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Company Information

Home » Market » Company Information

Bharat Heavy Electricals Ltd.

Jan 21
59.60 -2.10 ( -3.40 %)
 
VOLUME : 3254900
Prev. Close 61.70
Open Price 61.10
TODAY'S LOW / HIGH
58.70
 
 
 
62.15
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
35.15
 
 
 
79.50
Jan 21
59.60 -2.10 ( -3.40 %)
 
VOLUME : 26625295
Prev. Close 61.70
Open Price 61.40
TODAY'S LOW / HIGH
58.55
 
 
 
62.25
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
35.10
 
 
 
80.35
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Market Cap. ( ₹ ) 20753.10 Cr. P/BV 0.80 Book Value ( ₹ ) 74.62
52 Week High/Low ( ₹ ) 80/35 FV/ML 2/1 P/E(X) 0.00
Bookclosure 16/09/2021 TTM EPS ( ₹ ) -5.02 Div Yield (%) 1.77
NOTES TO ACCOUNTS
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2021-03 

(i) The provision for impairment in value of investment in NTPC-BHEL Power Projects Private Limited has been made to the extent of ' 50.00 crore (upto previous year ' 50.00 crore) based on the net financial position. The Board of Directors in its meeting held on February 08, 2018 has accorded in-principle approval for pursuing the winding up of NBPPL. Ministry of Power (MoP) has advised NTPC to consider buying out the stake of BHEL and decide either to continue it as an in-house EPC arm or close it after completion of present work. This advise was noted by NBBPL Board in its meeting held on 29.08.2019.

(ii) Dada Dhuniwale Khandwa Power Limited (DDKPL) stands dissolved vide NCLT order dated 2nd November, 2020. Against the investment of ' 22.50 cr, ' 17.57 cr was received (' 17.30 cr in FY 2018-19 & ' 0.27 cr in FY 2019-20). Balance ' 4.93 cr has been written off during the year and corresponding provision withdrawn.

(iii) The provision for impairment in value of investment in Powerplant Performance Improvement Limited amounting to ' 2.00 crore (previous year ' 2.00 crore) has been made since the JVC is under liquidation and the amount paid as equity is not recoverable.

The proposal for transfer of 51% stake in BHEL EML, sent by BHEL to Department of Heavy Industry, Govt. of India for approval, has been approved on 11th May 2021. Appropriate action to execute the Agreement with Govt of Kerela and to complete the necessary activities for transfer of Company's 51% stake in BHEL EML to Govt of Kerela at a consideration of ' 1 only and waiver of working capital loan of ' 3 cr alongwith interest accrued thereon given by BHEL to BHEL EML (refer note 14) is being taken.

) Terms / rights attached to the equity shares

The company has only one class of equity shares having par value of ' 2 per share (previous year ' 2 per share). Each holder of the equity shares is entitled to one vote per share.

) Issue of bonus share

The Company allotted bonus share on October 03, 2017 in the ratio of 1:2 i.e. one equity share for two existing fully paid-up equity shares. Consequently, the paid-up capital was increased from ' 489.52 crore in FY 2016-17 to ' 734.28 crore in FY 2017-18 by capitalization of reserves.

) Share buyback

The Company vide its Board approval dated October 25,2018, bought back its 18,93,36,645 fully paid-up equity shares of the face value of ' 2 each representing 5.16% of the total issued and paid-up equity share capital from the eligible equity shareholders of the Company for an amount of ' 1628,29,51,470 at a price of ' 86 per equity share in FY 2018-19. Consequently, the paid-up share capital was reduced from ' 734.28 crore in FY 2017-18 to ' 696.41 crore in FY 2018-19.

(a) Capital reserve : It represents mainly the excess of net assets taken, over the cost of consideration paid during amalgamation of the then subsidiary company (HPVP) with the BHEL.

(b) Capital redemption reserve: The Company has recognised Capital Redemption Reserve on buy back of equity shares from its general reserve The amount in capital redemption reserve is equal to nominal amount of equity shares bought back.

(c) General reserve: This represents accumulation of profits retained by Company to meet future (known/unknown) obligations.

