BEML fianl

EXECUTIVE SUMMARY

The ultimate objective of the company is to maximize the wealth. It is possible through

the effective performance. So effectiveness of the performance of a company can be

analyzed by using the different items of the financial statements using different tools. The

reason behind the selection of the particular topic is to determine the reasons for

irregularity and consistency in the performance by comparing the financial statement of

last 5 years.

Depending upon the statement of the problem objectives is framed. The objective of

the study is to analyze the changes taken place in the financial statements for the period

of 5 years and also find the effect of these changes on the financial performance. There

are different tools to analyze the financial performance of the company. Here ratio

analysis is used for the period of 5 years. The study includes the data collection through

the discussion with senior manager as well as the other staff from the finance department.

BEML is a heavy engineering manufacturing company. They undertake large projects

which extend over a period of financial year. The total target for the year 2012-13 is

4,000crores and BEML is going to celebrate 50th Anniversary in the 2013-14 and the

target fixed is 5,000 crores.

CMR INSTITUTE OF MANAGEMENT STUDIES

Introduction

The Government-owned corporations are termed as Public Sector Undertakings

(PSUs) in India. In a PSU majority (51% or more) of the paid up share capital is held by

Central Government or by any State Government or partly by the Central Governments

and partly by one or more State Governments. The Comptroller and Auditor General of

India (CAG) audits Government companies.

Post Independence, India was grappling with grave socio-economic problems,

such as inequalities in income and low levels of employment, regional imbalances in

economic development and lack of trained manpower, weak industrial base, inadequate

investments and infrastructure facilities. Hence, the roadmap for Public Sector was

developed as an instrument for self-reliant economic growth. The country adopted the

planned economic development polices, which envisaged the development of PSUs.

Initially, the public sector was confined to core and strategic industries. The second phase

witnessed nationalization of industries, takeover of sick units from the private sector, and

entry of the public sector into new fields like manufacturing consumer goods,

consultancy, contracting and transportation etc.

The Industrial Policy Resolution 1948 outlined the importance of the economy and its

continuous growth in production and equitable distribution. In this process, the policy

envisaged active engagement of the State in development of industries.

The Industrial Policy Resolution 1956 classified industries into three categories with

respect to the role played by the State -

The first category (Schedule A) included industries whose future

development would be the exclusive responsibility of the State

The second (Schedule B) category included Enterprises whose initiatives

of development would principally be driven by the State but private

participation would also be allowed to supplement the efforts of the State


The third category included the remaining industries, which were left to

the Private sector.

Two hundred years of colonial rule crushed Indian Industry and exhausted

resources. At the point of Independence, the leadership was convinced that political

freedom without economic freedom was of little use. However, most of the private

entrepreneurs did not have the vision, resources or capability or even the will to

undertake heavy investments in core sector industries which have long gestation

periods. Besides, given the ideological environment and shortage of supplies, it was

only natural for the Government not to choose a system controlled by the Private

enterprise.

Initially, the public sector was confined to core and strategic industries. Projects like

the Damodar Valley Cooperation, Sindhri Fertilizers and Chemicals, Indian

Telephone Industries, Hindustan Machine Tools, Steel plants, Aircrafts,

Shipbuilding, Bharat Heavy Electricals, Oil and Natural Gas Commission, and a host

of others. The second phase saw mainly three trends, a nationalization spree, and

takeover of sick units from the private sector, and entry of the public sector in new

fields like, Manufacturing consumer goods, Consultancy, Contracting, and

Transportation etc. Many foreign firms like Jessop & Co, Braithwaite & Co, and

Burn & Co etc were nationalized. Several hundred life insurance companies were

absorbed into the Life Insurance Corporation. Hundreds of coal mines were

transferred to the Coal Mines Authority. Then the public sector entered into fields

like making medicine, weaving cloth, and running hotels. During the 1970s and

1980s the growth was phenomenal, wherein it undertook works like providing power

and potable water, laying roads, constructing townships with basic amenities like

schools, markets, hospitals and recreation clubs.

The public sector attracted the best talent in the country. It not only provided jobs to

people in different regions, but invariably employed all the displaced people as well.


The public sector has to a large extent succeeded in meeting the objectives and

laying a strong foundation for the industrial development of the country. It is widely

recognized that the public sector management is based on strong systems and

processes which is not usually the case with the private sector. At the height of its

development, the public sector was less concerned with making profits and more

with nation building activities. Also, huge investments were made in sectors which

did not promise adequate return on the capital invested.

Post-1991, with declining revenues, and budgetary gaps, the government withdrew

its budgetary support, and increased the pressure on them to produce profits, and

thus dividends. While, their social and other gains were taken for granted, PSEs were

criticized for not producing adequate profits and for entering into fields like Tourism

and food supplies. This was partly the result of the global movement to private

industry.

Over the years, a focused bureaucratic and inflexible approach led to the sapping of

the autonomy. Somewhere down the lane, the government lost clarity in its roles of

Governance, as investor, regulator and business manager. The Government paid

little heed to the Constitution of the board of directors, and hardly empowered them.

There are a large number of private sector units today, where ownership rests with

Government owned Finance institutions. These companies are not hampered by

bureaucratic control, and therefore are able to perform much better. Privatization

may have served as a panacea to some of the developed countries, but a country like

India has to find its own solutions bearing in mind its needs. There is a virtue in

following a middle path.


Public Sector Undertakings (PSUs) have laid a Ground foundation for the industrial

development of the country. The public sector is less concerned with making profits.

Hence, they play a key role in nation building activities, which take the economy in the

right direction. PSUs provide leverage to the Government (their controlling shareholder)

to intervene in the economy directly or indirectly to achieve the desired socio-economic

objectives and maximize long-term goals. As agriculture is the backbone of Indian

economy, Public Sector Banks (PSBs) play a crucial role in pushing the agricultural

economy on to the progressive pathway and helping develop rural India. Moreover, PSUs

play a substantial role in the rural development by providing basic infrastructural services

to citizens.

CLASSIFICATION OF PUBLIC SECTOR UNDERTAKINGS

Public Sector Undertakings (PSUs) can be classified as Public Sector Enterprises

(PSEs), Central Public Sector Enterprises (CPSEs) and Public Sector Banks (PSBs).

Public Sector Enterprises (PSEs)

CHARACTERISTICS OF PSE

(a) Government Ownership and Management: The public enterprises are owned and

Managed by the Central or State Government, or by the Local authority. The

Government may either wholly own the public enterprises or the ownership may partly

Be with the government and partly with the private industrialists and the public. In any

Case the control, management and ownership remains primarily with the government.

(b) Financed from Government Funds: The public enterprises get their capital from

Government Funds and the Government has to make provision for their capital in its

Budget.

(c) Public Welfare: Public enterprises are not guided by profit motive. Their major focus


Is on providing the service or commodity at reasonable prices.

(d) Public Utility Services: Public sector enterprises concentrate on providing public

Utility services like Transport, Electricity, and Telecommunication etc.

(e) Public Accountability: Public enterprises are governed by public policies formulated

By the Government and are accountable to the Legislature.

(f) Excessive Formalities: The Government rules and regulations force the public sector

Enterprises to observe excess formalities in their operations. This makes the task of

Management very sensitive and cumbersome.

Central Public Sector Enterprises (CPSEs)

The Central Public Sector Enterprises (CPSEs) are also classified into 'strategic' and 'non-

strategic'. Areas of strategic CPSEs are:

Arms & Ammunition and the allied items of Defence equipments, Defence air-

crafts and Warships

Atomic Energy (except in the areas related to the operation of nuclear power and

applications of radiation and radio-isotopes to agriculture, medicine and non-

strategic industries)

Railways transport

Central public sector enterprise has been the mainstay of the Indian economy and were

set up with the mandate to

i) Serve the broad macro-economic objectives of higher economic growth,

ii) Achieve self-sufficiency in production of goods/ services,

iii) Facilitate long term equilibrium in balance of payments and

iv) Ensure stability in prices and create benchmarks for prices of essential items.

With the onset of economic reforms in 1991, the Government initiated a Systemic shift to

a more open economy with greater reliance upon market Forces and large role of the


private sector including foreign investment. Consequently, the CPSEs were exposed to

competition from domestic private Sector companies as well as the large Multi-National

Corporations. Given the Competitive environment, the CPSEs undertook significant

initiatives for up Scaling technologies and capacities in order to operate at par with the

private Counterparts in the liberalized economy. With continued focused efforts

Towards achieving excellence, several of the CPSEs have become self reliant and are

playing a critical role in building the Indian economy.

