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INTRODUCTION TO BHEL JAGDISHPUR INTRODUCTION TO BHEL JAGDISHPUR

BHEL unit of jadishpur came into existence during eighties. The foundation stone was laid on Feb.10th,1982. On 3rd march,1984 the prime ministry of India Mrs. Indra Gandhi inaugurated BHEL „s 11th manufacturing unit at jagdishpur in sultanpur distt.78 Km. Away from Lucknow, On the Lucknow-Sultanpur highway . BHEL manufactures a comprehensive range of power generation and transmission equipment for domestic as well as overseas markets BHEL‟50 year of glorious experience in the ceramic field, blended with that of NGK, Japan‟s world leader in insulator technology. Set the pace for the commissioning of the plant. This latest unit has been provide with the most modern and sophisticated facilities and was commissioned in record time of 18 months. Insulator plants, jagdispure has developed into one of India‟s largest disc insulator manufacturing centres, with the most steam lined lay out modern technology. It has provision to cope with the latest advances in the ceramic field. BHEL jagdispur is primarily concerned with the manufacturing of insulator which is used as electrical power equipment in power industries.

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PREFACE PREFACE

Finance is the lifeblood of an industry. The subject matter of Financial Management has been changing at a rapid pace. About a decade ago, the scope of Financial Management was circumscribed to the raising of funds, whenever needed & the financial decision-making & problem solving. The summer training program is designed to give the future managers the feel of the corporate happenings and work culture. These real life situations are entirely different from the stimulated exercise enacted in an artificial environment inside the classroom and it is precisely because of this reason that this summer training has been designed, so that the manager of tomorrow does not feel ill in the case when the time comes to shoulder responsibilities. The summer training is a bridge between the institution and organization to make us understand how theoretical knowledge will be applied in the practical field. It was exactly in this context that I was privileged enough to join Bharat Heavy Electricals Limited. In the FINANCE DEPARTMENT as a summer trainee. Bharat Heavy Electricals Limited (BHEL) was set up in 1959 by the Government of India with the objective of creating indigenous manufacturing base for power plant equipments. Today, BHEL is the 12th largest company in the world in Power Plant Equipments manufacturing and the largest in India. Bharat Heavy Electricals Limited (BHEL) is known not only for its professional management, but also for its enlightened and progressive approach towards employee welfare and betterment of society. The experience that I have gathered over the past two months has certainly provided me with an orientation, which I believe, will help me shoulder any assignment successfully in future. Ratio Analysis plays a crucial role in financial economics. It deals with investment decision & it its usual axiom in finance that the value of an investment is the present value of future cash flows that the asset is expected to generate. It also represents the growing edge of the business giving a proper overview of the organization‟s progress.

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ACKNOWLEDGEMENT ACKNOWLEDGEMENT

I would like to express my gratitude to all those who gave me the opportunity and subsequently guidance to complete this project. A mission of this magnitude could not have been be under taken without the guiding light of inspiration, cooperation, critical supervision, encouragement and above all the blessings of Goddess Saraswati.

It is with such a multitude of emotions that I shall ever remember the inspiring encouragement of my supervisor Dr. V.K.JHAA at every step during the period of the present study. I am thankful to Dr .NIRDOSH AGGRAWAL, as his stupendous knowledge provided the other sharp and critical dimensions to my work which I am sure has tremendously enhanced the value of this project. I am thankful to my institute and the faculty for their constant support and guidance throughout my project work. I would very sincerely like to thank my company mentor Mr. S.K.TRIPATHI Sr. Additional officer (Finance), and a special thanks to Shri K Ravi Kumar CMD & Director (Power) who not only permitted me to carry out the work but also encouraged me to go ahead with my training by giving me the opportunity to work in the real practical scenario. I am bound to thank other staff members for their stimulating support. I would like to give my special thanks to my PARENTS; their constant support enabled me to complete this project work.

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While working on this project various topics and concepts came to my knowledge which were unheard and unknown to me before. The basic purpose of preparing this project was to make a detailed study and understand its various concepts and outcomes. The project will help in exploring those dimensions which were not known to many but with the help of the following project those areas will be highlighted.EXECUTIVE SUMMARY The following project showcases the ratio analysis of one of the most well known PSU Bharat Heavy Electricals Limited. Various aspects about the awareness of financial area and various details of companies current market standing has been made clear through this project report. It would also help in knowing the various competitors of the industry and exploring the areas through which competitive advantage could be obtained. Further I have used ratio analysis method for the analysis of the company. I have compared BHEL share price from BSE Sensex for the last four years and one year projected and I have also compared the balance sheet of last 5 years which will explain the market standing of the company. 4 .

Comparison of BHEL with its competitors in respect to Debt and Equity. People will get encouraged at young age to invest in stock market. As an overview. The main objective of this project report is to provide complete financial study of BHEL to the shareholders and the parties interested in buying its shares. it focuses on the resulting effects of the various economic and market forces shaping its future.OBJECTIVE OF THE STUDY The following project showcase the ratio analysis of Bharat Heavy Electricals Limited. This study is positioned to offer a comprehensive overview of the financial condition of the company.Through this project many areas which were not known to shareholders can be explored. I have used the following technique:    Ratio analysis. To achieve my objective. Comparison of last five years Balance Sheet with Projected Balance Sheet. The study will be of critical interest particularly to the shareholders and other parties interested at various levels. Comparison of last five years BHEL share price with BSE Sensex. so that they can take the right decision at the right time in this dynamic business scenario. 5 .

COMPANY PROFILE 6 .

Renewable Energy. Transportation. Industry. over 100 project sites. today. BHEL was established more than 40 years ago. enables the Company to promptly serve its customers and provide them with suitable products.a dream that has been more than realized with a well-recognized track record of performance.BHARAT HEAVY ELECTRICALS LIMITED BHEL is the largest engineering and manufacturing enterprise in India in the energyrelated/infrastructure sector.. four Power Sector regional centres. Power Generation & Transmission. BHEL manufactures over 180 products under 30 major product groups and caters to core sectors of the Indian Economy viz. eight service centres and 18 regional offices. engineering and manufacturing to international standards by acquiring 7 .efficiently and at competitive prices. The high level of quality & reliability of its products is due to the emphasis on design. etc. The company has been earning profits continuously since 1971-72 and paying dividends since 1976-77. The wide network of BHEL's 14 manufacturing divisions. Telecommunication. ushering in the indigenous Heavy Electrical Equipment industry in India . systems and services -.

BHEL's operations are organised around three business sectors. Environmental Management Systems (ISO 14001) and Occupational Health & Safety Management Systems (OHSAS 18001) and is also well on its journey towards Total Quality Management. Industry including Transmission. Petrochemicals. namely Power. Captive and Industrial users. career planning.25. a positive work culture and participative style of management all these have engendered development of a committed and motivated 8 . Steel. Telecommunication & Renewable Energy . Cement plants. The company is striving to give shape to its aspirations and fulfil the expectations of the country to become a global player. committed to enhancing stakeholder value.000 MVA transformer capacity and other equipment operating in Transmission & Distribution network up to 400 kV (AC & DC). The greatest strength of BHEL is its highly skilled and committed 42.  Supplied over 25.and Overseas Business. Transportation. Refineries. BHEL has acquired certifications to Quality Management Systems (ISO 9001).and adapting some of the best technologies from leading companies in the world.  Supplied over 2. This enables BHEL to have a strong customer orientation. Fertilizer. together with technologies developed in its own R&D centres.000 MW of power generation . BHEL's vision is to become a world-class engineering enterprise. to be sensitive to his needs and respond quickly to the changes in the market.  Supplied over one million Valves to Power Plants and other Industries.600 employees.000 Motors with Drive Control System to Power projects. BHEL HAS:  Installed equipment for over 90.000 kms Railway network. etc. Continuous training and retraining.for Utilities. Every employee is given an equal opportunity to develop himself and grow in his career. Aluminium.  Supplied Traction electrics and AC/DC locos to power over 12.

quality and responsiveness.efficiently and economically. 8 service centres. non-conventional energy sources and telecommunication. Established in the late 50‟s. oil & gas. besides a large number of project sites spread all over India and abroad. An ISO 9000 certification has given the company international recognition for its commitment towards quality. Bharat Heavy Electricals Limited (BHEL) is.workforce setting new benchmarks in terms of productivity. transportation. industry. today. transmission. 9 . With an export presence in more than 60 countries. BHEL is truly India‟s industrial ambassador to the world. a name to reckon with in the industrial world. 4 power sector regional centres. enables BHEL to be close to its customers and cater to their specialized needs with total solutions . BHEL offers over 180 products and provides systems and services to meet the needs of core sectors like: power. 18 regional offices. It is the largest engineering and manufacturing enterprise of its kind in India and one of the leading international companies in the power field. A wide-spread network comprising 14 manufacturing divisions.

