4.funds Flow Statement 13072017 Shanti

PROJECT ON FUNDS FLOW STATEMENT
OF B.H.E.L
BY – B. SHANTI
A STUDY REPORT ON
“FUNDS FIOW STATEMENT”
OF B.H.E.L VISAKHAPATNAM
PROJECT REPORT -2017
Submitted to JNTU University, Kakinada in partial Fulfillment for

the award of the Degree of
MASTER OF BUSINESS ADMINISTRATION

Submitted by
B.SHANTI
Under the guidance of
M.SATYAVATHI (faculty)
VIGNAN INSTITUTE OF ENGINEERING FOR WOMEN

(Affiliated to JNTU University)
VISAKAPATNAM
2016-2018
CERTIFICATE
THIS IS TO CERTIFY THAT THE PROJECT REPORT ENTITLED “FUNDS FIOW

STATEMENT” BEING SUBMITTED BY B. SHANTI IN PARTIAL FULFILLMENT FOR
THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION BY VIEW
COLLEGE, DUVVADA. IS A RECORD OF CONFIDE WORK CARRIED OUT BY HER
UNDER MY GUIDANCE AND SUPERVISION.
VISHAKAPATNAM
DATE:
DECLARATION
I hereby declare that the following documental project titled by “FUNDS

FLOW STATEMENT” is an original and authentic work done by me for the
partial fulfillment of MBA degree program at BHEL.
All the endeavors out in the fulfillment of the task are genuine and original
to the best of my knowledge.
B.SHANTI
ACKNOWLEGDEMENT
I express my deep and sincere gratitude to director of MASTER OF

BUSINESS ADMINISTRATION course of COLLEGE, DUVVADA having
permitted me to do my project work under the able guidance of faculty
member M.SATYAVATHI , College, DUVVADA.I express my gratitude to
M.SATYAVATHI,MBA,(M.PHIL)ASST.PROFESSOR- Finance,for giving me
valuable suggestion in completing my project work.
I take this opportunity of expressing my sincere thanks to BHEL.

Especially the finance department who has helped me in giving the data for
preparation of my project report.
I want to express my heartfelt feelings to my parents and friends who

have corporate and supported in completion of my project work.
B.SHANTI
CONTENTS
CHAPTER 1: INTRODUCTION
a.Introduction
b.Need for the study
c.Objectives of the study
e.Scope of the study
f.Limitations
CHAPTER 2: INDUSTRY PROFILE
1) Industry profile
2) Market profile
3) Customer profile
4) Competitor profile
CHAPTER 3: COMPANY PROFILE

a. Introduction of BHEL
b. Financial Statements Analysis
c. History of BHEL
d. BHEL. An overview
e. Diversification
f. Research and development
g. Present strengths
h. Plant strengths
i. Constraints
CHAPTER 4: THEORITICAL FRAME WORK

CHAPTER 5: ANALYSIS AND INTERPRETATION
a.analysis of funds flow
b.Interpretation
CHAPTER 6: SUGGESTIONS & BIBLIOGRAPHY
QUALITY POLICY
“IN ITS QUEST TO BE GLOBAL ENGINEERING ENTERPRISE,
BHEL PURSUES CONTINUAL IMPROVEMENT IN THE QUALITY OF
ITS PRODUCTS, SERVICES AND PERFORMANCE LEADING TO
CUSTOMER DELIGHT THROUGH COMMITMENT, INNOVATION
AND TEAM WORK OF ALL EMPLOYEES”.

INTRODUCTION
HEAVY PLATES & VESSELS PLANT is a unit of BHARAT HEAVY
ELECTRICALS LIMITED, a Maharatna Central Public Sector Enterprise. Earlier
this plant was a separate company namely, BHARAT HEAVY PLATE &
VESSELS LIMITED (BHPV). BHPV was established in 1966 at Visakhapatnam,
Andhra Pradesh. It got merged with BHARAT HEAVY ELECTRICALS
LIMITED (BHEL) in August’2013 by virtue of an order of Board for Industrial
and Reconstruction (BIFR). BHEL named the unit as HEAVY PLATES &
VESSELS PLANT (BHEL-HPVP). It is 17 th manufacturing unit of BHEL and
incidentally this is only unit of BHEL situated at port.
1.1INTRODUCTION OF BHEL-HPVP PLANT

BHPV’s beginning was humble; it had a turnover of just Rs 1.95 cr in 1971-72
when commercial production first commenced. Since then, BHPV has come a long
way and exceeded a turnover of Rs 300 crores expanding its product line to
include high technology equipment and systems like Multi-layer Vessels, Turn
Key Cryogenics Plants, Storage and Distribution Systems, Industrial Boilers,
Waste Heat Recovery Systems, Oil and Gas Processing Systems etc.
This is one company which houses excellent engineering skills, uncompromising

quality control, dedicated erection & commissioning team under one roof, a
combination resulting in India’s self-reliance. BHPV acquired various National
and International quality accreditations such as ASME, National Board etc.
Today, after merging with BHEL, BHEL-HPVP stands with vast manufacturing
capability and can manufacture process equipment of almost any size.
1.2BHEL-HPVP PICTORIAL VIEW

HPVP is easily pictured by dividing the organization into the following divisions
to carry out its functions.
Engineering
Marketing & Commercial
Research and development
Production and Services
Erection Services
Material Management
Quality
Finance
Personnel and Administration.
Production and Services include planning, production technology, welding
technology and production. Production shops are classified as feeder shops and
assembly shops. M.P shop, LMS, HMS, Press shop, Shells shop, and Nozzle shops
will under feeder shops while Valve trays, PV, HE, and CP will come under
assemble shops. HPVP is having a shop floor area of over 56000 sq. m.
1.3WORKSHOPS
Parts that are used for assembling in Production shop are made in feeder shops.
The feeder shops are subdivided into six types, namely
MP Material Preparation
LMS Light Machine Shop
HMS Heavy Machine Shop
Press Bending & Pressing of Plates
Nozzles Pipe preparation & Welding
Shells Rolling & Welding Operation
1.3.2 PRODUCTION SHOPS
The parts made in the feeder shop assembled in production shop. The following
five shops come under production shop.
PV Pressure Vessels
HE Heat Exchangers
CP Cryogenic production
CSP I Combustion system products
CSPII Combustion system products
1.4SALIENT FEA TURES OF DIFFENRENT SHOP:

1.4.1 MATERIAL PREPARATION SHOP:
Plate material drawn from stores is cut to size and delivered to concerned
production shops. Gas cutting for carbon & low alloy steels can be done up at 50
mm thick, square cut, single bevel cut, with or without nose, double bevel cut with
nose can be directly cut plasma cutting stainless steel plates up to 80 mm thick.
1.4.2 LIGHT MACHINE SHOP:
n this shop, all small components machining such as marking holes in tube sheet,
and drilling planning of small items will taken up here. Nozzle to flange welding
is done in this shop
1.4.2.1 MACHINERY USED IN LIGHT MACHINE SHOP:-
Small and medium lathes
Auto lathe
Radial drilling machines
Small horizontal boring
Medium horizontal boring
Heavy lathe
Plane drilling machine
CNC drilling machine
CNC deep hole drilling machine (HMT)
Cylinder grinding machine
Horizontal surface grinder
CNC lathe machine.
1.4.3 HEAVY MACHINE SHOP
Machining, drilling, and surfacing of components which are more largely than the
capacity of L.M.S will be carried out here. The shop is equipped with one
5000mm, one 4000mm, one 2500mm diameter heavy double column vertical
turning and boring machines besides a number of smaller machines. Horizontal
boring machine is capable of bore max. Depth 2000mm.
1.4.3.1MACHINERY USED IN HEAVY MACHINE SHOP
Radial drilling 2no
Universal drilling 1no
Single column planning 1no
Double column planning 1no
Large horizontal boring 2no
1.4.4PRESS SHOP
The dished ends required for vessels are prepared with single plate and with petal
construction in this shop. Hydraulics presses upped max capacity of 1600T used
for pressing dished ends, petals of storage spheres and various other parts. Max
diameter of dished ends that can be prepared in the shop is 5000mm and max
thickness that can be handled be ion single stroke is 80mm, while upped 120mm
thick plates are also parade in stages.
1.4.4.1MACHINERY USED IN PRESS SHOP
Section bending roll ----------- 1no
Pneumatic hammer ----------- 1no
Pipe bending ----------- 2no
Hydraulic press 250 T ----------- 1no
Bending roll ----------- 1no
1.4.5 SHELLS SECTION:
In this shop, plates are rolled to required size and long seam and circumferential
seam welding will be done. Major welding is done by submerged arc welding
process. Max thickness welding done in this shop is 220mm. special narrow gap
welding machines available in this shop. This can weld upped 350mm thick with
groove width about 20-24mm.
1.4.5.1 MACHINERY USED IN SHELL SHOP
1. Plate edge planning 1200x80mm thick -------- 2 no.
2. Plate bending rolls 235x3025mm thick -------- 1 no.
5. Submerged arc welding -------- 3 no.
1.4.6 PRODUCTION SHOPS:
1.4.6.1 PRESSURE VESSEL ASSEMBLY:
This shop had all the attachments that are to be made on the shell as per drawing
such as nozzle, internal, external supports are welded. In this shop mainly vessels
which are used in high pressure application are available in this shop. To obtain
the required thickness, 6mm sheets are wrapped and welded layer by layer.
TYPES OF DISHED ENDS: Generally three types of dished ends are used, they
are:
a) Hemispherical
b) Tory spherical
c) Ellipsoidal
1.4.6.2 HEAT EXCHANGERS ASSEMBLY
In this shop heat exchangers are fabricated. Tube bundles and shell assembly I s
fabricated. Tube to tube sheet welding is mostly done with GTAW process. From
medium to high pressure heat exchangers with test pressures as high as
450kg/sq.cm and temperatures ranging from -65 to 900C are handled in this shop.
Titanium lined vessels fabricating was done in this shop.
1.4.6.3 CRYOGENIC PRODUCTION
Tanks and vessels for sub-zero temperature supplications are fabricated here. Not
only cryogenic tanks are produced in this section but also vast variety of
equipment, which include: Air separation units of capacity ranging from 50Nm/hr.
and up to 2200TPD produce oxygen, nitrogen & argon are available. Storage tanks
of horizontal & vertical designs starting form 500 liters and above up to 2, 00,000
liters capacity to hold liquid oxygen, nitrogen, argon and other vacuum insulate.
1.5 BHEL-HPVP PRODUCTS