(d) Retained earnings: Retained earnings are profits that Company has earned till date, less transfer to general reserve, dividends (incl. dividend distribution tax) or other distributions to shareholders.

(e) Re-measurement of net defined benefit plans: Differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumption or experience adjustments within the plans, are recognised in 'Other comprehensive income' and these are subsequently not to be reclassified to the Statement of Profit and Loss.

(i) The Company has a cash credit limit from banks aggregating to ' 6000 crore (previous year ' 6000 crore) and Company's counter guarantee / indemnity obligations in regard to bank guarantee / letters of credit limit aggregating to ' 54000 crore (previous year '54000 crore) sanctioned by the consortium banks. These are secured by first charge by way of hypothecation of raw materials, components, work in progress, finished goods, stores, trade receivables and other current assets both present and future. The outstanding bank guarantees as at 31.03.2021 is ' 39343 Crore (previous year ' 41491 Crore). This figure includes BG of ' 630 crore (previous year ' 971 Crore) issued as replacement and pending for vacation as on 31st March 2021

(ii) Loan from Banks represents loans against Fixed deposits (' 200 crore) and balance for WCDL (Working Capital Demand Loan). (Previous year loan from Banks represents WCDL).

(iii) Packing Credit in Foreign Currency (PCFC) has been availed by the Company. The outstanding amount of USD 40.50 million is repayable in parts during the months November 2021 to March 2022.

(iv) Buyer's credit has been availed by the Company. The outstanding amount of USD 6.18 million is repayable in April 2021.

(i) In view of various court cases, litigations and claims disputed by the Company, the outflow of resources is not ascertainable at this stage. Generally,contingent Liability in respect of court & arbitration cases are shown on award/court judgement and also reviewed on a case to case basis for its reporting in contingent liability.

(ii) It is not practicable for the Company to estimate the timing of actual cash outflows in respect of items (a) to (f) , if any, due to pending resolution of the respective proceedings. However, the chances are remote and contingent.

(iii) Liquidated damages represents likely claims or amount withheld by customer on account of delay in execution of projects which will be settled after commissioning and trial operation of project based on delay analysis and is being disclosed in line with Ind AS -37.

Note [42]

Current Financial liabilities includes a sum of ' 100.51 crore (previous year ' 100.51 Crore) towards guarantee fee demanded by the Government of India in respect of foreign currency loans taken by the Company at the instance of the Government upto 1990-91. The matter for its waiver has been taken up with the Government since there was no stipulation for payment of such guarantee fee at the time the loans (guaranteed by Government) were taken by the company.

Note [43]

The Company had taken over Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon on April 1, 1999 from Ministry of New and Renewable Energy (MNRE) on lease for a period of 30 years. The formal lease agreement with the Ministry of New and Renewable Energy (MNRE) is yet to be finalised.

Note [44]

Balance shown under Trade receivables, Trade payables, contractors' advances, deposits and stock / materials lying with sub-contractors/ fabricators are subject to confirmation, reconciliation & consequential adjustment, if any. The Company is in the business of long term construction contracts, bills are raised on the customers as per contract in line with billing schedule approved by the customer and the reconciliation is carried out on ongoing basis & provisions made, wherever considered necessary. Final reconciliation with customer is done on completion of project (Trial Operation and PG Test completed). Trade receivable of completed projects stand at '7882 crore (previous year '8098 crore) . Out of completed contracts, the projects reconciled with customers have outstanding trade receivables of '6299 crore (previous year '6676 crore).

Note [45]Disclosure on Leases - Ind AS 116

Lease Commitments - Company as Lessee

The company's significant leasing agreements are in respect of land, building and EDP equipments. The company has entered into a rate contract for lease arrangement for computer items, printers, video conferecing equipments and peripherals. Assets taken on lease are capitalised and disclosed separately as Right-of-use assets in the property, plant and equipment. The lease rentals are allocated between interest, maintainence and principal value. The interest and maintenance charges are charged to Statement of Profit and Loss and principal amount is adjusted to lease obligations.

The company has applied the following available practical expedients :

(i) The short-term leases exemptions to leases with lease term less than 12 months

(ii) The low value lease exemption to leases where underlying asset is of low value (assets of less than ' 50000 in value).

