2010

Bharat Heavy Electricals Ltd

International
Academy
of Devendra
Management Prasad
& PGPM/0911/022
Entrepreneurship
1|Page 2009-2011
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

7|Page
-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 DIR(AS)
V.K. Sharma, DO
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, Pratap Singh, US DIR(MKS)
NBCIL HSL, Sushila Devi, SO
SSL
2. PE.X HMT, PTL K.D. Sharma, US DIR(BBS)
S.P. Chopra, SO
3. PE.XII CCI, BLC, M.R. Bali, US DS(CNG)
TAFCO K.D. Joshi, SO
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4. COORD. SC/ST V.K. Wadhawan, DS(ANS)/
CELL, US OSD(VDV)
B.B. Biswas, SO
Shakti Bhasin,
SO
Laxman Dass, SO
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 DIR(SS)
Gopal, SO
Nirmal Malhotra,
SO
8. IT CELL - -do- DIR(AS)
9. Internationa - -do- DIR(SS)
l
Cooperation
Cell
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, S.V. Singh, US DIR(SS)
NIL Anjan Sarkar, SO
2. PE.II BOGL, K.S. Lather, US DIR(MN)
HCL,MAMC S. Haque, SO
3. PE.IV BYNL V.P. Singh, DD DIR(MKS)
R.K. Jha, SO
4. PE.VII HPC, NEPA K.S. Lather, US DIR(MN)
Thakeshwar, SO
5. ADMN - K.K. Sharma, US DIR(BBS)
M.Chakraborty,
SO
6. G.A. - K.K. Sharma, US DIR(BBS)
S.L.Aggarwal,SO
7. CASH - Uma Mathur, SO DIR(BBS)
8. HINDI - Karambir Singh, DIR(SS)
AD/OL
9. PARLIAMENT - K.K. Sharma, US DIR(BBS)
S.L. Aggarwal,
SO

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

S.No Section PSUs US/DO/SO/AO DS/DIR/Equivalent

/Desk
1. PE.III BBUNL, HPF V.K. Srivastava, DS(GS)/DIR(SS)
SO
Sunil Kumar, SO
2. PE.VI MUL, TCIL, G. Jayanthi, US DIR(MKS)
SIL V.Rajaram, SO
3. PE.VIII ILK, REIL, V.P.S.Yadav, US DS(CNG)
FCRI Biapat K. Sethi,
SO
4. PE.XI BHEL, HEI R.K. Singh, US DIR(MN)
A.K. Mishra, SO
5. AEI - G. Jayanthi, US DIR(MKS)
R.P.Gupta, SO
6. NATIS - A.K. Panda, SO DIR(MKS)
Cell

Marketing Analysis

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 Balance Sheet

Competitors
Last Price Market Cap. Sales Net Profit Total Assets
(Rs. cr.) Turnover
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

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