University of Education

Lower Mall Campus, Lahore

Department of Management Sciences

Internship Report
National Transmission and Despatch Company Limited
(NTDC)

A REPORT SUBMITTED TO THE DEPARTMENT OF MANAGEMENT SCIENCES,

UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE IN THE
PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION (3.5 YEARS)

Submitted By:
14-MBA-FM-99
Waqas Ahmad
2014-2018
17th November 2017
 University of Education
Lower Mall Campus, Lahore
Department of Management Sciences

LETTER OF UNDERTAKING

This internship report was submitted by Waqas Ahmad S/o Muhammad Javed

Roll No. 14-MBA-FM-99 for the partial fulfillment of the requirements for the degree of

MBA (3.5 years)

Session (2014-2018)
with specialization in
FINANCE
and is hereby accepted by the evaluation committee.

Internship Supervisor ________________________

Principal ________________________
 Dedication

First and foremost, I would like to thanks my ALLAH ALMIGHTY who helped me to fulfill my
tasks.

I dedicate all my efforts and struggles of the educational life to my dear parents; without them
I’m meaningless.

Also, I devote the work of this internship report to respectable and honorable teachers who
taught and supported me in developing my personality as a competent professional.
 ACKNOWLEDGMENT
First of all, I would like to express my deepest thankfulness to ALLAH ALMIGHTY for giving
me the strength and courage to complete my internship and prepare this report within the scheduled
time and My humblest thanks to the Holy Prophet Hazrat Muhammad (PBUH) who is forever
a torch of guidance & knowledge for humanity as a whole.

I am thankful to my Institute and all my honorable and respectable teachers who helped me a lot
in gaining the knowledge and played a role to improve my professional personality.

I am also grateful to all staff of National Transmission & Despatch Company, particularly Mr.
Furqan (Deputy manager) who have given his valuable time and given me chance to learn
something despite having his busy schedule. His constant guidance and advice played the vital role
in getting practical experience in the organization.

I am also thankful to the following persons.

Miss. Amna

Mr. Naeem

Mr. Hafiz Waheed

Mr. Faheel

Mr. Mohsin

Mr. Imtiaz

I submit my sober thanks to all staff of NTDC for providing several documents, papers, data,
figures and services as well as sharing their experience with me and teaching me different
techniques to build the computer network for to operate effectively and efficiently.
 Executive summary
This is the requirement of MBA course at, University of Education that all the students of Master
in Business Administration (MBA) have to spend at least six weeks in any organization to get
practical experience of organizational environment which is quite different from educational
environment.

The 6 weeks’ period is known as “internship period”. For this purpose, I got the opportunity to do
internship of 6 weeks’ period in “National Transmission and Despatch Company” from 18-09-
2017 to 27-10-2017. This is an attempt to know how the theories can be applied to practical
situation.

As being completely new to practical, corporate world setting, every hour spent in the NTDC gave
me some amount of experience all the time all of which cannot be explained in words. But
nevertheless, they were all useful for my career.

National Transmission and Despatch Company is a Govt. organization. it has a monopoly position
as it is the only organization of its nature. NTDC is responsible for transmission of electric power.
It plays a role as a distributor between GENCOS and DISCOS.

In this internship report, the general information about the company has been collected. The
information is gathered through primary sources and secondary sources as well. I have discussed
about every major aspect of the company which I observed and perceived during my internship
program. All main departments of NTDC are discussed in this report. The basic purpose of this
report is to investigate the NTDC History, Departments information, the activities taking place in
this organization. I have also analyzed the Finance department activities adopted by the NTDC in
detail.

I did my internship in Finance department at NTDC.

During my internship, I spent my 06 weeks in different sections of Finance. This is a good thing
to learn more knowledge about the overall finance department. Finance department controls all
financial activities of the Company. Three main tiers which would easily be identifiable at FD-
NTDC level are;
Operations & Maintenance (O&M) of the system through wheeling charges/ Use of System
Charges (UoSC) as determined by NEPRA

PSDP (own sources & local/foreign) for ever-extending national power infra-structure

Procurement of Power; purchase of power from generation companies (payment arrangements)

and sale of the same to distribution companies (collection arrangements)

Following are the sections of Finance through which I got practical knowledge by working there:

(1): Budget section (2): Loan section

(3): Letter of Credit section (4): Inter Office Transaction section

(5): Compilation section

Budget Section makes the budget to meet day-to-day business needs.

Loan section borrows the money to carry out external projects for the purpose of development.

LC section opens the Letter of Credit for surety of dealings and to remove the risk of loss.

IOT section keeps balance of transaction between the two departments

Compilation section is responsible to compile all the data receive throughout the finance
department.

You will able to read all my tasks, which I performed in the entire above sections in the next
coming pages.

I have divided my report in various portions. The first portion of my report consist of Introduction.
Further, readers will be able to understand about history of NTDC and NTDC`s mission and Vision
too. In the next section pages, report is giving a whole picture of NTDC organizational chart, its
main departments and functions performed by departments. In the next portion, I have written ratio
analysis of the company. So, it will increase the awareness of the readers regarding various
activities. After this portion, reader will be able to read about critical analysis (Horizontal and
Vertical) that I wrote with my true observation. SWOT analysis, to understand NTDC’s strengths,
weaknesses, opportunities and threats are also included here. I found some problems in the
organization and gave solutions to solve that problems according to my observation and
knowledge. At the end my conclusion and references from which I got knowledge are also
mentioned in my report.

Table of Content

Serial Topics Page

No: No:
1 Brief Introduction
2 Overview of Organization
(i) Brief History, Vision & Mission Statements,
(ii) Introduction of the Organization, Corporate Objective,
Market Standing
(iii) Product Lines
(iv) Business Volume
(v) Policy of Organization
(vi) Competitors of Organization
3 Organizational Structure
(i) Hierarchy of the Company
(ii) Number of Employees
(iii) Main Offices
(iv) Introduction of all Departments
(v) Comments on the NTDC Structure
4 Plan of Internship program
(i) A brief introduction of the branch/ Area office of the
organization
(ii) Starting and Ending date of Internship
(iii) Departments where I got Training
(iv) Duration of Training
5 Training Program
(i) Activities performed by the Dept.
(ii) Work performed by me
6 Structure of Finance Department in NTDC
(i) Department Hierarchy
(ii) Number of employees in Finance Department
7 Marketing Functions
(i) Products/Services offered
(ii) Pricing Strategies
(iii) Place
(iv) Promotion
8 Human Resource Management
(i) Employment recruitment and selection
(ii) Training & Development
(iii) Performance Management
(iv) Compensation Policy
9 Financial Analysis
(i) Ratio Analysis
10 Critical Analysis
(i) Horizontal Analysis, Vertical Analysis
(ii) Competitive Analysis
(iii) Future Prospects of company
11 SWOT Analysis
 (i) Strength
(ii) Weaknesses
(iii) Opportunity
(iv) Threats
12 Conclusion
13 Problems & Recommendations
14 Reference and Sources

(1) Brief Introduction

National Transmission and Despatch Company

National Transmission and Despatch Company (NTDC) is a public limited utility company
responsible for transmission of electric power. The NTDC has prepared an overall power
development program for the improvement of transmission system and its expansion.

National Transmission & Despatch Company (NTDC) was incorporated on 6th November, 1998
and commenced commercial operation on 24th December, 1998. It was organized to take over all
the properties, rights and assets obligations and liabilities of 220 KV and 500 KV Grid Stations
and Transmission Lines/Network owned by Pakistan Water and Power Development Authority
(WAPDA).

NTDC was granted Transmission License No.TL/01/2002 on 31st December 2002 by National
Electric Power Regularity Authority (NEPRA) to engage in the exclusive transmission business
for a term (30) years, pursuant to Section 17 of the Regulation of Generation, Transmission and
Distribution of Electric Power Act, 1997.

NTDC operates and maintains fourteen 500 KV and thirty-eight 220 KV Grid Stations, 5110.48
km of 500 KV transmission line and 9686.32 km of 220 KV transmission line in Pakistan.

Detail:

NTDC 500 KV 220 KV Total

Network
Number of Grid 14 38 52
Stations
Transmission line 5110.48 9686.32 14796.8
(km)

NTDC provides the services of transmission of electricity from GENCOs to DISCOs. DISCOs are
the costumers of NTDC.

Image of working of NTDC.

