ANALYSIS ON CURRENT ASSETS

WITH REFERENCE TO

TRANSMISSION CORPORATION OF ANDHRA

PRADESH LTD
By
SYED MUSHTAQ ALI
H.T.NO. (2128-12-672-035)
Project Report Submitted In Partial Fulfillment For
The Award Of

MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF BUSINESS ADMINISTRATION

HYDERABAD PRESIDENCY PG & DEGREE COLLEGE
(Affiliated to Osmania University)
RAJENDRANAGAR, RANGAREDDY
2013-2014

DECLARATION

I SYED MUSHTAQ ALI, hereby declare that the project report entitled ANALYSIS ON
CURRENT ASSETS is an original work done by me at TRANSMISSION

CORPORATION OF ANDHRA PRADESH LTD This project report is being

submitted to HYDERABAD PRESIDENCY DEGREE COLLEGE and PG CENTRE
affiliated to OSMANIA UNIVERSITY, HYDERABAD in partial fulfillment for award of the
post-Graduate Degree of Master Business Administration during the academic period 20132014.
I also declare that this project has not been submitted earlier in any other university or
institution.

Date:

SYED MUSHTAQ ALI

Place
(H.T.NO:2128-12-672-035)

ACKNOWLEDGEMENT
I take this opportunity to extend my profound thanks and deep sense of gratitude
to the authorities of TRANSMISSION CORPORATION OF ANDHRA
PRADESH LTD. For giving me the opportunity to undertake this project work
in their esteemed organization. I profusely thank Mr. Raghavendra
(Designation)
My sincere thanks to Honorable Director Mr. AZAM MOHIUDDIN, and
my project guide Mrs. ASMA KHAN(Associate professor of finance). For the
kind encouragement and constant support extended in completion of this project
work. From the bottom of my heart
I am also thankful to all those who have incidentally helped me, through
their valued guidance, co-operation and unstinted support during the course of my
project.

SYED

MUSHTAQ

ALI

(H.T.NO:2128-12-672-035)

List of Contents
CONTENTS

PAGE
NUMBERS
5
6

List of tables
List of figures
Chapter 1:
1.1 Introduction
1.2 Need for the study
1.3 Scope of the study
1.4 Objectives

7
8
8
9

Chapter 2:
2.1 Methodology
2.2 Theoretical Framework

10
10

3.1 Industry Profile

3.2 Company Profile

18
20

Chapter 3:

Chapter 4:
4.1 Data Analysis & Interpretation
Chapter 5:
5.1 Findings
Chapter 6:
6.1 Suggestions
6.2 Limitations
Chapter 7:
7.1 Summary & Conclusion
Chapter 8:
8.1 Bibliography

31
44
46
46
47
48

LIST OF TABLES
S.No.

Page No.

Analysis related to the Stocks

43

Analysis related to the Receivables

44

Analysis related to the Cash and Bank

45

Analysis related to the Loans and Advances

46

Analysis related to the Sundry receivables

47

Data related to the Stocks to current asset ratio

48

Data related to the Receivables to current asset ratio

49

Data related to the Cash & Bank to current asset ratio

50

Data related to loans & advances to current asset ratio

51

10

Data related to sundry receivables to current asset

ratio

43

11

Table showing the data related to the Current Ratio

44

12

Table showing the data related to the Quick Ratio

45

13

Analysis related to the working capital

46

LIST OF FIGURES
1

Graph related to the Stocks

43

Graph related to the Receivables

44

Graph related to the Cash and Bank

45

Graph related to the Loans and Advances

46

Graph related to the Sundry receivables

47

Graph related to the Stocks to current asset ratio

48

Graph related to the Receivables to current asset ratio

49

Graph related to the Cash & Bank to current asset ratio

50

Graph related to loans & advances to current asset ratio

51

10

Graph related to sundry receivables to current asset ratio

52

11

Graph showing the data related to the Current Ratio

53

12

Graph showing the data related to the Quick Ratio

54

13

Graph related to the working capital

55

CHAPTER 1

1.1 INTRODUCTION
The first major component of the balance sheet is current assets. These assets can easily
be converted to cash within one operating cycle -- the amount of time the company needs to
sell a product and collect cash from that sale, often anywhere between 60 and 180 days.
Companies need current assets to fund their day-to-day operations. If current assets fall
short, the company will have to scramble for other sources of short-term funding, either by
taking on debt (hello, interest payments) or issuing more stock (hello, shareholder dilution).

According to Alexander Wall

Current Assets are such assets as in the ordinary and natural course of business move
onward through the various processes of production, distribution and payment of goods until
they become cash or its equivalent by which debts may be readily and immediately paid.

Characteristics of current assets

Two characteristics of current assets
1. Short life span
2. Swiftly transformed into other asset forms

1. Short life span

Cash balance may beheld idle for a week or two, account receivables may have life
span of 30 to 60 days and inventories may be held for 2 to 60 days .the life span of depends
upon the time required of activities of procurement, production and sales, and collection
and the degree of synchronization among them.

2. Swiftly transformed into other asset forms

Cash is used for acquiring raw materials raw materials are transformed into finished
goods, finished goods generally sold on credit are converted into accounts receivables,
accounts receivables on realization generate cash

1.2 NEED OF THE STUDY

Current assets effects the liquidity position of the company and its investment opportunities
so the analysis is done to suggest the company how to maintain the current assets to over come
the problems of liquidity.

1. To show the role of current assets in an organization development.

2. To know the importance of current assets in APTRANSCO Ltd.
3. To study the liquidity position of APTRANSCO Ltd.
4. To analyze the investment pattern of current assets in the company.

1.3 SCOPE OF STUDY

Transmission Corporation of Andhra Pradesh Limited is a state-owned organization
which has huge amount of assets and different kind of assets. But the scope of the project is
related to the data for a period of 5 years (2003-08) which covers the current assets like
1. Cash
2. Receivables
3. Sundry debtors
4. Short-term loans and advances.
The scope is limited to the operations of APTRANSCO Ltd.
8

The data used for analysis is for a period of 5 years (2003-08) only.
The information obtained from the primary and secondary data was limited to
APTRANSCO Ltd.