Public Sector Banks (PSBs).

Among the Public Sector Banks in India, United Bank of India is one of the 14 major

banks which were nationalized on July 19, 1969. Its predecessor, in the Public Sector

Banks, the United Bank of India Ltd., was formed in 1950 with the amalgamation of four

banks viz. Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918),

Comilla Union Bank Ltd. (1922) and Hooghly Bank Ltd. (1932).

Oriental Bank of Commerce (OBC), a Government of India Undertaking offers

Domestic, NRI and Commercial banking services. OBC is implementing a GRAMEEN

PROJECT in Dehradun District (UP) and Hanumangarh District (Rajasthan) disbursing

small loans. This Public Sector Bank India has implemented 14 point action plan for

strengthening of credit delivery to women and has designated 5 branches as specialized

branches for women entrepreneurs.

ROLE OF PUBLIC SECTOR UNDERTAKINGS

Public Sector Undertakings (PSUs) have laid a strong foundation for the industrial


development of the country. The public sector is less concerned with making profits.

Hence, they play a key role in nation building activities, which take the economy in the

right direction.

PSUs provide leverage to the Government (their controlling shareholder) to intervene in

the economy directly or indirectly to achieve the desired socio-economic objectives and

maximize long-term goals.

As agriculture is the backbone of Indian economy, Public Sector Banks (PSBs) play a

crucial role in pushing the agricultural economy on to the progressive pathway and

helping develop rural India. Moreover, PSUs play a substantial role in the rural

development by providing basic infrastructural services to citizens.

GOVERNANCE OF PUBLIC SECTOR UNDERTAKINGS

The Department of Public Enterprise acts as a Nodal agency for all Public Sector

Enterprises (PSEs).

The important roles and tasks of the Department are:

General policy relating to Public Sector.

Matters relating to issue of Presidential Directives and guidelines to Public Sector

Enterprises.

Formulation of policy guidelines pertaining to Public Sector Enterprises in areas

like performance improvement and evaluation, financial management, personnel

management, board structures, wage settlement, training, industrial relation,

vigilance, performance appraisal, etc.

Matters relating to reservation of posts in the public sector enterprises for certain

classes of citizens.

All matters relating to Memorandum of Understanding between the Public Sector


Enterprises and the administrative Ministries/Departments.

Matters relating to delegation of powers to Board of Directors.

To undertake in depth studies in respect of significant areas of functioning of

Central PSEs.

Matters relating to ICEP International Center for Public Enterprise.

Matters relating to SCOPE Standing Conference of Public Enterprise.

To monitor and evaluate the performance of PSEs and to act as a repository of

data and to bring out an Annual Survey for the Parliament.

Permanent Machinery of Arbitrators for settlement of disputes among public

sector enterprises and Government Departments except disputes relating to tax

matters.

Appraisal of proposal from different administrative Ministries/Department.

Pertaining to restructuring, revival, joint venture etc.

INTRODUCTION TO FINANCE


Finance is lifeblood of the economy. It is one of the major components, which

activates and stimulates the overall growth of the economy.

Finance is a body of principles and theories, which deals with rising, and acquiring of

funds on reasonable terms, and use of money by the acquirer.

Definition:

Husband and Dockeray: “Something must direct the flow of economic activity and

facilitate its smooth operation. Finance is the agent that produces this result.

In the modern money oriented economy, finance is one of the basic foundations of all

kinds of economic activities. It is a master key, which provides access to all the

sources. It is rightly said that, “Business needs money to make more money”.

Efficient management of every business enterprise is closely linked with efficient

management of finance. Hence, a well-knit financial system directly contributes to

the growth of the economy.

BUSINESS FINANCE

Business finance is that business activity, which is concerned with the acquisition and

conservation of capital finds to meet financial needs and overall objectives of a

business enterprise.

Financial functions of a business may be stated as the procurement of funds and their

effective utilization.


FINANCIAL MANAGEMENT

Sound financial management is necessary in every organization. Collins Brooks has

remarked that, “Bad production management and sales management have stain in

hundreds, but, a faulty financial management have stain in thousands”.

Financial management is a managerial activity, which is concerned with the

anticipation of financial needs, acquiring financial resources, allocating funds in

business, administrating the allocation of funds and accounting and reporting to the

management over the financial matters.

RATIO ANALYSIS

Financial statement no doubt, contains the items related to profit and loss and financial

position of a concern, but the items found in financial statement will not be much use, if

they are considered independently. They will be very use, if they are considered in the

light of another, i.e., compared.

In this regard, ratio analysis is a powerful tool. A ratio is defined as “The indicated

quotient of two mathematical expressions” and “as the relationship between two or more

items”.It is used as an index or yardstick for evaluating the financial position and

performance of a firm. Ratio analysis is the technique of the calculation of number of

accounting adios from the data found in the financial statements , the comparison of the

accounting ratios with those of the previous years or with those of the concerns engaged

in similar line of activities or with those of standard or ideal ratios and interpretation of

the comparison there after.

Ratios can be expressed in two ways:

In the terms of time. Eg.: current assets to current liabilities =1.36 times

In terms of percentage. Eg.: net profit to net sales=50%


CLASSIFICATIONOF ACCOUNTING RATIOS

Accounting ratios can be classified mainly on 2 bases:

I. On the basis of origin or source of figures placed in relation

with each other:

(a) Balance sheet ratios or financial ratios

(b) Profit and loss account ratios or operating ratios

(c) Mixed or combined or inter-statement ratios

II. On the basis of nature and functions of the accounting ratios:

(a) Liquidity ratios

(b) Leverage ratios

(c) Turnover ratios

(d) Profitability ratios

LIOUIDTY RATIOS OR SHORT-TERM SOLVECY RATIOS

The importance of liquidity in the sense of the ability of a firm to meet current or

short-term obligations when they. Become due for payment can hardly be over-

stressed. This liquidity ratio measures the ability of a firm to meet its short –term

obligations and reflect short-term financial strength or solvency of a firm.

The most common ratios which measure the liquidity of a are:

1. Current ratio or working capital ratio

2. Quick ratio or Acid test ratio or Liquid ratio or Liquidity ratio

3. Absolute liquid ratio or Cash position ratio or Cash ratio

4. Inventory to Working capital ratio

5. Net working capital ratio


LEVERAGE/ CAPITAL STRUCTURE/LONG TERM SOLVENCY RATIO

Leverage Ratios are the financial ratios, which throw light on long-term solvency of a

firm as reflected in its ability to assure the long-term creditors with, regarded to

Periodic payment of interest during the period of loan

Repayment of principal on maturity or in pre determined installments

at due dates

There are thus, two aspects of the long term solvency of a firm

Ability to repay the principal when due &

Regular payment of interest

Accordingly, there are two different, but, mutually dependent & interrelated,

Types of leverage ratios

(a) First, ratios are based on the relationship between borrowed

finds & owners capital. Their ratio are computed from the balance sheet & have many

variations, such as

Debt Equity Ratio/ External-Internal Ratio

Property/Equity Net worth Ratio

Solvency Ratio

Fixed Asset to Net worth Ratio

Current Asset to Net worth Ratio

Current Liabilities to Net worth Ratio

Capital Gearing Ratio

Fixed Assets Ratio

(b) The second type of capital structure ratios, popularly called as

Coverage Ratios are calculated from profit & loss account included in this category

Dividend coverage Ratio

Total Fixed Charges Ratio

Interest Coverage Ratio


Activity/ Performance / Turnover Ratios

Activity Ratios refers to Ratios, which measures the level of activates, the

performance or the operating efficiency of an enterprise. They may be the defined as

the test of relationship between sales & various assets of the firm. Several Activity

Ratios are calculated to judge the effectiveness of asset utilization.

The important Activity Ratios are

1. Inventory/Stock Turnover Ratio

2. Receivable /debtors Turnover ratio/debtors Velocity

3. Creditors Turnover Ratio/creditors Velocity

4. Cash Turnover Ratio/Cash Velocity

5. Assets Turnover Ratio/Investment Turnover Ratio

6. Sales to net worth Ratio

7. Working Capital Turnover Ratio

Profitability Ratios

Profit is the difference between revenues & expenses over a period of time. Profit is

the ultimate output of the company & it will have no future if it fails to make

sufficient profits.

Profitability Ratios reveal the total effect of the business transactions on the profit

position of the enterprise & indicate how far the enterprise has been successful in its

aim.

