TERM PAPER

ON

FINANCIAL MANAGEMENT

Topic- Comparative working capital analysis of NTPC and

BHEL

Submitted to:-
Mr. Amarjeet Saini

Submitted by:-
Name – Md. Sagir Alam
Roll no: - RS (1901) B-39
Registration no: - 10906119

MBA
193(LSM)
 ACKNOWLEDGEMENT

First of all I would like to take this opportunity to express my gratitude towards all

those people who have helped me in the successful completion of this term paper,

directly or indirectly. I would also like to express my sincere gratitude towards

“Mr. Amarjeet sir” (my term paper guide) for his guidance and help which she

willingly provided at every step of my term paper.

Next, I would like to express my sincere ineptness to Wikipedia.org, and Google

for providing us with all necessary information for completion of this term paper.

Finally, I would like to thank all my family and friends for their encouragement,

support and good wishes

Index-
Introduction of working capital.
 Cycle of working capital management.
Introduction of NTPC
 Balance sheet of NTPC
Analysis of NTPC
Introduction of BHEL
Balance sheet of BHEL
 Analysis of BHEL
Comparative analysis between NTPC and BHEL
Conclusion.
Bibliography.
INTRODUCTION OF WORKING CAPITAL-

Working capital, also known as net working capital or NWC, is a financial metric which
represents operating liquidity available to a business. Along with fixed assets such as plant and
equipment, working capital is considered a part of operating capital. It is calculated as current
assets minus current liabilities. If current assets are less than current liabilities, an entity has
a working capital deficiency, also called a working capital deficit.

Working Capital = Current Assets − Current Liabilities

A company can be endowed with assets and profitability but short of liquidity if its assets cannot
readily be converted into cash. Positive working capital is required to ensure that a firm is able to
continue its operations and that it has sufficient funds to satisfy both maturing short-term debt
and upcoming operational expenses. The management of working capital involves managing
inventories, accounts receivable and payable and cash.

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

 accounts receivable (current asset)

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

The current portion of debt (payable within 12 months) is critical, because it represents a short-
term claim to current assets and is often secured by long term assets. Common types of short-
term debt are bank loans and lines of credit.
An increase in working capital indicates that the business has either increased current assets (that
is received cash, or other current assets) or has decreased current liabilities, for example has paid
off some short-term creditors.

By definition, working capital management entails short term decisions - generally, relating to
the next one year period - which is "reversible". These decisions are therefore not taken on the
same basis as Capital Investment Decisions (NPV or related, as above) rather they will be based
on cash flows and / or profitability.

 One measure of cash flow is provided by the cash conversion cycle - the net number of
days from the outlay of cash for raw material to receiving payment from the customer. As a
management tool, this metric makes explicit the inter-relatedness of decisions relating to
 inventories, accounts receivable and payable, and cash. Because this number effectively
corresponds to the time that the firm's cash is tied up in operations and unavailable for other
activities, management generally aims at a low net count.

 In this context, the most useful measure of profitability is Return on capital (ROC). The
result is shown as a percentage, determined by dividing relevant income for the 12 months by
capital employed; Return on equity (ROE) shows this result for the firm's shareholders. Firm
value is enhanced when, and if, the return on capital, which results from working capital
management, exceeds the cost of capital, which results from capital investment decisions as
above. ROC measures are therefore useful as a management tool, in that they link short-term
policy with long-term decision making. See Economic value added (EVA).

