summer project report

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Summer Training Report
On
COMPARATIVE ANALYSIS OF FINANCIAL STATEMENTS OF BHEL AND L&T
Completed In BHARAT HEAVY ELECTRICALS LTD. (BHEL)
Submitted In Partial Fulfillment
Of the Requirement
Of Masters of Business Administration
Corporate Mentor: Submitted By:
Name: LOKESH AGGARWAL Name of the student: RAHUL KUMAR
Designation: AGM Enr No: 40361203916
Organisation: BHEL Batch: 2016-2018
Submitted To:
Banarsidas Chandiwala Institute of Professional Studies, Dwarka, New Delhi
(Affiliated to Guru Gobind Singh Indraprastha University)

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Bonafide Certificate
This is to certify that as per best of my belief the project entitled “(COMPARATIVE
ANALYSIS OF FINANCIAL STATEMENTS OF BHEL AND L&T)” is the bonafide
research work carried out by (RAHUL KUMAR) student of MBA, BCIPS, Dwarka, New
Delhi during June-July 2016, in partial fulfillment of the requirements for the Summer
Training Project of the Degree of Master of Business Administration.
He has worked under my guidance.
--------------------
Name: Khusbu Madan
Project Guide (Internal)
Date:
Counter signed by
-------------
Name: Dr. Aparna Mishra
HOD/ Director
Date:

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Declaration
I hereby declare that this Project Report titled COMPARATIVE ANALYSIS OF
FINANCIAL STATEMENTS OF BHEL AND L&T submitted by me to Banarsidas
Chandiwala Institute of Professional Studies, Dwarka is a bonafide work
undertaken during the period from 19 June 2017 to 31 July 2017 by me and has
not been submitted to any other University or Institution for the award of any
degree diploma / certificate or published any time before.
(Signature of the Student) Date: / / 2017
Name: Rahul Kumar
Enroll. No.: 40361203916

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ACKNOWLEDGEMENT
I hereby certify that the work, which is being presented in the summer project report, entitled
“COMPARATIVE ANALYSIS OF FINANCIAL STATEMENTS OF BHEL AND
L&T” in partial fulfillment of the requirement for the award of the degree of Master of
Business Administration and submitted to the institution is an authentic record of my own
work carried out during the period of June to July 2017 under the supervision of Mr. Lokesh
Aggarwal.
I would also like to express my gratitude and regards to my guide Ms. Khushbu Madan (Asst.
Prof. BCIPS, Dwarka) for her exemplary guidance, monitoring and constant encouragement
throughout the course of the study. The blessing, help and guidance given by her time to time
shall carry me a long way in the journey of life on which I am about to embark.
I greatly acknowledge Mr. Lokesh Aggarwal (AGM) in Bharat Heavy for giving me the
opportunity to work in his prestigious place.

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EXECUTIVE SUMMARY
This report provides an analysis and evaluation of the current and prospective profitability,
liquidity and financial stability of BHEL Methods of analysis include analysis of L&T’s ratios
such as Debt, Current and Quick ratios. Other calculations include rates of return on
Shareholders’ Equity and Total Assets and earnings per share to name a few. All calculations
can be found in the appendices. Results of data analyzed show that all ratios are below
industry averages. In particular, comparative performance is poor in the areas of profit
margins, credit control, and inventory management but it is good in liquidity management.
The report finds the prospects of the company in its current position are not positive. The
major areas of weakness require further investigation and remedial action by management.
Recommendations discussed include:
• improving the average collection period for accounts receivable·
• improving/increasing inventory turnover·
• Reducing prepayments and perhaps increasing inventory levels.
The report also investigates the fact that the analysis conducted has limitations. Some of the
limitations include:
• Horizontal analysis is not possible due to shortage of time.
• The researcher was not able to focus on qualification factors.
• Data is limited to only year because detailed analysis was not possible.

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TABLE CONTENTS
CHAPTER-1 1 INTRODUCTION 7-8
CHAPETR-2
2.1.1
2.1.2
2.1.3
2.1.4
2.1.5
2.1.6
2.1.7
2.1.8
2.1.9
OVERVIEW OF BHEL
HISTORY
VISION, MISSION AND VALUES OF BHEL
OBJECTIVES OF BHEL
PRODUCTS OF BHEL
COMPETITORS
SUBSIDIARIES OF BHEL
BHEL BUSINESS AREAS
SWOT ANANLYSIS
10-11
11
12
13-14
14-20
20
20
21-22
23
2.2.1
2.2.2
2.2.3
2.2.4
ABOUT L&T
BUSINESS AREAS
COMPETITORS
SUBSIDIARIES
24-25
26-27
28
28
CHAPTER-3 3.1 LITERATURE REVIEW 30-31
CHAPTER-4 4.1
4.2
OBJECTIVE OF THE STUDY
SCOPE OF THE STUDY
33
33
CHAPTER-5
5.1
5.2
5.3
5.4
RESEARCH METHODOLOGY
SOURCE OF DATA
METHODS OF DATA COLLECTION
TOOLS
SIGNIFICANCE OF RATIO ANALYSIS
35
35-36
37
38-39
CHAPTER-6 6 DATA COLLECTION
DATA ANALYSIS
43-55
CHAPTER-7 7.1
7.2
7.4
7.5
FINDINGS
CONCLUSION
BIBLIOGRAPHY
LIMITATIONS OF THE STUDY
57
58
59
60

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INTRODUCTION
The analysis of financial statement is the systematic numerical calculation of the relationship
of one fact with the other to measure the profitability, operational efficiency and growth
potential of the business. Thus, the analysis of financial statement is basically a study of the
relationship among various financial facts and figures given in the financial statement.
In financial management, various tools are available for analysis of financial statements.
Among this, ratio analysis is a very powerful analytical tool useful for measuring the
performance of an organization. It helps the management to analyze the past performance of
the firm and to make further projections. Ratio analysis allows interested parties like
shareholders, investors, creditors, government and analysts to revolutionize certain aspects of
a firm's performance. The calculation of ratios is relatively simple, but proper analysis and
interpretation of the ratios can be made only by skilled analysts. Ratios normally indicate a
business's strengths and weaknesses in two ways:
* They provide an easy way to compare the present performance with the past; and
* They show the areas in which a particular business has comparative advantage or
disadvantage by comparing with the ratios of the other businesses of the same size and in the
same industry.
The financial development ratios not only measure the performance and help to take strategic
decisions on how to improve performance, but they also help determine the corporate value.
Ratio analysis is defined as the systematic use of ratio to interpret the financial statements so
that the strengths and weaknesses of a firm as well as its historical performance and current
financial condition can be determined. Therefore, ratio analysis is a widely used tool of
financial analysis. Against this backdrop, the present research attempts to measure the
performance of the BHEL using ratio analysis.