1) Profit Ratios Related to Sales

2) Profitability in Relation to Investment


1. Profit Ratios Related to Sales

These are the ratios, which are based on the premise that a firm should earn sufficient

profit on each rupee of sales, the difference ratios under this head are:

i. Profit Margin Ratio

Measures the relationship between profit & sales. The ratios under this category

are:

o Gross Profit Ratio

o Net Profit Ratio

ii. Expenses Ratio

Expenses refer to operating expenses of a firm exclusive of financial expenses

like interest, taxes & dividends & extra ordinary losses due to theft of goods,

goods loosed by fire etc. Different expense ratios are

o Operating Expenses Ratio

o Cost of Goods Sold Ratio

o Specific Expenses Ratio

2. Profitability Ratios Related to Investments

This is based on the exit that a firm should earn reasonable profits on the

capital invested. The different ratios under this category are

o Return on Assets

o Return on Capital Employed

o Return on Share holder’s Equity Funds

o Earnings Per Share

o Dividend Per Share

o Dividend Payout Ratio

o Earnings & Dividend Yield

o Price-Earnings Ratio


FUND FLOW ANAYSIS

FUND

The term fund may be interpreted in various ways, namely as cash, as total current

assets & as net current assets or net working capital.

FUND FLOW

Flow of fund means changes in the amount of fund or net working capital. There is said

to be flow of fund when a business transaction results in change, either in an increase or

in a decrease in the amount of fund or net working capital. If a transaction results in an

increase in the amount of fund, it is considered as source of fund. If a transaction results

in decrease of fund, it is considered as an application/use of fund.

FUND FLOW STATEMENT

A fund flow statement is a statement of fund or net working capital. It is also be a

condensed report of how activities of a business have been financed & how the

financial resources have been used during the period conversed by the statement.

Steps Involved in the Preparation of fund Flow statement:

i. Preparation of schedule of change in working capital.

ii. Preparation of adjusted profit & loss account to find out funds from operation.

iii. Preparation of fund flow statement.


Steps Involved in the Preparation of Fund Flow statement:

i. Preparation of schedule of change in working capital.

ii. Preparation of adjusted profit & loss account to find out funds from

Operation.

iii. Preparation of fund flow statement.

Significance

A fund Flow statement is useful in following ways:

It is helpful in knowing sources of fund.

It suggests the way in which working capital .Position can be improved.

It is useful in forecasting the fund flow & in projecting the working capital.

Requirements

It can be used in planning a sound dividend policy.

It is helpful in planning the temporary investment of ideal fund.

On a comparison of the fund flow statements of a concern for a numbers of

years, the information about the financial method used in part can be obtained.

CASH FLOW ANALYSIS

CASH FUND

It includes only cash along with bank balance.

CASH FLOW

It means actual flow or movement of cash in & out of an enterprise. The increase in the

cash balance implies the inflow of cash, source of cash or positive cash flow. The


decrease in the cash balance indicates the out flow of cash, application of cash or

negative cash flow.

CASH FLOW STATEMENT

It is a statement, which depicts the change in the cash position of a concern between one

balance sheet dates to another. A cash flow statement is prepared by taking into account

the opening & closing cash & bank balances, various sources of cash & various uses of

cash.

STEPS

Ascertainment of operating cash profit.

i) Ascertainment of cash flow from operations.

ii) Preparations of cash flow statement.

Significance

It gives penetration review of cash movements over an operating cycle.

i. It is helpful to a concern to evaluate its current cash position.

ii. It facilitates affective & efficient cash planning.

iii. It helps the management to analyze the past behavior of the cash cycle, & to

control the uses of cash in future.

iv. It is helpful in determining the policies of financial management like dividend

Payments, repayments of long-term loans etc


RESEARCH DESIGN

INTRODUCTION

The public sector undertakings, today occupies the key position in the economy it

is already grown into an Industrial giant with more than 20,000 crores of investment

about 1/4th of the finance to railways. Therefore it can be said that Public Sector

Company is on a growing phase. The funds required by the company to carry on its

business effectively and efficiently are determined by these financial statements which

give a brief idea to allocate the resources in the right manner which could ease up the

difficulty in planning the fund flows effectively. So the study reveals the manner in

which the company performs these activities in order to distribute it accordingly and

bring the company profits than incurring losses.

PROBLEM STATEMENT

The study is based on the performance evaluation of the public sector

undertaking, as initially post-independence the public sector undertaking were making

huge losses due to inappropriate management of resources, poor management and

insufficient financial resources. When company is earning average profit and is a head of

its competitors in terms of the market share then the company is considered to be

performing well.

OBJECTIVE OF THE STUDY

To study the liquidity and profitability position of the company.

To analyze the financial statement using ratio analysis tools.

To study the financial position of BEML over past 5 years.


RESEARCH DESIGN

Sources of Data

Primary data:

Primary data will be collected through personal interview with the company officials.

Secondary data

Secondary data will be collected through the following

Company annual reports

Magazines

Websites.

PLAN OF ANALYSIS

Data collected are presented through

Tables

Charts

Graphs

Diagrams

The data collected will be analyzed through ratio analysis.

SCOPE OF STUDY

The findings of this project would provide an insight into performance evaluation

of a public sector undertaking, enabling the companies to compare their performance

with the other public sector undertaking. Further the findings of this research would also

facilitate researchers, academicians & fellow students pursing on similar topics.


LIMITATIONS OF THE STUDY

Time constraint.

Some of the data cannot be collected due to confidential policies of the

undertaking.

Area of the study is restricted only to Bangalore complex.


INDUSTRY PROFILE

In early days rails called wagon were being used in Germany as early as 1550.

The primitive railed roads consisted of wooden rails over which horse driven wagons or

carts moved with greater ease than over dirt and roads. Wagon was the beginning of

modern railways. By 1776, iron had replaced the wood rails and wheels of carts. Wagon

ways evolved into Tramways and spread throughout Europe. Horses still provide all

pulling power. In 1789, Englishmen, William Jessup designed the first wagon with

flanged wheels. The flange was a groove that allowed the wheels to better grip the rail

this was an important design that carried over to later locomotives.

The invention of steam engine was critical to the invention of modern railroad and

trains. In 1803 a man named Samuel Homfray decided to fund the development of steam

powered vehicles to replace horse driven carts on tramway locomotive. On (1771-1833)

built that vehicle, the first steam engine tramway locomotive. On February 22, 1804, the

locomotive hauled a load of tonnes of iron, 70 men and five extra wagons the 9 miles

between the ironworks at Pen-y-Darron in the town of Merthyr Tydin, Wales to the

bottom of the valley called Abercynnon. It took about two hours.

In 1821, English, Julius Griffith was the first person to patent a passenger

locomotive. In September 1825 the Stockton and Darlington railroad company began first

railroad to carry both goods and passengers on regular schedules using locomotives

designed by English inventor, George Stephenson. Stephenson’s locomotive pulled six

loaded coal cars and 21 passenger cars with 450 passengers over 9 miles in about one

hour.

George Stephen is considered to be the inventor of the first stem engine for the

railways. Richard Trevithick’s invention is considered the first tramway locomotive,

however, it was a road locomotive, designed for a road and not for a railroad. Stephenson

was extremely poor and receiving very little formal education. He worked in local

collieries and was self-taught and reading and writing .In 1812, he became a colliery


engine builder and in 1814 he built the line’s first locomotive, the Locomotion. In 1825,

Stephenson moved to Liverpool and Manchester railway, where together with his son

Robert built (1826-29) the Rocket. Colonel John Stevens is considered the Father of

American Railroad.

In 1826 Stevens demonstrated the feasibility of steam locomotion on a circular

experimental track constructed on his estate in Hoboken, New Jersey. The first railroad

charter in North America was granted to John Stevens in 1815. The Pullman Sleeping car

was invented by George Pullman in 1857.It was designed to as a sleeper coach designed

for overnight passenger travel.

Advanced Train System

In 1960s and early 1970s, considerable interest developed in the possibility of building

tracked passenger vehicles that could travel much faster than conventional trains. From

1970’s, interest in an alternate high-speed technology centered on magnetic levitation, are

maglev. This vehicle rides on an air cushion created by electromagnetic reaction between

an on board and another embedded in its guide way.

Rail coach industry in India

India has been ruled by foreigners for several years and such, after independence

India has given priority to strengthen the country’s defence force. Several industries

producing defence equipment’s has been started by Government of India. India felt the

need of having strong defence, which is capable of defending its borders from

neighbour’s. In this view, the Ministry of Defence has established BEML.

