Bharat Heavy Electricals Ltd

BSE: 2306 | NSE: 500103 | ISIN: INE257A01026 
Market Cap: [Rs.Cr.] 58,705.69 | Face Value: [Rs.] 2
Industry: Electric Equipment

Management Discussions
Annexure

Annexure - I to the Directors' Report

A. FINANCIAL PERFORMANCE OF THE COMPANY

(i) Standalone Financial Results

Balance Sheet

1. Share Capital

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Authorised Share capital 2000 2000
Issued, subscribed & Paid up Share Capital 490 490

There is no change in the share capital during the year 2012-13.

2. Reserves & Surplus

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Capital Reserve 3 3
General Reserve 28850 23850
Surplus of Profit & Loss 1102 1031
29955 24884

The Reserve & Surplus has increased by Rs 5071 Crore during 2012-13 after additionof Retained earnings. A sum of Rs 5000 Crore has been transferred to General Reserve outof profit for the year 2012-13.

3. Borrowings

F.Y. 2012-13

F.Y. 2011-12

Long Term Short Term Total

Long Term

Short Term

Total

Unsecured Loans-Financial lease obligation 129 0 129 123 0 123
Secured Loan-Export credit 0 1286 1286 0 0 0
129 1286 1415 123 0 123

Borrowings have increased due to short term borrowings by way of export credit availedto manage cash flows.

4. Other Long Term / Current Liabilities

F.Y. 2012-13

F.Y. 2011-12

Other Long Term Liabilities Current Liabilities Total

Other Long Term Liabilities

Current Liabilities

Total

Trade payables (Incl. Acceptances) 756 9675 10431 617 10255 10872
Deposits from customers & others 74 481 555 105 444 549
Advances Received from customers & others 4960 11261 16221 6837 13144 19981
Other payables/ liabilities 2120 2120 2236 2236
5790 23537 29327 7559 26079 33638

The reduction in other long term liabilities and current liabilities by Rs 4311 Crorein 2012-13 is due to decrease in net balance of advances from customers.

5. Provisions

F.Y. 2012-13

F.Y. 2011-12

Long Term Short Term Total

Long Term

Short Term

Total

Provision for employee benefits 2185 488 2673 2076 401 2477
Provision for contractual obligation 3603 1387 4990 2793 1057 3850
Proposed Dividend (Incl. Div. tax)

-

941 941

-

1047 1047
Other Provisions 145 193 338 136 130 266
5933 3009 8942 5005 2635 7640

There is a net increase in total provision by Rs 1302 Crore in 2012-13 owing toaddition in the provision for contractual obligation.

6. Fixed Assets

F.Y. 2012-13 F.Y. 2011-12
Gross Block 10783 9707
Less: Depreciation/ amortisation 6328 5413
Less: Lease Adjustment Account (3) ( 3)
Net Block 4458 4297
Capital Work-in-Progress 1134 1324
Intangible assets under development 38 23
5630 5644

Gross Block increased by Rs 1076 Crore and Capital Work in progress includingIntangible Assets under development decreased by Rs 175 Crore during the year. The netincrease is due to capital expenditure incurred on augmentation of manufacturing capacityand modernisation of the facilities in manufacturing units and at power project sites.

7. Non Current Investments

F.Y. 2012-13 F.Y. 2011-12
Long Term Trade Investments 429 462

Long term trade investments have decreased by Rs 33 Crore due to sale of BHEL stake inUdangudi Power Corporation Ltd.

8. Deferred Tax Assets (Net)

F.Y. 2012-13 F.Y. 2011-12
Deferred Tax Assets (Net) 1551 1546

Deferred Tax assets (Net) has marginally increased by Rs 5 Crore mainly on account ofincrease in the surcharge on income tax.

9. Loans & Advances

F.Y. 2012-13

F.Y. 2011-12

Long Term Short Term Total

Long Term

Short Term

Total

Loans & Advances 905 2029 2934 900 2112 3012

Loans & advances have decreased by Rs 78 Crore owing to adjustment of advances madetowards purchases.

10. Inventories

F.Y. 2012-13 F.Y. 2011-12
Inventories 11764 13549

All efforts have been made to maintain inventory at a lower level. Inventory as numberof days of turnover is 86 days in 2012-13 as against 100 days in 2011-12.

