I IN NT TR RO OD DU UC CT TI IO ON NT TO OB BH HE EL LJ JA AG GD DI IS SH HP PU UR R

BHEL unit of jadishpur came into existence during eighties. The foundation stone was laid on Feb.10th,1982. On 3rd march,1984 the prime ministry of India Mrs. Indra Gandhi inaugurated BHEL s 11th manufacturing unit at jagdishpur in sultanpur distt.78 Km. Away from Lucknow, On the Lucknow-Sultanpur highway . BHEL manufactures a comprehensive range of power generation and transmission equipment for domestic as well as overseas markets BHEL50 year of glorious experience in the ceramic field, blended with that of NGK, Japans world leader in insulator technology. Set the pace for the commissioning of the plant. This latest unit has been provide with the most modern and sophisticated facilities and was commissioned in record time of 18 months. Insulator plants, jagdispure has developed into one of Indias largest disc insulator manufacturing centres, with the most steam lined lay out modern technology. It has provision to cope with the latest advances in the ceramic field. BHEL jagdispur is primarily concerned with the manufacturing of insulator which is used as electrical power equipment in power industries.

P PR RE EF FA AC CE E

Finance is the lifeblood of an industry. The subject matter of Financial Management has been changing at a rapid pace. About a decade ago, the scope of Financial Management was circumscribed to the raising of funds, whenever needed & the financial decision-making & problem solving. The summer training program is designed to give the future managers the feel of the corporate happenings and work culture. These real life situations are entirely different from the stimulated exercise enacted in an artificial environment inside the classroom and it is precisely because of this reason that this summer training has been designed, so that the manager of tomorrow does not feel ill in the case when the time comes to shoulder responsibilities. The summer training is a bridge between the institution and organization to make us understand how theoretical knowledge will be applied in the practical field. It was exactly in this context that I was privileged enough to join Bharat Heavy Electricals Limited. In the FINANCE DEPARTMENT as a summer trainee. Bharat Heavy Electricals Limited (BHEL) was set up in 1959 by the Government of India with the objective of creating indigenous manufacturing base for power plant equipments. Today, BHEL is the 12th largest company in the world in Power Plant Equipments manufacturing and the largest in India. Bharat Heavy Electricals Limited (BHEL) is known not only for its professional management, but also for its enlightened and progressive approach towards employee welfare and betterment of society. The experience that I have gathered over the past two months has certainly provided me with an orientation, which I believe, will help me shoulder any assignment successfully in future.
Ratio Analysis plays a crucial role in financial economics. It deals with investment decision & it its usual axiom in finance that the value of an investment is the present value of future cash flows that the asset is expected to generate. It also represents the growing edge of the business giving a proper overview of the organizations progress.

A AC CK KN NO OW WL LE ED DG GE EM ME EN NT T

I would like to express my gratitude to all those who gave me the opportunity and subsequently guidance to complete this project. A mission of this magnitude could not have been be under taken without the guiding light of inspiration, cooperation, critical supervision, encouragement and above all the blessings of Goddess Saraswati.

It is with such a multitude of emotions that I shall ever remember the inspiring encouragement of my supervisor Dr. V.K.JHAA at every step during the period of the present study. I am thankful to Dr .NIRDOSH AGGRAWAL, as his stupendous knowledge provided the other sharp and critical dimensions to my work which I am sure has tremendously enhanced the value of this project. I am thankful to my institute and the faculty for their constant support and guidance throughout my project work. I would very sincerely like to thank my company mentor Mr. S.K.TRIPATHI Sr. Additional officer (Finance), and a special thanks to Shri K Ravi Kumar CMD & Director (Power) who not only permitted me to carry out the work but also encouraged me to go ahead with my training by giving me the opportunity to work in the real practical scenario. I am bound to thank other staff members for their stimulating support. I would like to give my special thanks to my PARENTS; their constant support enabled me to complete this project work.

EXECUTIVE SUMMARY

The following project showcases the ratio analysis of one of the most well known PSU Bharat Heavy Electricals Limited. Various aspects about the awareness of financial area and various details of companies current market standing has been made clear through this project report. The basic purpose of preparing this project was to make a detailed study and understand its various concepts and outcomes. While working on this project various topics and concepts came to my knowledge which were unheard and unknown to me before. I have compared BHEL share price from BSE Sensex for the last four years and one year projected and I have also compared the balance sheet of last 5 years which will explain the market standing of the company. Further I have used ratio analysis method for the analysis of the company. The project will help in exploring those dimensions which were not known to many but with the help of the following project those areas will be highlighted. It would also help in knowing the various competitors of the industry and exploring the areas through which competitive advantage could be obtained.

CHAPTER I
1.1 1.2 1.3 1.4 Introduction Need of the study Scope of the study Objective of the study

1.1 Introduction

COMPANY PROFILE

BHARAT HEAVY ELECTRICALS LIMITED

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

BHEL has acquired certifications to Quality Management Systems (ISO 9001), Environmental Management Systems (ISO 14001) and Occupational Health & Safety Management Systems (OHSAS 18001) and is also well on its journey towards Total Quality Management.

BHEL HAS:

Installed equipment for over 90,000 MW of power generation - for Utilities, Captive and Industrial users. Supplied over 2,25,000 MVA transformer capacity and other equipment operating in Transmission & Distribution network up to 400 kV (AC & DC). Supplied over 25,000 Motors with Drive Control System to Power projects, Petrochemicals, Refineries, Steel, Aluminium, Fertilizer, Cement plants, etc. Supplied Traction electrics and AC/DC locos to power over 12,000 kms Railway network. Supplied over one million Valves to Power Plants and other Industries.

BHEL's operations are organised around three business sectors, namely Power, Industry including Transmission, Transportation, Telecommunication & Renewable Energy - and Overseas Business. This enables BHEL to have a strong customer orientation, to be sensitive to his needs and respond quickly to the changes in the market. BHEL's vision is to become a world-class engineering enterprise, committed to enhancing stakeholder value. The company is striving to give shape to its aspirations and fulfil the expectations of the country to become a global player. The greatest strength of BHEL is its highly skilled and committed 42,600 employees. Every employee is given an equal opportunity to develop himself and grow in his career. Continuous training and retraining, career planning, a positive work culture and participative style of management all these have engendered development of a committed and motivated workforce setting new benchmarks in terms of productivity, quality and responsiveness.

Established in the late 50s, Bharat Heavy Electricals Limited (BHEL) is, today, a name to reckon with in the industrial world. It is the largest engineering and manufacturing enterprise of its kind in India and one of the leading international companies in the power field. BHEL offers over 180

products and provides systems and services to meet the needs of core sectors like: power, transmission, industry, transportation, oil & gas, non-conventional energy sources and telecommunication. A wide-spread network comprising 14 manufacturing divisions, 8 service centres, 4 power sector regional centres, 18 regional offices, besides a large number of project sites spread all over India and abroad, enables BHEL to be close to its customers and cater to their specialized needs with total solutions - efficiently and economically. An ISO 9000 certification has given the company international recognition for its commitment towards quality. With an export presence in more than 60 countries, BHEL is truly Indias industrial ambassador to the world.

VISION

A WORLD-CLASS ENGINEERING ENTERPRISE COMMITTED TO ENHANCING STAKEHOLDER VALUE.

MISION

TO BE INDIAN MULTINATIONAL ENGINEERING ENTERPRISE PROVIDING TOTAL BUSINESS SOLUTION THROUGH QUALITY PRODUCTS, SYSTEMS AND SERVICES IN THE FIELDS OF ENERGY, INDUSTRY, TRANSPORTATION, INFRASTRUCTURE AND OTHER POTENTIAL AREAS.

