CHAPTER – I INTRODUCTION 1.

1 PROFILE OF THE COMPANY (BHEL) Bharath Heavy Electricals Limited is the largest engineering and manufacturing enterprise of its king in India. It is also one of the leading international companies in the field of power equipment measures. The first plant of BHEL was set up at Bhopal in 1956, which signaled the beginning of the Heavy Electrical Industry in India. 1.2 Wide spread centers In the early sixties, three more major plants were set up at Haridwar, Hyderabad and Trichy. The company has fourteen manufacturing units, four power sector regional centers, eight service centers and eighteen regional offices, besides project sites, spread all over India and abroad. A strategic business unit for ceramics was formed at Bangalore. 1.3 Unique specialties BHEL has a well recognized track record of performance making profits continuously since 1971-72 and paying dividends since 1976-77. BHEL manufactures over 180 products under thirty major groups. The quality and reliability of its products is due to the emphasis on design, engineering and manufacturing to international standards best acquiring and adopting some of the best technologies from leading companies in the world together with technologies developed in its own R&D centers.

1.4 Certifications BHEL has acquired certifications from both ISO 9000 & ISO 14000 standards for its operations and has also adopted the concepts of total quality management. BHEL has adopted occupational health and safety standards as per OHSAS 18001. The major units of BHEL have already acquired the ISO 14001 certification. The company’s inherit potential coupled with its strong performance over the years has resulted in it being chosen as one of the “Navratna” status. 1.5 Business sectors of BHEL BHEL’s operations are organized around three business sectors namely Power, Industry and International Operations. Industry operation includes Transmission,

Transportation, Telecommunication and Renewable Energy. 1.6 POWER SECTOR 1.6.1 Generation Power generation sector comprises thermal, gas, hydro and nuclear power plant business. Though BHEL supplied sets account logs nil till 1969MV or 65% of the total installed capacity of 95377 MV 70, it rises to 62,051

in the country.

BHEL has the capability of turning power projects from concept to commissioning. With its technology, it has the ability to produce thermal sets with super critical parameters unto 1000 MV unit rating and gas turbine- generator sets of upto 240 MV units rating.

1.6.2 Achievements a) To make the most part of the high-ash content coal used in India, BHIL supplies circulating fluidized bed combustion boilers to both thermal and combined cycle power plants. b) The company manufactures 235 MV nuclear turbine-generator sets and obtains a production of 500 MV in these sets. c) Custom made hydro sets of Francis, Pelton and Kaplan types for different headdischarge combinations are also engineered and manufactured by BHEL. d) Until now, the company had placed orders for more than 700 utility sets of thermal, hydro, gas and nuclear plants. This is based on contemporary technology comparable to the best in the world. It is also internally competitive.

1.7 INDUSTRIAL SECTOR 1.7.1 Industry BHEL is a major contributor of equipment and system to industries. Its major contributions are cement, sugar, fertilizer, refineries, petrochemicals, steel, paper etc. The range of systems and equipment supplied includes captive power plants, DG power plants, high-speed industrial drive turbines, electrical machines, pumps, valves etc. 1.7.2 Transportation Most of the trains operated by the Indian railways, including the metro in Calcutta, are equipped with BHEL’s traction electrics and traction control equipment. The company

also supplies electric locomotives to Indian railways and diesel shunting locomotives to various industries. The company have supplied 5000/4600 DC locomotives to Indian railways. Battery powered road vehicles are also manufactured by the company. 1.8 Telecommunication BHEL also give importance to telecommunication sector by way of small, medium and large switching systems. 1.8.1 Renewable energy Technologies used by BHEL for discovering non-conventional and renewable sources of energy include, wind electric generators, solar-power based water pumps, lighting and beating systems. 1.8.2 International operations BHEL has been established in over 50 counties of the world. Its knowledge is known from the United States in the West to the New Zealand in the far East. BHEL in these countries covers turnkey power projects of thermal, hydro and gas based type besides a wide variety of products like Switchgear, transformers and heat exchangers. BHEL has contributed over 1100 MV of boiler capacity to Malaysia. Besides this, they have also achieved successes in Oman, Saudi Arabia, Libya, Greece, Egypt, SriLanka etc. Their development in overseas has also provided BHEL, the experience of working with world renewed consulting organizations and inspection agencies. The demanding requirements of both domestic and international markets have been dealt successfully by BHEL. In terms of difficult works as well as technological, quality

