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Strategic Management - BHEL

1 Section C Group 5

Strategic Management II

Project Report

On

How is Indian Public sector (BHEL) in Heavy Engineering production

fighting its way through with technologically superior multinational

companies in India?

Submitted By:

Group 5, Section C Date: 29 Mar 2012

Govind Raj Kaushik PGP2011640 Manu Shivanand PGP2011716 Pa Badrinaraynan PGP2011764 Praveen Kumar Alluri PGP2011792 Punit Moris Ekka PGP2011801 Ragvendran K. PGP2011804 Saikiran Pollamarasetty PGP2011843 Shweta Kalla PGP2011881


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2 Section C Group 5

Table of Contents

Introduction ...................................................................................................................................................................... 3

Overview of the Power Sector in India ............................................................................................................................. 3

Industry Analysis: Porters 5 forces ................................................................................................................................... 4

BHEL (Bharat Heavy Electricals Limited)........................................................................................................................... 6

Product portfolio .............................................................................................................................................................. 6

BHEL SWOT Analysis ......................................................................................................................................................... 7

Competition Analysis ........................................................................................................................................................ 8

Boiler Turbine Generators (BTG Segment) ....................................................................................................................... 8

Transformer Segment ....................................................................................................................................................... 9

Challenges being faced by BHEL ..................................................................................................................................... 11

Diamond Framework for India in power plant manufacturing and engineering sector (BHEL)..................................... 13

Value Chain for BHEL ...................................................................................................................................................... 15

How BHEL can improve the supplier opportunity cost and customer willingness to pay ............................................. 17

Opportunities for BHEL ................................................................................................................................................... 18Conclusion ...................................................................................................................................................................... 19

References ...................................................................................................................................................................... 19

Appendices ..................................................................................................................................................................... 20


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3 Section C Group 5

Introduction

Indian Power sector had been dominated by public sector (BHEL) for many decades

till a few years back. But the monopoly of Bharat Heavy Electricals Limited was jeopardized

with the liberalization of the Indian economy, and the power sector in particular. It led to the

entry of foreign players into this sector and has shaken the grounds for BHEL. With their high

technology equipments, low costs and timely supply, these multinational companies are

giving a tough competition to BHEL.

Through this report, we analyse the power sector in India and its dominant player,

BHEL, followed by the competition it is facing and the actions that it is taking to tackle the

same. Some recommendations have also been presented as the way ahead for BHEL

Overview of the Power Sector in India

The Power sector is the backbone of the Indian economy. It is present in the

concurrent list of the Government. In the last decade, the electricity sector in the country

has moved from being a mostly vertically integrated structure with the State Electricity

Boards (SEB) owning the generation, transmission and distribution businesses to a more

unbundled corporate structure. As compared to about 23 integrated utilities or SEBs that

existed before the electricity reforms began, there are now more than 80 utilities/companies

comprising state owned generation, transmission and distribution companies, private

utilities engaged in all three functions in particular cities, industrial power generators

(captive power units) that own small plants that cater to the electricity needs of their

companies, central government owned power generation and transmission companies and

Independent Power Producers (IPPs).

From 170.4 TWh in FY1986, Indias electricity generation has increased to 811.1 TWh

in FY2011. Generation increased at 5.4% CAGR for the five years to FY2011. From a peak

growth rate of 7.5% in FY2007, the generation growth rate declined to about 5.9% in FY2011.

The share of renewable energy sources has increased over the years and was 1.4% of the

total electricity generated in FY2008 and FY2009.


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4 Section C Group 5

The power sector basically operates in 3 major segments which include the

generation, transmission and Distribution. The generation machinery comprises of Boilers,

turbines and generators. Transformers are major components in the transmission sector.

Similarly switchgears and control gears account for most of the distribution machinery.

BTG market is experiencing steady growth in the country. The generation equipmentsegment garnered revenues of USD4.2 billion in FY10. The market expanded at a CAGR of

23.9 per cent over FY0810. Boiler is the major segment, accounting for 63 per cent of the

total revenues. Turbines accounts for 27 per cent while generators account for the remaining

10 per cent. Production of transformers increased at a CAGR of 7.9 per cent during FY08-10.

