SWOT ANALYSIS OF BHEL, JHANSI

STRENGTHS

 The company has 180 products under 30 major product groups that cater to the needs
of the core sector like power, industry, transmission, transportation, defense,
telecommunications and oil business.
 BHEL's ability to acquire modern technology and make it suitable to Indian conditions
has been an exceptional strength of the company.
 Strong relationship with NTPC is strength as NTPC is planning a capacity expansion of Rs.
52bn and based on the past, 85% of NTPC projects have been bagged by BHEL. The
company also enjoys purchase price preference.

WEAKNESSES

 PSU status is a big weakness for BHEL as it is subject to their rules and regulations and is
forced to carry a huge amount of labor force, which it is unable to retrench.
 The company offers very stringent credit facilities to the customers and this is a
weakness when compared in the face of rising competition. On the other hand their
customers in the power segment, SEBs, have a huge amount of receivables standing
against their name in the company's balance sheet. This is a major weakness of the
company.
 The company is vertically integrated, which could have been avoided by outsourcing its
components for power generation and transmission. This could reduce the cost.

OPPORTUNITIES

 The power sector reforms are expected to pick up in the near future in India, which
would directly benefit BHEL.
 Increase in defense budget will increase the top line for the company.
 NTPC is planning additional capacities to the tune of 2,800 MW, at a cost of Rs 52 bn.
BHEL could benefit a lot as it has happened in the past that significant portion of the
project of NTPC is handled by BHEL. Nearly 85% of the NTPC projects were assigned to
BHEL only.
 The business of modernization and renovations of power plants is expected to grow in
India.
 The disinvestment plans of the government would bring in new resources and
experience into the company.
 Joint venture with Siemens in the name of Power Plant Performance Improvement Ltd.
(PPIL) is a major strength for the company. This tie-up will be beneficial as there is a lot
of scope for business.
 THREATS

 The global trend of consolidation has already resulted in a fall in turnover of the
company and this will prove to be a major threat in the years to come as well.

 The company is dependent on NTPC to a great extent.

 Recently, the government has permitted the import of second hand capital goods that
are 10 years old without the need for a license. This move will definitely increase
competitive pressures for BHEL.

7S frame work

Skills

• BHEL has historically invested in its talent pool and have been able to attract the brightest and best.
With a base of 42000+ skilled and committed employees, BHEL has went on to become the largest
engineering and manufacturing enterprise in India operating from over 40 yrs and manufacturing over
180 products across 30 major product groups.

• Following are the major areas of skill focus by BHEL: Thermal Power, Gas based Power, Hydro Power,
DG Power, Industrial turbo sets, Boilers & Boiler Auxiliaries, Heat exchangers & Pressure vessels, Pumps,
Power station control equipments, Oil field equipments, Transformers & Switch gears, Wind mills,
Industrial electrical machines, Non-conventional energy systems, Casting & Forgings, Transportation
equipment and Power devices.

• BHEL is a market leader in Power generation and Industrial electrical machines internationally.

Staff

• BHEL believes in investing in its employees and thus have created a culture of continuous learning
which enables them to be at the cutting edge of technology changes. BHEL is able to pursue this by:
o Continuous training and retraining

o Career planning for its employees

o Positive work culture and participative style of management

All these have engendered development of a committed and motivated workforce setting new
benchmarks in terms of productivity, quality and responsiveness.

• BHEL has joined the Global Compact of United Nations which includes the following principles

o Human Rights

Business should support and respect the protection of internationally proclaimed human rights

Make sure that they are not complicit in human rights abuses

o Labour Standards

Business should uphold the freedom of association and the effective recognition of the right to
collective bargaining

The elimination of all forms of forced and compulsory labour

The effective abolition of child labour

The elimination of discrimination in respect of employment and occupation

Shared Values

• As stated in its vision, BHEL has a strong focus on generating value for its stakeholders. This can be
adjudged by the fact that the company has been earning profits continuously since 1971-72 and paying
dividends since 1976-77.