Products manufactured at BHEL – HPVP plant include:-
a) PRESURE VESSELS:-
With different kinds of steels like carbon steel, stainless steel, clad steel, Monel
etc. and any combination of there off.
b) COLUMNS:-
Both shop and site fabricated columns with or without internals.
c) HEAT EXCHANGERS:-
From low pressure atmospheric fin coolers to high pressure heat exchangers
employing forged heads channels with test pressure as high as 500kg/sq.cm and
designs like U-tube, kettle type, etc.,
d) STORAGE SPHERES:-
Of any size (up to 60m), any thickness (up to 60mm) to handle any fluid or gases
like ammonia, ethylene, propylene, LPG etc.
e) HIGH PRESSURE MULTILAYER VESSLES:-
Ammonia and urea reactors built ply wall design to suit high pressure of the order
of 300kg/sq.cm hydraulic test pressure.
f) CRYOGENIC VESSELS:-
There are double wall construction with stainless inner shell and carbon steel outer
casing with evacuated inter space filled with pearlier (insulating material) for
guaranteed low evaporation rates.
g) AIR & GAS SEPERATION PLANTS:-
These plants are custom built mainly for production of oxygen, nitrogen, argon
and for separation of coke oven gas, converter gas for ammonia production. The
design include simple cycle with purification by absorption or with reversing
exchangers and capacities handling different feed stocks like bamboo, hard woods
etc.
h) EVAPORATION PLANTS:-
Plants designed for the concentration of solids in different types of spent liquors in
multiple effect evaporation bodies using steam heating. The application includes
paper & pulp and alumina industries.
All the above equipment’s are fabricated according to standard code to ensure the
safety during testing and service. The most commonly used codes are ASME,
BS5500, AD Mark Blotter, IS 2825, TEMA, ANSI, API etc. For fabricating all the
above equipment, welding is the best suited operation in terms of strength and
safety with standing at high pressure.
In B.H.P.V-HP&VP, production is also mostly carried out by welding. It involves

lot of work including preparation of technologies, procedure, conducting tests and
selecting suitable processes and suitable consumables. These works are carried out
by the WT department.
1.6 WELDING TECHNOLOGY

As BHEL-HPVP plant is a fabrication industry, it is mainly based on welding
technology. All welding operations done in the company are governed by welding
technology department. For its manufacturing techniques welding technology has
been playing a vital role. Welding technology department prepares the procedures
to be followed. Welding technology department will take care of all requirements
of welding in production shops.
Its main function is to release the required technology to shops to follow and
perform their job. The other functions are estimating welding cost, replying to
commercial enquiries and replying constructional problems. The equipment and
consumables required to the shop will also be selected by the same department.
The welding technology plays a vital role in any fabrication industry.
Keeping this fact in mind, BHEL-HPVP plant has already setup a welding
technology department managed by a team of highly qualified and efficient
personnel. This department handles all the welding activities in the industry.
BHEL-HPVP has mastered almost all welding processes including TIG and MIG.
The types of jobs tackled includes high pressure piping, tube to tube sheet joint,
high thickness multilayer welding, fabrication of clad vessels etc.
Welding technology department prepares the procedures to be followed to plan
and carry out the following functions of the welding technology department.
Preparation, revision and Approval of welding procedures specifications and

welding datasheets.
Procurement and Qualification of the Welding consumables.

Qualification, documentation of welding procedure qualification records.
Qualification documentation and maintenance of welder or welding operator

records.
Studying and solving quality problems related to welding and training of welders.
Release of welding technology documents
.
In order to perform planning and execution of the various functions welding
technology is basically divided into five groups so that it may effectively dispense
its duties:
Enquiry group
Technology group
Qualification group
Consumables group
Trouble shooting group
a) ENQUIRY GROUP:
Enquires or tender invitations received by the commercial departments are sent to
the enquiry group in the welding technology department for feasibility study.
These groups comprises of persons with a considerable experience in the
departments so that they may access whether or not a job can be carried out
successfully. Further, they also estimate the cost of welding consumables so that
the cost of welding can be included in the price to be quoted to the customer, prior
to receiving the sale order.
b) TECHNOLOGY GROUP
This group has got the task of deciding the welding parameters to be used. A
suitable welding procedure specification (WPS) is selected depending upon the
two parts to be joined. Evert WPS is based on a supporting procedure qualification
record (PQR) whose number is mentioned on the WPS. Besides, designing
the welded joint, the consumables group also raises the material indents for the
welding consumables (electrodes) required. These MI’s are forwarded to the
material procurement.
c) QUALIFICATION GROUP:
This group acts in response to the request forwarded to them by the technology
group concerning the qualification of any new welding procedure. They conduct
tests, invite the concerned inspectors and record the various readings from various
tests performed on the welded joint, in the quest fo4r qualifying the new
procedure. Secondly, they also perform the task of qualifying the welder in hand.
They ensure that all the welders are given practice in performing their duties.
d) CONSUMABLE GROUP:
This group keeps the track of all the consumables required. It clubs together
requirements received from the technology group.
e) TROUBLE SHOOTING GROUP:
The group shooting group shall take care of smooth execution of welding
operations on various products in production shops and erection sites in
association with production, quality control and production engineering personnel.
This group shall arrange for issue of welding technology Documents to the
concerned. Also the group shall participate in the investigation of the causes of
failure in welds and recommended corrective measures to avoid recurrence.
INTRODUCTION TO THE TOPIC
FINANCIAL MANAGEMENT
Financial management is managerial activity which is concerned with the
planning and controlling of firm’s financial resources. It was a branch of
economics till 1980 and as a separate discipline it was of recent origin. Still it
has no unique body of knowledge of its own and draws heavily from economics
for its theoretical concepts even today. Theory of financial management provides
conceptual and analytical insights to make decisions relating to the financial
aspects of organization skillfully.
Definitions of financial management:

“Financial management is concerned with the efficient use of an
important resource namely, capital funds”. –EZRA SOLOMAN
“Financial management is concerned with the managerial decisions that

result in the acquisition and financing of long-term and short-term credits for
the firm”. – PHILLIPPATUS.
“Financial management is that business activity which is concerned with

the acquisition and conservation of capital funds in meeting financial needs
and overall objectives of a business enterprise”. – WHEELER
These definitions we can understand the functions of the financial

management. Those are procurement of funds and effective utilization and part of
these functions use different techniques.
OBJECTIVES OF FINANCIAL MANAGEMENT
Quite obviously, the objective of the firm should be the maximization of its
value of the shareholders. The price of shares in the market indicates the value of
the firm. Factors like investment, financing and dividend exercise an influence on
the market price of the shares. The main objectives of financial management can
be said as:
PROFIT MAXIMIZATION
The objective of every organization is profit maximization. Profit
Maximization means maximizing the rupee income of firms. Profit is
considered as the most appropriate measure of a firm’s performance.
WEALTH MAXIMIZATION
It is a long - term objective. Wealth maximization is nothing but increasing
the wealth of the shareholders by way of contributing to the net worth of the
shareholders.
For attaining these above said objectives financial manager makes crucial
decisions relating to investment in different projects, dividend decisions ,
debt equity mix decisions, source of finance, analysis of ratios and working capital
management.
BHPV was established in the year 1966 at Visakhapatnam, Andhra Pradesh

as a Public Sector Undertaking under the Department of Heavy industry (DHI) to
manufacture and supply custom built process plant equipments for Core Sector
Industries like Fertilizers, Oil Refineries, Petrochemicals, Steel Plants, Nuclear,
Space, Defence and Power Sectors with the technical collaboration of SKODA
Export, Czechoslovakia. The Company is located on NH-5 near to Airport,
Railway Station and Sea Port in Visakhapatnam, Andhra Pradesh. The Company is
spread over a total area of 386 Acres.
BHEL-HPVP is a premier Organization specializing in design, fabrication,
supply and erection of Heat Exchangers, Columns, Storage Spheres, Reactors and
Strippers, Multilayer Vessels Reactor Regenerator Package, Air Separation Plants,
Purge Gas Recovery Units, Oxygen Plants, Nitrogen Plants, Hydrogen Plants,
Sulphur Recovery Units, Crude Stabilization Units, Mounded Storage Systems,
Compact Heat Exchangers, On Board Oxygen generating system etc., to Oil
Refineries, Fertilizer Plants, Steel Plants, Defence sector etc., and has been
contributing to the Nation building during the past four decades. The Company has
good potential to cater to the growing needs envisaged in Power, Oil and Gas,
Nuclear, Defence and other strategic sectors in future. Also, BHEL-HPVP is
highly reputed for the Quality and reliability of its products and possesses several
National & International Quality accreditations besides ISO 9001:2000
certification.
BHPV started production in the year 1971-72 with a turnover of just

