Introduction:

BHEL has played a pivotal role in shaping Engineering & Manufacturing capability in India
& is one of the largest engineering and manufacturing companies of its kind in India engaged
in design, engineering, construction, testing, commissioning and servicing of a wide range of
products and services with over 180 product offerings to meet the ever-growing needs of the
core sectors of economy.

Manufacturing units- 16 NOS.

Status of BHEL:-

Its profit have been declining over the past years. In the last four years alone, its turnover has
fallen 27 per cent — to Rs 27,850 crore in 2017-18 from Rs 38,389 crore in 2013-14. Order
book value has considerably decreased. In between, it even registered a loss of Rs 710 crore
in FY16, just a year after it posted a profit Rs 1,419 crore.

This decline is also reflected in the performance of the BHEL share in the stock markets.

The company’s market capitalisation, a key indicator to assess its value, has shrunk
significantly — from Rs 49,062.14 crore on 30 September 2014 to less than half at Rs 22,198
crore as of 5 March 2019, or a 55 per cent fall.
What went wrong with BHEL-

 Market of thermal power plants has been kind of stagnant with delay in government
policies, & tendering process. Risk of losing core business is high.

 Government restrictions on Budget regulations & policies which mostly restraint

them.

 Disinvestment strategy(5% disinvestment & never sold to anyone)

 CAG also notes that BHEL had fixed Strategic Plan targets from 2012 to 2017 with
focus on diversification and innovation. But the public sector undertaking did not set
any year wise milestones for implementation of the envisaged strategies. This resulted
in BHEL not achieving any of the strategic plan targets till 2015-2016 and the
shortfall ranged between 23.33 per cent and 113.91 per cent against specific goals.

 Political interference & favours

 Pressures of Union

 Top management mostly consists of Non-independent directors. So they are tilted

highly towards bureaucratic mode as we can derive from the Board of Directors. 5
independent directors- 3+2 ( most are ex govt secretaries).

 Retiring age of people compel them to stay away from taking difficult decisions and
they are complacent.( Search some credible source)

 Obsolescence of resources and technology.

Our recommendations-

We propose a transformation strategy as part where BHEL needs to implement-

 Good policy implementation support, procurement support, establish Public Private

Partnership (PPP) models

 Develop a committed workforce with a strong leadership pipeline at all levels.

Conduct competency assessments, determine capability gaps, develop and execute
talent management plans, Improve performance management plan, provide change
management support, and manage organisation structure at global benchmark levels.

 Update core internal processes, develop robust risk management and frameworks and
measure effectiveness of transaction controls to recommend improvements in their
procedures.  

 Seek support from government policies, expand operations to global markets and
collaborate with partners. 

 Specific strategic initiatives to focus on –

a) Quality- Strengthening the quality culture, focussing on delivering world class

products & services by adopting latest quality processes and initiatives

b) Project Execution- Arresting project delays and consolidate its position as a leading
project execution organisation by implementation of ‘Integrated Project Management
Software (IPMS)’ for real-time project monitoring, streamlining the supply chain to
support smooth erection work at sites, strengthening pre-engineering activities.
Thereby strengthening its EPC tag.

c) Cost Reduction,

d) Diversification,

e) Digital Enablement roadmaps execute large multi-location technology

transformation programmes

f) Technology upgradation (Both Embracing & Investing)-

Advanced steam path technologies needs to be developed inhouse like GE & that
will help to increase cost effectiveness.

 Reviewing and revamping processes, redesigning business models, expanding into

new markets/business-

 In parallel, the company needs to consolidate and reinvigorate recent initiatives in

Defence & Aerospace, Water, E-mobility, Batteries, Renewables and Transportation
verticals.
 Defence and Non-defence products / systems to jointly capitalise on the emerging
opportunities in the domestic and international market, as well as leverage the policy
initiatives of Government such as Make in India
 Invite global companies to partner with it and leverage its facilities and capabilities for
setting up a manufacturing base in the country.

Limitations in implementing workarounds

 (VLOOKUP($G4,$B$4:$D$24,2,0)-VLOOKUP(H$3,$B$4:$D$24,2,0))^2

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  https://www.powermag.com/history-of-power-plant-renovation-and-modernization-in-
india/

https://www.thehindubusinessline.com/companies/%E2%80%98Competition-from-China-is-no-
longer-a-threat-for-BHEL%E2%80%99/article20807625.ece

Bharat Heavy Electricals (BHEL) has declared 2020 as ‘The Year of Transformation’ with
the objective of putting the company on the path to becoming a Future-Ready Global
Engineering Organisation. Towards this end, it has kicked off a multi-dimensional
transformational strategy to address the multiple business challenges it currently faces –
including decline in its traditional market for thermal power equipment, disruptive
technology developments and increasingly stringent customer requirements. With this, the
company aims to turn the current challenges into opportunities for the future.

