31411008-BHEL

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CAPITAL BUDGETING : 

CAPITAL BUDGETING OF BHEL

BHEL – AN OVERVIEW : 

BHEL – AN OVERVIEW BHEL is the largest engineering and manufacturing enterprise in India in the energy-related/infrastructure sector, today. The company has been earning profits continuously since 1971-72 and paying dividends since 1976-77.

Slide 3: 

BHEL has Installed equipment for over 90,000 MW of power generation -- for Utilities, Captive and Industrial users Supplied over 2,25,000 MVA transformer capacity and other equipment operating in Transmission & Distribution network up to 400 kV (AC & DC). Supplied over 25,000 Motors with Drive Control System to Power projects, Petrochemicals, Refineries, Steel, Aluminum, Fertilizer, Cement plants, etc. Supplied Traction electrics and AC/DC locos to power over 12,000 kms Railway network. Supplied over one million Valves to Power Plants and other Industries. BHEL including Transmission, Transportation, Telecommunication & Renewable Energy - and Overseas business this enables BHEL to have a strong customer orientation, to be sensitive to his needs and respond quickly to the changes in the market.

BHEL - HAS TWO MANUFACTURING PLANTS: - : 

BHEL - HAS TWO MANUFACTURING PLANTS: - Heavy Electrical Equipment Plant (HEEP) and Central Foundry Forge Plant (CFFP). The Heavy Electrical Equipment Plant (HEEP) located in Haridwar, is one of the major manufacturing plants of BHEL. The core business of HEEP includes design and manufacture of large steam and gas turbines, turbo generators, hydro turbines and generators, large AC/DC motors and so on. Central Foundry Forge Plant (CFFP) is engaged in manufacture of Steel Castings: Up to 50 Tons per Piece Wt & Steel Forgings: Up to 55 Tons Per Piece Wt.

BHEL - CONTRIBUTION TO VARIOUS CORE SECTOR : 

BHEL - CONTRIBUTION TO VARIOUS CORE SECTOR Industry Sector Since its inception in 1982, the industry sector business has grown at an impressive rate and today, contributes significantly to BHEL’s turnover. BHEL, today, supplies all major equipment for the industries: AC/DC machines, alternators, centrifugal compressors, special reactor columns, heat exchangers, pressure vessels, gas turbine based captive, co-generation and combined-cycle power plants, DG power plants, steam turbine and turbo-generators, complete range of steam generators for process industries, solar photovoltaic systems, electrostatic precipitators, fabric filters, etc. BHEL also provides solution for water management system, coal and ash handling plants. The industries that serve include steel, aluminum, fertilizers, refinery, petrochemicals, chemicals, automobiles, cement, sugar, paper, mining, textile, etc.

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Transportation Sector In the transportation field, BHEL product range covers: AC locomotives, AC/DC dual-voltage locomotives, diesel-electric shunting locomotives, traction motors and transformers, traction electrics and controls for AC, DC and dual voltage EMUs, diesel-electric multiple units, diesel power car and diesel electric locomotives, battery powered vehicles and solution for urban transportation system including electric trolley buses, LRT & MRTs. A high percentage of the trains operated by Indian railways is equipped with traction equipment and controls manufactured and supplied by BHEL.

BHEL - OVERSEAS BUSINESS : 

BHEL - OVERSEAS BUSINESS BHEL, Ranking among the major power plant equipment suppliers in the world, is one of the largest exporters of engineering products and services from India. Over the years, BHEL has established its reference in around 60 countries of the world, ranging from the united state in the west to new Zealand In the far east. BHEL’s exports range cover individual product to complete power stations.

TRAINING OBJECTIVE : 

TRAINING OBJECTIVE To analyze financial position of BHEL & to study about Budgeting and Capital budgeting.

INTRODUCTION : 

INTRODUCTION BUDGETING CAPITAL BUDGETING

BUDGET : 

BUDGET Budget is a financial and / or quantitative statement, prepared and approved prior to a defined period of time, of the policy to be pursued during that period for the purpose of attaining a given objective. -CIMA official terminology

BUDGETING : 

BUDGETING Budgeting is the formulation of plans for a given future period in numerical terms. It is a method of looking ahead and attempting to solve problems before they arise.

USES OF BUDGET : 

USES OF BUDGET Optimum utilization of resources Performance evaluation Coordination Assignment of responsibilities Compelled planning Communication

BUDGETING PROCESS : 

BUDGETING PROCESS The method by which the annual budget is prepared will be differ from organization to organization. In some organization budgeting may be a well- organized, well documented procedures, while, in others the budget may be prepared in a rather ad hoc and disorganized manner. The budget process is shown below. The step in budgeting process representative to all organization is given below:

THE STEPS IN BUDGETING PROCESS : 

THE STEPS IN BUDGETING PROCESS Specification and communication of organizational objectives Determination of key success factors Establishment of clear lines of authority and responsibility Establishment of budget centers Determination of budget period Establishment of budget committee Appointment of budget controller Preparation of budget manual

CAPITAL BUDGETING : 

CAPITAL BUDGETING “capital budgeting is a long-term planning for making and financing proposed capital outlays.” - Charles T. Horngren,

SCOPE OF CAPITAL BUDGETIG DECISION : 

SCOPE OF CAPITAL BUDGETIG DECISION Expansion decision Replacement decision Choice of equipment Lease decision

IMPORTANCE OF CAPITAL BUDGETING : 

IMPORTANCE OF CAPITAL BUDGETING Heavy investment Permanent commitment of funds Long-term impacts on profitability Worth maximization of shareholders

THE CAPITAL BUDGETING PROCESS : 

THE CAPITAL BUDGETING PROCESS Project generation Evaluation Project selection Project execution

FINANCIAL PERFORMANCE : 

FINANCIAL PERFORMANCE

PROFIT BEFORE TAX : 

PROFIT BEFORE TAX

PROFIT AFTER TAX : 

PROFIT AFTER TAX

ANALYSIS : 

ANALYSIS Turnover for the year has touched a new high for the fourth year in succession thereby reaching the figure of Rs. 14410 Cr against Rs. 10336 Cr in 2004-05, an increase of 39.0 %. Value addition for the year 2005-06 stood at Rs. 4254 Cr against Rs. 5459 Cr for the year 2004-05, registering an increase of 28.3 %. Profit before tax for the year stood at Rs. 2484 Cr and is higher by 57.0 % as compared to the Rs. 1582 Cr in 2004-05. Profit after tax at Rs. 1621 Cr has increased by 70.0 % over the previous years of Rs. 953 Cr. Net worth increased by Rs. 7278 Cr to Rs. 6027 Cr. Debt-Equity Ratio improved from 0.09 in 2004-05 to 0.08 in 2005-06.

CONCLUSION : 

CONCLUSION During the training period I had studied about finance department of BHEL. With this study it can be clearly concluded that the BHEL shown a growth from last two years. Turnover is increased by 39.4 %, value addition increased by 28.3 %, in the same way profit after tax and profit before tax is increased by 70.0 % and 57.1 % respectively.

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