A PROJECT REPORT

ON

CASH FLOW STATEMENT OF IN SOUTH BIHR POWER HOLDING

COMPANY LIMITED (SBPDCL)”

SUBMITTED TO

MANAGEMENT PROGRAMME
DEPARTMENT OFAPPLIED ECONOMICS & COMMERCE
PATNA UNIVERSITY, PATNA
In the partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of:-
Mr. Navin Chandra Agarwal
Sr. Manager {F&A] PESU AREA
{SBPDCL} PATNA Submitted By:-
RITU KUMARI
Roll No.: 14
Reg. No. : 401201900276
Session : 2023-25
Paper Code : MB-305
MBA(finance)
 DECLARATION

I, RITU KUMARI, a student of M.B.A. (2023-25) Roll No-14, Department of applied economics
& commerce, Patna University, Patna, declare that this project is my original work to the best
of my knowledge and belief. This project has never been submitted to any university or
institute for the partial fulfillment of award of any degree or diploma.

Name - RITU KUMARI

Course - M.B.A. (FINANCE)

Roll No - 14

Session - 2023-25

Institute - Department of Applied economics & commerce

 ACKNOWLEDGEMENT
Before starting my project work, I was in a state of uncertainty that how the
things will be completed. But as I started my project work under the noble
guidance and better supervision of my guide mentor, Mr. Navin Chandra
Agarwal (Sr. Mananger F&A), the things became easier. His noble support is
really memorable to me forever.

I want to give special thanks to my project mentor of my college Prof. (Dr.)

S.B. Lal Sir for his great co-operation, suggestion, and guidance in successful
completion of my project.

I also want to give special thanks to the entire Officers and Workmen of
SBPDCL, who have not only supported me but also gave their valuable time, by
which I could be able to complete my project work successfully.

Last but not least I wish to make special mention of my friends, classmates
and family members who have continuously inspired, suggested, encouraged
and helped me directly and indirectly in so many ways, while preparing this
report.
 TABLE OF CONTENTS

Contents Page No.

Chapter 1. Introduction 1-10

Chapter 2. Organisation overview 11-20

Chapter 3. Revenue and cash management in 21-60

SBPDCL

Chapter 4. Data Analysis & Presentation 61-67

4.1 employee cost and administrative cost

4.2 Interpretations

Chapter 5. Summary &Conclusions 67-70

Finding & Suggestion
 PREFACE
Knowledge attains maturity and perfection through application in
practical field of rapidly changing circumstances. Keep in mind that
summer training has been kept as integral part of MBA program.

A project is a scientific and systematic study of real issues on a

problem with the application of management concept skills. The study can
deal with small or big issues of the organization. It can be case study where
a problem has been deal through the process of management.

Summer training is an essential part of MBA curriculum. It enables

the student to share the real experience in industry. My summer training
was placed in Bihar State Power Holding Company Limited, Vidyut
Bhawan, Patna.
 UNIT -1
INTRODUCTION
A cash flow statement is a financial statement that provides a detailed analysis of a
company's cash inflows and outflows over a specific period. It tracks the movement of
cash in three main activities: operating, investing, and financing. For a company like
South Bihar Power Distribution Company Limited (SBPDCL), the cash flow statement is
a critical tool for assessing its financial health, liquidity, and cash management. SBPDCL
is responsible for electricity distribution in the southern part of Bihar, covering various
districts.

Overview of SBPDCL

South Bihar Power Distribution Company Limited (SBPDCL) was established in 2012 as
part of the restructuring of the Bihar State Electricity Board (BSEB). The company's
primary function is to distribute electricity across southern Bihar, aiming to improve
electricity availability, quality, and customer service in the region. As a government-
owned entity, SBPDCL operates under the regulatory framework provided by the Bihar
Electricity Regulatory Commission (BERC), adhering to the standards and policies for
power distribution.

Purpose of the Cash Flow Statement for SBPDCL

The cash flow statement of SBPDCL is essential in evaluating its cash-generating

capacity, financial stability, and operational efficiency. It helps stakeholders understand
the cash position of the company, the sources of its cash inflows, and the utilization of
cash resources. The cash flow statement covers:
Operating Activities: This section reflects the cash generated or used from SBPDCL's
core operations, such as revenue from electricity sales, payments for power purchase,
operational expenses, employee wages, and other operating expenditures. It highlights the
company's ability to generate cash from its primary business activities.

Investing Activities: It includes cash flows associated with long-term investments, such
as the purchase of fixed assets, infrastructure development, and technology upgrades. For
SBPDCL, investing activities may involve investments in power distribution
infrastructure, metering technology, and grid modernization to improve service delivery.

Financing Activities: This section addresses the cash flows from financial operations,
including borrowing, repayment of loans, interest payments, government grants, and
equity contributions. Given that SBPDCL is a state-owned enterprise, government
funding and financial support often play a crucial role in its financing activities.

Importance of Cash Flow Analysis for SBPDCL

Analyzing the cash flow statement provides insights into the liquidity and cash
management strategies of SBPDCL, crucial for its ongoing operations and capital
projects. Key aspects of cash flow analysis for SBPDCL include:

Assessing Liquidity: It helps to determine whether the company has sufficient cash to
meet its short-term obligations, such as paying power suppliers and covering operational
costs.

Monitoring Cash Reserves: The cash flow statement shows how the company manages
its cash reserves for capital investments and emergency needs.

Evaluating Financing Needs: Understanding cash outflows related to debt servicing and
capital expenditure helps in planning for future borrowing or government grants.

Challenges in Cash Flow Management for SBPDCL

Managing cash flow in a power distribution company like SBPDCL involves several
challenges, such as:

High Operating Costs: Power purchase costs, maintenance of distribution networks, and
operational expenses significantly impact cash flow.

Debt Servicing Obligations: Repayment of loans and interest payments can strain cash
resources.

Dependence on Government Grants: SBPDCL often relies on government support to

fund its capital expenditures, impacting its cash flow stability.

In modern days, our society is largely dependent on Electricity for progress and
prosperity. In India, three fourth of its population is staying in rural areas. Electricity
plays a significant role in almost all the developing activities as well as our day to day
life. The use of electricity is very exhaustive, it is impossible to search the area where
electricity is not used.

The overall development of any country is fully depends on electricity. In

other words we can say that, power is the wheel-bar of socio-economic development of a
country.

So far the Electricity generation capacity of India is concerned and its position is
6th in world. As such under the provision of Indian Electricity supply Act, 1948. The
Govt. of India paid special attention towards the generation, transmission and
distribution of electricity. The electricity was made the subject to state’s concern and thus
different state electricity Boards came into existence.

South Bihar Power Holding Company Limited (SBPDCL ) is a Government of Bihar

Enterprise. It is Successor Company of Bihar State Electricity Board (BSEB). BSEB is
a state – owned electricity regulation board operating within the state of Bihar in India.
Bihar State Electricity Board(BSEB) was established in 1958 as a statutory corporation
under the Electricity (supply) Act , 1948 . As of November 2024, BSEB has nearly 1,700
officers and 14,850 employees.

The Generation capacity comes to just 530 MW. The BSEB was unbundled on 1st
November 2023. Power Finance Corporation was the main consultant for BSEB’S
restructuring.

BSEB unbundled into 5 parts namely Bihar State Power Generation Co. Ltd. (generation
business), Bihar State Transmission Co. Ltd (BSPTCL-Transmission Business), North
Bihar Power Distribution Co. Ltd & South Bihar Power Distribution Co. Ltd (Both In
Distribution Business) & Bihar State Power Holding Co. Ltd (Apex Holding Co.), Vide
Bihar State Electricity Reforms Transfer Scheme of Energy Department, Government of
Bihar Notification No. 17 dt. 30.10.2023.
BSEB

Type – Government Owned

Industry – Electricity Generation, Electricity Transmission , Electricity Distribution
Founded – 1958
Headquarter – Patna
Area Served - Bihar
Key Person – Mr. Pratyaya Amrit , IAS(Chairman & Managing Director )

Products – Electricity
Parent – Bihar State Power Holding Company Limited (SBPDCL )

.ADMINISTRATIVE SETUP

Administrative setup of SBPDCL are as follows :

2. Duties, Mission and Objectives
The duties of the Company have been defined in Section 18 of the Electricity Supply Act,
1948. It has been charged with the responsibility of promoting a co-ordinated
development of generation, supply and distribution of electricity in the State of Bihar on
an efficient and economic basis of management.
Though SBPDCL deals in only one product, i.e., electrical power, its significance and
utility value is enormous for the State. Almost all aspects of modern life-style are
dependent on it in one way or another.
In order to ensure that its responsibilities are discharged effectively and efficiently, the
Company has engaged nearly 1,700 officers and 14,850 staffs on various posts to
generate its own power and to maintain proper distribution system. It arranges to supply
the electricity properly to the consumers and maintain their equipments.
The responsibility of catering to entire state means SBPDCL must always be able to
understand present as well as future trends of power consumption. It has to formulate and
implement schemes for power generation so that growth in demand can be met
successfully in time.
Sometimes, it also becomes necessary for SBPDCL to purchase power from outside
agencies in order to meet the local demand.
As on today, the installed generating capacity of SBPDCL in terms of its Thermal and
Hydro-Electrical plants, exceeds 559.2 MW.
The Company has its full-fledged Accounts and Audit Department for proper keep-up of
its financial transaction as also to ensure efficient financial management on the
commercial line.
The Company has also its personnel wing to safeguard the interest of all its employees.
The bio-data and service records of the employee have been computerized at its
Headquarters.

