SUMMER TRAINING REPORT

ON

“RATIO ANALYSIS”

AT

BHARAT HEAVY ELECTRICAL LIMITED

HARDWAR

Submitted in partial fulfillment of the requirement for the Postgraduate in Management

PROJECT GUIDE BY:- SUBMITED BY:- MR.V.K TANGRI

GURPREET SINGH

Uttaranchal institute of technology

Arcadia Grant, Post Office, Chandawari

Prem Nagar, Dehradun, Uttrakhand

This is to declare that the study entitled “RATIO ANALYSIS” in the context of H.E.E.P. BHEL
being submitted by GURPREET SINGH in the partial fulfilment of the requirement by the
UTTRACHAL INSTITUTE OF TECHNOLOGY The study was conducted at Finance
Department, HEEP, BHEL, and Haridwar.

The matter embodied in this project report has not been submitted to any other University
or Institution.

V.K TANGRI

UIT (Dehradun)

PREFACE

The conceptual knowledge acquired by management students is best manifested in the projects
and training they undergo. As a part of curriculum of MBA, I have got a chance to undergo
practical training in HEEP (BHEL) Haridwar. The present project gives a perfect vent to my
understanding of the financial management specially the most modern concept of “Economic
Value Added” and organization behavior.

The project report entitled “ RATIO ANALYSIS ” is based on theme of BHEL Haridwar
performance on the basis of economic value addition made by the BHEL in the last 5 years.

2
The report will provide all the information regarding the RATIO ANALYSIS and their
importance in HEAVY ELECTRICAL EQUIPMENT PLANT-BHEL, HARDWAR.

I also hope that this report will be beneficial for my next batches and for those who are related to
this topic.

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 ACKNOWLEDGEMENT

I express my sincere thanks to the Management of ‘HEEP (Heavy Electrical Equipment

Plant) of BHEL, Ranipur, Haridwar Unit for giving me an opportunity to gain exposure on
matter related to Project under the esteem guidance of Mrs. SANTOSH ANAND (Sr.
Accounts Officer)

I hereby take this opportunity to put on records my sincere thanks to Mrs. SANTOSH
ANAND under the light of whose able guidance I could complete this project in an
effective and successful manner.

I am also indebted to MR.RAKESH KUMAR (Sr. Inventory control managers),Mr.

INDER KUMAR (Manager), Mr. SUJIT KUMAR (Dept Manage), Smt MINI KAPOOR
(turnover officer) for their valuable information's and inputs, which added dimensions and
meaning to my project.

I am also thankful to the rest of the staff of the SALES section for their valuable
suggestion and cooperation to achieve the task.

With sincere thanks

Mr.saurab josi (H.O.D)

Uttranchal institute of technology

Prem nagar, Dehradun

  Objective of study

 BHEL AN OVERVIEW

 INTRODUCTION OF RATIO ANALYSIS

1. MEANING

2. NATURE

3. ROLE OF RATIO ANALYSIS

4. USERS OF RATIO ANALYSIS

5. FINANCIAL RATIOS AND USERS

• MAJOR FINANCIAL RATIOS

1. LIQUIDITY RATIO

2. LEVERAGE RATIO

3. TURNOVER RATIO

4. PROFITABILITY RATIO

5
 Objective of the Study

• To know the organizational structure of bharat heavy electrical limited,

haridwar.

• To know the operations of bharat heavy electrical limited, haridwar.

• To know the Financial Statement of the Company and to know it’s investment
in different sectors.

• To know the techniques which were prevailing and used in the company for
maintaining its profit as it was in loss.

• To know the capital structure of bharat heavy electrical limited.

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B. H. E. L. A CORPORATE GIANT

Established in the late 50's BHARAT HEAVY ELECTRICALS LIMITED (BHEL) is

a name which is recognized across the industrial world. It is one of the largest engineering
and manufacturing enterprises in INDIA and is one of the leading international companies

7
in the power field. BHEL offers a wide spectrum of products and services for core sectors
like power transmission, industrial transportation, oil and gas, telecommunication etc.
Besides supply of non-conventional energy systems. It has also embarked into other areas
including defense and civil aviation. A dynamic 63000 strong team embodies the BHEL
philosophy excellence through continuous striving for state of the art technology. With
corporate headquarters in NEW DELHI, fourteen manufacturing units, a wide spread
regional services network and projects sites all over India and even abroad, BHEL is
India's industrial ambassador to the world with export presence in more than 50 countries.

B.H.E.L.'s range of services extent from project feasibility studies to after sales services,
successfully meeting diverse needs through turnkey capability.

BHEL has had a consistent track record of growth, performance and profitability. The
World Bank in its report on the Indian Public Sectors, has described BHEL as “one of the
most efficient enterprises in the industrial sector, at par with international standards of
efficiency". BHEL has acquired ISO 9000 certificate for most of its operations and has
taken up Total Quality Management (TQM).

certification for environmental management systems and OHSAS-18001 certification for

occupational health and safety management systems.

8
International Business:-

BHEL has, over the years, established its references in over 60 countries of the world.
These references encompass almost the entire range of BHEL products and services,
covering Thermal, Hydro and Gas based turnkey power projects, substation projects, and
rehabilitation projects; besides a wide variety of products like: Transformers, Compressors,
Valves and Oil field equipment, Electrostatic Precipitators, Insulators, Heat Exchangers,
Switchgears, Castings and Forgings etc.

Some of the major successes achieved by BHEL have been in Gas-based power projects in
Oman, Libya, Malaysia, Saudi Arabia, Iraq, Bangladesh, Sri Lanka, China, Kazakhstan;
Thermal Power Projects in Cyprus, Malta, Libya, Egypt, Indonesia, Thailand, Malaysia;
Hydro power plants in New Zealand, Malaysia, Azerbaijan, Bhutan, Nepal, Taiwan and
Substation projects & equipment in various countries. Execution of these overseas projects
has also provided BHEL the experience of working with world-renowned Consulting
Organizations and Inspection Agencies.

The Company has been successful in meeting demanding requirements International

markets, in terms of complexity of the works as well as technological, quality and other
requirements viz. HSE requirement, financing package, associated O&M services to name
a few. BHEL has proved its capability to undertake projects on fast-track basis. BHEL has

9
also established its versatility to successfully meet the other varying needs of various
sectors, be it captive power, utility power generation or for the oil flexibility to exhibited
adaptability by manufacturing and supplying intermediate products.

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 BHEL Corporation - An Introduction

GOINDWA
L Employees - 42096 (As on 1-4-07)
HARIDWA
R RUDRAPU Turnover - Rs 18702 Crores (2006-07)
NEW
DELHI R
JHANS JAGDISHPU
14 Manufacturing divisions
I R
VARANAS
BHOPA I CALCUTT
L PATN 4 Power Sector regional centres
BAROD AAAAA
A
A NAGPU 8 service centres and 16 regional
R offices
HYDERABA
D Major Units/Divisions are Certified
BANGALOR
EE RANIPE with ISO 9001(2000), ISO 14001
T
TIRUCHIRAPALL and OHSAS 18001
Y Continuous Profits since 1971-72
CORPORATE Caters to Core Sectors viz., Power,
OFFICE
Industry, Transportation,
Telecommunication, Renewable
MANUFACTURING
Energy etc.

LOCATIONS
Manufactures over 180 products
under 30 major product groups

SERVICE CENTRES

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B.H.E.L. IN INDIA:-

# REGIONAL OFFICES (POWER SECTORS)

***********************************

1. NEW DELHI (NORTHERN REGION)

2. CALCUTTA (EASTERN REGION)

3. NAGPUR (WESTERN REGION)

4. CHENNAI (SOUTHERN REGION)

# BUSSINESS OFFICES

*******************

1. BANGLORE

2. BARODA

3. BHUBANESHWAR

4. MUMBAI

5. CALCUTTA

6. CHANDIGARH

7. GUWAHATI

8. JABALPUR

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9. JAIPUR

10. LUCKNOW

11. CHENNAI

12. NEW DELHI

13. PATNA

14. RANCHI

15. SECUNDRABAD

# MANUFACTURING UNITS

1. BANGALORE

2. BHOPAL

3. GOINDWAL

4. HARDWAR

5. HYDERABAD

6. JAGDISHPUR

7. JHANSI

8. RUDRAPUR

9. RANIPET

10. TIRUCHIRAPALLY

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# SERVICE CENTRES

BANGLORE

BARODA

CALCUTTA

CHANDIGARH

SECUNDRABAD

NEW DELHI

NAGPUR

PATNA

VARANASI

COMPANY PROFILE:-

BHEL is India's largest engineering company and one of its kind in this part of the
hemisphere. It manufactures a wide range of state of the art power generation equipment
and systems besides equipment for industry, transmission, defense, telecommunication and
oil business.

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The first plant of BHEL was set up in Bhopal in 1956, which signaled the dawn of the
heavy electrical industry in India. In the early 60's three more major plants were set up in
Haridwar, Hyderabad and Tiruchirapalli. The company now has 14 manufacturing
divisions, 10 services centers and power sectors regional centers besides project sites
spread all over India and also abroad to provide prompt and effective service to customers.

BHEL's business broadly covers conversions, transmission, utilizations and conservation

of energy in core sectors of economy that fulfill vital infrastructure needs of the country.
Its product have established an enviable reputation of high quality and reliability, which is
largely due to emphasizes placed all along on contemporary some of the best technologies
of the world from the leading companies in U.S.A., EUROPE, and JAPAN together with
technologies from its own R&D centers technologies B.H.E.L. has consistently upgraded
its design and manufacturing facilities to international standards by acquiring and
assimilating.

