A DISSERTATION REPORT ON

Financial Ratio Analysis of Bharat Electronics Limited

 CONTENTS
Chapter No. Topic Page No.
1 Introduction Of the Topic 1-2
2 Objective of The Study 3
3 Methodology 4
4 Brief Explanations of Ratio 5-7
5 Classification of Ratio 8-13
6 Company Profile 14-20
7 Company Analysis & Interpretation 21-30
8 Finding 31-33
9 Recommendation 34
10 Conclusion 35
Annexure
Biblography

List of Table
No. Of Table Name of Tables Page No.
Table - 1 Liquidity Ratio Current Ratio 21
Quick Ratio 21
Table - 2 Leverage Ratio Debt to Equity Ratio 22
Interest Coverage Ratio 22
Table - 3 Efficiency Ratio Assets Turnover Ratio 23
Inventory Turnover Ratio 23
Debtors Turnover Ratio 23
Table - 4 Profitability Ratio Return on assets 25
Return on Equity 25
Return on Employed 25
Table - 5 Gross Profit Margin Ratio 26
Table - 6 Net Profit Margin Ratio 27
Table - 7 Capital Structure Earnings Per Share 27
Table - 8 Working Capital 28
Working Capital
Table - 9 Turnover Ratio 30
 List of Figure
No. Of Figure Name of Tables Page No.
Fig. - 1 Liquidity Ratio Current Ratio 21
Quick Ratio 21
Fig. - 2 Leverage Ratio Debt to Equity Ratio 22
Interest Coverage Ratio 22
Fig. - 3 Efficiency Ratio Assets Turnover Ratio 24
Inventory Turnover Ratio 24
Debtors Turnover Ratio 24
Fig. - 4 Profitability Ratio Return on assets 25
Return on Equity 25
Return on Employed 25
Fig. - 5 Gross Profit Margin Ratio 26
Fig. - 6 Net Profit Margin Ratio 27
Fig. - 7 Capital Structure Earnings Per Share 28
Working Capital
Fig. - 8 Turnover Ratio 30
 Chapter - 1
Introduction of the Topic
The manufacturing sector is crucial for employment generation and development
of an economy. Historically, the development process has witnessed a trend of
people shifting from agriculture to non-farm activities such as manufacturing and
services. This renders manufacturing crucial for India's development and
employment objectives. It is especially true given that agriculture comprises a
minor share of GDP, but accounts for a disproportionately large share in
employment.
Small and medium enterprises (SMEs) and micro small and medium enterprises
(MSMEs) account for 95 per cent of the total industrial activity in India and can
play a vital role in boosting employment generation. Estimates suggest, the SME-
MSME sector offers maximum opportunities for self-employment as well as jobs,
after the agriculture sector. In addition, the labour-capital ratio tends to be higher
for SMEs and MSMEs.
The National Manufacturing Policy is a positive step; the policy envisages
increasing the share of manufacturing to 25 per cent of GDP by 2022 and provides
employment to 100 million people. The policy is expected to focus on:

(i) improving the business environment and facilitating easy technology

acquisition and development;

(ii) providing access to capital for SMEs;

(iii) Enhancing the private sector's role in skill development.

Manufacturing has emerged as one of the high growth sectors in India. Prime
Minister of India, Mr NarendraModi, had launched the ‘Make in India’ program to
place India on the world map as a manufacturing hub and give global recognition

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to the Indian economy. India is expected to become the fifth largest manufacturing
country in the world by the end of year 2020*.
India is an attractive hub for foreign investments in the manufacturing sector.
Several mobile phone, luxury and automobile brands, among others, have set up or
are looking to establish their manufacturing bases in the country.
The manufacturing sector of India has the potential to reach US$ 1 trillion by 2025
and India is expected to rank amongst the top three growth economies and
manufacturing destination of the world by the year 2020. The implementation of
the Goods and Services Tax (GST) will make India a common market with a GDP
of US$ 2.5 trillion along with a population of 1.32 billion people, which will be a
big draw for investors.
With impetus on developing industrial corridors and smart cities, the government
aims to ensure holistic development of the nation. The corridors would further
assist in integrating, monitoring and developing a conducive environment for the
industrial development and will promote advance practices in manufacturing.

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 Chapter - 2
Objectives of the Study

This study endeavours to identify key financial ratios that point towards a
performance evaluation of Bharat Electronics Limited between the time frame
2015-2019. So the objective of this study are

1. To analyse current scenario of Indian Economy with special reference to the

manufacturing sector in India

2. To Evaluate the financial performance of Bharat Electronics Limited based

on its performance in last five years.

3. To compare the performance of the firm under different financial ratios.

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 Chapter – 3
Methodology

 Industry: Manufacturing Sector

 Type of Data: Secondary Data [Yearly]
 For Industry Analysis: 2015 to 2019
 Sources of Data:
 MoneyControl
 Annual Report
 Tools and Indicators Used:
 For Fundamental Analysis: Ratio
Liquidity Ratio Current Ratio, Quick Ratio
Leverage Ratio Debt Ratio, Debt to Equity Ratio,
Interest Coverage Ratio
Efficiency Ratio Assets Turnover Ratio, Inventory
Turnover Ratio, Debtor Turnover Ratio
Profitability Ratio Return Assets, Return on Equity, Return
on Capital Employed, Gross Profit
Margin, Net Profit Margin
Capital Structure Earnings Per share
Working Capital Ratio

 Software Used: MS-Excel has been used to create a Charts and Calculation.

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 Chapter - 4

Brief Explanations of Ratio

A Ratio is the relationship between one value and another. It is an expression of a

mathematical relationship between one quantity and another. The calculation of
ratios is an important technique for analysing and understanding profit and loss
accounts and balance sheets. Ratio analysis is the most widely used technique for
analysing and comparing financial reports. It analyses financial data from the
firm’s Profit and Loss Account and the Balance Sheet. It is a quantitative analysis
of information contained in a company’s financial statements. Ratio analysis is
used to evaluate various aspects of a company’s operating and financial
performance such as its efficiency, liquidity, profitability and solvency.

