Volume : 2 | Issue : 7 | July 2013 • ISSN No 2277 - 8160

Research Paper Commerce

A Study on “Financial Performance of BESCOM”

Dr. K.
Asst Professor, Govt. R.C. College of Com & Mgt, BANGALORE-01
Jayalakshmamma
The power sector in the country has been witnessing far-reaching changes in the last few years. Most of the monolithic
ABSTRACT state electricity boards have been unbundled generation, transmission and distribution activities separated by creating
separate companies. Regulatory commissions have been set up to ensure efficiency and economy in activities of
electricity industry besides fixing the electricity tariffs in a transparent manner. All these measure were initiated to improve the poor finical health
of state owned power utilities to overcome the power shortage (particularly during peak hours) and ensure reliability and quality of power to
the consumers. Karnataka is one of the few states in the country which are in the forefront of power sector reforms. It passed the Karnataka
Electricity reforms Act in 1999.

KEYWORDS: Power sector, efficiency, finical health & electricity tariffs

INTRODUCTION BESCOM in supplying power to all the sectors of the economy as well as
Aims to achieve continuous performance, enhancement in the areas its achievements in satisfying the needs of the society.
of operation and management of the infrastructure, implementation
of new projects/schemes and to require and sustain best practices in Objectives of study:
these areas with good business ethics and values. The Mysore state a) To know the growth & development of BESCOM.
had the enviable and glorious position of establishing the first major b) To know the different services rendered by the BESCOM to the cus-
hydroelectric generating station for commercial operations at Sivana- tomers.
samudram as early as 1902. The art at that time was still in its infancy, c) To identify the performance of BESCOM.
even in the advanced countries. The longest transmission line, at the
highest voltage in the world, was constructed to meet the power needs Scope of the study:
of mining operations at kolar gold fields. The generating capacity of The area of study is limited to the functioning of BESCOM at Chickbal-
the shivanasamudram power house gradually increased to 42 MW in lapur for 3 years.
stages. To meet the increasing demand for power, the shimsha gener-
ating station, with an installed capacity of 17.2 MW, was commissioned Methodology : Primary Data
in the year 1940. The power demand was ever on the increase, for in- The data has been collected from the primary sources by formal inter-
dustries and rural electrification, and additions to generating capacity views & discussions with the employees of the BESCOM.
became imperative. The 1st stage of 48 MW and 2nd stage of 72 MW of
the Mahatma Gandhi Hydroelectric Station were commissioned during Secondary Data
1948 and 1965, respectively. The state of Karnataka, with availability of Secondary data relating to the study has been collected from the jour-
cheap electric power, and other infrastructure facilities, was conducive nals, newspapers & internet.
for increased tempo of industrial activity. It became necessary to aug-
ment the power-generating capacity by harnessing the entire potential Tools for data collection:
of the Sharavathi valley. The first unit of 89.1 MW was commissioned in Data required for the study is collected through published statements
1964 and completed in 1977. of annual accounts of BESCOM, Such as profit and loss account and
balance sheet. This is further supplemented by information gathered
To improve the performance of the power sector and in tune with the during the discussion with their branch manager.
reforms initiated by Government of India, the Government of Karnata-
ka came out with a general policy proposing fundamental and radical Plan of Analysis:
reforms in the power sector. Accordingly an Act, namely the Karnataka The analysis as been done with the help of financial statements com-
Electricity Reforms Act was passed by the Karnataka Legislature. The parison of past years tables and statements of the company.
Reforms has mandated major restructuring of the Karnataka Electricity
Board and its Corporation. As part of corporation, Karnataka Electricity Limitations of the study
Board ceased to exist and Karnataka Power Transmission Corporation 1. Limitation of time: The time provided for the study was limited.
Limited was constituted from 1st August 1999. 2. Limitation of data collection: Due to shortage of time only impor-
tant information has been collected.
As a part of the reforms, the distribution sector was further divided into 3. Some information cannot be collected as it is confidential.
4 companies viz.
PLAN OF ANALYSIS
BESCOM-Bangalore Electricity Supply Company Limited. Unmetered Energy
SLNO CATEGORY IN CRORE
HESCOM-Hubli Electricity Supply Company Limited.
1 Irrigation Pump Sets 2694
MESCOM-Mangalore Electricity Supply Company Limited. 2 Public 3045
3 BJ / KJ 81.9
GESCOM-Gulbarga Electricity Supply Company Limited. Total 5820.9
These companies came into existence from 1st June 2002. Total Energy Sold : 14115 Mus

Statement of the problem: %energy loss : 25.07% (without EHT)

Power is highly required for any economic sectors of the world as well
as for all the human beings this power is mainly supplied by BESCOM Power supply
and more over there are no competitors for the supply of power for Power supply to rural areas was ensured to be per the direction of the
BESCOM this study is mainly conducted to know the performance of state government.
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 Volume : 2 | Issue : 7 | July 2013 • ISSN No 2277 - 8160