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VISION

16
A WORLD-CLASS, INNOVATIVE, COMPETITIVE AND PROFITABLE ENGINEERING
ENTERPRISE PROVIDING TOTAL BUSINESS SOLUTIONS.

MISSION

TO BE THE LEADING INDIAN ENGINEERING ENTERPRISE PROVIDING

QUALITY PRODUCTS SYSTEM AND SERVICES IN THE FIELDS OF ENERGY,
TRANSPORTATION, INDUSTRY, INFRASTRUCTURE AND OTHER POTENTIAL
AREAS.

VALUES

• MEETING COMMITMENTS MADE TO EXTERNAL AND INTERNAL

CUSTOMERS.

• FOSTER LEARNING, CREATIVITY AND SPEED OF RESPONSE.

• RESPECT FOR DIGNITY AND POTENTAIL OF INDIVIDUALS.

• LOYALTY AND PRIDE IN THE COMPANY.

• TEAM PLAYING

• ZEAL TO EXCEL

• INTEGRITY AND FAIRNESS IN ALL MATTERS.

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COMPANY'S BUSINESS MISSION AND OBJECTIVES

BUSINESS MISSION

To maintain a leading position as suppliers of quality equipment, systems and services in

the field of conversion of energy, for application in the areas of electric power
transportation, oil and gas exploration and industries. Utilize company's capabilities and
resources to expand business into allied areas and other priority sectors of the economy
like defence, telecommunications and electronics.

BUSINESS OBJECTIVES

GROWTH: -

To ensure a steady growth by enhancing the competitive edge of BHEL defence,

telecommunication and electronics in existing business, new areas and international
operations so as to fulfill national expectations from BHEL.

PROFITABILITY: -

To provide a reasonable and adequate return on capital employed, primarily through

improvements in operational efficiency, capacity utilization, productivity and generate
adequate internal resources to finance the company's growth.

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CUSTOMER FOCUS: -

To build a high degree of customer confidence by providing increased value for his money
through international standards of product quality, performance and superior services.

PEOPLE- ORIENTATION: -

To enable each employee to achieve his potential, improve his capabilities, perceive his
role and responsibilities and participate and contribute positively to the growth and success
of the company. To invest in human resources continuously and be alive to their needs.

TECHNOLOGY: -

Achieve technological excellence in operations by development of indigenous technologies

and efficient absorption and adaptations of imported technologies to suit business need and
priorities and provide the competitive advantage to the company.

IMAGE: -

To fulfill the expectations which stakeholders like government as owner, employees,

customers and the country at large have from BHEL.

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CONTRIBUTION OF BHEL IN VARIOUS CORE SECTORS

BUSINESS SECTORS: -

BHEL's operations are organized around three business sectors, mainly power, industry
and international operations. This enables BHEL to have a strong customer’s orientation,
to be sensitive to his needs and respond quickly to the changes in the market.

POWER SECTORS: -

Power is the core sector of BHEL and comprises of thermal, nuclear gas, diesel and hydro
business. Today BHEL supplied sets, accounts for nearly 66 % of the total installed
capacity in the country as against nil till 1969-70.

BHEL manufactures boilers auxiliaries, TG sets and associate controls, piping and station
C & I up to 500 MW rating with technology and capability to go up to 1000 MW range.
The auxiliary products high value capital equipment like bowl and tube mills, pumps and
heaters, electrostatic precipitators, gravimetric feeders, fans, valves etc.

BHEL has contracted so far around 240 thermal sets of various ratings, which includes 14
power plants set up on turnkey basis. Nearly 85 % of World Bank tenders for thermal sets
floated in India have been won by the company against international competition.

BHEL has adopted the technology to the needs of the country and local conditions. This
has led to the development of several technologies in house. The fluidized bed boiler that
uses low graded high-ash abrasive Indian coal is an outcome of such an effort. With large-

20
scale availability of natural gas and the sudden increase in demand, BHEL began to
manufacture gas turbines and now possesses two streams of gas turbine technology.

It has the capability to manufacture gas turbines up to 200 MW rating and custom built
combined cycle power plants. Nuclear steams generators, turbine generators, sets and
related equipment of 235 MW rating have been supplied to most of the nuclear power
plants in India. Production of 500 MW nuclear sets, for which orders have been received.

BHEL has developed expertise in renovation and maintenance of power plant equipment
besides specialized know how of residual life assessment, health diagnostic and life
extensions of plants. The four power sectors regional centers at New Delhi, Chennai,
Kolkata and Nagpur will play a major role in giving a thrust to this business and focus
BHEL's efforts in this area.

:-

INDUSTRY SECTORS:-

BHEL is a major producer of large size thyristor devices. The products

include centrifugal compressors, high speed industrial drive turbines, industrial boilers and
auxiliaries, waste heat recovery boilers, gas turbines, electric motors, drives, and

21
 control equipments, high voltage transformers, switch gears and heavy castings and
forgings.

Company in India with the capability to make simulators for power plants, defense
industrial process plants and other applications. An entry has been made in aviation
industry for which BHEL has set up facilities and is now producing two seater aircraft.

TRANSMISSION:-

A wide range of transmission products and systems are produced by BHEL to meet the
needs of power transmission and distribution sector. These include:

• Dry Type Transformers

• SF6 Switch Gears

• 400 KW Transmission Equipment

• High Voltage Direct Current System

• Series and Shunt Compensation Systems

In anticipation of the need for improved substations, a 33 KV gas insulated sub station
with micro processors base control and protection system has been done.

TRANSPORTATION:-

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65 % of trains in Indian Railways are equipped with BHEL's traction and traction control
equipment. These include:

• Broad Gauge 3900 HP AC / DC locomotives

• Diesel Shunting Locomotives up to 2600 HP

• 5000 HP AC Loco with thyristor control

• Battery Powered Road Vehicles and Locomotives

RESEARCH AND DEVELOPMENT:-

BHEL has a corporate R & D center supported by R & D groups at each of the
manufacturing divisions. The dedicated effort of BHEL's R & D engineers have produced
several new products like automated storage retrieval system automated guide vehicles for
material transportation etc. Establishment of Asia's largest fuel evaluation test facility at
Tiruchy was high light of the year. This facility will enable evaluation of combustion, heat
transfer and pollution parameters in boilers.

Major R & D achievement include:

• Design manufacture and supply of countries first 17.2 MW industrial steam turbines.

• Development of 4700 HP AC / DC loco for Indian Railways.

• Development of largest capacitor voltage transformers of 8800 PF 400 KV rating.

• Development and application low cost ROBOTS for job loading/unloading.

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According to ex- CMD Mr. R.K.D. Shah, "BHEL is spending Rs. 60 Crores on Research
and Development. Earning from product which has been commercialized has gone up 26
% to Rs. 760 Crores."

Human Resource Development Institute:-

BHEL has envisioned becoming "A World Class Engineering Enterprise committed to
enhancing stakeholder value". Force behind realization of this vision and the source of our
competitive advantage is the energy and ideas of our 44,000 strong highly skilled and
motivated people. The Human Resource Development Institute situated in NOIDA, a
corner-stone of BHEL learning infrastructure, along with Advanced Technical Education
Center (ATEC) in Hyderabad and the Human Resource Development Center at the
manufacturing Units, through various organizational developmental efforts ensure that the
prime resource of the organization – the Human Capital is “Always in a state of
Readiness”, to meet the dynamic challenges posed by a fast changing environment. It is
their constant endeavor to take the HRD activities to the strategic level of becoming active
partner to the (organizational) pursuits of achieving the organizational goal.

24
25
TECHNICAL COLLABORATIONS:-

PRODUCT COLLABORATIONS

# Thermal Sets, Hydro Sets, Motors & Prommashexport

Control Gears. RUSSIA

# Bypass & Pressure Reducing Systems Sulzer Brother Ltd.

SWITZERLAND

# Electronic Automation System for Siemens AG.

Steam Turbine & Generators GERMANY

# Francis Type Hydro Turbines General Electric

CANADA

# Moisture Separator Reheaters Baloke Duerr

GERMANY

# Christmas Trees & Conventional Well National Oil Well

Head Assemblies USA

# Steam Turbines , Generators and Axial Siemens AG.

26
 Condensers GERMANY

# Cam Shaft Controllers and Tractions Siemens AG.

Current Control Units GERMANY

# HDVC ABB

SWEDEN

# Programmable Controls ABB

SWITZERLAND

# Gas Turbines General Electric Co.

USA

# Tube Mills Stien Industries

FRANCE

DIVISIONS OF BHEL:-

There are 20 Divisions of BHEL, they are as follows:

1. HEEP, Haridwar

27
2. HPEP, Hyderabad

3. HPBP, Tiruchy

4. SSTP & MHD, Tiruchy

5. CFFP, Haridwar

6. BHEL, Jhansi

7. BHEL, Bhopal

8. EPD, Bangalore

9. ISG, Bangalore

10. ED, Bangalore

11. BAP, Ranipet

12. IP, Jagdishpur

13. IOD, New Delhi

14. COTT, Hyderabad

15. IS, New Delhi

16. CFP, Rudrapur

17. HERP, Varanasi

18. Regional Operations Division ARP, New Delhi

19. TPG, Bhopal

20. Power Group (Four Regions and PEM)

MAJOR COMPETITORS OF BHEL:-

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1. Ansaldo Italy

2. Asea Brown Boueri Switzerland

3. Beehtel USA

4. Block & Neatch USA

5. CNMI & EC China

6. Costain U.K.

7. Electrim Poland

8. Energostio Russia

9. Electro Consult Italy

10. Franco Tosi France

11. Fuji Japan

12. GEC Alsthom U.K.

13. General Electric USA

14. Hitachi Japan

15. LMZ Russia

16. Mitsubishi Japan

17. Mitsui Japan

18. NEI U.K.

19. Raytheon USA

20. Rolls Royce Germany

21. Sanghai Electric Co. China

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 B H E L ANALYSIS IN

2005-2006

FINANCIAL OPERATION

Turnover for the year has touched an all time high for the third year in succession thereby
touching the figure of Rs.145254.93 million against Rs.103363.97 in 2004-05, an increase
of 40.53%.

