BEML

SUGGESTIONS & CONCLUSIONS

“INDUSTRIAL BACKGROUND”
Industries are the guiding stars and backbone of an economy . The development of a country depends upon Industrialization of economy. After independence India through its 5 year planning programmes has given much importance to the growth of industries. Government has taken a leading march in enhancing increasing industrialization. In almost all the spheres the government has started industries. If industrialization has to take place good infrastructure facilities should be provided like roads, tunnels, dams etc., for the movement of goods transportation is a must with good road facilities. Thus there were greater improvements in the infrastructure facilities all over the country. The infrastructure facilities can be developed manually or mechanically. It is of the tremendous changes that take place in science, technology, which gave rise to mechanization in every field. However, if work is carried out manually there will not be greater efficiency or in other words productivity is less and it even consume more time. To increase efficiency and productivity and speed,

Adarsha College of Mgt & Science

1

BEML

SUGGESTIONS & CONCLUSIONS

mechanical equipments came in to existence. And thus there is an increase in demand for such products. After independence defence industries were given much importance. Government itself started all the defence industries. India felt the need of having strong defence to be secure and capable of defending its borders from its neighbourers. Keeping that in mind BEML was started under ministry of defence. It was mainly started to produce defence equipments and heavy capital equipments like Railway Coaches, Earthmovers, Machineries etc., Two wars with Pakistan and China aggressive made to the defence ministry to start one more unit of BEML. It was started in Kolar Gold Fields in the year 1964. It is one of the biggest in Asia. Unit of KGF, BEML is an ISO 9000 company engaged in manufacture of diverse equipments for core stores like mining, agriculture, earth moving equipments etc., It has sales turnover of Rs. 1347 crores. It is one of the biggest industries in Asia in the field of Earth moving equipments. This unit directly comes under ministry of defence. It produces defence equipments and earthmovers. Which are very much, portent for mining, road constructions etc., Its Research and Development

Adarsha College of Mgt & Science

2

BEML

SUGGESTIONS & CONCLUSIONS

Department is unique and one of the best in the country. R D department has contributed much to the growth of BEML industry. Its designed equipments were successfully used on various constructive processes. BEML has number of branch it has various units in different parts of the country have immensely contributed to the growth of the economy. It not only provides employment but also it has successfully achieved the advantages of economies of scale. Ancillary and Small industries were started around its vicinity. BEML has supplied various capital equipments leading to capital formation form its inception. It is one of the profit making public sector. It also earns foreign exchange to the country. The Europeans and African countries purchased earthmovers equipments produced by company. It is helping the economy’s growth both directly and indirectly.

Adarsha College of Mgt & Science

3

accounts receivables and inventory. it is neither in adequate nor excessive. or will be in turned into cash with in one year without disrupting the operations of the firm. In other words it refers to all aspects of administration of both current assets and current liabilities. The major current assets are cash marketable securities. This is so because both in adequate as well as excessive working capital positions are bad for any business. is concerned with the problems that arise in attempting to manage the current assets and current liabilities and the interrelationship that exists between them. The basic goal of working capital management is to manage the current assets and current liabilities of a firm in such away that a satisfactory level of working capital is maintained i. Management of working capital therefore. which earn no profits for the business.BEML SUGGESTIONS & CONCLUSIONS SUBJECT BACKGROUND:Working capital in general practice refers to the excess of current assets over current liabilities. In adequate of working capital may lead the firm to insolvency and excessive working capital implies idle funds. The term current assets refers to those assets which in the ordinary course of business can be. Adarsha College of Mgt & Science 4 .e..

out of current assets or earnings of the concern. the basic current liabilities are account’s payable. which are intended at their inception to be paid in the ordinary course of the business with in a year. Maintaining the investment in inventories consume a great deal of time of financial manager. Negotiating favourable credit term. 4. 2. 3. its effective provision can do much to ensure the success of business while its inefficient can lead not only to loss or profits but also the ultimate down fall of what otherwise might be considered as a promising concern. Managing current assets and current liabilities. Adarsha College of Mgt & Science 5 . Controlling the movement of cash. Meaning of Working Capital:Working capital may be regarded as life blood of business. 5. The importance of working capital manager is reflected in the fact that financial managers spend a great deal of time in:1. Administrating accounts receivables and 6.BEML SUGGESTIONS & CONCLUSIONS Current liabilities are these liabilities. bills payables bank overdrafts out standing expenses. Arranging short term financing.

inventories to receivables into cash.BEML SUGGESTIONS & CONCLUSIONS Working capital means that part of capital which is required for day to day maintenance of the business. In the words of Shubin “Working capital is the amount of funds necessary to cover the cost of operating the enterprise. “Circulating capital means current assets of company that are charged in the ordinary course of business from one firm to another. which in the ordinary Adarsha College of Mgt & Science 6 . the gross working capital is the capital invested in total current assets of the enterprise. Concepts of Working Capital:These are two concepts of working capital  Gross working capital  Net working capital The term working capital to gross working capital and represent the amount of funds invested in current assets. it is known as current capital because the amount is invested in current assets. According to Genesteberg. it is knows as revolving capital or circulating capital because cash revolves and becomes cash again in the working capital cycle. Current assets are those assets. for example from cash to inventories. Thus.

In narrow senses. Net working capital is the excess of current assets over current liabilities or say Adarsha College of Mgt & Science 7 . Examples: ♦ Constituents of current assets ♦ Cash in hand and bank balances ♦ Bills receivable ♦ Sundry debtors (less provision for bad debts) Inventories of stocks such as:  Raw materials  Work in progress  Stores and spares  Finished goods  Temporary investment of surplus funds  Prepaid expenses  Advance payment of tax  Accrued or outstanding incomes. the term working capital refers to the net working capital.BEML SUGGESTIONS & CONCLUSIONS course of business can be converted into cash within a short period of the normally one accounting year.

if it does not amount to appropriation of profits The gross concept is sometimes preferred to the net concept of working capital for the following reasons:- Adarsha College of Mgt & Science 8 . Bank overdraft g. Net working capital may be negative or positive. Provision for taxation. Dividend payable f. Current liabilities are those liabilities which are intended to be paid in the ordinary course of business with in a short period of time normally are continuous year out of current assets or the income of a business. Accrued or outstanding expenses d. Bills Payable b. when current assets exceeds current liabilities the working capital is positive and negative working capital results when the current liabilities are more than the current assets.BEML SUGGESTIONS & CONCLUSIONS Net working capital = current assets – current liabilities. Short-term loans. Sundry Creditors or accounts payable c. advances and deposits e. Constituents of Current Liabilities:a.

BEML SUGGESTIONS & CONCLUSIONS a. It enables the enterprise to provide correct amount of working capital at the right time. 2) It indicates the margin of protection available to the short-term creditors.e.. Every management is more interested in the total current assets with which it has to operate them the sources from where it is made available. 3) It is an indicator of the financial soundness of an enterprise. c. excess of current assets over current liabilities. Importance of adequate Working capital:Working capital is the life blood and nerve center of a business. b. which indicates the firm’s ability to meet its operating expenses and short term liabilities. however. i. it is also important for the following reasons: 1) It is qualitative concepts. Just as circulating of blood is essential in the human body for Adarsha College of Mgt & Science 9 . The gross concept of working capital is more useful determining the rate of return on investments in working capital The net working capital concept.

Regular supply of raw materials:Sufficient working capital ensures regular supply of raw materials and continuous production. Cash discount:Adequate working capital also enables a concern to avail cash discounts on the purchase and hence it reduces costs. Goodwill:Sufficient working capital enables a business concern makes prompt payments and hence helps in creating and maintaining goodwill. Easy loans:A concern having adequate working capital high solvency and good credit stand up can arrange loans form banks and others on easy a favourable terms.BEML SUGGESTIONS & CONCLUSIONS maintaining life. Adarsha College of Mgt & Science 10 . to maintain the smooth running of business in the following ways:- Solvency of the business:Adequate working capital helps in maintaining solvency of the business by providing uninterrupted flow of production. working capital is very essential.

BEML

SUGGESTIONS & CONCLUSIONS

Regular payment of salaries, wages and other day-to-day commitments:A company which has ample working capital, can make regular payments of salaries, wages and other day-to-day commitments which arises the morale of its employees, increase their efficiency, reduced wastage’s and cases and enhance production and profits.

High Morale:Adequacy of working capital creates an environment of security, confidence and high morale and creates overall efficiency in a business.

Ability of face crisis:Adequate working capital enables a concern to face business crisis in emergencies such as depression because such generally, there is much pressure on working capital.

Quick and regular return on investment:Sufficient of working capital enables a concern to pay quick and regular dividends to its investors as there may not be much pressure on working capital.

