COMPANY PROFILE @2010@bharat heavy electrical ltd report

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2010

Devendra Prasad PGPM/0911/022

2009-2011

Bharat Heavy Electricals Ltd

International

Academy

of

Management

&

Entrepreneurship

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About BHEL

BHEL, ranking among the major power plant equipment suppliers in the world, is one of the largest exporters of engineering products & services from India. Over the years, BHEL has established its references in around 60 countries of the world, ranging from the United States in the West to New Zealand in the Far East.

BHEL's export range covers individual products to complete Power Stations, Turnkey Contracts for Power Plants, EPC Contracts, HV/EHV Sub-stations, O&M Services for familiar technologies, Specialized after-market services like Residual Life Assessment (RLA) studies and Retrofitting, Refurbishing & Overhauling, and supplies to manufacturers & EPC contractors.

BHEL has assimilated and updated/adopted the state-of-the-art-technologies in the Power and Industrial equipment sectors acquired from world leaders.

BHEL has successfully undertaken turnkey projects on its own and possesses the requisite flexibility to interface and complement international companies for large projects, and has also exhibited adaptability by manufacturing and supplying intermediate products to the design of other manufacturers and original equipment manufacturers (OEMs). The success in the area of rehabilitation and life extension of power projects has established BHEL as a reliable alternative to the OEMs for such power plan

Turnover of the company

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History and Milestone

- Company was set up at Bhopal in the name of M/s Heavy electrical (India) Ltd. in collaboration with AEI, UK. Subsequently, three more plants were set up at Hyderabad, Hardwar and Trichy. The Bhopal Unit was controlled by the company, the other three were under the control of Bharat Hevey Electricals Ltd. - The Company's object is to manufacture of heavy electrical equipments. 1972 - In July the Operations of all the four plants were integrated. 1974 - In January Heavy electrical (India) Ltd was merged with BHEL. - For the manufacture of a wide variety of products, the company has developed technological infrastructure, skills and quality to meet the stringent requirements of the power plants, transportation, petro chemicals, oil etc. - BHEL has entered into collaboration which are technical in nature. Under these agreements, the collaborators have transferred, furnished the information, documentation, including know-how relating to design, engineering, manufacturing assembly etc. 1982 - BHEL also entered into power equipments, to reduce its dependence on the power sector. So, it developed the capability to produce a variety of electrical, electronic and mechanical equipments for all sectors, including transmission, transportation, oil and gas and other allied industries. 1991 - On 24th December converted into a public Limited company. - As per resolution passed on 23rd Dec. 1991, existing shares of Rs.1000 each was subdivided into equity shares of Rs.10 each. 2447,60,000 No. of equity shares of Rs.10 each allotted for consideration other than cash.

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1992 - Between January to February the company disinvested 489,52,000 equity shares of Rs.10 each. - During the year, 10 thermal sets, 2 gas sets and 11 hydro sets were commissioned. 1994 - The company commissioned two sets of 250 MW at Maharashtra and one 500 MW once-throug tower type boiler at Orissa. - During the year the company established Asia's largest fuel evaluation test facility at Tiruchi - The Company undertook the development of photovoltaic power systems for grid assisted operation, solar power refreigerator useful for vaccine and medical storage and demonstration of 2X5 KW phosphoric acid fuel cell module at a Chlor Alkali plant. 1995 - The country's premier state owned undertaking, BHEL, has commissioned India's first 250 mw capacity thermal generating unit at Dahanu power station in Maharashtra. BHEL won this World Bank contract against competition from multinationals. 1996 - This year company handed over 100th Electric Locomotive to Indian Railway. And 250th Hydro set installed at Dhupdal-1, successfully syncronised and handed over the 30 MW Fr.6 Gas turbine at Wadi Al Jizzi, Oman. - The company signed an agreement with Indian Railways for building and leasing 53 nos. AC/DC locos of 5,000/4,600 HP. 1997 - In May a joint venture company named Bhe-Ge Gas Turbine Services private Ltd. was incorporated with General Electric to carry out after

