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INTRODUCTION
1|Page
Objectives
This report addresses the following issues.
1. Comparative analysis of the Supercritical Boiler Manufacturers of India
2. SWOT analysis of the major players of the market.
3. Learning for L&T MHI Boilers Pvt. Ltd.
4. Strategic Evaluation of L&T MHI Boilers Pvt. Ltd.
5. Suggestions and Recommendations for L&T MHI Boilers Pvt. Ltd. for improving its
operational and selling efficiency
2|Page
This report is meant for the executives and students who are already having
knowledge of power sector and well aware of the functioning of the Coal Based
Thermal Power Plant.
The findings and recommendations are the personal view point of the author.
1.4 LIMITATION
The data collected for BHEL and Doosan Heavy Industries are from Secondary
Sources and presentations given by the company at different places. But complete and
up to date data was not available as most of them are related to trade secret of these
companies and volatile in nature. The law of protection of confidential information
effectively allows a perpetual monopoly in secret information. So that information
cant be shared through the report.
3|Page
L&T has an international presence, with a global spread of offices. A thrust on international
business has seen overseas earnings grow significantly. It continues to grow its overseas
manufacturing footprint, with facilities in China and the Gulf region.The company's
businesses are supported by a wide marketing and distribution network, and have established
a reputation for strong customer support.
4|Page
Founded:
in 1938
Today:
Export growth:
Over 60%
Int. Partners:
Revenue:
Resources:
Head Quarters:
Mumbai, India
Businesses:
Construction Services
Engineering & Construction Projects
Heavy Engineering
Electrical & Electronics
IT & Technology Services
Machinery & Industrial Products
Heavy Engineering
Information Technology
Construction
Diversified Business
5|Page
6|Page
7|Page
range from 10MPa to the maximum operating pressure of the unit. The test rig was then
transferred to Purdue University where Research continued with collaboration with B&W.
Much of the works were reported in the Technical Papers in the early 1930s by the authors
such as Kerr and Potter. Through the 1930s and 1940s power plant operating conditions
were limited to the subcritical regime because of the limitation of the metallurgy and water
chemistry control technology. In Europe, boiler technology followed the once through
philosophy. This at least in part was driven by material availability constraints and took
advantage of the fact that once through boiler generally used smaller diameter and thinner
wall tubes then did the natural circulation boiler. In addition, the once through boiler
eliminated the need for thick steel plate for the steam drum.
The rapid development of the B&W once through boiler paralleled the rapid expansion of the
United States Utility Industry in the 1960s and 1970s. The second and third boiler contracts
were also with American Electric Power, but these 450MW systems were ordered before the
Philo unit went into service. Both the boilers were tower style designs.
is
thermodynamic
expression
9|Page
Above
an
operating
pressure
of
is
single
phase
fluid
with
Thus, the drum of the drum-type boiler which is very heavy and located on the top of
the boiler can be eliminated.
Advanced Steel types must be used for components such as the boiler and the live
steam and hot reheat steam piping that are in direct contact with steam under elevated
conditions.
Type
Main Steam
Main Steam
Reheat Steam
Pressure, Bar
Temperature, C
Temperature, C
166
538
538
Super critical
247
535
565
270
585
600
295
595
600
10 | P a g e
Once through Boiler technology, which originated in Europe, has evolved into the
most effective application for Supper Critical Steam condition.
There are no operational limitations due to once through boilers compared through to
drum type boilers.
In fact once-through boilers are better suited to frequent load variations than drum
type boilers, since the drum is a component with a high wall thickness, requiring
controlled heating. This limits the load change rate to 3% per minute, while oncethrough boilers can step-up the load by 5% per minute..
Supercritical
Plant Efficiency
34%-37%
41%
CO (in g/KWH)
0.42 to 0.45
0.38
0.42 to 0.45
0.38
3.4 to 3.6
0.86 to 0.91
0.77
Types of Boiler
Generally we consider two types of boilers- Drum Boilers and Once through Boilers.
Boiler Types
Drum Boiler
Natural
Circulation
Boiler
Forced
Circulation
Boiler
Once Through
Boiler
Benson Boiler
Sulzer Boiler
11 | P a g e
Siemens Pvt.
Ltd.
