BHARAT HEAVY ELECTRICALS LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR`S REPORT
To the Members,
The Directors are delighted to present the 48th Annual Report on the
business and operations of the Company and the statement of accounts for
the year ended March 31, 2012.
FINANCIAL PERFORMANCE
Financial Year
Figures (in Rs.crore except per share data) 2011-12 2010-11
(a) Turnover (Gross) 49510 43337
(b) Revenue from operations (Net) 47228 41566
(c) Other Operational Income 751 680
(d) Operating expenses 38092 33663
(e) Operating profit 9887 8583
(f) Add: Other income 1266 1021
(g) Profit before depreciation,
finance cost & tax expense 11153 9604
(h) Less: Depreciation 800 544
(i) Less: Finance costs 51 55
(j) Profit before tax 10302 9005
(k) Less: Tax expense 3262 2994
(l) Profit after Tax 7040 6011
(m) Add: Balance brought forward
from the previous year 812 575
(n) Profit available for appropriation 7852 6586
i) Dividend:
(including interim dividend) 1567 1525
ii) Corporate Dividend tax
(incl. on interim dividend) 254 249
iii) Amount transferred to
General Reserve 5000 4000
(o) Balance in Profit & Loss 1031 812
(p) Earnings per Share (Rs.) @ 28.76 24.56
(q) NAV per share (Rs.) @ 103.67 82.34
(r) Economic Value Added (Rs. crore) 4032 3793
@ Calculated on post-split on number of shares for 2010-11 on like to like
basis.
FINANCIAL HIGHLIGHTS
During the year, the company witnessed growth in Turnover by 14.2% to
Rs.49510 crore from Rs.43337 crore in the previous year. The Revenue from
operations (Net) increased by 13.6% from Rs. 41566 crore in 2010-11 to
Rs. 47228 crore in 2011-12. Profit before Tax for the year 2011-12 is
placed at Rs. 10302 crore as against Rs. 9005 crore during 2010-11, a
growth of 14.4% as compared to previous year. Profit after Tax is placed at
Rs. 7040 crore as against Rs. 6011 crore during 2010-11, a growth of 17.1%
over previous year.
Excluding impact of change in policy related to warranty obligation for
earlier years in 2010-11, the turnover, PBT and PAT were Rs.41299 crore,
Rs. 8487 crore and Rs. 5665 crore respectively, an increase of 19.9%,
21.4% and 24.3% respectively in 2011-12 as compared to 2010-11.
The company has registered a significant growth in turnover, profit and
other financial parameters during the year 2011-12.
During the year company has sub-divided existing equity shares of face
value of Rs. 10/- into 5 equity shares of face value of Rs. 2/- each and
the record date was fixed October 04, 2011.
Net worth of the company has gone up from Rs. 20154 crore to Rs.25373
crore registering an increase of 25.9%. Net asset value (NAV) per share has
been placed at Rs. 103.67 in 2011-12 as against Rs. 82.34 (post-split) in
2010-11.
The company had filed Draft Red Herring Prospectus (DRHP) dated 28.09.2011
with Securities and Exchange Board of India (SEBI) on 30.09.2011 for
disinvestment of 5% of the paid up equity capital out of Government of
India`s shareholding. Consequent upon the receipt of `no-objection` for
withdrawal of DRHP for FPO, from Department of Heavy Industry/ Department
of Disinvestment, the Board of Directors in its meeting held on April 03,
2012 has approved the withdrawal of DRHP filed by the company with SEBI.
DIVIDEND
The Board has recommended a Final Dividend of 184% ( Rs. 3.68 per share),
Rs. 900.72 crore, for the year 2011-12. An interim dividend of 136% (
Rs.2.72 per share), Rs. 665.75 crore, on share capital of Rs.489.52 crore,
has already been paid for the year 2011-12. Thus the total dividend
(exclusive of dividend tax) for the year 2011-12 is Rs.1566.47 crore
(Rs.6.40 per share) as against Rs.1524.85 crore paid in the previous year.
Provision of Rs.146.12 crore has been made for Corporate Dividend Tax on
the Final dividend proposed. Corporate Dividend Tax of Rs.108 crore has
already been paid on the interim dividend.
ORDERS RECEIVED
Orders worth Rs.22096 crore were received during the year as against
Rs.60507 crore in 2010-11.
Sector-wise orders booked are as follows:
(Rs. in Crore)
2011-12 2010-11
Power Sector 14012 46393
Industry Sector* 7850 10375
International Operations 234 3739
Total Orders Booked 22096 60507
Order Book outstanding
at the end of the year 135300 164145
* excludes inter sectoral orders
The decrease in order book is mainly due to sharp slow down witnessed in
the Indian power sector. The developers are facing numerous constraints
like coal allocation, gas allocation, environment clearance, land
acquisition, legal issues, financing and fund tie-ups etc.
As a result bidding process of many projects was delayed and many projects,
including those for which the bids have been opened in last financial year,
could not be concluded for one or more of the above issues. Further, the
year 2011-12 witnessed unforeseen turmoil in various parts of the globe
influencing BHEL`s international business prospects.
RATING OF BHEL VIS-A-VIS MOU TARGETS
Performance of BHEL for the year 2010-11 has been rated as `Excellent` in
terms of MoU signed with the Government of India. BHEL has been awarded the
MoU Composite score of `1.02`.
The MoU rating for 2011-12 is under finalisation by the Government of
India. However, company`s own assessment places performance of the company
in `Excellent` category for Financial Year 2011-12.
MANAGEMENT DISCUSSION AND ANALYSIS
A report on Management Discussion and Analysis is placed at Annexure - I.
BOARD OF DIRECTORS
Appointment
Shri Trimbakdas S. Zanwar has been re-appointed as Part-time Non-Official
Director w.e.f. 11.10.2011.
Shri R. Krishnan has been appointed as an Additional Director w.e.f.
01.04.2012 to take charge of the office of Director (HR).
Shri Vijay Shankar Madan, IAS, Additional Secretary & Financial Advisor
Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce
& Industry has been appointed as Part-time Official Director w.e.f.
19.07.2012.
In accordance with Section 260 of the Companies Act, 1956 and Article
67(iv) of the Articles of Association of the Company, S/Shri Trimbakdas S.
Zanwar, R. Krishnan and Vijay Shankar Madan shall hold their directorships
upto the 48th Annual General Meeting of the Company and are eligible for
appointment as Directors at the Meeting.
Cessation
Shri Trimbakdas S. Zanwar who was appointed as Part-time Non-Official
Director w.e.f. 12.11.2010 had resigned and ceased to be a Director of the
Company w.e.f. 20.09.2011.
Shri Anil Sachdev, who was appointed as Director (HR) w.e.f. 01.09.2007
ceased to be a Director of the Company on attaining the age of
superannuation on 31.03.2012.
Shri Saurabh Chandra, IAS, former Additional Secretary & Financial Advisor,
Ministry of Commerce & Industry, consequent upon his appointment as
Secretary, Department of Industrial Policy & Promotion has relinquished his
position as Part-time Official Director w.e.f. 17.04.2012.
Shri Ashok Kumar Basu, Shri M.A. Pathan and Smt. Reva Nayyar who were
appointed as Part-time Non-Official Directors w.e.f. 22.06.2009 ceased to
be Directors of the Company on completion of their tenure on 21.06.2012.
The Board of Directors place on record their deep appreciation of the
valuable services rendered as well as advice and guidance provided by
S/Shri Anil Sachdev, Saurabh Chandra, Ashok Kumar Basu, M.A. Pathan and
Smt. Reva Nayyar during their tenure.
Further pursuant to Sections 255 and 256 of the Companies Act, 1956 and
Article 67(i) of the Articles of Association of the Company, S/Shri V.K.
Jairath, O.P. Bhutani and S. Ravi will retire by rotation at the Annual
General Meeting and being eligible, offer themselves for re-appointment.
In compliance with Clause 49(IV)(G)(i) of the Listing Agreement, brief
resumes of the Directors proposed for appointment and re-appointment along
with the nature of their expertise in specific functional areas and names
of companies in which the person also holds the directorship along with the
membership of the Committees of the Board are given at Annexure-II forming
part of the Directors` Report.
OFFICIAL LANGUAGE IMPLEMENTATION
The company continued its thrust on official language implementation in
line with Govt. of India`s policy. Other important activities undertaken
during the year for the compliance of Official Language policy of Govt. of
India are as under:
1. In order to remove hesitation among the employees, and give necessary
impetus to work in Hindi, Hindi workshops and Hindi computer training
programmes were organised in all the Units/Divisions including Corporate
Office.
2. With a view to create favourable atmosphere for usage of Hindi in the
Company, all the Units/ Divisions of the company, including Corporate
Office, celebrated Hindi Divas on 14.09.2011 and organised various Hindi
competitions during the celebration of Hindi Week/ Fortnight/Month in the
month of September, 2011.
3. BHEL Hindi Coordinators Meet was held on 11th & 12th October, 2011 in
Cochin, Kerala to discuss the various issues relating to the Official
Langauge implementation.
4. Various Hindi competitions and programmes were organised by most of the
Units/Divisions including Corporate Office for member organisations under
the auspices of Town Official Language Implementation Committees during the
year.
5. All national level functions e.g Republic Day, Independence Day,
International Women`s Day etc. were conducted in Hindi in Corporate Office
and major Units of the Company.
6. All the major Units and some of the Divisions of the Company published
12 Hindi magazines namely, BHEL Chandan by EDN, BHEL Darpan by EPD, BHEL
Kiran by Tiruchi, Surya Kiran by ISG, BHEL Yashasvi by RC Puram, Hyderabad,
BHEL Bharati by Bhopal, BHEL Ganga by Haridwar, Srijan by Jhansi, Shakti
Punj by Power Sector (Hq), Abhivyakti by Power Sector-NR, Poorvabha by
Power Sector-ER and Tarangini by Power Sector-WR during the year. Corporate
Office also brought out issues of its half yearly Hindi Magazine "Arunima"
during the year.
7. A Hindi Booklet `Rajbhasha Digdarshika` was published consolidating the
various provisions regarding Official Langauge and useful informations for
the employees for Hindi work e.g. English-Hindi glossary and notings, Manak
Vartani, bilingual addresses of the Units/Divisions, incentive schemes etc.
8. Many awards were received by the employees of major Units/divisions in
various Hindi Competitions organised under the auspices of Town Official
Language Implementation Committee.
9. Haridwar unit was awarded third prize by the Town Official Language
Implementation Committee for active contribution in Official Langauge
implementation. In addition, Town Official Language Implementation
Committee, Haridwar constituted and being operated under the Chairmanship
of our Haridwar Unit received second prize from Deptt. of Official
Langauge, Ministry of Home Affairs.
10. Committee of Parliament on Official Language inspected our Industry
Sector, Power Sector-SR, ROD-Hq. during the year and appreciated the
efforts being made in implementing Official Language Policy of the Govt. of
India, while taking a few assurances from us to enhance the use of Hindi in
official work.
11. BHEL Units/Divisions were inspected by Corporate Rajbhasha
Implementation Group for facilitating them to make progressive use of Hindi
as per the Govt. policy.
PARTICIPATION IN THE GLOBAL COMPACT OF THE UNITED NATIONS
BHEL is an environment friendly company in all its activities, products &
services, besides providing safe and healthy working environment to all its
stakeholders and has made UNGC programme as part of the Company`s strategy,
culture and day-to-day operations.
BHEL reiterates its commitment to United Nations Global Compact (UNGC)
Programme and set core values enshrined in its principles on human rights,
labour standards, and environment and anti corruption.
Company intends to advance GLOBAL COMPACT (GC) principles, as a responsible
corporate citizen. BHEL has taken a lead role in promoting GC principles in
other Indian organization through Global Compact Network (GCN) - an apex
level nodal agency, formed by the leading Indian organizations. BHEL
continued to remain in the forefront of all activities of the network as
Secretary/GCN being BHEL nominee. Noteworthy activities of the year were
participating in the national Convention and holding of monthly meetings of
the Network through case studies/ organizational experience sharing,
addressing the Global Compact principles in Indian context.
In recognition of BHEL`s contribution in support of Global Compact
programme and its outstanding Communication on Progress (COP), UNGC
continued to place BHEL under `Notable COP` category.
VIGILANCE
The Vigilance organisation of BHEL is headed by the Chief Vigilance Officer
(CVO). Each Unit/Region of BHEL has a vigilance set up headed by a senior
vigilance executive reporting to the CVO.
Preventive vigilance has been the thrust area of BHEL Vigilance throughout
all the years and the same received focused attention during the year. A
climate of preventive vigilance was generated to sensitize officials at all
levels about the ill effects of corruption and malpractices.
Apart from the above, an attitudinal shift was made to inculcate greater
seriousness in observance of rules / procedures / guidelines. Awareness
amongst employees of the organization was generated by organizing training
programmes. 83 such programmes were organized during the year 2011-12 in
various Units, Regions and offices of BHEL. Interactive sessions were held
with line executives representing different functional areas, in order to
create vigilance awareness and to enhance their knowledge of the Company`s
rules, procedures and policies.
With a view to making systems more effective and transparent, Vigilance had
carried out regular surveillance checks and system studies during the year
2011-12. Many suggestions towards system improvement have been rendered.
