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Bharat Heavy Electricals Ltd.

Environment & Strategy Overview
JM Financial India Conference
Mumbai
12
th
Nov 2013
at
Environment & Strategy Overview
Our Credentials
 A US$ 9 billion Engineering & Manufacturing
enterprise of its kind in India
 A ‘Maharatna’ company and a Major Integrated
Power Plant Equipment Manufacturer in the
World
 Profit Making Company since 1971-72
 Consistent Dividend Paying Company for over
thirty years (FY 1976-77 onwards)
 References in over 75 countries
 Installed base of more than 1,30,000 MW
 17 Manufacturing Units + 1 Subsidiaries + 6 JVs +
Infrastructure to deal with 150
+
project sites
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Environment & Strategy Overview
We are Single Source with Multiple Solutions for
Infrastructure & Industrial Sectors.
Power Industry Oil & Gas
Transmission Transportation Renewable
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Environment & Strategy Overview
We are Indian CPSE with GOI’s holding of 67.72%.
( As on 30
th
Sept 2013)
President of
India
67.72%
FIIs
15.25%
MFs, FI, Banks
4.94%
Insurance Cos.
7.01%
Bodies Corp
1.25%
Individuals
3.39%
Others
0.44%
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Environment & Strategy Overview
Despite challenging economic environment, we have
registered good growth ….
21,401
28,033
34,154
43,337
49,510
50,156
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Turnover (Rs Crore)
21% CAGR
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Environment & Strategy Overview
Despite challenging economic environment, we have
registered good growth ….
2,859
3,138
4,311
6,011
7,040
6,615
15%
12%
13%
15% 15%
14%
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Net Profit (Rs Crore) Profit Margin
Profitability
24% CAGR
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Environment & Strategy Overview
While maintaining leadership in Indian market
Order Inflows (Rs Crore)
50,270
59,678
59,037
60,507
22,096
31,650
48%
63%
45%
61%
33%
67%
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Order Inflows PS Market Share
Total Order Book as on 30.09.13: Rs 1,02,380 crore
* Due to bulk tender where distribution was pre-decided
*
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Environment & Strategy Overview
… Resulting in enhanced performance in project
execution
7,150
4,182
5,578
7,666
9,270
10,340
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Commissioning/ Synchronization (MW)
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Environment & Strategy Overview
Performance H1 FY2013-14
Rs Crore Up to Sept 2013 Up to Sept 2012 % Change
Turnover 15,987 19,750 ↓ 19%
Net Profit 921 2,195 ↓ 58%
Order received 4,470 8,717 ---
Orders book total 1,02,380 1,22,300 ---
Projects Comm/
Sync (MW)
4,764 3,505 ---
9
Rs Crore
Environment & Strategy Overview
Today, BHEL is facing challenges from several fronts.
Uncertainties in
Global economy
Transportation of
Heavy & ODC
consignments
Rising
Competition
Disturbances in
target export
markets
Indian Power Sector
in stagnation
Critical Raw
Materials, BoP
Vendors, Skill deficit
Slowing Indian
Economy
Slackness in large
Infrastructure
Projects
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Environment & Strategy Overview
But, there are huge market opportunities. India can
not grow more than 8% without focus on power sector.
147
220
306
425
575
778
735
1097
1524
2118
2886
3880
2008-09 2011-12 2016-17 2021-22 2026-27 2031-32
Generation
Capacity (GW)
Electricity
Generation (bln KWh)
State of Indian Power Sector
Generation Capacity 226 GW
(59% Coal)
Per capita consumption
of electricity
879.22 kWh
Less than 1/3 of
world average
AT&C Losses 26.15%
Demand- Supply deficit 8-9%
Peak demand-supply
deficit
13-14%
Avg cost of electricity 378 paisa/ unit
Realization 301 paisa/ unit
(80%)
Integrated Energy Policy 2006, Planning Commission
@ 8% GDP growth
Source: CEA Monthly Report June 2013
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Environment & Strategy Overview
Practically every 2 houses out of 3 in India are supplied power generated from BHEL sets
Installed capacity- Utility*
2,01,036 MW (31.03.13)
Generation- Utility**
838 bn Units (2012-13)
BHEL
66% Others
34%
BHEL
57%
Others
43%
… and we are placed well to harness these
opportunities
*Coal, Gas & CCP, Diesel, Nuclear & Hydro
** Coal, Nuclear & Hydro
• 500 MW thermal sets - consistent availability of more than 90% for the last six years.