NORTH BIHAR POWER DISTRIBUTION CO. LTD

SBPDCL is a company registered under the provisions of Companies Act 1956 and is a
fully owned subsidiary Company of SBPDCL.
The company is engaged primarily in the business of distribution of Electricity in North
Bihar. It has been vested with the distribution assets, interest in property, rights and
liabilities of the erstwhile BSEB necessary for the business of distribution in its area of
distribution comprising of all 21 districts of North Bihar (namely West Champaran, East
Champaran, Sitamadhi, Sheohar, Muzaffarpur, Vaishali, Saran, Siwan, Gopalgunj,
Mahubani, Darbhanga, Samastipur, Begusarai, khagaria, Saharsa, Supaul, Medhepura,
Araria, Katihar, Purnia, Kishangunj.
The company has been given the status of a Distribution Licensee as per Section14 of the
Electricity Act 2003. In order to fulfill the obligations of the Distribution licensee as
mandated under the provision of Bihar State Electricity Reforms Transfer Scheme 2012
and Electricity Act 2003, the main objects to be pursued by the company are :-
To undertake the activites of distribution to all consumers irrespective of the voltage
provision, supply, wheeling, purchase, sale, import, export and trading of electricity,
introduce open access in distribution as per the Electricity Act2003 and/or the directions
of the regulator.

Toplan,develop,acquire,establish,construct,erect,lay,hire,lease,buy,
sell,operate,run,manage,maintain,enlarge,alter,renovate,modernize,work and use a power
distribution system network in all its aspects including amongst others various voltage
lines and associated sub-stations, including distribution centres, cables, wires,
accumulators, plants, motors, meters, apparatus, computers and materials connected with
sub-tranmission, distribution, supply of electrical energy, ancillary services,
telecommunication and telemetering equipments.

To tender, finalize and execute power purchase Agreements and other agreement for sale
or purchase of electricity with generating companies,other distribution companies,Central
and State generating authorities, departments or companies, societies,other
states,utilities,Independent Power Producers and other Persons.

To undertake Rural Electrification schemes in the licensed area.

Any other work incidental to the objectives and function of the company.

BIHAR STATE POWER TRANSMISSION CO. LTD Vision &

Mission
To establish as a model State Transmission Utility (STU) and transmission license with
respect to planning, project implementation, operational capabilities, performance with
emphasis on cost and quality consciousness, human resources development and corporate
social responsibility .
The entire organization of the Bihar State Holding Company Ltd. has been set up keeping
in view the functions entrusted to it i.e., coordinated development of generation,
transmission and distribution of electricity in the state.

FUNCTION AND DUTIES OF BSPTCL

Functions of BSPTCL:

To undertake transmission of electricity through intra-State transmission system;

To discharge all functions of planning and co-ordination relating to intra- state

transmission system with-

Central Transmission Utility;

State Governments;

Generating companies;

Regional Power Committees;

Authority;

Licensees;

Any other person notified by the State Government in this behalf;

To ensure development of an efficient, co-ordinated and economical system of

intra-State transmission lines for smooth flow of electricity from a generation
station to the load centres;

Duties of BSPTCL:
So build, maintain and operate an efficient, co-ordinated and economical inter-state
transmission system or intra-state transmission and to comply with the direction of
 the Regional Load Despatch Centre and the State Load Despatch centre.

About BSPGCL
“Bihar State Power Generation Company Limited” the Generating Company to which the
Generating Undertakings of the board.

PROFILE OF GENERATION IN BIHAR

Bihar grid, as on date, is totally department on central supply. Earlier Katihar, Pirpainti
and Nabinagar were identified for installation of coal based Power Projects in the State of
Bihar. Subsequently, a Special Purpose Vehicle (SPV) in the name of “Bihar Power
Infrastructure Company Pvt.” Has been incorporated to carry out the development
activities and further carry out bid process management. Bihar State is also trying for a
nuclear power station.

Power system in Bihar is predominant by thermal power generation and the contribution
of hydro power is only 10%. Bihar has only 491.1 MW of installed capacity, of which
440 MW is thermal and remaining 51.1 MW is hydal.

Separation of Jharkhand from Bihar left the erstwhile Board with only three Power
Generation Plants. Details of which are as follows:

Barauni Thermal Power Station, Barauni (BTPS)

Muzaffarpur Thermal Power Station (MTPS)

Koshi Hydel Power Station (KHPS)

OVERVIEW OF SBPDCL
North Bihar Power Distribution Company Ltd (SBPDCL ) has been given the status of
the Distribution Licensee as per section 14 of the Electricity Act 2003 and engaged
primarily in the business of distribution of Electricity and is serving more than 18 lakhs
consumers in 20 districts of north Bihar.

OBJECTIVES OF SBPDCL
The main objectives of SBPDCL are:

To modernize and strengthen the distribution network.

To extend the distribution network to all the villages/tolas.

To provide meter to all the unmetered consumers.

To redresses the consumers grievances in the shortest possible time.

OBJECTIVE OF THE STUDY

To understand the meaning as well as management of advances made to
the employees.

To study the types of Advances made to employees of SBPDCL and its

subsidiaries.

To study the Procedure of granting House Building Advances.

To study the accounting of Advances made to employees.

To identify the need of advances made to the employees.

To find out importance of House Building advances made to the

employees.

To analyze the financial position of employees of SBPDCL & its

Subsidiaries.

To analyze the advantages & disadvantages of Advances.

To make suggestions & recommendations based on the study.

METHDOLOGY & DIFFICULTIES ENCOUNTERED

The method adopted for carrying out this study has been direct access to Power Holding’s
various records, order and instruction used issued by it from time to time and collection
of information by making personal contact with officers and staffs of the Power Holding.
The law enacted from time to time on electricity have also been carefully studied to
understand and ascertain the legal entity of the Power Holding, its setup, its area of
working, its power to frame regulation, governing services condition of its employees etc.
Details studied have also been made of the regulation and standing order formed by the
Power Holding under various law and status relating to labours. The systems prevailing
in the SBPDCL in the field of management of advances to employees have been narrated
critically andsuggestions for bringing about improvement have been incorporated in the
study.

Thus, I have adopted observation method, interviewing method, investigation method and
discussion method with officials.

This study has been completed with facing several difficult situations. Collection of
information from SBPDCL officials/employees during office working hours was the
most difficult task. It was not only that they were not willing to cooperate but they were
busy in attending their main jobs.

MAIN SOURCES OF INFORMATION

In my study survey, the main sources of information are as follows:

Files and Records.

Standing Orders.

Books of Accounting Codes

Notifications of Bihar Government

Circular Issued by the Management

 UNIT – 2
ORGANISATION : AN OVERVIEW
South Bihar Power Distribution Company Limited (SBPDCL) was established in
November 2012 as part of the restructuring of the Bihar State Electricity Board (BSEB)
to improve power distribution services in the state. The restructuring aimed at ensuring
efficient management, better customer service, and meeting the increasing demand for
electricity in Bihar. SBPDCL is a state-owned enterprise under the administrative control
of the Department of Energy, Government of Bihar. Its primary responsibility is the
distribution and supply of electricity in the southern region of Bihar.

Mission and Vision

Mission: To provide reliable, uninterrupted, and quality power supply to consumers at

affordable rates, while continuously improving the financial and operational efficiency of
the company.

