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BHEL- Diversify into IT Sector
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BHEL – Leverage itself to diversity into
New economy sector of IT
By K G Ramachandran,Chairman & Managing Director,Bharat Heavy Electricals Ltd.
 

Bharat Heavy Electricals Limited (BHEL) has completed yet another successful year in 1999-2000, despite operating in a highly competitive environment and subdued industrial climate in the country which witnessed declining trend in the sale price of products. Major highlights of performance during the year 1999-2000 are summarised below:

-Profit after Tax Rs.5994 million, up by 10.06%
-Turnover Rs.66340 million, decline marginally by 2.37%
-Net Worth Rs.33578 million up by 8.93%.
-Nav per Share Rs 137.2 up by 8.93%
Orders inflow during 1999-2000 stood at Rs.72210 million taking the total outstanding order book at the end of March, 2000 to over Rs.105,000 million available for execution in 2000-2001 and beyond.
ORDERS INFLOW
Power Sector
  • BHEL continued to demonstrate its competitiveness by bagging most of the power plant orders  placed during the year under open International Competitive Bidding in the country. Orders  worth Rs 4008 Crore were booked as against Rs.3281 Crore booked last year.
  • Notable orders booked, including those against International Competitive Bidding (ICB), are :
  • Ø   Talcher STPS (4x500 MW) of NTPC - the single largest thermal power plant equipment order
        ever on BHEL.
    Ø   Suratgarh TPS Stage II (2x250 MW) of RSEB.
    Ø  Tala HEP (6x170 MW) - highest rating (Pelton type turbines) hydro order for the largest
        hydroelectric project of Bhutan.
    Ø  Malana HEP (2x43 MW) of the Bhilwara Group.
    Ø   Kopili HEP Stage II (1x25 MW) of NEEPCO.
    Ø  Turnkey order for refurbishment of Korba TPS (2x120 MW) of MPEB.
    Industry Sector
  •  Despite subdued market conditions and severe competition, the Industry Sector booked orders worth Rs.2503 Crore, as against Rs.2304 Crore booked last year. Sustained focus on customer response and project management resulted in BHEL retaining an overall success rate of over 60%.
  • Significant orders booked against intense competitive bidding include :
  • Ø  Entry into new business area of Mounded Vessels for LPG storage - orders already bagged from IOC for facilities at Vizag, Ajmer and Delhi.
    Ø  7th consecutive order for 120 MW captive power plant from NALCO for Angul expansion - a measure of customer's confidence in BHEL.
    Ø  Retained market leadership of over 80% for Centrifugal Compressors with major orders from IOC Haldia and GAIL Vijaipur and Gandhar.
    Ø  Country's largest AFBC Boilers of 2x165 Tonnes/Hour capacity and 55 MW STG, from Jindal Steel & Power Ltd., Raigarh (M P).
    Ø  BHEL joined the national endeavour to promote non-conventional fuels and secured orders for Steam Turbine Generators from 5 sugar and 4 bio-mass projects.
    Ø  Thrust on motor business with overseas pump and compressor manufacturers - repeat orders from Ingersoll Dresser Pumps, UK and Austria. Over 70% market share retained in the domestic market for AC and DC Electrical Machines.
    Ø Leadership in the field of Ceramic Technology established with an order for 4 lakh Disc Insulators for + 500 kV HVDC application from PGCIL, following successful type testing at CESI, Italy.
    Ø Japan Bank for International Cooperation (JBIC) funded order for supply, erection and commissioning of three clear water pumping stations from Bangalore Water Supply and Sewerage Board.
    Ø Maintained leadership in 400 kV substations with two turnkey orders for KEB (Talaguppa)and PGCIL (Allahabad).
    Ø 4 nos. highest rating (306 MVA) Generator Trans- formers order for hydro power projects from 1000 MW Tehri HEP.
    Ø Market leadership of over 90% in Wellheads and X-mas Tree equipment with orders from ONGC and  OIL.
