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Bharat Heavy Electricals
BSE: 500103|NSE: BHEL|ISIN: INE257A01026|SECTOR: Infrastructure - General
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« Mar 13
Chairman's Speech (Bharat Heavy Electricals) Year : Mar '14
Dear Shareholders,
 
 It is a privilege to present the 50th Annual Report of your company
 celebrating the Golden Jubilee year of its momentous journey. BHEL has
 been successful in evincing a consistent performance in recent years
 while navigating through a strenuous business environment characterised
 by gradual slowdown in economic growth, fewer project finalisations and
 growing business complexities. Today, when many of our industry peers
 are finding it difficult to defy economic headwinds, your company has
 developed considerable Absorptive Strength as reflected from sustained
 market leadership, bottom- line performance, commendable project
 execution and continued focus on innovation.
 
 I would like to share some highlights of 2013-14 and provide a few
 thoughts on both the key focus areas of your Board and the future
 prospects of your company:
 
 - BHEL has achieved a turnover of Rs. 40,338 Crore and a net profit of Rs.
 3,461 Crore during 2013-14 registering a decline of 20% and 48%
 respectively over the last year, 2012-13.  The decline is largely due
 to unfavourable externalities. However, I am comforted by the
 resilience of your company as it made a net Profit Margin of 9% which
 is still higher than many industry peers.
 
 - In a market which has sharply contracted and has become fiercely
 competitive in recent years, your company further strengthened its
 leadership position with a market share of 72% in the Indian Power
 Sector. BHEL secured orders worth Rs. 28,007 Crore from its diversified
 business segments covering both domestic and international markets
 including a mega EPC order worth Rs. 7,900 Crore for 3x660 MW
 Supercritical units from NTPC for North Karanpura project against stiff
 international competition.
 
 - Our pace of project execution remained healthy.  During the year,
 your company synchronised/ commissioned all time high power projects of
 13,452 MW which is 30% higher than last year.
 
 - BHEL is committed to its innovation-led growth strategy. During the
 year, BHEL invested n,114 Crore on R&D - 2.76% of the turnover.
 Company also filed 434 patents and copyrights, enhancing the company''s
 intellectual capital to 2,589, which are in productive use.
 
 - Your company is focussed on capitalising new business opportunities.
 MoU with SECI, PGCIL, SJVNL, SSL, and REIL for setting up a 4,000 MW
 Ultra Mega Solar Power Project at Sambhar, Rajasthan and plan to set up
 an integrated manufacturing facility for 480 MW Solar PV systems
 (Wafers-Cells-Modules) are significant steps in this direction.
 
 - In view of current coal situation in the country your company has
 developed new fuel flexible supercritical boilers which can operate and
 maintain steam generation in the extreme cases of 100% specified Indian
 coal as well as 100% specified imported coal. This design will ensure
 continuous running of the Unit at rated capacity for different types of
 Indian or imported coal either individually or in combination.
 
 Preparing for Growth
 
 Today, as BHEL celebrates the Golden Jubilee year in its journey of
 sustained growth and leadership, it is also a celebration of India''s
 spectacular success in achieving self-sufficiency in the indigenous
 manufacture of heavy electrical equipment.  Ironically, this momentous
 occasion falls during turbulent times. Nevertheless, company is taking
 prudent strategies with focus on consolidating strengths and value
 propositions to emerge even more competitive for tapping opportunities
 in the next phase of economic growth of India.
 
 As envisaged in Strategic Plan 2012-17, BHEL has taken various
 initiatives to increase contribution in power projects, business
 expansion with more focus on EPC orders and enhancement of cost
 competitiveness. We are expanding our Power Sector portfolio by adding
 Flue-Gas Desulphurisation, Water Manage- ment System, Air Cooled
 Condenser and other Balance of Plant (BoP) Systems. Increasing level of
 indigenisation in Supercritical Technology, development of Advanced
 Ultra Supercritical power equipment and introduction of
 state-of-the-art CFBC technology are major strategies in Power Sector.
 
 - Diversification of business has been receiving the focus of
 Management of BHEL in recent years. Capacity expansion, product
 development, collaboration with stakeholders, capabilities
 consolidation and gaining execution experience are being pursued in
 various business verticals to enhance share of Industry Segment in
 turnover-mix.
 
