A report on

Bharat Heavy Electricals Ltd. (BHEL)

Submitted By:-

Group -9
Pankaj Taneja 09-I-133 Ravi Shanker Pandey 09-I-142 Sandhya Yadav 09-I-150 Saurabh Garg 09-I-151

About Company BHEL is the largest engineering and manufacturing enterprise in India in the energyrelated/infrastructure sector, today. BHEL was established more than 40 years ago, ushering in the indigenous Heavy Electrical Equipment industry in India - a dream that has been more than realized with a well-recognized track record of performance. The company has been earning profits continuously since 1971-72 and paying dividends since 1976-77. BHEL manufactures over 180 products under 30 major product groups and caters to core sectors of the Indian Economy viz., Power Generation & Transmission, Industry, Transportation, Renewable Energy, etc. The wide network of BHEL's 14 manufacturing divisions, four Power Sector regional centers, over 100 project sites, eight service centers, 18 regional offices and one subsidiary enables the Company to promptly serve its customers and provide them with suitable products, systems and services -- efficiently and at competitive prices. The high level of quality & reliability of its products is due to the emphasis on design, engineering and manufacturing to international standards by acquiring and adapting some of the best technologies from leading companies in the world, together with technologies developed in its own R&D centers. BHEL has acquired certifications to Quality Management Systems (ISO 9001), Environmental Management Systems (ISO 14001) and Occupational Health & Safety Management Systems (OHSAS 18001) and is also well on its journey towards Total Quality Management. BHEL has Installed equipment for over 90,000 MW of power generation -- for Utilities, Captive and Industrial users. Supplied over 2,25,000 MVA transformer capacity and other equipment operating in Transmission & Distribution network up to 400 kV (AC & DC). Supplied over 25,000 Motors with Drive Control System to Power projects, Petrochemicals, Refineries, Steel, Aluminum, Fertilizer, Cement plants, etc. Supplied Traction electrics and AC/DC locos to power over 12,000 kms Railway network. Supplied over one million Valves to Power Plants and other Industries. BHEL's operations are organized around three business sectors, namely Power, Industry including Transmission, Transportation and Renewable Energy - and Overseas Business. This enables BHEL to have a strong customer orientation, to be sensitive to his needs and respond quickly to the changes in the market. BHEL's vision is to become a world-class engineering enterprise, committed to enhancing stakeholder value. The company is striving to give shape to its aspirations and fulfill the expectations of the country to become a global player.

Product and Services Power Air Preheaters Boilers Control Relay Panels Electrostatic Precipitators Fabric Filters Fans Gas Turbines Hydro Power Plant Piping Systems Pulverizers Pumps Seamless Steel Tubes Soot blowers Steam Generators Steam Turbines Turbo generators Valves Industry Capacitors Ceralin Compressors Desalination Plants Diesel Generating Sets Industrial Motors & Alternators Gas Turbines Oil Field Equipment Solar Photovoltaic¶s Power Semiconductor Devices Seamless Steel Tubes Soot blowers Steel Castings & Forgings Steam Generators Steam Turbines Turbo generators Transmission Bushings Capacitors Control Relay Panels Dry-type Transformers Energy Meters HVDC Transmission System Insulators Switchgears Power Semiconductor Devices Power System Studies Control Shunt Reactor Transportation Electric Rolling Stock Electrics for Rolling Stock Electrics for Urban Transportation System Non Conventional Energy Source Mini/Micro Hydro Sets Solar Lanterns Solar Photovoltaic¶s Solar Water Heating Systems Wind Electric Generators R&D Products Fuel Cells Surface Coatings Automated storage & Retrievals Load Sensors Transparent Conducting Oxide

Main Manufacturing Units
Bhopal (Madhya Pradesh) Bharat Heavy Electrical Limited, Raipur, Hardwar (Uttarakhand) [10] Hyderabad (Andhra Pradesh) Jhansi (Uttar Pradesh) Tiruchirapalli(Tamil Nadu) Ranipet (Tamil Nadu) Bangalore (Karnataka) Jagdishpur (Uttar Pradesh) Rudrapur (Uttrakhand) Goindwal (Punjab) Bharat Heavy Plates and Vessels Limited (Vizag)

y y y y y y y y y y y

Besides these manufacturing units there are four power sectors which undertake EPC contract from various customers. The Research and Development arm of BHEL is situated in Hyderabad and two repair shops are at HERP (Heavy Equipment Repair Plant), Varanasi and EMRP(Electric machines repair plant) Mumbai.

In Industry Sector, BHEL secured record orders worth Rs. 10254 Crore in Captive Power, Rail Transportation, Power Transmission, Oil & Gas and other industrial segments. The year witnessed a growth of 40% over previous year with a number of first-time-ever achievements. Major orders received during the year / other business highlights- Industry segment-wise include: Captive Power Plants y Highest-value order ever received from HINDALCO for 6x150 MW BTG package for Mahan (MP). This is also the highest value order ever received in Industry sector. Largest order in the refinery segment received from HMEL (JV of HPCL & Mittal Energy Ltd.) for 153 MW Combined cycle CPP on LSTK basis. EPC order for Cogeneration Captive Power Plant Package (68 MW) from MRPL



