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PRESENTED BY- ROLL NO.

— PURUSHOTTAM MADHAV NARNAYAK 00

— SATYADARSHI RAVI 65
— KUMARI SNEHLATA 00
— PRAKASH PRASHAD 17
— LATA KUMARI 57
— POOJA 00
— VIVEKANAND 00
— VARSHA KUMARI 64
  
° HEC LTD. Is a Public Sector Undertaking, under Ministry of Heavy
Industry, Government of India, is a leading organization in India.
° HEC was incorporated on 31.12.1958 under the
Companies Act, 1956. The company started production in the year
1964. It was established under the Ministry of Industry with the
primary objective of achieving self sufficiency and self reliance in
the field of design and manufacture of equipment and machinery
for core sector, especially steel industries. It was visualized at that
time that one steel plant of one million ton capacity will be added
every year in India, which however, did not materialize.
Consequently the demand for steel making machinery was never
as high as it was expected. Hence HEC diversified its area of
operation in other core sectors like mining, railways, defense etc.
Currently, the company is engaged in the manufacture and supply
of capital equipment, machine tools and spares needed for the
core sector industries namely; steel, coal, cement, power, defense,
aluminum, ship building and railways etc.
° The head office and three plants of the company are situated in
Ranchi, the capital of the newly formed state Jharkhand. The
company has its offices in New Delhi and Kolkata.
° Capital Base: The authorized capital of the company is Rs.
500crores and the paid up capital is Rs.453.24crores.
° The company has three manufacturing units and one project and
consultancy division viz.
Ń Foundry Forge Plant (FFP)
Ń Heavy Machine Building Plant (HMBP)
Ń Heavy Machine Tool Plant (HMTP)
Ń Project Division (TKP)

 
 
 
° TO STUDY THE SYSTEM AND PROCEDURE FOLLOWED BY THE
COMPANY IN FINANCE
°
° TO KNOW THE EARNING CAPACITY OF THE BUSINESS
°
° TO JUDGE THE EFFICIENCY AND EFFECTIVENESS OF
MANAGEMENT
°
° TO KNOW ABOUT CASH FLOW
°
° TO KNOW ABOUT ACCOUNTING POLICY
°
° TO KNOW THE ACTIVITIES OF A CONCERN WHICH ARE DONE IN
FAVOUR OF SOCIETY
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° VISION
° To be a major Heavy Engineering Company in India providing quality products and
services to the Steel, Mining, Coal, Railways and other Strategic Sectors.
°
MISSION
° To acquire and maintain leading position as suppliers of quality equipment, spares,
systems & services for the Steel, Mining, Coal, Railways and other Strategic Sectors.
° To make the Revival Plan sustainable
° To expand business into allied areas and other priority sectors of the economy.
° GOAL
° GROWTH
° To attain substantial jump in production and bring about sustained growth to
attain production level of Rs.3000 crores by 2011-12.
°
° PROFITABILITY
° To provide reasonable & adequate return on capital employed, primarily through
improvement in operational efficiency, capacity utilization & productivity, in order to
generate adequate internal resources to finance the company¶s growth.
° HUMAN RESOURCE PLANNING & DEVELOPMENT
° To enable each employee to achieve his optimum potential,
improve his capabilities, perceive his role and responsibilities and
participate in and contribute to the growth and success of the
company.
° To continuously invest in human resources
and be alive to their needs, hopes and aspirations.
° 4) CUSTOMER SATISFACTION
° To build a high degree of customer confidence by providing
increased value for his money through improved product quality,
delivery, performance and customer service.
°
° 5) MODERNISATION
° To upgrade and modernize plants and equipment with the aim of
increasing availability of machines/equipment and removing
bottlenecks.
° 6) TECHNOLOGY
° To achieve technological excellence in operation by development
of indigenous technology and efficient absorption and adaptation
of imported technologies to suit business needs and priorities
with a view to providing a competitive advantage to the company.


