SUMMER INERNSHIP

ON

WORKING CAPITAL MANAGEMENT

IN BHEL JHANSI UNIT

Towards partial fulfilment of

Master of Business Administration (MBA)

(Affiliated to Dr. A.P.J. Abdul Kalam technical University,Lucknow)

Guided by

Guided by

BHASKAR CHATURVEDI
(HR manager, BHEL)

Dr. Preeti Mishra

(Asst. prof., BBDNITM)

Submitted by
Akansha kanaujiya
Roll no. 1405470061
Session 2015-2016
Department of Management

Babu Banarasi Das

National Institute of Technology & Management

Sector- I, Dr.Akhilesh Das Nagar,

FaizabadRoad,Lucknow(U.P.) India
PREFACE
The Summer Internship Project is an integral part of
the PGPM course. As a matter of fact every
management students, has to undergo practical
training in an approved business or organization,
under the guidance of professional managers, as to
become aware of the real life, business situation and
the environment.
During the course of training, the trainees are
expected to use and apply their academic knowledge
of and again valuable insight into corporate cultures
with all its environment operational complexity the
said training offers, a valuable of the trainings to
meet their academic knowledge with the real world
situation.
And I visited to various departments of BHEL Jhansi,
to study their working. In this report I have put my
best efforts to compile the data, to the highest level of
accuracy.

DECLARATION
We the undersigned, hereby declare that the minor
research project entitled working capital
management submitted by me to the BHEL, Jhansi
is a record of an original and confide work done by
me. This project work is submitted in the partial
fulfillment of the requirement for the award of the
degree of Master of Business Administration in
Management Science. The results embodied in this
project work have not been submitted to any other
institute or university for the award of any degree or
diploma appropriate references have been mentioned
wherever necessary.
Place: Jhansi
Date:

AKANSHA KANAUJIYA

ACKNOWLEDGEMENT
We take this opportunity to express our heartfelt
gratitude to all people who have extended their
assistance and provided us information during the
tenure of project and we are greatly indebted to them
for guiding and supporting us throughout the project
sparing some of their valuable time.
We would like to express our deep and sincere
gratitude to our project guide Mr. Bhaskar
chaturvedi for the valuable advice, precious time
and support that he offered to us and his effort to help
us work independently.
Last but not the least we would like to thank all the
respondents for giving their precious time and
relevant information we required , without which this
project would have been different story.

A - BRIEF INTRODUCTION

UNIT JHANSI

CONTENTS
Introduction of BHEL
a)Vision, Mission & values of BHEL
b) An Overview of BHEL
c) Various BHEL Units
d) Activity Profile of BHEL
e) Bharat Heavy Electrical Limited Jhansi (Unit)
f) Various Production Departments at BHEL
Jhansi
g) Health, Safety & Environment
Objective
Scope of the study
Introduction of working capital management
a) Guidelines and source of fund for working capital
requirement of BHEL
b )Cash management
c) Cash management in BHEL jhansi
d) Receivables management
e) Inventory management
f) Inventory management in BHEL jhansi
Finding and interpretation
Conclusion
Limitation
Annexes

(1) VISION, MISSION AND VALUES OF BHEL

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
responsible for delivering superior results that make a
difference in the lives of the people we touch.
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.
ENTEGRITY: 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.

(2) AN OVERVIEW OF BHEL

BHEL is the largest engineering and manufacturing
enterprise in India in the energy/infrastructure sector
today. BHEL was established more than 40 years ago
when its first plant was set up in Bhopal 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.
BHEL caters to core sectors of the Indian Economy
viz., Power Generation & transmission, Industry,
Transportation, Telecommunication, Renewable
Energy, Defense, etc. The wide network of BHELs
17 manufacturing divisions, four Power Sector
regional centers, over 100 project sites, eight service
centers and 18 regional offices, enables the company
to promptly serve its customers and provide them
with suitable products, systems and services9

efficiently and at competitive prices. BHEL has

already attained ISO 9000 certification for quality
management, ISO 27000 for Information Technology
and ISO 14001 certification for environment
management.
POWER GENERATION
Power generation sector comprises thermal, gas,
hydro, and nuclear power plant business.
TELECOMMUNICATION
BHEL also caters to Telecommunication Sector by
way of small, medium and large switching systems.
TRANSMISSION AND DISTRIBUTION (T&D)
BHEL offers wide-ranging products and systems for
T&D applications. Products manufactured include:
power transformers, instrument transformers, dry
type transformers, series &shunt reactors, capacitor
10

banks, vacuum &SF6 circuit breakers, gas-insulated

switchgears and insulators.
INDUSTRIES
BHEL is a major contributor of equipment and
systems to industries, cement, sugar, fertilizer,
refineries, petrochemicals, paper, oil and gas,
metallurgical and other process industries. The range
of systems & equipment supplied includes: captive
power plants, co-generation plants, DG power plants,
industrial steam turbines, industrial boilers and
auxiliaries, waste heat recovery boilers, gas turbines,
heat exchangers and pressure vessels, centrifugal
compressors, electrical machines, pumps, valves,
seamless steel tubes, electrostatic precipitators, fabric
filters, reactors, fluidized bed combustion boilers,
chemical recovery boilers and process controls.