 - Your company is also exploring collaboration opportunities in target
 countries to grow exports business.
 
 - Scale of operations at BHEL is emerging as key competitive advantage
 as it creates critical mass in power value chain. Capacity augmentation
 for power plant equipment manufacturing to 20,000 MW p.a, locomotive
 manufacturing to 75 numbers p.a, new Manufacturing Units- CSU
 Jagdishpur, PPPU Thirumayam, PEF Plant at Bhandara and merger of BHPV
 Vizag are steps undertaken by BHEL to leverage its scale.
 
 - Company is focusing on Innovation to steer future growth by
 transforming its R&D capabilities in a structured & focused manner.
 Investments in R&D are intensified to enhance capabilities in Product
 Development & Engineering with plan to maintain R&D expenditure at plus
 2.5% of Turnover.
 
 - BHEL will continue to pursue its key strategy of accelerating project
 execution with focus on intermediate milestones, delivery cycle
 reduction and deployment of additional Tools & Plants.
 
 - Demographic profile at BHEL is moving in favour of millennial
 generation resulting in gradual reduction of average age of employees,
 say from 48.96 yrs in 2006 to 40.84 yrs in 2013.  Therefore, People
 Development strategy of BHEL is focusing on developing each person''s
 competencies in alignment with business plans through implementation of
 initiatives like leadership development, competency mapping,
 performance linked pay, mentoring, Skill Development, career planning
 and succession planning.
 
 - Company works with a mission of providing sustainable business
 solution to its customers.  As decarburising power sector is at the
 heart of global efforts to make deep cuts in global CO2 emissions, BHEL
 is committed to offer fuel efficient and environment friendly
 technologies and products to its customers. First BHEL make 660 MW
 Supercritical unit was commissioned for NTPC at Barh and first 800 MW
 Boiler was synchronised for APPDCL at Krishnapatnam during 2013-14.
 
 Sustainability: Entrenched in Our Golden Heritage
 
 Your company has been leveraging technology and innovation for
 providing products, systems and services to its customers in an
 environmentally sustainable and socially responsible manner while
 remaining profitable.
 
 With first order for 500 M in 1978, 660 MW and 800 MW in 2008 and 700
 MW in 2010, we have been progressively introducing environment friendly
 and fuel efficient technologies for our customers.
 
 While we continue to find innovative ways to reduce our carbon
 footprint, through world class quality equipment with performance
 attributes like lower auxiliary power consumption, superior boiler
 efficiency, better plant heat rate & PLF and finally lower life cycle
 cost, our consistent focus on social initiatives reiterates our belief
 in not just being a good corporate citizen; but aspiring to change the
 world for better.
 
 Retaining Resilience
 
 Without resting on past laurels, your company will continue to build on
 its strengths through focus on capability enhancement, project
 execution, cost competitiveness & quality, diversification, engineering
 & technology and people development as envisaged in BHEL''s 6-Point
 Agenda.
 
 I am grateful to you, our stakeholders – customers for reposing their
 faith in us, employees whom we recognise as our core asset for their
 enthusiasm, unstinted devotion, and commitment towards the quest of
 excellence, our Members on the Board for their wisdom and continuous
 support; management team for efficiently steering the company''s
 resources and you, our shareholders for your trust and confidence.
 Various Ministries of GoI particularly the Department of Heavy Industry
 have been providing valuable guidance and support in our efforts.
 
 I am deeply indebted to the Leaders and employees of yesteryears who
 have brought us here - 50
 
 years of Engineering Excellence. Today, India is changing. Factors such
 as rising urbanisation, changing demography, energy security, climate
 change and inclusive development are transforming India. This new and
 changing India will have an insatiable appetite for wide range of
 products & services offered by BHEL. Therefore the Board of your
 company is confident of realising its vision of becoming a global
 engineering enterprise providing solutions for a better tomorrow and
 honouring our Golden Legacy.
 
 I look forward to your unwavering support in this challenging but
 exciting process of building a vibrant India.
 
 With best wishes,
 
 (B Prasada Rao)
 
 Chairman & Managing Director
 
 New Delhi
 August 07, 2014
Source : Dion Global Solutions Limited
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