Hitachi Power
Babcock &
Wilcox Boiler
Thermax
Limited
Alstom Boiler
BHEL
Ansaldo Caldaie
Foster Wheeler
GB Engineering
Enterprises
12 | P a g e
Sulzer Boiler
In contrast to the Benson boiler, the Sulzer Boiler operates by means of the separator
vessel during low load operation as well as during the once through operation. Due to the
separator vessel, the evaporation endpoint is fixed locally. The water level in the
separator vessel represents the balance between the feed water and the fuel mass flow.
Depending on the water level of the separator vessel, the feed water mass flow has to be
changed. The storage capacity of the Sulzer boiler is slightly larger than the one in the
Benson boiler.
Flow of Sulzer License
Sulzer Boiler
Technology
Korean Heavy
Industries
Mitsubishi
Heavy
Industries
Formosa
Heavy Industry
L&T (for
Supercritical
Tech)
Comparison between Benson Spiral Design and Sulzer Vertical Wall Design
Parameters
Design
Design
(Smooth Tubes)
Low
High
when
heat
which
13 | P a g e
Parameters
Design
Design
(Smooth Tubes)
makes
decrease
in
total makes
pressure drop
Flow Characteristic
increase
in
total
pressure drop
The more the heat absorption, The more the heat absorption,
the higher the mass flow rate the less the mass flow rate of
of fluid: Characteristic of fluid: Characteristic of Once
Natural
(G/Q)>0
Imbalance of Temperature
Supercritical-100 (Base)
Supercritical-102
Supercritical-100 (Base)
Supercritical-103
Ultra Supercritical- 96
Ultra Supercritical- 99
Higher
Lower
Lower
Higher
42%(approx.)
38% (approx.)
Lower
Higher
Lower Consumption
Higher Consumption
Less Accumulation
More Accumulation
Cost of Operation
Thermodynamic
Efficiency
CO2 Emissions
Coal
Consumption
(GCE/KWH)
Auxiliary
Power
Consumption
Accumulation of Slag
Capability in India
Indian
Technical
Type of
Waterwall
Company
Partner
Agreement
Arrangement
BHEL
Alstom
License
Spiral
Type of Tubes
Smooth Tubes
14 | P a g e
Indian
Technical
Type of
Waterwall
Company
Partner
Agreement
Arrangement
Doosan Heavy
Industries
L&T
Babcock
Mitsubishi
Babcock &
Thermax
Wilcox
BGR
Hitachi
Gammon
Ansaldo
Cethar
Riely/ Seimens
Doosan owns
Type of Tubes
Spiral
Smooth Tues
Joint Venture
Vertical
Rifled Tubes
Joint Venture
Vertical
Rifled Tubes
Joint Venture
Vertical
Rifled Tubes
Vertical
Rifled Tubes
Vertical
Rifled Tubes
Babcock
Gammon owns
Ansaldo
License
Collection of Data from Primary and Secondary Sources for BHEL, LMB and Doosan
Evaluating the strategy followed by LMB using SWOT, TWOS, SPACE Matrix
15 | P a g e
3.INDIAS GENERATION
EQUIPMENT MARKET
16 | P a g e
250000
200000
153188
150000
100000
39623
50000
4780
34444.12
27542
0
Thermal Nuclear Hydro
RES
Total
Captive
All Figures in MW
Total: 225 GW
Source: CEA
17 | P a g e
Capacity addition in the 11th Plan has been 69% of the original target, which is encouraging.
This is expected to increase further in the 12th Plan.
Estimated Segment-wise EE
Industry Size (2011-12)
Major T&D
Equipment
53%
Generation
Equipment
26%
Other
Electrical
Equipment
21%
Source: IEEMA
18 | P a g e
(`Rs.000 crores)
300-350
500-600
T&D equipment
700-750
1000-1150
Source: EY Analysis
19 | P a g e
4.1 BHEL
4.2 Doosan Heavy Industries
4.3 L&T MHI Boilers Pvt. Ltd.
4.4 Comparison
20 | P a g e
21 | P a g e
4.1.1
About BHEL
Established in 1964
Engaged in design, engineering, manufacture, construction, testing, commissioning
and servicing of a wide range of products and services for the core sectors of the
economy, viz. Power, Transmission, Industry, Transportation (Railway), Renewable
Energy, Oil & Gas and Defence
BHEL has a share of 59% in Indias total installed generating capacity contributing
69% (approx.) to the total power generated from utility sets (excluding nonconventional capacity) as of March 31, 2012.