A. The Company has following Schemes in the nature of Defined Benefits plans :

i) Gratuity Scheme

ii) Post Retirement Medical Scheme

iii) Provident Fund Scheme

iv) Travel claim on Retirement

(i) Gratuity (Funded Plan)

The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum limit of '20 Lakhs.The gratuity liability arises on account of future payments, which are required to be made in the event of retirement, death in service or withdrawal. The liability has been assessed using projected unit credit actuarial method.

(ii) Post Retirement Medical Benefits (Funded Plan)

The Company has Post-Retirement Medical benefit (PRMB), under which the retired employees and their spouses are provided medical facilities in the Company hospitals/empanelled hospitals subject to company medical rules.They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised annually on the basis of actuarial valuation.

Risk Exposure

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks such as increase in medical cost, investment risk, discount rate, mortality, disability and withdrawals.

(iii) Provident Fund

The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The Company has an obligation to ensure minimum rate of return to the members as specified by GOI. Accordingly, the Company has obtained report of the actuary. Wherever as per the actuarial valuation certificate liability for likely interest shortfall arises, the same has been provided in the accounts.

B. Long Term Leave Liability (Encashable Leave -EL /Half Pay Leave-HPL) - (Unfunded Plan)

The company provides for earned leave benefit and half pay leave to the employees of the company which accrue half yearly at 15 days (maximum) and 10 days respectively. The earned leave is encashable while in service subject to fulfilment of certain conditions. On retirement/superannuation, earned leave & half pay leave put together upto a maximum of 300 days is encashable subject to company policies & leave encashment rules.The leave liability has been treated as other long term benefits and has been assessed using projected unit credit actuarial method.

The company is a central Public Sector undertaking under the administrative control of Ministry of Heavy Industries and majority of its stake is held by Government of India. The significant transactions are with other PSUs, State owned utilities, Railways etc. which are also controlled by Govt. of India directly or indirectly. The transactions with such entities are normal, based on market driven rates at arms length price.

Construction of power projects is a long cycle business, where the contracts received by the company are either EPC contracts (Engineering, Procurement & Construction) or BTG Packages (i.e. Boiler, Turbine and Generator packages). Power projects are long gestation period projects with normal execution period of contract ranging between 3 to 5 years. BHEL scope of services includes supply of equipment, erection, commissioning, synchronizing the plant to the grid, completing the trial operation and providing the guaranteed parameters.

Although there are several components to the overall scope, such projects are generally considered one performance obligation. The control transfers simultaneously over the execution period as the entity performs rather than at discrete points in time and hence revenue is recognized over the period of time based on measure of progress (input cost method)

Note [50]

The Nationwide lockdown, consequent to spread of Covid 19 pandemic globally caused disturbance & slow down of the economic activity. This impacted the Company's operations during the FY 2020-21, which recouped progressively. Based on the internal & external information upto the date of approval of these financial statements,the company expects to recover the carrying amount of its assets,investments,trade receivables,contract assets & inventories. The company will continue to monitor the future economic conditions and assess its impact on its financial statements.

a. The Fair value of cash and cash equivalents, bank balances, loans, trade receivables, trade payables and others reasonably approximates their carrying amount. Trade receivables are evaluated after taking into consideration for Expected Credit Losses. Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.

Fair value hierarchy

The fair value of financial instruments have been classified in following categories depending on the inputs used in the valuation technique.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)

The company's activities are exposed to different financial risks arising out of natural business exposures to any company operating in the sector. The management of financial risk has always been an integral part of the company's business strategies and policies. The company reviews and aligns its policies and guidelines from time to time to address the financial risks in line with the needs and expectations of its various stakeholders. Exposure risk from the use of financial instruments can be categorized as under:

a) Credit risk

b) Liquidity risk

c) Market risk

This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk, and management of Company's capital. Further quantitative disclosures are included throughout these financial statements.