OBJECTIVES OF RATIO ANALYSIS: -

 To allow comparisons to be made which assists in predicting the future.
 To investigate the reasons for the changes.
 To see what the users can get from the accounting system output.
 To provide indicators of the firm’s past performance in terms of its
operational activity and profitability.
 To construct a simple explanations of a complicated financial statement by
its expression in one figure.
IMPORTANCE OF RATIO ANALYSIS: -
 Ratios are not only useful for internal management but also equally useful
for the prospective investors, creditors and outsiders.
 Ratios are the best instrument for testing solvency, liquidity, profitability
and management efficiency of any business.
 The ratio analysis can help the management to discharge their basic
functions of planning, forecasting, co-ordination and controlling the
activities of the business.

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 Ratios can play a vital role in communicating what has happened from one
period to another to the management outside shareholders or any other
interested parties.
 Ratios may be used as measure of efficiency.
 Ratios help to analyse the probable casual relation among different items
after analysing and scrutinizing the past results.
ADVANTAGES OF RATIO ANALYSIS: -

 Ratio analysis will help validate or disprove the financing, investment and
operating decisions of the firm. They summarize the financial statement into
comparative figures, thus helping the management to compare and evaluate
the financial position of the firm and the results of their decisions.

 It simplifies complex accounting statements and financial data into simple

ratios of operating efficiency, financial efficiency, solvency, long-term
positions etc.

 Ratio analysis helps identify problem areas and bring the attention of the
management to such areas. Some of the information is lost in the complex
accounting statements, and ratios will help pinpoint such problems.

 Allows the company to conduct comparisons with other firms, industry

standards, intra-firm comparisons etc. This will help the organization better
understand its fiscal position in the economy.

LIMITATIONS OF RATIO ANALYSIS: -

 The firm can make some year-end changes to their financial statements, to
improve their ratios. Then the ratios end up being nothing but window
dressing.

 Ratios ignore the price level changes due to inflation. Many ratios are
calculated using historical costs, and they overlook the changes in price level
between the periods. This does not reflect the correct financial situation.

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 Accounting ratios completely ignore the qualitative aspects of the firm. They
only take into consideration the monetary aspects (quantitative)

 There are no standard definitions of the ratios. So firms may be using

different formulas for the ratios. One such example is Current Ratio, where
some firms take into consideration all current liabilities but others ignore
bank overdrafts from current liabilities while calculating current ratio

 And finally, accounting ratios do not resolve any financial problems of the
company. They are a means to the end, not the actual solution.

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 Chapter - 5
Classification of Ratio

Neither the number of ratios is limited nor the purpose of analysis is uniform.
Therefore, set of ratios required will depend upon the purpose of analysis; type of
data available to the analyst etc. In general, the accounting ratios may be classified
on the following basis. Classification is not exclusive and may be overlapping in
certain cases. Ratios may be classified under certain categories; they are as
follows: -

 Liquidity ratios
 Leverage ratios
 Efficiency ratios
 Profitability ratios
 Capital Structure
Liquidity Ratios: -Liquidity ratios measure a company's ability to pay off its
short-term debts as they come due using the company's current or quick assets.
Liquidity ratios include the current ratio, quick ratio, and working capital ratio.

Current ratio: -The current ratio (CR) is equal to total current assets divided by
total current liabilities. This indicates the extent to which current liabilities can be
paid off through current assets.

Current Ratio =

Acid test ratio: -The acid test ratio, which is also known as the quick ratio,
compares the total of a company's cash, temporary marketable securities,
and accounts receivable to the total amount of the company's current liabilities.

Quick/Liquid/Acid Test Ratio=

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Leverage Ratios: - The leverage ratios, also called debt management ratios,
measure two key aspects of the use of debt financing by the firm. The use of debt
financing a called financial leverage. We want to know the level of financial
leverage used by the business as well as the ability of the firm to service its debt
obligations. The debt ratio, debt-equity ratio and interest cover is discussed below.

Debt ratio: -The debt ratio indicates the proportion of assets financed through both
short-term and long-term debt. This ratio is computed as total debt, which is the
sum of short-term and long-term debt, as a percentage of total assets. A higher
ration indicates higher leverage. A higher ration also means lower debt capacity in
that the ability for the firm to raise funds through more debt is lower due to already
high debt levels.

Debt ratio =

Debt to Equity Ratio: -The debt to equity ratio (D/E) is also widely used as an
indication of the level of financial leverage. While there are several ways of
computing this ratio, the most useful version is to express long term debt as percent
of total equity. Thus it focuses only on the long-term financing, both debt and
equity, and it is meaningful when we want to examine the long-term leverage.
Total equity includes both preferred equity and common equity. A higher debt
equity ratio indicates greater leverage and potentially higher financial risk.

Debt to Equity ratio =

Interest Coverage ratio: - The interest converge ratio, also known as the times-
interest earned (TIE), measures the ability of firm`s current operating earnings
(EBIT) to meet current interest obligations. It is the ratio of EBIT to interest
charge. The ratio shows number of times the interest payment is covered by the
firm`s operating earnings. The larger the coverage the better their ability of the
firm to service interest obligations on debt.

Interest Coverage Ratio =

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*Earnings before interest and Tax

Efficiency Ratios: -Efficiency ratios, also known as activity financial ratios, are
used to measure how well a company is utilizing its assets and resources. Common
efficiency ratios include:

Assets Turnover Ratio: -Asset turnover is a ratio that measures the value
of revenue generated by a business relative to its average total assets for a given
fiscal or calendar year. It is an indicator of how efficient the company is using both
the current and fixed assets to produce revenue.

Assets Turnover Ratio =

Average Assets =

Inventory/Stock Turnover Ratio: - Inventory turnover, or the inventory turnover

ratio, is the number of times a business sells and replaces its stock of goods during
a given period. It considers the cost of goods sold, relative to its
average inventory or a year or in any a set period of time.