W . LESCO
A
P Hydel . GEPCO
D D . IESCO
A
I . MEPCO
N
C . PESCO
G . GENCO-I
E T O . HESCO
N . GENCO-II
C
D S . QESCO
O . GENCO-III O . TESCO
C
S . GENCO-IV
. SEPCO

IPPS
  Main Functions:

Followings are the main functions of NTDC:

 System Operator.
 Transmission Network Operator.
 Contract Registrar and Power Exchange Administrator.

NTDC

Transmission Contract Registrar

System operator
Network and Power Exchange
(SO) Operator (TNO) Administrator
(CRPEA)

System Operator:

For secure, safe and reliable operation, control and despatch of general facilities.

Transmission Network Operator:

For operation and maintenance of transmission system including planning and expansion of its
transmission system, generation expansion, least cost planning and siting of new generation
facilities.

Contract Registrar and Power Exchange Administrator (CRPEA):

For the recording and notification of contracts and other matters relating to bilateral trading
between generation licensees and the BPCs and between generation licensees and the distribution
companies for their future capacity needs. The (CRPEA) shall also handle a financial settlement
system in close co-ordination with the system operator for the balancing market and for differences
arising with CPPA.

NTDC BOARD OF DIRECTORS

1 Mr. Babar Iqbal, Chairman

2 Mr. Ajmal Jamil, Director

3 Mr. Ghiasuddin Ahmed, Director

4 Engr. Mahfuz-ur-Rehman Pasha, Director

5 Mr. Wazir Ali Bhayo, Director

6 Mr. Nasir Gulzar, Director

Dr. Aamer Ahmed, Additional Secretary (Power) Ministry of Water and

7
Power/Director

8 Mr. Zafar Abbas, Managing Director NTDC/Director

9 Mr. Shah Jahan Mirza, Managing Director PPIB/ Director

(2) Overview of Organization

(i) HISTORY
At the time of independence, Pakistan inherited 60 MV of power generation capability for a
population of 3.15 million, yielding 4.5 units’ per capita consumption. Twelve years later, when
WAPDA was created in 1959, the generation capacity had increased to 119 MV. By that time
country had entered the phase of development, which required a dependable and sold
infrastructure, electricity being its most significant part. The task of hydel and thermal generation
projects, a matching transmission network and a distributing system, which could sustain the load
of rapidly increasing demand of electricity.

Pakistan’s power sector has been beset with poor operational and financial performance since the
mid -1990s; the government hence decided to restructure the sector “from an inefficient state-
controlled monopoly to a competitive, market driven system”. The competitive power sector is
envisioned to consist of:

Competitive generation with independent system operations and bulk power market.

Unbundled open, and undiscriminating access to transmission and distributions services; and

An independent regulatory body for effective market governance. Some major reforms include the
following:

In 1994, the government formulated a power policy that allows the private sector to invest in the
power sector to ensure sufficient generation capacity. The policy also allowed full flexibility to
independent power producers (IIPs) to bring capacity on line as quickly as possible at
predetermined power purchase prices. The government guaranteed implementation, fuel supply,
and power.

In 1997, the National Electric Power Regulatory Authority (NEPRA) was established. NEPRA is
responsible for issuing licenses, franchising monopoly business, setting and enforcing
performance standards and codes of practices, enforcing competitive policies, and setting charges
for the monopoly parts of power industry. It is also mandated to protect consumers against
monopolistic prices, encourage efficiency by promoting competition, and eliminate cross subsidies
between regions and consumer groups.
After all that the need of organization who could manage that transmission system the NTDC
formed and worked as separate legal entity as company’s ordinance act 1997 which can sue and
sued by its own name.

National Transmission & Despatch Company (NTDCL) Limited was incorporated on 6th
November 1998 and commenced commercial operation on 24th December 1998. After that NTDC
work as separate entity apart from WAPDA.

VISION

“NTDC is the back bone of our Power System. Our Vision is to provide and maintain a fault free
HV System with minimum possible losses and expenditure with the Concerted efforts of
Management & Engineering Section”
 MISSION STATEMENT

“To contribute in the development of Prosperous Pakistan by Managing Smooth and Economical
Transmission and Dispatch System through Excellence of Professional Work”

(ii) Objectives:

 The prime objective of NTDC is to help in increase the efficiency and reliability of
electricity supply.
 It is also the objective of NTDC to provide Good and Tremendous quality of Transmission
lines.
 To provide continuous and the improved voltage profile of electricity in Pakistan.
 Creating positive image of NTDC
 Prompt restoration of disrupted electricity supply.
 Availability of stores to deal with emergencies.
 NTDC`s objective is the up gradation of existing projects so that they will help the
industrial & commercial activities.
  Objective is to increase the number of Grid stations and Transmission lines for expansion
of activities.
 NTDC management also aims for interconnection facilities to evacuate power from across
the border projects like proposed development project of Central Asia- South Asia (CASA-
1000), 1300 MV project, a cross-border transmission interconnection at 500 KV, linking
the four countries to facilities the transfer of surplus power from Central Asian countries
to Pakistan, import of 100 MV power from Iran to Gwadar.

 Market Standing

Market standing shows the position of a company that whether it is beneficial to make investment
in that company or not. According to NTDC, as it under government regulation Pakistan that clear
us that 88% share of NTDC will be in the hands of Govt. and the rest 12% will be in the hands of
employees of NTDC.

WAPDA is undeniably important for Pakistan as the major hydroelectric power supplier and the
rating is, in a way, a recognition of this at most importance. WAPDA receive tariff from
NTDC/CPPA against supply of electricity. Financial aid needed for different projects is supplied
through a development loans or foreign re-lent loans from GoP. This helps WAPDA meet the
criteria of its financial profile. Though in past years WAPDA was under circular debts, now
recently established payment mechanism with the power purchaser has made the situation
favorable. This is ensuring timely receipt against monthly bills

(iii) Competitors

There is no competitor of National Transmission and Despatch Company. It has a monopoly

position because it is the only company of its nature. It is a Govt. organization, and Govt does not
allow any other organization to give the services like this.

Business Volume
Business volume plays a very important role in understanding the financial position of any
company. It has a great importance in the financial statement of the company. Company wants to
increase their business volume in the future because this will helpful in capturing the more
investors.
Business Volume of NTDC for the year of 2015 is: 22,235,741,941 whereas it was 19,836,334,940
in 2014. So, there is a huge increase in business volume of NTDC as compared to previous year. I
took 2015 is the current year because financial statement of 2016 are not yet audited by the
company.

(iv) Policy of the Organization

Every organization adopt policy to set the image that where the company will stand in next five to
ten years. Some companies adopt long term policies and some adopts medium term.

NTDC adopts medium term policy. Following are the main points of the Policy of NTDC.

 Reduce Transmission Lines

 Striving for reliable grid station
 Electricity without any hindrance

First point of policy is to build the strong system and to groom the existing system by providing
huge amount of funds so that company can reduce its transmission losses. In addition to this
company also made the policy to build number of grid stations that are reliable to expand the
functions of the company and added new functions by using new technology in new grid stations.
The last point of policy is company wants to transmits electricity from one place to another without
any hurdle and transfer electricity 24 hours easily and safely. Company is trying to achieve all
those things which they decided in policy.

(v) Product Line

Product includes both things (1) Goods and (2) Services.

National Transmission and Despatch Company does not deal in goods. It provides services all over
the Pakistan. As I mentioned above more than one time that the main service of NTDC is to provide
electricity from GENCOs to DISCOs. For this purpose, NTDC has number of Grid stations and
Transmission Lines so, in other words we can say that product lines of NTDC includes:

 Grid station
 Transmission Lines
NTDC maintains 500 KV and 220 KV grid stations in which electricity stores at first hand, then
after processing means change the voltage according to capacity.

And then transmission lines are used to despatched electricity from place to another safely and
efficiently.

(3) Organizational Structure

 Organizational Chart
  Number of Employees
Number of employees working under NTDC is approximately 12000 employees working in all
over NTDC, It includes all the employees from BPS 1 to BPS 20. Here is the detail of the
employees as below:
 REGULAR
4601

VACANT CONTRACT
1315 386

TOTAL
EMPLOYEES
12000

DEPUTATION DAILY
15 WAGES 338

WORKING
5345

 Main offices:
Adddress: WAPDA House, The Mall, Lahore, Pakistan.
Telephone: 92(042) 99201020 Ext: 2283, Email: www.ntdc.com.pk

 Brief Introduction to all Departments:

Here all the dept. working under NTDC names are as follows:

Management Director
 Finance Director
 General Manager (GSC)
 General Manager (GSO)
 General Manager (Planning Power)
 General Manager (Services Division)
 General Manager (Design)
 Chief Engineer (Telecom)
  Chief Engineer (TSG)
 I.T Directorate
 Director (HR)
Now there is brief detail of departmenta is below:

 Overview of GSC Development:

Grid System Construction (GSC) is responsible for arranging the construction of 500 & 220 kV
Grid Station and Transmission Line Projects.