BEML was mainly establish to produce equipment’s and heavy capital

equipment’s like railway coaches, Earth movers, machineries etc. ministry of defence

started one unit of BEML at Bangalore, In the year 1964. It is one of biggest unit in Asia.

BEML has number of branches all over India. Its various units in different parts

of the country have immensely contributed to the growth of the Indian economy. It not

only has provided employment but also successfully achieved the advantage of


economies of scale. Ancillary and small-scale industries have also been started around its

vicinity. It is contributing to the economic growth both directly and indirectly. It has

emerged as a powerful industries unit of Indian economy.

India’s heavy earth equipment and spare parts manufacture various capacities

ranging from mini version to giants. Overseas manufacture equipment’s and spare

exports to our country. Hence providing stiff competition.

Domestic manufactures

CLW: Large-scale loco productions in India did not begin until the establishment

of the Chittaranjan Locomotive works (CLW) in 1950.

DWL: the diesel loco works set up at Varanasi began producing diesel loco’s in

1967, and has since then produced a large number of main line and shunt diesels.

Variants of various classes in WDS and WDG series are supplied to industrial concerns

as well.

ICF: Integral Coach Factory has been making Emu’s for sub urban systems (e.g.

the YAU-I MG-4EMU) since 1966. It also makes some self-propelled special-purpose

units, such as the diesel Medical Relief Van and diesel electric tower cars.

Venkateshwara Transmission (Ventra) of Medak (Andhra Pradesh) is another

manufacturer who supplied some locomotives and locomotives parts to IR.

Apart from BEML there are two more companies that are equipped in the

manufacturing rail coaches, Integral Coach Factory (ICF) at Chennai and Rail coach

factory at Kapurtala.

Defence vehicle- An Introduction

Defence vehicles serve the most important purpose of defending any particular

country from external attacks in an efficient manner. Thus the machinery involved in

making of these companies that largely deal with the manufacturing of these vehicles are

Mahindra Motors and Ashok Leyland.


COMPANY PROFILE

BEML Limited (formerly Bharat Earth Movers Limited) was established in May 1964 as

a Public Sector Undertaking for manufacture of Rail Coaches and Spare Parts and Mining

Equipment at its Bangalore Complex. The Company has partially disinvested and

presently Government of India owns 54 percent of total equity and Public, Financial

Institutions, Foreign Institutional Investors, Banks and Employees hold rest 46 percent.

Bharat Earth Movers Limited (BEML) is a premier ISO 9001 Company in India and

second largest manufacturer of Earth Equipment in Asia. A three decade old Multi

Location and Multi Product Company, BEML has a vital application in diverse sectors of

economy such as coal, mining, steel, cement, power, irrigation, construction and road

building and railways. It had expanded its product range to cover high quality hydraulics,

heavy-duty diesel engines, and welding robots and undertaking of heavy fabrication jobs.

In public sector undertaking, BEML commands 70% market share in domestic

earthmover industry. Nearly 40% of its quality has be completed.

BEML Limited, a ‘Miniratna-Category-1’, plays a pivotal role and serves India’s core

sectors like Defence, Rail, Power, Mining and Infrastructure. The Company started with a

modest turnover of ` 5 Cr during 1965 and today, thanks to its diverse business portfolio,

the company has been able to achieve a turnover of more than ` 3,500 Cr. Its three major

Business verticals viz., Mining and Construction, Defence and Rail and Metro are

serviced by its nine manufacturing units located at Bangalore, Kolar Gold Fields (KGF),

Mysore, Palakkad and Subsidiary - Vignyan Industries Ltd, in Chikmagalur District.

BEML’s products are sold and serviced through its large Marketing Network spread all

over the Country. BEML’s products are exported to more than 56 countries. As part of

company’s globalization strategy, the company has expanded its global reach by opening

local company at Indonesia and Brazil recently in addition to Malaysia and China offices.


The company operates under three major Business verticals - viz. Mining and

Construction, Defence and Rail and Metro. A Director who acts as CEO of the Business

and reports to the Chairman and Managing Director of the company heads in each of the

above Business. In addition to the above, Technology Division of the company provides

end-to-end technology solutions in Auto, Aero, Defence and Rail and Metro related

areas. Trading Division deals in non-company products. BEML manufactures and

supplies Defence Ground Support Equipment such as Tatra based High Mobility Trucks,

Recovery Vehicles, Bridge Systems, Vehicles for Missile Projects, Tank Transportation

Trailers, Milrail Wagons, Mine Ploughs, Crash Fire Tenders, Snow Cutters, Aircraft

Towing tractors, Aircraft Weapon Loading Trolley. The company also plans to take up

overhaul and up gradation of Battle Tanks with a view to assemble and roll out the

products. Under Mining and Construction Business, the company manufactures and

supplies Mining and Construction equipment like Bull Dozers, Excavators, Dumpers,

Shovels, Loaders and Motor Graders to various user segments and under Rail and Metro

Business, manufactures and supplies Rail Coaches, Metro Cars, AC EMUs, OHE Cars,

Steel and Aluminium Wagons to the rail sector.

The company has a dedicated R&D infrastructure and team in line with consistent

policy of the company to meet the technological demands through in-house R&D and

strategic technical tie-ups with global players.

BEML operates on three major business verticals for associated equipment

manufacturing:

Mining and Construction

Defense

Rail and Metro


In addition to the above there are three Strategic Business Units (SBUs):

Technology Division for providing end-to-end engineering solutions

Trading Division for dealing in non-company products

International Business Division for export activities

The company has been registering consistent growth in sales and profits and has

made a turnover of ` 3,558 Cr in 2009-10 registering a growth of 18% over the previous

year with a Profit Before Tax of ` 320 Cr and has orders on hand of over ` 5,000 Cr as of

end March 2010.

The Company has drawn up VISION – 2013 with an ambitious growth rate of

12% CAGR for crossing 5,000 Crores turnovers by 2013-14 coinciding with BEML’s

Golden Jubilee year. With this emerging prospects, BEML has plans to cross ` 5,000

Crores in the next 2 years and is poised to achieve ` 10,000 Crores mark by 2016-17 and

the company is gearing up with necessary infrastructure for achieving the same.

Vision and Mission

Vision

To become a market leader, as a diversified company supplying products and

services to Mining and Construction, Railway and Metro and Defence Services and

emerge as an International Player.

Mission

Improve competitiveness through organizational transformation and

collaboration / strategic alliances / joint ventures in technology.

Grow profitably by aggressively pursuing opportunities in national and

international markets.

Attract and build people in a rewarding and inspiring environment by

fostering creativity and innovation.


Objectives

To maintain a dominant position in design, development, manufacture and

marketing of Defense, Earthmoving and Construction and Rail and Metro

equipment.

To diversify and grow.

To provide total engineering solutions to its customers.

To internationalize operations by enhancing exports.

To improve profitability.

To maintain State-of-the-Art technology for all products.

Re-orientation of the business operations to match present scenario.

Continuous building of skills and competencies to bring about Executive

Effectiveness for Management Succession.

Nature of the Business:

Rail and Metro Business:

In recent years, BEML Limited has forayed into high-tech Metro Trains deployed

for intra-city commuting. BEML is expanding its infrastructure to meet the greater needs

of metro projects coming up in the country. Also, BEML supplies equipment to Indian

Railways which include Integral Rail Coaches, Overhead Electric Inspection Cars, Postal

Vans, AC/DC Electric Multiple Units, D-EMUs, Utility Track Vehicles, Track Laying

Equipment, Broad-Gauge Railbus, Treasury Vans, Spoil Disposal Units etc


Infrastructure Facilities

BEML’s Bangalore complex, a unit of Bharat Earth Movers Limited is situated at The

unit has a variety of products which includes

Rail Coaches(Integral Rail Coaches)

Defense Aggregates(BMP)

DMRC(DELHI METRO RAIL CORPORATION)

BMRC(BANGALORE METRO RAIL CORPORATION)

AC-EMU

OHE CARS

Bangalore Complex spans an area of 93 acres and houses state of the art equipment

for carrying out design, manufacturing and testing products. Constant modernization and

companywide training programme have resulted in BEML Bangalore Complex,

possessing the state of art Technology and highly disciplined manpower. The Company

has three Canteens in the factory premises for the Employees, Officers and Executives.

The food and snacks are provided at subsidized rates and the rates are deducted from the

salary of the employees those who have opted for canteen food. Others whenever

required pay and take food. Employees pay Rs. 55 for lunch and for Officers Rs. 75.

