Bharat heavy electricals limited

Project Report on Financial Analysis

of

Bharat Heavy Electricals limited

Submitted to:

Prof. Ramesh

Submitted by:

V. Austin Samuel

FPB1214/56

CF Assignment Austin Samuel

Acknowledgement

I take this opportunity to express my profound gratitude and deep regards to my guide

(Professor Ramesh. S) for his exemplary guidance, monitoring and constant encouragement

throughout the course of this project. The help and guidance given by him time to time shall

carry me a long way in the journey of life on which I am about to embark.

His uncompromising demand for logical conclusions, quality of presentation, and

originality of work and novelty of ideas has benefited this study. I shall always remain grateful to

him and no words of thanks can compensate for the liberty that I had been given to encroach

upon whatever little spare time he had at their disposal.

Lastly, I thank almighty, my parents, and friends for their constant encouragement

without which this assignment would not be possible.

IBA, For Academic Purpose Only Page 1 of 18


Bharat Heavy Electricals Limited

About the Company:

It is an integrated power plant equipment manufacturer and one of the largest engineering

and manufacturing companies in India in terms of turnover. It was established in 1964, ushering

in the indigenous Heavy Electrical Equipment industry in India - a dream that has been more

than realized with a well-recognized track record of performance. The company has been earning

profits continuously since 1971-72 and paying dividends since 1976-77.

They are engaged in the design, engineering, manufacture, construction, testing,

commissioning and servicing of a wide range of products and services for the core sectors of the

economy, viz. Power, Transmission, Industry, Transportation (Railway), Renewable Energy, Oil

& Gas and Defense. The company has 15 manufacturing divisions, two repair units, four

regional offices, eight service centers and 15 regional centers and currently operates at more than

150 project sites across India and abroad. We place strong emphasis on innovation and creative

development of new technologies. Our research and development (R&D) efforts are aimed not

only at improving the performance and efficiency of our existing products, but also at using

state-of-the-art technologies and processes to develop new products. This enables them to have a

strong customer orientation, to be sensitive to their needs and respond quickly to the changes in

the market.

The high level of quality & reliability of our products is due to adherence to international

standards by acquiring and adapting some of the best technologies from leading companies in the

world including General Electric Company, Alstom SA, Siemens AG and Mitsubishi Heavy

Industries Ltd., together with technologies developed in own R&D centres.

Most of the manufacturing units and other entities have been accredited to Quality

Management Systems (ISO 9001:2008), Environmental Management Systems (ISO 14001:2004)

and Occupational Health & Safety Management Systems (OHSAS 18001:2007).

BHEL has a share of 59% in India’s total installed generating capacity contributing 69%

(approx.) to the total power generated from utility sets (excluding non-conventional capacity) as

of March 31, 2012.



BHEL’s global references are spread across 75 countries. The cumulative overseas

installed capacity of BHEL manufactured power plants exceeds 9,000 MW across 21 countries

including Malaysia, Oman, Iraq, the UAE, Bhutan, Egypt and New Zealand. Our physical

exports range from turnkey projects to after sales services.

They work with a vision of becoming a global engineering enterprise providing solutions

for a better tomorrow.

Greatest strength being highly skilled and committed workforce of 49,390 employees,

every employee is given an equal opportunity to develop himself/herself and grow in his/her

career. Continuous training and retraining, career planning, a positive work culture and

participative style of management - all these have engendered development of a committed and

motivated workforce setting new benchmarks in terms of productivity, quality and

responsiveness

About the Industry:

The electric power industry provides the production and delivery of electric energy, often

known as power, or electricity, in sufficient quantities to areas that need electricity through a grid

connection. The grid distributes electrical energy to customers. Electric power is generated by

central power stations or by distributed generation.

Many households and businesses need access to electricity, especially in developed nations,

the demand being scarcer in developing nations. Demand for electricity is derived from the

requirement for electricity in order to operate domestic appliances, office equipment, industrial

machinery and provide sufficient energy for both domestic and commercial lighting, heating,

cooking and industrial processes. Because of this aspect of the industry, it is viewed as a public

utility as infrastructure.



Product portfolio of Company:

Power Air Preheaters Boilers Control Relay Panels Electrostatic Precipitators Fabric Filters Fans Gas Turbines Hydro Power Plant Piping Systems Pulverizers Pumps Seamless Steel Tubes Soot blowers Steam Generators Steam Turbines Turbo generators Valves

Industry Capacitors Ceralin Compressors Desalination Plants Diesel Generating Sets Industrial Motors & Alternators Gas Turbines Oil Field Equipment Solar Photovoltaic Power Semiconductor Devices Seamless Steel Tubes Soot blowers Steel Castings & Forgings Steam Generators Steam Turbines Turbo generators Valves

Transmission



Bushings Capacitors Control Relay Panels Dry-type Transformers Energy Meters HVDC Transmission System Insulators Switchgears Power Semiconductor Devices Power System Studies Control Shunt Reactor

