New Delhi: State-owned Bharat Heavy Electricals Ltd, or Bhel, said it is increasingly facing delays in export of equipment due to bad roads and congestion at ports.
“It takes a month for the equipment to reach the port (in Mumbai) from our Jhansi manufacturing facilities in Madhya Pradesh. It is 25 days in the case of equipment transport from Hyderabad (facility to a port in Chennai),” said a senior Bhel executive, who didn’t want to be identified.
Of Bhel’s order book position of Rs1.25 trillion, overseas orders account for around Rs7,500 crore.
West Asia, Africa and Central Asia are the primary international markets for Bhel, which plans to raise exports to Rs10,300 crore by 2012.
“While we need break-bulk vessels to export the equipment not many such vessels come to our ports. We primarily export from Mumbai and Chennai ports but face a time and cost overrun problem,” said another Bhel executive, who also did not want to be identified.
Says Kuljit Singh, a partner at accounting firm Ernst and Young: “Logistics constraint is on account of physical infrastructure such as roads, ports and highways. It gets compounded when the manufacturing units are located across diverse locations. This is exactly what is happening with Bhel.”
“There are places when the roads do not have the capacity to carry such huge loads. Then comes the problem of over-head wires. There is also delays in availability of road permits,” said the second Bhel executive.
A case in point is NTPC Ltd’s Sipat power project turbine being stuck at Kasara Ghat on NH3 between Mumbai and Nashik for around six months because the road could not take the load.
Mint had reported on 27 May that India could miss by 20%, or 13,855MW, its target of adding almost 70,000MW of power over the next four years because of poor transport infrastructure.
The cargo handling capacity at India’s ports has to double to 1.59 billion tonnes a year by 2012 from about 757 million tonnes now to meet growing demands.
Bhel, India’s largest power generation equipment manufacturer, exported 100,000 tonnes of equipment in 2008-09 and imported 200,000 tonnes of raw materials during the same period.
The company imports raw materials worth Rs4,000 crore in a year.
Higher exports would help Bhel hedge against exchange-rate fluctuations as a depreciating rupee pushes up the cost of raw material imports.
For the fiscal year ended 31 March, the net profit of India’s largest power equipment maker was Rs3,039 crore, against Rs2,859 crore in the preceding year. Its order book rose 19% to Rs59,687 crore and turnover was up 29% at a record Rs27,505 crore.
Bhel has an annual capacity of manufacturing power equipment that can produce 10,000MW of electricity. The company says it plans to raise this to 15,000MW a year by December.
Bhel’s stock on Friday rose 2.67% to Rs1,707.4 at close on the Bombay Stock Exchange.