Some of the major areas where suggestions for improvement were given are:
* Customer approval of vendors
* Expanding vendor base in single vendor/ two vendor categories
* Guidelines for appointment of agents for export contracts
In addition, suitable recommendations were made for correction in certain
provisions of the following procedures:
* Supplier Evaluation, Approval & Review Procedure
* Purchase Policy
* Reverse Auction Guidelines
* Criteria for financial loading of commercial offers, received during the
tendering process
* Suspension of Business Dealings with suppliers / contractors
As per CVC directions, the Company has taken many initiatives to make
available all relevant information on the web on real time basis. One of
the major initiatives was to start pilot implementation of e-procurement in
select Units of BHEL. In addition, periodic checks are undertaken to ensure
that :
* Status of Purchase Orders, Works Contracts concluded every month, as per
CVC format, is being uploaded by all Units.
* Procedure and forms related to Vendor registration are hosted on the
Company web site.
* Status of vendor registration applications is hosted on the web and can
be viewed by vendors.
* List of banned firms is uploaded on Company web site.
* E-payment of vendor bills is being implemented throughout the
organization and principle of first-in, first-out is being followed as a
rule in payment of vendor bills.
* Status of bill payment can be viewed by the vendors on-line.
* Indents are being raised on-line in most of the Units.
* Information relating to Rules/Procedures governing the issue of license,
permissions, clearances etc., is available on the BHEL/Units websites.
SECURITY
The Company`s security mechanism is sufficient and geared up to provide
security to each Plant / Unit. Whereas the security of most of the Plants
of the Company is being managed by the CISF, in some smaller Plants, the
Company has its own security. In other Plants, Corporate Office and
Regional Offices, the security is being looked after by the private
agencies like M/s EATS sponsored by Directorate General Resettlement, Govt.
of India or Ex-Servicemen Corporations.
Adequate measures have been taken for security of computers Department of
Electronics Govt. of India (SRAC) have also carried out inspection of our
software security mechanism and their suggestions have been implemented.
Security audit of major Plants is being done by the Intelligence Bureau
periodically and the additional requirements, wherever pointed out by them,
are immediately complied with by the concerned Units. Review of security is
done internally also from time to time. Monthly report on theft/ pilferage
and fire incident is being complied by Corporate Security Department
alongwith quarterly reports on various security related issues as per the
decision taken after meeting of HR & Security Heads on 20th March, 2012.
Quarterly meetings have also been envisaged and likely to take place in the
month of July 2012.
The Management, Security Staff and the employees of Company are sensitized
to the security needs of Company.
SUSTAINABILITY
Sustainability is an integral part of the company`s strategy. BHEL is
committed to be an Environment friendly company in all its areas of
activities, products and service, providing safe and healthy working
environment.
In line with the company`s strategy, Environment Improvement Projects and
Community Development Programmes are given special thrust. Some of the
major EIPs executed in the past at BHEL plants and townships included tree
plantation drives, installation of rain harvesting plants, efficient water
and energy management, reduction in noise level, improvement in chemical
storage and handling systems etc.
The Department of Public Enterprises (DPE) has issued guidelines on
Sustainable Development on 23rd Sept. 2011. In conformance to the
guidelines, a Board-Level Committee for Corporate Social Responsibility &
Sustainable Development (BLC for CSR & SD), has been constituted. BHEL has
defined its SD policy in keeping in view the scale & nature of activities,
products & services.
The SD projects will have thrust on the projects in the fields of Rain
water harvesting, afforestation, captive power generation based on Solar
energy, use of renewable energy, energy efficiency & conservation and waste
disposal.
All manufacturing Units/ Regions of the company are accredited to
international standards viz. ISO-14001 certification for environmental
management and OHSAS-18001 certification for occupational health and safety
management systems.
DIRECTORS` RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby
confirmed:
(i) that in the preparation of the annual accounts for the financial year
ended 31st March, 2012 the applicable Accounting Standards have been
followed along with proper explanation relating to material departures;
(ii) that the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at the end of the financial year 2011-12 and of the profit of
the company for that period;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act,1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts for the financial
year ended 31st March, 2012 on a `going concern` basis.
CORPORATE GOVERNANCE
As per the requirements of Clause 49 of the Listing Agreement a detailed
report on Corporate Governance together with the following is given at
Annexure - III:
(i) CEO/CFO Certificate [as per Clause 49(V)] and
(ii) Certificate from the Company`s Auditors [as per Clause 49(VII)].
OTHER DISCLOSURES
Information in accordance with the provisions of Section 217(1)(e) of the
Companies Act, 1956 read with Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988 regarding conservation of
energy, technology absorption and foreign exchange earnings and outgo is
given at Annexure-IV.
None of the employees have drawn remuneration in excess of the limits
prescribed under section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of employees) Rules, 1975 during the year 2011-12.
Statement pursuant to Section 212 of the Companies Act, 1956 relating to
Subsidiary Companies is given at Annexure-V.
EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
There were no significant events occurring after the Balance sheet date.
AUDITORS
The Auditors of your Company are appointed by the Comptroller and Auditor
General of India. The names of auditors appointed for the year 2011-12 are
printed separately in the Annual Report.
The detail of cost auditors appointed for the year 2011-12 and Cost Audit
details are printed separately in the Annual Report.
The replies to the points referred to in the Auditors` Report and to the
Comments of the Comptroller and Auditor General of India are given at
Annexure - VI.
ACKNOWLEDGEMENTS
The Board places on record its sincere appreciation towards the Company`s
valued customers in India and abroad for the support and confidence reposed
by them in the management of the company and look forward to the
continuance of this mutually supportive relationship in future.
The Board also gratefully acknowledges the support and guidance received
from various Ministries of the Government of India, particularly the
Department of Heavy Industry, in Company`s operations and developmental
plans. The Directors express their grateful thanks also to the Comptroller
and Auditor General of India, Chairman and Members of Audit Board,
Statutory Auditors, Branch Auditors and Cost Auditors. The Company also
wishes to place on record its appreciation for the continued co-operation
received from all the Technology Collaborators and Suppliers and support
provided by the Financial Institutions and bankers. Last but not the least
the Board wishes to place on record its deep gratitude to all BHELites
whose enthusiasm, team efforts, devotion and sense of belongingness has
made this great company proud.
For and on behalf of the Board of Directors of
BHARAT HEAVY ELECTRICALS LTD.
B. Prasada Rao
Chairman & Managing Director
Place : New Delhi
Dated : July 26, 2012
ANNEXURE - I TO THE DIRECTORS` REPORT
MANAGEMENT DISCUSSION AND ANALYSIS
A. FINANCIAL PERFORMANCE OF THE COMPANY
(i) Standalone Financial Results
BALANCE SHEET
1. Share Capital
(Figures in S Crore)
FY FY
2011-12 2010-11
Authorised Share capital 2000 2000
Issued, subscribed &
Paid up Share Capital 490 490
During the year Company has sub-divided existing Equity Shares of face
value of S 10/- into 5 Equity shares of face value of S 2/- each. The
Authorised Share Capital & paid up capital remains the same.
2. Reserves & Surplus
(Figures in S Crore)
FY FY
2011-12 2010-11
Capital Reserve 3 3
General Reserve 23849 18849
Surplus of Profit & Loss 1031 812
24883 19664
The Reserve & Surplus has increased by S 5219 crore during 2011-12 after
addition of Retained earnings. A sum of S 5000 crore has been transferred
to General Reserve out of profit for the year 2011-12.
3. Long Term Borrowings
(Figures in Rs. Crore)
FY FY.
2011-12 2010-11
Unsecured Loans 123 102
Unsecured Loans represent credit for assets taken on finance lease.
4. Other Long Term / Current Liabilities:
(Figures in Rs.Crore)
FY. 2011-12 FY 2010-11
Other Current Total Other Current Total
Long Liabilities Long Liabilities
Term Term
Liabil- Liabil-
ities ities
Trade payables
(Incl. Acceptances) 618 10271 10889 384 8096 8480
Deposits from
customers & others 104 444 548 95 398 493
Advances Received from
customers & others 6829 13152 19981 8663 11727 20390
Other payables/
liabilities - 2220 2220 - 2044 2044
7551 26087 33638 9142 22265 31407
The increase in other long term liabilities and current liabilities is by S
2231 crore in 2011-12 mainly due to increase in trade payables by S 2409
crore, other payables/ liabilities by S 176 crore and deposits from
customers & others by S 55 crore partially offset by decrease in advances
from customers and others by S 409 crore. The increase in trade payables is
in line with the increase in purchase of material & built up of higher
inventory level, consequent to increase in volume of operations.
5. Provisions:
(Figures in Rs.Crore)
FY. 2011-12 FY 2010-11
Other Current Total Other Current Total
Long Liabilities Long Liabilities
Term Term
Liabil- Liabil-
ities ities
Provision for
employee benefits 2076 401 2477 1992 902 2894
Provision for
contractualobligation 2793 1057 3850 2339 644 2983
Provision for taxation
(Net of Advance Tax/TDS) - - - 466 - 466
Proposed Dividend
(Incl. Div. tax) - 1047 1047 - 1018 1018
Other Provisions 136 131 267 127 109 236
5005 2636 7641 4924 2673 7597
There is a increase in total provision by S 44 crore in 2011-12 mainly due
to increase in provision for contractual obligation by S 867 crore and
provision for dividend & others by S 60 crore which is offset by decrease
in provision for employee benefits by S 417 crore and provision for tax
(Net) by S 466 crore.
6. Fixed Assets
(Figures in Rs. Crore)
F.Y. F.Y.
2011-12 2010-11
Gross Block 9707 8050
Less: Depreciation/ amortisation 5413 4649
Less: Lease Adjustment Account (3) -
Net Block 4297 3401
Capital Work-in-Progress 1325 1723
Intangible assets under 23 10
development
5645 5134
Gross Block increased by Rs. 1657 crore, and Capital Work in progress
including Intangible Assets under development decreased by Rs. 385 crore
during the year. The net increase is due to capital expenditure incurred on
ongoing capacity augmentation programmes at various manufacturing units and
erection and commissioning facilities at the project sites.
7. Non Current Investments
(Figures in Rs. Crore)
F.Y. F.Y.
2011-12 2010-11
Long Term Trade Investments 462 439
Long term trade investments have increased by Rs. 23 crore mainly on
account of equity participation in Joint Venture Companies.
8. Deferred Tax Assets (Net)
(Figures in Rs. Crore)
FY FY
2011-12 2010-11
Deferred Tax Assets (Net) 1546 2164
Deferred Tax assets (Net) have decreased by Rs. 618 crore mainly due to
decrease in provisions.
9. Loans & Advances
(Figures in Rs.Crore)
FY 2011-12 FY. 2010-11
Long Short Total Long Short Total
Term Term Term Term
Loans & Advances 900 2112 3012 883 2383 3266
Loans & advances have decreased by Rs. 254 crore mainly due to decrease in
advances for purchases and others.
10. Inventories
(Figures in Rs. Crore)
F.Y. F.Y.
2011-12 2010-11
Inventories 13549 10963
Inventory increased by Rs.2586 crore over previous year in tune with the
increase in volume of operations. In number of days of turnover it
increased from 92 days in 2010-11 to 100 days in 2011-12.
11. Receivables
(Figures in Rs. Crore)
F.Y. 2011-12 F.Y2010-11
Long Trade Total Long Trade Total
Term Recei- Term Recei-
vables vables
Trade Receivables (Net) 9404 26336 35740 7251 20104 27335
Receivables increased by Rs.8405 crore mainly due to increase in volume of
operations and increase in deferred debts. In number of days of turnover it
increased from 230 days in 2010-11 to 264 days in 2011-12.
12. Cash and Cash Equivalents
(Figures in Rs. Crore)
FY FY
2011-12 2010-11
Cash & cash equivalents 6672 9630
The cash and cash equivalents at the year end are placed at Rs.6672 crore
as against Rs.9630 crore in 2010-11.
13. Other Current Assets
(Figures in Rs. Crore)
F.Y. F.Y
2011-12 2010-11
Other Current Assets 151 310
Other current assets represent Interest accrued on banks deposits and
investments.
STATEMENT OF PROFIT & LOSS
14. Revenue from Operations
(Figures in Rs.Crore)
F.Y. F.Y
2011-12 2010-11
Gross Turnover 49510 43337
Less : Excise Duty 1847 1436
Less : Service Tax 435 335
Revenue from operations (Net) 47228 41566
Revenue from operations (Net) increased by 13.62% during the year, Power
segment and Industry segment contributed 76% and 24% respectively for the
total revenue of the company.
15. Other Operational Income
(Figures in Rs.Crore)
F.Y. F.Y.
2011-12 2010-11
Export Incentive 12 43
Scrap Sales 308 272
Others 431 365
751 680
Other operational income increased by Rs.71 crore mainly due to increase in
scrap sales in line with increase in volume of operations.
16.Other Income
(Figures in Rs.Crore)
F.Y. F.Y.
2011-12 2010-11
Exchange variation (net) 99 100
Interest Income 814 627
Other income 353 294
1266 1021
Other income increased by Rs.245 crore during the year mainly due to
increase in interest income etc.
17. Cost of Material consumption, Erection & Engineering Expenses:
(Figures in Rs.Crore)
F.Y. F.Y.
2011-12 2010-11
Cost of consumption of
raw material & components 24549 19418
Consumption of stores & spares 564 470
Erection & Engineering Expenses 3795 3321
28908 23209
The increase in Consumption of Material, Erection & Engineering Expenses by
Rs.5699 crore or 24.56% is mainly on account of increase in Turnover /
volume of operation. As percentage of net turnover after adjustment of
accretion/decretion to WIP & FG, it increased from 55.96% (58.86 % after
adjustment of impact of warranty policy change) in 2010-11 to 60.49% in
2011-12.
18. Employee Benefits Expenses
(Figures in Rs. Crore)
FY FY
2011-12 2010-11
Employees Benefits Expenses 5466 5397
Employees remuneration & benefits increased by Rs. 69 crore from Rs. 5397
crore in 2010-11 to Rs. 5466 crore in 2011-12.
