Csah MGMT

project REPORT ON CASH MANAGEMENT
At BHARAT HEAVY ELECTRICALS LIMITED HARIDWAR, UTTARAKHAND

{Submitted in partial fulfillment of the requirement for award of master in business administeration}
Master in business administration Modern institute of technology rishikesh
SUBMITTED BY: PANKAJ SHARMA MBA (FINANCE)
PREFACE
No learning can be complete without practicing" Financial activities can be regarded as lifeblood of all business concern. In order to enhance the performance of finance department and overall success of a business concern, Study of Cash Management in the organization is very important because a profitable business becomes bankrupt when its run out of cash. The performance of a company very much depends on finance department. organization. Therefore these activities very much important for an
An alert Finance Manager can make cash management a profit centre by investing the cash surplus in a most profitable manner
I also hope that this Report will be beneficial for my next batches and for those who are related to this topic.
A C KN O WL ED G EM ENT
First of all I would like to thank Mrs. Santosh Anand and supervisor, who helped me to take up this topic which will remain current and relevant for a very long time. It is her suggestions and constant guidance that helped me in all walks of areas relevant to my topic. She gave her valuable time and immense knowledge to discuss the need, scope and coverage of the research. It is her meticulous suggestions about the research that has helped me to present an in depth analysis with very little scope to go haywire from the topic. I would like to pay my heart felt thanks to Mr. Subodh gupta,DGM(Finance) who constantly motivated me to do better in my study and in all walks of life. I am also grateful to my all faculty members for their valuable suggestions during my study. Most of the suggestions have been incorporated in my research. Last but not the least, I would like to thank my parents and my friends for their unending emotional and physical support which has helped me immensely in completing this research work within the scheduled time.
DECLARATION
I hereby declare that the study entitled CASH MANAGEMENT being submitted by
me in the partial fulfillment of the requirement for the award of master in business administration by modern institute of technology is a record of my own work.
The matter embodied in this project report has not been submitted to any other University or Institution. I further declare that all the information and facts furnished in this project report are based on my intensive findings
(PANKAJ SHARMA) MBA(finance)
INDEX
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
B.H.E.L. An Overview B.H.E.L. Haridwar Unit Objective of Study Evolution of Cash Management Objectives of Cash Management Meaning of Cash Management Reasons of Cash Management Factor Influencing Cash Management in Business Cash Flow Cycle Tools of Cash Management 57
1 26 44 45 47 48 50 53 56
Techniques Of Cash Forecasting & Cash Budgeting Cash Flow Statement of BHEL Effects of Cash Management in an Organization Suggestions & References Findings & Conclusion Bibliography
66 70 79 86 87 88
12.
13. 14. 15. 16.
B.H.E.L. A CORPORATE GIANT

Established in the late 50's BHARAT HEAVY ELECTRICALS LIMITED (BHEL) is a name which is recognized across the industrial world. It is one of the largest engineering and manufacturing enterprises in INDIA and is one of the leading international companies in the power field. BHEL offers a wide spectrum of products and services for core sectors like power transmission, industrial transportation, oil and gas, telecommunication etc. Besides supply of nonconventional energy systems. It has also embarked into other areas including defence and civil aviation. A dynamic 63000 strong team embodies the BHEL philosophy excellence through continuous striving for state of the art technology. With corporate headquarters in NEW DELHI, fourteen manufacturing units, a wide spread regional services network and projects sites all over India and even abroad, BHEL is India's industrial ambassador to the world with export presence in more than 50 countries. BHEL's range of services extent from project feasibility studies to after sales services, successfully meeting diverse needs through turnkey capability. BHEL has had a consistent track record of growth, performance and profitability. The World Bank in its report on the Indian Public Sectors, has described BHEL as one of the most efficient enterprises in the industrial sector, at par with international standards of efficiency". BHEL has acquired ISO 9000 certificate for most of its operations and has taken up Total Quality Management (TQM). All the major units/divisions of BHEL have been upgraded to the latest ISO-9001: 2000 version quality standard certification for quality management. All the major units/divisions of BHEL have been awarded ISO-14001 certification for environmental management systems and OHSAS-18001 certification for occupational health and safety management systems. BHEL occupies an all-important niche as evident by its ranking by CII amongst top eight PSUs based on financial performance. Recently in survey conducted by business India, BHEL has been rated as seventh Best Employer in India.
International Business:6
BHEL has, over the years, established its references in over 60 countries of the world. These references encompass almost the entire range of BHEL products and services, covering Thermal, Hydro and Gas based turnkey power projects, substation projects, and rehabilitation projects; besides a wide variety of products like: Transformers, Compressors, Valves and Oil field equipment, Electrostatic Precipitators, Insulators, Heat Exchangers, Switchgears, Castings and Forgings etc.
Some of the major successes achieved by BHEL have been in Gas-based power projects in Oman, Libya, Malaysia, Saudi Arabia, Iraq, Bangladesh, Sri Lanka, China, Kazakhstan; Thermal Power Projects in Cyprus, Malta, Libya, Egypt, Indonesia, Thailand, Malaysia; Hydro power plants in New Zealand, Malaysia, Azerbaijan, Bhutan, Nepal, Taiwan and Substation projects & equipment in various countries. Execution of these overseas projects has also provided BHEL the experience of working with world-renowned Consulting Organizations and Inspection Agencies. The Company has been successful in meeting demanding requirements International markets, in terms of complexity of the works as well as technological, quality and other requirements viz. HSE requirement, financing package, associated O&M services to name a few. BHEL has proved its capability to undertake projects on fast-track basis. BHEL has also established its versatility to successfully meet the other varying needs of various sectors, be it captive power, utility power generation or for the oil flexibility to exhibited adaptability by manufacturing and supplying intermediate products.
B.H.E.L. IN INDIA
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# REGIONAL OFFICES (POWER SECTORS) *********************************** 1. 2. 3. 4. NEW DELHI (NORTHERN REGION) CALCUTTA (EASTERN REGION) NAGPUR (WESTERN REGION) CHENNAI (SOUTHERN REGION)
# BUSSINESS OFFICES ******************* 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. BANGLORE BARODA BHUBANESHWAR MUMBAI CALCUTTA CHANDIGARH GUWAHATI JABALPUR JAIPUR LUCKNOW CHENNAI NEW DELHI PATNA RANCHI SECUNDRABAD
# MANUFACTURING UNITS
1. 2. 3. 4. 5. 6. 7. 8. 9.
BANGALORE BHOPAL GOINDWAL HARIDWAR HYDERABAD JAGDISHPUR JHANSI RUDRAPUR RANIPET TIRUCHIRAPALLY
10.
# SERVICE CENTRES
1. 2. 3. 4. 5. 6. 7. 8. 9.
BANGLORE BARODA CALCUTTA CHANDIGARH SECUNDRABAD NEW DELHI NAGPUR PATNA VARANASI
COMPANY PROFILE
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BHEL is India's largest engineering company and one of its kind in this part of the hemisphere. It manufactures a wide range of state of the art power generation equipment and systems besides equipment for industry, transmission, defence, telecommunication and oil business. The first plant of BHEL was set up in Bhopal in 1956, which signaled the dawn of the heavy electrical industry in India. In the early 60's three more major plants were set up in Haridwar, Hyderabad and Tiruchirapalli. The company now has 14 manufacturing divisions, 10 services centers and power sectors regional centers besides project sites spread all over India and also abroad to provide prompt and effective service to customers. BHEL's business broadly covers conversions, transmission, utilizations and conservation of energy in core sectors of economy that fulfill vital infrastructure needs of the country. Its product have established an enviable reputation of high quality and reliability, which is largely due to emphasizes placed all along on contemporary some of the best technologies of the world from the leading companies in U.S.A., EUROPE, and JAPAN together with technologies from its own R&D centers technologies B.H.E.L. has consistently upgraded its design and manufacturing facilities to international standards by acquiring and assimilating.
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VISION
A World Class Engineering Enterprise Committed To Enhancing Stakeholder Value.
MISSION
To Be An Indian Multinational Engineering Enterprise Providing Total Business Solutions Through Quality Products, Systems And Services In The Fields Of Energy, Industry, Transportation, Infrastructure And Other Potential Areas.
VALUES
MEETING COMMITMENTS MADE TO EXTERNAL AND INTERNAL
CUSTOMERS. FOSTER LEARNING, CREATIVITY AND SPEED OF RESPONSE. RESPECT FOR DIGNITY AND POTENTAIL OF INDIVIDUALS. LOYALTY AND PRIDE IN THE COMPANY. TEAM PLAYING ZEAL TO EXCEL INTEGRITY AND FAIRNESS IN ALL MATTERS.
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BUSINESS MISSION
To maintain a leading position as suppliers of quality equipment, systems and services in the field of conversion of energy, for application in the areas of electric power transportation, oil and gas exploration and industries. Utilize company's capabilities and resources to expand business into allied areas and other priority sectors of the economy like defence, telecommunications and electronics.
BUSINESS OBJECTIVES GROWTH: To ensure a steady growth by enhancing the competitive edge of BHEL defence, telecommunication and electronics in existing business, new areas and international operations so as to fulfill national expectations from BHEL.
PROFITABILITY: To provide a reasonable and adequate return on capital employed, primarily through improvements in operational efficiency, capacity utilization productivity and generate adequate internal resources to finance the company's growth.
CUSTOMER FOCUS: To build a high degree of customer confidence by providing increased value for his money through international standards of product quality, performance and superior services.
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PEOPLE- ORIENTATION: To enable each employee to achieve his potential, improve his capabilities, perceive his role and responsibilities and participate and contribute positively to the growth and success of the company. To invest in human resources continuously and be alive to their needs.
TECHNOLOGY: Achieve technological excellence in operations by development of indigenous technologies and efficient absorption and adaptations of imported technologies to suit business need and priorities and provide the competitive advantage to the company.
IMAGE: To fulfill the expectations which stakeholders like government as owner, employees, customers and the country at large have from BHEL.
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CONTRIBUTION OF BHEL IN VARIOUS CORE SECTORS

