Bhel to miss 15,000MW manufacturing capacity target

Bhel to miss 15,000MW manufacturing capacity target

New Delhi: At a time when India faces an electricity shortage of 12% during peak demand, state-run Bharat Heavy Electricals Ltd, or Bhel, will miss its target of achieving 15,000MW manufacturing capacity for power generation equipment by December due to delays in placing purchase orders for capital equipment.

This capacity is now expected to be reached by March, a delay that will have an impact on India’s power generation plans. Bhel, which has a current annual capacity of 10,000MW, has been drawing flak from different government agencies such as the Central Electricity Authority, India’s apex power sector planning body, for delays in servicing orders.

“There was a delay in capital equipment processing," said a senior Bhel executive, who did not want to be identified.

India has a power generation capacity of 147,000MW and plans to add 78,577MW by 2012. Of these, orders for a capacity of 42,431.58MW have been placed with Bhel, the country’s largest power equipment maker.

Missing power generation targets isn’t new to the country. In the five years to 2007, the country missed its target of adding 41,110MW by 49%. It added 9,300MW of generation capacity in 2007-08, against a target of 12,000MW. In 2008-09, it added only 3,454MW, against a target of 11,061MW.

“This could further delay plans to take the total capacity to 20GW by FY12," said Madanagopal R., an equity research analyst at Mumbai-based brokerage Centrum Broking Pvt. Ltd. “The development would have negative impact on our earnings growth estimates for Bhel for the financial year 2010-11."

Given the demand in the country, several private sector consortia are planning to make inroads into the domestic market. They include Toshiba Corp. of Japan along with JSW Group; Ansaldo Caldaie SpA of Italy and GB Engineering Enterprises Pvt. Ltd; Larsen and Toubro Ltd and Mitsubishi Heavy Industries Ltd of Japan and Bharat Forge Ltd and Alstom SA of France.

Bhel posted a net profit of Rs3,039 crore on revenue of Rs27,505 crore in the fiscal ended 31 March. It aims to be a $10 billion-plus (Rs46,200 crore) company by revenue by 2012.

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