Cycle of working capital-

Management of working capital Guided by the above criteria, management will use a
combination of policies and techniques for the management of working capital. These policies
aim at managing the current assets(generally cash and cash equivalents, inventories and debtors)
and the short term financing, such that cash flows and returns are acceptable.
 Cash management. Identify the cash balance which allows for the business to meet day to
day expenses, but reduces cash holding costs.
 Inventory management. Identify the level of inventory which allows for uninterrupted
production but reduces the investment in raw materials - and minimizes reordering costs -
and hence increases cash flow; see Supply chain management; Just In Time (JIT); Economic
order quantity (EOQ); Economic production quantity
 Debtor’s management. Identify the appropriate credit policy, i.e. credit terms which will
attract customers, such that any impact on cash flows and the cash conversion cycle will be
offset by increased revenue and hence Return on Capital (or vice versa); see Discounts and
allowances.
 Short term financing. Identify the appropriate source of financing, given the cash
conversion cycle: the inventory is ideally financed by credit granted by the supplier;
however, it may be necessary to utilize a bank loan (or overdraft), or to "convert debtors to
cash" through "factoring".
Introduction of NTPC
NTPC, India's largest power company, was set up in 1975 to accelerate power
development in India. It is emerging as an ‘Integrated Power Major’, with a significant
presence in the entire value chain of power generation business. NTPC ranked 317th in
‘2009, Forbes Global 2000’ ranked the World’s biggest companies. With a current
generating capacity of 31,704 MW, NTPC has embarked on plans to become a 75,000
MW company by 2017. NTPC has been ranked No. 1 in 'Best Workplaces for Large
Organizations' and eighth overall in 2008 by Great Places to Work in collaboration with
the Economic Times.

NTPC Limited, India’s largest power company with an installed capacity of 29,894 MW
is presently operating 15 coal based, 7 gas based power stations and 4 joint ventures.
NTPC contributed around 28.5% of the country’s entire power generation during the
year 2007-08 and plans to become a 75,000 MW power company by 2017. NTPC has
moved ahead by diversifying its portfolio to emerge as an integrated power major with
presence across the entire energy value chain. NTPC has been allocated 6 coal mine
blocks which are expected to produce 48 million tons per annum.

With its excellent practice in Human Capital Management, NTPC is the most admired
organization in public sector. Powered by dynamic and dedicated workforce, NTPC has
ambitious growth plans and to make it happen NTPC is looking for promising, energetic
young Graduate Engineers & Finance / HR professionals with brilliant academic record
to join the organization as:
Balance Sheet of NTPC In crores

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

12
12 mths 12 mths 12 mths 12 mths
mths

Sources Of Funds

8,245.5
Total Share Capital 8,245.50 8,245.50 8,245.50 8,245.50
0

8,245.5
Equity Share Capital 8,245.50 8,245.50 8,245.50 8,245.50
0

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

33,530.
Reserves 36,713.20 40,351.30 46,021.90 50,749.40
80

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

41,776.
Net worth 44,958.70 48,596.80 54,267.40 58,994.90
30

4,778.1
Secured Loans 6,173.50 7,479.60 7,314.70 8,969.60
0

12,647.
Unsecured Loans 14,464.60 17,661.50 19,875.90 25,598.20
10

Total Debt 17,425. 20,638.10 25,141.10 27,190.60 34,567.80

 20

59,201.
Total Liabilities 65,596.80 73,737.90 81,458.00 93,562.70
50

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12
12 mths 12 mths 12 mths 12 mths
mths

