India Study Group

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BHEL holding its own against Chinese power equipment cos

Chennai: Challenged on its turf by the Chinese manufacturers of power equipment, Bharat Heavy Electricals Ltd appeared to be on the backfoot. In the last three years, orders for boilers and turbines have been placed for a capacity of 72,000 MW and over a fifth of them have gone to the Chinese.

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Two factors worked for the Chinese – availability of capacity, which meant they could deliver quicker than BHEL, and price. Chinese manufacturers such as Dongfang, Shanghai Electric Corporation, SEPCO, CMEC and Harbin were anywhere between 10 per cent and 15 per cent cheaper than BHEL, good enough to clinch deals.

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But now BHEL is holding its own . In the recent times, the public sector engineering major has been winning orders against the Chinese, beating them on price.

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Best Bidder

BHEL is also the best bidder in 2,400-MW Debrand project of Tata Power and in the 1,050-MW Orissa project of Monnet Ispat.

However, the contracts are yet to be formally awarded. In both cases, Harbin Power of China is the second best bidder.

Apart from these, Doosan of Korea lost out against BHEL on 1×250 MW Trombay of TPCL and 1×250 MW Budge-Budge of CESC.

BHEL’s Chairman and Managing Director, K. Ravi Kumar, told Business Line that the fundamental reason for BHEL’s ability to drop prices is the increase in volume of business. With order book of Rs 1 lakh crore on hand, the company expects a turnover of Rs 27,000 crore in the current year, 25 per cent higher than last year’s Rs 21,497 crore.

Of course, prices in China have gone up and that, added with a strengthening of the yuan against the dollar, has also helped BHEL guard its turf.

More GMs

As a consequence of the increase in volume of business, BHEL has decided to raise the number of its General Managers by 39 to 189. The decision to this effect was taken on Wednesday.

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Confirming this to Business Line, Anil Sachdev, Director – HR, BHEL, said the number of project sites the company is working at has also been going up. Today, BHEL is working at around 120 sites. The General Managers will be posted at sites so that a senior manager is in charge of overseeing the implementation of the projects. “This will also give our customers more confidence,” Sachdev said.