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INDUSTRY PROFILE

Heavy Electrical Industry covers Units manufacturing large plant andmachinery required for power generation, distribution and utilization theseincludes turbo generators, boilers, and various types of turbines,transformers, motors switchgears and other such items.

Majority of products manufactured by Heavy Electrical Industry in thecountry, which includes items like power generating units electric motors,transformers, switchgears etc, are used by all sectors of the Indian Economy.Some major areas where these are used large projects for power generationincluding nuclear power stations, petrochemical complexes, chemical plantsintegrated steel plants, non-ferrous metal unit‟s etc. the industry has been

upgrading the existing technology. As a result , today India is among a

handful of nations to have strong industrial base can be undertake complex projects on turnkey basis for export markets also. The industry is free to takeup manufacture of any items.

The existing installed capacity in the industry is of the order of 4500MWof thermal, 1345MW of Hydro and about 25MW if gas based power generation equipment per annum and manufacturing units depending uponthe needs and their capacity are augmenting the capacity. The industry hasalso established a strong manufacturing base of the requirement of equipment for nuclear power plants in the country. The share of domestic

equipment is about 76% in the country‟s generation capacity.

The heavy electrical industry is capable of manufacturing transmissionand distribution equipment unto 900 KV AC and high voltage DC

The Indian industry has taken up the work for up gradation of transmission to next high voltage system of 765 KV class transformers,reactors, CTs, CVTs, bushing and insulators etc. large electrical motors usedin Steel, Petrochemical complex and other such heavy industries are also

being manufactured in the country.

The domestic heavy electrical equipment manufacturers are making useof the developments in the global market with respect to product designs andupgrading of manufacturing & testing facilities. The industry has taken upwork for development of Flexible Ac Transmission (FACTS) and other Power Electronics Projects. BHEL has already introduced FACTS andControlled Shunt Reactors (CRS)



TURBINES AND GENERATOR SETS:

The capacity established for manufacture of various kinds of turbinessuch as steam and hydro turbines including industrial turbines is more then9000MW power per annum in the county. Apart from BHEL the publicsectors unit that has the largest installed capacity of 8000MW per annumthere are unit in the private sector also manufacturing steam and hydroturbines for power generation and industrial use. The manufacturing rang of BHEL includes steam turbines up to 800MW unit rating, which they are

planning to enhance up to 750MW. They have capability to manufactureGas Turbines up to 400MW ISO rating.

AC generators manufactured in India are at par with international ACGenerators and consistently deliver high quality power with performance.

Domestic manufacturers are capable of manufacturing AC Generator rightform 0.7 KVA to 500000 KVS and above with specified voltage rating.

BOLIERS:

BHEL is the largest manufacturer of boilers in the country and has thecapacity to manufacture boilers from 300 to 500 MV capacity using Coal,lignite, oil natural gas or a combination of these super critical parametersupto 1000MW units size. BHEL presently accounts for around 70% total

production of boilers. The domestic industry has a capacity to meet the

requirement / demand for boilers indigenously.

TRANSFORMERS:

The domestic transformers industry is well established with ability to provide state of the are equipment. The industry has the capacity tomanufacture whole range of power and distribution transformers includingthe REC ratings of 25,53,100 KVA and also the extra high voltage range of 400KV, 600MVA. Special types of transformers are required for earthling,furnaces, rectifiers, electrostatic precipitators, freight loco etc., and series

and shunt reactors as well as HDVC transmission up to 700KV are also being manufactured in the country‟s power sector development programme.

The export opportunities have also improved for Indian industry. Many of the transformer manufacturers have now stated exporting their products,even to western countries and to the USA.

SWITCHGEAR AND CONTROL GEAR:



In India the entire range of circuit breakers form bulk oil, minimum oil, air blast, vacuum to Slphus Hexafluoride (SF6) are manufactured at standardspecification of the benefits of customers. Miniature Circuit BreakersMCBs), air circuit breakers, switches, rewire able fuses and High RuptureCapacity(HRC) fuses with their respective fuse bases, holders and startersare being produced to customer‟s specification as well as to standard

specifications. Motor control centers, distribution panels and elaboratecontrol systems base on microprocessor and computer control re alsoavailable for power stations, load dispatch centre, major receiving centersand industrial complexes. The industry is competitive in the field of designand engineering as the skills set available in the country are respectively lessexpensive.

SHUNTING LOCOMOTIVES:

Shunting locomotives for localized / internal transport facilities are used inRailways, Steel plants. Thermal power plants etc., the installed capacity inadequate to meet the domestic demand. BHEL among others ismanufacturing such locomotives.

The heavy electrical industry has brought out the drastic change in manyareas of development in all the countries. Due to the greater combination of electrical industries with other industries had helped in the growth of other industries. Due to major cost factor the Heavy Electrical Industries are been

confined only a few countries and are acting as the supporting pillars for those countries, and as well as the rest of the world..



Company History :

BHEL is the largest engineering and manufacturing enterprise in India inthe energy related infrastructure sector today. BHEL is one of the most

prominent companies of India…..

BHEL is also known as Bharat Heavy Electricals Limited is a gas andsteam turbine manufacturers in India. It is one of India‟s nine largest Pub licSector undertakings or PSUs, known as the Navaratnas or „The nine jewels‟…

Founded in the late 1950s, BHEL is today a key player in the power sector through the construction, commissioning and servicing of power

plants all over the world.. BHEL has around 14 manufacturing divisions,

four power sector regional centers, over 100 project sites, eight servicecenters and 18 regional offices.

As an engineering conglomerate, BHEL offers over a wide spectrum of products and services for core sectors including power generation,transmission and distribution; and oil and gas as well as the supply of nonconventional energy systems.

Over 65% of power generated in India comes from BHEL equipment.

Over all it has installed power equipment with a total capacity of over 90000MW.

BHEL has joined the Global Compact of United Nations and hascommitted itself to support it and the set of core values enshrined in its ten principles. The “Global Compact” is a partnership between the United Nations, the business community, international labor and NGO‟s. It provides

a forum for them to work together and improve corporate practices throughco-operation rather than conformation.

BHEL‟s contributions towards Corporate Social Responsibility till dateinclude adoption of villages, free medical campus / charitable dispensaries,schools for the under privileged and handicapped children, ban on childlabor, disaster / natural calamity aid, Employment for handicapped, Widowresettlement, Employment for Ex-serviceman, irrigation using treatedsewage, pollution checking campus, plantation of millions of trees, energy



saving and conservation of natural resources through environmentalmanagement.

BHEL shares the growing concern on issues related to Environment andOccupational Health & Safety (OHS) , and is committed to protectingEnvironment in and around its own establishment, and to providing safe andhealthy environment to all its employees. For fulfilling these obligations, aHealth, Safety & Environmental Policy has been formulated andimplemented through management systems.

In recognition of this, BHEL has been awarded the ISO 14001Environmental Management systems Certification and OHSAS 18001Occupational Health & Safety Management Systems Certification from M/sDet Norske Veritas (DNV). Under UNDP program for specialized services

in the area of Environment, BHEL has set up a Pollution Control ResearchInstitute (PCRI). BHEL also has a Model Centre for Occupational HealthServices at Tiruchy, which is a pioneer in this field in India. Today it offers awide range of occupational health care as well as expertise in work Environment monitoring, Toxicology, Ergonomics and in organization of OHS to multitude of industries for different sectors in India. Few ILOsponsored candidates from African countries have undergone training at thisModel centre.

BHEL has successfully launched products like Wind Electric

Generators, Solar Heating Systems… BHEL manufactures over 200 products under 30 major product groups and caters to core sectors of theIndian Economy viz., Power Generation & Transmission, Industry,Transportation, Renewable Energy, etc., ,.. The wide network of BHEL‟s 14

manufacturing divisions, four Power Sector regional centers, over 100projects sites, 8 services centers, 18 regional offices and one subsidiaryenables the Company to promptly serve its customers and provide them withsuitable products, systems and services efficiently and at competitive prices.

BHEL has acquired certifications to Quality Management Systems (ISO9001)‟ Environmental Management Systems (ISO 144001) andOccupational Health & Safety Management Systems (OHSAS 18001) and isalso well on its journey towards Total Quality Management.

BHEL has installed equipment over 90,000 MW of power generation for Utilities, Captive and Industrial users. Supplied over 2,25,000 MW a



transformer capacity and other equipment operating in Transmission &Distribution network up to 400 KW.. Supplied over 25,000 Motors withDrive Control System to Power project, Petrochemicals, Refineries, steel,Aluminum, Fertilizer, Cement plants, etc. Supplied over one million Valvesto Power Plants and other Industries.

BHEL‟s vision is to become a world-class engineering enterprise,committed to enhancing stake holders value. The company is striving togive shape to its aspirations and fulfill the expectations of the country to become a global player…

The Annual Turnover of BHEL for the year 2010-2011 was 43,337 crorewith and Profit After Tax 6011 crore. With the current deliverable Order Book exceeding 60,507 crore. And still growing, BHEL is poised for

excellent future growth. BHEL‟s highly skilled and committed manpower asset of 46,748 on 2010-2011, the best manufacturing facilities and practicestogether with the state of art technologies, has helped BHEL to deliver aconsistent track record of performance…

HEALTH, SAFETY & ENVIRONMENT POLICY:

BHEL is committed to being an environment friendly company in all itsactivities, products, and services and to provide safe and healthy workingenvironment to all employees as an integral part of business performance

through:

Compliance with applicable Legislation and Regulations. Continual improvement in the Occupational Health, Safety and

environmental Management Systems Performance. Promotion of activities for conservation of resources by

Environmental Management. Enhancement of Environmental, Safety and Occupational Health

awareness amongst employees, customers and suppliers by proactivecommunication and training.

Periodical review of Occupational Health, Safety & EnvironmentalManagement Systems to ensure its continuing suitability, adequacyand effectiveness.

Communication of this HSE Policy to all employees and interested parties…



Co-ordination with concerned Government agencies/ regulatory bodies engaged in Occupational Health, Safety & Environmentalactivities.

This policy shall be a 45,0000 crore company by 2011-2012. With all the positive developments in the economy, the power sector is poised for exponential growth, opening up opportunities for us and other players. AsIndia moves progressively towards becoming a major manufacturing hub,there are undeniable advantages in favor of Indian companies.

BHEL is also ready with introduction of advanced gas turbines for whichorders have also been bagged against international competitive bidding.

When the 500 MW rating sets were introduced in the country, bulk orders

were placed on BHEL for facilitating smooth transfer of technology into thecountry. This enabled the company to win subsequent orders on competitive bidding basis. The country today is reaping its benefits with these setsforming the backbone of the country‟s power generation.

When we look at segmental turnover, power business contributes to about72% of our sales. Three- fourth of the total electrical power produced in thecountry is on account of the power capacity established with BHEL madesets. With the strong economic growth and the higher growth rates requiredin the power sector, power business will continue to be the most important

constituent of BHEL‟s portfolio in the coming years also. As per thestrategic plan 2012 adopted by the company, we envisage power sector tocontribute 70% to company‟s turnover by 2011-2012 with 30% contributionfrom Industry related business.

BHEL has been a pioneer in the area of Human Resource Development, being the first Public Sector Undertaking of its kind in India to have setup anextensive HRD infrastructure as way back as the early sixties. HumanResource Development Centre (HRDC) of BHEL R.C. Puram, Hyderabadoccupies a significant place not only among other HRDCs of BHEL but alsoas an important Training and Development Centre in the twin cities of Hyderabad (Andhra Pradesh).

Sri K. Kamaraj, the Chief Minister, Madras, today‟s HRDC, R.C. Puram,

Hyderabad has come a long way, bagging the prestigious Golden Peacock

National Training Award. Since its inauguration on (earlier known asTechnical Training School) on 8

thJuly 1963.



We organize and conduct different kinds of Training and Development programs for our employees, customers, suppliers, and others. The spirit atour HRDC is continuous learning and “The Learning” which move towardsfocused individual and organizational Growth. BHEL has some values.

VALUES:

Zeal to Excel and Zest for Change

Integrity and fairness in all Matters

Respect for Dignity and Potential of Individuals Strict Adherence to commitments

Ensure Speed of Response

Foster learning, Creativity and Team-work Loyalty and Pride in the Company

General Management programs:

The objectives of GMP are as follows:

Creating an awareness of the influence of Business Environment onOrganization.

Enhancing Inter-Functional awareness in critical functional areas of BHEL.

Conceptual & experiential understanding of behavioral process in anorganization so as to enhance Personal, Inter-Personal, &Organizational Effectiveness,

Reviewing the present status of the Organization & challenges aheadthrough interactions amongst the group & with the Top- Management

Self-Learning.

The program duration is of 16 days and it touches upon the macro andmicro dimensions of various issues, like Management, Finance, Economy,IT, Project Management, Customer Delight, Quality, EQ, InterpersonalRelationship, Yoga & Meditation etc.,



We are also conducting quite intensive and focused sessions onPerformance Management System (PMS) and Performance Feedback &Counseling (PFC).

Customer Training Programs:

As a Corporate Policy, we at BHEL always give top priority to Customer Service and Satisfaction. And of course as a part of this policy, HRDC isconducting regular Customer Training Programs.

It is imperative that any power generation equipment should work troublefree with minimum maintenance. For this the personnel who are running theequipment should be aware of the basics of the design, testing, andintricacies of operational and maintenance aspects. With this end in view,

the following programs are offered on continuous basis. (Products).

Synchronous Generators Centrifugal Compressors

Gas Turbine Mark 4&5 Controls

Industrial Steam Turbines

Gas Turbines & Generators

Governing System Circuit Breakers

Pumps & Heat Exchangers

Turbo-Generators

QUALITY:

Quality Related Activities:

BHEL in its pursuit of excellence in all its operation has built a well knittedquality services group. The group‟s activities include.