a) Credentials
A USD 9 billion Engineering & Manufacturing
enterprise of its kind in India
A Navaratna company and a Major Integrated
Power Plant Equipment Manufacturer in the
World
Profit Making Company since 197172
Consistent Dividend Paying Company for over
thirty years (FY 1976 77 onwards)
References in over 75 countries
Installed base of more than 1,20,000 MW
15 Manufacturing Units+ 2 Subsidiaries+ 7 JVs+ Infrastructure to deal with
150+ project sites
Fully indigenized technology up to 600 MW
from world leaders
Supplied steam turbines, generators, boilers and
matching auxiliaries up to 800 MW ratings
including supercritical sets of 660/700/ 800 MW
346 coal based sets installed, including 58 sets
of 500 MW rating
376 nos BHEL make Hydro Utility sets installed in India
22 | P a g e
11%
6%
14%
68%
Foreign Institutional
Investors
Mutual Funds and UTI
23 | P a g e
25%
Supervisors
20%
Workers/others
55%
Total
100%
0.93
0.89
2010-11
2011-12
0.74
0.8
0.61
0.6
0.44
0.48
2006-07
2007-08
0.4
0.2
0
2008-09
2009-10
Steam generators for utilities, ranging from 30 to 500MW capacity, using coal,
lignite, oil, natural gas or a combination of these fuels: capability to manufacture
boilers with super critical parameters up to 1000 MW unit size.
Stoker boilers.
Chemical recovery boilers for paper industry, ranging from capacity of 100 to 1000
t/day of dry solids.
Pressure vessels.
Boiler Auxiliaries
Fan
Axial reaction fans of single stage and double stage for clean
air application, with capacity ranging from 25 to 800m3/s and
pressure ranging from 120 to 1,480 m of gas column.
Air Pre-heater
Gravimetric Feeders
Pulverisers
Pulse Jet and Reverse Air Type Fabric Filters (Bag Filters)
Electrostatic Precipitators
Mechanical Separators
Soot Blowers
Valves
25 | P a g e
f) BHEL Utility units (up to 2012)62% of Total Installed Capacity of India is contributed by BHEL Utility Sets
26 | P a g e
4.1.2
60000
50000
49510
50015
2011-12
2012-13
43337
40000
34154
28033
30000
20000
10000
0
2008-09
2009-10
2008-09
2009-10
2010-11
2010-11
2011-12
2012-13
59037
60000
60507
50000
40000
31528
30000
22096
20000
10000
0
2008-09
2009-10
2008-09
2009-10
2010-11
2010-11
2011-12
2011-12
2012-13
2012-13
27 | P a g e
c) Performance up to Q2FY13
Sl. No.
INR Crore
H1FY13
H1FY12
H1FY12*
% Growth
(A)
(B)
(C)
(A/C)
Turnover
19,750
18,189
18,189
8.6%
PBT
3,123
3,163
2,997
4.2*
PAT
2,195
2,228
2,115
3.8%
Project
3,505
3,025
3,025
16%
4,393
3,777
3,777
16%
Commissioned
(MW)
5
Order Book
(MW)
Power
Industry
Exports
Total
MW
3380
23
990
4393
INR Crores
5739
2049
975
8717
28 | P a g e
29 | P a g e
4.1.3
Equipment
Technology Partner
Coverage
Alstom, USA
500 1000MW
660 1000MW
MHI, Japan
Up to 1200MW
No.
1
Supercritical Boiler
Supercritical
Turbine Generator
Pumps
Fans
TLT, Germany
MECON, Ranchi
30 | P a g e
Sl. No.
Project
Rating
Customer
Scope
Ordering Route
(in MW)
1
2
Barh
2X660
NTPC
SG & TG
ICB
Bara
3X660
PPGCL
SG & TG
ICB Outbidding
L&T
Krishnapatna
2X800
APPDCL
SG
L&T
Yermarus
ICB Outbidding
2X800
RPCL
EPC Excluding
JV Route
Edlapur
1X800
RPCL
SG & TG
JV Route
Bellary
1X700
KPCL
EPC
ICB Outbidding
L&T
Lalitpur
3x660
Bajaj
SG & TG
ICB Outbidding
Alstom
Hindustan
Mouda
2x660
NTPC
TG
ICB
Raghunathpur
2x660
DVC
TG
---
10
Singrauli
2x660
DB Power
SG & TG
----
31 | P a g e
engineering,
commissioning,
repair,
Executive,
Alstom.
