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Bharat Heavy Electricals Ltd. Business & Strategy Overview
CLSA India Forum November 6, 2012 Gurgaon, India
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Our Credentials
A USD 9 billion Engineering & Manufacturing enterprise of its kind in India
A Navaratna company and a Major Integrated Power Plant Equipment Manufacturer in the World
Profit Making Company since 1971-72
Consistent Dividend Paying Company for over thirty years (FY 1976-77 onwards)
References in over 75 countries
Installed base of more than 1,20,000 MW
15 Manufacturing Units+ 2 Subsidiaries+ 7 JVs+ Infrastructure to deal with 150+ project sites
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We are Single Source with Multiple Solutions for Infrastructure & Industrial Sectors.
Power Industry Oil & Gas
Transmission Transportation Renewable
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We are Indian CPSE with GOIs holding of 67.72%.
( As on 30th Sept 2012)
President of India
67.72%
FIIs 14.35%
MFs, FI, Banks 5.90%
Insurance Cos.
6.83%
Bodies Corp 1.89%
Individuals 2.92% Others
0.39%
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Our stellar performance with more than 20% CAGR during last five years.
21,401 28,033
34,154
43,337 49,510
0
10,000
20,000
30,000
40,000
50,000
60,000
FY08 FY09 FY10 FY11 FY12
Turnover (Rs Crore)
* Excluding onetime impact of change in policy related to provisions for warranty obligations for earlier years
41,299*
20%
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Our stellar performance with more than 20% CAGR during last five years.
2,859 3,138
4,311
6,011
7,040
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FY08 FY09 FY10 FY11 FY12
Profitability PAT (Rs Crore)
* Excluding onetime impact of change in policy related to provisions for warranty obligations for earlier years
5,665*
24%
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We have retained leadership in shrinking & competitive market.
50,270
59,678 59,037 60,507
22,096
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
FY08 FY09 FY10 FY11 FY12
Order Book (Rs Crore)
* Excluding NTPC and DVCs bulk tender
BHEL 69%
Others31%
Market Share*
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Today, BHEL is facing challenges from all fronts.
Uncertainties in Global economy
Transportation of Heavy & ODC consignments Rising Competition
Political disturbances in target export markets
Indian Power Sector in stagnation
Critical Raw Materials, BoP Vendors, Skill deficit
Slowing Indian Economy
Slackness in large Infrastructure Projects
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But, there are huge market opportunities. India can not grow more than 8% without focus on power sector.
147 220
306 425
575
778
735 1097
1524
2118
2886
3880
2008-09 2011-12 2016-17 2021-22 2026-27 2031-32
Generation Capacity (GW)
Electricity Generation (bln KWh)
State of Indian Power Sector
Generation Capacity 208 GW (57% Coal)
Per capita consumption of electricity
818.9 kWh Less than 1/3 of world average
AT&C Losses 27.15%
Demand- Supply deficit 8-9%
Peak demand-supply deficit
13-14%
Avg cost of electricity 354 paisa/ unit
Realization 268 paisa/ unit (76%)
Integrated Energy Policy 2006, Planning Commission
@ 8% GDP growth
Source: CEA Monthly Report Sept 2012
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Efforts are being made to sustain growth momentum.
Rs Crore H1FY13 (A)
H1FY12 (B)
H1FY12* (C)
% Growth (A/C)
Turnover 19,750 18,189 18,189 8.6%
PBT 3,123 3,163 2,997 4.2%
PAT 2,195 2,228 2,115 3.8%
Project Comm. (MW)
3,505 3,025 3,025 16%
Order Book (MW)
4,393 3,777 3,777 16%
Total Order outstanding as on 30.09.12: Rs 1,22,300 crore
Performance up to Q2FY13
* Excluding onetime impact of change in a/c policy related to leave liability adjustments for earlier years.
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Order inflow is improving.
Sector Power Industry Exports Total MW 3,380 23 990 4,393
Rs Crore 5,739 2,049 975 8,717
Order Book H1FY13
Major Orders Received
Power Sector Industry Sector Exports 1x500 MW TG & SG package from
NTPC Vindhyachal
2x660 MW TG package for DVC Raghunathpur
160 MW BTG package from RRVUNL Ramgarh CCPP Stg.IV
2x700 MWe Rawatbhata Nuclear Power Station from NPCIL. This includes TG, CCI package and C&I for turbine island secondary cycle system.