Application Of Funds

42,996.
Gross Block 45,917.60 50,604.20 53,368.00 62,353.00
10

20,791.
Less: Accum. Depreciation 22,950.10 25,079.20 27,274.30 29,415.30
40

22,204.
Net Block 22,967.50 25,525.00 26,093.70 32,937.70
70

10,038.
Capital Work in Progress 13,756.00 16,962.30 22,478.30 26,404.90
60

20,797.
Investments 19,289.10 16,094.30 15,267.20 13,983.50
70

1,777.7
Inventories 2,340.50 2,510.20 2,675.70 3,243.40
0

1,374.7
Sundry Debtors 867.80 1,252.30 2,982.70 3,584.20
0

Cash and Bank Balance 367.30 176.80 750.10 473.00 271.80

3,519.7
Total Current Assets 3,385.10 4,512.60 6,131.40 7,099.40
0

5,491.1
Loans and Advances 6,555.10 8,781.70 9,936.20 7,826.10
0

5,711.0
Fixed Deposits 8,294.60 12,564.50 14,460.20 15,999.80
0

14,721.
Total CA, Loans & Advances 18,234.80 25,858.80 30,527.80 30,925.30
80

Deferred Credit 0.00 0.00 0.00 0.00 0.00

 5,884.6
Current Liabilities 4,910.30 5,422.20 5,548.40 7,439.20
0

2,676.7
Provisions 3,740.30 5,280.30 7,360.60 3,249.50
0

8,561.3
Total CL & Provisions 8,650.60 10,702.50 12,909.00 10,688.70
0

6,160.5
Net Current Assets 9,584.20 15,156.30 17,618.80 20,236.60
0

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

59,201.
Total Assets 65,596.80 73,737.90 81,458.00 93,562.70
50

16,680.
Contingent Liabilities 16,429.80 25,218.80 29,361.80 66,083.20
00

Book Value (Rs) 50.67 54.53 58.94 65.81 71.55

NTPC « Previous Years

Key Financial Ratios ------------------- in Rs. Cr. -------------------

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Investment Valuation Ratios

Face Value 10.0010.00 10.00 10.00 10.00
Dividend Per Share 2.40 2.80 3.20 3.50 3.60
Operating Profit Per Share
8.84 9.00 12.32 13.98 12.79
(Rs)
Net Operating Profit Per
27.3731.71 39.58 44.98 50.91
Share (Rs)
Free Reserves Per Share
39.7343.24 47.38 52.34 56.25
(Rs)
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Operating Profit Margin(%) 32.3028.40 31.13 31.07 25.11
Profit Before Interest And
21.3018.66 22.84 23.44 18.06
Tax Margin(%)
Gross Profit Margin(%) 37.1032.62 33.28 25.31 19.48
Cash Profit Margin(%) 31.0327.30 25.25 23.74 21.10
Adjusted Cash Margin(%) 28.8224.31 24.58 23.74 21.10
Net Profit Margin(%) 23.2020.20 19.39 18.51 18.11
Adjusted Net Profit
20.9917.20 18.69 18.51 18.11
Margin(%)
Return On Capital
13.1512.26 14.69 15.15 12.27
Employed(%)
Return On Net Worth(%) 13.9012.95 14.13 13.66 13.90
Adjusted Return on Net
12.5711.02 13.61 13.57 12.18
Worth(%)
Return on Assets Excluding
8.57 7.84 8.13 7.86 --
Revaluations
Return on Assets Including
8.57 7.84 8.13 7.86 --
Revaluations
Return on Long Term
13.1512.26 14.69 15.15 12.27
Funds(%)
Liquidity And Solvency Ratios
Current Ratio 1.72 2.11 2.42 2.36 2.89
Quick Ratio 1.44 1.84 2.18 2.16 2.59
Debt Equity Ratio 0.42 0.46 0.52 0.50 0.59
Long Term Debt Equity Ratio 0.42 0.46 0.52 0.50 0.59
Debt Coverage Ratios
Interest Cover 16.7911.59 9.49 10.28 11.91
Total Debt to Owners Fund 0.42 0.46 0.52 0.50 0.59
Financial Charges Coverage
5.73 5.04 6.29 7.31 7.97
Ratio
Financial Charges Coverage
5.56 4.93 5.35 5.82 7.08
Ratio Post Tax
Management Efficiency Ratios
Inventory Turnover Ratio 14.0812.31 14.10 33.59 28.21
Debtors Turnover Ratio 24.4723.32 30.78 17.52 12.78
Investments Turnover Ratio 43.4225.14 30.51 33.59 28.21
Fixed Assets Turnover Ratio 0.74 0.76 0.82 0.70 0.67
Total Assets Turnover Ratio 0.38 0.40 0.44 0.46 0.45
Asset Turnover Ratio 0.52 0.57 0.65 0.70 0.67