19. Finance Costs
(Figures in Rs. Crore)
F.Y. F.Y.
2011-12 2010-11
Interest and other borrowing costs 51 55
The interest cost represents the interest component of the lease rentals on
assets taken on finance lease and interest on short term borrowings during
the year.
20. Other Expenses of manufacturing, Administration, Selling & Distribution
(Figures in Rs. Crore)
FY FY
2011-12 2010-11
Other expenses of
Manufacturing, Administration,
Selling & Distribution 3223 2536
The increase in other Expenses of manufacturing, Administration, Selling &
Distribution is Rs. 687 Crore as compared to 2010-11 in line with the
increased level of operations of the company and also due to increase in
freight rates etc.
21. Provisions (Net)
(Figures in Rs. Crore)
F.Y. F.Y.
2011-12 2010-11
Provisions (Net) 1403 2715
The decrease in Provisions (Net) by Rs. 1312 crore as compared to previous
year is mainly on account of decrease in provision for Contractual
Obligations by Rs. 1222 crore, due to one time change in policy impact of
Rs. 1520 crore in 2010-11.
22. Depreciation
(Figures in Rs. Crore)
F.Y. F.Y.
2011-12 2010-11
Depreciation 800 544
The increase in depreciation by Rs. 256 crore is on account of increase in
gross block.
23. Tax Expense
(Figures in Rs. Crore)
F.Y. F.Y
2011-12 2010-11
Income Tax-Current Year 3277 3712
-Earlier Years (632) (82)
Deferred tax charge/ (credit) 617 (636)
Tax Expenses (Net) 3262 2994
The increase in tax expense (Net) is in line with the growth in profit for
the year.
24. Profit after Tax
(Figures in Rs. Crore)
F.Y. F.Y.
2011-12 2010-11
Profit after Tax 7040 6011
The Net profit for the year rose by Rs. 1029 crore or 17.12%.
25. Dividend
The company has paid an interim dividend of 136% (Rs. 2.72 per share), Rs.
665.75 crore, on share capital of Rs. 489.52 crore during the year 2011-
12. The Board has also recommended a Final dividend of 184% ( Rs. 3.68 per
share) i.e. Rs. 900.72 crore.
The total dividend (exclusive of dividend tax) for the year 2011-12 is
Rs.1566.47 crore (r 6.40 per share) as against Rs.1524.85 crore in the
previous year.
Provision of Rs.146.12 crore has been made for corporate dividend tax on
the final dividend proposed. Corporate dividend tax of Rs.108 crore has
already been paid on the interim dividend.
26. Transfer to General Reserve
Rs.5000 crore has been transferred to General Reserve for the year 2011-12
as against Rs.4000 crore in the previous year.
(ii) Financial Review of Subsidiary Companies
a) Bharat Heavy Plate and Vessels Ltd. (BHPV)
Bharat Heavy Plate and Vessels Ltd. (BHPV) is 100% subsidiary co. of BHEL
taken over on 10.05.2008. In 2011-12 BHPV recorded a profit of Rs.10.44
crore on a turnover of Rs.155.80 crore.
The financial highlights of BHPV are as under:
Rs. in Crore
F.Y. F.Y.
2011-12 2010-11
BHEL`s Investment in Equity at Rs.1/- at Rs.1/-
Advance against issue of shares 34.00 34.00
Turnover 155.80 136.98
Profit after Tax 10.44 8.78
b) BHEL Electrical Machines Ltd.
A subsidiary Company has been incorporated on 19th January 2011 as "BHEL
Electrical Machines Ltd.", with BHEL holding the majority stake of 51% with
an equity investment of Rs.5.36 crore and Govt. of Kerala retaining 49%. In
2011-12, BHEL EML recorded a loss of Rs.0.38 crore on a turnover of
Rs.21.14 crore.
(iii) Financial Review of Joint Venture Companies
a) BHEL-GE Gas Turbine Services Pvt. Ltd. (BGGTS)
BGGTS is a Joint Venture Company of BHEL & GE USA, formed to take up repair
& servicing of GE designed Gas Turbines. The Financial highlights of the
Company are as under:
in Rs.Crore
Particulars F.Y. F.Y.
2011-12 2010-11
BHEL`s Investment in Equity 2.38 2.38
Turnover 513.28 418.52
Profit after tax 60.76 57.36
Net Worth 114.48 91.34
During the year BGGTS has paid interim dividend at 480% and proposed final
dividend at 200% on the Equity share capital of Rs.4.76 crore.
b) NTPC - BHEL Power Projects Pvt. Ltd. (NBPPPL)
A Joint Venture between BHEL & NTPC incorporated on 28th April, 2008 for
carrying out EPC activities in the Power Sector. The Financial highlights
are as under:
in Rs. Crore
Particulars F.Y. F.Y.
2011-12 2010-11
BHEL`s Investment in Equity 25.00 25.00
Turnover 145.55 106.49
Profit after tax 13.06 9.26
c) Udangudi Power Corporation Ltd.
A Joint Venture between BHEL & TNEB, incorporated on 26th December, 2008,
to build, own and operate a 1600 MW (2x800 MW) Super Critical Thermal Power
Plant at Udangudi.
in Rs. Crore
Particulars F.Y. F.Y.
2011-12* 2010-11
BHEL`s Investment in Equity 32.50 32.50
Net Block 29.09 29.14
Capital Work in Progress 41.75 32.51
* Based on provisional figures
d) Raichur Power Corporation Ltd.
BHEL has promoted a joint venture company with Karnataka Power Corporation
Limited (KPCL) for setting up Supercritical Thermal Power Plant at
Karnataka on build, own and operate basis. The Joint Venture was
incorporated on 15.04.2009 under the name of "Raichur Power Corporation
Ltd".
Rs. Crore
Particulars F.Y. F.Y.
2011-12* 2010-11
BHEL`s Investment in Equity 331.52 331.52
Net Block 0.41 0.04
Capital Work in Progress 1473.87 852.35
(Including advances for capital expenditure)
* Based on provisional figures
e) Dada Dhuniwale Khandwa Power Limited
BHEL has promoted a joint venture company with Madhya Pradesh Power
Generating Company Ltd (MPPGCL) for setting up of a 2x800MW Supercritical
Thermal Power Plant at Khandwa, Madhya Pradesh on build, own and operate
basis. The Joint Venture was incorporated on 25.02.2010 under the name of
"Dada Dhuniwale Khandwa Power Ltd".
Rs. Crore
Particulars F.Y. F.Y.
2011-12* 2010-11
BHEL`s Investment in Equity 22.50 2.50
Net Block 0.03 0.02
Capital Work in Progress 0.73 0.23
* Based on provisional figures
f) Latur Power Company Ltd.
BHEL has promoted a Joint venture company with Maharashtra State Power
Generation Company Ltd
(MAHAGENCO) for setting up a 2x660 MW Thermal power plant or 1500 MW gas
based Combined Cycle Power Plant (CCPP) in Latur, Maharashtra. The Joint
Venture Company was incorporated on 06.04.2011 under the name of "Latur
Power Company Ltd". The present paid up equity of the JVC is Rs. 5 crore,
subscribed to equally by both the partners.
g) Barak Power Pvt. Ltd.
A Joint Venture between BHEL & PTC, incorporated on 1st Sept, 2008. The
Joint Venture has been wound up w.e.f. 11.10.2011 and the investment has
been written off during the year.
h) Power Plant Performance Improvement Ltd.
A Joint Venture between BHEL and Siemens and is under liquidation.
(iv) Consolidated Financial Statement (CFS)
Consolidated Financial Statements have been prepared in accordance with
Accounting Standard - 21 on "Consolidated Financial Statements" and
Accounting Standard - 27 on "Financial Reporting of Interest in Joint
Ventures."
A brief summary of the results on Financial performance in line with the
above AS are as under :
(Figures in S Crore)
2011-12 2010-11 %age increase
over 2010-11
Statement of Profit & Loss:
Turnover 49898 43636 14.35
Profit Before Tax 10367 9065 14.36
Profit After Tax 7087 6053 17.08
Balance Sheet Sources of Funds
Shareholders fund 25403 20155 26.04
Minority Interest 5 -
Non current liabilities 12867 14205 -9.42
Current liabilities 29155 25257 15.43
Total 67430 59617 13.11
Application of Funds:
Net Block (incl. CWIP) 6282 5366 17.07
Non Current Investments 6 11 -45.45
Deferred Tax Assets (Net) 1549 2165 -28.45
Other Non current assets 10503 8487 23.75
Current Assets 49090 43588 12.62
Total 67430 59617 13.11
B. PERFORMANCE OF BUSINESS SEGMENTS POWER SECTOR
From one of the most rapidly growing sector till last year, the Indian
Power Sector is witnessing slowdown during the year. The developers are
facing numerous constraints like Coal allocation, Gas allocation,
Environment clearance, Land acquisition, Legal issues, Financial closure
etc which are affecting the on-going projects as well as the new projects.
As a result, bidding process of many projects was delayed and many
projects, including those for which the bids had been opened in the last
financial year, could not be concluded for one or more of the above issues.
In the Power Sector business segment, BHEL continued to demonstrate its
competitiveness by bagging most of the Power Plant & associated equipment
orders placed during the year, in the country. Orders worth Rs.14,012 Crore
for supply and installation of main equipment as well as spares and
services were secured during the year.
Major achievements during the year
* Order received for the first ever 300 MW rating set with Forced
Recirculation Boiler from Abhijeet Projects for 1x300 MW Vizag.
* New Customer added: Singareni Collieries Company Ltd. (SCCL).
Significant orders received in the Power sector include:
Thermal:
Sub-Critical Orders:
Orders aggregating to 1,500 MW were received during the year, which
include-
* 2x600 MW Singareni Collieries Company Ltd. (SCCL)/ Adilabad (Main Plant
Package including Switchyard )
* 1x300 MW Abhijeet Power Projects / Vizag (Boiler Turbine Generator
package)
Super-Critical Orders
Orders aggregating to 1,320 MW were received during the year. In addition,
orders for Boiler package, Coal Handling Plant(CHP) package and Ash
Handling Plant(AHP) package for supercritical plants were also received.
These include-
* 2x660 MW DB Power Limited / Singrauli STPP (BTG including Switchyard)
* 2x660 MW NTPC / Mauda Steam Generator (SG) package (against Bulk tender)
* 2x800 MW RPCL / Yeramarus CHP & AHP package
SPARES & SERVICES BUSINESS GROUP (SSBG)
SSBG provides a single window facility to the customer for Post warranty
Services viz Supply of Spares, Overhauling, Repairs and Renovation &
Modernisation (R&M). SSBG booked orders worth Rs.1,842 Crore for Spares,
Rs.408 Crore for Services(including R&M) totaling to Rs.2,250 Crore during
the year.
COMMISSIONING:
BHEL crossed landmark of one lakh MW contribution towards country`s
installed capacity. BHEL has added so far 1,06,202 MW towards country`s
total installed capacity.
Overall, 9270 MW capacity was commissioned/ synchronized by BHEL during the
year both in the Domestic and International arena.
* BHEL commissioned 41 sets totaling 8997.8 MW during the year within the
country and abroad (including utility, industrial and overseas sets).
* In addition to commissioning of utility projects, BHEL has synchronized
272 MW [Chutak-1, 2(2X11 MW) and Parichha -5 (250 MW)], awaiting clearance
from utilities for capacity addition.
Utility sets commissioned during the year were-
* Kothagudam(Stg VI)U-1(500 MW), Simhadri U-4 (500 MW) in Andhra Pradesh.
* Lakwa WHRP (37 MW) in Assam.
* Pragati STG U-1 (250 MW) in Delhi.
* Hazira CCPP Extn GT &ST (351 MW) in Gujarat.
* Jhajjar U-2 (500 MW) in Haryana.
* Koderma U-1 (500 MW), Maithon RBC U-1,2 (2X525 MW) in Jharkhand.
* Bellary U-2 (500 MW) in Karnataka.
* Bhusawal U-4,5 (2X500 MW), Khaperkheda Expn-1 (500 MW) in Maharashtra.
* Neyveli (Stg II) U-1 (250 MW), Vallur U-1 (500 MW) in Tamilnadu.
* Harduaganj U-8 in Uttar Pradesh.
* Koteshwar HEP U-3,4 (2X100 MW) in Uttrakhand.
* Durgapur U-1,2 (2X500 MW), Santaldih U-6 (250 MW) in West Bengal.
Overseas sets commissioned by BHEL during the year include Devighat U-4,5
(2X5 MW), Oman U-1,2 (2X126 MW), Taiwan (63 MW).
ERECTION & COMMISSIONING HIGHLIGHTS
* During the XI Plan period BHEL commissioned 25,385 MW of Utility sets
which is nearly double of 13,613 MW achieved in X Plan period.
* Highest ever 8410 MW utility projects commissioned/ synchronized during
a year.
* All time high 8138 MW capacity added for utilities during a year: 29 %
up from the previous year.
* First Time achievements:
* BHEL commissioned 1xFr-9 FA Gas Turbine-based Combined Cycle Power Plant
(CCPP-351 MW) of GSEGL at Hazira, Gujarat followed by 2xFr-9 FA CCPP of
PPCL at Pragati-III (750MW- Module I) Delhi.
* BHEL has commissioned its first unit of 525 MW rating with commissioning
of 2X525 MW at Maithon. This new Rating set has been introduced to cater to
country`s specific market requirement.
* BHEL has also achieved capacity addition of its first 250 MW set with
CFBC boiler at Neyveli. This is the highest rating unit with CFBC boiler
commissioned in the country.
