A

Project Report On

A STUDY ON CASH FLOW STATEMENTS OF

MPPTCL
In partial fulfillment for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION

Under the Guidance of

Dr. Shweta Shrivastava
Professor

Submitted By
Vishesh Kureel
MBA III Sem.
ROLL.NO-20119030
Enrollment No. R17006A0410405

GYAN GANGA COLLEGE OF TECHNOLOGY, JABALPUR (M.P.)

Submitted To

RANI DURGAVATI VISHWAVIDALAYA, JABALPUR (M.P.)

Session : 2020-22

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 GYAN GANGA COLLEGE OF TECHNOLOGY, JABALPUR (M.P.)

FORWARD

I hereby forward the Training project entitled on the topic “A STUDY ON CASH
FLOW STATEMENTS OF MPPTCL” submitted by Vishesh Kureel, student of MBA
Department, Gyan Ganga Institute of Technology & Science, Jabalpur (M.P.) In partial
fulfilment of the requirement for the award of the degree of Master of Business
Administration for the subject MS- 303 Evaluation of On-Site Training Report and Viva
Voce of the syllabus of Rani Durgavati Vishwavidyalaya, Jabalpur (M.P.).

Dr. Narendra Kumar Shukla

Director - MBA

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 GYAN GANGA COLLEGE OF TECHNOLOGY, JABALPUR (M.P.)

DECLARATION

I hereby declare that the Training project entitled “A STUDY ON CASH FLOW
STATEMENTS OF MPPTCL”, which is being submitted in partial fulfilment of the
requirement for the award of the MBA for MS- 203 Training Project Evaluation & Viva
Voce of the syllabus of Rani Durgavati Vishwavidyalaya, Jabalpur, (M.P.) is an authentic
record and all the information and facts furnished by me are true to my knowledge and are
based on the information collected through primary and secondary research done by me.
The matter reported in this project is neither being used elsewhere nor has been
submitted earlier for the award of degree of Master of Business Administration.

Date- Signature
Place- Name – Vishesh Kureel

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 ACKNOWLEDGEMENT

It is with the sense of gratitude; I acknowledge the efforts of several people who have
helped me directly or indirectly to conduct this project work.
I would like to thank __________________, Finance Manager at MPPTCL without
whom I would have not got this exposure of learning.
Words fail to express adequately my feeling of deep sense of gratitude which I owe
from deep of my heart to Dr. Narendra Kumar Shukla Director, Department of MBA and
all the faculty members for their valuable support and counselling, constant help and
guidance without which the completion of the project would not have been possible.
I am grateful to my parents who brought me up with love and encouragement to this
stage and have always stood beside me as my pillars of strength and guidance.

And last but not the least I would like to thank almighty who has always guided me to

walk on the right path of life.

Vishesh Kureel

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 CONTENT

S. No. Title Page No.

i Certificate

ii Declaration

iii Acknowledgement

1. Executive Summary

2. Introduction

3. Company Profile

4. Objectives of the study

5. Research Methodology

6. Data Analysis And Interpretation

7. Findings

8. Conclusion

9. Suggestions

10. Bibliography

11. Annexure

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 EXECUTIVE SUMMARY

Information about the cash flows of an enterprise is useful in providing users of financial
statements with a basis to assess the ability of the enterprise to generate cash and cash
equivalents and the needs of the enterprise to utilize those cash flows. The economic
decisions that are taken by users require an evaluation of the ability of an enterprise to
generate cash and cash equivalents and the timing and certainty of their generation.
The Statement deals with the provision of information about the historical changes in
cash and cash equivalents of an enterprise by means of a cash flow statement which classifies
cash flows during the period from operating, investing and financing activities.
Scope
1. An enterprise should prepare a cash flow statement and should present it for each
period for which financial statements are presented.
2. Users of an enterprise’s financial statements are interested in how the enterprise
generates and uses cash and cash equivalents. This is the case regardless of the nature of the
enterprise’s activities and irrespective of whether cash can be viewed as the product of the
enterprise, as may be the case with a financial enterprise. Enterprises need cash for
essentially the same reasons, however different their principal revenue-producing activities
might be. They need cash to conduct their operations, to pay their obligations, and to provide
returns to their investors.

STATEMENT OF THE PROBLEM:

A financial statement contains income statement showing sales, Revenues, tax, expenses etc.
on the other side; the balance sheet shows the liabilities and assets position during the year.
The study of financial performance is composed of the following:
1. Analysis of the liquidity and between current liabilities and assets.
2. Analysis of the liquidity and profitability of the current assets and current liabilities.
3. Analysis of the long term financial of the firm over a period of time.
4. Analysis of various components of working capital E.g.: Cash Marketable securities
receivable and inventories
The study takes into consideration the external analyst point of view and with the help of the
past and latest financial statements, financial position, will tried to be analyzed impartially.

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CHAPTER SCHEME:
Chapter 1: - Introduction
Chapter 2: - Research design Consists of research design with the statement of problem,
objective of Study, materials and tools used, limitation and overview required.
Chapter 3: - Company Profile
Chapter 4: - Contains the analysis and interpretation of cash flow statement . It mainly, forms
a part of our evaluation process in analyzing their financial performance. It also includes the
required graphical presentations wherever necessary.
Chapter 5: - Contains the findings and recommendations & bibliography and annexure to the
report that has aided the study.

What is “cash flow”? It is the term used in business and personal finance to describe the cash
coming into or going out of a business or a personal account during a given period.

What does cash flow show? In the case of a business, the cash flow — inflow and outflow —
shows the following:

 It indicates the cash income of the company concerned—for example, from sale of
products—during a specified period.

 It indicates the cash expenditure of the company—for example, on payment of

salaries and purchase of raw materials for the manufacture of products.

Similarly, in personal finance, cash inflow indicates income from salary, for example, and
cash outflow indicates expenditure on household necessities and personal investments.
 Positive and negative cash flow

If the cash inflow of a business is higher than its cash outflow, it is said to have a positive
cash flow. This means that the business generates adequate cash to meet its expenditures.

For example, if a retail store earned a revenue of Rs. 10,00,000 in March 2015 and incurred
an expenditure of Rs. 5,00,000 in the same period, its cash statement would show a positive
cash balance of Rs. 5,00,000. This would be taken as one of the indicators of the viability of
the store’s business.

On the other hand, a negative cash flow would indicate that the business is not bringing in
enough cash to pay its dues, a sign that it is becoming unviable or insolvent.

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Cash Flow And Profit

However, a negative cash flow does not mean that a business is not profitable. For example,
imagine that a biscuit company is showing a negative cash flow, meaning that its cash
outflow is higher than its cash inflow.

This may be because the company is repaying a loan borrowed for purchase of land or
machinery, for example. It may be making a profit but using the cash from the profit for the
repayment of the loan.

Three Types of Cash Flow

In general, the cash flows of a business can be classified into three types: operating activities,
investing activities, and financing activities.

 Operating activities are cash transactions related to net income—for example, cash
generated from sale of goods or services (which is revenue, and is therefore related to
net income) and cash spent on purchase of raw materials (which is an expenditure,
and is therefore, again, related to net income).

 Investing activities are cash transactions related to noncurrent assets such as property
and machinery. Cash earned from sale of land and cash spent on purchase of
machinery fall in this category.

 Financing activities are cash transactions related to noncurrent liabilities and owners’
equities, which include payment of the principal amount of long-term debts, proceeds
from sale of stocks, and dividend payments.

Of these three activities related to the cash flow of a business, operating activities are the
ones that investors and company managers are most interested in, because these activities
show how well the core business operations of the company are doing.

The cash transactions related to operating activities tell the investors whether the business is
viable.

They are more interested in the income generated by the company through its core business
than in how much the company earned from a one-time transaction—for example, sale of
property or sale of company stock.

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Cash Flow Statement

Next, we move on to cash flow statement. The cash flow statement of a business organization
shows the balance between the amount of cash earned (from sale of products, for example)
and the cash expenditure incurred under various heads (payment of salaries and purchase of
raw materials, for example).

The income statement of a company shows its revenue and expenditure. However, under
what is known as the accrual method of accounting, which is the most common method of
accounting used by companies, revenue is reported in the income statement when it is earned,
not when cash actually comes in.

Similarly, expenditure is recorded in the income statement when the outgo is recognized, not
when cash is actually paid.

