Advance Management

Program
In
HRDI Noida & IIM - L
 Subjects in AMP
1. Managing the corporate paradigm  Dr P Singh
2. BHEL’s vision, issues and challenges  CMD
3. Financing Power projects  B Bhambani
4. Issues and challenges of  TL Palani
manufacturing in 21st century Kumar
5. BHEL’s strategies and growth plan  VP Singh
6. SWOT analysis of BHEL  Syndicate
7. Board of directors in 21st century  R Singh
8. Managing growth  A Chaturvedi
9. Financial statements  Dr Vipul
10. Developing Entrepreneurial thinking  Dr Akbar
11. Developing Cost leadership  Chakrovorty
12. Re-inventing an organization  AK Jain
 Subjects in AMP contd..
1. Managing the corporate paradigm  Dr. P Singh
2. Application of Internet technology in  Dr. Bhasker
Organisation
3. Electronic Commerce for Internal & Dr. Bhasker
External Customerisation
4. Evolving Competetive Excellence  Dr.Srivastav
through Value Chain
5. IT Solutions for value Chain  Dr.Srivastav
Management
6. e-Sourcing GE Practices  Shri A.K.Puri
 2. BHEL’s Vision, Issues and challenges
- KG Ramachandran CMD
Defined vision (1996) is to emerge as a :
WORLD CLASS
INNOVATIVE
COMPETITIVE
PROFITABLE
engineering enterprise providing total business solutions

- Big transformation from a historically mandated profit-

centric, function-oriented, inward looking organization to a
customer-centric, market oriented, outward looking
organization
 3. Financing Power projects
Power sector business objectives
•To maintain leadership as a supplier of power generating
equipment in the domestic power sector
• To secure maximum share from state/central sector projects
proposed for capacity addition during 9th and 10th plans
• To meet greater expectations of the customers in delivery
periods, improved technology, better quality and service after
sales etc.
• To quickly develop EPC capability to maximize business from
IPPs
• Enhancing project management capabilities through
Information Technology
 Emerging market needs
• State of the art technology
• Integrated gasification combined cycle (IGCC)
• Projects based on vacuum residue / pet coke
• Guaranteed availability of the plant
• Shorter project completion schedules
 500 MW 39-42 months
 210 MW 33-39 months
 GT OPEN CYCLE
Up to 200 MW 12-14 months
Above 200 MW 14-18 months
COMIBNED CYCLE
18-20 months & 18-24 months
 Ministry of Power projections
• 9TH PLAN (ORIGINAL) 40,245 MW
• Now envisaged 28,097 MW
• 10TH plan 65,000 MW
• Composition of 9TH Plan (40,245 MW)
 Central sector 11,909 MW
 State sector 10,748 MW
 Private sector * 7,588 MW
Ordering status as on 20.11.1999

