It gives me great pleasure in reporting that we concluded another
successful year of BHELs growth story. 2010-11 was an excellent year,
which saw private as well as public sector utilities and other
customers reposing confidence in company''s capabilities. Your company
turned out spectacular financial performance. Your company has managed
to sustain its leadership position and is ready to embark on a new
phase of dynamic growth. I take this opportunity to share with you
some of the key highlights of the year gone by:
Business & Financial Accomplishments:
Turnover of your company has quadrupled and profit has increased by six
times during last six years. Top line of the company was Rs. 43,337
crore, recording the strong growth of 27%. With Profit Before Tax of Rs.
9006 crore and Profit After Tax of Rs. 6011 crore, the profitability rose
appreciably by 37% and 39% respectively during the year. BHEL had many
accomplishments in various business areas. Some of them are:
- In spite of difficult market conditions, BHEL booked orders of 7 nos.
Boilers and 9 nos. Turbine-Generators with supercritical parameters
from public as well as private sector utilities.
- BHEL secured record orders worth Rs. 60,507 Crore, during the year,
despite various challenges confronting the power sector in recent
times. At the end of the year, total orders in hand for execution in
2011-12 and beyond, stand at aboutRs. 1,64,145 Crore.
- Order of first 700 MW Nuclear TG (2 sets) for KAPP 3,4 from NPCIL in
consortium with Alstom - new rating introduced.
- Repeat order for 10 sets of 270 MW each from the Indiabulls Group
indicating confidence of customers in your company.
- Export orders from 24 countries across five continents.
- The company is continuing to invest heavily in building capacities
and capabilities, not only to cope with rising demand, but also in view
of our drive to strengthen our engineering character. Therefore,
Capital investment of Rs. 1,655 crore and R&D expenditure of Rs. 982 crore
were incurred during the year.
- Economic Value Addition (EVA) reached Rs. 3,793 Crore, a 42% y-o-y
- EPS on the post-bonus equity capital increased to Rs. 122.80 against
previous year''s Rs. 88.06.
- A final dividend of 179% has been recommended by Board, in addition
to the interim dividend of 132.5% for the year, making a total of
311.50% for the year.
For a New Phase of Dynamic Growth
BHEL is committed to drive a new phase of growth, at a time of
increasing focus of Government of India on developing infrastructure
sector. In this environment, your company has over a period of time
established a number of differentiating competitive strengths,
including a powerful manufacturing base, world-class equipment
performance, the technology edge, diversified business portfolio,
country-wide efficient after-sales-service network, a robust balance
sheet capable of supporting its growth ambitions and strong human
Backed by these attributes, your company continues to pursue its
''6-Point Strategy'' to sustain its leadership in its current business
areas and capture opportunities in emerging growth areas.
1. Capacity Enhancement
Augmentation of manufacturing capacity from 15,000 MW to 20,000 MW is
on track for completion by March 2012. I am pleased to inform you that
BHPV Vizag which we acquired in 2008 as part of our inorganic growth
strategy has turned profitable in 2010-11. Further, your company has
taken 51% stake in Kasargod unit of KEL Kerala for rapid capacity
enhancement for rotating electrical machines. We will continue to build
capacities both organically as well as inorganically.
2. Accelerated Project Execution
Your company has continually been improving its execution capabilities.
Key drivers of our strategy are vendor base expansion, Advanced
Manufacturing Actions, greater application of Information Technology,
Rate Contracts, enhanced outsourcing, deployment of additional tools
and plants, Away Center Fabrication and greater empowerment of project
managers. Further, to address skill deficit in power sector your
company has taken various initiatives like adoption of ITIs and
leveraging in-house training infrastructure for skill enhancement in
the sector. On the back of these initiatives, we were able to
synchronize/ commission highest ever 9442 MW of power plant equipments
during the year.
3. Product Cost Competitiveness & Quality
There is a constant endeavor to reduce costs. Points of focus include
global sourcing, quicker indigenization, and various integrated
operations improvement initiatives like Design-to-Cost (DTC), Purchase
and Supply Chain Management (PSM) and Lean Manufacturing. These
initiatives and others will increase our cost competitiveness while
maintaining quality for which your company is well known.
Your company is well positioned to continue its diversification
strategy to enhance shareholders'' value as we expand our offerings in
new growth areas viz. Solar, Nuclear, Transportation, Transmission &
Distribution, and Water. We remain positive that our diversification
strategy would generate broad-based revenue streams for your company in
the long run.
5. Engineering & Technology
As a result of conscious commitment to anticipate future needs of our
society and to convert these needs into innovative technologies, your
company continues to invest heavily in R&D. Company registered 31%
growth in IPR capital taking the total to 1438 patents/ copyrights. It
is heartening to note that today innovation- led business strategy of
your company is globally recognized.
6. People Development
We strongly believe that the contribution of all of our talent is an
essential component to our growth aspirations. Accordingly, we are
reorienting focus of our Human Resource to develop not only each
person''s competencies, but also their performance and potential in
alignment with our ongoing business challenges.
I would like to thank my fellow Directors on the Board and the members
of the Management Committee for their wisdom and support. Various
ministries of GoI particularly the Department of Heavy Industry have
been providing valuable guidance and support in our efforts. And thanks
also to our customers, shareholders, and other business partners for
the opportunities to earn your confidence. Your company has been
fortunate to have had visionary leaders and dedicated employees as the
drivers of success. I look forward to continued support from all
stakeholders in BHELs challenging yet exciting journey into the future.
Chairman & Managing Director
August 12, 2011