QUALITY POLICY

IN ITS QUEST TO BE WORLD-CLASS, BHEL PURSUES CONTINUAL IMPROVEMENT IN THE QUALITY OF ITS PRODUCTS, SERVICES AND PERFORMANCE LEADING TO TOTAL CUSTOMER SATISFACTION AND BUSINESS GROWTH, THROUGH DEDICATION, COMMITMENT AND TEAM-WORK OF ALL EMPLOYEES.

QUALITY ASSURANCE

Quality of BHEL products is evidenced through state of-the-art design and technology adopted from world renowned collaboration. BHEL gives emphasis to the highest standards of quality at every stage of operation through implementation of quality management system and procedures in line with international standards and practices. BHEL, where quality systems as per ISO-9001 have taken deep roots, has now made significant achievements in Total Quality Management by adopting CII/EFQM model for business excellence. BHEL shares the growing global concern on issues related to environment & occupational health & safety. The units of BHEL have been accredited to ISO-14001 Environmental Management System.

JOINT VENTURE

BHEL-GE GAS TURBINE SERVICES PRIVATE LIMITED. NTPC-BHEL POWER PROJECTS PVT. LTD. UDANGUDI POWER CORPORATION LTD. BARAK POWER PVT. LTD. POWER PLANT PERFORMANCE IMPROVEMENT LTD. HEC & BHEL JOINT VENTURE FOR FOUNDRY FORGE COMPANY.

HIERARCHY OF BHEL

BOARD OF DIRECTORS

CHAIRMAN & MANAGING DIRECTOR

COMMITTEE OF DIRECTOR

CORPORATE FUNCTION

BUSINESS SECTOR

OPERATIONS

DIRECTOR FINANCE

DIRECTOR ENGINEE, R&D

DIRECTOR HR

DIRECTOR POWER

DIRECTOR IND SYS & PRODUCTS

DIRECTOR INTERNATIONAL OPERATIONS

MANAGEMENT COMMITTEE K. RAVI KUMAR (Chairman & Managing Director)

Power Business Power Sector Regions- North, East, South & West Spares & Services Business Mergers & Acquisitions

C.S.Verma (Director Finance)

Corporate Finance Taxation Financial Services Internal Audit JV (Finance) Corporate Monitoring Corporate Materials Management Corporate Manufacturing

Anil Sachdev (Director Human Resource)

Human Resource Development Institute Corporate Information Technology Corporate Engg. & Product Development Corporate Communication Corporate Productivity Corporate Health, Safety & Environment

B.P. Rao (Director Industrial & Product Business)

Transmission Business Transportation Business Ceramics Business Unit Component Fabrication Plant Corporate Research & Development

Centralised Stamping Unit

HIERARCHY OF FINANCE DEPARTMENT

DIRECTOR FINANCE

GENERAL MANAGER FINANCE

FINANCIAL SERVICES & BANKING, CASH MGT, DIRECT TAXATION

INTERNAL AUDIT

INDIRECT TAXATION

DEBTORS MGT, BUDGET BOOKS, CAPITAL BUDGET, FINANCE ADMIN, ESTT & PROVIDENT FUND Basically the whole set up of the finance department is made so as to cover all the aspects involved in the financial decisions. BHEL is a debt free company and has its own accounting policies. While to get a project, BHEL presents its quote like other participants and the whole procedure is carried on.

Firstly, we will analyze the various departments of finance at BHEL. These can be depicted as follows:

Cash management Corporate books Internal audit Establishment and payroll Financial services department Taxation (direct and indirect) Provident fund trust Debtors Budgeting Administration and insurance

BUSINESS DIVISIONS

BUSINESS SECTORS
BHELs operations are organized around three business sectors, namely Power, industry-including Transportation, Transmission, Telecommunication & Renewable Energy and Overseas Business. The major business (approx 80%) is from power sector.

(A) POWER SECTOR

BHEL manufactures a wide range of products and systems for thermal, nuclear, gas and hydro based utility power plants to meet customer requirements for power generation and transmission. Its capability ranges from supplying individual equipment to setting up complete power plants on turnkey basis, packed by reliable after sale-services. BHEL turnkey capabilities have been proved in a number of projects in India and abroad. BHEL built power generation sets account for nearly two-third of the overall installed capacity and three-fourth of the power generated in India. The company has proven expertise in plant performance improvement through renovation, modernization and upgrading of a variety of power plant equipment, besides specialized know how of residual life assessment (RLA), Health diagnostics and Life Extension Program (LEP) of plants.

Thermal

BHEL supplies steam turbines, generators, boilers and matching auxiliaries up to 800 MW rating including supercritical sets of 660/800 MW.

Nuclear

BHEL has manufactured and supplied steam turbines and generators for 220 MWe, 235 MWe and 540 MWe ratings.

Hydro

BHEL engineers and manufactures custom-built hydro power equipment. Its range covers turbines of Francis, pelton and Kaplan type. Pump turbines, bulb turbines.

(B) INDUSTRY SECTOR

BHEL manufactures and supplies major capital equipment and systems like captive power plants, centrifugal compressors, drive turbines, industrial boilers & auxiliaries, waste heat recovery boilers, gas turbines, pumps, heat exchangers, electric machines, valves, heavy castings and forgings, to a number of industries other than power utilities, like metallurgical, mining, cement, paper, fertilizers, refineries and petro-chemicals. BHEL has also emerged as a major supplier of controls and instrumentation systems especially distributed digital control systems for industries, and simulators for various applications. BHEL is supplying X'mas tree valves and well heads up to a rating of 10,000 psi to ONGC and Oil India. It can also supply on-shore drilling rigs, sub-sea well heads, super deep drilling rigs, desert rigs and heli-rigs.

Transportation

Today over 70% of the Indian Railways .one of the largest railway networks in the world is equipped with traction equipment built with bhel .Most of the trains of the Indian Railways are equipped with BHEL?s traction and traction control equipment. India's first underground metro at Calcutta runs on drives and controls supplied by BHEL. The Company has developed and supplied broad gauge 3900 HP AC locomotives, 5000/4600 HP AC/DC locomotives, diesel shunting locomotives of up to 2600 HP, battery powered road vehicles, including electrics & control electronics. BHEL has acquired the technology for 6000 HP 3-phase AC Locos and started manufacturing the electrics & controls as well as those for 3-phase AC EMUs, Diesel EMUs and OHE cars.

Transmission

BHEL today is the leader in the field of power transmission in India with a wide range of transmission systems and products. BHEL supplies a wide range of transmission products and systems of up to 400 kV class. Those include: high-voltage power and distribution transformers, instrument transformers, dry-type transformers, SF6 switchgear, capacitors and ceramic insulators. Equipment for high-voltage direct current (HVDC) systems is also supplied, for economic transmission of bulk power over long distances. Series and shunt compensation systems are also manufactured to minimize transmission losses. BHEL has developed and commercialized the countrys first indigenous 36 kV Gas Insulated Substation.

Gas

BHEL is the only Indian company capable of manufacturing large size gas based power plant equipment, comprising advance-class gas turbine up to 289 MW (ISO) rating for open and combined

cycle operations. BHEL is the largest supplier of well heads, X-MAS trees and oil rigs to ONGC and oil

(C) INTERNATIONAL BUSINESS

BHEL has, over the years established its reference in more than 70 countries across all inhabited countries 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, rehabilitation projects, besides a wide variety of products like transformers, compressors, valves and oil field equipment, electrostatic precipitators, photovoltaic equipment, Insulators, Heat exchangers, Switch gears etc. The company has been successful in meeting demanding requirements of international markets in terms of complexity of works 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. Besides undertaking turnkey projects on its own, BHEL also possesses the requisite flexibility to interface and compliment other international companies for large projects and has also exhibited adaptability by manufacturing and supplying intermediate products.

