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PSU SECTORS

• Group Three • Raghavi• Deepali• Vaseem• Sachin• Nita

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Flow of Presentation

• Introduction• Mission & Vision • Values• Business Model• Corporate Strategy• GE Matrix• Ditch Diagram • BCG Matrix• SWOT analysis• Product Life Cycle • Competitors• Recent news.• Question & Answer

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PSU SECTORS

HINDUSTAN PETORLIUMOIL & NATURAL GAS CORPORATIONMAHAVITARAN [MSEB]MMRDAMHADABHARAT PETROLIUMBSNLHMTBHEL [BHARAT HEAVY ELECTRICALS LTD.]MAHAGENCO [MAHARASHTRA STATE POWER GENERATION COMPANY]SAIL [STEEL AUTHORITY OF INDIA LTD]BEML [BHARAT EARTH MOVERS LTD.]

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Introduction

Was set up in 1959 by the Government of India.

wide-spread network comprising 14 manufacturing divisions, 8 service centers, 4 power sector regional centers, 18 regional offices

is the 12th largest company in the world in Power Plant Equipments manufacturing and thelargest in India.

has the ability to manufacture the entire range of power plant equipment.

has one of the largest capacities of power plant equipment in the world.

which could handle turnkey businesshas a capital base of Rs. 244.8 crore

current market capitalization is Rs. 3451.12 crore.

is undoubtedly a jewel in the crown of the public sector.

an export presence in more than 70 countries

Bharat Heavy Electricals Limited

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Vision : A world class Engineering Enterprise committed to Enhancing Stakeholders Values.

Mission & Vision

Mission : To be an Indian Multinational Engineering Enterprise providing. Total Business Solutions through Quality products, Systems and Services in fields of Energy, Industry, Transportation, Infrastructure & other potential areas.

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VALUES

Zeal to Excel and Zest for Change

Integrity and Fairness in all matters

Respect for Dignity and Potential of Individuals

Strict Adherence to Commitments

Ensure Speed Response

Faster Learning, Creativity and Team-Work

Loyalty and Pride in the Company

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Business Model

BHEL –Business Breakup

Power Division Industry Division

Transportation Transmission Industrial

Overseas Business

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Power Division

The performance of power division is related with the Indian power capacity.

This division manufactures products and systems for thermal, nuclear, gas and hydro based power plants.

It include turbines, generators and boilers with matching auxiliaries.

BHEL has an installed capacity of 7000 MW p.a. of power equipment.

BHEL contribution to the total capacity in the country is around 65% (around 60000 MW out of the total 92350 MW).

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Industry DivisionTransportation

• The demand in this segment mainly comes from Indian railways and particularly for traction motors which forms a significant part of this division sales.

• The demand from railways is for replacement and modernisation and this would continue to be a steady source of business for the company.

• In case of locomotives, BHEL has been supplying locos to Indian railways on BOLT basis in the past.

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Transmission

• This sub-division caters :

Transmission & distribution network of power sector.

• It includes transformers, switchgears, substations, High voltage DC lines.

• The demands for these products are directly linked to investments in the industrial sector and capacity additions in the power sector.

• The companies of their virtue of having a long chequered history in this segment are better placed in getting orders, especially in the transformers segment, where it has maintained its market position.

Others35%

BHEL21%

Crompton Greaves

17%

Vijay electricals

8%

Emco transfomers

7%

G E 6%

Imports6%

Others

BHEL

Crompton Greaves

Vijay electricals

Emco transfomers

G E

Imports

Market Share in Transmission Segment

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Industrial

BHEL involved in the development design , engineering , marketing , production , installation , and maintenance and after - sales service of rolling stock and traction propulsion systems.

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BHEL's overseas presence spans 70 countries in all the six continents of the world.

The Overseas business is one of the major focus areas for the company.

The company has about Rs.1020 crore Exports business in the year 2008.

Overseas Business

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Corporate Strategy

• Expansion of Production Capacity

• Cost Leadership

• Starting Joint Venture to tap business in new emerging business segments

• Completion of Project on Time

• Commitment towards TQM

• Updating of Technology from time to time with collaborative tie-ups with world leaders.

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STRATEGIC PARTNERSHIP

• Acquisition of Bharat Heavy Plates and Vessels (BHPV)

• Joint Venture with NTPC.

• JV with Nuclear Power Corporation of India Ltd (NPCIL)

• JV with Heavy Engineering Corporation (HEC)

• JV with Tamil Nadu Electricity Board (TNEB).