BUSINESS SECTORS: BHEL's operations are organized around three business sectors, mainly power, industry and international operations. This enables BHEL to have a strong customers orientation, to be sensitive to his needs and respond quickly to the changes in the market.
POWER SECTORS: Power is the core sector of BHEL and comprises of thermal, nuclear gas, diesel and hydro business. Today BHEL supplied sets, accounts for nearly 66 % of the total installed capacity in the country as against nil till 1969-70. BHEL manufactures boilers auxiliaries, TG sets and associate controls, piping and station C & I up to 500 MW rating with technology and capability to go up to 1000 MW range. The auxiliary products high value capital equipment like bowl and tube mills, pumps and heaters, electrostatic precipitators, gravimetric feeders, fans, valves etc. BHEL has contracted so far around 240 thermal sets of various ratings, which includes 14 power plants set up on turnkey basis. Nearly 85 % of World Bank tenders for thermal sets floated in India have been won by the company against international competition. BHEL has adopted the technology to the needs of the country and local conditions. This has led to the development of several technologies in house. The fluidized bed boiler that uses low graded high-ash abrasive Indian coal is an outcome of such an effort. With large-scale availability of natural gas and the sudden increase in demand, BHEL began to manufacture gas turbines and now possesses two streams of gas turbine technology.
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It has the capability to manufacture gas turbines up to 200 MW rating and custom built combined cycle power plants. Nuclear steams generators, turbine generators, sets and related equipment of 235 MW rating have been supplied to most of the nuclear power plants in India. Production of 500 MW nuclear sets, for which orders have been received. BHEL has developed expertise in renovation and maintenance of power plant equipment besides specialized know how of residual life assessment, health diagnostic and life extensions of plants. The four power sectors regional centers at New Delhi, Chennai, Kolkata and Nagpur will play a major role in giving a thrust to this business and focus BHEL's efforts in this area.
INDUSTRY SECTORS:BHEL is a major producer of large size thyristor devices. The products include centrifugal compressors, high speed industrial drive turbines, industrial boilers and auxiliaries, waste heat recovery boilers, gas turbines, electric motors, drives, and control equipments, high voltage transformers, switch gears and heavy castings and forgings.
Company in India with the capability to make simulators for power plants, defence industrial process plants and other applications. An entry has been made in aviation industry for which BHEL has set up facilities and is now producing two seater aircraft.
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TRANSMISSION:A wide range of transmission products and systems are produced by BHEL to meet the needs of power transmission and distribution sector. These include: Dry Type Transformers SF6 Switch Gears 400 KW Transmission Equipment High Voltage Direct Current System Series and Shunt Compensation Systems In anticipation of the need for improved substations, a 33 KV gas insulated sub station with micro processors base control and protection system has been done.
TRANSPORTATION:65 % of trains in Indian Railways are equipped with BHEL's traction and traction control equipment. These include: Broad Gauge 3900 HP AC / DC locomotives Diesel Shunting Locomotives up to 2600 HP 5000 HP AC Loco with thyristor control Battery Powered Road Vehicles and Locomotives
RESEARCH AND DEVELOPMENT:BHEL has a corporate R & D center supported by R & D groups at each of the manufacturing divisions. The dedicated effort of BHEL's R & D engineers have produced several new products like automated storage retrieval system automated guide vehicles for material transportation etc. Establishment of Asia's largest fuel evaluation test facility at Tiruchi was high light of the year. This facility will enable evaluation of combustion, heat transfer and pollution parameters in boilers. Major R & D achievement include:
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Design manufacture and supply of countries first 17.2 MW industrial steam turbines. Development of 4700 HP AC / DC loco for Indian Railways. Development of largest capacitor voltage transformers of 8800 PF 400 KV rating. Development and application low cost ROBOTS for job loading/unloading. According to ex- CMD Mr. R.K.D. Shah, "BHEL is spending Rs. 60 Crores on Research and Development. Earning from product which has been commercialized has gone up 26 % to Rs. 760 Crores."
Human Resource Development Institute:BHEL has envisioned becoming "A World Class Engineering Enterprise committed to enhancing stakeholder value". Force behind realization of this vision and the source of our competitive advantage is the energy and ideas of our 44,000 strong highly skilled and motivated people. The Human Resource Development Institute situated in NOIDA, a corner-stone of BHEL learning infrastructure, along with Advanced Technical Education Center (ATEC) in Hyderabad and the Human Resource Development Center at the manufacturing Units, through various organizational developmental efforts ensure that the prime resource of the organization the Human Capital is Always in a state of Readiness, to meet the dynamic challenges posed by a fast changing environment. It is their constant endeavor to take the HRD activities to the strategic level of becoming active partner to the (organizational) pursuits of achieving the organizational goals.
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TECHNICAL COLLABORATIONS
PRODUCT
# Thermal Sets, Hydro Sets, Motors & Control Gears. # Bypass & Pressure Reducing Systems
COLLABORATIONS
Prommashexport RUSSIA Sulzer Brother Ltd. SWITZERLAND
# Electronic Automation System for Steam Turbine & Generators # Francis Type Hydro Turbines
Siemens AG. GERMANY General Electric CANADA
# Moisture Separator Reheaters
Baloke Duerr GERMANY
# Christmas Trees & Conventional Well
National Oil Well Head Assemblies, USA
# Steam Turbines , Generators and Axial Condensers # Cam Shaft Controllers and Tractions Current Control Units # HDVC
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Siemens AG. GERMANY Siemens AG. GERMANY ABB SWEDEN
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# Programmable Controls
ABB SWITZERLAND
# Gas Turbines
General Electric Co. USA
# Tube Mills
Stien Industries FRANCE
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DIVISIONS OF BHEL
There are 20 Divisions of BHEL, they are as follows:
1.
HEEP, Haridwar HPEP, Hyderabad HPBP, Tiruchi SSTP & MHD, Tiruchi CFFP, Haridwar BHEL, Jhansi BHEL, Bhopal EPD, Bangalore ISG, Bangalore ED, Bangalore BAP, Ranipet IP, Jagdishpur IOD, New Delhi COTT, Hyderabad IS, New Delhi CFP, Rudrapur
2. 3. 4. 5. 6. 7. 8.
9.
10. 11. 12. 13. 14. 15. 16.
17. HERP, Varanasi 18. Regional Operations Division ARP, New Delhi 19. TPG, Bhopal 20. Power Group (Four Regions and PEM)
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MAJOR COMPETITORS OF BHEL

1. 2. 3. 4. 5. 6. 7. 8. 9.
Ansaldo Asea Brown Boueri Beehtel Block & Neatch CNMI & EC Costain Electrim Energostio Electro Consult Franco Tosi U.K.
Italy Switzerland USA USA China U.K. Poland Russia Italy France Japan USA Japan Russia Japan Japan U.K. USA Germany China
10.
11. Fuji 12. GEC Alsthom 13. General Electric 14. Hitachi 15. LMZ 16. Mitsubishi 17. Mitsui 18. NEI 19. Raytheon 20. Rolls Royce
21.
Sanghai Electric Co.
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RECENT ACHIEVEMENTS OF BHEL