MISSION TO BE INDIAN MULTINATIONAL ENGINEERING ENTERPRISE PROVIDING TOTAL BUSINESS SOLUTION THROUGH QUALITY PRODUCTS.VISION A WORLD-CLASS ENGINEERING ENTERPRISE COMMITTED TO ENHANCING STAKEHOLDER VALUE. 10 . INDUSTRY. TRANSPORTATION. SYSTEMS AND SERVICES IN THE FIELDS OF ENERGY. INFRASTRUCTURE AND OTHER POTENTIAL AREAS.

where quality systems as per ISO-9001 have taken deep roots. BHEL PURSUES CONTINUAL IMPROVEMENT IN THE QUALITY OF ITS PRODUCTS.QUALITY POLICY IN ITS QUEST TO BE WORLD-CLASS. COMMITMENT AND TEAM-WORK OF ALL EMPLOYEES. 11 . QUALITY ASSURANCE Quality of BHEL products is evidenced through state of-the-art design and technology adopted from world renowned collaboration. BHEL gives emphasis to the highest standards of quality at every stage of operation through implementation of quality management system and procedures in line with international standards and practices. has now made significant achievements in Total Quality Management by adopting CII/EFQM model for business excellence. BHEL. SERVICES AND PERFORMANCE LEADING TO TOTAL CUSTOMER SATISFACTION AND BUSINESS GROWTH. THROUGH DEDICATION.

LTD. 12 .  POWER PLANT PERFORMANCE IMPROVEMENT LTD.  BARAK POWER PVT. LTD.  NTPC-BHEL POWER PROJECTS PVT. The units of BHEL have been accredited to ISO-14001 Environmental Management System.  HEC & BHEL JOINT VENTURE FOR FOUNDRY FORGE COMPANY.  UDANGUDI POWER CORPORATION LTD.BHEL shares the growing global concern on issues related to environment & occupational health & safety. JOINT VENTURE  BHEL-GE GAS TURBINE SERVICES PRIVATE LIMITED.

R&D DIRECTOR HR DIRECTOR POWER DIRECTOR IND SYS & PRODUCTS DIRECTOR INTERNATIONAL OPERATIONS 13 .HIERARCHY OF BHEL BOARD OF DIRECTORS CHAIRMAN & MANAGING DIRECTOR COMMITTEE OF DIRECTOR CORPORATE FUNCTION BUSINESS SECTOR OPERATIONS DIRECTOR FINANCE DIRECTOR ENGINEE.

North. RAVI KUMAR (Chairman & Managing Director)     Power Business Power Sector Regions.MANAGEMENT COMMITTEE K. East. South & West Spares & Services Business Mergers & Acquisitions C.Verma (Director Finance)         Corporate Finance Taxation Financial Services Internal Audit JV (Finance) Corporate Monitoring Corporate Materials Management Corporate Manufacturing Anil Sachdev (Director Human Resource)   Human Resource Development Institute Corporate Information Technology 14 .S.

P.    Corporate Engg. Safety & Environment B. Rao (Director Industrial & Product Business)       Transmission Business Transportation Business Ceramics Business Unit Component Fabrication Plant Corporate Research & Development Centralised Stamping Unit 15 . & Product Development Corporate Communication Corporate Productivity Corporate Health.

FINANCE ADMIN.HIERARCHY OF FINANCE DEPARTMENT DIRECTOR FINANCE GENERAL MANAGER FINANCE FINANCIAL SERVICES & BANKING. ESTT & PROVIDENT FUND 16 . CASH MGT. CAPITAL BUDGET. BUDGET BOOKS. DIRECT TAXATION INTERNAL AUDIT INDIRECT TAXATION DEBTORS MGT.

BHEL presents its quote like other participants and the whole procedure is carried on. While to get a project.Basically the whole set up of the finance department is made so as to cover all the aspects involved in the financial decisions. These can be depicted as follows:          Cash management Corporate books Internal audit Establishment and payroll Financial services department Taxation (direct and indirect) Provident fund trust Debtors Budgeting Administration and insurance 17 . we will analyze the various departments of finance at BHEL. Firstly. BHEL is a debt free company and has its own accounting policies.

The major business (approx 80%) is from power sector.BUSINESS DIVISIONS BUSINESS SECTORS BHEL‟s operations are organized around three business sectors. namely Power. Transmission. Telecommunication & Renewable Energy and Overseas Business. 18 . industryincluding Transportation.

boilers and matching auxiliaries up to 800 MW rating including supercritical sets of 660/800 MW. 235 MWe and 540 MWe ratings. pelton and Kaplan type. Health diagnostics and Life Extension Program (LEP) of plants. Its capability ranges from supplying individual equipment to setting up complete power plants on turnkey basis. Its range covers turbines of Francis.  Thermal BHEL supplies steam turbines. packed by reliable after sale-services. BHEL turnkey capabilities have been proved in a number of projects in India and abroad.(A) POWER SECTOR BHEL manufactures a wide range of products and systems for thermal. generators. Pump turbines. besides specialized know how of residual life assessment (RLA). The company has proven expertise in plant performance improvement through renovation. BHEL –built power generation sets account for nearly two-third of the overall installed capacity and three-fourth of the power generated in India. modernization and upgrading of a variety of power plant equipment.  Hydro BHEL engineers and manufactures custom-built hydro power equipment. 19 . nuclear. gas and hydro based utility power plants to meet customer requirements for power generation and transmission.  Nuclear BHEL has manufactured and supplied steam turbines and generators for 220 MWe. bulb turbines.

like metallurgical. Diesel EMUs and OHE cars. centrifugal compressors. BHEL has developed and commercialized the country‟s first indigenous 36 kV Gas Insulated Substation. valves. Those include: high-voltage power and distribution transformers. It can also supply on-shore drilling rigs.000 psi to ONGC and Oil India. fertilizers. cement. Series and shunt compensation systems are also manufactured to minimize transmission losses. drive turbines. including electrics & control electronics. SF6 switchgear. dry-type transformers. waste heat recovery boilers. BHEL supplies a wide range of transmission products and systems of up to 400 kV class. electric machines. The Company has developed and supplied broad gauge 3900 HP AC locomotives.  Transmission BHEL today is the leader in the field of power transmission in India with a wide range of transmission systems and products. BHEL has acquired the technology for 6000 HP 3phase AC Locos and started manufacturing the electrics & controls as well as those for 3phase AC EMUs.one of the largest railway networks in the world is equipped with traction equipment built with bhel . diesel shunting locomotives of up to 2600 HP.  Transportation Today over 70% of the Indian Railways . refineries and petro-chemicals. battery powered road vehicles. desert rigs and heli-rigs. BHEL has also emerged as a major supplier of controls and instrumentation systems especially distributed digital control systems for industries. 20 . India's first underground metro at Calcutta runs on drives and controls supplied by BHEL. gas turbines. heat exchangers. sub-sea well heads. capacitors and ceramic insulators. paper. BHEL is supplying X'mas tree valves and well heads up to a rating of 10. Equipment for high-voltage direct current (HVDC) systems is also supplied. for economic transmission of bulk power over long distances. to a number of industries other than power utilities. 5000/4600 HP AC/DC locomotives. super deep drilling rigs. mining. heavy castings and forgings. and simulators for various applications.Most of the trains of the Indian Railways are equipped with BHEL?s traction and traction control equipment. industrial boilers & auxiliaries. pumps.(B) INDUSTRY SECTOR BHEL manufactures and supplies major capital equipment and systems like captive power plants. instrument transformers.

