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EIC

ANAYLYSIS
CAPITAL GOODS INDUSTRY

COMPANIES STUDIED:

BHEL; BHARAT FORGE

KIRLOSKAR; CROMPTON GREAVES
ACKNOWLEDGEMENT

We express our gratitude towards our madam for guiding us in
completing this project. Without her constant support it would not
have been possible for us to carry this project.
INDEX

1. ECONOMIC ANALYSIS

2. INDIA’S CAPITAL GOODS INDUSTRY ANALYSIS

3. COMPANY ANALYSIS:

BHARAT HEAVY ELECTRICALS LIMITED

BHARAT FORGE

KIRLOSKAR OIL ENGINES LTD.

CROMTON GREEVES LTD.
ECONOMIC ANALYSIS
India economic analysis provides various inputs on economic condition of this south-east Asian country. It
can be done both at a microeconomic as well as a macroeconomic level. India economic analysis could
also be described as being an explanation of various economic phenomena going on in this country.

In April 2008, industrial sector in India had recorded a growth of 7 percent. However, this figure is lesser
than 11 percent development, which had been achieved in April 2007. Much of this critical condition could
be attributed to an increase in prices of oil. Measures that have been taken by Reserve Bank of India, like
upward revision of repo rate and CRR, have also contributed to decrease in industrial production.

Manufacturing and electric sector have suffered as well in recent times. Their growth rates have come
down too. For manufacturing sector it was 7.5 percent and for electricity sector, rate of development
stood at 1.4 percent in April 2008. This rate is significantly low when compared to statistics of April 2007,
when rates of development for manufacturing and electricity were 12.4 percent and 8.7 percent
respectively.

In case of manufacturing sector much of this slump could be attributed to increase in input costs like
expenses of oil, raw materials, rates of interest and prices of goods and services. Mining sector has been
comparatively better off as it has managed to grow at a rate of 8 percent in April 2008 compared to 2.6
percent that was achieved in April 2007.

In core infrastructural industries, there has been deceleration as well, but it is still better off compared to
non infrastructural industries in India. Growth in April 2008 has been around 3.6 percent, which is less
than 5.9 percent achieved in April 2007. Industries like crude oil production, electricity and petroleum
refinery have been performing below expectations but coal, finished steel and cement have performed
better than April 2007.

In financial year 2007-08, average inflation in India was around 4.66 percent. This rate was lower than
average inflation of financial year 2006-07. In 2007-08, fiscal high prices of food items were primary
cause behind high rates of inflation. That high rate of inflation had to be controlled by banning a number
of necessary commodities as well as various financial steps. High prices of oil were responsible for
proportionately high rate of inflation in 2008-09.
Some of the key points that have been suggested by the India Economy Survey 2009:

 Economy can grow around 7 percent in 2009/10. This off course is largely dependent on how the US
Economy recovers over next few months. If US economy bottoms out around December, as many
analysts are expecting, India can easily look at 7% upwards growth.

 The Economy will get back to its growth path of around 9% in medium term.

 The government has shown its eagerness for Fiscal consolidation. The Fiscal deficit target is
suggested to be set at 3 percent of GDP at the earliest.

 Inflation is suggested to be a non-issue moving forward.

 The Economic Survey suggested allowing the public to hold greater equity in public sector
banks and aligning of voting rights in banks with equity holdings.

 Calibrated monetary policy approach is suggested for early return to high growth path.

 The Economic Survey has suggested that quality Foreign Direct Investment should be allowed to
seek regulatory reforms in higher education.
INDUSTRY ANALYSIS
THE INDIAN CAPITAL GOODS INDUSTRY

Origins

The development of a strong and vibrant engineering and capital goods sector has been at the core of the
industrial strategy in India since the planning process was initiated in 1951. The emphasis that this sector
received was primarily influenced by the erstwhile Soviet Union model, which had made impressive
progress by rapid state-led industrialization through the development of the core engineering and capital
goods sector.

Owing to these historical factors, today India has a strong engineering and capital goods base. The Indian
capital goods sector is characterized by a large width of products (almost all major capital goods are
domestically manufactured) – a legacy of the import substitution policy. Even nations with advanced
capital goods sectors do not produce the entire range of capital goods, but instead focus on segments, or
sub segments. The range of machinery produced in India includes heavy electrical machinery, textile
machinery, machine tools, earthmoving and construction equipment including mining equipment, road
construction equipment, material handling equipment, oil & gas equipment, sugar machinery, food
processing and packaging machinery, railway equipment, metallurgical equipment, cement machinery,
rubber machinery, process plants & equipment, paper & pulp machinery, printing machinery, dairy
machinery, industrial refrigeration, industrial furnaces etc. However, the raw materials used are largely
domestic in origin and in many instances, the quality of domestic raw materials is not up to the
international standards in terms of dimensional tolerances and metallurgical properties, which in turn
affects the quality of the final product.

Current Status

The capital goods industry’s annual production stood at Rs.500 billion in 2003-04. Its contribution to the
exchequer in terms of customs, excise and sales tax are estimated to be in excess of Rs.150 billion. From
CMIE data it is noticed that though there was a 15% increase in the market size in 2003-04, the
production growth of 2003-04 over 2002-03 was only negligible at 2.7%. Consequently there was a 55%
jump in imports .The imports in the capital goods sector are gradually going down as seen in the graph
over the last few months. Most Indian capital goods are functionally at par with equipment made
elsewhere in the world, but in some cases they rank poorly as far as finish is concerned. The limited
presence of Indian capital goods firms in the value chain leads to diminished cost and differentiation
advantage. An emerging trend among capital goods companies around the world is the transformation of
these engineering companies to a more service based organization.
Technology

The technological tie-ups in the different sectors of the capital goods industry as evident from the table
below gives a picture of the technical and financial collaborations which have taken place from 1992 to
2004.

Capital Investments

Investment in the manufacturing sector and the capital goods sector has both showed a declining trend in
the period of recession. The investment in the capital goods sector has gradually picked up from 2001-02.
However, the rise in investment in the capital goods sector is more than the rise in investment of the
manufacturing sector.

The investment pattern in the Capital Goods sector under implementation from April
1995 to April 2005 has shown an overall rising trend. If the trends in the outstanding
investment in the capital goods and the manufacturing sector, over the period of 1995 to
2005, are studied it is found that both are showing an increasing trend.

Credit to the engineering sector has shown an increasing trend after 1996 but has gone down slightly
between 1997 to 2002 and has again started rising from 2003 onwards.
Exports

Exports of capital goods has seen a growth starting from 2000-01 however the percentage change in IIP
of capital goods fell drastically during this phase at –3.4% in 2001-02.
The growth in capital goods exports has gained momentum from 2001 to 2004 but has
shown a sharp decline in 2004-05 reflecting a growth in demand in the domestic market,
which led to a fall in exports.

Existing Concerns

The capital goods sector in India faces a number of difficulties namely: -

• Low Tariffs (Below WTO Bound Rate)
• Inverted duty structure and lack of level playing field
• Domestic policy constraints
• Lack of demand growth due to delayed / shelved projects
• Inadequate Government spending on infrastructure
• Removal of restrictions on the import of second hand machinery
• Foreign financiers and contractors favouring home country suppliers
• High working capital requirement
• Lack of thrust on export

Infrastructure Issues

The manufacturing sector and in particular the four sectors under study are
facing disadvantages when compared to their International competitors due to
the poor infrastructure available in India in terms of
• Unreliable power and high cost per unit.
• Port congestion and high turnaround time
• High cost of fuel and poor road connectivity of port/airports with hinterland
leading to higher transportation cost.

Research and Development

To encourage domestic companies to invest more into R&D the customs duties / excise duties of
laboratory testing equipment should be reduced to make it affordable.
• 150% weighted deduction on R&D expenditure should be allowed under the Income Tax Act
Section 35 to encourage companies to set up full fledged R&D departments with requisite
manpower and laboratory.
• Customs duty or excise duty for laboratory testing equipment should be reduced to 5 %, or
exempted respectively. (A separate notification giving details of laboratory and testing equipment
may be issued.

Information and Communication Technology (ICT)

To encourage higher investment into ICT the following may be considered.

• Higher depreciation on IT hardware and software to encourage more companies to use ICT.