11

TRANSPORTATION
BHEL is involved in the development, design,
engineering, marketing, production, installation, and
maintenance and after-sales service of rolling stock
and traction propulsions systems. BHEL
manufactures electric locomotives up to 5000 HP,
diesel electric locomotives from 350 HP to 3100 HP,
both for mainline and shunting duty applications. It
also produces rolling stock for special applications
viz. overhead equipment cars, special well wagons,
and Rail-cum road vehicle.

12

RENEWABLE ENERGY
Technologies that can be offered by BHEL for
exploiting non-conventional and renewable
sources of energy include: wind electric
generators, solar photovoltaic systems, solar
heating systems, solar lanterns and batterypowered road vehicles.
OIL AND GAS
BHELs products range includes Deep Drilling Oil
Rigs, Mobile Rigs, Work Over Rigs, Well Heads
and X-Mas Trees, Choke and Kill Manifolds, Full
Bore Gate Valves, Mudline Suspension System,
Casing Support system Sub-Sea Well Heads,
Block valves, Seamless pipes, Motors,
Compressor, Heat Exchangers etc.

13

INTERNATIONAL OPERATIONS
BHEL is one of the largest exporters of engineering
products & services from India, ranking among
the major power plant equipment suppliers in the
world.

14

(3) VARIOUS BHEL UNITS

FIRST GENERATION UNITS
Bhopal

: Heavy Electrical Plant.

Haridwar

: Heavy Electrical Equipment Plant.

Hyderabad:

Heavy Electrical Power Equipment

Plant.

15

SECOND GENERATION UNITS

Tiruchy

High Pressure Boiler Plant.

Jhansi

Transformer and Locomotive Plant.

Haridwar

Central Foundry and Forge Plant.

Tiruchy

Seamless Steel Tube Plant.

UNITS THROUGH ACQUISTION & MERGER

Bangalore :

Electronics Division

Electro Porcelain Division.

NEW MANUFACTURING UNITS
Ranipet

Jagdishpur:

Boiler Auxiliaries Plant.

Insulator Plant.

Govindwal :

Industrial Valve Plant.

Rudrapur

Component and Fabrication Plant.

Bangalore

Energy Systems Division

BHEL is growing concern to meet the changing

needs of the nation has taken it beyond power into
16

the total gamut of energy, industry and transportation

BHEL is able to offer a service in each of this fields.
It;s manufacturing capability is supported by a
corporate R&D division at Hyderabad works closely
with the research and development cells at various
units and Welding Research Institute at
Tiruchinapalli.

17

(4) ACTIVITY PROFILE OF BHEL

POWER SECTOR PROJECTS

Thermal sets and Auxiliaries.

Steam generators and Auxiliaries.

Industrial fans.

Electrostatic precipitators.

Air pre heaters.

Nuclear power equipments.

Hydro sets and Auxiliaries.

Motors.

Transformers.

Rectifiers.

Pumps.

Heat Exchangers.

Capacitors.

Porcelain/Ceramics insulators.
18

Seamless steel tubes.

Casting and forging.

SYSTEMS/SERVICES
Turnkey power station.
Data acquisition Systems.
Power systems.
HVDC Commissioning systems.
Modernization and Rehabilitation.

TRASPORTATION SECTOR
Diesel Electric generators.
AC/DC locomotives.
DC locomotives and loco shunters.
Traction system for railways.
Electric trolley buses.

19

INDUSTRY SECTOR
Boilers.
Valves.
T.G. sets.
Power devices.
Solar Cells.
Photo Voltaic cells.
Gas Turbines.
Compressors.
Drive Turbines.
Oil rigs.
Blow out preventers.
Wind mills.
Control systems for electric devices.

20

(5) BHARAT HEAVY ELECTRICALS LIMITED

JHANSI (UNIT)
A BRIEF INTRODUCTION
By the end of 5th five-year plan, it was envisaged by
the planning commission that the demand for power
transformer would rise in the coming years.
Anticipating the countrys requirement BHEL
decided to set up a new plant, which would
manufacture power and other types of transformers in
addition to the capacity available in BHEL Bhopal.
The Bhopal plant was engaged in manufacturing
transformers of large ratings and Jhansi unit would
concentrate on power transformer upto 50 MVA, 132

21

KV class and other transformers like Instrument

Transformer s, Traction transformers for railway etc.
This unit of Jhansi was established around 14 km
from the city on the N.H. No 26 on Jhansi Lalitpur
road. It is called second-generation plant of BHEL set
up in 1974 at an estimated cost of Rs 16.22 crores
inclusive of Rs 2.1 crores for township. Its
foundation was laid by late Mrs. Indira Gandhi the
prime minister on 9th Jan. 1974. The commercial
production of the unit began in 1976-77 with an
output of Rs 53 lacs since then there has been no
looking back for BHEL Jhansi.
The plant of BHEL is equipped with most modern
manufacturing processing and testing facilities for the
manufacture of power, special transformer and
instrument transformer, Diesel shunting locomotives
and AC/DC locomotives. The layout of the plant is
22

well streamlined to enable smooth material flow from

the raw material stages to the finished goods. All the
feeder bays have been laid perpendicular to the main
assembly bay and in each feeder bay raw material
smoothly gets converted to sub assemblies, which
after inspection are sent to main assembly bay.
The raw material that are produced for manufacture
are used only after thorough material testing in the
testing lab and with strict quality checks at various
stages of productions. This unit of BHEL is basically
engaged in the production and manufacturing of
various types of transformers and capacities with the
growing competition in the transformer section, in
1985-86 it under took the re-powering of DESL, but
it took the complete year for the manufacturing to
begin. In 1987-88, BHEL has progressed a step
further in under taking the production of AC

23

locomotives, and subsequently it manufacturing

AC/DC locomotives also.
PRODUCT PROFILE OF BHEL JHANSI UNIT
1. Power transformer

up to

400 KV class 250 MVA.

2. Special transformer

up to

180 KV.
3. ESP transformer

95

KVp, 1400 mA.

