Introduction

Bharat Heavy Electricals Limited (BHEL) was set up in the late 1950’s with the goal of making India self- reliant in the field of indigenous manufacture of power generation equipment. Today, BHEL is the largest engineering enterprise of its kind in India with an excellent track record of performance; making profits continuously since 1971-72 and paying dividends since 1976-77.
With 180 products under 30 major product groups, today BHEL caters to core sectors of the Indian economy, viz. Power, Industry, Transportation (including railways) Transmission, Telecommunication, Defence, Non-conventional Energy Sources etc.
BHEL’s inherent potential coupled with its consistently excellent performance has resulted in it being chosen as a ‘Navratna’ PSE. Today, the company has a committed workforce of around 48,000 employees spread at 14 manufacturing divisions, 8 service centres and 4 power sector regional centres, besides project sites spread all over India and abroad. BHEL also has a Corporate R&D centre at Hyderabad and product based R&D centres at all its manufacturing units.
During 2001-02, BHEL achieved a turnover of Rs. 7287 Crore and Net Profit of Rs. 468 Crore, maintaining its track record of making profits uninterruptedly for the last 30 years.

Power

The power sector is the core business of the company and comprises thermal, nuclear, gas and hydro business. In less than three decades, BHEL has taken India from a position of total dependence on overseas sources to complete self-reliance in power plant equipment, design and manufacture. Today, BHEL’s generating sets account for nearly 74% of India’s total power generation. In real terms, that translates into approximately three out of every four homes in India being liet up with power generated by BHEL sets.
Since the first BHEL made thermal and hydel power generating equipments were commissioned in 1969-70, over 700 numbers thermal, hydro, gas and nuclear sets have been contracted on the company. These very sets form the backbone of the Indian power generating system. 
BHEL has introduced Gas Turbine based sets along with cogeneration and combined cycle systems keeping in view the need for more efficient, environment friendly and short gestation projects. As on date, over 125 Gas Turbines have been contracted on BHEL from India and abroad.

Joint Ventures

As part of its strategy to tap business in new emerging business segments, BHEL has set up 2 separate Joint Venture Companies (JVCs) in India, on a 50-50 equal partnership basis with world renowned corporations, Siemens AG, Germany, for plant performance improvement of old fossil fuel power plants and General Electric (GE), USA, for repair and servicing of old GE design heavy duty gas turbines. Both the JVCs have commenced commercial operation and booked very impressive orders.
Besides catering to the Indian market, the JVCs have access to many export markets. Having the synergy of know-how and expertise of both the partner companies in their respective areas, the JVCs, by virtue of their association with world’s leading corporations, have access to much needed finances. Both these JV companies are essentially engineering and marketing companies and source their requirements of hardware and services from the JV partners, thus providing additional business. The JVCs, with the support of BHEL and respective JV partners have the necessary competitive edge to face global competition in these emerging business areas.

International Competitiveness

One of the strong points of BHEL has been its international competitiveness, which the company has successfully proved by bagging over 86% of power plant orders under international competitive bidding (ICB) in the domestic market, since 1978. In fact, the presence of BHEL in the Indian power plant market has compelled the competitors (MNCs) to quote attractive prices for power equipment. As such if BHEL wins in these bids, it gains an order and adds value in every case where BHEL competes, the country derives the benefit of lower project costs.
During the year 2001-02, BHEL bagged orders for 3038 MW, including those under ICB in the country. Significant orders included:

• Rihand STPS Stage II (2x500 MW) of NTPC.
• Ramagundam STPS Stage III (1x500MW) of NTPC.
• Panipat TPS Units VII & VIII (2x250MW) of Haryana Power Gen.Corp.Ltd.
• Kota TPS Unit VI (195 MW) and Ramgarh CCPP Extn. (75 MW) of Rajasthan Rajya Vidyut Utpadan Nigam Ltd., maintaining its 100% share of thermal power plant equipment in Rajasthan.
• Mejia TPS Unit IV (210 MW) of DVC
• Dhuvaran CCPP (107 MW) of Gujarat State Electricity Corp Ltd and Kuttalam CCPP (101 MW) of TNEB; maintaining track record of winning all contracts for advanced class GT (Fr 6A), through ICB in India.
• Almatti Dam Hydro Power Project (290 MW) of KPCL.
• Madhikheda HEP (2x20MW) and Bansagar HEP (2x10 MW) of MPSEB
• The first ever piping and motor contracts for a nuclear power plant (2x500 MW TAPP).