PAT for the year 2005-06 stood at Rs.16792 million as against Rs.9534 million for the
year 2004-05, registering an increase of 76.13 %.

Value addition at Rs.56828 million has increase by 33.58% over the previous
year’s value added of Rs.42540 million.Net working capital (other than cash and bank
balance decrease by Rs.8432 million during the year.

The factors contributing to the decrease are:

a) Increase in Advance from customer by Rs.13314 million over previous year.

b) Increase in Other current liabilities and provision by Rs.3281 million.

Cash and bank balances, including short term deposits, at the year-end stood at Rs.26596
million as against Rs.13209 million at the end of last year. Equity remained at Rs.2448
million.Net worth increase by Rs.5699 million to Rs.52781 million. Debt-Equity Ratio
declined from 0.09 in 2004-05 to 0.08 in 2005-06.

POWER SECTOR

o During the year, power sector secured orders worth Rs.126785 million for supply
and installation of total 5313MW Generating Equipment, plant performance
improvement Business, Service and Spares. This is the highest ever order booking
by Power Sector in the year in term of financial value as well as in physical terms.

o The year witnessed highest number of order received for 500 MW sets (6Nos.) as
also 6Nos. of Turnkey/EPS contracts.

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 • 80% of the main equipment orders i.e. 4270 MW were won against stiff
International competitive Bidding (ICB).

• Because of multi task activities involved in setting up of Power Station

and requirement of faster completion of the project, customer bestowed
higher responsibilities on BHEL and ordered projects to be executed on
EPC/Turnkey basic.

o There has been a constant endeavor on part of BHEL to meet customer demand
through quicker delivery. During the year, BHEL set a new bench mark by
commissioning Kota V (195MW) in 24 months and 19 days.

INTERNATIONAL BUSINESS

• During 2005-06 overseas export orders worth Rs.33480 million have been booked
in diverse product areas. Ordering for certain major tenders where BHEL is
favorably placed, got shifted due to delay in finalization of orders by customers.

• The company secured several prestigious orders, each one of which signifies a
major step forward towards consolidation in international business:

 Supply and supervision of Fabric Filter for Romania-the first-ever order for
Fabric Filter in the export market and the first ever export order from
Romania.

 First ever export order for Electro Static Precipitators (E S Ps) on turnkey
basis received from Thailand.

• Other notable export orders received during the year included:

-Transformers from Greece;

-Solar Cells from Germany, Australia, Thailand and Italy;

-Residual Life assessment (RLA) Studies for Boilers for Finland

-Valves from Malaysia

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  Continued focus on After Sales Services to orders for spares & services
from Thailand, Oman, Indonesia, Malaysia, Azerbaijan, Libya, Bangladesh,
Malta, Malaysia, Sri Lanka.

CAPITAL INVESTMENT

In our continued efforts to upgrade the manufacturing technology and facilities, capital
investment of Rs.2730 million was made on plan capital programs during the year 2003-
04.The thrust of investment during the year was on implementation of the ongoing product
modernization schemes and also on replacement and up-gradation of ageing facilities. To
meet the increasing intensity of competition, investment planned for the year 2004-05 is
directed towards improving product quality, introducing new manufacturing technologies,
cycle time & cost reduction measures etc.

Highlights of the major schemes are as follows:

Schemes completed:

• Capacity augmentation of new design blades to 3500 MW at Hardwar

 Facilities for Total Impregnation of T Gs (TARI)

 New Office Building for PS-ER at kolkata

AWARD
WIN BY BHEL

 Prime Minister’s Shram Awards

From the prestigious ‘‘Prime Minister’s Shram Awards’’ (namely Shram Bhushan,
Shram Vir and Sharm Shari).3 Awards have been won by 5 workmen of BHEL, for
the year 2002, out of 17 awards declared by ministry of labour.

 Vishakarma Rashtriya puruskars

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 Nine Vishwakarma Rashtriya Puruskars have been won by 7 employees of BHEL
for the year 2005 and three awards have been won 6 employees of BHEL for the
year 2005.

 National Safety Awards

Two BHEL Units viz., Trichy and Electronics Division- Banglore have won three
awards for the year 2001.Also; Trichy Unit has three awards for the year 2005.

 National Awards for the welfare of persons with disabilities

Shri R.C.Parakh, AGM from Bhopal unit received this award from president of
India for his contribution to technological development of transformer product in
Bhopal .

RECENT ACHIEVEMENTS OF BHEL

1. BHEL's R&D ops contribute Rs 1,151 cr to turnover in 2005-06 [May 19 2006]

NEW DELHI: Bharat Heavy Electrical Ltd on May 18 said the company has
achieved a turnover of Rs 1,151 crore during 2005-06 through products developed
by in-house research and development operations. This revenue was eight per cent
of its total revenue of Rs 14,410 crore in 2005-06. This was the result of a constant
thrust on developing new technologies and products, improving existing products
and systems in terms of reliability, cost and quality through in-house R&D efforts.
The company invested about Rs 150 crore on Research and Development of

33
 products and systems during the year, which was among the highest in the country.
The company also filed for 84 patents, including three abroad, taking the total
number of patents filed till date to 339. Out of this, BHEL has been granted 26
patents and the rest are in various stages of processing. Thirteen copyrights have
also been filed. R&D and technology development are of strategic importance to
BHEL as it operates in a competitive environment where technology is a major
factor.

2. BHEL to manufacture 800 mw thermal sets [Apr 14 2006] Catching up with the
advancement in global technologies, Bharat Heavy Electrical Ltd (BHEL), through
the efforts of its corporate research and development division in Hyderabad, is now
equipped to manufacture 800 mw super-critical thermal power sets in the country.
Much sought-after by several players in power generation, including APGenco, for
its fuel efficiency, the super-critical technology has been till now viewed as the sole
domain of developed world. As part of its effort to emerge as one of the global
technology players in power systems and other new technologies, the R&D division
of BHEL has started fresh initiatives by setting up centers of excellence for surface
engineering (CoE-SE) and intelligent machines and robotics (CIMAR). According
to the source, CIMAR would be set up at the Corporate R&D division in
Hyderabad at an initial investment of Rs 4.77 crore. Among the new products, the
BHEL Corporate R&D has successfully completed design, supply and
commissioning of automated storage and retrieval systems for four of the 13
warehouses at the Central Ordnance Depot, Kanpur.

3. BHEL inks agreement with IIT Madras for new courses [Apr 25 2006]

Chennai: Bharat Heavy Electrical Ltd and the Indian Institute of Technology-
Madras have signed a memorandum of understanding for collaborative research in
the areas of design of boilers, manufacturing, metallurgical engineering,
mechanical engineering, information technology and other areas of mutual interest.
With the help of BHEL, Tiruchi, IIT-M will establish a research centre at the
BHEL campus for the purpose. IIT-M will select MS/PhD research scholars to

34
 work as research associates/project associates. BHEL on its part will make
available its research facilities and laboratories for the purpose. The collaboration
has also given scope for IIT-M to start two new courses one on energy engineering
and another on welding engineering. The courses will start from the academic year
2006-07. BHEL, which designs power plant boilers for handling a variety of coals,
is also interested in getting into coal research.

4. BHEL secures Rs 80 cr export order from EETC [May 10 2006] NEW DELHI:
Bharat Heavy Electricals Ltd (BHEL) has bagged its largest ever export order for
transformers worth Rs 80 crore from Egyptian Electricity Transmission Co
(EETC). BHEL will supply 14 transformers of 125 MVA to the state-run Egyptian
company as a part of the order. These transformers would be installed in eight sub-
stations at different locations in Egypt. The transformers, to be built at the
company's Jhansi plant, would be installed and commissioned under BHEL
supervision. The company had earlier executed a boiler project at Al Arish in
Egypt. With the order for transformers, BHEL has also established itself in the
transmission market in Egypt. BHEL had earlier reported a six-fold increase in its
export orders booking for the fiscal ended March 31 at Rs 3,348 crore. These orders
contributed to one-fifth of the company's total orders booked last year. With this
BHEL is poised to achieve a quantum growth in its export business driven by
consolidation in existing markets and widening its export base through expansion
of existing basket of products and services and entering new markets.

BHEL net profit up 62 pc(the tribune,3 June 2006)BHEL has posted a net profit of Rs
867.95 crore for the quarter ended March 31,2006, as compared to Rs 534.28
crore for the quarter ended March 31, 2005, an increase of 62.45 pc. Total
income has increased from Rs 4,518.94 crore in Q4 FY 04-05 to Rs 5728.96
crore for Q4 FY 05-06.It has posted a net profit of Rs 1679.16 crore for the year
ended March 31,2006(FY 05-06) as compared to Rs 953.40 crore for the year
ended March 31,2005. total income has increased from Rs 9977.36 crore in FY
04-05 to Rs 13820.02 crore for FY 05-06.The board of directors has
recommended a final dividend of 20 percent of equity of the company, making it

35
 to total of 145 percent of the equity share capital of the company for the financial
year 2005-06. this includes the interim dividend of 40 percent and special
dividend of 85 percent already paid during the year.