and other requirements like financing package, extended warrantees have proven its capabilities. The company has also been successful in meeting varying needs of the industry like captive power plants, utility power generation or for the oil sector requirements. BHEL possesses large amount of flexibility to interface and change international companies for large projects. The company also exhibits adaptability by manufacturing and supplying intermediate products, like steam generator pressure parts. BHEL can be compared with the original equipment manufactures by its success in the area of rehabilitation and life extension of power projects. 1.9 BHEL product range throughout India The BHEL ranges are 1. Thermal Power Plants 2. Gas based Power Plants 3. Hydro Power Plants 4. Heat exchanges and Pressure Vessels 5. Oil field Equipment 6. Boilers 7. Boilers Auxiliaries 8. Pumps 9. Power station Control Equipment 10. Switch Gear 11. Bus Ducts 12. Equipment for Nuclear Power Plants 13. Steam less Steel Tubes vision

14. Loyalty and pride of the company. which offer the companies capabilities in this field. systems and services in the fields of energy. 7. Foster learning. BHEL will also assist and co-operate with the concerned Government Agencies and Regulatory Bodies engaged in environmental activities.12 Values: 1. Integrity and fairness in all matters.10 BHEL’S Vision BHEL’S vision is to become a world class innovation and competitive and profitable engineering enterprise providing total business solutions. customers and suppliers are given adequate knowledge about environment. Ensure speed of response. Strict adherence to commitments. creativity and team work. Zeal to excel and zest for change. Employees. 6. industry. transportation infrastructure and other potential areas. 2. 5. 4. 3. . Compressors A world class-engineering enterprise committed to enhancing stakeholder value. 1.11 Mission It is an Indian multinational engineering enterprise providing total business solutions through quality products. 1. Respect for dignity and potential individuals. 1.

who have been undergoing a phase of consolidation.13. many developing nations are planning to expand their electricity infrastructure for the forthcoming years.1. Though there has been a decrease in overall orders in the recent times. This is one of the parts of the sluggish state of the global economy and because of unsatisfactory financial performance of many acquisitions in the electric power sector. The total worldwide order of booking has been lowered leading to aggressive marketing by major global power plant equipment manufacturing players. Some countries have modified their plans because of the change in restructuring electricity market and reforms.13 Opportunities and threats 1. BHEL has the global opportunity for servicing of generating machinery as well as distributing generation in the developing countries . These changes in the environment have led to a cautious approach by developers and it’s harder to get off the new projects from the ground.East Asian countries. Middle-East and Gulf cooperation council( GCC) countries. Number of promising market for new power equipment are found in South. Moreover.1 World Investments made in the electricity sector have been lowered in recent years by foreign electricity venture as foreign direct investment in the developing world.

2) Areas like water management pollution control and waste management.13. Combined Cycle Demonstration Plant (CCDP) . 1. port handling systems.000 sq. Trichy unit was established in 1963 and is situated in Trichy.1.Tanjore highway road around 20km from Trichy Central Bus Stand. Seamless Steel Tube Plant (SSTP) 3. The company has also revised the vision. meters and consists of a major unit namely. energy conservation systems. High Pressure Boiler Plant (HPBP) 2. 1. transportation and industrial systems and products. which are suitably adjusted and with remodification to reflect it’s current aspuations. mission and values statements. 12.14 BHEL. TRICHY UNIT BHEL.000 employees are working in this organization on permanent basis and around 4000 employees are working on contract basis. In corporate line the company aims to accelerate the growth with suitable strategies and focus area the core strengths of the and company are 1) To strengthen and extend the core business of power generation power. power transmission. It has an area of 2. simulators [power and process]. LNG terminals are newly entered 3) To enter into continuous revenue stream business like power generation and transmission and distribution.2 Positioning for the future BHEL has finalized a new corporate plan with the title “strategic plan 2007” and steps are taken to start the iniatives. 50.

Trichy. . Tubes o Piping systems o Columns o Valves o Boiler Auxiliaries o Wind Electric Generators 1.16 Finance Department Of BHEL. Trichy o Steam Generators for Power Generation and o Industrial Applications o Heat Recovery Steam Generators o Industrial Boilers o Atmosphere and Circulating Fluidized bed o Combustion Boilers o Nuclear Steam Generators and Reactors o Pressure Vessels o Hear Exchange o Seamless Steel Tubes o Studded tubes o Serrated fin. 1.15 Product profile of BHEL. Trichy The following are the important operations of finance department of BHEL.Boiler Auxiliaries plant of Ranipet and piping centre of Madras (Chennai) and Goinwal come under the control of Trichy Unit.