BHEL Non BHEL IPPs Yet to be ordered

Thermal 9390 75 10593 4368
Hydro, Fuel etc 3332 5478 600 6409
Total 12722 5553 11193 10777
 Current business strategies
• Continues to compete and get domestic business
• Equipment supply on deferred credit basis
• Arranging / Syndicating financial packages
• As a part of efforts to match multi-nationals on financial
package to bid for projects, BHEL has secured credit lines
amounting to Rs. 1700 crore as per the details given below
Financial Institution Amount (Rs. Crore)
ICICI 500
IDBI 1000
IFCI 200
TOTAL 1700
 Strategic Initiatives
• Existing turnkey capability to be augmented to EPC capability
to secure orders from IPPs
• To take up equity in selected IPP projects to ensure order for
supply of generating equipment
• Price competitiveness to be a continuous effort
• Delivery schedules at par with those of International
competitors
• To secure maximum orders from state / central sector as well
as muti laterally financed projects
• Taking up projects on consortium basis with partners on scope
sharing basis
• Financing packages facilitated / being facilitated for various
power projects from FIs / banks
• Focus on business in areas like R & M, up gradation, life
extension of generating sets through joint JVs etc.
 Assistance from FIs to Power sector
• Selection of projects for assistance based on :
• State-wise demand – supply gap
• Escrow able capacity of SEBs
• Degree of progress in the process of reforms of SEBs
• Major beneficiaries of the proposed assistance :
• Central power utilities – NTPC, NHPC
• State electricity boards – SEBs
• Independent Power Promoters – IPPs
• Banks may prefer to lend a good amount to NTPC & NHPC because of
their good track record
• Banks may also consider lending to SEBs as part of social obligation
• Three tier safety net for dues recovery
1) Irrecoverable, renewable and revolving LC
2) Escrow able arrangement
3) State govt. guarantee
4. Issues and challenges for manufacturing
in 21st Century
8 imperatives for 21st century manufacturing :
• Integration
• Flexibility
• Collaboration
• Speed of response
• Costs
• Knowledge management
• I.T. as enabler
• People & skills
 SWOT analysis of Indian manufacturing
Strengths
• Skilled, low cost manpower
• Large pool of scientists, engineers
• Extensive mineral and raw material
resources
• Well developed business and
commercial networks
• Large domestic market
• Competitive private / consumer
sector
Oppurtunities
• Liberalization / privatization
• High GDP growth
• Export orientation
• English and rapidly growing net –
economy
• Global Indian Diaspora
Weakness
• Low productivity and inconsistent
quality
• Lack of team spirit and synergy
• Fragmented capacities, not
modernized
• High landed costs of inputs
• Poor infrastructure
• Poor brand image
• Inefficient goods sector
Threats
• Slow moving bureaucracy and trade
regulation
• High fiscal deficit / low public
investment
• China / S E Asia more competitive
• Poor networking and weakening
nationalization
 5. BHEL’s strategies and growth plans
• Sixties : Learning phase
• Seventies : Consolidation & Integration
• Eighties : Market Orientation
• Nineties : Innovation & Business solutions

Characteristics of BHEL products

• All products of BHEL face competition
• Capital goods in nature, dependent upon the
growth of C.G. / B.G. sector
• Custom designed / tailor made. Only after
receipt of order is the design manufacturing done
 Macro Environment
• Sluggish growth of infrastructure, particularly in Power
sector resulting in demand contraction & under utilization
of capacities
• World wide consolidation & restructuring of Electrical
equipment industry
• Indian capital goods Industry bears high cost of capital,
infrastructural constraints and local taxes
• Non-availability of inputs at international prices to face
competition
• Deteriorating health of SEBs is affecting Electrical
equipment Industry resulting in low orders & large
outstanding
• Customs duty on imports reduced
• Zero customs duty in WB / ADB projects
• SAD not levied in all cases of import
 New products / diversification plans
• Advance Class Gas turbine
• Once through boiler
• Fabric filter
• 3-phase Traction electric
• Electrical multiple units
• Mass rapid urban transportation
• Gas insulated switch gear
• Port handling equipment
• Entry into power generation
• Coal washeries
• Ash handling
• Pollution control & water purification
 Overview of BHEL’s potential growth
• Power equipment
• Industry
Core • Transmission
• Transportation

• Defense
• NCES
Potential • process industries
• Transmission & distribution
growth Related • EPC
areas • Services
• Telecom
• Infrastructure