5. Workers’ participation in management yields savings at BHEL, Hardwar

DEHRA DUN, Nov 16: Empowerment of employees through the "quality the areas
of import substitution, revamping of old machine tools and safety over the past two
decades based on the principle of people-building and mutual development, the
"quality circle" was adopted by the BHEL’s Hardwar Plant in the year 1981 and
has, since then, yielded savings of nearly Rs five crore, according to Mr. Ashwini
Dhar, Public Relations Officer of the organization. The quality circle guides the
combined efforts and knowledge of workmen of a particular section. There are
more than four hundred quality circles actively working to enhance the excellence
on the process, quality and delivery fronts, Mr. Dhar said. Coordinators and
facilitators along with other members of the workers’ groups identify problems and
think of solutions collectively to prevent defects and maintain overall quality. Mr.
Dhar said upgrading, renovation and modernization of hydro sets installed at
various power stations equipped with BHEL and non-BHEL equipment was being
now undertaken by the Hardwar unit through its research and development efforts.
The Hardwar unit of BHEL has received an order of Rs eight crore from Power
Development Corporation, Jammu and Kashmir, to carry out renovation and
modernization of the lower Jhelum Hydro Electric Project. This project is equipped
with turbine and operator equipment supplied by BHEL and the project was
commissioned in 1980. Another order, worth Rs thirty crore, was received by the
BHEL plant for renovation, modernization and uprating of the units of Ganguwal
and Kotla Hydro Electric Projects under Bhakra Beas

6. Management Board and will ensure an increased output of the generating units by
as much as twenty per cent. Earlier, one unit each of the above machines was

36
renovated and updated by the BHEL resulting in a similar output increase for these
machines. More than a hundred sets of different capacities supplied by BHEL,
Hardwar, are commissioned at various power stations all over the country. The
hydro sets are tailor-made to suit varying hydroelectric parameters. Mr Dhar said
that at the Hardwar Plant, excellent engineering and manufacturing facilities
are available to supply kaplan, francis, pelton and reversible hydro turbines
along with matching generators and associated equipment. (UNI)

37
The Heavy Electrical Equipment Plant (HEEP) located in Haridwar, is one of the major
manufacturing plants of BHEL. The core business of HEEP includes design and

38
manufacture of large steam and gas turbines, turbo generators, hydro turbines and
generators, hydro turbines and generators, large AC/DC motors and so on.

Heavy Electrical Equipment Plant, Hardwar of this Multi-unit corporation with 7467
strong highly skilled technicians, engineers, specialists and professional experts is the
symbol of Indo Soviet and Indo German Collaboration. It is one of the four major
manufacturing units of the BHEL. With turnover of 164059 lacs and PBT of Rs.32489 lacs
HEEP added 3000 MW of power to the National grid during 2005-06.

HEEP is engaged in the manufacture of Thermal and Nuclear Sets up to 1000MW,

Hydro Sets up to HT Runner dia 6300mm, associated Apparatus Control gears, AC&
DC Electrical machines and large size Gas Turbine of 60-200 MW. HEEP Hardwar
contributes about 44% of India’s total installed capacity for power generation with
total capacity of Thermal, Nuclear & Hydro Sets of over 45000MW currently working
at a Plant Load Factor of 76% and Operational Availability of 86%. Inspite of acute
recession in economy, BHEL Hardwar received recent orders for Mejia-5&6,Sipat,
Bhatinda, Chandrapura, Bakreshwar, Santaldih, Bhilai, Dholpur.

HISTORICAL PROFILE:-

The construction of heavy electrical equipment Plant commenced in Oct.”1963”after

indo- soviet technical co-operation agreement in Sept.”1959”The first product to roll
out from the plant was an electric motor in January 1967.This was followed by first
100 MW Steam Turbine in Dec.1969and first 100MW Turbo Generator in August
1971.The plant’s “break even” was achieved in March 1974.BHEL went in for
technical collaboration with M/s Siemens, Germany to undertake design and

39
manufacture to large size thermal sets upto a unit rating of 1000 MW in the year
1976.First 200 MWTG set was commissioned at Obra in 1977.The continuum of
technological advancement subsequently saw the commissioning of 500 MW TG Set
in 1984 .The technical cooperation of Gas Turbine manufacture was also signed with
M/s Siemens Germany.First 150 MW ISO rating gas Turbine was exported to
Germany in Feb”1995”.Our 250 MW thermal set up at Dahanu Plant of BSES made a
history by continuous operation for over 150 days and notching up a record plant load
factor greater than 100%.

KEY COMPETITORS:-

Power Sector Giant of the World viz. Siemens Germany, ABB, General electric of
USA etc. are the major competitors of HEEP. All these are the MNC’s and enjoy huge
financial and R&D backup.

CORPORATE CITIZEN:-

HEEP Hardwars Strategic plans and its policy & strategy are commensurate with
BHEL Corporate / strategic Plan . As first PSU to adopt Corporate Planning as a
process . Board meetings for long –range development , BHEL has always guided
other PSU’s in their Corporate planning process .Board meeting , monthly
Management Committee meetings, Annual Revenue Budget exercise , Mid term
reviews , Apex TQ council reviews, Personnel Heads Meet, Quality Heads Meet ,
Technology Meets , Product committees meetings, Inter-Unit Quality Circle Meets etc.
are the some of crore strengths of BHEL Corporation’s vast network.

KEY CUSTOMERS AND SUPPLIERS :-

HEEP’s customer profile ranges from State Electricity Boards,Government Power

utilities like NTPC, NPC, NHPC to IPPs like Reliance Energy. HEEP has also supplied

40
Gas Turbine sets to overseas customers in Libya & Iraq. Power Sector Regions of BHEL
are its key internal customers. In view of expected market scenario,BHEL has strategically
decided that HEEP will concentrate on coal based Higher Rating Thermal Sets for
domestic market to fulfil the country’s vision of adding 107,000 MW capacity to achieve
‘Power on Demand’ by 2012. Our key customer, NTPC has drawn up plan for capacity
addition of 20,000MW by 2012. HEEP has planned for execution of 34,619MW by 2012.

FAVOURABLE BUSINESS ENVIRONMENT:-

Power Sector has to grow over 10% annually to reach the 7% GDP level. Thus, the
demand for thermal sets will remain high. Central Electricity Authority (CEA) is the
guiding authority for Power Sector strategies in our country. BHEL representatives, along
with representatives from various domestic customers, are an integral part of various
committees formed by CEA. This enables us to guide and understand the market
requirements and future challenges. To meet the 11th Five Year Plan target of adding
61,000MW, CEA has planned addition of 23 nos. standardized 500MW sets for faster
project execution and cost reduction. BHEL, including HEEP, is a part of this process.
CEA has standardized for the next capacity of 800MW sets and has asked BHEL to
prepare itself for manufacturing and supply in the 11th Five Year Plan. BHEL has tied up
with Siemens for upgradation of technology. Further CEA’s stress on R&M of ageing
Power Plants is also providing business opportunity to unit.

MAJOR CHALLENGES:-

The favorable business scenario has given the unit a major challenge of establishing Power
Infrastructure of the country in close co-ordination with its key customers. HEEP has
committed itself to meet the country’s requirements. To cater to the needs of higher rating
sets of 800MW, HEEP has collaboration with Siemens.

41
STRATEGIC CHALLENGES:-

• Key Business

• Cycle time reduction

• State of the art technology

• Cost reduction

• Operational

• Timely delivery

• Material cost reduction

• Productivity improvement

• Effective utilization of machines

42
 • Human Resource

• Motivation of employees

• Skill & Knowledge management

MAJOR MILE STONES:-

1975 Job Redesign concept launched for FIRST time in India.

1978 well documented Suggestion Scheme launched.

1982 Launched Productivity Movement & Quality Circle. Concept

1993 of ISO 9001 quality System.

1995 Adopted EFQM model of TQM for achieving Business Excellence.

1997 BHEL one of the 9 PSE’s declared “Navratna” by Govt. of India .

1997 National Productivity Award for HEEP by the President of India.

1998 Certificate of Merit by National Productivity Council for Outstanding

Performance for 2nd consecutive year.

1998 Accreditation of U stamp.

1999 Accreditation of R Stamp from National Board of Boiler and Pressure Vessel
Inspector, USA .

1999 AD-Merkblatt HPO Recertification by RWTUV for Gas Turbine Combustion

Chambers

1999 INSAAN Award for Excellence in Suggestion for 9th consecutive

year

1999 Launching of 5s concept

43
1999 PCRI recognized as Environmental Lab by Haryana State Board for

Prevention and Control of Pollution

1999 Accreditation of ISO 14001-Enviornment management system

2000 CII Site Visit for CII-EXIM Business Excellence Award-2000

2001 Top Management TQM Workshop at Rishikesh and HRDC

2001 INSAAN Award for excellence in Suggestion for 11th consecutive

year

2001 Launching of QTM & RCA at HEEP Hardwar by CMD

2002 Launching of delivery Index, Turnover Index and Manufacturing

Index

2002 JBE Workshop of Apex TQM Group at Tehri to evolve Business

policy

2003 Commendation for Strong Commitment to Excel in CII-EXIM

Bank Award

2004 Commendation for Significant Achievement in CIIEXIM

Bank Award.

2005 Award given by Institute of Cost and Works Accountants of

India for "Excellent Work in the field of Management

Accounting and Cost Concepts".

44
BUSINESS POLICY:

“In-line with Company’s Vision, Mission and values, we dedicate ourselves to

sustained growth with increasing positive Economic Value Addition and Customer
focused business leadership in the Power and Industry Sector.

CRITICAL SUCCESS FACTORS:

• Increase Orders of Spares/Services to 230 Cr.

• Decrease Capital employed by Rs. 120 Cr.

• Saving in Material Cost by 16 Cr. i.e. 5%- Rs. 4 Cr.

• Decrease in indirect material +miscellaneous expenses by 5%- Rs. 4 Cr.

