Bhel.doc

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

1.4 Certifications
BHEL has acquired certifications from both ISO 9000 & ISO 14000 standards for
its operations and has also adopted the concepts of total quality management.
BHEL has
adopted occupational health and safety standards as per OHSAS 18001. The major
units of
BHEL have already acquired the ISO 14001 certification.
The company–s inherit potential coupled with its strong performance over the
years
has resulted in it being chosen as one of the –Navratna– status.
1.5 Business sectors of BHEL
BHEL–s operations are organized around three business sectors namely Power,
Industry and International Operations. Industry operation includes Transmission,
Transportation, Telecommunication and Renewable Energy.
1.6 POWER SECTOR
1.6.1 Generation
Power generation sector comprises thermal, gas, hydro and nuclear power plant
business. Though BHEL supplied sets account logs nil till 1969-70, it rises to
62,051
MV or 65% of the total installed capacity of 95377 MV in the country.
BHEL has the capability of turning power projects from concept to commissioning.
With its technology, it has the ability to produce thermal sets with super
critical parameters
unto 1000 MV unit rating and gas turbine- generator sets of upto 240 MV units
rating.

1.6.2 Achievements
a) To make the most part of the high-ash content coal used in India, BHIL
supplies
circulating fluidized bed combustion boilers to both thermal and combined cycle
power
plants.
b) The company manufactures 235 MV nuclear turbine-generator sets and obtains a
production of 500 MV in these sets.
c) Custom made hydro sets of Francis, Pelton and Kaplan types for different
head-
discharge combinations are also engineered and manufactured by BHEL.
d) Until now, the company had placed orders for more than 700 utility sets of
thermal, hydro, gas and nuclear plants. This is based on contemporary technology
comparable to the best in the world. It is also internally competitive.
1.7 INDUSTRIAL SECTOR
1.7.1 Industry
BHEL is a major contributor of equipment and system to industries. Its major
contributions are cement, sugar, fertilizer, refineries, petrochemicals, steel,
paper etc.
The range of systems and equipment supplied includes captive power plants, DG
power plants, high-speed industrial drive turbines, electrical machines, pumps,
valves etc.
1.7.2 Transportation
Most of the trains operated by the Indian railways, including the metro in
Calcutta,
are equipped with BHEL–s traction electrics and traction control equipment. The
company

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

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

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

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

1.13.2 Positioning for the future
BHEL has finalized a new corporate plan with the title –strategic plan 2007– and
steps are taken to start the iniatives. The company has also revised the vision,
mission and
values statements, which are suitably adjusted and with remodification to
reflect it–s current
aspuations.
In corporate line the company aims to accelerate the growth with suitable
strategies
and focus area the core strengths of the and company are
1) To strengthen and extend the core business of power generation power, power
transmission, transportation and industrial systems and products.
2) Areas like water management pollution control and waste management, port
handling systems, simulators [power and process], energy conservation systems,
LNG
terminals are newly entered
3) To enter into continuous revenue stream business like power generation and
transmission and distribution.
1.14 BHEL, TRICHY UNIT
BHEL, Trichy unit was established in 1963 and is situated in Trichy-Tanjore
highway road around 20km from Trichy Central Bus Stand. 12,000 employees are
working
in this organization on permanent basis and around 4000 employees are working on
contract basis. It has an area of 2, 50,000 sq. meters and consists of a major
unit namely.
1. High Pressure Boiler Plant (HPBP)
2. Seamless Steel Tube Plant (SSTP)
3. Combined Cycle Demonstration Plant (CCDP)

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

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

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

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

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

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

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

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

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

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

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

.
To bring out the level of inventory and to analyse the receivables, payables and
cash management of the company
His findings were
.
Firm ability have been was increasing every year in order to meet the short
term liabilities.
.
More sales has been done on credit basis
.
Bank balance is sufficient to tackle unexpected problem.
.
Current ratio satisfactory level is 2:1. It is significantly achieved by the
company.
Miss. Mohanapriya, M.B.A, in her research on ’Working capital management of
Tanjore co-operative milk supply society Ltd.’ Which is the partial fulfillment
of the
requirements for the award of her degree submitted to Bharathidasan University,
in the year
November ’ 2003. Outlined the following objectives and findings.
Her Objectives were:
.
Know the project of Co-operative milk supply society.
.
Analysis the short term liquidity position of the study unit during the period
96-97
to 2000-01.
.
Analysis and evaluate working capital management.
Her Findings were:
.
The size of current assets has increased during the study period.
.
During the study period the working capital turnover ratio were 210.51;