from ICF Chennai. Besides Electrics. BRPL-Bongaigaon. Rourkela Steel Plant.y Cogeneration plant order from Fertilizer sector (GNFC) after a gap of more than 12 years for Barouche CPP. 22 Pole 11KV CACW induction type secured from M/s Kirloskar Brothers Ltd for CGPL. Order for highest rating BFP motor . This is the highest rating order received so far for slow speed Pressurised synchronous motors. Kasaragod for formation of JV for manufacture of Traction alternators & other rotating electrical machines for Indian Railways and other customers in India. of 700 HP DE Shunting Locomotives from JSPL. the order includes brakes and door mechanism to be integrated with the propulsion system. Orders for 9 nos. Mundra. y y Industrial Products (Mechanical) y Highest ever orders for up-gradation & refurbishment of 12 onshore drilling rigs and advanced instrumentation system for 53 onshore rigs from ONGC Highest ever orders for Compressors: HMELBhatinda. HPCLMumbai. Turbo Blower Package from SAIL. 18P motors from M/s Dresser Rand for compressor drives for HMEL Bhatinda refinery.3 Nos. 5200KW. after nearly two decades. 17500KW 11KV 4 Pole SCIMs for NTPC Barh 2 X 660 MW. & MRPL-Mangalore. y . Industrial Products (Electrical) y Order for 2 nos 4060 KW. First order for supply of largest vertical motors for CWP application to an Ultra Mega Power Project ± 10 nos. SAIL and Essar y Other business highlights in this segment include: y MoU with KEL. Variety of STG orders from various process industries y Rail Transportation y Significant order for Traction Electrics for Kolkata Metro.

following successful testing at STRI. y Transmission Systems ± Sub-station/switchyards y y Developmental order for 765KV Transformer. 400 KV switchyards: ONGC Tripura Power . 3 phase banks) reinforcing technological and market leadership in transformers Maiden order for Generator Transformers for 660 MW sets from NTPC for Barh Stage-II followed by order for Generator Transformers for Tirora Project of Adan Power (3x660 MW). y MoU for TCA signed with Nuovo Pignone S. 400 KV Shunt Reactors from PGCIL ± largest shunt reactor order ever placed in India. 26 nos. first consignment for PGCIL flagged-off.2 KV SP Bus duct from Coastal Gujarat Power Ltd. involving country¶s highest-rating Generator Transformers (930 MVA. Sweden. Wardha. y y New & Renewable Energies . GIS for TNEB.A Italy for Centrifugal Compressors Defence y First-ever order in Defense business for supply of ACS/IPMS (Auxiliary Control Systems-Integrated Platform Management System) from Mazagon Dock Ltd.p. GIS for 400 KV switchyards: ONGC Tripura Power . North Chennai. Satluj Jal Vidyut Nigam Ltd. PPCL. for Mundra UMPP. CVT & CB from PGCIL Order for FSC (Fixed Series Compensation) from PGCIL. CT. Reactor.y All-time high orders for Well Heads and X-mas trees from ONGC.Pragati ± III. Other business highlights in this segment include: y MoU with PGCIL for development of 1200KV transformer and other products BHEL becomes sole supplier in the world for 420 kN/320 kN porcelain insulators for 800KV HVDC transmission lines. OIL & private companies. Transmission Products (ROD) y Bulk order for 40 Transformers from Coastal Gujarat Power Ltd. Repeat business for 3 nos SRGMs from Mazagon Dock Ltd (Indian Navy) including spares. First order for supply of Bus ducts for Ultra Mega Power Project: 33 KV IP Busduct and 12 & 7. 400KV.

CREDA.stations / switchyards projects (15 nos.y PV Modules of various ratings from BEL. creating capacity addition of 687 MW. Alps Environmental Technologies. In Transmission Sector highest number of sub. Projects Commissioning: y y Captive Power Plant equipment (STG & GTG) ranging from 15 MW to 125 MW commissioned for various industry segments. solar cells and modules. Bangalore. MoU signed with BEL for formation of a JV to address Solar Photovoltaic business and for setting up manufacturing facility for silicon wafers.) including two overseas projects commissioned in 2008-09. y Major competitors of BHEL ELECTRO CONSULT ABB BEEHTEL BLOCK & NEATCH GENERAL ELECTRIC RAYTHEON WESTINGHOUSE CNMI & EC SANGHAI ELECTRIC CO GEC-ALSTHOM ELECTRIM FRANCO TOSI FUJI HITECHI MITSUBISHI TOSHIBA ROLLS ROYCE SIEMENS ITALY SWITZERLAND USA USA USA USA USA CHINA UK UK POLAND FRANCE JAPAN JAPAN JAPAN JAPAN GERMANY GERMANY y y y y y y y y y y y y y y y y y y . Chhattisgarh and other customers.

Mission statement evaluation matrix Firm Customer Products Markets Profit Technology SelfPublic Employees &Services & concept Image Growth BHEL No Yes No No Yes No No No 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 of response  Foster learning and teamwork  Loyalty and pride in the company. systems and services in the fields of energy.VISION. MISSION AND VALUES VISION A world class engineering enterprise committed to enhancing stakeholder value. . transportation. MISSION To be an Indian Multinational Engineering Enterprise providing total business solutions through quality products. industry. infrastructure and other potential areas.

like ABB. II. Competitive price and orders are captured by most of the dominant players. retail distribution licensed etc. Barriers to entry: Barriers to entry are high. so that concentrated focusing on the respective sector avoids chance of getting substituted. since government controls the tariff structure. Bargaining power of suppliers: Here the bargaining power of suppliers is not very high. Threat of Substitutes: It has many substitutes that might pose a threat Has less diversification with the sectors.BHEL: I. Bargaining power of Buyers: Bargaining power of the retail customers is low. IV. industry equipments . Suppliers are well diversified in the globe and BHEL ensures prompt delivery by the suppliers. The other barriers are fuel linkages. as power is in short supply. Mitsubishi. general electric. however this might change in future. GE etc. payment guarantees from state governments. Ex: Power sector equipments. Rivalry among existing players: Alstom. L&T. However government is a big buyer and payment by government is more erratic. This is basically achieved by: Acquisitions & mergers and joint ventures in other countries and technological improvements V.Porter¶s five forces Model . since each one is striving to gain their competitive advantage to gain bigger market share. as entering this business requires heavy investment initially. The intensity of competition is basically high. Wide customer base in India and in all the parts of the world III.