• 170 coal based sets achieved OA higher than 90%.
• 167 BHEL supplied coal based sets clocked uninterrupted operation of more than 90 days during the
year out of which, 53 sets ran twice continuously for more than 90 days and 29 sets ran continuously
for more than 200 days.
• Trombay 5 (500 MW) and Singrauli 5 (200 MW) clocked uninterrupted operation throughout the year.
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Environment & Strategy Overview
BHEL supplied power plant equipment exhibit world
class performance.
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* Average performance of thermal sets during 2007-2011; Source: North American Electric Reliability Council (NERC); 2013
84.73%
68.98%
10.41%
4.89%
86.80%
85.78%
6.56%
6.64%
Operating
Availability
(OA)
Plant Load
Factor (PLF)
Planned
Maintenance
Forced
Outages
due to Equip.
85.73%
62.80%
9.74%
4.51%
88.97%
80.16%
6.15%
4.89%
Operating
Availability
(OA)
Plant Load
Factor (PLF)
Planned
Maintenance
Forced
Outages
due to Equip.
Performance of 400-599 MW Sets* Performance of 200-299 MW Sets*







NERC member countries (North America, Canada, Europe part) BHEL Sets
Environment & Strategy Overview
Recent study* by CEA testifies our performance.
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Specific Fuel Consumption
(ml/kWh)
Operating Load Factor
(OLF)
Total Outages
Design Turbine Cycle Heat
Rate (THR) of 300 MW sets
(kcal/kWh)
Design Turbine Cycle Heat
Rate (THR) of 600 MW sets
(kcal/kWh)
1910
1893
1954
1922
2719
2527
Operating Heat Rate (OHR)
(kcal/kWh)
• Study covers 12480 MW (36 units) BHEL sets and 8220
MW (22 units) Chinese sets
• THR and OHR are on like to like basis (BHEL sets of 250
MW and 500 MW while Chinese sets of 300 MW and 600
MW). Also Chinese power plants uses feed heating from
High Pressure Turbine while BHEL does not.
• OLF and Total Outages percentages are of those plants
which uses Indian Coal only and excludes plants who
remained shut for very long time during study.
• SFC comparison is of those plants which uses Indian
Coal.
* Analysis of Chinese equipment vis-à-vis Indian(BHEL) Equipment, Central Electricity Authority, New Delhi India, May 2013
BHEL Equipment Chinese Equipment
71.6%
57.2%
3.06
6.13
18.7%
23.5%
Environment & Strategy Overview
As a result, we are market leader in Indian Power
Sector.
Chinese
Comp,
18496,
34%
Other
Foreign
Comp,
8227, 15%
BHEL,
25385,
46%
Other
Indian
Comp,
2856, 5%
XI Plan 2007-12 (54,964 MW)*

XII Plan 2012-17 (1,42,603 MW)
Chinese
Comp,
42155,
30%
Other
Foreign
Comp,
10670, 7%
BHEL,
66067,
46%
Other
Indian
Comp,
23711,
17%
*Actual Achievement
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Environment & Strategy Overview
Our Industry Sector Business: diverse, slated to grow
Transmission
7-9%
Transportation
3-5%
Captive Power
Plants & other
Industrial Products
12-15%
Transmission
• Transformers
• Switchgear
• Indl. Control Gear / Control Panels
• Capacitors
• Insulators
• HVDC/ Transmission Projects etc
Transportation
• Traction machines
• Traction Control gears
• IGBT Propulsion system
• DESL, AC Locos / DG Sets / etc
Captive Power Plants & other Industrial
Products
• CPP - Indl. TG / Boiler Sets
• Industrial Machines
• Compressors
• Oil Field Equipment, Valves etc
FY 2012-13
FY 2011-12
FY 2010-11
Contribution to total Turnover: 22-28%
Renewable & others
• Solar
• Water
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Environment & Strategy Overview
We are focusing on ‘6-Point Agenda’ to meet Strategic
Plan 2017 targets.
