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[1]

Asian School of Management, Pune

Synopsis of project report

On

WORKING CAPITAL MANAGEMENT

The Study Conducted from 18th MAY to 18th JULY 2010

At

Bharat Heavy Electrical¶s Limited

Prepared By: Faculty Guide:

Name: Raj Dubey Name: Prof. Vaze

Roll no: 09 (Department of Finance)

Batch: E



[2]

Table Of Contents

S. No Topics Page No.

1 Executive Summary 3

2 Company Profile 4-7

3 Products and services offered by HERP BHEL 8

4 Working capital management at BHEL 9-13

5 Balance sheet of unit and data analysis 14-16

6 Purpose/ objective of study 17

7 Research Methodology 18

8 Findings And Observations 19

9 Limitations 20

10 Suggestions And Recommendations 21

11 Conclusion 22

12 Bibliography 23



[3]

EXECUTIVE SUMMARY

Working capital is the capital required for maintenance of day-to-day business operations.

The present day competitive market environment calls for an efficient management of working

capital. The reason for this is attributed to the fact that an ineffective working capital

management may force the firm to stop its business operations, may even lead to bankruptcy.

Hence the goal of working capital management is not just concerned with the management of

current assets & current liabilities but also in maintaining a satisfactory level of working capital.

Holding of current assets in substantial amount strengthens the liquidity position &

reduces the riskiness but only at the expense of profitability. Therefore achieving risk-return

trade off is significant in holding of current assets. While cash outflows are predictable it runs

contrary in case of cash inflows. Sales program of any business concern does not bring back cash

immediately. There is a time lag that exists between sale of goods & sales realization. The capital

requirement during this time lag is maintained by working capital in the form of current assets.

The whole process of this conversion is explained by the operating cycle concept.

This study gives in detail the working capital management practices in BHEL.

Management of each current assets, namely inventory management, cash management, accounts

receivable management is studied permanent to BHEL. Similarly management of accounts

payable is studied to understand the managing of current liabilities. A part from this concept of

operating cycle is studied.

The research methodology adopted for this study is mainly from secondary sources of

data which include annual reports of BHEL, & website of the company. The use of primary

sources is limited to interviews with few of the employees in finance department.

The study of working capital management has shown that BHEL has a strong working

capital position. The company is also enjoying reasonable profits. BHEL has corporate tie up

with maximum leading Banks in India for providing short and medium term finance to thecompany. For financial requirement of projects outside India, BHEL has arranged forex funds.

BHEL sales position is also very good. Its excellent performance is attributed to reduced cost of

product The overall position of BHEL is good & the same is expected by continuum of existing

management policies, checking exchange rate risk, competing with domestic and global players

in terms of quality & quantity.



[4]

COMPANY PROFILE

1956 - Company was set up at Bhopal in the name of M/s Heavy electrical (India) Ltd. in

collaboration with AEI, UK. Subsequently, three more plants were set up at Hyderabad, Hardwar

and Tiruchy. The Bhopal Unit was controlled by the company, the other three were under the

control of Bharat Heavy Electricals Ltd. - The Company`s object is to manufacture of heavy

electrical equipments. 1972 - In July the Operations of all the four plants were integrated. 1974 -

In January Heavy electrical (India) Ltd was merged with BHEL. - For the manufacture of a wide

variety of products, the company has developed technological infrastructure, skills and quality to

meet the stringent requirements of the power plants, transportation, petro chemicals, oil etc. -

BHEL has entered into collaboration which are technical in nature. Under these agreements, the

collaborators have transferred, furnished the information, documentation, including know-howrelating to design, engineering, manufacturing assembly etc. 1982 - BHEL also entered into

power equipments, to reduce its dependence on the power sector. BHEL Heavy Equipment

Repair Plant (HERP), Varanasi set up in 1984.

Accordingly, two repair plants at Bombay & Varanasi came into existence, the foundation

equipment repair plant sprawling in 29.8 acre area at Varanasi was laid on 20th

September 1984

by Chief Minister of U.P. Shri Narayan Dutt Tiwari within a short span of 21 month much before

the schedule.

Starting a manufacturer of O&M spares for the boiler and boiler auxiliaries, repair activities got a

real break in 1990 when rebabitting of TG set bearing was taken up in the plant. Since thanrebabitting of different type of bearing including an unconventional synchronous condenser has

been carried out to the entire satisfaction of the customers. Now HERP manufactures turbine

spares, tools & tackles complete spares of bowl mill XRP 623,803,883 & 1003. The unit has a

plan to add Constant load hanger, Variable load hanger & condensate polishing unit in near

future.