4.1.5 ALSTOM
a) Presence
32 | P a g e
KEY DATA
b) Partnerships
Alstom in India has made strategic partnerships with strong local players to bring in
frontline technologies and enhance the quality and efficiency of its products:
Alstom and Druk Green Power Corporation in 2011- The JV will set up a
hydropower service centre in Bhutan to provide repair services for hydro runners
and other underwater parts of hydropower plants
Alstom and Bharat Forge Ltd. JV in 2009- The JV will manufacture steam
turbines and auxiliary equipment with an annual capacity of 5000 MW
Ongoing Projects
Pulverised coal tower type boiler: Suitable for all types of coal, especially to
reduce potential erosion from high ash coals
Pulverised coal two pass boiler: the most widely used design in the world, offering
lower maximum heights and potential for quicker build time
Gas and oil-fired boilers: using the latest technology and Alstom expertise for
efficient, reliable and eco-friendly solutions
Firing systems: burn a wide range of fuels, reduce your emission levels and
maintain excellent availability and reliability
34 | P a g e
766 new Vendors added in 201112 & Vendor base is more than
20,000.
Expansion
AMA
TCA
IT
Rate Contracts
Outsourcing
ACF
35 | P a g e
Strength
Argument
Economies of scale
from
Strength
Comprehensive turnkey experience
Argument
workforce
collaborations.
plants.
power industry.
plants.
Strength
access to customers.
Argument
customer service centers for greater interaction
with customers (so greater customer reach)
Acquisition
Weakness
High working capital requirement due to its exposure to cash starved State
Electricity Boards.
Inability to provide suppliers credit, soft loans for financing of power project.
PSU status is a big weakness for BHEL as it is subject to their rules and
regulations and is forced to carry a huge amount of labor force, which it is not
able to retrench.
Opportunities
Growing number of old plants (>25 Years) will provide a good market for R&M
of Thermal Power Plants.
Private sector power plant to offer expanded market as utilities suffer resource
crunch.
Export opportunities
Threats
Technical suppliers are becoming competitors with the opening up of the Indian
company.
Private sector power companies may give order to low cost bidder (Chinese
Bidder) compromising with quality aspect.
39 | P a g e
Technological Strategy
BHEL is the leader company to provide a technology to the various products. The two
ways of adopting technological strategies are:
ii.
Development Strategy
BHEL is amongst the highest investors in Research and Development in the country.
The R&D efforts have made significant contributions to almost all areas of operation
of BHEL; a few among them are: Research and Development Strategy. The ways of
adapting the strategies are:
iii.
Vendor Development
Global meeting of about 200 vendors is being held at Hardwar
iv.
40 | P a g e
41 | P a g e
42 | P a g e
Doosan
Corporation
Doosan Infracore
Doosan Babcock
(UK)
Doosan Heavy
Industries
Doosan Power
Systems
Skoda Power
(Czech)
Doosan Group
Doosan Mecatec
Doosan Industrial
Development
Doosan Engine
b) Global Presence
43 | P a g e
c) Credentials
Business Lines
Companies
Doosan Corporation
Doosan Affiliate
Business Lines
Companies
and Construction Limited
Doosan Mecatec
Doosan
Infracore
Ltd
2001 Renamed Doosan Heavy Industries & Construction. Ranked first in global desalination
market and selected as "Global Product"
2006 Acquired Kvaerner IMGB (Currently Doosan IMGB) and Mitsui Babcock (Currently
Doosan Babcock). Established water R&D centers in Dubai (UAE) and Tampa, Florida
(USA)
2009 Acquired Czech-based power systems maker Skoda Power. Doosan VINA plant
completed
2011 Acquired AE&E Chennai Works (Currently Doosan Chennai Works), a boiler maker in
India
Doosan Corp.
and Related
parties
41%
Foreign
Investors
13%
Local
Investors
30%
g) Production Capability
Boiler
Generator
Turbine
HRSG
Forging
9300
Forging
1500
Nuclear
15720
HRSG
8000
Turbine
8300
Generator
7500
Boiler
Wind
Nuclear
216
46 | P a g e
h) Manufacturing Facilities
Sales
47 | P a g e
II.
III.
Revenue:
power
The
power
10%,
and
DPS
and
other
Orders:
Led
by
power
accounted
for
23%.