Vision: To be a leading electricity distribution company in India, recognized for its

commitment to customer service, technological advancement, and sustainable energy
practices.

Core Functions and Responsibilities

SBPDCL is primarily responsible for the distribution of electricity and related services in
southern Bihar. Its main functions include:

Power Distribution: Distributing electricity to domestic, commercial, and industrial

consumers across various districts in southern Bihar.
Customer Service: Handling customer-related services such as new connections, billing,
meter reading, and complaint resolution.

Infrastructure Development: Developing and maintaining distribution networks,

including substations, transformers, and distribution lines, to ensure reliable electricity
supply.

Revenue Collection: Managing the billing and revenue collection from consumers for
the electricity supplied.

Loss Reduction: Implementing measures to reduce technical and non-technical losses in

the distribution network.

Service Area

SBPDCL serves the southern region of Bihar, which includes major districts such as
Patna, Gaya, Bhagalpur, Nalanda, Muzaffarpur, and others. The company is responsible
for distributing electricity to both urban and rural areas, covering millions of households,
commercial establishments, and industrial units.

Organizational Structure

SBPDCL is headed by a Chairman-cum-Managing Director (CMD), who oversees the

overall functioning of the company. The organizational structure includes:

Board of Directors: Consists of senior officials from the Department of Energy,

Government of Bihar, and experienced professionals from the power sector who provide
strategic direction and policy decisions.

Operational Divisions: The company is divided into several operational regions, each
managed by a Chief Engineer or Superintendent Engineer. These regions are further
divided into circles, divisions, and sub-divisions for effective management and service
delivery.
Functional Departments: Key departments include Operations, Finance, Human
Resources, Projects, Customer Services, and Information Technology. Each department
is responsible for specific functions to ensure smooth operations.

Key Initiatives and Projects

SBPDCL has undertaken several initiatives and projects to improve electricity

distribution in the region:

Strengthening of Distribution Network: Projects aimed at upgrading infrastructure,

including new substations, transformers, and distribution lines, to enhance the reliability
and quality of power supply.

Implementation of Smart Metering: Introduction of smart meters to improve billing

accuracy, reduce manual meter reading errors, and enhance revenue collection efficiency.

Loss Reduction Programs: Initiatives to reduce Aggregate Technical and Commercial

(AT&C) losses through network modernization, theft control, and energy audit measures.

Consumer Awareness Programs: Efforts to educate consumers on energy conservation,

payment schemes, and grievance redressal mechanisms.

Digital Initiatives: Implementation of online platforms for billing, payment, and

complaint management to improve customer service.

Financial and Operational Challenges

SBPDCL faces challenges that affect its financial and operational performance:

High AT&C Losses: The company deals with significant technical losses and power
theft, which impact revenue.

Dependence on Subsidies: As a government-owned entity, it relies on subsidies and

grants to maintain its financial health.
Debt Burden: Managing loans and debt servicing obligations is a challenge for
sustainable financial growth.

Aging Infrastructure: Upgrading old and obsolete infrastructure requires substantial

investment.

Regulatory and Compliance Framework

SBPDCL operates under the regulatory framework set by the Bihar Electricity
Regulatory Commission (BERC), which oversees tariff setting, service standards, and
performance monitoring. The company must comply with the Electricity Act, 2003, and
other applicable regulations.

Bihar state Electricity Board:-

Electricity Board was one of the biggest public sector undertakings in the state of Bihar;
it was established on 1st April 1958. The first prime minister of India Pandit Jawahar
LalNehru has said, “Industrialization produces steel, it produces power. This is the basis
for development of a country. Once you have got these bases it is to build up the nation.
The strategy of governing plans in India was to industrialize and that mean the basic
industries being given the first place”.

Energy is an inseparable component in human society providing both vital

inputs for the sustenance and also to lead luxury of life. Power is the engine of economic
growth, a pillar of sustainable development, basic need of everyone.

Electricity demand will undergo seculars increase during this country. It is

estimated that consumption is expected to increases by 73% between the period
from1999-2020, making electricity the fastest growing form of energy. This growth will
be driven mainly in developing countries, where 1.6 billion people are still without access
to Electricity.

Electricity is the core factor for overall socio-economic development of any

country. It plays a significant role not only for the industrial development but also for the
day to day need of our life. Most of the house hold appliances which are the necessities of
our life such as lights, fans, T.V, fridge, A.Cs are dependent on Electricity. Water is
precious for our life whether it is for the purpose of drinking or agriculture or for some
other purposes such as industrial etc. and this water depends on Electricity. Hospitals are
a very good example where life of thousands of people are being saved with help of
various life saving machine running on Electricity.

POSITION BEFORE INDEPENDENCE:-

Prior to 1946 there was no existence of any separate wings namely Electricity
department. Publics work department (PWD) used to take up all the works related to
Electricity then after the state has entered in this field.In 1948 electricity was available
only in the town area in the hand of few licensees and in limited area. The supply was
insufficient and limited. The generation and distribution of Electricity was the monopoly
of the private licensed companies. Such licensees were operating throughout the state and
the services of many of them were far from being satisfactory. Such company were
operating in Gaya, Hazaribagh, Giridih, Muzaffarpur, Deoghar, Buxar, Samstipur,
Marhowrah , Chapra, Sahabganj and Bhagalpur. These licensees were governed by the
provision made in the Indian Electricity Act, 1910. After the creation of Electricity
department changes occurred in the policy of the government. The government adopted
the policy of not granting any license but to develop directly the backward areas with
special focus on rural electrification.The government also decided to nationalize such
existing licensees that were unable to discharge their obligation as licensee towards
maintaining the supply of electricity efficiently. At same time it was also decided to give
all possible encouragement and support in term of finance and other facilities to the
companies who were performing satisfactory. In the pursuance of the above policy the
supplies at Gaya, Hazaribagh, Giridih, Muzaffarpur, Deoghar, Buxar, Samstipur,
Marhowrah, Chapra, Sahabganj and Motihari were taken over and loan of Rs 10 lakhs
and 6 lakhs respectively were advanced to the licensees at Muzaffarpur and Bhaglpur .

POSITION AFTER INDEPENDENCE:-

In the year 1947 when the national government came into existence, the
importance of power has been realized for overall economic as well as industrial
development of the country. Realizing this factor, the government of India has paid
special attention towards the generation, transmission and distribution of electricity. As
such under the provisions of Indian Electricity Supply Act, 1948 the electricity was made
subject to state’s concern and thus, establishment of electricity board in each of the state
was made compulsory. According to the Act, each state government was required to set
up a board within a period of two years from the date of enactment of Indian Electricity
Supply Act, 1948. However, many of the state government including Bihar could not set
such a Board within the stipulated period.

In this way the importance of Electricity was realized and the state government was
given a task to organize a separate Electricity department. Thus the service of Mr. Johan
Kuriyanwas obtained on lien from government of Madras to head this department as the
Chief Electrical Engineer and the Inspector, at the end of the year 1948. Thereafter Bihar
State Electricity Board was constituted on 1st April 1958 by the State Electricity
notification No 2884 dated 27.03.1958 issued by the state government under section 5(1)
of the Electricity (supply) Act, 1948. The Board is thus statutory organization, a quasi
government body corporatecreated under the provision of the central law that is thus
applicable also to other states of India except Jammu and Kashmir. The state electricity
Board was to be semi autonomous body design to control and regulate the power
development in the areas under their jurisdiction.

The provision of an Indian electricity Act, 1910 were such

that they only facilitated the economic consideration of private licensees. They were least
interested in development of area through electricity unless they were assured of
optimum return of their capital. What was worse govt. had minimum control over such
private organizations, rudimentary conditions were prescribed, which were incorporated
in the licensees. Some of the conditions were that charges from the consumers should not
arbitrarily fix. There should be a proper arrangement for the supply of electricity to any
locating either for domestic purpose or for any industrial purpose.

THE ELECTRICITY ACT, 2003

The State Electricity Boards were formed to manage the power needs for each,
giving priority for agriculture and industrial sectors. This helped to achieve self-
sufficiency in food products and increase the employment potential.

The State Electricity Boards did a good job until 1970s and early
1980s as the power uses in the agriculture sector increased many fold, the free/heavily
subsidized power supply put a heavy financial burden on the State Electricity Boards
pushing them to sickness. The political interference, the attitude of some people to get
free power to make money from this shady business all resulted in huge unaccounted
power leading to financial loss of State Electricity Boards, under to grow or even survive.