1.4. OBJECTIVES OF STUDY

1. To know and understand the concept of current assets.
1. To study the liquidity position of APTRANSCO.
2. To study the comparison of current assets.
3. To study the performance of current assets in APTRANSCO.
4. To analyze the current assets for a period of 5 years, that is, from 2007-11.
5. To draw inferences on managing of current assets.

CHAPTER 2
2.1 Methodology
1. The study of current assets mainly depends upon the secondary data.
2. The main source of secondary data is the annual reports and journals of APTRANSCO
3. Some of the information is also gathered from the companys website, that is

www.aptransco.com
ANALYZING TOOLS:
1. Ratios
2. Percentages
3. Tables
4. Graphs

2.2 Theoretical Framework

Current assets are cash and other assets expected to be converted to cash, sold, or
consumed either in a year or in the operating cycle. These assets are continually turned over in
the course of a business during normal business activity.
Current asset management involves managing cash, accounts receivable, and
inventories in an organization. Accounts receivable is the net monetary value realized by an
organization through sales. An efficient inventory management framework seeks to optimize
the available resources towards enhancing the productivity levels.
What is Current Asset Management?
It involves the management of cash, marketable securities, accounts receivable and
inventory.
10

Ensures a competitive advantage and often creates an increase in shareholder value.

Primarily concerned with liquidity and safety, and then on maximizing profits

Types of Current Assets:

There are five main kinds of current assets.

Cash and equivalents

Short- and long-term investments

Accounts receivable

Inventories

Prepaid expenses

I. Cash and equivalents

These assets are literally money in the bank: cold, hard cash or something equivalent,
like bearer bonds, money market funds, or vintage comic books. (OK, maybe not that last one.)
As completely liquid assets, cash and equivalents should get special respect from shareholders.
If a company had nothing better to do with these funds, it could mail them straight to you as a
fat dividend, or use them to buy back shares and boost the value of your stock.
Motives of cash holding:
1. Transaction motive
2. Precautionary motive
3. Speculative motive
Cash Flow Cycle
Ensure that cash inflows and outflows are synchronized for transaction purposes.
Cash budget is a tool used to track cash flows and ensuing balances.
Cash flow relies on:
1. Payment pattern of customers.
11

2. Speed at which suppliers and creditors process checks.

3. Efficiency of the banking system.
Cash-generating process is continuous although the cash flow may be unpredictable and
uneven.
Cash inflows are driven by sales and influenced by:

1. Type of customers.
2. Customers geographical location.
3. Product being sold.
4. Industry
Expanded Cash Flow Cycle

12

II. Short-term investments

These represent the next step above cash and equivalents. They normally come into play
when a company has so much cash on hand that it can afford to tie some of it up in bonds
lasting less than one year. This money can't immediately be liquefied without some effort, but it
does earn a higher return than plain old cash. Cash and investments give shares immediate
value, and while they're not entirely easy to liquidate, in a pinch they can be distributed to
shareholders with minimal effort.

13

III. Accounts receivable

Normally abbreviated as A/R, these are funds that customers currently owe to a company.
They've received the company's products, but haven't yet paid for those goods or services.
Companies routinely buy goods and services from other companies on credit. Although A/R is
almost always turned into cash within a short amount of time, some customers aren't so
diligent. In rare cases, companies have to write off bad accounts receivable if they've shipped
goods or provided services to a customer unwilling or unable to pay.
In that event, you'll see something called "allowance for bad debt" in parentheses beside
the accounts receivable number. The company's set this money aside to cover the potential for
bad customers, based on any such problems it may have previously endured. Even with this
allowance, companies may still be forced to take hefty write-down, or convert part of their
accounts receivable to a loan, if a big customer finds itself in unexpected trouble.
It's important to compare how quickly accounts receivable grow compared to revenue. If
receivables are rising faster than revenue, you know that the company hasn't yet been paid for
many of the sales in that particular quarter. (Later in this series, we'll look more closely at ways
to measure accounts receivable, including A/R turnover and days sales outstanding.)
Management of Accounts Receivable
1. Accounts receivable as an investment.
Should be based on the level of return earned equals or exceeds the potential gain
from other investments.
2. Credit policy administration
Credit standards
Terms of trade
14

Collection policy
Credit Standards
Determine the nature of credit risk based on:
1. Prior records of payments and financial stability
2. Current net worth and other related factors
5 Cs of credit:
1. Character
2. Capital
3. Capacity
4. Conditions
5. Collateral
Collection Policy
A number if quantitative measures applied to assess credit policy.
Average collection period

Ratio of bad debts to credit sales aging of accounts receivable

IV.Inventories
These are the components and finished products that a company has currently stockpiled
to sell to customers. Not all companies have inventories, particularly if they are involved in
advertising, consulting, services, or information industries. For companies that do sell physical
goods, however, inventories are extremely important.
Investors should view inventories somewhat skeptically when evaluating a company's assets.
Because of various accounting systems like FIFO (first in, first out) or LIFO (last in, first out),
15

as well as real liquidation compared to accounting value, the balance sheet often overstates
inventories' value.
In addition, inventories tie up capital. Money sunk into inventory can't be used to help sell
those goods (and turn them back into cash). Companies with inventories growing faster than
revenue, or sluggish sales of backed-up inventory, can be disasters waiting to happen. Again,
we'll look more closely at inventory turnover later in this series.
Inventory Management
Inventories are the most significant part of current assets. Stocks impact on important role in
the firm. Without maintaining inventory no firm ca run smoothly
Objectives of Inventory Management
1. To ensure continuous supply of materials to facilitate uninterrupted
production.
2. Maintain sufficient stock of raw materials for shortage period and benefit
from price

change.