• BHEL has a strong commitment towards environment and pollution control. Hence it has set up PCRI
which is the in-house R&D unit of BHEL. The institute has undertaken a number of R&D projects to
develop industrial pollution control technologies, such as:

o Development of prediction modes for forecasting air pollution

o Development of Acoustic barriers to control noise pollution in Fabrication shops

o Development of technology for disinfection of treated sewage using ultra violet radiation techniques

• BHEL supports anti-corruption practices and demonstrates it by participating in Global Compact of

United Nations which includes Anti-corruption principles.

Systems

• Quality Management:

o BHEL uses Quality Management Systems, which are certified to ISO 9001:2000 series of Standards by
Internationally acclaimed certifying agency, BVQI to meets its Quality policy.

o Corporate Quality and Unit level Quality structure enables requisite planning, control and
implementation of Company-wide Quality Policy and Objectives which are linked to the Company's
Vision statement

o Corporate Quality derives strength from direct reporting to Chairman and Managing Director of the
Company.

o BHEL utilizes and propagates Quality Management Systems and Total Quality Management

o As part of its quality initiative BHEL formulates, implements and monitors improvements plans with
focus on internal and external Customer Satisfaction. It performs investigations and preventive actions
on Critical Quality Issues.

o Calibration and testing laboratories of BHEL are accredited under the National Accreditation Board for
Calibration and Testing Laboratories (NABL) scheme of Laboratory Accreditation, which has got mutual
recognition with Asia Pacific Laboratory Accreditation Conference and International Laboratory
Accreditation Conference.
o BHEL has achieved product certification from international bodies like ASME, API etc. and Plant
Approvals by agencies like Lloyds Register of Shipping, U.K., Chief Controller of Explosives India, TUV
Germany etc.

o BHEL has adopted European Foundation for Quality Management (EFQM) model for Business
Excellence. Through this model and annual self-assessment exercise, BHEL is institutionalising
continuous improvement in all its operations.

• Vendor Management

o Vendor awareness is driven through online systems which makes the vendor bill payment processes
transparent.

o Vendor on-boarding is being made easy by making vendor registration & information systems
available online.

Strategy

o BHEL has participated in strategic alliances and JVs which has allowed them to expand their product
offerings and improve technology capability by undertaking joint R&D projects with its partners. Some
of the key alliances/JVs are as follows:

o BHEL and GE India Industrial Private Limited (GEIIPL), a 100% owned subsidiary of GE, USA, have joined
hands for cooperation on Water Treatment Equipment. As per the agreement, BHEL and GEIIPL will
jointly engineer and supply water treatment solutions for the Indian market. Over the term of the
agreement, through joint working, BHEL will acquire the capability to address large water treatment
systems based on GE Products, on its own.

o BHEL and Govt. of Kerala form JV for manufacture of products for Railways and Industries. Strategic
move to enhance BHELs presence in the Transportation, Industrial and Renewable Energy Sectors.

o BHEL and Toshiba Corporation sign MoU to form JV Company for Transmission and Distribution
business in India and other mutually agreed countries.
o BHEL and MPPGCL float JV Company for setting up Supercritical Thermal Power Project in Madhya
Pradesh.

o BHEL and KEL to form JV for manufacture of products for Railways and Industries; Strategic move to
enhance BHEL's presence in the Transportation, Industrial and Renewable Energy Sectors

o BHEL and TNEB float JV Company for setting up the first 2x800 MW Supercritical Power Project in
Tamil Nadu.

o BHEL, NTPC JV Company Incorporated, To jointly execute EPC Contracts and Manufacture and Supply
Equipment in India and Abroad

o BHEL makes its foray in execution of Supercritical Thermal Power Projects; Signs MoU with TNEB to
float JV Company for setting up the first 2x800 MW Supercritical Power Project in Tamil Nadu.

o R&D and technology development are of strategic importance to the company as it operates in a
competitive environment where technology is a key driver. Technology development efforts undertaken
by BHEL have led to the filing of patents and copyrights at the rate of nearly one a day, significantly
enhancing the company’s intellectual capital to almost 1,300 patents and copyrights filed, which are in
productive use in the company’s business.

