Bharath Electronics Report

WORKING CAPITAL MANAGEMENT
INDUSTRY PROFILE
The foundations for India's Defence Industry are widely believed to have been laid in 1801 with the establishment of the Gun Carriage Agency in Calcutta by the East India Company Although historically true, the birth of India's current defence industrial really came during the Second World War, when the decision was taken to establish a limited defence production capability in the country, to support the British war effort in Asia and the Middle East. Before then, the British had decided against establishing a significant defence equipment manufacturing capability in India, for fear of 'giving the natives access to modem military industry.
Ordnance Factories and Public Sector Undertakings:

At the Chi of the World War 2 India's Defence Industry capacity amounted to 16 ordnance factories. a clothing establishment, and an aircraft production plant; and the new government subsequently inherited this capability. No new factories were built in the first years after independence. From 1958 onwards, however, the ordnance factories were steadily expanded. The war against China in 1962 prompted a further expansion in India's ordnance capability. By 1970, the number of ordnance factories had risen to 31 and by the 1980s the number had reached 35. Today the country has 39 ordnance factories. In addition to its ordinance factors, India has eight defence focused public sector undertakings (PSUs)'. These are Bharat Electronics; Bharat Earth Movers; Mazagon Dockyards; Garden Reach Shipbuilders and Engineers; Goa Shipyard; Bharat Dynamics; Mishra Dhatu Nigam (Midhani); and Hindustan Aeronautics. The PSUs produce a range of defence equipment including helicopters, state of the art electronics, heavy trucks and tank transportation trailers, submarines, missile boats destroyers, frigates, corvettes, fast attack craft, guided missiles, and aeronautics.
Defence Research and Development:

India also has a defence research and development capability: the Defence Research and Development Organisation (DRDO), The DRDO has its roots in the Technical Development Establish (TDES) formed during the Second World War. These were amalgamated in 1959 to form the Defence Science Organisation (DSO).This in turn, was amalgamated with the Defence Science Services in 1958, to form the DRDO.
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The DRDO draws on the work of 51 laboratories/establishments across the country, and has close links with the eight PSUs. It also co-operates with 70 academic research institutions, 50 national science and technology centres, and some companies in the private sector. The organisation really came into its own in the 1980s, under the leadership of Dr A.J.P Abdul Kalam, when a number of major programmes were launched. These were the Integrated Guided Missile Development Project (1983); the Light Combat Aircraft (1983); the Advanced Light Helicopter; the Arjun Tank (first conceived in 1974); and a number of smaller projects, such as the Pinaka, a multiple barrel rocket launcher (MRBL).
Major Government Actors:

India's Defence Industry system is centred on the Ministry of Defence (MOD), which uniquely, is manned only by civilians. In simple organisation terms, the Ministry of Defence (MOD) is the major co-ordinating body for defence production and R&D. It consists of three main Dain departments: the Department of Defence; the Department of Defence Production and Supplies; and the Department of Defence R&D. In addition to this, there is the MOD Finance Division, which exists at the same level. The Department of Defence (DOD) is headed by the Secretary of State for Defence. His co-ordinates the activities of the other MOD Departments and the three armed services The Department of Defence Production was established in 1962 after the war with China in order to create an indigenous defence production base, while the Department for Defence supplies was established in 1965, with a view to forging links between the civil industries and defence production units. The two departments were eventually merged into one 1984. The department of Defence Research and Development, meanwhile, is headed by a secretary who so Scientific Adviser to the Defence Minister. Its main responsibilities are R&D planning and advising the Defence Minister on scientific aspects of military equipment. Several committees are also involved in the defence planning process: The Defence Ministers Committee (now replaced by the Defence Minster's weekly morning meeting); the MoD production and supply committee, which deals with matters relating to import substitution, domestic arms production, and the operation of the ordnance factories; and the Defence R&D Council, which formulates and reviews R&D defence programmes, and brings together the Defence Minister and the Directors General of the Council for Scientific and Industrial Research. The chief of the Staff Committee, which comprises of the three Chiefs of the Armed forces, provides a channel for providing military advice to the Prime Minster.
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Approaches to Defence Procurement and Industrialisation:

