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BHEL is the largest engineering and manufacturing enterprise in India in the energy-related /infrastructure
sector. BHEL manufactures over 180 products under 30 major product groups and caters to some of the core
sectors of the Indian Economy viz., Power Generation &Transmission, Industry, Transportation, Renewable
Energy, etc. It has a wide network of 14 manufacturing divisions, 4 Power Sector regional centres, with 100
project sites, 8 service centres and 18 regional offices.
Vision:
A world class engineering enterprise committed to enhancing the stakeholders value.
Mission:
To be an Indian Multinational Engineering Enterprise providing Total Business Solutions through quality
products, systems and services in the fields of energy, industry, transportation, infrastructure and other
potential areas.
Philosophy:
The BHEL philosophy of professional excellence through continuous striving for state-of-the-art technology
is embodied by a strong team of 62,500 employees, including over 11,000 highly qualified engineers.
Continuous training and retraining, a positive work culture and participative style of management have
resulted in the development of a committed and motivated work force, ready to meet the challenges of
tomorrow.
Workers' participation at all levels (even at the Board);
Encouragement to all employees to participate in cultural, sports, educational and other activities and
dedication to excel, coupled with safety habits.
The BHEL units are decentralized, independent and bureaucratic structure of work organization is almost
non-existent. Flexibility, rather than red-tapism is the norm in day-to-day working.
Shareholding Pattern:
4.21%
6.02% President of India
6.84%
Foreign Institutional
Investors
Mutual Funds and UTI
15.21%
Banks,Financial
67.72% Institutions,insurace co.
Others
BHEL have diversified their business in Power, Transportation, Industry, Renewable Energy. Oil
and Gas and International Business sectors. It manufactures over 180 products under 30 major product groups
Power Sector: BHEL is the largest manufacturer in India supplying wide range products and systems
for thermal, nuclear, gas utility and hydro-based captive power plants. It supplies steam turbines, turbines,
generators, boilers and matching auxiliaries. It is the only Indian company capable of manufacturing large-size
gas-based power plant equipment. It also supplies circulating fluidized bed combustion (CFBC) boilers for
thermal power plants. The co. Has proven expertise in plant performance improvement through renovation,
modernization and up gradation of variety of power plant equipments.
Industries: BHEL is the leading manufacturer of variety of electrical, electronic and mechanical
equipments for no. of industries like metallurgical, mining, cement, paper, fertilizers etc. It supplies systems
and individual products as:
-Centrifugal Compressors
-Drive Turbines
-Electrostatic Precipitators
-Waste heat recovery boilers
-ID/FD fan sets.
BHEL is leading company in the world having mastered the art of
burning Naphtha in Gas Turbines.
Transportation: The Indian Railways is equipped with traction equipment built by BHEL. Range of
products supplied by BHEL includes:
-Traction motors
-Traction generators
-Vacuum circuit breakers
-Locomotive bogies
It also has started the supply of equipment for Dual Voltage EMUs with 3phase
technology. BHEL has developed and established energy efficient technology for IGBT based propulsion
system for AC Drives, a landmark achievement in transportation sector.
Renewable Energy:BHEL has commissioned solar photo-voltaic grid interactive as well as standalone plants
at 12locations contributing to preservation of natural habitat of Lakshadweep Islands. Its products include:
-Solar water heating systems
-solar PV modules (for both domestic and industrial applications)
-space-grade solar panels(for ISROs)
-space-quality batteries
Oil and Gas: BHEL possesses expertise to design, manufacture and service various types of
equipment like:
-On-shore deep drilling rigs
-mobile rigs
-desert rigs
The company is in the process of manufacturing environment friendly AC-technology
based oil rings for on-shore application. It also supplies Casting Support System, Mud line Suspension System
to ONGC and GAIL(India) Ltd.
Transmission: The products manufactured by BHEL include:
-Power Transformers
-Instrument Transformers
-Shunt reactors
-SF6 switchgears
-Ceramic Insulators
-Circuit breakers
High voltage direct current (HVDC)systems have supplied for economic transmission
of bulk power over long distances. BHEL has into MoU with Toshiba Co., Japan to take projects in Extra high
voltage alternating current(EHVAC) and ultra high voltage alternating current(UHVAC).