11. Receivables

F.Y. 2012-13

F.Y. 2011-12

Long Term

Trade Receivable

Total

Long Term

Trade Receivable

Total

Trade Receivables (Net) 10654 29234 39888 9384 26357 35741

Receivables increased by Rs 4147 Crore. In number of days to turnover it increased from264 days in 2011-12 to 290 days in 2012-13.

12. Cash and bank balances

F.Y. 2012-13 F.Y. 2011-12
Cash & bank balances 7732 6672

The cash and bank balances at the end of 2012-13 would be Rs 6446 Crore net of shortterm borrowings of Rs 1286 Crore.

13. Other Current Assets

F.Y. 2012-13 F.Y. 2011-12
Other Current Assets 200 151

Other current assets represent Interest accrued on banks deposits and investments.

Statement of Profit & Loss

14. Revenue from Operations

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Gross Turnover 50156 49510
Less : Excise Duty 1904 1847
Less : Service Tax 634 435
Revenue from operations (Net) 47618 47228

During 2012-13, BHEL recorded its highest ever turnover of Rs 50156 Crore. Powersegment and Industry segment contributed 79% and 21% respectively for the total revenue ofthe company.

15. Other Operational Income

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Export Incentive 24 12
Scrap Sales 283 308
Others 500 431
807 751

The marginal increase in other operational income is owing to increase in freight &insurance income.

16. Other Income

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Exchange variation (net) 143 99
Interest Income 605 814
Other income 374 353
1122 1266

Other income decreased by Rs 144 Crore during the year mainly due to reduction ininterest income.

17. Cost of Material consumption, Erection & Engineering Expenses

F.Y. 2012-13 F.Y. 2011-12
Cost of consumption of raw material & components 23044 24549
Consumption of stores & spares 584 564
Erection & Engineering Expenses 4271 3795
27899 28908

There is reduction in material consumption as percentage of net turnover afteradjustment of accretion/decretion to WIP & FG from 60.49% in 2011-12 to 59.13% in2012-13.

18. Employee Benefits Expenses

F.Y. 2012-13 F.Y. 2011-12
Employees Benefits Expenses 5753 5465

Employees remuneration & benefits increased by 5% ( Rs 288 Crore) from Rs 5465Crore in 2011-12 to Rs 5753 Crore in 2012-13.

19. Finance Costs

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Interest and other borrowing costs 125 51

The interest cost represents the interest component of the lease rentals on assetstaken on finance lease and interest on short term borrowings during the year.

20. Other Expenses of manufacturing, Admini-stration, Selling & Distribution

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Other expenses of Manufacturing, Administration, Selling & Distribution 3777 3223

The increase in other Expenses of manufacturing, Administration, Selling &Distribution is Rs 554 Crore as compared to 2011-12 due to volume of operations and alsodue to liquidated damages charged off during the year.

21. Provisions (Net)

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Provisions (Net) 1566 1403

The increase in Provisions (Net) by Rs 163 Crore as compared to previous year is mainlyon account of net increase in provision for Contractual Obligations.

22. Depreciation

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Depreciation 953 800

The increase in depreciation by Rs 153 Crore is on account of increase in gross block.

23. Tax Expense

( Rs in Crore)
F.Y. 2012-13 F.Y. 2011-12
Income Tax-Current Year 3042 3277
- Earlier Years (220) (632)
Deferred tax charge/ (credit) (4) 617
Tax Expenses (Net) 2818 3262

The decrease in tax expense (Net) is in line with change in profit for the year.

24. Profit after Tax

in Crore)
F.Y. 2012-13 F.Y. 2011-12
Profit after Tax 6615 7040

25. Dividend

The company has paid an interim dividend of 106% 2.12 per share), Rs 518.89 Crore, onshare capital of Rs 489.52 Crore during the year 2012-13. The Board has also recommended aFinal dividend of 164.5% 3.29 per share) i.e. Rs 804.11 Crore.

The total dividend (exclusive of dividend tax) for the year 2012-13 is Rs 1323 Crore5.41 per share) as against Rs 1566.47Crore 6.40 per share) in the previous year.