X-MAS trees and oil rigs to ONGC and oil 21 . BHEL is the largest supplier of well heads. comprising advance-class gas turbine up to 289 MW (ISO) rating for open and combined cycle operations. Gas BHEL is the only Indian company capable of manufacturing large size gas based power plant equipment.

Hydro and gas based turnkey power projects . These references encompass almost the entire range of BHEL products and services. Insulators. electrostatic precipitators. financing packages and associated O&M services. be it captive power. besides a wide variety of products like transformers. to name a few.substation projects. BHEL also possesses the requisite flexibility to interface and compliment other international companies for large projects and has also exhibited adaptability by manufacturing and supplying intermediate products. The company has been successful in meeting demanding requirements of international markets in terms of complexity of works as well as technological . photovoltaic equipment. BHEL has also established its versatility to successfully meet the other varying needs of various sectors. Besides undertaking turnkey projects on its own. BHEL has proved its capability to undertake projects on fast track basis. rehabilitation projects.quality and Other requirements viz HSE requirements.(C) INTERNATIONAL BUSINESS BHEL has. compressors. Heat exchangers. utility power generation or for the oil sector. covering Thermal. 22 . over the years established its reference in more than 70 countries across all inhabited countries of the world. valves and oil field equipment. Switch gears etc.

Hyderabad. reducing time-cycle and costs. Recently.RESEARCH AND DEVELOPMENT BHEL‟s engineering and R&D efforts are focused on improving the quality of its products. as well as at all the manufacturing units and they have close interaction with other national research laboratories and academic institutions. accelerating indigenization and developing new products for diversification. A highly qualified and experienced team of engineers and scientists are engaged in R&D activities at BHEL‟s corporate R&D division. have been established. surface coating for erosion. including wide electric generators. and a centre for development of permanent magnet machines. centers of excellence for simulators. computational fluid dynamics (CFD). renewable energy systems. R&D efforts have already yielded several significant results in terms of better products and improved technologies. solar photovoltaic and solar water heating systems. A few among the many R&D accomplishments are: atmospheric bubbling fluidized bed combustion(AFBC) boiler(up to 165t/h). 23 .ceramic honeycombs for catalytic convertors. upgrading existing technologies.

PRODUCT RANGE  THERMAL POWER PLANTS  GAS BASED POWER PLANTS  HYDRO POWER PLANTS  DG POWER PLANTS  INDUSTRIAL SETS  BOILERS  BOILER AUXILIARIES  HEAT EXCHANGERS AND PRESSURE VESSELS  PUMPS  POWER STATION CONTROL EQUIPMENT  SWITCHGEARS  BUS DUCTS  TRANSFORMERS  INSULATORS  CAPACITORS  ENERGY METERS  INDUSTRIAL ELECTRICAL MACHINES  COMPRESSORS  CONTROL GEAR  SILICON RECTIFIERS  THYRISTOR EQUIPMENT 24 .

 TRANSPORTATION EQUIPMENT  OIL FIELD EQUIPMENT  CASTINGS AND FORGINGS  SEAMLESS STEEL TUBES  NON-CONVENTIONAL ENERGY SYSTEMS 25 .

02 421.39 26 .21 2423.18 95.29 0.85 20022.03 1639.09 1387.93 6 7 1156.34 1840.62 41.BALANCE SHEET Comparison of Balance Sheet for the year 2008 & 2009 Balance Sheet for the year ended 31st March.52 10284.81 489.26 2627.13 981.18 12938.21 5 5224.97 8 7837.4 4443.00 95.32 11 4975.52 12449.18 16576.90 8568.45 3445.87 8386.50 10314.22 1470.08 1040.17 13088.00 149.37 52.47 3403.2008 SOURCES OF FUNDS Shareholder' Fund Share Capital Reserves & Surplus Loan Funds Secured Loans Unsecured Loans APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation/Amortisation to-date Less: Lease Adjustment Account Net Block Capital Work -in-Progress Investments Deferred Tax Assets Net (Refer note no.03.29 1337.2009 For the year ended 31.67 350.67 36901.30 658. Loans& Advances Current Assets Inventories Sundry Debtors Cash & Bank Balance Other Current assets Loans and Advances Less: Current Liabilities & Provisions Current Liabilities Provisions Net current assets 1 2 3 4 489.18 10869.37 13088.40 11974.58 28332.07 5736.25 1511.39 59.88 10869.87 3713.29 8.02 15975.18 10 23357.39 10774.37 149.03.20 of Schedule 19) Current Assets.30 7883.80 27906. 2009 Schedule For the year ended 31.69 0.

17 crore (Previous year Rs.23 21576. 2009 Schedule EARNINGS Turnover (Gross) Less: Excise duty & Service Tax Turnover (Net) Other Income Accretion/Decretion to Work-inprogress & Finished Goods 28861.32 17145.80 27.23 OUTGOINGS Consumption of Material.77 1559.39 14 15 16 17620.17 1934.PROFIT & LOSS ACCOUNTS Comparison of Profit and Loss Account for the year 2008 & 2009 Profit & Loss Account for the year ended 31st March.25 35.87 2607.71 334.31 -0.1 -402.42 297.27 4836.03.64 1444.76 827.85 778.03.19 1820.33 1497.28 18A 17 18 5 1280. selling and Distribution Provisions (net) Interest & other borrowing costs Depreciation and amortisation Less: Cost of jobs done for internal use Profit before prior period items Add/(Less): Prior period items (Net) Profit before tax Less: Provision for taxation For Current Year :Current tax 2250.26 For the year ended 31.69 1644.01 2096.92 4430. Administration.00 -502.2008 27 .86 26212.89 4848.97 30. wealth tax Rs.21 38.27 61.54 21401.95 (incl.66 12A 13 For the year ended 31.36 1151.05 2983.77 11820.37 1787. 0. 0.07 crore) ::Fringe Benefit Tax Deferred Tax 40.2009 12 28033.68 1835.35 4431.96 11. Erection and Engineering Expenses Employees' remuneration & benefits Other expenses of Manufacture.18 24024.37 19304.

74. 19 of Schedule 19) 429.00 1571.87 crore) Balance carried to Balance sheet Basic and Diluted Earning per share (in Rs.52 126.00 832.34 442.05 2859.08 Profit after tax Add: Balance of profit brought forward from last year Foreign Project Reserves written back Profit available for appropriation Less: Appropriation::General Reserve Dividend (incl interim dividend of Rs.21 429.02 3303. 440.11 2000.64 3138.41 28 .07 2000.48 crore) :Fringe Benefit Tax -77.77 0.72 1.46 64.61 595.Tax (includes Income Tax abroad Rs.43 2973. 8.69 1.72 11.87 2873.) (Refer note no.17 3569.18 141.00 746.For earlier years :.56 1710.69 58.57 crore) :Corporate Dividend tax (incl Rs.39 0.

