A Study on Economic Value Addition in Andhra Pradesh Power Generation Corporation Limited, India (APGENCO)

Abstract

Electricity is essential for human survival and economic development. The power sector is not only the most important component of the infrastructure sector, but also crucial for development of all other infrastructure facilities, which is so important for overall development of the economy. Increase in production of electric power and reduction in cost of power together with proper distribution of power is important to sustain a high rate of economic growth and development. The aim of this research is to analyze the Economic Value Added (EVA) in Andhra Pradesh Power Generation Corporation Limited (APGENCO) for a period of 13 years. The present study is designed to make an attempt to understand the concept of EVA and its impact on APGENCO, which is a state owned organization in Andhra Pradesh, India. The analysis of the study indicates that EVA is better indicator to understand the wealth maximization of a company and increased value of shareholders wealth. EVA has applied as an indicator to understand the wealth maximization of APGENCO during the study period EVA was negative because of capital investment on new projects commenced from 2005-06 but revenues yielded from those projects commenced from 20010-11. EVA of APGENCO is low according to its size of capital and company should strive for more operating profits.