RESEARCH AND DEVELOPMENT

BHELs engineering and R&D efforts are focused on improving the quality of its products, upgrading existing technologies, accelerating indigenization and developing new products for diversification, reducing time-cycle and costs. A highly qualified and experienced team of engineers and scientists are engaged in R&D activities at BHELs corporate R&D division, Hyderabad, as well as at all the manufacturing units and they have close interaction with other national research laboratories and academic institutions. R&D efforts have already yielded several significant results in terms of better products and improved technologies. A few among the many R&D accomplishments are: atmospheric bubbling fluidized bed combustion(AFBC) boiler(up to 165t/h);ceramic honeycombs for catalytic convertors; surface coating for erosion; renewable energy systems, including wide electric generators; solar photovoltaic and solar water heating systems. Recently, centers of excellence for simulators, computational fluid dynamics (CFD), and a centre for development of permanent magnet machines, have been established.

PRODUCT RANGE

THERMAL POWER PLANTS GAS BASED POWER PLANTS HYDRO POWER PLANTS DG POWER PLANTS INDUSTRIAL SETS BOILERS BOILER AUXILIARIES HEAT EXCHANGERS AND PRESSURE VESSELS PUMPS POWER STATION CONTROL EQUIPMENT SWITCHGEARS BUS DUCTS TRANSFORMERS INSULATORS CAPACITORS ENERGY METERS INDUSTRIAL ELECTRICAL MACHINES COMPRESSORS CONTROL GEAR

 SILICON RECTIFIERS THYRISTOR EQUIPMENT TRANSPORTATION EQUIPMENT OIL FIELD EQUIPMENT CASTINGS AND FORGINGS SEAMLESS STEEL TUBES NON-CONVENTIONAL ENERGY SYSTEMS

BHEL COMPARISON WITH ITS COMPETITORS

The term capital structure refers to the percentage of capital (money) at work in a business by type. Broadly speaking, there are two forms of capital: equity capital and debt capital.

In other words, capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities. A firm's capital structure is then the composition or 'structure' of its liabilities. For example, a firm that sells $20 billion in equity and $80 billion in debt is said to be 20% equity-financed and 80% debt-financed. The firm's ratio of debt to total financing, 80% in this example is referred to as the firm's leverage. In reality, capital structure may be highly complex and include tens of sources. The Modigliani-Miller theorem, proposed by Franco Modigliani and Merton Miller forms the basis for modern thinking on capital structure, though it is generally viewed as a purely theoretical result since it assumes away many important factors in the capital structure decision. The theorem states that, in a perfect market, how a firm is financed is irrelevant to

its value. This result provides the base with which to examine real world reasons why capital structure is relevant, that is, a company's value is affected by the capital structure it employs. These other reasons include bankruptcy costs, agency costs, taxes, information asymmetry, to name some. This analysis can then be extended to look at whether there is in fact an optimal capital structure: the one which maximizes the value of the firm.

1.2 Need of the study

1.3 Scope of the study

1.4 Objective of the study

OBJECTIVE OF THE STUDY

The following project showcase the ratio analysis of Bharat Heavy Electricals Limited. The main objective of this project report is to provide complete financial study of BHEL to the shareholders and the parties interested in buying its shares. People will get encouraged at young age to invest in stock market.Through this project many areas which were not known to shareholders can be explored. This study is positioned to offer a comprehensive overview of the financial condition of the company. As an overview, it focuses on the resulting effects of the various economic and market forces shaping its future. The study will be of critical interest particularly to the shareholders and other parties interested at various levels, so that they can take the right decision at the right time in this dynamic business scenario. To achieve my objective, I have used the following technique:-

Ratio analysis. Comparison of last five years BHEL share price with BSE Sensex. Comparison of last five years Balance Sheet with Projected Balance Sheet. Comparison of BHEL with its competitors in respect to Debt and Equity.

CHAPTER II
2.1 RESEARCH METHODOLOGY 2.2 LIMITATION OF THE STUDY

2.1 RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

RESEARCH DESIGN AND METHODOLOGY

Research design is the plan structure and strategy of investigation conceived so as to obtain answers to research question and to control deviations. The Plan is the overall scheme or programme of the research which draws and outline of what researcher will do from writing the hypothesis and their operational implications to the final analysis of data. The structure and strategy are more specific than plan. Structure is the outline, the scheme, the paradigm of the operation of the variables, while strategy includes the method to be used to gather and analyse the data. Therefore every research project conducted scientifically has a specific strategy and structure to gather and analyse the data in a manner that aims at getting relevance to the purpose of research.

This is also known as research framework and plan which involves the following steps:

Determination of the approach to be used in the research work. Determination of the type of the data which will be required for this purpose. Identification of the possible sources of the data so required. Drawing strategy to gather required data. Deciding area of analysis to be made. Presentation and interpretation of the data with possible conclusion.

HYPOTHESIS
The word Hypothesis generally refers to a definite interpretation at a given set of facts, which is put forth as tentative suggestions and remains partly or wholly unverified. After it is once established it ceases to be a hypothesis and becomes a theory, or explanatory principle.

Analysing the Ratios of last four years with projected of 2010. Analysis of the financial statement of BHEL for the years: o 2005 2006 o 2006 2007 o 2007 2008 o 2008 2009 o 2009 2010 Comparison of last five years balance sheet with projected balance sheet.

RESEARCH TYPE DESCRIPTIVE SOURCE OF INFORMATION

The various data required to analyse the financial performance of Bharat Heavy Electricals Limited have been collected from the various annual reports published by BHEL. Hence the study of financial performance has been made though secondary data which are collected through journals, literature available on the topic, annual reports, supporting financial statements, balance sheet and profit and loss account of BHEL and also as and when required personal contact and discussion with various Managers (Finance Department) of BHEL corporate office in New Delhi. This personal contact and discussion can be considered as primary information, but mainly this study is based on secondary data. Some other sources are mention below:-

BHEL Annual report for the years: 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

BHEL website i.e. www.bhel.com BHEL financial software PULSE

2.2 LIMITATION OF THE STUDY

The researcher was not able to focus on qualification factors, which influences the financial position of the organization. The study is limited to BHEL So the result could not be generalized on macro level. Ratio analysis is only tools used for the financial statement analysis. Since the finance section in the organization being sensitive, analysis is based on the assumed data of BHEL.

CHAPTER III
3.1 DESCRIPTIVE WORK ON SUB TOPIC OF THE STUDY

3.1

FINANCIAL STATEMENT ANALYSIS

OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS:Financial statement analysis is the collective name for the tools and techniques to provide relevant information to decision-makers. The purpose of financial statement analysis is to assess a companys financial health and performance. Financial statement analysis consists of comparisons for the same company over periods of time and comparisons of different companies either in the same industry or in the different industries. Moreover, financial statement analysis enables investors and creditors to evaluate the past performance and financial position, and to predict the future performance.

Financial Ratios Financial ratios are used to evaluate profitability, liquidity, solvency and market strength. Financial ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements. The level and historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and attractiveness as an investment. Financial ratios are calculated from one or more pieces of information from a company's financial statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or revenues of a company, expressed in percentage terms. In isolation, a financial ratio is a useless piece of information. In context, however, a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing. A ratio gains utility by comparison to other data and standards. Taking our example, a gross profit margin for a company of 25% is meaningless by itself. If we know that this company's competitors have profit margins of 10%, we know that it is more profitable than its industry peers which is quite favorable. If we also know that the historical trend is upwards, for example has been increasing steadily for the last few years, this would also be a favorable sign that management is implementing effective business policies and strategies. Financial ratio analysis groups the ratios into categories which tell us about different facets of a company's finances and operations. An overview of some of the categories of ratios is given below.

 Leverage Ratios which show the extent that debt is used in a company's capital structure. Liquidity Ratios which give a picture of a company's short term financial situation or solvency. Operational Ratios which use turnover measures to show how efficient a company is in its

operations and use of assets.