Average Raw Material

-- -- -- -- --
Holding
Average Finished Goods
-- -- -- -- --
Held
Number of Days In Working
98.28131.98 167.21 171.01 173.56
Capital
Profit & Loss Account Ratios
Material Cost Composition 0.07 0.09 0.07 0.07 0.07
Imported Composition of
-- -- -- -- --
Raw Materials Consumed
Selling Distribution Cost
0.20 0.15 0.17 0.12 0.13
Composition
Expenses as Composition of
-- -- -- -- --
Total Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio Net
38.6945.23 44.11 45.53 42.31
Profit
Dividend Payout Ratio Cash
28.9333.45 33.83 35.33 32.83
Profit
Earning Retention Ratio 57.2346.91 54.23 54.17 51.75
Cash Earning Retention
68.8562.44 65.20 64.49 63.70
Ratio
Adjusted Cash Flow Times 2.42 2.95 2.89 2.86 3.62

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Earnings Per Share 7.04 7.06 8.33 8.99 9.95

Book Value 50.6754.53 58.94 65.81 71.55

Working capital analysis report of NTPC

Working capital is the difference between current assets and current liabilities of the
company. Through the balance sheet of the NTPC we calculate the following things.

 In 2005 the Total CA, Loans & Advances of the company is 14,721.80 crore, and
in 2009 it is 30,925.30 crore, means there are 110.06 % increase in current
assets during the five years of time.

 In 2005 the total CL & Provisions of the Co. is 8,561.30 crore and in 2009 it is
10,688.70 crore which show that there are 24.84% increase in current liabilities.

From the above we can say that the Co. has done well in last 5 years. It has
able to decrease their current liabilities in last 5 years.
 In 2005 the S. Debtor of the Co. was 1,374.70 crore, and in 2009 it is 3,584.20
crore which show that there is 160.73% increase in Debtors.

 In 2005 the Current Liab. Of Co. was 5,884.60 crore, and in 2009 it is 7,439.20
crore which show that there is 26.4% increase in C. Liab.

Note: I have considered C. Liab. As Creditor.

From the above we can said that the Co.’s have more chance of Bad Debt
because it Debtors has increased but when we talk about the Creditor we can
say that Co. is trying to reduce its C. Liab and is relying on Cash Payment to get
the Cash advantages.

 Cash and Bank Balance 367.30(2005) and 271.80(2009)

It has been decreased by 26% in last 5 years. Here the co. has done well
because it is utilizing its fund in various areas.

 Fixed Deposits 5,711.00(2005) and 15,999.80(2009)

It is increased by 180.11% in last 5 years. The co. approach is here to get Bank
Interest on cash that is why it has reduced its Cash in Hand and utilizing it in
Bank.

 Loans and Advances 5,491.10(2005) and 7,826.10(2009)

It has been increased by 42.52% in last 5 years. Here the Co. has increased its
loans and Advances to get interest thereon, which is a good approach adopted
by co.

 Provisions 2,676.70(2005) and 3,249.50(2009)

 It is increased by 21.4% in last 5 years. Here co. has increased its provision to
think of about Bad Debts, which is good approach. Also co. has not increased its
too much high.

 Net Current Assets 6,160.50(2005) and 20,236.60(2009)

It is increased by 228.5% in last 5 years. We know that this is the Working

Capital of the co. and it has increased tremendously in last 5 years, which is
showing the co. effective working capital management.

 The Current Ratio of Co. in 2005 was 1.72:1 and in 2009 it is 2.89:1.

We know the better C. Ratio is 2:1, Here the Co.’s clearly shows that its paying
capacity has been increased in last 5 years because Co. has reduced its C .Liab.

 The Quick Ratio in 2005 - 1.44:1 and in 2009 - 2.59:1

Good=1:1

Here the Co. has enough cash to pay its C. Liab easily. It becomes more capable
in last 5 years in terms of Quick Asset.

 Inventory Turnover Ratio 14.08(2005) and 28.21(2009)

From this ratio it is clearly shown that that the co. ratio has become twice and we
can say that the co. has done well enough in last 5 years.