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COMPANY PROFILE
BHEL has been the flag bearer of Indian engineering enterprises across the globe for over
four decades. Continuing its focus on globalization, BHEL has achieved consistent growth in its
exports. Its references encompass almost the entire range of BHEL products and services,
covering thermal, hydro and gas-based turnkey power projects, substation projects, rehabilitation
projects, besides a wide variety of products like Transformers, Compressors, Motors, Valves and
Oil field equipment, Electrostatic Precipitators, Photovoltaic equipment, Insulators, Heat
Exchangers, Switchgears, Castings and Forgings, etc.
The cumulative overseas installed capacity of BHEL manufactured power plants stands at
close to 10 GW. The first large turnkey project export by an Indian company was done by BHEL
in Libya (1977) and since the past few decades, BHEL has been expanding its operations in the
field of exports. Currently, BHEL has established references in 78 countries across the globe
with major contributions in the power sector of various countries and has contracted power plant
equipment of around 17,000 MW outside India. With the growing impetus on the renewables
sector worldwide, BHEL has reinforced its presence in this segment with orders from Turkey
and Nigeria. In 2015-16, BHEL secured export orders from 17 countries with maiden orders
from Belgium and Mozambique.

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Some of the major successes achieved by BHEL have been in gas-based power projects in
Oman, Libya, Malaysia, UAE, Saudi Arabia, Iraq, Bangladesh, Sri Lanka, China, Kazakhstan,
Belarus, Yemen; thermal power projects in Cyprus, Malta, Libya, Egypt, Indonesia, Thailand,
Malaysia, Sudan, Syria, Ethiopia, Senegal, New Caledonia, Ukraine; hydro power plants in New
Zealand, Malaysia, Azerbaijan, Bhutan, Nepal, Taiwan, Tajikistan, Vietnam, Rwanda, Thailand,
Afghanistan, Democratic Republic of Congo, Burundi; and substation projects & equipment in
various countries. Execution of these overseas projects has also provided BHEL the experience
of working with world renowned consulting organizations and inspection agencies. The company
has been successful in meeting demanding requirements of international markets, in terms of
complexity of work as well as technological, quality and other requirements viz. HSE
requirements, financing packages and associated O&M services, to name a few. BHEL has
proved its capability to undertake projects on fast-track basis. BHEL has also established its
versatility to successfully meet the other varying needs of various sectors, be it captive power,
utility power generation or for the oil sector. Besides undertaking turnkey projects on its own,
BHEL also possesses the requisite flexibility to interface and complement other international
companies for large projects, and has also exhibited adaptability by manufacturing and supplying
intermediate products.
The company is taking a number of strategic business initiatives to fuel further growth in
overseas business. This includes firmly establishing itself in target export markets, positioning
BHEL as a regular EPC contractor in the global market both in utility and IPP segments and
exploring various opportunities for setting up overseas joint ventures, etc.
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 equipments 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.

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VISION, MISSION AND VALUES OF BHEL
VISION
A global engineering enterprise providing solutions for a better tomorrow.
MISSION
Providing sustainable business solution 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 honor 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.

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Objectives of BHEL
A dynamic is one which keeps its aim high adopts itself quickly to changing environment. So
here we are in BHEL. The objectives of the company have been redefined in the corporate plan
for the 90’s.
1. BUSINESS MISSION
To be a leading engineering enterprises providing quality product system and services in
the field of conversion, transmission, utilization and conversion of energy for application
in the areas of electric power, transportation, oil & gas explorations and industries.
Utilize company’s capabilities and resources to extend business into allied areas and
other priority sector of the economy like defence, communication and electronics.
2. GROWTH
To ensure a steady growth by enhancing the competitive edge of BHEL in existing
business new areas and international market so as to fulfil national expectation from
BHEL.
3. PROFITABILITY
To provide a reasonable and adequate return on capital employed, primarily through
improvement in operational, efficiency, capacity utilization and productivity and generate
adequate internal resources to finance the company’s growth.
4. FOCUS
To build a high degree of customers confidence by providing increased value for his
money though International standards of product quality performance and superior
customer service.

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5. PEOPLE ORIENTATION
To enable each employees to achieve his potential, improve his capabilities perceive his
role and responsibilities and participate and contribute to the growth and success of the
company.
To invest in human resources continuously and be alive to their needs.
6. TECHNOLOGY
To achieve technological excellence in operation by development of indigenous
technologies and efficient absorption and adoption of imparted technologies to suit
business and priorities and provide competitive advantage to the company.
7. IMAGE
To fulfill the expectation this stakes holders like government as owner. Employees,
customers and the country at large have from BHEL.
THE PRODUCTS PROFILE INCLUDES
▪ Gas Turbines

▪ Turbo generators

▪ Pumps

▪ Solar Water Heating Systems

▪ Electrics for Urban Transportation System

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GAS TURBINES
Figure 1
(FIGURE 1)
BHEL – the largest Gas Turbine manufacturer in India, with the state-of-art facilities in
all areas of Gas Turbine manufacture provide complete engineering in-house for meeting
specific customer requirement.
With over 100 machines and cumulative fired hours of over four million hours, BHEL
has supplied gas turbines for variety of applications in India and abroad. BHEL also has
the world’s largest experience of firing highly volatile naphtha fuel on heavy duty gas
turbines.
TURBO GENERATORS
BHEL presently has manufactured figure Turbo-Generators of ratings upto 560 MW and
is in the process of going up to 660 MW. It has also the capability to take up the
manufacture of ratings up to 1000 MW suitable for thermal power generation, gas based
and combined cycle power generation as-well-as for diverse industrial applications like
Paper, Sugar, Cement, Petrochemical, Fertilizers, Rayon Industries, etc. Based on proven
designs and know-how backed by over three decades of experience and accreditation of
ISO 9001, the Turbo-generator is a product of high-class workmanship and quality.
Adherence to stringent quality-checks at each stage has helped BHEL to secure
prestigious global orders in the recent past from Malaysia, Malta, Cyprus, Oman, Iraq,