Structure of a Cash Flow Statement

The cash flow statement, or the statement of cash flow, gives the details of cash flows under
the three types of cash flows already described above—operating activities, investing
activities, and financing activities.

The heading of the statement gives the time period during which the cash flows mentioned
took place. The period is as decided by the company concerned: that is, it can be monthly,
quarterly, or annual.

We looked at the three types of cash flow and found that the income statement of a company,
under the accrual method system of accounting, does not provide the details on the basis of
cash.

It is the cash flow statement that managers and investors turn to understand the income
statement on the basis of cash.

The cash flow statement interprets the three types of cash flows in the following ways:

 Operating activities: The cash flow statement converts the entries in the income
statement into cash actually received and paid.

 Investing activities: It gives details of funds invested in land and machinery in cash
terms.

 Financing activities: The cash flow statement provides information about issuance of
the company’s own stocks and bonds as cash transactions.

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  Additional information: It makes available information on taxes and interest paid in
cash as well as cash payments under various other major heads.

 How is the cash flow statement used?

Although the cash flow statement of a company is considered a less important document than
its balance sheet or income statement, it provides vital information to the company managers
and investors about how the business is really doing.

The cash flow statement helps investors and company managers in the following ways:

 It tells the investors how their company is doing in its core business areas. This
indicates the viability of the business and the future of their investment. A positive
cash balance may lead to an increase in dividend, debt reduction, or acquisition of
another company. (However, it should be kept in mind that a negative cash flow
might sometimes be the result of the company’s projects—for example, an expansion
programme—and may not always be a sign of insolvency.)

 The cash flow statement gives the managers a basis for budgeting: for example,
availability of cash can help them firm up plans for investing in new machinery or
land.

 The statement shows the managers which revenue entries have yielded cash and
which of the expenditures entries have already been paid in cash. If some entries
related to net income are not turning into cash, they can find out why this is
happening and step up their efforts to convert these entries into cash.

Summary of Cash flow Statements

To wind up, here are some of the merits of the cash flow statement.

 As the cash flow statement focuses on the inflow and outflow of cash, it can be used to
analyse the actual performance of a business.

 Although the cash flow statement is seen as less important that other financial
statements of a company, such as the balance sheet and the income statement, it shines
light on aspects of performance not readily visible in other documents.

 Financial experts see the cash flow statement as a true reflection of the financial health
of a business in a given period and its viability, as it is more difficult to doctor,
compared with other financial documents of a company, such as the income statement.

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Therefore, the cash flow statement, often described as the most transparent index of
performance of a company, is an important tool of financial analysis.

SCOPE OF STUDY:
The scope of the study is confined to detail analysis of cash flow statement in
MPPTCLe.
1) An enterprise should prepare a cash flow statement and should present it for each
period for which financial statements are presented.
2) Users of an enterprise’s financial statements are interested in how the
enterprise generates and uses cash and cash equivalents.
This is the case regardless of the nature of the enterprise’s activities and
irrespective of whether cash can be viewed as the product of the enterprise, as may
be the case with a financial enterprise.
Enterprises need cash for essentially the same reasons, however different their
principal revenue-producing activities might be.
They need cash to conduct their operations, to pay their obligations, and to
provide returns to their investors.

LIMITATION OF THE STUDY:

1. Time: The time allotted for the project has been only around 45 days.
The study could be done only for the past 5 years.
2. Finance: Due to limited financial resources as in depth research could not be
undertaken.
3. The face value of the figures given in the balance sheet was used for the project.

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 INTRODUCTION

Cash is the basic input needed to keep the operations of the business going on a
continuing basis; it is also the final output expected to be realized by selling the product
manufactured by the manufacturing unit. Cash is the both the beginning and the end of the
business operations.
Sometimes, it so happens that a business unit earns sufficient profit, but in spite of
this it is not able to pay its liabilities when the become due. Therefore, a business should be
always try to keep sufficient cash, neither more nor less because shortage of cash will
threaten the firms liquidity and solvency, whereas excessive cash will not be fruitful utilized,
will simply remain ideal and affect the profitability of a concern. Effective cash
management, therefore, implies a proper balancing between the two conflicting objectives of
liquidity
The management of cash also assumes importance because it is difficult to predict
cash inflows and outflows accurately and there is no perfect coincidence between the inflows
and outflows of cash giving rise to either cash outflows exceeding inflows or cash inflows
exceeding outflows. Cash flow statement is one important tool of cash management because
it throws light on cash inflows and cash outflows of a particular period.
Meaning of Cash Flow Statement
A funds flow statement based on working capital is very useful in long-range
financial planning but this statement may conceal or exclude too much. This is so because it
does not take into considerations the movements among the individual current assets and
current liabilities i.e. it shows net change in working capital. Moreover, this statement treats
increases in receivables, inventories and prepaid expenses and decreases in accounts payable,
outstanding expenses and bank over draft as equivalent to decrease in cash. Likewise,
decreases in receivables, inventories and prepaid expenses and increases in creditors, bills
payable, outstanding expenses and bank overdraft are treated as equivalent to increases in
cash. This is not a correct treatment because this items do not decrease cash or make cash
available. Sundry creditors, bills payable, outstanding expenses become payable in the next
period. Similarly, inventories and receivable make cash available in the next period. It is
quite possible that there may be sufficient working capital as revealed by the funds flow
statement and still the company may be unable to meet its current liabilities as and when they
fall due. It may be due to an accumulation of inventories and an increase in trade debtors
caused by a slow down in collections. In such a situation, a cash flow statement is more

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useful because it gives detailed information to the management about the sources of cash
inflows and outflows. A cash flow statement can be defined as a statement which
summarizes sources of cash inflows and uses of cash outflows of a firm during a particular
period of time, say a month or a year. Such a statement can be prepaid from the data made
available from comparative balance sheet, profit and loss account and additional information.
This statement reports cash receipts and payments classified according to entities major
activities operating, investing and financing during the period a format that reconciles the
begging and ending cash balances. It reports a net cash inflow or net cash outflow for each
activity and for the overall business. It also reports from where cash has come and how it
has been spent.
Usefulness of Cash Flow Statement
Cash Flow Statement is very useful to the management for short term planning
due to the following reasons:-
(i) Predict future cash flows. This statement is often use as an indicator of the amount,
timing and certainty of future cash flows on the basis of what happened in the past. This
approach is better than accrual basis data presented by profit and loss account and balance sheet.
(ii) Determine the ability to pay dividends and other commitments. This statement
indicates the sources and uses of cash under operating, investing and financing activities, helps
share holders to know whether the business can make the payment of amount of dividends on
their investments in shares and creditors to receive interest and principal amount in time.
(iii) Show the relationship of net income to changes in the business cash. Generally
there is direct relation between net income and cash. I net income leads to increase in cash and
wise versa. But there may be a situation where a company’s net income is high but decrease in
cash balance and increase in cash balance when net income is low. Every user is interested to
know the reasons or difference between the net income and net cash provided by operations.
The net income generally tells the progress of the business while cash flow relates to the
liquidity of business. The uses or helped to assess the reliability of net profit with the help of
this statement.
(iv) Efficiency in Cash Management. This statement is very useful to the management
in evaluating financial policies and cash position. It will help the management to make the
reliable cash flow projections for the immediate future and will tell surplus or deficiency of cash
so that management may be able to make plan for investment of surplus cash or to tap the
sources where from the deficiency is to be met. Thus it is an important financial tool for the
management as it helps in the efficient cash management.
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(v) Discloses Movement of Cash. Previous year cash flow statement when
compared with the budget of that year will indicate as to what extent the resources of the
enterprise were raised and applied. Actual results when compared with the original forecast
may highlight the trend of the movement of cash that may otherwise remain undetected,
(vi) Discloses Success or Failure of Cash Planning. A Comparison of projected
Cash flow Statement with the actual Cash flow Statement will reveal the success or failure of
cash planning and incase of failure, necessary remedial steps can be taken to improve the
position. It also provides better measure for inter period and inter firm comparison.
(vii) Evaluate Management Decision. This statement, by providing information relating to
companies investing and financial activities, gives the investors and creditors about cash flow
information which help them evaluate management decisions.
(viii) Enhances the Comparability of Report. It enhance the comparability of the
reporting of operating performances by different enterprises, because it eliminates the effect of
using different accounting treatments for the same transactions and events.
Limitations of Cash Flow Statement
Inspite of various uses of Cash Flow Statement, it has the following limitations:
1. Cash Flow Statement gives the main items of inflow and outflow of cash only and does
not show the liquidity position of the company.
2. This statement is not a substitute of income statement which shows both cash and non
cash items. Therefore, net cash flow does not necessarily mean net income of the business.
3. It cannot replace funds flow statement as it cannot show the financial position of the
concern in totality.
Definitions
The following terms are used in this Statement with the meanings specified:
(i) Cash comprises cash on hand and demand deposits with banks.
(ii) Cash equivalents are short term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of changes in
value.
(iii) Cash flows are inflows and outflows of cash and cash equivalents.
(iv) Operating activities are the principal revenue-producing activities of the enterprise
and other activities that are not investing or financing activities.
(v) Investing activities are the acquisition and disposal of long-term assets and other
investments not included in cash equivalents.