With an R&D spend at nearly 2.5% of its sales turnover; BHEL is the highest spender on R&D in India for
its kind of industry. Significantly, BHEL is one of the only four Indian companies and the only Indian
Public Sector Enterprise figuring in ‘The Global Innovation 1000’ of Booz & Co., a list of 1000 publicly-
traded companies which are the biggest spenders on R&D in the world.

o BHEL plans to invest and build competency in emerging markets which includes Alternative energy,
transformer manufacturing (increased to 45,000 MVA), investment of Rs. 250 crores in CE (areas
identified are Photovoltaic, Sub-assembly, Defense products & Semiconductors. New product
investments in PADO hydro & gas, 800mw sets, railway signaling, space grade solar cells, ships control
system and integrated platform management system.

PESET analysis

PESTEL ANALYSIS Political Factors: BHEL being a public sector undertaking is greatly influenced by the
political forces. There is achange in policies every time the government changes. The business decisions
are steered to agreat extent based on the individual preferences of the new leadership. The company
does big business overseas and these projects are directly dependent on the incumbent ruler’s
internationaltrade policies. BHEL has, over the years, established its references in more than 70
countriesacross the world, encompassing almost the entire range of BHEL products and services,
coveringThermal, Hydro and Gas-based turnkey power projects, Substation projects, besides a
widevariety of products like: Transformers, Compressors, and Heat Exchangers etc.The government
policies and regulations relating the company’s client industries can largelyaffect the future of its
business with these customers. For example, power sector has seen amassive growth in the last few
years and has been at the top of the political agenda. Now power companies are the major clients of
BHEL. Promotion of the sector augers well for theorganization as it can crack heavy deals with these
companies. Moreover, the power sector wasderegulated in 2003, which opened doors for the entry of
private players in the market.Such entrants can also be potential customers for the company.Being a
PSU, it is the preferred choice for the other state-run entities and also the defenseservices. It developed
the Automatic storage & retrieval system (ASRS) for storage andinventory management system of the
Indian Army. The Company has signed a MoU withAPGENCO for setting up a 125 MW IGCC (Integrated
Gasification Combined Cycle)technology plant at Vijayawada. This is an eco-friendly, clean coal
technology Economic Factors: The economic boom in India particularly in the last one decade has played
a significant role incharting the success of the company. Lot of Industrialization has been brought about,
which hasalways been a catalyst for BHEL’s sprinting growth. Businesses are dependent on each other
for their survival and help themselves flourish mutually. When the economy does well all businessesride
up the rising wave. Power Generation is one of the primary indices of a country’s economic
development. As of 31.3.2008, BHEL- supplied sets accounted for nearly 64% of the total installed
capacity inthe country, contributing 73% of the total power generated in the country. BHEL
manufactures and supplies major capital equipment and systems like captive power plants,
compressors, industrial boilers, gas turbines, pumps, heat exchangers, electrical machinesetc. to a
number of industries like, metallurgical, mining, cement, paper, fertilizers, refineries & petro-chemicals,

2. etc., other than power utilities. The growth of these industries has multiplied theturnover of the
company leaps and bounds in the last few years. Turn key projects are the need of the hour and BHEL
has proven turnkey capabilities forexecuting power projects from Concept-to Commissioning. In the
area of urban transportation, BHEL is geared up for turnkey execution of electric trolley bus systems,
light rail systems and metro systems. Mass transport systems are a must for agrowing economy. Social
Factors: In India the whole country and its people are poised for a giant leap towards economic
growthand prosperity. People have realized how important it is for the economy to develop for their
own betterment. Levels of awareness have gone up drastically and people are much more open
toindustrial growth. However, having said that BHEL should also ensure that the company’sactions do
not come in the way of any of the stakeholders, its decisions are ethical and don’tencroach upon the
rights of the society. The company should not be negligent towards societalinterests and rights.
Companies are taking more interest in corporate social responsibility these days and stepshave been
taken by BHEL too to further the same. Its contributions towards CSR till dateinclude adoption of
villages, free medical camps/charitable dispensaries, schools for theunderprivileged and handicapped
children, ban on child labor, disaster/natural calamityaid, Employment for handicapped, Widow
resettlement, Employment for Ex-serviceman,irrigation using treated sewage, pollution checking camps,
plantation of millions of trees,energy saving and conservation of natural resources through
environmental management. Companies that are sensitive to the needs and development of the society
normally draw people’sattention and respect faster and can create a superior moral image in the minds
of their partnersand clients, the same showing more interest in working with an ethical and socially
consciousgroup.BHEL has established the Human Resource Development Institute in Noida, which forms
acornerstone of BHEL’s learning infrastructure. The centre through various HRD efforts ensuresthat
Human Capital - is “Always in a state of Readiness” to meet the dynamic challenges posed by a fast
changing environment. This not only helps in achieving the organizational goals, but italso serves as a
platform to train aspiring and competent youth of the nation. Technological Factors: BHEL being an
engineering and manufacturing giant is to a great degree driven by technologicaldevelopments and
innovations and has its earnest efforts directed towards improving itstechnological prowess to meet the
changing requirements of a growing economy. At the sametime

