A PROJECT REPORT ON

FINANCIAL STATEMENT ANALYSIS

IN
BHARAT HEAVY ELECTRICALS LIMITED

SUBMITTED

TO THE UNIVERSITY OF MUMBAI

AS A PARTIAL REQUIREMENT FOR COMPLETING THE

DEGREE OF

M.COM (ACCOUNTANCY) SEMESTER IV

SUBMITTED BY

Rawal Sumit Harkbahadur

ROLL NO: 38

UNDER THE GUIDANCE OF

MRS. RIYA RUPANI
NES RATNAM COLLEGE OF ARTS, SCIENCE AND COMMERCE

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 DECLARATION

I, Rawal Sumit Harkbahadur Student of M.Com (Accountancy)

Semester III (Academic year 2019-20) hereby declare that, I have completed
the research the research project on
FINANCIAL STATEMENT ANALYSIS IN
BHARAT HEAVY ELECTRICALS LIMITED

The information presented in this project is true and original to the best of my
knowledge. This project is previously not submitted to any University for any
Degree or Diploma Course of this or any other University.

Sumit Rawal
…………………….

(Student Name & Sign)

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 ACKNOWLEDGEMENT

I would like to thank the University of Mumbai, for introducing M.Com

(Accountancy) course, thereby giving its students a platform to be abreast with
changing business scenario, with the help of theory as a base and practical as a
solution.

I am indebted to our Principal Dr. (Mrs.) Mary Vimochana for

providing necessary facilities required for completion of the project.

I take this opportunity to thank our coordinator Mr. Rajiv Mishra for his
support and guidance. I would sincerely like to thank him for all his efforts.

I would like to express my sincere gratitude towards my project guide

Mrs. Riya Rupani whose guidance and care made the project successful.

I would like to thank my College library for having provided various

reference books and magazine related to my project.

Last but not the least; I would like to thank my parents for giving the best
education and for their support and contribution without which this project
would not have been possible.

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 INDEX

Sr. No. Particulars Page No.

1. INTRODUCTION
 OVERVIEW
 FEATURES
 FUNCTIONS
 IMPACT

2. LITERATURE REVIEW

3. RESEARCH METHODOLOGY
 CONCEPTUAL FRAMEWORK
 OBJECTIVES OF STUDY
 HYPOTHESIS
 SIGNIFICANCE
 LIMITATIONS

4. DATA ANALYSIS AND INTERPRETATION

5. CONCLUSION

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INTRODUCTION

Analysis means establishing a meaningful relationship between

various items of the two financial statements with each other in such a way that
a conclusion is being drawn. By financial statements by means of two
statements

1. Profit and loss account or Income Statement

2. Balance Sheet or Position Statement

These are prepared at the end of a given period of time. They are the indicators
of profitability and financial soundness of the business concern. The term
financial analysis is also known as analysis and interpretation of financial
statements. It refers to the establishing meaningful relationship between
various items of the two financial statements i.e. Income statement and Position
statement. It determines financial strength and weakness of the firm. Analysis
of financial statements is an attempt to assess the efficiency and performance
of an enterprise. Thus, the analysis and interpretation of financial statements is
very essential to measure the efficiency, profitability, financial soundness and
future prospects of the business units. Financial analysis serves the following
purposes.

MEASURING THE PROFITABILITY

The main objective of a business is to earn a satisfactory return on the funds

invested in it. Financial analysis helps in ascertaining whether adequate
profits are being earned on the capital invested in the business or not.

It also helps in knowing the capacity to pay the interest.

INDICATING THE TREND OF ACHIEVEMENTS

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Financial statements of the previous years can be compared and the trend
regarding various expenses, purchases, sales, gross profits and net profit etc
can be ascertained. Value of assets and liabilities can be compared and the
future prospects of the business can be envisaged.

ASSESSING THE GROWTH POTENTIAL OF THE

BUSINESS

The trend and other analysis of the business provides information indicating
the growth potential of the business.

COMPARATIVE POSITION IN RELATION TO OTHER

FIRMS

The purpose of financial statements analysis is to help the management to

make a comparative study of the profitability of various firms, engaged in
similar businesses. Such comparison also helps the management to study the
position of their firm in respect of sales expenses, profitability and utilising
capital, etc.

ASSESS OVERALL FINANCIAL STRENGTH

The purpose of financial analysis is to assess the financial strength of the

business. Analysis also helps in taking decisions, whether funds required for
the purchase of the new machines and equipment’s are provided from internal
sources of the business or not if yes, how much? And also, to assess how
much funds have been received from external sources.

OBJECTIVES OF THE STUDY

 To calculate the important financial ratio of the organisation as a part of

the ratio analysis thereby to understand the changes the needs and
trends in the firm’s financial position.
 To assess the performance of B.H.E.L on the basis of earnings and also
to evaluate the solvency position of the company.

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  To identify the financial strengths and weaknesses of the organization.
 To give the appropriate suggestions to the investors. To help them to
make more informed decisions.

NEED AND IMPORTANCE OF STUDY

Financial performance of an enterprise will affect other types of performance

and also the productivity of finances is good, the productivity of men and
material would be good.

Moreover, the study of non-economic and qualitative performance, which

studies the non-economic factors like customer satisfaction, citizen
satisfaction etc.

METHODOLOGY

The study carried with the cooperation of the management who permitted to
carry on the study and provided the requisite data collected from the
following sources.

 Primary Data

 Secondary data

PRIMARY DATA

The information collected directly without any reference is primary

data. In the study it is mainly with concerned officers or staff members either
individually or collectively. The data includes:

1. Conducting personal interview with the officers of the company.

2. Individual observation and inferences.
3. From the people who are directly involved with the transaction of the firm

SECONDARY DATA

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Study has been taken from secondary sources i.e. published annual reports of
the company editing, classifying and tabulation of the financial data.

For this purpose, performance data of BHEL for the years 2007-2008 to
20092010 has been used.

SCOPE OF STUDY

The scope and period of the study is being restricted to the following.

1. The scope is limited to the operations of the BHEL.

2. The information is obtained from the primary and secondary data was
limited to the BHEL.
3. The profit and loss, the balance sheet was on the last six years.
4. Comparison analysis was done by comparison of sister units.

LIMITATIONS OF STUDY

1. The study is confined to a period of last 4 years.

2. As most of the data is from the secondary sources, hence the accuracy is
limited.

COMPANY PROFILE

BHARAT HEAVY ELECTRICALS LIMITED

The vital role played by the BHEL today in the country is the mark of its
continuous efforts to improve the service in the nation by consultancy,
manufacturing and offering services in power sector.

This success story of BHEL however goes back to 1956 when its first plant was
set up in BHOPAL. Three more major plants followed in HARIDWAR,
HYDERABAD and THIRUCHIRAPALLI flowed this. These plants have been
the core of BHEL’S efforts to grow and diversify and become one of the most
integrated power and industrial equipment manufacturers in the world. The

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 company now has 14 manufacturing units,8 service centres and 4 power sector
regional centres, besides project sites spread all over India and abroad.

BHEL manufactures over 180 products under 30 major product groups and
meets the needs of core sector like power, industry, transmission, defence,
telecommunications, oil business etc. Its products have established an enviable
reputation for high quality and reliability. This is due to the emphasis placed
all along on design, engineering and manufacturing to international standards
by acquiring and adopting some of the best technologies developed in its own
R&D centres. BHEL has acquired ISO 9000 certification for environments.
BHEL caters to the needs of different sectors by designing and manufacturing
according to the need of its client in power sector.

COMPANY VISION, MISSION AND OBJECTIVE

VISION:

A world class, innovation, competitive and profitable engineering enterprise

providing total business solutions.