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(vi) Financing activities are activities that result in changes in the size and composition
of the owners’ capital (including preference share capital in the case of a company) and
borrowings of the enterprise.
(vii) Cash and Cash Equivalents Cash equivalents are held for the purpose of meeting
short-term cash commitments rather than for investment or other purposes. For an investment
to qualify as a cash equivalent, it must be readily convertible to a known amount of cash and
be subject to an insignificant risk of changes in value. Therefore, an investment normally
qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from
the date of acquisition. Investments in shares are excluded from cash equivalents unless they are,
in substance, cash equivalents; for example, preference shares of a company acquired shortly
before their specified redemption date (provided there is only an insignificant risk of failure of
the company to repay the amount at maturity).Cash flows exclude movements between items
that constitute cash or cash equivalents because these components are part of the cash
management of an enterprise rather than part of its operating, investing and financing
activities. Cash management includes the investment of excess cash in cash equivalents.
CLASSIFICATION OF CASH FLOWS
(i) Cash Flows from Operating Activities
The amount of cash flows arising from operating activities is a key indicator of the
extent to which the operations of the enterprise have generated sufficient cash flows to maintain
the operating capability of the enterprise, pay dividends, repay loans and make new
investments without recourse to external sources of financing. Information about the
specific components of historical operating cash flows is useful, in conjunction with
other information, in forecasting future operating cash flows.
Cash flows from operating activities are primarily derived from the principal
revenue-producing activities of the enterprise. Therefore, they generally result from
the transactions and other events that enter into the determination of net profit or loss.
Examples of cash flows from operating activities are:
(a) Cash receipts from the sale of goods and the rendering of services;
(b) Cash receipts from royalties, fees, commissions and other revenue;
(c) Cash payments to suppliers for goods and services;
(d) Cash payments to and on behalf of employees;
(e) Cash receipts and cash payments of an insurance enterprise for premiums and
claims, annuities and other policy benefits;
(f) Cash payments or refunds of income taxes unless they can be specifically
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identified with financing and investing activities; and
(g) Cash receipts and payments relating to futures contracts, forward contracts,
option contracts and swap contracts when the contracts are held for dealing or trading
purposes.
Some transactions, such as the sale of an item of plant, may give rise to a gain or loss
which is included in the determination of net profit or loss. However, the cash flows relating to
such transactions are cash flows from investing activities.
An enterprise may hold securities and loans for dealing or trading purposes, in which
case they are similar to inventory acquired specifically for resale. Therefore, cash flows
arising from the purchase and sale of dealing or trading securities are classified as operating
activities. Similarly, cash advances and loans made by financial enterprises are usually
classified as operating activities since they relate to the main revenue-producing activity of
that enterprise.
(ii) Cash Flows from Investing Activities
The separate disclosure of cash flows arising from investing activities is important
because the cash flows represent the extent to which expenditures have been made for
resources intended to generate future income and cash flows. Examples of cash flows
arising from investing activities are:
(a) Cash payments to acquire fixed assets (including intangibles). These payments
include those relating to capitalized research and development costs and self-constructed fixed
assets;
(b) Cash receipts from disposal of fixed assets (including intangibles);
(c) Cash payments to acquire shares, warrants or debt instruments of other enterprises
and interests in joint ventures (other than payments for those instruments considered to be
cash equivalents and those held for dealing or trading purposes);
(d) Cash receipts from disposal of shares, warrants or debt instruments of other
enterprises and interests in joint ventures (other than receipts from those instruments
considered to be cash equivalents and those held for dealing or trading purposes);
(e) Cash advances and loans made to third parties (other than advances and loans made by
a financial enterprise);
(f) Cash receipts from the repayment of advances and loans made to third parties (other
than advances and loans of a financial enterprise);
(g) Cash payments for futures contracts, forward contracts, option contracts and swap
contracts except when the contracts are held for dealing or trading purposes, or the payments
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are classified as financing activities; and
(h) Cash receipts from futures contracts, forward contracts, option contracts and swap
contracts except when the contracts are held for dealing or trading purposes, or the receipts
are classified as financing activities.
When a contract is accounted for as a hedge of an identifiable position, the cash flows of
the contract are classified in the same manner as the cash flows of the position being hedged.
Financing Activities
The separate disclosure of cash flows arising from financing activities is important
because it is useful in predicting claims on future cash flows by providers of funds (both capital
and borrowings) to the enterprise. Examples of cash flows arising from financing activities
are:

(a) Cash proceeds from issuing shares or other similar instruments;

(b) Cash proceeds from issuing debentures, loans, notes, bonds, and other short or long
term borrowings;
(c) Cash repayments of amounts borrowed.
(d) Cash payments to redeem preference shares and
(e) Payment of dividend.
Preparation 0f cash flow statement
An organization should prepare a cash flow statement according to according to
Account standard-3. The following basic information are required for the preparation for the
cash flow statement:
(1) Comparative Balance Sheets. Balance sheets at the beginning and at the end of the
accounting period are required to indicate to indicate the amount of changes that have
taken place in assets and liabilities and capital.
(2) Profit and loss account. This account of the current period enables to determine the
amount of cash provided by or used in operating activities during the accounting
period after making adjustments for non cash current assets and current liabilities.
(3) Additional data. In addition to the above statements, additional data are collected to
determine how cash has been provided or used e.g. sale or purchase of asset for cash.

This statement is prepared in three stages as given below :

1. Net profit before taxation and extra ordinary items.
2. Cash flows from operating, investing and financing activities.

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3. Cash flow statement
These are discussed one by one
1. Net profit before taxation and extraordinary items. This will not be equal to the net profit
as reported in the profit and loss account. It is so because of taxation and certain non
operating items (e.g., loss or profit on sale of fixed assets, dividend received or paid, amount
transferred to general, provision for taxation, fictitious assets written of f etc.) charged to the
profit and loss account . Tax paid and non-operating items are adjusted to the figure of profit
or loss in order to get the net profit before taxation and extraordinary items.
2. Cash flows from operating, investing and financing activities. Net profit before taxation
and extraordinary items is further adjusted with reference to depreciation in order to get the
figure of operating profit before working capital changes. This figure is further adjusted for
changes in current assets (except cash)/bank balance), current liabilities and tax paid
deducted to get the amount of net cash provided or used by operating activities. All the
increases in current assets except cash and decreases in current liabilities decrease cash. It is
so because increase in debtors takes place as current sales are greater than cash collections;
inventories increase when the current cost of goods purchased is more than the current cost of
goods sold leading to reduction in cash. Increase in prepaid expenses reduces cash from
operations because more cash is paid than is required for their current services. Likewise,
decrease in current liabilities reduces cash from operations because decrease in current
liabilities takes place when they are paid in cash. Similarly all decreases in current assets
except cash and increases in current liabilities increase cash from operations. Creditors would
increase because current purchases are more than the cash paid to them during the current
period. Decrease in prepaid expenses indicates that less payment has been made for services
than are currently used, i.e., some cash has been saved causing an increase in cash from
operations.
Changes in fixed assets and fixed liabilities have not been adjusted as these are
shown separately in the cash flow statement. It is so because current assets (i.e., debtors as a
result of credit sales, inventories as a result of purchases and sales and prepaid expenses
caused by operating expenses) and current liabilities (i.e., creditors because of credit
purchases and outstanding expenses caused by non-payment of some of the expenses of the
current period) are directly related to operations.

Reporting Cash Flows from Operating Activities.