Through small in size, HERP has been in adequate attention to all the facts of plant operation

like computerization, inventory control, quality assurance. In order to channellies the creative

energy of employees suggestion scheme and quality circle and productivity improvement project

are in operation.

Heavy Equipment Repair Plant, Varanasi has highly skilled & dedicated technicians, engineers

& specialist catering the requirements of various power plants of their mill and turbine O&M

spares. HERP has contributed a lot in refurbishing of various units of NTPC after taking it over

from SEB¶s and is a major player in Govt of India PIE program.



[5]

BHEL caters to core sectors of the Indian economy viz., power generation and transmission ,

industry transportation , renewable energy defiance etc. the wide network of BHEL 14

manufacturing divisions 4 power sector regional centers, 8 service centers, 15 regional office,

one subsidiary co. joint venture and a large number of projects sites spread all over India and

abroad enables the company to promptly serve its customers and provide them with suitable

products, systems and servicers- efficiently and at competitive prices

Power sector :-

Power generation sector comprises thermal, gas, hydro and nuclear power plant business. As of

31-3-2004, BHEL supplied sets account for nearly 71,255 MW or 64% of the total installed

capacity of 1,11,151 MW in the country, as against nil till 1969-70.

BHEL has proven turn key capabilities for executing power projects from concepts to

commissioning. It possesses the technology and capability to produce thermal sets with super

critical parameters up to 1000 mw unit rating and gas turbine-generator sets of up to 250 mw unitrating. Cogeneration and combined-cycle plants have been introduced to achieve higher plant

efficiencies. To make efficient use of the high ash-content coal available in India, BHEL supplies

circulating fluidized bed combustion boilers to both thermal and combined-cycle power plants.

The company manufactures 235 MW nuclear turbine generator sets and has commenced

production of 500 MW nuclear turbine generator sets.

Custom-made hydro sets of Francis, Pelton And Kaplan types for different head discharge

combinations are also engineered and manufactured by BHEL. In all, orders for more than 700

utility sets of thermal, hydro, gas and nuclear have been placed on the company as on date. The

power plant equipment manufactured by BHEL is based on contemporary technology

comparable to the best in the world, and is also internationally competitive.

The company has proven expertise plant performance improvement through renovation,

modernization and upgrading of a variety of power plant equipment, besides specialized know

how of residual life assessment, health diagnostics and life extension of plants.

Transmission :-

BHEL also supplies a wide range of transmission products and systems of up to 400KV class.

These include high voltage power & instrument transformers, dry type transformers, shunt &

series reactors, safe switch gear, 33KV gas insulated substation capacitors, insulators etc. for

economic transmission of bulk power over long distances, High Voltage Direct Current(HVDC)

systems are supplied. Series and shunt compensation systems, to minimize transmission loses,

have also been supplied



[6]

Industry sector :-

BHEL is a major contributor of equipment and systems to industries: cement, sugar, fertilizer,

refineries, petrochemicals, steel, paper etc. the range of systems and equipment supplied

includes: captive power plants, dg power plants, high speed industrial drive turbines, industrial

boilers and axillaries, waste heat recovery boilers, gas turbines, heat exchangers and pressure

vessels, centrifugal compressors, electrical machines, pumps, valves, seamless steel tubes and

process controls, control systems for process industries, and control and instrumentation systems

for power plants, defense and other applications. The company has commenced manufacture of

large scale desalination plants to help augment the supply of drinking water to people.

Transportation :-

Mostly of the trains operated by the Indian railways, including the metro in Calcutta, are

equipped with BHEL¶s traction electrics and traction control equipment. The company supplies

electric locomotives to Indian Railways and diesel shunting locomotives to various industries.

5000/4600 hp ac/dc locomotives developed and manufactured by BHEL have been supplied to

Indian railways. Battery powered road vehicles are also manufactured by the company. BHEL

also supplies traction electrics and traction control equipment for electric locos, diesel electric

locos, and EMUs/ DEMUs to the railways.

Telecommunication :-

BHEL also caters to telecommunication sector by way of small, medium, and large switching

systems.

Renewable energy :-

Technologies that can be offered by BHEL for exploiting non-conventional and renewable

resources of energy include: wind electric generators, solar power based water pumps, lighting

and heating systems. The company manufactures wind electric generators of unit size up to 250 KW for

wind farms, to meet the growing demand for harnessing wind energy.