PRODUCT PROFILE

BEML products that is “Machine that build the Nation” find their application in

core sectors of economy in the viz Mining, Agriculture, Energy, Irrigation, Cement,

Steel, Construction, Rail and Road Transport apart from Defence. The company has three

ranges of products like earth moving equipment’s, defence products and railway

products.The Earth movers Equipment’s include Bull dozers, Dump truck, Hydraulic

Excavators, Wheel dozers ,Tyre handlers, Pipe layers, Rope shovels, Drag lines, Motor

grades, Scrapers, Water sprinklers, Aircraft towing tractors and backhoe loaders.


BEML has recently introduced road headers and discharge loaders for underground

mining application, track laying equipment inspection cars. BEML manufactures heavy

truck and trailers and hydraulic aggregate for transportation sector. Apart from this

BEML also radio controls disaster management equipment in case of emergencies.


BEML PRODUCTS

RAIL AND METRO

Stainless Steel Metro cars

AC Electric Multiple Units

DC Electric Multiple Units

Passenger Coaches

Stainless Steel AC EMU’s

8 wheeler OHE cars

4 wheeler OHE cars

Track Laying Equipment’s

Rail bus

Spoil Disposal Units(SDU)

Treasury vans

Main rail coaches

Track Laying Equipment

Sky bus

Spoil Disposal Units(SDU)

Treasury vans

Utility Track vehicles(UTV)


ACHIEVEMENTS and AWARDS

CMD received Public Relations Council of India’s ‘CHANAKYA AWARD’ for

the year 2009-10

Received ‘Wealth Builder-Miniratna-Manufacturing Award’ in the second DSIJ

PSU Award-2010 held at New Delhi on 6th April 2010

Received 'Golden Peacock Award for Innovation Management' from Institute of

Directors on 16th January 2010.

CMD received the 'BEST PSU AWARD' instituted by India's leading B School,

Indian Institute of Planning and Management held at Bangalore on 25th March

2009.

Southern Region of EEPC India awarded BEML with 'Silver Shield' for Star

Performer as a Large Enterprise for its outstanding contribution to Engineering

Export held at Trivandrum on 11th February 2009.

CMD received the 'Raksha Mantri's Award for Excellence' for 'Best Performance

in Export’s held at New Delhi on 7th November 2008.

CMD received the 'ROTARIAN AWARD' of Vocational Excellence in their

District Conference held at Bangalore on 9th February 2008.

CMD received the 'BEST CEO AWARD' from Mr. SK Sharma, National

President, Indian Institute of Materials Management (IIMM) on 30th November

2007 at Chandigarh. Conferred ‘Star Performer Award’ by Engineering Export

Promotion Council, Southern Region on 24th November 2007.

CMD received the 'SCOPE Award for Excellence and Outstanding Contribution

to the Public Sector Management - Medium PSE CategoryD'for the year 2006-07

CMD received RakshaMantri's Award for'BEST DEFENCE PSU' for the year

2007.

Award for ‘Excellence in Technology and Innovation’ from Confederation of

Indian Industries (CII). Rated‘AAA’ by ICRA in January 2007.

Received 'Golden Peacock Award for Innovation Management' from Institute of

directors on 14th January 2007


Ranked 4th BEST WEALTH CREATER AMONG 21 BEST WEALTH

CREATERS OF INDIA and the first among PSUs (US$ 1 in 2002 as appreciated

to US$ 62.64 IN 2007) by Dalal Street Magazine.

Conferred “MINIRATNA Category –I Status “by MINISTRY OF DEFENCE,

Govt. of India during August 2006.

Received “GOLDEN EXPORT AWARD” from the Govt. of Karnataka, India

during August 2006.

Received “ENTERPRISE EXCELLENCE AWARD” from Indian Institute of

Industrial Engineers during May 2006.

Received “EXCELLENT “MOU rating in 2005-06

Award for “OUTSTANDING EXPORT PERFORMANCE” from Engineering

Export Promotion Council(EEPC) during 2005

Award for the “LARGEST AND MOST PROFITABLE CONSTRUCTION

EQUIPMENT COMPANY” 1st rank from Construction World-NICMAR 2007

Awarded “UDYOG RATAN AWARD” (Gold Trophy) by institute of Economic

Studies, New Delhi, during October 2004

Received “NIRYAT SHREE GOLD TROPHY” from Federation of Indian Export

Organization for its outstanding export performance in Export House/Non SSI

category for the financial year 2000-01

“NATIONAL AWARD FOR IMPORT SUBSTITUTION “ for Crawler Mounted

Shovels(2 to 2.5 bucket cu.,M. capacity)

Bangalore complex won the National Safety Award 1999 for achieving

“LOWEST AVERAGR FREQUENCY RATE OF ACCIDENT” and runner-up is

Mysore Complex Equipment division.

Established a local company in Indonesia

Launched Aerospace division and also rooled out Nation’s first Standard Gauge

Metro Car.


CORPORATE SOCIAL RESPONSIBILITY

As part of government’s sustainable village development programme, the

company has been contributing towards providing computers, laser printers, UPS

for PC’s and related furniture for installing in BhoraKalan High School, Gurgaon

District and many other schools.

Further the company has been contributing towards construction of additional

classrooms, library cum reading room etc.

The company is also sponsoring four severely disabled children of the United

Physically Handicapped School for the second consecutive year by providing

food, clothing and education.

BEML runs one Junior college and two nursery schools at KGF and one at

Bangalore.

The institutions are not only meant for the BEML employees children, but it also

caters to large extent to the local population.

In addition BEML also runs a KV Project School at KGF by providing school

building with infrastructure facilities, mid-day meal programme and other

facilities.

BEML also runs a school named “SHISHYA”


ORGANISATION STRUCTURE

Figure 3.1:- organization structure


COMPETITORS

The Main Local competitors of BEML

RAIL COACH FACTORY

HINDUSTAN MOTOR

TATRA UDYOG

ESCORTS

ASHOK LEYLAND

JESSOP ENGINEERING AND OTHERS

LARSEN and TURBO

INEGRAL COACH FACTORY

RAIL COACH FACTORY THE MAIN LOCAL COMPETITIORS OF BEML

The foundation stone factory at Kapurthala was laid by the Honorable Prime

Minister on 17th august 1985.Manufacture of coaches was started on 19th September,

1987 and the first coach was rolled out on 31st March, 1988.RCF production had

progressively gone up and along with ICF, these two production units have been able to

meet the requirements of the Indian Railways.

The state of the art manufacturing facilities and the processes have enabled us to achieve

excellence in design, development, manufacture, installation and after sales services of

the Rail coaches with a view to ensure continued satisfaction of the Rail customers.

RCF has a strong tradition of the innovation and developing new products. Many major

developments on coaching stock such as AC-3 tier coaches, Roof mounted AC package

Unit IRY/IR20 coaches, Self propelled Accident Relief Train, High Capacity Parcel

Vans, Post office coaches, Coaching container flats, Refrigerated van MG-DMU etc.

have taken place in RCF. The other varieties of coaches, which have been manufactured

at RCF, are inspection carriages, Over Head Equipment cars, MG coaches and AC

coaches for Ministry of Defence etc.


The first prototype Refrigerated van designed and developed by RCF was turned out in

October 2002.this has been well appreciated by the Railway customers and during 2003-

04, orders for 9 more Refrigerated vans have been placed on RCF recently. RCF has

developed a new product i.e., MG/DMU, which has already been pressed into services.

RCF has also developed MG/GSR, which has increased the seating capacity.

RCF has been entrusted with the task of manufacture of modern, high speed, state of the

art coaches with a TOT agreement with M/s.ALSTOM-LHB. Rail coach Factory has

further developed and manufactured LHB design coaches for Rajdhani rake. The design

for the variant coaches including layout, manufacturing drawings specializations etc was

entirely prepared at RCF. Honourable Minister of railway Sri Nitish Kumar inaugurated a

special assignment of the Railway Minister to manufacture fire proof coaches

accomplished by RCF and prototype on 21st 2003.

BEML Keen to Emerge As Global Brand

BEML LIMITED conferred with Mini Ratna Status and under the administrative control

of Ministry of Defence, is a multi-technology and multi-location company offering high

quality products for diverse sectors of economy such as Defence, Mining & Construction,

Rail & Metro, Technology services and Aerospace.

BEML has set its target to become a billion dollar company (Rs.5000 crores) as part of its

golden vision, by 2013-14 to coincide with its 50 years of foundation. BEML has bagged

prestigious Best PSU Award instituted by India’s leading B-School viz., IIPM. It has

emerged in the forefront of heavy engineering industries with a proven track record in

growth and revenues for over four decades. The Company has also bagged Raksha

Mantri’s Award for Excellency for the Best Performance in Export and also SCOPE

Award for Excellence and Outstanding Contribution to Public Sector Management from

the Prime Minister of India recently.