Adarsha College of Mgt & Science

11

BEML

SUGGESTIONS & CONCLUSIONS

Exploitation of favourable market conditions:Adequate working capital enables a concern to take advantage of the favourable market condition and also an edge over the competitors.

Excess or in adequate working capital:Every business concern should have adequate working capital to run its business operations. It should have neither redundant or excess working capital nor inadequate nor shortage of working capital. Excess is well, as short working capital positions are bad for may business.

Disadvantage of Redundant or Excessive working capital:i. Excessive working capital means idle funds which earn no profits for the business and hence the business cannot earn a proper rate return on its investments. ii. Redundant working capital lead to unnecessary purchasing and accumulation of inventories causing more chances of theft, waste and losses. iii. Excessive, working capital excessive debtors and defective credit policy, which may cause high incidence of bad debts.
Adarsha College of Mgt & Science 12

BEML

SUGGESTIONS & CONCLUSIONS

iv. v.

It may result into overall inefficient in the organisation. When there is excessive working capital, relations with banks and other financial institutions may not be maintained.

vi.

Due to low rate of return on investments, the value of shares may also fall.

vii.

The

redundant

working

capital

gives

to

speculative

transactions.

Disadvantages of inadequate working capital:a. A concern, which has inadequate working capital, pays its short term liabilities in time. b. It cannot buy its requirements in bulk and cannot avail of discounts. c. It becomes difficult for the firm to exploit favorable market conditions and undertake profit projects due to lack of working capital. d. The firm cannot pay day-to-day expenses of its operations and it creates inefficiencies, increases casts and reduces the profit of the business. e. It becomes impossible to utilize efficiently the fixed due to non-availability of the liquid funds.

Adarsha College of Mgt & Science

13

 Profit margin.  Fluctuations in the supply of raw materials.  Terms of purchases and sales.  Business cycle fluctuation.  Production policy  Volume of sales. Adarsha College of Mgt & Science 14 .  Operating efficiency. the following factors should be considered. Factors determining working capital requirements: Nature or character of business.  Size of business. The rate of return on investment also falls with the shortage of working capital.  Manufacturing cycle. Determinants of Factors affecting working capital:In order to determine the proper amount of working capital of a concern.BEML SUGGESTIONS & CONCLUSIONS f.  Price level changes.

Kind of working capital:Working capital may be classified in two ways. The need for working capital arises due to the time gap between production and realization of cash from sales. components and spares. 4) To meet the selling costs as packing advertising etc. Thus.. 6) To maintain the inventories of raw materials work-in-process. 3) To incur day-to-day expenses and overhead costs such as fuel power and office expenses etc. store and spares and finished stock. I. Adarsha College of Mgt & Science 15 . working capital is needed for the following purposes..BEML SUGGESTIONS & CONCLUSIONS Need of working capital:The need for working capital cannot be over emphasized every business needs amount of working capital. On the basis of Concept II. On the basis of time. 1) For the purchase of raw materials. 5) To provide credit facilities to the customers. 2) To pay wages and salaries.

provided for contingencies that may arises at unstated periods such as strike. depression etc. Adarsha College of Mgt & Science 16 . risk in prices. every firm has to maintain a minimum level of raw materials. Reserve working capital is the excess amount over the requirement for regular working capital. This working capital can further be classified as regular working capital. There is always a minimum level of current assets. finished goods and cash balance. which may be. The characteristics of permanent working capital are that:  The amount of permanent working capital remains in the business in one form or another. which is continuously required by the enterprise to carryout its normal operations.BEML SUGGESTIONS & CONCLUSIONS Fixed working capital:This is the minimum which is required ensure effective utilization of fixed facilities and for maintaining the circulation of current asset. For example. work in progress. This minimum level of current asset is called permanent or fixed working capital.

Special working capital is that part of working capital which is required to meet special exigencies such as launching of extensive marketing campaigns for conducting research. greater the size of the business. Seasonal working capital is the amount of capital required to meet the seasonal needs of the enterprise. i.e. Variable Working Capital:This is the amount of working capital. which is required to meet the seasonal demands and some special exigencies.BEML SUGGESTIONS & CONCLUSIONS  It also grows with the size of the business. Variable working capital can be further classified as seasonal working capital and special working capital. greater by the amount of working capital and vice versa. The variable working capital curve varies form period to period. Illustration:Illustration the total financial needs of a typical firm both for fixed assets and working capital. The fixed asset and permanent working capital are upward sloping. Adarsha College of Mgt & Science 17 . indicating that investment in such assets tends to increase over time with the growth of the firm.

In cash is called the operating cycle. iv. Adarsha College of Mgt & Science 18 . working capital cycle or cash cycle. ii. This cycle can be said to be at the heart of the need for working capital. The operating cycle refers to the length of the time necessary to complete the following cycle of events.BEML SUGGESTIONS & CONCLUSIONS Operating cycle:The duration of the time required complete the sequence of events right from purchase of raw materials or goods for cash to the realization of sales. iii. The cycle will repeat again and again over the period depending upon the nature of the business and type of the product. i. Conversion of cash into raw materials Conversion of raw materials into work-in-progress Conversion of work-in-progress into finished goods Conversion of finished goods into debtors Conversion of debtors into cash. v.

which cuts cyclical flow as shown above.BEML SUGGESTIONS & CONCLUSIONS The operating cycle shown in the figure relates to a manufacturing firm where cash is needed to purchase raw materials and converts raw materials into work-in-progress and then.. The working capital may be expanded or contracted by the influence of other financial or operating transactions. The cyclical flow of working capital is shown in the figure. The net stream of increase or decrease in working capital position always flows in and out in cycles order. This cyclical flow is also known as working capital turnover. Finished goods will be sold for cash on credit and ultimately debtors will be realized. the working capital availability at any point of time. The cash money available at any point of time is termed as ‘funds’ available i. When a company’s operation continues the components of current assets and current liabilities convert into one form or another. Adarsha College of Mgt & Science 19 . work-inprogress is converted into finished goods. Cyclical flow of working capital:The quantum or magnitude of various components of current assets and current liabilities may under go changes at any point of time.e.

however. The debenture holders are the Adarsha College of Mgt & Science 20 .BEML SUGGESTIONS & CONCLUSIONS Sources of working capital:Variable Shares Commercial banks Debentures Indigenous bankers Public deposits Trade creditors Ploughing back of profits Installment credit Loans from financial institution Advances Accounts receivables factoring Accrued expenses Commercial papers Deferred incomes Fixed credit / Financial of fixed working capital:There are five important sources of permanent working capital:- Shares:Issue of shares is the most important sources for raising the permanent or long term capital. A company can issue various types of shares as equity shares preference shares and deferred shares. Debentures:A debenture is an installment issued by the company acknowledging its debts to its holder. public company cannot issued deferred shares. According to the companies act. 1956.

Public Deposit:Public deposit is the fixed deposits accepted by a business enterprise directly from the public. life insurance corporations. Financing of variable working capital:The main sources of variable working capital are as followsIndigenous banks:Adarsha College of Mgt & Science 21 . modernization and replacement.BEML SUGGESTIONS & CONCLUSIONS creditors of the company. state financial corporations. Ploughing back of profits:It means the reinvestment by a concern of its surplus earnings in its business. The interest on debentures is a change against profit and loss account. Loans from financial institution:Financial institutions such as commercial banks. Now the business house accepts day’s public deposits for 5 to 7 years. state industrial development corporations. It is an internal source of finance and is most suitable for an established firm its expansion. industrial development bank of India and many others provide long term loans and also provide short term and medium term loans. A fixed rate of interest is paid on debenture. industrial finance corporation of India.

It is spontaneous source of finance. This method provides funds for some times and is used in course of short term working capital by many business houses. which have different fund position. Installment credit:This is another method of which assets are purchased and the payment is made in installment over predetermined period of time. provided the firm is considered creditworthy by its suppliers and represents 25to 50 percent of short term financing. Trade credit:It represents the credit extended by the suppliers of goods and services. The confidence of suppliers is the key to scrutiny trade credit.BEML SUGGESTIONS & CONCLUSIONS Now a days business house have to upend on indigenous bankers for obtaining loan to meet their working capital requirements. Advances:- Adarsha College of Mgt & Science 22 .

Commercial papers:- Adarsha College of Mgt & Science 23 . These funds increase the liquidity of a firm and constitute important sources of short-term finance. A factor is a financial institution which offers services relating to management and financing of debts arising out of credit sales which is also short-term financing. So they can be used for short-term financing since there is no interest payable for the delay payment. Factoring receivable credit:A commercial bank may provide finance by discounting the bills or invoices of are customers. wages and taxes. Deferred incomes:These are incomes receivable in advance before supplying goods or services. Thus a firm gets immediate payment for sales made on credit. Examples of these accrued expenses are salaries. Accrued expenses:These are the expenses which has been incurred but not yet due and hence not yet paid also.BEML SUGGESTIONS & CONCLUSIONS Some business house get advances from their customers and agents against orders and the sources are short-term sources of finance for them.