1. Quality assurance activities

2. Testing of product. The activities pursued under the heads areenumerates below.



Quality Assurance Activities:

Activities of the department:

a. Quality systems management of ISO 9000, ISO 14OOO APL, ASME, NABL

b. Quality planning of manufacturing & vendor related activities. c. Quality feedback system from various sites for corrective &

preventive action

d. Quality education & training for all the employees for continuous upgradation of skills

e. Continuous improvement in manufacturing through quality circles

f. Vendor quality evaluation by objective assessment for qualityimprovement

g. Quality audits for ISO 9001. ASME U & U2 STAMP, API, NABL,etc

h. Co-ordination with CQS for effective inspection of bought out itemsat vendors works

QUALITY FEEDBACK SYSTEM:

BHEL has got effective system of feedback from various sites withrespect to the quality of equipment manufactured in the unit as well as theitems bought out from vendors.

The feedback from sites is analysed by various agencies and correctiveand preventive actions are taken to avoid occurrence of similar mistakes.

QUALITY PLANNING:

Quality Assurance Plans for various manufactured equipment are prepared strictly In accordance with specifications, drawings and alsocustomer‟s requirements.

Contract documents, Tender Specifications, relevant product

specifications, drawings will be studied thoroughly before finalizationof QPs.

Vendor QPs are reviewed with respect to the product specifications/Engineering documents & customer requirements before they areapproved.



CO-ORDINATION WITH CQS FOR INSPECTION:

BHEL has got wide network of Corporate Quality Surveillance(CQS)groups located at all major metropolis for inspection of bought out materialsat vendors works to ensure quality before they are dispatched to BHEL /sites

Quality Assurance department maintains close liaison with CQSdepartment for providing clarifications with respect to testing and inspectionrequirements and resolves any problems / non- conformances in consultationwith functional groups concerned.

BOARD OF DIRECTIORS OF BHEL:

1. Shri B.PRASAD RAO (Chairman & Managing Director)

2. Shri SAURABH CHANDRA (Additional secretary & financialadviser)

3. Shri AMBUJ SHARMA (Joint secretary)

4. Shri ASHOK KUMAR BABU (Director)

5. Shri M.A PATHAN (Director)

6. Smt. REVA NAYYAR (Director)

7. Shri V.K. JAIRATH (Director)

8.

Shri TRIMBAKDAS S. ZANWAR(Director) 9. Shri S.RAVI (Director)

10. Shri ANIL SHACHDEV (Director in HR)

11. Shri SARANTA (Director in Power) 12. Shri O.P BHUTANI (Director in R&D)

13. Shri M.K DUBE (Director in IS&P) 14. Shri P.K BAJPAI (Director in Finance)

15. Shri I.P SINGH (Company Secretary)

Shri P.K BAJPAI deals the following topics:

Corporate finance

Budgeting & control Cost management Treasury management Accounts & audit Taxation



COMPANY PROFILE

SECTORS:

POWER SECTOR:

Power is the core sector of BHEL and comprises of thermal, nuclear, gas,diesel and hydro business. BHEL has taken India from a position of totaldependence on over seas sources to complete self-reliance in power plantequipment‟s. BHEL now has the capacity to set up power plants form the

concept to commissioning. Today BHEL sets account for nearly 80% of thetotal installed capacity in the country.

BHEL manufacturers Boilers and auxiliaries, DG sets and associates control,

piping and station C and I up to 700MW unit rating.

BHEL possesses two streams of gas turbine technology. It can manufacturegas turbines up to 500MW rating and has access to technology for higher size gas turbines. To give a thrust to the plant performance improvement of old fossil fuel plants and repair and service of GE design has turbines – two

joint ventures companies have been floated with Siemens AG and GErespectively.

INDUSTRIAL SECTOR:

BHEL contributes major capital equipment and systems like Captive Power Plants, Centrifugal Compressors, Drive Turbines, Switchgear, HeavyCasting and forging etc.

TRANSMISSION SECTORS:

Equipment for High Voltage Direct Current Systems is being supplied for Economic Transmission of Bulk Power over long distance.

OIL RINGS:

BHEL has been supplying On-shore drilling rigs, X-MAS tree valves andwellheads up to rating of 100PSI to Oil and Natural Gas CorporationLimited(ONGC) and OIL India. It can also supply sub sea well heads, super deep drilling rigs, Desert rigs and Hebi rigs..



TRANSORTATION SECTOR:

Most of the trains in the Indian Railways are equipped with BHEL tractionand traction control equipment. India‟s first Under -ground Metro at Calcuttaruns on drives and controls supplied by BHEL

TELECOMMUNATION:

BHEL also manufactures MAX-L, MAX-XL systems days draws CDOTtechnology and has plans to make other ranges of telecommunicationequipment as well.

NCES:

Technologies have been developed and commercialized for exploiting Non-conventional and Renewal sources of energy to serve remote and rural areas.These include photo voltaic cell, solar power based pumps, lightning andheating systems. BHEL has also emerged as a major ,manufacture of WindElectric Generators up to 300KW…

RANGE OF PRODUCTS MANUFACTURE ED IN BHEL:

BHEL purchases materials and components worth over Rs. 35000 Million(approx US $ 900 Million) per year. The suppliers are spread all over theworld with 40% purchases sources form outside India.

THERMAL SETS:

Steam turbines and generators up to 500MW capacity to manufacture up to1000MW unit size.

HYDRO SETS:

Custom built conventional hydro turbines of the kalpan, Francis and pell tontypes with matching generators up to 200MW. Pump turbines with matchingmotor generators. Valves spherical, butterfly and rotary, auxiliaries for hydro stations.



EQUIPMENT FOR NUCLEAR POWER PLANT:

Turbine and generators up to 500MW capacity

Steam generators for utilities up to 500MW

Reheater / separator

Heat exchangers and pressure vessels.

GAS TURBINES:

Gas turbines for industry utility applications, rating from 3 to 200MW (ISO)

BOILERS AND PRESSURE VESSELS:

Steam generators for utilities range 30MW to 500MW for coal.

Lignite and oil and natural gas or combination of this fuels.

Steam generators for industrial applications. Range 15 tones / hours,using or a combination of the following fuels, coal oil, natural gas,industrial gases, wood and bagasse.

Waste heat recovery boilers.

Recovery boilers for paper industry, range for 100 to 1000 tones / daydry solids

Pressure vessels.

Flushed bet combustion boilers.

BOILERS AUXILIARIES:

FANS:

Asial reaction fans of single stage and double stage for clean applicationwith a capacity ranging from 20 cubic meters/ seconds. With pressureranging from 120 to 1480 meters of gas column. Axial impulse fans for bothclear air and fuel gas applications. The fan capacity varying from 7 cubic

meters/ seconds to 600 cubic meters/ seconds with pressure ranging up to700 meters of gas column. Single and double suction radial fans for clean air and dust laden hot gases applications up to 400 degree centigrade withcapacity . varying from 4 cubic meters / second to 600 cubic meters / secondwith pressure varying from 150 to 180 meters of gas column.



AIR HEATERS:

Long strum rotary regenerative air pre heaters for boilers and processfurnaces in an old range of sizes and capacities. Large ore heaters utilitiescapacity up to the capacity of 1000 MW.

HEAT EXCHANGERS:

Surface condensers.

Low pressure and high- pressure heaters.

Chimney and gland steam condensers.

Tray type generator for Dg sets.

Coolers, condensers, separators and seal oil regulator tanks for refineries fertilizers and chemical plants and utility sets.

Steam operated air

PULVERTSFRS:

Sow and medium speed coal pulverizers up to a capacity of 100 tones/ hours tube mills for pulverizing low- grade coal with high ashcontent. Mechanical separators.

Gravimetric feeders.

Elec., 0 static precipitators of any capacity with efficiency up to

99.9% for utility and industrial applications.

VALVES AND SOOT BLOWERS:

Long term retractable soot blowers (travel up to 13 MW), walldisagrees, rotary, blowers and temperature probes and related control

panels operating pneumatic, electric or manual mode. Serial arm typesoot blowers for generative air preheaters.

High pressure and low pressure by pass equipment for utilities.

High and medium pressure values. Cast and forged steam, values of slide, globe, non return ( swing check and piston life check) type for steam. Oil and gas duties up to 600mm diameter, 250 Kg? sq.cm and540 degree centigrade temperature.

High capacity safety valves and automatic electrical operated pressurerelief values for set pressure up to 200kg/ sq.cm and + temperaturesup to 565 degree centigrade.



Safety relief valves for applications in power, process and all other industries. Maximum set pressures up to 175 kg.sq.cm andtemperatures up to 565 degree centigrade.

PUMPS:

Boilers feed pumps, boilers, booster pump, condensate pump, circulatingwater pump, condensate booster pump, starting water pump, emergency oil

pump, lubricating oil pumps, stand by oil pump.

All these pumps are for various utility applications to suit up to 66 MW.

SWITCH GEAR:

Switch gear is of the following types; Minimum oil circuit breakers(33KV-220KV) Sf6 Circuit breaker (132 KV-400KV) Vacuum circuit breakers (3.3KV-33KV)

For various in door and out door applications for voltage trading up to 400KV

TRANSOFRMERS:

Power transformers for voltage up to 400KV Instruments transformers current transformers up to 400 KV,electromagnetic voltage transformers up to 400 KV.

Special transformers earthling, furnace, rectifier,, freight, loco and admultiple units transformers, electro static precipitators, traction loadfeeding transformers, and cast coil dry type transformers.

Transformers and reactors for HVDC Series and shunt reactor up to 400 KV.

BUS DUCTS:

Bus ducts with associated equipment to suit generators power output of utilities up to 500MW.



CAPACITORS:

Power capacitors for industrial use up to 250KV for application up to400 KV

Compiling / Ctv capacitors for high voltage up to 400 KV. Electrolytic and paper capacitors for motor start and motor run duties.

INDUSTRIAL SETS:

From 1.5MW to 120MW for various industrial applications such as for sugar, petrochemicals, refineries, steel, paper, cement and fertilizers etc.

POWER DEVICES:

Silicon power diodes, thirstier power devices and solar photos voltaiccells.

Large area devices for high power applications.

COMPETITORS OF BHEL:

Through BHEL is formed by combination of GE (General Engineering) andSimons Companies, they became heavy competitors for the company.



COMPANY VISSION & MISSION:

VISSION :

A world class, innovative, competitive and profitable Engineering EnterpriseProviding total Business Solutions.

MISSION:

To be the leading Engineering Enterprise providing Quality productssystems and services in the field of Energy, Transportation, IndustryInfrastructure and other potential areas.

VALUES:

Meeting commitments made to External and Internal customers.

Faster learning. Creativity and speed of response Respect for Dignity and Potential of individuals

Loyalty and pride in the company.

Team playing

Zeal to Excel

Integrity and Fairness in all matters.



OBJECTIVES:

GROWTH:

To ensure a steady growth by enhancing the competitive edge of BHEL inexisting business, new areas and International operations so as to fulfill

National expectations from BHEL

PROFITABILITY:

To provide a reasonable and adequate return on Capital employed, primarilythrough improvements in Operational efficiency, Capacity Utilization and

productivity and generate adequate Internal resources to finance thecompany‟s growth. Confidence in providing increased value for this money

through International standards of products, Quality, performance andsuperior customer services.

TECHNOLOGY;

To achieve technology excellence in operations by development of indigenous Technologies to and efficient absorption and adaptation of imported Technologies to suit Business needs and priorities and provide acompetitive advantage of the company.

IMAGE:

To fulfill the expectations which stock holders like Government as own,Employees, customers and the country at large have from BHEL…



RATIO ANALYSIS

A ratio is simple mathematical expression. It is number expressed in termsof another number, expressing the quantitative relationship between the two.

Ratio analysis is the technique of interpretation of financial statement withthe help of various meaningful ratios. Ratios show the relationship betweentwo items in a more meaningful way. They help us to draw certaincomparison with related facts is the basis of ratio analysis.

The term “accounting ratios” is used to describe significant relationship

between figures shown on a balance sheet in a profit and loss account, in a budgetary control system or in any other part of accounting organization.

Accounting ratios thus shows the relationship between accounting data.

Ratios show how one number is related to another. It may e expressed in theform of co-efficient, percentage, proportion or rate. It is a number expressedin terms of another number, expressing the quantitative relationship betweenthe two figures. Ration analysis is the important and old technique of interpretation of financial statements with the help of various meaningfulratios. Ratios do not add any information that is already available, but theyshow the relationship between two items in a more meaningful way. Theyhelp us to draw certain conclusions. Comparison with related facts is the

basis of ratios analysis. Ratio may be used for comparison in any of the

following ways..

RATOIS MAY BE USED FOR COMPARISON OF THE

FOLLOWING:

Comparison of firm with its own performance in the past Comparison of a firm with another firm in the industry

Comparison of one firm with the industry as a whole. Comparison of an achieved performance with predetermined

standards

Comparison of an one department of a concern with other departments



ADVANTAGES OF RATIO ANALYSIS:

Ratio analysis has the following advantages:

Ratio analysis simplifies the understanding of statements. Ratio being out inter relationship among various financial figure and

bring to light their financial significance. Ratio analysis is a devise toanalyze and interpret the financial health of the enterprise.

Ratio contributes significantly towards effective planning andforecasting

A study of a trend in the past works as a helpful guide for the future.Ratio facilitate inter firm and intra comparison. They bring put thestrengths weakness and efficiency of forms and their departments.

Ratio serves as effective control tools. They also facilitate

establishment of a standard costing system and budgetary control. Ratio caters to the particular information need of a particular person,

depending on his interest in the business for which ratios are to becalculated. A creditor may interest in liquidity ratios, while aninvestor may want to study profitability ratios.

LIMIATION OF STUDY:

Ratio may not prove to be the tool for inter firm comparison. The twofirms may adopt different accounting policies and hence the result

might not be comparable. Similarly a change in accounting policies bya firm will make intra.

A study of ratio in isolation without studying the actual figures maylead to wrong conclusions. Ratios are only supplementary to and notsubstitutes for absolute figures

Ratios can be only as correct as the data which they are based. If theoriginal data is not reliable, then ratios will be misleading.

