A Study On Financial Performance of Bharat Heavy Electricals Limited (Bhel)

CHAPTER I
INTRODUCTION
FINANCE
Finance is a field that deals with the study of investments. It includes the dynamics
of assets and liabilities over time under conditions of different degrees of uncertainty and
risk. Finance can also be defined as the science of money management. Finance aims to price
assets based on their risk level and their expected rate of return.
Finance is defined as the provision of money at the time when it is required every
enterprises whether big, medium of small, needs finance to carry on it operation and to
achieve its targets. In fact finance is so indispensable today that it is rightly said to be the
lifeblood of an enterprises without adequate finance no enterprises can possibly accomplish
its objectives.
CLASSIFICATION OF FINANCE
Based on the sources, Finance is classified under two heads
1. Public Finance and

2. Private Finance.
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FINANCE
PUBLIC FINANCE PRIVATE FINANCE
PUBLIC REVENUE PERSONAL FINANCE
PUBLIC EXPENDITURE BUSINESS FINANCE
PUBLIC DEBT
BUDGETARY POLICY
FISCAL POLICY
PUBLIC FINANCE
Public finance is the study of the financial aspect of the government. It is the branch of
economics which assesses the government revenue and government expenditure of the public
authorities and the adjustment of one or the other to achieve desirable effects and avoid
undesirable ones.
Public Finance is that part of finance which hovers around the central question of
allocation of resources subjected to the budget constraint of the government or public entities.
It is that branch of economics which identifies and appraises the means and effects of the
policies of the government. Public Sector Finance tries to examine the effects and
consequences of different types of taxation and expenditure on the economic agents
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(individuals, institutions, organizations, etc.) of the society and ultimately on the entire
economy. It also analyzes the effectiveness of the policies aimed at certain objectives and
consequently to the development of procedures and techniques for increasing the
effectiveness of the policy.
“The complex of problems that centers on the revenue-expenditure process of

Government is referred to traditionally as public finance.”
- Professor Richard Musgrave
BRANCHES OF PUBLIC SECTOR FINANCE
(1) Public Revenue
It includes revenue earned by government from both tax (Income tax, sales tax, import
duty, etc.) and non-tax sources (different kinds of fines, fees etc.)
(2) Public Expenditure
It deals with the various types of expenditures of the government required for its proper
functioning.
(3) Public Debt
When the public expenditure of a government exceeds its revenue, for continuation of
its proper functioning, the government borrows from the public giving rise to public debt.
Subject matters under this head are:-
(a) Total amount of public debt

(b) Redemption of public debt
(c) Impact of public debt on different policy matters
(4) Budgetary Policy
Public or Budgetary deficit arises when public expenditure exceeds public revenue.
This branch of Public finance deals with the different ways to solution of public deficit.
(5) Fiscal Policy

Fiscal policy is concerned with the policy framework of the government after taking
into consideration government spending, avenues of government earning, government
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borrowings, etc. Hence, Public Finance and Private Finance are different from each other by
the fact that one is dealt in a public domain and the other on the individual level.
CATEGORIES OF PRIVATE FINANCE
Personal Finance
It basically deals with the optimization of finances in the individual (single consumer,
family, personal savings, etc.) level subjected to the budget constraint. For example, a
consumer can finance his/her purchase of a car by taking a loan from any bank or financial
institutions. In short, it can be said that Personal Finance is financial planning on the
individual level. It deals with the utilization of the monetary resources by individuals and
families by means of budgeting, saving and spending after taking into consideration the
probable life events of the future and risks associated with them.
Business Finance
It tries to optimize the goals (profit, sales, etc.) of a corporation or other business
organisation by estimating future asset requirements and then allocating funds in accordance
to the availability of funds.
The financial requirement of a company can be classified into Long-term, Mid-term &
Short-term.
Long-term finance
It is needed for buying machinery and equipment for the provision of land, factory
building and other fixed assets.
Mid-term finance
It is needed for small tools, implements and major repairs.
Short-term finance
It is required for a few months for the purchase of raw materials for processing and
meeting expenses like wages, salaries etc. (or) in other words to meet its working capital
requirements.
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Every enterprise whether big, medium of small needs finance to carry on its operation
and achieve its target. In fact, finance is so indispensable today that it is rightly said to be the
lifeblood of an enterprise. Without adequate finance, no enterprise can possibly achieve its
objectives.
If the finance function is properly blended with production, marketing, personnel,

accounting and other business function, the wastages of funds can be avoided. The finance
function is not just a service function though it is generally viewed as one.
DEFINITION OF FINANCE
“That business activity which is concerned with acquisition and conservation of

capital funds in meeting the financial needs and overall objectives of business enterprise”.
-Wheeler
“Business finance can be broadly defined as the activity concerned with the planning,
raising, controlling and administrating the funds used in the business”.
-Guttmann and Douglas
“Business finance deals primarily with raising, administrating funds by privately

owned business units operating in non-financial fields of industry”.
-Prather and wert
The area of the business management devoted to a judicious use of capital and a
careful selection of sources of capital in order to enable a spending unit to move the direction
of reaching its goals”
-J.F.Bradley
AIMS OF FINANCE FUNCTION
The following are the aims of finance function:
1. Acquiring Sufficient and Suitable Funds:

The primary aim of finance function is to assess the needs of the enterprise, properly
and procure funds, in time. Time is also an important element in meeting the needs of the
organisation. If the funds are not available as and when required, the firm may become sick
or, at least, the profitability of the firm would be, definitely, affected. It is necessary that the
funds should be, reasonably, adequate to the demands of the firm.
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2. Proper Utilization of Funds:
Raising funds is important, more than that is its proper utilization. If proper utilization
of funds were not made, there would be no revenue generation. Benefits should always
exceed cost of funds so that the organisation can be profitable. Beneficial projects only are to
be undertaken. So, it is all the more necessary that careful planning and cost-benefit analysis
should be made before the actual commencement of projects.
3. Increasing profitability:
Profitability is necessary for every organisation. The planning and control functions of
finance aim at increasing profitability of the firm. To achieve profitability, the cost of funds
should be low. Idle funds do not yield any return, but incur cost. So, the organisation should
avoid idle funds. Finance function also requires matching of cost and returns of funds. If
funds are used effectively, Profitability gets a boost.
4. Maximizing firm’s value
The ultimate aim of finance function is maximizing the value of the firm, which is
reflected in wealth maximization of shareholders. The market value of the equity shares is an
indicator of the wealth maximization.
IMPORTANCE OF FINANCE
In general, the term “Finance” is understood as provision of funds as and when

needed. Finance is essential requirement –sine qua non- of every organisation.
Required Everywhere
All activities, be it production, marketing, human resource development, purchases

and even research and development, depend on the adequate and timely availability of
finance both for commencement and their smooth continuation to completion. Finance is
regarded as the life-blood of every business enterprise.
Efficient Utilization More Important
Finance function is the most important function of all business activities. The efficient
management of business enterprise is closely linked with the efficient management of its
finances. The need of finance starts with the setting up of Business. Its growth and expansion
6
require more funds. The funds have to be raised from various sources. The sources have to be
selected keeping in relation to the implications, in particular, risk attached. Rising of money,
alone, is not important. Terms and conditions while raising money are more important. If
funds are utilized properly, repayment would be possible and easier, too. Care has to be
exercised to match the inflow and outflow of funds. Needless to say, profitability of any firm
is dependent on its cost as well as its efficient utilization.
OBJECTIVES OF FINANCIAL MANAGEMENT
Effective procurement and efficient use of finance lead to proper utilization of the
finance by the business concern. It is the essential part of the financial manager. Hence, the
financial Manager must determine the basic objectives of the financial management.
Objectives of Financial Management may be broadly divided into two parts such as:
 Profit maximization
 Wealth maximization
 Return maximization
Profit maximization
The objective of the financial management is to earn maximum profits. Various

important decisions are taken to maximize the profit of the firm. Profit maximization as an
objective of financial management results in efficient allocation of resources. No business
can survive without earning profit. Profit is a measure of efficiency of a business enterprise.
Profits also serve as a protection against risks which cannot be ensured. The accumulated
profits enable a business to face risks like fall in prices, competition from other units, adverse
government policies etc.,
Companies collect their finance by issuing shares to the public. Investors also
purchase shares in hope of getting good return from the company in the form of dividend. If
the company does not earn good profits and fails to distribute dividend, the people would not
invest in such a company and people who have invested will be ready to give their stock.
Thus profit maximization is considered as the main objective of business. The

following arguments are advanced in favour of profit maximization as the objectives of
business.
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 When profit earning is the main aim of business then the profit maximization should
be the obvious objective.
 Profitability is barometer for measuring efficiency and economic prosperity of a
business enterprise, thus profit maximization is justified on the grounds of rationality.
 Economic and business condition does not remain same at all the times. There may be
adverse business conditions like recession, depression, and severe competitions etc., a
business will be able to survive under favorable situations, only if has some past
earnings to rely upon. Therefore a business should try to earn more when situation is
favorable.
 Profits are the main sources of finance for the growth of the business. So, a business
should aim at maximization of profits for enabling its growth and development.
 Profitability is essential for fulfilling social goals also. A firm by pursuing the
objective of profit maximization also maximizes social economic welfare.
Wealth maximization
The objective of wealth maximization of shareholders considers all future cash flows,
dividends, earning per share, risk of decision, etc. This goal directly affects the policy
decision of the firm about what to invest in, and how to finance these investments.
Shareholders are always interested in maximization of wealth which depends upon the market
price of the shares. Increase in market price leads to appreciation in shareholders wealth. The
major goal of the financial management is to maximize the market price of the equity shares
of the company.
Return maximization
The final objective of the financial management is to safeguard the economic interest
of all the persons who are all directly or indirectly connected with company. They may be
shareholders, creditors or employees. All of these people must get maximum return on their
investment and this will be possible.
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APPROACHES OF FINANCE
A number of approaches are associated with function but for sale of convenience
various approach are divided into 2 categories
 Traditional Approach
 Modern Approach
Traditional Approach
The scope of finance function was treated, in the narrow sense of procurement or
arrangement of funds. The finance manager was treated as just provider of funds, when
organisation was in need of them. The utilization or administering resources was considered
outside the purview of the finance function. It was felt that the finance manager had no role to
play in decision making for its utilization. Others used to take decisions regarding its
application in the organisation, without the involvement of finance personnel. Finance
manager has been treated, in fact, as an outsider with a very specific and limited function,
supplier of funds, to perform when the need of funds was felt by the organisation. As per this
approach, the following aspects only were included in the scope of financial management:
(1) Estimation of requirements of finance,

(2) Arrangement of funds from financial institutions,
(3) Arrangement of funds through financial instruments such as shares, debentures, bonds
and loans,
(4) Looking after the accounting and legal work connected with the raising of funds.
Modern Approach
Raising funds and the proper utilization of fund is an efficient manner. The finance
function does not stop only by finding out sources of raising enough funds; their proper
utilization is also to be considered. The modern approach considers the three basic
management decision i.e., investment decisions and dividend decisions within the scope of
finance function.
(1) Allocation of funds

(2) Proper utilization of funds
(3) Increasing profitability
(4) Maximizing value of firm
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IMPORTANCE OF FINANCE FUNCTION
In general, the term “Finance” is understood as provision of funds as and when needed.
Finance is the essential requirement –sine qua non- of every organisation. Required
Everywhere: All activities, be it production, Marketing, Human resources development,
Purchases and even research and development, depend on the adequate and timely
availability of finance both for commencement and their smooth continuation to completion.
Finance is regarded as the life-blood of every business enterprise. Efficient Utilisation More
Important: Finance function is the most important function of all business activities. The
efficient management of business enterprise is closely linked with the efficient management
of its finances. The need of finance starts with the setting up of business. Its growth and
expansion require more funds. The funds have to be raised from various sources. The sources
have to be selected keeping in relation to the implications, in particular, risk attached. Rising
of money, alone, is not important. Terms and conditions while raising money are more
important. Cost of funds is an important element. Its utilisation is rather more important. If
funds are utilised properly, repayment would be possible and easier too.
AIMS OF FINANCE FUNCTION
1. Acquiring Sufficient and Suitable Funds
The primary aim of finance function is to assess the needs of the enterprise, properly,
and procure funds, in time. Time is also an important element in meeting the needs of the
organisation. If the funds are not available as and when required, the firm may become sick
or, at least, the profitability of the firm would be, definitely, affected. It is necessary that the
funds should be, reasonably, adequate to the demands of the firm. The funds should be raised
from different sources, commensurate to the nature of business and risk profile of the
organisation. When the nature of the business is such that the production does not commence,
immediately, and requires long gestation period, it is necessary to have the long-term sources
like share capital, debentures and long term loan etc. A concern with longer gestation period
does not have profits for some years. So, the firm should rely more on the permanent capital
like share capital to avoid interest burden on the borrowing component.
2. Proper Utilisation of Funds
Raising funds is important, more than that is its proper utilisation. If proper utilisation
of funds were not made, there would be no revenue generation. Benefits should always
10
exceed cost of funds so that the organisation can be profitable. Beneficial projects only are to
be undertaken. So, it is all the more necessary that careful planning and cost-benefit analysis
should be made before the actual commencement of projects.
3. Increasing Profitability
Profitability is necessary for every organisation. The planning and control functions of
finance aim at increasing profitability of the firm. To achieve profitability, the cost of funds
should be low. Idle funds do not yield any return, but incur cost. So, the organisation should
avoid idle funds. Finance function also requires matching of cost and returns of funds. If
funds are used efficiently, profitability gets a boost.
4. Maximizing Firm’s Value
The ultimate aim of finance function is maximizing the value of the firm, which is
reflected in wealth maximization of shareholders. The market value of the equity shares is an
indicator of the wealth maximization.
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NEED OF THE STUDY
Financial performance is the process of identifying the financial strengths and weakness
of the firm by properly establishing relationship between the items of balance sheet and profit
and loss account. The purpose of the financial performance is to diagnose the information
contained in the financial statement so as to judge the profitability and financial soundness of
the firm. The need for financial performance varies from party depending upon the purpose.
The study was to find out how Bharat Heavy Electricals Limited (BHEL) withstands its
efficiency.
 This project is done in Bharat Heavy Electricals Limited (BHEL) because it is the
company manufacturing a wide range of Electrical Equipments etc.
 This study is to find out how Bharat Heavy Electricals Limited (BHEL) utilizes its
assets efficiency and also find out profitability of the company.
 This study helps to analyze the financial performance of the companies.
 This project is based on past five years (2012-2017) annual report of Bharat Heavy
Electricals Limited (BHEL).
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OBJECTIVES OF THE STUDY
The financial analysis of Bharat Heavy Electricals Limited (BHEL) has been carried
out with the following objectives,
 To study the profile of Bharat Heavy Electricals Limited (BHEL) & to measure the
growth of the company.
 To analyze the financial position and Profitability of Bharat Heavy Electricals
Limited (BHEL).
 To analyze the Liquidity and Profitability of Bharat Heavy Electricals
Limited (BHEL) through Ratios.
 To analyze the overall performance of Bharat Heavy Electricals Limited (BHEL).
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SCOPE OF THE STUDY
 The study aims at assessing the financial strength and weakness of the firm for the
period of 5 years i.e., 2013-2017 which is revealed from the annual report and
accounting rewards.
 The liquidity and activity position of the firm are analyzed using liquidity and
turnover ratios.
 This study has given an idea to the public about the Financial Performance of the
company.
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RESEARCH & METHODOLOGY
Research and methodology is a way to systematically solve the research problem.