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Bangladesh, Sri Lanka and Saudi Arabia. The successful completion of the various export
projects in a record time is a testimony of BHEL's performance.
PUMPS
(FIGURE 2)
BHEL started manufacture of Pumps during the mid-sixties under technical collaboration
with M/s Sigma Latin, Czechoslovakia, to meet the requirements of 60 MW, 110 MW
and 210 MW thermal power stations, the scope of which was widened to meet the
requirements of power plants up to 500 MW, with the help of another collaboration with
M/s Weir Pumps, U.K. BHEL has also made some in-house product development to gain
spin off benefits from the above collaboration as well as to develop new pumps to meet
the requirements of Combined Cycle Power plants.
BHEL has undertaken a design up-gradation and retrofit of the existing 200 KHI Boiler
Feed pumps Inside Stators with energy efficient hydraulics and cartridge design internals
under technical tie-up with M/s Sulzer Pumps, Germany; and recommended the upgraded
200 KHI-S Boiler Feed pump to all customers of 110 MW & 210 MW Power Stations
operating with the earlier Czech design for increase of pump availability and reliability
and also considerable reduction in operational costs.

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SOLAR WATER HEATING SYSTEMS
(FIGURE 3)
BHEL a pioneer in the field of design manufacturing and installation of solar water
heating systems (SWHS) in the country till date have installed systems covering more
than 74,000 m2
of absorber area of capacity over 37 Lakh liters per day. The largest over
SWHS of 40000 LPD for space heating is in use at Dr. Willmar Schwab India Pvt. Ltd.
Noida.
Solar water heating systems are environmental friendly, pollution free equipments,
harnessing the abundantly available Sun's energy. They find application at homes,hostels,
hotels, and hospitals (swimming pool, bathing, washing, cleaning and cooking); in
industrial process heating (Textile, Food processing, Pharmaceutical, Dyeing, Breweries,
Metal Plating industries); Milk dairies and chilling plants; space heating in central air
conditioning systems; pre-heating of boiler feed water.
In the BHEL make Solar Collector, stabilized efficiency values up to 65% is assured
under normal circumstances over a long period without degradation.

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ELECTRICS FOR URBAN TRANSPORTATION SYSTEM
(FIGURE 4)
• 25 KV AC, 50 HZ, single phase, broad gauge/meter gauge, Electrical Multiple
Units with DC Drives.

• 1500V DC, broad gauge/meter gauge, Electric Multiple Units with DC Drives.

• 25 KV AC/1500 VDC broad gauge Electrical Multiple Units with 3 phase drive.

• Diesel Electric at Multiple Units

• Metro Railway.

• Tram Cars





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Some of the other products manufactured by BHEL are :-
THERMAL POWER PLANT
Steam turbines, boilers and generators of up to 500 MW capacities to manufacture boilers
and steam turbines with super critical steam cycle parameters and matching generators up
660 MW unit facilities available for 1000MW size.
HYDRO POWER PLANT
Mini/Micro hydro sets Spherical, butterfly, rotary values auxiliaries for hydro station.
BOILERS
Heat recovery steam generators, pressure vessels chemical recovery boilers for paper
Industry ranging from capacity of 100 to 100t/day of dry solids.
POWER DEVICES
High power capacity silicon diodes, Thyristor devices and solar Photovoltaic cells.
SYSTEM AND SERVICES
➢ Power generation system
➢ Transmission system
➢ Transportation system
➢ Industrial system
PIPING SYSTEM
Constant load hanger clamp and hanger components, variable, spring hanger for power
station up to 850 MW capacities combined cycle plants, industrial boilers and process
industries.

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TRANSFORMERS
o Power transformers for voltage up to 400 KV
o HVDC transformers and reactors of up to + or – 500 KV
CAPACITORS
➢ Power capacitors for industrial and power systems of up to 250 KVA rating for
application up to 400 KV
➢ Coupling/CVVT capacitors for voltages up to 400 KV
COMPETITORS OF BHEL
• L&T
• ADANI PORTS
• SIEMENS
• ABB INDIA
• LANCO INFRATECH
SUBSIDIARIES OF BHEL
• BHEL-GE Gas Turbine Services Pvt. Ltd.
• Heavy Plates & Vessels Plant
• Latur Power Company ltd.
• Udangudi Power Corporation ltd
• NTPC BHEL Power Projects Pvt. Ltd,
• BHEL Electrical Machines ltd.
• Dada Dhuniwale Khandwa Power ltd.
• Powerplant Performance Improvement ltd.

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BHEL Business Areas
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 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.

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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.
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 battery-powered road vehicles.
OIL AND GAS
BHEL’s 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.
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.

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BHEL SWOT ANALYSIS
STRENGTH
1. Strong engineering base and stable industrial relationship.
2. Has been making profits continuously and paying dividends since
1974.
3. Great support from the collaborators has helped it to acquire
modern technology and transform it to suit Indian conditions.
4. Huge customer base in domestic business leading to major
presence and influence in the market.
5. More than 190 products and 30+ major product groups.
6. Ability to deliver high quality products at a competitive price
Weaknesses
1. Inability to provide to give supplier’s credit, soft loans and
financing of power projects.
2. Longer delivery cycles when compared with other international
competitors.
3.The company lacks effective marketing infrastructure
Opportunities
1. There is a huge demand of power and is expected to grow further.
2. Ageing power plants need more service and spare parts
3. As it cost competitive, it has potential export opportunities
Threats
1.Increased competition both national and international companies
2. Foreign competitors rapidly spending on promotion tactics
3. Consolidations in the industry have reduced the turnover of the
company

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AN OVERVIEW OF L&T (LARSEN AND TOUBRO)
• Larsen & Toubro Limited (L&T) is amongst one of the India’s largest technology, engineering
construction and manufacturing conglomerate.
• L&T is considered to be the "bellwether of India's engineering sector“, and was recognized as the
company of the year in 2010.
• L&T’s business structure has a dominant presence in India's infrastructure, power, hydrocarbon,
machinery, shipbuilding and railway sectors.
• L&T has an international presence. The company's businesses are supported by a wide marketing
and distribution network, and have established a reputation for strong customer support.

