Bharat Bijlee Ltd Management Discussions.


The financial year 2019-20 witnessed paradigm shifts in geo-political strategies of several nations. The trend of globalization gave way to rising trade barriers. These developments magnified the cyclical and structural slowdowns already underway, dampening business sentiments globally. With the economic environment becoming more uncertain, firms turned cautious on long-range spending, and global purchases of machinery and equipment decelerated. To avert a deeper slowdown, central banks have cut interest rates and restarted asset purchases to create supportive financial conditions, and to stimulate consumer sentiment and, in turn, demand. The domestic economy during the financial year 2019-20 witnessed GDP growth of 4.2%, the slowest in the last eleven years. The Index of Industrial Production (IIP) registered cumulative growth of -0.8% during the year 2019-20 over the previous year. IIP – Manufacture of Electrical Equipment contracted by 4.2% during the same period. This was culmination of declining sales and inventory accumulation across sectors, and deferment of capital expenditure by both the private and public sector.

The Indian transformer industry continued to witness overcapacity and fierce competition amongst market players. The industry has been stagnant over the past several years due to the slowdown in private investment and the manufacturing sector.

UDAY (Ujwal DISCOM Assurance Yojana), a Scheme for the financial turnaround of power distribution companies (DISCOMs), was approved by the Government of India with the objective to improve operational and financial efficiency of State DISCOMs. Many DISCOMs have not been able to adhere to the reform paths envisaged under UDAY for a variety of reasons: tariffs not being reflective of costs; inadequate budgeting of subsidies; high aggregate technical and commercial (AT&C) losses etc. This has kept investment in the power sector muted. The Indian electrical motors industry also showed no growth, but your Companys initiatives to broaden its market reach has shown results. Energy efficient motors, transportation, railways and water are sectors driving demand for electric motors.


The Company operates in two Business Segments, viz. "Power Systems" and "Industrial Systems".

Power Systems:

The Power Systems segment comprises of Power Transformers up to 200 MVA, 220 KV voltage class and EPC projects for electrical substations up to 400 KV.

The sector continues to suffer from over-capacity and almost stagnant demand. Though the Company achieved near full capacity volumes, intense competition kept prices lower and profits muted. To maintain its flagship position as a preferred transformer supplier, the transformer plant has been upgraded to manufacture power transformers in a dust-free and humidity-controlled environment by air-conditioning the winding shop and installing de-humidifiers.

For the project business, we continue to tread cautiously, targeting orders from customers of repute to ensure timely completion of projects with reasonable profitability.

The revenue of the Power Systems Segment decreased by 9.9% as certain deliveries could not be effected in view of preventive measures and the nation-wide lockdown by the Government to contain the spread of Covid-19 pandemic; however the segmental profit improved by 16.6% due to cost control measures taken by the Company.

Industrial Systems:

This segment comprises of a full range of low and medium voltage industrial motors, permanent magnet technology machines (MTM) and AC variable drives and drive systems. The Motors business, despite a moderate GDP growth with negative IIP – manufacture of electrical equipment, continued its growth by enlarging product offerings, focusing on value engineering, and deepening its geographical reach. During the year we secured order for and successfully delivered a wide range of motors to lift the dam gates for the Kaleshwaram Lift Irrigation Project, currently the worlds largest multi-stage lift irrigation system. Further, our flameproof motors received the IECEx Certificate of Conformity under the IEC Certification Scheme for Explosive Atmospheres from SGS BASEEFA.

The Drives and Automation business has been developing newer applications with an eye on widening its sectoral reach.

The MTM business has been focusing on value engineering, and offers solutions for Indian and export markets. In spite of the entry of several international brands, our gearless elevator machines continue to hold a flagship position in the domestic market and have made inroads into export markets through our overseas partner. This vertical has also successfully developed and manufactured a range of servo motors; these have been successfully tested at Electrical Research and Development Association (ERDA).

The revenue of the Industrial Systems segment increased by 10.8% and the segmental profit increased by 31.9% as your Company successfully seized available market opportunities.


Key Financial Ratio FY 2019-20 FY 2018-19 Change Reason for Change more than 25%
Debtors Turnover Ratio 3.18 3.64 -13%
Inventory Turnover Ratio 4.73 6.33 -25% Inventory increased to support higher volume in Industrial Systems and delayed dispatch clearances at the year-end due to Covid-19 pandemic
Interest Coverage Ratio1 -53.47 -10.88 392% Increase in finance cost due to elongated working capital cycle
Current Ratio 1.59 1.71 -7%
Debt Equity Ratio2 0.50 0.42 18%
Return on Net Worth3 10.88% 10.78% 1%
Operating Profit Margin4 7.42% 6.64% 12%
Net Profit Margin5 4.91% 4.45% 10%

1 (Profit before Tax + Finance Cost + Depreciation - Interest Income) / (Finance Cost - Interest Income)

2 (Gross Debt - Cash and Cash Equivalents - Current Investments) / (Equity Capital + Other Equity - Other Comprehensive Income)

3 Profit after Tax / Average Equity Capital and Other Equity less Other Comprehensive Income)

4 (Profit before Tax - Exceptional Income) / Turnover

5 Profit after Tax / Turnover


Tight liquidity in the domestic financial markets in spite of an accommodative policy stance by the Central Bank, underutilized manufacturing capacity, and muted private sector capital expenditure remain the key risks.