Imports. Exports  System  Cash and Bank . Sales Accounting  Purchase Approvals  Budgets  Legal – Excise. Income Tax & Customs  Costing  Pay Roll  Internal Audit  Foreign Trade. Sales Tax.

2 CONCEPTS OF WORKING CAPITAL The two concepts of working capital are 1. or with in the operating cycle of the firm. But a short time financial decision mainly involves the cash flow within a year. Long.CHAPTER –II REVIEW OF LITERATURE 2. is the timing of cash. It means.term financial decisions by buying capital equipment or issuing debentures. involve cash which flows over an extended period of time. it concerned with day-to-day management activities. The key factor. which is used to differentiate long term financial management and short. 2.1 WORKING CAPITAL MANAGEMENT Working capital management is concerned with the decisions which are related with the current assets and the current liabilities. Gross working capital .term financial management.

hence it cannot take the advantage of cash discounts. debtors. Difficulties will arise in meeting the day-to-day expenses. This will lead to inefficiency and increase in costs with the minimum profits.1 Danger of inadequate working capital 1. in which one cannot pay its short-term liabilities in time. A net working capital becomes positive only when the current assets exceed current liabilities.3 TWO DANGEROUS POINTS OF CURRENT ASSETS 2. short-term securities. bills receivable and stock. So there arises a situation where there is a loss of reputation and tight credit terms. Net working capital The difference between current assets and current is called the net working capital.It refers to the investment made by the company in current assets. Current assets are the assets which can be converted into cash with an accounting year or operating cycle. bills payable. 2. 2. Current liabilities are the one which is claimed from the outsiders and are expected to be returned within an accounting year. 2.3. The organization’s requirements cannot be fulfilled in bulk. . It also includes cash. A negative net working capital occurs when current liabilities exceed current assets. Net working capital may be positive or negative. 3. and out siding expenses. Inadequate working capital will lead to a condition. It includes creditors.

3.2 Danger of Excessive Working Capital 1. This will lead to overall inefficiency in the organization. both the current assets i. there are chances of theft and loses. Excessive debtors and defective credit policy are the indication of excessive working capital. Excessive working capital will lead to low investments in fixed assets. 4. 5. Excessive working capital will make the management complacent.3. There may be delay in collection and increased incidence of bad debts. inadequate working capital and excessive working capital are dangerous. Beyond the limitations of both the level.4 NEED FOR WORKING CAPITAL MANAGEMENT Beyond the limit. fixed assets are not properly utilized. Excessive working capital will lead to unnecessary purchasing and excessive amount of inventories. 2. Thus this results in the fall of investments return. Hence there will be no profits for the business and there can be no proper rote of return on its investments.e. 5. Lack of working capital will lead to less favorable marketing conditions and less profitable projects. 2. The low rate of return on investment will lead to the fall in the value of shares. 2. Working capital Management provides effective and efficient decision to allocate the current assets. the common goal of the organization cannot be achieved. .4.. As a result. Due to scarcity of working capital.

is known as fluctuating or variable or temporary working capitals. when compared to their normal sales.1 Permanent Working Capital As the operating cycle is a continuous process. the need for current assets is felt constantly. Temporary working capital. Permanent working capital. 2. The Magnitude of the current assets need not to be the same.5. 2. It may increase or decrease over the time. When the company has a peak period of sales. 2.6 RATIO ANALYSIS . This minimum level of the current assets is known as permanent or fixed working capital. However the permanent working capital line needs not to be horizontal. there is a minimum level of current assets which are continuously required by the firm to continue its business operations.5 TYPES OF WORKING CAPITAL The two types of working capital are. The change of the extra working capital used to support the production and sales. 1. it will have large amount of inventories. However. when there is a slack period in the market.2. the investment made on the inventories and account receivable will be low. This makes the costumers to invest money for credit sales.5. 2.2 Temporary working capital On the other hand.

8 TYPES OF RATIOS 1.Ratio analysis. Current assets Current ratio = _______________________________ Current liability 2. 2. It describes in mathematical terms the quantitative relationship that exists between two numbers. refers to the analysis and interpretation of financial statements through ratios. 2. QUICK RATIO It is relationship between liquid assets and current liabilities.7 RATIO The term ratio simply means one number expressed in terms of another. Cash Cash ratio = _______________________ . CURRENT RATIO It is relationship between firm’s current assets and current liability. CASH RATIO It is relationship between cash and current liabilities. Now a day it is used by all the business and industrial concerns in their financial analysis. simply defined. Liquid assets Quick ratio = _________________________ Current liabilities 3.