    Ø Other major orders include: large size 500 TPD Chemical Recovery Boiler from West Coast Paper Mills; 400/220/132 kV switchyards from WBSEB; largest ever order from DoT for switching equipment totalling 2.53 lakh lines.
    Ø As a contribution towards national effort for effective metering of power, BHEL has taken up production of tamper-proof electronic energy meters developed in-house and has secured orders from customers like MSEB.
    •  First 800 HP Diesel Hydraulic shunting Loco was developed and supplied to IFFCO, Kandla, during the year.
    INTERNATIONAL BUSINESS
  •  Continuing the momentum gained in overseas business, the company achieved a quantum jump in physical exports, recording the highest ever export order inflow of Rs.703 Crore as against  Rs.250 Crore of last year - an increase of 181%. This performance has been achieved while  operating in a highly competitive internatio- nal market witnessing structural changes and  consolidation of major power equipment manufacturing companies.
  • During the year, BHEL secured orders for four prestigious gas-based and hydro projects, each  one of which signifies a major step forward.
  • Ø First ever export order for a Frame-9 Gas Turbine based power plant of 124 MW ISO rating on  turnkey basis from Ministry of Electricity & Water, Government of Oman. The order is significant as it not only firmly established BHEL in Oman but also marked the entry of BHEL in the setting up of large size gas turbine based power plants abroad on turnkey basis, so far the forte of a few companies from the developed world. This is the fourth successive power plant order secured by BHEL since its entry into Oman four years back.
    Ø The largest ever export order was secured for the supply of 2 nos. Gas Turbine Generating Units (159 MW ISO rating each) and auxiliaries. The order, received from General Company for Electrical Projects (GCEP), Iraq, under the Oil for Food programme shall, however, be executed on receipt of UN clearance.
    Ø BHEL achieved a major breakthrough in Bangla- desh, with an order for a 124 MW ISO rated Power Plant order at Baghabari. This was the second consecutive order for a Frame-9 Gas Turbine based project during the year and is a significant step forward for BHEL's plan to expand and consolidate its base in the Bangladesh market.
    Ø BHEL made a foray in the Central Asian region by bagging the first ever export order from Azerbaijan. The order for a 78.2 MVA Hydro Generator package for the EBRD-funded Mingechaur HEP was won against stiff competition not only from reputed international companies but also from well-entrenched local companies.
  •  Continued focus on product and services export led to notable successes during the year, including orders for Transformers from Azerbaijan and Greece; Shunt Reactors from Greece; Spares and services from Oman, Malaysia, Malta, Libya and Cyprus; Insulators from UK, Nepal, Malaysia, Saudi Arabia and France; Valves from USA and Japan; Load gear boxes for Gas Turbines from France and Electrics,including Motors, Controls and Power distribution system for a cold rolling mill from Bangladesh.
  • As a result of thrust on the after -market service business in overseas markets, BHEL completed rehabilitation work for 50 MW Boiler at Siddhirganj Power Station in Bangladesh. In  addition, overhauling of 2 Boilers of 30 MW each was carried out at Al Arish power project in Egypt, under BHEL's supervision.
  • In a record time of just 2 months, a 3 MW brushless alternator was manufactured and exported  to Vietnam.
  • Other export orders executed during the year include: Valves to USA, Japan and Kuwait; Insulators to UK, UAE, Saudi Arabia and Nepal; Transformers to Greece, Oman and Jordan and Spares and Services to Libya, Oman, Malta, Cyprus and Malaysia.
  • PROJECT FINANCE
    •  BHEL continued to upgrade its capability for providing/syndicating finances to customers on selective basis. BHEL has organised lines of credit from leading Financial Institutions like ICICI, IDBI and IFCI and major banks such as SBI as a sales-aid-financing measure. During the year, a large committed competitive credit was offered for a project.