• Effective implementation of QTM/RCA/CTQ

• Strengthening Internal customer concept

45
 • Development of an Incentive Scheme

• Reward Scheme including EXCEL Awards

• Effective implementation of PMS

• Effective Contract Management

• Technology Up gradation

‘Excellence triangle’ for each Critical Success Factor is now being drawn comprising
improvement projects. These projects will be centrally registered under On-line Central
Registration system to be developed for it. While CSF Champion will take the total stock
of position in the improvement projects undertaken in his respective CSF, progress of
individual projects will be reviewed by Area TQ Council (ATQC) and Functional TQ
Council (FTQC).

One of the major strengths of HEEP Hardwar is its free, open and consistent work culture
for making continuous improvement evident from the participation of employees in
Suggestions and Quality Circles. To recognize their efforts various productivity drives
and competition are organized through out the year and Executive director awards the
winners in the special Award Distribution Functions. The journey to excellence is
unending .It is a continuous search with commitment and belongingness. Sky indeed is
not the limit for perfection. The transition has strongly experienced a silent
internalization with a blend of commitment of the existing human resource for creating
benchmarks for excellence. The emergence of role models and clear-cut driving force at
the top provide an anvil to unleash the potential, which remain unexplored in search of
“Attitude to perform”. The surge has started and is getting communicated down the .
BHEL today through TQM is on march towards excellence.

46
 HEEP Product profile

• Thermal and Nuclear sets –( Turbines , generators , condensers and Auxiliaries of

unit capacity upto 1000 MW)

• Hydro sets including Spherical and Disc Valves

• Electrical Machines –( for various industrial applications , pump drives and power
station auxiliaries , unit capacity up to 20000 KW AC/DC)

• Control Panels –( for thermal/ hydro sets and industrial drives)

• Large size Gas turbines (unit rating ;60-200MW)

• Defence products (SRGMs)

47
PRODUCT CAPACITY RATINGS

* Thermal Sets Upto 1,000 MW

* Hydro Sets Maximum hydro runner

Turbine diameter 6,600 manufacturing Upto

115 MW

* Gas Turbines 60,200 MW 150 ratings

* Light Aircraft Two Seater

* AC / DC Machines 5, 20,000 KW

* Apparatus and Control Gears to match with the power equipment

* Steam Turbines for combined various combinations

Cycle power plant

* Heat Exchangers / condensers Manufacturing Upto 800 MW ratings

* Medical Equipment Linac (for cancer treatment)

* Super Rapid Gun Mount Naval Guns

48
 KEY CUSTOMERS AND SUPPLIERS

The Power supplier of the country National Thermal Power Corporation, NHPC, NPC,
and other IPPs and various State electricity Boards, are the key external customers of
HEEP Hardwar. HEEP has a long standing-relationship with its customers. Power Sector-
Regions, Power Sector Technical Services and other sister unit of BHEL are the key
Internal customers. Manufactures of Casting and Forging, ETS, Steels including alloy
steels, component of the product non-ferrous and insulating materials, equipment etc. are
its suppliers. Some of the key suppliers are Collaborators M/s Siemens Germany, sister
unit CFFP, SAIL, near by Ancillaries developed by BHEL etc. To further strengthen the
relations, one to one long term cooperation meetings are being held by BHEL with its
200 major suppliers on regular basis.

TOTAL QUALITY FOCUS:

To face the increased competition from MNC’s (due to liberalization policy of

Government) in early 90’s and to enter European market we moved towards ISO 9000
Certification. Concept of Business Excellence through EFQM Model was launched in
entire BHEL on pilot scale in Oct.”1995” In 1997 HEEP launched TQM in the entire
Plant and since then Self-Assessment is done every year in September. Based on
feedback Report of Assessment, critical success factors are identified and TQ action
plans are drawn. The philosophy of ISO 9001 ,TQM and ISO 14001 has been integrated
BHEL Hardwar for ultimately achieving “BUSINESS EXCELLENCE”.HEEP Hardwar
plant is accredited for ISO 9001 and ISO 14001 and is now on march towards TQM.5-S
was launched in March 1999 in a big way and now it has become a way of life in the
organization. In 2000 HEEP applied for CII-EXIM Business excellence award and site
visit was conducted but CII team in Seot.”2000.Cii feedback has gone a log way in
carrying out further improvement plans and giving a structured thrust to TQM movement

49
In July 2001, Unit’s TQ Council reviewed the TQ Action Plans 2001-02 for its
effectiveness and impact on accelerating the pace of improvement and consequent TQ
Score. Executive Director laid the challenge of achieving the TQ score of 650.With an
objective to bring awareness about he CII-EXIM Business Excellence Model amongst the
Sr. Executives, the first ‘Top Management TQM Workshop’s held at Rishikesh during
oct.2001Executive Director who is TQ Assessor also, himself steered the Workshop with
assistance from some experienced TQ Assessor of HEEP. It followed by second Top
Management TQM Workshop steered again by Ed was held at HRDC on
Oct’29,2001.Subsequantly the third Top Management TQM Workshop was held in
Nov’2001,where-in Sr. Counselor, CII deliberate the detail on Best practices of TATA
STEEL-the winner of ‘CII-EXIM Business Excellence Award 2000’.Simultaneously ,TQ
Assessors training program for the select group of young managers(to be developed as
Think Tanks)was organized in Nov’2001.To give further boost Apex Group was formed.
Apex Group developed “Roadmap to Business Excellence” based on Criteria Linkage of
CII-EXIM Business Model and the initiatives taken at Hardwar was drawn by the group
and it was widely circulated amongst the employees through special issue of Hardwar
Current in April 2002. To be a responsible corporate citizen and to meet exacting
international standards in occupational health, safety and environment, BHEL continued
re-certification of all its units/ divisions for OHAS-18001 Occupational Health and
Safety Management System as well as ISO-14001 Environmental Management System.
BHEL' journey in Total Quality Management (TQM) received a boost when all Four
major division of BHEL viz. Trichy, Hardwar, Bhopal and Hyderabad along with Power
Sector Northern Region received the coveted CII- EXIM commendation certificates.
Other significant achievements included:

- 'IMC Ramakrishna Bajaj National Quality Award 2004' to BHEL's Ranipet plant
making it the first PSE to win this award.

- BHEL's Hyderabad plant was adjudged the 'Best Organization in promoting

Quality Circles' for the second consecutive year by QCFI chapter convention.

For contribution to the Renewable Energy sector, the SESI2004: PVSEC Award for
Applications', was conferred on BHEL's Electronics Division, by solar Energy Society
of India.

50
51
OVERVIEW OF FINANCE FUNCTIONS

Role of finance function-

Finance function is the backbone of any organization. The finance function plays a very
critical role in the maximization of shareholders who provide the funds to the company.
This objective is being achieved by the finance department, which provides the carious
information on the financial parameters such as cash flows, profitability, cost and margin,
assets, working capital and shareholder value for the purpose of efficient utilization of
resources resulting in better profitability of the company. The importance of the finance
functions cannot be undetermined in any organization as

many companies have perished not due to bad production management but due to poor
financial management function acts like radar of the ship, which guides the direction of the
ship and saves it from the perils of the sea. In the same way finance department provides
timely and relevant information to various levels of management for the purpose of
decision-making.

The various activities undertaken by the finance department achieve the aforesaid
objectives, may be summarized as follows-

52
• Maintenance of account books, cost records.

• Preparation of salary bills and other related payment to employees: PP, bonus, TA,
departmental advances of PF accounts etc.

• Preparation of Profit & Loss a/c and Balance Sheet.

• Generation of various MIRs for management use: MIRs relating to turnover,

profitability, cash requirements, inventory.

• Coordination with company auditors, Govt. auditors, cost auditors and tax auditors.

• Decisions relating to purchase and sales.

• Investment decisions: capital investment decisions and working capital management

decisions.

• Financing decisions: decisions relating to financing-mix or capital structure or

leverage.

• Dividend policy decisions.

53
 COST SECTION

Cost- section of the company is divided into following two sections viz,

PRODUCT COST & CENTRAL COST and these deals with the following functions: -

(i) Determination of periodic profits including inventory valuation.

(ii) Determination of pricing policy of the company.

(iii) Work related to capital expenditures of the company.

54
(iv) Developing variance Management Information report for different parts of
management for purpose of cost control and reduction.

(v) Valuation of work in progress and finished goods.

(vi) Interaction with management of top management link for achieving cost control
and cost reduction and thereby improving bottom line of the company.

(vii) Preparation of cost sheet of different product and their analysis for future planning.

BOOKS AND BUDGET SECTION

This section deals mainly with the following:-

(i) Preparation of operating budget for the company as a whole.

(ii) Co-ordination with various functions of organization with regard to generation and
submission of important MIR's to corporate office.

(iii) Preparation of annual accounts of the company.

(iv) Coordination with company auditors with regard to company accounts.

(v) Maintenance and accounting of fixed assets accounts.

(vi) Preparation of long term profit plans based on broad objectives of the company.

55
 SALES SECTION

Sales accounts section will deal mainly with the following items :-

(i) Scrutiny and vetting of estimates / quotation for sale of products / services,
wherever financial concurrence is required.

(ii) Scrutiny and vetting of agreements for sales of products and services

(iii) Invoicing for sale / advance or progressive payment / erection income and other.

56
(iv) Maintenance of subsidiary records like sales journals / sales daybook, sundry
debtors ledgers, advances from customer ledger etc.

(v) Payments, recovery and accounting of sales tax, excise duty.

(vi) Accounting of claims on carriers/ insurance companies for missing items / damages
on outward consignments.

(vii) Scrutiny, payments and accounting of bills of carriers and insurers and other
miscellaneous claims relating to the outwards consignments.

(viii) Calculation and scrutiny of data for payments of royalties to the collaborators.