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° a
 


 

 





 
  




  



 







:-
Ń SIGNIFICANT ACCOUNTING POLICY
Ń DIFFERENT COMPONENT OF CASH FLOW STATEMENT
Ń DIFFERENT FINAL ACCOUNTS
Ń TECHNIQUE OF FINANCIAL STATEMENT ANALYSIS
Ń UNDERSTANDING THE EXISTING SYSTEM OF HANDLING
THESE SITUATION
°
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° 1) FINANCE AND ACCOUNT DEPARTMENT OF HEAVY MACHINE
BUILDING PLANT (HMBP) ---
° Mainly finance and account department deal with organization
function and different role of the organization. The function under the
administrative control of the general manager of the plant and under
the functional control of the director finance of the corporation he is
the financial advisor to the general manager and is responsible to
watch the financial interest of the plant and report there on to the
general manager and director finance.
°
° FUNCTION OF THE FINANCE AND ACCOUNTS DEPARTMENT BROADLY
AS UNDER--:
° a) To advice in all matter having financial implication.
° b) To watch the financial interest of the project and suggest measure
for economy in expenditure and remedies against wastage in material
labor and other expenditure.
° c) To keep the account of the project and to compile the financial
statement of accounts in accordance with statutory
° requirement and according to the rules and procedure
prescribed from time to time.
° d) To consolidate and compile the budget estimate of the
project for submission to the headquarters.
° e) To have budgetary and financial review periodically as
prescribed for submission to the authorities concerned.
° f) To collect, compile cost particulars as may be prescribed
from time to time and present the same with comment to
the management of the project and to the headquarter.
° g) To secure adequate accounting control over assets,
liabilities revenue & expenses.
° h) To prepare monthly trial balance periodical final accounts.
° i) To prepare annual profit and loss accounts and balance
sheet for submission to management.
° j) To deal with objection raised by the
° government audit
° statutory audit
° internal audit and dispose them off as expediously as
possible

   
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Following are the section in the finance
division--:
U ADMINISTRATION
U ESTABLISHMENT FINANCE
U PAY BILLS
U PROVIDENT FUND ACCOUNTS
U WORK FINANCE
U WORK ACCOUNTS
U WORK BILLS
U FOREIGN PAYMENTS
U STORE FINANCE
° STORE BILLS&OFF LOADING ACCOUNTS
° STORE ACCOUNTS
° CUSTODY STORE ACCOUNTS
° STORE VERIFICATION
° BOOKS AND COMPILATION
° SALES ACCOUNTING
° CASH AND DISBURSEMENT
° DATA PROCESSING
° TIME KEEPING
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° Financial statement are the end result of accounting process.
So they are source of information by which we can draw
conclusion about the profitability and financial position of
company. It is, therefore, necessary to show them in proper
manner with their suitable contents so that they can easily
understood and used by user like shareholders, creditors,
bankers, management, and public at large
° 
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° Financial statement are the basic and formal annual report with the help of
which the company¶s management communicates its financial information
to its users like it owners, shareholders, bankers, creditors, etc. these
statement generally refers to:
°  !"#"$%&'(%"!)
° '("#%""$ %"**) #"(+(!%&)
° #",*%"'('(!!"%!(!%&(
"*'""##%%*"#"*'+-
°
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° The Financial statements have been prepared
° as of a going concern on historical cost convention and on
accrual method of accounting in accordance with the
generally accepted accounting principles.

° 2 FIXED ASSETS
° Fixed assets (Other than land acquired free of cost from
State Government) are carried at the cost of acquisition or
construction less accumulated depreciation Land acquired
free of cost from State Government is valued of Rs.1/- per
acre.
°
° 3 INVENTORY VALUATION
° i) Inventory is valued at actual /estimated cost or net
realiasable value, whichever is lower. ii) Finished goods and
work in progress are valued at actual /estimated factory
cost or net realiasable value whichever is lower
° INVESTMENT
° Investment held/intended to be held over one year (i.e. being
long term ) are valued at cost less provision for diminution in
value other than temporary, while current quoted investments
are valued at lower of cost or market value

° INVENTORY
° Non moving items of stores are analysed from time to time.
Materials found surplus on physical verification are either
disposed off or reviewed to find out alternative uses for the
same. Loss,if any, is accounted for when it is ascertained.