Days/months in a year Debt collection period = _______________________________ Debtor’s turnover ratio 6. Total sales Debtors turnover ratio = ______________________________ Debtors 5. CREDITORS TURNOVER RATIO The ratio shows on an average the number of times creditors turned over during the year. DEBTOR’S TURNOVER RATIO It indicates the number time debtors turned over each year.Current liabilities 4. Generally the higher value of debtor’s turnover shows high efficiency to manage the credit management. DEBT COLLECTION PERIOD It indicates the speed with which debts are collected. Credit purchase Creditors turnover ratio = ________________________ .

INVENTORY TURNOVER RATIO It indicates the inventories turning into receivables through sales. to pay the debtors to creditors.Average creditors 7. WORKING CAPITAL TURNOVER RATIO This ratio explains the relationship between sales and working capital. . INVENTORY HOLDING PERIOD It indicates duration of holding inventories in stores. Days/months in a year Inventory holding ratio = ______________________________ Inventory turnover ratio 10. Sales Inventory turnover ratio =__________________________ Inventory 9. Days/months in a year Debt payment period = _______________________________ Creditor’s turnover ratio 8. DEBT PAYMENT PERIOD Creditor’s turnover ratio indicates the number of days taken by the firm.

So with this idea.Net sales Working capital turnover ratio = ______________________________ Net working capital CASH TURNOVER RATIO It is the relationship between sales and cash. Tiruchirrappalli”. Cash turnover ratio = Sales ___________________ Cash balance 2. it is better to go through the projects done by others earlier. it improves one’s project. MBA. J. let us see some of the projects done by others earlier. He did this project in the month of June 2004. of Bharathidasan University did a project with the title “Working Capital Management in Bharath Heavy Electricals Limited. Mr. Summing up. This gives a complete idea about one’s project.. The objectives of his study were  To analyse the requirement of funds for the routine activities of business.9 ARTICLES To make one’s project effective. . Maria peter Ignatius. using the data from 1998 to 2003.. It also helps to correct the mistakes done in the earlier projects.

. G. it indicates firm’s ability to pay the immediate obligations  Cash ratio clearly indicates firm’s debt borrowing power from financial institutions and other sources.  To study cash receivables position of the organization. Firm increased the debt collection period year by year. Dhanabal. It shows firm’s liberal debt collection policy.. To study on the source of fund generated and their methods of utilization.  Working capital turnover ratio was decreased in year by year. using the data from 1998 to 2003. MBA. His findings were  In all the years the value of the quick ratio is higher than the ideal value. He did the project in the month of June 2004. It clearly shows firm reduced to use net working capital for sales Mr. His objectives were  To study the financial position of the firm  To estimate the future of working capital requirement of the unit .  The firm’s debt collection period have more than 150 days. of Bharathidasaan University did a project with the title “Working Capital Management in Trichy Steel Rolling Mills Limited.  To know the amount of funds allotted in the current assets and to forecast the working capital trend. Tirchirappalli”.

It is significantly achieved by the company.B. Her Findings were:  The size of current assets has increased during the study period.51.    More sales has been done on credit basis Bank balance is sufficient to tackle unexpected problem. . Mohanapriya. Outlined the following objectives and findings. To bring out the level of inventory and to analyse the receivables. M.  During the study period the working capital turnover ratio were 210. Miss. in the year November – 2003.  Analysis the short term liquidity position of the study unit during the period 96-97 to 2000-01.  Analysis and evaluate working capital management. in her research on “Working capital management of Tanjore co-operative milk supply society Ltd.A.” Which is the partial fulfillment of the requirements for the award of her degree submitted to Bharathidasan University. Her Objectives were:  Know the project of Co-operative milk supply society. payables and cash management of the company His findings were  Firm ability have been was increasing every year in order to meet the short term liabilities. Current ratio satisfactory level is 2:1.