Domestic transformer industry has the capability to manufacture the whole range of power

and distribution transformers including transformers used for HVDC transmission up-to 500

KV. The switch gear industry in India manufactures entire voltage range from 240 KV to 800

KV.

Significant advances have been made in control gears due to major developments in

the field of technology. However there is a huge deficit between the requirements and the

supply. The per capita capacity is only 1/3rd

of the world average. Exports of the electrical

machinery sector increased at a CAGR of 14.9 per cent to USD1.9 billion from USD1.4 billion

during FY07-09. Transformers and generators were the primary drivers of the increase in

exports. Exports of electrical machinery stood at USD4 billion in FY10. Exports of electrical

power equipment & parts, valued at USD3.2 billion, constituted the largest share.

Industry Analysis: Porters 5 forces

The overall attractiveness of the power sector would be low to moderate based on

the following analysis:

Buyer Power Moderate

Opening up of markets has led to rivalry between the companies. Sheer number of buyers means players have many potential customers Market players are able to differentiate their products to a certain extent Buyers are reliant on products offered within this market to maintain their own business


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5 Section C Group 5

Supplier Power Moderate

The main suppliers to this market are the manufacturers of raw materials Raw materials are subject to price fluctuations Market players attempt to overcome this through hedging strategies Switching costs are relatively higher for private players.

New entrants Low

Major players are PSEs and other big private players Large capital cost required for setting up Subsequent high exit barriers also discourage new entrants Increasing demand in the end user market is the only positive sign for new entrants.

Substitutes - Low

No real substitutes for heavy electrical equipment Alternate sources for power generation are coming up However switching costs are high for adopting this. Difficult to assess whether these offer cost advantages per unit basis

Rivalry Moderate

Increased competition from Chinese companies. PSEs have dominance in heavy engineering, machine tools, boiler manufacturing. Several multinational companies of the likes of ABB and Seimens have entered the industry High fixed costs and low switching costs for buyers intensify rivalry

The Indian heavy engineering industry had been synonymous to BHEL for a long time

indeed. We look as to what, apart from governmental policies, helped BHEL sustain its

position for so long and the strengths it is competing on till date.


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6 Section C Group 5

BHEL (Bharat Heavy Electricals Limited)

Bharat Heavy Electricals Limited was established by the Government of India in 1964

to manufacture the electrical equipments indigenously within the country. Ever since it was

established, BHEL has been involved in the designing, developing and manufacturing, testing

and commissioning a wide range of products and services that cater to the core sectors such

as power, transmission, transportation, defence, renewable energy, oil and gas. BHEL has a

lion share of 62% of Indias total installed power generating capacity. The company has

invested heavily in R&D to develop new products and services. The company follows

stringent quality norms and has been accredited with ISO certifications. The company has

also been exporting its products and services to the countries like Malaysia, Iraq, Eqypt and

New Zealand. It has recorded revenues of Rs.43337 Crores and net profit INR 6011 for the FY

2011. It employs over 46,500 highly skilled people.

Product portfolio

BHEL manufactures a wide range of products in its portfolio under 30 major product

groups. The picture below illustrates the wide chain of activities that VHEL is into. It plays a

part in almost every stage of Power and Industrial applications.


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7 Section C Group 5

Let us understand the illustration here. First, for the oil fuels, we need the oil-rig

equipment. It is processed in a refinery. In the power generation plant, the heat they

produce heats the water in the boiler which flow through the steam pipes and rotates the

turbine.

This causes the generator to rotate. The power so produced is stepped up using a

transformer, and through the switchgear equipments is transmitted. The entire operation isautomated with the help of Instrument Transformers and Control and Relay Panels. It also

produces Hydel Power equipment and Desalination Plant equipment, Apart from these it

also produces locomotives which consume power. The detailed established capacity of the

entire product line of BHEL is enclosed in Appendix 1. In a nutshell these are the various

categories and the products of BHEL

Power Boilers, gas turbines, valve, turbo generators, air preheaters, electrostatic

precipitators, hydro power plant are some of the products which fall in the power category.

Industry Capacitors, compressors, desalination plant, gas turbines, oil field equipments,

turbo generator, photo voltaic cells, steam turbines, steam generators are some of the major

products that cater to the industries.

