Abstract
Power distribution in India is the weakest link in the entire chain of energy sector of the country and it burdens the other sub sectors which include generation and transmission and which in turn affect the overall economy. The present study attempts to measure the financial performance of the four state owned Gujarat distribution companies (discoms) using DuPont model for the period of five years. The data collected from the published annual financial statements of the companies was analysed using statistical tools using SPSS. The study found that the liquidity position of all the four discoms is satisfactory during the period of the study, it was also found that very low receivable days was maintained for the five years as compared to the national average. Being state owned companies serving the public profit margin was found to be low compared to the other components of ROE which are asset turnover and financial leverage. Correlation analysis shows that ROE has significant relationship with all the variables and ROE shares similar financial characteristics with ROA and ROCE. It is seen from the study that ROE is driven by low debt, high management efficiency and high asset turnover.
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