1
2
3
4
5
Engineering
&
Technology
6
▪ Timely investments
-Planned & scalable
▪ Inorganic Growth
▪ Supply Chain Agility
▪ Skill Enhancement
▪ Effective Site
Management &
Information Systems
▪ Operations Improvement
– Lean, DTC, PSM
• Global Sourcing, Indigenization
▪ Upgrade Product Range in
Thermal, Gas & Hydro
Generation
▪ Nuclear Power, Transmission,
Transportation, Renewable
Energy, Water
▪ Investment in R&D
▪ Absorption of Supercritical
Technology
▪ Fast-track Technology &
Product Development for
IGCC, 765/ 1200 kV
Transmission ,etc.
▪ Performance & Potential alignment of new
inductees with Company’s Challenges
▪ Leadership Development
▪ Technical/ Functional Competency
Development
Engineering
&
Technology
Capability
Enhancement
Accelerated
Project
Execution
Diversification
BHEL
Product
Cost
Competitiveness
& Quality
People
Development
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Environment & Strategy Overview
Innovation is our key focus area to steer future
growth.
175
213
263
303
351
385
FY08 FY09 FY10 FY11 FY12 FY13
Filing of Patents & Copy Rights (Nos.)
463
690
829
982
1199
1248
FY08
FY09
FY10
FY11
FY12
FY13
R&D Expenditure (Rs Cr)
2719
5570
6723
7809
9832
9643
FY08 FY09 FY10 FY11 FY12 FY13
Turnover from in-house
developed products (Rs Cr)
2.5%
~20%
2170
 Today our R&D focus is globally recognized (CII-Thompson Reuters Innovation Award 2010)
 Forbes ranks BHEL at No.9 in list of World's 100 Most Innovative Companies (July 2011)
 145 Mission & Technology Plans with over 1500 R&D projects identified for establishing self sufficiency in the
areas of UHV Transmission, Transportation, Ultra Super Critical Plants, Renewable energy, IGCC, Water etc.
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Environment & Strategy Overview
We are developing strong capabilities in Product
Development & Engineering.

 270/300/525/600/700 MW sub-critical sets
introduced
 Advance Class Gas Turbines tech in place
 765 & 1200 KV UHVAC Transformer, Reactor
developed
 IGCC development
 Transportation-IGBT technology developed
for Loco & ACEMU
 Sole supplier in world for 420 kN/320 kN
porcelain insulators for ±800 kV HVDC lines
Products Development
 Supercritical Technology with Technology tie-ups
with Alstom (Boiler), Siemens (TG) & MHI (Pumps)
 Rapid technology absorption in partnerships with
customers
 Supercritical Orders’ basket 24 TGs and 27 SGs:
 2X660 MW NTPC Barh (SG & TG)
 3X660 MW Prayagraj PGCL, Bara (SG & TG)
 2X800 MW APPDCL Krishnapatnam (SG)
 2X800 MW RPCL Yermarus (BTG)
 1X800 MW RPCL Edlapur (BTG)
 1X700 MW KPCL Bellary (EPC)
 2x660 MW NTPC Mauda (SG & TG)
 3x660 MW Bajaj Hindustan, Lalitpur (BTG)
 2x660 MW DVC, Raghunathpur (TG)
 2x660 MW DB Power, Singrauli (BTG)
 3x660 MW NTPC Nabinagar(SG)
 2x660 MW OPGC, IB Valley, Banharpalli (BTG)
 2x660 MW RRVUNL Suratgarh (EPC)
 2X800 MW NTPC Gadarwara (TG)
Supercritical Domain
 We are slated to play a key role in RDD&D in
India's first coal fired Advanced Ultra
Supercritical (AUSC) power plant in
association with Indira Gandhi Centre for
Atomic Research (IGCAR) and NTPC.