Inventory/ Stock turnover ratio =

Average Inventory/stock =

Debtors Turnover Ratio- This ratio shows the number of day for which credit is
outstanding in the value of the amounts owed by the debtors. It gives an indication
of the efficiency or otherwise of the credit and collection policies of the firm

Debtor Turnover Ratio =

Average Debtors =

Profitability Ratio: - Profitability ratios are a class of financial metrics that are
used to assess a business's ability to generate earnings relative to its associated
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expenses. For most of these ratios, having a higher value relative to a competitor's
ratio or relative to the same ratio from a previous period indicates that the company
is doing well.

Return on Assets: - Return on assets (ROA) is an indicator of how profitable a

company is relative to its total assets. ROA gives a manager, investor, or analyst an
idea as to how efficient a company's management is at using its assets to generate
earnings. Return on assets is displayed as a percentage and its calculated as:

Return on Assets =

Return on Equity-Return on equity (ROE) is a measure of financial performance

calculated by dividing net income by shareholders' equity. Because shareholders'
equity is equal to a company’s assets minus its debt, ROE could be thought of as
the return on net assets. ROE is considered a measure of how effectively
management is using a company’s assets to create profits. ROE is expressed as a
percentage and can be calculated for any company if net income and equity are
both positive numbers.

Return on Equity=

Return on Capital Employed- Return on capital employed (ROCE) is a financial

ratio that measures a company's profitability and the efficiency with which its
capital is employed. ROCE is calculated as:

Return on Capital Employed=

Gross Profit Margin Ratio:- The gross profit is calculated by deducting all the
direct expenses called cost of goods sold from the sales revenue. The cost of goods
sold primarily includes the cost of raw material and the labour expense incurred
towards the production. Finally, the gross profit margin is calculated by
dividing the gross profit by the sales revenue and is expressed in terms of
percentage.

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 Gross Profit Margin =

Net Profit Margin Ratio: - The net profit which is also called profit after tax
(PAT) is calculated by deducting all the direct and indirect expenses from the sales
revenue. Then, the net profit margin is calculated by dividing the net profit by the
sales revenue and is expressed in terms of percentage.

Net Profit Margin =

Capital Structure: - The capital structure is how a firm finances its overall
operations and growth by using different sources of funds. Debt comes in the form
of bond issues or long-term notes payable, while equity is classified as common
stock, preferred stock or retained earnings. Short-term debt such as working capital
requirements is also considered to be part of the capital structure.

Earnings per share (EPS): - EPS is the portion of a company's profit allocated to
each share of common stock. Earnings per share serve as an indicator of a
company's profitability. It is common for a company to report EPS that are
adjusted for extraordinary items, potential share dilution. Most simply EPS is
calculated as:

Earnings per Share =

Working Capital Turnover Ratio: As its name suggests it is the relationship

between turnover and working capital. It is a measurement comparing the
depletion of working capital to the generation of sales over a given period. This
provides some useful information as to how effectively a company is using its
working capital to generate sales.

A company uses working capital to fund operations and purchase inventory. These
operations and inventory are then converted into sales revenue for the company.
The working capital turnover ratio is used to analyse the relationship between the
money used to fund operations and the sales generated from these operations.

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Working capital, also known as net working capital (NWC), is the difference
between a company’s current assets, such as cash, accounts receivable (customers’
unpaid bills) and inventories of raw materials and finished goods, and its current
liabilities, such as accounts payable. Net operating working capital is a measure of
a company's liquidity and refers to the difference between operating current assets
and operating current liabilities. In many cases these calculations are the same and
are derived from company cash plus accounts receivable plus inventories, less
accounts payable and less accrued expenses.

Working capital is a measure of a company's liquidity, operational efficiency and

its short-term financial health. If a company has substantial positive working
capital, then it should have the potential to invest and grow. If a company's current
assets do not exceed its current liabilities, then it may have trouble growing or
paying back creditors, or even go bankrupt.

where the term working capital is a measure of both a company’s efficiency and its
short-term financial health. Working Capital = ∑Current Assets - ∑Current
Liabilities

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 Chapter – 6
Company Profile
Bharat Electronics Limited
Registered Office: Outer Ring Road,Nagavara,
Bengaluru, 560045,Karnataka

Bharat Electronics Limited (BEL)

was set up at Bangalore by the
Government of India under the
Ministry of Defence in 1954 to
meet the specialized electronic
needs of the Indian defense services. Over the years, it has grown into a multi-
product, multi-technology, multi-unit company serving the needs of customers in
diverse fields in India and abroad.

BEL is among an elite group of public sector undertakings, which has been
conferred the Navratna status by the Government of India. The growth and
diversification of the company over the years mirrors the advances in the
electronics technology with which BEL has kept pace.

The company registered Rs 5,561.03 croreturnover for the year 2010-11.

NavratnaDefensePSU (BEL) has received the Dun & Bradstreet-Rolta Corporate
Award under the 'Electrical and Electronic Equipment' category for the year
2010. The company has also received the SCOPE (Standing Conference of
Public Enterprises) Meritorious Award for Corporate Governance for the year
2009-10.

History of the company:

Starting with the manufacturing of few communication equipment in 1956, BEL

went on to produce receiving valves in 1961, germanium semiconductors in
1962 and radio transmitters for All India Radio (AIR) in 1964. In 1966, BEL set

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up a radar manufacturing facility for
the Army and in-house R&D, which
has been nurtured 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 of black & white TV picture tubes, X-ray tubes and
microwave tubes was started. The following year, facilities for manufacture of
integrated circuits and hybrid micro circuits were set up.

In 1972 BEL started 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 the company
was set up at Ghaziabad in 1974 to manufacture radars and tropo communication
equipment for the Indian Air Force. The third unit was established at Pune in
1979 to manufacture Image Converters and Image Intensifier Tubes.

In 1980, BEL's first overseas office was set up in 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 programma in 1982. The
same year BEL successfully achieved a turnover of Rs100 crore.

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. 1985 also saw BEL manufacturing Low Power TV

Page | 15
Transmitters and TVROs on a large scale for the expansion of Doordarshan's
coverage.

In the year 1986, the company witnessed the setting up of the seventh unit at
Kotdwara to manufacture switching equipment, the eighth unit to manufacture
TV glass shells at Taloja, Navi Mumbai and the ninth unit at Hyderabad to
manufacture electronic warfare equipment.