* During the year, 13 sets of 500/525 MW ratings were commissioned,
surpassing the previous best of 8 sets.
* BHEL commissioned 3625 MW in a single month.
* Full load operations of NTPC Simhadri Unit 4 achieved within 6 hrs of
synchronization indicating BHEL`s equipment reliability and commissioning
prowess.
* For THDC India Ltd, 100% targeted capacity addition was achieved during
the XI plan despite flooding at Koteshwar power station of THDC.
* Significantly, thermal and hydro units with a cumulative capacity of
1625 MW were commissioned at various power stations across the country in a
span of just 24 hours.
PERFORMANCE OF BHEL UTILITY SETS
* BHEL Thermal sets (coal based) generated 459706 MUs as against 435216
MUs last year, showing an increase of 5.63 % over previous year and
contributing 75 % of the country`s generation from thermal utility sets
(612880 MUs).
* BHEL coal based sets registered PLF of 75.5 % against National Average
of 73.3%.
* During the year, generation from BHEL supplied 195/200/210/250/500/525
MW coal based sets which form the backbone of country`s power generation
went to 428540 MUs with PLF of 78.9 % and OA of 89%. 70 % of total electric
energy generated by Coal sets in the country was contributed by these sets.
* Sixteen stations equipped with BHEL equipments recorded a PLF of above
90% Viz. Dahanu (100.9), Budge Budge (99.9), Sipat (98.5), Raigarh (97.3),
Amarkantak Ext -210 (93.5), Ramagundam (93.4), Vijaywada-500 (93.3), Mettur
(93.0), Simhadri (92.7), Bhatinda-LM (91.5), Kota (91.4), CESC (90.9),
Vijaywada (90.5), Bhilai (90.4), Vindhyachal (90.2), Rihand Stage II
(90.2).
* 198 BHEL supplied coal based sets achieved PLF of over 70%. Of these, 61
sets registered PLF of over 90% and 82 sets achieved PLF between 80% -90%.
* BHEL Coal Sets registered the Operating Availability (O.A.) of 86%
* 149 Thermal Sets of BHEL make achieved O.A. higher than or equal to 90%.
* 189 BHEL supplied coal based sets clocked uninterrupted operation for
more than 90 days during the year out of which:
* 106 sets ran once continuously for more than 90 days during the year.
* 56 sets ran twice continuously for more than 90 days.
* 25 sets continuously ran for more than 200 days.
* 2 sets ran thrice continuously for more than 90 days.
Meritorious Awards
A number of power stations with BHEL supplied sets, received meritorious
award this year under "National Meritorious Award Scheme for Power Sector"
instituted by Govt. of India for meritorious performance under different
categories.
* Performance for 2009-10 :
9 of 12 power stations which have received awards for performance are
equipped in part or completely with BHEL make sets. Stations that have
received the awards for performance are:
Gold: Dadri#5 TPS [BHEL], Dahanu TPS
[BHEL], Baspa (hydro) [Non BHEL].
Silver: Ramagundam STPS [BHEL / Non BHEL], Vindhyachal
STPS [BHEL / Non BHEL], Budge Budge TPS [Non BHEL],
Gerusoppa (hydro) [BHEL].
Bronze: Korba STPS [BHEL], Torangallu TPS
[BHEL / Non BHEL], Rihand STPS
[BHEL / Non BHEL], Bhira (hydro) [Non
BHEL].
Consolation: Kothagudam STPS [BHEL].
* Performance for 2010-11:
11 of 15 power stations which have received awards for performance are
equipped in part or completely with BHEL make sets. Stations that have
received the awards for performance are:
Gold: Vindhyachal STPS [BHEL / Non BHEL],
Udupi TPS#1 [Non BHEL], RAPS
(nuclear) [BHEL / Non BHEL], Nathpa
Jhakri (hydro) [BHEL / Non BHEL].
Silver: Ramagundam STPS [BHEL / Non BHEL], Torangallu
TPS [BHEL / Non BHEL], Mundra#5 [Non BHEL],
Neyveli TPS(Ext-I) [Non BHEL], Baspa(hydro)
[Non BHEL].
Bronze: Dahanu TPS [BHEL], Rihand STPS
[BHEL / Non BHEL], Trombay CCPP
[BHEL / Non BHEL], Pong Power House
(hydro) [BHEL].
Consolation: Korba (East) [BHEL], Tarapur APS (nuclear)
[BHEL / Non BHEL].
SERVICES:
BHEL continued its endeavor to render efficient customer service aimed at
facilitating uninterrupted power supply and keeping power plants in good
running condition. During the year, Power Sector overhauled 150
utility/captive sets (including Non BHEL sets).
Major services orders executed are-
* First ever capital overhauling of biggest BHEL make Nuclear TG in
operation at Tarapur Atomic Power Station (TAPS) unit-4 (540 MW) was
completed in time with all the precautions, safety measures & procedures at
TAPS.
* Rehabilitation of Devighat HEP, Nepal (3X5 MW) completed successfully
within 247 Days against the planned schedule of 9 months (around 270 days).
* Overhauling of JPL RAIGARH Unit-3/250 MW (LP Turbine, Generator, Bearing
Inspection & valves etc) completed in 8 days from barring gear to barring
gear against 15 days.
* UPRVUNL Rihand HEP Unit-5 (50 MW) synchronized successfully on
02.05.2011 and touched 55 MW output mark (10% over its original rating).
CUSTOMER APPRECIATION
Appreciations received from many reputed customers (like Maithon power
Limited, Andhra Pradesh Power generation corporation Limited (APGENCO),
Korba West Power Company Ltd., Bokaro Power supply company Pvt limited,
Kerala State Electricity Board,
MSPGCL, Abhijeet Projects Ltd, UJVN Ltd. etc.) for excellent support given
by BHEL.
INDUSTRY SECTOR
In Industry Sector, BHEL secured orders worth Rs.8782 Crore in Captive
Power, Rail Transportation, Power Transmission, Oil & Gas, Renewable
Energies and other Industrial Segments.
Major orders received during the year / other business highlights -
Industry segment-wise include:
Captive Power Plants
* Secured first ever order for GTG with Chiller from M/s Kribhco Ltd. for
their Hazira complex. Use of Chiller has resulted in enhanced power output.
Order won against stiff competition.
* First ever order for CPP Group for CFBC Boiler designed to operate on
100% coal middlings. The order for 67.5MW BTG with 280TPH CFBC Boiler was
secured from M/s Tecpro Systems Ltd for Power Plant being set up by M/s
Kohinoor Power, Kolkata.
* Grasim Cellulosic Division reposed their confidence in BHEL by placing
order for 3x32MW and 1x20MW STGs for their Export Oriented Unit at Vilayat
and Grasilene Division at Harihar, respectively.
* Reliance Industries also reposed their confidence in BHEL by placing
order for 2 nos. Fr6B GTGs for Dahej Plant against stiff competition.
Renewables:
* Orders for two Grid Interactive Solar PV Power plants of 5 MW each from
Karnataka Power Corporation and Indian Oil Corporation for their projects
at Mandya and Phalodi respectively.
Other business highlights in this segment include:
* BHEL has been contributing to the national effort for developing and
promoting renewable energy based products on a sustained basis. During the
year, the company set a new record in its Solar Photovoltaic (PV) business,
by commissioning 15 MWp of Solar Power Plants in various parts of the
country. This includes 5 MWp IOCL Phalodi, 3 MWp KPCL Raichur, 2 MWp India
Bulls Power Ltd Bareilly, 4MWp India Bulls Power Ltd, Katol, and 1.18 MWp
in Lakshadweep. These projects are based on Crystalline Silicon
Photovoltaic (cSi PV) technology which is well proven and has the longest
operational experience across the world.
* An MoU has been signed with IOCL and IIT-Rajasthan for joint development
work in the Solar area. Products and systems developed under this joint
effort will be tested and demonstrated at the Solar Field being created at
IIT-Rajasthan`s upcoming campus at Jodhpur.
Defence Business
* The 1st Aux Control System (ACS) after successful Factory Acceptance
Test (FAT) at AVIO Italy has been delivered to MDL for installation at
Naval Ship (P15A), thereby successfully launching the product.
Rail Transportation
* Received single largest order for 85 sets 25kV AC EMU (Conv.) from ICF,
Chennai and for 870 sets of Wheel and Axle assembly from Railway Board.
Other business highlights in this segment include:
* IGBT based Traction Power Convertor, Auxiliary Convertor and Vehicle
Control Unit for use on electric locomotives have been developed by BHEL. A
25kV AC 6000 HP Electric loco fitted with BHEL make IGBT based Traction
Convertor/Invertor, Auxiliary Convertor is in successful commercial
operation in Secundrabad section of IR and has clocked 60000 km.
* A new Traction Alternator type TA6801AZ developed for IR for use in HHP
DEMU. New alternator is 12% smaller and 20% lighter in weight resulting in
cost effectiveness, better efficiency of the coach together with ease of
maintenance.
Industrial Products - Mechanical:
* Rate contract for supply of Well Head & X-mas Trees finalized with M/s
ONGC. This is the 3rd consecutive placement of rate contract by ONGC on
BHEL, indicating the confidence ONGC has reposed in BHEL.
* Order received from ONGC for supply of 6 nos. state-of-the-art AC
drilling rigs after a gap of 18 years. Rigs with AC drive are the latest
trend worldwide due to more efficient rig operation on account of higher
power factor of AC motors.
* Compressor orders received from Refinery sector (IOCL Mathura), Petro-
chemical Sector (GAIL, Vijaypur & GAIL Pata) & Fertiliser sector (CO2
Compressor Revamp from NFL Panipat/Bhatinda).
Industrial Products - Electrical
* Record orders for motors from CHP/AHP suppliers for 217 motors and 15
nos. 980 - 6500KW motors from Manikgarh Cement.
* 9 new customers added in the industrial motors business.
Transmission System - Substation / Switchyard
* Orders from POWERGRID for 765/400 kV substation at Raichur, 400/220 kV
Aurangabad Substation & 400 kV Wardha substation Extn package against stiff
competition. 765/400 kV substation order has paved way for BHEL`s entry
into 765 kV substation segment.
Other business highlights in this segment include:
* As part of its endeavour to offer the most contemporary products &
technologies to customers, BHEL has successfully designed, manufactured and
commissioned India`s highest voltage Power Transformer of 1200 kV 333 MVA
rating at the 1200 kV National Experimental Substation of PGCIL. The Single
Phase Interconnecting Transformer has been developed and manufactured with
in-house engineering and manufacturing technology.
* Have engineered the underground 400 kV cable network using highest size
of EHV cable - 400 kV, 2500 sq mm - ever used in India to replace the 400
kV overhead transmission line for PPCL for Bamnauli Project which is in
advanced stage of implementation.
* The first 765 kV 80 MVAr single phase Shunt Reactor developed with in-
house technology has been tested successfully as per IEC standard.
Transmission Products
* Significant order of 14 nos. 285 MVA, 400 kV generator transformers for
KAPP and RAPP nuclear power plants of NPCIL.
* Customer reposes faith in BHEL- Secured full order for 28nos. 100 MVA,
220/ 66 kV and 12 nos. 160 MVA, 220/ 66 kV power transformers from PSTCL
(Punjab).
* Secured large orders of 19 nos. 160 MVA, 220 / 132 kV auto transformers
and 32 nos. 40 MVA,132 kV transformers from MPPTCL against JICA (Japan)
funded tenders.
Other business highlights in this segment include:
* BHEL Jhansi develops capability to supply 400 kV power and instrument
transformers.
* Successfully tested and supplied highest rating dry type transformer in
the country. 15 MVA, 36 kV dry type transformers for Reliance Sasan through
Bluestar has been developed for the first time in the country by Jhansi
plant.
* BHEL was awarded the `EXIM Achievement Award` in the Import Category by
the Tamil Chamber of Commerce.
INTERNATIONAL BUSINESS
* The year 2011-12 witnessed unforeseen turmoil in various parts of the
globe affecting BHEL`s international business prospects. The widespread
financial instability in Europe and political volatility in Middle East &
North Africa (MENA) region has caused delays in financial closure & project
financing resulting in postponement of finalization of new projects. These
recent political and civil unrest in the Middle East & North Africa (MENA)
and increasing security concerns have adversely affected the business
prospects in our traditional markets.
* In spite of such difficult and uncertain trends, BHEL has made
persistent efforts in maintaining its volume of international business.
Though certain large orders expected to be finalized during the year were
delayed, concerted efforts have helped us maintain our footprints by
securing orders from 21 countries across the world.
* The year marked significant steps towards globalization with successful
forays in new markets and new product areas, apart from firmly establishing
the company`s presence in existing markets.
MAJOR ACHIEVEMENTS DURING 2011-12:
During the year BHEL secured following prestigious orders:
* Single largest export order for transformers -secured the single largest
export order (in terms of financial value) for transformers from
Punatsangchhu Hydro Project Authority-I, Bhutan.
* Entry into new country - Ukraine - BHEL successfully made its maiden
entry into Ukraine by securing an order for 27 MW Steam Turbine Generator
package from Ukraine. BHEL has secured order for steam turbine from a
European country after a gap of 15 years.
* Repeat order for motors from Kenya - Reaffirming confidence of existing
customers, BHEL secured repeat orders for motors from Mombasa Cement Ltd.,
Kenya for supply of 2500 KW and 1400 KW Slip Ring Induction motors.
* New product in existing market - Wellheads from Georgia - For the first
time, an order for wellheads has been secured from the CIS market by
securing maiden export order of wellheads from Georgia.
* Letter of Intents received from for 6x170 MW Punatsangchhu-II & 4x180 MW
Mangdechhu Hydroelectric projects from Bhutan.
