the
Head Cashier at Circle Office counts it and prepares the
Collector Sheet (Annexure - III). Cash received is kept
overnight in the locker room after making entry in the key
register.
 In key register, opening and closing time of locker room is
recorded. It is signed by Head Cashier, AFO(R) or
Superintendent and Gunman.
 There are 2 keys for safe/locker room. 1st
key is kept by Head
Cashier who locks the cash chest. Thereafter Section
Officer/Superintendent operates the 2nd
key and gets the cash
chest closed under his supervision.
 Cash received at circle office is deposited with the bank on the
following day except for collections on Saturday and Sunday
where the cash received is deposited on the next working day.
 Head Cashier accompanies the cash along with security
personnel to deposit the cash with the Bank (SBI, Chandni
Chowk).

 The stubs of the pay-in-slips obtained are pasted in the register
maintained for this purpose.
 Floppy disk (having data of collection details)/ e-mail,
Annexure-I(Counter Summary), Circle Summary, Cheque
Scroll and stubs are sent to the Central Processing Cell.
1.4 Central Processing Cell (CPC)
 Floppy disk/ e-mail (having data of collection), Annexure - I
(Counter Summary), Circle Summary, Cheque, Scroll and
Stubs from all the 4 circles are received at the CPC.
 Data received from manual counters are converted into digital
mode at CPC. Stubs received from these counters are
punched through POS machines.
 Data received from KCC counter is also converted into digital
mode by using the stubs forwarded from this counter via circle
office.
 Data received from circle office are verified.
 Validation checks carried out are:
(i) Verifying Counter wise circle summary with counter wise
Annexure 1.
(ii) Soft data forwarded from circle office (in floppies) are
processed through software for validation.
(iii)The software generates a list of invalid or improper K. A/c.
no. and the same are saved in separate file.
♦ Following factors are considered:
(a) Incomplete field
(b) Wrong District Code
(c) Wrong K. No.
♦ Every entry in Invalid K. A/c. no. list is checked
against :

(a) The details made in collection summary
(b) Related stub and consequently
rectifications are made in the soft data.
(iv)After the validation procedure is over, the Input files are
prepared.
(v) Difference between various documents like Annexure 1,
Circle Summary, Input files (POS.dat), etc. is corrected
on the basis of source document at CPC and duly
authorized by the Officer In Charge. However the
authorized individual does not sign the corrections
made.
(vi)11 Input files are prepared as mentioned below :
(a) POS.dat
(b)POS.txt
(c) SFS.dat
(d)SFS.txt
(e) EBL.dat
(f) EBL.txt
(g) BJR.dat
(h)BJR.txt
(i) BDK.dat
(j) BDK.txt
(k) Summary.txt
(vii) Similarly bulk supply (KCC) files are prepared.
 These files are e-mailed to Head Office.-IT on a daily basis.
 The details of K. Nos. which can not be uploaded in the EBS
for some reason are sent to the CPC through e-mail called
“Suspense File”. At CPC the search for reasons of non-
uploadation is done by checking the stubs (the procedure is
known as 1st
level suspense clearance and 2nd
level suspense
clearance) and sent to the Head Office IT Dept. after which
the final Suspense List is generated at Head Office IT Dept.
The Final Suspense list is then sent to the centralised office at
VSNL Bldg. G.K.-I.

 Pay-in slips are prepared and cheques deposited.
 The difference of acknowledgement received from the bank
with concerned pay-in-slips details is required/ looked into.
 If a mistake is found then the respective Debit/Credit is made
to the consumer through passing of Debit/Credit note to the
centralised office at VSNL Bldg. G.K.-I where corresponding
JE is passed.
 Entry is made in SAP on a daily basis for Collection and
Dishonour of cheques.
 CPC retains notice from bank along with circle wise list of
cheques dishonored. It prepares :
(a) List containing old K. No. , New K Account No., Amount
of cheque, Date of cheque, Reason for dishonour, Cheque no.,
Bank name is prepared and such list is forwarded to Head
Office-IT.
(b) Dishonor notices are sent to consumers by courier.
(c) List of dishonoured Cheques is forwarded to the Business
Manager of all districts on a monthly basis for recovery
purposes.
Collection Point-2 (DROP BOX)
 Drop Box facility is available at every collection centre. The
stubs collected from drop boxes are stamped “Drop Box”. A
Drop Box Register prepared recording therein a single figure
representing sigma total of all cheques received through the
drop box system.
 Further, the cheques get recorded in the system through POS
machines/manual scroll of the designated counter for the day.

