INDUSTRY PROFILE Heavy Electrical Industry covers Units manufacturing large plant and machinery required for power

generation, distribution and utilization these includes turbo generators, boilers, and various types of turbines, transformers, motors switchgears and other such items. Majority of products manufactured by Heavy Electrical Industry in the country, 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 generation including nuclear power stations, petrochemical complexes, chemical plants integrated steel plants, non-ferrous metal units 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 take up manufacture of any items. The existing installed capacity in the industry is of the order of 4500MW of thermal, 1345MW of Hydro and about 25MW if gas based power generation equipment per annum and manufacturing units depending upon the needs and their capacity are augmenting the capacity. The industry has also 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 countrys generation capacity. The heavy electrical industry is capable of manufacturing transmission and 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 used in Steel, Petrochemical complex and other such heavy industries are also being manufactured in the country. The domestic heavy electrical equipment manufacturers are making use of the developments in the global market with respect to product designs and upgrading of manufacturing & testing facilities. The industry has taken up work for development of Flexible Ac Transmission (FACTS) and other Power Electronics Projects. BHEL has already introduced FACTS and Controlled Shunt Reactors (CRS)

TURBINES AND GENERATOR SETS: The capacity established for manufacture of various kinds of turbines such as steam and hydro turbines including industrial turbines is more then 9000MW power per annum in the county. Apart from BHEL the public sectors unit that has the largest installed capacity of 8000MW per annum there are unit in the private sector also manufacturing steam and hydro turbines 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 manufacture Gas Turbines up to 400MW ISO rating. AC generators manufactured in India are at par with international AC Generators and consistently deliver high quality power with performance. Domestic manufacturers are capable of manufacturing AC Generator right form 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 the capacity to manufacture boilers from 300 to 500 MV capacity using Coal, lignite, oil natural gas or a combination of these super critical parameters upto 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 to manufacture whole range of power and distribution transformers including the 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 countrys 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 standard specification of the benefits of customers. Miniature Circuit Breakers MCBs), air circuit breakers, switches, rewire able fuses and High Rupture Capacity(HRC) fuses with their respective fuse bases, holders and starters are being produced to customers specification as well as to standard specifications. Motor control centers, distribution panels and elaborate control systems base on microprocessor and computer control re also available for power stations, load dispatch centre, major receiving centers and industrial complexes. The industry is competitive in the field of design and engineering as the skills set available in the country are respectively less expensive.
SHUNTING LOCOMOTIVES:

Shunting locomotives for localized / internal transport facilities are used in Railways, Steel plants. Thermal power plants etc., the installed capacity in adequate to meet the domestic demand. BHEL among others is manufacturing such locomotives. The heavy electrical industry has brought out the drastic change in many areas 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 in the 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 and steam turbine manufacturers in India. It is one of Indias nine largest Pub lic 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 service centers 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 non conventional 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 has committed 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 NGOs. It provides a forum for them to work together and improve corporate practices through co-operation rather than conformation. BHELs 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 labor, disaster / natural calamity aid, Employment for handicapped, Widow resettlement, Employment for Ex-serviceman, irrigation using treated sewage, pollution checking campus, plantation of millions of trees, energy

saving and conservation of natural resources through environmental management. BHEL shares the growing concern on issues related to Environment and Occupational Health & Safety (OHS) , and is committed to protecting Environment in and around its own establishment, and to providing safe and healthy environment to all its employees. For fulfilling these obligations, a Health, Safety & Environmental Policy has been formulated and implemented through management systems. In recognition of this, BHEL has been awarded the ISO 14001 Environmental Management systems Certification and OHSAS 18001 Occupational Health & Safety Management Systems Certification from M/s Det Norske Veritas (DNV). Under UNDP program for specialized services in the area of Environment, BHEL has set up a Pollution Control Research Institute (PCRI). BHEL also has a Model Centre for Occupational Health Services at Tiruchy, which is a pioneer in this field in India. Today it offers 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 ILO sponsored candidates from African countries have undergone training at this Model 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 the Indian Economy viz., Power Generation & Transmission, Industry, Transportation, Renewable Energy, etc., ,.. The wide network of BHELs 14 manufacturing divisions, four Power Sector regional centers, over 100projects sites, 8 services centers, 18 regional offices and one subsidiary enables the Company to promptly serve its customers and provide them with suitable products, systems and services efficiently and at competitive prices. BHEL has acquired certifications to Quality Management Systems (ISO 9001) Environmental Management Systems (ISO 144001) and Occupational Health & Safety Management Systems (OHSAS 18001) and is also 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 with Drive Control System to Power project, Petrochemicals, Refineries, steel, Aluminum, Fertilizer, Cement plants, etc. Supplied over one million Valves to Power Plants and other Industries. BHELs vision is to become a world-class engineering enterprise, committed to enhancing stake holders value. The company is striving to give 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 crore with 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. BHELs highly skilled and committed manpower asset of 46,748 on 2010-2011, the best manufacturing facilities and practices together with the state of art technologies, has helped BHEL to deliver a consistent track record of performance HEALTH, SAFETY & ENVIRONMENT POLICY: BHEL is committed to being an environment friendly company in all its activities, products, and services and to provide safe and healthy working environment 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 proactive communication and training. Periodical review of Occupational Health, Safety & Environmental Management Systems to ensure its continuing suitability, adequacy and 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 & Environmental activities.

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. As India 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 which orders 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 the country. This enabled the company to win subsequent orders on competitive bidding basis. The country today is reaping its benefits with these sets forming the backbone of the countrys power generation. When we look at segmental turnover, power business contributes to about 72% of our sales. Three- fourth of the total electrical power produced in the country is on account of the power capacity established with BHEL made sets. With the strong economic growth and the higher growth rates required in the power sector, power business will continue to be the most important constituent of BHELs portfolio in the coming years also. As per the strategic plan 2012 adopted by the company, we envisage power sector to contribute 70% to companys turnover by 2011-2012 with 30% contribution from 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 an extensive HRD infrastructure as way back as the early sixties. Human Resource Development Centre (HRDC) of BHEL R.C. Puram, Hyderabad occupies a significant place not only among other HRDCs of BHEL but also as an important Training and Development Centre in the twin cities of Hyderabad (Andhra Pradesh). Sri K. Kamaraj, the Chief Minister, Madras, todays HRDC, R.C. Puram, Hyderabad has come a long way, bagging the prestigious Golden Peacock National Training Award. Since its inauguration on (earlier known as Technical Training School) on 8th July 1963.