Transmission Bushings, Capacitors, Control Relay Panels, Dry-type Transformers, Energy

Meters, HVDC Transmission System, Insulators, Switchgears, Power Semiconductor Devices,

Power System Studies, and Control Shunt Reactor are the major products in this category

Transportation Electric Rolling Stock, Electrics for Rolling Stock, Electrics for Urban

Transportation System are the major products catering to the transportation

Non-conventional Energy Source Mini/Micro Hydro Sets, Solar Lanterns, Solar

Photovoltaic, Solar Water Heating Systems, Wind Electric Generators are the non-

conventional energy source products.

BHEL SWOT Analysis

The biggest strength of BHEL that is helping it survive even now is its superior

technology. BHEL is renowned for its high quality equipments not just in the country, but in

the whole world. But the long delays in supplying orders are forcing customers to look at

other options. And now that various MNCs are offering their customers high technology

equipments at a lower cost, BHEL is getting replaced by many. We take a look at the


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8 Section C Group 5

competitors for BHEL in the BTG and Transformer segments, the two most value adding

segments for BHEL.

Strengths

Wide product portfolio Strong international operations Robust research and technological capabilities

Weaknesses

Delay in delivery times Controlling stakes of the Government

Threats

Intense competition from multinational companies such as Siemens, ABB Risk of losing ground to Chinese companies

Opportunities

Growing global demand for energy Accelerating power sector in India Poised to benefit from the Indian industry sector

Competition Analysis

Boiler Turbine Generators (BTG Segment)

The generation equipment segment garnered revenues of USD4.2 billion in FY10 with

the market expanding at a CAGR of 23.9% over FY08-10. Among the BTG equipment Boilers is

the major segment accounting for 63% of total revenue followed by Turbines and Generators

accounting for 27% and 10% respectively.

0

2

4

6

FY 08 FY 09 FY 10

Market size of

generation

machinery

Generation

machinery market

breakup (FY10)Generator

Turbine

Boiler


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9 Section C Group 5

BTG parts are going to witness increase in their sales due to the increase in power

generation capacity in India to 250 GW by 2022. Though the demand seems favourable the

BTG industry is facing strong competition due to the entry of global manufacturing facilities

through Joint Ventures and imports from China. The competitors are entering into market by

adopting low price strategy or by keeping the niche approach to get hold on market share.

According to exhibit-1, in the operational BTG segment BHEL is the leading player withcapacity of 15GW followed by L&T-MHI with a capacity of 4GW in FY11. By FY14, in the BTG

segment, BHEL is expected to increase its capacity to 20GW followed by L&T-MHI and BGR

Energy-Hitachi with estimated capacity of 4GW. BHEL being the market leader in BTG

segment through its brand image and being technologically ahead of the competitors they

are aggressively defending their market share by charging more than the Chinese based

OEMs. China based OEMs are charging 2crore/MW BTG set where as the domestic OEMs are

charging 2.8~3.2crore/MW. BHEL is continuously enhancing their manufacturing capacity

which is accounting for their competitive advantage. Its been observed that there is a shift in

the recent trend from subcritical to supercritical technologies and BHEL, market leader in the

domestic BTG market and L&T-MHI JVs have been able to win their first orders in the super-

critical segment in FY2009. The yearwise estimated capacity for BTG Manufacturing is given

in Appendix 2

Transformer Segment

BHEL commissioned 7150 MW of power plant equipment and comprising 6772 MW

Utility & Captive/Industrial sets in the country and 378 MW in overseas markets. Utility sets

totalling to 5,014 MW were put under Commercial Operation. The capacity of BHEL supplied

utility sets to 85,786 MW and BHEL maintained its share of 64% in the countrys total

installed capacity of 1,34,697 MW.


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10 Section C Group 5

BHEL has contracted 26 large sizes Gas Turbine Generating sets of 100 MW and above

ratings to a number of countries including Oman, China, Bangladesh, Vietnam, Italy, Iraq,

Libya and Sri Lanka the forte of only a few manufacturers in the world in this size of gas

turbines.