3. To minimize losses through wastages and damages.

4. Maintain sufficient finished goods inventory for smooth sales operation and
customer services.
5. Reduce the cost of production carrying cost and time.
Techniques of inventory management
1. Economic order quantity (EOQ)
2. Optimum production quantity (OPQ)
3. ABC analysis.
4. Just in time (JIT)
5. Determination of different stock levels.
16

Kinds of inventories
Raw materials.
Work in progress
Finished goods.

Motives of holding inventories

1. Transaction motive
2. Precautionary motive
3. Speculative motive

V. Prepaid expenditures
The company has already paid these expenses to its suppliers. They can be a lump sum
paid to an advertising agency, or a credit for some bad merchandise issued by a supplier.
Although these expenditures aren't technically liquid, since the company does not have actually
have the money in question in the bank, having bills already paid is a definite plus. It means
that those bills won't have to be paid in the future, allowing more of the revenue for that
particular quarter to flow to the bottom line and become liquid assets.

CHAPTER 3
3.1 INDUSTRY PROFILE
The transmission of electricity industry in India is mostly covered by the public sector
organizations. But after the entrance of private firms the industry now became very much
competitive. The industry growth rate is not very high because of the huge amount of capital,
government policies and restrictions. But it has the high potential in terms of growth and

17

development specially in the developing country like India. Some of the competitors for the
APTRANSCO are as follows.

GUJARAT ELECTRICITY REGULATORY COMMISSION

The functions of the commission as stated under the section 17 of the Gujarat Electricity
Industry (Reorganization & Regulation) Act, 2003 are as following;
To regulate purchase, transmission, distribution, supply and utilization of electricity, the quality
of electricity having regard to the interest of both the consumers and other persons availing the
services and utilities;
To regulate the procedureFor purchase and procurement of electricity from any source for transmission, sale,
distribution and supply there of in the state; and
For the determination of the price for such purchase or procurement;
To promote efficiency, economy and safety in the use of the electricity in the state;
To determine the tariff for electricity; wholesale bulk, grid or retail in accordance with the
provisions of this act;
To determine the tariff payable for the use of the inter-state transmission facilities in accordance
of this Act;
To issue licenses in accordance with the provisions of this Act and retain the same for its
expenses;
To levy fees, charges and fines in accordance with the provisions of this act and retain the same
for its expenses;
To regulate the working of the licensees and to enable that the working of licensees is efficient,
economical and equitable;

18

To require licensees to formulate prospective plans ad schemes in co-ordination with the other
person for the promotion of generation, transmission, distribution, supply and use of electricity;
To require the licensees to collect data and forecast the demand for use of electricity;
To set and enforce standards for the electricity industry in the state including standard relating
to safety, quality, continuity and reliability of service;
To promote competitiveness in the electricity industry in the state;
To formulate the standards, codes and practices for operation of the state grid and the power
system;
To promote efficient utilization and conservation of electricity, reduction of wastes and losses
in the use of electricity;
To give such advise to state government, as the commission deems appropriate on the matters
concerning generation, transmission, distribution, supply and utilization of electricity in the
state;
To refer, if the commission deems appropriate, matters to agencies and bodies dealing with
consumer disputes, restrictive and unfair trade practices and management and administration of
the affairs of the licensees;
To undertake all incidental or ancillary functions that the commission may consider
appropriate.

HIMACHAL PRADESH STATE ELECTRICITY BOARD

Himachal Pradesh has high altitude ranging from 350 to6975 meters with climate
conditions varying from semi-tropical to semi-arctic. The total population of Himachal Pradesh
as per 2001 census was 61, 77,248 with population with population density being 93 persons
per sq.Km. However, there are wice variations in area and population figures of the districts
and district-wise density varies from 2 persons per sq.km.in lahulspiti to 330 persons.
19

Electric supply at the time of formation of the state in 1948 was available only in the capitals of
the erstwhile princely states and the connected load at the time was less than 500 kw. Thus the
organization of the power utility in the state began relatively recently and first electrical
division was formed in august,1953 under the public works department. Subsequently a
department of M.P.P. & Power was formed in April, 1964 after realizing the need for exploiting
the substantial hydel potential abailable in the river basins. Thereafter, the State Electricity
Board in accordance with the provisions of electricity supply act (1948) was formed in the year
1971.accordingly,all functions of the department of multipurpose projects, power such as
generation, execution of hydro electric projects except functions of flood control and minor
irrigation were transferred to the board. Since then the state electricity board has made long
strides in executing the targets entrusted to it and at present is fully competent in organization
and infrastructure to take up any challenges.
Selection of developer on MOU Route allowed for projects up to 100 MW
Selection of developer on ICB route for projects above 100 MW.
No clearances necessary from CEA for projects selected on competitive bidding route for
projects costing upto Rs.2500 crores.
Secondary enerty tate to be at par with primary enerty. Premium on reak power proposed.
Process of transferring clearances to IPPs simplified.
100% foreign equity permitted on the automatic approval route provided it does exceed
Rs.1500 Crores.
Limit of 40%financing from Indian financial institutions waived off.
Projects upto 25 MW to Be transferred to MNES.
HPSEB to power @Rs.250/k Wh from projects upto 5 MW capacity
Banking & Wheeling Facilities permitted @2%including transmission losses. Incentives for
small HEP as per GOI Guidelines.
20

Moratorium of 5 years for payment of electricity duty by companies which consume electricity
produced by them.
Amicable industrial climate.
Exploitations of immenxe hydel potential can make himachal Pradesh one of the
prosperous state in the country. Himachal government is committed to harness this
expeditiously.

3.2 COMPANY PROFILE:

TRANSMISSION CORPORATION OF A P LIMITED
INTRODUCTION:
AP Transco came into existence on 1.02.1999 as a consequence of restructuring of the erstwhile
AP State Electricity Board (APSEB) to look after Transmission of Electricity in Andhra
Pradesh. From Feb 1999 to June 2005 AP Transco remained as Single buyer in the statepurchasing power from various Generators and selling it to DISCOMs in accordance with the
terms

and

conditions

of

the

individual

PPAs

at

Bulk

SupplyTariff(BST)rates.

