AN ORANISATIONAL STUDY AT NLCIL WITH SPECIFIC

REFERRENCE IN FINANCE
AND
ACCOUNTS BRANCH

Summer Internship Project Report

NLC India Limited

Prepared at:

NLC India Limited

By

NITHYA S.

MBA

SONA SCHOOL OF MANAGEMENT, SALEM.

1
 NLCIL LIMITED

“NAVARATNA” – GOVERNMENT OF INDIA ENTERPRISES

NEYVELI, TAMIL NADU

CERTIFICATE

This is to certify that the summer internship project report entitled “An Organizational
Study at NLCIL with Specific reference in Finance and Accounts” is the bonafide
work done by “S.NITHYA, Reg No: 1717301092”, in the partial fulfillment of the
requirement for the award of Master of Business Administration at SONA SCHOOL OF
MANAGEMENT, SALEM, done during the period from 15-06-2018 to 15-07-2018 at
Corporate Office, NLC India Limited, Neyveli.

Mr.T.Sumukha

Manager/Finance/Taxcell/CO

NLC India Limited, Neyveli.

PLACE : CHIEF MANAGER / L&D

DATE : Learning & Development Centre,
NLC India Limited

2
 DECLARATION

I affirm that the summer project work report titled “AN ORANISATIONAL STUDY
AT NLCIL WITH SPECIFIC REFERRENCE IN FINANCE AND ACCOUNTS
BRANCH” being submitted in partial fulfillment for the award of degree of Master of
Business Administration at Sona School of Management, Salem done during the
period Between 15.06.2018 to 15-07-2018 at CORPORATE OFFICE, NLC INDIA
LTD, NEYVELI is the original work carried out by me. It has not formed of any project
work submitted for an award of any degree or diploma, either in this or any other
university.

PLACE: Signature of the Student

DATE: [NITHYA.S]

3
 ACKNOWLEDGEMENTS

I express our sincere thanks to NLC INDIA LTD for providing this opportunity to carry
out the summer internship project.

I also express our sincere thanks to Mr. A.KATHIRVEL, CHIEF MANAGER/L&D,

Learning and Development Centre for providing us the opportunity to carry out the
project work in NLCI Limited.

I would like to thank my mentor Mr. T.SUMUKHA, MANAGER/FINANCE/TAX

CELL, CORPORATE OFFICE, NLCI Limited for his constant guidance and support.

I would like to thank Mr. SURAJITH SAHUL, DM/TAX CELL, CORPORATE

OFFICE, NEYVELI for supporting me in the internship training.

I express my sincere thanks to Mr. ANDE VASU, DEPUTY MANAGER OF

FINANCE /TREASURY CELL for his guidance and valuable support.

I express my sincere thanks to Mr. J.SIVAKUMAR, ADDITIONAL CHIEF

MANAGER/FINANCE/TREASURY CELL for his guidance to carry out this
internship project.

Finally, I would like to express my sincere thanks to all of the individuals and
organization who guided and supported me to complete my internship project.

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 ABSTRACT
The report aims at providing a general picture about the Finance and Accounts branch in
NLC with a specific detailed study about the functions of the taxation and treasury
department. Literature review explains the overview about nlc and the Finance and
Account branch followed by various functions and implications regarding, Advance tax,
Taxation and the activities in the treasury pertaining to NLC is discussed.

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 TABLE OF CONTENTS

TOPIC PAGE NO

TITLE PAGE 1
CERTIFICATE OF EVALUATORS 2
DECLARATION 3
ACKNOWLEDGEMENT 4
ABSTRACT 5
LIST OF TABLES 7
LIST OF CHARTS 8
1. INTRODUCTION 9
1.1 COMPANY PROFILE 9
1.2 VISION, MISSION AND VALUES 11
1.3 EVOLUTION OF NLC 12
1.4 GOVERNING BODY 12
1.5 GROUP COMPANIES 14
1.6 CSR INITIATIVES 15
2. ORGANIZATION 19
2.1 HR FUNCTIONS 19
3.FINANCE 24
3.1 FINANCE FUNCTION 24
3.1.1 ESTABLISHMEN SECTION 25
3.1.2 TREASURY 25
3.1.3 COMMERCIAL 25
3.1.4 TAXATION 26
3.1.5 TDS 26
3.1.6 CAPITAL STRUCTURE 27
3.1.7 INCOME STATEMENT 28

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4.OPERATIONS 29
4.1 MINING 29
4.1.1 MINE-I 29
4.1.2 MINE-II 29
4.1.3 MINE-I A 29
4.1.4 BARSINGSAR MINE 29
4.2 POWER GENERATION 30
4.2.1 THERMAL POWER STATION –I 31
4.2.2 THERMAL-II 32
4.2.3 THERMAL-I EXPANSION 32
4.2.4 TPS-II EXPANSION 32
4.2.5 BARSINGSAR POWER STATION 32
5. LITERATURE REVIEW 34
6.RESEARCH METHODOLOGY 35
7.FINDINGS 37
7.1 TAXATION SECTION 37
7.2 ADVANCE TAX 38
7.3 TAX AUDIT 39
7.4 BILLING 39
7.5 TREASURY 39
7.6 SWOT ANALYSIS 41
8.CONCLUSION 42