• IT
New • Advance communication system
Economy • Remote services
 6. SWOT analysis of BHEL
• Overall business scenario and trends
• BHEL’s strengths
• BHEL’s weakness
• BHEL’s opportunities
• BHEL’s threats
 Overall Business Scenario & Trends
• GDP Growth >=6% & Industrial Growth 7- 8% Expected
Annually
• Indian economy Expanding & Opening up
• 120,000 MW Capacity Addition by 2012
• Excess Power Plant Manufacturing Capacity Worldwide
• Emergence of Stronger Global Players through Mergers and
China
• Customer Preference for EPC/Turnkey Contracts
• Requirement of Financing Packages
• Ready & Cheaper Availability of International Financing
• Restructuring/Privatization of SEB’s & Setting Up of Electricity
Regulatory Commissions.
• Aging Thermal / Hydel Sets in India & Abroad
• Customer Preference for O & M Services
• Nuclear Power-20,000 MW by 2010
• Increase in Hydel Power Capacity for Peaking
Overall Business Scenario & Trends (Contd.)
• Expanding Market for GT/CC Plants
• Imminent Introduction of High Efficiency, Super-critical Thermal Plants
(660 MW above)
• T & D Market arising from Expansion of National Grid
• Introduction of MRTS in Major Cities
• Technological Up gradation in Railways
• Introduction of Inland Water Transportation
• Boom expected in Demand for Industrial Equipment / Drives / Controls
by Sugar/Paper/Petrochemical Industries
• Stricter Environmental Control Norms
• Accent on N.C.E.S. & of New Sources of Energy
• Increased Defense Outlay for Advanced & Sophisticated
Equipment/Systems
• Boom in IT Business
• Expansion in Healthcare Business (Medical Electronics)
Overall Business Scenario & Trends (Contd.)
• Demand for Coal Gasification
• Extensive Application of Biotechnology
• Use of Super-conductivity Technology
• Export Markets esp. in Middle East, South East, Bangladesh &
Africa
• Energy Management in Expanding Transmission Sector
• Reduction in Import Duties to Comply with WTO Guidelines
• Dis-investment of PSU’s
• Enforcement of Laws relating to patents & Intellectual Property
Rights
• LNG Emerging as an Energy Source
• Thrust in Infrastructure Sectors
 BHEL’s strengths
• Zero Debt & Cash Rich Company
• Knowledge of Indian Market
• Country-wide Network
• Pool of Trained,Skilled & Committed Manpower
• Installation & Service Capability with State of Art Equipment
• Well Established R&D and Training Facilities
• Growth in Order Book in Power Sector despite Recession
• Navaratna Company with Excellent Work & IR Environment
• Recognition in Export Market
• Wide Ranging Manufacturing Infrastructure including in-house
Foundry/Forge Plant
• Established Total Engineering Capability
• Availability of CFBC & High Efficiency Super-critical
Technologies
• Availability of Advanced Class GT Technology
 BHEL’s weakness
• Aging Manpower
• Inadequate Speed of Response
• Lack of Focus in R&D
• Low Productivity
• Ineffective/Inadequate Project Management
• Non-adherence to Contract Schedules
• Lack of Complete Autonomy
• Aging Manufacturing Facilities
• High Cost of Rework (Poor Quality)
• Resistance to Change
• Focus on “Product” Not “Project”
• In-adequate Indigenisation in Gas Turbines
• Lack of Awareness of Strategic Plans
• In-adequate Organisation Structure to meet Business Requirements
• Weak System Engineering in Transmission/Transportation
 BHEL’s weakness (contd…)
• Financial Packages not as Attractive as that Offered by MNC’s
• In-capability in Handling EPC Contracts
• In-adequate Civil Set-up to Handle Large Turnkey Jobs
• Delays in Closure of Contracts
• Vendors are not “Partners”
• HRM Policies not keeping pace with Changing Trends
• Large Sundry Debtors
• Low Attention to Spares
• Low Utilization of On-line IT
• Un-realistic Estimation in Certain Ares
• Inadequate Marketing Intelligence/Competence
• Persistent Quality Problems
• Lack of Accountability
 BHEL’s oppurtunities
• Expanding Indian Power Market 120,000 MW by 2012
• Customers looking for EPC/Turnkey Capability
• Usage of International Financing
• R&M Market including System Services
• Increase Volume of Hydel Business
• Develop as an O&M and Trouble shooting Service Provider
• Cater to Meet Nuclear Power Plant Requirements
• R&M of Power Plants (Thermal & Hydel)
• O&M of Power Utilities
• Tap Increasing Market for GT & CC Power Plants
• Market for High Efficiency, Supercritical & Environmental Friendly
Technology based Power Plants
• Increased Volume in T&D Business
• Develop as a Total System Supplier for MRTS & Inland Water
Transportation Projects
• Providing Total Service to C0-gen. & Captive Power Plant Needs
of Industry
 BHEL’s oppurtunities (contd..)
• Enter into Power Generation Business
• Increase Market Share in Pollution Control Systems
• Improve Competence to Meet N.C.E.S.Needs
• Tap the Market for Defense Equipment/Systems
• Diversification into Coal Gasification,Medical Electronics & Bio-
technology Applications
• Gainful Usage of Emerging Technologies of Superconductivity
• Enter IT Business Increase Export Share in Middle East,South East,
Bangladesh & Africa
• Gain Entry into Infrastructure Business
• Participate in Up gradation Program of Indian Railways
• Potential Business in LNG Storage & Distribution
• Potential Business in Coal Washeries, Water Treatment Plants
• Refurbishment of Compressors
• Remote Metering Systems for Energy,Water,Gas etc.
• Strategic Acquisition & Mergers
 BHEL’s threats
• Entry of MNC’s into Indian Market, especially China
• Customer Preference for Latest/Superior Technology
• Surplus Manufacturing Capacity in the World resulting in
Shorter Deliveries
• Amalgamation of Competitors leading to Fewer Global Players
• Changing Customs/Import Duty Structure for Raw Materials &
Equipment
• Outdated Labour Laws
• WTO Stipulations on Environment & Labour
• Outflow of skilled / knowledge man power to competitors
companies
 7. The board of directors in the 21st century
• The technologies that will influence business are IT, telecom,
robots, e-commerce, m-commerce, environment pollution
control, bio-technology.
• Each business will be global, highly competitive, prices will
be available in the Internet
• Organisations will be either very large or very small. There
would be unthinkable acquisitions / mergers / alliances
• Customers will dictate the price, quality, delivery, speed of
response, latest technology (of his liking / choice)
• Old ideas & old ways of doing business will have to be shed.
Organisations will have to unlearn and re-learn new ways. If
they don’t they will be taken over or will perish
• Knowledge workers will look for contract employment.
Neither individuals nor companies want long term employment
• Need for : Profit oriented planning; Customer focus; Setting
difficult benchmarks; Ethics in business; Innovative HRM
policies; Becoming trend setters; Concern for employees
 8. Managing global competition
• The increasing irrelevance of ‘comparative cost advantages’
• A fundamental planning reorientation is necessary for
successful globalisation
• Make the product price inelastic ( Q/P < 1 )
• Frame work for classification of Global industry
Height of Industry Mobility barriers