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sales repair and servicing of GE designed heavy duty gas turbines installed in India and certain other countries abroad. - The public sector Bharat Heavy Electricals Ltd (BHEL) has won the national best exporter award for 1995-96, instituted by the Engineering Export Promotion Council, of the eighth consecutive year, from Madurai. 1999 - Bharat Heavy Electrical have achieved yet another milestones by synchronising the fifth unit of 210 MW capacity at the Richur Thermal Power Station in Karnataka, much ahead of schedule, in just 29 months. With this, BHEL has set a new benchmark in the commissioning of future generating sets in the country, in the shortest possible time. - Bharat Heavy Electricals Ltd (BHEL) has commissioned a desalination plant on turnkey basis in the Gulf of Mannar in Tamil Nadu. - Bharat Heavy Electricals Ltd (BHEL) has entered into a technical collaboration agreement with Babcock Borsig Power GmbH of Germany for the manufacture of `once through boilers'. 2000 - The Company has enter the infotech sector and setting up a dotcom company with will provide B2B service in the area of electrical engineering and power sector. - The Company has won the top exporters award among the public and private sector companies in India for the 11th Consecutive year. - The Company has bagged the `Samman Patra' award from the Finance Ministry for its unblemished track record with Airport Customs in regard to payment of customs duties. - The electronics division of public sector Bharat Heavy Electricals Ltd. has been given the ISO 140001 certification by the Det Norske Veritas. - The Company has won the `Best Productivity Performance Award' in the heavy engineering industries category for the year 1997-98. - The company has become the first company capable of offering indigenously - developed ceramic disc insulators for 500 KV and - BHEL Tiruchi has bagged the Handa Rolling Trophy and Golden Key Award for the year 2000-2001, consequently for second time. 2001

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- Bharat Heavy Electricals Ltd. has bagged the prestigious Golden peacock national quality award for the second consecutive year for achieving excellence in quality conforming to global standards. - The R&D division of Bharat Heavy Electricals Ltd. has developed a 50-KW phosphoric acid fuel cell power pack as a joint venture of BHEL, the Ministry of Non-Conventional Energy Sources and Shree Rayalaseema Alkalies and Allied Chemicals Ltd. - The Company has commissioned first of the four hydro-power Generating units at Kurichu Hydro Electric Project in Bhutan. - Bharat Heavy Electricals Ltd (BHEL) is set to commission the first 500 MW unit of National Thermal Power Corporation's (NTPC) Simhadri power project three months ahead of schedule in March, 2002. 2002 -Awarded the top exporters’ award by Engineering Export Promotion Council for the year 1999-2000 -BHEL unit Power Sector Northerrn Region bags OHSAS-18001& ISO-14001 certification -Signs MoU with ONGC for providing, upgrading and refurbishment of oil-field equipments to its onshore and offshore applications -BHEL Tiruchi unit gets best employer-employee award -BHEL launches Vendor information system -BHEL clinches ONGC order worth Rs 230 crore -BHEL gets Rs 63 cr contract from NTPC -Gets Rs 35-cr grid substation project from Rajasthan Electricity Board -Launches its first-ever Vessel Traffic Management System (VTMS) at the New Mangalore port -Announces completion of 1000 mw Simhadri thermal power station -Launches web pages for development and expansion of vendor base for components required for energy meters 2003 -Forays into Operations & Maintenance (O&M) of power plants -First indigenously manufactured advance class gas turbine manufactured by BHEL, Ramachandrapuram unit flagged off to Gujarat State Electricity Corporation (GSEC) -BHEL and Skokdaexport tie-up for overseas projects -BHEL and TCS tie-up to develop IT-based solutions for power sector

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-Teams up with Alstom to bid for National Thermal Power Corporation's (NTPC) Rs 9,000-crore 2,000 MW Sipat thermal project in Chattisgarh -Awarded ISO 14001 and OHSA 18001 certifications by Det Norske Veritas, Netherlands. The company bags the award for implementing an integrated management system, HSE Health, Safety and Environment Management System. -Obtains a mega contract of worth Rs 1,412 crore for setting up the 1000 MW (stage II) Kahalgaon super thermal power project (STPP) in Bihar, which is being implemented by the National Thermal Power Corporation (NTPC) -The comapany gets hydro power order worth of mn order to set up a 12 megawatt hydroelectric power project in India's eastern Mizoram state. -BHEL gets Rs 2,700 cr orders from NTP 2004 -BHEL gets compressor and drive turbine package contract worth of Rs 20-cr -Bhel bags Rs 599 Cr order to set up 250 MW power project in Maharashtra state -With Indian Oil Corporation (IOC) opting to source equipment from Bharat Heavy Electricals Ltd (BHEL), the power utility on Feb 20 delivered two sets of gas turbines and generators out of the Rs 475-crore order, under which it has to provide a total of four sets -Bhushan Steel and Strips Limited had placed Rs 36 cr orders to BHEL for one unit of 30.75 mw STG set along with WHRB of 57.5 tonne capacity for the upcoming captive power plant at its Angul steel plant in Orissa. -Tata Consultancy Services (TCS) and Bharat Heavy Electricals Ltd (BHEL) on April 2 announced the release of PowerPac-G, a software product that addresses decision support and integrated asset management needs of power generation plants. TCS and BHEL will jointly market the product in the Indian and global markets, and initial orders have been firmed up. 2004 -Bharat Heavy Electricals Ltd (BHEL) has secured a contract worth Rs 647 crore from Maharashtra State Electricity Board (MSEB) to set up a 250 MW power unit -BHEL inks MoU with Oil India for land rigs upgradation