1. BHEL's R&D ops contribute Rs 1,151 cr to turnover in 2005-06 [May 19
2006] NEW DELHI: Bharat Heavy Electrical Ltd on May 18 said the company has achieved a turnover of Rs 1,151 crore during 2005-06 through products developed by in-house research and development operations. This revenue was eight per cent of its total revenue of Rs 14,410 crore in 200506. This was the result of a constant thrust on developing new technologies and products, improving existing products and systems in terms of reliability, cost and quality through in-house R&D efforts. The company invested about Rs 150 crore on Research and Development of products and systems during the year, which was among the highest in the country. The company also filed for 84 patents, including three abroad, taking the total number of patents filed till date to 339. Out of this, BHEL has been granted 26 patents and the rest are in various stages of processing. Thirteen copyrights have also been filed. R&D and technology development are of strategic importance to BHEL as it operates in a competitive environment where technology is a major factor.
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2. BHEL to manufacture 800 mw thermal sets [Apr 14 2006] Catching up
with the advancement in global technologies, Bharat Heavy Electrical Ltd (BHEL), through the efforts of its corporate research and development division in Hyderabad, is now equipped to manufacture 800 mw supercritical thermal power sets in the country. Much sought-after by several players in power generation, including APGenco, for its fuel efficiency, the super-critical technology has been till now viewed as the sole domain of developed world. As part of its effort to emerge as one of the global technology players in power systems and other new technologies, the R&D division of BHEL has started fresh initiatives by setting up centers of excellence for surface engineering (CoE-SE) and intelligent machines and robotics (CIMAR). According to the source, CIMAR would be set up at the Corporate R&D division in Hyderabad at an initial investment of Rs 4.77 crore. Among the new products, the BHEL Corporate R&D has successfully completed design, supply and commissioning of automated storage and retrieval systems for four of the 13 warehouses at the Central Ordnance Depot, Kanpur.
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3. BHEL inks agreement with IIT Madras for new courses [Apr 25 2006]
Chennai: Bharat Heavy Electrical Ltd and the Indian Institute of TechnologyMadras have signed a memorandum of understanding for collaborative research in the areas of design of boilers, manufacturing, metallurgical engineering, mechanical engineering, information technology and other areas of mutual interest. With the help of BHEL, Tiruchi, IIT-M will establish a research centre at the BHEL campus for the purpose. IIT-M will select MS/PhD research scholars to work as research associates/project associates. BHEL on its part will make available its research facilities and laboratories for the purpose. The collaboration has also given scope for IITM to start two new courses one on energy engineering and another on welding engineering. The courses will start from the academic year 200607. BHEL, which designs power plant boilers for handling a variety of coals, is also interested in getting into coal research.
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4. BHEL secures Rs. 80 cr. export order from EETC [May 10 2006] NEW
DELHI: Bharat Heavy Electricals Ltd (BHEL) has bagged its largest ever export order for transformers worth Rs 80 crore from Egyptian Electricity Transmission Co (EETC). BHEL will supply 14 transformers of 125 MVA to the state-run Egyptian company as a part of the order. These transformers would be installed in eight sub-stations at different locations in Egypt. The transformers, to be built at the company's Jhansi plant, would be installed and commissioned under BHEL supervision. The company had earlier executed a boiler project at All Arish in Egypt. With the order for transformers, BHEL has also established itself in the transmission market in Egypt. BHEL had earlier reported a six-fold increase in its export orders booking for the fiscal ended March 31 at Rs 3,348 crore. These orders contributed to one-fifth of the company's total orders booked last year. With this BHEL is poised to achieve a quantum growth in its export business driven by consolidation in existing markets and widening its export base through expansion of existing basket of products and services and entering new markets.
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BHEL net profit up 62 pc(the tribune,3 June 2006)BHEL has posted a net profit of Rs 867.95 crore for the quarter ended March 31,2006, as compared to Rs 534.28 crore for the quarter ended March 31, 2005, an increase of 62.45 pc. Total income has increased from Rs 4,518.94 crore in Q4 FY 04-05 to Rs 5728.96 crore for Q4 FY 05-06.It has posted a net profit of Rs 1679.16 crore for the year ended March 31,2006(FY 05-06) as compared to Rs 953.40 crore for the year ended March 31,2005. total income has increased from Rs 9977.36 crore in FY 04-05 to Rs 13820.02 crore for FY 05-06.The board of directors has recommended a final dividend of 20 percent of equity of the company, making it to total of 145 percent of the equity share capital of the company for the financial year 2005-06. this includes the interim dividend of 40 percent and special dividend of 85 percent already paid during the year.
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5. Workers
participation in management yields savings at BHEL,
Haridwar , Nov 16: Empowerment of employees through the "quality the areas of import substitution, revamping of old machine tools and safety over the past two decades based on the principle of people-building and mutual development, the "quality circle" was adopted by the BHELs Haridwar Plant in the year 1981 and has, since then, yielded savings of nearly Rs five crore, according to Mr. Ashwini Dhar, Public Relations Officer of the organization. The quality circle guides the combined efforts and knowledge of workmen of a particular section. There are more than four hundred quality circles actively working to enhance the excellence on the process, quality and delivery fronts, Mr.Dhar said. Coordinators and facilitators along with other members of the workers groups identify problems and think of solutions collectively to prevent defects and maintain overall quality. Mr.Dhar said upgrading, renovation and modernization of hydro sets installed at various power stations equipped with BHEL and non-BHEL equipment was being now undertaken by the Haridwar unit through its research and development efforts. The Haridwar unit of BHEL has received an order of Rs eight crore from Power Development Corporation, Jammu and Kashmir, to carry out renovation and modernization of the lower Jhelum Hydro Electric Project. This project is equipped with turbine and operator equipment supplied by BHEL and the project was commissioned in 1980. Another order, worth Rs. thirty crore, was received by the BHEL plant for renovation, modernization and uprating of the units of Ganguwal and Kotla Hydro Electric Projects under Bhakra Beas.
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6. Management Board and will ensure an increased output of the generating
units by as much as twenty per cent. Earlier, one unit each of the above machines was renovated and updated by the BHEL resulting in a similar output increase for these machines. More than a hundred sets of different capacities supplied by BHEL, Haridwar, are commissioned at various power stations all over the country. The hydro sets are tailor-made to suit varying hydroelectric parameters. Mr. Dhar said that at the Haridwar Plant, excellent engineering and manufacturing facilities are available to supply kaplan, francis, pelton and reversible hydro turbines along with matching generators and associated equipment. (UNI)
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The Heavy Electrical Equipment Plant (HEEP) located in Haridwar, is one of the major manufacturing plants of BHEL. The core business of HEEP includes design and manufacture of large steam and gas turbines, turbo generators, hydro turbines and generators, hydro turbines and generators, large AC/DC motors and so on. Heavy Electrical Equipment Plant, Haridwar of this Multi-unit corporation with 7467 strong highly skilled technicians, engineers, specialists and professional experts is the symbol of Indo Soviet and Indo German Collaboration. It is one of the four major manufacturing units of the BHEL. With turnover of 164059 lacs and PBT of Rs.32489 lacs HEEP added 3000 MW of power to the National grid during 2005-06. HEEP is engaged in the manufacture of Thermal and Nuclear Sets up to 1000MW, Hydro Sets up to HT Runner dia 6300mm, associated Apparatus Control gears, AC& DC Electrical machines and large size Gas Turbine of 60-200 MW. HEEP Haridwar contributes about 44% of Indias total installed capacity for power generation with total capacity of Thermal, Nuclear & Hydro Sets of over 45000MW currently working at a Plant Load Factor of 76% and Operational Availability of 86%. Inspite of acute recession in economy, BHEL Haridwar received recent orders for Mejia-5&6, Sipat, Bhatinda, Chandrapura, Bakreshwar, Santaldih, Bhilai, and Dholpur.
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HISTORICAL PROFILE:The construction of heavy electrical equipment Plant commenced in Oct.1963after indosoviet technical co-operation agreement in Sept.1959The first product to roll out from the plant was an electric motor in January 1967.This was followed by first 100 MW Steam Turbine in Dec.1969and first 100MW Turbo Generator in August 1971.The plants break even was achieved in March 1974.BHEL went in for technical collaboration with M/s Siemens, Germany to undertake design and manufacture to large size thermal sets upto a unit rating of 1000 MW in the year 1976.First 200 MWTG set was commissioned at Obra in 1977.The continuum of technological advancement subsequently saw the commissioning of 500 MW TG Set in 1984 .The technical cooperation of Gas Turbine manufacture was also signed with M/s Siemens Germany. First 150 MW ISO rating gas Turbine was exported to Germany in Feb1995.Our 250 MW thermal set up at Dahanu Plant of BSES made a history by continuous operation for over 150 days and notching up a record plant load factor greater than 100%.
KEY COMPETITORS:Power Sector Giant of the World viz. Siemens Germany, ABB, General electric of USA etc. are the major competitors of HEEP. All these are the MNCs and enjoy huge financial and R&D backup.
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CORPORATE CITIZEN:HEEP Haridwars Strategic plans and its policy & strategy are commensurate with BHEL Corporate / strategic Plan . As first PSU to adopt Corporate Planning as a process . Board meetings for long range development , BHEL has always guided other PSUs in their Corporate planning process .Board meeting , monthly Management Committee meetings, Annual Revenue Budget exercise , Mid term reviews , Apex TQ council reviews, Personnel Heads Meet, Quality Heads Meet , Technology Meets , Product committees meetings, Inter-Unit Quality Circle Meets etc. are the some of crore strengths of BHEL Corporations vast network.
KEY CUSTOMERS AND SUPPLIERS:HEEPs customer profile ranges from State Electricity Boards,Government Power utilities like NTPC, NPC, NHPC to IPPs like Reliance Energy. HEEP has also supplied Gas Turbine sets to overseas customers in Libya & Iraq. Power Sector Regions of BHEL are its key internal customers. In view of expected market scenario,BHEL has strategically decided that HEEP will concentrate on coal based Higher Rating Thermal Sets for domestic market to fulfil the countrys vision of adding 107,000 MW capacity to achieve Power on Demand by 2012. Our key customer, NTPC has drawn up plan for capacity addition of 20,000MW by 2012. HEEP has planned for execution of 34,619MW by 2012.
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FAVOURABLE BUSINESS ENVIRONMENT:Power Sector has to grow over 10% annually to reach the 7% GDP level. Thus, the demand for thermal sets will remain high. Central Electricity Authority (CEA) is the guiding authority for Power Sector strategies in our country. BHEL representatives, along with representatives from various domestic customers, are an integral part of various committees formed by CEA. This enables us to guide and understand the market requirements and future challenges. To meet the 11th Five Year Plan target of adding 61,000MW, CEA has planned addition of 23 nos. standardized 500MW sets for faster project execution and cost reduction. BHEL, including HEEP, is a part of this process. CEA has standardized for the next capacity of 800MW sets and has asked BHEL to prepare itself for manufacturing and supply in the 11th Five Year Plan. BHEL has tied up with Siemens for upgradation of technology. Further CEAs stress on R&M of ageing Power Plants is also providing business opportunity to unit.
MAJOR CHALLENGES:The favorable business scenario has given the unit a major challenge of establishing Power Infrastructure of the country in close co-ordination with its key customers. HEEP has committed itself to meet the countrys requirements. To cater to the needs of higher rating sets of 800MW, HEEP has collaboration with Siemens.
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STRATEGIC CHALLENGES: Key Business Cycle time reduction State of the art technology Cost reduction Operational Timely delivery Material cost reduction Productivity improvement Effective utilization of machines Human Resource Motivation of employees Skill & Knowledge management
MAJOR MILE STONES:1975

1978 1982 1993 1995 1997 1997 1998 1998 1999 Job Redesign concept launched for FIRST time in India. well documented Suggestion Scheme launched. Launched Productivity Movement & Quality Circle. Concept of ISO 9001 quality System. Adopted EFQM model of TQM for achieving Business Excellence. BHEL one of the 9 PSEs declared Navratna by Govt. of India . National Productivity Award for HEEP by the President of India. Certificate of Merit by National Productivity Council for Outstanding Performance for 2nd consecutive year. Accreditation of U stamp. Accreditation of Stamp from National Board of Boiler and Pressure Vessel Inspector, USA .
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1999 1999
AD-Merkblatt HPO Recertification by RWTUV for Gas Chambers
Turbine Combustion
INSAAN Award for Excellence in Suggestion for 9th consecutive year
1999
1999 1999 2000 2001 2001 2001
Launching of 5s concept
PCRI recognized as Environmental Lab by Haryana State Board for Prevention and Control of Pollution Accreditation of ISO 14001-Enviornment management system CII Site Visit for CII-EXIM Business Excellence Award-2000 Top Management TQM Workshop at Rishikesh and HRDC INSAAN Award for excellence in Suggestion for 11th consecutive year Launching of QTM & RCA at HEEP Haridwar by CMD Launching of delivery Index, Turnover Index and Manufacturing Index
2002
2002
2003 2004
JBE Workshop of Apex TQM Group at Theri to evolve Business
policy Commendation for Strong Commitment to Excel in CII-EXIM Bank Award Commendation for Significant Achievement in CIIEXIM Bank Award. Award given by Institute of Cost and Works Accountants of India for "Excellent Work in the field of Management Accounting and Cost Concepts".
2005
2006
BHEL celebrated its 50 years in August 2006.
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OVERVIEW OF FINANCE FUNCTIONS