BEML SUGGESTIONS & CONCLUSIONS Commercial papers represents unsecured. Adarsha College of Mgt & Science 24 . promissory notes issued by firms to raise short-term funds. But only large companies enjoying high credit ranking and financial health can issue rating and financial health can issue commercial papers to raise short-term funds. Working capital finance by commercial banks:Commercial banks are the bank most important sources of short-term capital. It is an important money market instrument. which was introduced by the reserve bank of India in this country. The major portion of working capital loans is provided commercial banks.

including service companies. It is the study of current assets and current liabilities. Working capital proportional to sales. This is a day to day activity and occupies most of the manager. Purpose of the study:Working capital importance to any company. it is impossible to increase sales without increasing working capital.” Statement of the problem:Working capital management is the heart and life of any business. Adarsha College of Mgt & Science 25 . Working capital management is a day-to-day activity unlike long term of the manager. also faulty working capital management is immediately refuted through low solvency. Faulty working capital results in either over or under liquidity of capital including solvency and reputation.BEML SUGGESTIONS & CONCLUSIONS Title of the project:“ANALYSIS OF WORKING CAPITAL MANAGEMENT OF BHARAT EARTH MOVERS LIMITED. to much diversion of long term funds into working capital and finally industrial sickness or loss of reputation. importance of working capital arises due to following reasons.

PROFILE OF BHARAT EARTH MOVERS LIMITED:1.BEML SUGGESTIONS & CONCLUSIONS One of the most major and common reasons for industrial sickness is faulty working capital management. 2. 5. To evaluate the efficiency of management of working capital. To analysis the various internal and external factors affecting working capital. Name of the company: BHARAT EARTH MOVERS LID. 7. Analysis of net working capital and its projections. Growth of income and growth to net working capital. practices and systems of the company. To analyze changes in working capital. Analysis the components of working capital. Adarsha College of Mgt & Science 26 . Hence this study is understood working capital management policies. To analyze inflow and outflow of funds.. To identify the need of working capital. 9. Objectives of the study:The specific objectives of the study are:1. 4. 3. 6. 8. To conduct a ratio analysis of the over all financial performance.

5.BEML SUGGESTIONS & CONCLUSIONS 2. Activity: - Public sector under taking Manufacture of Earth Moving Equipment’s.R. Rail coaches. 3. 1965 STATE BANK OF INDIA CANARA BANK STATE BANK OF MYSORE PUNJAB NATIONAL BANK STATE BANK OF PATIALA BANK OF INDIA STATE BANK OF BIKANED AND JAIPUR CENTRAL BANK OF INDIA BANK OF BARODA UNION BANK OF INDIA BEML has three production units and they are situated at the following address:Adarsha College of Mgt & Science 27 . Registered office: - “BEML SOUDHA” Corporate office No. 23/1. Defence Equipment’s. Date of establishment: 6. IV Main. Bankers: - January 1. S. Nagar BANGALORE. Group: 4.560 027.

BOARD OF DIRECTORS AS ON 18. Complex BEML Nagar KOLAR GOLD FIELDS. UNIT NO: 3 Mysore complex Belavadi post. Chair man and M.571 186.S. MYSORE.G.560 075 UNIT NO: 2 K. Natarajan Adarsha College of Mgt & Science 28 .2003 1.F.BEML SUGGESTIONS & CONCLUSIONS UNIT NO: 1 Bangalore complex P.583 115.D V. No.R.06.B. 7501 New Thippasandra post BANGALORE.

Later in few years the organisation had a tremendous grow and they were strong enough to diversify to sectors such as coal.S. The main purpose for setting up this organisation was to manufacture heavy earth moving equipments. Mazumdar K.e.. mining. Heavy –duty trucks. Director (Production) 5. After 1-year i. Director (HRD) SUGGESTIONS & CONCLUSIONS B. Director (Marketing) BRIEF HISTORY OF BEML:BEML is a public sector undertaking under the effective administration of ministry of defence.e. Venkatanathan R. The company was incorporated in the first 5 years plan when India was very weak in its economy.. BEML.C.BEML 2. 1965 the organisation has its own entity i. Director (R&D) 4.V. Director (Financial) 6. Raman V. truck laying equipments etc. Suthar P.. Adarsha College of Mgt & Science 29 . Nagaraja 3.A. (Department of defence supply) The organisation was set up in the late forties as a part of Hindustan Aircraft’s Limited now Known as HINDUSTAN AEONAUTICS LIMITED to manufacture Railway coaches. It gradually diversified into earth moving equipment in 1964. rail coaches.

construction of roads. irrigation.BEML SUGGESTIONS & CONCLUSIONS steel cement. Rail coaches:- Adarsha College of Mgt & Science 30 . Over the year the growth of the company has been phenomenal. building. heavy-duty diesel engines. Commencing its operations with a turnover of around Rs. welding robots and undertaking of heavy fabrication jobs. 5 crores in 1964-1965. The company has the distinction of making profits right from its inception. power. defence. The product range has also under gone drastic changes in terms of numbers and technology. the company has achieved a turnover of around Rs. 1421 crores for the year 2001-2002. Defence and railways constituted the major market for BEML’s product over the years the position has been taken over by mining sector particularly M/s coal India LTD (CIL). Also the customer profile has undergone significant changes whitest in the company’s. In the last few decades it has further brought new technical high quality inventions like hydraulics.

) and my sore manufactures a wide range of earth moving equipment. which is making significant contribution to the transport requirement of the country. this unit has consolidated its. The unit has since passed through many phases of rail coach building industry.a. status as a major supplier of integral rail coaches. The first all metal III class tier coach was built on standard 1 Rs. meeting about 25% of the country’s demand it has a production capacity of over 800 coaches p.F. Adarsha College of Mgt & Science 31 . BEML started in 1964 with railway equipment division at Bangalore. Under frame in 1948. The first rail coach factory in the Indian sub-content. In 1965 the rail coach division was separated from HAL and made the nucleus of a new public sector company the earth mover division of BEML.G. raised from rail coach division and subsequently located at BEML Nagar near Kolar Gold Fields (K. The 1958 the first all steel integral type III class coach was delivered to railway.BEML SUGGESTIONS & CONCLUSIONS Rail coach division BEML is one such undertaking.

The unit has taken up production of direct electrical multiple unit (DCEMV) and Rail bus and alternate current electrical multiple units (ACEMV) Manufacturing units: BEML is the second largest earth moving manufacture in Asia. MYSORE Adarsha College of Mgt & Science 32 . recovery vehicles.BEML SUGGESTIONS & CONCLUSIONS The Bangalore unit also manufactures heavy-duty trucks and trailer and also defenses aggregates to meet the needs of the armed forces. Missile transported have been developed on the heavy-duty truck. It has 3 production units with hi-tech facilities. BEML offers application of engineering service and under takes preparation of pre-feasibility of project reports and equipments selection studies. BANGALORE b. Recommendation of user proper studies (RUP) is done at customer sites to improve productivity and to reduce cost. KOLAR GOLD FIELD c. a. A number of variants such as crash fore tenders.

sophisticated new products and aggregates.BEML SUGGESTIONS & CONCLUSIONS These units have high forced technology manufacturing facilities. various units. structural engineering and power line testing with state of the art facilities. Its Rs. Marketing activities include field operations and intensive training of customer personnel in operations Adarsha College of Mgt & Science 33 . 300 millions composite research and development centre at KGF has laboratories in fluid power engineering material science. the company’s division continues to make significant strides not only is the indigenization of collaborates products faster but also in the design and development of high technology. Steel Foundry at Tarikere is meeting the requirement of quality steel costing of the company. There are about 13800 employees working round the clock for the betterment of BEML Marketing:A nation wide network of 10 regional office and 15 district offices provide customers with immediate access to the companies wide range of products and services. Workers:Manpower is the main sources for a successful industrial empire.

and disk brakes and computerized transmissions control system. Research and development:R &D made rich contribution over the years by designing developing and productionising a number of high technology products and aggregates for the core sector such as contribution to mining defense and rail. Towards achieving maximum customer satisfaction. In taking service to the doorsteps of customers. BEML offers application engineering services and fleet optimization solution.BEML SUGGESTIONS & CONCLUSIONS and maintenance of equipment additionally. the company has established BEML net a satyam net work-with a view to streamline spares supplies. Development of high technology products likes power transmission. BEML also undertakes to service machine all its lifetime. Adarsha College of Mgt & Science 34 . planetary axles calipers. Customer services:BEML service centers and spare parts depots provide total equipment care and rehabilitation services. BEML site engineers insure higher availability of machines through prompt after sales service.

like road headers. railway and defence sector. The studies include assessment of existing indigenous technological base. side discharge later.. Beml’s Bangalore complex has been awarded the ISO 9001 certificate on the 26th January 1994 by the Bureau Verities Qualities International (BVI) PRODUCT PROFILE: BEML produced durable international standard equipments and system designed to with stand tough working environment under varied climatic condition. BEML & ISO 9001 All the production divisions of Beml have been credited with ISO 9001 and ISO 9002 certification. introduction of new products. wheeled loader etc.BEML SUGGESTIONS & CONCLUSIONS R&D have also carried out detailed studies for the introduction products catering to the requirement of mining. in the product range and also the feasibility of manufacturing a number of products like field services equipment for defence sector. Benefits:Rail bus and spoil disposal units has been successfully developed and productions. Adarsha College of Mgt & Science 35 .

