Industry profile

BHEL is an integrated power plant equipment manufacturer and one of the largest engineering and manufacturing companies in India in terms of turnover. Established in 1964, BHEL ushered in the indigenous Heavy Electrical Equipment industry in India– a dream that has been more than realized with a well-recognized track record of performance. The company has been earning profits continuously since 1971-72 and paying dividends since 1976-77. BHEL is engaged in the design, engineering, manufacture, construction, testing, commissioning and servicing of a wide range of products services for the core sectors of the economy, viz. power, Transmission, Industry, Transportation, Renewable energy, Oil & Gas and Defence.

The company has 15 manufacturing divisions, two repair units, four regional offices, eight service centers, eight overseas offices and 15 regional centers and currently operates at more than 150 project sites across India and abroad. We place strong emphasis on innovation and creative development of new technologies.

The company has realized the capability to deliver 20,000 MW p.a. of power equipment enabling to address growing demand for power generation equipment. Our research and development (R&D) efforts are aimed not only at improving the performance and efficiency of our existing products, but also at using start-of-the-art technologies and processes to develop new products. This enables to us have a strong customer orientation, to be sensitive to their needs and respond quickly to the changes in the market.

During 2011-12, BHEL has registered a Top Line Growth of 20% with Turnover of Rs. 49,510 Crore and Net Profit Growth of 23.3% to Rs.7,040 Crore over the previous year excluding onetime impact of change in policy in 2010-11. At the end of the year total order in hand was about Rs. 1,35,300 Crore as of 31st march 2012 for execution during the year 2012-13 and beyond. During the XI plan period BHEL has commissioned 25,385 MW of utility sets, approximately double of that contributed during X plan.

Most of our manufacturing units and other entities have been accredited to Quality Management System (ISO 9001:2008), Environmental management system (ISO 14001:2004), and Occupational Health & Safety Management System (OHSAS 18001:2007).

POWER GENERATION

The power generation sector comprises thermal, gas, hydro & nuclear power plant business. As of 31.3.2012, BHEL supplied sets account for 1, 06,202 MW or nearly 59% of the total installed capacity (utility sets) of 1, 80, 413 MW in the country. Significantly, these generated 535.92 Billion Units of electricity, which constituted 69% of the total power generated in the country.

BHEL has proven turnkey capabilities for excluding power projects from concept-to-commissioning. BHEL manufactures sub-critical sets of up to 600 MW in the super-critical range; BHEL has secured orders for 18 sets of 660/700/800 MW supercritical sets for both Steam Generator & Turbine Generator Packages. In addition co-generation combined cycle

plants are also supplied by BHEL to achieve higher plant efficiencies. To make efficient use of the high-ash content coal available in India, BHEL also supplies circulating fluidized bed combustion (CFBC) boilers for thermal plants.

BHEL-built thermal sets consistently exceeding the national average efficiency parameters and achieved a Plant Load Factor (PLF) of 75.5% in 2011-12, which was 2.2% higher than the national average. Operating Availability (OA) of these sets was 86%.

BHEL is one of the few companies worldwide, involved in the development of Integrated Gasification Combined Cycle (IGCC) technology which would usher in clean coal technology.

Industries

BHEL designs, manufactures, supplies and offers services for a broad range of systems and individual products, such as coal and gas-based captive power plants (including co-generation and combined cycle plants), industrial boilers and auxiliaries, waste heat recovery boilers, gas turbines, heat recovery steam generators, steam turbines and auxiliaries, pumps, HT motors, centrifugal compressors, drive turbines, valves, Reverse Osmosis(RO) based water desalination systems and water treatments plants and others, for power utilities and a number of other industries, including oil & gas, metallurgical and mining, as well as process industries, such as cement, fertilizers, sugar, and paper industries.

Transportation:

BHEL provides electrical propulsion systems and controls to Indian Railways, which operates one of the world’s largest railway networks. WE also manufactures and supply electric locomotives to Indian Railways and diesel electric locomotives to cement, steel and fertilizer plants, thermal power stations, coal fields, ports and other medium and large industries and

metro rail transportation projects. We have also diversified into the area of track maintenance machines and coach building for Indian Railways.

The company also manufactures complete rolling stock i.e. Mainline 25 kV AC locomotive up to 5000 HP, EMU coaches and Diesel Electric Shunting locomotives from 350 HP to 1400 HP.

Oil and Gas:

BHEL is supplying onshore drilling rig equipment viz. draw-table, rotary-table, travelling block, swivel, mast and substructure, mud systems and rig electrics to ONGC and Oil India Ltd. Well heads and X-Mas Tree valves up to 10,000 psi rating for onshore as well as offshore application are being supplied to ONGC, Oil India Ltd, and private drilling companies. BHEL has also supplied Casing Support Systems, Mudline Suspension Systems and Block Valves to ONGC for offshore application. The system also has the capacity to supply complete onshore drilling rigs capable of drilling up to 9000M, with AC-SCR system or AC drives having latest state-of-the-art technology, mobile rigs, work-over rigs and sub-sea well heads. Currently, BHEL is executing orders for refurbishment and up gradation of onshore Oil Rigs from ONGC and Oil India Ltd. BHEL is leader in the field of centrifugal Compressors to Indian Oil and gas sector covering wide range of applications.

BHEL provides centrifugal compressors along with drivers (e.g. Gas Turbines, Steam Turbines, and Motors) to Refineries, Fertilizers, Petrochemicals, Pipelines, Gas processing, steel sector and others. BHEL manufacture Centrifugal Compressors up to 350 bar.

Renewable Energy:

BHEL has been manufacturing and supplying a range of renewable energy products and systems. It includes photovoltaic (PV) cells, modules, systems and power plants. BHEL has supplied stand alone solar PV Power Plants of rating up to 150 kwp. The company has executed grid-interactive PV power plants of ratings 5MWp at Belakavadi, Karnataka, 3MWp at Raichur, Karnataka for KPCL, 5MWp at Rawra, Rajasthan for IOLC, 2*2MWp at Katol, Nagpur and 2MWp at Barielly, UP for Indiabulls. The PV plants integrated to the DG grid at remote islands of Lakshadweep totaling to a capacity of 1.9MWp executed by BHEL is one of its kind in the world for island electrification. BHEL offers EPC solutions for Concentrated Solar Thermal Power (CSP) projects.

Water:

BHEL has been in the field of water desalination for many years. The first one MGD Sea Water Reverse Osmosis (SWRO) desalination plant was put up at Narippaiyur, Tamil Nadu in 1999.

BHEL offers complete EPC solutions for water treatment including SWRO plants, Waste Treatment Plant (WTP), Effluent Treatment Plant (ETP), and Sewage Treatment Plant (STP) etc, for power plants, industries and other utilities.

Defence:

BHEL has emerged as a reliable supplier of strategic equipment and services to Indian Defence and Para-military forces for over 20 years. BHEL has large infrastructural including dedicated engineering and manufacturing facilities at many locations to manufacture various types of equipment and provide complete services to meet the Indian defence requirement. Defence has been identified as a key growth area and BHEL has taken industrial licenses for the production of major defence equipment like all types of guns, Armoured & combat Vehicles, Advances Naval Systems, Propulsion Systems, Radars, UAVs, etc.

Transmission:

BHEL undertakes turnkey Transmission projects from concept to commissioning on EPC basis which includes execution of EHV & UHV substations/switchyard ranging from 132kV to 765kV, HVDC converter stations (up to ± 800kV), Reactive Power Compensation Schemes and Power Systems Studies. BHEL also supplied a wide range of products and systems for power transmission and distribution applications. The products manufactured by BHEL include Power Transformers, HVDC convertor Transformers, Instruments Transformers, Dry Type Transformers, Shunt Reactors, Power Capacitors, Vacuum and SF6 switch gear, Gas Insulated switchgear (33kV onwards), Control and Relay panels, SCADA, Thyristor valves and Controls for HVDC application, Ceramic and Composite Insulators, etc. BHEL has indigenously developed and supplied 765kV Transformers and has developed 765kV Shunt Reactor. BHEL is currently executing orders for supply of 756kV Auto Transformer, Generator Transformer and Shunt Reactors for substation/switchyard. For the 1200kV test station at Bina, BHEL has supplied the first 1200kV transformer developed indigenously in the country and has also supplied 1200kV CVT and Disc Insulator which are under successful operation. BHEL has also successfully developed and tested 530kN disc Insulators and now has a range of disc insulators for EHV & UHV AC/DC applications up to 1200kV AC and ±800kV DC with electro-mechanical strength from 70kN to 530kN suitable for both clean and polluted environments.

BHEL has a rich experience of more than four decades of setting up indoor and outdoor substations/switchyard on turnkey basis and has executed numerous transmission projects all across the globe. BHEL has indigenously developed and executed schemes using FACTs devices like Fixed Series Compensation for 400kV lines for enhancing the power transfer capability &

reducing transmission losses and Controlled Shunt Reactors (CSR) for dynamic reactive power management of long 400kV transmissions lines. For controlling power flow in 400kV system, BHEL has indigenously developed & supplied Phase Shifting Transformer.

International Business :

BHEL has, over the years, established in references in 75 countries across all the six continents of the world. These references encompass almost the entire range of BHEL products and services, covering Thermal, Hydro and Gas-based turnkey power projects, substation projects and rehabilitation projects, besides a wide variety of products like; Transformers, Compressors, Valves and Oil field equipment, Electrostatic Precipitators, Photovoltaic equipment, Insulators, Heat Exchangers, Switchgears, Castings and Forgings etc.