The study is completely based on the secondary source of data i.e., mainly annual report of
Bharat Heavy Electricals Limited (BHEL). The secondary data was selected from audited
financial, periodicals, annual report etc. of Bharat Heavy Electricals Limited (BHEL)
The study makes use of techniques like
 Comparative Balance Sheet & Income Statements

 Common Size Balance Sheet & Income Statements
 Ratio Analysis
 Trend Analysis
Simple Mathematical Tools like
 Averages
 Percentages
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LIMITATIONS OF THE STUDY
The main limitations of the present study are listed below,
 The study is limited for the period of 5 years i.e. from 2013-2017. Hence it may not be
applicable for other period.
 The study doesn’t take into account of other areas of financial management such as
capital budgeting, working capital etc.
 As the researcher has taken figures & analysis from the Annual Reports, All limitation
of these Statement will apply to the study only.
 It considers only monetary factors, non-monetary factors are not considered.
 The time allowed for the study is less.
 It has been conducted by using secondary data
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CHAPTER-II
REVIEW OF LITERATURE
Kaur Raghvir & et al. (2009)1 observed that the factors determinant of Capital
Structure - Experience of Indian Cotton Textile Industry. This study has 30 two objectives:
First, to identify important determinants of capital structure and secondly to test for the
applicability of trade-off and pecking order theories based on sample data drawn from the
Indian Cotton Textile Industry for the five year period 2003-04 to 2007-08. Multiple
Regression Analysis and Step-wise regression analysis have been carried out taking total debt
to equity ratio as the dependent variable. Profitability, growth opportunities, liquidity and
business risk turned out to be the most important determinants, followed by non-debt tax
shield and uniqueness. Only firm size and asset structure, two of the eight explanatory
variables of the study, were not found to be significant even at ten per cent level. On the basis
of the signs of the regression coefficients trade-off theory has been found to be applicable,
rather than pecking order theory, a position upheld by other empirical research works in the
area.
Sumathi (2009)2 stated that the Indian Textile industry occupies an important place in
the economy of the country because of its contribution to the industrial output, employment
generation and foreign exchange earnings. One of the earliest to come into existence in India,
it accounts for 14 per cent of the total Industrial production, contributes to nearly 30 per cent
of the total exports and is the second largest employment generator after agriculture. Profit
earning is the aim of business. In the course of analysis of this study various Statistical
techniques have been made. The Statistical techniques used are correlation, t-test, and
Multiple Regression analysis to find out the relationship between the variable and to identify
the factor influencing the profitability. Based on the analysis net sales and net profit have
some relationship and working capital management was a highly influencing factor to find
out profitability of selected textile companies in Coimbatore district. Companies must
concentrate with other influencing factor for better profit of the Company.
Amalendu Bhunia (2010)3 has undertaken an analysis of financial performance of
pharmaceutical companies to understand how management of 31 finance plays a crucial role
in the growth. The study covers to public sector drug & pharmaceutical enterprises listed on
Bombay Stock Exchange (BSE). The study has been undertaken for the period of twelve year
from 1997-98 to 2008-09. In order to analysis financial performance in terms of liquidity,
solvency, profitability and financial efficiency, various accounting ratios have been used.
17
Statistical measures namely Liner Multiple Regression Analysis and Test of Hypothesis – t
test has been used.
Dharmendra Mistry (2010)4 in his study “A Comparison of Financial Performance
of Major Gujarat Pharma” players through value added and economic value added”. The
purpose of this study is to classify major Gujarat pharmacy players in cohesive categories on
the basis of their financial characteristic revealed by the financial statements. The study also
revealed that economic value added has also positive correlation with firm size, funds of
proprietors, and funds of money lenders and have significant impact on economic value
added.
Gaur Jighyasu (2010)5 focus on the financial performance measures of business
group companies of India non-metallic mineral products industries. The study uses financial
data of fifty seven business group companies of Indian non-metallic mineral products
industries namely cement, glass, gems & jewelry, refractories, ceramic tiles, over a period of
ten years (1999-2008) and examines the firm’s financial performance using performance
measures through Operating Profit and Return on net worth, the size, Leverage, Working
Capital Ratio and Age of the firm are included as determinants of firm performance. Non-
metallic mineral product categories consist of important industries of the manufacturing
sector (which contributes almost fifteen per cent to the GDP) and three- four per cent to the
GDP.
Prasanta Paul (2011)6 reported that “Financial Performance Evaluation - A
Comparative Study of Some Selected NBFCs”. In this study, five listed NBFCs 32 have been
considered for analyzing comparative financial performance. Different statistical tools like,
Arithmetic mean, Standard Deviation, Coefficient of Variance, Correlation and Analysis of
Variance have been used extensively. Arithmetic Mean (AM) is an ideal measure of central
tendency, which is rigidly defined, easy to calculate, based on all observations and affected
least by fluctuations of sampling has been applied in this study. It has been used to get a
stable average and it is easy to understand the results of the study. It concludes that the
selected companies differ significantly in terms of their financial performance indicators from
one to another, may be for the different services they provide. There are no significant
differences in the last five years in the management of financial performance of each selected
NBFCs, except marginal deviation in some cases in the year 2006-07 may be for the effect of
general recession in that period
Neha Mittal (2011)7 Study the determination of capital structure choice of the
selected Indian industries. The main objective is to investigate whether and to what extent the
18
main structure theories can explain the capital structure choice of Indian firms. It has applied
multiple regression models on the selected industries by taking data for the period 2001-2008.
It examines the relevance of capital structure in selected Indian industries based on a
regression analysis and data study. It concludes that the main variables determining capital
structure of industries in India are agency cost, assets structure, non-debt tax shield and size.
The coefficients of these variables are significant at one per cent and five per cent levels.
Velmathi and Ganesan (2012)8 in their article entitled “Inventory Management of
Commercial Vehicle Industry in India” reported that the overall analysis of inventory
management of all units in the Indian commercial vehicle industry is very good. Among the
firms in the commercial vehicle industry TML occupies the first place in the management of
inventory. It is evidently proved through strong correlation between inventory and sales.
FML‟s average growth 33 rate of sales has been more than the growth rate of inventory
which indicates that very good administration of inventory. The study concluded that the
proper management of inventory is important to maintain and improve the health of an
organization. Efficient management of inventories will improve the profitability of the
organization.
Mehran Ali Memon and Izah Mohd Tahir (2012)9 in their study entitled
“Performance Analysis of Manufacturing Companies in Pakistan” stated that the main
objective is to examine the performance of fourteen manufacturing companies in Pakistan
using financial accounting ratios. The study suggested as ENGRO being the largest Company
by total assets over three years (2006, 2007, 2008) spent more, making low sales, having less
PBT and ROA than the other thirteen smaller companies: FCC being second largest
Company by assets it shows high sales, high PBT and ROA during the five year period. On
the other hand, NRL being the fourth largest Company by total assets shows highest sales in
five years, lowest expenditures in 2010 as compared to other thirteen listed companies but it
has decreasing PBT and ROA during the period under investigation. Finally, they concluded
that in highlighted companies incurred higher expenses as a result of Expense Preference
Behavior Theory and low productivity growth.
Kartik Chandra Nandi (2012)10 in his study “Trends in Liquidity Management and
Their Impact on Profitability: A Case Study”. Made an attempt to observe the trend values of
liquidity position of the Company and study the correlation between liquidity and
profitability. An attempt has also been made to establish the linear relationship between
liquidity and profitability with the help of a multiple regression model. The study used
various statistical tests viz. t-test, F-test and Durbin-Watson test and has been applied in order
19
to test the significance of the results obtained. He concluded that the selected Company
always tries to maintain adequate amount of net working capital in relation to current
liabilities so as to keep a good amount of liquidity throughout the study period.
Amir Hossein Jamali and Asghar Asadi (2012)11 in their study investigated the
relationship between the management efficiency and the firms profitability for a sample of
thirteen auto manufacturing companies listed on the Bombay Stock Exchange. The analysis is
carried out using Minitab 14 and conducting Pearson Coefficient correlation test on variables
of the study including Gross Profit Ratio and Assets Turnover Ratio. The central conclusion
of the study is that profitability and management efficiency are highly correlated to each
other and based on the results of the study recommendations for improving the management
efficiency and profitability in this industry are suggested.
Owolabi and Obida (2012)12 in their article titled “Liquidity Management and
Corporate Profitability: Case Study of Selected Manufacturing Companies Listed on The
Nigerian Stock Exchange” an attempt is made to measures the relationship between liquidity
management and corporate profitability using data from selected manufacturing companies
quoted on the floor of the Nigerian Stock Exchange. The result of the study was obtained
using descriptive analysis and the finding shows that liquidity management measured in
terms of the company’s Credit Policies, Cash Flow Management and Cash Conversion Cycle
has significant impact on corporate profitability. They found that managers can increase
profitability by adopting good credit policy, short cash conversion cycle and effective cash
flow management procedures.
Hima Bindu and Subrahmanyam (2012)13 in their study dealt with the evaluation of
earning power, analysis of operating efficiency, analysis of financial efficiency and
measurement of financial health of Dairy Industry in Andhra Pradesh using Z score analysis.
The financial health of Amrit Corp Limited, GSKCH Limited, Heritage Foods India Limited
and NDDB differs and these companies fall under too healthy zone. The financial health of
Ravi Leela Dairy Products Limited is in danger and the unit is considered to be in bankruptcy
zone. Its failure is certain and it would occur probably within a period of two years. 35
Venkataramana and Ramakrishnan (2012)14 evaluate the profitability and financial
position of selected cement companies in India through various financial ratio and applied
correlation, mean, standard deviation and variance. The study uses liquidity and profitability
ratios for assessment of impact of liquidity ratios on profitability performance of selected
cement companies.
20
Seyed Mohammad Alavinasab and Esmail Davoudi (2013)15 in their study
examined the relationship between working capital management and profitability for listed
companies on Tehran stock exchange. Hundraden forty seven companies were selected for
the period of 2005-2009. The effect of various variables of working capital management
including cash conversion cycle, the current ratio, current asset to total asset ratio, current
liabilities to total asset ratio and debt to total asset ratio on return on assets and return on
equity are studied. Multivariate regression and Pearson correlation are used to test the
hypothesis. The results of the statistical test of the hypothesis show a negative significant
relationship exist between cash conversion cycle and return on assets and cash conversion
cycle and return on equity. However, the relationship between current ratio and return on
equity is insignificant.
Hari Govinda Rao & et al. (2013)16 in their study entitled “An Empirical Analysis
on Financial Performance of Public Sector Housing Corporation in India: A Case Study of
HUDCO”, stated that the main concept of their study is Profitability and liquidity
management is of crucial importance in financial management decision. The most favorable
financial performance could be achieved by a Company that can tradeoff between
profitability and liquidity performance indicators. The purpose of this study is to find out the
financial position of and know the significance of them. Descriptive statistics discloses that
performance of the selected unit in terms of liquidity, solvency and profitability position is
very satisfactory and relatively efficient financial position is found in 36 all the cases. They
suggested that both the institutions under the study should concentrate on financial
profitability, especially unexplained variables in purpose of creating shareholders‟ wealth.
Vivek Kumar and Major Singh (2014)17 conducted a study on “Profitability of
Indian Banks – A Comparative Study of SBI and HDFC”. The study revealed that the various
profitability ratios of two banks as the measure of profitability. The common denominator
used for developing the various profitability ratios is business volume (deposits plus
advances). The study analyses the published five-year data from 2007-08 onwards for the two
largest banks, i.e., SBI- the largest public sector bank and HDFC- the largest private sector
bank. The comparative analysis of the profitability of the two banks clearly reveals that there
is a large difference between the profitability of the two banks. HDFC‟s profitability is more
than that of SBI.
Dharmaraj and Kathirvel (2014)18 in their study related to “Analyzing the Financial
Performance of Selected Indian Automobile Companies”, suggested that the financial
performance of Atul Auto Ltd, Ashok Leyland, HMT Ltd, Tata Motors Ltd, and SML ISUZU
21
Ltd are highly improved as compared to the group average value for all ratios. In India there
is a huge scope for automobile companies. They are financially strong and they are growing
at the rate of 17 per cent per annum and contributing to the Indian economy reasonably.
Finally, the study provides companies with understanding of the activities that would enhance
their financial performances. The results of this study imply that it might be necessary for all
companies to take all required decisions to enhance their financial position.
Moses Joshuva Daniel (2015)19 in his study “A Study on Financial Status of TATA
Motors Ltd” stated the main objectives to analyzing the overall financial status of the TATA
Motors Ltd by using various financial tools. In order to analyze financial status in terms of
Profitability, Solvency, Activity and Financial stability various accounting ratios have been
used. It is cleared from the study that 37 the Company’s financial performance is satisfactory.
The Company has stable growth and it shows a greater status in all the areas it works. The
Company has been suggested to reduce the expenditure as it increases every year. Decrease
in expenses will increase the profitability.
Kavitha and Palanivelu (2015)20 main objectives of their study is known about the
financial health of the steel industries and to analyze and compare the financial performances
of NSE listed steel industries based on ratio analysis and Z Score (Altman/s model). They
suggested that the companies‟ try to increase production and sales get maximize profit to
strengthen financial position of the NSE listed companies. The management may utilize
maximum production capacity and reduce interest burden increase profit. The policy of
borrowed financing in selected steel group of companies under study was not proper. So the
companies may use widely borrowed funds and can try to reduce the fixed charges burden
gradually by decreasing borrowed funds and enhancing the owner’s fund. They concluded
that the companies might enlarge their equity share capital by issuing new equity shares. For
regular supply of raw materials and the final product infrastructure facilities are required
further improvement.
22
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Indian Automobile Industry: From Theory to Practice”, Indian Journal of Science and
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Study of Selected Manufacturing Companies Listed on The Nigerian Stock Exchange”
Business Management Dynamics, Volume.2, No.2, August 2012, Pp.10-25.
23
13. Hima Bindu, T. and Subrahmanyam, S.E.V, “A Study on Financial Health Of Dairy
Industry in Andhra Pradesh Based on Z Score Analysis”, International Journal of Marketing,
Financial Services & Management Research, Volume.1, Issue 12, December 2012, ISSN
2277 3622, Pp.54-61.
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Performance: A Study on Selected Cement Companies in India”, International Journal of
Business and Management Tomorrow, Volume. 2, No. 5, 2012.
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between working capital management and profitability of listed companies in Tehran stock
exchange”, Business Management Dynamics, Volume.2, No.7, January 2013, Pp.01-08.
16. Hari Govinda Rao, C.H., Apparao, N., and Venkat Rao, B., “An Empirical Analysis
on Financial Performance of Public Sector Housing Corporation in India: A Case Study of
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of SBI and HDFC”. International Journal of Research in Finance & Marketing, Volume 3,
Issue 1, February 2013, Pp.11-20.
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Indian Automobile Companies”. Global Research Analysis, Volume: 2, Issue 4, April 2013,
Pp 18-20. 19. Moses Joshuva Daniel, A, “A Study on Financial Status of Tata Motors Ltd”,
Indian Journal of Applied Research, Volume 3, Issue 4, April 2013 ISSN - 2249-555X,
Pp.320-322.
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Industries”. International Journal of Scientific Research, Volume 2, Issue No.9, September
2013, ISSN No 2277-8179, Pp. 46-48.
24
CHAPTER III
COMPANY PROFILE
Company Name BHARAT HEAVY ELECTRICALS LIMITED
Type State-owned enterprise
Traded as BSE: 500103

NSE: BHEL
Industry Electrical Equipments
Founded 1964
Founder Government of India
Headquarters New Delhi, India
Area served Worldwide
Key people AtulSobti

(Chairman & MD)
Products Gas and Steam Turbines, Boilers, Electric Motors, Generators,