50 ton trailers Ejector and Air-cleaner assembly Mail-rail and mil-wagons Adarsha College of Mgt & Science 36 . iv. v.  DCEMU.Direct Current Electrical Multiple Units. Defence products: i. which help to the growth of the economy such as: a. And Armed Recovery Vehicle. iii.Alternate Current Electrical Multiple Units.BEML SUGGESTIONS & CONCLUSIONS Company products are of wide range. TATRA TRUCKS and its variants IGMP-Integrated Guided Missile Project HRV and ARV. Spares and other Railway products:  ACEMU. Defence products c. Railway products b.Heavy Recovery Vehicle. vi.  RAIL BUS. ii.

MINING & CONSTRUCTION: CRAWLER EQUIPMENT:  Hydraulics Excavator  Bulldozers  Pipe Layer  Electric Rope Shovel  Walking Drag Lines  Road Header  Long wall Mining Equipment  Telescope Excavator  Bucket Wheel Excavator  Stacks and Reclaimer  Slide Discharge Loader Adarsha College of Mgt & Science 37 . mining. fertilizer. steel.BEML SUGGESTIONS & CONCLUSIONS PRODUCT RANGE: BEML manufactures a wide range of products to meet the needs of construction. power. cement. defence and railway sectors. irrigation.

BEML SUGGESTIONS & CONCLUSIONS WHEEL EQUIPMENT:  Wheel Loader  Wheel Dozers  Motor Grades  Rear Dumpers  Bottom Dumpers  Water Sprinklers  Tyre Handlers DEFENCE PRODUCTION:  BEML – TATRA Heavy Duty Trucks  Heavy Duty Trailers  Transmissions. Ejectors and Air cleaners and Final Drivers for Defence Vehicles  Armoured Defence Vehicles  Snow Plough and Snow Cutter  Aircraft Moving Tractor Adarsha College of Mgt & Science 38 .

iv. Integral Rail Coaches of Various Models Overhead Equipment Inspection Car Track Laying Equipment Electrical Multiple Units Rail Bus Muck Wagons HEAVY FABRICATION & MACHINERY ENERGY:  Diesel Engines  Diesel Generator Sets ROBOTICS & AUTOMATION:  Industrial Welding Robots  Machine Tending Robots STEEL PLANT EQUIPMENT: a. v. vi. ii. Strand Guide ENERGY: Adarsha College of Mgt & Science 39 . iii.BEML SUGGESTIONS & CONCLUSIONS RAILWAY CONSTRUCTION: i. Continuous Casting Equipment b. Ladle Turret c.

Mysore 3. Diesel generator sets HYADAULIC AGGREGATES a. Diesel engines b.BEML SUGGESTIONS & CONCLUSIONS a. Telescope excavator f. Side discharge loader BEML manufacturing Units:1. Long wall mining equipment e. Gear pumps/plunger pumps b. Bangalore 2. Control values d. KGF BEML Subsidiary Units: Vignyan Industries  Terikere in Chick Mangalore BEML EXPORTS:- Adarsha College of Mgt & Science 40 . Bucket wheel excavator g. Stacker and reclaimer h. Cylinder/suspensions c.

across Europe. Kolkatta c.7. Bangalore i. Africa. BEML REGIONAL OFFICES:a. Asia and America etc. Ranchi f. Bilaspur g. New Delhi b. Sambalpur j.6. Mumbai d.BEML SUGGESTIONS & CONCLUSIONS Beml exports to 30 countries. Nagpur e. 224 lakhs of the previous year. The company achieved all time high Export turnover of Rs. Hyderabad h. Siliguri LOCATION OF BEML OFFICE – DISTRICT OFFICES  Ahmedabad  Bhuvaneshwar  Bhopal  Bilaspur  Chandigarh Adarsha College of Mgt & Science 41 . 189 lakhs as against Rs.

Hindustan motors Larsen and Turbo Telco Adarsha College of Mgt & Science 42 .BEML SUGGESTIONS & CONCLUSIONS  Chennai  Ernakulam  Goa  Gauhauti  Jammu  Kattur  Patna  Raniganj  Rourkela  Udaipur  Vishakapatnam COMPETITORS:The following are major competitors for Beml: Rail Coaches: a. iii. ii. Rail Coach Factory – Kapurtala – Punjab Earth Moving Equipments: i. Integral Coach Factory – Perambur – Tamil Nadu b.

BEML SUGGESTIONS & CONCLUSIONS Small Loader:  JCB  Escorts  Larsen and Turbo  Hindustan Motors COLLABORATION: BEML has established extensive collaboration with many companies around the world some of the collaboration are enumerated below: Name of the Company Komastu Komastu Dressers Omnipol General Electric Bumar IGM Indresco Mitsui Mike Ural mash Alpine Country Japan U.A Poland Australia U.S.A Japan RussiaVoest Australia Adarsha College of Mgt & Science 43 .A Czechoslovakia U.S.S.

Gujarat. Chennai for meeting their loading and handling requirements. Railways etc from the customer base. 2. Air Force. Private sectors: Almost all Steel.K. Port Trust: Mumbai. Power Sector. ordinance Factories. ONGC.BEML SUGGESTIONS & CONCLUSIONS Waspo U. Keloram Cement and J. Raymond’s Cement. Mining and Steel Sector:  National Mineral Development Corporation  Hindustan Zinc Limited Adarsha College of Mgt & Science 44 . Larsen and Turbo. NTPC. 3. Calcutta. 1. State Electricity Board.A CUSTOMER PROFILE: All the major and state governmental projects including Irrigation. Cement. Coal Sector: Coal India Limited and its subsidiary Company’s. National Hydro-Power Corporation. ISRO. Cement and mining companies a few of them CC.S. Defence Requirement: Defence services. TISCO. 5. Boarder Road Organisation. Ambiya Cements. 4.

Bangalore Complex b. Engine Division 14th time 6th time 1st time 4. And employees received number of suggestions award. Export Performance Award for achieving highest performance in export 2. BEML Future Plans:- Adarsha College of Mgt & Science 45 .BEML SUGGESTIONS & CONCLUSIONS  Hindustan Copper Limited  Kudremukh Iron Ore Limited  SAIL  Bharath Aluminum Corporation Limited  Indian Iron and Steel Corporation Limited BEML bagged the Number of Awards:In pursuit of excellence. National Award for being the outstanding employer of the Physically Handicapped. Safety Awards a. 3. Quality and Import Substitution. BEML is recipient of Corporate Excellence Award from the Government of India apart from recognition on Safety. Mysore c. 1.

capability and reliability Adarsha College of Mgt & Science 46 . This will benefit the company in the year to come. The policies are being preserved by the government and also help the growth of the company. The company is also increasing its market share of market to the defence sector.BEML SUGGESTIONS & CONCLUSIONS During coming year BEML is planning for diversify activities in the allied and non allied areas of present line business. The company is introducing new products. The order book position of earth moving equipment segments in encouraging and keeping in future prospects. Depending upon the secretarial needs and demand for earth moving equipment is scheduled to grow. To achieve and retain dominant position in earth moving and heavy construction industry by establishing high standards of quality. GOALS OF BEML:i. rail vehicles and special machinery for railways in a phased manner. In this connection effort have been made to introduce hydraulic components and aggregates.

iii. To conserve resources and eliminate waste through optimum utilization of men. money. To be competitive. To pursue state of art and environmental – friendly technologies as well as to develop cost effective and value added products.BEML SUGGESTIONS & CONCLUSIONS ii. To grow into a global company and a keen sense of vision and business ethics as well as to earn maximum profits. v. responsive and to continuously improve service so as to achieve customer satisfaction iv. materials and machinery Adarsha College of Mgt & Science 47 .