With project financing becoming a crucial aspect for furtherance of business in the power sector, which is open to participation by private sector / foreign promoters, BHEL has been pursuing a blend of strategies of providing/ syndicating, lease financing  & equity participation as a measure of sales-aid-financing. To strengthen its capability in arranging project finance, BHEL is in a constant dialogue with Financial Institutions in the country and abroad. ICICI and IFCI have sanctioned a line of credit of Rs.500 Crore and Rs.200 Crore respectively to enable BHEL to offer sales-aid-financing for equipment supplies to Independent and Captive Power Projects. IDBI has also sanctioned a line of credit of Rs.1000 Crore to BHEL. A similar strategic relationship has been developed with PFC. Dialogue has also been initiated with IDFC and KFW and BHF Bank Germany.
With a market share in the power industry in excess of 80%, BHEL has built up enough financial strength, both in terms of internal accruals and high borrowing capacity and is today capable of competing with the best in the world. In fact, the company has already provided supplier’s credit/offered financial packages in a limited way, worth Rs.s2000 Crore to a number of projects in the country. Major among these include, Kothagudem TPS (2x250 MW), Vijaywada TPS (2x210) and Raichur TPS (2x210MW).
 

Customer Focus

BHEL reinforced its commitment to providing prompt and efficient customer service by responding to customer’s emergency call and successfully renovating in record time, a rotor of foreign make at Sarni TPS and a damaged rotor at Amarkantak TPS. In addition, replacement of rotor at Tata Bhira HEP was successfully undertaken in 78 days against a schedule of 140 days.
Similarly, 500 MW TG set (Unit 7) at Vindhyachal STPS and a non-BHEL Turbine (9.5 MW) at TCL, Mithapur, which were damaged in fire accidents, were restored on urgent basis.

Transmission

In view of the poor quality of power supply and high transmission losses in the country, BHEL has focussed on power transmission as a thrust area. For evacuation of power, BHEL designs and carries out R&D on a wide range of transmission products and systems including high voltage power and distribution transformers, instrument transformers, dry type transformers, SF6 switchgear, insulators, shunt reactors, capacitors, spark gaps etc.
The company has successfully developed a device which will improve power transfer capability, reduce transmission losses and improve power system stability in India’s highest rating transmission lines. The new device, called Thyristor Controlled Shunt Reactor (CSR) is the first of its kind in the world and has been developed through BHEL’s in-house R&D efforts.
In the first phase of the developmental project, the company had successfully designed and tested the country’s first prototype CSR of 2 MV Ar, 11 kV, with technical consultancy from St. Petersburg University, Russia.
Spurred by the success, in the next phase of the project, BHEL developed the 50MVAr reactor for demonstration in an existing transmission system and PGCIL offered its Itarsi- Jabalpur transmission line at the 400 kV Itarsi substation for field trial of the prototype CSR.
A 36 kV Gas Insulated Substation (GIS) with double busbar has also been developed as a MoU project with the Govt. of India. This development provides continuous power supply without resorting to disconnection in case of disruptions. It offers a simple and cost effective solution to the power supply problems in medium voltage substations.
Order for indigenously developed 400 kV Thristor Controlled Series Capacitors to be installed for improving power transfer capability and reducing system losses in Kanpur-Ballabhgarh Flexible AC Transmission line of PGCIL, jointly funded by BHEL and the Ministries of Power & Information Technology.

NCES

BHEL, a pioneer in the development of non-conventional energy sources (NCES) in the country, has emerged as the market leader in renewable energy products like Solar Water Heating Systems (SWHS), Solar Photovoltaic Power Systems & Wind Electric Generators, Battery Powered Road Vehicles etc.
Over the years, BHEL, in coordination with the Ministry of Non-Conventional Energy Sources, has widened its product range and expertise in the field of NCES. Through extensive R&D efforts, BHEL has developed technologies which are used to manufacture products like solar photovoltaic systems, solar lanterns and battery powered road vehicles etc.
BHEL has so far supplied solar modules & systems for generating over 7 MW of power for applications in office and home lighting, stand-alone street lights, traffic signals, grid interactive power plants, rural automatic telephone exchanges, refrigeration system, unmanned offshore oil platforms, meteorological data collection platforms etc. Besides, BHEL has so far installed SWHS capable of producing cumulatively, over 33 lakh litres per day of hot water, throughout the country, for applications in dairies, hospitals, hotels, research institutions, swimming pools etc, besides domestic consumers.