Risk Management Framework

BHEL has in place a Board approved Risk Management Charter & Policy which provides overall framework for Risk Management in the company. The objective of the charter is to ensure that the risks are being properly identified, assessed and effectively managed by adopting suitable risk mitigation measures. The company has 3-layer risk management framework. At the first level, the Board Level Risk Management Committee (BLRMC) of the company is assigned with responsibility of reviewing the company's Risk Governance structure, Risk Assessment & Risk Management framework, Guidelines, Policies and Processes thereof. Risk Management Steering Committee (RMSC) at the second level is responsible for adopting & implementing the risk management framework and leading the risk management initiative across the company. Chief Risk Officer (CRO) being the convener of BLRMC & RMSC is responsible for periodic reporting on risk management to Board/ BLRMC. Key risks being faced by the company are analysed starting from Unit level for their respective areas to prepare risk mitigation plans and to ensure implementation.

a) Management of Credit Risk

Credit risk is considered as an integral part of risk reward balance of doing business. BHEL is involved in setting up of power projects pertaining to Government sector (State utilities, PSU's, Railways and other govt. departments etc.) and private sectors in India and abroad. The projects are generally funded by Financial Institutions/ banks or payments are covered by Letter of Credit (LC). The project duration ranges from 3 to 5 years and payments are generally realised in stages as per the terms of the contract including advance, progress payments, milestone payments and also retentions which are released on completion of such projects. Since majority customers profile pertains to Government sector, constituting 78% of total receivables coupled with the fact that the company itself is a CPSE, credit risk is relatively low. In respect of private sectors customers, the payment terms are mainly through LC. The company has well established review mechanism for receivables at various levels within organisation to ensure proper attention and focus for realisation in line with the company policies, procedures and guidelines.The company uses expected credit loss model to assess the impairment loss or gain and the disclosure of the same is made elsewhere. Further, adequate provisions are maintained to address any eventuality.

i) Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

The company makes investments out of surplus funds as per investment policy of the company duly approved by the Board and in line with the DPE guidelines .Credit risk on cash and cash equivalents and term deposits is very limited as the company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies.

b) Management of Liquidity risk

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including term deposits and the availability of Funding through an adequate amount of credit facilities to meet obligations as and when due. Robust cash management system and regular monitoring of cash flows enables management to plan and maintain adequate sources to finance its funds requirement throughout the year. Besides adequate cash and bank balances, company enjoys credit facilities. The company is able to meet all its fund requirements from internal resources i.e. the funds generated from operations and also through short-term borrowings used for better treasury management operations to optimise the returns on investments.

The Company is exposed to certain currency,commodity, interest rate risks arising from its operations. The company has foreign exchange risk management policy to cover the foreign exchange risks.To insulate the company against major commodity price fluctuation,framework agreements including price pass through claims are being entered regularly with supply chain partners including suppliers and customers. Surplus funds generated from operation are kept invested in short term deposits with PSU Banks or large sized private banks only and in debt based schemes of public sector mutual funds , thereby minimizing any chance of risk.

Foreign currency risk exposure The company's exposure to foreign currency risk at the end of reporting period, are as follows:

(i) The derivative instruments that are hedged and outstanding as on 31.03.2021 is NIL (previous year Nil)

The company's objective, while managing capital is to continue business as a going concern, safeguard,preserve and enhance its capital to provide maximum return to shareholders, benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Board of Directors also montiors the level of dividends to equity shareholders. The Company monitors capital, using a medium term view and long term view, on the basis of a number of financial ratios generally used by industry as well as by the rating agencies. The Company is not subject to externally imposed capital requirements. The Company's capital structure is managed against the various financial ratios as required to maintain highest credit ratings.

Note [55]

Assets and Liabilities are classified between Current and Non-current considering 12 months period as operating Cycle.

Note [56]

Weighted average cost of borrowing at 7.07 % (previous year @ 7.07%) as at the year end has been considered for working out present value of long term provisions and expected credit loss.

Note [57]

Prior period errors which are material are corrected retrospectively by restating the comparative amount for the prior periods presented in which such error occurred.For the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented are restated.

Note [58]

Figures have been rounded off nearest to ' in crore with two decimal.

Note [59]

Previous year's figures have been regrouped/ rearranged wherever considered necessary.

Note [60]

The Board of Directors has authorised to issue the Financial Statements 2020-21 in its meeting held on June 11 , 2021