* Footprints strengthened in 21 countries across the globe securing 68
orders - Orders for other products including revival of 15 MW STG from
Indonesia, transformers from Iraq, motors from Bangladesh,
Yemen and Nigeria and soot blowers from UAE have also been secured.
* Continued focus on after sales services led to orders for spares and
services from different parts of the world including Australia, Bangladesh,
Bhutan, Georgia, Indonesia, Iraq, Kazakhstan, Malaysia, Malta, Oman, Saudi
Arabia, Sri Lanka, UAE, United States, Vietnam and Yemen.
EXECUTION OF MAJOR OVERSEAS ORDERS:
In the year 2011-12, BHEL successfully commissioned 325 MW of power plant
capacity in overseas markets.
The major projects executed during the year are:
* Oman - 2x126 MW (2xFr-9E) Amal Power Project for Petroleum Development
of Oman.
* Nepal - Two units of 3x5 MW Devighat Hydro power plant commissioned and
project handed over to Nepal Electricity Authority.
* Taiwan - 63 MW Bihai Hydro Electric Plant commissioned. BHEL proved its
technical competence by achieving significantly higher efficiency compared
to guaranteed figures.
* Kabul - 220/110/20KV Chimtala Substation project successfully
commissioned.
BHEL is currently executing 24 nos. contracts spread over 19 countries
across the world-Afghanistan, Belarus, Bhutan, Ethiopia, Indonesia, New
Caledonia, Oman, Rwanda, Sudan Syria and Vietnam to name a few.
CUSTOMER APPRECIATION
* Afghanistan -220/110kV Kabul Sub Station Project - Appreciation received
from customer for successful completion of all works in record time in
challenging conditions.
* Nepal - Certificate of appreciation awarded by Nepal Electricity
Authority for successful completion of the 3 x 5 MW Devighat Hydroelectric
project.
* Bhutan - Appreciation received from Druk Green Power Corporation Limited
for restoration of Unit-1 of Chhukha Hydroelectric plant (in just nineteen
days) and replacement of critical components of Unit-1 & 2 of Tala
Hydroelectric plant.
C. CAPITAL INVESTMENT
* BHEL made a total capital investment of Rs.1122 Crore during 2011-12
towards augmentation of manufacturing capacity and modernization of
facilities in manufacturing units and at power project sites. This includes
capital investment of Rs.840 Crore towards capacity augmentation in
manufacturing units and power sector regions.
* Focused attention was given on rebuilding and retrofitting of existing
facilities to enhance their life, accuracy and productivity through an
additional investment of Rs.76 Crore during 2011-12.
* BHEL achieved capability for delivering 20,000MW power plant equipments
per annum. This, amongst others, included Augmentation of Control Equipment
to 7000 cubicles/year at EDN, Banglore, Boiler Auxiliaries at BAP, Ranipet,
Assembly Bays for Gas Turbine at Hyderabad, Boiler Shop at Trichy and New
Blade Shop at HEEP, Haridwar.
* "Power Plant Piping Unit (PPPU)" at Thirumayam, Tamilnadu with annual
production capacity of 80,000 MT high pressure piping started Commercial
Production during the year.
* About 70 major state-of-the-art machining facilities/ process plants
were commissioned during the year 2011-12 across BHEL units under various
ongoing Capacity Augmentation Schemes which includes 51 nos. state-of-the-
art CNC machines. The focus was on capacity expansion with multi tasking
facilities to improve productivity and introduction of automated processes.
Some of the unique facilities commissioned during the year included 8000T
Press for Boiler Drums, 20 Torch Panel Welding Station, CNC Gantry Drilling
& Milling Machine, Bogie Machining Centre, Fan Testing Station for upto
1000MW rating etc.
With above, BHEL has total 557 nos. CNC machines which include large size
Lathes, Horizontal Borers, Vertical Borers, Machining Centres, Flame
Cutting Machines, 5-axis Machining Centres, Incremental Pipe Bending
Machines, Special Purpose Machines etc.
D. JOINT VENTURES
I) BHEL-GE Gas Turbine Services Ltd. (BGGTS):
The Joint Venture Company, BHEL-GE Gas Turbine Services Ltd. (BGGTS), has
been promoted by BHEL with GE, USA for repair & servicing of GE designed
Gas Turbines has completed fourteen full financial years of operation.
BGGTS achieved a sales turnover of Rs.513.28 crore during the year 2011-12
with a profit after tax of Rs.60.76 crore. Orders for Rs.1047.36 crore
approx were booked by BGGTS during the year including an order of Rs.452
crore approx received from NTPC for renovation of GT package at Kawas.
BGGTS successfully completed gas turbine servicing & supply of spares to
various customers in both Public and Private sectors. For the year 2011-12,
BGGTS has declared a dividend of 680% thereby maintaining its consistent
record of improved performance.
II) Powerplant Performance Improvement Limited (PPIL):
The Joint Venture Company, Powerplant Performance Improvement Ltd. (PPIL),
has been promoted by BHEL with Siemens, Germany for plant performance
improvement of old fossil fuel power plants.
PPIL is in the process of settlement of outstanding issues and collection
of withheld payments for pending contracts. Since sufficient business to
ensure viability of the company has not been forthcoming, the promoter
partners have mutually agreed to gradually wind up the company.
III) NTPC BHEL Power Projects Private Limited
(NBPPL):
BHEL along with NTPC Ltd. has promoted a joint venture company "NTPC BHEL
Power Projects Private Limited" for carrying out EPC contracts for Power
Plants and other Infrastructure Projects in India and abroad. The JV
Company can also take up manufacture and supply of equipments, for power
plants and other infrastructure projects, which are not subject to any
limitation or restriction under any ongoing collaboration agreement of
promoter companies. BHEL`s Board has approved to enhance BHEL`s
contribution in the equity from the initial Rs. 5 lakhs to Rs. 100 crore
which will be done in tranches as per funds requirements of the JVC. The
paid up capital of the JVC is presently Rs. 50 crore, with BHEL and NTPC
each having subscribed Rs. 25 crore. The JVC has acquired land in
Mannavaram, AP and is in the process of implementing Phase-I of the
investment already approved. The JVC is also executing orders for Balance
of Plant equipment assigned to it. For the financial year 2011-12, the JVC
achieved a turnover of Rs. 145.55 crore and PAT of Rs. 13.06 crore
approx. NBPPL has entered into a technical collaboration agreement with M/s
DMW, USA for manufacture and supply of Coal Handling Plants.
IV) Barak Power Private Limited (BPPL):
BHEL had promoted a joint venture company with PTC India Ltd. for setting
up of 2x125MW CFBC based power plant in Silchar, Assam. The JVC was
incorporated on 1st September, 2008 under the name of Barak Power Private
Limited with an authorized and paid up capital of Rs. 10 lakh subscribed
to equally by BHEL and PTC. Due to non availability of local coal, the
power plant has not been found to be viable. Promoters enhanced their
contribution from Rs. 5 lakhs to Rs. 8.5 lakhs each to settle the
outstanding obligation and wind up the JVC. As intimated by Registrar of
Companies, the JVC has been wound up on 11.10.2011.
V) Udangudi Power Corporation Limited (UPCL):
BHEL has promoted a joint venture company with Tamilnadu Electricity Board
for setting up of a 2x800MW Supercritical Thermal Power Plant at Udangudi,
Tuticorin, Tamilnadu on build, own and operate basis. The JVC was
incorporated on 26.12.2008 under the name of "Udangudi Power Corporation
Ltd". The initial authorized and paid up equity of the JVC was Rs. 10
crore subscribed to equally by TNEB and BHEL. As per the Joint Venture
Agreement, the equity structure is to be subsequently diluted to bring in
Financial Institution/ Banks who would hold 48% of equity and TNEB & BHEL
would hold 26% each. The State Govt had allotted land for the JVC project
for which the payment has been made to Govt. of Tamilnadu with equal equity
contribution by both promoters. At present the paid up equity capital of
JVC is Rs. 65 crore, with BHEL and TNEB each having subscribed Rs. 32.5
crore. The JVC has been awaiting grant of coal linkage and MOEF clearance
before proceeding with finalizing main plant equipment order on BHEL. In
March 2012, Govt. of Tamilnadu has indicated that they would like to pursue
this project as a state project rather than as a JV project.
VI) Raichur Power Corporation Limited (RPCL):
BHEL has promoted a joint venture company with Karnataka Power Corporation
Limited (KPCL) for setting up of a 2x800MW Supercritical Thermal Power
Plant at Yeramarus, Raichur, Karnataka and 1x800MW Supercritical Thermal
Power Plant at Edlapur, Raichur, Karnataka on build, own and operate basis.
The Joint Venture Agreement with KPCL was signed on 12.01.2009 and the JVC
was incorporated on 15.04.2009 under the name of "Raichur Power Corporation
Limited". The initial authorized and paid up equity of the JVC was Rs. 10
crore subscribed to equally by KPCL and BHEL. Pursuant to financial closure
in November 2011 and induction of IFCI as the third equity partner, a
change in equity structure has been agreed and ultimately KPCL would hold
50%, BHEL 26% and IFCI 24%. The JVC has received MOEF clearance for the
2x800MW Yeramarus power project and the order for supply and E&C of main
plant equipment for the 2x800MW Yermarus project has been placed on BHEL
for a value of approx. Rs.6300 crore. The LOA for 1x800MW Edlapur project
valuing Rs.3100 crore has also been settled and Notice to Proceed would be
issued after MOEF clearance. At present the total paid up equity capital
of JVC is appro Rs. 728 crore, with BHEL holding Rs.331.5 crore, KPCL
holding Rs.346.5 crore and IFCI holding Rs.50 crore.
VII) Dada Dhuniwale Khandwa Power Limited (DDKPL):
BHEL has promoted a joint venture company with Madhya Pradesh Power
Generating Company Ltd (MPPGCL) for setting up of a 2x800MW Supercritical
Thermal Power Plant at Khandwa, Madhya Pradesh on build, own and operate
basis. The Joint Venture Agreement with MPPGCL was signed on 28.01.2010 and
the JVC was incorporated on 25.02.2010 under the name of "Dada Dhuniwale
Khandwa Power Ltd". The initial authorized and paid up equity of the JVC
was Rs.5 crore subscribed to equally by MPPGCL and BHEL. A change in equity
structure has been approved with BHEL holding 26%, MPPGCL-10%, PSUs/PSU-
FIs/PSU bank-16% and balance 48% by a partner. The process of selection of
48% partner has been initiated. At present the paid up equity capital is
Rs.45 crore, with BHEL and MPPGCL each having subscribed to Rs.22.5 crore,
to enable JVC to meet land acquisition expenses. The JVC has been awaiting
grant of coal linkage and MOEF clearance before proceeding with finalizing
main plant equipment order on BHEL.
VIII) Latur Power Company Limited (LPCL):
BHEL has promoted a Joint venture company with Maharashtra State Power
Generation Company Ltd
(MAHAGENCO) for setting up a 2x660 MW Thermal power plant or 1500 MW gas
based Combined Cycle Power Plant (CCPP) in Latur, Maharashtra. The Joint
Venture Agreement with MAHAGENCO was signed on 11.11.2010 and the JVC was
incorporated on 06.04.2011 under the name of "Latur Power Company Ltd". The
present paid up equity of the JVC is Rs.5 crore, subscribed to equally by
both the partners. The equity structure would be diluted subsequently to
bring in Financial Institution/Banks etc, so that MAHAGENCO and BHEL hold
26% equity each. The JVC is reviewing the viability of various options to
set up a coal based or gas based project keeping in view the constraints of
availability of sufficient water and fuel for the project.
E. R&D AND TECHNOLOGICAL ACHIEVEMENTS
BHEL places strong emphasis on innovation and creative development. The
research and developmental efforts of the company are thus aimed not only
at improving the performance and efficiency of the existing products, but
also developing new products using state-of-art technologies and processes,
relevant to the needs of the country to remain current both in terms of
technology & features vis-a-vis global benchmarks.
Accordingly, BHEL pursued two pronged strategy namely; aggressive in-house
efforts and encouraging innovation which is in line with the "Decade of
Innovations (2010-2020)" declared by Govt. of India. As a result, R&D spend
of the company has registered 22% growth over last financial year (from
Rs.982 Crore to Rs.1198.82 Crore and associated growth of 15% in turnover
from In-house developed products and services clocking turnover of Rs.9832
Crore, which is approx 20% of the total turnover of the company.
BHEL`s efforts for encouraging innovation have resulted in raising BHEL`s
IPR capital tally to 1786 as on date with highest ever IP Rs.(351 nos)
filed this year.
Some significant developments carried out during the year are as follows:
* As part of its endeavour to offer the most contemporary products &
technologies to customers, BHEL has successfully designed, manufactured and
commissioned India`s highest voltage Power Transformer of 1200 kV 333 MVA
rating at the 1200 kV National Experimental Substation of PGCIL. The Single
Phase Interconnecting Transformer has been developed and manufactured with
in-house engineering and manufacturing technology.
* First 400/220/33kV 500 MVA Auto Transformer manufactured by BHEL for
POWERGRID has been tested successfully.
* The first 765 kV 80 MVAr single phase Shunt Reactor developed with in-
house technology has been tested successfully as per IEC standard.
* BHEL has introduced new rating 300 MW thermal sets, with an improvement
of 3% in heat rate over the existing 270 MW rating, leading to more
efficient and environment-friendly power generation. BHEL has already won
its first order for this rating for Visakhapatnam TPP from the Abhijeet
Group through competitive bidding.