Profitability Ratios which use margin analysis and show the return on sales and capital

employed.
Solvency Ratios which give a picture of a company's ability to generate cash flow and pay it

financial obligations. It is imperative to note the importance of the proper context for ratio analysis. Like computer programming, financial ratio is governed by the GIGO law of "Garbage In...Garbage Out" A cross industry comparison of the leverage of stable utility companies and cyclical mining companies would be worse than useless. Examining a cyclical company's profitability ratios over less than a full commodity or business cycle would fail to give an accurate long-term measure of profitability. Using historical data independent of fundamental changes in a company's situation or prospects would predict very little about future trends. For example, the historical ratios of a company that has undergone a merger or had a substantive change in its technology or market position would tell very little about the prospects for this company. Credit analysts, those interpreting the financial ratios from the prospects of a lender, focus on the "downside" risk since they gain none of the upside from an improvement in operations. They pay great attention to liquidity and leverage ratios to ascertain a company's financial risk. Equity analysts look more to the operational and profitability ratios, to determine the future profits that will accrue to the shareholder. Although financial ratio analysis is well-developed and the actual ratios are well-known, practicing financial analysts often develop their own measures for particular industries and even individual companies. Analysts will often differ drastically in their conclusions from the same ratio analysis.

CURRENT RATIO
This ratio explains the relationship between current assets and current liabilities of a business, it measures the solvency of the company in the short-term. Current assets are those assets which can be converted into cash within a year. Current liabilities and provisions are those liabilities that are payable within a year. Current Assets Includes: - (a) Cash in hand and at Bank (b) Readily convertible or marketable securities (c) Stock (d) Sundry Debtors (e) Bills of exchange i.e. bills receivable, pre-paid expenses.

Current Liabilities Includes: - (a) Bills of exchange (b) Bills payable (c) Sundry Creditors (d) outstanding and occurred expenses (e) Income-tax payable (f) Bank over draft etc.

CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITY

BALANCE SHEET

Comparison of Balance Sheet for the year 2008 & 2009

Balance Sheet for the year ended 31st March, 2009

Schedule

For the year ended 31.03.2009

For the year ended 31.03.2008

SOURCES OF FUNDS Shareholder' Fund Share Capital Reserves & Surplus Loan Funds Secured Loans Unsecured Loans 3 4
0.00 149.37 149.37 13088.18 0.00 95.18 95.18 10869.39

1 2

489.52 12449.29 12938.81

489.52 10284.69 10774.21

APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation/Amortisation to-date 5

5224.87 3713.25 1511.62 4443.47 3403.08 1040.39 59.13 981.26 2627.37 52.34 658.03 1639.29 8.29

Less: Lease Adjustment Account Net Block Capital Work -in-Progress Investments 6 7

41.22 1470.4 1156.97

Deferred Tax Assets Net (Refer note no.20 of Schedule 19) Current Assets, Loans& Advances Current Assets Inventories Sundry Debtors Cash & Bank Balance Other Current assets Loans and Advances 8
7837.02 15975.50 10314.67 350.21 2423.67 36901.07

1840.30

1337.93

5736.40 11974.87 8386.02 421.09 1387.80 27906.18

Less: Current Liabilities & Provisions Current Liabilities Provisions 10 23357.32 11 4975.58
28332.90 16576.45 3445.85 20022.30 8568.17 13088.18 7883.88 10869.39

Net current assets

PROFIT & LOSS ACCOUNTS

Comparison of Profit and Loss Account for the year 2008 & 2009

Profit & Loss Account for the year ended 31st March, 2009

Schedule

For the year ended 31.03.2009

For the year ended 31.03.2008

EARNINGS Turnover (Gross) Less: Excise duty & Service Tax Turnover (Net) Other Income Accretion/Decretion to Work-in12A 13 12 28033.19 1820.86 26212.33 1497.36 1151.54 21401.01 2096.37 19304.64 1444.76 827.26

progress & Finished Goods 28861.23 OUTGOINGS Consumption of Material, Erection and Engineering Expenses Employees' remuneration & benefits Other expenses of Manufacture, Administration, selling and Distribution Provisions (net) Interest & other borrowing costs Depreciation and amortization Less: Cost of jobs done for internal use 17 18 5 1280.97 30.71 334.27 61.18 24024.27 Profit before prior period items Add/(Less): Prior period items (Net) Profit before tax Less: Provision for taxation For Current Year :Current tax 2250.17 1934.95 18A 4836.96 11.89 4848.85 778.25 35.42 297.21 38.32 17145.35 4431.31 -0.92 4430.39 14 15 16 17620.05 2983.68 1835.77 11820.87 2607.69 1644.23 21576.66

(incl. wealth tax Rs. 0.17 crore (Previous year Rs. 0.07 crore) ::Fringe Benefit Tax Deferred Tax 40.00 -502.37 1787.80 27.1 -402.77 1559.28

For earlier years :Tax -77.72 11.77

(includes Income Tax abroad Rs. 8.48 crore) :Fringe Benefit Tax 0.56 1710.64 Profit after tax Add: Balance of profit brought forward from last year 3138.21 429.69 0.00 1571.05 2859.34 442.72

Foreign Project Reserves written back Profit available for appropriation Less: Appropriation::General Reserve Dividend (incl interim dividend of 2000.00 832.18

1.17 3569.07

1.02 3303.08

2000.00 746.52

Rs. 440.57 crore) 141.43 :Corporate Dividend tax 2973.61 126.87 2873.39

(incl Rs. 74.87 crore) Balance carried to Balance sheet Basic and Diluted Earning per share (in Rs.) (Refer note no. 19 of Schedule 19) 64.11 58.41 595.46 429.69

CHAPTER IV
4.1 DATA ANALYSIS & INTERPRETATION

4.1 DATA ANALYSIS AND INTERPRETATION

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 CURRENT RATIO

1.58% 1.46%

1.40% 1.30%

1.32%

1.8

1.6

1.58 1.46

1.4

1.40 1.30 1.32

1.2

0.8

0.6

0.4

0.2

0 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 CURRENT RATIO

Analysis of Current Ratio Current Ratio is used to assess the firms ability to meet its short-term liabilities on time. According to accounting principles current assets of a business should, at least, be twice of its current liabilities. Higher the ratio better it is, because the company will be able to pay its current liabilities more easily. Hence, even if half the amount is realised from the current assets on time, the firm can still meet its current liabilities in full. It is seen in the figure that in the year 2005-2006 the Current Ratio has been the highest as compared to the other years. Since then the Current Ratio started declining till the year 2008-2009 where we know that the standard current ratio is 2, BHEL is far below the standard. In the year 2009-2010 it is expected by the company that the current ratio would not change significantly. By this it can be said that BHEL should have a proper current assets structure to cover up its liabilities.

QUICK RATIO
Quick Ratio is used as a measure of the companys ability to meet its current obligations since bank overdraft is secured by the inventories, the other current assets must be sufficient to meet other current liabilities. It indicates whether the firm is in a position to pay its current liabilities within a month or immediately Liquid Assets includes: - (a) Cash in hand (b) Cash at Bank (c) Short-term investments Current Liabilities Includes: - (a) Bills of exchange (b) Bills payable (c) Sundry Creditors (d) outstanding and occurred expenses (e) Income-tax payable (f) Bank over draft etc.