 Debtors Turnover Ratio 24.47(2005) and 12.78(2009)

From this ratio we can say that there is a decline in this ratio, this is because
Co.’s Debtors has increased in last 5 years. This shows that the Co. is not able to
get the payment on time. Co. have to wait long to get payment from its debtors.
Introduction of BHEL
BHEL is the largest manufacturer of rotating electrical machines in the country, and has
established itself as an industry leader. There are approximately about 30,000 BHEL
make HT machines all across the country in various industries and power plants. Since
nineties, BHEL has been adding about 1000 HT machines per year to this population of
machines.

Rotating electrical machines of various types and ratings are required for the operation
of any industrial plant or power plant. Failure or breakdown of a rotating electrical
machine can occur for various reasons at any time during the life of the machine. For
any plant, the cost of downtime as a result of failure or breakdown of an electrical
machine would be enormous. The costs of replacement of these machines often used
for very critical operations, are quite exorbitant and the process of procurement very
cumbersome. So, most of the times, the industry/power plant goes in for
repair/reconditioning of their old machines.

At this critical juncture, BHEL, Electrical Machines Repair Plant (EMRP) steps in to
cater to this need of the industry. The technological expertise of BHEL as the premier
manufacturer of electrical machines in India is available to the industry through EMRP.

Phase I of this unit of BHEL was set up in 1978 to cater to repair and maintenance of
traction machines for the Indian Railways. With time, Railways developed in-house
facilities for repair of traction machines. Consequently, Phase II of EMRP’s operation
was launched.

During Phase II, EMRP developed facilities for industrial machines, from coil
manufacturing to total service of industrial rotating machines, and the product profile
expanded to include large and medium range industrial machines, mini/midi hydro
generators. EMRP has successfully revamped many machines. Over the years, EMRP
has evolved into a Unit that is capable of offering total service to various industries for
all types of rotating electrical machines.

In India, when any industrial plant or power plant is set up, the rotating electrical
machines required for the operation of the plant are procured from various companies
from all over the world. EMRP has developed the capability to repair rotating electrical
machines of both BHEL and non-BHEL make having technology of the sixties or
technology of the nineties. In short, EMRP uses “Tomorrow's technology in Yesterday's
equipment”. In most cases of imported, non-BHEL or very old machines, technical
details / drawings are often not available.

Balance Sheet of Bharat Heavy

------------------- in Rs. Cr. -------------------
Electricals

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12
12 mths 12 mths 12 mths 12 mths
mths

Sources Of Funds

Total Share Capital 244.76 244.76 244.76 489.52 489.52

Equity Share Capital 244.76 244.76 244.76 489.52 489.52

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

5,782.1
Reserves 7,056.62 8,543.50 10,284.69 12,449.29
3

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

6,026.8
Net worth 7,301.38 8,788.26 10,774.21 12,938.81
9

Secured Loans 500.00 500.00 0.00 0.00 0.00

Unsecured Loans 36.98 58.24 89.33 95.18 149.37

Total Debt 536.98 558.24 89.33 95.18 149.37

6,563.8
Total Liabilities 7,859.62 8,877.59 10,869.39 13,088.18
7

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12
12 mths 12 mths 12 mths 12 mths
mths

Application Of Funds

3,628.5
Gross Block 3,821.62 4,134.61 4,443.03 5,224.43
0
 2,584.7
Less: Accum. Depreciation 2,839.79 3,146.31 3,462.21 3,754.47
0