[7]

International operations :-

BHEL has, over the years established its references in over 50 countries of the world, ranging

from the united states in the west to new-Zealand in the far east. These references encompass

almost the entire product range of BHEL, covering turnkey power projects of thermal, hydro and

gas based type sub-station projects, rehabilitation projects, besides a wide variety of products,like switch gear, transformer, heat exchangers ,insulators, castings and forgings. Apart from

over 1100MW of boiler capacity contributed in Malaysia, some of the other major successes

achieved by the company have been in Oman,Saudi Arabia,

Libya,Greece,Cyprus,Malta,Egypt,Bangladesh,Azerbaijan,Sri lanka,Iraq etc. execution of

overseas projects¶ has also provided BHEL the experience of working with world renowned

consulting organizations and inspection agencies.

Technology Up gradation and research and development :-

To remain competitive and meet customers¶ expectations, BHEL lays great emphasis on the

continuous Up gradation of products and related technologies, and development of new

products. The company has upgraded its products to contemporary levels through continuous

inhouse efforts as well as through acquisitions of new technologies from leading engineering

organizations of the world.

The corporate R&D Division at Hyderabad leads BHEL¶s research efforts in a number of areas

of importance to BHEL¶s product range. Research and product development centers at each of

the manufacturing divisions play a complementary role.

Reinforcing its position as a total solution provider BHEL has developed and successfully

commissioned a maintenance controller at the western mountain power project , Libya. Based on

powerpac-g , software jointly development by BHEL and TCS , this is the system for complete

power plant application and takes care of all the maintenance needs of a power station.



[8]

Range Of Products/Services Provided By HERP , VARANASI

y Bowl Mill XRP/XRS 623, 703HP, 783, 803, 803HP, 883, 1003 spares

y Turbine fasteners

y Repair/Rebabbiting of TG bearings

y Rotor machining

y Spares for Boiler Auxiliaries like Coal Burners, Fuel Piping, ESP, Air Preheater &

R.C. Feeder etc.

y Hydro Turbine component machining like Guide Vanes, Guide Bearings.

y Tools & Tackles of Steam Turbinesy Limiter Assembly, Oil Filter Assembly & Speed Changer Assembly of Governing

System.

Services Offered By HERP,VARANASI

Repair Machining Of --

HP/LP rotor of steam turbine (removal of thermal cracks)

Casing Liners and Diaphragm of steam turbine.

Minor machining of Power plant components at the site.

NDT like Ultrasonic testing of bearings at site

Consultancy for performance improvement of Bowl mills through modification of mill

components.

MISSION:

To be an Indian Multinational Engineering Enterprise providing Total Business Solution through

Quality Products, Systems and Services in the fields of Energy, Industry, Transportation,

Infrastructure and other potential areas



[9]

WORKING CAPITAL MANAGEMENT

Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to

fund operations, reinvest and meet capital requirements and payments. Understanding a

company's cash flow health is essential to making investment decisions. A good way to judge a

company's cash flow prospects is to look at its working capital management (WCM).

DefiningWorking Capital

Working capital refers to the cash a business requires for day-to-day operations, or, more

specifically, for financing the conversion of raw materials into finished goods, which the

company sells for payment. Among the most important items of working capital are levels of

inventory, accounts receivable, and accounts payable. Analysts look at these items for signs of a

company's efficiency and financial strength.

The term working capital refers to the amount of capital which is readily available to an

organization. That is, working capital is the difference between resources in cash or readilyconvertible into cash (Current Assets) and organizational commitments for which cash will soon

be required (Current Liabilities).

Thus:

WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES

In a department's Statement of Financial Position, these components of working capital are

reported under the following headings:

Current Assets

y Liquid Assets (cash and bank deposits)

y Inventory

y Debtors and Receivables

Current Liabilities

y Bank Overdrafty

Creditors and Payablesy Other Short Term Liabilities



[10]

ISSUES INWORKING CAPITAL

Working capital management involves arranging short term financing negotiating favorable

credit terms, controlling the movement of cash administreing inventory, thus Working capitalmanagement has following three components:

y Management of cash:- Identify the cash balance which allows for the business to meet

day to day expenses .It reduces cash holding costs

y Management of sundry debtors:- Money which is owed to a company by a customer

for products and services provided on credit It Identify the appropriate credit policy

y Management of inventory:- Money which is owed to a company by a customer for

products and services provided on credit It Identify the appropriate credit policy

Cash Management in B.H.E.L.