Subsequently, in accordance with the Third Transfer Scheme notified by GoAP, AP Transco has
ceased to do power trading and has retained with powers of controlling system operations of
Power Transmission.

Objectives:
The main objectives of the company (APRANSCO) are
1. To acquire, construct and operate extra high voltage, High voltage i.e. 132
KV and above.
2. Associate sub- stations and to improve and modernize the existing EHV and
HV lines and sub-stations there of.
21

3. The main business of APTRANSCO is purchase of electrical energy and sale

of energy to the distribution companies and bulk supply to other companies.
4. To co-ordinate with the generators and trading of power, finalization of power
purchase agreements with new generating projects for purchase of power.
5. All other works connected with the transmission and bulk supply of electrical energy in the
state of Andhra Pradesh.

Achievements of APTRANSCO:
It initiative:
ERP is being employed in APTRANSCO for improving the Accountability and
productivity of employees and for enhancing transparency.

Achievements:
AP Power sector secured 1st rank in CRISIL Rating during the year 2006
AP Transco received the power lines Expert Choice Award 2006 forMost Admired
Organization in the State Sector.
APTRANSCO received the gold medal for Most meritorious performance in 20062007 from the Honorable Prime minister.
The Salaries were revised w.e.f 01.04.2006 in Compliance with the agreement entered into
with the Unions/Associations.
APTRANSCO is striving its best to improve the efficiency of the employees by imparting
in-house and external training, giving monthly weightages based on performance which enables to
develop the skills in a competitive environment. The relationship of management with employees
was very cordial and supportive.

22

APTRANSCO - BOARD OF DIRECTORS

Ajeya Kallam, IAS

Chairman & Managing Director

K.Vijayanand, IAS

Joint M D (HRD,Comml.,IPC,Ref.,RA & IT)

M. Malakondaiah, IPS

Joint Managing Director ( Vigilance & Security)

G. Ramakrishna Reddy

Director ( Finance & Revenue )

K. Gopala Krishna

Director (Projects, Co-Ordination& Grid Operation)

M. Gopal Rao

Director ( Transmission )

Asst.Company Scretary

Sri.A.Srinivas Vijay Kumar

M.com., LLB., FCS.,FICWA.,DPA

Bankers:

State Bank of Hyderabad,

State Bank of India
Bank of Baroda, Andhra Bank,
Indian Overseas Bank
Central Bank of India, Bank of India,
Federal bank, Bank of Maharastra,
Vijaya Bank,
Development Credit bank.

23

Auditors:
Statutary Auditors:

M/s.Anjaneyulu & Co.,

30 Bhagya Laxmi nagar, Gandhi Nagar,
Hyderabad 500080.

Internal Auditors
(all qualified charted accountants)

1. Sri V.Stayan narayana

2. Sri.V.Srinivas rao
3. Ms.Anjurani Ganeriwal
4. Sri.K.Ramgopal
5. Sri.A.Sankar Kumar
6. Sri.K.Rama Chandra rao.
7. Sri.Sharath Sinha.

Register office:

6-3-572, Vidyuh Soudha,

Khairtabad,
Hyderabad-500 082
Andhra Pradesh

ORGANISATION STRUCTURE

BOARD OF DIRECTORS
ORGANIZATION CHART

24

About Electricity:
From electrons to electricity:
In everyday life we find bulbs in lampshades or fluorescent tubes all around us in houses,
offices, restaurants etc. You must have wondered what causes the bulb or the tube to light
up ? " Actually they need the electricity to light up. Electricity passes through wires that are
attached to them and it makes the bulbs and tubes glow.
25

WHAT IS ELECTRICITY?
All things are made up of very thin particles called atoms. Everything from metals, wood,
glass, water and gases are made of atoms.
We cannot see atoms because they are very, very small. However, scientists have found out that
even atoms are made up of smaller particles. One of the many types of particles in an atom is
the electron.
We get electric current because of the movement of the electrons. So, current is the flow of
electrons. One might imagine electrons traveling from one end of the wire to the other end and
making a continuous flow, just like the flow of water in a pipe (though the two are not exactly
identical).
HOW ELECTRICITY TRAVELS
Electricity travels along a path. If the path is blocked,

then electricity cannot keep flowing.

The whole path along which electricity travels is known as a circuit. A broken path is known
as an 'Open Circuit' and the electricity can not flow in an open circuit. An unbroken path is
known as a 'Closed Circuit' and the electricity can flow.
CONDUCTORS AND INSULATORS
Some materials allow electricity to flow through them easily, some materials do not. The
materials that allow electricity to flow through them easily are known as conductors. The
materials through which it is difficult for electricity to flow are known as insulators or nonconductors. Conductors are useful to us because they allow electricity to flow through them.

26

However, sometimes we do not want electricity to flow, in certain instances. And so we

have to use insulators to prevent the flow of electricity. For example we use rubber or plastic
insulators to cover electric wires in order to prevent electricity form flowing into our body.
Otherwise we will get an electric shock. So insulators are also useful to us.
HOW TO TURN ELECTRICITY ON AND OFF
We use electricity very often. We use electricity to work our radios, to run our fans, in electric
kettles to boil water and also to get light from the bulb.
However, we do not keep our radio 'on' all the time. And if it is cold, we do not want the fan to
keep running. After the water has boiled, we do no need electricity any more. We definitely do
not need to have the light 'on' when it is very bright. Therefore we must have a way and a
device to turn electricity 'on' and 'off', whenever we need to.
We use a switch to turn electricity 'on' and 'off'. The function of the switch is mainly to 'make'
or 'break' the circuit, thereby sometimes allowing the electricity to travel (ON POSITION) and
otherwise making the flow of electricity stop (OFF POSITION).