Ratios analysis suffers from lack of consistency. Ratio are defineddifferently by various experts and hence are prone to manipulations

In the absence of well accepted standards, interpretation of ratios becomes subjective.

Ratios fail to reflect the impact of price level changed, and hence can be misleading.

Ratios are only tools of an analysis. They cannot be a reliable guide tofuture aspects of a business



Ratios are based on a past data. They cannot be a reliable guide tofuture performance as a future dependent on various other factors.

Ratios are volatile and be influenced by a single transaction withextreme value.

Ratios are only indicators. They need a proper analysis by a capablemanagement, they are only means, and not in the interpretation of financial statements.

STEPS IN RATIO ANALYSIS:

1. Selection relevant data from the financial statements depending uponthe objection is the analysis.

2. Calculation of a appropriate ratios from the financial data

3. Comparison of the calculated ratios with the ratios of the same firm in

the past, or the ratios developed from projected financial statement or the ratios of some other firms or the comparison with ratios of theindustry to which the firm belongs

4. Interpretation of the ratios

TYPES OF COMPARISIONS:

1. CROSS-SECTIO ANALYSIS:

One way of comparing them ratio is to compare them with the ratio or

ratios of some other selected firm in the same industry at the same point of time. So it involves the comparison of two or more firm‟s financial ratios at

the same point of time. The cross section analysis helps the analysis to findout as to how a particular firm has performed in relation to its competitors.

2. TIME-SERIES ANALYSIS:

The analysis is called time series analysis when the performance of a firm is evaluated over a period of time. By comparing the present

performance of a firm with the performance of the same firm over

last few years, an assessment can be made about the trend in progress of n firm. The information generated by the time seriesanalysis can be of immense help the firm to make for futureoperations.



3. COMBINED ANALYSIS:

If the cross-section and time series, both are combined together tostudy behaviors and pattern of ratios, then meaningful andcomprehensive evaluation of the performance of the firm candefinitely be made. A the ratios of the standard firm can firm givengood results.

NEED OF RATIO ANALYSIS:

With the help of the ratio analysis one can draw conclusions regardingliquidity position of a firm. The liquidity position of a firm would besatisfactory it is able to meet its current obligations when they become due.A firm can be said to pay the interest on its short maturing debt usually

within a years as well the principal.

a. LONG-TERM SOLVENCY:

Ratio analysis is equally useful for assessing the long-term financialviability of a firm. This aspect of the financial position of a borrower is of concern to the long-term creditors, security analysis and the present and

potential owners of business. The long-term solvency is measured by theleverage / capital structure and profitability ratios which focus on earning

power and operating efficiency. The ratio analysis reveals the strength and

weaknesses of a firm in this respect.

b. OPERATING EFFICIENCYT:

Ratio analysis throws light on the degree of efficiency in the managementand utilization of its assets. In fact, the solvency of a firm is in the ultimateanalysis, department upon the sales revenues generated by the use of itsassets total as well as its components.

c. OVER ALL PROFITABILITY:

Unlike the outside parties which are interested in one aspect of thefinancial position of a firm, the management in constantly concerned aboutthe overall profitability of the enterprise that is they are concerned about theability of the firm to meet its short term as well as long term obligations toits creditors, to ensure a reasonable return to its owners and secure optimumutilization of the asset of the firm.



d. INTER-FIRM COMPARISON:

Ratio analysis not only throws light on the financial position of a firm butalso serves as a stepping stone to remedial measures. This is made possibledue to inter-firm comparison with industry averages. A single of ratio ismeaningless unless it is related to some standard or norm. one of thetechniques is to compare the ratios of a firm with the industry average.

USE OF RATIO ANALYSIS:

The ratio analysis is useful for many people. There are different partiesinterested in the ratio analysis for knowing the financial of the firm for different purposes. The supplier of goods an credit, bank, financialinstitutions, investors, shareholders and management all make use of ratio

analysis as a tool in evaluating the financial position and performance of afirm for granting credit providing loans or making investments in the firm.With the help of ratio analysis one can measure the financial condition of afirm and can point out whether the condition is strong, good, questionable or

poor.

MANAGERIAL USES OF RATIO ANALYSIS:

HELP IN DECISION-MAKING:

Financial statements are prepared primarily for decision- making. But theinformation provided in financial statement is not an end in itself and nomeaningful can be drawn form these statement alone. Ratio analysis helps inmaking decisions from the information provided in these financialstatements.

HELPS IN FINANCIAL FORCASTION AND PLANNING:

Ratio analysis is of much help in financial forecasting and planning,.Planning is looking ahead and the ratios calculated for a number of years

work as a guide for the future. Meaningful conclusions can be dawn for future forms these ratios. Thus, ratio analysis helps in forecasting and

planning



HELPS IN COMMUNICATING:

The financial strength and weakness of a firm are communicated ina more easy and understandable manner by the use of ratios. Theinformation contained in the financial statements is conveyed in ameaningful manner to different the one for whom it is meant. Thus ratioshelp in communication and enhanced the value of the financial statement.

HELP IN CONTROL:

Ratio analysis even help in making effective control of the business.

Standard ratios can be based upon perform a financial statements andvariances or deviations, if any can be found by comparing the actual withstandards so as to take a corrective action at right time.

TYPES OF RATIOS

The use of ratio analysis is not confined to financial manger only. Thereare different parties interested in ratio analysis for knowing the financial

position of the firm for different purposes. In view of several ratios, thereare many types of ratios, which can be calculated from the

FUNCTIONAL CLASSIFICATION OF RATIOS:

According to the test satisfied various ratios have been classified as below:

A. Liquidity Ratios

B. Long term Solvency /Leverage Ratios

C. Activity Ratios

D. Profitability Ratios

i. LIQUIDITY RATIOS:

Liquidity refers to the ability of a concern to meet its current obligationsas and when these become due. The short-term obligations are met byrealizing amounts from current, floating or circulated assets. The current



assets either be liquid or near liquid. These should be convertible into cashfor paying obligations of short-term nature.

If current asset can pay off current liabilities, then liquidity postion will besatisfied. On the other hand, if the current liabilities are not easily met outwith current assets then liquidity position will be bad. To measure theliquidity of a firm the following ratios can be calculated.

A. Current ratio

B. Quick or acid test or liquid ratio

C. Absolute liquid ratio or cash position

CURRENT RATIO:(CR)

Current ratio may be defined as the relationship between current assets andcurrent liabilities. This ratio also known as working capital ratio. It iscalculated by dividing the total of current assets by total of the currentliabilities. Thus

Current assets

Current ratio = ---------------------

Current liabilities

Current assets include cash and those assets, which can be easilyconverted into cash, with a short period of time. Generally, one year such asmarketable securities, debtors inventories, work in progress etc. currentliabilities are those obligations which are payable within a short period of generally one year and include outstanding expenses, bills payable,creditors, accrued expenses, short term advances income tax etc,. Generallya current ratio of 2 times or 2:1 is considered to be satisfactory.

QUICK RATIO (OR) ACID TEST RATIO(QR):

Quick ratio also knows as acid test ratio or liquid is more rigorous test of liquidity than the current ratio. The term liquidity refers to the ability of afirm to pay its short term obligations as and when they become due. Thetwo determinants



Of current ratio, as a measure of liquidity are current assets and currentliabilities. Quick ratio may be defined as the relationship cannot be termed to

be liquid asset because they cannot be converted into cash immediatelywithout a sufficient loss of value. The quick ratio can be calculated bydividing the total of the quick assets by total current liabilities. Thus

Quick (or) liquid assets

Quick / acid / liquid ratio = ------------------------------

Current liabilities

ABSOLUTE LIQUID RATIO (OR) CASH RATIO:

Although receivables, debtors, all bills receivables are generally moreliquid than inventories, yet there may be doubts regarding their realizationinto cash immediately or in time. Absolute liquid assets include cash inhand and cash at bank and marketable securities or temporary investments.

Absolute liquid assets

Absolute liquid ratio = ------------------------------

Current liabilities

B. LONG TERM SOLVENCY (OR) LEVERAGE RATIOS:

The leverage ratio may be calculated from the balance items to determinethe proportion of debt in total financing. Many variations of this ratios exit;

but all this ratios indicate same thing the extent to which the firm has reliedon debt in financing assets.

The leverage ratios are as follows

a. Debt ratio

b. Debt equity ratio

c. Total debt ratio

d. Capital employed to Net Worth Ratio

e. Interest coverage ratio

f. Preference dividend coverage ratio



g. Fixed payment coverage ratio

h. Financial leverage ratio

DEBT RATIO(DR):

The debt ratio is computed by dividing total debt by capital employedtotal debt will short and long term borrowings from financial institutions,debentures / bonds, different payments arrangement for buying capitalequipment, bank borrowings, public deposits and any other interest –

bearing loan

Capital employed will include total debt and net worth. Capital employedequals net assets, which consists of net fixed assets and net current assetsincluding interest bearing short-term debt for working capital.

Total debt

DEBT RATIO = --------------------

Capital employed

Debt equity ratio gives the relationship describing the lenders contributionfor each rupee of the owners contribution. Debt ratio is directly computeddividing total debt dividing total debt by net worth. The ideal ratio is 2:1

Total debt total long term debts

Debt Equity Ratio = ------------------- (or) -------------------------------

Net worth share holders funds

TOTAL DEBT RATIO(TDR):

The TD ratio compares the total debts with the total assets.

Total debt

Total debt ratio = ---------------------

Total assets



CAPTIAL EMPLOYED TO NET WORTH RATIO(CENR )

This ratio gives us an idea about how much are to be contributed together by lenders and owners for each rupee of the owners contribution. This can be found out by dividing capital employed by net worth.

Capital employed

Capital employed to net worth = -------------------------------

Net worth

INTEREST COVERAGE RATIO ( ICR):

The ratio is also called the times interest ratio and it measures the abilityof firm to pay the fixed interest liability. It measures as to how many timesthe interest liability of the firm is covered with the operating profits of thefirm.

Profit before interest and tax(EBIT)

Interest coverage ratio =-----------------------------------------------------

Interest

PERFERENCE DIVIDEND COVERAGE RATIO(PDCR):

This ratio attempts to measure the ability of the firm to pay the fixed preference dividend and tells as to how secure the preference dividend is inrelation to the earning power of the firm..

Profit after tax

Preference dividend coverage ratio = -------------------------

Preference dividend



CASH FLOW COVERAGE RATIO(CFCR):

It reflects the payment ability of the firm in terms of the coverage provided by the cash profit of the firm.

Cash flow coverage ratio = Earning before Interest and Tax + LeasePayment+

Non cash Expenses / I + Lease payments +(principal repayment + fixed preference dividend) / (1-t)

FI NANCIAL LEVERAGE RATIO:

It refers the use of fixed charge securities such as and the variables chargesecurities, or it refers to the presence of fixed charge in the income statementof the firm.

Earning before interest and tax

Financial leverage ratio = -------------------------------------------

Earning before tax

C. ACTIVITY RATIOS:

The ratios measure the effectiveness with a firm uses its availableresources. These ratios are called “Turnover Ratios”. Since they indicate the

speed which the resources are being turned onto sales. Usually the followingturnover ratios are calculated.

A. Capital turnover ratio(CTR) B. Fixed asset turnover ratio(FATR) C. Working capital turnover ratio(WCTR) D. Stock turnover ratio(STR)

E. Debtors turnover ratio(DTR)

F. Creditors turnover ratio(CTR)



G. Total asset turnover ratio(TATR)

CAPITAL TURNOVER RATIO:

This ratio establishes a relationship between net sales and capital

employed. To determine the efficiciency with which the capital employed isutilized. This ratio is computed by dividing the net sales by the capitalemployed. This ratio is usually expressed as times. It is calculated as

Net sales

Capital turnover ratio = ---------------------

Capital employed

Capital employed means long term and share holders funds. It indicates thefirm‟s ability to general sales per rupee is capital employed. In general,higher the ratio the more efficient the management and utilization of capitalemployed.

FIXED ASSETS TURNOVER RATIO:

This ratio establishes a relationship between net sales and assets. Thisratio is to determine the efficiency with the fixed assets. This ratio is todetermine the efficiency with which the fixed assets are utilized. This ratio iscomputed by „x‟ number of time. It is calculated as

Net sales

Fixed asset turnover ratio = --------------------------

Net fixed assets

It indicates the firm‟s ability to generate sales per rupee of investment in

fixed assets. In general higher the ratio, the more efficient the managementutilization of fixed asset and vice versa.

WORKING CAPITAL TURNOVER RATIO:

This ratio establishes a relationship between net sales and working capital.This ratio is to determine the efficiency with which the working capital is



utilized. This ratio is computed by dividing the net sales by the workingcapital. This ratio is calculated as

Net sales

Working capital turnover ratio = ---------------------

Working capital

Working capital means current asset – current liabilities

It indicates the firm‟s ability to generate sales per rupee of working capital.

In general higher the ratio, the more efficient the management and utilizationof working capital.

STOCK TURNOVER RATIO:

This ratio establishment a relationship between costs of goods sold andaverage inventory. This ratio is to determine the efficiency with theinventory is utilized. The ratio is computed by dividing the cost of goodssold by the average inventory. This ratio is expressed as

Cost of goods sold

Stock turnover ratio = ----------------------------

Average inventory

It indicates the speed with which the inventory is converted into sales. Ingeneral, a high ratio indicates efficient performance since an improvement inthe ratio shows that either the same volume of sales has been maintainedwith a lower investment in stocks. On the volume of sales has increasedwithout any increase in the amount of stocks. However, too high ratio andtoo low ratio call for future investigation.

