INTRODUCTION

HEAVY ENGINEEIRING COPORATION AT A GLANCE

Heavy Engineering Corporation or "HEC" is a Public Sector Undertaking ("PSU") in India. It is one of India's oldest and largest engineering companies. It is the biggest industry of its kind in Asia. HEC is under the Ministry of Heavy Industries, Govt. Of India. Established in the year 1958 as the largest integrated engineering industrial complex in India with excellent design, engineering, and manufacturing base. The company is engaged in the manufacture and supply of capital equipment’s, machine tools and spares needed for the core sector industries. One of the oldest and largest engineering company of India is Heavy Engineering Corporation. It is commonly known as HEC. It was setup in 1958 by the Government of India under the Ministry of Heavy Industries. It is involved in the manufacturing and supply of capital equipment’s along with machine tools and spares parts for core sector industries. HEC also go for casting & forging, fabrication, machining, assembly and testing of their own products. It has three units namely-heavy Machine Building Plant, Foundry Forge Plant and Heavy Machine Tools Plant. It is located at Ranchi and is ISO 9001:2008 certified company.

Location

HEC is situated near Hatia, in Ranchi, Jharkhand

Plants

It consists of three units:

Heavy Machine Building Plant (HMBP). Set up in Collaboration with erstwhile USSR. Design& Manufactures Equipment and Spares for different Sectors.

Heavy Machine Tools Plant (HMTP).Set up in Collaboration with erstwhile CSSR (M/s SKODA).Design & Manufactures CNC & Conventional machine tools in medium & heavier ranges. Manufactures special purpose railway machine tools and reconditions old machine tools.

Foundry Forge Plant (FFP) - Set up in collaboration with erstwhile CSSR (M/s SKODA) Manufactures heavy castings & forgings and rolls for hot & cold rolling mills for steel

OBJECTIVES OF THE STUDY

This study program has got the following objectives:

To know About HEC,Ranchi To aware about the various plant of HEC Ranchi To know the international scope of HEC Ranchi To know about the marketing study of HEC Ranchi To know about the product manufactured in HEC Ranchi To know about the customers of HEC To know about the competitors of HEC Ranchi To know about the financial condition of HEC Ranchi To know about the SWOT analysis of various plant of HEC To know about where HEC stands in product life cycle.

NEED OF THE PROJECT REPORT

A variety of operations keep businesses, especially large corporations, running efficiently and

effectively. Common business operation divisions include (1) production, (2) marketing, (3)

finance, and (4) human resource management.

SCOPE OF THE PROJECT

Gathering information and theoretical knowledge is a part of study. It becomescomplete

when added with practical knowledge as the noted truth comes to sight. Hence one

becomes more efficient and effective when a flavor of practical out look is added to the

bosky mind. As the study has got wide relevance is formulating valid information about

the HEC.

The authentic project reports helps us in several purposes Goal setting To get the profitability of the company To implement the rule and regulation in the company To overcome the risks in the company To understand the company’s marketing strategy To estimates the financial budgeting of the company and many more

INTRODUCTION

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, defiance 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, defiance,

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.500 cores and the paidupcapital is Rs.453.24 cores.

Existing Plant Facilities, Products and Past Collaborations:

More than 7000 acres of land had been conveyed to the company at the time of its incorporation by Govt. of Bihar for its use. The company has built plants, administrative office and township on this land.The company was set up with the capability to manufacture steel plant equipment that can enhance the steel producing capacity by one million tones per annum. The company has three manufacturing units and one project and consultancy division viz.

(i) Foundry Forge Plant (FFP)(ii) Heavy Machine Building Plant (HMBP)(iii) Heavy Machine Tool Plant (HMTP)(iv) Project Division (TKP)

The installed capacity of the plant units is as follows:-

(i) FFP: 44000 T of casting and forgings(ii) HMBP: 40,000 T of equipment and structures(iii) HMTP: 120 nos. of machine tools.

Details of facilities available, the products and the past collaborators of the plant are as follows:-

FOUNDRY FORGE PLANT (FFP)

The plant was established in collaboration with SKODAEXPORT of erstwhile CSSR and equipped with facilities for melting, heavy and medium casting, all types of forging and machining. Some of the major facilities installed in the plant are as follows:-

a. Induction furnaces of capacity 0.5 t, 2t and 3t.b. Arc furnaces of capacity 5t, 10t, 20t and 60t.c. Vacuum arc degassing furnace of capacity 60t.d. Hydraulic forge presses of capacity 6000t, 2650t, 1650t and 1000t.e. 3t hammer a series of small free forgings hammers and die forging presses.f. Various ranges of machine tools including one lathe of 53m bed length.g. Low frequency induction hardening machine for CRM rolls (25 mm depth).h. Centrifugal casting facility for slender bushes (350 mm dia and 1m long).i. Horizontal and vertical mist quenching equipment for quality heat treatment,

producer gas & oxygen plant

It manufacturers the following products:-

a. Medium and heavy castings/forgings for coal, defence, railway power and other engineering sector - iron castings weighing upto 100t, steel castings weighing upto 90t, non-ferrous castings weighing upto 1t and forgings weighing upto 20t.

b. Rolls for hot rolling mill and cold rolling mill of steel plant.c. Crankshafts for railways.d. Rolling mills, slabbing mills, blooming mills, SG iron rolls etc.