Some of the major successes achieved by BHEL have been in Gas-based power projects in Oman, Libya, Malaysia, UAE, Saudi Arabia, Iraq, Bangladesh, Sri Lanka, China, Kazakhstan, Belarus, Yemen; Thermal power projects in Cyprus, Malta, Libya, Egypt, Indonesia, Thailand, Malaysia, Sudan, Syria, Ethiopia, Senegal, New Caledonia, Ukraine; Hydro power plants in New Zealand, Malaysia, Azerbaijan, Bhutan, Nepal, Taiwan, Tajikistan, Vietnam, Rwanda, Thailand, Afghanistan, Democratic Republic of Congo; and substation projects & equipments in various countries. Execution of these overseas projects has also provided BHEL the experience of working with world renowned consulting organizations and inspection agencies.

The company has been successful in meeting demanding requirements of international markets, in terms of complexity of work as well as technological, quality and other requirements viz. HSE requirements, financing packages and associated O&M services, to name a few. BHEL has proved its capability to undertake projects on fast-track basis. BHEL has also established its versatility to successfully meet the other varying needs of various sectors, be it captive power, utility power generation or for the Oil sector.

The company is taking a number of strategic business initiatives to fuel further growth in overseas business. This includes firmly establishing itself in target export markets, positioning of BHEL as a regular EPC contractor in the global market both in utility and IPP segments and exploring various opportunities for setting up overseas joint ventures etc.

Technology upgradation, Research & Development :

BHEL’s products and systems are technology intensive and R&D and technology development are of strategic importance to BHEL in its endeavor to become an engineering enterprise offering a comprehensive range of products and services. During the year 2011-12 BHEL has

invested about Rs. 1200 Crore on R&D efforts, which corresponds nearly 2.42% of the turnover of the company, focusing on new product and system developments and improvements in existing products for cost effectiveness and higher reliability, efficiency, availability, quality, etc. To meet customer expectations, the company has upgraded its product to contemporary levels through continuous in-house efforts as well as through acquisition of new technologies from leading engineering organizations of the world. The IPR (Intellectual Property Rights) capital of the company has grown by 24% in the year, taking the total to 1786.

BHEL has established four specialized institutes, viz., Welding Research Institute (WRI) at Tiruchirappalli, Ceramic Technological Institute (CTI) at Bangalore, Centre for Electric Traction (CET) at Bhopal and Pollution Control Research Institute (PCRI) at Haridwar.

BHEL has developed several state-of-the-art products and processes during the year. A few significant examples are: commissioned India’s highest voltage power transformer of 1200kV 333 MVA rating; developed India’s largest 15MVA, 33/6.9 kV, 3 phase, 50 Hz, Natural Air cool Dry Type Cast Resin Transformer; introduced new rating 300MW thermal sets with improved heat rate; engineered new systems such as OGDHR (Operation Grade Decay Heat Removal System), SGTCDS (Steam Generator Tube Side Depressurization Circuit), etc., for the nation’s first Prototype Fast Breeder Reactor based power plant; developed a new product variant of Condensate Extraction Pump; developed a novel design of Electrostatic Precipitator Hopper Heating System; developed Ceramic Liners for Coal Nozzle Tips; developed improved Heat Transfer Elements for Air Preheaters; developed cost-effective new design variant of Swing Check Non-return valve for 600 MW boilers; developed high efficiency solar photovoltaic cells; manufactured and supplied grade solar panel totaling to 221 sq.m. in area of various satellites of ISRO; implemented state-of-the-art IEC61850 protocol on C&I platform for seamless integration of various third party Internet Enabled Devices; developed profibus system for 500 MW Turbine Generator C&I; developed state-of-the-art Substation Automation System; developed a new variant of increased safety Squirrel Cage Induction Motor; developed a mathematical model for dynamic simulation of 125 MW CFBC boilers; developed Non-Destructive Technique “Pulsed Thermography Technology for Characterizing & detection of surface defects in coatings”, etc.

The company is also engaged in research in futuristic areas like fuel cells for distributed environment-friendly power generation, clean coal technologies such as Advanced Ultra Supercritical technology for thermal power plants, process for addition of nano / micro particles for improving material characteristics, superconductivity applications in transformers, generators, motors, etc. In addition to the above, BHEL is enhancing its capabilities in technologies for a clean environment including renewable energy, carbon capture and natural resources like water, etc.

Human Resource Development Institute:

The Human Resource Development Institute (HRDI) situated in Noida, is the cornerstone of BHEL’s learning infrastructure, along with the Advanced Technical Education Center (ATEC) at Hyderabad and the Human Resource Development Centre’s (HRDCs) at different units.

HRDI has aligned its programmes and initiatives (like People Development Programmes, Knowledge Transfer Workshops, Job Specific Training & Mentoring Workshops, Life Education Workshops, BHEL: The Need of the Hour Programmes) based on CMDs Six Point Agenda for Dynamic Growth & Leadership.

The key focus in HRD efforts has been to keep the ‘Human Capital’ always in a state of readiness, so as to meet the dynamic challenges posed by the fast changing environment.

Guided by the HRD mission statement “To promote and inculcate a value-based culture utilizing the fullest potential of Human Resources for achieving the BHEL Mission”, the HRDI through a step-by-step strategic long-term training process and several short-term need based programmes based on comprehensive organizational research, enables the human resources to unearth and polish their potentials. HRDI is spearheading the HRD initiatives in the company and focusing on competencies, commitment and culture building.

Some of the important programmes include Core programmes, Strategic need based programmes and Functional programmes like Advanced Management, General Management, Strategic Management, Middle Management, Young Managers and Self Starter programmes. HRDI has developed detailed Induction Module for Execution, Supervisors and Artisans.

The HRD function of the company has prepared and implemented detailed programmes & modules from Artisans to the Top Management. In addition, HRDI provides professional support to corporate HR and HRDCs at Units/Divisions.

Sustainable Development:

Sustainability is an integral part of the company’s strategy. BHEL is committed to be an environment friendly company in all its areas of activities, products and service, providing safe and healthy working environment to all stakeholders.

In line with the company’s strategy, Environment Improvements Projects (EIP) are given special thrust. Some of the major EIPs executed in the past at BHEL plants and townships included tree plantation drive, installation of rain harvesting plants, efficient water and energy management, reduction in noise level, improvement in chemical storage and handling systems etc.

In conformance to the Sustainable Development (SD) guidelines issued by Department of Public Enterprises (DPE), a Board-Level Committee for Corporate Social Responsibility & Sustainable Development (BLC for CSR & SD), has been constituted to approve the SD plan and oversee the execution of these projects taken under SD. BHEL has defined its SD policy in keeping in view the scale and nature of activities, products and services.

Corporate Social Responsibilities:

BHEL believes that corporate social responsibility is an integral part of its operations. BHEL has established and participated in various socio-economic and community development programmes to promote education, improvement of living conditions and hygiene in villages and community situated in the vicinity of our manufacturing plants and projects sites through India.

As a part of Corporate Social Responsibility, BHEL Board has adopted DPE CSR guidelines as its CSR policy and projects based CSR initiatives are being implemented under eight identified focus areas which include: Environment Protection & Energy Conservation; Adoption of ITIs and setting-up skilled Development Institutes; Vocational Training; Education and Promotion of Talents; Adoption of Village and Community Development; Disaster/Calamity management; Health Management; Infrastructural Development. From time to time, BHEL provides financial contributions to people affected by Disaster/Calamity.

As a part of its social commitment, 7,941 Act Apprentices, and 8,419 students/trainees from various professional institutions underwent vocational training during 2011-12.

Participation in the UN’s Global Compact Programme :

As the world’s largest global corporate citizenship initiative, the Globle Compact is the first and the foremost concern which is exhibiting and building the social legitimacy of business and markets. BHEL reiterated its commitment to the United Nations’ Global Compact Programme and continued to play in lead role on promoting the set of core values enshrined in its ten principles on human rights, labour standards, environment and anti-corruption and intends to advance UNGC principles within the company’s sphere of influence and has ingrained it in its strategy, culture and day-to-day operations.

BHEL demonstrated its commitment through regular pooling of communication of progress (COP) on the UNGC website and has also taken a lead role in promoting UNGC principles in other Indian Organizations through Global Compact Netwhork by organizing case studies/organizational experience sharing & addressing the Global Compact principles in Indian

Context. The company publically advocates UN Global Compact principles to its stakeholders through Annual Report, Press Conference and other public communiqués.

Company profile:

a) Background and Inception of the company:

Heavy Electrical (India) Ltd was set up in Bhopal in August 1965 with a view to reach sufficiency in industrial product and power development for the industry products and power equipment for the industrialization of the country.

To meet the total demand of heavy electrical equipment, BHEL came in to the being in November 1964. Three plants were established:

1. High pressure Boiler Plant Trichy, Tamil Nadu - May 1965.2. Heavy Power Equipment Plant, Hyderabad (A.P) - DEC 19653. Heavy Electrical Equipment Haridwar – January 1967.

Brief history of BHEL-EPD (Electro Porcelains Division):

In the year 1932, the government of Mysore (presently Karnataka) established a department undertaking called the “The government porcelain factory” (GPF) to cater to the equipment of insulators for its electricity department under the leadership and guidance of the Sir. M.Visvesvaraya, the Dewan of Mysore, in order to raise the production from 50 tons to 200

tons per month the company obtained technical collaboration with M/S NGK Insulators Ltd, JAPAN.

In the year 1976, BHEL took it over as a subsidiary. It became a regular unit of BHEL in 1980 & was named Electro Porcelains Division (EPD). After takeover, EPD developed higher rating bushing and solid core insulators, Ceralin, high-tension insulators, were resistant high Alumina Ceramic lining materials and a host of other industrial ceramic products. Apart from being a recipient from the ISO 9001 Certificates for quality system in design and manufacture, recognition has come by way of awards for national productivity, safety and quality. The company has set up a ceramic technology institute with UNDP (United Nation Development Product)

EVOLUTION OF THE COMPANY

1 February, 1947

Advisory Planning Board felt need for electrical machinery industry in India.