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• With more than a seven decades of dedicated customer-focused service and continuous quest for
world class quality have established them as the leader of the E&C sector in India.
• The evolution of L&T into the country's largest engineering and construction
Organization is among the most remarkable success stories in Indian industry.
• L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers,
Henning Holck-Larsen and Soren Kristian Toubro. Both of them were strongly
Committed to developing India's engineering capabilities to meet the
Demands of industry.
• In the year 1950, L&T became a Public Company with a paid-up capital of Rs.2 million and a
sales turnover of Rs.10.9 million that year and now, In 2015-2016, the company generated a total
revenue of Rs. 60415 Crore.

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L&T BUSINESS AREAS
• Infrastructure segment
It comprises engineering and construction of building and factories, transportation
infrastructure, heavy civil infrastructure, power transmission & distribution and water,
smart world and communication projects.
• Power segment
It comprises turnkey solutions for coal-based and gas-based thermal power plants including
power generation equipment with associated systems and/or balance-of-plant packages.
• Metallurgical & Material Handling segment
It comprises turnkey solutions for ferrous (iron & steel making) and non-ferrous (aluminium,
copper, lead & zinc) metal industries, bulk material & ash handling systems in power, port, steel
and mining sector including manufacture and sale of industrial machinery and equipment.
• Heavy Engineering segment
It comprises manufacture and supply of custom designed, engineered critical equipment &
systems to core sector industries like fertiliser, refinery, petrochemical, chemical, oil & gas,
thermal & nuclear power, aerospace and defence.
• Electrical & Automation segment
It comprises manufacture and sale of low and medium voltage switchgear components, custom
built low and medium voltage switchboards, electronic energy meters/protection (relays)
systems, control & automation products. Electrical & Automation also included medical
equipment business in the previous year (upto the date of sale).
• Hydrocarbon segment
It comprises complete EPC solutions for the global Oil & Gas Industry from front-end design
through detailed engineering, modular fabrication, procurement, project management,
construction, installation and commissioning.
• IT & Technology Services segment
It comprises information technology and integrated engineering services.

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• Financial Services segment
It comprises retail and corporate finance, housing finance, infrastructure finance, general
insurance, asset management of mutual fund schemes and related advisory services.
• Developmental projects segment
It comprises development, operation and maintenance of basic infrastructure projects, toll
collection including annuity based projects, power development, development and operation of
port facilities and providing related advisory services.
• Others segment
It includes realty, shipbuilding, manufacture and sale of industrial valves, welding and cutting
equipment, manufacture, marketing and servicing of construction equipment and parts thereof,
marketing and servicing of mining machinery and parts thereof, manufacture and sale of rubber
processing machinery & castings, ready-mix concrete, asphalt & paving materials, mining and
aviation.

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COMPETITORS OF L&T
1) ABB LTD.
2) BECHTEL
3) HINDALCO
4) SUNDARAM FASTENERS
5) GAMMON INDIA
6) LANCO INFRATECH
SUBSIDIARIES OF L&T
a) L&T Hydrocarbon Engineering
b) L&T Financial Services
c) L&T InfoTech
d) L&T Technology Services
e) L&T Infrastructure Development Project ltd.
f) L&T MHPS Boilers Pvt. Ltd. And L&T MHPS Turbines Pvt Ltd.
g) EWAC Alloys Ltd.

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LITERATURE REVIEW
Before starting any research it is very necessary to read articles and other research papers that
have been written on the subject in the past. These literatures help us in developing a strong base
for our study and provide us with information that can be used during the research. It also helps
in developing the objectives of our study.
Mathews (2003) in his book has explained about hot el management and operation which is quite
helpful to researchers. Agrawal's (2008) book on ratio analysis provides a systematic, precise and
analytical explanation of the concept with realistic and practical examples. Further, Ponkiya's
(2012) paper provides conceptual framework of ratio analysis.
Gopinathan Thachappilly (2009), in this articles he discuss about the Financial Ratio Analysis
for Performance evaluation. It analysis is typically done to make sense of the massive amount of
numbers presented in company financial statements. It helps evaluate the performance of a
company, so that investors can decide whether to invest in that company. Here we are looking at
the different ratio categories in separate articles on different aspects of performance such as
profitability ratios, liquidity ratios, debt ratios, performance ratios, investment evaluation ratios.
James Clausen (2009), in this article he briefly express about the liquidity ratio. He Pronounce
that it is analysis of the financial statements is used to measure company performance. It also
analyses of the income statement and balance sheet. Investors and lending institutions will often
use ratio analyses of the financial statements to determine a company’s profitability and
liquidity. If the ratios indicate poor performance, investors may be reluctant to invest. Therefore,
the current ratio or working capital ratio, measures current assets against current liabilities. The
current ratio measures the company’s ability to pay back its short-term debt obligations with its
current assets. He thinks a higher ratio indicates the company is better equipped to pay off short-
term debt with current assets. Wherefore, the acid test ratio or quick ratio, measures quick assets
against current liabilities. Quick assets are considered assets that can be quickly converted into
cash. Generally they are current assets less inventory

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Chakravarty and Reddy (2006), in their paper on the financial performance comparison as a
major tool for financial performance, have studied 11 ratios of profitability, proprietary, liquidity
and turnover groups.
Nishanthini and Nimalathasan (2013), conducted the study “Determinants of profitability: A case
study of listed manufacturing companies in Sri Lanka”. It is concluded that selected
manufacturing companies has different ranking based on each profitability indicators such as
GPR, OPR, NPR, ROI, and ROCE. Based on the GPR, OPR, NPR, Royal Cheramic is at first
whereas Chevron Lubricants is at first based on Return on Investment, Return on Capital
Employed

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4.1) OBJECTIVES OF THE STUDY
• To examine the cash fluctuations of liquidity, profitability position of BHEL in respect
of L&T
• To find out the different types of ratios in the BHEL and L&T company
• To find out the financial performance & financial distributions of the BHEL in respect
of L&T.
• To forecast the performance of BHEL in future.
• To find out the long term solvency of companies on the basis of fundamental analysis’s
tools.
• To give suggestions on the basis of financial statement analysis.
4.2) SCOPE OF STUDY
There are hundreds of companies which are working in same field of construction, power
distribution, manufacturing etc. and it is very difficult to comparison of financial
statements of all the companies. So, the researcher decides to study only BHEL and L&T.
The study is confined to the management of RATIO ANALYSIS in BHEL. DELHI. The
main aim of the study is to assess the necessary of managing Current Assets and Current
liabilities.