Widow resettlement.BHEL: Political Factors: BHEL being a public sector undertaking is greatly influenced by the political forces. Social Factors: Companies are taking more interest in corporate social responsibility these days and steps have been taken by BHEL too to further the same. else it will be knocked out by the competitors. ban on child labor. Employment for Ex-serviceman. The Company has proven expertise in Plant Performance Improvement through renovation and up-rating of a variety of power plant equipments to improve the performance of . Technological Factors: BHEL being an engineering and manufacturing giant is to a great degree driven by technological developments and innovations and has its earnest efforts directed towards improving its technological prowess to meet the changing requirements of a growing economy. irrigation using treated sewage. energy saving and conservation of natural resources through environmental management. Companies that are sensitive to the needs and development of the society normally draw people¶s attention and respect faster and can create a superior moral image in the minds of their partners and clients. Power Generation is one of the primary indices of a country¶s economic development. power sector has seen a massive growth in the last few years and has been at the top of the political agenda. At the same time the company has to keep pace with the developments happening in its business areas. disaster/natural calamity aid. Turn key projects are the need of the hour and BHEL has proven turnkey capabilities for executing power projects from Concept-to Commissioning. There is a change in policies every time the government changes. Now power companies are the major clients of BHEL. plantation of millions of trees. The government policies and regulations relating the company¶s client industries can largely affect the future of its business with these customers. Its contributions towards CSR till date include adoption of villages. free medical camps/charitable dispensaries.MACRO ENVIRONMENTAL FACTORS . pollution checking camps. The business decisions are steered to a great extent based on the individual preferences of the new leadership. Employment for handicapped. The company does big business overseas and these projects are directly dependent on the incumbent ruler¶s international trade policies. the same showing more interest in working with an ethical and socially conscious group. Economic Factors: The economic boom in India particularly in the last one decade has played a significant role in charting the success of the company. For example. BHEL has been a leader always and the fact that India¶s first underground metro at Kolkata runs on drives and controls supplied by BHEL is a testimony to this. schools for the underprivileged and handicapped children.

Environmental Factors: BHEL is an environment friendly company in all its activities. BHEL¶s initiatives for 2009-10 The initiatives taken by BHEL are in the form of Joint ventures: JV Company NTPC Toshiba NPCIL Venture details Power equipments Transmission equipments Nuclear power equipments Initiatives by Competitors  ABB has set up a global corporate R&D center in Bangalore which focuses on industrial IT development and deployment. The company has made the principles of the Global Compact program of the United Nations a part of its strategy. products and services besides providing safe and healthy working environment to all its stakeholders. culture and day-to-day operations. Its Indian subsidiary is a global factory for high voltage . BHEL and its famous SBU The Ceramic Business Unit (CBU) of BHEL is a Strategic Business Unit for Ceramics and Systems. BHEL has taken certain measures to conserve these precious resources. It has set up rainwater Harvesting Plants and Energy Conservation Projects utilizing efficient technologies.existing plants. Ceramic Wear Resistant liners. This business unit deals with High Tension Insulators. Proper disposal of Chemical and other wastes is also a major concern for which the company has put up Chemical storage and disposal plants. Industrial Ceramic Products and associated Systems. The depleting water and energy resources are a cause of concern for all. CBU is headquartered at Bangalore. It has also emerged as a major supplier of controls and instrumentation systems for various power plants and industries.

Cummins Research & Technology India Pvt Ltd.20 0. medium voltage outdoor circuit breakers and magnetic actuators.80 .10 2 0. which would directly benefit BHEL 3.60 5.60 2. The power sector reforms are expected to pick up in the near future in India. NTPC is planning additional capacities to the tune of 2.45 0. (85% of the NTPC projects were 0. which would offer engineering design and analysis capabilities for the company¶s technical centers worldwide.20 4 0. Significant portion of the project of NTPC is handled by BHEL.72. External Factor Evaluation Matrix EFE ±BHEL(2010) BHEL Key External Factors Weight Rating Wtd Score Opportunities 1. taking advantage of India¶s technical know-how has opened a new R&D centre in Pune. Formation of business groups and tie ups for joint bidding 0. at a cost of Rs 52 billion.20 3 0.15 3 0. Capital Goods market segment to grow @40% 0.  Cummins.800 MW.15 4 0. The disinvestment plans of the government would bring in new resources and experience into the company 4.5 KV circuit breakers.