Industry

BHEL is a major contributor of equipment and systems to industries like cement, fertilizers, refineries, petrochemicals, steel, paper and telecommunications.  In addition, the non-power sector also includes supplies made to transportation & defence.  The range of equipment supplied includes Captive Power Plants, Compressors, High-Speed Industrial Drive Turbines, AC and AC/DC Locos, Diesel Electric Shunting Locos, Heat Exchangers etc.  This sector today accounts for half of the company’s turnover.
Today, over 72% of Indian Railways, the second largest railway network in the world, is equipped with traction equipment built by BHEL.  The company has also supplied over 55,000 traction machines to the Indian Railways.
The company is the market leader in several industrial products like Centrifugal Compressors, Motors, Dry Type Transformers, Wellheads & X-mas Tree assemblies, Gas turbine based co-generation plants as well as steam turbines and boilers for industries.
Recent successes of BHEL in the non-power business segment include; orders from infrastructure & core industrial sectors for equipment to be used in transmission, transportation, defence, oil exploration, petrochemical & telecom applications, besides Captive Power Plants.
Significant orders booked during 2001-02 included; 48 vertical motors for world’s largest pumping scheme (Sardar Sarovar Project); single largest order for Power Transformers, Shunt Reactor & Dry Type Transformers from Tala HEP, Bhutan and Euro-II compliant Diesel Electric locos from Delhi Metro.  Besides, enhanced thrust on overseas OEMs resulted in an order for electrical machines from Ansaldo, Italy.  In addition, in the captive power plant area, orders were secured for 40 MW co-generation power plant from Chennai Petroleum Corporation Ltd.; 22.92 MW Diesel power plant from the Govt. of Mizoram and 23 MW power plant from Aditya Cement Ltd.
A notable feature of the year was the company’s entry into a number of new business areas.  These included;
Specialized vehicles for Railways with orders for Rail cum Road Vehicles for use in accident relief; Diesel Electric Tower Cars for maintenance of overhead equipment on electrified tracks and Utility vehicle for removing condemned rails from tracks.
First commercial order for fixed series capacitors to be used in 400 kV transmission systems, bagged against international competition for Panki-Muradnagar line.

Global Presence

BHEL has carved a niche for itself in the global market, having supplied products, services & projects to over 50 countries ranging from the United States in the West to New Zealand in the Far-East.  The cumulative capacity of power generating equipment supplied by BHEL outside India, is over 3500 MW.
The company’s overseas presence includes several projects, a notable few being 150 MW (ISO) Gas Turbines to Germany; Utility Boilers, Open Cycle Gas Turbine Power Plant to Malaysia; turnkey Power Station for Tripoli West Power Station in Libya and Hydro Power Plant to Thailand. Recent contracts executed by BHEL include Gas based power projects in Saudi Arabia and Oman, Boiler in Egypt and several Transformers in Malaysia.
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. 800 Crore, during 2001-02.  This performance was achieved while operating in a highly competitive international market witnessing structural changes and consolidation of major power equipment manufacturing companies.
Despite this, BHEL made forays into the Chinese, Central Asian & African regions with orders for; 123 MW ISO Gas Turbine Generator and Auxiliaries for Shenzhen Nanshan Power Station in China, placed by AES, the world’s largest Independent Power Producer, 40 MW ISO Gas Turbine Generator and Auxiliaries from Tengizchevroil, (a joint venture of global oil giants Exxon-Mobil, Chevron-Texaco & Kazakh Oil Company), Kazakhstan and Motors from Algeria. Also, maiden orders were received for Simulators from the UK and RLA studies for Electrostatic Precipitators from Thailand.
Other notable successes during 2001-02 included orders for 4 Gas Turbine Generators (123 MW ISO each) and Auxiliaries for Rumaila Open Cycle Power Plant in Iraq from SITEA International, Switzerland and 57 MW Steam Turbine Generator for Kelanitissa CCPP of AES in Sri Lanka.
Significantly, having already earned a reference from Petroleum Development Oman, partly owned by the Royal Dutch Shell group of Netherlands; the Kazakh order will entrench BHEL’s reference with multinational oil giants like Exxon-Mobil and Chevron-Texaco, joint venture partners in TCO, thereby establishing BHEL’s capabilities to meet exacting standards of global oil sector companies.
Even in the current fiscal (2002-03), BHEL has already bagged export orders worth Rs. 315 Crore including an order for a 140 MW Gas Turbine based turnkey power plant in the Sultanate of Oman. 

Quality 

One of the important aspects of competitiveness is ‘Quality’ and the quality standards of BHEL equipment have been recognized in India & abroad.
All major manufacturing divisions and service centres of BHEL have been accredited with ISO 9000 certification by the world renowned BVQI of London. In addition, the company is adopting Total Quality Management (TQM) to keep abreast of world standards in order to benchmark and prepare the company’s products and internal processes to global standards.
Besides, as a commitment towards 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 & technological process upgradation, leading to improvement in quality of products & enhanced customer focus.
To fulfill 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 finalized a plan for all its units & service divisions to qualify for ISO-14001 Environmental Management System certification in a progressive manner. Significantly, 8 manufacturing plants of BHEL have already been awarded ISO-14001.