4. Freight Loco transformer
to 5400 KVA & 7475

3900

KVA for 3 phase.

5. ACEMU transformer

up to

1000 KVA (1-phase).

1385
KVA (3 phase).

24

6. Dry type transformer

up to 6300

KVA 33 KV class
7. Instrument transformer

VT &
CT up to 220 KV
class.

8. Diesel electric locomotives

up to
2600 HP.

9. AC/DC locomotives

5000
HP.

10. Over Head Equipment cum Test Car

11. Well wagon

200

tones.
12. Rail cum road vehicle
13. Dynamic track stabilizer

25

BHEL PERFORMANCE (CORPORATE

LEVEL)
PARAMETER
Turnover (Rs. /Cr.)
Order Inflow (Rs. /Cr.)
Net Profit (Rs. /Cr.)
Net Worth (Rs. /Cr.)
Megawatts Commissioned
R & D Investment (Rs.
/Cr.)
Patents/Copyrights Filed

2013 - 14
49510
22096
7040
25373
9270
1199

2014 - 15
50015
31528
6485
30315
10340
1248

351

385

(Nos.)
MAJOR UNITS TURNOVER (In Rs. /Crores)

DIVISION

2013 14 2014 15

JHANSI

(Actual)
1300
26

(Provisional
1365

CFFP HARDWAR
HEEP HARDWAR
BAP RANIPET
HPBP TRICHY/SSTP
EDN BANGALORE
BHOPAL
HEEP HYDERABAD
BHEL NET

506
5415
4210
14571
2301
4790
7072
49301

523
6375
3703
14970
1650
4703
6408
50015

(6) VARIOUS DEPARTMENTS/FUNCTIONS AT

BHEL JHANSI
TRANSFORMER COMMERCIAL (TRC) The
objective of the department is interaction with the
customers. It brings out tenders and notices and also
responds to them. It is this department that bags
contracts of building transformers. After delivery
regarding faults, this department does failures and
maintenance. All such snags are reported to them and
27

they forward the information to the concerning

department.
One of the major tasks of this department is to earn
decent profits over all negotiations. Transformer
industry has become very competitive. The company
offering the lowest price gets the contract but this
process may continue does the work on very low
profits. To avoid such a situation, a body by the name
of India Electrical and Electronics Manufactures
Association (IEEMA) was set up. This association
helps to maintain a healthy competitive atmosphere
in the manufacturing of electrical appliances.
TRANSFORMER ENGINEERING (TRE)
The transformer manufactured in BHEL Jhansi range
from 10 MVA to 250 MVA and up to 400 KV. The
various transformers manufactured in this unit are:POWER TRANSFORMER a) Generator
transformer b) System transformer. c) Auto
transformer.
28

SPECIAL TRANSFORMER a) Freight loco

transformer. b) ESP transformer. c) Instrument
transformer. d) Dry type transformer..BAY-00 & 0:
It is a sub part of Fabrication. It is the preparation
shop while the other two bays form the assembly
shop. This section has the following machines:
Planner machine To reduce thickness
Shearing machine
CNC / ANC Flame Cutting machine To cut
Complicated shaft items using Oxy-Acetylene
flame
Bending machine
Rolling machine
Flattening machine
Drilling machine
Nibbling machine
Pantograph flame cutting machine
29

BAY-1
It is also a sub part of Fabrication. It is an assembly
shop where different parts of tank come from bay
0.Here welding processes are used for assembly,
after which a rough surface is obtained Grinder
operating at 1200 rpm is used to eliminate the
roughness.
BAY-2
It is also a sub part of Fabrication It is an assembly
shop dealing with making different objects
mentioned below.
1-Tank assembly

5-cross feed

assembly
2-Tank cover assembly

6-core clamp

assembly

30

3-End Frame assembly

7-pin and pad

assembly
4-foot assembly
Before assembly, short blasting (firing of small
materials i.e., acid pickling) is done on different
parts of jobs to clean the surface before painting.

31

NON DESTRUCTIVE TEST

1

Ultrasonic test to detect the welding fault on the

CRO at the fault place high amplitude waves are

obtained.
2.

Die Penetration test Red solution is put at the

welding and then cleaned. After some time white

solution is mixed. Appearance of a red spot indicates
a fault at the welding.
3.

Magnetic crack detection Magnetic field is

created and then iron powder is put at the welding.

Sticking of the iron powder in the welding indicated
a fault.
4.

X-Ray Test: It is same as human testing and the

fault is seen in X-ray film.