.
194.60; 45.44 and 11.86 times respectively the higher ratios in the 2 year 1997-
98
and 98-99 indicates sufficient amount of working capital and effective
utilizations
of working capital.
.
The cash turnover ratio is to be increasing times.
Miss. Abiramisundhari, in her research on ’Working capital management of
TSRM Limited Trichy’. Which is the partial fulfillment of the requirements for
the award
of her M.Com degree submitted to Bharathidasan University, in the year November
’ 2003.
Outlined the following objectives and findings.
Her Objectives were:
.
To study the importance of W/c management for a concern.
.
To assess the proportion of the components of W/c of TSRM Ltd, Trichy.
.
To suggest measures to increases the efficiency of W/c management of TSRM
Ltd, Trichy.
Her Findings were:
.
The company has been taken for sufficient care for the maintenance of adequate
accounting period.
.
The proportion of net W/c to total assets showed on increasing trend through
out the five years.
.
The over all performance of receivables management showed a satisfactory
position throughout the past 5 years.

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

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

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

It is derived from the annual reports, magazines, web sites and the internal
auditing
books of BHEL.
4.4 TOOLS OF ANALYSIS
The researcher used tools to analysis the financial performance of the firm.
They are
1. Ratio analysis
2. Trend analysis
4.5 SCOPE OF THE STUDY
The main scope of the study is to evaluate, analyze and understand the current
assets management and to know the influence of the components of working capital
on
sales in the year 2001 ’ 2002 to 2005 ’ 2006.
4.6 PERIOD OF THE STUDY
The study analysis, ’the financial performance of Bharath Heavy Electrical Ltd’
covers the financial years from 2001 ’ 2006 consequently.
CHAPTER ’ V
DATA ANALYSIS AND INTERPRETATION
TABLE ’ 5.1
STATEMENT SHOWING CURRENT RATIO
Rs in lakhs
YEAR Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010
CURRENT
ASSETS
12,396.40
15,982.40
19,222.29
25,763.03
30,789.29
CURRENT
LIABILITIES
8,905.14
11,957.32
16,632.97
23,415.10
28,097.73
CURRENT
RATIO

SOURCE: SECONDARY DATA
INTERPRETATION
Current ratio during the year 2001-2002 was 1.71 and its slightly increased in
1.76
at 2002-2003 and its decreased 2003’2004 at 1.65 and its same value in 2004’2005
and
2005 ’ 2006. There is no significant.
CHART ’ 5.1
CURRENT RATIO

PERCENTAGE
1.8
1.75
1.7
1.65
1.6
1.55
1.5
1.45
2001-2002-2003-2004-200502
03 04 05 06
YEARS
current ratio
TABLE ’ 5.2
STATEMENT SHOWING QUICK RATIO
Rs in lakhs

LIQUID
ASSETS
LIQUID
LIABILITIES
LIQUID
RATIO
INTERPRETATION
The quick ratio in the year 2001-2002 was 1.29 and it gets increased 0.04% at
2002
and 2003 (1.33) and in 2003-2004 get decreased 0.02% (1.31) and 2004-2005 get
decreased
0.08% (1.23) and it again decreases 2005-2006 at 0.01%(1.22).
CHART ’ 5.2
LIQUID RATIO

1.16
1.18
1.2
1.22
1.24
1.26
1.28
1.3
1.32
1.34
PERCENTAGEliquid ratio
1.16
1.18
1.2
1.22
1.24
1.26
1.28
1.3
1.32
1.34
PERCENTAGEliquid ratio
2001-02 2002-03 2003-04 2004-05 2005-06
YEARS
STATEMENT SHOWING CASH RATIO
TABLE ’ 5.3
Rs in lakhs

CASH 1,483.97
2,068.91
1,511.02
1,950.51
865.08
CURRENT
LIABILITIES 8,905.14
11,957.32
16,632.97
23,415.10
28,097.73
CASH RATIO
INTERPRETATION
The Cash ratio of BHEL in the 2001-2006 was fluctuation in 2005-2006 it was 0.40
times and in 2001-2002 it was 0.10 times and 2003-2004 it was reduced to 0.42.
CHART ’ 5.3
CASH RATIO

0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
PERCENTAGECash ratio
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
PERCENTAGECash ratio
2001-02 2002-03 2003-04 2004-05 2005-06
YEARS
TABLE – 5.4
STATEMENT SHOWING DEBTORS TURNOVER RATIO