Computer software is present attracting a 60% rate of depreciation under Rule 5, Clause III (5) of
Appendix I to I.T. Rules. However, since the product life of software is very short and software is very
expensive yet essential in today’s competitive world, it is therefore proposed that the depreciation rate
be increased.

National Campaign
• Government jointly with Industry should initiate a national campaign to create
• awareness of next generation practices as well as undertake various initiatives to
• promote the development of the manufacturing industry and in particular the
• capital goods sector

Potential & Growth Prospects

Since the capital goods industry and its major constituents are fairly diverse, not only in terms of product
range, but also in terms of their user sectors, to appreciate the industry’s potential and growth prospects
over the next few years, it is necessary to understand some of the key sectors in greater detail.

The five major sectors in the capital goods industry which have a significant IIP weightage i.e. a total of
37.5816 that is 56.78% of the total are electrical machinery, process plant equipment, mining &
construction machinery, machine tools and textile machinery.
BHARAT HEAVY ELECTRICALS LIMITED

ABOUT THE COMPANY

Company was set up at Bhopal in the name of M/s Heavy electrical (India) Ltd. in collaboration with AEI,
UK. Subsequently, three more plants were set up at Hyderabad, Hardwar and Trichy. The Bhopal Unit
was controlled by the company; the other three were under the control of Bharat Heavy Electricals Ltd.

BHEL is the largest engineering and manufacturing enterprise in India in the energy-related/infrastructure
sector, today. BHEL was established more than 40 years ago, ushering in the indigenous Heavy
Electrical Equipment industry in India - a dream that has been more than realized with a well-recognized
track record of performance. The company has been earning profits continuously since 1971-72 and
paying dividends since 1976-77.
BHEL manufactures over 180 products under 30 major product groups and caters to core sectors of the
Indian Economy viz., Power Generation & Transmission, Industry, Transportation, Telecommunication,
Renewable Energy, etc. The wide network of BHEL's 14 manufacturing divisions, four Power Sector
regional centers, over 100 project sites, eight service centers and 18 regional offices, enables the
Company to promptly serve its customers and provide them with suitable products, systems and services
-- efficiently and at competitive prices. The high level of quality & reliability of its products is due to the
emphasis on design, engineering and manufacturing to international standards by acquiring and adapting
some of the best technologies from leading companies in the world, together with technologies developed
in its own R&D centers.
BHEL has acquired certifications to Quality Management Systems (ISO 9001), Environmental
Management Systems (ISO 14001) and Occupational Health & Safety Management Systems (OHSAS
18001) and is also well on its journey towards Total Quality Management.

BHEL has
Installed equipment for over 90,000 MW of power generation -- for Utilities, Captive and Industrial
users.

Supplied over 2,25,000 MVA transformer capacity and other equipment operating in Transmission &
Distribution network up to 400 kV (AC & DC).

Supplied over 25,000 Motors with Drive Control System to Power projects, Petrochemicals, Refineries,
Steel, Aluminum, Fertilizer, Cement plants, etc.

Supplied Traction electrics and AC/DC locos to power over 12,000 km Railway network.

Supplied over one million Valves to Power Plants and other Industries.

BHEL's operations are organized around three business sectors, namely Power, Industry - including
Transmission, Transportation, Telecommunication & Renewable Energy - and Overseas Business. This
enables BHEL to have a strong customer orientation, to be sensitive to his needs and respond quickly to
the changes in the market.
BHEL's vision is to become a world-class engineering enterprise, committed to enhancing stakeholder
value. The company is striving to give shape to its aspirations and fulfill the expectations of the country to
become a global player.
The greatest strength of BHEL is its highly skilled and committed 42,600 employees. Every employee is
given an equal opportunity to develop himself and grow in his career.
VISION, MISSION and VALUES

• A world class engineering enterprise committed to enhancing stake holder value.
• To be an Indian multinational engineering enterprise providing total business solutions through quality
products, systems and services in the field of energy, industry, transportation, infrastructure and other
possible areas.
• Zeal to excel & zest for change.
• Integrity and fairness in all matters.
• Respect for dignity and potential of individuals.
• Strict adherence to commitments.
• Ensure speed of response.
• Foster learning, creativity and team work.
• Loyalty and pride in the company.
Industry Name Bharat Heavy Electricals Limited

House Name Public Sector

Year Of Incorporation 1964

Registered Address

Address BHEL House, Siri Fort

District New Delhi

State Delhi

Pin Code 110049

Tel. No. 011-26001010 (15 Lines),011-26001046

Fax No. 011-26493021,26001102

Email : csynks@bhel.co.in Internet : http://www.bhel.com

Auditors
B K Ramadhyani & Co.

Registrars

Name Karvy Computershare Private Ltd

Address Cyber Villa, Plot No.17-24, Vittalrao Nagar, Hyderabad - 500081, Andhra Pradesh

Tel. No. : 23420815 - 820 Fax No. : 23431551

FACT SHEET
MANAGEMENT

Name Designation
Reva Nayyar Non Official PartTime Director
M A Pathan Non Official PartTime Director
Anil Sachdev Director
B P Rao Chairman and Managing director
C S Verma Director
Atul Saraya Director
Name Designation
Rajiv Bansal Part Time Official Director
K Ravi Kumar Chairman and Managing director
Ashok Kumar Basu Non Official PartTime Director
Saurabh Chandra Part Time Official Director
S Ravi Director
Balance Sheet of Bharat Heavy Electricals ------------------- in Rs. Cr. -------------------
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 244.76 244.76 244.76 489.52 489.52
Equity Share Capital 244.76 244.76 244.76 489.52 489.52
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 5,782.13 7,056.62 8,543.50 10,284.69 12,449.29
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 6,026.89 7,301.38 8,788.26 10,774.21 12,938.81
Secured Loans 500.00 500.00 0.00 0.00 0.00
Unsecured Loans 36.98 58.24 89.33 95.18 149.37
Total Debt 536.98 558.24 89.33 95.18 149.37
Total Liabilities 6,563.87 7,859.62 8,877.59 10,869.39 13,088.18
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 3,628.50 3,821.62 4,134.61 4,443.03 5,224.43
Less: Accum. Depreciation 2,584.70 2,839.79 3,146.31 3,462.21 3,754.47
Net Block 1,043.80 981.83 988.30 980.82 1,469.96
Capital Work in Progress 98.12 191.27 306.58 658.47 1,212.70
Investments 8.95 8.29 8.29 8.29 52.34
Inventories 2,916.11 3,744.37 4,217.67 5,736.40 7,837.02
Sundry Debtors 5,972.14 7,168.06 9,695.82 11,974.87 15,975.50
Cash and Bank Balance 1,392.86 1,483.97 2,068.91 1,511.02 1,950.51
Total Current Assets 10,281.11 12,396.40 15,982.40 19,222.29 25,763.03
Loans and Advances 1,921.33 4,186.27 5,517.59 7,366.17 4,616.67
Fixed Deposits 1,785.01 2,650.01 3,740.00 6,875.00 8,364.16
Total CA, Loans & Advances 13,987.45 19,232.68 25,239.99 33,463.46 38,743.86
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 7,248.99 8,905.14 11,957.32 16,632.97 23,415.10
Provisions 1,325.45 3,649.32 5,708.25 7,608.68 4,975.58
Total CL & Provisions 8,574.44 12,554.46 17,665.57 24,241.65 28,390.68
Net Current Assets 5,413.01 6,678.22 7,574.42 9,221.81 10,353.18
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 6,563.88 7,859.61 8,877.59 10,869.39 13,088.18

Contingent Liabilities 609.68 769.95 976.05 1,673.19 2,546.25
Book Value (Rs) 246.24 298.31 359.06 220.10 264.32
Cash Flow ------------------- in Rs. Cr. -------------------