Methodology:This project is an analytical research where in the research has to use the available facts as information and analyse these to make a critical evaluation of the materials this is also an applied research with an aim to find a solution for an immediate problems facing by industry or business organisation. The control aim of applied research is to discover a solution for some processing problem. This involves the following steps: Adarsha College of Mgt & Science 48 .BEML SUGGESTIONS & CONCLUSIONS Research Design:According to Daire and others “A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. The research design is the conceptual structure with in which research is conducted.

like comparative. Definition of concepts: Adarsha College of Mgt & Science 49 .com Method of analysis – analysis of ratio’s and fund flows and working capital statements. Sampling scheme: No specific sampling methodology was involves.BEML SUGGESTIONS & CONCLUSIONS Type of research – Analytical Tool – working capital and financial statements. The latest 6 years data and annual reports were considered in other words it was convenience sampling.india. Reference period: The period in this case study is for five financial years that is for 1997-1998 to 2001-2002. common size and fund flow.beml. Collected data – company annual reports and e-mail at www. Data collection: The required data was collected from the annual report of the company and direct person interview with the office of the company and also through company website.

Long term investments= are buildings. Net working capital= total current assets less current liabilities. Liquidity= it is used in a limited sense in the study to means short – term debt repaying capacity of the enterprise and can be issued by Adarsha College of Mgt & Science 50 . labour short term advances. following concepts were funds relevant and are defined under: Solvency = Reflected through current ratio’s Total current assets in Rupees Current ratio = Total current liabilities in Rupees Current assets = those that cab be converted into cash with in one year or less.. Current liabilities= those which have to be settled in one year or less. commercial papers fixed deposits from public inter corporate deposits etc. Short term source= are trade credit.. Short term investments= are raw materials.BEML SUGGESTIONS & CONCLUSIONS For the purpose of this study. plant and machinery and office equipment etc. Long term source= are shares and debentures reserves. Gross working capital= equals to total amount of current assets. vehicles.

methodology. reference period. scope for study. over view of chapter scheme. calculation of ratio’s interpretation. information about the BEML from its history to present days status will be given. Company profile:The details about the company form it’s arising in this chapter. Methodology:This chapter derails with the research design. statement of the problem. complete. data collection. definition of concepts. sampling scheme. Over view of chapter scheme:General back ground of the study introduction of the problem: This chapter will cover title of the project. Profitability= this means ability of the company in marketing profits in relation to capital employed and sales. Findings:Adarsha College of Mgt & Science 51 . purpose of the study. objectives of the study. Data Analysis and interpretation:This is the important part of this project and involves analysis of data.BEML SUGGESTIONS & CONCLUSIONS investing money short term securities including short term fixed deposits which banks.

balance sheet for the last five years. This is followed by Bibliography and annexure fund flow statement. Limitation of the study:The study only one company and for a period of 5 terms that is from 1997-98 to 2001-02. profit and loss account. Limitation:This chapter deals with instructions given at last.BEML SUGGESTIONS & CONCLUSIONS This chapter deals with the summary of the findings. Suggestion & Conclusions:This is concluding chapter and contains salient conclusions and recommendation. Expensive (in terms transport costs) Adarsha College of Mgt & Science 52 .

Financial analysis is the process of identification the financial strengths and weaknesses of the firm by properly established relationship between the items of the balance sheet and profit and loss account. They play dominate role in setting the frame work of management decisions. MEANING:In the words of “METCALF ANDTITARD financial analysis is a process of evaluating the understanding of the firms position and Adarsha College of Mgt & Science 53 . But the information provided in the financial statements is not an end. it itself as no meaningful conclusions can be drawn from these statements alone. However the information provided in the financial statements is of immense use in making decisions through analysis and the interpretation of financial statements.BEML SUGGESTIONS & CONCLUSIONS INTRODUTION:Financial statements are prepared primarily for decision making.

inventories. tenders. They have no access to the books of accounts and the internal records of the concern. Executives and employees of the concern also do it. Internal analysis:This is analysis done by internal parties they include persons who have access to the books of accounts and internal records of the concern.” “financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statements. They include shareholders. officers Adarsha College of Mgt & Science 54 . and a study of the trend of these factors.” The analysis of financial statement is an important aid to overall financial analysis. iv. iii. ii. TYPES OF FINANCIAL ANALYSIS:i. creditors etc.BEML SUGGESTIONS & CONCLUSIONS performance.” In the words of “MYERS. External analysis Internal analysis Vertical analysis Horizontal analysis External analysis:This is analysis done by external parties that is outside of the business.

Analysis 2. Comparison 3. In short re-classification and re-arrangement of the data found Adarsha College of Mgt & Science 55 . Horizontal or trend analysis:It is a type of analysis in which there is a comparison of the trend of each item in the financial statements over a number of years.BEML SUGGESTIONS & CONCLUSIONS appointed for the purpose by the government. Vertical or structural analysis:It is a type of analysis used study through ratios. the quantitative relationship of items in the financial statements on a particular date or for accounting year. Interpretation Analysis:This means methodical classification of data given in financial statement into homogeneous and comparable parts that is inter related parts. STEPS INVOLVED IN THE ANALYSIS OR FINANCIAL STATEMENTS:Analysis of financial statements involves three steps. personnel of the finance and accounting departments of the concern. 1.

Interpretation:After the financial statements are analyzed or dissected into comparable component parts and the relative magnitudes of the comparable components parts is measured through comparison. After the figures contained in the financial statements are dissected or split into the required comparable component parts.BEML SUGGESTIONS & CONCLUSIONS in the financial statement into groups of a few principal elements accounting to their resemblances and close connections and presenting them in the form most convenient for interpretation. Comparative statements b. Common-size statements Adarsha College of Mgt & Science 56 . TECHNIQUES OF FINANCIAL ANALYSIS:a. the comparable component part (the interconnected figures) must be compared with each other and their relative magnitudes (their relationship) must be measured. Trend analysis c. Comparison:Mere splitting up or re-grouping of the figures found in the financial statements into the desired component parts is not sufficient for judging the profitability and financial status of an enterprise. the results must be interpreted.

Adarsha College of Mgt & Science 57 . A comparative statement of BEML financial statements i. Ratio analysis Comparative statements:The comparative financial statements are statements of the financial statements. balance sheet and profit and loss account for the period of five years from 1997-1998 to2001-2002. at different periods of time. total liabilities and total sales. Fund flow statements e.BEML SUGGESTIONS & CONCLUSIONS d. Cash flow statements f. Trend analysis:The financial statement may be analyzed by computing trend of series of information. Common-size statement:The common-size statement balance sheet and income statement are shown in analytical percentages. the elements of the financial position are shown in comparative form so as to give an idea of financial position of two or more periods.e.. This method determines the direction up words of down words and involves the computation of the percentage relationship that each statement item bears to the same item in basis years. The figures are shown in percentages of total assets.

It shows the changes in cash both at the beginning and 1st the end of a period. The fund flow statement and statement of changes in working capital of BEML for the period of five years from 1997-1998 to 2001-2002.BEML SUGGESTIONS & CONCLUSIONS Fund flow statement:Fund flow statement is a statement of sources and uses of fund of net wording capital. Ratio analysis:A ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of Adarsha College of Mgt & Science 58 . In other words it is a statement which shows how the net working fund or technical device designed to high light the changes in the financial condition of a business enterprise between tow balance sheet dates. Cash flow statement:Cash flow statement is prepared by acquiring cash from different sources and the application of the same for different payments throughout the year. It is prepared from the analysis of cash transaction.

Analysis is the only means and not an end in itself. It does not consider changes in price levels. iii. Ratio analysis is a process of establishing and interpreting various ratios for helping in making certain decisions. As the financial statements are prepared on the basis of ongoing concern which does not give exact position. Adarsha College of Mgt & Science 59 .BEML SUGGESTIONS & CONCLUSIONS two mathematical expressions. iv. vi. LIMITATIONS OF FINANCIAL ANALYSIS:i. It is used as an index for evaluating financial position and performance of the firm. v. ii. Financial analysis is based upon only monitory information and non monitory factors are ignored. It is only a study of interim reports. Changes in accounting procedure by the firm may often make financial analysis misleading.

