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'BHEL has never been afraid of competition'

business Updated: Feb 06, 2011 23:07 IST

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Established more than 40 years ago, Bharat heavy electricals limited (BHEL) is the largest engineering and manufacturing enterprise in India in the energy-related/infrastructure sector. Its chairman and managing director BP Rao spoke to the Hindustan Times. Excerpts:

How do you see BHEL growing amid the emergence of companies setting up power equipment manufacturing hubs?
BHEL started off as a government enterprise and still 67% is owned by the government, of the 33% owned by the private sector, some 40% is held by foreign institutions. Our shares are very heavily traded in the market.
We have never been afraid of competition. Presently, BHEL is having 15 manufacturing units and four power sector regional centres. With 15 regional offices, four overseas offices, one subsidiary and eight separate service centres, BHEL has a very wide reach across India and our penetration of the market is deep. Therefore, we can reach any customer within a matter of hours. We manufacture the entire range of power equipment for all fuels (Thermal, Gas, Hydro, Nuclear, and Renewables) which is why we describe ourselves as an integrated power plant equipment manufacturer. Over the last five to six years we have grown at a rate of 20- 25% per annum, our top line has tripled and the bottom line quadrupled in a matter of four years.

BHEL has grown very rapidly over the last few years... will it carry on being viable to self-fund or need external funds to support growth?
Any expansion can be internally funded because we are in a very strong position financially with no debt and a Triple A rating. However, if debt is available in the market cheaper we might use it.
We are using our resources to help some of the state generation companies set up power projects to increase the size of the market and help ensure that we secure the orders. The benefit for us is to get higher returns on the surplus funds and help leverage equipment sales to higher growth. We are also trying to partner with steel makers to secure material supply for our main equipment. Expansion is also envisaged to cater to Nuclear segment.

What are the company’s target areas in terms of technology?
BHEL is very involved in the development of super-critical technology, which reduces the impact on the environment of coal-fired power generation. We have also introduced advanced-class gas turbines, which will increase efficiencies as India becomes a major gas producer and consumer. The Company is also working on developing clean coal technologies like IGCC and Ultra Super-critical thermal sets. We have certain nuclear technologies within BHEL, as we have supplied 80% of the nuclear plants, built when India was under sanctions. We are starting to acquire technology through partnerships with leaders in this segment. In terms of renewable, we are building capacity significantly. Our PV plant in Bangalore is currently at 8 MW pa, and we have plans to set up a JV with a capacity of 250 MW pa.

What do you think BHEL offers to the international firm looking for an Indian partner?
The collaborations that we have, such as Siemens for a wide range of products or Alstom for super-critical boilers, ensure win-win situation. BHEL's unparalleled service network in India is definitely a major plus for any partner but the core reason we attract such high level partners is the quality and capacity of our manufacturing plants.

What is BHEL's export strategy?
We are exporting to over 70 countries and exports have been a focus from day one. Our philosophy is that by exporting we are competing on the global stage and that we will learn from this competition. While exports represent only 10% of revenue, yet they are an extremely valuable way of ensuring that we stay ahead.

You have eight service centres, how important are services to the company?
Services are a vital part of BHEL and contribute approximately 30%-35% of revenue. About 30,000 MW of capacity in India is over 20 years old.