Rs.1.95 Crs and crossed Rs.300 Crs in the year 1996-97. The Company
contributed more than Rs. 650 Crs to the national exchequer during the past 20
years.
BHPV is the largest fabricator of process equipment in India for the

petroleum, fertilizer, chemical and allied industries. It is a subsidiary of a
navaratna Central Public Sector Enterprise – Bharat Heavy Electrical Limited
and is managed by an autonomous separate board of directors.
Situated in the city of destiny of Visakhapatnam on the western see coast of

the Deccan plateau, BHPV is accessible by road, rail, sea and is well connected to
all metropolitan cities by air.
NEED FOR THE STUDY

BHEL-HP&VP (BHPV) has emerged as one of the leading heavy
engineering Industries after its incorporation, in the year 1966 to manufacture
custom Built capital equipment required by the process industries like fertilizers,
Petro chemical & chemical industries.
After its commissioning & commencement of production, the Company has

been continuously updating its technologies, by entering into Collaborations with
renowned companies like M/s BSL, Deals - France, HCG-Netherlands, Hahn &
Clay-USA etc.
Mammoth Engineering capabilities & excellent designing network &

Manufacturing facilities, high degree of customer confidence, with sound work
Cultures are some of the vital factors involved in achieving continuous growth of
BHEL-HPVP.However in the early 2000s, the financial performance of the
industry went under great strain, due to a combination of adverse factors, which
got bunched year by year. Since 2001 steep rise in exorbitant interest costs,
increased inflation, global competition, Government policy etc further aggravated
the situation.
However, from the year 2008, the company started showing positive signs
in the operations and stared earning profits. The main reason for this development
is the decision of the Government to delink the company from BYNL, Allahabad
and make it part of Heavy Electrical Equipment Conglomerate BHEL. The year
2008 can be said as RE-BIRTH year for BHPV.
BHEL, from the date of taking over BHPV in 2008, started to look after
key areas like utilization of plant capacity to the fullest extent, attention on
financial discipline, HR related problems, Capex etc. From the year 2008 the
company re-started its business with new look, strategies, diversification and once
again started gaining customer confidence, thereby earning positive financial
figures and on the way of regaining past glory.
The importance of the study, Financial Statement Analysis in BHPV,

Visakhapatnam presupposes that one very important reasons for which Public
sector Enterprises in India has suffered financial strains in the late 80s and in 90s
or earned low Level of profit may relate to the misconstruing of the financial
aspects. Had these Enterprises managed the overall finance operations in an
efficient manner, they would have generated resources for its growth as well as
economic growth
OBJECTIVES OF THE STUDY

This study of BHPV has been undertaken to evaluate the financial efficiency of
the organization by establishing the following objectives.
(a)To know about the various sources of finances, working capital to BHEL-
HPVP (BHPV).
(b)To judge the financial position, i.e. the short-term liquidity position and the
long-term solvency of BHEL-HPVP (BHPV).
(c)To measure the operational efficiency of BHEL-HPVP (BHPV)To

determine the profitability trends of BHEL-HPVP (BHPV)
(d)To assess the overall financial position of the company through various
established techniques.
RATIO ANALYSIS:
Ratio analysis is a technique of analysis and interpretation of financial
Statements. It is the process of establishing and interpreting ratios for helping in
making certain decisions. However ratio analysis is not an end for itself. It is a
only a means of better understanding of financial strengths and weakness of a
firm.
SCOPE OF THE STUDY

The scope of the study is connected to one of the key areas of finance i.e.
Analysis & Interpretation of Financial Statements. The study appraises the
company's meeting the requirements for the process industries in the core sector
such as fertilizer, oil refineries, chemicals etc.
METHODOLOGY
The analysis of the project was based on the available information. Any
information about the topic is called the data. The data was gathered from various
sources i.e., Primary and Secondary sources.
Type of Data:
Primary Data
Secondary Data
Primary Data:
Any information that is collected afresh and for the first time is called
Primary data .The primary data happen to be original in character. The
Information is gathered from concerned employees. The employees and manager
of the financial department have provided the information needed for the study.
Secondary Data: Information which has already been collected by somebody else
or some other agency with definite purpose and which has already been processed
is called secondary data. The secondary data for the study have been gathered
from the balance sheets, profit and loss accounts annual reports and other books
and manuals of the BHEL-HP&VP (BHPV
LIMITATIONS OF THE STUDY
Every study is conducted under certain limitations. The study relates only
to financial data and other areas are not taken into consideration. The study is
carried out only for a period of 2 month. It was not possible to get cent percent
correct information. The research was made according to the information available
from related departments and through annual reports published. The sent study
covers only for a period of five years. So the analysis will be made on this basis.
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
INDUSTRY PROFILE
Experienced in design of columns, multi layer vessels, heat
exchangers, liquid oxygen & nitrogen unit, evaporation plants, digesters, mounded
vessels, sulphur recovery unit, gas dehydration, desalters, heater treaters, crude
stabilizations unit, storage vessels etc., backed by technology absorption &
adoption from the world leaders.
1. Skoda export, Czechoslovakia.
2. L’Air liquid, France.
3. KAMYR - AB Sweden
4. ARAMCO
5. NRDC,India
6. Hahn & Clay, USA.ETC.
BOILERS
BHPV absorbed technology from BHEL for industrial boilers
Design, Engineering, Manufacture, Erection, Testing & Commissioning of Boilers
with horizontal transfer of technical know – how from BHEL. Capacities up to
200 TPH in low, medium and high pressure ranges with superheat upto 540 degree
centigrade equipped with all modern features like.
1. FSSS (Furnace Safeguard Supervisory System)
2. Oil storage, pumping & heating units
3. Fire fighting system
4. Erection & Commissioning of STGs.
5. Dynamic simulation of power plant.
Fired Heaters
Technology absorption from ABB Lummus heat transfer (LHT) for design
and manufacture, Erection & Commissioning of Fired Heaters in the following
types;
1.Crude and Vacuum Heaters
2.Coker Heaters
3.Hot Oil Heaters
4.Charge Heaters
5.Recycle Heaters
MARKET PROFILE:-
In addition to BHPV legacy products such as process plants,
combustion systems, boilers, cryogenic equipments for refineries, fertilizer plants,
steel pants etc, with the takeover of the company by BHEL, the company
diversified into manufacturing equipments required for power generation plants in
and abroad.
CUSTOMER PROFILE:-
BHEL-HPVP (BHPV) clientele includes- Public, Private, Co-operative
Sector organizations in almost all the core sector of economy such as all the
fertilizer plants, petroleum refineries and steel plants in India and abroad. Now,
with the diversification all major power plants in India. Other major customers are
from paper, chemicals, defense, space sectors
COMPETITOR PROFILE:-
In the area of process plant: L&T, GR Engg, Lloyds steel,
ISGEC, John Thomson, Godrej etc
In the area of cryogenics: ICCP, INOX, Shanghai’s oxygen, L&T,

Linde, VJU, Essar, LINDE, Air
products, Kobe, Hitachi, HOPM, Praxair
In the area of combustion system: ISGEC, Babcock Thermax, Ignifluid

boilers, ABL L&T KTI, Thermax etc
CORPORATE OFFICE: - New-Delhi.