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-Bharat Heavy Electricals (BHEL) has bagged a Rs 80 crore export order from Petroleum Development Oman -Bharat Heavy Electricals Ltd (Bhel) has bagged a Rs 70-crore order from Punjab State Electricity Board to set up a hydro-electric project -The Bangalore-based electronics division of Bharat Heavy Electricals Ltd has bagged an order for supplying solar photovoltaic cells to S.E. Projects, Italy -The Electronics Division of Bharat Heavy Electricals Ltd (BHEL) has won a contract to set up five stand-alone solar power plants in the Islands of Sunderbans, West Bengal -Bharat Heavy Electricals Ltd (BHEL) has bagged an order from Steel Authority of India Ltd (SAIL) for setting up a 15-MW captive power plant at its steel complex in Bhilai 2005 -Delists equity shares from the Madras Stock Exchange Ltd (MSE) w.e.f. January 19, 2005. - Delists equity shares of the Company voluntary from The Stock Exchange, Ahmedabad (ASE) with effect from January 28, 2005. -Bharat Heavy Electricals Ltd (BHEL) and Rural Electrification Corporation (REC) have entered into a memorandum of understanding to work jointly in offering solutions along with financial packages in the power generation sector, covering both new power generation projects and renovation and modernisation of existing power plants 2006 -BHEL inks agreement with IIT Madras for new courses -Bechtel signs Dabhol agreement with BHEL -Bharat Heavy Electricals Tiruchirapalli on May 31 signed a MoU with National Institute of Technology, Tiruchirapalli to recognize and strengthen institute-industry interaction. -BHEL targets .7 bn contract in B'desh -BHEL has got a Rs 165 crore order from IOC for establishing a power plant at the oil major's Haldia refinery in West Bengal. 2007 -BHEL and French company Alstom will together produce 1,50,000MW of power over the next ten years. -Bharat Heavy Electricals Ltd (BHEL) has appointed Shri. N Gokulram

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as Part-time Official Director on the Board of the Company w.e.f. January 25, 2007. -Bharat Heavy Electricals Ltd (BHEL) has informed that Shri. Vineet Nayyar, Part-time, Non-Official (Independent) Director, has ceased to be on the Board of the Company with effect from February 28, 2007 on account of expiry of tenure. - BHEL has raised its research & development spend to Rs 238 crore during fiscal 2006-07, up from Rs 152 crore last year. - Bharat Heavy Electricals Limited (BHEL) has won orders for the supply and installation of the main plant package at the upcoming Jhajjar Super Thermal Power Project in Haryana. Valued at over Rs 2,900 Crore, the orders have been placed by Aravali Power Company Private Limited (APCPL), a joint venture company of NTPC, IPGPL and HPGCL. -Bharat Heavy Electricals Ltd (BHEL) and NTPC Ltd have singed a Memorandum of Understanding (MOU) to form a Joint Venture Company with the propose to work jointly to complement their respective strength and to carry out engineering procurement and construction (EPC) activities in the power sector. - BHEL, NTPC ink MoU for power projects. - Bharat Heavy Electricals Limited (BHEL) has won a turnkey order for setting up a captive power plant at a steel plant in West Bengal. -Bharat Heavy Electricals Ltd (BHEL)has informed that a Joint Venture agreement between the Company and NTPC Ltd has been singed on December 17, 2007 for Establishment and Operation of Joint Venture company for taking up EPC business. 2008 - Bharat Heavy Electricals Limited (BHEL), Trichy, has secured orders worth Rs 15,000 crore, its all-time high. BHEL, said the recent MoU with the TNEB for setting up two 800 Mw thermal power stations near Chennai had resulted in the power plant major bagging orders. -Bharat Heavy Electricals Ltd (BHEL) has informed that pursuant to order dated March 04, 2008 issued by Ministry of Heavy Industries and Public Enterprises, Department of Heavy Industry, Shri. K Ravi Kumar Director (Power)/BHEL has been entrusted with additional charge of the post of the Chairman and Managing Director/BHEL w.e.f. March 01, 2008.