QUICK RATIO = LIQUID ASSETS / CURRENT LIABILITY

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

QUICK RATIO

1.21% 1.16%

1.11% 1.10%

1.52%

1.6 1.52

1.4

1.21 1.2 1.16 1.11 1.10

0.8

0.6

0.4

0.2

0 2005 - 2006 2006 - 2007 2007 - 2008 2008 RATIO - 2009 2009 - 2010 QUICK

Analysis of Quick Ratio Quick Ratio is a purified form of current ratio, where stock is not considered. As it is hard to covert stock into cash, it is seen that weather the left over current assets other than inventory is covering the current liability or not. Higher the Quick Ratio greater the short term solvency. It is to be seen that the company keeps its quick assets more than its current liabilities. The idea is that for every rupee of

current liabilities, there should atleast be one rupee of liquid assets. This ratio is a better test of shortterm financial position of the company than the current ratio. Quick Ratio thus is a more rigorous test of liquidity than the current ratio and, when used together with current ratio, it gives a better picture of the short-term financial position of the company. It is seen that company had a declining Quick Ratio since the year 2005 to 2009, but in the near future it is estimated that the Quick Ratio will increase to 1.52 in the year 2009-2010.

DEBTOR TURNOVER RATIO

Debtors turnover, which measures weather the amount or resources tied up in debtors is reasonable and weather the company has been efficient in converting debtors into cash. It indicates the relationship between credit sales and average debtors during the year. The higher the ratio, better the position. DEBTOR TURNOVER = GROSS SALES / TOTAL DEBTORS

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

DEBTOR TURNOVER RATIO

2.02% 1.93%

1.79% 1.75%

1.65%

2.5

2.02 2 1.93 1.79 1.75 1.65 1.5

0.5

0 2005 - 2006 2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010

DEBTOR TURNOVER RATIO

Analysis of Debtor Turnover Ratio Debtor Turnover Ratio indicates the speed with which the amount is collected from debtors. The higher the ratio, the better it is, since it indicates that amount from debtors is being collected more quickly. The more quickly the debtors pay, the less the risk from bad debts, and so the lower the expenses of collection and increase in the liquidity of the company. It is seen that the Debtor Turnover Ratio of BHEL was highest in the year 2005-2006, after which the ratio had decline continuously. It shows that BHEL might have good sales position but its receivables are not sound. In the year 2005-2006 Debtor Turnover Ratio is 2.02 but it has been estimated that in the year 2009-2010 the Debtor Turnover Ratio will further fall to 1.65. BHEL should keep an eye on

it receivables and improve it. By comparing the Debtors Turnover Ratio of the current year with the previous year, it may be assessed whether the sales policy of the management is efficient or not.

PROFIT MARGIN
Profit Margin shows the relationship between profit and sales. Higher the sales more will be the profit, no standard figure are set for Profit Margin but for any company its Profit Margin should be adequate to bear its day to day expenses and other expanses.

PROFIT MARGIN (%) = PROFIT AFTER TAX / NET SALES

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

PROFIT MARGIN(%)

12.5% 14.00%

14.60% 12.00%

12.8%

16 14.6 14 12.5 12 12.0 14.00 12.8

10

0 2005 - 2006 2006 - 2007 2007 -PROFIT 2008 2008 2009 2009 - 2010 MARGIN (%)

Analysis of Profit Margin This ratio measures the margin of profit available on sales. Higher the profit ratio, better it is. No ideal standard is fixed for this ratio, but the profit ratio should be adequate enough not only to cover the operating expenses but also to provide for depreciation, interest on loans, dividends and creation of reserves. Profit Margin of BHEL is quite fluctuating as it is shown in the chart, but the lowest Profit Margin is in the year 2008-2009 which is 12% this is due to the impact of recession. But it has estimated that it would recover from the lowest point to 12.8%. The ratio is compared with earlier years ratio and important conclusion are drawn from such comparisons.

EARNING PER SHARE

Earning Per Share Ratio measures the profit available to the equity shareholders on a per share basis. All profits left after payment of tax and preference dividend are available to equity shareholder. Earning Per Share is generally considered to be the single most important variable in determining a shares price. It is also a major component used to calculate the price-to-earnings valuation ratio. EARNING PER SHARE = PROFIT AFTER TAX / NUMBER OF EQUITY SHARES

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

EARNING PER SHARE

68.60 98.70

58.00 64.10

88.05

120

100

98.7 88.05

80 68.6 64.1 60 58.00

40

20

0 2005 - 2006 2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010

EARNING PER SHARE

Analysis of Earning Per Share This ratio is helpful in the determination of the market price of the equity share of the company. It also helps in estimating the capacity of the company to declare dividends on equity shares. A comparison of Earning Per Share of the company with other will also help in deciding whether the equity share capital is being effectively used or not. It also helps in estimating the companys capacity to pay dividend to its equity shareholders. The Earning Per Share given in the figure was highest in the year 2006-2007 but due to recession problems. The Earning Per Share decline at an increasing rate from the year 2007-2009, but it is estimated that in the year 2009-2010 the Earning Per Share will increase to 88.05.

AVERAGE DEBT COLLECTION PERIOD

Average Debt Collection Period Ratio indicates the time within which the amount is collected from debtors and bills receivables. This ratio shows the time in which the customers are paying for credit sales.

AVERAGE DEBT COLLECTION PERIOD (DAYS) = TOTAL DEBTORS * 360 / GROSS SALES

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

AVERAGE DEBT COLLECTION PERIOD(DAYS)

178 186

201 205

218

250

218 201 200 186 178 205

150

100

50

0 2005 - 2006 2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010

AVERAGE DEBT COLLECTION PERIOD (DAYS)

Analysis of Average Debt Collection Period Increase in this ratio indicates the excessive blockage of funds with debtors which increase the chances of bad debts. A higher debt collection period is thus, an indication of the inefficiency and negligence on the part of management. On the other hand, if there is decrease in debt collection period, it indicates prompt payment by debtors which reduces the chances of bad debts. In the chart given above, it is seen that BHEL is having a good receivable management in its company. Due to the good financial terms and conditions with its debtors BHEL is able to maintain a higher Average Debt Collection Period.

INVENTORY TURNOVER RATIO

Inventory Turnover Ratio measures how well the resources at the disposal of the concern are being utilised. This ratio is know as turnover ratio as it indicates the rapidity with which the resources available to the concern are being used to produce sales. This ratio is generally calculated on the basis of sales or cost of sales.

INVENTORY TURNOVER RATIO = GROSS TURNOVER / INVENTORIES

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

INVENTORY TURNOVER RATIO

3.87% 4.44%

3.73% 3.57%

3.70%

4.5

4.44

3.87 3.73 3.57 3.7

3.5

2.5

1.5

0.5

0 2005 - 2006 2006 - 2007 INVENTORY 2007 - 2008 2008 - 2009 2009 - 2010 TURNOVER RATIO

Analysis of Inventory Turnover ratio Inventory Turnover ratio indicates weather stock has been efficiently used or not. It shows the speed with which the stock is rotated into sales or the number of times the stock is turned into sales during the year. Higher the ratio, better it is, since it indicates that stock is selling quickly. It is seen in the above figure that in the year 2006-2007 the Inventory turnover Ratio was highest that is 4.44. After which it followed a continuous decline trend till the year 2008-2009. But it is estimated to have a slight growth in the year 2009-2010 as BHEL has a joint venture with NTPC, GE GAS TURBINE SERVICES PRIVATE LIMITED and UDANGUDI POWER CORPORATION LTD which can be a big reason why Inventory Turnover Ratio is improving. Similarly, by comparing the Inventory Turnover Ratio of current year with the previous year, the management can assess whether inventory has been more efficiently used or not.

DEBT EQUITY RATIO

Debt Equity Ratio express the relationship between long-term debts and shareholders funds. A measure of a company's leverage. Debt/equity ratio is equal to long-term debt divided by common shareholders' equity. Typically the data from the prior fiscal year is used in the

calculation. Investing in a company with a higher debt/equity ratio may be riskier, especially in times of rising interest rates, due to the additional interest that has to be paid out for the debt.