48 | P a g e
IV.
3. Collaborations
Technological Collaborations
49 | P a g e
50 | P a g e
Items
Make/ Parameters
Furnace Dimension
Super heater
Reheater
7.1
7.2
Boiler Auxiliaries
9.1
438 T/hr.
Fans
9.1.1
9.1.2
9.1.3
9.2
Air Preheaters
9.2.1
9.2.2
10
10.1
11
Mills
Coal Feeder
51 | P a g e
Sl.No.
Items
(BRP)
Make/ Parameters
Type: Wet Stator, Glandless, single Section Sing
Discharge Pump
12
Oil Elevations
13
Turbine
13.1
Turbine Model
13.2
HP Turbine
13.3
IP Turbine
13.4
LP Turbine
13.5
Turbine
13.6
Generator
13.7
14
Number of HP Heaters
15
Number of LP Heaters
16
Boiler Efficiency
86.27%
17
Turbine Efficiency
45.26%
18
19
20
Unit Efficiency
38.96%
52 | P a g e
Boiler parameters for 660MW Power Plant of Doosan (Sliding Pressure Operation)
Unit
100%
100%
80%
50%
Both HP
60%
BMCR
TMCR
TMCR
TMCR
Htrs out
BMCR
of
(One
Operation
Stream)
SH System
Steam Flow at SHO
Steam Pressure at
T/Hr
2225
2023.75
1572.47
963.76
1839.5
1335
Kg/cm2(a)
256
254.45
238.01
151.25
252.92
204.4
deg. C
540
540
540
540
540
540
T/Hr
1741.8
1678.37
1328.96
836.41
1784.2
1138
SHO
Steam temp. at SHO
RH System
Steam Flow
2
Kg/cm2(a)
48.3
46.7
37.2
23.6
50.5
32.2
deg. C
568
568
568
568
568
568
deg. C
299
296
281
289
309
284
Kg/cm2
1.69
1.62
1.3
0.88
1.7
1.16
deg. C
289.64
286.23
270.35
244.34
196.15
261
Steam Temperature
Steam Pressure at
RHI
Steam Temperature
at RHO
Steam Temperature
at RHI
Pressure Drop across
RH
Control range
Strengths
Weakness
Instability in revenue.
Large dependence on energy sector
(EPC projects).
53 | P a g e
Opportunity
Fast growth in energy markets in
Balkan peninsula and in the MENA
region and especially in Turkey.
Massive need for energy
infrastructure projects.
Replacement of old capacity with
highly efficient lignite fired plants by
PPC.
Entry to new markets, such as Africa,
India.
INVESTMENT RISKS
Threats
Liquidity Risk: The risk is low due to the high net cash position of the company and
the fact that its customers are financially strong.
Interest Rate Risk: This risk is trivial due to very low debt.
Currency Risk: High risk in the last few years due to the expansion abroad.
54 | P a g e
55 | P a g e
56 | P a g e
Engineering &
Designing
Marketing
Procurement
Scope
of JV
Quality &
Safety
After Sale
Services
Manufacturing
Installation
Commissioning
57 | P a g e
Jaypee Nigrie
(2X660 MW)
MAHAGENCO
Koradi (3X660 MW)
PSEB Rajpura
(2X700 MW)
58 | P a g e
f) Accreditations
Sr. No.
A
FEATURES
MERITS
FURNACE WALL
Vertical wall construction as standard
in operation
flux zone
FIRING ARRANGEMENT
Circular corner firing (CCF) with twin
59 | P a g e
Sr. No.