BHEL-built power generating sets generated an all-time high 454.59 Billion Units of

electricity: 73% of the total power generation in the country. Consistently exceeding thenational average efficiency parameters, BHEL built thermal sets achieved the highest-ever

Plant Load Factor (PLF) of 79.9%; Operating Availability (OA) was also the highest-ever at

86.4%.

BHEL make 200-500 MW thermal sets, which form the backbone of the countrys

thermal generating capacity, operated at the highest ever PLF and OA of 85% and 90.4%,

respectively. Notably, 70 sets achieved PLF of over 90%. In addition, 7 BHEL make thermal

sets of various ratings operated at a record PLF of 100%. Of the 13 power stations awarded

with the Ministry of Powers Meritorious Productivity Awards for 2006-07, as many as 12 are

equipped with generating equipment manufactured and supplied by BHEL, reaffirming the

quality and reliability of BHELs equipment.

Since sustained growth has been witnessed in the Indian economy in the last few

years and as per latest estimates, the economy is expected to grow at 8.7 per cent in 2007-

08 and average at 9 per cent during its 9th plan. The 9th plan envisages a capacity addition of

78,577 MW to the installed power generating base of the country.

Riding on this growth, BHEL has plans to be a Rs.45000 Cr turnover company by 2011-

12. BHEL has tied up technology for higher-rating thermal sets based on supercritical

technology. Though the focus is presently on coal-based projects in view of the volatility in

gas prices, BHEL is introducing advanced-class gas turbines for which orders have already

been bagged against international competitive bidding.

BHEL is facing still competition from AlstomGrid, ABB, Siemens, CGL in the T&D

segment. Hence we see that the multinational companies are giving BHEL a tough

competition in its most revenue generating segments. The challenges for BHEL are not

limited to MNCs. We further explore the other challenges BHEL is facing at present.


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Challenges being faced by BHEL

Problems Galore

Traditionally, BHEL has had an advantage in the BTG segment. With competitors

being overseas, the transportation costs of these extremely heavy equipments were high.Further, the government supported BHEL by charging import duties that were more than

normal across the globe. This made BHEL, a monopolistic player and being a PSU, it led to

complacency. Though their products were of good quality, the deliveries were always late.

BHEL worked lazily throughout the year except for the three months Jan, Feb and Mar where

it works overtime to meet its targets. Let us look at the challenges that BHEL faces today and

how it plans to tackle it.

JVs for BTG

The foreign competitors, who delivered on time watched with vigilance. Players like

L&T lobbied hard with the government. The result is the JVs between foreign and local

players, L&T Mitsubishi, Alstom Bharat Forge, to name a few. Trying to handle the same,

BHEL signed a JV with NTPC called NBPPL (NTPC BHEL Power Projects Pvt Ltd). It focuses not

just on products but also on Project execution, there by taking a part of liability for delivery

delays on itself. Overall, BHEL now follows the strategy JVs for Capability enhancement and

M&A for Capacity enhancement. A list of these JVs are presented in Appendix 3

765kV and more

The highest transmission voltage in India today is 765kV. As the voltage gets higher,

the power loss gets reduced. The need for superior equipment also goes up. Players like

Areva, ABB and Siemens took the lead. While some of them established plants in India, some

of them distributed from off-shore locations. BHEL missed the bus, and lagged behind.

Though it has them in its portfolio today, it is unable to compete with the existing players.

However, it has taken a lead in the 1200kV segment. It has developed 1200kV

transformer indigenously. With it being one of its kinds in the world, this can be considered a

bright spot in BHELs multiplying problems today. The first test bay is expected to be

commissioned in Apr 2012 at Bina, M.P with all players taking part in it with equipment from


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each. With BHEL taking the Power Transformer supply, it has taken the crucial role in this

emerging market.

The Great Wall

Chinese products come at a very low cost. As per the current budget, the import

duties for power projects have been given tax-holidays for the next 3 years. Apart from that

they also give the option for credit payments. And the delivery style of BHEL has already

been discussed. As a result, they have emerged to be the strongest competitor in T&D

segment.

To tackle the same, it has utilised its Rs.10,000 Crore surplus to set up a new

subsidiary for providing NBFA, BHEL also organizes workshops for customers emphasising on

superior quality of BHEL products. Though it has orders booked for the next 5-6 yrs, it will

have to go a great deal to tackle this Chinese competition.