 MISSION:

To be the leading engineering enterprise providing quality products system and

services in the field of energy, transportation, industry, infrastructure and
other potential areas.

 VALUES:

1. Meeting commitments made to external and internal customers.

2. Faster learning, creativity and speed of response.
3. Respect for dignity and potential of individuals.
4. Loyalty and pride of the company.
5. Team playing.
6. Zeal to excel.
7. Integrity and fairness in all matters.

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OBJECTIVES

GROWTH:

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

exiting business, new areas and international operation so as to fulfil national
expectations from BHEL.

PROFITABILITY:

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

through improvements in operational efficiency, capacity utilization and
productivity and generate adequate internal resources to finance the company
growth. Confidence in providing increased value for this money through
international standards of product, quality, performance and superior
customer services.

TECHNOLOGY:

To achieve technology excellence in operations by development of indigenous

technologies to and efficient absorption and adaptation of imported
technologies to suit business needs and priorities and provide a competitive
advantage of the company.

IMAGE:

To fulfil the expectation which stock holders like government as own

employees, customers and the country at large have from BHEL.

SWOT ANALYSIS OF BHEL

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The strength, weakness, opportunities and threats which are being experienced
by BHEL as a growing concern have been summarized up in the following
lines.

 STRENGTH’S

1. Vast pool of trained man power.

2. Excellent state of art facilities.
3. Good working atmosphere
4. Rapport between management and union.
5. Product manufactured international quality
6. Low labour cost and low manufacturing cost.

 WEAKNESS

1. Excess man power

2. Slippage in delivery commitments
3. System implementation adequate
4. No financial package
5. Inadequate compensation package to employees.

 OPPORTUNITIES

1. Growing power sector machinery

2. Liberalization has opened up the market
3. Navratna company status
4. Dominant player in domestic market.

 THREATS

Liberalization–entry of MNC’S or private sector-more competition.

MNC’S taking away good employees with attractive packages.

Government taxation policy-against manufacturing sector.

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 Poor infrastructure.

PRODUCTS OF BHEL

BHEL manufactures a wide range of power plant equipment’s and also caters to
the industry sector.

1. Gas turbines
2. Steam turbines
3. Compressors
4. Turbo generators.
5. Pumps
6. Pulverizes
7. Switchgears
8. Oil rigs
9. Electrics for urban transportation system
10. Telecommunication.

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THEORITICAL FRAMEWORK OF FINANCIAL
STATEMENT ANALYSIS

INTRODUCTION TO FINANCE:

Financial statement is that managerial activity which is concerned with the

planning and controlling of the firm financial resources. Though it was a
branch of economic till 1890 as a separate activity or discipline it is of recent
origin. Still, as no unique body knowledge of its own, and draws heavily on
economics for its theoretical concepts even today.

The subject of financial management is of immense interest both academicians

and practising manager. It is of great interest to academicians because the
subject is still developing. And there are still certain areas where
controversies exist for which no unanimous solutions have been reached as
yet. Practicing manager are interested in this subject because among the
most crucial decision of the firm are those which relate to finance and an
understanding of the theory of financial management provides them with
conceptual and analytical insight to make those decision skilfully.

SCOPE:

Firms create manufacturing capacities for production of good, some provide

services to customers. They sell their goods or services to earn profit. They
fund to acquire manufacturing and other facilities. Thus the three most
important activities of a business firm are:

 PRODUCTION
 MARKETING
 FINANCE

FUNCTION:

The finance function form production, marketing and other functions. Yet the
function themselves can be readily identified. The function of raising funds,

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 inverting them in assets and distributing returns earned from assets to
shareholder respectively. The finance functions are:

 Investment or long-term asset mix decision

 Financing or capital mix decision

 Dividend or profit allocation decision

 Liquidity or short-term asset mix decision.

OBJECTIVES OF THE STUDY:

1. To calculate the important financial ratio of the organization as a part of

the ratio analysis thereby to understand the change and treads in the firm
financial position.
2. To access the performance of the BHEL on the basis of earnings and also
to evaluate the solvency position of the company.
3. To identify the financial strengths and weaknesses of the organization.
4. To give appropriate suggestion to the investors. To help them to make
over,
5. Informed decision.

SCOPE OF THE STUDY:

The scope and period of the study is restricted to the following.

1. The scope is limited to the operation in the BHEL.

2. The information obtained from the primary and secondary data was
limited to the BHEL
3. The key information performance indicated is taken from 2018-2020.
4. The profit and loss, the balance sheet was on the last 3 years.
5. Comparison analysis was done in comparison of the sister units.

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LIMITATIONS OF STUDY:

1. The study is confined to a period of last 3 years.

2. As most of the data is from secondary sources, hence the
accuracy is limited.

METHODOLOGY:

The study basically depends on:

1. PRIMIRY DATA
2. SECONDARY DATA

PRIMARY DATA COLLECTION:

The information collected directly without any reference is primary data. In the
study it is mainly through conservation without concerned officers or staff
member either individually or collectively. The data includes.

3. Conducting personal interview with officers of the company.

4. Individual observation and inferences.
5. From the people who are directly involved with the transaction of the
firm.

SECONDARY DATA COLLECTION

Study has been taken from secondary sources i.e. published annual report of the
company. Editing. Classifying and tabulation of the financial data for this
purpose performance data of BHEL or the year 2017-2018 to 2018-2019 have
been used.

INDEPTH ANALYSIS OF FINANCIAL ANALYSIS:

(A)DEFINITIONS:

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The term “financial analysis” is also known as “analysis and interpretation of
financial statements”. It refers to the process of determining financial strengths
and weaknesses of the firm by establishing strategic relationships between the
items of the balance sheet, profit and loss account and other operative data.

ACCORDING TO Mr. HARRY GUTTMANN:

“The first and most important functions of financial statements are of course to
those who control and direct the business to the end of security the profits and
maintaining sound financial conditions.”

(B)NATURE OF FINANCIAL STATEMENTS:

The term “financial statements” refers to the balance sheet reflection the
financial position of the assets, liabilities a capital of a particular company
during a certain period and profit and loss account showing the operational
results of the company during a certain period. Financial statements are plain
statements of informed opinion uncompromising in their truthfulness. It is
meant that within the limits of accepted accounting principles and the very
human abilities of the persons preparing them they have to rely on judgements
and estimated divorced of prejudice.

(C)CONVENTIONS:

According to the American institute of certified public accounts, financial

statements reflect , “a combination of recorded facts accounts conventions and
personal judgements and the judgements and the conventions applied affect
them materially”, this implies that the exhibited in the financial statements are
affected by recorded facts, accounting conventions personal judgements.

(D) USES AND IMPORTANCE OF FINANCIAL

STATEMENTS:

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The financial statements are mirrors which reflect the financial position and
operating strength’s or weaknesses of the concern. These statements are useful
to management, investors, creditors, bankers, workers, government and public
at large. George O May points of the following measure used of financial
statements:

 As a basis for taxation.

 As a basis for price or rate regulation
 As a guide to the value of investment already made
 As a basis for granting credit.

(E)LIMITATIONS OF FINANCIAL STATEMENTS:

 Financial statements are essentially interim reports and hence cannot be final

because the actual gain or loss of a business can be determined only efface it
has put down its shutters.

 They tend to give an appearance if finality and accuracy, because they are

expressed in exact money amount. Any value to the amounts presented in the
statement depends on the value standards of the person dealing with them.

 The balance sheet loses its functions as an index of current economic realities

due to the fact the financial statements are compiled on the basis of historical
costs while there is a market decline in the value of the monitoring unit and the
resultant rise in prices. The problem has become more important especially
during the war and the post war period.

 They do not give effort to many factors, which have a hearing on financial

conditions and operating results because they cannot be stated in terms of

money and are qualitative in nature. Such factors are reputation and prestige of
the business with the public its credit rating the efficiency and loyalty of its
employees and integrity of the management.

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 Due to these limitations it is said that financial statements don’t show the

financial conditions of the business rather they show, the position of financial
accounting for a business.

(F)PARTIES INTERESTED IN FINANCIAL STATEMENTS:

Now a days the ownership of capital of many public companies has become truly
board based due to dispersal of shareholding, hence, the public in general
evinces interest in the financial statements. Apart from the shareholders there
are other persons and bodies who are also interested in financial results
disclosed by the annual reports of the companies. As already mentioned, such
persons and bodies include:

1. Potential investors
2. Creditors, potential suppliers or other doing business with the company.
3. Debenture holders
4. Credit institutions like bankers.
5. Employee customers who wish to make along standing contact with the
company.
6. Economic and investment analysis
7. Members.

(G)ANALYSIS AND INTERPRETATION OF FINANCIAL

STATEMENTS:

Analysis and interpretation of financial statements are and attempt to determine

the significance and meaning of the financial statement data as so that a
forecast can be made of the prospects for future earnings ability to pay interest,
debt and maturities (current and long term) and profitability of a sound
dividend policy.

Financial analysis main function is pinpointing of the strength’s

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and weaknesses of a business concerns by regrouping and analysis of figure
contained in financial statements by making comparisons of various
component and by examine their content. The financial manager uses this as
the basis to plan future financial requirements by means of forecasting and
budgeting procedures.

The analysis of and interpretation of financial statements represents

the loss of the four measure steps of accounting viz.

 Analysis of each transaction to determine the accounts to debited and

credited and the measurements and the valuation of each transactions to
determine the amounts involved.
 Recording of the information in the journals. Summarization in largest
and preparation of work sheet.
 Preparation of financial statements.
 Analysis and interpretation of financial statements results in the
presentation of information that assets business managers, creditors and
investors. This requires a clear understanding of monitoring item of the
items.

The analysis must group that represents sound and unsound relationships
reflected by the financial statements. Those, the data is more maintain full and
it is placed in better perspective when it is provision and by means of
measurement, it’s relationship with others is established in terms of if relative
significance and it is ranked in terms of its relative significance. One can
achieve this by comparisons made between related items in the statement’s
series of years.

(H)TYPES OF FINANCIAL STATEMENTS:

Financial statements primarily comprise two basic statements:

1. The position statements of the balance sheet.

2. The income statements or the profit and loss account.

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Accounting principles specify that a complete set of financial statements must
include:

1. A balance sheets
2. An income statements
3. A statement of change in owners accounts.
4. A statement of changes in financial position.

BALANCE SHEET:

The balance sheet is one of the important statements depicting the financial
strength of concern. It shows the properties that are owned on one hand and on
the other hand the sources of the assets owned by the concern and all the
liabilities and claims it owes to owners and outsiders. The balance sheet is
prepared on a particular date. The right hand shows properties and assets and
the left hand shows liabilities.

INCOME STATEMENT OR PROFIT AND LOSS

ACCOUNT:

Income statement is prepared to determine the operation position of the concern.

It is a statement of revenues. The income statement may be prepared in the
form of manufacturing account to find out the cost of the production in the
form of trading accounts to determine gross profit or loss, in the form of profit
and loss account to determine net profit or net loss.

STATEMENT OF CHANGES IN OWNERS EQUITY:

The term owners’ equity refers in the claims of the owners of the business
against the assets of the firm. It consists of two elements.

1. Paid up share capital i.e. the initial amount of funds invested by the
shareholders.
2. Retained earnings/reserves and surplus representing undistributed
profits.

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The statement of changes in owners’ equity simply shows the beginning balance
of each owners equity account, the reasons of increases and decreases in each,
and its ending balance. However, in most cases the owners equity account
changes significantly in retain earnings and hence the statement of changes in
owners’ equity becomes merely a statement of retained earnings.

STATEMENT OF CHANGES IN FINANCIAL POSITION:

The basic financial statement i.e. the balance sheet and profit and loss account
and income statement of a business reveals the net effect of various transactions
on the operational position of the company. But there are many transactions
that do not operate through profit and loss account. Those for a better
understanding another statement of changes in financial position has to be
prepared to show the changes in assets and liabilities from the end of another
point of time. The statement of changes in financial position may take any of
the two forms. They are:

 Funds statements

 Cash flow statements

TOOLS OF FINANCIAL ANALYSIS USED IN THE STUDY:

MEANING OF COMPARATIVE STATEMENT:

The comparative financial statements are the statements of the financial position
of different periods; the elements of financial positions are then in a
comparative form to give idea of financial position of two or more periods. The
comparative statement may show:

• Absolute figures

 Changes in absolute figures i.e. increase or decrease in absolute figures.

 Absolute data in terms of percentage.

 Increase or decrease in terms of percentage.

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COMPARATIVE BALACE SHEET:

It is a statement of financial position of a business at a specific

movement of time. It represents all assets owned by the business at a particular

movement of time and the claims of the owners and outsiders against those
assets at the time. It is a way they shape the financial condition of the business
at that time.

The important distinction between an income statement and balance sheet is that
the income statement is for a period where as balance sheet is on a particular
date.

COMPARATIVE INCOME STATEMENT:

The comparative income statement gives the results of the

operation of a business. The comparative income statement gives an idea of the

program of a business over a period of time. The changes in absolute data in
money values and percentages can be determined to analyse the profitability of
the business.

GUIDELINES FOR INTERPRETATION OF INCOME

STATEMENT:

The analysis and interpretation of income statement will involve

the following steps:

1. The increase or decrease in sales should be compared with the increase

or decrease in cost of goods sold. An increase in sales will not always
mean an increase in profit. The profitability will improve if increase in
sales promotion and the control of operating
2. . expenses.

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 3. The second step of analysis should be the study of operation profit. The
operating expenses such as office and administrative expenses. Selling
and distribution expenses should be deducted from gross profit to find
out operating profit which will result from the increase in sales position
and control of operating expenses.
4. The increase or decrease in net profit give an idea about overall
profitability of the concern, non-operating expenses such as interest paid,
loss from sale of assets, writing off to deferred expenses or deducted
from operational profit we get the figure of operating profit.
5. An opinion should be formed about profitability of the concern and it
should be given at the end. This should be mentioned whether the overall
profitability is good or not

COMMON SIZE STATEMENTS:

The common size statement, balance sheet and income statement

are shown in analytical percentages. The figures are shown as percentages of

total assets, total liabilities and total sales. The total assets are taken as of and
different assets are expressed as a percentage of the total.

1. Common size balance sheet: A statement in which balance sheet items

are expressed as the ration of each asset to total assets and the ratio of
each liability is expressed as a ratio of total liabilities is called common
sized balance sheet.
2. Common size income statement: The items in income statement can be
shown as percentage of sales to show the relation of each item to sales.
A significant relationship can be established between item of income
statement and value of the sales. The increase in sales will certainly
increase selling expenses and not administrative are financial expenses.

TREND ANALYSIS:

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Trend percentages:

The method of trend percentages in useful analytical device

for the management since y substitution of percentage for large amounts, the
clarity and readability are achieved.

Trend percentages are immensely helpful in making

comparative study of the final statements for several years. The method of
calculating trend percentages involves the calculation of percentage
relationship that each item bears to the same item in the base year. The earliest
year may be taken as base year. Each item of the base year is taken as 100 and
on the basis the percentage for each of the item of each year is calculated.

Least Square Method:

This method is widely used in practised. It is a mathematical

method and with the help of a trend line fitted to the data in such a manner by
using the actual figures of the study period, we have to calculate the trend
values for these periods. Based on this value we can easily forecast the values
of the future period. The method of least square may be used either to fit a
straight-line trend or a parabolic trend. The straight line is represented by the
equation Y(C)=A+B(X).

ANALYSIS AND INTERPRETATION OF FINANCIAL

STATEMENT:

An attempt has been made to analyse and interpret the

financial statements of BHEL for the period of 2018-2019. These statements

were prepared on the basis of the data in the balance sheets and profit and loss
accounts of the BHEL for the above period.

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 RATIO ANALYSIS:

A ratio is a simple mathematical expression. It is a number

expressed in terms of another number, expressing the quantitative relationship

between the two, ratio analysis is the technique of interpretation of financial
statements with the help of various meaningful ratios. Ratios do not add to any
information that is already available, but they show the relationship between
two items in a more meaningful way.

Ratio analysis is a very important tool of financial analysis. It is the process of

establishing a significant relationship between the items of financial statements
to provide a meaningful understanding of the performance and financial
position of the firm. They help us to draw certain conclusions. Comparison
with related facts is the basis of ratio analysis. Ratios may be used for
comparison in any of the following ways.

1. Comparison of a firm with its own performance in the past.

2. Comparison of one firm with its own performance in the past.
3. Comparison of one firm with another firm in the industry.
4. Comparison of one firm with the industry as a whole.
5. Comparison of an achieved performance with pre-determined standards.
6. Comparison of one department of a concern with other departments.

TYPES OF RATIOS

 Liquidity ratio
 Capital structure/leverage ratio
 Profitability ratio
 Activity ratio.

 LIQUIDITY RATIOS:

it measures the short-term solvency of the firm. In a short period of a firm

should be able to meet all its short-term obligation i.e. current liabilities and

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 provisions. It is current assets that yield funds in the short period. Current assets
are those, which the firm can convert it into cash within one year or short run.
Current assets should not only yield sufficient funds to meet current liabilities
as they fall due but also to enable the firm to carry on its day-to-day activities.

The following are the important liquidity ratios:

1. Current ratio

2. Acid test/quick ratio.

3. Cash ratio

4. Net working capital ratio

1. Current ratio:
Current ratio is the ratio of current assets to current liabilities. Current
assets are the assets that are expected to be realized in cash or sold or
consumed during the normal operating cycle of the business or with in
one year, whichever is longer, they include cash in hand and bank, bills
receivable, net sundry debtors, stock of raw materials, finished goods
and working in progress, prepaid expenses, outstanding incomes,
assured incomes and short term or temporary investments. Current
liabilities are the liabilities that are to be repaid within a period of one
year. They include bills payable, sundry creditors, bank overdrafts,
outstanding expenses, income receivable in advance, proposed dividend,
provision for taxation, unclaimed dividends and short-term loans and
advanced repayable within one year. Any instalment of long-term
liability payable within the next 12 months is also current liability.
1. CURRENT RATIO= CURRENT ASSETS/ CURRENT LIABILITIES
2. Generally, 2: 1 ratio is considered ideal for the company.

2. Acid Test/Quick Ratio:

the acid test ratio is the ratio between quick current assets and current liabilities
and calculated by dividing the quick assets by current liabilities. Quick assets

26
 mean those which can be converted into cash immediately by exclusion of
inventory and prepaid expenses from current assets.

3. Acid test Ratio=Quick assets/Current liabilities.

4. Generally, 1: 1 ratio is considered to be ideal for the company.

3. Cash Ratio:

The cash ratio is the ratio of cash and bank balance; it is calculated dividing
cash and bank balance by current liabilities.

CASH RATIO= Cash and Bank balances/Current liabilities.

Generally, 1: 2 ratios are considered to be ideal for a company.

4. Net Working Capital Ratio:

Working capital ratio refers to comparing current assets to current liabilities

and serve as the liquidity reserve avail. To satisfy contingencies and
uncertainties. It is calculated by dividing net working capital by capital
employed.

Net Working Capital Ratio = net working capital/capital employed.

Generally higher ratio is considered ideal for a company.

 CAPITAL STRUCTURE/LEVERAGE RATIO:

These ratios indicate the relative interests of owners and creditors in a business
by showing long term financial solvency and measure the enterprise’s ability
to pay the interest regularly and to repay the principal on maturity or in
predetermined instalments at due dates.

The significant leverage ratios are:

1. Debt Equity Ratio

2. Proprietary Ratio

27
 3. Capital Gearing Ratio.

4. Fixed assets Ratio

5. Interest coverage Ratio

6. Dividend Coverage Ratio

7. Debt Service coverage Ratio.

1.Debt Equity Ratio:

It reflects the relative claim of creditors and shareholders against the assets of the
business. Debt usually refers to long-term liability.

Equity includes equity and preference share capital and reserves.

Debt Equity Ratio=long term liabilities/shareholders’ funds.

Ideal debt equity ratio is 2: 1

2.Propreitary Ratio:

It expresses the relationship between the net worth and total assets. A high
proprietary ratio is indicative of strong financial position of business.

Proprietary ratio = Net worth/ Total Assets

Net worth = Equity share capital + fictitious Assets

Total assets= fixed assets + Current Assets

Generally higher the ratio the ideal it is.

3.Capital Gearing Ratio:

A company is said to be highly geared if it has a high capital gearing ratio and
lowly geared if the capital gearing ratio is low. The extent of gearing determined
the future financial structure of the business. A company that is highly geared
will have to raise funds by issuing fresh equity shares, whereas a lowly geared

28
company would find it attractive to raise funds by way of term loans and
debentures.

Capital Gearing Ratio = funds bearing fixed interest and fixed dividend/equity

. shareholder’s funds

Funds bearing fixed interest and capital=Debentures + term loans +preference.

. share capital.

Equity share holder funds=Equity share capital +reserves-fictitious funds.

4.Fixed Assets Ratio:

This ratio indicates the mode of financial the fixed assets.

It is calculated as

Fixed assets Ratio= Fixed assets/capital employed

Capital employed= equity share capital + preference share capital +reserves +

long term Liabilities – Fictitious Assets.

Generally, a ratio of 0.67: 1 is considered ideal for a company.

5.Interest Coverage Ratio:

This ratio is called as “debt service ratio”. This ratio indicates whether a business
is earning sufficient profits to pay the interest charges. It is calculated as

Interest coverage ratio=PBIT/Fixed interest charges

PBIT=Profit before interest and taxes=PAT + Interest + Tax

Generally, a ratio of around 6 is normally considered as ideal for a company.

6.Dividend Coverage Ratio:

It indicates the ability of a business to pay and maintain the fixed preference
dividend to preference shareholders.

29
Dividend coverage ratio=PAT/Fixed preference dividend.

PAT= Profit After Taxes

7.Debt service Coverage Ratio:

It indicates whether the business is earning sufficient profits to pay not only the
interest charges, but also the instalments due to the principal amount. It is
calculated as

Debt service Coverage Ratio =(PBIT/Interest + Periodic Loan Installation)/(1-

Rate of income Tax)

Generally greater the ratio, the better is the servicing ability of company.

8.Profitibility Ratio:

Profitability ratios measure the profitability of a company. Generally they are

calculated either in relation to sales or in relation to investments. The various
profitability ratios are discussed under the following heads.