In B.H.E.L., the centralized cash credit system is followed. From 24-07-75 all the banking

transactions of the company have been centralized at corporate office, New Delhi. Under this

system all the sales proceeds of the units are deposited in a centralized account. This account

number is universal for all the units of ROD¶s. They have to deposit the sales process if this

account withdraws money from it. Only the corporate office operates it.

For meeting day to day expenses, the units have to prepare the estimates of such expenses,

which are then sent to corporate office weekly or monthly, or both. At unit level, the cash budgetis prepared on yearly basis for estimating the expected cash inflows and outflows. The yearly

budget is broken down into monthly and weekly intervals. The inflows and outflows and

estimated on following basis.

The only source of cash inflow for unit is corporate office. The sale proceeds cannot be directly

utilized. Based on the above requisitions, the corporate office allocates the funds.



[11]

For cash credit, corporate office will negotiate with consortium of Bank for total cash credit

required for the company as the whole. A consortium deed for hypothecation of stocks and stores

of company is executed by corporate office. All the information, documents etc. required in this

connection will be called for by the corporate office from the division.

Arrangements have been already been made by the State Bank of India, HDFC Bank, Canara

Bank, Bank of Baroda and Indian Overseas Bank for centralizing total cash credit limits at New

Delhi.

Under this scheme, the units have finished the required information under the following

documents. The units will send estimated, monthly cash flow statement to the corporate office

by 18th of every month.

Based on these cash flow statements, the corporate office will allocate the sub limits will be

transferred to the consortium of the bank by 25th of the month. The unit can utilize this fund.

The actual cash flow statement will be send to corporate office monthly i.e. 1st of succeeding

month.

The units are also required to send the weekly report of daily bank transactions to the corporate

office. These reports shows the detail of daily debit and credit transaction appearing in bankbook

of the company, enabling the posting of corporate bankbooks as well as verification of bank

statement received from banks.

The units are required to send the comparative statement of estimated and annual cash flow of

the preceding month. This report will be sent quarterly after inter-unit reconciliation meeting.

The total interest payable on cash credit availed by corporate office is to be allocated among the

units in the ratio of utilization of funds. Thus cash forecasting & budget are the principal tools of

cash management. Forecasting helps manager to know how much cash will be held in balance, to

what extent the firm should rely on banks financing and how much to invest in marketable

securities.



[12]

Receivable Management in BHEL.

The main products of BHEL are heavy industrial goods with long operating cycle. BHEL grants

liberal terms regarding trade credit to lure the potential customers to buy its product at favorable

selling prices.

To utilize its excess capacity, BHEL is granting liberal trade credit terms to its customers. The

main customers of BHEL are Railways, Power Industries and other Private Parties. BHEL has

overseas sales also.

All the BHEL units are having their commercial department. Commercial department and

Regional Operational Divisions (RODs) primarily carry out the job of recovery from the

customers. The sales section of finance department also actively takes part in receivable

management by preparing and sending invoices and reminders to customers at appropriate time.

They take track of money received from customers as advances, as against dispatch of finished

goods and money recoverable on account of price variation claims and conversion of deferred

debts into debtors. This monitoring is done work order wise. The aging schedule of customers

also prepared which gives the regarding period of outstanding balances.

The terms and conditions with the customers are finalized according to the credit policy laid

down by corporate office BHEL. However deviations are permitted with the due approval from

corporate office.

While lying down of credit policy by head office, industry conditions are taken into

consideration. Seeing huge investment in execution of work order, BHEL demands considerable

payment in advance in different phases of completion of work i.e. erection, installation,

commissioning, maintenance etc. Despite all these BHEL is presently facing cash crunch

because a major chunk of BHEL¶s customers consists of government bodies, which are very

casual in clearance of dues.



[13]

Inventory Management in BHEL,

The investment in inventory in production to total is a dominant determinant of working capital

management. It holds much important in context of BHEL as it is having a long production cycle

where a good amount of capital is tied up in form of raw material, work in progress and

conversion cost. Production planning and control department plays a pivotal role in inventory

management. The engineering department plays a supporting role and provides the requisition

regarding technology to be applied and material requires to PPC department. In BHEL the

inventory control is perform with following steps: -

1. Planning- This is done by PPC department is consultation with purchase, commercial, design

and manufacturing department prepares the planning schedule. This schedule along with

information provided by engineering and design department helps in material planning and

inventory control.