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 An enterprise should report cash flows from operating activities using either:

(a) the direct method, whereby major classes of gross cash receipts and gross cash
payments are disclosed; or

(b) the indirect method, whereby net profit or loss is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments, and items of income or expense associated
with investing or financing cash flows.
The direct method provides information which may be useful in estimating future
cash flows and which is not available under the indirect method and is, therefore,
considered more appropriate than the indirect method. Under the direct method,
information about major classes of gross cash receipts and gross cash payments may be
obtained either:
(a) from the accounting records of the enterprise; or
(b) by adjusting sales, cost of sales (interest and similar income and interest expense
and similar charges for a financial enterprise) and other items in the statement of
profit and loss for:
i) changes during the period in inventories and operating receivables and
payables;
ii) other non-cash items; and
iii) other items for which the cash effects are investing or financing cash flows
Under the indirect method, the net cash flow from operating activities is
determined by adjusting net profit or loss for the effects of:
(a) changes during the period in inventories and operating receivables and payables;
(b) non-cash items such as depreciation, provisions, deferred taxes, and unrealized
foreign exchange gains and losses; and
(c) all other items for which the cash effects are investing or financing cash flows.
Alternatively, the net cash flow from operating activities may be presented under the indirect
method by showing the operating revenues and expenses excluding non-cash items disclosed
in the statement of profit and loss and the changes during the period in inventories and
operating receivables and payables.
Reporting Cash Flows from Investing and Financing Activities

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 An enterprise should report separately major classes of gross cash receipts and gross
cash payments arising from investing and financing activities, except to the extent that cash
flows described in paragraphs 22 and 24 are reported on a net basis.
Reporting Cash Flows on a Net Basis
Cash flows arising from the following operating, investing or financing activities
may be reported on a net basis:
(a) cash receipts and payments on behalf of customers when the cash flows reflect the
activities of the customer rather than those of the enterprise; and
(b) cash receipts and payments for items in which the turnover is quick, the amounts
are large, and the maturities are short.
Examples of cash receipts and payments referred to in paragraph 22(a) are:
(a) the acceptance and repayment of demand deposits by a bank;
(b) funds held for customers by an investment enterprise; and
c) rents collected on behalf of, and paid over to, the owners of properties
Examples of cash receipts and payments referred to in paragraph 22(b) are advances made
for, and the repayments of:
(a) principal amounts relating to credit card customers;
(b) the purchase and sale of investments; and
(c) other short-term borrowings, for example, those which have a maturity period of
three months or less.
Cash flows arising from each of the following activities of a financial enterprise may be
reported on a net basis:
(a) cash receipts and payments for the acceptance and repayment of deposits with a
fixed maturity date;
(b) the placement of deposits with and withdrawal of deposits from other financial
enterprises; and
cash advances and loans made to customers and the repayment of those advances and loans

Special items
1 Foreign Currency Cash Flows
Cash flows arising from transactions in a foreign currency should be recorded in an
enterprise’s reporting currency by applying to the foreign currency amount the exchange rate
between the reporting currency and the foreign currency at the date of the cash flow. A rate
that approximates the actual rate may be used if the result is substantially the same as would
20 | P a g e
arise if the rates at the dates of the cash flows were used. The effect of changes in exchange
rates on cash and cash equivalents held in a foreign currency should be reported as a separate part
of the reconciliation of the changes in cash and cash equivalents during the period.
Cash flows denominated in foreign currency are reported in a manner
consistent with Accounting Standard (AS) 11, Accounting for the Effects of
Changes in Foreign Exchange Rates4. This permits the use of an exchange rate that
approximates the actual rate. For example, a weighted average exchange rate for a period
may be used for recording foreign currency transactions.
Unrealized gains and losses arising from changes in foreign exchange rates are not cash
flows. However, the effect of exchange rate changes on cash and cash equivalents held or
due in a foreign currency is reported in the cash flow statement in order to reconcile cash
and cash equivalents at the beginning and the end of the period. This amount is presented
separately from cash flows from operating, investing and financing activities and
includes the differences, if any, had those cash flows been reported at the end-of-period
exchange rates
2 Extraordinary Items
The cash flows associated with extraordinary items should be classified as arising from
operating, investing or financing activities as appropriate and separately disclosed.
The cash flows associated with extraordinary items are disclosed separately as
arising from operating, investing or financing activities in the cash flow statement, to enable
users to understand their nature and effect on the present and future cash flows of the
enterprise. These disclosures are in addition to the separate disclosures of the nature and amount
of extraordinary items required by Accounting Standard (AS) 5, Net Profit or Loss for the
Period, Prior Period Items and Changes in Accounting Policies
3 Interest and Dividends
Cash flows from interest and dividends received and paid should each be disclosed
separately. Cash flows arising from interest paid and interest and dividends received in the
case of a financial enterprise should be classified as cash flows arising from operating
activities. In the case of other enterprises, cash flows arising from interest paid should be
classified as cash flows from financing activities while interest and dividends received
should be classified as cash flows from investing activities. Dividends paid should be
classified as cash flows from financing activities.

21 | P a g e
 The total amount of interest paid during the period is disclosed in the cash flow
statement whether it has been recognized as an expense in the statement of profit and loss
or capitalized in accordance with Accounting Standard (AS) 10, Accounting for Fixed
Assets.

Interest paid and interest and dividends received are usually classified as operating
cash flows for a financial enterprise. However, there is no consensus on the classification
of these cash flows for other enterprises. Some argue that interest paid and interest and
dividends received may be classified as operating cash flows because they enter into the
determination of net profit or loss. However, it is more appropriate that interest paid and
interest and dividends received are classified as financing cash flows and investing cash flows
respectively, because they are cost of obtaining financial resources or returns on investments.
Some argue that dividends paid may be classified as a component of cash flows from
operating activities in order to assist users to determine the ability of an enterprise to pay
dividends out of operating cash flows. However, it is considered more appropriate that
dividends paid should be classified as cash flows from financing activities because they are
cost of obtaining financial resources.
4 Taxes on Income
Cash flows arising from taxes on income should be separately disclosed and
should be classified as cash flows from operating activities unless they can be specifically
identified with financing and investing activities.
Taxes on income arise on transactions that give rise to cash flows that are classified as
operating, investing or financing activities in a cash flow statement. While tax expense may be
readily identifiable with investing or financing activities, the related tax cash flows are often
impracticable to identify and may arise in a different period from the cash flows of the
underlying transactions. Therefore, taxes paid are usually classified as cash flows from
operating activities. However, when it is practicable to identify the tax cash flow with an
individual transaction that gives rise to cash flows that are classified as investing or financing
activities, the tax cash flow is classified as an investing or financing activity as appropriate.
When tax cash flow are allocated over more than one class of activity, the total amount of
taxes paid is disclosed
5. Investments in Subsidiaries, Associates and Joint Ventures
When accounting for an investment in an associate or a subsidiary or a joint
venture, an investor restricts its reporting in the cash flow statement to the cash flows

22 | P a g e
between itself and the investee/joint venture, for example, cash flows relating to dividends
and advances.
6 Acquisitions and Disposals of Subsidiaries and Other Business Units
The aggregate cash flows arising from acquisitions and from disposals of
subsidiaries or other business units should be presented separately and classified as
investing activities.
An enterprise should disclose, in aggregate, in respect of both acquisition and disposal of
subsidiaries or other business units during the period each of the following:
(a) the total purchase or disposal consideration; and
(b) the portion of the purchase or disposal consideration discharged by means of cash
and cash equivalents.
The separate presentation of the cash flow effects of acquisitions and disposals of
subsidiaries and other business units as single line items helps to distinguish those cash
flows from other cash flows. The cash flow effects of disposals are not deducted from those
of acquisitions.
7 Non-cash Transactions
Investing and financing transactions that do not require the use of cash or cash equivalents
should be excluded from a cash flow statement. Such transactions should be disclosed
elsewhere in the financial statements in a way that provides all the relevant information
about these investing and financing activities
Many investing and financing activities do not have a direct impact on current cash flows
although they do affect the capital and asset structure of an enterprise. The exclusion of
non-cash transactions from the cash flow statement is consistent with the objective of a cash
flow statement as these items do not involve cash flows in the current period. Examples of non-
cash transactions are:
(a) The acquisition of assets by assuming directly related liabilities;
(b) The acquisition of an enterprise by means of issue of shares; and
(c) The conversion of debt to equity.
Components of Cash and Cash Equivalents
An enterprise should disclose the components of cash and cash equivalents and
should present a reconciliation of the amounts in its cash flow statement with the
equivalent items reported in the balance sheet.
In view of the variety of cash management practices, an enterprise discloses the
policy which it adopts in determining the composition of cash and cash equivalents.
23 | P a g e
 The effect of any change in the policy for determining components of cash and cash
equivalents is reported in accordance with Accounting Standard (AS) 5, Net Profit or Loss
for the Period, Prior Period Items and Changes in Accounting Policies.
Other Disclosures
An enterprise should disclose, together with a commentary by management, the
amount of significant cash and cash equivalent balances held by the enterprise that are not
available for use by it.
There are various circumstances in which cash and cash equivalent balances held by
an enterprise are not available for use by it. Examples include cash and cash equivalent
balances held by a branch of the enterprise that operates in a country where exchange controls
or other legal restrictions apply as a result of which the balances are not available for use by
the enterprise.
Additional information may be relevant to users in understanding the financial
position and liquidity of an enterprise. Disclosure of this information, together with a
commentary by management, is encouraged and may include:
(a) the amount of undrawn borrowing facilities that may be available for future
operating activities and to settle capital commitments, indicating any restrictions on
the use of these facilities; and
(b) the aggregate amount of cash flows that represent increases in operating capacity
separately from those cash flows that are required to maintain operating capacity.
The separate disclosure of cash flows that represent increases in operating capacity
and cash flows that are required to maintain operating capacity is useful in enabling the user to
determine whether the enterprise is investing adequately in the maintenance of its operating
capacity. An enterprise that does not invest adequately in the maintenance of its operating
capacity may be prejudicing future profitability for the sake of current liquidity and
distributions to owners.

24 | P a g e
 COMPANY PROFILE
M.P. Power Transmission Company Ltd. (MPPTCL) is one of such five companies carved
out of MPSEB to undertake the activities relating to electricity transmission within the State
of M.P. Subsequently, in May'2006 one more Company, namely MP Power Trading Co.
M.P. Power Transmission Company was incorporated on 22nd November, 2001 and it
formally began its operations under an Operation &  Management Agreement   executed with
MPSEB on 1st July, 2002, which provided for undertaking all  activities relating to intra-state
transmission of electricity for and  on behalf of MPSEB. Further, in exercise of the powers
conferred by sub-section (1) of Section 39 of Electricity Act, 2003, GoMP has nominated this
Company as the State Transmission Utility  w.e.f. 01.06.2004.
Contact Details:
M. P. Power Transmission Company Ltd.
Block No. 2, Shakti Bhawan,
Rampur, Jabalpur
Pin- 482008
Our Vision
To rank among the top two transmission utilities in the country and offer quality, reliable,
efficient and prompt services to our stakeholders ensuring transparent and sustained
commercial viability in all operations.

Our Mission
Our mission is to emerge as a best in class transmission utility by achieving highest level of
operating parameters, complying with GRID code and simultaneously ensuring proper
development and growth of our employees.

Our Core Values

Aim and achieve efficiency improvements and loss reduction.
Be open to change and adopt best practices in operations and project management to improve
systems availability, quality and security.
Create an environment that motivates employee performance and values their contribution.
Develop and train employees, enhance their skills by job rotation and job enrichment and
encourage them to take greater responsibilities.
Ensure that system reliability, safety and security are not compromised.

25 | P a g e
Focus on generation of additional revenues by pursuing opportunities for offering
construction and project management expertise in the energy sector.
Under Power Sector Reform Programme, Government of Madhya Pradesh has unbundled
the M.P. State Electricity Board into five wholly owned State Government Companies, out of
which one each has been independently assigned Electricity Generation and Transmission
functions and the balance three are Distribution companies responsible for electricity
distribution in their respective jurisdiction. M.P. Power Transmission Company Ltd.
(MPPTCL) is one of such five companies carved out of MPSEB to undertake the activities
relating to electricity transmission within the State of M.P.
Subsequently, in May'2006 one more Company, namely MP Power Trading Co. Ltd.
has been carved out of MPSEB to look after trading of Power and other associated activities.
M.P. Power Transmission Company was incorporated on 22nd November, 2001 and it
formally began its operations under an Operation & Management Agreement executed with
MPSEB on 1st July, 2002, which provided for undertaking all activities relating to intra-state
transmission of electricity for and on behalf of MPSEB. Further, in exercise of the powers
conferred by sub-section (1) of Section 39 of Electricity Act, 2003, GoMP has nominated this
Company as the State Transmission Utility w.e.f. 01.06.2004.
Subsequently, vide GoMP notification No.3679/FRS/12/13/2002, dated 31.05.2005,
the Company has been provided functional autonomy with effect from 01.06.2005.Thus, with
effect from 01.06.2005, the Company has assumed the functions of intra-state transmission of
electricity, State Transmission Utility and State Load Despatch Centre as its own business
and not as an Agent of Madhya Pradesh State Electricity Board. The Registrar of Companies,
on 16.07.2002, has issued the Certificate for commencement of business to MPPTCL.

26 | P a g e
 HEAD OF DEPARTMENTS

Name of HoD's & Contact

Department Email Id
Designation No.

Shri S.K. Gaikwad Human Resources & O - 2702036/

ce.ca@mptransco.nic.in
Chief Engineer Administration 2938801

Shri Sanjay
O - 2702132/ ce.pnd@mptransco.nic.i
Kulshreshtha Planning & Design
2938802 n
Chief Engineer

Shri Chetan Jaiswal

O - 2702513/
Chief Finance Finance & Accounts cfo@mptransco.nic.in
2938803
Officer

Shri Ajay Kumar

O - 2702134/ ce.proc@mptransco.nic.
Shrivastava Procurement
2938804 in
Chief Engineer

Shri Sameer
Commercial & O - 2702144/ ce.cra@mptransco.nic.i
Nagotia
Regulatory Affairs 2938805 n
Executive Director

Shri Sudhir Kumar

Human Resource O - 2702286/ ce.hrd@mptransco.nic.i
Agrawal
Development 2938814 n
Executive Director

Shri R.S. Baghel O - 2702270/ ce.mni@mptransco.nic.i

EHT:Maint.
Chief Engineer 2938809 n

Shri Rajesh
Testing & O - 2702200/ ce.tnc@mptransco.nic.i
Shrivastava
Communication 2938808 n
Chief Engineer

Shri R.K.
O - 2702238/ ce.ehtc@mptransco.nic.i
Khandelwal EHT:Construction
2938807 n
Chief Engineer

Shri K.K. Prabhakar State Load Despatch O - 2702740/ ce.sldc@mptransco.nic.i

Chief Engineer Centre 2938806 n

27 | P a g e
 OBJECTIVES OF THE STUDY

Based on the information furnished in the financial statements, various objectives of

the cash flow statement are:
1. Explain importance of cash flow statement for investors and other stockholders;
2. Compare the differences between cash flow statement with other financial
statements;
3. Explain regulations relating to preparation of cash flows;
4. Familiar with the methodology for preparation of cash flow statement and different
components of cash flow statement; and
5. Comprehend how cash flow statement can be used in real life for different decision
making.
6. To analyze the risk management.
7. To analyze the risk management in MPPTCL.
8. To analyze the Gross NPA, Net NPA and Capital Adequacy Ratio of MPPTCL.

28 | P a g e
 RESEARCH METHODOLOGY

Analysis of past data a helps to understand the effectiveness of Risk Management Strategies
of Bank. This is a conclusive research.

DATA COLLECTION

Basically there are methods of data collection they Secondary data To achieve the objective,
information is Primary data are: collected through secondary data. Secondary data one
those which have been already been collected. it may be published or unpublished data. Some
of the data are collected through visit and personal observation. But mainly data are collected
form financial statement (annual report) of MPPTCL Ltd. all the information which are
collected, through data are analyzed interpreted and tabulated to full fill be objective. In this
study I have used Secondary Data.

TOOLS OF ANALYSIS
It is essential to use a systematic research methodology for the assessment of a project
because without the use of a research methodology analysis of any company or organization
will not be possible. In the present analysis mostly secondary data have been used. It is worth
a while to mention that I have used the following types of published data :
 Balance Sheet
 Profit & Loss A/c
 Prospectus of the Company
 General Body meeting reports
 Schedules

LIMITATIONS OF THE STUDY

 The research work is mainly based on secondary data that is, it is based on audited
accounts and its audited accounts are ambiguous then the result will be misleading.
 Less importance has been given to primary data which is actually the original data and
more reliable.
 The research work is completed in five months, which is not enough for any type of
proper and reliable research work.

29 | P a g e
ANALYSIS AND INTERPRETATION:
For the purpose of Analysis and interpretation, statement of Current Assets and Current
Liabilities, master tables and graphs were used for the effective presentation.

TOOLS FOR ANALYSIS:

The tabulated data has been analyzed thoroughly through various ratios and graphs, which is
used.

TOOLS FOR DATA COLLECTION:

The data so collected from various annual reports & financial Statements for 5 years been
classified & tabulated for better understanding & to give a complete picture at 1 place.

METHODOLOGY:
The schedule that was planned to be executed or the methodology of approach may be
explained as follows.
 An in depth study of the banking norms & procedures that are used in analyzing the
data obtained from the corporal clients.
 An overview of the procedures followed in analyzing the data obtained. The methods
followed are: Ratio analysis an effective tool in analysis.
 Proper & effective collection of the various data required in to with the analysis in
relevance with the current economic growth.
 An efficient analysis with an eye for errors or blunders that may occur due to
inefficiency. This is the most prominent feature of the study & was executed with
utmost care & diligence.
 It also included the study of various circulars & notes that were passed by the
management in this regard. Thus having a higher hand on the literature study of the
project as a whole.

30 | P a g e
 DATA ANALYSIS AND INTERPRETATION
1) NET PROFIT/LOSS BEFORE EXTRAORDINARY ITEMS AND TAX

S.No. YEAR Net Profit/Loss Before Extraordinary Items And Tax

1 MAR-20 681.88
2 MAR-19 325.99
3 MAR-18 167.21
4 MAR-17 104
5 MAR-16 194.81

NET PROFIT/LOSS BEFORE EXTRAOR-

DINARY ITEMS AND TAX
681.88
700

600

500 NET PROFIT/LOSS BEFORE

EXTRAORDINARY ITEMS AND
400 325.99 TAX

300
194.81
167.21
200 104
100

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16

INTERPRETATION
The Net Profit/Loss Before Extraordinary Items And Tax is constantly Increasing
year by year. In the year 2020 it was 681.88 crores, year 2019 it was 325.99 , year 2018 it
was 167.21, only in year 2017 it was decrease 90.81 crores from the previous year 2016, in
this year 2016 it was 194.81 crores This shows that the dividend payout ratio net profit was
increase after the year of 2017.
From the above graph it clear shows that the Net Profit/Loss Before Extraordinary
Items And Tax is Increasing gradually.

31 | P a g e
2) NET CASHFLOW FROM OPERATING ACTIVITIES

S.No. YEAR NET CASHFLOW FROM OPERATING ACTIVITIES

1 MAR-20 638.83
2 MAR-19 286.45
3 MAR-18 141.92
4 MAR-17 41.51
5 MAR-16 96.29

Net CashFlow From Operating Activ-

ities
700 638.83

600
500 Net CashFlow From Operat -
ing Activities
400
286.45
300
200 141.92
96.29
100 41.51

0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16

INTERPRETATION
The Net Cash Flow From Operating Activities is constantly Increasing year by year.
In the year 2020 it was 638.83 crores, year 2019 it was 286.45, year 2018 it was 141.92, only
in year 2017 it was decrease 54.78 crores from the previous year 2016, in this year (2016) it
was 96.29 crores. This shows that Net CashFlow From Operating Activities is increasing
after the year 2017.
From the above graph it clear shows that the Net CashFlow From Operating Activities
is Increasing gradually.

32 | P a g e
3) Net Cash Used In Investing Activities

S.No. YEAR NET CASH USED IN INVESTING ACTIVITIES

1 MAR-20 -575.48
2 MAR-19 -210.82
3 MAR-18 -103.52
4 MAR-17 -263.81
5 MAR-16 179.44

Net Cash Used In Investing Activities

Mar-16 179.44

-263.81 Mar-17
Net Cash Used In Investing
Activities
-103.52
Mar-18

-210.82 Mar-19

-575.48 Mar-20

-700 -600 -500 -400 -300 -200 -100 0 100 200 300

INTERPRETATION
The Net Cash Used In Investing Activities is constantly Increasing year by year. In
the year 2020 it was -575.48 crores, year 2019 it was -210.82, only in year 2018 it was
decrease from the previus year in 2018 it was -103.52 and in year 2017 it was -263.81crores,
year 2016 it was 179.44 crores This shows that the Net Cash Used In Investing Activities is
increasing after the year 2018.
From the above graph it clear shows that the Net Cash Used In Investing Activities is
Increasing gradually.

33 | P a g e
5) NET INC/DEC IN CASH AND CASH EQUIVALENTS

S.No. YEAR NET INC/DEC IN CASH AND CASH EQUIVALENTS

1 MAR-20 -55.62
2 MAR-19 47.86
3 MAR-18 10.81
4 MAR-17 -222.99
5 MAR-16 221.16

NET INC/DEC IN CASH AND CASH

EQUIVALENTS
Mar-16 221.16

-222.99 Mar-17 NET INC/DEC IN CASH AND

CASH EQUIVALENTS
Mar-18 10.81

Mar-19 47.86

-55.62
Mar-20

-250 -200 -150 -100 -50 0 50 100 150 200 250

INTERPRETATION
The Net Inc/Dec In Cash And Cash Equivalents is constantly change in every year. In
the year 2020 it was -55.62 crores, in the year 2019 it was 47.86, year 2018 it was 10.81, in
year 2017 it was -222.99 crores, and in the year 2016 it was 221.66 crores This shows that the
Net Inc/Dec In Cash And Cash Equivalents was randomly change during those years.
From the above graph it clearly shows that the Net Inc/Dec In Cash And Cash
Equivalents is constantly changed in every year from the year 2016-2017 and in the year
2018 it was increase by previous year again in year 2019 it was increase and in the last year
2020 again it was decrease.

34 | P a g e
6) CASH AND CASH EQUIVALENTS BEGIN OF YEAR

S.No. YEAR CASH AND CASH EQUIVALENTS BEGIN OF YEAR

1 MAR-20 59.97
2 MAR-19 12.11
3 MAR-18 1.3
4 MAR-17 224.29
5 MAR-16 3.13

Cash And Cash Equivalents Begin of

Year
250
224.29

200
Cash And Cash Equivalents
150 Begin of Year

100
59.97
50
12.11 3.13
1.3
0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16

INTERPRETATION
The Cash And Cash Equivalents Begin Of Year is constantly Increasing year by
year. In the year 2020 it was 59.97 crores, year 2019 it was 12.11, only in the year 2018 it
was decrease 225.99 from the previous year 2017, in 2018 it was 1.3 and in the year 2017 it
was 224.29 crores, in year 2016 it was 3.13 crores This shows that the Cash And Cash
Equivalents Begin Of Year is increasing during those years.
From the above graph it clear shows that the Cash And Cash Equivalents Begin Of
Year is Increasing gradually.

35 | P a g e
7) CASH AND CASH EQUIVALENTS END OF YEAR

S.No. YEAR CASH AND CASH EQUIVALENTS BEGIN OF YEAR

1 MAR-20 4.35
2 MAR-19 59.97
3 MAR-18 12.11
4 MAR-17 1.3
5 MAR-16 224.29

Cash And Cash Equivalents End Of Year

250 224.29

200

150 Cash And Cash Equivalents

End Of Year

100
59.97

50
4.35 12.11
1.3
0
Mar-20 Mar-19 Mar-18 Mar-17 Mar-16

INTERPRETATION
The Cash And Cash Equivalents End Of Year is randomly change in every year. In
the year 2020 it was 4.35 crores, year 2019 it was 59.97, year 2018 it was 12.11, year 2017 it
was 1.3 crores, in year 2016 it was highest 224.29crores This shows that the Cash And Cash
Equivalents End Of Year was constantly changed during past years.
From the above graph it clear shows that the Cash And Cash Equivalents End Of Year
is not stable nor increase/decrease with any ratio.

36 | P a g e
 FINDINGS

1) Net Profit/Loss Before Extraordinary Items And Tax is Increasing gradually.

2) Net CashFlow From Operating Activities is Increasing every year.

3) Net Cash Used In Investing Activities is Increasing gradually.

4) Cash And Cash Equivalents Begin Of Year is Increasing gradually.

5) Net Inc/Dec In Cash And Cash Equivalents is constantly changed in every year from

the year 2016-2017 and in the year 2018 it was increase by previous year again in

year 2019 it was increase and in the last year 2020 again it was decrease.

6) Cash And Cash Equivalents End Of Year is not stable nor increase/decrease with any

ratio.

37 | P a g e
 SUGGESTION

1. The dividend payout ratio should be maintained as the shareholders would prefer to
invest only if the dividend payout increases.
2. The EPS is increasing for the bank on yearly basis. So, the bank should maintain the
EPS so that the holders are retained by the bank.
3. The adjusted cash flow is decreasing for the past few years and this cash flow is
considered as operating or working capital of any bank. But the cash flow is neither
stable nor increasing as it is fluctuating the adjusted cash flow should be maintained
and the cash flow should be planned in such a way that the cash flow should increase
on a yearly basis.
4. Net Cash is the cash that is reserved in the bank for any investing or financing
activities. The cash should be increasing in any business to maintain it sound and
healthy bank. The Net cash should increase on a yearly basis and the net cash is the
life blood of any company or bank for diversification or expansion of it respectively.
5. Opening cash and cash equivalent is the initial investment or opening balance of any
business. But in this case it is for bank, so as per that the opening cash is increasing
for bank and this should be maintained as this will have a drastic impact on the
balance and the bank should also keep up this performance to improve in positive
direction.
6. Closing cash and cash equivalent is the closing balance or net balance available at the
end of the year. The closing cash was increasing substantially for all the years except
for the year 2020 as the balance has pitched down this should be maintained and
focused for better closing balance at the end of each year. The closing balance should
be looked for positive increase as it decreased when compared to other years.
 Risk Management strategies of MPPTCL Ltd. must be revised.
 Bank must try to reduce its Net and Gross NPA.
 Bank must try to improve its Capital Adequacy Ratio.
 Bank must do proper investigation before lending.
 Bank must do pre and post monitoring of Loans.
 Credit worthiness must be checked before giving loans.
 Bank must not try to take financial risk

38 | P a g e
 CONCLUSIONS

The process of financial risk management is an ongoing one.Strategies need to be

implemented and refined as the market and requirements change. Refinements may reflect
changing expectations about market rates, changes to the business environment, or changing
international political conditions, for example. In general, the process can be summarized as
follows:

 Identify and prioritize key financial risks.

 Determine an appropriate level of risk tolerance.
 Implement risk management strategy in accordance with policy.

Measure, report, monitor, and refine as needed. Risk management needs to be looked at
as an organizational approach, as management of risks independently cannot have the desired
effect over the long term. In this project I have analyzed the risk management process of
MPPTCL Ltd.. It was found that Net and Gross NPA of the bank is increasing which is not
good for the bank. Thus we can say that Bank must improve its risk management strategies

Credit Appraisal is a process of appraising the credit worthiness of loan applicants.

The funds of depositor’s i.e general public are mobilized by means of such advance /
investment.

Thus it extremely important for the lender bank to assess the risk associated with credit,
thereby ensure the security for the funds deposited by the depositors.

In UBI the credit appraisal is done by thorough study of the project which involves
Following.

1) Evaluation of Management: A detailed study about the promoters is carried out in order
to ensure promoters are experienced in the line of business and are capable to implement and
run the project

2) Technical Feasibility: A detailed study about the technical aspects is done to determine
the technical soundness of the project

39 | P a g e
3) Financial Viability: A detailed study relating to financial viability of the project is done;
thereby ensuring that project will generate sufficient surplus to repay the lan installment and
interest

4) Risk analysis: It determines the risk associated with the project this is done by performing
a Sensitivity analysis and Credit Rating. With Sensitivity Analysis the projects capacity to
service debts under worsened conditions is determined. Credit rating, provides rating for
various parameters like management, financial, market and so, thereby determine the credit
worthiness of the borrower.

5) It is on the basis of the credit risk level, collateral securities to be given. This shows
MPPTCL Ltd. has sound system for credit appraisal.

40 | P a g e
 BIBLIOGRAPHY
Text Books
 Murthy - Management Accounting First Edition-2000, S.Viswanathan (Printers
&Publishers), PVT, LTD.
 S.M. Maheswari - Management Accounting, Sultan Chand & Sons Educational
Publishers, New Delhi.
 R.K. Sharma and Shashi K Gupta Management Accounting and Business Finance-
16th Edition 2008
 Murali Krishna Working Capital Management- 2010
 Prasanna Chandra Financial Management: Theory & Practice- 2004

Website
 www.haritaseating.com
 www.acma.in
 www.google.com
 www.readyratios.com
 www.crisilresearcher.com
 www.moneycontrol.com
 www.investopedia.com
 investello.com/Analysis/Dashboard

41 | P a g e
 ANNEXURE
KEY FINANCIAL RATIOS OF MPPTCL (in Rs. Cr.)
  Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
PER SHARE RATIOS          
Basic EPS (Rs.) 41.9 19.3 8.9 4.4 10.3
Diluted EPS (Rs.) 41.9 19.3 8.9 4.4 10.3
Cash EPS (Rs.) 42.09 19.4 8.98 4.49 10.34
Book Value [Excl Reval
222.16 198.62 180.96 173.81 169.41
Reserve]/Share (Rs.)
Book Value
[InclRevalReserve]/Share 222.16 198.62 180.96 173.81 169.41
(Rs.)
Dividend / Share(Rs.) 5 2.5 1.75 1.75 1.75
Revenue from
49 26.58 15.2 9.67 15.23
Operations/Share (Rs.)
PBDIT/Share (Rs.) 43.03 20.58 10.59 6.63 12.33
PBIT/Share (Rs.) 42.85 20.48 10.51 6.54 12.24
PBT/Share (Rs.) 42.85 20.48 10.51 6.54 12.24
Net Profit/Share (Rs.) 41.9 19.3 8.9 4.4 10.25
PROFITABILITY
         
RATIOS
PBDIT Margin (%) 87.8 77.42 69.68 68.52 80.96
PBIT Margin (%) 87.43 77.05 69.12 67.57 80.39
PBT Margin (%) 87.43 77.05 69.12 67.57 80.39
Net Profit Margin (%) 85.51 72.6 58.54 45.49 67.32
Return on Networth /
18.86 9.71 4.91 2.53 6.05
Equity (%)
Return on Capital
19.12 10.21 5.74 3.73 6
Employed (%)
Return on Assets (%) 18.52 9.54 4.83 2.48 5.93
Total Debt/Equity (X) 0 0 0 0 0
Asset Turnover Ratio (%) 21.66 13.14 8.26 5.46 8.82

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LIQUIDITY RATIOS          
Current Ratio (X) 98.41 30.82 46.2 7.57 16.73
Quick Ratio (X) 98.41 30.82 46.2 7.57 16.73
Inventory Turnover Ratio
0 0 0 0 0
(X)
Dividend Payout Ratio
17.89 9.06 19.66 0 17.07
(NP) (%)
Dividend Payout Ratio
17.82 9.02 19.47 0 16.92
(CP) (%)
Earnings Retention Ratio
82.11 90.94 80.34 0 82.93
(%)
Cash Earnings Retention
82.18 90.98 80.53 0 83.08
Ratio (%)
VALUATION RATIOS          
Enterprise Value (Cr.) 26,888.2
73,036.32 111,901.88 82,399.04 65,051.70
3
EV/Net Operating
93.65 264.51 340.63 422.69 110.96
Revenue (X)
EV/EBITDA (X) 106.66 341.64 488.81 616.84 137.05
MarketCap/Net Operating
93.66 264.65 340.68 422.7 111.89
Revenue (X)
Retention Ratios (%) 82.1 90.93 80.33 0 82.92
Price/BV (X) 20.66 35.42 28.62 23.52 10.06
Price/Net Operating
93.66 264.65 340.69 422.71 111.89
Revenue
Earnings Yield 0.01 0 0 0 0.01