Functions GSC:

The main jobs of GSC include the following: -

 To supervise the Construction &Commissioning of500 kV & 220kV T/Lines & Grid
Stations.
 To supervise the construction of Interconnections for IPPs.
 To supervise the installation of metering system at cut off points in various Discos of
Energy transfer.

To maintain liaison between Project Authorities, Funding Agencies and Consultants for the smooth
running of Project.

 Overview GSO Operation:

GSO links Power Generation Units and load centers located in the entire Country and thus create
one of the largest interconnected Network. The GSO is characterized by 500 kV & 220 kV
backbone transmission corridors running generally North to South along the Indus River. Large
hydro generating resources are in the north, and large thermal resources are in the south. The
largest load center is in the middle of the country in the Punjab. NTDC is one of the largest
transmission companies in the world.

Because of large north-south distances, some 1,500 miles, the transmission losses, now about 3.1%
are significant. This level of losses is technically unavoidable when transmitting power across such
long distances.

 Overview of Planning-NTDC
The responsibility for national power planning, as an integrated exercise for Pakistan, is not housed
in any one entity. Energy sector planning, as a function, is cited in various documents, websites,
and presentations, of NEPRA, NTDC, Planning Commission, and MWP. PPIB also claims to
conduct generation planning after taking into account the public-sector power projects. Clearly the
Energy Wing of Planning Commission has a key role, as per their rules of business. Specifically,
there is no clear responsible authority for maintaining the reserve margin in the power sector. Also,
there is no responsible authority for establishing the desired fuel mix, and hence there is no
decision-maker that prevents over-reliance on oil-fired power plants. The Single Buyer Model
can only choose from available power generation plants.

Planning Commission currently has the mandate to make five-year plans in all sectors; there is a
section on power and a section on energy. The plan is developed by inter-ministerial working
group and aided, in the case of sections on energy, by world-class experts. Two other entities
involved in planning at GOP are ECC, Economic Coordination Committee of the Cabinet, which
considers, inter alia, pricing reforms and resource allocation such as gas allocation, and ECNEC,
Executive Committee of the National Economic Council. ECNEC makes decisions about capital
projects above certain budgetary limits.

 Overview of Service

The service division of NTDC is Self-Financing Formation of NTDC. It is an in-house consulting

organization to provide technical services on commercially basis. Its clients largely include
DISCOs & private manufacturing companies. After the transfer of 132 KV Transmission Network
to DISCOs they needed technical assistance in the field of design & Engineering, Control &
Protection Telecommunication Maintenance & Training, of transmission lines due to their limited
capacity in these fields. While establishing the service Divisions, it was the aim of the Company
to make the Service Division as self-financing Unit

 Overview of Design
 Working out requirements of material for Grid station and Transmission Lines projects.
 Preparation of the bidding documents for procurement of material /equipment.
 Preparation of the bidding documents for turnkey contracts.
  Evaluation of bids for procurement of material /equipment and construction /turnkey
projects.
 Preparation /vetting of Notification of Award and contracts Agreements.
 Vetting /approval of technical data /drawings of equipments /material/ works.
 Preparation of Grid Station Sites/Transmission Line Routes.
 Approval/vetting of transmission line profile
 Overview of Telecom

Telecommunication department of NTDC under GM (Services Division) provides Voice / Data

Communication and Tele-protection services to NTDC, WAPDA, DISCOS, GENCOs& IPPs. The
Data/ Voice Communication services of the Power Network provided to NPCC is playing key role
for the management of overall Power System of country

 Overview of IT-NTDC

IT department plays a central role in integration of all departments in an organization. It develops

an awareness of IT culture to achieve a paperless corporate environment by defining long term
goals and short term objectives with respect to IT, to enhance country wide NTDC inter office
communication network using IT based infrastructure and skills, training of officers and officials
with availability of IT hardware/Software and reshaping of daily data processing in electronic
format using database supported outsourced/developed/off the shelf software applications and
making their reports available for future decision making to avoid unnecessary delays in projects
completion.

 Overview of HR-NTDC
HR shall be responsible for the recruitment and placement of the "Right Person for the Right
Job" and enhancing their levels of motivation/morale/job satisfaction through the provision of the
necessary support systems and structures such as an attractive compensation package, a fair and
objective system for promotion and career progression, training and development inputs to keep
people in pace with the changing demands of their jobs, etc.
The functions of the HR include Development of the policies, guidelines and procedures for the
following human resources management concerns: -

 Manpower planning.
 Recruitment and Selection.
 Appointment, deployment, re-deployment / transfers.
 Compensation and benefits administration.
 Career planning and promotions.
 Performance management.
 Incentives administration.
 Training and development.

 Overview of FINANCE-NTDC

The Finance department of NTDC is Financial Advisor of the Company. He assists management
in Strategic Management decision making. He controls all financial activities of the Company.
Finance Directorate – NTDC administers finances of not only the transmission network being
Transmission Network Operator (TNO) and System Operator (SO) but also the Central Power
Purchasing Agency (CPPA) which procures power on behalf of distribution companies as per
Transmission License of NTDC.

 Comments on Organizational Structure

NTDC is a Govt organization and the structure of organization is the centralized. According to my
point of view. The structure of organization has some pros and cons. The good thing in
organizational Structure is that all departments are present there and all are working with mutual
understanding and always ready to help each other for the purpose of earning profit.

But there is some bad thing in structure is that, too much involvement of Govt and political
inferences. Officials have to follow Govt instructions because Govt takes part in decision making
and due to this filing process takes too much time and this will lead to delay in work.
 (4) Plan of Internship program

 Brief Introduction to the Branch:

I did my internship at NTDC Head Office. It is situated at WAPDA House Mall Road, Lahore.
There are two separate companies exist at WAPDA House, one is WAPDA which is responsible
for generation of electricity and the second one is NTDC which is responsible for Transmission of
electric power.
It controls all the regional offices. The overall environment at Head office was quite professional
and the working environment was very comfortable and the seniors were always eager to help their
juniors in any sort of problem. I observed that the employees are loyal the organization and all the
staff of Head Office are cooperative. All the main departments are working at Head Office such
as, Finance department, IT department, planning department etc.

Finance department deals all the financial activities of company, HR department deals with Hiring,
Firing and Training of employees, similarly all other departments are performing their routine
tasks at Head Office. But H.R department is not working in Head office, it performs its task like
hiring, firing and training in separate building. The name of that building is P.I.A Building or P.I.A
tower. That department also the part of head office but performs its functions in another building.
Now the problem is that people have to go in two separate buildings for the same case which is
time wasting and time consuming. Most of the time rest of the departments contact with that
department on telephone and communicates with them.
Despite situating in separate building H.R department perform its routine tasks very efficiently
and does not create the burden for organization.

 Starting and Ending Date of Internship

I joined the NTDC for internship in Finance Department. I worked in NTDC head office, Lahore.
My internship duration was 06 weeks, Date 18-09-2017 to 27-10-2017
I received a very warm welcome from everybody including the heads of all the sections and the
peers. They all have provided me great help in completing the tasks assigned to me. They provided
me required data time to time to fulfill my internship requirements.

(5) Training Program

I learned following knowledge and skills during my internship:

 In NTDC I learned that the theoretical knowledge is quite different from the practical

world.

 How to behave with colleagues and Officers.

 How can I manage work within time.

 Effective group communication and team work skills

 Problem solving skills

 Self Confidence

 How to work under pressure

I got internship training from Finance Department.

Following are the sections of Finance through which I got practical knowledge by working there

 Budget section
 Letter of Credit section
 Loan section
 Inter Office Transaction section
 Compilation section

I am going to discuss each section one by one.