D
FEATURES
MERITS
R H TEMPERATURE CONTROL
Use of gas biasing damper in the second
SUPERHEATER CONFIGURATION
Use of three stage superheater
RH applications
Pulverisers
Mill Offerings
MVM28, 32 and 34
Fixed/Rotary separators
Ceramic embedded liners for Roller & Table
Gearbox with thrust pad design
60 | P a g e
Features
Merits
Capacity
Large capacity Pulverizers
Ease in maintenance
Subcritical
Description
Unit
16.7 M pa
538/538
deg.c
1918
Ultra
Supercritical
Supercritical
24.1 M pa
24.1 M pa
566/593 deg.c
600/600
deg.c
1838
1814
Reducti
Reductio
on
Sub Vs
Sub Vs
SC
USC
80(4.2% 104(5.5%
61 | P a g e
Subcritical
Description
Unit
16.7 M pa
538/538
deg.c
rate
Boiler
efficiency
%
kCal /
rate
kWh
Coal
MM
consumption
T/Annum
Ash
MM
Generation
T/Annum
SOx
Supercritical
Supercritical
24.1 M pa
24.1 M pa
566/593 deg.c
600/600
deg.c
kWh
Plant heat
CO2
Ultra
MM
T/Annum
MM
T/Annum
87%
87%
87%
2207
2113
2085
3.676
3.524
3.477
1.544
1.48
1.46
7.278
6.981
6.888
0.023
0.0221
0.0218
Reducti
Reductio
on
Sub Vs
Sub Vs
SC
USC
94(4.2% 121(5.5%
)
0.152(4.
0.199
2%)
(5.5%)
0.064(4.
0.084
2%)
(5.5%)
0.297(4.
0.39
2%)
(5.5%)
0.0009(
0.0012
4.2%)
(5.5%)
62 | P a g e
MW
Station
Steam
Fuel
C/O
Condition
(0C)
Soma Joint
1,000
538/566
Coal
1995
1,000
566/593
Coal
1997
1,000
600/600
Coal
1998
700
593/593
Coal
2000
700
593/593
Coal
2003
900
595/595
Coal
2004
600
600/600
Coal
2004
1,000
600/600
Coal
2006
1,000
600/600
Coal
2007
600, 660
600/600
Coal
2007~
1,000
600/600
Coal
2009
EPCO Shinchi #2
Tohoku EPCO
Haramachi #1
Chugoku EPCO
Misumi #1
Hokuriku EPCO
Tsuruga #2
Kyusyu EPCO
Reihoku #2
Kansai EPCO
Maizuru #1
Tokyo EPCO
Hirono #5
China Yuhuan (4
units)
Licenser
China Taizhou (2
units)
Licenser
PJ in China (15
units)
Licenser
China Jinling (1
units)
Licenser
63 | P a g e
Shareholding Pattern
BHEL
President of India- 67.72%
Foreign Institutional
Investors- 13.49%
Mutual Funds and UTI1.44%
Banks, Financial institutions
insurance Companies11.40%
Others-5.95%
Technological Collaborations
BHEL
Supercritical Boiler
Supercritical
Turbine Generator
Pumps
Fans
Alstom, USA
Siemens (SAG)
Germany
Doosan Heavy
Industries
Babcock (Acquired)
MHI, Japan
TLT, Germany
64 | P a g e
SA-213 T22
SH Platen
SA-213 TP347H
Doosan Heavy
Industries
Assemblies
Finishing RH
SA-213 TP347H
Assemblies
SA-213 S304H
Finishing SH Front
SA-213 T91
Assemblies
Finishing SH Rear
SA-213 TP347H
Assemblies
Low Temperature
SA-213 T91
SA-213 T91
Reheater
SA-213 T23
SA-213 T22
SA-213 T12
SA-213 T12
SA-210C
SA-213 T1a
Economizer
Separator
Header SH Outlet
Header RH Outlet
SA-335 P91
SA-335 P92
SA-335 P122
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40000
35000
30000
25000
20000
15000
10000
5000
0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
0
0
0
3000
3000
3000
Doosan
BGR-Hitachi
3000
3000
3000
3000
Ansaldo Gammon
2000
2000
2000
Alstom/Bharat Forge
5000
5000
5000
5000
5000
Toshiba
3000
3000
3000
3000
3000
3000
L&T/MHI
5000
6000
6000
6000
6000
6000
BHEL
10020
13020
13020
13020
13020
13020
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
Doosan
3000
3000
3000
BGR/Hitachi
3000
3000
3000
3000
Cethar/Riley
4000
4000
4000
Thermax/Babcock
3000
3000
3000
Ansaldo Gammon
4000
4000
4000
L&T/MHI
5000
6000
6000
6000
6000
6000
BHEL
12500
17500
17500
17500
17500
17500
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5. STRATEGIC EVALUATION OF
L&T MHI BOILERS PVT. LTD.