We organize and conduct different kinds of Training and Development programs for our employees, customers, suppliers, and others. The spirit at our HRDC is continuous learning and The Learning which move towards focused 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 on Organization. Enhancing Inter-Functional awareness in critical functional areas of BHEL. Conceptual & experiential understanding of behavioral process in an organization so as to enhance Personal, Inter-Personal, & Organizational Effectiveness, Reviewing the present status of the Organization & challenges ahead through interactions amongst the group & with the Top- Management Self-Learning.

The program duration is of 16 days and it touches upon the macro and micro 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 on Performance 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 is conducting regular Customer Training Programs. It is imperative that any power generation equipment should work trouble free with minimum maintenance. For this the personnel who are running the equipment should be aware of the basics of the design, testing, and intricacies 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 knitted quality services group. The groups activities include.
1. Quality assurance activities 2. Testing of product. The activities pursued under the heads are

enumerates below.

Quality Assurance Activities:

Activities of the department:
a. Quality systems management of ISO 9000, ISO 14OOO APL, ASME, b. c. d. e. f. g. h.

NABL Quality planning of manufacturing & vendor related activities. Quality feedback system from various sites for corrective & preventive action Quality education & training for all the employees for continuous up gradation of skills Continuous improvement in manufacturing through quality circles Vendor quality evaluation by objective assessment for quality improvement Quality audits for ISO 9001. ASME U & U2 STAMP, API, NABL, etc Co-ordination with CQS for effective inspection of bought out items at vendors works

QUALITY FEEDBACK SYSTEM: BHEL has got effective system of feedback from various sites with respect to the quality of equipment manufactured in the unit as well as the items bought out from vendors. The feedback from sites is analysed by various agencies and corrective and 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 also customers requirements. Contract documents, Tender Specifications, relevant product specifications, drawings will be studied thoroughly before finalization of QPs. Vendor QPs are reviewed with respect to the product specifications/ Engineering documents & customer requirements before they are approved.

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 materials at vendors works to ensure quality before they are dispatched to BHEL / sites Quality Assurance department maintains close liaison with CQS department for providing clarifications with respect to testing and inspection requirements 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 & financial

adviser) 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 total dependence on over seas sources to complete self-reliance in power plant equipments. BHEL now has the capacity to set up power plants form the concept to commissioning. Today BHEL sets account for nearly 80% of the total 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 manufacture gas 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 GE respectively. INDUSTRIAL SECTOR: BHEL contributes major capital equipment and systems like Captive Power Plants, Centrifugal Compressors, Drive Turbines, Switchgear, Heavy Casting 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 and wellheads up to rating of 100PSI to Oil and Natural Gas Corporation Limited(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 traction and traction control equipment. Indias first Under-ground Metro at Calcutta runs on drives and controls supplied by BHEL TELECOMMUNATION: BHEL also manufactures MAX-L, MAX-XL systems days draws CDOT technology and has plans to make other ranges of telecommunication equipment as well. NCES: Technologies have been developed and commercialized for exploiting Nonconventional and Renewal sources of energy to serve remote and rural areas. These include photo voltaic cell, solar power based pumps, lightning and heating systems. BHEL has also emerged as a major ,manufacture of Wind Electric 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 the world with 40% purchases sources form outside India. THERMAL SETS: Steam turbines and generators up to 500MW capacity to manufacture up to 1000MW unit size. HYDRO SETS: Custom built conventional hydro turbines of the kalpan, Francis and pell ton types with matching generators up to 200MW. Pump turbines with matching motor 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 / day dry solids Pressure vessels. Flushed bet combustion boilers. BOILERS AUXILIARIES: FANS: Asial reaction fans of single stage and double stage for clean application with a capacity ranging from 20 cubic meters/ seconds. With pressure ranging from 120 to 1480 meters of gas column. Axial impulse fans for both clear air and fuel gas applications. The fan capacity varying from 7 cubic meters/ seconds to 600 cubic meters/ seconds with pressure ranging up to 700 meters of gas column. Single and double suction radial fans for clean air and dust laden hot gases applications up to 400 degree centigrade with capacity . varying from 4 cubic meters / second to 600 cubic meters / second with pressure varying from 150 to 180 meters of gas column.

AIR HEATERS: Long strum rotary regenerative air pre heaters for boilers and process furnaces in an old range of sizes and capacities. Large ore heaters utilities capacity 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 ash content. 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), wall disagrees, rotary, blowers and temperature probes and related control panels operating pneumatic, electric or manual mode. Serial arm type soot 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 and 540 degree centigrade temperature. High capacity safety valves and automatic electrical operated pressure relief values for set pressure up to 200kg/ sq.cm and + temperatures up 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 and temperatures up to 565 degree centigrade. PUMPS: Boilers feed pumps, boilers, booster pump, condensate pump, circulating water 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 400 KV 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 ad multiple units transformers, electro static precipitators, traction load feeding 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 to 400 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 voltaic cells. Large area devices for high power applications.

COMPETITORS OF BHEL: Through BHEL is formed by combination of GE (General Engineering) and Simons Companies, they became heavy competitors for the company.

COMPANY VISSION & MISSION:

VISSION : A world class, innovative, competitive and profitable Engineering Enterprise Providing total Business Solutions. MISSION: To be the leading Engineering Enterprise providing Quality products systems and services in the field of Energy, Transportation, Industry Infrastructure 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 in existing 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, primarily through improvements in Operational efficiency, Capacity Utilization and productivity and generate adequate Internal resources to finance the companys growth. Confidence in providing increased value for this money through International standards of products, Quality, performance and superior 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 a competitive 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 terms of another number, expressing the quantitative relationship between the two. Ratio analysis is the technique of interpretation of financial statement with the help of various meaningful ratios. Ratios show the relationship between two items in a more meaningful way. They help us to draw certain comparison 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 the form of co-efficient, percentage, proportion or rate. It is a number expressed in terms of another number, expressing the quantitative relationship between the two figures. Ration analysis is the important and old technique of interpretation of financial statements with the help of various meaningful ratios. Ratios do not add any information that is already available, but they show the relationship between two items in a more meaningful way. They help 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 FOLLOWING:

BE

USED

FOR

COMPARISON

OF

THE

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 to analyze and interpret the financial health of the enterprise. Ratio contributes significantly towards effective planning and forecasting 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 the strengths 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 be calculated. A creditor may interest in liquidity ratios, while an investor may want to study profitability ratios.