Provision of Rs 136.66 Crore has been made for corporate dividend tax on the finaldividend proposed. Corporate dividend tax of Rs 84.18 Crore has already been paid on theinterim dividend.

26. Transfer to General Reserve

Rs 5000 Crore has been transferred to General Reserve for the year 2012-13.

(ii) Financial Review of Subsidiary Companies

a) Bharat Heavy Plate and Vessels Ltd. (BHPV)

Bharat Heavy Plate and Vessels Ltd. (BHPV) is 100% subsidiary co. of BHEL taken over on10.05.2008. In 2012-13 BHPV recorded a profit of Rs 35.04 Crore on a turnover of Rs 240.27Crore.

The financial highlights of BHPV are as under:

Particulars F.Y. 2012-13 F.Y. 2011-12
BHEL's Investment in Equity at at
Advance against issue of shares 34.00 34.00
Turnover 240.27 155.80
Profit after Tax 35.04 10.44

b) BHEL Electrical Machines Ltd.

A subsidiary Company has been incorporated on 19th January, 2011 as"BHEL Electrical Machines Ltd", with BHEL holding the majority stake of 51% withan equity investment of Rs 5.36 Crore and Govt. of Kerala retaining 49%. In 2012-13, BHELEML recorded a loss of Rs 0.55 Crore on a turnover of Rs 26.53 Crore.

Particulars F.Y. 2012-13 F.Y. 2011-12
BHEL's Investment in Equity 5.36 5.36
Turnover 26.53 21.14
Profit after Tax -0.55 -0.38

(iii) Financial Review of Joint Ventures Companies a) BHEL-GE Gas Turbine Services Pvt.Ltd. (BGGTS)

BGGTS is a Joint Venture Company of BHEL & GE USA, formed to take up repair &servicing of GE designed Gas Turbines. The Financial highlights of the Company are asunder:

Particulars F.Y. 2012-13 F.Y. 2011-12
BHEL's Investment in Equity 2.38 2.38
Turnover 813.78 513.28
Profit after tax 81.70 60.76
Net Worth 157.38 114.48

During the year BGGTS has paid interim dividend at 500% and proposed final dividend at200% on the Equity share capital of Rs 4.76 Crore.

b) NTPC - BHEL Power Projects Pvt. Ltd. (NBPPPL)

A Joint Venture between BHEL & NTPC in-corporated on 28th April, 2008for carrying out EPC activities in the Power Sector. The Financial highlights are asunder:

Particulars F.Y. 2012-13* F.Y. 2011-12
BHEL's Investment in Equity 25.00 25.00
Turnover 116.25 145.55
Profit after tax 5.66 13.06

*Based on provisional figures

c) Udangudi Power Corporation Ltd. (UPCL)

A Joint Venture between BHEL & TNEB was incorporated on 26th December,2008, to build, own and operate a 1600 MW (2x800 MW) Super Critical Thermal Power Plant atUdangudi. On 26.03.2013, BHEL has sold its entire stake in UPCL.

(Rs in Crore)
Particulars F.Y. 2012-13 F.Y. 2011-12
BHEL's Investment in Equity - 32.50
Net Block - 29.09
Capital Work in Progress - 41.75

d) Raichur Power Corporation Ltd.

BHEL has promoted a joint venture company with Karnataka Power Corporation Limited(KPCL) for setting up Supercritical Thermal Power Plant at Karnataka on build, own andoperate basis. The Joint Venture was incorporated on April 15, 2009 under the name of"Raichur Power Corporation Ltd".

( Rs in Crore)
Particulars F.Y. 2012-13* F.Y. 2011-12
BHEL's Investment in Equity 331.52 331.52
Net Block 3.35 3.40
Capital Work in Progress (Including advances for capital expenditure) 3531.85 1469.07

*Based on provisional figures

e) Dada Dhuniwale Khandwa Power Limited

BHEL has promoted a joint venture company with Madhya Pradesh Power Generating CompanyLtd. (MPPGCL) for setting up of a 2x800 MW Supercritical Thermal Power Plant at Khandwa,Madhya Pradesh on build, own and operate basis. The Joint Venture was incorporated onFebruary 25, 2010 under the name of "Dada Dhuniwale Khandwa Power Ltd".