(A) GENERAL PROFITABILITY RATIO’S:

1.Gross Profit Ratio:

Gross profit is one of the most commonly used ratios. It reveals the result of
trading operations of the business. In other words, it indicates to us the
profitability of the business. It is calculated as

Gross Profit Ratio=(Gross Profit/Net sales)*100

Gross Profit=net sales-cost of goods sold.

Net Sales=Total Sales- Sales Returns

Cost of Goods Sold=Opening Stock + Purchases + Manufacturing expenses

closing Stock.

Generally, the higher the ratio, the better will be the performance of the
company.

30
2.Net Profit Ratio:

It indicates the results of overall operations of the firm. While the gross profit
ratio indicates the extent of profitability of core operations. Net profit ratio tells
us about overall profitability. It is called as

Net Profit Ratio=(Net Profit after Tax/Net Sales)*100

Generally higher the ratio, the more profitable to the company.

3.OPERATING RATIO:

It expresses the relationship between expenses

incurred for running the business, and the resultant net sales. It is calculated as

Operating Ratio=cost of goods sold + Office and Administrative expenses +

selling and distribution Expenses.

Generally lower the ratio, the better it is to the company.

4.OPERATING PROFIT RATIO:

It establishes the relationship between operating profit and sales. It is calculated

as

Operating Profit Ratio=(Operating Profit/Net Sales)*100

Generally higher the ratio, the better it is to the company.

5.Expensess Ratio:

Expenses ratios are the ratios that supplement the information given by the
operating ratio. Each of the expense rations highlights the relationship given
by the particular expense and net sales. For example, factory expenses ratio is
of factory expenses to net sales any expenditure can be shown as a ratio to
sales. All such ratios fall under the broad head of expenses ratios.

(B) OVERALL PROFITABILITY RATIOS:

1.Retun On Capital Employed Ratio(ROCE) OR Return On Investment

Ratio(ROD):

31
 This ratio reveals the earning capacity of the capital employed in

the business. In other words, capital employed is permanent capital invested in

the business. It is also called capital and hence, the ratio is also known as return
on invested capital

ROCE= (Profit before interest and taxes/capital employed) *100

2.Return On Net Worth(RONW):

It indicates the return, which the shareholders are earning on their resources
invested in the business. It is calculated as

RONW= (Profit after Tax/Net Worth) *100

Generally higher the ratio, the better it is to the shareholders.

3.Reurn On Equity Capital:

It expresses the return earned by the owners of the business, after adjusting for
debt and preference capital. It is calculated as

RETURN ON EQUITY= PAT- Preference dividend/equity shareholders’

funds.

Generally higher the ratio, the better it is to the company.

4.Return On Asset Ratio(ROA):

Return on assets reflects the return earned by the firm for the company for the
shareholders of the business on the investment of all the financial resources
committed to the business. It is calculated as

ROA=PAT/TOTAL SALES

Generally higher the ratio, the better it is to the shareholders.

5.Earning Per Share(EPS):

32
It is the earning accruing to the equity shareholders on every share held by them.
It is calculated as

EPS= PAT-Preference dividend/number of equity shares.

Generally, the ratio, the better is the performance of the company.

6.Dividends per share (DPS):

It is the amount of dividend payable to the holder of one equity share. It is

calculated as

DPS=Dividend on equity share capital/number of equity shares

Generally, from investors point of view, the higher the ratio, the happier the
investor.

7.Divident Pay Out Ratio:

It is the ratio of dividend per share to earning per share. It is calculated as

Dividend Pay Out Ratio=DPS/EPS

8.Price Earning Per Ratio (P/E Ratio):

It expresses the relationship between market price of one share of a company

and earnings per share of that company.

P/E Ratio=Market Price of Equity share/EPS

There is no ideal P/E ratio.

9.Dividend Yield Ratio:

It expresses the relationship between dividend earned per share and the market
price per share. In other words, it expresses the return on investment by
purchasing a share in the stock market , without accounting for any capital
appreciation. It is calculated as

DIVIDEND YIELD RATIO- Dividend per share/Market price of share.

33
 10.Book Value:

It is the fraction of the net worth of the business as depicted in the balance sheet,
which is attributable to one equity share of the business . it is calculated as

BOOK VALUE=Equity share holders funds/number of equity shares.

Generally higher the book value of the share, the more strong the business is
assumed to be.

 Activity Ratio:

Activity ratios measures the efficiency or effectiveness with which a firm

manager its resources or assets. They calculate the speed with which various
assets, in which funds are blocked up, get converted into sales. The significant
activity or turnover ratios are

1.INVENTORY TURN OVER RATIO OR STOCK TURN

OVER RATIO:

Stock turnover ratio indicates the number of items the stock has turned over into
sales in a year. It indicates to us the extent of stock required to be held in order
to achieve a desired level of sales.

Inventory Turn Over Ratio = Cost of Goods Sold/Average Stock

Cost of Goods Sold=Sales-Gross Profit.

Average Stock= (Opening Stock + Closing Stock)/2

Generally, 8 is considered ideal ratio of the company.

2.Debtor Turnover Ratio:

Debtors Turn Over Ratio expresses the

relationship between debtors and net credit sales. It is calculated as Debtors Turn
Over ratio= Net Credit Sales/Average Debtors.

Generally the ratio between 10-12 an ideal value for the company.

34
3.Creditor Turnover Ratio:

Creditors turn over ratio expresses the

relationship between creditors and net credit purchases. It is calculated as

Creditors Turn Over Ratio= Net Credit Purchases/Average Creditors.

Generally the ratio 12 is an ideal for the company.

4.Woking Capital Turnover Ratio:

This ratio is defined as

Working Capital Turn Over Ratio= Cost of Goods Sold/Working Capital

Working Capital=Current Assets- Current Liabilities.

Generally higher ratio indicates efficient utilization of firm’s funds.

5.Fixed Assets Turnover Rato:

It is Defined as ratio of Net Sales to the Fixed Assets.

Generally the ratio of around 5 is considered ideal for the company.

6.Total Assets Turnover Ratio:

It is defined as ratio of Net Sales to the Total Sales.

Generally higher the ratio, the greater is the ability of the firm to utilize the
investments in the business.

35
 DATA ANALYSIS AND INTERPRETATION

Current Assets and Lability Ratio

current current Ratios

assets liability
year

2009-10 155792 73129 2.13

2010-11 166669 74427 2.23

2011-12 155652 84990 1.83

2012-13 192697 116644 1.65

2013-14 235062 143200 1.64

2014-15 276062 208869 1.32

2015-16 310002 243220 1.27

2016-17 453597 376332 1.2

36
2017-18 580804 397574 1.46

2018-19 771519 502024 1.54

Interpretation –The ideal ratio for the concern is 2.13 i.e. current asset doubled
for the current liabilities considered to be satisfactory. The current ratio of
BHEL is less than! Thus, it has to maintain its efficient current assets.

Acid Test Ratio – Current Assets – Inventory / Current Liabilities

FINDINGS

1. The net working capital was Rs 155792 lac’s in 2009-2010. This

decreased to Rs 73129 lac’s in the year 2010-2011. In the year 2014-
2015 the net working capital is Rs 67193 lacs.
2. The current ratio of BHEL was 2.13 in the year 2009-2010. There was
decrease in the ratio up to the year 2016-2017. The ratio is decreasing
year by year. But the BHEL is maintaining current ratio more than the
standard norms of 2.
3. The organization is able to maintain both current ratio and quick ratio
above the standard norms. i.e. the ideal current ratio for the concern is
2:1 and the quick ratio is 1:1 but the cash ratio is fluctuating.
4. The quick ratio of the organization is in decreasing trend year by year.
5. Investment in current assets has been increasing from Rs 155302 lacs in
2009-2010 to Rs 310002 in 2010-2011.
6. The inventory turnover ratio of BHEL is fluctuating i.e., showing
decreasing trend during the years 2009-2010 to 2011-2012. But there
onwards it has slowly increased till the financial year.
7. The debtor’s turnover ratio has decreased from the year 2009-2010 to
2011-2012. It was 2.10 in the year 2013-2014. There was decrease in
debtor’s turnover ratio till the financial year.

