BHEL exploring non-power equipment business for profits

August 11th, 2012 - 5:01 pm ICT by IANS  

Tiruchirapalli, Aug 11 (IANS) Power equipment major Bharat Heavy Electricals Ltd. (BHEL) plans to focus on increasing its revenue from non-power segments like railways, defence and others, said a top company official.

“BHEL will bid aggressively for coaches for metro trains. Till now we are not a major player in this segment. We plan to supply 75 locomotives to Indian Railways this year, up from 54 units supplied last year,” B. Prasada Rao, chairman and managing director, told reporters here Friday.

He was in Tiruchirapalli to hold a series of review meetings with officials of the company’s boiler division.

On supplies to the defence sector, Rao said the company has been asked to look out for appropriate technology to supply 127 mm and 30 mm guns for the Indian Navy.

“We now supply 76 mm guns for the Indian Navy,” Rao said.

According to him, defence is not a big business for the company as it earns around Rs.400 crore. He said once the defence off-set clause gets into operation, the company will be able to earn more revenue from this sector.

Even though many of the power plants in the country are old, Rao is not very enthusiastic about the revenue potential from renovation and modernisation (R&M;) of these plants.

“R&M; is a tricky business. Power generation will not improve drastically just by carrying out R&M; of BTG (boiler, turbine generator). The balance of plant (BOP; power equipments other than BTG) too have to be modernised to get the full benefit of R&M; activity. We are discussing this issue with the Central Electricity Authority (CEA),” Rao said.

Asked about the Chinese competition and the pricing pressure with not much of new orders in the pipeline, Rao said: “The government plans to issue a guideline that all power plants should have a life of around 25-30 years. This would address the issue of overseas competition. We are increasing the local content in our boilers and it would make us more competitive.”

On BHEL not being the lowest bidder for bulk tender issued by NTPC recently, Rao said the company has taken several exercises since that tender and BHEL will be very competitive in future tenders.

“We have the volume (capacity) advantage over others. Our capacity is 20,000 MW per annum and we make the entire range of power equipments. This strength we will be leveraging,” Rao said.

Asked whether the company could reduce its margin to bag contracts and keep the Chinese players out, Rao said the proposed increase in the import duty of power equipment will not benefit domestic companies in a major way. He added that the cushion will be to the extent of only five percent as against the demand of 14 percent.

“Domestic manufacturers also have to import some equipment/components. We do not know when the revised import duty would be applicable and whether it would be prospective or retrospective,” Rao remarked.

He said the company is exploring the possibility of setting up a cold rolled grain oriented silicon (CRGO) steel project partnering with Vizag Steel (Rashtriya Ispat Nigam Ltd.) and a foreign player for technology.

“We plan to invest around Rs.1,000 crore this fiscal in our existing operations and if the CRGO steel project fructifies, then we will invest another Rs.400 crore,” Rao said.

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