9.REFERRENCE 43

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 LIST OF TABLES

TABLE 1.1 HISTORY OF NLC

TABLE 1.6 CSR ACTIVITIES ALLIGNED WITH GOALS

TABLE 2.1 HR DETAILS UNIT WISE EMPLOYESS COUNT

TABLE3.1.6 NLC CAPITAL STRUCTURE

TABLE3.1.7 INCOME STATEMENT

TABLE4.1.1 MINES AND ITS CAPACITY

TABLE4.2 THERMAL POWER AND ITS CAPACITY

TABLE7.2 ADVANCE TAX FORMATS

LIST OF CHARTS

CHART NO 1.3 EVOLUTION OF NLC CHART

CHART NO 2.1 ORGANIZATION STRUCTURE OF HR

CHART NO 3.1 ORGANIZATION STRUCTURE OF FINANCE

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 CHAPTER – 1

INTRODUCTION

1.1 COMPANY PROFILE

NLC India Limited (NLCIL) is formerly known as Neyveli Lignite

Corporation Limited is a government owned Lignite Company located in Neyveli,
Cuddalore District, Tamil Nadu. NLC is administered under the control of Ministry Of
Coal. The formation of NLC as a corporate body in 1956 and later it went to public in 7 th
March of the year 1986. It is engaged in the power business. The main activity of NLC is
lignite mining and power generation. It generates power to the states of Tamilnadu,
Andhra Pradesh, Kerala, Karnataka, Telangana and the Union Territory of Puducherry.

HISTORY

YEAR EVENTS OCCURRED

1935 The occurrence of coal deposits were first predicted around 1935 by certain French
Engineers in the coal starved Southern region of India

1938  Bore wells were sunk in Shri. Jambulinga Mudaliyar’s land in Neyveli and the
Black particles gushing forth attracted the attention of campaign Geologists
engaged in some other mission in the Neyveli, Virudhachalam area.
 Samples of the black substance taken from the above form well were sent to the
Government of Madras for analysis .

1945  The Geological Survey of India starts drilling operations near Neyveli around
1945
 Preliminary investigations indicate the existence of Lignite to the extent of about
500 tones in that area.

1956 NLC was formed as a Corporate body. NLC was born as a sponsored commercial
concern.

Table1.1 History of NLC

9
NLCIL Operates

 Three Open Cast Lignite Mines of total capacity of 28.5 Million Tonnes Per
Annum (MTPA) at Neyveli, Tamil Nadu and one open cast lignite Mine of
capacity 2.1 Million Tonnes Per Annum at Barsingsar, Rajasthan.
 Five pithead Thermal Power Stations with an aggregate capacity of 3240 MW.
Further NLC has also so far installed 17 Wind Turbine Generator of 1.50 MW
each, aggregating to 25.5 MW, thereby increasing overall power generating
capacity to 3265.50 MW.
 NLC has forayed into renewable energy sector with inauguration of a 10 MW
Solar Photo Voltaic power plant in Neyveli, thereby increasing the overall power
generating capacity to 3275.50 MW.
 A coal based thermal power project at Tuticorin, Tamil Nadu consists two units of
500 MW capacity each is being implemented through NLC Tamil Nadu Power
Limited (NTPL), a joint venture between NTPL and TANGEDCO (Tamil Nadu
Generation and Distribution Corporation) with equity participation in the ratio of
(89:11) and three units of 660 MW of each is being implemented through NUPPL
(Neyveli Uttar Pradesh Power Limited) a joint venture between NLC and
UPRVUNL (Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited) with equity
participation in the ratio of (51:49)
 A NAVARATNA company under the ministry of Coal.
 Present Mining Capacity - 30.6 MTPA (Lignite).
 Present Power Generation Capacity : 3240 MW (Lignite), 1000 MW(Coal), 140
MW(Solar),51 MW(Wind), Total – 4431 MW.
 Projected Capital Expenditure (up to 2025) : Rs.1,28,983Crore with a debt-equity
ratio of 70:30.

1.2 Vision, Mission and Values of NLCIL:

VISION

To emerge as an environment friendly and socially responsible leading Mining &

Power Company and strive for operational excellence in Mining & Exploration and
Power generation.

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MISSION

 To strive towards greater cost competitiveness and work towards continued

financial strength.
 To continually imbibe best practices from the best Indian and International
Organizations engaged in Power generation and Mining.
 To be a preferred employer by offering attractive avenues of career growth and
excellent work environment and development of human resources.
 To play an active role in society and be sensitive to emerging environmental
issues.

VALUES

N National Orientation

L Learning and Development

C Commitment for Excellence

I Innovation and Speed

TAGLINE

Creating Wealth for Well Being.

LOGO

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1.3 Evolution and Key Milestones

The Evolution and Key Milestones of NLCIL India Limited from 1956 to till

1.3 Evolution of NLC chart.

1.4 GOVERNING BODY

 Dr. SARAT KUMAR ACHARYA,

CEO and also ( Chairman and Management Director) is engaged
in spreading the wings of NLC India Limited, the Navratna company of
Govt. of India that he leads to various parts of the country with diverse
business portfolios such as
a) Lignite mining
b) Coal mining
c) Thermal power generation
d) Solar power generation
e) Wind power generation
 He also holds the position of Chairman in two more companies – NLC
Tamilnadu Power Limited (NTPL) and Neyveli Uttar Pradesh Power Limited
(NUPPL) engaged in coal based Thermal power generation/project
construction.

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  Dr. Acharya is a fellow of NIPM, co-chairs the National Mining Committee
and PSE Council council in CII, India and also is on the Board of governors
for institute of Public Enterprises, India. Widely travelled and well trained in
India and abroad, Dr. Acharya is a thought leader and achiever in the
Corporate Business.

Other Members in the Board of Directors are:

 Shri. PRABHU KISHORE, Chief Regional Manager.

 Shri. K. VISWANATH, Company Secretary.
 Shri. RAKESH KUMR, Director (Finance).
 Shri. V. THANGAPANDIYAN, Director (Power).
 Shri. R. VIKRAMAN, Director (Human Resource).
 Shri. NADELLA NAGA MAHESWAR RAO, Director (Planning and
Projects).
 Shri. SURESH KUMAR, Part time official Director.
 Shri. VIKRAM KAPUR, Part time official Director.
 Shri. AZAD SINGH TOOR, Non-official Part time Director
(Independent Director).
 Shri. CHANDRA PRAKASH SINGH, Non-official Part time Director
(Independent Director).
 Shri. K.MADHAVAN NAIR, Non-official Part time Director
(Independent Director).
 Shri. INDRAJIT PAL, Independent Director.
 Smt. NALINI PADMANABHAN, Independent Director.
 Smt. MONIKA ARORA, Independent Director.