In isolation. a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing. Financial statement analysis consists of comparisons for the same company over periods of time and comparisons of different companies either in the same industry or in the different industries. solvency and market strength. and to predict the future performance. we know that it is more profitable than its industry peers which is quite favorable. financial statement analysis enables investors and creditors to evaluate the past performance and financial position. a financial ratio is a useless piece of information. Financial Ratios Financial ratios are used to evaluate profitability. Financial ratio analysis groups the ratios into categories which tell us about different facets of a company's finances and operations. this would also be a favorable sign that management is implementing effective business policies and strategies.FINANCIAL STATEMENT ANALYSIS OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS:Financial statement analysis is the collective name for the tools and techniques to provide relevant information to decision-makers. An overview of some of the categories of ratios is given below. A ratio gains utility by comparison to other data and standards. The purpose of financial statement analysis is to assess a company‟s financial health and performance. In context. For example. however.  Operational Ratios which use turnover measures to show how efficient a company is in its operations and use of assets.   Leverage Ratios which show the extent that debt is used in a company's capital structure. Moreover. Taking our example. Financial ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements. the "gross margin" is the gross profit from operations divided by the total sales or revenues of a company.  Profitability Ratios which use margin analysis and show the return on sales and capital employed. Financial ratios are calculated from one or more pieces of information from a company's financial statements. liquidity. 29 . its operations and attractiveness as an investment. If we also know that the historical trend is upwards. Liquidity Ratios which give a picture of a company's short term financial situation or solvency. The level and historical trends of these ratios can be used to make inferences about a company's financial condition. If we know that this company's competitors have profit margins of 10%. a gross profit margin for a company of 25% is meaningless by itself. for example has been increasing steadily for the last few years.  Solvency Ratios which give a picture of a company's ability to generate cash flow and pay it financial obligations. expressed in percentage terms.

For example.Garbage Out" A cross industry comparison of the leverage of stable utility companies and cyclical mining companies would be worse than useless.. Credit analysts.. the historical ratios of a company that has undergone a merger or had a substantive change in its technology or market position would tell very little about the prospects for this company. financial ratio is governed by the GIGO law of "Garbage In. Using historical data independent of fundamental changes in a company's situation or prospects would predict very little about future trends. Equity analysts look more to the operational and profitability ratios. to determine the future profits that will accrue to the shareholder. 30 . focus on the "downside" risk since they gain none of the upside from an improvement in operations.It is imperative to note the importance of the proper context for ratio analysis. Analysts will often differ drastically in their conclusions from the same ratio analysis. practicing financial analysts often develop their own measures for particular industries and even individual companies. Like computer programming. They pay great attention to liquidity and leverage ratios to ascertain a company's financial risk. Although financial ratio analysis is well-developed and the actual ratios are well-known. Examining a cyclical company's profitability ratios over less than a full commodity or business cycle would fail to give an accurate long-term measure of profitability. those interpreting the financial ratios from the prospects of a lender.

58% 1.30% 1. bills receivable.e.32% 31 . Current Assets Includes: . Current assets are those assets which can be converted into cash within a year.(a) Bills of exchange (b) Bills payable (c) Sundry Creditors (d) outstanding and occurred expenses (e) Income-tax payable (f) Bank over draft etc. it measures the solvency of the company in the short-term.CALCULATION OF RATIOS CURRENT RATIO This ratio explains the relationship between current assets and current liabilities of a business. pre-paid expenses.(a) Cash in hand and at Bank (b) Readily convertible or marketable securities (c) Stock (d) Sundry Debtors (e) Bills of exchange i. CURRENT RATIO = CURRENT ASSETS /CURRENT LIABILITY YEARS CURRENT RATIO 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 1.46% 1.40% 1. Current Liabilities Includes: . Current liabilities and provisions are those liabilities that are payable within a year.

because the company will be able to pay its current liabilities more easily. the firm can still meet its current liabilities in full. It is seen in the figure that in the year 2005-2006 the Current Ratio has been the highest as compared to the other years. QUICK RATIO 32 . Higher the ratio better it is. According to accounting principles current assets of a business should. Since then the Current Ratio started declining till the year 20082009 where we know that the standard current ratio is 2. Hence. be twice of its current liabilities. In the year 2009-2010 it is expected by the company that the current ratio would not change significantly. BHEL is far below the standard. By this it can be said that BHEL should have a proper current assets structure to cover up its liabilities. even if half the amount is realised from the current assets on time. at least.Analysis of Current Ratio Current Ratio is used to assess the firm‟s ability to meet its short-term liabilities on time.

It indicates whether the firm is in a position to pay its current liabilities within a month or immediately Liquid Assets includes: .(a) Cash in hand (b) Cash at Bank (c) Short-term investments Current Liabilities Includes: . the other current assets must be sufficient to meet other current liabilities.Quick Ratio is used as a measure of the company‟s ability to meet its current obligations since bank overdraft is secured by the inventories. QUICK RATIO = LIQUID ASSETS / CURRENT LIABILITY YEARS QUICK RATIO 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 1.16% 1.(a) Bills of exchange (b) Bills payable (c) Sundry Creditors (d) outstanding and occurred expenses (e) Income-tax payable (f) Bank over draft etc.10% 1.21% 1.11% 1.52% 33 .

This ratio is a better test of short-term financial position of the company than the current ratio.Analysis of Quick Ratio Quick Ratio is a purified form of current ratio. As it is hard to covert stock into cash. there should atleast be one rupee of liquid assets. Higher the Quick Ratio greater the short term solvency. 34 . when used together with current ratio. but in the near future it is estimated that the Quick Ratio will increase to 1.52 in the year 2009-2010. it gives a better picture of the shortterm financial position of the company. it is seen that weather the left over current assets other than inventory is covering the current liability or not. It is to be seen that the company keeps its quick assets more than its current liabilities. where stock is not considered. Quick Ratio thus is a more rigorous test of liquidity than the current ratio and. It is seen that company had a declining Quick Ratio since the year 2005 to 2009. The idea is that for every rupee of current liabilities.

The higher the ratio.79% 1.65% 35 . better the position.DEBTOR TURNOVER RATIO Debtors‟ turnover.75% 1. which measures weather the amount or resources tied up in debtors is reasonable and weather the company has been efficient in converting debtors into cash.93% 1. It indicates the relationship between credit sales and average debtors during the year.02% 1. DEBTOR TURNOVER = GROSS SALES / TOTAL DEBTORS YEARS DEBTOR TURNOVER RATIO 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 2.

it may be assessed whether the sales policy of the management is efficient or not. BHEL should keep an eye on it receivables and improve it. the less the risk from bad debts.02 but it has been estimated that in the year 2009-2010 the Debtor Turnover Ratio will further fall to 1. It shows that BHEL might have good sales position but its receivables are not sound. The higher the ratio. The more quickly the debtors pay. In the year 2005-2006 Debtor Turnover Ratio is 2. It is seen that the Debtor Turnover Ratio of BHEL was highest in the year 2005-2006.65. after which the ratio had decline continuously. 36 . and so the lower the expenses of collection and increase in the liquidity of the company. the better it is. By comparing the Debtors Turnover Ratio of the current year with the previous year. since it indicates that amount from debtors is being collected more quickly.Analysis of Debtor Turnover Ratio Debtor Turnover Ratio indicates the speed with which the amount is collected from debtors.

no standard figure are set for Profit Margin but for any company its Profit Margin should be adequate to bear its day to day expenses and other expanses. Higher the sales more will be the profit.00% 12. PROFIT MARGIN (%) = PROFIT AFTER TAX / NET SALES YEARS PROFIT MARGIN(%) 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 12.5% 14.60% 12.8% 37 .PROFIT MARGIN Profit Margin shows the relationship between profit and sales.00% 14.

Profit Margin of BHEL is quite fluctuating as it is shown in the chart. Higher the profit ratio. interest on loans. The ratio is compared with earlier years ratio and important conclusion are drawn from such comparisons. dividends and creation of reserves.Analysis of Profit Margin This ratio measures the margin of profit available on sales. but the lowest Profit Margin is in the year 2008-2009 which is 12% this is due to the impact of recession.8%. better it is. But it has estimated that it would recover from the lowest point to 12. but the profit ratio should be adequate enough not only to cover the operating expenses but also to provide for depreciation. 38 . No ideal standard is fixed for this ratio.