1,043.8
Net Block 981.83 988.30 980.82 1,469.96
0

Capital Work in Progress 98.12 191.27 306.58 658.47 1,212.70

Investments 8.95 8.29 8.29 8.29 52.34

2,916.1
Inventories 3,744.37 4,217.67 5,736.40 7,837.02
1

5,972.1
Sundry Debtors 7,168.06 9,695.82 11,974.87 15,975.50
4

1,392.8
Cash and Bank Balance 1,483.97 2,068.91 1,511.02 1,950.51
6

10,281.
Total Current Assets 12,396.40 15,982.40 19,222.29 25,763.03
11

1,921.3
Loans and Advances 4,186.27 5,517.59 7,366.17 4,616.67
3

1,785.0
Fixed Deposits 2,650.01 3,740.00 6,875.00 8,364.16
1

13,987.
Total CA, Loans & Advances 19,232.68 25,239.99 33,463.46 38,743.86
45

Deferred Credit 0.00 0.00 0.00 0.00 0.00

7,248.9
Current Liabilities 8,905.14 11,957.32 16,632.97 23,415.10
9

1,325.4
Provisions 3,649.32 5,708.25 7,608.68 4,975.58
5

8,574.4
Total CL & Provisions 12,554.46 17,665.57 24,241.65 28,390.68
4

5,413.0
Net Current Assets 6,678.22 7,574.42 9,221.81 10,353.18
1

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

6,563.8
Total Assets 7,859.61 8,877.59 10,869.39 13,088.18
8
Contingent Liabilities 609.68 769.95 976.05 1,673.19 2,546.25

Book Value (Rs) 246.24 298.31 359.06 220.10 264.32

Key Financial Ratios of Bharat

------------------- in Rs. Cr. -------------------
Heavy Electricals

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 8.00 14.50 24.50 15.25 17.00
Operating Profit Per Share (Rs) 53.25 90.85 144.84 76.54 85.55
Net Operating Profit Per Share
393.81549.17 709.38 399.19 543.68
(Rs)
Free Reserves Per Share (Rs) 219.29267.56 348.80 209.99 254.23
Bonus in Equity Capital -- -- -- 50.00 50.00
Profitability Ratios
Operating Profit Margin (%) 13.52 16.54 20.41 19.17 15.73
Profit Before Interest And Tax
10.90 14.36 18.47 16.73 13.96
Margin (%)
Gross Profit Margin (%) 15.38 18.11 22.41 17.65 14.47
Cash Profit Margin (%) 11.78 13.97 14.88 15.59 12.12
Adjusted Cash Margin (%) 9.18 11.71 15.07 15.59 12.12
Net Profit Margin (%) 9.58 12.19 13.51 13.87 11.36
Adjusted Net Profit Margin (%) 6.98 9.92 13.70 13.87 11.36
Return On Capital Employed (%) 21.22 29.35 42.84 41.56 37.00
Return On Net Worth (%) 15.82 23.00 27.48 26.53 24.25
Adjusted Return on Net Worth (%) 11.53 18.72 27.86 27.07 23.28
Return on Assets Excluding
6.30 8.23 9.10 8.14 --
Revaluations
Return on Assets Including
6.30 8.23 9.10 8.14 --
Revaluations
Return on Long Term Funds (%) 21.22 29.35 42.84 41.56 37.00
Liquidity And Solvency Ratios
Current Ratio 1.63 1.53 1.43 1.38 1.36
Quick Ratio 1.22 1.17 1.13 1.09 1.02
Debt Equity Ratio 0.09 0.08 0.01 0.01 0.01
Long Term Debt Equity Ratio 0.09 0.08 0.01 0.01 0.01
Debt Coverage Ratios
Interest Cover 17.11 39.28 87.78 127.55 157.71
Total Debt to Owners Fund 0.09 0.08 0.01 0.01 0.01
Financial Charges Coverage Ratio 19.80 43.46 93.42 135.94 168.59
Financial Charges Coverage Ratio
15.40 33.77 62.37 90.12 114.07
Post Tax
Management Efficiency Ratios
Inventory Turnover Ratio 3.41 3.68 4.24 3.88 3.70
Debtors Turnover Ratio 1.82 2.05 2.06 1.80 1.90
Investments Turnover Ratio 3.79 4.15 4.64 3.88 3.70
Fixed Assets Turnover Ratio 8.31 11.87 14.62 4.48 5.20
Total Assets Turnover Ratio 1.47 1.72 1.97 1.81 2.05
Asset Turnover Ratio 2.67 3.54 4.27 4.48 5.20