Role of finance function
Finance function is the backbone of any organization. The finance function plays a very critical role in the maximization of shareholders who provide the funds to the company. This objective is being achieved by the finance department, which provides the carious information on the financial parameters such as cash flows, profitability, cost and margin, assets, working capital and shareholder value for the purpose of efficient utilization of resources resulting in better profitability of the company. The importance of the finance functions cannot be undetermined in any organization as many companies have perished not due to bad production management but due to poor financial management function acts like radar of the ship, which guides the direction of the ship and saves it from the perils of the sea. In the same way finance department provides timely and relevant information to various levels of management for the purpose of decision-making.
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The various activities undertaken by the finance department achieve the aforesaid objectives, may be summarized as follows Maintenance of account books, cost records. Preparation of salary bills and other related payment to employees: PP, bonus, TA, departmental advances of PF accounts etc. Preparation of Profit & Loss a/c and Balance Sheet. Generation of various MIRs for management use: MIRs relating to turnover, profitability, cash requirements, inventory. Coordination with company auditors, Govt. auditors, cost auditors and tax auditors. Decisions relating to purchase and sales. Investment decisions: capital investment decisions and working capital management decisions. Financing decisions: decisions relating to financing-mix or capital structure or leverage. Dividend policy decisions.
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COST SECTION
Cost- section of the company is divided into following two sections viz, PRODUCT COST & CENTRAL COST and these deals with the following functions: (i) (ii) (iii) (iv) (v) (vi) Determination of periodic profits including inventory valuation. Determination of pricing policy of the company. Work related to capital expenditures of the company. Developing variance Management Information report for different parts of management for purpose of cost control and reduction. Valuation of work in progress and finished goods. Interaction with management of top management link for achieving cost control and cost reduction and thereby improving bottom line of the company. (vii) Preparation of cost sheet of different product and their analysis for future planning.
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BOOKS AND BUDGET SECTION

This section deals mainly with the following:(i) (ii) (iii) (iv) (v) (vi) Preparation of operating budget for the company as a whole. Co-ordination with various functions of organization with regard to generation and submission of important MIR's to corporate office. Preparation of annual accounts of the company. Coordination with company auditors with regard to company accounts. Maintenance and accounting of fixed assets accounts. Preparation of long term profit plans based on broad objectives of the company.
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SALES SECTION
Sales accounts section will deal mainly with the following items :(i) (ii) (iii) (iv) (v) (vi) Scrutiny and vetting of estimates / quotation for sale of products / services, wherever financial concurrence is required. Scrutiny and vetting of agreements for sales of products and services Invoicing for sale / advance or progressive payment / erection income and other. Maintenance of subsidiary records like sales journals / sales daybook, sundry debtors ledgers, advances from customer ledger etc. Payments, recovery and accounting of sales tax, excise duty. Accounting of claims on carriers/ insurance companies for missing items / damages on outward consignments. (vii) Scrutiny, payments and accounting of bills of carriers and insurers and other miscellaneous claims relating to the outwards consignments. (viii) Calculation and scrutiny of data for payments of royalties to the collaborators. (ix) Review and reconciliation as well as follow up of recovery of outstanding dues from the customers in coordination with the commercial department.
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STORES SECTION
For the convenience of performance of various function it is divided in to further three sections which are as follows: a) Stores bills. b) Stores review. c) Foreign payment. They deal mainly with the following items of works: (i) (ii) (iii) Payment of suppliers bills including bills for advances -indigenous and foreign. Pricing of stores receipt vouchers including fixed assets vouchers and fixed assets receipt vouchers. Maintenance of accounts of advances to suppliers, claims recoverable, claims for short suppliers, rejections and rectifications of materials and sundry creditors. (iv) (v) Opening of letter of credit and arranging payments to foreign suppliers under foreign credit / differed payment agreements. Payment of bills for ocean freight, port trust dues, custom duty, local agents commission and clearing agents bills, transit insurance bills, bills of contractors for transport /handling etc. and accounting of such payments are made at regional offices. (vi) Maintenance of accounts of material issued on loan and materials issued to subcontractors. (vii) Keeping account of earnest money and security deposits received from tender and suppliers. (viii) Adjustment of stores in transit to be made at the close of the year.
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PAYROLL SECTION
This section deals mainly with the following functions: (i) (ii) (iii) (iv) (v) (vi) Preparation of monthly wage bills. All account work related to personal payments and disclose profit and loss account of the company. Dealing with income tax authority with regard to personal taxation of employee. Dealing with other statutory authority such as P.F. Commissioner, ESI (employee state insurance). To ensure correct payment of salary and wages and other benefits to employees in, telephone and miscellaneous payments. Preparation of monthly wage bills. account of the company. (viii) Dealing with income tax authority with regard to personal taxation of employee. (ix) Dealing with other statutory authority such as P.F. Commissioner, ESI (employee state insurance). (vii) All account work related to personal payments and disclose profit and loss
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WORKS SECTION
Works section of the company is dealing with the following functions: (i) (ii) (iii) (iv) (v) Payments of contractors bills including bills for advance. Maintenance of accounts of contractors with regard to security deposits, earnest money, progressive payments. 215 maintenance of accounts of materials issued on loans to contractors. All accounting work related to capital expenditure in progress on erection of plant & machinery and building. All other miscellaneous work relating to hiring of various facilities.
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STRENGTH (S): Low cost producer of quality equipment due to cheap labour and fully depreciated plants. Flexible manufacturing set up. Entry barrier due to high replacement cost of its manufacturing facilities.
WEAKNESSES (W): High working capital requirement due to its exposure to cash starved SEBs (State electricity boards) and High WIP. Inability to provide project financing.
OPPORTUNITIES (O):
High-expected growth in power sectors (7000 MW/p.a. needs to be added)
High growth forecast in Indias index of industrial production would increase demand for industrial equipment such as motors and compressors.
THREATS (T): Technical suppliers are becoming competitors with the opening up of the Indian economy.
Fall in global power equipment prices can effect profitability.
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After
recession
with
my
research
guide.
I choose
the
project
of
CASH MANAGEMENT. I discussed the project with my instructor and coordinator Mrs. SANTOSH ANAND (Sr.A/0) at H.E.E.P., BHEL, Haridwar. She approved the project. After that, a simple course of action has been followed for working on this project. Entire information and data were gathered from the respective annual report of BHEL, Haridwar. All the figures are taken from their Cash Flow Statement of the respective years and the other internal documents, which were personally shown by the members of company in our interest.
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OBJECTIVE OF THE STUDY

Behind every study there is an objective, whatever people do they have some objective keeping in their mind and they work on it until their objective gets fulfilled. . CASH MANAGEMENT refers to the management of cash and the whole accounts department works very hard on it. Their main objective is to maintain cash outflow in proportion to the cash inflow of the company and to avoid over drafting. Cash section maintain cash outflow as per the payment requirement and in accordance with the allocation of funds from corporate finance.
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Evolution Of Cash Management

All Business transaction involves give & take. Earlier this give & take was settled through commodities. One commodity was exchanged with another. This system of Barter had three difficulties; Presence of two persons who could satisfy each others need. Determination of the rate of exchange Problems of exchanges of large with smaller commodities. Early Cash:- It was to overcome the disadvantages of Barter that a need for a medium of exchange was felt & commodity as medium as entered the business arena. The commodity money didnt serve the purpose well because was devoid of basic features of good money, i.e., durability, divisibility & portability. Metals became the medium of exchange. First it was silver then gold. These metals were weighted every time a transaction was settled. Later on, to overcome the difficulties of weightment every time, the metals were cut down in to pieces of definite weightage & coinage into circulations. Present Day Cash:- With the increase of business & trade it became increasingly difficult to use commodity money as a medium of exchange due to the problem explained above. Thus started the era of paper money the initial use of paper money was in the form of receipts given by London goldsmiths for deposits of coin. In the first phase of paper money, these receipts were accepted as medium of exchange only if these were convertible into same value .
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The Origin of cash can be easily understand by with the below three stages
Future Cash:
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Computer has entered every segment of commercial world. The advent of internet has further intensified its penetration. Cash too, has remained aloof from its impact. In fact, mass experiments are going on which could transform the way we could think about money. A new breed of cash, which is basically a software is being developed for circulation in future it sis a kind of a electronic money known as E cash Under the system one may have E-cash in the form of a credit card size piece of plastic with an embedded microchip that one can load with E-money purchased with traditional currency or one can have E- cash in his personal computer or electronic wallet downloaded over phone lines from the issuer of e money. E cash can be issued both by banks and non banks. As on date non-banking corporations are more aggressive in this process of cash replacement. Commercial banks are entrusted with the creation of money by central banks of concerned countries by keeping a fraction of deposit as reserve. E-cash represents the biggest revolution in the currency since bold replaced co-wrie shells some experts look at its as a revolution similar to industrial revolution. Some of the benefits of e cash are given below: 1) E-cash is more convenient and feasible than traditional money. 2) Banks that issue e-cash could find it much cheaper than handling checks and papers that accompany traditional money. 3) Unlike credit card which provides no privacy to its users e-cash offers virtually complete anonymity.
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Objectives Of Cash Management:

Inspite of the fact that cash does not earn any substantial return for the business, it is held by the concern with the following motives. 1). TRANSACTION MOTIVE - A company enters into a variety of business transactions resulting both inflow and outflow of cash, at times the cash outflow exceeds the cash inflow. In order to meet the business obligations in such situation, it is necessary to maintain adequate cash balance. Thus, a firm with the motive of making routine business payments maintains cash balance. 2). PRECAUTIONARY MOTIVE - A firm holds cash balance to meet sudden cash needs arising out of unexpected contingencies such as floods, strikes, obsolesces sharp increase in prices of raw materials, presentation of bills for payment earlier than expected date more amount of cash will be kept by the firm if 1there will be more possibility of such contingencies 3). SPECULATIVE MOTIVE -BHEL also keeps cash balance to take advantage of unexpected business opportunities. Such motive is there of speculative nature. 4). COMPENSATION MOTIVE - Banks provide certain services to their customers free of charge. So they usually require the customers to keep minimum cash balance with them which unable them to earn interest and compensate for the free services render
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MEANING OF CASH MANAGEMENT

The term cash management refers to the management of cash and 'near cash assets' while cash includes coins, currency notes, cheques, bank drafts, and the demand deposits, the near cash assets include marketable securities and time deposits with banks. Such securities and deposits are easily convertible into cash.
CASH MANAGEMENT refers to the management of cash and the whole accounts department works very hard on it. Their main objective is to maintain cash outflow in proportion to the cash inflow of the company and to avoid over drafting. Cash section maintain cash outflow as per the payment requirement and in accordance with the allocation of funds from corporate finance.
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INTRODUCTION OF CASH Cash is that form of money which the person can use any time. It may be in the form of any currency. It is also called liquid money .it is the most desirable form of money because this money can use without any obstacle or regulation. NATURE OF CASH: IT IS LIQUID MONEY
The most important nature of cash is its liquid form. Cash is that form of money which is available to use any time. So the liquidity is the main feature of cash. LIFE BLOOD OF BUSINESS
Cash is the most important sector of business without cash business cannot run that is why it is indispensable part of business. ONE OF THE MODE OF PAYMENT
Cash is one of the most acceptable form of receipts because if the payment is made in the form of cash then it will give more security to the receiver. That is why it is more desirable. IT IS THE PART OF CURRENT ASSETS
Cash is the part of current asset and is shown on the assets side of the balance sheet. Cash at bank and cash in hand are two major parts of cash. Now I am going to discuss all the things, tools and procedure, which the BHEL is using for, cash management (A centralized system)
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REASONS OF CASH MANAGEMENT

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Cash management involves the following four basic problems 1). CONTROLLING LEVEL OF CASH - One of the basic objectives of cash management is to minimize the level of cash balance with the firm. This objective is sought to be achieved by means of the following:
PREPARING CASH BUDGET - Cash budget is the most important device for planning and controlling the use of cash. It involves the future receipts and payments of the firm. On the basis of this information the finance manager can determine the future cash needs of the firm . PROVIDING FOR UNPREDICTABLE DISCRIPANCIES - Cash budget shows discrepancies between cash receipts and payments on the basis of normal business activities. AVAILABILITY OF ALTERNATIVE SOURCE OF FUNDS - A firm may not need to keep large cash balance. If it has arrangements with banks for borrowing money in times of emergencies.
2). CONTROLLING OF CASH INFLOW - In order to prevent fraudulent diversion of cash receipt and speeding up collections of cash, an adequate control on cash inflow is necessary. A properly installed internal check system can, to a great extent, to minimize the possibility of fraudulent diversion of cash. Speedier collection of cash can be made possible by adoption of the following two techniques:
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CONCENTRATION BANKING SYSTEM : It is a system of decentralizing collection of account receivables. According to this system branch offices are authorized to collect the payment from the customers, and deposit in the
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local bank accounts this system facilities fast movement of funds. This system is good in case of the firms having there spread over a large area. LOCK BOX SYSTEM: This system is more popular in the U.S.A. and is further step in speeding up collection of cash. This system has been devised to element delay arising in cash of the concentration banking system on account of a time gap between actual receipt of checks by the regional collection centers and its deposits in the local bank account. Under this system BHEL higher a post office box and instructs its customers for their remits to the box. It also reduces the chances of fraud in the cash collection process and controls the cash inflows better. In order to avoid the unnecessary pockets of idle funds, the company should maintain minimum number of bank accounts 3). CONTROLLING OUTFLOWS OF CASH - an efficient control over cash outflows is equally important for conserving cash and reducing financial requirements. Control over cash outflow signifies slow disbursement. In order to control the outflows of cash efficiently, a firm should keep in view the following consideration. CENTRALIZED SYSTEM FOR CASH PAYMENTS - should be followed as compared to decentralized system in cash of collections. All payments should be made from a single control account, i.e., from the central office of the company. However, the local office of the company may pay local expenses.
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PAYMENT SHOULD BE MADE ON THE DUE DATES , neither before nor after. The company should neither loss cash discount nor its prestige on account of delayed payments. The company should, therefore, made payments within the terms offered by the suppliers.
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3). PLAYING FLOAT:- Technique should be used by the company for maximizing the availability of funds. The term 'float' means the account tide up in checks, which have been issued by BHEL but not have yet been presented, for payment by the creditors. As a result of time lag between issue of a cheque and its actual presentation, The actual bank balance of a firm may be more than the balance shown in the books. The difference is called 'payment of float'. The longer the 'float period the greater would be the benefit of the firm
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Factors Influencing Cash Management in Business:

The Cash Flow in a business is influenced by a number of factors. These can be classified into two categories56
1) Internal factors 2) External factors Internal factors are those factors which are internal to the business, and by & large arise as a result of management decisions. External factors, on the other hands are such environmental factors which are not under the direct control of management, such factors affect the economy as a whole & their ramifications are felt by an individual business as well. These exercise influence on the availability of cash in a business. Now we will try to go in deep to understand in a proper manner that how they influence cash management as a whole.
1) Internal Factors- Internal Factors are products of management policies
followed either consciously & positively, or unconsciously by default, or combination of both. Following are some of the avenues from where these factors emanate & affect the cash in a business.
Operating policies: These refer to all types of decisions which make the business operative. Operating policies are basically aims for the business BECAUSE EVERY BUSINESS DESIRES TO OPERATE AT ITS OPTIMUM LEVEL. For this it has to gear up its entire department like production, marketing sales etc.
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Fixed Assets: Fixed assets are the long lived properties of the business which it owns & uses as an aid to generate the profits. So far as cash is concerned investment in fixed assets embodied two important features. 1) It requires cash outlay of high order. 2) The cash is sunk for a longer period whenever these are purchased.
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Management of Receivables:
In the modern competitive business
environment there is no escape from selling goods on credit The credit policy followed by the business has a direct bearing on the cash in the business. The cash remains blocked to the extent and period of credit allowed. Also credit term like cash discount will affect the flow of cash from debtors.
Inventory: Inventory refers to the stock held by the business. Funds are normally tied up in three kinds of inventory
1) Raw Material
2) Work in process 3) Finished goods
Payment Policies: It refers to the policies concerning the payment to be released to creditors & suppliers. Extracting maximum credit from suppliers, utilizing cash discount offered by them are some of the ingredients of prudent purchase management policies resulting in decelerating of cash outflow.
Miscellaneous: Other factors which affect the cash flow may arise due to commercial & statutory requirements. Some of the examples are periodic deposit of advance tax installment.
54 2) External Factors: External factors are covered by all determinants
relevant to the overall economy &/or a particular industry
Monetary & fiscal factors: These factors relate to the money supply in the economy. During period of inflation, the economy is flushed with money, Price rise has a cascading effect on the output and the business has cash in abundance. On the other hand, during recessionary period
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demand for goods contracts & economy faces cash drought. The fiscal factors too, have a direct bearing on the cash availability in a business Tax is an important fiscal factors which determines the size of disposable cash in the hands of business
Special factors relevant to an industry : In addition to monetary & fiscal factors, there may be some special factors unique to a particular industry as well. These also influence the cash flow of a business.
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Cash Flow Cycle:
Cash
Sales
Purchas e
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Stock
Labour
WIP
DIAGRAM OF CASH FLOW CYCLE
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TOOLS OF CASH CONTROL:

1). CASH BUDGET : - It is the most significant tool of controlling the use of cash. It provides a comparison between actual and budgeted cash receipts and disbursements locating the points of deviations, if any. The financial manager, after ascertaining the reasons for deviations between the actual and budgeted figures, can take the necessary action to remove. 2). INFLOWS AND OUTFLOWS OF CASH :- In order to check the change in cash position of the firm from one period to another a cash flow statement is cash. 3). RATIO ANALYSIS - Ratio analysis is also an important tool of cash control. Different ratio, liquidity ratio, receivables turnover ratio, and inventory turnover ratio and cash position ratios.
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ANALYSIS OF CASH MANAGEMENTS WITH THE HELP OF CASH BUDGET:
INVESTMENTS OF SURPLUS FUNDS
As we knew that cash is a non earning asset. Cash not required for the temporary period can be invested in near cash asset i.e., marketable securities, which are readily convertible into cash, short term securities are considered near cash because they are income bearing and near cash items, excess cash should be invested in marketable securities, which can be promptly converted into cash for two reasons -: 1) The working capital requirements fluctuate due to reasonability and different business aid. Excess cash in slack season is idle temporarily and it should be used for investment in short term securities. 2) Excess cash may be held as a buffer to meet unpredictable financial need the decision to invest in short term securities must following points :
(a)
take into account
SAFETY : there are two types of risk associated with dealing in securities i.e. price risk and default risk. Price risk refers to adverse price movements. Default risk is the risk that an issuing organization may not be able to its obligations safe securities earn low return. A company is normally interested in receiving as high return as possible, but a proper balance should be maintained between profitability and risk.
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(b)
MATURITY : The long maturity of securities is associated with danger of price fluctuations. So BHEL should prefer to invest in securities; whose remaining life is longer then six to nine months.
Company in the following short term investments may invest the temporary cash surplus:DEPOSIT ACCOUNTS : - This is a very flexible investment with low risk but interest rates are relatively low. TERM DEPOSITS :- Interest rates are higher and depend on length of deposit, but amount invested cannot be drawn except on maturing. GOVERNMENT AND LOCAL AUTHORITIES SECURITIES:They provide a guaranteed fixed income, if held until maturity.
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ANALYSIS THROUGH RATIO ANALYSIS; CURRENT RATIO:- It is the best ratio to find relationship between the current assets and current liabilities. We can easily calculate the current ratio with the help of the following formula:
Current ratio = current assets/current liabilities

