ANALYSIS OF FINANCIAL

POLICIES OF SELECT ENERGY

SECTOR COMPANIES
Coal India | NTPC | Tata Power

Group 9 10/9/16 Financial Management II

Table of Contents
Acknowledgement...................................................................................................................... 2
Project Description ..................................................................................................................... 3
COAL INDIA ............................................................................................................................... 5
SHORT TERM FINANCIAL POLICY ..................................................................................... 5
Working Capital Analysis ................................................................................................ 5
Operating Cycle and Cash Cycle .................................................................................... 6
Investments in Current Assets ....................................................................................... 6
LONG TERM FINANCIAL POLICY........................................................................................ 7
DIVIDEND POLICY ................................................................................................................ 9
DIVIDEND DECLARATION TILL DATE ........................................................................... 9
REPURCHASE, SPLITS AND BONUS .......................................................................... 10
TATA POWER ......................................................................................................................... 12
SHORT TERM FINANCIAL POLICY ................................................................................... 12
Working Capital Analysis .............................................................................................. 12
Operating Cycle and Cash Cycle .................................................................................. 13
Investments in Current Assets ..................................................................................... 14
LONG TERM FINANCIAL POLICY...................................................................................... 15
DIVIDEND POLICY .............................................................................................................. 17
DIVIDEND DECLARATION TILL DATE ......................................................................... 17
REPURCHASE, SPLITS AND BONUS .......................................................................... 18
NTPC........................................................................................................................................ 20
SHORT TERM FINANCIAL POLICY............................................................................... 20
Working Capital Analysis .............................................................................................. 20
Operating Cycle and Cash Cycle .................................................................................. 21
Investments in Current Assets ..................................................................................... 22
LONG TERM FINANCIAL POLICY...................................................................................... 22
Disinvestment ................................................................................................................. 24
DIVIDEND POLICY .............................................................................................................. 25
DIVIDEND DECLARATION TILL DATE ......................................................................... 26
Peer Comparison ..................................................................................................................... 28
Net Working Capital Interpretation:.............................................................................. 28
Current Ratio Interpretation: ......................................................................................... 29
Operating Cycle Interpretation: .................................................................................... 29

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 .............................................................................................................................................. 30
Cash Cycle Interpretation:............................................................................................. 30
Debt to equity Ratio Interpretation ............................................................................... 31
.............................................................................................................................................. 31
Revenue Interpretation .................................................................................................. 32
Sustainable Growth Rate Interpretation ...................................................................... 32
Internal Growth Rate Interpretation.............................................................................. 33
Annual Growth Rate Interpretation .............................................................................. 33
Dividend payout ratio interpretation ............................................................................ 34
Retention Ratio Interpretation ...................................................................................... 35
SPLITS, BONUS AND REPURCHASE .......................................................................... 35

Acknowledgement

We would like to sincerely thank Prof Preeti Goyal for mentorship and support during our
project Analysis of Financial Policies of select energy sector companies in India as
part of course work for Financial Management II taught by her.

Group 9

Afzal Anwar

Amibika Mangal

Anupam Mishra

Setu Shah

Vinitha

Yash Raj

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Project Description

For the project, we have chosen 3 listed companies from the Energy sector: Coal India,
NTPC and Tata Power. The analysis of these companies will be based on the
following basis:

Short Term Financial Planning: Working Capital requirements, Operating

Cycle, Cash Cycle, Investments in current assets, flexibility of the short term
policy.
Long Term Financial Planning: Debt and Equity split, long term loans, IPOs.
Dividend Policy: Stability of the dividend policy, Low v/s High payouts,
Retention ratios, Stock repurchases Splits and Bonus.

The analysis will be done in two stages:

Intra Firm Analysis- Firms performance over a period of last 5 years.

Inter Firm Analysis- Comparing the performance of the companies with each
other.

Sources of Data Used:

1. Money Control
2. Annual Balance Sheet
3. Reuters Financial
4. Economic Times

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COAL INDIA

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COAL INDIA

Coal India Ltd., founded in 1973, is the largest coal producer based on the coal
reserves and the raw coal production. It is a government of India (GOI) enterprise and
currently operates 471 mines across 8 states in India. The company has total coal
reserves of 18.9 billion tonnes and coal resources amount to 64.2 billion tonnes.

SHORT TERM FINANCIAL POLICY

The Short term financial policy of a firm is concerned majorly concerned with the
following 3important decisions:

Working Capital Requirements

Measuring and analysing Operating and Cash cycle
Evaluating firms investment in current assets.