International Business:BHEL provides services, covering thermal, hydro and gas based trunkey power
projects related products in more than 70countries in the world besides a variety of products like transformers,
valves, oil field equipments, insulators, heat exchangers etc. BHEL is taking a no. of projects overseas
like largest ever order for a hydro project has been created by securing order of puntasangchu-I hydro power
plant from Bhutan.
Areas of Operations:
Heavy Electrical Plant, Bhopal.
Centre for Electric Transportation, Bhopal
EMRP, Mumbai
Heavy Electrical Equipment Plant, Haridwar
Pollution Control Research Institute, Haridwar
Central Foundry Forge Plant, Haridwar
Heavy Power Equipment Plant, Haridwar
Industrial Valves Plant, Goindawal
High Pressure Boiler Plant, Tiruchirappali
Seamless Steel Tube Plant, Tiruchirappali
Welding Research Institute, Tiruchirappali
Piping Centre, Chennai
Boiler Auxilliaries Plant, Ranipet
Electronics Division, Bangalore
Electronic Systems Division, Bangalore
Global/Indian Economy and Major Economic Indicators:
The global recovery rate from the last years down has slowed down during the end of this financial year. The
highest growth rate is of China, around 10% followed by India with a growth rate of 8.5%. The Indian
economy, which had exhibited a sharp recovery in the second half of 2009-10, witnessed further
consolidation of growth in the first quarter of 2010-11. With a normal monsoon, lead data on the kharif
sowing and production estimates suggest an above trend rate of growth in the agriculture sector in
2010-11. Industrial growth remains robust, although, with greater volatility. Going forward, while the
growth rates in the services sector and agriculture are likely to remain elevated, sustainability of the
recent buoyancy in the industrial sector would require alleviation of supply constraints, particularly in
the infrastructure sector and sustained momentum in private demand.
Details of important economic indicators are as under:
GDP Growth Rate: Real GDP growth was placed at 8.8 per cent during the first quarter of 2010-11,
which is the highest quarterly growth recorded so far since the third quarter of 2007-08. The estimated
growth rate the current FY is 8.5% while for the next FY is 9%.
Growth rate of Agriculture: Agriculture and allied activities witnessed a strong pick-up over the
previous four quarters, led by higher growth in allied activities. The estimated growth rate in agriculture
during the current FY is 4.6% while for the next FY is 3.2%.
Growth Rate of Service Sector: The services sector growth recorded further acceleration in Q1
2010-11 relative to both the previous quarter and the corresponding quarter of last year. Growth in the
„trade, hotels, restaurants, transport, storage and communication‟ segment has been robust in recent
quarters. The estimated growth rate in services during the current FY is 9.2% while for the next FY is
9.5%.
Index of Industrial Production: Growth in industrial output has exhibited volatility in the recent
period, notwithstanding double-digit growth during October 2009 to July 2010 (except June 2010). IIP
recorded a lower growth of 5.6 per cent in August 2010 compared with 10.6 per cent in August 2009,
mainly on account of negative growth in capital goods and consumer nondurables. The estimated growth
rate in IIP during the current FY is 9% while for the next FY is 9.1%.
Infrastructure: The infrastructure sector comprising six core industries (accounting for 26.6 per cent of
the total weight in IIP) recorded a growth of 4.0 per cent during April- September 2010-11, which
represents some moderation as compared to the corresponding period of the preceding year (4.5 per
cent). The growth in the infrastructure sector during the period was led by crude oil, petroleum refinery
and finished steel, while there was lower growth in cement, electricity and coal production as compared
to April-September 2009-10.
Growth rate of Imports and Exports:
Exports: India‟s exports, which exhibited a robust recovery in the last quarter of 2009-10, continued to
record high growth during the current financial year.
Imports: Reflecting the demand associated with robust domestic growth, imports increased at a higher
pace, though with some volatility during the year so far. Oil imports registered a growth of 54.8 per cent
during the first quarter of 2010-11.
Exchange Rates against currencies of major trading partners: The real effective exchange rate
(REER) index for 6-currency had exhibited significant appreciation in 2009-10. During 2010-11 so far
(April-October 22, 2010), the 6-currency REER has recorded higher appreciation as compared with
36-currency REER. The 36-currency REER covers around 90 per cent of India‟s foreign trade.
Inflation Indices:
Wholesale Price Inflation: WPI inflation increased at a faster pace since November 2009 to reach 11.0
per cent (year-on-year) by April 2010 and remained elevated in the first quarter of 2010-11. Consumer
Price Inflation: Inflation, as measured by various consumer price indices, continued to moderate in
2010-11 so far. Available measures of inflation, as measured by various CPIs indicate that it remained in
the range of 9.1-9.8 per cent in September 2010. The divergence between WPI and CPI inflation also
reduced in recent months.