32

BAY-3
Here are basically three sections in the bay:
Machine section
Copper section
Tooling section
BAY 4
It is the winding section.
There are four types of coil fixed in a transformer,
they are :
1. Low voltage coil (LV)
2. High voltage coil (HV)
3. Tertiary coil
4. Tap coil
The type of winding depends upon job requirement.
Also, the width and thickness of the conductors are
33

designed particulars and are decided by design

department. Conductors used for winding is in the
form of very long strips wound on a spool, the
conductor is covered by cellulose paper for
insulation.
For winding first the mould of diameter equal to
inner dia meter of required coil is made .The
specification of coil are given in drawing. The
diameter of mould is adjustable as its body is made
up of wooden sections that interlock with each other.
This interlocking can be increased or decreased to
adjust the inner diameter of coil.
The moulds are of following types
1. Belly types
2. Link types
3. Cone type

34

BAY-5
It is core and punch section. The lamination used in
power, dry, ESP transformer etc for making core is
cut in this section.
CRGO (cold rolled grain oriented) silicon steel is
used for lamination, which is imported in India from
Japan, U.K. Germany. It is available in 0.27 and
0.28 mm thick sheets, 1mt wide and measured in
Kg.The sheet s are coated with very thin layer of
insulating material called carlites.
For the purpose of cutting and punching the core
three machines are installed in shop
BAY-6
Single-phase traction transformer for AC
locomotives is assembled in this section. This
Freight locomotive transformers are used where
there is frequent change in speed. In this bay core

35

winding and all the assembly and testing of traction

transformer is done.
Three-phase transformers for ACEMU are also
manufactured in this section. The supply lines for
this transformer are of 25 KV and power of the
transformer is 6500 KVA. The tap changer of
rectifier transformer is also assembled in this bay.
Rectified transformer is used in big furnace like the
thermal power stations / plants (TPP).
BAY-7
1. This is the insulation shop. Various types of
insulations are
2. AWWW - All Wood Water Washed press paper.
3. The paper is 0.2-0.5mm thick cellulose paper
and is wound on the
conductors for insulation.

36

4. PRE COMPRESSED BOARD: This is widely

used for general insulation & separation of
conductors in the forms of blocks.
5. PRESS BOARD: This is used for separation of
coils e.g. L.V. from H.V. It is up to 38 mm
thick.
6. UDEL(Un Demnified Electrical Laminated)
wood or Permawood
7. This is special type of plywood made for
insulation purposes.
8. FIBRE GLASS: This is a resin material and is
used in fire pron areas.
9. BAKELLITE
10.

GASKET- It is used for protection against

leakage.
11.

SILICON RUBBER SHEET- It is used for

dry type transformer.

37

BAY 8
It is the instrument transformer and ESP transformer
manufacturing section.
INSTRUMENT TRANSFORMER
These are used for measurement. Actual
measurement is done by measuring
instruments but these transformers serve the purpose
of stepping down the voltage to protect the
measuring instrument. They are used in AC system
for measurement of current voltage and energy and
can also be used for measuring power factor,
frequency and for indication of synchronism. They
find application in protection of power system and
for the operation of over voltage, over current, earth
fault and various other types of relays.

38

ESP TRANSFORMER
The Electrostatic Precipitator transformer is used for
environmental application. It is used to filter in a
suspended charge particle in the waste gases of an
industry. They are of particular use in thermal power
stations and cement industry.
The ESP is a single-phase transformer. It has a
primary and secondary. The core is laminated and is
made up of CRGOS. It is a step up transformer. An
AC reactor is connected in series with primary coil.
The output of the transformer must be DC the is
obtained by rectifying AC using a bridge rectifier
(bridge rectifier is a combination of several hundred
diodes). A radio frequency choke (RF choke) is
connected in series with the DC output for the
protection of the secondary circuit and filter circuit.
The output is chosen negative because the particles
39

are positively charged. The DC output from the

secondary is given to a set of plates arrange one after
the others. Impurity particles being positively
charged stick to these plates, which can be jerked off.
For this a network of plates has to be setup all across
the plant. This is very costly process in comparison
with the transformer cost. A relive vent is also
provided to prevent the transformer from bursting it
higher pressure develops, inside it. It is the weakest
point in the transformer body. An oil temperature
indicator and the secondary supply spark detector are
also provided.
One side of the transformer output is taken and other
side has an marshalling box which is the control
box of the transformer.

40

BAY-9
In this bay power transformer are assembled. After
taking different input from different bays 0-9
assembly is done Power transformer is used to step
and step down voltages at generating and substations. There are various ratings 11KV, 22KV,
manufactured, they are
1. Generator transformer.
2. System
3. Autotransformer.
A transformer in a process of assemblage is called a
job. The design of the transformer is done by the
design deptt. & is unique of each job; depends on
the requirement of customer. The design
department provides drawing to the assembly
shop, which assembles it accordingly.

41

The stepS involved in assembly are:

1. Core building
2. Core Lifting.
3. Unlacing.
4. Delacing and end-frame mounting.
5. High voltage terminal gear and low volt terminal
gear mounting
6. Vapour phasing and oil soaking
7. Final servicing and tanking.
8. Case fitting.
STORE
There are three sections in store:
1. Control Receiving Section
2. Custody Section
3. Scrap Disposal Section

42

LOCOMOTIVE PRODUCTION (LMP)

There are following products are manufactured at
Loco shops

Alternating Current Locomotive (ac Loco)

WAG-5H

AC./D.C. Loco

WCAM-2P

WCAM-3
W-broad gauge
A-running in AC mode
C-running in DC mode
G-hauling goods train
P-hauling passenger train
M-hauling passenger & goods train

Diesel Electric Locomotive Shunting

(DESL)

350 HP

700 HP

43

Single Power Pack (SPP): One 700 HP m/c

is made as a single
Unit. It is a meter gauge locomotive
Twin Power Pack (TPP): 2 350HP m/cs are
combined in 1 engine
& can be operated individually or in
combination depending on the load.

450 HP

1400 HP

1150 HP

1350 HP

2600 HP

1150 HP and 1350 HP DESL s are non-standard

locomotives and are modified versions of 1400
HP DESL based on requirement of customer.

44

Under mention are the new non-conventional

products designed and developed for Indian
Railways based on their requirement.

OHE (Overhead electric) recording and

testing cars

UTV(Utility vehicle )

RRV(Rail cum road vehicle)

DETV( Diesel electric tower car)

BPRV(Battery power road vehicle)

BCM(Blast cleaning machine)

200 T Well wagon for BHEL Haridwar

Metro Rake-Kolkata Metro Railways

LOCOMOTIVE MANUFACTURING (LMM)

This section deals with manufacturing of
locomotives. The main parts of the
locomotive are

45

Under frame: The frame on which a

locomotive is built
Super structure: The body of locomotive is
called superstructure

or Shell and is

made of sheet of Mild steel

DC motor
Alternator
Compressor
Flower
Static Rectifier-MSR
Static Converter-SC
Exchanger
Bogie-The wheel arrangement of a loco is
called a bogie. A bogie essentially contains
1-wheel axle arrangement
2-Suspension
3-Brake rigging
Traction transformer: It is fixed on under frame
and gets supply from an overhead line by
46

equipment called pantograph. The type of

pantograph depends on supply. This transformer
steps down voltage and is fitted with a tap
changer. Different taps are taken from it for
operating different equipment. One tap is taken
and is rectified into DC using MSR and is fed to
the DC motor.
Railways has two types of power supplies 25
KV , 1 Phase ,50hz AC
-1500 V DC
An AC/DC loco is able to work on both of these
supplies. For e.g. WCAM-3.
WORK ENGINEERING & SERVICES
(WE&S)
This department looks after the commissioning
and maintenance of all the machinery used in
the factory. It also has 3 two-stage air
47

compressors for supplying compressed air to

the various bays.
The department has 03 different divisions:

Electrical Engg

Electronics Engg

Mechanical Engg

ELECTRICAL ENGINEERING:
This division looks after all the electrical
machinery and power distribution of the factory.
Snags detected in the system are immediately
reported to this dept by the concerning
dept.WE&S takes prompt action to rectify it.
The factory has a feeder of 11KV .The total
load sanctioned for the factory is 2500MVA But

48

the maximum demand reaches the range of

1700-2000 MVA.
Here are various sub-stations (SS) inside the
factory, for distribution of power to different
sections.
SS -1

Supplies

Bay-6 to Bay 9

SS -3

Supplies

Bay 1to Bay-4

SS -4

Supplies

SS -5

Supplies

SS -6

Supplies Administrative building

Boiler and loco plant

Bay -5

TECHNOLOGY
This department analyses the changes taking
place in the world. and suggest changes
accordingly. This is very important because the
products must not get obsolete in the market
otherwise they will be rejected by the customer.
49

FUNCTIONS: Technology functions can be

classified as:

Processing Sequence - The sequence of

process of manufacturing is decided for timely

and economic completion of the job.

Operation time estimate - It includes

incentive scheme management

Allowed operation time - It includes

incentive amount

Facilities identification - It includes

looking for new equipment or plant or tools to

increase productivity

Special process certification - Special

processes are the ones requiring expertise for

example identifying errors, cracks, air bubbles
in welding

50

Special tools requirement - Special tools

are allotted, if possible, when required else the

design has to be reconsider.

Productivity projects compilation - It

includes the initial analysis of the problem and

their appropriate solution to enhance
productivity.
The principle of working is that
IF YOU DO NOT MAKE THE CHANGES IN
YOUR COMPANY, THE CUSTOMER WILL
CHANGE YOU.
CENTRAL QUALITY SERVICE First we get
acquainted with a few terms concerning this
department.
QUALITYIt is the extent to which products and
services satisfy the customer needs.
QUALITY ASSURANCEAll those plants and
systematic action necessary to provide adequate

51

confidence that a product or service will satisfy the

given requirement is called quality assurance.
QUALITY CONTROLThe operational technique
and activities that are used to fulfill requirement for
quality are quality control.
QUALITY INSPECTIONActivities such as
measuring, testing, gauging one or more
characteristics of a product or service and comparing
these with specified requirement to determine
conformity are termed quality inspection.

52

BHEL JHANSI PERFORMANCE

FINANCIAL (In Rs. /Crore)

53

PRODUCT

Power

2013

2014 15

14

(Provisional) %

(Actual)
564

Growth

457

19

Transformer
Non Power

304

376

24

Transformer
Loco
Total

430
1300

532
1365

24
5

PHYSICAL

PRODUCT

Unit

2013

2014 15

14

(Provisional

(Actual)

54

POWER TRFR
ESP TRFR
FRT LOCO

NOS
MVA
NOS
NOS

161
9585
1280
90

135
10101
1745
108

TRFR- 1 PH
FRT LOCO

NOS

30

44

TRFR- 3PH
ACEMU TRFR
NOS
DRY TYPE TRFR NOS
INSTRUMENT
NOS

161
125
335

240
105
404

NOS
NOS

15
53

10
62

LOCOMOTIVE
WAGON/WHEEL NOS

12

TRFR
DESL
AC

AXLE SET
(7) HEALTH, SAFETY AND ENVIRONMENT
MANAGEMENT
BHEL, as an integral part of business performance
and in its endeavor to becoming a world class