The financial losses of State Electricity Boards continue to mount, reaching

unsustainable level, having no funds for proper operation, maintenance or growth in
capacity to meet increasing demand.

To rescue the State Electricity Boards from sinking the parliament has approved
The Electricity Act, 2003, aims at promoting the competition in the power sector,
protecting interest of the consumer and supply of power in all areas. It modifies and
replaces the earlier Indian electricity act 1910, Electricity Supply Act, 1948 and
Electricity Regulatory Commission Act, 1998.

To understand this properly, we have to see the power sector

problems:-
Although the installed generation capacity has increased to 1, 06,500 the consumers to
face serious problems in most of states.

The analysis shows those main problems are:-

Huge T & D (Transmission & Distribution) losses.

Large Subsidies.

Skewed tariffs and cross subsidies.

No proper metering.

Delayed and defective billing.

No energy accounting and revenue control.

Poor management and size of State Electricity Boards.

Attitude and mindset of some people.

Lack of accountability and clear responsibilities.

10. Political interference.

11. Lack of policy for reward/punishment etc.

 The inability of the State Electricity Boards to generate sufficient
revenue made them sick and increasingly dependent on the state governments. They
had no funds to increase generating capacity or even operate and maintain the existing
power systems, resulting in more shortage and poor power quality, inviting
consumer’s wrath.

To tackle this situation the new Act, 2003 came into existence with a view to promote
competition in the power sector, protect the interest of consumers and supply
continuous quality power at affordable price.

The Act consists seventeen parts:-

Preliminary

National Electricity Policy and Plan

Generation of Electricity

Licensing

Transmission of Electricity

Distribution of Electricity

Tariff

Central Electricity Authority

Regulatory commission

Appellate Tribunal for Electricity

Investigation and Enforcement

Reorganization of Board

Offences and Penalties

Special courts

Dispute Resolution

Other Provision

Miscellaneous
The Electricity Act 2003 is a well-drafted excellent piece of legislation covering in
details all aspect of electricity generation, transmission, distribution and trading activities.
By attracting private participation and investments providing open access to reach the
consumers and easy licenses to encourage more competition. By providing stringent
punishment for the theft of power and the power equipment, there is a new hope for
tackling the major problem of excessive power theft, which has already crippled the
utilities.

However implementation of the Act in Orissa is an eye opener as to how even well-
drafted legislation, with some loose ends could spoil the show leading to disastrous and
shocking failure.

Dealing in detail all these things can be another subject for detailed study /
research. Since it is a burning topic today.
ORGANISATIONAL CHART OF ADMINISTRATION WING
Member of Administration

Asst. Law Officer

Law Officer
Dy. Law Advisor
Senior Law Advisor cum Addl. Sec. (in the rank of Dist.
Judge) Dy. Sec. (in the rank of SDJM)
Lower Division Asst.
Upper Division Asst.
Adm. Officer
Under Sec.
Joint. Sec.
Director of Department proceeding
Labor Welfare Officer
Dy. Director of Personnel
Director of personnel
Personnel Department
Security Hawldar
Intelligence officer
Security officer
Director Security
System Supervisor
Asst. Director
Dy. Director
Director
L. D. A
U. D. A
Section Officer
Director Public Relation
Dept. Of I.T
Establishment
Legal Dept.
Technology Section to Chairman
 UNIT -3
ANALYSIS & MANAGEMENT OF ADVANCES MADE TO
EMPLOYEES

Interest bearing advances

Advances made to employees refer to financial payments given by an

organization to its employees before their regular salary or wages are
due. These advances can cover various needs, such as travel expenses,
medical emergencies, or personal financial support. The management
of advances is an important aspect of financial administration, as it
ensures that the company's resources are used efficiently and
accounted for properly.
The analysis and management of employee advances involve
understanding the reasons for the advances, implementing a robust
policy framework for disbursement, and establishing mechanisms for
recovery. Effective management helps maintain transparency,
minimize financial risks, and improve employee satisfaction.

Types of Advances Made to Employees

Salary Advances: These are payments made to employees before the
usual salary disbursement date. They may be granted for personal
reasons, financial emergencies, or unforeseen circumstances.
Travel Advances: Given to employees who need to undertake official
travel for work purposes, covering expenses like transportation,
accommodation, and meals.
Medical Advances: Provided for urgent medical treatment or health-
related emergencies for the employee or their immediate family
members.
Festival or Special Occasion Advances: Offered during festivals or
other significant events, allowing employees to manage additional
financial needs during these times.
Housing or Vehicle Loans: Some organizations offer advances to
employees for purchasing or constructing houses or buying vehicles,
often structured as loans with specific repayment terms.
Key Aspects of Analysis and Management
Establishing Clear Policies and Guidelines
Organizations should establish clear policies that outline the eligibility
criteria, maximum allowable advance amounts, repayment terms, and
approval procedures. This ensures that advances are disbursed
uniformly and fairly, preventing misuse or favoritism.
Policies should specify the types of advances available, documentation
required, and conditions under which advances can be requested (e.g.,
number of times an advance can be taken in a year).
Approval and Documentation Process
A well-defined approval process should be in place for sanctioning
advances, involving authorization from relevant departmental heads
or the finance department. This adds an extra layer of oversight to
prevent unauthorized disbursement.
Proper documentation is crucial to record the purpose of the advance,
approval details, and repayment plan. This may include forms filled
out by employees, supporting documents like medical bills for medical
advances, and travel plans for travel advances.
Repayment and Recovery Mechanisms
Repayment terms for advances should be clearly communicated to
employees. For example, salary advances may be recovered in equal
monthly installments, while travel advances should be settled upon
submission of travel expense reports.
For advances that are not repaid promptly, companies should have
measures in place to recover the amounts from future salaries or other
dues.
Monitoring and Reporting
Regular monitoring of advances helps track outstanding balances and
ensures timely recovery. It is essential to maintain a record of advances
disbursed, amounts repaid, and the remaining balance.
Periodic reporting on employee advances helps management assess
the financial impact and identify trends, such as frequent advance
requests, which may indicate employee financial distress.
Accounting Treatment
Advances are considered short-term assets on the company's balance
sheet until they are recovered. Proper accounting entries are required
to record the disbursement of advances and subsequent repayments.
The finance department should ensure compliance with relevant
accounting standards and practices regarding the classification and
reporting of advances.
Challenges in Managing Employee Advances
Delayed or Non-recovery: Employees may leave the organization
before repaying the full amount, leading to difficulties in recovery.
This can happen especially with salary advances.
Misuse of Advances: Without strict policies, advances may be
requested frequently or for non-essential purposes, leading to a drain
on the company’s financial resources.
Lack of Documentation and Control: Poor documentation and weak
approval processes can result in advances being disbursed without
proper justification or authorization.
Accounting and Compliance Issues: Failure to maintain accurate
records of advances may lead to accounting discrepancies and non-
compliance with financial regulations.
Best Practices for Effective Management
Implement a Structured Advance Management Policy: Clearly define
the types of advances available, eligibility criteria, approval
procedures, repayment terms, and documentation requirements.
Use Technology for Tracking: Leverage HR and financial software to
track advances disbursed, repayments, and outstanding balances. This
ensures accuracy and provides real-time data for decision-making.
Regular Audit and Review: Conduct periodic audits to ensure that
advances are being managed as per the policy and that there are no
irregularities. Review the policy periodically to make adjustments
based on changing circumstances.
Educate Employees on Policies and Responsibilities: Ensure that
employees understand the guidelines for requesting advances and
their repayment obligations. Transparency reduces confusion and
improves compliance.

A. House Building Advances.

House Building Advance is one of the Prime Advance which is very popular
amongst employees. Below are the terms & conditions:

1. With the sanction of the Board advances may be granted to employees who
desire to build houses for occupation by themselves, at places where no house are
available or where house rent is exceptionally high. No advance is permissible for the
construction of a house except at the place in which the Board employee is actually
serving or at which he permitted to reside while performing the duties at his headquarters
station. Also no advance is permissible to a Board employee who is likely to retire before
complete recovery can be effected.

Note : Secretary to the Board is authorized to sanction such advance which are in
strict accordance with the rules.