* BHEL has developed India`s largest 15 MVA, 33/ 6.9 kV, 3 phase, 50 Hz,
Natural Air cooled Dry Type Cast Resin Transformer. The new transformer
offers advantages over conventional oil filled transformers in respect
being free from the risk of fire and being maintenance-free. The
transformer will be used for supplying power to huge dredgers employed for
open cast coal mining for continuous extraction of coal for Ultra Mega
Super Thermal Power Project.
* For the nation`s first Prototype Fast Breeder Reactor based power plant,
new systems have been engineered for the first time to cater to specific
needs of safe and reliable operation of the plant, such as OGDHR [Operation
Grade Decay Heat Removal System], SGTSDC [Steam Generator Tube Side
Depressurisation Circuit], etc. In-house capabilities have been utilised to
complete mechanical,
electrical and C&I design for various regimes of operation and to ensure
reliable and safe operation of these critical subsystems.
* An indigenous design & manufacturing capability has been established for
Main steam stop valve for 660 MW supercritical power plant applications. A
cost-effective, new design variant of Swing Check Non return Valve has also
been developed to take care of sudden pressure surge during valve opening
required for water storage down comer lines of 660 MW Supercritical Boilers
and economizer inlet line of 600 MW Projects.
* Continually striving to improve the economies of solar PV systems, BHEL
has developed an optimized printing process for solar cells for achieving
higher aspect ratio (Grid line height / Grid line width) resulting in an
all-time high solar cell conversion efficiency of 18% along with enhanced
PV module output from 227 W to 240 W. BHEL has also developed a new LASER
based isolation technique adopted for removal of junction at edges of
crystalline silicon solar cells leading to enhancement of yield to 99% and
gain in efficiency.
* As a reliable partner in ISRO`s space program, BHEL achieved a major
landmark with the successful deployment of its Space Grade Solar Panels on
the GSAT-8 satellite. Launched from French Guyana, the satellite is ISRO`s
heaviest satellite, weighing in at about 3100 Kg at lift-off. The four
Solar Panels supplied by BHEL for GSAT-8, have an area of over 5 sq. mtrs.
each, totalling to around 21 sq. mtrs. and comprise multi-junction Solar
Cells in series and parallel combinations, with a total power capacity of
4.5 kW. BHEL has supplied 51 Space Grade Solar Panels totalling to 221 sq.
mtrs. in area for various satellites of ISRO, which are deployed on INSAT
3A, INSAT 3E, GSAT 2, GSAT 3, GSAT 4, IRSP 5 and EDUSAT satellites, now in
orbit.
* In its efforts at automating fabrication processes, BHEL has automated
the welding process for `Manufacture of Bifurcate Components` used in re-
heater coils and low temperature super heater coils (LTSH) of fossil
boilers. The automated process has enhanced productivity and lowered defect
rate.
* With an endeavour to remain contemporary in technology, BHEL has
implemented state-of-the-art IEC61850 protocol on C&I platform to address
compatibility at control panel as well as Human Machine Interface sides
that allows seamless integration of various third party IED`s (Intelligent
Electronic Device) in Hydro Power Plants.
* For the benefit of its customers in terms of improved product life, a
cost-effective new variety of `Ceramic Liners for Coal Nozzle Tips` having
better thermal shock resistance, has been developed for the first time in
India. These liners have enhanced the life of nozzle tips and shall also be
deployed in 660/ 800 MW supercritical power plants.
* BHEL established 4 new Centres of Excellence, during the year 2011-12 in
the areas of (i) Advance Fabrication Technology, (ii) Coal Research Centre,
(iii) Nano Technology application (iv) UHV lab for GIS development.
With this, BHEL has established 13 Centres of Excellence focussing on
development of new products, processes, analytical tools for improvements
in design, enhancing efficiency and life cycle in exisitng products,
meeting the company`s and national requirement of developing new products
systems for both industrial and strategic applications.
F. QUALITY PERFORMANCE HIGHLIGHTS
1. Continuing its tradition of achieving excellence, three Units of BHEL
(Hyderabad, PSER & EDN) have been awarded "Commendation for Significant
Achievement" and BHEL-Ranipet received award for "Commendation for Strong
Commitment to Excel" in 2011-12 under CII EXIM Bank Award Scheme for
Business Excellence as per the globally recognized model of European
Foundation for Quality Management (EFQM).
2. Customer Satisfaction Survey conducted in 2011-12 at Haridwar & Trichy
units and at Power Sector Eastern region has recorded an improvement in
Customer Satisfaction Index by 5.26%, 5.19% & 7.14% respectively over
previous survey establishing company`s sustained commitment towards
quality.
3. As a part of its thrust to ensure cost competitiveness, the company has
successfully completed 32 case studies in respect of process improvement &
cost reduction.
4. Three Quality circles of BHEL won gold awards for their case studies
presentation in International Quality Circle Conference (ICQCC - 2011) held
at Yokohama, Japan.
G. HUMAN RESOURCE MANAGEMENT
1) Industrial Relations
1. Thrust on participative culture continued during the year and the
Industrial Relations in various Units and Service Divisions of the Company
remained harmonious and cordial. Consequentially, mandays lost reported
during the year 2011-12 was negligible.
2. Two meetings of the apex level bipartite forum, namely "The Joint
Committee for BHEL" were held during the year. Elections for reconstitution
of the Joint Committee were conducted in all the units, wherever due, in
two phases on 10th May, 2011 and 26th May, 2011. The Joint Committee was
reconstituted with a total strength of 48 members on 31.05.2011. Meetings
were also held with the representatives of Executives and Supervisors
wherein both Company and employee interest related issues were discussed.
3. A two day Special Session of the Joint Committee was organized at Jaipur
on 26th and 27th August, 2011 wherein the status of implementation of the
recommendations emerging out of the earlier workshops was followed up.
Presentations were also made by all the units on the progress made in the
implementation of three shift operations so as to reduce the overtime
expenditure and the impediments in increasing the productivity of the
workforce were discussed threadbare.
4. 60 meetings of the Plant Councils and 240 meetings of the Shop councils
were held during the year in various units of the Company wherein issues
like cost reduction, meeting the production targets and customer
commitments, sequential delivery, product quality, etc. were deliberated at
length to improve the overall performance.
2) Awards won by BHEL, Units & employees
Continuing its tradition of winning prestigious national/ international
awards, the organisation and its employees won several awards during the
year 2011-12. Notable among these included:
* SCOPE Meritorious Award for R&D, Technology Development and Innovation`.
The award was presented by the Hon`ble President of India, Smt. Pratibha
Devisingh Patil to CMD, BHEL.
* `MoU Excellence Award 2009-10` as the Top Performing CPSE in `Industrial
Sector`. The award was presented by the Hon`ble Prime Minister of India,
Dr. Manmohan Singh to CMD, BHEL.
* BHEL became the only PSU to be unanimously selected for the `NDTV Profit
Business Leadership Award` for the second year in succession. The award for
2011 was conferred to BHEL in the industry vertical of `Engineering`.
* BHEL was conferred the maximum number of 4 `ICWAI National Awards for
Excellence in Cost Management`, among public and private sector companies
for 2010-11. BHEL was awarded the recognition for the seventh successive
year.
* `Essar Steel Infrastructure Excellence Award 2011` was awarded to BHEL
by CNBC TV18.
* 3 `National Safety Award` to BHEL`s Hyderabad and Trichy units for
outstanding achievements in terms of longest accident free period and
lowest accident frequency rate at their works.
* Under the Rolta Corporate Awards 2010 of Dun & Bradstreet, BHEL was
selected as the top Indian company under the `Engineering / Capital Goods`
sector.
* The `Intellectual Property Award 2011` was conferred on BHEL by CII.
* BHEL also won the `Golden Peacock Award for Occupational Health & Safety
2011` and the `Golden Peacock Award for Innovation Management 2011` in the
Manufacturing Sector category.
* BHEL was awarded the `EXIM Achievement Award` in the Import Category by
the Tamil Chamber of Commerce.
* Other awards include `Dainik Bhaskar India Pride Gold Award 2011` for
excellence in Central and State Public Sector Enterprises in the category
of Heavy industries; `Gentle Giant` award from the Dalal Street Investment
Journal and `Enertia Award 2011` under the category Technology & Innovation
for Conventional Energy (Thermal, Nuclear, etc.).
* For its outstanding export performance, BHEL has won the Engineering
Export Promotion Council (EEPC)`s Top Export Award for the twenty second
year in succession.
* BHEL has been ranked the Ninth Most Innovative Company in the world by
the renowned US business magazine Forbes. Significantly, BHEL is the only
Indian engineering company on the list, and is ranked much higher than
similar multinational companies in the power equipment field.
* BHEL was recognised as the `Best Engineering Company to Work For` in the
Engineering & Automotive category by Business Today magazine.
* Continuing its winning streak in the CII Exim Award Scheme for Business
Excellence as per the globally recognised model of European Foundation for
Quality Management, three units of BHEL namely HPEP Hyderabad, EDN
Bangalore and Power Sector Eastern Region won the `Commendation for
Significant Achievements in TQM`. In addition, its BAP Ranipet Unit, was
awarded `Commendation for Strong Commitment to Excel`.
* 3 Quality Circles won Gold Medals for their case studies at the
International Quality Circle Conference (ICQCC - 2011) held in Yokohama,
Japan.
* 8 Prime Minister`s `Shram Awards` including 2 `Shram Bhushan` and 5
`Vishwakarma Rashtriya Puraskars`.
* The following awards in individual category conferred on CMD, BHEL:
* `SCOPE Excellence Award 2009-10` in individual leadership category
(Maharatna & Navratna PSEs) by the Hon`ble Prime Minister of India, Dr.
Manmohan Singh.
* `Eminent Engineering Personality of India Award` from the Institution of
Engineers (India) at the Indian Engineering Congress.
* `Forbes India Leadership Award 2011` in the `Best CEO Public Sector`
category.
* `Sivananda Eminent Citizen Award- 2011` of the Sanatana Dharma
Charitable Trust by H.E. Sh. E.S.L. Narasimhan, Hon`ble Governor of Andhra
Pradesh.
* `9th Wartsila Mantosh Sondhi Award` by Mr. Bjorn Rosengren, President
and CEO, Wartsila Corporation for outstanding contribution to the energy
sector in India.
3) Human Resource Development
* NEW INITIATIVES
* HRDI organized the following three training programmes for senior
management:
* 15 GMs of BHEL underwent training (2 weeks at IIM-A followed by 1 week
at AIM, Manila) along with 15GMs of NTPC
* Five GMs attended Global Leadership Programme which had module of one
week in India and 2 weeks abroad
* Four AGMs attended 2 week training programme conducted by IIM-A at
Bhutan
* Survey on Generation Y - HRDI conducted BHEL youth survey to understand
what factors enable the Generation Y (those born after 1980) employees of
BHEL to contribute optimally to the organization. 1079 responses were
received from GEN-Y employees across BHEL and analysed on the following
three dimensions:
* Work
* Relationship
* Compensation
Findings of the survey will pave the way to new initiatives that will help
in assimilating the GEN-Y into BHEL culture.
* Training Plan for Board Members has been approved.
* Five year Strategic Plan Document envisioning HRD activities has been
approved by the management.
* TRAINING
* Total number of employees exposed to different types of training during
the year 2011 - 12 is 31758, giving 15.10 training man days per employee.
In addition to employees, 7941 Act Apprentices were trained in different
units giving 1445298 man days
* Customer Training has been a regular activity at BHEL and during the
year, 1916 customers were trained viz. IOCL, GAIL, HINCO, CFCL, GNFC, TOYO,
GSEG, GPPC, ESSAR, ONGC, KSK, SRIRAM, SAIL, MRPL, BPCL etc. giving 143873
man days
* Rising to the social commitment, 8419 Vocational Trainees from different
professional institutions were also trained giving 301296 man days.
* MENTORING
* During the year 2011-12, workshops were conducted at Bhopal, Hyderabad,
Trichy, Vindhyachal and Hardwar to train 519 mentors and mentees.
4) Manpower strength
The manpower strength of the Company as on 31.03.2012 was 49,390.
5) Status on Presidential Directives
Directives for reservation policy for reserved category persons
Presidential Directives on reservation policy issued by Central Govt. from
time to time pertains to provision of certain percentages of reservation in
direct recruitment as well as promotion in specified posts and for
specified reserved category of candidates, i.e SCs, STs, OBCs and
Physically Challenged. Besides, the Directives also contain provision of
certain concessions and relaxations in direct recruitments, promotions and
reservation for housing for specified category of employees. The
Presidential Directives on the subject from time to time are being strictly
complied with and reservation percentages are ensured through maintenance
of Post Based Roster system as prescribed by Govt. However, there is no
direct impact of these guidelines on the financial position of the company.
I. Activities of the company for welfare and advancement of SCs and STs
The company has been following the Presidential Directives and guidelines
issued by the Government of India from time to time regarding reservation
for SCs, STs OBCs and PH. During the year 2011-12, various Community
Development activities focused on SocioEconomic development of SCs, STs and
Backward classes have been carried out in the communities and villages in
and around BHEL Units and in locations where company has presence under
BHEL Scheme of Corporate Social Responsibility.
II. Representation of SC/ST employees:
The overall representation of SC/ST/OBC employees in total manpower was
19.75%, 5.72% and 22.22% for SCs, STs and OBCs respectively as on
01.01.2012.
However, the percentages in direct recruitment during the year are 18.71%
for SCs, 6.81% for STs and 35.16% for OBCs. This does not include offers
issued, but joined after 01.01.2012, which takes care of the required
percentage of reservation.
The Annual Statement in the prescribed format showing the representation of
SCs, STs and OBCs as on 01.01.2012 and number of appointments made during
the preceding calendar year, as furnished to the Government, is given at
Annexure -A.