LIMIATION OF STUDY:

Ratio may not prove to be the tool for inter firm comparison. The two firms may adopt different accounting policies and hence the result might not be comparable. Similarly a change in accounting policies by a firm will make intra. A study of ratio in isolation without studying the actual figures may lead to wrong conclusions. Ratios are only supplementary to and not substitutes for absolute figures Ratios can be only as correct as the data which they are based. If the original data is not reliable, then ratios will be misleading. Ratios analysis suffers from lack of consistency. Ratio are defined differently 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 to future aspects of a business

Ratios are based on a past data. They cannot be a reliable guide to future performance as a future dependent on various other factors. Ratios are volatile and be influenced by a single transaction with extreme value. Ratios are only indicators. They need a proper analysis by a capable management, 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 upon

the 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 the industry 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 firms financial ratios at the same point of time. The cross section analysis helps the analysis to find out 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 series analysis can be of immense help the firm to make for future operations.

3. COMBINED ANALYSIS: If the cross-section and time series, both are combined together to study behaviors and pattern of ratios, then meaningful and comprehensive evaluation of the performance of the firm can definitely 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 regarding liquidity position of a firm. The liquidity position of a firm would be satisfactory 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 financial viability 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 the leverage / 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 management and utilization of its assets. In fact, the solvency of a firm is in the ultimate analysis, department upon the sales revenues generated by the use of its assets total as well as its components.
c. OVER ALL PROFITABILITY:

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

d. INTER-FIRM COMPARISON:

Ratio analysis not only throws light on the financial position of a firm but also serves as a stepping stone to remedial measures. This is made possible due to inter-firm comparison with industry averages. A single of ratio is meaningless unless it is related to some standard or norm. one of the techniques 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 parties interested in the ratio analysis for knowing the financial of the firm for different purposes. The supplier of goods an credit, bank, financial institutions, investors, shareholders and management all make use of ratio analysis 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 a firm 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 no meaningful can be drawn form these statement alone. Ratio analysis helps in making decisions from the information provided in these financial statements.

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 in a more easy and understandable manner by the use of ratios. The information contained in the financial statements is conveyed in a meaningful manner to different the one for whom it is meant. Thus ratios help 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 and variances or deviations, if any can be found by comparing the actual with standards 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. There are different parties interested in ratio analysis for knowing the financial position of the firm for different purposes. In view of several ratios, there are 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. B. C. D.

Liquidity Ratios Long term Solvency /Leverage Ratios Activity Ratios Profitability Ratios

i.

LIQUIDITY RATIOS:

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

assets either be liquid or near liquid. These should be convertible into cash for paying obligations of short-term nature. If current asset can pay off current liabilities, then liquidity postion will be satisfied. On the other hand, if the current liabilities are not easily met out with current assets then liquidity position will be bad. To measure the liquidity 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 and current liabilities. This ratio also known as working capital ratio. It is calculated by dividing the total of current assets by total of the current liabilities. Thus Current assets Current ratio = --------------------Current liabilities Current assets include cash and those assets, which can be easily converted into cash, with a short period of time. Generally, one year such as marketable securities, debtors inventories, work in progress etc. current liabilities 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,. Generally a 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 a firm to pay its short term obligations as and when they become due. The two determinants

Of current ratio, as a measure of liquidity are current assets and current liabilities. Quick ratio may be defined as the relationship cannot be termed to be liquid asset because they cannot be converted into cash immediately without a sufficient loss of value. The quick ratio can be calculated by dividing 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 more liquid than inventories, yet there may be doubts regarding their realization into cash immediately or in time. Absolute liquid assets include cash in hand 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 determine the 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 relied on debt in financing assets. The leverage ratios are as follows
a. b. c. d. e. f.

Debt ratio Debt equity ratio Total debt ratio Capital employed to Net Worth Ratio Interest coverage ratio 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 employed total 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 employed equals net assets, which consists of net fixed assets and net current assets including interest bearing short-term debt for working capital. Total debt DEBT RATIO = -------------------Capital employed Debt equity ratio gives the relationship describing the lenders contribution for each rupee of the owners contribution. Debt ratio is directly computed dividing total debt dividing total debt by net worth. The ideal ratio is 2:1 Total debt Debt Equity Ratio = total long term debts

------------------- (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 ability of firm to pay the fixed interest liability. It measures as to how many times the 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 in relation 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 + Lease Payment + 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 charge securities, or it refers to the presence of fixed charge in the income statement of 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 available resources. These ratios are called Turnover Ratios. Since they indicate the speed which the resources are being turned onto sales. Usually the following turnover ratios are calculated.
A. B. C. D. E. F.

Capital turnover ratio(CTR) Fixed asset turnover ratio(FATR) Working capital turnover ratio(WCTR) Stock turnover ratio(STR) Debtors turnover ratio(DTR) 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 is utilized. This ratio is computed by dividing the net sales by the capital employed. 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 the firms ability to general sales per rupee is capital employed. In general, higher the ratio the more efficient the management and utilization of capital employed. FIXED ASSETS TURNOVER RATIO: This ratio establishes a relationship between net sales and assets. This ratio is to determine the efficiency with the fixed assets. This ratio is to determine the efficiency with which the fixed assets are utilized. This ratio is computed by x number of time. It is calculated as Net sales Fixed asset turnover ratio = -------------------------Net fixed assets It indicates the firms ability to generate sales per rupee of investment in fixed assets. In general higher the ratio, the more efficient the management utilization 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 working capital. This ratio is calculated as Net sales Working capital turnover ratio = --------------------Working capital Working capital means current asset current liabilities It indicates the firms ability to generate sales per rupee of working capital. In general higher the ratio, the more efficient the management and utilization of working capital. STOCK TURNOVER RATIO: This ratio establishment a relationship between costs of goods sold and average inventory. This ratio is to determine the efficiency with the inventory is utilized. The ratio is computed by dividing the cost of goods sold 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. In general, a high ratio indicates efficient performance since an improvement in the ratio shows that either the same volume of sales has been maintained with a lower investment in stocks. On the volume of sales has increased without any increase in the amount of stocks. However, too high ratio and too low ratio call for future investigation. DEBTORS TRURNOVER RATIO: This ratio establishes a relationship between net credit sales and average trade 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 debtors include 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, which implies prompt payments by debtors and a low ratio, indicates a longer collection period, which implies prompt payments by debtors and a low ratio, 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 and average trade creditors. The ratio is to determine the efficiency with which the 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 average each 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 the availability 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 business enterprise. Profits to the management are the test of efficiency and a measurement of control to owners, a measures of worth of their investment to 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 sales revenue and therefore, the profit margin ratios measure the relationship between the profit and the sales. They are
a. b. c. d.