2. All such advances must be bona fide required for the purpose of building
suitable houses for the personal residences of the Board employee concerned, and if more
is advanced than shall be actually expended for the purpose; the surplus shall be refunded
to the Board.
 3. An advance shall not exceed thirty six months pay of the employee to whom it is
made; not more than one advance shall be made for the same house; and no employee
may receive a second advance while any portion of a previous advance with interest
accrued thereon is outstanding against him (pay means pay as defined in rule 34 Bihar
Service Code).

4. The advances should be drawn by instalments, the amount of each installment

being such as is likely to be required for expenditure in the next three months.
Satisfactory evidence should be produced to show that the amount of the installment
has been actually utilized for the purpose for which it was drawn before the next
installment is paid. The repayment shall commence form the fourth issue of pay after the
first installment is taken and be completed in five years.

5. Advances will be recovered by the deduction of monthly installments, equal

to one-sixteen part of the total advance, from the pay bills of the employee concerned.
The authority sanctioning an advance may, however, permit recovery to be made in a
smaller number of installments if the employee receiving the advance so desires. The
amount of interest calculated in accordance with para above installments being not
appreciably greater than the installments by which the principal was recovered. The
recovery of interest will commence from the month following that in which the whole of
the principal has been repaid.

Note : The amount of the advance to be recovered monthly should be fixed in whole
rupees except in the case of the last installment when the remaining balance including
any fraction of a rupee should be recovered.

6. In order to secure the Board from loss consequent on a employee dying or

quiting the service before complete repayment of the advance, with interest accured
thereon in accordance with para above, the house so built, together with the land it stands
upon, must be mortgaged to the Board, by whom the mortgage will be released on
liquidation of the full amount due.

Note : The mortgage bond will be prepared in form F.R.13E.B.E. 5 and the
reconveyance in Form FR 15 (E.B.E. 6)
7. The employee must satisfy the sanctioning authority regarding his title to the
land upon which the house is or is proposed to be built.

Note 1 : This rule does not preculude the grant of an advance to a person who doeble
not possess full proprietary right in the land upon which he intends to build provide the
sanctioning is satisfied that the applicant has a lease of which the unexpired portion is
of a term and value sufficient to justify the grant of the advance and that there is no
danger of the lease lapsing or of the Board being unable to dispose of it, should it
become necessary to foreclose the mortgage. In examining the mortgagor’s title care
should be taken to see that the lease does not prevent any subdemise by the lessee 9the
mortgagor). The mortgage bond in such cases will be prepared in Form (E.B.E. 7) F.R.
14.

Note 2 : In cases in which ground rent, municipal taxes and similar dues are payable
to local authorities on account of land taken on lease, the sanctioning authority may at
its discretion ask the employee taking the advance to produce for the inspection
receipts for these payments within fifteen days of their falling due. If the sanctioning
authority may it at its discretion ask the employee taking the advance to produce for the
inspection authority finds that such dues hae not been paid by borrower step may be
taken to recover the said dues including interest thereon. If any, from the pay of the
employee concerned for payment to the parties concerned.

8. The applicants title to the property should be examined by the sanctioning

authority before the advance is actually paid, and in cases where there is any doubt as to
the validity of that title, the Revenue and Registration authorities or, if technical legal
advice is necessary the Joint secretary (Legal) of the Board, should be consulted. It
should be seen that, in the case of a house-building advance, he has undisputed title to the
land on which it is proposed to build and that, in the case of an advance for the purchase
of a house, he will obtain such title as soon as the purchase price is paid; that there will be
no legal obstacle in either case to the property being mortgaged to the Board and that the
Board will have the right of foreclosing on the conditions mentioned in the mortgage
bond.

9. The head of the office in the case of a non gazetted employee and the
controlling officer in the case of a gazetted officer should, when asking for the authority
for payment, send to the Accounts Officer a certificates either in the bill in which the
advance is drawn, or separately, to the effect that the mortgage bond in from E.B.E 5 has
been executed by the Board employee taking the advance and that it has been duly
registered.

10. A Board employee quitting or removed from the station where he has built a
house, before the whole amount due has been liquidated, will continue liable to the
deductions of his monthly instalment until the advance with interest accrued thereon in
accordance with para above has been repaid but, with the special sanction of the Board he
may be allowed to dispose of thehouse,provided he is there by enabled to clear off a once
the whole amount due, or to transfer it to any other employee of his own or higher rank,
the future deductions being made from the pay of such employee.

11. Applications for advances must be made through the applicants departmental
superior, who will record his opinion as to the necessity for the assistance solicited. The
applicant must certify that the sum is to be expended in building only, and pledge himself
that, should there be any surplus funds after house is completed, they will be at once
refunded to the board.

12. The last pay certificate granted to the employees under advances must
specify the original amount of such advances, the amount repaid and the balance together
with interest accrued thereon remaining, due.

13. Advances may also be given, where considered necessary, for the purchase
of land on which to construct a house, if the other conditions laid down in the foregoing
rules are satisfied and the total amount of the advance for the purchase of the land and the
construction of the house does not exceed thirty six months pay of the employee
concerned.

The employee should sign an agreement in form (E.B.E. 8) FR-16 at the time of
taking an advance for the purchase of land and the amount should not exceed what is
required for the purpose. A mortgage deed in Form (E.B.E. 9) F.R. 17 should be executed
before any further advance is drawn for the purpose of constructing the house. The
mortgage deed must be registered within four months of its execution.

In order to save board from loss, the applicants title to the property should be
carefully examined by the sanctioning authority and the instructions laid down in
Appendix 6 should be followed.

14. An Advances may be made to an employee for the purchase of a house

(including the cost of effecting repairs and improvements to it), the general principles of
the foregoing rules about house building advances being applicable, and the employee
being required in addition to a mortgage deed, to deposit with the Board satisfactory
evidence of clear title to the house.

Note 1 : The advance may be drawn in full at once, but satisfactory evidence should be
produced before the Financial Controller to show that the amount advance for the
purchase has been spent within three months of its drawal and the amount advanced
for repairs or improvements within a further period two months. A certificate to this
effect from the head of the office will ordinarily suffice. The repayment in the case
shall commence with the first issue of pay after the advances is taken and be completed
in five years. Interest will be calculated in accordance with para above and the
recovery thereof will be made as laid down in para 5.

Note 2 : When asking for the authority for payment of the advance the controlling
officer should record on the bill a certificate to the effect that he has secured and
retained with him an agreement in Form E.B.E. 8 FR 16 signed by the applicant
pending execution of the final mortgage bond in Form E.B.E. 5 FR 13 after the house
is actually purchased. The fact of execution and registration of the latter bond should
also be intimated to the financial controller as soon as possible.

15. An advance may also be given for the purpose of repaying a private loan
taken by an employee expressly (i) for the purchase of land for building a house or (ii) for
the purchase of a house provided –

(1) That the usual conditions specified in paras 13 and 14 are satisfied;

(2) That the applicant has through his private loan acquired an unencumbered
title to the land or the house purchased and

(3) That the original loan for the purchase of the land or the house, as the case
may be, was taken not more that twelve months before the date of receipt of
the applications for an advance to discharge the private debt.

16. An advance may be made under the following rules to a board employee to
enable him to effect repairs to his house :-

(i) An advance may be made only if () the repairs are required to make th
house habitable, (2) they are not in the nature of ordinary repairs and
(3) they involve an outlay lage in comparison with the value of the
house.

(ii) Note more than one advance is admissible in respect of the same
house.

(iii) No advance shall exceed nine months pay of the Board employee to
whom it is made, and it will be drawn as laid down in para 4.

(iv) An advance may be made to a Board employee to repair a house

which he has built or purchased with a previous advance under para 1
or 14, but unless the Board permits otherwise, at least five years must
clapse since the previous advance was drawn.
 (v) Subject to the above, the general principles of para 1 to 14 or 15 as the
case may be shall apply, the maximum period for repayment of such
advances being two and a half years interest will be calculated and
recovered in accordance with para 5.

Note 1 : An advance for repairs of a house is admissible even if it was not built or
purchased out of an advance taken from the Board.

Note 2 : Instructions laying down the procedure to be followed in dealing with

applications for advances for the construction, purchase or repair of houses are
contained in Appendix 9.

B. Advance for purchase of Motor Cars.

17. The board may sanction an advance to a boards employee for the purchase of a
motor car if they consider that it is in the interest of the public service that the Board
employees should use a car in the discharge of his duties.