 Loan Section
Loan section of NTDC borrows and maintains the loan for external purposes and not for internal
purposes. The purpose of borrowing the loan is to complete different types of projects. When
company starts new projects to expand the functions and activities of company then it needs huge
amount of money so due to the fulfillment of projects company has to borrow different kinds of
loan.
Loan section of NTDC deals with following three types of loan.
1. Cash development loan (CDL)
2. Local Financing
3. Relent loan financing

 Cash development loan

A form of financing in which the loan is backed by a company's expected cash flows. Before going
to local or relent loan financing company borrows money from ministry of finance. If ministry of
finance option is not enough to fulfill the requirements of money, then company goes for other
options. The advantage of this loan is that interest rate on this loan is usually low than other loans.
 Local Financing

Local financing means company borrows the money from within the boundary of country. They
borrow money from commercial Banks, Financial institutions or Govt. etc. Company goes for local
financing when Cash Development Loan option is not suitable. Company pays Mark-up on local
Financing. The rate of mark-up is not fixed so the rate of Mark-up is decided on the time of making
loan.
Following is the procedure to get local financing

Request for Financing Received from GM planning along with project detail

Approval/Directions of MoWP for seeking Local Financing

BOD Approval

Expression of interest called from all AA+ & above rating banks
Selection of three lowest bidders (Banks) by committee

Recommendation forwarded to MoF through MoWP along with term sheets

Approval from MD-NTDC

Summary for ECC Approval through MoWP

Signing of Term Sheet

BOD resolution for signing of Financing Documents

Signing of Financing Documents

Effectiveness of loan after fulfilling the Loan Covenants

 Drawdown Notice sent to Bank for disbursement

Markup/Principal Repayment of loan.

 Relent Loan Financing

Relent loan financing means company borrows the money from outside the country. NTDC prefer
to borrow money from international financial institutions because in this way foreign currency
comes into Pakistan and company learns new techniques etc.But due to some restrictions company
cannot borrow money directly from international institutions so Govt of Pakistan played a role
here. Govt borrows money and relent to NTDC after deciding markup rate. The rate of Mark-up
is different in every case so the rate is decided at the time of making Loan. JICA Loans, Asian
Development Loan and World Bank are the financial institutions for relent loan financing.

Following is the procedure for relent loan financing

Request for Financing Received from GM planning along with project detail

Approval/Directions of MoWP & EAD

Draft Loan Agreements for negotiation

Vetting from Legal Advisor of NTDC from legal point of view

Comments forwarded to EAD through MoWP on Financing Document

BOD Resolution for signing of Financing Documents

Signing of Financing Documents

Effectiveness of Loan

Markup/Principal Repayment of loan.

 Methods of Disbursement

 Withdrawal for Direct disbursement

 Withdrawal for Commitment Letter
 Reibursement
  Payment through Assignment account
 LC Section

LC section of NTDC is responsible to open various types of LC. Basically. Most of the work of
NTDC relies on Engineering base working because NTDC maintains Grid stations as well as
Transmission lines. Due to this purpose company has to buy heavy equipment.
NTDC purchases the equipment from inside as well as outside the company.
In case of foreign LC NTDC is importer because it purchases and foreign company is exporter.
The company of exporter who sells its equipment to NTDC needs surety for payment so for this
purpose NTDC has LC section. Because of letter of credit Banks of two parties are involved in
dealing and the Bank of Buyer gives guarantee to seller`s Bank that payment will be made within
the scheduled time.
Letter of Credit minimizes the risk of loss of both parties.

LC section of NTDC opens four types of LC.

 Types of LC
 Inland / Local LC
 Foreign LC Against NTDC own Resources
 Foreign LC Donor Based (ADB, WB)
 Foreign LC against JICA Loans

‘Following is the procedure of international LC opening in NTDC:

Notification of
Award/contract
Agreement

Establishment of Gathering of LC
Letter of Credit by Information
Bank
 Request to Bank for
Vetting of Draft by CE provision of Draft
& LC sec. of FD L/C

Approval of Pakistan
National Shipping
Provision of LC Draft
Corporation
by Bank

Approval of State Bank of

Pakistan on Cash Foreign
Exchange Allocation

The above method is about opening of Foreign LC. When we want to open Local LC then two
steps including Approval of Pakistan National Shipping Corporation and Approval of State Bank
will be removed.
 Need Of LC.

LC opens to minimize the risk. Following are the risk that can be minimized or removed by LC
opening.
 Risk assessment
 Country Risk
 The financial standing of the importer
  Acceptability and sale ability of goods
 The status of the exporter

 IOT Section

IOT stand for Inter Office Transaction. IOT section maintains transaction between two offices or
among various offices of NTDC.
The purpose of IOT is to reduce or minimize the risk of cash loss. Because of this, two offices
sales and purchases different Equipment without the use of cash.
For Example: One office of NTDC is in South area and the second one is in North area. South
area office needs some equipment for transmission lines purposes like Transformer, Circuit
Breaker, Line Isolator etc. then they can get that equipment from North area office by issuing SS
Cheque instead of giving cash to them.
South area office will Debit Transformer, Circuit Breaker and will Credit SS Cheque. Similarly,
North area Office will Debit SS Cheque and Credit Transformer, Circuit Breaker.
These two Offices will remain continue the transactions for the whole month and after one month
offices will send data to the IOT Section of NTDC in Head Office.
IOT Section in Head Office Reconcile the balances of two offices on daily or monthly basis.
If there is any discrepancy between the balance of two offices, then IOT section will give
instruction to the office for correction.

 Budget Section

Budget section of NTDC prepares and maintains 4 types of budget for the company. These budgets
relate to internal as well as external matters. These budgets are prepared for providing help to
employees of the company, meets day-to-day functions & operations and also prepared for the
completion of different projects.

 4 types of Budget.

 LONG TERM ADVANCES TO EMPLOYEES

 WAPDA EQUIPMENT PROTECTION SCHEME
  OPERATION & MAINTAINANCE
 DEVELOPMENT BUDGET

I am going to discuss all these one by one:

 LONG TERM ADVANCES TO EMPLOYEES

Procedure to give long term advances to employees:

Kinds Application Eligibilty Advance Issuance Recover In Case

Time Amount of of of Death
Advances Advance
Plot 1st July to 31st Five-year 36 X Basic Lumpsum 120 Write off
Aug Service Pay Installments
House -do- -do- -do- Lumpsum 120 Write off
Installments
Construction -do- -do- -do- Four Equal 120 Write off
Installments Installments
Car -do- -do- 150000/- Lumpsum 60 Write off
Installments
Motor Cycle -do- -do- 50000/- Lumpsum 60 Write off
Installments
Bicycle -do- -do- 5000/- Lumpsum 40 Write off
Installments

BPS 01 to 15 employees are granted LTA without interest

Interest is applicable as per GPF interest Rate.
 WAPDA EQUIPMENT PROTECTION SCHEME

In this they prepare budget only to give protection to employees against any emergency.

 Operation & Maintenance Budget

This budget is prepared by this section. This is the very important budget for NTDC. This budget
plays a very important role in daily routines of the company. Operating and Maintenance budget
helps in maintaining and performing different functions of company.
Operating and Maintenance Budget is Approved by M.D (Managing Director) because this relates
to internal matters of company that’s why there is no need to take approval or permission from
Govt.
First of all, estimation of budget for this year is prepared. Then the person who has the authority
to approve the budget matches this estimation with previous budget after this he will give approval
according to average of this year estimation and previous year budget.
NTDC will perform its routines functions and activities like to pay Salary to Employees, Medical
Expenses Training Expenses and all other day-to-day expenses from this Budget So, this is
finalized after viewing all types of Incomes and Expenses. Expenses should be incurred within the
limit of Income.

 Development Budget

Development Budget is also known as PSDP. PSDP stands for Public Sector Development
Program. This budget is also prepared by this section. When company wants to expand its
functions and activities then it goes for development purposes. The purpose of this budget is to
build new Grid stations and transmission lines or expand existing Grid stations and transmission
lines.
Approval of Development Budget is taken from Govt. Of Pakistan because this budget relates to
external matters of company. Development budget is approved for specific purposes once
Development budget is approved for some specific purposes then it cannot be used for another
purpose. This is a special thing in Development Budget.
PC is also deal in this section. PC stands for
PC 1
In PC 1 detail estimation cost is studied by authorities. The persons who is responsible for approval
of PC 1 also checks scope of work then final the PC.
PC 2
In this Stage, they check feasibility study. (Technical)
PC 3
Check Physical Progress.
PC 4
In this stage completion is done.
PC 5
In this stage after completion benefits are determined.