Transportation Electric Rolling Stock Electrics for Rolling Stock Electrics for Urban Transportation System

Non-Conventional Energy Source Mini/Micro Hydro Sets Solar Lanterns Solar Photovoltaic Solar Water Heating Systems Wind Electric Generators

R&D Products Fuel Cells Surface Coatings Automated storage & Retrievals Load Sensors Transparent Conducting Oxide

Organization structure of the company:



Sales of BHEL (Quarter wise)













Financial HR



Analysis:

Bharat Heavy Electricals Ltd., a Navratna company, is the largest engineering and manufacturing enterprise in India for power & infrastructure-related products, with 54% market share. The company has a 25-year history of consistent profitability and manufactures over 180 products for power sector and other industries like transportation, fertilizer, water, steel and renewable energy. The company's operations are organized around two major business segments - power (79% of FY11 revenues) and industry (21%).

The company has 15 manufacturing divisions, 4 power sector regional centers, over 100 project sites, 8 service centers, and 15 regional offices. It is also one of the largest exporters of engineering products and services from India. It supplies its product to over 60 countries in the world. The company gets 96.80% revenues from domestic markets and 3.20% from exports. The Company was incorporated in 1964.



X- Ray Analysis:

BHEL has performed extremely well in the past ten years, except in FY03. The company has increased its Net Sales by 22% CAGR in the last ten years; however the EPS increased by 28% during the same period. This was due to the margin expansion that the company witnessed from FY04 to FY08. India’s increased focused on infrastructure and the monopoly situation enjoyed by the company made this possible. FY09 and FY10 again saw a decrease in margins on the back of increasing raw material prices. The company’s margins have increased substantially to 18% in FY11 as raw material prices dipped. The company has grown its BVPS by 19% 10 yr. CAGR. Given the huge revenues and profitability enjoyed by the company, it has managed to increase its operating cash flow by 14.3% over the last 10 years. Hence, the Company has expanded its business successfully in the past. Currently, the Company has Debt to Net Profit ratio of 0.03, which shows the company is a relatively debt free company & can repay all its debt easily within a year at current level of profit.



BHEL has maintained a high ROE & ROIC, above 25%, over the last 5 years. This shows that the management of the Company is very efficient in utilizing the funds. Being a capital intensive industry, the company has huge working capital requirements. The company has managed to maintain its working capital days at an average of 514 days. However, this is 1.5 times higher than the industry average of 360 days. The company has managed to reduce its net working capital from 180 levels to 107 in FY11, which is lower than the industry average of 180 days but very high when compared to its competitors like ABB and Siemens.

P.S: All the above factors say that the 10 YEAR X-RAY of BHEL is very good

Conclusion



Being a Public sector company and having Sound engineering base and ability to

assimilate and maintaining relatively stable industrial relationship it is able to set up power

plants on turnkey basis with a complete know- how for manufacture of entire equipment is

available with the company. It also has the ability to manufacture or procure to supply spares.

It is fully equipped to take capital maintenance and servicing of the power plants and

largest source of domestic business leading to major presence and influence in the market. The

ability to successfully overhaul and renovate power stations equipment of different international

companies makes it stand on top on the market share price on competing with Larsen which is its

immediate competitor.

Maintaining a market share of around 35% is not a common thing but BHEL is able to do

this very effectively. Increase in PAT, CFAT suggests that the company is doing well in

attaining good sales and thereby good profits. The company should be concentrating more on the

Annual Growth Rate because the AGR was fluctuating from year to year. If sustainability is

attained n AGR then the company can make sure to reach the top position in coming 10 years.

Bibliography:



1. http://www.equitymaster.com/research-it/company-info/detailed-financial-

information.asp?symbol=BHEL&name=BHEL-Detailed-Financial-Data

2. www.moneycontrol.com

3. www.wikipedia.com


information.asp?symbol=BHEL&name=BHEL-Detailed-Financial-Data#.UTlwqdb7C-Y


information.asp?symbol=BHEL&name=BHEL-Detailed-Financial-Data#.UTlwqdb7C-Y

6. http://www.capitalmarket.com/MarketWatch/marketcap.htm


http://www.capitalmarket.com/MarketWatch/marketcap.htm

http://www.equitymaster.com/research-it/company-info/detailed-financial-information.asp?symbol=BHEL&name=BHEL-Detailed-Financial-Data#.UTlwqdb7C-Y




http://www.wikipedia.com/

http://www.moneycontrol.com/

http://www.equitymaster.com/research-it/company-info/detailed-financial-information.asp?symbol=BHEL&name=BHEL-Detailed-Financial-Data

http://www.equitymaster.com/research-it/company-info/detailed-financial-information.asp?symbol=BHEL&name=BHEL-Detailed-Financial-Data

Bharat heavy electricals limited

Education

new products

total power

existing products

art technologies

best technologies

manufacturing units

general electric company

project report