EARNING PER SHARE Earning Per Share Ratio measures the profit available to the equity shareholders on a per share basis.60 98. Earning Per Share is generally considered to be the single most important variable in determining a share‟s price.10 88. It is also a major component used to calculate the price-to-earnings valuation ratio. All profits left after payment of tax and preference dividend are available to equity shareholder. EARNING PER SHARE = PROFIT AFTER TAX / NUMBER OF EQUITY SHARES YEARS EARNING PER SHARE 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 68.05 39 .70 58.00 64.

40 . It also helps in estimating the company‟s capacity to pay dividend to its equity shareholders. The Earning Per Share given in the figure was highest in the year 2006-2007 but due to recession problems.05. The Earning Per Share decline at an increasing rate from the year 20072009.Analysis of Earning Per Share This ratio is helpful in the determination of the market price of the equity share of the company. but it is estimated that in the year 2009-2010 the Earning Per Share will increase to 88. A comparison of Earning Per Share of the company with other will also help in deciding whether the equity share capital is being effectively used or not. It also helps in estimating the capacity of the company to declare dividends on equity shares.

AVERAGE DEBT COLLECTION PERIOD Average Debt Collection Period Ratio indicates the time within which the amount is collected from debtors and bills receivables. AVERAGE DEBT COLLECTION PERIOD (DAYS) = TOTAL DEBTORS * 360 / GROSS SALES YEARS AVERAGE DEBT COLLECTION PERIOD(DAYS) 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 178 186 201 205 218 41 . This ratio shows the time in which the customers are paying for credit sales.

A higher debt collection period is thus. it is seen that BHEL is having a good receivable management in its company. an indication of the inefficiency and negligence on the part of management. if there is decrease in debt collection period.Analysis of Average Debt Collection Period Increase in this ratio indicates the excessive blockage of funds with debtors which increase the chances of bad debts. On the other hand. Due to the good financial terms and conditions with its debtors BHEL is able to maintain a higher Average Debt Collection Period. In the chart given above. 42 . it indicates prompt payment by debtors which reduces the chances of bad debts.

INVENTORY TURNOVER RATIO Inventory Turnover Ratio measures how well the resources at the disposal of the concern are being utilised. This ratio is know as turnover ratio as it indicates the rapidity with which the resources available to the concern are being used to produce sales.57% 3.70% 43 .44% 3.87% 4. This ratio is generally calculated on the basis of sales or cost of sales. INVENTORY TURNOVER RATIO = GROSS TURNOVER / INVENTORIES YEARS INVENTORY TURNOVER RATIO 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 3.73% 3.

better it is. by comparing the Inventory Turnover Ratio of current year with the previous year. It is seen in the above figure that in the year 2006-2007 the Inventory turnover Ratio was highest that is 4. GE GAS TURBINE SERVICES PRIVATE LIMITED and UDANGUDI POWER CORPORATION LTD which can be a big reason why Inventory Turnover Ratio is improving. 44 . since it indicates that stock is selling quickly. But it is estimated to have a slight growth in the year 2009-2010 as BHEL has a joint venture with NTPC. Higher the ratio. Similarly. After which it followed a continuous decline trend till the year 20082009.Analysis of Inventory Turnover ratio Inventory Turnover ratio indicates weather stock has been efficiently used or not. It shows the speed with which the stock is rotated into sales or the number of times the stock is turned into sales during the year. the management can assess whether inventory has been more efficiently used or not.44.

Investing in a company with a higher debt/equity ratio may be riskier. DEBT EQUITY RATIO = TOTAL DEBT / TOTAL EQUITY YEARS DEBT EQUITY RATIO 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 0. A measure of a company's leverage.01% 0. Typically the data from the prior fiscal year is used in the calculation. especially in times of rising interest rates.01% 0.01% 45 . due to the additional interest that has to be paid out for the debt.01% 0. Debt/equity ratio is equal to long-term debt divided by common shareholders' equity.07% 0.DEBT EQUITY RATIO Debt Equity Ratio express the relationship between long-term debts and shareholder‟s funds.

By analysing the above chart. Generally. It has a high level of equity as compared to its debts and so a final conclusion can be drawn that BHEL has to face less financial risk. A high debt equity ratio provides sufficient protection to long-term lenders. it shows a rather risky financial position from the long-term point of view. it is noticed that BHEL has always maintained a stable Debt Equity Ratio after the year 2006-2006. If the debt equity ratio is more than that. debt-equity ratio of 2:1 is considered safe.Analysis of Debt Equity Ratio Debt Equity Ratio is calculated to assess the ability of the company to meet its long term liability. as it indicates that more and more funds invested in the business are provided by long-term lenders. 46 .

This ratio is calculated by dividing the „net profit before charging interest and income-tax‟ by „fixed interest rate‟. Net profit before interest and income-tax is to be taken for the calculation of this ratio because this is the amount of profit out of which interest and income-tax is to be paid out.08 120.73 47 .22 125.INTEREST COVERAGE RATIO Interest Coverage Ratio is also known as „Debt Services Ratio‟.60 197.65 86. INTEREST COVERAGE RATIO = PROFIT BEFORE INTEREST & TAX / INTEREST EXPENSES YEARS INTEREST COVERAGE RATIO 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 43. Fixed interest charges include interest on fixed (long-term) loans or debentures.

more secure the lender is in respect of payment of interest regularly. This ratio measures the margin of safety for long-term lender. A long-term lender is interested in finding out whether the business will earn sufficient profits to pay the interest charges regularly.08. it is an unsafe position for the lender as well as for the company also.Analysis of Interest Coverage Ratio Interest Coverage Ratio indicates how many times the interest charges are covered by the profits available to pay interest charges. If profits just equal interest. The highest Interest Coverage Ratio was in the year 2007-2008 that is 125. Higher the ratio.73 48 . as nothing will be left for shareholders. but it is expected rise in the year 2009-2010 to 197. it had a slight dip in the year 2008-2009.

PRICE EARNING RATIO = MARKET PRICE PER EQUITY SHARE / EARNING PER SHARE YEARS PRICE EARNING RATIO 2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 20.25 27.29 44. The ratio is useful in determining the financial position of the company.20 23. it also helps in knowing whether the shares of a company are under or over-valued.24 21.32 49 .PRICE EARNING RATIO Price Earning Ratio indicates the number of times the earning per share is covered by its market price.

32 in the year 2009-2010.25 in the year 2008-2009 but it is expected to improve to 27. As we can see above that in the year 2007-2008 the Price Earning Ratio is 44.24 but due to recession Price Earning Ratio had a steep fall to 21. 50 .Analysis of Price Earning Ratio Price Earning Ratio helps the investor in deciding whether to buy or not to buy the shares of the company at a particular market price.