Gross profit ratio Operating ratio Operating profit ratio Net profit ratio

GROSS PROFIT RATIO: Gross profit ratio measures the relationship of gross profit to net sales and usually 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 the other 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 and it 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 and taxes. 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 additional revenue 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. But some of the expenses may be increasing while some may be falling. Hence, expense ratios are calculated by dividing each item of expenses with the net sales to analyze causes of variation of the operating ratio. The following are the different types of expenses ratios:
1. 2. 3. 4. 5. 6.

Cost of goods sold ratio Administrative and office expenses ratio Selling and distribution expenses ratio Operating expenses ratio Non- operating expenses ratio 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 expenses ratio: (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 firms ability to generate 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 and tax 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 / capital employed)*100 The ratio indicates the firms ability of generation profit per rupee of capital employed. higher the ratio, the more efficient the management and utilization of capital employed. 3.Return on share holders fund: This ratio measures a relationship between net profit after interest and tax and a shareholders fund. This ratio is computed by dividing the net profit after interest Return on shareholders fund = (net profit after interest and tax / shareholders fund)*100 This ratio indicates the firms ability to generating profit per rupee of shareholders funds. Higher the ratio, the more efficient the management and utilization of shareholders funds.

PROFITABILITY ANALYSIS FROM THE POINT OF VIEW OF OWNERS:

1. 2. 3. 4. 5. 6.

Return on equity Earnings per share Dividend per share Dividend payout ratio Price earnings ratio Dividend yield ratio

1)Return on equity: The return on equity examines profitability from the preservative of the equity 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 shareholders funds)*100 2)Earning per share: The return on equity measures the profitability in terms of the total funds and explains the return as a percentage of the funds. The profitability of a form can also be measured in terms of number of equity shares. Earning per share = (profit after tax pref. dividend / number of equity shares)

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 the from of dividend. The amount of profits distributed to shareholders per share is 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 and the 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 the expectations 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. With reference to the equity shares, the yield may be defined as the rate of return on 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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

CURRENT ASSETS 155792 16669 1556552 192697 235062 276062 351150 453597 619850 771519

CURRENT LIABILITIES 73129 74427 84990 116644 143200 208869 254740 376332 436619 502025

CURRENT RATIO 2.13 2.24 1.83 1.65 1.64 1.32 1.38 1.21 1.42 1.53

INTERPRETATION:

CURRENT INVENTORY QUICK/ACID/LIQID RATIO -:

ASSET

----------------------------------------CURRENT LIABILITIES

YEAR 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2010-2011 2011-2012

CURRENT ASSETS 97663 94129 92406 128963 160046 194586 239684 312407 390514 573459

CURRENT LIABILITIES 73129 74427 844990 116644 143200 208869 254740 376337 436619 502025

LIQUID RATIO 1.34 1.26 1.09 1.11 1.12 0.93 0.94 0.83 0.89 1.14

INTERPRETATION: The ratio is regularly comming down when compared to 2001-2002 which means the organization is in satisfaction but in 2010-2011 the ratio has raised....

ABSOLUTE LIQUID RATIO: ABSOLUTE LIQUID ASSETS ABSOLUTE LIQUID RATIO : --------------------------------------------CURRENT LIABITIES

YEAR 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

CURRENT ASSETS 898 1281 473 2094 4643 12 14 15 1475 1415

CURRENT LIABITIES 73129 74427 84490 116644 143200 208869 254740 376332 436619 502025

LIQUID RATIO 0.01 0.02 0.01 0.02 0.03 0.01 0.01 0.01 0.01 0.01

INTERPRETATION: In the year 2005-06 it has increased up t0 0.03 which is very good sign in that 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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

TOTAL DEBT 497 573 386 513 1054 607 587 2566 2034 2265

CAPITAL EMPLOYED 90522 99337 79114 85026 102525 79459 107986 96894 207052 305906

DEBT RATIO 0.01 0.01 0.00 0.01 0.01 0.01 0.01 0.03 0.00 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 is increasing their debts that is said to be not good organization. but in 200910 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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

TOTAL DEBT 497 573 386 513 1054 607 587 2566 2034 2265

NET WORTH 3252 3252 3252 3252 3252 3252 6504 6504 6504 6504

DEBT RATIO 0.15 0.18 0.12 0.16 0.32 0.19 0.09 0.39 0.31 0.34

EQUITY

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

YEAR

PBIT

INTEREST

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

13500 13420 15821 33122 60867 63290 68916 68478 86483 130330

3054 258 48 1105 682 2300 5870 6826 5870 6504

INTEREST COVERAGE RATIO 4.42 52.02 329.60 29.97 89.25 27.52 11.74 10.74 14.73 20.03

INTERPRETTION:

The interest coverage ratio is being calulated by using EBIT and interest on funds. It was 4.42 in 2001-02, where as in 2002-03 & 2003-04 it has huge invrease to 52.02 & 329.6 respectively, which is not good for the organization and again it has decreasing regularly form 2006-09 and again 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

CAPITAL EMPLOYED 90522 99337 79114 85026 102525 79459 107986 96894 207052 303906

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

CAPITAL TURNOVER RATIO 1.69 1.39 2.21 2.05 2.61 3.64 2.87 4.28 2.41 2.19

INTERPRTATION:

The Capital Employed Turnover ratio is being calculated by using Net sales 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 and increased in 2008-09 and falling down. 2. FIXED ASSET TURNOVER RATIO:

Net Sales Fixed Assets Turnover Ratio = ------------------------------Net Fixed

YEAR

NET SALES

NET ASSETS 7859 795 8360 8896 10300 12247 13877 7699 22595 33422

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

FIXED FIXED ASSETS TURNOVER RATIO 19.49 19.43 20.87 19.63 25.21 23.64 22.36 23.44 22.15 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 2004-05and it has been huge increase to 25.21 in 2005-06 and from the 2006-07 to 2008-09 the fluctuation of fixed ratio is satisfactory.