EFFICIENCY IMPROVEMENT in the year 2006-07 & it has been increased to 280.71 in the year 2007-
As a consequence are objective approaches. The revenue demand and 08.
collections have shown as increased trend has continued in FY-2008.
Table Showing the Share Deposit
Table shows the Revenue Demand
Particulars 2007-08 2006-07 2005-06
Demand FY 04 Rs.2769
Share Deposit 42.86 42.86 22.62
Demand FY 05 Rs.3195
Total 42.86 42.86 22.62
Demand FY 06 Rs.3675
Demand FY 07 Rs.3915 INTERPRETATION:
From the above table we can observe that the share deposits of BES-
Demand FY 08 Rs.4347 COM is 22.62% in the year 2005-06, it has been increased by 42.86% in
the year 2006-07 & it has maintain same in the year 2007-08.
INTERPRETATION:
Form the above table we can observe that the revenue demand of Table Showing Service Line & Security Deposit
BESCOM is increasing year by year when compare to previous year like
Particulars 2007-08 2006-07 2005-06
2006 &b 2007. i.e., it is increase in increasing rate.
Service Line & Security Deposit 30.23 14.52 40.95
Table shows Revenue Collections Total 30.23 14.52 40.95
Particular Years Amount (Crores) INTERPRETATION:
Collection FY 2006 Rs.3675 From the above table we can observe that the securing deposits of BES-
COM in the year 2005-06 is 40.95 & it has been decreased to 14.52 in
Collection FY 2007 Rs.3815 the year 2006-07 & it the year 2007-08 it has been increased to 30.23.
Collection FY 2008 Rs.4347
Chart Showing Service Line & Security Deposit
INTERPRETATION:
The revenue collection has increased. The percentage of revenue is
14.37% Revenue Gap is down by 42.8% from Rs.421 Crores to Rs. 237
Crores.

Table shows Collection Efficiency

Collection Efficiency Without BJ/KJ overall
FY-06 95.60% 84.28%
FY-07 96.07% 86.84%
FY-08 96.15% 87.73%

INTERPRETATION: FINDINGS:
Form the above table we can observe that the collection efficiency of  Year by year the revenue demanded has been increased as per the
BESCOM in increased every year when compared to previous year i.e., increase in revenue demand, revenue collection also increased.
for 2007-86.84% & 2008-87.73% it shows that the company has to in-  Reserve & surplus of the company as increased to (280.71) Rs in
crease its collection efficiency. crores in 2007-08 when compare to 2005-06 (175.36) crores.
 Secured loans of the company also increased in 2007-08 when
Table shows Showing Meter Consumption compare to 2005-06.
Input Energy Meter Consumption  Unsecured loans of the company have been decreased by
Year (MU) (MU) % percentage 3196.63%.
 The gross & net block assets of the company have been increased
FY – 2007-08 18539.2 14115.43 76.13 year by year & working capital also increased.
 Current assets of the company has been decreased by 1000 crores
The metered consumption has increased. it shows credit sales of the company has been decreased.
 Current liabilities of the company have been increased by 1000
Table Showing Reserves & Surplus crores which show credit purchase has increased.
Particulars 2007-08 2006-07 2005-06 SUGGESTIONS:
Reserves & Surplus 280.71 75.2 275.36  The company has increases its reserve demand & revenue collec-
tion increased year by year by this it should be maintain the same
Total 280.71 75.2 275.36 or increase in future also.
 In collection efficiency of the company is increased only 5% by this
INTERPRETATION: it has increased its collection capacity.
From the above table we can observe that the reserves & surplus of  The reserve & surplus of the company is increased it shows the
BESCOM is 275.36 in the year 2005-06 & It has been decreased by 75.2 company is in good position it should maintain same.
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Volume : 2 | Issue : 7 | July 2013 • ISSN No 2277 - 8160

 The same deposits of the company has been increased it shows CONCLUSION:
the healthy position of the company. From the study conducted by me A STUDY ON PERFOFMANCE OF BES-
 The secured loans of the company is increased it shows the in- COM AT CHICKBALLAPUR. I came to know the performance of BESCOM
crease in liabilities the company has to reduce the secured loans .Then way of classification of costs. I came to know the risk taken by
of the company. BESCOM both financially & technically by calculating the financial per-
 Unsecured loans of the company is decreased it is good to compa- formance of BESCOM from Last 3 years.
ny.
 The gross & net block of the company is increases it shows the So, I have concluded my study with classification & comparison of vari-
company in good position. ous item From last 3 years .I have identified various reasons for the de-
 The current assets of the company have been decreased so that cline & improvement in the performance of BESCOM in last 3 financial
should maintain the same. years. I have also come out with certain suggestions to overcome the
 The current liabilities of the company have been increased. It is not reasons for declining in the performance which may help the BESCOM
good to the company it is better to decrease the current liabilities to improve upon functions.
of the company.

REFERENCES Holmes, Geoffrey Andrew, Sugden, Alan, and Gee, Paul, 2008. Interpreting company reports and accounts. | McKenzie, Wendy, 2010. FT guide
to using and interpreting company accounts. , Financial Times guides. | O’Regan, Philip, 2006. Financial information analysis. | Pendlebury, M.
W. and Groves, Roger, 2003. Company accounts: analysis, interpretation and understanding. | Penman, Stephen H., 2013. Financial statement
analysis and security valuation, New York: McGraw-Hill. | Pike, Richard and Neale, Bill, 2009a. Corporate finance and investment: decisions & strategies. | Pike, Richard and Neale,
Bill, 2009b. Corporate finance and investment: decisions & strategies. | Rees, Bill, 1995. Financial analysis. | Walton, Peter, 2000. Financial statement analysis: an international
perspective. | WWW.BESCOM.com

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