To conquer opportunities and to emerge as global brand, BEML has established a

company in Brazil to cater to the entire South American market. Recently the company


has also established a local company in Indonesia viz., PT.BEML INDONESIA apart

from International Warehouse in Malaysia and Outsourcing offi ce at China to cater to

the requirement of Asia and Pacific markets and also for sourcing respectively.

BEML LIMITED is the biggest OEM of defence land systems in India and the product

range includes High Mobility Vehicles (HMVs) for offset & cross country applications in

the configurations ranging from 4x4 &12x12 in collaboration with TATRA Czech &

Slovak.

Variants of these trucks are also manufactured by BEML Ltd that includes Special

Chassis for the Brahmos & Pinaka, Field Artillery Trucks for towing 155/130 mm guns,

Medium / Heavy Recovery Vehicles, Bridge carrying vehicles (Sarvatra), Pontoon Bridge

Systems(PMS), Heavy Duty off-highway Trailers, Missile Launchers & supporting

vehicles and MAST cum Radar vehicles.

Engineering Mine Ploughs and Armored Recovery Vehicles are also manufactured by

BEML. BEML also manufactures & supplies Armoured Recovery vehicles (ARVs) in

collaboration with M/s Bumar, Poland. The transmission, ejector and air cleaner

assembly, final drive & hydro pneumatic suspension for BMP II tank are some of the

aggregates supplied by BEML to BMP II and T-72.

BEML has also in-house developed Snow cutter for use of Indian Army and Director

General of Border Road forces (DGBR) for snow clearing operations in forward areas.

The equipment is undergoing extensive field trials. This equipment can withstand

extreme conditions at altitude up to 18,000 feet. The snow clearance rate is 3500

tonnes/hr and the casting distance is 40 mts.

Different types of Army rail products for the exclusive use of armed forces like the Mil

Rail Coaches for movement of personnel and mil wagons for the transportation of combat

equipment are also being manufactured.


Defence Business:

New Projects /Opportunities:

BEML has developed and manufactures mobile assault Pontoon Bridge system for the

Indian army. These floating bridges can span water bodies’ up to 227 mts and take tank

loads up to 60 tones. BEML is the nodal production agency for 15mts supported Sarvatra

bridge systems. These bridges can span up to 75mts & cover depth of 5.85 mt by self

adjusting pier system while carrying load up to 60 tones. The individual units of the

bridge system are capable of being transported, launched and retrieved by BEML

TATRA 8x8 vehicles. BEML is also exploring opportunities in supplies of 10mt & 5 mts

short span bridges for which it is working closely with DRDO. BEML will also be

offering the state of the art 43 mts span Dry Support bridges to the Indian Army for load

capacity MLC 80 T/MLC 100T/ MLC. This bridge can be launched from one side of the

bank without intermediary support.

Offset opportunities

BEML being the offset partners for DMD, Slovakia for wheeled guns with 30% of value

is in the final stages of offering 155mm wheeled guns for which trials are scheduled

shortly.

Aerospace Division

The Aerospace Division of BEML is a recent addition of new business. The Aerospace

Division has recently bagged orders from HAL for Slat jigs for SU-30, Fuselage rotating

jig for IJTs, Tow bars for Aircraft operations, Gear component for Cheetah- Chetak

helicopters & ALH. BEML is already in the manufacture of Ground Support Equipments

(GSE)/ Ground Handling Equipment (GHE) that includes 18T and 28TAircraft Towing

Tractors(ATT) Automatic Weapon Loaders and Crash Fire Tenders.

This division also proposes to manufacture aero-structures and also different types of jigs

for manufacture and assembly of aero-structures. BEML got CEMILAC certification for


Aero design & is in the process of obtaining manufacturing certification to become

eligible for tie-up for Defence Aero offsets. BEML Aerospace division also has set its

prospective business plans to garner the offset opportunities that are foreseen.

Technology Division

The Technology Division is one of the new strategic business units of BEML Ltd

providing e-engineering services to the industry in the areas of Defence, Aerospace, Rail

& Metro and Automotive & Mining. The services cover all the domains of product

development cycle of systems involving cutting-edge technology. The manpower at

Technology Division consists of 150 well qualified engineers with many years of design

and development experience. They are supported by the latest infrastructure like high-end

computation servers and all the CAD and CAE tools. This division is working on a

number of prestigious projects with some of the renowned industries and has now been

well recognized as the one-stop-shop for development of new products. The division has

partnered with many of the DRDO laboratories for the development of solutions varying

from aerospace applications to naval systems and land systems. Infrared radiation

suppression systems launch and recovery systems for the unmanned underwater

surveillance equipment, design and validation of airborne antennae and quality systems

for manufacture of combat machines are some of the projects that are being executed at

present. Development of simulators for the training of our armed forces has been

identified as one of the thrust areas by this division. The driving simulator for the BEML-

Tatra trucks, which BEML manufactures and supplies to the Army in bulk supplies, was

developed by the Technology Division and has earned the appreciation of the Training

Command. BEML displayed this simulator at the recent DEFEXPO 2010. BEML, thus,

sets its sight to improve Business volume of Defence and expected to cross Turnover of

around Rs. 3500 Crores in 2009-10 with the order book of around Rs 5400 Crores.


CURRENT SCENARIO OF BEML

BEML Limited (formerly Bharat Earth Movers Limited) is a public sector

undertaking under the Ministry of Defence and the Chairman and Directors are

directly appointed by the Government of India.

The Government has a stake of 54% in BEML and issued public shares in order to

raise funds to improve the infrastructure facilities etc

BEML is answerable to the Government of India and also to the public if the

profit is reduced drastically.

Nearly 12000 work forces are solely depending on BEML for their daily

livelihood.

Small scale industries and small entrepreneurs are also depending on BEML.

There is a worldwide marketing and sales service centers are operating to market

BEML products globally.

The present order position of the company is rail coaches 900, ACMEU-27,

SSEMU-9, OHE-36, DMRC RS6-100, BMRCL (Bangalore metro)-45 and Jaipur

metro-8 cars.

The total target for the year 2012-13 is 4,000crores and BEML is going to

celebrate 50th Anniversary in the 2013-14 and the target fixed is 5,000 crores

BEML as a future vision and recently an Aerospace division is going to be

operated shortly by fixing the target of 10,000 crores in the year 2017 onwards.

The recent allegations, controversies in the Media and News papers are only on an

individual person not on the Company. The Company is stable and the

production is going on well in all the divisions. Also the dedicated workforce and

Officers are working day and night to achieve the target fixed by the

Management.

The allegations against the Company will not affect its domestic market or global

market as BEML has established Quality products in the Domestic as well as

global market.


The recent allegations are targeted on CEO not on Company`s Qualitative

products. There is no failures of its products because still BEML is monopolized

its products in Domestic market as well globally.

FUTURE PROSPECTS OF BEML

The company also manufactures railway coaches and wagons for Indian Railways and

defence forces. Recently, BEML has diversified its business by successfully assembling

state-of-the-art stainless metro coaches for Delhi Metro Corporation (DMRC) under

technical collaboration with M/s Rotem of South Korea.

If Indian Railways has its way, the day is not far when commuters would get to travel in

much lighter and faster state-of-the-art Aluminium coaches.

India's two largest public sector enterprises, the Bangalore-based Bharat Earth Movers

Ltd and the Bhubaneswar-based National Aluminium Company Ltd will soon be building

the country's first prototype coaches for trial runs by the Railways.

With the railway ministry endorsing the proposal of the Aluminium Association of India

to manufacture aluminium rail coaches after conducting a techno-eco study recently,

BEML and Nalco are set to sign a memorandum of understanding by this year-end to

design and develop the prototype.

BEML is waiting for the clearance from the Railway Board to go ahead with the project.

The railway ministry is scheduling a meeting with BEML for working out the modalities,

cost structure and the potential.

As one of the leading suppliers of freight wagons and passenger coaches to the railways

over the decades, BEML has already expanded its product portfolio to roll out stainless

steel metro coaches for the Delhi Metro Rail in joint collaboration with Rotem of Korea.

"Since aluminium coaches will be lighter than steel, traveling in them will not only be

more comfortable, but also cheaper for maintaining and operating.