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Internal Analysis
Strategic planning begins with an appraisal of the firms strengths and weaknesses. All areas
of the firm must be assessed, including organization, financial capabilities, technical
competence, location, production skills, physical plant and equipment, management,
workforce, the sales force, image, customers, customer loyalty, cost advantages, advertising
and so on. Typically, competing firms provide a reference point, a basis for comparison, but a
variety of criteria must be used in assessing strengths and weaknesses, including objective
criteria. Strategic planning is motivated by a desire to maximize exposure of the firms
strengths, while minimizing the exposure of the weaknesses. But that does not mean that the
weaknesses have to be accepted or that new strengths cannot be acquired. The central
concern of strategic planning is to allocate the firms resources as effectively as possible.
Clearly, one purpose of the analysis of strengths and weaknesses is to define areas in which
the firm should commit resources that will improve its capabilities.
Environmental Analysis
If the environment were static there would be no need for the strategy formulation process.
The environment obviously changes continually, however, as do the firms capabilities. The
purpose of environmental analysis is to identify and assess threats and opportunities as they
are evolving in the market place. The company itself is a part of the changing environment,
especially since it develops and refines its basic competence in interaction with its customers
evolving needs.
Environmental analysis requires a constant flow of information from a potentially limitless
array of sources. Among the most obvious sources of information are sales representatives,
customers, distributors, trade associations, management associations, universities, trade
journals and professional publications. In addition to this general analysis, there is usually a
need for more detailed analysis and measurement, including forecasts. The accuracy of all
forecasts used as the basis for planning should be checked periodically for the obvious
reasons that actual experience may diverge significantly, even if the original forecasts was
reasonable. A variety of sophisticated techniques exists for sales forecasts (Makridakis,
S.,Wheelwright, S.C., Mcgee,V.E., 1983, p.138-149). The marketing strategist need not be an
expert in the use of these techniques, but he should know the basic assumptions, strengths
and weaknesses of each, especially those that are being used by the staff people who provide
the forecasts and the reports.
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The following marketing strategy needs to be needs to be adopted following the above
analysis.
Having a good combination of products, design capabilities and financial strength the
company should try to aggressively increase the presence in the EPC contracting
market of Power Plant set up and gain experience at the earliest.
In the IPPs the projects are much of smaller financial value so these do not invite
purchase preference for the government organization like BHEL.
Strong marketing efforts are required to throttle competition from the contractors that
have close proximity to the SEBs.
Use of good corporate image to convert into long term relationship to obtain
synergistic advantage.
Weaknesses
Opportunities
S-O Strategies
W-O Strategies
Threats
S-T Strategies
W-T Strategies
WEAKNESSES
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upon.
Complete
product
range
for
of
power
generation.
won.
Considered to be having
Intra
technology
coordination
&
design
organisation
in
L&T
sometimes
contract
of
manpower
across
delays
the
preparation
Good
financial
As
LMB
company
Access
to
technical
database
strong
is
JV
managements
of
come
together
before
MHI.
interest
companies have to be
knowledge
and
turnkey
knowhow
for
power
generation
projects.
the
ability.
condition.
of
customers is yet to be
India.
Confidence
working
environment
dedicated
both
the
difficult.
Good
of
with
of
Supercritical
boilers only.
professionals
and
optimum
level of inventory.
OPPORTUNITIES
SO STRATEGIES
to
aggressively.
greater demand of
WO STRATEGIES
Improve procurement
cycle and reduce the
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Demand
leading
to
brand name.
minimize risks.
organization structure to
orders.
opportunities.
market.
Healthier
working
environment
and
participation
power
contractors.
Increased
external
commercial
or
to the customer.
sector.
process difficulties.
companies.
borrowings
ADB/WB
funding
ST STRATEGIES
lobbying
margins.
sector.
prevent
To train manpower to
Increased
in
Emergence
of
of
leading
to
maintaining
enhanced
playing
of
new
may
in
the
competition
contractors on business
Turnkey
sharing arrangements to
preference
effect
Doosan etc.
Increased
field
level
segment.
contracts
extension
no.
price war.
increase
be extended to generation
competitors
To
WT STRATEGIES
for
other
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also
expose
manufacturers to greater
them.
intense competition.
To be cautious in the
process, alarming it to be
event
of
change
in
government
and
the
people.
process
of
reforms
liberalization of power
sector is moving at a
much faster pace than the
other
contemporary
countries.
This pace should not lead
to a total breakage of the
system.
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Advantage (CA) and Industry Strength (IS) and Y-axes represents net effect of Financial
Strength(FS) and Environment Stability.
