A SYNOPSIS ON

Comparison of the Profitability and performance in the financial market of PGCIL with its competitors

Under he G!idance of" #r$ Ar!p #!kher%ee Dept of Finance, Xavier Institute of Social Service, Ranchi

S!bmitted by" Shresth &otish Finance Roll no.47

CON 'N S
. INTRODUCTION . R !I " OF #IT R$TUR %&RO'# ( ST$T ( NT . O') CTI! S OF T* &RO&OS D STUD+ . R S $RC* ( T*ODO#O,+ . SCO& OF T* &RO&OS D STUD+ . 'I'#IO,R$&*+

IN (O)UC ION
This study deals with the relationship between share prices and share dividends. Most financial textbooks point out that in a well-functioning capital market these two variables should be related the present value of the share should be equal to the dividend stream discounted by the return earned on securities of comparable risk. Of course, this simple relationship only holds in a world of certainty where investors have access to perfect information. where investors have rational expectations. ! substantive body of empirical research supports the view that share prices are influenced by changes in company dividends. "n addition, stock market studies demonstrate that share prices respond to dividend news# dividend increases tend to be associated with share price increases while dividend cuts are usually associated with share price falls $%ettit, &'()# !hrony and *wary, &'+,# !beyrathna et al., &''-.. ! small minority of authors has suggested that dividend cuts may not be seen as bad news by investors# instead, they may indicate that a company has profitable investments which it wishes to fund from internal cash resources PROFITABILITY ANALYSIS %rofitability analysis is the process of identifying the financial strengths and weaknesses of a firm with respect to profitability. "n this study profitability in dayto-day and long-term transaction will be studied. /atio analysis is a widely used tool of financial analysis. /atio analysis is often underrated but is extremely helpful in providing valuable insight into corporation financial health. %ublic is pouring lot of money in the stock market and new issues are coming very rapidly. %ublic and the management of the companies need to assess financial health of the company periodically. !nalysis of financial data is based evertheless, some authors demonstrates that a similar relationship should hold in a world of uncertainty

on five parameters namely, sales, assets, net income, stockholders equity and number of employees. *tockholders are concerned whether income will be sufficient to cover interest and the management is interested in the future success of operations under their leadership. 0or these reasons , one must have various analytical tools to assist in interpreting the key relationships and trends and to predict the potential future success. /atios normally pinpoint business strengths and weaknesses in two ways1 Firstly: The ratio provide an easy way to compare today2s performance with the past and Secondly: /atios depict the areas in which a particular business is competitively advantageous or disadvantageous. There are several different categories of ratios and each category focuses on a different area. *ome of the ratio which can b used in analy3ing the financial health of an establishment are as under1 $a. %rofitability /atio1 -./ -0/ -1/ -4/ -2/ $b. $c. $d. $e. $f. /eturn on "nvestment or et %rofit to 4apital 5ross %rofit /atio Operating /atio et %rofit /atio "nterest-coverage /atio

6iquidity /atio 7ebt /atio !ctivity /atio 7ebt 4overage /atio Turnover /atio etc.

CO#PANY P(O*IL'