ESP packages for NTPC Mauda and Sholapur projects
765 kV Transformers- MEIL, Cobra (JV of Megha Engineering & Cobra for UP Transmission upgradation), Bajaj Hindustan-Lalitpur,UP
9x160 MVA, 220 kV Auto Transformers from RRVPNL
40 sets Traction Electrics for DEMU from BEML Bangalore, 44 sets of Traction Electrics for MEMU from Railway Board, 220KV Substation at Pusauli from Bihar State Electricity Board
Coal Handling Plant package from NTPC Meja 47 sets Power Converter with control
electronics for CLW Chittaranjan
EM package for 6x165 MW Hydro Electric project from Punatsangchu Hydro Project, Bhutan
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Our Contribution in Power Sector
A major manufacturer of power plant equipment for various fuels
Fully indigenized technology up to 600 MW from world leaders
Supplies Steam turbines, generators, boilers and matching auxiliaries up to 800 MW ratings including supercritical sets of 660/ 700/ 800 MW
346 coal based sets installed, including 58 sets of 500 MW rating
376 nos. BHEL make Hydro Utility sets installed in India
Indias Installed Capacity (Utility) 1,80,413 MW (31.03.12)
Indias Generation Coal Sets (Utility) 6,12,880 million Units (2011-12)
BHEL, 59%
Others, 41%
BHEL, 75%
Others, 25%
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Superior performance from BHEL sets in Indian Market.
Source: CEA Review of Performance of Thermal Power Stations 2010-11
85.63% 77.41%
8.32% 7.97%
83.85% 75.08%
8.49% 10.32%
Operating Availability
(OA)
Plant Load Factor (PLF)
Auxilliary Power
Consumption
Forced Outages
due to Equip.
BHEL All India Average
9 Power Stations out of 12 and 10 Power Stations out of 13 equipped with BHEL equipment awarded with GOIs National Awards for Meritorious Performance for years 2009-10 & 2010-11 respectively
490 MW National Capital Thermal Power Project Dadri Unit-5 of NTPC, supplied & commissioned by BHEL awarded GOIs National Award for Early Completion.
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And our sets have scaled global performance benchmarks.
* Average performance of thermal sets during 2006-2010; Source: North American Electric Reliability Council (NERC); 2010
84.85%
70.22%
10.30% 4.95%
91.12% 86.56%
5.94% 2.94%
Operating Availability
(OA)
Plant Load Factor (PLF)
Planned Maintenance
Forced Outages
due to Equip.
86.51%
66.56%
9.04% 4.45%
89.22% 81.15%
6.07% 4.71%
Operating Availability
(OA)
Plant Load Factor (PLF)
Planned Maintenance
Forced Outages
due to Equip.
Performance of 400-599 MW Sets* Performance of 200-299 MW Sets*
NERC member countries (North America, Canada, Europe part) BHEL Sets
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We are market leader in Indian Power Sector.
BHEL, 36496,
49%
Chinese Comp, 21567,
29%
Others less Chinese Comp, 16201,
22%
*Total order placed as on 18.09.12: 119,505 MW
XI Plan 2007-12 (~ 74,264 MW) XII Plan 2012-17 (>100,000 MW)*
BHEL, 49009,
41%
Others less Chinese Comp, 29966,
25%
Chinese Comp, 40530,
34%
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We service customers from all segments.
IPP, 4391, 37%
State, 1295, 11%
Central, 6076, 52%
IPP, 7680, 51%
Central, 1420, 9%
State, 5971, 40%
Power Sector Orders Received in FY11 Power Sector Orders Received in FY12
Our product attributes Lower Auxiliary Power Consumption
Boiler Efficiency
Lower Design Heat Rate
Better PLF
Our business attributes Product Quality
Execution Capability
Service Reliability
Engineering Excellence
Lower Life
Cycle Cost
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MW, % MW, %
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Our Industry Sector Business.
Transmission 7-9%
Transportation 3-5%
Other Industrial Products 12-15%
Transmission
Transformers Switchgear Indl. Control Gear / Control Panels Capacitors Insulators HVDC/ Transmission Projects etc
Transportation
Traction machines Traction Control gears DESL AC Locos / DG Sets / etc
Other Industrial Products
Industrial Machines Indl. TG / Boiler Sets Compressors Oil Field Equipment Valves etc
FY 2010-11
FY 2009-10
FY 2008-09
Contribution to total Turnover: 22-28%
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We are focusing on 6-Point Agenda to meet Strategic Plan 2017 targets.