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RESEARCH METHODOLOGY
This chapter describes how the data needed in order to fulfill the purpose was collected.
We used quantitative approach for our thesis because the majority of data collection from
the quantitative approach.
5.1) SOURCES OF DATA
• The source of data is annual reports of BHEL and L&T.
• Recorded data from data base management system.
5.2) METHODS OF DATA COLLECTION
DATA COLLECTION
METHODS
PRIMARY DATA SECONDARY
(QUALITATIVE) (QUANTITATIV)
5.2.1) Primary Data (Qualitative Information)
Primary data is information that you collect specifically for the purpose of your research
project. An advantage of primary data is that it is specifically tailored to your research needs.
A disadvantage is that it is expensive to obtain.

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5.2.2) Secondary data (Quantitative Information)
Secondary data are those data, which were already prepared by some others. I have
collected some more data from the following data
i. From the Balance sheets and P&L accounts.
ii. Published and unpublished manuals, records and files.
Other information is gathered from the books mentioned in bibliography

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5.3) Tools (RATIO ANALYSIS)
Financial ratios are useful indicators of a firm's performance and financial situation. Financial
ratios can be used to analyze trends and to compare the firm's financials to those of other firms.
Ratio analysis is the calculation and comparison of ratios which are derived from the information
in a company's financial statements. Financial ratios are usually expressed as a percent or as
times per period. Ratio analysis is a widely used tool of financial analysis. It is defined as the
systematic use of ratio to interpret the financial statements so that the strength and weaknesses of
a firm as well as its historical performance and current financial condition can be determined.
The term ratio refers to the numerical or quantitative relationship between two variables. With
the help of ratio analysis conclusion can be drawn regarding several aspects such as financial
health, profitability and operational efficiency of the undertaking. Ratio points out the operating
efficiency of the firm i.e. whether the management has utilized the firm’s assets correctly, to
increase the investor’s wealth. It ensures a fair return to its owners and secures optimum
utilization of firm’s assets. Ratio analysis helps in inter-firm comparison by providing necessary
data. An inter firm comparison indicates relative position. It provides the relevant data for the
comparison of the performance of different departments. If comparison shows a variance, the
possible reasons of variations may be identified and if results are negative, the action may be
initiated immediately to bring them in line. Yet another dimension of usefulness or ratio analysis,
relevant from the View point of management is that it throws light on the degree efficiency in the
various activity ratios measures this kind of operational efficiency.

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5.4) Significance or Importance of Ratio Analysis
1) It helps in evaluating the firms performance
With the help of ratio analysis conclusion can be drawn regarding several aspects such as
financial health, profitability and operational efficiency of the undertaking. Ratio points out
the operating efficiency of the firm i.e. whether the management has utilized the firm’s assets
correctly, to increase the investor’s wealth. It ensures a fair return to its owners and secures
optimum utilization of firm’s assets.
2) It helps in inter-firm comparison
Ratio analysis helps in inter-firm comparison by providing necessary data. An inter firm
comparison indicates relative position. It provides the relevant data for the comparison of the
performance of different departments. If comparison shows a variance, the possible reasons
of variations may be identified and if results are negative, the action may be initiated
immediately to bring them in line.
3) It simplifies financial statement
The information given in the basic financial statements serves no useful Purpose unless it s
interrupted and analyzed in some comparable terms. The ratio analysis is one of the tools in
the hands of those who want to know something more from the financial statements in the
simplified manner.
4) It helps in determining the financial position of the concern
Ratio analysis facilitates the management to know whether the firms financial position is
improving or deteriorating or is constant over the years by setting a trend with the help of
ratios The analysis with the help of ratio analysis can know the direction of the trend of
strategic ratio may help the management in the task of planning, forecasting and controlling.

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5) It is helpful in budgeting and forecasting
Accounting ratios provide a reliable data, which can be compared, studied and analyzed.
These ratios provide sound footing for future prospectus. The ratios can also serve as a basis
for preparing budgeting future line of action.
6) Liquidity position
With help of ratio analysis conclusions can be drawn regarding the Liquidity position of a
firm. The liquidity position of a firm would be satisfactory if it is able to meet its current
obligation when they become due. The ability to met short term liabilities is reflected in the
liquidity ratio of a firm.
7) Long term solvency:
Ratio analysis is equally for assessing the long term financial ability of the Firm. The long
term solvency is measured by the leverage or capital structure and profitability ratio which
shows the earning power and operating efficiency, Solvency ratio shows relationship
between total liability and total assets.
8) Operating efficiency:
Yet another dimension of usefulness or ratio analysis, relevant from the View point of
management is that it throws light on the degree efficiency in the various activity ratios
measures this kind of operational efficiency.
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of
ratio to interpret the financial statements so that the strength and weaknesses of a firm as well
as its historical performance and current financial condition can be determined. The term
ratio refers to the numerical or quantitative relationship between two variables.