DEBTORS TRURNOVER RATIO:

This ratio establishes a relationship between net credit sales and averagetrade debtors. This ratio is to determine the efficiency with which the tradedebtors are managed. This ratio is computed by dividing the net credit sales

by average trade debtors. This ratio is expressed as



Net credit sales

Debtors turnover ratio = -------------------------------

Average trade debtors

Average trade debtor = (opening trade debtors + closing trade debtorsinclude bills

receivable debtors)/2

it indicates the speed with which the debtors turnover on an average eachyear. In general, a high indicates the shorter collection periods, whichimplies prompt payments by debtors and a low ratio, indicates a longer collection period, which implies prompt payments by debtors and a lowratio, indicates a longer collection period, which implies delayed payments

by debtors. However, too high ratio and low ratio calls to further investigation. The ideal ratio may be 8 to 10 term.

CREDITORS TURNOVER RATIO:

The ratio establishes a relationship between net credit purchases andaverage trade creditors. The ratio is to determine the efficiency with whichthe creditors are managed. This ratio is computed by dividing the net credit

purchases by average trade creditors. The ratio is expressed as

Net credit purchases

Creditors turnover ratio = ------------------------------

Average trade creditors

Average trade creditors = (opening trade creditors + closing trade creditors

include

Bills payable creditors)/2

It indicates the speed with which the creditors turnover on an averageeach year. In general, a high ratio indicates the shorter payment period,which implies either the availability of less credit or earlier payments, and a



low rate indicates a large payment period, which implies either theavailability of more credit or delayed payments.

TOTAL ASSETS TURNOVER RATIO:

Net sales

Total assets turnover ratio = -------------------------------

Average tangible assets

D).PROFITABILITY RATIOS:

The primary objective of a business undertaking is to earn profits.Profits earning is considered essential for the survival of the business. In the

words of Lord Keynes, profit is the engine that drives the businessenterprise. Profits to the management are the test of efficiency and ameasurement of control to owners, a measures of worth of their investmentto the creditors, the margin of safety; to employees, and a source of fringe

benefits; to government, a measure of tax paying capacity and the basis of legislative action. Generally profitability ratios are calculated either inrelation to sales or in relation to investment.

The various profitability ratios are discussed below:

PROFITABILITY RATIOS BASED ON SALES OF THE FIRM:

A. PROFITABILITY RATIOS:

The profit margin refers to the profit contributed by per rupee of salesrevenue and therefore, the profit margin ratios measure the relationship

between the profit and the sales. They are

a. Gross profit ratio

b.

Operating ratio c. Operating profit ratio

d. Net profit ratio



GROSS PROFIT RATIO:

Gross profit ratio measures the relationship of gross profit to net sales andusually represented as percentage. It is also know as average mark up ratio.Thus, it is calculated by dividing the gross profit by sales

Gross profit

Gross profit ratio = ----------------------- x 100(or)

Net sales

OPERATIING RATIO:

Operating ratio establishes the relationship between cost of goods sold

and other operating expenses on the one hand the one hand the sales on theother hand. In other words, it measures the cost of operations per rupee of sales. The ratio is calculated by dividing operating coasts with the sales andit is represented as a percentage.

Total operating cost

Operating ratio = ---------------------------------- x 100

Net sales

(or)

Cost of goods sold + operating exp

Operating ratio = - --------------------------------------------------- x 100

Net sales

OPERATING PROFIT RATIO(OPR):

It refers to the pure operating profit if the firm i.e ,. The profit generated by the operation of the firm a find hence is calculated before considering



any financial change. It is also known as the earning before interest andtaxes. This ratio is calculated by dividing operating profit by sales.Operating profit is calculated as

Operating profit ratio = Net sales – Operating cost

(or)

Operating profit (or) EBIT

Operating profit ratio = --------------------------------------- x 100

Net sales

NET PROFIT RATIO:

It establishes the relationship between the net profits(after tax) of the firm.It measures the efficiency of the management in generating additionalrevenue of over and above the total cost of operations.

Net profit (after tax)

Net profit ratio = ------------------------------ x 100

Net sales

B. EXPENSES RATIO:

Expenses ratio indicate the relationship of various expenses to net sales.The operating ratio reveals the average total variations in expenses. Butsome of the expenses may be increasing while some may be falling. Hence,expense ratios are calculated by dividing each item of expenses with the netsales to analyze causes of variation of the operating ratio. The following arethe different types of expenses ratios:

1. Cost of goods sold ratio

2. Administrative and office expenses ratio

3. Selling and distribution expenses ratio

4. Operating expenses ratio

5. Non- operating expenses ratio

6. Financial expenses ratio



7. Operating ratio

8. Raw material ratio

9. Direct expenses ratio

1.Cost of goods sold ratio =( Cost of goods sold / net sales)*100

2. Administrative and office expenses ratio:

(Administrative and office expenses / net sales)*100

3.Selling and distributive expenses ratio

( Selling and distributive expenses / net sales)*100

4. Operating expensesratio:

(Operating expenses/ net sales)*100

5. Non operating expenses ratio:

(Non operating expenses / net sales)*100

6.Financial expenses ratio:

(Financial expenses / net sales)*100

7. operating ratio:

(Total operating cost / net sales)*100

8. Raw material ratio:

(Raw material consumed / net sales)*100

9. Direct expenses ratio:

(Direct expenses / net sales)*100

PROFITABILITY RATIOS BASED ON ASSETS / INVESTMENT:

1. Return on total assets

2. Return on o employed



3. Return on shareholders funds

1.Return on total assets:

This ratio measures a relationship between net profit before interest and

tax, and tax, and total assets. This ratio indicates the firm‟s ability togenerate profit per rupee of total assets, this ratio is expressed as a

percentage. It is calculated as

Return on total assets = (net profit after tax / average total assets)*100

2.Return on capital employed:

This ratio measures a relationship between net profit before interest andtax and capital employed, this ratio is computed by dividing the net profit

before interest and tax by capital employed. it is expressed as a percentage.It is calculated as

Return on capital employed = (net profit before interest and tax / capitalemployed)*100

The ratio indicates the firm‟s ability of generation profit per rupee of capital

employed. higher the ratio, the more efficient the management andutilization of capital employed.

3.Return on share holders fund:

This ratio measures a relationship between net profit after interest and taxand a shareholders fund. This ratio is computed by dividing the net profitafter interest

Return on shareholders fund = (net profit after interest and tax /shareholders

fund)*100

This ratio indicates the firm‟s ability to generating profit per rupee of

shareholders funds. Higher the ratio, the more efficient the management andutilization of shareholders funds.



PROFITABILITY ANALYSIS FROM THE POINT OF VIEW OF

OWNERS:

1. Return on equity

2. Earnings per share

3. Dividend per share

4. Dividend payout ratio5. Price earnings ratio

6. Dividend yield ratio

1)Return on equity:

The return on equity examines profitability from the preservative of theequity investors by relating profits available for the equity shareholders with

the book value of the equity investment.

Return on equity =(profit after tax – pref.dividend / equity shareholdersfunds)*100

2)Earning per share:

The return on equity measures the profitability in terms of the total fundsand explains the return as a percentage of the funds. The profitability of aform can also be measured in terms of number of equity shares.

Earning per share = (profit after tax – pref. dividend / number of equityshares)

3)Dividend per share:

Sometimes the equity shareholders may not be interested in the earning

per share but in the return which they are actually receiving from the in thefrom of dividend. The amount of profits distributed to shareholders per shareis known as dividend per share.

Dividend per share = (total profits distributed / number of equity shares)

4)Dividend payout ratio:



The dividend payout ratio is the ratio between the dividend per share andthe earning per share of the firm i.e it refers to the proportion of the earnings

per share which has been distributed by the company as.

Dividend payout ratio = (dividend per share / earnings per share)*100

5)price earning ratio:

This is the ratio which establishes the relationship between the earning per share and the market price of a share. The earning ratio indicates theexpectations of the equity investors about the earning of the firm.

Price earning ratio = (market price per share / earning per share).

6)dividend yield ratio:

The yield is defined as the rate of return in the amount invested. Withreference to the equity shares, the yield may be defined as the rate of returnon the market of equity shares

Earnings yield = (earning per share / market price per share)

Dividend yield = (dividend per share / market price per share)



DATA ANALYSIS

&

INRERPRETATION



ANALYSIS OF RATIOS:

A .LIQUIDITY RATIO:

CURRENT ASSETS

1. CURRENT RATIO: ----------------------------------

CURRENT LIABILITES

YEAR CURRENT

ASSETS

CURRENT

LIABILITIES

CURRENT RATIO

2001-02 155792 73129 2.13

2002-03 16669 74427 2.24

2003-04 1556552 84990 1.83

2004-05 192697 116644 1.65

2005-06 235062 143200 1.64

2006-07 276062 208869 1.32

2007-08 351150 254740 1.38

2008-09 453597 376332 1.21

2009-10 619850 436619 1.42

2010-11 771519 502025 1.53

INTERPRETATION:



CURRENT ASSET -INVENTORY

QUICK/ACID/LIQID RATIO : -----------------------------------------

--

CURRENT LIABILITIES

YEAR CURRENTASSETS

CURRENTLIABILITIES

LIQUID RATIO

2001-02 97663 73129 1.34

2002-03 94129 74427 1.26

2003-04 92406 844990 1.09

2004-05 128963 116644 1.11

2005-06 160046 143200 1.12

2006-07 194586 208869 0.93

2007-08 239684 254740 0.94

2008-09 312407 376337 0.83

2010-2011 390514 436619 0.89

2011-2012

573459

502025

1.14

INTERPRETATION:

The ratio is regularly comming down when compared to 2001-2002 whichmeans the organization is in satisfaction but in 2010-2011 the ratio hasraised....



ABSOLUTE LIQUID RATIO:

ABSOLUTE LIQUID ASSETS

ABSOLUTE LIQUID RATIO : ------------------------------------------

----

CURRENT LIABITIES

YEAR CURRENTASSETS

CURRENTLIABITIES

LIQUID RATIO

2001-02 898 73129 0.01

2002-03 1281 74427 0.02

2003-04 473 84490 0.01

2004-05 2094 116644 0.02

2005-06 4643 143200 0.03

2006-07 12 208869 0.01

2007-08 14 254740 0.01

2008-09 15 376332 0.01

2009-2010 1475 436619 0.01

2010-2011 1415 502025 0.01

INTERPRETATION:

In the year 2005-06 it has increased up t0 0.03 which is very good sign inthat financial year, but in year 2006-07 to regularly zero which is not good

for the company.



LONG TERM SOLVENCY (OR) LEVERATE RATIOS:

TOTAL DEBT

1. DEBT RATIO : --------------------------------------------

CAPITAL EMPOYED

YEAR TOTAL DEBT CAPITAL

EMPLOYED

DEBT RATIO

2001-02 497 90522 0.01

2002-03 573 99337 0.01

2003-04 386 79114 0.00

2004-05 513 85026 0.01

2005-06 1054 102525 0.01

2006-07 607 79459 0.01

2007-08 587 107986 0.01

2008-09 2566 96894 0.03

2009-2010 2034 207052 0.00

2010-2011 2265 305906 0.00

INTERPRETATION:

The debt ratio has regularly constant is around 0.1 from the year 2001 to

2007 in it which is good for the organization in 2008-09 the company isincreasing their debts that is said to be not good organization. but in 2009-10 to 2010-2011 the company is not having debts that is zero



2. DEBT EQUITY RATIO :

TOTAL DEBT

DEBT EQUITY RATIO = ----------------------------- (OR)

NET WORTH

TOTAL LONGTERM DEBTS

= ---------------------------------------------

SHAREHOLDERS FUNDS

YEAR TOTAL DEBT NET WORTH DEBT EQUITYRATIO

2001-02 497 3252 0.15

2002-03 573 3252 0.18 2003-04 386 3252 0.12

2004-05 513 3252 0.16

2005-06 1054 3252 0.32

2006-07 607 3252 0.19

2007-08 587 6504 0.09

2008-09 2566 6504 0.39

2009-2010 2034 6504 0.31

2010-2011 2265 6504 0.34

INTERPRETATION:

The debt equity ratio of BHEL is around 0.1, 0.2 and 0.3 from 2001-02to 2007-08 and then it has increased upto 0.34 in 2010-2011. This isgood for the company.



3.INTEREST COVERAGE RATIO:

Profit Before Interest and TaxINTEREST COVERAGE RATIO = ------------------------------------------

interest

YEAR PBIT INTEREST INTERESTCOVERAGERATIO

2001-02 13500 3054 4.42

2002-03 13420 258 52.02

2003-04 15821 48 329.60

2004-05 33122 1105 29.97

2005-06 60867 682 89.25

2006-07 63290 2300 27.52

2007-08 68916 5870 11.74 2008-09 68478 6826 10.74

2009-2010 86483 5870 14.73

2010-2011 130330 6504 20.03

INTERPRETTION:

The interest coverage ratio is being calulated by using EBIT and intereston funds. It was 4.42 in 2001-02, where as in 2002-03 & 2003-04 it hashuge invrease to 52.02 & 329.6 respectively, which is not good for theorganization and again it has decreasing regularly form 2006-09 andagain it has little bit increased in 2010-2011



ACTIVITY RATIO:

C.ACTIVITY RATIO:

1.CAPITAL TURNOVER RATIO:

Net Sales

Capital Turnover Ratio = ------------------------------

Capital Employed

YEAR NET SALES CAPITALEMPLOYED

CAPITALTURNOVER RATIO

2001-02 153205 90522 1.69

2002-03 137838 99337 1.39

2003-04 174490 79114 2.21 2004-05 174668 85026 2.05

2005-06 267214 102525 2.61

2006-07 289491 79459 3.64

2007-08 310235 107986 2.87

2008-09 414816 96894 4.28

2009-2010 500486 207052 2.41

2010-2011 665323 303906 2.19

INTERPRTATION:



The Capital Employed Turnover ratio is being calculated by using Netsales and Capital Employed. It was observed that it has increasedregularly from

2004-05 to 2006-07... and than sudden fall to 2.87 in 2007-08 andincreased in 2008-09 and falling down.