Average Raw Material Holding 76.99 75.00 78.98 88.75 80.96

Average Finished Goods Held 12.48 11.47 10.27 12.03 9.74
Number of Days In Working
202.17178.86 157.05 169.89 140.04
Capital
Profit & Loss Account Ratios
Material Cost Composition 52.88 52.81 49.30 53.22 58.56
Imported Composition of Raw
32.58 28.71 30.94 27.73 27.81
Materials Consumed
Selling Distribution Cost
1.89 1.45 1.27 1.22 1.09
Composition
Expenses as Composition of Total
8.29 5.27 6.31 4.80 6.70
Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 23.33 24.09 28.67 30.54 31.02
Dividend Payout Ratio Cash Profit 18.97 21.02 26.04 27.66 28.03
Earning Retention Ratio 68.01 70.40 71.73 70.07 67.69
Cash Earning Retention Ratio 75.67 74.91 74.30 72.83 70.92
Adjusted Cash Flow Times 0.59 0.35 0.03 0.03 0.04

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Earnings Per Share 38.95 68.60 98.66 58.41 64.11

Book Value 246.24298.31 359.06 220.10 264.32
Working capital analysis report of BHEL

 Net Current Assets 5,413.01(2005) and 10,353.18(2009)

The W. Capital of the Co. is increased by 91.26% in last 5 years. This is showing
that Co.’s C. Asset has become approximately double than its C. Liab.

 Total CA, Loans & Advances 13,987.45(2005) and 38,743.86(2009)

The total CA, Loans & Advances has been increased by 176.99% in last 5 years.

 Total CL & Provisions 8,574.44(2005) and 28,390.68(2009)

This has been increased by 231.10% in last 5 years means Co. is relying heavily
in Credits.

 Cash and Bank Balance 1,392.86(2005) and 1,950.51(2009)

The co. cash balance has increased by 40% in last 5 years means co. use to
keep more cash in hand to make immediate payment and gain opportunity
advantage.

 Fixed Deposits 1,785.01(2005) and 8,364.16(2009)

The Co. deposits have also been increased by 368.5% in last 5 years. Here the
co. has utilizing its funds properly.
  Loans and Advances 1,921.33(2005) and 4,616.67(2009)

It has been increased by 140.28% in last 5 years.

 Sundry Debtors 5,972.14(2005) and 15,975.50(2009)

It has been increased by 167.5% in last 5 years.

 Current Liabilities 7,248.99(2005) and 23,415.10(2009)

Note: C. Liab. Is treated as Creditor.

It has been increased by 223% in last 5 years.

If we talk about both its debtor and creditor then we can say that the co. is
using credit purchase policy heavily to get the benefit from it. On other hand it is
also able to get amount from its debtor on time which is good for the Co.

 Provisions 1,325.45(2005) and 4,975.58(2009)

It has been increased by 275.38% in last 5 years. Here the co. approach is to
keep itself in safe mode.

Ratios
 Current Ratio 1.63:1(2005) and 1.36:1(2009)

Here the co. C. Ratio in 2009 is not good in comparison to 2005. It means co.
has increased its C. Liab. In last 5 years. The co. must think of about it.

 Quick Ratio 1.22:1(2005) and 1.02(2009)

After analyzing the Q. Ratio we can say that the co. was more able to make quick
payment in 2005 but right now in 2009 it has also a good ratio.

 Inventory Turnover Ratio 3.41(2005) and 3.70(2009)

 As per this ratio there is only slightly changes has came in last 5 years. Here co.
ratio has increased and this is a good sign for Co.

 Debtors Turnover Ratio 1.82(2005) and 1.90(2009)

Here also not much more changes have occurred in last 5 years. Here the co.
collection time has decreased, this is good for Co.

Comparison between NTPC and BHEL

 C. Ratio (2:1)
 If we talk about C. Ratio then the BHEL has Current Ratio 1.63:1(2005) and
1.36:1(2009) and NTPC has in 2005 was 1.72:1 and in 2009 it is 2.89:1.