 Adjustment in value of “Revenue stamp usage” for the day is
carried out where consumer does not provide the bill for
release of receipt.
 Other documentation in this regard are similar to one
described under para 1.3 and 1.4 above.
Collectiion Point – 3 (SFS – Skypak Financial Services Drop Boxes)
 Skypack Drop Boxes across Delhi were introduced as an
additional collection point. Skypack provides services of
depositing the cheques along with the pay-in-slips with the
SBI, Chandni Chowk Bank.
 3 files (Soft Copy) are sent by Skypak to CPC.
(i) DAT.file
Collection details per consumer in digital mode circle wise.
(ii) PRN file
Circle wise collection details giving cheque no., customer
no., cheque amount, cheque date, MICR No., Bank and
Branch details, book no., district code and zonal office.
(iii) Invalid cheques:
These cheques are primafacie incomplete and therefore not
deposited by SFS. SFS gives details of such cheques circle
wise specifying reasons. CPC then send notices to the
consumers.
 The SFS sends the stubs deposited date wise and circlewise.
 As per the instruction of BSES, SFS should not invalidate
cheques of value more than Rs.5000.

 Eight pay-in-slips are prepared for collection from four circles
i.e. two pay-in-slips per circle wherein branch transfer and
local clearing cases are separately recorded.
Collection Point -4 (Easy Billing System)
 This system was introduced on 1st
Feb., 2004 through which
the consumers can make payment against their bill at any of
the ‘Easy Bill Counters’ located at various places in Delhi.
 At the Easy Bill Counter the bills and cheques are scanned by
the machine similar to the POS machine and receipt is given to
the consumer on the bill, specifying the cheque number and
amount paid.
 At the ‘Easy Billing Office’ the Pay-in-slips are prepared. One
pay-in-slip is used for maximum no. of 150 cheques.
 At the end of day, the data is consolidated at the Easy Billing
office for four circles.
 The next day cheques are deposited in the designated bank and
the data is forwarded to Central Processing Cell (CPC)
through e-mail.
 The CPC receives the following two files :
(i) DAT.file - containing the consolidated data of all the
circles.
(ii) PRN.file - containing the pay-in-slips detail of each
circle separately.
 This data is not validated through the normal validation
procedure at CPC.
 At CPC a summary file containing date, no. of cheques,
amounts etc, is prepared with the help of dat.file.
Collection Point - 5 (E- Collection)

 Two outside agencies are engaged in collection through e-
mode. These are-
i. Bill Junction
ii. Bill Desk
 Collection through bill junction was started on 4th
Feb. 2004
and through bill desk it was started on 28th
April, 2004.
 Consumer having an account with these agencies can avail the
facility of payment through e-mode.
 The consumer has to make a request for paying the bill to
these agencies through internet.
 On receiving the request, the Bank debits the consumer
account for the billed amount.
 These agencies consolidate the data company-wise i.e. for
BRPL and BYPL separately and forward it to the CPC along
with the Demand Draft made in favour of both the companies
separately.
 Data is received by CPC in the form of dat.file and a file in
letter format showing K.A/c No.(Old as well as New),
Amount, Payment date (i.e. date of forwarding the DD).
 The DD is deposited by the CPC the next day in the
designated bank.
 The data is consolidated with that from other collection
points.
2. DOCUMENTATION
2.1 Records Maintained At Collection Centres
2.1.1 In case of POS Counters (Energy Collections)

(a) Collection Details
Individual customer wise details with S. No., K. No.,
Amount, Entry Mode (Scanned, Manual, and Forced),
Payment Mode (Cash or Cheque) are recorded, 3 copies are
printed, one copy is retained at the counter and 2 copies are
forwarded to the Circle Office.
(b) Counter Summary
Total collections are categorized into Domestic and SIP
collections. These collections are further bifurcated into
cash and cheque collections. Revenue stamps used along
with no. of stubs is also mentioned under respective head.
(c) Cheque List
Details of cheque collections i.e. S. No. Tr. No., Cheque
No., Bank name, Cheque amount is mentioned in it.
(d) Annexure – I
Summary of total collections at the counter is recorded in
Annexure – I which is equal to counter summary prepared
from POS machine – the only difference being that the
Annexure 1 is prepared manually by counter cashier and
the figures are written after actual counting of the no. of
stubs and the total amount received. Four copies are
prepared, 2nd
copy is retained and the rest are forwarded to
Circle Office. It is verified by Circle Head Cashier.
(e) Log Book for POS Machine per collection counter
Time and date of making complaint to the vendor, along
with the nature of problem/s is/are recorded in the POS
machines. Service Engineer Report, which is received
when any person from the vendor attends complaint, is
also attached in this log book.
(f) Drop Box Register