3. the company has to keep pace with the developments happening in its business areas, else itwill be
knocked out by the competitors. BHEL has been a leader always and the fact thatIndia’s first
underground metro at Kolkata runs on drives and controls supplied by BHELis a testimony to this.The
government is setting up supercritical thermal power plants in the country, eachgenerating around
2500-4000 MW and has plans to come up with many more in the nearfuture. BHEL has developed the
technology and capability to produce large capacitythermal sets with super critical parameters to gear
up for this requirement. The Company has proven expertise in Plant Performance Improvement through
renovation andup-rating of a variety of power plant equipments to improve the performance of existing
plants.It has also emerged as a major supplier of controls and instrumentation systems for various
power plants and industries.For enhancing the power transfer capability and reducing transmission
losses in 400 kV linesBHEL has indigenously developed a state-of-the-art 400 kV Controlled Shunt
Reactor for reactive power management of long transmission lines.R&D plays a big role in technological
development and BHEL attaches a lot of importance to itall the same. BHEL’s investment in R&D is
among the highest in the corporate sector in India. Products developed in-house during the last five
years contributed 13.80% to the revenuesin 2007-08. Besides this, the company has developed many
eco-friendly technologies to serve theenvironment conscious. Environmental Factors:BHEL is an
environment friendly company in all its activities, products and servicesbesides providing safe and
healthy working environment to all its stakeholders. Thedepleting water and energy resources are a
cause of concern for all. BHEL has taken certainmeasures to conserve these precious resources. It has
set up rainwater Harvesting Plants andEnergy Conservation Projects utilizing efficient technologies.
Proper disposal of Chemical and other wastes is also a major concern for which thecompany has put up
Chemical storage and disposal plants. All these projects helped increating pollution free environment,
conservation of precious resources like energy, water, fueloil, coolant besides installation of proper
system for storage/handling of chemical waste.The company has made the principles of the Global
Compact program of the United Nations a part of its strategy, culture and day-to-day operations. Global
Compact is a partnership betweenthe United Nations, the business community, international labor and
NGOs and has a set of corevalues enshrined in its ten principles on human rights, labor standards,
environment andanticorruption. BHEL has been manufacturing and supplying a range of Renewable
Energy products andsystems. BHEL is actively associated with the development and adoption of Hydel,
WindPower and Concentrated Solar Power (CSP) projects in India and abroad.
4. It has developeda technology for reduction of NOx gases from coal-based thermal power plant. The
company isalso taking active interest in CDM (Clean Development Mechanism) Projects and activities.
Legal Factors: BHEL has attained ISO - 9001 certification for quality management and all its
manufacturingunits/divisions have been upgraded to the latest ISO-9001: 2000 version. All the major
units/divisions of BHEL have been awarded ISO -14001 certification for environmentalmanagement
systems and OHSAS-18001 certification for occupational health and safetymanagement systems. The
company has to adhere to the scores of legal rules andregulations, the acts, particularly the Companies
Act 1956, The Factories Act, theEnvironmental Protection Act, Sale of Goods Act etc .These days no
company wants to be unethical in its activities and be on the wrong side of the law books, as the media
in India is very active and the smallest of irregularities noticed and reported by them can ruin the image
of the company hugely.