 Compilation Section
Compilation section is a very important section of finance. It is just like a mother of all sections in
FINANCE DEPARTNENT. In this section, all activities and functions performed by all sections
of finance are compiled in a single book of account.

In finance, there are two main categories of activities:

1 Operation activities 2 Development activities
Operation activities are those which are performed on daily basis or routine work.
Development activities are those which are performed for the expansion of organization and not
for routine work.
Various offices send data relating operation activities and development activities to Compilation
Section periodically. There are 32 formations of NTDC. Formation is just like a branch. All
formation has its own office for working different activities so every formation sends data to
compilation section on monthly basis. Data includes all things like Fixed Assets, Current Assets,
Fixed Liabilities, Current Liabilities, Operating Expenses, Depreciation, Taxation, Interest etc.
Compilation section gathers these data under main HEAD. For Example, all fixed assets come
under fixed asset head and all operating expenses comes under operating expense head etc. After
that this section prepares and maintains Ledger Account, Trial Balance, Profit & Loss Account
and Balance Sheet.
To consolidate all activities and functions performed under finance Department is not an easy task.
It is very difficult and time consuming challenge but Compilation Section fulfills this task
accurately and very carefully.

 Work Done by me

In Budget Section, I prepared the list of all possible expenses of NTDC and match to them with
the all possible incomes of the company. I also match the estimation of this year budget with
previous year budget compared the difference of two years’ budget.
I personally observed that, this is a very difficult task to prepare the Budget.

In Loan Section, I learnt the ways of taking loan. I also learn practically that how to make Draw
Down notice.
In IOT Section. I reconciled the balance of two offices. I prepared the reconciliation statement in
such manner that one office wrongly debited to another account instead of debiting the actual
account, the other possibility of discrepancy is that one office wrongly debited excess amount than
actual amount. So, the task is given to me to reconcile the discrepancies and make correct to that
statement.

In Compilation Section, I learnt following things.

How to prepare Ledger Account.
How to prepare Trial Balance.
How to prepare Profit & Loss Statement.
How to prepare Balance Sheet.

In LC Section, I learnt how to open the L.C and about the Amendments of LC. Amendments of
LC is done if LC is expired, for Enhancement purpose and for variation purposes. So, I read
different kinds of documents and find out the exact need for Amendment.

 Finance Department
 Introduction

The in-charge of finance /Accounts department of NTDCL is Finance Director he is Financial

Advisor of the Company. He assists management in Strategic Management decision making. He
controls all financial activities of the Company. Finance Directorate – NTDC administers finances
of not only the transmission network being Transmission Network Operator (TNO) and System
Operator (SO) but also the Central Power Purchasing Agency (CPPA) which procures power on
behalf of distribution companies as per Transmission License of NTDC.

Three main tiers which would easily be identifiable at FD-NTDC level are;

 Operations & Maintenance (O&M) of the system through wheeling charges/ Use of System
Charges (UOSC) as determined by NEPRA.
 PSDP (own sources & local/foreign) for ever-extending national power infra-structure.
  Procurement of Power; purchase of power from generation companies (payment
arrangements) and sale of the same to distribution companies (collection arrangements).

General classification of core activities is here under;

 Corporate Finance
 Corporate Account

Corporate Account Corporate Finance

 Consolidation  Tariff
 Pension  Budget
 Establishment  Banking
 General Administration  Loans
 Inter Office Transaction  L/C’s
 Taxes  GST
 Budget

(6) Finance Hierarchy Chart

 Setup of Finance Department

Finance Director

Manager Manager
Corporate
Finance
Accounts

Dy: Manager Asstt Manager Deputy Manager Deputy Deputy

Payments/ Manager Manager
(F&TA) Budget Banking Pension Admin

Asstt Manager Asstt Manager

Asstt Manager
Payments/ Admin
Establishment
Banking
Asstt Manager
Loan & L/C
Asstt Manager Asstt Manager
Establishment Consolidation
(GAD)

Asstt Manager
IOT

Sr.
Section Responsibility Activity
No.

Corporate Manager Corporate  Corporate Accounts

1  Administration
Accounting Accounting
 Payroll

Corporate  Corporate Planning & Control

Manager Finance  Costing/Pricing
2 Planning &
(CP&C)  Budgeting
Control
 Loan Management
 Imprest Banking
Head Quarter Dy. Manager A/C
3  Pension & Funds
Accounts (H/Q)
 Audit Observation Reply
Pre-Audit & Payments
 Field  IOT Reconciliation
4 Formation Dy. Manager (C.A)  Receivables/Payables
A/C  Fixed Assets Register
 Accounts Consolidation

 Goals:

 Finance Directorate NTDC is much concerned about the processes and progress of the
main three tiers of FD-NTDC; as mentioned earlier at introductory segment.

 Business Process Re-Engineering (BPR) plays a vital role in process refinement and is
required more often to adapt the latest practices. FD-NTDC has initiated the process
improvement phase with system analysis recently which would definitely help to save
some time on the learning curve at ERP implementation phase for sure.
 Corporate Finance comprises wide areas of tariff, budget, loans & L/Cs, Banking, GST etc.
where the decision making is prompt and each section is being managed in admirable
corporatized skills. This segment is looking after the finances required for operations and
development.
 Number of Employees

Approximately 1000 employees worked in NTDC Finance Department.

(7) Marketing Functions

 Products/Services
National Transmission and Despatch Company (NTDC) provide services towards Distribution
Companies (DISCOs). NTDC acts as a bulk supplier of electricity and is responsible for the entire
transmission network. The electricity is transmitted to ten DISCOs for onward distribution to end
consumer.

NTDC collect the energy/electricity from WAPDA Hydel Power Projects, Generation Companies
(GENCOs) and from Independent Power Producers (IPPs) and transmit this electricity toward
DISCOs through Grid Stations and Transmission Lines/Network.

 Pricing Strategy:

NTDC does not set the price of its services by itself. It is a Govt organization and is bound to
follow the rules of Govt. National Electric Power Regulatory Authority (NEPRA) is a regulatory
authority and plays a role in setting the price for NTDC. NEPRA gives Tarif rate to NTDC for
charge against the services. Tarif is basically the amount that NTDC charges for providing services
to DISCOS as a profit.
Tarif is calculated as:
Revenue Requirement/ M.D.I
M.D.I stand for Maximum Demand Indicator.

 Place:

NTDC operates and maintains fourteen 500 KV and Thirty-eight 220 KV Grid Stations, 5077 km
of 500 KV transmission line and 7359 km of 220 KV transmission line in Pakistan.

REGION WISE GRID STATIONS

Name of the region 500 KV 220 KV Total

Islamabad 2 7 9

Lahore 3 16 19

Multan 4 5 9

Hyderabad 4 9 13
G. Total 14 38 52

LIST OF 500 KV GRID STATIONS

1 Islamabad SHEIKH MUHAMMADI PESHAWAR

2 RAWAT

3 Lahore SHEIKHUPURA

4 GATTI (FAISALABAD)

5 NOKHAR

6 Multan NEW MULTAN

7 MUZAFFAR GARH

8 D.G KHAN

9 YOUSAF WALA

10 Hyderabad GUDDU

11 DADU

12 JAMSHORO

13 NKI (KARACHI)
14 ROHRI

LIST OF 220 KV GRID STATIONS

1 Islamabad BURHAN

2 BANNU

3 DAUD KHEL

4 MARDAN

5 SANGJANI
6 SHAHI BAGH

7 UNIVERSITY

8 Lahore BUND ROAD

9 GHAKKAR

10 JARANWALA

11 KALA SHAH KAKU

12 LUDEWALA

13 NISHAT ABAD

14 NEW KOT LAKPAT

15 RAVI

16 SARAFRAZ NAGAR

17 SIALKOT (SAHOWALA)

18 WAPDA TOWN

19 SHALAMAR

20 SUMUNDARI ROAD

21 BANDALA

22 GHAZI ROAD

23 TOBA TEK SINGH

24 Multan NEW MUZAFFAR GARH

25 OKARA

26 KASSOWAL

27 BAHAWALPUR

28 VEHARI
29 Hyderabad HALA ROAD

30 QUETTA INDUSTRIAL

31 SIBBI

32 SHIKAR PUR

33 T.M. KHAN

34 DAHARKI

35 ROHRI

36 RORA LAI

37 KHUZDAR

38 GUDDU

 Promotion:

NTDC is the sole distributor of electricity in Pakistan, NTDC provides agency services and have

no promotional activities, it enjoys the power of monopoly. There is power purchase agreement

(PPA) between the electricity users and NTDCL for 25 years that the supply of electricity will be

provided through NTDC to all private and public entities and households.