3.WORKING CAPITAL TURNOVER RATIO:

Net Sales Working Capital Turnover Ratio = ------------------------------Working Capital

YEAR

NET SALES

WORKING CAPITAL

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

82663 92242 70662 76053 91862 67193 96410 77265 183231 269494

WORKING CAPITAL TURNOVER RATIO 1.85 1.49 2.47 2.30 2.91 4.31 3.22 5.37 2.73 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 200809 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

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

AVG TRADE DEBTORS DEBTORS TURNOVER RATIO 85001 1.80 81237 1.70 82827 2.11 112238 1.56 135322 1.97 156311 1.85 196296 1.58 251352 1.65 327330 1.52 452305 1.47

INTERPRETATION: The Debtors Turnover Ratio is to in in 2001-02 the ratio is 1.80 and from 2002-03 to 2010-2011 it is decreasing. that is not good for the organization and it has been satisfactory to the company.

5. CREDITORS TURNOVER RATIO:

Net Credit Purchases Creditors Turnover Ratio = ---------------------------Avg Trade Creditors

YEAR

NET CREDIT AVG TRADE CREDITORS PURCHASES 12060 16646 16350 16727 19656 151552 183845 259592 340310 342167 29738 27610 20467 24225 39495 148899 148899 221718 299951 341238

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

CREDITORS TURNOVER RATIO 0.41 0.60 0.80 0.69 0.50 1.01 1.09 1.17 1.13 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 company has 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 ASSETS TURNOVER RATIO 0.93 0.79 1.05 0.86 1.06 1.08 0.95 0.49 0.89 0.91

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

163995 175557 166157 204179 251604 265985 324684 832355 556870 723690

INTERPRETATION: A ratio of total assets turnover ratio is the some times increased and some 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 2001-02 2002-02 2003-03 2004-04 2005-05 2006-06 2007-07 2008-08 2009-09 2010-2011 NET SALES 153205 137838 174490 174668 267214 289491 310235 414816 500486 665323 GROSS PROFIT 13500 13420 15821 33122 60867 63916 68916 68478 86483 130330 GROSS RATIO 8.81 9.74 9.07 18.96 22.78 21.86 22.21 16.51 17.27 19.58 PROFIT

INTERPRETATION: The Gross Profit Ratio in 2005-06 has been increased to 22.78, it is good for the company to meet the financial requirement and it is slightly decrease 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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 NET SALES 153205 137838 174490 174668 267214 289491 310235 414816 500486 665323 TOTAL COST 131006 116708 49823 36639 201962 221227 234677 338382 404791 524531 OPERATING OPERATING RATIO 85.81 84.67 85.86 78.23 75.58 76.42 75.64 81.57 80.87 78.83

INTERPRETATION: Generally the lower the operating ratio the better for the business concern. In 2001-02 the ratio is 85.81 which are not satisfactory, when in 2008-09 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

YEAR 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2002-11

NET SALES 153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

NET PROFIT(AFTER) 10446 13678 15773 32017 61549 65590 74786 75304 93584 133235

OPERATING RATIO 6.82 9.92 9.04 18.33 23.03 22.66 24.11 18.15 18.15 20.02

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

Company History :
BHEL is the largest engineering and manufacturing enterprise in India in the 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 and steam turbine manufacturers in India. It is one of Indias 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 service centers 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 non conventional 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 has committed 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 NGOs. It provides a forum for them to work together and improve corporate practices through co-operation rather than conformation. BHELs 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, Widow resettlement, Employment for Ex-serviceman, irrigation using treated sewage, polluation checking campus, plantation of millions of trees, energy saving and conservation of natural resources through environmental management. BHEL shares the growing concern on issues related to Environment and Occupational Health & Safety (OHS) , and is committed to protecting Environment in and around its own establishment, and to providing safe and healthy environment to all its employees. For fulfilling these obligations, a Health, Safety & Environmental Policy has been formulated and implemented through management systems. In recognition of this, BHEL has been awarded the ISO 14001 Environmental Management systems Certification and OHSAS 18001 Occupational Health & Safety Management Systems Certification from M/s Det Norske Veritas (DNV). Under UNDP programme for specialized services in the area of Environment, BHEL has set up a Pollution Control Research Institute (PCRI). BHEL also has a Model Centre for Occupational Health Services at Tiruchy, which is a pioneer in this field in India. Today it offers 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 ILO sponsored candidates from African countries have undergone training at this Model 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 the Indian Economy viz., Power Generation & Transmission, Industry, Transportation, Renewable Energy, etc., ,.. The wide network of BHELs 14 manufacturing divisions, four Power Sector regional centers, over 100projects sites, 8 services centers, 18 regional offices and one subsidiary enables the Company to promptly serve its customers and provide them with suitable products, systems and services efficiently and at competitive prices. BHEL has acquired certifications to Quality Management Systems (ISO 9001) Environmental Management Systems (ISO 144001) and Occupational Health & Safety Management Systems (OHSAS 18001) and is also 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 with Drive Control System to Power project, Petrochemicals, Refineries, steel, Aluminum, Fertilizer, Cement plants, etc. Supplied over one million Valves to Power Plants and other Industries. BHELs vision is to become a world-class engineering enterprise, committed to enhancing stake holders value. The company is striving to give 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 crore with 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. BHELs highly skilled and committed manpower asset of 46,748 on 2010-2011, the best manufacturing facilities and practices together with the state of art technologies, has helped BHEL to deliver a consistent track record of performance HEALTH, SAFETY & ENVIRONMENT POLICY: BHEL is committed to being an environment friendly company in all its activities, products, and services and to provide safe and healthy working

environment 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 proactive communication and training. Periodical review of Occupational Health, Safety & Environmental Management Systems to ensure its continuing suitability, adequacy and 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 & Environmental activities.