1
2
3
4
5
Engineering & Technology
6 Timely investments
-Planned & scalable Inorganic Growth
Supply Chain Agility Skill Enhancement Effective Site
Management & Information Systems
Operations Improvement Lean, DTC, PSM Global Sourcing, Indigenization
Upgrade Product Range in Thermal, Gas & Hydro Generation
Nuclear power, Transmission, Transportation, Renewable Energy, Water
Investment in R&D Absorption of
Supercritical Technology Fast-track Technology &
Product Development for IGCC, 765/ 1200 kV Transmission and so on
Performance & Potential alignment of new inductees with Companys Challenges
Leadership Development Technical/ Functional Competency
Development
Engineering &
Technology
Capability Enhancement
Accelerated Project
Execution Diversification
BHEL
Product Cost
Competitiveness & Quality
People Development
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Innovation is our key focus area to steer future growth.
464
690 829
1005
1199
2.17%
2.46% 2.43%
2.32%
2.42%
0
500
1000
1500
2000
FY08 FY09 FY10 FY11 FY12
R&D Spend (Rs Cr) R&D % TO
2719
5570 6334
7810
9832 13%
20% 19%
18% 20%
0
3000
6000
9000
12000
15000
18000
FY08 FY09 FY10 FY11 FY12
Commercialization (Rs Cr) Comm % TO
Expenditure towards R&D Turnover from in-house developed products
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We are developing strong capabilities in Product Development & Engineering.
270/525/600 MW sub-critical sets introduced
Advance Class Gas Turbines tech in place
765 & 1200 KV UHVAC Transformer developed
IGCC development
Transportation-IGBT technology being pursued
Sole supplier in world for 420 kN/320 kN porcelain insulators for 800 kV HVDC lines
Products Development Introduced Supercritical Technology with Technology
tie-ups with Alstom (Boiler), Siemens (TG) & MHI (Pumps)
Rapid technology absorption in partnerships with customers
Supercritical Orders basket 18 TGs and 18 SGs:
2X660 MW Barh (SG & TG) 3X660 MW Bara (SG & TG) 2X800 MW Krishnapatnam (SG) 2X800 MW Yermarus (SG & TG) 1X800 MW Edlapur (SG & TG) 1X700 MW Bellary #3 KPCL (EPC) 2x660 MW NTPC Bulk Tender, Mauda (SG & TG) 3x660 MW Bajaj Hindustan, Lalitpur (SG & TG) 2x660 MW DVC, Raghunathpur (TG) 2x660 MW DB Power, Singrauli (SG & TG)
Supercritical Domain
We are slated to play a key role in RDD&D in India's first coal fired Advanced Ultra Supercritical (AUSC) power plant in association with Indira Gandhi Centre for Atomic Research (IGCAR) and NTPC.
AUSC: 5% more efficiency; 12% savings in coal; Less GHG emissions
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Our Capacity Enhancement Program is Timely, Planned & Scalable to meet Market Demand.
Acquired BHPV Vizag as 100% subsidiary in 2008. Slated to enhance our capabilities in design, fabrication, supply and erection of custom built process plant equipments. Turnaround in 2010-11
BHEL Electrical Machines Ltd. (JVC between BHEL & KEL (Kasargod)/ GoK) for manufacturing of products for Railways and Industries. Strategic move to enhance our presence in Transportation, Industrial and Renewable Energy Sectors.
15000 MW
20000 MW
March 2010 March 2012
Manufacturing Capacity Expansion
Inorganic Growth
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Various initiatives are being taken to enhance pace of execution.
Skill enhancement at ITIs in JV/PPP mode: Kabiguru (WB), Latur (Mah), Bajpur (UP), Peramvalur (TN), Khandwa & Khaknar (MP), Haridwar (Uttranchal)
Leveraging WRI Trichy to train high pressure welders
Extensive training to Act Apprentices & Customers
Lateral/ Campus/ Special/ FTA Recruitment
Retired Specialists as Consultants, Re-Employment
Bridging Skill Deficit
Greater empowerment of Project Managers
Deploying additional Tools & Plants like heavy cranes suitable for erection of sets up to 800 MW.