III. Manpower strength of Physically Challenged employees as on 01.01.2012
As on 01.01.2012, we have a total of 823 Physically Challenged employees in
BHEL. The group wise manpower strength of Physically Challenged employees
in the Company as on 01.01.2012 is given at Annexure - B.
H. CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY DEVELOPMENT
(a) Health, Safety & Environment Highlights
BHEL continued with its commitment towards conservation of the environment.
The Company successfully completed various Environment Improvement Projects
(EIPs) during the year 2011-12. These projects helped in enriching the
environment, conservation of precious natural resources like energy, water,
fuel oil, coolant and mitigating the environmental pollution. Major ElPs
cumulatively completed in and around units/ regions and sites, include: (i)
Rain Water Harvesting Plants; (ii) Tree Plantations; and (iii) development
of Green Coverage.
Other key EIP initiatives undertaken were in the areas of Water
Conservation Projects, Energy Saving Systems utilizing efficient
technologies, Installation/ Improvement in fumes extraction system,
Installation of Paint Booth, Noise Level Reduction System, Chemical Storage
& Handling System, Resource Conservation (Lubricant/ metal/Coolant), and
Utilization of Non-Conventional Energy Sources.
Besides the above activities, BHEL conducted Training and awareness
Programmes on Environment, Health & Safety and Skill Development programmes
for employees including contractors` workers etc.
Sustainable Environment Management / Development Policy:
BHEL has formulated its Sustainable Development Policy as an integral part
of the Company`s strategy. A Budget of Rs.50 Lakhs plus 0.1% of Profit
After Tax (PAT) for the previous year exceeding Rs.100 Crore is earmarked
for Sustainable Development projects and activities. For the year 2011-12,
an amount of Rs.6.41 crore is provided towards sustainability development
expenditure.
All manufacturing units/regions of the company are accredited to
international standards of environment management systems, viz. ISO-14001
certification for environmental management and OHSAS-18001 certification
for occupational health and safety management.
BHEL is an environment friendly company in all its activities, products &
services, besides providing safe and healthy working environment to all its
stakeholders and has made UNGC programme as part of the Company`s strategy,
culture and day-to-day operations.
BHEL reiterates its commitment to United Nations Global Compact (UNGC)
Programme and set core values enshrined in its principles on human rights,
labour standards, and environment and anti-corruption.
Company intends to advance GLOBAL COMPACT (GC) principles, as a responsible
corporate citizen. BHEL has taken a lead role in promoting GC principles in
other Indian organization through Global Compact Network (GCN) - an apex
level nodal agency, formed by the leading Indian organizations. BHEL
continued to remain in the forefront in all activities of the network as
Secretary/GCN being BHEL nominee. Noteworthy activities of the year were
participating in the national Convention and holding of monthly meetings of
the Network through case studies/ organizational experience sharing,
addressing the Global Compact principles in Indian context.
In recognition of BHEL`s contribution in support of Global Compact
programme and its outstanding Communication on Progress (COP), UNGC
continued to place BHEL under `Notable COP` category.
(b) Corporate Social Responsibility Highlights
BHEL scheme on Corporate Social Responsibility (CSR) has evolved over the
years and has been endorsed by the top management as a policy statement on
the underlying principle that the Company is a committed Corporate Citizen
fully alive to the need of building synergy between business and CSR as an
integral part of its business strategy.
As an integral part of the society, BHEL is moving forward by achieving the
objectives of its social responsibility. In the year gone by, the Company
supported innumerable social initiatives across the country by undertaking
projects in diversified areas like Health, Environment Enrichment, Hygiene,
Education, Community Development, Self-Empowerment etc., supporting
projects of Afforestation, Water Conservation, providing Potable Water
accessories, besides conducting Health Camps around the Units/Project sites
for Diagnostic and Medicine distribution for common ailments. For the year
2011-12, an amount of Rs. 30.05 crore (0.5% of PAT of 2010-11) is
earmarked for CSR projects.
Community Development:
(i) The Company successfully improved the sewage system at Haridwar, to
supplement the requirement of Ganga Pollution Control Unit, Uttarakhand
Peyjal Nigam, Haridwar.
(ii) Six Reverse Osmosis plant units are installed at Bellary, Hubli, Puri,
Varanasi, Gandhinagar and Vadodra to provide safe and pure water in the
base kitchens for mid-day meal kitchens managed by Akshaya Patra.
Self-empowerment:
Taking the focus on Community development beyond the basic needs of health
and education, BHEL organizes various programmes for talent upgradation of
social and economically backward students for their empowerment in order to
make them self-reliant. It supported one such programme for Apparel
training of students belonging to below-poverty-line families in Chhindwara
district, Maharashtra. Organized a Cutting and tailoring training programme
through NGOs for ladies in Jhansi to provide livelihood opportunities and
empowerment of women.
Health & Hygiene:
Adopting a multi-disciplinary approach towards CSR in which health and
medical care, hygiene, sanitation, provision of pure drinking water and
education take the top most priority, BHEL initiated projects titled
`Vision to all` in (i) Guntur district of Andhra Pradesh to carry out
cataract operations for five hundred patients; and (ii) another unique
project, for carrying out 300 orbit surgeries for eye-patients from Andhra
Pradesh, Orissa and Chattisgarh commenced at Sankar foundation Eye Hospital
in Vishakhapatnam (AP).
BHEL has been organizing free health check-up camps for workers at its
different sites/ regions as preventive measures for various ailments.
BHEL provided five food delivery vans in the Guwahati Region in Assam to
supplement the midday meal programme under the "Sarva Shiksha Abhiyaan" by
the Government of India. This is in order to provide hygienic and hot food
to school children.
Education:
The Company is promoting various Scholarship Programmes for students to
enable them pursue higher education. Under these programmes, financial
assistance is provided to wards of widows in adopted schools and villages
by units. Supporting need based Construction of hostels, classrooms,
toilets etc. in educational institutes.
Disaster Management:
BHEL has compassionately responded to the beck and call of the victims
devastated by the earthquake in Sikkim by initiating efforts for the
refurbishment of four government schools which were damaged by the
earthquake.
Talent upgradation/Skill development:
To meet nation`s requirement of skilled manpower,
BHEL has adopted various ITIs under the Government of India PPP scheme
(Government ITI, Latur by Hyderabad Unit, Government ITI Bajpur by Rudrapur
Unit, Government Women ITI, Khandwa & ITI, Khaknar by Bhopal Unit,
Government ITI, Peramvalur by Tiruchy Unit - Under approval by state
Technical Board), Government ITI, SIDCUL, Haridwar by Haridwar Unit - Under
approval by state Technical Board).
As part of its CSR initiative regarding talent upgradation/skill
development, BHEL, in association with CIL, DVC & SSDA has set up Kabiguru
Industrial Training Centre (KGITC) at Bolpur, Santiniketan (West Bengal) to
provide high quality technical education and to give a filip to the
economic development needs of the area.
Phase-I of the Institute is ready. All the four trades, i.e. Fitter,
Welder, Plumber and Dress-making have been affiliated under NCVT. The
Institute has also acquired Income Tax exemption status under Section 80G.
The classes for Fitter trade with 42 students (including 02 girls) are in
progress since Aug 2010. For the remaining 03 trades - Welder, Plumber and
Dress-making, admissions are in progress for the sessions to commence
shortly.
CSR Training & Development
Believing firmly in the training needs of its employees and staff, the
Company trained 12 CSR officials from different units/regions of BHEL for a
better understanding and implementation of the CSR guidelines issued by the
Department of Public Enterprises (DPE). BHEL also organized the 2nd CSR
Conclave for Central Region CPSEs in Bhopal in association with the
National CSR Hub, TISS, Mumbai.
As far as promoting CSR activities in BHEL are concerned, the Company has
notified Expression of Interest (EOI) on its web page www.bhel.com as
"Expression of Interest (EOI) for Corporate Social Responsibility (CSR)
Projects." As a precedent of the previous year, a non-lapsable CSR fund
equal to half percent of PAT of previous year is earmarked towards CSR
Activities.
(c) As an organisation committed to people development through motivational
measures, BHEL is introducing Child Care Leave for female employees, in
addition to the existing Maternity Leave and Creche facilities at
factories.
I. RIGHT TO INFORMATION ACT, 2005
* BHEL is a front-runner in implementing the Right to Information
(RTI)Act, 2005 in letter and in spirit. A Central Public Information
Officer (CPIO) and a Central Assistant Public Officer (CAPIO) at the
company level and 15 CPIOs for each of the major administrative units are
functioning as part of Right to Information Group.
* Proactive disclosures were made in line with Section 4 (1) (b) of the
Act through BHEL website. Suitable guidelines have been placed on RTI web
page on BHEL web site for convenience of the applicants, seeking
information. Guidelines have been issued to administrative units to ensure
compliance to the mandatory requirements of the Act.
* BHEL received 1297 RTI applications during the year 2011-2012, while 159
appeals were filed before the First Appellate Authority. All these
applications and appeals were disposed off as per the provisions of the
Act.
* BHEL as an active member of Steering Committee on RTI constituted by
Standing Conference of Public Enterprise (SCOPE) participated in Symposium
on "Right to Information Act, 2005 for Central Public Sector Enterprises"
held on 29th & 30th of July 2011 at Bengaluru.
* An interactive programme for updating the recent developments in the
field of Right to Information was organized for the existing CPIOs and the
CPIOs who had taken the charge recently wherein alongwith other speakers,
Ms. Sushma Singh, Hon`ble Information Commissioner from Central Information
Commission addressed the participants.
J. INTERNAL CONTROL SYSTEM
* The company has Internal Audit Cells located at major manufacturing
units and regional offices of the company which carry out audit as per
annual audit programme approved by Director (Finance)/ Board Level Audit
Committee. The Internal Audit department checks the adequacy and
effectiveness of internal control system through regular audits, system
reviews and monitors compliance of various policies and procedures. The
Company has in-house Internal Audit Department commensurate with its size
of operations. Functioning of Internal Audit and adequacy of internal
control system is reviewed by Board Level Audit Committees which is
supported by Unit Level Audit Committees.
* The company has well placed proper and adequate systems of internal
control and documented procedures covering all financial and operating
functions. Adequate internal control measures are in the form of various
codes, manuals and procedures issued by the management covering all
critical and important activities viz. Purchase, Material, Stores, Works,
Finance, and Personnel etc. These codes, manuals and procedures are updated
from time to time and are subject to strict compliance which is monitored
by Internal Audit. The Company continues its efforts to align all its
processes and controls with global best practices.
K. MERGERS & ACQUISITIONS
BHEL is actively pursuing acquisition opportunities in Europe & USA in the
areas of core technologies in energy sector including renewables and other
potential areas like transportation & transmission to achieve its
objectives like access to technology, access to global markets, securing
global supply sources, diversifying into related & new business areas etc.
to facilitate in achieving top line and bottom line growth targets as
envisaged in Strategic Plan 2017.
In this pursuit, BHEL is consistently evaluating its technology profile,
product mix and exploring new potential markets for suitable target
opportunities in close co-ordination with its empanelled International M&A
Advisors.
Bharat Heavy Plate & Vessels, Visakhapatnam (BHPV) a wholly owned
subsidiary of BHEL has achieved net profit of Rs. 10.44 Crore in FY 2011-
12. Modernisation Scheme at an expense of Rs. 231 Crore is being
implemented at BHPV to establish it as a hub for Industrial Boilers.
The Board of BHEL has recommended the merger of BHPV with BHEL & a detailed
Scheme of Amalgamation has been submitted to the Government of India.
L. OPPORTUNITIES AND THREATS
World
The global economy which had gone through crisis during 2008-09, after
showing prospects of recovery in 2010, has recently become more uneven with
confidence falling sharply, and downside risks are growing following
barrage of shocks like devastating tsunami in Japan, unrest in some oil
producing countries coupled with turbulence in euro zone. Although some of
the advanced economies like US and Germany have shown the prospects of
expansion at sluggish pace of 2% growth (as per WEO), the situation in
emerging market economies have become more uncertain. Less policy
tightening can provide an environment for better growth in emerging
economies.
Demographics and economic expansion drive energy demand. Pace of the global
economic recovery holds the key to energy prospects for the next several
years, but it will be governments` responses to the twin challenges of
climate change and energy security that will shape the future of energy in
the longer term. A review of World Energy by BP maintains that the energy
efficiency will improve globally at a rate of 2.0% per annum vs 1.2% per
annum over past 20 years on the back of accelerated growth in low and
medium income countries. As per BP energy outlook 2030, energy used to
generate electricity remains the fastest growing sector accounting for 57%
of projected growth in primary energy consumption to 2030 against 54%
recorded during 1990-2010.
In recent years, world has seen notable steps forward by international
political fraternity in policy making, with the negotiation on important
international agreements on climate change, reform of inefficient fossil-
fuel subsidies and development and deployment of low-carbon technologies
which has potential to transform the global energy systems.
As per World Energy Outlook 2011, world primary energy demand is expected
to increase by 33% between 2010 and 2035 with global population likely to
increase by 1.7 Billion people and the world economy likely to grow at
annual average rate of 3.5%. Demand for all forms of energy is projected to
rise at an annual average rate of around 1 percent a year during 2011-2035.
The fastest growing major source of energy will be natural gas although
Coal would remain a dominant fuel till 2025 and then decline with shift to
a less carbon intensive energies led by OECD and China. Despite increase in
share of natural gas in energy mix, the share of fossil fuels in global
primary consumption is expected to fall slightly from 81% in 2010 to 75% in
2035. Global investment in energy supply infrastructure is expected to be
around $38 Trillion over 2011-2035 opening up vista of opportunities from
exploration of primary energy to generation of electricity. By 2035, China
would account for 22% of world demand, up from 17% today followed by India
with 18% share in the rise.