Abiramisundhari. Trichy.  The over all performance of receivables management showed a satisfactory position throughout the past 5 years. Her Findings were:  The company has been taken for sufficient care for the maintenance of adequate accounting period. Which is the partial fulfillment of the requirements for the award of her M. Miss.  To assess the proportion of the components of W/c of TSRM Ltd. in her research on “Working capital management of TSRM Limited Trichy”. Trichy. Outlined the following objectives and findings.  The proportion of net W/c to total assets showed on increasing trend through out the five years.Com degree submitted to Bharathidasan University.60. 45. Her Objectives were:  To study the importance of W/c management for a concern. in the year November – 2003.  To suggest measures to increases the efficiency of W/c management of TSRM Ltd.44 and 11. .86 times respectively the higher ratios in the 2 year 1997-98 and 98-99 indicates sufficient amount of working capital and effective utilizations of working capital.  The cash turnover ratio is to be increasing times. 194.

B.  Operating ratio is considered to be yardstick of operating efficiently of the concern.C. His Objectives were:  To know the Financial Performance of Dalmia Cement. Which is the partial fulfillment of the requirements for the award of her degree submitted to Bharathidasan University. Outlined the following objectives and findings.  To examine the practice follow into Management of cash.Mr.C.  Performance of the co should be judged on the basis of return on equity capital.  To know the techniques of Inventory Management in D.  The concern has show dormant and fast moving inventories during the 5 years a study period. Phil. M. His Findings were:  Raw Material Consumption over the study period in terms of quantity and value has showed an incise trend. It is satisfactory positive . Kamaraj. in the year November – 2003. in his research on “Working capital management of Dalmia Cement Limited Trichy”.

. To study the adequacy of working capital and suggest improvement to overcome deficiency if any. 3. Evaluate the working capital of the company during the period of study. Analysis of working capital with various tools. Analysis of various components of working capital.1 OBJECTIVES 1.CHAPTER –III 3. 2. 4.

This involves exploring the possible methods. one by one. considering the resources at the disposal of research.2 PRIMARY DATA The primary data is collected by observation by the researcher of the functioning of the unit. Research is the scientific way to solve the problem and it’s increasingly used to improve market potential.3 SECONDARY DATA . 4. and arriving at the best solution. 4.CHAPTER –IV 4.1 RESEARCH METHODOLOGY It is purely and simply the framework or a plans for the study that guides the collection and analysis of data.

905.29 Mar 2009 25.4 TOOLS OF ANALYSIS The researcher used tools to analysis the financial performance of the firm.29 8. Trend analysis 4. analyze and understand the current assets management and to know the influence of the components of working capital on sales in the year 2001 – 2002 to 2005 – 2006.It is derived from the annual reports. CHAPTER – V DATA ANALYSIS AND INTERPRETATION TABLE – 5. 4.97 23.396.10 28.03 Mar 2010 30. magazines.222.415.6 PERIOD OF THE STUDY The study analysis.982.789. web sites and the internal auditing books of BHEL. “the financial performance of Bharath Heavy Electrical Ltd” covers the financial years from 2001 – 2006 consequently. They are 1. Ratio analysis 2. 4.40 Mar 2007 15.32 16.632.097.40 Mar 2008 19.73 .763.14 11.957.1 STATEMENT SHOWING CURRENT RATIO Rs in lakhs YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO Mar 2006 12.5 SCOPE OF THE STUDY The main scope of the study is to evaluate.

76 at 2002-2003 and its decreased 2003–2004 at 1.71 and its slightly increased in 1. CHART – 5.1 CURRENT RATIO . There is no significant.SOURCE: SECONDARY DATA INTERPRETATION Current ratio during the year 2001-2002 was 1.65 and its same value in 2004–2005 and 2005 – 2006.

65 1.55 1.8 1.5 1.1.6 1.2 STATEMENT SHOWING QUICK RATIO Rs in lakhs YEAR Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 .45 200102 200203 200304 YEARS 200405 200506 current ratio TABLE – 5.7 1.75 PERCENTAGE 1.

LIQUID ASSETS LIQUID LIABILITIES LIQUID RATIO SOURCE: SECONDARY DATA INTERPRETATION The quick ratio in the year 2001-2002 was 1.2 LIQUID RATIO .29 and it gets increased 0.23) and it again decreases 2005-2006 at 0.33) and in 2003-2004 get decreased 0.08% (1.01%(1.31) and 2004-2005 get decreased 0.04% at 2002 and 2003 (1.22).02% (1. CHART – 5.

26 1.2 1.22 1.3 Rs in lakhs YEAR Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 .28 1.18 1.34 1.24 1.1.3 1.32 1.16 2001-02 2002-03 2003-04 2004-05 2005-06 YEARS PERCENTAGE liquid ratio STATEMENT SHOWING CASH RATIO TABLE – 5.