05 1 0. 0.10 2 0.20 0.20 1 0.05 0.20 1 2. Increase in defence budget will increase the business prospects for the company Total 0.10 . Political pulls & pressures may jeopardize growth of the company 5.40 0. Emergence of new players in the market like Schneider etc. Labour in the Indian Capital Goods sector is highly cost competitive. The company is dependent on NTPC to a great extent.05 2 0.20 3 0.assigned to BHEL only) 6. 4. The government has permitted the import of second hand capital goods that are 10 years old without the need for a license.85 EFE ± BHEL (2010) Wtd score Key External Factors Weight Rating Threats 1. 3.38 times that of Taiwan¶s.60 0. The labour cost efficiency (which captures the cost and productivity aspects of labour) for Indian Capital Goods sector is 1.32 times that of China¶s and 1. 2.20 2 0.

for Future Competitive Success 0. the .25 3 0.45 0. BHEL AND THE GLOBAL MARKET .200 crore till date to Rs 24. which move in line with international prices. and keep pace with technological developments in the sector.000 crore worth of orders generated in the fiscal year that began in April. low manpower costs and efficient procurement and processing practices. While organic growth is expected to contribute Rs 6200 crore to its order book by 2012. Plant and Electric industry is technology intensive. 7.15 3 0.75 1 2.OPPORTUNITY FOR BHEL Bharat Heavy Electricals Ltd is planning to triple export orders to Rs10300 crore by 2012. 4) The Power.65 1) Power projects are typically awarded through the International Competitive Bidding (ICB) route. The past track record of the PPE manufacturer in the country and in international markets also plays an important role in winning project bids. The ability and resources to invest in research is a significant competitive advantage for BHEL in the PPE industry. BHEL currently has orders worth Rs1. Indian Capital Goods manufacturers now procure raw materials at market prices. with significant investments required in R&D to improve efficiency and performance.10 trillion. Its international projects contributed Rs 3. Raw material price indices have risen faster than the machinery price index. Cost competitiveness is dependent on factors such as access to technology at low costs. but the BHEL±institute interactions are low and brain drain from India. reduce the chances of creation of commercially technologies. With the dismantling of various price controls. the ability to provide finance and take up equity stakes in these projects will influence the competitive position of Power plant equipment manufactures.6. where pricing is an important criterion in awarding the contract. India has a number of high quality R&D institutions. Total KSFs . local manufacturing facilities resulting in lower freight costs. 3) Power projects are long gestation projects involving significant risks relating to project completion and implementation. 2) As the share of Independent Power Producers in new capacity additions increases over the long term.

remaining Rs 4.100 crore will come from acquisitions and joint ventures.textile) government &retail consumers *Highy demanding consumers .000 crore each (through organic and inorganic growth) by 2017.structure& rivalry Factor Conditions Demand Condtions Government Related & Supporting industries *Liberalized overall policy regime *Import duties on a range of equipment have been reduced *Consumers include power utilites. Industrial majors(refining. Overseas Business 8000 6000 4000 Overseas Business 2000 0 704 2006 1071 2007 1020 2008 2012 6200 Chart showing BHEL¶s overseas business FUTURE OUTLOOK OF THE INDUSTRY: Indian engineering industry *India s comparatively cheaper and skilled workforce can be effectively utilized to set up large low cost production bases for domestic and export markets *Huge investments from the companies for R&D etc *A larger number of domestic as well as international players *Highly competetive industry Firm strategy. This is expected to go up to Rs 8.auto.

5) BHEL is bridging the skill deficit and training high pressure welders of contractors 6) BHEL is technological ahead of other companies in the sector like IGBT technology being pursued in transportation and is the sole supplier in world for 420 kN/320 kN porcelain insulators for 800 kV HVDC lines and has TCA with Sheffield Forge masters UK for Forgings 7) BHEL has applied innovation in marketing and supply chain with partnerships forged with NTPC. Its applying IT to manage supply chain management through SAP/ERP.transmission. It provides solutions in the field of power. *India has well developed teritary and technical institutions *Well developed vendor base BHEL Analysis of competitive advantage of the firm:1) BHEL is a single source for multiple solutions of Infrastructure & Industrial sectors of the economy.*Heavy electrical industry has been de-licensed with 100% FDI allowed *Demand linked to the industry growth *The focus to develop road.transportation. 4) Continuously enhancing manufacturing capacity Upto 15GW by 2010. 8) MoU with GE-Hitachi for cooperation in nuclear island equipment for Power plants to be set up by NPCIL. KEL & HEC and enhancing vendor base & balance of plant. .Oil&Gas to name a few 2) A major manufacturer of power plant equipment for various fuels.improve power generation etc. 3) Fully indigenized technology up to 600 MW from world leaders.ports. e-procurement and reverse auctioning.

20 4 0. Rwanda & new market segments in Syria. Japan. 13) Breakthrough in transportation business with bulk order for 50 nos. MoU with GE for Diesel Electric Locos & mfg.20 4 0. 14) Forays in new markets ±Belarus. MoU with Toshiba Japan covering Transformer GIS for EHVAC & UHVAC range etc. Single source for multiple solutions for Infrastructure & Industrial sector 3. Nigeria.9) MoU with BEL for formation of a JV to address Solar Photovoltaic business. Score Strengths 1. Senegal.80 2. Tajikistan. Possessing technology & design ability 0.15 4. one Patent/Copyright filed every alternate working day.30 .80 0. 12) Rs. Good corporate Image & established brand name 0. 11) Significant growth in Intellectual Capital. Strong & wide network of manpower across India 0.15 1 0. 25 KV Electric Locomotive type WAG 7 from Indian Railways. Presently executing 40 contracts in 25 countries Internal Factor Evaluation Matrix IFE ±BHEL(2010) BHEL Key Internal Factors Weight Rating Wtd. 2311 Crore export orders from twenty six countries. of propulsion systems 10) Market capitalisation of over One Trillion rupees.15 2 0.