The approach that India has adopted in defence procurement and defence industrial development is similar to that followed other less developed countries (LDCs). Within this general model, however, the countrys experience can be divided into three stages. The first was from independence in 1947 until the early to mid-1960s. The second went from the period following the Sino-India war (1962) and second Indo-Pakistan (1965) conflict until the mid-1980s. And the third went from the mid-1980s until the present day. In the first period, India only possessed the ability to make things such as shells and other ammunition, small arms, guns and explosives; it also had a limited aircraft and ship maintenance capabilities based in Bangalore and Calcutta. Thus, it had to look abroad to foreign defence equipment suppliers, such as the United Kingdom and France to meet its needs. During the second stage, efforts were made to build up domestic production, mostly through assembly under license from the Soviet Union and the United Kingdom. (This programme was centred on the PSUs). During this period, the range of activities undertaken by defence sector was also deliberately widened it include previously peripheral items such as clothing. The third period started with large purchases from the Soviet Union by the former Prime Minister Rajiv Gandhis government (1984-1989). During this period, India consistently spent over 3.3 % of Gross Domestic Product (GDP) on building up its armed forces. By the end of the decade, India had the fourth largest armed forces in the world, the fifth biggest air-force, and the sixth biggest navy. Likewise, India became the worlds largest importer of conventional weapons, spending $US 12.2 billion in the period, of which Russia was the largest supplier. By the end of the 1980s India was assessed as being able to assemble Completer Knock Down (CKD) and Semi-Knock Down (SKDs) purchased from foreign companies and production under license. Furthermore, gradual improvements were also made in and greater attention paid to the country's defence research and development capability, as well as systems integration for the incountry assembly of weapons. The move towards defence indigenisation and the tensions associated with it in the I990s did not occur in a vacuum; indeed it arguably happened earlier than India either predicted or was ready for. For example, the 1991 economic crisis that best the economy forced India to reduce defence spending as a percentage of GDP, from four per cent in the late 1980s to below three per cent in 1994, while the amount of funding allocated to procurement was slashed.
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Table One: Indian Defence Spending - $US and % of GDP: 1990 1991 1992 1993 1994 1995 1996 US $ 10.01 8.07 6.75 7.0 7.33 8.3 11.8 GDP 3.5 3.0 2.48 2.5 2.7 2.5 2.8 % *Estimate. Source: IISS Military Balance, 1990-1991, 2000-2001
1997 12.2 3.1
1998 10.0 2.0
1999 12.4 2.8
2000 15.9 3.6
The end of the Cold War and the col Japse of the Soviet Union, meanwhile, led to the end of the supply of cheap and subsidised weaponry from Moscow. As the previously centralised Soviet arms industry was now spread across the new Republics, India also found it increasingly difficult to acquire spare parts for much of this equipment. Against this backdrop, indigenous R&D was apparently seen a way around the problem. India's approach to defence industrial development from Independence onwards is also closely related to its approach to economic development generally. Crucial Jy, a significant proportion of India's defence production and R&D base is entirely under state control. This is the result of the Industrial Policy Resolutions of 1948 and 1956. These placed the development of all key sectors of the economy, such as machine tools, railways, iron and steel and defence production, under state control. The large-scale participation of private sector companies III defence production, in the meantime, is limited to providing components to the PSUs. Even though the manufacture of components, assemblies and sub-assemblies was opened up to the private sector in 1991, the Indian armed forces procure 250 per cent more from the public than the private sector. A survey of 500 top companies in Indian in the same year also reported that only 30 of them had involved in defence contracts. Thus manufacturing of defence equipment had been and has been traditionally under the control of Government of India since independence. The Industrial Policy of the country had kept defence production in the public sector since First Industrial Policy outlined in the Industry Policy Resolution of 1948. The Industries (Development & Regulation) Act, 1951 gave statutory base to the Industrial Policy. Under .this policy, the Defence Industry, which required heavy investments, strong R&D backing and on which there could be total reliance because of its criticality, remained under Government Control at all times. The control over defence industry was exercised under the Industries (Development & Regulation) Act, 1951, which made licensing compulsory. As a consequence of the then industrial policy, a large infrastructure for Defence production consisting of 39 Ordnance Factories, 8 Defence PSUs and 50 Research & Development laboratories was created in the country.
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After considering the capital intensive nature of defence industry sector as also the need to infuse foreign technology and additional capital including FDI, Govt. decided in May, 2001 to open Defence industry for private sector participation up to 100% with FDI permissible up to 26% - both subject to licensing. Now with this policy change all defence related items have been removed from Reserved Category and transferred to the licensed category, as a result of which private sector can manufacture all types of defence equipment after getting a licence. Consequent to the Government's announcement about the policy change, Department of Industrial Policy & Promotion (DIPP) in consultation with Ministry of Defence, issued detailed guidelines regarding the modalities for consideration of applications for grant of Industrial License. After the announcement of policy changes, there has been a paradigm shift in the role of private sector in the field of indigenisation, i.e., from the role of supplier of raw materials, components, sub-systems, they have now become partners in the manufacture of complete advanced equipment/system. The basic objective of allowing private sector participation is to harness available expertise in the private sector towards the total defence efforts and search for self-reliance. In-built advantages of the private sector are its reservoir of management, scientific and technological skills coupled with its ability to raise resources. The involvement of private sector with its world-class expertise and high technology would not only augment. India's indigenous defence production capability but also lead to creation of employment and infrastructure in the country, giving a strong impetus to the economy. It must be acknowledged that the policy change of May 2001 for allowing private industry to produce any defence item under licence was a logical outcome of liberalization initiated in India in 1991. The private sector industry in India is now just beginning to become significant partier in production and development of Defence items. However, contrary to the common perception, the Private Sector has been playing significant role it the Defence industry sector as sub-contractors and ancillary industry. The private sector mainly has been involved in supply of raw materials, semi-finished products, parts and components to Defence PSUs and Ordnance Factories to a great extent and also to Base Workshops of Army and Base Repair Depots of Air Force and the Dockyards of the Navy. Defence PSUs and Ordnance Factories are outsourcing their requirements from private sector (mainly SMEs) in the range of 20-25%. Out of this outsourcing, about 25% requirement is met though small-scale sector. Increasing security concerns of a rapidly growing economy along with India's strategic geographical and political positioning have driven industry towards giant strides in indigenous manufacture of weaponry, machinery and sophisticated equipments. The market for export of India's defence technology and products is expanding every year, as are the requirements of its own armed forces making India an attractive market as well as an investment destination for joint venture.
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The joint venture offers one of the most comprehensive on-site products ranges from small, easy to use pagers to practical, durable private Mobile Radios and the latest technology, digital cordless communication systems. Brief details of the products are: Access 700 one-way speech paging system which supports 100 pagers. Access 1000/3000 Radio Paging system which supports 1500/5000 users. Computer Radio Integration units. Digital Cordless Communication System
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COMPANY PROFILE
HISTORY
The growth and diversification of BEL over the years mirrors the advances in the electronics technology, with which BEL has kept pace. Starting with the manufacture of a few communication equipment in1956, BEL went on to produce Receiving Valves in 1962 and Radio Transmitters for AIR in 1964. In 1966, BEL set up a Radar manufacturing facility for the Army and in-house R&D, which has been over the years. Manufacture of Transmitting Tubes, Silicon Devices and Integrated Circuits started in 1967. The PCB manufacturing facility was established in 1968. In 1970, manufacture black & White TV Picture Tube, X-ray Tube and Microwave Tubes started. e following year, facilities for manufacture of Integrated Circuits and Hybrid Micro Circuits were set up. 1972 saw BEL manufacturing TV Transmitters for Doordarshan. The following year, manufacture of Frigate Radars for the Navy began. Under the government's policy of decentralization and due to strategic reasons, BEL ventured to set up new Units at various places. The second Unit of BEL was set up at Ghaziabad in 1974 to manufacture Radarsj and Tropo communication equipment for the Indian Air Force. The third Unit was established at Pune in 1979 to manufacture Image Converter and Image Intensifier Tubes. In 1980, BEL's first overseas office was set up at New York for procurement of components and materials. In 1981, a manufacturing facility for Magnesium Manganese Dioxide batteries was set up at the Pune Unit. The Space Electronic Division was set up at Bangalore to support the satellite programme in 1982. The same year saw BEL achieve a turnover of Rs.100 crores. In 1983, an ailing Andhra Scientific Company (ASCO) was taken over by BEL as the fourth manufacturing Unit at Machilipatnam. In 1985, the fifth Unit was set up in Chennai for supply of Tank electronics, with proximity to HVF, Avadi. The sixth Unit was set up at Panchkula the same year to manufacture Military Communication equipment. ISO saw BEL manufacturing on a large scale Low Power TV Transmitters and TVROs for the expansion of Doordarshans coverage. In1986 witnessed the setting up of the seventh Unit at Kotdwara to manufacture Switching Equipment, the eighth Unit to manufacture TV Glass Shell at Taloja (Navi Mumbai) and the ninth Unit at Hyderabad to manufacture Electronic Warfare Equipment.
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In 1987, a separate Naval Equipment Division was set up at Bangalore to give greater focus to Naval projects. The first Central Research Laboratory was established at Bangalore in 1988 to focus on futuristic R&D. 1989 saw the manufacture of Telecom Switching and Transmission Systems as also the setting tip of the Mass Manufacturing Facility in Bangalore and the manufacture of the first batch of 75,000 Electronic Voting Machines. The agreement for setting up BEL's first Joint Venture Company, BE DELFT, with M/s Delft of Holland was signed in 1990. Recently this became a subsidiary of BEL with the exit of the foreign partner and has been renamed BEL Optronic Devices Limited. The second Central Research Laboratory was established at Ghaziabad in 1992. The first disinvestment (20%) and listing of the Company's shares in Bangalore and Mumbai Stock Exchanges took place the same year. BEL Units obtained ISO 9000 certification in 1993-94. The second disinvestment (4.14%) took place in 1994. In 1996, BEL achieved Rs.l,000crores turnover. In 1993, all Units / SBUs / Divisions of the company have been certified for ISO 9001 Quality Management System and ISO 1400 Environment Management System. Seven Units / SBUs (Ghaziabad, Panchkula, Kotdwara, Hyderabad, Military Communication, Electronics Warfare &Avionics and Export Manufacturing) are also certified for AS 9100 Aerospace Standards. The Central Software Development group of the company has CMMi Level 5 certification. In 1997, GE BEL, the second Joint Venture Company with M/s GE, USA, was formed as also the third JVC with M/s Multitone, UK, and BEL Multitone. The same year, USA imposed supply restrictions on BEL. In 1998, BEL set up its second overseas office at Singapore to source components from South East Asia. The same year, US and European sanctions were imposed on BEL. The Company was able to overcome the effects of the sanctions and insulate Indian defence forces from the fall-out of denial regimes by finding technical solutions to circumvent the denials and by keeping up the promised deliveries to customers.
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The year 2000 saw the Bangalore Unit, which had grown very large, being reorganized into six Strategic Business Units (SBUs). The R&D groups in Bangalore were also restructured into Specific Core Groups and Product Development Groups. The same year, BEL shares were listed in the National Stock Exchange. In2002, BEL became the first defence PSU to get operational Mini Ratna Category I status. In 2003, the Company's turnover crossed the Rs.2,500 marks. In 2006-07, BEL achieved a turnover of Rs.3,952.69 crores. In June 2007, BEL was conferred the prestigious Navratna status based on its consistent performance. BEL looks forward to leverage the increased functional autonomy for further business growth and diversification. BEL has its corporate office at Bangalore and manufacturing units at nine locations in India. A network of marketing and customer support centres across India completes the vertically integrated company profile. To mark the company's International presence. There are two offices, one in New York and the other in Singapore.
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VISION&MISSION VISION:
To be a world-class enterprise in Professional Electronics.
MISSION:
To be a customer focused globally competitive company in defence electronics and in other chosen areas of professional electronics, through quality, technology & innovation.
VALUE:
Putting customers first. Working with transparency, honesty & integrity. Trusting and respecting individuals. Fostering teamwork. Striving to achieve high employee satisfaction. Encouraging flexibility & innovation. Endeavouring to fulfil social responsibilities. Proud of being a part of the organization.
OBJECTIVES:
To be a customer focussed company providing state-of-the-art products & solutions at competitive prices, meeting the demands of quality, delivery & service. To generate internal resources for profitable growth. To attain technological leadership in defence electronics through in-house R&D, partnership with defence/research laboratories & academic institutions. To give thrust to exports. To create a facilitating environment for people to realise their full potential through continuous learning & team work. To give value for money to customers & create wealth for shareholders. To constantly benchmark company's performance with best-in-class internationally. To raise marketing abilities to global standards. To strive for self-reliance through indigenization.
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Quality objective:
1. Effective and efficient design and development process, considering the present and future needs of customers. 2. Enhanced customer on-time delivery of defect free products and effective life cycle support. 3. Continual up gradation and utilization of infrastructure and human resources. 4. Mutually beneficial alliances with suppliers.
Production and Services:

BEL offers Products under Defence, Non - Defence, Turn Key Solutions. They also offer services like Contract Manufacturing, Design & Manufacturing Services, Semi- conductor Device Packaging, Software Development and Quality Assurance Facilities.
Product Range:
1. RADARS: 3 Dimensional Tactical Control Radar Low Level Weigh Radar Weapon Locating Radar Airport Surveillance Radar IFF Equipment/Secondary Surveillance Radar 2. SONAR&UNDERWATER EQUIPMENT: Sonar & Transducers Towed Torpedo Decoy ASW Fire Control Systems Sonar Simulators Sonobuoys 3. NAVAL FIRE CONTROL SYSTEMS: Gun Fire Control Systems for Naval Platform Optical Director Systems for Naval Guns Electro Optical Fire Control System 4. COMMAND & CONTROL SYSTEMS Battle Management system (BMS) Shakti (Artillery Combat Command & Control System) Sanjay (Battlefield Surveillance System) Samvahak (Command Information & Decision Support System)
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5. COMMUNACTION EQUIPMENT: Receivers Transmitters Tran receivers 6. SATCOM SYSTEMS: Fly Away Terminals TV uplink earth station Intelsat F3 earth station Digital Satellite Communication Terminal 7. TELECOM EQUIPMENT/ SYSTEMS: 2/8/34 Mbps Intermediate Data Rate Full range of ADSL2+CPEs Wi-Fi/ Wi- Max based Broadband Networks 8. SOUND &VISION BROADCASTING: MW Transmitters and FM Transmitters 10KW MW Mobile Broadcast Station Remote Unmanned TV Station TV Receiver Only(TVRO) Terminals Disaster Warning Set Top Box (STB) 9. TANK ELECTRONIC AND CONTROL SYSTEMS: NBC Protection System for Armoured Fighting Vehicles Advanced Land Navigation System (ALNS) Hydraulics for T-72 Tanker Stabilisers 10. OPTIC & ELECTRO-OPTICS: Optical Sub-Assemblies Laser range Finders Multifunctional Uncooled Thermal Images T1 based Disaster Managements system 11. ELECTRONIC WARFARE SYSTEMS: Electronic warfare Equipment (Airborne, Shipborne, Land-Based) 12. ANTENNAE: Shaped Reflector Radar Antenna Multi Beam & Scanning Beam Antenna IFF Array Antenna (Linear & Planner)
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A brief list of the Customers in the defence and civilian market segments and the products and services offered to them by BEL is given below:
Brief list of Products, Services and Customers in BEL:

Products and Services Defence Communication Radars & Sonar Customers Indian Defence Services, Para-military forces. Indian Defence Services, Civil Aviation, Meteorological Department, Space Department Department of Telecommunication, Para-military forces. Power Sector, Oil industry, Railway.
Telecommunication
Broadcasting Equipments& Studio All India Radio, Doordarshan, (National Radio & TV Systems Broadcasters) Electronic Voting Machine Solar Products & Systems Tunkey Systems, Networks Components Election Commission Of India Individual, Private & Government Organizations
E-Governance Police, State Governments, Public sector Undertakings.
All India Radio &Doordarshan the National Radio & TV Broadcasters, Instrumentation Industry, Switching Industry, Entertainment Industry, Telephone Industry.
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Exports play a key role in BEL's strategic perspective. The ranges of products and services that are exported have been increasing over the years. A number of international companies also use the facilities at BEL for contract manufacturing. The broad list of products and services being exported is given below:
List of Products and Services Exported:

Products and Services Defence Communication Equipment spare parts Radars &Sub-systems Electronic Warfare products and services Opto-electronics products Customers and Botswana, Indonesia, Suriname, Malaysia
Indonesia, Egypt, Switzerland Russia, Brazil Sri Lanka, Nepal, Israel, South Africa
Semiconductor devices, Microwave Tubes Malaysia, Singapore, Turkey, Netherlands, UK, USA, and Transmitting Tubes France, Hong Kong Suriname, Germany, Zimbabwe, Botswana, Solar Products &Systems Kenya, Nigeria Vacuum Interrupters Contract Manufacturing Services Electronic Voting System Radio &TV Broadcasting Systems Telecom and SATCOM systems Malaysia, UAE, Uganda, Turkey, UK, Azerbaijan &Outsourcing USA, Canada, Belgium, Italy, Germany, France, UAE. Sri Lanka, Uganda, Malawi, South Africa. products and Nepal, Mauritius
Nigeria, Kenya
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BEL operates at 9 units mainly and has 11,180 employees (as on 31.03.2011) comprising 4914 executives, 598 technical cadre and 5668 non executives. The different types of units that fall under BEL can be divided into 11 parts and they are as depicted below.
Corporate office Regional office

Manufacturing network
Marketing office and service centers
Joint venture companies
Central research laboratories
BEL
Subsidiary company
Liason office
Overseas office Technical cell (BEL FOJ/GRSE Ltd) Systems division
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These units/main divisions have their own offices at various cities. Their locations are as follows shown
Manufacturing Network:
Bangalore (in 1954) Ghaziabad (in 1974) Pune (in 1979) Machilipatnam (in 1983) Chennai (in 1985) Panchakula (in 1985) Hyderabad (in 1986) Kotdwara (in 1986) Taloja (Navi Mumbai in 1986)
Corporate Office:
Bangalore
Regional Office:
New Delhi Mumbai Calcutta Hyderabad Chennai Vishakhapatnam
Marketing Office and Service Centre:

International Marketing Centre, Bangalore Central Marketing, New Delhi Delhi Marketing Centre & Regional Service Centre, New Delhi National Marketing Division, New Delhi Mumbai Marketing Centre, Mumbai
Central Research Lab:

Bangalore Ghaziabad
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Overseas Office:
New York (NYRO) Singapore (SIRO)
Liaison Office:
Agra
Systems Division:
Bangalore
Technical Cell:
Kolkatta
Subsidiary Company:
BEL Optronic devices Ltd.(Pune)
Joint Venture:
BEL-Multitone Ltd (Bangalore) GE-BE Pvt. Ltd. (Bangalore)
BG Complex Strategic Business Unit (SBU):

1. SBU 10 MR (Military Radar) 2. SBU 20 NS (Naval System) 3. SBU 30 MCE & EW (Military Communication & Electronic Warfare) MCE EWA NCS 4. SBU 40 T&BS (Transmitting & Broad casting System) 5. SBU 50 Comp (Components) 6. SBU 60 EM (Export Manufacturing) 7. SBU 70 Finance Central
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OWNERSHIP PATTERN:
Anil Kumar M.L. Shanmukh I.V.Sarma M.G.Raghuveer H.N. Ramakrishna M.N. Krishnamurthy,IPS V.V. Balakrishnan Elaine Mathias R.C. Nautiyal J.k. Batheja GhanshyamNarain M.V. Gowtama VipinKatara Chairman and Managing Director Director (Human Resources) Director (R & D) Director (Finance) Director (Marketing) Chief Vigilance Officer General Manager (International Marketing) General Manager (Finance) General Manager (Human Resources) General Manager (Internal Audit & Systems) General Manager (TORQUE) General Manager (Technology Planning) General Manager (Strategic Planning)
Infrastructure:
Over the years, commitment to maintaining clean and green environment has taken deep roots in the organisation as evidenced by improved result in prevention of pollution, energy conservation, water conservation, use of renewable energy and hazardous waste reduction, use of besides introduction of eco-friendly processes and materials. Sustenance of Zero discharge, Legal compliance, measurement and monitoring, verdant surroundings and a forestation are a way of life in BEL. The Company, with its ISO 14001 (2004) certified Environmental Management System, addresses environmental issues in a wider perspective with a firm resolve to reduce all form of environmental degradation, passionately participates in our environmental endeavours to promote an environmental free of pollution. Some of the initiatives taken are presented below: Cleaner Technology. Emission to Air. Water Pollution. Hazardous waste Management System. Biomedical Waste. On Site Emergency Plan and Systems. Water Management.
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LIQUIDITY:
The Companys shares are very liquid and are actively traded on the Indian exchanges. Relevant data of turnover for the financial year 2010-2011 is given below: BSE No. of shares traded Value( in Lakhs) Market Price Data: Quotation on BSE ` Per Share Month Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 High 1927.40 1760.00 1800.00 1793.00 1840.00 1729.95 Low 1602.00 1625.50 1616.30 1613.25 1610.10 1620.00 Quotation on NSE ` Per Share High 1928.40 1758.00 1807.00 1795.00 1842.80 1727.90 Low 1600.00 1625.30 1651.05 1624.20 1612.05 1620.00 26,83,242 47,706 NSE 132,44,660 2,36,210 BSE+NSE 159,27,902 2,83,916
Top 10 Shareholders as on 31st March 2011:

Sl No. Name No. of Shares 6,06,89,600 21,19,931 13,75,081 12,48,437 7,89,503 7,05,369 5,71,982 5,36,000 4,50,749 4,28,351 % Holding 75.86 2.65 1.72 1.56 0.99 0.88 0.71 0.67 0.56 0.45
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1 President of India (including 5 Govt. nominees) 2 Life Insurance Corporation of India 3 LIC of India Market Plus-1 4 LIC of India Market Plus 5 HDFC Trustee Co Ltd-HDFC Equity Fund 6 LIC of India-Money Plus 7 Life Insurance Corporation of India- Profit Plus 8 HDFC Trustee Co Ltd-HDFC Top 200 Fund 9 SBI Mutual Fund- Magnum Tax Gain 1993 10 HDFC Trustee Co Ltd-HDFC Tax Saver Fund
Awards & Recognition:

Standing Conference of Public Enterprises (SCOPE) Meritorious Award for Corporate Governance for the year 2009-10. SCOPR Award for R&D Technology Development & Innovation for the year 2007-08. Raksha Mantris Award in the categories of Best Performing Division, Import Substitution, Design Effort and Innovation for the year 2008-09 Selected as the top Indian Company under the Electrical & Electronic Equipment, Technology Development sector for the Dun & Bradstreet-Rolta Corporate Award 2010. International Aerospace Award 2011 under the categories of Most Influential Company of the Year and Excellence in Innovation. Gold prize in the Heavy industries category of DNA-Dainik Bhaskar Indian Pride Award (2010) for Excellence in Innovation. BEL employees received the prestigious Prime Ministers Shram Award for the year 2005, 2006, and2007 in the categories of Shram Bhushan, Shram Devi, ShramVir/Veerangana and Shram Shree, respectively. A Senior Technical Assistant of Bangalore Complex has been selected for the Prime Ministers Shram Ratna for the 2008.
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DIRECTOR (F)
GM (F) GM (IA)
DIRECTOR (R&D)
GM (TP) CS (CRL/BG) CS (CRL/DEL)
GM (SP) GM (HR)/BC GM (F)/BC GM (T&BS) GM (ES) GM (MR) GM (EM) GM (COMPS) GM (MC & EW) GM (NS)
DIRECTOR (HR)
CMD
DIRECTOR (HR)
GM (HR)/CO
GM (TORQUE)
DIRECTOR (OU)
CVO
GM (GAD) GM (PK) GM (CHN) GM (MC) GM (PN) GM (HYD) GM (KOT) GM (NAMU)
DIRECTOR (MKTNG)
GM (IM) GM (SYS)
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Mckensys 7s frame work with special reference to BEL.
STRUCTURE:
Organizational structure refers to formal hierarchical relationships & positional arrangements it deals with how members communicate with others, how information flows, what roles he performs, Rules & procedures existing to guide the activities of members as part of organization With reference to BEL, it has good mentor, disciplined relationship, encouragement, help & guidance. Anil Kumar M.L. Shanmukh I.V.Sarma M.G.Raghuveer H.N. Ramakrishna M.N. Krishnamurthy,IPS V.V. Balakrishnan Elaine Mathias R.C. Nautiyal J.k. Batheja GhanshyamNarain M.V. Gowtama VipinKatara
Chairman and Managing Director Director (Human Resources) Director (R & D) Director (Finance) Director (Marketing) Chief Vigilance Officer General Manager (International Marketing) General Manager (Finance) General Manager (Human Resources) General Manager (Internal Audit & Systems) General Manager (TORQUE) General Manager (Technology Planning) General Manager (Strategic Planning)
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SKILL:
Skills are capabilities of organization as a whole. Skills, which describe the organization as competence like in BEL has manufacturing skills, R&D etc, The skills, which BEL process are assertive, decision-making, business knowledge, leadership, attitude, adaptability, courageous, & dynamism. However the skill requirement varies from the job to job. Recruitment & Selection process in BEL handpicks the best engineering and managerial talent from the countrys reputed organizations, technical and management colleges. The selection is been done from reputed business houses, campus selection, placement agencies, and Advertisements & Data base. There is a selection committee, which conducts group discussions, personal interviews & other formalities. TRAINING & DEVELOPMENT: To bridge the gap between existing skills & desired skills. Training in BEL is aimed at the systematic development of knowledge, skills, attitude and teamwork. Training & development of personal skills is considered a high priority area and it forms an integral part. Programs are undertaken keeping in view the dynamic changes in the environment, which are contributed by rapid technological obsolescence or for personality development or as an Induction. INTERNAL TRAINING. EXTERNAL TRAINING. ON THE JOB TRAINING.
STYLE:
In BEL there are Quality circles where the employees can suggest any improvements in systems. There is a grass root level participation. These suggestions are implemented either by interdepartmental communications, mutual understanding, or by top-level analysis, where huge investments are involved. Even the policy decisions are taken with consultancy of respective persons. Employees take casual decisions & their immediate head gives the feedback. From the above facts we can say that BEL has a participative management style.
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SYSTEMS:
It refers to all rules, regulations & procedures both formal & informal. It includes production plans, control system, capital budgeting systems, cost accounting procedures, budgetary systems, recruitment training & development plans. In BEL, every department has got their own Management Information system.
Human Resource Information System: There is an HR package which stores all

employee profile such as employee ID, code no, joining date, place of posting, place of posting, name, personal profile, bank name, A\c no, grade, department, qualifications, designation, experience, pay scale, & history. On the basis of this data rating is done. It also gives information of overall employee structure like no of persons joined in a month, transfers, promoted, land giver category, loan taken employees, etc
Quality Systems: Every production department has quality packages. They have their
own targets & grades. JSW has Laboratory, R&D & Testing facilities.
STAFF:
BEL operates at 9 units mainly and has 11,180 employees (as on 31.03.2011) comprising 4914 executives, 598 technical cadre and 5668 non executives.
SHARED VALUES:
People come first in the new business paradigm. The success of an organization essentially depends upon utilization of this resource. All the employees in BEL can give suggestions on improvement of technology, production process or operations. Proposals with the implementation process are welcomed. The top people reviews & analyses. Scheme makers get awards. Department with zero level accidents & quality achieved gets incentives. On Independence Day every year, one employee gets BEST EMPLOYEE of BEL award.
STRATEGY:
It includes basic purposes, missions, objectives, goals & major action plans & policies. In BEL, every department has its own strategies & policies. Marketing Strategies focusing on selected major customers (I.e. Indian Govt) in terms of their locations, demands etc., Customizing of product so that the best advantage by using BEL product in terms of yield.
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SWOT Analysis: Strength:

Strong R & D base-in-house as well as by close association DRDO labs. Well established system & procedures skilled, dedicated & motivated work force. Compatibility to provide lifetime product support. Implementation of SAP across all the Units/offices.
Weaknesses:
Low risk taking ability not proactive enough. Lack of aggressive marketing. Dependence on Defense sector.
Opportunities:
System solution business. Export though offset mechanism. Strategic Alliances.
Threats:
Private sector participation in Defense production. Sourcing of Technology-non-availability & exorbitant cost. Large number of international players.
Unit wise Budget Details for 2011-12(` in Lakhs)

Unit Bangalore Ghaziabad Pune Navi Mumbai Machilipatnam Panchkula Kotdwara Hyderabad Chennai Head Office (CRLs) Total Budget 8627 9492 303 352 772 122 200 936 672 1103 22579 Norms 25% of PAT 16333 3208 365 53 515 1343 39 964 244 0 23064 Surplus / Excess 7706 -6284 62 -299 -257 1221 -161 28 -428 0 1588
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A Summary of the Companys Financial result is given below: 2010-11 Value of Production Turnover (Gross) Profit Before Depreciation. Interest & Tax Interest Depreciation Provision for Tax Profit After Tax Add: Balance brought forward from previous year Less: Amount transferred to Capital Reserve Balance available for Appropriation Interim Dividend @`6 per share on paid up Capital of 8,000 lakhs Proposed Final Dividend @`15.60 per share on paid up Capital of 8,000 lakhs Tax on Dividend Transfer to General Reserve Transfer to Capital Reserve Reserves & Surplus Net Worth Earnings Per Share (in`) Book Value Per Share (in`) 12,480.00 2,821.79 40,000.00 41.98 490,570.65 498,570.65 107.68 623.21 4,800.00 552,080.34 552,969.32 128,362.22 43.36 12,204.23 29,967.78 86,146.85 191,303.51 41.98 277,408.38
(` in Lakhs)
2009-10 524,788.20 521,977.40 116,150.66 53.48 11,594.23 32,415.25 72,087.10 177,236.84 90.77 249,233.17
4,800.00
10,560.00 2,569.66 40,000.00 90.77 424,525.59 432,525.59 90.11 540.66
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LEARNING EXPERIENCE:
I was very fortunate to undergo project in Bharat Electronics Limited, Bangalore. It is one of the monopolist players in the Defence Industry in India, very large in size. I could understand various dynamics of this sector during my industry study. I studied various strategies of this organization and I came to know how they are important in overall development of the company and the organization as whole. This project has made me realize how working capital acts as a life blood to the organization. How important is working capital in smooth running of organization. I learnt the different types, components o f working capital. Conservative Policy, Aggressive Policy, the ratios and formulas used were Liquidity Ratio, Profitability Ratio, Turnover Ratio, and Leverage Ratio. I even learned what additional competencies I may have to develop to be a successful professional in corporate world. By and large it was a fruitful & useful experience of undergoing project Bharat Electronics Limited, Bangalore as I could observe the way in which an organization of its size actually functioned.
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INTRODUCTION
The project is carried out in Bharat Electronics Limited (BEL), a Government of India Enterprise, and Ministry of Defense. The project studies the working capital management in BEL and evaluates its financial management performance. Working Capital Management is the integral part of overall financial management. Management of investment of funds in business. Funds can be invested permanent/long term purpose such as acquisition of fixed assets, expansion and diversification of business, modernization of plants and machinery and R&D. Funds are also needed for short-term purpose that is for day-to-day operation of the business. Day-to-day operation includes procurement of raw materials, payment of wages and meeting and other day-to-day expenses these funds are known as working capital. It refers to that part of the firms capital, which is required for financing current assets such as cash, marketable securities, debtors, inventories, work-in-progress and finished goods. Working capital management helps to carryout day-to-day operation of business smoothly.
MEANING:
Working capital management refers to management of current assets and current liabilities and the inter-relationship that exists between them. In other words, it refers to all aspects of administration of both current assets and current liabilities. Working capital management is significant facet of financial management. Because investments in current assets represent a substantial portion of total investment and investment in current assets and the level of current liabilities have to be geared quickly to change in sales.
DEFINITION:
According to Hoagland working capital is descriptive of that capital which is not fixed. But the more common use of the working capital is to consider it as the difference between the book value of the current assets and the current liabilities.
IMPORTANCE OF THE WORKING CAPITAL:

The developing economies are generally faced with the problem of inefficient utilization of resources available to them. Capital is the scarcest productive resource in such economies and proper utilization of these resources promotes the rate of growth, cuts down the cost of production and above all improves the efficiency of the productive system.
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Fixed capital and working capital are the dominant contributors to the total capital of the developing country. Fixed capital investment generates production capacity whereas working capital makes the utilization of that capacity possible. Thus the study of working capital behavior occupies an important place in financial management. Working capital has acquired a great significance and sound position for the twin objects of Profitability and Liquidity.
WORKING CAPITAL:
Every business needs funds for two purposes its establishment and to carry out day-to-day operations. Accordingly, funds needed for a business can be broadly classified under: Fixed capital (long needs) Working capital (short-term needs) Fixed capital forms the skeleton of any business; working capital is its flesh and blood.
SHORT TERM CAPITAL CURRENT ASSETS MEDIUM TERM CAPITAL FIXED ASSETS LONG TERM CAPITAL
Fig. 1.1: Working Capital Management & Profitability Analysis of BEL Long-term funds are required to create a production facility through purchase of fixed assets such as plant, machinery, land, building, furniture etc. Investments in these assets represent a part of the firms capital that is blocked more or less on a permanent or fixed basis and hence is called fixed capital. Funds are also required for short-term purpose like purchase of raw materials, payment of wages, salaries and other expenses. These funds are known as working capital. Working capital is what makes a company work. It is impossible to carry on any business only with fixed assets, working capital is a must. Inadequately of working capital takes any business to death.
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Working capital management deals with the most dynamic field in finance, which needs constant interaction between finance and other functional managers. The finance manager acting alone cannot improve a companys working capital situation. The ultimate long-term solution for a difficult working capital does not lie with the banks; rather, it lies with the manufacturing, marketing and finance activities. Manufacturing has an important role to play in operating with minimum inventories; the purchase department should be able to obtain the best possible terms from suppliers. The marketing department should negotiate with customers for the best terms. The finance manager should be able to coordinate and achieve optimal utilization of operating funds at the lowest interest cost. Thus,
Working capital management has come to be known as the cash triangle:

MARKETING (CREDIT) FINANCE (CASH FLOW)
MANUFACTURING (INVENTORY)
Fig. 1.2: The Cash Triangle. Due to the factors mentioned above the management of working capital become one of the most significant jobs of the finance manager. In this project the various components of current assets & liabilities, the extent of funds tied up in each, the trend of changes in funds tied up with each components, the efficiency with each component are managed and overall efficiency of working capital management and its impact on profitability is studied.
CONCEPT OF WORKING CAPITAL:

The term working capital literally means capital used for conducting the day to day operations. It refers to that part of total capital which is used for carrying out the routine and regular business operations. In short, it is the amount of funds used for financing the short-term working capital requirements. Short term working capital includes stock of raw materials, supplies needed to manufacture, semi-finished goods awaiting sale, sundry debtors constituting the pending collections against sales and short-term investment. The working capital is also termed as circulating capital. Circulating capital means current assets of a company that are changed in the ordinary course of business from one firm to another, as for example from cash to inventories to receivables, receivables into cash.
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Working capital referred to as floating capital consist of funds invested in current assets. Current assets imply those assets which in the ordinary course of business can be converted into cash within a short period of time. In the same way current liabilities are the payable with in a short-term out of the day today income. In short, Working capital is the amount of funds necessary to cover the cost of operating the enterprise working capital in a going concern, it consist of cash receipt from sales which are used to cover the cost of current operations.
KINDS OF WORKING CAPITAL
On the basis of concepts
On the basis of time
Gross working capital
Net working capital
Fixed working capital
Temporary working capital
Regular working capital
Reserve working capital
Seasonal working capital
Special working capital
Fig. 1.3 Shows the kinds of Working Capital
Gross working capital:

The concept of gross working capital is a financial concept. Gross working capital refers to the total investment in current assets, such as cash in hand, cash at bank, accounts receivables, stock of finished goods, work in progress, and stock of raw materials prepaid expenses etc. working capital is also expressed as circulating or operating or current capital.
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Net working capital:

The concept of networking is an accounting concept. Net working capital means net current assets, i.e. the excess of current assets over current liabilities. It is also referred to as positive working capital. In case current liabilities excess the current asset it is expressed as negative working capital or working capital deficit.
Operating cycle or working capital cycle:

In modern business, the concept of working capital has changed a lot. In the present time a new concept known as operating cycle has emerged and is gaining popularity. There is much different between current and fixed assets, as far as recovery of investment is concerned. Every business required many years to recover the investment in fixed assets is turned over many times in a year. Investment in current assets is recovered through a firms operating cycle. When stocks of finished goods are sold and debtors are collected. Usually firms operating cycle is less than a year. The term operating cycle implies the period of time required to convert sales into cash. As per operating cycle concept working capital is that part of capital which circulates in different firms such as cash to raw material, to work in progress, to finished good, to sales, to debtors, to cash. It is also called circulating capital. The working capital rotates in such a way that money will be blocked at different stages in different forms till recovery in the form of cash. The cycle begins with cash and ends with appreciation or depreciation of cash. This can be called cash conversion cycle. The operating cycle of any manufacturing firm has to pass through three stages: Assembling of resources like raw materials, labour power and fuel etc. Manufacturing the goods i.e. conversion of raw material into work in progress into finished goods. Selling the goods i.e. cash sale/credit sale. Credit sale creates book debts or bills receivables.
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Purchases
RMCP+WIPCP+FGCP
Payment
Credit sales
Collection
Inventory Conversion
Receivables Conversion
Period
Period
Payables Gross Operating Cycle
Net Operating Cycle
Fig. 1.4: Showing operating cycle RMCP (Raw material conversion period) WIPCP (Work in process conversion period) FGCP (Finished goods conversion period) The operating cycle of the manufacturing concern starts with the purchase of raw materials and services and ends with the realization of the cash. The following steps are followed in between these: Purchase of raw materials and services. Conversion of raw materials into work in progress. Conversion of work in progress into finished goods inventory. Conversion of finished goods stock into sales debtors and receivables. Realization of cash.
This cycle continues again from cash to purchase of raw materials and so on. The length of operating cycle of a manufacturing firm is the total of inventory conversion period and receivable period and accounts payable period from the financial statement of the firms. For this the following formula can be used.
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Table 1.2: Showing the ratios and its formulas

Sl.No. 1 Inventory Turnover Ratio (ITR) Therefore, Inventory conversion period. 2 Debtors Turnover Ratio (DTR) Therefore, Inventory conversion period. 3 Creditors Turnover Ratio. = Accounts receivable period Number of days in a year = Net Credit purchase Average accounts payable Or = Net purchase Average Crs = Net sales Average debtors = Number of days in a year Inventory Turnover Ratio = Cost of goods sold Average inventory Ratios Formulas
(Note: In case of information about credit purchase is not available total purchases may be assumed to be credit purchase) Net operating cycle = Inventory conversion period + Accounts receivable period accounts payable period
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Fig. 1.5: Showing permanent and temporary working capital
TYPES OF WORKING CAPITAL: Permanent or fixed working capital:

It is the minimum level of working capital in terms of current asset which is always required by the firm to carry on its business operations. This part of working capital is fixed irrespective of changes in the operations. There is a need for current asset for the smooth flow of operating cycle which is a continuous process. Hence the need for current asset is felt regularly. In any business certain fixed portion of current asset is always required that is referred to as permanent or fixed working capital as core capital asset thus the permanent working capital is permanently needed for the business and it is usually financed out of long term funds. This is why current ratio should be more than one.
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Temporary working capital
Permanent working capital
Fig. 1.6: Showing Permanent and temporary working capital
Temporary or variable or fluctuating working capital:

It is a type of working capital which keeps on fluctuating from time to time depending on business activities. It indicates the need for additional current asset required at different times, example Additional inventory has to be procured to support series during peak sales Period. Investment in inventories decreases during depression period. Thus, it is the extra working capital required to support the changes in the production and sales activities. It is usually financed from short term sources of finance such as bank credit.
COMPONENTS OF WORKING CAPITAL:

The composition of working capital varies from one business to another. The composition of working capital of trading concern is quite different from that of manufacturing. The term composition implies the various components or constituent parts that are included in the working capital, the major components of working capital are current asset and current liabilities.
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Current Asset:
These are the assets which can be converted into cash within an accounting year or within the operating cycle whichever is longer. Some of these assets like stock of finished goods debtors and bills receivables may not be converted into cash within the required period. Even then these assets are still included in the list of current assets. Basically, the current asset include inventories trade debtors, advances, investments, prepaid expenses and cash in hand and cash at bank. The components of current asset are shown in the following manner: Inventories raw materials, stores and spares, work in progress, finished goods etc. Loans and advances trade debtors, bills receivables, prepayments like prepaid expenses advance payment of taxes. Investment government securities, semi government securities, industrial securities, private deposits. Cash and bank balances fixed deposits with banks, cash at bank cash in hand.
Finished Goods
Accounts Receivable
Working Process Wages, Salaries factory overheads
Cash
Raw materials
Suppliers
Fig. 1.7 Current Asset Cycle
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Current Liabilities:
These are the liabilities which are payable within an accounting year. Usually, all those liabilities which are required to be paid within a year are regarded as current liabilities. These liabilities include trade creditors, bank overdraft, provisions for taxes, dividends and bonus, outstanding expenses etc. Some of these liabilities may not strictly be described as current liabilities but nevertheless these liabilities are included in the category of current liabilities. The components of current liabilities are in the following manner: Trade dues- Trade creditors, bills payable, outstanding expenses. Borrowing- Loans from banks, public deposits, bank overdrafts, cash credit. Advances received Provisions- Provision for taxation proposed dividend.
The three important methods of maintaining current assets at optimum levels are: Current assets and fixed assets ration Liquidity Vs. Profitability Cost benefit Trade off
Current assets to Fixed assets ratio:

Optimum level of current assets is required to maximize the shareholders wealth and firm needs fixed and current assets to support particular level of output. We can measure the level of current asset by relating it to fixed asset. Therefore, Current assets ratio = Current Assets Fixed assets
Current Asset Policies:

Mainly there are three policies. The following figure shows the alternative current asset policies.
Conservative Policy:
Assuming Fixed asset as constant and higher current asset/ fixed asset ratio indicates conservative policy. It implies that if liquidity is greater, the risk is lower.
Aggressive Policy:
Lower current asset/ fixed asset ration indicates aggressive policy. It implies that if liquidity is lower, the risk is higher.
Average Policy:
It is also called as moderate policy. It lies between conservative and aggressive policy.
Liquidity Vs profitability: Risk - Return Off:

The current assets holdings will depend upon its working capital policy that it may follow conservative or aggressive policy. These policies involve risk return trade-offs. Under certainty condition larger investments in current assets yield lower rate of return and smaller investments yield higher rate of return. The working capital management policies of a firm largely affect its profitability, liquidity, and structural health of organization. The most important aim of working capital management is profitability and solvency. Solvency refers to ability to maturing obligations. For ensuring solvency the firm should be very liquid which means it holds large amount of current assets. Thus liquid firm has less risk of insolvency. Therefore the aim of working capital policy is to provide enough liquidity to the firm.
. '
Fig. Showing cost trade off

To earn higher amount of profitability, the firm has to sacrifice solvency. Because to maintain liquidity, firm has to in certain cost that, cost tied up in current assets and that extent investment will idle and it affect the profitability position. When firm wants to earn higher profitability it has to sacrifice solvency and this pose firm the greater risk of cash shortage and stock outs. So the goal of working capital management is to maintain a trade-off between profitability and risk.
Cost benefits Trade Off:

The cost benefit trade-off is different way of looking in to risk- return off in terms of cost of maintaining a particular level of current assets. These are two types of costs involved in the current assets. Cost of liquidity Cost of ill liquidity
Cost of Liquidity:
If the firm's level of current asset is very high, it has excessive liquidity. Its return on assets will be low as funds tied up in idle cash and stocks earn nothing and high levels of debtors (through low rates of rerun) increase with the level of current assets.
Cost of illiquidity:
It is the cost of folding insufficient current assets. The firm will not be in a position to honour its obligations if it carries too little cash. This may force the firm to borrow funds at high rates of interest and adversely affect credit worthiness of the firm and also it pose difficulties in obtaining funds in future. So in determining the optimum level of current assets the firm should balance the profitability solvency tangible by minimizing total costs- costs of liquidity and costs of illiquidity. The following figure indicates that with level of current assets, the cost of liquidity increases while the cost of illiquidity decreases and vice versa. The minimum cost point indicates the optimum level of current assets. Some of the approaches to the study of working capital analysis or analysis of working capital can be conducted through a number of devices, such as: 1)
Ratio analysis:
The technique of ratio analysis can be employed for measuring short term liquidity or working capital position of firm.
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2)
Fund flow analysis:

It is a technical device designated to study the source from which additional funds were derived and the use to which there sources were put. Such a statement provides an efficient method for a financial manager to assess the growth of the firm, its financial.
3)
Working capital budget:

A budget is a financial and! or quantitative expression of business plans and policies to be pursued in the future period of time. Working capital budget, as a part of total budgeting process of business, is prepared estimating future long term and short term working capital needs and the source of finance them, then comparing the budgeted figures with the actual performance for calculating variance if any so that corrective actions may be taken in the future. The objective of working capital budget is to ensure availability of funds as and when needed and to ensure effective utilization of these resources. However the first two approaches have been adopted in the analysis of Working Capital.
Table 1.3: Showing the ratios and its formulas and its significance Ratio Liquidity Ratio Current Ratio Formula Significant
I 1)
= Current assets Current Liability = Quick assets Quick Liability It measures short term solvency of the firm
2)
Quick / liquid ratio
3)
Cash/absolute ratio
liquid = Cash + bank balance Current Liability
4)
Net working capital = Net working capital ratio Net asset Interval measure = Current assets - inventory x 365 Average daily operating expense
5)
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II 1)
Profitability Ratio Operating ratio expenses = Operating expenses x 100 Net sales = Operating profit x 100 Capital employed = Gross profit x 100 Sales It measures the operating efficiency of the firm
2)
Return on investment
3)
Gross profit margin
4)
Net profit margin
= Profit after tax x 100 Net sales
III 1)
Turnover Ratio Inventory turnover ratio Current assets turnover ratio Working capital ratio = Net sales Net current assets = Cost of goods sold Average inventory To measure the efficiency and effectiveness of the firm
2)
= Net sales Current asset
3)
IV 1)
Leverage Ratio Debt ratio = Total debt Net asset/ capital employed = Fixed assets Net worth = Total debt Shareholders equity or net worth
2)
Fixed assets
3)
Debt equity ratio
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RESEARCH DESIGN
INTRODUCTION:
The present study is a micro consigned to BEL. It attempts to analyse and interpret the Working capital management" For the purpose of collecting the required information for research study the following methods have been adopted the field survey method and case study methods have been used the interview techniques and non-participant observations were adopted for the collection of data from the different working capital management.
STATEMENT OF THE PROBLEM:

The project is carried out in Bharat Electronics Limited (BEL), a Government of India Enterprise, Ministry of Defence Since the industry scenario is such that it has a long selling cycle time. Hence it has a continuously increasing turnover, the operating cycle is long and the working capital requirements are high. In such a scenario, management of the company play according to the dynamics of the industry in such a way that it leads to an advantage to the company. The management should workout the optimal level of working capital, which gives an deal trade-off between risk, return and profitability. The short-term solvency of the firm depends upon proper management of working capital.
OBJECTIVES OF THE STUDY:

The main objectives of the study are: To analyse working capital management practices at the Public sector (BEL). To suggest remedial measures.
RESEARCH DESIGN DETAILS:

TYPE OF RESEARCH DATA COLLECTION METHOD AREA OF RESERCH Case Study Method Secondary Data ANALISYS WORKING CAPITAL MANAGEMENT PRATICE AT PUBLIC SECTOR IN CASE OF BHARAT ELECTRONICS Ltd. 5 Years (2007-2011)
DATA SELECTED
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This project a Study on Analisys of Working Capital Management practice at Public Sector a case of BHARAT ELECTRONICS Ltdis considered as an analytical research. Analytical Research is defined as the research in which, researcher has to use facts or information already available, and analyse these to make a critical evaluation of the facts, figures, data or material. The project includes finding of primary data and secondary data. It includes surveys and fact-finding enquiries. So, the project basically covers description of state of affairs, as it exists at present. Here in this case, the researcher does not have control over the variables. Here, the job done as a researcher is to use the facts and information already available. The research is done with the aid of the annual reports, the company database textbooks and the observation and interaction being the only source of primary data whatever is used. The same set information is analysed to make the critical evaluation of the material. With the given nature of research this is an analytical type of research wherein the analysis of the existing set of affairs are used to arrive the effect of working capital management on the return and profitability of the company.
TOOLS USED:
The data were analyzed using the following financial tools and techniques. Ratio analysis Statement of changes in working capital
TECHNIQUES:
The techniques used for the collections of the financial statements, data and other information as follows. The primary data were collected by interaction and observation. The secondary data were collected from the-published annual reports, budgeted manuals and the audited balance sheet and profit and loss account, database of the company.
LIMITATIONS:
Usefulness of the Working Capital depends upon the ability &intensions of the Company. Working capital is required only for financing the current assets &current liabilities. Current assets &current liabilities can change, they are not constant. The effect of working capital in the firm/organization leads to insecure. The component of working capital can varies from one Business to another Business.
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NEED AND SIGNIFICANCE OF THE STUDY:

It is difficult to decide any inference from the mass of figures in order to judge accurately, regroup and analyse the figures as disclosed by these financial statements and also to know the earning capacity, operating efficiency, and financial condition etc. of a concern. The need for working capital arises at every stage of business concern. A new concern requires a lot of liquid funds to meet initial expenses like promotion, formation, etc. The amount needed as working capital in new concern depends primarily on its size and the ambitions of its promoters. Greater the size of business unit generally larger will be the need for working capital and the amount of working capital goes on increasing with the growth and expansion of business up to it attains maturity stage. Therefore working capital is needed for, Purchase of raw material, components and spares. Pay wages and salaries. Incur day to day expenses and overhead costs such as fuel, power and office expenses. To meet the selling costs as packing, advertising etc. To provide credit facilities to the customer. To maintain the inventories of raw material, work in progress, stores and spares and finished goods.
The management of assets in any organization is an essential part of overall management. The enterprise at the time of formation attaches great importance to fixed assets management as a part of investment decision making. However, in the overall day-to-day financial management, after the initial investment, the management given more importance to managing Working Capital. It we look at any financial statement it will be evident that the investment in fixed assets remains more or less static but the working capital is constantly changing or always fluctuating in nature.
METHODOLOGY:
Methodology is defined as a particular or a set of procedures, the analysis of these procedures of enquiry in a particular field. This chapter gives a clear picture of how the study has been carried on. It summarizes the procedures followed in this study. The methodology adopted to collect the information is secondary data is mainly taken from the annual reports of the company for past four years i.e. from year 2007-08, year 2008-09, year 2009-10, 2010-11, And data so collected was properly analysed and interpreted to achieve the objective of the project study conducted.
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PURPOSE:
Literature review is the beginning of the primary data collection. It acts as a gateway to the familiarity exercise by getting exposed to the study field in details. Literature review included texts, databases, internet, journals and dailies. The purpose of literature review is innumerable in research work. Specific need for references and citations makes secondary data quite valid. Literature review forms the integral part of larger research. Secondary data form sole basis for research for research in some instances. Above all, secondary data has proven to be less costly, readily available, less time consuming and less effort required compared to primary data. Literature review provides support to validate secondary data hence complementing the field data conclusion. It has also been observed that secondary data gives insight into the research details. It is mandatory to examine secondary data as a prerequisite for accuracy and relevance for primary data and subsequent analysis. Literature review heavily relied on published texts, Annual Reports accounting and financial database of the company, fact sheets of the company, other manuals, internet and revered journals and case studies in the field of working capital management were constantly reviewed. The review of the literature provided a solid guideline to conduct the study. It provided the secondary data required and the adequate guideline for the nature of the primary data.
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DATA ANALYSIS AND INTERPRETATION
CURRENT RATIO:
The current ratio is the ratio of the current liabilities. It is calculated by dividing current assets by current liabilities This ratio is an indicator of firm's commitment to meet its short-term liabilities. Higher ratio, better the coverage, 2: 1 ratio is treated as standard ratio. This ratio is also called as solvency/working capital ratio. Formula: Quick ratio = Quick assets (except stock and prepaid exp) Current Liabilities
QUICK ACID TEST/ LIQUID RATIO:

This ratio is also termed as "Acid Test Ratio" or "Liquid Ratio." This ratio is ascertained by comparing the liquid assets (i.e. assets which are immediately convertible into cash without much loss) to current liabilities prepaid expenses and stock are no taken as liquid assets. The ratio is also an indicator of short term solvency of the company. It measures the short term liquidity i.e. it measures short term debt paying ability. Higher the ratio better the coverage standard ratio is 1: 1. Formula: Quick Ratio = Quick assets (except stock and prepaid exp) Current liabilities
CASH / ABSOULTE LIQUID RATIO:

Cash is the most liquid asset. Here trade investments or marketable securities are equivalent of cash therefore they are included in computation of cash ratio. This ratio indicates the liquidity position of the company and its commitment to meet its short-term liabilities standard ratio for this is 0.5: 1. Formula: Cash Ratio = Cash + bank balance Current liabilities
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INVENTORY TURNOVER RATIO:

It indicates the efficiency of the firm in producing and selling it products. A low ratio indicates that inventory does not sell fast and stable in the warehouse for a long time. Whereas high ratio is indicator of good inventory management for judging inventory turnover ratio is ratio is good or bad it should be compared with past and expected ratios. High ratio is also good from the view point of liquidity and vice versa. Avg. Inventory is calculated by taking stock levels of raw materials, working process and finished goods at the beginning of year & at the end of the year & that is divided by two. Formula: Inventory turnover ratio =
Cost of goods sold Average inventory
Hence Avg. Inventory = Opening stock + Closing stock 2 The different tools of Inventory Management: Fixation of levels. ABC Analysis. VED Analysis. FSN Analysis. Economic Order Quantity (EOQ) Perceptual Inventory System
Explanation: Inventory management refers to managing the stores to ensure that there is neither over stocking nor under stocking of materials. An efficient system of inventory management will determine what to purchase, from where to purchase, how much to purchase and where to store.
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The tools of Inventory Management:

Fixation of levels: It is a tool through by which materials ate maintained in the store houses by fixing different levels namely maximum level, Re-Order level, Minimum level and Danger level. Levels are fixed taking into consideration the factors like cost and nature of raw materials, lead time storage spare etc. ABC Analysis: Materials are controlled giving importance to its value. Materials are graded as A,B &C where in materials with "A" grade are costlier in value but less in number where as materials with " C" grade are cheaper in value and more in number. "B" grade materials are moderate in value and moderate numbers of such items are maintained. VED Analysis: Materials are categorized as Vital, Essential and Desirable components. Much importance is given to the materials categorized as Vital than to the desirable components. FSN Analysis: Under this type, materials are grouped according to their movements Fast Moving Items are stored in large quantities to meet the requirements. Slow moving items are moderately stored Non- moving items are rarely required therefore the quantity stored is very less. Inventory will be coming in to the business. That would help the fixation of value of the firm Economic Order Quantity: Economic order quantity is the size of the lot to be purchased which is economically viable EOQ is a point at which the ordering cost and the carrying cost are minimum. Perceptual Inventory System: A record is kept on a continues basis as and when the materials are received and issued and hence, it is called perpetual inventory system.
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INVENTORY CONVERSION PERIOD:

Inventory conversion period is the time taken between purchase of raw materials &sale of finished goods. It includes: Raw Materials Conversion Period WIP Conversion Period Finished goods conversion period
Formula: Inventory conversion period = Inventory (Net) X 365 Value of production
Inventory ration for the year 2007-08 = 13515.7 X 365 =120 days 41113.7 2008-09 = 24209.6 X 365 = 167 days 52732.7 2009-10 = 24487.1 X 365 = 170 days 52478.8 2010-11 = 24607.7 X 365 = 163 days 55208.0
Table showing Inventory Ratio for the year: Inventory ratio for the Year 2007-08 2008-09 2009-10 2010- 11 Days 120 167 170 163
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Chart showing Inventory ratio for the year: Inventory ratio for the year
180 160 140 120 100 80 60 40 20 0 2007-08 2008-09 2009-10 2010-11 120 167 170 163
ANALYSIS: In 2009-10 the Inventory ratio has gone up to 170 when compared to 2008-09 & has come down to 163 in 2010-11. The above table and chart reveals that the inventory conversion period is showing decreasing trend. From the year 2009-10 onwards it means it has marginally improved. This signifies that the efficiency of the firm in producing and selling has shown some improvement. INTERPRETATION: The Company manufacturing activities are in connection with certain internal and external norms in order to complete the sales. The business terms includes certain conditions as the product is meant for Defence and Non Defence customers. Such types of causes lead to changes in Inventory conversion period boom and steeps. However, the nature of operations of BEL and the customer profile make it a very challenging task. Due to the nature of Electronic industry worldwide, it is required to hold huge value items in stock readily to have an uninterrupted production, which results in more funds blocked as Raw materials & components inventory. Generally lower the inventory turnover ratio results in minimizing of holding costs& working capital blockage at the same time it also reduces the risk. And also minimizes the loss which may occur due to obsolescence.
Page 51
Debtors Turnover Ratio (DTR):