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 1581.64 2564.35 3736.07 4430.39 4848.85
Net Cash From Operating Activities 818.29 1623.83 2821.37 3477.90 3291.20
Net Cash (used in)/from
-35.25 -156.51 -212.66 -12.54 -512.82
Investing Activities
Net Cash (used in)/from Financing
-264.82 -511.21 -933.77 -888.25 -849.73
Activities
Net (decrease)/increase In Cash and
518.22 956.11 1674.94 -2577.11 1928.65
Cash Equivalents
Opening Cash & Cash Equivalents 2659.64 3177.86 4133.97 8386.02 8386.02
Closing Cash & Cash Equivalents 3177.86 4133.98 5808.91 5808.91 10314.67
Key Financial Ratios of Bharat Heavy
------------------- in Rs. Cr. -------------------
Electricals
Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Investment Valuation Ratios
Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 8.00 14.50 24.50 15.25 17.00
Operating Profit Per Share (Rs) 53.25 90.85 144.84 76.54 85.55
Net Operating Profit Per Share (Rs) 393.81 549.17 709.38 399.19 543.68
Free Reserves Per Share (Rs) 219.29 267.56 348.80 209.99 254.23
Bonus in Equity Capital -- -- -- 50.00 50.00
Profitability Ratios
Operating Profit Margin(%) 13.52 16.54 20.41 19.17 15.73
Profit Before Interest And Tax Margin(%) 10.90 14.36 18.47 16.73 13.96
Gross Profit Margin(%) 15.38 18.11 22.41 17.65 14.47
Cash Profit Margin(%) 11.78 13.97 14.88 15.59 12.12
Adjusted Cash Margin(%) 9.18 11.71 15.07 15.59 12.12
Net Profit Margin(%) 9.58 12.19 13.51 13.87 11.36
Adjusted Net Profit Margin(%) 6.98 9.92 13.70 13.87 11.36
Return On Capital Employed(%) 21.22 29.35 42.84 41.56 37.00
Return On Net Worth(%) 15.82 23.00 27.48 26.53 24.25

Liquidity And Solvency Ratios
Current Ratio 1.63 1.53 1.43 1.38 1.36
Quick Ratio 1.22 1.17 1.13 1.09 1.02
Debt Equity Ratio 0.09 0.08 0.01 0.01 0.01
Long Term Debt Equity Ratio 0.09 0.08 0.01 0.01 0.01
Debt Coverage Ratios
Interest Cover 17.11 39.28 87.78 127.55 157.71
Total Debt to Owners Fund 0.09 0.08 0.01 0.01 0.01
Financial Charges Coverage Ratio 19.80 43.46 93.42 135.94 168.59
Financial Charges Coverage Ratio Post Tax 15.40 33.77 62.37 90.12 114.07
Management Efficiency Ratios
Inventory Turnover Ratio 3.41 3.68 4.24 3.88 3.70
Debtors Turnover Ratio 1.82 2.05 2.06 1.80 1.90
Investments Turnover Ratio 3.79 4.15 4.64 3.88 3.70
Fixed Assets Turnover Ratio 8.31 11.87 14.62 4.48 5.20
Total Assets Turnover Ratio 1.47 1.72 1.97 1.81 2.05
Asset Turnover Ratio 2.67 3.54 4.27 4.48 5.20
ANALYSIS

DEBT EQUITY RATIO

A higher debt equity ratio indicates a riskier financial position than a lower debt equity ratio, with
1:1 considered as ideal.

Year Year Year Year Year
2005 2006 2007 2008 2009
Debt-Equity ratio 0.09 0.08 0.01 0.01 0.01

Debt –Equity ratio has been under control since 2005.

CURRENT RATIO

A higher ratio indicates poor investments policies of the management and poor inventory
control, while low ratio indicates lack of liquidity and shortage of working capital, with 2:1
considered as ideal because current assets should be two times to current liabilities.

Year Year Year Year Year
2005 2006 2007 2008 2009

Current ratio 1.63 1.53 1.43 1.38 1.36

Current ratio has been kept at lower levels since last five year.

QUICK RATIO

Quick ratio of 1:1 is considered as ideal. It indicates short term debt paying capacity of the
organization.

Year Year Year Year Year
2005 2006 2007 2008 2009

Quick ratio 1.22 1.17 1.13 1.09 1.02

INVENTORY TURNOVER RATIO

Higher ratio indicates that higher sales are being made by a unit of investment in stock. High
ratio shows that the company works on comparatively low margin of profit. Ratio shows better
performance if it increases, it shows that investment in stocks leads to higher sales and vice
versa.

Year Year Year Year Year
2005 2006 2007 2008 2009

Inventory turnover ratio 3.41 3.68 4.24 3.88 3.70
Inventory turnover ratio has remained at lower levels since last five years and has moved in
both directions in the past five years.

DEBTORS TURNOVER RATIO

The ratio shows how quickly debtors are converted into cash. A standard ratio is set by the
company. The resulting ratio if turns out to be lower than the standard ratio, indicates inefficient
working by the company.

Year Year Year Year Year
2005 2006 2007 2008 2009

Debtors turnover ratio 1.82 2.05 2.06 1.80 1.90

The ratio has remained at relatively lower levels since last five years.

ASSET TURNOVER RATIO

The amount of sales generated for every dollar's worth of assets. It is calculated by dividing sales in
dollars by assets in dollars.

Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue - the higher
the number the better. It also indicates pricing strategy: companies with low profit margins tend to have
high asset turnover, while those with high profit margins have low asset turnover.

Year Year Year Year Year
2005 2006 2007 2008 2009

Asset turnover ratio 2.67 3.54 4.27 4.48 5.20

Although at lower levels the ratio has increased uptill 2009.

OPERATING PROFIT MARGIN

A ratio used to measure a company's pricing strategy and operating efficiency. Operating margin is a
measurement of what proportion of a company's revenue is left over after paying for variable costs of
production such as wages, raw materials, etc. A healthy operating margin is required for a company to be
able to pay for its fixed costs, such as interest on debt.
Year Year Year Year Year
2005 2006 2007 2008 2009

Operating profit margin(%) 13.52 16.54 20.41 19.17 15.73

Over the past five years operating profit margin peaked in 2007 but since then has
declined, reflecting not a healthy margin as compared to 2007.

NET PROFIT MARGIN

The ratio of net profits to revenues for a company or business segment - typically expressed as a
percentage – that shows how much of each dollar earned by the company is translated into profits.

Net Profit Margin = Net Profit / Revenue

Year Year Year Year Year
2005 2006 2007 2008 2009

Net profit margin(%) 9.58 12.19 13.51 13.87
11.36

Net profit margin have declined in 2009, when they saw a constant from 2005 to
2008.

EARNINGS PER SHARE (EPS)

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per
share serve as an indicator of a company's profitability.

Year Year Year Year Year
2005 2006 2007 2008 2009

Earnings per share 38.95 68.60 98.66 58.41 64.11
The EPS indicates a good performance by the company.
BHARAT FORGE

ABOUT THE COMPANY

The Company was incorporated on 19th June 1961 at Mumbai. The main object of the Company is to
manufacture forgings and finished crankshafts.

Business:

Bharat Forge Limited (BFL), the flagship company of the USD 2.4 billion Kalyani Group, manufactures
various forged and machined components for the automotive and non-automotive sector.

Since commencement of operations in 1966, BFL has achieved several milestones and is today among
the largest and technologically most advanced manufacturer of Forged & Machined components. As one
of India’s emerging multinationals, the company has manufacturing operations across 12 locations and 6
countries - 4 in India, 3 in Germany, one each in Sweden, Scotland, and USA & 2 in China.

BFL’s customers include the top five Passenger Car & top five Commercial Vehicle Manufacturers in the
world and the total customer list includes almost all the major names in the automotive business.
Every second heavy truck manufactured in USA runs on a "Made by Bharat Forge, India" front axle
beam.
BFL manufactures wide range of highly engineered critical and safety components for Engine and
Chassis applications for the automotive industry.
BFL today is among the few global automotive component manufacturers with capability to offer front
line design & engineering, dual shore manufacturing capability and full service supply capability.
Backed by a full service supply capability and dual-shore manufacturing model, Bharat Forge provides
end-to-end solutions from product conceptualization to designing and finally manufacturing, testing and
validation.
Products:
Bharat Forge is the country’s largest manufacturer and exporter of automotive components and
leading chassis component manufacturer in the world. With significant global market share, it is
ranked among the leading forging companies in the world.
With manufacturing facilities spread over 12 locations - 4 in India, 3 in Germany, and 1 each in
Sweden, Scotland, North America and 2 in China, the company manufactures a wide range of safety
and critical components for passenger cars, commercial vehicles and diesel engines.
The company also manufactures specialized components for the aerospace, power, energy, oil & gas,
rail & marine, mining & construction equipment, and other industries. It is capable of producing
complex large volume parts in both steel and aluminium.
FACT SHEET

Industry Name Forgings

House Name Kalyani Group

Year Of Incorporation 1961

Regd. Office

Address Mundhwa,, Pune Cantonment

District Pune

State Maharashtra

Pin Code 411036

Tel. No. 020-26702777,020-26702476

Fax No. 020-26822163

Email : info@bharatforge.com Internet : http://www.bharatforge.com

Auditors
Dalal & Shah

Registrars

Name Bharat Forge Ltd.