2. FIXED ASSET TURNOVER RATIO:

Net Sales

Fixed Assets Turnover Ratio = -------------------------------

Net Fixed

YEAR NET SALES NET FIXEDASSETS

FIXED ASSETSTURNOVER RATIO

2001-02 153205 7859 19.49

2002-03 137838 795 19.43

2003-04 174490 8360 20.87

2004-05 174668 8896 19.63

2005-06 267214 10300 25.21

2006-07 289491 12247 23.64

2007-08 310235 13877 22.36

2008-09 414816 7699 23.44

2009-2010 500486 22595 22.15

2010-2011 665323 33422 19.90

INTERPRETATION:

A high fixed assets turnover ratio indicates better utilization of the frim'sFixed Assets. A ratio is around 19.5 to 21.00 in 2001-02 to 2004-05andit has been huge increase to 25.21 in 2005-06 and from the 2006-07 to2008-09 the fluctuation of fixed ratio is satisfactory.



3.WORKING CAPITAL TURNOVER RATIO:

Net Sales

Working Capital Turnover Ratio = -------------------------------

Working Capital

YEAR NET SALES WORKINGCAPITAL

WORKINGCAPITALTURNOVER

RATIO

2001-02 153205 82663 1.85

2002-03 137838 92242 1.49

2003-04 174490 70662 2.47

2004-05 174668 76053 2.30

2005-06 267214 91862 2.91

2006-07 289491 67193 4.31

2007-08 310235 96410 3.22

2008-09 414816 77265 5.37

2009-2010 500486 183231 2.73

2010-2011 665323 269494 2.47

INTERPRETATION:

A Working Capital Turnover ratio indicater better utilization of the

firm's fixed assets. A ratio is increased to 4.31 in 2006-07 and in 2008-09 but it decreases to 2.47 it is same as 2003-04.



4. DEBTORS TURNOVER RATIO:

Net Credit Sales

Debtors Turnover Ratio = -------------------------

Avg Trade Debtors

YEAR NET SALES AVG TRADE

DEBTORS

DEBTORS

TURNOVER RATIO

2001-02 153205 85001 1.80

2002-03 137838 81237 1.70

2003-04 174490 82827 2.11

2004-05 174668 112238 1.56

2005-06 267214 135322 1.97

2006-07 289491 156311 1.85

2007-08 310235 196296 1.58

2008-09 414816 251352 1.65 2009-2010 500486 327330 1.52

2010-2011 665323 452305 1.47

INTERPRETATION:

The Debtors Turnover Ratio is to in in 2001-02 the ratio is 1.80 and from2002-03 to 2010-2011 it is decreasing. that is not good for theorganization and it has been satisfactory to the company.



5. CREDITORS TURNOVER RATIO:

Net Credit Purchases

Creditors Turnover Ratio = ----------------------------

Avg Trade Creditors

YEAR NET CREDIT

PURCHASES

AVG TRADE CREDITORS CREDITORS

TURNOVER RATIO

2001-02 12060 29738 0.41

2002-03 16646 27610 0.60

2003-04 16350 20467 0.80

2004-05 16727 24225 0.69

2005-06 19656 39495 0.50

2006-07 151552 148899 1.01

2007-08 183845 148899 1.09 2008-09 259592 221718 1.17

2009-2010 340310 299951 1.13

2010-2011 342167 341238 1.00

INTERPRETATION:

The Creditors Turnover Ratio is increased from 2006-07 to 2009-10 it

is not good for the company. And from 2001-02 to 2005-06 the companyhas decrease its debtors. so it is good for the company



6. TOTAL ASSETS TURNOVER RATIO:

Net Sales

Total Assets Turnover Ratio = ---------------------------

Total Assets

YEAR NET SALES TOTAL ASSETS TOTAL ASSETSTURNOVER RATIO

2001-02 153205 163995 0.93

2002-03 137838 175557 0.79

2003-04 174490 166157 1.05

2004-05 174668 204179 0.86

2005-06 267214 251604 1.06

2006-07 289491 265985 1.08

2007-08 310235 324684 0.95

2008-09 414816 832355 0.49

2009-2010 500486 556870 0.89

2010-2011 665323 723690 0.91

INTERPRETATION:

A ratio of total assets turnover ratio is the some times increased andsome times decreased. when increase the ratio the company has satisfied

when the decrease of the ratio the company has satisfied.



PROFITABILITY RATIO:

1.GROSS PROFIT RATIO:

Gross Profit

Gross Profit Ratio = ----------------------- x 100

Net Sales

YEAR NET SALES GROSS PROFIT GROSS PROFIT

RATIO 2001-02 153205 13500 8.81

2002-02 137838 13420 9.74

2003-03 174490 15821 9.07

2004-04 174668 33122 18.96

2005-05 267214 60867 22.78

2006-06 289491 63916 21.86

2007-07 310235 68916 22.21

2008-08 414816 68478 16.51

2009-09 500486 86483 17.272010-2011 665323 130330 19.58

INTERPRETATION:

The Gross Profit Ratio in 2005-06 has been increased to 22.78, it isgood for the company to meet the financial requirement and it is slightlydecrease in 2006-07 is 21.86 and it is go on decreasing in 2008-09 and it

is also decrease in 2010-11.



2.OPERATING RATIO:

Total Operating Cost

Operating Ratio = -------------------------------------- x 100

Net Sales

YEAR NET SALES TOTAL OPERATINGCOST

OPERATINGRATIO

2001-02 153205 131006 85.81

2002-03 137838 116708 84.67

2003-04 174490 49823 85.86

2004-05 174668 36639 78.23

2005-06 267214 201962 75.58

2006-07 289491 221227 76.42

2007-08 310235 234677 75.64

2008-09 414816 338382 81.57

2009-10 500486 404791 80.87

2010-11 665323 524531 78.83

INTERPRETATION:

Generally the lower the operating ratio the better for the businessconcern. In 2001-02 the ratio is 85.81 which are not satisfactory, when in2008-09 it has decreased to 81.57 which are satifactory to the businessconcern. and it is always falling down.



3.NET PROFIT RATIO :

Net Profit (after tax)

Operating Ratio = ------------------------------------- x 100

Net Sales

YEAR NET SALES NETPROFIT(AFTER)

OPERATINGRATIO

2001-02 153205 10446 6.82

2002-03 137838 13678 9.92

2003-04 174490 15773 9.04

2004-05 174668 32017 18.33

2005-06 267214 61549 23.03

2006-07 289491 65590 22.66

2007-08 310235 74786 24.11

2008-09 414816 75304 18.15

2009-10 500486 93584 18.15

2002-11 665323 133235 20.02

INTERPRETATION:

The net operating ratio is increased from2001-02 to 2007-08 that definescompany is in a good position. And from 2008-09 to 2010-11 the net profitratio is decreasing that defines company has not satisfactory.



Company History :

BHEL is the largest engineering and manufacturing enterprise in India inthe energy related infrastructure sector today. BHEL is one of the most prominent companies of India…..

BHEL is also known as Bharat Heavy Electricals Limited is a gas andsteam turbine manufacturers in India. It is one of India‟s nine largest Public

Sector undertakings or PSUs, known as the Navaratnas or „The nine jewels‟…

Founded in the late 1950s, BHEL is today a key player in the power sector through the construction, commissioning and servicing of power

plants all over the world.. BHEL has around 14 manufacturing divisions,four power sector regional centers, over 100 project sites, eight servicecenters and 18 regional offices.

As an engineering conglomerate, BHEL offers over a wide spectrum of products and services for core sectors including power generation,transmission and distribution; and oil and gas as well as the supply of nonconventional energy systems.



Over 65% of power generated in India comes from BHEL equipment.Over all it has installed power equipment with a total capacity of over 90000MW.

BHEL has joined the Global Compact of United Nations and hascommitted itself to support it and the set of core values enshrined in its ten principles. The “Global Compact” is a partnership between the United Nations, the business community,international labour and NGO‟s. It

provides a forum for them to work together and improve corporate practicesthrough co-operation rather than conformation.

BHEL‟s contributions towards Corporate Social Responsibility till date

include adoption of villages, free medical campus / charitable dispensaries,schools for the under privileged and handicapped children, ban on child

labour, disaster / natural calamity aid, Employment for handicapped, Widowresettlement, Employment for Ex-serviceman, irrigation using treatedsewage, polluation checking campus, plantation of millions of trees, energysaving and conservation of natural resources through environmentalmanagement.

BHEL shares the growing concern on issues related to Environment andOccupational Health & Safety (OHS) , and is committed to protectingEnvironment in and around its own establishment, and to providing safe andhealthy environment to all its employees. For fulfilling these obligations, a

Health, Safety & Environmental Policy has been formulated andimplemented through management systems.

In recognition of this, BHEL has been awarded the ISO 14001Environmental Management systems Certification and OHSAS 18001Occupational Health & Safety Management Systems Certification from M/sDet Norske Veritas (DNV). Under UNDP programme for specializedservices in the area of Environment, BHEL has set up a Pollution ControlResearch Institute (PCRI). BHEL also has a Model Centre for OccupationalHealth Services at Tiruchy, which is a pioneer in this field in India. Today itoffers a wide range of occupational health care as well as expertise in work Environment monitoring, Toxicology, Ergonomics and in organization of OHS to multitude of industries for different sectors in India. Few ILOsponsored candidates from African countries have undergone training at thisModel centre.



BHEL has successfully launched products like Wind Electric

Generators, Solar Heating Systems… BHEL manufactures over 200

products under 30 major product groups and caters to core sectors of theIndian Economy viz., Power Generation & Transmission, Industry,Transportation, Renewable Energy, etc., ,.. The wide network of BHEL‟s 14

manufacturing divisions, four Power Sector regional centers, over 100projects sites, 8 services centers, 18 regional offices and one subsidiaryenables the Company to promptly serve its customers and provide them withsuitable products, systems and services efficiently and at competitive prices.

BHEL has acquired certifications to Quality Management Systems (ISO9001)‟ Environmental Management Systems (ISO 144001) andOccupational Health & Safety Management Systems (OHSAS 18001) and isalso well on its journey towards Total Quality Management.

BHEL has installed equipment over 90,000 MW of power generation for Utilities, Captive and Industrial users. Supplied over 2,25,000 MW atransformer capacity and other equipment operating in Transmission &Distribution network up to 400 KW.. Supplied over 25,000 Motors withDrive Control System to Power project, Petrochemicals, Refineries, steel,Aluminum, Fertilizer, Cement plants, etc. Supplied over one million Valvesto Power Plants and other Industries.

BHEL‟s vision is to become a world-class engineering enterprise,

committed to enhancing stake holders value. The company is striving togive shape to its aspirations and fulfill the expectations of the country to become a global player…

The Annual Turnover of BHEL for the year 2010-2011 was 43,337 crorewith and Profit After Tax 6011 crore. With the current deliverable Order Book exceeding 60,507 crore. And still growing, BHEL is poised for excellent future growth. BHEL‟s highly skilled and committed manpower

asset of 46,748 on 2010-2011, the best manufacturing facilities and practicestogether with the state of art technologies, has helped BHEL to deliver aconsistent track record of performance…

HEALTH, SAFETY & ENVIRONMENT POLICY:

BHEL is committed to being an environment friendly company in all itsactivities, products, and services and to provide safe and healthy working



environment to all employees as an integral part of business performancethrough:

Compliance with applicable Legislation and Regulations. Continual improvement in the Occupational Health, Safety and

environmental Management Systems Performance. Promotion of activities for conservation of resources by

Environmental Management. Enhancement of Environmental, Safety and Occupational Health

awareness amongst employees, customers and suppliers by proactivecommunication and training.

Periodical review of Occupational Health, Safety & EnvironmentalManagement Systems to ensure its continuing suitability, adequacyand effectiveness.

Communication of this HSE Policy to all employees and interested parties…

Co-ordination with concerned Government agencies/ regulatory bodies engaged in Occupational Health, Safety & Environmentalactivities.

This policy shall be a 45,0000 crore company by 2011-2012. With all the positive developments in the economy, the power sector is poised for exponential growth, opening up opportunities for us and other players. AsIndia moves progressively towards becoming a major manufacturing hub,

there are undeniable advantages in favour of Indian companies.

BHEL is also ready with introduction of advanced gas turbines for whichorders have also been bagged against international competitive bidding.

When the 500 MW rating sets were introduced in the country, bulk orderswere placed on BHEL for facilitating smooth transfer of technology into thecountry. This enabled the company to win subsequent orders on competitive

bidding basis. The country today is reaping its benefits with these setsforming the backbone of the country‟s power generation.

When we look at segmental turnover, power business contributes to about72% of our sales. Three- fourth of the total electrical power produced in thecountry is on account of the power capacity established with BHEL madesets. With the strong economic growth and the higher growth rates requiredin the power sector, power business will continue to be the most important



constituent of BHEL‟s portfolio in the coming years also. As per thestrategic plan 2012 adopted by the company, we envisage power sector tocontribute 70% to company‟s turnover by 2011-2012 with 30% contributionfrom Industry related business.

BHEL has been a pioneer in the area of Human Resource Development, being the first Public Sector Undertaking of its kind in India to have setup anextensive HRD infrastructure as way back as the early sixties. HumanResource Development Centre (HRDC) of BHEL R.C. Puram, Hyderabadoccupies a significant place not only among other HRDCs of BHEL but alsoas an important Training and Development Centre in the twin cities of Hyderabad (Andhra Pradesh).

Sri K. Kamaraj, the Chief Minister, Madras, today‟s HRDC, R.C. Puram,

Hyderabad has come a long way, bagging the prestigious Golden Peacock National Training Award. Since its inauguration on (earlier known asTechnical Training School) on 8

thJuly 1963.

We organize and conduct different kinds of Training and Development programs for our employees, customers, suppliers, and others. The spirit atour HRDC is continuous learning and “The Learning” which move towardsfocused individual and organizational Growth. BHEL has some values.