Heat Exchangers, Pumps, Switchgears, Sensors, Automation and
Control Systems, Power electronics, Transmission systems etc.
Revenue ₹29,474.99 crore (US$4.5 billion) (2017)
Operating income ₹627.83 crore (US$96 million) (2017)
25
Net income ₹495.86 crore (US$76 million) (2017)
Total assets ₹61,230.20 crore (US$9.4 billion) (2017)
Number of employees 39,821(2017)
Website www.bhel.com
BHARAT HEAVY ELECTRICALS LIMITED
Bharat Heavy Electricals Limited (BHEL) owned and founded by the Government
of India, is an engineering and manufacturing company based in New Delhi, India.
Established in 1964, BHEL is India's largest power generation equipment manufacturer.
It was granted the prestigious Maharatna (big gem) status in 2013 by Govt of India for
its outstanding track record and vast scale of operations. The elite list of Maharatna
companies contains a total of 8 behemoth Public Sector Undertakings (PSUs) of India.
Maharatna status affords the Boards of these companies enhanced financial and operational
autonomy from the Government.
HISTORY
BHEL was established in 1964 ushering in the indigenous Heavy Electrical

Equipment industry in India. Heavy Electricals (India) Limited was merged with BHEL in
1974.In 1991; BHEL was converted into a public limited company. Over time, it developed
the capability to produce a variety of electrical, electronic and mechanical equipment’s for all
sectors, including transmission, transportation, oil and gas and other allied industries.
However, the bulk of the revenue of the company is derived from sale of equipment for
power generation such as turbines, boilers, etc. As of 2017, BHEL supplied equipment
contributed to about 55% of the total installed power generation capacity of India. The
company has also supplied thousands of Electric Locomotives to Indian Railway, as well as
defence equipment such as the Super Rapid Gun Mount (SRGM) naval guns and Defence
Simulators to the Indian Armed Forces.
26
OPERATIONS
BHEL is engaged in the design, engineering, manufacturing, construction, testing,

commissioning and servicing of a wide range of products, systems and services for the core
sectors of the economy, viz. power, transmission, industry, transportation, renewable energy,
oil & gas and defence.
It has a network of 17 manufacturing units, 2 repair units, 4 regional offices, 8 service

centers, 8 overseas offices, 15 regional centers, 7 joint ventures, and infrastructure allowing it
to execute more than 150 projects at sites across India and abroad. The company has
established the capability to deliver 20,000 MW p.a. of power equipment to address the
growing demand for power generation equipment.
BHEL has retained its market leadership position during 2015-16 with 74% market
share in the Power Sector. An improved focus on project execution enabled BHEL record its
highest ever commissioning/synchronization of 15059 MW of power plants in domestic and
international markets in 2015-16, marking a 59% increase over 2014-15. With the all-time
high commissioning of 15000 MW in a single year FY2015-16, BHEL has exceeded 170 GW
installed base of power generating Equipments.
It also has been exporting its power and industry segment products and services for
over 40 years. BHEL's global references are spread across over 76 countries across all the six
continents of the world. The cumulative overseas installed capacity of BHEL manufactured
power plants exceeds 9,000 MW across 21 countries including Malaysia, Oman, Iraq, UAE,
Bhutan, Egypt and New Zealand. Their physical exports range from turnkey projects to after
sales services.
MANUFACTURING FACILITIES
Major manufacturing facilities
 High Pressure Boiler Plant (HPBP), Tiruchirappalli

 Heavy Electrical Plant (HEP), Bhopal
 Heavy Electrical Equipment Plant (HEEP), Ranipur (Haridwar)
 Heavy Power Equipment Plant (HPEP), Hyderabad
 Boiler Auxiliaries Plant (BAP), Ranipet
 Transformer Plant (TP), Jhansi
27
 Electronics Division (EDN), Bangalore
Other manufacturing facilities
 Electronic System Division (ESD), Bangalore

 Electro-Porcelains Division (EPD), Bangalore
 Industrial Valves Plant (IVP), Goindwal
 Central Foundry Forge Plant (CFFP), Ranipur (Haridwar)
 Component Fabrication Plant (CFP), Rudrapur
 Seamless Steel Tube Plant (SSTP), Tiruchirappalli
 Power Plant Piping Unit (PPPU), Thirumayam
 Heavy Plates & Vessels Plant (HPVP), Visakhapatnam
 Centralized Stamping Unit & Fabrication Plant (CSU & FP), Jagdishpur
 Insulator Plant (IP), Jagdishpur
 Heavy Equipment Repair Plant (HERP), Varanasi
 Electrical Machine Repaid Plant (EMRP), Mumbai
Besides the above, the company has a number of offices across the country for sales,
engineering, project management, logistics and R&D.
VISION
“A global engineering enterprise providing solutions for a better tomorrow”
MISSION
Providing sustainable business solutions in the fields of Energy, Industry &

Infrastructure
VALUES
GOVERNANCE: We are stewards of our shareholders investments and we

take that responsibility very seriously. We are accountable and for delivering
superior results that make a difference in the lives of the people we touch.
28
RESPECT: We value the unique contribution of each individual. We believe in
respect for human dignity and we respect the need to preserve the environment
around us.
EXCELLENCE: We are committed to deliver and demonstrate excellence in

whatever we do.
LOYALTY: We are loyal to our customers, to our company and to each other.
INTEGRITY: We work with highest ethical standards and demonstrate a

behavior that is honest, decent and fair. We are dedicated to the highest levels of
personal and institutional integrity.
COMMITMENT: We set high performance standards for ourselves as

individuals and our teams. We honour our commitments in a timely manner.
INNOVATION: We constantly support development of newer technologies,

products, improved processes, better services and management practices.
TEAM WORK: We work together as a team to provide best solutions &

services to our customers. Through quality relationships with all stakeholders
we deliver value to our customers.
29
CHAPTER – IV
ANALYSIS AND INTERPRETATION
ANALYSIS OF FINANCIAL STATEMENTS:
The only source of information about the business available to various parties such as
the public, shareholders, employees, creditors and government is the published financial
statements. These groups are interested in the business for various reasons. To satisfy the
requirements of various parties the figures in the financial statements are rearranged so that it
exhibits the real picture for each party. This is called financial analysis.
Interpretation, which follows analysis of financial statements, is an attempt to reach to

logical conclusion regarding the position and progress of the business on the basis of
analysis. Thus, analysis and interpretation of financial statements are regarded as
complimentary to each other.
TYPES OF FINANCIAL STATEMENT ANALYSIS
A distinction is drawn between various types of financial analysis either on the basis of
material used for the same according to the modus operandi of the analysis.
a) On The Basis Of Material Used
External analysis
It is made by those who do not have access to the detailed records of the company. This
group, which has to depend almost entirely on published financial statements, includes
investors, credit agencies and governmental agencies regulating a business in a normal way.
The position of external analyst has been improved in recent times owing to the governmental
regulations requiring business undertaking to make available detailed information to the
public through audited accounts. The annual reports of companies contain details such as
director’s report, auditor’s report etc., apart from profit and loss account and balance sheet.
Internal analysis
The internal analysis is accomplished by those who have access to the books of accounts
and all other information related to business. While conducting this analysis, the analyst is a
30
part of the enterprise he is an analyzing. Analyzing for managerial purposes is an internal
type of analysis and is conducted by the executives and employees of the enterprise as well as
governmental and court agencies, which may have regularly and other justification over the
business.
b) On The Basis Of Modus Operandi of Analysis
Horizontal analysis
When financial statements for a number of years are reviewed and analyzed, the
analysis is called ‘Horizontal Analysis’. As it is based on data from year to year rather than
one date or period of time as a whole, this is also called as ‘Dynamic Analysis’. The trend of
various items such as sales, profit, and cash balance etc., can be compared. This is very useful
for long-term trend analysis and planning.
Vertical analysis
It is frequently used for referring to ratios developed for one date or for one accounting
period. Vertical analysis is also called ‘Static Analysis’. This is not very conductive for
proper analysis of the firm’s financial position and its interpretation, as it does not enable to
study data n proper perspective. This can only be perspective. This can only be provided by a
study conducted over a number of years so that comparison can be affected. Therefore
vertical analysis is not very useful.
METHODS OF ANALYZING FINANCIAL STATEMENTS
The analysis of financial statements consists of a study of relationship and trends, to

determine whether or not the financial position and results of operations as well as the
financial progress of the company are satisfactory. The financial statements are analyzed in
the following four methods.
31
FINANCIAL STATEMENT
ANALYSIS
COMPARATIVE COMMON SIZE

RATIO ANALYSIS TREND ANALYSIS
STATEMENTS STATEMENTS
32
COMPARATIVE STATEMENT
The comparative balance sheet analysis is the study of the trend of the same times,
group of items and computed items in two or more balance sheet of the same business
enterprise on different dates. The changes in periodic balance sheet items reflect the conduct
of business. The changes can be observed by comparison of the balance sheet at the
beginning and at the end of a period and these changes can help in forming an opinion about
the progress of an enterprise.
Comparative statements give the data for all the periods as follows:
 Absolute money value for each item separately for each period.
 Increase and decrease in the terms of percentage.
 Increase and decrease in the terms of the absolute data.
 Comparison stated as ratios.
 Percentage of totals.
The comparative statements, prepared consistently will help to understand trends and
directions of the movements in the financial positions. These enable horizontal analysis.
 Current financial position.

 Long term financial position.
 Profitability of the concern.
33
TABLE: 1 COMPARATIVE BALANCE SHEET OF BHARAT HEAVY
ELECTRICALS LIMITED (BHEL) FOR THE YEAR 2013 & 2014
2013 2014 ABSOLUTE PERCENTAGE

PARTICULARS
(Rs in Crores) (Rs in Crores) CHANGES (%)
ASSETS
CURRENT ASSETS
Inventories 11,869.03 9,808.69 -2,060.34 -17.36
Trade Receivables 29,370.29 28,198.55 -1,171.74 -3.99
Cash And Cash Equivalents 7,845.05 12,019.97 4,174.92 53.22

Short Term Loans And
2,123.73 2,113.48 -10.25 -0.48
Advances
Other Current Assets 202.73 254.34 51.61 25.46
Total Current Assets 51,410.83 52,395.03 984.20 1.91
FIXED ASSETS
Tangible Assets 4,336.84 4,561.52 224.68 5.18
Intangible Assets 329.74 167.81 -161.93 -49.11
Capital Work-In-Progress 2,329.92 2,907.22 577.30 24.78

Intangible Assets Under
39.42 21.44 -17.98 -45.61
Development
Total Fixed Assets 7,035.92 7,657.99 622.07 8.84
NON-CURRENT ASSETS
Non-Current Investments 5.94 5.91 -0.03 -0.51
Deferred Tax Assets [Net] 1,555.80 1,975.92 420.12 27.00
Long Term Loans And Advances 929.78 1,315.00 385.22 41.43
Other Non-Current Assets 10,814.43 11,892.72 1,078.29 9.97
Total Non-Current Assets 13,305.95 15,189.55 1,883.60 14.16
Total Assets 71,752.70 75,242.57 3,489.87 4.86
34
PARTICULARS
LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 489.52 489.52 0.00 0.00
Reserve & Surplus 30,043.21 32,667.35 2,624.14 8.73
Total Shareholder's Funds 30,532.73 33,156.87 2,624.14 8.59
NON-CURRENT LIABILITIES
Long Term Borrowings 1,233.03 1,961.33 728.30 59.07
Other Long Term Liabilities 5,811.43 6,600.18 788.75 13.57
Long Term Provisions 5,962.52 7,510.46 1,547.94 25.96
Total Non-Current Liabilities 13,006.98 16,071.97 3,064.99 23.56
CURRENT LIABILITES
Short Term Borrowings 1,390.54 2,659.34 1,268.80 91.25
Trade Payables 9,753.80 8,833.10 -920.70 -9.44
Other Current Liabilities 14,025.89 11,662.75 -2,363.14 -16.85
Short Term Provisions 3,038.06 2,841.00 -197.06 -6.49
Total Current Liabilities 28,208.29 25,996.19 -2,212.10 -7.84
Total Capital And Liabilities 71,752.70 75,242.57 3,489.87 4.86
INTERPRETATION
The Company has growth in the year 2014 with an extent of 6.42% from the last year
2013. The Company’s Non-Current Liabilities has increased from Rs. 8,810.09 to Rs. 12,258.
The Company should concentrate on the borrowings. And reduce it to attain maximum
growth. During the period of 2013-2014 Bharat Heavy Electricals Limited company’s current
assets increased to 75,242.57. The fixed asset of the Company has been increased to 7657.99.
During the year 2013-2014 company’s liability is increased to 75,242.57. Hence the Growth
in 2014 is Satisfactory.
35
TABLE: 2 COMPARATIVE INCOME STATEMENT OF BHARAT HEAVY

PARTICULARS
SALES TURNOVER 50,845.99 39,569.41 -11,276.58 -22.18

EXCISE DUTY 1,930.15 0 -1,930.15 -100.00
NET SALES 48,915.84 39,569.41 -9,346.43 -19.11
ADD: OPERATING INCOME
OTHER INCOME 1,132.90 1,623.02 490.12 43.26
STOCK ADJUSTMENTS 0 -1,057.14 -1,057.14 0.00
TOTAL INCOME 50,048.74 40,135.29 -9,913.45 -19.81
LESS: OPERATING EXPENSES
RAW MATERIALS 28,171.38 18,032.61 -10,138.77 -35.99
POWER & FUEL COST 562.18 605.54 43.36 7.71
EMPLOYEE COST 5,824.00 5,956.57 132.57 2.28
SELLING AND ADMIN EXPENSES 0 4,428.91 4,428.91 0.00
MISCELLANEOUS EXPENSES 4,754.03 4,908.85 154.82 3.26
TOTAL EXPENSES 39,311.59 33,932.48 -5,379.11 -13.68
OPERATING PROFIT 9,604.25 4,579.79 -5,024.46 -52.31
LESS: NON-OPERATING
EXPENSES
PBDIT 10,737.15 6,202.81 -4,534.34 -42.23
INTEREST 127.61 133.46 5.85 4.58
PBDT 10,609.54 6,069.35 -4,540.19 -42.79
DEPRECIATION 957.18 985.36 28.18 2.94
OTHER WRITTEN OFF 0 0.31 0.31 0.00
PROFIT BEFORE TAX 9,652.36 5,083.68 -4,568.68 -47.33
EXTRA-ORDINARY ITEMS -0.45 -6 -5.55 1233.33
PBT (POST EXTRA-ORD ITEMS) 9,651.91 5,077.68 -4,574.23 -47.39
TAX 2,837.61 1,575.34 -1,262.27 -44.48
REPORTED NET PROFIT 6,693.10 3,502.34 -3,190.76 -47.67
36
INTERPRETATION
1. From the above performance comparison the Bharat Heavy Electricals Limited
Company’s total revenue has been decreased to 39,569.41 from previous year.
2. During the years 2013-2014 Bharat Heavy Electricals Limited total expenses has been
decreased to 33,932.48.
3. Profit before deduction of all taxes is decreased to 6069.35. Profit after charging of all
taxation appears to be in decreasing manner.
4. Hence the growth in sales has been decreased and the company has to take certain
actions to improve the sales.
5. So, the growth of the company in 2014 is not satisfactory.
37

PARTICULARS
ASSETS
CURRENT ASSETS
Inventories 9,808.69 10,111.89 303.20 3.09
Cash And Cash Equivalents 12,019.97 9,948.90 -2,071.07 -17.23

2,113.48 2,281.84 168.36 7.97
Advances
Other Current Assets 254.34 178.18 -76.16 -29.94
Total Current Assets 52,395.03 49,040.93 -3,354.10 -6.40
FIXED ASSETS
Tangible Assets 4,561.52 4,069.99 -491.53 -10.78
Capital Work-In-Progress 2,907.22 2,605.01 -302.21 -10.40