 AUSC: 5% more efficiency; 12% savings in
coal; Less GHG emissions
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Environment & Strategy Overview
Our scale is another competitive advantage.

 Acquired BHPV Vizag as 100% subsidiary in 2008. Slated to enhance our capabilities in design,
fabrication, supply and erection of custom built process plant equipments. Turnaround in 2010-11.
Merged with BHEL in Aug 2013 wef Oct 2011.
 BHEL Electrical Machines Ltd. (JVC between BHEL & KEL (Kasargod)/ GoK) for manufacturing of
products for Railways and Industries. Strategic move to enhance our presence in Transportation,
Industrial and Renewable Energy Sectors.
15000
MW
20000
MW
March 2010 March 2012
Inorganic Growth
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 New manufacturing plant operationalized:
 Power Plant Piping Unit, Thirumayam
 High Pressure Boiler Plant - Unit II, Trichy
 Setting up the greenfield Power Equipment
Fabrication Plant at Bhandara, Maharashtra
Manufacturing Capacity Expansion New Manufacturing Plants
Environment & Strategy Overview
Various initiatives are being taken to enhance pace of
execution.

 Skill enhancement at ITIs in J V/PPP mode: Kabiguru (WB), Latur (Mah), Bajpur (UP),
Peramvalur (TN), Khandwa & Khaknar (MP), Haridwar (Uttranchal) …
 Leveraging WRI Trichy to train high pressure welders
 Extensive training to Act Apprentices & Customers
 Lateral/ Campus/ Special/ FTA Recruitment
 Retired Specialists as Consultants, Re-Employment
Bridging Skill Deficit

 Central monitoring system for PG test: 58 PG test (TG, SG & ESP) during 2012-13
 Deploying additional Tools & Plants like heavy cranes suitable for erection of sets up to 800 MW.
 Cranes available in PS (>=75 MT): 129 nos
 Strand J acks: 2 nos
 Induction Heating Machines in PS: 294 nos
Site Capability Enhancement
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Environment & Strategy Overview
Various initiatives are being taken to enhance pace of
execution.
Vendor Base
Expansion
 ~1900 new Vendors added in 2012-13 & Vendor base >20,000
 Developing BoP vendors: 40 (2008-09) + 84 (2009-10) + 42 (2010-11)
 Procurement Office established in Shanghai, China
AMA  Advanced Manufacturing Action for long lead items
TCA  Technology Collaboration Agreement with Sheffield Forgemasters UK for
large size forgings (up to 1000 MW)
 Technology Collaboration Agreement with MHI Japan for FGD
IT  e-Procurement , Reverse Auction (~36%)
Rate
Contracts
 Long term Rate Contracts for Steel, Copper, CRGO, Transformer Oil
(contribution to total purchase ~25%)
Outsourcing  Enhanced thrust is being given for outsourcing of low tech/ non-core
manufacturing
ACF  ‘Away Center Fabrication’ adopted by Trichy & Ranipet Units
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Environment & Strategy Overview
Our Diversification Strategies:
Expanding our Offerings in New Growth Areas
 Highest rating SPV Power Plant orders of 10
MW each from NTPC for Unchahar and
Talcher.
 Commissioned 5 MW grid-connected Solar
Photo Voltaic (SPV) Plant for KPCL at Mandya,
Karnataka
 MoU signed with Govt. of Maharashtra to
consider the possibility of setting up an
integrated facility for the manufacturing of
Solar Photo Voltaic systems.