A ratio “is an expression of the quantitative relationship between two numbers”. Leverage ratios 1. Coverage ratios 3. Kell and Bedford.BEML SUGGESTIONS & CONCLUSIONS “ANALYSIS AND INTERPRETATION OF RATIO’S” Ratios: A ratio is a simple arithmetical expression of the relationship of one number to another. Turn over ratios 4. According to accountant’s Handbook by Wixan. Profitability ratios 2. Profitability ratios:This ratios measure the results of business operations or over all performance and effectiveness of the firm. Adarsha College of Mgt & Science 60 . 1. Type’s of ratios:They are mainly classified into 5 types viz. Financial ratios 5. It may be defined as the indicated quotient of two mathematical expressions.

4. Coverage ratios:These ratios show the safety of the fixed interest bearing security holders.. Turn over ratios:These will indicate the company’s assets i. A. Financial ratios:Financial ratio is mainly two kinds they are. B. greater the ratio more will be efficiency of assets usages and overall efficiency of the management. Like debenture holders preference holders.e.BEML SUGGESTIONS & CONCLUSIONS 2. Liquidity ratios:Ascertained to measure the liquidity position as solvency position towards the payment of short term obligations. Liquidity ratios B. Adarsha College of Mgt & Science 61 . usage of resources at its disposal. 3. Stability ratios A. Stability ratios:Ascertained to measure the long term solvency.

46 3.84 2001-02 157416. It indicates the availability of current assets in rupees for every one rupee of current liability.31 1998-99 164745. It is a measurement of firm’s short term solvency.12 52943.12 80377.84 in the year 2000-01 and further reduced to 1. Adarsha College of Mgt & Science 62 .1 Year Current assets Current liability % of current ratio 1997-98 152653. The company has maintained the current ratio favourable for the year 1997-98 to 19992k but has dropped to 1.70 56090.64 46143.69 1.78 the year 2001-02.64 2000-01 147890.75 2.94 1999-2k 139782.68 2.BEML SUGGESTIONS & CONCLUSIONS Current ratio:It is a ratio which express the relationship between total current assets to total current liabilities. Current assets Current ratio: Current liabilities Table No.78 Interpretation:The normal current ratio is considered as 2:1.31 88226.44 1.

5 1 0.31 2.BEML SUGGESTIONS & CONCLUSIONS Current Ratio 3.78 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Quick ratio:- Adarsha College of Mgt & Science 63 .94 2.64 1.5 0 1.5 3 2.5 2 1.84 3.

76 52943. Quick assets Quick ratio: Current liabilities Table No.36 1. It reveals the firm’s position to meet the current liability through quick assets Quick assets we have considered as sundry debtors.49 2000-01 84021.06 in the year 2001-02.06 Interpretation:The normal quick ratio is considered as 1:1.80 80377.44 1.BEML SUGGESTIONS & CONCLUSIONS Quick ratio also known as Acid Test or liquid ratio.88 1998-99 96784. This ratio expresses the relationship between liquid assets and liquid liabilities.88 in the year 1997-98 to 1. Adarsha College of Mgt & Science 64 .32 56090.75 1.73 1999-2k 78705.2 Year Quick assets Current liabilities % of quick ratio 1997-98 86921.05 2001-02 93530.28 46143.06 88226.68 1. cash and bank balances. The company has maintained the quick ratio favourable for the past five years even though it is declining from 1. other current assets and loans and advances.69 1.

6 1.4 1.2 0 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Years Debt-equity ratio:The debt-equity ratio expresses the relationship between total debt and net worth or equity of the company or the relationship 65 Adarsha College of Mgt & Science .2 Times 1 0.6 0.8 1.4 0.BEML SUGGESTIONS & CONCLUSIONS Quick Assets 2 1.8 0.

23 59184.18 2.3 Year Long term debts Share holders funds D. Long term debt Debt equity ratio= Share holders funds Table No.50 2001-02 89697.22 1999-2k 107576.R % 1997-98 129802.82 in the year 1999-2k and further reduced to 1. Share holders funds we have to considered as share capital & reserves and surplus.02 59376.54 58423.91 59664.82 2000-01 89135.93 2. Adarsha College of Mgt & Science 66 .30 1.84 1. The ratio of debt varies according to the nature of the business and availability of cash flows.22 1998-99 130320. Long term debts we have calculated as secured loans and un secured loans.50 for the year 2000-01 and 2001-02.50 Interpretation:The normal debt equity ratio is considered as 2:1.BEML SUGGESTIONS & CONCLUSIONS between borrowed capital & owner’s capital.48 56564.28 1.E. The company has maintained the debt equity ratio favorable for the year 1997-98 and 1998-99 but has dropped to 1.

BEML SUGGESTIONS & CONCLUSIONS Debt Equity Ratio 2.5 1.5 0 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Years Net profit ratio:- Adarsha College of Mgt & Science 67 .5 2.82 1.5 2.22 1 0.22 2 1.5 1.

Adarsha College of Mgt & Science 68 . Net operating profit Net profit ratio= Net sales Table No. It indicates the amount of sales left for share holder after all costs and expenses have been met.00 2.4 Year Net operating profit Net sales Net profit ratio 1997-98 1626.96 Interpretation:The ratio show that the company has very low profit in the year 1998-99 has improved over the year from 371.47 lakhs to 1284.69 124212.41 1998-99 371. it help to know the operational efficiency of the business.47 113181.09 125132.82 2001-02 1284.00 0.00 0.00 2000-01 1031.00 0.93 115335.33 1999-2k 2481.BEML SUGGESTIONS & CONCLUSIONS This ratio indicates net margin earned on sales.51 133245.51 in the year 2001-02. The company has to further strive towards achieving the high net profit ratio.00 1.

33 1.96 0.82 2 0.BEML SUGGESTIONS & CONCLUSIONS Net profit Ratio 2001-2002 0.41 0 1 2 3 2000-2001 1999-2000 1998-1999 1997-1998 Return on total assets:- Adarsha College of Mgt & Science 69 .

It also indicates whether the total assets of the business have been properly used or not PBIT Return on total assets= Total assets Table No.92 185276.71 1301.75 1064.75 x 100 Adarsha College of Mgt & Science 70 .BEML SUGGESTIONS & CONCLUSIONS This profitability ratio is measured in terms of relationship between profit and total assets.89 0.66 2359.68 0.64 172702.5 Year 1997-98 1998-99 1999-2K 2000-01 2001-02 Interpretation:The ratio shows that the company has very low return on total asset in the year 1998-99 and has improved over the years it indicates that the total assets of the business have not been properly utilized.09 271.49 165077.00 Total assets Ratio 174033. PBIT 1605.45 1.15 158847.58 0.19 0.

BEML SUGGESTIONS & CONCLUSIONS Return on Total Assets 1.6 1.2 1 0.8 0.2 0 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Inventory turn over ratio:The inventory turn over ratio indicates the number of times of the inventory of a company rotates with an accounting cycle.4 1. It Adarsha College of Mgt & Science 71 .4 0.6 0.

36 2.78 13170. The stock turnover ratio depends upon the type of the company or type of industry.14 65732. Sales Inventory Turnover Ratio = Inventory Table No.16 72 Adarsha College of Mgt & Science .R 125971. The formula for ascertaining this ratio is Cost of goods sold Inventory turn over ratio:Inventory Where the figure as cost of goods sold is not available in the published annual statements.84 61076.90 67961.6 Year 1997-98 1998-99 1999-2k Sales Inventory I.36 1.38 1.T.BEML SUGGESTIONS & CONCLUSIONS indicates the number of times the average stock is turned during a year.92 121261. this formula may be used.

Hence the company may strive towards achieving better utilization of inventory and reducing the inventory holding.78 to 2.11 2. Adarsha College of Mgt & Science 73 .89 63868. while the normal of this ratio may be taken as 5 to 6 times.25 2.32 63886. considering the types of goods as capital goods the normal may be considered as 3 to 4 times.03 142414.23 times in the year 2001-2002.23 Interpretation:It can be seen that from the year 1998-1999 the turnover ratio has been improved from 1.BEML SUGGESTIONS & CONCLUSIONS 2000-01 2001-02 134740.

5 1 0.5 2 1.5 0 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Years Debtors Turnover ratio: Debtors turnover ratio indicates the numbers of times the detours turnover every year generally the higher the value of debtors Adarsha College of Mgt & Science 74 .BEML SUGGESTIONS & CONCLUSIONS Inventory Turnover Ratio 2.

BEML SUGGESTIONS & CONCLUSIONS turnover the more efficient is the management of credit Debtors turnover ratio can be calculated by dividing the total sales by the debtors outstanding Sales Debtors turnover ratio= Debtors Particulars Sales Debtors DTR 1997-98 61881.51 125971.54 2.04 in the year 1997-98 to 2. Adarsha College of Mgt & Science 75 .62 2.17 2.03 Interpretation : The debtors turnover ratio is improved in the period of five years from 2.53 2000-01 52066.14 121261.04 1998-99 60664.55 2.51 in 2001-02.84 134740. Considering the nature market of the company which is of capital equipments the efficiency of credit management is good.59 2001-02 142414.90 131708.89 56729.99 2.00 1999-2000 52016.