18. The total amount to be advanced to a Board’ employee for purchase for
purchase of a motor car shall not exceed Rs. 15000 or 18 months pay, or the anticipated
price of the car whichever is less. If the actual price is less that the advance taken the
balance should forthwith be refunded to the Board.

Note 1 : For this purpose “pay” includes “Special pay”, Personal Pay’, cost of living
allowance and emoluments specially classed as “Pay”

Note 2 : Board employees whose pay is less than Rs. 400 will not be eligible for such
advances except in very exceptional cases where relaxation of this rule may be
necessary on public grounds.

Note 3 : The pay limits mentioned in the rule and note 1 will not be relaxed except in
very special circumstances for reasons to be recorded in writing.

19. The employee who is on leave or about to proceed on leave for whom an
advance has been approved by the Board will not be allowed to draw the advance earlier
than a week before the expiry of the leave.

20. The amount of advances will be repayable in not more that seventy-five
consecutive monthly installments. It will commence form the first issue of pay after the
advances is drawn. An employee may however, if he so desires be permitted to repay the
advance in smaller number of installments or he may pay more than one installment at a
time. Time amount of interest calculate in accordance with para above will be reovered in
one or more installments, each such installment being not appreciably greater than the
installment by which the principal was recovered. The recovery of interest will
commence form the month following that in which the whole of the principal has been
repaid.

Note 1 : The amount of the advance to be recovered monthly should be fixed in whole
rupees except in the case of the last installment when the remaining balance including
any fraction of a rupees should be recovered.

21. Except when an employee proceeds on-leave not being leave on average pay
not exceeding four months (or privilege leave) earned leave not exceeding 90 days or any
other leave which is treated as equivalent to leave on average pay not exceeding four
months, or retires from the service, or is transferred to an appointment the duties of which
do not render the possession of a motor car necessary, the previous sanction of the board
is necessary to the sale by him of a car purchased with the aid of an advance which with
interest accrued has not been fully repaid. If an employee wishes to transfer such a car to
another employee who performs the duties of a kind that renders the possession of a
motor car necessary the Board may permit the transfer of the liability attaching to the car
to the latter employee provided that he records a declaration that he is aware that the car
transferred to him remains subject to the mortgage bond and that he is bound by its terms
and provisions.

22. In all cases in which a car is sold before the advance received for its
purchase from the Board with interest accrued thre on has been fully repaid, the sale
proceeds must be applied, so far as may be necessary, towards the repayment of such
outstanding balance. Provided that when the car is sold only in order that another car may
be purchased the Board may permit an employee to apply the sale proceeds such
purchase, subject to the following conditions :-

The amount outstanding shall not be permitted to exceed the cost of the new car;

The amount outstanding shall continue to be repaid at the rate previously fixed.

The new car must be insured and mortgaged to Board as require by these rules.

23. An employee may be allowed advances to purchase more that one car at a
time if it can be shown that such action is clearly desirable in the public interest and
provide that the total amount outstanding at any one time by way of such advances
against a particular employee does not exceed the limit within which advances may be
given.

24. An employee who draws an advances in India for the purchase of a motor
car is expected to complete his negotiation for the purchase and to pay finally for the car
within one month from the date on which he draws the advance, falling such completion
and payment, the full amount of the advance drawn with interest thereon for on month
must be refunded to the Board. At the time of drawing the advance the employee will be
required to execute an agreement in from (E.B.E. 10) F.R. – 18 and on completing the
purchase, he will further be required to execute a mortgage bond in Form (E.B.E. 11).
F.R. 18 hypothecating the car to the Board as security for the advance. The cost price of
the car purchased should be entered in the schedule of specifications attached to the
mortgage bond.

25. The order sanctioning an advance will remain valid for only six months from
the date of issue.

26. An employee to whom an advance is sanctioned execute an agreement in Form

(E.B.E. 10) F.R. 18 which should be presented to the Accounts Officer. The Accounts
Officer shall scrutinize the agreement before payment is made and forward the same,
after payment has been made, to the Secretary. The Accounts Officer should at the same
time record on the bill, for purposes of audit, a certificate to the following effect.

“Certified that the requisite agreement has been executed in the proper form and
presented before me with the bill and I have forwarded the same to the Secretary.”

27. The mortgage bond, referred to in para 24 should be executed within one
month from the date of receipt of the advance and sent to the Secretary.

27. (1) The car must be insured against full los by fire, theft or accident,
Insurance on owner-driven or other similar qualified terms is not sufficient for purpose of
this rule. Insurance policies at a reduced rate of premium shall, however, be accepted as
adequate in case where –

The owner of the car undertakes to meet up to the first Rs. 250 or so of a claim
preferred against an insurance company in the event of an accident, or

The car is not insured against accident for any season of the year during which it is
not in use but is stored in a garage.

(2) Such insurance should be effected from the date of purchase of the car.
 (3) A clause as in (E.B.E. 12) F.R. – 20 should be inserted in all policies of
insurance in respect of motor cars, purchased by employees with the help of advances
taken from the Board. All officers of the Board taking advances for purchase of vehicles
should disclose to the insurer the fact of the vehicle having been purchased with the help
to inserted in the policies of insurance of such vehicles. The vehicles should in no case be
insured with insurance companies which do not agree to include the clause in the policy.

(4) On receipt of the certificate prescribed in para 3.69 the secretary will obtain
from the employee drawing the advance a letter to the motor insurance company with
whom the motor car is insured to notify to them the fact that the Board is interested in the
insurance policy secured. He will himself forward this letter to the company and obtain
their acknowledgment. In the case of insurances effected on annual basis the process
prescribed above shall be repeated every year until the advances has been fully repaid to
the Board.

(5) Contravention of these orders will render the Board employee liable to refund
the whole of the amount advanced with interest accured unless good reason is shown to
the contrary. The amount for which the car is insured during any period should not be
less that the outstanding balance of the advance with interest accrued at the beinning of
that period and the insurance should be renewed from time to time the amount due is
completely repaid. If, at any time and for any reason the amount insured under a current
policy is less that the outstanding balance of the advance, including interest already
accrued, the employee should refund the difference o the Board. The amount to be
refunded must be recovered in not more than three monthly installments.

28. Advances for the purchase of motor cars to employee in foreign employee in
foreign employee should be granted from the funds of the foreign employer and when the
later desires to make such an advance, he should apply to the Board for the necessary
sanction. If the sanction is accorded it will be subject to the provision that the advance by
the foreign employer shall be regulated by the same conditions as would apply if the
employee were serving directly under the Board.

29. The grant of an advance for the purchase of a motor car to an employee who
proceeds on deputation out of India and desires a motor car for use during his deputation
is not admissible.

C. Advance for purchase of Motor Cycles

 30. An advance for the purchase of a motor cycle may be sanctioned to an
employee to an employee whose substantive pay does not exceed Rs. 1200. The amount
of the advance should not exceed Rs. 2000 or the anticipated price whichever is less. If
the actual price paid is less than the advance taken, the balance should be forth with
refunded to Board.

31. The general rules and conditions prescribed in sub-section (B) above relating to
advance for purchase of motor cars except para 3.61 apply mutatis mutandis to advances
for purchase of motor cycles as well.

D. Advance for purchase of Cycles

32. All Heads of Departments and Secretary to the Board are authorized to
sanction advances for purchase of bicycles to the employees of the Board under their
control subject to the following rules and conditions :-

(i) Advance should be granted only to permanent Board’s employees in

superior service, but in exceptional cases, an advances may also be allowed
to temporary Boards employees in superior service, whose term of
employment is sufficiently long, and the circumstances admit of the
provision of adequate security for due recovery of the advance.

(ii) No advance will be given to an employee whose pay exceeds Rs. 250.

(iii) The amount of advance shall be limited to three months pay of the employee
concerned subject to a maximum of Rs. 250. In case of temporary
employees the amount of advance should be limited to two months pay or
Rs. 125 whichever is less.

(iv) if the actual price of the cycle is less than the advance taken, the balance
should forthwith be refunded to the Board.

Note :-Production of receipts or cash memos, showing the actual priceof the
cycle purchases with advance to the head of office where the employee
obtaining the advances is employed should invariably be insisted upo by
the authorities sanctioning a cycle advance to employees under their
administrative control.
(v) Recovery will be deducting monthly instalments equal to one-twenty-fourth
part of the advances from the pay bill of the officer concerned except in case
 of temporary employees in whose case the recovery should be made in not
more that 12 monthly installments. Recovery will commence from the first
issue of pay after the advance is drawn.