Over the head

BHELs machines are quite old and have already depreciated completely. Its only cost

is maintenance and labor. It also has location advantage. Inspite of the same, BHEL lost an

order for supply of supercritical turbine generator set to the Andhra Pradesh Power

Generation Company to L&T by a margin of 500 Crores. Another new player BGR Energy beat

BHEL for equipment supply to the Rajasthan government in consortium with China's

Dongfang.

The reason if analyzed will turn out to be its very high overhead costs accounting

from high salaries of employees. Apart from that, it also maintains a township with schooling

and medical facilities at all its plants. To tackle the same, BHEL plans to sell the houses of the

township to the employees. They are also developing an alternate mechanism for medical

funding.

It also attempted to reduce the cost by using temporary workforce. Though it

resulted in significant reduction in costs, quality was compromised. Skilled labour has always

been one of the strengths of BHEL, but with senior people either retiring or taking a VRS, it

risked losing its competitive advantage. It has now back tracked and has started recruiting

heavily, especially through campus interviews


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With competition and challenges from all sides, BHEL is also taking measures to

safeguard its position in the industry. Besides being a public sector enterprise is also working

to its advantage in ensuring the same:

Diamond Framework for BHEL

Porters diamond

model is mainly used to

investigate the national

competitive advantage in

a specific industry. It is

also used to explain why

certain companies based

in certain nations capable

of consistent innovation.

The model has four main

and two additional

attributes. The four main attributes are Factor conditions, demand conditions, related &

supporting industries, firm strategy, structure and rivalry. Two additional attributes are

government and chance. All these attributes interact with each other and they form a

dynamic system.

1. Factor Conditions: Human resources: The expertise required for power industry comprises of electrical and

electronics, mechanical, computer science, civil and other closely related engineering

areas. India has produced a lot of engineers in these streams, and research programs are

also in place. So skilled man power is available and wages in India are low, which implies

that skilled labour is available at low cost.

Physical resources: Raw materials such as steel, copper are available. Both arecommodity products and processing industry is available in India.

Infrastructure: Necessary infrastructure is available, and it is continuously upgraded. Capital: Capital investments for the power sector are continuously increasing as the

demand for the power in India is increasing.


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2. Demand Conditions: There is a huge power deficit in India. As of Dec 2011, over 300 million citizens had no

access to electricity in India.

India's power demand is seen rising 55.6 per cent to 1,400 billion kilowatt hours (bkwh)by the end of next five year plan period i.e., by March 2017.

3. Related and Supporting Industries: Presence of supporting industries like ancillary industries and SMES Lot of power generation companies were formed and supported by government which in

turn generated business for power plant equipment manufacturing industry

Railway industry played a major role in supporting power sector, as it is the primary coaltransporter. This in turn supported companies like BHEL who supplied equipment to

power generation companies

4. Firm Strategy, Structure and Rivalry: There is no immediate competitor for BHEL from private players of the industry. All the firms in this industry believed in permanent innovation process to meet the global

standards and needs of the power industry.

5. Government: Government developed goals for power sector which lead to a sustained investment in

the power plant manufacturing and engineering industry.

Currently competition is regulated and de-regulation process is on-going. Funds are made available under various schemes to the companies at a lower cost of

capital

Government owns nearly 69% of share in BHEL

6. Chance: Earlier the pressure for innovation is less, but currently due to the entry of foreign

players a lot of innovation is taking place.


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Companies are globalizing and are starting new branches in abroad The aim of nation and the companies is to satisfy electricity needs of every Indian citizen

and this is a great motivator for everyone in the value chain of this industry

Value Chain for BHEL

BHEL is putting in efforts across its value chain to ensure its position as a competitive

player in the Indian power sector. Considering the component wise efforts:

Infrastructure: BHEL is making large investment on increasing the capacity. It is adopting

both organic as well as inorganic means to achieve the same. It Acquired BHPVVizagas as

100% subsidiary in 2008 which is slated to enhance their capabilities in design, fabrication,

supply and erection of custom built process plant equipments. BHEL Electrical Machines Ltd.

is a joint venture between BHEL & KEL (Kasargod)/GoK for manufacturing of products for

Railways and Industries. It is a strategic move to enhance their presence in Transportation,

Industrial and Renewable Energy Sectors.