Working Capital Analysis

The Net Working Capital of the Company has reduced over the period of last 5
years.
This can primarily be due to the fact that the company has paid out its long term
debt.
Also the Investments in Fixed Assets have increased over the years. Thereby
leading to a decrease in Working Capital.

N E T WOR KIN G C APITAL & C U R R E NT

R AT IO
12,000.00 2.5

10,000.00
2
8,000.00

6,000.00 1.5

4,000.00 1
2,000.00
0.5
0.00
2016 2015 2014 2013 2012
-2,000.00 0

Net working capital Current Ratio

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 Operating Cycle and Cash Cycle

Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Operating cycle 371.528556 146.1693 147.3279 83.53275 42.98791
Cash cycle 365.0479508 140.0084 135.8472 71.51948 31.72535
Days in payables 6.480605266 6.160915 11.48064 12.01327 11.26257
Days in Inventories 360.3490115 134.4449 137.6933 82.76078 42.98352
Days in Receivables 11.17954449 11.72447 9.634606 0.771966 0.004388

From the above it is evident that both the Operating Cycle and the Cash cycle
has increased for Coal India
It is because the days in Inventories and Receivables have both increased while
the days in Payables have come down.

400

300

200

100 Cash cycle

Operating cycle
0
1 2 3 4 5

Operating cycle Cash cycle

Investments in Current Assets

2016 2015 2014 2013 2012

Current assets to 56.20449465 25.9636 48.0275 70.3833 57.7037

sales 5 9 4 9

The company maintains a very high Current Assets to Sales Ratio

This means that the company has a very flexible short term finance policy.
The investments in Inventory have increased at an average rate of 86% over
the past 4 years.

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 C U R R EN T ASSE T S TO SAL E S
Current assets to sales

75
50
25
0
2016
2015
2014 Current assets to sales
2013
2012

LONG TERM FINANCIAL POLICY

Coal India got its share listed on both BSE and NSE on 4th November, 2010.
The objective was to carry out the divestment of 631,636,440 Equity Shares.
It was done through a Book Building process where a price band of225-245
was set.

Issue Details
Issue Open Oct 18, 2010 - Oct 21, 2010
Issue Type Book Building
Issue Size 631,636,440 Equity Shares of Rs 10 aggregating up to Rs 15,199.44
Cr
Face Value Rs 10 Per Equity Share
Issue Price Rs. 225 - Rs. 245 Per Equity Share

The Authorized share capital of the company as on 31.3.2016 was Rs 8904.18 crores
distributed between Equity and Non-Cumulative Redeemable Preference shares as
under

800,00,00,000 Equity shares of Rs 10 each 8000 Crore

90,41,800 Non Cumulative, 10% Redeemable shares @1000
904.18 Crore
each
Total 8904.18 Crore

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 The details of the shares Disinvested by Government of India are as follows:

Financial Year of Disinvestment % of Shares Disinvested No of shares

Disinvested
2010-11 10% 631,636,440
2013-14 0.35% 22,037,834
2014-15 10% 631,636,440
2015-16 0.00% 83,104

Hence the number of shares held by Government of India as of March

2016 was 503,09,70,582 i.e. 79.649% of the total share capital.

The firm has no long term debt for the past 3 Fiscal years, prior to that also
the Debt Equity Ratio of the Company has reduced from 0.18 in 2012 to 0.14
in 2013. It shows that it is more dependent on its Equity rather than Debt
which is considered to be good thing.

IGR & SGR

0.5
0.4
0.3
0.2
0.1 IGR
0 SGR
-0.12012 2013 2014 2015 2016

-0.2
-0.3
-0.4

The actual sales growth is more than the potential that they could achieve for 3
of the last 5 years. Also as there is no debt in 2014 and 2016, SGR<IGR.

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 DIVIDEND POLICY

Coal India got its share listed On Stock exchanges on 4th November, 2010.
It is the fourth most valued company in the world with a market capitalization of
Rs. 2.16 lakh crores.
The company, follows a Residual Dividend Policy. It has a good dividend track
report and has consistently declared dividends for the last 5 years.
The company announced its first interim dividend on 18 th Feb,2011, at the rate
of 35%
It has maintained an average dividend yield (a dividend expressed as a
percentage of a current share price) of 6.0 % over the last 5 financial years.
For the year ending March 2016, Coal India has declared an equity dividend of
274.00% amounting to Rs 27.4 per share. At the current share price of Rs
318.80 this result in a dividend yield of 8.59%.
The growth in dividend payments has been more than 6% since the company
started paying out dividends in 2011. The same is depicted in the chart below.
The following are the Dividend Payout and Retention Ratios over the years .

Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Dividend payout 1.058941 0.976948 1.220469 0.902861 0.783172
Retention -0.05894 0.023052 -0.22047 0.097139 0.216828
Yield 0.09 0.06 0.09 0.04 0.03

DIVIDEND DECLARATION TILL DATE

Announcement Effective Dividend Dividend Remarks

Date Date Type (%)
26-02-16 14-03-16 Interim 274 Rs.27.4000 per share(274%)Interim
Dividend
20-02-15 3/3/2015 Interim 207 Rs.20.7000 per share(207%)Interim
Dividend
8/1/2014 17-01-14 Interim 290 Rs.29.0000 per share(290%)Interim
Dividend
20-05-13 6/9/2013 Final 43 Rs.4.3000 per share(43%)Final
Dividend
1/3/2013 18-03-13 Interim 97 Rs.9.7000 per share(97%)Interim
Dividend
18-05-12 6/9/2012 Final 5 Rs.0.50 per share(5%)Final Dividend
24-02-12 15-03-12 Interim 95 -
12/5/2011 8/9/2011 Final 4 -
2/2/2011 18-02-11 Interim 35 -

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 REPURCHASE, SPLITS AND BONUS

Coal India plans to repurchase 1.7 per cent, or 10.89 crore shares in the mining
company at Rs 335 each.
Small shareholders can tender 5 shares for every 22 held. Other investors are
eligible to tender 5 shares for every 337 held.
The company has not gone for any split and bonus since the time it has been
listed.

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TATA POWER

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TATA POWER

Tata Power is India's largest integrated power company with a significant international
presence. The Company has an installed generation capacity of 10477 MW in India
and a presence in all the segments of the power sector viz Generation (thermal, hydro,
solar and wind). It serves central and western railways, Mumbai port, refineries, textile
mills, fertilizer factories, municipal corporation water pumping plants, and other
industries and commercial and residential complexes.

The company operates in various successful public-private partnerships in generation,

transmission and distribution in India namely Tata Power Delhi Distribution Limited
with Delhi vidyut board for distribution in North Delhi, Powerlinks Transmission Ltd.
with Power Grid Corporation of India Ltd.

SHORT TERM FINANCIAL POLICY

The Short term financial policy of a firm is concerned majorly concerned with the
following three important decisions:

Working Capital Requirements

Measuring and analysing Operating and Cash cycle
Evaluating firms investment in current assets.

Working Capital Analysis

Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Net Working Capital -2550.95 -2552.45 -4068.72 -765.82 1228.8
Current Ratio 0.585 0.593 0.465 0.832 1.324

The Net Working Capital of has decreased since 2012 is negative. This means that
the fixed assets are being financed with short term debt
This can primarily be due to the fact that the company has paid out its long term debt
Tata Powers average current ratio over the last 5 financial years has been 0.76 times
Average long term debt to equity ratio over the last 5 financial years has been 0.77
times which indicates that the Company ( Refer to Long Term Financing Section)

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 N E T WOR KIN G C AP ITAL
2000 1.400

1000 1.200

0 1.000

-1000 0.800

-2000 0.600

-3000 0.400

-4000 0.200

-5000 0.000
2012 2013 2014 2015 2016

Net Working Capital Current Ratio

Operating Cycle and Cash Cycle

Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Days in Inventory 74.58 60.88 64.08 49.46 53.41
Days in Account 51.73 55.68 48.86 42.53 39.87
Receivables
Days in Account 141.01 104.23 86.27 60.77 65.03
Payables
Operating Cycle 126.31 116.56 112.95 91.99 93.28
Cash Cycle -14.70 12.33 26.68 31.22 28.25

From the above, we can deduce that operating cycle has increased compared
with previous five financial years. Also, the cash cycle has increased by 40%
since 2012 with a year on year increase of almost 10%
The increase in operating cycle over the last five financial years is largely due to low
inventory turnover, which has been fluctuating. Whereas, receivables turnover has
increased
Tata Powers cash cycle has been declining since FY2012. For the FY2016, the cash
cycle is negative. This means Tata Power has reworked its short term policy and
doesn't pay its suppliers for the goods that it buys until after it receives payment for
selling those goods. It has been able to reduce short term borrowing due to
increase in DPO (Days in payables outstanding)
We can also deduce that company has had a stable past record and maintains a
flexible short term policy. Tata power continues to enjoy good supplier relationship and
extends transparency.
Below mentioned graph also demonstrates the consistency and flexibility in their short
term financial policy