In terms of their C. Ratio NTPC has an edge over the BHEL in 2009. NTPC
has more effectively managed its C. Asset over its C. Liab.

 Q. Ratio (1:1)

If we talk about in terms of Q. Ratio then the BHEL has Quick Ratio 1.22:1(2005)
and 1.02(2009) and NTPC has Quick Ratio in 2005 - 1.44:1 and in 2009 - 2.59:1
respectively.

Here both the Co.’s has ability to make quick payment easily but NTPC
has again edge over the BHEL in 2009 because it has 2.59 Quick Asset in
comparison to BHEL 1.02.

 Inventory Turnover Ratio

If we talk about the Inventory Turnover Ratio then BHEL has Inventory Turnover
Ratio 3.41(2005) and 3.70(2009) and NTPC has Inventory Turnover Ratio
14.08(2005) and 28.21(2009) respectively.

We can see a huge gap in Inventory Turnover Ratio between both the
companies, here the Inventory Turnover Ratio of NTPC far more than the BHEL.
Here the NTPC has edge over BHEL because it can produce twice a year.

 Debtors Turnover Ratio

If we talk about the Debtor Turnover Ratio then BHEL has Debtors Turnover
Ratio 1.82(2005) and 1.90(2009) and NTPC has Debtors Turnover Ratio
24.47(2005) and 12.78(2009) respectively.
 Here we can also see a huge gap between both the companies ratio. Here
the BHEL has an edge over the NTPC. BHEL collection time has decreased
where as it is increased in case of NTPC.

 Net Current Assets

If we talk about the N. Current then BHEL Net Current Assets 5,413.01(2005)
and it is 10,353.18(2009). The W. Capital of the Co. is increased by 91.26% in
last 5 years. This is showing that Co.’s C. Asset has become approximately
double than its C. Liab. In case of NTPC the Net Current Assets 6,160.50(2005)
and 20,236.60(2009). It is increased by 228.5% in last 5 years. We know that this
is the Working Capital of the co. and it has increased tremendously in last 5
years, which is showing the co. effective working capital management.

 Cash and Bank Balance

BHEL cash balance has increased by 40% in last 5 years where as NTPC Cash
and Bank balance has been decreased by 26% in last 5 years.

 Fixed Deposits

BHEL F. Deposit have been increased by 368.5% in last 5 years where as NTPC
F.D. is increased by 180.11% in last 5 years.

 Loans and Advances

BHEL Loans and Advances have been increased by 140.28% whereas NTPC
has been increased by 42.52% in last 5 years.
  Sundry Debtors

BHEL Debtors has been increased by 167.5% whereas NTPC Debtors has been
increased by 160.73% in last 5 years.

Conclusion:
As we know the both of company are renowned for its excellence and considered as
one of the best Indian Companies. But when we talk about its comparison then it
become difficult to do so. Here I have done the analysis of both the companies for last
five years in terms of their W.Capital.

As per C. Ratio and Inventor Turnover Ratio NTPC has edge over BHEL. In terms
of Q. Ratio Both are same but in terms of Debtor turn over BHEL has edge over NTPC.
If we talk about the N. Current Asset then BHEL W. Capital of the Co. is increased by
91.26% in last 5 years. This is showing that Co.’s C. Asset has become approximately
double than its C. Liab. In case of NTPC it is increased by 228.5% in last 5 years. We
know that this is the Working Capital of the co. and it has increased tremendously in last
5 years, which is showing the co. effective working capital management.

Overall I can say that the W. Capital Management of NTPC is good than the BHEL from
the above analysis. Because it has an edge over the Ratio as well as in C. Asset and C.
Liab.
Bibliography-
 www.moneycontrol.com

 www.wikipedia.com

 www.capitaline.com
 www.ntpc.com

 www.bhel.com

 www.investopedia.com

 www.capitaline.co

 www.moneybhai.com

 www.planware.org

 www.workingcapital.htm