40 | P a g e
5.5) Formula for ratio analysis
Liquidity ratio
a) Current Ratio:
Current Ratio = Current assets /Current liabilities
b) Quick Ratio:
Quick Ratio= Quick Assets*/Current Liabilities
*Quick Assets= Current Assets-Inventories
c) Cash Ratio:
Cash Ratio = Cash / Current Liabilities
d) Net Working Capital Ratio:
Net Working Capital Ratio= Net Working Capital*/Total Assets
*Net Working Capital= Current Assets – Current Liabilities
Profitability Ratio
a) Net Profit margin
Net Profit margin = Net profit after tax/sales
b) Gross Profit margin ratio
Gross Profit margin ratio= Gross profit/sales
c) Return on Total Assets
Return on Total Assets = Net profits after taxes / total assets
d) Return on common stock equity
Return on common stock equity = Net income / Common stockholders’ equity
e) Operating Profit Margin
Operating Profit Margin = Operating profits / Sales

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Leverage Ratio
a) Debt Ratio
Debt Ratio =Total liabilities / Total assets ---------------- (16)
b) Debt to Equity Ratio
Debt to Equity Ratio= Total debt/Net worth
Activity Ratios
a) Assets Turnover Ratio
Assets Turnover Ratio= Net Sales/Total Assets
b) Inventory Turnover Ratio
Inventory Turnover Ratio= Cost of Goods Sold/Inventory
Growth Ratio
a) Earnings Per Share Ratio
Earnings per Share Ratio= PAT/Number of outstanding shares
b) Dividends per share Ratio
Dividends per share Ratio= Dividend paid/Number of outstanding shares
c) Price-Earnings Ratio
Price-Earnings Ratio= Market price per share/Earning per share
d) Dividend Payout Ratio
Dividend Payout Ratio= Dividend per share/Earning Per Share

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6.1) DATA COLLECTION (MEANING)
Data collection is the process of gathering and measuring information on variables of interest, in
an established systematic fashion that enables one to answer stated research questions, test
hypotheses, and evaluate outcomes.
DATA OF BHEL AND L&T
RESOURCES
BHEL L&T
in crores in crores
Total assets 66690.1 97069.71
current assets 46539.03 66283.56
fixed assets 20151.07 30786.15
total liabilities/total debt 33636.75 56531.38
Non-current liabilities 12700.21 9065.4
current liabilities 20936.54 47285.98
turnover 26586.51 60415
operating profit/loss (PBIT) -1964 6170.78
gross profit/loss(PBT) -514 6689.11
net profit/loss -913.42 5311.46
earnings per share (EPS) -3.730 57.02
inventory 9637.39 1888
PAT -913.42 5311.46
interest expense(finance cost) 27 1449.04
Equity shares 2447600000 931478845
net working capital 25152 18997.58
capital employed 29778 54530
Accounts receivable/Trade
receivables
24428.98 26309.19
reserves 32682.98 40532.03
shareholders equity/fund 33053.35 40718.33
net worth 33054 40718
share capital 4895200000 1862957690
face value 2 2
proposed dividend 97.9 1699.95
net sales 25138 59779.61
COGS 28551 56056.75
Market price per share 143.45 1183

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6.2) DATA ANALYSIS (MEANING)
Data analysis, also known as analysis of data or data analytics, is a process of inspecting,
cleansing, transforming, and modeling data with the goal of discovering useful information,
suggesting conclusions, and supporting decision-making.
There are five important categories of ratios related to the RATIO
LIQUIDITY RATIOS
It is extremely essential for a firm to be able to meet its obligations as they become due.
Liquidity ratios measure the ability of the firm to meet its current obligations.
The most common ratios, which indicate the extent of liquidity, are
▪ Current ratio
▪ Quick ratio
CURRENT RATIO
The current ratio is calculated as per the following formula
Current ratio = Current assets
Current liabilities
Current assets include cash and those assets, which can be converted into cash within a year. All
obligations maturing within a year are included in current liabilities.
As a conventional rule, a current ratio of 2:1 or more is considered satisfactory. The higher the
current ratio, the greater the margin of safety.
BHEL L&T
= 46539.03/20936.54
= 2.2
= 66283.56/47285.98
= 1.40

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QUICK RATIO OR ACID RATIO
An asset is quick or liquid if it can be converted into cash immediately without a loss of value.
Cash is the most liquid asset. Other assets which are considered to be relatively liquid and
included in quick assets are debtors and bills receivables and marketable securities. The ratio can
be calculated by using the following formula
Quick ratio = Quick assets
Current Assets
Quick assets = Current assets – Inventories
Generally a quick ratio of 1:1 is considered to represent a satisfactory current financial position.
BHEL L&T
= (46539.03-9637.39)/20936.54
= 1.76
= 64395.56/47285.98
= 1.36
NET WORKING CAPITAL RATIO
The net working capital ratio is the net amount of all elements of working capital. It is intended
to reveal whether a business has a sufficient amount of net funds available in the short term to
stay in operation. Use the following formula to calculate the net working capital ratio:
Net Working Capital = Current Assets – Current Liabilities
An alternative version of the ratio compares net working capital to the total amount of assets on
the balance sheet. In this case, the formula is:
(Current assets - Current liabilities) ÷ Total assets
BHEL L&T
= 25602.49/66690.1
= 0.38
= 18997.58/97069.71
= 0.19

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CASH RATIO
The cash ratio or cash coverage ratio is a liquidity ratio that measures a firm’s ability to pay off
its current liabilities with only cash and cash equivalents. The cash ratio is much more restrictive
than the current ratio or quick ratio because no other current assets can be used to pay off current
debt–only cash.
Cash ratio = Cash/Current Liability
BHEL L&T
= 10085.99/20936.54
= 0.48
= 74.77/47285.98
= 0.0015
Analysis
If we compared all the liquid ratios of BHEL with L&T, we find that BHEL’s liquid ratio is
higher than L&T’s liquid ratio which states that BHEL is more liquid than L&T and a more
liquid firm can easily convert its assets into cash and payoff their dues as soon as they occurred.
LEVERAGE RATIOS
The short term creditors like bankers and supplier s of raw material are more concerned with the
firm’s current debt paying ability. On the other hand, long term creditors, like debenture holders,
financial institutions etc., are more concerned with the firm’s long term financial strength.
To judge the long term financial position of the firm, financial leverage or capital structure ratios
are calculated.
Leverage ratios may be calculated form the balance sheet items to determine the proportion of
debt in total financing.
The leverage ratios are calculated in two methods. Such as