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. As India 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 which orders 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 the country. This enabled the company to win subsequent orders on competitive bidding basis. The country today is reaping its benefits with these sets forming the backbone of the countrys power generation. When we look at segmental turnover, power business contributes to about 72% of our sales. Three- fourth of the total electrical power produced in the country is on account of the power capacity established with BHEL made sets. With the strong economic growth and the higher growth rates required in the power sector, power business will continue to be the most important

constituent of BHELs portfolio in the coming years also. As per the strategic plan 2012 adopted by the company, we envisage power sector to contribute 70% to companys turnover by 2011-2012 with 30% contribution from 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 an extensive HRD infrastructure as way back as the early sixties. Human Resource Development Centre (HRDC) of BHEL R.C. Puram, Hyderabad occupies a significant place not only among other HRDCs of BHEL but also as an important Training and Development Centre in the twin cities of Hyderabad (Andhra Pradesh). Sri K. Kamaraj, the Chief Minister, Madras, todays HRDC, R.C. Puram, Hyderabad has come a long way, bagging the prestigious Golden Peacock National Training Award. Since its inauguration on (earlier known as Technical Training School) on 8th July 1963. We organize and conduct different kinds of Training and Development programs for our employees, customers, suppliers, and others. The spirit at our HRDC is continuous learning and The Learning which move towards focused 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 on Organization.

Enhancing Inter-Functional awareness in critical functional areas of BHEL. Conceptual & experiential understanding of behavioral process in an organization so as to enhance Personal, Inter-Personal, & Organizational Effectiveness, Reviewing the present status of the Organization & challenges ahead through interactions amongst the group & with the Top- Management Self-Learning.

The programme duration is of 16 days and it touches upon the macro and micro 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 on Performance 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 trouble free with minimum maintenance. For this the personnel who are running the equipment should be aware of the basics of the design, testing, and intricacies 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 knitted quality services group. The groups activities include.
1. Quality assurance activities 2. Testing of product. The activities pursued under the heads are

enumerates below.

Quality Assurance Activities:

Activities of the department:
a. Quality systems management of ISO 9000, ISO 14OOO APL, ASME, b. c. d. e. f. g. h.

NABL Quality planning of manufacturing & vendor related activities. Quality feedback system from various sites for corrective & preventive action Quality education & training for all the employees for continuous up gradation of skills Continuous improvement in manufacturing through quality circles Vendor quality evaluation by objective assessment for quality improvement Quality audits for ISO 9001. ASME U & U2 STAMP, API, NABL, etc Co-ordination with CQS for effective inspection of bought out items at vendors works

QUALITY FEEDBACK SYSTEM: BHEL has got effective system of feedback from various sites with respect to the quality of equipment manufactured in the unit as well as the items bought out from vendors. The feedback from sites is analysed by various agencies and corrective and 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 also customers requirements. Contract documents, Tender Specifications, relevant product specifications, drawings will be studied thoroughly before finalization of QPs. Vendor QPs are reviewed with respect to the product specifications/ Engineering documents & customer requirements before they are approved.

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 materials at vendors works to ensure quality before they are dispatched to BHEL / sites Quality Assurance department maintains close liaison with CQS department for providing clarifications with respect to testing and inspection requirements 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 & financial

adviser) 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 with the help of various meaningful ratios. Ratios show the relationship between two items in a more meaningful way. They help us to draw certain comparison 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, 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 the form of co-efficient, percentage, proportion or rate. It is a number expressed in terms of another number, expressing the quantitative relationship between the two figures. Ration analysis is the important and old technique of interpretation of finanacial statements with the help of various meaningful ratios. Ratios do not add any information that is already available, but they show the relationship between two items in a more meaningful way. They help us to draw certain conclusions. Comparision with related facts is the basis of ratios analysis. Ratio may be used for comparison in any of the following ways.. RATOIS MAY FOLLOWING:

BE

USED

FOR

COMPARISON

OF

THE

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 to analyze and interpret the financial health of the enterprise. Ratio contributes significantly towards effective planning and forecasting 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 the strengths 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 be calculated. A creditor may interest in liquidity ratios, while an investor may want to study profitability ratios.

LIMIATION OF STUDY:

Ratio may not prove to be the tool for inter firm comparison. The two firms may adopt different accounting policies and hence the result might not be comparable. Similarly a change in accounting policies by a firm will make intra. A study of ratio in isolation without studying the actual figures may lead to wrong conclusions. Ratios are only supplementary to and not substitutes for absolute figures

Ratios can be only as correct as the data which they are based. If the original data is not reliable, then ratios will be misleading. Ratios analysis suffers from lack of consistency. Ratio are defined differently 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 to future aspects of a business Ratios are based on a past data. They cannot be a reliable guide to future performance as a future dependent on various other factors. Ratios are volatile and be influenced by a single transaction with extreme value. Ratios are only indicators. They need a proper analysis by a capable management, 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 upon

the 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 the industry 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 firms financial ratios at the same point of time. The cross section analysis helps the analysis to find out 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 series analysis can be of immense help the firm to make for future operations.
3. COMBINED ANALYSIS:

If the cross-section and time series, both are combined together to study behaviors and pattern of ratios, then meaningful and comprehensive evaluation of the performance of the firm can definitely 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 regarding liquidity position of a firm. The liquidity position of a firm would be satisfactory 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 financial viability 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 the leverage / 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 management and utilization of its assets. In fact, the solvency of a firm is in the ultimate analysis, department upon the sales revenues generated by the use of its assets total as well as its components.

c. OVER ALL PROFITABILITY:

Unlike the outside parties which are interested in one aspect of the financial position of a firm, the management in constantly concerned about the overall profitability of the enterprise that is they are concerned about the ability of the firm to meet its short term as well as long term obligations to its creditors, to ensure a reasonable return to its owners and secure optimum utilization of the asset of the firm.
d. INTER-FIRM COMPARISON:

Ratio analysis not only throws light on the financial position of a firm but also serves as a stepping stone to remedial measures. This is made possible due to inter-firm comparison with industry averages. A single of ratio is meaningless unless it is related to some standard or norm. one of the techniques 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 parties interested in the ratio analysis for knowing the financial of the firm for different purposes. The supplier of goods an credit, bank, financial institutions, investors, shareholders and management all make use of ratio analysis 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 a firm 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 no meaningful can be drawn form these statement alone. Ratio analysis helps in making decisions from the information provided in these financial statements.