 Joint Working Arrangement with Abengoa
Spain for Concentrated Solar Power Plant
(CSP)
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Environment & Strategy Overview
Our Diversification Strategies:
Expanding our Offerings in New Growth Areas
 MoU signed with Indian Railways for setting up a green
field coach factory for Mainline Electric Multiple Unit
(MEMU).
 Participation with global majors in the tender for setting
up a factory for Electric Loco factory at Madhepura and
Diesel Loco factory at Marhowra respectively.
 Catering to RDSO's requirement for conversion of
existing DC EMUs to 25 kV AC EMUs, BHEL has
successfully type tested a 1200 kVA AC EMU transformer
which matches the dimensions of the conventional AC
EMU transformer with a 20% enhanced output.
 Orders for State-of-the-art propulsion equipment for
6000 HP Electric Locomotives and 1400 HP AC EMUs
(IGBT based) under execution
 Executing an order for 200 numbers of 5,000 HP 25 kV
AC Mainline Electric Locomotives (Type WAG -7) for
Indian Railways.
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Environment & Strategy Overview
Our Diversification Strategies:
Expanding our Offerings in New Growth Areas
 Manufacturing Associate Agreement with GE India Industrial Private
Limited (GEIIPL), for Water Treatment Equipment.
 BHEL will be able to provide more cost-effective membrane-based
water treatment systems for power plants and industrial sector for all
type of input water like sea water, brackish water and waste water.
 765 kV Transformers & Reactors orders received from Megha
Engineering and Infrastructure Ltd. for Western UP Transmission
System upgradation, and BIDCO for the upcoming 3x660 MW Lalitpur
TPS.
 To improve the stability and reliability of power systems, BHEL has
developed and manufactured a 3-Phase, 315 MVA, 400 kV class, Phase
Shifting Transformer with state-of-the-art features. It will be installed
at APGENCO Kothagudem.
 India’s first and highest rating indigenously developed 1200 kV
class Transformer successfully test charged to cater to 1200 kV
UHVAC Transmission Systems
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Environment & Strategy Overview
Our Diversification Strategies:
Expanding our Offerings in New Growth Areas
 Steam generators for new rating 700 MWe
Nuclear sets
 Tripartite JV with NPCIL & Alstom in process for
conventional island of Nuclear Projects for 700
MWe & above
 MoU with GE-Hitachi for cooperation in Nuclear
island equipment for Power plants to be set up by
NPCIL
 Order secured from NPCIL for TG package for
2x700MWe for RAPP 7&8
 Order for supply & Installation of Control and
Instrumentation for Turbine Island Secondary
Cycle System for 2x700 MW Kakrapar project in
Gujarat.
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Environment & Strategy Overview
“ Five years after the global financial crisis, the
economy and the industry are still reeling under the
crisis of confidence in India as well as in the world. We
too are affected by this crisis but we are not allowing
the crisis go waste. Your company is building new
competitive advantages by experimenting new ideas
and methods rapidly, frequently, and economically—
not only with products and services but also with
business models, processes, and strategies. While we
may have to go through some pains in short term, I
have absolutely no doubt that your company’s inherent
technology strength, highly committed manpower,
manufacturing prowess and innovation ecosystem will
enable us to recapture the growth once Indian
economy moves to another growth trajectory in near
future.”
B Prasada Rao
Chairman & Managing Director
49
th
AGM, Sept 20, 2013

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AA:PLD:56::111113
Thank you!
Powering Progress…
…Brightening Lives
Cautionary Statement: Statements in this “presentation” describing the company’s objectives, estimates, expectations or predictions may be
“forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those
expressed or implied. Important factors that could make a difference to the company’s operations include global and Indian demand supply
conditions, finished goods prices, cyclical demand and pricing in the company’s principal markets, changes in government regulations, tax regimes,
economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour
negotiations. The company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any
subsequent development, information or events, or otherwise.