DEBT EQUITY RATIO = TOTAL DEBT / TOTAL EQUITY

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

DEBT EQUITY RATIO

0.07% 0.01%

0.01% 0.01%

0.01%

0.08

0.07

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0.01

0.01

0.01

0.01

0 2005 - 2006 2006 - 2007 2007 - 2008 EQUITY 2008 - 2009 RATIO 2009 - 2010 DEBT

Analysis of Debt Equity Ratio Debt Equity Ratio is calculated to assess the ability of the company to meet its long term liability. Generally, debt-equity ratio of 2:1 is considered safe. If the debt equity ratio is more than that, it shows a rather risky financial position from the long-term point of view, as it indicates that more and more funds invested in the business are provided by long-term lenders. A high debt equity ratio provides sufficient protection to long-term lenders. By analysing the above chart, it is noticed that BHEL has always maintained a stable Debt Equity Ratio after the year 2006-2006. It has a high level of equity as compared to its debts and so a final conclusion can be drawn that BHEL has to face less financial risk.

INTEREST COVERAGE RATIO

Interest Coverage Ratio is also known as Debt Services Ratio. This ratio is calculated by dividing the net profit before charging interest and income-tax by fixed interest rate. Net profit before interest and income-tax is to be taken for the calculation of this ratio because this is the amount of profit out of which interest and income-tax is to be paid out. Fixed interest charges include interest on fixed (long-term) loans or debentures.

INTEREST COVERAGE RATIO = PROFIT BEFORE INTEREST & TAX / INTEREST EXPENSES

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

INTEREST COVERAGE RATIO

43.65 86.22

125.08 120.60

197.73

250

200

197.73

150 125.08

120.6

100 86.22

50

43.65

0 2005 - 2006 2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010

INTEREST COVERAGE RATIO

Analysis of Interest Coverage Ratio Interest Coverage Ratio indicates how many times the interest charges are covered by the profits available to pay interest charges. A long-term lender is interested in finding out whether the business will earn sufficient profits to pay the interest charges regularly. This ratio measures the margin of safety for long-term lender. Higher the ratio, more secure the lender is in respect of payment of interest regularly. If profits just equal interest, it is an unsafe position for the lender as well as for the company also, as nothing will be left for shareholders. The highest Interest Coverage Ratio was in the year 2007-2008 that is 125.08, it had a slight dip in the year 2008-2009, but it is expected rise in the year 2009-2010 to 197.73

PRICE EARNING RATIO

Price Earning Ratio indicates the number of times the earning per share is covered by its market price. The ratio is useful in determining the financial position of the company, it also helps in knowing whether the shares of a company are under or over-valued.

PRICE EARNING RATIO = MARKET PRICE PER EQUITY SHARE / EARNING PER SHARE

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010

PRICE EARNING RATIO

20.20 23.29

44.24 21.25

27.32

50.00 44.24

45.00

40.00

35.00

30.00 27.32 25.00 20.20 20.00 23.29 21.25

15.00

10.00

5.00

0.00 2005 - 2006 2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010

PRICE EARNING RATIO

Analysis of Price Earning Ratio Price Earning Ratio helps the investor in deciding whether to buy or not to buy the shares of the company at a particular market price. As we can see above that in the year 2007-2008 the Price Earning Ratio is 44.24 but due to recession Price Earning Ratio had a steep fall to 21.25 in the year 2008-2009 but it is expected to improve to 27.32 in the year 2009-2010.

COMPRASION OF BALANCE SHEETS

Projected
Mar 2010 Mar 2009

Audited Balance Sheet

Mar 2008 Mar 2007 Mar 2006 Mar 2005

Particulars

SOURCES OF FUNDS Share Capital Share warrants & Outstanding Total Reserve Shareholder's Funds Secured Loans Unsecured Loans Total Debts Total Liabilities 4895.00 0.00 154278.00 159173.00 0 1278.00 1278.00 160451.00 4895.2 0.00 124492.90 129388.10 0 1493.70 1493.70 130881.80 4895.2 0.00 102846.90 107742.10 0 951.80 951.80 108693.90 2447.6 0.00 85435.00 87882.60 0 893.30 893.30 887759.00 2447.6 0.00 70566.2 73013.38 5000.00 582.40 5582.40 78596.2 2447.60 0.00 57821.34 60268.94 5000.00 369.82 5369.82 65638.76

APPLICATION OF FUNDS : Gross Block Less: Accumulated Depreciation Less: Impairment of Assets Net Block Lease Adjustment A/c Capital Work in Progress Pre-operative Expenses pending Assets in transit Investments 0.00 0.00 798.00 0.00 52248.70 37132.50 0 15116.20 -412.20 11569.70 0 0 523.40 44434.70 34030.80 0 9812.6 -591.30 6580.03 0 0 82.90 41350.50 31170.50 0 10180.00 -292.60 3025.40 0 0 82.90 38220.6 28527.6 0 9693.00 129.80 1845.72 0 0 82.93 36289.37 26193.47 0 10095.90 346.51 953.18 0 0 89.52

Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Other Current Assets Loans and Advances Total Current Assets 92355.00 206887.00 97901.00 4068.00 28137.00 429348.00 78370.20 159755.00 103146.70 3502.1 24236.7 369010.7 57364.00 119748.70 83860.20 4210.9 13878.00 279061.8 42176.70 96958.2 58089.10 1997.00 11408.7 210629.7 37443.7 71680.7 41339.7 845.00 11998.7 163307.8 29161.07 59721.42 31778.62 471.76 12296.92 133429.79

Less : Current Liabilities&Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets 280237.00 44180.00 324417.00 104931.00 233573.20 49755.8 283329 85681.70 165764.50 34458.5 200223.00 78838.80 118978.7 25222.4 144201.1 66428.6 88077.4 15122.8 103200.2 60107.6 71204.46 13254.47 99213.58 48970.85

Miscellaneous Expenses not written off Deferred Tax Assets / Liabilities Total Assets 0.00 15272.00 160451.00 0 18403.00 130881.80 0 13379.30 108693.90 0 9351.60 88775.9 0 6737.20 78596.2 0 5182.79 65638.76

Note: The Balance Sheet for the year 2010 is projected.

YEARLY WATCH ON BHEL SHARE PRICE

Year Open Price 2005 2006 2007 2008 2009 2010 771.00 1,394.00 2,302.00 2,585.00 1,372.00 2,410.00 High Price 1,498.50 2,668.00 2,925.00 2,626.00 2,550.00 2,585.00 Low Price 669.05 1,185.00 1,301.00 984.10 1,250.00 2,231.55 Close Price 1,386.25 2,298.15 2,584.25 1,362.40 2,406.10 2,392.30 No. of Shares 18499206 24980291 38394966 100635722 51161637 8878750 No. of Trades 321067 853810 1568607 4950831 2193431 377966 18,338,365,492.00 52,742,658,846.00 82,380,062,277.00 158,572,603,593.00 93,346,160,183.00 21,193,694,729.00 Total Turnover (Rs.)