Address Mundhwa, Pune Cantonment, Pune - 411036, Maharashtra
MANAGEMENT

Name Designation
B N Kalyani Chairman and Managing director
S D Kulkarni Director
Uwe Loos Director
Lalita D Gupte Director
Alan Spencer Director
Amit B Kalyani Executive Director
S E Tandale Executive Director
Sunil K Chaturvedi Executive Director
Naresh Narad Additional Director
Name Designation
S M Thakore Director
Pratap G Pawar Director
P C Bhalerao Director
P H Ravikumar Director
G K Agarwal Deputy Managing Director
B P Kalyani Executive Director
P K Maheshwari Executive Director
V K Jairath Additional Director
BALANCE SHEET – BHARAT FORGE

Mar
Mar '07 Mar '08 Mar '09
Mar '05 '06

12
12 mths 12 mths 12 mths 12 mths
mths

Sources Of Funds
Total Share Capital 59.56 54.46 54.54 44.54 44.54
Equity Share Capital 39.56 44.46 44.54 44.54 44.54
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 20.00 10.00 10.00 0.00 0.00
Reserves 383.00 1,109.67 1,272.26 1,428.74 1,442.39
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 442.56 1,164.13 1,326.80 1,473.28 1,486.93
Secured Loans 383.21 381.60 373.57 461.58 870.66
Unsecured Loans 34.67 610.86 1,028.04 825.91 937.21
Total Debt 417.88 992.46 1,401.61 1,287.49 1,807.87
Total Liabilities 860.44 2,156.59 2,728.41 2,760.77 3,294.80
Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

12
12 mths 12 mths 12 mths 12 mths
mths

Application Of Funds
Gross Block 948.78 1,265.12 1,735.06 2,029.63 2,684.23
Less: Accum. Depreciation 421.33 489.87 583.13 711.77 853.07
Net Block 527.45 775.25 1,151.93 1,317.86 1,831.16
Capital Work in Progress 278.47 372.30 280.71 436.43 232.28
Investments 38.35 444.02 450.71 593.67 367.20
Inventories 186.08 254.27 302.79 338.12 364.24
Sundry Debtors 143.06 188.55 253.95 356.29 260.11
Cash and Bank Balance 26.62 22.05 13.73 15.79 33.94
Total Current Assets 355.76 464.87 570.47 710.20 658.29
Loans and Advances 429.16 591.78 557.08 777.60 748.93
Fixed Deposits 1.50 483.36 722.54 149.20 332.76
Total CA, Loans & Advances 786.42 1,540.01 1,850.09 1,637.00 1,739.98
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 517.21 614.51 695.46 772.86 574.71
Provisions 257.36 361.73 309.80 451.33 301.11
Total CL & Provisions 774.57 976.24 1,005.26 1,224.19 875.82
Net Current Assets 11.85 563.77 844.83 412.81 864.16
Miscellaneous Expenses 4.30 1.25 0.23 0.00 0.00
Total Assets 860.42 2,156.59 2,728.41 2,760.77 3,294.80

Contingent Liabilities 524.31 444.62 699.45 721.47 671.52
Book Value (Rs) 106.84 51.93 59.14 66.17 66.78

Cash Flow ------------------- in Rs. Cr. -------------------

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 248.08 314.89 359.81 396.98 157.67
Net Cash From Operating Activities 137.93 171.93 295.77 345.63 218.06
Net Cash (used in)/from
-268.70 -634.19 -238.62 -618.75 -68.93
Investing Activities
Net Cash (used in)/from Financing
150.29 939.55 173.71 -298.17 52.58
Activities
Net (decrease)/increase In Cash and
19.52 477.29 230.86 -571.29 201.72
Cash Equivalents
Opening Cash & Cash Equivalents 8.60 28.13 505.41 736.28 164.99
Closing Cash & Cash Equivalents 28.13 505.41 736.28 164.99 366.70
Key Financial Ratios ------------------- in Rs. Cr. -------------------

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Investment Valuation Ratios
Face Value 10.00 2.00 2.00 2.00 2.00
Dividend Per Share 12.50 3.00 3.50 3.50 1.00
Operating Profit Per Share (Rs) 87.58 17.72 21.17 23.50 20.03
Net Operating Profit Per Share (Rs) 308.14 70.98 83.75 98.65 92.42
Free Reserves Per Share (Rs) 90.47 48.53 55.82 62.46 64.04
Bonus in Equity Capital 21.94 19.52 19.49 19.49 19.49
Profitability Ratios
Operating Profit Margin(%) 28.42 24.96 25.28 23.82 21.66
Profit Before Interest And Tax
24.00 19.72 19.15 17.02 14.13
Margin(%)
Gross Profit Margin(%) 26.55 24.79 25.32 17.49 14.40
Cash Profit Margin(%) 17.49 17.21 17.55 15.76 15.76
Adjusted Cash Margin(%) 18.87 17.22 17.84 15.76 15.76
Net Profit Margin(%) 13.20 12.72 12.41 12.11 4.92
Adjusted Net Profit Margin(%) 14.20 12.52 12.61 12.11 4.92
Return On Capital Employed(%) 34.23 16.98 16.33 16.11 10.17
Return On Net Worth(%) 36.52 17.78 18.16 18.52 6.94
Liquidity And Solvency Ratios
Current Ratio 0.76 1.14 1.18 0.89 1.34
Quick Ratio 0.77 1.31 1.53 1.04 1.55
Debt Equity Ratio 1.04 0.87 1.07 0.87 1.22
Long Term Debt Equity Ratio 0.70 0.65 0.77 0.63 1.07
Debt Coverage Ratios
Interest Cover 11.02 9.26 7.98 5.97 4.95
Total Debt to Owners Fund 1.04 0.87 1.07 0.87 1.22
Financial Charges Coverage Ratio 10.28 8.08 6.67 5.57 4.84
Financial Charges Coverage Ratio
Post Tax 7.39 6.17 5.17 4.93 3.53

Management Efficiency Ratios
Inventory Turnover Ratio 6.58 6.40 6.41 14.28 13.49
Debtors Turnover Ratio 10.02 9.52 8.43 7.20 6.68
Investments Turnover Ratio 12.45 11.40 11.64 14.28 13.49
Fixed Assets Turnover Ratio 1.80 1.62 1.45 1.08 0.77
Total Assets Turnover Ratio 1.42 0.73 0.68 0.80 0.62
Asset Turnover Ratio 1.28 1.25 1.07 1.08 0.77

Average Raw Material Holding 26.01 31.75 32.00 19.08 13.98
Average Finished Goods Held 0.35 0.43 1.77 1.18 1.59
Number of Days In Working Capital 3.50 128.65 163.11 67.66 151.18

Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 38.78 37.08 38.01 33.45 25.22
Dividend Payout Ratio Cash Profit 28.54 27.03 26.71 22.15 10.27
Earning Retention Ratio 63.98 62.32 62.58 57.73 85.58
Cash Earning Retention Ratio 72.99 72.65 73.59 74.30 92.13
AdjustedCash Flow Times 1.81 3.54 4.05 3.62 5.47

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05
Earnings Per Share 40.31 9.26 10.78 12.26 4.64
Book Value 106.84 51.93 59.14 66.17 66.78

ANALYSIS

DEBT EQUITY RATIO

A higher debt equity ratio indicates a riskier financial position than a lower debt equity ratio, with
1:1 considered as ideal.

Year Year Year Year Year
2005 2006 2007 2008 2009

Debt-Equity ratio 1.04 0.87 1.07 0.87 1.22
Debt –Equity ratio has fluctuated over past five years but has been under control since 2005.