Adarsha College of Mgt & Science 76 .BEML SUGGESTIONS & CONCLUSIONS Debtors Turnover ratio 120000 100000 80000 60000 40000 20000 0 1997-98 1998 99 1999 2000 2000 2001 20012002 Percentage of cash to current liabilities Current liabilities Cash & Bank balance Debits collection period: The collection period measures quality of debtors as it indicates the speed of collection of approximate numbers of days taken by the company to collect the debtors after making sales.

BEML

SUGGESTIONS & CONCLUSIONS

Higher the turnover ratio, shorter the debits collection period & better the credit management, better the liquidity of debtors and vice – Versa. Collection period sales Sales Collection period = Debtors Rs in lakhs Particulars No. of days DTR DCP Interpretation: 1997-98 365 2.04 179 1998-99 1999-2000 365 2.00 183 365 2.53 144 2000-01 365 2.59 141 2001-02 365 2.51 145 x 365

The company's debits collection period is favourable & showing improvements over the period of time since the company is decling with capital goods the debits collection period is considered to be good.

Adarsha College of Mgt & Science

77

BEML

SUGGESTIONS & CONCLUSIONS

Debits collecton period
400 350 300 250 200 150 100 50 0 199798 199899 19992000 200001 200102 Numbers of days Debtors turnover ratio Debits collection period

Working capital turnover ratio: This ratio states whether investments in net current assets as been properly utilized, it determines how efficient the company is a converting raw materials to finished the products. The working capital is taken as: Current assets – Current liabilities

Adarsha College of Mgt & Science

78

BEML

SUGGESTIONS & CONCLUSIONS

Sales Working capital turnover ratio = Working Capital Working capitals turnover ratio: Year 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Net sales 115335.00 113181.00 124212.00 125132.00 133245.00 Working capital 106510.18 108654.95 86838.44 67512.43 69189.87 WCTR 1.08 1.04 1.43 1.85 1.93

Interpretation: The working capital turnover ratio is improving over the year. The non being the 5 – 6 times considering the nature of product as capital items. The none can be taken as 3 – 4 times, the company as to still improve the working turnover ratio.

Adarsha College of Mgt & Science

79

BEML SUGGESTIONS & CONCLUSIONS Working capitals turnover ratio 140000 120000 100000 Net sales 80000 Working capital 60000 Working capital turnover ratio 40000 20000 0 19971998 19981999 19992000 20002001 20012002 Cash ratio: It is the ratio cash & Cash equivalent balance. to current liability it can be calculated as follows Adarsha College of Mgt & Science 80 .

75 0.69 88226.99 25456.01 2001-02 18839.35 1998 .39 52943.00 11505.68 0.64 80377. Adarsha College of Mgt & Science 81 .22 2000 .36 0.L 1997-98 16017.BEML SUGGESTIONS & CONCLUSIONS Cash Cash ratio = Current Liabilities Particulars Cash & Bank bal Current liabilities % of cash to C.03 56090.23 0.33 46143.21 25895.44 0.29 Interpretation: The cash ratio in the year 1998-99 is high & the company as maintained the cash ratio around 25% for the past three years which is good sign.45 1999 .

2000 99 2000 2001 20012002 Percentage of cash to current liabilities Current liabilities Cash & Bank balance Current liabilities to working capital: Current Liabilities Current liabilities to working capital = Working Capital Adarsha College of Mgt & Science 82 .1999 .BEML SUGGESTIONS & CONCLUSIONS Cash ratio 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 199798 1998 .

44 Working capital 106510.28.69 88226.61 1.28 Interpretation: The ratio show that the company as very low current liabilities to working capital in the years 1998 0.18 108654.87 CL / WC 0.75 52943.43 as increased in the year 2001-2001 at 1.43 69189.28 1.68 80377.36 56090.44 67512. Adarsha College of Mgt & Science 83 .52 0.BEML SUGGESTIONS & CONCLUSIONS Year 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Current liabilities 46143.95 86838.43 0.

BEML SUGGESTIONS & CONCLUSIONS Current liabilities to working capital 120000 100000 80000 Current liabilities 60000 40000 20000 0 19971998 19981999 19992000 20002001 20012002 Working capital Current liablities / Working capital Share holders fund to working capital: SHF Share holder fund to working liabilities = Working Capital Adarsha College of Mgt & Science 84 .

Adarsha College of Mgt & Science 85 .68 & 2001-2002 in 0.BEML SUGGESTIONS & CONCLUSIONS Year 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Share holder fund 585.64.55 & 1999 they have decreased 0.68 0.55 0.76.54 in 2000 they have improved to 0.23.64.84.43 69189.54 0.28 596.93 591.95 86838.44 67512.18 586.87 SHF / WC 0.18 108654.84 Working capital 106510.30 593.86 Interpretation: The ratio show that the company as low share holder fund to working capital in the year 1998 at 0.88 0.86.

BEML SUGGESTIONS & CONCLUSIONS Share holders fund to working capital 120000 100000 80000 60000 40000 20000 0 19971998 19981999 19992000 20002001 20012002 Working capital Share holder fund / Working capital Current assets to fixed assets: Current Assets Current assets to fixed assets = Fixed Assets Year Current assets Fixed assets CA / FA 86 Adarsha College of Mgt & Science .

12 1.24 7.24 9.80.745.07.31 21.650.890.92 7.12 1.56. Adarsha College of Mgt & Science 87 .782.653.23 8.94.57.030 7.24 & improved in the year 2001 – 2002 at 9.39.32.50 20.64.80 The ratio show that the company as higher current assets to fixed assets in the year 7.47.598 16.BEML SUGGESTIONS & CONCLUSIONS 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Interpretation: 1.79.416.384 19.70 1.64 1.798 17.

12 19.56.598 7.79.416.24 7.24 Fixed Assets to Working Capital: Fixed Assets Fixed Assets to Working Capital = Working Capital Adarsha College of Mgt & Science 88 .64.07.BEML SUGGESTIONS & CONCLUSIONS Current assets to fixed assets 12 10 8 6 4 2 0 Current assets / Fixed assets 1997-1998 1.798 2001-2002 1.64 21.23 9.653.782.47.650.890.384 2000-2001 1.745.70 20.12 17.39.50 1999-2000 1.57.92 7.030 1998-1999 1.8 8.94.31 16.32.

23.20 0.27 again in 2002 have decreased 0.27 0.98 17945.18 108654.22 0.BEML SUGGESTIONS & CONCLUSIONS Year 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Interpretation: Fixed assets 21650.84 19327.23 The ratio show that the company as low fixed assets to working capital in the year 1998 at 0.95 86838. Adarsha College of Mgt & Science 89 .44 67512.19 0.87 FA / WC 0.22 & 2001 0.98 1607030 Working capital 106510.20 & 1999 they have decreased 0.50 20793.43 69189.19 2000 they have improved to 0.

95 2000-2001 17945.18 1999-2000 19327.43 0.19 0.22 0.44 2001-2002 1607030 69189.50 106510.3 0.15 0.25 0.BEML SUGGESTIONS & CONCLUSIONS Fixed Assets to Working Capital 0.2 0.27 0.1 0.84 108654.98 67512.98 86838.87 1998-1999 20793.23 Current assets to Working capital: Current Assets Current assets to Working Capital = Working capital Adarsha College of Mgt & Science 90 .2 0.05 0 1 1997-1998 21650.

653.28 The ratio show that the company has low current assets to working capital Adarsha College of Mgt & Science 91 .39.18 108654.782.64 1.19 2.87 CA/WC 1.31 Working capital 106510.416.57.61 2.47 1.56.64745.43 69189.52 1.47.12 1.95 86838.BEML SUGGESTIONS & CONCLUSIONS Year 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 Interpretation: Current assets 1.890.70 1.12 1.44 67512.

BEML SUGGESTIONS & CONCLUSIONS Current assets to Working capital 2. BEML is a defence oriented undertaking enjoying monopolistic market in earth moving heavy equipments over a period of time Adarsha College of Mgt & Science 92 .5 0 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 a.61 2.28 1.19 1 1.47 0.5 2 1.52 1.5 2.