In addition this plant has also developed the following critical products:-

a. Armour plate forging for defenceb. Turret castings for defence.c. Propeller shafts for Navy.

HEAVY MACHINE BUILDING PLANT (HMBP)

The plant was established in collaboration with ROMASEXPORT of erstwhile USSR and equipped with facilities for machining, gear cutting, heavy structurals and heat treatment. The plant comprises the following shops:-

a. Heavy Machine Shopb. Medium and small machine shop

c. Reduction gear shopd. Block of coke oven shope. Heat treatment and forging shopf. Tools shopg. Repair shop

Some of the major facilities installed in the plant are as follows:-

a. Giant lathe (SOB:4 m, CD:20m)b. CNC vertical turning and boring machine (job dia, 14m, job weight 250t)c. CNC plano milling machine (job size 3.5mx7mx2.5m,job weight 120t).d. CNC Horizontal boring machine (200 mm spindle dia x 18 m col.travel)e. CNC flame cutting machine (Max job size 25mx6.2m upto 500 mm thick).f. Gear cutting machine (max job dia 5m, max. module 40mm hobbing).

.The plant designs and manufactures equipment and spares for the following:-

a. Steel plants.b. Coal/mining equipment viz. 5 and 10 cu.m. rope shovels, hydraulic shovels,

draglines, crushers and grinders, material handling equipment etc.c. Aluminium, power, defence, space research and atomic energy etc.

HEAVY MACHINE TOOLS PLANT (HMTP)The plant was established in collaboration with SKODA of erstwhile, CSSR and equipped with facilities for manufacturing heavy machine tools-both conventional and CNC version. It has also design and R&D wing manned with trained and experienced engineers. The plant is equipped with CNC machine tools, conventional machine tools, induction hardening equipment etc. The plant designs and manufactures equipment and spares for the following:-

Special purpose railway machine tools CNC & Conventional machine tools in the medium and heavy rang for core sectors

and defence like vertical turning and boring machine, roll turning lathe, roll grinding machine, deep hole boring machine, planer, plano-milling machine etc.

For movement of the materials within the plant and uptoHatia railway yard (nearest railway station) HEC has its siding of approx. 100 kms. of railway lines served by its own diesel engines (8 nos.) and wagons (125 nos.). The company has power generating facilities consisting of 4 nos. of DG sets each of 2.8 MW in FFP and 1 no of 3.5 MW of DG set in HMBP as standby arrangement.f Directors

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

1. To acquire and maintain leading position as suppliers of quality equipment, spares, systems & services for the Steel, Mining, Coal, Railways and other Strategic Sectors.

2. To make the Revival Plan sustainable3. To expand business into allied areas and other priority sectors of the economy.

OBJECTIVES

1. GROWTH

To attain substantial jump in production and bring about sustained growth to attain production level of Rs.3000 crores by 2011-12.

2. 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.

3. 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.

Products

Steel Sector Strategic Sector Mining Sector Indian Railways Coke Oven Battery Draglines Electric Rope Shovel (10 Cum) Electric Rope Shovel (5 Cum) Planning Machine Primary Gyratory Crusher Reversible Hammer Crusher Special Purpose Railway Macine Tools Steel Castings-20 Cum Slag Cup Steel Castings-Bottom Housing Of Pinion Stand Steel Castings-Spindle Stand Steel Melting Converters Steel Forgings Vertical Turning & Milling Machine Crane Lathe Continuous Casting Machine Roll Grinding Machine Plano Milling Machine Blast Furnace Deep Hole Boring Machine Forged Rolls Rod Mill Four Roll Crusher Cone Crusher Horizontal Boring Machine Radial Drilling Machine

Contribution to Indian Railways

HEC is a regular supplier of various Machine Tools including Special Purpose Machine Tools for different Railway Workshops, Crank Shafts to DLW, and Varanasi for Diesel Locomotives.

Special Purpose Machine Tools supplied to Railways are:

• Surface Wheel Lathes (Conventional and CNC version)

• Under Floor Wheel Lathes (Conventional and CNC version)

• Axle Journal Turning & Burnishing Machine

HEC Future Plans

•Castings/Forgings for nuclear power plant in the rane up to 500-1000 MW

•Fabrication & Machining of various components required for nuclear power plant in the range up to 500-1000 MW.