Renewable energy sources will have to play a central role in moving the
world onto a more secure, reliable and sustainable energy path. The share
of non-hydro renewable in Power Generation is expected to increase from 3%
in 2009 to 15% in 2035 with China and EU driving this expansion providing
half of the growth. The potential is unquestionably large, but the pace of
realization hinges critically on the strength of government support to
stimulate technological advances to make renewables cost competitive in
comparison to other energy sources.
Arising from the challenges of availability, accessibility, and
accountability, energy sector needs policy innovations and technology
innovations for harnessing more electricity from various sources including
renewable.
India
GDP growth of 6.5% during 2011-12 against 8.4% recorded a year back due to
stubbornly high inflation, high level of deficits, rapidly devaluing rupee
bloating imports coupled with uncertainty surrounding reform process and
dampened exports has been the cause of concern for the health of the
economy and employment.
Sectoral indicators are also disappointing as Agriculture & Manufacturing
posted a subdued growth while Mining contracted. The only watershed has
been electricity, gas and water supply which increased by 7.9% in Financial
Year 2012 compared to a 3% growth a year back. Indian rupee breached all
time low of 57-level against dollar due to number of macro-economic factors
like flight of foreign investment, large current account deficit, growing
import bills and speculative trading based on negative sentiments.
Industrial growth, as per IIP data released by CSO, registered contraction
of 3.2% during March`2012 due to underperformance in mining, manufacturing
and Capital Goods. The Capital Goods sector has registered subdued
performance all through the year 2011-12 pummeled by bleak investment
climate due to high interest rate and uncertainty in finalization of
projects.
Power Sector
Government of India is strongly committed to build an efficient and rapidly
growing electricity sector with large-scale private and foreign investment
with state-of-the art technology. Various policy and regulatory reforms
like Electricity Act. 2003 demonstrate this resolve. As a result, the
sector has been growing quite remarkably over the last two plan periods.
12th Plan throws huge opportunities for growth with envisaged investment of
around USD 300 billion in heavy electrical industry. During 11th Plan, the
country witnessed highest ever capacity addition of 54,964 MW which is
virtually double that added during the 10th Plan. Still, country`s power
sector is characterized, with some pockets as notable exceptions, by a
sharp demand-supply imbalance, frequent power cuts, and inadequate
coverage. The peak load deficit during 2011-12 was in the range of 10.8%.
It is acknowledged that the deficit in power availability is a significant
impediment to the sustained development of the economy. In this context,
bridging the gap in demand and supply has become critical and consequently,
large capacity additions are being undertaken in different segments of the
sector-Generation, Transmission and Distribution. During 12th and 13th Plan
periods, Government of India plans to add around 100 GW each to the power
generation capacity of the nation with the matching additions in T&D
segments. Therefore tremendous opportunities for growth exist for all
stakeholders. Taking forward the growth story the Country has been adding
manufacturing capacities with huge investments in power equipment sector.
New players from India, China and developed nations are constantly striving
to exploit these opportunities emanating from Indian markets.
Indian power sector is also responding to the challenges of climate change
by introducing energy efficient, climate friendly and less fuel consuming
technologies like higher rating thermal sets with Supercritical parameters,
UHV Transmission systems etc. Development of IGCC and Advanced Ultra
Supercritical technology is also being pursued aggressively.
The performance of the heavy electrical and power equipment industry is
closely linked to finalization of power projects. However, 2011-12
witnessed a state of uncertainty in this sector due to postponement of
investment decisions, lack of clarity on availability of coal, land issues,
non availability of Gas and burgeoning cost of raw materials driven by
rupee depreciation. Other challenges like skill deficit, constrained
availability of critical raw materials, infrastructure constraints and lack
of level playing field in respect of tariff benefits to project imports are
the critical issues calling for urgent attention to give a boost to
domestic production of Power & Heavy electrical equipments. Capacity
imbalances particularly in Balance of Plant areas have emerged as one of
the main impediments for realizing the capacity addition targets of the
sector. The woes of land acquisition, delay in regulatory clearances,
erratic fuel supplies, lack of adequate infrastructure and deteriorating
financial position of state utilities are risks to sustain required growth
momentum of the sector.
Implementation of tariff measures to take care of the disadvantages
suffered by the domestic industry had been under consideration of the
Government for some time. Recently, the Cabinet has approved the imposition
of custom duty on power equipment for all power projects and the same is
expected to be notified soon. This will partly offset the disadvantage
faced by BHEL with respect to foreign competitors.
Industry Sector
With depressing growth of economy and stagnated industrial production, the
progress of Industry sector remains a veritable cause of concern.
During 2011-12, the industrial sector exhibited signs of slowdown as the
IIP growth remained by and large flat with intermittent spikes mainly on
account of sharp deceleration in capital and intermediate goods, mining and
manufacturing which could be attributed to the slump in investment,
vagaries associated with availability and accessibility of coal, land
issues and high inflation throughout the year.
The recent trend of bleak performance of Industry due to unimpressive
sentiments is unlikely to continue on the back of strong fundamentals of
economy of the country. The demand is expected to revive over mid to longer
term on the back of the need for Energy and infrastructure development to
sustain the country`s economic growth. Robustness in urban and rural
consumption supported by appropriate policy measures would be instrumental
in economy to bounce back.
M. POSITIONING FOR THE FUTURE
* Strategic Plan 2012-17, adopted by the company attempts to steer the
company with a vision of becoming a global engineering enterprise. It
comprises expanding our offerings in the power sector by building EPC
capability, focus on industry businesses, expansion of spares & services
and adoption of a collaborative approach.
* In spite of the current stagnation in Power Sector, we believe that the
power sector will continue to remain a major contributor to our top line
with transportation and transmission emerging as the next big business
verticals. We will continue to strengthen our presence in the Nuclear,
Renewable and Water segments.
* We will continue to sustain our focus on innovation to develop strong
capabilities in product development and engineering. To uphold our
reputation for excellence in our core capability of `Engineering &
Technology`, we will continue to upgrade existing products and systems to
contemporary levels and develop new products through continuous in-house
efforts as well as through acquisition of new technologies.
* In recent years, BHEL has expanded its manufacturing capacity. We are
taking various initiatives to streamline our manufacturing value chain for
full exploitation of a strong manufacturing base.
* BHEL has recruited more than 20,000 highly talented and competent people
at all levels during last five years. Human Resource focus would be on
developing each person`s competencies, their performance and potential in
alignment with business plans. Leadership development, competency mapping,
performance linked pay, career planning and succession planning initiatives
are in various stages of implementation.
* 6-Point Agenda` viz. Capability Enhancement, Accelerated Project
Execution, Product Cost Competitiveness & Quality, Diversification,
Engineering & Technology and People Development will continue to drive us
for reaping an execution premium to put us ahead of our peers.
* Notwithstanding the uncertainties in the business environment and rising
intensity of competition, we aspire to reach a turnover level of US$20
billion dollar by 2017.
N. RISKS AND CONCERNS
The recovery from global economic recession is still shrouded with
uncertainty. The global financial condition continues to remain uneven as
there is downside risk due to Euro-zone crisis and Political turmoil in
certain parts of the world like MENA region. Most affected is investment,
which contracted reflecting dampening business sentiments coupled with slow
pace of execution of projects in the country. Uncertainty about demand
conditions given sluggish global economic recovery and its likely contagion
effect, regulatory issues regarding environmental clearances and land
acquisition as well as sector specific issues like availability of coal
besides high cost of capital have stagnated the growth in the economy of
our country.
The Indian power sector has over the years caught attention of the world
because of high power capacity additions program planned in the country.
This has resulted in a number of international players/ suppliers of power
equipment increasing their focus on the growing Indian market by joining
hands with domestic companies, setting up manufacturing facilities or
augmenting their existing capabilities. Domestic power developers/utilities
are facing shortage of coal due to supply constraint as supply of coal is
not matching with demand. The situation is further aggravated by poor
logistics affecting delivery.
A combination of global competition and open access in the domestic market
is putting pressure on the margins as new players are likely to move
towards gaining market share by bidding aggressively. This could escalate
the competitive intensity for BHEL in the long-term. The margins could also
be impacted by unforeseen rise in raw material prices, especially steel and
copper, due to depreciating currency. In international business, Country`s
exports of capital goods face impediments mainly in terms of non-tariff
restrictions leading to competitive disadvantage.
There are mounting worries over energy security and climate change in the
global context. Concern is on the rise about environment pollution in the
emerging economies. India has an overall strategic imperative to balance
the goals of sustainable energy use, enhanced competitiveness and
maintenance of the security of the energy supply. The Indian market is
moving steadily towards adaptation of new technologies, like super-critical
technology and its assimilation which can lead to initial technical
hitches. The domestic power sector has other concerns like limited number
and capacity/capability of balance of plant vendors in the country as well
as competent/qualified construction contractors for taking up large size
power projects and handling of increased construction load, shortage of
skilled manpower with sub-contractors, contractual issues between project
authorities/ developers, contractors and their sub-contractors etc.
In most of the business areas in which BHEL operates, the growth prospects
are dependent on policy decisions at the national and international levels
as also on the prevailing business trends.
For and on behalf of the Board of Directors of
BHARAT HEAVY ELECTRICALS LTD.
B.Prasada Rao
Chairman & Managing Director
Place : New Delhi
Dated : July 26, 2012
ANNEXURE TO THE DIRECTORS` REPORT
CONSERVATION OF ENERGY
Energy Management is an important thrust area in BHEL. BHEL has been
proactive in Energy Conservation in its operation.
Broad framework or Action plan of energy conservation in BHEL is as
follows:
A. Enhancing the efficiency of existing equipment.
B. Purchasing BEE labelled Equipment.
C. Spreading awareness among employees & their family members.
D. Promoting renewable sources of energy.
Major activities undertaken for energy conservation (during the financial
year 2011-12) were:
1. Key personnel were certified as Energy Manager/ Energy Auditor at
manufacturing units.
2. Energy conservation week was celebrated across the company from 14th to
21st December. Several competitions like painting, essay writing in
regional language, quiz, were organized in units/ offices, schools and
townships.
3. Energy audit was conducted at HPEP Hyderabad, IP Jagdishpur, and EPD
Bangalore to find OFI (opportunities for improvement).
4. Solar street lighting had been installed to tap renewable energy.
5. Guidelines for Procurement of Energy Efficient Equipment on the basis of
LCCA (Life Cycle Costing Analysis) were issued.
TECHNOLOGY ABSORPTION AND RESEARCH & DEVELOPMENT:
Research & Development:
1. Specific areas in which R&D carried }
out by the Company } Given in the Directors` Report
} under "R&D & Technology"
2. Benefits derived as a result of the }
above R&D }
3. Future plan of action:
The following are the major thrust areas for R&D and technology:
* More efficient conventional thermal power plants using supercritical
parameters
* More efficient conventional thermal power plants using ultra-
supercritical & Advanced Ultra supercritical parameters
* Advanced control and instrumentation platform for thermal power plant
and industrial application
* Coal research for refinement of understanding Indian coal
characteristics
* Integrated Gasification Combined Cycle (IGCC) power plants
* Green technologies for Reduction of emissions such as Underground Coal
Gasification, clean development mechanism (CDM) projects etc.
* Atmospheric and Circulating Fluidized Bed Combustion (CFBC) boilers
* Large size hydro power plants with higher efficiency and longer life
* Advanced transmission systems like q800kV HVDC, 765 kV, 1200 kV
Transmission systems/ products
* Flexible AC Transmission systems, including devices such as Thyristor
Controlled Series Compensation, phase shifting transformer, static
synchronized compensator (STATCOM), controlled shunt reactor, etc.
* Gas insulated switchgear
* Efficient, reliable and cost effective transportation solutions
including IGBT - based applications, three-phase AC drive system for diesel
electric locos
* Higher rating Industrial steam turbines
* Enhancing efficiency of the existing products
* Grid connected renewable energy systems such as solar PV, solar thermal,
wind etc.
* Simulators
* Advanced Fabrication Technologies
* Surface coatings including ceramic applications
* Residual life assessment studies
* Deployment of new technologies including deployment Intelligent machines
& robotics, for reducing cycle time and cost
* Specialized engineering software applications
* Knowledge Management
* Total Engineering solutions including EPC with focus on automation.
* Vibration and noise reduction
* Applications based on high temperature Superconductors.
* Desalination and Water Treatment Plants
* Nano-technology applications
* Hydrogen energy and fuel cells
EXPENDITURE ON R&D
Total Rs. 1198.82 Crore
a) Recurring Rs. 1160.52 Crore
b) Capital Rs. 38.30 Crore
Expenditure as a percentage
of total turnover 2.42%
Technology Absorption and Adoption:
Details of technology imported during the last 5 years:
Technology Year of Absorption status
import
Pumps for higher rating
thermal power plants 2007 Technology absorption in progress.
Large size forgings 2010 Technology absorption in progress.
Centrifugal Compressors 2010 Technology absorption in progress.
Water Treatment Systems 2011 Technology absorption in progress.
Foreign Exchange Earnings and Outgoings:
(Rs. in Crore)
2011-12 2010-11
(i) Foreign Exchange Used 9815 8389
(ii) Foreign Exchange Earned 14419 9226
For and on behalf of the Board of
Directors of
BHARAT HEAVY ELECTRICALS LTD.
Place : New Delhi B. Prasada Rao
Dated : July 26, 2012 Chairman & Managing Director |