CURRENT RATIO

A higher ratio indicates poor investments policies of the management and poor inventory
control, while low ratio indicates lack of liquidity and shortage of working capital, with 2:1
considered as ideal because current assets should be two times to current liabilities.

Year Year Year Year Year
2005 2006 2007 2008 2009

Current ratio 0.76 1.14 1.18 0.89 1.34

Current ratio has been kept at lower levels since last five year.

QUICK RATIO

Quick ratio of 1:1 is considered as ideal. It indicates short term debt paying capacity of the
organization.

Year Year Year Year Year
2005 2006 2007 2008 2009

Quick ratio 0.77 1.31 1.53 1.04 1.55

INVENTORY TURNOVER RATIO

Higher ratio indicates that higher sales are being made by a unit of investment in stock. High
ratio shows that the company works on comparatively low margin of profit. Ratio shows better
performance if it increases, it shows that investment in stocks leads to higher sales and vice
versa.
Year Year Year Year Year
2005 2006 2007 2008 2009

Inventory turnover ratio 6.58 6.40 6.41 14.28 13.49

Inventory turnover ratio has increased in last five years. It was highest in 2008.

DEBTORS TURNOVER RATIO

The ratio shows how quickly debtors are converted into cash. A standard ratio is set by the
company. The resulting ratio if turns out to be lower than the standard ratio, indicates inefficient
working by the company.

= Credit sales / Average amount receivable

Year Year Year Year Year
2005 2006 2007 2008 2009

Debtors turnover ratio 10.02 9.52 8.43 7.20 6.68

The ratio has declined over last five years and is not a healthy sign.

ASSET TURNOVER RATIO

The amount of sales generated for every dollar's worth of assets. It is calculated by dividing sales in
dollars by assets in dollars.
Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue - the higher
the number the better. It also indicates pricing strategy: companies with low profit margins tend to have
high asset turnover, while those with high profit margins have low asset turnover.

Year Year Year Year Year
2005 2006 2007 2008 2009

Asset turnover ratio 1.28 1.25 1.07 1.08 0.77

The ratio has declined continously in last five years.

OPERATING PROFIT MARGIN

A ratio used to measure a company's pricing strategy and operating efficiency. Operating margin is a
measurement of what proportion of a company's revenue is left over after paying for variable costs of
production such as wages, raw materials, etc. A healthy operating margin is required for a company to be
able to pay for its fixed costs, such as interest on debt.

Year Year Year Year Year
2005 2006 2007 2008 2009

Operating profit margin(%) 28.42 24.96 25.28 23.82 21.66

Over the past five years operating profit margin peaked in 2005 but since has
fluctuated in both directions but by 2009 has declined considerably as compared to
2005 and is not a healthy indication.

NET PROFIT MARGIN

The ratio of net profits to revenues for a company or business segment - typically expressed as a
percentage – that shows how much of each dollar earned by the company is translated into profits.
Net Profit Margin = Net Profit / Revenue

Year Year Year Year Year
2005 2006 2007 2008 2009

Net profit margin(%) 13.20 12.72 12.41 12.11
4.92

Net profit margin have declined sharply by 2009, and depicts companies
unhealthiness.

EARNINGS PER SHARE (EPS)

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per
share serve as an indicator of a company's profitability.

Year Year Year Year Year
2005 2006 2007 2008 2009

Earnings per share 40.31 9.26 10.78 12.26 4.64

The sharp decline in EPS over the years show poor permformance by the company.
Crompton Greaves

Introduction

Crompton Greaves (CG) is part of the US$ 3 bn Avantha Group, a conglomerate
with an impressive global footprint.

Since its inception, CG has been synonymous with electricity. In 1875, a Crompton
'dynamo' powered the world's very first electricity-lit house in Colchester, Essex,
U.K. CG's India operations were established in 1937, and since then the company
has retained its leadership position in the management and application of electrical
energy.

Today, Crompton Greaves is India's largest private sector enterprise. It has
diversified extensively and is engaged in designing, manufacturing and marketing
technologically advanced electrical products and services related to power
generation, transmission and distribution, besides executing turnkey projects. The
company is customer-centric in its focus and is the single largest source for a wide
variety of electrical equipments and products.

With several international acquisitions, Crompton Greaves is fast emerging as a
first choice global supplier for high quality electrical equipment.

History

The history of Crompton Greaves goes back to 1878 when Col. R.E.B. Crompton founded
R.E.B.Crompton & Company. The company merged with F.A Parkinson in the year 1927 to form
Crompton Parkinson Ltd., (CPL). Greaves Cotton and Co (GCC) was appointed as their concessionaire in
India. In 1937, CPL established, it's wholly owned Indian subsidiary viz. Crompton Parkinson Works Ltd.,
in Bombay, along with a sales organization, Greaves Cotton & Crompton Parkinson Ltd., in collaboration
with GCC. In the year 1947, with the dawn of Indian independence, the company was taken over by Lala
Karamchand Thapar, an eminent Indian industrialist. Crompton Greaves is headquartered in a self-owned
landmark building at Worli, Mumbai.

Products & Services Offered

The company is organized into three business groups viz. Power Systems, Industrial Systems, Consumer
Products. Nearly, two-thirds of it's turnover accrues from products lines in which it enjoys a leadership
position. Presently, the company is offering wide range of products such as power & industrial
transformers, HT circuit breakers, LT & HT motors, DC motors, traction motors, alternators/ generators,
railway signaling equipments, lighting products, fans, pumps and public switching, transmission and
access products. In addition to offering broad range of products, the company undertakes turnkey
projects from concept to commissioning. Apart from this, CG exports it's products to more than 60
countries worldwide, which includes the emerging South-East Asian and Latin American markets.

Thus, the company addresses all the segments of the power industry from complex industrial solutions to
basic household requirements. The fans and lighting businesses acquired "Superbrand" status in January
2004. It is a unique recognition amongst the country's 134 selected brands by "Superbrands", UK.

Acquisitions - Crompton Greaves Ltd., now an Indian MNC

Pauwels Acquisition
Crompton Greaves has completed the acquisition of the Belgium-based Pauwels on 13th May 2005. The
group has manufacturing facilities in Belgium, Ireland, Canada, USA and Indonesia and well spread
distribution network across the globe. The acquisition catapults the company amongst top ten transformer
manufacturers in the world. It has truly transformed into an Indian MNC making a long-cherished dream
finally come true.

Apart from strengthening it's foothold in the Indian market, Crompton Greaves acquisition of the Pauwels
Group and it's transformer manufacturing facilities in five countries is expected to provide a significant
impetus to the company's international presence.

The additional turnover of approximately Rs.1,380 crore of Pauwels Group for it's last financial year is
expected to increase Crompton Greaves' International business to around 50% of it's turnover, making
the company a force to reckon with, in the international market.
Ganz Acquisition
Crompton Greaves have also successfully acquired Hungarian based Ganz (GTV), engaged in the
manufacture of EHV Transformers, Switchgear, Gas Insulated Switchgear (GIS), Rotating Machines and
Contracting businesses and Transverticum Kft (TV), engaged in the supporting areas of design, erection,
commissioning and commercial activities on 17th October, 2006;TV being a subsidiary of GTV.

Microsol Acquisition
The acquisition of Microsol Holdings Limited (MHL) and its associate companies in May 2007 is yet
another significant stride in CG's journey towards positioning itself as a Global T&D Solutions Provider.

MHL, based in Ireland with facilities in UK and USA, is engaged in the business of providing sub-station
and distribution automation for the utility industry including MV and HV sub-stations, new sub-stations and
retro-fitting solutions for existing sub-stations. The acquisition reinforces CG's ability to design, build and
service world-class sub-stations, with state-of-the-art automation & high-end engineering.
Sonomatra Acquisition
Crompton Greaves concluded an arrangement for the acquisition of Societe Nouvelle de Maintenance de
Transformateurs (Sonomatra) of France in June 2008. Sonomatra provides on-site maintenance and
repair of power transformers and on-load tap changers, oil analysis, oil treatment and retro filling. The
approximate enterprise value of this acquisition is €1.30 mn. This acquisition will enhance Crompton
Greaves' capabilities in the services segment of its transmission and distribution business and is the
company's fourth international acquisition.