•Manufacture of components like:

- Reactor Pressure Vessel

- Main Vessel/Inner Vessel

- Radiation Shield Assembly

- Turbine

- Shell Forging

- Various types of Nozzles etc.

Strengths

• Huge Fabrication Facility

• Special Forging of Nuclear Quality

• Quality Machining and Heat Treatment

• Inspection and Testing

• Skilled Knowledge Base

MAJOR CUSTOMERSSTEEL SECTOR

Steel Authority of India  

Bokaro Steel Plant Bokaro

Bhilai Steel Plant Bhilai

Durgapur Steel Plant Durgapur

Rourkela Steel Plant Rourkela

Alloy Steel Plant Durgapur

RashtriyaIspat Nigam Ltd Vishakhapattanam

Tata Iron and Steel Company Jamshedpur

Essar Steel Gujarat

Jindal Steel Mumbai

INDOMAG New Delhi

MECON Ranchi

NeelachalIspat Nigam Ltd. Dubri/Orissa

MINING SECTOR

Coal India Ltd.  

Northern Coalfields Limited Singrauli

Mahanadi Coalfields Limited Sambalpur

Eastern Coalfields Limited Sactoria

Bharat Coking Coal Limited Dhanbad

South Eastern Coalfields Limited Bilaspur

Cental Coalfields Ltd. Ranchi

Westen Coalfields Ltd. Nagpur

Hindustan Copper Ltd. Kolkata

Hindustan Zinc Ltd. Udaipur

NMDC Hyderabad

Singareni Collieries Company Ltd.

Kothagudam

Neyveli Lignite Corporation Ltd. Neyveli

DEFENCE SECTOR

Ordanance Factory Board  

Metal & Steel Factory Ichapore

Field Gun Factory Kanpur

Ordinance Factory Kanpur

Ordinance Factory Ambernath

Ordinance Factory Ambajhari

Gun Carriage Factory Jabalpur

Ordinance Factory Muradnagar

Indian Navy  

MisraDhatu Nigam Ltd. Hyderabad

Goa Shipyard Ltd. Goa

Mazhgaon Dock Ltd. Bombay

DRDO Diff. Units

RAILWAY SECTOR

Indian Railways Workshops  

Eastern Zone Jamalpur, Kanchrapara, Lilluah

East Central Zone Samastipur

Central Zone Matunga, Parel, Kurdwadi

Northern Zone Alambagh, Amritsar, Charbagh

North Central Zone Jhansi

North Eastern Zone Gorakhpur, Izzatnagar

North East Frontier Zone New Bongaigaon, Dibrugarh, Lumding

North Western Zone Jodhpur, Bikaner, Ajmer

South Eastern Zone Kharagpur

Southern Zone Trivandrum

COFMOW  

Diesel Locomotive Works Varanasi

Chittaranjan Locomotive Works Chittaranjan

Integral Coach Factory Chennai

Rail Coach Factory Kapurthala

Diesel Loco Modernization Works

Patiala

ALUMINIUM SECTOR

Bharat Aluminium Company Korba

National Aluminium Company Angul

POWER SECTOR

Bharat Heavy Electricals Ltd. Diff. Units

National Thermal Power Corporation

Diff. Units

Damodar Valley Corporation Durgapur

Jharkhand State Electricity Board Patratu

U.P. State Electricity Board Lucknow

Tamilnadu Electricity Board Chennai

OTHER SECTOR

Indian Space Research Organisation

Sriharikota

Vikram Sarabhai Space Centre Trivandrum

Variable Energy Cyclotron Centre

Kolkata

Bhabha Atomic Research Centre Kolkata

GOVT.MINT Mumbai

Fertiliser Corporation of India Barauni

Tata Engineering & Locomotive Company

Jamshedpur

Larsen & Toubro Mumbai

New Bongaigaon Refinery Bongaigaon

Oil & Natural Gas Commission Mumbai

Batliboi Mumbai

TATA Growth Shop Jamshedpur

Tin Plate Company India Ltd. Jamshedpur

Tata Yodogawa Jamshedpur

McNally Bharat Dhanbad

TRF Limited Jamshedpur

TATA International Kolkata

AREA OF BUSINESS

Steel Plant and equipment Mining & mineral processing equipment Machine tools Power Railway Space research application Defence Cement Atomic & nuclear power

CORE COMPETENCY

Eot crane design Various steel plant equipment & component coke Oven blast furnace Converter, rolling mills

Financial analysis

A Memorandum of Understanding has been signed between Heavy Engineering Corporation Limited, Ranchi (HEC) and HMT Machine Tools Ltd. on 09.04.2010 at New Delhi.

This joining together of HEC and HMT-MTL will make it, the largest Machine Tools manufacturer in the Country with the capability to design, manufacture and supply a wide range of machine tools and offer total solution to customers, from smallest to largest machine tools from a single source.

Earlier the Jharkhand High Court, on 13.11.2009, had quashed the winding up order and approved revival package of HEC. The considerable improvement in work culture, team building, customer focus, commitment and ability to deliver in time or even ahead of schedule has helped the company for this growth and in getting approval of Govt. for implementation of 50 % DA merger.

From a huge loss of 285 Cr. in 2005, it recorded 303.30 Cr. gross turn over with a marginal profit of 2.86 Cr. in 2006. It further increased its profit successively to 4.17 Cr in 2007-08, 18.37 Cr in 08-09, and 26.93 Cr. in 2009-10.

Heavy Engineering Corporation, Ranchi turnover Crosses 500 Crore Mark

Financial asssesment

Income statement :-

Y31 Mar (Rs m) 08 09 10 11Revenue 23,088 29,498 27,427 36,491Operation profit 4,276 5,137 5,916 8,640Depericiation 975 1,o86 1,392 1,750Interest expenses

1,006 1,422 1,473 1,310

Other income 174 176 176 176Profiy before tax 2,468 2,806 3,288 5,756Taxes 704 922 1,061 1,892Minorities & other

11 30

Net profit 1,754 1,853 2,167 3,864

Balance sheet:-

Y/e 31 Mar (Rs m)

08 09 10 11

Equity capital 250 250 250 250

Reserves 9,424 1,15 12,985 16,555Net worth 9,674 11,355 13,236 16,806Minority 118 168 168 168Debt 11,375 16,713 17,315 15,405Debt tax liab (net)

1,536 1,306 1,110 1,221

Total liabilities 22,702 29,541 31,828 33,600

Fixed assets 17,410 26,232 28,904 29,154Investment 4 4 4 4Net working capital

4,567 2,217 2,635 3,421

Inventories 7,817 6,513 6,542 8,703Sundry debts 3,234 4,264 3,964 5,274Other curr assets

4,233 3,118 2,919 3,789

Sundary creditors

10,039 10,875 10,112 13,453

Other curr liab 677 802 678 891Cash 721 1,088 286 1,021Total assets 22,702 29,541 31,828 33,600

Cash flow statement :-

y/e 31Mar (Rs m) 08 09 10 11Profit befor tax 2,468 2,806 3,228 5,756Depreciation 975 1,086 1,392 1,750Tax paid 704 922 1,061 1,892Working capital 135 2,350 418 787Op cash flow 2,875 5,320 3,141 4,827Cap expenditure 4,606 9,909 4,063 2,000Free cash flow 1,731 4,589 922 2,827Equity raised 478 122 7 -Debt financing/disposal

1,745 5,338 603 1,910

Dividend paid 293 294 294 2394Other items 32 211 196 111Net in cash 231 367 802 735

Key ratio

y/e 31Mar(Rs m) 08 09 10 11 Growth matrix(%)

Revenue growth 17.5 27.8 (7.0) 33.0Op profit growth 21.8 20.1 15.2 46.0 EBIT growth 26.6 21.7 11.2 50.3Net profit growth 27.6 5.7 16.9 78.3

Profitability ratios(%)OPM 18.5 17.4 21.6 23.7EBIT margins 15.1 14.3 17.1 19.4Net profit margin 7.6 6.3 7.9 10.6RoCE 16.7 16.2 15.3 21.6RoA 6.0 5.0 5.2 8.5

Per share ratioEPS 7.0 7.4 8.7 15.4Dividend per share 1.0 1.0 1.0 1.0Cash EPS 10.9 11.7 14.2 22.4BVPS 38.7 45.4 52.9 67.2

Valuation ratio(x)P/E 10.8 10.3 8.8 4.9P/CEPS 7.0 6.5 5.3 3.4P/B 2.0 1.7 1.4 1.1EV/EBIDTA 6.9 6.7 6.1 3.9

Payout(%)Dividend payout 16.7 15.9 13.6 7.6Tax payout 28.5 32.9 32.9 32.9

Liquidity ratio

Debtor days 51 53 53 53Inventory days 124 81 87 87Creditor days 159 135 135 135

Leverage ratio

Interest coverage 3.5 3.0 3.2 5.4Net debt/ equit 1.1 1.4 1.3 0.9Net debt/ op profit 2.5 3.0 1.7

Component ratios(%)

Raw material 47.7 46.9 43.6 44.8Power & fuel 7.3 6.1 6.6 5.6Staff cost 7.1 5.8 6.7 5.5Other op exp 19.4 23.7 21.3 20.4