VALUES:

Zeal to Excel and Zest for Change

Integrity and fairness in all Matters

Respect for Dignity and Potential of Individuals Strict Adherence to commitments

Ensure Speed of Response

Foster learning, Creativity and Team-work Loyalty and Pride in the Company

General Management programs:

The objectives of GMP are as follows:

Creating an awareness of the influence of Business Environment onOrganization.



Enhancing Inter-Functional awareness in critical functional areas of BHEL.

Conceptual & experiential understanding of behavioral process in anorganization so as to enhance Personal, Inter-Personal, &Organizational Effectiveness,

Reviewing the present status of the Organization & challenges aheadthrough interactions amongst the group & with the Top- Management

Self-Learning.

The programme duration is of 16 days and it touches upon the macro andmicro dimensions of various issues, like Management, Finance, Economy,IT, Project Management, Customer Delight, Quality, EQ, Interpersonal

Relationship, Yoga & Meditation etc.,

We are also conducting quite intensive and focused sessions onPerformance Management System (PMS) and Performance Feedback &Counseling (PFC).

Customer Training Programmes:

As a Corporate Policy, we at BHEL always give top priority to Customer Service and Satisfaction. And of course as a part of this policy, HRDC is

conducting regular Customer Training Programmes.

It is imperative that any power generation equipment should work troublefree with minimum maintenance. For this the personnel who are running theequipment should be aware of the basics of the design, testing, andintricacies of operational and maintenance aspects. With this end in view,the following programmes are offered on continuous basis. (Products).

Synchronous Generators Centrifugal Compressors

Gas Turbine Mark 4&5 Controls Industrial Steam Turbines

Gas Turbines & Generators

Governing System Circuit Breakers

Pumps & Heat Exchagers

Turbo-Generators



QUALITY:

Quality Related Activities:

BHEL in its pursuit of excellence in all its operation has built a well knittedquality services group. The group‟s activities include.

1. Quality assurance activities

2. Testing of product. The activities pursued under the heads areenumerates below.

Quality Assurance Activities:

Activities of the department:

a. Quality systems management of ISO 9000, ISO 14OOO APL, ASME, NABL

b. Quality planning of manufacturing & vendor related activities. c. Quality feedback system from various sites for corrective &

preventive action

d. Quality education & training for all the employees for continuous upgradation of skills

e. Continuous improvement in manufacturing through quality circles f. Vendor quality evaluation by objective assessment for quality

improvementg. Quality audits for ISO 9001. ASME U & U2 STAMP, API, NABL,

etc

h. Co-ordination with CQS for effective inspection of bought out itemsat vendors works

QUALITY FEEDBACK SYSTEM:

BHEL has got effective system of feedback from various sites withrespect to the quality of equipment manufactured in the unit as well as theitems bought out from vendors.

The feedback from sites is analysed by various agencies and correctiveand preventive actions are taken to avoid occurrence of similar mistakes.



QUALITY PLANNING:

Quality Assurance Plans for various manufactured equipment are prepared strictly In accordance with specifications, drawings and alsocustomer‟s requirements.

Contract documents, Tender Specifications, relevant productspecifications, drawings will be studied thoroughly before finalizationof QPs.

Vendor QPs are reviewed with respect to the product specifications/Engineering documents & customer requirements before they areapproved.

CO-ORDINATION WITH CQS FOR INSPECTION:

BHEL has got wide network of Corporate Quality Surveillance(CQS)groups located at all major metropolis for inspection of bought out materialsat vendors works to ensure quality before they are dispatched to BHEL /sites

Quality Assurance department maintains close liaison with CQSdepartment for providing clarifications with respect to testing and inspectionrequirements and resolves any problems / non- conformances in consultation

with functional groups concerned.

BOARD OF DIRECTIORS OF BHEL:

1. Shri B.PRASAD RAO (Chairman & Managing Director)

2. Shri SAURABH CHANDRA (Additional secretary & financialadviser)

3. Shri AMBUJ SHARMA (Joint secretary)

4.

Shri ASHOK KUMAR BABU (Director) 5. Shri M.A PATHAN (Director)

6. Smt. REVA NAYYAR (Director)

7. Shri V.K. JAIRATH (Director) 8. Shri TRIMBAKDAS S. ZANWAR(Director) 9. Shri S.RAVI (Director) 10. Shri ANIL SHACHDEV (Director in HR)



11. Shri SARANTA (Director in Power) 12. Shri O.P BHUTANI (Director in R&D)

13. Shri M.K DUBE (Director in IS&P) 14. Shri P.K BAJPAI (Director in Finance)

15. Shri I.P SINGH (Company Secretary)

Shri P.K BAJPAI deals the following topics:

Corporate finance

Budgeting & control Cost management Treasury management Accounts & audit Taxation

Internal audit

Financial services



RATIO ANALYSIS

A ratio is simple mathematical expression. It is number expressed in terms

of another number, expressing the quantitative relationship between the two.Ratio analysis is the technique of interpretation of financial statement withthe help of various meaningful ratios. Ratios show the relationship betweentwo items in a more meaningful way. They help us to draw certaincomparison with related facts is the basis of ratio analysis.

The term “accounting ratios” is used to describe significant relationship

tio between figures shown on a balance sheet in a profit and loss account, ina budgetary control system or in any other part of accounting organization.

Accounting ratios thus shows the relationship between accounting data.Ratios show how one number is related to another. It may e expressed in theform of co-efficient, percentage, proportion or rate. It is a number expressedin terms of another number, expressing the quantitative relationship betweenthe two figures. Ration analysis is the important and old technique of interpretation of finanacial statements with the help of various meaningfulratios. Ratios do not add any information that is already available, but theyshow the relationship between two items in a more meaningful way. Theyhelp us to draw certain conclusions. Comparision with related facts is the

basis of ratios analysis. Ratio may be used for comparison in any of thefollowing ways..

RATOIS MAY BE USED FOR COMPARISON OF THE

FOLLOWING:

Comparison of firm with its own performance in the past



Comparison of a firm with another firm in the industry

Comparison of one firm with the industry as a whole. Comparison of an achieved performance with predetermined

standards

Comparison of an one department of a concern with other departments

ADVANTAGES OF RATIO ANALYSIS:

Ratio analysis has the following advantages:

Ratio analysis simplifies the understanding of statements. Ratio being out inter relationship among various financial figure and

bring to light their financial significance. Ratio analysis is a devise toanalyze and interpret the financial health of the enterprise.

Ratio contributes significantly towards effective planning andforecasting

A study of a trend in the past works as a helpful guide for the future.Ratio facilitate inter firm and intra comparison. They bring put thestrengths weakness and efficiency of forms and their departments.

Ratio serves as effective control tools. They also facilitateestablishment of a standard costing system and budgetary control.

Ratio caters to the particular information need of a particular person,depending on his interest in the business for which ratios are to becalculated. A creditor may interest in liquidity ratios, while aninvestor may want to study profitability ratios.

LIMIATION OF STUDY:

Ratio may not prove to be the tool for inter firm comparison. The twofirms may adopt different accounting policies and hence the resultmight not be comparable. Similarly a change in accounting policies bya firm will make intra.

A study of ratio in isolation without studying the actual figures maylead to wrong conclusions. Ratios are only supplementary to and notsubstitutes for absolute figures



Ratios can be only as correct as the data which they are based. If theoriginal data is not reliable, then ratios will be misleading.

Ratios analysis suffers from lack of consistency. Ratio are defineddifferently by various experts and hence are prone to manipulations

In the absence of well accepted standards, interpretation of ratios becomes subjective.

Ratios fail to reflect the impact of price level changed, and hence can be misleading.

Ratios are only tools of an analysis. They cannot be a reliable guide tofuture aspects of a business

Ratios are based on a past data. They cannot be a reliable guide tofuture performance as a future dependent on various other factors.

Ratios are volatile and be influenced by a single transaction withextreme value.

Ratios are only indicators. They need a proper analysis by a capablemanagement, they are only means, and not in the interpretation of financial statements.

STEPS IN RATIO ANALYSIS:

1. Selection relevant data from the financial statements depending uponthe objection is the analysis.

2. Calculation of a appropriate ratios from the financial data

3. Comparison of the calculated ratios with the ratios of the same firm in

the past, or the ratios developed from projected financial statement or the ratios of some other firms or the comparison with ratios of theindustry to which the firm belongs

4. Interpretation of the ratios

TYPES OF COMPARISIONS:

1. CROSS-SECTIO ANALYSIS:

One way of comparing them ratio is to compare them with the ratio or ratios of some other selected firm in the same industry at the same point of time. So it involves the comparison of two or more firm‟s financial ratios at

the same point of time. The cross section analysis helps the analysis to findout as to how a particular firm has performed in relation to its competitors.

2. TIME-SERIES ANALYSIS:



The analysis is called time series analysis when the performance of a firm is evaluated over a period of time. By comparing the present

performance of a firm with the performance of the same firm over last few years, an assessment can be made about the trend in

progress of n firm. The information generated by the time seriesanalysis can be of immense help the firm to make for futureoperations.

3. COMBINED ANALYSIS:

If the cross-section and time series, both are combined together tostudy behaviors and pattern of ratios, then meaningful andcomprehensive evaluation of the performance of the firm candefinitely be made. A the ratios of the standard firm can firm given

good results.

NEED OF RATIO ANALYSIS:

With the help of the ratio analysis one can draw conclusions regardingliquidity position of a firm. The liquidity position of a firm would besatisfactory it is able to meet its current obligations when they become due.A firm can be said to pay the interest on its short maturing debt usuallywithin a years as well the principal.

a. LONG-TERM SOLVENCY:

Ratio analysis is equally useful for assessing the long-term financialviability of a firm. This aspect of the financial position of a borrower is of concern to the long-term creditors, security analysis and the present and

potential owners of business. The long-term solvency is measured by theleverage / capital structure and profitability ratios which focus on earning

power and operating efficiency. The ratio analysis reveals the strength andweaknesses of a firm in this respect.

b. OPERATING EFFICIENCYT:

Ratio analysis throws light on the degree of efficiency in the managementand utilization of its assets. In fact, the solvency of a firm is in the ultimateanalysis, department upon the sales revenues generated by the use of itsassets total as well as its components.



c. OVER ALL PROFITABILITY:

Unlike the outside parties which are interested in one aspect of thefinancial position of a firm, the management in constantly concerned aboutthe overall profitability of the enterprise that is they are concerned about theability of the firm to meet its short term as well as long term obligations toits creditors, to ensure a reasonable return to its owners and secure optimumutilization of the asset of the firm.

d. INTER-FIRM COMPARISON:

Ratio analysis not only throws light on the financial position of a firm butalso serves as a stepping stone to remedial measures. This is made possibledue to inter-firm comparison with industry averages. A single of ratio is

meaningless unless it is related to some standard or norm. one of thetechniques is to compare the ratios of a firm with the industry average.

USE OF RATIO ANALYSIS:

The ratio analysis is useful for many people. There are different partiesinterested in the ratio analysis for knowing the financial of the firm for different purposes. The supplier of goods an credit, bank, financialinstitutions, investors, shareholders and management all make use of ratioanalysis as a tool in evaluating the financial position and performance of a

firm for granting credit providing loans or making investments in the firm.With the help of ratio analysis one can measure the financial condition of afirm and can point out whether the condition is strong, good, questionable or

poor.

MANAGERIAL USES OF RATIO ANALYSIS:

HELP IN DECISION-MAKING:

Financial statements are prepared primarily for decision- making. But the

information provided in financial statement is not an end in itself and nomeaningful can be drawn form these statement alone. Ratio analysis helps inmaking decisions from the information provided in these financialstatements.

HELPS IN FINANCIAL FORCASTION AND PLANNING:



Ratio analysis is of much help in financial forecasting and planning,.Planning is looking ahead and the ratios calculated for a number of yearswork as a guide for the future. Meaningful conclusions can be dawn for future forms these ratios. Thus, ratio analysis helps in forecasting and

planning

HELPS IN COMMUNICATING:

The financial strength and weakness of a firm are communicated in amore easy and understandable manner by the use of ratios. The informationcontained in the financial statements is conveyed in a meaningful manner todifferent the one for whom it is meant. Thus ratios help in communicationand enhanced the value of the financial statement.

HELP IN CONTROL:

Ratio analysis even help in making effective control of the business.

Standard ratios can be based upon perform a financial statements andvariances or deviations, if any can be found by comparing the actual withstandards so as to take a corrective action at right time.

TYPES OF RATIOS

The use of ratio analysis is not confined to financial manger only. Thereare different parties interested in ratio analysis for knowing the financial

position of the firm for different purposes. In view of several ratios, thereare many types of ratios, which can be calculated from the

FUNCTIONAL CLASSIFICATION OF RATIOS:

According to the test satisfied various ratios have been classified as below:

A. Liquidity Ratios

B. Long term Solvency /Leverage Ratios

C. Activity Ratios



D. Profitability Ratios

i. LIQUIDITY RATIOS:

Liquidity refers to the ability of a concern to meet its current obligationsas and when these become due. The short-term obligations are met byrealizing amounts from current, floating or circulated assets. The currentassets either be liquid or near liquid. These should be convertible into cashfor paying obligations of short-term nature.

If current asset can pay off current liabilities, then liquidity postion will besatisfied. On the other hand, if the current liabilities are not easily met outwith current assets then liquidity position will be bad. To measure theliquidity of a firm the following ratios can be calculated.

A. Current ratio

B. Quick or acid test or liquid ratio

C. Absolute liquid ratio or cash position

CURRENT RATIO:(CR)

Current ratio may be defined as the relationship between current assets andcurrent liabilities. This ratio also known as working capital ratio. It iscalculated by dividing the total of current assets by total of the currentliabilities. Thus

Current assets

Current ratio = ---------------------

Current liabilities

Current assets include cash and those assets, which can be easilyconverted into cash, with a short period of time. Generally, one year such asmarketable securities, debtors inventories, work in progress etc. currentliabilities are those obligations which are payable within a short period of generally one year and include outstanding expenses, bills payable,creditors, accrued expenses, short term advances income tax etc,. Generallya current ratio of 2 times or 2:1 is considered to be satisfactory.