47 | P a g e
• Total Debt Ratio
• Debt Equity Ratio
Debt Ratio
Debt ratio is used to analyze the long term solvency of a firm. The firm may be interested in
knowing the proportion of the interest bearing debt in the capital structure. It may, therefore,
compute the debt ratio by using following formula
Debt Ratio = Total debt
Total Assets
BHEL L&T
= 33636.75/66690.1
= 0.50
= 56531.38/97069.71
= 0.58
DEBT EQUITY RATIO
From the total debt ratio which clears the percentage of lenders contribution to owner’s
contribution or the relationship describing the lender’s contribution for each rupee of the
owner’s contribution is called debt equity ratio. It can be calculated by using the following
formula
Debt equity ratio = Total debt
Net Worth
BHEL L&T
= 33636.75/33053.35
= 1.00
= 56531.38/40718
= 1.38
Analysis
• Generally, a debt ratio lower than 1 indicates that the company has more assets than its
debt and the firm is able to clear its debt by selling long term assets and further it will
help in getting loan easily from banks and other financial institutions. If we look at the
figures of debt ratio, BHEL has a ratio of 0.50 in respect of L&T which has 0.58. This
describes that both the firms have good debt ratio and both the firm have the ability to
clear its debt.
• A debt equity ratio less than or equal to 1 indicates firm raise capital 50% through
borrowings and 50% through selling equity shares. If we compare both, BHEL has

48 | P a g e
1.00 and L&T has 1.38. This shows that BHEL has equal amount of debt and equity
while L&T has more debt than equity and hence BHEL has less chance to become a
defaulter.
PROFITABILITY RATIOS
The profitability ratios are calculated to measure the operating efficiency of the company.
A company should earn profits to survive and grow over a long period of time. Profit is the
difference between revenues and expenses over a period of time. We should continuously
evaluate the efficiency of its company in terms of profit.
Profitability ratios include the following: -
➢ Gross Profit Margin Ratio
➢ Operating Profit Margin Ratio
➢ Net Profit Margin Ratio
➢ Return on Capital Employed Ratio
➢ Return on Net worth Ratio
➢ Return on Assets
GROSS PROFIT MARGIN
The first profitability ratio in relation to sales is the gross profit margin. It can be calculated as
Gross profit margin = Sales – Cost of goods sold
Sales
This ratio indicates the average spread between the cost of goods sold and sales revenue.
A high gross profit margin ratio is a sign of goods management. It is relative to the industry
average implies the firm able to produce at relatively lower cost. A lowgross profit margin may
reflect higher cost of goods sold due to the firm’s inability to purchase raw materials at
favorable terms, inefficient utilization of plant and machinery or over investment in fixed assets
resulting higher cost of production.

49 | P a g e
BHEL L&T
={(-514)/26586.51}*100
= -1.93
= 6689.11/59779.61*100
= 11.18
OPERATING PROFIT RATIO:
It is expressed as => (Operating Profit / Net Sales) x 100
Higher the ratio indicates operational efficiency
BHEL L&T
= {(-1964)/26586.51}*100
= -7.38
= 6170.78/59779.61*100
= 10.32
NET PROFIT MARGIN
Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross
profit. The ratio is measured by using the following formula
Net profit margin = Profit after tax (PAT)
Sales
This ratio is establishes a relationship between net profit and sales and indicates management’s
efficiency in manufacturing, administering and selling the products. This ratio is the overall
measure of the firm’s ability to turn each rupee sales into net profit.
BHEL L&T
= {(-913.42)/26586.51}*100
= (-3.43)
= 5311.46/59779.61*100
= 8.8

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RETRUN ON CAPITAL EMPLOYED:
(Net Profit before Interest & Tax / Average Capital Employed) x 100
Average Capital Employed is the average of the equity share capital and long term funds
provided by the owners and the creditors of the firm at the beginning and end of the accounting
period.
BHEL L&T
= {(-913.42)/29778)}*100
= -3.06
= 6170.78/54530*100
= 11.3
RETURN ON NET WORTH
Return on equity (ROE) is a measure of profitability that calculates how many dollars of profit a
company generates with each dollar of shareholders' equity.
ROE = Net Income/Shareholders' Equity
BHEL L&T
= {(-913.42)/33054}*100
= -2.76
= 5311.46/40718*100
= 13
RETURN ON INVESTMENT
The term investment may refer to total assets or net assets. The conventional approach of
calculating return on investment is to divide profit after tax by investment.
ROI = EBIT
Net assets
BHEL L&T
= {(-913.42)/66690.10}
= (-0.013)
= 5311.46/97069.71
= 0.05

51 | P a g e
RETURN ON ASSET
The return on assets ratio, often called the return on total assets, is a profitability ratio that
measures the net income produced by total assets during a period by comparing net income to
the average total assets. In other words, the return on assets ratio or ROA measures how
efficiently a company can manage its assets to produce profits during a period.
Return on Assets = Net income/ Average total assets
BHEL L&T
= -913.42/33345.05
= -0.02
= 59779.71/48534.85
= 1.23
Analysis
Generally profitability ratio depicts the status of company performance in terms of revenue
generation from sales (of goods, inventories, raw material, and fixed assets), retention of
employees and profit generates from investment activities.
If we compare BHEL’s and L&T’s profitability ratio, we see that BHEL’s profit ratio in
respect of its competitors has been low and even in negative form.
Through this we can analyze that BHEL wasn’t generate any revenues for the period 2015-
2016 and L&T is performing well in respect to BHEL.
ACTIVITY RATIOS
Activity ratios are employed to evaluate the efficiency with which the firm manages and
utilizes its assets. These ratios are also called turnover ratios because they indicate the speed
with which assets are being converted or turnover into sales.
Following are the different activity ratios:
o Inventory turnover ratio
o Assets turnover ratio

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INVENTORY TURNOVER RATIO
This ratio indicates the efficiency of the firm in producing and selling its product. It is
calculates as
Inventory turnover ratio = Cost of goods sold
Average work-in-progress
BHEL L&T
= 28551/9637.39
= 2.96
= 635.39/1888
= 0.33
ASSETS TURNOVER RATIOS
The asset turnover ratio is an efficiency ratio that measures a company’s ability to generate
sales from its assets by comparing net sales with average total assets. In other words, this
ratio shows how efficiently a company can use its assets to generate sales.
Assets turnover Ratio = Net sales
Average total assets
BHEL L&T
= 25138/33345
= 0.75
= 59779.61/97069.71
= 0.61
Analysis
Smaller activity ratios may indicate that the company is holding higher levels of inventory instead of
selling. A low ratio also suggests a deficiency in the collection process. So below is the analysis of
BHEL:
• Collection from inventory in case of BHEL is better than L&T.
• However, collection from sale of assets in not great in both the firms due to mismanagement of
funds.