2 March, 1948 Exploratory Committee to set up heavy electrical generating equipment factory in state sector.

3 January, 1955

S.A.Gelkary Committee reiterates needs for heavy electrical generating equipment factory.

4 August, 1956 Heavy Electrical Pvt. Ltd. Incorporated, later renamed H.E (I) Ltd at Bhopal.5 November,

1964BHEL established plants at Haridwar, and Trichy.

6 July, 1972 Action Committee for public enterprise recommends integration.

7 January,1974 H.E. Ltd and BHEL formally merged.

8 January,1974 Company prepares first corporate plan.

9 January, 1980

Company prepares first corporate plan, emphasis laid on growth.

10 January, 1992

Govt. brings liberalization policy, allows private sector to manufacture power-generating equipment's, investment policy of Govt. on public shareholding BHEL shares offered to employees also.

11 January, 1995

BHEL shares listed on all principal stock exchanges of the country.

12 February, 1997

Greater autonomy on PSU's BHEL accorded the "NAVARATNA" status.

13 October, 1977

BHEL prepares document on perspectives for 2002.

14 1999-2000 A team of members were conferred with the Prime Minister's "SHRAM BHUSHAN".

15 2006 Implementation of SAP.

b) Nature of the business:

EPD at Bangalore is the leading producer of high-tension porcelains insulators in the country. It offers wear resistant high alumina ceramic lining material for power, steel, cement and mining industries as well as a wide range of industrial ceramics disc insulators are of class of themselves acknowledge by international reputed laboratories.

BHEL is the largest engineering and manufacturing enterprise in India in the energy related infrastructure sector today. BHEL was established more than four decades ago when its first plant was set up in Bhopal ushering in the industry.

BHEL caters to cover sector of the Indian Economy viz., Power Generation and Transmission, Industry, Transportation, Telecommunication, Renewable energy and Defence. The wide network of BHEL’s 15 manufacturing divisions, 4 power sector Regional Centers, over 150 project sites, 100 service centers and 18 Regional offices, enables the company to promptly serve its customers and provide then with suitable products, systems and service efficiently and at competitive prices. BHEL has already obtained ISO 9001 Certificate for its Quality Management.

c) Vision, Mission, and Quality Policy:

Vision:

A global engineering enterprise providing solutions

for a better tomorrow.

Mission:

Providing sustainable business solutions in the fields of Energy,

Industry, and Infrastructure.

Quality Policy:

“To be a leading position in the design, manufacture and supply of products and services of consistent quality meeting the national or international”.

d) Products & Service Profile:

Products:

BHEL-EPD India’s leading manufacturer of High-Tension porcelain Insulators, a class by themselves acknowledge by internationally reputed laboratories of CESI (Italy). KEMA (Holland), Doulton (UK), CPRI (India) and IISc (India). BHEL disc insulators are known for their reliability more than 10 million insulators are in service in India and abroad.

Product range of BHEL-EPD includes:

High-Tension porcelain Insulators for transmission and distribution lines from 11Kv to 800Kv with a wide range of 70kN to 300kN in standard, semi-fog, fog, anti-fog, verities.

Hollow Insulators for Power Transformers, Instrument Transformers, Electrostatic Precipitators, Circuit Breakers of Conventional and Gas Insulated Types.

Post Insulators for support for Bus Bars, Switches and Isolators from 11kv to 200kv. Wear-resistant High Alumina Ceramic Lining Material for Power, Steel, Cement and

Mining Industries, as well as a wide range of Industrial ceramics. Catalytic converter for two and four wheeler vehicles.

Products of BHEL-EPD:

Disk Insulator:

They are used for the suspension and transmission purposes. They range from 90kN to 400kN. Insulators are mainly used to prevent transmission losses. There are no substitutes to insulators. They have both AC and DC applications.

Hollow Insulators:

They are used for electrical apparatus purposes. They come in a cylindrical or taper bore shape. Their applications are in power transformers, instrument transformers, electrostatic precipitators and circuit breakers.

Post and Pin Insulators:

They are used for substations. They are used as bus supports in sub-stations for switches and isolators from 11kv to 220kv.

Solid Core Insulators:

They are used in railway traction applications.

Ceralin:

High Alumina Ceramic wear resistant lining material is best suited for wear-resistant applications. This will enhance the life of products and components from wear and tear. Many applications in Thermal Power Plants, Cement, Fertilizers, Coal Washeries are working satisfactorily with this material.

New Products:

Ceramic honeycomb substrates for Catalytic converters. Catalytic converters for a diesel. Diesel particulates filter for heavy duty vehicles and stationary engines. Deodorizes (Carbon Honeycombs). High Alumina Ceramic products for stringent applications.

Services:

BHEL continued its endeavor to render efficient customer service aimed at facilitating uninterrupted power supply and keeping power plants in good running condition. During the year, Power Sector overhauled 150 utility/capacity sets (including Non BHEL sets).

e) Area of Operations: Heavy Equipment Plant, Bhopal. Transformer Plant, Jhansi. Heavy Electrical Equipment, Haridwar. Central Forge and Foundry Plant, Haridwar. Heavy Power Equipment Plant, Hyderabad. High Pressure Boiler Plant, Trichy. Steam Less Steel Tube Plant, Trichy. Insulator Plant, Jagdishpur. Boiler Auxiliaries Plant, Ranipet. Electro Porcelains Division, Bangalore. Electronic Porcelains Division, Banglore.

Industrial System Group, Bangalore. Industrial Values Plants, Goindwal. Component Fabrication Plant, Rudrapur.

f) Ownership Pattern:

Board of Directors as on 07-08-2012

Shri B. Prasada Rao – Chairman & Managing Director

Shri Vijay S. Madan – Additional Secretary & Financial Advisor

Shri ambuj Sharma – Joint Secretary

Shri V.K. Jairath – Director

Shri Trimbakdas S. Zanwar – Director

Shri S. Ravi – Director

Shri Atul Saraya – Director (Power)

Shri O.P. Bhutani – Director (E,R&D)

Shri M.K. Dube – Director (IS&P)

Shri P.K. Bajpal – Director (Finance)

Shri R. Krishnan – Director (HR)

Shri I.P. Singh – Company Secretary

g) Competitor’s Information:

Major Competitors of BHEL:

1. Aditya Birla

2. WS Industries, Chennai.

3. Sharavana

4. Jayashree Insulators.

5. IEC, Bhopal.

6. Chinese manufacturers

7. Sediver – France

8. NGK - Japan.

9. Modern Group Industries, Rajasthan.

h) Infrastructural Facilities:

Roads:

BHEL has nice roads facility inside the plant to facilitate the transportation inside the plant.

Water:

BHEL has a good water facility for the processing as well as for drinking the water. The water which is used in the processing is further used in gardening and by this it acts as the role model in area of environment friendliness.

Human Resource Development Center:

The company also organizes a number of programmes on team building, organizational development, productivity techniques and company information through a well-equipped HRD center. And also an auditorium is provided with modernized Visual aids.

Canteen:

The canteen in BHEL has hygiene food with the great taste. It is as same as home food. The processing in this department is very fast and it is well equipped to serve the people.

i) Achievements and Awards:

BHEL-EPD which is one among the Navarathnas is best owed with so much of awards and achievements since from inception.

The following are the awards which are mentioned below as follows:

‘SCOPE Meritorious Award for R&D, Technology Development and Innovation’. The award was presented by the Hon’ble President of India, Smt. Prathiba Devisingh Patil to CMD, BHEL.

CMD, BHEL received ‘SCOPE MoU Award for Excellence & Outstanding Contribution to Public Sector Management 2009-10’ from the Hon’ble Prime Minister of India.

Hon’ble Union Minister for Commerce & Industry presented the Intellectual Property Award 2011 to CMD, BHEL & Director (E,R&D).

CMD, BHEL received the NDTV Profit Business Leadership Award 2011 in the Engineering category from the Union Minister of Finance.

Deputy Minister, Ministry of India & Trade of the Czech Republic presented EEPC all India Award for Excellence in Exports to BHEL.

‘Essar Steel Infrastructure Excellence Award 2011’ was awarded to BHEL by CNBC TV18.

BHEL also won the ‘Golden Peacock Award for Occupational Health & Safety 2011’ and the ‘Golden Peacock Award for Innovation Management 2011’ in the Manufacturing Sector category.

BHEL was awarded the ‘EXIM Achievement Award’ in the Import Category by the Tamil Chamber of Commerce.

BHEL became the only PSU to be unanimously selected for the ‘NDTV Profit Business Leadership Award’ for the second year in succession. The award for 2011 was conferred to BHEL in the industry vertical of ‘Engineering’.

BHEL was conferred the maximum number of 4 ‘ICWA National Award for Excellence in Cost Management’, among private & public sector companies for 2010-11. BHEL was awarded the recognition for the seventh successive year.

j) Work flow model:

k) Future growth and Prospects:

The dynamic of Indian energy sector has undergone a sea change over the past few years. The Indian Power Sector in on the threshold of transformation to a self-sustaining and viable sector as various monitoring and reforms measures have been put in place by the government. Generation capacity addition has picked up steam and a substantial portion of the power capacity addition of 41000 MW by end of X plan is likely to happen. Projects are under various stages of formulation and finalization for the XI Plan Capacity addition programmes of over 60000MW.

Various policy initiatives and other positive impulse have led to an improved investment climate in the infrastructure a sector. These has mandated BHEL changing market requirements and evolve strategies to tackle issues related to growth and value creation BHEL is fully equipped to capitalize on these emerging opportunities.

BHEL has formulated its strategic plan 2012-17. The plan attempts to steer your company towards becoming a global engineering enterprise. Key drivers of our success are expanding our offerings in power sector by building EPC capability, focus on industry businesses, expansion of spares and services and adoption of collaborative approach.

Power sector will continue to remain major contributor in our top line with transportation and transmission emerging as next big business verticals. Strategies are in place to strengthen our presence in Nuclear, Renewable and Water segments.

In recent years, BHEL has optimally invested for manufacturing capacity expansion. We are taking various initiatives to stream line our manufacturing value chain for full exploitation of strong manufacturing base.

l) Structure of McKinsey’s 7S frame work:

McKinsey’s 7s frame work with special reference to organization under study:

Origin:

The 7s framework was first mentioned in “The Art of Japanese Management” by Richard Pascal and Anthony Athos in 1981. They had been investigating how Japanese industry had been so successful. At around the same time that Tom peter and Robert Waterman were exploring what made a company excellent. The seven S models were born at a meeting of these four authors in 1978. It appeared also in “In Search of Excellence” by peter and waterman, and was taken up as a basic tool by the global management consultancy company McKinsey.

Since then it is known as their 7-S model. In McKinsey’s 7-S model, the seven elements are distinguished as hard S’s and soft S’s.

The hard elements are feasible and easy to identify. They can be in strategy statements, corporate plans, and hardly feasible. They are difficult to describe since capabilities, values and elements of corporate culture are continuously developing and changing.

They are highly determined by the people at work in the organization. Therefore it is more difficult to plan or to influence the characteristics of the soft element. Although the soft factors are below the surfaces, they have the great impact on the hard structure, strategies and systems of organizations.

Descriptions:

The Hard S’s:

Strategy Structure Systems

The Soft S’s:

Style Staff Skill Shared values

Strategy:

Strategies to achieve the overall objectives are carefully spelt out function wise so as to integrate with the comprehensive overall plan. The strategy and action plans are time bound with specific responsibilities assigned to individual/group/task forces.

The main strategy to improve its services to the customer by following up and attending any complaints in more compensated way.

Also, corporate strategy takes the environmental opportunities, threats and the organizational strengths and weakness into account and provides an optimal match between the firm and the environment.

System:

The organizational has well defined systems on each and every function. The procedures to be followed are well documented and audited. BHEL uses complete systemized process in all fields like quality control systems, performance measurement systems. There is a very good computerized system wherein database on all operational aspects is available. The systems at BHEL have been certified for ISO 9001. EPD has also been certified for ISO 14001 for environment management system and OFSAS management system.

Structure:

A well balanced organizational structure on which the company can apart from sustaining the business also gave is evident in BHEL-EPD. The organization is well manned and structured, with each function given utmost importance.

Since BHEL being the public sector unit the structure of the organization is more democratic and military type i.e., the decision is taken by the top level management of the company. For analyzing and taking decisions the top management will consult the lower and functional level managers.

STRUCTURE OF A FINANCE DEPARTMENT OF BHEL-EPD

STRUCTURE OF A MARKETING DEPARTMENT OF BHEL-EPD

GENERAL MANAGER

DGM (FINANCE MANAGER)

MANAGER

->Sales account

MANAGER

->Bills payable

MANAGER

->Cost

->Cash

->Materials purchase

->Work proposal

->Concurrence

MANAGER

->Books & Budgets

->Indirect Tax

->Pay Roll

3 Account Office3 Account Office1 Account Office1 Account Office

2 Assistants2 Assistants 3 Assistants5 Assistants

GENERAL MANAGER

DGM (MARKETING MANAGER)

DEPUTY MANAGER

SENIOR EXECUTIVE

(Ceramic Products)

SENIOR EXECUTIVE

(Other type of Insulator)

SENIOR EXECUTIVE

(Disc insulator)

EXECUTIVEEXECUTIVE4 EXECUTIVES

GENERAL MANAGER

STRUCTURE OF HR DEPARTMENT OF BHEL-EPD

Style:

DEPUTY MANAGER

->Recruitment

->Performance Appraisal

->HRIS

->MRIS

->Business Excellence

->Communication & Public Relation

->Contractor Labor

MEDICAL SUPERINTENDENT

->Factor Medical Centre

->Township Dispense

SENIOR MANAGER

->Establishment

-HRDC

-Security & Fire

-Intelligence

->Industrial relations

->Welfare

-Canteen

-ESI

-Medical centre

-Kannada Cell

General Physicians

Nurses

Officers Assistants

ExecutivesOfficers & Assistants

ExecutivesTranslatorRajbhasha Adikari

Attenders

The style of an organization according to McKinsey Frame Work becomes evident through the patterns of actions taken by the members of the top management team over a period of time. BHEL being an OSU there is no opportunity for grievances while making decisions regarding any problem or project. Here employee i.e. Artisans are consulted for the ideas viewpoints regarding any problem. Here there is no autocratic style of leaderships. BHEL believes in participative style of decision making because decisions generated is favorable to everyone and it could be one of the best.

Staff:

The employee strength of 606 person in that 100 are executives, 123 are supervisors, 303 are Artisans, 18 are support technical staff, 19 are USW/SSW, 28 are Clerical and Office Supporting staff, and 15 Trainees. The staffs are educated, skilled and lead by professional at the line manager, middle and top level executives. Artisans have direct exposure on the job operation and supervisors are trained in various operational areas and rotation made to ensure overall development. The manager’s and top level executives have professional expertise in one or more functional areas. Many have had experience of working in different units of BHEL which has enhanced their vision. A dedicated staff from top to down below has been a good aspect in BHEL-EPD.

Skills:

Skills are a blend of knowledge and experience. With the attitude involvement and dedication of the workforce, this factor is the STRONGEST ASSET AT BHEL-EPD which has kept its flag high for over 74 years. The inputs provided on training the workforces, maturing their talents involving them in a various group activities, exposing them to outside industrial work, motivating them in a each and every possible way has helped EPD workforce have the highest level of MORALE acknowledged throughout the BHEL Corporation.

Shared Values:

With a vision of being a world class, innovative, competitive, the company has a common goal to all its concerns and shares the information available in every concern.

Values:

Respect for dignity and potential of individuals. Loyalty and Pride in the company. Foster learning, creativity and teamwork. Zeal to excel and Zeal for change. Integrity and Fairness in all matter.

Ensure speed of response. Strict adherence to commitments.

m) SWOT Analysis:

BHEL Companies Strengths, Weakness, Opportunities, and Threats are as follows.

Strengths:

The greatest strength of BHEL is its highly skilled and committed employees. Every employee is given an equal opportunity to develop himself and grow in his career. Brand name (Internationally). Known for quality product of Disc, Hollow Insulators and Ceralin. Separate ceramic research institute with expert manpower and lab for pilot production. Total Quality Management. Leading status in Ceralin an impetus for new product introduction in existing market. Ethical and transparent biz practices. Quality Certification of ISO 9001, ISO 14001, ISO 18001. Introduction of BSC Matrix which speaks about strategies objectives.

Weakness:

Ratios of skilled to unskilled workforce are low and hence difficult for development. Depleting skilled force due to retirement. Expensive manpower for ceramic business. More number of casual labors than the permanent labors. Manually oriented product lines. Resistance to change at lower level. Cost not commensurate with returns with certain varieties of insulators.

Opportunities:

The company can introduce reward based on seniority, competency and performance. Growth in existing products in exports markets. Growth in new products in existing market and new market.a) SF6 hollow insulators plus station market and new market.b) Composite insulators.c) Industrial ceramics.d) Acid proof tiles.e) Honeycomb substrates.

Opportunity for automation. The company can give more emphasis in team building and quality circle for better

performance and results. The company introduces 360 degree Appraisal than 180 degree Appraisal.

Threats:

Merger of world renowned Japanese manufacture NGK with Indian firm (Jayashree Insulators) to produce high quality products in competition.

Threat of low price Chinese insulators market entry India. Competition from other private manufacturers. Pay scale of lower level employees can bring unrest and turnovers, which may affect the

work in progress. Stiff prices competition for insulators. Profit margin stiff competition from the national players like jayashree insulators.

n) Financial statement of BHEL EPD

5 YEAR PROFIT AND LOSS ACCOUNT OF BHEL EPD DIVISION:

Rs.Crores

2011-12 2010-11 2009-10 2008-09 2007-08EARNINGSSales less returns 220.47 185.4 131.94 127.46 114.22Income from external erections & services 0.03 2.31 0.07 3.54 0.73Jobs done for internal use 0.15 13 0.98Other revenues 10.65 8.8 6.05 4.14 4.53Accretion/(Decretion) to work in progress & finished goods -6.56 8.23 0.94 -2.28 2.13transfer out t other divisions 60.82 46.65 49.25 49.4 40.85

TOTAL 285.42 251.55 201.26 183.24 162.46

OUTGOINGSRaw materials 72.31 64.92 57.62 44.15 46.04Stores & Spares 12.94 9.61 9.67 8.52 8.53Transfer in other division 4.22 0.84 0.05Employees remuneration & benefits 69.74 68.18 87.82 43.9 36.94Mfg. & other expenses 71.72 61.63 49.58 56.36 50.41Interest 0.07 0.07 0.09 -1.35 0.2Depreciation 2.03 2.15 2.24 2.35 2.43Provisions 3.94 5.66 -23.29 14.4 2.8Prior period items

Profit Before Tax 48.45 38.5 17.55 14.91 15.06

TOTAL 285.42 251.55 201.26 183.24 162.46

Profit Before Tax 48.45 38.5 17.55 14.91 15.06

Balance of profit brought forward from last year 51.46 17.87 11.75 11.07 12.44LESS:A. Provision transferred to unit (Taxation/Dividends/Others) 20.73 4.91 11.42 14.23 14.63B. Adjustment for issue of bonus share 1.8 Balance of Profit carried to Balance Sheet 79.18 51.46 17.87 11.75 11.07

5 YEAR BALANCE SHEET OF BHEL EPD DIVISION:

Rs.Crores 2011-12 2010-11 2009-10 2008-09 2007-08RESOURCESA. Own:Funds from Head Office 3.6 3.6 3.6 3.6 3.6Funds from Corp. Office - CC a/c (Cr.) 0.1 0.5Inter Division Accounts (Cr.)Reserves & Surplus 79.18 51.46 17.87 11.75 11.07 TOTAL 82.88 55.06 21.47 15.35 15.17B. OutsideUnsecured loans 0.54 0.87 0.65 0.3 0.42 TOTAL 0.54 0.87 0.65 0.3 0.42

TOTAL A&B 83.42 55.93 22.12 15.65 15.59

UTILISATION OF RESOURCESFixed AssetsGross Block 60.86 59.16 58.05 56.88 56.84Less: Depreciation to date 53.08 50.94 48.79 46.58 44.92 Net Block 7.78 8.21 9.26 10.3 11.92

Capital expenditure in progress 0.49 0.66 0.01

Funds from Corp. Office - CC a/c (Dr.) 0.07 0.84 2.33

Inter Division Accounts (Dr.) 46.69 69.94 38.98 37.81 23.92

Net Current AssetsCurrent Assets 140.53 93.08 75.73 61.54 45.12Loans & Advances 12.04 10.72 6.85 3.8 3.81 Total 152.58 103.8 82.58 65.34 48.93

Less: Current Liabilities 79.2 83.96 76.28 47.38 40.2 Provisions 44.91 42.79 33.24 52.76 28.98 Total 124.11 126.75 109.53 100.14 69.18

Net Current Assets 28.47 -22.95 -26.95 -34.8 -20.25

TOTAL 83.42 55.93 22.12 15.65 15.59Contingent Liabilities 3.05 2.72 2.16 1.97 1.48

o) Learning experience:

j

INTRODUCTION TO FINANCE:

Finance is the life blood of the business. Finance is an Art & Science of managing money. Finance is the set of activities dealing with the management of funds more specifically; it is the decision of collection and use of funds.

MEANING OF FINANCE:

Finance is the science of money or provision of money at the time required. It is the life blood of the business which provides access to all resources of manufacturing and merchandising activities. It studies the principle and method of obtaining and control of money from those who have saved it and of administrating it by those whom the control passes. Finance comes literally from the Latin words “Finishing: simple words finance is economic plus accounting is keeping a record and track of transactions.

DEFINITION OF FINANCE:

“Finance is the Art & Science of managing money”.According to “Khan & Jain”

According to Oxford dictionary, the word ‘Finance’ connotes ‘Management of money’.

Webster’s Ninth new collegiate dictionary defines finance as:“The science on study of the management of funds as the system that includes

the circulation of money, the granting of credit, the making of investment and the provision of banking facilities”.

SCOPE OF FINANCE:

It takes an outsider of supplier view of finance as emphasis in the past, a finance function is confirmed to procurement of funds. The major issue in the traditional approach of finance function was how resources could best be raised from combinations of available sources. Therefore, the finance managers, those days were expected to have through knowledge on their interrelated aspects of raising and administrating resources from outside.

FINANCIAL STATEMENT:

A financial statement is a collection of data organized according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It is the outcome of the summarizing process of accounting.

The term ‘Financial Analysis’, also known as ‘Analysis and Interpretation of Financial Statements’ refers to the process of identifying the extent and reasons for changes in assets, liabilities, capital, expenses and incomes in Balance Sheet and Income Statements of two data.

KINDS OF FINANCIAL STATEMENTS:

Financial statements primarily comprise two basic statements:

1. The financial position statement or the balance sheet.2. The income statement or the profit & loss account.

These statements are used to convey to management and interested outsiders the profitability and financial position of a firm.

Financial statements are the outcome of summarizing process of accounting.

In the words of JOHN N.MYER, ”The financial statements provide a summary of the business enterprise, the balance sheet reflecting the assets, liabilities and capital as a certain date and income statement showing the results of operation during a certain period”.

Financial statements are also called as financial report. In the words of Anthony, “Financial statements essentially are interim reports, presented annually and reflect a division of the life of an enterprise into more or less arbitrary accounting period-more frequently a year.”

NATURE OF FINANCIAL STATEMENT:

The financial statements are prepared on the basis of record facts. The recorded facts are those which can be expressed in monetary terms. The statements are prepared for a particular period, generally one year. The transactions are recorded in a chronological order, as and when the events happen. The accounting records and financial statements prepared from these records are based on historical costs. The financial statements, by nature, are summaries of the items recorded in the business and these statements are prepared periodically, generally for accounting period.

OBJECTIVES OF FINANCIAL STATEMENT:

The primary objective of financial statement is to assist in decision making.

The Accounting Principles of Board of America (APBA) states the following objectives of financial statement.

I. To provide reliable financial information about economic resources and obligations of a business firm.

II. To provide other needed information about changes in such economic resources and obligations.

III. To provide financial that assists in estimating the earning potentials of business.

TOOLS AND TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS:

The analysis and interpretation of financial statements is used to determine the financial position and the results of operating as well. A number of methods or devices are used to study the relationship between the different financial statements.

An effort is made to use those devices which clearly analyze the position of the enterprise. Some of the important tools or methods to analyze the financial statements of concern are as follows:

1. Comparative Statement Analysis.2. Common-size Analysis.3. Trend Analysis.4. Cash Flow Statement.5. Fund Flow Statement.6. Ratio Analysis.7. Leverage Analysis.8. Variance Analysis.9. C.V.P. Analysis.

TOOLS USED FOR THE STUDY:

Ratio Analysis is the technique which is used for the study to analyze the financial performance of the BHEL-EPD.

Bar Chart is the statistical tool used for the study.

RATIO ANALYSIS:

Ratio analysis is the technique of analysis and interpretation of financial statements. It is a process of establishing and interpreting various ratios in making business decisions. Ratio analysis thus, is a quantitative tool enabling us to draw qualitative results.

It involves following 3 steps

DEFINITION:

According to Kholer, “A ratio is a relation of the amount ‘a’ to another ‘b’ expressed as the ratio of ‘a to b’ or as simple fractions, integer, decimal, or percentage”.

IMPORTANCE OF RATIO ANALYSIS:

The inter-relationship that exists among the different items appearing in the financial statements is revealed by accounting ratios. Ratios are useful to the internal management, prospective investors, creditors and outsiders. Ratios are the best tool for measuring liquidity, solvency, profitability and management efficiency of a firm. Thus, ratios have wide application and immense use study.

IDENTIFY USER AND THEIR INFORMATON NEEDS

CALCULATION OF APPROPRIATE RATIOS

INTERPRETATION OF RATIOS

Various groups of people are interested in analyzing the financial information to indicate the operating efficiency and the various aspects of the firm’s financial position. With the help of ratios one can determine the:

Ability of the firm is to meet current obligations. Extent to which the firm has used the long-term solvency by borrowing funds. The overall operating efficiency and performance of the firm.

A short-term creditor will be interested in current financial position of the firm. But, a long-term creditor is interested in solvency of the firm and profitability of the firm. The equity shareholders are generally concerned with their return and they are interested in the financial condition of the firm. Ratios prove to be of a great help to all these people. Some ratios are more important in one kind of analysis, while other ratios are important in different kind of analysis.

In credit analysis, the analyst will usually select a few ratios. He may use the Current Ratio or Quick Ratio to judge the firm’s liquidity or debt paying ability.

The ratio analysis is also useful in security analysis – the analysis concerned with efficiency with the firms utilizes its assets and manages financial risk to which the firm exposed.

Management has to protect the interests of all concerned parties: Creditors, Investors, Owners, etc. Their position depends upon the operating performance. From time to time management use ratio analysis to determine the firm’s financial strength and weakness and accordingly takes action to improve the firm’s position. For meaningful interpretation, the ratios of a firm should be compared with the ratios of similar firms. This comparison will reveal whether the firm is efficient or inefficient. Thus, the ratio analysis highlights the liquidity, solvency, profitability etc.

USERS OF RATIO ANALYSI:

Ratio analysis will be useful to the following parties in the business concern; Shareholders, Investors, Creditors, Employees, Governments, and Tax Audit requirements.

NEED FOR RATIO ANALYSIS:

Ratio analysis serves as an aid to management in the analysis and interpretation of financial statement. Different parties like investors, creditors, bankers etc., also need the ratio analysis for different purposes. The needs for ratio analysis are as follows:

1) To diagnose the financial health of business concern.2) To establish relationship between various related items of financial statements.3) To have deep insight into the data given in the financial statements for making accurate

decision.4) Ti reveal trends in cost, sales, profit and other related items for forecasting future events.5) To control costs for improving profitability of the firm.6) To measure efficiency of an organization.

7) To facilitate inter-firm comparison.8) To help the creditors, investors, bankers etc., in making profitable investment decisions.

ADVANTAGES OF RATIO ANALYSIS:

1) It simplifies mass of accounting data.2) It reveals relationship between various figures contained in financial statements. 3) It helps to identify areas of strength and weakness.4) It facilitates inter firm and intra firm comparisons.5) It serves as an effective tool to assess liquidity, solvency, profitability etc.6) It serves as an aid to management in discharge of its functions such as planning, decision making

etc.7) It assists management in controlling cost and performance.8) It provides clues on trends and future problems.

LIMITATIONS OF RATIO ANALYSIS:

1) Ratios are useful only when they are compared with past results of the business or with the results of the similar business.

2) The quality of ratio analysis depends upon the quality of information recorded in the financial statement.

3) Ratio analysis consists of only quantitative data and ignores qualitative factors which may also influence the conclusions.

4) Lack of standard formula for calculations of ratios makes it difficult to compare them.5) Ratios fail to indicate clearly and point where the error lies.6) Ratio analysis is only an indicator; it cannot be taken as final since other things have also to be

considered.7) It is very difficult to laid down standard for ratios.

CLASSIFICATION OF RATIOS:

RATIOS

Liquidity Ratios Leverage Ratios Turnover Ratios Profitability Ratios

Current Ratio

Quick Ratio

Super Quick Ratio

Debt-Equity Ratio

Proprietary Ratio

Capital Gearing Ratio

Fixed Assets Ratio

Solvency Ratio

Fixed Assets Turnover Ratio

Working Capital Turnover Ratio

Debtors Turnover Ratio

Debtors Collection Period Ratio

Creditors Turnover Ratio

Stock Turnover Ratio

G/P Ratio

N/P Ratio

Operating Cost Ratio

ROI Ratio

EPS Ratio

Price Earnings Ratio

Return on Share Holders Funds

Return Equity Shareholders Fund

1) LIQUIDITY RATIO:

Liquidity ratios play a key role in the analysis of short-term solvency of a firm. The term liquidity refers to the ability of a firm to pay in cash its outstanding short-term obligations. To judge the liquidity of a firm following ratios are examined:

a) Current Ratio:

Current ratio means the ratio of current assets to current liabilities. It indicates relationship between current assets and current liabilities. It also called as Working Capital Ratio. It is calculated as follows:

Current Ratio=Current Assets/Current Liabilities

A current ratio of 2:1 is considered to be ideal. It means current assets should be twice of current liability to provide for sufficient working capital after meeting current liabilities. A very high ratio is also not desired as it indicates less efficient use of funds.

b) Liquid Ratio or Acid Test Ratio:

This ratio is also called as ‘Quick Ratio. ‘Liquidity ratio is ratio of liquid assets to liquid liabilities. This ratio shows relationship between liquid assets and liquid liabilities. It is calculated with the help of following formula:

Liquid Ratio=Liquid Assets/Liquid Liabilities

The assets which are immediately convertible into cash are called as liquid assets. All current assets except stocks and prepaid expenses are treated as liquid assets. Similarly the liability which is to be paid immediately is termed as liquid liability. All current liabilities except bank overdraft are considered as liquid liabilities. A liquid ratio of 1:1 indicates highly solvent financial position of a firm.

c) Super Quick Ratio or Cash Ratio:

It is the ratio of absolute liquid assets to liquid liabilities. Therefore it is also called as ‘Absolute Liquid Ratio’. The formula is as follows:

Absolute Liquid Ratio=Absolute Liquid Assets/Liquid Liabilities

Absolute liquid assets include cash in hand, cash at bank and short term or temporary investments. The ideal absolute liquid ratio is taken as 1:2. This ratio gains much significance only when it is used along with first two ratios. However, it is not widely used in practice.

2) LEVERAGE RATIOS:

These ratios are used in analyzing long-term solvency of a firm. These ratios indicate the pattern of financing i.e. whether long-term requirements have been met out of long-term funds or not. The important ratios used for analysis of long-term solvency of a firm are as follows:

a) Debt Equity Ratio:

This ratio indicates the relationship between borrowed funds (debt) and owner’s fund (equity). It is determined to measure the firm’s debt in the business. This is also called as external and internal equity ratio. It is calculated by applying the following formula:

Debt-Equity Ratio=Borrowed Fund/Owned Fund

The borrowed fund refers to total outside liabilities. The outside liabilities include all debts, whether long-term or short-term. The owned fund includes preference share capital, equity share capital, reserves and surplus.

b) Proprietary Ratio:

It is a variant of debt equity ratio. It is the ratio of proprietor’s funds (share holders fund) to tangible assets. Formula for calculation of this ratio is as follows:

Proprietary Ratio= Shareholders Fund/Total Assets

Shareholders fund include preference share capital, equity share capital, all reserves and surplus less goodwill and preliminary expenses. Total assets include all assets except goodwill and preliminary expenses.

c) Capital Gearing Ratio:

This ratio is mainly used to analyze the capital structure of a firm. The term capital gearing refers to the proportion between the fixed interests and dividends bearing funds to equity shareholders funds. It is calculated as follows:

Capital Gearing Ratio=Fixed Interest and Dividend Bearing Funds/Equity Shareholders Funds

d) Fixed Assets Ratio:

This ratio explains whether the firm has raised adequate long term funds to meet its fixed assets requirements. It is calculated as follows:

Fixed Assets Ratio=Fixed Assets/Long Term Funds

Fixed assets include net fixed assets after depreciation and investments. Long term funds includes preference and equity share capital, reserves & surplus & long term loans less goodwill & preliminary expenses.

e) Solvency Ratio:

It refers to the ability of the firm to pay both short term and long term liabilities. A co is solvent, if it can meet its outside liability of its total assets. It is calculated as follows:

Solvency Ratio: Total Outsiders fund/Total Assets*100

Outsider’s liabilities include debentures, long term loans, creditors, bills payable, bank overdraft, outstanding expenses etc. Total assets include all assets except goodwill and preliminary expenses.

3) TURNOVER RATIOS:

Turnover ratios measure efficiency with which the assets are managed in the business. These ratios are also called as Efficiency or Activity Ratios as they show how efficiently assets rotate in the business. High ratio indicates efficient management on assets and low ratio depicts inefficient management of assets.

a) Fixed Assets Turnover Ratios:

This ratio indicates the extent to which the investment in fixed assets contributes towards sales. It indicates whether the investment in fixed assets has been judicious or not. It is calculated as follows:

Fixed Assets Turnover Ratios=Net Sales/Fixed Assets

Net sales mean sales less returns. Fixed assets are taken net of depreciation.

b) Working Capital Turnover Ratio:

This ratio shows whether working capital has been efficiently used in making sales. High ratio indicates higher operating efficiency of a firm and vice-versa. It calculated as follows:

Working Capital Turnover Ratio=Sales/Working Capital

Working Capital = Current Assets – Current Liabilities.

c) Debtors Turnover Ratio:

Debtors form an important part of current assets. Therefore quality of debtors to a greater extent decides the liquidity of a firm. This ratio establishes relationship between credit sales and average accounts receivable. It is calculated as follows:

Debtors Turnover Ratio=Credit Sales/Average Debtors

Average debtors include ‘trade debtors’ and ‘bills receivable’. This ratio is also called as ‘Debtors Velocity’.

d) Debtors Collection Period Ratio:

This ratio shows the extent to which the debts have been collected in time. A shorter collection period signifies prompt collection of dues while a longer period signifies poor collection performance. The ratio may be calculated by following formula:

Debtors Collection Period Ratio=Months in a year/Debtors Turnover Ratio

e) Creditors Turnover Ratio:

This ratio indicates the speed with which the payment is made to creditors for credit purchases. It is calculated as follows:

Creditors Turnover Ratio=Credit Purchases/Average Accounts Payable

Accounts payable includes trade creditors and bills payable. The average accounts payable is calculated by dividing the sum of opening and closing creditors and bills payable by two.

f) Debt Payment Period Ratio:

This ratio gives averaged credit period enjoyed by the firm in payment of dues to creditors. It is calculated by the following formula:

Debt Payment Period Ratio=Months or Days) in a year/Creditors turnover Ratio

g) Stock Turnover Ratio:

This is also known as Inventory Turnover Ratio. This establishes relationship between cost of sales and average inventory. It indicates whether investment in inventory is within proper limit or not. It is calculated as follows:

Stock Turnover Ratio=Cost of goods sold/Average inventory

4) PROFITABILITY RATIOS:

Profitability is an indicator of efficiency with which the operations of the business are performed. Profitability ratios are used to know how efficiently operations are carried out. Generally, the profitability ratios are calculated relating the profit either sales or to capital employed. The important profitability ratios are as follows:

a) Gross Profit Ratio:

It ratio of gross profit to net sales expressed as a percentage. It shows the relationship between gross profit and sales. It is also called as ‘Gross Margin Ratio’. It is calculated as follows:

Gross Profit Ratio=Gross Profit Ratio/Net Sales *100

b) Net Profit Ratio:

This is the ratio of net profit to net sales. It indicates relationship between net profit and net sales in terms of percentage. It is calculated as follows:

Net Profit ratio=Net Profit/Net Sales *100

Net profit is the balance of P&L A/c which is calculated after charging all operating and non-operating expenses and incomes.

c) Return on Investment Ratio:

This is the ratio which indicates percentage of return on capital investment in the business. It shows efficiency of the business as a whole. It is calculated as follows:

Return on Investment=Operating Profit/capital Employed*100

Operating profit is profit before interest and tax excluding non-trading income and non-trading expenses. Capital employed includes preference and equity share capital, reserves and surplus and long term loans. Alternatively, it is sum total of fixed assets and net working capital.

d) Return on Shareholders Fund:

It is the ratio of net profit to shareholders fund. It is worked out to find out the profitability of the firm from the shareholders point of view. Following is the formula for calculation:

Return on Shareholders fund=Net profit after interest and tax/Shareholders Fund*100

Net profit here means net profit after interest and tax including non-operating income and expenses. Shareholders fund include preference and equity share capital and all reserves and surplus.

Statement of the problem:

The ultimate aim of any organization is to make profit. To achieve this objective organization has to manage all functional department effectively and efficiently. The financial performance of BHEL-EPD Ltd evaluated through one of the tool of financial management ratio analysis technique.

The study broadly attempts to determine the overall financial performance of a company for the last five years. Since finance is important parameters of every business concern to determine the growth and profitability, the study of the topic sounds momentous.

Therefore, an attempt has been made to analyze the trends in which the company is moving based on ratio analysis technique and tried to identify the areas where lapses have occurred and also to suggest necessary remedial measures to overcome the lapses.

Objectives of the study:

1) To study the effectiveness of financial performance analysis and interpretation activity of BHEL-EPD.

2) To analyze and interpret the different financial ratios.3) To help the company in finding out the gray area and factors responsible for the same.4) To suggest measures for improving and accelerating the business performance.5) To evaluate the performance of BHEL-EPD.6) To overview the financial position of the company.

Scope of the study:

The study has been conducted for performance evaluation of BHEL-EPD through financial statements so that the overall performance of the company can be find out in terms of profitability, liquidity, and long-term financial position of the company. For the study the time period is 5 years i.e. 2007-08 to 2011-12.

Ratio analysis is the technique used to find out the results and to comment on the performance of the company. Tables and charts have been used to give a more precise definition of the pattern.

Methodology:

The quality of the project work depends on the methodology adopted for the study. Methodology in turn depends on the nature of the project work. The use of proper methodology is an essential part of any research. In order to conduct the study scientifically suitable methods and measures are to be followed.

Methodology is a plan or a strategy of the investigation process that sets out to obtain solution of the study.

Type of research:

The present study is descriptive type of research which attempts to study the evaluation of financial performance of BHEL-EPD Ltd, Bangalore.

Sources of data:

Limitations of the study:

1) The study is limited only for 5 years; hence broad generalization about the company may not be possible.

2) The figure and facts claimed in the annual reports are assumed to be true.3) The analysis is done mainly on secondary data.4) The study was time bounded.5) The study of BHEL-EPD is restricted because some ratios are unavailable.6) The study is not able to predict to future performance of the company, only past performance is

evaluated.

1. LIQUIDITY RATIOS:

1.1. CURRENT RAIO:

Table no. 1.1: showing the Current Ratio:

(Rs. In Crores)

CURRENT RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Current Asset 48.93 65.34 82.58 103.8 152.58

Current Liabilities 69.18 100.14 109.52 126.75 124.11

Current Ratio 0.7072853 0.6524865 0.75401753 0.8189349 1.2293933

ANALYSIS:

From the above analysis it can be seen that the company has a fluctuating ratio trend. The current ratio is highest in the year 2011-12 i.e., (1.23) when compared to the others.

Current Ratio = Current assets/Current liabilities

Chart No.1.1: Showing Current Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

0.2

0.4

0.6

0.8

1

1.2

1.4

Current Ratio

Current Ratio

INTERPRETATION:

From the above chart we can see that in the year 2011-12 the current ratio is highest compared to the rest of the years because of increase in the current assets and decrease in current liabilities.

1.2.Quick Ratio:

Table No.1.2: Showing Quick Ratio

(Rs. In Crores)

QUICK RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Quick assets 30.25 48.69 64.33 74.9 128.2

current liabilities 69.18 100.14 109.52 126.75 124.11

Ratio 0.4372651 0.4862193 0.5873813 0.590927 1.0329546

ANALYSIS:

Form the above table we can say that the company has a increasing ratio trend. The ratio is highest in the year 2011-12 (1.03) when compared to the previous years.

Quick Ratio = Quick Assets/Current Liabilities

Chart No.1.2: Showing Quick Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

0.2

0.4

0.6

0.8

1

1.2

QUICK RATIO

Ratio

INTERPRETATION:

From the above chart we can conclude that the company’s ratio trend is increasing. The ratio is the highest in the year 2011-12 (1.03) when compare to the rest of the years.

1.3. Absolute Liquid Ratio:

Table No.1.3: Showing Absolute Liquid Ratio

(Rs. In Crores)

ABSOLUTE LIQUID RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Absolute Liquid Assets 0.01 0.01 0.02 0.02 0.04

Liquid Liabilities 69.18 100.14 109.52 126.75 124.11

Ratio 0.0001446 0.000099 0.0001826 0.0001578 0.0003223

ANALYSIS:

The absolute liquid ratio is fluctuating. In the year 2007-08 it was 0.ooo14, in the year 2008-09 it was 0.oooo9, in the year 2009-10 it was 0.00018, in the year 2010-11 it was 0.00015, and in the year 2011-12 it is 0.00032.

Absolute Liquid Ratio=Absolute Liquid Assets/Liquid Liabilities

Chart No.1.3: Showing Absolute Liquid Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

0.00005

0.0001

0.00015

0.0002

0.00025

0.0003

0.00035

ABSOLUTE LIQUID RATIO

Ratio

INTERPRETATION:

In the above chart we can see that the ratio of absolute liquid ratio is highest in the year 2011-12 i.e., 0.0003223. This is good sign for the company.

2. LEVERAGE RATIOS:

2.1.Debt Equity Ratio;

Table No.2.1: Showing Debt Equity Ratio

(Rs. In Crores)

DEBT EQUITY RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Outsiders Fund 0.42 0.3 0.65 0.87 0.54

Share holders fund 15.17 15.35 21.47 55.06 82.88

Ratio 0.0276862 0.019544 0.0302748 0.0158009 0.0065154

% of Ratio 2.7686223 1.9543974 3.0274802 1.5800944 0.6515444

ANALYSIS:

The ratio of debt equity is fluctuating year by year. In the year 2007-08 it was 2.76%, in the year 2008-09 it was 1.95%, in the year 2009-10 it was 3.02%, in the year 2010-11 it was 1.58%, and in the year 2011-12 it is 0.65.

Debt Equity Ratio=Outsiders fund/Shareholders Fund

Chart No.2.1; Showing Debt Equity Ratio:

2007-08 2008-09 2009-10 2010-11 2011-120

0.5

1

1.5

2

2.5

3

3.5

DEBT EQUITY RATIO

% of Ratio

INTERPRETATION:

From the above chart we can conclude that the debt equity ratio of the company is satisfied. It is 0.6515 in the year 2011-12 which is less compare to the previous years. The ratio is the nearest to ideal of the debt equity ratio i.e., 1:1.

2.2.Proprietary Ratio:

Table No.2.2: Showing Proprietary Ratio

(Rs. In Crores)

PROPRIETY RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Share holders fund 15.17 15.35 21.47 55.06 82.88

Total assets -8.83 -24.5 -17.69 -14.74 36.25

Ratio -1.718007 -0.626531 -1.21368 -3.735414 2.2863448

ANALYSIS:

The table showing that the proprietary ratio for the year 2011-12 is 2.286 where the ratio of previous years is in negative form.

Proprietary Ratio=Shareholders Fund/Total Assets

Chart No.2.2: Showing Proprietary Ratio

2007-08 2008-09 2009-10 2010-11 2011-12

-4

-3

-2

-1

0

1

2

3

PROPRIETARY RATIO

Ratio

INTERPRETTATION:

From the above chart we can conclude that the proprietary ratio is highest in the year 2011-12 i.e., 2.2863 which is good sign for the company. The high ratio indicates relatively lesser risk to the creditors.

2.3.Fixed Assets Ratio:

Table No.2.3: Fixed Assets Ratio

(Rs. In Crores)

FIXED ASSETS RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Fixed assets 11.92 10.3 9.26 8.21 7.78

Net worth 15.17 15.35 21.47 55.06 82.88

Ratio 0.7857614 0.6710098 0.4312995 0.1491101 0.0938707

ANALYSIS:

The fixed assets ratio is fluctuating year by year. In the year 2007-08 it was 0.7857, in the year 2008-09 it was 0.6710, in the year 2009-10 it was 0.4312, in the year 2010-11 it was 0.1491, and in the year 2011-12 it is 0.9387.

Fixed Assets Ratio=Fixed Assets/Net Worth

Chart No.2.3: Showing Fixed Assets Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

FIXED ASSETS RATIO

Ratio

INTERPRETATION:

The above chart shows the fixed assets ratio which is under the control. The ideal ratio is 0.67. However, the fixed assets ratio is not exceeded the 1.

2.4. Solvency Ratio:

Table No.2.4: Showing Solvency Ratio

(Rs. In Crores)

SOLVENCY RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Total outsiders fund 69.6 100.44 110.17 127.62 124.65

Total assets -8.83 -24.5 -17.69 -14.74 36.25

Ratio -7.88222 -4.099592 -6.227812 -8.658073 3.4386207

% of Ratio -788.222 -409.9592 -622.7812 -865.8073 343.86207

ANALYSIS:

The table showing that the solvency ratio for the year 2011-12 is 343.86% which is more compare to the previous year’s which shows in negative form.

Solvency Ratio=Outside Liabilities/Total Assets*100

Chart No.2.4: Showing Solvency Ratio

2007-08 2008-09 2009-10 2010-11 2011-12

-1000

-800

-600

-400

-200

0

200

400

SOLVENCY RATIO

% of Ratio

INTERPRETATION:

From the above chart we can conclude that the solvency ratio of the company is highest in the year 2011-12 i.e., 343.86%. The company’s solvency ratio is not satisfactory.

3. EFFICIENCY OR ACTIVITY RARIO:

3.1.Fixed Assets Turnover Ratio:

Table No.3.1: Showing Fixed Assets Turnover Ratio

(Rs. In Crores)

FIXED ASSETS TURNOVER RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Net sales 114.22 127.46 131.94 185.4 220.47

Fixed assets 11.92 10.3 9.26 8.21 7.78

Ratio 9.5822148 12.374757 14.24838 22.582217 28.338046

ANALYSIS:

The table shows that the fixed assets turnover ratio is in increasing trend. In the year 2007-08 it was 9.58, in the year 2008-09 it was 12.37, in the year 2009-10 it was 14.24, in the year 2010-11 it was 22.58, and in the year 2011-12 it is 28.33.

