Things have come a full circle for Bharat Heavy Electricals Ltd (BHEL).
Eyed as a buyout target by the likes of ABB and Siemens a decade ago, the power equipment maker that makes a wide range of industry goods is now on the prowl in the West to turn the tables with acquisitions on its own, challenging the conventional wisdom that Indian public sector companies are victims, not victors.
A little known fact is that BHEL is already present in 65 countries, thanks to its increasingly successful international business unit, while the company has positioned itself to retain its “technology character” – going well beyond the socialist days when it was a monopoly supplier to creaking state utilities.
If successful, BHEL, which is backed by an army of world-class engineers working at globally competitive costs, would join an elite club that includes the Tatas, Essar, the Aditya Birla Group and wind turbine maker Suzlon, which have made audacious acquisitions.
BHEL has set up a five-member committee headed by B.P.Rao, general manager, corporate planning and development to scout for buyouts, which could give it access to new customers and technologies.
"This committee would periodically submit to the board details and reports about the companies that we could acquire in the US and Europe,” Chairman and Managing Director Ashok Puri told Hindustan Times. “The committee comprises a cross-functional five-member team drawn from the company's business sectors."
BHEL said on Monday that in the 2006/07 fiscal year, it spent Rs. 238 crore on research and development, an increase of 58 per cent from the previous year, as it moved to achieve a turnover of $10 billion by 2011/12 under a strategic plan, compared with current sales of $4.0 billion.
While refusing to divulge details about the specific companies that it plans to acquire, Puri said, “The thrust would be to get companies that can give us access to market, technology and supply chain (intermediate products). There are a number companies that fit our bill. We will wait for the committee to submit its report.”
The panel, comprising representatives from various divisions, would include specialists in turnkey power generation, engineering, capital equipment supplies and finance.
Puri said that one member would be from the international operations to provide insights on overseas opportunities.