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GROWTH RATIO
EARNING PER SHARE
Earnings per Share = (Net Income - Preferred Dividends) ÷ Average Common Shares
Outstanding
EPS shows the rate of earnings per share of common stock. Preferred dividends are deducted
from net income to get the earnings available to common stockholders.
BHEL L&T
= {(-913.42)/24476}*100
= -3.73
= 53114600000/931478845
= 57.02
PRICE-EARNING RATIO
Price-Earnings Ratio = Market Price per Share ÷ Earnings per Share
We used to evaluate if a stock is over or under-priced. A relatively low P/E ratio could
indicate that the company is under-priced. Conversely, investors expect high growth rate from
companies with high P/E ratio.
BHEL L&T
= 143.45/-3.73
= -38.45
= 1183/57.02
= 20.7
DIVIDEND PER SHARE
A Dividend per share (DPS) is the total dividend a company pays out, over a 12-month period,
divided by the total number of outstanding shares. A company uses this method to share
profits with its shareholders. DPS can indicate how profitable a company is over a fiscal
period.
BHEL L&T
= 97.9/24476*100
= 0.4
= 16999500000/931478845*100
= 18.25

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DIVIDEND PAYOUT RATIO
Dividend Pay-out Ratio = Dividend per Share ÷ Earnings per Share
Determines the portion of net income that is distributed to owners. Not all income is
distributed since a significant portion is retained for the next year's operations.
BHEL L&T
= 0.4/-3.73
= -0.10
= 18.25/57.02
= 0.32
Analysis
Growth Ratios are used to value a company's equity, and are often used by analysts to
determine if a company is a buy, sell or hold. Below is the analysis of different growth ratio:
• A higher EPS is the sign of higher earnings, strong financial position and, therefore, a
reliable company to invest money. BHEL has a negative EPS stating that the firm
performance in terms of revenue generation is not good in comparison with L&T which
has 57.02 EPS.
• Also the P/E ratio and dividend payout ratio of BHEL is in negative defining the lack in
payment of dividend.
• And even the dividend per share of BHEL is also low in respect of L&T.

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COMPARISSION OF RATIOS
BHEL L&T
LIQUIDITY RATIO
CURRENT RATIO 2.2 1.40
QUICK RATIO 1.76 1.36
CASH RATIO 0.48 0.0015
NET WORKING CAPITAL 0.38 0.19
PROFITABILITY RATIO
GROSS PROFIT RATIO -1.93 11.18
NET PROFIT RATIO -3.43 8.8
OPERATING PROFIT RATIO -7.38 10.32
NET PROFIT TO NET WORTH -2.76 13
RETURN ON CAPITAL EMPLOYED -3.06 11.3
RETURN ON INVESTMENT -0.013 0.05
RETURN ON ASSETS -0.02 1.23
CAPITAL STRUCTURE ANALYSIS RATIO
DEBT TO ASSET RATIO/DEBT RATIO 0.50 0.58
DEBT TO EQUITY RATIO 1.00 1.38
ACTIVITY ANALYSIS RATIO
ASSET TURNOVER RATIO 0.75 0.61
INVENTORY TURNOVER RATIO 2.96 0.33
GROWTH RATIO
EARNING PER SHARE -3.73 57.02
DIVIDEND PER SHARE 0.4 18.25
PRICE EARNING RATIO -38.45 20.7
DIVIDEND PAYOUT RATIO -0.10 0.32

57 | P a g e
7.1) FINDINGS
• Both L&T and BHEL are well known for their strong execution capabilities. However,
the woes of the power sector as well as slowing economic growth are reflecting visibly
on BHEL’s performance.
• In spite of its huge order book, BHEL could hardly convert them into revenues due to
client side issues.
• Over the last four quarters, the company’s revenues have remained flat. And if analyst
estimates are any indication, revenues for the current financial year are expected to
remain flat or could even decline marginally.
• BHEL’s management, too, has indicated that existing orders from the private sector could
face execution delays at the customers end.
• In our view, presence of L&T in diverse business opportunities ranging from heavy
engineering, construction, power, machinery and industrial products, ship building,
infrastructure, finance and information technology lends the company a great benefit
of diversification.
• L&T, too, is facing its share of problems, but it is still in a better position given the
business diversification.

58 | P a g e
7.2) Conclusion
• The firm BHEL liquidity position in terms of short term is good but in long term it
doesn’t perform well.
• In spite of having good liquidity ratio it fails to recover the profits from sales.
• The efficiency of the company is also good but last some years not better.
• The above analysis enables the company to understand the financial position and
financial soundness of BHEL.
• Lackness of order booking in last two or three years affecting company performance
since new orders execution would take 20 months for each project.
• In spite of the International competitive bidding and lean power market, BHEL secured
more than 85% of the total order floated in open market.

59 | P a g e
7.3) BIBLIOGRAPHY
• Income statement, Balance Sheet, and Profit and Loss Statement of BHEL (2015-2016)
Accessed on September 2, 2017 from
http://www.bhel.com/financial_information/pdf/15-
16/BHEL%20Annual%20Report%202015-16.pdf.
• Income statement, Balance Sheet, and Profit and Loss Statement of L&T (2015-2016)
Accessed on September 2, 2017 from
http://www.larsentoubro.com/media/33317/lt-annual-review-2015-2016.pdf.

60 | P a g e
7.4) Limitation of the Report
• Since time available is only six weeks for the project work, a detailed analysis was not
possible. 

• The researcher was not able to focus on qualification factors, which influences the financial
position of the organization. 

• The study was limited to BHEL, so the result could not be generalized to macro level. 

• Ratio analysis is only tools used for the financial statement analysis. 

• Since the finance and accounting is an organization being a very sensitive area, analysis is
based on the assumed data of BHEL. 

• Due to inter firm comparison, data is limited for the period of 2016-2017. 

• Use of chart is not possible because the data taken only of one year


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