Manufacturing, Marketing & Servicing Network.

CG's business operations consist of 22 manufacturing divisions spread across in Gujarat, Maharashtra,
Goa, Madhya Pradesh and Karnataka, supported by well knitted marketing and service network through
14 branches in various states under overall management of four regional sales offices located in Delhi,
Kolkata, Mumbai and Chennai. The company has a large customer base, which includes State Electricity
Boards, Government bodies and large companies in private and public sectors.

Future Outlook.
The quality of households is enhanced when their money is invested into products such as fans and
lighting for basic comforts. Their lives are literally touched by delight. Similarly, Crompton helps electricity
boards and other utilities to reach electricity to the last home and factory. Therefore, every individual in
India who uses electricity can be considered as Crompton customer. Hence, the company continues to
further and consolidate the initiatives that Colonel Crompton set into motion by focusing on meeting
increasing customer demands for products that are eco-friendly, energy efficient and with intelligent
monitoring and control systems.

All economic indicators point towards the manufacturing sector being the future driver of India's economic
growth. India is today preferred destination for sourcing various engineering goods not only due to low
cost but also due to high quality of products. Although, the climate for the manufacturing sector is bright,
the concern is the threat of imminent competition from global players who are already in the process of
setting up manufacturing facilities in India. The market is expected to remain competition with an added
element of competition from imported products.

However, several measures that the company has already taken and it's plans for the future, together
with business impact of the Pauwels acquisition, will equip the company to respond in adequate measure
to this competitive pressure.

Top of Form Bottom of Form
Crompton Greaves

Balance Sheet ------------------- in Rs. Cr. -------------------
Mar'05 Mar '06 Mar '07 Mar '08 Mar '09

12mth
12 mths 12 mths 12 mths 12 mths
s

Sources Of Funds

Total Share Capital 5.24 52.37 73.32 73.32 73.32

Equity Share Capital 5.24 52.37 73.32 73.32 73.32

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 34.07 468.77 586.01 842.67 1,153.99

Revaluation Reserves 1.57 15.24 14.97 14.76 14.58

Networth 40.88 536.38 674.30 930.75 1,241.89

Secured Loans 24.88 217.12 241.35 62.37 34.52

Unsecured Loans 6.57 32.65 28.69 25.19 19.15

Total Debt 31.45 249.77 270.04 87.56 53.67

Total Liabilities 72.33 786.15 944.34 1,018.31 1,295.56
Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

12mth
12 mths 12 mths 12 mths 12 mths
s

Application Of Funds

Gross Block 80.86 847.41 915.31 1,055.51 1,111.53

Less: Accum. Depreciation 46.65 497.69 525.31 562.80 600.82

Net Block 34.21 349.72 390.00 492.71 510.71

Capital Work in Progress 0.95 14.08 43.38 22.59 12.95

Investments 6.82 102.13 135.11 194.33 265.52

Inventories 17.71 191.81 247.01 262.95 281.32

Sundry Debtors 54.11 659.64 803.89 956.22 1,012.26

Cash and Bank Balance 7.34 68.94 137.57 109.67 181.49

Total Current Assets 79.16 920.39 1,188.47 1,328.84 1,475.07

Loans and Advances 9.92 185.93 244.10 294.15 334.19

Fixed Deposits 0.00 56.19 36.00 47.98 291.02
Total CA, Loans & Advances 89.08 1,162.51 1,468.57 1,670.97 2,100.28

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 57.16 782.30 934.69 1,108.20 1,265.88

Provisions 1.57 59.99 158.04 254.10 328.02

Total CL & Provisions 58.73 842.29 1,092.73 1,362.30 1,593.90

Net Current Assets 30.35 320.22 375.84 308.67 506.38

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 72.33 786.15 944.33 1,018.30 1,295.56

Contingent Liabilities 10.31 357.03 675.38 801.03 788.21

Book Value (Rs) 7.51 99.52 17.99 24.99 33.48

Top of Form Bottom of Form
Crompton Greaves

Cash Flow ------------------- in Rs. Cr. -------------------
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 125.23 194.80 307.00 485.65 614.27

Net Cash From Operating Activities 133.07 250.87 239.32 443.09 572.44

Net Cash (used in)/from
-29.80 -70.53 -134.42 -179.34 -120.17
Investing Activities

Net Cash (used in)/from Financing
-35.19 -119.63 -56.46 -279.67 -137.41
Activities

Net (decrease)/increase In Cash and
68.08 60.71 48.45 -15.93 314.86
Cash Equivalents

Opening Cash & Cash Equivalents -105.52 64.42 125.13 173.58 157.65

Closing Cash & Cash Equivalents -37.44 125.13 173.58 157.65 472.51
Top of Form Bottom of Form
Crompton Greaves

Key Financial Ratios ------------------- in Rs. Cr. -------------------

Mar'0
Mar '06 Mar '07 Mar '08 Mar '09
5

Investment Valuation Ratios
Face Value 10.00 10.00 2.00 2.00 2.00
Dividend Per Share 7.00 7.00 1.40 1.60 2.00
Operating Profit Per Share (Rs) 33.63 48.01 9.35 13.20 20.60
Net Operating Profit Per Share (Rs) 394.67 491.96 92.78 107.22 127.64
Free Reserves Per Share (Rs) 61.36 85.81 15.46 22.46 30.95
Bonus in Equity Capital 30.93 30.93 50.66 50.66 50.66

Profitability Ratios
Operating Profit Margin(%) 8.52 9.75 10.07 12.30 16.14
Profit Before Interest And Tax
6.43 7.96 8.86 11.18 15.02
Margin(%)
Gross Profit Margin(%) 8.14 9.53 9.67 11.27 15.17
Cash Profit Margin(%) 7.51 7.96 6.77 7.90 11.76
Adjusted Cash Margin(%) 7.66 8.31 6.32 7.90 11.76
Net Profit Margin(%) 5.50 6.26 5.62 7.92 8.40
Adjusted Net Profit Margin(%) 5.06 6.61 5.16 7.92 8.40
Return On Capital Employed(%) 19.82 30.15 34.79 47.43 59.04
Return On Net Worth(%) 29.20 31.29 29.18 34.27 32.35

Liquidity And Solvency Ratios
Current Ratio 0.97 1.21 1.09 1.18 1.32
Quick Ratio 1.22 1.12 1.11 1.02 1.13
Debt Equity Ratio 0.80 0.48 0.41 0.10 0.04
Long Term Debt Equity Ratio 0.52 0.40 0.25 0.08 0.04
Debt Coverage Ratios
Interest Cover 5.70 8.16 10.14 15.11 26.49
Total Debt to Owners Fund 0.80 0.48 0.41 0.10 0.04
Financial Charges Coverage Ratio 7.90 9.71 11.37 16.40 28.07
Financial Charges Coverage Ratio
7.86 8.28 8.26 12.25 16.49
Post Tax

Management Efficiency Ratios
Inventory Turnover Ratio 11.77 13.56 13.85 16.47 17.88
Debtors Turnover Ratio 3.87 4.29 4.65 4.47 4.75
Investments Turnover Ratio 12.89 14.73 15.13 16.47 17.88
Fixed Assets Turnover Ratio 6.01 7.55 8.91 3.74 4.25
Total Assets Turnover Ratio 2.92 3.35 3.67 3.93 3.68
Asset Turnover Ratio 2.56 3.04 3.72 3.74 4.25

Average Raw Material Holding 19.47 13.86 12.89 16.78 15.64
Average Finished Goods Held 7.95 7.05 6.04 5.03 4.82
Number of Days In Working Capital 52.88 44.75 39.78 28.27 38.96

Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 36.15 25.63 27.93 21.85 21.59
Dividend Payout Ratio Cash Profit 24.56 20.17 23.19 19.35 19.39
Earning Retention Ratio 60.72 75.73 69.62 74.85 83.21
Cash Earning Retention Ratio 74.04 80.69 75.15 78.11 84.57
AdjustedCash Flow Times 1.97 1.15 1.25 0.28 0.10

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Earnings Per Share 2.19 31.14 5.25 8.56 10.83
Book Value 7.51 99.52 17.99 24.99 33.48
CROMPTON GREAVES ANALYSIS

DEBT EQUITY RATIO

A higher debt equity ratio indicates a riskier financial position than a lower debt equity ratio, with
1:1 considered as ideal.