    PROJECT COMPLETION AND COMMISSIONING
  •  During the year, the company added 59 sets of 3522 MW in the country, including 10 nos. of 199 MW captive/industrial sets and 8 nos. of 128 MW diesel sets for India's largest diesel power plant at Kozhikode.
  • With this, the installed capacity of BHEL sets went up to 62,460 MW and BHEL maintained its  share of nearly 65% in the country's total installed capacity of 97,059 MW.
  • Major power projects commissioned during the year include:
  • -500 MW thermal set for Vindhyachal Unit 8.
    -250 MW thermal sets for Bakreswar Unit 1, Raichur Unit 6, Birsinghpur Unit 4 and Unchahar
     Unit 4.
    -220 MW nuclear sets for Kaiga 2 and RAPP 3.
    -143 MW Gas Turbine sets for Faridabad Units 1 and 2.
    -120 MW Steam Turbine for Kayamkulam CCPP.
  •  In addition, the first 2 sets at the 90 MW (3x30 MW) Gas Turbine based turnkey power plant of Petroleum Development Oman (PDO) were commissioned during the year. Significantly for the  first time in PDO's history, an EPC contractor - BHEL - has been awarded the 'Best Contractor's Camp Award' for measuring upto the exacting standards of Health, Safety and  Environment, stipulated by 'Shell' worldwide.
  • In the Transmission sector, the 1500 MW + 500 kV Chandrapur-Padghe HVDC project was  commissioned and handed over to MSEB. Also, power flow was achieved at the + 200 kV National HVDC Stage II project between Barsoor and Lower Sileru, successfully demonstrating the  national capacity for HVDC technology.
  • EQUIPMENT PERFORMANCE
  •  BHEL-built thermal sets achieved the highest ever Plant Load Factor (PLF) of 68%, which was higher than the national average. The Operating Availability (OA) of these sets was 80.2%. BHEL-make 200/210/250/500 MW thermal sets, which form the backbone of the country's thermal generating capacity, operated at an all time high PLF of 74.3%. BHEL supplied sets generated  305.70 Billion Units of electricity, constituting 72% of the total electricity generated in  the country during 1999-2000.
  • Notably, 107 BHEL-built thermal sets achieved PLF of over 70%, of these 23 sets achieved PLF of over 90% and 47 achieved PLF of between 80 to 90%.
  • BHEL built nuclear sets achieved the highest ever PLF and OA of 78.2% and 85.9%, respectively.
  • BHEL hydro sets achieved the highest ever unit availability of 98.15%.
  • BHEL built hydro sets at the 336 MW Chukha HEP in Bhutan broke all previous records
  • by  generating 1944 Million Units (MUs) during 1999, due to 100% availability of BHEL sets.
  • BHEL built 500 MW (Unit 6) at Trombay TPS has been running continuously for over a year.
  • CUSTOMER FOCUS
  •  To facilitate uninterrupted power supply and to keep power plants in good running condition, BHEL overhauled the highest ever 100 utility and industrial thermal sets equivalent to 19,773 MW, including 10 non-BHEL sets equivalent to 2257 MW.
  • A 201 MVA, 400/21kV single phase Generator Transformer of Peebles UK make at NTPC Rihand was repaired in a record time of 9 months.
  • BHEL reinforced its commitment to providing prompt and efficient customer service by  successfully renovating a turbogenerator at Essar Steel Limited's Captive Power Plant at  Hazira, in Gujarat, in a record time of just 45 days. The turbogenerator, of 11 MW capacity was badly damaged causing a major hurdle in production.
  • QUALITY
  •  As a commitment towards Total Quality Management (TQM), in line with CII/EFQM guidelines,annual improvement action plans are being implemented involving techniques like;Benchmarking,Business Process Re-engineering, Six Sigma and Gemba Kaizen. These are resulting in cycle time reduction for further improvement in delivery and technological process upgradation, leading to improvement in quality of products and enhanced customer focus,on continuous basis.