PLANT OFFICE: - Visakhapatnam, Andhra Pradesh
COMPANY PROFILE
COMPANY PROFILE
Bharat Heavy Plates and Vessels Ltd, it is a public limited Company. It is a

job order/ shop production industry. According to customer specifications and
requirements it produces various products. Fore seeing the country’s need for
fabricating equipment of an exclusive Factory with the main object of reducing
dependence on foreign suppliers and become self sufficient ourselves. Thus the
birth of BHPV in the year 1966 to meet the demands of process equipment for
core industry like Fertilizers, petrochemicals, petroleum and other chemical
industries initially. BHPV using different types of materials manufactured and
supplied several built equipments such as pressure vessels, heat exchangers,
columns, internal trays etc. After executing some important orders, BHPV LTD
gained full confidence of customers which cleared the way to enter the
line of cryogenic field, pulp cooking plant, evaporation plant and industrial
boilers on a total turnkey basis which of later years helped in augmenting
turnover of the company and increasing profitability.
INTRODUCTION ABOUT BHEL-HPVP (BHPV):

In the liberalized economy of India and in the era of globalization a
company must rethink its business mission and all functional strategies. In these
days companies find themselves competing in a race where the road signs and
rules keep days when it was “business as usual” companies could succeed only by
having innovative ideas combined with by effective financial management.
Therefore, it is not surprising that today’s winning companies are those which
foresee the future and manage the finance effectively. One can manage finance
effectively by managing working capital, capital structure and taking decision on
capital budgeting. Ultimately, finance is at its best about value adding, developing
new products and raising the world’s standards of living. The heavy engineering
industry is a major strength of any economy. These heavy engineering industries
which produce capital goods are the most modern of the entire industrial group
In India these heavy engineering industries occupy a crucial role in its

economic development in view of the huge investment as well as the critical
importance to nation. These industries are mostly confined to the public sector
only. BHPV Ltd. is the largest fabricator of process equipment in India for the
petroleum, chemical and allied industries. It is fully owned by the government of
India and is managed by an autonomous board of directors. Situated in the City of
destiny of Visakhapatnam on the western see coast of the Deccan Plateau, BHPV
is accessible by road, rail, sea and is well connected to all metropolitan cities by
air.
BHEL-HPVP (BHPV), Visakhapatnam is a public sector undertaking BHEL-
HPVP has been selected for the study. The topic selected is “A study on Financial
Statements Analysis”.
Bharat Heavy plates & Vessels Ltd., started off in 1966 as fully owned
Government Company for Design, Manufacture & Supply of capital equipment
required for process industries in the core sector such as fertilizers, oil refineries &
petrochemicals etc. Sri D. Sanjeevayya laid the foundation stone, the then Minister
of Industry on 8th Jan 1967 in Visakhapatnam. It comes under the purview of the
Department of Heavy Industry, Ministry of Industry. With the technical
collaboration of SKODA Export Company of Czechoslovakia in the year 1968, it
got expertise and guidance for establishing the project and for the Design &
manufacture of various process equipments. BHPV became a fully owned
subsidiary of Bharat Heavy Electricals Ltd.
Licensed installed capacity is 23210MT. The initial capital outlay is Rs.17.5

crores. The product mix included heat exchangers, columns, and pressure vessels,
Storage vessels, piping etc. During the year of it commercial production i.e. 1971-
1972 the turnover was just Rs 5 lakhs. In 1996-97 it has recorded on turnover of
Rs 29998 lakhs i.e. all time high. Last Five year performance is produced here
under.
Description 2016-17 2015-16 2014-15 2013-14 2012-13
15458.0 21019
GTO (Net of 9042.95 9290.20 7539
8 .81
I Excise Duty)
Value Added ( I- 6104.11 3950.96 11081.
7012.63
II II) 3291 70
-5499.41 -8240.90 -8674 -
3279.
Gross 18415.1
26
III Margin(PBDIT) 5
-7251.25 -9622.85 -9304 -
3186.
18557.2
Gross 15
IV Profit(PBIT) 2
Extra Ordinary 414.3
V 0.00
Income 5
-7742.31 -10279.51 -9242 -
3503.
Profit before Tax 18655.1
97
VI (PBT) 8
VII Income Tax 0.00 0.00 0.00 0.00 0.20
-7742.31 -10279.51 -9242 -
3503.
18655.1
77
VIII Profit after Tax 8
PHYSICAL OUTPUT
Licenced Installed T/o (Rs-
Sl Year Cap Capacity Achieved Crs)
1 2008-09 23210 MT 23210 MT 5876 MT 84
2 2009-10 23210 MT 23210 MT 5100 MT 104
3 2010-11 23210 MT 23210 MT 12289 MT 137
4 2011-12 23210 MT 23210 MT 8335MT 156
5 2012-13 23210 MT 23210 MT 11551MT 240
6 2013-14 23210 MT 23210 MT 10180MT 156
7 2014-15 23210 MT 23210 MT 3187MT 70.45
8 2015-16 23210 MT 23210 MT 4600MT 84
9 2016-17 23210 23210 5360 108
HISTORY OF BHEL-HPVP (BHPV)
Licensed to start construction of plant at Visakhapatnam in 1966, BHPV

confronted many obstacles such as water problems, frequent power cuts both at
initial stage as well as at the time when construction was going on. In spite of all
those obstacles the civil and structural work was completed to a major extent by
the end of 31st March1967.The licensed and installed capacity is 23210 MT. The
initial capital outlay being Rs.17.5 crores. Later after Completion of installation
work BHPV had received orders for the 1 st time from M/S BOKARO steel plant
and Fertilizer Corporation of India ltd., for fabrication and supply of equipment.
The factory at initial stages had suffered a loss in fabrication and delivery of
equipment to customers due to delay in the procurement of required raw material.
The factory was scheduled to go into production initially in July 1967, but due to
backlog of some uncompleted construction work the Company went into
commercial production only in 1971. Sir K.C.Panth then the Minister of State for
steel and heavy engineering inaugurated the initial production in 1970 where some
production facilities had already been established by installation of fabricating
machinery like bending rolls, welding equipment etc. During the first year
production, the company has incurred a loss of Rs 27.47 lakhs mainly due to
incidence of fixed expenditure apportion-able to Production like establishment
depreciation etc. The same loss position was continued till 1978 - 1979. The
continuous losses put BHPV far from profiteering companies.
In 1979-80 BHEL-HPVP (BHPV) has witnessed several significant events
both on financial as well as production fronts. BHEL-HPVP (BHPV)for the first
time in its years of commercial production attained a break-even level with a
marginal profit of Rs 33.09 lakhs as against a net loss of Rs 129 lakhs projected at
the beginning of the year. During 1980-81 the company for the second consecutive
year, earned a net Profit (after tax) Rs 48.21 lakhs from its operations. This year
BHEL-HPVP (BHPV) operations included manufacturing of very critical and
sophisticated equipment to core industries. Again in 1981-82 the company
operations resulted in a net profit of Rs 60.19 lakhs as against a budgeted loss of
Rs 20/- lakhs. Major pending interest on loan from GOI was cleared in this year.
During 1982-83 BHEL-HPVP (BHPV) reached 100% target production and
resulted in a net profit of Rs103.71 lakhs as against the budgeted loss of Rs 95
lakhs. With prestigious work orders from Visakhapatnam steel plant for supply of
air and gas separation plants BHPV crossed a target production and its operations
resulted in a net profit of Rs 575 lakhs. Again in 1987-88 BHPV’s projects were
successfully fabricated and its profits took an upward trend and its operations
resulted in PAT of Rs 290 lakhs. It was expected to emerge an increasing trend in
the profits of BHPV for the year 1988-89.
However, due to changes in the economy with entry of global players in

1990s, increased private sector competition, introduction of LSTK concept by
customers and Governments policy towards PSU i.e. implementation of VRS and
proposals for disinvestment, the Company has suffered huge losses in 2002-03 and
2003-04. By virtue of this, entire net worth of the company got eroded. This
resulted for reference of the company to BIFR in August 2004.
Various revival proposals tried after 2004 for rehabilitation of the company
through outright sale, merging with other PSUs, stand alone revival etc. However,
due to change in Government policy after 2005 and considering the potential of
BHPV, GOI has finally made the company as subsidiary of BHEL, a Navaratna
PSU.
AN OVERVIEW OF TOP MANAGEMENT:
From May 2008 the company became subsidiary of BHEL. At Corporate
level the company’s affairs are managed by the Board consist of full time
Managing Director and CMD, BHEL as the chairman of the board. In addition, 1
Ex officio Director from DHI (administrative ministry) & 2 functional Directors
also constitute the Board.
Technology & Market Issues:

The present plant & machinery & infrastructure utilizing by the company is
of 30 years old and have been fully depreciated. At present the internal lead time
is high when compare to competitors. Similarly in the areas of engineering the
lead time required for design and drawings is to be reduced which requires
implementation of sophisticated process design software.
Product Diversification
The company has undertaken several EPC contracts on EPC/LSTK basis at
various locations in India and abroad. The Company R&D Department has
developed technology for manufacture of compact Heat Exchanger for the light
Combat Aircraft (LCA) under the funding by Aeronautical Development
Agency (ADA). BHPV now with the technology acquired from BHEL
(Holding Company), diversified into power plant equipment, namely HRSG
Boilers, Deaerators etc.
Revival and Turnaround of the company:
The salient features of revival scheme are as below.
(As per the Govt. of India, Ministry of Heavy Industries & Public Enterprises,
Department of Heavy Industry, letter F.No. 1 (11) / 2004 – PE (IV) Dated
07.05.2008)
1. GOI will waive and write off loan and interest amounting to Rs.415.61 Crs.
2. GOI to provide guarantee amounting to Rs.250 Crs to enable BHPV to
raise bonds from the domestic market subject to the conditions as
intimated vide this office letter of even no. dated 29.04.2008
3. The entire paid up capital of BHPV to the tune of Rs. 33.79 Crs would be
transferred to BHEL at a notional value of Re. 1/-.
4. BHEL will take over both the assets and liabilities (including contingent
liabilities) of BHPV as a going concern.
5. The takeover will entail the following concessions from the
6. Government of Andhra Pradesh:
a) Transfer of title of land measuring 386.73 acres in possession of BHPV
as gift along with waiver of registration and stamp duty.
b) Waiver of Sales Tax arrears amounting to Rs.42.16 Crs
c) Waiver of NALA Tax of Rs.43 lakhs and
d) Waiver of dues towards Water Tax, Property Tax, and Vacant Land Tax
of Rs.3.96 Crs.
7. The consortium of Bankers has agreed for One-Time-Settlement BHEL may
take timely advantage of the offer.
8. BHEL will infuse at least Rs.34 Crs as additional Equity Capital and
adequate funds for up-gradation of manufacturing facilities, Capex and
Working Capital.
9. BHEL will take over BHPV with all its employees.
10. DHI will assist BHEL in settling the disputed demands relating to excise,
customs, income-tax etc., on a case to case basis.
11. BHEL will take-over BHPV as its subsidiary and take all possible steps for
its revival. The matter regarding reconstitution of the Board of Directors is
under consideration of the competent authority.
The Sanctioned Rehabilitation-cum-Take-over Scheme:
The Revival Scheme envisages take-over of Bharat Heavy Plate and
Vessels Limited (BHPV), a Government of India Enterprise and Subsidiary of
Bharat Yantra Nigam Limited (under The Ministry of Heavy Industries and Public
Enterprises) by Bharat Heavy Electricals Limited (BHEL), a Government of India
Enterprise (also under the Ministry of Heavy Industries and Public Enterprises) as
its subsidiary. As per the scheme, the entire undertaking of BHPV shall be
transferred to BHEL as its subsidiary. The entire paid-up capital of Rs 33.79 Crs
would be transferred to BHEL at a nominal value of Re 1/- . BHEL will take-over
both assets and liabilities (including contingent liabilities) of BHPV as a going
concern. BHEL will take-over BHPV with all its employees. BHEL will infuse at
least Rs 34 Crs as additional Equity Capital and adequate funds for up-gradation
of manufacturing facilities, CAPEX and working capital. Above cited “Sanctioned
Rehabilitation–over-Scheme” has been found acceptable to all the employees and
secured creditors.
Above scheme was approved by BIFR in October 2010.
Synergy of Business between BHEL and BHPV:

In addition to improvement in present business of BHPV, the take-over by
BHEL will have the following advantages:
 Managerial and marketing support from BHEL.

 Diversification into High Pressure Power Boilers.
 Technological Support for new products.
 Financial Support for up – gradation of manufacturing facilities,
Capex and Working Capital Requirements.
 Ensured flow of new orders.
 Synergy between the two organizations in view of similarity of
products/technologies.
 Business advantage due to excellent Brand Image of BHEL.
Factors for revival of BHPV through takeover by BHEL:
BHEL on its part has worked out the viability of the BHPV takeover, taking
into consideration the points:
BHEL to enhance the capabilities & capacities of BHPV to build upon its
strengths in the existing business of supplying process equipment to sectors like
Oil, Petrochemicals, Fertilizers etc. In addition, BHEL plans to enhance BHPV’s
capabilities & capacities in the area of industrial boilers, heat exchangers,
condensers etc.In capital investment of Rs. 235 Crs is envisaged for the up-
gradation of required facilities. Expected growth in the market for BHPV’s
products , especially in process equipment and cryogenics. As per Industry
analysis, orders worth Rs. 1700 Crs per annum are expected in the next five years
from oil Refineries and Petrochemical projects to flow to the engineering &
fabrication industry.
With a market share of BHPV of 15% – 18% in the past in this segment,
BHPV can become more confident in addressing this market overcoming its
financial constraints by participating in some of the tenders with BHEL support.
As such, BHPV’s financial weakness would be mitigated once its restructuring is
completed and BHEL takes over its functioning. The Captive Power Projects
(CPP) and Industrial boilers market segment is expected to grow from around Rs.
1800 Crs in 2007-08 to an estimated level of Rs. 2400 Crs in next five years based
on projected 12 % industrial growth in the coming years. BHPV can target a share
of 25% – 30% of this market, provided market expectations on delivery and price
are fulfilled. Currently, the Trichy unit of BHEL is constrained in targeting the
industrial boilers market due to heavy load of boiler orders from the utility
segment. In this regard, BHPV can be developed as a dedicated center for
industrial boilers by BHEL. The sales turnover from this segment has been
projected to reach to level of Rs, 800 Crs by the fifth year after functional take
over by BHEL, based on factors like increased volume, better financial
capabilities leading to lower working capital borrowing costs etc.
BHEL-HPVP (BHPV): A N O V E R V I E W .
1. INTRODUCTION
Incorporation of the Company : 1966
Primary Objective : To manufacture custom built
. Capital Equipment for the
process of Industries such as
Fertilizers, Petrochemicals,
Petroleum Refineries, and
Chemicals etc.
Collaboration Technical provided by : SKODA, Czechoslovakia.

Commencement of Construction : 1968
Completion of Construction : 1971
Commencement of Production : 1971
Initial Project Cost : Rs. 17.5 crores
Initial Product Mix : Heat Exchangers, columns,
Pressure vessels,
Technological :
Structures, Piping etc
Installed Capacity : 23, 210 M.T.
Turnover for the year 2016-17 : Rs. 108 crores
2. RESOURCES
PRODUCTION FACILTIES
Factory Area : 197 Acres
Total Covered Area : 90,000 sq. Meters
Covered area of Production Shops : 56,000 sq. Meters
Power Requirement : 3,000 KW from APSEB
No. of Ancillary Units : Around a Dozen
IMPORTANT MACHINERY
The maximum crane lifting capacity is 120 tones, but loads up to 250 tones
can be lifted with improvisation. Maximum Rolling capacity is 60mm in cold
condition and 170mm in hot condition. BHPV has the largest heat treatment
furnace in India, the size being Meters width, 5.5 meters height and 36.5 meters
long. One more furnace of 200 Ton capacity and 15mtrs. Bogie length has been
added. Other critical equipment available with BHPV are Deep Drawing
Hydraulic Press of 1600T capacity Single Spindle CNC Deep hole Drilling
Machine with Gun Drilling attachment and 2Nos. CNC drilling machines which
can employ conventional drills. Another CNC Deep hole drilling machine has
been installed recently by HMT.A number of Welding Rotators of capacity up to
250 Tones. Welding equipment such as manual Arc, Sub merged Arc, TIG, MIG,
Plasma including the latest high productive welding equipment such tune
head submerged arc welding, and Bi-cathode TIG welding .Tube fining
Machine. A number of vertical and horizontal boring machines with a maximum
capacity of 5 meters dia and 200mm spindle dia respectively. Different types of
Non-destruction Testing Equipment. Well equipped Physical and Chemical
Laboratories. Metrology section etc., HCL Super-Mini Computer, Two Mini
computers 56 CAD Machines and 118 Personal computers.
MANPOWER (As on 1st May, 2017)

 Workmen / Staff : 702
 Supervisors : 79
 Executives : 220
 Total : 1001
 Apprentices - 30
 Contract Labour - 295
EMPLOYEE WELFARE AMENITIES
 Township Area - 151 Acres

 No. of Quarters - 1192
 20 bed Hospital
 Protected Water Supply
 Underground drainage system
 English medium school with CBSE Syllabus
 Telugu medium school with AP State Syllabus
 Special school for mentally handicapped children.
 Vocational training centre for mentally handicapped
 Community center for cultural activities & sports – open air theatre
facilities
 Kalyana Mandapam.
By absorbing know-how from various world renowned collaborators, BHPV

upgraded its status from a mere fabricator of process equipment to that of an
engineering company of international repute.
PROJECTS OF NATIONAL IMPORTANCE EXECUTED/UNDER
EXECUTION
S.NO. CUSTOMER PROJECT/EQUIPMENT
1. IOCL Paradip Boiler III & IV Boiler Drums -2 No’s
2. HRSG Modules& KRIBHCO MRSG Module12No

& OPAL 3&
3. PCL Chennai Nitrogen storage tanks
4. BHEL Haridwar 80 No’s support plates for conducer
5. TISCO&RINL Vizag 200 M3 oxygen, Nitrogen, & Argon

Buffer vassals
6. BHEL, Chennai Higher Diameter pipe bends
7. NRL,Numaligarh 600 Nm3/hr HPN plant
8. HPCL, Visakhapatnam CDU Heater with APH System/VDU

Heater
9. HPCL, VREP – II Clad/CS Columns/CS heat Exchangers
Visakhapatnam etc
10. HPCL, Visakhapatnam Co-boiler
11. HPCL, Visakhapatnam Revamping of 50TPH oil & gas fired

boiler
12. HPCL, Mumbai 50 TPH Boiler
13. BPCL, Mumbai Nitrogen Plant
14. Hyundai Heavy Industries, Cryo Nitrogen plant

New Delhi
15. Space application centre, 505m Dia thermal vacuus system
Ahmedabad
16. TECHNIMONT ICB LTD. Nitrogen plant
Mumbai
17. OSWAL CHEMI Waste Heat LP boilers
FERTILIZER LTD-Paradeep
As a part of total quality management program, BHPV has acquired ISO
9001 certification during the year 1993-94, particularly to boost up its exports and
to be competitive in the international market.
 Re-certification of ISO 9001 has been obtained in September, 1996.
 In recognition of high standards of our quality, confederation of Indian
industry (CII), Southern Region, AP presented the Quality Award.