QUICK RATIO (OR) ACID TEST RATIO(QR):

Quick ratio also knows as acid test ratio or liquid is more rigorous test of liquidity than the current ratio. The term liquidity refers to the ability of afirm to pay its short term obligations as and when they become due. Thetwo determinants

Of current ratio, as a measure of liquidity are current assets and currentliabilities. Quick ratio may be defined as the relationship cannot be termed to

be liquid asset because they cannot be converted into cash immediatelywithout a sufficient loss of value. The quick ratio can be calculated bydividing the total of the quick assets by total current liabilities. Thus

Quick (or) liquid assets

Quick / acid / liquid ratio = ------------------------------

Current liabilities

ABSOLUTE LIQUID RATIO (OR) CASH RATIO:

Although receivables, debtors, all bills receivables are generally moreliquid than inventories, yet there may be doubts regarding their realizationinto cash immediately or in time. Absolute liquid assets include cash inhand and cash at bank and marketable securities or temporary investments.

Absolute liquid assets

Absolute liquid ratio = ------------------------------

Current liabilities

B. LONG TERM SOLVENCY (OR) LEVERAGE RATIOS:

The leverage ratio may be calculated from the balance items to determinethe proportion of debt in total financing. Many variations of this ratios exit;

but all this ratios indicate same thing the extent to which the firm has reliedon debt in financing assets.

The leverage ratios are as follows



a. Debt ratio

b. Debt equity ratio

c. Total debt ratio

d. Capital employed to Net Worth Ratio

e. Interest coverage ratio

f. Preference dividend coverage ratio

g. Fixed payment coverage ratio

h. Financial leverage ratio

DEBT RATIO(DR):

The debt ratio is computed by dividing total debt by capital employedtotal debt will short and long term borrowings from financial institutions,debentures / bonds, different payments arrangement for buying capital

equipment, bank borrowings, public deposits and any other interest – bearing loan

Capital employed will include total debt and net worth. Capital employedequals net assets, which consists of net fixed assets and net current assetsincluding interest bearing short-term debt for working capital.

Total debt

DEBT RATIO = --------------------

Capital employed

Debt equity ratio gives the relationship describing the lenders contributionfor each rupee of the owners contribution. Debt ratio is directly computeddividing total debt dividing total debt by net worth. The ideal ratio is 2:1

Total debt total long term debts

Debt Equity Ratio = ------------------- (or) -------------------------------

Net worth share holders funds

TOTAL DEBT RATIO(TDR):

The TD ratio compares the total debts with the total assets.



Total debt

Total debt ratio = ---------------------

Total assets

CAPTIAL EMPLOYED TO NET WORTH RATIO(CENR):

This ratio gives us an idea about how much are to be contributed together by lenders and owners for each rupee of the owners contribution. This can be found out by dividing capital employed by net worth.

Capital employed

Capital employed to net worth = -------------------------------

Net worth

INTEREST COVERAGE RATIO ( ICR):

The ratio is also called the times interest ratio and it measures the abilityof firm to pay the fixed interest liability. It measures as to how many timesthe interest liability of the firm is covered with the operating profits of the

firm.

Profit before interest and tax(EBIT)

Interest coverage ratio =-----------------------------------------------------

Interest

PERFERENCE DIVIDEND COVERAGE RATIO(PDCR):

This ratio attempts to measure the ability of the firm to pay the fixed preference dividend and tells as to how secure the preference dividend is inrelation to the earning power of the firm..

Profit after tax

Preference dividend coverage ratio = -------------------------



Preference dividend

CASH FLOW COVERAGE RATIO(CFCR):

It reflects the payment ability of the firm in terms of the coverage

provided by the cash profit of the firm.

Cash flow coverage ratio = Earning before Interest and Tax + LeasePayment+

Non cash Expenses / I + Lease payments +(principal repayment + fixed preference dividend) / (1-t)

FI NANCIAL LEVERAGE RATIO:

It refers the use of fixed charge securities such as and the variables chargesecurities, or it refers to the presence of fixed charge in the income statementof the firm.

Earning before interest and tax

Financial leverage ratio = -------------------------------------------

Earning before tax

C. ACTIVITY RATIOS:

The ratios measure the effectiveness with a firm uses its availableresources. These ratios are called “Turnover Ratios”. Since they indicate the

speed which the resources are being turned onto sales. Usually the followingturnover ratios are calculated.

A. Capital turnover ratio(CTR)

B. Fixed asset turnover ratio(FATR) C. Working capital turnover ratio(WCTR) D. Stock turnover ratio(STR)



E. Debtors turnover ratio(DTR)

F. Creditors turnover ratio(CTR)

G. Total asset turnover ratio(TATR)

CAPITAL TURNOVER RATIO:

This ratio establishes a relationship between net sales and capitalemployed. To determine the efficiciency with which the capital employed isutilized. This ratio is computed by dividing the net sales by the capitalemployed. This ratio is usually expressed as times. It is calculated as

Net sales

Capital turnover ratio = ---------------------

Capital employed

Capital employed means long term and share holders funds. It indicates thefirm‟s ability to general sales per rupee is capital employed. In general,

higher the ratio the more efficient the management and utilization of capitalemployed.

FIXED ASSETS TURNOVER RATIO:

This ratio establishes a relationship between net sales and assets. Thisratio is to determine the efficiency with the fixed assets. This ratio is todetermine the efficiency with which the fixed assets are utilized. This ratio iscomputed by „x‟ number of time. It is calculated as

Net sales

Fixed asset turnover ratio = --------------------------

Net fixed assets

It indicates the firm‟s ability to generate sales per rupee of investment infixed assets. In general higher the ratio, the more efficient the managementutilization of fixed asset and vice versa.

WORKING CAPITAL TURNOVER RATIO:



This ratio establishes a relationship between net sales and working capital.This ratio is to determine the efficiency with which the working capital isutilized. This ratio is computed by dividing the net sales by the workingcapital. This ratio is calculated as

Net sales

Working capital turnover ratio = ---------------------

Working capital

Working capital means current asset – current liabilities

It indicates the firm‟s ability to generate sales per rupee of working capital.In general higher the ratio, the more efficient the management and utilizationof working capital.

STOCK TURNOVER RATIO:

This ratio establishment a relationship between costs of goods sold andaverage inventory. This ratio is to determine the efficiency with theinventory is utilized. The ratio is computed by dividing the cost of goodssold by the average inventory. This ratio is expressed as

Cost of goods sold

Stock turnover ratio = ----------------------------

Average inventory

It indicates the speed with which the inventory is converted into sales. Ingeneral, a high ratio indicates efficient performance since an improvement inthe ratio shows that either the same volume of sales has been maintainedwith a lower investment in stocks. On the volume of sales has increased

without any increase in the amount of stocks. However, too high ratio andtoo low ratio call for future investigation.

DEBTORS TRURNOVER RATIO:

This ratio establishes a relationship between net credit sales and averagetrade debtors. This ratio is to determine the efficiency with which the trade



debtors are managed. This ratio is computed by dividing the net credit sales by average trade debtors. This ratio is expressed as

Net credit sales

Debtors turnover ratio = -------------------------------

Average trade debtors

Average trade debtor = (opening trade debtors + closing trade debtorsinclude bills

receivable debtors)/2

it indicates the speed with which the debtors turnover on an average each

year. In general, a high indicates the shorter collection periods, whichimplies prompt payments by debtors and a low ratio, indicates a longer collection period, which implies prompt payments by debtors and a lowratio, indicates a longer collection period, which implies delayed payments

by debtors. However, too high ratio and low ratio calls to further investigation. The ideal ratio may be 8 to 10 term.

CREDITORS TURNOVER RATIO:

The ratio establishes a relationship between net credit purchases andaverage trade creditors. The ratio is to determine the efficiency with whichthe creditors are managed. This ratio is computed by dividing the net credit

purchases by average trade creditors. The ratio is expressed as

Net credit purchases

Creditors turnover ratio = ------------------------------

Average trade creditors

Average trade creditors = (opening trade creditors + closing trade creditorsinclude

Bills payable creditors)/2



It indicates the speed with which the creditors turnover on an averageeach year. In general, a high ratio indicates the shorter payment period,which implies either the availability of less credit or earlier payments, and alow rate indicates a large payment period, which implies either theavailability of more credit or delayed payments.

TOTAL ASSETS TURNOVER RATIO:

Net sales

Total assets turnover ratio = -------------------------------

Average tangible assets

D).PROFITABILITY RATIOS:

The primary objective of a business undertaking is to earn profits.Profits earning is considered essential for the survival of the business. In thewords of Lord Keynes, profit is the engine that drives the businessenterprise. Profits to the management are the test of efficiency and ameasurement of control to owners, a measures of worth of their investmentto the creditors, the margin of safety; to employees, and a source of fringe

benefits; to government, a measure of tax paying capacity and the basis of legislative action. Generally profitability ratios are calculated either in

relation to sales or in relation to investment.

The various profitability ratios are discussed below:

PROFITABILITY RATIOS BASED ON SALES OF THE FIRM:

A. PROFITABILITY RATIOS:

The profit margin refers to the profit contributed by per rupee of salesrevenue and therefore, the profit margin ratios measure the relationship

between the profit and the sales. They are

a. Gross profit ratio

b. Operating ratio

c. Operating profit ratio

d. Net profit ratio



GROSS PROFIT RATIO:

Gross profit ratio measures the relationship of gross profit to net sales andusually represented as percentage. It is also know as average mark up ratio.Thus, it is calculated by dividing the gross profit by sales

Gross profit

Gross profit ratio = ----------------------- x 100(or)

Net sales

OPERATIING RATIO:

Operating ratio establishes the relationship between cost of goods sold

and other operating expenses on the one hand the one hand the sales on theother hand. In other words, it measures the cost of operations per rupee of sales. The ratio is calculated by dividing operating coasts with the sales andit is represented as a percentage.

Total operating cost

Operating ratio = ---------------------------------- x 100

Net sales

(or)

Cost of goods sold + operating exp

Operating ratio = - --------------------------------------------------- x 100

Net sales

OPERATING PROFIT RATIO(OPR):

It refers to the pure operating profit if the firm i.e ,. The profit generated by the operation of the firm a find hence is calculated before considering



any financial change. It is also known as the earning before interest andtaxes. This ratio is calculated by dividing operating profit by sales.Operating profit is calculated as

Operating profit ratio = Net sales – Operating cost

(or)

Operating profit (or) EBIT

Operating profit ratio = --------------------------------------- x 100

Net sales

NET PROFIT RATIO:

It establishes the relationship between the net profits(after tax) of the firm.It measures the efficiency of the management in generating additionalrevenue of over and above the total cost of operations.

Net profit (after tax)

Net profit ratio = ------------------------------ x 100

Net sales

B. EXPENSES RATIO:

Expenses ratio indicate the relationship of various expenses to net sales.The operating ratio reveals the average total variations in expenses. Butsome of the expenses may be increasing while some may be falling. Hence,expense ratios are calculated by dividing each item of expenses with the netsales to analyze causes of variation of the operating ratio. The following arethe different types of expenses ratios:

1. Cost of goods sold ratio

2. Administrative and office expenses ratio

3. Selling and distribution expenses ratio

4. Operating expenses ratio

5. Non- operating expenses ratio

6. Financial expenses ratio



7. Operating ratio

8. Raw material ratio

9. Direct expenses ratio

1.Cost of goods sold ratio =( Cost of goods sold / net sales)*100

2. Administrative and office expenses ratio:

(Administrative and office expenses / net sales)*100

3.Selling and distributive expenses ratio

( Selling and distributive expenses / net sales)*100

4. Operating expensesratio:

(Operating expenses/ net sales)*100

5. Non operating expenses ratio:

(Non operating expenses / net sales)*100

6.Financial expenses ratio:

(Financial expenses / net sales)*100

7. operating ratio:

(Total operating cost / net sales)*100

8. Raw material ratio:

(Raw material consumed / net sales)*100

9. Direct expenses ratio:

(Direct expenses / net sales)*100

PROFITABILITY RATIOS BASED ON ASSETS / INVESTMENT:

1. Return on total assets

2. Return on o employed



3. Return on shareholders funds

1.Return on total assets:

This ratio measures a relationship between net profit before interest and

tax, and tax, and total assets. This ratio indicates the firm‟s ability togenerate profit per rupee of total assets, this ratio is expressed as a

percentage. It is calculated as

Return on total assets = (net profit after tax / average total assets)*100

2.Return on capital employed:

This ratio measures a relationship between net profit before interest andtax and capital employed, this ratio is computed by dividing the net profit

before interest and tax by capital employed. it is expressed as a percentage.It is calculated as

Return on capital employed = (net profit before interest and tax / capitalemployed)*100

The ratio indicates the firm‟s ability of generation profit per rupee of capitalemployed. higher the ratio, the more efficient the management andutilization of capital employed.

3.Return on share holders fund:

This ratio measures a relationship between net profit after interest and taxand a shareholders fund. This ratio is computed by dividing the net profitafter interest

Return on shareholders fund = (net profit after interest and tax /shareholders

fund)*100

This ratio indicates the firm‟s ability to generating profit per rupee of

shareholders funds. Higher the ratio, the more efficient the management andutilization of shareholders funds.



PROFITABILITY ANALYSIS FROM THE POINT OF VIEW OF

OWNERS:

1. Return on equity

2. Earnings per share

3. Dividend per share

4. Dividend payout ratio5. Price earnings ratio

6. Dividend yield ratio

1)Return on equity:

The return on equity examines profitability from the preservative of theequity investors by relating profits available for the equity shareholders with

the book value of the equity investment.

Return on equity =(profit after tax – pref.dividend / equity shareholdersfunds)*100

2)Earning per share:

The return on equity measures the profitability in terms of the total fundsand explains the return as a percentage of the funds. The profitability of aform can also be measured in terms of number of equity shares.