905.08 8.91 1.415.32 16.3 CASH RATIO .10 times and 2003-2004 it was reduced to 0. CHART – 5.957.068.CASH CURRENT LIABILITIES CASH RATIO 1.097.97 2.40 times and in 2001-2002 it was 0.483.511.73 SOURCE: SECONDARY DATA INTERPRETATION The Cash ratio of BHEL in the 2001-2006 was fluctuation in 2005-2006 it was 0.10 28.632.51 865.14 11.950.02 1.97 23.42.

2 0.05 0 2001-02 2002-03 2003-04 2004-05 2005-06 YEARS PERCENTAGE Cash ratio TABLE – 5.4 0.15 0.35 0.45 0.1 0.0.3 0.4 STATEMENT SHOWING DEBTORS TURNOVER RATIO .25 0.

87 15.75 CHART.5.05 Mar 2010 34.974.975.06 9.Rs in lakhs YEAR TOTAL SALES DEBTORS DEBTOR TURNOVER RATIO SOURCE: SECONDARY DATA INTERPRETATION Debtors constitute an important constitute of current assets and therefore the quality of debtors to a great extent determines firm’s liquidity .33 Mar 2008 21.504.058.739.775.50 20. the better it is.60 Mar 2009 28. In the year 2004-2005 the debt is 1.168.695.613. since it would indicate that debts are being collected promptly.4 DEBTOR TURNOVER RATIO .688.56 comparing to the previous year came down. Mar 2006 14.43 7.The higher the ratio.46 Mar 2007 19.82 11.

8 0.4 0.5 Rs in lakhs YEAR Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 .2 0 200102 200203 200304 YEARS 200405 200506 DTR DEBT COLLECTION PERIOD TABLE – 5.8 1.2 1.4 PERCENTAGE 1.6 1.6 0.2 1 0.

DAYS DEBT TURNOVER RATIO DEBT COLLECTION PERIOD 365 365 365 365 365 SOURCE: SECONDARY DATA INTERPRETATION The debt collection period of BHEL in the 2001-2002 was 247 days and in 20052006 it was 195 days.5 DEBT COLLECTION PERIOD . CHART – 5.

2003.6 CREDITORS TURNOVER RATIO Rs in lakhs YEAR CREIDT Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 .2004.250 200 PERCENTAGE 150 100 50 0 2001.200502 03 04 05 06 YEARS DTCP TABLE – 5.2002.

70 times.PURCHASE CREDITORS CREDITORS TURNOVER RATIO SOURCE: SECONDARY DATA INTERPRETATION The Creditors turnover ratio of BHEL was fluctuating during the year 2001 – 2006. It was upward in (2001 – 2002) was 0.82 times and it was downward in 2003 – 2004 is 0.6 CREDITORS TURNOVER RATIO . CHART -5.

64 2001.68 0.72 0.200502 03 04 05 06 YEARS CTR TABLE –5.8 0.7 0.74 PERCENTAGE 0.78 0.66 0.76 0.2003.2004.7 DEBT PAYMENT PERIOD Rs in lakhs YEAR Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 .82 0.2002.0.

.DAYS CREDITORS TURNOVER RATIO DEBT PAYMENT PERIOD 365 365 365 365 365 \ SOURCE: SECONDARY DATA INTERPRETATION The debt collection period of BHEL in the 2001-2002 was 245 days and in 20052006 it was 451 days.

200502 03 04 05 06 YEARS DPP TABLE –5.7 DEBT PAYMENT PERIOD 600 500 400 PERCENTAGE 300 200 100 0 2001.2002.2004.CHART – 5.2003.8 .

775. .60 Mar 2009 28.CASH TURNOVER RATIO Rs in lakhs YEAR SALES CASH 1.068.43 CASH TURNOVER RATIO SOURCE: SECONDARY DATA INTERPRETATION The cash turnover ratio in the year 2001-2006 was downward in the year in the 2001-2002 it was decreased 3.24.613.483.504.91 1.97 2.739.46 Mar 2007 19.51 865.058.950.511.05 Mar 2010 34.33 Mar 2008 21.02 1.08 Mar 2006 14.

T.CASH TURNOVER RATIO 16 14 12 10 8 6 4 2 0 PERCENTAGE C.R 2001-02 2002-03 2003-04 2004-05 2005-06 YEARS .