Technology and R&D

Technology is a major element in the corporate strategy of BHEL, as most of its products and services are highly technology intensive in nature. As a part of this, the company in the past has been updating technology from time to time with collaborative tie-ups with world leaders.
The company’s own R&D efforts have been concentrated on the areas of optimum utilization of existing energy systems by coal, hydro, non-conventional energy systems, energy conservation, life assessment and extension of existing power plants, development of clean coal technologies such as Integrated Gasification Combined Cycle (IGCC) power plant, Pressurised Fluidised Bed Combustion (PFBC) systems, more efficient transportation systems etc. The R&D expenditure of BHEL is the highest in any comparable industry in India.
As a contribution to national pollution control efforts, BHEL has been continuously alive to the responsibilities of protection & conservation of the environment and the ecological balance. Electrostatic Precipitators, designed and supplied by the company, have been working at an efficiency of 99.95%, thereby effectively controlling air pollution emissions form thermal power plants and industries like cement. BHEL has also developed CFBC boilers which have higher efficiency & ability to fire low-grade fuels with reduced emissions, besides equipment/systems for DHDS, fly ash utilization and desalination etc.

New Technologies

BHEL has entered into a Technology Collaboration Agreement with an internationally reputed company for Variable Pitch Axial Flow Fans, suitable for use with boilers of upto 660 MW rating.
BHEL has positioned itself to offer state-of-the-art Distributed Control Systems for Power Plant and Industry. A new technology licensing agreement with Max Control Systems Inc., USA was entered into, recently. The system offers state-of-the-art distributed digital controls with extremely fast response time for higher efficiency, reliability, low operating cost and safer plant operations.
In addition, the company has taken steps to equip itself as the forerunner in the country for manufacturing more efficient and environment friendly super critical 660 MW thermal sets. These are the next higher utility thermal sets in the country being introduced for grid operations.

Positioning for the Future
Capital Investment & Asset Modernization

For enhancing company’s competitive market positioning, as part of holistic modernization of facilities, 20 new CNC machines were installed the tally to 296 - the highest number of CNC machines in a single company in the country.
A number of modernization schemes have been completed at BHEL’s Bhopal, Trichy, Ranipet and Bangalore units, covering star products like Traction Motors, Transformers, Fossil Boilers, Heat Exchangers, Pressure Vessels, Control Equipment etc., while modernization schemes for technology upgradation and for new products are under implementation at Hardwar and Hyderabad units.
During 2001-02, an investment of Rs.160 Crore was made under plan programes to enhance the competitiveness of key products/areas including augmentation and upgradation of IT infrastructure.
Growth Avenues
While steps have been taken for enhancing the company’s competitive edge; policy initiatives in power sector reforms, increased focus on distribution, enhanced outlay for Accelerated Power Development & Reforms Programe (APDRP) and incentives for infrastructure investments to spur industrial growth would provide further stimulus in the coming years.
For furthering growth prospects, BHEL has put in place several initiatives viz.
Business development efforts in identified areas viz.

• R&M of off-shore/on-shore oil platforms.
• Operation & Maintenance (O&M) services for power plants.
• Expanding area of industrial systems to cover core sector industries in addition to mining.
• Renewed thrust on high-growth areas viz.
• After-Market Services including spares/R&M services with thrust on R&M of hydro sets.
• International business through initiatives like entering new markets, O&M services, merging as a service centre for International OEMs and establishing manufacturing/assembly/repair centres overseas.
• Exploring opportities in Energy Conservation, Water & Waste Management, Pollution Control, Ports, LNG Terminals etc.
• Leveraging vast main knowledge in power/engineering sectors to offer IT-enabled engineering services.

India embarked on a programe of liberalization since 1991, which has resulted in relaxation of controls & procedures resulting in the opening-up of the Indian economy and more competition, in the public as well as the private sectors.
In this scenario, the fortunes of any business enterprise would solely depend upon its ability to meet market needs in respect of price, delivery, quality, after sales- service etc. with speed and efficiency, irrespective of their being public or private sector enterprises.
While BHEL is internationally competitive, it is also adopting suitable measures aimed at reducing cycle times, improving its business processes, benchmarking against world leaders to enable it to deal with the current business realities.
For any enterprise having global aspirations, it is essential that it becomes a strong domestic player first and BHEL has already demonstrated this ability quite creditably. However, in terms of the ability to become an equally strong player in the international market requires that on one hand the company should further build on its international image and at the same time be supported by suitable country specific and industry specific strategies by the Government.
On its way to becoming a truly Indian transnational, the company always strives to create an ever increasing value for users of its products and services. It is the company’s constant endeavour to transform into one of the most competitive enterprises of its kind in this part of the world to international quality standards.

The Author is Chairman & Managing Director
Bharat Heavy Electricals Limited