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 in a more easy and understandable manner by the use of ratios. The information contained in the financial statements is conveyed in a meaningful manner to different the one for whom it is meant. Thus ratios help 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 and variances or deviations, if any can be found by comparing the actual with standards 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. There are different parties interested in ratio analysis for knowing the financial position of the firm for different purposes. In view of several ratios, there are 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 obligations as and when these become due. The short-term obligations are met by realizing amounts from current, floating or circulated assets. The current assets either be liquid or near liquid. These should be convertible into cash for paying obligations of short-term nature. If current asset can pay off current liabilities, then liquidity postion will be satisfied. On the other hand, if the current liabilities are not easily met out with current assets then liquidity position will be bad. To measure the liquidity 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 and current liabilities. This ratio also known as working capital ratio. It is calculated by dividing the total of current assets by total of the current liabilities. Thus Current assets Current ratio = --------------------Current liabilities Current assets include cash and those assets, which can be easily converted into cash, with a short period of time. Generally, one year such as marketable securities, debtors inventories, work in progress etc. current liabilities 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,. Generally a 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 a firm to pay its short term obligations as and when they become due. The two determinants Of current ratio, as a measure of liquidity are current assets and current liabilities. Quick ratio may be defined as the relationship cannot be termed to be liquid asset because they cannot be converted into cash immediately without a sufficient loss of value. The quick ratio can be calculated by dividing 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 more liquid than inventories, yet there may be doubts regarding their realization into cash immediately or in time. Absolute liquid assets include cash in hand 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 determine the 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 relied on debt in financing assets. The leverage ratios are as follows

a. b. c. d. e. f. g. h.

Debt ratio Debt equity ratio Total debt ratio Capital employed to Net Worth Ratio Interest coverage ratio Preference dividend coverage ratio Fixed payment coverage ratio Financial leverage ratio

DEBT RATIO(DR): The debt ratio is computed by dividing total debt by capital employed total 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 employed equals net assets, which consists of net fixed assets and net current assets including interest bearing short-term debt for working capital. Total debt DEBT RATIO = -------------------Capital employed Debt equity ratio gives the relationship describing the lenders contribution for each rupee of the owners contribution. Debt ratio is directly computed dividing total debt dividing total debt by net worth. The ideal ratio is 2:1 Total debt Debt Equity Ratio = total long term debts

------------------- (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 ability of firm to pay the fixed interest liability. It measures as to how many times the 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 in relation 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 + Lease Payment + 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 charge securities, or it refers to the presence of fixed charge in the income statement of 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 available resources. These ratios are called Turnover Ratios. Since they indicate the speed which the resources are being turned onto sales. Usually the following turnover ratios are calculated.
A. B. C. D.

Capital turnover ratio(CTR) Fixed asset turnover ratio(FATR) Working capital turnover ratio(WCTR) 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 is utilized. This ratio is computed by dividing the net sales by the capital employed. 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 the firms ability to general sales per rupee is capital employed. In general, higher the ratio the more efficient the management and utilization of capital employed. FIXED ASSETS TURNOVER RATIO: This ratio establishes a relationship between net sales and assets. This ratio is to determine the efficiency with the fixed assets. This ratio is to determine the efficiency with which the fixed assets are utilized. This ratio is computed by x number of time. It is calculated as Net sales Fixed asset turnover ratio = -------------------------Net fixed assets It indicates the firms ability to generate sales per rupee of investment in fixed assets. In general higher the ratio, the more efficient the management utilization 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 working capital. This ratio is calculated as Net sales Working capital turnover ratio = --------------------Working capital Working capital means current asset current liabilities It indicates the firms ability to generate sales per rupee of working capital. In general higher the ratio, the more efficient the management and utilization of working capital. STOCK TURNOVER RATIO: This ratio establishment a relationship between costs of goods sold and average inventory. This ratio is to determine the efficiency with the inventory is utilized. The ratio is computed by dividing the cost of goods sold 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. In general, a high ratio indicates efficient performance since an improvement in the ratio shows that either the same volume of sales has been maintained with a lower investment in stocks. On the volume of sales has increased without any increase in the amount of stocks. However, too high ratio and too low ratio call for future investigation. DEBTORS TRURNOVER RATIO: This ratio establishes a relationship between net credit sales and average trade 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 debtors include 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, which implies prompt payments by debtors and a low ratio, indicates a longer collection period, which implies prompt payments by debtors and a low ratio, 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 and average trade creditors. The ratio is to determine the efficiency with which the 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 average each 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 the availability 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 business enterprise. Profits to the management are the test of efficiency and a measurement of control to owners, a measures of worth of their investment to 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 sales revenue and therefore, the profit margin ratios measure the relationship between the profit and the sales. They are
a. b. c. d.

Gross profit ratio Operating ratio Operating profit ratio Net profit ratio

GROSS PROFIT RATIO: Gross profit ratio measures the relationship of gross profit to net sales and usually 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 the other 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 and it 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 and taxes. 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 additional revenue 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. But some of the expenses may be increasing while some may be falling. Hence, expense ratios are calculated by dividing each item of expenses with the net sales to analyze causes of variation of the operating ratio. The following are the different types of expenses ratios:
1. 2. 3. 4. 5. 6.

Cost of goods sold ratio Administrative and office expenses ratio Selling and distribution expenses ratio Operating expenses ratio Non- operating expenses ratio 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 expenses ratio: (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 firms ability to generate 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 and tax 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 / capital employed)*100 The ratio indicates the firms ability of generation profi t per rupee of capital employed. higher the ratio, the more efficient the management and utilization of capital employed. 3.Return on share holders fund: This ratio measures a relationship between net profit after interest and tax and a shareholders fund. This ratio is computed by dividing the net profit after interest Return on shareholders fund = (net profit after interest and tax / shareholders fund)*100 This ratio indicates the firms ability to generating profit per rupee of shareholders funds. Higher the ratio, the more efficient the management and utilization of shareholders funds.

PROFITABILITY ANALYSIS FROM THE POINT OF VIEW OF OWNERS:

1. 2. 3. 4. 5. 6.

Return on equity Earnings per share Dividend per share Dividend payout ratio Price earnings ratio Dividend yield ratio

1)Return on equity: The return on equity examines profitability from the preservative of the equity 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 shareholders funds)*100 2)Earning per share: The return on equity measures the profitability in terms of the total funds and explains the return as a percentage of the funds. The profitability of a form can also be measured in terms of number of equity shares. Earning per share = (profit after tax pref. dividend / number of equity shares)

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 the from of dividend. The amount of profits distributed to shareholders per share is 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 and the 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 the expectations 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. With reference to the equity shares, the yield may be defined as the rate of return on 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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

CURRENT ASSETS 155792 16669 1556552 192697 235062 276062 351150 453597 619850 771519

CURRENT LIABILITIES 73129 74427 84990 116644 143200 208869 254740 376332 436619 502025

CURRENT RATIO 2.13 2.24 1.83 1.65 1.64 1.32 1.38 1.21 1.42 1.53

INTERPRETATION:

CURRENT INVENTORY QUICK/ACID/LIQID RATIO -:

ASSET

-----------------------------------------

CURRENT LIABILITIES

YEAR 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2010-2011 2011-2012

CURRENT ASSETS 97663 94129 92406 128963 160046 194586 239684 312407 390514 573459

CURRENT LIABILITIES 73129 74427 844990 116644 143200 208869 254740 376337 436619 502025

LIQUID RATIO 1.34 1.26 1.09 1.11 1.12 0.93 0.94 0.83 0.89 1.14

INTERPRETATION: The ratio is regularly comming down when compared to 2001-2002 which means the organization is in satisfaction but in 2010-2011 the ratio has raised....