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BALANCE SHEET OF Mar-20 Mar-19 Mar-18 Mar-17 Mar-16
MPPTCL (in Rs. Cr.)
  12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND          
LIABILITIES
SHAREHOLDER'S FUNDS          
Equity Share Capital 79.57 79.57 79.57 79.57 79.57
TOTAL SHARE CAPITAL 79.57 79.57 79.57 79.57 79.57
Reserves and Surplus 3,455.86 3,081.34 2,800.18 2,686.45 2,616.41
TOTAL RESERVES AND 3,455.86 3,081.34 2,800.18 2,686.45 2,616.41
SURPLUS
TOTAL SHAREHOLDERS 3,535.43 3,160.91 2,879.75 2,766.02 2,695.98
FUNDS
NON-CURRENT          
LIABILITIES
Long Term Borrowings 0 0 0 0 0
Deferred Tax Liabilities [Net] 0 0 0 9.49 10.74
Other Long Term Liabilities 21.31 19.02 20.35 1.87 1.87
Long Term Provisions 8.8 9.86 11.24 7.64 6.74
TOTAL NON-CURRENT 30.11 28.88 31.59 19 19.35
LIABILITIES
CURRENT LIABILITIES          
Short Term Borrowings 0 0 0 0 0
Trade Payables 2.1 4.69 2.85 1.54 2.63
Other Current Liabilities 32.52 24.42 12.54 8.32 7.69
Short Term Provisions 0 0 0 19.25 21.62
TOTAL CURRENT 34.62 29.11 15.39 29.11 31.94
LIABILITIES
TOTAL CAPITAL AND 3,600.16 3,218.90 2,926.73 2,814.13 2,747.27
LIABILITIES
ASSETS          
NON-CURRENT ASSETS          
Tangible Assets 152.88 67.79 67.4 68.06 75.15

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Intangible Assets 0 0 0 0 0
Capital Work-In-Progress 0 33.34 8.19 1.19 0.97
Other Assets 5.5 5.63 5.76 0 0
FIXED ASSETS 158.38 106.76 81.35 69.25 76.12
Non-Current Investments 0 2,177.53 2,107.53 2,489.71 2,102.88
Deferred Tax Assets [Net] 7.94 8.08 8.36 0 0
Long Term Loans And Advances 0 0 0 34.86 32.2
Other Non-Current Assets 26.92 29.35 18.41 0 1.87
TOTAL NON-CURRENT 193.24 2,321.72 2,215.65 2,593.82 2,213.07
ASSETS
CURRENT ASSETS          
Current Investments 3,340.00 759.87 650.59 182.25 276
Inventories 0 0 0 0 0
Trade Receivables 0.43 0.29 3.96 0.63 8.19
Cash And Cash Equivalents 4.96 60.27 12.4 1.55 225.25
Short Term Loans And Advances 0 25.85 0 1.17 0.84
OtherCurrentAssets 61.53 50.9 44.13 34.71 23.92
TOTAL CURRENT ASSETS 3,406.92 897.18 711.08 220.31 534.2
TOTAL ASSETS 3,600.16 3,218.90 2,926.73 2,814.13 2,747.27
OTHER ADDITIONAL          
INFORMATION
CONTINGENT LIABILITIES,          
COMMITMENTS

Contingent Liabilities 14.86 23.66 54.38 46.15 350.96

CIF VALUE OF IMPORTS          
Raw Materials 0 0 0 0 0
Stores, Spares And Loose Tools 0 0 0 0 0
Trade/Other Goods 0 0 0 0 0
Capital Goods 0 0 0 0 0
EXPENDITURE IN FOREIGN          
EXCHANGE
Expenditure In Foreign Currency 0 0 0 0.62 0.62
REMITTANCES IN          

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FOREIGN CURRENCIES
FOR DIVIDENDS
Dividend Remittance In Foreign -- -- -- -- --
Currency
EARNINGS IN FOREIGN          
EXCHANGE
FOB Value Of Goods -- -- -- -- --
Other Earnings -- -- -- -- --
BONUS DETAILS          
Bonus Equity Share Capital -- -- -- -- --
NON-CURRENT          
INVESTMENTS
Non-Current Investments Quoted -- -- -- 37,712.63 21,617.76
Market Value
Non-Current Investments -- -- -- 277.15 798.83
Unquoted Book Value
CURRENT INVESTMENTS          
Current Investments Quoted -- -- -- -- --
Market Value
Current Investments Unquoted -- -- 650.59 24.47 276
Book Value

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PROFIT & LOSS ACCOUNT OF MAR MAR MAR MAR MAR
MPPTCL (in Rs. Cr.) 20 19 18 17 16
  12 12 12 12 12
mths mths mths mths mths
INCOME
REVENUE FROM OPERATIONS 779.86 423.05 241.90 153.90 242.32
[GROSS]
Less: Excise/Sevice Tax/Other Levies 0.00 0.00 0.00 0.00 0.00
REVENUE FROM OPERATIONS 779.86 423.05 241.90 153.90 242.32
[NET]
TOTAL OPERATING REVENUES 779.86 423.05 241.90 153.90 242.32
Other Income 35.30 25.51 10.36 11.10 9.13
TOTAL REVENUE 815.16 448.56 252.26 165.00 251.45
EXPENSES
Cost Of Materials Consumed 0.00 0.00 0.00 0.00 0.00
Operating And Direct Expenses 0.00 0.00 0.00 0.00 0.00
Changes In Inventories Of FG,WIP And 0.00 0.00 0.00 0.00 0.00
Stock-In Trade
Employee Benefit Expenses 84.72 53.53 26.91 20.35 17.05
Finance Costs 0.00 0.00 0.00 0.00 0.00
Depreciation And Amortisation Expenses 2.90 1.55 1.36 1.46 1.38
Other Expenses 45.66 67.49 56.78 39.19 38.21
TOTAL EXPENSES 133.28 122.57 85.05 61.00 56.64
PROFIT/LOSS BEFORE 681.88 325.99 167.21 104.00 194.81
EXCEPTIONAL, EXTRAORDINARY
ITEMS AND TAX
Exceptional Items 0.00 0.00 0.00 0.00 0.00
PROFIT/LOSS BEFORE TAX 681.88 325.99 167.21 104.00 194.81
TAX EXPENSES-CONTINUED
OPERATIONS
Current Tax 13.94 18.02 27.60 35.23 32.30
Less: MAT Credit Entitlement 0.00 0.00 0.00 0.00 0.00
Deferred Tax 1.08 0.80 -2.01 -1.25 -0.62

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Tax For Earlier Years 0.00 0.00 0.00 0.00 0.00
TOTAL TAX EXPENSES 15.02 18.82 25.59 33.98 31.68
PROFIT/LOSS AFTER TAX AND 666.86 307.17 141.62 70.02 163.13
BEFORE EXTRAORDINARY ITEMS
PROFIT/LOSS FROM CONTINUING 666.86 307.17 141.62 70.02 163.13
OPERATIONS
PROFIT/LOSS FOR THE PERIOD 666.86 307.17 141.62 70.02 163.13
OTHER ADDITIONAL
INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) 41.90 19.30 8.90 4.40 10.30
Diluted EPS (Rs.) 41.90 19.30 8.90 4.40 10.30
VALUE OF IMPORTED AND
INDIGENIOUS RAW MATERIALS
STORES, SPARES AND LOOSE
TOOLS
Imported Raw Materials 0.00 0.00 0.00 0.00 0.00
Indigenous Raw Materials 0.00 0.00 0.00 0.00 0.00
STORES, SPARES AND LOOSE
TOOLS
Imported Stores And Spares 0.00 0.00 0.00 0.00 0.00
Indigenous Stores And Spares 0.00 0.00 0.00 0.00 0.00
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share Dividend 119.36 27.85 27.85 0.00 27.85
Tax On Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend Rate (%) 100.00 50.00 35.00 35.00 35.00

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CASH FLOW OF MPPTCL MAR MAR MAR MAR MAR
(in Rs. Cr.) 21 20 19 18 17
  12 12 mths 12 mths 12 mths 12 mths
mths
NET PROFIT/LOSS BEFORE 245.10 681.88 325.99 167.21 104.00
EXTRAORDINARY ITEMS AND TAX
Net CashFlow From Operating Activities 169.36 638.83 286.45 141.92 41.51
Net Cash Used In Investing Activities -149.28 -575.48 -210.82 -103.52 -263.81
Net Cash Used From Financing Activities -0.18 -118.97 -27.77 -27.59 -0.69
Foreign Exchange Gains / Losses 0.00 0.00 0.00 0.00 0.00
Adjustments On Amalgamation Merger Demerger 0.00 0.00 0.00 0.00 0.00
Others
NET INC/DEC IN CASH AND CASH 19.90 -55.62 47.86 10.81 -222.99
EQUIVALENTS
Cash And Cash Equivalents Begin of Year 4.35 59.97 12.11 1.30 224.29
Cash And Cash Equivalents End Of Year 24.25 4.35 59.97 12.11 1.30

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