Year Year Year Year Year
2005 2006 2007 2008 2009

Debt-Equity ratio 0.80 0.48 0.41 0.10 0.04

Debt –Equity ratio has been under control since 2005,but has declined tremendously in 2009.

CURRENT RATIO

A higher ratio indicates poor investments policies of the management and poor inventory
control, while low ratio indicates lack of liquidity and shortage of working capital, with 2:1
considered as ideal because current assets should be two times to current liabilities.

Year Year Year Year Year
2005 2006 2007 2008 2009

Current ratio 0.97 1.21 1.09 1.18 1.32

Current ratio has increased since last five years.

QUICK RATIO

Quick ratio of 1:1 is considered as ideal. It indicates short term debt paying capacity of the
organization.

Year Year Year Year Year
2005 2006 2007 2008 2009

Quick ratio 1.22 1.12 1.11 1.02 1.13

The ratio has shown ordinary levels since last 5 yrs.
INVENTORY TURNOVER RATIO

Higher ratio indicates that higher sales are being made by a unit of investment in stock. High
ratio shows that the company works on comparatively low margin of profit. Ratio shows better
performance if it increases, it shows that investment in stocks leads to higher sales and vice
versa.

Year Year Year Year Year
2005 2006 2007 2008 2009

Inventory turnover ratio 11.77 13.56 13.85 16.47 17.88

Inventory turnover ratio has remained at lower levels since last five years and has moved in
both directions in the past five years.

DEBTORS TURNOVER RATIO

The ratio shows how quickly debtors are converted into cash. A standard ratio is set by the
company. The resulting ratio if turns out to be lower than the standard ratio, indicates inefficient
working by the company.

Year Year Year Year Year
2005 2006 2007 2008 2009

Debtors turnover ratio 3.87 4.29 4.65 4.47 4.75

The ratio has remained at relatively lower levels since last five years.

ASSET TURNOVER RATIO

The amount of sales generated for every dollar's worth of assets. It is calculated by dividing sales in
dollars by assets in dollars.

Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue - the higher
the number the better. It also indicates pricing strategy: companies with low profit margins tend to have
high asset turnover, while those with high profit margins have low asset turnover.

Year Year Year Year Year
2005 2006 2007 2008 2009
Asset turnover ratio 2.56 3.04 3.72 3.74 4.25

Although at lower levels the ratio has increased uptill 2009.

OPERATING PROFIT MARGIN

A ratio used to measure a company's pricing strategy and operating efficiency. Operating margin is a
measurement of what proportion of a company's revenue is left over after paying for variable costs of
production such as wages, raw materials, etc. A healthy operating margin is required for a company to be
able to pay for its fixed costs, such as interest on debt.

Year Year Year Year Year
2005 2006 2007 2008 2009

Operating profit margin(%) 8.52 9.75 10.07 12.30 16.14

Over the past five years operating profit margin peaked in 2009, reflecting a
healthy margin for company.

NET PROFIT MARGIN

The ratio of net profits to revenues for a company or business segment - typically expressed as a
percentage – that shows how much of each dollar earned by the company is translated into profits.

Net Profit Margin = Net Profit / Revenue

Year Year Year Year Year
2005 2006 2007 2008 2009

Net profit margin(%) 5.50 6.26 5.62 7.92
8.40

Net profit margin have increased in 2009.

EARNINGS PER SHARE (EPS)

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per
share serve as an indicator of a company's profitability.
Year Year Year Year Year
2005 2006 2007 2008 2009

Earnings per share 2.19 31.14 5.25 8.56 10.83

The EPS indicates a good performance by the company.

Kirloskar Oil Engines Ltd.
Manufacturer of the wide range of Diesel Engines, Diesel Generating Sets
and Engine Bearings and Engine Valves.

Year of incorporation : 1946 Sales Income, year ending March 31,
2007 : Rs. 1,883 Cr. / USD 470 Million
No. of employees : 2,858

Business Areas
We are the acknowledged leader in Engines, Engine Bearings, Engine
Valves, and Diesel Generating Sets.

Our engines are the preferred choice when it comes to powering
Agricultural Machinery, Construction & Material Handling Machinery,
Marine applications and equipment used by Armed Forces (Military).

Our Diesel Generating Sets in the range 2 Kva to 6 MW are preferred by
the industry at large, households and the service sector comprising of
banks, telecommunication establishments, commercial use buildings,
hotels and restaurants. We also offer generating sets over 1 MW that run
on Heavy Fuel Oils. Similarly, our Engine Bearings and Engine Valves are
the chosen ones for OEM use in automobiles and other engines.

Product Range
Our product range includes Diesel Engines, Irrigation Pump sets, Diesel Generating Sets, Engine
Bearings and Engine Valves.

Vision 2012
We will become a major Global Player in off–highway engines and power generation businesses by
offering winning combinations of Quality, Cost and Delivery through innovation and unmatched
service.

We will be amongst the Top Five engine companies of the world.

While pursuing the above, we will continue to enhance the value of engine bearing and valves
business.

Career opportunity
KOEL is all set to take on challenges of tomorrow. Human capital is the only Sustainable Competitive
Advantage we have to do so. We recognize this, and hence the potential performers will get what
they truly deserve and not what the Market determines!

Learning Unlimited… Learning does not stop until you wish so! At KOEL, in our continuous strive to
Enriching Lives; KOELians are put to test their mettle. It helps us to Learn, Unlearn, & Relearn the
facets of business dynamics as well as achieve Personal Mastery.

Work Life Balance
The Best Place to be: At KOEL we strive not only to make it The Best Place to Work For, but The
Best Place To Be where Work is not Job, but a means to achieve Satisfaction, a place where you
come with a smile, and leave with a smile.

Social Responsibility
Social Responsibility: at KOEL, we do believe that all our efforts have to be aligned for the betterment
of the society that we live in, that we owe to the society. You will get an opportunity to serve the
society the way you like to.
Bottom of Form
Kirloskar Oil Engines

Balance Sheet ------------------- in Rs. Cr. -------------------

Mar'05 Mar '06 Mar '07 Mar '08 Mar '09

12mth
12 mths 12 mths 12 mths 12 mths
s

Sources Of Funds
Total Share Capital 19.42 19.42 19.42 38.83 38.83
Equity Share Capital 19.42 19.42 19.42 38.83 38.83
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 542.66 698.96 831.93 876.16 921.25
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Net worth 562.08 718.38 851.35 914.99 960.08
Secured Loans 51.49 66.84 99.42 342.77 348.94
Unsecured Loans 0.23 0.17 6.89 0.12 0.05
Total Debt 51.72 67.01 106.31 342.89 348.99
Total Liabilities 613.80 785.39 957.66 1,257.88 1,309.07
Mar'05 Mar '06 Mar '07 Mar '08 Mar '09

12mth
12 mths 12 mths 12 mths 12 mths
s

Application Of Funds
Gross Block 421.51 483.38 530.51 921.32 992.39
Less: Accum. Depreciation 289.70 314.01 255.59 275.35 337.55
Net Block 131.81 169.37 274.92 645.97 654.84
Capital Work in Progress 12.87 22.84 57.28 64.93 18.14
Investments 378.41 499.89 517.39 476.33 471.88
Inventories 86.61 110.94 148.36 194.05 123.88
Sundry Debtors 219.77 308.43 389.25 356.46 292.43
Cash and Bank Balance 6.20 13.03 35.46 61.59 79.11
Total Current Assets 312.58 432.40 573.07 612.10 495.42
Loans and Advances 192.45 242.93 290.99 402.00 215.10
Fixed Deposits 0.49 4.61 5.85 0.01 0.01
Total CA, Loans & Advances 505.52 679.94 869.91 1,014.11 710.53
Deferred Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 266.73 386.73 505.72 609.81 406.02
Provisions 148.10 199.94 256.10 333.64 140.29
Total CL & Provisions 414.83 586.67 761.82 943.45 546.31
Net Current Assets 90.69 93.27 108.09 70.66 164.22
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 613.78 785.37 957.68 1,257.89 1,309.08

