Bharat Heavy Electricals Ltd, (Bhel), India’s leading power generation equipment manufacturer, is expected to have a record year with the order book projected to show an almost 50% jump to Rs25,000 crore.
“We have captured 93% of the market share in the power generation equipment manufacturing business in the country, with orders worth 8,000MW in 2006-07,” said K. Ravi Kumar, director (power) for the company. Bhel had posted a turnover of Rs14,525 crore in 2005-06.
The company has increasingly come under criticism for not being able to match up to the power-generation equipment demands in the country. The total power shortfall expected in the current Plan (2002-07) is 17,860MW, some 43.44% of the 41,110MW capacity addition that was targeted in the Plan period.
Power shortages have been identified as one of the key infrastructure bottlenecks threatening the country’s ability to sustain the 9% growth per annum, recorded in the last two years.
Currently India has an installed generating capacity of 1,28,182MW and plans to add an additional 68,870MW during the next Plan (2007-12).
However, the “order book position has never been an issue with Bhel,” says Shubhranshu Patnaik of accounting firm PricewaterhouseCoopers.
“What needs to be seen is that whether they are able to execute the projects in the required time frame.” He added that since Bhel was adding a lot of capacity, it might be in a position to meet growing demand.
A government working group report, submitted as an input into the preparation of the 11th Five-Year Plan (2007-12) for the power sector, noted that around 3,960MW could not be commissioned during the current Plan period, which ends this fiscal year on account of delays from its super critical technology tie up by Bhel.
Bhel has a manufacturing capacity of 8,000MW and plans to ramp up capacity to 15,000MW by 2009-10.
“Our expansion programme will be cheaper as we do not have to set up a greenfield capacity in the country,” Kumar said. Bhel has 14 manufacturing divisions.
Bhel is expected to face competition from Dongfang of China and Larsen & Toubro Ltd (in association with Mitsubishi Heavy Industries and Toshiba Corp.) when they set up manufacturing facilities in the country.
Kumar is unfazed by the coming competition, saying that “it will take time for anew greenfield facility to be set up in the country.”
However, he concedes that competition will come from Chinese firms as they typically put in low bids.