As part of the transformation strategy, the company has taken up the task of reviewing and
revamping processes, redesigning business models, expanding into new markets/businesses
and developing a committed workforce with a strong leadership pipeline at all levels. Specific
strategic initiatives focus on Quality, Project Execution, Cost Reduction, Diversification,
Digital Enablement, Technology upgradation.

These initiatives are being coordinated and monitored through a ‘Transformation Office’ set
up at the corporate headquarters.

Quality: The company has recently launched a companywide ‘Quality First’ initiative aimed
at strengthening the quality culture, focussing on delivering world class products & services.
Towards this end, a detailed roadmap has been put in place for strengthening quality
processes at all levels. It may be noted that BHEL has been the pioneer of the quality
movement in the country since the 1970s with the adoption of the then state-of-the-art quality
& business excellence processes and has received numerous quality awards. The current
exercise will further build on this history and put in place latest quality processes and
initiatives, as a step towards developing organisational excellence.

Revamp of Project Execution capabilities is another major initiative under way with the
objective of arresting project delays and consolidating its position as a leading project
execution organisation.  Under this initiative, a number of steps have been taken up,
including implementation of ‘Integrated Project Management Software (IPMS)’ for real-time
project monitoring, streamlining the supply chain to support smooth erection work at sites,
strengthening pre-engineering activities, etc., for long term EPC excellence. The company 
has,  further,  taken-up  review  of  designs,  specifications  and  procurement processes for
ensuring quality & competitiveness.

The company’s two pronged product strategy focusses on: a) Defending the core through
excellence  in execution, cost competitiveness, focus on spares & services/ improved
technology and b)diversification into new business areas by engaging a leading consultancy
agency for identifying new growth areas and developing strategies for the same. In parallel,
the company is, consolidating and reinvigorating recent initiatives in Defence & Aerospace,
Water, E-mobility, Batteries, Renewables and Transportation verticals.

To improve the financial health of the company, emphasis is being laid on cash management
with a number of Cross Functional Teams set up to take up specific issues faced by the
company. The success of these efforts is already visible in improved cash collection, vacation
of provisions, increased conversion of contract assets into collectibles, closure of long
pending cases, etc.

Digital enablement is another key focus area for the company. Various initiatives taken/
being taken in this direction include installation of IPMS for real-time project monitoring,
implementation of  e-Office for faster decision making & file processing as well as
integration of multiple ERP platforms for  end-to-end monitoring of manufacturing, project
execution and related processes  to improve the   overall efficiency of the organisation.

BHEL has, traditionally, been a preferred employer for graduates from leading institutions. It 
is  further  focussing  on  employees  as  the  backbone  and  cornerstone of  its  success.
Towards this end, employee development and engagement is being targeted through review
and revamp of the various HR systems & processes. The performance management system
has also been revamped for closer alignment of performance & rewards.

BHEL is consolidating and reinvigorating the initiatives taken in Defence & Aerospace, Water, E-
mobility, Batteries, Renewables and Transportation businesses.

Defence and Non-defence products / systems to jointly capitalise on the emerging opportunities in
the domestic and international market, as well as leverage the policy initiatives of Government
such as Make in India

MoU will also enable BEL and BHEL to make joint efforts to explore markets for products
developed individually or jointly.

GE’s Powering Efficiency Center of Excellence (COE), which aims to slash global CO2 emissions from
the world’s fleet of existing coal plants through a total plant hardware and software solution
approach

Advanced steam path technologies needs to be developed inhouse like GE & that will make it
more cost effective

Lack of innovation

5 independent directors- 3+2 ( most are ex govt secretaries)

contingent workforce - increased flexibility. influx of work arises / project comes up, a
contingent worker can be hired . business slows down again, the business is not stuck paying
a salary for a worker that isn’t vital to the organization, which is especially important in a
fragile economy. There is no need to lay off workers when You have CW.

Access to expertise is another advantage. Business owners can find the skills and experience
they need for a specific project in a contingent worker that they cannot find internally.
Businesses get to access a growing pool of highly qualified talent to ensure that work gets
completed properly.
Electrical Manufacturing industry in India: BHEL
: Status of BHEL What went wrong with BHEL:
Soultions we can provide: