BHEL expecting turnover of Rs 45,000 cr by 2012

BHEL plans to rake in Rs 7,000 crore from exports by 2012. It is a  sharp climb from its Rs 1,000 crore export turnover today. So, BHEL is looking for acquisitions.

State-run power equipment company, BHEL, is considering mergers and acquisitions to fuel growth. That is how it plans to more than double turnover to Rs 45,000 crore, by 2012, from Rs 19,000 crore now. It has plans for a six-fold increase in exports over the next five years. BHEL is also considering acquisitions in Europe and the US for technology.

BHEL has already bid for controlling stake in Bharat Heavy Plate and Vessels, a medium-sized company, that makes boilers. Funding the acquisition will present no problems.

With an order book of Rs 55,000 crore, BHEL expects to reach a capacity of 10,000 mw a year by December and 15,000 mw by December 2009.

AK Puri , CMD, BHEL said that their order book, as on July 1, stood at Rs 62,400 crore.

He added that they expect to bag a major part of the 11^th plan orders. According to Puri, BHEL's FY09 turnover may be in excess of FY07. He added that over the next few years, they see a growth CAGR of 18-20%. He also said that they are expecting a turnover of Rs 45,000 crore by 2012.

Puri said that the near-term capex of Rs 3,200 crore will be funded by internal accruals. He added that the first phase to 10,000 MW will be completed by December 2007. Meanwhile, the second phase to 15,000 MW will be completed by 2009.

"We will be bidding for most UMPPs and are ramping up our capacities for the same," Puri said adding that they are expecting the first success on ultra mega power project, or UMPP, in the next 6-12 months.

He added that the company will be bidding for super-critical power projects based on suitability and that their order book will be executed over the next 2.5 years. According to Puri the JV with NTPC is for Engineering Procurement and Construction, or EPC, projects.

Excerpts from CNBC-TV18's exclusive interview with A K Puri:

Q: How is the order position looking like, at this point of time, both in terms of a backlog and the kind of pipeline that you have, for the rest of the year?

A: We have Rs 62,400 crore orderbook position, as on July 1, 2007; as per the first quarter results. The new orders are yet to be finalized, for the 11^th plan, which is of 78,000 mega watt, out of which 50,000 mega watt has so far been ordered.

There is further 28,000 mega watt, which is yet to be ordered, in the coming months. So, we have reasonably good expectations to bag a major chunk of these orders, in the coming months, as and when these projects get finalized. 

Q: What would your orderbook look like twelve months down the line?

A: It depends on how many of these projects are actually ordered, which is not entirely in our hands. It is the utility companies, which will have to configure these projects and bring them to the ordering stage. We believe that the power ministry is pushing them very hard and many of these utility companies are now running overboard to see that these projects get ordered in time. Looking at the 10^th plan experience, they want the 11^th plan to begin well. Therefore, the first step is ordering in time and the endeavours in that direction are good. But we need to still see how and when these orders are finalized.

Q: You have managed a turnover of about Rs 3,200 crore, in the first quarter. If we extrapolate, you should be managing over Rs 13,000 crore in this year in terms of revenues. What kind of CAGR are you looking at, to reach your target of Rs 45,000 crore turnover by 2012?

A: Rs 18,700 crore was our turnover last year. The first quarter is generally always weak; the activity builds up towards the end of the quarter. It builds on from quarter to quarter and the first quarter is always the weakest in any year, because of the nature of the product profile that we have.

In the first quarter, we had a turnover of Rs 3,569 crore and for the year as a whole, we will definitely surpass last year's turnover. We expect a healthy growth over last year of around 18-20% this year as well.

There will be major growth in the coming years, because of the two major capacity expansion programmes that we have launched already.

The first phase of expansion from 6,000-10,000 mega watt is coming to fruition by end of this year. The second phase of expansion from 10,000-15,000 mega watt will be ready by December 2009. This will give a major boost to future revenues and we expect a turnover of 45,000 crore, by 2012.

Q: The end of this year would be December or March?

A: In the month of December, the capacity will become 10,000-mega watt, but the benefits will accrue over the next twelve months.

Q: What is the total amount, in terms of rupee-crore, that you are spending on capex between now and 2009? Are you adequately funded for the same or are there any funding opportunities, that are doing rounds at this point?

A: To take our capacity from 10,000-15,000 mega watt, we have a capex of Rs 3,200 crore lined up already and all of it is from internally generated resources. So, there is no issue as far as ranging the funds is concerned.

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