POWERGRID %O89/5/"7 was incorporated in &'+' and based on its impeccable performance, 5ovt. Of "ndia categori3ed it as the Miniratna 4ategory:" %*; w.e.f. Oct2'+. 0urther, recogni3ing the role of %O89/5/"7 in the overall development of "ndian power sector and its consistent performance as per benchmark parameters stipulated by 7epartment of %ublic 9nterprise $7%9. < avratna status= was conferred to %O89/5/"7 w.e.f. &st May, ),,+.%O89/5/"7 was listed on "ndian >ourses in *ept ),,( and the 4ompany came with 0ollow on %ublic offer in ovember ),&,. %resently 5ovt. of "ndia holding is -'.?)@ and the balance A,.B+@ is held by "nstitutional "nvestors and public .%O89/5/"7 is playing a strategic role in "ndian %ower *ector development by establishing C maintaining the power transmission infrastructure which carries around B,@ of total power generated in the country. %O89/5/"7 has been instrumental in providing an efficient, reliable and smooth grid operation and management in the country. *ince ),,', the 5rid Management and operation has been entrusted to %ower *ystem and Operation 4orporation limited $%O*O4O, a &,,@ wholly owned subsidiary of %O89/5/"7.. T%4$ ational Thermal %ower 4orp.. "ndia2s largest power company, T%4 was set up in &'(B to accelerate power development in "ndia. T%4 is emerging as a diversified power maDor with presence in the entire value chain of the power generation business. !part from power generation, which is the mainstay of the company, T%4 has already ventured into consultancy, power trading, ash utili3ation and coal mining. T%4 ranked AA(th in the E),&), 0orbes 5lobal ),,,2 ranking of the 8orld2s biggest companies. T%4 became a Maharatna company in May, ),&,, one of the only four companies to be awarded this status. !t T%4, People before Plant Load Factor is the mantra that guides all F/ related policies. T%4 has been awarded o.&, >est 8orkplace in "ndia among large organi3ations and the best %*; for the year ),&,, by the 5reat %laces to 8ork "nstitute, "ndia 4hapter in collaboration with The 9conomic Times. F%4$ ational Fydro %ower 4orp.. F%4 6td is a Mini-/atna 4ategory-" 9nterprise of the 5overnment of "ndia. The company is one of the largest organi3ations in the field of hydro power development in the country. The company is a hydroelectric power generating company dedicated to the planning, development and implementation of an integrated and efficient network of hydroelectric proDects in "ndia. They execute all aspects of the development of hydroelectric proDects, from concept to commissioning of the proDects. F%4 6td was incorporated on ovember (, &'(B as a private limited company under the name ational Fydro 9lectric %ower 4orporation %vt. 6td. "n !pril ), &'+-, the company was converted into a public limited company. The company was established with an obDective to plan,

promote and organi3e an integrated and efficient development of hydroelectric power in all aspects. 6ater, they expanded their obDects to include development of power in all aspects through conventional and non-conventional sources in "ndia and abroad.

REVIEW OF LITERATURE
"n this proDect work, secondary data are used as a basis of analysis. "n this study, >eta and Golatility calculations and different types of trading strategies are analy3ed. The current study has been undertaken to measure the risk and variability of different company2s shares at different point of time. "t is also helpful for analy3ing the company2s performance in the share market at the time of dividend declaration. *o the progress in the share market is high and we can see the investors are in the right path or they are achieving their obDectives .

O+,'C I-' O* S U)Y

The division of net earnings of a firm between dividend payments and retained earnings is a maDor financial decision. "f the principal obDective of a corporate financial management is to maximi3e the market value of equity shares, the question that naturally arises is1 what is the relationship between dividend policy and market price of equity sharesH This is one of the most controversial and unresolved questions in corporate finance. The present study is basically focused on the following1 ature and types of dividend polices 7eterminants of dividend policy "mpact of dividend policies on the share prices of the units concerned

To evaluate financial health, %rofitability, liquidity and operational efficiency of the establishment.

To have an inter-firm $%54"6,

T%4,

F%4. comparison measure

efficiency and help the management to take remedial measures.

RESEARCH METHDOLOGY
$&. *O;/49* O0 7!T!1

$a. %rimary data1 %rimary data required for study will be collected through direct interaction with financial executives of the establishment. *ince a good rapport has been maintained the management has assured timely guidance and assistance and availability of relevant information through ledger and files etc. $b.*econdary data1 *econdary data will consist of annual reports, publications, audited financial statement issued, day-to-day working files and budgets for different years. 8hich will be obtain from their websites $c."nterview with key %ersonnel1 7ata will also be collected by interviewing the key personnel of the firm. The problems of the firm relating to the liquidity will be discussed with them along with sources of finances and future prospects.

SCOP' O* .' P(OPOS') S U)Y

The study is confined to the cos. related to %ower sector. The study is undertaken to know beta values, coefficient of correlation and Golatility of three companies from the said industry. They are1 %ower 5rid 4orporation of "ndia 6td. ational Thermal %ower 4orporation ational Fydro %ower 4orporation The study can be extended to other firms in the same industry.

BIBLIOGRAPHY
0inancial Management by ".M. %andey www.bseindia.com www.moneycontrol.com www.calloptionputoption.com www.powergridindia.com www.nhpcindia.com www.ntpc.co.in 0inancial Management by !shish Ialra