Note :-The provisions of note 1 to para 3.63 apply mutatis mutandis to the
recovery of advance granted under this rule.

(vi) No advance shall be given to a employee who has obtained a cycle advance
previously until after the lapse of seven years from the date of the last
drawal.

(vii) No advanceshall be given to those who are due to reach the age of
superannuation within three years.

(viii) Advances should not be granted to employees who are bound by rules to
keep a pony or who possess a motor car or a motor cycle.

(ix) The bicycle purchased with the advance will be considered to be the
property of the Board until the advances is fully repaid.

(x) The advance will be interest bearing and the interest will be charged at the
rate prescribed by the Board from time to time.

Note :-The amount of interest recoverable under para 3.40 shall be recovered in
one installment after the principle has been repaid.

33. Advances for the purchase of bicycles to permanent class IV employees may
be sanctioned by the authorities competent to sanction such advances to
employee in superior service subject to the following rules and conditions :-

(i) The amount of advance shall be limited to six months pay of the employee
or Rs. 150 or the price of the cycle purchased whichever is less.

(ii) Recovery will be made by deducting monthly installments equal to 1/30 th

part of the advance from the pay bill of the employee concerned together
with interest accruing thereon at the prescribed rate in one or two additional
 installments. Recovery from pay shall commence from the first issue of pay
after the advances is drawn.

(iii) The pay of the employee and the fact that he holds a permanent post should
invariably be stated in the order sanctioning the advance.

(iv) Other terms and conditions prescribed in para 3.76 above shall, mutatis
mutandis apply in cases of advances to permanent class IV employees.

Note :-No advance under this rule should however, be sanctioned to a Boards
servant who has been provided with a Boards cycle.

34. In making an application for advance for purchase of a bicycle an employee

will state what means of conveyance he possesses. In forwarding the application the
superior officer should satisfy himself that the applicant does not already possess a
serviceable bicycle.

35. A specimen from which an advance for purchase of a bicycle may be

sanctioned after suitable maodification is given in Form (E.B.E., 13) F.R. 21

Here is the example how the HBA is provided to the employees of SBPDCL . And what
was the process of recovery . This example also explain the procedure of giving advances
.
The all amount of HBA is not given in one time , For this , such installment amount are
fixed and given at time to time .
Now , here we show the recovery process of the HBA . There are four slab , according to
which , the interest on the given amount is calculated .
Rate of interest for all the slab are different and slabs are as follows:-
SLABINTEREST RATE
0 – 25,000 ---- 7%
25,000- 50,000 ---- 8.5%
50,000 – 75,000 ---- 10.25%
75,000 & Above ---- 12%
These are the interest rate for the given slab , according to slab the interest on the given
amount is calculated .

To understand the process we give the example of ‘Sri Anand Kumar Das’ , who was
posted at the post of S.O at SBPDCL . The sanctioned order is LT.NO – 372 dated 31-
01-2023 and the amount is sanctioned is Rs 7,50,000 having the HB Account No. 1539 .
He was allotted the amount of Rs 7,50,000 in 4 installment . These are :-

INSTALLMENT AMOUNT DATED

1 2,50000 31-1-2023

2 2,00000 02-04-2023

3 1,75,000 10-03-2023

4 1,75,000 13-10-2023

The interest calculation on the recovery amount is calculated as follows:-

Sri Nand Kumar Das

PROGRESSIVE
Month/Year Opening Balance Deduction Remarks
FIGURE
Mar-06 55000 0 55000
Apr-06 55000 0 55000
May-06 55000 0 55000
Jun-06 55000 0 55000
Jul-06 55000 0 55000
Aug-06 55000 0 55000
Sep-06 55000 0 55000
Oct-06 55000 0 55000
Nov-06 55000 0 55000
Dec-06 55000 0 55000
Jan-07 55000 0 55000
Feb-07 55000 0 55000
Mar-07 55000 0 55000
Apr-07 55000 0 55000
May-07 55000 0 55000
Jun-07 55000 0 55000
Jul-07 55000 0 55000
Aug-07 55000 0 55000
Sep-07 55000 0 55000
Oct-07 55000 0 55000
Nov-07 55000 0 55000
Dec-07 55000 0 55000
Jan-08 55000 3200 51800
Feb-08 51800 0 51800
Mar-08 51800 3400 48400
Apr-08 48400 0 48400
May-08 48400 3400 45000
Jun-08 45000 0 45000
Jul-08 45000 0 45000
Aug-08 45000 5100 39900
Sep-08 39900 0 39900
Oct-08 39900 0 39900
Nov-08 39900 5100 34800
Dec-08 34800 0 34800
Jan-09 34800 0 34800
Feb-09 34800 5100 29700
Mar-09 29700 0 29700
Apr-09 29700 0 29700
May-09 29700 5100 24600
Jun-09 24600 0 24600
Jul-09 24600 0 24600
Aug-09 24600 0 24600
Sep-09 84600 6800 77800
Oct-09 77800 1700 76100
Nov-09 76100 1700 74400
Dec-09 74400 0 74400
Jan-10 74400 0 74400
Feb-10 74400 0 74400
Mar-10 134400 6800 127600
Apr-10 127600 1700 125900
May-10 125900 0 125900
Jun-10 125900 1700 124200
Jul-10 124200 1700 122500
Aug-10 122500 1700 120800
Sep-10 120800 1700 119100
Oct-10 119100 1700 117400
Nov-10 117400 1700 115700
Dec-10 115700 1700 114000
Jan-11 114000 1700 112300
Feb-11 112300 1700 110600
Mar-11 110600 1700 108900
Apr-11 108900 1700 107200
May-11 107200 1700 105500
Jun-11 105500 1700 103800
Jul-11 103800 1700 102100
Aug-11 102100 1700 100400
Sep-11 100400 1700 98700
Oct-11 98700 1700 97000
Nov-11 97000 1700 95300
Dec-11 95300 1700 93600
Jan-12 93600 1700 91900
Feb-12 91900 1700 90200
Mar-12 90200 1700 88500
Apr-12 88500 1700 86800
May-12 86800 1700 85100
Jun-12 85100 1700 83400
Jul-12 83400 1700 81700
Aug-12 81700 1700 80000
Sep-12 80000 1700 78300
Oct-12 78300 1700 76600
Nov-12 76600 1700 74900
Dec-12 74900 1700 73200
Jan-13 73200 1700 71500
Feb-13 71500 1700 69800
Mar-13 69800 1700 68100
Apr-13 68100 1700 66400
May-13 66400 1700 64700
Jun-13 64700 1700 63000
Jul-13 63000 1700 61300
Aug-13 61300 1700 59600
Sep-13 59600 1700 57900
Oct-13 57900 1700 56200
Nov-13 56200 1700 54500
Dec-13 54500 1700 52800
Jan-14 52800 1700 51100
Feb-14 51100 1700 49400
Mar-14 49400 1700 47700
Apr-14 47700 1700 46000
May-14 46000 1700 44300
Jun-14 44300 1700 42600
Jul-14 42600 1700 40900
Aug-14 40900 1700 39200
Sep-14 39200 1700 37500
Oct-14 37500 1700 35800
Nov-14 35800 1700 34100
Dec-14 34100 1700 32400
Jan-15 32400 1700 30700
Feb-15 30700 1700 29000
Mar-15 29000 1700 27300
Apr-15 27300 1700 25600
May-15 25600 1700 23900
Jun-15 23900 1700 22200
Jul-15 22200 1700 20500
Aug-15 20500 1700 18800
Sep-15 18800 1700 17100
Oct-15 17100 1700 15400
Nov-15 15400 1700 13700
Dec-15 13700 1700 12000
Jan-16 12000 1700 10300
Feb-16 10300 1700 8600
Mar-16 8600 1700 6900
Apr-16 6900 1700 5200
May-16 5200 1700 3500
Jun-16 3500 1700 1800
Jul-16 1800 1700 100
Aug-16 100 100 0

TOTAL 175000 7387000

CALCULATION OF INTEREST:

SHEET RATE OF
PROGRESSIVE INT.
NO. INT.
1 642720 7 3749
2 1257200 8.5 8905
3 1959200 10.5 17143
4 12291680 12 122917
TOTAL 152714

Unit-4
Data analysis & intepretetion
The HBA amount is alloted on the basis of designation . Here we show some data that
how much amount is allotted in the year 2015-2016. We consider some designation of
BSHPCL to show & analyse the data .
These are :-
1)Assistant Accountant (A.A)
2)Senior Officer (S.O)
3)Head Clerk (H.C)
4)Typist

Data of A.A
Account no. Name Designation Amount
HB-0529 Ajay Kishore Prasad A.A 650000
HB-0039 Amar Nath Yadav A.A 550000
HB-0546 Anand Mohan Thakur A.A 750000
HB-1206 Bhubneshwar Shrivastav A.A 575000
HB-1273 Bhudeo Jha A.A 725000
HB-0998 Bindeshwar Prasad Singh A.A 685000
HB-0111 Bhubneshwar Jha A.A 690000
HB-0912 Binod Kumar Jha A.A 456000
HB-1282 Binod Kumar Singh A.A 700000
HB-0887 Banshidhar prasad A.A 590000
HB-0369 Ashok Kumar Singh A.A 650000
HB-0596 Ashok Kumar Verma A.A 655000
HB-0244 Awdhesh Kumar Verma A.A 750000
HB-0086 Bachu Bihari Prasad A.A 560000
HB-0901 Anand Prasad Singh A.A 580000

Rs.- 10,14,60000 to the assistant accountant in the financial year 2023-2024 .