37
CONCLUSIONS AND SUGGESTIONS:

1. The current ratio of BHEL is decreasing year by year. In the year 2009-
2010 it was 2.13 and during the year 2010-2011 it has gone up to 2.23
later in the next financial year 2012-2013 it has gone up to 1.65, so the
company should concentrate effectively on the management of Current
Assets and Current Liabilities.
2. The Net Working Capital of BHEL is good for almost in range for each
and every year. It is always in the ideal ratio for every organization.
3. The BHEL is using the moving average method in valuation of stock.
4. The debtors constitute nearly 50% of the Total Current Assets. For the
Company it is difficult to manage the accounts receivables. The
company should collect debts as quickly as possible.
5. The company has to exercise cost of control and cost of reduction
techniques to increase its profitability.
6. The debtor’s turnover ratio in 2015-2016 is 1.27. the ratio has increased
than previous years except for 2011-2012, which had 1.83. the
decreasing ratio shows the inefficient management. They should
concentrate more on the collection of the debts.
7. The return on investment ratio of the BHEL is 59.40 in 2018-2019. It has
increased when compared to previous year’s ratios. It is beneficial to
investors who are interested to know the profits earned by the company.
8. The investment in loans and advances should be minimized to possible
extent.
9. Effective internal control system should be established. So that it can
have control over all aspects of the company.

OBJECTIVES OF THE STUDY

Following are the objectives of the study

 To understand the procedure followed in BHEL for Capital

Budgeting.

38
 To understand the schemes for which Capital Budgeting is done.

 To study the various parameters for assessing the performance of

the organization.

 To offer suggestions based on the findings.

CAPITAL BUDGETING TECHNIQUES

A number of investment criteria or capital budgeting techniques are in use or in

practice.

They may be grouped into following categories :

1. Discounted cash flows or time adjusted

a. Net present value

b. Internal rate of return

c. Profitability index

2. Non-discounting cash flows or Traditional

a. Payback period

b. Accounting rate of return

CAPITAL BUDGETING IN BHEL

The capital budgeting in BHEL is based on capital budget manual, which covers
the following aspects.

1. Capital funds budget

39
  Five – year plan
 Annual plan exercise
 Non – plan budget exercise
 Feasibility report
1. Progress reporting and monitoring
2. Replacement guidelines
3. Government guidelines

Capital Fund Budget:

Capital funds budget is what enables a program of action on all capital

expenditure items to be grouped in one consolidated document. This outlines
the proposal for creation of new assets addition for increase in production,
diversification and reduction of coast ensures how these ventures will be
financed over a given period, it includes five years plan, annual plan exercise
and non-plan budget exercise, which are described below.

Five - Year Plan:

The government has been formulating five years plans for the economic growth.
Inline with this policy, BHEL also formulates the five years plans of the
company and submits to the government for inclusion in every five years plan
of the county.

Five year plan exercise normally starts from the third year of the previous five
years plan. The schemes included in the plan approved by planning
commission are prioritized for implementation depending on the need
resources etc., these schemes should be inline with perspective plan of the
country.

Annual Plan Exercise:

The capital funds budget annual plan is meant for making provisions for cash
expenditure of capital nature including the foreign exchange component where
ever necessary.

1. Revised estimate for current year.

40
 2. Budget estimates for the ensuring year i.e., budget year.
3. Preliminary budget estimates for year following the budget year.

Non Plan Budget Exercise:

All expenditure on capital equipment like cranes, material heading

equipment, special tools and plant equipment, which are required at
project sites for erection and commissioning purpose etc., should be
considered as non-plan expenditure.

Feasibility Report:

Guidelines for preparation of feasibility report. For every investment a detailed

feasibility report is required to be formulated for approval of the competent
authority. The feasibility report must spell out in detail the following…

 Objective of the scheme / project .

 Consistency with the company plans / policies.

 Inputs required and their phasing.

 Financial / economic analysis.

 Implementation plan.

 Expansion program in future if any.

Progress Reporting Monitoring:

Once the capital budget has been approved it has to be ensuring the
targets laid down regarding physical and financial progress adhered
to. Any short fail in this regard is likely in delay the completion of
project and ultimately affects production program. Therefore each
project is continuously monitored at divisional level both physically

41
 and financially. For major projects consisting more than five cores.
Projects review committees are required to be consisted having
representatives from project unit and corporate office. Those
committees should meet periodically to review the progress and
recommenced, taking corrective action.

Replacement Guidelines:

Substantial investments have been made in the plant and machinery in all the
BHEL manufacturing divisions. Though modernization and expansion
programs, new machine tools have been added from time to time. New projects
are underway increasing investments in plant and machinery still to higher
level.

Replacement of plant and machinery are needed for the following reasons.

 Due to natural wear and tear .

 Technological obsolescence.
 Change in service requirement.
 Accident.

Government Guidelines:

Reference has been made in various government manual containing

guidelines/policies, which are relevant for the capital budgeting exercise within
BHEL and with other government.

42
PROCEDURE FOR CAPITAL BUDGETING IN
BHEL

The capital budgeting in BHEL has in four phases, which can be explained as
follows….

First Phase:

This phase involves the different aspects in approval of the proposals put forth
but the department concerned. The different steps involved are…

1. A letter of requisition with the proposal is sent by the concerned

department to the R&D department. This letter contains the specification
of items in the case of replacement the need for the replacement is to be
clearly specified along with the cost estimates.
2. This proposal is forward to finance department, industrial engineering
and maintenance and services department for their consent.
3. Finance department looks into financial aspects of the proposals.
4. Industrial engineering department cheeks whether the specifications are
apt of the proposal.
5. Maintenance and service department consent.

Third Phase :

1. A representative of the supplier gives the demonstration with respect to

the technical aspects and usage of item.
2. The item is then put to use.
3. From time to time, steps are taken for its proper maintenance.

43
Forth Phase:

1. If the machines worn out or obsolete, it is disposed of the replacement.

PROFILE OF ORGANIZATION INDUSTRY PROFILE

44
45
BHARATH HEAVY ELECTRICAL LIMITED

The vital role played by the BHEL today in the country is the mark of its
continuous efforts to improve the service in the nation by consultancy,
manufacturing and offering services in power sector.

46
This success story of BHEL however goes back to 1956 when its first plant was
set up in BHOPAL. Three more major plants in HARIDWAR, HYDERABAD
and TIRUCHINAPALLI

follow. These plants have been the core of BHEL’s efforts to grow and diversify
and become one of the most integrated power and industrial equipment
manufacturers in the world. The company now has 14 manufacturing units, 8
service centres and 4 power sector regional centres, besides project sites spread
all over India and abroad.

BHEL manufactures over 180 products under 30 major product groups and
meets the needs of core sector like power, industry, transmission, defence,
telecommunications, oil business etc. Its products have established an enviable
reputation for high quality and reliability. This is due to the emphasis placed
all along on design, engineering and manufacturing to international standards
by acquiring and adopting some of the best technologies developed in its own
R&D centres. BHEL caters to the needs of different sectors by designing and
manufacturing according to the need of its clients in power sector.

INDUSTRIAL SECTOR:

BHEL contributes major capital equipment and systems like captive power
plants centrifugal compressors, drive turbines, heavy castings and forging etc.

 Capacitors
 Compressors
 Diesel generating sets
 Industrial motors and alternators
 Gas turbines
 Steam generators
 Steam turbines

TRANSMISSION SECTOR:

47
BHEL also produces high voltage transformer an SF6 switch gears up to 400KV.
India’s first indigenous 145KV gas insulated switch gear was developed and
commercialized by BHEL. It consists of the following.

 Capacitors
 Control relay panels
 Dry-type transformers
 Energy meters
 Insulators
 Switch gears
 Power semiconductor devices
 Power system studies

OIL SECTOR:

BHEL has been supplying onshore drilling rigs, X-MAS tree valves and
wellheads up to a rating of 1000 PSI to ONGC and OIL India. It can also supply
subsea wellheads, super deep drilling rigs, desert rigs and hebi rigs.

TRANSPORTATION SECTOR:

Most of the trains in the Indian railways are equipped with BHEL’s traction and
traction control equipment. India’s first underground metro at Calcutta runs on
drives and controls supplied by BHEL. The company also manufactures broad
gauge 3900HP AC locomotives, 5000/4600HP AC/DC locomotives. BHEL
has acquired the technology for 3 phase electrics for 6000HP AC locomotives.

NON CONVENTIONAL ENERGY:

 Mini/Micro hydro sets

 Solar lanterns
 Solar photovoltaics’
 Solar water heating system
 Wind electric generators

48
TELECOMMUNICATION:

BHEL also manufactures MAX-XL systems based on C DOT technology and

plans to make other range of telecommunication equipment as well.

STEAM TURBINES

BHEL has the capability to design, manufacture and commission steam turbines
of up to 100 MW rating for steam parameters ranging from 30 bars to 300 bars
0
pressure and initial & reheat temperatures up to 600 C. Steam Germany
covering the whole range of requirements for Drive, Cogeneration, Captive
Power, Utility and Combined Cycle applications BHEL today is fully equipped
to provide comprehensive service to clients covering system engineering,
equipment design and turnkey erection and commission.

STEAM TURBINES

49
BHEL presently has manufactured Turbo-Generators of ratings upto 560 MW
and is in the process of going upto 660 MW. It has also the capability to take
up the manufacture of ratings up to 1000 MW suitable for thermal power
generation, gas based and combined cycle power generation as-well-as for
diverse industrial applications like Paper, Sugar, Cement, Petrochemical,
Fertilizers, Rayon Industries, etc, Based on proven designs and know-how
backed by over three decades of experience and accreditation of ISO 9001, the
Turbo-generator is a product of high-class workmanship and quality.
Adherence to stringent quality-checks at each stage has helped BHEL, to
secure prestigious global orders in the recent past from Malaysia, Malta,
Cyprus, Oman Iraq, Bangladesh, Sri Lanka and Saudi Arabia.

The successful completion of the various export projects in a record time is a

testimony of BHEL’s performance.

50
PUMPS

BHEL started manufacture of Pumps during the mid-sixties under technical

collaboration with M/s Sigma Lutin, Czechoslovakia, to meet the requirements
of 60 MW, 110 MW and 210 MW thermal power stations, the scope of which
was widened to meet the requirements of power plants up to 500 MW, with the
help of another collaboration with M/s Weir Pumps, U.K. BHEL has also made
some in-house product development to gain spin off benefits from the above
collaboration as well as to develop new pumps to meet the requirements of
Combined Cycle Power plants.BHEL has undertaken a design up-gradation
and retrofit of the existing 200 KHI

Boiler Feed pumps Inside Stators with energy efficient hydraulics and cartridge
design internals under technical tie-up with M/s Sulzer Pumps, Germany, and
recommended the upgraded 200 KHI-S Boiler Feed pump to all customers of
110 MW & 210 MW Power Stations operating with the earlier Czech design
for increase of pump availability and reliability and also considerable reduction
in operational costs.

51
PULVERIZERS

BHEL manufactures mills for pulverized coal fired Thermal and Industrial
boilers, BHEL till date has manufactured over 1200 bowl mills and over 100
tube mills, operating in different coal fired Thermal power stations in India.

BHEL has absorbed technology from world leader M/s. Combustion

Engineering USA for bowl mills. The specific range – 583 XRP/XRS to 1043
XRP covers the-state-of-the-art mills required for the India market and are
supplied as Industrial boilers as-well-as Utility boilers of 60 MW, 110 MW,
210 MW & 500 MW capacity.

52
OIL RIGS

BHEL started manufactures oil field equipment in collaboration with M/s UA

Steel Engineers and Consultants USA (National Oil Well), M/s Skytop
Brewster USA, M/s Branham Industries USA, M/s IRI International, USA.
After successful absorption of technology, BHEL now has the capability to
manufacture conventional deep drilling rigs up to a depth of 9000 meters,
mobile rigs to a depth of 3000 meters and well servicing rigs to a well depth of
6100 meters.

SWITCH GEARS:

BHEL is involved in the design, commissioning and service of a wide range of

switch gears catering to various applications like power station auxiliaries,
power distribution process industries, rural electrification, open cast mines,
electric traction and other special applications, BHEL started manufacturing

53
 circuit breakers in 1965 in collaboration with ASIA, Sweden and to keep pace
with the technological advancement and to meet customer requirements.

Switchgear is of following types:

 Minimum of circuit backers (33KV-220KV)

 Sf6 circuit breaker (132KV-400KV)
 Vacuum circuit breakers (3.3KV-33KV)

SOLAR WATER HEATING SYSTEM:

BHEL a pioneer in the field of design manufacturing and installation of solar

water heating systems in the country till date installed systems covering more
than 74000m2 of absorber area of capacity over 37lakh liters per day. The
largest Solar water heating system is used at Dr.Will Mar Schwable India
Pvt.ltd. Noida.

In the BHEL make solar collector, stabilize efficiency values up to 65% is

assured

under normal circumstances over a long period without degradation

COMPANY'S VISION, MISSION AND OBJECTIVES:

VISION: A world class, innovative, competitive and profitable engineering

enterprise

providing total business solutions.

MISSION: To be the leading enterprise providing quality products systems and

services in the field of energy, transportation, industry, Infrastructure and other
potential areas.

VALUES:

 Meeting commitments made to external & internal customers

54
  Foster learning, creativity & speed of response.
 Respect for dignity & potential of Individuals.
 Loyalty and pride in the company.

 Team playing.

 Zeal to excel.
 Integrity and fairness in all matters.

OBJECTIVES:

GROWTH:

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

existing business, new areas and international operation so as to fulfill national
expectations from BHEL

PROFITABILITY:

To provide a reasonable and adequate return on capital employees, primarily

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

Confidence by providing increased value for this money through international

standards of product quality, performance and superior customer service.

TECHNOLOGY:

To achieve technology excellence in operations by development of indigenous

technologies to and efficient absorption and adaptation of imported
technologies to suit business needs and priorities and provide a competitive
advantage of the company

IMAGE:

55
To fulfil the expectations which stockholders like government as owners,
employees, customers and the country at large have from BHEL.

SWOT ANALYSIS:

The strengths, weakness, opportunities and threats, which are experienced By

BHEL as a growing concern, have been summed up in the following lines:

STRENGTHS:

*Excellent state of art facilities.

*Good working condition.

*Rapport between management and Union.

*Products manufactured to International quality.

*Low labour cost and low manufacturing cost.

*Vast pool of trained man power.

WEAKNESSES:

*System implementation inadequate.

*No financial Package.

*Inadequate compensation payable to employees.

*Excess manpower.

OPPORTUNITIES:

*Growing power sector machinery.

*Liberalization has opened up the market.

*Navaratna company status.

*Dominant player in domestic market.

56
*Export potential growing.

THREATS:

*Liberalization -Entry of MNC'S/ private sector-more Compensation.

*MNC'S weaning away good employees with good attractive salaries.

*Govt. Taxation policy-against manufacturing sectors.

*Poor infrastructure.

*Dumping of goods.

*Attractive credit policy by FFI'S and MNC'S.

KEY FACTORS:

*45-CNC M/C tools including CNC 5-axis M/C Center.

*50 ton balancing tunnel

*Computerized attendance system

*Series-39 main frame computers-with multiprocessor system

*Capacity-200 remote terminals with 13 bulk printers

*CAD/CAM,PC-LAN{Local area network}

*More than 200 personal computers with data exchange facilities with
mainframe computer

WELFARE:

*Six schools,2junior Colleges and 1 womesn's degree college *School for

mentally retarded.

*Houses on ownership basis to employees-LIG-1000,MIG-2500 and HIG-460

*Adopted 3 villages provided basic amenities.

57
ABOUT B.H.E.L RAMACHANDRAPURAM UNIT:

About 30km away from the city centre on the fringes of the historical city of the
qutub

shah kings lies the hub of the Ramachandrapuram unit of Bharat heavy electrical
limited, Hyderabad made a beginning in 1965 with the idea of "Bringing power
to the people".

The success story of B.H.E.L, Ramachandrapuram has its roots in its

Commitments to

the nation's economic growth, towards which it has set high standard for itself.
Striving hard to take part in the building of a Strong and self reliant India.

B.H.E.L started its operations, initially by manufacturing 12MW,60MW and

110MW

capacity steam turbines, generators and auxiliaries for the power and the
industry sector with collaboration of SKODA of CZECHOSLOVAKIA.

Realizing the need for diversification, B.H.E.L Hyderabad soon ventured in To

other

areas absorbing latest technologies from world leaders to meet Emerging

challenges and the needs of the country. Steam turbines , Gas Turbines Turbo
generators Compressors, Pumps, Switch Gears, Oil Field Equipment,
pulverizing mills, Heat exchangers including a host of auxiliaries, on now form
the profile of products at B.H.E.L, Hyderabad..

INTERNATIONAL OPERATIONS:

BHEL has exported its equipment and services to over 50 countries. In Malaysia,
BHEL has supplied 80% of the Boilers besides several hydro sets and gas
turbines. BHEL equipment’s are in operation in Malta, Cyprus, Saudi Arabia,
Oman, Egypt, Cyprus, Libya, Greece, Bangladesh, Srilanka, Iraq, and
Australia, etc. BHEL exports turnkey power projects of thermal, hydro, abd
gas based types, substation projects, rehabilitation projects, besides a wide

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 variety of products like insulators, transformers, valves motors, traction
generators and services for renovation and modernization and operation power
station.

RESEARCH AND DEVELOPMENT [R&D]:

BHEL is one the few companies worldwide involved in development of

Integrated Gasification Combined Cycle[IGCC] technology, which would
usher in clean coal technology. BHEL R&D efforts have produced several new
products. Some of the recent successful R&D products are automated storage
retrieval systems, automated guided vehicles for material transportations,
automatic robotic welding systems.

HUMAN RESOURCES DEVELOPMENT (HRD)

The greatest strength of BHEL is its highly skilled and committed people. Every
employee is given equal opportunity to develop himself and improve his
position.

Continuous training and retaining, a positive work culture and participative style
of management have led to the development of a motivated work force and
enhanced

productivity and quality.

ORGANISATION STRUCTURE

B.H.E.L a public sector undertaking is a company form of organization with

corporate functions, Business sectors and Operating units under the control of
Chairman & Managing director reporting to the Board of directors.

Directors individually deal with corporate functions with the help of Executives

Directors/ General Manager’s in-charge.

Each unit is headed by an Executive Director /General Manager’s in-charge.

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MANPOWER STRENGTH IN B.H.E.L

The highly trained and motivated manpower of B.H.E.L is its biggest asset.

The total number of regular employees working in B.H.E.L, RC PURAM UNIT

is

6358 out of this, Executives are 1587, supervision is 1200 and the Non-
supervisors are 3471 this work force is an unending reservoir of talent, which
alone can transform the company in to a global player it wants to be.

The vision of B.H.E.L becoming a truly Indian company deeply imbibed in our
rich culture and heritage is neither a dream nor too distant a reality

OBJECTIVES OF B.H.E.L:

To achieve and maintain a leading position as supplier of quality equipment,

Systems and services to serve the National & International Markets in the field
of energy.

The areas of interest would be conversion, Transmission and Utilization &

Market leadership.

FINANCE DEPARTMENT IN B.H.E.L HYDERABAD

Additional General manager/Finance heads the finance department at B.H.E.L

Hyderabad. It is segregated into different sub groups reporting to Additional
General Manager/ Finance. Finance department is organized in to Product
Wing and Centralized wing.

Product Wing is divided into various products like TCGT, EM, HEF, PUMPS,
SG,

PULV, F&S, WORKS & MISC, ED&ST, BUDGET & MONITORING ETC.

Each product groups deals with all types of finance and Accounting relating to
that product wise concurrence to proposals for Procurement and incurring
expenditure, material accounting, cost accounting sales accounting, budget
preparation, and other miscellaneous activities relating to that product.

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Centralized Wing deal with Establishment matters pertaining to all employees
of the unit, Cash management dealing with total cash management of the unit,
Books section deal with preparation of annual accounts and Taxation matters,
Export incentive section deal with all export incentive matters, stock
verification and Productivity groups related to those subjects.

In addition, there is an internal audit, which audits all the functions of the unit
and directly reporting to corporate office.

As it is a product form of organization, Financial Accounting system is desired

to meet the requirement of operation.

The flow of authority and responsibility has definite forms of hierarchy ranging
from Additional General Manager to the Clerical cadre.

BHEL today enjoys national and international presence and it is ranked among
the top 12 companies in the world manufacturing power generation equipment.

The first plant of what is today known as BHEL was established nearly 40 years
ago in 1956 at Bhopal and was the genesis of the Heavy electrical equipment
industry in India.

A country –wide network of 14 BHEL manufacturing units is spread across

Bangalore,

Bhopal, Hardwar, Tiruchirapalli, Hyderabad, Ran pet, jagishpur, Reaper,

goindwal, Jhansi, Chennai, Varanasi and Gurgoan in addition to a number of
service division all over the country.

B.H.E.L’s wide range of Products Caters to the need of Power generation for

Thermal, Hydro and Nuclear power station, Transmission, Transportation,

Industry, Oil and Gas and Non Conventional energy.

B.H.E.L’s collaboration with world leader’s help in keeping it abreast of the

Latest technologies in the field, BHEL is well known for reaching power to the
people.

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But the cornerstone of its philosophy is anchored on its endeavor to offer quality
products through dedicated service.

The BHEL has emerged as an industrial empire that has carved a niche as a
major power generating equipment manufacturer in India.

The operation of BHEL is organized around business sectors to provide a strong

Market orientation.

These business sectors are power, Industry and International operations.

The company has been chosen as one of the “NAVARATNA” public sector
Enterprise, which is to be supported by the government in their endeavor.

To become future global players, a strong work force of 53,000 dedicated

personnel provides this assurance in ample measure.

TOTAL EMPLOYEES TOTAL EMPLOYEES

TOTAL ASSETS 29352 MILLION

REVENUE 18.6% Rs 4430 MILLION

TURNOVER 5000 CRORE

PROFIT 35000 CRORE

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