OPEN PRICE

HIGH PRICE

LOW PRICE

CLOSE PRICE

3500

3000

2500

2000

1500

1000

500

0 OPEN PRICE HIGH PRICE LOW PRICE CLOSE PRICE

2005-2006 771 1498.5 669.05 1386.25

2006-2007 1394 2668 1185 2298.15

2007-2008 2302 2925 1301 2584.25

2008-2009 2585 2626 984.1 1362.4

2009-2010 1372 2550 1250 2406.1

2010-2011 2410 2585 2231.55 2393.3

SHAREHOLDING PATTERN

SHAREHOLDING PATTERN (as on 31st March 2009)

CATEGORY 2009
VOTING STRENGHT (%) No. Of SHARES HELD Promoters Holding

Indian Promoters President of India (POI) Nominees of POI 67.72 0 331510000 400

Total Promoters Holding

67.72

331510400

Non-Promoters Holding Institutional Investors Mutual Funds and UTI Banks, Financial Institutions, Insurance Companies 4.01 Foreign Institutional Investors Others Directors & Relatives Private Corporate Bodies Indian Public Foreign Nationals NRIs / OCBs Trust Share in Transit (NSDL / CDSL) 0 3.86 1.97 0.00 0.12 0.00 0.15 400 18875727 9604223 1250 609975 13657 737372 17.03 19619712 83379194 5.14 25168090

Total Non-Promoter Holding Grand Total

32.28 100

158009600 489520000

BHEL V/S BSE Sensex

VOTING STRENGHT (%)

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% President of India (POI) Foreign Institutional Investors Mutual Funds and UTI Banks, Financial Institutions, Insurance Companies 17.03% 5.14% 4.01% 67.71%

Bombay Stock Exchange Limited (BSE) is the oldest stock exchanged in Asia with a rich heritage. Popularly know as BSE, it was establishment as The Native Share & Stock Brokers Association in 1875. it is the first stock exchange in the country to obtain permanent recognition in 1956 from the government of India under the Securities Contracts (Regulation) Act, 1956. The Exchanges pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked world wide. Earlier an Association of Persons (AOP), the exchange is now a demutualised and corporative entity incorporate under the provisions of the Companies Act, 1956. Pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). Bombay Stock Exchange limited received its Certificate of Incorporation on 8th August 2005 and Certificate of Commencement of Business on 12th August 2005. the Due Date for taking over the business and operations of the BSE, by the Exchange was fixed for 19th August 2005, under the Scheme. The Exchange has succeeded the business and operations of BSE on going concern basis and its recognition as an Exchange has been continued by SEBI.

With demutualization, the trading rights and ownership right have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries.

The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth. The Exchange provided an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSEs on Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement function s of the Exchange are ISO 9001:2000 certified. The BSE SENSEX (also know as the BSE 30 index) is a value-weighted index composed of thirty scrips, with the base April 1979=100. the set of companies which make up the index has been changed only a few times in the last twenty years. These companies account for around one-fifth of the market capitalization of the BSE. Apart from BSE SENSEX, which is the most product stock index in India, BSE uses other stock indices as well: BSE 500 BSE 100 BSE 200 BSE PSU BSE MIDCAP BSE SMALLCAP BSE BANKEX BSE TECK BSE AUTO BSE PHARMA BSE FMCG BSE METAL

The BSE Broadcast is a large ticker on the wall of the BSE, which continuously displays the latest stock quotes from the market. It will also display on what is described as Indias and South Asias largest video screen Indias leading business-news channel; NDTV Profit.

This new system was unveiled on December 15, 2006, when Dr. Prannoy Roy, the Managing Director of New Delhi Television (NDTV) Ltd, struck the BSEs opening bell. Mr. Damodaran, the Chairman of the Securities and Exchange Board of India (SEBI), said that the ticker would provide information and analysis of the financial world.

MONTHLY COMPRASION OF BHEL SHARE PRICE WITH BSE SENSEX

For The Period: April 2005 to March 2006

MONTH

BHEL Share Price at BSE (Rs.) High Price Low Price

BSE Sensex (Rs.) High Price Low Price

No. of Shares

Net Turnover

Traded

(Rs.)

Apr-05 May-05 Jun-05 Jul -05

830 950 897.5 1,039.00

755 789.25 832 841.5

6,649.42 6,772.74 7,228.21 7,708.59

6,506.60 6,183.07 6,729.39 7,165.45

1410536 1387296 808986 1183812

11219.47 12086.56 7029.23 11112.1

Aug-05 Sept-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06

1,147.00 1,244.00 1,318.00 1,498.50 1,489.00 1,815.00 2,050.50 2,280.00

971 1,060.10 1,080.00 1,115.05 1,316.00 1,185.00 1,780.00 1,990.00

7,921.39 8,722.17 8,821.84 9,033.99 9,442.98 9,945.19 10,422.65 11,356.95

7,632.01 7,818.90 8,662.99 7,989.86 8,813.82 9,422.49 9,959.24 10,368.75

1341333 970856 1972837 1586379 1674850 1549550 1786695 2361183

14397.78 10953.32 23413.96 21015.26 23560.77 23982.42 33577.5 50672.77

For The Period: April 2006 to March 2007

MONTH

BHEL Share Price at BSE

BSE Sensex

No. of Shares

Net Turnover

(Rs.) High Price Apr-06 May-06 2,444.00 2,465.00 Low Price 2,200.00 1,600.10

(Rs.) High Price Low Price 12,102.00 12,671.11 11,008.43 9,826.91

Traded

(Rs.)

1318047 1327255

30,777.55 28,186.96

Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07

2,046.00 2,067.00 2,307.90 2,414.70 2,498.00 2,556.50 2,668.00 2,595.00 2,572.00 2,321.35

1,531.20 1,730.25 2,026.00 2,185.25 2,259.00 2,367.00 2,232.00 2,105.05 2,107.00 1,940.00

10,626.84 10,940.45 11,794.43 12,485.17 13,075.85 13,799.08 14,035.30 14,325.92 14,723.88 13,386.95

8,799.01 9,875.35 10,645.99 11,444.18 12,178.83 12,937.30 12,801.65 13,303.22 12,800.91 12,316.10

3088569 2710143 3342355 2215985 1256993 1381309 2642207 2536467 2157255 2902970

56,837.81 51,892.13 73,321.15 50,860.05 29,985.64 34,080.16 63,252.45 58,571.58 51,283.02 61,727.66

For the Period: April 2007 to March 2008

MONTH

BHEL Share Price at BSE

BSE Sensex

No. of Shares

Net Turnover

(Rs.)

(Rs.)

Traded

(Rs.)

High Price Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sept-07 Oct-07 Nov-07 Dec-007 Jan-08 Feb-08 Mar-08 2,593.80 2,922.50 1,544.00 1,899.00 1,900.00 2,089.20 2,750.00 2,925.00 2,870.00 2,626.00 2,366.00 2,235.00

Low Price 2,145.00 1,351.00 1,301.00 1,520.10 1,540.00 1,856.00 1,970.00 2,380.00 2,348.00 1,800.00 1,850.00 1,765.00

High Price 14,383.72 14,576.37 14,683.36 15,868.85 15,542.40 17,361.47 20,238.16 20,204.21 20,498.11 21,206.77 18,895.34 17,227.56

Low Price

12,425.52 13,554.34 13,946.99 14,638.88 13,779.88 15,323.05 17,144.58 18,182.83 18,886.40 15,332.42 16,457.74 14,677.24

2922746 2527206 2847536 3834352 4716863 2646160 5482424 3279060 2541927 3223135 2710078 3990925

709.54 642.36 401.54 646.86 802.05 514.59 1265.06 883.05 657.13 718.47 574.96 786.91

For the Period: April 2008 to March 2009

MONTH

BHEL Share Price at BSE (Rs.) High Price Low Price

BSE Sensex (Rs.) High Price Low Price 15297.96 16196.02 13405.54 12514.02 14002.43 12153.55 7697.39 8316.39 8467.43 8631.6 8619.22 8047.17

No. of Shares Traded

Net Turnover (Rs.)

Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sept-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09

2,088.00 1,934.00 1,689.00 1,812.00 1,872.55 1,910.00 1,629.10 1,527.65 1,456.00 1,487.05 1,488.00 1,594.50

1,570.90 1,581.25 1,325.25 1,340.00 1,610.00 1,430.00 984.10 1,160.00 1,212.10 1,250.00 1,296.60 1,251.00

17480.74 17735.7 16632.72 15130.09 15579.78 15107.01 13203.86 10945.41 10188.54 10469.72 9724.87 10127.09

11437758 5128590 10723607 10803274 7978823 11216545 12253008 10673945 11194666 6452522 5147031 6545030

201736.32 89003.01 156668.82 168371.31 138939.07 186463.94 157168.23 141722.65 151852.96 89293.71 71257.49 92810.5

For the Period: April 2009 to March 2010

MONTH

BHEL Share Price at BSE

BSE Sensex

No. of Shares

Net Turnover

(Rs.) High Price Apr-09 May-09 Jun-09 Jul -09 Aug-09 Sept-09 Oct-09 Nov-09 1,709.00 2,334.00 2,385.50 2,405.00 2,368.00 2,334.00 2,550.00 2,300.30 Low Price 1,450.20 1,572.30 2,008.00 1,940.00 2,106.00 2,180.00 2,184.90 2,105.00 High Price

(Rs.) Low Price

Traded

(Rs.)