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. The year 1989 saw
the manufacture of Telecom Switching and Transmission Systems as also the
setting up of the Mass Manufacturing Facility in Bangalore and the manufacture
of the first batch of 75,000 Electronic Voting Machines (EVMs).

The agreement for setting up BEL's first joint venture (JV) company, BE
DELFT, with Delft of Holland was signed in 1990. Recently the JV 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 of 20% and listing of
the company's shares on the 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 1,000 croreturnover. In 1997, GE BEL, the joint

venture company with GE, USA, was formed. In 1998, BEL set up its second
overseas office at Singapore to source components from South East Asia. The
year 2000 saw the Bangalore unit, which had grown very large, being
reorganized into Strategic Business Units (SBUs). There are seven SBUs in the
Bangalore unit. The same year, BEL's shares were listed on the National Stock
Exchange.

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In 2002, BEL became the first defence PSU to get operational Mini Ratna
Category I status. In June 2007, BEL was conferred the prestigious Navratna
status based on its consistent performance. During 2008-09, BEL recorded a
turnover of Rs 4624 crore.

The company entered in joint venture agreement with Multitone, UK to offer

most comprehensive on-site product ranges -- from small, easy to use pagers to
practical, durable private mobile radios and the latest technology, digital cordless
communication systems.

Subsidiaries

BEL Optronic Devices is a subsidiary company established for conducting

research, development and manufacture of image intensifier tubes and associated
high voltage power supply units for use in military, security and commercial
systems. The company is located in Bhosari Industrial Area, Pune. BEL also
owns another subsidiary under the name of Belop Financials.

Joint Ventures:

GEBE was set up in 1997 as a joint venture between Bharat Electronics Limited
and General Electric Medical System. The facility based at Whitefield,
Bangalore, India, manufactures X-ray tubes for RAD & F and CT systems, as
well as components such as High Voltage Tanks and Detector modules for CT
system. The products are exported worldwide and meet the safety and regulatory
standards specified by FDA, CE, MHW, AERB and the facility has been
accredited with ISO-9001; ISO-13485 and ISO-14001 certifications. GEBEL
also markets the conventional X-ray tubes made at Pune Unit of BEL.

The turnover of GEBEL during 2004-2005 was over Rs. 450 crore including an
export of over Rs. 430 crores. The company has been recognized for its
outstanding export performance since 1998 by the Export Promotion Councils.
The facility conforms to the high standards of Environment, Health & Safety and
is recognized as a GE Global Star site. Apart from manufacturing, a dedicated

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engineering team is working on the development of new technologies &
products to meet various customer needs.

BEL - Multitone:

BEL and Multitoned, UK, offers state- of- the- art Mobile Communication
Products for the workplace.Multitoned invented paging in 1956 when it
developed the world's first system to serve the 'life or death' environment of St.
Thomas Hospital, London. With the strength of Bharat Electronics in the Radio
Communications field and the technology of Multitoned in the field of Radio
Paging, the joint venture company is in a position to offer tailor made solutions
to the Mobile Communication needs at workplaces in various market segments.

The joint venture offers one of the most comprehensive on-site product 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

Products
Defence - Under this BEL
offers products for
communication, radars,
naval systems, opto
electronics, Electronic
Warfare systems, weapon
system, tank electronics
and simulators.

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Non defense - The Company offers products in area of switching equipment, TV
and broadcast, DTH, telecom, simputer, electronic voting machines and
electronic components.System/Turnkey Solutions - It offers C4I solutions,
SATCOM Networks and VTMS.

Services - It offers a range of services such as contract manufacturing, design

and manufacturing services, semiconductor device packaging, software
development and quality assurance facilities.

Customers The company caters to companies in area of Indian Defense

Services, Para -military forces, Radars & Sonars Indian Defence Services, Civil
Aviation, Meteorological Department, Space Department, Telecommunication
Department, Power Sector, Oil Industry, Railways, All India Radio,
Doordarshan, Police, State Governments, Public Sector Undertakings and many
more.

Exports BEL exports its products to countries like Indonesia, Egypt,

Switzerland, Botswana, Surinam, Malaysia, Russia, Brazil, Sri Lanka, Nepal,
Israel, South Africa, UAE, Uganda, Turkey, UK, Azerbaijan, Germany,
Zimbabwe, Kenya, Nigeria, Canada, Belgium, Italy, France, Malawi and
Mauritius.

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 CAPITALSTRUCTURE Company Details
PE (x) 20.69 Engineering -

Market 20759.77 Industrial

Capitalization Industry Equipment’s

EPS 26.06 Chairman MV. Gowtama

Managing
Dividend Yield % 3.99
Director MV. Gowtama
Dividend Per Share 7
Company
Face Value 2 Secretary S. Sreenivas
52 Week high 122.15 ISIN INE263A01024
52 Week low 72.55 Bloomberg
Code BHE IN
Beta 1.1445
Reuters
Book Value 1
Code BAJE.BO

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 Chapter - 7
Company Analysis & Interpretation

Bharat Electronics Ltd

Fundamental Analysis

1. Liquidity Ratios: -

Liquidity Ratio of Bharat Electronics Ltd

Year 2018-19 2017-18 2016-17 2015-16 2014-15

Current Ratio 1.52 1.45 1.61 1.87 1.89

Quick Ratio 1.09 0.98 1.05 1.38 1.46

Table: - 1. Source: ACE Equity of Bharat Electronics Ltd

Liquidity Ratio of Bharat Electronics Ltd

1.87 1.89
2 1.52 1.45 1.61 1.46
1.38
1.09 0.98 1.05
1

0
2018-19 2017-18 2016-17 2015-16 2014-15
Current Ratio Quick Ratio

Fig: - 1. Liquidity Ratio of Bharat Electronics Ltd

 The current ratio for financial year 2018-19 is 1.52(as per new format). As
compare to the past 5 year’s performance of Bharat Electronics Ltd, the
current ratio has increased, as in 18-19 it is1.52, in 17-18 it was 1.45, in
2016-17 it was 1.61, in 2015-16 it was 1.87 and in 2014-15 it was 1.89.
 The current ratio of financial year 18-19 implies that Bharat Electronics Ltd
market liquidity position is better and it can meet its creditors demand in
better way.