° DEFERRED REVENUE EXPENDITURE

° To lump sum payment towards foreign collaboration in the
form of technical knowhow, documentation and reports for
any product is treated as Deferred Revenue Expenditure,
which is written off in five
° years.
° REVENUE RECOGNITION
° i) Sales are recorded when significant risks and rewards of
ownership are transferred to the customers. Part supplies against
long term contracts for which bills have been raised are
accounted for at contract price or provisional price. In case of
dispatches for which challans and gate passes have been issued
but bills are not raised, sales are accounted for at contract or
provisional prices as unbilled sales.
° Sales are accounted for inclusive of excise duty but exclusive of
sales tax.
° PROVISION FOR WARRANTY
° A provision of 0.5% on sales is made for liabilities under
contractual obligations/ warranties. Expenses on
warranties/contractual obligation are accounted for against
natural heads in the year of incurrence.
° DEPRECIATION
° Depreciation on fixed assets is charged on straight line method as
per the rates prescribed in the Schedule XIV of the Companies Act
and in respect of additions to / deductions from the fixed assets
during the year; depreciation is charged on prorata monthly basis.
° SUNDRY DEBTORS
° This includes items billed at provisional rates pending finalization of
prices and receipt of formal orders from customers and also value
of dispatches which are unbilled after adjustment on pro-rata basis
of advances/ progress payments received against the relevant
contract.
SCHEDULE ³25´ ± NOTES ON ACCOUNTS
. The accounts of the Company have been prepared on
³going concern basis´ which is dependent on the
availability of finance and its future profitability. The
Company continues to be a Sick Industrial Company within
the meaning of Section 3(1)(o) of Sick Industrial
Companies (Special Provisions) Act, 1985 with its negative
net worth.
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° %%*+% is defined as the process of identifying
financial strengths and weaknesses of the firm by properly establishing
relationship between the items of the balance sheet and the profit and loss
account.
° 
 
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° To know the efficiency of the management.
° To assess the earning capacity or profitability
° To measure the solvency
° To judge the financial strength
° To know the trend of the business
° Helpful in comparative study
° To judge the capability of payment of fixed cost bearing securities
 
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° COMPARATIVE STATEMENT
° Statements for two or more years are placed side by side then
these are called comparative financial statements. These statements may
be prepared for the purpose of comparing profitability with the help of
figures of production, sales, expenses etc.
° COMMON SIZE STATEMENT
° Statements which tell about the relationship of various item of a financial
statement with some common item. In common size income statements
sales figure is taken at 100 and other figures are expressed as percentage of
sale.
° TREND ANALYSIS
° When profitability and financial position over a series of years are studied
then it is called trend analysis. It is the most useful form of horizontal
analysis.
° RATIO ANALYSIs
° Ratio analysis is expressing the relationship between various item of profit
and loss account and balance sheet. Ratio analysis is one of the most
important tools as it is very much helpful to know the profitability, solvency
and efficiency of the concerned.
° CASH FLOW STATEMENT
° Cash flow analysis is the study of movement of cash into the organization as
well as movement of cash out of organization. cash flows into the business
then it is called positive cash flow or cash inflow and when cash flows out of
the business then it is called negative cash flow or cash outflow.
° TREND ANALYSIS
° When the analysis done for the purpose of comparing the
financial statement over a period of years i.e. more than two
years then it is called trend percentage analysis. Trend
analysis tells us the upward or downwards direction and
further computes the percentage relationship that each
variable bears to the same variable in the base year.
° Trend analysis is calculated from the following formulae--:
° |*"$"#%*"#$((+(.*"$"#%*"#
0+(1233
° Following is the information about HEC lmt. For year
2006, 2007, 2008 , 2009.