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 Operating Cash Cycle Vs Cash Cycle

140
120
100
80
60
40 Cash Cycle
20
Operating Cycle
0
2016 2015 2014 2013 2012

Operating Cycle Cash Cycle

Investments in Current Assets

Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Current Asset to Sales 0.3999 0.3830 0.3809 0.3689 0.5303

The size of investment of companys investment in current assets have largely

remained unchanged in terms of value, whereas sales have fluctuated for the
same time period
As the ratio is high for Tata power, we can say that it maintains an
accommodative short term financial policy.
Companys short term to long term financing has been consistently less and
this further indicates that company has a flexible policy.

Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Short Term Debt/Long Term 0.17 0.20 0.22 0.14 0.11
Debt

Tata power maintains a stable Current Assets to Sales Ratio for the past five
years with the exception of year 2012.

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 .

C U R R EN T ASSE T TO SAL E S

60.00

40.00

20.00

0.00
2016
2015 Current Asset to Sales
2014
2013
2012

LONG TERM FINANCIAL POLICY

Tata Power Share Holding Pattern

Holder's Name No of Shares % Share Holding

Promoters 893200466 33.02%
Foreign Institutions 706491989 26.12%
Financial Institutions 591335369 21.86%
General Public 404288081 14.95%
National Banks Mutual Funds 68714988 2.54%
Others 36984336 1.37%
Central Government 3614169 0.13%
Source: Economic Times

Tata Power is listed on the Bombay Stock Exchange, of the BSE

SENSEX index, and the National Stock Exchange of India, where it is not a damp.
Its Global Depository Receipts (GDRs) are listed on the London Stock Exchange and
the Luxembourg Stock Exchange.
The Companys shares are compulsorily traded in dematerialized form and are
available for trading through both the Depositories in India viz. National Securities
Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL).

The Authorized share capital of the company as on 31.3.2016 was Rs 300 crores
distributed between Equity and Preference shares as under
o As of 31 st March 2016, Promoter Group of 14 shareholders hold 8.9 million
shares

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 o Shares held by public adds up to 18 million shares with a holding of 66% of
total shareholder fund and rest remains with the promoter group.

In 2014, Tata power through a rights issue, where every investor holding 50 shares
was eligible to buy seven shares of the company offered 7.5 million equity shares
with a face value of Re 1 each for cash at Rs 60 a share (including a premium of Rs
59) for an aggregate amount of up to Rs 1,993.38 crore to existing investors. With
About Rs 533 crore from the net proceeds will be used to partly repay certain
borrowings of Tata Power.

Debt to Equity Ratio for Tata power has been an average of 7.7 this past financial
years. This also indicates that the company is not taking enough advantage from
financial leverage. Debt to Equity ratio measures how the company is leveraging
barrowing against the capital invested by the owners.

Post-acquisition of Welspun renewable assets which was funded by medium term

debt the D:E ratios are projected to increase further. As per the recent investor meet,
Tata power is focused on taking all possible measures to maintain D:E ratios at levels
which are reasonable while capitalizing on growth opportunities

Year Mar '2016 Mar '2015 Mar '2014 Mar '2013 Mar '2012
IGR 0.013 0.021 0.021 0.029 0.039
SGR 0.029 0.048 0.055 0.073 0.088
Actual Growth -0.073 0.045 -0.098 0.085 0.279

0.100 IGR SGR

0.090
0.080
0.070
0.060
0.050
0.040
0.030
0.020
0.010
0.000
2012 2013 2014 2015 2016

There is a sharp decline in Tatas sustainable growth since 2012. It is the maximum
rate of growth that that the company can maintain without additional leverage.
Companys actual growth has drastically reduced over the last five year from 27.9%
to a negative 7% because of decline in revenue.

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 Both SGR and IGR , SGR>IGR, have declined over the past five years as the net
profits have decreased by almost 12% year on year. The decline in net profits have
cut the asset utilization (ROA) and return on equity by almost half.