It is also generating increasing profits year by year.10 4 0.10 0. Since BHEL is an Indian Company. This is because it is the Numero Uno in the Capital Goods industry. SLM is the commonly used method of depreciation used in India. BHEL does not have any commitments and contingencies.05 2 0.40 0. it too follows the follows Straight Line Method (SLM) of depreciation to value the fixed assets. Bureaucratic structure 0. Role clarity on the requirement of being an equipment supplier or a solution provider 2.45 Total 1 3 The score of 3 indicate that BHEL is above average in their overall internal strategic position.15 3 0. BHEL being a public sector company various processes for procurement and supplying are cumbersome and are subjected to auditing 3.Weakness 1. Financial Analysis The Company follows Straight Line Method (SLM) of depreciation to value the fixed assets. Dividend Per Share of BHEL & top 4 competitors .

30 25 Dividend Per Share(BHEL) 20 Dividend Per Share(L&T) 22 13 17 10.5 12.5 15 Dividend Per Share(Suzlon) Dividend Per Share(BGR ENERGY) Dividend Per Share(BEML) 5 10 0 1 2 3 4 5 X axis represents year from 2005 to 2009 Y axis represents rupees in crores BHEL is constantly paying dividends to its share holders and the closest to paying dividends is L&T. Operating Profit Margin (%) of BHEL & top 4 competitors .

An area of concern for BHEL. Gross Profit Margin (%) of BHEL & top 4 competitors 30 25 20 Gross Profit Margin(%)(L&T) 15 10 5 0 -5 -10 Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 Gross Profit Margin(%)(Suzlon) Operating Profit Margin(%)(BGR Energy) Operating Profit Margin(%)BEML) Gross Profit Margin(%)(BHEL) Y axis represents rupees in crores .30 25 Operating Profit Margin(%)(BHEL) 20 15 10 5 0 Mar '05 -5 -10 Mar '06 Mar '07 Mar '08 Mar '09 Operating Profit Margin(%)(L&T) Operating Profit Margin(%)(Suzlon) Operating Profit Margin(%)(BGR Energy) Operating Profit Margin(%)BEML) Y axis represents rupees in crores Operating Profit margin has decreased considerably in the last two years.BHEL should concentrate on using technology & methodology which can increase operational efficiency.

5 1 0. depending on the requirements of future projects. Inventory turnover ratio of BHEL & top 4 competitors 180 160 140 120 100 80 60 40 20 0 Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 Inventory Turnover Ratio(Suzlon) Inventory Turnover Ratio(BGR Energy) Inventory Turnover Ratio(BEML) Inventory Turnover Ratio(BHEL) Inventory Turnover Ratio(L&T) .5 0 Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 Debt Equity Ratio(L&T) Debt Equity Ratio(Suzlon) Debt Equity Ratio(BGR Energy) Debt Equity Ratio(BEML) Y axis represents rupees in crores Debt-Equity ratio for BHEL is one of the lowest in the industry.5 3 2.Gross Profit has decreased in the year 2008 & 2009.5 Debt Equity Ratio(BHEL) 2 1. Debt-Equity ratio of BHEL & top 4 competitors 3. One of the factors can be due to decrease in demand of Capital goods due to the economic slowdown in 2008.1. It is efficiently using its financial resources. indicating that it can again go for debts as and when required. In the year 2008 & 2009 it has decreased to 0.

which have high gestation period so it may take sometime to get returns. is due to the fact that BHEL project take turn key projects for completion . . Earning Per Share of BHEL & top 4 competitors 120 100 80 60 40 20 0 Mar '05 -20 Mar '06 Mar '07 Mar '08 Mar '09 Earnings Per Share(BHEL) Earnings Per Share(L&T) Earnings Per Share(Suzlon) Earnings Per Share(BGR Energy) Earnings Per Share(BEML) Y axis represents rupees in crores The recent decrease in earning per share in the years 2008 & 2009.Y axis represents rupees in crores BHEL is able to efficiently manage its inventory as its one of the lowest in the industry. EPS is highest for L&T.


y After the production of control equipment are made its under gone quality check and quality pass certificate is issued or the product returns for the rework. y The marketing departments of the units are responsible for the projects and surrender the work to the project management and commercials department. material management department arrange for the material through procurement or through the EDN manufacturer. .y The corporate marketing get the order and splits the work according to the functions of various units and to the marketing department of the respective unit. y After the list of components is prepared by the engineering department. y y The procured materials are under gone quality checks and surrendered to the stores. y After the product passes the quality check it goes to the system testing to check the working of the control equipments. y The project management and commercial department forms all the documentation and agreements with customer and L2 network schedule for the project and get the necessary approval from the customer. y y After the systems testing the products are inspected by the customers and approved. Once the control equipments are approved by the customer then the control equipments are packed and dispatched to the site. y The PMC Department also coordinates the project inside the factory through SAP ERP systems. The store maintains the inventory of all the materials and supplies the materials for the production of control equipments. y Then through ERP systems the engineering department view the project details and prepares the components list and specification of the components.

y Once the control panels are interconnected with other systems the power plant is ready for the operation. . illegal activity are carried out.y The erection commission department installs the control equipments as per the appropriate layout. vigilance and transport. factory service. WAN and computers to carry out the work more efficient. security. y HR department looks after the recruitment. y Vigilance department monitors the employees and give alarm and alert to the management before any unwanted and unethical. information systems and service. y The information systems and service department looks after the network connections like LAN. training. y To do the above function without interruption and delay there are some more departments like HR department. township. personnel management and public relation.

