PSU SECTORS

• Group Three • Raghavi

• Deepali
• Vaseem
• Sachin
• Nita
25

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 Flow of Presentation

• Introduction
• Mission & Vision
• Values
• Business Model
• Corporate Strategy
• GE Matrix
• Ditch Diagram
• BCG Matrix
• SWOT analysis
• Product Life Cycle
• Competitors
• Recent news.
• Question & Answer

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 PSU SECTORS

HINDUSTAN PETORLIUM
OIL & NATURAL GAS CORPORATION
MAHAVITARAN [MSEB]
MMRDA
MHADA
BHARAT PETROLIUM
BSNL
HMT
BHEL [BHARAT HEAVY ELECTRICALS LTD.]
MAHAGENCO [MAHARASHTRA STATE POWER GENERATION COMPANY]
SAIL [STEEL AUTHORITY OF INDIA LTD]
BEML [BHARAT EARTH MOVERS LTD.]

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 Introduction
Bharat Heavy Electricals Limited
Was set up in 1959 by the Government of India.

wide-spread network comprising 14 manufacturing divisions, 8 service centers, 4 power sector

regional centers, 18 regional offices

is the 12th largest company in the world in Power Plant Equipments manufacturing and the
largest in India.

has the ability to manufacture the entire range of power plant equipment.

has one of the largest capacities of power plant equipment in the world.

which could handle turnkey business

has a capital base of Rs. 244.8 crore

current market capitalization is Rs. 3451.12 crore.

is undoubtedly a jewel in the crown of the public sector.

an export presence in more than 70 countries

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 Mission & Vision
Vision : A world class Engineering Enterprise committed to Enhancing Stakeholders Values.

Mission : To be an Indian Multinational Engineering Enterprise providing. Total

Business Solutions through Quality products, Systems and Services in fields of
Energy, Industry, Transportation, Infrastructure & other potential areas.

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 VALUES
 Zeal to Excel and Zest for Change

 Integrity and Fairness in all matters

 Respect for Dignity and Potential of Individuals

 Strict Adherence to Commitments

 Ensure Speed Response

 Faster Learning, Creativity and Team-Work

 Loyalty and Pride in the Company

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 Business Model
BHEL –Business Breakup

Power Division Industry Division Overseas Business

Transportation Transmission Industrial

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 Power Division
 The performance of power division is related with the Indian power capacity.

 This division manufactures products and systems for thermal, nuclear, gas and hydro
based power plants.

 It include turbines, generators and boilers with matching auxiliaries.

 BHEL has an installed capacity of 7000 MW p.a. of power equipment.

 BHEL contribution to the total capacity in the country is around 65% (around 60000
MW out of the total 92350 MW).

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 Industry Division
Transportation

• The demand in this segment mainly comes from Indian railways and particularly for
traction motors which forms a significant part of this division sales.

• The demand from railways is for replacement and modernisation and this would
continue to be a steady source of business for the company.

• In case of locomotives, BHEL has been supplying locos to Indian railways on BOLT
basis in the past.

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 Transmission

• This sub-division caters :

Transmission & distribution network of
power sector. Emco
transfomers
• It includes transformers, switchgears, 7%
substations, High voltage DC lines. Imports Others
Vijay GE
• The demands for these products are 6% BHEL
electricals 6%
directly linked to investments in the 8% Others Crompton Greaves
industrial sector and capacity additions 35% Vijay electricals
in the power sector. Crompton
Greaves Emco transfomers
• The companies of their virtue of having BHEL
a long chequered history in this 17% GE
21%
segment are better placed in getting Imports
orders, especially in the transformers
segment, where it has maintained its Market Share in Transmission Segment
market position.

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 Industrial

BHEL involved in the development design , engineering , marketing ,

production , installation , and maintenance and after - sales service of rolling
stock and traction propulsion systems.

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 Overseas
Business

BHEL's overseas presence spans 70 countries in all the six continents of the world.

The Overseas business is one of the major focus areas for the company.

The company has about Rs.1020 crore Exports business in the year 2008.

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 Corporate Strategy

• Expansion of Production Capacity

• Cost Leadership

• Starting Joint Venture to tap business in new emerging business segments

• Completion of Project on Time

• Commitment towards TQM

• Updating of Technology from time to time with collaborative tie-ups with world leaders.

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 STRATEGIC PARTNERSHIP

• Acquisition of Bharat Heavy Plates and Vessels (BHPV)

• Joint Venture with NTPC.

• JV with Nuclear Power Corporation of India Ltd (NPCIL)

• JV with Heavy Engineering Corporation (HEC)

• JV with Tamil Nadu Electricity Board (TNEB).