 Human Resource Management

 Recruitment & Selection procedure:

For Recruitment, it is must to give the ad by using various medias. There is always two ways of
recruitment, one is internal and the second is external.

For internal Recruitment, first see the number of employees, then see the vacant positions and give
ad in the newspaper selection board committee finals the candidate for the vacant position.

For external recruiting & selection, the following is the process:

This process is designed for incoming candidate and criteria are set on the basis of these following
things:

Candidates:

 Age

Minimum 18y and Maximum 40y

 Gender

Male \Female

 Domicile

Punjab\Sindh\KPK\Baluchistan\FATA\AJK

 Qualification

Matric \Intermediate \B.A/B.sc\BS.HONS/Masters\M.S/MPhil\PHD

 Written test

Subject Relevant

General Knowledge

The person who pass the written test they call for that person for interview.

 Interview

The person who pass interview also and meet their expectation then appointment letter given to
that person.

 Training & Development:

To give the training to employees is necessary for the organization without getting proper training
employee cannot give its maximum performance to the company. But process of training starts by
determining the need of training. If training is necessary for the employees, then offices of
concerned employees should pay attention to their training and training develops the skills of
employees.
And after training the training committee must give remarks about the employee learning and his
efficiency report to his concerned office so that they can understand the role of training to his work
environment.

NTDC does not force any employee to get training and development. Training and development
completely depends on the employees in NTDC, and training and promotional exam is necessary
in the promotion of employee so employees want to go on training for their broad-mindedness in
promotion. Training conducted by the dept. of Confidential & Training they send documents of
employee and employees get training from Islamabad their training center is in Islamabad and the
amount (T/A, D/A) which they spent on training got reimbursed from the office. Training fees
given by employees to training institute.

 Performance Management:

Performance management is all about how individuals contribute to an organization's goals. An

effective performance management and appraisals process focuses on aligning your workforce,
building competencies, improving employee performance and development, and driving better
business results.

 Compensation policy:

To compensate the employees is necessary for every organization because good employees are the
assets of the company. When company gives compensation to employees then they give more
attention to company and give their best performance for the betterment of company. In NTDC
compensation given to employees according to their scale high scale employees enjoys more
benefits than low scale employees. If compensation given to employees according to their effort
and their work done than it should be helpful for employees and for the organization also and
he/she work for betterment of organization and more devoted to achieving targets of organization.

(8) Financial Statement Analysis

 THREE YEARS BALANCE SHEET OF NATIONAL TRANSMISSION
AND DESPATCH COMPANY LIMITED

ASSETS 2015 2014 2013

Rupees Rupees Rupees
Non-Current Assets

Property, plant & equipment 163,305,670,883 150,262,851,292 127,321,282,099

Long term loans and advances 516,222,147 1,254,108,907 1,255,830,385

Long term deposit 7461822 7,466,823 7,466,823

163,859,354,852 151,524,427,022 128,584,579,307

Deferred taxation 32,623,414,074

Current Assets
Store, spare parts & loose tools 11,960,230,994 9,353,132,102 9,366,579,366

Trade Debts 450,718,041 365,856,969,014 234,882,321,605

Receivables from GOP 24,600,000,000 31,000,000,000 31,000,000,000

Current portions of long term &
advances 59,828,866 50,752,012 47,497,265
Receivable from CPPA-G 31,394,026,276 - -
Advances 20,016,366,492 26,862,998,841 41,519,112,974

Accrued Markup - 23,958,166 19,525,414

Other Receivables 30,024,549,739 74,493,087,038 44,191,909,025

Short term investments -

Cash & bank balances 7,910,280,166 25,499,459,033 17,232,470,579

126,416,000,574 533,140,356,206 378,259,416,228

Total Assets 290,275,355,426 684,664,783,228 506,843,995,535

EQUITY & LIABILITIES

Share capital & reserves

Share capital & reserves 52,700,381,000 52,700,381,000 52,700,381,000

Accumulated profit / loss 41,810,635,228 30,868,614,003 23,906,852,017

94,511,016,228 83,568,995,003 76,607,233,017

Share deposit money - 7,163,232,938 7,163,232,938

Non-current Liabilities

Loan note payable to CPPA 42,412,1168,630 - -

Long term loans 32,780,830,945 32,094,679,150 37,603,952,698

Deferred Liabilities 17,223,190,681 16,557,461,681 15,609,095,000

Deferred taxation 6,241,238,778 6,100,180,469 6,043,400,130

Deferred credit 5,038,740,202 5,218,817,975 54,696,874

103,696,169,236 59,971,139,275 59,311,144,702

Current Liabilities

Trade & other payables 19,071,341,609 499,585,805,448 341,748,749,931

Provision for Doubtful Receivable 29,172,520,672 - -

Accrued Markup 13,153,586,402 7,558,222,392 4,414,657,115

Current portion of long term loans 30,670,721,279 26,817,388,172 17,513,477,645

Provision for taxation - - 55,500,187

92,068,169,962 533,961,416,012 363,732,384,878

Contingencies & commitment

Total Equity and Liabilities 290,275,355,426 684,664,783,228 506,813,995,535

THREE YEARS INCOME STATEMENT OF NATIONAL TRANSMISSION
AND DESPATCH COMPANY LIMITED

2015 2014 2013

Rupees Rupees Rupees

Sales 22,235,741,941 19,836,334,940 16,834,551,278

Operating Expense 11,710,820,151 12,339,639,999 14,770,870,780

Finance cost 1,831,063,603 1,363,315,664 748,674,385

(13,541,883,754) (13,702,955,663) (15,519,545,165)

Other Income 1,520,040,131 934,893,952 96,859,704,195

Profit before tax for
year 10,213,898,318 7,068,273,229 98,174,710,308

Taxation

Current - - 83,911,250

Deferred (141,058,309) (56,780,339) (38,666,814,204)

Net Profit 10,072,840,009 7,011,492,890 59,423,984,854

 Introduction of Financial Analysis

Financial analysis is the process of evaluating businesses, projects, budgets and other finance-
related entities to determine their performance and suitability. Typically, financial analysis is used
to analyze whether an entity is stable, solvent, liquid or profitable enough to warrant a monetary
investment.

One of the most common ways to analyze financial data is to calculate ratios from the data to
compare against those of other companies or against the company's own historical performance.

 Ratio Analysis:
Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication
of a firm's financial performance in several key areas. Ratio analysis is used to evaluate various
aspects of a company's operating and financial performance such as its efficiency, liquidity,
profitability and solvency. The trend of these ratios over time is studied to check whether they are
improving or deteriorating. In addition, ratios can be used in a form of trend analysis to identify
areas where performance has improved or deteriorated over time.

There are following main ratios which I have done in this report.

 Current Ratios
 Cash Ratio
 Profit Margin Ratio
 Return on Assets Ratio
 Return on Equity
 Total Debt Ratios
 Time interest Earned Ratio
 Equity Multiplier Ratio
 Fixed Assets Turnover Ratio
 Total Assets Turnover Ratio

1. Current ratio = Current Asset__

Current Liability
Current Assets =Store, spare parts & loose tools+ Trade Debts+ Receivables from GOP+
Current portions of long term & advances+ Receivable from CPPA-G+ Advances+ Accrued
Markup+ Other Receivables+ Short term investments+ Cash & bank balances

Current Liabilities = Trade & other payables+ Provision for Doubtful Receivable
+ Accrued Markup+ Current portion of long term loans+ Provision for taxation.

2015 2014 2013

1.373 0.998 1.04

2. Cash Ratio = Cash__________

Current Liability

2015 2014 2013

0.086 0.0477 0.05

3. Total Debt Ratio = Total Asset-Total equity

Total asset

2015 2014 2013

0.6744 0.878 0.85

4. Equity Multiplier = Total Asset

Total equity

2015 2014 2013

3.071 8.193 6.62
 5. Time Interest Earned ratio = EBIT
Interest

2015 2014 2013

5.58 5.184 131.13

6. Return on Asset = Net Income____

Total Asset

2015 2014 2013

0.035 0.0102 0.117

7. Return on Equity = Net income_

Total Equity

2015 2014 2013

0.107 0.084 0.78

8. Profit Margin = Net Income

Sales

2015 2014 2013

0.453 0.353 3.53

9. Total Asset Turnover = Sales

Total Assets

2015 2014 2013

0.076 0.029 0.033

10. Fixed Asset Turnover = Sales

Net Fixed Assets
 2015 2014 2013
0.136 0.132 0.13

(9) Critical Analysis

Horizontal Analysis
“Horizontal Analysis is also known as trend analysis. A horizontal analysis, or trend analysis, is a
procedure in fundamental analysis in which an analyst compares ratios or line items in a company's
financial statements over a certain period of time.”