OTHER WAYS TO OBTAIN ELECTRICITY ( BATTERIES )

There are mainly two kinds of batteries namely primary and secondary. The primary batteries
we use are known as dry cells. Many other types of dry cells are shown in the picture. A dry
cell can give a steady current for a certain time after which the current becomes weaker and
weaker and finally it produces no more current. It is of no use to us anymore. This is one type
27

of battery.
On the other hand, the secondary battery is known as wet cell. We call it a wet cell because
inside the cell there is liquid. We also call the wet cell shown below 'an accumulator'. It
can give us electricity for a longer time. And when it becomes weak it starts giving lesser
current, we recharge it. After recharging the wet cell becomes as good as new and starts giving
normal current again.
HOW IS ELECTRICITY PRODUCED ( Generation of Electricity )
The electricity, which we use for electric bulbs, fans, kettles and irons, is produced by
'generators'. A generator is actually a very big dynamo. It can produce a very large amount
of electricity. Number of generators produce power in Power Station. Electricity produced at a
power station is allowed to flow through metallic cables, which run from the Power Station to
our houses and offices. Then they run back from our houses and offices to the power station,
forming a closed circuit (remember the essential condition for the flow of current - the closed
circuit ! ). Don't be surprised if you don't see many cables running from pole to pole, they can
be laid underground too!

ELECTRICITY CAN GIVE US HEAT

Our common experience is that whenever we put our hand near a lighted electric bulb,
we feel the heat coming from the bulb. Similarly, we can feel a touch of heat from a lighted
torch after sometime. Also if we switch on an electric kettle containing water the water starts
boiling after sometime. Actually there is a long piece of coiled wire inside the kettle, when
electricity passes through it, heat is produced which makes the water boil.
28

ELECTRICITY CAN GIVE US LIGHT

We notice that every time electricity is passed through the thin wire of a bulb, light is produced.
We say that some of the electricity has been 'changed' to light. Actually, the changing of
electricity into heat takes place first. The electricity that passes through the thin tungsten wire
inside the bulb, makes the wire very hot. The wire becomes so hot that is glows. When it glows,
it gives off light. Similarly electricity is converted to light in a fluorescent lamp too.
But whereas a tungsten bulb uses up a lot of electricity before light is produced, a fluorescent
lamp uses up only a small amount of electricity to produce light. Therefore for the same amount
of electricity a fluorescent lamp gives off more light than a tungsten bulb.
ELECTRICITY IS A FORM OF ENERGY
Electricity can be converted into heat, light or magnetism. In fact electricity, heat, light and
magnetism are all forms of energy. There are many more forms of energy. And they can be
converted into one another. For example electrical energy can be changed to light energy, heat
energy or magnetic energy.

ELECTRICITY CAN PROVE TO BE FATAL TOO

Electricity is very useful to us in many ways. We can use to make our lives more comfortable.
But it can be very DANGEROUS to us too. Here are a few tips to stay away from harm

1.

Do not touch a bare wire from the main electrical circuit. It may be a live wire i.e.

electricity might be traveling through it. If you touch it, the electricity will flow into your
body and might give you an electric shock.
29

2.

Climbing a lamppost carrying electric wires is dangerous. A lamppost is usually made

of metal and is therefore a good conductor of electricity. Some electricity may escape from the
electric wires to the lamppost and so you could be electrocuted.
3.

Do not push a needle through an electric wire. An electric wire is covered by rubber or

plastic insulators. If you do so, electric current will flow through the needle to your body and
give you a shock .
4.

Do not try to repair electrical appliances. Leave it to an electrician.

5.

Touching an electrical appliance with wet hands is dangerous! Water can conduct

electricity.
Ask an electrician to educate you about electrical safety.

MEASUREMENT OF ELECTRICITY
-

Electric current in a wire is something like water current in a pipe.

The amount of electricity passing through the wire per second is measured in ampere(A).

- The "pressure" pushing the electricity along the wire is measured in Volt (V). For example a

30

torch battery is 1 Volts; a car battery is 6 Volts or 12 Volts. Electricity running in the cables
in your house is 240 volts.
-

The amount of electrical energy used in homes, offices, etc. is measured by an electricity

meter in kilowatt-hours.
-

Watt is the unit of power or rate of doing work. A kilowatt-hour is the electrical energy

supplied at a rate of 1,000 watts

for 1 hour.

Compilation of Accounting period

G.S.R 1134 In Exercise of the power conferred by Section 69 of The electricity (Supply) act
1948 (54 of 1948), The Central Government, in consultation with the Comptroller And Auditor
general of India and state government makes the following rules which are applicable to State
Electricity boards, namely

CHAPTER 4
4.1 DATA ANALYSIS AND INTERPRETATION

31

In this chapter an attempt has been made to present the information about the current
assets analysis and interpretation.
1. STOCKS
Table 1:

Analysis related to the Stocks during the year 2006-11

Year
2006-07
2007-08
2008-09
2009-10

Previous year
1065920973
1369789247
1529523889
1678318226

Current year
1369789247
1529523889
1678318226
2130745267

Change
303868274
159734642
148794337
452427041

%Change
22.18357858
10.4434225
8.865680816
21.23327683

2010-11

2130745267

2528235026

397489759

15.72202564

VALUE IN RS.

Interpretation:
The above table reveals the change and the percentage change in the amount of stocks
in rupees from 2006-2011. In the year 2011 it has increased from 167 crore to 213 crore.
Mostly it is in increasing trend.
Graph 1:

GRAPH RELATED TO THE STOCKS DURING

THE 2006-11
3000000000
2500000000
2000000000
1500000000
1000000000
500000000
0

Previous year
Current year
Change
%Change
2006- 2007- 2008- 2009- 201007
08
09
10
11
YEARS

Interpretation:

It has been compared that stock has decreased from 2006 to 2011
2. Receivables against power supply
32

Table 2:

Analysis related to the Receivables during the year 2006-11

Year
2006-07
2007-08
2008-09
2009-10
2010-11

Previous year
4561629294
9170789088
20021215428
20347872047
2375926204

Current year
9170789088
20021215428
20347872047
2375926204
2953104319

Change
4609159794
10850426340
326656619
-17971945843
577178115

%Change
50.259141
54.194644
1.6053601
-756.41852
19.544793

Interpretation:
The above table reveals the change and the percentage change in the amount of
receivables in rupees from 2006-2011. It has increased from 97 crore to 29 crore over the
period of 2006-11. In 2007 it has drastically increased from 97 crore to 200 crore but after the
two years of consistency then it came back to the 23 crore.
Graph 2:

VALUE IN RS.

