Financial Soundness Of Power Generation Companies In India- An Empirical Study

Abstract

The power sector has been identified as a critical component of infrastructure for any country's long-term economic growth. Electricity is a critical input factor for the country's economic development. The full and effective utilization of an economy's other input factors, such as land, labor, and capital-related resources, is heavily reliant on the uninterrupted availability of electricity. The Indian power sector is widely regarded as the most diverse in the world, with conventional and non-conventional sources of power generation. The nation's demand for electricity has significantly increased, and it is anticipated that it will continue to do so in the future. To meet the rising electricity demand, massive increases in installed power-producing capacity is required. As a result, the current study attempts to examine the financial performance of India's top six electricity companies based on market capitalization using the Zmijewski X-Score model and financial ratios from 2017-18 to 2021-22. The liquidity position of all the selected companies was not satisfactory except for NHPC and the profitability performance of public companies was healthy as compared to private companies. All the selected companies except Adani Power were found in a better and sound financial position as per the X-Score model.