837.217.33 4.43 9.9 INVENTORY TURNOVER RATIO Rs in lakhs YEAR SALES INVENTORY Mar 2006 14.613.67 Mar 2008 21. in 2001-2002 the inventory turnover ratio was high up to 3.504.058.739.775.736.744.TABLE – 5.27.37 Mar 2007 19.40 Mar 2009 28.46 INVENTORY TURNOVER RATIO SOURCE: SECONDARY DATA INTERPRETATION Inventory turnover of BHEL for 2001 – 2006 was fluctuation.81 and it was low in 2004-2005 at 3. .46 3.02 Mar 2010 34.235.05 7.60 5.

9 3.9 2001.1 3 2.6 3.8 3.3 3.4 3.200502 03 04 05 06 YEARS ITR .5 PERCENTAGE 3.9 INVENTORY TURNOVER RATIO 3.CHART –5.2002.7 3.2003.2004.2 3.

TABLE – 5. 2001-2002 365 2002-2003 365 2003-2004 365 2004-2005 365 2005 -2006 365 .10 INVENTORY HOLDING PERIOD Rs in lakhs YEAR DAYS INVENTORY TURNOVER RATIO INVENTORY TURNOVER PERIOD SOURCE: SECONDARY DATA INTERPRETATION Inventory turnover period of BHEL for 2001 – 2006 was 107 days in 2003.it was 106 days and 2003-2004 it get reduced 96 days and it got raised in 2004-2005 to 112 days In 2005 -2006it got downwards to 102 days.

10 INVENTORY TURNOVER PERIOD 115 110 105 PERCENTAGE 100 95 90 85 2001.2003.2004.200502 03 04 05 06 YEARS IHP .2002.CHART – 5.

739.504.33 Mar 2008 21.058.43 .11 WORKING CAPITAL TURNOVER RATIO Rs in lakhs YEAR SALES NET WORKING CAPITAL WORKING CAPITAL TURNOVER RATIO SOURCE: SECONDARY DATA INTERPRETATION Working capital turnover ratio for the year 2005-2006 was 2.613. It is higher when comparing the past four years.TABLE-5.60 Mar 2009 28. The working capital management has to improve by more concentration on collection strategies.46 Mar 2007 19.775. Mar 2006 14.23 times.05 Mar 2010 34.

85 WCTR 2001.CHART-5.2002.95 1.9 1.25 2.15 2.2004.05 2 1.11 WORKING CAPITAL TURNOVER RATIO 2.1 PERCENTAGE 2.12 WORKING CAPITAL FOR TREND ANALYSIS Rs in lakhs .2 2.2003.200502 03 04 05 06 YEARS TABLE –5.

40 Mar 2007 15.632.32 16.415. And working capital is also increased.957.29 Mar 2009 25.763.905.12 WORKING CAPITAL FOR TREND ANALYSIS .10 28.97 23.29 8.982.73 SOURCE: SECONDARY DATA INTERPRETATION In this current asset is increasing during the period of study.40 Mar 2008 19.222.396. Current liability is also increased during the period of study. CHART – 5.14 11.YEAR CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL Mar 2006 12.789.097.03 Mar 2010 30.

2004.13 ANALYSIS OF VARIOUS COMPONENTS IN WORKING CAPITAL CURRENT ASSETS .2002.2003.1800000 1600000 1400000 1200000 1000000 VALUES 800000 600000 400000 200000 0 CA WC CL 2001.200502 03 04 05 06 YEARS TABLE –5.

Rs in lakhs Particulars inventories Sundry debtors C& B balance Other assets Loans and advances Total SOURCE: SECONDARY DATA Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 INTERPRETATION In this period inventories.13 ANALYSIS OF VARIOUS COMPONENTS IN WORKING CAPITAL . Cash and bank balance was only increased during the period of the study. CHART – 5. other current assets and loan and advances was decreased during the period of the study. sundry debtors.

60 50 40 PERCENTAGE 30 20 10 0 2001.200404 05 YEARS 200506 INVENTORIE S SD CASH & BANK OTHER CA LOAN & ADV TABLE –5.13 CURRENT LIABILITIES Rs in lakhs YEAR Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 .200202 03 2003.

CHART – 5.CURRENT LIABILITIES PROVISIONS TOTAL SOURCE: SECONDARY DATA INTERPRETATION In this liabilities was downward in the period of study in this provision was upward in the period of study.13 CURRENT LIABILITIES .

