PSU SECTORS

Group Three Raghavi Deepali Vaseem Sachin Nita

25

Created by Group 3

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

Created by Group 3

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.]

Created by Group 3

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

Created by Group 3

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.

Created by Group 3

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

Created by Group 3

Business Model
BHEL Business Breakup

Power Division

Industry Division

Overseas Business

Transportation

Transmission

Industrial

Created by Group 3

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).

Created by Group 3

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.

Created by Group 3

Transmission
This sub-division caters : Transmission & distribution network of power sector. It includes transformers, switchgears, substations, High voltage DC lines. The demands for these products are directly linked to investments in the industrial sector and capacity additions in the power sector. The companies of their virtue of having a long chequered history in this segment are better placed in getting orders, especially in the transformers segment, where it has maintained its market position.

Emco transfomers 7% Vijay electricals 8% Crompton Greaves 17% GE 6% Imports 6% Others 35% BHEL 21% Others BHEL Crompton Greaves Vijay electricals Emco transfomers GE Imports

Market Share in Transmission Segment

Created by Group 3

Industrial

BHEL involved in the development design , engineering , marketing , production , installation , and maintenance and after - sales service of rolling stock and traction propulsion systems.

Created by Group 3

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.

Created by Group 3

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.

Created by Group 3

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.

Created by Group 3

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.

Created by Group 3

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 ).

Created by Group 3

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% 24.60% BHEL CHINESE OTHERS

62.10%

Share in 11th Plan Thermal Orders

Created by Group 3

GE MATRIX
Strong Average
THERMAL

Weak
INDUSTRIAL

High

POWER

Medium

GAS

TRANSMISSION

OVERSEAS

Low

TRANSPORTATION

R & D PRODUCT

Telecommun ication

Created by Group 3

Ditch Diagram

BHEL

L&T

Reliance Infra Created OTHERS by Group 3

BCG MATRIX
TARS

MARKS

Nuclear power plant & Thermal Power Plant Business Coal based 75 % Nuclear based 65 % Hydro based 50 %

Overseas Business, Super Critical Business

CASH COWS
Transmission Business TECHNOLOGY. Transportation Business

DOGS
NA

Created by Group 3

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 Created by Group 3

Competitors
CESC (Calcutta Electric Supply Corporation) Larsen & Toubro Siemens GAIL (Gas Authority of India Limited) Reliance Infrastructure. Tata Power Lanco

Created by Group 3

BHEL can Anticipate

BHELs expected performance for the year 2008-09 Gross Sales (Turnover) (Rs. Millions) Gross Margin (Rs. Millions) PBDIT to Total Employment (Rs. Millions) Gross Margin to Gross Block (%) Gross Profit to Capital Employed (at year end) (%) Net Profit to Net Worth (at year end) (%) Added Value to Gross Sales (%) 250,000 57,240 1.241 95.71 79.83 26.64 20.25

Created by Group 3

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.

Created by Group 3

5 generic competitive strategies

TYPE OF ADVANTAGE SOUGHT T A R G E T M A R K E T
Lower Cost
BHEL

Differentiation

Broad range of Buyers

Overall low cost Leadership strategy Best-Cost Producer Strategy Focused low cost strategy
Created by Group 3

Broad Differentiation strategies

Buyer Segment or Niche

Focused Differentiation strategies

Life Cycle portfolio mix

Weak

Average
BHEL 64%

Strong
Early Development Industry Takeoff Rapid Growth Shake Maturity out Market Saturation

Decline

Stage in life cycle

Created by Group 3

Net Profit for the last 5 Years in Crores

Mar-04 658.15 Mar-05 1003.75 Mar-06 1679.16 Mar-07 2414.70 Mar-08 2871.11

Created by Group 3

The 5 force model of competitive analysis of BHEL.

Substitute.
(No Substitute)

Suppliers

Rivalry among Competing sellers

(L & T,GAIL, Siemens)

Buyers
NTPC & Govt Entities

Potential new Entrants

(Chinese Player, Korean) Created by Group 3 Private & Confidential
28

Thank you very much for listening to us.

Created by Group 3