2. Procurement ± The procurement is done by purchase department. It is done with the

assistance of PPC and commercial department for maintaining a tradeoff between carrying cost

and ordering cost. A single purchase order is placed for the entire quantity of a specific item and

its scattered delivery over a period of time is received. This method helps in obtaining cash and

quantity discounts and saving carrying cost. In case of foreign purchase also one order is placedfor the full requirement of an item and scattered delivery is opted because variation caused in

material cost due to fluctuation in exchange rate is much less than the carrying cost of the

material which is approximately 25% of the total price.

3. Receipt and Custody- For the proper inventory control on receipt of materialin store, quality

control department checks the material as per specification. The cost section fills details of all the

purchase by issuing store receipt voucher and material issue voucher.

4. Issue -After receiving the material and storing, the management keeps the information

whether these material are being issued to desired destination. Full record of every issuing of

material is kept for the proper inventory control.

5 . Accounting -The record of every transaction regarding the use of material in every

department is kept. These records give the overall view of how and where inventories have been

used.



[14]

BALANCE SHEET OFHER P UNIT

BALANCE SHEET (AS ON

1 MARCH¡

010)

Rs. In lakhs

As 31-03-10 As 31-03-09

Sources of funds

Shareholders fund

share capital

Funds from Head office 48 ¢ 82 48 ¢ 82

Funds TO &From Corp¢

Off ccc A/C (cr¢

Balance) 130¢ 99 214

¢ 13

Reserves and surplus 19034 ¢ 37 19214 ¢ 18 13599 ¢ 27

Loan Funds

Secured Loan

Unsecured loan 51 ¢ 17

Deffered tax liability

19265¢ 35 13899

¢ 87

Application of funds

Fixed assets

Gross block 2565£ 19 2298

£ 01

Less DEP £ /Amortisation to date 1381 £ 78 1210 £ 65

1183 £ 41 1087 £ 36

Add/ deduct: lease adjustment account

less :Impairment loss

Net Block 1183 £ 41 1087 £ 36

Capital work in Progress 9 £ 15 61 £ 83

1192 £ 56

Investment NIL NIL

Inter division a/c (Dr £ balance) 10650 £ 63

Current assets , Loans And Advances

Current assets

Inventories 5828 £ 46 4402 £ 23

Sundry debtors 9800 £ 98 4259 £ 27

Cash and bank balance 1 £ 08 2 £ 12

Other current assets

Loans and advances 224 £ 48 367 £ 83

15855 9031 £ 45

less:

Current Laiblities And provisionLaiblities 7251 £ 99 4476 £ 3

Provisions 1180 £ 85 1751 £ 03

8432 £ 84 6227 £ 33

Net current assets 7422 £ 16

Profit and loss account (Dr £ balance )

19265 £ 35 13899£ 87



[15]

CURRENT RATIO: Rs in lakhs

CURRENT ASSET

CURRENT LIABILITY

CURRENT RATIO

31- 3-2 10 31-03-2009

CURRENT ASSET 15855 9031

CURRENT LIABILITY 7252 4476

RATIO 2.186 2.017

QUICK RATIO:

Rs in lakhs

C.A.-INVENTORY

C.L.QUICK RATIO 31-03-2010 31-03-2009

C.A.-INVENTORY 10027 4629

CURRENT LIABILITY 7252 4476

RATIO 1.382 1.034





[17]

Objective of Study

.

y

To study in general the working capital management procedure in BHEL (HERP),Varanasi.

y To analyze and apply operating cycle concept of working capital in BHEL (HERP),

Varanasi.

y To know how the working capital is being financed.

y To know the various methods to be followed by BHEL for inventories and accounts

receivables.

y To give suggestions, if any, for better working capital management in BHEL.

Thus a detailed study regarding the working capital management in BHEL is to be done to

consider the effectiveness of working capital management, identify the shortcoming in

management and to suggest for improvement in working capital management



[18]

Research Methodology

Research methodology used for study secondary sources of data. most of study is conducted

based on secondary sources.

Secondary sources of data mainly include annual reports of BHEL. Statement of changes in

working capital for the past 5 years is done using the data taken from these financial reports.

Similarly time series analysis of operating cycle and calculations of ratios is done. Apart from

this, the website of BHEL is referred to know the products, product facilities, network etc.

