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
- 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
- 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
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.
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
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
August 07, 2014