SWOT ANALYSIS Strengths Good corporate image & established Brand Name Complete range of products for transmission and distribution Strong relationship with NTPC is a strength as NTPC is planning a capacity expansion of Rs. Early birds to learn faster and thus achieve repeat orders Demand for power and hence plant equipment is expected to grow . The company also enjoys purchase price preference. 52 bn and based on the past. Inability to provide supplier¶s credit. Formation of business groups & tie-ups for joint bidding. Ageing power plants would give rise to more spares and services business. which may lead to redundant costs and also rising costs. Private goals that lead to budget growth and employment growth. ii. Displacement of social objectives by political objectives. Internal inefficiencies in bureaucratic activity Larger delivery cycles in comparison with international suppliers of similar equipment. Opportunities BHEL has huge investments opportunities in infrastructure by governments & large organizations leading to greater demand of goods & services. 85% of NTPC projects have been bagged by BHEL. soft loans and financing of power projects Non productive working environment and increased of private sector participation. iii. Increase in demand (part of economic recovery process) leading to industry operating at full capacity. iv. Direct political intervention in managerial decision over an arm length relationship that would restrict government¶s task of setting appropriate managerial incentive structure. Being a public sector company BHEL is suffering from sub optimality of control due to: i. Considered to be having design ability Weaknesses The procurement process in the company is cumbersome and subject to auditing Low exposure to the needs and dynamics of distribution business Role clarity on the requirement of being an equipment supplier or a solution provider Acceptance of customers to execute low value high volumes jobs.

Emergence of new players in the market and old players becoming strong and eating away a part of the market share Political pulls and pressures may jeopardize the whole process. Strategies to improve the weakness Improve the speed and quality of purchases as the competition in this range is with small contractors To create channel partners rather than operate as individual companies Strengths opportunities (SO) strategies Increase market share aggressively Present a better way of performing the jobs in tune with the established brand name To address the demand in all the parts of nation to gain wide spread experience and exploit the opportunities To offer design solutions to the customers Invest money in the process to have financial advantage Weakness opportunities (WO) strategies Improve procurement cycle and reduce the process difficulties . Threats BHEL has number of small contractors leading to price wars & loss of business. Strategies to capitalize the strengths Having a good brand image and product portfolio. raising alarm about the privatization and being anti-people Increased threats from Chinese manufacturers. they should aggressively defend and increase the market share. Improve internal efficiency and productivity of the employees of BHEL.Increased external commercial borrowings opportunities leading to better payment options.

Execute pilot projects to gain experiences and minimize risks Strengths Threats (ST) strategies To increase lobbying with the government to prevent extension of purchases preference and maintaining level playing field in the segment. Weakness Threats (WT) strategies Reduce costs to increase margins To train manpower to counter the threats of enhanced competition and to execute the job efficiently BHEL in order to get considerable and profitable share in the increasing competitive market. To check the emergence of new players and be well prepared to counter them To be cautious in the event of change of the government and the process of reforms falling off the track. Price Competitiveness Brand building exercise.To gain customers confidence in the distribution business also The above can be achieved through Increased level of public relations with the customer through dedicated marketing and sales team. need greater emphasis on the following areas Increasing market share aim to increase penetration. .

5. Industries: Petrochemicals 4. Cement etc. Transmission 3. Power 2. Refineries. Non-Conventional energies 7. Transportation Power sector: BHEL is the topmost producer of boilers with two third market share and even turbines and generators are manufactured making them the market leader. . These sectors are as follows: 1. Oil and Gas 6.BCG MATRIX BHEL has its contribution are 6 sectors.

But the growth of cement sector has dropped to 10. Thus these are the question mark products of BHEL and should be invested upon more to bring it to star position. Hence. Thus with a high market share and high growth this is a star SBU for BHEL and it should reap upon the most on it. It should invest more in technology to sustain competition in this sector and saving it from becoming a dog product. The refineries SBU takes a good share of the market and it is growing rapidly in India at 62% which accounts to a high growth.Transmission sector: The transmission sector comes under the industry segment which caters to 22% of BHEL¶s industry segment. It consists of gas insulated substation SBU and transformation SBU which holds a good market share and the growth in this sector is much more than power sector which is 40% y-o-y. Refineries and cement sector: The cement sector does not have any individual player who accounts for more than 12% of market share. . BHEL with a small market share in a slow growth market is a dog SBU.43%.

BHEL has lost significant market share.Oil and Gas sector: The oil and gas sector is growing by 45% in which the major contribution is of gas sector. The BCG matrix can be presented as follows: . But due to cheap and technologically better equipments supply from international level. Due to the high growth market and decreasing market share it is a question mark product now and BHEL should decide fast whether to invest more and improvise market share or divest from this sector. Since BHEL is one of the oldest producers of drilling equipments it has a good market share in its supply.

But due to many producers of equipments and foreign competition BHEL has not succeeded to secure a high market share. In fact all producers hold more or less similar market share. Thus it¶s a highly growing market. .Non conventional energies: The renewable energy sector especially wind energy is seeing a massive growth y-o-y. Thus this is on the verge of becoming a star product for BHEL. But due to the overseas expansions of BHEL it has a high market share in this sector.