DIVIDEND POLICY

TATA POWER COMPANY LIMITED

DATE OF LISTING (NSE) : 03-APR-1996
FACE VALUE : 1.00
ISSUED CAP. : 2704629398(SHARES) AS ON 10-OCT-2016
FREE FLOAT MARKET CAP. *: RS. 14623.66(CR)

Over the last 5 financial years, company has been generating enough for the
shareholders after servicing its debt obligations
Tata Powers market capitalization is of Rs 21772 Crores with a P/E ratio of 32.20,
which is much above the industry average of 12.75.
Tatas dividend yield is much lower than the industry average of 2.30. However, the
gross margin (TTM) is at 38.85 compared to industry average of 10.16
The company, follows a Residual Dividend Policy. For the year ending March 2016,
Tata Power Company has declared an equity dividend of 130.00% amounting to Rs
1.3 per share. At the current share price of Rs 80.70 this results in a dividend yield of
1.61%. Largely due to continued strong operational performance by TATA Power
businesses
The company has maintained a good dividend track report and has consistently
declared dividends for the last 5 years
The growth in dividend payments has been consistently growing over the last five
financial years. This can be deduced from the deceased retention ratio. The same is
depicted in the chart below.
The following are the Dividend Payout and Retention Ratios over the years.

Mar '2016 Mar '2015 Mar '2014 Mar '2013 Mar '2012
Dividend Payout 46% 35% 35% 27% 25%
Retention 54% 65% 65% 73% 75%
Dividend per
1.3 1.3 1.25 1.15 1.25
Share
Dividend 130 130 125 115 125

DIVIDEND DECLARATION TILL DATE

# Announcement Date Ex-Date Amount Interim/Final

1 24-May-2016 07-Sep-2016 1.30 Final
2 19-May-2015 20-Jul-2015 1.30 Final
3 29-May-2014 23-Jul-2014 1.25 Final
4 30-May-2013 26-Jul-2013 1.15 Final
5 22-May-2012 24-Jul-2012 1.25 Final

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 6 19-May-2011 02-Aug-2011 12.50 Final
7 25-May-2010 16-Aug-2010 12.00 Final
8 28-May-2009 14-Jul-2009 11.50 Final
9 23-Jun-2008 18-Aug-2008 10.50 Final
10 31-May-2007 17-Jul-2007 9.50 Final

REPURCHASE, SPLITS AND BONUS

In 2014, Tata Power Delhi Distribution paid a dividend of about Rs 125 crore to its
shareholders, the Delhi Government and its parent company Tata Power. Tata power
paid dividend of Rs 61 crore, which was the highest dividend paid by the electricity
distribution company to Delhi Government at that time

Tata Power had last split the face value of its shares from Rs 10 to Rs 1 in
2011.The share has been quoting on an ex-split basis from September 26, 2011 till
now
Announcement Old FV New Ex-Split
Date FV Date
19-05-2011 10 1 26-09-2011
22-05-1995 100 10 22-05-1995

Till date, Tata power has not paid out any bonuses

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NTPC

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NTPC

NTPC Limited (previously known as National Thermal Power Corporation Limited) is

an Indian PSU Public Sector Undertaking, engaged in the business of generation of
electricity and allied activities and was founded in 1975. The headquarters of the
company is situated at New Delhi. NTPC's core business is generation and sale of
electricity to state-owned power distribution companies and State Electricity Boards in
India. The company also undertakes consultancy and turnkey project contracts that
involve engineering, project management, construction management and operation
and management of power plants.
The company has also ventured into oil and gas exploration and coal mining activities.
It is the largest power company in India with an electric power generating capacity
of 45,548 MW. Although the company has approx. 16% of the total national capacity
it contributes to over 25% of total power generation due to its focus on operating its
power plants at higher efficiency levels

SHORT TERM FINANCIAL POLICY

The Short term financial policy of a firm is concerned majorly concerned with the
following 3 important decisions:

The Working Capital Requirements of the firm

Measuring and analysing Operating and Cash cycle for day to day operations
Evaluating firms investment in current assets to increase their yield.

Working Capital Analysis

Working capital refers to the management of cash flows such that a firm is able
to continue its operations and that it has sufficient ability to satisfy both maturing short-
term debt and upcoming operational expenses.

Net working capital for the firm is decreasing for the year except for 2013 to
2014. The decrease can be attributed to the fact that the firm is investing more
in long term assets and power industry being asset major industry its justified
as company tries to get more diversified.

The other increase for a year can be explained where company is investing
more in gaining current assets in order to service their day to day needs and
bring stability.