Horizontal analysis allows investors and analysts to determine how a company has grown over
time. The statements for two or more periods are used in horizontal analysis. The earliest period
is usually used as the base period and the items on the statements for all later periods are compared
with items on the statements of the base period. The changes are generally shown both in dollars
and percentage.

The horizontal analysis is done by restating amount of each item or group of items as a percentage.
Such percentages are calculated by selecting a base year and assign a weight of 100 to the amount
of each item in the base year statement.

Following is the formula of conducting Horizontal Analysis.

Formula = Current Year amount – Base year amount X 100

Base Year amount

LIMITATIONS
 Horizontal Analysis also has some following Limitations.
• Being highly dependent on the selection of base year and the period under
examination in the financial model.
• Horizontal analysis provides little insight into why the trend occurred in a
financial model.
  Horizontal analysis does not address the challenge of negative numbers.

NATIONAL TRANSMISSION AND DESPATCH COMPANY LIMITED

HORIZONTAL ANALYSIS OF BALANCE SHEET:
2015% 2014% 2013%
Assets:
Non-current assets
Property, plant and 28.26 18.02 100
equipment
Long term loans and (58.89) (0.13) 100
advances
Long term deposits 0 0 100
Current assets
Stores, spare parts and loose 27.69 (0.14) 100
tools
Trade debts (99.8) 55.76 100
Receivable from Government (20.64) - 100
of Pakistan
Current portion of long term 25.96 6.85 100
loans and advances
Advances (51.78) (35.30) 100
Accrued markup - 22.70 100
Other receivable (32.05) 68.51 100
Short term investments - - -
Cash and bank balances (54.10) 47.97 100
Total current assets (66.58) 40.95 100
Total assets (42.75) 35.08 100
Equity and liabilities
Share capital and reserves
Share capital 0 0 0
Accumulated profit/loss 74.88 29.12 100
Share deposit money - - 100
Non-current liabilities
Long term loans (12.82) (13.21) 100
Deferred liabilities 10.34 6.07 100
Deferred taxation 3.20 0.94 100
Deferred credit (3.45) 9441.3 100
Total non-current liabilities 74.08 1.11 100
Current liabilities
Trade and other payable (94.42) 46.19 100
Accrued markup 197.9 71.21 100
Current portion of long term 75.12 53.12 100
loans
Provision for taxation - - 100
Total current liabilities (74.68) 46.80 100
Total equity and liabilities (42.75) 35.09 100

Interpretations:

 The horizontal analysis of balance sheet of year 2014 and 2015 NTDC, year 2013 taken as
base year, the non-current assets in year 2015 is lower than year 2014.
 Accrued markups in the year 2014 is less as compared to the year 2015.
 Total current assets of the year 2016 is less (-66.58) and year 2014 is high (40.95).
 In liabilities, deferred liabilities in 2015 is (10.34) which is higher to pay as compared to
the year 2014 which is (6.07).
 Total non-current liabilities year 2015 is higher to pay in the defined year which is (74.08)
as compared to the year 2014 which is a lower (1.11).
 Total current liabilities year 2014 is (-74.68) and year 2013 is (46.80).

NATIONAL TRANSMISSION AND DESPATCH COMPANY LIMITED

HORIZONTAL ANALYSIS OF PROFIT & LOSS ACCOUNT:
2015% 2014% 2013%

Sales 32.08 17.83 100

Operating Expense (20.72) (16.46) 100

EBIT 40.39 263.2 100

Finance cost 144.57 82.10 100

- - -

Other income (99.45) (99.03) 100

Profit before tax for the year (89.59) (92.80) 100

Taxation (99.63) (99.85) 100

Profit after tax for the year. (83.05) (88.20) 100

Interpretation:

 The horizontal analysis of profit and loss account 2014-15 NTDC, year 2014 is taken as
base year, profit before tax for the year 2015 is higher (-89.59) as compared to year 2014
which is (-92.80).
 Sales of 2015 are much higher as compared to 2014. High sales show high profit.
 Analysis shows that finance cost is much higher of 2015 than 2014. It means company has
to pay more interest this year as compared to previous year.
 Finally, profit after tax for 2015 is higher which is -83.05 as compared to 2014 which is -
88.20 It means year 2015 have been more profitable than 2014.

Vertical Analysis
When using vertical analysis, the analyst calculates each item on a single financial statement as a
percentage of a total. The term vertical analysis applies because each year's figures are listed
vertically on a financial statement. The total used by the analyst on the income statement is net
sales revenue, while on the balance sheet it is total assets.

This approach to financial statement analysis, also known as component percentages, produces
common-size financial statements. Common-size balance sheets and income statements can be
more easily compared, whether across the years for a single company or across different
companies.

Vertical analysis is a technique for identifying relationship between items in the same financial
statement by expressing all amounts as the percentage of the total amount taken as 100. In a balance
sheet, for example, cash and other assets are shown as a percentage of the total assets and, in an
income statement, each expense is shown as a percentage of the sales revenue.
In a vertical analysis, the percentage is computed by using the following formula:

NATIONAL TRANSMISSION AND DESPATCH COMPANY LIMITED

VERTICLE ANALYSIS OF BALANCE SHEET:
2015 2014 2013
Assets:
Non-current assets
Property, plant and 56.26 21.95 25.12
equipment
Long term loans and 0.18 0.18 0.25
advances
Long term deposits 0.0026 0.001 0.0047
Total non-current assets 56.45 22.13 2.54
Current assets
Stores, spare parts and loose 4.12 1.37 1.84
tools
Trade debts 0.16 53.44 46.34
Receivable from 8.47 4.53 6.12
Government of Pakistan
Current portion of long term 0.02 0.007 0.0094
loans and advances
Advances 6.90 3.92 8.19
Accrued markup - 0.004 0.0038
Other receivable 10.34 10.88 8.72
Short term investments - - -
Cash and bank balances 2.73 3.72 3.39
Total current assets 43.55 77.86 74.63
Total assets 100 100 100
Equity and liabilities
Share capital and reserves
Share capital 18.16 7.70 10.40
Accumulated profit/loss 14.40 4.51 4.72
Total 32.56 7.82 15.11
Share deposit money - - -
Non-current liabilities
Long term loans 11.29 4.68 7.42
Deferred liabilities 5.93 2.42 3.10
Deferred taxation 2.15 0.90 1.92
Deferred credit 1.76 0.76 0.01
Total non-current liabilities 35.72 8.76 11.70
Current liabilities
Trade and other payables 6.57 72.97 67.43
Accrued markup 4.53 1.10 0.87
Current portion of long term 10.57 3.92 3.46
loans
Provision of taxation - - 0.01
Total current liabilities 31.72 77.99 71.78
Total equity liability 100 100 100

Interpretation:

 Vertical Analysis of Balance Sheet for the year 2013, 2014 and 2015 shows that total Non-
Current Assets of 2015 are higher than 2014 and 2013. This analysis also shows that total
Non-Current Assets of 2014 are higher than 2013 but lower than 2015.
 The analysis shows that Current Assets of 2015 are lower than the other two years. It means
company invest little amount in current asset this year.
  It is shown in the analysis that total Non-Current Liabilities of 2015 are higher than the
other two years. Also, shows that total Non-Current Liabilities of 2014 are lower than 2015
and 2013.
 Total current liabilities of 2015 are lowest than the other two years.

NATIONAL TRANSMISSION AND DESPATCH COMPANY LIMITED

VERTICLE ANALYSIS OF INCOME STATEMENT:
2015% 2014% 2013%

Sales 100 100 100

Operating Expense 52.67 62.21 87.74

EBIT 47.33 37.79 12.26

Finance cost 8.23 6.87 4.45

- - -

Other income 6.84 4.71 575.36

Profit before tax for the year 45.93 35.63 583.17

Taxation 0.63 0.28 229.68

Profit after tax for the year. 45.30 35.34 352.98

Interpretations

 Vertical Analysis of profit & Loss account shows that operating Expenses in 2015 are
lower than 2014 and 2013. But operating expenses of 2014 are higher as compared to 2015
and lower than 2013.
 The analysis shows that Finance Cost of 2015 which is 8.23 is much higher as compared
to other two years. It means company takes more Loan to meets its requirements.
  NTDC`s Profit before tax in 2015 is larger than 2014.
 Company pays more tax to Govt in 2015 but is much lower than 2014.
 Analysis shows that Net Profit of NTDC in 2015 is much higher than 2014 and net profit
of 2014 is much lower than 2013.