  • To fulfil its role of a corporate citizen towards protection and conservation of the environment and ensuring that its products and systems also meet such requirements, BHEL has finalised a Corporate Environment Management Policy for ISO14001 certification.
  • TECHNOLOGY DEVELOPMENT
    •  During the year, a turnover of over Rs.530 Crore was achieved by commercialising products and systems through in-house R&D/technology developments.
    Ø To reduce pollutant emissions from automobile exhaust systems, a Ceramic Honeycomb Substrate,conforming to Euro II norms was developed and a Catalytic Converter based on it has successfully completed a cumulative on-road trial run of 80,000 kms after being fitted in a mid-size car.
    Ø BHEL's Photovoltaic modules have been successfully tested and certified at the European Solar Test Installation, Joint Research Centre, ISPRA, Italy.
    Ø India's largest vertical motor of 3175 kW capacity, has been developed for the first time in the country, for Simhadri TPS.
    Ø For the first time in the country, a breakthrough has been achieved in power plant automation technology, with the successful indigenous development of a new automation system called Automatic Plant Start-up/Shut down (APS) and Automatic Plant Regulator (APR) system.  The systems have since been commissioned at the 291 MW NEEPCO, Kathalguri and the 350 MW NTPC, Kayamkulam, power plants.
    Ø To prevent erosion of hydro components in hilly regions due to excess silt in water, a High Velocity OXY Fuel (HVOF) coating process has been developed which is simple in application and can be easily adopted on large components.
     
    RENEWABLE ENERGY SOURCES
  •  100 kW Grid Interactive solar power plant has been commissioned at Kiltan Island, Lakshadweep and supplies for another 100 kW Grid Interactive solar power plant at Minicoy Island,Lakshadweep have been completed.
  • BHEL-supplied Wind Electric Generators (8x250 kW) were successfully commissioned at the first windfarm of Rajasthan at Amarsagar (Jaisalmer). So far, 296 WEGs equivalent to 66 MW have been supplied to various customers.
  • As BHEL's own contribution to green power, a 4 MW windfarm has been commissioned and synchronised with the Grid at Kadavakallu in AP. Besides, three Grid Interactive solar power plants, totalling 100 kW, have been commissioned at BHEL offices in Delhi and Noida.
  • Highest ever orders for 11,500 nos. portable Solar PV Lanterns were received during the year  for use in rural areas.
  • CAPITAL INVESTMENT
    During the year, a capital investment of Rs.112 Crore was made on plan capital programmes with focus on holistic modernisation and replacement of ageing facilities for enhancing competitiveness of key products/areas. Programme for refurbishment and uprating of all medium and heavy machine tools and equipment, was given renewed thrust.
    TECHNICAL COLLABORATION AGREEMENTS
  •  BHEL has become the forerunner in taking up manufacture of sub and super critical Once-Through Boilers by entering into a Technical Collaboration Agreement (TCA) with Babcock  Borsig ower GmbH, Germany - one of the technology leaders in Once Through Boilers. For the  upcoming mega power projects in the country, the installation of Once-Through Boilers with  super-critical parameters will not only improve efficiencies but also be environment friendly with lower emission of gases like SOx and NOx.
  • BHEL has also entered into a TCA with Apparatebau Rothemuehle Brandt + Kritzler Gmbh, Germany-a company providing technical solutions in the field of energy and environment, for the manufacture of state-of-the-art pollution control equipment called 'Fabric Filters'. With the introduction of stringent pollution control regulations in the country, manufacture of Fabric  Filters assumes significance as customers are now looking for high efficiency and cost effective pollution control equipment.
  • HUMAN RESOURCE
    MANAGEMENT
    With the aim of streamlining and optimising its human resources, a Voluntary Retirement Scheme was introduced in the company. The scheme was a major success since as many as 8274 employees availed of it. Apart from this, the company has undertaken several new initiatives including revamping its training/retraining programmes for its employees.
    NATIONAL/INTERNATIONAL RECOGNITION
    •  As a result of individual and collective efforts, a number of national and international awards have been bagged by various units and employees of BHEL.