( Rs in Crore)
Particulars F.Y. 2012-13* F.Y. 2011-12
BHEL's Investment in Equity 22.50 22.50
Net Block 0.02 0.03
Capital Work in Progress 1.63 0.75
*Based on provisional figures

f) Latur Power Company Ltd.

BHEL has promoted a Joint venture company with Maharashtra State Power GenerationCompany Ltd. (MAHAGENCO) for setting up a 2x660 MW Thermal Power Plant or 1500 MW gasbased Combined Cycle Power Plant (CCPP) in Latur, Maharashtra. The Joint Venture Companywas incorporated on April 6, 2011 under the name of "Latur Power Company Ltd.".The present paid up equity of the JVC is Rs 5 Crore, subscribed to equally by both thepartners.

g) Power Plant Performance Improvement Ltd.

A Joint Venture between BHEL and Siemens and is under liquidation.

(iv) Consolidated Financial Statement (CFS)

Consolidated Financial Statements have been prepared in accordance with AccountingStandard- 21 on "Consolidated Financial Statements" and Accounting Standard - 27on " Financial Reporting of Interest in Joint Ventures."

A brief summary of the results on Financial performance in line with the above AS areas under:

2012-13 2011-12 % age increase over 2011-12
Statement of Profit & Loss
Turnover 50673 49898 1.55
Profit Before Tax 9531 10367 -8.06
Profit After Tax 6693 7087 -5.56
Balance Sheet
Sources of Funds
Shareholders fund 30533 25403 20.19
Minority Interest 5 5 0.00
Non current liabilities 13007 12880 0.99
Current liabilities 28208 29142 -3.20
Total 71753 67430 6.41
Application of Funds
Net Block (incl. CWIP) 7036 6282 12.00
Non Current Investments 6 6 0.00
Deferred Tax Assets 1556 1549 0.45
Other Non current assets 11744 10374 13.21
Current Assets 51411 49219 4.45
Total 71753 67430 6.41

B. PERFORMANCE OF BUSINESS SEGMENTS

Power Sector

The Indian Power Sector is witnessing a slowdown since the past few years. Issues ofcoal linkages, environmental clearances, land acquisition and fund constraints haveresulted in non-finalization of new projects, especially in the private sector and some ofthe ongoing projects are on a slow execution path.

• In the Power Sector business segment, despite these challenges and intensecompetitive pressure, BHEL has maintained its market leadership in the domestic market forutility sets:

• Power Sector secured orders worth Rs 25,560 Crore; 82% up from last year.

• Secured orders for 8 nos. Turbine Generator (TG) package and 9 nos. Boilers forSuper-critical sets during the year.

• Continued Customer Confidence; Repeat order of TG package for 2x700 MWe RAPP7&8.

• Orders for 7 nos. of standalone ESP Packages for supercritical sets againststiff global competition.

Significant orders received in the Power sector include:

Thermal

Sub-Critical Orders:

• 1x500 MW NTP

Futures & Options Quote
Expiry Date :
229.55    3.25 (1.44%)
Instrument: FUTSTK
Expiry Date: 31-Jul-2014
Open Price: 227
Average Price: 228.50
No. of Contracts Traded: 12,724
Open Interest: 1,63,42,000
Underlying: BHEL
Market Lot: 2,000
Previous Close: 229.55
Day's High | Low: 230.70 | 225.05
Turnover (Cr.): 581.49
Open Int. Change: 0,82,42,000 ([33.53]% )
Key Information

Key Executives:

B Prasada Rao , Chairman & Managing Director

I P Singh , Company Secretary

Ambuj Sharma , Official Director (Part time)

P K Bajpai , Director (Finance)


Company Head Office / Quarters:

BHEL House,
Siri Fort,
New Delhi,
New Delhi-110049
Phone : New Delhi-91-11-66337000(15 Lines) / New Delhi-
Fax : New Delhi-91-11-66337533 / New Delhi-
E-mail : query@bhel.com/inder@bhel.in
Web : http://www.bhel.com

Registrars:

Karvy Computershare Pvt Ltd
105-108 Arunachal Bl,19 Barakhamba Road,Connaught Place,New Delhi - 110 001

 
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