20 49755.76 12296.93 36289.6 28527.2 2447.72 0 0 82.8 283329 85681.80 4895.70 130881.00 0.6 -591.70 0 0 523.40 0 0 82.00 129.47 99213.00 206887.8 29161.00 582.30 893.90 107742.1 24236.9 88077.00 97901.1 66428.40 44434.00 78838.80 951.4 144201.50 0 10180.00 0.50 0 15116.00 429348.03 0 0 82.2 71204.90 41350.79 280237.00 0.70 3502.70 83860.7 369010.60 3025.00 1278.60 0 893.00 78370.85 0 5182.00 154278.18 0 0 89.10 1997.00 160451.90 118978.60 88775.38 5000. 51 .70 1493.7 210629.80 0 9812.7 163307.00 85435.30 887759.00 324417.2 0.82 5369.42 31778.34 60268.80 1845.00 798.00 102846. Loans & Advances Inventories Sundry Debtors Cash and Bank Other Current Assets Loans and Advances Total Current Assets Less : Current Liabilities&Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off Deferred Tax Assets / Liabilities Total Assets 4895.9 13878.62 471.7 57364.00 11408.20 4210.00 160451.2 0.00 0 1278.00 28137.7 41339.8 42176.52 92355.90 2447.58 48970.00 119748.00 233573.70 96958.80 108693.00 70566.00 87882.8 103200.20 159755.20 78596.00 279061.20 11569.30 6580.76 Note: The Balance Sheet for the year 2010 is projected.7 845.10 0 951.6 0 9351.2 58089.7 25222.40 78596.50 34458.2 60107.10 0 1493.7 37443.92 133429.82 65638.6 0.46 13254.00 103146.80 165764.6 0 6737.00 11998.00 369.00 130881.07 59721.70 0 18403.2 73013.6 0 9693.30 108693.94 5000.00 -292.00 4068.00 4895.40 5582.20 -412.00 159173.80 0 13379.00 0.5 200223.47 0 10095.4 15122.76 0.50 31170.37 26193.00 44180.90 129388.00 52248.00 57821.00 2447.60 0.79 65638.90 38220.00 124492.6 0.70 37132.51 953.00 15272.90 346.7 71680.00 104931.COMPRASION OF BALANCE SHEETS Projected Mar 2010 Mar 2009 [ Audited Balance Sheet Mar 2008 Mar 2007 Mar 2006 Mar 2005 Particulars SOURCES OF FUNDS Share Capital Share warrants & Outstanding Total Reserve Shareholder's Funds Secured Loans Unsecured Loans Total Debts Total Liabilities APPLICATION OF FUNDS : Gross Block Less: Accumulated Depreciation Less: Impairment of Assets Net Block Lease Adjustment A/c Capital Work in Progress Pre-operative Expenses pending Assets in transit Investments Current Assets.70 34030.

410. of Trades 321067 853810 1568607 4950831 2193431 377966 Total Turnover (Rs.00 1.00 1.183.15 2.694.572.250.593.30 No.160.50 2.YEARLY WATCH ON BHEL SHARE PRICE Year Open Price 771.00 984.25 1.925.10 1.406. of Shares 18499206 24980291 38394966 100635722 51161637 8878750 No.301.498.185.585.10 2.338.346.668.00 2.386.00 21.00 2.00 158.298.00 2.25 2.00 82.55 Close Price 1.00 2.) 18.00 52.302.00 2.365.00 Low Price 669.584.394.392.231.00 2.00 2.729.658.00 2.00 2005 2006 2007 2008 2009 2010 52 .00 High Price 1.492.380.372.00 1.277.40 2.603.585.626.550.362.062.00 93.846.05 1.193.742.

OPEN PRICE 3500 3000 2500 HIGH PRICE LOW PRICE CLOSE PRICE 2000 1500 1000 500 0 OPEN PRICE HIGH PRICE LOW PRICE CLOSE PRICE 20052006 771 1498.5 669. Of SHARES HELD 53 .05 1386.25 20062007 1394 2668 1185 2298.25 20082009 2585 2626 984.72 331510000 No.15 20072008 2302 2925 1301 2584.1 1362.1 2 22 2 SHAREHOLDING PATTERN SHAREHOLDING PATTERN (as on 31st March 2009) CATEGORY 2009 VOTING STRENGHT (%) Promoters Holding Indian Promoters President of India (POI) 67.4 20092010 1372 2550 1250 2406.

72 331510400 Non-Promoters Holding Institutional Investors Mutual Funds and UTI Banks.97 0.00 0.Nominees of POI 0 400 Total Promoters Holding 67.14 25168090 Total Non-Promoter Holding Grand Total 32.15 400 18875727 9604223 1250 609975 13657 737372 17.86 1.12 0.03 19619712 83379194 5.01 Foreign Institutional Investors Others Directors & Relatives Private Corporate Bodies Indian Public Foreign Nationals NRIs / OCBs Trust Share in Transit (NSDL / CDSL) 0 3.00 0. Insurance Companies 4.28 100 158009600 489520000 BHEL V/S BSE Sensex 54 . Financial Institutions.

00% 10.71% 17.00% 67.03% 5.14% 4.00% 90.00% 40.00% 80.00% 60.01% President of India (POI) Foreign Institutional Investors Mutual Funds and UTI Banks. Financial Institutions.00% 30.00% 20. Insurance Companies 55 .00% 50.00% 0.VOTING STRENGHT (%) 100.00% 70.

Bombay Stock Exchange limited received its Certificate of Incorporation on 8th August 2005 and Certificate of Commencement of Business on 12th August 2005. Pursuant to the BSE (Corporatization and Demutualization) Scheme. With demutualization. The exchange is 56 .Bombay Stock Exchange Limited (BSE) is the oldest stock exchanged in Asia with a rich heritage. The Exchange‟s pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index. 1956. under the Scheme. it is the first stock exchange in the country to obtain permanent recognition in 1956 from the government of India under the Securities Contracts (Regulation) Act. by the Exchange was fixed for 19th August 2005. 2005 notified by the Securities and Exchange Board of India (SEBI). Popularly know as “BSE”. Earlier an Association of Persons (AOP). is tracked world wide. The Exchange has succeeded the business and operations of BSE on going concern basis and its recognition as an Exchange has been continued by SEBI. the „Due Date‟ for taking over the business and operations of the BSE. SENSEX. the trading rights and ownership right have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. the exchange is now a demutualised and corporative entity incorporate under the provisions of the Companies Act. 1956. it was establishment as “The Native Share & Stock Brokers Association” in 1875.

representatives of Trading Members and the Managing Director of the Exchange. The surveillance and clearing & settlement function s of the Exchange are ISO 9001:2000 certified. The Exchange provided an efficient and transparent market for trading in equity. BSE uses other stock indices as well:         BSE 500 BSE 100 BSE 200 BSE PSU BSE MIDCAP BSE SMALLCAP BSE BANKEX BSE TECK 57 .professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals. These companies account for around one-fifth of the market capitalization of the BSE. The BSE‟s on Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. the trading volumes on the Exchange showed robust growth. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The BSE SENSEX (also know as the BSE 30 index) is a value-weighted index composed of thirty scrips. Apart from BSE SENSEX. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. the set of companies which make up the index has been changed only a few times in the last twenty years. with the base April 1979=100. The Board is inclusive and is designed to benefit from the participation of market intermediaries. During the year 2004-2005. which is the most product stock index in India. debt instruments and derivatives.

It will also display – on what is described as India‟s and South Asia‟s largest video screen – India‟s leading business-news channel. MONTHLY COMPRASION OF BHEL SHARE PRICE WITH BSE SENSEX 58 . the Managing Director of New Delhi Television (NDTV) Ltd. Prannoy Roy. Mr.    BSE AUTO BSE PHARMA BSE FMCG BSE METAL The BSE Broadcast is a large ticker on the wall of the BSE. which continuously displays the latest stock quotes from the market. Damodaran. This new system was unveiled on December 15. said that the ticker would provide information and analysis of the financial world. NDTV Profit. struck the BSE‟s opening bell. when Dr. the Chairman of the Securities and Exchange Board of India (SEBI). 2006.

442.) (Rs.5 832 7.039.921.78 10953.422.00 1.5 7.316.708.489.990.75 No.772.96 21015.99 7.01 1.422.147.356.033. of Shares Traded Net Turnover (Rs.82 1.318.00 8.821.00 841.74 6.1 14397.185.77 For The Period: April 2006 to March 2007 MONTH BHEL Share Price at BSE BSE Sensex 59 No.989.00 10.00 1.183.05 9.945.00 1.42 6.662.23 11112.42 33577.498.For The Period: April 2005 to March 2006 MONTH BHEL Share Price at BSE BSE Sensex (Rs.00 9.47 12086.050.77 23982.24 2.50 1.818.959.244.50 1.815.19 9.59 7.280.649.10 8.84 8.86 1.00 11.080.99 1.39 1.165.) High Price Low Price High Price Low Price 830 755 6.368.228.45 1.17 7.722.00 1.729.00 9.26 23560.813.115.506.5 50672.56 7029.780.21 6.65 9.60 950 789.32 23413.49 2.95 10.632.) Apr-05 May-05 Jun-05 Jul -05 Aug-05 Sept-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 1410536 1387296 808986 1183812 1341333 970856 1972837 1586379 1674850 1549550 1786695 2361183 11219.07 897.25 6.00 971 7.39 7.90 1. of Shares Net Turnover .00 1.060.98 8.