RESEARCH & DEVELOPMENT
Research & Development department was established in 1975 and is well
equipped with high tech equipment to cater to Applies Research and Product
Development. R&D has developed 136 Projects so far. Some of the products
commercialized include:
 Titanium Anodes
 Titanium Air Bottles
 Cryogenic Vats
 Individual Quick Freezing Unit
 Super Insulated Piping.
 Super Insulated Cryogenic Storage tanks
 D.M. Water Plants

A prestigious order for Development of Heat Exchangers for Light Combat
Aircraft (LCA) Phase-II has been received from Aeronautical Development
Agency, Bangalore.
 Some of the Awards received for excellence in R&D include:
 CIS Award for R&D achievement in 1992-93.
ANCILLARISATION
BHPV has developed some ancillary industries in its vicinity to cater to its
requirements. Apart from offering sufficient work load to these industrial units,
BHPV has been assigning work to a number of small sector industries. BHPV
provides material, transportation and inspection services to the Ancillaries to help
them rise to its quality requirements.
PRESENT STRENGTHS
 Financial, Managerial, Technical back-up and support of Navaratna PSU,
BHEL
 Excellent Design & Engineering capabilities.
 State –of –the – Art Manufacturing facilities.
 Accomplished image as a supplier of Quality Products in the domestic and
international markets.
 High degree of customer confidence.
 Technological tie-up arrangements.
 Well trained and qualified work force and Engineers.
 Sound work culture & harmonious Industrial Relations.
 Extensive computerization.
 Capability to supply Projects & Systems on turnkey basis.
 Project Management Skills.
PLANS & STRATEGIES
 To grow as an Engineering, Procurement and Construction Company.
 To enlarge Export Business.
 To resort to extensive computerization and Automation for reduction of
cycle time, improvement of quality and reducing costs.
 To forge strategic business alliances with International Companies to derive
technological and marketing advantages.
 To strive for continuous updating of technologies to be on par with
International Companies.
 To focus on Human Resources Development.
 To change the work culture to be compatible with market demands.
CONSTRAINTS
 Non computerization / No ERP
 High average age of employees / no executive recruitment since 1998
 Working capital constraints
 Replacement/updating of machinery
CHAPTER III
THEORITICAL FRAME WORK OF THE STUDY

Meaning
Generally a fund is interpreted as working capital. Thus, funds flow is change in
working capital. Hence, the changes in working capital is called as flow, the flow
may be inflow or outflow. The term working capital has two concepts, gross
working capital and net working capital. Gross working capital is the total of all
current assets, whereas net working capital is the excess of current assets over
current liabilities. Fund flow statement is prepared and interpreted on the basis of
net working capital concept. Funds flow statement measures and presents in an
analytical manner the summarized version of the numerous flows of funds for a
specified period.
Importance of funds flow statement

Funds flow statement is an important tool; it helps in the planning, deployment and
controlling of funds year after year. The following are the benefits of funds flow
statement. It provides a detailed analysis and understanding of changes between
two balance sheet dates. It shows the fund mobilization and canalization. It helps to
take fund projections for the future. It is a useful technique to measure the quantum
funds needs for efficient operation of a firm.
The basic purpose of preparing the statement is to have a rich into the financial
operations of the concern. It analyses how the funds were obtained and used in the
past. In this sens, it is a valuable tool for the finance manager for analyzing the past
and future plans of the firm and their impact on the liquidity. He can deduce the
reasons for the imbalances in uses of funds in the past an take necessary corrective
actions. In analyzing the financial position of the firm, the Funds Flow Statement
answers to such questions as-
1. Why were the net current assets of the firm down, though the net income
was up or vice versa?
2. How was it possible to distribute dividends in absence of or in excess of
current income for the period ?
3. How was the sale proceeds of plant and machinery used ?
4. How was the sale proceeds of plant and machinery used ?
5. How were the debts retired ?
6. What became to the proceeds of share issue or debenture issue ?
7. How was the increase in working capital financed ?
8. Where did the profits go?
Though it is not an easy job to find the definite answerers to such questions
because funds derived from a particular source re rarely used for a particular
purpose. However, certain useful assumptions can often be made and reasonable
conclusions are usually not difficult to arrive at.
(2) Evaluation of the Firm's Financing. One important use of the statement is that it
evaluates the firm' financing capacity. The analysis of sources of funds reveals how
the firm's financed its development projects in the past i.e., from internal sources or
from external sources. It also reveals the rate of growth of the firm.
(3) An Instrument for Allocation of Resources. In modern large scale business,

available funds are always short for expansion programmes and there is always a
problem of allocation of resources. It is, therefore, a need of evolving an order of
priorities for putting through their expansion programmes which are phased
accordingly, and funds have to be arranged as different phases of programmes get
into their stride. The amount of funds to be available for these projects shall be
estimated by the finance with the help of Funds Flow Statement. This prevents the
business from becoming a helpless victim of unplanned action.
(4) A Tool of Communication to Outside World. Funds Flow Statement helps in

gathering the financial states of Business. It gives an insight into the evolution of
the present financial position and gives answer to the problem 'where have our
resources been moving'? In the present world of credit financing, it provides a
useful information to bankers, creditors, financial, it provides a useful informations
and government etc. regarding amount of loan required, its proposes, the terms of
repayment an sources for repayment of loan etc. the financial manager gains a
confidence born out of a study of Funds Flow Statement. In fact, it carries
information regarding firm's financial policies to the outside world.
(5) Future Guide. An analysis of Funds Flow Statements of several years reveals
certain valuable information for the financial manager for planning the future
financial requirements of the firm and their nature too i.e. Short term, long-term or
mid term. The management can formulate its financial policies based on
information gathered from the analysis of such statements. Financial manager can
rearrange the firm's financing more effectively on the basis of such information
along with the expected changes in trade p payables and the various accruals. In
this way, it guides the management in arranging its financing more effectively.
Fund Flow Analysis
Fund may be interpreted in various ways as
(a) Cash,
(b) Total current assets,
(c) Net working capital,
(d) Net current assets.
For the purpose of fund flow statement the term means net working capital. The
flow of fund will occur in a business, when a transaction results in a change i.e.,
increase or decrease in the amount of fund.
According to Robert Anthony the funds flow statement describes the sources from
which additional funds were derived and the uses to which these funds were put. In
short, it is a technical device designed to highlight the changes in the financial
condition of a business enterprise between two balance sheets.
Different names of Fund-Flow Statement
A Funds Statement
A statement of sources and uses of fund
A statement of sources and application of fund
Where got and where gone statement
Inflow and outflow of fund statement
Objectives of Fund Flow Statement
The main purposes of FFS are –
 To help to understand the changes in assets and asset sources which are not
readily evident in the income statement or financial statement.
 To inform as to how the loans to the business have been used.
 To point out the financial strengths and weaknesses of the business.
Format of Fund Flow Statement Sources Applications
Fund from operation
Fund lost in operations
Non-trading incomes
Non-operating expenses
Issue of shares Redemption of redeemable preference share
Issue of debentures
Redemption of debentures
Borrowing of loans Repayment of loans
Acceptance of deposits
Repayment of deposits
Sale of fixed assets
Purchase of fixed assets
Sale of investments (Long Term)
Purchase of long term investments
Decrease in working capital
Increase in working capital
Steps in preparation of Fund Flow Statement.
1. Preparation of schedule changes in working capital (taking current items only).
2. Preparation of adjusted profit and loss account (to know fund from or fund lost
in operations).
3. Preparation of accounts for non-current items (Ascertain the hidden
information).
Preparation of the fund flow statement.
There is a plenty of business transactions which results in flow of funds or which
cause changes in working capital.
For this purpose, all the business transactions classified into (a) those transactions
which increase funds i.e. sources of funds (b) those transactions which decrease
funds i.e. application of funds. Identification of transactions causing for increase or
decrease in funds is essential for funds flow statement analysis. The following
transactions do not affect the flow of funds. These are
1. Transactions between two current assets. (For ex. conversion of stock into
cash)
2. Transactions between two current liabilities.
3. Transactions between current assets and current liabilities.
4. Transactions between two non-current or fixed assets.
5. Transactions between two long-term liabilities.
6. Transactions between non-current assets and long-term liabilities.
It is clear from above, transactions between a current account (non-current account)

and another current account (non-current account) does not affect flow of funds.
The first three is connected with current account; the last three belongs to non-
current account. As against this concept, any transaction between a current account
and a non-current account affect funds. These are;
1. Transaction between a long term liability and a current asset.
2. Transaction between a long term liability and a current liability.
3. Transaction between a non-current asset and a current asset.
4. Transaction between a non-current asset and a current liability.
Step - 1: Preparation of Schedule of Changes in Working Capital