The following are recorded:-
♦ Date
♦ Total Amount
♦ Counter No. allocated (to cover the day’s cases of
receipt through drop box).
♦ No. of Cheques
2.1.2 In case of Commercial Counters (Non-Energy Collections)
(a) Cash Receipt Book
Receipt is issued to the consumer who makes the payment.
It is signed by Cashier.
(b) Daily non energy collection sheet (Annexure – II)
Details of daily collections are recorded. Non energy
collections under 16 different types are recorded separately
under respective column in the sheet. This sheet is
prepared manually. Entries relating to old connections are
made in this sheet since the database is not there. It is
prepared by cashier. 4 copies of Annexure – II are
prepared. One copy to Accounts department, 2nd
copy to
CPC via Circle Office, 3rd
copy to Circle Office and 4th
Copy is retained for file purpose.
(c) Cashier Chart (Summary)
Entries relating to new connections are made in the
computer where database has been created otherwise they
are written on Annexure – II sheet. At the end of the day,
the Cashier Chart (Summary) is printed and
filed/dispatched to the circle office.
(d) Annexure – I
(i) Refer 2.1.1(d) above.
2.1.3 Manual Collection Counters (Theft Collections)
(a) Daily collection summary

The total collections are recorded manually consumer wise.
One copy is sent to Enforcement Department, while others
are retained.
(b) Annexure - I
Refer 2.1.1(d) above
2.2 Records Maintained At Circle Office
1. Collector Sheet / White Book
Counter wise details of cash and cheque collections are
entered in this sheet. Value and number of Revenue
Stamps used is also mentioned along with No. of cheques
and no. of stubs received at the counter.
A detail of inventory of cash (currency notes denomination
wise) is recorded. It is prepared by the Head Cashier at the
circle office.
2. Heavy Collection Sheet
The Head Cashier at Circle office prepares Heavy
Collection Sheet counter wise with the help of counter
summary – Annexure – I, submitted by various collection
centers. The collections are bifurcated into Energy and
Non-Energy collections. Under energy collections, details
are cash stubs, no. of cheque stubs, no. of cheques, no. of
revenue stamp used, head of the account K or SIP duly
indicating the POS or Manual Counter. Under non-energy
collections details are under 16 columns.
Three copies are prepared and distributed as:
1st
- CPC
2nd
- Central Circle
3rd
- Retained (File Copy)
3. Circle Summary

It is prepared by the clerk under the supervision of
Superintendent or AFO(R). Wherein counter wise details
of cash collections, cheque collections, no. of cheques, no.
of stubs under Manual and POS counter, number of
commercial slips, revenue stamps used is recorded. It also
indicates the type of counter - POS or Manual or
Commercial.
It is forwarded to CPC, Shankar Road, for preparation of
Input files.
The Circle Summary is prepared through use of MS Excel.
This document is almost same as Collector Sheet/White
Sheet.
4. Heavy Collector Sheet (in addition to Circle Heavy
Collection Sheet):
This sheet is only prepared in Central Circle by AFO(R)
and sent as a soft copy to Head Office via CPC. The sheet
prepared on daily basis by AFO(R) at the month end gives
total collections for the month.
The collection details circle wise, district wise are bifurcated
into energy, theft and non-energy collections. While energy
collections are further bifurcated into K & SIP Account
wise, Non energy collections are bifurcated into 15 sub
head and energy collection on account of Pro-Rata and
without stub under 17 total sub heads. This sheet is
prepared from Circle Office Heavy Collection sheet
received on daily basis.
5. Miscellaneous
a) Daily Collection Register
Daily collections under energy and non-energy head, Cash
and cheque are recorded. Pre-printed register is pending
introduction.
b) Revenue Stamp Register

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