 4335 4336  

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Cash &bank 1456.10 1077.08 5531.23
balance
SUNDRY 10755.44 14529.19 20460.21
DEBTOR
INVENTORY 12293.59 12465.39 12305.62
 ÷OMPARATIVE BALAN÷E SHEETS
°
AS AT 31ST MAR÷H 2007, 2008, AND 2009


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2007 2008 2009 2007 2008 2009

% % %

CASH & 1456.1 1077.0 5531.23 100 73.97 379.87

BANK 8
BALANCE

SUNDRY 10755. 14529. 20460.2 100 135.09 190.23

DEBTOR 44 19 1

INVENT- 12293. 12465. 12305.6 100 101.39 100.09

ORIES 59 39 2
" 24505. 28071. 38297.0 100 114.55 156.28
13 66 6
Working notes-:
Trend percentage is calculated as follows-:
1) cash and bank balances
In the year 2008--: In the year 2009
=1077.08/1456 X100 = 73.97% 5531.23/1456.10=379.87%
"**7 there is overall increase in current assets over the year so is
showing the increasing trend. On the basis of such trend we can say
current assets may be increased in future also.

° 2) SUNDRY DEBTOR
° In the year 2008 In the year 2009
14529.19/10755.4 X 100 = 135.08 20460.21/10755.44 X100 =
° 190.23
° "**7 there is overall increase in current assets over the year so is
showing the increasing trend. On the basis of such trend we can say
current assets may be increased in future also.
°
° 3) INVENTORIES
° In the year 2008 in the year 2009
° 12465.39/12293.59 X 100=101.39 12305.62/12293.59=100.09%
° "**7 there is overall decrease in current assets over the year so is
showing the decreasing trend. On the basis of such trend we can say
current assets may be decrease in future also.
RATIO ANALYSIS OF 
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BALANCE-SHEET RATIO (figure in lacs )

CURRENT RATIO= CURRENT ASSET/CURRENT LIABILITIES
Current asset =39807.68, current liabilities =73190.66
Current ratio=39807.68/73190.66=0.54:1

"**- short term financial position of this company is not very good
because the ratio is below ideal standard. The ratio of this company is
0.54:1 and ideal current ratio is 2:1

LIQUID RATIO= LIQUID ASSET /CURRENT LIABILITIES

Liquid asset =39807.68, current liabilities =73190.66
Liquid ratio=39807.68/73910.66=0.54:1

"**7short term financial position of HEC company is not sound

because its liquid ratio is below ideal standard. The ratio of this company
is 0.54:1 and ideal ratio is 1:1.
° DEBT-EQUITY-RATIO=LONG TERM DEBT/SHARE HOLDER FUNDS
° Long term ratio=54.83; share holder fund=62719.16
° Debt equity ratio=54.83/62719.16=0.000814:1

° "**9long term financial position of this company is not

very good because its debt equity ratio which is 0.000814:1 is
less than 2:1 which is considered as safe company.

° TOTAL ASSET TO DEBT RATIO=TOTAL ASSET/LONG TERM ASSET

° Total asset= 39807.68 ; long term asset=54.83
° Total asset to debt ratio= 39807.68/54.83 =72.72:1

° "**7 total asset to debt ratio is very high higher ratio is

healthy sign because it provides security lenders for provides long
term loan to the business. There should not be very high or very
low ratio. It should be a satisfactory ratio.

° PROPRIETORY RATIO=SHAREHOLDER FUND/TOTAL ASSET ON

CAPITAL EMPLOYED
° Shareholder fund=60607.89+21118.21 = 81726.16 ; total asset
on capital employed=39807.68
° Propreitory ratio=81726.16/39807.68=2.05:1
° "**7 this ratio highlights that how much proportion of
shareholders fund is employed in the total assets of an enterprise
so this ratio is very important from the creditor¶s security point of
view because higher the ratio indicates the adequate safety for
creditors. So we can say proprietary ratio should have neither a
very high nor a very low.