Human Resource Management: It has started skill enhancement at ITIs in JV/PPP mode:

Kabiguru(WB), Latur(Mah). It is also leveraging WRI Trichy to train high pressure welders and

providing extensive training to Act Apprentices & Customers. By hiring retired specialists as

Consultants, it is getting more expertise in the area. Through campus Recruitments, it is

trying to find the best talent available for itself.


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Technology Development: The R&D investment at BHEL is one of the highest in India. It is

also the winner of CII-Thompson Reuters Innovation Award 2010 in the 'Hi-tech Corporate'

category for innovation.

Procurement, Inbound and outbound logistics: For Increasing efficiency of supply chain

BHEL is going for Vendor Base Expansion (BHEL has added 1148 new vendors in 2009-10).

Global Sourcing (for low cost of RM) is also being looked into and for the same it has also

opened a procurement office in Shanghai, China. For long lead time operations, it has

designed an AMA (Advanced Manufacturing Action). It has entered into Technology

Collaboration Agreement with Sheffield Forge masters UK for large size forgings. To speed up

the procurement process, it has started Reverse Auction and e-Procurement methods. Long

term rate Contracts for steel, copper, CRGO, Transformer, Oil will help it in getting the right

price for its raw materials and finished products. Outsourcing for low tech/non-core

manufacturing is laid emphasis on in BHEL.

Operations: BHEL is working on improved operations through efforts for Lean, DTC, PSM and

on implementation of ERP/SAP. Its labour productivity is increasing over the years. Between

2007 and 2012(expected), the manpower productivity has increased by 17%, the capacity by

100% and the turnover by 167%.

Services: The operations and maintenance services and the allied services offered by BHEL

are deemed to be one of the best in the industry.

So, we find that BHEL is definitely trying to keep its lion share in the power sector

intact, we further look as to how BHEL can generate more value for its customers:


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How BHEL can improve the supplier opportunity cost and customer

willingness to pay

A suppliers opportunity cost is the minimum price they would accept and still

choose to supply the resource.

CURRENT SCENARIO: BHEL follows an online reverse auction through their portalhttps://bhel.abcprocure.com/domain/index.jsp for getting competitive bids. This is an effective

way of maintaining competition between the suppliers for supply of medium to high

customized component assemblies. BHEL should continue the current practice.

Disadvantage: This does not build any long term relationship with the supplier and

also, the opportunity cost lost for a supplier might not be substantial enough to bid for a low

cost.

PROPOSED: For the non-customized component assemblies, BHEL should go for thelong term contract with its suppliers for supply of parts. This will ensure that the opportunity

cost of losing a contract is very high and will thus entice the supplier for a low cost bid.

A customers willingness-to-pay is the maximum price they would pay and still

choose to purchase a product.

Current scenario: BHEL has its orders booked for the coming years but has been very

inefficient in meeting the schedules of delivery. Due to a very high requirement of electrical

machinery in the power sector, delivery is an important criterion for increasing the customer

willingness to pay.

PROPOSED: BHEL has to increase its capacity of production of boilers and more

importantly, streamline is value chain for decreasing the lead time for delivering to the

customers. Also, its competitors are like Siemens are focusing on increasing the efficiency of


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the equipment. It is recommended that BHEL works on these aspects to increase the

customer willingness to pay.

The online portal used by BHEL for reverse auction. This increases the competitiveness of the bids.

There are other opportunities also available with BHEL, some of which are listed as follows:

Opportunities for BHEL

1. Nuclear Power Generation State-owned NPCIL is ramping up its operations. BHEL should re-orient and focus its

efforts to develop technology for this too

2. Solar and Wind Power generation BHEL can play a big role in helping National Solar Mission achieve its proposed target of

20,000 MW of grid connected solar power.

Foray into wind power generation can also be done by BHEL3. Power capacity addition The market demand and budget reforms Tax-free bonds, ECB, additional depreciation of 20% for new power projects in first year,

and exemption for 1 more year

4. High-voltage technology Power transmission in India, currently at around 765 KV Expected to move further up with advent of 1200kV test bay at Bina Opportunity to be the first entrant in T&D equipments


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Conclusion

BHEL has so far enjoyed a monopolistic atmosphere protected by the government.

