Once a profit making giant, BHEL is an NPA now, shows CAG report
The company suffered a huge loss in all areas due to its failure to match the price of its competitors in getting work orders.india Updated: Aug 08, 2017 22:36 IST
The country’s biggest blue chip company, Bharat Heavy Electricals Ltd (BHEL), has failed to live up to the NDA government’s ‘Make In India’ promise by giving in to its Chinese competitors.
A Comptroller and Auditor General’s (CAG) report presented in the Parliament shows the company’s profit of Rs 7,400 crore in 2011-12 turned into a loss of Rs 913 crore in 2015-16.
“It’s heading towards a disaster,” says a CAG source, who is a part of the audit team. “Chinese companies are far superior in quality, innovation, pricing and timely completion of the project.”
When thermal power generation, a core area of competence of BHEL, is being replaced by renewal energy sources such as solar, wind and water, the company’s diversification initiatives are poor, says the source.
The company, which manufactures products and provides services to private and government firms in three sectors - power, industry and international operations -- suffered a huge loss in all areas due to its failure to match the price of its competitors in getting work orders.
The company witnessed the steepest fall in its profit of Rs 1,419 crore in 2014-15 to a loss of Rs 913 crore in 2015-16 , shows the CAG report.
Its annual turnover declined over 53% from Rs 49,510 crore in 2011-12 to Rs 26,587 crore in 2015-16.
The report says that BHEL was aware of the challenges in the business environment and had fixed strategic plan targets for 2012-17 with a focus on diversification and innovation. However, it “didn’t set year-wise milestones for implementation of the envisaged strategies”.
Highlighting the competitiveness of BHEL in core business areas, the report says it has been an area of concern as its success rate against competitors declined from 80.44% in 2013-14 to 43.95% in 2014-15 and to 0% in 2015-16.
“BHEL needs to develop its own products that excel over competitors through R&D initiative, “recommends the CAG. “Expeditious efforts should also be made to forge technological tie ups in new business areas.”