 Competitive Analysis

Competitive Analysis means to identify the competitor and evaluate their strategy to determine
their strengths and weaknesses relative to those of your own product or service.
There is no possibility of competitive analysis in this report because I did my internship in NTDC
head office and this company has no competitor. So, due to the non-availability of competitor there
is no need for this analysis.

 Future prospects of organization

Every organization starts its business with the purpose of earning profit. NTDC also started its
business with the aim of earning profit. But to earn the same profit in every year is not the purpose.
NTDC wants to expand its business activities as well as its functions to create a positive image
and for future growth. For this purpose, NTDC is building new grid stations in different areas of
the country. Expansion of activities means company wants to earn more and more profit in future.
NTDC makes budget for Development purposes and also borrows some money to use in
development process to expand its business. Business Volume of NTDC is showing the
tremendous growth of the company. This thing shows that future is bright of this company.

(10) SWOT Analysis

SWOT analysis aims to identify the key internal and external factors seen as important to achieving
an objective. SWOT analysis groups key pieces of information into two main categories: (1)
Internal factors – the strengths and weaknesses internal to the organization. (2) External factors –
the opportunities and threats presented by the environment external to the organization.

A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying
the objective of the business venture or project and identifying the internal and external factors
that are favorable and unfavorable to achieve that objectives.

Strengths:
 NTDC has skilled labor & working staff.
 Operating in an environment of ‘Sole-Buyer Concept’.
 NTDC has a Monopoly position.
 NTDC has Expansion and investment capacity.
 The company is Satisfying the huge demand of Electricity.
 This organization is Working on new and improved projects.
 Business secured due to unique nature of line business.
 Large number of customers of the company.
 Large number of employees and successfully serving Pakistan.
  Educating their employee with new techniques.
 NTDC is a Govt. Institution.
 NTDC is Internationally popular. And due to this, investors are interesting to invest.
 Trained engineering and support personnel human resource.
 Guaranteed Revenue from the regulator as performing in regulatory regime.
 Secured Collection & Payment on behalf of the Govt. of Pakistan.
 It has low employee turnover.

Weaknesses:
 Large number of senior citizen workers.
 Public Awareness campaign is not sufficient.
 In this organization, corruption is the common.
 There is political influence for getting the job in NTDC.
 Debts & Political Interferences.
 Old methods of working in NTDC.
 There is a Gap among upper and lower management in the company.
 Postings of those officers on senior level having insufficient experience in field of
planning.
 Overburdening of tasks for existing officers hampering their performance.
 Poor Management Information System (MIS).
 Lack of coordination among employees.
 No specialized Cell for Taxes & Duties.
 No data base system.
 Late filing of Tariff petition due to non-availability of Data-base and lack of co-ordination.
 Potential of services division is still under-utilized.
 Manual working is more than using system.
 No specific plan to reduce Transmission Losses.

Opportunities:
 NTDC can use solar power and make electricity by it-self.
 NTDC can use new technologies to supply electricity.
 Introduction of data base system.
  Introduction of ERP & online Cash Book.
 NTDC can get new and talented employees by giving awareness and training.
 Telecom services can earn more revenue if switched on fiber-tech.
 Projects delivered timely on Govt. priorities can earn more wheeling charges to operate
system with massive tax benefits.
 Sole function of power procurement could stimulate investors.
 Unused potential of services division could be utilized.
 Timely completion of projects can reduce cost-overrun with provision of an opportunity to
invest unused funds in alternatives projects.
 There is no competitor in the market, and there is a big opportunity to get more market.

Threats:
 There is always a threat that government may impose some duties on NTDC.
 Political and governmental interventions in operational issues.
 The main source to get electricity is WAPDA which is facing water crisis and subsequently
drastic energy crisis.
 Financial risks of debts.
 No specialized Cell for Taxes & Duties.
 Future to incorporate ever changing technology challenges.
 NTDC is preparing 132 KV G &T/L which subsequently become assets of DISCOs.
 Fluctuation on power supply is a major hazard for the NTDC.
 Conventional Strength of personnel; Out-dated Organogram.
 Lack of monitoring on PSDP from financial aspect.
 No revision in the ‘Book of Financial Power’ in line with PPRA Rules.
 Late Financial Statement preparation.
 Poor Maintenance Plans hinders in optimum funds utilization ultimately time value of
money suffers.

(13) Conclusion
Finally, the report is done with 1.5 months’ enormous efforts and with the help of many other
people. Most importantly it was a very valuable experience that I suppose is going to be used in
future jobs.

It was really a good experience to work in National Transmission and Despatch Company Head
Office. I learnt so much from there and also get a chance to practice the things that I have learnt
during my internship. I want to thanks the CFO of NTDC, who allows me to do internship in the
NTDC Head Office and also want to thanks the employees of NTDC for their co-operation. NTDC
act as a transmission and despatch company, it dispatches the electricity to the distribution
companies which further on facilitate the end consumer. NTDC has number of Grid Stations and
Transmission Lines spread throughout the country.

All the sections that I have worked in while my internship program have a very good working
environment. I learnt lot of things from all sections.

There are few recommendations that I gave to company for the betterment of work. I would also
like to suggest future interns to join NTDC, as it is one of the best organization to learn and gain
experience from for the future.

In the end, I would like to conclude it by saying that working in such a renowned organization has
been a great pleasure. I gained positive experience while my internship program which I believe
would help me in the near future when I will be entering in the professional life.

(11) Problems Identification

While my internship program, I noticed some problems being faced by the organization, which
are as following:

 Poor communication between NTDC’s departments. Every department does work

according to their mood and this becomes the reason of late completion of work.
 There is no proper seating arrangements for visitors and internees in departments. Internees
have to give their seats to visitors because of lack of place.
 Advanced technology is not being used in most of NTDC’s departments. They are working
manually more than using proper computer system.
 They have provided me knowledge about NTDC but not according to the requirement of
internship due to much work load on the employees.
 As NTDC is under Ministry of Pakistan, which means political interferences could be
sometimes problematic for the organization.
 Some employees are not sincere with their job only come for attendance.
 The big problem of NTDC is transmission losses. When NTDC transmits electricity from
500 KV Grid Stations to 220 KV Grid Stations and also from transmission lines to DISCOs
then some MV or some Voltage of electricity is loss due to unappropriated system.

(12) Recommendations

 The top management should give the authority and flexibility to every manager to make
decisions according to the situation.
 I suggest that the company should try to engage professional and right person for the
right job.
 A proper training should be given to the employees and the workers to enhance their skills.
 While promoting or employing any personnel, only the experience should not be
considered but also the relevant professional education be kept in mind.
 The computer technology should also be used in decision making as well as in storing and
feeding the data.
 Monthly reconciliations must be ensured with power producers & distributors.
 NTDC should purchase more furniture including chairs for outsiders like internees and
visitors. Lack of seating arrangements puts negative impact to the outsiders so NTDC
should remove this shortage.
 Staff of NTDC should give proper attention to internees so that they can get maximum
knowledge.
 The management should try to motivate the employees by offering good pay, bonus and
rewards etc.
 Tariff petition needs to be prepared and filed under regulatory cell with NEPRA in close
co-ordination of Finance & Technical side.
References
The knowledge and information about the company has been collected through primary sources
and secondary sources as well.
Primary Sources:
 Mr. Amir Waheed Ahmed C.FO NTDC WAPDA HOUSE LAHORE.
 Mr. Furqan Deputy Manager (Compilation)
  Mr. Mohsin
 Mr. Waseem Deputy Manager (IOT)
 Mr. Imtiaz Deputy Manager (L/C)
 Miss Amna Deputy Manager (Loan)

SECONDARY SOURCES:

 http://www.wapda.gov.pk
 http://www.ntdc.com.pk
 http://www.Nepra.Org.pk
 http://www.Lesco.gov.pk
 www.investopedia,com
 Financial Statement of NTDC