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  The quick ratio for financial year 18-19 is 1.09. As compared to the past 5
year’s performance of Bharat Electronics Ltd the quick ratio has decreased.
In 17-18 it was 0.98, in 2016-17 it was 1.05, in 2015-16 it was 1.38 and in
14-15 it was 1.46.
 It implies that Bharat Electronics Ltd has enough short-term assets to cover
its immediate liabilities without selling its inventory. The liquidity position
of the company is much better.

2. Leverage Ratios: -

Leverage Ratio of Bharat Electronics Ltd

Year 2018-19 2017-18 2016-17 2015-16 2014-15

Debt to Equity ratio 0.00 0.01 0.01 0.00 0.00

Interest Coverage 165.99 308.71 111.94 178.70 204.26

Ratio

Table: - 2. Source: ACE Equity of Bharat Electronics Ltd

Leverage Ratio of Bharat Electronics Ltd

350 308.71
300
250
204.26
200 165.99 178.7
150 111.94
100
50
0 0.01 0.01 0 0
0
2018-19 2017-18 2016-17 2015-16 2014-15
Debt to Equity ratio Interest Coverage Ratio

Fig: - 2. Leverage Ratio of Bharat Electronics Ltd

 The Debt to Equity Ratio for financial year 2018-19 is 0.00as per new
format). As compare to the past 5 year’s performance of Bharat Electronics
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 Ltd, the current ratio has decreased, as in 18-19 it is0.00, in 17-18 it was
0.01, in 2016-17 it was 0.01, in 2015-16 it was 0.00 and in 2014-15 it was
0.00.
 The Debt to Equity ratio of financial year 18-19 implies that Bharat
Electronics Ltd market liquidity position is not better.
 The interest Coverage ratio for financial year 18-19 is 165.99. As compared
to the past 5 year’s performance of Bharat Electronics Ltd the Interest
Coverage ratio has deceased. In 17-18 it was 308.71, in 2016-17 it was
111.94, in 2015-16 it was 178.70 and in 14-15 it was 204.26.
 It implies that Bharat Electronics Ltd has enough short-term assets to cover
its immediate liabilities without paying its inventors. The liquidity position
of the company is much better.

3. Efficiency Ratios: -

Efficiency Ratio of Bharat Electronics Ltd

Year 2018-19 2017-18 2016-17 2015-16 2014-15

Assets Turnover Ratio 0.63 0.59 0.52 0.45 0.43

Inventory Turnover 2.70 2.22 2.04 2.04 2.10

Ratio

Debtors Turnover 2.34 2.24 2.28 2.05 1.79

Ratio

Table: - 3. Source: ACE Equity of Bharat Electronics Ltd

Page | 23
 Efficiency Ratio of Bharat Electronics Ltd
3 2.7
2.5 2.34 2.22 2.24 2.28
2.04 2.04 2.05 2.1
2 1.78

1.5
1
0.63 0.59 0.52 0.45 0.43
0.5
0
2018-19 2017-18 2016-17 2015-16 2014-15

Assets Turnover Ratio Inventory Turnover Ratio Debtors Turnover Ratio

Fig: - 3. Efficiency Ratio of Bharat Electronics Ltd

 The Assets Turnover Ratio for the financial year 18-19 is 0.63%. As
compared to the past 5 year’s performance of Bharat Electronics Ltd the
Assets Turnover Ratio of the company is Over all increased which implies
that the company is utilized its assets to generate profit.
 The Inventory Turnover ratio for financial year 18-19 is 2.70%. As
compared to the past 5 year’s performance of Bharat Electronics Ltd the
Inventory Turnover Ratio of the company for financial year 18-19 is
Increased, which implies an Increased in the company’s ability to
generate profits without needing as much capital. Raising Inventory
Turnover Ratio is usually the no problem.
 The Debtors Turnover Ratio for financial year 18-19 is 2.34%. As compared
to the past 5 year’s performance of Bharat Electronics Ltd, the Debtors
Turnover Ratio ofthe company for financial year18-19 has increased, which
implies Bharat Electronics Ltd is rising in financial year 18-19.

Page | 24
 4. Profitability Ratio: -

Profitability Ratio of Bharat Electronics Ltd

Year 2018-19 2017-18 2016-17 2015-16 2014-15

Return on Assets 9.51 7.91 8.50 7.57 7.29

Return on Equity 21.45 17.87 17.63 14.84 15.19

Return on Capital 30.50 24.70 23.43 19.76 19.27

Employed

Table: - 4. Source: ACE Equity of Bharat Electronics Ltd

Profitability Ratio of Bharat Electronics Ltd

35
30.5
30
24.7
25 23.43
21.45
19.76 19.27
20 17.87 17.63
14.84 15.19
15
9.51 8.5
10 7.91 7.57 7.29
5

0
2018-19 2017-18 2016-17 2015-16 2014-15

Return on Assets Return on Equity Return on Capital Employed

Fig: - 4. Profitability Ratio of Bharat Electronics Ltd

 The return on asset for the financial year 18-19 is 9.51%. As compared to
the past 5 year’s performance of Bharat Electronics Ltd the ROA of the
company is Over all increased which implies that the company is utilized its
assets to generate profit
 The return on equity ratio for financial year 18-19 is 21.45%. As compared
to the past 5 year’s performance of Bharat Electronics Ltd the return on
equity ratio of the company for financial year 18-19 is increased, which
Page | 25
 implies an increase in the company’s ability to generate profits without
needing as much capital. Raising return on equity is usually to solve the
problem.
 The return on capital employed for financial year 18-19 is 30.50%. As
compared to the past 5 year’s performance of Bharat Electronics Ltd, the
return on capital employed of the company for financial year18-19 has
increased, which implies Bharat Electronics Ltd is gaining from its assets in
financial year 18-19.