55

organization and sharing the growth global concern

on issues related to Environment, Occupational
Health and Safety, is committed to protecting
Environment in and around its own establishment,
and providing safe and healthy working environment
to all its employees. For fulfilling these obligations,
Corporate Policies have been formulated as:
ENVIRONMENTAL POLICY
Compliance with applicable Environmental
Legislation/Regulation;
Continual Improvement in Environment
Management Systems to protect our natural
environment and control pollution;
Promotion of activities for conservation of
resources by Environmental Management.
Enhancement of Environmental awareness
amongst employees, customers and suppliers.
56

OCCUPATIONAL HEALTH AND SAFETY

POLICY
Compliance with applicable Legislation and
Regulations.
Setting objectives and targets to
eliminate/control/minimize risks due to
Occupational and Safety Hazards.
Appropriate structured training of employees on
Occupational Health and Safety (OH&S)
aspects.
Formulation and maintenance of OH&S
Management programmes for continual
improvement;
57

 Periodic review of OH&S Management System

to ensure its continuing suitability, adequacy and
effectiveness;
Communication of OH&S Policy to all
employees and interested parties.
WORKING CAPITAL
Working capital (abbreviated WC) is a financial
metric which represents operating liquidity available
to a business, organization or other entity, including
governmental entity. Along with fixed assets such as
plant and equipment, working capital is considered a
part of operating capital. Net working capital is
calculated as current assets minus current liabilities.
It is a derivation of working capital, that is commonly
used in valuation techniques such as DCFs
(Discounted cash flows). If current assets are less
than current liabilities, an entity has a working
capital deficiency, also called a working capital
deficit.
A company can be endowed with assets and
profitability but short of liquidity if its assets cannot
readily be converted into cash. Positive working
capital is required to ensure that a firm is able to

58

continue its operations and that it has sufficient funds

to satisfy both maturing short-term debt and
upcoming operational expenses. The management of
working capital involves managing inventories,
accounts receivable and payable, and cash.

Calculation
Current assets and current liabilities include three
accounts which are of special importance. These
accounts represent the areas of the business where
managers have the most direct impact:

accounts receivable (current asset)

inventory (current assets), and
accounts payable (current liability)

The current portion of debt (payable within 12

months) is critical, because it represents a short-term
claim to current assets and is often secured by long
term assets. Common types of short-term debt are
bank loans and lines of credit.
An increase in working capital indicates that the
business has either increased current assets (that it
has increased its receivables, or other current assets)
or has decreased current liabilitiesfor example has
paid off some short-term creditors.

59

Current Assets Current Liabilities excluding

deferred tax assets/liabilities, excess cash, surplus
assets and/or deposit balances.

Types of Working Capital:

Working capital is classified into different types and
the classification is based on the following views:
1. Balance Sheet View
2. Operating Cycle View
On the basis of Balance Sheet View, types of
working capital are described below:

60

Gross Working Capital (GWC): Current

assets in the balance sheet of a company are
known as gross working capital. Current assets are
those short term assets which can be converted
into cash within a period of one year. The grey
area in the management of current assets or gross
working capital is its unpredictability i.e. it is very
difficult to ascertain the exact time of conversion
of such assets. Why such a nature is problematic?
It is because the liabilities occur at their time and
do not wait for our current asset to realize. This

Types of Working Capital

Permanent /
Temporary / Variable
Net Working
Fixed
Working Capital
Capital
Working
Requirement
Capital
3000

2500

500

2500

2500

2800

2500

300

3200

2500

700
61

mismatch or the gap creates a need for arranging

working capital financing.
Net Working Capital (NWC): Net working

capital is a very frequently used term. There are

two ways to understand net working capital. First
one says it is simply the difference of current
assets and the current liabilities in the balance
sheet of a business. The other understanding
discloses little deeper or hidden meaning of the
term. As per that, NWC is that part of current
assets which are indirectly financed by long term
assets. Compared to gross working capital, net
working capital is considered more relevant for
effective

working

capital

financing

and

management.
On the basis of Operating Cycle View, types of
working capital are as below:
o

Permanent / Fixed Working Capital: Dealing

with current asset and fixed assets is totally

62

different. Determining the financing requirement

in case of fixed assets is simply the cost of the
asset. Same is not true for current assets because
value of current assets is constantly changing and
it is difficult to accurately forecast that value at
any point of time. To simplify the complexity to
some extent, on the basis of past trend and
experience, we can find a level below which
current asset has never gone. The current assets
below this level are called permanent or fixed
working capital. See the example below:
In the example, 2500 is the permanent working
capital below which the net working capital has not
gone.
o

Regular Working Capital: It is the permanent

working capital which is normally required in
the normal course of business for the working
capital cycle to flow smoothly.

63

Reserve Working Capital: It is the working

capital available over and above regular
working capital. It is kept for contingencies
which may arise due to unexpected situations.
Temporary

Variable

WC:

Temporary

working capital is easy to understand after getting

hold over permanent working capital. In simple
terms, it is the difference between net working
capital and permanent working capital. The main
characteristic which can be made out from the
example is fluctuation. The temporary working
capital therefore cannot be forecasted. In the
interest of measurability, this can be further
bifurcated as below which can create at least some
base to forecast.

Seasonal Working Capital: Seasonal

working capital is that temporary increase in
working capital which is caused due to some
relevant season for the business. It is applicable

64

to businesses having impact of seasons for

example, manufacturer of sweaters for whom
relevant season is the winters. Normally, their
working capital requirement would increase in
that season due to higher sales in that period
and then go down as collection from debtors is
more than sales.