1.5 GROUP COMPANIES:

Collaboration of NLC and Joint Ventures:

 1986 - A supplementary feasibility report for first mine expansion and

a report on setting up a Power Station of 2x210 MW were submitted to
the Government of India.

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 1987 – The company along with Engineers India Ltd had entered into a
contract with Gujarat Mineral Development Corporation for
monitoring expansion and commissioned the 400 KV transmission
system line between Neyveli to Chennai and Neyveli to Pondicherry
along with sub stations.
 1988 – An agreement was entered into with ICB of India for the
preparations of the Techno feasibility report for revamping the urea
plant with the consultation of original supplier Technimont, Italy.
 1990 – Then four electro static precipitators were erected and
commissioned in Thermal Power Plant-I.
 1993 – A contract was signed with M/S PDIL, Sindri for installation of
efficient treatment plant for the fertilizer factory.
 1998 – Corporation had take up a sizeable equity stake in the 250 MW
lignite based power project is being established at Srimushnam in the
state by Tamilnadu Industries Captive Power Company ltd (TIPACO).
 1999 – NLC entered into an agreement with ST – CMS an US Power
generating private company to set up 250 MW Thermal Power station
to supply lignite.
 2000 – The company had transferred its Power Transmission System to
Power Grid Corporation of India Ltd.
 2002 – NLC had signed a MOU with Rajasthan government to set up a
lignite based Thermal power station at Barsingsar in Bikaner district.
 2003 – The company had entered into MOU with Tamil Nadu
Electricity Board for setting up of 100 MW Thermal Power station at
Tuticorin in Tamil Nadu.
 2004 – NLC bagged an ISO quality certification and made a tie up
with the Oil and Natural Gas Corporation Ltd (ONGC).
 2005 – The company had entered into MOU with Rural Electrification
Corporation and made a Joint venture agreement with Tamil Nadu
Electricity Board.
 2007 – The company had entered into a Joint Venture Agreement with
Mahanadhi Coal Fields, a subsidiary of Coal India for developing and
Talabira II and III Coal blocks.

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  2015 – NLC Tamil Power Limited (NTPL) – a Joint Venture between
NLC and TANGEDCO and also the subsidiary company NUPPL With
UPRVUNL.

1.6 CSR INITIATIVES

NLC views its business as an opportunity to set up the mechanisms for

sustainable socio-economic development of its operating regions and also for contributing
to the National Building efforts. NLCI’s Business Strategy are closely linked to its -
orporate Social Responsibility (CSR). NLCI has been taking various CSR
projects/activities for the benefits of inhabitants of neighboring village’s right from its
inception and had adopted a full-fledged CSR policy from the year 2009.

NLC’s Operations are Technology and Project Driven with extensive land
requirements. NLC is aware of the three dimensions of the CSR with specific and
conspicuous as natural corollary to its large scale Mining and Power Station Projects,
namely:

1. The production and supply of electricity at low cost with minimum impact
on the environment.
2. The Peripheral/Community development by regular Extra–Business
contribution to the society.

CSR POLICY:

The purpose of NLC’s CSR policy is to maximize its contribution to the Sustainable
Development of the Localities in which it operates.

CSR APPROACH

A systematic and positive approach to enhance on all the three facts, viz. profit,
people and planet in such a manner to deliver value addition to all stakeholders.

MAJOR THREATS AREAS

1. Economic Performance.
2. Social Performance- covering Education, R&R, Quick Resolution of
Compensation disputes, Peripheral Development, Employability and

15
 Entrepreneurial Development, Employability of Engineering and
Management Students, Health and improving the quality of life.
3. Environmental performance.

BUDGET

Though the minimum CSR funding requirements under the DPE guidelines is
0.5% of net profit, NLC has allocated 1% of Profit after tax for CSR.

CSR PLAN AND GOALS

The CSR process is NLC is METHODOLOGICALLY targeted at attaining the

objectives of:

1. Striking win – win Solutions in all situations involving the interest of the
stakeholders.
2. Establishing a harmonious relationship of NLC with the local Public.
3. Inclusive growth with appropriate value shared with all the stakeholders.
4. Environment Production and upgradation for the future.

GROUP OF NLC CSR ACTIVITIES SOCIAL GOALS TO WHICH ALLIGN

The core business of NLC is an Eradicate extreme Poverty and hunger,

environmentally friendly and socially Develop a Global Partnership for
sustainable manner Development.

Supply of mines water to surrounding Eradicate extreme Poverty and hunger.

villages for irrigation.

Environmental safety measures, Pollution Ensure environmental sustainability.

Integrated farming system developed in the
control, Afforestation, Land reclamation,
afforested area.
Construction of check – dams, Rain
water harvesting

Education to the children of Local Achieve universal primary Education. In

Neyveli Township Schools upto Higher
society in Neyveli Schools along with the
Secondary level and colleges are

16
ward of NLC employees/contract functioning.
workers. Construction of schools in
Peripheral villages, supplying uniform,
notebooks for students.

Support to Women in Public Sector Promote Gender Equality & Empower

WIPS, Ladies Club etc., Women.

Community Health Screening Campus Combat HIV/Malaria and other disease.

Free out – patient treatment and Health to all. NLC hospital is available.
subsidized inpatient treatment for
surrounding villagers.