However, the winds have changed. International players now compete in the big market that

India is. It does have orders booked for the next 5 years but the period after that would be in

a spot of bother. BHEL can compete technically, but the other aspects pose the questions.

Even recently, the 1200kV T&D equipments totally developed indigenously prove its

technical competency, but achieving cost competency seems to be a problem. Lost orders to

new players and Indian-International JVs have forced BHEL to retrospect. It remains to be

seen whether BHEL can sustain its market share, utilising its skilled man power and

machinery. As of now, with players like L&T lining up, the future looks troubled.

References

1. BHELs current procurement system: https://bhel.abcprocure.com/domain/index.jsp2. Indian Power Sector , March 2012 ICRA3. Electrical machinery , November 2011 , IBEF4. Global power generation, February 2012, Marketline (Datamonitor 360)5. http://ibnlive.in.com/generalnewsfeed/news/transformer-industry-fears-crisis-due-to-

raw-material-shortage/916605.html

6. http://www.crnindia.com/commodity/copper.html7. http://www.sciencedirect.com/science/article/pii/S096014810900278X8. http://en.wikipedia.org/wiki/Electricity_sector_in_India9. http://www.hindustantimes.com/business-news/Markets/BHEL-share-sale-likely-next-

fiscal-year-govt/Article1-811711.aspx

10.http://www.dnaindia.com/money/report_govt-fails-to-decide-on-ongc-bhel-stake-sale-to-meet-again_1650457

11.http://www.bhel.com/about.php12.http://gop.academia.edu/ADemir/Papers/1450959/COMPETITIVE_ADVANTAGE_OF_WIN

D_POWER_INDUSTRY_FOR_TURKEY_ANALYSIS_OF_FACTOR_CONDITIONS_IN_PORTERS_

DIAMOND_MODEL

13.http://en.wikipedia.org/wiki/Diamond_model14.http://www.cedro-uva.org/lib/jansen.economics.html


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Appendix 1: Installed Capacity of various Product categories of BHEL

S. NO. PRODUCT UNIT INSTALLED CAPACITY ACTUAL PRODUCTION

2010-11 2009-10 2010-11 2009-10For For

Sale CaptiveConsum-

ptionFor For

Sale CaptiveConsum-

ptionHEP- BHOPAL

1 Turbo Sets

- Steam Turbine/Nuclear Turbine Set

MW

2 Hydro Sets

Hydro Turbine Nos

MW

Hydro Generator Nos

MW

3 Large Electrical Machine Nos

4 Traction Machines Nos

(Incl.TG/AG,Blower Motors,BPRV etc.)

5 Power Transformers Nos

MVA

6 Instrument Transformer Nos

7 Electrical Machines Nos

8 Switchgear Nos

9 Capacitor MVAR

10 Industrial Controlgear Nos

11 Traction Controlgear Set12 Control Equipment Nos

13 Heat Exchangers Nos

MT

14 Control Panels Nos

15 Cathodic Protection System Tonne

TP, JHANSI

1 Power Transformers 33kv/ 132kv Nos./MVA

2 Other Transformer

Special Purpose Transformer Nos

(Dry Type Trfr. etc.)

Traction Transformer. Nos

(Frt. Loco & ACEMU)

Instrument Transformer Nos

ESP Transformer Nos

3 Diesel Shunters Nos

4 AC Locomotives Nos

(Upto 6500 HP)