• JV with Siemens AG of Germany.

• JV with GE of the US.

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 NEW BUSINESS AREA

• BHEL has ventured into the business of defence applications.

• It has obtain a high volume of business from the ministry of defence.

• The total turnover of the industrial segment, supplies to defence (which are mainly
armoured recovery vehicles and naval guns) comprise about 7%.

• BHEL is entering into Integrated Gasification Combined Cycle systems, Coal

Washeries, LRT Systems etc.

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 STRATEGY BUSINESS

• BHEL is involved in several strategic business initiatives for internationalization.

• BHEL targeting the export markets, positioning as a reputed engineering ,procurement &
construction (EPC) contractor globally & looking opportunities for overseas joint
ventures.

• It has management contract for Bharat Pumps & Compressors Ltd & proposed takeover
of Bharat Heavy Plates & Vessels (sister concern PSU ).

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 Competitive Strength

• BHEL has been internationally competitive.

• The company has successfully proved by bagging over 86% of power plant orders
under international competitive bidding (ICB) in the domestic market.

• With a market share in the power industry in excess of 70%, BHEL has built up
enough financial strength.

13.30%
BHEL
CHINESE
24.60%
62.10% OTHERS

Share in 11th Plan Thermal Orders

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 GE MATRIX
Strong Average Weak

High POWER THERMAL INDUSTRIAL

Medium GAS TRANSMISSION OVERSEAS

Telecommun
Low TRANSPORTATION R & D PRODUCT
ication

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Ditch Diagram

BHEL

L&T

Reliance Infra

Created OTHERS
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 BCG MATRIX
TARS
? MARKS

Nuclear power plant & Thermal Overseas Business,

Power Plant Business Super Critical Business
Coal based 75 %
Nuclear based 65 %
Hydro based 50 %

CASH COWS DOGS

Transmission Business NA
TECHNOLOGY.
Transportation Business

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trengths
180 Products under 30 major product group. Ability to acquire the new technology. Strong relationship
with NTPC-85% of its projects bagged by BHEL. Positive Drivers.

eakness

PSU Status, stringent credit facilities to the customers in rising competitions. Vertically
integrated, no outsourcing.

pportunities
Good future in India for Power sector, increase in defense budget, NTPC plan for addition
2800 MW, Business modernization & renovation, Joint venture with Siemens in the name of
Powerplant.

hreats
The global trend of consolidation, more dependency on NTPC, Elimination of Import license

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 Competitors
 CESC (Calcutta Electric Supply Corporation)

 Larsen & Toubro

 Siemens

 GAIL (Gas Authority of India Limited)

 Reliance Infrastructure.

 Tata Power

 Lanco

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BHEL can Anticipate

BHEL’s expected performance for the year 2008-09

Gross Sales (Turnover) (Rs. Millions) 250,000

Gross Margin (Rs. Millions) 57,240

PBDIT to Total Employment (Rs. Millions) 1.241

Gross Margin to Gross Block (%) 95.71

Gross Profit to Capital Employed (at year end) (%) 79.83

Net Profit to Net Worth (at year end) (%) 26.64

Added Value to Gross Sales (%) 20.25

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 Recent News

 BHEL and KEL to form JV.

 BHEL achieves major landmark with the supply of Space Grade Solar Panels for first satellite export
project of ISRO

 BHEL and KPCL float JV Company for setting up Supercritical Thermal Power Projects in Karnataka.

 BHEL Plans to increase spending on R & D & also planning to implement ERP in HR to improve
efficiency.

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 5 generic competitive strategies
TYPE OF ADVANTAGE SOUGHT
T Lower Cost Differentiation
A BHEL

R
G Overall low cost Broad
Broad range
Leadership Differentiation
E of Buyers
strategy strategies
T Best-Cost
Producer
M Strategy
A
R
Buyer Focused Focused
K Segment or low cost Differentiation
E Niche strategy strategies
T
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 Life Cycle portfolio mix
Competitive Position

Weak

Average
BHEL 64%

Strong

Early Industry Rapid Shake Market

Maturity Decline
Development Takeoff Growth out Saturation

Stage in life cycle

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 Net Profit for the last 5 Years in Crores

Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

658.15 1003.75 1679.16 2414.70 2871.11

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 The 5 force model of competitive
analysis of BHEL.

Substitute.
(No Substitute)

Rivalry among
Buyers
Suppliers Competing sellers NTPC & Govt Entities

(L & T,GAIL, Siemens)

Potential new
Entrants
Created
(Chinese Player,&
Private byKorean)
Group 3
Confidential 28
Thank you very much for
listening to us.

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