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2009 - Bharat Heavy Electricals on June 12 said it has bagged a Rs 4,015-crore from Hindalco Industries for supplying boilers, turbines and generators at its 900-MW captive power plant in Orissa. MW (2 x 600 MW) greenfield power project located at Derang in the Angul district of Orissa. - BHEL has bagged a Rs. 1,300-crore order from NTECL, a joint venture of power producer NTPC and Tamil Nadu Energy Company, for supply of turbines to the upcoming Vallur Thermal Power Project in Tamil

Nadu.

Organisation Structure

DEPARTMENT OF HEAVY INDUSTRY

MINISTER: SHRI SONTOSH MOHAN DEV MINISTER OF STATE: SMT KANTI SINGH SECRETARY (HI&PE): SHRI PRIYADARSHI THAKUR WORK ALLOCATION AMONGST OFFICERS (EXCLUDING TECHNICAL OFFICERS) IN DEPARTMENT OF HEAVY INDUSTRY 1. The Charge of AS& FA (Shri Naresh Chaturvedi) S.No Section/Desk PSUs US/DO/SO/DS DS/DIR/Equivalent 1. Finance-IIII - S. Sen, US

V.K. Sharma, DO DIR(AS)

2. B&A - B.Umamaheshwari,AO DS(MR)/CCA(AN) 2. The Charge of Joint Secretary (Shri A. Didar Singh) S.No Section/Desk PSUs US/DO/SO/AO DS/DIR/Equivalent 1. PE.V HEC, CCIL,

NBCIL HSL, SSL

Pratap Singh, US Sushila Devi, SO

DIR(MKS)

2. PE.X

HMT, PTL K.D. Sharma, US S.P. Chopra, SO

DIR(BBS)

3. PE.XII CCI, BLC, TAFCO

M.R. Bali, US K.D. Joshi, SO

DS(CNG)

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4. COORD.

SC/ST CELL,

V.K. Wadhawan, US B.B. Biswas, SO Shakti Bhasin, SO Laxman Dass, SO

DS(ANS)/ OSD(VDV)

5. TSW NIDC, EPI Vineet Saini, US OSD(VDV) 6. HE&MT - K.G. Thang, US DIR(BBS) 7. O&M

- S.P. Veer, US

Gopal, SO Nirmal Malhotra, SO

DIR(SS)

8. IT CELL - -do- DIR(AS) 9. Internationa

l Cooperation Cell

- -do- DIR(SS)

10. VIG - K.K. Kohli, US DIR(MN) 3. The Charge of Joint Secretary ( Shri D.R.S. Chaudhary) S.No Section/Desk PSUs US/DO/SO/AO DS/DIR/Equivalent 1. PE I AYCL, RIC,

NIL S.V. Singh, US Anjan Sarkar, SO

DIR(SS)

2. PE.II BOGL, HCL,MAMC

K.S. Lather, US S. Haque, SO

DIR(MN)

3. PE.IV BYNL V.P. Singh, DD R.K. Jha, SO

DIR(MKS)

4. PE.VII HPC, NEPA K.S. Lather, US Thakeshwar, SO

DIR(MN)

5. ADMN - K.K. Sharma, US M.Chakraborty, SO

DIR(BBS)

6. G.A. - K.K. Sharma, US S.L.Aggarwal,SO

DIR(BBS)

7. CASH - Uma Mathur, SO DIR(BBS) 8. HINDI - Karambir Singh,

AD/OL DIR(SS)

9. PARLIAMENT - K.K. Sharma, US S.L. Aggarwal, SO

DIR(BBS)

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4. The Charge of Joint Secretary (Dr. Surajit Mitra)

S.No Section /Desk

PSUs US/DO/SO/AO DS/DIR/Equivalent

1. PE.III BBUNL, HPF V.K. Srivastava, SO Sunil Kumar, SO

DS(GS)/DIR(SS)

2. PE.VI

MUL, TCIL, SIL

G. Jayanthi, US V.Rajaram, SO

DIR(MKS)

3. PE.VIII ILK, REIL, FCRI

V.P.S.Yadav, US Biapat K. Sethi, SO

DS(CNG)

4. PE.XI

BHEL, HEI R.K. Singh, US A.K. Mishra, SO

DIR(MN)

5. AEI

- G. Jayanthi, US R.P.Gupta, SO

DIR(MKS)

6. NATIS Cell

- A.K. Panda, SO DIR(MKS)

Marketing Analysis

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Balance Sheet

Competitors

Last Price Market Cap.

(Rs. cr.)

Sales

Turnover

Net Profit Total Assets

BHEL 2,379.25 116,469.05 26,858.63 3,138.21 13,088.18

Larsen 1,444.80 86,727.42 33,926.37 3,481.66 19,015.72

Suzlon Energy 73.25 11,403.06 7,251.94 -469.27 13,909.80

BEML 1,090.30 4,540.50 2,797.17 268.84 2,483.04

BGR Energy 480.50 3,459.60 1,922.10 115.09 1,268.94

AIA Engineering 341.35 3,219.63 931.67 133.46 685.86

Alfa Laval 1,195.45 2,170.99 799.31 90.17 312.62

Praj Industries 85.05 1,570.75 774.37 129.76 456.19

Sanghvi Movers 223.20 966.19 357.50 101.42 893.66

Walchandnagar 250.70 954.42 524.12 23.40 552.18

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Ratio Analysis

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Swot Analysis

Strengths:

Sound engineering base and ability to assimilate

Relatively stable industrial relationship

Access to contemporary technologies with the support from renowned collaborators. Ability to set up power plants on turnkey basis, complete know- how for manufacture of entire equipment is available with the company.

Ability to manufacture or procure to supply spares.

Fully equipped to take capital maintenance and servicing of the power plants. Largest source of domestic business leading to major presence and influence in the market. Ability to successfully overhaul and renovate power stations equipment of different companies.

Low labour cost.

For non- BHEL products, services and spares are not easily available and if they are, price charged are very high.

Sound financial position in terms of profitability and solvency.

Low debt equity ratio (even lower than 0.5:1) for all the years under study, enabling company to raise capital.

Weaknesses:

Difficulty in keeping up the commitments on the product delivery and

desired sequence of supplies.

Larger delivery cycles in comparison with international suppliers of similar equipment. Inability to provide supplier’s credit, soft loans and financing of power projects.

Lack of effective marketing infrastructure.

Due to poor financial position of state electricity boards, which are the major customers of BHEL in India, liquidity position of BHEL is not satisfactory.

Being a public sector company BHEL is suffering from sub optimality

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of control due to: 1. Displacement of social objectives by political objectives, which may lead to redundant costs and also rising costs. 2. Direct political intervention in managerial decision over an arm length relationship that would restrict government’s task of setting appropriate managerial incentive structure. 3. Private goals that lead to budget growth and employment growth. 4. Internal inefficiencies in bureaucratic activity.

Opportunities:

Demand for power and hence plant equipment is expected to grow.

Private sector power plants to offer expanded market as utilities suffers resource crunch.

Ageing power plants would give rise to more spares and services business.

Life expansion program for old power stations. Export opportunities.

Easy processing of joint ventures/ collaboration/import/ acquisition of new technology.

Financial and operational autonomy for profit making public sector enterprises. To make the public sector more efficient government has decided to grant enhanced autonomy and delegation of powers to the profit making public sector enterprises.

Threats: Increased competition both national and international.

Multilateral agencies reluctant to lend to power sector because of poor financial management of S.E.Bs

More concessions to private sector and not to government owned utilities like NTPC or S.E.Bs, so future power projects would be opened up in private sector.

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Future outlook

BHEL’s manufacturing capac-ity expansion from 10,000 MW p.a. to 15,000 MW p.a. is proceeding apace and the company has decided to hike this further to 20,000 MW by the end of the XIth Plan at an investment of Rs.15,900 Mil-lion. Further, the foundation stone for a new plant at Tiru-mayam in Tamil Nadu has been laid for the manufacture of boiler components, he added. Mr. Ravi Kumar(chairman & MD) assured shareholders that BHEL’s fundamentals are in place for success and despite operating in a difficult environment, the company is approaching the challenges from a position of strength. BHEL will continue to make efforts to maintain its business leadership and emerge as a world class organisation.

Index

Sr .no Content Page. No 1 About BHEL 2 2 Turn Over 2 3 History and Milestones 3-9 4 Organisation Structure 10 5 Market Analysis 12 6 Competitors 13 7 Balance Sheet 13 8 Ratio Analysis 14 9 SWOT Analysis 15-16 10 F uture Outlook 17