It reveals the difference between the current assets and liabilities. Increase in current
assets and decrease in current liability will increase the working capital amount. At the
same time decrease in current assets and increase in current liability will decrease the
working capital amount.
Statement or schedule of changes in working capital
________________________________________________________________________
Particulars Previous year Current year Effect on working capital
Increase Decrease
______________________________________________________________________
Current Assets
Þ Cash in hand
Þ Bills receivable
Þ Sundry debtors
Þ Temporary investments
Þ Stocks / inventories
Þ Prepaid expenses
Þ Accrued incomes
_______________________________________________________________________
Total current assets
________________________________________________________________________
________________________________________________________________________
Particulars Previous year Current year Effect on working capital
Increase Decrease
________________________________________________________________________
Current liabilities
Þ Bills payables
Þ Sundry creditors
Þ Bank overdraf
Þ Short term advances
Þ Dividends payables
Þ Provision for taxation
________________________________________________________________________
Total current Liabilities
________________________________________________________________________
Working capital = CA- CL
Net increase or decrease in working capital =
Step – 2: Preparation of Adjusted P&L Account – to find fund from

operations
Because is the source of fund and will show in fund flow statement’s source side. So
before making fund flow statement, we must make statement showing the fund from
operation.
Operation means business activity and fund from operation means profit from business
activity. So, you will easy understand that profit from business activity between two
accounting period must be the source of fund.
Statement of fund from operations / Adjusted P/L Account
________________________________________________________________________
Closing balance of profit and loss account or retained earnings
as given in the Balance sheet
________________________________________________________________________
ADD: non –fund and non operating items which have been already
Debited to profit and loss account
1. Depreciation
2. Amortization of fictitious and intangible assets
Þ goodwill
Þ patents
Þ trade marks
Þ preliminary expenses
Þ discount on issue of shares
3. Appropriation of retained earning such as
Þ Transfer to general reserve
Þ Dividend equalization fund
Þ Transfer to sinking fund
Þ Contingency reserve etc.
4. Loss on sale of any non current or fixed assets such as
Þ Loss on sale of land and building
Þ Loss on sale of machinery
Þ Loss on sale of furniture
Þ Loss on sale of long term investments
5. Dividends including
Þ Interim dividend
Þ Proposed dividend (If it is an appropriation of profit and not taken as current liability)
6. Provision for taxation (if it is not taken as current liability)
7. Any other non fund / non operating items which have been debited to P/L account
Total (A)
LESS: Non –Fund or non operating items which have already been credited to profit and loss
account
1. Profit or gain from the sale of non current / fixed assets such as
Þ Profit on sale of land and building
Þ Profit on sale of plant and machinery
Þ Profit on sale of long term investment etc.
2. Appreciation in the value of fixed assets such as increase in the value of land if it has been
credited to profit and loss account
3. Dividends received
4.Excess provision retransferred to profit and loss account or written back .
5. Any other non operating item which has been credited to profit and loss account
6. Opening balance of profit and loss account or retained earnings as given in the balance
sheet
______________________________________________________________________________
Total (B)
______________________________________________________________________________
Funds received from operation or business activities = total (A) – Total (B)
______________________________________________________________________________
Step – 3: Funds Flow Statement for the year ending……
A) Source of funds
1. Fund from operation (balance of second step)
2. Issue of shares capital
3. Issue of debentures
4. Raising of long term loans
5. Receipts from partly paid shares, called up
6. Amount received from sales of non current or fixed assets
7. Non trading receipts such as dividend received
8. Sale of investments (Long term)
9. Decrease in working capital as per schedule of changes in working capital
_______________________________________________________________________
Total
B) Applications or uses of funds

_______________________________________________________________________
1. Funds lost in operations (Balance negative in second step)
2. Redemption of preference share capital
3. Redemption of debentures
4. Repayment of long term loans
5. Purchase of long term loans
6. Purchase of long term investments
7. Non trading payments
8. Payment of tax
9. Payment of dividends
10. Increase in working capital (As per positive balance of 1st step)-
_______________________________________________________________________
Total
CHAPTER -IV
ANALYSIS AND INTERPRETATION

Statement showing changes in working capital(Rs.in lakhs)
Effect of working capital increase decrease

particulars FUND2015-2016 2016-2017
FLOW STATEMENT Rs Rs
Source Amount appalication amount
Current assets 21844.47 17850.03 - 3994.4
- P 1781.64
urchase of fixed assets 4
Share holder funds
21844.47 17850.03
5721.23 Unsecured loans 4780
Funds from operation 31246.19 26411.34 4834.8 -
Un secured loans -
Current liabilities
5
Net Decrease in working 840.41
31246.19 26411.34
Capital
total current liabilities
6561.64
-9401.72 -8561.31 6561.64
- 840.41
Net working capital(CA-CL) 840.41
NET Decrease in working 9401.72 9401.72 4834.8 4834.8
capital 5 5
Adjusted p&L A/C
a
particulars amount particulars mount
1770.27 5721.23
To depreciation By funds from operation
T 3951.03
o accumulated loss
5721.23 5721.23
Interpretation
The short term financial position of the company is not at all satisfactory where as
working capital in 2015-16,-9401.72 is reduced to -8561.31 in the year 2016-
17,that means the company has to take drastic steps to increase its liquidity
position.
As per operation of funds we raised a source amount of Rs.6561.64 with that we
have to settle various loan accounts or buy some fixed assets as per our
Funds flow statement.sale of fixed assets is not at all good sign for a company.
Over all performance of the company is not at all satisfactory in these (2015-16 to
2016-17) years so the management has to take action regarding the improvement of
short term as well as long term financial position
Statement showing changes in working capital(Rs.in lakhs)

Partic Effect of working capital increase decrease
ulars 2014-2015 2015-2016 Rs Rs
Current assets 31112.08 21844.47 - 9267.61
Total current assets 31112.08 21844.47
Current liabilities 43189.85 31246.19 11943.66 -
Total current liabilities 43189.85 31246.19
Net working capital -12077.77 -9401.72 - 2676.05

2676.05
Net decrease in working 12077.77 12077.77 11943.6
Capital 6 11943.66
Fund flow statement
particular amoun Particular amoun

s t s t
Shar - Fund 18398.46
e holders fund s lost in operation
Unsecure 11683.31
d loans
Sale of fixed assets 4039.12
Net decreasing in 2676.03

working capital
18398.46 18398.46
Adjusted P&L A/C

amou Particular amoun
particulars nt s t
To depreciation 1092.13 To accumulated loss 19490.59
To funds lost in 18398.46
operation
19491 19491
interpretation
the short term liquidity position of the company is not all satisfactory where as
working capital in 2014-15, 12077.77 is reduced to 9401.72 in the year 2015-16,
that means the company should take necessary steps to salvage its weak liquidity
position.
Funds flow statement shows that we raised appalication amount of
Rs.18398.46,wich is not a good sign for an enterprise.
Overall performance of the company is not at all satisfactory in these (2014-15 to
2015-16) years.so the management has to take action regarding the improvement of
its weak liquidity position
Statement showing changes in working capital (Rs. In lakhs)
Effects of Working capital Increase Decrease

Particulars 2013-14 2014-15 Rs. Rs.
29445.50 31112.08 1666.58 -

Current assets
29445.50 31112.08
45376.54 43189.85 2136.69 -
Current Liabilities
45376.54 43189.85
Total current liabilities
-15881.04 -12077.77 3853.27
Net working capital = (CA-CL) 3853.27
15881.04 15881.04 3853.27 3853.27
Net decrease in working capital
Fund Flow Statement
Sources Amount Application Amount
Share holder fund Redemption of secured loans 20165.98
Redemption of unsecured
Depreciation of fixed assets 825.99 19193.50
loans
Funds from operation
34679.72
Net decrease in working
3853.27
capital
39359.48 39359.48
Adjusted P & L A/C
Particulars Amount Particulars Amount

To miscellaneous expenses 2583.87 By Funds from operation 34679.72
To, accumulated loss 32115.87

34679.72 34679.72
Interpretation
The short term financial position of the company is not at all satisfactory where as
working capital in 2013 – 14, -15931.04 is reduced to -12077.77 in the year 2014 – 15,
that means the company has to take drastic steps to increase its liquidity position.
As per operation of funds we raised a source amount of Rs 34679.72 with that we have
to settle various loan accounts or buy some fixed assets as per our funds flow statement.
Sale of fixed assets is not at all a good sign for a company.
Overall performance of the company is not at all satisfactory in these (2013–14 to 2014
–15) years so the management has to take action regarding the improvement of short
term as well as long term financial position.

Particulars
2012 – 13 2013 - 14 Rs. Rs.
Current Assets 19756.64 26014.07 6257.43 -
Total current assets 19756.64 26014.07

Current Liabilities 11305.55 20189.06 - 8883.51
Total current liabilities 11305.55 20189.06
Net working capital = (CA-CL) 8451.09 5825.01 2626.08 -

2626.08
Net decrease in working 8451.09 8451.09 8883.51 8883.51

capital
Fund Flow Statement
Sources Amount Applications Amount
Share holder fund NIL Funds lost in operation 5001.84
Raising of secured loans 80.32
Raising of unsecured loans 2208.08
Depreciation of fixed asset 87.36
Net decrease in working capital 2626.08
5001.84 5001.84
Adjusted P & L A/C
To, miscellaneous expenses 602.97 By, accumulated loss 5604.81

To, funds lost in operation 5001.84
5604.81 5604.81
Interpretation
The short term liquidity position of the company is not at all satisfactory where as
working capital in 2012 – 13, 8451.09 is reduced to 5825.01 in the year 2013 – 14, that
means the company should take necessary steps to salvage its weak liquidity position.
Funds flow statement shows that we raised application amount of Rs. 5001.84 which is
not a good sign for an enterprise
Overall performance of the company is not at all satisfactory in these (2012 – 13 to 2013
– 14) years so the management has to take action regarding the improvement of its
weak liquidity position.