ABSOLUTE LIQUID RATIO: ABSOLUTE LIQUID ASSETS

ABSOLUTE LIQUID RATIO : ----

-----------------------------------------CURRENT LIABITIES

YEAR 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

CURRENT ASSETS 898 1281 473 2094 4643 12 14 15 1475 1415

CURRENT LIABITIES 73129 74427 84490 116644 143200 208869 254740 376332 436619 502025

LIQUID RATIO 0.01 0.02 0.01 0.02 0.03 0.01 0.01 0.01 0.01 0.01

INTERPRETATION: In the year 2005-06 it has increased up t0 0.03 which is very good sign in that 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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

TOTAL DEBT 497 573 386 513 1054 607 587 2566 2034 2265

CAPITAL EMPLOYED 90522 99337 79114 85026 102525 79459 107986 96894 207052 305906

DEBT RATIO 0.01 0.01 0.00 0.01 0.01 0.01 0.01 0.03 0.00 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 is increasing their debts that is said to be not good organization. but in 200910 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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

TOTAL DEBT 497 573 386 513 1054 607 587 2566 2034 2265

NET WORTH 3252 3252 3252 3252 3252 3252 6504 6504 6504 6504

DEBT RATIO 0.15 0.18 0.12 0.16 0.32 0.19 0.09 0.39 0.31 0.34

EQUITY

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

2001-02

13500

3054

INTEREST COVERAGE RATIO 4.42

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

13420 15821 33122 60867 63290 68916 68478 86483 130330

258 48 1105 682 2300 5870 6826 5870 6504

52.02 329.60 29.97 89.25 27.52 11.74 10.74 14.73 20.03

INTERPRETTION:

The interest coverage ratio is being calulated by using EBIT and interest on funds. It was 4.42 in 2001-02, where as in 2002-03 & 2003-04 it has huge invrease to 52.02 & 329.6 respectively, which is not good for the organization and again it has decreasing regularly form 2006-09 and again 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

CAPITAL EMPLOYED 90522 99337 79114 85026 102525 79459 107986 96894 207052 303906

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

CAPITAL TURNOVER RATIO 1.69 1.39 2.21 2.05 2.61 3.64 2.87 4.28 2.41 2.19

INTERPRTATION:

The Capital Employed Turnover ratio is being calculated by using Net sales 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 and increased in 2008-09 and falling down.

2. FIXED ASSET TURNOVER RATIO:

Net Sales Fixed Assets Turnover Ratio = ------------------------------Net Fixed

YEAR

NET SALES

NET ASSETS 7859 795 8360 8896 10300 12247 13877 7699 22595 33422

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

FIXED FIXED ASSETS TURNOVER RATIO 19.49 19.43 20.87 19.63 25.21 23.64 22.36 23.44 22.15 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 2006-07 to 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

WORKING CAPITAL

WORKING CAPITAL TURNOVER RATIO

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

82663 92242 70662 76053 91862 67193 96410 77265 183231 269494

1.85 1.49 2.47 2.30 2.91 4.31 3.22 5.37 2.73 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 200809 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

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

AVG TRADE DEBTORS DEBTORS TURNOVER RATIO 85001 1.80 81237 1.70 82827 2.11 112238 1.56 135322 1.97 156311 1.85 196296 1.58 251352 1.65 327330 1.52 452305 1.47

INTERPRETATION:

The Debtors Turnover Ratio is to in in 2001-02 the ratio is 1.80 and from 2002-03 to 2010-2011 it is decreasing. that is not good for the organization and it has been satisfactory to the company.

5. CREDITORS TURNOVER RATIO:

Net Credit Purchases Creditors Turnover Ratio = ---------------------------Avg Trade Creditors

YEAR

NET CREDIT AVG TRADE CREDITORS PURCHASES 12060 16646 16350 16727 19656 151552 183845 29738 27610 20467 24225 39495 148899 148899

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

CREDITORS TURNOVER RATIO 0.41 0.60 0.80 0.69 0.50 1.01 1.09

2008-09 2009-2010 2010-2011

259592 340310 342167

221718 299951 341238

1.17 1.13 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 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

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 2010-2011

153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

163995 175557 166157 204179 251604 265985 324684 832355 556870 723690

TOTAL ASSETS TURNOVER RATIO 0.93 0.79 1.05 0.86 1.06 1.08 0.95 0.49 0.89 0.91

INTERPRETATION:

A ratio of total assets turnover ratio is the some times increased and some 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 2001-02 2002-02 2003-03 2004-04 2005-05 2006-06 2007-07 2008-08 2009-09 2010-2011

NET SALES 153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

GROSS PROFIT 13500 13420 15821 33122 60867 63916 68916 68478 86483 130330

GROSS RATIO 8.81 9.74 9.07 18.96 22.78 21.86 22.21 16.51 17.27 19.58

PROFIT

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 slightly decrease 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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

NET SALES 153205 137838 174490 174668 267214 289491 310235 414816 500486

TOTAL COST 131006 116708 49823 36639 201962 221227 234677 338382 404791

OPERATING OPERATING RATIO 85.81 84.67 85.86 78.23 75.58 76.42 75.64 81.57 80.87

2010-11

665323

524531

78.83

INTERPRETATION:

Generally the lower the operating ratio the better for the business concern. In 2001-02 the ratio is 85.81 which are not satisfactory, when in 2008-09 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

YEAR 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2002-11

NET SALES 153205 137838 174490 174668 267214 289491 310235 414816 500486 665323

NET PROFIT(AFTER) 10446 13678 15773 32017 61549 65590 74786 75304 93584 133235

OPERATING RATIO 6.82 9.92 9.04 18.33 23.03 22.66 24.11 18.15 18.15 20.02

INTERPRETATION:

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