"Aluminium being lighter, its coaches will consume less fuel or electrical power as

proven in developed countries like Korea and Japan,".


the initial cost of producing aluminium coaches would be 2-3 times more than steel, they

will prove to be more efficient and cost effective, operationally and in the long term.

"The railway ministry has already responded positively to the proposal. As BEML has

the expertise with an active R&D set-up and Nalco has the metal and technology, it will

be a win-win situation to roll out the prototype aluminium rail coaches next year," the

initial high cost of the coaches, including their development could be off-set in the long-

term with reduced operational and maintenance costs. The game plan is to make

aluminium rail coaches first for the suburban services where high-grade steel coaches are

being used over the decades consuming more fuel or electric power.

Hundreds of local trains, EMUs and pull-push trains are in operation daily in the four

major metros (Mumbai, Kolkata, Delhi and Chennai), besides other cities across the

country. Substituting them with the lightweight metal (aluminium) coaches will drive

down the cost of ownership for the railways in the long run.

In the light of increasing use of lighter/composite materials and plastics in several

products and components in place of steel and other heavier metals the world over, the

Aluminium Association was persuading the automobile and two-wheeler industries to go

in for the silvery and more malleable metal, which is corrosion proof.

"Aluminium vehicles will be more efficient, light weight and consume less fuel. The

metal's utility, durability and functionality are found to be more advantageous even in

aerospace and space applications," the association president affirmed.

The consumption of aluminium in each automobile in India is about 20-25kg against

150kg in countries like the US, Japan, Korea, and Europe. The automobile and other

transport sectors are yet to make much headway in designing and developing products

with more aluminium.

The potential is huge. With abundant resources and proven technology, Indian industries

should harness them to double the aluminium content to catch up with developing

countries such as China and others in the region.

According to global industry surveys, the per capita consumption of aluminium in India

is just 500gm against 2.9kg in China and 4-5kg in advanced countries such as the US,

UK, Japan and Korea. The company ruled out the divestment of Nalco in the near future

due to opposition from several quarters. BEML however, admitted that the process of


acquisitions, mergers and consolidation in the industry would continue as part of the

global phenomenon in the aluminium industry.

With the government permitting foreign direct investment in the aluminium sector, the

prospects of overseas players pitching for equity stake, joint ventures or green field

projects are bright.

The total smelting capacity in India is still half of other countries. At 0.9 million tonnes,

we are way behind China and Russia, which have 4.5 million tonnes and 5 million tonnes

production capacity respectively.

Revival of the manufacturing sector, good monsoon and all-round economic activity are

expected to double the Indian aluminium industry growth during the current fiscal year

(2003-04) to 8 per cent from 3-4 per cent over the last two years due to downturn in the

economy.

Nalco is targeting an export revenue of Rs 2000 crores (Rs 20 billion) in the current

fiscal, with a projected gross turnover of Rs 3500 crores (Rs 35 billion) and net profit of

Rs 700 crores or Rs 7 billion.


Products of rail and metro

Stainless steel metro cars

Passenger coaches

AC electrical multiple units

Stainless steel AC EMUS

DC electrical multiple units

Rail bus


Overhead Equipment Inspection Cars

8 wheeler van

4 wheeler one

Treasury vans


BEML LTD

Liquidity ratio:

1) Current Ratio= current assets

current liabilities

TABLE: 4.1

Current asssets

Year Current assets

2006-2007 1864735084

2007-2008 1769148995

2008-2009 3099940517

2009-2010 8187954973

2010-2011 8189437545

The current asset percentage was increased from the year 2006-11 by 4.39%

Table: 4.2 Current Liabilities

Year Current Liabilities

2006-2007 1234457174

2007-2008 1107513038

2008-2009 1384929634

2009-2010 3256721447

2010-2011 2578124003

The current liabilities has been decreased from the 2006-11 drastically.


CURRENT RATIO

TABLE: 4.3

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

1.5 times 1.59 times 2.2 times 2.51times 3.17 times

Graph NO: 4.1

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

0

0.5

1

1.5

2

2.5

3

3.5

Series1

YEAR

CURRENT RATI

O

ANALYSIS AND INTERPRETATION

This ratio measures the solvency of the company in the short term. Current assets

are those assets which can be converted into cash within a year. Current liabilities

are those payables which are over the year. This constitutes of the current assets

are more important for the ratio helps in evaluation of the company’s solvency

position. Higher the ratio it is more capable of paying its liabilities.

The current ratio of 2010-11 is 3.17 which are higher than the previous years. The

ratio shows that the company is in very strong position to pay off its liabilities.


Turnover Ratio

1) Inventory turnover ratio= Sales

Average stock

TABLE: 4.4

Year Sales

2006-2007 2982530085

2007-2008 2846847932

2008-2009 5757690250

2009-2010 7071457491

2010-2011 7394837880

The sales percentage is increased form the year 2006-11 by 2.47%

AVERAGE STOCK

Table: 4.5

Year Average stock

2006-2007 2914689008

2007-2008 2914689008

2008-2009 4302269091

2009-2010 6414573871

2010-2011 14466294871

In the year 2006-07 the average

stock was 0.49% and drastically increased from the year 2007- 11 by 0.22%.


Table No: 4.6 INVENTORY TURNOVER RATIO

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

1.02 0.97 1.33 1.10 0.51

Graph no :4.2

2006-2007 2007-2008 2008-2009 2009-2010 2010-20110

0.2

0.4

0.6

0.8

1

1.2

1.4

YEAR

INVENTORY TURNOVR RATI

O s

Chart: 4.2


The inventory turnover ratio indicates the efficiency of a firm’s inventory

management. The ratio gives the rate at which stocks are converted into sales and

then into cash.

The lower turnover ratio indicates excess inventory. So the company has higher stock

which means the company has cash locked up in inventory.


Debtors turnover ratio= Credit sales

Average debtors

CREDIT SALES

Table No: 4.7

Year Credit Sales

2006-2007 2982530085

2007-2008 2846847932

2008-2009 5757690250

2009-2010 7071457491

2010-2011 9394837380

The credit sales percentage has increased from the year 2006-11 by 2.47%

Table No: 4.8

AVERAGE DEBTORS

Year Average debtors

2006-2007 373116489.5

2007-2008 373116489.5

2008-2009 706402220.5

2009-2010 2475795254

2010-2011 3573417781

The average debtor percentage in the year 2006-07 was 9.5% and drastically reduced from the year 2007-11 by 1.44%.


4.9 DEBTORS TURNOVER RATIO

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

7.99 7.62 8.15 2.85 2.62

Graph No :4.3

.

2006-2007 2007-2008 2008-2009 2009-2010 2010-20110

1

2

3

4

5

6

7

8

9

YEAR

DEBTORS TURNOVER RATI

O


This ratio indicates the relationship between net credits and trade debtors. It shows the

rate at which cash is generated by the turnover of debtors. The term debt includes trade

debtors and bills receivables.

The debt collection shows decreasing figures due to long duration for recovering the bills

receivables. The company should increase its debt collection efforts so that the incidence

of bad debts is reduced.

.


Fixed asset turnover ratio= Sales

Net fixed asset

SALES

Table no 4.10

Year Sales

2006-2007 2982530085

2007-2008 2846847932

2008-2009 5757690250

2009-2010 7071457491

2010-2011 9394837380


Table no 4.11 NET FIXED ASSET

Year Net fixed asset

2006-2007 297330966

2007-2008 385898649

2008-2009 506587400

2009-2010 708564168

2010-2011 827148127

The net fixed asset percentage in the year 2006-07 was 2.78% and from 2007-11 the net fixed asset increased.


Table no 4.12 FIXED ASSET TURNOVER RATIO

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

10.03 7.37 11.20 9.97 8.94

Chart : 4.4

2006-2007 2007-2008 2008-2009 2009-2010 2010-20110

2

4

6

8

10

12

YEAR

FIXED ASSET TURNOVER RATI

O


This ratio indicates the efficiency with which the firm is utilizing its investments in fixed

assets. The company fixed asset turnover ratio is fluctuating widely.


The company is efficiently utilizing the company fixed assets in the year 2006-07 and in the

year 2008-09. As the company supplies only to the Indian railways, it depends on the orders

received from the Indian railways.