1/1

210 or

250/236

25

2500

25

2500

450

3200

30000

200

1800

3000

3200

250

220600

52

1100

600

2700

200/15000

140

140

1000

500

10

30

1/1

210 or

250/236

25

2500

25

2500

340

3200

30000

200

1000

3000

3200

250

220600

52

1100

600

2700

105/5500

140

140

1000

500

10

30

0 0

0 0

15 0

1149 0

15 1

1256 30

387 3

2351 0

18292 513

414 0

1327 4

2952 0

2610 0

0 0

191 01580 0

42 0

0 0

395 0

0 0

151/7337 1/60

181 3

154 0

464 0

1228 0

7 0

31 0

0 0

0 0

24 0

785 0

25 0

1399 0

336 4

2379 0

13351 880

354 1

1159 7

2892 28

2112 136

0 0

164 01301 0

39 0

0 0

392 2

0 0

142/4483 2/88

159 12

130 0

363 0

1106 0

8 0

22 0


21/23

140



2010-11 2009-10 2010-11 2009-10

For For For ForSale Captive Sale Captive

Consump- Consump-

tion tion

HEEP - HARDWAR

1 Turbo Sets* MW 10020 5750 2900 0 2355 0

2 Hydro Sets MW 0 0 0 0 0 0

3 Electrical Machines MW 0 0 0 0 0 0

4 Gas Turbine MW

5 Super Rapid Gun Mounts Nos 3 3 2 0 2 0

* Capacity of Turbo Sets includes manufacturing capacity of spares equivalent to 500 MW

CFFP HARDWAR

1 Steel Castings MT 6000 6000 3574 0 3736 6

2 Steel Forging

(a) Steel Forgings (Heavy) MT 2410 2410 1057 811

(b) Medium Forgings (Medium) MT 3000 3000 1777 1590

3 Billets and Blooms MT 4000 4000 143 17

4 N F Casting MT 250 250 89 39

HPEP- HYDERABAD

1 Steam Turbines MW 1630 1140 1913.18 797.4

2 Generators MW 2720 1947 2626.55 1626.953 Gas Turbine MW 1090 992 1721.6 1287.7

4 Compressors Nos 9 9 20 12

5 Pulverisers Nos 172 101 172 145

6 Pumps Nos 280 187 341 227

7 Breakers Nos 1035 1035 5 186

8 Heat Exchangers Nos 152 152 257 191

9 Oil Rigs Nos 14 5 41 23

10 Drive Turbines Nos 27 10 32 29

EDN - BANGLORE

1 Control Equipments CUBICLE 4500 4300 6251 398 5421 476

2 Power Devices Nos 20000 20000 21077 19420

3 Photovoltaics KWS 8000 8000 4715 18 1155

4 Simulators (Defence Electronics) SETS 0 0 0 0


22/23

141



Source: BHELs Annual Report

2010-11 2009-10 2010-11 2009-10For For

Sale Captive

Consump-tionFor For

Sale Captive

Consump-tion

TIRUCHY

1 Boilers MT

2 Valves MTNos

3 Nuclear Steam Generating Equipments MW

4 Seamless Steel Tubes MT

5 Armoured Recovery Vehicles Nos

BAP - RANIPET

1 Boiler Auxiliaries MT

I V P GOINDWAL

1 Industrial Valves & MTValves Spares Nos

EPD - BANGLORE

1 Insulators & Bushings CMT

2 Assembled Production MT

3 Ceralin CMT

4 Ceralin (Assembled) MT

IP - JAGDISHPUR

1 Insulators CMT

2 Ceralin MT

3 Ceralin(Assembled) MT

CFP - RUDRAPUR

1 S W H S

2 Solar Lanterns Nos

3 Bus Duct MT

CSU

1 Stampings Nos

481162

13800

382/500

40000

25

245553

788

6250

745

6000

1574

150

13000000

481162

13800

382/500

40000

25

207305

788

6250

745

6000

1574

150

13000000

595939

174415

35221

0

293210 0

247913860

6459

9253

1599

4130

7376.56 0

1912.81 0

4397.27 0

1318 0

3600000 0

545045

168869

32787

0

244933 0

191111091

6633

8840

1400

3355

7169.78 0

1593.21 0

3662.55 0

1188 0

1436000 0


23/23

Appendix 2: Year wise Estimated Capacity for BTG manufacturing

Appendix 3 List of JVs with State Utilities

Names of Joint Ventures Country ofIncorporation

Proportion ofOwnership

Power Plant Performance Improvement Ltd. India} One share

BHEL-GE Gas Turbine Services Pvt. Ltd. India} less than50%

NTPC-BHEL Power Projects Pvt. Ltd. India 50%

Udangudi Power Corporation Ltd. India 50%

Barak Power Pvt. Ltd. India 50%

Raichur Power Corporation Ltd. India 50%

Dada Dhuniwale Khandwa Power Ltd. India 50%

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