1.6 NLC’s CSR activities aligned with the Social Goals.

CSR ACTIVITIES IN PERIPHERAL DEVELOPMENT

The CSR of NLC is participatory in nature. As regards the Peripheral Developmet

Scheme

(PDS) works, rapid baseline survey is conducted in the locality for the purpose of
analyzing the needs of the local society. NLC has been making a Regular Annual Fund
Allocation exclusively for PDS works. This allocation has been enhanced from Rs.1
Crore from 2 Crore per annum. NLC’s Peripheral Development Scheme works are:

 Concrete Road in Muthadikuppam.

 Black Topped Road in Vadakkuvellore.
 Drinking Water Borewell Melakuppam.
 High School in Erumbur.
 Artificial Limbs/Calipers to over 25,000 persons across the State.
 Education – NLC management aided schools run by nlc’s provided
infrastructure are functioning in Neyveli Township.
 Annual Book-Fair at Neyveli adds to the intellectual flair of the local
population.
 Health – NLC hospital is functioning for the health of the people.
 NLC provides subsidized transport services to provide common access to
all the township facilities to the Public, along with its employees.

17
Notable recent awards are:-

 Award received from Government of Tamil Nadu for Best CSR.

 First place awarded by District TB Centre for TB Eradication
Programme.

18
 CHAPTER – 2

ORGANIZATION STRUCTURE

2.1 HR FUNCTIONS

DIRECTOR HR

EXECUTIVE DIRECTOR HR

GM HR GM-HR GM-HR GM-HR GM-HR

THERMAL NPP MINES NUPP

DGM-HR CM-HR

ACM-HR CM-HR TS ACM- CM HR CM DGM CM-HR

TS 2 2 HR TS 1 SERVICE MINES

2.1 Organizational structure chart.

EMPLOYEES DEVELOPMENT

The company gives high priority towards training of executives, supervisors and
workers. Apart from utilizing the training facilities available in the Learning and
Development Centre of the Company, the employees are also deputed to other training
centres within India. Training facilities provided by the equipment manufacturers within
the country/abroad are also utilized. Quality circle activities are co-ordinated in Learning
and Development Centre which has given many benefits to the Organization. Case study

19
presentation of Neyveli Quality Circles brought good name by demonstrating their
contribution outside Neyveli in many conferences.

TRAINING:

Learning and Development Centre is in the job of fulfilling the Training needs of all
categories of employees and developing the Skills, Knowledge and Attitude. TRAINING
and VALUE to LIFE is the mantra for development and indeed the growth of the
individual and the organization to which he belongs. The enrichment of the individual is
achieved through the objectives:

 Continual improvement of the Training Practices using the Skills and

Technology to excel in this Competitive World.
 To effectively utilize the In-house Competency of Human Potential
 To achieve Human Excellence through effective Training Practices.
 At LDC Training Programs are conducted under various categories.
 In-house Training Programs are planned systematically. All training
programs will start with prayer and end with a stress relieving
YOGA/Meditation in most of the programs as a work-life balancing art.

INDUSTRIAL RELATIOINS:

NLC continues to maintain cordial industrial relations. The Joint Council of

Unions and Associations of Engineers and Officers are functioning in NLC effectively.
The management has a regular system of discussions on common matter which helps to
maintain good industrial relations and to create mutual trust and belief among the
employees.

WELFARE OF THE EMPLOYEES

The Company as a model employer lays great stress on the welfare of its
employees and peripheral villages. Some of the salient features are:

 Township with over 21000 houses.

 Subsidized transport.
 Medicare with more than 350 bed facilities.
 Industrial Canteens.
 Special Incentive Schemes for small family norm.

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  Education-Schools and a college in Neyveli Campus.
 Recreation facilities like clubs, gyms.
 Post-retirement medical assistance.

NO. OF EMPLOYEES

UNIT CODES NAME OF THE UNITS MALE FEMALE TOTAL

COUNT COUNT

9 Central Establishment 850 191 1041

7 New Services Units 902 36 938

16 Medical 254 252 506

5 Thermal Power Station I 239 17 256

30 Barsingsar Ext Proj-Halda 10 0 10

Mines

15 Chennai, Kolakata, Delhi 87 30 117

and Mumbai.

29 Bithnok Project 7 0 7

11 Material Management 219 84 303

20 T.P.S-II 1379 36 1415

8 Township Administrative 941 165 1106

Office.

21 Mine-II 2757 55 2812

28 NLC Tamil Nadu Power Ltd 221 13 234

24 New Projects 41 3 44

19 Neyveli new Thermal 233 10 243

Station

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25 Barsingsar Project 428 5 433

31 NUPPL 102 0 102

26 Thermal Power Station II 239 1 240

Expansion.

1 Mine I and I A 3538 137 3675

2 Thermal Power Station-I 725 56 781

TOTAL 13172 1091 14263

2.6 HR Details-Unit Wise Male and Female Count.

PROMOTION

The promotion for lower level, middle level and upper level mainly depends on the
eligibility period.

Supervisors:

 S1-S2:1year-time bound basis subjected to fitness.

 S2-S3:4year-time bound basis subjected to fitness.
 S3-E1:4year-time bound basis subjected to fitness.

Junior Management:

 E1-E2:4year-merit selection.
 E2-E3:4year-time bound basis subjected to fitness.
 E3-E4:4year-time bound basis subjected to fitness.
 E4-E5:4year-time bound basis subjected to fitness.

Middle Management:

 E5-E6:4year-time bound basis subjected to fitness.

 E6-M1:3year-merit selection.
 M1-M2:3 year-vacancies based.

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Senior Management:

 M2-M3:18 months-vacancy based.

 M3-M4:18 months-vacancy based.
 M4-M5:12 months-vacancy based.
 M5-M6:12 months-vacancy based.

