Make in India: BHEL Bullish on Acquiring Defence Orders

INS Arihant's Nuclear Power Plant - The steam Generator was provided by Bharat Heavy Electricals Limited (BHEL)

NEW DELHI: State-run power equipment maker BHEL is bullish on defence manufacturing sector, particularly naval, field guns and sub-marines, which is being opened up and is looking for original equipment manufacturers (OEMs) for partnership.

Over the years, the company has made significant contributions for naval guns and Integrated Platform Management System (IPMS), BHEL Chairman and Managing Director (CMD) B Prasada Rao said at the company's 51st AGM held here.

The 'Make in India' initiative in the defence sector is opening up large opportunities in naval and field guns, sub-marines, etc. BHEL is actively pursuing these opportunities by partnering with global OEMs, he added.

In spite of 2014-15 being an extremely challenging financial year, BHEL secured orders worth Rs 30,814 crore, an increase of 10 per cent over the previous year, in intensely competitive domestic and overseas markets, Rao said.

Despite severe market shrinkage and stiff competition in the power sector, BHEL maintained its leadership position with a market share of 72 per cent for the second consecutive year.

By expanding its offerings, the company secured 89 per cent of its total orders in the power sector on engineering, procurement and construction (EPC) basis.

"At the end of the year, total orders in hand for execution in 2015-16 and beyond, stand at Rs 1,01,018 crore," he said.

For the third time in a row, BHEL synchronized/ commissioned power projects of more than 10,000 MW in a single year. Power projects totalling 11,941 MW were commissioned during the year, inclusive of 10,230 MW utility sets, 1,392 MW captive sets/ industrial sets in the country and 319 MW in overseas markets. 

"2014-15 marked a turnaround in the Indian hydropower sector with an addition of 736 MW to Central utilities, the highest in a decade. Notably, entire 736 MW of hydroelectric projects were commissioned by BHEL," Rao said. 

At the meeting, Rao informed shareholders that 2014-15 saw the highest power capacity addition in the country. However, the generation sector is still to come out from the stressful conditions which have adversely affected the power sector development for past three to four years. 

Major constraints including non-availability of long-term coal linkages to identified projects, inability to ramp up indigenous coal and gas production, rising prices of imported fuel, poor financial health of state discoms and land acquisition had been hampering the sector, the CMD said.

In the last one year, certain proactive steps taken by the government, including allocation of coal blocks through e-auction, rationalisation of fuel prices and expeditious clearance of projects has provided much needed relief.

However, the retarding force which was created by the market shrinkage of the last three to four years, continued to impact BHEL's operations for the second consecutive year, he said.

"BHEL has faced these challenges, and from managing growth to managing slowdown, the company has demonstrated its strong inherent competitiveness as reflected from its sustained market leadership, continued focus on innovation and excellent project execution," he added.

In the renewable segment, BHEL has been in the field of solar Photo-Voltaics (SPV) for nearly three decades now. It has developed capabilities to supply complete SPV systems on EPC basis for both off-grid and grid-interactive requirements. 

It has also geared itself to take up EPC of large size solar projects (i.e. greater than 50 MW) to address emerging market trends and the increased potential in this segment, Rao said. 

BHEL still faces many challenges but recent policy initiatives taken by the government are likely to improve the business environment and provide momentum to existing and upcoming projects, he added. 

"The company is focusing on leveraging its intrinsic capabilities to build a strong foundation for the coming years," Rao said. 

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