Bharat Heavy Electricals Ltd (BHEL) has secured diamond. Analysis: -The above point is listed as an opportunity in SWOT analysis as huge investments by governments in infrastructure. which may affect this arrangement. Strategy2:-BHEL to acquire Czech power plant Analysis: .280 MW for various nuclear power plants. cobalt and iron ore mines in the Democratic Republic of Congo. Bhel has also been looking at Romanian and Chinese companies. Strategy3:.Listed in SWOT analysis formation of joint ventures. which finally bought the firm. Also it will help BHEL understand its market standing globally. But in Africa it has got a bigger order that of EPC (engineering. turbines etc. It is also leveraging India¶s relation with Africa and enhancing diplomatic relation. It may be difficult for the arrangement to work out so BHEL should look orders from other politically stable countries.BHEL to compete with overseas vendors for equipment supply orders for nuclear power projects Analysis:-BHEL has credibility and has supplied state-of-the-art power generating equipment of various ratings corresponding to nearly 3. procurement. This is a good strategy as it will help BHEL get orders from outside and not depend only on Indian firms like NTPC. BHEL and NPCIL have also recently signed a memorandum of understanding to form a joint venture (JV). In India BHEL is able to get orders for supply of equipments like boilers.Analysis of major strategies Strategy1:-BHEL has decided to enter into continent of Africa.Listed in SWOT analysis formation of joint ventures. BHEL is trying by way of M&A to get the technology for large turn key projects and market access to unexplored areas. Startegy4:-BHEL partnership with NPCIL Analysis:. Aimed at synergizing the strengths of the two companies. and construction) contract. BHEL failed in acquiring Czech power plant equipment-maker Skoda Power because its bid was around 10% lower than Doosan Heavy Industries and Construction. BHEL has been a major partner in NPCIL's vision to achieve self-reliance in nuclear energy and its association with NPCIL began in 1970 with the development of technology and manufacture of prototype channel covers and heavy water heaters. The JV will carry out EPC activities for nuclear power plants both within the country and outside on mutually beneficial terms. Although there are political uncertainties in countries such as Congo. .

It¶s good on part of BHEL as it will help in monitoring vendors. The system would help in taking quicker decisions Strategy8:. Time Management. The system will motivate them to perform better. This non availability of raw materials is adversely affecting BHEL & putting a question mark in building equipments for power plants like reactors. Although NPCIL will eat some of the profit but it¶s necessary as then they can capture market as both are experts in their respective areas as illustrated when they jointly developed turbine generator sets and steam generators at Tarapur. It is aimed at aimed at fulfilling the long-felt need to synergize and integrate human resource function across the organization to leverage maximum benefits. Manager Self Service and Product Development based on SAP model in the Power Sector Southern Region.Bharat Heavy Electronics Limited (BHEL) is facing difficulties in securing timely supply of basic raw materials for its manufacturing units and its supply commitments for power projects envisaged for commissioning in the Eleventh Five-year Plan. BHEL can develop technology so that it can enter into supplying of equipments to defense. Travel Management. Besides reaching out to internal customers for their requirements on real-time basis.BHEL units plan to re-enter defense business Analysis:-Defense is one of the areas where government allocates large chunk of it¶s money. and the Tiruchi unit. According to the system a vendor who performs well in a month will get further orders. As BHEL's outsourcing target keeps increasing to reach 7. Bharat Heavy Electricals Limited (BHEL) has taken up on pilot basis the Release II of HR systems for Payroll.BHEL nuclear expertise Analysis:. sub-contractors will have to inevitably expand their capacities through technology up gradation.It will help in the development of BHEL as an indigenous source capable of designing and manufacturing steam turbine generator sets of these ratings to meet the needs of various nuclear projects proposed to be set up in the country in the future. Chennai. Strategy5:. they would also play an increasing role as strategic partner in business.5 lakh tonnes in 2010-11 and 10 lakh tonnes in 2011-12.Listed in SWOT analysis as a weakness that working environment in BHEL is non productive. BHEL should build suppliers relations well. Employee Self Service. . Strategy7:-Time-saving HR systems in BHEL Analysis: . BHEL should concentrate on less number of suppliers and long term relationships (like Toyota). It will help augment productivity of BHEL. Strategy6:-BHEL puts in place system of performance-based loading Analysis:-Listed in SWOT analysis as a threat number of small contractors leading to price wars and loss of business.

y y This section act as one of the feeder lines the main assembly of control equipments.The R&D efforts have made significant contributions to almost all areas of operation of BHEL. manage and share content.Vendor development Analysis:. The total time consumed for one board manufacturing is 3minites. Integrate Search & document management with every day tools. Create a division portal website. Bidding for international and national power project. y Direct Ignition of Pulverized Coal (DIPC). procuring. The six sigma was first implemented in the year 2002 and today it has attained the sigma level of 5.It is a good strategy and save cost of integration & deployment time. It will help improve the intra. y Ceramic liners for abrasion resistance application in thermal power plants.Research and Development Strategy Analysis:. . Six sigma implementation in PCB sub assembly section y PCB sub assembly section manufactures power control board (modules) for control equipments. Startegy10:.team collaboration.Startegy9:-Implementation of Share point portal Analysis: . Production line y In production line the raw board is feeded at one end and the finished module is received at one end.44. integrating all system and delivering a complete project to the customer within a stipulated timeframes will become easy. Startegy11:.create.Microsoft internet Explorer & Microsoft office application to help . a few among them are: y Atmospheric Bubbling fluidized bed Combustion (FBC) boiler up to 100 tones/hr.Vendor development of 200 vendor @ Hardwar is conducted which helps in improving relation between BHEL and vendors.

y According to the study they have formerd a list of problems causing defects in the production line. connection testing by optical methods. y It has intracted with the operators about the difficulties faced and studied the defected components to understand where the problem lies in the production line. Applying Soldering paste Micro feeder medium feeder large feeder oven connectio n testing by optical x-ray testing manual mounting of capacitors Pathway Of Quality Service Department y The quality service department has completely studied the proces that were taking place in the production line. X-ray testing. manual capacitor mounting. oven.y In the manufacturing of modules the various function involved are applying of soldering paste. feeder of components. y Some of the most affecting problems in the production line are o Viscosity of soldering paste o Spreaing of soldering paste o Pick and place problem of components in the modules o Faulty components . y The quality service epartment has follwed the DMAIC principle to implement the six sigma.

