A: The IIP number at 3% is only a quick estimate. It is also on higher base. Last year the IIP numbers stood at 14.76% and this year it is around 3%. It is mostly because of basic goods and intermediate goods. The capital goods though have done better, they are at 8.6%, When the real estimate comes, the numbers for March should be higher.

Q: How much do you think projects could get delayed by?

A: We have taken certain measures like capacity booking, which has been approved by the government.  Secondly we have taken advanced manufacturing and advanced procurement actions. Thirdly we are now acquiring special facilities which we look to integrate. We recently acquired Bharat Heavy Plate and Vessels (BHPV), which has a manufacturing base. Also we are enhancing the delivery time of the suppliers by ordering in advance. This is what we have done for the new projects and this should help us in meeting project schedules.

We are likely to achieve 15,00-megawatt by December 2009. We realized that we required some facilities for this year’s production and  the best way we figured was to acquire some companies that have these machinery.

This will have slight pressures on margins but as far as execution is concerned we will try to keep the project schedules on time.   

Q: The market was a bit disappointed with BHEL’s quarterly performance this time. How much margin pressure do you think you might have to face over the next few quarters?

A: As far as interest rates are concerned we do not borrow. Ours is a zero-debt company and we don’t even borrow for our working capital. Even our expansions expenditure, which is at about Rs 5,000-6,000 crore were all from internal accruals. Speaking about interest rates, we do not feel that the margins are going to be affected. There could be a slight rise in raw material costs, which we feel will be more than offset by our increased volume this year. We are planning a 25% growth for 2008-09 over 2007-08, so that overheads should come down. When you have higher production figures, that should take care of the raw material increases. There will definitely be some pressure from raw material increase and that should be offset by reduced overheads on higher volume. There will be small pressure on margins.

As far as ‘supercritical space’ is concerned it is only for the first few sets that we are importing. After 10 sets we never imported any material. We don’t have any finished products imported from our collaborators. There will be some pressure on margins, but that is only marginal compared to our turnover.

Q: On your focus on the ‘supercritical unit,’ what is the kind of contribution you see coming in from that segment to your overall order book position going forward? 

A: There are two segments, which are quite rewarding segments. One is the supercritical segment and the other is the advanced gas turbine segment, which I signed at GE, (USA). I think as far as advanced class-gas turbines segments are concerned we have already got orders. So there are spates of orders coming in for gas base power projects based on advanced class gas turbines, one area where we are diversifying into.

The second area is the supercritical area. The technical parameters which have quoted for the recent jobs, are one of the best in the world. So we have very high technical superiority as far as the bids are concerned. We have already won an order and we are expecting certain orders from Krishnapatnam and also from our own unit, which we are installing in Tamil Nadu. We are in discussion with Reliance Energy for the ultra mega-supercritical sets. We are expecting some more revenues from supercritical area in the future too. We are also bidding for new projects in the 660-megawatt for which NTPC is coming out with a tender and we are quite sure we will be able to win this bid.