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 N E T WOR KIN G C AP ITAL & C U R R E NT
R AT IO
40,000.00 0.70
20,000.00 0.60
0.00
2016 2015 2014 2013 2012 0.50
-20,000.00
-40,000.00 0.40

-60,000.00 0.30
-80,000.00
0.20
-100,000.00
0.10
-120,000.00
-140,000.00 0.00

Net working capital Current Ratio

Operating Cycle and Cash Cycle

Mar '2016 Mar Mar Mar Mar

'2015 '2014 '2013 '2012
Operating cycle 405 320 258 265 215
Cash cycle 214 132 -14 -91 -24
Days in payables 191 188 272 356 239
Days in Inventories 244 192 150 138 129
Days in Receivables 161 129 108 127 87

Operating Cycle and Cash Cycle

500
400
300
200 Cash cycle
100
Operating cycle
0
-100 2016 2015 2014 2013 2012

Operating cycle Cash cycle

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 From the above it is evident that both the Operating Cycle and the Cash cycle
has decreased for NTPC except for the year from 2013 - 2014
It is because the days in Inventories and Receivables have both increased while
the days in Payables have come down.

Investments in Current Assets

The company maintains a very high Current Assets to Sales Ratio

This means that the company has a very flexible short term finance policy.
TPC Ltd is rated below average in current asset category among related
companies. It is rated below average in price to sales category among related
companies

Mar '2016 Mar '2015 Mar '2014 Mar '2013 Mar '2012

Current
assets to 0.424 0.5137 0.557 0.639 0.635
sales

Current assets to sales

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2016
2015
2014
2013
2012

LONG TERM FINANCIAL POLICY

NTPC listed its share on BSE and NSE on 6th November, 2004 at Rs 88 on NSE
and 70 on BSE. The issue price was fixed at Rs. 62 per share of Rs. 10 each. On the
NSE and the BSE the scrip closed at Rs. 75.55. The company got listed on the
derivatives segment also.
The public issue was of 86.58 crore equity shares of Rs. 10 each consisting of a fresh
issue of 43.29 crore equity shares of Rs. 10 each by NTPC and an offer for sale of
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 43.29 crore equity shares of Rs. 10 each by the Government was oversubscribed by
about 12 times the issue size .
The bidding price band for the IPO was Rs. 52-62 per share.
The key objective of this issue was to fund a part of the generation capacity
expansion program that required a capital expenditure of Rs 415 bn. The issue size
in the range of Rs 45 bn to Rs 52 bn will fund 10% to 12% of the estimated capex.

Issue Summary
Type Public issue, Min. subscription 100 shares
100% book
building
Size Rs 45.0 bn to Rs Lead Managers ICICI Securities, ENAM
53.6 bn Financial Consultants and
Kotak Mahindra Capital
Company
Price Rs 52 to Rs 62 per Listing BSE & NSE
share
Face value Rs 10 per share Promoters The Government of India
Shares on offer 865.5 million Promoters post 89.5%
issue holding

Issue Opens October 07, 2004 Issue Closes October 13, 2004

Issue structure
QIBs Non-Institutional Retail
Investors Portion
Number of shares 422,607,500 211,303,750 211,303,750
% of net offer to public 50% 25% 25%
(non-employees)
Minimum Rs 50,001 Rs 50,001 100 shares
Bid/Application size
In multiples of 100 shares 100 shares 100 shares
Maximum Not exceeding the Not exceeding the Rs 50,000
Bid/Application size size of the offer size of the offer

The Authorized share capital of the company was Rs 8245.46 crores.

From To Class Authorized Issued Paid Up Paid Paid Up

Year Year Of Capital Capital Shares (Nos) Up Capital
Share Face
Value

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 2014 2015 Equity 10,000.00 8,245.46 8245464400 10 8,245.46
Share
As of 30, Sep. 2015, Government of India held around 74.96% equity shares in NTPC.
Over 680,000 individual shareholders hold approx. 1.92% of its shares. Life Insurance
Corporation of India is the largest non-promoter shareholder in the company with 10.03%
shareholding

Shareholders Shareholding

Promoters: Government of India 74.96%

Foreign Institutional Investors 9.19%

Financial Institutions/Banks 11.07%

Individual shareholders 01.92%

Mutual Funds/UTI 01.8%

Others 1.06%

Total 100.0%

Disinvestment

NTPC Limited is engaged in the business of power generation and has an installed
capacity of 30,644 mega watts. The paid-up capital of the company as on 31.03.2009
is Rs.8, 245.46 crore comprising 824, 54, 64,400 shares of face value of Rs.10
each. Presently, the Government of India is holding 75% approx of the paid up equity
capital of the company and the balance is held by public/institutions/FIIs. The shares
of the company are listed on the stock exchanges in India.

The Government of India intends to disinvest 5% paid up equity share capital of

NTPC Limited comprising of 41,22,73,220 shares out of its shareholding of 75%,
through Further Public Offer in the domestic market in future. A part of the Public
Offering will be reserved for the employees of the company.