Future Outlook:
Power Sector: Power Sector is witnessing a lot of vibrancy and action on all fronts providing offering growth
opportunities for all stakeholders.An accelerated growth of power sector is imperative for overall growth and
development of Indian economy
SWOT Analysis:
Strengths:
➢ Good corporate image
➢ Complete range of products for transmission and distribution
➢ Established Brand Name.
Considered to be having design ability.
Weakness
➢ The procurement process in the company is cumbersome and subject to auditing
➢ Low exposure to the needs and dynamics of distribution business
➢ Role clarity on the requirement of being an equipment supplier or a solution provider
➢ Acceptance of customers to execute low value high volumes jobs
Opportunities
➢ Huge investment leading to greater demand of goods and services
➢ Demand leading to industry operating at full and over capacity
➢ Better price realizations
➢ Early birds to learn faster and achieve repeat orders
➢ Formation of business groups and tie ups for joint bidding
➢ Healthier working environment and increased private sector participation in operation of
distribution circles also.
Threats:
➢ Purchased preference maybe extended to distribution sector
➢ Increased in number of small contractors leading to price wars
➢ Emergence of new players in the market.
➢ Political pulls and pressures may jeopardize the hole process, raising alarm about the
privatization and being anti-people.
0.6
0.5
0.4
Operating Margin
0.3
Profit Margin
0.2 Contribution Margin
0.1
0
2010 2009 2008 2007 2006
Market ratios:
With EPS increasing from Rs. 68 to Rs. 88 in 5 years with a dip in 2008 (because of an increase in common
shares outstanding) because of the rise in net income and marginal increase in dividend payout is attractive to
investors. However, decrease in cash flow per share is a deterrent with an uneven cash flow over the 5 years.
140
120
100
80
Earnings per share
60
Cash Flow Pay out
40
20
0
2010 2009 2008 2007 2006
0.25
0.2
0.15
Div pay out
0.1
0.05
0
2010 2009 2008 2007 2006
0.6
Cash Flow from
0.4 operations ratio
0.2
0
2010 2009 2008 2007 2006
200
180
160
140
120
Avg. No. of days
100 receivables outstanding
80 Avg no of days payables
60 outstanding
40
20
0
2010 2009 2008 2007 2006
0.09
0.08
0.07
0.06
0.05
0.04 debt to equity
0.03
0.02
0.01
0
2010 2009 2008 2007 2006
During the year, the company witnessed a healthy growth in gross turnover by 21.83% to Rs.34154 Cr.
over previous year. The turnover (net of excise duty) increased by 25.37% to Rs.232862 Cr. over last
year. Net profit for the year is placed at Rs. 4311 Cr. as against Rs. 3138 Cr. during the last year, a growth
of 37.38% over previous year.
Increased in turnover coupled with savings in material cost over previous year have contributed to the
better financial performance during the year.
Net worth of the company has gone up from Rs.12939 Cr. to Rs.15917 Cr. registering an increase if
23.02%. Net asset value per share has increased from Rs.264.32 during the last year to Rs.325.16 for the
financial year 2009-10.
Although the holding period for raw material increases and for work in progress remains almost
constant, the holding period for the finished goods decreases. But the company‟s payables and
receivables duration also increases. Although company has almost negligible debt, the most the working
capital is tied up in the payables and the receivables.
The company is witnessing a time of immense opportunities but also of great challenges. Today, the
energy demand is growing at a rate of more than 7% but still Indian power sector is plagued with peak
deficit of around 16%. It is essential to reduce this huge power demand-supply gap to enable to maintain
its high growth trajectory of more than 8%. As BHEL is concerned, it is fully equipped to capitalise on
these opportunities. It has also taken steps to increase its productivity which will ultimately manifolds its
turnover.
BHEL has also increased its investments in R&D and uses upto 20% of the retained earnings for the
same.
Looking to the future, the company has drawn strategic plan to ensure sustainable profitable growth for
the year with the objective of achieving a turnover of Rs. 450000mn by the end of Mar‟12.
For shareholders, excellent business opportunities are emerging for the company which will help it to
maintain its strength, stability and focus to grow its business and remain a well managed company.