Most of Internal Controls of the Company have been automated through the SAP ERP system. System driven controls ensure consistency, continuous monitoring and compliance. Internal Controls have been designed to mitigate financial and operational risks and ensure that transactions are being made within authority delegated by the top management, recorded properly and reported correctly.

Internal controls across the Company are periodically reviewed and tested to assess its adequacy and effectiveness both by the Companys Internal Audit team and the Statutory Auditors. The Management and Audit Committee are apprised of the outcome of such reviews. Internal Controls are further reinforced based on such reviews, if required. The Company has defined a framework for Risk Management that gets reviewed regularly and updated along with all businesses of the Company.


It was expected that political stability following the general elections would bring much needed foreign capital into infrastructure development. The Government of India has set an ambitious target of a $ 5 Trillion economy by

2025. It has also announced a INR 100 trillion spend on infrastructure. To energise the "Make in India" programme, the Government also revised tax rates to attract investment in manufacturing. Global trade tensions, geo-political conflicts, and protectionist policies continue to cause import-export distortions. Despite these concerns, the long term growth story of India remains intact. The lockdown to combat the Covid-19 pandemic outbreak, not only domestically but globally, has had a destructive impact on economic activity. The lockdown has since been extended in a graded manner. For the foreseeable future, economic activity in general and profitability will continue to be affected by supply chain gaps, labour mismatches due to departure of migrant workers, and behavioural changes towards consumption and funding issues. A revival in consumption and economic activity, and a receding of risk sentiment will hinge upon the timing and availability of a vaccine for Covid-19. Against this backdrop of a tough environment, your Company has been cautiously treading the path of enriching its product basket and upgrading its manufacturing facilities to maintain its position of a trusted engineering brand.

For Bharat Bijlee Limited

Nikhil J. Danani

Vice Chairman & Managing Director

Particulars 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross Sales 76299 77385 58683 53306 66262 70883 74557 78456 92457 92111
Net Sales 69704 71051 53534 48205 60562 63453 67334 76874 92457 92111
Cptl. Empld.1 30951 38375 39807 38224 39875 44127 48136 58008 60448 68135
Net Worth1 28135 31860 31208 30078 26535 27254 30378 36544 40518 43350
Gross Block 11913 14465 16127 16845 16986 17258 8184 8466 9705 11010
Net Block 7124 8989 9688 9400 8370 7672 7197 6547 6948 7357
Profit/(Loss) Before Tax 9233 6603 (819) (1342) (3443) 735 1806 7268 6193 6892
Profit/(Loss) After Tax 7353 5367 (478) (1130) (3405) 719 1442 6097 4153 4562

1 Excluding Equity Instruments through other Comprehensive Income

Particulars 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Excise Duty 9.5 8.8 9.6 10.1 9.8 11.4 10.7 2.1
Profit/(Loss) 10.6 7.4 (0.9) (2.2) (5.9) 1.1 2.9 8.0 8.2 4.8
Taxation 2.7 1.7 (0.6) (0.4) (0.1) 0.1 1.5 2.4
Depreciation 1.3 1.3 2.0 2.2 2.1 1.6 1.5 1.2 0.9 0.9
Interest 1.3 1.9 2.3 2.6 3.4 3.2 2.4 2.5 2.0 2.1
Other Exp. $ 1.7 2.7 6.0 5.6 7.0 4.8 3.9 1.3 5.5 5.7
Personnel # 8.0 9.7 12.6 14.2 12.9 12.6 12.7 12.0 10.9 12.1
Materials 74.4 75.3 78.6 78.0 80.5 76.7 76.6 73.4 72.5 72.0

$ Other Expenditure is adjusted for Other Income and Exceptional Income.

# Personnel cost is adjusted for Expenditure on VRS written off and Provision for Gratuity.

Period ended March March March March March March March March March March
2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Sales 92872.67 92457.43 78455.85 74557.09 70882.85 66262.36 53305.60 58682.72 77384.76 76299.48
Before Taxes 6891.63 6193.00 7267.82 1805.68 735.37 (3443.14) (1342.12) (819.33) 6602.51 9232.85
After Taxes Net of Adjustments 4562.00 4153.06 6096.76 1441.82 719.19 (3404.95) (1197.92) (489.50) 5367.23 7352.53
Dividends 706.45 706.45 141.29 141.29 1412.89 1412.89
Earnings Per Share () 80.69 73.49 107.88 25.51 12.73 (60.25) (19.98) (8.61) 94.97 130.10
Equity Dividend Rate
( Per Share) 12.50 12.50 2.50 2.50 25.00 25.00
Net Worth Per Share () 767.09 716.93 646.61 537.52 510.25 469.52 532.21 552.20 563.74 497.82
Debt Equity Ratios+ 0.01:1 0.04:1 0.05:1 0.04:1 0.07:1

+ Debt = Loan Funds less cash credit & Short-Term Loans from Banks; Equity = Shareholders Funds