Rs in lakhs
TOTAL
SALES
14,739.46
19,058.33
21,775.60
28,504.05
34,613.43
DEBTORS 7,168.06
9,695.82
11,974.87
15,975.50
20,688.75
DEBTOR
TURNOVER
RATIO
INTERPRETATION
Debtors constitute an important constitute of current assets and therefore the
quality
of debtors to a great extent determines firm–s liquidity .The higher the ratio,
the better it is,
since it would indicate that debts are being collected promptly. In the year
2004-2005 the
debt is 1.56 comparing to the previous year came down.
CHART- 5.4
DEBTOR TURNOVER RATIO

PERCENTAGE
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
DTR
2001-
2002-2003-2004-200502
03 04 05 06
YEARS
DEBT COLLECTION PERIOD
TABLE – 5.5
Rs in lakhs

DAYS 365 365 365 365 365
DEBT
TURNOVER
RATIO
DEBT
COLLECTION
PERIOD
INTERPRETATION
The debt collection period of BHEL in the 2001-2002 was 247 days and in 20052006
it was 195 days.
CHART – 5.5
DEBT COLLECTION PERIOD

PERCENTAGE
DTCP
250
200
150
100
50
0
2001-2002-2003-2004-200502
03 04 05 06
YEARS
TABLE – 5.6
CREDITORS TURNOVER RATIO
Rs in lakhs
CREIDT

PURCHASE
CREDITORS
CREDITORS
TURNOVER
RATIO
INTERPRETATION
The Creditors turnover ratio of BHEL was fluctuating during the year 2001 –
2006.
It was upward in (2001 – 2002) was 0.82 times and it was downward in 2003 – 2004
is 0.70
times.
CHART -5.6
CREDITORS TURNOVER RATIO

PERCENTAGE
0.82
0.8
0.78
0.76
0.74
0.72
0.7
0.68
0.66
0.64
CTR
2001-2002-2003-2004-200502
03 04 05 06
YEARS
TABLE –5.7
DEBT PAYMENT PERIOD
Rs in lakhs

DAYS 365 365 365 365 365
CREDITORS
TURNOVER
RATIO
DEBT
PAYMENT
PERIOD

INTERPRETATION
The debt collection period of BHEL in the 2001-2002 was 245 days and in 20052006
it was 451 days.

DPP
CHART – 5.7
DEBT PAYMENT PERIOD
0
100
200
300
400
500
600
PERCENTAGE
200102
200203
200304
200405
YEARS
200506
TABLE –5.8

CASH TURNOVER RATIO
Rs in lakhs
SALES 14,739.46
19,058.33
21,775.60
28,504.05
34,613.43
CASH
1,483.97
2,068.91
1,511.02
1,950.51
865.08
CASH
TURNOVER
RATIO
INTERPRETATION
The cash turnover ratio in the year 2001-2006 was downward in the year in the
2001-2002 it was decreased 3.24.

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

TABLE – 5.9
INVENTORY TURNOVER RATIO
Rs in lakhs
SALES 14,739.46
19,058.33
21,775.60
28,504.05
34,613.43
INVENTORY 3,744.37
4,217.67
5,736.40
7,837.02
9,235.46
INVENTORY
TURNOVER
RATIO
INTERPRETATION
Inventory turnover of BHEL for 2001 – 2006 was fluctuation. in 2001-2002
the inventory turnover ratio was high up to 3.81 and it was low in 2004-2005 at
3.27.

CHART –5.9
INVENTORY TURNOVER RATIO
3.9
3.8
3.7
3.6
3.5
PERCENTAGE 3.4
3.3
3.2
3.1
3
2.9
2001-2002-2003-2004-200502
03 04 05 06
YEARS
ITR

TABLE – 5.10
INVENTORY HOLDING PERIOD
Rs in lakhs
YEAR 2001-2002 2002-2003 2003-2004 2004-2005 2005 -2006
DAYS 365 365 365 365 365
INVENTORY
TURNOVER
RATIO
INVENTORY
TURNOVER
PERIOD
INTERPRETATION
Inventory turnover period of BHEL for 2001 – 2006 was 107 days in 2003.it was
106 days and 2003-2004 it get reduced 96 days and it got raised in 2004-2005 to
112 days
In 2005 -2006it got downwards to 102 days.

CHART – 5.10
INVENTORY TURNOVER PERIOD
115
110
105
PERCENTAGE 100
95
90
85
IHP
2001-2002-2003-2004-200502
03 04 05 06
YEARS

TABLE-5.11
WORKING CAPITAL TURNOVER RATIO
Rs in lakhs
SALES 14,739.46
19,058.33
21,775.60
28,504.05
34,613.43
NET
WORKING
CAPITAL
WORKING
CAPITAL
TURNOVER
RATIO
INTERPRETATION
Working capital turnover ratio for the year 2005-2006 was 2.23 times. It is
higher
when comparing the past four years. The working capital management has to
improve by
more concentration on collection strategies.