Special

Working

Capital:

Special

working capital is that rise in temporary

working capital which occurs due to a special
event which otherwise normally does not take
place. It has no basis to forecast and has rare
occurrence normally.

For example, country where Olympic

Games are held, all the business require extra
working capital due to sudden rise in business
activity.

It was all about the types of working capital. It needs

to be managed with several working capital

65

techniques so as to have the effective working capital

management.

66

FINDING AND INTREPRETATION

CURRENT RATIO
The current ratio is a financial ratio that measures
whether or not a firm has enough resources to pay its
debts over the next 12 months. It compares a firm's
current assets to its current liabilities. It is expressed
as follows:

The current ratio is an indication of a firm's market

liquidity and ability to meet creditor's demands.
Acceptable current ratios vary from industry to
industry and are generally between 1.5 and 3 for
healthy businesses. If a company's current ratio is in
this range, then it generally indicates good short-term
financial strength. If current liabilities exceed current
assets (the current ratio is below 1), then the
company may have problems meeting its short-term
obligations. If the current ratio is too high, then the
company may not be efficiently using its current
assets or its short-term financing facilities. This may
also indicate problems in working capital
management.
Low values for the current or quick ratios (values less
than 1) indicate that a firm may have difficulty

67

meeting current obligations. Low values, however, do

not indicate a critical problem. If an organization has
good long-term prospects, it may be able to borrow
against those prospects to meet current obligations.
Some types of businesses usually operate with a
current ratio less than one.
Current ratio = current assets / current liabilities
CURRENT RATIO
particular\
years
current
asset
current
liability
current
ratio

2010-11 2011-12 2012-13 2013-14 2014-15

888

828

1015

1012

1217

607

555

686

540

557

1.462932 1.491892 1.479592 1.874074 2.184919

68

It measure the shot term solvency of the firm. The

ability to meet short term obligation which indicates
the rupees of current asset available for each rupee of
current liability. The current ratio of 2:1 is been
considered satisfactory. In context of BHEL jhansi
the current ratio is the 1.46 in 2008-09 which
gradually increased up to 2.18 which show 72 %
increase in current asset and current liability. The
increasing ratio always shows the ability to meet
current obligation. The higher current ratio shows
higher liquidity low profit because there is load of
current liability.

69

CASH RATIO
Cash ratio is the ratio of cash and cash equivalents of
a company to its current liabilities. It is an extreme
liquidity ratio since only cash and cash equivalents
are compared with the current liabilities. It measures
the ability of a business to repay its current liabilities
by only using its cash and cash equivalents and
nothing else.
Cash ratio = cash / current liability
CASH (in
RATIO lakhs)
particul 2010- 2011- 2012- 2013- 2014ar\ years 11
12
13
14
15
cash
0.8
0.9
0.366 0.506 0.41
current
liabilitie
s
607
555
686
540
557
cash
0.0013 0.0016 0.0005 0.0009 0.0007
ratio
18
22
34
37
36

70

A cash ratio of 1.00 and above means that the

business will be able to pay all its current liabilities in
immediate short term. Therefore, creditors usually
prefer high cash ratio. But businesses usually do not
plan to keep their cash and cash equivalent at level
with their current liabilities because they can use a
portion of idle cash to generate profits. This means
that a normal value of cash ratio is somewhere below
1.00.
In cash ratio of BHEL Jhansi is low and reaches to
0.000534 during 2012-13 which is very low which
mean BHEL is unable to pay all its current liabilities
in immediate short term .

71

LIQUID RATIO
In finance, the Acid-test or quick ratio or liquid ratio
measures the ability of a company to use its near cash
or quick assets to extinguish or retire its current
liabilities immediately. Quick assets include those
current assets that presumably can be quickly
converted to cash at close to their book values. A
company with a Quick Ratio of less than 1 cannot
currently pay back its current liabilities.

Note that Inventory is excluded from the sum of

assets in the Quick Ratio, but included in the Current
Ratio. Ratios are tests of viability for business entities
but do not give a complete picture of the business'
health. If a business has large amounts in Accounts
Receivable which are due for payment after a long
period (say 120 days), and essential business
expenses and Accounts Payable due for immediate

payment, the Quick Ratio may look healthy when the

business is actually about to run out of cash. In
contrast, if the business has negotiated fast payment
or cash from customers, and long terms from

72

suppliers, it may have a very low Quick Ratio and yet

be very healthy.
Generally, the acid test ratio should be 1:1 or higher,
however this varies widely by industry. [1] In general,
the higher the ratio, the greater the company's
liquidity (i.e., the better able to meet current
obligations using liquid assets).[2]
Notice that very often "Acid test" refers to Cash ratio,
instead of Quick ratio:
[3]

73

LIQUID RATIO

particul
ar\ years
current
assetinventor
y
current
liability
liquid
ratio

2010- 201111
12

201213

201314

201415

646

712

644

761

626

607
555
686
540
557
1.064 1.1279 1.0379 1.1925 1.3662
25
28
01
93
48

74

The liquid ratio is moving upward and ratio moves

from 1.06 to 1.36 during 2010-11 to 2014-15
respectively. This show the over all increase of 30 %
in last 5 years of Jhansi unit of BHEL.