Debtors constitute an important role in current assets. The quality of debtors to great extent determines the firm's liquidity. It indicates number of times debtors are turned over during the year. Generally higher the value of debtors turnover the more efficient is the management of debtors and at the same time very high ratio implies firms inability due to lack of resources to sell on credit there by losing sales and profits. Higher the ratio is better, since it indicate that debts are being collected more promptly in general, short collection period is preferable. Two ratios are used by financial analysts to great extent determines Finn's liquidity. Two ratios are used by financial analysts to judge the liquidity of a firm. They are 1. Debtors' turnover ratio, and 2. Debt collection period ratio. Formula: Debtors turnover ratio = Credit sales Debtors
2007-08= 41025.4 = 1.99 20557.1 2008-09= 46240.9 =2.02 22782.0 2009-10= 52197.7 = 2.41 21683.6 2010-11= 55296.9 = 1.90 29032.5
Page 52
Table showing Debtors turnover Ratio for the year Debtors turnover ratio for the Year 2005-06 2006-07 2007-08 2008-09 Value 1.99 2.02 2.41 1.90
Chart showing Debtors turnover Ratio for the year:
Debtors turnover Ratio for the year

3 2.5 2 1.99 1.5 1 0.5 0 2007-08 2008-09 2009-10 2010-11 2.02 2.41 1.9
ANALYSIS: In 2009-10 the Debtors turnover ratio has going up from 2007-2010 and after this there is fall in the year 2010-11.
Page 53
INTERPRETATION: When we look at the graph the ratio is increasing year after year. The debtors turnover ratio is increasing continuously in the past years. This is mainly due change in; The mixture of defence and non-defence customers cannot be considered as same. Hence the major customer is of Defence, normal process delays are expected from Government agencies. Payment Terms and customer profile also impacts on decreasing the ratio. It is noticed that the collection of Receivables is very much procedure oriented and hence unforeseen delays expected. Most of the despatches are made during the last quarters of the year, resulting in high level of Receivables during the year end.
Further, where the payments are linked to completion of certain activities (installation & commissioning, testing etc.), it may be ensured that such activities are completed in time.
Debtors' Collection Period (DCP):

Debtor's collection period represents the average conversion period. Debtor's collection period is the average time taken to convert debtors into cash. It can be calculated as follows: Formula: Average collection period (in days) = Debtors X 365 Sales 2007-08 =20557.1 X 365 = 183 days 41025.4 2008-09 = 22765.3 X 365 = 180 days 46236.9 2009-10 = 21683.6 X 365 = 152 days 52197.7 2010- 11 = 29032.5 X 365 = 192 days 55296.9
Page 54
Table showing Debtors collection period Debtors collection period 2007-08 2008-09 2009-10 2010- 11 Days 183 180 152 192 A
Chart showing Debtors collection period
Debtors collection period

192 (2010-11) 183 (2007-08)
152 (2009-10)
180 (2008-09)
ANALYSIS: The Debtor's collection period is decreasing, from 2007-08 to 2009-10 which is good sign from the company's point of view. The debtor's collection period is increased in 2010-11.
Page 55
INTERPRETATION: Debtor's or Average collection period measures the quality of the debtors since it measures the period with which the money is collected from them. Debtors Collection Period ratio shows the increase in collection period in 2010-11 compare to last three years. Shorter the collection period implies faster realisation of debtors. Shorter the average collection period, the better the trade credit management and better the liquidity of debtors. The Receivable position of BEL cannot be treated on par with other manufacturing companies. The separate allowance needs to be given for the nature of the products / Customer profile [Defence and Non Defence] being handled by BEL.
Creditors Turnover Ratio:

The creditors are interested in finding out how much time the firm is likely to take in repaying its trade creditors. It indicates the speed with which the payments for credit purchases are made to the creditors. The ratio can be computed as followed Formula: Creditors turnover ratio = Total Purchases Creditors
It is similar to Debtors Turnover Ratio. CTR = Credit Purchases or Average Creditors Total Purchase Creditors
Page 56
Current Assets Turnover Ratio:

Current assets turnover ratio is computed by dividing net sales by current assets. The ratio indicates the extent to which the investment in current assets as contributed towards sales. Thus it helps the firm to know its efficiency of utilizing current assets. If the ratio is compared with a previous period. It indicates whether the investment on current assets has been judicious or not. The ratio is calculated as follows: Formula: Current assets turnover ratio = Cost of Goods Sold (Net sales) Current Assets
Net Working Capital Ratio:

The difference between current assets and current liabilities excluding short-term borrowings are called net working capital. It measures the firm is liquidity and firm is potential reservoir of funds. Formula: Net working capital ratio = Net working capital Net assets
Working Capital Turnover Ratio:

This is also known as Working Capital Leverage Ratio. This ratio indicates whether or not working capital has been effectively utilized in making sales. The WCTR can be computed as follows: Working Capital turnover ratio = Working Capital Net Sales 2007-08 = 26309.0 = 0.641 41025.4 2008-09 = 31355.6 = 0.678 46236.9 2009-10 = 36562.9 = 0.70 52197.7 2010-11 = 42676.5 = 0.771 55296.9
or
Net current assets Net Sales
Table showing Working capital turnover ratio: Working capital turnover ratio 2007-08 2008-09 2009-10 2010- 11 Times 234 248 256 281
Chart showing Working capital turnover ratio

Working capital ratio for the year
281 300.00 234 250.00 200.00 150.00 100.00 50.00 0.00 2007-08 2008-09 2009-10 2010-11 248 256
ANALYSIS: When we see the Company Turnover ratio in all the four years from 2007-08 to 2010-11 is decreased. This indicates working capital has been effectively utilized in making sales i.e. year by year
Page 58
INTERPRETATION: This ratio tries to highlight is how effectively working capital is being used in terms of the turnover. Here we can see there is decrease in working capital Turnover ratio in all the four years from 2007-08 to 2010-11 is decreased. This indicates working capital has been effectively utilized in making sales i.e. year by year, however in the year 2010-11 this had increased indicating the funds are not blocked in working capital and thus increasing the funds available for funds. Compared to the percentage of sales there is decrease in percentage of net working capital so this indicates the working capital has been effectively utilized in making sales i.e. year by year
Gross Operating Cycle (GOC):

The firm's gross operating cycle can be determined as inventory conversion period plus debtor's conversion period. The debtor's conversion period is the time required to inventory conversion period and debtor's conversion period is referred to as gross operating cycle or the time lag between the purchase of raw materials and collection of cash for sale is Gross operating cycle. Thus GOC is given as follows, Formula: Gross operating cycle = Inventory conversion period + Debtors collection period
Net Operating Cycle (NOC):

In practice, a firm may acquire resources (such as raw materials) on credit and temporarily postpone payment of certain expenses. Payables, which the firm can defer, are spontaneous sources of capital to finance investment in current assets. The creditors (payables) deferral period is the length of time the firm is able to defer payments on various resource purchases. The difference between (gross) operating cycle and payable deferral period (Accounts payable period) is net operating cycle or net operating cycle is the time length between the payment for raw material purchases and the collection of cash for sale. Formula: Net Operating Cycle = Gross operating Cycle-Creditors Conversion Period
Page 59
Gross Profit Margin:

It reflects the efficiency with which management produces each unit of product. This ratio indicates the average spread between the cost of goods sold and 'the sales revenue. A high gross profit ratio is a sign of good management and low gross profit ratio reflects higher cost of goods sold due to reduction in selling price higher cost of production etc. The ratio expresses the relationship between gross profit and net sales. The gross profit margin ratio tells us the profit a business makes on its cost of sales, or cost of goods sold. Gross profit is the profit we earn before we take off any administration costs, selling costs and so on. Formula: Gross profit margin = Gross Profit X 100 Net Sales
NET PROFIT MARGIN RATIO:

Net profit is obtained when operating expenses interest and taxes are subtracted from gross profit. This ratio indicates company's capacity to withstand adverse economic conditions. A company with high net margin ratio would be in an advantageous position to survive in the phase of falling selling price rising costs of production etc and vice versa. The net profit margin ratio tells us the amount of net profit per 1 rupee of turnover a business has earned. That is, after taking account of the cost of sales, the administration costs, the selling and distributions costs and all other costs, the net profit is the profit that is left, out of Which they will pay interest, tax, dividends and so on. Formula: Net Profit margin ratio = Profit after Tax X 100 Net Sales
Page 60
STATEMENT SHOWING WORKING CAPITAL, REQUIREMENT FOR THE YEAR 2008-09

(` in Lakhs)
Particular Current Assets: Inventories Sundry Debtors Cash &Bank Balances Loans &Advances Total Current Assets (A)
Amount (Rs.)
Amount (Rs.)
24,179,094 22,781,964 26,419,452 4,976,721 78,357,231
Current Liabilities: Current Liabilities Provisions 42,602,265 4,399,403
Total Current Liabilities (B)
47,001,668
Working capital Requirement (A-B)
31,355,563
Page 61

(` in Lakhs)
Amount (Rs.)
Amount (Rs.)
244,870.52 216,836.20 357,840.50 44,965.68 864,512.9
Current Liabilities: Current Liabilities Provisions 443,102.49 54,148.52
497251.01
367261.89
Page 62

(` in Lakhs)
Amount (Rs.)
Amount (Rs.)
246,076.59 290,324.66 651,935.64 57,199.21 1,245,536.1
Current Liabilities: Current Liabilities Provisions 759,742.47 57,360.37
817102.84
428433.26
Page 63
CONSOLIDATED BALANCE SHEET as at 31st March 2011