Contingent Liabilities 240.59 271.91 260.57 232.01 212.84
Book Value (Rs) 285.99 73.10 87.69 47.12 49.44
Top of Form Bottom of Form
Kirloskar Oil Engines

Cash Flow ------------------- in Rs. Cr. -------------------

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 201.28 245.97 239.50 187.41 180.54

Net Cash From Operating Activities 62.31 108.32 137.70 204.31 65.68

Net Cash (used in)/from
-78.64 -68.99 -100.59 -363.18 0.48
Investing Activities

Net Cash (used in)/from Financing
-2.71 -28.39 -13.39 179.16 -48.65
Activities

Net (decrease)/increase In Cash and
-19.04 10.95 23.71 20.30 17.51
Cash Equivalents

Opening Cash & Cash Equivalents 25.73 6.69 17.59 41.30 61.60

Closing Cash & Cash Equivalents 6.69 17.64 41.30 61.60 79.11
Top of Form Bottom of Form
Kirloskar Oil Engines

Key Financial Ratios ------------------- in Rs. Cr. -------------------

Mar'0
Mar '06 Mar '07 Mar '08 Mar '09
5

Investment Valuation Ratios
Face Value 10.00 2.00 2.00 2.00 2.00
Dividend Per Share 12.50 4.00 4.00 2.00 1.00
Operating Profit Per Share (Rs) 53.56 12.91 20.86 12.03 14.06
Net Operating Profit Per Share (Rs) 596.11 143.45 197.63 113.13 111.79
Free Reserves Per Share (Rs) 260.74 68.05 82.58 43.57 49.92
Bonus in Equity Capital -- -- -- 49.99 49.99

Profitability Ratios
Operating Profit Margin(%) 8.98 8.99 10.55 10.63 12.57
Profit Before Interest And Tax
6.55 6.76 8.67 8.55 8.75
Margin(%)
Gross Profit Margin(%) 10.87 11.73 12.37 8.63 8.86
Cash Profit Margin(%) 16.71 15.65 10.67 7.52 9.04
Adjusted Cash Margin(%) 8.27 8.36 8.54 7.52 9.04
Net Profit Margin(%) 14.49 13.73 9.06 5.36 5.27
Adjusted Net Profit Margin(%) 6.05 6.45 6.92 5.36 5.27
Return On Capital Employed(%) 17.43 19.01 23.04 16.78 16.86
Return On Net Worth(%) 30.94 27.92 20.96 13.00 12.07

Liquidity And Solvency Ratios
Current Ratio 1.08 1.05 1.09 1.01 1.25
Quick Ratio 0.97 0.95 0.93 0.85 1.02
Debt Equity Ratio 0.09 0.09 0.12 0.37 0.36
Long Term Debt Equity Ratio 0.05 0.06 0.10 0.34 0.35
Debt Coverage Ratios
Interest Cover 33.83 25.28 24.69 16.42 6.96
Total Debt to Owners Fund 0.09 0.09 0.12 0.37 0.36
Financial Charges Coverage Ratio 19.15 18.21 10.91 12.94 8.01
Financial Charges Coverage Ratio
29.73 24.47 10.08 9.26 6.22
Post Tax

Management Efficiency Ratios
Inventory Turnover Ratio 13.85 13.16 13.27 13.10 20.52
Debtors Turnover Ratio 5.74 5.34 5.50 5.89 6.69
Investments Turnover Ratio 15.48 14.45 14.60 13.10 20.52
Fixed Assets Turnover Ratio 9.58 9.27 7.89 2.44 2.24
Total Assets Turnover Ratio 1.96 1.83 2.05 1.78 1.69
Asset Turnover Ratio 2.89 3.02 3.77 2.44 2.24

Average Raw Material Holding 33.17 34.66 37.11 34.99 27.34
Average Finished Goods Held 6.10 5.59 4.67 6.63 3.66
Number of Days In Working Capital 27.87 23.82 20.28 11.58 27.23

Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 15.86 22.07 25.14 38.19 19.60
Dividend Payout Ratio Cash Profit 13.75 19.37 21.33 27.90 11.57
Earning Retention Ratio 62.04 53.00 67.12 63.07 80.83
Cash Earning Retention Ratio 72.23 63.76 73.34 72.78 88.58
AdjustedCash Flow Times 0.52 0.55 0.63 2.05 1.75

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Earnings Per Share 88.48 20.41 18.38 6.13 5.97
Book Value 285.99 73.10 87.69 47.12 49.44
KIRLOSKAR OIL ENGINES ANALYSIS

DEBT EQUITY RATIO

A higher debt equity ratio indicates a riskier financial position than a lower debt equity ratio, with
1:1 considered as ideal.

Year Year Year Year Year
2005 2006 2007 2008 2009

Debt-Equity ratio 0.09 0.09 0.12 0.37 0.36

Debt –Equity ratio has been under control since 2005.

CURRENT RATIO

A higher ratio indicates poor investments policies of the management and poor inventory
control, while low ratio indicates lack of liquidity and shortage of working capital, with 2:1
considered as ideal because current assets should be two times to current liabilities.

Year Year Year Year Year
2005 2006 2007 2008 2009

Current ratio 1.08 1.05 1.09 1.01 1.25

Current ratio has been kept at lower levels since last five year.

QUICK RATIO

Quick ratio of 1:1 is considered as ideal. It indicates short term debt paying capacity of the
organization.

Year Year Year Year Year
2005 2006 2007 2008 2009

Quick ratio 0.97 0.95 0.93 0.85 1.02

Since 2005, in year 2009 company’s ratio is very close to perfection.
INVENTORY TURNOVER RATIO

Higher ratio indicates that higher sales are being made by a unit of investment in stock. High
ratio shows that the company works on comparatively low margin of profit. Ratio shows better
performance if it increases, it shows that investment in stocks leads to higher sales and vice
versa.

Year Year Year Year Year
2005 2006 2007 2008 2009

Inventory turnover ratio 13.85 13.16 13.27 13.10 20.52

Inventory turnover ratio has remained at lower levels since last five years and has moved in
both directions in the past five years. In year 2009 it has increased tremendously.

DEBTORS TURNOVER RATIO

The ratio shows how quickly debtors are converted into cash. A standard ratio is set by the
company. The resulting ratio if turns out to be lower than the standard ratio, indicates inefficient
working by the company.

Year Year Year Year Year
2005 2006 2007 2008 2009

Debtors turnover ratio 5.74 5.34 5.50 5.89 6.69

The ratio has remained at relatively lower levels since last five years.

ASSET TURNOVER RATIO

The amount of sales generated for every dollar's worth of assets. It is calculated by dividing sales in
dollars by assets in dollars.

Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue - the higher
the number the better. It also indicates pricing strategy: companies with low profit margins tend to have
high asset turnover, while those with high profit margins have low asset turnover.

Year Year Year Year Year
2005 2006 2007 2008 2009
Asset turnover ratio 2.89 3.02 3.77 2.44 2.24

The ratio has decreased in 2009.

OPERATING PROFIT MARGIN

A ratio used to measure a company's pricing strategy and operating efficiency. Operating margin is a
measurement of what proportion of a company's revenue is left over after paying for variable costs of
production such as wages, raw materials, etc. A healthy operating margin is required for a company to be
able to pay for its fixed costs, such as interest on debt.

Year Year Year Year Year
2005 2006 2007 2008 2009

Operating profit margin(%) 8.98 8.99 10.55 10.63 12.57

Over the past five years operating profit margin started picking up in 2007, and
has increased till 2009, reflecting a healthy position of company.

NET PROFIT MARGIN

The ratio of net profits to revenues for a company or business segment - typically expressed as a
percentage – that shows how much of each dollar earned by the company is translated into profits.

Net Profit Margin = Net Profit / Revenue

Year Year Year Year Year
2005 2006 2007 2008 2009

Net profit margin(%) 14.49 13.73 9.06 5.36
5.27

Net profit margin have declined in 2009, company saw a constant decline from
2005 to 2009.

EARNINGS PER SHARE (EPS)

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per
share serve as an indicator of a company's profitability.
Year Year Year Year Year
2005 2006 2007 2008 2009

Earnings per share 88.48 20.41 18.38 6.13 5.97

The EPS indicates a good performance by the company.