5. Gross Profit Margin Ratio

Gross Profit Margin Ratio of Bharat Electronics Ltd

Year 2018-19 2017-18 2016-17 2015-16 2014-15

Gross Profit Margin 24.52 21.32 23.99 25.00 23.72

Table: - 5. Source: ACE Equity of Bharat Electronics Ltd

Gross Profit Margin Ratio of Bharat Electronics Ltd

26 25
25 24.52
23.99 23.72
24
23
22 21.32
21
20
19
2018-19 2017-18 2016-17 2015-16 2014-15
Gross Profit Margin

Fig: - 5. Gross Profit Margin Ratio of Bharat Electronics Ltd

 The Gross Profit Margin for financial year 18-19 is 24.52%. As compared to
the past 5 year’s performance of Bharat Electronics Ltd, the Gross Profit
Margin of the company for financial year18-19 has increased, which implies
Bharat Electronics Ltd is gaining from its Gross Profit in financial year 18-
19.
Page | 26
 6. Net Profit Margin Ratio

Net Profit Margin Ratio of Bharat Electronics Ltd

Year 2018-19 2017-18 2016-17 2015-16 2014-15

Net Profit Margin 15.19 13.42 16.24 16.87 16.83

Table: - 6. Source: ACE Equity of Bharat Electronics Ltd

Net Profit Margin Ratio of Bharat Electronics Ltd

20 16.87 16.83
15.19 16.24
15 13.42

10

0
2018-19 2017-18 2016-17 2015-16 2014-15
Net Profit Margin

Fig: - 6. Net Profit Margin Ratio of Bharat Electronics Ltd

 The Net Profit Margin for financial year 18-19 is 15.19%. As compared to
the past 5 year’s performance of Bharat Electronics Ltd, the Net Profit
Margin of the company for financial year18-19 has decreased, which implies
Bharat Electronics Ltd is gaining from its Net Profit in financial year 18-19.
7. Capital Structure: -

Capital Structure of Bharat Electronics Ltd

Year 2018-19 2017-18 2016-17 2015-16 2014-15

Earnings Per Share 7.74 5.88 6.20 5.07 4.53

Table: - 7. Source: ACE Equity of Bharat Electronics Ltd

Page | 27
 Capital Structure of Bharat Electronics Ltd
10
7.74
8
5.88 6.2
6 5.07
4.53
4
2
0
2018-19 2017-18 2016-17 2015-16 2014-15
Earnings Per Share

Fig: - 7. Capital Structure of Bharat Electronics Ltd

 The earnings per share in financial year 18-19 are Rs7.74. As compared to
the past 5 year’s performance the earnings per share is over all good in this
financial year as compared to financial year 17-18 has decreased and
earnings per share of financial year 16-17 has increased,
 This implies increased in the earning power of the company in financial
year 18-19

8. Working Capital

Working Capital
2018-19 2018-17 2017-16 2016-15 2015-14
Current Assets
Inventories 4443.35 4579.36 4881.67 4157.01 3424.21
Trade Receivable 5373.67 5014.30 4368.26 3721.91 3805.32
Cash And Cash
Equivlents 971.87 841.07 3827.19 7216.11 6037.92
Short term Loans
Advances 2100.04 1714.36 791.34 453.67 1596.35
Other Current Assets 2985.51 2155.43 198.04 283.96 72.55
Total Current Assets
(A) 15874.44 14304.52 14066.50 15832.66 14936.36
Current Liabilities
Trade Payables 1434.05 1368.99 1297.37 1162.26 1184.33
Other Current Liabilities 8533.88 8059.45 7022.81 6967.99 5405.62

Page | 28
Short Term Borrowings 0.00 13.70 13.58 28.39 24.73
Short Term Provisions 480.82 454.04 417.07 292.40 1281.98
Total Current
Liabilities (B) 10448.75 9896.18 8750.83 8451.04 7896.66
Working Capital (A-B) 5425.69 4408.34 5315.67 7381.62 7039.70
Table: - 8. Source: ACE Equity of Bharat Electronics Ltd

Interpretation:-It is obsevered from the table that in 2014-15, 2015-16, 2016-17,

and 2017-18 the working capital is Decreased. But from 2018-19 it is shown that
working capital is increased and there is a positive working capital which is a good
sign.

When a company has more current assets than current liabilities, it has positive
working capital. Having enough working capital ensures that a company can fully
cover its short-term liabilities as they come due in the next twelve months. This is
a sign of a company's financial strength.

However, having too much working capital in unsold and unused inventories, or
uncollected accounts receivables from past sales, is an ineffective way of using a
company's vital resources.

Positive working capital is closely tied to the current ratio, which is calculated as a
company's current assets divided by its current liabilities. If a current ratio is less
than 1, the current liabilities exceed the current assets and the working capital is
positive.

If working capital is temporarily negative, it typically indicates that the company

may have incurred a large cash outlay or a substantial increase in its accounts
payable as a result of a large purchase of products and services from its vendors.

However, if the working capital is positive for an extended period of time, it may
be a cause of concern for certain types of companies, indicating that they are
struggling to make ends meet and have to rely on borrowing or stock issuances to
finance their working capital.

Page | 29
 9. Working Capital Turnover Ratio : -

Working Capital Turnover Ration of Bharat Electronics Ltd

Year 2018-19 2017-18 2016-17 2015-16 2014-15

Working Capital 2.24 2.38 1.73 1.05 1.01

Turnover Ratio

Table: - 9 . Source: ACE Equity of Bharat Electronics Ltd

Working Capital Ratio of Bharat Electronics Ltd

2.5 2.38
2.24
2 1.73
1.5
1.05 1.01
1
0.5
0
2018-19 2017-18 2016-17 2015-16 2014-15
Working Capital Turnover Ratio

Fig: - 8. Working Capital Turnover Ratio of Bharat Electronics Ltd

 Positive working capital means that the company is able to pay off its short-
term liabilities. On the other hand, negative working capital means that a
company is currently unable to meet its short-term liabilities & obligations
with its current assets. In a general sense, the higher the working capital
turnover, the better because it means that the company is generating a lot of
sales compared to the money it uses to fund the sales.

Page | 30
 Chapter - 8
Findings
 The current ratio for financial year 2018-19 is 1.52(as per new format). As
compare to the past 5 year’s performance of Bharat Electronics Ltd, the
current ratio has increased, as in 18-19 it is1.52, in 17-18 it was 1.45, in
2016-17 it was 1.61, in 2015-16 it was 1.87 and in 2014-15 it was 1.89..
 The quick ratio for financial year 18-19 is 1.09. As compared to the past 5
year’s performance of Bharat Electronics Ltd the quick ratio has decreased.
In 17-18 it was 0.98, in 2016-17 it was 1.05, in 2015-16 it was 1.38 and in
14-15 it was 1.46.
 The Debt to Equity ratio of financial year 18-19 implies that Bharat
Electronics Ltd market liquidity position is not better.
 The interest Coverage ratio for financial year 18-19 is 165.99. As compared
to the past 5 year’s performance of Bharat Electronics Ltd the Interest
Coverage ratio has deceased. In 17-18 it was 308.71, in 2016-17 it was
111.94, in 2015-16 it was 178.70 and in 14-15 it was 204.26.
 The Assets Turnover Ratio for the financial year 18-19 is 0.63%. As
compared to the past 5 year’s performance of Bharat Electronics Ltd the
Assets Turnover Ratio of the company is Over all increased which implies
that the company is utilized its assets to generate profit.
 The Inventory Turnover ratio for financial year 18-19 is 2.70%. As
compared to the past 5 year’s performance of Bharat Electronics Ltd the
Inventory Turnover Ratio of the company for financial year 18-19 is
Increased, which implies an Increased in the company’s ability to
generate profits without needing as much capital. Raising Inventory
Turnover Ratio is usually the no problem.
 The Debtors Turnover Ratio for financial year 18-19 is 2.34%. As compared
to the past 5 year’s performance of Bharat Electronics Ltd, the Debtors

Page | 31
 Turnover Ratio ofthe company for financial year18-19 has increased, which
implies Bharat Electronics Ltd is rising in financial year 18-19.
 The return on asset for the financial year 18-19 is 9.51%. As compared to
the past 5 year’s performance of Bharat Electronics Ltd the ROA of the
company is Over all increased which implies that the company is utilized its
assets to generate profit
 The return on equity ratio for financial year 18-19 is 21.45%. As compared
to the past 5 year’s performance of Bharat Electronics Ltd the return on
equity ratio of the company for financial year 18-19 is increased, which
implies an increase in the company’s ability to generate profits without
needing as much capital. Raising return on equity is usually to solve the
problem.
 The return on capital employed for financial year 18-19 is 30.50%. As
compared to the past 5 year’s performance of Bharat Electronics Ltd, the
return on capital employed of the company for financial year18-19 has
increased, which implies Bharat Electronics Ltd is gaining from its assets in
financial year 18-19.
 The Gross Profit Margin for financial year 18-19 is 24.52%. As compared to
the past 5 year’s performance of Bharat Electronics Ltd, the Gross Profit
Margin of the company for financial year18-19 has increased, which implies
Bharat Electronics Ltd is gaining from its Gross Profit in financial year 18-
19.
 The Net Profit Margin for financial year 18-19 is 15.19%. As compared to
the past 5 year’s performance of Bharat Electronics Ltd, the Net Profit
Margin of the company for financial year18-19 has decreased, which implies
Bharat Electronics Ltd is gaining from its Net Profit in financial year 18-19.
 The earnings per share in financial year 18-19 are Rs7.74. As compared to
the past 5 year’s performance the earnings per share is over all good in this
financial year as compared to financial year 17-18 has decreased and
earnings per share of financial year 16-17 has increased,
Page | 32
 It is obsevered from the table that in 2014-15, 2015-16, 2016-17, and 2017-
18 the working capital is Decreased. But from 2018-19 it is shown that
working capital is increased and there is a positive working capital which is
a good sign.

Page | 33
 Chapter - 9
RECOMMENDATION

Understanding the problem faced by companies which can lead to a poor

performance.

The researcher has given the following recommendation.

Management of Bharat electronics limited continues its research to enhance the

predication and classification accuracy in the year before corporate failure. They
need to examine all logistics regression analysis that was applied estimate the
financial performance of different organization.

Beside one company the panel data needs to we selected from another companies
also more than five years. This research need to evaluate in terms of the financial
failure and success. As an organization manager needs to evaluate performance not
only on the bases key ratios but also seek after the Z score to estimate the future
financial health.

The key financial indicator can improve shareholders confidence share price and
dividend payout also need to be incorporated to improve nature of analysis.

Page | 34
 Chapter - 10
CONCLUSION

In the conclusion, researcher would like to mention that different accounting

policies restrict the use of ratios as they might district the company comparisons.
Companies refrain from window dressing of the financial analysis and reporting.
But dispute these limitations financial ratios are extensively used in evaluating the
performance and profitability of a firm. Bharat electronics limited leverage ratios,
efficiency ratio assets turnover ratio gives to indications of the financial stability of
the organization. Ratio analysis is required at all levels of the management as a
source of information for observing and learning about the company performance
against its competitors or its previous year. Ratios can also give information’s
about the bankruptcy or the growth of the company in the past few years.

Page | 35
 Annexure
Bharat Electronics Ltd. Profit And Loss [INR-Crore]
DESCRIPTION Mar-19 Mar-18 Mar-17 Mar-16 Mar-15
No of Months 12.00 12.00 12.00 12.00 12.00
INCOME :
Gross Sales 12164.17 10485.16 9220.70 7729.24 7112.22
Less: Inter divisional transfers
Less: Sales Returns
Less: Excise / GST 84.36 552.36 375.47 19.59
Net Sales 12164.17 10400.80 8668.34 7353.77 7092.63
EXPENDITURE :
Increase/Decrease in Stock -130.68 410.89 -408.11 -209.68 31.17
Raw Material Consumed 6037.64 5070.74 4800.41 4019.30 3866.79
Power & Fuel Cost 43.88 37.78 37.99 45.85 44.61
Employee Cost 1895.14 1787.57 1559.44 1267.21 1281.00
Other Manufacturing Expenses 156.14 165.84 139.87 158.73 185.28
General and Administration Expenses 218.50 183.97 169.48 149.69 143.03
Selling and Distribution Expenses 60.00 58.22 35.18 37.85 24.91
Miscellaneous Expenses 1115.92 902.90 620.75 551.87 340.66
Less: Expenses Capitalised
Total Expenditure 9396.54 8617.91 6955.01 6020.82 5917.44
Operating Profit (Excl OI) 2767.63 1782.89 1713.33 1332.95 1175.19
Other Income 214.77 452.22 498.74 599.57 511.67
Operating Profit 2982.40 2235.11 2212.07 1932.52 1686.86
Interest 15.93 6.36 17.87 9.74 7.44
PBDT 2966.47 2228.75 2194.20 1922.78 1679.42
Depreciation 338.13 271.72 211.63 191.96 166.15
Profit Before Taxation & Exceptional
Items 2628.34 1957.03 1982.57 1730.82 1513.27
Exceptional Income / Expenses
Profit Before Tax 2628.34 1957.03 1982.57 1730.82 1513.27
Provision for Tax 780.31 549.78 485.54 427.22 316.22
Profit After Tax 1848.03 1407.25 1497.03 1303.60 1197.05
Extra items
Minority Interest -0.27 0.69 0.21 0.64 0.16
Share of Associate 38.64 23.78 26.34 33.15
Other Consolidated Items
Consolidated Net Profit 1886.40 1431.72 1523.58 1337.39 1197.21
Adjustments to PAT
Profit Balance B/F 5020.85 4770.35 4417.03 3793.84 3145.57
Appropriations 6907.25 6202.07 5940.61 5131.23 4342.77
Equity Dividend % 340.00 200.00 225.00 170.00 292.00
Earnings Per Share 7.74 5.88 6.82 55.72 149.65
Adjusted EPS 7.74 5.88 6.20 5.07 4.53

Page | 36
 Bharat Electronics Ltd. Balance Sheet - [INR-Crore]
DESCRIPTION Mar-19 Mar-18 Mar-17 Mar-16 Mar-15

EQUITY AND LIABILITIES

Share Capital 243.66 243.66 223.36 240.00 80.00
Share Warrants &Outstanding’s 0.00 0.00 0.00 0.00 0.00
Total Reserves 8967.84 7772.02 7512.41 9006.16 8237.71
Shareholder's Funds 9211.50 8015.68 7735.77 9246.16 8317.71
Minority Interest 13.30 13.03 13.72 4.77 6.11
Long-Term Borrowings
Secured Loans 33.33 16.67 0.35
Unsecured Loans
Deferred Tax Assets / Liabilities -472.01 -430.06 -528.95 -458.60 -338.43
Other Long Term Liabilities 223.13 183.64 187.79 201.58 1.08
Long Term Trade Payables 0.26 0.05 0.57 0.02
Long Term Provisions 923.64 818.60 891.50 700.19 434.15
Total Non-Current Liabilities 675.02 605.56 567.01 443.74 97.16
Current Liabilities
Trade Payables 1434.05 1368.99 1297.37 1162.26 1184.33
Other Current Liabilities 8533.88 8059.45 7022.81 6967.99 5405.62
Short Term Borrowings 13.70 13.58 28.39 24.73
Short Term Provisions 480.82 454.04 417.07 292.40 1281.98
Total Current Liabilities 10448.75 9896.18 8750.83 8451.04 7896.66
Total Liabilities 20348.57 18530.45 17067.33 18145.71 16317.64
ASSETS
Non-Current Assets
Gross Block 3308.76 2512.18 1902.36 1421.87 2894.40
Less: Accumulated Depreciation 1011.26 673.24 401.38 190.03 1821.39
Less: Impairment of Assets
Net Block 2297.50 1838.94 1500.98 1231.84 1073.01
Lease Adjustment A/c
Capital Work in Progress 322.85 443.97 414.19 221.95 140.21
Intangible assets under development 526.18 496.08 328.62 207.84 0.12
Pre-operative Expenses pending
Assets in transit
Non-Current Investments 964.52 937.45 491.08 462.46 0.05
Long Term Loans & Advances 298.30 280.29 183.60 140.05 78.26
Other Non-Current Assets 64.78 229.20 82.36 48.91 89.64
Total Non-Current Assets 4474.13 4225.93 3000.83 2313.05 1381.28
Current Assets Loans & Advances
Currents Investments
Inventories 4443.35 4579.36 4881.67 4157.01 3424.21
Sundry Debtors 5373.67 5014.30 4368.26 3721.91 3805.32
Cash and Bank 971.87 841.07 3827.19 7216.11 6037.92

Page | 37
Other Current Assets 2985.51 2155.43 198.04 283.96 72.55
Short Term Loans and Advances 2100.04 1714.36 791.34 453.67 1596.35
Amt Due from firm (directors
interested)
Total Current Assets 15874.44 14304.52 14066.50 15832.66 14936.36
Net Current Assets (Including Current
Investments) 5425.69 4408.34 5315.67 7381.62 7039.70
Total Current Assets Excluding Current
Investments 15874.44 14304.52 14066.50 15832.66 14936.36
Miscellaneous Expenses not written off
Total Assets 20348.57 18530.45 17067.33 18145.71 16317.64
Contingent Liabilities 1060.03 2421.93 1681.27 780.39 626.12
Total Debt (Long Term Plus Short
Term) 33.34 80.36 63.58 28.39 25.27
Book Value 37.80 32.90 34.63 385.26 1039.71
Adjusted Book Value 37.80 32.90 31.49 35.02 31.51

Page | 38
Bibliography

 Books
o Corporate India (Magazine)
 Bibliography
o www.tradingeconomics.com
o www.investopedia.com
o www.indiainfoline.com
o www.indianecomomy/deficitfinancing
o Ace equity.

Page | 39
Thank you

Page | 40