GRAPH RELATED TO THE RECEIVABLE DURING

2006-11
30000000000
20000000000
Previous year
10000000000

Current year
Change

0
-10000000000

200607

200708

2008- 200909
10

201011

%Change

-20000000000
YEARS

Interpretation:
The above graph is showing the trends in the receivables levels. It is showing the
change in the percentages and absolute figures over the period of 2006-11.
Receivables of power supply has gradually decreased from 2007 to 2011 with negative value

3. Cash and Bank

Table 3:

Analysis related to the Cash and Bank during the year 2006-11
33

Year
2006-07
2007-08
2008-09
2009-10
2010-11

Previous year
503439568
372103289
1929613643
1603939352
860844534

Current year
372103289
1929613643
1603939352
860844534
545838796

Change
-131336279
1557510354
-325674291
-743094818
-315005738

%Change
-35.2956512
80.7161765
-20.3046512
-86.321605
-57.7103973

Interpretation:
The above table reveals the change and the percentage change in the amount of cash and
bank in rupees from 2006-2011. It has increased from 37 crore to 54 crore over the period of
five years. In the year 2007 it has drastically increased from 37 crore to 192 crore. Then after
the 2 years it came down to 86 crore and then decreased to 54 crore. Mostly it is in decrease
trend.
Graph 3:

VALUE IN RS.

GRAPH RELATED TO CASH & BANK DURING

2006-11
2500000000
2000000000
1500000000

Previous year

1000000000

Current year
Change

500000000

%Change

0
-500000000
-1000000000

200607

200708

200809

200910

201011

YEARS

Interpretation:
The above graph is showing the trends in the cash and bank balance levels. It is
showing the change in the percentages and absolute figures over the period of 2006-11.

Its to be noted that cash n hand and at cash at bank decreased in the year 2006-07
but increased in the next year , but again it decreased for the remaining 3 years
4. Loans and Advances
Table 4:
Year

Analysis related to the Loans and Advances during the year 2006-11
Previous year

Current year
34

Change

%Change

2006-07
2007-08
2008-09
2009-10
2010-11

286445873
284768247
279375211
283085262
321339342

284768247
279375211
283085262
321339342
317495207

-1677626
-5393036
3710051
38254080
-3844135

-0.58912
-1.930392
1.3105772
11.904574
-1.210769

Interpretation:
The above table reveals the change and the percentage change in the amount of cash and
bank in rupees from 2006-2011. It has increased from 28 crore to 31 crore over the period of
five years. There is not much increase or decrease in the levels of loans and advances. They are
maintaining at consistent levels. The change is very little hence, negligible.
Graph 4:

VALUE IN RS.

GRAPH RELATED TO LOANS & ADVANCES

DURING 2006-11
350000000
300000000
250000000

Previous year

200000000

Current year

150000000
100000000

Change
%Change

50000000
0
-50000000

200607

200708

2008- 200909
10
YEARS

201011

Interpretation:
The above graph is showing the trends in the cash and bank balance levels. It is
showing the change in the percentages and absolute figures over the period of 2006-11
It is to be found that the loans and advance of AP TRANSCO did not have a gradual change the
change was negligible until 2009 -10 where it was increased by 11 %

5. Sundry Receivables
Table 5:
Year
2006-07

Analysis related to the Sundry receivables during the year 2006-11

Previous year
600236241

Current year
3288109201
35

Change
2687872960

%Change
81.745246

2007-08
2008-09
2009-10
2010-11

3288109201
2050975362
1924542752
2072744481

2050975362
1924542752
2072744481
6034016109

-1237133839
-126432610
148201729
3961271628

-60.319293
-6.5694883
7.1500241
65.649007

Interpretation:
The above table reveals the change and the percentage change in the amount of Sundry
receivables in rupees from 2006-2011. In the year 2007 it has increased from 600 crore to 328
crore. Then it came down to 20 crore in 2008. Again in the year 2010 it increased to 60 crore.
The receivables are fluctuating over the 5 years.
Graph 5:

VALUE IN RS.

GRAPH RELATED TO SUNDRY RECEIVABLES

DURING 2006-11
7000000000
6000000000
5000000000
4000000000

Previous year

3000000000

Current year

2000000000

Change

1000000000

%Change
0

-1000000000
-2000000000

200607

200708

200809

200910

2010
11

YEARS

Interpretation:
The above graph is showing the trends in the sundry receivables. It is showing the
change in the percentages and absolute figures over the period of 2006-11
The change in sundry receivable was fluctuating where it increased in the first year (2006
-07),then decrease a bit in the following 2 years and then increased to 03 core in 2010-11

RATIOS:
1. STOCKS TO CURRENT ASSETS:
Table 6: Data related to the Stocks to current asset ratio during the year 2006-11
Year

Inventory

Current assets
36

Ratio%

2006-07
2007-08
2008-09
2009-10
2010-11

1369789247
1529523889
1678318226
2130745267
2528235026

14485559072
25810703533
25837757639
7761599828
12378689457

9.45624
5.925929
6.495603
27.4524
20.42409

Interpretation:
The data in the above table represents the ratio of stocks to current assets for the period
of 5 years i.e. from 2006-2011, the ratio was 9% in 2007 it decreases to 5% in the year 2008,
from 2009 it increases to 6% and then in the year 2010 further increased to 27%.
Graph 6:

The above graph is showing the ratios of stocks to current assets over the period of 2006-08.
From 2007 to 09 the ratio is very less due to the less stocks levels. But in the year 2010 & 11 it
is very high due to high amount of stock.
Interpretation: in the beginning, out of the total current assets of AP TRANSCO ,9.4% was in
terms ofwhich decreased for 2 years but was 20% in the lat year ie 2011.