    Ø For the fifteenth year in succession, an employee of BHEL has been selected for the coveted Prime Minister's Shram Award, for outstanding performance.
    Ø For the tenth year in succession, BHEL has won EEPC's export award for outstanding export performance during 1997-98.
    Ø Best Contractor's Camp Award' to BHEL at PDO, Hubara (Oman) site, for measuring upto the exacting standards of Health, Safety and Environment, stipu- lated by 'Shell worldwide'.
    Ø Golden Peacock National Quality Award 1999', for encouraging Total Quality Management practice in manufacturing and service organisations has been awarded to BHEL's Bhopal Plant.
    Ø QCFI's 'Neyveli Lignite Corporation (NLC) Rolling Trophy', for the Best Public Sector Organisation promo- ting the Quality Circle movement in India has been awarded to BHEL's Haridwar Plant.
    Ø SSTP, Trichy won the National Safety Council, USA's 'Significant Improvement Award' for 1998.
    Ø British Safety Council Award for Electronics Division, Bangalore.
    Ø Excellence in Suggestion Scheme' awards of Indian National Suggestion Scheme Association (INSSAN) for Hyderabad and Trichy units.
     
    SOCIAL RESPONSIBILITIES
  •  BHEL and its employees also contributed to the Prime Minister's National Relief Fund for rendering relief to the victims hit by the Super Cyclone in Orissa. Besides, BHEL employees extended medical and other assistance to the cyclone victims.
  • Various welfare activities, including medical camps and infrastructure support to schools in adopted villages, were undertaken, during the year.
  • FUTURE OUTLOOK
    •  BHEL has taken several initiatives to address the requirements of the changing business

    •  environment and market needs.
    ØBHEL has decided to taken up Infotech as a business initiative. With its existing expertise in IT and rich experience in Power Station engineering, Servicing and allied areas, BHEL can leverage itself to diversify into the new economy sector of Information Technology and IT enabled services. The company would provide IT enabled business solutions globally in the following areas :
    * Dot.Com Company - B2B vertical portal for electrical, engineering and Power Industry segments.
    * Software integrator and solution provider.
    * Expert systems for erection, commissioning, operation and mainte- nance of power plant equipment, training package on Power maintenance.
    * Computer Aided modelling analysis jobs.
    * Application Service Provider (ASP).
    Ø It is focussing on the growing area of Services business i.e. after market Services, life extension, renovation, modernisation and uprating of power plants and industrial equipment, alongwith increased customer orientation. It is taking up such services for non-BHEL equipment also, in the Indian as well as overseas markets. In this area, the two Joint Ventures with leading global companies - Siemens and General Electric - in thermal power plants and gas turbines for after market services are already functional.
    Ø As part of strategic alliances, a joint working agreement has been finalised with GE-India Technology Centre Pvt. Ltd. (a wholly owned subsidiary of GE USA) to source engineering services from BHEL for development and manufa- cture of various electronic control systems  for diesel electric locomotives. Joint venture is also being planned with GE Transportation Systems to manufacture the diesel-electric propulsion systems.
    Ø To address emerging business prospects in the urban transportation area, BHEL has entered into consortia with leading international majors and is participating in various metro rail Projects.
    Ø As a growth strategy, the business of renovation, modernisation and uprating of hydro Power Stations, which has a vast potential, is being targeted. BHEL has recently signed a Memorandum of Understanding with Bhakra Beas Management Board (BBMB), a premier organisation operating hydro electric Power Stations. Both BHEL and BBMB will synergise each other's expertise for renovation, modernisation and uprating jobs of hydro electric Projects.
    Ø Continuing from the momentum gained for exports this year, a multi pronged action plan is being pursued to further enhance exports. The actions include, evolving as a sourcing centre for global power and industrial needs, thrust on large size Project exports with suitable Government support for credit, entry into new markets for services business etc.

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