Data of S.O
Account no. Name Designation Amount
HB-0217 Bipin Prasad S.O 650000
HB-1211 Awadhesh Kumar Singh S.O 55000
HB-0227 Chandra Bhusan Singh S.O 700000
HB-1132 Daya Nand Prasad S.O 750000
HB-0291 Fakira Lal S.O 600000
HB-0315 Gaya Nand Jha S.O 650000
HB-0223 Ganesh Jha S.O 500000
HB-1517 Hari Mohan Jha S.O 575000
HB-0679 Indra Kant Jha S.O 650000
HB-0146 Jagdish Kumar S.O 725500
HB-1113 Kapil Dev S.O 685000
HB-1265 Krishna Choudhary S.O 725500
HB-0018 Indu Bhushan Prasad S.O 655000
HB-1183 Jagnath Prasad S.O 754500
HB-0189 Gyan Prakash S.O 565000

Rs.9480700 is alloted to senior manager in the financial year 2023-2024.

Data of H.C

Account no. Name Designation Amount

HB-0525 Akhila Nanthd Srivastav HC 759000
HB-0894 Amar Nath Jha HC 655000
HB-0958 Amar Nath Mukhopadhaya HC 525000
HB-0903 Amar Nath Pandey HC 455000
HB-1288 Amod Kumar Singh HC 725000
HB-1025 Amerendra Kumar Singh HC 235000
HB-0481 Awdhesh Kumar Sinha HC 525000
HB-0065 Awdhesh Chandra Das HC 625000
HB-1237 Ayodhaya Singh HC 750000
HB-0986 Bahalen Anand HC 450000
HB-0323 Bijendra Kumar HC 600000
HB-1208 Bindeshwar Pd. Yadav HC 650000
HB-1463 Binod Kumar Mishra HC 625000
HB-0291 Birmani Sinha HC 575000
HB-0187 Biswasi Dodrai HC 750000

Rs.8904000 is alloted to head clerk in the financial year 2023-2024 .

Data of Typist
Accont no. Name Designation Amount
HB-0247 Ashok Kumar Thakur Typist 650000
HB-0487 Ashok Kumar Verma Typist 455500
HB-1147 Ashok Prasad Typist 750000
HB-1205 Awadh Kumar Verma Typist 655000
HB-1412 Badri Prasad Typist 525000
HB-1422 B.n Prasad Typist 625000
HB-1151 Ayodhya Choudhary Typist 450000
HB-0908 Babu Lal Singh Typist 750000
HB-1129 Baij Nath Pandey Typist 256200
HB-0028 Bacha Ojha Typist 650000
HB-1387 Azad Mohan Prasad Typist 750000
HB-1265 Ayodhya Prasad Typist 456500
HB-1679 Baij Nath Prasad Typist 750000
HB-4462 B.B Singh Typist 456500
HB-1441 B.K Gupta Typist 650000

Rs.85,59,600 is alloted to typist in the financial year 2023-2024.

DATA ANALYSIS ON THE BASIS OF DESIGNATION

YEAR DESIGNATION TOTAL AMOUNT

2023-2024 ASSISTANT ACCOUNTANT 10,14,6000
2023-2024 SENIOR OFFICER 94,80,700
2023-2024 HEAD CLERK 89,04,000
2023-2024 TYPIST 85,59,600

Unit -5
Finding and Suggestions
In this UNIT we will discuss about the measure taken by the SBPDCL to meet its
losses:-

1) To stop the T&D losses, new technologies are required to be induced but, board
does not appear serious about it. Board is still purchasing same type of conductors,
transformers and other equipment which are responsible for the heavy
losses. It is not looking towards the new inventions rather, operating with the
conventional techniques.

2) To stop the theft of power, Company has established an Anti Power Theft Cell but
due to various reasons, this cell is not working in the desired manner. Those reasons are,
limited resources, lack of freedom in the work, various political and social interference,
poor law and order situation prevailing in the state etc.

3) New grids which are essential to shorten the distribution feeders have not been
established in the past years which indicate about the lack of planning and lack of
foresightedness at the top level of the management.

4) To prevent tempering of meters by the dishonest consumers, board has induced the
scheme of replacing the conventional electromagnetic meters with the latest tamper proof
electronic meters, but the progress of this scheme is not satisfactory. This scheme under
APDRP has been started in Patna and Muzaffarpur on the experimental basis and orders
on the turnkey basis has been placed for crores of the rupees but it has given a negative
result as, from various parts it has been reported that these meters are actually not a
foolproof device to prevent the theft of energy.

5) Company has assigned the collection work to some commercial banks in Patna, but
this system is still not giving a positive result.

6) In the recent past the company has taken effective steps towards collection of govt.
dues and its achievement in this area can be considered as satisfactory.

7) Steps towards increasing the number of agricultural and industrial consumer do not
appear to be taken by the company.

8) Company fixes the target of collection for its various offices but there is no any
provision of punishment, if such target is not achieved.
9) Company has established a consumer grievance cell at its headquarter at Vidyut
Bhawan, Baily Road, Patna. This step to solve the problems of the consumers, is
appreciable but, it is not very effective as it is working at a centralized level whereas, the
consumers and their problems are of various parts of the state and they required to be
solved at that level only.

---------------X---------------

Summary and Conclusion

The possible solution to meet the losses has also been identified in the purview of reasons
of losses. Those possible solution are:-

1) Company should minimize its expenditure so that it may be less than the total income
or even equal to the total income so that at least the goal to reach at the B.E.P. can be
achieved. Those parts of administrative and other expenses which are escapable must be
minimized.
2) Lag in billing cycle should be minimized and prepaid system like telephones should be
introduced. It will help the organization in collection of its receivables in time or even in
advance which will reduce the investment in working capital and consequently it will
reduce the cost by way of reduction in payment of interest for the borrowings. SBPDCL
have already induced this type of meters which supplies power on prepaid basis. By
Inducing this system, revenue will be collected in advance and certainly it will help the
organization in many ways, such as, reduction in borrowings, debtors, expenses made on
collection of dues etc.

3) State govt. and its various departments should change its attitude towards payment of
electricity bills/dues in time. It will help company in smooth operation and minimizing its
losses on this account.

4) Tariff should be revised periodically so that too much with the market condition
keeping in view the viability as well as sustainability of the concern and if it essential to
provide subsidy, it should be compensated accordingly by the state govt.

5) Company should define the responsibility of each and every level of officials so that
one can be held responsible if the desired goal is not achieved. Similarly there should be
provisions for punishment and it will certainly improve the quality and enthusiasm of its
officials, resulting in to profit to the organization.

6) Consumers grievance cell should be established at each and every level of its activity
so that; the problems of the consumers can be solved, where it arises. It will develop the
confidence, satisfaction and awareness level of the consumers towards timely payment
and proper use of power and it will lead the organization towards profit.

My suggestion is that if the management of company takes the aforesaid

measures, its loss can be prevented and in the long run the concern may be
converted into a profitable utility of the state.
 BIBLIOGRAPHY

ANNUAL REPORTS OF BICICO

FINANCIAL MANAGEMENT – I M PANDEY

FINANCIAL MANAGEMENT - RAVI M. KISHORE