Additionally over the years the government have reduced their stake in NTPC from
approx 85% to 75% as part of their initiative (policy) to encash their holding in PSUs
for cash for other govt initiatives.

24 | P a g e
 Mar Mar Mar
Year Mar '2015 Mar '2014
'2016 '2013 '2012
IGR 0.01 0.01 0.01 0.01 0.01

SGR 0.09 0.11 0.08 0.11 0.09

Actual
-0.05 0.01 0.09 0.06 0.13
Growth

IGR & SGR

0.14

0.12

0.10
Axis Title

0.08
SGR
0.06 IGR
0.04

0.02

0.00
2016 2015 2014 2013 2012

Company is using a mix of debt and equity for financing which shown from the data as
company has varying debt (long term) and also NTPC has issues FPO and IPOs during
the tenure as well.

DIVIDEND POLICY

For the year ending March 2016, NTPC has declared an equity dividend of
33.50% amounting to Rs 3.35 per share. At the current share price of Rs 148.30
these results in a dividend yield of 2.26%. The company has a
good dividend track report and has consistently declared dividends for the
last 5 years.

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 DIVIDEND DECLARATION TILL DATE
Announcement Effective Dividend Dividend(%) Remarks
Date Date Type
31/05/2016 08/09/2016 Final 17.5% Rs.1.7500 per
share(17.5%)Final Dividend

18/01/2016 05/02/2016 Interim 16% Rs.1.6000 per

share(16%)Interim Dividend

29/05/2015 03/09/2015 Final 17.5% Rs.1.7500 per

share(17.5%)Final Dividend

20/01/2015 04/02/2015 Interim 7.5% Rs.0.7500 per

share(7.5%)Interim Dividend

15/05/2014 13/08/2014 Final 17.5% Rs.1.7500 per

share(17.5%)Final Dividend

17/01/2014 31/01/2014 Interim 40% Rs.4.0000 per

share(40%)Interim Dividend

10/05/2013 05/09/2013 Final 20% Rs.0.7500 per share(7.5%)Final

Dividend & Rs.1.2500 per
share(12.5%)Special Dividend

18/02/2013 01/03/2013 Interim 37.5% Rs.3.7500 per

share(37.5%)Interim Dividend

10/05/2012 06/09/2012 Final 5% Rs.0.50 per share(5%)Final

Dividend

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PEER COMPARISON

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Peer Comparison
Short Term Financial Policy

Net Working Capital

20,000.00

0.00

Mar '12 Mar '13 Mar '14 Mar '15 Mar '16
-20,000.00

-40,000.00

-60,000.00

-80,000.00

-100,000.00

-120,000.00

Coal India NTPC Tata Power

( Refer to Excel for Calculations)

Net Working Capital Interpretation:

While comparing the three companies, we can deduce that NTPC has high
current liabilities which means that it has negative working capital higher
than its peer. Negative working capital could be a financing strategy
because NTPC is actually using its suppliers working capital as its own

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 Current Ratio
2.5

1.5

Axis Title
1

0.5

0
Mar '12 Mar '13 Mar '14 Mar '15 Mar '16

Coal India NTPC Tata Power

Current Ratio Interpretation:

While comparing the three companies, we can deduce that NTPC has maintained the
most stable current ratio over the last five financial years.

Whereas, Coal Indias current ratio has gradually reduced over due to decreasing
current liabilities.

Over the last 5 financial years, Coal India has better liquidity compared to NTPC and
Tata Power with reference to its current ratio.

Operating Cycle
500

400

300

200

100

Mar '12 Mar '13 Mar '14 Mar '15 Mar '16

Coal India NTPC Tata Power

Operating Cycle Interpretation:

Among the three companies, Tata power has stable operating cycle with least
variation. Whereas, Coal Indias operating cycle has increased significantly over the
last five years. NTPC has the longest operating cycle compared to Tata Power and
Coal India. This is largely because of high days in inventory and days in receivables.

29 | P a g e
 Cash Cycle
400

300

200

100

Mar '12 Mar '13 Mar '14 Mar '15 Mar '16 -100

Coal India NTPC Tata Power

Cash Cycle Interpretation:

Among the three companies, Coal India has the longest cash cycle due to
high days in inventory
Tata powers cash cycle has reduced over the years and for the last
financial year, it is calculated to be negative. On the other hand, NTPC
cash cycle has changed from negative to positive cycle due to shorter
payables cycles

Current Asset to Sales

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Mar '12 Mar '13 Mar '14 Mar '15 Mar '16

NTPC Tata Power

For the purpose of the analysis, we have ignored Coal India from the graph as
the ratio compared to others was very high primarily because of large current
assets it holds.
For both Tata Power and NTPC, the current asset to sales has reduced over
the last five financial years.