The prolonged economic slow down in the country adversely affected the entire earth moving equipment as also rail way segment resulting in a sharp drop in demand for the products.The present market for earth moving equipment is becoming increasingly competitive. c. b. This had a telling effect on the operation of the company which is visible in the profitability position.Even though the company’s liquidity or short term solvency position is good. This will result in considerably lowering down the profitability. d. Due to high current ratio. While the sales to defence segment is showing considerable increase the sales in rail coaches segment has dropped sharply. Adarsha College of Mgt & Science 93 . This is due to lack of orders for rail coaches from railway board. the high current ratio is not desirable. 1998-99and 1999-2000.BEML SUGGESTIONS & CONCLUSIONS . The number of manufacturers with in the country is increasing. The company is also facing competitions from abroad due to globalization. The current ratio of the company is very high during the year 1997-98. Since it results in less efficient use of funds or lucking up of funds in current assets.

The sales have been heavily affected during the last few years necessitating the company to maintain high level of FGI/WIP affecting the financial position of the company. The company is experiencing the problem of reduced order position and under utilization of manpower unlike other major companies. Adarsha College of Mgt & Science 94 . The company has almost a nil profit when compared to the turnover and the indication also shows no improvement over the years. The earnings per share is very low.08 times of turnover to working capital in the year 1997-98 and improved to 1. g.1. The profitability ratio show that shows no improvement over the years. This is a steady improvement even though not up to the required level when compared to other major companies. i.93 times in the year 2000-01. The net profit ratio is very low especially in the year 1998-99.45 in the year 2001-02.BEML SUGGESTIONS & CONCLUSIONS e. The turnover to working capital ratio reveals that the company is able to make only 1. The activity ratio shows that the company is not utilizing the fixed assets at optimum level.17 in the year 1998-99 and Rs. it was Rs. h. The profitability ratio show that the company is unable to make sufficient profit. f. 0.

The time allowed by the collection of the information is very less.BEML SUGGESTIONS & CONCLUSIONS i. I could not gather full and genuine information about the Adarsha College of Mgt & Science 95 .

As the industry is very large-scale. From this study generalization can not be drawn. The study is completely based on the information given by the personnel and also the information collected from company’s documents. Lot of time is required to collect the right information from the right person. iv. SUGGESTIONS:- Adarsha College of Mgt & Science 96 . the officers are very busy with their working schedules. ii. iii. So it was very difficult to have direct interaction with the company officers for the collection of the information. v. The time allowed by the collage was also limited.BEML SUGGESTIONS & CONCLUSIONS topic because of limited time allowed to do the project.

cut in administrative expenditure and increase in sales. iv.BEML SUGGESTIONS & CONCLUSIONS i. The company shout utilize the available large marketing network and improve the customer relation through the constant customer support and after sales services. The long term solvency of the company and its liquidity position is good. iii. Adarsha College of Mgt & Science 97 . Over all. v. The working capital of the company is satisfactory and has to be maintained further. ii. effective utilization of labour. Reducing cost of raw materials. should increase the over all profitability. The company has to improve net profit ratio by increasing sales and concentrating on more profitable products. the financial position of the company is satisfactory. The current and quick ratios are almost up to the standard requirement for the past two years. The company should focus on cost control measures for ensuring competitive pricing of the equipment.

The inventory turnover ratio is very less when compared to standard for 5 to 6 times. This can be brought down to 75 to 90 days by better management of inventory. The company is holding the inventory for almost 170 days for the past three years. Adarsha College of Mgt & Science 98 .BEML SUGGESTIONS & CONCLUSIONS vi.

which can be achieved by. This shows the efficient liquidity position of the company. the amount of working capital level maintained. To conclude. the less risk of running out of cash but profitability will be less. Adarsha College of Mgt & Science 99 . if the profitability on the product is the sale concentration. What the customer can afford can afford can only be determined as a sale price. the level of working capital. The greater. cost reduction. the profitability will be greater but the more will be risk of running out of capital to meet day-to-day requirements.BEML SUGGESTIONS & CONCLUSIONS CONCLUSIONS:In a competitive environment we cannot demand a price what we want. The lower. the main objective is to have a balance liquidity position and track off between risk and profitability. The firm is in highly liquidity position because the optimum level of current ratio is 2:1. If the cost is taken as a sale price to capture the market. The financial position for running day-to-day business is sound.

00 986.00 459.68 520. OTHER CURRENT ASSETS 5.00 2445.00 788.00 0.33 80.00 1998-99 62.00 0. PROFIT OF TAX 2.61 606.00 0.00 6. LOAN & ADVANCES TOTAL CURRENT LIABILITIES CURRENT LIABILITIES NET WORKING CAPITAL 657. 0.00 210.00 3741. 0.CAPITAL 7.54 610.00 3741.53 461.00 2296.00 0.00 774.89 803.00 2145.00 18634. 274. 1574.46 149.BEML Particulars SOURCES OF FUNDS 1.00 21935.00 1. 104. INCREASE IN W.43 1065. CASH & BANK BALANCE 4.39 1397.00 139.00 4205. DECREASE IN BORROWINGS 3.00 0. INCREASE IN SHARE CAPITAL 4.00 621.00 1999-2000 2000-2001 2001-20 1460.00 4205.32 618. 567. 1843.00 0.12 127.00 26014. DIVIDENDS AND TAXES 5. 258.56 4. 441. SUNDRY DEBTORS 3.00 0.00 0. 882.38 638.17 9.66 188.00 539. 2652.00 23305. 26.00 0.00 19039.12 1997-98 1998-99 1999-2000 2000-2001 2001-20 638. 0. INCREASE IN BORROWINGS 6. INVESTMENTS 6.00 419.00 811.00 0.00 0.77 675.00 2451.05 2. 691. SHARE PREMIUM 5.00 0. INVENTORIES 2. OTHERS TOTAL SUGGESTIONS & CONCLUSIONS 1997-98 1065.00 21935.89 1526.00 0. DECREASE IN W.00 405.CAPITAL 4. STATEMENT OF CHANGES IN WORKING CAPITAL Particulars CURRENT ASSETS 1.00 0.00 287.76 520.00 22103.10 679. 2652. FIXED ASSETS 2.00 2346. 566.22 102.00 0.00 0.45 560.65 254.00 26014. 0.00 897.00 1596. DEPRECIATION 3.00 2267. -58.00 600.00 0.00 535.82 529.04 1478.41 1647. Adarsha College of Mgt & Science 100 . OTHERS TOTAL UTILISATION OF FUNDS 1.44 868.00 0.00 0.82 160.00 2634. 4.16 115.91 1086.00 0.39 4. 0. 1677.00 0.

09 Adarsha College of Mgt & Science 101 .93 1998-99 1212.69 2000-01 2001-02 1347.11 1626.66 5.16 13.15 91.34 10.22 23.36 1153.65 6.BEML SUGGESTIONS & CONCLUSIONS TABLE SHOWING THE WORKING RESULTS OF THE COMPANY FOR THE PERIOD OF FIVE YEARS SL.62 80.32 25.00 14.40 96.12 31.47 1999-00 1317.05 1284.28 0.25 -0.35 21.01 7.02 0. PARTICULARS NO.62 Nil 371.51 1424.00 4.81 1131.45 16.05 5.99 2.08 1251.40 10.60 9.35 Nil 1031.06 1.97 2481.22 16.65 4.10 0.70 1332.65 08.97 1242.72 2. 1 Turnover 2 3 4 5 6 7 8 9 10 Excise Duty Net Sales Other income Prior period Adjustment profit before tax Tax provisions Profit after tax Proposed Dividend Net Sales Profit 1997-98 1259.81 -0.60 8.81 28.09 74.71 106.

BEML SUGGESTIONS & CONCLUSIONS BIBLIOGRAPHY Bussiness Finance Financial Management Management of Working Capital Financial Management & Policy Managerial Accounting Annual Report Web Site Cost Accounts Manual Material Accounts Manual Reedy & Appanaiah Shashi. K. Gupta & Kappor Praveen Kumar Jain Prasanna Chandra B.S Raman Printed annual reports of the company for the year 1997 –98 to 2001-02 WWW. Bemlindia.com BEML BEML Adarsha College of Mgt & Science 102 .

00 0.00 4205.00 405.00 0.00 566.INCREASING W.DECREASED IN BORROWINGS 3.00 0.00 0.00 2652.00 419.00 210.00 2267.00 0.OTHERS 2634.00 219935.BEML SUGGESTIONS & CONCLUSIONS UTILIZATION OF FUNDS 1.00 0.00 26014.DIVIDENDS AND TAXES 5.00 811.00 621.00 26.00 441.00 TOTAL 3741.00 139.00 Adarsha College of Mgt & Science 103 .FIXED ASSETS 2.00 897.INVESTMENTS 6.00 1677.00 0.00 539.00 23305.00 -58.00 986.00 0.00 2145. 00 1596.00 287. CAPITAL 4.00 18634.00 0.

Sign up to vote on this title
UsefulNot useful