Total Cranes as on March 2012: 128
Several process improvements to reduce PI to PO conversion time
Site Capability Enhancement
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Various initiatives are being taken to enhance pace of execution.
Vendor Base Expansion
766 new Vendors added in 2011-12 & Vendor base is more than 20,000. Procurement Office opened in Shanghai, China
AMA Advanced Manufacturing Action for long lead items
TCA Technology Collaboration Agreement with Sheffield Forgemasters UK for large size forgings (up to 1000 MW)
IT e-Procurement , Reverse Auction (~32%)
Rate Contracts
Long term Rate Contracts for Steel, Copper, CRGO, Transformer Oil (contribution to total purchase ~20%)
Outsourcing Enhanced thrust is being given for outsourcing of low tech/ non-core manufacturing
ACF Away Center Fabrication adopted by Trichy & Ranipet Units
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We are expanding our offerings in New Growth Areas.
Solar Evaluating the possibility of setting up a large manufacturing facility for silicon wafers, solar cells & modules
Joint Working Arrangement with Abengoa Spain for Concentrated Solar Power Plant (CSP)
Nuclear Steam generators for new rating 700 MWe Nuclear sets Tripartite JV with NPCIL & Alstom in process for conventional island of Nuclear
Projects for 700 MWe & above Order for 2x700 MWe Rawatbhata Nuclear Power Station (TG) BHEL-Alstom
consortium from NPCIL
Water Manufacturing Associate Agreement with GE India Industrial Private Limited (GEIIPL), for Water Treatment Equipment.
BHEL will be able to provide more cost-effective membrane-based water treatment systems for power plants and industrial sector for all type of input water like sea water, brackish water and waste water.
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We are expanding our offerings in New Growth Areas.
Transportation MoUs with Alstom and GE for participating in the tender for setting up a factory for Electric Loco components at Dankuni, West Bengal and Diesel Loco factory at Marhowra, Bihar respectively
Breakthrough orders for State-of-the-art propulsion equipment for 6000 HP Electric Locomotives and 1400 HP AC EMUs (IGBT based)
Executing an order for 200 numbers of 5,000 HP 25 kV AC Mainline Electric Locomotives (Type WAG -7) for Indian Railways
T&D Indias first and highest rating indigenously developed 1200 kV class Transformer successfully test charged to cater to 1200 kV UHVAC Transmission Systems
Breakthrough order from PGCIL for the world's first + 800 kV 6,000 MW UHV Multi-Terminal DC Transmission Link between North-East and Agra, in consortium with ABB, Sweden
Entry into highly competitive 765 kV UHV Transformers- orders for 53 nos from MEIL Cobra and Bajaj Hindustan- Lalitpur UP
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Statements in this presentation describing the companys objectives, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include global and Indian demand supply conditions, finished goods prices, cyclical demand and pricing in the companys principal markets, changes in government regulations, tax regimes, economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour negotiations. The company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events, or otherwise.
Cautionary Statement
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Thanks!
AA:PLD:58::051112
Bharat Heavy Electricals Ltd.Business & Strategy OverviewOur CredentialsWe are Single Source with Multiple Solutions for Infrastructure & Industrial Sectors.We are Indian CPSE with GOIs holding of 67.72%.Our stellar performance with more than 20% CAGR during last five years.Our stellar performance with more than 20% CAGR during last five years.We have retained leadership in shrinking & competitive market.Today, BHEL is facing challenges from all fronts.But, there are huge market opportunities. India can not grow more than 8% without focus on power sector.Efforts are being made to sustain growth momentum.Order inflow is improving.Our Contribution in Power SectorSuperior performance from BHEL sets in Indian Market.And our sets have scaled global performance benchmarks.We are market leader in Indian Power Sector.We service customers from all segments.Our Industry Sector Business.We are focusing on 6-Point Agenda to meet Strategic Plan 2017 targets.Innovation is our key focus area to steer future growth.We are developing strong capabilities in Product Development & Engineering.Our Capacity Enhancement Program is Timely, Planned & Scalable to meet Market Demand.Various initiatives are being taken to enhance pace of execution.Various initiatives are being taken to enhance pace of execution.We are expanding our offerings in New Growth Areas. We are expanding our offerings in New Growth Areas. Slide Number 26Slide Number 27