730.067.64 34.) High Price 12.30 12.35 Low Price 2.860.00 2.572.00 2. of Shares Net Turnover .102.35 10.00 2.00 2.105.95 Low Price 11.026.00 (Rs.444.45 58.444.485.92 14.837.325.940.83 12.66 For the Period: April 2007 to March 2008 MONTH BHEL Share Price at BSE BSE Sensex 60 No.075.727.600.723.367.00 2.252.10 1.080.00 1.25 2.892.668.45 11.498.937.30 14.178.799.626.10 Traded (Rs.70 2.046.875.(Rs.00 2.02 61.81 51.90 2.99 11.00 2.985.00 2.15 50.107.259.800.55 28.307.05 2.799.20 1.414.200.035.316.283.556.13 73.50 2.00 2.91 8.940.321.85 13.571.186.16 63.777.00 1.00 2.386.43 12.008.05 29.18 12.794.00 12.25 2.11 10.595.00 2.58 51.) High Price 2.96 56.88 13.303.185.671.826.232.08 14.645.01 9.43 9.84 10.65 13.321.465.801.91 12.22 12.) Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 1318047 1327255 3088569 2710143 3342355 2215985 1256993 1381309 2642207 2536467 2157255 2902970 30.00 2.531.17 13.

323.00 1.50 1.498.00 Low Price 2.540.88 13.886. of Shares Net Turnover .16 20.11 21.40 17.00 1.089.96 786.366.870.47 20.683.05 514.626.00 2.42 16.850.383.544.00 2.13 718.88 15.00 1.380.) Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sept-07 Oct-07 Nov-07 Dec-007 Jan-08 Feb-08 Mar-08 2922746 2527206 2847536 3834352 4716863 2646160 5482424 3279060 2541927 3223135 2710078 3990925 709.54 646.638.59 1265.10 1.72 14.946.542.457.895.37 14.00 2.00 2.40 15.34 13.00 (Rs.925.204.77 18.54 642.970.24 Traded (Rs.36 15.900.00 1.47 574.85 15.361.00 2.00 1.238.348.20 2.56 Low Price 12.05 657.99 14.227.593.00 2.800.00 2.34 17.899.00 1.182.(Rs.00 1.677.80 2.332.86 802.856.) High Price 14.351.576.765.74 14.00 1.554.750.425.36 401.868.206.00 1.52 13.83 18.00 1.301.00 2.) High Price 2.235.144.779.91 For the Period: April 2008 to March 2009 MONTH BHEL Share Price at BSE BSE Sensex 61 No.520.922.58 18.21 20.05 17.06 883.145.

456.) High Price 17480.25 1.07 186463.00 1.94 157168.610.487.250.90 1.96 16196.31 138939.00 1.(Rs.43 8631.00 1.02 14002.01 13203.82 168371.55 1.6 8619.7 16632.43 12153.00 1.22 8047.55 7697.01 156668.581.570.05 1.00 1.49 92810.39 8316.088. of Net .39 8467.78 15107.325.60 1.212.74 17735.54 10469.00 1.65 1.72 15130.00 1.87 10127.10 1.340.86 10945.23 141722.32 89003.17 Traded (Rs.00 (Rs.54 12514.689.00 1.00 1.09 15579.527.160.00 1.251.25 1.65 151852.09 Low Price 15297.5 For the Period: April 2009 to March 2010 MONTH BHEL Share Price at 62 BSE No.910.10 1.488.96 89293.71 71257.00 984.812.) High Price Low Price Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sept-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 2.72 9724.594.10 1.872.430.41 10188.) 11437758 5128590 10723607 10803274 7978823 11216545 12253008 10673945 11194666 6452522 5147031 6545030 201736.50 1.00 1.02 13405.296.629.934.

180.368.450.190.BSE (Rs.474.405.30 14265.64 320687.92 17142.385.240.25 15790.10 9901.28 17290.82 16669.00 2.93 17793.44 478480.52 15398.01 16772.40 2.300.56 Shares Traded Turnover (Rs.550.30 2.427.53 15732.00 2.572.65 898816.20 17790.30 2.00 1.334.4 649055.00 2.48 15404.32 16002.54 11682.99 14930.27 618987.50 2.00 2.94 17530.454.) High Low Price Price 11492.00 2.00 2. of Net .46 14784.00 Low Price 1.435.81 13400.96 644164.) High Price 1.184.20 1.106.709.00 2.271.00 2.33 17493.00 2.00 2.008.940.17 15896.105.38 590096.94 16601.00 2.90 2.00 2.46 959091.07 482221.02 972786.00 2.33 16289.) 5747127 5058116 4107612 4499184 2872252 2615956 2669151 2158387 2700857 2020797 1357271 1778426 904251.00 2.334.99 15600.00 2.323.00 Apr-09 May-09 Jun-09 Jul -09 Aug-09 Sept-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Sensex (Rs.9 For the Period: April 2010 to March 2011` MONTH BHEL Share Price at 63 BSE No.54 427720.

72 144213.00 Low Price 2.) High Price 2.399.231.00 2.62 LISTING ON STOCK ENCHANGE & STOCK CODE 64 .00 Sensex (Rs.08 16022.02 17380.55 2.492.08 17386.382.48 Shares Traded Turnover (Rs.251.50 2.585.) Apr-10 May-10 Jun-10 1397668 1702788 621800 349000.02 399266.) High Low Price Price 17970.BSE (Rs.30 2.

BHEL’s Shares are listed on the following Stock Exchange:-

Name of the Stock Exchange  Bombay Stock Exchange Limited 1st Floor, New Trading Ring, Rotunda Building, P J Tower Dalal Street Fort Mumbai – 400 001

Stock Code 500103

National Stock Exchange of India Limited “Exchange Plaza” C-1, Block – G Bandra Kurla Complex Bandra (East) Mumbai – 400 501

BHEL

BHEL COMPARISON WITH ITS COMPETITORS
65

The term capital structure refers to the percentage of capital (money) at work in a business by type. Broadly speaking, there are two forms of capital: equity capital and debt capital.

In other words, capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities. A firm's capital structure is then the composition or 'structure' of its liabilities. For example, a firm that sells $20 billion in equity and $80 billion in debt is said to be 20% equity-financed and 80% debt-financed. The firm's ratio of debt to total financing, 80% in this example is referred to as the firm's leverage. In reality, capital structure may be highly complex and include tens of sources. The ModiglianiMiller theorem, proposed by Franco Modigliani and Merton Miller forms the basis for modern thinking on capital structure, though it is generally viewed as a purely theoretical result since it assumes away many important factors in the capital structure decision. The theorem states that, in a perfect market, how a firm is financed is irrelevant to its value. This result provides the base with which to examine real world reasons why capital structure is relevant, that is, a company's value is affected by the capital structure it employs. These other reasons include bankruptcy costs, agency costs, taxes, information asymmetry, to name some. This analysis can then be extended to look at whether there is in fact an optimal capital structure: the one which maximizes the value of the firm.