21.44 17.29 -4.15 -19.36
Development
Fixed Assets 7,657.99 6,852.38 -805.61 -10.52
NON-CURRENT ASSETS
Non-Current Investments 5.91 5.91 0.00 0.00

Long Term Loans And
1,315.00 1,312.64 -2.36 -0.18
Advances
Other Non-Current Assets 11,892.72 11,447.40 -445.32 -3.74
Total Non-Current Assets 15,189.55 14,995.37 -194.18 -1.28
Total Assets 75,242.57 70,888.68 -4,353.89 -5.79
38
PARTICULARS
LIABILITIES
SHAREHOLDER'S FUNDS
Reserve & Surplus 32,667.35 33,717.08 1,049.73 3.21
Total Shareholder's Funds 33,156.87 34,206.60 1,049.73 3.17
Long Term Borrowings 1,961.33 1,733.62 -227.71 -11.61
Other Long Term Liabilities 6,600.18 5,359.02 -1,241.16 -18.80
Long Term Provisions 7,510.46 6,770.09 -740.37 -9.86
Total Non-Current Liabilities 16,071.97 13,862.73 -2,209.24 -13.75
CURRENT LIABILITES
Short Term Borrowings 2,659.34 96.15 -2,563.19 -96.38
Trade Payables 8,833.10 9,087.71 254.61 2.88
Short Term Provisions 2,841.00 4,321.28 1,480.28 52.10
Total Capital And Liabilities 75,242.57 70,888.68 -4,353.89 -5.79
INTERPRETATION
1. During the period of (2014-2015) Bharat Heavy Electricals Limited company’s

current asset is decreased to 14,995.37. The fixed asset of the Company has been
decreased by 6,852.38.
2. During the years (2014-2015) Bharat Heavy Electricals Limited company’s non-
current liability of has decreased to 13,862.73. The current liability of the Company
has been decreased to 22,817.12.
3. During the years (2014-2015) company’s liability is decreased to 70,888.68. Hence
the company is suffering in loss.
39

PARTICULARS
SALES TURNOVER 39,569.41 31,710.25 -7,859.16 -19.86

EXCISE DUTY 0 921.66 921.66 0.00
NET SALES 39,569.41 30,788.59 -8,780.82 -22.19
OTHER INCOME 1,623.02 1,230.59 -392.43 -24.18
STOCK ADJUSTMENTS -1,057.14 339.5 1,396.64 -132.11
TOTAL INCOME 40,135.29 32,358.68 -7,776.61 -19.38
RAW MATERIALS 18,032.61 14,674.40 -3,358.21 -18.62
POWER & FUEL COST 605.54 556.46 -49.08 -8.11
EMPLOYEE COST 5,956.57 5,475.48 -481.09 -8.08
SELLING AND ADMIN
4,428.91 3,604.10 -824.81 -18.62
EXPENSES
MISCELLANEOUS EXPENSES 4,908.85 4,676.22 -232.63 -4.74
TOTAL EXPENSES 33,932.48 28,986.66 -4,945.82 -14.58
OPERATING PROFIT 4,579.79 2,141.43 -2,438.36 -53.24
LESS: NON-OPERATING
EXPENSES
PBDIT 6,202.81 3,372.02 -2,830.79 -45.64
INTEREST 133.46 92.43 -41.03 -30.74
PBDT 6,069.35 3,279.59 -2,789.76 -45.96
DEPRECIATION 985.36 1,082.01 96.65 9.81
OTHER WRITTEN OFF 0.31 0 -0.31 -100.00
PROFIT BEFORE TAX 5,083.68 2,197.58 -2,886.10 -56.77
EXTRA-ORDINARY ITEMS -6 -10.29 -4.29 71.50
PBT (POST EXTRA-ORD
5,077.68 2,187.29 -2,890.39 -56.92
ITEMS)
TAX 1,575.34 736.85 -838.49 -53.23
REPORTED NET PROFIT 3,502.34 1,450.44 -2,051.90 -58.59
40
INTERPRETATION
1. From the above performance comparison of Bharat Heavy Electricals Limited

Company the total revenue has been decreased to 32,358.68.
2. During the years (2014-2015) Bharat Heavy Electricals Limited Company’s total
expenses has been decreased to 28,986.66.
3. Profit before deduction of all taxes is decreased to 2,197.58. The profit after taxation
seems to be low because there where less amount of sales and revenue.
4. Hence the company has to concentrate on the sales and sales turnover to increase the
profit of the company.
5. The growth of the company in 2015 is comparatively less compared to 2014. Hence
the growth is not satisfactory.
41

PARTICULARS
ASSETS
CURRENT ASSETS
Inventories 10,111.89 9,608.44 -503.45 -4.98
Cash And Cash Equivalents 9,948.90 10,087.20 138.30 1.39

2,281.84 173.81 -2,108.03 -92.38
Advances
Other Current Assets 178.18 2,831.57 2,653.39 1489.16
FIXED ASSETS
Tangible Assets 4,069.99 3,831.35 -238.64 -5.86
Capital Work-In-Progress 2,605.01 309.46 -2,295.55 -88.12

17.29 8.38 -8.91 -51.53
Development
Fixed Assets 6,852.38 4,286.55 -2,565.83 -37.44
NON CURRENT ASSETS
Deferred Tax Assets [Net] 2,229.42 3,662.72 1,433.30 64.29

Long Term Loans And
1,312.64 65.62 -1,247.02 -95.00
Advances
Other Non-Current Assets 11,447.40 11,369.24 -78.16 -0.68
Total Non-Current Assets 14,995.37 15,894.00 898.63 5.99
Total Assets 70,888.68 65,320.46 -5,568.22 -7.85
42
PARTICULARS
LIABILITIES
SHAREHOLDER'S FUNDS
Reserve & Surplus 33,717.08 31,824.63 -1,892.45 -5.61
Total Shareholder's Funds 34,206.60 32,314.15 -1,892.45 -5.53
Long Term Borrowings 1,733.62 126.29 -1,607.33 -92.72
Other Long Term Liabilities 5,359.02 4,508.98 -850.04 -15.86
Long Term Provisions 6,770.09 7,629.61 859.52 12.70
CURRENT LIABILITES
Short Term Borrowings 96.15 3.53 -92.62 -96.33
Trade Payables 9,087.71 8,708.44 -379.27 -4.17
Other Current Liabilities 9,311.98 8,691.07 -620.91 -6.67
Short Term Provisions 4,321.28 3,337.61 -983.67 -22.76
INTERPRETATION
1. During the period (2015-2016) company’s current assets decreased to 45,139.91. The
fixed asset of the Company has decreased to 4286.55.
2. During the years Bharat Heavy Electricals company’s non-current liability decreased
by 1,597.85. The current liability of the Company has been decreased by 2,076.47.
3. During the years company’s liability is decreased by 5,568.22.
4. The Company Growth is not Satisfactory for the Shareholder’s as the previous year’s
growth was also decreasing. The company has to concentrate and improve the growth.
43

PARTICULARS
SALES TURNOVER 31,710.25 27,639.44 -4,070.81 -12.84

EXCISE DUTY 921.66 960.92 39.26 4.26
NET SALES 30,788.59 26,678.52 -4,110.07 -13.35
OTHER INCOME 1,230.59 1,476.43 245.84 19.98
STOCK ADJUSTMENTS 339.5 -210.05 -549.55 -161.87
TOTAL INCOME 32,358.68 27,944.90 -4,413.78 -13.64
RAW MATERIALS 14,674.40 13,428.64 -1,245.76 -8.49
POWER & FUEL COST 556.46 499.47 -56.99 -10.24
EMPLOYEE COST 5,475.48 5,387.33 -88.15 -1.61
SELLING AND ADMIN
3,604.10 2,978.08 -626.02 -17.37
EXPENSES
MISCELLANEOUS EXPENSES 4,676.22 5,531.84 855.62 18.30
TOTAL EXPENSES 28,986.66 27,825.36 -1,161.30 -4.01
OPERATING PROFIT 2,141.43 -1,356.89 -3,498.32 -163.36
LESS: NON-OPERATING
EXPENSES
PBDIT 3,372.02 119.54 -3,252.48 -96.45
INTEREST 92.43 359.81 267.38 289.28
PBDT 3,279.59 -240.27 -3,519.86 -107.33
DEPRECIATION 1,082.01 936.7 -145.31 -13.43
OTHER WRITTEN OFF 0 0 0.00 0.00
PROFIT BEFORE TAX 2,197.58 -1,176.97 -3,374.55 -153.56
EXTRA-ORDINARY ITEMS -10.29 0 10.29 -100.00
PBT (POST EXTRA-ORD
2,187.29 -1,176.97 -3,364.26 -153.81
ITEMS)
TAX 736.85 -455.55 -1,192.40 -161.82
REPORTED NET PROFIT 1,450.44 -721.42 -2,171.86 -149.74
44
INTERPRETATION
1. From the above performance comparison of Bharat Heavy Electricals company the
total revenue has been decreased by 4,110.07.
2. During the years Bharat Heavy Electrical limited company’s total expenses has been
decreased by 1,161.30.
3. Profit before tax has been decreased by 3,374.55. The profit before tax in the current
year is negative (Loss) – 1,176.97.
4. Profit after tax has been decreased by 2,171.86. Hence in the current year 2016 the
company is suffering in heavy loss.
5. Hence the growth of the company is not satisfactory for the Shareholders as there is
Dividend for them. Hence the Goodwill of the concern is decreased.
45

PARTICULARS
ASSETS
CURRENT ASSETS
Inventories 9,608.44 7,379.67 -2,228.77 -23.20
Trade Receivables 22,438.89 22,077.58 -361.31 -1.61
Cash And Cash Equivalents 10,087.20 10,493.55 406.35 4.03
Short Term Loans And Advances 173.81 135.78 -38.03 -21.88
Other Current Assets 2,831.57 2,817.38 -14.19 -0.50
FIXED ASSETS
Tangible Assets 3,831.35 3,496.43 -334.92 -8.74
Capital Work-In-Progress 309.46 159.51 -149.95 -48.46

8.38 8.83 0.45 5.37
Development
Total Fixed Assets 4,286.55 3,769.53 -517.02 -12.06
NON CURRENT ASSETS
Non-Current Investments 796.42 757.13 -39.29 -4.93
Long Term Loans And Advances 65.62 78.04 12.42 18.93
Other Non-Current Assets 11,369.24 9,992.60 -1,376.64 -12.11
Total Non-Current Assets 15,894.00 14,673.96 -1,220.04 -7.68
Total Assets 65,320.46 61,347.45 -3,973.01 -6.08
46
PARTICULARS
LIABILITIES
SHAREHOLDER'S FUNDS
Reserve & Surplus 31,824.63 31,899.47 74.84 0.24
Total Shareholder's Funds 32,314.15 32,388.99 74.84 0.23
Long Term Borrowings 126.29 89.55 -36.74 -29.09
Other Long Term Liabilities 4,508.98 3,721.17 -787.81 -17.47
Long Term Provisions 7,629.61 5,006.19 -2,623.42 -34.38
CURRENT LIABILITES
Short Term Borrowings 3.53 6.03 2.50 70.82
Trade Payables 8,708.44 8,715.88 7.44 0.09

Short Term Provisions 3,337.61 4,193.78 856.17 25.65
Total Current Liabilities 20,740.65 20,142.63 -598.02 -2.88
INTERPRETATION
1. During the period of comparison Bharat Heavy Electrical limited company’s current
assets decreased by 2,235.95. The fixed asset of the Company has been decreased to
3769.53.
2. During the years Bharat Heavy Electrical limited company’s non-current liability
decreased by 3,447.97. The current liability of the Company has been decreased to
20,142.63.
3. During the years company’s liability is decreased by 3,973.01. Hence the Company’s
growth is falling due to crisis. In order to survey the company has to increase the
profit.
47

PARTICULARS
SALES TURNOVER 27,639.44 30,608.63 2,969.19 10.74

EXCISE DUTY 960.92 1,102.06 141.14 14.69
NET SALES 26,678.52 29,506.57 2,828.05 10.60
OTHER INCOME 1,476.43 983.36 -493.07 -33.40
STOCK ADJUSTMENTS -210.05 -992.94 -782.89 372.72
TOTAL INCOME 27,944.90 29,496.99 1,552.09 5.55
RAW MATERIALS 13,428.64 13,535.17 106.53 0.79
POWER & FUEL COST 499.47 451.55 -47.92 -9.59
EMPLOYEE COST 5,387.33 5,408.00 20.67 0.38
SELLING AND ADMIN EXPENSES 2,978.08 3,055.51 77.43 2.60
MISCELLANEOUS EXPENSES 5,531.84 5,236.54 -295.30 -5.34
TOTAL EXPENSES 27,825.36 27,686.77 -138.59 -0.50
OPERATING PROFIT -1,356.89 826.86 2,183.75 -160.94
LESS: NON-OPERATING
EXPENSES
PBDIT 119.54 1,810.22 1,690.68 1414.32
INTEREST 359.81 351.3 -8.51 -2.37
PBDT -240.27 1,458.92 1,699.19 -707.20
DEPRECIATION 936.7 849.79 -86.91 -9.28
OTHER WRITTEN OFF 0 0 0.00 0.00
PROFIT BEFORE TAX -1,176.97 609.13 1,786.10 -151.75
EXTRA-ORDINARY ITEMS 0 0 0.00 0.00
PBT (POST EXTRA-ORD ITEMS) -1,176.97 609.13 1,786.10 -151.75
TAX -455.55 130.39 585.94 -128.62
REPORTED NET PROFIT -721.42 478.74 1,200.16 -166.36
48
INTERPRETATION
1. From the above performance comparison of Bharat Heavy Electrical limited company
the total revenue has been increased by 1552.09.
2. During the years Bharat Heavy Electrical limited company’s total expenses has been
decreased by 138.59. It is very less compared to previous year’s expenses.
3. Profit before deduction of all taxes is increased by 609.13 from loss in the previous
year.
4. Profit after taxation is increased to 478.74 from loss in the previous year 2016.
5. Hence the growth is increased compared to previous year. The company has to
increase the sales in order to gain more income.
49
COMMON SIZE STATEMENTS
The common size statements, balance sheet and income statement are
shown in analytical percentages. The figures are shown as percentages of total assets, total
liabilities and total sales. The common size statements may be prepared in the following way;
1. The total of assets or liabilities is taken as 100.

2. The individual assets are expressed as a percentage of total assets, i.e., 100 and
different liabilities are calculated in relation to total liabilities.
50
TABLE: 9 COMMON SIZE BALANCE SHEET OF BHARAT HEAVY
ABSOLUTE ABSOLUTE
2013 2014
PARTICULARS CHANGE CHANGE
(Rs in Crore) (Rs in Crore)
(%) (%)
ASSETS
CURRENT ASSETS
Inventories 11,869.03 16.54 9,808.69 13.04
Trade Receivables 29,370.29 40.93 28,198.55 37.48
Cash And Cash Equivalents 7,845.05 10.93 12,019.97 15.97

2,123.73 2.96 2,113.48 2.81
Advances
Total Current Assets 51,410.83 71.65 52,395.03 69.63
FIXED ASSETS
Tangible Assets 4,336.84 6.04 4,561.52 6.06
Intangible Assets 329.74 0.46 167.81 0.22
Capital Work-In-Progress 2,329.92 3.25 2,907.22 3.86

39.42 0.05 21.44 0.03
Development
Total Fixed Assets 7,035.92 9.81 7,657.99 10.18
NON-CURRENT ASSETS
Deferred Tax Assets [Net] 1,555.80 2.17 1,975.92 2.63

Long Term Loans And
929.78 1.30 1,315.00 1.75
Advances
Other Non-Current Assets 10,814.43 15.07 11,892.72 15.81
Total Non-Current Assets 20,341.87 28.35 22,847.54 30.37
Total Assets 71,752.70 100.00 75,242.57 100.00
51
ABSOLUTE ABSOLUTE
2013 2014
(%) (%)
LIABILITIES
SHAREHOLDER'S FUNDS
Reserve & Surplus 30,043.21 41.87 32,667.35 43.42
Total Shareholder's Funds 30,532.73 42.55 33,156.87 44.07
Long Term Borrowings 1,233.03 1.72 1,961.33 2.61
Other Long Term Liabilities 5,811.43 8.10 6,600.18 8.77
Long Term Provisions 5,962.52 8.31 7,510.46 9.98
Total Non-Current Liabilities 13,006.98 18.13 16,071.97 21.36
CURRENT LIABILITES
Short Term Borrowings 1,390.54 1.94 2,659.34 3.53
Trade Payables 9,753.80 13.59 8,833.10 11.74
Other Current Liabilities 14,025.89 19.55 11,662.75 15.50
Short Term Provisions 3,038.06 4.23 2,841.00 3.78
Total Current Liabilities 28,208.29 39.31 25,996.19 34.55
Total Capital And Liabilities 71,752.70 100.00 75,242.57 100.00
INTERPRETATION
1. During the period 2013-2014 Bharat Heavy Electrical limited company’s current
assets increased to 52,395.03. The fixed asset of the Company has been increased to
7657.99.
2. During the years 2013-2014 Bharat Heavy Electrical limited non-current liability of
the concern increased to 16,071.97. The current liability of the Company has been
decreased to 25,996.19.
3. During the years 2013-2014 company’s liability is increased to 75,242.57.
52
TABLE: 10 COMMON SIZE INCOME STATEMENT OF BHARAT HEAVY
ABSOLUTE ABSOLUTE
2013 2014
(%) (%)
NET SALES 48,915.84 100.00 39,569.41 100.00
OTHER INCOME 1,132.90 2.32 1,623.02 4.10
STOCK ADJUSTMENTS 0 0.00 -1,057.14 -2.67
TOTAL INCOME 50,048.74 102.32 40,135.29 101.43
RAW MATERIALS 28,171.38 57.59 18,032.61 45.57
POWER & FUEL COST 562.18 1.15 605.54 1.53
EMPLOYEE COST 5,824.00 11.91 5,956.57 15.05
SELLING AND ADMIN EXPENSES 0 0.00 4,428.91 11.19
MISCELLANEOUS EXPENSES 4,754.03 9.72 4,908.85 12.41
TOTAL EXPENSES 39,311.59 80.37 33,932.48 85.75
OPERATING PROFIT 9,604.25 19.63 4,579.79 11.57
LESS: NON-OPERATING EXPENSES
PBDIT 10,737.15 21.95 6,202.81 15.68
INTEREST 127.61 0.26 133.46 0.34
PBDT 10,609.54 21.69 6,069.35 15.34
DEPRECIATION 957.18 1.96 985.36 2.49
OTHER WRITTEN OFF 0 0.00 0.31 0.00
PROFIT BEFORE TAX 9,652.36 19.73 5,083.68 12.85
EXTRA-ORDINARY ITEMS -0.45 0.00 -6 -0.02
PBT (POST EXTRA-ORD ITEMS) 9,651.91 19.73 5,077.68 12.83
TAX 2,837.61 5.80 1,575.34 3.98
REPORTED NET PROFIT 6,693.10 13.68 3,502.34 8.85
53
INTERPRETATION
1. From the above comparison of Bharat Heavy Electrical limited company the gross
profit decreased from 21.95% to 15.68% during the years 2013-2014.
2. During the years 2013-2014 Bharat Heavy Electrical limited company’s operating
profit decreased by 19.63% to 11.57%
3. During the years 2013-2014 Bharat Heavy Electrical limited companies’ expenses
decreased from 39,311.59 to 33,932.48.
4. Net profit of the Company decreased by 13.68% to 8.85%
5. The growth of the company has to be increased and the sales has to be increased to
earn more profit.
54
ABSOLUTE ABSOLUTE
2014 2015
(%) (%)
ASSETS
CURRENT ASSETS
Inventories 9,808.69 13.04 10,111.89 14.26

2,113.48 2.81 2,281.84 3.22
Advances
FIXED ASSETS
Tangible Assets 4,561.52 6.06 4,069.99 5.74
Capital Work-In-Progress 2,907.22 3.86 2,605.01 3.67

21.44 0.03 17.29 0.02
Development
NON-CURRENT ASSETS

Long Term Loans And
1,315.00 1.75 1,312.64 1.85
Advances
Total Assets 75,242.57 100.00 70,888.68 100.00
55
ABSOLUTE ABSOLUTE
2014 2015
(%) (%)
LIABILITIES
SHAREHOLDER'S FUNDS
Reserve & Surplus 32,667.35 43.42 33,717.08 47.56
Long Term Borrowings 1,961.33 2.61 1,733.62 2.45

CURRENT LIABILITES
Short Term Borrowings 2,659.34 3.53 96.15 0.14
Trade Payables 8,833.10 11.74 9,087.71 12.82
INTERPRETATION
1. During the years Bharat Heavy Electrical company’s current assets decreased from
52,395.03 to 49040.93. The fixed asset of the Company has been decreased by
10.18% to 9.67%.
2. During the years Bharat Heavy Electrical company’s non-current liability of the
concern decreased from 21.36% to 19.56%. The current liability of the Company has
been decreased from 34.55% to 32.19%.
3. During the years companies shareholder’s fund is increased from 44.07% to 48.25%.
56
ABSOLUTE ABSOLUTE
2014 2015
(%) (%)
NET SALES 39,569.41 100.00 30,788.59 100.00

OTHER INCOME 1,623.02 4.10 1,230.59 4.00
STOCK ADJUSTMENTS -1,057.14 -2.67 339.5 1.10
TOTAL INCOME 40,135.29 101.43 32,358.68 105.10
LESS: OPERATING EXPENSES 0.00 0.00
RAW MATERIALS 18,032.61 45.57 14,674.40 47.66
POWER & FUEL COST 605.54 1.53 556.46 1.81
EMPLOYEE COST 5,956.57 15.05 5,475.48 17.78
SELLING AND ADMIN EXPENSES 4,428.91 11.19 3,604.10 11.71
TOTAL EXPENSES 33,932.48 85.75 28,986.66 94.15
OPERATING PROFIT 4,579.79 11.57 2,141.43 6.96
LESS: NON-OPERATING EXPENSES
PBDIT 6,202.81 15.68 3,372.02 10.95
INTEREST 133.46 0.34 92.43 0.30
PBDT 6,069.35 15.34 3,279.59 10.65
DEPRECIATION 985.36 2.49 1,082.01 3.51
OTHER WRITTEN OFF 0.31 0.00 0 0.00
PROFIT BEFORE TAX 5,083.68 12.85 2,197.58 7.14
EXTRA-ORDINARY ITEMS -6 -0.02 -10.29 -0.03
PBT (POST EXTRA-ORD ITEMS) 5,077.68 12.83 2,187.29 7.10
TAX 1,575.34 3.98 736.85 2.39
REPORTED NET PROFIT 3,502.34 8.85 1,450.44 4.71
57
INTERPRETATION
1. From the above comparison Bharat Heavy Electrical Company’s gross profit
decreased from 15.68% to 10.95% during the years 2014 & 2015.
2. During the years Bharat Heavy Electrical company’s operating profit decreased by
11.57% to 6.96%
3. During the years Bharat Heavy Electrical company’s operating expenses increased by
85.75% to 94.15%
4. Net profit of the Company decreased by 8.85% to 4.71%
5. The growth of the company is not good. The company’s net profit has been decreased
to half percentage from previous year.
58
ABSOLUTE ABSOLUTE
2015 2016
(%) (%)
ASSETS
CURRENT ASSETS
Inventories 10,111.89 14.26 9,608.44 14.71

2,281.84 3.22 173.81 0.27
Advances
Other Current Assets 178.18 0.25 2,831.57 4.33
FIXED ASSETS
Tangible Assets 4,069.99 5.74 3,831.35 5.87
Capital Work-In-Progress 2,605.01 3.67 309.46 0.47

17.29 0.02 8.38 0.01
Development
NON-CURRENT ASSETS

Long Term Loans And
1,312.64 1.85 65.62 0.10
Advances
Total Assets 70,888.68 100.00 65,320.46 100.00
59
ABSOLUTE ABSOLUTE
2015 2016
(%) (%)
LIABILITIES
SHAREHOLDER'S FUNDS
Reserve & Surplus 33,717.08 47.56 31,824.63 48.72
Long Term Borrowings 1,733.62 2.45 126.29 0.19
CURRENT LIABILITES
Trade Payables 9,087.71 12.82 8,708.44 13.33
INTERPRETATION
1. During the years Bharat Heavy Electrical Company’s current assets decreased by
69.18% to 69.11%. The fixed asset of the Company has been decreased by 9.67%
to 6.56%.
2. During the years Bharat Heavy Electrical Company’s non-current liability of the
concern decreased by 19.56% to 18.78%. The current liability of the Company has
been decreased to 32.19% to 31.75%.
3. During the years companies shareholder’s fund is increased by 48.25% to 49.47%.
60
ABSOLUTE ABSOLUTE
2015 2016
(%) (%)
NET SALES 30,788.59 100.00 26,678.52 100.00
OTHER INCOME 1,230.59 4.00 1,476.43 5.53
STOCK ADJUSTMENTS 339.5 1.10 -210.05 -0.79
TOTAL INCOME 32,358.68 105.10 27,944.90 104.75
LESS: OPERATING EXPENSES 0.00 0.00
RAW MATERIALS 14,674.40 47.66 13,428.64 50.34
POWER & FUEL COST 556.46 1.81 499.47 1.87
EMPLOYEE COST 5,475.48 17.78 5,387.33 20.19

SELLING AND ADMIN
3,604.10 11.71 2,978.08 11.16
EXPENSES
TOTAL EXPENSES 28,986.66 94.15 27,825.36 104.30
OPERATING PROFIT 2,141.43 6.96 -1,356.89 -5.09

LESS: NON-OPERATING
EXPENSES
PBDIT 3,372.02 10.95 119.54 0.45
INTEREST 92.43 0.30 359.81 1.35
PBDT 3,279.59 10.65 -240.27 -0.90
DEPRECIATION 1,082.01 3.51 936.7 3.51
OTHER WRITTEN OFF 0 0.00 0 0.00
PROFIT BEFORE TAX 2,197.58 7.14 -1,176.97 -4.41
EXTRA-ORDINARY ITEMS -10.29 -0.03 0 0.00
PBT (POST EXTRA-ORD ITEMS) 2,187.29 7.10 -1,176.97 -4.41
TAX 736.85 2.39 -455.55 -1.71
REPORTED NET PROFIT 1,450.44 4.71 -721.42 -2.70
61
INTERPRETATION
1. From the above comparison of Bharat Heavy Electrical Company’s gross profit
decreased by 3,372.02 to 119.54 during the years. The company is suffering from
heavy loss.
2. During the years Bharat Heavy Electrical Company’s Expenses increased by 94.15%
to 104.30%. The company should control the expenses.
3. During the years Bharat Heavy Electrical Company’s operating profit decreased and
become negative (loss) 6.96% to -5.09%
4. Net profit of the Company decreased and net loss of -721.42 is for the year 2016.
5. The Company’s growth rate has been decreased and heavy loss has been incurred in
the year 2016.
6. The company should take necessary steps in order to survey this situation.
62
ABSOLUTE ABSOLUTE
2016 2017
(%) (%)
ASSETS
CURRENT ASSETS
Inventories 9,608.44 14.71 7,379.67 12.03

173.81 0.27 135.78 0.22
Advances
Other Current Assets 2,831.57 4.33 2,817.38 4.59
FIXED ASSETS
Tangible Assets 3,831.35 5.87 3,496.43 5.70
Capital Work-In-Progress 309.46 0.47 159.51 0.26

8.38 0.01 8.83 0.01
Development
NON-CURRENT ASSETS

Long Term Loans And
65.62 0.10 78.04 0.13
Advances
Total Assets 65,320.46 100.00 61,347.45 100.00
63
ABSOLUTE ABSOLUTE
2016 2017
(%) (%)
LIABILITIES
SHAREHOLDER'S FUNDS
Reserve & Surplus 31,824.63 48.72 31,899.47 52.00
Long Term Borrowings 126.29 0.19 89.55 0.15
CURRENT LIABILITES
Trade Payables 8,708.44 13.33 8,715.88 14.21
INTERPRETATION
1. During the years Bharat Heavy Electrical Company’s current assets increased by
69.11% to 69.94%. The fixed asset of the Company has been decreased by 6.56% to
6.14%.
2. During the years Bharat Heavy Electrical Company’s non-current liability of the
concern decreased from 18.78% to 14.37%. The current liability of the Company has
been increased from 31.75% to 32.83%.
3. During the years Company’s shareholder’s funds is increased by 49.47% to 52.80%.
64
ABSOLUTE ABSOLUTE
2016 2017
(%) (%)
NET SALES 26,678.52 100.00 29,506.57 100.00
OTHER INCOME 1,476.43 5.53 983.36 3.33
STOCK ADJUSTMENTS -210.05 -0.79 -992.94 -3.37
TOTAL INCOME 27,944.90 104.75 29,496.99 99.97
RAW MATERIALS 13,428.64 50.34 13,535.17 45.87
POWER & FUEL COST 499.47 1.87 451.55 1.53
EMPLOYEE COST 5,387.33 20.19 5,408.00 18.33
SELLING AND ADMIN EXPENSES 2,978.08 11.16 3,055.51 10.36
TOTAL EXPENSES 27,825.36 104.30 27,686.77 93.83
OPERATING PROFIT -1,356.89 -5.09 826.86 2.80

LESS: NON-OPERATING
EXPENSES
PBDIT 119.54 0.45 1,810.22 6.13
INTEREST 359.81 1.35 351.3 1.19
PBDT -240.27 -0.90 1,458.92 4.94
DEPRECIATION 936.7 3.51 849.79 2.88
OTHER WRITTEN OFF 0 0.00 0 0.00
PROFIT BEFORE TAX -1,176.97 -4.41 609.13 2.06
EXTRA-ORDINARY ITEMS 0 0.00 0 0.00
PBT (POST EXTRA-ORD ITEMS) -1,176.97 -4.41 609.13 2.06
TAX -455.55 -1.71 130.39 0.44
REPORTED NET PROFIT -721.42 -2.70 478.74 1.62
65
INTERPRETATION
1. From the above comparison Bharat Heavy Electrical Company’s gross profit
increased by 0.45% to 6.13% during the years.
2. During the years Bharat Heavy Electrical Company’s operating profit increased to
2.80% in 2017.
3. During the years Bharat Heavy Electrical Company’s operating expenses decreased
by 104.75% to 99.97%
4. Net profit of the Company increased by -2.70% to 1.62%.
5. The company has taken steps to improve the profit and to control the expenses.
6. The company has entered into service sector and it has grown over the period of one
year. The company’s performance in the year is satisfactory.
66
RATIO ANALYSIS
The ratio analysis is one of the most powerful tools of financial analysis. It is the
process of establishing and interpreting various ratios. With the help of ratio analysis,
financial statements can be analyzed very clearly and decisions can be made from this
analysis. A ratio is a simple arithmetical expression of the relationship of numbers to another.
DEFINITION OF RATIO ANALYSIS
According to accountants hand book by Wixon Kell and Bedford,” A ratio is an

expression of the quantitative relationship between two numbers.”
RATIOS USED IN ANALYSIS
 Liquidity ratio
 Solvency ratio
 Profitability ratio
 Activity ratio
67
1. LIQUIDITY RATIO
Liquidity refers to the ability of the concern to meet its current obligation as and
when these become due. The short term obligations are meet by realizing amounts from
current assets. The current assets should be either liquid or near liquid. These should be
convertible into cash for paying obligation for short term nature. The sufficiency or
insufficiency of current assets should be assessed by comparing them with short term
liabilities. If current assets can be used to pay off current liabilities then liquidity position will
be satisfactory. If current liabilities may not be easily met out of current assets then liquid
position will be load. The bankers, suppliers of goods and other short term creditors are
interested in the liquidity of the concern.
To measure the liquidity of a firm the following ratios can be calculated:

 Current ratio
 Liquid ratio or Quick ratio
 Absolute liquid ratio
68
CURRENT RATIO
Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio is also known as working capital ratio is a measure of general liquidity
and is most widely used to make the analysis of short term financial position or liquidity of
the firm. It is calculated by dividing the total of current assets by total of the current
liabilities. The thumb rule for the current ratio is 2:1 formula for calculating current ratio is
TABLE: 17 CURRENT RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
YEAR CURRENT ASSETS CURRENT LIABILITIES RATIO
2013 51,410.83 28,208.29 1.82

2014 52,395.03 25,996.19 2.02
2015 49,040.93 22,817.12 2.15
2016 45,139.91 20,740.65 2.18
2017 42,903.96 20,142.63 2.13
69
CHART: 1 CURRENT RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
2.20 2.18
2.15
2.13
2.10
CURRENT RATIO
2.00 2.02
1.90
1.82
1.80
1.70
1.60
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart the current ratio of Bharat Heavy Electricals Limited
Company is fluctuating for the five years period (2013 to 2017) ranging from 1.42% to
2.13%. In the year 2013 the ratio which is 1.82% increased to 2.02% and finally reached to
2.13% in the year 2017. The current ratio is above the rule of the thumb and the high ratio
indicates that the liquidity position of the firm is good and the firm will be able to pay its
current liabilities in time without facing difficulties. The standard current ratio is 2 (i.e.) 2:1
so it is proposed to sustain the current ratio of the Company either by increasing current asset
or by improving the repayment of liabilities.
70
LIQUID RATIO
Liquid ratio is also known as acid test or Quick ratio is a more rigorous test or
liquidity then the current ratio. The ‘liquidity’ refers to the ability of a firm to pay its short
term obligation as and when they become due. Quick ratio may be defines as the relationship
between quick or liquid assets and current liabilities. An asset is said to be liquid if it can be
covered into cash within a short period without a loss of value. The quick ratio can be
calculated by dividing the total of the quick assets by total current liabilities.
TABLE: 18 LIQUID RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
YEAR LIQUID ASSETS CURRENT LIABILITIES RATIO
2013 39541.80 28,208.29 1.40

2014 42586.34 25,996.19 1.64
2015 38929.04 22,817.12 1.71
2016 35531.47 20,740.65 1.71
2017 35524.29 20,142.63 1.76
71
CHART: 2 LIQUID RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
1.80 1.64 1.71 1.71 1.76

1.60 1.40
LIQUID RATIO
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
The above table & chart reveals the liquid ratio of Bharat Heavy Electricals Limited
Company for the five years (2013 to 2017). In the year 2014 the liquid ratio shows an
increase to 1.64. In the year 2016 to 2017 the liquid ratio ultimately increased to 1.71 to 1.76.
The Company shows a slight rise in trend 2016 to 2017. This states that the Company has
fluctuating in liquid resources. The ratio indicates that the Company is good in maintain
liquid assets. But it should improve the liquid assets in order to meet the unavoidable
circumstances.
72
ABSOLUTE LIQUID RATIO
The logical consequences of the concept of eliminating the inventories as a liquid

asset in the acid test ratio owing to their questioning value in the liquidation of elimination of
debtors from the total assets in the computation of absolute liquid ratio. Absolute liquid ratio
indicates the relationship between super asset and current liabilities. This ratio is calculated
along with current ratio to know the liquidity position of the firm.
TABLE: 19 ABSOLUTE LIQUID RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
YEAR ABSOLUTE LIQUID ASSETS LIQUID LIABILITIES RATIO
2013 7,845.05 28,208.29 0.28

2014 12,019.97 25,996.19 0.46
2015 9,948.90 22,817.12 0.44
2016 10,087.20 20,740.65 0.49
2017 10,493.55 20,142.63 0.52
73
CHART: 3 ABSOLUTE LIQUID RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
ABSOLUTE LIQUID RATIO
0.60
0.50 0.46 0.52

0.49
0.44
0.40
0.28
0.30
0.20
0.10
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
The above table & chart shows the absolute liquid ratio of Bharat Heavy Electricals
Limited Company for the five years (2013 to 2017). In the year 2014 the absolute liquid ratio
shows an ultimate increase to 0.46. In the year 2016 to 2017 the absolute liquid ratio
ultimately increased to 0.49 to 0.52. The Company shows a slight rise in trend 2016 to 2017.
This states that the Company has fluctuating and adequate liquid resources. This ratio
indicates that the Company is good in maintaining adequate liquid assets. The Absolute liquid
asset has to be maintained in order to meet the current liabilities.
74
ACTIVITY RATIO
Funds are invested to various assets in business to make sales and earn profits.
The management of assets, the larger is the amount of sales and the profits. Activity ratios
measure the efficiency or effectiveness with which a firm manages its resource and assets.
These ratios are also called turnover ratios because they indicate the speed with which assets
are converted or turned over into sales.
The ratios are calculated under current asset movement ratio:

 Inventory turnover ratio
 Debtor turnover ratio
 Creditor turnover ratio
 Fixed assets turnover ratio
75
INVENTORY TURNOVER RATIO
Inventories turnover ratio will indicate whether inventory has been effectively used or
not. The purpose is to see whether only the required minimum funds have been blocked up in
inventory. It indicates the number of times the stock has been turned over during the period
and evaluates the efficiency with which a firm is able to manage its inventory.
TABLE: 20 INVENTORY TURNOVER RATIO OF BHARAT HEAVY

ELECTRICALS LIMITED
YEAR COST OF GOODS SOLD AVERAGE INVENTORY RATIO
2013 38,178.69 12697.26 3.01
2014 33,366.60 10838.86 3.08
2015 27,416.57 9960.29 2.75
2016 26,558.98 9860.17 2.69
2017 27,696.35 8494.06 3.26
76
CHART: 4 INVENTORY TURNOVER RATIO OF BHARAT HEAVY
INVENTORY TURNOVER ELECTRICALS LIMITED
3.50
3.01 3.08 3.26
3.00
2.75
2.69
2.50
RATIO
2.00
1.50
1.00
0.50
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart it shows the inventory ratio of Bharat Heavy Electricals
Limited Company for the five years (2013 to 2017). The inventory ratio measures the
velocity of conversion of stock into sales. The Companies inventory ratio looks good during
the years. In the year 2013 the ratio is 3.01 times in the year, and increase to 3.08 times in
year 2014 Inventory of the year 2015 it decreases to 2.75 times. The ratio slightly decreased
to 2.69 in the year 2016. And in the year 2017 the inventory ratio has increased to 3.26 times.
So the Company has to maintain the same level of performance in future period.
77
DEBTORS TURNOVER RATIO
A concern may sell goods on cash as on credit. Credit is one of the important
elements of sales promotion. The volume of sales can be increased by following a liberal
credit policy. Hence, liquidity position of a concern to pay its short term obligation in time
debits upon the qualities of its trade debtors. Generally higher the times of debtors turnover
the more efficient the management is in terms of due collection. Debtor’s turnover ratio can
be calculated by:
TABLE: 21 DEBTORS TURNOVER RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
AVERAGE ACCOUNTS
YEAR CREDIT PURCHASE RATIO
PAYABLE
2013 28,171.38 10061.49 2.80
2014 18,032.61 9293.45 1.94
2015 14,674.40 8960.41 1.64
2016 13,428.64 9068.95 1.48
2017 13,535.17 8883.03 1.52
78
CHART: 5 DEBTORS TURNOVER RATIO OF BHARAT HEAVY ELECTRICALS
DEBTORS TURNOVER LIMITED
1.75
1.80
1.60
1.37
1.40
RATIO
1.20 1.13 1.26

1.00 1.04
0.80
0.60
0.40
0.20
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart it shows the debtors turnover ratio of Bharat Heavy
Electricals Limited Company for the five years period (2013 to 2017). The debtor’s turnover
ratio of the Company is satisfactory during the five years period. It was 1.75 times in the year
2013 and decreased to 1.37 times in the year 2014. In the year 2016 the ratio decreases to
1.13 times and in the year 2017 there where slight increase up to 1.26 times. The Company
has taken steps to improve its position. The higher the value of debtor’s turnover, the more
efficient is the management of sales.
79
CREDITORS TURNOVER RATIO
In the course of business operation, a firm has to make credit purchase and incur
short term liabilities. A supplier of goods, i.e., creditor is naturally interested in finding out
much time the firm is likely to take in repaying its trade creditors. The analysis for creditor’s
turnover is basically the same as of debtor’s turnover ratio except that in the place of trade
debtors the trade creditors are taken as one of the components of ratio and in place of average
daily sales, average daily purchase are taken as the other components of the ratio. This ratio
indicates the velocity with which the creditors are turned over in relative in purchases.
TABLE: 22 CREDITORS TURNOVER RATIO OF BHARAT HEAVY

ELECTRICALS LIMITED
CREDIT AVERAGE
YEAR RATIO
PURCHASE ACCOUNTS PAYABLE
2013 28,171.38 10061.49 2.80
2014 18,032.61 9293.45 1.94
2015 14,674.40 8960.41 1.64
2016 13,428.64 9068.95 1.48
2017 13,535.17 8883.03 1.52
80
CHART: 6 CREDITORS TURNOVER RATIO OF BHARAT HEAVY
CREDITORS TURNOVER ELECTRICALS LIMITED
3.00 2.80
2.50
1.94
2.00
RATIO
1.64
1.50 1.48 1.52
1.00
0.50
0.00
2013
2014
2015
2016
YEARS 2017
INTERPRETATION
From the above table & chart it shows the Creditors Turnover Ratio of Bharat Heavy
Electricals Limited Company for the year 2013 to 2017. The Company's creditor ratio is
decreasing for the five years. The ratio is 2.80 for year 2013 and decreases to 1.94 times in
the year 2014. The ratio has increased slightly from 1.48 times from 1.52 times in the year
2017. This indicates the Company has not maintained adequate cash and it indicates that the
Company is not efficient in paying to its creditors and also this shows lesser and lesser
availability of supplier’s credit.
81
FIXED ASSETS TURNOVER RATIO
The fixed asset turnover ratio is, in general, used by analysts to measure operating
performance. It is a ratio of net sales to fixed assets. This ratio specifically measures how able
a Company is to generate net sales from fixed asset investments. In a general sense, a higher
fixed asset turnover ratio indicates that a Company has more effectively utilized investment
in fixed assets to generate revenue. The formula for fixed asset turnover ratio is
TABLE: 23 FIXED ASSETS TURNOVER RATIO OF BHARAT HEAVY

ELECTRICALS LIMITED
YEAR NET SALES FIXED ASSETS RATIO
2013 48,915.84 7,035.92 6.95
2014 39,569.41 7,657.99 5.17
2015 30,788.59 6,852.38 4.49
2016 26,678.52 4,286.55 6.22
2017 29,506.57 3,769.53 7.83
82
CHART: 7 FIXED ASSETS TURNOVER RATIO OF BHARAT HEAVY
FIXED ASSETS TURNOVER ELECTRICALS LIMITED
8.00
6.95 7.83
7.00
6.22
6.00
5.17
5.00
RATIO
4.49
4.00
3.00
2.00
1.00
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart the fixed asset turnover Ratio Bharat Heavy Electricals
Limited Company for the five year period (2013-2017). In the year 2013, the ratio was
6.95% which is decreased to 5.17 and finally reaches 7.83 in the year 2017. The high ratio
indicates that the position of the firms is good. They should take steps to maintain this
position for the upcoming years.
83
SOLVENCY RATIO
Teat of solvency refers to the ability of a concern to meet its long term
obligations. The long term indebtedness of a firm includes debenture holders, financial
institutions providing medium and long term loans and other creditors selling goods in
installment basis. The long term creditors of a firm are primarily interested in knowing the
firm ability to pay regularly interest on long-term borrowings, repayment of the principal
amount at the maturity and the security of their loans. Accordingly, long term solvency ratio
indicates a firm ability to meet the fixed interest and costs and repayment schedules
associated with its long term borrowings.
The following ratios serve the purpose of determining the solvency of the concern:
 Debt equity ratio

 Proprietary ratio
 Fixed asset to net worth ratio
 Current asset to proprietary ratio
 Current liability to net worth
 Current asset to total liability
84
DEBT EQUITY RATIO
Debt equity ratio is also known as internal, external equity ratio. It is calculated to
measure the relative claims of outsiders and the owner against the firm’s assets. This ratio
indicates the relationship between the external equity or outsider’s funds and the internal
equities or the shareholders fund thumb nail for calculating working capital turnover ratio is
TABLE: 24 DEBT EQUITY RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
YEAR TOTAL LIABILITIES SHAREHOLDERS FUND RATIO
2013 71,752.70 30,532.73 2.35
2014 75,242.57 33,156.87 2.27
2015 70,888.68 34,206.60 2.07
2016 65,320.46 32,314.15 2.02
2017 61,347.45 32,388.99 1.89
85
CHART: 8 DEBT EQUITY RATIO OF BHARAT HEAVY ELECTRICALS LIMITED
2.50 2.35
DEBT EQUITY RATIO
2.27
2.07
2.00 2.02
1.89
1.50
1.00
0.50
0.00
2013
2014
2015
2016
2017
YEAR
INTERPRETATION
From the above table & chart it shows the debt equity ratio of Bharat Heavy
Electricals Limited Company for the years (2013 to 2017). The Company's debt equity ratio
is 2.35 times during the year 2013. In the year 2016 it decreases of 2.02 after that in the year
2017 it decreases to 1.89 times. A very low ratio indicates that the Company has not used
much of debt financing in business. This indicates that the Company has to maintain their
performance.
86
PROPRIETARY RATIO
This ratio establishes the relationship between the shareholders fund to total asset
of the firm. This ratio is an important ratio for determining the long term solvency of the
firm. It is the variant of the debt equity ratio. It is also known as shareholders to total equity
ratio or net worth to total assets ratio. Formula for calculating proprietary ratio is
TABLE: 25 PROPRIETARY RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
TOTAL TANGIBLE
YEAR SHAREHOLDERS FUNDS RATIO
ASSETS
2013 30,532.73 4,336.84 7.04
2014 33,156.87 4,561.52 7.27
2015 34,206.60 4,069.99 8.40
2016 32,314.15 3,831.35 8.43
2017 32,388.99 3,496.43 9.26
87
CHART: 9 PROPRIETARY RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
10.00
PROPRIETARY RATIO
9.00 9.26
8.40 8.43
8.00 7.04 7.27
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart it shows the proprietary ratio of for five years (2013 to
2017). During the year 2013-2017 the ratio appears to be in increasing 7.04 to 9.26. During
the period 2016 to 2017 there where sudden increase in ratio. The lower ratio indicates the
share of the shareholders in the Company is not in sufficient number. The sudden increase in
the proprietary ratio shows that the Company has taken adequate measures to increase the
shareholders’ funds.
88
FIXED ASSET TO NET WORTH RATIO
Fixed assets to net worth is a ratio measuring the solvency of a Company. This ratio
indicates the extent to which the owners' cash is frozen in the form of fixed assets, such as
property, plant, and equipment, and the extent to which funds are available for the Company's
operations (i.e. for working capital).
TABLE: 26 FIXED ASSETS TO NETWORTH RATIO OF BHARAT HEAVY

ELECTRICALS LIMITED
YEAR FIXED ASSETS NETWORTH RATIO
2013 7,035.92 30,532.73 0.23
2014 7,657.99 33,156.87 0.23
2015 6,852.38 34,206.60 0.20
2016 4,286.55 32,314.15 0.13
2017 3,769.53 32,388.99 0.12
89
CHART: 10 FIXED ASSETS TO NETWORTH RATIO OF BHARAT HEAVY
ELECTRICALS LIMITED
0.25 0.23 0.23
0.20
FIXED ASSETS TO
0.20
NETWORTH
0.15
0.13
0.10 0.12
0.05
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table, the Fixed asset to Net worth Ratio of Bharat Heavy Electricals
Limited Company for the five year period 2013-2017. During the year 2013 to 2015 there
was continuous decrease in the ratio. During the year 2017 there was an ultimate decrease to
0.12 times. The low ratio indicates that the Company is not proper in maintaining the fixed
assets. So the company has to increase its position in the assets.
90
CURRENT ASSET TO PROPRIETARY RATIO
Current Assets to Proprietors’ Fund Ratio establish the relationship between current
assets and shareholder’s funds. The purpose of this ratio is to calculate the percentage of
shareholders’ funds invested in current assets.
TABLE: 27 CURRENT ASSETS TO PROPRIETARY RATIO OF BHARAT HEAVY

ELECTRICALS LIMITED
YEAR CURRENT ASSETS SHAREHOLDER'S FUND RATIO
2013 51,410.83 30,532.73 1.68
2014 52,395.03 33,156.87 1.58
2015 49,040.93 34,206.60 1.43
2016 45,139.91 32,314.15 1.40
2017 42,903.96 32,388.99 1.32
91
CHART: 11 CURRENT ASSETS TO PROPRIETARY RATIO OF BHARAT HEAVY
ELECTRICALS LIMITED
1.80 1.68
PROPRIETARY RATIO
1.58
CURRENT ASSETS TO
1.60
1.43
1.40 1.40
1.32
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart the current assets to proprietary ratio of Bharat Heavy
Electricals Limited Company are gradually decreasing for the five year period 2013-2017. In
the year 2013 the ratio was 1.68 which is decreased to 1.32 in the year 2017. The low ratio
indicates that the position of the firms is good. Hence the company has to increase its current
assets in order to meet its liquidity.
92
CURRENT LIABILITY TO NETWORTH RATIO
This ratio establishes the relationship between the Current liabilities to net worth
of the firm. The ratio of proprietor's funds to total funds is an important ratio for determining
long- term solvency of a firm. The formula for current liability to net worth ratio is
TABLE: 28 CURRENT LIABILITY TO NETWORTH RATIO OF BHARAT HEAVY

ELECTRICALS LIMITED
YEAR CURRENT LIABILITIES NETWORTH RATIO
2013 28,208.29 30,532.73 0.92
2014 25,996.19 33,156.87 0.78
2015 22,817.12 34,206.60 0.67
2016 20,740.65 32,314.15 0.64
2017 20,142.63 32,388.99 0.62
93
CHART: 12 CURRENT LIABILITY TO NETWORTH RATIO OF BHARAT HEAVY
ELECTRICALS LIMITED
1.00 0.92
CURRENT LIABILITY TO
0.90
0.78
0.80
0.70
NETWORTH
0.67
0.64
0.60 0.62
0.50
0.40
0.30
0.20
0.10
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart the Current liability to Net worth ratio of Bharat Heavy
Electricals Limited Company is shown it is fluctuating for the five year period 2013-2017. In
the year 2013, the ratio was 0.92 and in the year 2015 it was 0.67 times which reaches its
minimum and finally falls to 0.62 in the year 2017. The low ratio indicates that the liquidity
position of the firms is not good. Hence the company has to increase the liquidity in order the
meet the requirements.
94
CURRENT ASSET TO TOTAL LIABILITIES
The Current Assets to Total Liabilities ratio measures the Company’s ability to cover
its total debt with its Total Current Assets. This ratio is also used to estimate the liquidity of
the Company by showing the Company can pay its creditors with its current assets if the
Company’s assets ever had to be liquidated. An increasing Current Asset to Total Debt ratio
is generally a positive sign, showing the Company has a better ability to satisfy its debt
obligations using its Total Current Assets.
TABLE: 29 CURRENT ASSETS TO TOTAL LIABILITIES OF BHARAT HEAVY

ELECTRICALS LIMITED
YEAR CURRENT ASSETS TOTAL LIABILITIES RATIO
2013 51,410.83 71,752.70 0.72
2014 52,395.03 75,242.57 0.70
2015 49,040.93 70,888.68 0.69
2016 45,139.91 65,320.46 0.69
2017 42,903.96 61,347.45 0.70
95
CHART: 13 CURRENT ASSETS TO TOTAL LIABILITIES OF BHARAT HEAVY
ELECTRICALS LIMITED
CURRENT ASSETS TO
0.72 0.72
TOTAL LIABILITIES
0.72
0.71
0.71
0.70 0.70
0.70
0.70
0.69
0.69 0.69
0.69
0.68
0.68
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table, the current asset to total liability of Bharat Heavy Electricals
Limited for the five year period 2013-2017 is shown. In the year 2013, the ratio was 0.72
times which is decreased to 0.70 and finally it reaches its minimum 0.69 and becomes
constant in the next year and finally it reached to 0.70 in the year 2017. The increased ratio
indicates that the liquidity position of the firms is good in the last year. But the company
should concentrate more.
96
PROFITABILITY RATIO
The primary objective of a business undertaking is to earn profit. Profit earning is

considered essential for the survival of business. Efficiency of a business is measures by
profitability. Profitability ratio measures the profit earning capacity of the business concern.
A business enterprise can discharge its obligation to the various segments of the society only
through earning profits. Generally, profitability ratios are calculated either in relation to sales
or in relation to investment.
The following ratios are known as general profitability ratios
 Gross profit ratio

 Net profit ratio
 Operating ratio
 Operating profit ratio
97
GROSS PROFIT RATIO
Gross profit ratio measures the relationship of gross profit to net sales and is usually
represented as a percentage. It is used to evaluate the operational performance of the
Company. Thus, it is called by dividing the gross profit by sales. The formula for gross profit
ratio is
TABLE: 30 GROSS PROFIT RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
YEAR GROSS PROFIT NET SALES RATIO
2013 10,737.15 48,915.84 21.95
2014 6,202.81 39,569.41 15.68
2015 3,372.02 30,788.59 10.95
2016 119.54 26,678.52 0.45
2017 1,810.22 29,506.57 6.13
98
CHART: 14 GROSS PROFIT RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
25.00
GROSS PROFIT RATIO
21.95
20.00
15.68
15.00
10.95
10.00
5.00 6.13
0.45
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart it shows the gross profit ratio of Bharat Heavy
Electricals Limited Company for the year 2013 to 2017. During the year 2013, the
Company's gross profit ratio is 21.95% and it reaches to 15.68% in 2014 then there was a fall
up to 0.45% in 2016. This shows that the company indicates low cost of goods sold due to
unfavorable purchasing policies, lower selling prices over investment in plant and machinery.
This shows that the Company has to improve and has to take steps to increase the ratio
further in the future. Hence the growth is satisfactory in 2017.
99
NET PROFIT RATIO
Net profit ratio establishes a relationship between net profit (after taxes) and sales,
and indicates the efficiency of the management in manufacturing selling, administrative other
activities of the firm. The formula for net profit ratio is
TABLE: 31 NET PROFIT RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
YEAR NET PROFIT NET SALES RATIO
2013 6,693.10 48,915.84 13.68
2014 3,502.34 39,569.41 8.85
2015 1,450.44 30,788.59 4.71
2016 -721.42 26,678.52 -2.70
2017 478.74 29,506.57 1.62
100
CHART: 15 NET PROFIT RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
13.68
14.00
NET PROFIT RATIO
12.00
10.00 8.85
8.00
6.00
4.71
4.00
2.00
-2.70
1.62
0.00
-2.00 2013
2014
2015
-4.00 2016
2017
YEARS
INTERPRETATION
From the above table & chart it shows the net profit ratio of Bharat Heavy Electricals
Limited Company for the years 2013 to 2017. The Company's ratio for the year 2013 is
13.68%. The ratio decreased to 8.85% during the second year 2014 and it decreases to 4.71%
in the third year 2015. In the year 2014 the ratio becomes negative due to net loss of -2.70%
and then increases to 1.62% in the year 2017. Hence the Company has to take steps to
increase the ratio by increasing the net profit and this can be achieved by cutting down
expenses.
101
OPERATING RATIO
Operating ratio measures the relationship between cost of goods sold and operating
expenses on the one hand and the sales on other. In other words, it measures the cost of
operations per rupee of sales. The ratio is calculated by dividing operating costs with the net
sales and it's generally represented as a percentage. The formula for operating ratio is
TABLE: 32 OPERATING RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
YEAR OPERATING COST NET SALES RATIO
2013 39,311.59 48,915.84 80.37
2014 34,989.62 39,569.41 88.43
2015 28,647.16 30,788.59 93.04
2016 28,035.41 26,678.52 105.09
2017 28,679.71 29,506.57 97.20
102
CHART: 16 OPERATING RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
120.00
105.09
100.00 93.04
OPERATING RATIO
88.43 97.20
80.37
80.00
60.00
40.00
20.00
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart it shows the Operating Ratio of Bharat Heavy
Electricals Limited Company is increasing for five years 2013 to 2017. The Company's ratio
is 80.37% in the year 2013. In the year 2016 the ratio increases to maximum of 105.09% &
slightly falls to 97.20% in 2017. They should maintain this low cost of operating expenses.
The higher operating ratio indicates to be less favorable with a small margin to cover interest,
tax and reserves.
103
OPERATING PROFIT RATIO
Operating profit ratio measures the relationship between cost of goods sold and
operating expenses on the hand and the sales on the other. In other words, it measures the
cost of operations per rupee of sales. The ratio is calculated by dividing operating costs with
the net sales and it's generally represented as a percentage. The formula for operating profit
ratio is
TABLE: 33 OPERATING PROFIT RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
YEAR OPERATING PROFIT NET SALES RATIO
2013 9,604.25 48,915.84 19.63
2014 4,579.79 39,569.41 11.57
2015 2,141.43 30,788.59 6.96
2016 -1,356.89 26,678.52 -5.09
2017 826.86 29,506.57 2.80
104
CHART: 17 OPERATING PROFIT RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
OPERATING PROFIT RATIO
19.63
20.00
15.00
11.57
10.00
6.96
5.00
-5.09 2.80
0.00
2013
2014
-5.00 2015
2016
2017
-10.00
YEARS
INTERPRETATION
From the above table & chart it shows the Operating Profit Ratio of Bharat
Heavy Electricals Limited Company for five years 2013 to 2017. The Company's ratio is
19.63% in the first year. During the year 2015 the ratio decreases to 6.96% and in the
year 2016 it became negative due to net loss & in the year 2017 it increased to 2.80%
which shows the operating profit is flat for the Company. So the Company has to take
necessary steps to control cost and increase the ratio further and take steps to maintain
stability.
105
OVERALL PROFITABILITY RATIOS
Profits are the measure of overall efficiency of a business. The higher the profits, the
more efficient are the business considered. Thus, overall profitability or efficiency of a
business can be measured in terms of profits related to investments made in the business.
The following ratios are known as overall profitability ratios
 Net worth ratio

 Return on capital employed ratio
 Capital turnover ratio
106
NETWORTH RATIO
The net worth ratio states the return that shareholders could receive on their
investment in a Company, if all of the profit earned were to be passed through directly to
them. Thus, the ratio is developed from the perspective of the shareholder, not the Company,
and is used to analyze investor returns. The ratio is useful as a measure of how well a
Company is utilizing the shareholder investment to create returns for them, and can be used
for comparison purposes with competitors in the same industry. The formula for net worth
ratio is
TABLE: 34 NETWORTH RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
NET PROFIT AFTER TAX SHAREHOLDERS

YEAR RATIO
(NPAT) FUND
2013 6,693.10 30,532.73 21.92
2014 3,502.34 33,156.87 10.56
2015 1,450.44 34,206.60 4.24
2016 -721.42 32,314.15 -2.23
2017 478.74 32,388.99 1.48
107
CHART: 18 NETWORTH RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
25.00
21.92
NETWORTH RATIO
20.00
15.00
10.56
10.00
5.00 4.24
-2.23
1.48
0.00
2013
2014
-5.00 2015
2016
2017
YEARS
INTERPRETATION
From the above table & Chart the Net Worth Ratio of Bharat Heavy Electricals
Limited Company for the five year period 2013-2017. In the year 2013, the ratio was 21.92%
and decreases to 10.56% in the year 2014 and then there was a slight decrease to 4.24% and it
became negative due to loss in the year 2016 and gradually increased to 1.48% in 2017. The
low ratio indicates that the Profitability position of the firms is not good. The Company is
proposed to increase its Net worth.
108
RETURN ON CAPITAL EMPLOYED
Return on capital employed is a profitability ratio that measures how efficiently a

Company can generate profits from its capital employed by comparing net operating profit to
capital employed. In other words, return on capital employed shows investors how many
rupees in profits each rupee of capital employed generates. Return on capital employed is a
long-term profitability ratio because it shows how effectively assets are performing while
taking into consideration long-term financing. The formula for return on capital employed is
TABLE: 35 RETURN ON CAPITAL EMPLOYED OF BHARAT HEAVY

ELECTRICALS LIMITED
YEAR OPERATING PROFIT CAPITAL EMPLOYED RATIO
2013 9,604.25 43,539.71 0.22
2014 4,579.79 49,228.84 0.09
2015 2,141.43 48,069.33 0.04
2016 -1,356.89 44,579.03 -0.03
2017 826.86 41,205.90 0.02
109
CHART: 19 RETURN ON CAPITAL EMPLOYED OF BHARAT HEAVY
ELECTRICALS LIMITED
0.25
0.22
RETURN ON CAPITAL
0.20
EMPLOYED
0.15
0.10 0.09
0.04
0.05
-0.03 0.02
0.00
2013
2014
-0.05 2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart the Return on capital Employed Ratio of Bharat Heavy
Electricals Limited Company for the five year period 2013-2017. In the year 2013, the ratio
was 0.22 which decreased to 0.09 and becomes negative in the year 2016 and slightly
increases and reaches 0.02 in the year 2017. The low ratio indicates that the Overall
Profitability position of the firms is not good. The Company is proposed to increase their net
profit.
110
CAPITAL TURNOVER RATIO
Capital turnover ratio is a measurement comparing the depletion of working capital

used to fund operations and purchase inventory, which is then converted into sales revenue
for the Company. The capital turnover ratio is used to analyze the relationship between the
money that funds operations and the sales generated from these operations. The formula for
capital turnover ratio is
TABLE: 36 CAPITAL TURNOVER RATIO OF BHARAT HEAVY ELECTRICALS