2004.2003.2002.90 80 70 60 50 PERCENTAGE 40 30 20 10 0 LIABILITIES PROVISION 2001.200502 03 04 05 06 YEARS CHAPTER – VI FINDINGS OF STUDY .

805139.47l346.87. 3. 4. The working capital as per trend analysis. 13.57 in 2005-2006. Working capital turnover ratio was downward year by year. 11. The average collection period is high in 2001-2002 that is 107 days and 2005-2006 is 102 days in this reduce collection period.48 and get increased in the year 2005-2006 was 1. The working capital as per trend analysis. The current ratios for all the subsequent years are good. working capital was in the year2001-2002 was 333792. It is upward while comparing from 2001-2002. 2. In this analysis of various components in working. current assets was in the year 2001-2002 was Rs.02 and the in the year 2005-2006 was Rs.67. current liabilities was in the year 20012002 was Rs. The quick ratio for all the subsequent year is good. Analysis of each component in working capital sundry creditors is upward manner during the period of study.54 and the in the year 2005-2006 was Rs. liabilities downward trend and provision are upward trend during the period of study. The proportion of cash in current asset was increasing in 2001-2006. 12. 5. 9. From the above table the quick ratio found satisfactory. 7. In current liabilities.so the current assets was increased during the period of study. The working capital as per trend analysis.90. Inventory turnover ratio was 3.so the working capital was increased during the period. Then cash and bank balance only upward trend. It is all of them are standard norm. in inventory sundry debtors in loan and advances and other current assets are downward trend. All of them are above standard norm.1. 10. 6. in current asset. 8. The debtor turnover ratio in the year 2001-2002 was 1. .1032002.90.48 and the in the year 2005-2006 was 601075. So the short term solvency position of the company is good.1633077. The Cash balances of the organization found fluctuating over the years.so the current liabilities was increased during the period of study.

Apart from present technique of age wise analysis. division and products to be followed. Periodic review on non moving and slow moving items of inventory must be done by the organization. To avoid bad debts and to increase effective sales. Debt collection policy is also very liberal. They excess of the fund can be invested in other productive applications. reason wise analysis to be done periodically and suitable actions to be taken by the organization.CHAPTER . 3. 7. CHAPTER – VIII . 4. While collecting dues from customer collecting focus on customer irrespective of production unit. All suppliers are to be educated on the requirement of various documents so that delay in processing of bills and payment may be reduced/avoided by the organization. 5. Automatic storage and retrieval system (ASRS) presently implementing in components stores of BHEL. 6. Through the current assets a level is satisfactory.VII SUGGESTION AND RECOMMEDATIONS 1. trichy may also be introduce in others stores or units. 2.

CONCLUSION The overall working capital management of BHEL is effective and satisfactory. the most care has been taken to analyze the working capital position of the BHEL. Apart from that growth and financial soundness of the studying unit have also been made. However. effective steps may be taken to reduce sundry creditors and inventory by using latest tools and techniques. .

Only five years financial statement of BHEL are used for this schedule. . hence the accuracy of the findings and conclusion of the statement will depend upon the accuracy of the given data. The limitations of the tools and techniques used in the study will also reflect in the outcome of the study.CHAPTER –IX LIMITATION Only secondary data collected from BHEL trichy is used for the study.

In addition to that study contains the analysis of financial soundness and growth of the firm in the term of liquidity solvency and trend analysis.X SCOPE FOR FURTHER STUDY The present study concentrates on the working capital position with reference to BHEL.CHAPTER . .

Financial management. N. Sultan chand & sons New Delhi. k.2000. and B. co www. Maheshwari.Tata McGraw Hill Publishing Company Limited.ge. P. N.1999. Jain. Financial management.eighth edition. third edition. Thirteenth edition. in www . 2001. financial management. Sultan chand & Sons New Delhi. Kuldarni. Himalaya publishing House. Maheshwari. S. I. Sathyaprasad.BIBLIOGRAPHY BOOKS • • • • • • • M. Vikas publishing House pvt.2002. S.Tata McGraw.New Delhi. New Delhi. 2003.Ltd.fourth edition.org www. Annual reaports of BHEL (2001-2006) Internal records of the company WEBSITE: www.org ..Y. Dr.Khan and p. Pandey. Bhel.siemens. financial management.G. principles of management accounting. M. NEW Delhi. Prasanna Chandra. . sixth edition.V. 2001.NEW Delhi. abb. Ninth edition. financial management.Hill publishing Company Limited.