INTERPRETATION:As we all know that the current ratio of any company may be 2:1, but according to the USA accounting standard any company should maintain a ratio of 1.33:1. Moreover we can see from the above calculations that the current ratio of BHEL in 2003-04 was 1.22:1 which is quite unfavorable and bad from the companies point of view, the current assets and current liabilities were in inappropriate proportion. It means that the company was not quite able to meet out its liabilities. The current ratio of the company is continuously rising i.e. in 2004-05 it was 1.14:1, in 2006-07 it was 1.12:1. In 2007-08 the current ratio has gone down to 0.96:1 which was the lowest in the last five years due to the increase in current liabilities and decrease in the current assets as compared to previous year. The current assets decreased due to decrease in inventory which was65365 in 2007-08 as compared to67627 in 2006-07 the current ratio further Detroit in 2007-08 to 0.96:1 which is not favorable from companies point of view. Decrease in current assets is again due to stock, or inventory and sundry debtors. It indicates that the ideal stock is less, which is not favorable for the company.
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LIQUIDITY RATIO :- This ratio establishes a relationship between quick assets and current liabilities. The major objective to compute this ratio is to measure the ability of the firm to meet its short-term obligations as and when due without relying upon the realization stock. We can easily calculate this ratio with the help of the following formula:
Liquidity ratio= liquid assets/current liabilities
INTERPRETATION
Liquid ratio indicates that what amounts of liquid assets are available for each rupee of current liability. We know that the liquid ratio of any company may be 1:1, is considered to be satisfactory. Now comparing the company's position according to the liquid ratio. In 2003-04 the liquid ratio of the company was 0.75:1 which was less than the standard ratio that indicates liquid position of the company was not good. The liquid ratio started decreasing in 2004-05 was 0.54:1 which was 0.63:1 in 2005-06 .It followed the same trend 0.54:1 which were the worst liquidity position years for the company. But again it followed a upward trend in 2006-07 & 2007-08, the ratios were 0.67:1 & 0.64:1 respectively. It means that the liquidity position of the company is constantly decreasing it is due to large amount of current liabilities as compared to liquid assets. Also the number of debtors of the company are increasing. This is not better from management's point of view. As more of amount is blocked in the debts and chances of bad debt will increase.
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ANALYSIS OF CASH MANAGEMENT STATEMENT WITH THE HELP OF CASH FLOW STATEMENT : Cash flow statement shows inflows & outflows of cash or sources and application of cash during a periodic period. This statement explains the various transactions, which have affected the cash balance and cumulative impact of these transactions in cash balances between two balance sheet dates. This statement is extremely helpful in planning for immediate future to avoid serious cash shortages. A proper planning of cash transactions helps management to have cash available when needed.
INTERPRETATION OF CASH FLOW STATEMENT
It helps us to plan of optimum utilization of funds and avoid the situations leading to idle cash \ surplus. It ensures timely payment of dividend and other major cash transactions. It exhibit in right peers perceive the company's ability to meet demand of trade creditors and bank loan. It discloses the reasons that lead to movement of cash balance.
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OUTFLOW/ INFLOW OF CASH
DISBURSEMENT OF SALARY/ WAGES: NOTIFICATION OF DATES OF PAYMENT In accordance with the provision of the payment of wages act and rules made there under, Accounts officer notify the dates of payment of wages of various categories of employees in office and the shop floor. MODE OF PAYMENT Payment should be made either by cheque or by transfer through bank according to the instructions contained in the pass order on the debit advice cum payment voucher. PAYMENT SYSTEM Wherever payment is made in cash, disbursement of salary/ wages is made by pay packet system. The pay packet contain the exact amount payable to the employees along with the net amount is noted on the pay packet system. This is not necessary if pay slips containing details of the gross amount of salary and deduction are securely attached to the pay packets. Payment through pay packet or in loose cash is made by the pay disbursement officials selected for the purpose, who should be permanent employees of the company and covered under fidelity insurance.
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TIME FOR PAYMENT Accounts officer notices the time for payment at each counter or shop floor to the concerned officers in charge well in time. The disburser is available at the counter floor only during these specific hours and the officers in charge are expected to see that all the employees working with are available to receive the payment during these specific hours. The employees who do not receive the salary during these hours will be paid on days specifically notified for payment of unpaid wages. Salary remaining unpaid for 10 days or more is remitted back to the bank and the amount is credited to unpaid wages account. IDENTIFICATION The correct identification of individual employees is the responsibility of the identifying officials. He should identify the individual employees coming forward to receive the payment on the pay bills by initiating against the individuals name in the pay bill. He should also sign on the pay bill, certify that he has identified & witnessed the payment to the employees mentioned in the pay bill. PAYMENT PROCEDURE At the time of payment, employees stand in queue to receive their payment. Each employee presents himself before the pay disburser & sign against his name in the pay bill. In case of illiterate person, the identifying official insures that the left hand thumb impression is given by the individual concerned in his presence. No claim for support will be entertained if the employee concerned has left the counter after singing the pay bill.
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PAYMENT THROUGH BANK On the receipt of the pay bill, bank wing separate out the cases requiring payment through banks & send cheques to the concerned bank one day in advance of the due date of disbursement. If for nay reason cheques/letters of the authority are made out more than one day in advance, they will bear an endorsement, payable on or after & the due date of payment shell be specified therein. RESPONCEBLITY FOR CASH The pay disburser shell be responsible for cash received by them from the time of obtaining payment from chief cashier till pay has been disbursed & unpaid amount handed over to the chief cashier. PAYMENT TO AN EMPLOYEE ON BEHALF OF ANOTHER Payment of salary/wages & allowance etc. should normally be made to the individual concerned only & under no circumstances to outsider on behalf of the company employees. When payment is made to accompany employee on behalf of another, the following procedure should be followed.
Payment of dues one employee should not be made to another accept on
the written authority of the person to whom the payment is due which shell be attached to the pay bill in support of payment. Signature of the employee to whom the payment is due shall be attested The employee to whom the payment is made o9n the basis of authority by the officer under whom the employee is working. letter should be properly identified before payment.
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TECHNIQUE OF CASH FORECASTING AND CASH BUDGETING: Cash forecasting means of cash near future. It is very important task because it avoids the problem of over cash and under cash. Cash forecasting is based on two major factors: 3) 4) Forecasting of payment Forecasting of receipts
FORECASTING OF PAYMENT: Forecasting of payment means is to forecast the payment of near future that is requirement of cash for payment purpose. There are a lot of many payments, which the company pays. Some of them are as follows: Day today basic funds requirements Medical reimbursement Traveling allowances Pending of bills Argent bills Statuary bills - sales tax, excise duty, reasonable provident fund (RPF), income tax. Priority payments. Employee related payments Salary payments Overtime payments Incentives Festival advances etc.
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FORECASTING OF RECEIPTS Forecasting of receipts means to forecast the cash that the company receives. There are several types of receipts. Some of them are as follows: 1. 2. 3. 4. 5. 6. 7. Vocational trainees fees Rent of residential house Medical card fees Tender document Earnest money Security deposit Payment by customer
After forecasting the receipts and the payments companies makes a comparison between them and estimate the net difference and on the basis of the difference company estimates the cash requirements.
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CASH FLOW STATEMENT

CASH FLOW STATEMENT A cash flow statement is a statement showing inflow & outflow of cash during a particular period. Many organizations follow the procedure of accounting standard 3 for making the cash flow statement. CASH FLOW STATEMENT PERFORMA (ACC TO AS.-3) (A) CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax as per profit & loss A/C Adjustment for Depreciation Loss on sale of fixed assets Gain on sale of fixed assets Interest paid or received Dividend received OPERATING PROFIT BEFORE WORKING CAPITAL CAHANGES Add- decrease in current assets Increase in current liability Less- decrease in current assets Increase in current liability
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Cash generated from operating activities Less- Income tax Cash flow before extra ordinary items Add/Less Extra ordinary items Net cash inflow from operating activities. (B) CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets Sale of fixed assets Purchase of investments Sale of investments Interest & dividend received Net cash used in investing activities (c) CASH FLOW FROM FINANCIAL ACTIVITIES Repayments of loans Issue of share capital Interest & dividend paid Net cash used in financial activities (A+B+C) Net increase or Decrease in Cash. Add- opening balance of cash Get closing balance of cash. We can easily understand cash flow statement by an example of BHEL given below:
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CASH FLOW STATEMENT