WAGE REVISION:

The wage revision is scheduled once in 10 years for executives by the pay
committee. Currently the wage is revised on 2017. For non-executive the wage revision is
scheduled for once in 5 years.

JOB ROTATION AND TRANSFER POLICIES:

The job rotation and transfer policies are need based. Generally there are four
various shift. They are general shift from 9am-5pm, three shift from 6-14hrs; 14-22hrs;
22-6hrs.

TRADE UNION:

There are around 13 trade union in NLC they are

CITU,INTUC,AITUC,LLF,PMK etc.,

CERTIFICATIONS:

 NLC’s Three Power Stations and the Three Mines at Neyveli are certified
with ISO 14001 (Environment Management System).
 ISO 9001 (Quality Management System).
 OHSAS 18001 (Occupational Health and Safety Management System).

23
 CHAPTER-3

FINANCE AND ACCOUNTS BRANCH

3.1 FINANCE FUNCTIONS.

DIRECTOR FINANCE

CGM – FINANCE CGM – FINANCE MINES CGM – FINANCE

THERMAL SERVICES

CGM – FIN ACM – FIN ACM – FIN ACM –FIN GM-FIN GM-
TPS 1 EXP TPS 1 TPS 2 TPS 2 EXP MINES FINANCE

DGM – FIN DGM – FIN DGM – FIN

MINES TAX AND TREA, COM,
SERVICES COST AND
BUDGET

ACM – FIN ACM – FIN ACM – FIN

MINES 1 MINES 1A MINE 2

CM – FIN DCM-FIN ACM-FIN ACM-

ESTAB SEC TAX PL FIN REG
OFF

3.1 Organization chart of finance.

24
There are 3 main sections that work in coordination with the F&AB section which are:

 Accounts Division of MINES

THERMAL
OTHER UNITS

FINANCE DIVISIONS.

1. Establishment Section
2. Treasury
3. Commercial
4. Taxation.

3.1.1 ESTABLISHMENT SECTION.

The establishment section looks after the personal services matters of all the
officials from joining to retirement. It includes

 Tax Provisions and Deductions

 Fixation of pay.
 Gratuity
 Superannuation benefit
 Employee provident fund.

3.1.2 Treasury

Treasury department consists of three main functions:

 Investment
 Loans
 Fund management

3.1.3 Commercial

 Commercial department prepare bills for power scheduled from the

NLC Stations on the beneficiary EBs/Discoms of the Southern Region

25
 and Rajasthan based on the allocation of the month as per Regional
Energy Account and Final Implemented Schedule of the respective
station.
 It plays a vital role in getting the tariffs fixed for NLC Power Station by
the regulatory body, Central Electricity Regulatory
Commission(CERC), represents NLC before CERC in the formulation
of major policies, notifications, Tarrif Regulations, Unscheduled
Interchange Regulations and the other Power related matters and
dispute redressal related to Power Sale etc.
 Preparing Invoices for Power Sales, taking efforts for Revenue
realization and resolution of disputes with the beneficiaries.
 Deals with Southern Regional Load Dispatch Centre in the matter of
SOC and MOC bills for NLC Power Stations
 Deals with CEA in getting allocation of Power for NLC Schemes.
 Deals with Power grid in getting Connectivity for NLC Projects.

3.1.4 TAXATION.

A tax is a financial charge or other levy imposed upon a taxpayer by a State or

the functional equivalent of a State to fund various public expenditures.

3.1.5 TDS

Tax deduction at source means the tax required to be pid by the assesses, is
deducted by the person paying the income to him. Thus, the tax is deducted at the source
of income itself. The tax so deducted at source by the payer is to be deposited in the
income tax department account.

Tax Deductor has to prepare and file Quarterly TDS statements. Such
statements need to be in Electronic format and needs a technical tool to generate the
same. NSDL, TRACES and E-filling are used to file TDS returns in NLC for employees,
contractors and other parties. Sometimes, Deductor find it difficult prepare and file TDS
statements. So in those cases, Deductor outsources this work to an external return
preparation agency. CA, Tax Practitioners undertake the return preparation work on
behalf of Deductors.

26
 TRACES is a web-based application of the Income Tax Department that
provides an interface to all stakeholders associated with TDS administration. It enables
viewing of challan status, downloading of NSDL Conso File, Justification Report and
Form 16/6A as well as viewing of annual tax credit statements.

Various Forms used to File Returns:

 FORM 27EQ – Quarterly statement of collection of tax at source.

 FORM 27Q – Quarterly statement of deduction of tax from interest,
Dividend or any other sum payable to non-resident.
 FORM 24Q – Quarterly statement for tax deducted at source in respect of
all other than salaries.
 FORM 16 – Annual statement for tax deducted at source from income
chargeble under the head “Salaries”.
 FORM 16A - Quareterly statement for tax deducted at source in respect
of income other than salaries.

3.1.6 CAPITAL STRUCTURE

YEAR CLASS AUTHORIZED ISSUED PAID UP PAID PAID UP

OF CAPITAL CAPITAL SHARES UP CAPITAL
SHARE FACE
VALUE

2016-17 Equity 2,000.00 1,528.57 1528568427 10 1,528.57

share

2015-16 Equity 2,000.00 1,677.71 1677709600 10 1677.71

share

2014-15 Equity 2,000.00 1,677.71 1677709600 10 1677.71

share

3.1.6 NLC Capital Structure.

27
3.1.7 INCOME STATEMENT

NLC’s income statement in Annual trends

2018 2017 2016 2015 2017

Income statement
(cr)
8,496.20 8,672.84 6,669.05 6,087.68 5,967.23
Revenue

586.85 674.41 525.15 709.29 1,024.76

Other income

9,347.25 7,194.20 6,796.97 6,991.98

Total income 9,083.83

-5,532.2 -5,636.77 -4,480.73 -3,816.96 -4,084.00

Expenditure
-204.98 -169.06 -188.36 -156.06 -181.58
Interest
3,550.85 3,710.48 2,525.11 2383.33 2,209.13
PBT
-861.15 -682.91 1,925.88 -803.65 -707.25
Tax

1,848.79 3,027.57 1,204.15 1.579.68 1,501.88

Net Profit
1528,57 214.81 1,677.71 1,677,71 1,677.71
Equity

Table 3.1.7 Income statement

28
 CHAPTER- 4

OPERATIONS

4.1MAIN FUNCTIONS:

The main activity of NLC India is Mining (Coal & Lignite) and Power Generation
(Thermal and Renewable Energy)

4.1.1 Mining

NLC India has four lignite mines namely Mine I, Mine II, Mine IA and Barsingsar
Mine. The lignite mined out is used as fuel to the linked pit head power stations. Also raw
lignite is being sold to small scale industries to use it as fuel in their production activities.

MINES CAPACITY (MTPA)

MINE I 10.5

MINE 1 A 3.0

MINE II 15.0

BARSINGSAR MINE 2.1

TOTAL 30.6

Table 4.1.1 Mines and its capacity

4.1.2 MINE – I Including Expansion

The lignite seam was first exposed in August 1961 and regular mining of lignite
commenced in May 1962.German excavation technology in open cast mining, using
Bucket Wheel Excavators, Conveyors and Spreaders were used for the first time in the
country in Neyveli Mine-I. The capacity of this mine was 6.5 MT which met the fuel
requirements of TS-I. The capacity was increased to 10.5MT of lignite per annum from
March 2003 u der Mine-I expansion scheme and at person meets the fuel requirement for
generating power from TPS-I and TPS-I Expansion.

29
4.1.3 MINE – II Including Expansion

In February, 1978 Government of India sanctioned the Second Lignite Mine of

capacity 4.7 MT of lignite per annum and in February 83, Government of India
sanctioned the expansion of second Mine capacity from 4.7 Million Tonnes to 10.5
Million Tonnes. Unlike Mine – I, Mine –II had to face problems in the excavation of
sticky clayey soil during initial stage. The method of mining and equipment used are
similar to that of Mine-I. The seam is the same as of Mine – I and is contiguous to it. The
lignite seam in Mine-II was first exposed in September 1984 and the expansion of Min e-
II from 10.5 MTPA to 15.0 lignite on October 2004 with a cost Rs.2295.93 crore. Mine-II
Expansion project was completed on 12th March 2010. The lignite excavated from Mine-
II meets the fuel requirements of Thermal Power Station-II and Thermal Power Station-II
Expansion under implementation.

4.1.4 MINE – IA

Government of India sanctioned the project Mine - I A of 3 million tonnes of

lignite per annum at a sanctioned cost of Rs.1032.81 crores in February 98. This project is
mainly to meet the lignite requirement of M/S ST-CMS for their power plant and also to
utilize the balance lignite to trhe best commercial advantage of NLC. The project was
completed on 30th March 2003 within time and cost schedule.

4.1.5 Barsingsar Mine

GOI sanctioned implementation of Barsingsar mine with a capacity of 2.1MTPA

of lignite per annum at an estimated cost of Rs.254.60 crore in December 2004.Bothj
overburden and lignite production has been outsourced. Lignite excavation commenced
on 23rd November 2009 and production attained the rated capacity on 31 st January 2010.

4.2 POWER GENERATION:

NLC India has five pithead Thermal Power Stations with an aggregate capacity of
3240 MW. Further, NLC India has installed 34 Wind Turbine Generators of capacity 1.50
MW each and also commissioned 10 MW Solar Photo Voltaic Power plant in Neyveli,
resulting in an overall power generating capacity of 3301 MW.

30
POWER PLANTS CAPACITY (MW)

TPS I 600

TPS II 1470

TPS I EXPANSION 420

BARSINGSAR TPS 250

TPS II EXPANSION 500

WIND POWER PLANT 51

SOLAR POWER PLANT 140

TUITIORIN TPS 1000

TOTAL 4431

Table 4.2 Power Stations and its Capacity

4.2.1 THERMAL POWER STATION-I (600MW)

The 600 MW Neyveli Thermal Power Station-I in which the first unit was
synchronized in May 62 and the last unit of 100 MW each. The power generated from
Thermal Power Station-I after meeting NLC’s requirements is supplied to TANGEDCO,
Tamilnadu which is the sole beneficiary. Due to the aging of the equipments high
pressure parts, Life extension program has been approved by GOI in March 1992 and was
successfully completed in March’ 99 extending the life by 15 years. In view of the high
grid demand in this region, this power station is being operated after conducting Residual
Life Assessment (RLA) study. GOI has sanctioned a 2x500 MW Power Project (Neyveli
New Thermal Power Plant – NNTPS) in June 2011 as replacement for existing TPS-I.

31
4.2.2 THERMAL POWER STATION-II (1470) MW

The 1470 MW Second Thermal Power Station consists of 7 units of 210 MW

each. In February 1978, Government of India sanctioned the Second Thermal Power
Station of 630 MW capacity (3x210 MW) and in Feb’83, Government of India
sanctioned the Second Thermal Power Station Expansion from 630 MW to 1470 MW
with addition of 4 units of 210 MW each. The first 210 MW unit was synchronized in
March 1986 and the last unit (Unit – VII) was synchronized in June’93. The power
generated from Second Thermal Power Station after meeting the needs of Second Mine is
shared by the Southern States viz., Tamil Nadu, Kerala, Karnataka, Andhra Pradesh and
Union Territory of Pondicherry.

4.2.3 THERMAL POWER STATION-I EXPANSION (420 MW)

Thermal Power Station-I has been expanded (2x210 MW) using the lignite
available from Mine-I Expansion, was sanctioned by Government of India in February
1996. Unit-I was synchronized in October 2002 and Unit-II in July 2003. The power
generated from this Thermal Power Station, after meeting the internal requirements, is
shared by the Southern States viz., Tamil Nadu, Kerala, Karnataka, and Union Territory
of Pondicherry.

4.2.4 TPS-II EXPANSION (500MW)

This Project is consisting of two units of 250 MW capacity each. Unit-II attained
commercial operation in April 2015 and Unit-I in July 2015. The lignite requirement is
met through expansion of Mine-II. The steam generators of this project employ eco-
friendly Circulating Fluidized Bed Combustion (CFBC) technology. This technology has
been adopted for 250 MW Capacity units for the first time in India.

4.2.5 BARSINGSAR THERMAL POWER STATION (250 MW)

Government of India sanctioned the Barsingsar Thermal Power Station 250 MW

(2X125MW) in October 2004. The units were commissioned in December 2011 and in
January 2012. The Power generated from this Thermal Power Station after meeting
internal requirements is shared by the DISCOMS of the state of Rajasthan.

32
OBJECTIVES OF THE STUDY

 To identify and evaluate the various procedures adopted in Finance and

Accounts branch.
 To suggest measures, if any, for improvement in the existing procedures.

LIMITATIONS OF THE STUDY

 The activities performed in the Finance department are vast in NLCIL.

However the study is only limited in the TAX and Treasury cell due to time
constraint.

PLACE OF STUDY

Neyveli Lignite Corporation India Limited.

Finance and Accounts Branch, Corporate Office, Neyveli – 607801, Tamil Nadu.

TIME TAKEN FOR THE STUDY

Time taken for the study is 1 month.

33
 CHAPTER-5

LITERATURE REVIEW

Organizational study report (2006),

An organizational study of Arabian Industries, LLC was done. The main method
of data collection was through research. Primary data was collected through observation,
personal interview and discussion with the managers and employees, whereas the
secondary data was obtained through company’s internal records, publications, annual
reports, etc. Various departments were studied, including the Finance department. In the
finance department, the various functions and process including accounts receivable,
accounts payable, cash management, salary processing and accounting and annual
budgeting were studied.

Organizational study of the MEHER CAPACITORS PVT LTD,

The organizational structure of the company and the department study of the
organizational departmental study, accounting and finance was studied in depth where,
working capital management of the company along with the trade credit, accounts
receivable management. The various accounting policies used in the company for fixed
assets, depreciation, inventories, retirement benefits, borrowing costs have also been
studied.

Organizational study of ESCORT railway division,

A Study of business level functions of the company was done which indeed
Operations department, Human Resource department, Marketing department, Finance
department, Materials department and Engineering department. In the finance department,
the various functions carried out by the finance department were studied. It included
purchase of bills, sale invoice records, budgeting and costing, sales accounting, Treasury
operations.

This Project aims to study various procedures followed in the Taxation department,
Commercial department, Establishment section and the functions carried out in the
treasury department.

34
 CHAPTER-6

RESEARCH METHODOLOGY

Research Methodology is the process used to collect information and data for the purpose
of making business decisions. The methodology may present and historical information.

Hypothesis

A null hypothesis is a hypothesis which a researcher tries to disprove. Normally the null
hypothesis represents the current view of an aspect that the researcher wants to challenge.

Research methodology involves the researcher providing an alternative hypothesis, an

alternate way to explain the phenomenon.

Variable

A variable is something that changes according to different factors. Independent variables

is variable which the researcher would like to measure while dependent variable is the
effect dependent on the Independent variable. Confounding variables are variables with a
significant effect on the dependent variable.

RESEARCH METHOD (SELECTION)

The selection of research method is crucial for what conclusions you can make about a
phenomenon. It affects what can be said about the cause and factors influencing the
phenomenon. Time, feasibility, ethics and availability must also be taken into
consideration before choosing the research method.

RESEARCH METHOD TYPES

Research Approach is of two types:

 Inductive
 Deductive

Inductive approach is concerned with the generation of new theory emerging from the
data. Emphasis is on exploring new phenomena. Generally associated with Qualitative
research.

35
Deductive reasoning works from the more specific ways. It is informally called as ‘top-
down’ approach. From a broad, general sense, we narrow down to more specific
hypothesis we can test. Deductive approach is aimed at testing a theory. Emphasis is
generally on causality. Generally associated with Quantitative research.

RESEARCH TOOLS

 Observation
 Documentary analysis.

Observation includes the behavioral, non- behavioral activity.

Documentary Analysis is usually evaluation of historical or public records or reports,

government documents.

36
 CHAPTER-7

FINDINGS

7.1 Taxation Section of NLC

Taxation activities in NLC are:

 Corporate tax
 TDS
 Income Tax Return (ITR) Filing.
 Salary remittance.

Important sections under TDS

 192 – Payment of income under the head “salaries”

 194 c – Applies to a person who is responsible for “paying any sum to a
contractor or sub-contractor”.
 194 J – Fees for Professional and Technical services.
 194 I – TDS on RENT
 194 A – Interest other than “Interest on securities”.
 194 LA – Compensation in case of Land Acquisition.
 195 – Payment to non-resident persons (Foreign Payments)

7.2 ADVANCE TAX

It is the payment of tax liability by a person before the end of a financial year. This
is applicable only in case of income tax of an individual or a business entity. Advance tax
is payable only when an asses total tax liability exceeds Rs.1000. Advance tax can be
paid online through the website of income tax department.

In NLC, advance tax is paid in 4 phases

Phase Percentage to be paid Due date

First Quarter 15% June 15
Second Quarter 45% Sep 15
Third Quarter 75% Dec 15
Fourth Quarter 100% Mar 15
TABLE 7.2 Advance Tax Format.

