Abstract

This case focuses on the issues arising from the power problems faced by the manufacturing industries in the Ghaziabad area. Sukriti produced continuous length wires as per the market demand. For producing continuous length wires, the company used imported and indigenous machines. These machines derived power from a combination of power supplied by the UPSEB and a diesel generator. However, switching of machines from UPSEB power to the generator took 2-3 minutes. To bridge this gap, the company installed a UPS to ensure the continuous supply of power and thereby production of a continuous length of wire. IGL proposed to lay the PNG gas lines in the industrial area. Sukriti considered the possibility of transferring the machines to a gas generator to prevent the stoppage of machines. The transfer of machines to the gas generator required a proper financial appraisal of the cost involved in both the alternative fuel supplies.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• External and Internal Factors in which the business operates.
• Financial evaluation of alternative sources of energy supplies
• Role of depreciation in reducing cost.
• Applicability of corporate tax rates under the Income Tax Act 1961
• Written Down Value Method of calculating depreciation.

Keywords

Financial management, Cost benefit analysis, financial evaluation, corporate tax, Depreciation, Written Down Value Method, Environmental analysis