Fixed Assets Turnover Ratio=Net Sales/Fixed Assets

Chart No.3.1: Showing Fixed Assets Turnover Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

5

10

15

20

25

30

FIXED ASSETS TURNOVER RATIO

Ratio

INTERPRETATION:

The above chart shows the fixed assets turnover ratio which is increasing year by year respectively. In the year 2011-12 it is increased to 28.33 which is more compare to the rest of the years.

3.2. Working Capital Turnover Ratio:

Table No.3.2: Showing Working Capital Turnover Ratio

(Rs. In Crores)

Working Capital Turnover Ratio

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Sales 114.22 127.46 131.94 185.4 220.47

Working Capital -20.25 -34.8 -26.94 -22.95 28.47

Ratio -5.640494 -3.662644 -4.89755 -8.078431 7.743941

ANALYSIS:

The table shows that the working capital turnover ratio is highest in the year 7.74 when compare to the rest of the years.

Working Capital Turnover Ratio=Sales/Working Capital

Chart No.3.2: Showing Working Capital Turnover Ratio

INTERPRETATION:

From the above chart we can conclude that the company has the more working capital turnover ratio which is 7.7439 in the year 2011-12, where as previous years are in the negative form.

2007-08 2008-09 2009-10 2010-11 2011-12

-10

-8

-6

-4

-2

0

2

4

6

8

Working Capital Turnover Ratio

Ratio

3.3. Inventory Turnover Ratio:

Table No.3.3: Showing Inventory Turnover Ratio

(Rs. In Crores)

INVENTORY TURNOVER RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Cost of goods sold 114.22 127.46 131.94 185.4 220.47

Avg. Inventory 18.68 16.65 18.25 28.9 24.38

ratio 6.114561 7.6552553 7.229589 6.4152249 9.0430681

ANALYSIS:

The inventory turnover ratio is fluctuating year by year. In the year 2007-08 it was 6.11, in the year 2008-09 it was 7.65, in the year 2009-10 it was 7.22, in the year 2010-11 it was 6.41, and in the year 2011-12 it is 9.04.

Inventory Turnover Ratio=Net Sales/Inventory

Chart No.3.3: Showing Inventory Turnover Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

1

2

3

4

5

6

7

8

9

10

INVENTORY TURNOVER RATIO

ratio

INTERPRETATION:

From the above chart we can say that the inventory turnover ratio is highest whish 9.043 in the year 2011-12. The highest turnover ratio indicates the brisk sales in the company.

3.4. Debtors Turnover Ratio:

Table No.3.4: Showing Debtors Turnover Ratio

(Rs. In Crores)

DEBTORS TURNOVER RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Credit Sales 19.8 35.27 45.73 46 48.39

Accounts Receivables 26.43 44.88 57.46 64.16 116.12

Ratio 0.7491487 0.7858734 0.795858 0.7169576 0.4167241

ANALYSIS:

The table shows the debtors turnover ratio. In the year 2007-08 it was 0.749, in the year 2008-09 it was 0.785, in the year 2009-10 it was 0.795, in the year 2010-11 it was .716, and in the year 2011-12 it is 0.416.

Debtors Turnover Ratio=Credit Sales/Accounts Recievables

Chart No.3.4: Showing Debtors Turnover Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

DEBTORS TURNOVER RATIO

Ratio

INTERPRETATION:

The above chart shows that the debtors turnover ratio is decreased to the 0.4167 in the year 2011-12. The lower ratio indicates that the debts are not collected promptly which is not a good sign for the company.

3.5. Debtors Collection Period Ratio:

Table No.3.5: Showing Debtors Collection Period Ratio

(Rs. In Crores)

DEBTORS COLLECTION PERIOD RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Months in a year 12 12 12 12 12

DTR 0.749149 0.785858 0.795858 0.716958 0.416742

Ratio 16.018 15.269 15.078 16.737 28.794

ANALYSIS:

The table shows the debtors collection period ratio. In the year 2007-08 it was 16.018, in the year 2008-09 it was 15.269, in the year 2009-10 it was 15.078, in the year 2010-11 it was 16.737, and in the year 2011-12 it is 28.794.

Debtors collection Period Ratio=Months in a year/Debtors Turnover Ratio

Chart No.3.5: Showing Debtors Collection Period Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

5

10

15

20

25

30

DEBTORS COLLECTION PERIOD RATIO

Ratio

INTERPRETATION:

The above chart shows that the debtors turnover ratio is increased to the 28.794 in the year 2011-12 compare to the previous years. The highest ratio indicates the quality of debtors by measuring the promptness in the collection process.

4. PROFITABILITY RATIO:

4.1. Gross Profit Ratio:

Table No.4.1: Showing Gross Profit Ratio

(Rs. In Crores)

GROSS PROFIT RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Gross Profit 15.27 13.55 15.52 36 46.18

Net Sales 114.22 127.46 131.94 185.4 220.47

Ratio 0.1336894 0.1063079 0.1176292 0.1941748 0.2094616

% Of Ratio 13.368937 10.630786 11.762923 19.417476 20.94616

ANALYSIS:

The gross profit ratio is fluctuating year by year. In the year 2007-08 it was 13.36%, and decreased in the year 2008-09 i.e. 10.63%, and further it increased to the 11.76% in the year 2009-10, 19.41% in the year 2010-11, 20.94% in the year 2011-12.

Gross Profit Ratio=Gross Profit/Net Sales*100

Chart No.4.1: Showing Gross Profit Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

5

10

15

20

25

GROSS PROFIT RATIO

% Of Ratio

INTERPRETATION:

From the above chart we can conclude that the gross profit ratio is increased to the 20.946 in the year 2011-12. The increasing trend is the good sign to the company. The highest gross profit ratio indicates the greater profitability.

4.2. Net Profit Ratio:

Table No.4.2: Showing Net Profit Ratio

(Rs. In Crores)

NET PROFIT RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

Net Profit (PAT) 11.07 11.75 17.87 51.46 79.18

Net sales 114.22 127.46 131.94 185.4 220.47

Net profit ratio 0.09691823 0.09218578 0.13544035 0.27756203 0.35914183

% 0f growth 9.6918228 9.21857838 13.5440352 27.7562028 35.9141833

ANALYSIS:

The table shows the increasing trend in the net profit ratio of the company. In the year 2007-08 it was 9.69%, in the year 2008-09 it was 9.21%, in the year 2009-10 it was 13.54%, in the year 2010-11 it was 27.75%, and in the year 2011-12 it is 35.91%.

Net Profit Ratio=Net Profit/Net Sales*100

Chart No.2.4: Showing Net Profit Ratio

2007-08 2008-09 2009-10 2010-11 2011-120

5

10

15

20

25

30

35

40

NET PROFIT RATIO

% 0f growth

INTERPRETATION:

From the above chart we can conclude that the net profit ratio which constant increase in the ratio indicates the improvement in the business. It is increased to the 35.914 in the year 2011-12. It is good sign for the company. It helps in assessing the overall efficiency of a firm.

4.3. Return On Capital Employed Ratio:

Table No.4.3: Showing Return on Investment Ratio

(Rs. In Crores)

RETURN ON CAPITAL EMPLOYED RATIO

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

NPBIT 15.06 14.91 17.55 38.5 48.45

capital employed -8.33 -24.5 -17.69 -14.47 36.25

Ratio -1.8079232 -0.6085714 -0.9920859 -2.6606773 1.33655172

% of Ratio -180.79232 -60.857143 -99.208592 -266.06773 133.655172

ANALYSIS:

The table shows that the return on capital employed ratio. It shows the highest trend in the year 2011-12 which is 133.65, when compare to the rest of the years.

Return on Capital Employed Ratio=NPBIT/Capital Employed*100

Chart No.4.3: Showing Return on Investment Ratio

2007-08 2008-09 2009-10 2010-11 2011-12

-300

-250

-200

-150

-100

-50

0

50

100

150

RETURN ON CAPITAL EMPLOYED RATIO

% of Ratio

INTERPRETATION:

The above chart shows that the return on capital employed ratio is increased to the 133.655% in the year 2011-12 where as rest of the years are in the negative form. The highest ratio shows the highest return on capital employed. This is the good sign to the company.

4.4. Return on Shareholders Fund Ratio:

Table No.4.4: Showing Return on Shareholders Fund

(Rs. In Crores)

RETURN ON SHAREHOLDERS FUND

ITEM / YEAR 2007-08 2008-09 2009-10 2010-11 2011-12

NPAIT 11.07 11.75 17.87 51.46 79.18

Shareholders Fund 15.17 15.35 21.47 55.06 82.88

Ratio 0.7297297 0.7654723 0.8323242 0.9346168 0.9553571

% of Ratio 72.972973 76.547231 83.232417 93.461678 95.535714

ANALYSIS:

The table shows that the return on shareholder’s fund which is in increasing trend year by year. In the year 2007-08 it was 72.97%, in the year 2008-09 it was 76.54%, in the year 2009-10 it was 83.23%, in the year 2010-11 it was 93.46%, and in the year 2011-12 it is 9.387%.

Return on Shareholders Fund=NPAIT/Shareholders Fund*100

Chart No.4.4: Showing Return on Shareholders Fund

2007-08 2008-09 2009-10 2010-11 2011-120

10

20

30

40

50

60

70

80

90

100

RETURN ON SHAREHOLDERS FUND

% of Ratio

INTERPRETATION:

From the above chart we can conclude that the return on shareholder’s fund is increasing year by year. In the year 2011-12 it is increased to 95.535% which is good sign for the shareholders of the company. The highest ratio indicates the how well the firm used the owners fund.