Earning per share = (profit after tax – pref. dividend / number of equityshares)

3)Dividend per share:

Sometimes the equity shareholders may not be interested in the earning

per share but in the return which they are actually receiving from the in thefrom of dividend. The amount of profits distributed to shareholders per shareis known as dividend per share.

Dividend per share = (total profits distributed / number of equity shares)

4)Dividend payout ratio:



The dividend payout ratio is the ratio between the dividend per share andthe earning per share of the firm i.e it refers to the proportion of the earnings

per share which has been distributed by the company as.

Dividend payout ratio = (dividend per share / earnings per share)*100

5)price earning ratio:

This is the ratio which establishes the relationship between the earning per share and the market price of a share. The earning ratio indicates theexpectations of the equity investors about the earning of the firm.

Price earning ratio = (market price per share / earning per share).

6)dividend yield ratio:

The yield is defined as the rate of return in the amount invested. Withreference to the equity shares, the yield may be defined as the rate of returnon the market of equity shares

Earnings yield = (earning per share / market price per share)

Dividend yield = (dividend per share / market price per share)

DATA ANALYSIS



&

INRERPRETATION

ANALYSIS OF RATIOS:

A .LIQUIDITY RATIO:

CURRENT ASSETS

1. CURRENT RATIO: ----------------------------------

CURRENT LIABILITES



YEAR CURRENT

ASSETS

CURRENTLIABILITIES

CURRENT RATIO

2001-02 155792 73129 2.13

2002-03 16669 74427 2.24

2003-04 1556552 84990 1.83

2004-05 192697 116644 1.65

2005-06 235062 143200 1.64

2006-07 276062 208869 1.32

2007-08 351150 254740 1.38

2008-09 453597 376332 1.21

2009-10 619850 436619 1.42

2010-11 771519 502025 1.53

INTERPRETATION:

CURRENT ASSET -INVENTORY

QUICK/ACID/LIQID RATIO : -----------------------------------------

--



CURRENT LIABILITIES

YEAR CURRENTASSETS

CURRENTLIABILITIES

LIQUID RATIO

2001-02 97663 73129 1.34

2002-03 94129 74427 1.26

2003-04 92406 844990 1.09

2004-05 128963 116644 1.11

2005-06 160046 143200 1.12

2006-07 194586 208869 0.93

2007-08 239684 254740 0.94 2008-09 312407 376337 0.83

2010-2011 390514 436619 0.89

2011-2012 573459 502025 1.14

INTERPRETATION:

The ratio is regularly comming down when compared to 2001-2002 whichmeans the organization is in satisfaction but in 2010-2011 the ratio hasraised....

ABSOLUTE LIQUID RATIO:

ABSOLUTE LIQUID ASSETS



ABSOLUTE LIQUID RATIO : ------------------------------------------

----

CURRENT LIABITIES

YEAR CURRENTASSETS

CURRENTLIABITIES

LIQUID RATIO

2001-02 898 73129 0.01

2002-03 1281 74427 0.02

2003-04 473 84490 0.01

2004-05 2094 116644 0.02

2005-06 4643 143200 0.03

2006-07 12 208869 0.01

2007-08 14 254740 0.01

2008-09 15 376332 0.01

2009-2010 1475 436619 0.01

2010-2011 1415 502025 0.01

INTERPRETATION:

In the year 2005-06 it has increased up t0 0.03 which is very good sign inthat financial year, but in year 2006-07 to regularly zero which is not goodfor the company.



LONG TERM SOLVENCY (OR) LEVERATE RATIOS:

TOTAL DEBT

1. DEBT RATIO : --------------------------------------------

CAPITAL EMPOYED

YEAR TOTAL DEBT CAPITALEMPLOYED

DEBT RATIO

2001-02 497 90522 0.01

2002-03 573 99337 0.01

2003-04 386 79114 0.00

2004-05 513 85026 0.01

2005-06 1054 102525 0.01

2006-07 607 79459 0.01

2007-08 587 107986 0.01 2008-09 2566 96894 0.03

2009-2010 2034 207052 0.00

2010-2011 2265 305906 0.00

INTERPRETATION:

The debt ratio has regularly constant is around 0.1 from the year 2001 to2007 in it which is good for the organization in 2008-09 the company isincreasing their debts that is said to be not good organization. but in 2009-10 to 2010-2011 the company is not having debts that is zero



2. DEBT EQUITY RATIO :

TOTAL DEBT

DEBT EQUITY RATIO = ----------------------------- (OR)

NET WORTH

TOTAL LONGTERM DEBTS

= ---------------------------------------------

SHAREHOLDERS FUNDS

YEAR TOTAL DEBT NET WORTH DEBT EQUITYRATIO

2001-02 497 3252 0.15

2002-03 573 3252 0.18

2003-04 386 3252 0.12

2004-05 513 3252 0.16

2005-06 1054 3252 0.32

2006-07 607 3252 0.19 2007-08 587 6504 0.09

2008-09 2566 6504 0.39

2009-2010 2034 6504 0.31

2010-2011 2265 6504 0.34



INTERPRETATION:

The debt equity ratio of BHEL is around 0.1, 0.2 and 0.3 from 2001-02

to 2007-08 and then it has increased upto 0.34 in 2010-2011.

This is good for the company.

3.INTEREST COVERAGE RATIO:

Profit Before Interest and Tax(PBIT)

INTEREST COVERAGE RATIO = ------------------------------------------

-----

Interest

YEAR PBIT INTEREST INTERESTCOVERAGERATIO

2001-02 13500 3054 4.42



2002-03 13420 258 52.02

2003-04 15821 48 329.60

2004-05 33122 1105 29.97

2005-06 60867 682 89.25

2006-07 63290 2300 27.52 2007-08 68916 5870 11.74

2008-09 68478 6826 10.74

2009-2010 86483 5870 14.73

2010-2011 130330 6504 20.03

INTERPRETTION:

The interest coverage ratio is being calulated by using EBIT and intereston funds. It was 4.42 in 2001-02, where as in 2002-03 & 2003-04 it hashuge invrease to 52.02 & 329.6 respectively, which is not good for theorganization and again it has decreasing regularly form 2006-09 andagain it has little bit increased in 2010-2011.

ACTIVITY RATIO:

C.ACTIVITY RATIO:

1.CAPITAL TURNOVER RATIO:



Net Sales

Capital Turnover Ratio = ------------------------------

Capital Employed

YEAR NET SALES CAPITALEMPLOYED

CAPITALTURNOVER RATIO

2001-02 153205 90522 1.69 2002-03 137838 99337 1.39

2003-04 174490 79114 2.21

2004-05 174668 85026 2.05

2005-06 267214 102525 2.61

2006-07 289491 79459 3.64

2007-08 310235 107986 2.87

2008-09 414816 96894 4.28

2009-2010 500486 207052 2.41

2010-2011 665323 303906 2.19

INTERPRTATION:

The Capital Employed Turnover ratio is being calculated by using Netsales and Capital Employed. It was observed that it has increased

regularly from

2004-05 to 2006-07... and than sudden fall to 2.87 in 2007-08 andincreased in 2008-09 and falling down.



2. FIXED ASSET TURNOVER RATIO:

Net Sales

Fixed Assets Turnover Ratio = -------------------------------

Net Fixed

YEAR NET SALES NET FIXEDASSETS

FIXED ASSETSTURNOVER

RATIO 2001-02 153205 7859 19.49

2002-03 137838 795 19.43

2003-04 174490 8360 20.87

2004-05 174668 8896 19.63

2005-06 267214 10300 25.21

2006-07 289491 12247 23.64

2007-08 310235 13877 22.36

2008-09 414816 7699 23.44

2009-2010 500486 22595 22.15

2010-2011 665323 33422 19.90



INTERPRETATION:

A high fixed assets turnover ratio indicates better utilization of the frim's

Fixed Assets. A ratio is around 19.5 to 21.00 in 2001-02 to 2004-05

and it has been huge increase to 25.21 in 2005-06 and from the 2006-07to 2008-09 the fluctuation of fixed ratio is satisfactory. But the fixed

ratio is decreased in 2010-2011

3.WORKING CAPITAL TURNOVER RATIO:

Net Sales

Working Capital Turnover Ratio = -------------------------------

Working Capital

YEAR NET SALES WORKINGCAPITAL

WORKINGCAPITALTURNOVER RATIO



2001-02 153205 82663 1.85

2002-03 137838 92242 1.49

2003-04 174490 70662 2.47

2004-05 174668 76053 2.30

2005-06 267214 91862 2.91 2006-07 289491 67193 4.31

2007-08 310235 96410 3.22

2008-09 414816 77265 5.37

2009-2010 500486 183231 2.73

2010-2011 665323 269494 2.47

INTERPRETATION:

A Working Capital Turnover ratio indicater better utilization of thefirm's fixed assets. A ratio is increased to 4.31 in 2006-07 and in 2008-09 but it decreases

to 2.47 it is same as 2003-04.



4. DEBTORS TURNOVER RATIO:

Net Credit Sales

Debtors Turnover Ratio = -------------------------

Avg Trade Debtors

YEAR NET SALES AVG TRADE

DEBTORS

DEBTORS

TURNOVER RATIO

2001-02 153205 85001 1.80

2002-03 137838 81237 1.70

2003-04 174490 82827 2.11

2004-05 174668 112238 1.56

2005-06 267214 135322 1.97

2006-07 289491 156311 1.85

2007-08 310235 196296 1.58

2008-09 414816 251352 1.65 2009-2010 500486 327330 1.52

2010-2011 665323 452305 1.47

INTERPRETATION:

The Debtors Turnover Ratio is to in in 2001-02 the ratio is 1.80 and from2002-03 to 2010-2011 it is decreasing. that is not good for theorganization

and it has been satisfactory to the company.



5. CREDITORS TURNOVER RATIO:

Net Credit Purchases

Creditors Turnover Ratio = ----------------------------

Avg Trade Creditors

YEAR NET CREDITPURCHASES

AVG TRADE CREDITORS CREDITORSTURNOVER RATIO

2001-02 12060 29738 0.41

2002-03 16646 27610 0.60

2003-04 16350 20467 0.80

2004-05 16727 24225 0.69

2005-06 19656 39495 0.50

2006-07 151552 148899 1.01

2007-08 183845 148899 1.09



2008-09 259592 221718 1.17

2009-2010 340310 299951 1.13

2010-2011 342167 341238 1.00

INTERPRETATION:

The Creditors Turnover Ratio is increased from 2006-07 to 2009-10 it isnot good for the company. And from 2001-02 to 2005-06

the comapny has decrecase its debtors. so it is good for the company.

6. TOTAL ASSETS TURNOVER RATIO:

Net Sales

Total Assets Turnover Ratio = ---------------------------

Total Assets



YEAR NET SALES TOTAL ASSETS TOTAL ASSETSTURNOVER RATIO

2001-02 153205 163995 0.93

2002-03 137838 175557 0.79

2003-04 174490 166157 1.05

2004-05 174668 204179 0.86

2005-06 267214 251604 1.06

2006-07 289491 265985 1.08 2007-08 310235 324684 0.95

2008-09 414816 832355 0.49

2009-2010 500486 556870 0.89

2010-2011 665323 723690 0.91

INTERPRETATION:

A ratio of total assets turnover ratio is the some times increased andsome times decreased. when increase the ratio the company has satisfied

when the decreacse of the ratio the company has satisfied.



PROFITABILITY RATIO:

1.GROSS PROFIT RATIO:

Gross Profit

Gross Profit Ratio = ----------------------- x 100

Net Sales

YEAR NET SALES GROSS PROFIT GROSS PROFITRATIO

2001-02 153205 13500 8.81

2002-02 137838 13420 9.74

2003-03 174490 15821 9.07

2004-04 174668 33122 18.96

2005-05 267214 60867 22.78

2006-06 289491 63916 21.86

2007-07 310235 68916 22.21

2008-08 414816 68478 16.51 2009-09 500486 86483 17.27

2010-2011 665323 130330 19.58



INTERPRETATION:

The Gross Profit Ratio in 2005-06 has been increased to 22.78, it is good

for the co,pany to meet the financial requirement and it is slightlydecrease in 2006-07 is 21.86 and it is go on decreasing in 2008-09 and itis also decrease in 2010-11.

2.OPERATING RATIO:

Total Operating Cost

Operating Ratio = -------------------------------------- x 100

Net Sales

YEAR NET SALES TOTAL OPERATINGCOST

OPERATINGRATIO

2001-02 153205 131006 85.81

2002-03 137838 116708 84.67

2003-04 174490 49823 85.86

2004-05 174668 36639 78.23

2005-06 267214 201962 75.58

2006-07 289491 221227 76.42

2007-08 310235 234677 75.64

2008-09 414816 338382 81.57

2009-10 500486 404791 80.87



2010-11 665323 524531 78.83

INTERPRETATION:

Generally the lower the operating ratio the better for the businessconcern. In 2001-02 the ratio is 85.81 which are not satisfactory, when in2008-09 it has decreased to 81.57 which are satifactory to the business

concern. and it is always falling down.

3.NET PROFIT RATIO :

Net Profit (after tax)

Operating Ratio = ------------------------------------- x 100

Net Sales

http://3.net/

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YEAR NET SALES NETPROFIT(AFTER)

OPERATINGRATIO

2001-02 153205 10446 6.82

2002-03 137838 13678 9.92

2003-04 174490 15773 9.04

2004-05 174668 32017 18.33

2005-06 267214 61549 23.03

2006-07 289491 65590 22.66

2007-08 310235 74786 24.11

2008-09 414816 75304 18.15

2009-10 500486 93584 18.15

2002-11 665323 133235 20.02

INTERPRETATION:

The net operating ratio is increased from2001-02 to 2007-08 that definescompany is in a good position.And from 2008-09 to 2010-11 the net

profit ratio is decreasing that defines company has not satisfactory.

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