CHART-5.11
WORKING CAPITAL TURNOVER RATIO
2.25
2.2
2.15
2.1
PERCENTAGE
2.05
2
1.95
1.9
1.85
02 03 04 05 06
YEARS
2001-2002-2003-2004-2005-
WCTR
TABLE –5.12
WORKING CAPITAL FOR TREND ANALYSIS
Rs in lakhs

CURRENT
ASSETS
12,396.40
15,982.40
19,222.29
25,763.03
30,789.29
CURRENT
LIABILITIES
8,905.14
11,957.32
16,632.97
23,415.10
28,097.73
WORKING
CAPITAL
INTERPRETATION
In this current asset is increasing during the period of study. Current
liability is also
increased during the period of study. And working capital is also increased.
CHART – 5.12
WORKING CAPITAL FOR TREND ANALYSIS

VALUES
1800000
1600000
1400000
1200000
1000000
800000
600000
400000
200000
0
CA CL
2001-2002-2003-2004-200502
03 04 05 06
YEARS
TABLE –5.13
ANALYSIS OF VARIOUS COMPONENTS IN WORKING CAPITAL
CURRENT ASSETS

Rs in lakhs
Particulars
Mar
2006
Mar
2007
Mar
2008
Mar
2009
Mar
2010
inventories
Sundry debtors
C& B balance
Other assets
Loans and advances
Total
INTERPRETATION
In this period inventories, sundry debtors, other current assets and loan and
advances was decreased during the period of the study. Cash and bank balance was
only
increased during the period of the study.
CHART – 5.13
ANALYSIS OF VARIOUS COMPONENTS IN WORKING CAPITAL

0
10
20
30
40
50
60
PERCENTAGE
2001-
02
2002-
03
2003-
04
2004-
05
2005-
06
YEARS
INVENTORIE
0
10
20
30
40
50
60
PERCENTAGE
2001-
02
2002-
03
2003-
04
2004-
05
2005-
06
YEARS
INVENTORIE
TABLE –5.13
CURRENT LIABILITIES
Rs in lakhs

CURRENT
LIABILITIES
PROVISIONS
TOTAL
INTERPRETATION
In this liabilities was downward in the period of study in this provision was
upward
in the period of study.
CHART – 5.13
CURRENT LIABILITIES

PERCENTAGE
90
80
70
60
50
40
30
20
10
0
LIABILITIES
2001-2002-200302
03 04
YEARS
2004-200505
06
CHAPTER – VI
FINDINGS OF STUDY

1.
The working capital as per trend analysis, current assets was in the year 2001-
2002
was Rs.805139.02 and the in the year 2005-2006 was Rs.1633077.90.so the current
assets was increased during the period of study.
2.
The working capital as per trend analysis, current liabilities was in the year
20012002
was Rs.47l346.54 and the in the year 2005-2006 was Rs.1032002.90.so the
current liabilities was increased during the period of study.
3.
The working capital as per trend analysis, working capital was in the year2001-
2002
was 333792.48 and the in the year 2005-2006 was 601075.67.so the working capital
was increased during the period.
4.
In this analysis of various components in working, in current asset, in
inventory
sundry debtors in loan and advances and other current assets are downward trend.
Then cash and bank balance only upward trend.
5.
In current liabilities, liabilities downward trend and provision are upward
trend
during the period of study.
6.
Analysis of each component in working capital sundry creditors is upward manner
during the period of study.
7.
Working capital turnover ratio was downward year by year.
8.
Inventory turnover ratio was 3.57 in 2005-2006. It is upward while comparing
from
2001-2002.
9.
The current ratios for all the subsequent years are good. All of them are above
standard norm. So the short term solvency position of the company is good.
10. The debtor turnover ratio in the year 2001-2002 was 1.48 and get increased
in the
year 2005-2006 was 1.87.
11. The quick ratio for all the subsequent year is good. It is all of them are
standard
norm. From the above table the quick ratio found satisfactory.
12. The Cash balances of the organization found fluctuating over the years. The
proportion of cash in current asset was increasing in 2001-2006.
13. The average collection period is high in 2001-2002 that is 107 days and
2005-2006
is 102 days in this reduce collection period.

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

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

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

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

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

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