Particulars
2011-12 2012-13 Rs. Rs.
26488.21 31934.12 5445.91

Current Assets
26488.21 31934.12
22574.81 24216.67 1641.86

Current Liabilities
22574.81 24216.67
Total current liabilities
3913.40 7717.45
Net working capital = (CA-CL)
3804.05 3804.05
Net increase in working capital
Fund Flow Statement
Sources Amount Applications Amount

3379.78 3804.05
Share holder fund Net increase in working capital
19226.66
Raising of secured loans 2722.23 Funds lost in operation
1166.3
Raising of unsecured loans
15762.4
Depreciation of fixed asset
23030.71 23030.71
Adjusted P & L A/C
To,miscellaneous expenses 27896.67 By, accumulated loss 47123.33
To, Funds lost in operation 19226.66

47123.33 47123.33
Interpretation
The short term liquidity position of the company is good, in the year 2011 – 12, working
capital 3913.40 is increased to 7717.45 in the year 2012 – 13, which indicates the
company has improved its liquidity position.
According to Funds flow statement the company incurred losses in its operations which
is not a good symbol for an enterprise
Overall performance of the company is some what satisfactory in these (2011 – 12 to

2012– 13) years but the position can be improved in the future.
Cash Flow Statement
Particulars As on 31-03-15
Cash flow from operating activities
Net profit for the year 9635.52
Adjustments for:
Depreciation charge for the year 848.30
Adjustment for:
Increase/ Decrease in inventory -499.92
Decrease in loans and advances 3032.41
Increase/ Decrease in debtors 3078.63
Increase in deferred revenue expenditure 2563.87
Increase/Decrease in liabilities -95.46
Increase/Decrease in provisions -157.51
Net cash flow from operating activities 18405.84
Purchase of fixed assets -22.31
Increase/Decrease in investments 0.00
Cash flow from investing activities -22.31
Increase in secured loans -21815.24
Increase in unsecured loans -19193.50
GOI Loan waiver 22480.33
Cash flow from financing activities -18528.41
Net increase in cash and cash equivalents -144.88
Cash and cash equivalents OB 585.57
Cash and cash equivalents CB 440.69
As on 31-03-14
Particulars
Net profit for the year -5604.84
Adjustments for:
Adjustment for:
Increase/ Decrease in debtors -2396.93
Net cash flow from operating activities -3113.01
Increase in secured loans 80.33
Increase in unsecured loans 2208.08
Cash flow from financing activities 2288.41
Adjustments for:
Adjustment for:
Increase/ Decrease in inventory 981.48
Increase/ Decrease in debtors 173.9
Increase/Decrease in provisions 19.74
Net increase in cash and cash equivalents 628.59
Adjustments for:
Adjustment for:
Increase/ Decrease in inventory 1465.27
Decrease in loans and advances -1876.41
Increase/Decrease in investments .02
Adjustments for:
Adjustment for:
Increase in deferred revenue expenditure -58.51
Increase/Decrease in liabilities 1172.95
CHAPTER V
SUGGESTIONS
I. The working capital management of the firm must be improved, as the
current assets of the firm are just enough to meet the short term obligation
leaving no room for much needed working capital.
II. Determined efforts are to be made to reduce the level of sundry debtors.
Necessary steps are to be taken to reduce the delay in collection period by
reducing transit item and inspection time of customer’s before acceptance.
III. Inventory levels of the firm should be brought down in order to reduce the
carrying cost. Further, stores and spares for the company are high. To bring
down the cost being incurred for the repairs and maintenance, their levels
will have to be reduced.
IV. BHEL should try to secure short term loans from other financial institutions at
lesser rates of interests compared to rates charged by commercial banks.
Further, BHPV can pursue certain reliefs with the Government by way of
moratorium on loan payments and freezing of interests.
V. Non rationalization of manpower, an ill for every public sector undertaking
should be done away with planning and establishing its manpower
requirements in a way that would eliminate the unwanted and training
facilities to such in other self sufficient activities.
VI. The cost control mechanism of the firm should be improved, so that wasteful
expenditure can be avoided and areas of cost reduction can be identified.
VII. The company should upgrade its technology and also take necessary measure
in order to curtail the avoidable to enable the company to competitive rates
in order to meet competition from private players.
VIII. BHEL has to secure more export orders by identifying new import market in
order to increase its production and benefits from the economies of large
scale.
IX. Efforts are to be made to earn more return on capital employed by reducing
the outsider’s funds.
X. There must be better co-ordination among purchases, production, marketing
and financial departments. This will help in the betterment of the financial
performance of the firm.
XI. Scraps must be disposed on time through auctions.
XII. The firm should try to reduce excessive dependence on outsider’s funds in
order to reduce the interest burden of the firm which is keeping the margin
of the firm under pressure.
XIII. The company’s cash balance position was not steady and it is highly
fluctuating, so, the company should try to maintain a proper balance so that
it leads to positive effect towards networking capital.
BIBLIOGRAPHY
 Financial analysis by IM Pandey

 Financial management, Apollo Publishers
 The Hindu Newspaper
 Library of BHPV
 Financial Services
D. M. Mithani and E. Gordan (Himalaya Publication)
Vasant Desai and S. Jain (Himalaya Publications)

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PROJECT ON FUNDS FLOW STATEMENT

“FUNDS FIOW STATEMENT”

PROJECT REPORT -2017

Submitted to JNTU University, Kakinada in partial Fulfillment for

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

VIGNAN INSTITUTE OF ENGINEERING FOR WOMEN

THIS IS TO CERTIFY THAT THE PROJECT REPORT ENTITLED “FUNDS FIOW

I hereby declare that the following documental project titled by “FUNDS

I express my deep and sincere gratitude to director of MASTER OF

I take this opportunity of expressing my sincere thanks to BHEL.

I want to express my heartfelt feelings to my parents and friends who

CHAPTER 3: COMPANY PROFILE

CHAPTER 4: THEORITICAL FRAME WORK

BHEL PURSUES CONTINUAL IMPROVEMENT IN THE QUALITY OF

ITS PRODUCTS, SERVICES AND PERFORMANCE LEADING TO

CUSTOMER DELIGHT THROUGH COMMITMENT, INNOVATION

AND TEAM WORK OF ALL EMPLOYEES”.

1.1INTRODUCTION OF BHEL-HPVP PLANT

This is one company which houses excellent engineering skills, uncompromising

1.2BHEL-HPVP PICTORIAL VIEW

1.4SALIENT FEA TURES OF DIFFENRENT SHOP:

1.5 BHEL-HPVP PRODUCTS

In B.H.P.V-HP&VP, production is also mostly carried out by welding. It involves

1.6 WELDING TECHNOLOGY

Preparation, revision and Approval of welding procedures specifications and

Procurement and Qualification of the Welding consumables.

Qualification documentation and maintenance of welder or welding operator

Definitions of financial management:

“Financial management is concerned with the managerial decisions that

“Financial management is that business activity which is concerned with

These definitions we can understand the functions of the financial

BHPV was established in the year 1966 at Visakhapatnam, Andhra Pradesh

BHPV started production in the year 1971-72 with a turnover of just

BHPV is the largest fabricator of process equipment in India for the

Situated in the city of destiny of Visakhapatnam on the western see coast of

NEED FOR THE STUDY

After its commissioning & commencement of production, the Company has

Mammoth Engineering capabilities & excellent designing network &

The importance of the study, Financial Statement Analysis in BHPV,

OBJECTIVES OF THE STUDY

(c)To measure the operational efficiency of BHEL-HPVP (BHPV)To

SCOPE OF THE STUDY

In the area of cryogenics: ICCP, INOX, Shanghai’s oxygen, L&T,

In the area of combustion system: ISGEC, Babcock Thermax, Ignifluid

CORPORATE OFFICE: - New-Delhi.

Bharat Heavy Plates and Vessels Ltd, it is a public limited Company. It is a

INTRODUCTION ABOUT BHEL-HPVP (BHPV):

In India these heavy engineering industries occupy a crucial role in its

Licensed installed capacity is 23210MT. The initial capital outlay is Rs.17.5

Licensed to start construction of plant at Visakhapatnam in 1966, BHPV

However, due to changes in the economy with entry of global players in

Technology & Market Issues:

Above scheme was approved by BIFR in October 2010.

Synergy of Business between BHEL and BHPV:

 Managerial and marketing support from BHEL.

Collaboration Technical provided by : SKODA, Czechoslovakia.

MANPOWER (As on 1st May, 2017)

 Township Area - 151 Acres

By absorbing know-how from various world renowned collaborators, BHPV

1. IOCL Paradip Boiler III & IV Boiler Drums -2 No’s

2. HRSG Modules& KRIBHCO MRSG Module12No

4. BHEL Haridwar 80 No’s support plates for conducer