Industry analysis is done based on the information gathered from newspapers and websites of

Indian steel ministry & other sector related websites.

The use of primary sources is limited to interviews with some of the employees in finance

department. The reason being, it is against the company¶s policies & producers to reveal the

sensitive financial information.

Collecting the Information

With respect to primary and secondary data, the information is collected. Primary data tells us toasking the question to the person personally like interaction with employers and account head in

BHEL . Secondary data means that to get the data from the internet, company magazines, annual

reports of the company , internal financial document which is provided by the account

department.



[19]

Findings & Observation

During my project period, I have studied the working capital management in BHEL

HER P), Varanasi. On the basis of my study my f indings and observation are as follows:-

Estimation of working capital requirement is done of the basis of the length of operating

cycle of different products.

Net working capital increased year on year.

The Current and Quick ratio are around 2.18 and 1.38 respectively indicating that the

firm is highly liquid and would be able to meet its short term liabilities effectively

The WC is also showing an increasing trend which is attributed to the increasing profits.

Centralized cash management system has proved better cash security .

Inventory control system have somewhere time consuming.



[20]

Limitations of the study

Although every effort has been made to study the ³Working Capital Management

´in

detail, in an organization of BHEL size, it is not possible to make an exhaustive study in a

limited duration .

It is not possible to include data of 2009- 10 as the audited financial report has not come

yet (at the time of preparation of this report). However data of 2009 ± 10 is included partially

from the un-audited financial reports of BHEL.

Apart from the above constraint, one serious limitation of the study is, that it is not

possible to reveal some of the financial data owing to the policies and procedures laid down

by BHEL. However the available data is analyzed with great effort to get an insight into

Working Capital Management in BHEL.



[21]

RECOMMENDATIONS AND SUGGESTIONS

There is a great need for effective management of working capital in any firm. There is no

precise way to determine the exact amount of gross or net working capital for any firm. The data

and problems of each company should be analyzed to determine the working capital. There is no

specific rule as to how current assets should be financed. It is not feasible in practice to finance

current assets by short-term sources only. Keeping in view the constraints of the company, a

judicious mix of short and long term finances should be invested in current assets. Since current

assets involve cost of funds, they should be put to productive use.

During my project period, I have studied the working capital management in BHEL

(HERP), Varanasi. On the basis of my study I am putting forward some suggestions.

Implementation of which may certainly improve the efficiency of working capital management

in the unit.

Due to order base work in unit the inventories are determined after the order is received.

It takes time to inform the requirement for the inventories to higher authority .unit should

arrange the raw material in advance which may reduce the time and leads to overcome

the outstanding orders problem and defiantly help in the expansion of capacity

production..

Outstanding orders of recent past years are in increasing mode these orders should be

minimize as far as possible. It shows the capacity of production of any company but withreference of past data available with us the production turnover is also increasing thus it

clearly seems that the order receiving one in financial year is somewhere higher than

increased production capacity.

Storage capacity should be made more reliable so that the storage of materials can be

made in safe manner which leads to faster production.

Government department customers are lagging in debt payment which should be

consider.



[22]

Conclusion

Any change in the working capital will have an effect on a business's cash flows. A

positive change in working capital indicates that the business has paid out cash, for example in

purchasing or converting inventory, paying creditors etc. Hence, an increase in working capital

will have a negative effect on the business's cash holding. However, a negative change in

working capital indicates lower funds to pay off short term liabilities (current liabilities), which

may have bad repercussions to the future of the company.

y The Company is focusing strict eye watch on cash management now days.

y The WC is also showing an increasing trend which is attributed to the increasing profits.

Net working capital increased year on year. The factors contributing to the increase are:

a) Increase in Sundry Debtors due to relaxing of the credit policy

b) Increase in Inventory.

c) Increase in Other Current Assets and Loans and Advances. However, increase in

Current Liabilities and Provisions has offset the increase in Current Assets.

d) The Current and Quick ratio are around 2.18 and 1.38 respectively indicating that

the firm is highly liquid and would be able to meet itsshort term liabilities

effectively



[23]

BIBLOGRAPHY

Financial management I.M. Pandey

Financial management Presanna Chandra

Working capital Management I.M. Pandey

Annual Reports of BHEL

General Articles of BHEL HER P), Varanasi

Website: www.bhel.com, www.indianinfoline.com,

Newspapers: Economic Times of India, The Hindu.

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