37
ADVANCE TAX CALCULATION:

An individual can calculate advance tax on their own and determine if they have to
pay advance tax.

Steps to be followed to calculate advance tax:

 Determine the Income: Determine the income you receive other than your
salary.
 Minus the Expenses: Deduct your expenses from the income. Deduct expenses
related to the work such as rent of the work place, travel expense, internet and
phone costs.
 Total the Income: Add up other income that you might receive in the form of
rent, interest income, etc. Deduct the TDS deducted from your salaried income.
 Total Advance Tax: If the tax due exceeds RS.10,000 then you’ll have to pay
advance tax.

ADVANCE TAX BENEFITS:

 Advance Tax helps in reducing stress of taxpayers. By paying tax in advance,

taxpayers do not have to worry about money shortage or tax payments at the
last moment.
 It spreads up the tax collection process.
 It increases government funds as the government can earn an interest on the
collected amount.
 Advance tax saves people from defaulting on their tax payments.

REFUND OF ADVANCE TAX:

At the end of the year, if the Income Tax Department finds out that you have paid
more tax than you should have paid, then it will refund the excess amount. Taxpayers can
claim refund by filling and submitting Form 30. They have to claim within a period of
one year from the last year of the assessment year.

7.3 TAX AUDIT:

A tax audit is an examination of your tax return by an outside agency to verify that
income and Deductions field are accurate. The income tax law asks the taxpayers to get

38
the audit of accounts of their business or profession done according to provision of
income tax law.

7.4 BILLING

The billing is done for the sale of power from thermal power stations.

Two kinds of charges are

 Energy charges (variable cost)

 Capacity charges(Fixed cost)

Capacity Charges include

 Return on Equity
 Interest on Loan
 Interest on Working Capital
 Depreciation
 Operation and Management.

Energy charges include

 Lignite/coal
 Oil

The sharing of gain is done among beneficiaries and generators in the following
proportion beneficiaries – 40% and Generators 60%

7.5 Treasury

Treasury department takes cares of the surplus cash generated in excess revenue minus

Expenses. Along with this, if an investment is to be made, the best possible

approach is also determined by the treasury department.

INVESTMENT

 Investment is done in accordance with the department of public enterprise

guidelines, where not more than 20% can be invested in private banks and
the rest could be invested in public banks. Usually this has to be invested in
the government sector along with competitive pricing.

39
  In NLC, the debt equity ratio for thermal plants is decided at 70:30,
therefore minimum of 30% is funded through equity and the rest is funded
through debt. The cost of equity in NLC is at-least 15.5%, whereas the cost
of debt is lesser and is based on competitive pricing.

TYPES

 Treasury bills and Government of India Securities

 In mutual funds as per DPE guidelines.
 Loan and Deposits with CPSE’s

MAJOR RECEIPTS

 Power receipts
 Lignite sales receipts
 TAQA (US based NRIC)

DIVIDENED PROCEDURES

 Dividend is return on the pay debt share capital.

 Dividend will paid on pay debt share capital to its Shareholders.
 It includes interim dividend
 Interim dividend is paid based upon the half early performance of the
company.
 It is declared by board of directors.
 Paid by shareholders of the company within 14 days of declaration, we have
to pay dividend distribution Tax.
 Through dividend warrants (or) electronic modes.

DISINVESTMENT

 Shareholding will be in the hands of various people like financial institutions.

It gives contribution to ex-cheque of the government.

Feature of disinvestment

 Disinvestment through minority stack sale.

 The Government of India shareholding should not be less than 51%

40
  For listed companies, the minimum public shareholding of 25% by 31 st
august 2018.
 For unlisted companies having more accumulated losses

LOANS

The amount required for the investment is taken from the treasury department only
after the approval of Director of Finance. If amount required is more than the actual
amount available in the treasury, then loan is taken from the banks for the fulfillment of
proposed Projects/Investments.

CASH MANAGEMENT

For any company, cash management is an important factor. Treasury Department

assures the sufficient Cash funds availability in the Treasury of NLC, so that a proper
liquidity is maintained for the Organization and is competent to face any contingencies.

7.6 SWOT ANALYSIS

STRENGTH:

 Availability of lignite and water for power generation

 Harmonious industrial relations
 Expertise in operation and maintenance.
 AAA Credit rating.

WEAKNESS

 Mines moving towards higher stripping ratio and consequent increase in cost of
mining
 Higher cost of production.

OPPURTUNITIES

 Government of India aim to provide each household access to electricity, round

the clock and improve the quality of life of people through 24x7 power supply.
 Rise in the per capita consumption of power.
 Launch of 100 smart cities mission by GOI.

41
THREATS

 Delay in commissioning of new projects.

 Challenge posed by renewable energy to thermal generation.
 Higher cost for rehabilitation and resettlement measures for land evictee.

42
 CHAPTER-8

CONCLUSION

Tax Cell is one of the few departments in NLC which is keep computerizing records and
forms that were previously stored manually. This is not only helps in faster mode of
transfer of files from one level of the organization to the other, but also performs in an
efficient manner. Also the damage and loss of records is minimized. It focused on
actively working on automating certain routine activities which presently take a larger
amount of time and efforts. In order to accomplish its mission, the treasury department in
NLC India Ltd must engage in the following activities such as investments, working
capital monitoring, Issue Credit to customers, Fund raising, Credit rating agency
relations, Bank relations. In essence, treasury activities revolve around the monitoring of
cash. All other task of the department support these functions.

43
 CHAPTER - 9

REFERRENCE

1. Annual report of NLC India Limited, 2017 -18.

2. www.nlc india.com

3. “Deduction under section 800”. Policybazzar.com

4. TDS, LawNotes.

5.https://economictimes.indiatimes.com/nlc-india-ltd/stocks/companyid-12317.cms,
capital structure, income statement.

44