Author: Priyanka Bhaidkar
Introduction
The Power Grid Corporation of India Limited, often referred to as POWERGRID or PGCIL, is a renowned Indian state-owned company, established in 1989. It plays a pivotal role in the country’s power transmission and distribution sector. POWERGRID boasts a significant market share in India. It is a listed Company, with 51.34% holding of Government of India and the balance is held by Institutional Investors and public. The company is listed on major stock exchanges in India, including the BSE and NSE. Its primary offerings include power transmission for 275 substations, consultancy for over 25 global clients and 150+ domestic clients, and project management services, with a focus on enhancing the reliability and efficiency of India. The company has received several awards for its contributions to the power sector and its operational excellence. Some of its notable awards are, the prestigious Miniratna Category-I status, the Maharatna status for its significant recognition for public sector enterprises, Golden Peacock Environment Management Award for environment management, SCOPE Meritorious Award for being one of the top performer enterprises in Public sector and Corporate Social Responsibility Award for its significant contributions to social and environmental initiatives.
Objective
To calculate Beta and to see its significance.
Review of Literature
Case Study of Efficiency Analysis on Power Grid Corporation of India Ltd
Gupta and Gupta (2014) conducted research on ‘Efficiency Analysis on Power Grid Corporation of India Ltd.’ In 2014, Power Grid wheeled about 50% of the total power generated in India with a pan-India presence, hence the sound financial health of the company would thus aid in achieving higher growth of the power sector. The present study was conducted to get insights on the financial management at PGCIL. Ten year data, i.e., from 2002-12 was considered for drawing observations with focus on efficiency analysis. The primary objectives were to study the financial health of PGCIL company and to study the impact of recession in 2007-08 on the financial performance of PGCIL. This paper was divided into three sections. Section I discussed the two liquidity ratios i.e. current ratio and acid test ratio for PGCIL over a period of ten years, 2002-2012. Section II presents the debtors turnover ratio and inventory turnover ratio of PGCIL over the ten year period and concluding observations are contained in Section III.
This study analyzed the liquidity ratios of PGCIL over the period of ten years, 2002-12. It was concluded from the analysis that the current ratio and the acid test ratios of PGCIL were at alarming levels. This situation warrants immediate remedial action for infusing positive sentiments to the short term lenders / creditors. The higher the turnover ratios, the better it is. This can be understood from the fact that companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover. Recession during 2007-08, had no effect on PGCIL liquidity.
A Study on Corporate Social Responsibility at Power Grid Corporation of India Limited
Lakra Sunit (2017) conducted a study on ‘Corporate Social Responsibility at Power Grid Corporation of India Limited’ in Bangalore. Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. This paper highlights the concept of CSR and practices exhibited by Power Grid Corporation of India Ltd.
This study was conducted using secondary data. In this study, data on the CSR was collected from the websites, annual reports, newspapers and CSR reports. Limitation of the study This study was done exclusively on CSR activities exhibited by Power Grid in India. CSR at Power Grid Power Grid emphasizes on the overall development of areas and communities around its establishments. It undertakes various community development schemes through provision of facilities like health, education, drinking water besides infrastructure like roads, community centers etc.
Under ‘rural development’ Power Grid has undertaken establishment of “Model Sites of Learning” in two locations in Kudgi (Karnataka) and Kurnool (Andhra Pradesh), of about 5000 hectare each, for a period of 5 years w.e.f. 2013-14 for harnessing the potential of rainfed areas by adopting integrated water source management approach and to enhance water availability Kurnool District progress indicates company’s initiative in soil analysis and fertilizer recommendations, capacity building program and land development with convergence of MGNREGA; Environment Protection through Installation of Solar Photovoltaic Lights in various village, plantation of 50,000 saplings etc was undertaken by POWERGRID in association with Eco-Task Force of the Indian Army. Under ‘skill development’, POWERGRID in association with NSDC (National Skill Development Corporation) is imparting livelihood oriented skill development training to 5000 youths spread across 33 locations across the country. Other certificate courses are also run by POWERGRID. It is also well known for its initiative of inclusion where Persons with Special Needs are skilled through their course. For contributing to health goals, they undertook construction of 10 storied, 325 bedded Dharmshala at AIIMS, New Delhi, for providing shelter to patients and their attendants. Preventive Health Checkup camps at 94 locations across India were set up. More than 25,000 persons enrolled and benefitted.
It can be concluded from the above exploratory study that ‘Power Grid’ is actively exhibiting Social Responsibility in various fields like Health, Education, Environmental protection. Policies are in place with regard to CSR. Company has an Integrated Management System to upgrade and improve the quality, health and environment management system.
Data collection
The data for Nifty and equity for company ‘Power Grid Corporation of India Limited’ has been downloaded from two websites, namely, finance.yahoo.com and nseindia.com respectively, from historical data head, for the period, ‘November 1st 2022’ to ‘October 31st 2023.’ The data was manipulated for arriving at the Friday closing prices for Nifty and Equity. Further, the Board of Directors of PGCIL in its meeting held on July 31st, 2023 announced the issue of bonus shares in the ratio 1:3 (1 equity share of the company for every 3 equity shares held). This had affected prices of shares from August 1st 2023. This was considered while calculating the returns. The returns on Nifty were named as ‘X’ and subsequently, returns of Equity were named as ‘Y.’. They both regressed.
Data analysis
POWERGRID = 0.3188 + 0.5308 NIFTY,
n= 48, R square= 0.049, F = 2.45
Above equation shows the relationship of the company ‘Power Grid Corporation of India Limited’ with ‘Nifty.’ t stat for b is 1.5679, p value is 0.12, which is more than 0.05 so, b = 0. Meaning Nifty does not impact ‘Power Grid Corporation of India Limited.’
R^2 = 0.049 Meaning 4% of ‘Power Grid Corporation of India Limited’ share is explained by Nifty and 96% depends upon other things like fundamentals.
F = 2.45 And p = 0.12 which is more than 0.05, hence, the model is not statistically significant at the 5% significance level, further Nifty does not affect the share significantly.
Conclusion
The results indicate that (Beta) i.e. b = 0.5308 which is less than 1; so it is good for long term investment.
References
1.Gupta Surbhi and Gupta Mohit, (2014), ‘A Case Study of Efficiency Analysis on Power Grid Corporation of India Ltd’ International Journal of Science and Research (IJSR), Amity University, Noida, Vol. 3 Issue 12, December 2014
2. Lakra Sunit (2017), ‘A Study on Corporate Social Responsibility at Power Grid Corporation of India Limited’ Community Institute of Management Studies Bangalore, Vol-3 Issue-5 2017