75

INVENTORY TURNOVER RATIO

Inventory turnover is the ratio of cost of goods sold
by a business to its average inventory during a given
accounting period. It is an activity ratio measuring
the number of times per period, a business sells and
replaces its entire batch of inventory again.
Inventory turnover ratio= cost of goods sold /average
inventory
INVENTORY TURNOVER RATIO
particula 2010 20112012- 2013- 2014r\ years -11 12
13
14
15
average
inventory

sales
653
inventory
turnover ratio

222
727
0.30536
5

252.5
950
0.26578
9

76

335
1300
0.25769
2

411.5
1371
0.30014
6

Inventory turnover ratio is used to measure the

inventory management efficiency of a business. In
general, a higher value of inventory turnover
indicates better performance and lower value means
inefficiency in controlling inventory levels. A lower
inventory turnover ratio may be an indication of overstocking which may pose risk of obsolescence and
increased inventory holding costs. However, a very
high value of this ratio may be accompanied by loss
of sales due to inventory shortage.Inventory turnover
is different for different industries.

Businesses which trade perishable goods have very

higher turnover compared to those dealing in
durables. Hence a comparison would only be fair if
made between businesses of same industry.
Inventory turnover ratio indicates the efficiency of
the firm in producing and selling its product. In a
manufacturing company inventory of finished goods
is used to calculate inventory turnover. In this unit the
inventory level contain some ups and down.
Inventory level is decreasing and in year 2013-14 it
reach to 0.25 which is the lowest of last 5 year.

77

WORKING CAPITAL TURNOVER RATIO

Working capital turnover ratio indicates the
velocity of the utilization of net working capital.
Working capital turnover = sales / net current assets
The two components of the ratio are cost of sales and
the net working capital. If the information about cost
of sales is not available the figure of sales may be
taken as the numerator. Net working capital is found
by deduction from the total of the current assets the
total of the current liabilities.

78

WORKING CAPITAL
TURNOVER
particul
ar\
years
sales
working
capital
working
capital
turnove
r

201011
653

20011- 201212
13
727
950

201314
130

201415
137

281

272

473

660

329

2.3238 2.6727 2.8875 0.2748 0.2075

43
94
38
41
76

79

The working capital turnover ratio measure the

efficiency with which the working capital is being
used by a firm. A high ratio indicates efficient
utilization of working capital and a low ratio
indicates otherwise. But a very high working capital
turnover ratio may also mean lack of sufficient
working capital which is not a good situation.
In BHEL working capital turnover ratio is decreasing
which show in effective utilization of resources.

80

TOTAL ASSETS TURNOVER RATIO

Total assets turnover = sales / total assets
particul
ar\ years
sales
total
asset
asset
turnover

201011
653

total asset turnover ratio

2011- 2012- 201312
2013
2014
727
950
1300

20142015
1371

922
864
1097
1115
1329
0.7082 0.8414 0.8659 1.1659 1.0316
43
35
98
19
03

81

Total assets turnover ratio show organization ability

in generating sales from all financial resource
committed to total assets. Total asset turnover of
BHEL show increase in asset till 2012-13 and
approximately 4.5% increase. This shows that BHEL
generate 1.03 rupee over 1 rupee investment which
positive.

82

RETURN ON CAPITAL EMPLOYED

Return on capital employed is similar to Return on
Assets (ROA), but takes into account sources of
financing. Net Operating Profit After Tax (NOPAT) is
equal to EBIT * (1 - tax) -- the return on the capital
employed should be measured in after tax terms.
Operating income In the numerator we have Net
Operating Profit After Tax, i.e. operating profit
or EBIT (1-t) (earnings after tax).
Capital employed
In the denominator we have net assets or capital
employed instead of total assets (which is the case of
Return on Assets). Capital Employed has many
definitions. In general it is the capital investment
necessary for a business to function. It is commonly
represented as total assets less current liabilities (or
fixed assets plus working capital).
ROCE uses the reported (period end) capital
numbers; if one instead uses the average of the
opening and closing capital for the period, one
obtains Return on Average Capital Employed
(ROACE).

83

84

particular\ years
PBIT
capital
employed
return on cpt
employed

2010-11
15

RETURN ON CAPITAL EMPLOYED

2011-12
2012-13
2013-14
2014-15
20
108
130
102

315

310

412

576

772

0.047619

0.064516

0.262136

0.225694

0.132124

This ratio show that capital which has been put by

BHEL return over it in the same year the ratio of
return has been increased in 2012-13 that show the
return over capital employed is much effective and
after that there is decrease in capital employed which
shows that proper utilization of resource is
inefficient.

85

CONCLUSION
The study helps to analysis the efficiency and
effectiveness in financial management. BHEL
liquidity position in terms of short and long are good.
The efficiency of the company is good. The overall
financial position of BHEL is sound and working
capital is able to day to day liability of the
company. BHEL oversea business is going to
increase more in the future years. Market distribution
in international market can be increased by entering
into the new foreign countries. The quality control
and quality assurance is major concerning area of
86

BHEL. Financial strategy adopted by BHEL is sound.

BHEL is the public sector unit with 65% of its share
takes in to the hands of government.

LIMITATIONS
Only ratio analysis tool is use for financial
performance evaluation.
Only 5 year is considered.
BHEL Jhansi is only considered, while other
BHEL units are not considered

87

BIBLIOGRAPHY
Financial management: I.M Pandey
Management Accounting: S.D. Chowdhary
Annual Report_2014-15
Financial information: courtesy- Books/ Budget
Section
www.bhel.com
88

www.bheljhs.co.in

89