Sources of Fragmented Specialized

Differentiation
Stalemate Volume

• Creating niches is very in fragmented industries

• No company in any industry can afford to develop a
mind set, it has to look in a direction closest to the
customer and be very wary of technological innovations
any where in the world
 9. Flow of assets and liabilities
Liabilities Assets
Dividend / Interest /
repayment Purchase • Raw materials
• Fixed assets
Liabilities • Services
• Owners
• lenders CASH

Process
• Suppliers
• Others Lenders & Suppliers /
Owners Vendors

Employees • Finished goods

/ others & services
 10. Developing Entrepreneurial thinking
• What is Intrapreneurship ?
– The process of profitably creating innovations within an
organization setting.
• In creating climate for in-house entrepreneurial ways four climate
characteristics must be developed
– Explicit goals
– System of feedback
– Emphasis on individual responsibility
– Rewards based on results
Traditional manager Intrepreneur
• Wants promotion and corporate • Goal oriented and self motivated,
rewards but also responds to rewards
• Delegates action • Gets hands dirty
• Attention primarily on events inside • Both inside and outside Corporation
corporation • Likes moderate risk
• Cautious • Creates needs
• Discovers needs • Treasure symbols of freedom
• Cares about status symbol • Adept at getting others to agree
• Agrees with those in power private vision
• Pleases others • Pleases self, customers and sponsors
Thank you