COMPANY

TOTAL DEBT

NETWORTH

CAPITAL STRUCTURE

66

DEBT BHEL LARSEN SUZLON ENERGY BEML BGR ENERGY 149.37 6556.03 7329.48 567.64 707.8 12938.81 12459.69 6580.32 1915.37 561.15 1.14126 34.4769 52.6929 22.861 55.7784

EQUITY 98.85874 65.5231 47.30708 77.13904 44.2216

Bharat Heavy Electrical Limited, currently the debt employed is very less, which means that the debt is much lower than equity. In other words the firm prefers equity over debt. Where as other companies, of the same industry, when compared with BHEL show a better mix of debt and equity. Suzlon energy and BGR energy employs a good mix of debt and equity in the capital structure as compared to BHEL. But for BHEL it mainly deals in equity as we can see in the chart above that BHEL has negligible debt as compared to its competitors. 67

RESEARCH METHODOLOGY 68 .

Drawing strategy to gather required data. Therefore every research project conducted scientifically has a specific strategy and structure to gather and analyse the data in a manner that aims at getting relevance to the purpose of research. The „Plan‟ is the overall scheme or programme of the research which draws and outline of what researcher will do from writing the hypothesis and their operational implications to the final analysis of data. the scheme. Structure is the outline. Presentation and interpretation of the data with possible conclusion. The structure and strategy are more specific than plan. Identification of the possible sources of the data so required. while strategy includes the method to be used to gather and analyse the data.RESEARCH DESIGN AND METHODOLOGY Research design is the plan structure and strategy of investigation conceived so as to obtain answers to research question and to control deviations. the paradigm of the operation of the variables. HYPOTHESIS 69 . This is also known as research framework and plan which involves the following steps:       Determination of the approach to be used in the research work. Deciding area of analysis to be made. Determination of the type of the data which will be required for this purpose.

bhel. RESEARCH TYPE – DESCRIPTIVE SOURCE OF INFORMATION The various data required to analyse the financial performance of Bharat Heavy Electricals Limited have been collected from the various annual reports published by BHEL.   Analysing the Ratios of last four years with projected of 2010.com BHEL financial software PULSE AWARDS 70 . After it is once established it ceases to be a hypothesis and becomes a theory. Hence the study of financial performance has been made though secondary data which are collected through journals. This personal contact and discussion can be considered as primary information.The word Hypothesis generally refers to a definite interpretation at a given set of facts. literature available on the topic. or explanatory principle. www. supporting financial statements. annual reports. Analysis of the financial statement of BHEL for the years: o 2005 – 2006 o 2006 – 2007 o 2007 – 2008 o 2008 – 2009 o 2009 – 2010  Comparison of last five years balance sheet with projected balance sheet. but mainly this study is based on secondary data. Some other sources are mention below:BHEL Annual report for the years:      2005 – 2006 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 BHEL website i. which is put forth as tentative suggestions and remains partly or wholly unverified. balance sheet and profit and loss account of BHEL and also as and when required personal contact and discussion with various Manager‟s (Finance Department) of BHEL corporate office in New Delhi.e.

BHEL Receiving ICWAI National Award for Excellence in Cost Management from Shri Anurag Goel.Shri C. Director (Finance).S Verma. GOI CMD. Minister of Corporate Affairs. Former secretary –Power. GOI 71 . Shri Ravi Kumar receiving the prestigious ‘ENERTIA Individual Contribution Awards in Thermal Power Sector’ from Shri R V Shahi. Secretary.

Sheila Dikshit CNBC-TV18 Best Performing CFO Awards presented to Shri C.Rao. Smt.S. BHEL receiving the DSIJ Most Investor Friendly PSU Awards 2009 from Hon’ble Chief Minister of Delhi.Verma.Shri B.P. Director (IS&P). Director (Finance). BHEL 72 .

● In the organization. ● BHEL should formulate its policy for Provident Fund Department. ● As BHEL is a PSU preventive measures should be taken to avoid frauds and manipulation. 73 . ● Commitment should be equalized for every person. ● Replacement of old machinery with an automatic plant. ● Proper training and development programs should be provided to its employees. ● Improvement in the medical facility provided at BHEL ● Improvement in the IT Department of BHEL ● Proper utilization of plant location. ● Regular monitoring should be done for disposal/alternate usage of high value items lying unutilized for a long period. so that retired employees should easily get their compensation.SUGGESTIONS ● Proper utilization of time both in respect of corporate and labour resources. there must me be co-operation with other department and other branches.

Bharat Heavy Electricals (BHEL) reported a 29% YoY growth in sales to Rs135bn. In the Power Sector business segment. EPC orders constituted 30% of the order book. the orders amounted to 16. Jaypee Group. Indiabulls. RESULTS: For Q4FY10. with an effective monopoly in the domestic power equipment space.689 MW from like of. It saw highest ever orders from Private Sector customers worth 14. Tata‟s.5bn and industry segment reported a sales growth of 16% YoY to Rs 31bn. STRONG ORDER BOOK: The current order book stands at Rs1438bn (4. Videocon. 9bn during the year. In terms of power plant equipment.489 MW. BHEL secured record orders worth Rs. comparison between BHEL share price and BSE share price has been made to analysis the market standing of the company. BHEL secured orders worth Rs. Adhunik. etc. it offers a veritable backbone for the country‟s power sector and is one of the largest engineering and manufacturing enterprises in the world.38x FY10 sales). Avantha. BHEL‟s order inflow for the quarter was Rs234bn. a growth of 40% over the previous year. Sterlite. To analysis the company I have used ratio analysis that is a tool of financial management with the help of which manage can take various decision to increase productivity and minimize cost. Jindal Power. ACC. In Industry Sector business segment.6bn. a growth of 22% YoY.143. 41. 74 . Further. Hindalco. The power segment reported a sales growth of 30% to Rs111.CONCLUSIONS Bharat Heavy Electricals Ltd is one of the companies likely to get the coveted „Maharatna‟ status shortly is not surprising.

With the government forcing on infrastructure development. Strong order book . future of the company is bright and promising. VALUATION: At the CMP of Rs2255. It expects to have an order inflow of Rs 550-600bn for FY11.9x FY12E earnings respectively.9x FY11E and 16. We expect the stock to deliver a earnings growth of 28% over FY09-12E. And. it is still growing. Overall. company has „strong fundamentals‟ which is reflected in its sustainable good performance. The company has been able to increase the vendor base to 26100 in FY10 and addition of 1100 vendors. It has been able to maintain market share of 55% in the XII plan orders till date and confident of maintaining the market share of entire XII plan orders. increased vendor base. increasing employee strength and high capacity utilization makes us confident of BHEL‟s execution capabilities.MAINTAINED MARKET SHARE OF 55%: The Company expects the pace of order flow to continue. the stock trades at 20. 75 . It also expects to add ~3000-4000 employees per annum over the next 2 years.

S N Maheshwari ● Financial Management By Sudhindra Bhat LIMITATIONS 76 .BIBLIOGRAPHY WEBSITES ● www.indianshareshistory.bhel. 2nd Revised Edition) ● Financial Management By Dr.in ● www. Kothari.com ● www. R.moneycontrol.bseindia.com NEWS PAPERS ● Economic Times ● Business Standard ● Market Express BOOKS ● Research Methodology (C.co.google.com ● www.com ● www.

 The study is limited to BHEL So the result could not be generalized on macro level. analysis is based on the assumed data of BHEL. which influences the financial position of the organization.  Ratio analysis is only tools used for the financial statement analysis.  Since the finance section in the organization being sensitive. The researcher was not able to focus on qualification factors. 77 FINDINGS .

 BHEL is the main market holder in the domestic market but faces a fierce competition at international level.  The quality control & quality assurance is major concerning area of BHEL.  Financial strategy adopted by BHEL is best. During the training extracted the following distinctive features of BHEL.  Market distribution in international market can be increased by entering into the new foreign countries. REFRENCE 78 .  BHEL overseas business is going to increase more in the next five years.

S N Maheshwari 79 .co.● www.bhel.in ● Economic Times ● Financial Management By Dr.com ● www.google.