11492.10 14930.54 15600.30 15732.81 16002.46 17142.52 17493.17 17290.48

9901.99 11682.99 14265.53 13400.32 14784.92 15398.33 15896.28 15404.94

5747127 5058116 4107612 4499184 2872252 2615956 2669151 2158387

904251.46 959091.65 898816.02 972786.4 649055.38 590096.96 644164.07 482221.27

Dec-09 Jan-10 Feb-10 Mar-10

2,427.00 2,454.00 2,435.00 2,474.00

2,190.00 2,240.00 2,271.40 2,323.00

17530.94 17790.33 16669.25 17793.01

16601.20 16289.82 15790.93 16772.56

2700857 2020797 1357271 1778426

618987.44 478480.64 320687.54 427720.9

For the Period: April 2010 to March 2011`

MONTH

BHEL Share Price at BSE

BSE Sensex

No. of Shares

Net Turnover

(Rs.) High Price Apr-10 May-10 Jun-10 2,585.00 2,492.50 2,399.00 Low Price 2,382.30 2,231.55 2,251.00 High Price

(Rs.) Low Price

Traded

(Rs.)

17970.02 17386.08

17380.08 16022.48

1397668 1702788 621800

349000.02 399266.72 144213.62

LISTING ON STOCK ENCHANGE & STOCK CODE

BHELs Shares are listed on the following Stock Exchange:-

Name of the Stock Exchange Stock Code

Bombay Stock Exchange Limited 1st Floor, New Trading Ring, Rotunda Building, P J Tower Dalal Street Fort Mumbai 400 001

500103

National Stock Exchange of India Limited Exchange Plaza C-1, Block G Bandra Kurla Complex Bandra (East) Mumbai 400 501

BHEL

COMPANY

TOTAL DEBT

NETWORTH

CAPITAL STRUCTURE DEBT EQUITY 98.85874 65.5231 47.30708 77.13904 44.2216

BHEL LARSEN SUZLON ENERGY BEML BGR ENERGY

149.37 6556.03 7329.48 567.64 707.8

12938.81 12459.69 6580.32 1915.37 561.15

1.14126 34.4769 52.6929 22.861 55.7784

120

100

98.85874

80 65.5231 60 47.30708 40

77.13904

44.2216

52.6929 20 34.4769 22.861 0 1.14126 BHEL LARSEN SUZLON BEML ENERGY DEBT

55.7784

BGR ENERGY

EQUITY

Bharat Heavy Electrical Limited, currently the debt employed is very less, which means that the debt is much lower than equity. In other words the firm prefers equity over debt. Where as other companies, of the same industry, when compared with BHEL show a better mix of debt and equity. Suzlon energy and BGR energy employs a good mix of debt and equity in the capital structure as compared to BHEL. But for BHEL it mainly deals in equity as we can see in the chart above that BHEL has negligible debt as compared to its competitors.

DEBT
60 52.6929 50 55.7784

40 34.4769 30 22.861 20

10 1.14126 0 BHEL LARSEN SUZLON ENERGY BEML BGR ENERGY

120

EQUITY
98.85874

100

80 65.5231 60 47.30708 40

77.13904

44.2216

20

0 BHEL LARSEN SUZLON ENERGY BEML BGR ENERGY

CHAPTER V
5.1 CONCLUSION & SUGGESTION

5.1 CONCLUSION
Bharat Heavy Electricals Ltd is one of the companies likely to get the coveted Maharatna status shortly is not surprising, with an effective monopoly in the domestic power equipment space, it offers a veritable backbone for the countrys power sector and is one of the largest engineering and manufacturing enterprises in the world. To analysis the company I have used ratio analysis that is a tool of financial management with the help of which manage can take various decision to increase productivity and minimize cost. Further, comparison between BHEL share price and BSE share price has been made to analysis the market standing of the company.

RESULTS: For Q4FY10, Bharat Heavy Electricals (BHEL) reported a 29% YoY growth in sales to Rs135bn. The power segment reported a sales growth of 30% to Rs111.5bn and industry segment reported a sales growth of 16% YoY to Rs 31bn.

STRONG ORDER BOOK:

The current order book stands at Rs1438bn (4.38x FY10 sales), a growth of 22% YoY. BHELs order inflow for the quarter was Rs234bn. In the Power Sector business segment, BHEL secured orders worth Rs. 41. 9bn during the year. In terms of power plant equipment, the orders amounted to 16,489 MW. It saw highest ever orders from Private Sector customers worth 14,689 MW from like of, ACC, Adhunik, Avantha, Hindalco, Indiabulls, Jaypee Group, Jindal Power, Sterlite, Tatas, Videocon, etc. In Industry Sector business segment, BHEL secured record orders worth Rs.143.6bn, a growth of 40% over the previous year. EPC orders constituted 30% of the order book.

MAINTAINED MARKET SHARE OF 55%: The Company expects the pace of order flow to continue. It expects to have an order inflow of Rs 550-600bn for FY11. It has been able to maintain market share of 55% in the XII plan orders till date and confident of maintaining the market share of entire XII plan orders. The company has been able to increase the vendor base to 26100 in FY10 and addition of 1100 vendors. It also expects to add ~3000-4000 employees per annum over the next 2 years.

VALUATION: At the CMP of Rs2255, the stock trades at 20.9x FY11E and 16.9x FY12E earnings respectively. Strong order book , increased vendor base, increasing employee strength and high capacity utilization makes us confident of BHELs execution capabilities. We expect the stock to deliver a earnings growth of 28% over FY09-12E. Overall, company has strong fundamentals which is reflected in its sustainable good performance. With the government forcing on infrastructure development, future of the company is bright and promising. And, it is still growing.

SUGGESTIONS

Proper utilization of time both in respect of corporate and labour resources. Improvement in the medical facility provided at BHEL Improvement in the IT Department of BHEL Proper utilization of plant location. Replacement of old machinery with an automatic plant. As BHEL is a PSU preventive measures should be taken to avoid frauds and manipulation. Proper training and development programs should be provided to its employees. Commitment should be equalized for every person. In the organization, there must me be co-operation with other department and other branches. BHEL should formulate its policy for Provident Fund Department, so that retired employees should easily get their compensation.
Regular monitoring should be done for disposal/alternate usage of high value items lying unutilized for a long period.

CHAPTER VI
6.1 BIBLIOGRAPHY

CONCLUSIONS

6.1 BIBLIOGRAPHY
WEBSITES www.bhel.com www.google.co.in www.indianshareshistory.com www.bseindia.com www.moneycontrol.com

NEWS PAPERS Economic Times Business Standard Market Express

BOOKS Research Methodology (C. R. Kothari, 2nd Revised Edition) Financial Management By Dr. S N Maheshwari Financial Management By Sudhindra Bhat

FINDINGS

During the training extracted the following distinctive features of BHEL. BHEL overseas business is going to increase more in the next five years. Market distribution in international market can be increased by entering into the new foreign countries. BHEL is the main market holder in the domestic market but faces a fierce competition at international level. The quality control & quality assurance is major concerning area of BHEL. Financial strategy adopted by BHEL is best.

REFRENCE

www.bhel.com www.google.co.in Economic Times Financial Management By Dr. S N Maheshwari