(` In Lakhs)
Schedule SOURCES OF FUNDS Shareholders Funds Share Capital Reserves & Surplus MINORITY INTEREST Government Grants Loan Funds Secured Loans Unsecured Loans
As at 31.3.2011
As at 31.3.2010
1 2 2A 3 4 5
8000.00 505,257.04 513,257.04 251.87 1728.32 70.19 21.51 91.7 515,328.93
8000 437,617.06 445,617.06 220.47 2,083.74 106.72 21.51 128.23 448,049.50
APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation/Amortisation Net: Block 6 Less:Unrealised Profit Net Block after Unrealised Profit Capital Work-in-progress 7 Investment 8 Deferred Tax Assets Current Assets, Loans & Advances Inventories 9 Sundry Debtors 10 Cash & Bank Balance 11 Loans & Advances 12 Less: Current Liabilities & Provisions Current Liabilities Provisions
188,732.68 138,431.66 50,301.02 0.12 50,300.90 5,965.97 56,266.87 0.07 18,245.18 247,553.63 291,924.90 653,675.75 66,456.79 1,259,611.07
179,880.50 128,806.98 51,073.52 0.12 51,073.40 3,272.93 54,346.33 0.07 15,832.37 246,884.90 219,501.84 358,669.65 53,268.66 878,325.05
13 14
761,022.11 57,772.15 818,794.26
445,849.20 54,605.12 500,454.32

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Net Current Assets Miscellaneous Expenditure TOTAL
440,816.81 0 515,328.93
377,870.73 0 448,049.50
Page 65
Profit and Loss Account for the year ended 31st March 2011
(` In Lakhs)
Schedule INCOME
Sales less returns Income from services Turnover (Gross) Less: Excise Duty Turnover (Net) Other revenues Accretion/(decretion) to Work-in-Progress, Finished Goods & Scrap Profit on Sale of Fixed Assets (Net) Transfer from Grants EXPENDITURE Consumption of Raw Materials & Components Consumption of Stores & Spares Purchase of Finished Goods Employees Remuneration& Benefits Other Expenses of Manufacturing, Selling, & Distribution Interest Depreciation/Amortisation on Fixed Assets Less: Expenditure allocated to Capital jobs Profit before Prior Period, exceptional & extraordinary items Less: Exceptional Items-Expense Less: Extraordinary Items Profit for the Year Less: Prior Period Items (Net) Profit After Tax (PAT) Less: Provision for Taxation -Current Year -Earlier Years -Deferred Taxes -Total Provision for Taxation Profit After Tax (PAT) PES Institute of Technology
Year ended 31.3.2011

520,642.98 32,326.34 552,969.32 5,794.70 547,174.62 38,416.22 -888.98 136.10 378.45 585,216.41 209,285.59 3,021.89 101,269.47 104,186.17 41,118.30 43.36 12,204.23 471,129.01 18.90 471,110.11 114,106.30 0.00 114,106.30 0.00 114,106.30 -2,008.33 116,114.63 31,900.00 458.80 -2,391.02 29,967.78 86,146.85
Year ended 31.3.2011

501,539.47 20,437.93 521,977.40 3,933.52 518,043.88 36,334.89 2,810.80 341.96 964.34 558,495.87 227,395.21 4,134.69 70,923.75 100,958.47 35,813.23 53.48 11,594.23 450,873.06 35.74 450,837.32 107,837.55 3,134.91 104,523.64 0.00 104,523.64 21.29 104,502.35 33,500.00 -72.78 -1,011.97 32,415.25 72,087.10 Page 66
Less: Transfer to Capital Reserve Add: Balance Brought Forward from previous year Profit available for appropriation Appropriations Dividends: Interim Dividend Proposed Final Dividend Dividends Tax Transfer to General Reserve Balance carried to Balance Sheet
41.98 191,408.38 277,408.38
90.77 177,236.84 249,233.17
4,800.00 12,480.00 2,821.79 40,000.00 217,306.59 277,408.38
4,800.00 10,560 2569.66 40,000.00 191,303.51 249,233.17
Page 67
FINDINGS:
1. Current assets and Current liabilities are increasing. 2. The Current Ratio in the year 2011 is 1.52. Hence it has take care about this ratio as it is more than (1: 1) in the year 2011. 3. Even though liquidity ratio shows a decreasing trend compared to the Industrial standards. We cannot say that the company is not in position to pay its short term debts. But it is advisable to maintain a healthy liquidity ratio. 4. The Current Ratio and liquid Ratios are below the standard ratio i.e. 2: 1 and 1: 1 5. The company's quick ratio is fluctuating hence company has to formulate policies in such a way that such fluctuations can be minimized to a greater extent in the upcoming days. 6. The cash ratio is above the standard ratio of 0.5: I in all the 4 years. It indicates that there is sufficient liquidity and short-term liabilities are met in time. 7. The cash ratio is good it indicates that the company has the capable to meet daily expenses and it even has the capable to generate cash from sales. 8. The current ratio and liquidity ratio are above standards. It IS good from company's point of view. It means creditors are paid promptly. 9. Return on investment. Debtor's turnover ratio IS decreasing and debtor's collection period has increased. This indicates the collections are not made promptly. Creditors turnover ratio is moderate and the credit payment period is also not quite normal this may due to purchase of materials in lump sum on seasonal. 10. The debt ratio are decreasing in 2008 and 2009 and where as in 2009 company has taken a short term debt there is no long term loans which shows the strong financial internal resource of company.
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11. The increase debtor's turnover ratio shows company follows a sound credit policy. 12. The inventory conversion period is showing decreasing trend. It means inventory is rapidly turning into receivable through sales. This signifies the efficiency of the firm. 13. The ITR is increasing over the past few years indicating the company's sound inventory policy it indicates that company's inventory is moving quickly. 14. The company is in a position to collect its debts in time and is also capable of managing its day today activities. 15. Debtor's conversion period also showing favourable on the part of company and it also helps to manage credit efficiently. This is due to the rigid credit policy followed by the firm. 16. Current assets turnover ratio is showing decrease and increasing trend which indicates that current assets are not being properly used towards making sales of the company but it is decreased in the year 2008-2009. 17. Working Capital Turnover ratio are satisfactory in all four years shows better utilization of assets towards meeting the sales. 18. When we look at the working capital turnover ratio, working capital has been effectively utilized in making sales i.e. year by year, but in 2008-09 it has been decreased. 19. Working capital turnover ratio shows a positive trend. This can be maintained if the company follows existing policy coupled with the suggestion mentioned below. 20. Net Profit ratio indicates increasing trend but still it IS not m advantageous position. But overall efficiency has increased
Page 69
SUGGESTIONS:
The Current Ratio and liquidity Ratios are above the standard ratio i.e. 2: 1 and 1: 1 company has to maintain the same for coming years. The company should maintain its operating expense ratio. This indicates the pirating efficiency of the company. The operating cycle period has been decreased so that working capital requirement should be less and in turn it is improving liquidity position of firm. The profit of the company can be maximized by reducing operating expenses. The gross profit has been improving so there is reduction in cost of production. So there is better efficiency of management. The firm is depending more on self-finance or retained earnings for working capital. Debtor turnover ratio of the company is satisfactory so the companies receivable management is good. But in this respect too company has to take care not to follow excessively stringent credit policies as it may lead to lower sales. Working capital ratio has increased. This is due to considerable increase in sales, however working capital is concerned so the company should put more effort to increase the sales and continue the same. The concern should make necessary arrangement to increase cash balance so as to provide sufficient coverage to Quick liabilities.
Page 70
CONCLUSION:
Working capital Sales Ratio during the year 2007-08 it was 234 times and by the year 2008-09 it has increased to 248 times and by the year 2009-10 it increased to 256 times and for the previous year 2010-11 it has increased to 281 times. This ratio shows that the company's requirement of working capital has increased during the period which is reflected in the increase in the ratio from 234 times in 2007-08 to 281 times in 2010-11. Inventory Ratio during the year 2007-08 it was 120 days time and by the year 2008-09 it has increased to 167 days and by the year 2009-10 it has increased to 170 days and during previous year 2010-11 it has decreased to 163 days. The inventory ratio is increasing year by year. Average collection period during the year 2007-08 it was 183 days time and by the year 2008-09 it has decreased to 180 days and by the year 2009-10 it has decreased to 152 days but during previous year 2010-11 the collection period increased to 192 days compare to last year. This company has undergone revolutionary changes over period of time marching it's possible to success. It enjoys a good stand in the global market its turnover in previous year and should continue to do so by adopting changes to face competition in the market. The production and supply procedures adopted at BEL are standard and are of modern trends and it has better growth of opportunities. However they may be modified to suit the specific needs of the organization, as per the changes in the market. The overall working capital of the company is good but they have to take care about the each components of working capital which plays vital role in managing day-to-day activities of the company. As BEL is a manufacturing company there is no hard and fast rule to maintain the standard norms as other companies are following. The practical analysis is different from the theoretical explanations so we have calculated what we got from the company. A study of working capital management shows that the net working capital requirement has come down and also there is a significant improvement in collections due to a rigid credit policy adopted by the company. In conclusion, it is efficient in managing capital of the company. We got lot of information about the practicality of the calculation from the company and we learnt lot of things from this project training where application of acquired knowledge plays vital role. The things we learnt from this project will help us for long distance in our life.
Page 71
BIBLIOGRAPHY
Books: Financial management & policy, Jams C. Van Horne. Working Capital Management, VE Ramamurthy. Financial Management Khan & Jain.
Brochure and Financial Report of the Company. Magazines given by the Company. Annual Report of the Company.
Websites: www.bel.co.in www.bel-india.com
Page 72

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WORKING CAPITAL MANAGEMENT

Ordnance Factories and Public Sector Undertakings:

Defence Research and Development:

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

Major Government Actors:

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

Approaches to Defence Procurement and Industrialisation:

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

1997 12.2 3.1

1998 10.0 2.0

1999 12.4 2.8

2000 15.9 3.6

WORKING CAPITAL MANAGEMENT

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

Production and Services:

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

Brief list of Products, Services and Customers in BEL:

E-Governance Police, State Governments, Public sector Undertakings.

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

List of Products and Services Exported:

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

Corporate office Regional office

Marketing office and service centers

Joint venture companies

Central research laboratories

Overseas office Technical cell (BEL FOJ/GRSE Ltd) Systems division

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

Marketing Office and Service Centre:

Central Research Lab:

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

BG Complex Strategic Business Unit (SBU):

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

Top 10 Shareholders as on 31st March 2011:

WORKING CAPITAL MANAGEMENT

Awards & Recognition:

PES Institute of Technology

WORKING CAPITAL MANAGEMENT

GM (TP) CS (CRL/BG) CS (CRL/DEL)

GM (GAD) GM (PK) GM (CHN) GM (MC) GM (PN) GM (HYD) GM (KOT) GM (NAMU)