y To stop the spreading of soldering paste it has introduced laser cut stencil for applying the solerin paste. y To monitor and understand the changes made a quality service team member were appointed in deputation till the growth in the sigma level is achieved. y To avoid the faulty components the vendors were asked to supply for uniform pin heights and accoring to strict quality norms and the goods are accepted only after the detailed inspection. Six sigma achievement . y To place the capcitors in the modules by mannualy the fixtures were made for the easy mounting of capacitors on the modules.o Drying of modules o Placing of capacitors y To solve the above problems the qualitydepartment has taken efforts to like finding the correct viscosity for avoiding the short circuit of the modules when it is energized. y The drying of modules are done by gradual process by heating the modules gradualy and cooling it gradulay for the proper drying of soldering paste and avoid the short circuit of moules. y To stop the pick and place problem QS has introduced the special feeder for the components.And also in to increas the speed and reduce the mismatching of pins the components in are splited according to the size of the componets and three feeder were introduced as shown in the above figure.


Hence there is limited scope for growth in the order book in the future. BHEL enjoys 54% share in the XI plan power orders and order book size of 1. joint ventures with state electricity boards. 43. BHEL enjoys high EBITDA margins (16. competitive pressures and higher import content in the proportion of supercritical orders will reduce margins in the financial year 2011.5 times of its closest competitor.Factors affecting the projected financials: y A dominant position. It is debt free with a debt equity ratio of 0.012 in the financial year 2009. wide product portfolio and strong relationship with government agencies make BHEL gain advantage over the competitors with aggressive power capacity addition targets set for the XI and XII five year plans.800 crore in the financial year 2010 and thereby the company has strong sales visibility in the coming years. BHEL order book will peak in the financial year 2011 since 45% of XII plan power equipment orders have been already placed (54% share of BHEL). Rise of commodity prices. New orders are expected to slow down in the coming years since 45% of XII plan orders have already been placed. BHEL is the preferred supplier of power equipment for government projects but its share in the private sector is low. L&T. BHEL enjoys substantial economies of scale with a manufacturing capacity that is 2.5% for L&T). y y y y y y y y y y y . BHEL is well positioned to bag supercritical orders due to its technological partnerships.1% in financial year 2009 and 11. Robust growth revenues due to enhanced execution capabilities (capacity increased by 50% during 2008-2010 to 15 GW). Dominant industry status (63% of the installed capacity in the financial year 2009).

Industrial segment revenue to increase in the future years(transmission. Recently BHEL secured the largest order to date from Indian Railways (990 crore) to manufacture 150 electric locomotives. timely deliveries) Slow execution rate by BHEL may result in lower new order growth Deregulation may lead to lower order flows Margin contraction due to higher commodity prices Currency appreciation may lead to preference for imported equipment y y y y y y .TURNOVER OF 27% CAGR: CAPACITY ADDITION: y y y Robust growth in power demand leading to more order inflows for BHEL. renewable and nuclear energy) y RISKS AND CONCERNS: y L&T. strongest domestic threat to BHEL. transport. Increased price competitiveness in the future leading to market share loss. High private sector participation. plans to increase its production capacity to 6GW. superior quality. Low cost Chinese manufacturers (No import duty on Chinese goods.

STRATEGIES: TECHNOLOGICAL STRATEGIES: y Upgrading its product engineering and manufacturing technology base by induction of state of the art technologies. oil) Prepare the organization for competition through quality.procurement) Have suitable product capabilities including manufacturing capacities and technologies Long term rate contracts(copper. steel. Upgrading equipment and facilities to maintain quality leadership y FUNCTIONAL LEVEL STRATEGIES: y y Focusing on initiatives such as design to cost. transformer. low cost operations and efficiencies Assess and build enabling HRM & Financial Management y y y y BUSINESS LEVEL STRATEGIES: y y y Vendor base expansion Outsourcing(low technology. low core manufacturing) Plans to go big in defense orders. GLOBAL STRATEGIES: y Identify potential future growth drivers in domestic and international market segments(non renewable energy) . e. lean manufacturing Purchase and supply chain management initiatives through leveraging IT(negotiations through reverse auctions.

government interference is more. It is one of the top five organizations in the employee satisfaction. There are no much exports of products in Middle East. bringing it on the threshold of becoming on world-class player in the international arena. Age factor of the employees. as one of the ³NAVRATNA´ Public Sector Undertakings by the Government of India. It was really worth doing in this company as this study of the organization. But the company¶s policies and procedures should be updated and all its weaknesses and threats should also be resolved by having the aggressive and dynamic managers into the top. other business in the company campus. . CONCLUSION Bharat Heavy Electricals Limited is one of the India most dynamic and successful company which has already attained ISO9000 certification for the Quality Management and ISO14001 Certification for the environment Management. Bangladesh.FINDINGS The major findings from the study of the organization are as follows: y y y y y y y y y y y y As it is a public sector company. There is no good relation between and the management. Not spending more money on Research and Development. has raised my knowledge about the various functions of the various departments and also to know how the organization study will helps a lot to a student to know how the organizations should be and how all the department functions and also to know what type of various major Weaknesses and Threats arises in the company. and poor accountability. So that does not leave to take some decisions. There is a slow pace of development. Huge salary bill for the employees and poor accountability. Africa and some other nations. southeast. Technology is mainly depended on the collaborators. There is an enormous paper work in the company. Extracurricular activities are more among the employees like sports. BHEL has been crowned. The policies and procedures of the company are very out dated. There are a stringent rules and regulations. etc.

Sign up to vote on this title
UsefulNot useful