(ix) Review and reconciliation as well as follow up of recovery of outstanding dues

from the customers in coordination with the commercial department.

STORES SECTION

For the convenience of performance of various function it is divided in to further three

sections which are as follows: -

a) Stores bills.

b) Stores review.

c) Foreign payment.

They deal mainly with the following items of works:

57
(i) Payment of supplier’s bills including bills for advances -indigenous and foreign.

(ii) Pricing of stores receipt vouchers including fixed assets vouchers and fixed assets
receipt vouchers.

(iii) Maintenance of accounts of advances to suppliers, claims recoverable, claims for

short suppliers, rejections and rectifications of materials and sundry creditors.

(iv) Opening of letter of credit and arranging payments to foreign suppliers under
foreign credit / differed payment agreements.

(v) Payment of bills for ocean freight, port trust dues, custom duty, local agents
commission and clearing agents bills, transit insurance bills, bills of contractors for
transport /handling etc. and accounting of such payments are made at regional
offices.

(vi) Maintenance of accounts of material issued on loan and materials issued to

subcontractors.

(vii) Keeping account of earnest money and security deposits received from tender and
suppliers.

(viii) Adjustment of stores in transit to be made at the close of the year.

PAYROLL SECTION

This section deals mainly with the following functions:

(i) Preparation of monthly wage bills.

(ii) All account work related to personal payments and disclose profit and loss account
of the company.

(iii) Dealing with income tax authority with regard to personal taxation of employee.

58
(iv) Dealing with other statutory authority such as P.F. Commissioner, ESI (employee
state insurance).

(v) To ensure correct payment of salary and wages and other benefits to employees in,
telephone and miscellaneous payments.

(vi) Preparation of monthly wage bills.

(vii) All account work related to personal payments and disclose profit and loss account
of the company.

(viii) Dealing with income tax authority with regard to personal taxation of employee.

(ix) Dealing with other statutory authority such as P.F. Commissioner, ESI (employee
state insurance).

WORKS SECTION

Works section of the company is dealing with the following functions:

(i) Payments of contractor’s bills including bills for advance.

(ii) Maintenance of accounts of contractors with regard to security deposits, earnest

money, progressive payments.

(iii) 215 maintenance of accounts of materials issued on loans to contractors.

59
(iv) All accounting work related to capital expenditure in progress on erection of plant
& machinery and building.

(v) All other miscellaneous work relating to hiring of various facilities.

LINKAGE OF FINANCE DEPARTMENT WITH OTHER

DEPARTMENTS

INTEGRATION MODEL

60
61
62
 CONTENTS

• Strengths

• Weaknesses

• Opportunities

• Threats

63
SWOT ANALYSIS

STRENGTHS (S):

• Low cost producer of quality equipment due to cheap labour and fully depreciated
plants.

• Flexible manufacturing set up.

• Entry barrier due to high replacement cost of its manufacturing facilities.

64
 • Comprehensive turnkey experience from product design to commissioning.

• Committed and skilled work force.

• Relatively stable industrial relationship.

• Access to contemporary technologies with back up support from renowned

collaborators.

• Capabilities to manufacture 4500 MW of thermal TG sets. 4000 MW of boilers, 1345

MW of Hydro sets and 1000 - 2000 MW of Gas Turbines annually.

• Ability to set up power plants on turnkey basis, complete know-how for manufacture of
entire equipment is available with the company.

• Ability to manufacture or procure to supply spares.

• Fully equipped to take capital maintenance and servicing of power plants.

• Largest share of domestic business leading to; major presence and influence in the
market.

• ISO 9001 international companies.

• Ability to successfully overhaul and renovate power station equipment of different

international companies.

• Regional centers for services for easy accesses to customers.

65
WEAKNESSES (W):

• High working capital requirement due to its exposure to cash starved SEBs (State
electricity boards).

• Inability to provide projects financing.

• Difficulty in keeps up commitments on products delivery and desired sequences of supplies.

• Longer delivery cycle in comparison with International suppliers of similar equipment.

• Inability to provide supplier’s credit, soft loans for financing of power project.

• Lack of effective marketing infrastructures.

• Inadequate banking infrastructure.

66
OPPORTUNITIES (O):

• High-expected growth in power sectors (7000 MW/ p.a. needs to be added).

• High growth forecast in India’s index of industrial production would increase demand
for industrial equipment such as motors and compressors.

• Demand for power and hence power plant equipment market is expected to grow.

• Private sector power plant to offer expanded market as utilities suffer resource crunch.

• Aging of power plants would give rise to more spares and service business.

• Life extension programs for old power stations.

• Export opportunities.

• Easy processing of ventures/collaboration/ imports/ acquisition of new technology.

67
 THREATS (T):

• Technical suppliers are becoming competitors with the opening up of the Indian
economy.

• Fall in global power equipment prices can effect profitability.

• Reduced allocation for power sector.

• Increased competition both national and international.

• Multilateral agencies reluctant to lend to power sector because of poor financial

management by SEB’s.(State Electricity Boards)

• Inadequacy of availability of gas would reduce gas turbines business prospects.

• Level playing ground not available. Foreign Co. Spending much more on business
promotion tactics.

• Private sector power companies may not follow so transparent evaluation procedure for
bids

68
69
 CONTENTS

• Opportunities & Constraints

• Correlation of The Concepts of Management

• With Real-Life Situation

70
OPPORTUNITIES & CONSTRAINTS

During this summer training I got the following opportunities & constraints:

Opportunities

• To work in Friendly Environment.

• Helpful staff of the Company.

• To interact with more MBA’s guys of different Institutes.

• To enhance the knowledge.

• Team Spirit.

Constraints

 Working hours for trainees were allotted from 1.00 PM to 4.00 PM only, according to
BHEL policy. Increase in the allotted hours could have further improved the quality of the
project.

 Due to non-availability of concerned executives during the allotted hours the time of
interaction available was limited.

71
 CORRELATION OF THE CONCEPTS OF MANAGEMENT WITH REAL-LIFE
SITUATION

There are so many important concepts of Management, which are directly applicable on
real life situations such as: -

LEADERSHIP

During my Summer Training, I had found that what an effective leader could do for any
firm. How an effective leader with good communication skills and excellent motivation
techniques can improve the performance of the group leading to an overall development of the
organization.

I have also found that markets scenario the near participative style of leadership is the best one,
as it allows every staff member from top to bottom to lead.

COORDINATION

The coordination also plays an efficient role in the development of any organization.
Any organization is set to be successful when its entire staff coordinates together and work as

72
one. The coordination applied during my Summer Training, students of different institutes
shared their views in-group discussions. I have learnt so many concepts by them and the
coordination between us was really good.

MOTIVATION

As we have learnt in the First Semester that Motivation plays an important role in the
development of any organization. I was motivated with the sincerity and hard working of my
reporting officer Shri Vivek Goel and other finance personnel. In Finance Department of HEEP
Haridwar, everybody appreciated Shri Vivek Goel for his excellent role especially in Economic
Value Added.

COMMUNICATION

For being an effective leader the basic need is effective communication skills. I had
seen that our training in charge had excellent communication skills with top to bottom. The
Communication also helped me in communicating the senior officials and employees of BHEL,
when I went for an Interactive Session regarding my Project

73
\

After recession with my locality member. I choose the project of Working capital management.
I discussed the project with my instructor and coordinator Mrs. SANTOSH ANAND (Sr.A/0)
at H.E.E.P., BHEL, Hardwar.

She approved the project. After that, a simple course of action has been followed
for working on this project. Entire information and data were gathered from the respective
annual report of BHEL, Hardwar. All the figures are taken from their balance sheet, profit &
loss account of the respective years and the other internal documents, which were personally
shown by the members of company in our interest.

74
75
MEANING OF RATIO ANALYSIS

MEANING:

The ratio analysis is one of the most useful and common method analyzing financial

statements. As compared to other tools of financial analysis, the ratio analysis provides very

useful conclusions about various aspects of the working, like financial position, solvency,

stability, liquidity and profitability of an enterprise.

76
The term “Ratio” refers to the numerical or quantitative relationship between two

items/variables.

NATURE:

Ratio analysis is a powerful tool of financial analysis. In financial analysis, a ratio is used as a

benchmark. For evaluating the financial position and performance of a firm. The relationship

between two accounting Figures, expressed mathematically, is known as a financial ratio.

Ratios help to summaries large quantities of financial data and to make qualitative judgment

about the firm’s financial performance.

77
This relationship is an index or yardstick, which permits a qualitative judgment to be formed

about the firm’s ability to meet its current obligations. It measures the firm’s liquidity .The

greater the ratio, the Greater the firm’s liquidity and vice-versa. The point to note is that a ratio

reflecting a quantitative relationship helps to form a qualitative judgment. Such is the nature of

all financial ratios.

ROLE OF RATIO ANALYSIS:

1: Aid in financial forecasting—Ratio analysis is very helpful in financial forecasting. Ratios

relating to past sales, profits and financial position form the basis for setting future trends.

2: Aid in comparison—With the help of ratio analysis, ideal ratio can be composed and they

can be used for comparing a firm’s progress and performance. Inter firm comparison or

comparison with industry averages is made possible by the ratio analysis.

78
3: Financial solvency of the firm—Ratio analysis indicates the trends in financial solvency of

the firm.

Solvency has two dimensions- long-term solvency & short-term solvency. Long term solvency

refers to the Financial viability of a firm. Short-term solvency is the liquidity position of the

firm.

4. Communication value—Different financial ratios communicate the strength and financial

standing of the form to the internal and external parties. They indicate the over all profitability

of the firm.

5.Other uses—Financial ratios are very helpful in the diagnosis and financial health of a firm.

They highlight the liquidity, solvency, profitability and capital gearing etc. of the firm. They are

useful tool of analysis of financial performance.

USERS OF RATIO ANALYSIS

1 Trade creditors are interested in firm’s ability to meet their claims over a very short period

of time.

79
2. Suppliers of long-term debts are concerned with the firm’s long-term solvency and survival.

They analyze the firm’s profitability over time, its ability to generate cash to be able to pay

interest and repay principal and the relationship between various sources of funds.

3. Investors, who have invested their money in the firm share , are most concerned about the

firm’s earning.

4. Management of the firm would be interested in every aspect of the ratio analysis. It is their

overall responsibility to see that the resources of the firm are used most effectively and

efficiently, and that the firm’s financial condition is sound.

FINANCIAL RATIOS AND UTILITY

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A ratio may be defined as a fixed relationship in degree or number between two numbers.

In finance, ratios are used to point out relationships that are not obvious from the raw

data. Some uses of ratios are following: -

1. To compare different companies in same industry. Ratios can highlight the factors

associated with successful and unsuccessful firms. They can reveal strong firms and weak

firms, overvalued undervalued firms.

2. To compare different industries. Every industry has its own unique set of operating and

financial characteristics. These can be identified with the help of ratios.

3. To compare performance in different time periods. Over a period of years, a firm or a

industry develop certain norms That may indicate future success or failure. If relationship

changes in firm's data over different time periods, the ratio may provide clues and trends of

future problems.

MAJOR FINANCIAL RATIOS

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A ratio is an arithmetical relationship between tow figures. Financial ratio is a study of

ratios between various items or groups of items in financial statements. Financial ratios

have been classified in several ways. For our purposes, we divide them into five broad

categories as follows: -

• LIQUIDITY RATIOS

• LEVERAGE RATIOS

• TURNOVER RATIOS

• PROFITABILITY RATIOS

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 CURRENT RATIO

This ratio indicates the extent of the soundness of the current financial position of an

undertaking and the degree of safety provided to the short-term creditors. The higher the

current ratio, the larger amount of rupee available per rupee of current liability, the more the

firms ability to meet current obligations and the greater safety of funds of short term creditors.

Current Ratio = Current Assets/Current Liabilities

Year 2004-05 2005-06 2006-07 2007-08 2008-09

Ratio 1.13 1.25 1.11 0.95 ………….

1.4 1.26
1.13 1.11
1.2 0.95
1 0.8
0.8
RATIO
0.6
0.4
0.2
0
2004-05 2005-06 2006-07 2007-08 2008-09

YEAR
INFERENCE:

In the year’s entire ratio is greater than 1, which indicates that short-term creditors are safe.

There is constant increase in the ratio, and Company should try to utilize its short-term resource

more efficiently.

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 LIQUIDITY RATIO

Quick ratio is a more refined tool to measure the liquidity of an organization. It is a better test

of financial strength than the current ratio, because it excludes very slow moving inventories

and the items of current assets, which cannot be converted into cash easily. This ratio shows the

extent of cushion of protection provided from the Quick assets to the current creditors. A Quick

ratio of 1:1 is usually considered satisfactory.

Liquidity Ratio = Quick Assets / Current Liabilities

Year 2003-04 2004-05 2005-06 2006-07 2007-08

Ratio 0.75 0.54 0.63 0.67 0.64

0.8 0.75
0.67 0.64
0.7 0.63
0.6 0.54
0.5
RATIO
0.4
0.3
0.2
0.1
0
2003-04 2004-05 2005-06 2006-07 2007-08

INFERENCE:

The quick ratio has coming down from (0.75 to 0.64) which shows that short-term liquidity of

the company is not so good. But in the interest of the company it appears that short term credits

are not fully utilized, and the company should make efforts.

STOCK TURNOVER RATIO

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A considerable amount of a company’s capital may be tied up in the raw material, work-in-

progress and finished goods. It is important to ensure that the level of stock is kept as low as

possible, consistent with the need to fulfill customer order in time.

The higher the stock turnover rate or the lower the stock turnover period the better, although the

ratio will vary between companies.

Stock turnover Ratio = Cost of Goods Sold / Avg. Inventory

Where;

Cost of goods sold = sales- gross profit

Average inventory = (opening balance + closing balance)/2

Year 2003-04 2004-05 2005-06 2006-07 2007-08

Ratio

YEAR

85
 3 2.84
2.38 2.41 2.3
2.5
RATIO 2.06
2

1.5

0.5

0
2003-04 2004-05 2005-06 2006-07 2007-08

INFERENCE:

Stock turnover ratio indicates that how quick inventories are converted into sales. It indicates

the position of the inventory management of the company.

As the stock turnover ratio is increasing from year to year, but in 2005-06 it suddenly

goes down but after that it again start to increase and company should try to reduce it

order to have better inventory management.

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 DEBTORS TURNOVER RATIO

Debtor T/O, which measures whether the amount of resources tied up in debtors is

reasonable and whether the company has been efficient in converting debtors into cash.

The higher the ratio, the better the position.

Debtors Turnover Ratio = Credit Sales/Avg. Debtors

Where;

Avg. debtors = (opening debtors + closing balance)/2

Year 2003-04 2004-05 2005-06 2006-07 2007-08

Ratio

2.9
3 2.69
2.58
2.5 2.22
2
RATIO 2

1.5

0.5

0
2003-04 2004-05 2005-06 2006-07 2007-08

YEAR

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INFERENCE:

This ratio indicates that how quick Debtor is collected and greater the ratio shows better

the position of the company. Here from the graph it is clear that in 2004 debtors were

collected quickly but from then that is from 2005 to 2008 the condition has worsened as

ratio has decreased it means that the debts are not being collected rapidly. This fact was

discussed and the management that due to overall recession in global market, company

has to be liberal in providing credit to the customers pointed it out

DEBT EQUITY RATIO

The ratio indicates the relationship between loan fund and net worth of the company. If

the proportion of debt to equity is low a company is said to be low-geared and vice versa.

A debt equity ratio of 2:1 is the norm accepted by financial institutions for financing

projects.

The higher the gearing, the more volatile the return to the shareholders.

Debt Equity Ratio = Long Term Debt/Share Holders Funds

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Ratio 0.11 0.10 0.09 0.08 0.09

88
 0.12 0.11
0.1
0.1 0.09
0.08
0.08
RATIO
0.09
0.06

0.04

0.02

0
2002-03 2003-04 2004-05 2005-06 2006-07
YEAR

INFERENCE:

89
Debt Equity Ratio shows that how much funds a company has to meet the long-term

obligations. Lesser the ratio shows better the position of the company.

90
 PROPRIETOR RATIO or (SHARE HOLDER EQUITY RATIO)

It is assumed that larger the proportion of the shareholders equity, the stronger is the

financial position of the firm. This ratio will supplement the debt-equity ratio. In this ratio

a relationship established between the shareholder’s fund and the total assets. A reduction

in shareholder’s equity signally the over dependence on outside source for long term

financial needs and this carries the risk of higher level of gearing. This ratio indicates the

degree to which unsecured creditors are protected against loss in the event of liquidation.

Proprietor Ratio = Share Holder Funds / Total Assets

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Ratio 0.5

0.5
0.5
0.48
0.46 0.45
RATIO 0.44
0.42 0.42 0.4172
0.42
0.4
0.38
0.36
2002-03 2003-04 2004-05 2005-06 2006-07

YEAR

INFERENCE:

91
There is increase in shareholders fund but there is no fresh investment in FA is made and

this may affect future profitability of the company, as new investment are required in

fixed assets, which will ultimately earn revenue for the company.

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 SOLVENCY RATIO

Solvency is a state where the company is supposed to be financially sound and capable of

meeting its liability out of its assets. This ratio indicates the relationship between total

liabilities and total assets of the business.

Solvency Ratio = Total Liabilities /Total Assets

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Ratio 1.62

1.85 1.81
1.8
1.75
RAT IO 1.7
1.7
1.65 1.62
1.61 1.61
1.6
1.55
1.5
2002-03 2003-04 2004-05 2005-06 2006-07

YEAR

INFERENCE:

Here from the data and the ratios of last five years it is clear that the company’s financial

position is sound and is capable of meeting its liabilities out of its total assets. From the

93
last five years data we see that the solvency ratio is increasing continuously and it has

decreased from 1.81 in 2002-03 to 1.62 in 2006-07 indicating a sound financial position of

the company.

94
 FIXED ASSETS TO NET WORTH RATIO

This ratio shows that how efficiently the fixed assets are utilized by the company. This

also shows that what portion of net worth is invested in the fixed assets.

Fixed Assets to Net Worth Ratio = Fixed Assets / Proprietor Funds

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Ratio

0.25 0.24
0.21
0.2 0.17
RATIO
0.15 0.13
0.11
0.1

0.05

0
2002-03 2003-04 2004-05 2005-06 2006-07

YEAR

INFERENCE:

95
It is clear from the graph there is declining, which is mainly because most of the assets are

depreciated fully and more over increase in the proprietor’s fund. There is a need to invest in

fixed assets, which will ultimately earn revenue for the company.

96
 FIXED ASSETS RATIO

This ratio indicates the proportion of long term funds deployed in fixed assets. Fixed

assets minus depreciation provided on this till the date of calculation. The higher the ratio

indicates the safer the funds available in case of liquidation. It also indicates the portion of

long-term fund that is invested in the working capital.

Fixed Assets Ratio = Fixed Assets/Long Term Funds

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Ratio 1.79

2.5
2.22
2.03
2 1.94
1.76 1.79

1.5
RAT IO
1

0.5

0
2002-03 2003-04 2004-05 2005-06 2006-07
YEAR

97
INFERENCE:

This ratio indicates that proportion of long funds deployed in fixed assets.

GROSS PROFIT RATIO

This ratio measures the gross profit margin on the total net sales made by the company.

The ratio measures the efficiency of the company’s operation and this can also be

compared with the previous years results to ascertain the efficiency partners with respect

to the previous year. When every thing is normal the gross profit margin should remain

unchanged, irrespective of the level of production and sales, since it is based on the

assumption that all costs deducted when computing gross profit, which are directly

variable with sales. A stable gross profit margin is therefore the norm.

Gross Profit Ratio = (Gross Profit / Net Sales) × 100

Year 2003-04 2004-05 2005-06 2006-07 2007-08

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 Ratio 12.65 15.88 19.23 23.67 18.08

25 23.67

19.23
20 18.08
15.88
15 12.65
RATIO
10

0
2003-04 2004-05 2005-06 2006-07 2007-08

YEAR

INFERENCE:

In 2003-04 the ratio was 12.65 but after that it increased. This was due to factors like direct

labour and direct material, which are the main components of cost of production. So main

emphasis should be given on reducing the direct material cost .the ratio suddenly decline in the

year 2007-08 because of wage revision Due to which the company was compelled to spend a

lot on labour cost and moreover they are losing their orders so they should try to maintain their

position. This fact was discussed with the management that there is overall recession in the

99
marketing and profit margin or being reduce in order to sustain in market however effort should

be made by the company to reduce it cost through measure like cost reduction and cost control.

NET PROFIT MARGIN

This ratio established relationship between net profit and net sales. Net profit ratio shows

the operational efficiency of the managerial inefficiency and excessive selling and

100
 distribution expenses. In the same way, increase shows better performance. Increase or

decrease in the ratio is determined in comparison to pervious year’s performance.

Net Profit Margin = Profit After Tax / Net Sales × 100

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Ratio

16
14.01
14
11.56
12
RATIO 9.22
10
oo 7.6
oIo 8 5.94
OO 6
OO 4
O
2
0
2002-03 2003-04 2004-05 2005-06 2006-07

YEAR

INFERENCE:

This is clear from the graph that it shows a fluctuating trend as a result of increase in cost of

production and loss of orders. So in order to improve that the company should try to decrease

its cost of production and also increase its sales. This facts was discussed with the management

101
 that there is overall recession in the market and the profit margin are being reduced, in order to

sustain in the market however efforts should be made by the company to reduce its cost through

measure like cost reduction and cost control.

FIXED ASSETS TURNOVER RATIO

Fixed assets are used in the business for producing goods to be sold. The effective

utilization of fixed assets will result in increased production and reduced cost. It also

ensures whether investment in the assets have been judicious or not.

Fixed Assets Turnover Ratio = Cost of Goods Sold / Fixed Assets

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Ratio 10.94

14
12.12
12 10.94

10
8.31
RATIO 8 6.94
5.66
6

0
2002-03 2003-04 2004-05 2005-06 2006-07

YEAR

102
INFERENCE:

This ratio is fluctuating which shows that the company is not using its fixed assets

effectively. Efforts should be made to invest in new machine, which are more

productive/efficient as compared to existing machine, which will increase the profitability

of the company in long run.

103
104
105
ADVANTAGES OF RATIOS

The ratio analysis is one of the most powerful tools of financial analysis. It is use as a device to

analysis and interprets the financial health of enterprise. Just like a doctor examines his patient

by recording his body temperature, blood pressure etc. Before making his conclusion regarding

the illness and before giving his treatment, a financial analyst analyses the financial statement

with various tools of analysis before commenting upon the financial health or weaknesses of an

enterprise. 'A ratio is known as a symptom like blood pressure, the pulse rate or the temperature

of the individual.' It is with help of ratios that the financial statements can be analyzed and

decision made from such analysis.

1. HELPS IN DECISION-MAKING:

Financial statements are prepared primarily for decision-making. But the information provided

in financial statements is not an end in itself and no meaningful conclusions can be drawn from

these statements alone. Ratio Analysis helps in making decisions from the information provided

in these financial statements.

2. HELPS IN FINANCIAL FORECASTING AND PLANNING: Ratio analysis is of much

help in financial forecasting and planning. Planning is looking ahead and the ratios

calculated for a number of year's work as a guide for the future. Meaningful conclusions can

be drawn for future from these ratios. Thus, ratio analysis helps in forecasting and planning.

106
3. HELPS IN COMMUNICATING:

The financial strength and weaknesses of a firm are communicated in a easier and

understandable manner by the use of ratios the information contained in a financial

statement is conveyed in a meaningful manner to the one for whom it is meant. Thus, ratios

help in communication and enhance the value of financial statements.

4. HELPS IN CO-ORDINATION:

Ratios even help in coordination, which is utmost importance in effective business

management. Better communication of efficiency and weakness of an enterprise results in

better co-ordination in the enterprise.

5. HELPS IN CONTROL:

Ratio analysis even helps in making effective control of the business. Standard ratios can

be based upon Performa financial statements and variance or deviations, if any, can be

found by comparing the actual with the standards so as to take corrective action at the right

time. The weaknesses or otherwise, if any, come to the knowledge of the management

which helps in effective control of the business.

107
USES OF FINANCIAL STATEMENTS TO DIFFERENT PARTIES

The analysis and interpretation of financial statements is an important accounting activity. The

end users of business statements are interested in these statements primarily as an aid to

determine the financial position and the results of the operations. There are different parties

interested in the financial analysis of their statements and their aims and their objectives also

differ significantly. The following are the use of statement analysis to different parties:

• TO THE FINANCIAL EXECUTIVES: -

The first party interested in the financial statement analysis is the finance department of the

business concern itself to the financial managers such analysis provides a deep insight into the

financial condition of the enterprises and the view of the past performance which helps in

future decision making. The financial statements give vital information concerning the position

of the enterprise as well the result of the operations.

• TO THE TOP MANAGEMENT: -

The top management of the concern is also increased in the analysis of these statements

because it helps them reaching conclusions regarding:

 Performance appraisal of overall business activities.

108
 Enquiry about current financial position and long term strategic planning.

 Queries concerning the relationships of earnings to trends in sales etc.

 Queries concerning the relationships of earnings to investment.

• TO THE CREDITORS: -

The analysis of these statements is very essential to the creditors. Also some aspects of

enterprise operations are of interest to creditors in regard to liquidity of funds, soundness of

financial structure, profitability of the operations, effectiveness of working capital

management etc.

• TO THE INVESTORS AND OTHERS: -

Investors’ presents as well as prospects are also interested in the measurement of earning

capacity of the securities. Investors have been increasingly concerned with the cash

generation capability of an enterprise, primarily in terms of the flexibility available to such

enterprises to acquire other business and new assets on an advantage basis for this purpose.

PROBLEMS OF FINANCIAL STATEMENTS

109
There are certain problems and issues encountered in financial analysis, which call for care and

judgment in such exercise.

• DEVELOPMENT OF BENCHMARKS: -

Given the diversity of BHEL product lines, it is difficult to find suitable benchmarks for

evaluating its financial performance and conditions. Hence even for such firm, the financial

analyst may run into difficulty. If information is available only about industry average or

some other standard and not about the entire dispersion of ratios for various firms in the

industry, it may not be possible to draw meaningful inferences.

• WINDOW DRESSING: -

Firm may resort to window dressing to project a favorable financial picture. When window

dressing is suspected, the financial analyst should look at the average data available as per

resource.

• PRICE LEVEL CHANGES: -

110
 In India financial accounting takes into consideration price level changes. As a result,

balance sheet figures are distorted and profits are misreported. Hence financial statement

analysis can be vitiated.

• VARIATIONS IN ACCOUNTING POLICIES: -

Business firms have some latitudes in accounting treatment like depreciation, valuation of

stocks research and development expenses, foreign exchange transactions, installment sales,

preliminary and preoperative expenses, and provision of reserve and revaluation of assets.

Due to diversity of accounting practices found in practice, comparative financial statement

analysis may be vitiated.

CONCLUSIONS AND SUGGESTIONS

I have obtained some weak and strong points of the company during the analysis of financial

statements, which are as follows: -

As just only the analysis financial statement is not only mean to reach at conclusions we cannot

substitute it for sound judgment. Furthermore good judgment depends upon the intelligence and

ability of the analyst.

111
• On seeing the liquidity position of BHEL. I conclude that it is not very good as the current

assets are in the form of inventories and debtors. The debt collection period is high and

inventories are least liquid current assets. So maintaining the inventories are relatively costly

affair for the company and the management must have to investigate properly. It is very

necessary so that fund should not be blocked unreasonably. Efficient inventory management is

required in BHEL.

• On seeing the leverage position of the BHEL, I conclude that it is very good as the stake of

owners in company is continuously increasing and its long-term debt continuously decreasing

it means that company is paying its debt promptly and creditors will not face any risk in

investing in BHEL as also BHEL is giving assured ROI.

• On seeing turnover, fixed assets and current assets turnover of company goes on increasing

which is a good indicator as it brings commensurate gain and also the average collection

goes on decreasing but management should take more efficient steps to reduce it.

• On seeing the profitability of the BHEL its overall performance is very good. A continuous

increase in the values of EPS (except year 1999) and DPS results, investors feel safe to

invest money in BHEL.

112
 BIBLIOGRAPHY

B.H.E.L.- Annual Report

B.H.E.L.- BALANCE SHEET

Financial Management by S.N. Maheshwari

Management Accounting by S.N. Maheshwari

113
114
115
116
Unit-HEEP, HWR.
particulars ACT00 A
-01 -0
SOURCES
Funds from corp. 4570 4
off.
Reserve&surplus 43011 4
Inter unit bal.(net)
Deferred credit 13036 0
Unsecured loan
Secured loan 0 6
0 0
1103 2

TOTAL 61721
117
5
118