YEAR : 03-04 FORM NO : 25 DIVISION : HEEP HARIDWAR
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON BHEL RECEPT AGAINST CURRENT DESP. 1) BHEL. Incl. Libya. 2) NON BHEL SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) BHEL 2) NON BHEL 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) BHEL 2) NON BHEL INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NON- OPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2002-03 BUDGET 2003-04 FLASH 2003-04 ACTUAL 2003-04
13435 19482 77356 110273 3310 5062 8372 118645
17650 905 94889 113544 2817 2125 4942 118486
29792 4420 68390 102602 2891 2808 5699 108301
32166 3109 68062 103337 2696 3490 6186 109523
6528 10440 26657 1802 849 46276 23999 2915 8599 2099 4853 44 -306 485 42688 88964 29681 0 0 2863 7606 0 1345 11814 100778 17867
4250 9836 25343 1702 1150 42281 25187 3970 10866 2524 5983 50 1000 0 49580 91861 26625 0 0 4562 7390 0 1473 13425 105286 13200
6765 12498 20163 1622 1045 42093 23744 3313 9456 2438 6839 65 -411 0 45444 87537 20764 0 0 6975 4975 2170 1153 15273 102810 5491
9610 11961 19764 1602 1096 44033 24423 3186 9310 2332 6793 56 -530 0 45570 89603 19920 0 0 6975 4740 91 1110 -12916 102519 7004
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CASH FLOW STATEMENT

DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON BHEL RECEPT AGAINST CURRENT DESP. 1) BHEL. Incl. Libya. 2) NON BHEL SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) BHEL 2) NON BHEL 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) BHEL 2) NON BHEL INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NONOPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2003-04 BUDGET 2004-05 FLASH 2004-05 ACTUAL 2004-05
32166 3109 68062 103337 2696 3490 6186 109523
15950 50592 72831 139373 2033 2090 4123 143496
21994 49804 79223 151021 1204 3117 4321 155342
25524 49735 84619 159878 904 3155 4059 163937
9610 11961 19764 1602 1096 44033 24423 3186 9310 2332 6793 56 -530 0 45570 89603 19920 0 0
7260 14163 41430 2420 2400 67673 25550 4313 1640 2552 6582 95 322 0 41054 108727 34769 0 0
12558 17269 48051 1556 1490 80924 25057 3271 8125 3162 6822 70 -400 0 46107 127031 28311 0 0
12614 18303 49988 1360 1512 83777 24788 3261 7985 3345 6880 51 -680 14 45644 129421 34516 0 0
6975 4740 91 1110 -12916 102519 7004
8940 4666 166 1620 -15392 124119 19377
6588 2016 118 986 9780 136739 18603
8074 2012 117 928 -11131 140552 4587
76
71
77
CASH FLOW STATEMENT

25524 49735 84619 159878 904 3155 4059 163937
18650 19745 142871 181266 4478 2580 7058 188324
21342 20326 1149091 156569 1749 3786 5535 162104
20730 20396 118862 159988 2108 4015 6123 166111
12614 18303 49988 1360 1512 83777 24788 3261 7985 3345 6880 51 -680 14 45644 129421 34516 0 0 8074 2012 117 928 -11131 140552 23385
10250 24874 48605 2480 2800 89009 26974 6801 18444 3581 8065 120 -200 0 63785 152794 35530 0 0 11678 8730 242 1750 -22400 175194 13130
17150 33408 37038 2675 2560 92831 27857 4378 10228 3265 7620 70 -500 0 52918 145749 16355 0 0 127078 2392 195 996 -16290 162039 65
18305 34574 36579 2616 2528 94602 27490 4178 10304 2511 7196 56 -1007 0 50728 145330 20781 0 0 12710 2141 300 1043 -16194 161524 4587
72 78
CASH FLOW STATEMENT

20730 20396 118862 159988 2108 4015 6123 166111
17980 3799 178266 200045 692 3240 3932 203977
43090 2742 171832 217664 464 4045 4509 222173
50856 2946 161272 215074 464 4134 4598 219672
18305 34574 36579 2616 2528 94602 27490 4178 10304 2511 7196 56 -1007 0 50728 145330 20781 0 0 12710 2141 300 1043 -16194 161524 4587
18020 30925 43570 2570 3000 98085 29081 8236 13697 3706 8589 110 -500 0 62919 161004 42973 0 0 17441 10750 490 1150 -29831 190835 13142
19650 35583 41040 3691 2596 102560 28261 6849 11491 3441 9244 118 -2000 0 57404 159964 62209 0 0 15613 6084 316 2015 24028 183992 38181
21176 35007 40907 3677 2638 103405 28216 6750 11633 3198 9343 108 -2000 0 57248 160653 59019 0 0 15612 6363 320 1895 -24190 184843 34829
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CASH FLOW STATEMENT

YEAR : 07-08 FORM NO : 5.1 DIVISION : HEEP, HARIDWAR
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON BHEL RECEPT AGAINST CURRENT DESP. 1) BHEL. Incl. Libya. 2) NON BHEL SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) BHEL 2) NON BHEL 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) BHEL 2) NON BHEL INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NON- OPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2006-07 BUDGET 2007-08 ACTUAL 2007-08 APPOVED BE 2008-09
50856 2946 161272 215074 464 4143 4598 219672
40050 3419 216954 260423 750 4050 4800 265223
59338 2837 182316 244487 279 4085 4364 248851
57800 1394 284978 344172 750 4225 4975 349147
21176 35007 40907 3677 2638 103405 28216 6750 11633 3198 9343 108 -2000 0 57248 160653 59019 0 0 15612 6363 320 1895 -24190 184843 34829
20150 31280 51070 5250 3300 111050 33173 9100 20237 4177 12600 170 -2100 0 77357 188407 76816 0 0 20116 20448 415 1190 -42169 230576 34647
24179 41556 37371 6603 3431 113140 32151 5234 13883 3410 12514 130 -3670 -63 63589 176729 72122 0 0 23228 7720 326 1718 -32992 209721 39130
22541 40075 96058 14510 3800 176984 38590 7300 23270 4348 16021 219 -3801 0 85947 262931 86216 0 0 23035 22426 524 1540 -47525 310456 38691
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74
PROCEADURE OF RECEIPTS & PAYMENTS:

PROCEDURE FOR RECEIPTS: Receipts of money on behalf of the company broadly divided under two categories. Cheque, draft, postal order and cash received on behalf of the company. Direct credit received and accounted for bank by way of the telegraphic
transfer, realization or money against customer invoices through bank, receipts of bank directly by bank on behalf of company. While direct receipts by bank are accounted for through receipts bank book. Cash, cheque, demand draft and postal order are received directly by the company are accounted through receipt cash book. The cashier has to deposit in bank all the cheque, demand draft etc and the cash received on the same day if received before the close of the banking hours, otherwise on the next working day. RECEIPTS ACCOUNTED FOR THROUGH RECEIPTS BANK BOOK:When credit advice slips are received from bank for credit received by them directly on behalf of the company, they will be accounted for through receipts bank book and the account had Cash receipt control account will be credit.
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81
RECEIPTS ACCOUNTED FOR RECEIPTS CASH BOOK Cheque, postal order, demand draft, drawn in favour of the company and all money received over the counter should be taken as receipts in the receipts cash book. Casita Cheque (Cheque drawn in favour of the chief cashier for drawing cash from bank). PRINTING AND CUSTODY OF MONEY RECEIPTS BOOK The purchase department arranges for direct delivery of the printed money receipts book to the Accounts officer. Before the receipt books are taken in to account they should be properly examined to ensure that there in no defect either in the No. of foils or there numbering & the person who examine the books should shine on the top cover page f the receipt books. The receipt book in use should be kept in the safe custody. Unused money receipts book shall be kept under lock. PROCEDURE FOR PAYMENTS DEBIT ADVICE CUM PAYMENT VOUCHER All payments are admitted through debit cum advice payment Vouchers which are passed on the cash/Bank section by various bills passing section along with the document in the support of payment. The debit cum advice payment Voucher contains the pass order in which the net amount payable as well as the mode of payment i.e. whether by cash, by cheque, by demand draft & the name of the party is indicated.
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PAYMENT BY CHEQUE: In case of payment to be made by cheque the details names of payees, amount etc. will be recorded in the relevant drown register after making entries in the cheque drown register, assistance in charge will prepare the cheque on cheque writing machine & along with the cheque drawn register, the cheque will put up to the accountant. The accountant will verify the following aspects with regards of the making of cheque. The name of the party in full in whose favour of cheque is drawn with The amount of cheque drown agrees with the amount mentioned in the
reference to the pass order. pass order & the amount on the cheque tallies both in words & figures. PAYMENT BY DEMAND DRAFT: In case of the payment to be made by demand draft, letters of authority is made out in favor of local bank for issued of demand draft & sent to the cashier for obtaining the demand draft. Demand draft when received from the bank will be made over the accounts officer who will arrange to dispatch them along with the original copy of the covering letter by registered post to the parties concerned through the banking after keeping the note of particulars on the debit advice cum payment Voucher.
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83
PAYMENT BY CASH: In rare case (where amount does note exceed Rs.2500) payment to the outside
parties, who can only be individual & not firms may be made in cash after proper identification. Head of the department recommends payment by cash. Account officer should also insure that the maximum amount of cash that can be drown from bank on any day shell not be exceed the amount of the insurance cover taken for loss, theft etc.
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78
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EFFECTS OF CASH MANAGEMENT IN AN ORGANISATION: FUNCTION OF CASH DEPARTMENT: The cash/bank section shall be responsible for banking of all the money received by the Organization and disbursement of all authorized payment on behalf of the Organization and also for the safe custody of all the cash valuables as may be ensured to the Department The broad functions of cash/bank Department are as under: Receipts of money in the form of cash, Cheque, bank draft, postal order Payment of money in the form of cash, Cheque, demand draft, etc. to
etc. on are half of the Organization. suppliers, contractors etc. on behalf of the Organization and disbursement of salaries wages and other personal payments of employees. Handling the custody of cash, Cheque etc. till disbursement or deposit in bank and custody of other valuables like government and other paper securities, share certificate, bank guarantees, etc. where the work is entrusted to the cash department. Accounting of the all receipts and payments on behalf of the company in cash/bank books, maintenance of register and other records incidental to and other records incidental to and for the efficient discharge of responsibilities of the section. Preparation of cash inflow statements, cash forecasting and other cash /
bank related reports.
79 86
For efficient discharge of duty of the section, the section where necessary will be grouped into cash and bank wings to attend cash and bank transaction respectively. ORGANISATION: The cash/ bank section must be under the charge of an official of finance and accounts department not below the rank of Accounts officer for the purpose of control and supervision of the section activities. He is assisted by number of accountants. Chief cashier, assistant clerks as are necessary for the efficient conduct if the business in the cash and bank section. In the case of small offices the cash/ bank section, works be under the charge of a finance executive who is responsible for all day to day operation and the for the adherence with all other procedural aspects. DUTIES AND RESPONSIBILITIES OF THE OFFICIAL INCHARGE OF THE CASH/ BANK SECTION: The official incharge of the cash/ bank section is responsible for the efficient functioning of the section, in accordance with the procedural order issued by division concern from time to time. The Incharge broadly insure The storeroom and cash are properly locked and guarded. The salaries, wages and other payments are disbursed to the employees on
the scheduled day without any inconvenience to the employees.
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87
The information required for the cash credit accommodation is arranged The cash and bank books are written up every day regularly and correctly. The registers and other records required to kept in cash section are
and furnished to the bank and corporate office regularly on due date.
properly maintained. CHECKING & SECURITY ARRANGEMENT CHECKING: Period check by Accounts officer. Surprise check of cash. Daily check of cash book & bank book.
SECURITY: Custody of cash. Insurance. Preservation of records.
DAILY CHECK OF CASH BOOK AND BANK BOOK:The Accounts officer (cash) should ensure that the cash book & the bank book are written every day & the entries made there & should be thoroughly checked. While checking the cash book it should be seen that. All the money received at the cash counter or by the chief cashier during the day has been duly brought account in cash book & the paper official receipts have been issued. It is also seen that all receipts of the previous day & not deposit into bank.
81
All payments made have been properly recorded in the cash book & they
88
are supported by Voucher duly passed by the competent authority.
PERIODIC CHECK BY ACCOUNTS OFFICER:In order to ensure that the function & duties are being discharge properly, the Accounts Officer will carry out a regular review of the records of the cash section & also make physical checks of the cash balance held by the chief cashier & other member in the cash section. He should also e balance held by the chief cashier & other member in the cash section. He should also exercise frequent checks on the Accounts of chief cashier at the cash counter. He also that the procedure for payment is being followed at the cash counter strictly in conformity with the prescribed procedure, after that he submit a report to the Head of finance & accounts department. SURPRISE CHECK OF CASH;The Head of Finance of accounts department may nominate any senior Accounts Officer other than the one in charge of cash section, at least once a month to conduct a surprise verification of cash. The Officer so nominated shell carry out the verification on the same day & furnish a report to the Head of finance & Accounts department. The officer conducting the surprise check should also verify the blank cheque books/foil & bank receipts book in custody. Whenever physical verification of cash is done, the actual balance is deferent domination of notes, coins & unpaid Vouchers shell be recorded in a separate form by the officer undertaking the verification. The officer making the verification shall also report any excess or shortage immediately to the Head of the finance & accounts department.
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CUSTODY OF CASH: All the cash & other valuable document shell be kept in iron safe in the strong room, Chief Cashier shell keep the strong room & other shall remains with the Account officer. The duplicate keys & master keys should remain kept in the
89
safe custody of the Head of finance & Accounts department. INSURANCE The cash in the strong room should be insure by an insurance policy, should cover Loss due to theft, burglary etc. Loss while in transit from bank to cash room & vice versa & also while in transit to the various pay center for disbursement.
which
Adequate fidelity in respect of the employee handling cash/valuables .
PRESERVATION OF CASH; All the voucher, receipts & the books are preserved for a long period & if the cash section wants to destroy the records then first it should get the permission of concerned department like permission from income tax, Excise duty, Sales tax, different sections of accounts departments & also from law & vigilance department.
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BOOK OF ORIGINAL ENTRY FOR BANK AND CASH TRANSACTION CHEQUE DRAWN REGISTER;Cheque drawn register is intended for recording the payment made by cheque. Separate register is made for each bank. Since it is only a record of payment made by Cheque transfer between banks. Payment made by bankers on the basis of letter of authority and direct debits given by bankers is not to be entered in the cheque drawn register but it is recorded in payment bank book either direct or through a separate register maintained for the letter authority issued by division. PAYMENT BANK BOOK:Payment bank book is book of account maintained for accounting the payment made through the bank account. Apart from recording the entries from the cheque drawn register, other direct by the bank like the following payment also are posted in the Payment bank book: Payment made by bank direct on the basis of letter of credit Bank and other service charge debited by bank Interest charges debited by bank Payment made by bank on the basis of the letter of authority issued by company. RECEIPTS BANK BOOK: This book is intended for recording all deposit made into the bank account and all credit directly made by the bank. For direct credit , credit advances slip should obtained from the bank and the entries made in the receipt bank book on the basis of these credit advances.
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PAYMENT CASH BOOK: This book is intended to record payment made by way of cash for making payment in cash, Cheque are drawn in favour of cashier/ authorized official and he enchases these cheque in the bank for getting cash for disbursement. The cheque, demand draft etc. which are received on behalf of the company and deposit into the bank through the chief cashier are also accounted for the payment cash book and when they are paid into the bank. RECEIPT CASH BOOK:All money received by the way of cash, cheque or demand draft over the cash counter and cheque draw in favour of authorized cashier for payment of bills are all accounted for in this book. Cheque / demand draft or other receipts received by the banker directly will not be accounted for in this book but will be accounted for directly in the receipts bank book on the basis of credit advice slips received from the banker.
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SUGGESTION
No doubt BHEL and its cash department are very good. They are performing their functions in a very impressive way but if the company thinks about these following points then the working will be better. Staff of the cash department should be sufficient because the load always very much there on them. So it will be good if organization increases its working force for their cash department. Cash section should not be very far away from other departments like finance department which controls the cash section. So that employees would not have to face difficulties, because every time they have to go there again and again.
Cash section should not be very small in size. Specially book keeping section. It should not be very congested. So organization must provide enough space.
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CONCLUSION
It is very difficult to elaborate all the work of cash section. But I have tried my level best to cover all the work done by it. This project was undertaken in order to know the effectiveness of cash section of finance department of the company. I would like to conclude my project with these points: Cash department is the backbone of the finance department and organization itself. All money transactions are done through this department. Cash department should be totally connected with corporate office. It works on the instruction of corporate office. That is why the system is called centralized cash management system. All tools should be used by cash department & in a efficient and reliable way. Salary disbursement, system should be marvelous and other tools like bank book, cash book, voucher, cash draft etc. should be helpful to maintain account up to date and in a systematic form. Staff of cash section should be a mixture of youth & experience, knowledgeable and hard working. They should perform their work efficiently with a team spirit. Environment of cash department should be very cooperative. So at last I can say it was a good experience. I learnt a lot through out my project and I am sure that this knowledge will help me forever.
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BIBLIOGRAPHY
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To complete this summer training project report the following sources were referred: Cash and bank manual Books and budget manual www.google.com www.bhel.com
Cash Management by R.N. JOSHI
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project REPORT ON CASH MANAGEMENT

At BHARAT HEAVY ELECTRICALS LIMITED HARIDWAR, UTTARAKHAND

Master in business administration Modern institute of technology rishikesh

SUBMITTED BY: PANKAJ SHARMA MBA (FINANCE)

(PANKAJ SHARMA) MBA(finance)

B.H.E.L. A CORPORATE GIANT

A World Class Engineering Enterprise Committed To Enhancing Stakeholder Value.

CONTRIBUTION OF BHEL IN VARIOUS CORE SECTORS

Siemens AG. GERMANY General Electric CANADA

# Moisture Separator Reheaters

Baloke Duerr GERMANY

# Christmas Trees & Conventional Well

National Oil Well Head Assemblies, USA

Siemens AG. GERMANY Siemens AG. GERMANY ABB SWEDEN

General Electric Co. USA

Stien Industries FRANCE

10. 11. 12. 13. 14. 15. 16.

MAJOR COMPETITORS OF BHEL

Sanghai Electric Co.

RECENT ACHIEVEMENTS OF BHEL

2. BHEL to manufacture 800 mw thermal sets [Apr 14 2006] Catching up

participation in management yields savings at BHEL,

6. Management Board and will ensure an increased output of the generating

MAJOR MILE STONES:1975

AD-Merkblatt HPO Recertification by RWTUV for Gas Chambers

INSAAN Award for Excellence in Suggestion for 9th consecutive year

JBE Workshop of Apex TQM Group at Theri to evolve Business

BHEL celebrated its 50 years in August 2006.

OVERVIEW OF FINANCE FUNCTIONS

BOOKS AND BUDGET SECTION

High-expected growth in power sectors (7000 MW/p.a. needs to be added)

Fall in global power equipment prices can effect profitability.

OBJECTIVE OF THE STUDY

Evolution Of Cash Management

Objectives Of Cash Management:

MEANING OF CASH MANAGEMENT

REASONS OF CASH MANAGEMENT

Factors Influencing Cash Management in Business:

In the modern competitive business

2) Work in process 3) Finished goods

54 2) External Factors: External factors are covered by all determinants

relevant to the overall economy &/or a particular industry

Cash Flow Cycle:

DIAGRAM OF CASH FLOW CYCLE

TOOLS OF CASH CONTROL:

ANALYSIS OF CASH MANAGEMENTS WITH THE HELP OF CASH BUDGET:

INVESTMENTS OF SURPLUS FUNDS

take into account

Current ratio = current assets/current liabilities

Liquidity ratio= liquid assets/current liabilities

INTERPRETATION OF CASH FLOW STATEMENT

OUTFLOW/ INFLOW OF CASH

Payment of dues one employee should not be made to another accept on

CASH FLOW STATEMENT

CASH FLOW STATEMENT

13435 19482 77356 110273 3310 5062 8372 118645

17650 905 94889 113544 2817 2125 4942 118486

29792 4420 68390 102602 2891 2808 5699 108301

32166 3109 68062 103337 2696 3490 6186 109523