• JV with Siemens AG of Germany.

• JV with GE of the US.

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NEW BUSINESS AREA

• BHEL has ventured into the business of defence applications.

• It has obtain a high volume of business from the ministry of defence.

• The total turnover of the industrial segment, supplies to defence (which are mainly armoured recovery vehicles and naval guns) comprise about 7%.

• BHEL is entering into Integrated Gasification Combined Cycle systems, Coal

Washeries, LRT Systems etc.

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STRATEGY BUSINESS

• BHEL is involved in several strategic business initiatives for internationalization.

• BHEL targeting the export markets, positioning as a reputed engineering ,procurement & construction (EPC) contractor globally & looking opportunities for overseas joint ventures.

• It has management contract for Bharat Pumps & Compressors Ltd & proposed takeover of Bharat Heavy Plates & Vessels (sister concern PSU ).

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Competitive Strength

• BHEL has been internationally competitive.

• The company has successfully proved by bagging over 86% of power plant orders under international competitive bidding (ICB) in the domestic market.

• With a market share in the power industry in excess of 70%, BHEL has built up enough financial strength.

62.10%24.60%

13.30%BHEL

CHINESE

OTHERS

Share in 11th Plan Thermal Orders

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POWER

GAS

THERMAL

TRANSMISSION

INDUSTRIAL

TRANSPORTATION R & D PRODUCT

OVERSEAS

Strong Average Weak

High

Medium

Low

GE MATRIX

Telecommunication

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Ditch Diagram

BHEL

OTHERS

L & T

Reliance Infra

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BCG MATRIXTARS ? MARKS

CASH COWS DOGS

Overseas Business,Super Critical Business

Transmission BusinessTECHNOLOGY.Transportation Business

Nuclear power plant & Thermal Power Plant BusinessCoal based 75 %Nuclear based 65 %Hydro based 50 %

NA

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180 Products under 30 major product group. Ability to acquire the new technology. Strong relationship

with NTPC-85% of its projects bagged by BHEL. Positive Drivers.

trengths

eakness

pportunities

hreats

PSU Status, stringent credit facilities to the customers in rising competitions. Vertically integrated, no outsourcing.

Good future in India for Power sector, increase in defense budget, NTPC plan for addition 2800 MW, Business modernization & renovation, Joint venture with Siemens in the name of Powerplant.

The global trend of consolidation, more dependency on NTPC, Elimination of Import license

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Competitors

CESC (Calcutta Electric Supply Corporation)

Larsen & Toubro

Siemens

GAIL (Gas Authority of India Limited)

Reliance Infrastructure. Tata Power

Lanco

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BHEL can Anticipate

BHEL’s expected performance for the year 2008-09

Gross Sales (Turnover) (Rs. Millions) 250,000

Gross Margin (Rs. Millions) 57,240

PBDIT to Total Employment (Rs. Millions) 1.241

Gross Margin to Gross Block (%) 95.71

Gross Profit to Capital Employed (at year end) (%) 79.83

Net Profit to Net Worth (at year end) (%) 26.64

Added Value to Gross Sales (%) 20.25

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Recent News

BHEL and KEL to form JV.

BHEL achieves major landmark with the supply of Space Grade Solar Panels for first satellite export project of ISRO

BHEL and KPCL float JV Company for setting up Supercritical Thermal Power Projects in Karnataka.

BHEL Plans to increase spending on R & D & also planning to implement ERP in HR to improve efficiency.

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5 generic competitive strategies

Overall low cost Leadership

strategy

Broad Differentiation

strategies

Focused Differentiation

strategies

Focusedlow cost strategy

Best-Cost Producer Strategy

Buyer Segment or Niche

Broad range of Buyers

Lower Cost DifferentiationTARGET

MARKET

TYPE OF ADVANTAGE SOUGHT

BHEL

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Life Cycle portfolio mixLife Cycle portfolio mix

Weak

Average

Strong

Early Development

IndustryTakeoff

RapidGrowth

Shakeout

Maturity Market Saturation

Decline

Stage in life cycle

Com

peti

tive

Pos

i ti o

n

BHEL 64%

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Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

658.15 1003.75 1679.16 2414.70 2871.11

Net Profit for the last 5 Years in Crores

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The 5 force model of competitive analysis of BHEL.

Substitute. (No Substitute)

BuyersNTPC & Govt Entities

Potential newEntrants

(Chinese Player, Korean)

SuppliersRivalry among

Competing sellers(L & T,GAIL, Siemens)

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Thank you very much for listening to us.