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Long Term Financial Policy

Debt to equity Ratio Interpretation

Debt to Equity Ratio

1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Mar '12 Mar '13 Mar '14 Mar '15 Mar '16

Coal India NTPC Tata Power

It is important to measure the debt-to-equity ratio because capital structure is

one of the fundamental considerations in financial management.
Debt-to-equity ratio which is low, say 0-0.1 for Coal India, would suggest that
the company is not fully utilizing the cheaper source of finance (i.e. debt)
whereas a debt-to-equity ratio that is high, say 1.4 for NTPC or 0.7 for Tata
Power, would indicate that the company is facing a very high financial risk.
But a higher debt-equity ratio however is because debt is a cheaper source of
finance compared to equity because of tax savings (dividends are not tax
deductible) and predictable return for lenders.
When debt-to-equity level increases, as it does for NTPC, the more expensive
source of finance (i.e. equity) is replaced by the cheaper alternative (i.e. debt)
leading to an increase in shareholder wealth.

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 Revenue Interpretation

Revenue
80,000.00
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00

Mar '12 Mar '13 Mar '14 Mar '15 Mar '16

Coal India NTPC Tata Power

As NTPC has a higher market share when compared to other two companies (Coal
India and Tata Power), their revenue is evidently high than Coal India and Tata Power.
In the case of Coal India, it experienced a major increase in sales for the period
reviewed and was also able to control the expense side of its business. That's a sign
of very efficient management, and more likely than not, gives a really good clue as to
how solid of an investment the company may be.

Sustainable Growth Rate Interpretation

SGR
0.5
0.4
0.3
0.2
0.1
0
Mar '12 Mar '13 Mar '14 Mar '15 Mar '16 -0.1
-0.2
-0.3
-0.4

Coal India NTPC Tata Power

The sustainable growth rate (SGR) is a companys determined growth rate in

sales using internal financial assets and without having to increase debt or
issue new equity. The value of SGR for Tata Power and NTPC are almost

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 constant for last 5 years whereas for Coal India it is fluctuating at regular time
interval as there is a lot of variation in the dividend paid over the last 5 years.

Internal Growth Rate Interpretation

IGR
0.25

0.2

0.15

0.1

0.05

0
Mar '12 Mar '13 Mar '14 Mar '15 Mar '16
-0.05

-0.1

-0.15

-0.2

Coal India NTPC Tata Power

The low values of IGR, for the companies considered, suggest that they are
able to achieve growth in business without obtaining outside financing. It
measures a firm's ability to increase sales and profit without issuing more stock
or debt. The decrease in IGR, of Coal India, even though its borrowings for the
past few years is zero, is because of their internal growth strategy to increase
the companys market share for products the firm already sells.

Annual Growth Rate Interpretation

The AGR of the three companies are on the same line as SGR, the value of AGR for
Tata Power and NTPC are almost constant for last 5 years as they are looking at
sustainable growth, on the other hand for Coal India there is a lot of fluctuation due to

33 | P a g e
the high variation of dividend payments over the last 5 years.

AGR
0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
Mar '12 Mar '13 Mar '14 Mar '15 Mar '16
-0.1

-0.2

Coal India NTPC Tata Power

Dividend Policy

Dividend Payout Ratio

1.4

1.2

0.8

0.6

0.4

0.2

0
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12

Coal India NTPC Tata Power

Dividend payout ratio interpretation

Out of all the three companies Coal India has the Highest Dividend Payout Ratio,
followed by NTPC and TATA Power.
Coal India has one of the highest Dividend Payout Ratios in the Industry.

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 Even though all the companies are stable in their payments, both NTPC and TATA
Power have low payouts compared to Coal India

Retention Ratio
1

0.8

0.6

0.4

0.2

0
Mar '12 Mar '13 Mar '14 Mar '15 Mar '16
-0.2

-0.4

Coal India NTPC Tata Power

Retention Ratio Interpretation

As is evident from the graph, Retention Ratio of Coal India is lowest.
Coal India has been consistently giving high dividends for the past 5 years because of
which its retains less money.

SPLITS, BONUS AND REPURCHASE

COAL INDIA TATAPOWER NTPC

SPLIT NO YES NO

BONUS NO NO NO

REPURCHASE YES NO NO

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