The strategic position of L&T MHI Boilers Pvt. Ltd. as EPC contractors and strategies to be
adopted for taking up of Turnkey Projects is depicted below using the EFE, IFE and SPACE
Matrices.
External Factor Evaluation Matrix (EFE Matrix)
Key External factors
Weights
Ratings
Weighted
Score
Opportunities
Huge investments leading to greater demand of
0.1
0.2
0.075
0.15
0.025
0.075
0.1
0.2
0.05
0.05
0.075
0.15
0.075
0.15
0.025
0.05
0.15
0.6
0.075
0.225
0.025
0.075
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Weights
Ratings
Weighted
Score
0.025
0.05
0.1
0.2
0.1
0.2
2.375
Weights
Rating
Weighted
Score
0.05
0.25
0.05
0.2
3
4
4
3
0.15
1
0.2
0.6
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Weights
Rating
Weighted
Score
0.025
0.1
0.025
0.075
0.025
0.075
0.05
0.05
0.15
0.15
0.125
0.25
0.05
1
0.1
2.75
Weakness
The procurement process in the company is not
updated with new vendors from time to time.
Total
The ratings are as follows
1. The response is superior
2. The response is above average
3. The response is average
4. The response is poor
Comments:
The score of 2.75 indicates that the L&T MHI Boilers Pvt. Ltd. is just above average in its
overall internal strategic position.
Rating
Rating
Environmental Stability
(ES)
o Operating Margin
o Technology changes
-2
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o Return on Investment
o Rate of inflation
o Leverage
o Demand variability
o Liquidity
o Price range of
-3
-4.5
-6
competitive products
o Working Capital
-5
market
o Cash Flow
o Competitive pressure
-3
o Price elasticity of
-6
28/8demand
o Risk involved in business
5
Average
o Consumption pattern
3.5
Rating
-3
o Market Share
-6
o Product Quality
-1
-1
Average
-6
-4.437
Rating
6
o Growth Potential
o Profit Potential
o Financial Stability
o Technological Know
how
o Customer Loyalty
-6
o Resource Utilization
-6
o Capital Intensity
-3
market
o Vertical Integration
-2
o Productivity, Capacity
Utilization
Average
-3.5
Average
Directional vector:
X axis: - (-3.5) +4= 0.5 Y axis: - 3.5+ (-4.437) = -0.937
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Comments:
The L&T MHI Boilers should follow the aggressive strategy. It has strong internal strengths,
which should be used to take advantage of the external opportunities. The boiler
manufacturer should go for
a) Joint ventures for advanced technology on clean power
b) Market Penetration
c) Market Development
d) Concentric diversification
e) Horizontal Integration
f) Price Competitiveness
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6. CONCLUSION AND
RECOMMENDATIONS
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The study and the analysis of the data give an insight of the requisite marketing strategy for
the L&T MHI Boilers Pvt. Ltd. Thus in order to get considerable and profitable share in the
increasingly competitive market, greater emphasis is required to be put on the following
areas:
Increasing market share Aim to increase penetration.
Price Competitiveness to meet the levels of the competitors
Brand building exercise To gain customers confidence in the power sector.
The above can be achieved through
1. Greater participation in the business for execution of turnkey projects.
2. Pre tendering activities to help customers developing specifications calling for
superior quality products.
3. Increased level of public relations with the customer especially for the power
generation business through dedicated Marketing & sales team.
4. Helping the customer by conducting system studies and advocating the right
equipment at the right place.
5. Improving the flow of information and speed of response towards the customer.
6. Competitive prices and delivery schedules, to meet the levels of other EPC
contractors.
7. Cost cutting exercise within the organization to improve realizations.
8. Awareness about the market development and competitor strategies.
9. Innovating ideas like life enhancement of old equipments, retrofitting old
equipments etc. This will help in increasing the customers confidence.
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Preparation and Performance Appraisal. People of high calibre can also be hired
specially from BHEL which is a leader of the sector and have good network in the
industry.
6. Quantification of Strategic Plan for next 5 Years- A strategic plan is to be made
and communicated to the employees for the next 5 years with a periodical review of
their achievements so that the employees will always be able to focus on their
individual goals to be achieved.
Infrastructure / Tools
1. Better communication facilities among the executives.
2. Data management tools and software packages to keep track of the changes in the
prices of the raw material.
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7. REFERENCE
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