Profitability ratios

1) Net profit ratio= Net profit * 100

Sales

NET PROFIT

Table:4.13

Year Net Profit

2006-2007 117150523

2007-2008 -316154685

2008-2009 375900145

2009-2010 635253361

2010-2011 -88208172

The net profit percentage in the year 2006-07 was -0.7% hence the profits increased in the year 2009-10 by .022%. SALES

Table: 4.14Year Sales

2006-2007 2982530085

2007-2008 2846847932

2008-2009 5757690250

2009-2010 7071457491

2010-2011 9394837380



Table:4.15 NET PROFIT RATIO

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

3.92 11.10 6.52 8.98 -1.19

Graph: 4.5

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

-15

-10

-5

0

5

10

15

YEAR

NET PROFIT RATI

O


The net profit ratio indicates the overall measure of a firm’s ability to turn each

rupee of sales into profit.

The net profit is declined due to losses made by the company by not acquiring

Government projects.


2)Net operating ratio=Net profit+ depreciation+ interest *100 Sales

Net operating

Table:4.16

YearNetprofit+depreciation+

interest

2006-2007 143997361

2007-2008 -287075370

2008-2009 423495591

2009-2010 704467952

2010-2011 187975015

The net profit is highly fluctuating since 2006-10 the company profits were increased by 1.30% and in the year 2010-11 the percentage of net operating was 0.26%.

Table:4.17

SALES

Year Sales

2006-2007 2982530085

2007-2008 2846847932

2008-2009 5757690250

2009-2010 7071457491

2010-2011 9394837380

The sales in the year 2006-07 was 2.47% due to low production the sales volume was increasing by 1.04%

Table No :4.17


NET OPERATING RATIO

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

4.82 -10.08 7.35 9.96 2.54

Graph No: 4.6

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

-15

-10

-5

0

5

10

15

YEAR

NET

OPERATI

NG RATI

O


EV/EBITDA is a valuation multiple used in finance and investment to measure

the value of a company. This important multiple is often used in conjunction with,

or as an alternative to, the P/E ratio (Price/Earnings ratio) to determine the fair

market value of a company.

On observation, it’s clear that the company’s Net operating ratio is widely

fluctuating. This is due to the fact that Indian Railway is the sole customer of the

company’s product. Indian Railways has not been consistent in lifting the

products or in placing orders. Hence the fortune of the company is directly

dependent on the orders received from Indian Railways


http://en.wikipedia.org/wiki/Fair_market_value

http://en.wikipedia.org/wiki/Fair_market_value

http://en.wikipedia.org/wiki/P/E_ratio

Expenses ratio

1) Raw material ratio= Direct material cost *100

Net Sales

DIRECT MATERIAL COST

Table No: 4.18

Year Direct material cost

2006-2007 1586860692

2007-2008 1730030836

2008-2009 3903818909

2009-2010 5059998589

2010-2011 5230207554

The material cost percentage was 3.2 % in the year 2006-07 and hence from then the percentage increased by 1.03%.

SALES

Table No: 4.19Year Net Sales

2006-2007 2982530085

2007-2008 2846847932

2008-2009 5757690250

2009-2010 7071457491

2010-2011 9394837380



Table No:4.19 RAW MATERIAL RATIO

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

53.20 60.71 67.90 71.55 70.72

Graph No: 4.7

2006-2007 2007-2008 2008-2009 2009-2010 2010-20110

10

20

30

40

50

60

70

80

YEAR

RAW

MATERIAL RATI

O


Direct material is the biggest cost component for the company. This

component has been steadily increasing over the years. This is due to the fact

that the cost of raw materials is increasing over the years and as Indian

Railways is the sole customer of the company, the company has been unable to

pass on its cost to its customer.


2) Labour ratio= Direct labour cost *100 Net sales

Table No.4.20 DIRECT LABOUR COST

Year Direct labour cost

2006-2007 904066300

2007-2008 956676833

2008-2009 1097614625

2009-2010 1346135932

2010-2011 1443918661

Direct material cost is fluctuating from the year 2006-11. The percentage of direct

material cost in the year 2006-08 was 1.59% and in the year 2010-11 is 1.07%.

SALES

Table No :4.21Year Net Sales

2006-2007 2982530085

2007-2008 2846847932

2008-2009 5757690250

2009-2010 7071457491

2010-2011 9394837380



Table No:4.22 LABOUR RATIO

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

30.31 33.60 19.06 19.03 19.52

Graph No: 4.8

2006-2007 2007-2008 2008-2009 2009-2010 2010-20110

5

10

15

20

25

30

35

40

YEAR

LABOUR RATI

O


The labour cost has decreased substantially from 2007-08 to 2008-09. Since then the

Company has been able to maintain the labour cost at acceptable level


What is the order book of the company for the next year?

Graph No: 4.9

Rail coachACMUSSMUOHEBMRCLDMRCLJaipur metro

ANALYSIS: Based on the data provided by the company, it can be interpreted that the

orders has been increased in mean time.

Inference:

The orders are increased due to the improvisation of Metro cities and most of the BEML

orders are for the ongoing projects like Rail coaches, Delhi and Bangalore Metro.


What is debtor’s life cycle?

Graph No: 4.10

1 month2 months 3 months

ANALYSIS:

According to the analysis and data provided by the respondents, debtor’s life cycle begins

from not less than 2 months.

INFERENCE: when the bills are recovered earlier the company will have enough cash

to meet the working capital requirement.


FINDINGS AND SUGGESTIONS

BEML is a heavy engineering manufacturing company. They undertake large

projects which extend over a period of financial year. Hence the profits are not

uniform for every year.

BEML is a public sector undertaking the objective and motive of the company are

not always profitability. The objective of this public sector undertaking is to

provide engineering services and make the country efficient.

The company’s profits are fluctuating since 2006-07 the profit was 3.92, in the

year 2007-08 the profits increased to 11.10, in the year the profits drastically

came down to negative figure of -1.19 in the financial year 2010-11

BEML has higher current ratio in the year 2010-11 it was 3.19 times and in the

year 2009-10 the current ratio was decreased by 2.51 times. This ratio is viewed

by the external creditors to evaluate the company’s ability to pay off their dues.

As BEML is a government undertakings have an in built assurance of safety of

their dues. Hence the company is having a positive current ratio.

BEML’s railway division only customer is Indian Railway which is again

government organization. So the growth of the division is directly dependent on

the order take-off ability of the Indian railways.

When BEML increases its production they deploy more labourers. The

company’s labour ratio has decreased from the year 2007-08 and 2009-2010

substantially and in the year 2010-11 the labour ratio was increased to 19.52.

Cost of raw material for BEML is high due to fluctuation in the production. The

cost of raw materials were less in the year 2006-07 by 53.20 and in the year 2009-

10 the cost was increased to 71.55%.

Debt collection period is for a longer duration because their project runs for 3-5

years. So they cannot recover their bills quickly. The company debtors turnover

ratio was 7.99 in the year 2006-07 and in the year 2008-09 the ratio was increased

by 8.15 and it decreased in the 2010-11 to 2.62 times.


BEML get orders only from Indian railways due to this fact the company is not

able to use the fixed asset efficiently. The company’s fixed asset ratio is

fluctuating in the year 2006-07 by 10.03 and in the year it was increased by 2008-

09 11.20 times.

BEML cannot recover its cost quickly due to their other operating expenses. In

the year 2006-07 the ratio was 15.02% and in the year 2008-09 the net operating

ratio was increased by 16.79% and then from the year 2009-10 and 2010-11 it

was decreased to 12.60%


CONCLUSION

“BEML” is the pioneer in the market of manufacturing rail coaches. The company has

grown progressively and shown profits since its inception regardless of the state of

economy. The company produces on the order basis only.

The major customer for the BEML is Indian railways as the company is having a fair

market position in the industry. The company is maintaining its unit efficiently. The

company maintains well trained and qualified employees and considers them as an asset

to the company. The company profits are fluctuating due to its excessive dependency on

a sole customer, the Indian railways. The company with its technology leadership

resources, well qualified employees and asset base can increase its profits by diversifying

its customer base.

As owning a railway wagons is opened to private companies, BEML should diversify its

customer base and this will lead to uniform revenue base, thus reducing the wastage of

resources in lean years and also helps the company to grow its business and profitability.


RECOMMENDATIONS

The company has to improve its current assets to maintain an

appropriate current ratio for short term solvency.

The inventory management is inefficient. It is recommended that the

company to implement just in time inventory techniques to reduce

inventory cost. This will also help in increasing the profitability.

The company’s profitability is fluctuating as the company is 100%

dependent on the Indian railways. To reduce this dependency and

increasing profitability, the company should explore the markets in

private companies. As private companies are allowed to own a wagon.

BEML can diversify its customer base.

The company has to concentrate on expenses ratio in order to cut down

on material and labour cost and produce the products at lesser cost for

its prospective customers


BEML fianl

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