2. RECEIVABLES TO CURRENT ASSETS:

Table 7: Data related to the Receivables to current asset ratio during the year 2006-11
Year

Receivables

Current assets

Ratio%

2006-07

9170789088

14485559072

63.3098732

2007-08

20021215428

25810703533

77.5694293

37

2008-09

20347872047

25837757639

78.7524689

2009-10

2375926204

7761599828

30.6112948

2010-11

2953104319

12378689457

23.8563568

Interpretation:
The data in the above table represents the ratio of receivables to current assets for the
period of 5 years i.e. from 2007-11, the ratio was 63% in 2007 it increases to 77% in the year
2008, from 2009 it increases to 78% and then in the year 2010 drastically decreased to 30% and
further decreased to 23%.
Graph 7:

Interpretation:
The above graph is showing the ratios of receivables to current assets over the period of
2006-11. From 2007 to 09 the ratio is very high due to the huge amount of debtors. But in the
year 2010 & 11 it is very less due to low amount of debtors.

The more contribution of the current asets of APTRANSCO was the

recievables which contributed 63 %to the total current assests which was
reduced to 23% in 2011

CASH & BANK BALANCE TO CURRENT ASSETS:

Table 8: Data related to the Cash & Bank to current asset ratio during the year 2006-11
Year

Cash & Bank

Current assets

Ratio%

2006-07
2007-08

372103289

14485559072

2.5687879

1929613643

25810703533

7.4760211

38

2008-09
2009-10
2010-11

1603939352

25837757639

6.20773433

860844534

7761599828

11.0910708

545838796

12378689457

4.40950391

Interpretation:
The data in the above table represents the ratio of cash & bank balances to current assets
for the period of 5 years i.e. from 2006-201, the ratio was 3% in 2007, it increases to 7% in the
year 2008, from 2009 it decreases to 6% and then in the year 2010 drastically increased to 11%
and again decreased to 23% in 2011.
Graph 8:

Interpretation:
The above graph is showing the ratios of cash and bank to current assets over the period
of 2006-11. From 2007 to 09 and in 2011 the ratio is very low, due to the less cash and bank
balance. But in the year 2010 it is high due to more cash and bank balance.
The% of cash and bank in the total current asset was very lesser with the highest being 11
% in the year 2010

LOANS & ADVANCES TO CURRENT ASSETS:

Table 9: Data related to loans & advances to current asset ratio during the year 2006-11
Year

Loans and advances

Current assets

Ratio%

2006-07

284768247

14485559072

1.9658768

39

2007-08

279375211

25810703533

1.0824006

2008-09

283085262

25837757639

1.0956263

2009-10

321339342

7761599828

4.1401174

2010-11

317495207

12378689457

2.5648532

Interpretation:
The data in the above table represents the ratio of loans & advances to current assets for
the period of 5 years i.e. from 2006-2011, the ratio was 1% from 2007 to 2009, it increases to
4% in the year 2010, then decreases to 2% in 2011.
Graph 9:

Interpretation:
The above graph is showing the ratios of loans & advances to current assets over the
period of 2006-11. From 2007 to 09 and in 2011 the ratio is very low, due to less amount of
loans and advances. But in the year 2010 it is high due to high amount of loans and advances
The loans and advances were also very less with highest being in 2010,where it increased to
32 crores in 2010.

SUNDRY RECEIVABLES TO CURRENT ASSETS:

Table 10: Data related to sundry receivables to current asset ratio during the year 2006-11
Year
2006-07

Sundry receivables
3288109201

Current assets
14485559072
40

Ratio%
22.699222

2007-08
2008-09
2009-10
2010-11

2050975362
1924542752
2072744481
6034016109

25810703533
25837757639
7761599828
12378689457

7.9462203
7.4485672
26.705119
48.745193

Interpretation:
The data in the above table represents the ratio of sundry receivables to current assets
for the period of 5 years i.e. from 2006-2011 the ratio was 22% in 2007 it decreases to 7% in
the year 2008, from 2009 it increases to 26% and then in the year 2010, and further increased to
48% in 2011.
Graph 10:

Interpretation:
The above graph is showing the ratios of sundry receivables to current assets over the
period of 2006-11. In 2008 and 09 the ratio is very less due to the less debtors.
Sundry receivables contribution n the year 2007 was very high ie 22%but was decreased in the
following 2 year but was almost half in the year 2011 where t was 48 %

LIQUIDITY RATIOS:
1. CURRENT RATIO
Table 11:
Table showing the data related to the Current Ratio
Year
2006-07

Current assets
14485559072

Current liabilities
22261509733
41

Current ratio
0.650699761

2007-08
2008-09
2009-10
2010-11

25810703533
25837757639
7761599828
12378689457

26309296604
32208167256
13678388611
15983668205

0.981048787
0.802211359
0.567435248
0.77445861

Interpretation:
The data in the above table represents the current ratio of the organization for the
period of 5 years. In every year the ratio was less than 1%.
Graph 11:

Interpretation:
The graph showing the current ratio of the organization for the period of 5 years. In
every year the ratio was less than 1%.
We can find that the current liabilities of AP TRANSCO are always more than their current
liabilities in 2009 -10; their assets were very less which were later recovered

QUICK RATIO
Table 12:
Table showing the data related to the Quick Ratio
Year

Liquid assets

Current liabilities

Quick ratio

2006-07

13115769825

22261509733

0.589168

42

2007-08

24281179644

26309296604

0.9229125

2008-09

24159439413

32208167256

0.7501029

2009-10

5630854561

13678388611

0.4116607

2010-11

9850454431

15983668205

0.6162825

Interpretation:
The data in the above table represents the quick ratio of the organization for the period
of 5 years. In every year the ratio was less than 1%.
Graph 12:

Interpretation:
The above graph showing the quick ratio of the organization for the period of 5 years.
In every year the ratio was less than 1%.
We can find out that AP TRANSCO had 1311 crores of ready to sell assets in the beginning and
their quick ratio change from 0.5 to 0.6

WORKING CAPITAL
Table 13:
Analysis related to the working capital during the year 2006-011
Year
2006-07

Current assets
14485559072

Current liabilities
22261509733
43

Net current assets

-7775950661

2007-08
2008-09
2009-10
2010-11

25810703533
25837757639
7761599828
12378689457

26309296604
32208167256
13678388611
15983668205

-498593071
-6370409617
-5916788783
-3604978748

Interpretation:
From the above table we can observe that the current liabilities exceed current assets in
the every year i.e. from 2007 to 2011. In the year 2011 the net current assets increased to -36
crore from -77 crore in 2007.
Graph 13:

Interpretation:
From the above graph we can observe that the working capital of the organization is
negative in every year i.e. 2006-11..
AP TRANSCO had a negative net current asset for their working capital which was after a time
period of 5 years decreased to less than half ie from -77 to -36

CHAPTER 5
5.1 Findings:
1 .It has been compared that stock has decreased from
20006 to 2011
44

2. Recievables of power supply has gradually decreased from 2007 to 2011 with

negative value
3. Its to be noted that cash n hand and at cash at bank decreased in the year 2006-

07 but increased in the next year , but again it decreased for the remaining 3
years
4. It is to be found that the loans and advance of AP TRANSCO did not have a
gradual change the change was negligible until 2009 -10 where it was increased
by 11 %
5. The change in sundry receivable was fluctuating where it increased in the first

year (2006 -07), then decrease a bit in the following 2 years and then increased to
03 core in 2010-11

6.: in the beginning, out of the total current assets of AP TRANSCO ,9.4% was in
terms of which decreased for 2 years but was 20% in the last year ie 2011
7. The more contribution of the current assets of APTRANSCO was the

receivables which contributed 63 %to the total current assets which was reduced
to 23% in 2011
8. The% of cash and bank in the total current asset was very lesser with the

highest being 11 % in the year 2010

9. The loans and advances were also very less with highest being in 2010, where it

increased to 32 crore in 2010.

10. Sundry receivables contribution n the year 2007 was very high ie 22%but was

decreased in the following 2 year but was almost half in the year 2011 where t
was 48 %
11. We can find that the current liabilities of AP TRANSCO are always more than
their current liabilities in 2009 -10 ,their assets were very less which were later
recovered
12. We can find out that AP TRANSCO had 1311 crores of ready to sell assets in
the beginning and their quick ratio change from 0.5 to 0.6
13. AP TRANSCO had a negative net current asset for their working capital
which was after a time period of 5 years decreased to less than half i.e. from -77
to -36

45

CHAPTER 6
6.1 SUGGESTIONS
1. The internal control system must be improved to eliminate the fluctuations.

46

2. To maintain sound liquidity position, fluctuations in cash and bank balances should be
reduced.
3. In order to reduce the bad debts, the credit collection period should be reduced.
4. The company has to maintain proper records showing full particulars including
quantitative details of the current assets.
5. The current asset should be managed carefully else it will lead to more blockage of
funds.
6. The current asset includes 35% as receivables hence they should try to decrease their
receivables.
7. The company needs to maintain the liquidity ratios i.e. current and quick ratios closer to
the standard 1.

6.2 LIMITATIONS OF STUDY

APTRANSCO is s state-owned organization and it has huge amount of
resources for funds and it has its own assets.
1. The present study is restricted to only current asset management in Transmission
Corporation of Andhra Pradesh LTD.
2. The present study is limited to a particular area only, that is, Andhra Pradesh.
3. Certain information is not supplied by the organization on confidential grounds. This
aspect may restrict the results to some extent.
4. The period of study taken into consideration is only 5 years, that is, from 2006 to 2011.

CHAPTER 7
SUMMARY AND CONCLUSIONS
7.2CONCLUSION:
47

1. The company has enough funds to meet its current liabilities. But at the same time, the
company has a huge amount of cash blocked in sundry debtors. This call for a change in
the company policies as these debts could turn into bad debts which in turn would take
away the competitive advantage from APTRANSCO due to sudden cash crunch. Thus
the company must try to improve its average collection period and increase average
payment period to improve its working capital management efficiency.

2. The company needs to maintain the liquidity ratios i.e. current and quick ratios closer to
the standard 1 to avoid the liquidity crisis.

3. It can be concluded that for the smooth functioning of operations of the company it
need to maintain the current assets in proportion to its current liabilities, so that it can
maintain better liquidity.

CHAPTER 8
8.1 BIBLIOGRAPHY
Text Books:
Jain, SP & Narang, KV, Advanced Accounting, Kalyani Publications
48

Maheshwari SN, Finance Management, Sultan Chand & Sons

Prasanna Chandra, Finance Management, Tata McGraw Hill
Pandey I.M., Finance Management, Vikas Publication
Vishwanath S.R, Corporate Finance, 2nd edition, Sage Publication Inc.
Richard A Brealey, Stewart C Myers, Franklin Allen, Pitabas Mohanty, Principles of
Corporate Finance, 8th edition, Tata Mc Graw-Hill Publishing Company Ltd.
John J Hampton, Financial Decision Making, 4th edition, Prentice-Hall of India Private Ltd.
Khan M Y, Jain P K, Financial Management, 2nd edition, Tata MC Graw-Hill Publishing
Company Ltd.
Chandra Bose D, Inventory Management, 2006, Prentice-Hall of India Private Ltd.

ANNUAL REPORTS OF APTRANSCO LTD

Web sites:

www.aptransco.com
www.google.com

49