LIMITED
YEAR NET SALES CAPITAL EMPLOYED RATIO
2013 48,915.84 43,539.71 1.12
2014 39,569.41 49,228.84 0.80
2015 30,788.59 48,069.33 0.64
2016 26,678.52 44,579.03 0.60
2017 29,506.57 41,205.90 0.72
111
CHART: 20 CAPITAL TURNOVER RATIO OF BHARAT HEAVY ELECTRICALS
LIMITED
1.20 1.12
CAPITAL TURNOVER RATIO
1.00
0.80
0.80
0.64 0.72
0.60 0.60
0.40
0.20
0.00
2013
2014
2015
2016
2017
YEARS
INTERPRETATION
From the above table & chart the capital turnover ratio of Bharat Heavy Electricals
Limited Company is decreasing for the first four years and increased in the final year in the
period of (2013-2017). In the year 2013, the ratio was 1.12 which decreases to 0.80 in the
year 2014. Then it slightly decreased to 0.60 in the year 2016 and finally it increased to 0.72
in the year 2017. The ratio indicates that the Overall Profitability position of the firms is not
good and they should take steps to improve the ratio in further years.
112
TREND ANALYSIS
This ratio can be defined as index numbers of the movements of the various financial
items in the financial statements. Trend ratios show the nature and rate of movements in
various financial factors. Trend ratios also are presented graphically. They are useful in
predicting the behavior financial factors. Trend analysis determines the direction upwards or
downwards and involves the computation of the percentage relationship that each statement
item bears to the same item in the base year. The information for a number of years is taken
up and one year, generally the first year, is taken as a base year. The figure of the base year is
taken as 100 and trend ratios for other year are calculated on the basis of base year. The
researcher will be able to see the trend of figures, whether upwards or downwards.
 Sales
 Purchase
 Gross Profit
 Net Profit
 Current Assets
 Current Liabilities
113
TREND OF SALES
TABLE: 37 TREND OF SALES OF BHARAT HEAVY ELECTRICALS LIMITED
YEAR NET SALES TREND PERCENTAGE
2013 48,915.84 100.00
2014 39,569.41 80.89
2015 30,788.59 62.94
2016 26,678.52 54.54
2017 29,506.57 60.32
CHART: 21 TREND OF SALES OF BHARAT HEAVY ELECTRICALS LIMITED
100.00 100.00
90.00
TREND OF SALES
80.00
80.89
70.00
60.00 62.94
60.32
50.00 54.54
40.00
30.00
20.00
10.00
0.00
2013
2014
2015
2016
2017
YEARS
114
INTERPRETATION
From the above table & Chart it reveals the sales for Bharat Heavy Electricals
Limited. The Company sales show decrease in trend for five years period (2013 to 2017). The
sale was 80.89% in the year 2014 when compared to 2013 which was 100%. In the year 2017
the trend percentage reaches to 60.32%. The Company has to maintain the increase level of
performance and it should take necessary steps for increasing the profit. The company has to
increase its purchase in order to boost the sales.
115
TREND OF PURCHASE
TABLE: 38 TREND OF PURCHASE OF BHARAT HEAVY ELECTRICALS
LIMITED
YEAR PURCHASE TREND PERCENTAGE
2013 28,171.38 100.00
2014 18,032.61 64.01
2015 14,674.40 52.09
2016 13,428.64 47.67
2017 13,535.17 48.05
CHART: 22 TREND OF PURCHASE OF BHARAT HEAVY ELECTRICALS

LIMITED
100.00
100.00
TREND OF PURCHASE
90.00
80.00
70.00 64.01
60.00
52.09
50.00
47.67
48.05
40.00
30.00
20.00
10.00
0.00
2013
2014
2015
2016
2017
YEARS
116
INTERPRETATION
From the above table & Chart it reveals the purchase for Bharat Heavy Electricals
Limited. The Company purchase shows a fluctuating trend for five years period from (2013
to 2017). The purchase was 64.01% in the year 2014 when compared to 2013 which was
100%. In the year 2015 decreased and reached to 52.09%. In 2017 purchase has gone up little
by 48.05%. The trend percentage indicates that the Company must watch over the expenses
and control over the purchase.
117
TREND OF GROSS PROFIT
TABLE: 39 TREND OF GROSS PROFIT OF BHARAT HEAVY ELECTRICALS
LIMITED
YEAR GROSS PROFIT TREND PERCENTAGE
2013 10,737.15 100.00
2014 6,202.81 57.77
2015 3,372.02 31.41
2016 119.54 1.11
2017 1,810.22 16.86
CHART: 23 TREND OF GROSS PROFIT OF BHARAT HEAVY ELECTRICALS

LIMITED
100.00
100.00
TREND OF GROSS PROFIT
90.00
80.00
70.00
57.77
60.00
50.00
40.00
31.41
30.00
20.00
10.00 16.86
1.11
0.00
2013
2014
2015
2016
2017
YEARS
118
INTERPRETATION
The above table & Chart shows the gross profit of the Company for five years from
the year 2013 to 2017. It is clear from this table that the gross profit shows decrease trend for
the five years (2011 to 2015). The trend percentage for the year 2014 was 57.77%. When
compared to 100% in the year 2013. In the year 2016 the rate of gross profit for the Company
has reached to 1.11% and then in the year 2017 there were slight increase in gross profit. The
Company has taken steps to improve a good rate of gross profit and should concentrate on
sales.
119
TREND OF NET PROFIT
TABLE: 40 TREND OF NET PROFIT OF BHARAT HEAVY ELECTRICALS
LIMITED
YEAR NET PROFIT TREND PERCENTAGE
2013 6,693.10 100.00
2014 3,502.34 52.33
2015 1,450.44 21.67
2016 -721.42 -10.78
2017 478.74 7.15
CHART: 24 TREND OF NET PROFIT OF BHARAT HEAVY ELECTRICALS

LIMITED
100.00 100.00
80.00
60.00
52.33
AXIS TITLE
40.00
21.67
20.00
-10.78
0.00 7.15
2013
2014
2015
-20.00 2016
2017
AXIS TITLE
120
INTERPRETATION
The above table & chart shows the net profit of the Company for five years (2011 to
2015). The Company's net profit shows a decreasing trend in the period of five years. The
trend percentage for the year 2014 is 52.33% when compared to 100% in the year 2013 it is a
great decrease. In the year 2015 also the net profit decreased to 21.67% and in the year 2016
it has become negative to -10.78%. In the year 2017 it increased to 7.15%. The Company
must maintain the rise in net profit. The Company has to take steps to maintain a good rate of
Net Profit. Hence from the above chart we could understand that the company is suffering in
heavy losses.
121
TREND OF CURRENT ASSETS
TABLE: 41 TREND OF CURRENT ASSETS OF BHARAT HEAVY ELECTRICALS
LIMITED
YEAR CURRENT ASSETS TREND PERCENTAGE

2013 51,410.83 100.00
2014 52,395.03 101.91
2015 49,040.93 95.39
2016 45,139.91 87.80
2017 42,903.96 83.45
CHART: 25 TREND OF CURRENT ASSETS OF BHARAT HEAVY ELECTRICALS

LIMITED
120.00
TREND OF CURRENT ASSETS
100.00
101.91
100.00 95.39
87.80
80.00 83.45
60.00
40.00
20.00
0.00
2013
2014
2015
2016
2017
YEARS
122
INTERPRETATION
The above table & chart reveals the current assets of the Company for five years from
2013 to 2017. It is clear from the above table that the current assets of the Company have
been decreased in the years. The trend percentage was increased 101.91% in the year 2014
when compared to 100 % in the year 2013. The percentage of the current assets decreased in
the third year by 95.39% in the year 2015. The percentage of the current assets decreased in
the fourth year by 87.80% in the year 2014. In the year 2017 again there was an decrease and
the percentage reaches to 83.45%. The low percentage indicates that the Company’s
performance is not good. The Company has to take steps to sustain this position in upcoming
years.
123
TREND OF CURRENT LIABILITIES
TABLE: 42 TREND OF CURRENT LIABILITIES OF BHARAT HEAVY
ELECTRICALS LIMITED
YEAR CURRENT LIABILITIES TREND PERCENTAGE
2013 28,208.29 100.00
2014 25,996.19 92.16
2015 22,817.12 80.89
2016 20,740.65 73.53
2017 20,142.63 71.41
CHART: 25 TREND OF CURRENT LIABILITIES OF BHARAT HEAVY

ELECTRICALS LIMITED
TREND OF CURRENT LIABILITIES
100.00
100.00
92.16
90.00
80.89
80.00
73.53
70.00 71.41
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2013
2014
2015
2016
2017
YEARS
124
INTERPRETATION
The above table & chart reveals the current liabilities of the Company for five
years from 2013 to 2017. It is clear from the above table that the current liabilities of the
Company shows decrease in trend. The trend percentage was 92.16% in the year 2014 when
compared to 100% in the year 2013. The percentage of the current liabilities decreased to
73.53% in 2016. In the year 2017 there was a decrease up to 71.41%. The Company’s
performance is not good because this decrease shows a fall of the company. It has to take
steps to control down the amount of current liabilities to increase liquidity position and build
up current assets.
125
CHAPTER V
FINDINGS AND SUGGESTIONS
FINDINGS
I.COMPARATIVE FINANCIAL STATEMENT
A) Comparative Balance Sheet

Fixed Asset of the Bharat Heavy Electricals Limited has been decreasing constantly
from the year 2013 to 2017. Current Assets of the Company are gradually decreasing. But the
Current Liabilities of the company is also decreasing. Capital of the Company for the past
five year (2013-2017) is decreasing. The overall balance sheet and the financial position of
the Bharat Heavy Electricals Limited are not satisfactory.
B) Comparative Income Statement
There has been decrease in sales for the last five years from 2013-2017. Total income
of the Company is constantly decreasing every year. Through the five years period all other
expenses shows a constant decrease. On the decrease in expenses & Profit, the profitability
position of the concern is not good.
II .RATIO ANALYSIS
a. Liquidity Ratio
 The current ratio of the company has been Increasing during the five years
mainly because of the increase in the current liabilities.
 The quick ratio is also constant fluctuating during the past previous
preceding five years. Company’s Liquid ratio is good.
 The absolute liquid ratio of the Company is increasing in the five years
and in the last year the Company’s absolute ratio was good.
b. Activity Ratio
 The inventory turnover ratio of the Company was fluctuating during the
five’s years period. There is no constant decrease and increase.
126
 Bharat Heavy Electricals Limited debtor’s turnover ratio was slightly
decreased. During 2017 there was a increase.
 Creditors’ turnover is constantly decreasing in the past previous preceding
five years
 Fixed asset turnover ratio was slightly decreasing but during the previous
year there were a gradual increase.
c. General profitability ratio
 The gross profit ratio of the Company has a constant decrease but there
was a slight increase during the last year.
 Net profit ratio is very low compared to the five years. The profit side of
the Company is not up to the level.
 The operating ratio of the companies is ultimately increasing.
 Operating profit ratio of Bharat Heavy Electricals Limited is fluctuating
there was a constant decrease and it became negative in 2016.
d. Overall profitability ratio
 The return on shareholders’ investment ratio is very low for the Company.
 The return on equity capital is on the lower side.
 The net worth is also decreasing it is not satisfactory.
 The return for the capital employed is also decreasing and in the year
2016 it has become negative.
 The capital turnover ratio is not satisfactory it is decreasing. It is not so
good for the company.
III. TREND ANALYSIS
 The sales shows decreasing trend in each year of past preceding previous five
years.
 There trend of purchase is decreasing in every year of past preceding previous five
years.
 There was decreasing trend in gross profit in each year of past preceding previous
five years at last it has increased.
127
 Net profit trend was has become Negative in the year 2016 of past preceding
previous five years. Hence company is suffering in loss.
 Current asset showed an increasing trend in 2014 and then it started decreasing.
 Current liabilities have shown decrease in trend. It is good but it is not up to the
mark.
SUGGESTIONS
 The Current ratio of the Company should be increased to safer levels. The Liquidity
position of the companies is good. The Company should invest more in current asset
and reduce current liability to keep the current ratio to a satisfactory level.
 The Company should concentrate on sales and profit. As the company is suffering from
a fall for 3 Years.
 For better profitability and liquidity the Company should use long term funds for
financing fixed assets and also use on current assets.
 The credit policy of Company is quite satisfactory and the Company may sell more on
credit to its customers and increase sales and give a good trend in production.
 The Company can introduce a performance appraisal system with incentives for
increasing the productivity of employees.
 Reserves should be utilized for the growth of the Company.
 Manufacturing concern require more investment in capital goods.
 Better Control of Cost will assure improved profits in future.
128
CHAPTER VI
CONCLUSION
The main objective of the study was to analyze the financial performance of
Bharat Heavy Electricals Limited. The analysis was done on the basis of the data collected
from the published annual auditor reports. From the analysis done, interpretation made and
findings drawn. Thereby it was concluded that the companies has to increase the efficiency in
utilization of its resources. The overall profitability and financial performance of the
Company seems to be satisfactory. The company has to control the indirect expenses so that
their product can survive in the market. From this analysis we can concluded that Bharat
Heavy Electricals Limited has taken steps to improve their standards to sustain in the
competitive market.
129

A Study On Financial Performance of Bharat Heavy Electricals Limited (Bhel)

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CHAPTER I

Based on the sources, Finance is classified under two heads

1. Public Finance and

PUBLIC FINANCE PRIVATE FINANCE

PUBLIC REVENUE PERSONAL FINANCE

PUBLIC EXPENDITURE BUSINESS FINANCE

“The complex of problems that centers on the revenue-expenditure process of

- Professor Richard Musgrave

BRANCHES OF PUBLIC SECTOR FINANCE

(1) Public Revenue

(2) Public Expenditure

(a) Total amount of public debt

(5) Fiscal Policy

CATEGORIES OF PRIVATE FINANCE

It is needed for small tools, implements and major repairs.

If the finance function is properly blended with production, marketing, personnel,

“That business activity which is concerned with acquisition and conservation of

“Business finance deals primarily with raising, administrating funds by privately

AIMS OF FINANCE FUNCTION

The following are the aims of finance function:

1. Acquiring Sufficient and Suitable Funds:

4. Maximizing firm’s value

In general, the term “Finance” is understood as provision of funds as and when

All activities, be it production, marketing, human resource development, purchases

Efficient Utilization More Important

OBJECTIVES OF FINANCIAL MANAGEMENT

The objective of the financial management is to earn maximum profits. Various

Thus profit maximization is considered as the main objective of business. The

(1) Estimation of requirements of finance,

(1) Allocation of funds

AIMS OF FINANCE FUNCTION

1. Acquiring Sufficient and Suitable Funds

2. Proper Utilisation of Funds

4. Maximizing Firm’s Value

Research and methodology is a way to systematically solve the research problem.

The study makes use of techniques like

 Comparative Balance Sheet & Income Statements

Simple Mathematical Tools like

The main limitations of the present study are listed below,

Company Name BHARAT HEAVY ELECTRICALS LIMITED

Type State-owned enterprise

Traded as BSE: 500103

Industry Electrical Equipments

Founder Government of India

Headquarters New Delhi, India

Area served Worldwide

Key people AtulSobti

Products Gas and Steam Turbines, Boilers, Electric Motors, Generators,

Revenue ₹29,474.99 crore (US$4.5 billion) (2017)

Operating income ₹627.83 crore (US$96 million) (2017)

Total assets ₹61,230.20 crore (US$9.4 billion) (2017)

Number of employees 39,821(2017)

BHARAT HEAVY ELECTRICALS LIMITED

BHEL was established in 1964 ushering in the indigenous Heavy Electrical

BHEL is engaged in the design, engineering, manufacturing, construction, testing,

It has a network of 17 manufacturing units, 2 repair units, 4 regional offices, 8 service

Major manufacturing facilities

 High Pressure Boiler Plant (HPBP), Tiruchirappalli

Other manufacturing facilities

 Electronic System Division (ESD), Bangalore

“A global engineering enterprise providing solutions for a better tomorrow”

Providing sustainable business solutions in the fields of Energy, Industry &